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Grand Harbor members in sensitive talks with developer

STORY BY RAY MCNULTY (Week of November 12, 2020)

One day after Grand Harbor members overwhelmingly rejected a proposal to take over ownership of the community and control of the club’s facilities from the developer, both sides had resumed talks last weekend.

“Right now, we’re in the middle of some very sensitive negotiations,” Grand Harbor Members Association Board President Doug Sweeny said Saturday. “We always wanted to have a negotiated deal and an amicable transition – and we still do – but we couldn’t endorse that last proposal from the developer because we didn’t believe it was in the members’ best interest.

“We still believe, however, that one way or another, we’re going to get to a resolution.”

The latest negotiations come after a period of contention between the developer and Grand Harbor members, who contend the developer has failed to properly maintain and operate club facilities.

Sweeny said the GHMA has no timetable for the latest negotiations and feels no pressure to reach an agreement quickly, but board members believe Grand Harbor’s Massachusetts-based developer is motivated to make a deal.

He didn’t say why, adding only “we sense they are ready to get something done here and move on.”

If so, Bayswater Development LLC – a subsidiary of billionaire Carl Icahn’s business empire – will need to sweeten a recent take-it-or-leave-it ultimatum that included none of the capital improvements, $4.5 million in cash, or $6.5 million in real estate the members association had demanded.

In a vote that concluded at midnight Friday, more than 85 percent of the 673 club members who voted on the matter rejected the company’s proposal, refusing to settle for the turnover of 500-plus unsold memberships that weren’t worth anywhere near their nominal face value of $28 million.

Bayswater, which has owned the club and managed its operations since 2004, responded by shutting down all facilities at 5 p.m. Saturday, as it said it would in pre-vote email to members.

The company claimed it lacked the funds needed to keep the club open, saying more than 160 members had resigned and others were withholding their dues, creating a $6 million budget shortfall.

However, GHMA wrote in a Nov. 1 email to members that the company had collected $3 million in dues – more than enough to cover the club’s operations.

Bayswater also has threatened to declare the company “insolvent” and seek Chapter 7 protection in bankruptcy court, where the club’s amenities could be purchased by a third party.

Sweeny, though, said the GHMA board believes the two parties want to make a deal and can reach a fair and acceptable compromise to avoid such a fate.

“A lot of our members belong to other clubs up north, and they know how clubs are supposed to operate,” Sweeny said. “So, we’re not walking into this like, ‘Now what do we do?’

“We want to assume control of the club, but we are not desperate,” he added. “We don’t feel we have to take what they’re offering.”

If the members do take ownership of the club, however, Sweeny said the members association has the funds needed to operate its facilities and expects to see many of the departed members return.

Many of those former members have joined other clubs, such as Vero Beach Country Club and The Boulevard Tennis Club.

“Some members won’t come back as long as the developer owns the club,” he said. “They’re going to sit on the sidelines until a deal is done.”

As recently as last week, however, a deal seemed unlikely as the development company hurled harsh accusations at the GHMA board, and the board returned fire.

In an Oct. 31 email to the club’s membership, the developer attempted to drive a wedge between members and the GHMA board that has represented them throughout the sometimes-contentious negotiations.

In fact, the company accused the board of misconduct in the negotiations, encouraging members to not pay their dues and/or resign, and interfering with club employees.

“It is now undeniable that GHMA is the architect of the financial crisis now faced by the club,” the company wrote. “Its actions have been reckless and uninformed and have brought the club to the brink of self-destruction.”

The company also claimed the rash of member resignations “are the product of the deliberately false narratives espoused by GHMA and its leadership and have irreparably damaged the club.”

Alleging that the GHMA did not act responsibly or in good faith during the negotiations, the company wrote that the board “persistently made unreasonable demands and employed tactics designed to extract outsized concessions” that went well beyond the developer’s legal obligations.

The company went on to accuse the GHMA board of directing members to not vote or vote against the developer’s proposal, and interfering with club employees, “causing a major problem with employee retention, which will, in turn, impair club operations.”

In its Nov. 1 email to members, the GHMA board wrote that the company’s attacks were “stunning” and denied the allegations, writing that:

• The GHMA never supported or encouraged a dues boycott, nor encouraged members to resign, both of which would be “totally contrary to our goal of a healthy, vibrant, member-owned club.”

• The development company “walked away from fruitful negotiations multiple times,” and that the GHMA still hopes the issues can be resolved and a deal can be reached.

• Members all have a “keen interest in retaining the valued employees of our club family.”

The board then accused the development company of expending “considerable effort in trying to undermine and demonize (the) GHMA and specific members with untruths and false allegations in a desperate attempt to influence your vote.”

Despite the tumultuous negotiations and resulting shutdowns, Sweeny said the board is bullish on the future of Grand Harbor, one of the largest and most popular country club communities in the Vero Beach area.

“We’ve got one of the most desirable footprints of any club in town,” Sweeny said, referring to Grand Harbor’s two golf courses, tennis complex, main clubhouse, lagoon-front marina and beach club. “And we are on the cusp of creating a renaissance.

“Our goal is to significantly grow our membership through marketing and improving our amenities,” he added, “and we’re very encouraged by the enthusiasm we’re seeing from our members.

“Despite what we’ve gone through, there’s a lot of energy and excitement here.”