Downtown Miami

Joe Carollo faces lawsuit and ethics complaint after stalling Bayside observation wheel

Miami Commissioner Joe Carollo at a City Commission meeting on Aug. 14, 2018.
Miami Commissioner Joe Carollo at a City Commission meeting on Aug. 14, 2018.

Miami Commissioner Joe Carollo is being sued by a company that wants to build a 190-foot-tall observation wheel at Bayside Marketplace — a plan that Carollo worked on as a private consultant before he was reelected to the commission in November 2017.

He faces accusations that as a commissioner, he used his insider knowledge of the company’s sales projections to pressure the owners to share more of the company’s future revenues with the city, a tactic the company said is a breach of contract. A manager of the company also confirmed to the Miami Herald that an ethics complaint has been filed at the Miami-Dade Commission on Ethics and Public Trust.

The lawsuit states that before his return to City Hall that year, Carollo was paid $125,000 as a consultant for Platinum Advisors LLC, a firm seeking to erect the wheel before the 2020 Super Bowl festivities on the downtown waterfront. After he was elected, his employment with the company ended. Carollo helped the company scout possible locations for the wheel, according to the lawsuit, and he arranged for a meeting between the company’s principals and administrators of Bayside Marketplace, the proposed site for the wheel.

An affiliate company created for the venture, SkyViews of America, pursued the wheel in an effort that dragged on at City Hall for a few years over how to secure zoning approvals for the wheel because the proper location for amusement rides was not explicitly defined under the city’s zoning code. The observation wheel, once described as a “Ferris wheel on steroids,” would have closed gondolas big enough for people to walk in rather than open seats.

At the Sept. 26 City Commission meeting, SkyViews needed a final approval before the wheel could go up: an amendment to the lease Bayside Marketplace has with the city. The shopping center has a long-term lease from the city that runs through 2067, and the wheel would involve a sublease of land near the Hard Rock Cafe. Bayside is run by New York-based Ashkenazy Acquisition Corp.

During last month’s debate, Carollo vehemently pushed the representatives from Bayside and SkyViews to steer more profits to city coffers, insisting that the city was giving up valuable “air rights” — the rights to build taller development — for too little in return. He demanded a larger revenue sharing arrangement, which stalled the vote.

SkyViews executives, thinking that an agreement could be hashed out in a short time, waited at City Hall, but Carollo called for the end of the meeting later that night on a technicality and the item never came back for consideration.

Monday afternoon, SkyViews sued Carollo in Miami-Dade Circuit Court, accusing him of improperly using his knowledge of the company’s proprietary information, including its financial projections, to try to renegotiate the deal’s terms in the middle of the commission debate to make the deal more profitable for the city.

SkyViews’ lawsuit contends that when Carollo squeezed for more revenue, he was breaching his contract with the company. The company maintains that Carollo should not have participated in the debate, and he should have stepped away as he had during previous public votes on the matter.

“Defendant Carollo maliciously, in bad faith, and in blatant violation of his fiduciary duties, interfered with SkyViews’ ability to obtain the needed approval during the Sept. 26, 2019, Commission meeting,” the lawsuit says.

BAYSIDE M9 Rendering (3).jpg
An observation wheel will be installed at Bayside Marketplace in downtown Miami. Bayside Marketplace

Carollo told the Herald Tuesday he had asked City Attorney Victoria Mendez if there were any ethical issues with his participation in the vote. He said he received clearance after the attorney’s office sought the advice of the ethics commission earlier on Sept. 26 to confirm that he had no conflict of interest.

The commissioner said SkyViews’ accusations were baseless. He denied being given any proprietary financial information during his time working for the company, insisting he was only used to scout locations and set up one meeting with management at Bayside Marketplace.

“There’s nothing whatsoever that I’ve stated that violated any fiduciary responsibility that I had from 2016 when I was hired — not by the company that’s doing this wheel,” he said, explaining that he had worked for Platinum, not its affiliate SkyViews. “What I was not going to do was to violate my fiduciary responsibility I have as a commissioner to the residents of Miami.”

Carollo said his frustration was directed solely at Bayside Marketplace, the city’s tenant on public land along the downtown waterfront, over the terms for changing Bayside’s lease with the city that would allow the wheel. He said the wheel is “good for the city of Miami in that area.

“What is not good is that the people who have the lease in Bayside from the city are going to profit from it tremendously, and the city residents are going to get crumbs,” he said.

Jim Riggs, a principal for both SkyViews and Platinum, told the Herald there’s no dispute about the work Carollo performed under the contract.

“His only role was introductions and site selection,” he said.

Riggs said his company has spent millions to purchase the wheel, which is lying disassembled in a warehouse in Miami-Dade County, and to navigate the approval process at City Hall for years. He cast the attraction as part of an overhaul and expansion of Bayside Marketplace, a 30-year-old center.

Carollo’s reaction at the Sept. 26 hearing, after not having participated in several previous debates on the issue, shocked Riggs.

“He absolutely blindsided us,” he said.

The case is being heard by Miami-Dade Circuit Judge Thomas Rebull. Carollo has been in Rebull’s courtroom before — in January 2018, the judge presided over a challenge to Carollo’s 2017 election. After two days of testimony focused on whether Carollo met the city’s residency requirement before filing to run for the District 3 commission seat, Rebull ruled in Carollo’s favor.

Since returning to office, the commissioner’s behavior has incited controversy and spurred another lawsuit from an established businessman in his district. Bill Fuller, co-owner of the Ball & Chain nightclub, sued Carollo in federal court last year over the commissioner’s persistent efforts to find code violations affiliated with Fuller and his business partners. The suit is pending in federal court.

Joey Flechas covers government and public affairs in the city of Miami for the Herald, from votes at City Hall to neighborhood news. He won a Sunshine State award for revealing a Miami Beach political candidate’s ties to an illegal campaign donation. He graduated from the University of Florida.