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Yachts docked at the Palm Harbor Marina next to Waterview Towers, its parking garage visible at right along Flagler Drive in downtown West Palm Beach. |
The West Palm Beach-facing "Radiator
Grill" side of Waterview Towers, the 32-story high rise
built on city land in the early 1980s, photographed in 2005.
The 132-unit condo building forever changed the city's
skyline and continues to be a source of litigation over
issues dating to the city's 1979 lease with Chase
Enterprises.
The lease allowed the construction of a 22-story condo
building called Waterview Towers, also known as the
“Radiator Building” because its city-facing side looks like
a radiator grill.
The lease also gave control of an adjacent marina — which
has grown into the home of some of the biggest, most
beautiful yachts in the world — to the late Connecticut
developer, David Chase.
Since the Palm Harbor Marina expanded to accommodate those
yachts in 2009, the city has prospered, not just from the
added downtown business brought by yacht owners and their
crews, but, as the marina’s landlord, by a 15-fold increase
in lease payments from $35,000 a year in 2009 to more than
$500,000 in both 2019 and 2020.
But a 2015 lawsuit filed by the residents of Waterview
Towers could change all that. It makes a powerful case that
the city erred when it allowed the massive marina expansion
that drew all those fabulous yachts.
The challenge appeared credible enough to prompt a legal
threat from the Chase family’s Leisure Resorts LLC detailing
the city’s exposure and adding, “The truth of the matter is
that the current legal issues faced not only by the city,
but also significantly, by Leisure, are the product of past
mistakes and miscalculations by the city attorney’s office.”
And it prompted city negotiators to sign a settlement
proposal in June 2018, one that remained confidential until
September 2019 and remains unfulfilled. It calls for an end
to that lawsuit and four others with the unlikely solution
that the city pay $2.5 million to control a sidewalk it
already owns.
At the heart of the issue is a mistake: When the city let
Leisure rip out four old docks and install five new ones to
accommodate mega yachts a decade ago, no one realized that
the submerged lands upon which those docks would be built
had no connection to the surface except for a sidewalk under
the control — not of the city and not of the marina — but of
the residents of Waterview Towers.
And no one asked the condo dwellers to let the
multimillion-dollar expansion proceed.
‘A distinctly different vision’
Boats have docked at the city-owned marina just south of the
Flagler Memorial Bridge since 1948. It was a sleepy downtown
then and it was still sleepy in 1968, without a single
high-rise lining the now bustling Flagler Drive waterfront,
when city leaders leased out the marina for 99 years to
Edward Durell Stone Jr.
That’s the year David Chase, a Holocaust survivor who became
one of the biggest builders in Hartford, Conn., came to West
Palm. He wanted to build the county governmental center but
he didn’t get that job.
Instead he met up with Stone.
The architect who held the city lease had founded the
renowned landscape architecture firm EDSA. He didn’t have
big plans for the sleepy city’s marina. He envisioned
building low-rise apartments, lawyer Culver “Skip” Smith
told city commissioners in 1989.
Chase brought loftier ambitions.
Or as Smith, a West Palm native, explained:
“And then, as sometimes happens, those of us who live close
to a place all their lives don’t have quite the same vision
as those who see it for the first time from the outside, and
Mr. Chase had a distinctly different vision as to the
highest and best use of that marina and was willing to take
what then everybody thought was (a) crazy risk to build
high-scale and fairly pricey condominium apartments in a
high-rise setting in what was essentially a slum, downtown
West Palm.”
To go with that high rise, even as early as 1979, Chase had
visions of expanding the marina, which could cater to yacht
owners seeking a berth just across the Intracoastal Waterway
from Palm Beach.
The city, hungry for development, contemplated twin towers
before settling on the lone 22-story condo building that now
graces the site. But city officials gave Chase an option to
turn the southern portion of the site, a pie-shaped parcel
of about an acre and a half, into a four-story,
20,000-square-foot building.
That site is a parking lot today. But it played a pivotal
role in the million-dollar scramble that would ensue.
When the Chase family pitched that site for an eight-story
hotel in 2014, a hotel that condo residents feared would
block their waterfront views and intrude on their privacy,
the proposal would awaken a slumbering giant — the Waterview
Towers Condominium Association.
Hotel wins city backing
With Smith’s 1989 presentation, as documented in one of the
many lawsuits over the property, the Chase family’s Leisure
Resorts began a two-decade-long pursuit of an expanded
marina.
At the time, the marina covered 14 acres of “submerged
land,” and had four docks. Leisure wanted to expand it to
cover an additional 8 acres, rip out the four docks and
install five new ones to accommodate 196 yachts, an increase
of 36.
