Nakash Family and Setai File Suit to Overturn Zoning Changes for Bvlgari Hotel development in Miami Beach

Susan Askew
Susan Askew

Nakash Family and Setai File Suit to Overturn Zoning Changes for Bvlgari Hotel development in Miami Beach:

City Commission approved additional height and density for the project

An LLC owned by the Nakash family and the Setai Resort & Residences Condominium Association this week filed a lawsuit challenging zoning amendments and the vacation of a right-of-way made by the City of Miami Beach to allow the development of the first Bvlgari Hotel in the U.S. BHI Miami Limited plans to renovate the historic Seagull Hotel, formerly a Days Inn at 21st and Collins, into one of the ultra-luxury hotels. To do that, it sought a zoning change to allow rooftop and ground floor additions and the vacation of a City right-of-way on 21st Street for a small amount of additional FAR. FAR or Floor Area Ratio is used to measure the density of a building. Both actions were approved by the Commission in May followed by design approval from the Historic Preservation Board (HPB) a month later. 

In the suit filed in Miami-Dade County Circuit Court, the Nakash's Setai Hotel Acquisition LLC which owns the 88 rooms in the Dempsey-Vanderbilt Hotel as well as the newer oceanfront tower claims it has protected ocean views across the Seagull Hotel property which will be blocked if the Bvlgari is built as approved, a “taking” of their property rights. They also say the City was “improperly motivated” by a $7.4M public benefit fee to approve the changes, a case of illegal contract zoning. The Dempsey-Vanderbilt units are included in the Setai Resorts & Residences. The newer, larger Setai tower is oceanfront behind the Dempsey-Vanderbilt which faces Collins Avenue from the front and with its east side toward the ocean.

According to the suit, Setai Owners LLC built the new residential tower on the ocean “in the early 2000s” and “by order of the Miami Beach Historic Preservation Board, rebuilt The Dempsey-Vanderbilt Hotel to replicate and maintain its original art deco design with direct ocean views.” Designed by Henry Hohauser, the original hotel was built in 1937. Further, the suit states, “The Dempsey-Vanderbilt Hotel has always enjoyed direct ocean views across the Seagull Hotel property, which was developed with a hotel that was built in 1948.”

Setai Hotel Acquisition LLC purchased the Dempsey-Vanderbilt Hotel and the 40-story oceanfront tower from Setai Owners LLC, a Lehman Brothers Holdings company, in 2015 for $90M. The Nakash family built the Jordache Jeans empire and owns a number of properties in Miami Beach including the Setai, Hotel Victor, Casa Casuarina, and the Breakwater.

BHI purchased the Seagull for $120M in January 2020, announcing later in the year it planned to open a Bvlgari Hotel on the property. Bvlgari Hotels & Resorts is a joint venture of luxury Italian jeweler Bvlgari and Marriott International. Its current locations include Milan, Bali, London, Beijing, Dubai, and Shanghai. “In five of these six locations they rank first (and second in the one remaining location) in average daily room rate performance when compared to top performing hotels in their respective locations,” BHI attorney Carter McDowell of Bilzin Sumberg noted in the application letter to the HPB. “Worldwide, Bvlgari Hotels ranks number 2 out of 26 competitors with an overall luxury brand score of 93.2%.” In addition to Miami Beach, the hotel brand is opening in Paris, Moscow, Rome, and Tokyo. (The "v" in Bvlgari is pronounced as a "u.")

The zoning changes allow for a rooftop and ground level additions attached to the existing building as long as they don’t exceed the height of the rooftop addition up to 120 feet. 

The court filing references the previous version of the City’s zoning ordinance for the area known as the Architectural District which passed in 2007 and listed criteria for consideration of any approval for a height greater than 50 feet including: “The proposed addition shall not substantially reduce existing or established view corridors, nor impede the appearance or visibility of architecturally significant portions of an existing structure, as determined by the Historic Preservation Board.” [Emphasis in lawsuit.] The ordinance as approved strikes through the clause “substantially reduce existing or established view corridors, nor” leaving it to read “The proposed additions shall not impede the appearance or visibility of architecturally significant portions of an existing structure, as determined by the historic preservation board.”

“The direct ocean view rooms and the ocean view corridor are a fundamental economic asset and a legally protected right” that Setai Hotel Acquisitions relied on when making its purchase, the lawsuit claims.

