To bring a major expo center and commuter trains downtown, Miami commissioners may be asked to commit more than $150 million in redevelopment agency and city money to the two projects, the Miami Herald has learned.
But in order to spend city dollars on Tri-Rail’s Coastal Link or the Miami Marriott Marquis World Convention Center, commissioners might have to override the mayor’s veto.
The parent companies of All Aboard Florida and Tri-Rail, and expo center developer MDM Development Group, have talked to Miami’s elected officials recently about subsidy packages that would help finance a larger convention center and hotel on the old Miami Arena site as well as the addition of a Tri-Rail terminus at All Aboard’s MiamiCentral Station.
Tri-Rail, which has announced that it needs $69 million to run its passenger trains into downtown by piggybacking on All Aboard’s Orlando-to-Miami rail project, has been able to secure about $29 million in soft pledges from the state and county. That leaves $40 million to be provided by the city and its Omni and Southeast Overtown/Park West community redevelopment agencies.
Across the street from MiamiCentral Station, MDM Development may need $115 million in tax rebates through 2042 to build the $700 million, 1,800-hotel room project approved by city commissioners in October, according to documents obtained by the Herald. Without the money, the developer may build a smaller project.
On Tuesday, representatives of MDM and All Aboard owner Florida East Coast Industries sat down in back-to-back meetings with Mayor Tomás Regalado. Afterward, the mayor told the Herald that he thinks both projects are important for Miami, but he has serious concerns about the public financing.
In both cases, the city might be asked to contribute so-called “clawback” dollars — property taxes paid to the Overtown CRA and then transferred into Miami’s general fund. In Tri-Rail’s case, the city also has been asked to take out a loan to finance improvements needed to extend a MiamiCentral transit platform 50 feet above the ground and lay two Tri-Rail lines.
Regalado said providing clawback dollars would be an end-run around a public referendum. He also said that MDM discussed a scenario in which the city would guarantee subsidy payments in later years should the Overtown CRA expire in 2030 as scheduled, and not be extended by the county through 2042.
“To commit property tax dollars to a private venture, I was not supportive of that,” Regalado said of the expo center. “My position was very clear that I won’t be supporting any use of the city’s property tax dollars after the CRA expires, or even floating bonds against the general fund to support that project.”
Regalado also said he would veto any attempt by the city commission to commit general fund dollars to Tri-Rail or issue bonds for the project.
“I can’t support to compromise the general fund of the city of Miami just because Tri-Rail would be a good thing for downtown Miami,” Regalado said.
The mayor’s position could be a complication for both projects, which supporters believe could improve traffic and business in the downtown area. Jack Stephens, executive director of the Tri-Rail parent company South Florida Regional Transportation Authority, says the commuter train has only a matter of weeks to secure funding before hitting an All Aboard construction deadline.
Stephens said if the city issues bonds to finance Tri-Rail’s improvements, it would lower the debt payments on the project. The city would also “backstop” the financing — essentially guaranteeing the loan with the promise that the CRA would pay the bills.
“Any way we can lower that cost helps the overall project and is to the benefit of the taxpayers,” Stephens said. “We would absolutely encourage and love the city to participate and backstop those bonds in order to lower the cost to the project. That would just be phenomenal.”
Last week, city officials began circulating a draft resolution that would direct Miami’s city manager to negotiate with the county and Miami’s CRAs to issue bonds to fund Tri-Rail improvements and “if necessary” provide city funds to the project. The resolution was ostensibly sponsored by Commissioner Marc Sarnoff, but created by attorneys for Tri-Rail.
Sarnoff told the Herald on Wednesday that he hadn’t yet seen the resolution or signed anything, and by mid-afternoon the resolution hadn’t been placed on Miami’s March 12 commission agenda. Sarnoff said he supports the general idea, but isn’t married to using Miami’s money.
“I said in concept I’d support the resolution if you put my name on it, but I’d not seen and not been versed in the particulars,” he said of the resolution. “It’s got my name on it, but it only becomes my draft when I say it’s my draft.”
On Tuesday, minutes after he met with Regalado, Florida East Coast Industries senior vice president of corporate development Jose Gonzalez stressed that All Aboard endorses public funding for Tri-Rail, but isn’t requesting public money for its own project. He said he met with the mayor to update him on the project, not negotiate for subsidies, even though the topic came up.
