Due Diligence

Using what Mother Nature provided, David V. Johnson developed luxury resorts, million-dollar homes, and marquee office buildings in Michigan and beyond — but then came Hurricane Irma.
David V. Johnson
David V. Johnson, chairman of Victor International Corp. in Clarkston, has developed luxury resorts in metro Detroit and Michigan, as well as Oil Nut Bay in the British Virgin Islands (shown).

After Hurricane Irma passed directly over the British Virgin Islands in 2017, devastating the protectorate, paralyzing the nation’s economy, and causing about $20 million in damage to his Oil Nut Bay resort, David V. Johnson immediately turned to restoring the place. While the fortress-strong structures of all the buildings on his $1-billion property had held, Irma nevertheless tore off roofs, sandblasted windows, and sucked acres of  lush landscaping out into the ocean.

Johnson switched the tasks of the 200 construction workers who’d been building the resort to hurricane cleanup, and also retained his own staff of about 100 people, immediately pouring millions of dollars into reconstruction, even though neither visitors nor insurance money would appear at Oil Nut Bay for months. Instead of catering to moneyed guests, Johnson’s employees kept busy repairing battered buildings and replanting denuded grounds. While most people in the islands’ dominant resort trade suddenly went jobless, Oil Nut Bay’s staff kept working until their regular jobs resumed with the return of owners and renters in pre-hurricane volumes in 2018.

So it’s understandable that Johnson was disappointed last fall when he started getting word that a handful of his employees were bolting for Rosewood Little Dix Bay, a resort about six miles to the southwest that was just getting up off its back. The defectors were making a bit more money at Little Dix, and the place was closer to their homes than was the relatively remote Oil Nut Bay. Johnson called an all-hands meeting to send a message.

“As of 5 p.m. today, we’re closing Oil Nut Bay,” he told the gathering of the resort’s entire staff. After gasps had quieted into confused murmuring, he quickly said, “I’m not going to do that. But I am concerned about loyalty. We gave you jobs when no one else would have. You folks are my family in the British Virgin Islands. I’m in it for you, and I don’t want to lose any of you. At the end of the day, you have to decide, but I’ve been here and I will continue to be here for you. So please stay with us.”

Loyalty is a bedrock principle to Johnson, as evidenced by the many friends and associates from Michigan who have ended up with him in the Caribbean as Oil Nut Bay homeowners and employees. There’s goal-setting, hard work, and perseverance, too. In business, Johnson’s operational pillars also include abstaining from partnerships, lawsuits, and debt, if at all possible.

And — maybe relevant above all else to his accomplishments in real-estate development — there’s his vision: Johnson believes he can survey and explore any piece of property and figure out what it should be, rather than just what it is. “People want to clear things, and I want to keep everything — trees and hills,” he says. “I can just look at it differently than anyone else.”

This combination of attributes is why Johnson could push through a spine-shattering accident that threatened to leave him a paraplegic. Why he became one of the premier real-estate developers in suburban Detroit. It also explains how he navigated decades of frustrations in developing Bay Harbor Resort in northwestern Michigan, and how the 70-year-old Johnson, as the crowning accomplishment of his career, could build a 400-acre resort catering to the very rich that straddles a breathtaking stretch of the island of  Virgin Gorda. It’s little wonder that the Urban Land Institute of Michigan will bestow a lifetime achievement award on Johnson at a ceremony in Detroit in May 2021.

Down at Oil Nut Bay, it’s another typical day in paradise: a high temperature of 82 degrees and a low of 75, with playful breezes keeping things comfortable and sweeping away the no-see-um sand flies that are infamous in the islands. Massive granite outcroppings and carpets of hillside greenery loom over the cay on all sides.

The Caribbean Sea splashes in over a reef that creates a pleasing little ripple of white foam, which then disperses in a panoply of  blues. The ridge of coral lies perfectly at about 1,000 feet from the shore, ensuring family-navigable 2- to 3-foot surf all the way out there, as if the cove had been designed by a waterpark architect.

Perfect white sand imported by the barge load from Barbuda, another Caribbean island, is glistening on the beach. Black pelicans swoop over the water. And somewhere close under the surface are sea turtles, whose local breeding grounds Johnson got the BVI government to protect from boats.

Bay Harbor
Bay Harbor in northwestern Michigan

Conch fritters are on the appetizer menu at the Marina Club. At the Nova restaurant, entrées include wahoo poke with seaweed salad and daikon radish. Take one of the resort’s ubiquitous electric golf carts over to the Pavilion for dessert, where you’ll find yuzu pana cotta with citrus, and passionfruit and sesame ice cream. 

