Downtown Miami

Miami could lease public land in exchange for a new government HQ. Voters will decide

An affiliate of developer Adler Group wants to build a three-tower mixed-use and mixed-income complex on the north bank of the Miami River in downtown. The company wants to lease city-owned land for the project. In return, Adler would build a new administration building for the city’s workforce.
An affiliate of developer Adler Group wants to build a three-tower mixed-use and mixed-income complex on the north bank of the Miami River in downtown. The company wants to lease city-owned land for the project. In return, Adler would build a new administration building for the city’s workforce. Nichols Brosch Wurst Wolfe & Associates

Miami administrators say their main office downtown, a 10-story tower on the north bank of the Miami River, is out-of-date, expensive to maintain and too small for the city’s large bureaucracy.

To replace the Miami Riverside Center, located at 444 SW Second Ave. and built in 1992, the city held a competitive bid for offers two years ago and spent 18 months negotiating a deal to lease the land to a developer for construction of a residential complex and a new administration building.

That plan will now go to Miami voters, who must approve any lease of public waterfront land for private development. In the November election, voters will answer a ballot question on whether the city should approve a 99-year lease with Adler Group, through affiliate Lancelot Miami River LLC, to redevelop the waterfront real estate. The lease has a purchase option.

Adler would be able to develop three residential towers — likely two condo and one rental — on the city-owned property combined with adjacent property the company owns.

In return, the city would receive $3.6 million in annual rent for the first five years. Starting in the sixth year, the city would receive the greater of two amounts: the base annual rent increased by 1.5 percent each year or 3 percent of the developer’s gross revenues. According to the deal’s term sheet, the minimum overall value of the property is set at $69.4 million, a floor for the sale price of the property if and when Adler wants to buy.

Adler representatives say they plan to eventually use the option to buy the city-owned property.

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The current city of Miami administration building, on the north bank of the Miami River, is difficult to maintain and too small for the city’s growing workforce, administrators say. Marjie Lambert mlambert@miamiherald.com

The city would also receive a new administrative headquarters, financed and built by Adler, in the form of either a fourth tower on the same riverfront site or a building elsewhere. Under the proposed terms, the new administration building would include about 230,000 square feet of office space and a minimum of 1,000 parking spaces, 610 of which would be set aside for city employees and visitors to city offices. The city would rent out ground floor space for retail use to generate rental income, an estimated $800,000.

Mayor Francis Suarez said the city’s workforce has outgrown the current facility, and the proposed deal is structured in a way that the city will get more space in a new building at no cost to the taxpayer. He echoed commissioners in saying the city might want to build the new headquarters on other city-owned property.

“There are details left to be finalized as to whether the new administration building would be built on the current site or at another location,” Suarez said.

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This rendering shows an aerial view of the proposed redevelopment of the Miami Riverside Center, the city’s administrative headquarters. The new development would include four towers: a new municipal building and three residential towers. One residential tower would include workforce and market-rate rental units, and the other two would have a range of condo units. Nichols Brosch Wurst Wolfe & Associates

The deal also includes a provision for sharing profits from assets sold on the site. Should Adler sell any real estate — including any condo unit — the city would get 2 percent of the proceeds.

“The transaction fee was to give the city some additional value,” said Jonathan Raiffe, Adler’s chief operating officer. “So that when we made money, they would share in some of that.”

During a public hearing in July, Adler also agreed to pay on-site employees a living wage and to set aside 10 percent of the residential rental units for workforce housing.

Early voting begins Oct. 22. Election day is Nov. 6. Miami voters will see this question on their ballot:

Shall the City enter into a 99 year lease of approximately 3.15 acres at 444 SW 2 Avenue with winning bidder, Lancelot Miami River, LLC? Lancelot shall provide:

Development of mixed use riverfront destination;

New public Riverwalk and other public amenities;

Annual rent equal to the greater of $3,620,000 increased by 1.5% annually or 3% of gross revenues;

Design and development of a new administrative building.

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