Will the Byron Carlyle Development be Ground Zero for the Workforce Housing Debate in Miami Beach?

Susan Askew
Susan Askew

Will the Byron Carlyle Development be Ground Zero for the Workforce Housing Debate in Miami Beach?:

Two proposals and a divided evaluation committee

Two proposals for the use of the City-owned Byron Carlyle Theater in North Beach have put the debate over workforce housing in Miami Beach front and center. The City sought proposals for redevelopment of the property that continues to operate as an O Cinema but has fallen into disrepairTwo bidders emerged, one proposing a new hotel with retail, the other containing workforce housing, Class A office space, and retail. Both, as required, include cultural space as a public benefit.

An evaluation committee of City staff and a North Beach resident last month recommended in favor of the hotel but the discussions, just now available to the public, reveal divided opinions over the proposals and the best use of the property. The next step is up to Miami Beach City Manager Jimmy Morales who can transmit the hotel recommendation to Commissioners, express a preference for the workforce housing proposal, suggest further discussions with both developers or reject both proposals and start the process over again. Ultimately, the decision is up to the City Commission.
 
Pacific Star Capital, led by Aria Mehrabi, is proposing an 11-story hotel designed by architect Kobi Karp along with retail space in an adjacent City-owned parking lot which was also an option for development in the Request for Proposals (RFP). Pacific Star already owns the City National Bank building and several parcels around it. Mehrabi started with a grand vision for the area that involved swapping parcels with the City to build a more “cohesive” project but his plans have been stalled as he has not been able to reach an agreement with Miami Beach officials for nearly two years. From the beginning, he has expressed interest in the adjacent Byron Carlyle site. According to Pacific Star's website, the firm which is based in Los Angeles, specializes in real estate investment opportunities that provide investors with "attractive, risk-adjusted high yield returns and capital appreciation."

The other bidder to redevelop the Byron Carlyle is a partnership between Menin Hospitality and KGTC, LLC. Menin is a hospitality and development group whose portfolio includes the Mondrian South Beach, Shelborne South Beach, Gale South Beach, and Raffaello Chicago. KGTC’s managers include Matis Cohen, one of the leaders in the development of the North Beach Town Center, and Marisa Galbut, regional director for Crescent Heights whose projects include 1212 Lincoln Road, 500 Alton Road, and the new Baptist Health facility, among others. The group submitted a proposal for a seven-story building with 114 workforce housing units and a separate Class A office building with retail in both. The project is designed by Arquitectonica.
 
When the evaluation committee met in July, members debated the future vision for North Beach and the City’s goals for creating more workforce housing. The questions that emerged: Is the goal to have an aspirational/catalytic project and what is that? If not City-owned property for workforce housing, then where? While the edge, in the end, went to the hotel development, the five-member committee divided 3-2.
 
Some background: The City defines the qualifications for workforce housing as households earning up to 140% of the Area Median Income (AMI). In Miami-Dade County, the AMI is $54,900. An individual qualifying for workforce housing could have an income of $76,860. In contrast, someone qualifying for affordable housing would earn less than 80% of AMI or $47,450. 
 
The “creation and/or preservation of workforce and affordable housing” is one of the City’s top six guiding principles in its Comprehensive Plan.  The goal is to “have available a minimum of 6,800 housing units of workforce, affordable low- and moderate-income households and special need populations during the period through 2030,” the Plan states.
 
Currently, the City manages 89 affordable units including five added in the past week with the acquisition of a 5-unit building in North Beach.
 
The Byron Carlyle

The North Beach Master Plan noted the development of the Byron Carlyle could be a “catalytic project… that embodies the vision for the Town Center." Located in the North Beach Town Center area fronting 71st Street between Byron and Carlyle Avenues, the Byron Carlyle “opened as an independent movie theater in 1968 and later expanded into a Regal Cinema which shut down in 2002,” according to the Master Plan.  The property was later acquired by the City and is now partially leased to O Cinema though its deteriorating condition led the City to a discussion of the benefit (and costs) of repairs versus soliciting proposals for its redevelopment.
 
“By carefully conceptualizing the redesign of this property, the City could begin to implement the Town Center concept with mixed-use, multi-story development and encourage further development along 71st Street,” according to the Master Plan. “Some of these uses could include a library, an economic incubator to spur entrepreneurship in the area, or a welcome center. The new building could include office spaces and/or civic uses in the upper floors.”
 
