The stains are incongruous in this otherwise immaculate penthouse apartment on the 24th floor of the north tower at Sunset Harbour, a massive bayside condominium complex just north of the Venetian Causeway in Miami Beach. Pollack's faux-painted walls and baby-grand piano frame a sun-drenched view of the Beach and the Atlantic Ocean -- the very picture of luxury living Iris and husband Fred Pollack bought into more than four years ago.
But it turns out the picture was drawn in pencil, not indelible ink, and residents allege it is steadily disappearing under the eraser of one of Miami Beach's largest developers. A long and unusually bitter battle is under way between the residents of the roughly 500 condo and townhome units at Sunset Harbour and several companies that operate under the banner of Pacific International Equities and a related trade name, Groupe Pacific. In addition Sunset Harbour's north tower, which was never granted a certificate of occupancy despite being home to hundreds of residents for several years, has become a major headache for the City of Miami Beach.
The condo association for the north tower is suing Pacific International Construction and Yacht Club Southeastern, two of the companies responsible for developing the tower, and their founder, Charles Bedzow. The companies are now controlled by Bedzow's son Michael, a former real estate attorney.
The north tower's complaints include balconies so unstable the city has deemed them unsafe for residents to use, windows and glass doors unlikely to withstand a stiff breeze, and major plumbing and concrete problems. Residents also discovered that the amenities in their homes -- from supposedly extra-insulated "party" walls to thermostats to security systems -- were not installed or were constructed with inferior materials.
In 1997, as residents began moving into the north tower, accusatory memos were flying back and forth between Pacific International Construction and the contractors hired to build the tower. For example, Pacific wrote to project engineer Raul Puig alleging that the corners of some balconies were cracked and breaking off because of inadequate steel reinforcement. Michael Bedzow complained to DCC Constructors, the project manager, that the subcontractor who installed many of the building's windows and glass doors had left large gaps between the frames and the building that could cause problems with "support, hurricane and windstorm viability, and water leakage." While acknowledging that the Sunset Harbour north tower was rife with construction problems, Bedzow placed the blame for most of them squarely on DCC's "poor management and lack of control."
DCC, in its own memos, charged that a major factor contributing to the problems was Pacific's delays in paying subcontractors. (In a 1997 memo titled "Lack of payment to subcontractor," a DCC manager complained to his boss: "As you know, this problem is and continues to be one of the main factors in manpower to complete our T.C.O. dates.") Pacific International later sued DCC and several of those subcontractors.
It wasn't until March 1999 that the north tower's balconies were judged to be so dangerous the city notified residents not to use them "until clearance from the building department is provided." As of this week, nearly three years later, residents are still waiting for the city's approval. (Owners of Sunset Harbour townhomes and south tower condos have their own grievances, though they are not as numerous or as dangerous as those associated with the north tower.)
The north tower condo association claims in its lawsuit that Charles Bedzow and his companies violated building codes and engaged in unfair and deceptive trade practices and racketeering. Strong language? Not really, says James "Fred" Harrington, the attorney representing the condo association. Besides the glaring construction defects, Harrington maintains residents were falsely told Sunset Harbour would be a complete living community that would include bayfront shops, a restaurant, a spa, and a private gym. He pulls out dozens of splashy ads to prove it. "There's no bayfront shopping," he says. "The private gym that was supposed to be there? The developer converted that to apartments and sold it. All the retail shop spaces? The developer sold all those. The health spa was not opened until [early 2001], and people had been living there four or five years. The restaurant was never installed."
Pacific counters that it was unsuccessful in attracting retail stores and a restaurant to the bayfront spaces because there's no street frontage and not enough parking.
All this squabbling has been hard on residents like Linda Arama, a 55-year-old outpatient manager at Mount Sinai Medical Center who bought a one-bedroom condo in Sunset Harbour's north tower with the idea of eventually retiring there. "We were told a song and a dance and lied to," she grumbles. "I took every dollar I had and sunk it into this place, around $150,000. There's a lot of people like me here who don't have money." Arama, who sits on the condo board, also believes the city has been negligent in allowing the developer to go years without fixing the building's problems. "The city allows [the Bedzows] to get away with this," she rails. "Builders need to be slapped by the parent when they don't do the right thing, and the city is the parent we rely on to protect us."
But Miami Beach officials describe themselves as powerless to do much. Phil Azan, director of the city's building department, says many of the residents' problems don't fall under the city's purview. "There's a lot of anger from the association because they have been promised things that weren't delivered. We understand that," he says. "If it's a code issue we investigate, but if it's maintenance we have to let it go." Azan rather sheepishly admits that it is "unusual" for the city to keep renewing a building's temporary certificate of occupancy -- every 90 days -- for more than five years. But the alternative, he adds, is unthinkable: "If we don't extend it, then we have to vacate the building. Then it becomes a media nightmare." When the developer fixes the north tower's balconies, Azan says, it will likely get its C.O.
