Miami airport shops would get rent cut and lower wage rules under Miami-Dade plan

After a $90 million rent break during the COVID-19 pandemic, Miami International Airport’s politically powerful tenants would receive no-bid extensions and more rent reductions under a plan circulated this week by the administration of Miami-Dade Mayor Daniella Levine Cava.

A memo from the mayor’s office lays out a deal to give Newslink, Cafe Versailles, Duty Free Americas and other tenants seven-year extensions at the county-owned airport and eliminate a minimum-rent rule designed to shield MIA from weak sales at the stores and restaurants paying for space in one of the country’s busiest airports.

The new rent structure would increase as MIA airport traffic recovers, with full rent kicking in once the airport returns to 2019 traffic levels.

The undated memo obtained by the Miami Herald carried the mayor’s signature in blue. But after the Miami Herald inquired about the memo, Levine Cava’s office said it was circulated too soon, used a stamped signature and does not represent a final plan from the mayor.

“This memo was sent out in error; it should not have been processed with the Mayor’s [signature] stamp as the content is still under review,” Levine Cava’s office said in a statement from the mayor’s chief of staff, Johanna Cervone.

COVID relief could last for years at MIA

The proposal would cost the airport about $53 million through 2022 if air-traffic levels remain below pre-pandemic levels, according to the memo. It lists the author as Levine Cava’s chief operating officer, Jimmy Morales, who oversees county airports.

Rents at MIA subsidize ticket prices, since MIA passes on the remaining cost of running the airport to the airlines through landing fees.

County commissioners last year approved MIA’s request to waive minimum rents during the pandemic, and this deal would eliminate them altogether. The agreement also includes reductions in the portion of sales that tenants must pay in rent, with the discounts dropping as air traffic returns.

MIA tenants likely face a longer recovery than counterparts in other major travel destinations because of COVID-19’s outsized impact on international travel and Miami’s reliance on foreign tourists.

While domestic traffic was off 34% through March compared to 2019 levels at MIA, international traffic was down 69%. In all, MIA traffic is down 51% compared to pre-pandemic levels.

The memo called the proposed discounts a way to get MIA’s shops and restaurants back into business quicker. Under the proposal, ground rent would slowly increase as the airport gets closer to 2019 passenger volumes, giving vendors “the opportunity to reopen their businesses with minimal costs.”

In May, about 60% of the airport’s 222 stores and restaurants were open for passengers. By making it cheaper to reopen, the new rent arrangements “will ultimately deliver long-term relief and benefit’s to MIA’s concession businesses, the traveling public and the County,” the Morales memo read.

MIA might drop price caps on its terminal shops

The proposal also would lift a rule preventing MIA shops and restaurants from charging significantly more than what a customer would pay outside the airport. While existing deals cap mark-ups at 10% above retail prices outside the airport, the proposed agreements would eliminate that “competitive pricing” rule.

The airport would be in a financial crisis without federal aid, with revenue down $473 million since March 2020, according the memo.

Miami-Dade is using federal relief dollars for airports to make debt payments and cover payroll. MIA also used $124 million in federal dollars to cover minimum-rent requirements by vendors, including car-rental companies and cargo handlers, along with retailers. Those operators and tenants continue to pay their required portion of sales to MIA, offsetting the aid expense by $34 million.

Airport tenants represent some of the most reliable source of donations in county elections. Members of the Falic family — owner of Duty Free Americas, MIA’s top-selling retailer — gave $6,000 in October to We the People, the political committee for Miami-Dade County Commission Chairman Jose “Pepe” Diaz. In March, Duty Free donors also gave $5,000 to Our Democracy, Levine Cava’s committee.

Representatives of the top MIA vendors were not available for comment Saturday.

The proposal would rewrite living-wage rules for airport vendors’ employees, watering down provisions secured by labor unions in recent years. Currently, vendors covered by the living-wage policy must pay at least $13.88 an hour, or $17.45 an hour if the employer doesn’t offer health insurance that’s worth the equivalent of $3.57 an hour.

Under the proposal, that $3.57 penalty would end. MIA vendors would be required to ensure employees carry “minimal essential coverage” under a federal statute that allows for health insurance through Medicaid, the Affordable Care Act and employer plans.

Miami-Dade commissioners extended living-wage rules to retail tenants in 2018, but only for new leases. The proposed new agreement would extend living wages to all tenants immediately, but under the revised terms that don’t include the $3.57-per-hour healthcare penalty.

Without a new deal, the current living-wage provisions would kick in under any lease extension at MIA, so tenants would fall under the rules eventually.

Union against healthcare change in Levine Cava memo

Wendi Walsh — an executive with Unite Here, the union that represents workers for airport vendors — said the proposed living-wage change would let employees receive “lower-quality” healthcare worth less than $3.57 an hour.

“The living wage was put in place for a reason” she said. “Companies are asking for an extension at the airport and a reduction in costs. The least they could do is provide the same living wage that other employers in the county provide.”

In her statement, Cervone said Levine Cava would meet unions before signing off on a new agreement with MIA vendors.

“The Mayor is a long-time champion for the living wage at the airport and she is still in the process of meeting with key stakeholders, including labor, to make sure protections for workers are included in any updated agreement with concessionaires,” she said. “The Mayor is committed to the best path forward that protects airport workers’ wages and benefits, and ensures that businesses can successfully operate as we turn the corner on economic recovery.”

This story was originally published May 29, 2021 at 5:07 PM.