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September 2, 2010 |
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| September 10, 2007 |
By: Oscar Pedro Musibay |
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Reality vs. sales material
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handful of buyers at Biscayne Landing still think the former federal Superfund site in North Miami is a dump.
Pembroke Pines homeowner Mike Waters signed a $450,000 contract two years ago to buy a 1,900-square-foot unit with views of Biscayne Bay. Sales brochures feature an illustration of floor-to-ceiling bedroom windows and glass-lined balconies.
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The reality is starkly different — bedroom windows half the size shown and metal railings typical of lower-end apartment balconies.
Waters, a hurricane shutter contractor, planned to move to the new development to be closer to his wife’s family in Miami-Dade County. Now he’s hired an attorney to get out of the contract and retrieve his 10 percent deposit.
He never paid the second 10 percent deposit and didn’t close on the unit in a “very plain-looking building,” one of two completed so far by Boca Developers.
Waters claims the developer and sales team misrepresented the “elegance” of the project and isn’t following through on the Williams Island-style community they promoted in fliers and other sales materials.
And the whole place reeks, he said.
The developer blames the smell on the mangrove “swamp” next door — the 993-acre Oleta River State Park, Waters said.
“It just smells terrible,” he said. “It smells like a dump.”
The Biscayne Landing site off Biscayne Boulevard at 151st Street literally was a dump, serving as a landfill for five years starting in the mid 1970s. A company called Munisport attempted to create hills for its planned golf course with the fill. By 1983, the site was on the federal Environmental Protection Agency’s Superfund list of properties with the worst chemical contamination.
Looking for excuses?
Waters and two other contract holders are seeking mediation to voice their complaints as required by their contracts. If that doesn’t resolve the issue, they will go for arbitration, which would be the final word.
Jeff Scott, president of Biscayne Landing, said the unhappy buyers are investors who didn’t make the profit they expected and now want out. He said quality concerns are an excuse to break the contract.
“If the market continued to escalate, we wouldn’t be hearing a peep out of anybody,” he said. He did not respond directly to a question about the brochures but said the quality of the final product should have been obvious from the pricing.
“These people got an excellent buy in this project with price points as low as $200 a square foot. These were not ultra-luxury, oceanfront condos,” Scott explained. “The building reflects the price.”
His sentiment about pricing and quality has been echoed by the company’s sales office.
Claudio Liberman, who signed contracts for two units priced at more than $500,000 each, said part of the reason he bought at Biscayne Landing was comments from brokers saying the prices reflected low land costs. He wants his $160,000 deposit back.
 “I don’t have faith in the project,” Liberman said. “They sold me something totally different.”
Attorney Robert Cooper of Aventura is representing Waters and Liberman.
Two towers completed
Deerfield Beach-based Boca Developers has completed two 25-story towers with 373 units so far on the 193-acre site. Plans call for more towers and townhouses for a total of 5,999 residential units plus 450,000 square feet of commercial space, including offices, stores and a hotel.
“They were looking to cut corners on the cost of construction. Putting in metal railings is much cheaper than glass balconies and putting in cheap, crappy windows is cheaper than putting in floor-to-ceiling windows,” Cooper said of the twin towers. “It looks like a 1970s Kendall apartment building.”
Like other housing developments in South Florida, the residential component of Biscayne Landing is being reconfigured.
Townhouses were scheduled next but are on hold, and the deadline for construction of the next two residential towers is not certain.
The city has given the developer a lifeline. In response to the real estate downturn, it extended the deadline for building the next two towers and loosened rules that favored ownership over rentals.
In July, the city gave Boca Developers until 2011 instead of 2009 to build 450 additional units, and they can be as small as 600 square feet instead of the original minimum of 900 square feet. The developer also will be allowed to lease up to half of its next two towers rather than be required to sell all the units.
The shift is an effort to adapt the development to the brutal reality that the residential sales market has withered.
“We have the ability because Biscayne Landing is a master plan community that is substantial in size,” Scott explained. “We can change our development strategy to react to the market.”
The company also reacted by looking for more cash.
Cabot Investment Properties offered in June to pay $168 million for 236 units spread among Biscayne Landing and two other Boca Developers projects, Marina Grande in Riviera Beach and Peninsula II in Aventura, the Miami Herald reported.
Scott said Boca has not closed a deal with Cabot and would not confirm whether there was a contract. But he acknowledged the company was considering selling blocks of units to investment groups.
 At Biscayne Landing, Boca Developers is refocusing on the commercial side, and the company’s logic is sound because office and retail is stronger than residential, North Miami Mayor Kevin Burns said.
The next phase to begin early next year will feature a 14-story, 180,000-square-foot office tower, 100,000 square feet of retail space and a 25-story building combining a 210-suite InterContinental Indigo hotel and 400 residential units, Scott said.
It’s going to take two years to complete the commercial segment, and city officials and the developer hope the condo market will have time to recover by then.
