THE LIST OF 37

IRREGULARITIES AND/OR ILLEGALITIES COMMITTED BY THE CITY

OF MIAMI IN HANDLING THE FLAGSTONE PROJECT ON WATSON
ISLAND AFTER 2004
Prepared September, 2016

1. Between 2004 and 2009, the City failed to collect rent that it was due
from Flagstone for the project on Watson Island, nor took other action
on multiple breaches of its contract to the city, state and outside
vendors.
2. The 2010 renegotiation and approval of a new agreement failed to
abide by the Citys Charter prohibiting the City from considering a rent
payment for less than fair market value.
3. The 2010 renegotiation and approval of a new agreement failed to
abide by the referendum language which specifically stated that the
project needed to be built as a unit, not in phases
4. The City failed to present the 2010 renegotiation and approval of a
new agreement to other potential bidders in the form of a new RFP,
as the changes to the waterfront project were material.
5. The 2010 renegotiation and approval of a new agreement was based
on a 2002 traffic study, which was inadequate then, and failed to
undertake a new traffic study to inform the Commission of the
implications of the project on a neighboring jurisdiction, Miami Beach.
Such a traffic study, done properly, might have alerted the City of
Miami Beach to initiate an inter-jurisdictional mediation as permitted
by state law.
6. The 2010 renegotiation and approval of a new agreement changed
the income for the City and State by granting the developer the
unilateral power to violate the $2 million minimum requirement in the
2001 referendum.
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7. Between 2010 and 2014, Flagstone failed to make its now revised
payments to the State, thus breaching the good-faith provision added
in 2010.
8. As Flagstone failed to obtain financing and meet construction
commencement dates, the City extended the project in 2011, 2012
and 2013. It was stated publically that the extensions were required
because of lawsuits and the economic downturn. That statement,
contained in a Commission resolution as the basis for the extension
was knowingly false, as the lawsuit terminated in 2005 and the
economic downturn did not impact Miami until mid- to late- 2008 at
the earliest. In between 2005 and 2009, the developer failed to obtain
financing for the project.
9. In 2012, the State Department of Environmental Protection, which
has jurisdiction over land use of State property, terminated the
agreement because Flagstone had failed to 1) make its rent
payments to the State and 2) failed to cure outstanding financial
claims from members of the public. It stipulated that these failures
were not curable.
10.
In 2013, the City undertook an appraisal of the property
because of the interest of developer Jorge Perez of Related Group.
The instruction provided the appraiser was to measure only the
incremental value of the expansion that Related wanted to undertake.
This request was rejected by the appraiser as contrary to professional
standards. The new appraisal showed a fair market rent of $7 million.
11.
In 2013, the City failed to meets its requirement under the
States Public Records laws to produce requested documents. The
requestor was forced to file a claim in court to obtain the documents.
The court ordered all the documents produced, without exception.
12.
In September, 2013, the City extended the agreement with
Flagstone without addressing the mandated fair market rent
requirement of the Charter, despite having an appraisal that the
property was now worth $7 million, versus the original $2 million.
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13.
In the fall of 2013 and in early 2014, the City implored the State
DEP to agree to amend the lease and was told by the DEP that the
developer was in breach for failing to make payments to the State or
satisfy his outstanding financial obligations to private citizens. The
City Attorneys office also attempted to skirt state law by redefining
the nature of the State lease of the property to the City of Miami, also
rejected by the State.
14.
In the spring of 2014, the City failed to respond to a request
from the DEP to comment on the contents of a White Paper
circulated in Tallahassee by the local State Representative whose
district includes Watson Island and which raised serious legal as well
as policy issues.
15.
In April, 2014, the developer retained a lobbyist close to
Governor Scott to put pressure on the Florida DEP which was on
record of not approving a new modification of the lease. The City
worked through Flagstones lobbyist to overrule. The DEP stated that
scheduling policies prevented it from adding the modification to the
Cabinet agenda before the end of May, but the Governor overruled
the DEP and put it on the agenda, just days before the previous
extension of June expired.
16.

through 22. On May 8, 2014, the City Commission voted to

amend the lease based on knowingly false, misleading and
inadequate advice, including knowing material omissions from
an Assistant City Attorney.
After a private colloquy with Commissioner Sarnoff, ACA Robin
Jones Jackson misled the Commission in several ways:
a. She asserted that without voting for the modification as it was
submitted by the staff, the City would be in breach of its contract
with the developer and be liable for a payment to the developer.
b. She asserted that she had documented evidence to support a
potential claim of $58 million.
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c. She failed to explain that the developer was in breach of the

contract because it failed to make required payments to the
State.
d. She failed to disclose the 2013 and 2014 appraisals which
showed that the fair market rent should be $7 million or more,
despite a Commission discussion on this very point at this very
moment.
e. She failed to disclose that by not adjusting the rent for the
property, the City would be violating its Charter.
f. She failed to disclose that continuing with the material changes
in 2010, to build the project in stages, violated the approved
ballot initiative.
23.

