Amid Overriding Complaints, Worldcenter Developers To Get Millions In Subsidies

Miami city commissioners on Monday easily approved a multi-year tax-rebate deal worth tens of millions of dollars for the giant Miami Worldcenter project, overriding complaints from a score of Overtown residents, labor officials and activists that the plan was rushed through.
The 5-0 vote came during a rare, middle-of-the-holidays meeting of the city commission, sitting as the board of the Southeast Overtown/Park West Community Redevelopment Agency, in a packed community room at Camillus House. The unusual timing was prompted by what the project’s developers say were pressing contractual and financial deadlines.
The subsidy package would kick back more than half the property taxes paid out to the redevelopment agency by the owners of the 10-block complex, which sits inside the CRA’s boundaries – or as much $88 million through the 12-year life of the deal. The CRA typically gets a big chunk of property taxes generated by new development inside its boundaries for the purpose of remedying blight, including by providing financial incentives to attract private developers.
In exchange, corporations managed by Miami World Center Holdings, LLC, and shopping center developer The Forbes Company agreed to pay higher wages and ensure their contractors and subcontractors hire up to one-third of their unskilled workers from Overtown and then around Miami and the county.
Also somewhat unusual was the fact that city officials made little attempt to make a case in a three-hour-plus hearing for why the $1 billion Miami Worldcenter development, in the planning for more than a decade and backed by deep pocketed investors from Palm Beach County and California, needs financial incentives in order to build.
CRA staff made no presentation at the outset, and board chairman Keon Hardemon simply opened up the floor to public comments to start the hearing. Worldcenter managing partner Nitin Motwani spoke only to thank the city.
Numerous speakers, however, complained that the plan, which Hardemon conceded he was still changing over the Christmas holiday, was insufficiently vetted publicly. It struck some critics, who contended the city gets little in return other than hiring and wage targets, as a “corporate welfare.”
 

“Why do we need to be incentivizing this project?” asked Paul Savage, attorney for a group of activists and developers who have sued over what they contend are giveways of public streets to the project. “Miami is on fire with development. We don’t need to give away incentives like this.”

When it came time to debate, commissioners clearly had made up their minds, although board member Frank Carollo griped that neighborhoods in which Worldcenter contractors are to recruit workers were still being added at the last minute to the deal.
Commissioners defended the plan as a “tough’’ agreement that’s precisely what the CRA was created to do, with built-in penalties if the developers don’t meet hiring goals. Hardemon said he gave the developers “hell’’ during negotiations and boasted the resulting agreement set a new standard for government-set hiring and wage goals.
He said the CRA will retain significant tax revenue from the project to reinvest in Overtown.
 

“I’m tired of having overgrown lots and dead bodies in the community,’’ said Hardemon, whose district includes Overtown. “What changes this is development….I can’t wait any longer. I’m sick of waiting. We’re ready to build.’’

Commissioner Marc Sarnoff also noted the developers, who have been trying to get the mixed-use project built for a decade, won’t get the subsidies unless they actually build.
“If they don’t build it, they don’t get a penny,’’ Sarnoff said.
But numerous speakers fretted that the proposal was not released until Christmas week and was still being tweaked on the day of the vote. The Urban Environment League and the Overtown Advisory Board, the reconstituted public body that’s supposed to monitor the Worldcenter development on behalf of the city, both asked the plan be deferred. The Overtown board has not formally seen or weighed the subsidy plan.
Officials from construction trade groups said it’s unclear how the hiring goals in the plan would be enforced or whether they go far enough.
“Most of the language (in the agreement) is completely unenforceable,” organizer Jackie Carmona told the board.
And some critics noted the deal would divert millions in tax money from redevelopment of Overtown, the goal of the CRA.
“Too often we have seen the city rush into deals with agreements with the private sector, with disastrous results,’’ said UEL president Grace Solares, reading from a resolution approved by the group’s board.
The tax rebates are valued at $6.9 million a year once the $1 billion first phase is completed, and pay back more to the developer than what was previously being considered. The rebates, beginning as early as 2018, would continue through 2030.
A portion of the subsidies would go toward the financing of some $57 million in public infrastructure improvements necessary to build the project, like roadways, utilities and parks. The remainder is being discussed as part of the financing of a parking garage, currently being negotiated with the Miami Parking Authority.
The city has used the strategy previously as an incentive to development, subsidizing the cost of installing or improving infrastructure to support a project. The city formed a CRA to enable development of Midtown Miami, once an abandoned railyard, kicking back taxes to the developers to underwrite installation of streets, parking structures and electrical, sewage and water systems where there were none.
But other equally large projects, including Swire’s similar and equally massive Brickell City Centre, have started construction without public subsidy, although that’s located in a proven neighborhood. The Park West district where Miami Worldcenter would rise has long been mostly derelict and has struggled to attract development.
The UEL also raised potential legal questions over the deal. The group’s resolution questions whether state laws that allow creation of CRAs permit granting rebates in exchange for hiring firms located outside the boundaries of the redevelopment area.