Business Monday

Miami Beach Convention Center’s big plans

Jack Portman, vice chairman of Portman Holdings and of John Portman & Associates, an architectural and engineering firm, stands on 17th Street near Convention Center Drive in Miami Beach.
Jack Portman, vice chairman of Portman Holdings and of John Portman & Associates, an architectural and engineering firm, stands on 17th Street near Convention Center Drive in Miami Beach. MIAMI HERALD STAFF

The saga of the Miami Beach Convention Center includes an epic vision, sudden defeat and modest rebirth of a plan to update the dated facility in the name of bringing more conventions and more money to Miami-Dade.

The tired old building, lacking in space and 21st century technology that the meeting industry demands, rests in the center of a booming oceanside resort city that wants to add another layer to its allure. The Beach wants to attract big industry conventions that bring thousands of visitors and millions of dollars in economic impact to the city and region. The goal is to attract deep-pocketed business groups to come and spend money in Miami Beach.

Government and tourism officials say the 58-year-old facility lacks the kind of space and modern features that conventions now require, like a slick grand ballroom and hi-tech meeting rooms with fast telecommunications hookups.

“It’s medical and pharmaceutical. It’s computers. It’s hi-tech. It’s automotive. It’s banking. It’s all of those market sectors that would love to come here,” said William Talbert III, president and CEO of the Greater Miami Convention and Visitors Bureau. “The marketplace is looking for a shovel in the ground. They want a renovated Convention Center.”

Now, after more than a decade of planning, politics and sometimes controversy, the designs are ready, and the city is negotiating a final price with the contractor. Officials plan to take a price to the City Commission in October, which if approved, would set the stage for the project to begin in late December.

For this project, it’s the closest the city has yet come to getting a shovel in the ground.

ARC OF THE CONTROVERSY

The Miami Beach Convention Center has long been an important part of South Florida’s landscape. Built in 1957, when Miami Beach was a much sleepier resort town, its uses have grown and morphed with the demands of the growing convention business and, sometimes, events that put it in the national spotlight. Among the many historic moments it was host to: Muhammad Ali beat Sonny Liston in a boxing match in 1964. It was also home to turbulent national political party conventions: the Republicans in 1968 and 1972, the Democrats in 1972 — the era of Richard Nixon and George McGovern.

In 1989, as the tourism and convention industries flourished, the center saw the first of its major facelifts: a $92 million renovation that doubled the size of the building to four halls, as it is today. Barely a decade later, however, tourism officials again started calling for a major overhaul to keep pace with other updated convention facilities around the country.

More planning went on, and in 2013 these calls for updates by tourism officials were answered, culminating in a round of competitive bidding by prominent developers and famous architects for the redevelopment of 52 acres bounded by Washington Avenue, 17th Street, Meridian Avenue and Dade Boulevard. The likes of Dutch architect Rem Koolhaas and Danish architect Bjarke Ingels proposed grand designs to inject life into a sleepy area of South Beach.

In summer 2013, the city picked South Beach ACE, a team led by Tishman Hotel and Realty, to move forward with the billion-dollar plan to build a convention center and headquarter hotel complex with retail and parking. About $600 million in public funds would have paid for construction costs.

But it was a false start.

The project was a hot topic in the contentious election season that followed. Miami Beach Commissioner Jonah Wolfson spoke out against the size of the ACE project, leading a campaign against it. The effort eventually led to a court case that succeeded in getting the plan off the ballot in November 2013.

In 2014, a new Miami Beach mayor and three new commissioners led a change in direction: They called off negotiations with ACE, opting to start over. The new approach: Remove retail aspects and decouple the Convention Center re-do from the hotel.

Then Denver-based Fentress Architects, which was on the runner-up team in 2013, got an $11 million contract in April 2014 to design the first portion of the new plans. The architects worked with Miami-based Arquitectonica and Dutch landscape design firm of West 8, which designed the well-regarded SoundScape Park in front of the New World Symphony.

The bidding for the big-ticket project started — a solicitation that saw three of four competing firms drop out before the end. One firm remained: Clark Construction Group, based in Bethesda, Maryland. In January, lack of interest from contractors forced the city to revamp the approach when City Manager Jimmy Morales said the process lacked necessary competition on price.

“It was not going to be transparent enough for us to recommend anything to the commission,” said Maria Hernandez, the project director of the convention center district and the city official overseeing the plan.

