December 2021
Future of Bahia Mar, Boat Show
subject of ongoing negotiations
Bahia Mar. The mere mention of the name evokes a lot of passion across Fort Lauderdale.
 
And for good reason. It’s the critically important home of the Fort Lauderdale International Boat Show, and it sits at the center of our marine and yachting community, popular among locals and tourists alike.
 
Yet, you may remember that in 2017, the then City Commission agreed to allow the holder of the lease, Rahn Bahia Mar, to develop 651 apartment rental units – packing them onto the 16-acre peninsula. This was in addition to a hotel, a grocery store and a series of kiosk-like stores along the south waterfront. These buildings would be positioned not just on the peninsula, but on that northern sliver of land along Seabreeze Boulevard.
 
The Boat Show? Well, it was relegated to the small remnant of open space and the inside of a parking garage. As commissioner for District 2 at the time, I argued vehemently against the proposal, well into the early hours of the morning.
 
I lost, the community lost, and there was talk that the Boat Show would move to another city. At this moment, there is nothing preventing them from building what is now approved.
 
Nothing that is except common sense and the vagaries of the lending marketplace. The developers find themselves in a position that given the requirements of lenders today, that approved plan likely will not work.
 
Knowing that, they approached the city earlier this year to see if a different plan could be reached, one that would work better for them as well as the community.
 
The moment is at hand. We have before us the opportunity to protect the Boat Show and redevelop the property in a way that showcases it with a first-class hotel, marina and resort complex with better public access and more public amenities.
 
So far in the negotiations, we have won a number of concessions from Rahn Bahia Mar.
 
First, we have reduced the number of residential units from 651 to 350. This was accomplished by eliminating three of seven residential towers.
 
This allows a much larger open-air space for the Boat Show than the 2017 plan – albeit not as much as it has had historically but it’s an acreage that Boat Show promoters now believe is sufficient. The city can work with them to find additional space if needed.
 
That is not all we’ve accomplished.
 
There is a significant public promenade around the marina, a central event lawn overlooking the Intracoastal Waterway that the public could use, a grocery store available to mariners as well as beach residents, and a marine village of small shops. There is also commercial space interwoven in the buildings that would be marketed to yacht brokerages, chandlers and other maritime-related businesses.
 
The existing Bahia Mar Hotel would be demolished and rebuilt to luxury standards. The residential units would be branded residences administered and marketed by a major hotel company. And the whole Bahia Mar site would be made more resilient with the construction of new seawalls.
 
But there is a catch: the developers currently have just over 40 years left on their lease with the city. In order to agree to a reduction in the development, they are requesting a new lease with a combined term of 100 years. Moreover, the units would now be sold as condominiums.
 
We’ve been hearing many points of view in response to these new proposed terms.
 
Some say wait it out, let the lease expire and take the land back then. But that is not a great option. We cannot allow either the Bahia Mar site to continue to age and become a blight on the beach.
 
Or we could let the developers to go ahead and try to build the project that was approved in 2017, but honestly, that would be a disaster. It would destroy the Boat Show, and intense development would negatively impact the entire beach.
 
Some say buy out the lease. We tried. They don’t want to sell.
 
Given that, I believe we are moving closer to a plan that would be a better option for the city and the Boat Show.
 
The Boat Show, the largest in-water boat show in the world, has been central in my mind during my meetings with Rahn Bahia Mar.
 
It’s vital to our economy far beyond just the marine industry. The show is important as well to our hotels, restaurants and other retail establishments. This year’s show drew more than 100,000 attendees and outpaced prior records with total sales topping $715 million.
 
The promoters believe the total economic impact was $1.3 billion – a value higher than that generated by hosting a Super Bowl!
 
I believe the plan now before us ensures the Boat Show is much better protected. And we’ve reshaped the site in a way that it is more of a resort in character – another important goal raised with us by the community.
Still, the city is not done with negotiations. I cannot speak for other commissioners, but I am not satisfied yet.
 
The conversation has now turned to the terms of a new lease. I do not believe Rahn Bahia Mar has offered financial terms that compensate the city appropriately.
 
After all, the city owns the property. We bought it at great expense when the Coast Guard declared it surplus following World War II.  The commission has a fiduciary responsibility to get the best terms possible in our role as the property owners.
 
For years, the city has received pennies while the leaseholders have made millions under the lease we are currently burdened with. Can you believe the city has received less than $2 million a year in annual rent, while Rahn Bahia Mar rakes in more than $6 million just from letting the Boat Show use the property for a couple weeks?
 
The developers think we should be satisfied that they offering to pay us a little more.
 
What do they think is fair? Try $3.7 million in rent. That’s giving us a cut of the profits from commercial, hotel and marina space and a $1-per-square-foot annual rent on the residences. They also estimate that they would pay $610,000 in transfer fees a year on future condo resales.
 
The developers also kick in a share of the initial sales of the residential units. They expect that would total about $69.4 million once all units sell. Finally, they establish three trust funds – committing $1 million apiece to trust funds for affordable housing, parks and environmental sustainability.
 
I really don’t think we should base the lease on the city being business partners with Rahn Bahia Mar. There is another methodology for determining commercial rent – basing it on the property’s valuation. This is the approach I favor.
 
Real estate consultants have estimated that Bahia Mar is worth $182 million and recommend a rental rate of between 4 and 7 percent based on that valuation. At a 6 percent rent, this would bring the city $10.9 million a year … or more than $1 billion over the course of the lease.
 
The property may actually be worth more than that. The city had a formal appraisal done in 2016 and it set a valuation at $218 million. The commission has asked for a new appraisal, which should be completed in 60 days.
 
So, we are rather far apart on base rent: $3.7 million compared to $10.9 million. They say it evens out if we count their property taxes toward their rent. That’s mixing apples and oranges. A private landlord wouldn’t do that, and neither should we.
 
There are also other lease issues that I want to firm up.
 
I’ve long worried how the Boat Show would fit at Bahia Mar if there is a significant residential component. While one would hope people would buy there because they want to be at the center of the show, I fear that some future residents will be displeased by the annual disruption of their lives. We need strong commitments written throughout the agreements and future sales contracts that guarantee the Boat Show’s presence.
 
So, before I can accept any new deal, we need to achieve better financial terms and have those solid Boat Show commitments made. Stay tuned. This should come to a conclusion in the next couple months.
 
In closing, I wish everyone a happy holiday season and hope you have a great New Year!

Yours,


Dean
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Mayor Trantalis helps judge the boats participating in the 50th annual Winterfest Boat Parade along the city's waterways.