South Point Update

In some distant, breezy January a century from now, the pundits will congregate along Ocean Drive to herald the 100th Art Deco Weekend. In the shadow of whatever remains of Miami Beach's architectural splendor, they will celebrate the colorful history of that narrow spit of land, the legacy of South Florida's grand tradition of hype, hucksterism, and as that era passed, of redevelopment.

And with an annoyed, dismissive gesture toward the hodgepodge of high-rises that comprise the southern tip of the island, one of the older scholars will tell the story of the legendary Marriott project.

As short-lived as it was grandiose, nothing better symbolizes late-twentieth-century Miami Beach's dreams of development glory than the Marriott Corporation's scheme to turn a good portion of a 255-acre neighborhood into the largest vacation resort in Dade County. The lavish complex never materialized, of course; the plan fell flat on its face after only a year of negotiations, but not before striking fear of eviction and demolition into the hearts of the hundreds of people who stood to lose their homes to the bulldozers.

The idea first surfaced in October 1989, after the city solicited bids for, of all things, a parking garage. Instead of a stopgap solution to the city's parking woes, Marriott proposed to raze eight city blocks and construct two hotels with a total of 3000 rooms, 2400 units of apartments, time-shares, and condominiums, and at least two retail shopping centers. The estimated cost: $800 million.

When local residents and property owners got wind of the plan, they also got organized, forming the South Pointe Association to stand up to Marriott and the City of Miami Beach. For anyone who lived in the area (bounded by Sixth Street and Government Cut, between the Atlantic Ocean and Biscayne Bay), the threat of eviction was immediate and very real. In 1973, with the blessing of the state legislature, Miami Beach commissioners had declared the area blighted and created a special "redevelopment district," in the process granting themselves the power of eminent domain, which allowed the city to seize private property. If city commissioners were enamored of Marriott's plan, they could force property owners to sell their land so the project could go forward.

For eight months city officials negotiated with Marriott and its partner in the venture, Rahn Properties of Fort Lauderdale. Administrators rejected the initial proposal, whereupon the developers reduced the scope of their project by two-thirds. But the plan finally fizzled on a humid afternoon in June 1990, as a Marriott vice president announced that the developers were unable to commit to a schedule for building the complex because they could not secure financing. While most of the players in the brief but big-time Marriott game agree that a lack of money was at the root of its demise, former Miami Beach city manager Rob Parkins says the vocal residents of South Pointe played a big part in killing the deal. "The people's objections significantly affected the ability of that deal to go forward," asserts Parkins, who left Miami Beach earlier this year to manage the affairs of Palm Springs, California.

"I was greatly relieved that the city would not try to condemn my home," recalls George Lowander, who attended the city hall meeting at which Marriott acknowledged its financial problems. Lowander moved to South Pointe from Coconut Grove more than six years ago. He bought an efficiency condominium at First Street and Collins Avenue, and liked the area so much he bought another apartment, and then the Diamond and Crystal apartment houses in the 100 block of Collins Avenue. All but one of his properties fall within the area that Marriott wanted for its resort complex.

As unrealistic as the Marriott project seems, it hasn't been the most outrageous plan ever proposed for the seaside redevelopment district. That distinction belongs to developer and Fontainebleau Hilton owner Stephen Muss, a member of the board of the redevelopment agency. Muss proposed transforming the area into a "New Venice" by bulldozing most of the 372 buildings and replacing them with 4300 hotel rooms, 2600 residential units, and 470,000 square feet of retail shops and entertainment facilities. And, of course, canals. The price tag: $1.2 billion. Not to mention the eviction of 6000 elderly residents to make room for the world-class resort that would be built atop the rubble of their homes. Fortunately for the residents, no master developer stepped forward. After a half-dozen years on the drawing board, the vision was scrapped.

By the end of 1982, fed up with the lack of progress and with the increasing ravages of time, grime, and crime, city commissioners fired the board of the Miami Beach Redevelopment Agency and appointed themselves in its place. They vowed to lift a ten-year-old moratorium on new construction and building improvements that had caused the neighborhood to deteriorate to an unprecedented degree. The following year Beach commissioners approved the South Shore Revitalization Strategy, which, despite Marriott's rude interruption, remains in effect to this day. That revision calls for boutiques and restaurants with a marine-related theme near the Miami Beach Marina on Biscayne Bay, a core of retail shops around Joe's Stone Crab restaurant on Biscayne Street, office buildings along Fifth Street, high-rise development along the waterfronts, and lower-density residential housing in the interior.

