|By Douglas Hanks, The Miami
HeraldMcClatchy-Tribune Regional News
Oct. 20, 2011--The University of Miami plans an 18-story hotel and clinical facility for its new research park, with the $112 million complex targeting medical conferences and traveling patients seeking treatment at the nearby Jackson hospital campus.
Confirming earlier plans, the developer of the UM park will ask Miami-Dade County to approve $90 million in tax-free bonds next week for the 18-story project. The bonds would be backed by private funds and lenders could not pursue tax dollars if the developer defaults, according to the county authority that issues the bonds.
County leaders have embraced the eight-acre University of Miami Life Science and Technology Park along Seventh Avenue as a rare bright spot in a beleaguered economy for its ability to attract the high-paying jobs that come with medical companies and bio-tech ventures.
But the recession made leasing a challenge and UM backed off earlier plans to build a second research building in favor of a hotel that administrators say is needed in the hospital district.
"There has always been strong demand for a hotel and conference center in the Miami Health District, and that demand is growing as our city emerges as a medical, research, biotech and biomed destination and the University of Miami Life Science & Technology Park attracts new tenants," UM medical school Dean Pascal J. Goldschmidt said in a statement issued Thursday. "Accelerating the construction of a hotel in Building Two of the UMLSTP presents the most immediate development opportunity to meet this demand."
The 225-room hotel will include about 90,000 square feet of clinical space that would center around providing clinical medical services, said Sandy Weeks, president of Wexford Science and Technology, the Baltimore firm contracted by UM to develop the first two buildings.
The combination of medical offices and a hotel so close to Jackson could make the complex attractive for so-called "medical tourism" -- foreign patients traveling to Miami for procedures they would rather not have done in their home countries. James Wagner, head of the Miami-Dade authority that would issue the bonds for the hotel complex, called the plan a coup for the county since it would fund a new construction project and commercial building at no risk to taxpayers.
"Look at the capital investment we're getting here,'' Wagner said. "I look at it as a win-win."
In documents filed with the county, Wexford estimates the $108 million building will create nearly 880 jobs tied to construction, with an average pay of $47,000. Once open, the hotel and office facility would create about 430 jobs paying, on average, $55,000, Wexford says.
Some activists criticized the first building, which received $8 million in federal subsidies and requested $5 million from Miami, for creating the kind of high-skill medical jobs that are out of reach for most residents in nearby Overtown. But Wexford countered that it took extra efforts to hire local construction workers, and wants to use state and city dollars to train nearby residents for medical and research jobs at the complex.
Local hiring will be key under the latest financing plan for the second building. Wexford hopes to be the first developer in Miami-Dade to use federal tax-free bonds tied to employing local residents.
Under the program, developers can qualify for tax-free bonds -- which bring lower interest rates for construction financing -- if they pledge that 35 percent of the people working in the completed project will live in nearby federal empowerment zones, Wagner said.
The empowerment zone stretches through Miami-Dade, but mostly includes residential areas in Opa Locka, Miami's airport area and Overtown, where the UM park sits. While other projects have wanted to use the bonds, they were too worried about penalties that come with failing to meet the hiring criteria, Wagner said.
"They were really afraid they couldn't meet that criteria," he said. "That one particular requirement scared them off."
Wexford, a Baltimore firm that specializes in developing projects for universities, used a stimulus program for the $60 million in tax-free bonds that financed the first $108 million building. Those bonds did not come with residency requirements, but are no longer available.
Wexford also received $8 million in federal development subsidies for the first building, and Weeks said Wexford will pursue the same tax credits for the second building. UM administrators asked Miami-Dade for $25 million to build parking garages for the park, but the negotiations stalled over how many high-paying jobs the complex could create.
A hotel lends itself to more Overtown hiring, since low-pay hospitality jobs would be attractive in one of Miami's poorest neighborhoods. When the hospitality industry launched a training center several years ago, it targeted the Overtown neighborhood as a natural source for more workers.
A Wexford consultant said a hotel would likely meet hiring criteria for the empowerment zone, but medical offices and other clinical facilities wouldn't, Weeks said. That might prompt Wexford to use the tax-free bonds for the hotel construction alone.
The 184,000-square-foot hotel portion would cost about $64 million to build, while the clinical space would cost about $35 million. An open-air "rain garden" linking the first and second building would cost another $9 million, according to Wexford's proposal.
The empowerment-zone bonds, launched during the Clinton administration, will no longer be available in 2012, Wagner said. So Wexford's try for them would be Miami-Dade's last chance to benefit from the money.
When the first UM building officially opened last month, about 60 percent of the offices and research facilities were filled. The biggest tenant is UM itself, which moved its organ and tissue banks into the new six-story facility. Wexford owns the building and leases the land from UM, Weeks said.
Weeks said occupancy should hit 75 percent sometime next month as more tenants sign leases. He said the weak economy made it harder for Wexford to find the kind of research firms ready to open up new space in Miami.
"It's slower than we hoped. No question about it,'' Weeks said. "But we are leasing something every day. The demand is there, it's just getting [tenants] to pull the trigger.''
(c)2011 The Miami Herald
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