Ahead of commission’s vote, a tussle over how to spend $90M from Heat arena deal

For the first time, Miami-Dade County has a chance to make millions of dollars in naming-rights revenue off of a stadium it owns. That’s set off a tussle over how to spend the windfall, with county commissioners angling for direct access to the money.

The Bitcoin exchange FTX would pay Miami-Dade $135 million over 19 years to become the new title sponsor of the Miami Heat’s county-owned arena. The Heat collects $40 million of that, and about $5 million goes to a commission for the Superlative Group, the marketing firm Miami-Dade hired to find a naming-rights sponsor.

That leaves $90 million for Miami-Dade to spend, setting off negotiations between Mayor Daniella Levine Cava and Keon Hardemon, the commissioner whose district includes the arena.

Documents released Thursday night have naming-rights dollars being used to “address the gun-violence crisis and expand economic prosperity for our residents,” Levine Cava wrote in a memo to commissioners.

Levine Cava would have budget control over 70% of the dollars, with commissioners allocating the remaining 30% within their districts.

“I think this is an opportunity to address a long-standing problem that’s been exacerbated during the pandemic,” Levine Cava said Thursday.

The proposal is set for a Friday vote at an 11 a.m. special meeting called to consider the FTX deal. It’s a different plan than Hardemon had been pushing earlier in the week, which would have had all the money distributed through commissioners’ offices.

Under the formula Hardemon originally proposed, the 13 commissioners would each get a share of the $90 million FTX expects to pay over 19 years, with the money dedicated to the broad categories of combating gun violence and boosting prosperity.

Levine Cava and Hardemon met twice this week, according to the mayor’s public calendar.

The final version has commissioners receiving about $27 million over 19 years for prosperity and anti-violence expenditures, and the administration using the remaining $63 million for yearly plans to combat gun violence and promote prosperity throughout the 13 districts.

Commissioners, mayor jockey for position

Hardemon’s legislation was the latest example of a newly elected County Commission testing how much power a newly elected mayor was ready to cede. Hardemon and five other commissioners are new to the board after a 2012 term-limits law forced its first retirements in November, the same time Levine Cava took office.

On March 17, commissioners narrowly voted to divvy up a $4.7 million settlement with former Marlins owner Jeffrey Loria rather than accept Levine Cava’s plan to close tax-revenue gaps left by the COVID-19 downturn. At the time, Commissioner Eileen Higgins, one of five votes against the plan, warned: “This board could use different pools of funds for 13 district uses, as opposed to going through the standard budget process.”

Allocations still require commission approvals at meetings, but the expenditures aren’t part of the budget that’s approved every September.

McGhee called the distribution of county funds to commissioners a “good idea” if the amounts are small enough not to cause significant budget strains. “The wishes and wills of the people are different, depending on which commission you’re in,” he said in an interview. “A commissioner is an employee of the employers of the district, and must follow the wishes and wills of the people.”

Miami-Dade owns the Heat arena, and pays the team a $5.4 million subsidy each year as part of the original agreement that brought the NBA venue to the Miami waterfront in 2000.

The county also must pay the Heat $2 million a year in naming-rights revenue, whether or not the county has a paying sponsor. American Airlines dropped out of the naming-rights talks ahead of its $2-million-a-year agreement expiring in 2020.

That brings the county’s arena expense to about $7.4 million a year, which Miami-Dade pays out of hotel taxes. The FTX deal roughly covers that amount, with an average payment of $7.1 million. Of that $2 million, would go to the Heat.

Under the proposed legislation, none of the FTX money would cover the existing arena expenses. That adds to the historic strain on the county’s hotel taxes, where revenues are down about 50% from the COVID-19 pandemic.

A hole to fill from hotel tax shortfall

In a recent memo, Levine Cava said Miami-Dade plans to make up for the lost hotel taxes with a new round of federal stimulus dollars. Miami-Dade is set to receive about $520 million from Washington.

Board members already distribute roughly $1.5 million assigned yearly to each of the 13 commission districts for staff expenses and grants. On average, the FTX revenue would mean a yearly increase of about $109,000, or 7% of what’s spent now

Most of that comes from the $1.2 million office budget each commissioner receives, which can be converted into grant money or distributions.

Commissioners also have authority over a few pools of grant dollars. That includes the combined $225,000 available in 2021 from permit revenue collected in “stroller fees” — the $35 residents can pay to get a parking permit for spaces reserved for parents of young children. Commissioners passed legislation in 2013 requiring a third of the revenue be distributed by commission district.

Raquel Regalado, a Miami-Dade commissioner, said she sees no issue with commissioners taking a larger role in distributing county dollars.

“I would say the County Commission is leading because we’re not just having a press conference about gun violence,” she said. “It’s just a different county commission... It’s a commission that has kind of stepped into the void.”