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Gulf American Land Corporation

March 03, 2023

Gulf American Land Corporation (GALC) was a land development company in Florida founded by brothers Leonard and Jack Rosen. During the late 1950s and 1960s, GALC was the largest land sales company in the United States.[1] The company is noted for its role in the development of Cape Coral, Florida, and pioneering the sales method of instalment land purchases.

In the late 1960s, GALC sold 173,000 mi (278,000 km) of swampland, dubbed Golden Gate Estates, to about 40,000 buyers. Many buyers bought plots that were still underwater. They paid for them in monthly installments and acquired ownership of their properties when payments were complete. Gulf American built 183 mi (295 km) of roads and 813 mi (1,308 km) of flood control canals advertising Golden Gate Estates as semi-improved land, though there were no utilities or public services. The fill resulting from digging flood control canals was used to raise the land level to comply with minimum building elevation legal requirements. The canals drain 233 billion US gal (880 billion l) of fresh water a year into Naples Bay, damaging the coastal saltwater ecology while causing the groundwater table to drop 2 ft (0.61 m) to 4 ft (1.2 m). The Florida Department of Business Regulation adopted real estate development reforms in the 1970s because of such abuses.[2][3]

In 1969, GALC (which by then had shortened its name from Gulf American Land Corp to Gulf American Corp) and its sister companies were taken over by General Acceptance Corp.[4]

Beginning

Leonard and Jack Rosen began their business career as street vendors in Baltimore.[3] They used the earnings of their original business and high interest loans advanced by Chicago financier, Jay Pritzker to set up a real estate development company selling yet-to-be developed plots of land in the northwest Florida Everglades to prospective homeowners from the Northeast and Midwest. This involved the Rosen's 1957 purchase of 103 sq mi (270 km2) of land located in pristine mangrove swamps for $678,000 and the establishment of offices in strategically important Northeastern and Midwestern towns and cities, where prospective customers were enticed by using high-pressure sales techniques to take a day trip to Southwest Florida to inspect developments and commit to a purchase.[3][4] Leonard would be convinced by Milt Mendelsohn to create these developments in Florida.[5]

Gulf American

The Rosen's land purchase in November 1957 was followed by the start of construction in January 1958 and the first completed units being occupied by residents soon after. The same year, the Rosen's also founded Gulf American Land Corporation (GALC).[4]

GALC organised day trips for prospective customers by using their own airline, Gulf American Airlines, which operated a shuttle service linking Miami to Fort Myers Page Field using a fleet of five Douglas DC-3s. Page Field was the closest airport to GALC's Cape Coral residential development (which prospective customers accessed by complimentary bus transfers from the airport).[3][4] From 1958, GALC also began contracting US supplemental carrier[nb 1] Modern Air to fly prospective customers from the Northeast and Midwest into Miami, where they transferred between Modern Air's Curtiss C-46s and Gulf American Airlines' DC-3s en route to and from Fort Myers.[6] These flights formed part of Gulf American Land's free sales pitch and were free for prospective customers, who were also served a free meal on board the aircraft on each leg of their journey.[7] GALC's business eventually accounted for 25% of Modern Air's total business.[6]

To protect themselves against buyers attempting to wriggle out of the contractual terms of their purchase agreements with GALC following a sudden change of mind and potential defaulters, plots were oversold.[3] Gulf American would start getting complaints against their sales practices in the early 1960s. Governor Haydon Burns respond to this criticism by placing Leonard Rosen to Florida's Installment Land Sales Board which was created to investigate these complaints.[5]

On 29 June 1966, Modern Air became a wholly owned subsidiary of GALC following the purchase of the airline's entire stock from its previous owner, John Becker, for $807,500 in May/June 1966.[8][9][6] GALC's acquisition of Modern Air resulted in consolidation of the airline's operations at Miami International Airport[nb 2] and its merger with Gulf American Airlines.[10]

