Miami commissioners are expected Thursday to entertain negotiations to lease the site of their riverside administrative headquarters to a private developer and pay for a custom-made office building elsewhere in the city.
The tradeoff, which would give Adler Group the land needed to build more than a million square feet of shops, apartments and hotel rooms on the north bank of the Miami River, is up for a vote Thursday in which commissioners can give Miami’s administration the ability to negotiate a final agreement in the hopes of netting a better financial return.
“Nobody’s been guaranteed anything at this point,” City Manager Daniel Alfonso said.
Under the agreement proposed months ago by Adler Group affiliate Lancelot Miami River, LLC, the firm would enter into a 90-year ground lease with the city for its two-acre property. The developer, in response to a city solicitation, offered to structure the lease in a way that, through rent and a cut of gross sales, would pay the city a projected $335 million over the length of the agreement, a present day value of about $70 million.
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Nobody’s been guaranteed anything at this point
City Manager Daniel Alfonso
If the deal is approved, Miami’s staffers, who have outgrown the former Florida Power & Light building at 444 SW 2nd Ave., would stay on the site until Adler finishes building the city a new, user-friendly office in 2020. The new office — which carries a price larger than the offer on the city’s land — would be built at one of three likely locations: next to the Lyric Theater in Overtown, next to Marlins Park in Little Havana, or inside the seven-acre Link at Douglas complex that Adler is building at the Douglas Road Metrorail Station.
For now, there is no preferred site, Alfonso said.
Once the move is made, Adler Group, which is already planning to develop a 1.5-acre parcel it owns immediately next to the city’s property, would proceed with the second and third phases of an expanded $465 million mixed-use project on the river called Nexus Riverside Central. The larger development would include three 36-story residential towers with 1,350 units, a 150-room hotel and 30,000 square feet of shops and restaurant space.
Nexus Riverside Central is designed by Studio X Architects. Miami’s office building would be designed by Stantec.
Michael M. Adler, CEO of Adler Group, declined a requested interview, referring questions about the project to the city. He issued a statement through a spokeswoman.
We are committed to the city to develop both projects
Michael M. Adler, CEO of Adler Group
“We are thrilled by the opportunity to enter a partnership with the City of Miami to redevelop the existing MRC site and develop the City’s new administrative headquarters,” he said. “We are committed to the city to develop both projects and look forward to working with the community on shaping the future of this area.”
Adler Group was left as the only bidder on the city’s land after a second firm, Panther Capital Management, dropped out. A selection committee that reviewed the offer recommended that the city accept, but adopted the advice of city real estate consultant CBRE urging commissioners to seek better terms. Of particular concern, CBRE noted that Miami would pay up to $123 million for its new 375,000-square-foot office and 1,200-car garage — a roughly $50 million gap from what Adler would pay for the city’s land.
The prospect of paying out of pocket is somewhat surprising, given that Alfonso talked more than a year ago when he first began studying the deal about possibly having money left over after building a new facility, given the value of riverfront land. The gap widens by another $30 million if Adler doesn’t develop the property, according to CBRE.
Adler and the city, however, have already started working to reduce the city’s costs by looking at different ways to structure the agreement, according to administrators. Any final, negotiated agreement would need city commission approval. Miami law also requires a voter referendum for the long-term lease of waterfront land.