500-700 Alton Road Plan Receives Final Approval

Susan Askew
Susan Askew

500-700 Alton Road Plan Receives Final Approval:

Allows 519-ft tower, provides public park for Miami Beach

Miami Beach Commissioners gave final approval to zoning changes and a development agreement to allow Russell Galbut’s Crescent Heights to build a 519-foot, 44-story tower on the 500 block of Alton Road. In exchange, the City will get a three-acre public park on the 600 block, built by the developer.
 
Earlier this year, Mayor Dan Gelber challenged the community and Galbut to come to an agreement that would get rid of the eyesore of the old South Shore Hospital building and do better than the project that had been approved for the site at the City’s gateway. That project is an intense mixed-used development with 510 units, 75,000 sq ft of retail, and very little green space. 
 
After 146 meetings by Galbut’s count, the City Commission this week approved a grander vision – the tall tower with a public park that includes resiliency features and community gathering spaces.  
 
The City’s lead negotiator on the project, Assistant City Manager Eric Carpenter, said that since April and further since last month’s Commission meeting, the City has worked to incorporate the wishes of the nearby residents. One of the key components of the agreement was “a very thin tower” in the northeast corner of the 500 block to allow greater view corridors. He noted the intensity of the project has been reduced from what was approved to 410 residential units and 15,000 sq ft of retail space. The park will not only be a public amenity, it will also contain many resiliency components to help with stormwater management in the event of major weather events.
 
We’re at a place where we’ve significantly improved the project,” Carpenter said.
 
Carpenter outlined the remaining sticking points in the development agreement: short-term rentals, faster delivery of the park in phases, fees to be paid by the developer, the timeline for demolishing the shell of the Old South Shore Hospital that has stood on the 600 block for more than a decade, the public benefits associated with Baywalk construction, and the ability to close 6th Street during construction. After two and half hours of discussion with public and Commission feedback, several City officials and Galbut went back to the negotiating table and came back after the lunch break with a final proposal. 
 
Carpenter emphasized the agreement prohibits hotel use but will include nine amenity suites available only to the residents of the building for visiting guests. Galbut asked for shorter term rental periods of not less than thirty days to be in line with a number of neighboring buildings to help him secure financing for the project. Lenders, he said, would not want to see restrictions on a building that others did not have. After a debate about the potential for increased intensity of use versus the type of short-term renters in a luxury building (i.e. seasonal renters), the final agreement allows Galbut rentals of not less than thirty days on 10 percent of the units that he controls. That number will be a diminishing number as the units are sold. Once the building is sold out, the condo documents would not allow rentals of less than six months and a day.
 
Galbut also agreed to earlier delivery of the first and second phases of the park. Initially, phase one had an outside date of 48 months for delivery and phases two and three had outside delivery dates of approximately eight years. Commissioners balked at that and suggested they would compromise on the other issues if the park could be delivered sooner.
 
The agreement as approved sets delivery for phase one at 18 months from permitting with an outside date of 30 months, an improvement of 18 months from the original proposal. Carpenter estimated phase one could be delivered in the summer of 2021 if all goes well with the land use board approval processes. 
 
For phase two of the park, agreement was reached for initiation of that phase within 48 months of Design Review Board (DRB) approval, with an outside delivery date of 66 months from approval, far sooner than the initial 8 ½ years. Phase three park delivery remains at 96 months from the effective date of the development agreement as that is the green space around the tower and can’t be delivered until construction is complete.

With regard to the application fees, the City agreed to a lower fee as there is an effort to revisit those overall. Previously the City had a $10,000 cap on application fees for the land use boards but removed those recently. In doing so, the fees for larger projects ballooned and, in the case of this project, would have totaled approximately $400,000. To keep the project moving and not delay it for the debate on how to handle fees going forward, the City and developer agreed to a $15,000 application fee. If the City’s policy is revised and the fees for this project would be more than $15,000, then “the City will contribute that as a way to accelerate the DRB process,” Carpenter said.
 
The debate over the impact fees stemmed from Galbut’s objection that the fees had already been paid on the property at one time and he wanted credit for those fees, not a waiver of the entire $526,000 but a credit for the fees already paid. The final agreement states that the City and Galbut will negotiate a fee not to exceed $10 million for him to construct the pedestrian bridge from the corner of his development crossing over 5th Street. If Galbut builds the pedestrian bridge, then he would pay 100% of the impact fee; if he does not end up building the bridge, there would be a 50-50 split of the impact fee between the developer and City. 
 
