We have previously written about Miami-Dade County’s proposed SMART plan, a massive, six-corridor expansion of the existing heavy rail system, and the benefits of delivering all or portions of the project as a public-private partnership (P3). This month, the County Mayor released an updated multiyear transportation pro forma that identifies $8.457 billion in available funding to implement the SMART Plan over the next 40 years. The County has estimated that this income stream could be used to borrow $2.6 billion today, or enough to construct two of the six corridors. Although the County does not have the funding to construct the entire SMART plan using a traditional, publicly financed and operated delivery, the County can utilize a P3 to stretch its financial resources as far as possible.
We recently wrote about Miami-Dade County’s proposed resolution that would designate the areas within the County’s SMART Plan corridors as “Areas of Countywide Significance.” The Board of County Commissioners has since adopted that resolution, allowing the County to maintain regulatory jurisdiction and facilitate development within the SMART Plan corridors. Passage of that resolution has set the stage for the next step to further streamline the development process for property surrounding transit stations that is owned by the County, but sits within a municipality.
Now, the County is focused on expanding the Rapid Transit Zone (RTZ) to the properties it owns surrounding transit stations, which were included in the areas deemed significant by the resolution. The RTZ ordinance, originally drafted by Bilzin Sumberg Partner Stanley Price, grants zoning and permitting jurisdiction for the County’s transit system to the County, even if the property is within a city that would otherwise have permitting jurisdiction. By consolidating this jurisdiction within a single government entity, the County can facilitate P3 transit development by reducing permitting risk. Continue Reading
Ride-sharing has become a primary mode of transportation in many cities and for many people and is possibly the most visible evidence of the ways that technology is transforming transportation. Now, the ride-sharing apps are taking it one step further in a move that will provide a boost to Miami Dade County’s SMART plan, which includes a massive transit expansion and the viability of mass transit P3s. Just this month, Lyft announced that it is updating its app with two major technological advancements.
The Florida First District Court of Appeal recently decided Crapo v. Provident Group-Continuum Properties, LLC, which sets forth a rule that should result in more favorable property-tax treatment for P3s in Florida. In general, an economic disadvantage facing privately-owned projects, as compared to publicly owned projects, is the imposition of real estate taxes, which are often around two percent of the property value per year. Although there are many exceptions, in general, privately owned and operated developments are subject to property tax, while government-owned and operated developments are not. P3s, which have elements of both public and private developments, often operate in a legally gray area. Continue Reading
Last week, the Rand Corporation, which just completed an analysis of the federal bid-protest system, announced that one thing the federal government has been doing particularly well is resolving bid protests quickly–the majority within 30 days.
As we’ve explained in a prior post, a bid protest is a proceeding where a bidder for a government contract can challenge the government’s selection process or decision. Bid protests generally take place before the contract has been officially awarded by the government agency in order to give the government the opportunity to consider the issues raised and correct its course if required. Although the government sometimes has the ability to award a contract before resolving the protest–such as in the case of a public emergency–in general, the protest must be resolved first. That means that a prolonged protest delays the award, execution, and performance of the contract.
Unfortunately, delays in the award decision can be fatal to the final contract. Because the cost of labor, materials, etc., can fluctuate, a bidder may not be able to hold its price firm for a prolonged period. In the public-private partnership (P3) context, the risk of a prolonged bid protest is even more severe, as the winning proposer will have financial commitments with firm expiration dates. In the event that the financial commitment expires before the contract is awarded, the deal could fall apart. As a recent example, the P3 procurement for the I-395/Signature Bridge project required private financing commitments, but the state took nearly a full year to resolve the protest filed by the second-place proposer. The hearing examiner ultimately upheld the agency’s decision, but renewing the financial commitments after the lengthy delay will surely be a challenge. Continue Reading
Regional mass-transit systems are often plagued by the permitting challenges associated with construction in multiple cities, each with its own priorities, regulations, and permitting processes. For example, the cost of the first leg of the Los Angeles light rail system skyrocketed due to the design changes demanded by each of the several municipalities the system was required to traverse. Because the recently proposed expansion of Miami-Dade County’s transit system (the SMART Plan) will similarly traverse multiple jurisdictions, the project would benefit greatly from consolidated permitting and decision making at the regional level. Continue Reading
For many years we have sought to address the problems faced by mixed-use developments where different uses in a single structure are carved up into separate fee simple parcels. The main problem has been the inability to obtain separate tax folio numbers for the separate parcels. This has resulted in a situation where it is either difficult or impossible to finance the separate parcels since they all share one tax folio number and there is only a single tax bill issued for multiple parcels. For reasons not clear, the Tax Assessor’s Office has refused to provide separate tax ID numbers arguing that a separation for tax billing can be achieved by creating a condominium structure. However, anyone knowledgeable in the condominium arena recognizes that using a condominium regime may frequently create more serious problems than the tax issue.
