Balancing act vital in choosing users of scarce public lands
Written by Michael Lewis on September 29, 2015
Diametrically opposed views on handing PortMiami sites to business users raise questions about how government should disburse scarce public land.
One end of the spectrum is like the kid with a dollar who has to spend it right now. The other end resembles the tightwad who still holds onto his first dollar. Views collide when government wrestles with business leases.
The use-it-now call surfaced as Miami’s Downtown Development Authority weighed leasing almost 9 seaport acres for 90 years for a Miami Yacht Harbor, which would include a hotel, convention space, duty-free shops, restaurants, a yacht marina and more.
County commissioners got an unsolicited proposal from promoters of the project – on the site where a soccer stadium had been sought a year earlier – and didn’t bite, prompting Commissioner Bruno Barreiro to tell downtown authority members that we should move fast.
“There’s a lot of interest from the outside world,” he said. “The commission has to make a decision. That’s a huge piece of property that’s not being utilized.”
Mr. Barreiro then noted that he has long sought an airport fuel farm on the site and the county should get moving. “We can’t have that land just sitting there.”
The opposing view came as Xavier Suarez commented on fellow commissioners’ OK to lease land to Royal Caribbean Cruises for up to 60 years for a terminal for its largest ships, which now berth at Broward’s Port Everglades.
“You’re doing something problematic when you tie up valuable property like this for that long,” Mr. Suarez told Miami Today. “This is a lease that, at the total discretion of the cruise company, could go for 60 years and no one knows if the lease will end up being more valuable, if cruising will still be popular 60 years from now, if people will still like the large vessels.”
The lease-it-now view prevails. Local governments for years have cut deals with the first business through the door. Whatever the asset is, when someone proposes a use that will net any cash flow at all, a deal is often sealed.
Mr. Suarez told us that the Royal Caribbean site should have been offered to other lines too. We have little doubt that PortMiami officials did so informally.
But there are far fewer major cruise lines than companies cobbled together just to develop on one government site or another. There is always an idea to put scarce public land to private use.
Each offering is a rush deal – but the rush is the proposer’s, not government’s need to yield the public’s land. It takes strong leaders to ask why the hurry.
There is validity to Mr. Barreiro’s call to not leave public land fallow. Leasing it for anything would produce some revenue, which is better than nothing – though the best use of land for public purposes like developing our community’s economy and increasing the public good in other ways is often a better choice than merely the highest lease payment.
And don’t forget that open public space held for decades is a real value too, both as green space and as an opportunity for something spectacular one day.
Waiting for the best use can, however, also be extreme. Mr. Suarez is right that we can’t know whether large cruise ships will be popular, or even used, in 60 years. And he’s probably correct that the land would lease for more in 20 years than today – if it’s not under water as the sea rises.
But criteria that land will lease for more in the future than today and that we can’t lease if we don’t know what society will do in six decades will freeze everything. We’d never get a lease based on highest possible value in 60 years, nor could we deal based on known future habits.
As a practical matter, what’s the tipping point?
First, don’t just cut a deal with the first proposer. That won’t yield the best result and is likely to be based on cronyism. On the other hand, we can’t wait until we know the future and pick uses and charge rents based on that future.
The multi-use port project was proposed by a new company that has an idea. The cruise terminal is for a global corporation that is a major port user. Which is more likely to fulfill the lease and do what it pledges? A lease is only good if the tenant stays solvent. That should be a second criterion.
Another yardstick is becoming an area asset and meshing with local aspirations. Both projects would fit, though downtown is leery of hotel, shopping and meeting competition. Nobody is leery of more liners run by an industry giant in the cruising capital of the nation.
A fourth aspect is procedural: does everyone who might want to use a site get fair shot at the opportunity?
We don’t know if Carnival and other lines got the chance to lease the space that Royal Caribbean is dealing for. They should have, both for fairness and because Carnival and others are good port tenants.
We do know that the port’s southeast corner sought for the mixed-use project would have dozens of bidders.
But, as a fifth criterion, government should decide in public what it wants on its land before it seeks proposals. Many projects could fit in, make a profit and pay the lease. They’d submit a proposal if they knew about it. But not all of them would rank among top choices for land use.
The most profitable use of port land, taken to extremes, might be drug smuggling. It’s a maritime use. It provides foreign trade. It creates jobs. It would not compete with many nearby businesses. Still, it would not be the best choice.
The land uses should fall into the port’s master plan, which is now too broad. Most uses could fit. Narrow that plan to uses vital to a seaport. Resist any effort to stretch too far.
Mr. Suarez is correct that if we hold land we can someday lease it for far more. Mr. Barreiro is correct that if we lease land today we will have income stream that we would otherwise forfeit – though a higher future rent could give us that money with interest down the road.
Had private owners held undeveloped all of Brickell Avenue 60 years ago they would probably get 100 times the price today – but that would have left Miami much the poorer for 60 years.
Local government has massive realty assets. Dispersing them as fast as possible is not in the public’s interest, nor is holding them unused for decades.
A consensus master plan of what we want our community to be like in the decades ahead can make hard choices easier. Even so, it would change – for example, if cruising were no longer popular, the seaport would change its tenant mix.
It might be years before this community could craft such a plan. In the meanwhile, government must target some middle ground between handing over control of as much public land as quickly as possible and rejecting all income from land deals by studying them to death.