July 2, 2018 | The Real Deal
Agreement could head to voters for approval in November
By Francisco Alvarado
Miami Beach officials will soon begin hammering out a deal with the development team led by Jackie Soffer and David Martin to build a new convention center hotel.
On Monday, the city commission voted unanimously to let city manager Jimmy Morales negotiate the proposed terms with Miami Beach Connect, the development entity created by the powerhouse builders proposing an 185-foot-tall hotel with 800 rooms adjacent to the newly renovated Miami Beach Convention Center.
The goal is to have an agreement that Miami Beach residents can vote on in the November general election.
Soffer and Martin recruited Arquitectonica and its subsidiary Arquitectonica Geo to create a sleek project that incorporates environmentally conscious elements into the building design and landscaping that help combat flooding and other effects of climate change. Their Miami Beach Connect ensemble also features Craig Robins’ Dacra, which is conducting urban planning; Meyer Davis Studio, which is in charge of programming the restaurant; and Coastal Tishman, the general contractor.
While there appears to be overwhelming support among city commissioners for their proposal, the odds don’t favor the Soffer-Martin partnership. Residents have rejected previous convention center hotel referendums, most recently in 2016. Atlanta-based Portman Holdings had worked out a development deal with the city for a 288-foot, 800-room hotel that was defeated by voters.
Some commissioners cited concerns about traffic congestion and the number of rooms as long-standing reasons voters have said no to a convention center hotel.
Commissioner Michael Gongora said he was surprised Miami Beach Connect submitted an 800-key hotel proposal given voters rejected Portman’s version with the same number of rooms. “I am concerned that if it is still at 800 rooms, we may not get to where we want to be,” he said.
A Miami Beach Connect spokesperson previously told The Real Deal that the developer would be able to reduce the room count. However, Greater Miami Convention and Visitors Bureau CEO Bill Talbert said that Miami Beach needs to have a hotel with at least 800 rooms in order to compete for major conventions.
If built, Miami Beach Connect’s hotel would rise on a surface parking lot next door to the convention center and behind the Fillmore at the Jackie Gleason Theater. The Soffer-Martin team has pegged the price tag between $348 million to $362 million. About 65 percent would be financed with construction loans and the remainder through partner equity.
Miami Beach Connect is offering the city 2.5 percent of the hotel’s gross operating revenues, which would come out to roughly $2 million in the fifth year of the deal. The two parties would enter into a 99-year ground lease. The city could collect $10.2 million a year when the revenue sharing is combined with taxes the project would have to pay.