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Six-Digit Discount

Former Mayor Scott Newton: Did he help grease the skids for Wilton Station developers?

On June 10, 2004, at the groundbreaking ceremony for the "planned community" called Wilton Station, city officials from Wilton Manors and real estate developers from the company Ellis Diversified Inc. (EDI) acted like revelers at a wedding, toasting to a prosperous future. The $100 million condo development — a five-building complex of 272 units — was the first major luxury project in the small city, and it would trigger more such developments.

Then-Mayor (now city commissioner) Scott Newton took to the lectern and praised the developers. "I want to thank [them] for helping our city to grow and become a better place to live," he said in a video from the event. "Everything we asked them to do, they went beyond that. If we asked for an inch, they went three inches." To crown the day, the developers and their wives, leaning on shovels in spotless suits and cocktail dresses, posed for a photo in a mud field looking not unlike 19th-century prospectors.

What a difference five years makes. Wilton Station would be completed just as the housing market was peaking. Boom turned to bust. Condo prices dropped 20 to 30 percent in Wilton Station, and dozens of residents were foreclosed. By 2009, the City of Wilton Manors would be scrounging for cash, and a political battle would break out over $375,000 in fees. Developers would accuse city officials of a backroom deal and a broken promise, the mayor would target a rival city commissioner with allegations of corruption, and taxpayers would be left to suffer the mess.

In 2004, around the same time that Wilton Station's units went up for presale and immediately sold out, city engineers determined that a population boom would strain the city's aging sewage system. They would need to replace an antiquated lift station that pumps liquid waste into the main water-treatment facility. To pay for the $1.5 million upgrade, Wilton Manors commissioners in September 2004 considered an ordinance to impose impact fees of $1,600 on every new condo unit in the city. The developers of Wilton Station protested that they had already paid for and received their building permits and shouldn't be slapped with new fees so late in the game. Citing previous court rulings, city officials argued that the law would be on their side should a legal battle ensue. The ordinance passed unanimously over the developers' objections.

As with any condo project, inspectors needed to ensure that the buildings were up to code, then issue a certificate of occupancy (commonly called a "CO") before any residents would be allowed to move in. City Manager Joseph Gallegos explains, "Wilton Station passed inspections, but it needed to pay sewer-impact fees to get its COs." Despite the earlier insistence that those fees shouldn't apply to Wilton Station, EDI in late 2006 obligingly coughed up $73,000 — the impact fee for the first of its five buildings. In return, they received the CO for that building.

Soon afterward, the additional four buildings went up, Wilton Station received COs, and residents moved in. Today, Wilton Station is a cluster of green, orange, and beige monolithic buildings and cobblestone, palm-tree-lined avenues walled off from the world like a religious cloister. Each unit comes with a whirlpool bath. There's a high-tech gym and a cinema. Two waterfalls pour into the swimming pool, where bacchanals regularly occur.

There was just one outstanding matter: Wilton Station had never paid the impact fees — totaling $375,000 — for those last four buildings. In cash-rich 2004, the sum may have seemed like chump change, but in the current economic climate, Wilton Manors is planning to cut services and some departments have cut back to a four-day workweek. What's more, the city is short $1 million for the new sewage lift station. To complete it, the newly elected mayor of Wilton Manors, Gary Resnick, sought grants in Tallahassee. "But the state is broke," he says, "and we were turned down." With money so tight, the question burned: How had Wilton Station's developers received the COs if they had never paid the required six-figure fees?

City Manager Gallegos tells New Times that he had billed Wilton Station since 2007. "We sent letters and made phone calls to the developers notifying them of the missed payments." He says that EDI essentially ignored the bills until the end of 2008, when the company requested building permits for a row of commercial spaces in Wilton Station. The developers were refused because of the unpaid fees, so early this year, they asked that the issue be put on the agenda at a City Commission meeting in hopes of resolving the matter.

When Resnick got wind of the old debts, the issue ballooned from a mere bookkeeping matter into a public political feud. Resnick published a notice in the Town Crier, the city's official newsletter. Wilton Station "never paid all the impact fees it owes our City," Resnick wrote. "Based on the number of units, Wilton Station owed the City approximately $450,000. It paid $73,000 in 2006 but for some reason we are still looking into, never paid the balance prior to obtaining COs. In any event, Wilton Station has now requested the City to waive most of the $375,000 impact fees." He warned his constituents that all of the city's residents may have to pitch in to cover the tab for the sewage lift station.

