500 Alton Road development on hold as developers and Miami Beach tangle in court

Susan Askew
Susan Askew

500 Alton Road development on hold as developers and Miami Beach tangle in court:

City seeks to quash ruling of its zoning board for two additional floors within building envelope

Despite settlement talks over how many floors can be included in the proposed tower for 500 Alton Road, the City of Miami Beach has filed suit to quash a ruling by its own Board of Adjustment that allows the developers to include two additional floors. The dispute has gone from simmer to fast boil in a matter of a month with the City calling the ruling “a gift to a powerful developer” and the developers accusing the City of having “hijacked and manipulated” the authority of the zoning board.
The ruling by the Board of Adjustment (BOA) last month overturned 48 years of City policy to include stairwells, elevator shafts, mechanical chutes and chases in the measurement of floor area or Floor Area Ratio (FAR). Floor area or FAR is the amount of floor space allowed within a structure. It measures and controls density (along with other parameters that include maximum height, how far a building must be set back from the property line, and percent of lot coverage allowed). Allowable FAR varies by zoning district. For example, a single-family residential area has less allowable floor area than a higher intensity commercial district. 
By excluding those areas in the floor area calculations, the 500 Alton Road developers, which include Crescent Height’s Russell Galbut and Terra Group’s David Martin, gain an additional 21,000 sq ft of space within their 519-ft tower. While all dimensions of the building remain the same as what was approved by the Design Review Board (DRB) – including height and width – the ruling allows for an additional two floors inside the approved building envelope.
The decision, however, is not specific to 500 Alton which is one of the City’s arguments. If allowed to stand, the ruling “adversely affects the public by unleashing unknown population demands on the City’s infrastructure,” according to its filing in Miami-Dade County Circuit Court.
The developers of two large projects approved but not yet underway – Ocean Terrace and 72 Park – have both indicated their desire to utilize the additional FAR granted in the zoning board's ruling. 
Meanwhile, the City Commission this week referred to the Planning Board a draft ordinance that would codify the inclusion of the stairwells, elevator shafts and mechanical chutes and chases in the calculation of floor area. Commissioners also participated in a closed legal session to “review settlement negotiations and/or strategy related to litigation expenditures” with regard to the lawsuit over the BOA ruling.
While the developers have filed an application for building permits for The Park on Fifth, until there is a settlement or Court ruling, the project is on hold.

Before we get into the details, a summary:
The developers and the City reached an agreement to allow a transfer of FAR from the 600 block of Alton Road to the 500 block to allow for the 519-ft tower where the height limit is 75 feet. 
Proposed tower and park for 500-600 Alton Road

In exchange, the developers will build a 3-acre public park deeded to the City and provide access for a pedestrian bridge over 5th Street. The bridge, which would be paid for with $10 million from General Obligation (GO) Bond proceeds, would be constructed by the developers who chose renowned French artist Daniel Buren to create the design for the structure. 

Proposed pedestrian bridge over 5th Street designed by Daniel Buren

The approved tower contains 43 levels with 311 units. Seeking an additional two floors, the developers appealed the City’s historic interpretation of FAR calculations to the Board of Adjustment which ruled in their favor. A total of 15,000 sq ft of retail and restaurant space is approved for the 500-600 blocks. 

Galbut (separate from Martin) has previous approval for a project on the site known as “The Waves” which includes shorter buildings without public greenspace or the pedestrian bridge. That project is approved for 510 units and 75,000 sq ft of retail space.

Approved project for 600 Alton Road

600 Alton Road was the site of the old South Shore Hospital, a structure that sat abandoned for a decade. Residents in neighboring buildings reached out to Mayor Dan Gelber for help in finding a solution that would remove the “eyesore” while also providing greenspace and less bulky structures on the site. 

The hospital skeleton was ultimately imploded in April after an agreement was reached that would allow Galbut to replace the structure with one of a similar size should the development agreement for the tower and park fall apart. 

