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Steamy Opportunity
By Sean Roth
Real Estate Editor
At least once a month for five years, Edward Ullmann has thought about giving up. Strategic planning for the redevelopment of the Warm Mineral Springs Day Spa, now known as The Springs Original Fountain of Youth, has been painful, especially since Ullmann is an inexperienced developer.
Ultimately, it's the possibility of what could replace the '50s era springs that has kept him going. If his dream is realized, the new development will be one of North Port's largest private employers and tourist attraction. It would also make Ullmann one of the most important people in the city.
"This is truly history making," Ullmann says. "Our plan is to take this spa to the next level."
Possibilities for the spring are omnipresent to Ullmann. Where there is now only a small retail/ticket area and a 1.4-acre pond area with walkway, Ullmann envisions 27 estate homes on the property's north end, 243 condominiums in vacation villas on the east end, an extensively renovated day spa, a second semi-enclosed mineral pool, a new medical treatment and rehabilitation center called the Fountain of Youth Institute of Natural Healing, a 30,000-square-foot conference and banquet facility, 21,000 square feet of retail space and a 22,000-square-foot welcome center and spa.
The price tag for the new construction: about $50 million, he says. And the facility's employment would grow from 22 to about 300.
To make the venture successful, Ullmann, a former pharmacist, plans to increase the spa's presence in Florida, while at the same time adding to its international reputation - the bulk of the springs' 70,000 visitors annually are eastern Europeans. This means greater spending on both traditional marketing and Internet promotions.
In a somewhat separate business model, Ullmann hopes to draw world-renowned natural healers to the Institute of Natural Healing to study the springs and work with patients.
He also plans to expand the bottling of the spring water. At present, the water is sold only on site, but under the new plan the water would be sold to health practitioners nationwide.
"This is not just a single business venture," Ullmann says. "The way this really works is when you get the economic synergies ... when you get the businesses feeding off each other. Our goal is to create an international wellness community. I have to figure out how to get everyone from the airport. I have to find the local folks for the labor to do that. I have to figure out where the flowers will come from."
Ullmann hopes to have the entire facility built in three years, but he says five years is more realistic.
The entrepreneur had roughly the same plan when his development company, Golden Springs LLC, bought the property in December of 1999 for $3.75 million. Today, nothing is much different except for the completion date.
Still, Ullmann remains optimistic.
He says construction on the water and sewer system will start within six months and major construction will kick off before year's end.
About 12 private investors, including family members, are backing the project. He declined to name them.
The 53-year-old Ullmann describes the past five years as a tough introduction to Florida's development world. "Real estate development is a big boy's game," he says. "There is a lot that can happen."
The project has fueled local controversies.
In 2002, several investors in Golden Springs LLC voted to remove Ullmann as managing member. The squabble spilled over into operations of the springs, with members changing locks, and Ullmann changing them back.
"This was really a non-event," Ullmann says. "These were passive members of the limited liability company. (The way the LLC was set up) they had no say in the running of the company."
For several years, Golden Springs fought in the courts to evict Bioluminescence Institute Inc., a company that wanted to provide diving lessons in the springs.
For the past five years, area residents - several of which are Europeans who moved to the area to be near the springs, and environmental groups have expressed concerns about the future health of the warm mineral springs.
"I anticipated a certain level of opposition that has always turned out with environmental concerns," Ullmann says. "They are concerned about what we are doing to this great place so we had to move delicately. We are having consultants come out to show that the development won't have a negative impact on the springs."
Chief among the concerns driving development of the spa is the cost of operating it. While operationally the spa can get by, its profit isn't enough to cover debt service and site development, dominated by Golden Springs' $3.7 million mortgage.
So what is a pharmacist and health maintenance organization founder with no development experience doing attempting the largest private real estate venture in North Port? It comes down to the old axiom of being in the right place at the right time.
After working as a pharmacist for five years, Ullmann, 24, was elected to public office in Ulster County, New York. At 28, he was appointed mental health director for Ulster. In 1981, Ullmann accepted an HMO fellowship at Georgetown University. When he completed the fellowship a year later, he started Kingston, N.Y.-based WellCare Management Group Inc. to manage a non-profit HMO, the Mid-Hudson Health Plan.