The specter of the city's power of eminent domain in South Pointe did not vanish, however. That fear still looms over Miami Beach's oldest neighborhood, which lies south of the borders of the famous Art Deco District. In the past three years commissioners have invoked their power in order to acquire private property in a three-block tract where Cobb Partners Inc. of Coral Gables intends to build town houses, and city administrators admit they might well use eminent domain again if a project requires it. Some property owners, such as Lowander, say it is this threat of condemnation and confiscation that is holding back redevelopment of their neighborhood. "It's difficult to go ahead and plan a future with condemnations staring at you," says Lowander. "It's hard to deal with."

Despite South Pointe's shaky history, it still attracts people willing to stake money on it. Artist Dana Hotchkiss, for example, purchased a run-down eight-unit apartment building at 222 Ocean Dr. for $525,000 in the spring of 1989. She spent another $50,000 to turn the place into a home for herself and her long-time companion, Fred, a gray mutt of terrier and poodle extraction. She parks her silver Mercedes convertible in a first-floor apartment that she's converted into a garage. Across a hallway is a spacious studio with white walls, a bleached parquet floor, and a view of Ocean Drive. The studio is an empty canvas for the concrete benches, small metal tables, and large abstract paintings Hotchkiss creates. Above the studio is her living quarters, with a spectacular view of Ocean Beach Park and the Atlantic Ocean just beyond. "When I bought this building," Hotchkiss says, "I had no idea what was going on in the neighborhood. I learned just before closing that I could have my property condemned and taken from me. Unlike most, I went ahead with my purchase. People told me I was crazy. But I decided to play the odds."

Developers Louis Gross and Howard Gottlieb are playing the odds, too. Along the 300 block of Meridian Avenue, they want to build eighteen three-bedroom town houses that will sell for more than $120,000 apiece. Private investors will finance the project, for which an architect is drawing up plans. Gross and Gottlieb say they expect ground breaking to take place sometime next year. The duo is not worried about the city condemning their land, Gross says, because they are building what the city wants in that location.

Four blocks away at 140 Ocean Dr., David Colby and Wilhelm Moser recently opened a restaurant next door to their remodeled Century Hotel. Further up the street, just north of Dana Hotchkiss's house, are three vacant 50-foot lots owned by the Mau Mau Corporation, whose directors are Emilio and Gloria Estefan of Miami Sound Machine. The Estefans razed two apartment buildings on the tract. Their attorney, Jorge Hernandez Torano, says his clients have no plans for developing the site at this time.

Other South Pointe gamblers include Kay Statz and his business partner, Norbert Flasch. They plan to build sixteen upscale town houses on three vacant lots at Second Street and Jefferson Avenue. Ground breaking is scheduled for early next year; preconstruction prices range from $139,000 to $169,000. When completed, the town houses will be the first new homes built in the neighborhood since the high-rise South Pointe Tower was finished in early 1988 at the tip of the island.

Statz, president of Camp Development Co., has had the city agree in writing not to condemn his property if he finishes at least one four-unit building within one year of starting construction. "We're not spending $1.8 million on this property to have the city take it away," Statz says. "I wouldn't spend a dime if the city could do that."

State law requires the city to pay "fair market value" for each property it acquires under the law of eminent domain. But unlike regular real estate deals, a person whose property has been condemned has no choice but to sell, and there's only one prospective buyer: the city. Using two appraisers, commissioners determine the "fair market value" and make an offer. If the owner rejects the offer, the city can sue, allowing a jury to decide if the proposed price is truly fair. (In an area such as South Pointe, where the city stalled development for such a long time, a "fair" price might be computed on the basis of neighboring property, whose value was equally, artificially deflated.) Should the jury determine that the property owner is entitled to significantly more than the city has offered, the city can back out of the deal entirely.