City Seeks to Quash Board of Adjustment Ruling

The City’s suit asks the Court to quash the Board of Adjustment (BOA) order issued earlier this month stating, as they did at the BOA hearing, the space dedicated to elevator shafts, stairwells, and mechanical chutes and chases is included in calculations because they are not specifically excluded. The Land Development Regulations (LDRs) specifically exclude certain elements such as attic space, terraces, breezeways, open porches, unenclosed balconies, and mechanical equipment rooms above the main roof deck from the calculation but the LDRs do not exclude stairwells, elevator shafts, and the mechanical chutes and chases.
The appeal notes 48 years of historical precedent and two rulings by the City’s former Planning Director and two rulings by previous Boards of Adjustment affirming the Planning Director’s interpretation that the areas are included in the measurement.
The Court filing submitted by Jeffrey Bass, Shubin & Bass, on behalf of the City also states that in 14 prior development applications submitted to the City’s Planning Department, the developers have followed the City’s historic definition of floor area. “The Developers never objected,” it says.
When the definition of floor area was codified in 1971, stairwells, elevator shafts and the mechanical elements were specifically included in the measurement followed by a list of exclusions, but in a 1989 rewrite, “a stylistic change for purposes of simplicity, clarity, consistency, and ease of administration” was made to “remove the list of inclusions because – from a drafting perspective – it was impossible to list all areas of a building that count as Floor Area” according to the filing. “[T]he definition was re-styled to provide a clear and exclusive list of areas to exclude from the computation of Floor Area.” At the same time, the City Commission added another exclusion for areas below grade to the list. “Relevant here, the Commission did not elect to add the Elements [ruled on by the BOA] to the list of Exclusions,” the City states. On four separate occasions, the City filing notes, that the Commission has added or refined the list of exclusions, the stairwells, elevator shafts and mechanical elements were not specifically excluded. [All emphases in Court filing.]
“Despite several legislative opportunities to exclude the Elements from the definition of Floor Area, the commission repeatedly elected to include them.” 
The ruling, according to the suit, amounts to “...an unauthorized legislative amendment to the LDRs beyond the BOA’s delegated authority; and an end-run around both the Act and the City Charter.” The City’s Charter requires a referendum for any increase in FAR.
“The BOA possesses neither power nor authority to create a new Exclusion for the Elements. Such is a legislative act that must be accomplished by the City Commission through the legislative process,” the filing states.
The City alleges the BOA “improvidently circumvented the legislative process to create a new Exclusion for the Elements. It did so – plainly – as a gift to a powerful developer who wants two more floors of building to sell. That act represents – to the nth degree – all the evils of the ‘power-imposed’ zoning that reviewing courts uniformly condemn. The foregoing errors are compounded by the BOA’s failure to support its decision with any evidence whatsoever.”
"It did so – plainly – as a gift to a powerful developer who wants two more floors of building to sell. That act represents – to the nth degree – all the evils of the ‘power-imposed’ zoning that reviewing courts uniformly condemn."

