[PICS] Key West Powerboat Races

The Key West World Championship powerboat races are underway this week.

This is the WORLD championship - the Superbowl of offshore racing.

According to tour promoters, Key West is the favorite venue for offshore powerboat races - allowing fans to watch the races from shore, mingle with the drivers and check out the boats in the nearby pits, and enjoy typically calm racing conditions.

Spectators lined the Key West harbor - from Fort Zachary Taylor State Park to Mallory Square.

Below are photos from one heat of the races. (click on them to see larger versions)

Seeing boats enter the tranquil harbor at over 100 mph, followed by a swarm of helicopters, was stunning. Congratulations to the winners and all the participants. We may never get the Superbowl, but Key West is happy to crown a world champion.

Race fans watching the action from Mallory Square

Fountain Marine, always a leader, roaring by.

Powerboats racing by Sunset Key in Key West's harbor.

The start of a race - the big (and LOUD) boats head offshore.

Speeding by the Westin Resort (formerly the Hilton) at over 100 mph.

Power boat race in Key West underway.

Looking like a spaceship, this power boat is nearly as fast.

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Luxury Condo Towers Over Lazy Lane in Key West

Traveling down Lazy Lane yesterday, one couldn't help but notice the large construction development in progress. Known as Harbor House, this 32-unit luxury condominium is under construction and will likely change the character of the Key West Bight.

The developers website offers "special pre-construction pricing starting at $1,866,750". With units "ranging in size from 1,900 to more than 2,300 square feet", that translates to nearly $1000 per square foot.

This development caused quite a bit of anxiety among Old Town residents, who thought the initial plans for over 100 condo units was too dense (and tall) for the area. After a long battle, the 32-unit version became the final plan. And now, the construction is under way.

While riding down Lazy Lane, adjacent to the Schooner Wharf Bar ("The Last Little Piece of Old Key West") and home to little shacks housing cottage industries, one can't help but notice the two-and-a-half-story building practically touching the funky Lane.

Notice the photo attached to this blog post (click the photo to see a larger version).

Aren't there set-back requirements that restrict building so close to the property line - especially for a building that is nearly 35 feet tall?

Or does Harbor House own Lazy Lane?

Or was this a part of the development agreement?

Will there be any landscaping between Lazy Lane and this building?

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Fantasy Fest 2008 Theme Announced

The theme has been announced for next year's Fantasy Fest!

The 2008 theme is: Pirates, Pundits and Political Party Animals

(I can already hear the head shaking)

I get the part about politics, given that Fantasy Fest 2008 will be near election time.

But the pirate part looks to be more of a nod to the uber-sponsor Captain Morgan.

Creativity is what I applaud, and I hope that next year's crop of costumed partiers does more than simply paint granny's body.

Either way, its a fun time to be here, and I highly recommend you leave the kids and spend the week here on a wild Key West vacation.

What are your good costume ideas?

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Fantasy Fest 2007 Photos - Body Paint on Duval - Friday

Fantasy Fest 2007 is well under way and Key West is hopping with partiers, body paint, and sexy costumes. This year's Alice in Wonderland theme is revealing itself (pun intented) with fun body art and creative costumes.

Here are a few photos from the Friday Street Fair:

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A Tale of Two Cay Clubs

A previous post on the Key West Chronicle blog, titled Has Cay Clubs Bitten Off More Than It Can Chew, has received more comments than any other post (148 comments as of now, and growing).

The post was published 5 months ago and questioned if Cay Clubs had a sound plan.

Late last night, two anonymous comments were submitted. One comment was attributed to "Crystal" (Dave Clark's wife? mistress? good friend?). The other comment was written by a former employee of Cay Clubs. Although there is no way to determine who wrote and submitted the comments, both comments seemed heartfelt and had quite a bit of information.

