August 29, 2005

Miami, Fl – Brigham Moore LLP, the state’s largest private property rights defense law firm, recently secured an eminent domain settlement for the developers of the Opus project. The Florida Department of Transportation (FDOT) paid $78,000,000 for the three parcels of land located along Biscayne Boulevard and across the street from Miami’s new performing arts center. The FDOT acquired the land for use in the planned improvements to the I-395 causeway to Miami Beach. 

Developer Murphy Baklot Partnership, whose principal is Paul Murphy, had contracted to purchase the three parcels totaling 3.7 acres in February of 2004 from land owners: 1200 Biscayne Enterprises, LLC, 1237 Biscayne Boulevard, LLC, and Miami Realty Acquisitions, LLC. The three entities decided not to develop the properties that they purchased several years earlier. Instead they contracted to sell the three parcels located between Interstate 395 and the Miami Performing Arts Center to the developer. But the contract never closed.

While the contract to purchase the property was still pending, Murphy worked diligently to obtain the necessary approvals and financing to construct the buildings. In addition, for more than one year the partnership worked on development plans for a three-phase development totaling more than 1,500,000 square feet and was about to obtain development approvals to begin construction. The project was substantially pre-sold and had all the necessary financing lined up to begin construction.

But Murphy’s plans weren’t the only ones for the property. The FDOT’s plan to improve I-395, which was thought abandoned, had apparently been revived. The state is currently considering different alternatives, including a $525 million proposal for an underground tunnel as well as another plan that would raise the causeway higher while reducing the number of pilings used in the current design.  In either event, the Opus parcel would be needed. However, with the Opus project complete, the highway project would not be possible. The FDOT had to act fast.  

With its land tagged for a potential government taking and development stalled by the FDOT’s declarations, Murphy retained Brigham Moore partners Juan Muñiz and Mark Tobin together with co-counsel Lucia Dougherty, a partner in the land use group of Greenberg Traurig in Miami. 

For the FDOT, negotiations were handled by Debora Rivera, district right of way manager, and Debra Herman, FDOT’s senior eminent domain counsel.

After months of negotiations, the FDOT agreed to pay $78,000,000 for the land and the project in its current stage of development. The landowners received $29,000,000, which was the price that they were to be paid by the development partnership under the pending contract. The developer was entitled to the rest. (Under Florida law, the contract-sellers of a property being condemned are entitled only to the price they were to be paid pursuant to the contract. The contract-buyers are entitled to the balance of the condemnation proceeds).

This was a difficult case because the valuation of property that is condemned in the course of development is very complex. The developers in cases like this are entitled to more than just the raw land value. They are entitled to be paid for the value of the project in its current stage of development including the profit they may have earned for their efforts to date. In this case, the developer was entitled to the appreciation in land value since the date it contracted to buy the property. It was also entitled to the enhancement in value resulting from its efforts during the course of the year where it conceptualized and designed the project, sought approvals, and pre-sold the planned high-rise buildings.

Muñiz, who together with his partner Toby Brigham represented the developers of the Miami Circle site in Miami and the Hyde Park Market site in Ft. Lauderdale, is not new to representing owners whose properties have been taken in the course of development. “It is actually quite common these days in such an active real estate market where virtually every site that appears vacant has been spoken for with development plans.”

“This is a fine settlement for all the parties involved. The FDOT acted quickly and was able to save its highway project by acquiring this land before the Opus development was completed. Every day that passed would have meant a higher purchase price for the FDOT. Once vertical construction began, it is highly unlikely that the FDOT would have been able to afford the property,” said Muñiz.

The developer could have awaited its day in court. According to Muñiz, the claim in an eminent domain trial would have been between $120 and $140 million. But this might have taken years.

“A quick resolution was important to my client and essential to the deal,” said Muñiz. “The FDOT’s ability to act quickly made it the quintessential win-win.’”

Over the years, Brigham Moore has handled major South Florida condemnation cases including the Port of Miami, Bicentennial Park, the Miami-Dade Federal Courthouse, Miami Circle, the Metrorail People Mover, and most recently, the expansion of the Miami International Airport, also known as MDX.