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September 2, 2010 |
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| March 28, 2008 |
By: Paola Iuspa-Abbott |
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oca Developers, one of South Florida’s biggest condo builders, has stopped construction at one project, laid off most of its staff and faces millions of dollars in liens on its projects for unpaid bills.
At its Marina Grande project, Boca Developers faces more than $11 million in liens. And two contractors have moved to foreclose on their liens.
According to a source familiar with the company’s operations, the lender funding construction of the 468-unit Marina Grande condo project in North Miami Beach has moved to take over the project, but Boca Developers denied that assertion.
“That has not occurred,” Boca Developers co-founder Brian Street said in an e-mail. He added that the company “voluntarily halted construction” of Marina Grande “in light of challenging marketplace issues.”
Calls to Marina Grande lender iStar Financial were not returned.
Boca Developers also faces trouble at its largest project — the sprawling Biscayne Landing mixed-use development in North Miami.
Boca Developers has seen sales at its properties, including Biscayne Landing, plummet.
At the same time, buyers are increasingly walking away from contracts to purchase condos, a problem exacerbated by the fact that buyers can’t find mortgages with banks tighten lending standards.
Residential real estate values in South Florida are in sharp decline and banks are unwilling to finance condos at prices set during the boom.
One source said cancellations at Biscayne Landing have approached 60 percent.
Street said that figure is “incorrect.”
In the last few weeks Boca Developers slashed its work force from 120 employees to about 30, the source said.
Many of the fired employees worked in the sales department.
Street blamed layoffs on the market conditions.
Boca Developers owes more than $11 million, including $3.28 million to Core Slab Structures and $5 million to Gryphon Construction, for work on Marina Grande at Biscayne Boulevard and 170th Street.
Miami attorney Mauro Santos, who represents Shoreline Foundation, a marine construction firm, said his client has been understanding about Boca Developers’ plight and doesn’t plan to push his company’s foreclose action against the property — for now.
Shoreline had a contract for $3.5 million and is owed $1 million, Santos said.
“My client has been patient and cooperative and yet is preserving his lien rights,” Santos said.
The uncertain future of Biscayne Landing, which Boca Developers is building on publicly owned land, has North Miami officials worried. The city has been “bombarded” with complaints from contractors claiming Boca Developers owed them money.
Contractors have been trying to file liens on the property, but city officials told them liens can’t be filed against the project because it’s on public land, according to North Miami Beach city attorney Lynn Whitfield. Boca Developers has a 200-year ground lease with the city.
The complaints “caused the city great concerns as to the future completion of the project,” the city manager wrote in a letter to the developer in December. “The city has a fiduciary duty to its citizens to ensure that this project is completed and the city reaps the benefits.”
Boca Developers replied to the city, assuring officials it would pay the contractors and tell them not to bother the city in their collections efforts.
In the letter to the city manager on Dec. 20, the company also said it had obtained a $233.5 million loan from Column Financial in early 2007 and that funding was enough to complete Biscayne Landing.
The letter signed by Jeffrey Scott, president of Biscayne Landing LLC, indicated a townhouse portion of the project had been scrapped because of a lack of financing.
Biscayne Landing is to have about 6,000 condos and apartments, a 200-room hotel and nearly 300,000 square feet of retail space on close to 200 acres on Biscayne Boulevard between 135th and 151st streets.
Boca Developers began planning Biscayne Landing six years ago. So far, one 373-unit condo building has been completed.
Miami-Dade County property records indicate buyers of 218 units have closed on their condos.
The developer is now trying to get city approvals to move up construction of the retail space and delay construction of additional condos. Boca Developers also wants to build more rentals and fewer condos, according to city attorney Whitfield.
She said if lender Column Financial tries to take over the project, the city would have to be notified.
Boca Developers has at least half a dozen projects from Key West to Daytona Beach, including Peninsula I and II at 3201 NE 183rd St. in Aventura. The buildings have 446 condos.
Closings on units in Peninsula I began last year. So far 192 units have closed with the last occurring in May, according to public records.
Boca Developers began planning Marina Grande four years ago, about a year before the South Florida housing market peaked. In 2005, Fremont Investment provided the developer a $40 million loan. The loan was later bought by iStar.
Boca Developers planned to market the project with units priced starting at $800,000.
But things didn’t go as planned. The project was delayed by law suits brought by North Miami Beach residents opposing the size of the waterfront development. Initially, Boca Developers wanted to build twin 24-story towers on the site at that time zoned for no more than 15 stories.
The legal battle delayed construction until late 2006 when the developer agreed to reduce the towers to 18 floors.
So far, the foundation of one of the two buildings has been built, but little else has been done in the last 10 months, said Steve Pizzillo, North Miami Beach’s chief building inspector.
A permit to build the tower has been approved, but the developer has not picked it up, he said.
“It is a beautiful project,” he said. “It is a shame it has been sitting there.”
Paola Iuspa-Abbott can be reached at piuspa@alm.com or at (305) 347-6657.
Marina Grande site photo by A.M. Holt
Correction
The story incorrectly referred to the Peninsula I condominium. Peninsula I has not been affected by problems experienced by Boca Developers. It is Peninsula II that began closings last year and has had slow sales.
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