Is Florida the Sunset State?

[w¡n9Nµ7 §£@¥€r 123]

Greetings from Florida, where the winters are great!

Otherwise, there's trouble in paradise. We're facing our worst real estate meltdown since the Depression. We've got a water crisis, insurance crisis, environmental crisis and budget crisis to go with our housing crisis. We're first in the nation in mortgage fraud, second in foreclosures, last in high school graduation rates. Our consumer confidence just hit an all-time low, and our icons are in trouble--the citrus industry, battered by freezes and diseases; the Florida panther, displaced by highways and driveways; the space shuttle, approaching its final countdown. New research suggests that the Everglades is collapsing, that our barrier beaches could be under water within decades, that a major hurricane could cost us $150 billion.

We do wish you were here, because attracting outsiders has always been our primary economic engine, and our engine is sputtering. Population growth is at a 30-year low. School enrollment is declining. Retirees are drifting to the Southwest and the Carolinas, while would-be Floridians who bought preconstruction condos in more optimistic times are scrambling--and often suing--to break contracts. This is our dotcom bust, except worse, because our local governments are utterly dependent on construction for tax revenues, so they're slashing school and public-transportation budgets that were already among the nation's stingiest. "This may be our tipping point," says former Senator Bob Graham.

Florida was once a swampy rural backwater, the poorest and emptiest state in the South. But in the 20th century, air-conditioning, bug spray and the miracle of water control helped transform it into a migration destination for the restless masses of Brooklyn and Cleveland, Havana and Port-au-Prince. Florida developed its own ventricle at the heart of the American Dream--not only as an affordable playground and comfortable retirement home with no income tax but also as a state of escape and opportunity, a Magic Kingdom for tourists, a Fountain of Youth for seniors, a Cape Canaveral for Northerners looking to launch their second acts. Even the soggy Everglades, once considered a God-forsaken hellhole, became a national treasure.

But now the financial and environmental bill for a century of runaway growth and exploitation is coming due. The housing bust has exposed a human pyramid scheme--an economy that relied on a thousand newcomers a day, too many of them construction workers, mortgage bankers, real estate agents and others whose livelihoods depended on importing a thousand more newcomers the next day. And the elaborate water-management scheme that made southern Florida habitable has been stretched beyond capacity, yo-yoing between brutal droughts and floods, converting the Everglades into a tinderbox and a sewer, ravaging the beaches, bays, lakes and reefs that made the region so alluring in the first place. "The dream is fading," says University of South Florida historian Gary Mormino. "People think Florida is too crowded, too spoiled, too expensive, too crazy, too many immigrants--name your malady."

Still, the winters really are great! And this doom-and-glooming might sound familiar. In 1981, TIME declared crime- and drug-plagued South Florida a "Paradise Lost." The region then embarked on an epic boom. Southeast Florida--including Miami, Fort Lauderdale, West Palm Beach--ballooned into the nation's seventh largest metro, while southwest Florida--Naples, Cape Coral, Fort Myers--became the fastest-growing metro. Last year 82.4 million visitors found their way to this lost paradise. And last month Governor Charlie Crist unveiled a $1.75 billion deal to buy the U.S. Sugar Corp. and its 187,000 acres of farmland, a move that would help restore the Everglades. It's the state's best eco-news in decades.

So lifers like seventh-generation Floridian Allison DeFoor--lawyer, lobbyist, historian, Episcopal minister, environmental consultant and Republican operative--are disinclined to panic just yet. "Sure, it's the end of Florida as we know it," DeFoor quips. "It's always the end of Florida as we know it."

Florida's history is lush with volatility and flimflam. As Groucho Marx's real estate huckster warned in The Cocoanuts in 1929, "You can even get stucco! Oh, how you can get stucco." But eventually, the lies always seemed to come true, because there were always new dreamers from cold climates, and worthless swampland was just a drainage canal and a zoning variance away from becoming a golf-course subdivision.

