UPDATE: Voters approved both Watson Island referendum items following the Nov. 5, 2024, election.
Watson Island is the Afghanistan of Miami politics and development. Many empires have tried to conquer it over the years. Many empires have failed.
But a set of proposals being brought to Miami voters on Nov. 5 could stand to be a game changer, said Miami Commissioner Damian Pardo, who is supporting the proposals.
If voters pass the items this time, things will be different because the companies involved mean business.
“These folks have put a lot on the line here, and they have a lot of capital invested,” Pardo told WLRN, speaking about the developers. “So I don’t think either of these development groups are going to just not do the project.”
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The two items — R-24-0282 and R-24-0281 — pertain to a head-spinning web of leases of public property that have been in effect on Watson Island for well over a decade. The island is split in two by the MacArthur Causeway, and it is prime real estate, facing toward the city skyline.
On the north side of the island, developers Terra and ESJ Capital would be allowed to buy 5.4 acres of public land for $135 million. The developers are currently leasing the land from the city for Jungle Island, and the change would let them build luxury apartments and retail, and would cancel current plans for a theme park and a hotel. Thirteen acres of public land would be removed from the current lease and given back to the city, and developers would be responsible for building a public waterfront park at no additional cost to taxpayers.
On the south side of Watson Island, the ballot item would sell 3.2 acres of public land to the developer BH3 for $25 million, and would extend a lease of other public lands by 24 additional years. The sale and extended lease would allow luxury condos to be built there, in addition to office spaces. A public waterfront would also be developed on the south side of the island, and it would connect with the northern section.
The two items are technically separate questions involving different deals and different developers, but they are connected by design and vision.
“They’re not connected deals, like people can vote for the North and against the South, which would be unusual,” said Pardo. “But in reality there is a connectivity that is being provided which is currently not there and benefits us.”
Just making sense of the stakes of the question is difficult, Pardo acknowledged, especially when the past is taken into account.
Both current leases have convoluted, sordid histories. In 2017, the city canceled a lease on the south side of the island when commissioners argued the developer wasn’t living up to the lease terms. The developer sued the city and taxpayers were forced to cough up $20 million to settle the suit.
On the north side of the island, Jungle Island — the former Parrot Jungle — had to be bailed out by the city and county to the tune of millions after slow attendance almost led it to default on a federal loan. That was before a 2018 vote that extended the lease to ESJ, agreeing to let ESJ build a hotel on the site. That hotel deal would be repealed if voters pass the ballot referendum in November, and condominiums would be instead approved.
“This is super complicated. It’s super complex,” Pardo told WLRN.
But a few parts of the deals are a sure thing, he assured.
The waterfront will be developed for public use if one or both of the items passes, he said. Digital renderings of the sites show public walkways with city views.
The $160 million generated from the sales of the properties, assuming they pass, would go directly to the general fund of the city, straight into the bank account.
On top of that, a total of $24 million would go towards the city in order to help address “affordable housing” and “infrastructure” issues citywide. Of that, $15 million would come from the north side deal, and $9 million from the south side deal.
Which exact fund all that money would go to has yet to be decided.
“The feeling was, we can figure those details out later,” said Pardo.
The Affordable Housing Trust Fund
Over the last several years, the Affordable Housing Trust Fund has become a Swiss Army Knife of city government. Promised payments into the fund have helped push through large scale development projects. Payments are also made into the fund to allow developers to build things not currently allowed by zoning laws. As the city with the largest affordable housing crisis in the nation, additional housing funds are difficult to argue against.
At least $1 million in future rents from the planned soccer stadium at Melreese Golf Course will go toward the city’s Affordable Housing Trust Fund. A deal to develop publicly owned parts of the Miami River in downtown Miami comes along with a promised $25 million contribution to the fund.
Until now, how the money in that fund is used has been something of a mystery.
But a WLRN analysis of revenue and expenditures from the Trust Fund begins to paint a clearer picture.
Records obtained by WLRN show that less than half of the money that has been put into the Affordable Housing Trust Fund in recent years has been spent at all, even as the city is in the depths of the worst housing affordability crisis in the nation.
Much of the money that has been spent has gone to city employee salaries, retirement benefits, life insurance benefits, landscaping and utilities, records show.
Commissioner Pardo said he doubts the fund will be used for the Watson Island deals, and that it is much more likely that district commissioners split it among themselves to use in their own districts, assuming the referendums pass.
"That was not discussed in this transaction," he said.