Part Two
The threat of condemnation can affect how a banker views a prospective loan, says banking expert John Zdanowicz, a finance professor and director of Florida International University's Center for Banking and Financial Institutions, which conducts research and provides training seminars for the banking industry. A loan on property subject to condemnation is riskier than most, because there is no guarantee that the borrower will receive enough money from a forced sale to pay off a bank note. "The incentive for government is to underprice, obviously," Zdanowicz says. "They're not going to pay true market value because they have the power of the state behind them to underprice."

Eminent domain and its potential for court tie-ups is risky business for the city, too. And it's expensive. In 1988 city administrators put together a large tract by condemning private property for the Cobb town-house project, a three-block chunk of real estate between First and Second streets, and Alton Road and Washington Avenue. Mel Mendelson, a former city commissioner, demanded three-million dollars to cover the cost of relocating his 5000-square-foot meat packing plant, which stood at 833 First St. The city offered him $669,000, the highest of two independent appraisals. Mendelson hired eminent-domain attorney Toby Price Brigham and went to court. Both parties eventually settled at $1.2 million. But after three years city administrators still need to agree on deals for the purchase of eleven of the 23 properties required for the Cobb project. All those cases will most likely be decided in court.

So far the city has spent more than five million dollars in land acquisition, relocation costs, and fees for lawyers and consultants for the Cobb project. They've got another $1.65 million if needed, says Bill Harrison, deputy director of the redevelopment agency. Cobb, in turn, will pay the city only $4.6 million, a price it negotiated before the condemnation process began. "Because of the cost of litigation involved in condemnation, where the [city] pays attorney costs on both sides plus all consultant fees, the days of large-tract acquisition are behind us," Harrison says. "After the dust clears, the only people who will come out of this making a lot of money are the lawyers."

Regardless of whether commissioners wield the power, eminent domain in South Pointe means the area remains designated as a redevelopment district. And that designation translates into increased options for city funding. According to Carla Talarico, who took over as acting city manager when Rob Parkins left town, the financially strapped city needs to maintain that designation to keep open the option of financing future development. Seven-million dollars in tax-increment revenue bonds were sold to cover the cost of acquiring the Cobb tract, says Talarico, and funds for repaying those millions are available only as long as the redevelopment agency exists. Tax-increment financing, which is based on the assumption that property taxes will rise as redevelopment occurs, allows city and county property-tax money to be earmarked to pay off specific bond issues. Talarico says the city administration will ask the state legislature in the 1992 session to extend the life of South Pointe's designation as a redevelopment district for ten years beyond its current expiration date of 2003.

Assistant City Manager Stuart Rogel asserts that with county, federal, and state monies dwindling, the city must hold on to all the authority it possibly can. "The only thing available is the redevelopment authority," he argues. "The real estate market is terrible. We just need to learn our lessons on South Pointe, which are many. We don't give enough incentives for small development, and we are looking at that. One of the things we learned is that having eminent-domain powers throughout an entire redevelopment area casts too much of a cloud on the ability to develop. We have to be more specific on what sites we are going to pursue eminent domain."

South Pointe Association president Tamra Sheffman doesn't take much comfort in Rogel's assessment or in Bill Harrison's assurance that the city is unlikely to grab any more big chunks of land. Her board of directors wants commissioners to ban all condemnation that benefits private developers. "Hearing that the city might not do more large-scale condemnations doesn't make me feel any better," says Sheffman. "I don't believe it. The redevelopment agency is in place and it can be called on to be used."

In November, after a typically contentious election campaign, Miami Beach voters brought many new faces into city hall, and with them some changes in attitude. Among the new commissioners only one - Sy Eisenberg - feels the status quo is fine as far as South Pointe is concerned. The two incumbents, Martin Shapiro and Abe Resnick, have said the city should restrain its impulse to invoke eminent domain. Mayor Seymour Gelber, who campaigned on a platform of chasing special interests out of city hall, is even more firm in his conviction. "I'm opposed to the menace of eminent domain," he says. Newly elected commissioner Neisen Kasdin observes, "It's finally sunk in that the restrictions on small-scale development were counterproductive. South Beach began to come back with small-scale development and rehabilitation, and the city failed to recognize that South Pointe was the same market. The forces driving change north of Sixth Street should be given free rein south of Sixth Street."

This past week the commission asked city administrators for options regarding how best to deal with South Pointe and the problems of its redevelopment designation. A discussion of the issues is scheduled for early January.

