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Kaskades buiding under renovation by Menin Hotels

PHASED PERMITTING SERIES
ENVIRONMENTAL LAW INCONSEQUENTIAL IN MIAMI BEACH
Miami Beach Officials Favor Developer Ignoring Environmental Concern
15 April 2014
By David Arthur Walters
MIAMI MIRROR
My investigation of the “phased permitting”
1
introduced on July 31, 2013, by Miami Beach City
Manager Jimmy Morales and his building official Mariano Fernandez
2
revealed that major
renovation of the Kaskades apartment building on the Southwest corner of James Avenue and
3
rd
Street proceeded without the prerequisite environmental protection permit from Miami-
Dade Regulatory and Economic Resources Department of Environmental Resources
Management (DERM).
“Gale Suites at Kaskades” is being renovated by Menin Hotels in conjunction with the
completed renovation of the old Ritz Plaza Hotel, now occupied as the Gale Regent Hotel,
standing on 3
rd
Street between Collins and James Avenues. Menin Hotels is run by locally-bred
hoteliers Keith Menin and Jared Galbut, familial protégé’s of cruise company director and
developer Russell Galbut, a father-figure whose Crescent Heights company served as the boot
camp for their conversion of old apartment buildings into boutique hotels. ‘Uncle’ Galbut’s
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influence has helped them get financing, cut red tape, and get several projects done quickly
around the city. Galbut interests own a vast amount of real estate in Miami Beach via a web of
companies.
Miami-Dade County entered into various consent agreements with the United States after
being sued by the federal government for failing to protect the environment. DERM,
responsible for seeing that the stipulations are followed, issues so-called DERM permits,
without which building officials are not supposed to issue construction permits.
Yet, without the necessary DERM permit, the City of Miami Beach issued “phased” permit
B1401637 for the declared $10.7 million renovation on January 9, 2014, good for six months,
until July 8, at which time it may be renewed. A phased permit fee of $1,500 was paid. The so-
called phased permit was issued against master permit B1400581, applied for on October 31,
2013, upon which a partial fee of only $7,409 was paid against a total fee of $33,995, leaving a
balance due of $26,586. Incidentally, total permit fees must be paid before the master permit is
issued, according to the city’s website, although that has not been the practice, according to
David Weston, a certified fire inspector who said he uncovered untold millions in unpaid permit
fees, and was subsequently fired. Weston had complained about gross under-valuations of
projects when permit fees were based largely on project valuations. Now they are assessed
largely on square footage although a portion of the fee collected is supposed to be paid out to
governmental entities based on project valuations.
I asked the Building Department for a list of phased permits issued. There was some delay in
compiling it, apparently due to a coding issue. I sent the list over to DERM, and asked if the
phased projects had been permitted by DERM. I pointed out that the city’s public releases on
the prerequisites of phased permitting did not include the DERM permit as a specifically
required item.
Luis Espinoza, Communications Program Manager for DERM, informed me on March 5 that 17
of the 23 items listed had DERM approvals. The spreadsheet indicated that a DERM permit was
actually denied for the Kaskades project on February 3. The reasons for the denial were: a
drainage well permit was pending, a clarification was needed for the proposed uses associated
with eating establishments, a Miami-Dade County Water and Sewer Department (WASD)
ordinance letter was pending, and a clarification of point of discharge of elevator sump pump
was also needed.
“The City of Miami Beach procedures should be revised to specify that DERM approval is
required prior to the phase permit being issued. DERM will be contacting the City of Miami
Beach to assure that the required DERM approval is listed as part of the Phased Permit process,
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and that the DERM approval is consistently obtained prior to City approval of all Phased
Permits.”
I passed along this advice from DERM to Jimmy Morales and Mariano Fernandez on March 10,
with a note that he should review his checklist and make sure DERM permits are included along
with another item I had called to his attention, an opinion of the state fire marshal that fire
marshal must sign off of phased permits too.
“Not sure why you are so obsessed with phased permitting,” Morales responded. “It has
worked well in Miami and it is beginning to work well here. The Building Official is aware of
what DERM and Fire require.”
