In hindsight, what remains etched on the landscape in South Florida is far more durable and troubling: the visible scars of hubris, greed and corruption. The power developers comprised a who’s who of Miami's builders. Like the skyline filled with construction cranes only a few years ago, most are gone or re-materialized as vultures either owning or advising new investors in the recycling of billions of dollars of failed real estate projects. What was gold-plated in 2004 by the Sun Post is now worth pennies on the dollar. The Sun Post, itself, is defunct.In 2004, Miami fawned over condo opening parties. Kleig lights crossed the tropical nighttime sky, casting light into the cement and steel and glass towers and the dreams of speculators. The models and rap stars. Champagne in magnums and Ferraris. Coke in the VIP rooms. Stretch limos, Hummers, Benz, Rolls, all devices to remind investors that if they can party with house money one condo at a time, why not two or three or four? Janitors and maids, taxi drivers, nurses and firemen. Everyone was doing it. Live the dream.
Become a real estate speculator and live the dream. In 2005 Willy Bermello, head of a prominent Miami engineering firm and former president of the Latin Builders Association, dismissed concerns about a bubble in Miami’s housing markets. In “Build Them and They Will Come”, Bermello wrote on the Miami Herald oped page...
“ Lately, there has been more written about the "condo bubble" than the weapons of mass destruction during the Iraq war. There is a relationship in both phenomena: If you say it often enough, you actually start believing it, and soon enough you're on your way toward a self-fulfilling prophecy. … real estate continues to still be a safe harbor for investors, whether it be equity or the purchase of a condo in South Florida, where doubling of your investment in less than two years is commonplace... this bubble is not latex, it is stainless steel.” (Miami Herald, May 21, 2005)
This Eleventh Day of Christmas begins with an apocryphal story. It is not from the condo canyons of downtown Miami, still empty enough at night time-- despite thousands of condo units zoned and permitted under the guise of revitalizing the urban core-- but from Opa-lacka, another place that eerily echoes the vacant stretches of downtown Miami at night. "This is Iraq in America," one local muttered to Miami New Times in 2007 as he made his way into "the Triangle": nine infamous blocks of Opa-Lacka that make up the town's northwest corner.
"Walking down the street after sundown in Opa-locka is widely regarded as either foolish or deviant; there are places in town where the same is true even in daylight. Amid the decaying liquor stores in Middle Eastern-style buildings, illicit auto body joints, and cinder-block ant-farm apartments, a preponderance of idlers can make Opa-locka appear as though it's trapped in a kind of morbid summer vacation. People can be found, at all hours, hanging out in every nook and cranny, bored by the passage of each car and person." (Baghdad West: In Opa-locka, gang warfare, drug dealing, and decay are a way of life, Miami New Times, April 25, 2007)
Opa Locka's heyday was during the Roaring Twenties. In 1925 alone, 971 subdivisions were filed for platting and 174,530 deeds recorded. According to the 2007 mid-term census, in Opa-Lacka males had a median income of $22,347 versus $19,270 for females. The per capita income for the city was approximately $15,000 (the per capita income for Florida; $26,696). In 2009, The Palm Beach Post reported a remarkable real estate scam. "Cosmetologist, barber, dental technician, seniors: A cluster of 25 South Florida buyers living within 15 miles of Opa-Locka all picked up millions of dollars in loans, drove 60 miles north, bought a slice of ornate paradise in Versailles, and then defaulted... How this cluster of South Florida buyers found their collective way from some of the poorer regions of Miami-Dade County to Wellington is a mystery. There was no single lender, title company or seller connecting all 25. Almost none responded to repeated requests for comment by phone and registered letters. Several have no working phone numbers." ("Cluster of buyers from Opa-Locka spike foreclosures of million-dollar mansions in Wellington gated community", September 26, 2009)
In the grand scheme of the housing market collapse-- trillions of dollars of vanished equity-- the $41 million is smaller than a Higgs bosun. According to the Post, "Their addresses when they purchased mansions revealed modest, even Spartan homes. They lived within miles of each other and several lived much closer. All defaulted. Every home went into foreclosure." They had a fourth thing in common: Robin Hood.
