|Finance and Economic Resiliency Committee Members
|Alina T. Hudak, City Manager
|April 29, 2022
|UPDATE REGARDING POTENTIAL BUSINESS RETENTION INCENTIVE FOR GROOT HOSPITALITY, LLC, LOCATED AT 1680 MERIDIAN AVENUE, TO PROVIDE UP TO TWENTY (20) PARKING ACCESS CARDS PER YEAR, FOR USE OF PUBLIC PARKING FACILITIES IN THE LINCOLN ROAD AREA, BASED UPON AVAILABILITY.
|On September 17, 2021, the Mayor and City Commission approved a referral item to the Finance and Economic Resiliency Committee (“FERC” or “Committee”) to discuss possible business retention incentives for Groot Hospitality, LLC (“Groot”) as sponsored by Commissioner Ricky Arriola. The desired incentive includes parking spaces that Groot may utilize to operate at its new expanded corporate headquarters at 1680 Meridian Avenue, Miami Beach.
Groot is an established Miami Beach based hospitality company with a portfolio of restaurants, cafes, nightclubs, and hotels. Groot currently employs hundreds of employees at its numerous Miami Beach restaurants and nightlife venues including LIV at the Fontainebleau Hotel, Papi Steak, Story, Strawberry Moon at the Goodtime Hotel, and Sushi Fly Chicken (SFC). Groot’s multiple hospitality ventures generate significant tax revenue, employ residents, and enhance the Miami Beach tourism and hospitality-centered economy.
Groot seeks thirty (30) parking spaces, via monthly permits, for access and use by its employees in the Lincoln Road area. Groot’s landlord, Market Street Real Estate Partners LLC (MSREP), has communicated the company’s plans to hire approximately 40 full-time employees and 10-15 vendors. To accommodate these employees, Groot recently expanded its office footprint from 2,800 sf to 7,600 sf. Prior to Groot’s recent expansion, the Lincoln Road Business Improvement District expressed concerns that Groot was considering relocating its corporate headquarters to Wynwood or another location away from Miami Beach unless the company could find access to additional parking.
The Parking Department manages multiple surface parking lots in the Lincoln Road area near Groot’s headquarters, including P25, P26, and P27, each with assigned parking permits. At peak times, permit holders experience challenges with accessing available parking as spaces are not reserved but rather utilized on a first-come, first-served basis. The City also manages three (3) area parking garages – (1) 17th Street parking garage (G5), (2) City Hall parking garage (G7), and (3) Pennsylvania Avenue parking garage (G9), each are at or near capacity with an extensive waiting list.
During the September 24, 2021 FERC meeting, the Committee discussed the potential to offer a parking incentive to encourage Groot to maintain its headquarters in Miami Beach. The Parking Department shared information on existing challenges and strategies to identify solutions and maximize usage, including reassessing and evaluating existing waiting lists for accuracy. Additional proactive strategies proposed included offsetting demand, prioritizing access card issuance, balancing parking demand, increasing access card percentages, and working with private parking operators.
Notwithstanding the application of these strategies, it was noted that free parking cannot be offered. The Parking Department operates as an enterprise fund and its revenue bonds are impacted by parking revenue. The Committee also discussed exploring a long-term approach to leverage parking, as a city asset, by evaluating parking demand data, utilizing technology, and engaging with stakeholders and the business community to ascertain need. Specific to Groot, the Committee recommended that the Administration identify and make a parking solution available to Groot, and return to the FERC to discuss a broader parking incentive policy recommendation to promote equity and transparency.
During the October 22, 2021 FERC meeting, the Administration provided information on parking demand, and usage and capacity to increase issuance of access cards. It was noted that the greatest demand for parking is largely during daytime office hours allowing for evening availability to support nighttime uses and activities. By conducting parking counts and analyzing transient and access card usage at the 17th Street (G5) and Pennsylvania Avenue (G9) parking garages, the Parking Department determined that there was room to increase access card availability by approximately fifty (50) spaces.