I was amused by his diagnosis that I was suffering from an obsession. City officials seem to
practice psychiatry without a license when they do as the Soviets once did, diagnose anyone
who does not believe their government is the best of all possible governments as somehow
insane, using such terms as “obsessed,” “moronic,” “deluded,” and “demented” – Soviet
psychiatrists coined the phrase “sluggish schizophrenia.”

I noticed that construction continued apace on the Kaskades. I presumed that Morales had
Fernandez issue a Stop Work Order, and that a DERM permit was quickly obtained.
Au contraire: I checked with DERM only to discover no permit had been issued, wherefore I
addressed Morales yet again, on April 8, with copies to Mayor Philip Levine, Commissioner
Michael Grieco, who is the only commissioner who responds to my requests, Assistant Building
Director Stephen Scott, and City Attorney Jose Smith—none of them responded:
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“Construction was begun and has proceeded without a DERM permit on Galbut's $10,700,000
Kaskades renovation across from the Gale Regent, Phase Permit B1401637 (Image attached). As
I advised you previously, DERM denied a DERM permit on February 3, 2014. Yet you considered
me ‘obsessed’ when I raised the issue in respect to my Phased Permitting Inquiry. Construction
continued without the DERM permit even after you forwarded my advice to the Building
Official, therefore I assume that he considers DERM permits inconsequential where Phased
Permitting is concerned. I shall contact the federal government for its perspective. You
mentioned that your version of Phased Permitting was successful in the City of Miami when
your building official was Building Official over there. I stand by for the answer to my question,
Successful for Whom? Mind you that I have no axe to grind with Russell Galbut and Family, and
even offered my services to him when I lived at what is now the Gale Regent. He is a
controversial figure, of course, and you may be aware of the large double permit fee charges
prosecuted by Jose Smith's office in regards to his Mondrian Hotel project. I suppose Phased
Permitting with several extensions might have prevented that process along with the
scandalous aftermath involving the Ethics Commission.”
According to the city’s official line, double permit fees are always assessed where jobs are
begun without permits. In reality they are often waived, or selectively imposed against disliked
parties, or enforced when a troublemaker, perhaps a jealous or vindictive person, insists.
Bribery is always suspected given the city’s long history of corruption. The city recently
proposed to make the waivers official, purportedly benefiting only those who come forward
and confess their sins before being caught red-handed.
Russell Galbut, like the Lord, has many enemies eager to expose his evils to the detriment of his
goods. His flagship hotel conversion, the Mondrian, was subjected to sizable double-permit
fees. He appealed to the county Board of Rules and Appeals on the basis that city officials knew
work was ongoing without permits, had in fact visited the site during construction, and had
therefore permitted it. The theodicy was sound, so the evil was excused by a margin of one
vote: the Board agreed 8 to 7 on June 17, 2011, to grant the appeal. Chairman Jesus Gomez
“closed with remarks that while he felt uneasy about what has happened, there are indications
that work was being done with the knowledge and authorization of the City given that
inspections were performed.” A complaint was then filed with the county Ethics Commission
that Rules Board member Myron Rosner had received more than $10,000 in contributions for
his mayoral campaign from Galbut and had twice ruled in favor of Galbut. The Ethics
Commission naturally dismissed the complaint.
And now it appeared that the Galbutian interests are getting ahead of the formal permitting
process yet again, at the Kaskades. On April 11, I sent along more evidence of work in process
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to Espinoza at DERM along with a copy of the consent decree stipulating that the county
protect the environment:
“You have probably read the attached Consent Decree and the preceding ones a dozen times. I
am not sufficiently indoctrinated in the issues to fully understand the implications the decrees
have for this particular project. Therefore I consulted with David Weston, an engineer who
takes a keen interest in compliance issues. The local building official and his manager, the city
manager, could care less about this environmental issue. I am standing by to hear whether or
not proceeding with construction without a DERM permit is inconsequential.”