Hiking trails ascend the steep cliffs and are labeled, like Michigan ski runs, as “double black diamonds” or much easier. Kids bounce off the walls in the Nut House play area. An emergency medical clinic on the site is staffed, as always, by a doctor from Henry Ford Health System in Detroit.

No wonder Johnson has chosen Oil Nut Bay as his official domicile. He and his wife of 15 years, Pam, live in a $40-million, 8,000-square-foot signature property they named Halo, perched atop one of the main peaks. Their oasis features 24-foot-long, motorized glass doors that open to the outside, 18-foot ceilings, a media room soundproofed with 16-inch-thick walls, an 18-foot-high waterfall controlled with a mobile app, five bedrooms, and six-and-a-half baths. Pam designed the interior; she’s also an animal lover who keeps a small barn with horses, cats, several tortoises, and a rescued emu.

Johnson says that actually living atop a property is rare for a real-estate developer, but he’s a hands-on owner and is always improving things. Most days he’s either in his office near the beach, or traversing the property in a rugged Defender Max all-terrain vehicle, for he’s still building Oil Nut Bay.

Johnson has laid the development out as a collection of 10 different “neighborhoods,” including the Beach, where only four of 10 home sites remain available; the Marina, which overlooks a 93-slip marina and offers private over-water hammocks; and the Boulder, on the “wild side” of the island, for those who enjoy watching the ocean crashing against the rocks and appreciate regular whale sightings.

So far, Johnson has welcomed 43 homebuyers from around the world to properties ranging from $2 million to $50 million in value, out of a total of 117 home sites. Owners include the investment banker over there, the self-made tech entrepreneur over here, the scion of old money on the next ridge. Michigan’s renowned DeVos family is among them. Neighboring islands are owned by a Silicon Valley giant, Sir Richard Branson of Virgin fame, and Michigan’s Van Andel family, who grew Amway with the DeVoses in the Grand Rapids area.

The grandest remaining parcel at Oil Nut Bay is a rocky 35 acres on a cliff called Pajeros Point that’s listed at $55 million whole. For those with some wealth but lesser ambitions, Oil Nut Bay offers rental homes that range from $1,000 a night to $25,000 a night.

Oil Nut Bay is the anti-Sandals. Each owner must name their place, for instance. Some monikers are soaring, such as Poseidon’s Perch; others, such as the adjacent Water’s Edge, are relatively uninspired. No owner or guest can peek into anyone else’s adjacent property from their own. It’s so private that outdoor showers predominate. “I want to take even routine tasks and make them memorable,” Johnson says.

There’s never really been anything like routine for David Johnson. Born in Detroit to a machinist, Victor, and a stay-at-home mom, Eleanor, he grew up in Livonia. His mother unwittingly provided an early career boost: She would make raking fun by having him arrange piles of leaves in the form of a rough floor plan of their sprawling ranch house. “Then she’d say, ‘Make it a three-bedroom,’ ” he remembers. “I look back at that now, and it really helped me envision planning.”

Johnson demonstrated an entrepreneurial itch at age 12, when he launched a lawn-care business. When he went to Michigan State, he eyed a career in orthodontics or package engineering before a minor in marketing and his startup proclivity began presenting another path. Johnson and four friends bought some underperforming service stations, ignored the expensive old paradigm of operating an adjacent garage to make the money, and made a profit selling gasoline by pricing it equal to Meijer, Clark, and other off brands. The experience gave Johnson valuable exposure to real estate and the first sense that that was where his destiny lay.

Returning home, he got an interview with a realty firm owned by the legendary luxury-housing developer Howard Keating. When Christmas 1972 came around, Johnson didn’t have enough money to buy his mother a present but he did get 165 listings from a new-home builder, sold $3 million worth of real estate, and won a contest. Soon he was president of Keating’s real-estate brokerage business.

Oil Nut Bay Beach Club Pools
Bay Harbor in northwestern Michigan, previous picture, and the Beach Club at Oil Nut Bay in the British Virgin Islands, above, reflect Johnson’s passion for resort-style communities set in pristine, waterfront locations.

By late 1974, the peripatetic Johnson had struck out on his own with a company he called Maple Associates, plying properties in Birmingham and Bloomfield Hills. A year later he teamed with two partners to form luxury builder Abbey Homes, which became the biggest custom home builder in the Midwest over the next few years.

Then something happened that changed Johnson’s life in a big way — but not as much as it could have. On Aug. 5, 1978, he and some friends were celebrating the wrap-up of a deal on an Orchard Lake development when Johnson dove into the pool at his home and broke his neck when he hit the water. “I did a dive I’d done a hundred times before, but this time two guys jumped in front of me and I turned my head sideways before I hit the surface,” he recalls. He managed to butterfly stroke to the side, his head bleeding, before he became paralyzed and friends pulled him out.

