Hollywood no longer owes $2.58 million to a developer that sued the city for imposing a height restriction that limited a planned condominium to 65 feet, shorter than the previous 150-foot limit.

The Fourth District Court of Appeal reversed a trial court ruling setting damages owed to GSK Hollywood Development LLC for lost development rights after the city shrunk height rules on the company's property.

GSK, led by principals Joseph Kavana and Manuel Grosskopf, wanted to build a 150-foot luxury condominium tower on 1.2 acres at the northeast corner of State Road A1A and Jefferson Street, just steps from the beach, according to court filings and property records.

The site had a zoning allowing construction of up to 150 feet high when GSK bought it for $3.9 million in 2002, but the City Commission in 2005 voted to change the height limit for eight blocks on the barrier island including GSK's property, where the building height was limited to 65 feet.

GSK filed a property rights lawsuit in Broward Circuit Court in 2009, listing a Bert J. Harris Jr., Private Property Rights Protection Act claim alleging the height change cost it at least $5.4 million in lost property value, and a civil rights claim alleging its due process rights under the 14th Amendment were violated. The constitutional claim was potentially worth $40 million.

After a jury and a bench trial, Circuit Judge William Haury in 2016 entered a final judgment in favor of the city on the due process claim but against the city on the Bert Harris claim, setting damages at $1.5 million plus $1.08 million in prejudgment interest.

At the Fourth DCA, the three-judge panel last week affirmed the due process decision but reversed on the property rights claim, noting GSK hadn't formally applied to the city for a taller building before making the Harris Act claim.

“A claim relating to building restrictions under the then-existing version of the Harris Act does not accrue unless the property owner formally applied to develop the property; thus, allowing the governmental entity to specifically apply the law or ordinance to the property in question,” Judge Jeffrey Kuntz wrote for a unanimous panel. Judges Burton Conner and Martha Warner concurred.

GSK presented its plan to city leaders at an informal event but didn't file a preliminary site plan until 2010, about a year after suing, the appellate panel noted.

Weiss Serota Helfman Cole & Bierman member Daniel Abbott, partner Laura Wendell and former associate Adam Schwartzbaum represented the city on appeal.

Duane Morris partners Harvey W. Gurland Jr. and Lida Rodriguez-Taseff as well as former partner Scott Marder represented GSK.

GSK attorney Leoncio E. de la Pena, founder of the De La Peña Group law firm in Miami, who wasn't involved in the lawsuit, said, “We are considering our legal options and, as we have done in the past, we will explore all of them to protect our financial interest.”

NEIGHBORS OPPOSED

GSK argued in the lawsuit that the 65-foot height limit prevented the company from building an economically viable and marketable project.

GSK said it did due diligence to make sure it could build up to 150 feet before closing on the property purchase and had verbal assurances about height rules from city staff members, the complaint said.

The company presented its plan to the city's economic development roundtable, planning staff, City Commission members and representatives from The Summit, a two-tower condominium just south of GSK's property, according to the complaint.

GSK maintained that political pressure from Summit property owners who opposed GSK's plan prompted the City Commission to shrink the allowable building height. The city issued a development moratorium, and the city planning staff studied shorter building heights.

After that study, the city Planning and Zoning Board recommended keeping the 150-foot height but gradually reducing heights approaching the beach, according to the appellate panel. The City Commission, however, adopted the 65-foot height limitation.

Then-Hollywood Mayor Mara Giulianti was receptive to gripes from Summit owners.

“The mayor responded to their emails, writing that she had 'protected the Summit from every bad project that has come down the pike' and that 'when the presentations are made and the vote is taken, I'm sure my vote will make my friends at Summit happy … as they always have,' ” Kuntz wrote.

Abbott, who was the city attorney when the shorter height ordinance was adopted, said prospects for other 150-foot buildings convinced city leaders that a 150-foot limit “ was an inappropriate height.”

“If the suggestion is it was really the prospect of a building being built that caused the city to revisit its allowable height ordinances, I think that might very well be true,” he said. “Oftentimes what spurs a government to adopt a land-use regulation is when it comes to their attention that somebody is going to build something that is inappropriate for the area.”

GSK could file for a rehearing before the Fourth DCA or appeal to the Florida Supreme Court. If no action is taken, the trial court is to enter a judgment in favor of the city.