By Sabrina Rodriguez
By Michael E. Miller
By Carlos Suarez De Jesus
By Luther Campbell
By Kyle Munzenrieder
By Sabrina Rodriguez
By Trevor Bach
By Kyle Munzenrieder
I knew it was going to be a good day when I arrived at 7:30 in the morning to find several hundred people already waiting in line, and the doors weren't scheduled to open until 10:00," says Russell Galbut, managing director of South Florida's most prolific condo company. "It was an absolutely amazing day!"
At this slightly less frenetic juncture, Galbut is reflecting on the glory of Crescent Heights's most recent grand opening. Part yard sale, part gold rush, the February 20 event lured more than 1500 potential purchasers through the sliding-glass doors of the 334-unit Ocean Pavilion, on the 5600 block of Collins Avenue in Miami Beach. "We had a huge, huge, huge, huge turnout!" crows Galbut, erupting into verbal italics. "It was a thrill of a lifetime."
Only the sleepiest South Floridians weren't aware of the Ocean Pavilion's auspicious Crescent Heights debut. In the days prior to the sale, the company unleashed a torrent of advertising, from newspaper and radio ads to 30-second TV spots and 30-minute infomercials. Banners and signs ("CONDOS FROM $79,900"; "ONE GRAND OPENING $1000") beckoned from the building's pizza-orange faaade; American and Crescent Heights corporate flags wafted in the breeze; a small plane was sent aloft to announce the event from higher altitudes. Galbut says the bill for advertising totaled $480,000.
By early afternoon it was like a carnival. A mime in silver body paint provided live entertainment. A half-dozen television sets blared the current Crescent Heights infomercial through the lobby. Free Coca-Cola flowed for all. The parking lot was filled to capacity, so new arrivals pulled directly onto the sidewalk or simply stopped in the traffic lanes of Collins Avenue. Sales staffers shuttled packs of prospective buyers up and down the elevators to view the one- and two-bedroom apartments. And like ants to a picnic, TV news crews gathered to record the spectacle for posterity. "The ocean apparently still attracts buyers, buyers by the thousands!" Channel 10's Su Keenan prattled. Stumbling over her words, the WPLG-TV reporter was so overwhelmed by the moment that she geographically misplaced the Ocean Pavilion. "It certainly is an occasion that people are still excited about buying property," she opined, "and that's good news for all of South Beach."
By the end of that sun-blessed Sunday, Russell Galbut and his Crescent Heights cohorts had collected refundable $1000 deposits on every single apartment in the oceanfront edifice, a piece of property the company had purchased only a month earlier. Waiting lists for some units ran four deep. Galbut expects official sales to begin within a few weeks, after the State of Florida approves the conversion to condos.
"It was an absolutely amazing day!" reiterates the 41-year-old Galbut, putting a final exclamation point on his recollection. A husky man of medium height, he pushes a chair out from behind his fat crescent of a desk and plops himself down with a jolly, if slightly contrived, laugh. Dozens of framed objects A paintings, photographs, civic awards and commemorations, newspaper articles A rest on the floor, waiting to be mounted on the walls of his office off the Ocean Pavilion's lobby. Until a few days ago, Galbut's base of operations was the Decoplage, a Crescent Heights development at the east end of Lincoln Road. But as he has done in the past, Galbut has followed the company to its current hot spot. "I like to have more of a hands-on approach," he explains. "I don't want to take my foot off the gas pedal."
Indeed, this is a rare sedentary moment in the life of a man who seems to be in perpetual motion. Even while seated, Galbut is restless and tense, crossing and uncrossing his legs, leaning on one elbow against his desk, pushing forward with both elbows on his thighs, then pressing back into the cushion of his swivel chair.
