Daytona's Bray and Gillespie Files Bankruptcy
DAYTONA BEACH - The largest hotel management group in Daytona Beach, Bray and Gillespie, filed for Chapter 11 bankruptcy Friday morning in U.S. District Court at Jacksonville. The company operates 24 hotels in the Daytona Beach area, mostly along the beach front
Bray and Gillespie, Inc. doing business as Ocean Waters Development Inc., petitioned the court for Chapter 11 relief. Chapter 11 Bankruptcy procedures allows a debtor to stop paying its debts while reorganizing. The bankruptcy filing affects 79 affiliated properties and includes over $415 million in debt, with New York law firm Anderson Kill & Olick alone owed about $2 million.
According to Volusia County records, several mortgage holders have also separately begun foreclosure proceedings against the partners, including the creditor that financed Ocean Waters' headquarters building at Atlantic Avenue and Oak Ridge Boulevard.
Bray and Gillespie are also one of the largest real estate developers in the area and have undertaken a number of condominium projects in recent years. They have often been recipients of Daytona Beach City Government largesse thanks to their vast influence with the city's public officials.
Bray and Gillespie are some of the largest campaign financers in Daytona Beach politics, an investment that has paid handsomely in the past with very generous zoning designations not normally available to other developers. These zoning grants were instrumental in B&G's success and gave them hundreds of millions of dollars in profits in past years, often by flipping these properties without even breaking ground.
The sharp decay of Daytona Beach as a viable destination for business or tourism was compounded by the current economic recession and contributed to the failure of the company, once though to be indestructible.
Since 1988, Daytona Beach-based Bray & Gillespie had been involved in more than 100 individual hotel transactions. Their holdings include almost a mile of oceanfront property in Daytona Beach.
Reading from their own 2005 press release we catch a gleam of their flipping strategy:Traditionally, developers acquire oceanfront hotels, hold them, renovate them if necessary and then operate them at a profit
Principals Charles Bray and Joseph Gillespie were often seen in local balls rubbing elbows with Daytona Beach Mayor Glenn Ritchey and embattled City Commissioner Dwayne Taylor as well as the city's elite of political campaign donors that have financed the rise to power of the current pack of Commissioners.
We feel the market is receptive for redevelopment of some of those properties either by turning them into large luxury resort hotels or upscale condominiums
The company believes the timing was perfect for such projects because the supply of much oceanfront property is limited.
February, 2005
Other developers wondered how B&G obtained approvals for what seemed like impossible developments due to the great density and lack of public spaces.
The rezonings gave tenfold returns without ever breaking ground, too great an inducement to just flip the properties to other developers instead of building the proposed projects themselves.
This strategy worked with fabulous results until now...
In another very publicized case, the City of Daytona Beach utilized its powers of Eminent Domain to seize the private properties of long time business owners along a segment of the beach. The parcels were then transferred to a partnership headed by developer and key campaign financer William Geary for a proposed $150 million development.
The partnership recipient of the seized land, is Boardwalk Convention Hotel Partners Ltd., headed by William Geary of Carlsberg Management Co. in Los Angeles.
Today, this land is an unsightly and barren open dirt field right in the heart of the beach district. The partnership was unable to flip the property and never started the planned development. Daytona Beach taxpayers are paying for the bonds used to finance the deal and crafted by city officials.
The Daytona Beach City Commission has been struggling faced with mounting criminal complaints for corruption, fraud, breach of public trust and abuse of powers. The State attorney, John Tanner was recently voted out of office largely for failing to investigate or prosecute the large number of corruption cases against Daytona Beach public officials. Tanner was strongly supported by the same special interests that have benefited with diverse lucrative contracts, funding of pet projects and personal hobbies, and overall preferential treatment by the City Commission.
OCEAN WATERS RESORTS
| |
---|---|
DAYTONA BEACH | |
Bermuda House | 141 |
Boardwalk Inn and Suites | 101 |
Conch House | 80 |
La Playa Resort | 238 |
Mayan Inn | 112 |
Plaza Ocean Club | 206 |
Plaza Resort and Spa | 342 |
Royal Beach Motel | 49 |
Saxony Inn | 27 |
Seaside Inn | 97 |
Super 8 Oceanfront | 32 |
ORMOND BEACH | |
Aqua Terrace Motel | 38 |
Best Western Mainsail Inn | 44 |
Comfort Inn on the Beach | 50 |
Driftwood Resort | 44 |
La Breeze Inn & Suites | 41 |
Makai Beach Lodge | 110 |
Quality Inn and Suites | 58 |
DAYTONA BEACH SHORES | |
Acapulco Hotel and Restaurant | 133 |
Beachside Plaza Resort | 33 |
Islander Resort | 144 |
Palm Plaza Resort | 98 |
Sunny Shore Resort | 32 |
Surfside Hotel | 193 |
GRAND TOTAL | 2,443 |
What the news journal doesn't tell you, is that, prior to the hurricanes of '04, they only had about 7-8 properties in their collection. After the hurricanes hit, they took all the insurance settlement monies and gobbled up the mom and pop motels and paid outrageous prices for them, rather than taking the insurance money and fixing the initial property back up. Ocean Waters has been known to pay 3-8 times more than what a property was really worth. Yes, Ocean Waters, can't get credit with local vendors because the local vendors have been screwed many times out of payments for services received.
Now would be the time for the News Journal to print a story in reference to the 10 years that Ocean Waters has been doing business in the area, pull up all the lawsuits that have been served against them. Interview the actual employees, past and present, to tell you how that Ocean Waters are the ones responsible for making the wages in the area so low for the hospitality market, since they have a monopoly on most of the larger properties in the area. Why doesn't the News Journal do some investigation and look at the history of Bray and Gillespie before their arrival in Daytona and look how they screwed many other people, vendors, and banks in New Orleans.
Rumor has it, New Orleans kicked them out of the city and told them not to come back because they were not welcome. Have the News Journal pull up some of the inspections that have taken place on the properties that Ocean Waters own. They will find that some of the infractions were quietly swept under the rug and never fixed.
Why doesn't Volusia County report that the resort tax since the hurricanes of '04 has tremendously been reduced since the properties that Ocean Waters owned have either been torn down or still sitting empty. Those properties are not putting money into the coffers of the county. If you think back over the years, at some of the landmark properties that they own Laplaya (used to be a Best Western, but couldn't keep up with Best Western standards because they refused to put money into the upkeep of the property), Plaza Ocean Club (used to be a Radisson, once again, couldn't keep up with the standards of the franchise for Radisson), Mayan Inn (same rules apply that applied to LaPlaya), Bermuda House (used to be a Howard Johnson).
Now to speak of treatment and employee morale, that's another story in itself. We haven't gotten a raise in over 3 yrs. Look at how everything has doubled in price from 3 years ago. Here we are making a few cents more than minimum wages and putting in a full 40 hour week, and we are not surviving at all. We have to pay $5 per week for uniforms. They nickel and dime us anyway they can because its more money in their pocket to blow on frivolous items that they can't afford.
It's time for a change in Daytona, kick out Ocean Waters and bring in some new blood, do not let new investors come into this town and try to pull the wool over our city and county leaders and blow smoke up their wazoos.