|By Andres Viglucci, The Miami
HeraldMcClatchy-Tribune Regional News
April 02, 2011--Veteran developer Tibor Hollo's long-stalled effort to build a hotel in Miami's Omni district will get a big boost from the city's community redevelopment agency, which has agreed to an unusual tax rebate of up to $9 million to help get the project off the ground.
Though providing financial incentives for private development is part of the anti-poverty agency's mission, the size of the rebate has raised eyebrows among city watchers, some of whom question whether the city is getting enough in return.
In exchange for the rebate, approved by the agency this week, Hollo's Florida East Coast Realty has pledged to generate at least 268 new full-time jobs in its hotel, with about a third coming from the surrounding area, which includes portions of Overtown.
Hollo and CRA officials say the deal is carefully calibrated to produce real public benefits, including helping re-start development and spur business in the area, generating new property taxes, and creating hundreds of permanent and temporary jobs.
"You're incentivizing people to build now, to start to see a crane go up,'' said Miami Commissioner Marc Sarnoff, chairman of the Omni Community Redevelopment Agency. "This makes good strategic sense. It is tied to jobs.''
The precise size of the rebate -- which would come out of the property taxes generated by the hotel -- would depend on the number of jobs actually produced, the size of Hollo's investment and how quickly he gets the project done. The rebate is capped at $600,000 a year until the expiration of the CRA in 2030, and would kick in after Hollo completes the planned $62 million, 250-room Mikado hotel tower around the end of 2014, and after the project has generated $1.2 million in taxes. Given that timing, CRA administrators say, the project is unlikely to qualify for the maximum rebate of $9 million.
The hotel, which will rise on a vacant lot at Northeast 17th Street and Fourth Avenue, just north of the massive Omni center Hollo built in the 1970s, also includes retail and commercial space.
An analysis by the agency concluded that each job produced would cost the city about $1,100 a year. The city can kill the deal if the project isn't under way by 2019.
But former CRA director Frank Rollason, echoing some comments on blogs critical of the city administration, questions whether the agency drove a hard enough bargain. For instance, he said, redevelopment agencies often get public parking, office space for city use or other public benefits in addition to jobs in exchange for tax rebates. In this case, Hollo has agreed only to host four CRA meetings a year.
And before deciding to spend its money on Hollo's project, city officials should analyze whether the hotel could be built without city help, Rollason said.
"I don't fault Tibor. He's a shrewd businessman, and there is no harm in his asking,'' Rollason said. "But if you're the city, you have to look at this project and see if this is something Tibor would have built anyway, or is it something that won't come out of the ground if the CRA doesn't get involved.''
It's definitely the latter, said Hollo's son and company vice president Jerome Hollo. Since the market crash stalled the project, the developers' bankers have committed to financing the project, but stricter borrowing requirements make it harder to raise all the money they need, Jerome Hollo said. The CRA money helps fill that gap, and will thus help draw substantial private investment into the district, he said.
"This was one important piece'' in bringing the project to fruition, Hollo said. "We feel the timing is right now.''
He also noted that the taxes to be rebated will be only a portion of the property's tax bill, which he estimated at $900,000 to $1.2 million annually, meaning local governments will still receive significant additional revenue from the project.
"What people have to recognize is this is a tax increment that would not be there if not for this project,'' Hollo said.
The Mikado also includes 119 market-rate apartments for active seniors who can take advantage of the hotel's services, but the CRA tax rebate will not go to that portion of the project, Hollo said.
The mixed-use Mikado project, which the city commission approved in 2006, is the last piece in a set of adjacent residential towers Hollo built north of the Omni just before and during the real estate boom of the mid-2000s. The hotel, planned to capitalize on the construction of the nearby Arsht Center for the Performing Arts, is named after the famous Gilbert and Sullivan opera set in Japan and will have an Asian theme. Sonesta will manage the hotel.
Jerome Hollo said he is now working on obtaining construction permits from the city and work could begin within weeks "if all goes well.''
Sarnoff noted there is precedent for the Mikado deal. The CRA has approved two similar tax-rebate deals in the Omni District, for the Bayview Marketplace retail center and the multi-use Omni Complex project on Biscayne Boulevard, though neither one of those is moving forward at present.
Sarnoff, whose commission district includes the Omni area and who is up for re-election this year, has benefited from campaign contributions by Hollo's companies. In his last campaign finance report, covering the last three months of 2010, Sarnoff's campaign reported receiving $10,500 in contributions, including at least $9,000 in contributions from Florida East Coast Realty and 17 other corporate entities listing Hollo's office address. Each gave the maximum $500. Sarnoff has reported receiving a total of $298,000 in contributions.
Sarnoff said the contributions from Hollo did not influence his decision to support the Mikado tax rebate.
"I don't sell my vote,'' he said. "I never have and I never will.''
Miami Herald staff writer Charles Rabin contributed to this report.
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