All of these assertions or omissions were false and, as an

attorney, she not only knew, but had a duty to know and
communicate this information.
(On October 23, 2015 a litigant on the Watson Island issue filed
a formal complaint with the Miami-Dade County Commission on
Ethics and Public Trust against Assistant City Attorney Robin
Jones Jackson. In March, 2016, the Commission found no
probable cause. The complainant has filed a 30 page request
to reopen the hearing, permit the attorney to present, as they
permitted the defendants attorney to appear, and provided
documents confirming that the Assistant City Attorney misled
the Ethics Commission staff and the Ethics Commission staff
misled the Ethics Commissioners themselves. The request to
reopen the case was accompanied by 200 pages of
documents. (These documents have been provided to each of
the City of Miami Commissioners.) On July 13, the Ethics
Commission voted to reopen the matter, with one
Commissioner remarking that had she had all of the relevant
information, she would never have voted for no-probablecause.)
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24,

On May 8, 2014 the Commission voted to amend the lease

without adjusting the required rent payment to the City to meet
its Charter requirement.

25.

On May 8, 2014 the Commission voted to amend the lease

without a legally required traffic study.

26.

On May 14, 2014 the Deputy City Manager of the City of Miami
knowingly misled the State Cabinet about the issue of traffic
studies. Responding to allegations contained in the State
Representatives White Paper, she told the Cabinet that the
City had a study and that it satisfied their requirements. She
later admitted under oath in a deposition that she had been
given the newest study by the developers lobbyist only an hour
before the Cabinet meeting. She misled the Cabinet because it
was not possible for her or any official in the City to have
reviewed the study to see if it met legal requirements. The
study did not.

27.

By June 2, 2014 the lease that required the developer

commence construction was breached. The language
specifically required permits to have been issued and physical
construction to begin. The developer did not meet either
requirement. Instead, the developer sent two divers into the
Bay to examine the plants that would have to be removed. Nor
were permits issued for the construction of the marina.
According to the Miami Herald, the citys legal staff concluded
that the preliminary environmental work meets the contractual
conditions for start of construction under Flagstones
agreement with the city. City staff falsely asserted that they
had met the terms of the lease. (June 22, 2014)

28.

On July 9, 2014 at the Citys Commission meeting, the City and

developer were invited to show that construction had begun. As
the City refuses to implement a notification system of agenda
items that individuals have an interest in, the information
hearing had no one representing the public in attendance.

29.

The City failed to respond to public records requests for copies

of the permits required before construction was to commence
on June 2.

30.

On August 15, 2014 the citizen requesting the public records

was forced to go to court to obtain documents relating to the
commencement of construction, including the permits. At a
hearing on August 20th, the Citys attorneys admitted that they
had been withholding relevant records dating back to May 5th.
Court ordered the City to produce all documents immediately.

31.

On September 5, 2014 the Court ordered the City to produce

documents it had not supplied, including permits, henceforth on
an automatic, continuing basis. The City soon violated that
order.

32.

In September, 2014 seven citizens filed a claim against the City

with five counts. These included a violation of three sections of
the City charter: the referendum, competitive bidding, and fair
market rent provisions. It also alleged a violation of the County
Citizens Bill of Rights and a failure to commence construction
by the lease expiration date. That suit was dismissed for lack
of standing. Oral arguments on the basis of special injury were
heard by the 3rd District Court of Appeal on April 19, 2016. The
decision is pending.

32.

In November, 2014, Mr. Aldo Bustamante testified under oath in

a deposition that there were no permits for construction issued.
This was false.
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33.

On December 21, David Smiley of the Miami Herald reported

that Mr. Aldo Bustamante, Assistant Director of the Department
of Real Estate Asset Management, told him on the record that
the developer did not need permits for the marina construction.

34.

On March 5, 2015, the permits for marina construction were

delivered to the litigants attorney. The permits were dated
August 14, 2014 proving two points: that they were not in
existence before the June 2 deadline, and that the City had
knowingly violated a court order.

35.

In March, 2015 the Court announced a show cause order to

the City to show why they should not be held in contempt of
court. Ultimately, the court decided not to hold the City in
contempt. An appeal of that decision has been reserved and is
pending resolution on another matter before the court and will
be appealed when the case is ripe.

36.

In April, the City of Miami Beach requested information from the

City of Miami relating to its traffic study. None was provided.

37.

In November, the citizen seeking public records filed a claim

with the court for reimbursement of $209,000 for repeatedly
being required to go to court and incur legal costs to obtain the
records. At no time during the entire public records efforts did
the City obtain a ruling in its favor on the production of
documents. In the meantime in April, 2016, the Supreme Court
of Florida definitively determined that it was not necessary to
prove intent to obtain reimbursement for a government body
that forced a claimant to court to produce public records the
argument that the City of Miami used in opposition to the
financial claim. A decision on the fee claim has not been issued
by the Judge.
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