Convention Center Hotel Lease Approved

City Center

Susan Askew
Susan Askew

Convention Center Hotel Lease Approved:

Commissioners hoping third time is a charm

After two failed attempts to build a hotel connected to the Miami Beach Convention Center, a new City Commission is trying again. Final approval came this week on a 99-year lease for a hotel proposed by Jackie Soffer and David Martin. Commissioners also voted to place the item on the November ballot for voters’ consideration. It requires 60% approval. 
 
Maria Hernandez with the City Manager’s Office is managing the construction of the Convention Center. She noted the developers of the proposed 800-room hotel on a 2.6 acre site adjacent to the Convention Center had reached a labor agreement with local union Unite Here as requested by the Commission. Since first reading on July 17, the City also received the final appraisal for the site.
 
“The developer’s financial proposal, which would result in $2.6m in annual rent to the City once the hotel stabilizes in year 5, is in line with the [appraisal] which confirms a fair market value in the range of $2.39 to $2.96m annually.”
 
Hernandez added the final lease was updated to include a detailed a construction staging area plan in order to minimize disruptions to 17th Street and Convention Center Drive during construction. Also, since the July 17th approval, the developer held one additional community meeting to further review the proposal with residents.
 
City Manager Jimmy Morales said, the hotel “will create business for other hotels. It’s not competing. It’s bringing in more shows, more conventions, helps raise the boat.” The goal for the hotel is to bring in more conventions and high-end trade shows “where people come in one day and three or four days later leave and in between they’re walking and using public transportation” reducing the number of cars on the road. “For those reasons we strongly recommend this project,” he said.
 
Alex Heckler, attorney for development entity Miami Beach Connect, noted Soffer and Martin are Miami Beach residents who both grew up here. Comparing the proposal to the 2016 so-called Portman deal, he said, the new design calls for a hotel that is 185 feet tall, 100-feet lower than the one proposed in 2016. Heckler said it is also 111,000 sq. ft. smaller.  The developers have proposed interior loading and drop-off for rideshare and delivery vehicles to address the traffic concerns raised in 2016. Economically, it provides “$4.2m more to the City over the first ten years guaranteed than the Portman deal,” Heckler said. He reiterated that a labor agreement had been executed.
 
The Miami Beach Convention and Visitors Bureau and the Super Bowl 2025 Committee affirmed their support of a hotel before Wendi Walsh, Unite Here Local 355 representative, spoke to the labor piece. She said the deal protects the City from labor disruptions “but also I did want to say that we have a lot of low wage workers who do live here on Miami Beach and not every hotel provides the kind of wages and benefits that allow a worker to work just one job and still make ends meet,” she said. “I think as you all know we do represent another hotel here on Miami Beach that is owned by the Soffer family and I may regret saying this when it comes to bargaining next time but, you know, I do think those are the best hotel jobs on Miami Beach and allow for workers to make a good living and provide for their families and I’m excited about this for the potential for future workers being able to have good jobs in this hotel and, of course, we’re going to do everything we can to make sure that the residents understand what this hotel can provide to the residents here who work here in the future.”
 
Activist Frank Del Vecchio reminded Commissioners that for all the positive comments before them, “This is going to be in the voters’ hands. It’s going to require a 60% vote…I am fearful that there is a distrust among the voters.”
 
Commissioner Michael Góngora echoed those sentiments later in the meeting commenting on the community meeting the night before. “I was a little bit alarmed, though, because I will tell you there are a lot of residents that are unhappy with us and I think particularly unhappy with the Mayor and those of us that got elected in the last election because we did speak a lot about construction fatigue and a pause and there are a number of people that feel that between this hotel, the GO Bond, the [500-700] Alton Road project, the North Beach Town Center, that in fact what they’re looking at is more and more construction and not less and I think we need to be aware of that as a Commission.” 
 
“I do think the electorate is very disillusioned, in general, with all of the development whether it be in North Beach or Washington Avenue, the [500 Alton Road] tower in South Beach, and now this large hotel,” agreed Commissioner Kristen Rosen Gonzalez. “And I think the Commission, if we’re going to support this, should consider some kind of hotel moratorium afterwards.”
 
Rosen Gonzalez, who co-chaired the Blue Ribbon Panel on the Convention Center Hotel, said she was voting in favor of it but encouraged action later to address the number of hotel rooms coming online in the City which is changing its character, she said.
 
Commissioner Mark Samuelian said he supported the project because of what it could do for the City, noting that the current revenue from “a surface parking lot that generates about $100,000 a year” will convert to “$10m once we’re up and running at a steady state and that is goodness for our community.”  
 
“In the last three years there have been 17 new hotels in Miami Beach,” Samuelian said, but “this is the one that really pays off for the public. This is the one that really delivers” for the City.  
 
“I always have been sensitive to overdevelopment and construction, that’s sort of part of my value system,” Samuelian continued. “I think the concerns of the community have been heard and I’m fully supportive of what we’re doing today.”
 
Commissioner John Alemán said, in addition to the revenue Samuelian referenced, “This Convention Center hotel allows us to stem this flow of loss of convention business. Since the last vote [in 2016], the City has lost $130m worth of conventions, many, many medical conventions, the types of convention goers that are going to spend a lot of money while they’re here enjoying our very beautiful city eating out and so forth. So, it’s not even just the $10m, it is the uplift on our Convention Center business which benefits all of our other hotels and restaurants and others, our arts institutions, and really the entire community so I’m very supportive of this.”
 
