The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian private island, billed as the world’s first “carbon neutral” luxury eco-resort, is at the centre of a bitter dispute as the March 15 deadline for its $3.8m “minimum bid” auction looms.

Tribune Business can reveal that Star Island, formerly known as Cabbage Cay and located just west of Eleuthera’s Harbour Island, is the focus of an intensifying battle between two parties to an alleged joint venture agreement for its multi-million dollar development.

Eric Engler, a Florida-based attorney, told Tribune Business yesterday he is reviving his lawsuit seeking $25m in damages from Star Island’s owner, David Sklar, for purported breach of contract and loss of profits.

He is claiming that Mr Sklar failed to perform his obligations under their agreement, specifically the development of a “masterplan” for the island, which was essential to the project’s ability to obtain the necessary construction, investment and environmental approvals from the Government.

Without these permits Star Island’s development stalled, and Mr Engler was unable to perfect a lien over its real estate to secure his investment in the project. He told Tribune Business that he has been unable to recover, or earn a return on, the $1m he invested to develop the property into what Mr Sklar is now attempting to auction off to new owners.

Mr Engler said his “partner’s” failure to deliver meant he was also unable to secure new investors or real estate buyers for Star Island. He revealed that The Bahamas’ former New York consul general, Forrester Carroll, had repeatedly promised to help obtain the necessary permits - once the Government could see what it was approving. Mr Carroll’s brother, Frank Carroll, is named in documents obtained by Tribune Business as a “principal” and member of Star Island’s management team

But Mr Sklar yesterday blasted Mr Engler’s lawsuit as “frivolous”, and accused the latter of trying to pressure him into settling by running to the media in a bid to disrupt/interfere with Star Island’s sale and scare off potential buyers.

He denied that the impending sale will be impacted by Mr Engler’s actions, pointing out that the lawsuit only named him as a defendant - not the two entities, Star Island Holdings and Family Island Development Ltd, that are selling the properties.

Mr Sklar argued that, as a result, Mr Engler’s lawsuit will not affect the sale or potential buyers, with the only potential impact being to the sales proceeds he will receive in a personal capacity.

He admitted that Mr Engler invested monies in Star Island’s development, but alleged that the attorney failed to obtain the necessary approvals from the Government to qualify as an accredited investor.

Mr Sklar said all Mr Engler’s funds were accounted for, but claimed the latter started making demands that he be given “half the island in return”, which the Star Island owner branded unacceptable. He is demanding that the action, filed in the Florida state courts on the Broward County circuit, be dismissed on the grounds that their contract is “unenforceable”.

However, Mr Engler’s re-emergence and plan to revive his legal action is especially ill-timed for Mr Sklar given his ongoing efforts to sell Star Island via an auction being overseen by Bahamian realtor, Coldwell Banker Lightbourn Realty. All bids are due to be submitted by next Friday, March 15, with the minimum or “floor” price set at $3.8m.

Mr Engler’s lawsuit, which has been seen by Tribune Business, alleges that he and Mr Sklar entered into a December 2013 joint venture agreement “to create the world’s first fully-sustainable, 100 percent clean energy powered resort and research station, a title for which at least two other groups are currently vying.

“The project’s uniqueness, importance and value are of vast proportions, and the profits contemplated by the venture are substantial,” the lawsuit added. “The commercial value to being the first developers in the world to open an off-grid, fully sustainable, clean energy resort is an important element of the venture.”

A 39-page document prepared by Mr Sklar for potential investors, which has been seen by this newspaper, sought to raise $12m to finance Star Island’s build-out. Crafted before the 2008-2009 recession, when real estate values were at their highest, it projected that a total $82m in gross proceeds would be raised from sales to investors. Net revenues, after commissions and closing costs, were pegged at $72m.

Mr Engler’s lawsuit claims that, under the terms of their deal, Mr Sklar was supposed to complete Star Island’s masterplan “within 60 days” of contract signing to facilitate obtaining the necessary permits and approvals from the Government.

He was also to obtain the required permits for a resort/hotel, bar and grill, homes, villas, bungalows and other properties, as well as provide a lien over part of Star Island’s real estate to help secure Mr Engler’s investment.

“Defendant has failed and refused, and continues to fail and refuse, to perform the obligations set forth despite plaintiff’s [Mr Engler’s] repeated requests,” the action added, with Mr Sklar’s failure to respond deemed a “repudiation” of their joint venture agreement.

Mr Engler yesterday revealed to Tribune Business he had previously attempted to buy Star Island outright himself, only to be beaten to the acquisition by Mr Sklar and his investor group in the mid-2000s.

An admirer of Eleuthera’s landscape, and with an interest in developing eco-resorts and research stations, Mr Engler said he was introduced to Mr Sklar several years later in 2012 by Rhonda Waton, the local H. G. Christie realtor, who informed him that Star Island was “back on the market”.

The island was “on the market for half the investment put in”, but Mr Engler and Mr Sklar soon realised they had “a commonality of interest” when they saw each other’s drawings and business plans for an eco-resort at the location.

