County should carefully vet Miami Worldcenter incentives
Written by Michael Lewis on January 7, 2015
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.