Real Estate Litigation

EUGENE STEARNS

Stearns Weaver Miller Weissler Alhadeff & Sitterson

Mehmet Bayraktar's Flagstone Island Gardens LLC won the bidding in 2001 to transform much of Miami's city-owned Watson Island into a vacation playground with a megayacht marina, hotels, stores and restaurants.

The city issued a major use special permit for the project on 11 acres of leased land along MacArthur Causeway and an adjacent 13 acres of submerged land with a stunning view of Miami's skyline.

The Deep Harbour marina opened, but the city and developer started a long-term quarrel about the project with each side blaming the other for stalled work under a 2003 agreement.

Flagstone sued the city after the City Commission suspended development by declaring Flagstone in default for failing to begin hotel and retail construction by an April 30, 2017, deadline.

The legal dispute centered on parking, but community activists under the name Coalition Against Causeway Chaos added a political dimension to the deadlock.

The city's case fell apart when Miami-Dade Circuit Judge William Thomas ruled the company had complied with agreements and started work by the city's deadline. The judge noted the community group's involvement and called it "quite effective." The ruling triggered settlement talks.

The developer's attorney, Eugene Stearns, could have sought $200 million in damages. The parties reached an agreement that was approved in May calling for a settlement valued at $20 million and resumption of the project.

The city agreed to pay Flagstone Island Gardens $5 million upfront and $2.5 million payments in the next fiscal year and the year after. The city also agreed to erase $10 million in rent that otherwise would be due over 10 years.

Plans call for a 535-foot hotel with 305 rooms, including 105 timeshares, and a 375-foot hotel with 300 rooms. The retail portion would cover 221,000 square feet, and the parking garage would be up to three stories high with 1,500 spaces.