Intervention by the Court is the “appropriate remedy to quash ‘power-imposed zoning’, i.e., a zoning approval ‘based on no more than the fact that those who support it have the power to work their will,’” the City states, citing previous case law.
The suit says that there must be “competent substantial evidence” to support the Board’s ruling. Citing testimony by project supporters and Galbut at the BOA hearing, the appeal states, “Irrelevant evidence, lay opinion evidence, and ‘I-Am-The-Biggest-and-Most-Powerful-Landowner-In-The-City’ evidence is insufficient to support a quasi-judicial action.”
“The Principal [Galbut] testified that he has ‘historically been the largest property owner on Miami Beach that’s still alive today’ and that he has ‘done more projects on Miami Beach than anyone alive today,’” according to the City’s narrative. “He testified that this was an ‘incredible’ Project and that he needed more Floor Area to make it economically viable… because ‘[a]t the end of the day it’s what you can sell that matters’… He clarified on cross examination that this whole matter of interpretation arises from his desire to add two (2) more floors to his building beyond that which the City approved… No syllable uttered by the Principal related to the issues on appeal; not one word constitutes competent and substantial evidence to support the conclusion that the Elements fall within an Exclusion.”
“Did the Developers present enough power to get the votes? Yes. Did the Developers present enough evidence to sustain the votes? No!” the appeal states.
In the BOA hearing the developers stated the Code did not specifically define “floor” and they referred to dictionary and architectural textbook definitions of floor being areas you can stand on. The City’s appeal reiterates its position that “floor area” is a phrase with its own meaning, “gross horizontal areas of the floors of a building.”
Citing the specific exclusion for “attic space, whether or not a floor actually has been laid,” and “explicit directions for the calculation of Floor Area in ‘volumetric buildings’ lacking ‘interior floors’” which could include theaters, warehouses, etc. in the Code, the appeal states, “the existence or non-existence of an ‘actual floor to stand on’ is immaterial to the calculation of Floor Area.”
“No honest reader of the text can reach the conclusion that the legislature intended to exclude the Elements because they don’t possess a floor to stand on.”
“The bottom line is this: if the legislature wished to draft a separate exclusion for the Elements, it could quite easily have done so on many occasions. But it didn’t. Because the plain text of the definition provides no Exclusion for the Elements, they are included in Floor Area,” the City concluded.
At the hearing, BOA member Barry Klein, one of two votes to uphold the City’s position, argued the definition was clear in that the measurement “goes to the outside of the building…  The definition could be hardened maybe,” he said, but he added he didn’t believe the areas were excluded. “This particular developer, you can’t tell me that they came in here blind, not knowing the rules,” he said.
Noting the original statute specifically included the elevator shafts and other elements in question but the 1989 Code change removed them, Board member Richard Baron said he was compelled to support the appeal citing what he called “40 or more years of misinterpretation of the statute.”

Despite a fear of overdevelopment, Board member Richard Segal said, “We’re thirty years behind… Why aren’t we moving along with downtown? Why aren’t we moving along with Brickell? Why aren’t we moving along with other places? If we’re really concerned about FAR, let the Commission come and make a decision at that time.”
The Board ultimately voted 5-2 to support the developers’ position.

Developers’ Motion to Dismiss the City’s Appeal

The developers accuse the City of misappropriating the BOA’s authority by drafting and signing the final BOA order that they say is “written favorably” to the City and “inconsistent with the Board of Adjustment’s ruling, which was in favor of the Applicants.”
“Despite the Applicants being the prevailing parties, there is no mention of the facts and arguments that they presented in support of their appeal to the Board of Adjustment,” the developers state in their motion filed by Ronald Lowy of Lowy and Cook. “Further, the Order is signed by the City’s Chief of Planning and Zoning, not the Board of Adjustment. It is therefore no surprise that the Petitioners filed this action, including their 517-page Petition, just one day after the Order was entered as both were drafted together to buttress each other.” [Emphasis in the filing.]
“Looking at all of the relevant facts concerning the entry of the Order leads to the inescapable conclusion that the Petitioners are trying to pull a fast one in abusing the appropriate administrative and judicial process,” the motion states.
They also claim the City and its legal counsel “reneged on their prior representation that the Applicants would have an opportunity to review and comment on the draft Order prior to its entry,” a misrepresentation they say “is unethical and warrants sanctions pursuant to the standards of professional conduct required of members of The Florida Bar.”
They accuse the City of Miami Beach and the Planning Department of “attempting to circumvent their own final determination made by the City’s BOA in order to achieve the results desired by certain individuals in the City Administration. This is blatant attempt [sic] by the Planning Department to enact its own legislation,” according to the filing.
“It is completely inappropriate for the Petitioners to have exclusive control over drafting the very Order that reverses their prior Determination,” the developers state and, in a footnote, add, “This entire scenario is a perfect example of the idiom of the fox guarding the hen house which is also often used to describe someone who is put in charge of policing himself.”
They also cite previous case law with regard to appeals of administrative board orders. Specifically, City of Miami v. Hollis, (FL 1955), which they quote: “We are not unmindful of the rule adopted in this jurisdiction that the Court ordinarily will not substitute its judgment for that of an administrative board in a zoning matter where the question presented is fairly debatable.”
“Additionally, when this Court reviews the decision of the BOA to reverse the Determination of [current] Planning Director [Tom Mooney], this Court must accept the evidence most favorable to the prevailing party,” the motion states, quoting a 2006 ruling: “In considering factual issues resolved by the trial court, an appellate court must construe the evidence in a light most favorable to the prevailing party.”
“Thus, relying on an order written by the non-prevailing party is nonsensical and a blatant attempt to include findings that were actually resolved by the BOA against the Petitioners,” the developers claim.
“In sum, the Petitioners prepared, manipulated, and entered the Order that they are appealing in this matter, an action that is inappropriate, biased, and inconsistent with the decision of the BOA,” according to the filing. “The public cannot maintain confidence and trust in the BOA’s process and authority when it can so easily be hijacked and manipulated by the Petitioners as they deem fit.”
“The public cannot maintain confidence and trust in the BOA’s process and authority when it can so easily be hijacked and manipulated by the Petitioners as they deem fit.”

