Real Estate

New Report Warns Magic City Development Could Displace Thousands of Low-Income Residents

The Magic City Innovation District is already deeply controversial in Miami: A group of rich developers, including one guy indicted in the national college-bribery scandal, wants to put a $1 billion luxury complex in the middle of Little Haiti, one of Miami's most historic immigrant communities. Anti-gentrification activists have long lobbed criticism at the project, and many residents worry the development will push the neighborhood into a spiral of hypergentrification.

Now activists have released an analysis that warns the project could cost residents millions of dollars in relocation fees and added rent payments. The Community Justice Project — an organization that has pushed the developers to add more affordable-housing and local-hiring restrictions — commissioned the study.

"Even though the Magic City Innovation District project will generate economic value for those residents and visitors able to take advantage of its amenities, the proposed development project will invariably generate environmental, economic, and social impacts that should not be overlooked," the study says.

The investors — a team that includes developer Tony Cho, Cirque du Soleil founder Guy Laliberte, and accused collegiate-briber Bob Zangrillo — would place buildings as tall as 25 stories and create 2,630 residential units, 432 hotel rooms, 2 million square feet of office space, and 340,000 square feet of retail space at a 17-acre site on NE 60th Street at NE Second Avenue. The first section of the development, the music venue Magic City Studios, opened during Miami Art Week 2016. A different, similarly massive development, Eastside Ridge, has been proposed a few blocks south. Activists worry that if both projects are built, Little Haiti will cease to be the neighborhood it once was.

Critics have also assailed Miami Commissioner Keon Hardemon for, in their eyes, selling out the local neighborhood. At a commission meeting earlier this year, activists became outraged after the Magic City developers announced they were stripping major portions of the affordable-housing and local-hiring restrictions from the project and were instead planning to donate $31 million to a fund run by Hardemon's office. Local nonprofits worry the money will be inadequate or misspent.

The developers have long argued the Magic City project will bring billions in new tax and business revenue to the city. But activists warn that the city isn't adequately paying attention to the project's costs. According to the new study, there were 10,819 households in Little Haiti in 2017. Of that number, 5,614 — about half — earned less than $25,000 per year, and 3,154 households earned less than $20,000 annually. The study noted that those earning less than $20,000 yearly already spend more than 30 percent of their income on rent.

"Assuming the 3,154 low-income, housing-cost-burdened households are displaced in the coming years with increased gentrification, the total estimated annual cost of displacement to households is more than $16 million in the first year of moving, and nearly $8 million per year after moving," the analysts stated.

The study also notes that people who are displaced from their homes typically incur costs beyond moving expenses. People forced to move due to gentrification, for example, often endure longer commutes, miss school or work days, become less productive at work, and undergo mental stress as part of the ordeal.
All told, the report warns that if all 3,154 rent-burdened residents are forced to leave, they'd incur a whopping $68 million in direct and indirect costs. Residents forced to move after gentrification are also likelier to lose their jobs, and the report warns that for every person who loses their employment after moving, their household would lose $10,569 in yearly income. Evicted households are likelier to experience homelessness as well, and the activists note that increased levels of homelessness also strain county resources.

Plus, if minority-owned households leave the area, the study warns that minority-owned businesses in the area will also suffer.

"Displaced families must often settle for sub-par housing and may search for new housing again with a year after the initial move, resulting in recurring upfront moving costs," the report warns. "The estimated costs of displacement within the first year ($5,200) could actually be incurred over multiple years. These additional costs amount to 22 percent of the average income of a Little Haiti household."
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Jerry Iannelli is a former staff writer for Miami New Times from 2015 to March 2020. He graduated with honors from Temple University. He then earned a master's degree in journalism from Columbia University.