Court Clears Path for Redevelopment of Walesbilt Hotel, Rules in Favor of City

BARTOW - A Circuit Court ruling Thursday has set the stage for reverting ownership of the historic Walesbilt Hotel in Lake Wales back to the city, ending a years-long legal battle for control of the 10-story building.

Circuit Judge William T. Sites ruled that the current owner, Dixie-Walesbilt LLC's Raymond Brown, fraudulently induced the city into contracting with him to redevelop the property, and ultimately to sign the deed over to Brown, according to the ruling.

The court's ruling found Dixie-Walesbilt LLC in default of the redevelopment agreement with the city, paving the way for the city to reclaim the hotel.

Lake Wales lawyer Robin Gibson, a city commissioner who chairs the city's Community Redevelopment Agency, said he and Kevin Ashley, the city's lawyer in this litigation, will review the order and have a report for the city at Tuesday's City Commission meeting.

Lawyers for the city filed the lawsuit in January 2022, citing that Brown, in submitting his proposal to redevelop the hotel, had misrepresented the involvement of financial backers in the project, his experience in redevelopment projects, and that additional funding had come in through the pre-sale of residential units. Based on those representations and their reliance that they were true, city commissioners contracted with Brown in February 2010 to redevelop the abandoned building, A year later, they signed the deed over to him based on progress he said he'd made, court records show.

Since that time, Brown has made incremental improvements, but none on the scale anticipated in the city's contract. Brown has previously blamed city officials for impeding his redevelopment efforts.

In court documents, Brown stated he was upfront with the city when his primary investor, Rajesh Kumar, backed out of the project during the economic downturn around 2010, but Site's ruling challenges that, stating documents submitted to the city listed Kumar as a 50 percent partner in the project.

Reached by telephone after the ruling was issued, Brown indicated that he had not yet spoken to his attorney and declined comment.

The city suit alleged Brown also committed "fraud in the inducement" by claiming that as many as 19 condominium units had been pre-sold in the building. The ruling stated that "promises and statements made by Dixie-Walesbilt regarding the status of the company's plans to renovate the building were false" and that the statement "was made with actual knowledge of its falsity. No other conclusion is reasonably possible," the ruling by Circuit Court Judge William T. Sites concluded.

Florida's Supreme Court has recognized that "fraud in the procurement of a contract is ground for rescission and cancellation of a contract." Such a final outcome would return title to the building to the City and CRA.

Once that action takes place, city commissioners are expected to transfer title to the Community Redevelopment Agency, which can then negotiate a new development agreement with a selected developer, carefully crafted to assure that it will occur in a timely manner.

The historic hotel was a magnet for visitors upon opening prior to the construction of Bok Tower. The building featured a state-of-the-art "fireproof" design of steel-reinforced concrete and lightweight cement partition walls.

It included such modern features as a central vacuum cleaner system when it opened during the so-called "Gatsby Era" of the Roaring Twenties, almost 100 years ago. Marble floors, custom brass railings, Corinthian capitals, and coffered ceilings imported from Italy decorate an ornate atrium lobby.

Several entities have expressed interest in redeveloping the property as a high-end hotel. Redevelopment is seen as a key part of an economic revival for the historic downtown by drawing thousands of visitors annually to stays in the heart of the area.

An $11 million reconstruction of adjacent Park Avenue is currently underway, which city officials hope will provide catalyst for the redevelopment of the hotel. New brick pavement, street trees, and other amenities now enhance the neighborhood around the vacant building.

The street renovation is part of the Lake Wales Connected designs, which are being funded through a combination of grants and an $18.5 million bond issue. Tax Increment Financing (TIF) will retire the bonds through revenue captured by the CRA as area property values rise.

The city and CRA plan to continue to reconstruct downtown streets as funds from the CRA and grants become available. Funds are already in line to reconstruct neighboring Orange and Crystal Avenues east of First Street.