The Real Deal Miami

Omni Mall developer seeks $7M from Miami for $95M project

By Erik Bojnansky | May 18, 2009 12:36PM

Developer Andrew Penson wants $7.7 million in tax breaks from Miami as he pushes a plan to revamp the 1.1 million-square-foot Omni International Mall. The city will decide tonight if he gets it.
 
Penson, president of New York-based Argent Ventures, is transforming the defunct complex into 350,000 square feet of office space, 225,000 square feet of big-box retail space, and 16,000 square feet of regular retail space. Penson will also refurbish an adjacent 527-room hotel and a seven-level parking garage.
 
In exchange for the full amount of a city subsidy from a fund for economic development, Penson will guarantee a $95 million investment and create 817 full-time jobs and 538-part time jobs.
 
Whether it happens is now up to Miami’s Community Redevelopment Agency (CRA), which would offer a 50 percent rebate on property taxes from the project, according to agency executive director James Villacorta. Fifty-one percent of the construction and mall jobs created by the project will be reserved for those living within Miami’s Omni and Southeast Overtown redevelopment districts if the incentive agreement is approved. Penson would also give the city enough Omni Mall land to build a traffic circle at the intersection of North Bayshore Drive and 17th Street.
 
If the developer falls short in his promises, he gets less money, according to the proposed Omni Development Incentive Agreement.
 
The mall lies within the Omni Redevelopment District, where most property taxes are collected by the CRA for the purposes of combating “blight and slum” in that area. Penson first formally requested a tax subsidy from the CRA board in May 2008.
 
The $7 million subsidy is on the CRA agenda for tonight’s meeting. However, Commissioner Marc Sarnoff, whose district includes Omni, says he will likely ask that the item be postponed “unless somebody briefs me real hard, real fast.” Sarnoff says he still hasn’t been briefed on the latest draft of the incentive agreement.
 
Even if the subsidy is delayed Monday “it looks like it will happen eventually,” Villacorta says.
 
Representatives of Argent Ventures could not be reached for comment.
 
Terry Salzman, senior vice president of SRS Real Estate Partners, says the $7 million subsidy is a worthy investment. 
 
“If you get government support… it will go a long way toward helping Omni begin the revitalization process,” he says. “That portion of downtown Miami is ripe for redevelopment.”
 
And once the “Omni Shops” project is completed, which Salzman estimates will happen in 24 months, the real estate market will be positioned to absorb the new office and retail space. “That section of… Miami is ready to be turned out,” he says. “When the project is ready, the market will be ready for it.”
 
The mall prospered into the 1980s, but by the 1990s anchors such as Jordan Marsh and JC Penney began closing. The last two tenants within the mall, a Radio Shack and a gift shop, closed in 1999.
 
Argent Ventures and Lehman Brothers purchased most of the mall for $33 million in 2000 and tried to turn it into a telecommunications hub. But after Argent Ventures invested $10 million, the dot-com bubble burst. Undeterred, Argent purchased Lehman Brothers’ interest in Omni in 2005 for $100 million. Argent received permission to build 4,000 condominiums on top of Omni from the city of Miami in March 2007 but opted to redevelop the space as office and retail instead.