In March 2005, the developers of the Waves Las Olas condominium project sent out a letter to the dozens of buyers who'd already collectively plunked down $3 million in deposits for units in the yet-to-be-built tower.
"If you've driven by The Waves property recently, you probably noticed steel rebars in the ground and cranes working there," the letter said in reference to the property at 401 NE Third St. in Fort Lauderdale. "We've officially commenced construction!"
That milestone meant it was time for buyers to pony up another 10 percent deposit, which they dutifully did. Under the purchase agreements, the developer could use those deposits toward constructing the 25-story condominium, whose marketing slogan was "No rules, no walls, no boundaries."
Waves Las Olas
And no ceilings or floors, for that matter.
More than a year later, the property stands as barren as a Monday-morning church lot. A ragtag steel-woven fence surrounding the property lies tangled and drooped. Those much-ballyhooed steel rebars remain, surrounded only by jutting weeds and a lone tree on the lot, which is just west of the gritty Greyhound station.
In the condo fever that's gripped South Florida for the past half dozen years about 10,000 new downtown condo units are either recently completed or on their way the Waves seems to have heated to supernova implosion. Left in the wake of the unfinished project are buyers poised to sue the developer, a rarefied real estate agency ducking for cover, and a former city commissioner squeezed in the middle.
The Waves looked a lot rosier back in 2004, when Kenneth Tewel first heard of it. A tall man with a broad forehead, swept-back hair, and measured speech, Tewel was looking to escape the upkeep required for his waterfront home in Lauderdale-by-the-Sea. Problems with discs in his neck had made routine chores not to mention putting up hurricane shutters burdensome, and, as a native New Yorker, he looked forward to living downtown.
So in November 2004, he visited the Galleria Collection of Fine Homes on Las Olas Boulevard, which handles the sales of many of the city's glitziest projects, including downtown's Las Olas River House, Esplanade on the New River, and the Tides.
"They had this wonderful mockup of the Waves," Tewel recalls of the scale model displayed at Galleria. "It was gorgeous." The building had a funkier design than most downtown towers; the façade on the lower stories resembled waves. The 75 units were loft-style, with 21 different open floor plans to choose from. Exposed commercial ductwork just added to the bohemian milieu.
The Galleria's website gushed with overblown prose about the building: "Want to tell a friend where you live? Just point to the stunning sculpture of a building that is your new home. The Waves' post-modern, contemporary design stands out in a sea of sameness. At The Waves, you don't just enter, you arrive into a world that is at the same time exciting and serene... with soaring ceilings, a wall aquarium, a glass-enclosed, state-of-the art fitness center, looking out on the tranquil beauty of a Zen Orchid Garden. And this is just the lobby."
Construction was to begin in early 2005 and finish in late 2006 an ideal timeframe for Tewel, who needed the time to sell his home. He agreed to buy a 1,700-square-foot unit for $488,800 and made a $61,200 deposit in January 2005. The contract also called for him to deposit an additional $61,200 when construction began, which the developers could use for building.
The escrow agent who would hold the roughly $6 million was Dean Trantalis, then a Fort Lauderdale city commissioner. His involvement both raised Tewel's eyebrows and offered assurance that the project was on the up and up. The Galleria assured Tewel that there was no risk involved and that the developers Stewart Robin, Richard Schweitzer, and Jose Hermo had 25 years of experience.
In March, after the developers announced that construction had begun, each buyer sent his second 10-percent deposit to Trantalis. Then they went to a little party.
"There were a couple of shacks on the property," Tewel says. "We were all invited to a hammering party after we gave our second deposit, and we knocked them down. There was a huge hullabaloo that they tried to get into the newspapers." He pauses to consider the absurdity of it all. "That was the last activity that ever took place on that site."
Tewel says he was assured at that time that all funding was in place, that construction was ahead of schedule, and that he could expect occupancy within 18 months. "As soon as that money was collected, everything stopped dead." During the coming months, he frequently called the developers and Galleria, asking about the dearth of activity on the site. He was given different stories about the delay. The Galleria assured him that everything was on track.
"I called Galleria every single week, because they were the salespeople, and they purported to represent this. But by August, they said they wanted to have nothing to do with this anymore because they hadn't been paid by the builder. So they weren't going to represent the project anymore."
The luxury realty company, which declined to comment for this article, scrubbed its website of references to the Waves and stopped returning phone calls to Tewel. There were, after all, other condos in town.
Late last year, Tewel finagled his way into a meeting with Schweitzer, who was the managing partner for Waves LLC. "I said, 'Look, you're going to see me or I'm showing up with TV cameras,'" he recalls saying. Schweitzer told him that they'd had trouble with lenders, exacerbated by the fall hurricanes. Tewel says the developer promised him he'd have the option of getting all his money back if things weren't ironed out within a couple of weeks.
He didn't hear from Schweitzer again.
In January 2006, Tewel received a form letter from Robin, one of the developers, notifying him that the completion date in his purchase agreement couldn't be met because the hurricanes in Florida and Louisiana had "substantially decreased the availability of labor and inventory of materials for new construction." The delayed completion certainly wasn't any news to Tewel, who knew perfectly well that the property remained a wasteland. The letter mentioned nothing about refunding deposits. (Phone messages left by New Times at the developer's office were not returned.)
Frustrated by the cold shoulder from both the developers and Galleria, Tewel turned to the man who held the escrow money, Trantalis. On March 30 this year, Trantalis sent out an account statement for the deposits, noting that he had received "numerous inquiries" about the money. While not very specific, the statement showed that almost $3 million had been disbursed to the developers in 2006 between April 4 and November 29. More than $70,000 had been released in November, well after Hurricane Wilma hit. Finally, on December 8, Trantalis denied a withdrawal request for $23,428.
"He knew by August that this was in trouble," Tewel contends. "He knew this was not on schedule. He knew that lenders had pulled out. He knew that the builder was not communicating with buyers. He knew that Galleria had pulled out."
Trantalis, who left the City Commission in March after his term expired, told New Times that December was the first he'd heard of problems.
"They told me that they're not going to be able to build the building with the current contracts and that they were going to have to find a joint venture or someone else to buy the project," he explained. "That was the first I heard of it the first it was confirmed to me and at that point, I stopped making any further payments."
Tewel questions whether Trantalis, as escrow agent, has remained independent from the developers, as required by state law. Trantalis was to receive a discount on a condo unit in lieu of being paid for his work, which was to include acting as closing agent for all units. Thus far, Trantalis says, "I've not seen one dime from this."
Tewel has filed a complaint about Trantalis with the Florida Bar Association. He's also likely to join in a lawsuit being prepared by a local attorney on behalf of many of the would-be buyers.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
Do the Waves' problems represent the wave of South Florida's future? Could be, Deerfield Beach real estate analyst Jack McCabe says. Because of the construction frenzy, building supplies have skyrocketed and laborers have grown scarcer.
"We've seen a number of projects recently that have been postponed and delayed and some like this one where construction was supposed to have started a year ago but still there's no activity," McCabe says. "Buyers are all getting very upset because the developer's been holding onto their money and they haven't seen anything happen. We've also had what I would call second-tier, or late-to-the-game, developers. In many cases, they don't have a track history of completing large-scale developments."
What probably troubles Tewel more than anything else is the obvious: Where did $3 million go without so much as a shovel of dirt moved on Third Street?
"I have a lot of questions," Tewel says calmly. "Nobody is picking up the phone."