Downtown Miami

Subsidies put Miami Worldcenter under a microscope

A rendering of the Miami Worldcenter
A rendering of the Miami Worldcenter Courtesy

Attend a union rally in Miami or a street protest, and someone is likely to bring up the Miami Worldcenter.

Stretching 10 city blocks of luxury condos, apartments and high-end shops, the nation’s second-largest urban development is perhaps rivaled in size only by its polarizing reputation. The planned $1.7 billion complex has been both hailed as the project that will ignite progress in some of Miami’s most depressed communities, and scorned as the first major step in the gentrification of nearby, historic Overtown.

In a city where cranes fill the sky, the Worldcenter has been singled out by unions, activists and scholars due to its potential economic impact and a sizable subsidy package approved last year by an anti-poverty agency to pay for upgrades to infrastructure, such as water and sewer lines. As the developers prepare to break ground, criticisms and legal challenges have soared to new heights, drawing even greater scrutiny on what the Worldcenter is getting and what it’s giving in return.

“This is all just abuse of slum and blight,” said Frank Schnidman, a Florida Atlantic University professor who specializes in community redevelopment agencies. “They’re building a city for people who don’t live here yet, and totally ignoring the people who do.”

According to an incentive agreement approved in late December by Miami commissioners, companies tied to master developer Miami Worldcenter Associates and The Forbes Company, the developer behind the 765,000-square-foot Mall at Miami Worldcenter, will get a 57 percent tax break through 2030, excluding the value of their land.

If both phases of the project are built, recent internal estimates show that will be worth $108 million in tax rebates over a dozen years.

In exchange for the money, Worldcenter Associates agreed to pay higher wages and make hiring within the county a priority, starting in the redevelopment area and Overtown. Of the 10,000 construction jobs expected to be created, one third of unskilled laborers on the project must come from Miami-Dade, along with one in ten workers with specialized training. When the Worldcenter opens, jobs and a few shops are also supposed to be set aside for local workers and companies.

Contractors have to pay their workers an hourly rate of $12.83 — one dollar above the so-called living wage — and electrical journeymen will get a “responsible wage” of more than $30 an hour.

The developers face fines if they fail to deliver on their promises. In April, the redevelopment agency picked a consultant tasked with monitoring the developer’s compliance with the agreement.

Critics see the money as welfare for wealthy developers, using anti-poverty money to boost their bottom line. But Miami Commissioner Keon Hardemon, who negotiated the deal, believes the subsidies will jump-start a project that flailed for the better part of a decade and inject millions in new revenues into Overtown’s community redevelopment agency. That CRA, which is tasked with eradicating slum and blight, fills its coffers with property taxes. The millions it keeps can be used for business grants and affordable housing.

“This isn’t some fly-by-night project,” Hardemon said. “Without the Worldcenter I believe we lose lots of investment that will start to develop as soon as the Worldcenter breaks ground. It will give us tens of millions of dollars to invest into the redevelopment area.”

The so-called tax-increment financing model isn’t unique to the Worldcenter. With little controversy, the developers of the Midtown Miami project received a 2004 deal returning $170 million in order to finance the construction of a parking garage. All Aboard Florida is likely to receive a far smaller tax-rebate package to help finance rail infrastructure to bring commuter trains to its transit station.

But, the Worldcenter promises to create around 18,000 jobs, including thousands related to hospitality if MDM Group — a different developer that may seek as much as $115 million in tax rebates — builds an 1,800-room hotel and expo center on the site of the old Miami Arena.

With so much work on the line, labor groups like the AFL-CIO, SEIU and Unite Here! have hounded the developers, demanding stronger jobs commitments and using the project to stir emotions during protests and rallies.

Bishop James Dean Adams, a tall Baptist pastor who has become one of the Worldcenter’s most visible critics, has led several street marches past the development site. At one testy gathering inside a church, where Adams and Hardemon exchanged barbs, tensions rose so high among attendees that a fight broke out. In April, during a national rally over minimum wages, Adams brought a crowd sitting in the wooden pews of Greater Bethel AME to their feet by ripping the developers, saying they’re profiting off the backs of the poor.

“We’re here tonight because we’re tired of living in a city and county where poverty flourishes, where the rich get richer and the poor get poorer,” he boomed over a microphone before protestors spilled into the streets.

Adding to the scrutiny, the developers of Brickell City Centre, a major project south of the Miami River and outside of a redevelopment area, received no tax rebates and still say they hired 40 percent of the construction workforce from within the city of Miami and paid unskilled workers more than what the Worldcenter has pledged. Last month, a labor-friendly Florida International University research center, which focuses on issues facing low-income workers, published a study criticizing the Worldcenter deal for having weak job commitments and community benefits in comparison to other redevelopment projects around the country.

Now, unions want county commissioners to force greater labor concessions in order to create a special taxing district that would allow the Worldcenter to raise money through special assessments to its property owners. If approved, the district would issue municipal bonds to help finance an estimated $73 million in infrastructure improvements.

“We think the Miami Worldcenter sets a precedent in how development is set forth in South Florida,” Cynthia Hernandez, an AFL-CIO spokeswoman, told The Herald. “This is a prime example of a very inequitable project that the community is funding to the fine tune of $108 million and probably more when [the expo center] hotel comes to discussion.”

Clarence Woods III, executive director of the Overtown CRA, said many critics either don’t understand or choose to overlook that the money is funding public infrastructure upgrades. though the CRA curiously declined to explain the details of the agreement to the public when Miami commissioners gathered and approved the package in late December.

“What’s alarming to me is the amount of misinformation, lack of information and what I’m hearing about the project in what’s been negotiated in terms of the community benefits agreement,” Woods told county commissioners early this month.

Nitin Motwani, managing principal of Miami Worldcenter Associates, said in most of his projects, he doesn’t have to worry about water, sewer and other infrastructure upgrades. But in Park West, he said neither the city, county, nor the CRA wanted to guarantee bonds to improve the area not just on the site of the project but also around it, so the developers said they’d do it — with their own property tax dollars.

Even then, Motwani said the tax rebates won’t fully cover the cost of financing the upgrades, and that’s why Worldcenter is seeking the creation of a community development district.

“The problem is there’s nothing to hook up to,” Motwani said. “So even when we set up Venture Hive [a one-story tech office on Second Avenue], we had to go in and improve the infrastructure for the bathrooms and plumbing because the infrastructure was so bad.”

As for hiring goals, Motwani said Worldcenter Associates still hope to hire locally as much as possible, calling the requirements in the incentive agreement a “floor” and not a ceiling. But concerns about the amount of ongoing construction and available labor in Overtown — there are about as many construction jobs available as there are people in Overtown — led to the language in the subsidy deal.

“It’s exponentially cheaper for us to employ folks from Miami-Dade County,” Motwani said. “Our contractors want it because it makes their costs lower. We want it because it all rolls back to the developer in the end. Everyone is aligned in trying to prioritize Miami-Dade hiring.”

The scrutiny isn’t likely to die down any time soon. Next month, county commissioners are expected to debate the creation of the Miami Worldcenter Community Development District. And on June 3, the city and CRA were sued by developer Martin Margulies, who is seeking to throw out the subsidy agreement.

In the meantime, MDM Group, the developer behind the expo center and 1,800-room Marriott hotel, may ask for its own, more substantial financing package, no doubt heightening the scrutiny of how Miami officials and developers use property taxes. MDM representatives continue to say that they haven’t determined whether to seek the money from the CRA.

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