Yet even boosters admit that Florida's Miracle-Gro has created many of its current problems. "We need steady growth, not crazy growth," Crist says. There's a sense that paradise has been ruined by awful traffic, overcrowded schools, overtapped aquifers and polluted beaches. The land of Disney dreams for the middle class is now a high-cost, low-wage state with Mickey Mouse schools and Goofy insurance rates, living beyond its environmental and economic means in harm's way. As peculiar as it sounds, this go-for-broke state of boundless possibilities--the land of Kimbo Slice, Miami Vice and Mar-a-Lago--might be leading America into a new era of limits.

The Busted Dream

Juan Puig embodied the Florida dream, proving that an ordinary guy with moxie could make a fortune and enjoy the high life by selling the dream to others. A Cuban immigrant, he started his career as a janitor and then a baggage handler at the Miami airport, living in a Hialeah apartment without air-conditioning, peddling sunglasses to co-workers on the side. In the 1990s, he discovered real estate, rehabbing and selling a few foreclosed duplexes, then developing town houses and branching into condo conversions as the market went nuts. He soon built a statewide empire with 300 employees, including a staff priest who blessed his projects. He bought a waterfront mansion in Coral Gables, a fleet of classic cars, a Ferretti yacht, huge collections of fine wine, Cuban art and luxury watches. Just last year he spent $80,000 on an antique billiard table.

Puig's financial records were a mess, and his accountant was a convicted felon with ties to the Colombian drug kingpin, Pablo Escobar. But that never seemed to bother Puig's investors or lenders, who kept showering him with money as long as condo prices kept soaring. It certainly didn't bother Puig, who explained in a recent deposition that he never paid attention to his books, in part because his expertise was in matters like where to advertise property and whether to paint the doors yellow or white, and in part because he never imagined the Florida housing market could tank: "Of course, I trusted that the business, like always, would be successful."

Of course, he got stucco. Now that South Florida has tied Las Vegas as the nation's fastest-tanking real estate market, Puig is bankrupt, with $80 million in debts. His mansion was liquidated for $11.4 million, and his yacht went back to the bank. At Puig's bankruptcy auction, bidders competed for a necklace studded with 226 diamonds, a Sopranos pinball machine, a 1965 Ferrari, nine designer bikes and other bubble baubles. The billiard table went for $25,000. "It's amazing how fast it all came crashing down," says Puig's criminal defense attorney, Joel Hirschhorn.

In the Paradise Lost days, Hirschhorn worked the white-powder bar, representing Medellín cartel leaders and other cocaine cowboys. Then he wore a pinkie ring with a two-carat diamond; now he wears Brooks Brothers and defends fraud cases. "It's where the action is," he explains with a grin. An epidemic of inflated appraisals, exaggerated incomes, straw buyers--and the lax regulation to enable it all--has made Florida tops in mortgage fraud, according to the Mortgage Asset Research Institute; in a recent Palm Beach County case, a grocery cashier's salary was listed as $344,000 a year. And Paul Singerman, bankruptcy counsel for Puig's companies, is even busier. His firm represents the Florida home builders Tousa Inc. and Levitt and Sons, which happen to be the nation's two largest bankrupt home builders, along with droves of failing contractors, landscapers and architects. "I got two calls from window distributors this week," Singerman told me. "A tile guy called this morning."

Keep the cell phone on, Paul. In some Miami high-rises, the foreclosure rate is as high as 1 in 4, and owners who still own are getting nailed with huge condo fees to make up for the lost revenue. Florida banks repossessed 620% more property last year than in 2006, and they're starting to unload nonperforming real estate loans for as low as 30¢ on the dollar. Miami topped a recent list of America's worst housing markets, just ahead of Orlando, with Tampa fourth. From 20% to 40% of the speculators who waited on lines to buy preconstruction condos during the boom are expected to walk away from those investments before closing; many are turning to a new cottage industry of get-your-deposit-back lawyers. "The ambulance chasers are everywhere," says developer Jorge Pérez, the so-called Trump of the Tropics, whose Related Group faces more than 100 lawsuits by remorseful buyers. "We've gone from euphoria to panic in a year."

