Three Omni Catalyst Projects Could Garner 43m In Tax Rebates
Written by Yudislaidy Fernandez on May 21, 2009
By Yudislaidy Fernandez
With one tax rebate agreement approved and two in the pipeline, the Community Redevelopment Agency is banking on these projects — which could receive a combined $43 million in tax rebates — to serve as catalysts for the Omni area’s redevelopment.
But Miami Commissioner Marc Sarnoff, whose district includes the Omni area, warns that the Omni redevelopment agency has to be cautious in approving these economic incentives. Otherwise, it might overpay for job creation and development, he said.
He asked at Monday’s agency board meeting for more time to review the agreements before a vote.
"I want to see development, but at what cost?" he said in a later interview. "I need to understand what these agreements mean before giving money to millionaires."
Mr. Sarnoff says he plans to do a cost-benefit analysis on both projects.
Omni Mall owners are requesting a $7 million tax rebate for their renovation project and Miami developer Tibor Hollo seeks a $16 million rebate for the Sonesta Mikado Hotel.
The agency has long thought of tax increment funding rebates as an incentive for developers to build within the agency’s boundaries, said Executive Director Jim Villacorta, encouraging them to build projects faster and get them on the tax roll.
The redevelopment agency fills its coffers by setting a base value for the area’s real property and receiving for agency use the tax increment above the base level as property values rise.
Omni Mall owner New York-based Argent Ventures requested this tax rebate about a year ago but several parts of the agreement took time to negotiate, Mr. Villacorta said.
One delay was getting the developer to offer an easement of the right-of-way to the city for a traffic circle at North Bayshore Drive and Northeast 17th Street, which the capital improvement department is planning, he said.
The mall owners were also pushing to include adjacent condo properties they own in the rebate deal, he said, a request the agency denied.
Another concern for Commissioner Sarnoff is the future impact the tax rebate handouts could have in the redevelopment agency’s bonding capacity.
The Omni agency is conducting a finding of necessity study that could lead to a possible expansion of the district’s boundaries and allow the issuance of bonds to finance further redevelopment of the area.
But Mr. Villacorta said when the agency did bond projections it included in its calculations some of the developments slated for the Omni area — except for the Sonesta Mikado Hotel project, which was announced earlier this year.
Once developments rise, he said, the agency is to collect more in tax increment funding than it did when the land was vacant or smaller structures occupied it.
"Hopefully, these projects serve as a catalyst to entice other developers to come and build in the area," Mr. Villacorta said. "We are not collecting TIF [tax increment funding] to collect TIF. We need to spend it on things that will help the [local] economy."
Developer Hollo is requesting a $16 million rebate for his $100-plus million, 36-floor Sonesta Mikado Hotel to rise at 1701 NE 4th Ave. The project is to employ about 600 during construction, Mr. Hollo said, and another 300 to run the upscale hotel.
Omni Mall owners are asking for a $7 million rebate for the $140-plus million Omni Mall revamp the property is undergoing. The project encompasses a 350,000-square-foot, mixed-use office development, 16,000 square feet of retail and renovation of a 527-room hotel, located at 1501-1701 Biscayne Blvd.
The renovated complex is to create 700 full-time office positions within five years and 100 full-time retail jobs within three years, the incentive agreement shows.
The completed hotel component already employs 245 people and is to add 17.
Developers are not to receive the tax rebates until the promised investment and job goals are met. If target investments and deadlines are not reached, the rebates are proportionally reduced.
The agency’s board last month approved the redevelopment agency’s first tax rebate agreement.
Local developer Ignacio Garcia Du-Quesne is to receive a $20 million rebate following completion of Bayview Market, a $200 million retail and office project at Northeast Second Avenue and 17th Street set to begin construction next year.
Area developers and business owners are often knocking at the agency’s door for economic incentives, Mr. Villacorta said. "Developers come in every day asking for incentives."
But for now, he said, no other projects are in the pipeline to receive tax rebates.
"None are definite enough to bring to the [CRA] board."