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Front Page » Business & Finance » Miami cuts Jungle Island debt to get hotel project moving

Miami cuts Jungle Island debt to get hotel project moving

Written by on August 3, 2021
  • www.miamitodayepaper.com
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Miami cuts Jungle Island debt to get hotel project moving

Miami city commissioners have approved a deal giving the owners of Jungle Island a financial break on money they owe the city, and the move is hoped to help the company get financing so it can build a big hotel at the Watson Island site.

The decision came at the commission’s July 22 meeting, but only after spirited comments from Commissioner Joe Carollo who objected to the deal. The vote was 4-1, with Mr. Carollo voting no.

Mr. Carollo opposed additional concessions to the lease holder.

“They’re crying they need (a break) after we’ve given them – I don’t know how many breaks we’ve given them,” said Mr. Carollo.

“I don’t want these characters coming up here every few months and asking for more and more. I can’t take the alligator tears,” he said.

The commission voted to amend a development agreement with ESJ JI Leasehold LLC to pay a portion of a loan given by the city to the original lessee for construction and operation of a hotel at Jungle Island on Watson Island in exchange for the project being completed by 2026.

That will require ESJ to show a certificate of occupancy for the hotel.

The amended agreement will allow ESJ JI Leasehold to pay an $8 million lump sum on the original $13.8 million loan made in April 2000 to prior lessee Parrot Jungle and Gardens of Watson Island LLC, and the remaining balance of $5,821,923 would be reduced by $2 million if paid by Jan. 31, 2028. 

The city owns the 19.3 acres at 1111 Parrot Jungle Trail known as Jungle Island. The city leased the property to Parrot Jungle and Gardens Inc. with a lease and development agreement on Sept. 2, 1997.

Miami-Dade County made a $25 million Department of Housing and Urban Development (HUD) guaranteed loan in 2001 to the prior lessee for construction and operation of the Parrot Jungle and Gardens of Watson Island project.

In 2007, city commissioners approved an assumption of an 80% interest and obligation in the HUD loan and agreed to defer the prior lessee’s obligation to pay the loan amounts from August 2006 through and including the payment due in August 2011. Deferred payments totaling about $17,277,403 – of which 80% is from the city and 20% from the county – were to be made by the prior lessee on or before Aug. 1, 2019, or over a period of 10 years with 5% interest beginning Jan. 1, 2020.

The city’s 80% portion of payments on the HUD loan comes to about $13,821,923.

ESJ has agreed to pay part of the city’s portion, or $8 million, within 12 months, following the approval and execution of a second amendment to the development agreement by the city and county. That leaves about $5.8 million as the remaining balance of the city’s portion.

The city’s Department of Real Estate and Asset Management recommended the city accept the discounts in an effort to collect a majority of a long-outstanding debt and to enable ESJ to get financing needed to complete construction of the hotel and additional improvements required in the lease.

The department’s recommendation also is to improve the city’s position on future rents from ESJ.

Commissioner Manolo Reyes said, “I want to hear from the city manager. Do you agree with this deal?”

City Manager Art Noriega said an audit of the company gives credence for the city to “take as much money as you can up front … there are more incentives to get the money sooner rather than later.”

Mr. Carollo has been a vocal critic of many of the lease agreements the city has for its waterfront properties, complaining that the city is not charging nearly enough for such highly valued land.

“The bottom line here is: this has become a hotel project,” said Mr. Carollo. “Do you know how many people would stand in line to build a hotel there? We’ll never know. We have no idea what we really should receive from the hotel.”

Mr. Reyes asked if the city could start over and put out a formal request for proposals for development on the site.

Mr. Noriega said no.

“I want to see development take place there, or we start all over again,” Mr. Reyes said.

“They are not in default so we don’t have the ability to just terminate the lease,” said Mr. Noriega.

Mr. Carollo said, “I’m biting my tongue … To me it’s unreal that someone with no bargaining chip comes up here and is dictating to us.”

Commission Chair Ken Russell went back to Mr. Noriega asking, “Does the amount of money up front outweigh the concessions? Is it a good deal for us?

“Yes. I support accelerated payment,” Mr. Noriega said.

Approved by referendum in August 2018, the Jungle Island hotel off the MacArthur Causeway would have up to 300 guest rooms atop a reconstructed parking garage.

The developer’s application describes the hotel linking to the Jungle Island theme park as well as to the city-owned Ichimura Japanese Garden through a signature stairway.

Earlier in the meeting, many residents of 1000 Venetian, a condo on a nearby island, complained of loud music late into the night allegedly coming from an outdoor venue at Jungle Island.

City commissioners directed the police chief and city administration to investigate the continuing complaints.

One Response to Miami cuts Jungle Island debt to get hotel project moving

  1. Bert Reply

    August 6, 2021 at 8:04 am

    I’m sure there is a “friendly developer” behind this deal.

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