Miami offers quality of life
Miami Mayor Tomas Regalado speaks with Business & Investment about the steps Miami is taking to become even more attractive to investment – such as becoming a regional center for EB-5 visas – and how its multicultural and vibrant community lends the city a more diverse and exciting lifestyle
Miami is the most populous metropolis in the southeastern U.S. In 2010 Miami ranked 7th in the U.S. in finance, commerce, and culture. In 2008, Forbes ranked Miami as “America’s Cleanest City”. What do you consider to be the reasons for Miami’s excellent positions?
Number one, the people. Some people say it is the climate. It is not; it is the people. Miami did not ask to become a Latin American city, but it has – first because of the Cubans, then the Nicaraguans, then the Colombians and the Haitians. It is a unique “United Nations” in terms of population representation. Because of that, and because of Miami’s location and the climate, Miami has become a center for many people to settle down and invest. In Miami you have the climate and the culture of any Latin American city, but with the security that you have in the United States, for your investment and for your family.
A few blocks away from here, there is a closed neighborhood which is high-end, it is called Bay Heights. To give you an example, we had issues of complaints from the residents – these are homes valued at no less than $1 million. It is a closed area with 300 residential homes. We had to send public works to clean the storm sewers and the homeowners’ association requested that we distribute fliers telling people not to blow leaves and so on. The residents requested that it be written in English, Spanish, and Portuguese, because there are many Brazilians that have bought houses to settle down in. If you move farther into downtown Miami, you will see that the occupancy level in downtown condos is at 94%.
There are a lot of French, Russian, Portuguese, and Venezuelans living in Brickell and downtown. Different cultures and nationalities bring relatives and friends because of the quality of life. We have some schools that take grades of students from Europe, and we would recognize their grades here in Miami. This has attracted foreign executives. In Miami we have several neighborhoods that are a showcase of what the city as a whole is and South Florida. We have Little Havana, Little Haiti, and Little Managua.
Why have people chosen Miami? Because it is comfortable even if you do not speak English. It is comfortable if you want nightlife, and has a quality of life that New York will not give you. It has the infrastructure to accommodate people that are willing to come and work here as executives. You also have people who still come from Cuba, from Venezuela: exiles. And you have the media outlets, which are 60% Hispanic. The hubs of the two major Spanish networks in the U.S. are located here. So it is a combination of all of the above and the climate is very nice.
Looking at the potential the city has, how can Miami continue to expand its global operations?
I think that one of the major steps we are taking is becoming a regional center for EB-5 visas. I think that will be the icing on the cake, because we have seen that investors from Latin America and China want to come to the U.S., but it is a very cumbersome and difficult process to look for investment. Right now, there is only one city in the U.S. that is a regional center: Dallas. We are looking at the Dallas model and applying to the State Department, and the Department of Immigration, to become a regional center. What does this mean for the city of Miami? It means that any project that could guarantee 10 permanent jobs for two years qualifies an individual for an investor visa. The investor gets a green card, and everybody is happy. We are not charging anything; the city is not making any money. It is just that in the geographical area of the city, any project qualifies, if we get a designation of regional center.
So this, we believe, will bring a few million dollars in investment. Then you have the investors that want to buy real estate, which is very cheap now. The success of Miami as a city to invest in has also been the downfall of governments like the city of Miami. We have seen a huge decrease in revenues because of real estate taxes. Our main source of revenue is real estate taxes. Since the crisis, we have lost $60 million in real estate taxes, which is a lot. It is still not back to where it was, and it will never be, because prices were really high for real estate. What we did was we said two years ago: “OK, we have this situation. We have low values for homes. Let us reduce the taxes.” We had to make very tough decisions, but the strategy worked, because with low value and low taxes, people rush to buy and invest.
You were quoted in an article last winter saying that “economic development is the way to an enhanced quality of life.” In the same article, you praised the Swire development downtown, which is worth over $800 million. Aside from the regional center for visas, what more do you think can be done to encourage investors to come here?
Changing the way that government works is the only way to incentivize investment. Why? Because getting a building permit used to take a lot of time. For the government employee, it does not matter if he finishes today or tomorrow or in two weeks, because he or she will go home and get the same check. But for a developer, to have plans, stock, and permitting not ready costs a lot of money. So we have established a system where you can get a permit to start building, even a temporary permit, in 24 hours. But we still have to fine-tune the permitting process, because it takes a lot of time and involves a lot of inspections. We understand that there are codes as we are a hurricane-prone area. But government has to realize that they have to work with the people. The culture here in government has been, for many years, one of, “I am doing you a favor”. The fact of the matter is the developer, or the person who is going to build something, is doing us a favor, because he is paying our salary, and we work for them. So changing the culture is more important. You can change the protocol in theory, but you also have to do so in practice.
City Hall has engaged in personal efforts for attracting investors, for example in the boat industry.
Right. We are in the process of building two new marinas in the city of Miami, because the boat industry is a major industry. We have many marinas in the city. Yes, the economy has hit everyone hard, including the boating industry, but I do not see it from here. I see more boats every day. Big boats.
There is a company, Horizon Yachts, from Taiwan, that is going to open an office in Miami, so they want a foothold in the U.S. There are a lot of things we are trying to do with the boating industry, because it is “a natural” for the city. We have many miles of coast.
Are these new marinas being built by developers or the city?
The city is partnering with private developers since these are city lands. It will be a public-private partnership, as we do not have the funds to build a marina, so we are partnering with the private sector to do it. One is a mega-yacht marina, and the other one will be a regular marina. The city will get a share, but both will be private.
Speaking more about the state of Florida, we know that there are more than 1,500 foreign-affiliated companies giving jobs to more than 300,000 Floridians. What is your evaluation of the relations the city and state has with Latin American companies?
