North Miami Rolls the Dice for a Big Win

Flash-forward four years and drive north along Biscayne Boulevard from 135th to 151st streets. You will likely see a changed landscape, and with ever-slower traffic, you’ll have plenty of time to take a long look.

On the left, you may see four or five flashy high-rises of up to 20 stories, replacing what is now an industrial district of warehouses and odd lots. On the right, you just might catch 33-story towers coming out of the ground, a new nine-story tower, a 20-story luxury apartment complex and maybe more.

While the frontage on either side of Biscayne Boulevard on this stretch is in North Miami Beach, the development just described is in the City of North Miami. And it could be the savior of this cash-strapped municipality which, like North Miami Beach to the north, is a bull’s-eye for developers.

The tide is moving fast. The city has approved most of the developments just described in the last year, many in the last few months.

Yet there’s potential trouble just below the surface.

The Big Gamble

North Miami is playing against the odds, spending money it doesn’t have on the newly obtained Wildcat community center and finding its way forward by rebranding and reimagining a forlorn industrial district west of U.S. 1 into a destination center near the planned 151st Street rail station.

The city is making its moves to create a hot new development destination in the Biscayne Corridor and downtown, after five years of constant operational deficits, layoffs, pay freezes and credit problems. All this, plus activist Laura Hill’s accusations of chicanery in North Miami’s recent municipal elections with city employees “helping” voters into the booths to steer the ballots being cast.

Some residents and at least one former elected official are questioning no-bid contracts undergirding three major moves tied to the municipal gamble that requires lots of hands on deck to pay off.

For various reasons, those hands are getting replaced fast.

Under City Manager Theresa Therilus, City Hall staff has churned over the last year. Rasha Cameau left the city’s community redevelopment agency (CRA) in December for the county’s management and budget department. Former community planning and development director Tanya Wilson left to become assistant city manager in Miami Shores, joining Esmond Scott, former North Miami Beach city manager.

Other recent departures include library director Lucia Gonzalez, building director Steve Pizillo, communications director Susset Cabrera and the city’s IT team, which went to work for the City of North Miami Beach, itself roiling with problems of its own under City Manager Arthur H. Sorey III and a commission that descends ever further into open warfare.

North Miami District 1 Councilman Scott Galvin has stepped out front as cheerleader. First elected in 1999, he is term-limited out in May 2023 and determined to leave a positive legacy. For him, pessimism and paralysis are not options.

“I’m there for only 16 months and I can tell where the opportunity is,” he said. “I don’t have time to dillydally. The time has come to be bold and reach out and grab the gold ring. We need to create a mentality of ‘yes, we can.’”

When Galvin says that, he means a few big things.

The first is the rebranding of the semi-industrial district extending nine blocks south of 151st Street and west of the FEC tracks, near the planned 151st Street rail station. The area’s most prominent project is an 832-unit apartment building from Oleta Development, with two 20-story buildings and two eight-story buildings on 5.5 acres.

The second is the next addition to the 870-unit Aliro Apartments just south of North Miami’s Audi and Lexus dealerships: 519 units across eight stories at 1820 NE 142nd St.

Last is Tate Capital’s 20-story luxury Allure, a mixed-use apartment project designed by Kobi Karp. That one’s being developed through a 99-year lease on 2.11 acres of city-owned land at $100,000 a year and a $15.2 million infrastructure grant from the North Miami CRA.

Political Price Tag?

This is where things get complicated and where – as the saying goes – the political sausage is made.

Tate Capital partner and North Miami resident Jimmy Tate says he was approached on the Allure project by Mayor Philippe Bien-Aime, who with Galvin has consistently championed the project as a boon for the city. The CRA’s budget last fall was cut from $7.5 million to $3.5 million to help the city balance its books, shortly before Cameau announced her departure. Tate or affiliated entities contributed more than $50,000 to Bien-Aime’s successful mayoral campaign. The term-limited mayor is contending for the District 2 county commission seat to be vacated by Jean Monestime.

Tate’s big goal is to attract other developers and rebrand the area, technically known as the “Transit Overlay District.”

“Our goal is to create a new district,” he said.

