Miami-Dade County

Mayor’s son has plan for county land: a $300 million ‘micro’ steel mill in Homestead

These steel rods from China could have homegrown competition in Miami if a planned “micro” steel mill gets built near Homestead. A partnership that includes a son of Miami-Dade Mayor Carlos Gimenez wants to build the roughly $300 million project on county-owned land.
These steel rods from China could have homegrown competition in Miami if a planned “micro” steel mill gets built near Homestead. A partnership that includes a son of Miami-Dade Mayor Carlos Gimenez wants to build the roughly $300 million project on county-owned land. Getty Images

One of the mayor’s sons has big plans for a tired piece of county land.

Julio Gimenez, whose father is Miami-Dade Mayor Carlos Gimenez, is a partner in a venture that wants to build a $298 million steel mill project on about 123 acres of county-owned land near Homestead that’s been designated for commercial development for 15 years. Julio Gimenez and partners are pitching a “micro” mill using electric furnaces to transform scrap metal into steel products, including rebar, that can be used in construction projects.

Miami-Dade commissioners are scheduled to vote on the no-bid $16.8 million sale Tuesday on an expedited schedule, with no prior review by a commission committee. But approval would only start a process of permitting, zoning changes and money-raising that could last 18 months before Miami-Dade Steel LLC has to make more than an $840,000 down payment.

Documents filed with the county show an ambitious financing plan, with Miami-Dade Steel LLC planning to borrow about $200 million on Wall Street and raise another $100 million from investors. The partnership has to prove it has financing secured before it can proceed with the purchase of county land next year.

Julio Gimenez did not respond to text messages asking questions about the project. He’s one of two minority partners in the deal, according to documents provided by Miami-Dade. The lead partner, Gustavo Lopez, answered a few questions on Thursday but said he had to catch a plane and could not conduct a full interview. He dismissed the challenge of raising so much money for a Miami-Dade steel mill, saying he’s built larger projects in other countries.

“This is a little thing,” Lopez said by phone. “I have done many, many steel mills in my life. My kids want to have something in Miami.”

Lopez said he has built mills in Colombia, Ecuador, and China, and consulted on others.

The proposal has the backing of Commissioner Dennis Moss, whose district includes the site, which used to be part of the Homestead Air Reserve Base. One of the mayor’s top aides, Deputy Mayor Jack Osterholt, supervised the administration’s talks with the mayor’s sons and partners.

The mayor formally recused himself in July 2017 when the process began, and the director of the county’s Ethics Commission recently endorsed the process in an email to the younger Gimenez. County rules “allow you to transact and enter into a contract ... with Miami-Dade County, as long as the contract does not interfere with the full and faithful discharge of your father’s duties to the County,” wrote director Jose Arrojo.

The speech touted the county’s declining unemployment rate and record traffic levels at Miami International Airport and PortMiami, while promising more efforts on public safety, economic development, parks and solar power.

Micro mills rely on local markets to remain viable, and can undercut far-off competitors by saving on the transportation costs needed to ship in steel products. That could make Homestead-made steel attractive to Latin American importers using PortMiami.

Micro mills also have been popular with start-up groups who see opportunity in President Donald Trump’s tariffs on imported steel, leading to concerns about too many new mills. “These things are popping up all over the place,” University of Pittsburgh economics professor Frank Giarratani told the Miami Herald last year.

Electric machinery lets micro mills avoid the belching smoke stacks of traditional steel plants, allowing developers to pitch the projects as environmentally friendly.

“This was a tough sell,” Moss said. “I had in my mind pictures of smoke stacks from the Northeast. Over time, they were able to convince me this is a good thing for the community.”

Miami-Dade is using economic-development laws that allow the waiving of competitive bidding for the proposed land sale to the steel partners. The partnership has agreed to create 180 permanent jobs at the site paying at least $48,750 a year. Another 56 jobs must pay at least $40,000. Those jobs must exist for 20 years, and failure to comply with the requirements could require the partnership to pay hundreds of thousands of dollars in fines.

This is the second county project being pursued by Julio Gimenez, a former construction executive. He’s also involved with a group that wants to build a halfway house on county land for Miami-Dade’s Corrections Department.

Leroy Jones, a nonprofit head with extensive county contracts, is heading up that effort. Jones, president of Neighbors and Neighbors Association, also is playing a key role in the steel project, with a deal to train workers to staff the facility.

A breakdown from the county shows Lopez with a 50 percent stake in Miami-Dade Steel and Julio Gimenez holding 23 percent. The third partner, Miami social worker Shana Cox, has a 27 percent share. Cox could not be reached for an interview Friday.

A summarized financial plan submitted to county commissioners as part of the agenda item shows the challenge ahead of the steel partners if they get approved by the board. The partnership plans to raise $30 million in equity payments from investors this year, and another $27.5 million in 2020. Another $50 million would come from foreign investors through the EB-5 visa program, which allows people to purchase green cards in exchange for investments in job-producing projects.

Most of the money for the project would be borrowed, with Miami-Dade Steel hoping to sell $200 million worth of bonds on Wall Street.

In an April 19 letter, Citi agreed to underwrite the bonds for what it called a “robust and financeable” project. The letter by a managing director at the bank, David Livingstone, praised Miami-Dade Steel for an “experienced deal team” that enjoys “local political support.”

The land that Miami-Dade Steel wants was part of a 600-acre portfolio given to the county by the U.S. Air Force in 2004 at a time when the military was shrinking its footprint at the base. The area was devastated after Andrew in 1992, and the main requirement was that the county use the land for economic-development projects.

Its remote location and contamination issues have limited interest, Moss said, but there’s enough land to accommodate multiple developers interested in exploring projects. Moss said he’s also in talks with other builders interested in commercial facilities near the proposed mill.

Even if a project seems like a long shot, Moss said, there’s little downside in letting a developer try.

“It’s a risk to some degree,” Moss said of the mill proposal. “But I’m willing to take the risk.”

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