Miami-Dade’s top economic engine could get a fast-tracked makeover, courtesy of a no-bid deal with its tenants.
County Commissioners are scheduled to vote Tuesday on a resolution by Danielle Cohen Higgins and Kevin Marino Cabrera authorizing a no-bid deal with concessionaires at Miami International Airport (MIA).
The deal, which requires two-thirds approval from the dais, would keep the existing restaurants and retailers at the hub for 12 years, with one three-year renewal option. In exchange, they would agree to yearly rent increases, among other things, and invest up to $332 million to renovate their spaces.
Concessionaires that opt into the three-year renewal would have to commit to “approximately an additional $65 million of investment,” MIA Director Ralph Cutié said, adding that Miami-Dade altogether would see “almost $1.1 billion” in revenue from the deal.
Other aspects of the agreement would see concessionaires pay 0.5% of their gross revenues to cover a customer experience fee MIA would use to improve areas adjacent to their spaces; a 0.5% marketing fee to pay for advertising and a new secret shopper program; and a 0.25% infrastructure repair and maintenance fee restaurants that use grease traps would have to pay.
Two-thirds of the $332 million would cover improvements to the spaces, Cutié said, with most of the remainder going toward upgrading equipment.
“One of the most important things that the item does is it resets the ratio of food and beverage to retail, which currently is at 46% food and beverage and about 54% retail. The industry-recognized optimum standard is … about 65% (to) 35%,” he said. “As part of this agreement, the … concessionaires will turn that ratio to the more optimum 65%, 35% … food and beverage to retail.”
The deal comes amid a confluence of headwinds for Miami-Dade. Mayor Daniella Levine Cava has called for spending cuts as pandemic funds dry out. At the same time, the county is investing $9 billion to improve and expand MIA after years of criticism about its dilapidated escalators, walkways and long-out-of-commission Skytrain.
Cohen Higgins told Florida Politics that while some concessionaires aren’t fully onboard with the deal, “the vast majority” are. She said taking a “piecemeal approach” of negotiating with each of the businesses and outside companies hoping to replace them would delay the much-needed improvements and limit the plan’s impact.
“These businesses are doing well, knock on wood,” she said. “We want to incentivize a full-spectrum renovation.”
Cabrera, who is likely to soon leave County Hall for a job as U.S. Ambassador to Panama, said the no-bid deal also makes sense because the concessionaires the county has contracts with now are doing good jobs.
“If it ain’t broke, don’t fix it,” he said. “If we were (to) go out to bid … I think it would take another decade … because we know what happens. It gets slowed down. People are going to do bid protests and we’ll be here forever and ever before we actually get there.”
He said that the deal includes safeguards that weren’t there in past contracts, including a provision allowing for a tenant to be evicted if they violate parts of the agreement.
Commissioners will also consider a separate but related resolution soliciting bids for concessionaires interested in filling 10 vacant spaces in MIA’s North Terminal, out of which American Airlines operates. The item also seeks competitive procurement for tenants for the Central Terminal and the hub’s to-be-built Terminal K.
Cohen Higgins pointed to that separate resolution in response to concerns Commissioner Keon Hardemon raised during a March 12 committee meeting about how the larger no-bid deal denies Black-owned businesses an opportunity to compete.
Hardemon noted that it’s been nearly 20 years since the county held an airport-wide round of competitive bidding for concessionaire spaces and that contract extensions for them are traditionally for four years.
“There’s no way that we should let this moment pass without doing something more significant for the people that we believe should be there,” he said. “In order for us to move forward with this significant of a step, there’s some unbundling that needs to be done.”
Commissioner Oliver Gilbert, the immediate past Chair of the County Commission, said he was sympathetic to Hardemon’s concern and appreciated Cabrera’s sentiment about not fixing unbroken things.
“But ‘broke’ and ‘fix’ is relative to your position,” he said. “For people who don’t necessarily have the opportunity, they would think, ‘Yeah, someone else is doing well there, but I could do well there (too).’”
MIA has nearly 280,000 square feet of concession space across its North, Central and South terminals. The airport’s website says its concession tenants “are selected through a competitive selection process.”
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