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Marc Rutenberg Homes blames Pinellas County, neighbors for development's 3-year delay

County says liens stop developer from building
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Posted at 12:04 PM, Jun 16, 2022
and last updated 2022-06-16 20:36:45-04

PALM HARBOR, Fla. — Vacant land in Pinellas County is hard to find these days, so a Palm Harbor man counted himself lucky when he came across a new planned development where he could build his dream home.

But three and a half years after he put down a big deposit, the project is at a stand-still and customers are fighting to get their money back.

“It’s a disaster that’s going on almost four years,” said Joe Isaacs.

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Joe Isaacs said he paid a $135,000 deposit for his lot and home in 2018, won in arbitration and has not been able to get his money back.

Isaacs said it all started when he sold his rental properties and used some of the money to pay Marc Rutenberg Homes a $135,000 deposit for a custom home in “The Wilds” subdivision.

“It was gonna be the cat’s meow”

“We’re standing in what was supposed to be a lot where I was going to have a custom million-dollar home built for a contract I signed back in 2018,” Isaacs said, showing us the lot he picked out for his home.

It was supposed to have a pool, a covered patio, a gourmet kitchen and a home theater.

“This was going to be my last home,” Isaacs said. “The problem is that nothing ever got built. Not for us or for anybody else.”

Weeds and grass now grow on the property, which was cleared and graded in late 2020.

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Joe Isaacs says Marc Rutenberg Homes is contesting the final arbitration report.

“It was gonna be the cat’s meow, I guarantee you,” said Ron Schulte.

Schulte was sales manager for Marc Rutenberg Homes. He said at least four customers signed contracts to build homes in the wilds.

“That’s what they wanted was a Marc Rutenberg custom home… one of a kind,” Schulte said.

Marc’s father Charles Rutenberg founded a real estate brokerage. His uncle Arthur Rutenberg started a home building company which now has 40 franchises in 10 states.

Isaacs believed Marc was following in his family’s footsteps.

“So I figured how could we lose? It was a no-brainer,” Isaacs said.

But sometimes the best-laid plans go astray.

Feud with neighbors led to delays

Neighbors opposed The Wilds, sending letters to county and state agencies warning about potential flooding.

That led to redesigns and delays.

Rutenberg never obtained a bond for the project and never got approval for his plat, the official map showing property lines, roads, utilities and other features.

“It’s just paperwork that you go in and file your final plat. But it never came,” Schulte said.

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The Wilds is a 17-lot, luxury custom home development in Palm Harbor.

According to a Pinellas County spokesperson, until a plat receives final approval from the county commission, a builder can’t transfer ownership of lots or get building permits.

Rutenberg didn’t submit his plat until last September, almost three years after Issacs signed his contract.

Since then, the company hasn’t met the conditions outlined in a letter from the Pinellas County building department.

“He could’ve had 17, $2-5 million-dollar homes in here,” Schulte said.

Isaacs said he asked Rutenberg for his money back in 2020, but when Rutenberg refused a full refund he took legal action, alleging he was told to expect his home to be finished in one to two years.

“We took it to arbitration. After over a year of arbitration, we won,” Isaacs said.

The arbitration order awarded Isaacs more than $220,000 for his deposit, legal fees and interest, saying Rutenberg “was well aware in November 2018 that the project was not yet platted, finally designed or approved for construction.”

“We took it to Pinellas County Court to get the arbitration turned into a judgment. And now he’s trying to get the arbitration order vacated,” Isaacs said.

Rutenberg alleged in a counter suit he “suffered an unexpected illness which precluded him from being able to provide sworn testimony” during the arbitration hearing.

A court date for the new lawsuit has not been set.

Liens must be satisfied for plat approval

In a short phone conversation in mid-May, Rutenberg blamed neighbors and the county for delays and infrastructure cost overruns.

He agreed to do an on-camera interview, but later canceled, saying in an email he tested positive for COVID-19.

A Pinellas County spokesperson said Rutenberg must satisfy seven liens filed by contractors alleging the company owes money for labor, services or materials.

They include a $145,000 lien from the main engineer.

Records show what appears to be a history of financial problems including delinquent property tax payments and other unpaid liens.

We tracked Rutenberg down at the entrance to Turtle Beach, another new construction neighborhood he’s developing.

When we tried to ask him questions, he drove away.

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Marc Rutenberg of Marc Rutenberg Homes is developing The Wilds in Palm Harbor.

Schulte said Marc Rutenberg let him go in May 2020.

He said Rutenberg wrote him a recommendation letter but never paid him commissions for properties he sold in The Wilds.