“Having rooms with ocean views is an important attribute and feature of the [sic] The Dempsey-Vanderbilt Hotel which attracts many of the guests to the hotel,” according to the Court filing. “These direct ocean view rooms with a view corridor across the Seagull Hotel Property have a much higher per night rental rate than the rest of the rooms in the hotel.”

“The Dempsey-Vanderbilt Hotel generates a significant amount of its revenue by having rooms with ocean views,” the filing claims. In addition to a reduction in room revenue, the suit claims the value of the property will be less due to the loss of its property rights to the view corridor.

“BHI admitted that there was an impact to the ocean views of six (6) rooms based upon a study it prepared and submitted to the CITY,” according to the suit.

A current view with the Setai on the left, the Dempsey-Vanderbilt in the center, and the Seagull Hotel to the right

Current ocean views from sixth floor of Dempsey-Vanderbilt

What Setai attorney Kent Harrison Robbins says will be views from some Dempsey-Vanderbilt rooms after the new Bvlgari addition is built.

On its website, the Setai advertises 87 rooms in the “landmark” Art Deco Dempsey-Vanderbilt building ranging from studios with city or courtyard views, junior suites with city views, one-bedroom suites with city and courtyard views, and one-bedroom suites with “partial ocean view.” The rooms with partial ocean view rent for $1,600 nightly while the others range from $473 per night Sunday through Wednesday (the studios) to $1,620 for the one-bedrooms without ocean views on weekends. There is no indication how many rooms have partial ocean views. Full oceanfront suites are advertised in the newer building.

When BHI purchased the Seagull Hotel Property, the suit states, it was subject to the current zoning regulations “which provided limits to the height of any proposed attached additions to the building, as well as prevent any proposed addition from substantially reducing view corridors, including the ocean view corridor of The Dempsey-Vanderbilt Hotel and individual units therein.” After the purchase, the filing says, BHI proposed changes to the zoning code to allow the rooftop and ground level additions.

The City, according to the Setai, “was improperly motivated to support the draft ordinance, which was for the sole benefit of BHI redeveloping the Seagull Hotel Property” and detrimental only to their property because of a $7.4M public benefit fee agreed to by the Bvlgari owners. Based on the agreement, BHI will pay $1M within 30 days following the Historic Preservation Board’s approval “becoming final and non-appealable.” Another $4M is to be paid prior to the issuance of a full building permit and the remaining $2.4M upon issuance of a temporary certificate of occupancy.

“Thus, the contractual payments are illegally conditioned upon the issuance of development orders and approvals,” according to the court filing. “By virtue of the contract with the payments conditioned upon issuance of development approvals and orders, the CITY must support and approve BHI’s proposed development otherwise it will not receive $7,400,000,” constituting illegal contract zoning, the suit claims.

“The CITY’s public hearings regarding the proposed text amendments were a sham as the CITY, due to its desire to receive the sum of $7,400,000, already made its decision prior to said hearings,” the filing alleges.

The Setai asks the Court to temporarily and permanently enjoin the City from repealing the view corridor language, stating the City’s actions “significantly interfered with and/or destroyed [Setai Hotel Acquisition's] reasonable investment-backed expectations to own and rent individual units with ocean views” and, as such, the ordinance changes “constitute a taking of [their] private property and private property rights” under the Florida Constitution.

If the Count determines that a taking has occurred, the Setai “requests that this Court enter appropriate orders, judgments or decrees” which would require the City to formally condemn the property and schedule a trial or hearing “for the purpose of determining full or just compensation for the taking.”

At the City Commission meeting on May 26 when the zoning change was passed at second reading, BHI attorney Carter McDowell addressed the arguments made by Robbins in previous presentations before committees and Land Use Boards. He noted that prior to construction of the Setai, the Seagull enjoyed full ocean views to the south but when it was built, it “obliterated all of our views to the south… they built a 107-foot-tall garage which is what our entire south façade faces, yet they are claiming that we are blocking their view.”

“To add injury to insult… they put a finish on the north side of the garage facing 20th Street… and turned their backside to us with no architectural character at all,” McDowell said. 