And we haven't hit bottom. The glutted Miami market already has a five-year inventory, but Peter Zalewski of Condo Vultures says 22,000 more condos are still under construction downtown, which will double the supply. "Just wait. We haven't even started to feel what we're going to feel," he says.

That's also true in Florida's exurban boomtowns, communities like Homestead, Port St. Lucie and Kissimmee, that subprime borrowers flocked to for cheaper land and better deals. Now their homes are going back to the bank, and their neighborhoods are dotted with unmowed lawns and mosquito-infested pools. "Those lower-priced options are the places that are going to hurt for a long time," says Wayne Archer, head of the University of Florida's real estate program.

The problem is, even those lower-priced options aren't cheap. Florida's prices remain higher than the national average--especially when you count sky-high property taxes and insurance premiums that can be as burdensome as mortgage payments--while its wages are lower. Fitch Ratings warned that when a big hurricane hits, Florida's insurance market "could effectively collapse." That won't jump-start a recovery.

Water, Water, Everywhere

Nobody used to worry about the Big One hitting Florida, because it was a waterlogged wilderness. "It is a land of swamps, of quagmires, of frogs and alligators and mosquitoes!" a Congressman scoffed. "A man, sir, would not immigrate into Florida--no, not from hell itself!" In 1880, Florida ranked 34th of 42 states and territories in population, and the census found only 257 residents in most of South Florida.

Florida's leaders believed that if they could just drain the swamp, they could turn a peninsular wasteland into a recreational, agricultural and residential paradise. They failed catastrophically. In 1928, a hurricane blasted Lake Okeechobee, killing some 2,000 pioneers that their promises had drawn to the Everglades.

But U.S. Army engineers eventually made the dream come true by imprisoning Lake O behind a giant dike, subduing the Everglades with 2,000 miles of levees and canals, seizing control of nearly every raindrop that fell in southern Florida. Their all-out war on natural water flow made the bottom half of the state safe for an unrestrained building frenzy that began after World War II and basically continued until Juan Puig bought his billiard table. Florida now has 18 million residents, most of them south of Orlando. Such progress had a price. Half the Everglades is gone. The rest is polluted, disconnected and infested by invasive species ranging from fast-growing ferns to pythons.

And South Florida is having an ecological and hydrological meltdown, the legacy of a century of plumbing and dredging and growing without much thinking. The Everglades ecosystem now hosts 69 threatened or endangered species, and its rookeries and fisheries have crashed. Massive algal blooms are turning Florida Bay into pea soup. The region's reefs have lost up to 95% of their elkhorn coral; persistent red tides have made it tough for sunbathers to breathe at the beach.

Now the rainiest swath of the country is running dry, facing a specter of structural droughts. And the dike around Lake O. is leaking so badly that water managers routinely dump billions of precious gallons out of the lake to avoid a 1928-style calamity, ravaging estuaries and draining the region's water supply. This spring the lake fell so low that 40,000 acres of its exposed bottom burned out of control, along with 40,000 acres of the perennially parched Everglades National Park.

We have water, water, everywhere, but much of South Florida's per capita use is 50% above the national average, and we've lost half the wetlands that used to recharge our aquifers. So water shortages threaten to limit growth in a way that wetlands regulations or bad headlines never could. "Florida is astonishingly wasteful," says Cynthia Barnett, author of Mirage: Florida and the Vanishing Water of the Eastern U.S. Now the Orlando area is pushing to suck water out of rivers to its north, local utilities are jacking up water rates as much as 35%, and South Florida's water board may cap withdrawals from Everglades aquifers. "The idea of water shortages down here never occurred to anyone," says environmentalist Shannon Estenoz, a Crist appointee to the board. "But we've got to change the culture because the status quo is unsustainable."

