June 15, 2024

A billboard ban in Miami’s Design District did not cause a single-story office building in the chic neighborhood to lose millions of dollars in value, according to a recent court ruling.

On May 20, six months after a week-long bench trial, Miami-Dade Circuit Court Judge Migna Sanchez-Llorens ruled that the city of Miami was not liable for property owner Karenza Apartments being unable to capitalize on billboard ads on his property at 100 Northeast 38th Street. 

Karenza, an entity owned by Michael Seigel in Fort Lauderdale, was seeking $4.8 million in damages against the city. According to Karenza’s complaint, appraisals commissioned by the owner showed that after a ban on billboards went into effect in 2017, its Design District property’s value dropped to $8.6 million from $13.4 million. 

“The court finds that plaintiff did not have a reasonable, investment-backed expectation to use its property to continue to host murals,” Sanchez-Llorens’ order states. “Karenza’s property was not disproportionately burdened as Karenza did not have a reasonable investment-backed expectations as a matter of law.” 

Karenza’s legal team vowed to appeal Sanchez-Llorens’ verdict, which they alleged failed to follow instructions from the Third District Court of Appeal. In 2022, the appeals court overturned a previous ruling by Sanchez-Llorens granting the city summary judgment without a trial. 

Sanchez-Llorens failed to “examine and objectively analyze” Karenza’s evidence that the city violated its property rights to monetize the building with billboard revenue, the appeals court ruling states. 

Karenza’s lawyers from Miami firm Stearn Weaver Miller provided The Real Deal with a statement bashing Sanchez-Llorens’ verdict. The judge “refused to follow the appellate court’s explicit mandate” and “Karenza remains steadfast and confident that the appellate court will once again reverse and direct” Sanchez-Llorens to award damages, the statement said. 

Private attorneys representing the city claim the verdict has broader implications for investors who own commercial properties in South Florida. 

“The court is telling owners that if you believe you have a right to use your property in a certain way for your own benefit, you need to deploy resources to exploit that right,” said Robert Stein, a partner with Rennert Vogel Mandler & Rodriguez. “It’s a sign post for property owners that they can’t sit on any [property] rights. You actually have to put investment behind it.” 

Sanchez-Llorens determined that Miami taxpayers should not foot the bill for Karenza’s inability to land contracts with outdoor advertising companies and erect murals on its Design District property, said Daniel Maland, Stein’s law partner. 

“This case also sends a message that if property owners don’t have a viable claim, the city has a duty to fight it,” Maland said. “The plaintiff absolutely should not be compensated by taxpayers.” 

Karenza sued the city in 2019, alleging that two years earlier Miami officials banned outdoor advertising murals in the Design District to appease Dacra’s Craig Robins, the largest property owner in the neighborhood. The district has become a luxury fashion, fine dining and arts destination. 

At the time, Karenza had landed a deal with billboard company Becker Boards Miami to put up a mural on the roof of its Design District office building, the lawsuit alleged. Karenza had obtained a permit for the mural. 

When the ban went into effect in 2017, Becker Boards Miami switched the mural location to another property south of Interstate 195 that is not affected by the prohibition, the complaint alleged. 

However, during the trial, executives for Becker Boards Miami and other outdoor advertising companies testified that Karenza’s property was not suitable for murals and that their firms were not willing to invest in redeveloping the existing building to accommodate a billboard, Sanchez-Llorens’ order states. 

At trial, Karenza’s owner, Michael Siegel, also failed to show he had invested any money or successfully obtained loan commitments to redevelop the property so it could be used for murals. 

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