Breaking down the Related-backed Miami Beach Deauville referendum

Billionaire Stephen Ross’ Related Companies pumped nearly $1.3 million into the political action committee backing his plan to develop the oceanfront Deauville site in Miami Beach. And that PAC is securing endorsements from elected officials across the county.

Referendum 1 doesn’t mention Ross, Related or the Deauville, but the ballot question would boost the floor area ratio — or allowable project size — for the 3.8-acre Deauville site at 6701 Collins Avenue to 4.5 from 3.0.

Ross is in contract to buy the property from the Meruelo family for reportedly $500 million, and that deal is contingent on the referendum passing. The New York-based developer and Miami Dolphins owner enlisted Frank Gehry to design the proposed project.

The Deauville, a historic property that the Meruelo family is said to have let fall into disrepair, will be demolished by implosion Nov. 13, days after next week’s election on Nov. 8. The city of Miami Beach ordered the demolition after the Meruelo-led company that owns the property submitted a structural report late last year that determined it was an unsafe structure.

New York-based Related is the sole contributor to YES For A Safe and Strong Future, the PAC promoting referendum 1 in Miami Beach. The PAC raised $1.27 million and has spent more than $1.23 million on advertising, direct mail and political robo text messaging, according to The Real Deal’s analysis of contributions listed on the database Voter Focus. Neisen Kasdin, a former mayor of Miami Beach, chairs the PAC. Kasdin, co-managing partner of Akerman’s Miami practice, is Ross’ attorney for the proposal.

The referendum increases the FAR in the North Beach Oceanside Resort Overlay District, between 6605 and 6757 Collins Avenue, which is centered around the Deauville property. The way it’s worded, for the project to qualify, the developer would build a hotel with a minimum of 150 rooms and reduce maximum density of the overall project by 50 percent, provided the owner provides public beach access. (While the project size would be larger than what’s currently allowed, it would have fewer units.)

Ross has said that his plans call for one luxury condo tower and one hotel tower that would be Equinox-branded. Related owns a stake in Equinox.

For lots smaller than 150,000 square feet, or about 3.4 acres, the FAR would increase to 3.0 from 2.25. That means that the owners of the Sherry Frontenac hotel at 6565 Collins Avenue, south of the Deauville, and the owners of the lot north of the Deauville at 6757 Collins Avenue, would also benefit. Urbanica Management, led by Charlie Porchetto and Diego Colmenero, owns the latter site.

Who stands to gain from the referendum passing

A handful of real estate players stand to benefit from the referendum passing. At the top of that list is the current owner of the Deauville, the Meruelos, as well as Related and Ross, and to a lesser extent, the owners of the properties north and south of the Deauville.

The Meruelo family, led by Belinda and Homero Meruelo, has been criticized for not maintaining the Deauville, and the family was accused of intentionally doing so. The historic structure, built in 1957 and designed by Melvin Grossman, hosted the Beatles for their U.S. debut in 1964 on “The Ed Sullivan Show.” Critics, led by Miami Beach commissioner Kristen Rosen Gonzalez, have said that allowing the referendum to move forward would reward the Meruelos, who, prior to the demolition order, had racked up fines with the city of Miami Beach. The hotel was damaged by a fire and Hurricane Irma, and has been closed for years.

Over the summer, the Meruelos offered $200 million to buy out unit owners at the historic Casablanca condo-hotel nearby at 6345 Collins Avenue. That purchase is reportedly contingent on the referendum passing and Related closing on the Deauville acquisition. They could use the money from the sale of the Deauville to purchase the Casablanca via a 1031 exchange, according to industry experts. The Meruelos developed the Akoya condo building immediately north of the Casablanca, at 6365 Collins Avenue.

Ross and his Related Companies have been expanding aggressively in South Florida in recent years, pushing farther south in Miami-Dade County. Ross, who grew up in North Beach, also ramped up his investment and development in West Palm Beach’s commercial market, specifically focusing on Class A offices.

Public benefits

The developer said it will contribute $500,000 to a committee that will fund arts and education programs at schools in Miami Beach, fund construction of a recreational community center, and provide $1 million to a new housing relief fund. Related has also said the Equinox project will generate $100 million for the North Beach Community Redevelopment Agency, plus taxes.

Endorsements

Miami Beach Mayor Dan Gelber brought the unsolicited proposal to the city commission in May, and supports the project and referendum.

Miami-Dade Mayor Daniella Levine Cava, county commissioners Sally Heyman and Eileen Higgins, state representative and ex-Miami Beach commissioner Michael Grieco all endorsed the ballot question. Ana Bozovic, a market expert and owner of brokerage and data firm Analytics Miami, also appears in an ad supporting the referendum

In an automated text message, Levine Cava wrote that the referendum “gives us a real shot to invest in the North Beach CRA and truly remake an area that needs significant investments.”

PAC’s expenditures

The PAC has been running the television ads, robo texts and mailing of fliers.

Edge Communications, led by political strategist Christian Ulvert, received more than $841,000 since September, according to Voter Focus. Ulvert ran Levine Cava’s campaign for county mayor.

The PAC also paid MDW Communications, led by Michael Worley, more than $331,000 for direct mail consulting and text campaigns. Separately, it paid the Tampa-based firm Mercury Public Affairs nearly $157,000 for advertising, Voter Focus shows.

Lobbying and consulting firm DRC Associates, led by David R. Custin, was paid more than $24,000.