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The Real Deal Miami

Hyatt’s redevelopment dreams for the Knight Center strike out again

Miami City Commission votes against putting the issue on August referendum
By Francisco Alvarado | May 11, 2018 01:30PM

Rendering of Hyatt Regency redevelopment proposal

For the second time in less than a year, Hyatt Hotels Corp. failed to win the Miami City Commission’s permission to let residents vote on their redevelopment proposal for the site of the James L. Knight Convention Center and the adjacent Hyatt Regency Miami.

Citing pressure to rush through an Aug. 28 ballot measure that could grant the company a new 99-year lease, four out of five commissioners signaled they would reject Hyatt’s request during their meeting Thursday.

As a result, the redevelopment plan is now on life support, unless Hyatt and its lobbyists can convince Chairman Keon Hardemon, Willy Gort, Manolo Reyes and Joe Carrollo in the next two weeks that the city is getting the best deal possible in time for the next commission meeting on May 24.

“It is not fair to us to make a decision without having all the facts and without being able to read everything very carefully on a 99-year lease that involves hundreds of millions of dollars,” Carrollo said. “It would be irresponsible for me to take a vote. This is how we have gotten into deals in the past that have come back and burned us big time.”

Hardemon also said he had too many questions about the proposed lease agreement before he felt comfortable putting it before Miami voters. “It is not ready to be put on the ballot,” Hardemon said. “It hasn’t been proven that this is something we need to do right now.”

The only commissioner ready to give voters final say on the Hyatt proposal was Ken Russell, who during a meeting in July 2017 helped derail the company’s first attempt at a new 99-year lease that involves taking over the Knight Center site, which sits on 4.1 acres at 400 Southeast Second Avenue. Russell had argued that the city should set aside a southern portion of the property as a riverfront park.

To meet Russell’s demand, Hyatt presented new conceptual drawings by project architect Kobi Karp that included a town square and riverwalk, as well as an offer to have affordable and workforce housing units inside two new residential towers of the proposed new development. The third tower would be a Hyatt hotel.

“Hyatt is a very good partner with the city and this is our chance to look at this site and see what it could and should be,” Russell said. “I believe we as the city, since this is our land, that we should set the example for development.”

However, Russell criticized staffers from Miami’s Department of Real Estate and Asset Management and Hyatt representatives for not having detailed conversations about the proposed lease agreement with Carrollo and Commissioner Manolo Reyes, both of whom were elected in November and were not on the commission last summer.

“This is a learning lesson for the administration and applicants of the city that this commision should not be the last stop,” Russell said. “Two commissioners have been in office for six months. If you had gone to them six months ago, I bet we would be at a ‘yes’ today. We would have baked the cake by now. It feels rushed and it shouldn’t have.”

Hyatt Senior Vice President Tiffany Leadbetter Donato said she was assigned in January to try one more time to negotiate a deal with the city that could go before Miami voters. She assumed some of the blame for trying to fast-track the second go-round. “I am typically [the one to say] ‘lets get this billion dollar deal done in the next month,'” Donato said. “Probably to the dismay of people in this room, I am very aggressive.”

She said Hyatt bigwigs were also uneasy about approaching the city again because they believed the company had offered a good deal last summer. “It was turned down, and the thought was the city probably won’t agree to anything,” Donato said. “I said let’s throw everything we have at it before we give up on this location that we really like.”

Donato said Hyatt has been unable to generate interest from residential developers to possibly partner on the project because of fears the city wouldn’t approve any deal.  “The feedback from the development community is that it is a waste of their time if the city doesn’t give us anything,” she said.

According to Hyatt’s latest plan, the Knight Center and the Hyatt Regency would be torn down to make way for a new 900-room hotel and two residential towers that also would each have 900 units. One of the buildings could possibly be all micro-units. Russell wants Hyatt to make 10 percent of the residential units affordable and workforce housing.

Based on estimates from the city’s real estate department, Hyatt’s rent payments would increase from roughly $1.7 million a year to approximately $9 million a year. The company would also share some revenue with the city.