In the interest of keeping you informed, these comments are reprinted below:

Anonymous commenter submitted:

Didn't you know, I am his mistress ;)
-Cristal
I haven't been here in quite a while, months actually, but it's nice to see both sides still interested in discussing these matters. I'm sorry for all the investors to be in the
position to be financially devastated. I hope Dave can keep it together- he's not giving up. The Berman group (another big developer in the Keys) just went bankrupt. The company building "Playa Cristal" on the old America Outdoors just died (47 yrs old) in his sleep (most likely from stress). All of the publicly traded development companies' stock just recently went to "junk status" (within the last couple of months). Times are definitely not good in this industry and market. All we can do is keep trying and plow ahead (with everything we can, for as long as we can). That's what I see Dave trying to do. He is all-consumed with keeping things moving forward. The bad press never helps and that was the main reason the merger didn't work out. That hurts everyone. But there are relationships in the works as we speak. The A&B deal has a substantial down payment that would be hard to lose- from many months past (maybe even a year, I'm not 100% certain). Closing on it and running it is a better plan, according to my information. I appreciate all the kind and gracious people in the Keys who have shown me, Dave, and our kids respect, whenever we are out in the community.
It helps me remember that there are truly good and decent people still out there, no matter how black our eyes get during this economic downturn/nightmare. Given this is such a small town, I expected people to treat us with a much different demeanor- given the layoffs, leaseback issues, etc. But they haven't. They usually say hello, ask how we're doing and wish us the best. They share stories of their friends and associates who face similar circumstances- tellus about their business downturns, etc. I feel really badly for our employees down here, holding their breaths, hoping for a better day- worried every morning whether or not they'll have their jobs. Several have been offered positions with the company taking over some of the projects down here- unfathomably, most declined. It's unreal how much loyalty and dedication these people generously devote. I really thank you all. Drs. Blumenthal, I'm sorry for whatever your situation has been. I know you've sold many properties with us (not sure if you bought?) No matter what, we will always admire and respect you (I think that's the neighbor blogger?)...Re-the blogger who mentioned the "83 houseboat"- it's actually a '72 houseboat. It's not very marketable, given most '72 houseboats can't be given away (it was given to us). I guess we should try to sell that, though- you're right. I'll work on that this week. Most of our time and energies lately have gone to holding things together and coming up with a more feasible gameplan for today's market. Again, I appreciate all the supportive comments and I sincerely apologize for any and all of the people who are disappointed and angered by the fall-out. You have every right to feel the way you do and to speak your minds. I wish there were more forecasts to share, but I think everything is continuously up in the air- each day's circumstances change- sometimes for the better, sometimes for the worse. So any news or forecasts we post or share, may change in a moments notice. I wish I could tell you more- I wish I knew more. I'm sorry.

Another anonymous commenter submitted:

I was an employee of cay clubs. I noticed alot of problems in the company that i heard many people try and bring to attention but were just ignored. cay clubs violated many rules including many FREC rules. there was alot of misrepresentation rumors about ricky long before the market turned so poorly and they were ignored. they allowed him to continue becasue his sales were so high.
but the bigger problem is whomever was in charge of finances. its was like no one in any of the companies (cay clubs was divided into like 50 different ones) knew what the other comapny was doing. we didnt even have a CFO until the ending days. and yes the director of flight operations and his assistant are still employed along with at least one pilot. and there still is a plane. even if we do not own the planes we just borrow someones elses for the day (which is still pricey). many people that worked there were underqualified. many departments were a complete joke. its not just the owners who are struggling. the employees were let go with no warning, no pay, no vacation pay, etc. the sales agents are still owed lots in commission. barry graham owns over 20 units of his own at cay clubs and he hasn't been paid commissions or leasebacks. hes owed millions. there had just been a sales meeting about a month before the first layoffs where everyone was told the company was doing great only to be let go without warning. talking about lack of communication the hardest part for the owners and employees alike has been the lack of communication. even within the company it was all rumors and hearsay because dave was not talking to anyone. even other partners and directors had no idea what was going on. some of the employees were taking angry calls and could do nothing to help because they didn't know what was even going on. no bulletins saying for example "hey we aren't paying rental money, so here's why and here's what to say". Nope they just had to take all the angry calls and make it that much worse because the employees didnt even know. still communication has been horrible with was is left of cay clubs. gary and david schwarz have resigned. ever wonder why neither schwarz brother invested in even one unit? and if i recall most daves units were in his dads or cristals names and i dont even know if any of them ever even closed. food for thought. barry hasnt been in the picture for a while. they owe him so much money id bet they are avoiding him all together. ive heard that cristal and dave may not even be married so that if anything did happen daves not screwed. the last parts a rumor but the rest is fact.
dave-i dont think you intentionally meant for all this to happen so all i have to say is better communication is key. and manuals are a state law people work better and tend to follow rules better if there are manuals. and dont try and say there are cause they were quickly created at the very end after everything started going down. there was no organization or structure in that company and because of that you have hurt ALOT of people. There was even an owner who commited suicide because of his financial struggles due to cay clubs. forclosures and bankruptcies are huge dave. marriages get ruinied people lose everything they worked for. so everyone thats saying you are crook i dont believe that to be the case, but you definately need some business management classes before you start up another one.