"It was always difficult to get funding for HMOs but this was right after President Reagan had cut off federal funding," Ullmann says. "So I formed a coalition of a cross section of community employers. This was led by IBM. These employers gave me seed capital. I also got some assistance from the local economic development corporation. I invested my own money as well. I also cosigned on every loan I could get and borrowed from my friends and family. It was a risky time, but my whole life has been risky."
The nonprofit was successful, he says. In 1987, Ullmann started a for-profit HMO called WellCare of New York, which was also managed by WellCare Management.
For nine years, WellCare of New York and WellCare Management experienced explosive growth. While he was president, chief executive and chairman of WellCare of New York, the HMO grew to more than 100,000 members and generated about $180 million in annual revenue.
In 1995, executives at WellCare Management added Bienestar, an alternative health-care program, to its list of services.
The next year, the company hit a brick wall.
In March of 1996, the Barron's magazine published a report that suggested company officials played with the company's financials to inflate the stock price. That accusation was followed by an official SEC investigation and several shareholder lawsuits against WellCare Management and its main executives.
Ullmann says that was how it looked from the outside, but the inside story was much different. He contends the small company became the target of a coordinated attack by a group of investors who had shorted the stock.
"It wasn't personal," Ullmann says. "It was just about money. But it was pretty awful. We faced a pretty literal attack for almost nine months. We had people calling in bomb threats. For a while we endured nonstop shenanigans designed to try to make stock go lower. As a small company, we were pretty easy to manipulate. It doesn't take much to create a stir."
The business was burglarized and several employees and their families were threatened, he says.
WellCare Management's stock declined sharply. In May of 1996, Ullmann resigned as chairman and CEO of WellCare Management. He remained chairman of WellCare of New York. He also retained a controlling stake in WellCare Management.
Ullmann purchased Bienestar from WellCare Management and operated it as a private spin-off company.
WellCare Management eventually made a class action payment of $2.5 million to settle shareholder lawsuits. WellCare officials admitted no wrongdoing, and in an SEC filing company officials cited the cost of fighting the litigation and the much higher possible damages should the company have lost the class action case.
"I could not be any more proud of my experience at WellCare," Ullmann says." It was not something I was entirely prepared for. It was my first experience with a publicly traded company, and we were extremely visible in the New York stock market."
Shortly after Ullmann took over Bienestar, he was introduced to the Warm Mineral Springs property in North Port.
"I was at a health seminar in the Ozark Mountains of Missouri," Ullmann says. "When I bumped into a Realtor."
Ullmann, who already lived half of each year in Naples, drove to North Port to check out the property.
"I didn't know what to do with it for about a year," he says. "I just didn't get it. It was a real estate deal but it was also a health-care deal. But I decided to give it a try. I would never have believed it would turn out to be the granddaddy of mineral waters in the nation."
Ullmann says that with 9 million gallons of water circulating daily, the 87-degree spring is the most productive warm mineral spring in the United States.
In addition, Ullmann says the heat and mineral content of the water in the springs has medicinal benefits, which should be studied.
"I want people to know what the empirical information shows once we can get some diagnostic tests set up," he says. "I believe the water is so powerful that once you add science to the evaluation process, the outcomes that we will be able to show will be pretty incredible. Europeans have embraced the medical benefits of warm mineral springs and have incorporated it into their national health care. For example, if someone is recovering from a knee injury, they would be encouraged to go to a warm mineral springs. It provides stress reduction and it accelerates the healing process for both acute and chronic conditions."
So Golden Springs closed on the property. Then the real work started.
The mineral springs was outside the city limits of North Port, so Ullmann applied to have the city annex the property. The annexation went well and by October of 2000, it looked like Ullmann would be able to file a site plan with the city. Then Sarasota County and North Port got into a legal battle over the annexation of the Warm Mineral Springs, Taylor Ranch, Glawson/Carlton and the River Road Office Park.
The turmoil forced Ullmann and Golden Springs to wait until the issue with the two municipalities was resolved two years later.
A year later, Ullmann submitted a rezone request and master plan to the city. In March, the City Commission unanimously approved the project's preliminary site plan.
Ullmann expects to file a final site plan in the next 90 days and to then apply for building permit.
"Fifty-years from now when I'm looking down from heaven," Ullmann says, "the North Port community will either say that that guy from New York did the right thing or it was a lost opportunity. That is just the way I view this."
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