Even after the City Commission switched to a construction manager at-risk approach — where the selected company would negotiate a price with the city after putting subcontracts out to bid — only Clark submitted a proposal. All along, a robust building market was blamed for the lack of bidders.

The city has pressed on with the riskier approach, picking Clark to finish designs and use bids on subcontracts to negotiate a final price with the city. Those negotiations continue. Hernandez and Morales will go to the commission in October with a number.

THE PLANS

Only a vote on the final price of the project remains before the city begins construction.

The city expects that price to meet the project’s construction budget of $500.3 million. The overall cost of the makeover totals $596 million, which includes design and contingency costs as well as money set aside for public art installations.

A series of government bonds is funding the project. One set of bonds will be paid for from a pot of county property taxes directed toward development in a special taxing district that includes Miami Beach’s city center and the convention building. The other bonds will be backed by a 1 percent increase in the city’s hotel tax, which was approved by voters in 2012, and parking revenue.

Designs for the renovated center include a wavy white facade adorning the exterior of the 1.4 million square-foot building, 505,000 square feet of exhibition space inside, 10 additional meeting rooms and about 870 on-site parking spaces. A vortex-shaped media screen would shine in the front lobby and adjustable LED lights would dress walls and ceilings in ballrooms.

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The goal is to complete the renovation before Art Basel — the premier annual event for the Convention Center — in December 2017.

The land across the street, which is now a 5.8-acre parking lot, will be transformed into a park by summer 2018, with a memorial honoring veterans, according to the plans.

Hernandez said she’s confident the project will stay within budget and get started on time. She and City Manager Jimmy Morales expect construction to begin after Art Basel Miami Beach this December.

“It’s been built up over all this time. This is our moment,” Hernandez said. “To me it’s very exciting. You know, it’s been such a long time coming. We’re going to deliver it.”

Morales said adding more smaller meeting spaces and bolstering the building’s telecommunications capacity will give meeting planners what they need.

“We’re taking a tired old building and making it 21st-century,” he said.

Sidney Jordan, CEO of Clark’s southern division, told the Miami Herald his firm has been working with Fentress and the city to create plans that include efficiencies in order to meet the budget. These efficiencies include placing services included in “floor boxes,” or features underneath the showroom floor that include various utility hookups, in the wall.

He said the project will not change significantly.

“No program space is cut. No parking is cut,” he said. “The efficiency doesn’t impact the experience patrons have or what it takes to operate the facility.”

Mayor Philip Levine, who was elected in November 2013, praised the current plan and called the previous deal a “massive overdevelopment” that didn’t fit in with the neighborhood.

“Now we are renovating our Convention Center ourselves, maintaining ownership of these 52 precious acres and creating something that’s more in scale with our neighborhood and the quality of life of the residents that live in Miami Beach,” he said.

Although he wishes the city could have attracted more bidders, Morales said he’s pleased with the current process because it has stayed on schedule and has not been surrounded by the noise that surrounded the last round.

“When you think about how controversial the last process was, this process has not been controversial,” he said.

THE HOTEL

Equally important, proponents say, is a separate endeavor to build a headquarter hotel next door. Lodging adjacent to the center is a deal-breaker for the kinds of corporate groups and industry meetings the facility hopes to book, according to local tourism chiefs.

“The Convention Center hotel is critical,” said Talbert. “It’s the opinion of the meeting planners we meet with every day. It’s not the opinion of Bill Talbert.”

The city fielded one proposal to build a hotel on public land at the corner of 17th Street and Convention Center Drive, behind the Fillmore Miami Beach at the Jackie Gleason Theater.

Two bidders proposed and one was disqualified after it submitted a plan that included a public subsidy.

The remaining firm: Atlanta-based Portman Holdings, a namesake member of the Portman-CMC team that lost the 2013 bid for the previous redevelopment plan.

Portman wants to privately finance a $400 million headquarter hotel with 800 rooms that would rise up 30 stories and connect directly to the Convention Center.

Financing would come solely from Portman through debt and equity, with no public money subsidizing the development. The firm has developed convention center hotels around the globe. But the Miami Beach project added a new layer of complexity to the kind of job the company has already done in locales from Los Angeles to Detroit to Shanghai.

This project requires 60 percent of Miami Beach voters to approve the lease of public land needed to allow Portman to build.

“We’ve never had a project go to the voters,” said vice chairman Jack Portman.

He said being in that position for the first time prompted his company to conduct a public opinion poll to help shape the strategy for garnering support for the project.