The City issued a Request for Proposals (RFP) for development earlier this year, ending up with the two bidders.
 
Menin/KGTC Proposal: Workforce housing, office space, retail, cultural space

 

The Menin/KGTC proposal has at its center workforce housing. Matis Cohen told the evaluation committee the target is employees of the City of Miami Beach, Mount Sinai, and other businesses whose employees “increase traffic at peak hours, earn here but spend elsewhere, and take pride in the city they live in and not work in.”
 
The proposed residential building would be seven stories containing 114 units. They would include a mix of studios (42 units with an average size of 417 sq. ft.), 1- bedrooms (36 units, average size 585 sq. ft.), and 2-bedrooms (36 units, average size of 798 sq. ft.). Rents would be in the range of $1,275 for studio apartments, $1,650 for one-bedrooms, and $2,100 for two-bedroom units, Cohen said.
 
The ground floor of the residential building would include retail and a 10,000 square foot cultural center with a proposed “functional artist workspace” in the front and a theater in the back with ceiling heights of 25 feet. On the adjacent parking lot, the developers are proposing ground level retail and four floors of office space. They want to encourage local businesses to locate in the retail spaces.
 
The Byron Carlyle is to the south of Cohen’s proposed 72nd and Park development that was recently submitted to the Miami Beach Design Review Board. The Galbut family is also an investor in that project. The 30,000 square foot amenities deck at 72nd and Park would be available for use by the residents of the Byron Carlyle residential building, Cohen said.

Cohen, the largest property owner in the North Beach Town Center, emphasized the developer group’s local roots. “We are residents and we are your neighbors. We believe our mission is to build a community. We’re looking for a return on community not a return on investment.”
 
Architect Ray Fort of Arquitectonica noted Miami Beach’s focus on sustainability which he pointed out is “not just environmental, it’s also the social and economic aspects of that.” In addition to the workforce housing, he said the office space would provide “a place where people could work, all the different uses to really create a proper neighborhood.”
 
Jared Galbut, one of the principals of Menin Hospitality acknowledged his company “is a hotel company” and that his initial reaction to the Byron Carlyle RFP was “Hey, let’s build a hotel.” Then, he said, “I realized that a hotel is not what North Beach needed. Really understanding what’s going on in Miami-Dade County, Miami Beach, the need for workforce housing was of great importance.” 
 
During the question and answer portion of the presentation, Galbut was asked “Why workforce housing versus a hotel which you’ve normally done?”
 
“In the last couple of years there have been thousands of units entered into the market in Miami Beach hotels,” Galbut responded. “The market has not fully absorbed that” noting additional hotel units in the pipeline include 800 at the new Miami Beach Convention Center hotel as well as “a couple other thousand in the next couple of years coming up.”
 
“That is actually the last thing that we need in this market right now and especially on City-owned land,” Galbut said. “I think it would be a poor usage of that property.”
 
With regard to the financial proposal, Cohen said the group was willing to “take the risk and cost of the development” if the City would contribute the land. The developers would build workforce housing and the retail and office space “on spec” to create spaces for local businesses and entrepreneurs, meaning the City would not receive rent payments initially and, later, a reduced rent to provide spaces for the types of businesses it wants to attract. 
 
He said the group would have to abide by a 30-year minimum commitment to the units remaining as workforce housing but was willing to negotiate a longer term. The cultural space would be deeded back to the City. The developers say they are also willing to purchase the property at fair market value if the City would like a cash payment upfront.
 
Mark Milisits, Director of the City’s Office of Real Estate, said the RFP stipulated a long-term lease of 50 years with two twenty-year renewal options, not City contribution of land or purchase.
 
“You have a mandate to build workforce housing over a certain period of time which has not been done,” Galbut said. “We’ll build it for you. Your participation is you give us the land.” However, he said, the developers were flexible and willing to discuss a long-term lease if that is the City’s preference.
 
Pacific Star Capital Proposal: Hotel, retail, cultural space

 

(Note, Aria Mehrabi joined the evaluation committee meeting by phone from California and was very hard to hear in the recording, thus he is not quoted heavily.)
 