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Pet Halloween Costume Contest in Key West

The annual Pet Masquerade Contest was held at a waterfront Key West hotel last night as part of the weeklong Fantasy Fest celebration.

Once again, the event did not disappoint.

Many contestants signed up with their dogs, cats, and other pets dressed up in imaginative and funny costumes. Being Key West, there was a whole menagerie of animals: lizards, Key West chickens, and even a LIVE lobster!

Enjoy these photos from the event:

The skateboarding Uncle Sam dog...cool!

The Plaid Hatters take the stage.

A skunky dog costume - ay chihuahua!

Santa's little helper is a crowd favorite.

Pirate dog and owner strutting onstage.

Another Pirate duo - overlooking the Key West harbor.

Watch out geckos! You too GEICO!

Representing the Key West Naval Air Station.

Miss Muffet (with map since she lost her "whey") with spider dog.

Lobster costume with real lobster "pet". Is that melted butter in his pale?

The luck of the Irish...times two!

The Key West Chicken Lady, Kathy Sheehan, with a Key West rooster.

Two ballerinas ready to go onstage.

Florida Seminole football fans.

Always classy, the weimaraner shines in tuxedo.

Playing on the Alice and Wonderland theme of this years Fantasy Fest.

I hope the bigger dogs don't get any ideas.

Tiny chihuahua cowboy and partner.

Nice costumes! Who's the pet?

Have you ever dressed your pet in a costume? What did it look like?

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No Bottom Yet for Key West Real Estate

Strange. Today's Key West Citizen editorial, titled "A Keys buyer's market offers opportunities," read as if written by a real estate broker. The editorial makes a case for why it is now a good time to buy.

No doubt, the Keys are a wonderful place. But market indicators show that Key West real estate has further to fall before bottoming.

Like it or not, the Citizen's editorial staff may have recommended catching the proverbial falling knife. It may be one thing for the editors to look the other way while the real estate pros continue to publish an erroneous and misleading advertisement. But I found this use of the editorial space to be a disservice - mainly because it overlooking the apparent problems with the real estate market.

Supply continues to heavily outweigh demand. Before a bottom in the market is achieved, supply and demand will need to find equilibrium. Although the bear market is into its second year, the technical indicators have not improved. In fact, they have deteriorated.
The number of properties for sale in Key West for the first three quarters of this year continued to swell higher.
Meanwhile, total sales, value of sales, and average sales price continued to fall. Further compounding the bear market in real estate, average days on the market swelled higher.
According to data recently published for residential Key West real estate, comparing the first 3/4 of 2006 versus 2007:

• total sales were down 0.5% to 366


• dollar value of sales dropped 15% to $305 million


• average sales price dropped 14% to $833,000


• average days on the market grew 29% to 174 days


• average list price was down 7% to $991,000


• the number of properties for sale increased 9% to 1394

Meanwhile, the demand side of the equation has been hobbled. Lenders have shut off the free flow of money, regulators are looking at legislation to further reign in the market, home prices are still very high, and taxes and hurricane insurance continue their burden.
We have likely not seen the bottom of the real estate market here. The Zillow chart attached to this post shows the Market Value change for Key West over the past 10 years. (Notice, on the chart, that a double bottom is trying to hold (the right side of the chart). But given the supply/demand numbers, prices are likely to continue to fall - thereby breaking the double bottom. When this happens, it is often referred to as the "other shoe dropping".)