In December 1966, GALC's stockholder meeting resolved to drop "Land" from its name to shorten it to Gulf American Corporation (GAC) to reflect its increasing diversification and approved an employee stock purchase plan worth $600,000.[6][11] This saw GAC and Modern Air become wholly owned subsidiaries of newly created holding company GAC Corporation, with all real estate related business activities being absorbed into newly formed GAC Corp subsidiary GAC Properties.[12]

In 1967, the State of Florida ordered GAC Properties to suspend all sales for 30 days, following allegations of fraudulent sales practices.[4]

According to Leonard Rosen, the Rosen's total accumulated net profit from property-related activities amounted to $100 million, while GAC's stock was valued at $150 million by the end of the 1960s.[4]

Sale of Gulf American to General Acceptance

In 1969, the Rosen's sold GAC to General Acceptance Corporation for more than $200 million, with Jack and Leonard Rosen each receiving a cash payment of $100,000, in addition to approximately $63 million worth of General Acceptance stock and dividend payments of $544,000 each year for the first three years and $1.64 million each year thereafter.[13]

General Acceptance Corp's origins go back to August 1933, when it was formed in Allentown, Pennsylvania. Initially focusing on car finance, in the 1950s, General Acceptance branched out into insurance, consumer and real estate finance, followed by expansion into truck trailer and construction equipment manufacturing in the 1960s.[14][15]

From May 1969, GAC Properties began organising day trips for prospective customers to view its new Rio Rico property development near Nogales in conjunction with its Modern Air airline, flying them into Tucson, Arizona.[16][12]

Also in 1969, Jack Rosen died at the age of 50 in Miami, as a result of a heart attack.[4]

GAC's dwindling property business in the wake of the recession caused by the 1973 oil crisis resulted in cancellation of subsidiary Modern Air's contract to fly in prospective land buyers from the Northeast and Midwest to inspect its property developments in various locations in Florida and Arizona at the end of 1973.[17] Rising interest rates increased GAC's borrowing costs and made it increasingly difficult to refinance the company's public debt. In addition, GAC's poor environmental record and controversial sales techniques attracted growing negative attention among the authorities, consumer and environmental groups as well as the general public. These factors combined to force a reduction in residential developments and closure or disposal of non-core activities, including GAC's computer leasing business and Modern Air. As a result, GAC entered Chapter 11 bankruptcy protection in 1975.[14][3]

GAC emerged from bankruptcy protection in September 1980 as a wholly owned subsidiary of newly created holding company Avatar Holdings, Inc. Under its new guise, the real estate business still accounted for 70% of its total revenues, with the remainder being accounted for by water and wastewater utility services.[14]

In 1987, Leonard Rosen died of natural causes in Las Vegas at the age of 72.[4]

