Six Questions for Alan Kluger

MIAMI—Developers holding land in Miami-Dade County have been facing a costly quandary. Once a developer files a plat with Miami-Dade County, it has to post a bond for neighborhood improvement—and the only way to get the bond back is to make the promised improvements.

With the economic downturn, thousands of property owners have been sitting on undeveloped land with no intent to develop on it anytime soon, if at all. What happens to the bond? Until now, there was no procedure in Miami-Dade to vacate the plat and recover the bond. For developers in need of liquidity, this is bad news. But things just changed.
 
Kluger Kaplan attorneys Alan Kluger and Richard Segal worked with Miami-Dade County to create a new procedure that would allow developers to vacate a plat and recover the bond tied up in escrow. One of its clients, Tetrastar had $150,000 tied up in bonds and was able to reclaim the money thanks to the new procedure.

GlobeSt.com caught up with Alan Kluger, founding partner of Miami-based litigation firm Kluger, Kaplan, Silverman, Katzen & Levine, to talk about the new procedure and how developers in need of cash flow can leverage it.

GlobeSt.com: Tell us a little bit about why this procedure to vacate a plat was created and why didn’t it exist before as a process for developers to access?

Kluger: When seeking to re-plat a piece of land in Miami-Dade County to develop on it, a developer must put up a bond with Miami-Dade County that is held as security for the developer’s agreement to put in certain public improvements, such as sidewalks, paved streets, etc. Until the recent unprecedented downturn in the real estate market there was never a reason to vacate a plat.  

Even if the initial developer decided not to pursue the project and build on the land, having the land already platted was a valuable asset which in normal real estate conditions would be sold along with the land. Under normal circumstances, the developer who decided not to pursue the project would sell the land along with the plat as an additional incentive to the buyer. However, during the downturn many developers made the economic choice to hold the land--rather than develop on it--until the market recovered.
 
GlobeSt.com: So do you think more developers will look to vacate plats?

Kluger: Most developers would rather have the cash flow and amount of the bond at their disposal rather than having it tied up and unavailable. Miami-Dade County is aware of many bonds that are currently in place yet the developer has not gone forward with the project and is unlikely to do so for many years to come. This new procedure provides a perfect synergy for both the county and the developer, along with his attorney, to work together to return the bond and reapply for a plat when ready to build.
 
GlobeSt.com: How does the process work?

Kluger: We worked closely for many months with the head of the Public Works and Waste Management Department of Miami-Dade County to create a process for doing vacating plats. Among other things, rescinding a plat requires drafting of a resolution to rescind that needs to be approved by the Miami-Dade Board of County Commissioners. Richard Segal recently brought the first ever resolution to rescind a plat before the Miami-Dade Board of County Commissioners and it passed unanimously. While not terribly time consuming, it can be complex and requires careful attention to detail, an understanding of the law, and an ability to navigate the various agencies at the county level.

GlobeSt.com: What is the biggest challenge with this process?

Kluger: There are many procedures that need to be followed and monitored on a daily basis to make sure that the plat is properly vacated, and it takes time to make sure that the procedure is done correctly. It is important to have an attorney who is familiar with the process to monitor the entire procedure and make sure that it is done correctly at every step of the way to ensure that the plat is vacated and the bond is properly returned without liability.  
 
GlobeSt.com: What happens if a developer chooses to build after they have already vacated a plat?

Kluger: If the developer decided to build on the land down the line, they would not be precluded from doing so and could always go back to the county to reapply for a plat.

GlobeSt.com: Do you think that as the economy recovers and developers build again this procedure will still be necessary?

Kluger: Now that the hard work of creating the procedure and setting the initial precedent is done, this procedure of vacating plats for the purposes of having the bond returned will likely be a tool that developers will always consider. Miami’s real estate market is cyclical and the recent recession only made developers more cautious about launching new projects. But with this procedure, a developer can always recover a bond if they change their mind on the project or foresees a downturn in the market.