New Opportunity Zone Rules May Spur Greater Investment in Miami

By staff writer

April 2019

The new proposed regulations for opportunity zones issued by the Internal Revenue Service and the Treasury Department earlier this month could unlock further real estate investment in Miami and give business investors a chance to reap greater profits.

The qualified opportunity zones are part of the Tax Cuts and Jobs Act that passed in 2017 and were implemented last year, but they also build on tax breaks for what used to be referred to as “empowerment zones.” They seek to incentivize investment in distressed areas through relaxation of taxation on capital gains obtained through the sale of appreciated assets if those gains are reinvested in qualified opportunity funds. The new rules could drive development as well as property values.

Ronald Fieldstone, one of the partners of  Saul Ewing Arnstein & Lehr LLP, was bullish on the opportunity zones even before the new rules. Recently, he told Invest: Miami that there was  “tremendous opportunity”  in the designated areas.

“For instance, the area extending from the west side of Biscayne to the railroad tracks up to 36th Street is a booming opportunity zone. Most of Overtown is an opportunity zone, and you will see a lot of residential and multifamily development there. All of North Miami is an opportunity zone as well, and there is currently an almost 200-acre, mixed-use project being developed there.”

One of the most important updates under the new regulations is the definition of “substantially all.” Generally, the law requires a qualified opportunity fund to hold at least 90 percent of its assets in eligible stock, partnership interests or business property. For business property to be an eligible investment, the law specifies that “substantially all” of the fund’s tangible property must be held within an opportunity zone; however, “substantially all” was not originally defined. The new regulations provide an explicit definition: at least 70 percent of the fund’s tangible business property must be held within opportunity zones, it now says. This clear standard allows businesses and investors to easily know whether they qualify.
Investors can already avoid capital gains taxes on appreciation resulting from opportunity zone investments that they hold for more than ten years. However, the program expires in 2028, meaning that the cutoff to benefit is the recognition of capital gains by December 31, 2026 and reinvestment in a qualified opportunity fund by June 30, 2027. Under the new regulations, though, investors are entitled to hold their opportunity zone investments for a longer time than the original ten years when acquired near the program’s expiration in 2028, but also for another 10 years after expiration.

The new regulations also provide an important safe harbor from the requirement that 90 percent of a fund’s assets be held in eligible property categories. They provide that investing in businesses that are rehabilitating or constructing tangible business property in an opportunity zone, including real estate development companies, can count cash provided to those businesses toward the 90 percent requirement if they use the money for the project within 31 months.

The original opportunity zone regulations included a “50 percent Rule” which required that at least half of an opportunity zone business’s revenue had to be generated within an opportunity zone. Under the new regulations, businesses can qualify if at least 50 percent of the hours their employees work are within the zone, if it performs at least half of its services within the zone or if there are significant management and operational functions present within the zone.

Finally, the new regulations notably provide that the “original use” requirement for designating qualified opportunity zone business property will be disregarded in certain cases. In the original wording, used tangible property satisfied this requirement only if the property had not been previously placed in service in the qualified opportunity zone. Now, structures that have been vacant or abandoned for five years or more, or property acquired after December 31, 2017 under a market rate lease, counts as qualified opportunity zone business property.

In aggregate, these changes are likely to make the opportunity zone incentive program even more attractive to investors, thereby further promoting investment in the zones.

To learn more, please visit:

Opportunity Zones: Frequently Asked Questions

Opportunity Zones: New Rule Changes

Bacardi Shines a Spotlight on its Latin Roots

By staff writer

April 2019

The longstanding battle between Bacardi and Pernod Ricard over the hearts and minds of Havana Club rum lovers has extended to a new front — the theatrical stage. “The Amparo Experience,” depicting the saga of pre-revolutionary Cuba and the story of the Arechabala family, Havana Club’s founders, is intriguing audiences across South Florida.

The company is hoping the immersive theatrical production, which tells the story of its Havana Club Rum, will blaze a path to Broadway after its two-month debut run.

It has an intriguing and colorful story to tell. At the start of the 1960s, the Arechabalas watched as their thriving rum business was seized at gunpoint and without compensation by the government of Fidel Castro. Some of the family was thrown into jail, while others escaped to Miami. Included in the loot: the Havana Club recipe.