Weston followed up on the issue with his own letter that very day:
“Kindly, at your convenience, email me the Miami Dade process number or tracking number
that this project was given for the recent DERM review. Also you were going to get back to me,
indicating whether failure to obtain DERM approvals and/ or failure to file DERM applications
were detailed in, and a violation of the terms of your consent agreement. Finally I ask you if
you are empowered to enforce compliance in the municipal areas? My reading of this
agreement suggests that ultimate responsibility for compliance and/or lack of compliance
should be of great and urgent concern to your offices. As you may have noted I have been
copied with the emails from Mr. Walters and I have become puzzled by what appears to be
regular non-compliance on important environmental matters. I have seen, in my own
professional experience, clients that have been turned down by DERM and forced to abandon
or change projects due to environmental issues. It is, in my opinion, a disservice to the
developers to allow construction to continue without DERM approval. Based upon Mr. Walters
reporting it would be a terrible disaster if the developer were allowed to continue construction
only to discover that their use would not be permitted.”
# #


1
The Florida Building Code allows government entities with building officials to adopt phased
permitting, which is a mode of proceeding with construction in phases or phase-by-phase prior
to the approval of a permit for the entire project. This controversial manner of proceeding
without a full permit is usually employed throughout the country on very large projects such as
dams, solid waste disposal landfills, gas pipelines, highways, railways, and so on, where certain
unanticipated contingencies may be encountered along the way that call for changes in plans,
or for proceeding with groundwork on projects where designing extends beyond breaking
ground with grading, paving, and laying underground utilities. The concept itself has been
criticized as inherently absurd because contradicts the very purpose for permitting, being in
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effect an “early start” or “no-permit permit” allowing construction to progress before
developers and contractors have all their ducks in a row.
Construction stakeholders may find phased permitting attractive for putting smaller projects on
a “fast track” with expedited reviews and private inspections when facing inadequate time and
money to design a complete plan. They may desire to get ahead of permitting delays due to
inefficient building departments, or there may be uncertainty over whether future phases may
be built, or they may simply be shy of cash and credit to complete the project.
However, advisors may recommend against phased permitting because it costs more.
Construction costs may rise and put costs over budget. Reduced economies of scale and
redundant costs make project more expensive. Large projects have greater economy of scale
than starting and completing a series of small projects. Higher permitting costs, and higher
architectural and engineering fees as plans are submitted to building departments, and extra
site visits by design teams, and design teams may be called on to rework designs of the project
in progress. Furthermore, a full permit may not be approved. Work may have to be stopped on
one phase before getting a permit on another phase, resulting in delays in completion. Planning
may be inadequate, leaving one unprepared to completely phases, requiring the project be
abandoned or undoing work already done. Involvement with construction may be indefinite
hence time consuming.
The Miami Beach version of phased permitting was adopted shortly after the new city manager
was appointed to curb corruption and inefficiency, and he imported his building official from
the City of Miami. Miami Beach had no need for phased permitting in the past despite the
construction of its tall towers. While other cities divide projects into several logical phases, each
phase to be separately permitted for a fee, thus far Miami Beach “phased” building projects
seem to have only one phase, from groundbreaking to rooftop, with a single nonrefundable fee
of up to $2,000 charged for the permit. Only a small deposit on the master permit application is
charged pending full approval.
The reason for phased permitting in Miami Beach appears obvious: to avoid the problems of
proceeding in the traditional manner, without a permit. Now the bribe for “getting ahead of the
permits”, where there was a bribe before, is paid to the city. Private inspectors, who have an
inherent conflict of interest and whose inspections according to several studies are inferior to
dedicated public inspectors, must be employed for so-called phased jobs. Phased permitting
may aggravate the ineptitude of the building department, and effectively permit corruption.
The need for phased permitting as defined and professed by City Manager Jimmy Morales is a
virtual confession of his own administrative incompetence as well as the incompetence of his
building department and the director he engaged to do his bidding.
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2
On April 17, 2013, days after former Miami-Dade Commissioner and Doral City Attorney
Jimmy Morales took his appointed position as City Manager of the City of Miami Beach on April
Fool’s Day 2013, he imported Miami’s top building official, Mariano Fernandez to be his
building official and director of the Miami Beach Building Department, which has a long history
of corruption and arrests.
