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Front Page » Opinion » County should carefully vet Miami Worldcenter incentives

County should carefully vet Miami Worldcenter incentives

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Written by on January 7, 2015

County should carefully vet Miami Worldcenter incentives

Incentives that Miami commissioners OK’d unanimously last week could hand Miami Worldcenter up to $90 million in tax rebates at almost no cost to them.

That’s a giveaway to people who for a decade have been trying to build the project and now are in a perfect climate to do so. Nobody has made a convincing case that they wouldn’t proceed without money that the city aims to hand them.

The multi-block development would turn underused Park West into a mega-complex of hotel rooms, retail stores, offices, convention space, residential units, parking and more and create a whole new feeling just north of downtown. If it succeeds, it would be a high-profile urban asset.

In return for up to $6.889 million yearly through 2030, developers would have to build the project and see its value rise. Rebates would be up to 75% of increased taxes their properties and others nearby would pay as they were put to use. But no matter how much values rose, $6.889 million a year would be tops.

It would be easy to make a case for rewarding developers for taking a chance on a $1.75 billion project if this were 2008 in the midst of a downturn. But today, Miami’s skyline is once again covered in cranes east of I-95 and we’re in the midst of a boom.

Just south of downtown, Swire is developing Brickell City Centre, which itself will probably cost above $1.75 billion (the announced cost remains $1.05 billion, but the expanse has grown and construction costs are up 25% to 30% since work began). Swire, however, started during the recession and without government incentives.

A key difference is that Park West is not Brickell Avenue and won’t be. It’s not yet comfortable for walking or visiting. Miami Worldcenter should help change that.

The other difference is that Miami Worldcenter is beside Overtown, a community of high unemployment. The city’s sole stated benefit from the deal is that the area would get top preference for construction and permanent jobs at Miami Worldcenter and that three area businesses would get project space at 20% reduced rent.

But even the job preferences are squishy. They’re goals, not mandates. They’re only 30% of unskilled construction labor jobs and 10% of skilled labor. And via a sliding scale, developers could meet the 30% and 10% goals by hiring from anywhere in Miami-Dade County if they don’t get qualified people from areas of underemployment.

Employers would first look within the redevelopment area. Then they’d look in Overtown. Then they’d go to targeted Miami zip codes. Then they’d look anywhere in the city. Then they could look in targeted county zip codes. Last choice is the whole county. At the end of that, they’d need 30% of their total unskilled workers and 10% of their skilled team. They could fill the other 70% of unskilled jobs and 90% of skilled jobs anywhere on the globe.

And what would they have to pay? At least $463 for 40 hours for unskilled jobs with health insurance or $513 without. But contractors today are falling all over themselves to find construction help, and 39,600 people in the county are working in construction. So those targets are probably below the going rate, not a goal to meet.

Nonetheless, those are the big concessions from Miami Worldcenter to get tens of millions of dollars.

This clearly is no deal where the city expects a payback. It’s not a deal to get a development that private enterprise wasn’t already itching to do. And it’s not a large-scale creator of good jobs in a poverty area – developers could meet goals without hiring a single person from Park West or Overtown.

The deal was a quickie, voted on between Christmas and New Year’s at the developers’ behest. When was the last time five city commissioners gathered in that week? Probably never.

But that doesn’t say it’s a done deal. Miami-Dade County commissioners must vote on the budgetary impact: money that would have stayed in Miami Community Redevelopment Agency coffers or gone to the county will now go to Miami Worldcenter.

Will the county rubberstamp the hurry-up action or question the need for and public benefits of the deal in returns for many millions in tax rebates?

Worldcenter developers also plan to ask the county to issue municipal bonds at lower interest for some of their infrastructure. Developers would repay part or all of the bonds from the tax rebates.

Meanwhile, Miami Worldcenter is dealing with Miami’s parking agency to jointly develop parking.

And developers of the Marriott hotel and convention center complex that is part of Miami Worldcenter are expected to cut their own deal with the Community Redevelopment Agency for more tax rebates.

Complicating all these moving parts, it’s equally hard to pin down just who’s involved. Six separate limited liability corporations are part of Miami Worldcenter, with geographic pieces of the project’s six-segment first phase owned by different groups. The second phase would add two more segments.

The 85-page agreement with the Community Redevelopment Agency names no individual owners. If government knows who they’re dealing with, they’re not saying. And as any business owner knows, a contract is only as good as the people involved.

Not that we know of anything wrong with anyone involved. We just don’t know who is involved. And because we don’t, we become even more curious why they had to rush a deal through within days during the holidays.

