Sweetheart Costco deal stretches on, grows even worse

Two years ago Miami-Dade was warned it had to rush a deal to sell 17.32 acres for a small fraction of its value or lose a Costco store forever. Last week commissioners unanimously gave Costco two more years to decide if it wants the bargain site after all.

In the process, the county sweetened the deal with the site’s developer by handing over 3% of the county’s cost to spend its own money to create 400 affordable housing units on more of its own land to house only county workers. No outsiders need apply.

The reason for the rush in 2023 was to get 493 needed Costco warehouse club jobs in the south part of the county. Documents commissioners approved last week now say it’s 210 jobs, not 493.

The documents also say that if Costco doesn’t close a deal by 2027, the contract will die – but only if either the county or Costco formally asks out. Otherwise, land that the county had set aside for water and sewer department needs can stay in limbo until one of them blows the whistle.

Meanwhile, the county has said it can’t find equally good replacement land.

Does all this sound surreal? It sure did to us when we strongly recommended against this deal back in 2023. It’s only gotten worse since. Yet no commissioner said a word before approving contract changes unanimously last week.

The affordable housing deal with a company run by developer Michael Swerdlow is another no-bid county arrangement, as was the Costco deal with another company under his umbrella. The pattern is unfortunately quite familiar: someone comes to the county with a deal that won’t wait, only the proposer can play, and the county buckles.

In both the Costco and affordable housing cases, the county commission voted to tell Mayor Daniella Levine Cava to cut a deal fast, and only with the proposer. She’s also being asked to find an unstated amount of money to create affordable housing for only water and sewer employees. It’s not explained why the two projects are related, other than that the land for both comes from the water and sewer inventory and the same developer benefits from both.

But lurking in the background is a national economy with a shaky future that may verge on a recession. Costco’s original “due diligence” period expired without it signing on with the developer, and now it’s getting two more years to decide whether it really wants a lease on county land in Cutler Bay that was needed in such a rush in 2023 that the mayor had only 30 days to negotiate a sale to the developer.

“This offer is not going to be here longer,” deal proponent Kionne McGhee told fellow commissioners in April 2023. “They have other options that are not found within this county, and options like these are not found every single day. If it’s not here, it’s going to be somewhere else.”

“We have to move faster,” added Commissioner Oliver Gilbert III.

So the county did move faster. The developer targeted land that wasn’t for sale that the county wanted to keep, offering $4.5 million for land that was appraised at $30 million to $32 million. In the end, the developer got the contract for about $9 million in either cash or a land swap for the site that Costco urgently wanted but today can’t make up its mind about.

Mr. Swerdlow, in making the deal, told commissioners he knew the land was worth more than he was offering but that it wasn’t worth as much to Costco as it was to the county for its own needs.

“The proposal is based on the rent Costco can pay, period,” Mr. Swerdlow said last year. “It is not based on what any appraiser says the property is worth.”

So in a county giveaway to lure a national big-box retailer, the county built in a $20 million-plus gift in value. That giveaway caused the county last week to ignore that the developer’s due diligence period for the contract had expired and then extend until April 1, 2027, the buyer’s decision on whether the deal will actually take place. Where is the $20 million-plus public benefit?

Meanwhile, the vote also gives Mr. Swerdlow’s company as developer 3% of the cost of the county paying to build its own private supply of workforce housing that the county today has no money for.

Last week’s vote tells Mayor Levine Cava to work out a final deal for the housing for county workers with the developer. If she can’t reach a deal that she thinks benefits the county, she must report that to commissioners for their action.

We trust the administration to do its best, but given the facts and the history of this land giveaway deal it’s hard to see how the mayor can turn this bitter lemon into lemonade.