As did the Miami Beach development pioneers who plied the art of land-selling as dream-making, Galbut and partners Bruce Menin (his cousin) and Sonny Kahn earn their daily bread with hype A and volume. Since 1989, when the company purchased its first building in South Florida, Crescent Heights has become a real estate juggernaut, snapping up inexpensive rental properties and hotels from South Beach to Hollywood and transforming them into inexpensive condominiums. Dangling the time-honored lure of sun and fun, trading on the current hipness of Miami Beach, and employing a massive international advertising machine, the three entrepreneurs have seduced thousands of buyers to their doorstep and shot to the top of local real estate rankings. Last year alone, according to the Miami-based Appraisal & Real Estate Economics Associates (AREEA), Crescent Heights sold 1018 units for a total of $83,205,600 A more than any other condominium developer in South Florida. (Ugo Columbo, the second-ranking developer, sold 120 units for a total of $59,522,500.) Among the top 40 condominium developers ranked by AREEA, Crescent Heights is the only conversion specialist; the rest are in the business of new construction. The Decoplage won South Florida Business Journal's 1993 Renovation and Rehabilitation Project of the Year Award; that building's 650 units sold out in a little more than a year, a remarkably short time by real estate standards. In January, at the grand opening of the Continental at 4000 Collins Ave., the Crescent Heights staff took reservations for all the units in a single day. (To borrow from Russell Galbut's hyperbole, the Continental's waiting list ranged several dozen deep.) Galbut says he expects both the Continental and the Ocean Pavilion to sell out officially within two months, after the state approves the conversions.
Crescent Heights's director stresses that his professional drive, and his partners,' stems from a devotion to the public good. Both he and Bruce Menin were born and raised in Miami Beach, he says, and they are proud of the contributions Crescent Heights has been able to make in the form of capital improvements and augmentation of the municipal tax base. "We've been advertising and promoting this city now for well in excess of five years," notes Galbut. "I don't do it for the money; I do it because I have real pride in what I do. I love what I do," he proclaims as his speech surfs away on a wave of selfless boosterism. "I like to consider myself a businessman but also a man of conscience, and I believe that we all have the ability in ourselves for greatness, and the only way to find it is to work hard and constantly strive to better ourselves. And I love this city very much. Miami Beach has always been close to our heart and soul."
Behind the veneer of provincial loyalty, though, is a blisteringly aggressive company that has pursued its agenda relentlessly and, critics say, with an arrogance that puts Miami Beach's founding fathers to shame. Several Miami Beach commissioners are worried that all the new buyers snapping up refurbished Crescent Heights units are displacing an equal number of previous residents, many of whom are elderly, unable or unwilling to buy. Further, some fear that the immensity of the company's financial presence translates into smooth sailing at City Hall, and that the civic and political clout wielded by the three men who run the real estate empire constitutes a threat to the community.
In the world of Crescent Heights A at least that world conveyed in the company's 30-minute infomercials A there isn't a gray hair in sight. Life is all about luxuriating on the beach, or skimming over the Atlantic in a sailboat, or dancing until dawn. In Crescent Heights-ville ("The Good Life Capital") nobody seems to work, and the operative currency is boobs and biceps, preferably tanned. The infomercial, not accidentally, opens with a fuzzy, close-camera shot of bikinied breasts.
This hyped sense of youthfulness and vigor pervades the entire organization. "I think it comes in large measure from the personalities of Russell, Sonny, and myself," says 31-year-old chief operating officer Bruce Menin. A tall, edgy, fast-talking Harvard grad who holds a law degree from Northwestern and a master's in economics from a university in Australia, Menin was working as a lawyer on Wall Street when Galbut and Kahn, the company's president, invited him to join their venture in 1990. "I love working with these guys," says Menin. "They are extremely high-energy. We're very driven, achievement-oriented people."
Both Menin and his cousin Galbut lace their vocabulary with snappy buzzwords and maxims meant to underscore the company's spirit and work ethic. Do It Right the First Time. Groups Make Better Decisions. Lead, Follow, or Get Out of the Way. KISS: Keep It Simple, Stupid. ("My father taught me this one," says Galbut. "It means to keep something simple so even a stupid person can understand it.") At all times Crescent Heights employees are within easy reach of a transcript of their official mission statement, which reads: "We are committed to work as a group, to improve our company in an organized, energetic manner, committed to respect our fellow employees, listening patiently to input, taking consensus of issues with a value concept of honesty, trust, and a never-ending burning desire to be everything we can be."