The city went to bat for the developer.
It sued the state in 1994 over who controlled the submerged
land.
The city lost.
The state controlled the submerged land.
The ruling, which came down in 1995, went to the Florida
Supreme Court, which upheld it in 1999.
But the marina expansion didn’t move forward. More lawsuits
did.
Leisure sued the city, saying the city blocked it from
moving forward by falsely claiming to have owned the
submerged land. While Leisure won on the facts, the city won
in practice. The court ordered no relief for Leisure, a
ruling upheld by the appellate court in 2003.
As the legal issues were set aside, a detente came to exist
between the city and Leisure. Leisure would move forward on
its plan to bring mega yachts and work closely with the city
to build a hotel on the parking lot site.
Both sides were convinced that the 1979 lease that allowed
Waterview Towers did not limit the parking lot site to a
mere four-story building. The city’s objections focused on
not the height of Leisure’s proposed eight-story hotel but
its placement.
The hotel would have been right smack dab in front of the
old city hall, which then-Mayor Lois Frankel wanted to tear
down and sell to a developer for an even grander,
water-facing hotel.
The city didn’t want its hotel site’s water view blocked by
Leisure’s hotel.
At the time, Waterview Towers residents seemed to have few
qualms.
In a November 2008 memo, Cheryl Chase, daughter of David
Chase, summed up agreement over issues of construction
noise, insurance and maintaining building integrity.
On the hotel issue, she assured residents that “we have
expended significant time and energy” to produce a hotel
site plan that would address the concerns of the residents
and the city.
Al Irato, the condo board president, replied with a short
note outlining points of agreement and concluding, “Be
assured that it is our intent to be as cooperative as
reasonably possible without jeopardizing any of our rights
or the safety of Waterview Towers or its unit owners.”
The residents, however, were treated simply as interested
observers, whose complaints could be considered or not. No
one considered them partners whose support was pivotal.
The city went to work papering the deal, signing agreements
in April 2009 that began shaping today’s $120 million legal
brawl.
One of those agreements called for a big hike in Leisure’s
rent payments to the city: 8 percent of the newly expanded
marina’s income.
In 2009, before the expansion, the city received $35,000,
slightly more than it had in previous years. The next year,
as the new marina began drawing larger yachts, the city’s
share advanced to $88,000. The next year it went up to
$188,000.
By 2016, it topped $450,000 and in 2020, it reached
$567,000.
But the city gained those lucrative rent increases based on
a falsehood, condo residents would argue. And that’s when
the real trouble began.
City’s failures take center stage
Even before the city approved an eight-story hotel in
September 2014, Waterview Towers resident Laura Bennett
sued.
The Palm Beach real estate agent with a penthouse condo
wanted a court to declare her rights not just as an
interested party but as a partner with power equal to that
of the Chase family in deciding what could be built on the
parking lot site.
And her neighbors? The other 131 condo owners? They, too,
deserve that same power, her attorney, Bob Sweetapple,
argued.
But they were on the outside looking in as Chase and the
city moved forward with plans for the hotel.
Bennett, who would be joined in the lawsuit by the condo
association, first took aim at the 2009 “development
agreement” negotiated by the city and Chase’s Leisure
Resorts.They argued that it carried far more weight than it
deserved.
The agreement allowed Chase to build a 125-room hotel with
no height restriction except for one — to allay the city’s
concerns about its own view. The two sides agreed to a
two-story height limit on the portion of the site
immediately across the street from the old City Hall.
But the development agreement didn’t reference the
decades-old condo documents limiting the 1.5-acre site to a
single building of no more than four stories and 20,000
square feet. It said nothing about how much waterfront
blockage to allow, even though earlier agreements spelled
out a 100-foot limit.
The development agreement didn’t cut out the residents
entirely. It said the city and the developer had consulted
with the condo association and “will continue to consider
the association’s input.”
Five years later, as Palm Harbor moved forward, the condo
association’s lawyer, John Eubanks, pointed out city
failures.
No public hearings were held to approve the development
agreement, he wrote in a letter to City Attorney Claudia
McKenna.No notice was sent to condo owners. The deal can’t
override earlier agreements, he wrote.
While the city argued that their lawyers never intended for
the development agreement to have the authority of law, the
document played an outsized role in city decision-making,
Eubanks wrote.
“In fact, the development agreement has become the basis for
the ‘urban myth’ that the association has no right to oppose
the application, since ‘something will be built on the
parcel’ because the developer is ‘entitled to build a
hotel,’” Eubanks wrote.