I think the state of Florida has yet to realize the potential for the Latin American investor. There are major players in the state such as Disney, the meatpacking industry, the citrus, and the orange groves.
The Latin American capital has not gone north of Miami yet, and the state has determined that. I think they are beginning to understand the reality. The governor is going on a trip to Spain in May, a trade delegation. It is part of reaching out to the Hispanic market. In the city, we have to confess that most of the new businesses that have settled in the city of Miami have come because they want to come. We do not have the incentives where we can tell investors, “I will give you a million dollars if you settle here,” for example. They have come because they want to, and our mission is to keep them here and to help them, and to facilitate the infrastructure and other amenities. For example, the city just approved a heliport. There is no heliport in the state of Florida. We just signed an agreement with a heliport company in New York, and they will be building a heliport. Who would use it? Very rich people and tours and so on. It is just another amenity that we offer.
The city is composed of five districts. How do the commissioners work together to benefit the citizens of Miami?
Each member of the council is elected by district, and the mayor is elected citywide. The reason this is done is to keep a balance, because if you have a citywide election, maybe a Hispanic will be elected, but you will disenfranchise the African-Americans, and the Anglos. So the system of districts was implemented by the courts many years ago. The commission is a legislative body, but each commissioner is very engaged in things about the district, and we have been able to pass legislation that we proposed. I do not vote, because the executive mayor is in charge of creating the budget, and presiding over the sessions or appointing a presiding officer, and the mayor has the veto power among other things. So we bring items to the commission for discussion, they vote but we have been working with them in a very collegial way, and the city council is composed of three Hispanics, one African-American lady, and one Anglo representative.
It represents the demographics of the city well.
It mirrors the numbers of the city.
Miami has a reputation for nightlife, for beaches, for clothing stores and people come here for tourism too. But lately cultural activities have been developed and promoted over the past decade, which you have been a strong part of. What other initiatives have you taken since you became the mayor?
We created the Arts and Entertainment Council, and we restructured the mayor’s international council. Through those entities, we have brought different art exhibits and have been able to facilitate many galleries opening here in Miami. Through the mayor’s international council, we have been very proactive on ties with China and Taiwan and Latin America. Recently we came back from Peru, which is an emerging economy, and we had seminars in Lima. We spoke to more than 200 businesspeople about investing in Miami. There was a huge crowd in the Chamber of Commerce in Lima. Miami has the glamour, you know.
Also, we have been able to create partnerships with the private industry. Those partnerships are, I think, the only way to succeed. For instance, the city owns a very old historic theater in downtown Miami. We would not have been able to keep it open had it not been for the subsidy of the city, because of the economic crisis. So we partnered with the private sector, and a trust took over the theater. It is functioning very well. We are doing the same with the Marina Stadium, a stadium which had been abandoned for 20 years and which has been declared a historical monument and is on the protection list of the World Monument Trust. So we are partnering with the Miami Heat organization for them to run the stadium.
But I think the most important accomplishment is reining in the budget of the city of Miami, and reducing the costs of salaries and benefits that the city was paying. 92% of every dollar went to salaries and benefits in the city of Miami, for the employees. Now we have brought it down to 74%, because there is no operation money, and without operation we cannot do infrastructure like streets and sidewalks. So that is important.
We have also done the city’s art inventory; until now, the city never knew what we had in terms of culture and paintings donated to the city. There were works of art abandoned in a park or in a warehouse for example. Now we have a nice inventory of different things that we have as part of the city’s properties. There are many artworks, including paintings, sculptures…
We have been reading about your background since your youth. It is very interesting, because you are the son of a political activist who was a highly influential figure in Cuban society. You worked as a journalist; you were the first Cuban-American member of the White House Press Corps; you were also elected as a Miami City Commissioner in 1996, and have been reelected to office three times – and now you are the mayor. How has this vast experience helped you to command this cosmopolitan city?
I think my experience as a City Council member for many years helped a lot, because you understand the day-to-day complaints of the people. I think the fact that I was able to travel throughout the world when I was assigned to the White House gives you a different perspective on everything. You can compare the cleanliness of your city, or the architecture, or the planning, the police, public safety and it gives you a better understanding.
“Leadership is the ability to transform ambition into reality.” What would you say are the main characteristics a leader must have in order to achieve this vision and turn it into a reality?
I think that, number one, you have to make very tough decisions. We had to do it, and we did it. I think it is important that you understand that the only way to bring investment, the only way to create new industries, is offering quality of life. Quality of life is very basic and very simple: it is protection provided by the police…you have your fire department always ready to go…you have the streets cleaned, you have the streets and sidewalks fixed, you have the garbage picked up, that is quality of life. Only because of quality of life will people move in. In the past, people in the city of Miami moved out of the city and went into the suburbs. Now, in downtown Miami, we are seeing a surge in population of more than 20,000 new residents, which is extraordinary, because it is like a city. There are cities here in Florida that have less than 20,000 people – and the downtown of Miami only has 20,000 new people.
To finish off, we would like you to share a message with the readers of American Economy about Miami – there are all these Latin American companies and people that have their eyes fixed on Miami as it recovers from the crisis…what is your final message to all these people?
I think that Miami is the right place to be in the future, first of all because there has been a huge investment in Miami International Airport. The airport will be one of the signature ports in the U.S. Second, the Port of Miami. The Pport of Miami is undergoing work that would put it on a par with Panama in 2014. The work on the port is a very important milestone for the future. Then, because whatever language you speak, it is spoken here in Miami, so especially for Latin Americans, you can feel at home. We promise you that we will help. We are not perfect, but you will feel at home.