95-21469 Reso RESOLUTION NO. 95 -21469
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA AUTHORIZING
THE ADMINISTRATION TO PROVIDE A LOAN TO THE
MIAMI BEACH REDEVELOPMENT AGENCY ( "AGENCY ")
PURSUANT TO THE ATTACHED PROMISSORY NOTE AND
RATIFYING THE ACTIONS OF THE AGENCY IN
AUTHORIZING THE CHAIRMAN AND SECRETARY TO
EXECUTE THE ATTACHED PROMISSORY NOTE,
CONCERNING A LOAN FROM THE CITY OF MIAMI BEACH,
FLORIDA TO THE AGENCY IN THE AMOUNT OF
$12,000,000.00 TO PAY CERTAIN EXPENSES TO BE
INCURRED BY THE AGENCY WITH RESPECT TO THE
ACQUISITION OF THE ROYAL PALM AND SHORECREST
HOTELS, WHICH ARE REDEVELOPMENT PROJECTS
WITHIN THE CITY LIMITS.
WHEREAS, in connection with the acquisition by the Miami Beach Redevelopment
Agency ( "Agency ") of certain property described as the Royal Palm and Shorecrest Hotels,
which are redevelopment projects within the geographic limits of the City of Miami Beach
(the "City "), the Agency may incur expenses for which the Agency requires the City to lend
the Agency funds ; and
WHEREAS, the Agency intends to repay this loan not later than January 18, 1996
as provided in the promissory note attached hereto as Exhibit "A."
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA that:
1. The Administration is authorized to lend the Agency up to $12,000,000.00
pursuant to the promissory note attached hereto as Exhibit "A;" in connection with a loan
from the City of Miami Beach to the Agency to pay certain expenses to be incurred by the
Agency with respect to the acquisition of the Royal Palm and Shorecrest Hotels, which are
redevelopment projects within the City limits; and
•
2. The actions of the Agency in authorizing the Chairman
g y g and Secretary to
execute the promissory note attached hereto as Exhibit "A" regarding a loan from the City
of Miami Beach to the Agency in the amount of $12,000,000.00 to pay certain expenses
to be incurred by the Agency with respect to the acquisition of the Royal Palm and
Shorecrest Hotels, which are redevelopment projects within the City limits, are ratified.
PASSED and ADOPTED THIS 18th diy of Januar \ 1995.
s f
MAY
ATTEST:
CITY CLERK FORM APPROVED
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LEGAL DEPT.
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Date l
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CITY OF MIAMI BEACH
(I:
CITY HALL 1700•CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673 -7010
FAX: (305) 673 -7782
COMMISSION MEMORANDUM NO. � , J
January 18, 1995
To: Mayor Seymour Gelber and
Members of the City Commission
From: Roger M. Carlton ,
City Manager
Subject: Resolution Authorizing the Loan of up to $12 Million from the City to the
Redevelopment Agency
Administrative Recommendation
The Administration recommends that the Mayor and City Commission approve this resolution
authorizing the loan of up to $12 million from the City to the Redevelopment Agency for the
acquisition of the Royal Palm and Shorecrest property.
Background
The Miami Beach Redevelopment Agency is currently in negotiations with Loews/Forest City Ratner
and the Sheraton/HCF Group for the construction of two hotels on the east side of Collins Avenue
between Fifteenth Street and Lincoln Road. The Agency has acquired the site for the Loews Hotel
and is beginning condemnation proceedings to acquire the site for the Sheraton Hotel. The funds to
acquire the Lows site were from the proceeds of the initial financing for the Redevelopment Agency
of $25 million in February, 1994.
Analysis
The City currently has $115 million in its cash management portfolio. This amount will decline to
AGENDA
ITEM 1� �-
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approximately $40 million in November of this year. Of that $40 million, $20 million will be from
operating funds and the other $20 will be from bond funds. The loan to the Redevelopment Agency
will be made from the operational funds of the City as the purpose of the loan will not be for a tax
exempt purpose and if tax exempt funds were used for the loan it would adversely affect the tax status
of the bonds.
