City shouldn't give a $200 million gift for an urban eyesore
By Michael Lewis
Such temerity: The developer of City Square at the Miami Herald site is asking Miami's government to fund the full $200 million cost of the retail mall's parking garage - nearly $50,000 per parking space.
Last year, the entire project of 641,104 square feet of retail, the parking and two 62-story residential towers was reported to cost $370 million. So the city is being asked to contribute more than half of everything, just to build parking for the developer.
What's wrong with this picture? Everything.
Of course, construction costs have risen. Yet a May report the developer commissioned said the cost of constructing the retail plus parking is $277.3 million, of which government is being asked to pay $200 million for the privilege of - what?
Well, if the city's Omni Community Redevelopment Agency were to put up $200 million, Maefield Development of Indiana would put up a 130-foot-tall mall plastered with 90-foot-tall electronic billboards next to the county's new performing-arts center. Just think, a taxpayer-supported eyesore rising where government took pains to keep out high-rise condos that could mar arts center patrons' view and where it sought to sink an expressway below grade to keep the vista clear.
But we'd be getting more. There'd be 1,528 parking spaces that would meet more than half the arts center's needs - presumably at high cost to patrons and great profits to developers. There'd be 1,780 spaces for shoppers. And there'd be 744 spaces for the Miami Herald, whose parking lots developers would buy for $190 million as the project's site.
Why, now that I think of it, a $200 million city subsidy would cover all the land cost and then some. And the Herald's owners would be able to unload the site, which has languished under a sell agreement since March 2005 as the condo boom evaporated. The city's $200 million would funnel cash to the McClatchy Co. to trim debt it just incurred in buying the Herald.
See how well all of this can work out? The developer gets the city to pay for the land, the Herald's parent gets the money, the Herald gets its parking spaces and the property on which the Herald building sits - which is being rezoned for massive residential towers - would become saleable, too.
It's a win-win for everybody - unless you consider the public. But, hey, you can't please everyone.
Project plans long had been announced when Maefield wrote to the city this month asking for $200 million. Until a few weeks ago, not a penny of government money had been under consideration.
Why should government fund an eyesore?
Well, the developer wrote, "Maefield Holdings, LLC, is interested in your participation with a direct financial contribution to offset the high costs associated with delivering a world-class development for the benefit of the City of Miami. As such, the Omni CRA financial commitment will maximize the benefit delivered to the residents in the current environment of increasing construction costs and high land prices."
I didn't know the project was to benefit the City of Miami at all. I had imagined it was an investment from which developers expected to profit, not a public service. Silly me.
And how much exactly have the land prices risen since the contract to buy was cut 18 months ago? Seems like $190 million then is the same as $190 million now - far too much. But why should the city bail someone out of a bad deal or rescue McClatchy?
In fact, government has no business paying anyone to build on a $190 million site, some of the community's most expensive land. Though it's in a redevelopment zone, the area has been booming with buildings that were paid for by developers, not the city. This is not urban renewal.
In fact, it may not even be good for Miami. Looking at a mall the equivalent of 13 stories covered with nine-story electronic billboards, the city's planning report says, "the quality and location of signage in the project is excessive and does not meet Zoning Code." It calls the billboards "large-scale advertisement panels."
Two issues intersect here: Should the city allow the project at all, and should the public finance it?
The Omni Community Redevelopment Agency is to address city funding Sept. 5, though commissioners would have final say as to whether the city would enrich developers to gain nothing more than they were promised at no public cost six weeks ago.
Then Sept. 7, a special commission meeting will consider zoning approval that McClatchy, the Herald's owner, requires for the mall's building permit.
We're no fans of massive billboards, now barred here for good reason. Making them electronic is worse. Sticking them outside the performing-arts center is doubly offensive.
But that's aesthetics. Presumably, some people like highways with billboards every 20 feet. Somebody somewhere must like 90-foot electronic signs. There's no accounting for taste.
But there should be accounting for public money. This community has a history of cutting atrocious deals with developers of public projects, but a big-box mall is no more a public project than is an office building or a condo tower. There is no reason to consider a subsidy of any amount.
Then again, considering those who would benefit from the deal, you never know, do you?