Herbits v. City of Miami
| Decision Date | 26 October 2016 |
| Docket Number | No. 3D15–1039.,3D15–1039. |
| Citation | 207 So.3d 274 |
| Parties | Stephen HERBITS, et al., Appellants, v. The CITY OF MIAMI, et al., Appellees. |
| Court | Florida District Court of Appeals |
Dubbin & Kravetz and Samuel J. Dubbin, P.A.; Carlton Fields Jorden Burt and Richard J. Ovelmen and Enrique D. Arana and Justin S. Wales and Namrata S. Joshi, for appellants.
Greenberg Traurig and Elliot H. Scherker, Alan T. Dimond, Brigid F. Cech Samole and Jay A. Yagoda ; Victoria Méndez, City Attorney, and John A. Greco, Deputy City Attorney, and Forrest L. Andrews, Assistant City Attorney, for appellees.
Before ROTHENBERG, SALTER and SCALES, JJ.
The seven appellants, plaintiffs in the circuit court (collectively "Appellants"), are five individuals residing in the City of Miami and two residing in the City of Miami Beach. The appellees, defendants below, are the City of Miami ("City") and Flagstone Island Gardens, LLC ("Flagstone"), a private development entity. The Appellants appeal the dismissal with prejudice of their third amended verified complaint1 seeking declaratory and injunctive relief regarding Flagstone's plans to lease and develop public land on Watson Island for use as a mega-yacht marina, two hotels, over 380,000 square feet of retail and commercial space, and parking facilities.
The primary issue presented below and here is whether the Appellants have alleged a legally sufficient basis for standing to assert five claims against the City and Flagstone under provisions within the City of Miami Charter, the Miami–Dade County Citizens' Bill of Rights, and the agreements between the City and Flagstone as enacted in City resolutions. For the reasons which follow, we affirm the trial court's dismissal of the complaint with prejudice.
In light of the standard of review applicable to an order dismissing a complaint with prejudice, we recount the facts as detailed in the Appellants' 55–page complaint and its 35 attached exhibits.2
The Flagstone project, as initially presented via referendum in November 2001, shape-shifted into something quite different by the time of the incarnation described in the complaint filed in December 2014. In late 2000, the City Commission enacted resolution 00–1081, authorizing an RFP for a mixed use development on City-owned property3 along the MacArthur Causeway on Watson Island. The resolution required that the RFP comply with City Charter section 29–B by providing the City with "at least fair market value" for the long-term lease payments. Flagstone's winning response to the RFP specified that the "Island Gardens" project would combine "hotels, retail, dining, entertainment, gardens and a selection of cultural facilities and civic art as an intimate village adjacent to one of the finest purpose-built mega-yacht marinas in the world." Flagstone represented that the project would involve a total project cost of $281 million (of which Flagstone itself would contribute and raise $112 million).
In September 2001, the City Commission enacted resolution 01–971 designating Flagstone as the successful respondent to the RFP and authorizing a long-term lease of the property for 45 years (with two 15–year renewal options) and annual rent of "$2,000,000 as the minimum annual guaranteed base rent," with annual increases based on the Consumer Price Index and a percentage of gross receipts. As required by section 29–C of the City Charter, City voters were presented with a ballot question regarding the proposed lease of public lands in a special election conducted November 6, 2001:
Shall the City lease City-owned land consisting of 24.2 total upland and submerged acres on Watson Island to Flagstone Properties, LLC, for development of a mega yacht marina, fish market, hotels with timeshare units, a maritime museum, public gardens, cultural facilities, restaurants, retail and support facilities, for 45 years with two 15–year renewals, subject to capital investment, subject to a minimum guaranteed rent of $2,000,000 and other conditions the City may require?
Although the voters approved the ballot question, the City did not specify a time for commencement of the lease or the "guaranteed rent of $2,000,000." In January 2003, the City and Flagstone signed an agreement to enter into a ground lease. This agreement was subject to numerous conditions and approvals, as were the three amendments to it. In 2010, nine years after the referendum, the City and Flagstone executed an "amended and restated agreement to enter into ground lease," also subject to numerous conditions precedent and further documentation. Through the filing of the complaint in 2014, Flagstone and the City had not actually entered into a ground lease, nor had Flagstone taken possession of any part of the property or begun to pay rent.