The commission's new perspective has led many South Pointe residents and small developers to believe their situation might improve. "What I can't figure out is that it took so long to realize what's going on in the neighborhood," says developer Kay Statz, who has undertaken renovations all over South Beach. "Everything that has happened to this point in South Beach has been because of private incentives. But it's not because the city was smart enough to help these people. On the contrary, they did everything to stop them. Now the city is waking up, after they started making tremendous revenue from the sales tax."

When an update of the eight-year-old revitalization strategy is completed next spring, a series of meetings will be held to solicit public comment. "That plan was written at a different time, in the real estate market," Assistant City Manager Stuart Rogel says. "It now requires a look to see what has worked and what hasn't. Conditions have changed. We need to see what techniques and strategies should be used to encourage redevelopment." Rogel adds that the update most likely will limit condemnation to certain areas.

Aside from the threat of losing their property, South Pointe inhabitants have reason to fear an onslaught of high-rise architecture. To date, only the luxurious 24-story condos of South Pointe Tower, and Alton Road's thirteen-story pair of Rebecca Towers, which provides subsidized housing for the elderly, loom skyward. A grand scheme in its own right, the South Pointe Towers project realized only a fraction of its blueprinted hotel/residential promise before sliding into bankruptcy. The fate of the still-undeveloped land from the aborted project will be decided by a federal judge. More than likely, high-rises will go up at the tip of the beach.

For one thing, the city's current zoning code places no height restrictions along the waterfront. And for another, the economics of development encourages high-rises along the water. Because waterfront land is more expensive than inland property, a tall structure stands to bring in more money than a small one, unless tax or other artificial incentives are added to skew the equation. Additional sky-scraping towers are likely to be built on fourteen acres of bayside property along Alton Road, a by-product of the ill-fated "New Venice" plan that the city offered to South Shore Developers Inc. after a court battle five years ago. Another strategic triangle of waterfront land lies just west of South Pointe Park. Some of the vacant 5.5-acre site is in public hands (the city and the housing authority), the rest is privately owned by a group of Alaskan investors. All of it is prime high-rise property.

In fact, says Carla Talarico, the only waterfront in South Pointe that might be spared the ascent of massive towers is Ocean Drive north of Penrod's Beach Club. Planners will consider that idea in their update of the redevelopment plan, she adds.

Critics fear the seemingly inevitable big-time waterfront development will effectively wall off the ocean and bay from the rest of the neighborhood, creating a claustrophobic clone of West Avenue or the concrete canyon of upper Collins Avenue. "The area shouldn't be plasticized with high-rises," says attorney Toby Brigham. "That would destroy its character. There are plenty of other places where that kind of development can go." Tamra Sheffman, president of the South Pointe Association, suggests that planners wouldn't have to look far: "I would like to see high-rise in the middle and low-rise on the ocean, so people in the middle could still see what is happening all around them."

As far as the neighborhood's historic aura is concerned, much already seems destined to be lost. Which is a shame. The creative energy of South Beach's Art Deco buildings didn't disappear south of Sixth Street, preservationist Nancy Liebman says. Small buildings with Art Deco features went up along the lower end of Ocean Drive and throughout South Pointe. Some gems still stand, such as the Century and Nemo hotels, but many others, such as the Corsair Hotel at the foot of Ocean Drive, have already fallen victim to the wrecking ball. "As in the Art Deco District, it is the collection of buildings that's important," stresses Liebman, the executive director of the Miami Design Preservation League, which successfully fought to have South Beach's historic district listed on the National Register of Historic Places. "That's why even the Century Hotel wouldn't stand on its own. It just happens to resemble everything that is uptown in the Deco district. The context has been lost."

Part Three
University of Miami professor Aristides Millas - an architect, preservationist, and urban planner - worries about protecting the historic buildings that remain in the neighborhood. "The problem with South Beach is you can't have preservation on one side of the street and `anything goes' on the other side," says Millas. "You have to be sensitive to this historic area, which contains some of the city's oldest buildings. It's where the history of Miami Beach began, and there has been no attempt to save any of it. I've always been mystified about why the city wants to continue the redevelopment designation. As long as that redevelopment agency stays in, they'll try to put deals together and really destroy the fabric of the neighborhood.

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