Miami Beach and Ocean Terrace Holdings Settle Dispute Over Density Calculation

Susan Askew
Susan Askew

Miami Beach and Ocean Terrace Holdings Settle Dispute Over Density Calculation:

Developers to get additional floor area, City gets $3 million

The City of Miami Beach has settled litigation with the developers of Ocean Terrace over the amount of floor area allowed on a nearly one-block development site that will include a new luxury residential tower and hotel addition along with retail components when complete. Under the settlement, Sandor Scher and Alex Blavatnick’s Ocean Terrace Holdings will make a $3 million contribution to the City while gaining the ability to apply a more liberal standard of Floor Area Ratio (FAR).

“This resolution clears the way for the long-desired revitalization of North Beach,” Scher wrote in an email to RE:MiamiBeach. “It will allow us to advance plans for a world-class oceanfront promenade for the community.”

Ocean Terrace Holdings sued the City last year claiming it breached a development agreement by refusing to apply a definition of floor area that would allow for more habitable space following a zoning board ruling in November 2019. The Board of Adjustment (BOA) decision, which excluded stairwells, elevator shafts, and mechanical chutes and chases from the calculation of FAR, applied to Russell Galbut and David Martin’s 500 Alton Road project. Shortly after, the City Commission adopted a more specific ordinance codifying the historic definition but, in between the BOA ruling and passage of the ordinance, Ocean Terrace Holdings filed new plans with the Historic Preservation Board (HPB) for an addition to the Broadmoor Hotel and a proposed residential tower that relied on the BOA ruling, resulting in an additional 20,000 sq. ft. of habitable space for the Ocean Terrace development.

In its suit, the developers sought damages in the amount of approximately $800,000 per month. Following court-ordered mediation, the settlement agreement was reached. It calls for the first payment of $1 million within ten days of the execution of the settlement agreement and a second payment of $1 million on or before September 1, 2021. The final $1 million will be applied toward the construction of the 72nd Street Community Complex and paid either upon execution of a design-build agreement for the complex or on April 1, 2022, whichever is earlier. Should the City not proceed with the complex by January 1, 2024, it will have the option to use the $1 million for another project in North Beach.

Under the terms of the agreement Ocean Terrace Holdings will be able to exclude “(1) voids in floors to accommodate elevator shafts; (2) voids in floors to accommodate mechanical/ventilation/trash shafts; and (3) enclosed stairwells, including enclosed stairwells within accessory garages.”

The developers also committed to an expedited schedule for the park/streetscape improvements on Ocean Terrace as part of an earlier agreement with the City in exchange for transfer of the FAR from the street to accommodate an addition to the Broadmoor Hotel. Finding a hotel flag to operate the Broadmoor and Ocean Surf Hotels (photo above) which will be combined into one boutique hotel proved challenging due to its small size, so the developers approached the City with the proposal to provide $15 million through a small park and streetscape improvements in front of their development along Ocean Terrace. That plan remained on hold along with the rest of the development pending the outcome of this litigation.

“Ocean Terrace Holdings has continued to speak with several potential hotel flags of the caliber that it wants to bring to North Beach. Having this issue resolved is a critical step in advancing these talks,” Scher said.

The terms of the settlement require HPB approval of the park/streetscape improvements on or before September 30, 2021; submission of construction drawings by February 1, 2022 or within four months of HPB approval, whichever occurs later; obtaining a full building permit for the improvements by September 1, 2022 or within seven months of submission of construction drawings, whichever occurs later; and commencing construction within 60 days after obtaining a building permit.

The Ocean Terrace development project includes a mix of historic preservation, restoration, and new construction in a nearly full block along Ocean Terrace and Collins Avenue between 74th and 75th Streets. Scher said the developers have not begun sales of the units in the residential tower “but look forward to doing so soon.”

“Any subsequent changes to the overall development plan as a result of this settlement will be minor,” he noted.

The settlement agreement can be found here.

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