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Cay Clubs Merger Terminated

It is now official.

The merger of Cay Clubs with Keys Hospitality Acquisition Corp has been terminated.

As a result, Cay Clubs may have extreme difficulty in avoiding bankruptcy - given they are already late on payments and near default on large loans.

According to filings with the Securities and Exchange Commission (SEC), the merger was terminated because of "The deterioration of Cay Clubs' market in Florida, the liquidity problems it is facing and the recent unavailability of jumbo mortgages for potential condo-hotel buyers have made it highly unlikely that certain closing conditions contained in the agreement could be met."

Cay Clubs is among the largest developers in the Florida Keys - having bought numerous properties at the peak of the real estate market.

Should Cay Clubs become enter bankruptcy, the implications for the Florida Keys could be significant.

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Sun Setting for Cay Clubs?

The future of Cay Clubs looks dependent upon the successful merger with Keys Hospitality Acquisition Corp - a shell company formed to acquire other businesses.

Shareholders of Keys Hospitality Acquisition will soon vote on whether to acquire Cay Clubs.

The merger has significant risks. Filings with the SEC detail those risk factors. These will be distributed to the voting shareholders. According to the filings, if 20% of IPO shareholders vote against the merger, the deal will not happen.

Cay Clubs is clearly in trouble - despite layoffs, cancelled fishing tournaments, and backing out of other deals. Currently, Cay Clubs is past due on payments - while much more coming due.

According to filings with Security and Exchange commission, "At March 31, 2007, Cay Clubs had approximately $91 million in long-term indebtedness, of which approximately $73.8 million matures within one year and the remainder matures within three years. Cay Clubs is presently past due on $1.0 million in payments on $54.3 million in underlying indebtedness, of which approximately $9.2 million has been declared in default by the lender."

Below are some of the most notable risk factors detailed in the SEC filing:

• Inability to renew or refinance indebtedness as it matures and to remedy a default and repay past due amounts on existing indebtedness could cause Cay Clubs to surrender the related asset and adversely impact its ability to continue executing its business plan.
• Cay Clubs’ inability to pay its property management and/or lease payments to previous buyers has impacted Cay Clubs’ credibility in the market.
• Cay Clubs is subject to the risks of the real estate market and the risks associated with real estate ownership and development, including the risks and uncertainties relating to the cost and availability of construction materials, services and land for new properties.
• Although Cay Clubs owns certain of its condominium resort facilities, certain properties are actually owned by Sunvest Communities U.S.A. L.C. or its affiliates and therefore Cay Clubs is forced to rely upon Sunvest or its affiliates in order to properly execute its business plan with respect to such properties, and if such business plan is unable to be properly executed, Cay Clubs’ revenues and earnings will be reduced.
• If Cay Clubs’ relationship with IMG Academies is terminated, then such event could prevent Cay Clubs from executing all or a portion of its existing business plan and therefore significantly reduce Cay Clubs’ revenues and earnings.
• Cay Clubs is vulnerable to the risk of unfavorable weather conditions and continued inclement weather could reduce Cay Clubs’ revenues and earnings.
• Cay Clubs faces significant competition.
• Cay Clubs’ future growth requires additional capital whose availability is not assured.
• Because Cay Clubs’ business depends on the acquisition of new land, the unavailability of desirable land could reduce Cay Clubs’ revenues or negatively affect its results of operations.

Amazingly, the board of directors of Keys Hospitality Acquisition "determined unanimously that the merger proposal is fair to, and in the best interests of, Key and its stockholders.

According to the filing:

"directors determined the fair market value of Cay Clubs by analyzing the value of each of Cay Clubs’ properties in the following manner: (i) valued the unsold condo-hotel units based on past sales of units at the property and in comparable Cay Clubs properties; (ii) valued the unsold wet and dry boat slips based on market comparables; (iii) valued any amenities, extra land or development rights in the property based on the price a developer would pay for the land in order to achieve a reasonable profit margin; and (iv) valued the potential cash flow from hotel/resort operation by using a multiple of eight times cash flow (derived from Cay Clubs’ financials and projections for the particular property). For each Cay Clubs’ property, an asset value was reached by adding the four sources of value described above (if applicable) and any debt associated with the property was subtracted from such amount to arrive at an equity value for each property. The board did not apply any discounts for time value of money or risks. These equity values for all of the Cay Clubs’ properties were then aggregated to yield a total equity number significantly in excess of the initial consideration to be paid to Cay Clubs’ members in the merger. In addition, Key’s board also reviewed projected sales and earnings that can be generated by Cay Clubs and compared these to public companies operating
in segments similar to Cay Clubs. Accordingly, Key’s board has unanimously approved and declared advisable the merger and unanimously recommends that you vote or instruct your vote to be cast “FOR” the approval of the merger proposal."

Notice part "(i) valued the unsold condo-hotel units based on past sales of units at the property and in comparable Cay Clubs properties."

This alone is a red flag and means that Keys Hospitality is not pricing the condo units based on post-crash prices, but on prices it received in the past.

Given the monumental crash in the South Florida condo market, Keys Hospitality Acquisition Corp. shareholders might want to do their own evaluation of the value of the Cay Clubs assets.

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Diesel Fumes and Your Heart

Occasionally, sad news is reported that a scuba diver has died - most often from an apparent heart attack.
And most people assume that the cause was an unfit diver suddenly exerting too much energy.

But a study published this week may point to another contributor to the problem.

According to a study by the University of Edinburgh, diesel exhaust can change the heart's electrical activity. The study looked at air pollution and its effect on physiology of the heart.

I bring this up since most dive boats have diesel engines, and breathing some of the exhaust fumes is often unavoidable. Could there be a link between dive deaths and diesel exhaust? Should those at risk avoid breathing those fumes?

Here is a reprint of that story to help you decide:

A study by the University of Edinburgh and Umeå University measured the effects of diesel exhaust on heart and blood vessel function in men who have previously experienced a heart attack.

The research, funded by the British Heart Foundation and published in the New England Journal of Medicine, found that inhalation of diesel exhaust caused changes in the heart's electrical activity, suggesting that air pollution reduces the amount of oxygen available to the heart during exercise.

Dr Nicholas Mills, of the University's Centre for Cardiovascular Sciences, said: "This study provides an explanation for why patients with heart disease are more likely to be admitted to hospital on days in which air pollution levels are increased. Most people tend to think of air pollution as having effects on the lungs but, as this study shows, it can also have a major impact on how our heart functions."

Twenty men who had suffered a previous heart attack were carefully screened to ensure they did not suffer from angina or heart rhythm problems and that their heart condition was stable and appropriately treated. The men were exposed for one hour to either filtered air or dilute diesel exhaust while intermittently riding a stationary bicycle in a carefully monitored exposure chamber in Umeå University. Heart function was monitored continuously and blood tests taken six hours after leaving the chamber.

Electrical monitoring of the heart showed that inhalation of diesel exhaust caused a three-fold increase in the stress of the heart during exercise. In addition, the body's ability to release a "guardian" protein known as t-PA (tissue plasminogen activator), which can prevent blood clots from forming, was also reduced by more than one third following exposure. The link between air pollution and heart disease is strongest for the fine exhaust particles produced by road traffic.

Researchers are particularly interested in diesel engines because they generate 10-100 times more pollutant particles than petrol engines. The number of diesel-powered automobiles is increasing in Europe and other parts of the world. "Diesel exhaust consists of a complex mixture of particles and gases. Before we can recommend the widespread use of particle traps in diesel engines, we need to show that particles are the responsible component," Dr Mills said. "If we do that, then it is likely that devices to filter particles from exhaust, will reduce exposure and benefit public health."

Professor Peter Weissberg, Medical Director of the British Heart Foundation (BHF), said: "There is already evidence that air pollution can make existing heart conditions worse. This research is helping us work out why. It shows that in patients with coronary heart disease, diesel exhaust can reduce the amount of oxygen available to the heart during exercise, which may increase the risk of a heart attack.

"Because of the overwhelming benefits of exercise on heart health, we would still encourage heart patients to exercise regularly, but preferably not when there is a lot of local traffic around. Heart patients can look out for pollution levels on their local weather forecasts."

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