Daily Archives: November 20, 2006

Is the Haskins/Sarnoff Election Runoff a Street Car Referendum?


Streetcar plan’s fate may ride on runoff


Tuesday’s runoff election between incumbent Linda Haskins and challenger Marc Sarnoff for the Miami City Commission District 2 seat comes at a critical juncture for the proposed $200 million Streetcar project.

Haskins, who finished second in the seven-candidate field, supports the proposed trolley.

Sarnoff, who was the No. 1 vote-getter in the Nov. 7 general election, opposes the Streetcar.

He sees it as a whole lot of sizzle but not a lot of steak, another ”legacy building” project for Mayor Manny Diaz that will draw much needed money away from necessary city services. Sarnoff worries about what will happen to the overhead electric lines if we suffer a direct hurricane hit.

Sarnoff believes the city could better improve mobility — at a much lower price tag — developing a fleet of hybrid buses that could circulate in the same areas. Hybrids, he said, would give the city more flexibility to alter routes in the event of accidents, construction and fluid growth patterns than a fixed-rail train system.

Haskins, however, sees the Streetcar as a major part of a much larger vision for Miami’s future, a vehicle to link emerging neighborhoods with stores, museums, restaurants, parks, arts and employment centers from the Design District and the University of Miami/Jackson Memorial Hospital medical campus to the downtown core.

And Haskins believes that Sarnoff’s bus-centric plan won’t solve the mobility problem because large segments of the population — more affluent, better educated — who might forsake their cars for a fast, safe, reliable trolley would never get on a bus.

Haskins wants the city to not only develop the Streetcar system, but to feed it with local circulator buses similar in size and scale to the Coral Gables trolleys, which are really hybrid buses tarted up to look like trains.

The seat that Haskins and Sarnoff are vying for is only one of five on the commission. But it’s a symbolically important one for the Streetcar.

The original Streetcar plans were being pushed primarily by the mayor and former District 2 Commissioner Johnny Winton.

Before Winton’s drunken fall from grace, the Streetcar was pretty much confined to District 2, running on a north-south alignment from Northeast 41st Street in the Design District, through Midtown Miami and Wynwood, and then circulating into downtown on streets and avenues not currently served by the elevated Metromover.

But late last year, city planners were instructed to add an east-west spur that would run largely along the 20th Street corridor out to the Civic Center/Jackson Memorial Hospital district.

This new spur would not only provide additional access to the emerging redevelopment plans for the University of Miami medical center, but additional political cover as well.

The new route runs through Allapattah, which is represented by Commissioner Angel Gonzalez, and Overtown, represented by Commissioner Michelle Spence-Jones.

With low voter turnout expected — there’s nothing else on the ballot and it’s the Tuesday before Thanksgiving — it’s hard to call the Haskins vs. Sarnoff race a referendum on the Streetcar.

But it will sure make things interesting at Dinner Key, especially if Sarnoff wins. Because the Streetcar proposal isn’t going to become less controversial in the coming months.

It’s not set in stone, but city staff and its Streetcar consultants are hoping to brief commissioners and the mayor in the next couple of weeks on a public-private financing model that has no track record — all puns intended — with North American transit systems.

The concept: One team of firms would design, build, finance, operate and maintain the Streetcar and would be repaid over a 30-year, or longer, period.

While a growing number of American communities are considering similar public-private partnerships to pay for big-ticket infrastructure projects like bridges, tunnels and toll roads, no modern-era train or transit system has been built this way.

City staff and the consultants are looking for the commission’s approval to start short-listing the likely firms that would compete for the Streetcar gig early next year and then let them bid for the job in late 2007 or in early 2008.

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The Market Slowdown Blame Game