Give the residents their say
Eubanks argued that under the 1979 lease and documents
initiating the condominium in 1981 his clients were actually
equally empowered “co-lessees” and deserved the same say in
the project as Chase’s Leisure Resorts.
It went for naught. His client and her neighbors would get
no special treatment at the upcoming city commission
meetings. Unlike the Chase attorneys, they would be allotted
three minutes to speak and no chance to question witnesses.
Three weeks after his letter to McKenna, Eubanks filed
Bennett’s lawsuit to get a court to declare what the city
had denied: that the condo dwellers were partners in the
development, not just interested observers.
He based the lawsuit on the unique arrangement set out in
the city’s 1979 lease, which divided the property into two
parts. The residential portion consisted of the 132-unit
condo building. The marina and the parking lot, where the
hotel would go, were dubbed the commercial portions, C-1 and
C-2, respectively.
The company that signed the lease, an affiliate of Chase
Enterprises, was the lessee but so was the company it
assigned to run the marina, Leisure Resorts, as were the
people who bought condos, he argued, citing the original
condo documents.
Five months later, in September 2014, despite protests from
condo residents, commissioners voted 4-1 to approve an
eight-story, 92,000-square-foot Marriott hotel with a
three-story, 137-space parking garage on the parking lot
site south of Waterview Towers.
It would never be built.
Court ruling a victory for condo owners
After the city approved the hotel, Eubanks filed a second
lawsuit, this time on behalf of the entire Waterview condo
association and two residents, John Gildea and Gerald
Waldman. Waldman, a Washington, D.C., developer who would
serve as condo association president for four years, took on
a pivotal role that continues to this day.
With just three minutes to speak and no chance to question
witnesses, the condo residents weren’t afforded due process,
he argued.
And here the two lawsuits overlapped.
While Eubanks initially asked a trial judge to declare
Waterview residents the equivalent of partners in the
project, he made a similar argument with a three-judge
appellate panel in the second lawsuit, saying as partners
they merited a greater role in the decision-making. Since
they were denied that role, they asked the court to quash
the hotel plan.
While the court proceedings on the first issue dragged on,
the three-judge panel in the second suit came back in
October 2015 with a ruling.
The condo residents deserved a greater say in what happened
to the property than other city residents. They should have
been allowed to make their case to the city commission.
“Indeed, (the condo residents) are more than mere ‘adjoining
landowners’ or ‘interested participants,’” the three-judge
panel wrote. “Instead, they have an active property interest
in the parcel of land which is the result of their status as
co-lessees, along with the developer.”
But that ruling didn’t sway the trial judge in the first
case. Rejecting the findings of the three-judge panel nearly
a year later, Palm Beach County Circuit Judge Edward
Garrison found the condo dwellers had no special powers.
“The (Waterview) association and the residential unit owners
do not have the right under the lease to consent or approve
any development plans for the commercial units,” Garrison
wrote. The condo residents, he concluded, “are not
co-lessees of the commercial portion.”
Adding to the doubts among condo residents at their defeat,
Garrison ordered them to pay Leisure’s attorneys’ fees and
costs, amounting to $306,000.
The Waterview residents appealed.
And they won.
In November 2017, an appellate court reversed the trial
court decision, writing an opinion that closely mimicked
Eubanks’ arguments from 2014.
The bottom line: the unusual setup starting with the 1979
lease made the condo owners and the Chase family co-equals
when it came to changes on the commercial side of the
property.
And those limits on the size, number and height of the
building could not be ignored. The city could not make a
deal with the developer to allow an eight-story hotel when
the 1979 lease called for a four-story building.
Four months later, the appellate court granted Waterview
residents more good news: It rescinded the order forcing
them to pay Leisure’s attorneys’ fees.
The condo association could have sought repayment of its
fees paid but never filed to collect.
Despite leaving money on the table, the cost of all those
lawsuits would come to play a prominent role in the condo
owners’ future.
Funny thing about those new docks
Despite the adverse rulings, the city seemed to regard the
court’s decisions as aberrations.
Even after the first ruling declaring the condo dwellers to
be co-lessees, former City Attorney McKenna continued to
insist in a June 2016 deposition that the condo dwellers
still had “no say whatsoever” over the commercial portions
of the property.
But Eubanks and Sweetapple had only just begun.
They took a fairly innocuous lawsuit filed in 2015 that
challenged the marina’s right to use condo common property,
such as the sidewalk leading to the docks, and turned it
into something quite extraordinary.
