HOMEWEBSITE.html
SERIESCRESPOGRAM_SERIES_-_MASTER.html
LINKS2012_LINKS.html
2012 ARCHIVES2012_ARCHIVES.html
DOCUMENTSDOCUMENTS.html
CONTACT ME2012_CONTACT_INFO.html
2011 ARCHIVES2012_ARCHIVES.html
CRESPOGRAM REPORT

JULY 9, 2012

IT’S REALLY A BAD DEAL FOR THE CITY
PART II
BUNGLE IN THE JUNGLE REDUX
http://alturl.com/osph2http://alturl.com/osph2shapeimage_12_link_0

The Jungle Island story keeps getting more interesting, in a bad way.


The briefest description of this mess to date is that these folks seriously miscalculated their ability to make a go of their tourist attraction on Watson Island over the last 15 years, and became deadbeats owning the Federal Government, Miami-Dade County and the City of Miami around $26 million in loan payments and taxes.


When you owe that kind of money, and the option of continuing to do things the same way is evidence that someone’s insane, the owners of Jungle Island came up with the idea of offering the City a deal they figured the City couldn’t refuse.


With the help of a high-priced lobbyist and the negotiating skills of a couple of the Mayor’s pals - Stephen Kneapler and Mikki Canton - who rumor has it were delegated by His Ignorance to look out for the City’s interests - Jungle Island’s owners proposed that the City give them an additional 13 acres of property, including a City Marina and a City Park, in return for a secret, “unnamed investor,” coming in with a wheelbarrow full of money to pay off their debt, and build a resort hotel/casino/fancy new marina, or who knows what on the expanded property.


Not everyone is happy with the outline of the deal, most importantly, because no one knows who the secret “unnamed investor” is, or even the broadest outlines of just what will actually be built on the expanded piece of property that the Jungle Island owners want the city to give them.


It’s your basic pig in a poke, bad deal, that the City of Miami Commission has become known for supporting during their annual July Giveaways.


Giving city land away to an “unnamed investor” is just a variation on giving land away to ball teams that won’t let you look at their books, or doing deals where the developer gets to have his personal lawyers rewrite City ordinances in ways that benefit the  developer and screws the citizens.


His Ignorance, Mayor Tomas Regalado might bemoan the fact that, “every deal in the City of Miami,” is a bad deal, but this deal, along with the Grove Key Marina/Scotty’s Landing deal also up before the City Commission this week, are both examples that he’s working overtime to keep the string of bad deals alive. 


And, in typical Regalado fashion, this deal is bad not only because of all the issues that have been reported on so far, but also because this is a deal where His Ignorance is once again all to happy to give away city land for far less than it’s value.


THE CITY LAND THAT JUNGLE ISLAND NOW WANTS


In order for them to survive, the owners of Jungle island, claim, and the City has agreed, that they need 3 more pieces of City property.


The first of these properties is included as Condition 1.1 of the TERM SHEET. (A PDF of the Agreement and attachments is at the bottom of this story.)


THE MIAMI PARKING AUTHORITY LOT 3  AND BOAT RAMP C

This piece of property is 4.67 acres. Exhibit D of the TERM SHEET included as part of the Jungle Island Group Memorandum of Key Lease Amendment Terms and Conditions Precedent, state that once Jungle Island has obtained control over this property that for the first 4 years of this agreement, or until whatever “Attraction, Retail and/or Themed Hotel is built, the rent on this piece of property shall be $96,487.57 annually.


This property is owned by the City of Miami and is currently part managed by the Miami Parking Authority.  In addition to being a parking lot, it is also a boat ramp.


The other two pieces of property are cited in Section 3: ADJUSTMENT TO RENT, as properties that are owned by the City but currently under lease or agreement to other parties.  They are:


THE ICHIMURA MIAMI-JAPANESE GARDEN

This piece of property is 1.04 acres. Exhibit D of the TERM SHEET included as part of the Jungle Island Group Memorandum of Key Lease Amendment Terms and Conditions Precedent, state that if Jungle Island is successful in securing this property that for the first 4 years of this agreement, or until whatever “Attraction, Retail and/or Themed Hotel is built, the rent on this piece of property shall be $21,487.00 annually.


A history of the Japanese Garden can be found HERE.


The property belongs to the City of Miami and is operated as a City Park.  Because of the history of this park, Jungle Island would probably have to finance the creation of a new park elsewhere.