The developer also plans to get the complex certified as environmentally friendly under an innovative program focusing on neighborhoods rather than individual buildings.
Affordable component
The city approved Biscayne Landing in 2002 with developer Michael Swerdlow at the helm. Boca Developers was brought in as a partner the following year.
Scott said Boca Developers last year bought Swerdlow out of Biscayne Landing and the Marina Grande projects in Riviera Beach and Daytona Beach.
Scott would not disclose the buyout price, but he said Swerdlow had previously approached Boca Developers to buy it out.
Mayor Burns has reasons to be a Biscayne Landing booster after the ownership shift. The city granted the developer a 200-year lease and supported Miami-Dade County’s $31 million grant to help clean an ammonia plume leaching from underneath the site into Biscayne Bay.
The city is in line for 4 percent of the net proceeds from rental units, 4 percent of the net proceeds from sales and $1,500 per completed unit annually as payment for the lease.
What it thought it was getting in return was nothing less than a revitalization of the bedroom community.
Biscayne Landing must match every market rate unit it builds east of Biscayne Boulevard with the construction or rehabilitation of an affordable unit west of the boulevard.
The developer has proposed building 5,999 market-rate units, so the city would get an equal number of new or rehabilitated affordable units. But Scott said the developer is not obligated to deliver the affordable housing until 15 years after Biscayne Landing is completed. He doesn’t expect to complete the project for about eight to 10 years.
But the city is already moving to identify potential development sites for affordable units.
Tax increases from the redevelopment of the Biscayne Landing property will go into a special fund to pay for upgrading the city’s Community Redevelopment Agency district, which covers about 60 percent of North Miami.
Biscayne Landing is expected to generate $3 million for the CRA in the 2008-09 year, about a third of the CRA’s current budget. Payments will increase annually as more buildings are added to the tax rolls, said CRA executive director Tony Crapp Sr.
The CRA was created in 2004 solely to oversee the affordable housing segment tied to Biscayne Landing.
The city’s ambition to create affordable housing is great, and greater still is the need. North Miami could only help 15 of 537 residents who applied for $50,000 in mortgage assistance for needy first time home buyers.
To qualify for the program, a buyers household income must fall between 50 percent and 120 percent of the county’s median income of $45,200.
Money from the CRA will help boost the program.
And Boca Developers stands to benefit from the affordable housing, too, because it is first in line to build or rehab the homes as part of its deal with the city.
North Miami Housing, the Boca Developers’ affordable housing joint venture with a minority partner, is guaranteed a 15 percent profit on every affordable unit it produces for the city.
The mayor said Boca Developers is the “preferred contractor” and it has an incentive to do well on the affordable side of the deal because Boca still needs city approval for other elements of the Biscayne Landing project.
Boca Developers has also agreed to foot $10 million to build an Olympic sports training facility and $10 million for a city’s library.
Crapp said the deal, which predated his tenure with the CRA, allows Boca Developers to recoup some of the money from the affordable housing it builds.
“Obviously, the developer, being a smart developer, saw that basically they are going to be the cash cow in terms of generated tax revenues that would benefit the city — the $10 million contribution to the Olympic facility,” Crapp said. “If you extract those kinds of concessions, they are going to try and make themselves whole on the other side. They are recovering some of the revenue that they are paying on one hand on the other side.”
The city has nothing to show for itself on the affordable housing side of the deal with Boca Developers. The affordable joint venture has not built or rehabbed a single unit.
Crapp said the city is still identifying projects and may make bulk purchases of existing apartment buildings for rehabbing and new construction.
Clean up woes
The developer is also having problems cleaning up the site.
The county told Boca Developers in April and in August that its strategy for cutting the ammonia output was not working and that the developer had to provide the county with a new plan. An alternative cleanup method could cost as much as $25 million more, according to a story in the Miami Herald.
With city backing, Boca Developers petitioned the county’s Environmental Quality Control Board to have the county lower the standard for ammonia concentrations leaking into the bay. The request was scheduled for review last Thursday but was withdrawn before the meeting.
“There never has been hazardous materials found on the site,” Scott said last year. “The only requirement was that we clean the groundwater that goes into Biscayne Bay.”
Technically, the ammonia plume is under the site, but it was caused by the 6 million cubic yards of household and commercial waste dumped at the landfill from 1974 to 1980.
Nancy Lee, a board member of the nonprofit Urban Environment League of Miami-Dade County, opposed the project, supporting instead the idea of turning the land into a regional park. Now that the development has started, she’s given up on the park idea.
“My only thing is to clean up the damn site,” she said. “It’s way past due.”
The cleanup is important, but that won’t make up for Waters’ disdain for the project and how the developer has handled his concerns about the quality of the building.
“They haven’t even started the pool and the gym,” he said.
Oscar Pedro Musibay can be reached at omusibay@alm.com or at (305) 347-6651.
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