“IF YOU PAY ATTENTION TO THE LITTLE CHECKMARK UNDER EACH OF THE ATTRACTIONS, EACH OF OUR MAJOR ATTRACTIONS.  THOSE WERE ALL BUILT WITH PUBLIC FINANCIAL SUPPORT.  SKYRISE MIAMI IS NOT LOOKING FOR ONE NICKEL, NOT ONE PENNY OF CITY OF MIAMI SUPPORT.”

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OCTOBER 20, 2014
BARRED FROM NUMEROUS GOVERNMENTAL COMPUTER NETWORKS FOR TELLING THE TRUTH
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ANOTHER BAD DEAL FOR MIAMI
JEFFREY BERKOWITZ EXEMPLIFIES WHAT A DUPLICITOUS, HYPOCRITE LOOKS LIKE.  HIS PHOTO SHOULD ACCOMPANY THE DEFINITION OF THOSE WORDS IN THE DICTIONARY 
PART XXI

Even before I met him, I pegged Jeffrey Berkowitz as just another self-aggrandizing, two-faced developer who had mastered a strategy of using bullying tactics and money to get what he wanted from stupid politicians, all the while working hard to present himself as a standup guy quick to give money in support of community services or activities that could be used to burnish his image. 


The critical component at the center of all these charitable activities for guys like Berkowitz always includes making sure a camera or a press agent is close by to capture the presentation of the check.


In Miami, people like Berkowitz are found every month on the pages of the society magazines posing with crooked politicians or fellow gift givers while getting an award of some kind for writing a check, all intended to convey the notion that when shit wrapped in money floats to the top of the milk pitcher, it should be considered cream.


I knew that Berkowitz was just another lying developer interested in trying to get his hands on public money when I discovered during the research for my first story about Skyrise - a 2 part video commentary that I did on March 17th - that after the Miami Herald in a November 2013 story claimed that Berkowitz had told them that he intended to build this 21st century Dildo without any public money, he turned around and had his pals at the county on January 29th, introduce a Resolution asking for $10 million from the Florida Legislature for this project.


By the time he showed up at City Hall on June 26th of this year talking about how he needed the City Commission to immediately approval the amended contract with Bayside Marketplace - a contract that included a sub-contract between his company and Bayside that served as the facade of the deal that allowed him to bypass any real requirements to have this project judged by the taxpayers on it’s own merits - he was threatening the Commissioners that if they didn’t do what he wanted by making sure that this issue got on the August ballot, he would take his marbles, go home ,and the City would be left with an empty parking lot for the next 46 years.


It was all bullshit and just part of the numerous bogus claims and arguments he made that day.  By then, the backroom deals had all been made, and Berkowitz’s bluff and bluster was just a show for the rubes in the audience. 


Part of the pitch that Berkowitz had made that day was his claim that he did not need, nor was he looking for any public money.

Here is the video of Berkowitz making that claim at the Commission meeting.

To the average, uniformed listener, which included Tomas Regalado, the Mayor of Miami, the message that Berkowitz was conveying both literally and by inference, was that he was not looking for any public money.


By then however, Berkowitz had already submitted a request for economic development money from Miami-Dade County, and that request had been quietly sitting in a file at the County Building waiting for the right  moment to be introduced by Berkowitz’s dear friend and recipient of thousands of Berkowitz dollars to his campaigns, Miami-Dade County Mayor Carlos Gimenez.

ALL ESTIMATES ARE BASED ON BERKOWITZ’S CLAIM OF 3.2 MILLION VISITORS.



















IF HE DOESN’T REACH THAT NUMBER HE’S IN TROUBLE, AND ALL OF THE OTHER REVENUE GENERATING PARTS OF HIS CASH FLOW PALE IN COMPARISON TO THE MONEY HE EXPECTS TO GENERATE THROUGH TICKET SALES FOR PEOPLE GOING TO THE OBSERVATION DECKS: $77,374,296 VERSUS $27,613,766 FOR EVERYTHING ELSE.

BERKOWITZ EXPECTS TO GET 3.2 MILLION VISITORS TO VISIT THE TOWER.

Now, bear in mind as we start this that the above numbers are based on assumptions that Berkowitz states were made as part of “a very detailed study done by an independent leading company in the attraction and entertainment space,”


I have no reason to doubt Berkowitz, but as the saying goes, you get what you pay for, and this study, as well as all the other studies that Berkowitz has paid for have been created in part with the knowledge that they are going to end up being used to provide a basis for potential investors to cough up money.