The city manager’s office is required to submit an annual financial report outlining the spending of this trust fund, but it has not done so. WLRN’s analysis was conducted to try to understand what was happening with this money, even as the city is not releasing those required reports, despite weeks of requesting the reports.
Neither the city manager's office, the City Clerk's Office and the Department of Housing and Community Development were able to provide the full reports.
Between October of 2017 and July of 2024, the City of Miami’s Affordable Housing Trust Fund brought in $6,172,062.82 in revenue from different sources. The city has only spent $2.7 million of that money, amounting to less than half.
Much of the money spent did not directly go toward building affordable housing, but to salaries and benefits of city staff. Nearly $600,000 was spent on a program to help city employees put down payments to buy homes in 2018. Fifteen city staffers benefitted from that program.
In addition to that one-time program, a total of $171,040 went toward the salary and retirement benefits of city staffers since 2017. Nearly $10,000 was spent on life and health insurance benefits; about $9,500 on utilities for city-owned properties; $8,600 for landscaping services; and $84,000 on repairs and maintenance of city-owned affordable housing properties.
Since late 2017, records show that the fund spent $1.7 million on two affordable housing projects: Building 11 units of housing at the Pearl Gardens Apartments and rehabbing 182 units of affordable and public housing at the Smathers Preservation Phase 1, records show.
Both those projects were completed in 2020. No further funding towards constructing specific affordable housing projects has been approved or spent.
Further questions sent to the city manager's office about the use of the Affordable Housing Trust Fund went unanswered.
In addition to getting money from large scale projects that are approved by voters, the Trust Fund receives money from developers who ask for special rights to build things not allowed by city code. Developers who violate affordable housing agreements with the city are also required to pay penalties into the fund.
“I have never taken a detailed look at that Fund or any of the things that are happening within it,” Pardo said when asked by WLRN if the fund will be used in connection to the Watson Island funds. “I myself am very interested now in taking a closer look at it. But as far as this – what’s on the ballot now – I’m very confident that that $24 million tranche is distributed, that those commission offices and even District 2 will be able to answer for it in the long term.”
Skepticism of the deals
Community activist Grady Muhammad is skeptical of the vague plan for affordable housing and infrastructure money from the ballot referendums.
The current Jungle Island lease to build a hotel on Watson Island – a part of which could be sold by voters if the city passes November’s ballot referendum – was supposed to include $650,000 in affordable housing. Voters passed that ballot item in 2018, but the city was never paid that money, since the hotel was never built.
Muhammad drew a comparison to hundreds of thousands of promised dollars that were never paid to the Liberty City Revitalization Trust as part of the doomed SkyRise Miami development that was approved by voters in 2014. Since the SkyRise tower was never built, the developer was never required to pay that money, as WLRN has previously reported. Despite not paying the money or building the promised project, the developer still controls the waterfront public land.
“We’re gonna have a nice beautiful political campaign selling that madness to the voters that they’re gonna get money, they’re gonna get jobs, they’re gonna get all of these things. And at the end of the day nothing is going to happen,” said Muhammad. “At the end of the day the developers are gonna make out like fat cats and the city and the taxpayers are gonna be left holding the bag.”
Campaign finance records show that BH3, the development company behind one of the upcoming Watson Island ballot referendums, has spent over $700,000 since April in hopes of convincing voters to approve building luxury condominiums on publicly owned waterfront land.
Commissioner Pardo said that in order to prevent developers from finding a way to get out of paying money for public benefits, the affordable housing and infrastructure money has been designed to come in batches. One-third of the northside money would come up front. The second-third would come when the developments are built and they receive the initial Temporary Certificate of Occupancy. The final third would come after the second building’s Temporary Certificate of Occupancy is issued.
“The southside has a similar plan with their contribution,” said Pardo. “It’s phased, and it makes sense because that way you can apply it consistently over a period of time. Because sometimes when you get a big chunk of money up front, it’s like, well if you’re not using it it’s not ideal. You want to be able to match projects with funding and not have money just sitting there not doing anything for people.”
Pardo said “not a single” person that has taken part in community meetings has walked away thinking the ballot items are a bad deal, especially when they learn about the expansion of a publicly accessible waterfront park.
He is strongly supporting the two ballot referendums, saying they will benefit the entire community.
Compared to past deals on Watson Island, this time will be different, Pardo stressed. The prospect that developers would drop the ball and not actually build these projects is very remote, he said.
“They have already invested so much in this,” said Pardo. “I’m very confident that these projects will be completed.”
