Is Florida the Sunset State?
Water Crisis Mortgage Fraud Political Dysfunction Algae Polluted Beaches Declining Crops Failing Public Schools Foreclosures
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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."