Also, as you will see, at the end, this isn’t rocket science. At the level of counting heads, and figuring out how many heads you need to count in order to make money, this is pretty straightforward math.


Today, there is no Skyrise Tower, so these are projected numbers and a lot of things could happen before 2018 that could make them completely unreliable as financial benchmarks, but they’re the only numbers available to work with in order to determine the financial viability of this project.


PART I - THE PROJECTED REVENUE NUMBERS FOR THE FIRST FULL YEAR OF OPERATION

IF YOU DIVIDE TOTAL REVENUES OF $99,998,062 BY 3.2M YOU GET $31.25. THAT’S THE AVERAGE AMOUNT THAT EACH VISITOR IS EXPECTED TO SPEND

THEN IF YOU DIVIDE THE 3.2M  OF ANNUAL VISITORS BY 365 DAYS A YEAR YOU GET 8,767, AND THAT IS THE NUMBER OF VISITORS THAT NEED TO VISIT EACH DAY IN ORDER TO REACH 3.2M

8,767 DAILY VISITORS X $31.25 = $273,881.08. THAT’S THE AMOUNT OF REVENUE THAT IS NEEDED EVERY DAY COME RAIN, SHINE, HURRICANES OR THE RAPTURE IN ORDER TO REACH THE REVENUE TOTAL OF $99,988,062.

PART I I - WHERE ARE ALL OF THESE MILLIONS OF PEOPLE GOING TO COME FROM EVERY YEAR?


Based on his initial projection of 3.2 million visitors, Berkowitz has stated in the Notes and Assumptions part of his Consolidated Cash Flow projections that he anticipates a 1% increase in ticket price and an increase of 1.5% in ticket sales, for a cumulative increase in visitors over the first ten years to 33,479,077. 


That’s a lot of people for a metropolitan area that has 2.5 million residents and last year had 14.2 million overnight visitors.


This is even more evident when you see the comparison choices that Berkowitz and his team are using as examples of successful towers that he expects to emulate.


Last week, Hank Adorno - yes Miami, THAT Hank Adorno - who turns out is the Executive Director of Berkowitz’s, Miami Metropolitan Regional Center LLC, EB-5 program, responded to an email from Charles Corda.


Here is that email, courtesy of Corda.

THE STRATOSPHERE TOWER COMPARISON


CONTRARY TO BERKOWITZ’S CLAIM THAT NO OTHER TOWER COMES “CLOSE IN THE SCOPE OF AMENITIES WE WILL BE OFFERING,” ONE TOWER MATCHES THE CLAIMS HE MAKING FOR SKYRISE.  THAT TOWER IS THE STRATOSPHERE TOWER IN LAS VEGAS.














THIS TOWER HAS A CASINO, A ROLLER COASTER, A BUNGIE JUMP, AND IT’S IN A CITY THAT LAST YEAR HAD 39,668,221 VISITORS.


WITH ALL OF THIS, AND AFTER BEING OPEN 18 YEARS, THIS TOWER IS NOW ONLY REACHING A TOTAL OF 40,000,000 VISITORS, OR APPROXIMATELY, 2,222,333 VISITORS A YEAR.  THAT’S APPROXIMATELY 1,000,000 MILLION LESS VISITORS THAN BERKOWITZ  EXPECTS WILL VISIT SKYRISE.

From: Hank Adorno <hadorno@miamet.com>

Date: June 18, 2014 11:19:57 AM EDT


Subject: RE: SkyRise


Hi. We had an extensive feasibility study done by a highly respected consulting firm in this space, International Theme Park Services, Inc.http://www.interthemepark.com/  


They reviewed over 20 similar towers around the world, several of which Jeff and I have visited and none of them come close in the scope of amenities and attractions we will be offering.,You can go to our website and learn about approximately 40 such towers, http://skyrisemiami.com/TOWERS/index.html


Here is just some quick facts about the attractiveness of towers/observation decks


Eiffel Tower has 7 million annual visitors and over 250 million since it open 125 years ago


The Statue of Liberty has over 3 million annual visitors


The Empire State Building has 4 million annual visitors and over 131 million since it open in 1931. It also produces $85 million in revenues


Tokyo Skytree, which open in March, 2012 has blown through its initial projections and is averaging over 6 million annual visitors


One World Trade Center (the tallest building in the US and owed by the NYC Port Authority) just leased the top two floors (raw space) for observation to a Jerry Jones (Dallas Cowboy) lead group for $60 million a year for 15 years

Observation Towers are big draws around the world. Our 3.2 million estimate is conservative. We are not building an attraction and hoping they will come. They are already here. We are giving visitors and residents something unique to do. Florida is the #1 tourist destination in the world with over 94 million annual visitors. A significant portion go to Orlando. SkyRise will make us more competitive and with All-Aboard Florida easier to access.


