Twenty years ago, Miami Beach’s hotel market was sleepy enough that Miami-Dade County created a special taxing district aimed at revitalizing a “blighted area” that includes Lincoln Road and the oceanfront off 16th Street. Today, that land has gained about $4 billion in value, but elected leaders don’t want to declare victory just yet.
On Tuesday, Miami-Dade commissioners are set to vote on adding another 22 years to the “City Center” district in order to divert millions of dollars in county property taxes to the $590 million renovation of the Miami Beach Convention Center. The district currently gets about $16 million a year from the county fund that pays for police, parks and other core services, but leaders see the move as key to economic growth in the coming decades.
“One of the top priorities I’ve had is we need a new convention center,” Miami-Dade Mayor Carlos Gimenez said. “Tourism is still our No. 1 driver here.”
The deal negotiated by Gimenez and Miami Beach Mayor Philip Levine captures both sides of a debate over the districts known as Community Redevelopment Agencies.
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Governments set up the districts to capture a generation’s worth of property-tax increases for a certain area, and then spend the newfound money on improvement projects. Broward County commissioners voted earlier this year to sunset their CRA districts, saying they’d rather appropriate the property-tax dollars through the normal budgeting process, while Hialeah is in the process of creating one inside its city limits.
In Miami Beach, leaders point to one of the great commercial success stories in the region. Founded in 1993, the City Center district acquired the land and provided a construction subsidy for the Loews, then the first major branded hotel built on the beach since the 1960s. Now South Beach enjoys its status as a premier U.S. lodging market, while the district’s Lincoln Road recently saw six properties sell for $342 million — one of the priciest commercial deals in South Florida history.
“Miami Beach still would have been very successful” without the district, said Kevin Crowder, the city’s former economic-development director and who now works for the Miami office of Redevelopment Management Associates. “But I don’t think it would have been at the scale or the pace it was with the CRA.”
But with the district’s legally mandated sunset date approaching in 2022, city and county leaders aren’t willing to say goodbye to the earmarked dollars.
Extending the City Center district’s life to 2044 would generate $274 million needed for an extensive upgrade of the 1957 convention center, home to Art Basel, the Miami International Boat Show and past Super Bowls. Tourism leaders and elected officials have been debating the upgrade since the late 1990s, and Miami Beach voters in 2012 approved increasing the city’s hotel tax to fund about $205 million of the work.
“Look what Art Basel brought to town,” said Stuart Blumberg, the retired head of a county hotel trade group and the former chairman of Miami Beach’s convention-center advisory panel. “If you put a better product out on the street, you’re going to bring more people here and everybody benefits.”
Mayor Levine secured Gimenez’s backing of the CRA extension as part of a larger agreement that allows Miami-Dade to delay an $18 million payment to Miami Beach for another taxing district in the city’s South Pointe area. The deferred payment was crucial to Gimenez closing a budget gap for the 2015 fiscal year that initially had him proposing steep police cuts. If county commissioners reject the CRA extension Tuesday, Miami-Dade would again face an $18 million budget hole.
“Our hands are a little bit tied,” said County Commissioner Esteban “Steve” Bovo, who voiced reluctant support for the extension. “By all accounts, the Beach CRA has been fantastically successful. Why extend it?”
County and city officials say there’s no need to show the district remains blighted to justify the extension. Like other CRAs, the City Center district captures both local and county taxes. Extending the CRA would generate enough revenue to borrow $274 million for the convention-center project, and Miami-Dade’s share of that would amount to about $121 million, city officials said.
“We think for a regional facility, that’s really cheap,” said Kathie Brooks, assistant city manager.
Miami-Dade would not use the one tax with the word “convention” in it to actually build the convention center. The Convention Development Tax, a 3 percent surcharge on hotel bills, is already committed to a range of other spending needs, including debt on the Adrienne Arsht performance hall and Marlins Park as well as for outstanding bonds tied to a 1989 upgrade of the convention center itself.
“We tried that first,” Brooks said of CDT. Gimenez’s deal with Levine does call for Miami-Dade to contribute hotel taxes to operating the convention center, but only if collections are high enough each year.
Miami-Dade already provides Miami Beach with $4.5 million a year in CDT for convention-center support and maintenance. That would increase after the renovation by an average of about $5 million a year, provided Miami-Dade generated enough CDT to make the payment.
The city’s agreement puts Miami Beach behind a number of current CDT recipients, including the maximum $5 million payment the Miami Dolphins negotiated this year with Gimenez under a bonus system tied to hosting Super Bowl and other major events in a renovated Sun Life Stadium.
If county hotel-tax revenues aren’t high enough, Miami Beach can draw the same subsidy from the taxing-district funds. If Miami-Dade does make the CDT payments, surplus dollars from the taxing district would go to pay down the convention center’s construction debt. Once that debt is extinguished, the district would be dissolved, according to the agreement.
Extending Miami Beach’s City Center district won’t take away money from Miami-Dade, but it would scrap the revenue increase that the county’s $1.5 billion general fund would enjoy if the district dissolved on schedule seven years from now. Miami-Dade estimates the extra 22 years for the CRA will cost roughly $570 million in property taxes, assuming the county secures almost $190 million in refunds from Miami Beach called for in the deal. Those figures would make the cost about $25 million a year in 2014 dollars.
As a county commissioner, Gimenez was a leading critic of CRA spending. The issue came up during his 2011 run for mayor, when former rap star and long-shot mayoral candidate Luther Campbell cited Gimenez’s CRA position in endorsing Gimenez’s main rival, Julio Robaina.
At the time, Gimenez said Campbell overstated his CRA objections, insisting he simply wanted more scrutiny on spending. Last week, Gimenez said he also argued for retaking CRA dollars for general purposes, but only for those districts flush with cash going into the recession.
“It wasn’t that I wanted to kill them for good,” he said. “You can’t paint a broad stroke, and say all CRAs are good or all CRAs are bad.”