This cultivated sense of community and Brady Bunch-style harmony, further promulgated by a quarterly company newsletter, has filtered down through the hierarchy to the peppy young sales staff and even to the construction crews. Everyone in the organization wears a shiny Crescent Heights nameplate. "We have every beautiful person that God created in this organization, from Jew to Christian to Moslem, so it seems we have a real family," Galbut asserts. "And there's pride in being a member of the family, because everybody knows that there's only one goal, there's no hidden agendas. We're interested in only one thing, and that's to provide the best quality of service to our customers. And in doing so we make more money for ourselves, more money for our company."
Genetic material also binds the organization. Not only are Menin and Galbut related, but other members of the Galbut-Menin clan work together at a family law firm (Galbut, Galbut, Menin & Wasserman), which does all of Crescent Heights's acquisition work and some of its contracts and litigation. In addition, an insurance company owned by Miami Beach Commissioner Sy Eisenberg (Galbut's father-in-law) handles some of Crescent Heights's policies. In all, Russell Galbut oversees about 30 family-owned companies, including a home health-care agency, a nursing home, several adult congregate living facilities, a vehicle tag agency, a firm that delivers durable medical equipment, and a western clothing store (from which come the cowboy boots and belts that are indispensable to Galbut's wardrobe).
Crescent Heights has its roots in a Galbut family whose local history is interwoven with the city's. The patriarch, Abraham Al "Albee" Galbut, came to Miami Beach from the Catskills in the Thirties and opened a 24-hour drugstore-restaurant at Fifth Street and Washington Avenue. "He was known as the Mayor of Fifth Street," says Russell Galbut. "The restaurant was the center of the universe. The mayor, commissioners, the police chief all went there."
Of Albee's children, Hyman acquired the highest profile in the City of Miami Beach, founding a law firm and serving for a time as city commissioner. His four children, all sons, inherited his ambitiousness and, after attending universities in the northeast, all returned to their hometown: two are now doctors at Miami Heart Institute, a third heads the law offices.
Russell Galbut earned an undergraduate degree in hotel management from Cornell University and a law degree from the University of Miami. While still in law school, he got involved in the construction industry and contracted his first building in 1976; the single-story brick structure at the corner of Washington Avenue and Tenth Street houses the family's law firm. He also began developing shopping centers, office buildings, and new condominiums. When interest rates soared in the early Eighties, Galbut switched to the construction of nursing homes and adult congregate facilities, ventures that weren't as dependent on low interest rates. During the late Eighties, the Galbuts owned hundreds of rental apartments in Houston and New Orleans, units which they have since sold.
In 1989 Galbut met Sonny Kahn, who was converting condominiums in Southern California. Kahn had emigrated from Israel to Los Angeles in 1972. There, he says, his first jobs included driving a cab and repairing cars. In the early Eighties he founded Crescent Heights and developed a few residential projects, including the refurbished Granville Hotel in West Hollywood.
The Carriage rental properties (Carriage Club North, Carriage Club South, and Carriage House) between 50th and 55th streets on Collins Avenue brought Galbut and Kahn together. Since then their projects have included the conversion of apartment buildings and hotels into condominiums and condominium-hotels. In some cases, such as the Decoplage, the conversions have required near-total renovations, from the replacement of roofs, plumbing, and electrical wiring all the way down to details such as elevator buttons. "I sometimes say ours has been a bigger challenge because we're given the worst stuff to work with in a way," comments Menin, who describes the Decoplage and the Hampton (on Washington Avenue on South Beach) as "ugly" buildings. In other cases, such as the Ocean Pavilion and the nearby Alexander, Crescent Heights has acquired structures in good enough shape to sell without much renovation. Regardless of a building's quality, Menin says, the company always sells units "as is"; buyers are encouraged to hire the developer's subcontractors to renovate their units, at an additional cost.
In all Crescent Heights has converted fifteen properties, fourteen in Dade and one in Hollywood. Total units sold since 1989: approximately 4000. Increase in the number of Crescent Heights employees: 70 (1989) to 700 (today). Gross revenue since 1989: $260,477,300.
Russell Galbut emphasizes that his company's "buy low, sell low" strategy is a major success factor. Several Crescent Heights buildings A the Alexander at 5225 Collins Avenue, for instance, and the Decoplage A were in foreclosure when the partners purchased them. The Alexander was purchased for $30 million, about $50 million below what it was worth, says Galbut.
