The prospect of 3,500 new jobs in Miami's long-neglected urban core and $316 million in new property taxes over the next three decades has city officials speechless. "What can I say?" shrugs Miami Mayor Manny Diaz. "An unbelievable deal for the city."

The deal is Midtown Miami, a $1-billion mixed-use development on 56 acres of barren land a few blocks north of downtown Miami. Groundbreaking took place last spring. The property, the old Buena Vista Rail Yard, borders the stylish Miami Design District to the north and the revitalized Biscayne Boulevard to the east. To the west, local artists are colonizing a scruffy zone of commercial and industrial space. Co-developer Daniel Pfeffer of New York calls it "the quintessential hole in the doughnut."

Pfeffer and developer Michael Samuel acquired the property in 2002 for $34.5 million, envisioning a "city within a city," where residents would live, work and play within a compact grid of condo clusters and towers, restaurants, shops, parks and office space. The project calls for apartments atop street-level cafes and work/live units for artists. A streetcar will ferry residents to the city's business district to the south.

Pfeffer and Samuel are focused on residential development. Their first tower's 338 units, due to open in 2006, sold out in one day. Prices range from $200,000 to $800,000, with some set aside for affordable housing. Cleveland-based Developers Diversified Realty is developing the commercial side, consisting of a 600,000-sq.-ft. shopping center to include the kind of big-box retailers that rarely enter gritty urban centers: Target, Circuit City and Linens 'n Things, to name a few.

Pfeffer credits Mayor Diaz for fast-tracking the deal, despite some skittishness from city commissioners. In the end, Diaz signed off on the largest public subsidy in Miami's history -- a $103-million tax-free bond to pay for roads, sewers and other infrastructure. The bond will be repaid with property taxes, but not until the project is complete, leaving the city largely risk-free. Other funds will be raised through the formation of the Midtown Miami Community Development District.

City and county officials praise the project as part of an aggressive plan to stimulate growth in Miami's poorest urban neighborhoods by repopulating the downtown area with professional-class workers eager to flee the road-clogged suburbs.