GAC's current business activities include providing US consumers with

See also

Notes and citations

Notes
  1. ^ holder of supplemental air carrier certificate authorised to operate non-scheduled passenger and cargo services to supplement the scheduled operations of certificated route air carriers; an airline holding a supplemental air carrier certificate was also known as a "nonsked" in the US
  2. ^ apart from maintenance activities which remained at Trenton
Citations
  1. ^ Dodrill, David E. (1993). Selling the Dream : The Gulf American Corporation and the Building of Cape Coral, Florida. Tuscaloosa, Alabama: University of Alabama Press. ISBN 978-0-8173-0597-0.
  2. ^ Bukro, Casey (February 23, 1989). "Florida 'Estates' Paradise To Some". Chicago Tribune.
  3. ^ a b c d e f Beyer, Morten S. [1] Flying Higher: The Rosen Boys, 2009, p. 180
  4. ^ a b c d e f g h "People of Influence: The Rosen brothers in Cape Coral". news-press.com. 28 August 2014. Retrieved 24 July 2017.
  5. ^ a b Clark, James C. (October 28, 1990). "UNDERWATER LOTS! SWAMP CITIES! $10 DOWN! WELCOME TO FLORIDA, THE LAND OF SUNSHINE, SURF AND SCAMS". Orlando Sentinel (Digital). Retrieved February 25, 2022.
  6. ^ a b c d Airways (Proctor, J., Archive, Modern Air Transport), Vol. 24, No. 03, Iss. 255, p. 63, Airways International Inc., Miami, May 2017
  7. ^ Worley, K. and Addison, D. (2007). "From Wetland Ecosystem to Failed Residential Development and Back (Free Flights – Free Meals – Free Sales Pitch: Modern Air Transport, Inc.)" (PDF). Environmental Science Department Conservancy of Southwest Florida, Naples, FL. p. 12. Retrieved 29 July 2017.{{cite web}}: CS1 maint: multiple names: authors list (link)
  8. ^ "Modern Air's New President". Flight International: 503. 3 April 1969. Retrieved 29 July 2017.
  9. ^ "World Airline Directory". Flight International: 543. 11 April 1968. Retrieved 29 July 2017.
  10. ^ Beyer, Morten S. [2] Flying Higher: Reorganizing Modern Air, 2009, pp. 181/2
  11. ^ Beyer, Morten S. [3] Flying Higher: The Rosen Boys, 2009, p. 181
  12. ^ a b Airways (Proctor, J., Archive, Modern Air Transport), Vol. 24, No. 03, Iss. 255, p. 65, Airways International Inc., Miami, May 2017
  13. ^ Davis, Jack E. [4] The Gulf: The Making of An American Sea, 2017, Part 14: The Growth Coast
  14. ^ a b c "News-Press Business". News-Press from Fort Myers, Florida: 63. 6 November 1989. Retrieved 29 July 2017.
  15. ^ Beyer, Morten S. [5] Flying Higher: General Acceptance Corp. Buys Modern Air, 2009, p. 193
  16. ^ "Modern Air Signs Up". Flight International: 311. 28 August 1969. Retrieved 29 July 2017.
  17. ^ "MODERN AIR TRANSPORT (MAT): United States (1946-1975)". Www.WorldHistory.Biz. 6 September 2015. Retrieved 29 July 2017.
  18. ^ "General Acceptance Corp". Bloomberg L.P. 2017. Retrieved 29 July 2017.