In the 2018 legislative session we were fortunate in having a tax bill that was originally prepared in 2014, and which languished for many years, inserted in the 2018 budget bill and passed as part of the budget bill CS/HB 7087. Continue Reading
Yesterday, the City of Chicago selected two finalists in its procurement process for the planned O’Hare Express, a mass transit system that will connect downtown Chicago to O’Hare International Airport within 20 minutes–substantially faster than either existing mass transit service on the Blue Line or vehicular alternatives. The two finalists are Elon Musk’s firm, The Boring Co., and a P3 consortium including experienced firms in the P3 market such as Meridiam Infrastructure and Mott MacDonald.
Whichever firm ultimately prevails in the competition, O’Hare Express is likely to jump-start the market for mass transit P3s in the United States. Significantly, O’Hare Express is conceived as a revenue P3, which means that the private developer and operator of the system will be repaid by the revenues (e.g., fares) that it collects from users of the system. Continue Reading
In a significant ruling, Florida’s Fourth District Court of Appeal in the case of Ocean Concrete, Inc. v. Indian River County ruled the government violated the developer’s Bert J. Harris Act rights by denying a site plan for the development of a project that had established a reasonable, investment-backed expectation. The Ocean Concrete ruling is particularly important because Bert J. Harris claim is one of the only ways to protect development investment expectations against overstepping governmental regulations that fall short of a constitutional taking.
The Bert J. Harris, Jr., Private Property Rights Protection Act was codified in 1995, to provide protection to private property owners against burdens placed on their property rights by governmental entities. Bert J. Harris claims provide an important recourse for private property owners when a regulation burdens their property rights, but still falls short of an actual constitutional taking. Specifically, the action of a governmental entity is not required to reach the level of a taking, but only “inordinately burden” an “existing use” or a “vested right” in the private property. While the Act has been on the books since 1995, Florida courts still grapple with its interpretation. Continue Reading
Cities across America are facing an affordability crunch and housing in Miami is no different. The short supply of affordable housing is even scarcer in proximity to Miami’s central employment districts with no single solution available. Efforts to promote inclusionary zoning (mandatory affordable unit requirements) have populist appeal, but limited success and actually reduce land values for property owners. Micro-units though, have the opportunity to create both affordable housing and also increase developer profitability. In accomplishing both affordability and profitability, micro-units hit the perfect spot that incentivizes the private sector to build affordable housing because it is more profitable. As a result, several municipalities in South Florida are exploring codifying micro-units.
Micro-units provide affordability for the simple reason that the units are smaller and cost less to build, while yielding a greater return for developers and landlords. Thus, they provide the unique dual benefit of affordability and profitability. Reduction of minimum unit size increases unit density with the same building envelope. Moreover, smaller units always rent for more per square foot than their larger counterparts. Thus, the same building envelope can now contain more units and these units can rent at a higher price per square foot. The units remain relatively inexpensive to rent simply due to their size. In Manhattan’s Kips Bay neighborhood, micro-units ranging from 260 to 360 square feet were developed to test the viability of micro-units. The Kips Bay units are fully leased, proving out the micro-unit model. Continue Reading