These bargains are reflected in the condominiums' asking prices, among the lowest available for seaside property in Miami. According to marketing director Brian Duchman, Crescent Heights prices average between $125 and $150 per square foot. "This is reasonable, but not a killer deal," comments David Dabby, senior vice president of AREEA. The range, Dabby says, is comparable to other older buildings along Collins and significantly lower than the cost of new beachfront luxury construction, which goes for $175 per square foot and up.
In addition to their prices, Crescent Heights executives highlight their "one-stop shopping" concept: not only will the company sell the condominium, but it will arrange financing and renovation of individual units. The company also offers to manage units for owners who want to be absentee landlords. The full-service mentality, the developers point out, is particularly convenient for the out-of-town or foreign buyer. Menin estimates that this contingent accounts for about twenty percent of the company's sales. Most buyers, he adds, are looking for an investment and use the condominiums as weekend or vacation homes. A majority enroll in the rental program.
"It's very hard for anybody to compete with us," says Russell Galbut. "Just our telemarketing team consists of 50 employees." The company also has enlisted (for free) the help of several South Florida personalities, such as Capital Bank chairman Abel Holtz and modeling executive Irene Marie, to give videotaped testimonies about the joys of doing business and living in Miami. Sonny Kahn says Crescent Heights has spent hundreds of thousands of dollars doing direct marketing in Latin America -- television commercials mostly -- but has found local marketing more effective. ("We've found the best way to hook them is when they're here," offers marketing director Brian Duchman.)
Financing has been provided by several banks, including Home Savings Bank and Holtz's Capital Bank, on whose board of directors Russell Galbut sits. (According to Kahn, Crescent Heights's relationship with Capital Bank goes back to the Eighties and California, where Capital helped finance several of Kahn's projects.) AREEA's David Dabby points out that not only has this arrangement benefitted the developer, but it has also been a "good deal," as he puts it, for the banks, which can finance the property acquisitions in bulk and potentially participate in individual mortgages.
"The next couple of years look pretty good for them," predicts Dabby. "As long as the real estate market is expanding, they'll probably do okay." For his part, Kahn says he's surprised he's stayed in Miami as long as he has; business has been good. However, he adds in a rare unglossy Crescent Heights moment, "I hate to be telling people Miami Beach will go down, but...." Kahn pauses. "Anybody who's buying today below $150,000, it makes sense," he continues. "But those paying $150,000 or above A I wouldn't want to be in their shoes." While he doesn't want to predict if and when the bottom will fall out of the Miami Beach real estate market, he says the area is following a pattern similar to Los Angeles, where the market eventually collapsed under too much construction.
Such negative vibrations have not stopped Crescent Heights from eyeing other buildings on the Beach: The company's most recent acquisition (February) was the $5,950,000 Casablanca Hotel & Apartments at 6345 Collins Ave. Menin says he and his partners are constantly on the prowl for potential purchases. Crescent Heights has also begun studying future buys in New York, Atlanta, and Phoenix.
With their rise as real estate kings, Galbut and Menin have become active community players as well as the designated company barkers. (Kahn has remained in the shadows, assiduously avoiding the media and developing a reputation for privacy. He did, however, reluctantly consent to a brief phone interview for this story.) Among their municipal posts, Galbut sat on Miami Beach's Zoning Board of Adjustment for twelve years; Menin is currently a member of the board. "I'm proud of what we've accomplished and I got to do it in my own hometown," Menin says. "This community enabled me to go to a place like Harvard, see the world, and come back. I'm honored."
The company chiefs and their families have also opened their wallets for numerous local causes; Menin is quick to boast that by his reckoning, the Galbut family enterprises are the largest local benefactors of Jewish enterprises in Miami Beach and abroad. Although the staff of the organization isn't predominantly Jewish, Crescent Heights does seem to cloak itself in a veil of Jewish piety. When Lubavitcher Rebbe Menachem Mendel Schneerson suffered a stroke last month, says Brian Duchman, Crescent Heights honchos circulated a memo inviting all employees to cut short their workday and attend a prayer session at a shul located in the Carriage House. In the freshly sanded doorway of the new sales offices attached to the lobby of the Ocean Pavilion, mezuzahs have been mounted. Company administrators also repeatedly boast that they close on Saturdays A which, they never fail to note, is the busiest real estate day of the week. "It's a company of principles, of values," asserts Menin. "Not being open on Saturdays shows we're willing to make a commitment to something that's more important than money."
