Transit trouble: PBC hit with lawsuit over stalled sale of land for key transportation hub

Years before there was a stylish and modern Brightline passenger rail station in West Palm Beach, a plan existed for a different transportation center, a hub that would serve as a gateway to commuters using the highway, buses, taxis and commuter train stations.

Transit Village, a private venture led by investor Michael Masanoff, would be more than a stopping point for commuters on the western edge of the downtown. It also would be a new city neighborhood, a place with nearly 1,000 apartments, a 275-space parking garage, a hotel, offices and restaurants.

But 12 years after the plan was conceived and agreed upon with Palm Beach County, the project still has not advanced.

In a Feb. 29 lawsuit, Transit Village said Palm Beach County is to blame for the delay.

Transit Village developer said Palm Beach County seeks tenfold 'windfall' on property sale

The complaint alleges the county has reneged on a long-standing deal to sell land for the project in West Palm Beach to Transit Village for $3.6 million.

Instead, the county is demanding more than $35 million, a "windfall" nearly ten times the agreed-upon price, Transit Village claims in its lawsuit filed in Palm Beach County Circuit Court. Transit Village's lawsuit against the county asks a judge to force the county to complete the deal for the original price.

In a statement, Transit Village said it regretted having to sue the county over the stalled deal. But the company said it had made many efforts to resolve an impasse. This includes participating in a recent but failed mediation.

"Related and the development team believe that the existing agreement is valid and binding and want to move forward with a project that has considerable public benefits, including workforce housing and more than $25 million in infrastructure improvements at no cost to the public," said Jorge Mendez, a spokesman for Related Group, a key investor in the project.

Related Group is led by Jorge Pérez, a prolific housing builder in South Florida who joined the Transit Village group in 2021. Related Group is not affiliated with Related Cos., a major developer in West Palm Beach, led by Miami Dolphins owner Stephen Ross.

"The Transit Village project has been in development for over a decade, facing numerous setbacks," Mendez continued. "We believe now is the critical time for this project to advance, and we want to execute on an agreement that is currently in place to finally get this shovel-ready project started."

County Administrator Verdenia Baker and county attorney Denise Coffman did not return requests for comment for this story.

More about development: Laurel apartments start leasing at The Square. Will renters get access to fitness center?

Public transportation, housing more important than ever in growing West Palm Beach

The lawsuit is a major pothole in the plan to carve out a transportation niche in a key portion of the city.

The six-acre site is a wedge-shaped piece of land south of Banyan Boulevard, between Clearwater Drive and the CSX railroad tracks running parallel to Tamarind Avenue. This is where Amtrak and Tri-Rail trains enter the city's historic train station.

The $1 billion project has been in the works since 2009 when the county issued a request for proposals for a mixed-use, "transit-oriented" development.

The goal was to support and boost public transportation. The project has taken on added importance with the explosion of growth in West Palm Beach during the past few years, especially the relocation of businesses and residents to the city during the pandemic.

Added growth means more cars on the road, which means frequent traffic tie-ups.

The daily headache is only expected to worsen as numerous office and housing projects planned throughout the city are built, including in the section of town near Clear Lake, the city's main drinking water supply.

The Brightline passenger rail system did build a station in West Palm Beach in 2017, in a spot slightly east of the planned Transit Village.

But Brightline has only one other stop in Palm Beach County, in Boca Raton. And it does not travel to western Palm Beach County.

Instead, Brightline only goes south to stops in Broward and Miami-Dade counties, and north to Orlando in Orange County. A plan to build a station in Stuart recently was announced.

More: Bristol builder teams with investors for Clear Lake condo tower on West Palm's waterfront

West Palm Beach's Transit Village originally planned on a $3.6 million purchase

A deal between the county and Transit Village LLC was codified in 2012 when Transit Village agreed to pay $3.6 million for some of the county land in West Palm Beach.

The county would continue to own the land where an Intermodal Transit Center would be built. The center would be a hub for people boarding trains in downtown West Palm Beach, switching from different bus routes, or between buses and Tri-Rail, Greyhound or Amtrak.

Transit Village also agreed to spend $25 million on improvements to the site for its use as a transit mode.

The project received a big boost in 2021 when Related Group and deep-pocketed finance partners joined the effort.

These investors include Globe Invest Limited, the investment arm of billionaire entrepreneur Teddy Sagi; and BH Group, a Miami-based private equity and real estate investment firm that frequently joint ventures on mixed-use projects.

A key city committee approved plans in 2022 for four, 25-story towers rising on the site. The plan has three residential towers with 986 units, including 40 reserved for workforce housing and 165 micro-apartments that are typically cheaper to rent.

The fourth tower, which is 25 floors but taller than the residential buildings because of higher floor heights, would have 108 hotel rooms and 182,720 square feet of office space. There would also be 49,400 square feet of retail space, 2,000 parking spaces in a multi-level garage and 606 spaces for bicycle parking.

When the city committee approved the tower plan, Masanoff was elated.

"There is not a downside to this," Masanoff said. "It's a huge, huge, huge victory for the public, for the neighborhood, for transportation, for everybody."

At the time, Masanoff said the Transit Village garage should take about three years to build with the apartments following within nine to 18 months. The price of the project was expected to exceed $1 billion.

Site plan approvals were obtained in January 2023, and Transit Village was expected to break ground last year.

Then came the county's demand for more money, the lawsuit says.

More: Transit Village in West Palm Beach will have nearly 1,000 residential units

Property's sale falters over grant repayment, price hike, Transit Village claims

Transit Village's lawsuit said the deal's sticking point is the repayment of $2.98 million in grants made to the county when it bought the West Palm Beach land in 1992. The grants were issued by the Federal Transportation Administration.

Transit Village said in its lawsuit it has no obligation to repay the grant funding without a written demand outlining the repayment amount.

It's a condition "that has never been met," the lawsuit said.

In an Oct. 13 letter to Transit Village, the county gave another reason for the closing delay, Transit Village's lawsuit said. The county said it would not close unless it could “recoup” additional money from the sale of the property.

In its lawsuit, Transit Village said it would not have moved forward with the project, and spent $6 million meeting a variety of contract requirements, if it knew the county would demand "an exponential" increase in the purchase price just prior to closing.

Staff writer Kimberly Miller contributed to this report.

Alexandra Clough is a business writer at The Palm Beach Post. You can reach her at aclough@pbpost.com. X: @acloughpbp. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Post: Transit Village sues Palm Beach County over stalled transportation hub