Finally and probably most telling is that Jeff is spending the first 30 million in construction cost. You do not do so unless you most firmly believe that your projections are reasonable. We have been at this for almost 4 years and we have done our homework. Jeff has a 35 year history of 100% successful projects. He did so by being conservative and putting together a world class team. You can learn about the team by visiting, http://skyrisemiami.com/TEAM/index.html

 

If you had a visitor from out of town, where would you take them?

 

Let me know if I can answer any other questions. If you have a moment please view the video at the beginning of the website.

 

PS, please call me Hank.

THE STATUTE OF LIBERTY


4,200,000. Visitors a year

New York City Resident Population = 8,475, 500

New York City Visitors = 48,700,000 per year (2010 approx.)

Combined Visitor and Resident Population = 57,175,500.

Statue of Liberty Capture Rate = 7.3%

Extrapolate to South Florida

16,817,176 x 7.3% =1,227,654 Visitors to SkyRise

Given all of the possible places and activities that the Greater Miami Convention and Visitors Bureau already claims are available for visitors there is no guarantee that going up a 1000 foot observation tower, or taking a 400 foot drop in an amusement ride is necessarily going to leap to the top of every visitor’s to do list.


HANK ADORNO’S APPLES AND ORANGES COMPARISONS DON’T SUPPORT BERKOWITZ CLAIMS


I am grateful to Charles Corda for taking the time to research each of the locations that Hank Adorno cited in his email, and in doing the comparisons to Miami. He has circulated those calculations and his opinion on the potential financial impact to the City to the Mayor and members of the City Commission, and to folks on his extensive mailing list, and again, you can see a copy HERE.

THE EMPIRE STATE BUILDING


3,500,000. Visitors a year

New York City Resident Population = 8,475, 500

New York City Visitors = 48,700,000 per year (2010 approx.)

Combined Visitor and Resident Population = 57,175,500.

Empire State Building Capture Rate = 6.1%

Extrapolate to South Florida

16,817,176 x 6.1% =1,025,848 Visitors to SkyRise

THE EIFFEL TOWER


7,000,000. Visitors a year

Paris Resident Population = 2,340,000.

Paris Visitors = 70,000,000 per year (approx.)

Combined Visitor and Resident Population = 72,340,000. a year

Eiffel Tower Capture Rate = 9.7%

Extrapolate to South Florida 16,817,176 x 9.7% =1,631,266 Visitors to Skyrise

THE TOYKO SKYTREE


6,000,000. Visitors Per Year

Tokyo Resident Population = 35,000,000.

Tokyo Visitors = 426,000,000 per year (approx.) An astounding number

compared to just about anywhere else.

Combined Visitor and Resident Population = 461,000,000.

SkyTree Capture Rate = 1.3%

Extrapolate to South Florida

16,817,176 x 1.3% =218,623 Visitors to SkyRise

As part of the argument that Corda put forward in his email also dealt with the  financial projections that Berkowitz provided the City.

Assuming Mr. Berkowitz is correct that 3,200,000 People will Visit SkyRise

The project will do quite well and show a considerable profit.


If however the number of visitors is more in line with similar structures

around the world, at a max. of 10% of combined visitor and resident

populations Mr. Berkowitz will be in dire straights.


Extrapolating from Mr. Berkowitz’s own projections he MUST have 6,677

Visitors PER DAY just to break even.


6,677 Visitors x $31.25= $208,656.25 Gross Income per Day -

approximately equal to his projected expenses of $208,667.82 PER DAY


IF his actual Visits are more in line with Similar Structures around the world

(adjusted by available Population/Visitors), the project will be bankrupt

almost immediately upon opening.


Combined Dade County/ ”Miami and the Beaches ” Resident/Visitor

Population = 16,817,176 x 10 % =1,681,717. Per Year Divided by 365 days

= 4,607 Visitors per day.


4607 Visitors per Day x $31.25 Per Visitor = $143,969. PER DAY GROSS

REVENUE


With Expenses Fixed at $208,656.25 vs Gross Revenue of $143,969.

means the Project Loses $64,687 PER DAY.


The Question then simply becomes “will this project “SkyRise”capture a

greater percentage of the available population than the most Iconic

Structures on Earth?


