June 19–Flagstone Island Gardens has filed a $122 million lawsuit seeking to block the city of Miami from booting the developer off of Watson Island and taking its mega-yacht marina for the public.
In an eight-count complaint that includes allegations of collusion, the developer asks a Miami-Dade judge to void an "invented" declaration by the city that Flagstone defaulted on its master agreement to build a resort on city land off the MacArthur Causeway. Arguing that it is the city that has breached the agreements, Flagstone also demands that Miami officials approve a modified project design, extend a permit allowing for the ongoing use of its marina, and continue to make related payments to the state to keep the project viable.
"As a proximate cause of, and but for the city's breach of the agreements, Flagstone incurred compensatory damages of more than $122 million in investment, loss of its expected profits, and loss of the more than $3.6 billion in expected value Flagstone created in the project," states the lawsuit, filed on behalf of Flagstone by attorney Eugene Stearns of Stearns Weaver Miller Weissler Alahadeff & Sitterson.
Flagstone submitted the lawsuit, first reported by blogger Al Crespo, on June 9, one day after the city issued a notice of default to the developer saying Flagstone had failed to secure a construction loan and begin construction on a retail and parking phase by the required deadlines. The notice and complaint were both expected after Miami commissioners voted May 30 to declare Flagstone in default of its agreements for Watson Island.
The commission vote itself, however, was something of a surprise.
Flagstone, a company by Turkish developer Mehmet Bayraktar, has been trying to develop Watson Island since 2001, when voters approved the development of a mega-yacht marina, two hotel towers and a retail complex on the northwest corner of the island.
So far, the developer has built only the marina, blaming 9/11 and the Great Recession for its woes. The developer has also fought aggressive opposition from Venetian Islands residents who for years argued unsuccessfully in court and at city hall that Flagstone and the city repeatedly violated Miami's own laws and charter in pursuing the project.
But in its lawsuit, Flagstone accuses the city, and in particular Commissioner Ken Russell, of colluding with a former Venetian Island resident, Stephen Herbits, in order to evict Flagstone and take its marina. The lawsuit claims the city "switched sides, taking counsel from the very obstructionists the city asked Flagstone to spend years and millions fighting."
Bayraktar says the city blew up a pending deal to bring in a buyer willing to throw down $185 million to purchase 95 percent of Flagstone's development rights for the site. He says commissioners "invented Flagstone's default as a pretext" to pursue a different vision for Watson Island, and that they now want to take his marina.
Flagstone is asking a judge to issue an injunction barring the city from evicting the developer. It is also asking the judge to declare the city in breach of its agreements with the developer and liable for damages.
Flagstone is requesting a jury trial.
