By Marianela Toledo | Florida Watchdog
MIAMI — Miami is bracing for what may soon become another ongoing public works project, which could make one developer rich and leave taxpayers feeling short-changed.
Although the renovation plan has been on the table for years, the city is in the final stages of wrapping up the search for a developer and has narrowed it to two finalists: The Portman CMC group and South Beach ACE.
Portman Holdings-led Portman CMC of the Peachtree Center in Atlanta has partnered with Miami condominium developer Ugo Colombo, Cirque du Soleil and the Bal Harbor Shops.
Their competitor, South Beach ACE, is led by Tishman Hotel and Realty, Miami developer Robert Wennett and architect Rem Koolhaas. The company’s work includes the Walt Disney World Swan and Dolphin, the Miracle Mile revitalization in Coral Gables and Lincoln Road’s 1111 building.
South Beach ACE proposed the renovation of the Miami Beach Convention Center and the expansion of Lincoln Road, which would create retail centers on parking lots near the pedestrian mall in South Beach.
But who benefits from this deal? The taxpayers or the developers?
The renovation and expansion of the public facility is set to include a hotel, several outdoor public spaces, restaurants and entertainment areas, as well as retail spaces, homes and commercial areas.
The city only has a little more than $200 million for the project — $55 million from the Miami Dade County bonds and about $150 million from a new penny tax resort.
Problem is, the estimated cost of the 52-acre project is $1 billion.
This is where ‘creative financing’ gets, well, creative. To come up with the rest of the money to spruce up the aging facility, county officials developed a plan that would include giving the winning developer land, in the form of a grant, said Commissioner Jonah Wolfson.
Florida Watchdog could not confirm whether the land deal is effectively a gift or a long-term lease, although the developer would get money from, for example, sales and rentals for condominiums, retail and commercial spaces.
“That’s a lot more money than you would need to remodel the Convention Center, said Wolfson.”
“I am not opposed to the redevelopment of the convention center,” said Wolfson, who favors a public referendum to decide the fate of the project. “What bothers me is that in addition to the renovations, developers are competing to profit from a trade area of over 100,000 square feet, condominiums and almost a thousand hotel rooms. These projects are incredibly valuable, and it is bizarre that the city would grant them as a gift.”
Florida Watchdog tried to contact Miami Beach Mayor Matti Herrera Bower, but she has not responded to our request for an interview.
In this video from Nov. 22, which appears on the website of the city of Miami Beach, developer Portman CMC, estimates the entire project would cost $800 million.
Ambrish Baisiwala, CEO of Portman CMC, says, “The renovation of the convention center will cost between $250 and $300 million, while $500 to $550 million more will be earmarked for the construction of the hotel, a commercial area, residential and other offices, public spaces and parks.”
In addition to money from the hotel ground lease and the $200 million from the city, Baisiwala said, private investors will help pay for the development of the commercial and retail elements.
Portman CMC originally planned to demolish the historic Jackie Gleason (Fillmore) theater, but had a change of heart when people protested the move. The firm announced it intends to include the historic site in its renovation plans.
A South Beach ACE representative — one of the finalists bidding on the project — in this video Nov. 11 says, “When we finally all agree on the master plan, there will be profits generated by these lease transactions and this could eventually be used for the renovation of the Convention Center.
“We’ll put the money toward the construction of the hotel. We will rent you (the city) part of the land for a period of time so that you will have money.”
In another presentation about the project, South Beach Ace said the public segment of the project would cost between $450 million and $500 million.
Commissioner Wolfson also expressed concern regarding the players involved in the project. The former city’s procurement director, Gus Lopez was arrested in a separate case. The charges include racketeering, money laundering, bribery, bid tempering, unlawful compensation and official misconduct.
“One of the developers has on their team a former commissioner who served for one year, Victor Diaz.” Diaz is a lobbyist for South Beach ACE.
“I think the mayor and commissioners are desperate to get going on the project because they have waited such a long time, but I think is a bad deal for the city,” said Wolfson. “I’m also upset that this can’t be done faster, but I think we should just start with the remodeling, nothing more.”
Meanwhile, Wolfson has formed a Political Action Committee to get the 4,500 signatures necessary to put the project to vote. So far, he has collected $15,000 dollars from the Fontainebleau hotel, one of the organizations that submitted a bid and lost. So far the commissioner has collected 3,000 signatures, but 1,500 are still needed.
“The best way to get a good deal is to have the citizens decide and we are gathering signatures,” he said.
The next meeting is Wednesday in the Miami City Hall.
Watch the video with Commissioner Jonah Wolfson:
Contact Marianela Toledo at Marianela.Toledo@FloridaWatchdog.org