A still-unfinished proposal floated a year ago to resolve all the issues surrounding the Palm Harbor Marina and its adjoining condo tower on Flagler Drive calls for the city to pay the condo owners $2.5 million — to buy the rights to a sidewalk the city already owns.

But an even greater cost looms, buried in the thousands of pages of lawsuits that have littered Palm Beach County Circuit Court for years. The resolution to those lawsuits could cost the city and the owners of the Palm Harbor Marina many millions more. The failure to resolve could cost the city as well, as the marina owners threatened last year to sue the city for $120 million.

The mess that has given birth to 13 lawsuits — seven involving the city — and more than 2,000 court docket entries since 2014 revolves around a crescent-moon shaped slice of waterfront that the city, regrettably in the view of many residents, all but gave away in the 1970s under a 99-year lease.

Years into the disputes, one judge trying to take it all in, said he felt as if he were reading a chapter in “Alice in Wonderland.” “This,” he said, “is getting down the rabbit hole.”

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.