She noted the new proposal addresses the three main concerns that surfaced in an FIU survey after the failed vote: height, traffic, and design.
 
Góngora agreed the design appears to be better, the height is lower, and that the traffic plan is better. However, he said, “If you want to get the votes from the City and you want to get my vote, ultimately, people really need to understand what’s the benefit for us?… We need to understand what does this extra money [from hotel rent and Convention Center business] mean?”
 
“I don’t think that the residents understand what does that mean for them so we need to let [them] know,” Góngora said. “We faced a deficit this year. It wasn’t that big of a deficit but we’re going to be looking at a bigger deficit next year. None of us up here want to raise millage rates or be accused of raising taxes… so we’re looking for alternative sources of income and this is one of them that would provide a healthy jolt, an infusion of money into the City’s bank account that would allow us to look at those funds to help defer the costs and not raise property taxes.”
 
“I am concerned for the residents in the neighborhood that have suffered through a lot of construction,” he concluded. “The noise and debris of the Convention Center renovation as well as the redoing of 17th Street many times. We really have to look for a way to try to limit the noise and the impact of any further construction. Our residents are just tired of it.”
 
Mayor Dan Gelber said, “We listened to the community. It’s smaller. It may not be smaller in rooms but it is smaller in size which is not insignificant because a lot of people didn’t like the scale of the last one. It does address, I think, the number one concern that anyone had which was traffic in a way that is both inventive, creative, and actually aesthetically pleasing which is sort of amazing.”
 
“I think the other thing we all have to remember,” Gelber said, “who our Convention Center attracts is very important to our community. If we consistently have these trade shows and day shows where people come across the Causeway and go back at the end of the day, all that does is increase our congestion.” But conventions that bring overnight guests are not using the roads, he said, which is better for residents.
 
When Góngora mentioned concerns about the number of rooms being the same as the number in the previously failed hotel proposal and sought a reduction, Commissioner Ricky Arriola who co-chaired the Blue Ribbon Panel said, “You’re never going to make 100% of the people happy 100% of the time. Just because people make comments, that doesn’t mean that’s what you need to do. The real ask from the Convention and Visitors Bureau was 1,000 rooms so I think the compromise was 800.”
 
“They already came down 100 feet in height,” Arriola added. “I think the concerns of the community have been largely addressed up to the point where this won’t be a financially feasible hotel for the Convention Center if we keep cutting, so I think a 100 feet height reduction is a drastic reduction. That addresses a big – one of the top three concerns – that we got in our survey. The traffic mitigation measures that they’ve taken address the traffic issue and certainly the design. This is a spectacular design.”
 
“I want to remind folks, the majority of Miami Beach voters did vote in favor of the hotel, 54%. So it’s not like they rejected this outright,” he said. “We have an arbitrary, for political purposes, 60% threshold but that’s how we do most votes in this city. This would have passed under almost any other circumstance but for an arbitrary political ploy that was done years ago to make this a 60% threshold. I think this team is superior to the team that proposed the hotel last time, the locals, they have an amazing track record. They’re going to do a great job over the next ninety days to get out in front of the voters, educate them. They’ve got a great architect.  I think this will pass.”
 
The lease was approved on second and final reading. Commissioners then voted to place it on the November ballot for approval.
 
 
Learn more about the hotel at the developer's website: miamibeachconnect.com.
 

Commissioners then debated asking voters if they wanted to allocate hotel rent revenue for education, traffic mitigation, and stormwater projects. 
 
Góngora said, “I don’t want my hands tied… I don’t think today we can anticipate our priorities will be the same 99 years down the road.” He also objected to funding education items that should be the Miami-Dade County Schools responsibility. 
 
“We’re taking over and funding things… just because we’re a fairly well-off city, we can’t keep undertaking things that are a County School Board responsibility and then tell residents we don’t have the money to… fund parks, fix cracked sidewalks. I personally think this is a bad idea and a bad road to go down.” He added his other concern is that the “only way to undo ballot initiatives is by another ballot initiative.”
 
Arriola told sponsor Micky Steinberg, “I love the spirit of this. I just think tying future Commissioners’ hands…to be tying our hands, I don’t think it’s a good policy decision.”
 
Samuelian agreed he did not want a “policy that’s going to force us to push money in a way that is not optimal.” He liked the idea of using the minimum rent amount received but not the rent anticipated over and above the minimum guarantee.
 
He proposed allocating the minimum rent received equally among the three buckets while giving the option to change the policy with a 5/7 vote of Commission. “If there’s revenue above [the minimum], that gives the flexibility,” he said.
 
The Commission voted 4-3 to ask voters if the Convention Center hotel was approved, should the City “dedicate the guaranteed rent payments received by the City to enhance funding in equal portions annually for stormwater projects in lieu of rate increases, traffic reduction measures, and education with any amendment of such ordinance subject to a 5/7 (supermajority) vote of the City Commission.”
 
Morales noted there is $16m in rent in the first ten years guaranteed and $9.5m in variable rent anticipated. 
 
Voting yes: Gelber, Steinberg, Alemán, Samuelian. No: Arriola, Góngora, Rosen Gonzalez.
 

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