Architect Kobi Karp said Pacific Star is well underway on its plans for a retail development to the east of the Byron Carlyle Theater and is getting ready to submit plans for the City National Bank and adjoining parcels that Pacific Star also owns that will include residential, office, and retail uses.
 
Karp said the vision laid out in the North Beach Master Plan “is why Aria came here and bought the City National Bank building.” 
 
For the Byron Carlyle, he said, “We look at this block in a completely different fashion” proposing “mostly hotel” use.

“We feel this is an assembly where the hotel is complementary to the retail and it is complementary to the residential” aspects of the other nearby Pacific Star proposed developments, Karp said.
 
The proposal consists of an 11-story hotel with 160 units. The hotel would have a separate entry from the second-floor cultural space which would be accessed from the east side of the building. It is envisioned as “an interactive space that we feel will be complementary to the hotel and the food and beverage” which could also use the space. 
 
Karp said “Bringing [hotel] brands to great locations is what we specialize in” noting relationship with brands such as Moxy, Marriott, and Hyatt, among others.
 
“We have a great brand, we can’t disclose to you today,” Karp said of the proposed hotel. “We have a vision… to tie [the hotel] to the village and the ocean. We have a great anchor with a great business plan to come into this location.” 
 
During the Q&A, Karp said the “trellis façade” was something the “tenant desires.” With regard to the height, he said “We don’t mind the building being shorter.” The taller building and its “J-shape” allowed “more innovation on the façade.”
 
He also noted some of the sustainable features of the building including a water collection system for irrigation and solar panels for electricity. The RFP requires a LEED Gold certified development and both proposers met the requirement, though Pacific Star emphasized the sustainable features of their proposal more than Menin/KGTC did in their presentation to the evaluation committee.

With regard to the type of hotel that wants to locate in the space, Mehrabi said he’s worked with Starwood, Hilton, Hyatt, and Marriott, among others, without naming the specific brand. Pressed further for a “star” rating, he said, “It won’t be a five, it won’t be a three.”
 
The cultural space includes more than 22,000 square feet in total including a smaller area for a theater or similar use and a 9,000 square foot cultural center, two-story theater lobby, and an outdoor terrace for the exclusive use of the cultural space. Ceiling heights range from 15 to 18 feet.
 
The financial proposal includes an upfront $8.8 million payment to the City and an offer to purchase the adjacent parking lot for $3 million. Milisits, again, objected reminding Karp and Mehrabi the RFP was “clear we’re not looking to sell.” He said the committee could not consider proposals to purchase. In addition the lease terms were not as expected by the City which included the 50 year term and two, twenty-year renewal options in the RFP.
 
Hotel Use vs Workforce Housing
 
If you strip out the design (which would have to be approved by the Design Review Board, not the evaluation committee) and the proposers and focus only on the discussion of the use for the property, there was an interesting struggle with regard to public benefit.
 
First, the players. The Byron Carlyle evaluation committee included:
  • Mark Milisits, Director, Miami Beach Office of Real Estate
  • John Bowes, North Beach resident, president of the Normandy Shores Homeowners Association
  • Marcia Cerna, Deputy Director, Miami Beach Capital Improvement Program Office
  • Rogelio Madan, Chief of Community and Sustainability Planning, Miami Beach Planning Department 
  • Brandi Reddik, Cultural Affairs Program Manager, Miami Beach Tourism and Culture Department
 
The evaluation criteria:
  • Proposer Team Qualifications (25 points)
  • Financial Return to the City (10 points)
  • Maximizing Cultural Component and Public Benefit (25 points)
  • Design and Resiliency (20 points)
  • Program and Consistency with North Beach Master Plan (20 points)
 
In general, there was concern that neither proposer met the requirements of the RFP with regard to the financial proposal. “Both proposers have kind of put us in a bit of a predicament with the structure of the financial payments to the City,” Milisits said. Bowes suggested they both should be disqualified (which is something that could happen if Morales decides to do that).
 
But beyond the financial discussion, Bowes, a 32-year North Beach resident, said, “Where I struggle is – and I live there – North Beach is probably the most affordable place to live right now and it looks horrible. I kind of wanted to see something different than affordable or workforce housing… I kind of wanted something different there instead of more efficient, cost-efficient places to live and, maybe that’s selfish of me, but I live and breathe it and I’ve seen it.”  
 