In the 1990s, the Cuban government partnered with French company Pernod Ricard to sell their Havana Club across the world, while the Arechabala Family fought back by joining forces with another Cuban family in exile, Bacardi, which began producing rum that was also based on the original recipe.

With the play, Bacardi aims to tell that story while strengthening its grip over the Havana Club name and driving interest in the product’s Cuban heritage. Although the company hopes to eventually take the play to other sites around the nation, it is proud to introduce it in Miami, company executives said.

“Miami keeps us connected to our Latin roots,” said Pete Carr, regional president, North America.It has been a part of our history since 1964,” he explained, adding that Bacardi’s story really began in Santiago de Cuba in 1862.

“As a Latin company, Miami keeps us connected to our Latin roots. The city is also a short flight to our global headquarters in Bermuda and to our rum distillery in Puerto Rico.”

Bacardi became interested in putting on a play after considering different options to publicize the product’s interesting tale. The production also fits well into Bacardi’s “Forever Cuban” campaign, which focuses on the company’s history and tradition.

Of course, they hope it will spur further interest in Havana Club and the company’s other products. “We’re seeing more people having cocktails at home, so their interest in the mixology, provenance and ingredients is growing,” said Carr. “When you have 157 years of stories to share, and are the world’s most-awarded rum, this trend allows us to connect even more with consumers.”

“Amparo” will run in South Florida through June 1.


What, Where and When:

What: “The Amparo Experience” by Vanessa Garcia.

Where: 221 NE 17th St., Miami.

When: Thursday-Saturday (7 and 10 p.m.). Sunday (3:30 & 6:30 PM).

Through May 31 st.

Cost: $79 (21 or older).

Information: 877-542-8262 or www.theamparoexperience.com.

To learn more, please visit: https://www.bacardi.com/

 

Historic Virginia Key is Looking to the Future

By staff writer

April 2019

As its name implies, Historic Virginia Key Beach Park is rich with history. Since it reopened in 2008, however, the park has wasted no time in establishing itself as both an environmental preserve area and a prime site for cultural events.

Virginia Key’s history dates back to the 1920s, when it became a haven for the local African American population due to segregation. It remained a segregated zone in the 1950s and was closed by the city in 1982 due to high maintenance costs. In 1999, however, a group of locals that called themselves the Virginia Key Beach Park Civil Rights Task Force organized in response to developers looking to buy the land. As a result of their efforts to highlight the value of the park’s history, the city established the Virginia Key Beach Park Trust to oversee its future development.

Since it reopened to the public in 2008, Historic Virginia Key Beach Park has become a popular site for everything from summer camps to large music festivals. In a recent conversation with Invest: Miami, Guy Forchion, the park’s executive director, highlighted the park’s value as a community center — particularly for local youth.  

“The YMCA opened a summer camp here focused on marine biology before we even opened up to the public. Two years ago, we added two other summer camps,” Forchion explained. “HistoryMiami Museum brings students and schools through for tours of the park as well, which is truly the future of the park — being able to tell its story to young people and educate them about its history.”

The park hosted the 2018 House of Creatives Music and Arts Festival last November, which featured regional, national and international music groups, including big names such as Foster the People and MIA. The festival also showcased local cuisine with an array of vendors from various restaurants in the area.

This event came on the heels of the widely publicized announcement that the park would be the site of the famous Ultra Music Festival, which traditionally has been held in downtown Miami’s Bayfront Park.

“The people with the Ultra Music Festival worked with us very actively and responsively from the moment they announced the event would happen here,” said Forchion. “Ultra did a great job working with us to protect the natural environment here as well. They did all they could to protect the area and make the event as ‘green’ as possible.”  

He said the music festival had a minimal impact on the Historic Virginia Key Beach Park venue, though a more comprehensive assessment of the event’s impact on the property would follow.  “With several more days of production breakdown and loadout, we look forward to the opportunity to review the property in its entirety,” he said.

Outside of providing a fantastic venue for music and arts, the park is also crucial to the study of rising sea levels. “There has been an incredible change in our shoreline in just the last eight years,” Forchion explained. “The park is a living experiment in this regard, and the University of Miami has had classes come and spend a week on the beach each year to do research on rising sea levels, as well as on the aquatic ecosystem here.”

