One more delay chalked up to COVID-19, the construction of the Miami Beach Convention Center Hotel. Developers David Martin and Jackie Soffer provided a “force majeure” notice to the City under the Hotel Development and Ground Lease Agreement. Force majeure clauses deal with unforeseeable circumstances that impact the ability to fulfill a contractual obligation.
City Spokeswoman Melissa Berthier said the developers filed this notice on March 16: “Pursuant to the Agreement, the Developer is entitled to, and the City is required to grant, an extension of time for events of force majeure and/or economic force majeure, which would include epidemics/pandemics such as COVID-19 and/or economic events that would impair the developer’s ability to obtain a construction loan commitment for the hotel project."
"The exact period of the extension as it relates to the Hotel Project has not been determined, as the City, County and State of Florida have been continually operating under a State of Emergency since the March 16 notice was provided to the City," Berthier wrote.
In an email to RE:MiamiBeach, Martin emphasized, “We remain fully committed to the development of the Miami Beach Convention Center Hotel. Since announcing a management agreement with Hyatt, one of the world’s premier hospitality operators, earlier this year, we have been hard at work finalizing construction plans for the hotel. The team behind the new Grand Hyatt Miami Beach looks forward to realizing our vision for this project.”
“The public health emergency brought on by the pandemic has affected all corners of business and society, and prompted our team to file a required legal notice that memorialized the undisputed and unforeseeable delay caused by the pandemic,” he said. “We all look forward to the day that this pandemic is behind us. We remain confident of Miami Beach’s long-term future as a premier business, leisure and convention destination, and we look forward to the grand opening of the Grand Hyatt Miami Beach.”
The announcement that the 800-room hotel would be a Grand Hyatt was made during Miami Beach Mayor Dan Gelber’s State of the City address in February, just weeks before the State of Emergency was implemented. The 185-ft, 17-story hotel will be built on the corner of 17th Street and Convention Center Drive. The site, adjacent to both the Convention Center and Fillmore Theater, contains a small surface parking lot and City-owned building which will be demolished.
At the February announcement, Martin said the hotel was in the permitting process and he expected shovels in the ground “in the coming months, vertical construction next year , with completion by end of 2023.”
The hotel construction delay means projected revenues to the City, which is facing budget challenges due to COVID, will be pushed further out. In a January 2019 memo to Commissioners in preparation for their vote on the long-term lease for the development site, City Manager Jimmy Morales noted the developer’s projections for the first year of hotel operations total $6.2 million, accounting for the ground lease payment, real estate taxes paid to the City, resort taxes, and food and beverage taxes.
That estimate “does not include an additional $1.5 million recurring annual payment of Convention Center Development Taxes (CDT) from Miami Dade County once the hotel opens,” Morales wrote at the time. “Additionally, there would also be resort tax revenue generated at other hotels and restaurants from the additional visitors to the city. As such, the City stands to start receiving millions of dollars of revenue one year earlier.”
In the FY 2021 budget documents presented to the City Commission this past week, Morales indicated, “Given the current uncertain economic conditions in the hospitality industry and the financial markets, however, we do not know as of today when construction of the hotel will commence and, therefore, when the hotel will open for business.”
Since May, the Convention Center has been the site of a walk-up and drive-through COVID testing facility that uses part of a parking lot where the hotel will eventually be constructed. Indoors, the State is operating an alternative care facility in the event local hospitals see a surge in COVID patients. It has remained unused since it was set up in April.
Photo: Michael Timmerman
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