Renderings of the Miami Beach Convention Center Hotel (Credit: John Portman & Associates)
The 192-page lease still needs to go back to the city commission for second reading on Sept. 2. And, since the hotel will be built on 2.65 acres of city-owned land, the deal will have to be ratified by 60 percent of Miami Beach voters on Nov. 3.
If the deal is approved by Beach officials and voters, Portman Holdings aims to have a $400 million hotel complex completed by Art Basel 2018.
Under the proposed lease, Portman Holdings, an Atlanta-based architecture and real estate development company, will have the right to build a convention center hotel that will include 95,000 square feet of conference and ballroom space and 37,400 square feet of restaurants and retail space just east of the Fillmore Miami Beach at the Jackie Gleason Theater. The hotel will complement the city’s planned $500 million revamp of the Miami Beach Convention Center.
In exchange, Portman Holdings will pay the city 2.5 percent of its gross revenue or a minimum base rent that will start at $209,279 the first year and increase to $418,557 by year ten, whichever amount is greater. (The minimum base rent will be re-negotiated every 10 years.)
In rent alone, the city will make between $21 million and $44 million, said Jeff Sachs, the city’s consultant and managing partner of Strategic Advisory Group. In 99 years, the city will make anywhere from $35 million to $74 million in net present value rent.
The city of Miami Beach will also be entitled to property taxes and resort taxes, Sachs added, which amounts to $151 million in 30 years and $233 million in 99 years at net present value.
But that’s not all. Portman has the right to sell its interest. The first three times at least 50 percent interest of the hotel is sold by Portman or future owners, the city will be entitled to a payment of $2 million or 0.25 percent
The contract also stipulates that gambling is banned at the hotel and that Portman or future owners can’t be involved in any future casinos in Miami-Dade County. The developer would be forbidden from asking the city for subsidies.
“Miami Beach is truly blessed,” Sachs told Miami Beach commissioners. “This is the only convention center hotel that I’ve worked on that doesn’t have a subsidy.”
Miami Beach City Commissioner Michael Grieco said he was interested in adding language to the agreement that would also block future tax rebates to the project. But Commissioner Joy Malakoff wanted assurances that such a clause wouldn’t harm the deal. “I’d just like to be more comfortable with it,” she said.
Commissioner Jonah Wolfson was not comfortable with the deal. The lone dissenter, Wolfson said that he didn’t like that the lease was between the city and Portman Miami Beach LLC, a subsidiary that Wolfson claimed had no assets. Wolfson said that legally, Portman Miami Beach LLC wasn’t the entity that answered the city’s request for proposals to develop a convention hotel — it was Portman Holdings.
Wolfson also questioned why the city reduced its initial demand of 4 percent of its annual gross revenue to 2.5 percent. (A memo from City Manager Jimmy Morales stated that the gross revenue demand reduction was “driven by the further underwriting of the financing of the hotel project and a reassessment of local labor costs.”)
Before voting against the project, Wolfson predicted that city voters will reject the pending lease with Portman. “We’re dealing with an entity with no incentive to cut a [better] deal,” he said.
Jack Portman, vice chairman of Portman Holdings, said his company will illustrate to voters the benefits of the project. “We are happy to have this opportunity to make this contribution both civically, financially, and culturally,” Portman said.
No comments:
Post a Comment