The park was also recently awarded an Institute of Museum and Library Sciences grant to digitize its extensive photo archive. And future goals include the establishment of a full-blown museum — a project Forchion and the city have been working on. They’ve already drafted legislation to fund the planning and construction of the museum.

The park generates “a lot of revenue,” Forchion pointed out — a fact that can only help their cause.

To help preserve the park’s legacy and enrich its future, locals can make donations to the park by visiting: https://virginiakeybeachpark.net/donate/

Miami Sports Teams: Champions of Accessibility

By staff writer

March 2019

Credit: AECOM Hunt

With baseball’s opening day just behind us, Miami sports fans are gearing up for what’s sure to be an exciting year of professional sports. And local teams are pulling all the stops to make sure as many people as possible can enjoy the games.

Two of Miami’s teams, the Marlins and the Heat, are leading the pack in terms of fan engagement and accessibility. They’re doing so through strategic initiatives that range from technological innovations to improving ticket affordability.

The Miami Marlins have been proactive in enhancing and revamping their image, but improving the fan experience is of equal priority to the organization, team executives say. Marlins Park now features local food vendors and more communal spaces geared at giving the park a Miami “vibe.”

One of the most noteworthy efforts made by the organization is offering more affordable ticketing options. “We’ve created new opportunities for our millennial audience, including our new standing-room-only section in right field,” said Marlins’ President of Business Operations Chip Bowers in a recent conversation with Invest: Miami. “Now they can come for about $12 a ticket and have access to other parts of the ballpark.”

With society at large relying more and more on technology, it should come as no surprise that major sports teams are also looking at digital measures to facilitate fan accessibility to games, as well as create a more intimate relationship between the organization and its fans.

Matthew Jafarian, the Miami Heat’s vice president of digital strategy and innovation, outlined the importance of understanding fans’ needs in the digital age, and how technology can be leveraged to strengthen the relationships sports teams have with their fans.

One of the fundamental problems in sports is not knowing who the fan is,” said Jafarian. Paper tickets are largely anonymous and don’t tell the team who its customers are — “a challenge for any organization” that the organization has countered by upgrading to digital ticketing last season. “Now, 85 percent of our fans enter Heat games with mobile tickets.”

In addition to mobile tickets, the Heat mobile app allows fans to access tickets directly, as well as to navigate parking at the arena. “One in every three Heat fans use our app when visiting the arena, which allows the organization to develop a really close relationship with them,” Jafarian said.

And, “now that we have this great platform, we’re exploring ways to make the fan experience even better, potentially by upgrading our mobile payments feature to a full loyalty program in the near future.”

But these are just a few ways in which sports organizations are widening accessibility, creating more engaged fans and improving the overall fan experience. And Miami’s sports fans can look forward to taking advantage of a growing number of these immersive, often high-tech perks in coming years.

To learn more about our interviewees and efforts being made by their respective organizations to promote fan accessibility, please visit the following:

https://www.mlb.com/marlins

https://www.nba.com/heat/

PortMiami: Gateway to the Global Economy

By staff writer

March 2019

To say that 2018 was a banner year for PortMiami would be an understatement.

According to the port’s website, 5,592,000 cruise passengers travelled through the port last fiscal year, a 4.7 percent jump from 2017, making it the busiest cruise port in the world.

In conversations with Invest: Miami, Carnival Corporation CEO Arnold Donald highlighted that the port is “breaking its own record” for cruise passengers — a testament to the city’s value as a travel and tourism destination.

Mayor Gimenez has said he expects the port to surpass seven million passengers by 2020, which is further testament to Miami being an excellent city for people to begin their cruise vacation, as well as to the great team of people who work at and provide support to PortMiami,” Donald explained. “Of our nine global cruise line brands, two-thirds of them bring guests to and from Miami as part of their vacation experiences. AIDA Cruises, Carnival Cruise Line, Costa Cruises, P&O Cruises (UK), Princess Cruises and Seabourn will all call on PortMiami in the next year.”

Aside from tourism and cruises, however, much of the port’s economic impact can be attributed to its vital function as a cargo hub.