Regarding the claim that the 2007 ordinance “gave them the right to have an unrestricted view across our private property,” McDowell said, “the absurdity of that is they’re saying a City ordinance intentionally granted them an easement across our property. You not only didn’t, you don’t have the authority to do that. If you had, it would be a taking of our property rights.”

And, he added, “As the construction of the Setai itself clearly demonstrates, there is no right to light and air and view. If there was, they wouldn’t have been able to build their project.”

Even with the rooftop addition, McDowell said the Bvlgari would be “shorter than their garage.” In the HPB application letter and at the HPB hearing, McDowell emphasized, “The height of the Bvlgari with the rooftop addition is 9 stories and 105’11”. By comparison, the Setai parking pedestal to the south is 11 stories and 107’-9” tall and the tower is more than three times as tall at 393’-7”. The renovation also includes the thoughtful removal of a portion of the building’s southwest corner to pull the structure further away from the Setai hotel rooms located to the west and will create a truly four-sided design, replacing the plain rear/back of house view the Setai rooms currently face.”

"We will affect some of the views in some of the rooms in the Art Deco part of the Setai Hotel," McDowell told the HPB. "We will not entirely block the ocean view from any of those rooms. There is no view of the ocean below the fifth floor because of the landscaping and other things that occur between it and the beach. Those rooms are a thousand feet from the water, a thousand feet, three football fields away... that is the ocean view they are somehow claiming we are negatively impacting."

At both the Commission and HPB meetings, Setai attorney Kent Harrison Robbins emphasized that his client was not opposed to the entire project but was hoping for a compromise that would limit the south addition to the hotel to four floors, thus protecting the views of the Dempsey-Vanderbilt units on the 5th-8th floors. Both sides seem to agree that landscaping blocks views below those floors.

“Otherwise,” Robbins told the HPB, it’s a “wonderful” and “well-planned” project. At the Commission meeting, however, he said that if the view corridor language was not preserved in the ordinance, his client would “challenge this whole thing” including the vacation of the City right-of-way on 21st Street to give extra FAR to the new hotel by including the right-of-way in a single, unified development site. There seems to be a discrepancy in the amount of additional FAR. According to the lawsuit, it’s 13,500 sq. ft. but the resolution states it’s 6,736 sq. ft.  

Nonetheless, the Setai says the City Commission cannot grant the vacation because the City Charter requires a voter referendum for the vacation of any property with beach access from Collins Avenue to the Erosion Control line, the boundary to the public beach.

According to a memo from Miami Beach City Manager Alina Hudak accompanying the resolution, the vacation provides a “perpetual, non-revocable easement for the City’s continued use… so that roadway access and circulation would not be affected.” The vacation resolution states, in addition to “continued public use of the Roadway Segment for City access… the Owner has further agreed to the installation and perpetual maintenance of additional landscaping adjacent to the Owner’s Property within the City’s Beach Access and Beachwalk area…”

The suit was filed by Bradley Gould of GrayRobinson PA for Setai Hotel Acquisition LLC and Robbins for the Setai Resort & Residences Condominium Association. At the City Commission meeting, Gould said there is a “property right under Florida law for light and view if it is by contract or statute. There is no common law right but if there is a statute that creates a view corridor, it becomes a property right.”

Acting City Attorney Rafael Paz told Commissioners that the City disagreed saying the review criteria within the ordinance which references view corridors applied to “views from the public right of way, not from private property.” Planning Director Tom Mooney added that the HPB review criteria including consideration of view corridors is covered in another section of the Code which is why the City struck the language in the zoning ordinance.

Commenting on the filing, McDowell wrote in an email, “As you are aware the plans for the development of The Bulgari Hotel Miami Beach have earned support from the City Commission, City Staff, the Miami Beach Planning Board, the Miami Beach Historic Preservation Board, and a broad coalition of residents, businesses and community stakeholders. We are excited about moving forward developing a six-star resort that will elevate Miami Beach’s appeal as an international destination and deliver significant positive economic impact to the City and Community. We look forward to prevailing against these baseless claims.”

A City spokeswoman said the City had not yet been served with the suit.

Rendering at top courtesy Citterio-Viel & Partners and Revuelta Architecture International
Photos of Dempsey-Vanderbilt courtesy Kent Harrison Robbins, PA

Corrected to reflect location of Dempsey-Vanderbilt is on the east side of Collins Avenue in front of the larger tower and not across the street as stated in a previous version.

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