The deal required the city to relinquish air rights to a parking podium that will be topped by a hotel and four condo towers. Those air rights will not revert to the city when the developer’s lease ends in 100 years.
The 100-year lease deal that paved the way for a private developer to build luxury condo towers on taxpayer-owned land at Bahia Mar just got more lucrative.
But there’s a catch.
Fort Lauderdale will still own the land, but is forever giving up the “air rights” to a parking podium that will perch on 7 of the 16 acres of dry land at Bahia Mar, longtime home of the Fort Lauderdale International Boat Show.
The new deal will rake in tens of millions for the city while almost guaranteeing the condos keep on increasing in value for decades on end, experts say.
In a vote that came just before midnight Tuesday, commissioners agreed to transfer air rights to the Bahia Mar Community Development District.
Here’s why the air rights — the development rights in the airspace above the land — are so important: With the city’s transferal of the air rights to the CDD, it means the owners will own their condos in perpetuity. Even though Fort Lauderdale will still own the land, the city will never be able to take ownership of the condo units, the hotel or the podium.
Critics say it was a bad move, one that can never be reversed or rectified. Fort Lauderdale has now forever relinquished air rights to nearly half the site that sits on dry land, they note. And developer Jimmy Tate and his partners will pocket far, far more money than the city, they add.
Tate, the leaseholder of Bahia Mar, told commissioners their vote is only going to help the city’s bottom line.
The air rights, appraised at $249 million, are expected to substantially increase the value of the condo units, in turn boosting city coffers over the term of the lease.
Without the air rights, the condos would sell for an estimated $2,000 per square foot, according to projections made by Colliers International. With the air rights, that increases to $2,500 per square foot, based on conservative estimates.
Tate told commissioners he expects the condos to sell for closer to $3,000 per square foot.
Tate did the math for them.
“$1,000 per square foot on 1.1 million square feet is an additional $1.1 billion (in profits),” Tate said. “The city gets 5% of that. That’s over $55 million. You’re getting that as soon as we close (on the units).”
If the commission vote had gone the other way, the developer would be forced to sell the condos based on a 100-year master ground lease.
“That means they’d be sold at a 25% to 50% discount,” Tate said. “People will need a discount on a property they’re going to lose in 100 years. Now that the condo owners will own the air rights, they can’t be thrown out (when the ground lease ends).”
Before the commissioners cast their votes, critics argued Fort Lauderdale should be getting a way better deal than it’s getting.
“This is not even a bad deal. This is a joke,” said Marilyn Mammano, a resident speaking for the group Lauderdale Tomorrow.
The city’s consultant claimed the city would make hundreds of millions over the course of the 100-year deal, she said.
“Well in 100 years, four generations will pass, inflation will eat up the profits, the money will disappear into the city budget and the barrier island could be underwater,” she said. “Even if the city gets 5 percent of the increase in sales price, the developer will get 95 percent of the increase in sales price. Does this sound like a good deal to you? It certainly doesn’t to us.”
Mayor Dean Trantalis defended the deal.
“We’re not giving away the 7 acres,” he told the South Florida Sun Sentinel on Friday. “We’re conveying the air rights, but we still own the land. So anything that’s going to be built above the ground will always still need the city’s approval. We will never own the buildings. But they can’t build anything without city approval. If the buildings come down in a hurricane or tidal wave, they have to come back to the city for site-plan approval.”
City officials say the new deal will bring in an estimated $285 million in additional revenue to Fort Lauderdale, with $220 million going to the city’s general fund and the rest going to a Community Trust Fund set up by the developer.
When 100 years are up, the site will revert back to the city, with the exception of the air space above the podium, hotel and condo towers included.
Developers plan to remake Bahia Mar as we know it. The taxpayer-owned land will eventually become home to a $1 billion development expected to add millions to city coffers.
For those who might have forgotten, Trantalis had this reminder: “This whole arrangement is to get the city more income than what we were getting. Our income (under the former lease deal) would have been under $2 million if we did not allow for condo development.”
The former lease, which included a yearly base rent of $300,000, earned taxpayers $1.7 million per year.
But the new lease will add around $24 million a year to city coffers through 2122 once the property is built out, according to a financial analysis by Colliers International.
Tate persuaded commissioners to give him and his partners full rein over the public land for another 100 years in April 2022.
Commissioners say Tate’s $1 billion project is much better than one approved in 2017 that called for 651 rental apartments and boxy buildings that would have stood no higher than 12 stories.
Tate already has the city’s blessing to build four condo towers and a hotel at 801 Seabreeze Blvd. The 256-room hotel will stand 300 feet high. The condo towers, with a total of 350 units, will rise 270 feet.
The plan also calls for a park and public promenade along with a new seawall, marina village, a waterfront restaurant, shops and offices.
Critics say they are keeping close watch on the deal as it morphs and changes.
The latest deal requires the developer to build two pickleball courts and upgrade fitness equipment at Fort Lauderdale Beach Park, across the street from Bahia Mar. The developer will also be required to relocate a maintenance yard below the Bahia Mar pedestrian bridge. The total value of those improvements: $1 million.
Critics were not impressed.
Longtime resident Anne Hilmer, a member of the group Lauderdale Tomorrow, had a question for commissioners before Tuesday night’s vote.
“Why not lease the air rights?” Hilmer asked. “Why do we have to give them away in perpetuity? Giving away these air rights is forever, for pickleball courts, exercise equipment and a storage shed. It’s a bad decision.”
The vote was 4-1, with Commissioner Warren Sturman casting the lone “no” vote, saying he agreed with critics that the city could have gotten a better deal.
Steve Glassman, district commissioner for the area, called the deal a win-win, saying it would benefit the city over time.
Commissioner John Herbst agreed.
“I think it’s a much better deal than what we had prior to the consideration of the air rights,” Herbst said. “The air rights are already effectively under contract for the next 100 years. So I don’t think this is substantially changing anything. And I think this will add significantly to the city’s revenue stream.”
Susannah Bryan can be reached at sbryan@sunsentinel.com. Follow me on X @Susannah_Bryan
