Miami Delays Vote On $29M Sale Of Watson Island Site After Undervaluation Concerns
The Miami City Commission didn't pull the trigger on selling off a piece of Watson Island to developers after doubts were raised over whether it was accepting too little.
In a 4-1 vote Thursday evening, city commissioners decided to hold off on approving the $29M sale of a property on the south side of Watson Island to a subsidiary of developers Merrimac Ventures and BH3 Management that is planning a hotel and condo project, the Miami Herald reported.
Commissioners Joe Carollo, Miguel Angel Gabela, Ralph Rosado and Damian Pardo voted to defer the vote, while Christine King opposed the motion.
The delay is to ensure the city isn't just handing over the site to developers. An appraisal by Integra Realty Resources, prepared for the city and finalized in a report this week, found the land was worth between $257M and $342M, the Herald reported.
“I don't want no developer to ever, when they're talking and counting the millions they made in any project, to say, ‘Man, we took those people for fools,’” Carollo.
“Maybe once they give me all these numbers, I might come to the same conclusion that I'm being told,” he added. “But right now, I just think that I want to see, not guess, what the final number could be.”
The terms of the deal included that the developers, through their subsidiary IG Luxury, would purchase the land, while the 99-year ground lease would be terminated.
Due to the site's prime location on the water between Miami Beach and Downtown Miami, and its neighbor that sold for significantly more, many are characterizing the sale price as a “giveaway," City Manager Arthur Noriega said.
An appraisal by IRR and CBRE evaluated the land between $27M and $29M, Noriega said at the meeting. The reason the first evaluations were so low were because the 99-year lease has a cap on the entitlement density, he said, calling it a "good deal for the city."
According to the report, the lower number reflects development plans confirmed in negotiations with the city, which includes caps on entitlements. The higher number reflects a situation where a developer is free to choose what to develop on the site and would optimize it, the Herald reported.
“When the appraisers did their valuation, yes, they did a valuation as if that 3.2 acres had no encumbrances on it, because that's required by charter, but it's unrealistic,” Noriega said.
BH3 Management and Merrimac Ventures partnered to acquire the leasehold interests in 2023 from Flagstone Property Group for an undisclosed amount.
Miami voters approved the sale of the parcel last November for at least $25M and the development of the parcel, which is planned to include a 40-story tower with condos and a hotel, a 30-story hotel, a 2.2-acre public promenade, offices, waterfront shopping and dining.
Voters also approved the $135M sale and approval to redevelop 5.4 acres on the island's north side, the Jungle Island animal theme park, to Terra Group and Aventura-based ESJ Partners.
The developers have invested more than $110M in acquiring the lease rights and making infrastructure improvements to the property, BH3 principals Nitin Motwani and Greg Freedman said in a statement to the Herald.
In a statement to Bisnow, the developers said by the time the city commission approves the plan, they will have invested about $150M for the rights to develop the site.
“The joke, or the rumor, that there's a curse on this island feels more and more real every day, because it's been three years now, and every time we're making two steps forward, we end up making three steps back," Motwani said at the meeting.
The item will be reviewed again on Dec. 11.