“I have not said one word about Marc since he relieved me, retired me. And I’m having second thoughts about doing this now, but Joe asked and I said okay, I’ll help,” Schulte said. “I feel really responsible.”

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Former Sales Director Ron Schulte.

A hard lesson learned

Without his deposit and with high legal bills, Isaacs purchased a more modest model home in another Tampa Bay area community.

“It will be a really hard lesson that we’ve learned, but it is what it is,” he said.

We emailed Rutenberg a list of questions.

Late Wednesday evening we received his responses, which are listed below.

The liens on the County Officials Records page indicate you owe certain vendors large sums of money (including your main engineer John Landon who I spoke to). Will this stand in the way of you fulfilling the requirements for plat approval?

We spoke at length regarding the platting of the Wilds community, and reviewed the status of the project performance bonding submittals to Pinellas County. In review, Wilds Land Company provided Pinellas County performance bond submittals on two separate occasions, with the County rejecting both submittals. Typical of our community development procedures for the last three decades, our site contractor has always been obligated to provide performance bonds for the completion of the project infrastructure. At the Wilds, this same requirement is in place. However, the current staff of the County rejected the submittal, with explanation that the bond must be submitted by the Developer. In an effort to satisfy the County, the bond was resubmitted under both the site contractors name and the Developer’s name, providing the County even further financial assurances. Subsequently, again the County rejected the performance bond submittal. The County could not provide any support for the management decision, nor could the County provide any regulatory document to support what appears to be an arbitrary decision without purpose nor reason. Through our many decades of development history, and in each community development we have been involved in, the County has always accepted the performance bond submittals whereby the value of the bond was set at 110% of the outstanding work, and always deducted the value of the completed work under the Engineer of Record certifications. This same process was followed at the Wilds, with in this case Landon, Moree and Associates as the Engineer of Record providing to the County the needed certifications. The County, in a reversal of its decades long history rejected the basis of the performance bond, requiring instead that the bond instrument be submitted in the full value of the project work. At the time the performance bond was submitted, the completed work represented over 90% of the total value of the work. Again, the County’s rejection of the bond submittal, and its determination that the value of the performance bond be the total value of the work is without regulatory support and is contrary to the decades long administrative requirements of the County. The cost associated with the County’s decision was without benefit to the County, added burden to the Developer, and continued to document the type of arbitrary staff decisions that delay development work throughout Pinellas County. Eventually, the delays to continue to submit replacement documents, including performance bond values required by the County, caught up with the actual completion of the project, causing the purpose and practicality of the performance bond submittal pointless. Of note, the County has received and approved the required maintenance bond for the Wilds project.

Have you paid the other fees and arranged the inspections referred to in the October letter from Pinellas County? Records show you were delinquent in paying property taxes on the subdivision property and that you waited several months to pay a $300,000 lien filed by Burgess Civil Engineering. What was the reason for not paying taxes and bills on time?

As of this date, and as confirmed under the certification of the Engineer of Record, all site development work is fully complete, and further that all inspection fees have been fully paid. The County has performed numerous on site inspections with all punch list work identified fully complete. Internally, the County requires that both the Public Works department and the Utilizes department “sign off” on the work. We know of no outstanding work to be further completed, and are now waiting for the County to internally transmit these internal confirmations. In addition to these internal County actions, the County requires that their internal survey department confirms the placement of both PRM’s and PCP’s. These permanent survey markers were placed by Shimp and Associates in February of 2022, and confirmed by Shimp under the plat certifications now submitted to the County. This internal check list of the County we are hopeful has been or will be satisfied within the next few days. The County informed you that several liens are clouding title to the property and preventing the processing of the community plat. As of this date, we know of no liens filed on the Wilds properties, and also advise you that the real estate taxes on this property are fully paid. Should you wish to confirm this status, please contact Bill Kiimpton, copied here for your reference. With specific reference, the site contractor, Burgess Civil, was paid for all contracted work April 22, 2022, and executed a Satisfaction of Lien and Release of Lien on this same date. The recording of the instrument occurred afterwards, with apologies extended by the Burgess Civil counsel. As regards Landon, Moree and Associates, no further monies are owed, and the previously recorded liens are fully satisfied. The County has misinterpreted an invalid lien filed against the property from Sand Dollar Development. Mr. Kimpton has provided the County with confirming documentation.