Although an appraisal obtained by the City in 2013 set the fair market value of an annual lease payment for the property at over $7 million, the City renegotiated, reduced, and deferred annual lease payments from a "minimum annual guaranteed base rent" of $2 million to annual amounts that were to increase incrementally from $300,000 for the year beginning October 1, 2010, to $1 million, by October 1, 2013 ("construction rent"), to $2 million beginning October 1, 2018, and thereafter. As noted, however, these terms were provisional and were not embodied in binding, written ground leases with terms that had actually commenced.
The development and investment partners involved in the Flagstone project also changed frequently from the list provided in Flagstone's RFP response to those participating by 2014. The financial crisis of 2008 was allegedly a factor, but the changes in co-developers and site plans culminated in extensive renegotiation of the Flagstone–City agreement to enter into a ground lease.
In late 2009, the City Attorney approved a form of resolution authorizing termination of the agreement to enter into ground lease based on non-payment of rent and Flagstone's failure to discharge or bond various liens on the property. During the period 2010 through 2012, City staff and the Commission continued to discuss whether the agreements should be terminated and a new RFP and referendum process initiated.
In July 2012, an Assistant City Attorney opined that changes to the terms of the City–Flagstone agreement would violate the 2001 referendum, and a private attorney working for Flagstone opined that an annual compensation to the City of less than $2 million would require a new referendum and a new RFP. The complaint also alleges that critical information on the modifications, deadlines, appraised value, and changes in the City itself—particularly traffic—between 2001 and 2014 were concealed from the public.
There is no doubt that mixed use development projects of the intended size and scale of the Flagstone project are complex in many respects, including zoning and permitting, financing, and construction. But the verified allegations in the complaint and the exhibits describe a moving target that tied up a prime piece of public waterfront for 14 years without moving from paper plans to the high-rise buildings, cultural facilities and marina for mega-yachts described in Flagstone's winning RFP submission and the City referendum. Collectively, the "Agreement to Enter Ground Lease" of late 2002, the amendments in 2004, 2006, and 2008, and the "Amended and Restated Agreement to Enter into Ground Lease" of 2010,4 seem to comprise in substance an option to develop the property rather than a ground lease providing a "guaranteed" annual financial return to the City.
Appellant Stephen Herbits, joined by Robert Zimmerman (not a party to the 2014 lawsuit at issue here) initially challenged a City zoning resolution pertaining to the Flagstone project in 2004. Their petition for certiorari to quash City resolution R–04–0462 () was denied by the appellate division of the Miami–Dade Circuit Court in early 2005. Herbits v. City of Miami, 12 Fla. L. Weekly Supp. 432a (Fla. 11th Cir.Ct.App.Div. Mar. 1, 2005).
In 2013 and 2014, Mr. Herbits filed public records lawsuits against the City in order to obtain documents pursuant to Chapter 119, Florida Statutes (2013). After the 2013 lawsuit was filed, the City produced the appraisal showing that the fair market rental value for the property to be leased had increased to over $7 million.
Mr. Herbits and 1000 Venetian Way Condominium, Inc. (not a party here), also petitioned for administrative review of the decision by the Board of Trustees of the Internal Improvement Trust Fund to approve the City's request for modifications to the deed restrictions on the submerged lands that were slated to become the site of the marina within the Flagstone project. When the Board of Trustees dismissed their request with prejudice, Mr. Herbits and 1000 Venetian Way appealed to the District Court of Appeal, First District, in Tallahassee. In a split decision, that Court affirmed the dismissal, concluding that the petitioners failed to establish that the parties' substantial interests would be affected. Herbits v. Bd. of Trs. of Internal Improvement Tr. Fund, 195 So.3d 1149 (Fla. 1st DCA 2016).
In September 2014, Mr. Herbits commenced the present lawsuit. Additional plaintiffs/Appellants were joined, and Flagstone was allowed to intervene as a defendant. The third amended complaint at issue here was filed in December 2014.
The City and Flagstone persuaded the trial court to dismiss earlier versions of the complaint for lack of standing and a failure to allege "special injury." In section III of this opinion we assess whether such allegations are in fact required as to count IV, but the Appellants did amend to add allegations of special injury applicable to all five counts:
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