The developer has already delayed the vote for four months to have more time to convince enough residents to get behind the project. “Turns out that our strategy became: Well, maybe we need more time,” Portman said.

Stuart Blumberg, former chair of the Convention Center advisory board and longtime advocate for Miami-Dade’s hotel industry, said the success of the renovation absolutely hinges on the development of the hotel and a commitment from the hotel industry on room blocks and rates.

“Yes, you’ve got to renovate the center,” he said. “Do you need the hotel? Yes, if indeed the rest of the hotel industry supports it.”

Others, like Levine, don’t think the hotel is so essential, however. He voted in favor of the lease but said the renovation can still succeed if the hotel fails at the polls because Miami Beach has a strong hotel market.

On Sept. 2, Miami Beach city commissioners postponed the vote from November, a date members had approved on a first reading. The item is expected to be voted on during the March 15 primaries, although commissioners will still have to vote to place it on that ballot.

That campaign for the hotel will take the form of “a coordinated effort” with the Greater Miami Convention & Visitors Bureau, the Greater Miami and the Beaches Hotel Association and other entities, Portman said. The approach will be mostly grassroots — face-to-face interaction with homeowners associations and other citizen groups — but will also include more public promotion such as advertising.

Portman spokeswoman Kelly Penton said the company was in the process of creating a political action committee to fund that effort. The developer will provide at least 65 or 75 percent of the funding for the PAC, and as much as 85-90 percent, Portman said.

An opposition movement to the hotel is likely, and term-limited Commissioner Wolfson has said he’ll speak out against the project — as he did in 2013.

With the delay, the timeline for the hotel will shift. Rather than open in November of 2018 in time for Art Basel the following month, the hotel would need to be ready by March 2019, Portman said.

“We would, of course, do everything possible to open before Art Basel,” he said. “But we’re not legally obligated to do that, not until mid-March.”

THE BUZZ

Meanwhile, excitement about the project continues to grow within the tourism industry.

A 2011 study commissioned by the Greater Miami Convention and Visitors Bureau forecast a large increase in spending from a renovated center. It predicts spending will more than double with a renovation and an adjacent hotel, from $70 million to $180 million.

Wendy Kallergis, president and CEO of the Greater Miami and the Beach Hotel Association, said her group backs the hotel, adding that the mix of luxury, boutique and limited-service hotels in Miami Beach will help meeting organizers find diverse room rates.

She also said she has been in marketing meetings with groups waiting for both the remodeled center and the hotel to get done so they can come to Miami Beach.

“There’s just tremendous interest in the success of this project,” she said.

Miami Herald staff writer Hannah Sampson contributed to this report.

Hotel overview

▪ Developer: Portman Holdings

▪ Cost: $400 million, to be privately financed by developer; no public subsidy

▪ Number of rooms: 800

▪ Number of floors: 30

▪ Location: Corner of 17th Street and Convention Center Drive

▪ Timeline: The public land lease requires approval from 60 percent of voters. That referendum was pushed back to March 2016, which means that if approved, the hotel would open in March 2019.

Renovation overview

▪ Contractor: Clark Construction Group

▪ Cost: $500 million in construction costs. Another $96 million are budgeted for design costs, contingencies and public art.

▪ Key upgrades: A grand ballroom, junior ballrooms, about 5,000 square feet in expanded exhibition space, 874 on-site parking spaces, more meeting rooms with upgraded telecommunications connections, linear park along Collins Canal to the north and a 6-acre park across Convention Center Drive on the site of a parking lot.

The recent saga

December 2012: City Commission votes to pursue redevelopment of the Miami Beach Convention Center and 52 acres of its surrounding neighborhood.

July 2013: After months of public discussion and jockeying over two grand proposals put forth by competing teams of prominent developers and star architects, the commission chooses South Beach ACE for the job.

September 2013: Court decision strikes down a referendum on the renovation. The court rules Miami Beach must negotiate material terms to a lease of public land before holding a voter referendum

January 2014: A new City Commission, with three new members and a new mayor, scraps the plan and adopts a new approach separating the Convention Center renovation from the hotel.

April 2014: Denver-based Fentress Architects gets $11 million contract to design first part of the project.

October 2014: Four firms bid to finish designs and build the new Convention Center.

January 2015: Three firms ranked behind the top-ranked firm — submitted by Clark Construction — drop out of the bid. City project managers blame a healthy construction market for deterring firms from spending money on bids.