The developers are asking the Court to throw out the City’s appeal based on a lack of standing to appeal final decisions of the BOA unless it can show it “is, or will be, injuriously affected by the order” or, alternatively, that the Court give the Board of Adjustment 15 days to enter its own order independent of the City Administration due to “a clear and irreconcilable conflict of interest in this action.”

Citywide implications of the Decision

Two developers of approved projects have expressed interest in adapting their plans to include the additional FAR that would be allowed if the BOA ruling stands.
In a letter to City Attorney Raul Aguila on behalf of Ocean Terrace Holdings (OTH), Neisen Kasdin, Joni Armstrong Coffey, and Kristofer Machado of Akerman note that as the “owner and redeveloper of the historic Broadmoor and the Ocean Surf hotels, and of nearly all of the remainder of the city block along Ocean Terrace and Collins Avenue between 74th Street and 75th Street” the developers have a “significant stake in the finality of the BOA Determination.” Kasdin is a former Mayor of Miami Beach.

Tower proposed for Ocean Terrace

They urged the City to recognize the BOA decision. “The city code grants the BOA ‘exclusive authority’ to rule on and correct errors in the Planning Director’s enforcement of the land development regulations,” they write. “The BOA’s capacity is adjudicatory, not advisory, and its decisions are binding and enforceable on the city administration.”
The letter, written prior to the City’s appeal states, “…a city appeal would harm the BOA’s reputation and would call into question its function and impartiality going forward. The city administration cannot intend to compel the BOA with the threat of litigation into issuing interpretations the administration favors. The BOA Determination must be recognized as final if the BOA is to remain truly an independent and respected administrative board.”
"The city administration cannot intend to compel the BOA with the threat of litigation into issuing interpretations the administration favors."

Noting the potential for legislation to amend the Land Development Regulations, they ask that projects with “an approved development agreement or have obtained or submitted for discretionary approvals or building permits prior to the new amendment, including OTH’s project should be deemed fully and permanently vested” in the definition of floor area as determined by the BOA.
With regard to a potential settlement with the 500 Alton developers, OTH’s representatives said, “[T]he city should extend the benefits of the settlement to all other similarly situated projects, including OTH’s project… Otherwise, the city risks treating similar projects unequally without a rational basis for the difference in treatment.”
They also urged the City not to delay applications for new projects that wish to build in accordance with the BOA ruling. “Though some in the city administration may wish that the BOA had ruled differently, the city cannot institute a de facto moratorium on development applications and deny applicants the right to build in accordance with the BOA Determination until the BOA Determination is overturned or the city code is amended to the city administration’s liking.”
The impact of allowing the BOA order to stand would be “modest”, they write, “as the areas excluded from ‘floor area’ under the BOA Determination account for but a sliver of the overall capacity of a building.” They also cite the restrictions within the City Code including “the significant bulk and dimensional limitations” as well as “the tens of millions of square feet already built in the city, and the reality that very few sites remain that could accommodate significant new development. For these reasons, we anticipate that any additional floor area made available by the BOA Determination would have only a negligible and virtually imperceptible effect on development in the city.”
Matis Cohen, developer of 72 Park in North Beach, received Design Review Board approval for a mixed-use project on almost an entire city block between 71st and 72nd Street in the new Town Center district. The project will include a 21-story tower with 270 rental units.