Opa-Lacka is a place "... where piles of rotting furniture and garbage are left to mount; where apartments are rented with shot-out windows; where the only tenable form of commerce appears to be trade in drugs, cheap alcohol, and fried food. Aside from four bunkerlike convenience stores and four restaurants, the Triangle is little more than vacant lots, churches, and sub-standard housing." The fraudsters bought in Wellington; horse country, polo fields and insta-grow subdivisions where flippers came, saw, and vanished into thin air.
The fraud reported by the Post happened in 2006 and 2007. How did it happen? "American Home Mortgage Corp., which through its subsidiaries wrote more than $6 million in the soured loans, can't say. It went belly up."
The records are gone or boxed up in a dark warehouse behind chain link fence. The foreclosure pile-up in Florida has erased accountability as surely as a neutron bomb. Everything looks the same. The American economy functions though millions are unemployed. The middle class is under more pressure than at any time since the Great Depression. The planned community where the $41 million disappeared is called Versailles.
By 2009, South Florida ranked number 3 in the nation for financially distressed projects, just behind metropolitan New York City and greater Las Vegas. Real Capital Analytics assessed South Florida with $6.3 billion in problematic loans, beating out Los Angeles, Chicago, Pheonix, Dallas and Atlanta. Florida was also the most delinquent state in the nation as measured by the Mortgage Bankers Association. According to data assembled by the real estate advisory firm, Condo Vultures, South Florida experienced 74,574 foreclosure actions that year. The Miami Herald reported: "New foreclosure filings in Miami-Dade, Broward and Monroe counties are on pace to top 120,000 this year. Court clerks say filings could even go as high as 135,000." (Foreclosure Crisis far from over for South Florida, Oct 17, 2009) By comparison, South Florida registered nearly 33,000 foreclosure actions for the year in 2007 and 75,000 in 2008.
Here is the Sunpost in 2004: “Born in Spain, developer Inigo Ardid uses his passion for the good life and his love of Miami as inspiration for his projects. The inexhaustible, 6'2", 27-year-old often caps his long days at the office with extended evenings that embrace Miami's vibrant culture, and Ardid believes his developments should reflect Miami's sophistication - hip, fresh and stylish. The Miami River is Ardid's new center of attention, where The Ivy will take shape as a modern 45-story tower of 400+ condominium residences, complemented by an extensive array of services and amenities.”
In scarcely two years, Ardid was holding his breath for the Christian Science Monitor: "For some developers, all of a sudden the numbers don't work anymore," says Mr. Ardid, "(In Miami) There are over 400 projects that have been canceled." In January 2006, Ardid secured a $130 million dollar loan from Chicago-based Corus Bank. The bank was shuttered by August 2009 with more than 2/3rds of its loans categorized as non-performing at the time. It was called “the poster child for aggressive condominium development”. http://www.bloomberg.com/apps/news? pid=newsarchive&sid=aTTT9jivRIWE
The New York Times reported: "More than any other condo lender, Corus epitomized the easy lending and lax oversight of the go-go years — and the pain of the ensuing bust. Its share price, which was nearly $13 in February of 2008, has plummeted into the land of penny stocks, closing at 25 cents Wednesday." With Corus seized by regulators, Ardid was frantically cutting prices at The Ivy condominium project in downtown Miami on the Miami River.
This is how the project was described by Miami PR flaks: "The Ivy, a 45-story condominium tower on the north bank of the Miami River in downtown, will house 504 units in more than 550,000 square feet of space. Scheduled for completion in early 2007, the Luis Revuelta-designed glass tower features one-, two- and three-bedroom floor plans plus executive sky lofts. It will range in size from 700 to 2,000 square feet; while ranging in price from $400,000 to $4 million. These days, the blog “Miami Cond Lifestyle” writes of the Ivy: there have been no foreclosure or short sales “because most of the speculators who contracted to buy in these buildings decided not to close and walked away from their deposits.”
