Communication Builds Our Community

Gibson Lays Out History, City Position in Walesbilt Lawsuit

City to Pursue $1.629 Million From Dixie Walesbilt LLC and Manager Ray Brown

Despite a significant ruling in favor of the city, the future of the Walesbilt Hotel still hangs in the balance of an active lawsuit, Deputy Mayor Robin Gibson told the city commission during the boards' regular meeting Tuesday night. The ten-story boom-era hotel, constructed in 1926, is the dominant feature of the city's downtown and has been a topic of discussion by the commission for more than a decade. It has remained vacant since 1996.

The Walesbilt Hotel has attracted proposals that would see it restored as a high-end hotel. The possibility is seen as a major potential driver of property values and economic redevelopment of the city's historic downtown core.

In a 33-minute presentation at Tuesday's commission meeting, Gibson, an attorney, explained the long course that led to the award of a summary judgement on two counts in the city's lawsuit against hotel owner Dixie-Walesbilt LLC.

"In the past there has been some deal of confusion and misinformation," Gibson said, undoubtedly referring to a competing narrative on social media claiming that the city had prevented the success of the redevelopment effort. A Walesbilt Facebook page includes numerous videos and historic photos, along with details of the work undertaken to restore the building. The most recent posts there were dated in 2016.

Deputy Mayor Robin Gibson is part of a three-person "crew" which is guiding the city's efforts to reclaim the Walesbilt Hotel for possible restoration.

"What I'm doing tonight is to provide accurate information to everybody so that there will be no further communication or misinformation on the project," Gibson said, "and it will be going forward for resolution."

Longstanding hopes for the redevelopment of the 10-story structure have been stymied by lack of progress on rehabilitation. Restoration as a high-end hotel has been proposed by at least two different qualified groups including Buena Vista Hospitality Group and Preferred Hotels and Resorts.

Similar projects have proven successful in neighboring Lakeland and Winter Haven. Such an outcome would provide a powerful economic engine in the heart of downtown.

Creative reuse of surrounding property might require a developer to purchase the current Care Center retail store, a possibility that Care Center Director Rob Quam told Lake Wales News in 2022 he would willingly take to his board. "We don't want to stand in the way" of downtown redevelopment" he said.

The city granted title to the property to Dixie Walesbilt, LLC without cost in July 2011 after being assured by company manager Ray Brown that financing to develop condominiums was in place and that as many as 19 units had been "presold" during a contractual period. Judge William Sites found those claims to be "fraud in the inducement" after it was shown that Brown testified under oath in a related suit that there was no financing deal, and that no units had been presold.

Gibson described himself as one part of a three-member executive committee, including City Manager James Slaton and attorney Kevin Ashley, that was authorized by the commission to pursue the lawsuit. Ashley was retained in 2021 to "analyze the situation for us," Gibson said. "He was magnificent." Gibson said of Ashley's work on the suit.

"Of that three-member crew, Kevin Ashley pulled the strongest oar," Gibson said, as Ashley pointed out that the "statute of repose" would expire in early February of the following year, requiring the city to act or be forever barred, and focused on the issue of fraud.

Only two months before that date, Brown approached the commission with a prospective financier who might have funded the project. "That was the first person we ever heard of who was going to provide financing for this project. We established a very good rapport. We made it very clear to him that all we wanted was the redevelopment of the hotel."

Robert Connors

The ten-story Walesbilt Hotel was opened in january 1927 at the tail end of the Great Florida Land Boom. It includes a number of architectural details that make it uniquely attractive for hotel uses.

"After two visits, we heard no more from (financier Daniel) Greenberg," Gibson said, forcing the city to file the lawsuit before the lapse of the statute of repose. That complaint cited 16 counts, nine related to breach of contract and seven to fraud.

Gibson said he likes to get lawsuits "right down to the core issue," which the three decided was the issue of fraudulent statements made to the city by Brown to gain title to the building in 2011.

The city filed the motion for summary judgement on only two counts after the court rejected Brown's own motion for summary judgement. On February 29 Judge William Sites ruled in the city's favor. "This was a significant achievement," Gibson said.

"The suit continues," Gibson said. "There are still 14 other counts," outlining an additional $1,629,572 in unpaid fees and damages that may be recovered in addition to the building's title.

Courtesy REG Architects

A design presented to the city commission in 2022 by architectural firm REG showed a redeveloped hotel with an adjacent parking garage, retail blocks, and a conference center. Creative reuse of surrounding property might require a developer to purchase the current Care Center retail store, a possibility that director Rob Quam said he would willingly take to his board. "We don't want to stand in the way." of downtown redevelopment, he told the News in 2022.

That total, which may be requested by the city if the suit goes forward, represents $50,000 Brown promised for sidewalk improvements, $30,000 promised for the city history museum, and $1,364,000 in calculated tax revenue lost since the promised completion date. "Eleven years in which these taxes were not realized," Gibson said. Those are in addition to the city's attorney fees of more than $185,000.

"We will move for the finding of damages, and the amount of damages," Gibson told his fellow commissioners. "Brown is not shielded" for personal liability by his company for fraudulent activity, Gibson reported, but said that "what we want is rescission," which he expects to happen because "fraud cannot be rewarded."

Rescission refers to a court action rescinding the original transaction and placing the parties back into their original positions, meaning the city would once again be the title-holder.

Robert Connors

A sign urging "likes" for a Facebook page controlled by Dixie Walesbilt LLC manager Ray Brown has attracted more than 6,000 fans for his efforts to restore the hotel "out of pocket."

An appeal is possible, Gibson said, but not necessarily bad, because "once a final judgement is entered, regardless of appeal, the plaintiff who has the benefit of that final judgement can levy on assets" of the defendant. Brown is the owner of the nearby American Legion Building, among other assets.

As part of a normal rotation withing the court system, Judge Sites has been shifted to a new division, so the case may be taken up by a new judge who may handle the issues of recission and damages, Gibson said.

Once rescission is granted the city may then proceed to negotiate terms with a new developer. Any such new contract would be expected to include strict benchmarks for progress and a reversion to the city if they are not met.

Robert Connors

Internal shopping arcades within the hotel offer multiple retail spaces which could bring renewed vibrancy to downtown shopping experiences. The units feature original mosaic tile flooring and transom windows.

"There are things that are confidential, and there are things that are public," Gibson said of the lawsuit, citing the discussions that took place in mediation, which will forever be private.

There are no plans for further discussions between the parties, Gibson told Lake Wales News. "We intend to pursue the matter."

 

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