 

Jim Ellis, founder of EDI, was surprised by Resnick's publicizing the matter and called his account "slanted" as well as "offensive and highly unprofessional." In retaliation, the developers skipped the City Commission meeting. Resnick replied by placing a motion to sue the developers on the next meeting's agenda.

Wayne Thies, former head of the Community Services Department, says that it was a "major goof" and "an innocent administrative mess-up" for his staff to issue the COs without first receiving the outstanding revenue. He says former Assistant Director Anne Barnes was responsible for collecting such fees, "but they slipped through this time." Thies and Barnes no longer work for the city.

Three weeks ago, as Wilton Station's developers waited to learn whether they would be slapped with a lawsuit, EDI's Ellis suggested that there was more to the story than a bookkeeping mistake. Speaking in his downtown Fort Lauderdale office, Ellis said, "It's too convenient for the city to say it was an administrative error."

Ellis claims that "city officials and a number of city commissioners" implied that they would allow the fees to go unpaid. The developer says that in 2006, he met with Thies as well as Director of Public Services David Archaki and City Attorney Kerry Ezrol. The three of them acknowledged that the fees "screwed over" the developers, Ellis says. "Everyone there agreed that paying the full set was not appropriate."

Ellis seemed irate that city officials were reneging on this deal now, under new economic restraints and public scrutiny. As for the commissioners who he hinted agreed to overlooked the fees, Ellis thundered that he would name names "only in court." Sounding a deep note of betrayal, he said, "They promised to work with us. We trusted them — multiple people." He threatened that if the city took Wilton Station to court over the fees, "I will make a very, very, very personal issue of this."

If city bureaucrats had indeed agreed to waive fees, it would have been illegal, Mayor Resnick says. "It's in our city code," he affirms. "The only people who can waive or alter a fee are the City Commission." He added that it would be extremely rare even for the commission to waive impact fees.

Meanwhile, Thies, Archaki, and Ezrol all deny ever making any such deal. Thies says that City Commissioner and then-Mayor Newton "had spoken to me on the developers' behalf, but he never, ever influenced me to look the other way and have these things waived." He says Newton instead proposed collecting the fees in installments, making it easier for the developers to pay.

The juicy details of Ellis' accusations may never be publicly aired, because the City Commission eventually decided to compromise rather than take Wilton Station to court. At a meeting on May 26, commissioners Ted Galatis and Newton argued that the cost of litigation would outweigh the recouped fees. There was also the possibility that the city could lose in a court battle. Resnick accused his longtime foe, Newton, of trying to protect the developers because he'd received political contributions from Wilton Station.

Newton exploded in furious gestures. "That's the same crap you've been spreading since this thing started," he said. "I've only received $500 from Wilton Station. That's not enough to buy my vote!"

"More like $6,000," Resnick retorted. (Records show that Newton received $500 from Wilton Station LLC in 2004 but has collected about $6,000 over the years in personal contributions from Wilton Station's developers and their wives. Resnick and Galatis have also accepted contributions from Wilton Station developers over the years.)

At the following commission meeting, on June 9, the tone was much more civilized. By then, attorneys for the city and Wilton Station had hashed out a compromise, which City Manager Gallegos read aloud for a vote. The developers would pay the city $150,000 in cash up-front. Another $66,400 is to be collected on the 40 vacant units in Wilton Station as they sell, yielding a slow trickle of fees to the city.

The compromise passed 4-1. Resnick's was the lone dissenting vote. "I appreciate the movement toward compromise, and I can see both sides," he said somberly. "But with what we have economically facing us and with the cost of the sewage station, we can't afford this."

 

The settlement spares Wilton Manors a legal battle, but it also gives Wilton Station a $160,000 discount on impact fees. With property tax revenues in Wilton Manors projected to fall 17 percent next year and the new sewage station needed in two to three years, residents — who already pay the highest water bills in Broward County — will apparently have to pick up the difference.


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