“For the most part, condo prices have continued their headlong plunge, with units in both Miami-Dade and Broward counties now worth less than half on average what they were at the peak in late 2006. That meant plummeting from $294,400 to $138,400 last month in Miami-Dade and from an all-time high of $210,000 in 2006 to $83,200 in Broward. (Dec 20, 2009, Palm Beach Post) http://www.miamicondolifestyle.com/blog/archives/miami-river-brickell-condos-foreclosure-and-bank-owned-opportunities/
In its 2004 Christmas edition, the Sun Post also lauded Jacobo Cababie. "One third of GICSA, Mexico's largest development company, Jacobo Cababie can sense opportunity. After helping catapult his family's company to eminence, he set his sights on Florida's real estate market, recognizing its strength and multicultural audience. He relocated to Miami in 2000 to form Cabi Developers, with the upscale Parc at Turnberry Isle marking the company's first foray into the U.S. market. In three short years, Cabi has gained stature as one of South Florida's leading developers. With the 851-unit Everglades on the Bay condominium in Downtown Miami, Cabi is capturing the city's colorful, vivacious spirit in a hip home for urbanites. The twin tower high-rise project is slated to feature many of the same high-end retail shops GICSA properties are known for attracting."
In January 2008, Jacobo Cababie died of a massive heart attack in Miami. He was only 39 years old. "Jacobo was a true gentleman who treated all people with respect and kindness," Miami Mayor Manny Diaz said. "He had a wonderful vision of the future of Miami, and I am sad he won't be able to witness his vision realized." His vision would never be realized for another reason. At the time, the family's real estate empire was severely burdened by the project lauded by the Sun Post. "A Mexican real-estate family's move into the U.S. has led to problems that could ripple throughout their empire. The Cababie family, of Mexico's well-known Grupo Gicsa development company, is potentially on the hook for hundreds of millions of dollars as a result of personal guarantees they made on loans used to finance two major U.S. real-estate investments, according to court documents and people familiar with the matter. Last month, the family's largest U.S. project, an 850-unit condominium in downtown Miami called Everglades on the Bay, entered Chapter 11 bankruptcy, the same day a foreclosure action was launched. Struggling in one of the worst condo markets in decades, the project defaulted in March on a $256 million construction loan from a group led by Bank of America Corp. that was guaranteed by Gicsa and in part the family, according to foreclosure documents filed in Florida state court.” (Wall Street Journal, Sept 2, 2009)
A few months later, Bank of America and its attorneys were forced to admit in court that they filed false accusations in an attempt to have the bankruptcy of developer Cabi Downtown dismissed. "As a result, U.S. Bankruptcy Judge Laurel Isicoff said she will allow the Chapter 11 bankruptcy to move forward to a confirmation hearing, and said she would consider sanctions against BofA’s attorneys. “I don’t know what you all were thinking. I don’t know what else to say,” Isicoff said, according to a transcript of Thursday’s bankruptcy hearing. “I am going to issue an order to show cause why Bank of America and its counsel should not be sanctioned for the cost of all attorneys appearing at this hearing today for filing this motion and the affidavit.” (South Fl Business Journal, Feb 5, 2010)
"The developer of the troubled Everglades on the Bay twin-tower condo project in Greater Downtown Miami has cut a deal to transfer title of the remaining 712-unsold units to the complex's lending syndicate headed by Bank of America. Mired in bankruptcy since August 2009, the project's developer, Cabi Downtown LLC with manager Elias Cababie, announced the turnover at 1:52 pm Friday in a statement, characterizing the deal as an "agreement in principle." (Condo Vultures, June 1, 2010) ... to be continued
(also see 12th Day of Christmas)
and (10th day of Christmas)
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