The Administration also presented a conceptual parking subsidy program in-lieu of providing guaranteed city-owned parking accommodations for restaurant and hospitality firms and venues. As proposed at the October 2021 FERC meeting, the City Commission could establish a program to offer city parking (if available) and offset costs with an allocation from the General Fund, or if city parking is not available, provide funding for an alternative to city-owned parking, such as privately-operated parking facilities.
Ultimately the Committee affirmed its desire to assist Groot, but also expressed concerns about the financial impact of the proposed parking incentive policy. The Committee determined that further study was needed based on data related to parking capacity, inventory, and demand.
According to the 2019 Customer Satisfaction Survey, the majority of Miami Beach businesses, approximately 70%, have a positive overall image of the city. However, in terms of parking and transit, there are opportunities for improvement. When businesses were asked how it would rate the effectiveness of public transit for employee commuting, 52% of respondents indicated fair or poor. Only 28% of businesses reported providing free or subsidized parking for employees. When asked about the availability of public and private parking for customers, 57% of businesses replied that there were seldom or almost never any parking spaces nearby.
With respect to the Groot request, the Administration is sensitive to Groot’s contribution as an employer and purveyor of various first-rate dining, hospitality, and entertainment offerings in the City. Though Groot has not formally requested monthly parking permits or joined the waiting list through the Parking Department, the Administration acknowledges Groot’s unique position as a local mainstay in the hospitality industry and investor in the Miami Beach community.
After months of discussion by the FERC on diversifying the city’s economic base, on March 17, 2021, the Mayor and City Commission adopted resolutions identifying technology and financial services as targeted industries for business attraction, retention and expansion efforts. Identified methods included inducements and incentives for locating or expanding local headquarters or regional offices for other industries, a category which may include Groot. The Mayor and City Commission authorized baseline criteria and performance standards for the Economic Development Department to market and offer services and multi-year financial incentives, such as the Job Creation Incentive Program for the targeted industries. It is important to note that companies in the established targeted industries are not currently offered a parking incentive, however, these businesses often seek parking accommodations when considering relocation to or expansion in Miami Beach.
Although the City Commission directed the Administration to prioritize the recruitment and retention of technology and financial services, there is a desire to elevate and firmly support the hospitality industry, the backbone of the City’s economy. Based on the discussions during the September 24, 2021 and October 22, 2021 FERC meetings, the Parking Department has evaluated parking demand and access at area parking facilities and has separated twenty (20) parking access cards for potential use by Groot.
Funding for this type of incentive is not currently identified or appropriated. If this financial incentive is to be offered during the current fiscal year, a budget appropriation would be required. The fiscal impact, at the current rate for parking access cards, is $108 plus tax per space per month. If the City incentivizes parking access cards for Groot, the cost for twenty (20) parking access cards for twelve months would be $25,920 (with no tax applied). For two (2) years, the cost would be approximately $51,840, and for three (3) years, the incentive would cost $77,760 based on current parking rates.
While services and financial incentives are an important component of the city’s targeted industry attraction and retention strategy, non-targeted industry retention is an important policy decision as existing businesses are valuable assets to our economy.
|As a major Miami Beach tourism and hospitality stakeholder, the Administration recommends assisting and retaining businesses in a manner that is equitable and respectful of the individuals and companies already on the waiting list for monthly parking access cards. Due to current parking demand in the desired area, it is not feasible for the City to address multiple ad hoc parking requests on a consistent basis.
With authorization of a business retention parking incentive for Groot, the Administration anticipates additional requests for parking accommodations and incentives may come forward from other businesses and applicants currently on the waiting list.
Void of a holistic approach to prioritizing limited parking spaces, the Administration suggests that if recommended, that this type of incentive be curtailed until such time as a general policy is adopted with established criteria and funds appropriated. The Administration also recommends that the policy include criteria for a recurring award of the incentive, not exceeding three (3) years, upon annual verification of an executed commercial lease equal or greater than three (3) years, at a minimum, and an increase of leased space.
|Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14?
|Does this item utilize G.O. Bond Funds?
|Prosperity - Revitalize targeted areas and increase investment.