Internal city memo reveals lawyers’ concerns over Inter Miami stadium lease agreement

When Miami Mayor Francis Suarez announced last month that a proposal to build a professional soccer stadium and commercial complex on a city golf course was finally ready for an all-important vote, the news surprised a team of attorneys who thought they were still hashing out unresolved issues in the billion-dollar deal.

According to a legal memo sent this week to elected officials, lawyers working since 2019 to negotiate a series of complex agreements for the proposed Miami Freedom Park still had concerns about unresolved financial terms, deadlines and the lack of evidence that the developer can finance the project when Suarez declared the deal done.

“We were not aware that any final agreement had been reached, and we were not given any advance notice with respect to release of the documents,” reads the Jan. 12 memo, authored by attorneys at Shutts & Bowen, O’Melveny & Myers and Fowler White Burnett.

The memo, obtained by the Miami Herald, suggests there was a behind-the-scenes disagreement between Suarez and the city’s team of private lawyers about a deal that would radically transform 131-acres of public land next to Miami International Airport and bring professional soccer to Miami.

Among the outstanding issues laid out by the attorneys: the amount the team would pay in a security deposit on the no-bid, 99-year lease, and the lack of evidence to prove the development team is financially capable of building the project before a lease is signed. The memo also suggested the team should pay a higher rent that ought to be adjusted for market conditions in the future using appraisals, a provision that is not in the proposal.

Suarez was surprised Thursday and said he had not seen the memo when a reporter asked him if he had consulted with the city’s legal team before publicly stating that negotiations were complete.

“I don’t have to consult with the outside counsel. The outside counsel works for me,” said the mayor, referring to three law firms hired by the commission to represent the city in negotiations.

Suarez, who has publicly promoted the deal since its inception, added that “at some point, you have to move on to the next stage, and I felt that we had substantially completed negotiations, and we were ready to go to the next phase.”

Different opinions

Miami taxpayers have paid more than $3 million for lawyers from three law firms to negotiate the deal that would allow developers to turn the city-owned Melreese golf course into a massive commercial and soccer stadium complex called Miami Freedom Park. The owners of Major League Soccer franchise Inter Miami, including retired soccer star David Beckham and MasTec chairman Jorge Mas, want a lease to build a sprawling campus with a shopping center, hotel, office park, stadium and public park. The 25,000-seat stadium would host Inter Miami home games.

On Jan. 6, Miami Mayor Francis Suarez told the Herald the city had reached an “agreement in principle.” But the contracted lawyers, under the guidance of City Attorney Victoria Méndez, thought there were still at least 28 issues to work out, according to the Jan. 12 memo. The attorneys were also surprised the developers had released hundreds of pages of lease documents that were described as the “final version” of the deal.

Some points in the city memo echo recent analyses by the Herald:

• The lease package does not directly address the replacement of upzoned parkland, which is required by city law. That issue is kicked down the road to when the developers ask the commission to rezone part of the 131-acre plot of public land.
• The proposed minimum rent of $3.57 million has not changed since the project was first announced in 2018, and full rent would not be due until the stadium is complete. With delays and extensions permitted under the deal, it could be as long as 10-and-a-half years before the developers are required to pay full rent, according to calculations by the city’s attorneys.

• Attorneys also noted that under the proposed agreement, annual rent increases are capped at 4%. Some in the real estate community have raised questions about the proposed rent amounts when land values have increased and average rents for Miamians have spiked dramatically, in some cases by as much as 34% from 2020 to 2021.

City Manager Art Noriega echoed Suarez on Thursday, saying he hadn’t yet read the memo. He said there were “some nuances to some of the contract language that still hadn’t been finalized, but the actual meat of the agreement had already been completed.”

“There’s legal advice that you’re given, or advice you’re given by counsel, and some of it weighed in on business terms and the like,” Noriega told the Herald. “We didn’t always agree.”

The city manager described the agreement as “99%” of what both sides agreed to, with a small amount of work left to do on the legalese.

Méndez, the city attorney who emailed the memo to city commissioners, only spoke generally about the concerns in the memo.

“As an attorney, you always want the perfect agreement for your client,” she said. “But at the end of the day, it’s a policy decision for the commission.”

Representatives from Miami Freedom Park declined to comment for this story.

Noriega confirmed that four of five city commissioners have been briefed on the proposed agreement, which needs four votes to pass. The one commissioner who has not yet been briefed is the deal’s loudest critic, Commissioner Manolo Reyes, who has pledged to vote “no” since the proposal was made public in 2018.

The lease package is expected to come to a vote in the coming weeks. A Feb. 23 vote on the Miami Freedom Park deal was pushed back due to a scheduling conflict, and officials now expect a vote to be held at 10 a.m. on March 9.

This story was originally published February 11, 2022 at 3:38 PM.