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Mehmet Bayraktar, the Turkish Developer Behind Long-delayed
Luxury Resort on Miami's Watson Island, to Receive One Last Chance
for Survival on $640 million Venture


By Charles Rabin, The Miami HeraldMcClatchy-Tribune Regional News

Dec. 22, 2009--A plan to spiff up Watson Island, which nearly went down in a cloud of dust last week with Miami city commissioners questioning the developer's checkbook, past due rent to the city and liens on the property, will get one last chance to survive Tuesday.

Awarded the rights to develop on what the city considers the crown jewel of its waterfront portfolio, Flagstone developer Mehmet Bayraktar had received several extensions to come through on an original $281 million deal that calls for a five-star hotel, exclusive restaurants and a mega-yacht facility that would cater to the world's wealthiest clientele.

No shovel has hit the ground on what was hailed as Miami's greatest waterfront vision eight years ago.

Last week the City Commission threw down the gauntlet: Bayraktar has been asked to attend a Tuesday morning emergency meeting, make good on $500,000 in back rent, pump up his escrow by at least another $500,000, and make good on other concessions -- or lose the rights to build on the key link between Miami and Miami Beach.

The deal is now expected to cost more than $600 million.

Bayraktar and his advisors say the project has stalled because of lawsuits and the melting global economy. City leaders question why nothing was done on the ballyhooed project before the economy began to slide in 2007.

"I don't believe for one second the global meltdown is the reason," said Mayor Tomas Regalado, whose preference is to strip the Watson Island rights from Bayraktar, but who nevertheless negotiated to give him one more chance. "They have had years."

Countered Bayraktar lobbyist Brian May: "I understand the city is frustrated with the project. Flagstone is also frustrated."

It was only a week after the terrorist attacks in 2001 when city commissioners gathered on Watson Island to pick the winner of perhaps the most exclusive bid in Miami in decades. Bayraktar was given the prize ahead of several others, including developer Michael Swerdlow.

But the deal wasn't quite done: A 1987 charter amendment made Watson Island the only piece of city waterfront property that could not be developed without a public vote.

So two months late in November 2001, after a $100,000 campaign by city leaders to sway public opinion, Miamians overwhelmingly voted for Bayraktar to build.

What was promised filled the hearts of a city still reeling from 9/11, and who had watched the city's infrastructure stagnate for years: ritzy hotels, shops, gardens, restaurants and a 54-slip mega-yacht complex that would attract the biggest yachts from around the globe.

THE DEAL

Flagstone was to pay $1 million a year in rent during the two years it would take to build, then $2 million a year to the city and a percentage of retail and hotel sales. Miami expected to see $250 million over the project's 45-year lease.

But construction was delayed as Bayraktar fought lawsuits and money woes. Then the world's economy went into the tank. The city granted him extensions. Though construction never began, he upped his rent payments to $83,000 a month, or $1 million a year.

Last week, city leaders led by Regalado and Commission Chairman Marc Sarnoff said they'd had enough. Regalado blasted Bayraktar from the podium, as Sarnoff did the same from behind the dais. May and other advisors held out for more time.

They discussed the problems in the sunshine three times. Between those airings, Bayraktar's team and city negotiators tried to reach agreement upstairs in the city manager's office.

At one point during the proceedings Bayraktar himself took the podium, saying he moved to Miami after the 2001 deal and has not made an attempt to do another development since. He claims to have spent close to $50 million keeping the project afloat.

But Sarnoff, an attorney, pounced. He disclosed Bayraktar is facing $2.7 million in judgments and $2.1 million in liens on the property. Then, to free the city of legal obligations before attempting to kill the project, Sarnoff asked Bayraktar if Miami was in breach of contract.

"The city, in principle, is not in breach of contract," Bayraktar said.

So Sarnoff set his conditions: Immediately provide $500,000 in back rent, prepay rent by $1 million, put $2 million in escrow, and sign an affidavit saying Miami is not responsible for delays.

Sarnoff's moves prompted conditions from Commissioner Francis Suarez, who said no more extensions, and asked that Bayraktar agree to vacate the premises within 30 days if he doesn't live up to new rent obligations.

At the meeting, Bayraktar had laid out new conditions he said he can live up to. He wanted a one-year extension until January 2011, the release of $500,000 in escrow to cover his late rent payments, and a lowered monthly rent of $42,000.

That angered Commissioner Frank Carollo: "I don't want to send a message that if you're in default with the city of Miami that brings you the opportunity to wheel and deal."

ANGRY RESPONSE

At one point during the meeting, in a hallway outside the chamber, someone handed Bayraktar papers, which he refused. Caught later in the parking lot, he grabbed them and angrily threw them down on the wet pavement.

When May, the Flagstone lobbyist, returned from the final evening meeting upstairs at City Hall, he said the sides were close, but final approval was needed from Bayraktar's family who was not in Miami.

"It's really hard to explain [the complex terms of a negotiation] to folks who are fast asleep in Turkey," May said.

Monday afternoon, Bayraktar's attorneys said their client agreed to pay the rent he owed by turning over $498,000 being held in escrow.

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To see more of The Miami Herald or to subscribe to the newspaper, go to http://www.herald.com.

Copyright (c) 2009, The Miami Herald

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