Acknowledging “nice parts” of North Beach he said, for the Town Center and Ocean Terrace, “I’m looking for something different so, in my view, my perspective, I’m not excited about workforce housing, micro-units. The City may feel differently but I certainly don’t.”
 
“The hotel, maybe that’s a little bit better,” he added, “not kind of what I was thinking was going to happen but I would say, from a weight perspective, Pacific Star has got a better concept from a beneficial use” perspective for the area.
 
Madan who was very involved in the development of the North Beach Master Plan and development guidelines said, “The City has a great need for workforce housing. Our comprehensive plan talks about maintaining 6,500 units in the City of workforce housing… It is one of the reasons we have a significant traffic issue in the City as workers here have to commute in.” 
 
“On the other side, I think the theater and public space component of the Pacific Star Capital [proposal] is a little more beneficial to the City, but the hotel component, I don’t think the City needs to be incentivizing hotels,” Madan said. “We’ve already had proposals for the North Beach Town Center that have been approved. They haven’t moved forward yet in terms of building permitting, but they have been approved.”
 
“There is a private sector demand for hotels and the private property can accommodate the hotel development,” Madan added. “It really doesn’t need to take place on public land which is a very limited resource so, in terms of the public benefit, Menin Group has the edge there.”
 
Milisits liked the public benefit contribution of the larger cultural space proposed by Pacific Star, though he noted the Menin proposal for a greater ceiling height in its cultural space.
 
He then added, “Public benefit. I think we all know we need workforce housing in North Beach. I don’t know that this is the project for it. We’re in sort of the initial stages of the revitalization of North Beach and I don’t know that the first one out of the box should be workforce housing, but that also raises the question, where else are we going to put it?”
 
He referenced Madan’s point, adding, “There are other hotel developments proposed, that’s just a trade off as to which one we prefer.”
 
Reddik put her resident hat on in saying “I think we’re missing something about the public benefit here, and that is the fact that in a hotel, the lobby acts as a public space… Miami Beach is a hotel culture” where people meet their friends in hotel restaurants. “In that neighborhood we have nothing like that and that could be an interesting benefit for the residents there that you would have a place, a hotel lobby, a place to eat, a place to congregate and that really doesn’t exist right now.”
 
Bowes said, despite the projects in the pipeline, “Unfortunately, we still don’t have a place” for guests to stay in North Beach when they visit saying the closest hotels that he would send people to are in Surfside and Mid-Beach.
 
When Bowes pressed for further details on the workforce housing goal, Madan said, “It’s kind of aspirational, it’s really just a goal the City has to maintain.”
 
“Internal City goal with no teeth to it other than we need this, we need to find a place for it?” Bowes retorted.
 
Cerna noted, “I think the idea is also to be less car-centric” allowing people to live where they work. 
 
The proposals that have come before the City for the Town Center area, Madan said, “are going to be more luxury housing. We have more affordable units to the north. There’s this middle-income area that’s really lacking” in terms of housing.
 
At the end of the evaluation exercise, Menin/KGTC won in overall points (413 to 405 out of a total of 500) but the recommendation is determined by the rankings. In other words, three of the committee members ranked Pacific Star first and two ranked the Menin/KGTC proposal first giving Pacific Star the edge. 
 
[Article continues below]
 
 
Points John Bowes Maria Cerna Rogelio Madan Mark Milisits Brandi Reddik   Maximum Total  
Menin/KGTC 87 89 85 78 74   500 413  
Pacific Star 70 90 82 85 78   500 405  
 
 
Ranking John Bowes Maria Cerna Rogelio Madan Mark Milisits Brandi Reddik   Low AggregateTotals   Ranking
Menin/KGTC 1 2 1 2 2   8   2
Pacific Star 2 1 2 1 1   7   1
 
[Summary of overall scores. See detailed scoresheets at the end of this article.]
 
 
Anecdotes from City Commission

While the project is under the “cone of silence” and neither proposers nor Commissioners are able to discuss the specifics of the proposals, Commissioner John Alemán addressed the RFP process, in general, when discussing another RFP for City bus shelters at this week's City Commission meeting.
 
