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HomeMy WebLinkAboutSubmittal-Commissioner Ken Russell-Stearns Weaver Miller LetterSTEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A. Submitted into the public record f itet (s) 3Y4 5�0 ��1 . City Clerk May 26, 2017 Via Hand Delivery and Electronic Mail Mayor Tomas P. Regalado City of Miami 3500 Pan American Drive Miami, Florida 33133 tregalado@miamigov.com Keon Hardeman, Chairman City of Miami 3500 Pan American Drive Miami, Florida 33133 khardemon@miamigov.com Ken Russell, Vice President City of Miami 3500 Pan American Drive Miami, Florida 33133 krussell@miamigov.com BZ Eugene E.Stearn's 150 West Flagler Street, Suite 2200 Miami, FL 33130 Direct: (305) 789-3400 Fax: (305) 789-2669 Email: esteams@stearnsweaver.com Commissioner Wilfredo Gort City of Miami 3500 Pan American Drive Miami, Florida 33133 wgort@miamigov.com Commissioner Frank Carollo City of Miami 3500 Pan American Drive Miami, Florida 33133 fcarollooffice@miarnigov.com Commissioner Francis Suarez City of Miami 3500 Pan American Drive Miami, Florida 33133 fsuarez@miamigov.com Re: Island Gardens, Watson Island, Florida ("Property") Dear Mayor, Chairman, Vice Chairman and Commissioners, In advance of the agenda item scheduled for Tuesday, May 30, Flagstone Island Gardens, LLC has asked this firm to review claims that the City of Miami has a legal right to terminate the rights Flagstone enjoys under the Retail/Parking Component Amended and Restated Ground Lease ("Lease") dated as of August 31, 2016 and the Amended and Restated Agreement to Enter Into Ground Lease ("Agreement") dated as of February 1, 2010 (the Lease and Agreement are collectively referred to as the "Agreements"). We have reviewed the claims and provide this letter in response. As described below, the arguments in favor of the termination are frivolous, and have been rejected over decades at the ballot box, before the City Commission, by numerous courts, and, in recent days, explicitly rejected by City staff tasked with administration of this project. MIAMI • FORT LAUDERDALE • TAMPA • TALLAHASSEE 233y- 51r6A-o1-�+\Nn\s5oner\l\-4n\\)s4- 3\( ( 1I,\\er l,A\tc May 26, 2017 Page 2 Submitted into the public p record f r ite�;(s) 5r ,1 on ,�jqMtn . City Clerk While we appreciate the desire in some quarters to reconsider decisions made by the City and approved by its voters in a referendum, the issue presented for next week's Commission hearing is not one of policy. It is simply whether a legal right exists to unilaterally terminate contractual rights. In fact, no right arguably exists to terminate the Agreements. Thus, were the City to take any action to cancel or terminate the Agreements it would be a breach of the Agreements, cause Flagstone substantial economic damages — in excess of $100 million -- and require the City to provide compensation for those damages. Notwithstanding hysterical claims made by longtime opponents of the development, many of which have been repeated in the Miami Herald and blog postings as if they are true, Flagstone has timely met every contractual obligation required of it. It has diligently and timely proceeded with construction of the Major Components as defined in the Agreements for the development of the Island Gardens project (the "Project"). While some could complain that the Agreements when they were made and amended gave Flagstone too much time to perform its obligations that is not the kind of argument that holds any sway in a court of law. Similarly, complaints that the Agreements were arranged behind closed doors are not only false, they ignore all of the undisputed facts and have no bearing on Flagstone's contractual rights. Indeed, the voters approved the project in a public referendum despite bitter opposition from those who were then and now armed with enthusiasm rather than facts. The Marina, a Major Component, was completed ahead of schedule. Flagstone has commenced construction of the next phase, the Retail/Parking component, adhering to the requirements set forth in the Agreements. Flagstone timely met every contractual milestone for construction of the Retail/Parking component. Indeed, the following facts cannot be disputed: 1) On March 24, 2016, Flagstone was issued the Florida Department of Health General Permit. 2) On September 1, 2016, Flagstone obtained approval of the Phased Foundation Permit and immediately commenced work on the site, eight months prior to the April 20, 2017 deadline provided in the Agreements. 3) On September 2, 2016, Flagstone was issued the Miami -Dade Wastewater Collection/Transmission System Construction Permit. 4) On October 3, 2016, Flagstone was issued the FDOT Utility Permit. 5) On February 28, 2017, Flagstone received partial approval of the foundation work completed as of that date. 6) On April 28, 2017, Flagstone obtained preliminary approval of the City of Miami Public Works Permit, which final permit was issued on May 4, 2017. 