The recent $20 million settlement in a lawsuit brought by a marina developer against the city of Miami could cost the city more than the settlement, according to one city commissioner. On May 9, city commissioners in Miami voted for a $20 million settlement in a two-year-old lawsuit filed by Flagstone Island Gardens LLC and Flagstone Development Corp.
Flagstone, which has been developing the Island Gardens mega-resort project on Watson Island, had sued the city for more than $122 million for breach of contract. The developers had filed the lawsuit on June 9, 2017, about a month after the city commission had unanimously found Flagstone in default on its ground lease. The city, which owns a 6.5-acre site on Watson Island, had approved the Island Gardens project in 2001. By 2016, Flagstone had completed a deep-harbor marina, but no other land portions of the planned resort.
On March 22, 2018, the circuit court in Miami found in favor of Flagstone and, rather than face bankruptcy, the city of Miami commission approved the $20 million settlement. The million settlement includes a $5 million cash payment for the plaintiff’s attorneys, $2.5 million cash payment due in fiscal 2019-2020, $2.5 cash payment due in 2020-2021 and rent offsets of $10 million over a 10 year period.
City Commissioner Manolo Reyes said after the settlement that the city will lose more than $20 million when everything is accounted for, according to MiamiTodayPaper.com. He said the city has already lost revenue from rental payments of the past and on buildings that have not been constructed. He also told the city manager that the public needs to understand that the economic impact will be more than $20 million. “It could be,” replied the city manager, according to the paper. “But the goal of reaching the settlement was “to make our cash outlay as small as possible…plus, we want this project finished.”
The resolution that approved the settlement also included the agreement that: “The parties have agreed to revise the controlling agreements relating to the Flagstone project on Watson Island, to be executed by the City Manager, in forms acceptable to the City Attorney,” according to the paper.
The Island Gardens Marina has 5,000 linear feet of slips with depths up to 27 feet. The marina’s website says the marina has the capacity to dock yachts of 500-feet plus in length, including smaller tenders.