When Invest: Miami sat down with Juan Kurlya, PortMiami’s director and CEO, he noted that investing in infrastructure improvement for cargo transport is critical for maintaining the port’s reputation as one of the fastest-growing and most active ports in the country.

“Growth is expected to continue as the world’s leading ocean carriers take advantage of PortMiami’s recent capital infrastructure investments, including channel deepening, new Post-Panamax gantry cranes, on-dock intermodal rail and direct interstate access via the new tunnel,” said Kurlya. “Without our infrastructure upgrades, we wouldn’t be experiencing the growth in containerized cargo vessels we’re seeing today.”

It is safe to say that these strategic investments and improvements are paying off. In fiscal year 2018, the port handled a staggering 1.084 million TEUs of cargo, with each TEU representing a standard 20-foot container.

Despite its record-setting numbers, however, PortMiami has no plans to slow its growth any time soon. Long-term goals include establishing a route to Miami from Western Africa. Furthermore, the port will welcome a new Virgin Voyages cruise terminal in 2020. Norwegian Cruise Lines and MSC cruises have also announced plans to open terminals in the fall of 2019 and 2022, respectively.

To learn more about the port and our interviewees, visit:

http://www.carnivalcorp.com/
http://www.miamidade.gov/portmiami/

 

 

Experience Aventura Mall

By staff writer

March 2019

With over 300 stores ranging from luxury retail to mass market, an onsite resort and golf course, seemingly limitless dining options and museum-quality art, it should come as no surprise that the Aventura Mall ranked number two on Travel + Leisure’s list of “America’s Most Visited Shopping Malls.”

The mall is the largest in Florida, and with a whopping 28 million annual visitors, it is a testament to the value of experiential retail and how it can be utilized to draw in customers and capital.

As the e-commerce industry continues to rise nationally, malls such as Aventura highlight the value behind experiential retail — i.e., offering customers a multifaceted and immersive retail setting that allows them to do much more than simply shop.

“The stores that need to be experiential tend to cater to the higher-end demographic. Cocowalk and the Aventura Mall’s expansions are examples of this,” explained Hue Chen, president of Saglo Development, in a recent conversation with Invest: Miami. “Retailers need to continue to add to their offerings in ways that make their businesses unique to their customers. It’s important to be memorable.”

What sets the Aventura Mall apart from other large, experiential malls is its emphasis on sophistication and cultural enrichment.

“The Collection,” a collection of sculptures and art installations found throughout the mall, showcases work from world-renowned international and local artists such as Robert Indiana, Claire Fontaine and Brian Butler. The Collection is so expansive that visitors can sign up for guided tours of the mall to learn more about the art featured.

In addition to art, visitors to the mall can take advantage of its many events scheduled throughout the year, ranging from fashion shows, to launch events for major clothing brands such as Lacoste, to food festivals.

As if the mall wasn’t already well equipped to attract tourists, there is also a luxury hotel — the JW Marriott Turnberry Resort and Spa — onsite that offers a golf course and free transportation for visitors to and from the site.

When Invest: Miami spoke with Jackie Soffer, CEO and chairman of Turnberry Associates and principal owner of the Aventura Mall, she highlighted the mall as one of the reasons Aventura itself has become a “well-known shopping destination” that continues to draw in vacationers.

“Weve grown the mall, which is now easily one of the top malls in the country and has over the years changed for the better in terms of its sophistication and quality of tenants,” Soffer told Invest:. “We are continuing to expand Aventura with plans for new hotels and an office building.”

The mall expanded in 2017 and opened a new three-level wing that features retail outlets such as Zara and Topshop Topman, as well as modern architecture by Carlos Zapata. This speaks volumes for the innovative and forward-thinking nature of the Aventura Mall and its leaders, as that same year 7,000 malls closed their doors nationwide. There’s no question the nature of American retail is changing, but the Aventura Mall is staying well ahead of the game!

To learn more about the mall and its offerings, as well as our interviewees, visit the following websites:

Aventura Mall: https://aventuramall.com/
Turnberry Associates: https://www.turnberry.com/
Saglo Development: http://www.saglo.com/

 

The City International

By staff writer

March 2019

Long known as the “City Beautiful,” Coral Gables has always been an important city in Miami-Dade County. Home to the University of Miami and known for its elegant real estate and lush vegetation, the centrally located city has rapidly become an attractive destination for international businesspeople.