Whose failure is flipping’s flop? Don’t blame messenger

By Michael Lewis
A broker in our pages last week blamed the media for the residential real estate slide. And a developer wrote to us that press warnings of a condo bust had killed the market here and driven him out of it.
Folks, don’t shoot the messenger.
The press didn’t build tens of thousands of condos, then contract with speculators who now are stuck with units — or might never close.
Unlike our developer friend, we never wrote to another newspaper that Miami’s condo bubble could never, ever burst, that prices would rise forever.
We aren’t the ones who told potential buyers that they could resell condos for 20% or 40% more in a year with only a down payment actually out of pocket.
We aren’t the ones who are still building tower after condo tower, flooding the market with housing while Multiple Listings Service sales have fallen nearly a third and some smaller brokerages are shaky.
We’re the ones who issued sober warnings in the face of what most now agree was over-optimism at best. Seven columns in this space in 2‡ years warned that more than 100,000 planned Miami-Dade condos were a full decade’s supply.
If timely warnings helped slam brakes on a market that experts now admit was about 80% speculators and only 20% real residents, good. The press would have been far more culpable if we’d seen a train wreck coming and hadn’t raised a warning signal.
In a September 2004 article, as condo projects seemingly daily were announcing sellouts as soon as they hit the market, we asked, “When is a sale a sale?” Some developers said reservations alone didn’t make a sale but a 10% deposit with a signed contract did. Some mentioned 20%.
Now we ask that question with more concern because as the glut of for-sale condos grows even while more are rising, some “sold” units might never close. If a condo’s price falls more than the out-of-pocket deposit, a buyer could just walk away rather than throw more good money after bad.
Experts warn that a year from now, residential foreclosures are likely to soar. Let’s hope it doesn’t get that far.
But then, we hoped it wouldn’t get as bad as it has.
Last week, the Wall Street Journal reported that 59 would-be buyers in one abandoned Brickell condo project are suing the developer for the profits they lost in flipping unbuilt units for higher prices.
Perhaps the people they flipped to are also suing for the profits they in turn lost when they passed the units on to the next buyers at still higher prices.
Unbridled optimism and greed. That’s what fueled much of a market that saw in the city of Miami alone 9,000 new housing units in 2005, more than four times as many as in any year since the 1940s, with 14,000 more due this year and 7,000 more in 2007. Last year at this time, more than 71,000 units were in the permitting process, permitted or rising, within city limits.
We have asked for years just who the developers thought would actually live in 100,000 units priced far above what the bulk of local residents could afford. The answer — to the surprise of even some developers — seems to be that many condos weren’t sought for occupancy at all but for trading.
In the end, of course, someone will occupy every new condo. Most are good quality and all will be worth what’s paid for them and be fine investments in the long run.
But it turns out that the condos we’re still building at a record pace are going to be bargains as residences when purchased at proper prices, not bargains as trading commodities that can be flipped in a matter of months for a 20% or 40% profit. Sorry if the get-rich-quick schemes had to end with the hot air going out of the balloon.
As the air started leaking last year, those who hype the market blamed the plague of hurricanes and hired publicists to counter warnings of an end to the euphoria. This year, with hurricanes thankfully absent, the culprit is the plague of the press.
Maybe next year those who claimed the market would only go up forever will look in the mirror and see another culprit.
Meanwhile, the City of Miami and others keep on approving plans for still more massive high-rise condos.
Which means that ever more bargains loom for buyers who plan to live and enjoy where they buy rather than flip what they buy to enjoy the quick profits.


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More Signs that the Office/Condo Market is Picking Up

by: Natalie Keith from: http://www.globest.com/news/786_786/miami/150814-1.html

MIAMI-With low interest rates and the lack of available land for new office construction, developers are pursuing office condominium projects. According to a CB Richard Ellis office condo white paper, there are currently 60 properties totaling 4.5 million sf of planned or completed office condominium projects within Miami-Dade County.

In recent weeks, work has started on several office condominium projects. North Miami-based NR Investments is converting a nine-story, 103,000-sf office building at 12250 Biscayne Blvd. into an office condominium project called the BLDG for an estimated cost of $20 million. It will feature ground-level retail space with offices ranging in size from 300 to 11,500 sf. Prices for the units will range from $255 to $330 per sf.

In addition, Jacksonville-based Flagler Development Group and Kenneth Weston & Associates broke ground on One Seventeen Professional Arts Center, a 133,000-sf office condominium project. The project is located within the Kendall Town & Country Center at the corner of SW 117th Avenue and SW 82nd Drive. “Southwest Dade’s residential and business communities continue to grow at a rapid pace increasing the need for medical services,” says Kenneth Weston & Associates Inc. president Kenneth Weston.

Among factors that have contributed to the increased interest in office condos includes low interest rates and limited office construction. As an example, CBRE points out that leasing class B office space in Downtown/Brickell can cost about $25 per sf based on current market conditions. Factoring in rent escalations over a 10-year period, the rate is closer to $28 per sf. By comparison, office space in the space area can be purchased for $400 per sf.

“Once you factor in components such as tax savings and the value an owner builds as the asset appreciates over time, the net cost of owning over a 10-year period is lower than renting, on a after-tax basis,” the report states.

Another factor behind the burgeoning office condo market is the economic infeasibility of constructing new office buildings. Currently there is only 250,000 sf of new office construction. New construction is hindered by many factors, such as the lack of available land, high construction costs and the rezoning of land previously designated for office development into other uses, such as residential.

Other office condominium projects undertaken by NR Investments in recent months include the 180,000-sf Museum Plaza class A office building in Fort Lauderdale and the 55,000-sf Office in Hollywood. NR Investment principal Ron Gottesmann tells GlobeSt.com that, when developing an office condominium project, location is a key factor. “I’m convinced that, in order to have a successful office condominium project, you must be located in an upscale neighborhood.”

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