In point of fact “SkyRise will have to capture approximately 150% More of

the available population and visitors than the above noted structures to

break even.


As such it seems to be that Mr. Berkowitz’s financial projections are highly

optimistic at best.


If his actual visitor numbers are in line with other similar yet more iconic

structures around the world, as adjusted by available populations and

visitors, this project will bleed red ink to the tune of approx. $64,000 PER

DAY starting on day one.


I doubt if even Mr. Berkowitz, a renown and respected developer, can

weather that storm for very long.


At that rate the project loses $23,360,000. in the first year of operation.

I would assume that well before that occurs the project goes into

bankruptcy.


In summary, all of the above numbers except those related to extant

observation towers, are of a conjectural nature. No one can predict with

absolute certainty how many people will visit this project each day. Not I.

Not Mr. Berkowitz, nor his consultants. However if similar projects around

the world are used as a guide for analysis, this project is doomed to failure.

In the end We,The Citizens of Miami will have a 1000 Foot high problem on

our hands. The costs to the City of Miami can be astronomical.

While I agree with Corda that Berkowitz’s projections are highly optimistic, I think that he might get through the first one or two years just on the basis of the tower’s novelty.


It’s after those first couple years, and after he faces direct competition from the other observation towers offering similar views of Miami, as well as competition from the World Center Convention complex who will have their own mix of high-class restaurants, night clubs, convention space and all the rest that I think is where Berkowitz and his tower will face Corda’s  calculations. 


By then however, Berkowitz might have cashed out, the current Mayor and members of the Miami City Commission will be gone from office, and the only ones still around will be the taxpayers, who as usual, will wonder how any of this could have happened.


BERKOWITZ’S RESPONSE


Five days before I published my story, I had written to Berkowitz, asking him to respond to my calculations.  He did so on June 21st, and I included his comments to my financial questions in my story. 


His response did not contradict the basic financial numbers that Corda and I had come up with.


At the time, I published his letter as a separate story to provide readers with an opportunity to read his arguments without comments from me.  You can do so too by clicking HERE.


PICKING THE TAXPAYER’S POCKET IS NOT PART OF THE JOB DESCRIPTION OF LOCAL ELECTED OFFICIALS, NO MATTER HOW HARD THEY TRY TO MAKE IT SO


Whether it was the air rights that the City of Miami wanted to give away to the Miami WorldCenter, or the refusal of the Miami City Commission to adjust the agreement with the developer of the Watson Island project to pay a fair market rate as the rent for that property, or the giveaway of the Parcel B for a Cuban Museum, or the Miami marine Stadium to a handful of guys who plan on turning the property into their personal cash cow, or now this effort to give Jeffrey Berkowitz $9 million dollars of taxpayer money, after he misled everyone by claiming that he didn’t want public money and that he would pay for the infrastructure costs himself, the bottom line is that the elected officials in Miami and Miami-Dade County have developed a very bad habit of screwing the taxpayers at every single opportunity.


Gone are any efforts to pick the pocket of the taxpayers with a little finesse. These corrupt politicians have just become so rapacious and so brazen that they have turned Miami into a Thugoracy.


Instead of bags with hundred dollars bill being used as payoffs the politicians have just created Electioneering Communications Organizations (EOC), where the developers and others who come before them contributes $5000, $10,000, $25,000 and $50,000 checks that amount to little more than legal bribes and payoffs. 


Look at the donations to Francis Suarez, Marc Sarnoff, Carlos Gimenez and others, and you clearly see the pattern of the same lobbyists, lawyers and developers who come before the City of Miami and Miami-Dade County looking for variances, sweetheart Development Agreements, Tax Increment Funding, or economic development handouts, turning around and writing out these big checks either before, or soon after they got what they wanted from the politicians.


This has all been made possible because we also have a corrupt State Attorney who herself takes thousands and thousands of dollars in “gifts” including hotel rooms, limo service, jewelry, flowers, tickets to events and lauders those “gifts” through FORM 9’s , which is another convenient way that politicians have created to launder payoff and bribes.


Jeffrey Berkowitz repeatedly said he was going to build this ugly, and potentially financially ruinous amusement tower with private funding, yet, behind everyone’s back he was conspiring with his bought and paid for pal, Carlos Gimenz, to screw ALL the taxpayers in Miami-Dade County by increasing their property taxes to pay for something they didn’t have a chance to vote on, and the ones in the City of Miami who did vote for it, got lied to.


That’s bullshit!





