Overpriced, Underdone, and Left Behind

That would be the Courts at South Beach, the taxpayer-supported project that was supposed to rejuvenate South Pointe

Miami Beach's South Pointe neighborhood, the area below Fifth Street, has really taken off. The Portofino group of companies headed by German bad boy Thomas Kramer is fulfilling its vision of towering condominium projects lining some of the most pricey waterfront real estate in Florida. Renowned architect Helmut Jahn has designed three more giant glass towers that would be plopped down along the beach near South Pointe Park. The city marina has been spiffed up and now features two restaurants and an upscale market. Fancy restaurants and nightclubs have opened and prospered.

But the Courts at South Beach languishes. The much ballyhooed project, born a decade ago with millions of dollars in public money and with the ambitious goal of sparking the rejuvenation of South Pointe, now settles into the shadows of the rising developments surrounding it. More accurately, those shadows are falling on the crabgrass and steel rebars of the development's largely desolate construction pit.

"The city took a bath on that one," says then-Miami Beach Mayor Seymour Gelber, speaking two weeks ago on his last day in office. "The Courts were once the thing on the southern end. They had a big-time developer at that time, and the commission was fortunate, they felt, in getting them to come down and do it in this area. Then everything [in South Pointe] started to jump. They are no longer the prime project. Now they are just another building project down there."

South Pointe real estate was not always so tantalizing. Back in 1973, as the entire city descended into record-setting levels of poverty, Beach officials felt compelled to take drastic steps to spur development. With state approval, they designated South Pointe a formal redevelopment district, a change that brought with it a decadelong building moratorium, creation of a special taxing district, new zoning to allow large projects, and most important, an extraordinary city-planning tool: eminent domain, the right to seize private property.

With these new powers in place, Beach leaders considered razing the entire neighborhood and carving from the rubble a network of canals. While officials clung to their Venetian dream despite sky-high interest rates (and many other problems), little investment was made in the neighborhood -- not by the city and not by private parties, who feared their property could be seized at any time.

"I have the view that when the city commission became, in essence, the developer, all development ceased," offers Toby Brigham, a Miami attorney who specializes in eminent domain issues and who represented several South Pointe property owners. "What has taken place in South Pointe has occurred despite the redevelopment project and would have occurred without it."

After the grandiose canal plan died in 1981, officials explored other projects. By condemning a few blocks of property and selling them to a developer at an attractively low price, the city hoped new construction would spur other, private investment.

Eventually city leaders seized land between between First and Second streets and Alton Road and Washington Avenue. The intended project, as stated in the city's initial request for proposals, would be "affordable and secure ownership housing to residents," with townhouses selling for as little as $73,000. But the city soon revised its specifications to permit higher-end development. The winning proposal, submitted by Cobb Partners of Coral Gables, called for the Courts at South Beach to comprise more than 300 Mediterranean-flavor townhouses and shops built around courtyards and piazzas. The cost of a three-bedroom Cobb townhouse: $350,000.

Chuck Cobb, the respected former chief executive of Arvida (as well as a former ambassador to Iceland), fronted the Cobb partnership. The agreement between his company and the city, signed in 1989, stated that construction couldn't begin until the city had acquired two complete blocks of land (a third block was added during modifications later that year). To comply, the city booted working-class apartment dwellers and long-time homeowners and then relocated or demolished their buildings, some of which were historically valuable.

In addition, a string of businesses was condemned, including a meat-packing plant owned by former city commissioner Mel Mendelson. The South Pointe mikvah (a Jewish ritual bath) became the Courts' sales office. The condemnation process took much longer than anticipated and the money paid out to property owners was much higher than originally estimated (the Mendelson property alone ended up costing the city $1.2 million). In the end, the city spent more than $6 million in bond money for the first two blocks alone, which it then sold to Cobb for just $2.8 million.

Further complications soon followed. Only a year after agreeing to build luxury townhouses, Cobb argued that the economy had shifted and the neighborhood could no longer support such high-end properties. Instead it asked to build 350 smaller rental units, a proposal the city rejected. Development stalled again while workers cleaned up contamination of the site. A lawsuit between Cobb and a contractor held up construction longer still. In fact, a judge dismissed the lawsuit just last month.

After nearly nine years, only one of five phases of the project, consisting of 66 residential units, is completed. Miami Beach officials, optimistic as ever, argue that in the long run the Courts will enhance the neighborhood, as well as the city's tax base. The next phase, based on new designs approved by the city, is expected to start in the first quarter of next year, though nothing is definite.

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