When Miami Beach voters go to the polls on June 3, their heads will be ringing with numbers their public officials have been shouting at them like auctioneers. How much will a yes vote on the waterfront zoning referendum amendment cost the city? Some say $15 million. Others say $25 million. Forty million dollars? That's what the city manager says. Do I hear $90 million? Yes, you do, and from a city commissioner, no less.
Where are they getting these doomsday stats? After all, the ballot initiative merely proposes that any increases after January 31, 1997, in allowable zoning density along the already built-up Miami Beach waterfront be subject to a referendum. The amendment's proponents (led by a group whose name, Save Miami Beach, makes a terrific rallying cry) present it as a way to curb rampant development. As Save Miami Beach chair David Dermer says, "The last thing a speculator wants to deal with is 10,000 voters. It's easier to deal with four or five commissioners behind closed doors."
Some of those commissioners, as well as the mayor, the city manager and his staff, and a political action committee backed by Thomas Kramer, believe that if it is passed by Beach voters, the amendment will spell financial disaster for the city. Why? Because of a small plot of land in South Pointe known as the Alaska Parcel, the megalomaniacal German developer Kramer and his Portofino Group, and a complex deal that might unravel if the referendum passes.
To understand where these staggering dollar figures come from, one must first endure a brief history lesson: Go back to the beginning of the Eighties, when bad economic times had afflicted the Beach south of Fifth Street with urban blight of the first order. In an attempt to breathe some life back into South Pointe, the commission undertook several initiatives to lure private-sector investment. Unfortunately the city violated some of its agreements and ended up losing a few costly lawsuits, totaling $30 million. Appeals lessened the blow, but in the end the city was left with certain court-ordered obligations to aggrieved developers, including in some instances liberal zoning rights. By the spring of 1994, those developers had sold their South Pointe properties. The buyer: the Portofino Group.
Unlike the previous owners, Portofino meant to start developing its lots immediately. When then-city manager Roger Carlton showed commissioners a mockup of what Kramer's company had the right to build if it so desired, they blanched. (Today Commissioner David Pearlson remembers Carlton's drawing as "a wall of concrete from Fifth Street to First Street.")
At Carlton's urging, city officials began negotiating with Portofino to devise a plan that would be profitable for the developer and bearable for the city. The resulting inch-and-a-quarter-thick document, thenceforth known as the Portofino Agreement, was passed by a 6-1 commission vote (Martin Shapiro dissented) and signed on November 7, 1995. Under the agreement, the city's financial obligations came to about $13 million.
Key components of the deal included Portofino taking on some of the city's construction responsibilities imposed by the prior court ruling (parking, sea wall repair, et cetera), and additional elements such as extending Washington Avenue southward and building a pedestrian walkway along Biscayne Bay. Portofino also agreed to sell the city a seven-acre lot, located between Third and Fifth streets and bounded by Alton Road and the bay, on the condition that the city would spread out the equivalent allowable square footage elsewhere.
A big chunk of that so-called upzoning was to be applied to the Alaska Parcel, a 3.44-acre plot just west of the brand-new Portofino Tower. That site, more desirable for development than the seven-acre lot, currently carries a zoning height limit of 40 feet.
Which brings us to the present: Back when the Portofino Agreement was signed, zoning changes required only a five-sevenths vote of the commission. If the June 3 referendum passes, the increase to which the commissioners agreed will no longer be the city's to give; the discretion will belong to the citizens.
Some fear the move to zoning increase by referendum would be grounds for Portofino to back out of the agreement, at which point the developer could build under the terms of the old court settlements and the city would be stuck once again with the construction obligations. According to a report issued last week by Deputy City Manager Sergio Rodriguez, the construction costs could be anywhere from $13.5 million to $40.5 million, depending on whether the city has to purchase and condemn property in the process.
An even gloomier financial picture has been painted by Commissioner Pearlson, who, along with Mayor Seymour Gelber, has spoken openly against the proposed charter amendment. At a commission meeting last week, Pearlson assessed the potential damage at between $83 million and $90 million. "That is a combination of the values of the cash the city would have to pay and the loss of benefits the community would have gained from Portofino," the commissioner posits.
To the Save Miami Beach advocates, these astronomical figures are just another voice in the chorus of what chair David Dermer has called "the million-dollar campaign of lies" being waged by the opposition. (That dollar figure refers to more than $900,000 in the coffers of Miami Beach Citizens Against Higher Taxes, the Portofino-funded PAC that is working to defeat the amendment.) Dermer and his group say the dismal fiscal scenarios are proof that the city government is in bed with the deep-pocketed Portofino.