He’d broken his C6 vertebra into 13 pieces. Doctors screwed bolts into his head and said he would need surgery just to have a chance to retain movement from the shoulders down. In denial, Johnson talked determinedly about recovering and going skiing in Aspen. Then, in a fateful bedside conversation, a doctor friend urged him to get real and reckon with the hand he’d been dealt.

“I decided then that today was the best day of my life,” Johnson recalls. “I wasn’t going to blame anybody. I certainly wasn’t dead. This doctor told me that I had about three weeks before whatever I was going to do would become my permanent personality, and the sides of the slope would be too big to climb out of. It was the best advice I ever got.”

As he recovered physically — with the tiny pieces of his vertebra almost miraculously fusing themselves back together, leaving him with a lifetime limp — Johnson pivoted hard strategically. He sold out of Abbey Homes and his brokerage business to local big-name broker Earl Keim on his 30th birthday. And he rethought what he was going to do next.

“It was never about how much money I was making,” he says. “It was always about creating new paradigms in real estate in the luxury market. And I went on to figure out how to build one-of-a-kind, generational communities in harmony with nature.”

In the early 1980s, Johnson applied his new philosophy to build Chestnut Hills in Bloomfield Hills. His next project was Heron Bay, where the average lots were $500,000 apiece and some were more than $1 million. His ability to envision the end result also came in handy when he was working properties alongside I-275, before most developers tried to take advantage of its strategic location.

Wanting to sell a 25-acre plot there to hesitant executives of Digital Equipment Corp., the Boston-based computer giant, Johnson rented a helicopter, got them aboard, and had the pilot rise straight up from the middle of the property to about 144 feet, then slowly rotate.

“When they wondered what I was doing, I pointed out that they could see Southfield and Metro Airport and downtown Detroit and Ann Arbor from up there,” Johnson says. “I told them they could be 20 minutes from everywhere. I took them up to that height because I envisioned a building 12 stories tall. And Digital bought based on that. I just had to overcome the way everyone else looked at the property.”

In 1988, Johnson saw something on South Fox Island: an opportunity to create a “Nantucket of the West” on the dot in Lake Michigan that’s about 60 miles due west of Mackinac Island and about one-third larger.

Oil Nut Bay Nova
The Marina Village and the Nova restaurant opened at Oil Nut Bay in April 2019.

“The leaves had just turned color, and it had just rained and the sun was out,” Johnson says. “I saw nature as I’d never seen it before. All of a sudden, development became physical beauty. It changed my goal into buying the most beautiful land and seeing what it needed to be, versus what the government said it should be.”

After this epiphany, Johnson held off on developing South Fox Island, as he began to tally the stratospheric costs of putting a mixed-use resort on the island. Soon his gaze turned to the southwest and around the bend of Lake Michigan, to the five miles of shoreline between Charlevoix and Petoskey that eventually would become known as Bay Harbor Resort.

At that point it was called Three Fires Point and was known as the sad location of the largest abandoned cement plant in the world, inoperative for 30 years. Dust from piles of cement that had been left behind washed over the locals regularly. A handful of developers had taken stabs at refurbishing the property, Johnson says, “but no one could pull it off.” He did (see sidebar).

As usual with Johnson, the seeds of his next accomplishment were sown in the success in front of him. Bay Harbor owners began urging him to develop a winter destination they could call their own. “But I didn’t want to just do another golf-course community in Florida,” Johnson says.

So beginning in 2004, and continuing for six years, the Johnsons visited 13 countries on their 130-foot yacht in search of  the ideal place to build such a resort, one that would meet three important criteria: a 10-month season “because I can’t handle the cold,” a government with Western reliability, and one that would accommodate extremely low population density. (He even met with Fidel Castro, but Cuba “wouldn’t give me title to any land,” Johnson says. “And besides, the country was frozen in 1950.”)

Having found his harbor of a lifetime, Johnson bought the land beneath what is now Oil Nut Bay, used relentless determination to negotiate support with the BVI government and for the purchase of an adjacent 100 acres from one of the island’s oldest families, and began plotting his development. He wanted no fewer than 50 units but not more than 100 or so, and no branded hotel. He wanted to build “much higher quality than anyone had built in the Caribbean before,” with construction standards that, among other things, could withstand hurricanes. “I didn’t want anyone to look at us and say the infrastructure wasn’t as good as anything in the U.S.,” he says.