This is the response from the Pinellas County Building Department to our question:

  • Mr. Rutenberg opted to complete the subdivision in lieu of providing a subdivision bond. The code allows either option.
  • Of the prerequisites prior to approval of the plat, outlined in the letter dated October 21, 2021, the property taxes are now current. 
  • One lien has been satisfied. There are still 7 liens that must be paid and released.
  • There are additional requirements, including infrastructure inspections and final sign-off and acceptance of public utilities that are necessary to serve the new lots, that must be completed.
  • We don’t have any information as to whether construction “could start in a matter of weeks.” Nothing can start until the other obligations are satisfied. 

(Editor’s Note: We reviewed the Pinellas County Official Records Website and could not find documentation as of 6/15/2022 that the liens involving the Wilds project had been satisfied)

According to Isaacs, there is some type of stop-work order in place on his permits, which prevents Rutenberg from moving forward. What is the current situation?

 The first building permit application submittal of the Wilds community was the building permit submitted for Wilds Lot 16, the intended site of the Isaacs’ home. The permit application was accepted and fully processed by the County, with all required permit issuance costs fully paid by MRH. The County notified MRH, the applicant, the permit was approved, with its release subject to the further on-site HML permit inspection. The County was fully prepared to release the building permit the fall of 2020. The HML inspection is required of all building permits, as a pre-requirement of the building permit release. This inspection verifies that the required silt screen is installed as well as required tree barricades. Subject to the inspectors verification of these two on-site requirements, the building permit would be released. Mr. Isaac was notified by MRH of the building permit approval, at which time MRH received directly from Isaac’s counsel notice of the Isaac’s contract termination. These two events were sequential. It is assumed by us that Mr. Isaacs decision making was created by the County notice of the building permit approval, reasoning that if he had allowed construction to commence, a termination of the contract would prove to be very difficult. The County will accept for building permit processing up to four building permit applications prior to platting. The language of the County regulations reference that these permits are specific to model homes. However, under the testimony of Blake Lyons, the former Director of the County Building and Development Review Services, Mr. Lyons confirmed that the County does not distinguish building permit submittals by category, and allows the issuance of up to four building permits prior to platting regardless of the identification and or purpose. Mr. Isaac’s counsel has pressed this issue on numerous occasions, and relies on this misrepresentation of the County policy as a fundamental argument to support the Isaac contract termination. Throughout our four decade long history of developing communities in Pinellas County, this policy has been in place and continues to be in place today. With reference to your comment, “according to Isaac’s, there is some type of stop work order in place on his permits”, this is unknown to us, and unfounded. We intend this next month to now finalize the building permitting issuance for our construction of Wilds lot 16, and will be building what is a beautifully unique custom home for a family that wishes to make the Wilds home. Our targeted completion date is Fall of 2023.

We sent the same question to the Pinellas County Building Department. This is their response:

  • The code prohibits the transfer of ownership of the lots prior to platting. 
  • Because there is nothing to guarantee this developer will complete the project and complete the platting process, no model home permits can be issued.
  • If building permits are issued you run a high risk of future homeowners that can’t get COs for their homes. A homeowner could be the ones stuck completing the project.
  • Once all of the platting requirements have been satisfied, building permits can be issued and Joe’s home could be built as a model.
  • Once the plat is approved by the Board of County Commissioners, recorded by the Clerk, and the Property Appraiser assigns parcel IDs to the new lots, ownership can be transferred from the developer.

Is there any chance you will resolve this dispute with Joe Isaacs before a court date is set on your lawsuit?

As you and I discussed, MRH has made several attempts to resolve the dispute with Mr. Isaac’s. MRH first requested that the parties meet under mediation, and under this opportunity meet to resolve the dispute. Mr. Isaac’s steadfastly refused, and immediately without consideration filed for arbitration of the contract termination. MRH first then offered to repay the initial deposit payment received from the Isaac’s, only requesting that the Isaac’s agree to some sharing of the actual costs incurred by MRH for the design and permitting expenses of the Isaac home. Mr. Isaac’s again steadfastly refused to even consider the offer.  MRH then made a further offer to the Isaac’s to return the entire deposit, without offset of any kind, which offer has also been rejected by the Isaac’s. You have asked if there is any chance that the dispute can be resolved before a court date is set on our lawsuit,  I would hope so, and would welcome an open door from the Isaac’s to do just that. Our offers have been rejected at each turn. Mr. Isaac’s is a rich man who wants more to “win” this dispute than anything else. We want to move forward with our tradition as Florida’s First Family of Homebuilders. We believe that the court will support the reasoning of our lawsuit, and perhaps allow resolution before further court costs and unnecessary legal expenses are incurred. If you believe you might offer both us and the Isaac’s a path forward it would be very welcomed. Our Company has designed and constructed a distinguished quality of home for now over three decades, and in this time finds itself for the very first time involved in a lawsuit filed against one of our homeowners.

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