Miami may sell prime waterfront land to developer for $29M. Is that a fair price?
The Miami City Commission is expected to vote Thursday on the $29 million sale of a 3.2-acre piece of land on Watson Island, one of the largest tracts of undeveloped city-owned waterfront property, where a developer plans to build luxury high-rise hotel and condo towers.
The proposed sale follows a ballot referendum that voters passed in November 2024 green-lighting the land sale for a to-be-determined price. The charter amendment stipulated that the sale price must be fair market value, for a minimum of $25 million.
But a recently ordered city appraisal found the land could be worth far more than the minimum price voters agreed to when they passed last year’s charter amendment. That appraisal, conducted by Integra Realty Resources and finalized this week, found that the land overlooking Biscayne Bay is worth between $257 million and $342 million, depending on the level of restrictions on development.
The appraisal also found that an existing long-term lease between the city and the developer on the site is worth $28.9 million.
Thursday’s legislation, sponsored by Commissioner Damian Pardo, states that the developer will pay the city $29 million. Instead of paying for the land itself, the developer is effectively buying the city out of the lease.
As a result, the lease will be nullified, and ownership of the land will transfer from the city to IG Luxury, a subsidiary of the developer, BH3 Merrimac.
The deal also requires the city to pay $4 million to the state to lift deed restrictions.
READ MORE: A village on the bay? Miami voters to decide on $2 billion projects for Watson Island
The city had previously leased the land to Flagstone Property Group, a different developer that was planning another project on the site. The Flagstone project ultimately fell through.
That’s where BH3 Merrimac came in. In 2023, it bought the city lease from Flagstone Property Group. BH3 Merrimac declined to say how much it spent acquiring the Flagstone lease. But City Manager Art Noriega said the existing lease “encumbered” the land, reducing its value significantly.
“We’re still dealing with terms and conditions that existed from an initial solicitation, which is a totally different market,” Noriega said at City Hall on Wednesday.
Noriega said the proposed $29 million sale is “absolutely” a fair deal. He pointed to another recent appraisal that valued the 3.2-acre property between $11 million and $110 million, depending on the types of restrictions on the land. He said that “disparity” is because the two appraisals used “entirely different comps.” Yet those separate appraisals yielded similar valuations for the leasehold, with the second report valuing it at $27 million — just $1.9 million less than the other report.
“We probably should have never had them value it as unencumbered land because it was encumbered,” Noriega said.
BH3 Merrimac principals Greg Freedman and Nitin Motwani said in a statement to the Miami Herald that “the property is subject to existing restrictions limiting what can be developed.”
They added that the $29 million purchase price “far exceeds” the $25 million floor that voters approved and noted that the referendum also requires them to give the city $9 million to be used for affordable housing and more.
“BH3 Merrimac has already invested more than $110 million in acquiring the lease rights and making infrastructure improvements to the property ahead of development,” Motwani and Freedman said in the statement. “Once this sale is approved by Commissioners, BH3 and Merrimac will proceed with developing the mixed-use destination that voters approved in November of 2024.”
Despite those arguments, former City Commissioner Ken Russell said he was skeptical of the deal, saying, “$29 million for three acres on the water in downtown Miami is a giveaway.”
“Why are we desperate to get rid of this property?” said Russell, who recently lost a bid for mayor. “We’re not. It’s incredibly valuable.”
Russell compared the deal to the city’s recent sale of the historic Olympia Theater to a public charter school, calling it “very short-sighted.”
“To me, it’s just indicative of a pattern right now of selling valuable city assets,” Russell said.
Following last year’s referendum, BH3 plans to develop its Watson Harbour project on the south side of the island. The north side is the location of the Jungle Island site being developed separately by David Martin’s Terra and ESJ Capital Partners, doing business as Ecoresiliency. Voters last year also passed a ballot question for the $135 million sale of that 5.4-acre site to Ecoresiliency.
BH3’s Watson Harbour development will include two towers — one that’s slated to be about 40 stories tall that would include up to 105 condos and 150 hotel rooms, as well as a standalone “lifestyle hotel” that would be approximately 30 stories high with upward of 350 rooms, the development team told the Herald last year. The condo units would be luxury housing, defined as homes over the $1 million mark, according to Motwani.
The development will also include shops and restaurants adorning the waterfront and an office building with enough room for five company offices.
Pardo, who is sponsoring the proposed sale, did not respond to a request for comment on the proposal Wednesday. The sale requires four-fifths approval by commissioners and just one commission vote.
Commissioner Joe Carollo said he wasn’t sure if he was in favor of the deal.
“I want to see more information,” Carollo told the Herald.
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