March 03, 2023
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Gulf American Land Corporation GALC was a land development company in Florida founded by brothers Leonard and Jack Rosen During the late 1950s and 1960s GALC was the largest land sales company in the United States 1 The company is noted for its role in the development of Cape Coral Florida and pioneering the sales method of instalment land purchases In the late 1960s GALC sold 173 000 mi 278 000 km of swampland dubbed Golden Gate Estates to about 40 000 buyers Many buyers bought plots that were still underwater They paid for them in monthly installments and acquired ownership of their properties when payments were complete Gulf American built 183 mi 295 km of roads and 813 mi 1 308 km of flood control canals advertising Golden Gate Estates as semi improved land though there were no utilities or public services The fill resulting from digging flood control canals was used to raise the land level to comply with minimum building elevation legal requirements The canals drain 233 billion US gal 880 billion l of fresh water a year into Naples Bay damaging the coastal saltwater ecology while causing the groundwater table to drop 2 ft 0 61 m to 4 ft 1 2 m The Florida Department of Business Regulation adopted real estate development reforms in the 1970s because of such abuses 2 3 In 1969 GALC which by then had shortened its name from Gulf American Land Corp to Gulf American Corp and its sister companies were taken over by General Acceptance Corp 4 Contents 1 Beginning 2 Gulf American 3 Sale of Gulf American to General Acceptance 4 See also 5 Notes and citationsBeginning EditLeonard and Jack Rosen began their business career as street vendors in Baltimore 3 They used the earnings of their original business and high interest loans advanced by Chicago financier Jay Pritzker to set up a real estate development company selling yet to be developed plots of land in the northwest Florida Everglades to prospective homeowners from the Northeast and Midwest This involved the Rosen s 1957 purchase of 103 sq mi 270 km2 of land located in pristine mangrove swamps for 678 000 and the establishment of offices in strategically important Northeastern and Midwestern towns and cities where prospective customers were enticed by using high pressure sales techniques to take a day trip to Southwest Florida to inspect developments and commit to a purchase 3 4 Leonard would be convinced by Milt Mendelsohn to create these developments in Florida 5 Gulf American EditThe Rosen s land purchase in November 1957 was followed by the start of construction in January 1958 and the first completed units being occupied by residents soon after The same year the Rosen s also founded Gulf American Land Corporation GALC 4 GALC organised day trips for prospective customers by using their own airline Gulf American Airlines which operated a shuttle service linking Miami to Fort Myers Page Field using a fleet of five Douglas DC 3s Page Field was the closest airport to GALC s Cape Coral residential development which prospective customers accessed by complimentary bus transfers from the airport 3 4 From 1958 GALC also began contracting US supplemental carrier nb 1 Modern Air to fly prospective customers from the Northeast and Midwest into Miami where they transferred between Modern Air s Curtiss C 46s and Gulf American Airlines DC 3s en route to and from Fort Myers 6 These flights formed part of Gulf American Land s free sales pitch and were free for prospective customers who were also served a free meal on board the aircraft on each leg of their journey 7 GALC s business eventually accounted for 25 of Modern Air s total business 6 To protect themselves against buyers attempting to wriggle out of the contractual terms of their purchase agreements with GALC following a sudden change of mind and potential defaulters plots were oversold 3 Gulf American would start getting complaints against their sales practices in the early 1960s Governor Haydon Burns respond to this criticism by placing Leonard Rosen to Florida s Installment Land Sales Board which was created to investigate these complaints 5 On 29 June 1966 Modern Air became a wholly owned subsidiary of GALC following the purchase of the airline s entire stock from its previous owner John Becker for 807 500 in May June 1966 8 9 6 GALC s acquisition of Modern Air resulted in consolidation of the airline s operations at Miami International Airport nb 2 and its merger with Gulf American Airlines 10 In December 1966 GALC s stockholder meeting resolved to drop Land from its name to shorten it to Gulf American Corporation GAC to reflect its increasing diversification and approved an employee stock purchase plan worth 600 000 6 11 This saw GAC and Modern Air become wholly owned subsidiaries of newly created holding company GAC Corporation with all real estate related business activities being absorbed into newly formed GAC Corp subsidiary GAC Properties 12 In 1967 the State of Florida ordered GAC Properties to suspend all sales for 30 days following allegations of fraudulent sales practices 4 According to Leonard Rosen the Rosen s total accumulated net profit from property related activities amounted to 100 million while GAC s stock was valued at 150 