340 Million Ballpark Parking Coverup Needs Firm Action
Written by Michael Lewis on October 16, 2008
By Michael Lewis
Miami commissioners should be livid. Taxpayers too.
There it was on our front page: the city manager low-balled construction of baseball parking by at least $56 million and said it would break even thereafter although he had a study saying it would lose $8.3 million a year.
And despite two studies, one putting stadium parking construction at $150 million and the other at $156 million, and despite telling consultants June 27 to plan for the $156 million version, City Manager Pete Hernandez says he’s sticking to a $94 million estimate.
Mr. Hernandez didn’t tell his commissioners about the first study, dated Oct. 25, 2007, when he led them to approve what they were told was a $94 million, breakeven garage.
Yet the study from the Miami Parking Authority, the city’s parking expert, put the cost at $150 million and showed that the city would lose $290 million leasing it through the 35-year term with the Florida Marlins.
Since that first study, national realty firm Jones Lang LaSalle, which the city hired in part to coordinate the parking concepts, updated construction to $156 million; it’s likely to soon rise again.
The parking authority refused to join the deal because it anticipated losses. CEO Art Noriega told Jones Lang LaSalle in June that 6,000 spaces weren’t needed, garage use should be limited and the neighborhood could absorb most parking for games.
Yet the manager, ignoring the city’s experts, feels 6,000 spaces can be built for $94 million. Perhaps he gets that feeling from Mayor Manny Diaz, who plans a stadium as his legacy when he leaves office next year.
Mr. Hernandez also said the city would break even if the Marlins paid the city $10 a space, then resold to the public for more.
Yet the parking authority study that Mr. Hernandez possessed said that if half the spaces yielded $10 and the other half $15, the city still would lose $8.3 million. He also knew the Marlins would get the best 250 spaces free.
Adjusting for those changes, annual losses would hit $9.7 million — $340 million over the 35-year obligation to the Marlins. Even knowing that, Mr. Hernandez until recently insisted a garage would fund itself without tax use.
Last week, questioned by a Miami Today reporter about the numbers he knew long ago, he said the city will need Convention Development Taxes to fund "maybe as much as half" of the parking facilities.
That painful revision assumes record tax collections. The troubled global economy, however, makes that gamble on more and more visitors paying higher and higher hotel rates dicey.
Armed only with the manager’s low-balled figures, commissioners voted for a deal to build parking for 6,000 cars in a single garage that they were told would cost $94 million.
The manager then changed that plan in June to a $156 million project with three garages instead of one, with 950 of the 6,004 spaces in open surface lots, eating more city-owned green space at the old Orange Bowl site. No land cost is included — just another city giveaway.
At the same time he added a new wrinkle: attach residential and retail units to the garages, raising total construction to $185 million in the Jones Lang LaSalle report.
Yet he hasn’t brought any of the changes to the commission. "It’s a horrible business," says Commissioner Tomás Regalado.
Now realistic construction costs and the losses are out in the open instead of hidden away in the manager’s office. But the Marlins’ sweetheart deal is already cut. The losses fall on taxpayers, thanks to false assurances.
If commissioners aren’t livid, they just don’t care. The deal stuck them with unexpected hundreds of millions. Plus, it relies on convention tax revenues committed for 35 years that may shrink, forcing the city to divert general funds to pay for parking losses.
The city, in other words, made a 35-year policy decision based on figures that were dead wrong.
As the Marlins now pay for planning, deadlines have passed for final parking and other ballpark contracts. Negotiations continue. If the stadium dies, the city, the county and the team are each required to pay one-third of the Marlins’ costs. The longer we wait, the higher the bill if this lopsided deal is aborted, as it should be.
But now a larger, darker cloud impends: the economy. Government is facing rising needs and shrinking revenues. Another stadium in such chaos is unaffordable luxury.
Bonding has frozen. Even if a stadium or garages could get funded, they’d face far higher interest than projected, multiplying costs.
For taxpayers’ sake, the city and county should halt talks now, pay the team for its work and target more timely missions.
Besides aborting a $340 million parking drain, it would save the city $13 million pledged to a stadium and preserve our Orange Bowl site for a greater community need. It would also save the county $347 million.
City and county commissions must start digging more deeply into information paid managers hand them. In bad times, they can’t shrug off hidden facts or tolerate low-balled figures.
County Commissioner Sally Heyman has repeatedly asked for costs of stadium-related infrastructure. Since the city, not the county, would pay to move streets and utilities, city commissioners must do the same. But City Manager Hernandez has been evasive about such costs.
Mr. Hernandez may feel $94 million will do what experts advise him will cost $156 million, and he might want to tap taxes for $340 million when he forecast breakeven, but he should have told commissioners out loud and in public what the experts said before a vote led the city to a 35-year sinkhole.
Commissioners must find courage to direct the manager so that no such cover-up occurs again.