THE MIAMI YACHT CLUB

PAGE LINK - COPY AND PASTE

Copy the link below, and it will be a permanent link to this page that you can post on Facebook, or anywhere else.

This piece of property is 7.74 acres. Exhibit D of the TERM SHEET included as part of the Jungle Island Group Memorandum of Key Lease Amendment Terms and Conditions Precedent, state that that if Jungle Island is successful in securing this property that for the first 4 years of this agreement, or until whatever “Attraction, Retail and/or Themed Hotel is built, the rent on this piece of property shall be $159,917.00 annually.


The current lease agreement with the City on this property will expire on March 31, 2016, although there are 2 - 5 year options.  The City Currently collects $51,237.24 in rent.  An agreement on this property before the expiration of the lease would require a buyout of the remaining time left on the lease.


Not included in the current plans, but certainly on a back burner is the property at the East end of the Island that currently is operated by the Miami Outboard Club, and sits on 6.88 acres.


The total annual rent payments that the City of Miami would collect on these properties, consisting of 13.45 acres - and it’s hard to believe that Jungle Island would not succeed in taking whatever steps are required in order to obtain the control of these properties - is $277,891.57.


While this amount is clearly more than the amount that the properties currently generate, the fact is that we’re talking about 13.45 acres of City property, and a construction period of 4 years. 


The TERM SHEET might say that the “Construction Phase cannot last longer than 4 (Four) years,” but there is no penalty language in this document that would enforce that, or provide penalties if they do not complete construction within the 4 year period.


IN FACT, THERE ARE NO PENALTIES OR PENALTY PAYMENTS INCLUDED FOR ANY VIOLATION OR FAILURE TO COMPLY WITH ANY PART OF THIS AGREEMENT, WHICH GIVEN THE BEHAVIOR OF THE JUNDLE ISLAND FOLKS TO DATE, IS TANTAMOUNT TO THE CITY GIVING THEN A TUBE OF KY JELLY AND BENDING OVER.


IS THIS THE BEST DEAL THE CITY CAN DO?


As I said, $277,891.57 is more money than the Yacht Club and the Parking Lot currently provide the City in lease payments and parking fees, but is it really the best short term deal that the City could get for the property?


Consider how much the City is demanding of the new tenants of Grove Key Marina/Scotty’s Landing.


The first two years of that deal, during the time that the new tenants will be renovating the marina and the restaurant, they will be required to pay $720,000.00, and then the rent will raise to $840,000.00.


Currently, the City gets $600,000.00 a year from the Grove Harbor/Whole Foods property.


The City gets 686,950.80 a year from Monty’s.


On the other hand, after the first 4 years of paying $277,891.57, this deal goes all funny. Instead of paying more in rent for these properties, the City switches over to a 5% of gross deal that is explained this way:


        “Section D. (iii) of the Third Modification to the lease

        and Development Agreement, dated October 29,2008,

        shall be amended to read - Rent for the Additional

        Improvement shall be the greater of an amount equal

        to 5% of the Gross revenue received by the Tenant,

        Subtenant or, if operated by other than the tenant or

        a Subtenant, the operator of the Attraction, Retail and

        or Themed Hotel or $62,500 per month.”


First, this doesn’t make sense.  This is a confusing bit of language for it being so important, especially since this item was pulled from the last Commission’s agenda supposedly to strengthen the definition of Gross Revenue so as to protect the City against the kind of antics the Miami Marlins and Miami Heat operation engaged in to screw the taxpayers out of every dime they could get away with.


Furthermore, when does the 5% of gross become instead $62,500 a month? The above language does little to adequately explain when and how this little switch could happen?


Given the probability that a casino will end up on this property, this deal memo seems badly written, and reflects poorly on the legal and financial expertise of whoever is supposed to be looking out for the interests of the City of Miami.


The folks at Jungle Island have already demonstrated a willingness to screw the City, so there is no reason to give them so much as an iota of benefit of the doubt in any of the language of this new deal.


THE PHONY JOBS ARGUMENT


One of the thing to be expected at this week’s City Commission meeting will be a bunch of Jungle Island employees being bused in, wearing Tee Shirts and carrying signs, ready to argue that the City of Miami needs to support this deal to save their jobs.


I’ve always found these efforts to bus in employees to support their management’s position on public policy issues to be coercive and reflective of a view that employees are easily manipulated to support bad decision making by employers.


Foe Jungle Island employees, the notion that the City of Miami  Commission would actually care about their plight, should consider that in the last few years the Commission has demonstrated a willingness to screw over the City’s employees.


