Miami Beach

Miami Beach voters to weigh in on proposed hotel rent payments

This rendering shows the overhead view of the proposed convention center hotel in Miami Beach. The 800-room hotel would be 288 feet tall.
This rendering shows the overhead view of the proposed convention center hotel in Miami Beach. The 800-room hotel would be 288 feet tall. Provided to the Miami Herald

Much of the debate surrounding the proposed headquarter hotel for the Miami Beach Convention Center has concentrated on traffic concerns, the size of the project and the anticipated public benefit from the deal.

In addition to the proposed ground lease that would allow Atlanta-based developer Portman Holdings to build a 288-foot tall, 800-room hotel behind the Fillmore Miami Beach at Jackie Gleason Theater, voters will decide on what would happen with the rent payments to the city if the lease passes.

The second ballot question asks — assuming the lease is approved by 60 percent of voters — if those payments should be evenly distributed to four areas of the city’s budget: mass transit and traffic reduction, pre-K through 12 education, stormwater projects and undergrounding of utilities.

According to the city’s financial analysis, the rent payment would total about $418,500 after 2018, the hotel’s first year in operation. This number is a combination of a minimum rent and additional rent based on anticipated revenues.

By 2028, the minimum rent would be $1.6 million, and the projected revenues bring that up to $3.4 million. The minimum payment in 2038 would be $2 million, with an additional $2.2 million in projected revenue.

Hotel opposition has criticized the support campaign for overstating the public benefit from the hotel. The supporters have advertised “an estimated average of $24.6 million per year per lease and tax payments.”

60 percent is the threshold needed for convention center hotel ground lease to pass.

The $24.6 million figure is an average across the life of the 99-year lease taken from combining rent payments and tax revenue to the city — resort taxes, food and beverage resort taxes, taxes paid to the local Community Redevelopment Agency that covers the convention center district, and others.

The second ballot question only addresses the allocation of the lease payments, not the tax revenue. According to Miami Beach City Manager Jimmy Morales, some of that tax revenue could be justified to fund big-ticket items in the future, such as mass transit that would connect the convention center to downtown Miami — Bay Link.

Should both ballot questions pass, Morales said the city could be creative with how to spend the rent payments for education. Miami-Dade Public Schools is responsible for funding the city’s schools, but Miami Beach has an agreement with the School Board in which the city funds the International Baccalaureate and dual enrollment programs at Miami Beach Senior High.

“We could use our parks for after-school and athletic programs,” he said.

Morales said the rent revenue could help minimize storm water rate increases in the future. The rates have been substantially raised in recent years to pay for the city’s ambitious anti-flooding program to combat sea level rise.

The city has not paid for putting utilities underground in the past. Instead, a few neighborhoods have taxed themselves to do it. With the rent money, Morales said, the city could pursue undergrounding lines.

As the city plans to expand its trolley system and implement the South Beach portion of the Bay Link light rail connection that would connect Miami Beach to downtown Miami over the MacArthur Causeway, the last fourth of the rent payments would go these types of projects.

Joey Flechas: 305-376-3602, @joeflech