Alan David, administrative vice president of Groupe Pacific (who returned messages left for Michael Bedzow), asserts that the company would have preferred to fix the balconies more than two years ago, but the condo association objected to the repair plan. "The reason the balconies cannot be used today is because the north tower would not let us fix them," David argues. "We've been prepared to do it right along."
Well-known developer Stanley Tate is the special master appointed by the circuit court two years ago to broker a compromise among the developer, residents, and the city regarding balcony repairs. He hired an engineer to evaluate the developer's repair plan and concluded it wasn't adequate. That didn't go over well with the developer's attorneys. "They did everything but yell at me from the top of the courthouse," Tate recollects. "They were arguing with me that they could do what they wanted to it, fix it, settle it. And that's true, but in six months the problem would be back. I said, “Don't waste your money.'"
Former Miami Beach Commissioner Nancy Liebman remembers that in her eight years on the commission other projects developed by Pacific International Equities had problems. "It's always the same thing," she recalls. "The people who buy these apartments wind up in this frantic battle with the developer. The city always seems to be impotent in trying to deal with these kinds of things." Former Beach Mayor Neisen Kasdin wrote a letter to State Attorney Katherine Fernandez Rundle on July 27, 2000, asking her office to investigate possible "improprieties" in the building process. "In my experience as an official of the City of Miami Beach," Kasdin wrote, "no single project has experienced construction problems greater than those found at Sunset Harbour."
So how exactly does a smart group of condo-buying professional people get taken in so completely by a sales pitch? Because it's a really good one. "When you purchase a residence from a Pacific International Equities company you're also buying confidence and credibility," boast glossy marketing literature and numerous full-page ads in the Miami Herald. Besides Sunset Harbour, Pacific International is responsible for building condominiums L'Excellence, La Gorce Palace, the Sterling, La Rive Gauche, and several other Miami Beach landmarks. The company is also working on Brickell on the River, twin towers on the Miami River that are being trumpeted as vital to the renaissance of that area.
Tom Kresse, president of the Sunset Harbour townhome association and owner of a court-reporting firm, says he got sucked in much the same way many other residents did. "You look at a project like this and if nothing is obviously bad, there's a certain amount of faith that goes into it," he observes. "You figure, they've been developing on the Beach for years. You don't think there's treachery and trickery. And you assume the city is going to be inspecting everything." (Kresse says townhouse residents have complaints about elevator and dock repairs, the health spa, and used appliances substituted for new ones in some of the units.)
Alan David from Groupe Pacific has an answer for that: Read the sales contract before you sign it. And don't forget to inspect the plans, on file with the city, that set forth the building methods and materials to be used. "When the association says it didn't get what it was promised -- any contract says you are not relying on oral representations," David says pointedly. "If you [listen to] ten salespeople, I don't care where you are, you'll get ten different stories. When they bought the apartments, they signed the contracts and they should have known what it said."
It's clear any warm feelings that may have existed between Sunset Harbour residents and Bedzow's companies have long since been doused by years of acrimony. The residents claim Bedzow has retaliated against them at every turn. Larry Schantz, a condo board member and attorney, recounts what happened when the associations decided to cancel and renegotiate the deal they had with Bedzow to pay some of the health-spa costs. "Michael said he wanted to work with us," he relates. "Then he never got back to us. Then he fired everyone [at the spa] and shut the place down [in October 2001]. Then I realized you can't negotiate with terrorists."
David counters that when the associations canceled their agreement, it would have been stupid for the developer to keep the spa open because he would have been unable to collect the money owed him for its operation. In effect the developer would have been subsidizing the health spa. "I'm not Santa Claus," David retorts. "We are businesspeople."
Most recently, on February 1 the north tower association received a letter from Bedzow's attorneys demanding $6.8 million in damages unless residents stopped using extra parking spaces in the garage. Each condo unit is allotted one space, but for the past five years residents have been able to use an additional valet space owned by the developer. David says the developer now wants to sell them to residents -- for $17,000 each. "We're not going to [be able to] sell them if they're using them for free," he maintains. "We have the absolute right to do it."
Further, David contends that most of the north tower condo association's legal claims are without merit and that the litigation is being driven by a handful of disgruntled board members. "In this case there are certain personal feelings that members of the board have toward the developer," he says. "It could have been and should have been resolved a long time ago. We are not going to respond favorably to an emotional wish list."
Harrington, the condo association's attorney, looks weary as he contemplates a distant end of the road. "These guys for years and years have just bullied [residents]," he says. "They stall and wear them down and most people give in. Meanwhile they're trying to make their lives miserable."