It's not just gator-huggers who say that. Back in 1995, a 42-member commission stocked with bankers, farmers and developers released a unanimous report declaring South Florida unsustainable, warning that the ecosystem's destruction was hurting people as well as panthers by lowering water tables, increasing flood risks, fueling gridlock and replacing paradise with "mind-numbing homogeneity, and a distinct lack of place." In the words of the novelist and columnist Carl Hiaasen, the bard of Florida's decline, "You don't have to be a wacko enviro to want your kids to be able to swim in a lake or maybe see an animal that isn't in a cage or a seaquarium. And even people who don't give a rat's ### about the panther will care when saltwater comes out of their faucets."

That's why Democrats, Republicans, the sugar industry and environmentalists came together in 2000 to support a $12 billion plan to revive the Everglades, the largest ecosystem-restoration project in history. But the project has stumbled and stalled, which is why Crist's sugar deal is so exciting. It will essentially take Everglades restoration back to the drawing board, reviving hope for a free-flowing River of Grass and a stable water supply.

But quality of life remains the biggest risk to the Florida dream. So many Northeastern transplants are leaving Florida for other states with less congestion and better education systems that they have their own nickname: Halfbacks. In 2000, Florida attracted 19% of the nation's migrating seniors; by 2006, it was only 13%. Florida still has some of America's richest ZIP codes, but it ranks among the worst states in school spending and health coverage.

The GOP-controlled legislature has responded to the state's woes with protracted arguments about evolution and other Terri Schiavo--style social issues as well as legislation proposing crackdowns on bikers who pop wheelies, students who wear droopy pants and truckers who hang fake cojones on their rigs. It also slashed $5 billion from the state budget. "I just got in an argument about whether we're 50th or 45th in the nation in graduation rates," says Florida house minority leader Dan Gelber. "What a great debate to have."

"The Outlook Is Always Bright Here!"

I was already feeling grumpy about all this when I watched a lecture by the University of Miami's renowned coastal geologist Harold Wanless. The Intergovernmental Panel on Climate Change had predicted a sea-level rise of up to 2 ft. by 2100, but Wanless meticulously explained why 3 ft. to 4 ft. is much more likely--assuming the world can slash carbon emissions enough to slow global warming. I live in Miami Beach, so I didn't care for his PowerPoint slide showing much of Miami Beach under water. "That's if we get our act together," he said. Then he showed a slide of all Miami Beach submerged. "That's if we don't."

I felt better after talking to the bubbly Crist, who's like human Prozac. "How can you not be optimistic about Florida?" he asked. "Is there a more beautiful place on the planet?" He then recounted a story that probably won't help him in the GOP Veepstakes: "John McCain told me, 'It's tough in those Rust Belt states. You really feel a bit of depression in people's outlook. But when you get to Florida, people feel great.' And it's true! The outlook is always bright here!" When I reminded him of Florida's growth-challenged economy and growth-ravaged environment, he took no offense. "We're going to make a new Florida!" he declared.

He means a sustainable Florida. He's been doing his part environmentally, pushing a sweeping energy bill through the fractious legislature, fulfilling his pledge to be the "Everglades governor." His greatest challenge, though, is economic sustainability, attracting high-wage industries that don't depend on perpetual growth. His predecessor, Jeb Bush, lured a few biotech firms, with the help of lavish subsidies, and Crist has targeted green-tech sectors like solar power as well as global trade. But not even corporate titans who enjoy Florida vacations seem eager to relocate to a high-priced state with a service-economy workforce and troubled schools. "The decisions about relocating high-paying businesses are made by people who value education, and Florida isn't ready for the modern economy," says Graham, the former Senator. New corporate subsides will be a tough fiscal sell. "The politicians have told us: Not if it costs money," says Space Coast economic-development director Lynda Weatherman. The shuttle will be canceled in 2010, and her region may lose 6,000 jobs. "Six thousand one, if I can't figure out how to attract new ones," she says.

Still, did I mention the winters are nice? As baby boomers retire, as Hispanic markets expand, as leftist dictators harass wealthy South Americans, some people will always want to come to Florida. In anticipation of the next boom, developer Pérez has set up a $1 billion fund to buy distressed properties, and Zalewski of Condo Vultures has been besieged by foreign investors. "Eventually, Florida is going to grow again," he says.

