Sunday, November 22, 2015

Miami Herald on Homestead Racetrack: Really? ... by gimleteye

Today the Miami Herald published a paean to the Homestead Raceway that made me, in the immortal words of Jim Defede, throw up a little in the back of my throat.

"3100 permanent jobs" created by the Homestead Raceway? REALLY? Show us where, Miami Herald: don't print ridiculous assertions without backup. Especially not when the issue -- the Homestead Raceway -- is shrouded by its history of corruption. It's like the outlandish job justifications used by consultants for every pie-in-the-sky project that has come down Interstate 95 in the last thirty years.

The racetrack was "the savior of Homestead" after Hurricane Andrew? Really? I thought the housing boom in the mid-2000's, championed by the same thieves who promoted the raceway -- saved Homestead. We don't call the city, "HUD-stead" or the "most corrupt little city in America" for nothing. The Raceway turned into exactly what its critics predicted at the time, after Hurricane Andrew: a wedge to pile more people into fragile wetlands and to move the Urban Development Boundary.

How about a note -- a footnote even! -- how $60 million, at least, of taxpayer money was shifted into the pockets of well-connected people by horrendous deal-makers on the Miami-Dade County Commission?

That's a euphemism for "stolen" like its grandchild: the Miami Marlins Stadium.

You won't read that in the Miami Herald, but we never forget. Miami New Times is more helpful: "In 1993, when Homestead was struggling to recover from Hurricane Andrew, the city teamed up with H. Wayne Huizenga and Ralph Sanchez to build a world-class motorsports stadium. As with all other new development in South Miami-Dade, the deal hinged upon empty wetland, and the dirt, gravel, and crushed lime-rock needed to fill it." 

Whatever marijuana Miami Herald editors are smoking these days, before falling asleep, they might want to read their own Carl Hiaasen in 2001 on the Raceway and what we call, "the most corrupt little city in America". Read your own archives, Miami Herald.
Generous Homestead going broke The Miami Herald, - September 26, 2001
Carl Hiaasen
 Crippled by mismanagement and pillaged by fast-buck artists, Homestead is trying desperately not to go broke.

Last week the City Council approved a hacked-down budget designed to address a $13 million shortfall, the result of years of stunning incompetence and hazy deal-making.
 One of the major threats to the city’s solvency is its biggest so-called prize, the Homestead-Miami Speedway. Sold with the promise of reviving the area’s devastated economy after Hurricane Andrew, the race track has instead sucked away precious municipal resources. Today it looms as a huge tax burden. Built (and rebuilt) with some $60 million in public funds, the speedway has been a windfall chiefly for those who put on the races.
 This was predicted from the onset, but the politicians in Homestead seemed determined to be fleeced. They were unaccountably delighted to do business with race promoter Ralph Sánchez, even though his track record at the Miami Grand Prix was a joke. The man never put on a race that made money, or that didn’t rely on massive infusions of tax dollars.
 Nothing changed in 1993 when Sánchez got to South Dade, except the scope of his freeloading. Before it was over, Homestead had agreed to kick in $28 million toward the racetrack—an amount it could scarcely afford, given the post-Andrew fiscal slump. In return, the city would own the facility and collect $2.1 million annually in rent—a sum that barely covered the debt payment on the $20 million it borrowed to bankroll the speedway.
 So where was the big payoff to come from? The track’s operators agreed to give Homestead 10 percent of all annual profits exceeding $15 million. It probably will come as no shock to learn that the track has never cleared $15 million a year and that Homestead has never seen any profits. But the City Council seldom lets basic math get in the way of blind optimism. Just when you thought it couldn’t do anything dumber, it did.
 In 1997, after the original Indy-car configuration was modified to Winston Cup, the group headed by Sánchez and Wayne Huizenga decided to sell its lease to NASCAR impresario Bill France. Initially, Homestead asked for $7 million. Fourteen months later, however, the council approved the lease transfer without demanding so much as a penny.
 More amazingly, the city removed the revenue-sharing clause from the contract and reduced the rent to only $1 million, beginning in 2015. Thus, with one baffling stroke of the pen, Homestead guaranteed that it would take no share of its own speedway’s profits, even if the NASCAR races were wildly successful.
 France got a sweetheart lease, Huizenga and Sánchez danced away with an estimated $10 million each, and the city got zippo. Interestingly, the deal was shepherded by then-City Manager Alex Muxo, who later went to work for (what a coincidence!) Huizenga.
 Homestead continued to struggle. Earlier this year, ex-Miami-Dade Manager Merrett Stierheim was asked to help keep the city from going under. One of his first suggestions: Sell the speedway. Citing a recent court ruling, Stierheim noted that the residents of Homestead soon will be stuck with $690,000 in annual property taxes for the facility. City leaders asked the track’s management to help cover the unexpected expense, but Speedway President Curtis Gray declined. What a surprise.
 Meanwhile, folks in Homestead have another good reason to be miffed. Their electric bills are going up, too, thanks in part to the speedway. Four of the city’s main generators have been offline for some time, costing millions in lost profits and repair. These losses might otherwise have been absorbed by a surplus in the Electric Fund. Unfortunately, that account was raided years ago when the city “borrowed” $8 million in Electric Fund cash reserves and spent it on the racetrack.
 According to former Finance Director Bob Nachlinger, the money was never repaid and eventually was written off as an uncollectable loan. Today Homestead officials are trying to balance the budget without putting the speedway up for sale. If that sounds idiotic, remember that things actually could be worse. They could sell it back to Ralph and Wayne.
Here is more from New Times:

(EXCERPT) ... The city appointed a committee of four city employees and one noncity employee to review the proposals. The committee assigned scores, up to 25 points, to each firm, based on criteria such as "Landfill Redevelopment Experience," and "Quality/Quantity of Success for Similar Situations." In the end, ATC won. Two committee members gave Parsons 15 points for experience, and ATC 20 and 25 points. Assistant city manager and former police chief Curtis Ivy, Jr., initially gave Parsons 25 points for experience, then crossed it out and gave the firm a 20. He gave ATC 25 points. In fact Ivy gave that company a perfect score of 100. Michael Tavano, the city's director of public works, gave ATC an 86, and Parsons a 68 overall. "[ATC] had a lot of relationships with state agencies, like the DEP and DERM," Tavano says. "A lot of Parsons's experience was out-of-state."

The only committee member to rank Parsons higher than ATC was Edward Swakon. He was also the only noncity employee and the only engineer. Swakon could not be reached for comment.

ATC's Lynch says the team he assembled for the project, from local construction company Redland to powerhouse developers Terremark, helped win the confidence of the committee. Lynch also points out that his proposal emphasizes the possibility of commercial development on the site, such as stores. Conversely Parsons's development partner, Florida Environmental Developers, was a firm organized solely for the dump project.

But Parsons's lawyer Rivero counters that according to the proposal, ATC simply doesn't have the experience his firm has in closing and developing dumps. Parsons was the lead engineering firm in the closure of the Old South Dade Landfill, taking on a $15 million chunk of the $30 million project. ATC's contracts are far smaller. For instance in the first completed project it lists as a reference, the former Ojus Landfill, ATC was paid $1.4 million out of a $20 million contract. (Lynch responds that the majority of that contract was for construction of a school.)

As for developing commercial space on the dump site, Rivero says his team is open to that as well. But until the soil is tested, he says, no one can say with certainty that buildings will be allowed.

ATC's ranking bewildered councilman Berrones. "From my understanding of the proposals, Parsons had more experience doing this kind of thing. I was surprised," he says.

Once the committee ranked ATC on top, Baldwin started negotiations. He first asked for a more detailed plan. According to Baldwin, vague wording on the new set of documents left open the possibility the city would have to fund some of the project. Without going into detail Baldwin says, "I had questions about their initial proposal. I demanded there be clarity [on cost]." Lynch says he has since allayed those fears. "[The proposal] wasn't clear. Charlie Baldwin asked some tough questions. Let me be emphatic, this project will not ask the City of Homestead to pay one penny for the closure or redevelopment of the landfill."