If anyone knows the potential of the company's clout, it is Miami Beach Commissioner Nancy Liebman. In this past November's commission race, Crescent Heights threw its weight behind Liebman's opponent, Mike Karpel, and even though Liebman prevailed, she's still smarting from the contest. She says she was alarmed on election day to see throngs of Crescent Heights staffers gathered at polling places to campaign for Karpel. "When we asked them why they were at the polls, they told me that if I won, Crescent Heights would be out of business," recalls Liebman, who has an extensive resume as a preservationist. "They were scared I was going to stop 'progress.' The most inspirational part of the victory was that I had defeated that machine."
"Tremendous volunteers," Galbut declares. "And I'll tell you why: Crescent Heights is a family. It's really a family. Yeah, we fight within the family. But when it comes right down to it, we're one big family. The effort these people put forth because they felt it was for the family was incredible.
"We supported Mike because we need to have someone we felt was intelligent when it came to financial responsibility for the tax dollars that are collected," Galbut says, adding that the Karpel campaign was just a warm-up for Crescent Heights's involvement in the next commission race. "We were not as vocal or as visible as we'll be in the next election," he promises. "We'll be out there very strongly, I'll guarantee you that."
"We have two words for Crescent Heights's conduct: arrogant and abusive." Irving, an 87-year-old retired attorney, sits slumped in his wheelchair in an unused lounge at the Ocean Pavilion. In this room overlooking the expansive pool deck and boardwalk behind the building, a group of longtime residents, all of them elderly Jewish men, gather every afternoon to kibbitz. These days Crescent Heights is a main topic of conversation, though not one that gives the men a whole lot of pleasure. "We were a very happy building until one day we got a notice that [former owner Mitchell] Taylor had sold the building to Crescent Heights," says Irving, an articulate man with a gentle voice gone gravelly with age. He lifts his head slightly and squints through his thick glasses. "They've destroyed the morale in this building."
The comment is affirmed with nods and harrumphs from the seven men who have pulled their chairs into a discussion-group oval. ("For fear of retribution," none of the men wanted their names used in this article. Only Irving was willing to go public under his first name.) Most of the Ocean Pavilion's current residents are elderly; several of these men have lived in the 23-year-old building since the early Seventies.
"They took away our card room," Irving says ruefully. "They took away our social world." As part of the company's renovations, he explains, Crescent Heights cordoned off a conference room the men had used as a meeting place, forcing them to relocate to their present location. The men grumble about other disruptions to their lives, particularly the noise and constant commotion in the lobby, not to mention the grand opening celebration. "It was like a circus," snaps a stern-faced man in a baby-blue tennis hat and matching trousers. "The people were queuing up like it was the hit picture show showing for free."
All these hassles, the residents admit, are minor inconveniences next to the biggest dilemma they now face. With the Ocean Pavilion's imminent condo-ization, they must now decide whether they'd rather buy their units or move out. A big outlay of capital at such a late age doesn't make great business sense, the men agree. But to relocate is difficult for anyone, particularly an elderly person. While nearly all the men say they will buy their units A it's the path of least resistance A they maintain that purchasing is not a viable option for many other residents, who scrape by on interest from savings and don't have any money to spare.
Under Florida law, residents of a building undergoing a conversion may agree to buy at a price set by the developer, before the unit is put up for sale. If they refuse, those who have lived in the unit for more than six months may stay for the duration of their lease or nine months, whichever is longer. (Newer residents get only a six-month extension.) But Irving and his friends are suspicious that Crescent Heights is not acting in good faith and that the company simply wants to clear out the old to make room for the new. A few tell of how Crescent Heights sales employees quoted them several different prices on the same unit. "A lot of people in the building will pay the increased price because they don't want to indulge in the negotiations," says Irving.