The question is whether it will grow up. If Florida can reinvent itself, it can be the tip of the American spear, showing the nation how to save water and energy, manage growth, restore ecosystems and retool economies in an era of less. But that will require a new kind of reinvention. "We know how to crash and how to recover," says Miami historian Arva Moore Parks. "We don't seem to know how to learn."

http://www.time.com/time/printout/0,8816,1821648,00.html

[Mark&Steph 0]

I'm a 13 year Florida resident, and I approve this article.

[peejay 327]

Kind of reminds me of the articles that said the same thing about California several years ago. Paradise turns to nightmare and long time residents flee in an effort to find another paradise somewhere else. Only problem is the same thing eventually will happen to the new paradise. All the ####### just follow you there. Welcome to America. That is how developers make their money.

[w¡n9Nµ7 §£@¥€r 123]

Paradise turns to nightmare and long time residents flee in an effort to find another paradise somewhere else. Only problem is the same thing eventually will happen to the new paradise.

I've always thought that's precisely what the 'homeless' episode of South Park was referring to.

[Welshcookie 17]

A.J....stop pissing on my parade!!! (counting down to my move to FL )

[w¡n9Nµ7 §£@¥€r 123]

A.J....stop pissing on my parade!!! (counting down to my move to FL )

Which part of FL?

[Welshcookie 17]

Palm Bay/Orlando......but I'm sure paradise will quickly wear thin ....nice time to buy a house though I hear

[w¡n9Nµ7 §£@¥€r 123]

Palm Bay/Orlando......but I'm sure paradise will quickly wear thin ....nice time to buy a house though I hear

Good luck!

[kaydee457 13]

I just bought there...My insurance rates are reasonable at about 850/year for a 2800 sq.ft home. Heck, I pay that much in Sillynoise for a 1800 sq. ft. Townhome!

It's a great time to buy in Florida, if you can afford to move there of course! If you're looking to scratch out a living there then it's probably not for you.

[w¡n9Nµ7 §£@¥€r 123]

I just bought there...My insurance rates are reasonable at about 850/year for a 2800 sq.ft home. Heck, I pay that much in Sillynoise for a 1800 sq. ft. Townhome!

Are you relocating from work or retiring? Or vacation home?

[kaydee457 13]

I just bought there...My insurance rates are reasonable at about 850/year for a 2800 sq.ft home. Heck, I pay that much in Sillynoise for a 1800 sq. ft. Townhome!

Are you relocating from work or retiring? Or vacation home?

It's a vacation home for now....I'll be a "snowbird" for a while and then eventually relocate there.

Going to love it. Golf course, tennis courts, swimming pool, clubhouse, bocce courts........Gated community with security guards. No snow- Did I mention NO FCUKING SNOW?

Wife loves it too....It can't get any better!

Hurricanes? Not afraid of them. I've weathered a few in my lifetime and modern construction in Florida will do fine in a storm of up to Cat 4.

[MrsCat 6]

No snow- Did I mention NO FCUKING SNOW?

Amen to that!

[w¡n9Nµ7 §£@¥€r 123]

I just bought there...My insurance rates are reasonable at about 850/year for a 2800 sq.ft home. Heck, I pay that much in Sillynoise for a 1800 sq. ft. Townhome!

Are you relocating from work or retiring? Or vacation home?

It's a vacation home for now....I'll be a "snowbird" for a while and then eventually relocate there.

Going to love it. Golf course, tennis courts, swimming pool, clubhouse, bocce courts........Gated community with security guards. No snow- Did I mention NO FCUKING SNOW?

Sounds awesome!

[akdiver 3]

That was an interesting read, thank you for posting it.

It confirms everything I believe about Florida - recently substantiated by last year's trip to South Beach and Clearwater - that Florida is a place where, under no circumstances, would I ever want to live. Like many other states, the environment has been so artificially enhanced that it draws more people than can possibly be sustained by the resources available, becoming a cesspool of over-population with tenuous economics. No thanks.