Carrental Firms Threaten To Boycott Intermodal Center
Written by Dan Dolan on February 22, 2007
By Dan Dolan
National car-rental chains say they’ll back out of lease agreements and sink Miami International Airport’s $1.3 billion mass-transit hub if local fleet owners’ demands for larger, disproportionate space at the new facility are met, state and county officials revealed last week.
Miami-Dade County commissioners, county aviation director José Abreu and Florida Department of Transportation District 6 Secretary Johnny Martinez said national fleets are insisting that customer-service areas, parking spaces and maintenance bays be allocated proportionate to market share, which would give eight local companies a combined 1.2% of space at the airport’s Miami Intermodal Center auto-rental facility.
But small fleets want nearly 25% of the space, said Mr. Abreu, who recently held a series of negotiations to end the 6-year-old dispute. He said local firms now hint they’ll scale back some demands, but the national companies are threatening to walk away from the project.
If that happened, the intermodal-center project, which also includes an airport MetroRail link, would have to be scrapped because the state wouldn’t have enough money to finish the job, Mr. Martinez said.
The state used a $3.25-per-car daily rental surtax and lease agreements with eight national giants and eight local firms to guarantee construction bonds for the center, Mr. Martinez said. Without the national companies’ surtax fees, there wouldn’t be enough cash to repay the loans because big fleets generate 99% of the revenue, he said.
Under a complex agreement negotiated nearly a decade ago, the state manages project financing and construction, officials said. The county is responsible for dividing space at the car-rental center and overseeing operations.
That agreement also imposed the rental surtax and divided rental-center space based on market share. All 16 car companies inked the deal even though a market-share split gave national chains about 99% of the rental facility, Mr. Abreu said.
About six years ago, small fleets said they needed bigger facilities to be able to compete against the national giants. Miami-Dade commissioners Dorrin Rolle, Jose "Pepe" Diaz and Joe Martinez back the local companies. Mr. Rolle is pushing to change the original agreement and give local firms about 25% of the auto center.
Commissioners Carlos Gimenez, Sally Heyman and Diaz say the big companies are threatening to pull out of the deal.
Commissioner Martinez said he doesn’t think that would happen, but other officials aren’t so sure.
"This is very serious," Mr. Abreu said. "The national car companies aren’t bluffing. The truth is they can go elsewhere. They don’t need to be based at the intermodal center to do business. I think they’re prepared to walk away if they don’t get what they want."
Johnny Martinez said the county and state government can’t really stop them. "The big companies can’t be forced to sign an amendment to the original agreement," he said. "They can simply walk away from the project and leave us without a funding source. Or they can sue. I think their chances in court would be very good. This is making me very nervous because the project funding is now in jeopardy."
Until the issue is resolved, Johnny Martinez said, he will not award a $300 million contract for the next phase of construction, which was scheduled to begin this year. He said delays could drive up project costs.
The state official said he is negotiating with a builder who agreed to drop his price after bids for the project came in $100 million higher than original estimates. If the car-rental dispute doesn’t end quickly, the builder might be forced to raise prices, he said.
Florida has spent $600 million on the job. Johnny Martinez said the state would ask the county to cough up the cash if the project dies.
"We need to sort this out very, very soon," he said.
He agreed to give the county another 30 days to negotiate a settlement between the car companies. But Mr. Abreu said he’s not convinced that is in the cards.
"I’m at a loss. This is very frustrating," Mr. Abreu said. "The huge companies won’t agree to any amendment to the original agreement. The small companies have moved a little, but there’s entrenchment on both sides."
The dispute may actually be more about money than space allocation, business leaders and government officials say. People familiar with the fight suggest the local fleets want a bigger slice of the pie simply to drive up the price if they chose to sell their combined holdings at the rental center to the national companies.
"Right now, only the 16 original companies have any right to operate at the intermodal center," Johnny Martinez said. "They are locked in. No one else can come into the facility. I’ve heard it would be possible for any company to sell its allocation."
He said he didn’t know if small fleets intend to sell their shares of the operation. He declined to discuss the issue.
A spokesman for the local firms did not respond to inquiries about the dispute.
National chains’ representatives declined to comment because the matter is pending before the county commission.