million by the end of the 1960s 4 Sale of Gulf American to General Acceptance EditIn 1969 the Rosen s sold GAC to General Acceptance Corporation for more than 200 million with Jack and Leonard Rosen each receiving a cash payment of 100 000 in addition to approximately 63 million worth of General Acceptance stock and dividend payments of 544 000 each year for the first three years and 1 64 million each year thereafter 13 General Acceptance Corp s origins go back to August 1933 when it was formed in Allentown Pennsylvania Initially focusing on car finance in the 1950s General Acceptance branched out into insurance consumer and real estate finance followed by expansion into truck trailer and construction equipment manufacturing in the 1960s 14 15 From May 1969 GAC Properties began organising day trips for prospective customers to view its new Rio Rico property development near Nogales in conjunction with its Modern Air airline flying them into Tucson Arizona 16 12 Also in 1969 Jack Rosen died at the age of 50 in Miami as a result of a heart attack 4 GAC s dwindling property business in the wake of the recession caused by the 1973 oil crisis resulted in cancellation of subsidiary Modern Air s contract to fly in prospective land buyers from the Northeast and Midwest to inspect its property developments in various locations in Florida and Arizona at the end of 1973 17 Rising interest rates increased GAC s borrowing costs and made it increasingly difficult to refinance the company s public debt In addition GAC s poor environmental record and controversial sales techniques attracted growing negative attention among the authorities consumer and environmental groups as well as the general public These factors combined to force a reduction in residential developments and closure or disposal of non core activities including GAC s computer leasing business and Modern Air As a result GAC entered Chapter 11 bankruptcy protection in 1975 14 3 GAC emerged from bankruptcy protection in September 1980 as a wholly owned subsidiary of newly created holding company Avatar Holdings Inc Under its new guise the real estate business still accounted for 70 of its total revenues with the remainder being accounted for by water and wastewater utility services 14 In 1987 Leonard Rosen died of natural causes in Las Vegas at the age of 72 4 GAC s current business activities include providing US consumers with hire purchase car finance plans purchased from car dealerships extended warranty contracts credit life and disability insurance in connection with contracts purchased from third parties 18 See also EditGeneral Development CorporationNotes and citations EditNotes holder of supplemental air carrier certificate authorised to operate non scheduled passenger and cargo services to supplement the scheduled operations of certificated route air carriers an airline holding a supplemental air carrier certificate was also known as a nonsked in the US apart from maintenance activities which remained at Trenton Citations Dodrill David E 1993 Selling the Dream The Gulf American Corporation and the Building of Cape Coral Florida Tuscaloosa Alabama University of Alabama Press ISBN 978 0 8173 0597 0 Bukro Casey February 23 1989 Florida Estates Paradise To Some Chicago Tribune a b c d e f Beyer Morten S 1 Flying Higher The Rosen Boys 2009 p 180 a b c d e f g h People of Influence The Rosen brothers in Cape Coral news press com 28 August 2014 Retrieved 24 July 2017 a b Clark James C October 28 1990 UNDERWATER LOTS SWAMP CITIES 10 DOWN WELCOME TO FLORIDA THE LAND OF SUNSHINE SURF AND SCAMS Orlando Sentinel Digital Retrieved February 25 2022 a b c d Airways Proctor J Archive Modern Air Transport Vol 24 No 03 Iss 255 p 63 Airways International Inc Miami May 2017 Worley K and Addison D 2007 From Wetland Ecosystem to Failed Residential Development and Back Free Flights Free Meals Free Sales Pitch Modern Air Transport Inc PDF Environmental Science Department Conservancy of Southwest Florida Naples FL p 12 Retrieved 29 July 2017 a href Template Cite web html title Template Cite web cite web a CS1 maint multiple names authors list link Modern Air s New President Flight International 503 3 April 1969 Retrieved 29 July 2017 World Airline Directory Flight International 543 11 April 1968 Retrieved 29 July 2017 Beyer Morten S 2 Flying Higher Reorganizing Modern Air 2009 pp 181 2 Beyer Morten S 3 Flying Higher The Rosen Boys 2009 p 181 a b Airways Proctor J Archive Modern Air Transport Vol 24 No 03 Iss 255 p 65 Airways International Inc Miami May 2017 Davis Jack E 4 The Gulf The Making of An American Sea 2017 Part 14 The Growth Coast a b c News Press Business News Press from Fort Myers Florida 63 6 November 1989 Retrieved 29 July 2017 Beyer Morten S 5 Flying Higher General Acceptance Corp Buys Modern Air 2009 p 193 Modern Air Signs Up Flight International 311 28 August 1969 Retrieved 29 July 2017 MODERN AIR TRANSPORT MAT United States 1946 1975 Www WorldHistory Biz 6 September 2015 Retrieved 29 July 2017 General Acceptance Corp Bloomberg L P 2017 Retrieved 29 July 2017 Retrieved from https en wikipedia org w index php title Gulf American Land Corporation amp oldid 1141458725, wikipedia, wiki, book, books, library,

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