“It is what the market wants”, is how the builders and developers put it. Florida drew an endless supply of new buyers, according to the experts. One thousand people a day were moving to the Sunshine State, it was said; a ceaseless flow of U-Hauls and moving vans. To conservationists and community activists, it never made sense to sacrifice quality of life to the real estate snake oil salesmen.
To meet the requirements of state law, certain formalities of performance were required of developers. These staged events—called the provisions of “growth management”—were exactly the form of regulatory hurdle that Florida’s development community finally succeeded in overturning in 2011. One criteria, demonstration of need, involved dueling crunching of numbers. Housing units, absorption rates, schools and transportation: in theory the planning of development in Florida involved a form of titration that would prevent development from metastasizing like a runaway cancer. In practice, the toxic brew of campaign money, compliant elected officials, the revolving door between the regulated and regulators, and the ceaseless flow of money from Wall Street overwhelmed Florida.
Even then, in the midst of the condo boom and the relentless expansion of Miracle-Gro suburbs into wetlands bordering the Everglades, the lie was visible. It wasn’t “what the market wants”. It was what the market would finance. The quaint idea of local bankers making loans to known businesses and owners dissolved into robo-mortgages spit out by computer algorithms and a hailstorm of fees, commissions, and compensation that destroyed those vestiges of objection for old Florida and times gone by.
The Christmas edition of the now defunct Sunpost was layed out to celebrate developers. It was 2004 and there was no holding back. Let the good times roll.
“The head of H&H Development Co., Harvey Hernandez acquires prime real estate in centrally located areas and develops high-quality buildings without passing on the high cost to consumers,” the Sunpost wrote. As a result, Hernandez has a portfolio of seven development projects and more than 1,200 units in only three years. Fueled by an innate desire to create, and armed with an entrepreneurial spirit, the real estate investor turned developer began to diversify his investments to include ground-up projects. Today, condominiums like Mediterranean and Solaris fulfill the niche of attractively priced condominiums, while the 2005 venture in the Miami Arts District distinguishes itself with its signature design flair and strong reference to the Arts.”
Five years later, Condovultures reported out a nearby Hernandez project, Gallery Art Condominium. “A newly created South Florida entity has purchased 20 units in a new Greater Downtown Miami condo tower for $2.9 million, or an average $169 per square foot – (representing) a 59 percent discount off of the average closed sales price in the project up to that point... The seller was Gallery Art Condominium LLC with Harvey Hernandez as principal...” (Real Estate Channel, 12/24/09)
It didn’t work out in the high end and it didn’t work out in the low end. It didn’t work out in condominiums or in platted subdivisions scattered through Florida’s wetlands and farmland like breadcrumbs.
The Sunpost writes in 2004, “Paul Drummond has a relentless desire to meet challenges head on and accomplish whatever is required. ... he became involved with WCI Communities in 1997 where he soon became project manager of development projects in Naples and Pelican Bay on the west coast of Florida such as The Estates at Bay Colony Golf Club, Villa Coronado, Cove Towers and The Colony. Drummond has since been tasked with overseeing WCI's projects on the east coast of this state as regional president of WCI's East Coast Towers Division in 2002. Drummond now is in charge of 19 luxury high-rise projects from Coral Gables to Jacksonville with residences priced from $500,000 to $12 million, including One Bal Harbour and Mosaic in Miami.”
WCI Communities has a special place in the pantheon of the housing boom and bust, of course. Its founder, Al Hoffman, was finance chair for both campaigns of George W. and Jeb Bush. WCI filed for chapter 11 bankruptcy protection in August 2008 after failing to refinance $1.8 billion in debt.
Long after topping off, the Boymelgreen towers sit mostly empty. The towers provide both a see-thru from the western suburbs to Biscayne Bay and a see-thru to the worst excesses of the building boom. “By himself, Shaya Boymelgreen was one of the most prolific developers in New York City. Now, teamed up with Africa-Israel Investments, a company that earned billions in the diamond market and other transactions, Boymelgreen not only continues building in New York, but has announced his intent to invest $1.5 billion in Miami and Miami Beach.” (December, 2004, Sun Post)
Five years later, Boymelgreen was fighting bankruptcy. (NY Times, Dec 9, 2009) "U.S. regulators have shut down LibertyPointe Bank, chaired by real estate magnate Shaya Boymelgreen. The bank thus gained the dubious distinction of being the first bank to be shuttered by U.S. authorities in New York in 11 years." (Haraetz, March 16, 2010)
From the Sunpost: “The much-anticipated Midtown Miami is said to have been the brainchild of Michael Samuel, a New York developer who comes with a long list of credentials for redefining a neighborhood. Born and raised in Brooklyn, Samuel learned the real estate business from his father, who had amassed a collection of residential buildings in New York. He founded Samuel & Co., now a $2 billion firm, as a property management and full-service building maintenance firm that was hailed for pioneering a high-tech time-management system that enhanced security and accountability for clients. He was also instrumental in converting rentals during the birth of the co-op concept in New York City. Now as a partner in Midtown Group, with the affluent Joe Cayre of Midtown Equities, he is redeveloping Wynwood and the Upper East Side with projects such as Midtown Miami and Nirvana, while simultaneously creating hundreds of jobs.
Five years later, the Miami New Times reported: “Other signs of Midtown Miami's problems include Cayre's initial partner, Miami developer Michael Samuel, bailing out of the project by selling off his interest last year. In addition, Cayre is facing foreclosure on a 5.5-acre site next to Midtown Miami, which indicates his company might not have the financial wherewithal to finish the project." (Miami New Times, Jan 8, 2009)
The housing crash has left municipalities and local government in tatters. But the bright side of the long, slow bleed of municipal budgets has been the return of affordability. That is the claim. The reality is different.”
In “10 Worst Cities for Renters” (May, 2011), Bloomberg notes,“In fact, metro Miami has the greatest share of residents who pay more than half of their income to rent in the nation. The share reached 34.2 percent in 2009, up from 26 percent in 2000, as real household income growth stagnated and median rent in the area, adjusted for inflation, rose by 22.2 percent during that period, according to the Harvard report.” According to the report, Miami even beat out Detroit, with 32.8 percent.
http://realestate.yahoo.com/promo/the-10-worst-cities-for-renters.html
So who was the building boom, good for? It substantially fueled the politics of destruction that continue to tear at the economy. The very same forces that used easy money like pouring gasoline on a fire are in place and they have made their aim, since the housing crash and collapse of real estate values, to dismantle those rules and regulations they claim to inhibit economic recovery.
… to be continued.
(Also see 10th day of Christmas)
and see the 7 and 8th day of Christmas
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