Miami-Dade County

Miami Commission declares Flagstone Island Gardens in default of city contract

Flagstone Island Gardens opened a mega-yacht marina on Watson Island last year, but was declared Tuesday by Miami commissioners to have violated its city contracts.
Flagstone Island Gardens opened a mega-yacht marina on Watson Island last year, but was declared Tuesday by Miami commissioners to have violated its city contracts. emichot@miamiherald.com

The ground beneath publicly owned Watson Island and Miami City Hall shifted Tuesday when Miami commissioners moved to sever ties with Flagstone Island Gardens by declaring the developer in breach of its contract to build a controversial island resort off the MacArthur Causeway.

In a shocking rebuke of city administrators, commissioners unanimously agreed that Mehmet Bayraktar’s Flagstone has violated portions of a master agreement overseeing the phased construction and operation of a $1 billion complex of hotel towers, shops and mega-yacht slips approved by voters back in 2001. At Commissioner Francis Suarez’s urging, they said Flagstone failed to secure a mandatory construction loan before being awarded a land lease in August to build a $31 million parking garage and retail structure.

Now, the same administrators who spent the last month defending Flagstone will draft a default letter stating how they believe the developer violated its various compacts with the city and ended up in default.

“This is a changing tide in the city of Miami that’s in favor of transparency and accountability. Fifteen years this project hasn’t gotten off the ground,” said Commissioner Ken Russell, who called for Tuesday’s special meeting on the grounds that the developer had missed a May 1 deadline to begin construction. “This will be the end of it.”

Fifteen years this project hasn’t gotten off the ground.

Commissioner Ken Russell

Time will tell if he’s correct — or if the city commission just made a costly mistake.

For Flagstone’s many critics, Tuesday’s vote was a sign of changing politics at City Hall, which has been accused for years of bending over backwards to keep a floundering developer locked into one of the city’s most valuable pieces of land. But Flagstone’s attorneys and representatives warned Tuesday that commissioners are setting up taxpayers up for a $100 million lawsuit if they kick Bayraktar off Watson Island.

Over the holiday weekend, Flagstone attorney Gene Stearns compared Russell’s push to terminate Flagstone’s agreement and take over the mega-yacht marina Bayraktar built and opened last year to a country nationalizing private resources.

“What is being suggested is that, now that the valuable Marina is complete, the City should simply take it,” Stearns wrote. “There are countries where private property rights are exposed to the risk of such whims. This is not one of them.”

There are countries where private property rights are exposed to the risk of such whims. This is not one of them.

Gene Stearns, Flagstone attorney

Brian May, Flagstone’s lobbyist, said during Tuesday’s four-hour hearing that the developer has consistently met its obligations since getting back on track in 2014 following a series of delays and financial problems. He dismissed claims that Flagstone was in default as “ludicrous,” and described calls to end Flagstone’s relationship with the city as putting politics over reason.

Even were the commission to declare Flagstone in default, May said, the developer would still have the opportunity to “cure” whatever breaches the city alleged, the scope of which wasn’t entirely clear Tuesday afternoon.

“I don’t know where we go from here,” May said after the vote. “We’ll see what the city does with its notice.”

Miami City Attorney Victoria Méndez — who had no opinion Tuesday on whether Flagstone was in breach of its contract and suggested that commissioners hire a special counsel in order to make that decision — declined to comment on whether the developer can cure any alleged defaults. But a majority of commissioners believe their rocky relationship with Flagstone is at an end.

“They got a cure period of 15 years,” said Commissioner Frank Carollo.

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