Miami-Dade County

At MIA, fights over leases, a freeze on contracts and train rides to restaurants

Chuck McCown of Salt Lake City, Utah gets some work done outside a closed Café Versailles in the renovated wing of Concourse E at Miami International Airport while waiting for a flight. McCown went to another terminal to get something to eat.
Chuck McCown of Salt Lake City, Utah gets some work done outside a closed Café Versailles in the renovated wing of Concourse E at Miami International Airport while waiting for a flight. McCown went to another terminal to get something to eat.

When Café Versailles wanted to extend its lease at Miami International Airport’s refurbished Concourse E into the next decade, the request met a firm no from director Emilio González.

“After careful review,” González wrote in a Feb. 13 email to Christopher Descalzo, a partner in the company that operates the famous Cuban restaurant in MIA, “your request to extend the term of the Café Versailles location for another six years is not approved.”

Two days later, word came from a top aide to Mayor Carlos Gimenez that the county-owned airport shouldn’t be so hasty in denying the Versailles request.

“Since the Mayor gave me the responsibility to review the situation,” Deputy Mayor Jack Osterholt wrote to González on Feb. 15, “your letter to Chris may be a bit ahead of his decisions.” Depending on what Gimenez decides, Osterholt wrote to the airport director, “some of your comments to Chris may need to be revised.”

The exchange — which ended with a brisk “Understand completely” from González — hints at a closed-door drama unfolding at the county’s $1 billion-a-year airport.

With influential airport tenants complaining about business woes and pressing the Gimenez administration for relief, the mayor last month ordered a freeze on contract decisions involving MIA’s vast retail operation.

I’ve ordered our procurement folks and our real estate folks to go to the airport, look at all of the contracts, look at the entire situation.

Miami-Dade Mayor Carlos Gimenez

He dispatched top aides from outside MIA to review the complaints and other issues involving leases. They’re supposed to make recommendations on what to do next at a county facility that’s long been a source of well-paid lobbyists, campaign contributions and extensive interest from county commissioners who ultimately vote on big contracts.

“I’ve ordered our procurement folks and our real estate folks to go to the airport, look at all of the contracts, look at the entire situation,” Gimenez said. “And come back with a comprehensive recommendation as to how to clean it all up and then move forward in the future.”

MIA vendors, led by Newslink owner Chris Korge, have complained about no-bid deals going to other retailers. The airport has gotten heat in recent years for no-bid agreements. Those include a restaurant for Gloria Estefan endorsed by the administration and the County Commission in 2015, and a temporary doll kiosk for Maritza Gutierrez, a former chairwoman of a county toll board and the wife of Armando Gutierrez, a prominent lobbyist.

The friction comes amid continued delays on a sweeping effort by MIA administrators to refresh dining and shopping options throughout the airport by opening up retail and restaurant locations to bidders. That request for proposals for 19 locations in MIA’s Central Terminal failed to win Gimenez’s approval in 2016.

“That was about the time that the mayor was considering which route to take at the airport,” said Gimenez spokesman Michael Hernández, confirming the mayor’s decision not to authorize the request for proposals.

Central Terminal includes Concourse E, a wing that is home to newly renovated “Satellite E” — an area so remote it’s reachable only by train. An extended renovation process that dates back to 2002 has left Satellite E vendors, including Versailles and Newslink, fuming at lost business during the construction period, which closed the area completely in 2014.

Now it has reopened, but travelers using the nine gates there can’t order food from a waiter because the space lacks a full-service restaurant. And they can’t pass their time with a cocktail because there’s no bar.

“It’s kind of caught us in a place where we’ve upgraded the area,” MIA’s concessions director, Adrian Songer, said of Satellite E. But signing new restaurants and shops “still has to be done.”

The proposal drafted by MIA consultants before Gimenez ordered the freeze on new contracts called for a bakery in the space occupied by Versailles in Satellite E, along with a theme restaurant, craft-beer bar and coffee shop.

When Chuck McCown, an engineer from Salt Lake City, went looking for lunch while waiting for a flight home in Satellite E last month, he wound up getting back on the train that connects the area to the main terminal. “I just went exploring,” he said while nursing a fountain soda on the floor in the Satellite E, facing a Bob Marley-themed coffee vending machine and a shuttered sports bar. “I’ve got lots of time.”

We’ve tried our best to work with the airport.

Newslink owner Chris Korge

González said that he’s wanted to invite new bids for the Central Concourse for several years but that the county hasn’t settled on the best approach to solicit the business. He said the airport’s immediate goal is to beef up retail and dining in Satellite E, once the county decides the best way to secure new leases.

“What we’re looking at is the mechanism to get stuff there the quickest,” said González, a former immigration director under President George W. Bush. “But we’re working on it as quickly as we can.”

