Miami-Dade County

County may refund $1 million in rent to airport shops after Hurricane Irma

Passengers in Miami International Airport’s North Terminal, home to some of the most popular restaurants and shops in the county-owned airport.
Passengers in Miami International Airport’s North Terminal, home to some of the most popular restaurants and shops in the county-owned airport. Miami Herald Staff

Retailers at Miami International Airport won’t get the year-long rent break they wanted from Miami-Dade County as relief from Hurricane Irma. Instead, Mayor Carlos Gimenez wants to waive rent for the five days when the airport was either closed or partially idled by the Sept. 10 storm, a rebate worth about $1.1 million.

Miami-Dade commissioners must decide the issue, and at least one sounded wary Tuesday about how taxpayers would react to the county-owned airport providing storm relief to a tiny subset of businesses with the ability to ask for aid from the elected officials.

“We’re going to have Miami-Dade residents here next week asking for relief from their taxes,” Commissioner Rebeca Sosa said during a committee hearing on MIA retail leases and the rent the vendors pay. “How do I explain to them they don’t get any relief?”

Airport contracts include provisions allowing for rent breaks if MIA closes due to disasters and other one-time events. But the comment touched on the tension hovering over the meeting, which saw Gimenez unveil a dramatic reworking of how Miami-Dade will manage the shops, restaurants, bars, kiosks and other retail outlets that generate nearly $200 million a year in revenue for the airport.

We’re going to have Miami-Dade residents here next week asking for relief from their taxes.

Miami-Dade Commissioner Rebeca Sosa

Amid long-running tension between airport administrators and retailers, Gimenez announced he was removing responsibility for the leasing operation from the airport and installing it in his suite of offices on the 29th floor of County Hall. A top aide, Leland Salomon, will supervise the leasing and purchasing functions of the airport, reporting directly to the mayor. The county’s purchasing department would also process and bid out MIA contracts, rather than the airport maintaining its own procurement operation.

“Everyone was complaining. From the vendors, to the aviation department, to the commission,” Michael Hernández, Gimenez’s communications chief, said in an interview. “So something wasn’t working.”

The move is sensitive for Gimenez, since it reduces the bureaucratic distance between him and decisions affecting top campaign donors for him and county commissioners. Duty Free Americas, MIA’s top retailer, was the largest donor to Gimenez’s 2016 reelection campaign, and one of the ten largest donors to incumbent commissioners that year, according to Herald data. Other large donors with MIA outlets include the company behind the Versailles restaurants and Newslink newsstands.

All we’re asking you today is to look at us as your partner, not your adversary.

Miguel de Grandy, lobbyist for Newslink, owner of shops and newstands at Miami International Airport.

Retailers, led by Newslink partner Chris Korge, have been pressing MIA administrators, county commissioners and the mayor’s office for rent relief to compensate for lower sales. They describe Irma, which shut down MIA flights completely for three days, as only the latest blow in a long stretch of disrupted sales at the airport, thanks in part to American Airlines decreasing the layovers that used to give passengers more time to dine and shop between flights.

At Newslink’s premiere retail airport outlet, the Shoppes at Ocean Drive, sales were down 14 percent going into 2017, to $7.3 million, according to company figures. That represented a 26 percent drop from its debut sales year in 2012, when the collection of boutique shops brought in nearly $10 million.

“All we’re asking you today is to look at us as your partner, not your adversary,” Newslink lobbyist Miguel de Grandy told commissioners at the meeting of the commission’s Economic and Development and Tourism committee.

De Grandy pointed to other times when commissioners have lowered rent obligations at the airport to help vendors facing woes. That included stretches of construction delays inside the terminals that slowed foot traffic in various terminals, and when baggage-wrap companies complained of rivals undercutting their prices off the airport grounds.

After Irma, vendors sent MIA director Emilio González a letter asking for up to a year’s worth of rent reductions to compensate for lost business from the storm and the broader issue of weaker sales. Passenger traffic is down about 2.5 percent for the year, a decline made worse by Irma. Before the storm, MIA said concession revenue, including rent from retailers, was actually up about 5 percent.

The county’s airport contracts specify that Miami-Dade has no obligation to adjust rent requirements if air traffic declines or passenger patterns shift. González has largely rebuffed retailer requests for relief, leading to appeals with Gimenez and commissioners. In his memo, Gimenez rejected the request for long-term rent breaks, but cited contractual provisions in recommending a post-Irma rebate for storm effects.

Gimenez’s memo lists about 30 retailers in line for a post-Irma rent credit, with the highest amount, about $400,000, going to Duty Free and the lowest, about $2,500, going to a Books & Books shop.

Part of Gimenez’s MIA reorganization calls for ending the longstanding practice of the airport bidding out individual retail and restaurant spaces. Instead, the mayor wants a “master concessionaire” to take over more terminals and be responsible for subleasing space without county involvement.

“The mayor’s recommendation isn’t to run [MIA] out of the mayor’s office,” Hernández said. “The mayor’s recommendation is to bring in a master concessionaire to run the mall aspect of Miami International Airport.”

He said the thinking behind the strategy is to “try our best to de-politicize the procurement process.”

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