This is Florida, Epicenter of the Housing Bust and of Public Corruption

The building boom in Florida is in cinders. It is going to take a long time to tally the costs and devastation to the public interest. “Developer gives up fortune,” reads a bankruptcy story in The Miami Herald about Juan Puig who “lived the high life during the housing boom: a Gables Estates waterfront mansion, a condo near Aspen. A fleet of 10 luxury cars, including a 1966 Ferrari and 1969 DeTomaso Mangusa. A 59-foot Ferretti Yacht. More than 70 pieces of art. A gold Cartier watch with diamonds. Extensive wine collection. Welsh Hunter pony. But now he and his wife must give it all back.”

Puig’s flameout was caused by bad bets on the arbitrage between rental values and condos. But the $100 million in debt that Puig owes and can’t account for is a pinhole compared to the massive speculation and overinvestment in the hyper-inflated construction bubble that mars the Florida landscape. Back in 2003, Jeb Bush loyalist and campaign finance chair, Al Hoffman who was then chairman of WCI Communities, Inc.—crowed to the Washington Post that suburban sprawl was “an unstoppable force”. Today, WCI is now struggling against a stronger force: reality. The cost to international credit markets from the exuberance of builders and the development lobby in fast-growing states like Florida is already measured in the tens of billions, a landscape of structured mortgage products and financial derivatives fertilized by Wall Street without friction, impedence, or meaningful regulation.

For the public interest, of course, what is left from the building boom are massive deficits, degraded wetlands, bad water quality, and a trail of public corruption that seems to have no end.

Take Palm Beach County, for example.Former county commissioner Tony Masilotti is headed to prison, for taking a piece of the action on property he was involved in, as a zoning matter. Current county commissioner Warren Newell just plead guilty to criminal charges on another land deal where more than $300K lined his pocket from a success fee paid to an engineering consultant. As reported by the Palm Beach Post, a key figure in the cases is Enrique Tomeu, president and co-owner of Palm Beach Aggregates. Tomeu’s company also figured in the corruption case of former County Commission Chairman Tony Masilotti. In a transaction that led to Masilotti’s political demise and conviction, Tomeu helped Masilotti gain control of$7.7 million worth of land in Brevard County. In return, Masilotti engineered a vast zoning increase allowing 2,000 homes on 1,200 western-county acres that had been limited to 120 units. Tomeu persuaded a state agency, closely managed by the Governor’s Office in Tallahassee, to purchase 1190 acres of his property to be used as “water storage”.

An engineering consultant, Dan Shalloway, engineered the $190 million land deal for the Palm Beach Aggregates rock pit to be used for “water storage”. He is now facing a professional-misconduct complaint. On Monday, the South Florida Water Management District filed the complaint with the Florida Board of Professional Engineers, according to the Palm Beach Post. The four count complaint includes allegations that Shalloway lied to the district in 2001 about his relationship with Palm Beach Aggregates, a Loxahatchee mining company that was trying to sell 1,190 acres of rock pits to the district for water storage. “Please let me clarify that neither my firm nor I works for Palm Beach Aggregates, “ Shalloway wrote to then-district Executive Director Frank Finch. “We were merely pointing out to water available to the public as good citizens.” Shalloway and (Palm Beach County Commissioner Newell) made arrangements as far back as 1998 to share the profits from any sale of the pits.The media has yet to explore the links between Tomeu and Governor Jeb Bush, who was elected to his first term in 1998, and had clearly articulated the twin goals, economic development and environmental protection, that were well served by entrepreneurs like Tomeu—a Geoge W. Bush Pioneer and contributor to the US Senate campaign of Mel Martinez—who keeps up appearances with Florida environmentalists.

And that is another price of the building boom: the extent to which environmentalists were compelled to cozy up to land speculators and entrepreneurs like Tomeu.If any of the greens were aware of the behind-the-scenes manoevering including the corruption of local government in Palm Beach, through land deals pushed by Tomeu, no one is raising their hand.Nor did conservationists have any leverage when the State of Florida agreed to the per acre benchmark established by the Palm Beach Aggregates deal, at more than $180,000 near lands owned by Big Sugar and coveted by the environmental community for the restoration of the Everglades.

The outrageous purchase price was justified for its “environmental benefit”: in fact, it was a price pushed by corruption. Period. But the consequences are extreme: inflated values which supported wealth creation of the growth machine have pushed the cost of environmental restoration into the stratosphere on the one hand and buttressed by well-financed property rights advocates on the other, establishing precedents by which future land values will be measured.

For county commissioners and bankrupt developers, there is always a chance to start over. And for career bureaucrats, another rung on the professional ladder.But there is no starting over for the train of destruction that greed has etched on the Florida landscape. In June, Nicole Brochu, columnist for the Ft. Lauderdale Sun Sentinel, wrote, “Count me as thrilled federal prosecutors are cleaning up the halls of government and tossing the scoundrels out of office. But when you watch as low-life drug dealers get 10 and 20 years for their craft, or vandals get enhanced hate-crime penalties for spray-painting a swastika on a synagogue, or even button-down CEOs like Enron’s Jeffrey Skilling get 24 years in the slammer, you expect the same iron fist to come down on the dirty politicians who infect the democratic process and victimize the entire community.”But the same iron fist is not coming down on those who illegally facilitated the growth machine.

The tale of $100 million disappearing down the drain of the housing bust, of county commissioners shuffled off to jail, tells another story: why Florida voters are ready to take away the power from elected officials for new changes to comprehensive land use plans. (See, Florida Hometown Democracy

Here is the hard scrabble truth: while the beneficiaries and entrepreneurs of the late, great housing boom may be able to “start over”—after their fortunes have been lost and declaring bankrupcy, or, business plans burnt to a crisp—the communities they wrecked by promoting terrible zoning changes, allowing the costs of infrastructure to be deferred, wetlands destroyed, water quality: these results cannot be reversed.There is no starting over for Florida.

The legacy of the building boom—the call by the growth machine for “streamlined permitting”, “more protection, less process”—all the ways in which Floridians have been promised a higher quality of life, while the public interest has been dragged under the bus—these are reasons Floridians will vote for the Florida Hometown Democracy measure if they are given a chance. It should come as no surprise to the construction and development lobby that it reaps what is sows: profound citizen discontent over the trashing of Florida and barriers erected against the public interest—like Amendment 3 approved by a state-wide vote in 2006 that raises the threshold to 60 percent of the electorate, for changes to the Florida Constitution by referendum. The Herald reports that the Puig bankruptcy “is the biggest yet to come out of the slumping housing market”. But it is certainly not the last. And Florida is far, far from totaling the damage.

ALAN FARAGO of Coral Gables, who writes about the environment and the politics of South Florida, can be reached at



Alan Farago is president of Friends of the Everglades and can be reached at