County to City: You’re Responsible
City and County May Go To Legal Blows Over Fees Owed By Developers

The county Water and Sewer Department was not “exercising appropriate diligence in assessing and collecting fees according to policy.”

By Erik Bojnansky

The City of Miami Beach may be asked to pay for hundreds of thousands of dollars in uncollected impact fees after the Miami-Dade County Commission approved a settlement with a developer, Thursday, Jan. 25.

ZOM South Beach, Ltd., one of the developers of the Waverly at 1330 West Ave., will only pay $175,000 of the $526,347 owed the county for water and sewer connection fees.

The $526,347 was just a portion of more than $4.7 million in sewer connection fees that are owed by Miami Beach developers, according to the county’s Audit and Management Services Department.

The county manager’s office recommended passing the settlement. “This settlement is fair and reasonable given the strength of the entities’ defenses, the risks of litigation and the costs of trying this case,” stated “a manager’s background” memo.

Neisen Kasdin, a former Miami Beach mayor and the attorney for ZOM South Beach, told the commission that the fees were actually owed by the initial developer of the Waverly (above), whom he called “Berman.” Kasdin claimed ZOM South Beach had no idea the fees were never paid to the county and added that the building was now under the control of the condo association. Although Kasdin felt his clients had no legal responsibility to pay the fees, he said they were persuaded to negotiate a settlement by the “jaw-dropping” of Assistant County Manager Roger Carlton, a former Miami Beach city manager.

County officials said they would hold Miami Beach responsible for any outstanding fees.

“[Miami-Dade Water and Sewer Department’s] collection effort on these outstanding connection charges does not relieve the City of Miami Beach from its responsibility to either collect or pay the remainder of these delinquent fees,” the manager’s report stated.

But Miami Beach City Manager Jorge Gonzalez wrote in a letter to the county that the city was not “a party” to the final discussions between the county and the Waverly’s developers. The city is also against paying the difference of any unpaid water and sewer fees.

“In meeting with county staff, the City of Miami Beach has argued that the public interest is best served in having the development interests that are responsible for the outstanding Water and Sewer charges pay those charges in full directly to Miami-Dade County,” Gonzalez wrote. “The City and Miami-Dade County have agreed that it is not in the public interest to have either Miami-Dade County or the City of Miami Beach expend funds in lieu of the development interests responsible for the Water and Sewer Connection Charges.”

“From a legal standpoint, the city of Miami Beach has no responsibility whatsoever for any alleged water and sewer connection fees,” City Attorney Jose Smith said Tuesday. Smith added that the matter may “end up in litigation.”

“We obviously have a disagreement as to a) their responsibilities and b) their defense to any litigation they might face,” said Assistant County Attorney David Murray.

Water and sewer fees are supposed to be collected from new development projects to pay for installing the infrastructure needed to service the new buildings. Without it, taxpayers at large pay for the brunt of any needed water and sewer infrastructure improvements.

Last year the Audit and Management Services Department discovered that between 1989 and 2005, more than $10.4 million in water and sewer connection fees were not paid by developers who were building in Miami Beach. Since then $5.7 million has been collected, leaving a balance of $4.7 million unpaid for projects, many of which are more than four years old.

“These projects, which total $3,225,900 depending on individual circumstances, could be subject to Florida’s 4 Year Statute of Limitations,” the manager’s memo stated.

Those Miami Beach projects, besides the Waverly, that now owe the county money are:

The Loews Hotel: $899,047. (County officials now believe the amount the Loews owes “may be significantly less,” according to the manager’s report.)

Yacht Club at Portofino: $513,758

Portofino Tower: $310,356

The Royal Palm Hotel: $286,129

Cosmopolitan Towers: $229,831

The Ritz-Carlton Hotel: $145,218

Ocean Blue Condominiums: $138,961

The Shores Club: $118,585

Collins Victory Plaza: $106,255

Miami Beach Public Works Director Fred Beckmann said that in a longstanding interlocal agreement with the county, it was Miami-Dade’s responsibility to collect water and sewer impact fees from developers. “There have been instances in the past … 2000 and before” when Miami Beach granted building permits to projects without giving proof that impact fees were paid. Last year, at the city of Miami Beach’s request, the County Commission approved a resolution requiring that permits only be granted when there is proof that water and sewer impact fees are paid, Beckmann said.

A later audit, conducted in September 2005, found that the county Water and Sewer Department was not “exercising appropriate diligence in assessing and collecting fees according to policy.” The Miami Herald also reported in August 2006 that three county water and sewer employees resigned after it was found that they were granting “special privileges” to at least one developer. 

“I was told the employees who were involved with [not collecting fees] were going to be disciplined, but they ended up resigning,” said Frank Calderon, spokesman for the Miami-Dade Water and Sewer Department. One of the employees included a supervisor, he said.

Comments? E-mail erik@miamisunpost.com.