As Miami commissioners consider awarding public subsidies to developers of massive projects in exchange for local wage and workforce commitments, a new study is criticizing the last deal they cut.
Florida International University’s RISEP center is publishing a paper Monday on the economic incentive package negotiated with the developers of the Miami Worldcenter, a 27-acre, $1.7 billion complex planned in Miami’s Park West neighborhood. That agreement, awarded in late December, provides up to $108 million in property-tax rebates through 2030 if the entire project is built on time.
In exchange for the money, which will be used to fund infrastructure improvements around the complex’s shops, condos and watering holes, the Worldcenter’s developers agreed to hire specific percentages of its construction and permanent labor force from local pools, with the threat of modest penalties if they fail. They also agreed to pay higher wages.
City Commissioner Keon Hardemon, chairman of the Southeast Overtown/Park West Redevelopment Agency, says the deal he negotiated is among the toughest ever crafted on behalf of Overtown residents. But the new study — entitled “Who Benefits?” — found that the Worldcenter deal fell far short of arrangements in other corners of the country that, unlike the Worldcenter deal, were crafted between community alliances and the developers.
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“These economic incentives provide huge amounts of leverage, and we should be getting a huge bang for our buck,” said Alayne Unterberger, associate director for the FIU Research Institute on Social and Economic Policy and author of the study.
Unterberger compared the Worldcenter agreement to four community benefits agreements: Staples Center in Los Angeles, KingsBridge Armory in New York, the Oakland Army Base and Yale New Haven Hospital in Connecticut. She focused on whether local jobs had hard commitments, and whether wages were guaranteed to be above the minimum wage.
The Worldcenter agreement calls for the developers to hire 30 percent of its unskilled contractors, 10 percent of its skilled contractors, and 20 percent of its subcontractors from local pools countywide, with high priority to Overtown. Contractors on the project must pay a $12.83 an hour “living wage” for jobs without benefits, and electrical journeymen are to be paid a $30.11 “responsible” hourly wage. The developers are hit with penalties that increase the further they fall short of their workforce goals.
In comparison, the developers of the massive KingsBridge ice skating rink and 360-acre Oakland Army Base redevelopment projects secured 25 percent and 50 percent construction workforce commitments respectively within the tight boundaries of the Bronx and Oakland, Unterberger writes. Those projects also guaranteed half their permanent jobs to locals.
She says community groups negotiated the wages they wanted on the other four projects and secured living wage commitments for permanent jobs. Worldcenter was negotiated privately and gives a “responsible wage” only to electrical journeymen and no wage commitments for permanent jobs.
Unterberger also questions job training commitments, saying that only the developers of the Worldcenter and Oakland Army Base declined to pay for jobs-training programs. Worldcenter is working with South Florida Workforce and the school district’s Lindsay Hopkins training center.
“The Miami Worldcenter [deal] falls short in comparison to these other four community benefit agreements,” Unterberger writes.
Unterberger’s RISEP is releasing the study publicly Monday, hoping to influence pending votes for similar incentives for a planned expo center near the Worldcenter project and for the All Aboard Florida transit hub. The CRA is also negotiating a covenant that includes workforce and wage commitments with the developer of a 10-acre tech hub in order to build a 633-foot tower with large LED signs.
But the Worldcenter’s developers and the head of the Overtown redevelopment agency that negotiated the deal defended their agreement and the promises made to the community. (Unterberger’s study also incorrectly lists the values of Worldcenter’s property tax rebates at $175 million due to an apparent misunderstanding of public documents published along with the agreement in December.)
“The CRA’s investment of approximately 5 percent of the total project cost will supplement $1.7 billion in total private investment for Miami Worldcenter’s two phases,” Worldcenter spokesman Aaron Gordon said. “As a result of our agreement, Miami's Overtown and Park West neighborhoods will receive significant community benefits in the form of job creation and new opportunities for local businesses.”
Clarence Woods, executive director of the Southeast Overtown/Park West Community Redevelopment Agency, declined to comment on the study because he said he’d only been able to read the conclusion of Unterberger’s study, which the Miami Herald provided. He did say, however, that he did not agree with the conclusions.
Hardemon did not respond to a call to his cellphone or an email sent to his chief of staff with the study attached.