Before it opened in 2012, Oil Nut Bay required $100 million in infrastructure investments, and Johnson included significant nods toward sustainability with solar panels on some roofs and native vegetation growing to cover others, for instance. Workers used jackhammers and dynamite to blast through granite veins so tough that they’re known as “blue bitch,” and then Johnson laid caramel-colored concrete on the resulting paths to match the prevailing rockscape — at an extra cost of 28 percent. Oil Nut Bay put in $2 million in guardrails just for what he calls “peace of mind.”

“There are major resort amenities,” says Shaylene Todd, Oil Nut Bay’s marketing director, who joined Johnson from a post in Belize, “but it’s a collection of homes. That’s the biggest differentiating factor.”

Much of the future of Oil Nut Bay may well be determined by whether BVI will lengthen a runway at its Beef Island airport from the current 4,650 feet to 6,500 feet to accommodate larger jets. The extension into a lagoon would allow regular flights from the U.S. that Johnson believes would set off a boom in Virgin Gorda and BVI.

But Johnson is happy with what Oil Nut Bay is already. “Ninety days after the hurricane, we were open for business again,” he says. “The owners came back and were blown away. It’s a completely different place. Now it’s a matter of you’d better pick your lot or it won’t be here.

“This is my life. I don’t have a Virgin Galactic,” he says of Branson, the larger-than-life Brit, his friend and neighbor, who’s flying craft into outer space. “I’m blessed to have lived in and owned some of the world’s greatest properties. I’m really just God’s caretaker, leaving them better than when I found them.”

Homegrown Talent

One big reason David Johnson has been able to fulfill his wildest dreams as a real estate developer is that he has a knack for finding the right person for each position in his company. In his orbit at Oil Nut Bay is a network not only of Michigan-connected owners, but — even more prominently — important employees and other work associates from his home state who have been with Johnson for several decades.

There’s Mark Moore, for example, who started as a wildlife biologist on Johnson’s South Fox Island and, through the years, has evolved into vice president of purchasing for Oil Nut Bay. Kyle Turner got to know Johnson in Traverse City and now is his personal chef. Larry Oswald was CEO of the former Chrysler unit Global Motorcar and a Bay Harbor owner who ended up spending several years designing and overseeing construction of much of the infrastructure at Oil Nut Bay.

“I like to have someone who has great intelligence and attitude, and teach them our business,” Johnson says. “I’ve found that people are capable of doing more than they think. Find what they’re passionate about and put them in that environment, and they thrive.”

Or, as Dr. Louis Cannon — an Oil Nut Bay owner who’s also a cardiologist in Petoskey, and founder and senior managing director of Biostar Capital, a biotech venture-capital firm in Charlevoix — puts it, “Give me an all-star and I’ll find a place for them on the team. It’s not like (Johnson is) filling a void; he wants to find the best person.”

Resort By The Bay

Oil Nut Bay - Halo
The Johnson’s $40-million home at Oil Nut Bay, dubbed Halo, features green roofs, an 18-foot-high waterfall, five bedrooms, six-and-a-half baths, motorized glass doors, and a guest house, called Rainbow (lower residence).

Building Bay Harbor Resort was the pinnacle of David Johnson’s accomplishments in Michigan. But there were so many ups and downs along the way that he might as well have erected a roller coaster there to commemorate them. After deciding to pass on building a resort on South Fox Island, in the early 1990s Johnson scoured sites throughout the Midwest where he could develop a “master-plan resort community,” he says. “I’d looked at things left over from the S&L crisis in the 1980s, but didn’t want to pick up other people’s broken projects.”

Besides, the five-mile stretch on Lake Michigan that would become Bay Harbor could be more gorgeous than anything he’d developed in southeast Michigan once a shuttered cement plant was leveled in 1994. Nine months later, another explosion blasted away the barrier between Lake Michigan and a quarry. Less than 24 hours later, more than 2.5 billion gallons of water formed Bay Harbor Lake.

Today, the 32 different “neighborhoods” Johnson created at Bay Harbor anchor a luxury lifestyle for residents that also includes boutique shopping, a deep-water marina, a premier yacht club, an equestrian center, and a 27-hole golf club that offers more water frontage than any other course in North America. The 2018 opening of the Great Lakes Center for the Arts, Johnson believes, perfects the development.

Along the way, Johnson and Bay Harbor endured an epic struggle with the parent company of Consumers Power, which initially was a partner but later backed out, and eventually had to foot the bill for a water-quality dispute. He leveraged all of his grit, savvy, and experience to navigate the property through the 2009 auto-industry bankruptcies. “Harbor Springs,” a resort city across Little Traverse Bay from Bay Harbor, “first was developed 100 hundred years ago and had the Who’s Who of the Midwest,” Johnson says. “I figured if they could do that a century ago, with no cars to get people there, I could do it again.”