Miami-Dade County

Inspector General faults Miami-Dade oversight in Frost Museum debacle

A bird’s-eye view of the Frost Science Museum’s beleagured construction effort.
A bird’s-eye view of the Frost Science Museum’s beleagured construction effort. Miami Herald file photo

Miami-Dade should not have allowed tax dollars to flow so freely into the construction of the Frost Science Museum without insisting that promised private dollars were keeping on a pace needed to finish the $305 million project, according to a new report from the county’s Inspector General office.

The report issued on the eve of a County Commission vote on a $48 million rescue package for the museum’s construction project zeroed in on an agreement Frost executives struck with the county three years ago to raise private dollars for the effort. The April 2013 deal called for Frost to contribute $107 million to the construction budget, joining the $165 million Miami-Dade was providing in borrowed funds tied to property taxes.

While the independent museum has spent almost all of Miami-Dade’s construction money building a new home, it failed to secure the private dollars needed to finish construction on a venture once budgeted to cost about $275 million. The report questioned why Miami-Dade continued to fund construction when the private museum was not generating the donations needed to meet its end of the bargain.

“We now know that the Museum did not have the entire amount of $107 million in cash. It also did not have that amount in pledges or other written commitments in April 2013,” read the memo released Monday by the Inspector General office. “The Museum was well short of the amount it needed to fund its share of the Project cost.”

At issue is completion of Miami’s newest and most ambitious museum destination — a four-acre complex with the institution’s planetarium, as well as a new aquarium designed to make it downtown’s most popular tourist attraction. Named after the billionaire couple Phillip and Patricia Frost, the museum’s top private donors, the Frost became embroiled in controversy once Mayor Carlos Gimenez revealed the need for a government rescue to make up for a shortfall in private dollars.

The OIG report goes on to question the Gimenez administration’s vigilance on the 2013 deal and urges officials not to allow another project to spend the county’s money upfront while waiting until the end to contribute private dollars.

“While we cannot go back in time to conduct the due diligence that should have occurred in or around April 2013, the OIG believes that, in order to protect taxpayers’ investment and to ensure viability of other funding sources, future agreements of this type should require the grantee to fund cash requirements on a concurrent basis with the use of County funds,” the report stated.

Michael Spring, the Gimenez deputy overseeing the Frost proposal, declined to comment on the OIG report beyond saying it was generally supportive of the rescue package facing a vote Tuesday before the 13-member county commission. The report does bolster the Gimenez administration’s position that it has no choice but to step in and rescue the Frost.

The “County has been placed in an untenable position,” reads the report. “After having approved the investment of $165 million, the County is now faced with the possible cessation of construction — and the degradation of its investment — due to the Museum’s fundraising shortfalls,” the report stated.

...we cannot go back in time to conduct the due diligence that should have occurred

Miami-Dade Inspector General report

Threatening to send contractors home late last year, the museum secured a rescue agreement with Gimenez calling for Miami-Dade to shift a planned $4 million yearly subsidy from operating costs to the debt payments needed to raise $48 million to finish construction.

While it was not in dispute, the OIG did confirm the Gimenez administration’s contention that its hotel-tax forecasts had long included a $4 million yearly subsidy for the Frost museum’s operating costs. Part of Gimenez’s rescue agreement requires Frost to pledge not to seek any additional financial help from the county.

Losing that planned subsidy makes the Frost’s opening even more challenging. It has already pared down its design to save about $20 million in construction costs. The OIG’s office said it was “concerned” about the reliance of forecasts from a bullish museum consultant’s report that predicts surges in attendance, membership and other revenue once the Frost moves from its longstanding home in Coconut Grove to downtown Miami’s new Museum Park.

The “County must be vigilant as to the potential impact of any variance in the factors used to determine the Museum’s operating forecast,” the report stated.

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