The development team’s annual rent is linked to the remediation costs of the stadium
David Beckham and Jorge Mas’ development group may now have to pay less in rent to the city of Miami after toxic contaminants like arsenic, barium and lead were found seeping under the soil at Melreese golf course, where they plan to build a $1 billion MLS stadium complex.
Pollutants were found to be above the legal limit in a report this week by environmental consulting firm EE&G. That led city officials to shut down the golf course to allow outside experts to analyze the results of the environmental testing. It’s unclear how long this process will take.
The findings and the closure of the Melreese golf course come at a crucial time for the stadium plan. In November, voters allowed the city to move ahead with the project and for the city to negotiate the terms of the 99-year lease with the development group. But so far, the city has yet to finalize those terms and the team has announced it will play its first two seasons at Lockhart stadium in Fort Lauderdale.
The project known as Freedom Park would include a 25,000-square-foot soccer stadium as well as more than 1 million square feet of retail and office space and about 750 hotel rooms. In total, the development is valued at $1 billion and will be built on 73 acres out of the 131-acre Melreese Country Club.
A spokesperson for Miami Freedom Park said the final remediation costs are unknown, but under the terms of the proposed lease, the development group could have to pay less in rent if the environmental cleanup costs are higher.
According to the proposed lease terms, the Beckham Mas Group will pay an annual rent of the greater of two options: 5 percent of tenant revenue, or the fair market appraised value of the leased property. That fair market value is based on “the highest and best use of the [leased] property, taking into consideration the actual cost of environmental remediation for the [leased] property,” as well as the site development cost for a public park, according to the lease terms.
So, if the remediation costs are high, the fair market appraisal could be lower, and the development group would have to pay less in rent. At minimum, the development group has to pay $3.6 million in rent annually.
The development group previously projected the remediation costs to be about $35 million, but Miami Mayor Francis Suarez said team officials said costs could rise to $50 million, according to the Miami Herald. Mas told the Herald that the city would not foot the bill for additional costs, and developers would seek state and federal contributions. In contrast, it cost $10 million to remove 86,000 tons of toxic soil at Grapeland Park, which is directly adjacent to Melreese.
Now, the city of Miami has to work with the Department of Environmental Resources Management to develop a site plan to address the contaminated soil. A city spokesperson did not respond to a request for comment.
In South Florida, golf courses like Melreese are often redeveloped as land becomes more scarce.
John Fumero, an environmental lawyer at Nason Yeager in Boca Raton, said high levels of arsenic are commonly found on such sites.
“Based upon what has been disclosed this far, everything here [at Melreese] can be addressed. It can be remediated,” said Fumero, who was the former general counsel of the South Florida Water Management District.
Howard Nelson, an environmental law and land use attorney with Bilzin Sumberg, said a large concrete stadium is the ideal structure to have at the Melreese site, and the city can take advantage of private developers paying for the remediation.
“I don’t think the city of Miami has a better opportunity to get it [Melreese Country Club] remediated than moving forward with this development,” Nelson said.