According to Mr Engler, they agreed that he would raise the funds to start construction while Mr Sklar came up with the masterplan and associated drawings in 90 days. “For the investment, he would give me a lien or transfer ownership of 50 percent of the real estate and be 50/50 parties in developing the island,” Mr Engler added.

Construction work began in November 2013, and Mr Engler said one year later a beach club, restaurant, agricultural farm, bar and grill and two apartments had been built, completing phase 1A’s development.

Fresh water was located, and associated systems put in, while solar panels were installed on the roofs and began generating electricity from November 2014. “Most of what you’re seeing in the plan from the real estate agent is my doing,” Mr Engler said. “This was going to be an exclusive island with only a certain number of members.

“It was to be an exclusive retreat where people could come and feel happy about their carbon negativeness. Everyone spoke to loved it. I knew the project was going to work, members or not. The idea of taking a totally green vacation was extremely appealing.

“I wanted to bring eco-luxury to the sustainable tourism market. But I didn’t have the masterplan and drawings. I needed to get more investment, but you can’t really sell it unless you show them what you’re selling. By 90 days I was going nuts.”

Mr Engler alleged that Mr Sklar’s response was that he was “too busy and couldn’t do it in a timely manner”. As a result, the Florida-based attorney offered to cover all Mr Sklar’s costs for producing the masterplan, and claimed the latter promised to do it in two weeks.

“I heard two weeks about 300 times,” he told Tribune Business, recalling how Forrester Carroll had repeatedly promised the necessary permits will be forthcoming once the Government could see what it was approving in terms of a masterplan.

“All along I was having these meetings where people were saying everything’s going to be fine, don’t worry about it,” Mr Engler said. “By Spring 2015 I was rather upset that I did not have the documents needed.

“I didn’t have the masterplan from Sklar to file for the necessary permits. We’re about to open and start operating the restaurant and beach club. How do I get the permits I need?”

Mr Engler alleged that the masterplan, and permits, never came, resulting in his late 2015 filing of the Broward Circuit Court action. He added that this had been paused after Mr Sklar allegedly offered to settle by selling Star Island to him, and he put together an investor group to accomplish this, but “when I needed his co-operation he stopped communicating at the critical point”.

Claiming that Mr Sklar had merely been seeking to stall the lawsuit, Mr Engler said he now planned to dust off the action and revive the discovery process and deposition of witnesses.

Turning to Star Island’s impending sale via auction, Mr Engler said: “Anybody thinking about buying would find it important to know there’s a lawsuit concerning this property. Any potential buyer should be on notice that if I win this lawsuit there’s a good chance I’m going to sue the new owners.

“I’m hopeful that whoever is looking at purchasing this property knows there’s a potential exposure and I intend on having this contract in court. Once that judgment’s obtained I can bring it to The Bahamas and have it recognised, so there’s potential exposure for any buyer.”

Mr Sklar, though, dismissed Mr Engler’s threat to Star Island’s sale, describing the Florida lawsuit as “a completely frivolous action”. Acknowledging that he was “definitely aware of” Mr Engler and his claims, he added that “there’s obviously no love lost between the two of us”.

“I can tell you that’s absolutely laughable and pure fiction,” Mr Sklar told Tribune Business of the threat to Star Island’s sale. “ We don’t want to continue any type of business relationship with him. It’s not been a good situation, but I have zero desire to do any type of business dealings with him.”

Pointing out that the companies owning Star Island are not encumbered by the lawsuit, Mr Sklar said “any number of masterplans” were created and submitted to the Government for approval while Mr Engler was involved with the project.

He confirmed that his adversary was introduced to him by Ms Waton and offered to help finance the project, adding: “Long story short, our primary investors we had at the beginning of the project went broke in 2008. I’m not a finance guy; I’m a design/construction guy. My talent is to execute a vision. We’re really proud of the work done.”

Mr Sklar alleged that Mr Engler failed to obtain the necessary investment approvals from the Government. Records of the latter’s investment in Star Island were kept, with Mr Sklar intending to repay him for the funds.

“We never denied receiving the money, but he never did it the way we asked him to as an approved investor,” Mr Sklar told Tribune Business. “We were told that as long as someone is willing to give you money you’re not doing anything wrong to keep accepting it.”

Coldwell Banker Lightbourn Realty, in advertising the sale, said: “Cabbage Cay is a sustainable, off-the-grid, 35 acre private island located just a short boat ride west of world-famous Harbour Island and minutes away from mainland Eleuthera.

“Cabbage Cay currently produces its own electricity via solar power as well as its own fresh water via reverse osmosis. There are a number of well-built structures on the island including a gorgeous 650 square foot apartment that sits above an open air outdoor living and dining area with fantastic views of the multi-hued waters of a protected bay, as well as a lovely cottage with a living room, bedroom and bathroom adjacent to the bar and grill.

“A partially constructed hill top unit sits 40 feet above sea level with 360 degree views of the surrounding area. Roads run through the property allowing scenic access around the entire island. This breathtaking island with its unique features make this a buyer’s dream come true.”