The Real Deal Miami

Tunnel could sink on shelter ruling

By Erik Bojnansky | July 06, 2009 12:24PM

The $1 billion underwater tunnel intended to improve access to the Port of Miami may be doomed by a legal ruling on a $10 million homeless shelter.

Observers worry that a recent opinion from Florida Attorney General Bill McCollum that bars Miami’s Community Redevelopment Agency from using $10 million in redevelopment money to build a new homeless shelter will also squelch the agency’s role in funding the much needed Port Tunnel.

McCollum ruled that state law prevents the agency from funneling tax revenue outside the agency’s boundaries, which would keep it from assisting the nonprofit group Camillus House from building a headquarters in the Overtown neighborhood, also part of the Community Redevelopment Agency’s purview.

McCollum ruled that state law will prevent using CRA funds to relocate Camillus House, run by the Catholic organization Little Brothers of the Good Shepherd.

“That statute does not authorize the expenditure of funds for construction of facilities located outside the redevelopment area,” he wrote in his June 19 memo.

McCollum’s opinion will also likely derail any attempt to funnel $88 million in property taxes collected within the Omni district toward a tunnel connecting the Port of Miami to Watson Island, a key component for funding the project.

Larry Spring, Miami’s chief financial officer, did not return a phone call for comment after the ruling.

For backers of the tunnel project, which has already been revived after being scrapped once during the region’s financial collapse, McCollum could well be the face of an expensive lesson in bureaucracy. 

Under the state of Florida’s Chapter 163, also known as the Community Redevelopment Act, the city of Miami created three redevelopment districts — Southeast Overtown Park West, Omni and Midtown — with the intent of removing “slum and blight.” The act enabled Miami to allocate property taxes that would normally flow to the coffers of Miami-Dade County and the city’s general fund to be used for projects designed to increase property values within those districts. The districts are governed by the Community Redevelopment Agency, or CRA. The policy of the CRA, in turn, is set by Miami’s five city commissioners. 

McCollum’s ruling conflicts with an opinion written by Steven Zelkowitz, an attorney with the Miami-based firm Gray Robinson, who said money collected within those districts can be used for projects outside their boundaries “under certain circumstances.”

“The Florida Statutes tend to contemplate redevelopment and related activities within designated boundaries,” Zelkowitz wrote in a June 6 memo to Miami City Attorney Julie Bru. “However, nothing in the Florida Statutes, applicable case law or authority expressly prohibits the use of TIF Revenue funds outside the boundaries of the community redevelopment area when a public purpose is served generally in the form of a demonstrable public benefit.”

TIF stands for tax increment financing, a term used by local government officials to describe the property taxes collected from property value increases within a community redevelopment agency.

The city of Miami and Miami-Dade County have long seen property taxes collected within the CRA’s Omni district as one of many revenue streams that will help make a $2.9 billion “global agreement” for the downtown area a reality.

Among the components of the plan, passed by city and county officials in 2007, are a billion-dollar tunnel, a $369 million Marlins baseball stadium and the $563 million Museum Park. So far, the CRA has agreed to pay off the remaining debt incurred from the construction of the $484 million Adrienne Arsht Center for the Performing Arts, which opened in 2006. That frees the county up to use hotel resort taxes for the construction of a Marlins stadium. The CRA is also expected to allocate $2 million toward sprucing up Museum Park once it is absorbed into the Omni redevelopment district’s expanded boundaries.

Miami officials also did a radical rezoning to promote a massive overhaul of Park West by Miami Worldcenter, a limited liability company owned by developers Art Falcone and Marc Roberts. A key component of the plan for 12 million square feet of hotels, condominiums, apartments, office and retail was moving Camillus House from its current home of 726 NE 1st Avenue, inside the proposed “city within a city’s” borders, to a 3.1-acre campus in Overtown.

Even more vital was the Port of Miami tunnel, which would divert trucks heading to the port away from Park West’s streets, enabling the creation of open-space parks and a Lincoln Road-style pedestrian mall along NE Seventh Street.

Miami Worldcenter’s future remains uncertain since Falcone and Roberts in January walked away from a deal to purchase 7 acres from the Africa-Israel company for $88.7 million. Africa-Israel reportedly kept Miami Worldcenter’s deposit. Nitin Motwani, managing director of Miami Worldcenter, did not return phone calls for comment.

There are no longer any plans to include the future tunnel within the Omni district, however. Watson Island was left out of the proposed expansion at Miami Commissioner Marc Sarnoff’s request.

Thanks to McCollum’s opinion, Miami officials will need to reconsider leaving out Watson Island if they want CRA funds to help pay for the tunnel, said Jessica Pacheco, staff counsel for the CRA. “The city is going to have to expand the boundary for the Watson Island portion of the port [tunnel],” she said.