Convention Center Hotel Lease: Ballot Questions #2 and 3

This year’s Miami Beach ballot initiatives include establishing an Office of the Inspector General, leasing City-owned land for a hotel connected to the new Convention Center, and a General Obligation (G.O.) Bond. Following is a look at the Convention Center Hotel lease questions.
 
Question #3: Should City lease 2.6 acre property at northeast corner of 17^th Street and Convention Center Drive to MB Mixed Use Investment, LLC for 99 years, requiring, per Resolution 2018-30425:

• Construction/operation of 800 room Hotel (maximum height of 185 feet), connected to Convention Center,
• No City funding,
• No gambling,
• Rent to City after Hotel opens, including greater of guaranteed rent ($16,616,242 over first ten years, adjusted thereafter), or percentage of Hotel’s revenues annually?

 
A companion Question #2:
If voters approve City’s Convention Center Hotel lease with MB Mixed Use Investment, LLC, shall the City adopt an ordinance dedicating the Hotel’s 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 supermajority (5/78ths) City Commission approval?
 
Important note: The vote on Question #3 is for a lease on property adjacent to the Convention Center (above). It is not a referendum on the design. While concept renderings were provided as part of the lease, they are not final. The design is subject to review and approval (with all the requisite public comment) by the City’s Design Review Board.
 
 

MB Mixed Use Investment, LLC (“Miami Beach Connect”) is a joint venture controlled by local developers and Miami Beach residents, David Martin, a principal with Terra International Developments, and Jackie Soffer, a principal of Turnberry Associates.
 
The lease agreement is for the development and operation of a privately-funded convention hotel. If this were a City-owned hotel, no vote would be needed, however, the City’s Charter “requires approval by at least 60% of the voters voting in a Citywide referendum of any lease of ten (10) years or more of certain City-owned properties located in the vicinity of the Convention Center, including the Hotel Site property that is the subject of the Ballot Question,” according to the City’s Voter’s Guide.
 
The hotel is estimated to cost $362 million to build and would be connected to the new $620 million Convention Center via a skybridge. According to the terms of the lease, it would be completely privately-funded with no City subsidies, tax rebates, or tax abatements. Miami Beach Connect would also be responsible for all ad valorem taxes, resort taxes, and other fees.
 
In an email to residents explaining the City Commission’s thinking in putting the item on the ballot, Mayor Dan Gelber wrote, “Since not a penny of City funding or taxpayer dollars will be used for the construction or operation of the Hotel, that means a net gain of tens of millions over the next decade to our residents.”
 
“The second major point is a bit nuanced but equally important,” he continued. “We have just spent over $600 million to renovate the Convention Center. It will be filled regardless of this vote – the question is by whom: conventions or trade shows?”
 
Supporters, including the Greater Miami Convention and Visitors Bureau, argue that the Convention Center has mostly attracted trade shows – and local “day trippers” who drive – rather than more lucrative conventions that largely bring in out-of-town visitors who use other means of transportation to get from the airport to their hotels and who will walk to nearby restaurants. 
 
“That is why during the Auto Show (a trade show) this week we sent out a notice to residents that they should expect clogged streets,” Gelber wrote. “On the other hand, two weeks ago we had a 5 day convention of health care professionals – and there was no impact on our traffic because the attendees were in our hotels and not commuting in cars.”
 
“Before its renovation, our Convention Center was 70% trade show, 30% convention – we strongly believe with an adjacent hotel with a guaranteed room block to permit the City to book convention events, that ratio will at least reverse itself which will mean much less traffic and more resort taxes for the City,” Gelber said. 
 
This is the third time the City has tried to build a Convention Center Hotel. While 54% of voters gave their approval in 2016, it failed due to the 60% requirement. After considering the height and traffic objections to the previous proposal, the developers have proposed a 185-foot hotel (the maximum as allowed under the lease), which is 100 feet less than the proposal rejected by voters two years ago.
 
 

Bill Talbert, CEO, of the Greater Miami Convention and Visitors Bureau (GMCVB) wrote in an email, “Completing the convention center with a privately-funded headquarter hotel will help keep existing events such as Art Basel and E-Merge Americas and attract new, world-class meetings from the healthcare, technology, and finance industries. This gives our convention center the opportunity to live up to its full potential and energize our local economy.”
 
Talbert noted that at the proposed 185 feet, not only is the hotel “more than 100 feet shorter than previous proposals. The hotel’s maximum height is also less than several nearby buildings, including the Lincoln Road Clocktower, the Shore Club and The Loews Hotel.”
 
The GMCVB estimates the lack of a Convention Center hotel has cost the City $130 million in lost revenue as a result of being locked out of bidding on conventions that require a connected hotel. Talbert said a Convention Center hotel will boost the local hospitality industry “by driving occupancy rates and elevating the caliber of conventions that come to the City, which is why the Greater Miami Convention and Visitors Bureau and the Greater Miami & The Beaches Hotel Association – the two leading voices of our local hospitality sector – have been supporters of a convention hotel for more than a decade.”
 
One of the key questions has been how a hotel will impact the Fillmore. Talbert wrote, the “beloved venue and Miami Beach icon” has been factored into the location of the hotel, ensuring the “preservation and protection” of the theater. According to the City’s Voter’s Guide, the Fillmore will continue operations during and after construction of the hotel.
 
Additional info:

Resiliency and sustainability measures are integrated into the design according to the developers. "It will include stormwater management and reuse, flood risk mitigation, energy efficieny and the use os solar power, and design features that ensure continuity during weather events," according to David Martin. They have also committed to achieving LEED Gold certification.

The lease requires “at least 320 parking spaces” and an “approved hotel brand.” At a recent community meeting, developer David Martin said Hyatt and Hilton are on the short list.
 
Not only can the hotel site not be used for gambling establishments of any kind, "Miami Beach Connect (or any subsequent Hotel lessee or persons with an ownership interest in lessee) cannot own or operate any gambling establishment in Miami-Dade County,” according to the City’s Voter’s Guide.
 
Finally, the developers will contribute approximately $3.2 million to the City’s Art in Public Places projects throughout the City.
 
With regard to question 2 and allocation of funds, the City notes guaranteed rent payments in Year 5 of $2,000,0000, although $2.6 million is anticipated.  According to the City’s Voter’s Guide, “Accordingly, if this Ballot Question 2 is passed, the City would dedicate $2,000,000 in Year 5 (in equal portions of $666,666.66) for stormwater projects, traffic reduction measures, and education. Any rent payments received in Year 5 in excess of the $2,000,000 guaranteed rent would be used to support other public programs or projects, as part of the City’s General Fund.”