Invest: Miami recently sat down with Raul Valdes-Fauli, the mayor of Coral Gables, and he provided a unique perspective on the city’s development, having also served as the city’s mayor from 1993 to 2001.

“It’s a different city today,” said Valdes-Fauli, reflecting on the city as it was when he previously served as mayor. “It is much more developed and more modern.”

He also pointed to the city’s cultural offerings as one of its assets, highlighting the Coral Gables Museum — which has a unique focus on environmental preservation and urban design — as well as the city’s selection of local bookstores and theaters, “which is wonderful for a community of our size.”

Given the fact that Miami’s already cemented status as an international destination has grown with the area’s economy, it makes sense that well-developed areas outside of Downtown, such as Coral Gables, have also started to fall under the radar of companies and executives overseas.

According to its website, the city is now home to over 20 consulates and foreign government offices, along with more than 150 multinational corporations, an astounding number for a city with a land area of 12.92 square miles.

When Invest: spoke with Socrates Melo, managing director of international human resource consulting firm Randstad’s Miami office, he pointed to Coral Gables as a hotspot for international companies looking to develop their business in the United States and the Americas.

“There are people here [Miami] who understand both U.S. and Latin American culture,” he explained. “As such, companies coming to the region have a unique advantage if they want to develop their business in South America, Central America and the United States. The areas seeing the highest demand are Kendal, Doral and Coral Gables.”

These observations were echoed by President and CEO of Sora Global Insurance Efrain Sora, who, in conversation with Invest:, pointed to the city’s location within the county as one of the keys to its growth.

“Coral Gables has become an international hub, both in terms of business and people coming from overseas to live here,” said Sora. “The city is located at the center of Miami-Dade County as well, so our location is favorable in terms of attracting business from all over the country and the world.”

With over half of its 50,000-resident population being fluent in another language and a projected future job growth of 36.7 percent, the velocity of the growth of the city’s international appeal shows no signs of slowing down.

To learn more about our interviewees, the Coral Gables Museum and the City of Coral Gables itself, please visit:

https://www.coralgables.com/mayors-office

https://www.randstadusa.com/about/contact/office-locator/florida/miami/randstad-miami_435/

https://soraglobal.com/

http://coralgablesmuseum.org/

Visit, Work, Play!

By staff writer

March 2019

Miami has long been touted as a “live, work, play” city. The growth of the city’s business ecosystem seen over the last 10 years has worked to further this reputation, with thousands of international and national investors and companies flocking to the city to both support and capitalize on its growth.

Given that Miami’s already strong tourism industry has seen even more growth in recent years, it should come as no surprise that a significant portion of those visiting the city (whether to work, play or both) do so for business-related purposes.

According to the Greater Miami Convention Center and Visitors Bureau, of the nearly 16 million people who visited Miami in 2017, 7 percent did so for business. With the bureau’s 2018 report due out in May, one can reasonably expect this number to be even higher.

The city’s hotels have, of course, taken note of this trend and followed suit. The hotels’ strategic locations, coupled with the array of amenities and event venues provided by each, all work to provide this balance.

An excellent example of this is the Hyatt Regency Miami. The hotel is located in downtown along the Miami River and is connected to the city’s James L. Knight Center, a noted venue for concerts and conventions. In addition to the hotel’s luxury accommodations and proximity to the port, airport and much of the city’s famous nightlife and dining venues, the hotel has unique offerings for business travelers.

For instance, the Hyatt brand offers a unique “Meetings on Demand” service that allows visitors to reserve spaces in the hotel for business, specifically conference rooms, meeting venues, boardrooms and co-working spaces. Visitors can also request deluxe accommodations, such as food and drink packages and customized room setups.

Furthermore, given that the hotel contains over 100,000 square feet of event and meeting space that is directly connected to the Knight Center’s convention center, its capability for hosting large events is almost limitless. This is key considering, on average, about half of the city’s business travelers come to Miami for conventions, specifically.

