Miami-Dade County

After 16 years, billion dollar project’s fate rests in the hands of Miami

A mega-yacht marina is open at Flagstone Island Gardens, but the hotel towers and shops approved in 2001 have yet to be built.
A mega-yacht marina is open at Flagstone Island Gardens, but the hotel towers and shops approved in 2001 have yet to be built. emichot@miamiherald.com

The tumultuous saga of Flagstone Island Gardens is finally coming to a head after 16 years of lawsuits, delays and deadline extensions.

Miami commissioners have called a special meeting Tuesday to debate the fate of the $1 billion complex of shops and hotel towers that voters approved on Watson Island in 2001. Turkish developer Mehmet Bayraktar built and opened a mega-yacht marina early last year, but has only just begun work on the upland portion of the project — an action that is now a point of contention.

Miami Commissioner Ken Russell says Bayraktar missed a May 1 deadline to legally “commence construction” of the retail and parking phase of the project. He wants commissioners to boot Flagstone off one of South Florida’s most valuable pieces of public property by declaring the developer in default of its city agreements.

“I understand they moved some dirt around a few days before [their deadline] to try to convince us that construction had begun,” Russell told Miami’s other commissioners earlier this month. “But their phased permit, which allows them to begin building before the master permit is finally approved, actually expired back in March and was not reinstated until May 4. Three days late? No — it’s 15 years and three days late.”

Three days late? No — it’s 15 years and three days late

Commissioner Ken Russell

No one has more to lose than Bayraktar, who has held onto 24 public upland and submerged acres for nearly 20 years. He has watched two historic building booms pass him by while grappling with complications of the PortMiami Tunnel dredging, fallout from the 9/11 terrorist attacks and the Great Recession.

At this point, questions abound about whether Bayraktar — who has sought for years to bring in an equity partner — can afford to build the 600 hotel rooms, several hundred thousand square feet of retail and 1,530 parking spaces contemplated in his latest requested design.

But before signing a ground lease with the city, Bayraktar swore in an August affidavit that Flagstone and its affiliates have the money to complete the retail and parking phase currently under way. He also swore that his company and affiliates have spent more than $92 million on the project so far — money that he’ll no doubt fight for if jettisoned from Watson Island.

A wrongful termination of this agreement has very serious implications

Brian May, Flagstone lobbyist

“A wrongful termination of this agreement has very serious implications,” Brian May, Flagstone’s lobbyist, said without elaborating.

May is adamant that Flagstone met its deadline for upland construction, adding that Flagstone has held weekly meetings with city administrators for months in order to discuss the micro details of the project and the developer’s obligations. He says critics who hound Bayraktar for delays create a self-fulfilling prophecy by halting progress.

For years, Bayraktar has been dogged by a group of Venetian Islands residents who say his company has once again broken its lease, part of a trend of failing to meet its obligations and promises to voters. Russell, who campaigned in 2015 on a reform platform, says the city has made enough excuses for the developer and believes Watson Island, already host to a seaplane base and yet-to-open heliport, would be better served as a “multi-modal” transit hub.

But Flagstone has a big cheerleader on its side: the city administration.

Miami’s real estate department said earlier this month that Flagstone met its construction obligations by pulling permits and beginning work to excavate a major utility line on site. Meanwhile, emails show city staffers have been cobbling together various permits from different public agencies, such as county water and sewer, to show that Flagstone had its permits in place and began work in time to meet its deadlines.

Miami City Attorney Victoria Méndez did not respond to requests for comment, but Mayor Tomás Regalado said she told him that she also believes Flagstone complied with its contract.

We’ll have to see how it plays out on Tuesday.

Daniel Alfonso

“Given the information that I have seen, I would advise that they’re not in default,” said City Manager Daniel Alfonso. “But we’ll have to see how it plays out on Tuesday.”

There is considerable pressure on the commissioners to vote one way or the other. Flagstone isn’t outright saying they’ll sue if they’re declared in default. But it’s widely presumed that Bayraktar will file a lawsuit to protect his interests if commissioners take back Watson Island.

Flagstone is also a reliable source of campaign contributions for incumbents, and at least two commissioners are running campaigns for seats on the ballot in November. On the other hand, Flagstone has become to some a symbol of wayward governance and real estate transactions in a city with a questionable track record for development deals.

On Friday, the Coalition Against Causeway Chaos, an Anti-Flagstone nonprofit created by Venetian Islands residents, sent a letter to commissioners arguing that city officials have consistently accommodated unexpected delays and granted improper approvals for the project. Just one day earlier, state Rep. David Richardson, D-Miami, used the word “suspicious” during a City Hall appearance in reference to a state deed waiver granted Flagstone in 2014 by Gov. Rick Scott and the Florida Cabinet despite objections from the Department of Environmental Protection.

“I very much am in favor of pushing the reset button,” said Richardson, who also questioned whether the state is getting short shrift in the developer’s roughly $1 million rent. “I don’t think the valuation is proper and I hope we can revisit this.”

At least two commissioners, Russell and Frank Carollo, are eager to be rid of Flagstone. But they’ll need one more vote from Wifredo “Willy” Gort, Keon Hardemon, or Francis Suarez if they’re going to get the city to declare Flagstone in default.

“There’s been a history of allowing this project to move forward just on its own momentum,” said Russell. “But I think there’s a change in culture.”

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