The 5 Dwarfs on the City Commission might play lip service and make self-serving comments to placate the audience, but no one should believe that this gang really cares about doing anything for  employees, their own or anyone else’s. 


Secondly, it’s a red herring argument to claim that if the City doesn’t step up and do this deal these people will all loose their jobs.


Truth be told, most of the people who work in the animal park are destined to be out of a job sooner or later because the only thing that keeps that part of the facility from becoming a ghost town full of wild animals now is the deal with the School Board that buses in kids on a regular basis.


At the forefront of the discussion over this property, the singular fact that has to be focus on how to proceed is that whoever the “unnamed investor” is, that individual’s ultimate intention is to turn the property into a casino/resort destination.


You don’t agree to put up the $75 - $100 million or more dollars that the makeover will entail unless every square foot of that property is measured against how much money it can return on investment.


A second-rate wild animal attraction will not survive the cost-analysis steamroller.


Overall however, the replacement planned for Jungle Island will be a significant job developers, both in construction jobs, and in the increased number of service jobs that come with a casino/resort hotel.


THE WORST PART OF THIS DEAL


The absolute worst part of this deal is that the City is in a rush to approve this revised Memorandum and Deal Memo without having a clue of just what is actually going to happen to the property if the Referendum is approved in November.


It stands to reason that the current structure, which was really badly designed to attract visitors passing by on the Causeway, will probably be knocked down to accommodate the new hotel/casino/retail shopping venue has already been decided on, and that tucked away in some office architectural renderings have already been prepared as to how the property will look in the next few years. 


Yet the City Commission is prepared to put a Referendum before the citizens of Miami without providing any real information on who the “unnamed investor” is, what the real plans for this property will be, or even an idea of what the place will look like if the deal goes through. 


It’s really astounding that the members of the City Commission could even consider this deal without there being a public discussion about any of these issues, much less a requirement that these issues receive the kind of transparency needed to make an informed decision.


Even convicted heroin dealer, and Marc Sarnoff pal, Mark Siffen, whose deal two years ago to plop 5, 240 foot LED billboards on top of a parking garage on the piece of Miami Herald property he had optioned a block from the Performing Arts Center was the skanky deal of that summer, was smart enough to have prepared a set of architectural renderings of what his project would look like.


This time, there isn’t even a drawing on a cocktail napkin that provides any inkling of what this “unnamed investor” has in mind for this property.


HERE’S AN OPTION ON HOW TO DO THIS DEAL AND LOOK OUT FOR THE TAXPAYERS


Call the bluff of the Jungle island owners!  Take over Jungle Island evict the owners, put in a temporary management team and negotiate directly with the “unnamed investor!” 


At best, the owners of Jungle Island have been bad business people with lousy judgement and a bad business plan; at worst they’ve been raking in wheel barrows of money from their catering and Treetop Ballroom operation, paying themselves handsomely in the process, while crying poor mouth to avoid paying the millions they owe in rent and taxes.


Once they’ve been evicted you’ll be surprised how quickly the “unnamed investor” will come out of the shadows, looking to make a deal.


Whoever this “unnamed investor is, he/she is smart enough to know that dealing directly with the City, instead of having to deal with and through the Jungle Island group, has got to be a better deal for him/her.


It’s certainly got to be a better deal for the City, because this individual is the one who actually controls the money required to clean this mess up, and it’s ALWAYS better to deal directly with whoever controls the money.


More importantly, this deal can proceed with a lot more openness and accountability than pretending that the Jungle island group is anything other than a collection of untrustworthy middlemen looking for ways to keep themselves in the deal flow.


At this point the only thing that the Jungle Island gang has is a lease on a piece of property owned by the City of Miami that they are on the verge of defaulting on.


If this property is going to end up being a casino - and there are certainly a number of folks and groups who are opposed to this happening, and therefore should be really upset in how this proposed process would bypass any future opportunity to force a vote on a casino going up on Watson Island - then the City of Miami owes it to the citizens to deal directly with the person who controls the purse strings and will be making the real decisions, and not with a bunch of local light weights who’ve spent the last 15 years blowing smoke up everybody’s ass and crying poor mouth when they’ve have to come up with the millions that the taxpayers have provided to underwrite their lifestyle.


To do anything else is absolutely insane!


There are bad deals, and bad deals, and then there are BAD DEALS!


THIS IS A VERY BAD DEAL!


THE LATEST JUNGLE ISLAND DEAL MEMORANDUM