In 2018 alone, the Hyatt Regency hosted an array of events that reflected the city’s dynamic economy, such as the internationally-recognized World Stem Cell Summit, the 2018 U.S. Cannabis Conference & Expo and the Caribbean Hospitality Industry Exchange Forum. Events planned for 2019 include the return of the Stem Cell Summit, the Miami-Dade Chamber of Commerce Symposium and Business Luncheon, as well as the Miami Career Fair.

With the hotel industry as a whole facing a degree of uncertainty and competition due to the rise in popularity of short-term hospitality rental services such as AirBnb, unique capabilities and accommodations are crucial for attracting visitors.

Thanks to local hotels such as the Hyatt Regency, however, Miami’s hotels still remain the most popular choice by far for visitors. According to the GMCVB’s report, 66.5% of visitors to the city chose to stay in area hotels, with only 4.8% electing to rent a residence.

To learn more about the Hyatt Regency and its offerings for business travelers, visit the following:

https://meetingsondemand.hyatt.com/OnlineBooking/

https://www.hyatt.com/en-US/hotel/florida/hyatt-regency-miami/miarm

 

The Opioid Crisis

By staff writer

February 2019

According to recent data from the Centers for Disease Control and Prevention, 70,237 Americans died from overdose in 2017. This outnumbered nationwide deaths from both gun violence and car accidents. This staggering number of deaths is directly related to increased access to powerful opioids, and young people in particular are being hit hard. With the abrupt loss of the healthiest and most productive members of society, U.S. life expectancy has dropped three years in a row. The country has not seen this kind of consecutive-year decline since World War II.

In Florida, the news is a little bit brighter. A recent study by the Drug Enforcement Agency found that the state reduced its sale of opioids by 62 percent between 2010 and 2017. And according to recent data from the Florida Department of Law Enforcement, overdose deaths dropped in Miami-Dade County in 2017. One reason for this reduction is the IDEA Exchange, Florida’s first and only needle exchange program. Through this program, which was established in 2016, the county has been saturated with thousands of doses of naloxone, an overdose-reversal agent used by first responders and emergency departments.

Other healthcare industry leaders are getting involved in the war on opioids as well. Our team at Invest: Miami recently spoke with Penny Shaffer, market president at Florida Blue, about what the insurance provider is doing to help combat the epidemic.

“At Florida Blue, we are taking an aggressive approach to fighting this opioid crisis in Florida,” Shaffer told Invest:. “We were the first health insurer in the state to eliminate coverage of the highly addictive opioid OxyContin. Our Florida Blue Foundation is contributing nearly $3 million to organizations that are providing front-line opioid addiction support. In October, we convened an Opioid Imperative at our Innovation Center in Lake Nona, bringing together leaders and influencers from the healthcare system, academia, nonprofit organizations, advocacy groups, first responders, government, those personally affected by addiction, families, employers and others to further discuss the issues we are facing and shine a light on effective solutions. And most recently, we announced a joint effort to develop a collaborative approach to the problem in one of the hardest hit areas in our state: Central Florida.”

However, despite these small gains, the opioid crisis is by no means nearing an end. “The opioid crisis is not something one organization can solve on its own,” Shaffer said. “It takes a team of dedicated individuals and organizations coming together, committed to the cause — and that is why we are partnering with a number of stakeholders to address this epidemic in communities across Florida.”

Echoing this sentiment of dedication and collaboration, H. Bruce Hayden, CEO of Banyan Health Systems, told Invest:, “Right now, society simply cannot support the population of people struggling with opioid addiction. However, we can be supportive of solving this issue through both collaboration and education.”

Hayden also underscored the importance of continuity of care in treating patients addicted to opioids. “Given the current healthcare climate, the industry is now a world of mergers and acquisitions,” he told Invest:. “There is an increased need for specialization and the ability to offer a continuum of services, which is one of the things Banyan Health Systems has strived to do as an organization with our community partners.”

With more than 140 Americans dying every day from overdoses of opioids such as heroin and fentanyl, opioids are the leading cause of death in the U.S. Miami-Dade’s healthcare leaders are taking this epidemic very seriously and working together to implement solutions that will save thousands of lives.

For more information on our interviewees, please visit their websites:
Florida Blue, https://www.floridablue.com/
Banyan Health Systems, https://www.banyanhealth.org/