A secret $1.2 million deal between a star-studded roster of investors and a homeowner’s group for supporting a $61 million redevelopment of the Standard Miami Beach may violate the city’s ethics code. A partnership featuring billionaire Barry Sternlicht, architect Bjarke Ingels, lawyer and singer Shakira’s ex-boyfriend Anthonio de la Rúa and hospitality CEO Miguel Isla Esteve wants to redevelop the iconic Miami Beach hotel.
Last week, the Miami Beach City Commission’s land use and sustainability committee voted to seek the Miami-Dade Commission on Ethics and Public Trust’s opinion on whether the agreement Sternlicht’s partnership secured with the Belle Isle Residents Association, or BIRA, is illegal.
In exchange for its support, the development team agreed to pay the $1.2 million in three separate payments to a non-profit entity created by BIRA that would ostensibly fund public improvements on Belle Isle, the neighborhood that is home to the Standard Miami Beach.
Sternlicht owns 15.4 percent of the company that owns the 102-room hotel at 40 Island Avenue. The redevelopment project is being managed by Miami-based Integra Investments, but the company does not have an ownership stake.
During a heated discussion at the Oct. 14 meeting, city commissioner David Suarez said the arrangement runs afoul of city and Miami-Dade County laws that prohibit any person or entity from being paid fees contingent on obtaining government approvals.
Suarez obtained and provided copies of the previously undisclosed agreement to fellow committee members, city commissioners Alex Fernandez and Laura Dominguez. The document contains language stating that two of the payments would occur after the development team has secured all city zoning and building permit approvals.
“I have serious concerns about the process we are witnessing here,” Suarez said during the meeting. “This $1.2 million payoff is being tied to how we and our committees vote on this project. This raises serious ethical [concerns.]”
A spokesperson for the Standard Miami Beach redevelopment partners and BIRA representatives did not respond to a request for comment. In a statement after publication, Integra principal Victor Ballestas said the agreement “ensures that funds will be allocated specifically for community enhancements” and “is being updated to align with the [city’s] lobbyist regulations.”
The land use and sustainability committee had been scheduled to vote on changing the zoning for the Standard Miami Beach property to allow for condos and allow for the construction of on-site parking, marking the first step in seeking the city’s authorization to redevelop the iconic hotel.
The Standard Miami Beach’s revamp is designed by starchitect Bjarke Ingels of BIG and Miami-based Kobi Karp Architecture & Interior Design. Plans call for redeveloping the east wing of the hotel into a five-story mixed-use building with six luxury condos, 50 hotel rooms and a ground-floor garage. The proposal also entails renovating the three-story west wing by reducing the number of rooms to 50 from 67, plans show.
Sternlicht has assembled a formidable roster of investors for the project, including de la Rúa, and Argentine architect Sebastian Sas. Other partners include tech billionaire and political activist Peter Thiel; bio tech investor Jeff Aronin; and Esteve, CEO of Nomade People, a hotel management company that operates the Standard Miami Beach.
During the meeting, Suarez sharply criticized Standard Miami Beach’s lobbyist, land use attorney Michael Larkin, for allowing his client and the association to enter into the agreement.
“I called the owner of the Standard,” Suarez said. “He was upset. He was livid. He said this is the first time he worked with Michael Larkin, and he told me he was being shaken down.”
(In a text message to The Real Deal, Suarez said he was referring to Esteve as the person he called. Larkin did not respond to a voice message and text message seeking comment).
Committee members Fernandez and Dominguez initially sought to vote in favor of allowing the project to move on to review by the Miami Beach Planning Board. They relented after Chief Deputy City Attorney Nicholas Kallergis advised that the ethics commission should provide the city with guidance on whether the agreement is prohibited by law.
“It is a very good [project] and it shouldn’t be tainted in any way…because of a private agreement between parties that the city is not involved with,” Fernandez said. “It might be good for public optics to allow the ethics commission to weigh in on this before we move forward.”