Morales, a lawyer who specialized in land use, a political insider, and, according to his résumé,
“a native son of the City of Miami Beach and a product of its public schools,” was shooed into
the city manager job notwithstanding the slate of outsider candidates put forward by a
professional recruitment firm, despite the fact that he has no experience as a professional
business or political administrator, and Miami Beach is supposed to be governed by an
apolitical, strong professional management system. He was hired in the scandalous wake of
several arrests of code compliance officers and the subsequent forced retirement of the former
city manager, Jorge Gonzalez, with the expectation that he would curb corruption. Gonzalez
insists that Morales has in fact done nothing more to curb corruption than he had done prior to
his departure.
“The City is at a critical juncture in its history. It faces significant infrastructure challenges and is
considering major developments…. I am confident I am up to the task even though mine is not
the traditional or customary route to such an appointment. I haven’t spent my professional
career as a government administrator and I’m not a lifelong government employee…. On the
private side I represented clients confronting government obstinacy, bureaucracy and
incompetence.” November 8, 2012, résumé letter submitted to Mayor and Commissioners
Fernandez exit as Miami’s building official came on the heels of a inspector general’s report
that the county was proceeding with public works construction without permits. OIG Final
Report IG12-26, dated December 19, 2012, In Re Miami-Dade County Internal Services
Department’s Failure to Obtain Building Permits for Work Located in the City of Miami,
concluded that:
“The OIG investigation substantiated the allegation that ISD was required to obtain building
permits, but failed to do so for both projects reviewed. The City of Miami Building Department
officials advised the OIG that building permits were required for both projects, and confirmed
that the permits had not been obtained. The failure by ISD to obtain building permits for these
projects means that the projects were not inspected by qualified electrical, plumbing, and/or
mechanical inspectors. The purpose of an inspection is to ensure that work is done safely and
meets the requirements of the building code. Incorrect installations could result in life safety
issues, potentially causing a hazardous situation for employees and the public, and could also
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lead to more costly repairs in the future. Currently, both projects are completed; however,
neither has undergone an inspection as required. The OIG finds this matter troubling, as the
aforementioned investigative findings are similar to findings substantiated in another
investigation conducted by the OIG (IG12-04). That investigation revealed that ISD failed to
obtain a building permit until 16 months after the start of a substantial roofing project, and
then significantly minimized the scope of the work and the cost of the project on the permit
application. The OIG is concerned that a pattern of building code violations appears to be
emerging and should, therefore, be addressed.”
Fernandez placed himself at the epicenter of a purported corruption scandal when he
condemned Miami’s landmark 26-story Palm Bay Towers and ordered it torn down after being
pressured to take action by a resident who happened to be his childhood friend, a lawyer
named Jorge Ramos. At issue was the $5 million estimated assessment cost for the replacement
of the tower’s windows, nine-feet-high, constituting the supporting walls. The owners divided
into warring factions; the rich and the not-so-rich. Fernandez held that the windows would
have to be replaced. According to a January 10, 2010, Miami Herald report, a retired
aeronautical engineer, resident George Meller, claimed that most of the building's windows
were all right, and referred to the condemnation as “a total put-up job. It's Miami corruption.”
“The building hasn't been shut down, though it took an emergency court order and the unusual
intervention of the City Commission to override, temporarily, the actions of its own chief
building official, who declared the ultra-posh tower unsafe under a law typically used to
condemn blighted properties.”
More recently, the Miami SunPost exposed how an unlicensed general contractor who has
done millions of dollars of work on the beach and in Miami completely renovated a downtown
apartment building without permits right under the noses of inspectors who were alerted to
the construction in progress yet were not available on nights and weekends, when much of the
work was done, and who may have staged two inspections during working hours after the
contractor was tipped off. The contractor was amazed that anyone would object to his
activities, saying he was “just getting ahead of the job” like everyone else does, and said
building officials told him they wanted him to succeed by “getting his paper right,” i.e. renting
licenses and getting permits.

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