These men, and the hundreds of other elderly Beach residents who have been caught in the Crescent Heights machinery, have the ear of Miami Beach Commissioner Nancy Liebman, which seems to function these days like a radar dish for Galbut-related news. "I have the concern that they're bringing in second-home vacationers, not the kind of people who are going to be involved in the Beach," Liebman says of Crescent Heights. "The saddest part of the whole picture is that we'll never have that recognizable element we had in the Sixties and Seventies: the old people. There are no more aluminum chairs. We worked very hard to create what Miami Beach is today and now, I guess, we're facing the realities of success."
"The reality is that nothing ever stays the same forever," Russell Galbut counters. "Nothing forces anybody out. Tenants have the right of first refusal, they have the right to buy their apartment for the lowest price." Galbut says the company has never violated its statutory obligations to existing tenants and any misquotes of price may have been a misunderstanding because prices were upped after the Ocean Pavilion's one-day grand opening sale. (He offered to review the individual case files if the men were willing to give their names.) "There's nothing we won't do to make a current tenant happy. But the reality is there are people who have a philosophy of rental that will never change. That's the way they were inbred, and all they're interested in is renting. So we find buyers."
Most of those buyers, Galbut admits, are in the 30-to-55 age group. "We've brought in a much more international, cosmopolitan group of residents from Europe and South America and we've brought in some very well-known stars," he insists, though he refuses to supply the names of any luminaries who have invested. He says that in the apartment buildings Crescent Heights has converted, about ten percent of the residents buy their units; the figure is closer to twenty percent in the Ocean Pavilion.
Beyond the changing demographics, Liebman and other officials have voiced their concern about the effect that condo conversions are having on the supply of hotel rooms in the city. Two years ago Commissioner Neisen Kasdin suggested slowing down the conversion process by seeking an increase in minimum size for a living unit. (Under current zoning laws, a new apartment must have a floor area of at least 550 square feet if it is to contain a full kitchen and be technically considered a living unit. A rehabilitated property, such as a condo conversion, must have a floor area of at least 400 square feet.) "The point of my proposal was to prevent conversion of hotel rooms into apartments," Kasdin says, "to keep the hotel stock up and to prevent the creation of undersized living units, thereby preventing slum conditions. Typically a slum comes about with undersized units. Apartments get subdivided, more people cram into smaller units, and an area becomes less desirable."
Crescent Heights's high-gloss advertising program tends to obscure the bare realities of the product being offered. Aside from the top-end units, this is essentially fast-food real estate: quick, inexpensive fare, and marginally nutritious. When its units were on the market, the Alexander offered commodious two-bedroom, 1200-square-foot condos for about $250,000 apiece. Slightly larger two-bedroom "townhomes" at the Castle Beach Club at 5445 Collins Ave. are priced up to $275,000 and offer tennis and volleyball courts, a pool, and a jacuzzi. But many of the company's properties comprise tiny units that would barely be habitable on a full-time basis. Studios at the Continental, for instance, begin at $33,900 and range upward to $53,900. These units range in size between 220 and 275 square feet, legally not large enough for a kitchen A not physically big enough, in fact, for much more than a folding futon, a chair, and a table. Studios at the Mantell cost between $36,000 and $51,000 and comprise less than 400 square feet. Though the building has a pool, it offers no parking.
"Did you ever read Thomas Hobbes's Leviathan, when he says people are 'nasty, brutish, and short'?" asks Bruce Menin, offering an interesting interpretation of the English philosopher's description of life (not people) in the absence of a social contract. "It's been a learning experience for me that when you're a large target, people like to throw large stones." Menin is responding to the allegation, frequently leveled by critics and competitors, that Crescent Heights receives favorable treatment from the City of Miami Beach, a charge Galbut and Menin deny.
"I find the city almost impossible to deal with at times," Galbut says, and he goes further, accusing the current commission of offering poor public leadership in the realm of business. "It concerns me when we don't have professional businesspeople elected to the commission. When you bring new commissioners on-board who lack any business experience, any prior public service experience because they don't have a basic understanding of how government works, it slows the whole process down." When pressed for specifics, Galbut declines. "There's no sense," he responds. "I believe in always using energy for the positive purposes rather than for the negative."