“I’ve got to impress that we have to quit calling it the industrial district,” agrees Galvin. “You have to get to ‘NoMi.’ Downtown NoMi is much better than saying ‘West Dixie Downtown Corridor.’ We need to call it something with a little more pizzazz.”

Another big thing for Galvin is the city’s lease of the Wildcat Center. Galvin has led the charge for the city to acquire the 38,000-square-foot, three-story building, complete with gym, weight room, basketball courts, lockers, offices and an auditorium.

As of January, that was a done deal. Galvin says the parks and recreation department is aiming to move in by March 1, that homeowners’ groups can start meeting there any time and that the center should be in full operation by summer.

Here, too, Tate plays a critical role.

Tate Capital bought the Wildcat Center for $10.7 million around the first of the year, more than double the $4.5 million Property Management Group paid last July, when Johnson & Wales University completed its sale of its 25-acre main campus to PMG for just under $60 million. Later in July, IMC Equity Group paid $21 million for the university’s shuttered golf management center, an adjoining student apartment building, and a surface parking lot and vacant lot. Before that, an IMC affiliate bought three apartment buildings on Emerald Drive.

Wildcat was the last PMG property to sell and in January Tate immediately leased it back to the city for roughly $1 million a year at 9% developer-financed interest, with an option to purchase it for $11 million after three years, after the city failed to get conventional financing at a lower rate. With taxes, maintenance costs and staff, the center will likely cost North Miami $2 million a year – a drag on a city that recently posted a deficit of $5 million and has no usable reserves.

The Proposed Solution

To pay for the center, the city had to get creative. On Jan. 11, the council approved selling the 1974-vintage Gwen Margolis Center at 1590 NE 123rd St. to Oldtown Capital, a Chicago-based multifamily developer, for $3.1 million. In addition, Galvin worked to redeploy $2 million pledged from Solé Mia’s developers for a community center to help fund the Wildcat.

Oldtown Capital is also involved with local investor-developer Sebastien Scemla with the 384-unit Eleven55 NoMi project at 1155 NE 126th St. just east of downtown North Miami. Scemla expects 1155 to break ground in the second quarter of 2022.

The Margolis and Solé Mia deals together would give the city $5.1 million in the bank to apply toward the center’s purchase.

“I want to make sure this place is operational and functional and a gem to the city,” said Galvin of the Wildcat. “The council seems committed to doing this right. We are a month out of the agreement and we have $5 million ready to use. We didn’t have that a month ago.”

Tate also is confident the city could buy the center back in three years.

One possible ace up the sleeve in the deal is that North Miami could sell Tate the land his group is leasing. The city over the last few years has bought back leased land from Solé Mia and One Fifty One at Biscayne, generally using the proceeds to reverse books.

While the Wildcat and Margolis moves have supporters, opponents are growing more vocal.

Former District Councilwoman Carol Keys, herself a real estate lawyer, says the move was poorly timed and ill-conceived, with no parking provisions and insufficient and outdated appraisals. She called the Wildcat, Allure and Margolis transactions “sweetheart deals.”

In the first two, councilmembers solicited Tate. The Margolis deal was an unsolicited bid. The last appraisal, for $2.9 million, was a year ago, and the real estate market has appreciated dramatically since then. Rents alone in Miami are up 38%, the highest gains nationwide.

“That should have brought in $6 million in today’s market. The major problem with our city over the many years is that the city manager is not responsible to the citizens but to the whims of the council. She should have been arguing against the sale and against the Wildcat Center. We’re seeing undeveloped lots being sold for way more. If you’re financially stretched you shouldn’t be doing this. It’s like a drunk selling his car to buy half-priced liquor in a bar,” said William Welsh, real estate investor and former District 2 candidate.

On the council, only District 2 Councilwoman Kassandra Timothe has consistently voted no, fearing eventual consequences that could manifest in 2023 and 2024.

Advocating for the Margolis sale is lawyer, political operative and former North Miami Mayor Andre Pierre, who represents Oldtown Capital and a growing list of other developments in the area as a lobbyist.

“North Miami is popping all over,” he said. “This is a good deal for the city.”