Proposed 72 Park development

Cohen, who has submitted updated plans utilizing the BOA’s new interpretation of FAR, echoed Ocean Terrace Holdings’ assertion that restrictions in the City Code guard against the City’s claim that including the additional areas creates “unknown population demands”.
In addition to restrictions on height, setbacks, lot coverage limits, and floor area, Cohen said the Comprehensive Plan “dictates the density of every single neighborhood in the City” by setting a maximum number of residential units per acre. “It is absurd how the City conflates intensity and density when it’s convenient for them,” he said of the appeal.
As to 500 Alton Road, Cohen said, “They are legally allowed to have 540 apartments according to the Comprehensive Plan and the approved [Waves] plan. If Russell Galbut wanted to build 540 apartments, he could,” noting the current plan calls for 311 units. Regarding the additional two floors, he said, Galbut could do “two floors with one unit.”
“The process that the City is taking that blocks you in every way and now is spending our money to fight it is crazy,” Cohen said. “Every time there’s a liberalization of any code in this city, the City goes to court. So, we only trust our boards when they want to restrict. Once you go through the whole process of getting a Board of Adjustment hearing finding, they find in your favor, the City sues its own board? We can’t trust the system. The City itself doesn’t trust its own system.”

500-600 Alton Road Project Specific Implications

What happens if the developers lose (e.g. there is no settlement with regard to the number of floors they are allowed to build and the Court grants the City’s request to quash the order):
  • They could proceed with development as planned which includes a 3-acre public park and a pedestrian bridge over 5th Street.
  • Russell Galbut could build his currently approved plan for the site known as “The Waves” which does not include public greenspace or the pedestrian bridge.
  • Galbut, who owns the property, could do nothing with the site which has been vacant for more than a decade.

Ordinance to include stairwells, elevator shafts, mechanical chutes as floor area 

Following the Board of Adjustment ruling, Mayor Dan Gelber along with co-sponsors Commissioners Michael Góngora and Mark Samuelian proposed an ordinance that would codify the interpretation that stairwells, elevator shafts, and mechanical chutes and chases are included in the measurement of floor area. According to a memo accompanying the item at this week’s City Commission meeting, City Attorney Raul Aguila, noted, “The Ordinance also provides that, ‘for the avoidance of doubt, unless otherwise provided for in [the] land development regulations, floor area excludes only the spaces expressly identified…’ 
At the meeting when the item was referred to the Planning Board for recommendation, Gelber said he assumed the Board “will have a full and robust hearing on it” followed by “a full and robust hearing” at the Commission which would have two readings of the legislation. He noted, “The intention as written is to reestablish the prior interpretation” to include the areas in the definition of floor area. “That could change as it goes through the process.”
At the Commission meeting, Miami Design Preservation League Executive Director Daniel Ciraldo said the organization supports the interpretation of the Planning Director to include the areas within the measurement. He noted, “I understand that there is a push from some of the neighbors nearby to just do something because, it’s true, that property has been a blight on our community for many years, but at the same time I think we all have to be cognizant of the fact that there is a rule of law and the rule of law does need to be followed.”
“On my own personal note about this, when I went to the Board of Adjustment [hearing], I was also surprised to see members of the public from nearby essentially saying this may be the law but it doesn’t matter to me because I want my park or I want this or that and I think it’s a slippery slope.”
The Planning Board will consider the item at its meeting December 17.

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