Articles

The owner of this iconic building ordered all tenants to leave. Some aren't going

Miami Herald / Rene Rodriguez / August 31, 2021

Maria Ray had a plan. By May 2022, she would have saved enough money to relocate from Miami to San Juan and take care of her aging father in the family home where she grew up.

Ray just hadn't counted on her landlord suddenly terminating her lease.

Ray, who works as a business consultant for hospitality companies, is one of the roughly 200 residents of the Hamilton on the Bay apartment tower, located at 555 NE 34th St. in Edgewater, who received a notice on May 16 requiring themto move out by July 16 so the building's new owners, the Denver-based real estate investment and management firm Aimco/AIR, could complete renovations and repairs.

That deadline has been extended until Sept. 17 and Aimco is now offering tenants three months' rent plus a $500 stipend to help with move-out costs.

But 17 tenants — including Ray — are staying put, because they say the settlement being offered is not enough to move in the current rental market.

The situation at the Hamilton has resulted in a standoff that could serve as a bellwether for future cases in which a building's owner attempts to terminate the leases of all of its tenants in one swoop.

"We're all trying to move out," said Ray, 45, who has lived at the Hamilton since October 2009 and pays a discounted rent of $1,150 for a one-bedroom unit. "We're trying to comply. But I signed a lease with Aimco for 16 months. I was counting on having a certain amount of time to move.

"My business slowed down because of COVID," she said. "This situation has completely consumed my life. I can't work from home because of the constant jack-hammering and noise. They turned off the air-conditioning in the hallways. They are being super aggressive. We have no day-to-day stability."

Aimco bought the iconic tower, which was built by Carnival Cruise Line founder Ted Arison in 1984, for $80.9 million in August 2020. Repairs were already underway at the building for water damage caused by Hurricane Irma in 2017, which led the previous management company, Bainbridge Management, to offer tenants discounts on their rents to make up for the inconvenience.

Aimco kept those discounts in place. But the company also required tenants to sign new leases that promised them up to 18-month stays — and included an early termination clause. When Aimco exercised that clause in May, giving tenants 60 days to move out, the public outcry convinced the company to push back the move-out deadline to Sept. 17, although residents say the noisy renovation work inside and outside the building, which limits access to many common areas, has made life at the Hamilton close to unbearable.

Since the May 16 letter was issued, 100 of the formerly occupied 130 units at the Hamilton's 265 apartments have been vacated.

Today, 30 units in the building remain occupied, although 13 of those tenants have pledged to vacate their unit by the Sept. 17 deadline.

Digging in their heels

The remaining 17 tenants — along with 20 other former tenants who moved out without accepting Aimco's settlement — have organized. They are demanding the company pay a group settlement of $22,500 per leaseholder, and they have hired attorney David Winker to defend them from legal action by Aimco.

"The residents were fraudulently led to sign the new leases, so the contracts are null and void," said Winker. "Therefore the termination of the leases is also null and void."

Lee Hodges, senior vice president of Aimco's southeastern division, called Winker's claim of fraud "frivolous" in an email to the Herald.

"Aimco would not enter into or extend discounted leases to compensate residents willing to remain in the building during construction if it knew that it would have to terminate those leases just a few months later," Hodges said in a statement. "When the leases ended, so did rents from the building's leases. Terminating that revenue is inconsistent with basic economics."

Greg Frank, 40, is one of the former Hamilton tenants who moved his wife and son out of their one-bedroom apartment the second week of July. The couple was paying $1,200 in rent for a 1,250-square-foot unit. Now they are paying $2,000 per month for a 900-square-foot apartment in Dania Beach.

But Frank did not accept Aimco's financial move-out package. Instead, he is part of the group hoping to reach a settlement with Aimco.

"We had to leave Miami because we couldn't find a comparable place we could afford and now we are trying to negotiate as a group," he said. "Some people felt like they didn't have any power and accepted Aimco's deal to move out. But if the company wasn't so messed up, we wouldn't be dealing with this. And the bigger issue is this is a growing threat to the people of South Florida. People are going to continue to be displaced as Miami's popularity grows."

In July, the owner of an apartment building at 426 E. 34th St. in Edgewater, which is just one block away from the Hamilton, threatened his tenants with mass evictions. Residents suspect the evictions were fueled by the owner's intent to sell the aged building, along with 10 adjoining lots in the popular neighborhood, for $50 million to real estate developers.

A possible bellwether

Despite the standoff, Aimco is standing firm on the Sept. 17 deadline, saying it needs everyone out in order to conduct necessary repairs on the 37-year-old building's plumbing — work that will require tearing down walls of kitchens and bathrooms.

"This has been a very difficult situation for everyone involved," wrote Aimco's Hodges in an email to the Herald. "In good conscience, we cannot allow residents to live in a building with a compromised sanitary sewer system that is actively leaking human waste, nor can we risk our residents waking up in the middle of the night in an apartment flooded with sewage."

What if the Sept. 17 deadline passes and a tenant has not moved out?

"Our last resort would be to seek court assistance," Hodges wrote, meaning filing evictions.

Evictions could not come at a worse time in Miami's currently cutthroat rental market. According to the July rent report by Realtor.com, the median rent in the Miami-Fort Lauderdale-West Palm Beach metro area stands at $2,300 — a year-over-year increase of 20.7%. Rents for studios shot up 18.2% to $1,845; one-bedrooms grew 17.3% to $2,030; and two-bedrooms jumped 17.1% to $2,622.

The finance website Finder.com just rated Miami as the worst city in the U.S. for renters, who pay an average of $2.32 per square foot for a two-bedroom unit. Nearly 63% of rental households are cost-burdened, meaning they spend more than 30% of their income on rent.

"A lot of people who already moved have incurred a lot of debt," said Adrian Madriz, executive director of the advocacy group Struggle for Miami's Affordable and Sustainable Housing (SMASH), which has held public rallies to bring attention to the situation at the Hamilton. "Some people had to put their expenses on credit cards and put themselves at financial risk. But there are still other people who don't have those options. They need the financial assistance. They want to leave but need the proper resources to do so."

Government intervention

Miami-Dade Mayor Daniella Levine Cava and U.S. Rep. Frederica Wilson are two government officials who have written letters to Aimco, asking the company to pay tenants the requested move-out funds and provide all current residents with first-refusal rights upon completion of the renovations at a monthly rate no higher than 15% of their existing rent.

"The displacement of hundreds of residents without sufficient support from Aimco/AIR would create financial burdens for the impacted residents, and contribute to our community's housing affordability crisis," Levine Cava wrote in a letter dated Aug. 18.

Jennifer B. Johnson, who is executive vice president, chief administrative officer and general counsel for Aimco, replied on Aug. 19, saying that the company has already done everything it could to help tenants, including waiving their security deposits regardless of the condition of their apartment on move-out dates.

She also wrote that the $22,500 figure is inflated and "was not developed based on actual moving costs or rents, or particularized needs. Rather, multiple residents have sought relief based on lost wages and other claimed economic damages unrelated to their residence at Hamilton on the Bay."

But SMASH's Madriz added that the court showdown will be protracted — and could end up costing Aimco a lot more than the $22,500 payment the residents are requesting.

"They're thinking they can scare everybody away, and they already have scared a lot of people away," Madriz said. "But we're going to call their bluff."