Such suspicions aside, predictions of multimillion-dollar disasters are based on a crucial assumption: that Portofino will pull out of the deal if the referendum passes. Though Miami Beach City Attorney Murray Dubbin says that passage of the amendment would surely be grounds to do so ("The amendment could be construed as a breach of the contract and give [Portofino] an opportunity to back out," he declares), others say a pullout by the developer is unlikely. At least two commissioners -- Neisen Kasdin and Martin Shapiro -- say passage of the amendment will probably result in new negotiations between Portofino and the city. "It's likely that if this passes, Portofino will come back to the table," Kasdin says.
John Dellagloria, who was chief deputy city attorney for the City of Miami Beach from 1990 to 1996 and who now works as city attorney for North Miami, cautions that renegotiation is far from a sure thing. "If the people pushing the amendment are hoping that by unraveling this transaction they will bring Portofino to its knees, they are most likely mistaken," he warns.
Agrees Edward Resnick, a retired attorney who chairs Miami Beach Citizens Against Higher Taxes and who also headed the city's negotiating committee for the Portofino Agreement: "David Dermer and some commissioners think they're playing Russian roulette with Portofino, and that [Portofino] is going to blink and renegotiate," he scoffs. "They're playing Russian roulette with the finances and solvency of the city."
Spokesmen for Portofino did not return phone calls requesting comment for this story, but according to an attorney for the company, the developer is ready and willing to pull the trigger if the amendment passes. "In the most likely event, I would imagine that Portofino would go forward with their vested rights, unless the commission took action to ameliorate the effects," says Matt Gorson of the law firm Greenberg Traurig.
But pulling out of the agreement or renegotiating aren't Portofino's only options if voters approve the amendment.
"It is going to end up in court if it passes," predicts Murray Dubbin, who has already issued a written opinion that the amendment is unconstitutional. "A judge will end up ruling on its constitutionality in some form. As to the many possible ways it can get there, I don't feel I can speculate."
According to Stanley Price, a land-use attorney for the Miami law firm of Eckert, Seamans, Cherin & Mellott, the amendment violates existing legal precedent in Florida. "Referendum and initiative are no longer appropriate vehicles to review land use," says Price, citing a 1993 Brevard County case in which the Third District Court of Appeals ruled that rezonings that have a limited impact on property owners are "quasi-judicial" in nature. "If they are quasi-judicial, then a vote of the electorate does not afford the property owner due process," Price explains.
Constitutional or not, the question will come before the voters of Miami Beach on June 3, and their response to this issue will provide an excellent barometer for the political climate leading up to the November elections. Commissioners Sy Eisenberg and Nancy Liebman are up for re-election; the mayor's office will also be vacant, as Gelber has served the full six years the city charter allows.
David Pearlson says it is "unknown at this time" if he will run for mayor. As the commission's most vocal opponent of the amendment, Pearlson's potential candidacy could be aided by its failure. In any case, he would very likely choose not to run if Metro-Dade Commissioner Bruce Kaplan decides to take a shot at the mayor's seat. "If I don't run, [Kaplan] will run," Pearlson says.
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Martin Shapiro says he "hasn't made any decision" about running for mayor. He was the lone vote against the Portofino Agreement, and though he has not taken a public stance on the charter amendment -- "I don't tell people how to vote," he says -- his reputation as an anti-development voice might allow him to ride the passage of the amendment into the center seat on the dais.
Neisen Kasdin has already declared his candidacy for mayor. Though he has not taken a stand on the amendment either, he has grown increasingly critical of the city's estimates of its financial responsibilities should the Portofino deal fall through. "The likely consequence of Portofino telling us it wants out of the deal is not a $50 million Armageddon," he insists.
A candidate might also emerge from within Save Miami Beach. Seymour Gelber thinks so. "I think [the referendum] will pass, then lead into November elections," says the mayor. "From those in the group doing this for political purposes, you'll see four or five of the advocates for passage running for office."
Might one of these be Save Miami Beach chair David Dermer, who mounted an unsuccessful campaign for the commission in 1991? "At this time all I'm concerned about is June 3," Dermer says. "I would reserve comment on that. Today I have no personal ambitions beyond June 3.