February 2015: In order to keep the renovation plan on schedule to begin after Art Basel in December 2015, the city decides to change the approach to finding a contractor due to lack of competition on price. Fentress will finish drawings, and city puts “construction manager at risk” contract out to bid.

April-May 2015: Clark is again the only bidder for the construction manager at risk contract, where the firm would put subcontracts out to bid and negotiate price with the city. Commission votes to move forward with Clark.

September 2015: Clark puts subcontracts out to bid. City is negotiating a guaranteed maximum price with the firm, which will go to commissioners for approval Oct. 21.

A home to history

Originally called the Miami BBQ Beach Exhibition Hall, the Convention Center was built in 1957 to seat 15,000 people at one time.

In August 1961, the Convention Center was the meeting place for a youth convention set up by the American Lutheran Church. Dr. Martin Luther King Jr., among others, spoke at it. A Billy Graham Crusade was also held at the Convention Center that year.

The Miss Universe pageant was held here from 1960-1971 and in 1997.

The 1968 and 1972 Republican National Conventions (Richard Nixon nominated), and the 1972 Democratic National Convention (George McGovern nominated) were held at the Convention Center.

The 1964 match in which Sonny Liston lost to Muhammad Ali was held here.

Among other sporting events of note:

▪ Terry Funk defeated Jack Brisco for the National Wrestling Alliance (NWA) World Heavyweight Championship at the Convention Center in 1975.

▪ World Wrestling Entertainment (WWE) held its WrestleMania Axxess event at the complex March 29-April 1, 2012.

▪ In basketball, the ABA’s The Floridians called the Convention Center (and the Convention Center Annex) home when they played in Miami.

▪ The Florida Flamingos of World Team Tennis played home matches in the Convention Hall in 1974, their only year of existence.

▪ Without an on-campus facility, the University of Miami men’s basketball team played many games at both the Convention Center and the Miami Beach Auditorium in the 1960s.

▪ In 1989, the facility underwent a $92 million renovation and doubled in size, creating the four-hall center that is present today. In the past six years, the facility has had more than $35 million in continuing upgrades, including complete renovations of all restrooms, full carpet replacement, and installation of a state-of-the-art telecommunications and networking infrastructure.

▪ The center hosts the annual South Florida Auto Show, Art Basel, Forgiato Fest, and many other popular conventions. Major annual trade shows include the Jewelers International Showcase and Cruise Shipping Miami.

SOURCE: WWW.MIAMIBEACHCONVENTION.COM; WIKIPEDIA

Boat show, some events to be displaced

The two years it will take to complete the renovation will displace some events, including the Miami International Boat Show. Organizers of the premier boating event in South Florida are holding dates in 2018, but the show will have to relocate during construction; space the event always uses in the parking lot will be lost to the development of the park.

The event is one of 27 that have canceled because of the work, according to city’s tourism department. The first four months of 2017 are completely blacked out as contractors plan to demolish a wing of the building. The Convention Center will lose about $12 million in revenue from 2016-2018 during the renovation.

Max Sklar, Miami Beach’s tourism director, said the cancellations were expected because the work will make the whole building unavailable and many of the shows need more than the two halls that would be open. Nineteen of the events are holding dates for 2018 and beyond, and a few more are waiting to see if the hotel plan passes and breaks ground.

“This also reflects that a large portion of the events that had to cancel are very much interested in returning once the improvements are completed and are holding future dates,” Sklar said in an email.

Project planners have tailored phases of construction to accommodate a marquee event: Art Basel. Each year, the premier art festival is staged at the Convention Center, and with it come numerous satellite events and thousands of visitors, including well-heeled art collectors, celebrities and musicians.

City officials want to minimize any inconvenience to Basel, an event that the GMCVB estimates bring around $13 million to the region each year. The renovation work won’t begin until after this year’s festival in December.

Bob Goodman, spokesman for Art Basel Miami Beach, said fair officials have been briefed on the designs and planned construction schedule throughout the process in an effort to minimize the inconvenience to the world-renowned art festival.

He said Basel organizers are looking forward to the improvements, support the hotel plan and are ready to work around the dust.

“It will be done with hopefully minimal interruptions,” he said. “There will be new ways of coming and seeing the festival, but overall the show will not be impacted in a negative way.”

JOEY FLECHAS

The information above was corrected to reflect that the first four months of 2017 at the Miami Beach Convention Center are closed to events, due to construction. That date was originally misstated in the article.

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