He said All Aboard will build with or without Tri-Rail. But construction needs to begin very soon. If Tri-Rail isn’t included in the downtown project, Stephens said that likely closes the door on extending the commuter line not just to downtown, but also to Midtown and up through Aventura along the FEC tracks.
“We believe 100 percent that the public sector should work with Tri-Rail to get to downtown Miami,” Gonzalez said.
Sarnoff, who sits on the county’s Metropolitan Planning Organization — which he called “dysfunctional” — said the city commission ought to consider what it can do to improve traffic in Miami.
“I’m faced with the fact we have a traffic problem in Miami that needs to be solved, unfortunately probably at a commission level,” he said.
Complicating matters, credit agencies just improved Miami’s dismal bond ratings, which could be affected if the city were to take on more debt. Also, talks to provide subsidies to Tri-Rail and MDM come on the heels of a controversial $88 million tax rebate package paid by the Overtown CRA — which is governed by Miami’s commissioners — to the Miami Worldcenter. The agreement was not the first of its kind in Miami, but has intensified criticism of “handouts” for developers.
The expo center was at one point part of the Worldcenter project before being sold to MDM. Documents provided to Regalado on Tuesday show that the Overtown CRA might be asked to pick up an even larger tab for the expo center than what it’s paying the larger Worldcenter.
MDM attorney Javier Fernandez, however, said the financial projections — which in fine print state “may not be relied upon in any way for any reason” — are not part of an official request. He said MDM has not yet decided how or if to proceed with a request for public assistance, though convention centers are typically subsidized.
He said Tuesday’s meeting with Regalado was exploratory, and the conversation generally hinged around whether the city will consider renegotiating an agreement with Miami-Dade County to allow MDM to recoup a larger portion of its property taxes. Right now, Fernandez said, the developer can be returned half of what figures to be a $7 million property tax bill, because that’s all that’s paid to the CRA. He said to finance the 400,000 square feet in convention space and 1,800 hotel rooms pitched to the city in September, the developer likely needs to pay 95 percent of its taxes to the CRA, and receive 75 percent of that money back.
Should that happen, MDM projects it would receive $115 million in rebates through 2042. Fernandez, an attorney with Stearns Weaver who also represents Tri-Rail, said that amount, when inflation is considered, equals to about $60 million in today’s dollars, which is what MDM would need to build were it to receive money upfront similar to the McCormick Place expo center in Chicago.
Without any public money, MDM projects it might build 1,000 hotel rooms and 200,000 square feet of meeting space. The value of the project would also be cut in half, to about $350 million.
“This is a project that will further cement downtown’s place in the local region as a center for convening and significant regional activity,” said Fernandez. “It’s a project that will generate 1,300 direct jobs in terms of full-time employment, not to mention it will result in significant ancillary development.”
Fernandez skirted questions about whether MDM floated the idea of having the city guarantee subsidies beyond 2030, but he did say he thought the meeting with Regalado went well. “I think he recognized MDM plays a crucial role in downtown’s revitalization,” Fernandez said.
Regalado said he doesn’t want to block important projects. But he said if it comes down to city funds, commissioners will have to override his vetoes with a four-fifths vote.
“I know I’ll be criticized,” Regalado said. “But I’d rather be criticized and not compromise the future of the city of Miami.”
Who wants public money and why:
- The South Florida Regional Transportation Authority: The parent company of Tri-Rail says it needs $69 million to connect to the FEC tracks and bring commuter trains into downtown Miami at All Aboard Florida’s MiamiCentral Station. With roughly $20 million set aside by the Florida Department of Transportation, and another $8 million tentatively pledged in county transit funds, Tri-Rail is seeking $40 million from the property taxes generated by All Aboard’s project. The city has also been asked to issue bonds to finance the project and lower debt payments.
- MDM Development Group: Internal projections show that the developer of the Miami Marriott Marquis World Convention Center believes it needs $115 million in property tax rebates over 23 years in order to build the 1,800-room, $700 million expo center approved by the city in September. An attorney for the developer said MDM hasn’t yet made a request for public assistance.