When negotiations are completed, the city council will vote on whether to approve the ATC proposal or not. Shiver, responding to critics, asked city attorneys to decide whether Mestre's fundraiser was a conflict of interest, and if it should prevent him from voting on the contract. On July 8 the firm of Weiss Serota Helfman Pastoriza & Guedes sent its reply: There did not appear to be a conflict of interest because the mayor did not receive direct tangible gifts. The mayor was free to vote.
"Let the red flags fly; I did not do anything improper," Shiver declares, adding that the criticism is coming from would-be political opponents and a business interest. The date of the vote has not yet been set.

There is a second act to this tale of dirt.

A mile and a half east of the dump site sits another city project, a 62-acre expanse of shallow, murky water sectioned off by earthen dikes. The millions of cubic yards of dirt and rock lying beneath this city-owned tract are the key to completing two other nearby public jobs. The city wants to turn the marsh into a lake, then use the extracted dirt to fill a proposed industrial park, and to create additional parking for the Homestead Motorsports Complex.

Early this year the city contracted with one firm to dig the lake and remove the fill -- without opening the projects to public bid. The firm, the Redland Co., is a major campaign fundraiser for Steve Shiver, and also happens to be a subcontractor on the ATC dump bid.

In 1993, when Homestead was struggling to recover from Hurricane Andrew, the city teamed up with H. Wayne Huizenga and Ralph Sanchez to build a world-class motorsports stadium. As with all other new development in South Miami-Dade, the deal hinged upon empty wetland, and the dirt, gravel, and crushed lime-rock needed to fill it. A crucial part of the racetrack deal, which also created the Park of Commerce, was a swap between the city and developer Florida Design Communities (FDC). The firm offered land for the Homestead Motorsports Complex and the Park of Commerce. In return the city would either pay FDC $1.4 million in cash or give the company an equivalent amount of fill by December 30, 1998. As the deadline approached, it was clear the city did not have the money to pay FDC.

Meanwhile FDC continued to develop its residential subdivisions in the city. In one of them FDC contracted with The Redland Co. to excavate a six-acre lake and use the extracted dirt for fill. In July the city ordered Redland to stop, arguing it was an illegal quarry. FDC promptly sued the city.
As 1998 drew to a close, FDC had the city over a couple of barrels: the six-acre lake lawsuit and the $1.4 million debt. The city needed to "shit or get off the pot, if you'll pardon my French," says councilman Steve Bateman.

Also, two more crucial deadlines were fast approaching. First, the city had promised a developer affordable fill as an enticement to develop the Park of Commerce, a 270-acre wedge of city-owned, industrially zoned land just west of the racetrack. Second, the city needed to provide an additional overflow parking lot for the upcoming Winston Cup Jiffy Lube 400 NASCAR race, scheduled for November 12-14 at the racetrack.

City Manager Baldwin says he and his staff figured out a plan that addressed all of those needs. The city owned four tracts of wetland south of the motorsports complex. Baldwin theorized that the city could change the zoning, use two tracts for overflow parking, and dig a lake in another to provide fill. That fill also could be used for the park and to pay off FDC.

The mayor, for one, loved the plan. "Unfortunately, we'd been dealt a significant financial burden [in the $1.4 million obligation to FDC], but I think [the 62-acre lake proposal] was the most efficient resolution that we could do," Shiver says. Baldwin calls the deal "a no-brainer."

As the City of Homestead proceeded to get state and county approval to dig the lake, South Miami-Dade's biggest provider of fill was looking over the city's shoulder. Steve Torcise, Jr., president of Florida Rock & Sand, scheduled a meeting with Baldwin in November of this past year. "He wanted to know what was happening relative to our lake," Baldwin remembers. "He came in to visit, and I explained the whole thing to him." Baldwin says he described the process to Torcise, noting that the last significant step, a blasting permit from the Miami-Dade County Commission, was set for the commission's December 15 agenda.

In retrospect, Baldwin allows, he wishes he'd kept his fool mouth shut about that commission meeting. There, into the wee hours of the morning, Florida Rock's lawyers lobbied long and hard to delay the issuing of the blasting permit. The landfill firm opposed the lake project because it could become a possible city-owned source of fill to compete with the firm's own quarry four miles south of Florida City.