The developer has also committed to building the Baywalk behind the buildings from 10th to 12th Streets but the permitting is on the City. Carpenter told Commissioners that the consultant working with the City on the permitting “had some significant pushback from the County and the Army Corps [of Engineers] on this over water Baywalk concept. We’re still cautiously optimistic but this is not a fait accompli that we will get a permit.” 
 
Under the final development agreement, if Galbut does build the pedestrian bridge and if the Baywalk does not come to fruition, Galbut will contribute the $750,000 that he would have received to build the Baywalk toward the cost of the pedestrian bridge, thus reducing the cost to the City.
 
The shell of the old South Shore Hospital building that sits on the 600 block of Alton Road


Regarding demolition of the 10-story shell of the South Shore Hospital building: Commissioners and the community had asked for a fast demolition. The reason the shell has remained is that Galbut would have to give up his development rights to the height of the old building which was grandfathered in when zoning in the area was reduced. If for some reason this deal approved by the Commission were to fall through, he would lose the height that is currently grandfathered on the site if the building were to be torn down before all approvals were in place. The agreement reached yesterday indicates he will tear the building down within 60 days if an ordinance is passed that would allow him to build on a footprint that is 2.25 times greater than the current shell or within six months of DRB approval. If approved by the Commission in February, the hospital could be demolished by April. On the other hand, if that ordinance is not approved, Carpenter said he expected the item to go to DRB in March and with their approval on that date, the building would be torn down next September.
 
Finally, Galbut agreed to provide an alternative pedestrian pathway south of 8th Street during the closure of 6th Street for construction.
 
The most difficult part of the discussion among Commissioners was with regard to the short-term rentals. Under current zoning, the property could be used for a hotel and is zoned for short-term rentals. Creating a restriction that is different from the surrounding neighbors would make financing difficult, Galbut said. 
 
In addition, he said, rentals (and short-term rentals) are a way to get the building done quickly. For a condo building, he said, developers rely on pre-sales before building.
 
“You want the park done fast. You want the building done fast,” Galbut said. “I don’t know that we’re going to be able sell all the units” in the current market so, initially, the units will also need to be rented. “That’s how the process works. In order to sell unsold inventory, we need to be able to rent it seasonally.”
 
Once the units are sold, the owners will have to rent for terms longer than six months and a day. “You want us to build quickly, this is one of the ways to do this,” he said.
 
Carpenter said, “I think we are in a good place. I think this is a good project and, ultimately, I think we have gotten more than a fair deal from the developer.”
 
Commissioner Michael Góngora, a condo association attorney, worried about slow sales and the potential for the building to remain a short-term rental building if it were to be more profitable. 
 
Galbut responded, “I can’t predict the market nor can anyone else. What we need is the ability to get financing on this building. In order to do that we need to have the same rights commonly enjoyed [by the surrounding buildings and the] ability to rent units in the interim. The goal is not to do that.”
 
He said the building was going to be “a spectacular high rise not meant for short term rentals.” The other option, he said, “is to wait” for the units to be presold before building. He also noted the building will have “intense daily management” to deal with any issues.
 
At that point, agreement was reached on the 10 percent of developer-owned units restriction for the rentals of not less than 30 days.

After nearly six hours of discussion in total on the development agreement, it was approved unanimously by the Commission. The rezoning ordinances sailed through later in the day in a matter of minutes. Those permitted the FAR (floor area ratio) on the property to be concentrated in the 500 block, allowing for the increased height on the tower. This was accomplished by the City “vacating” 6th Street, though the street will remain open and the City will have all rights to use it. 
 
Gelber said the development site was one of the “unfinished things” he saw in the City when he was running for office, “a huge gaping sore” with an approved project that "was of no help to anyone” containing 500 units that could have all been Airbnb rentals. 
 
“I’m very satisfied” he said. “This terrible entryway to the city is going to be gone very soon… I know that the work has just begun… but hopefully in a few years from now we’re going to look back and say this is going to be exactly as we imagined it.”


Renderings: Arquitectonica
 
Proposed pedestrian bridge over 5th Street from 500 Alton Road tower

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