The rising cost of a redesigned International Swimming Hall of Fame on city-owned land — now approaching $219 million — has commissioners calling for the developer to shoulder more risk in the face of future economic uncertainty.
Fort Lauderdale will be required to contribute up to $11 million a year in lease payments over the course of a 30 years toward the public-private project, a total of $330 million. Now, the developer wants the lease amount increased to $13.6 million a year, bringing the overall payment to $408 million.
The city would recoup money through revenue-sharing from tenants. But if the onsite businesses were to fail, taxpayers would be left holding the bag, city officials say.
“This is just a huge risk to the city,” Commissioner Ben Sorensen said at a City Hall meeting. “Whether it’s fully leased (or not), we are on the hook for $13.6 million a year.”
Vice Mayor John Herbst also expressed concern.
“If the revenue targets are not met, then the city has to make up the shortfall,” he said. “We might make money, we might lose money. We are truly a partner in this in that respect, that we share a little bit of the upside and potentially a lot of the downside.”
The commission has asked staff to return to the negotiating table to work out a better deal for the city. Any changes to the comprehensive agreement will require commission approval.
Two years ago, Fort Lauderdale commissioners made a deal with Hall of Fame Partners to rebuild and modernize the east and west buildings that flank the city’s Fort Lauderdale Aquatic Center at 501 Seabreeze Blvd.
The project now includes an aquarium and elevated promenade, increasing project costs from $190.4 million to $218.8 million.
The city is not borrowing the money but is guaranteeing the debt.
If all goes well, Fort Lauderdale would receive $14.7 million a year in net annual revenue from the project, according to the developer. After making an annual lease payment of $13.6 million, the city would see a gain of $1.1 million a year.
To help offset the increase in the master lease payment, the developer is offering to increase other revenue that would be paid to the city from $2 million to $4.75 million.
Mario Caprini, CEO of Capital Group P3 of Florida and a partner in the project with Hensel Phelps, told commissioners he was worried any changes might force another redesign of the project.
The height of the west building has already been scaled back in response to critics who worried it might eclipse the Aquatic Center’s iconic dive tower, which stands nearly nine stories high. The original design called for a building standing 134 feet. That was scaled back to 120 feet. Now it’s down to 85 feet.
The east building has also gotten shorter. Initial plans called for a building standing 95 feet high. The new plan brings that down to 50 feet.
Under the current proposal, the west building overlooking the Intracoastal would include the Hall of Fame museum, a family-friendly aquarium, a rooftop restaurant, event space and exhibit space. The project would open by 2027.
“What happens if the entire building is empty?” Caprini asked the commission. “Is it possible? Yes. It is likely? No.”
Mayor Dean Trantalis pushed back.
“Sometimes businesses don’t always make it,” he told Caprini. “If you’re talking about a restaurant, maybe there’s not going to be enough business. … There are all these factors that we, as people who are supposed to be responsible for the public purse, have to make sure that the risk to the public is zero.”
Under the deal, the city will lease the property to the developer.
The developer will build the project in four phases. Those improvements will be leased back to the city, which would then sublease space to tenants.
Those revenues are meant to offset the master lease payment the city is required to make to the developer over the course of the 30-year lease.
Here’s what planned for all four phases of the project:
Phase 1
Ocean Rescue headquarters and seawall improvements.
Phase 2
West building: International Swimming Hall of Fame museum; aquarium; event space; exhibit space; rooftop restaurant, west end of public promenade
Phase 3
East building: Dive grandstand; dryland training; teaching pool, retail shop and cafe; elevated promenade; and north and south end of public promenade
Phase 4
Public water dock and shade structures. Potential addition: Covered grandstands.
Herbst said the addition of the aquarium made him feel more comfortable with the fact that the city has agreed to guarantee the debt on the project.
“I would never have supported this deal without the inclusion of the aquarium because the only way this project makes sense to me is with the aquarium,” he said. “The only reason I was reluctantly supportive of this project in the first place is because I think that the aquarium puts Fort Lauderdale on the map as a unique location in the South Florida market. I think it will drive foot traffic to that area.”
Commissioner Steve Glassman defended the project, predicting it will become another landmark destination on the barrier island.
“I’m not going to be as nervous as some of my colleagues on this,” Glassman said. “This is a holistic approach on that beach area. We’re doing amazing things in that stretch, from the reimagining of Bahia Mar to every development along that way and then this particular peninsula.”
Glassman said he understands the risk but thinks it’s a good bet.
“Again, that aquarium is a game changer for this site,” he said. “And I do believe that we’re going to be fine. And at the end of 30 years, who do you think owns all of this? The city of Fort Lauderdale owns all of this, all of these improvements, all of this investment.”
Under the deal, the city will take ownership of the buildings in 30 years for $1.
Susannah Bryan can be reached at sbryan@sunsentinel.com. Follow me on X @Susannah_Bryan