Miami commissioners will vote Thursday on a lucrative contract to rebuild a seven-acre parcel of waterfront property next to City Hall.
If the commission approves the 50-year lease with Grove Bay Investment Group — the only group that bid on the project to redevelop Grove Key — the project will go to voters in November.
City leaders say it’s a good deal because it promises to bring in a minimum guaranteed annual rent of $1.8 million — with the potential for more. That’s $1 million more than the city currently receives in lease payments from the Chart House, Scotty’s Landing, and the Grove Key Marina.
The Grove Bay Investment Group is backed by Eduardo Garcia and Giraldo Leyva Jr. It plans to build three restaurants, including a Shula’s Steak & Seafood and a high-end Peruvian restaurant, as well as a boat-storage facility. It will also manage the retail space in the planned parking garage and help pay for its construction.
The proposed 50-year lease on the land includes two option periods for 15-year extensions, which would take the lease to 80 years.
The city required the group to deposit $7 million in an escrow account to assure that it had the liquidity to finance the project. In addition, Grove Bay promises to invest more than $17.5 million on the development.
“This is a good deal for the city,” said Mayor Tomás Regalado. “I think the reason why there weren’t many bids on the project is because we asked for so much money in escrow and in investments.”
But Stephen Kneapler, one of the five members of the committee that analyzed the bids, is now threatening to sue if the commission takes a vote on the project.
He said that the city ignored either the state’s Sunshine Law or its own “cone of silence” by closing to the public a June 4 meeting in which the two original bidders presented their proposals, yet allowed Commissioner Marc Sarnoff’s chief of staff and the director of the Miami Parking Authority (MPA) to attend.
The cone of silence prohibits communication between potential bidders and city staff.
“You can have an open meeting or you can have a closed meeting. But you can’t have a meeting where you allow only certain people who are not part of the selection committee to attend,” said Alejandro Vilarello, a former city attorney who is representing Kneapler.
The second group that bid for the project, Veleta LLC, dropped out of the running prior to the committee’s final meeting on June 26.
Miami-Dade County’s Commission on Ethics & Public Trust is now reviewing Kneapler’s complaints.
Sarnoff said his chief of staff, Ron Nelson, asked for permission from city officials before attending the meeting. “Should he have been there? He asked and the city said, ‘No problem,’ ”, Sarnoff said. “He relied on that information.”
The commissioner added that Nelson did not tell him anything about what was said during the meeting and that “there was no communication” between his office and the bidders.
The city’s legal department says that no rules were violated.
In a memo sent last week to the Ethics Commission and to Vilarello, Assistant City Attorney Kevin Jones said the meeting was considered exempt from the Sunshine Law. He also pointed to an exemption to the cone of silence for oral presentations before selection committees.
Commissioner Francis Suarez, who says he supports the project, believes that the Ethics Commission should investigate any allegation of potential wrongdoing.
“I also think they should investigate the entire process, including members of the selection committee,” he added.
His comment was an apparent reference to Kneapler himself. He was once a business partner of former Mayor Manny Diaz in Monty’s restaurant, just a few blocks east of the Chart House. Vilarello said his client has no financial interests in the Grove Key deal.
Attorney Richard Perez, who represents the Grove Bay Investment Group, assured that any potential violations of the cone of silence have nothing to do with the project’s integrity.
“By all measures, this is a great deal for the city of Miami, when you look at what happened last year and compare it to what you have today,” he said. “If the city had moved forward with its [request for proposals] last year there would have been only $1.2 million in minimum guaranteed rent. Now you have $2 million in guaranteed rent.”
Grove Bay has agreed to pay a $2 million minimum guaranteed rent per year if the MPA builds a four-story parking garage on the site in less than two and a half years after the lease is signed, said Henry Torre, director of public facilities.
“The MPA has stated that the garage can be built within 18 months, so we are very comfortable that we will accomplish this deadline,” he said.
Last year, City Manager Johnny Martinez scrapped controversial requests for proposals on the Scotty’s parcel and the Chart House parcel after complaints about how the process was run. The city issued the new request for all seven acres of the property in January.
Commissioner Frank Carollo said the proposal isn’t bad: “Without finishing reviewing and analyzing all the documents, it appears to be a much, much better deal than what the city has done in the past.”