After years of wrangling, Fort Lauderdale commissioners voted to lease the city-owned Bahia Mar to an entity led by Jimmy and Kenny Tate for up to 100 years, enabling them to move forward with development plans.
The Tates’ Rahn Bahia Mar, LLC plans to develop 350 condos and 88,000 square feet of commercial space on the Bahia Mar property and build a new hotel to replace the existing 296-room DoubleTree hotel at 801 Seabreeze Boulevard. The new hotel will have 256 rooms and 60 condo-hotel units.
“It has been a long time coming. We still have a few more steps to go. But this was a big one to get behind us,” said Kenny Tate.
As part of the approval, the city agreed to terminate an existing lease with the Tates scheduled to expire in 40 years.
Tate said Rahn Bahia Mar has downsized a site plan the city had approved in 2017 for Bahia Mar by cutting the number of residential units from 651 to 410 (including the 60 condo-hotel units) and reducing the commercial space from 150,000 square feet to 88,000 square feet.
City revenue from the Bahia Mar property, including a share of proceeds from condo sales, will total $2.3 billion over 100 years, or an average of $23 million a year, according to a report by Colliers International. The existing lease with Rahn Bahia Mar, set to expire in 2062, has been generating about $1.5 million of annual revenue for the city.
The condo revenue forecasts were based on a “conservative” assumption that Bahia Mar condo sales will equal $2,000 per square foot, Ken Krasnow, Colliers’ vice chairman of institutional investor services for Florida, told commissioners at their meeting Tuesday night. “Condos already are selling for $2,300 to $2,500 per square foot on the beach today,” Krasnow said.
“From a financial perspective, this is a very strong proposal for the city,” he told commissioners before they voted 4-1 to approve a new lease for Rahn Bahia Mar. The initial 50-year term of the new lease could be extended for another 50 years.
Under the new lease, the annual base rent doubled to $600,000 from $300,000 under the existing lease. The new lease also requires the developer to pay the city a share of revenue from not only condo sales but also hotel and marina operations.
Those operations surge during the annual Fort Lauderdale International Boat Show, based largely at a riverfront marina on the west side of Bahia Mar. Most of the 38.7-acre Bahia Mar site is underwater property that supports marina operations. Last month, boat show organizers, which have long opposed the redevelopment project, sued the Tates’ affiliate over a lease agreement “gag provision” that bans them from speaking out against the project to city officials and possibly the general public as well, according to the complaint filed in Broward County Circuit Court.
The total build-out of the Bahia Mar development project, which is pending a site-plan review by the city, will take three to five years, Tate told The Real Deal. “We’re looking at a little more than two years before we can break ground,” he said.
Mayor Dean Trantalis said maintaining public access to Bahia Mar and extracting more city revenue from the city-owned property will serve a public purpose.
Ben Sorenson, the only commissioner who voted against the new lease, disagreed: “For me, public purpose does not include hundreds of multimillion-dollar condos.”
Many of the 250 people who registered to speak about Bahia Mar at the commission meeting Tuesday night agreed with Sorenson and favored a city-wide referendum vote on the future of the property.
But Fort Lauderdale City Attorney Alain Boileau said such a referendum would constitute a contractual breach of the city’s existing lease agreement with Rahn Bahia Mar.