This loan should be viewed as an interim financing to be repaid when the permanent financing is in
place at the conclusion of the negotiations e otiations for the h
p g e otels. At that time the amount of additional
financing that will be needed for the hotels will be known and the amount of this loan will be added
to that total and the entire amount of the permanent borrowing will be effected. The City could issue
another series of tax increment bonds for the funds for this loan; however, the issuance of multiple
series of bonds would cause the costs associated with those issuances to be substantially higher than
a single larger issuance.
As the purpose for the funds and the subsequent issuance of bonds will be on a taxable basis, the
interest costs to be incurred in this loan should also be based on a taxable rate. To the extent that the
Redevelopment Agency draws on this credit facility from the City, the interest rate will be at the
prime rate reset monthly until such time as the amount is repaid with the permanent financing. The
City is currently earning approximately 7% on its investments and the funds utilized by the
Redevelopment Agency will cause the City's investment income to be reduced by the interest it would
receive on those funds. By charging the Redevelopment Agency prime rate on those funds the City
will actually increase its investment by a marginal rate of 1.5% or up to $15,000 a month.
The source of the funds for this loan will be from the General Fund's unappropriated reserves and the
Self-Insurance Fund's reserve for future claims. The use of these funds by the Redevelopment Agency
should have no adverse impact on the operations of the City unless these is a major catastrophe such
as another Hurricane Andrew or if the City experiences major shock losses in its self - insurance
program. Barring such occurrences, the loan of these funds for a nine to twelve month period will not
be harmful to the City.
Conclusion
As these funds loaned to the Redevelopment Agency will allow the Agency to complete the
acquisition of the second hotel site and will be on an interim basis until negotiations are concluded
and permanent financing is accomplished and the City will earn an incremental increase in its income,
the loan should be approved.
RMC /RJN /cp
PROMISSORY NOTE
$12,000,000.00 MIAMI BEACH, FLORIDA
c,M ' , 1995
ti
FOR VALUE RECEIVED, the undersigned, the Miami Beach Redevelopment Agency, a
Florida municipal corporation ( "Maker "), promises to pay to the order of the City of Miami Beach,
a Florida municipal corporation ("Payee"), at its offices at 1700 Convention Center Drive, Miami
Beach, Florida or at such other address in the United States of America as may be specified in writing
from time to time by holder hereof, the principal sum of TWELVE MILLION AND NO/ 100
DOLLARS ($12,000,000.00) (the "Loan"), or such lesser principal amount as is outstanding, payable
together with interest thereon from the date hereof at the rate of PRIME per annum upon the unpaid
balance from time to time outstanding until maturity, same being payable, in lawful money of the
United States of America, as follows:
The entire principal balance of the Loan together with all accrued and
unpaid interest on the Loan shall be due and payable in full on January
18, 1996.
The rate of PRIME per annum, as referenced above, shall be adjusted each month and shall
be the PRIME rate as of the first business day of the month. The principal of this Note may be
prepaid in whole or in part at any time and from time to time without penalty or premium.
By virtue of this Note and subject to the conditions of this Note, Payee is creating a line of
credit in favor of Maker and Maker may draw upon this line of credit as often as it chooses as long
as the outstanding principal balance under this Note does not exceed Twelve Million and NO /100
Dollars ($12,000,000.00) at any given time.
If default is made under this Note which default continues for a period of thirty (30) days
following written notice to the Maker, then at the option of the holder hereof, the entire outstanding
principal sum, together with all accrued and unpaid interest shall become immediately due and
payable.
Presentment for payment, demand, notice of dishonor, rotest and notice of protest are hereby
p P Y
waived by all makers and endorsers hereof, together with all other requirements to hold each of them
liable as Makers and endorsers.
MIAMI BEACH REDE `1 OPMENT AGENCY,
a Fl • rida municipal corpora ' • n
BY: j
Se s r r Gelber, airman
.
ATTEST: /{
� / FORM APPR..QVED
REDEVELOP T AGENCY
GENER a C0ASEL
'chard Brown, Secretary
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