Wynwood's White Elephant

Miami's foreign-trade zone is a giant, peach-and-mauve testament to the city's incompetence

Just south of the rainbow-color storefronts that compose Miami's Fashion District stands an empty L-shaped edifice. Its 30-foot-tall, concrete walls were erected a year ago to store tens of thousands of boxes. These days they hold only a folding table and a white, plastic lawn chair. Security cameras perched above large bay doors monitor neither workers nor delivery trucks, only concrete and asphalt. A security guard's golf cart, immobilized by two flat tires, is the lone vehicle in a sprawling parking lot that was designed for dozens of cars and tractor-trailers.

Welcome to the Wynwood Foreign Trade Zone, sixteen acres that were supposed to be the heart of an urban renaissance. The only structure on the site is the $5.5 million, peach-and-mauve-color warehouse, which is stuck in a bureaucratic morass without a foreseeable exit. The City of Miami is preparing to foreclose on the vacant building even as the federal government inquires about the project's ruination.

Taxpayers will likely be stuck with the warehouse's multimillion-dollar mortgage. Like the Miami Arena sixteen blocks south, the building has been a money loser. Wynwood residents, who were supposed to reap the trade zone's benefits, now will have to help pay the bills. One-third of them are mired in poverty. Johnny Williams, who lives in a public housing project just south of the site, sees the empty structure and vacant land as an example of Miami's ineptitude. "That thing has been sitting there doing nothing since I moved in here," he says, standing near an abandoned car. "Just another dumb move that ain't helping no one."

A brainchild of the Wynwood Community Economic Development Corp. (WCEDC), the federally backed foreign-trade zone was born in 1989. Designers banked on Miami's reputation as a Latin American gateway to attract a slew of tenants. Such zones allow entrepreneurs to import raw materials such as leather, assemble them into products such as shoes, and export them without paying duties. Businesses can also use FTZs to store goods in transit and not pay tariffs.

Trade zones have become popular in the new global economy; there are a total of eighteen in Florida, including one west of Miami International Airport. But the decadelong battle between WCEDC and the city for control of the Wynwood project has impeded its opening. In limbo are the 800 jobs that city leaders promised to Wynwood's residents.

The endeavor got a boost later in 1989, when the city commission donated land for the site. The vote was an attempt to help ease strained relations between city hall and residents following the fatal 1988 police beating of drug trafficker Leonardo Mercado.

In 1991 the federal government, which regulates foreign trade zones, issued WCEDC a license and offered low-interest financing. The U.S. Department of Housing and Urban Development (HUD) chose city bureaucrats to administer the loan, but squabbles delayed construction. In 1994 HUD brought the city and WCEDC together by threatening to pull the money if the sides could not reach a compromise.

In 1996 a settlement was reached: WCEDC gave the city more authority to oversee the project. In return Miami pledged to support the trade zone and guarantee the $5.5 million loan. WCEDC selected developer Oded Meltzer and his company, Dade Foreign Trade Zone, Inc., to lead the effort. The obligatory groundbreaking ceremony followed and construction started in 1997. The structure was completed in the summer of 1998, but the zone has been unable to sign tenants. Building inspectors have cited flaws in the design: Two exits don't meet city standards, and there are no fans to extract smoke during a fire. Meltzer says he lacks the money to make these repairs and contends the city has refused to cooperate.

Miami commissioners counter that Meltzer never even made the first mortgage payment, which was due this past July. The city's argument: It doesn't want to fund a development that's on shaky financial ground. Court records reveal that Meltzer owes an additional $365,005 to twenty creditors. Meltzer declined to comment on those debts and did not return several messages left at his office.

In January the Miami commission ordered city attorney Alejandro Vilarello to foreclose on the warehouse. Vilarello expects to act by the end of June. If he is successful, city taxpayers will own the 150,000-square-foot structure, which is located on Twenty-third Street between NW Second and Fifth avenues. "My understanding is that [Dade Foreign Trade Zone] says it can't make it work," says Commissioner Willy Gort. "Then let's go ahead with the foreclosure and give it to someone who can run it."

But there are problems ahead. Even if the city successfully forecloses, it will not gain possession of the land beneath the building or the foreign-trade zone license, which are controlled by WCEDC.

WCEDC executive director William "Bill" Rios indicates he will not surrender. He challenged Miami's latest action in an eight-page letter mailed to HUD in April. In it Rios accuses the city of failing to support the project. In 1994 Rios sent a similar missive that led to HUD's involvement.

On May 5 of this year HUD gave city leaders 30 days to respond to Rios's letter. Vilarello pleaded the city's case in a letter sent this past week. If HUD is dissatisfied, it could cut funding to other city projects or refer the matter to the U.S. Attorney General's Office for an investigation.

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