Miami-Dade commissioners on Tuesday approved a $49 million bailout for the Frost Science Museum, agreeing to a nearly 30 percent increase in the tax dollars going to a project that already had secured $165 million from the county.
A shortfall in private donors left the Frost without the funds needed to finish construction of its new four-acre home in downtown Miami’s Museum Park, a move designed to transform the venerable nonprofit into one of the city’s most popular attractions. In a 12 to 1 vote, commissioners approved the plan by Mayor Carlos Gimenez to use hotel taxes to rescue the construction project.
“We can’t just sit back and watch it fail,” Gimenez said before the vote. “We owe this museum to the future generations of Miamians.” After the vote, Gimenez told reporters: “When our children and grandchildren are going through that science museum, they are going to thank us for what we did today.”
We can’t just sit back and watch it fail. We owe this museum to the future generations of Miamians.
Mayor Carlos Gimenez
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Before the crisis, Gimenez had planned to propose a $4 million yearly operating subsidy from county hotel taxes for the Frost once it opens. Instead, those dollars would be locked into a 20-year stream of debt payments tied to the $49 million borrowed for construction. (Though often referred to as a $45 million rescue, lending documents say Miami-Dade will borrow up to $49 million.)
Critics of the Gimenez administration slammed the plan, saying Frost should have to find more benefactors rather than turn to government coffers for a solution.
“What are we telling our kids if people do wrong acts and what we do is just bail them out?” school board member Raquel Regalado, who is challenging Gimenez in the 2016 mayoral race, asked commissioners. Commissioner Juan C. Zapata cast the lone no vote against the proposal. He said he wanted the administration scrutinized over the crisis, which saw Miami-Dade pay roughly $160 million to a construction project only to see Frost unable to provide the private dollars needed to finish it. “We didn’t get here by accident,” Zapata said.
What are we telling our kids if people do wrong acts and what we do is just bail them out?
Raquel Regalado, who is challenging Gimenez in the 2016 mayoral race
Commissioner Esteban “Steve” Bovo questioned whether the plan doesn’t leave the county leaders looking like “suckers.” “I’ll support it,” Bovo said. “But I’ll do so painfully.”
Dr. Phillip Frost, one of the wealthiest individuals in South Florida, and his wife, Patricia, attended Tuesday’s Commission meeting. They are the museum’s top private benefactors, having pledged $45 million for the project, which includes a modernized version of the museum’s signature planetarium and a new aquarium designed to dramatically bolster attendance.
Frost urged commissioners to support the plan, recalling his childhood in Philadelphia during World War II, when his older brother home on leave took him for a day at the city’s science museum. “I was dazzled and inspired,” said Frost, who turned a medical career into a string of medical and drug companies that grew his fortune into the billions. “This is an institution that can influence the course of young people’s lives.”
In an interview, Frost seemed to gently knock Miami’s elite for not providing the dollars needed to support non-profits like the science museum. “Giving is a learned experience. It’s not genetic,” Frost said. “I think the community may have a little bit more learning to do, in terms of being more generous”
The Frosts took control of the board during the museum’s financial crisis, using their offer of a short-term loan needed to keep contractors on the job to oust the former board and install a smaller group of their choosing, including Patricia.
More than a decade ago, Miami-Dade agreed to borrow $165 million tied to property taxes for the Frost project — a high-profile expenditure included in the $2.9 billion bond referendum that county voters approved in 2004. Several commissioners linked their support of the rescue package to delivering the upgraded science museum promised as part of the bond item 12 years ago.
The voters spoke loud and clear that they wanted a science museum.
Commissioner Rebeca Sosa
“The voters spoke loud and clear that they wanted a science museum,” Commissioner Rebeca Sosa said Tuesday. Commissioner Xavier Suarez said the museum’s opening will boost interest in science across Miami at a time when sea-level rise needs inspired solutions from a new generation. “This is as important as any single thing we can do for this community,” he said. Added Commissioner Barbara Jordan: “I know it’s going to be a spectacular facility.”
When construction began in 2012, Frost had not raised the money needed to finish what was then a $275 million project. In fact, the museum did not plan to borrow the money needed to complete construction until last summer. At that time, banks declined to provide the $100 million Frost officials wanted, citing a lack of pledges.
That prompted a cash crisis, with a county bailout seen as the only solution. This week, the county’s Inspector General office issued a report criticizing the Gimenez administration for allowing almost all of the county’s $165 million contribution to the museum to be spent while the Frost was allowed to save its private dollars until the end of the construction time line.
Jean Monestime, chairman of the county commission, noted past fights for even minor help to cultural institutions without the clout that the Frost brought to its pursuit of a government-funded rescue. When an institution in the minority community faces a crisis, Monestime said the reaction too often is: “ ‘Oh my God, this community is a failure.’ Nobody wants to give it a second look and a give a remedy to the situation.”
“When it comes to institutions helping our most affluent community,” he said, “we find ways to solve problems in the most creative ways.”
The county bailout will compensate for the shortfall on private dollars, with banks willing to lend about $40 million (not the $100 million the Frost Museum had originally hoped to borrow). Roughly $20 million in cuts from the museum’s construction are slated to close the gap, allowing the museum to be done in time for a planned November opening.
As part of the deal Gimenez aides negotiated, the Frost must pledge not to seek additional funds from the county until Miami-Dade pays off the new $49 million debt it is assuming for the museum.
Gimenez described the rescue package as a fiscal wash, since it redirects the planned operating subsidy into debt payments. “We’re not asking for extra money,” Commissioner Sally Heyman said in defending the proposal. But yearly subsidies can be reduced or eliminated on any given year — in 2014, Gimenez rewrote his proposed budget to shift $1.5 million from an art museum to the county police force — while debt payments must be made.
As part of the deal Gimenez aides negotiated, the Frost must pledge not to seek additional funds from the county until Miami-Dade pays off the new $49 million debt it is assuming for the museum. Commissioner Audrey Edmonson, whose district includes the museum site, echoed a warning in the IG report that the Frost’s operating budget could be a challenge.
“I have a concern of their ability to maintain the property in the future,” Edmonson said. “Because of the $4 million we were to give them for operating expenses now will go toward paying off [the county] debt.”
Museum officials say they’re confident the Frost will be on sound financial footing once it opens, and that donors currently spooked by the construction crisis will come through with naming rights that will bolster the budget. Without a county rescue, museum leaders said, donors won’t consider providing the private dollars needed to finish construction.
“We’re here to ask you to do a very difficult thing,” said Cesar Alvarez, the Miami lawyer who is the new chairman of the Frost board. “We understand that.”