Clevelander announces plans to remake Ocean Drive icon into 30-story affordable housing

The owners of the Clevelander Hotel and Bar on Ocean Drive are looking to replace the iconic South Beach establishment with a high-end restaurant and a housing development under a new state law designed to encourage affordable housing.

Jesta Group, which owns the Clevelander and adjoining Essex House hotel, said in a press release Thursday morning it will submit plans to the city of Miami Beach in the coming days for a development with 40% of units designated as affordable and a maximum height of approximately 30 stories, which it said is now allowed under Florida’s Live Local Act designed to incentivize affordable housing.

“Since purchasing the Clevelander Hotel and Bar a few years ago, we have been proud to operate this legendary and iconic establishment in South Beach. Although we are happy to continue operating as we have, some have expressed a desire that we change our business model at the property,” Jesta Group senior managing director Anthony O’Brien said in a statement. “With the Live Local Act, we now have a unique opportunity to do that.”

The development would have a ground-floor restaurant, according to the release, and would maintain the buildings’ historic Art Deco facades.

Alexander Tachmes, an attorney for the Clevelander, called the idea “a huge win on multiple levels.”

“The city wins by achieving its goal of turning a nightlife venue into a sophisticated restaurant and replacing hotel rooms with residential product on Ocean Drive,” Tachmes said. “The city and hospitality workers win by the introduction of a significant quantity of affordable housing, which will give the hospitality community greater options to live in the community in which they work.”

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The Clevelander wins, Tachmes added, “by replacing a highly profitable business with enough potential development revenue to justify a change in business models.”

The Clevelander was built in 1938 and was instrumental in the revitalization of South Beach in the 1980s before undergoing major renovations in 2009. It offers an outdoor pool and patio that have become a staple of the South Beach party scene on Ocean Drive.

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In recent years, city leaders have sought to change the hard-partying character of South Beach with an intense focus on Ocean Drive. In 2021, the Clevelander successfully sued the city to block an attempt to roll back an alcohol sale curfew from 5 a.m. to 2 a.m.

In an interview Thursday, O’Brien said the proposal was partially a response to political pressure.

“There has been an effort over a number of years to try to change our business model on Ocean Drive,” O’Brien said. The Live Local Act, he said, provided the “first opportunity we’ve seen as owners of this property that actually makes financial sense.”

Mayor calls it ‘worst idea ever’

But Miami Beach Mayor Dan Gelber said he wasn’t previously aware of the proposal, and, in a statement, called it the “worst idea ever.” Gelber said Jesta Group, which bought the Clevelander and Essex properties in 2018, “should be ashamed.”

“Thirty-story buildings would simply destroy what is known throughout the world as the iconic postcard of our city,” Gelber said.

City Commissioner Ricky Arriola was more optimistic about the idea, saying state lawmakers “had to force our hand” after the city approved down-zoning legislation that limited the ability to build affordable housing.

“I think you’re going to see more projects like this in the future. I’m not sure that’s a bad thing,” Arriola said. “Potentially, we’re going to get more affordable housing, and, in the case of the Clevelander, we will potentially eliminate an outdoor nuisance, which will help clean up Ocean Drive.”

City spokesperson Melissa Berthier said the city administration has not yet seen the plans.

“We look forward to learning more about the proposed project,” she said.

Miami Beach voters will elect a new mayor in November as Gelber is term-limited. They will also choose three new commissioners in an election that could swing the balance of power in the city.

Jesta Group is a Montreal-based real estate investment firm that is also behind a $300 million plan to redevelop the site of Shuckers Bar & Grill in North Bay Village. O’Brien said the firm would potentially look to relocate the Clevelander within South Florida.

“We absolutely love this asset and we recognize the historic and iconic nature of its past,” he said. “We do not plan on ending the Clevelander’s brand as a bar and restaurant.”

Live Local Act

Florida lawmakers passed the Live Local Act in March as a $711 million plan to build affordable housing, incentivize new construction through tax breaks and offer interest-free loans to help Floridians afford down payments.

The bill, which took effect in July, allows developers to preempt local zoning laws on height and density if at least 40% of residential units in their proposed projects are affordable for at least 30 years, defined as units affordable for households making up to 120% of the area median income — which is approximately $75,000 in Miami-Dade County.

READ MORE: A new law is supposed to boost affordable housing. South Florida cities are furious

The legislation says local governments can’t restrict the density of an affordable development below the maximum density allowed anywhere in the city. And it says local lawmakers can’t limit such a project’s height below the tallest height permitted within one mile of the project or three stories, whichever is higher.

It does not provide any explicit exceptions for historic districts such as the Art Deco Historic District in South Beach. Under the law, the Clevelander proposal could bypass the Miami Beach Historic Preservation Board, which typically has the power to review redevelopments of historic structures.

Clevelander representatives said their project would feature a maximum of 137 units. The affordable units would be rentals, they said, while the remaining units would be condos.

The project could potentially face pushback based on a provision in the Live Local Act that says developers still must comply with municipal land development regulations, which include floor-area ratio, a method of regulating building size.

Tachmes, the Clevelander attorney, said the proposal would exceed the existing floor-area ratio allowed on Ocean Drive, but said he believes it will pass legal muster based on the intent of the state law.

Historic preservation advocates have fought for decades to protect the Art Deco character of Miami Beach, successfully helping to defeat a state bill earlier this year that would have prohibited local officials from blocking the demolition of many historic buildings designated as unsafe.

But the Live Local Act, which has also faced fierce opposition from South Florida cities, could ultimately have similar effects.

“What’s really disappointing is it sounds like a total preemption of local control,” Daniel Ciraldo, executive director of the Miami Design Preservation League, said of the Clevelander proposal. “I think once you look at the details, it should be clear that this is not the silver bullet that it’s purporting to be.”

Some Democrats criticized the bill for barring local authorities from enacting rent controls, and for including language that appears intended to entice real estate developers who typically build market-rate projects, rather than give experienced affordable homebuilders new incentives to get more homes built.