“I recently sat through the Byron Carlyle selection process and I observed that with five people... any one person on the selection committee that doesn’t really understand the spirit and intent when we create a procurement initiative from this dais” can impact a decision, she said. “Our strategic intent doesn’t always make it fully into the minds of those five people that are selected. And they can make recommendations that are not in the best alignment [with the City] and so I think we should always keep the door open for this body to say we want the process to be transparent and fair, but did we actually end up with the right recommendation based on all of that?”
 
[This writer's personal experience with the process: The evaluation committees usually include one “resident” slot though any of the other members of a committee may also be residents. Having participated on an evaluation committee for another procurement process, it became clear that the only way for a resident to impact a selection was to have wide divergences in scores. In the case of the Byron Carlyle process, resident John Bowes scored the Menin/KGTC proposal as an 87 out of 100 and the Pacific Star plan as a 70. None of the other scores had as wide a gap and, in this case, resulted in Menin/KGTC having a higher point total but behind in the rankings, which may mean the rankings do what they’re intended to do and not allow one member to skew the process.]
 
Has the Commission gone a different direction than an evaluation committee or City Manager recommendation or sought discussions with more than one proposer? This past week, with regard to a contract for a consultant to solicit proposals for the Convention Center naming rights, an evaluation committee and the City Manager recommended one consultant, however, the Commission wanted to be sure it was maximizing the opportunity based on the experience of the vendors and asked the City Manager to have further discussions with both vendors and come back with a recommendation in September. So, yes, it does happen.
 
As to workforce housing, when an ordinance was up for second reading to allow smaller, more affordable co-living units within the North Beach Town Center, the Commission voted for a maximum of 312 even though City staff recommended 624 as means of providing options for millennials and workers who could live on the Beach, rather than commute.  
 
Before the vote, Mayor Dan Gelber noted, “We can’t keep talking about workforce housing if we’re not prepared to do something about it.”
 
And that may, ultimately, be the debate for the Byron Carlyle site.
 

Pacific Star renderings: Kobi Karp Architecture and Interior Design
Menin/KGTC renderings: Arquitectonica
Followed by detailed scoresheets from evaluation committee members
 
 
 
Menin/KGTC proposal; rendering by Arquitectonica
Menin/KGTC proposal; rendering by Arquitectonica
Menin/KGTC proposal; rendering by Arquitectonica
Pacific Star Capital proposal; rendering by Kobi Karp Architecture
Pacific Star Capital proposal; rendering by Kobi Karp Architecture
Pacific Star Capital proposal; rendering by Kobi Karp Architecture
 
 

Individual score sheets
 

 
John Bowes Maximum Menin/KGTC Pacific Star
Proposer Team Qualifications 25 25 15
Financial Return to the City* 10 0 0
Maximizing Cultural Component & Public Benefit 25 22 20
Design and Resiliency 20 20 15
Program and Consistency with North Beach Master Plan 20 20 20
       
Total 100 87 70
 
*Bowes handwritten note: Does not meet RFP req
 
Maria Cerna Maximum Menin/KGTC Pacific Star
Proposer Team Qualifications 25 23 22
Financial Return to the City 10 7 8
Maximizing Cultural Component & Public Benefit 25 23 23
Design and Resiliency 20 18 19
Program and Consistency with North Beach Master Plan 20 18 18
       
Total 100 89 90
 
 
Rogelio Madan Maximum Menin/KGTC Pacific Star
Proposer Team Qualifications 25 24 23
Financial Return to the City 10 2 5
Maximizing Cultural Component & Public Benefit 25 23 20
Design and Resiliency 20 17 18
Program and Consistency with North Beach Master Plan 20 19 16
       
Total 100 85 82
 
 
Mark Milisits Maximum Menin/KGTC Pacific Star
Proposer Team Qualifications 25 25 20
Financial Return to the City 10 0 5
Maximizing Cultural Component & Public Benefit 25 15 25
Design and Resiliency 20 18 20
Program and Consistency with North Beach Master Plan 20 20 15
       
Total 100 78 85
 
 
 
Brandi Reddick Maximum Menin/KGTC Pacific Star
Proposer Team Qualifications 25 25 25
Financial Return to the City 10 2 4
Maximizing Cultural Component & Public Benefit 25 15 18
Design and Resiliency 20 15 13
Program and Consistency with North Beach Master Plan 20 17 18
       
Total 100 74 78
 

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