Lighthouse Point City Commission Divided on Issuing Demolition Permits for the Lighthouse Point Yacht Club
Danielle Charbonneau
May 16, 2023
April 25 marked another contentious Lighthouse Point City Commission meeting when, in an effort to catalyze forward momentum on the Lighthouse Point Yacht Club, Commission Vice President Sandy Johnson opened up a discussion on potentially amending the City’s current development agreement with yacht club developer, Terry Paterson, in order to expedite the demolition permit and tear down the now defunct property.
“I think we’re at a critical point right now,” Johnson said at the meeting. “One of the things that I think would help is if we would expedite the demolition permit and say that it’s time now we take the club down, because at this point, the club’s not ever going to be used. It’s been vacant for almost a year.”
According to the current developer’s agreement Paterson must first prove “financial viability” for completion of the project before a demolition permit can be issued by the City. The agreement also states that once demolition begins, the clock starts on the agreed construction timeline of 40 months. Johnson proposed the Commission allow Paterson to begin demolition before the financial viability requirement is fully met, and consider not starting the clock upon the issuance of the demolition permit. No other commissioner seconded this idea, so the motion stalled.
Following the meeting, Commissioner Evert Marshall spoke with Lighthouse Point magazine and expressed his concern that the building, as it stands now, could be a potential liability.
“The building serves no purpose and I would consider it a hazard,” he said. “I understand some Commissioners are worried about him [Paterson] going belly up. But at the same time, an intelligent person would understand that the ground is worth more vacant than with a building on it. If he [Paterson] has the money to tear the building down, and he’s going to have to pay for it, then what is the problem?”
The problem, according the Commissioner Jason Joffe, is that Paterson has not shown sufficient financial viability to complete the project.
“I have seen failed projects like this and the unfortunate carnage that has ensued,” Joffe said. “It becomes embroiled in litigation for years and years. I’ve been very clear from day one with this project, that that was my greatest fear. We’re where I exactly didn’t want to be, and where the development agreement was supposed to prevent us from being, which is a half started, closed club.”
In the developer’s agreement, what exactly constitutes sufficient proof of financial viability is not clearly defined.
According to Paterson, in order to show proof of financial viability, he was asked by Mayor Kyle Van Buskirk to present a letter from a financial institution showing the bank’s intention to fund the development project. Paterson said he was given a clear example of such a letter that was submitted to another municipality to prove financial viability on a similar development project. Paterson said he followed the template and submitted a letter to the City Commission from Colorado Savings Bank dated April 20, 2023.
The letter stated: Colorado Federal Savings Bank has approved a construction loan in the amount of $25,500,000 for construction of residential units to the Borrowing Entity, Lighthouse Point Yacht Club Investments, LLC. The loan is subject to a satisfactory level of financial disclosure, as well as satisfactory due diligence investigations and credit analysis.”
“I provided what they [the Commission] asked for, and now Jason Joffe says its not worth the paper it’s written on,” said Paterson in an interview.
The letter was not deemed by the Mayor as sufficient proof of financial viability for a few reasons: it only showed funds for 16 of the 22 residential units, it did not show funds for the rest of the yacht club development, and it was subject to loan approval and closing conditions.
Paterson said he has been waiting on another letter from Synovus Bank which he said will show funding for the rest of the project. He said he is willing to show the Mayor the documents that prove he meets all loan requirements and closing conditions, but said he does not want to submit those documents formally to the Commission because he does not want “sensitive personal financial information to become public record.”
While Paterson knew in advance the Commission would discuss the status of the yacht club at its April 25 meeting, Paterson did not appear. When asked why by Lighthouse Point magazine, Paterson said he feared losing decorum. Instead Joseph Gratton, with Lighthouse Point Yacht Club Investments, came forward to answer the Commissioners’ questions.
Ultimately the Mayor has the authority to determine if sufficient financial viability has been shown to satisfy the current developer’s agreement. The Mayor said Paterson has not done so yet. Until that point, or until the Commission votes and agrees to amend the developer’s agreement, the demolition permits will not be issued by the City.
This fact was misrepresented by a recent newsletter published by the Lighthouse Point Yacht Club which stated that financial viability had been proven and that the project was cleared for demolition permits.
“I hope Mr. Paterson focuses his resources on finalizing his permit and securing the financing he needs to deliver on the promises he has made to the membership of that club and the residents of Lighthouse Point. If he did that, we wouldn’t have any issue,” said Commissioner Joffe. “We’d have no issue at all.”
Corrections
In response to a previous article in the May 2023 issue of Lighthouse Point Magazine, the Lighthouse Point Yacht Club reached out to Lighthouse Point Magazine to clarify some points. Here are the facts we feel warrant clarification:
1) Reporter misused the term club calling the club “defunct” and saying the amendment request was to demolish the “club.” The Lighthouse Point Yacht Club is not defunct. It is still operational, running events and programs with an active membership. The request was to tear down the clubhouse building, not the club in its entirety. The term “clubhouse” should have been used to distinguish the clubhouse building from the Club entity itself.
2) The article published the letter of intention from Colorado Federal Savings Bank, and explained this letter showed only funds for 16 of the 22 residential units. The funding of only 16 units was intentional as Phase One of the development project includes only 16 residential units and the entirety of the commercial Yacht Club (including the clubhouse, pool, youth center, bistro, marina perimeter wall and parking). As corrected by the Yacht Club: “The purpose of the Developers Agreement is to ensure the construction of the Clubhouse and Yacht Club commercial elements, not the residences. Therefore it is irrelevant whether we build the residences or not.” As of print time, no letter of intention has been submitted on public record to show intent of funding from a lender for the commercial club, but Mr. Patterson has said: “We have invited all commissioners to meet privately with us to review all bank term sheets and letters of intent for both sides of the project.” Ultimately, per the development agreement, Mayor Kyle Van Buskirk will have the final say when he feels “proof of financial viability” has been shown for both sides of the project.