Government errs when it skips deliberation. Just recall the Marlins stadium vote. Afterward, county commissioners said they hadn’t gotten facts they needed. Or think of David Beckham’s big land rush for a public waterfront site for a soccer stadium.

Any business seeking a handout – even if it happens to be good for taxpayers – would like to rush it through without public scrutiny. It’s easier to get things done when nobody’s looking.

Miami took a cursory look. Now the ball heads for the county’s court. Let’s hope they lay out and consider all the facts before they act.

6 Responses to County should carefully vet Miami Worldcenter incentives

  1. VICTOR

    January 7, 2015 at 9:27 pm

    Really!, like Miami doesn’t have enough issues with traffic as it is. A city were commissioners and mayors turn their back on public transportation, on expanding the train and making it more accessible. Things have gotten so bad here in Miami, that you travel only if have too.

  2. Gerwyn Flax

    January 7, 2015 at 11:10 pm

    On most issues i usually agree with you, but on this particular project, i beg to differ. Regarding Overtown, unemployment is high, but why styme a project that just might change that? Even a twenty percent increase in employment would be significant for this area. Why cast a shadow on the company and its proprietors, when it is the City’s resposibility to fully vet the issues, holiday or not. This area of downtown has for decades been neglected by the city and the few makeshift entities that still exist. Now comes a company/ companies willing to take the financiaal risks to rebuild the area, and every month there is an issue, seemingly all in an effort to delay or derail the project. Every builder/developer seeks concessions from the City. It’s the nature of big business these days. The City must find the right balance between concessions for the company, and the need to attract businesses that provide good employment for its residents. I think this is the one project that should be built in Miami. When compared to City Center, it provides for employment and gentrification of an area that sorely needs it.

  3. Frank Schnidman

    January 8, 2015 at 1:13 am

    Dear Michael;
    The last time I remember 5 City Commissioners gathering between Christmas and New Year’s was when they as the CRA approved the Global Agreement for the Marlins Stadium Deal.
    Excellent analysis. And, hopefully, the County Commission will look at this “Economic Incentive Agreement,” and under its authority as recognized in the Agreement in Section 4.2, they will say “NO” this year, and every year when the SEOPW budget is sent to them for approval. This would in effect end the viability of the Agreement.
    But in denying approval of the CRA budget for this item, the County Commission should make it clear that the Community Redevelopment Act itself does not authorize a CRA to act as an economic development agency, and an Opinion of the Florida Attorney General clearly makes that point. The mandate of a CRA is the alleviation of slums and blight and the provision of affordable housing, and the SEOPW CRA is way out of its league when playing economic development agency. Just compare the approach the CRA took in this deal that clearly awarded this grant of public tax dollars to a developer who according to the agenda package back up material and the discussion at the Board meeting simply did not need this money to make the project happen, compare it to the approach the State of Florida’s economic development agency Enterprise Florida takes when it enters into a Tax Refund Agreement–see Florida Statutes section 288.106 (4), (5), (6), and (7).
    When you take a moment and reflect on what the SEOPW CRA did with its gift of tax money from the CRA Trust Fund, money earmarked for the alleviation of slums and blight and the provision of affordable housing, to Worldcenter was to play reverse Robin Hood–they stole from the poor to give to the rich.

    Professor Frank Schnidman
    School of Urban and Regional Planning
    Florida Atlantic University

  4. DC Copeland

    January 8, 2015 at 10:13 am

    “Will the county rubberstamp the hurry-up action or question the need for and public benefits of the deal in returns for many millions in tax rebates?”

    I expect county commissioners to rubberstamp the deal because they’re not much different than their Miami bedfellows. Oh, there might be some kind of grandstanding for the public record, but in the end they will elbow those already in bed with the developers to move over.

  5. mike

    January 8, 2015 at 12:55 pm

    I don’t understand your argument, or lack of one? You would delay this massive project that will provide hundreds if not thousands of jobs to negotiate? You think dirt lots and homeless shelters better serve our community? People wait 10 or 20 years for projects because the “right” person doesn’t get a cut, or the “right” company doesn’t get a contract. These tax breaks are nothing in the big picture, unless the “right” people haven’t been paid.

  6. Ben Grimm

    January 9, 2015 at 3:39 pm

    We MUST to keep the never-ending cycle of boom and bust going here at an accelerated rate. It wouldn’t be Miami if it didn’t take off like a rocket and come crashing down just as spectacularly.

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