MIA is in the process of reopening some spaces with existing leases in Satellite E, including Versailles, a Starbucks and a Pizza Hut. A Stella Artois kiosk is coming, and Newslink sells water, magazines and snacks in a temporary space there.

After his exchange with Osterholt, González did approve a two-year extension for Versailles on its Satellite E location to compensate for construction delays and other issues. But the company that operates the café, Global Miami, argued it was entitled to more time since its chain of coffee stands had endured so much lost business from problems throughout the airport — including a disabled train to Concourse E after a 2008 crash.

“Our request to add an additional six years to our lease is only fair given the losses we have accumulated,” Descalzo, a partner in Global Miami, wrote González Feb 17.

In an interview, Descalzo said Versailles also was hurt by condensed flight schedules and the proliferation of temporary restaurant spaces and vending areas. “You bid [on] an area and it’s going to be four restaurants and four cafés,” he said. “All of a sudden, they put all of these kiosks in front of your locations. That hurts us.”

It’s kind of caught us in a place where we’ve upgraded the area. But our solicitation — our procurement for that area — still has to be done.

MIA concessions director Adrian Songer on Satellite E

MIA’s contracting system has always been a source of tension in Miami-Dade, given the money to be made there and the active role vendors play in local fundraising circuits. For Gimenez’s record-breaking $7 million war chest during his successful reelection campaign last year, his top donor was the airport’s Duty Free Americas chain, which gave at least $295,000, according to Herald data. Versailles gave at least $35,000 and Newslink at least $33,000.

The county’s decision to award no-bid deals to Estefan Kitchen, Perry Ellis and other Miami-based enterprises raised eyebrows in 2015 when the Gimenez administration submitted them to the County Commission as a way to give travelers a “taste of Miami” in Concourse D. Backlash prompted county commissioners to instruct MIA to offer no-bid leases to black-owned businesses as a way to give smaller companies a chance at the competition-free program.

Gutierrez’s Maru dolls, which include Hispanic girls and boys, secured a kiosk in the area last year, with a lease set to expire this summer.

“It’s a pop-up,” said Maritza Gutierrez, an advertising executive. “It’s a hole in the wall that’s 90 square feet.”

A prominent fundraiser for Hillary Clinton and other national Democrats, Korge used to be a leading County Hall lobbyist before he launched a new career as an airport concessionaire. His Newslink chain has become an MIA mainstay, and the company also owns the Shoppes at Ocean Drive, a high-end retail area in Concourse D.

MIA figures show Newslink reported $47 million in revenue in 2015 and $41 million in 2016, about a 13 percent drop.

I’ve ordered our procurement folks and our real estate folks to go to the airport, look at all of the contracts, look at the entire situation.

Miami-Dade Mayor Carlos Gimenez

Korge blames a series of challenges at MIA for declining sales, including the airport allowing luxury stores to open near the Ocean Drive area several years ago, and construction delays and train delays in Concourse E that left Newslink unable to earn revenue there. He’s asked for lease extensions in Satellite E and a kiosk to help compensate for the hits taken by his business.

“We’ve tried our best to work with the airport,” Korge said, saying he calculated his rent payments based on a retail landscape that MIA scrambled about five years ago.

“They have been able to successfully stonewall giving us relief,” Korge said of González and his top aides. “I don’t think the airport director should run the airport on the basis of vengeance and vendettas. That’s how he has treated our company.”

MIA officials rejected Korge’s request, saying they had already provided Newslink enough relief through larger spaces, lease extensions and rental concessions. “The concessionaire always bears the risk of doing business in an airport,” reads an undated MIA memo titled Newslink Report. “The Aviation Department has a right to develop its concessions program as it sees fit.”

Making no headway at MIA, Korge pressed his case with the mayor’s office. Korge emailed Osterholt a lease amendment he wanted for Newslink. The document included a space for MIA to add its letterhead at the top and a blank signature line for Songer, the concessions chief. “I look forward to resolving this matter once and for all,” Korge wrote Dec. 28. “Have a great holiday.”

Osterholt forwarded Korge’s proposed agreement to Ken Pyatt on Jan. 4, saying it was a request “which we will discuss when we meet.”

With a freeze on airport leases, Korge and Versailles are left to wait like other would-be vendors seeking more space at MIA.

One option under consideration by Gimenez’s review team, which includes chief purchasing officer Miriam Singer and economic-development director Leland Salomon, is to outsource all concession decisions to a single company, which would manage restaurant and retail locations under county specifications.

That would expand an existing model at MIA, where several companies lease large swaths of the airport, and help insulate the administration from refereeing disputes over individual locations.

“Basically, the mayor wants to put everybody’s concerns at ease,” said Hernández, whom Gimenez recently tapped to supervise MIA’s media operation as part of an expanded portfolio. “The last thing the mayor wants to do is pick winners and losers.”