In February, a buyer relocating from New York almost closed on a riverfront condo in Fort Lauderdale… but then came the smell of sewage, extinguishing all interest in the property.
“She liked the building and wanted to buy,” said Weichert Realtors Hallmark Properties broker-associate David Small, recalling the buyer’s second visit to the condo building along the city’s Middle River, where he had the $1.5 million listing. “We went through the lobby to look at the dock, and as soon as I opened the door, she declined to even move forward. I lost a sale. … She could smell it, the odor.”
Brokers said other Fort Lauderdale properties also became a harder sell after multiple pipeline breaks from Dec. 10, 2019, to Feb. 24 sent more than 200 million gallons of wastewater gushing onto city streets and waterways. The staggering volume of sewage spilled in Fort Lauderdale over that period exceeded the volume of oil that spewed over 87 days from a well in the Gulf of Mexico after the Deepwater Horizon drilling rig explosion in 2008. Crews kept spilled sewage out of Fort Lauderdale homes by vacuuming some of it off streets and discharging the rest into waterways, raising questions about water quality in a city that promotes itself as the “Venice of America.”
Few real estate pros have felt the impact more than residential brokers with listings in such sewage-soaked areas as Rio Vista and Victoria Park.
“I’ve thought about moving out of Victoria Park,” said Paul Straub, a principal of Victoria Park Realty and resident of the area, citing a lack of closings because of sewage spills. “Usually at this time of year, I’d have three deals in the bank already,” Straub said, “and this year, I’ve got nothing going on.”
He said that even some out-of-towners are aware of the city’s sewer issues: “I’ve talked to people from up north who say, ‘Do you still have shit all over the streets down there?’”
The pipeline breaks in December 2019, January and February on the eastern, largely residential side of the city had little initial impact on the Fort Lauderdale metropolitan area’s overall housing market.
The Miami Association of Realtors (an amalgam of six organizations that includes the Broward-Miami Association of Realtors) reported that the number of home sales in Broward County increased 6 percent in January, compared to January 2019. At the same time, the number of active listings for houses and condos fell 17.4 percent in January this year from the same month last year.
The winter sewage spills “could be” one reason why the number of Broward County listings fell, said Lynda Fernandez, the Miami Association of Realtors’ chief of communications and international, but she noted a similar decline in Miami-Dade County, where the number of houses listed for sale in January fell 13.6 percent while the number of condo listings dropped 9.8 percent.
“That’s the trend,” she said. “New listings are not increasing.” She added that the impact of the Fort Lauderdale sewage spills on such hard-hit areas as Victoria Park, Rio Vista and Coral Ridge may become clearer on May 12, when the Miami Association of Realtors will release its first quarter report on residential sales in Broward County by city and by ZIP code.
Pamela Ossa, an agent for The Howland Group, a Fort Lauderdale-based residential brokerage, claimed the sewage spills had only a minor impact on her winter season sales activity, citing the city government’s quick cleanup and repair work: “The city has addressed the problem, especially in the areas we specialize in, like Rio Vista.”
Commercial property owners were largely unscathed because the sewage spills happened in predominately residential areas. Just west of the Rio Vista area, for example, a new office building called the 550 Building is attracting tenants. And they don’t mention the sewer pipe breaks, said Joseph Byrnes, senior vice president of Fort Lauderdale-based Berger Commercial Realty, which is marketing the property.
“We just met with a big law firm there, and the subject never even came up,” Byrnes said. “It never does — and believe me, we’re not about to bring it up. The biggest impact is in the residential world. I know a fellow who owns a house in Rio Vista. He says you can’t sell a house in Rio Vista right now. ”
Building boom gone bust?
The sewer emergencies renewed debate over whether Fort Lauderdale allows excessive real estate development. Some residents urge a moratorium on construction until upgrades to underground infrastructure are completed.
“I think it’s just common sense that you need to put on the brakes and get a grip on this thing,” Fort Lauderdale resident John Gagne told city commissioners at their March 3 meeting.
But city commissioners show little inclination to ban new construction to somehow save Fort Lauderdale’s sewer system. Instead, they have jacked up one of the city’s so-called “impact fees” for development-related municipal services to help cover infrastructure costs, raising water and sewer connection fees for new homes and multifamily buildings in September for the first time in about a decade. The 89 percent increase that raised the one-time water-and-sewer connection fee to $3,865 took effect Dec. 16, 2019.
“There was no outcry from the development community, like, ‘Oh my God, what are you doing? How can you raise fees?’ People understood,” said Ken Krasnow, vice chairman of institutional investor services in Florida for brokerage firm of Colliers International. The old $2,037 connection fee “was almost — I don’t want to say artificial — it was not representative of a changing and growing market,” he added.
About $600 million in spending is planned over the next five years to improve the city’s wastewater, drinking water and storm water systems.
Henry Pino, a principal of Miami-based Alta Strategic, which is developing a 492-unit apartment project near downtown Fort Lauderdale called Eon, said he expects higher impact fees and tougher scrutiny of development proposals and their infrastructural consequences at City Hall: “It will definitely hold up development … There’s a certain crisis there.”