Miami-Dade County

August 6, 2014

Miami-Dade aviation department recommends scrapping Airport City project

Mayor Carlos Gimenez said he wants to further study the issue before making a decision.

Miami International Airport has formally advised Miami-Dade County Mayor Carlos Gimenez to reject a much-ballyhooed development that has been in the works for more than six years.

Gimenez informed county commissioners in a memo late Wednesday that he was reviewing the recommendation by Aviation Director Emilio González but had yet to make a decision.

“Due to MIA’s importance as the top economic engine for our community, I will be conducting a full and exhaustive review of all our options,” Gimenez wrote.

The mayor said he would meet with the airport’s financial advisors and ask commissioners on a transportation and aviation committee for their opinions before weighing in.

“My Administration’s final decision will prioritize what’s best for the future positive growth of MIA and making sure it remains one of the world’s premier airports,” he wrote.

Airport City’s demise had been foretold last month when developer Odebrecht USA warned it might sue the county if Miami-Dade rejected the project. González, who took over the aviation department last year, had asked his staff to reconsider whether the public-private partnership on valuable property just east of MIA still made business sense. Airport City was initially proposed in 2007.

No, it didn’t, aviation administrators concluded — even after Gilberto Neves, Odebrecht’s chief executive, said the company might go to court to seek damages and reimbursement of the more than $11 million it had spent on the project.

“Based upon updated air traffic forecasts, improved market conditions, the best interests of Miami-Dade County, the traveling public and our airline partners, I must recommend that the County withdraw the proposed development of Airport City,” González wrote in his July 29 recommendation.

Odebrecht USA executives were not available to comment Wednesday night. In the past, they have suggested that politics is the real reason Miami-Dade leaders have stalled the project.

While Odebrecht USA is based in Coral Gables and has worked extensively for the county, the company’s Brazilian parent company has an affiliate operating in Cuba — a concern for some local Cuban American politicians.

State lawmakers went as far as to approve legislation in 2012 that would have prohibited the county and any other Florida government from hiring Odebrecht USA, but a federal judge ruled it unconstitutional.

González, who has maintained that the Cuba relationship is not part of his purview, made no mention of the issue in his three-page recommendation. Instead, he outlined the history of the project, which came up in the depths of the economic recession as a way for the airport — in debt for a $6.4 billion capital-improvement program — to expand without spending additional public funds.

González’s administration had already downsized the original Airport City, envisioned at first as a 33-acre development expected to bring in half a billion dollars to the county over 50 years, to a nine-acre project featuring a 400-room hotel.

The reduction would allow MIA to build more off-gate airplane parking spaces to keep up with demand from international carriers. In March, Odebrecht and the county had agreed to terms for the developer to build and manage the hotel and pay rent to MIA.

But then the aviation department looked into whether it could finance, construct and operate the hotel on its own and found out it could make more money — an assertion that surprised some commissioners, who said in July that they worried about taking on that financial risk.

González wrote that a county study showed a five-year return of $18.5 million to the county, including parking revenues, for a self-financed hotel — compared to $5.2 million with a private developer. The gap grows as time goes on, according to the study.

“To mitigate some of the risks associated with self-financing, MDAD will retain the services of a highly qualified private firm to oversee the project and ensure that it remains on time and within budget,” he wrote. “It is worth nothing that other leading U.S. Gateway airports have self-financed airport hotels, including San Francisco, Denver and Dallas/Ft. Worth.”

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