They would argue something no one had thought about in the
36 years since the city and David Chase signed that lease
calling for construction of a 132-unit condominium. They
would delve into what is known as riparian rights and
submerged land and upland holdings and come out with the
unique argument that the 132 condo dwellers controlled the
marina.
What tipped them off?
It started, documents indicate, with the city’s failure to
have subjected the marina expansion back in 2007 to any kind
of formal site plan review. Typically, builders can’t pull
building permits without a site plan review. But Leisure
Resorts ripped out the old docks and spent upward of $20
million to install new ones without getting a city OK’d site
plan.
The lawyers hit on this discrepancy when Leisure sought to
tweak its docks in 2015 to add nine spaces for mega yachts
on the south end and remove nine smaller slips on the north
end.
When the condo lawyers sued over the lack of a site plan and
asked to see the 2007 site plan, the city couldn’t find it.
So it approved one retroactively. And it approved the new
proposal as well.
The research led to another curious finding. Back in the
1990s, the city had argued in court against the state that
it owned the submerged land by the marina.
But in a ruling confirmed in 1999 by the Florida Supreme
Court, it was determined that the state owned most of the
land. In fact, the only water bottom the city owned was the
land beneath the marina’s four docks.
And in its 2009 construction job, Leisure Resorts ripped
those docks out and built five new docks, all of them in
different places — over state, not city, submerged land.
If the city didn’t own the land, it couldn’t lease it to
Leisure Resorts.
As a result, Eubanks and Sweetapple would argue in November
2017, “all of the five docks included within the initial
marina expansion are not part of the condominium property,
and yet were placed upon and attached to condominium
property without permission of the association or unit
owners.”
Mistake builds upon mistake
Blissfully unaware of the potential pitfalls, in 2009 the
city carved out new lease agreements with the state.
And then the city subleased those submerged lands to Leisure
Resorts.
Problem fixed.
Not quite.
By 2017, after years of litigation, the condo residents had
found their golden moment.
Riparian rights, under state law, must be tied “to land
bordering on navigable waters.”
That means the city had to show that it controlled the
uplands — the land on shore — to support a submerged lands
lease.
Believing it had control of those uplands, the city and
Leisure in 2009 signed a contract to give Leisure a
10-foot-wide strip, which included a sidewalk, to meet the
state’s standard.
The problem, Eubanks and Sweetapple argued, is that the city
did not control the uplands it attempted to give away.
Back in 1979, when city officials first gave David Chase the
right to build a condo, the city did not reserve any rights
to itself under the lease.
When the Waterview Towers condominium documents were
approved in 1981, the rights given to Chase were transferred
to the condominium owners — not just the 132 unit owners but
Leisure as well, as the owner of the two commercial
properties, the marina and the parking lot.
The land along the waterfront, including the sidewalk along
the water, became part of the condo’s “common elements.”
And who controlled those? The 132 condo owners and Leisure
Resorts.
“Therefore,” Eubanks and Sweetapple wrote, “at the time of
the riparian easement, the city had no riparian rights to
give to Leisure.”
They couldn’t lease the land and they couldn’t grant the
upland rights. As a result, they argued, yacht owners have
no right to use the condo’s common elements, including the
walkway along the water needed to get to and from their
boats.
When the city held its annual boat show and allowed up to
50,000 visitors to check out Leisure’s docks, those visitors
were stepping on private condo property “to the detriment of
the residential unit owners.”
And who benefited? the association lawyers asked. Leisure,
of course, but the city as well, since when it upped the
rent to take in an 8 percent share of marina revenues “the
city essentially became a partner with Leisure in the
operation of the marina.”
In September 2017, the Florida Department of Transportation
fighting a Leisure Resorts claim over bridge construction
that blocked access to parts of the marina, incorporated the
condo association's argument in a court filing.
"It appears from the information available to FDOT at this
time that the (condo) association may have ownership of the
promenade (sidewalk), sea wall and the riparian rights,
which are held in common by all of the unit owners of the
condominium," FDOT lawyer Ryan Bourgoin wrote. "It appears
that the riparian easement from the city to Leisure Resorts
is invalid because the city did not have any riparian rights
to grant to Leisure Resorts."
The Waterview residents had reached their pinnacle, the high
point in years of legal wrangling. They controlled access to
the marina. They could demand a share of the profits or
block anyone from stepping from a yacht onto dry land.
“It was one of those eureka moments that you’re happy you
went to law school 40 years ago for,” Sweetapple would say,
years later.
It would all unravel, but for the moment, in a world defined
by lawsuits, the Waterview Towers condo residents stood on
top.