IT’S ALSO BEEN POINTED OUT TO ME THAT THE ONE THING THAT SEEMS TO SEPARATE ALL OF THE TOWERS THAT BERKOWITZ POINTS TO AS COMPETITORS OR COMPARISONS ARE COMMUNICATION TOWERS.



















ALL OF THESE TOWERS GENERATE A PORTION OF THEIR INCOME FROM PROVIDING TV, RADIO, AND OTHER ELECTRONIC TRANSMISSION SIGNALS, EVEN THE EIFFEL TOWER, YET BERKOWITZ SEEMS TO HAVE COMPLETELY IGNORED THIS VALUABLE REVENUE STREAM.

Investor materials describe a lucrative venture, with Berkowitz projecting Skyrise would soar in value to $630 million within five years.  "Cash flow from the operation of the Skyrise Miami Tower may be sufficient to return all, or a significant portion,  of the the EB-5 investor's capital after year 5" read the brochure.


"That's the projection," said Berkowitz, who wore a brass Skyrise lapel pin for Thursday's meeting. "All I can do is hope they're right."

When a bigshot developer claims that all he can do is hope that the financial projections that he’s stuck in a sales brochure intended to get Chinese investors will give him $1 million dollars apiece so that they can get a Temporary Green Card are right, you got to wonder about the quality and reliability of those projections.


Because sometimes I know that folks don’t read all the way through some of my longer stories, I am reprinting the central portion of my June 23rd story that was based on the Consolidated cash Flow projections that he was required to provide the Miami City Manager in May. If you can’t read all of the numbers on this page, a larger copy is available so you verify these calculations by clicking HERE.


I must also point out that I have no way of knowing whether the Consolidated Cash Flow projections that I and Charles Corda used is the same document, or reflects the same projections, that the Miami Herald references as the investor materials in the quote above.


Here are the documents and what I wrote on June 23rd.

“Most of these towers around the world have been built with government assistance,” Mayor Carlos Gimenez Berkowitz said. “I’m of the opinion that something this important should have some level of government participation.”

NOTE: I wrongly attributed the above quote to Mayor Carlos Gimenez. It was Jeffrey Berkowitz who said it, and while I incorrectly castigated Carlos Gimenez for his effort to give his pal Berkowitz $9 million, the fact that it was Berkowitz who made this claim is infinitely worse, given his prior claims about not wanting any public money.  If he was, and is of the opinion that this project is so important that it warrants public money, he should have been up front about that fact from the very beginning, and not hide behind the claims that he was not “looking for one nickel, not one penny of City of Miami support,” implying as so many believed, that he wasn’t looking for ANY public money.


Additionally this arsine logic is the kind of double speak that provides sleazy and corrupt politicians a rationale for throwing out objective requirements and substitute their “opinion” for how to spend public money on projects of dubious value.


For the taxpayers, the money would come from a General Obligation Bond issue intended to support the funding of public infrastructure projects, and would result in an increase in the property taxes that all homeowners in the county - including those in the City of Miami.


Infrastructure.  That’s what this money is supposedly going to be spent on, things like the the extension of Baywalk.  This is what Gimenez and Berkowitz now claim is what part of the money will go for.


Listen to what Berkowitz had to say about who would pay for the Baywalk on June 26th.

Again, it’s all a hustle.  I would not be surprised that if the real reason that Berkowitz now has such a desire to get his hands on this $9 million dollars is because it’s something that he can turn around and use as part of his sales pitch to all those potential Chinese investors he’s trying to get to give him $270 million dollars through his EB-5 program.


The competition for EB-5 money is fierce, and given the kinds of projects that are now out in the marketplace looking for investors, the ability of Berkowitz to announce that he got $9 million in taxpayer money might ease some of the glaring problems that I have previously written about his financial claims for this project.


WHAT JEFFREY BERKOWITZ’S FINANCIAL PROJECTIONS TELL US ABOUT IT’S POSSIBLE SUCCESS OR FAILURE


This is my 22 story about Skyrise Miami.  I’m proud of the information that I was able to uncover and the efforts I made to provide that information in a way that could be readily understood by anyone who took the time to read the stories.


The single most important story I wrote was PART XI, written on June 23rd. In that story, thanks to the financial breakdown that Coconut Grove architect Charles Corda put together, I was able to provide my readers with a copy of the Consolidated Cash Flow Projections that Berkowitz had provided the City of Miami, and explain in detail how those projections didn’t make financial sense.


Therefore, when I read in the Miami Herald this claim by Berkowitz, it struck me that he was carving out an escape path for himself should it turn out that the numbers that I and Corda claimed might lead to his downfall.