Florida Rock succeeded; the commission deferred a final vote until January 21. That was beyond the December 30 deadline by which the city had to pay off FDC. If the city couldn't blast, the city couldn't give FDC the fill. They'd have to give FDC the $1.4 million in cash -- which Baldwin maintains was $1.4 million the city didn't have.

Then, as Baldwin tells it, a white knight appeared in the form of Charles Pinkney "Pinky" Munz, president of the Redland Co. that had been digging the small lake for FDC nearby (the excavation the city had stopped, prompting the FDC lawsuit). Thus, Munz was intimately familiar with the city's entanglements with FDC. He also has been a big supporter of Shiver's political career, contributing $2000 to Shiver's 1997 campaign through his corporations and family members. Baldwin remembers: "Pinky Munz came in to see me and said, 'How about if I put up the $1.4 million to FDC under an agreement with you all?'"

Sounded good to the city. After receiving an extension from FDC, the city council on January 19 voted to accept Munz's payment of their debt to FDC. In exchange Munz would be paid to excavate the lake and carry out the rest of the city's plan to provide fill for the Park of Commerce and the overflow parking for the racetrack. He'd also get to keep half of the fill.

On January 20 the city and FDC settled the small-lake lawsuit. This settlement clearly was connected to the big-lake deal. In a closed city council meeting on January 4 attorney Joseph Serota describes how he and Baldwin came up with a plan to "resolve both the [$1.4 million obligation to FDC], and by doing that, we would resolve the pending litigation." Under the terms of that settlement, Redland would be allowed to finish digging the six-acre lake. Suddenly, the small lake that the city had called a quarry was no longer a quarry -- and neither was the even bigger lake half a mile south.

"I wanted to help the city, but it was also a business opportunity," Munz says. "It's a good deal for us."


Anonymous said...

Hah, hah, hah! The Homestead Speedway is the gift that keeps giving! ROFL.

Anonymous said...

The racetrack and local political hostages to the speedway's campaign cash also say the racetrack contributes $300,000,000 annually to the local economy. There has never been a more absurd statement made in South Florida without being vetted. That statement is never challenged

Anonymous said...

No need for the dated marijuana put down. Also, smoking marijuana is a more sane act than drinking alcohol.

Anonymous said...

Jorge Luis Lopez is the man in the suit behind the misinformation about what the racetrack contributes economically to the county. In tandem they provide the grease for the wheels of political stooges from county hall to the eighteen mile stretch.

sundayniagara said...

Keep the track and build a world-class dragstrip.

Anonymous said...

If there was ever a reason FOR rapidly higher tides it is Homestead.

Anonymous said...

A drag strip would be great. Big money maker. But I'm sure that would get corrupted :(

Anonymous said...

I'm guessing there are maybe 20 permanent employees at the Speedway and that includes the half dozen track and ground workers who are paid just above minimum wage.

With regards to Homestead Electric, why does the city continue to generate it's own electricity? Is it cheaper than FPL? IIRC, FPL customers in Homestead pay less than those on the city grid.

Anonymous said...

Homestead's electric utility is transferring close to $12 million a year to the city's general fund.
Other utility customers residing in Homestead get their share of $12 million in services from Homestead power customers.
The mayor, city council and city manager are aware of this but any attempt at a correction of this bogus process will result in higher taxes to make up for the $12 million. That is political suicide. In 2007 less than $5 million was transferred. Customers of Homestead power have paid taxes disguised as energy bills for many years. If you are a customer of Homestead power just prior to the primary election you received a rather expensive flyer from the city, paid for by you telling you about the rate reduction that customers of Homestead power would give you. This was a campaign piece paid for with tax dollars in lieu of campaign dollars. This is brazen creativity on display.
These stories never get published but it is a Ponzi scam and it's all unregulated because the city council oversees the process and they answer to no agency on what they charge.

Anonymous said...

Gee, I wonder if advertising revenue the Herald gets from the track accounts for anything?? Steve Hagen