7) The new Phased Foundation Permit was issued on May 4, 2017. May 26, 2017 Page 3 Submitted into the publipn record fair iteip (s) on J13p in. City Clerk 8) Flagstone filed a minor modification to the Major Use Special Permit, seeking to enhance the Project's aesthetics by eliminating the above ground parking structure and relocating the required parking underground. Since filing the minor modification in 2013, City and Flagstone successfully defended the third lawsuit which was filed in 2014 against the City of Miami, and final decision in favor of City and Flagstone issued in December, 2016. Between 2016 and the present, Flagstone has diligently responded to planning staffs various requests for further information on the minor modification. Those who seek to relitigate the merits of the Project seem to be arguing that because there was a temporary lapse of a government approval and because a new permit was approved but not issued until May 4, 2017, the City has a technical "gotcha" argument to force a default of Flagstone's $100,000,000 investment. This argument is nonsense, and fails for a least two reasons. First, construction commenced in September 2016, eight months before the contract deadline. Second, the Agreements provide that such a temporary lapse does not constitute an event of default. Indeed, as your staff has explicitly told you, Section 6.1.13(b) of the pertinent Agreement states in pertinent part as follows: (b) Flagstone shall... (ii) apply to the City for Foundation Permits and commence site utility relocation work by such time period as necessary to begin such site utility work for the applicable Major Project Components, (iii) obtain and provide any other necessary governmental approvals for commencement of construction for the applicable Major Project Component(s), and (iv) continue to use good faith efforts to keep active and in full force and effect such FDOT Approvals, City Approvals, Foundation Permits, other necessary governmental approvals... . Should any of the FDOT Approvals, the City Approvals, the Foundation Permits, the Miami- Dade County Class I Permit for the Marina, or any other governmental approvals temporarily lapse, (i) such lapse shall not be a reason to extend the Outside Dates for construction commencement of any Major Project Component, and (ii) such temporary lapse shall not constitute an Event of Flagstone's Default as long as Flagstone continues to use good faith efforts to reinstate any such lapsed FDOT Approval(s), City Approval(s), Class I Permit, the Foundation Permits, or any other governmental approval, as applicable. [Emphasis added.] The permits described in 1, 3, 4 and 6 above were necessary for the upland utility relocation work, a prerequisite to further construction on the site. Thus, Flagstone has complied with Section 6.1.13(b) of the Agreement and obtained the requisite permits and timely commenced construction of the upland improvements. Flagstone employed good faith efforts to reinstate the single lapse as provided for in Section 6.1.13(b) and the issue was corrected. Had there been a default, the Agreements do not allow termination. Instead, in the event of a Default, the City Manager is required to issue a Notice of Default, the City is obligated to provide written notice to Flagstone stating with particularity the respects in which the City May 26, 2017 Page 4 Submitted into the public record f p r it m(s) 5 '1 on 5 136 in City Clerk contends that Flagstone has failed to perform any such covenant, conditions and agreements and Flagstone has the right to cure any such default as provided in Article XXV of the Lease. Complaints about the time it has taken to complete the Project are particularly outrageous when advanced by those whose behavior slowed down the Project through baseless litigation and through roadblocks to normal permitting processes. Flagstone has successfully defended the Project against the multitude of frivolous lawsuits. Indeed, Flagstone intervened in lawsuits to argue on the City's behalf when the objectors sued the City. Each of the lawsuits failed but each took time and caused delays, a circumstance exacerbated by the collapse of credit markets in late 2007. And while the existence of these unexpected burdens did cause delays, they did not cause delays sufficient to result in a breach of the Agreements. The move now to take over the Project is particularly offensive given that Flagstone not only timely commenced but timely completed the large vessel Marina, an element of the Project which posed enormous permitting and construction issues. What is being suggested is that, now that the valuable Marina is complete, the City should simply take it. There are countries where private property rights are exposed to the risk of such whims. This is not one of them. We recognize that it is difficult to sit before a crowd made angry by false claims and try to explain the truth to people with little interest in listening. Here, there is no legal choice. Thank you for your consideration and we look forward to addressing these issues at the May 30 Commission meeting. Very truly yours, '14;4 a. ��n ` , Eugene E. Stearns t‘a-. cc: Daniel J. Alfonso, City Manager (courtesy copy via email only) Victoria Menendez, City Attorney (courtesy copy via email only) Todd B. Hannon, City Clerk (courtesy copy via email only)