Miami-Dade County

Should Miami swap land for a new administration building? Voters will decide

An affiliate of developer Adler Group wants to build a three-tower mixed-use and mixed-income complex on the north bank of the Miami River in downtown. The company wants to lease city-owned land for the project. In return, Adler would build a new administration building for the city’s workforce.
An affiliate of developer Adler Group wants to build a three-tower mixed-use and mixed-income complex on the north bank of the Miami River in downtown. The company wants to lease city-owned land for the project. In return, Adler would build a new administration building for the city’s workforce. Nichols Brosch Wurst Wolfe & Associates

November’s ballot is a little longer for Miami voters after commissioners approved one more referendum on leasing public land for private development.

This proposed public land deal might not pack the same star power and controversy of the high-profile, rushed drama of David Beckham’s quest to build a large soccer stadium and commercial complex on Miami’s only municipal golf course. But this proposal involves a prime piece of city-owned, waterfront real estate; a developer who wants to build three new residential towers downtown; a new segment of public riverwalk; and a new $140 million headquarters for the city’s municipal workforce to replace the aging, cramped Miami Riverside Center.

A week after a high-profile vote to hold a referendum on whether the city should lease Melreese Country Club to Beckham and his partners, the City Commission last week agreed to ask voters whether Miami should lease 3.15 acres of city-owned land at 444 SW Second Ave., the site of the city’s 10-story administration building overlooking the Miami River.

In return, the city would receive a new administration building and parking facility, rent payments on its waterfront property, and a cut of future major property transactions from what will be built there: a planned three-tower private residential development with each tower offering housing for different income levels. The new city administration building might be built next to the residential towers, but the city is also considering other sites

In August 2016, Adler Group won a competitive bid to redevelop the land and build the city a new administration building to replace the Miami Riverside Center, which used to belong to Florida Power & Light. After about 18 months of negotiations, Adler and the city administration have agreed to the basic terms of a deal, which voters will consider at the ballot box.

Adler Group, through affiliate Lancelot Miami River LLC, wants the city to agree to a 99-year lease, with an option to buy the property from the city. Adler wants to combine the public property with adjacent property the company owns in order to build the residential towers and a public riverwalk, and would use the lease’s purchase option to do that.

This rendering shows an aerial view of the proposed redevelopment of the Miami Riverside Center, the city’s administrative headquarters. The new development would include four towers: a new municipal building and three residential towers. One residential tower would include workforce and market-rate rental units, and the other two would have a range of condo units. Nichols Brosch Wurst Wolfe & Associates

A fourth tower would house the new administration facility, which would be financed and built by Adler and would include about 230,000 square feet of office space with a minimum of 1,000 parking spaces, 610 of which would be dedicated to city employees and visitors to the city offices. The city could also seek other sites for the new municipal building, though that would add millions in development costs.

The administration would rent out ground floor space for retail use to generate additional rent income, which city officials estimate could reach $800,000.

According to proposed terms, Adler would pay the city $3.6 million in annual rent for the first five years. Beginning the sixth year, the city would receive the greater of two amounts: the base annual rent increased by 1.5 percent each year or 3 percent of the developer’s gross revenues. The term sheet sets the minimum overall value of the property at $69.4 million, a floor for the sale price of the property if and when Adler wants to buy.

Should any asset on the site be sold, such as a condo, the city would get 2 percent of the proceeds. Commissioner Joe Carollo negotiated the provision at last week’s meeting, an increase from the original proposed 1 percent transaction fee.

The proposal includes the the new administration building on the property, but some commissioners still want to explore building it elsewhere.

“They’re going to do much better selling condos there or renting if they don’t have an administration building there from any government,” Carollo said.

During that discussion, Mayor Francis Suarez said the city will continue to consider looking at other sites for a new administration building.

“We’ve looked at some alternative sites leading up to today, and we will continue to look at alternative sites beyond today,” he said.

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The current city of Miami administration building, on the north bank of the Miami River, is difficult to maintain and too small for the city’s growing workforce, administrators say. Marjie Lambert

Mirroring his dealings with the Beckham group, Commissioner Ken Russell demanded assurances from Adler that on-site employees would receive a living wage, and that 10 percent of the residential rental units would be set aside for workforce housing. The Adler team agreed.

Jonathan Raiffe, Adler’s chief operating officer, told the Miami Herald on Monday that many details are not final because the deal is structured so that if voters approve, Adler would have to build the new administration building first so municipal workers could move in before any further development occurred. At that point, Adler could design, permit and build the three residential towers. Two of the towers are expected to be condos, and the third would be rentals.

“One tower will be more on the luxury end of the spectrum, one tower on more of a mid-market spectrum and one tower more of a workforce plus rental project. We believe all of those components can flow and go together,” he said. “We’re most likely not doing super high-end luxury.”

The tower with the workforce and market-rate rental units would be about 30 stories tall, and the other two would be around 50 to 60 stories.

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Adler Group is proposing to build a riverwalk as part of its residential complex, with restaurant and entertainment facilities on the ground floor facing the Miami River. Nichols Brosch Wurst Wolfe & Associates

City Manager Emilio Gonzalez said the Miami Riverside Center is dated, costly to maintain and too small for the city’s workforce.

“This is not a new building. It has roof issues, elevator issues, air conditioning issues,” he said. “There’s a cost to keeping this building, afloat, and as this building gets older, those costs will continue to go up.”

The leadup to the Miami Riverside Center ballot question was markedly different to the rushed development of the Beckham stadium and commercial complex concept, the other public land lease on November’s ballot. Adler and the city have been negotiating terms of the deal for about a year and a half, with the aid of outside attorneys — negotiations that followed a public solicitation.

“It’s taken us a while to get here,” Gonzalez said.

By sharp contrast, the Beckham deal debuted publicly days before a public vote to hold a referendum on whether the city should waive its competitive bidding laws to negotiate a lease for the soccer stadium and commercial development.

Regarding the lease of the Miami Riverside Center site, Miami voters will see this question on the November ballot:

Shall the City enter into a 99 year lease of approximately 3.15 acres at 444 SW 2 Avenue with winning bidder, Lancelot Miami River, LLC? Lancelot shall provide:

Development of mixed use riverfront destination;

New public Riverwalk and other public amenities;

Annual rent equal to the greater of $3,620,000 increased by 1.5% annually or 3% of gross revenues;

Design and development of a new administrative building.