Argent’s plan for Omni built on subsidy

/
Jun.June 04, 2008 02:02 PM

Not too long ago, developer Argent Ventures planned to build six residential towers, ranging from 58 to 66 stories, on top of the former 1.2 million-square-foot Omni International Mall in downtown Miami.

In a tough real estate market, that $1 billion project has been reshaped as a $142 million plan for the Offices at the Omni. The plan calls for upgrading the Hilton Hotel, creating 300,000 square feet of office space, renovating tens of thousands of square feet of retail and building an additional 500 parking spaces.

And even the scaled down plan is predicated on a significant public subsidy.

“In today’s real estate market … there is a significant gap between what we have and what we need,” said Al Dotson of law firm Bilzin Sumberg, which represents Argent Ventures.

That means the towers have been tabled, for now, according to Vicky Toledo-Garcia, another Bilzin Sumberg attorney who represented Argent Ventures when it received a major use permit from the Miami City Commission in March 2007.

Requesting a tax rebate

Argent Ventures is seeking an annual property tax rebate from Miami’s Community Redevelopment Agency (CRA) for the next 10 years, arguing that the project would provide 2,000 new jobs.

The agency levies taxes on 95 percent of the property value increases since the agency’s creation. And the rebate would amount to “65 percent of ad valorem taxes generated by the incremental increase in property value.”

The company is also asking for “local hiring bonuses” to be awarded if the company hires people who happen to live within Miami’s CRA districts or enterprise zones.

In return, Argent would commit to “hosting job training workshops” if the CRA decides to grant Argent Ventures the rebate.

The Omni redevelopment district, created in 1986 to eliminate blight and slum, is located just north of downtown Miami. It includes not only Omni International Mall at 1601 Biscayne Boulevard, but also the Adrienne Arsht Center for the Performing Arts and One Herald Plaza, the headquarters of the Miami Herald.

Last year, the CRA collected more than $25 million in revenue from the Omni district, much of it from taxes that would normally flow into the budgets of the city of Miami and Miami-Dade County.

CRA executive director James Villacorta said that rebating a portion of the tax increment Argent pays would be in keeping with his agency’s mission of revitalizing the area, since the project would be creating jobs and enhancing property values. The issue is how much the agency can afford and if that amount will allow Argent to make the scaled-down project work.

That’s a sticking point.

The agency is committed to paying the county 35 percent of that increment, plus $1.4 million, to pay for the public bonds used to build the $446 million Adrienne Arsht Center for the Performing Arts.

When asked what would happen if the CRA opted not to give Argent a rebate package, Dotson replied that Omni’s plans would be “reworked.”

It’s been a tough go at the Omni

Tibor Hollo, president of Florida East Coast Realty who built the Omni 31 years ago, has no opinion on Argent’s quest for incentives. He’d just like to see something good happen there.

“It is probably one of the great commercial spots (in Miami),” Hollo said. “It hurts me to see that nothing is moving. Something has to be done.”

Omni International Mall was developed just north of downtown Miami around a Jordan Marsh and an old Spanish-style mansion in 1976. Constructed on 11 acres of land, Omni included a seven-level parking garage and a 526-room hotel.

“I built it and it did pretty well,” said Hollo, who spearheaded several projects in the downtown area since the 1970s.

Hollo sold his interest in the mall, and Omni continued to prosper into the 1980s. But by the early 1990s, Jordan Marsh had closed and JC Penney followed suit in January of 1999. By the end of that year, Omni’s last two tenants, a gift shop and a Radio Shack, went out too.

Now its fate is in the hands of Argent Ventures of New York City, founded by Andrew Penson, who made his mark buying properties and mortgages in the 1990s. Argent owns land under Grand Central Terminal and parcels along 150 miles of Metro North commuter rail in New York City. It’s also the former owner of the Capitol Records Tower in Hollywood, the Manhattan Mall and a piece of New York City’s Chrysler Building.

Argent Ventures and Lehman Brothers bought most of the mall for $33 million in 2000 and tried to turn it into a facility for telecommunications companies. Argent even spent $10 million preparing the mall for that purpose. But then the dot-coms crashed and so did Argent’s plans.

Argent Ventures didn’t give up. It bought out its partner, Lehman Brothers, for $100 million, obtaining the entire mall, including the hotel and old house. Soon after, Argent unveiled plans to build 4,000 condo units on top of the old mall, complete with a proposal to construct cross streets on the old block.

“We view this as the greatest development site in the U.S. It sounds corny but we think it is true,” Argent COO Mark Teitelbaum told the South Florida Business Journal in 2005. The Miami City Commission gave Argent’s high-rise project its blessing in March 2007.

Then once again the market intervened.

Signs of life

Today, signs of life at Omni are the hotel, which switched flags from Radisson to Hilton in January, the garage and the Miami International University of Art & Design (in Jordan Marsh’s former space since 2002). In December, construction crews began working on the mall’s façade, decorated with banners advertising the future “Offices at the Omni.”

Teitelbaum did not return phone calls seeking comment, but he did tell the Miami Herald in November that space at the Offices at the Omni would go for $35 per square foot while space in new downtown office buildings are being offered for more than $40 per square foot.

According to a September 2007 letter from Argent Ventures to the CRA, much of the office space would be created in the former Jordan Marsh, where Argent Ventures is investing $46 million in conversion work. That includes installing a “modern Class A window system” to “minimize the ‘concrete jungle’ effect.”

Another $60 million is being invested to “re-create” a major retail center in Omni. “The ground floor will have small- to medium-size retail with a planned supermarket of about 40,000 square feet,” the Argent Venture letter says. The second through fourth floors of what was the JC Penney building will be converted into retail space for tenants, including spaces from 15,000 to 30,000 square feet each — i.e., big box retail — while 150 parking spaces will be created on J.C. Penney’s old roof.

The hotel remodeling includes “full room renovations and upgrades to meet Hilton standards” at a cost of $31 million, the letter says. And $5 million is already being invested, adding 500 parking spaces to the garage, creating a total of 2,500 covered spaces that can also be utilized for the performing arts center. An existing bridge connects the complex to the county’s Metromover.

Argent Ventures isn’t giving up its major use permit to build condominiums. Although Argent is moving ahead with its renovation plans, Toledo-Garcia said the major use permit for the six high-rises can be renewed every two years indefinitely.


Related Articles

arrow_forward_ios
Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...