A deal Crescent Heights and the City of Miami Beach struck last year raised some eyebrows. The arrangement called for the Decoplage and the Di Lido Hotel, which sit on opposite sides of Lincoln Road where it dead-ends at the Atlantic, to surrender to the city privately held land that blocked public access to the beach. In return, the city would spend up to $450,000 redesigning and rebuilding the block. With a more attractive streetscape and newfound pedestrian traffic, Crescent Heights would be in a position to develop potentially profitable commercial properties along the right-of-way. Some observers say the transformation of a dead end into a commercial thoroughfare with shops and sidewalk cafes is bound to result in a windfall for the company. In addition, the deal calls for the street to be elevated slightly, giving the Decoplage and the Di Lido room to expand their underground garages.
Menin says he still questions whether the deal was good for Crescent Heights at all. "We're losing our private cul-de-sac," he says, adding that the city had plans to open the street in any case, even if it meant purchasing the right of way. (City officials say such a purchase probably would have cost more than $450,000 in attorneys' fees alone, and that as it stands, the arrangement sped up the process.)
While the city's building department records for several Crescent Heights projects don't reveal a company that flagrantly skirts the law, the developers do have a history of thumbing their corporate nose at certain city codes, especially those that deal with signage. Last year Crescent Heights created a brief public uproar when it made an advance payment of $10,000 to a city account to cover anticipated fines against its buildings, specifically the Decoplage, where the developers routinely hung illegal banners and streamers promoting sales. The city had cited several other Crescent Heights buildings for similar violations. Cities typically collect fines by filing liens that must be settled before a property is sold, or when the city forecloses on the liens. The Crescent Heights account was intended to allow Miami Beach to pay itself as fines accumulated. "It's one of the soundest things I've done as a business attorney, which turned out to be perceived as a horrible thing," says Laurence Feingold, Miami Beach's city attorney. "It was perceived as condoning, so we abandoned it."
Galbut complains that his company is scrutinized more closely than smaller businesses that get away without paying all the requisite city fees. "There is nobody, nobody, no other developer in the history of Miami Beach who has paid the kind of fees we've paid," he exclaims. "But you go out there today, no one else has permits for their banners. I'm not telling you a single name, but there's virtually no other developer who is in compliance with the ordinance. Do I think there's a double standard? Yes. Am I complaining about it? No. I'm a big boy."
While he concedes that dozens of other businesses commit violations, Paul Gioia, Miami Beach's building department director, denies that he treats Crescent Heights harshly; it simply boils down to volume. "If you have zero properties, I won't go after you," Gioia says. "But if you have 3700 properties, I'll go after you probably 3700 times more than the other guy."
The issue was again elevated to a matter of public debate when Nancy Liebman complained at a March commission meeting that the city wasn't doing enough to stop repeat code violators. Liebman was particularly incensed about Crescent Heights's behavior during the Ocean Pavilion's grand opening; the commissioner says she was deluged with phone calls from residents along Collins Avenue who complained about the commotion and the parking problems. In addition, she says, two banners were strung between the building and a public utility pole without city approval. Liebman notified Assistant City Manager Eddie Cox and Gioia, who investigated and cited the Ocean Pavilion for the illegal banners. The fine totaled $250.
Technically the violation at the Ocean Pavilion did not constitute a repeat offense, even though Crescent Heights has been cited for sign violations at several of its buildings. Because each property operates under a different corporate name, violations at one building only affect that building, and penalties are negligible compared to the economic gains that result from infractions such as improper signage. Liebman argued that the city should toughen its codes.
Russell Galbut says he suspects Liebman is bitter that he supported her opponent in last November's commission race. "She wasted $1000 of city time and money calling up every inspector and bringing them in," he sputters, his cheery demeanor giving way to a glare. "Her vindictiveness and attempted acts of intimidation and extortion and all these other things are such ugly tactics. Someone like this doesn't last very long.
"Again, I don't want to be negative," Galbut continues, attempting to nudge the conversation's tack back to "the positive," as he puts it. "But all this is just total nonsense. Everything was so beautiful and so positive. One of the reasons Miami Beach is successful today and really turned the corner is the tax base increased almost $700 million in the last six to seven years. Everybody may have paid a little piece of that $700 million, but well over $250 million came about from one developer, and one developer only, okay? That was Crescent Heights.
"We want to leave a mark on this community and do something we're proud of," Galbut concludes.
No one would argue that Crescent Heights hasn't accomplished the first objective, at least.