The city of Holmes Beach and developer Shawn Kaleta have been at odds for years.
But a settlement agreement has wiped the slate clean.
City commissioners unanimously voted Feb. 27 to approve a settlement with Kaleta to resolve his 2022 federal lawsuit against the municipality — Kaleta et al v. City of Holmes Beach — and all claims involving its alleged “anti-Kaleta policy.”
In exchange, the city agreed to approve a site development plan permitting a spa and bar/lounge at the Bali Hai Beach Resort, 6900 Gulf Drive, as well as waive and release 15 code enforcement fines and liens against the developer’s properties.
No money changed hands in the deal, which required both parties to be responsible for their own legal fees.
Kaleta owns numerous vacation homes and the Bali Hai, Anna Maria Island, Coconuts and Islands West resorts.
While battling with the city in a variety of circuit court cases and appeals, Kaleta filed a federal lawsuit Dec. 31, 2021, alleging the municipality has an “anti-Kaleta policy” in which the city discriminates against the developer, violating his constitutional rights under the Equal Protection Clause.
He dismissed and refiled an amended version of the suit in October 2022.
The amended lawsuit claimed the city “unlawfully focused … inordinate and unconstitutional over-regulatory attention solely upon plaintiffs by stalling development plans, denying access to public hearings and failing to respond to record requests.
The suit asked the court to order the city to cease any unlawful practices, engage in corrective measures and award the developer damages.
The lawsuit also cited the city’s handling of proposed development and operations at Bali Hai as evidence of mistreatment.
The resort opened in 1971 but was purchased in 2019 for about $20 million by Kaleta, who renovated the property.
The city, claiming the business was not permitted to operate a bar, issued a stop work order for the construction of a bar/lounge on the property in January 2020 due to a lack of permits and an updated site plan.
Kaleta claimed that Bali Hai was previously permitted to operate a bar/lounge and the allowance should have continued under Kaleta’s ownership.
The resort filed a site plan detailing changes and operations for a spa and bar/lounge.
However, city commissioners voted in October 2021 to approve a site plan that prohibits live music, special events and the bar/lounge, and allowed the spa for guests only, largely due to the motel’s limited parking.
The dispute led to extensive litigation between the business and municipality, which snowballed into a federal lawsuit.
The settlement includes three exhibits:
- Conditions for minor site plan approval for a spa and bar/lounge at the Bali Hai;
- A list of outstanding code enforcement fines and liens, including associated administrative costs, set to be waived or released by the city;
- A joint statement from the involved parties.
The first exhibit, which provides conditions for a site plan that permits a spa and bar/lounge at the Bali Hai, resolves one of the many issues stoking litigation between the parties.
Conditions limit the use of the spa and bar/lounge to motel guests only, closing the bar/lounge 10 p.m.-6 a.m., as well as prohibiting outdoor amplified music unless authorized by a city-issued special event or temporary use permit.
The settlement agreement states that the developer will submit an updated site plan that complies with the city’s conditions, and the municipality will “timely receive, process and approve” the application.
Attorney Jay Daigneault, of the Clearwater-based Trask Daigneault law firm, told The Islander Feb. 29 that the Bali Hai site plan was a “primary” part of the settlement.
“It’s going to have one of those under conditions that are favorable to protecting the interests of the adjoining property owners, the city and the property owner himself,” Daigneault said.
While no money was exchanged in the agreement, the city is set to waive or release 15 outstanding code enforcement fines and liens, including associated administrative costs, listed in the second exhibit.
Of those outstanding fines and liens, 11 were against the Bali Hai, two were against the Islands West Resort and another two were against a pair of units at the Coconuts Beach Resort.
The settlement also establishes the Islands West Resort, 3605 Gulf Drive, as a legally nonconforming structure, allowing the property’s eight units to be used as nightly rentals.
The third exhibit, the joint statement, was set to be released in The Islander within 90 days of the agreement’s execution.
The statement reads, “The City of Holmes Beach and Mr. Shawn T. Kaleta wish to publicly express their shared regret concerning any real or perceived animosity or ill-will between them. … The city and Mr. Kaleta are committed to moving forward to working together to balance and advance the interests of all the city’s residents, visitors, tourists, businesses, property owners and stakeholders.”
There was no public comment.
Commissioner Carol Soustek moved to approve the settlement agreement.
Commissioner Greg Kerchner seconded the motion, which passed.
Reactions
Mayor Judy Titsworth told The Islander March 1 that she was happy with the settlement, which she believes addressed the root causes of the city’s conflict with Kaleta rather than merely relieving symptoms.
“Even if the city won, which we felt we had a very strong case, it wouldn’t have handled any of the code compliance issues that we still had. So this was a win-win for everybody,” Titsworth said. “Winning the case would have just been, “Oh, OK, you win. You win your attorney’s fees and the other one pays the other. Then we’re still at square one.”
Daigneault, the city’s lead attorney on the case, said he was relieved to bring litigation between the developer and municipality to a mutually beneficial conclusion.
“I think the settlement is a really good thing for the city,” he said. “I think it’s a very rational, reasonable and beneficial way to end all this litigation.”
Attorney Louis Najmy, a partner with the Bradenton-based Najmy Thompson law firm, attended the Feb. 27 meeting on behalf of Kaleta. He wrote in a Feb. 28 text message to The Islander that he too was satisfied with the settlement.
“We are pleased that both parties came together to get this settled. With this settlement, Mr. Kaleta was able to achieve obtaining over $10 million in land entitlements from the city and, more importantly, the city has now condemned prior practices of targeting Shawn and his businesses and therefore, hopefully, this will eradicate the toxic culture that unfairly existed within the city operations against him,” Najmy wrote.
“No citizen would ever want a city to operate in that fashion. At the same time, both parties are moving forward to work together without the existence of such negative culture. It was great to see the mayor and city leaders make concessions to achieve this. It’s a positive result for all.”
Shawn T. Kaleta et al v. City of Holmes Beach, Apology
The City of Holmes Beach and Mr. Shawn T. Kaleta wish to publicly express their shared regret concerning any real or perceived animosity or ill-will between them.
Although the current mayor and commissioners do not believe they have personally acted in this regard, no favor is gained by any city employee or official treating Mr. Kaleta or his partners and related entities differently than anyone else or unequally, and targeting Mr. Kaleta and his properties will not be permitted as may have happened in the past.
No benefit is gained by violating the city’s ordinances or performing work without appropriate permits.
Compliance with all applicable statutes, ordinances, and regulations is expected of every citizen, property owner, business, visitor and the city.
The city and Mr. Kaleta are committed to moving forward to working together to balance and advance the interests of all the city’s residents, visitors, tourists, businesses, property owners and stakeholders.
Mayor Judy Titsworth
Mr. Shawn T. Kaleta