99-23208 RESO
RESOLUTION NO. 99-23208
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, APPROVING ON FIRST
READING, THE DEVELOPMENT AGREEMENT, IN
ACCORDANCE WITH THE REQUIREMENTS OF THE FLORIDA
LOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT,
BETWEEN THE CITY OF MIAMI BEACH AND 16TH STREET
PARTNERS LLC, FOR DEVELOPMENT OF THE SITE LOCATED
AT WASHINGTON AVENUE AND 16TH STREET, AND SETTING
THE SECOND PUBLIC HEARING FOR CONSIDERATION OF THE
DEVELOPMENT AGREEMENT ON JUNE 23, 1999, AND FURTHER
SETTING A PUBLIC HEARING, PURSUANT TO SECTION 82-36
THROUGH 82-40 OF THE CODE OF THE CITY MIAMI BEACH, ON
JUNE 23, 1999, FOR APPROVAL OF THE LEASE AGREEMENTS
BETWEEN THE CITY OF MIAMI BEACH AND 16TH STREET
PARTNERS LLC, TO LEASE THE SITE LOCATED AT
WASHINGTON AVENUE AND 16TH STREET.
WHEREAS, on January 5, 1998, pursuant to the authorization of the Mayor and City
Commission, the Administration issued a Request for Proposals for the development of public-
private parking facilities in the area south of Dade Boulevard (the "RFP"); and
WHEREAS, the City issued the RFP in order to solicit qualified development teams to bid
on certain publicly-owned sites identified in the RFP and/or to propose the development of parking
on privately owned property; and
WHEREAS, on April 6, 1998, the City received proposals from five (5) different
development teams for various sites throughout the South Beach area; and
WHEREAS, on June 30, 1998, an Evaluation Committee appointed by the City Manager
and approved by the Mayor and City Commission, heard presentations from five teams; and
WHEREAS, in accordance with the criteria identified in the RFP, the Evaluation Committee
ranked the proposals and provided their recommendations to the City Manager; and
WHEREAS, on July 15, 1998, the City Commission adopted Resolution No.98-22857,
authorizing the Administration to negotiate with a joint venture composed of entities owned by
Comras Company of Florida, Inc., and LNR Partners, Inc. (which joint venture is now known as 16th
Street Partners LLC), with regard to the site located at Washington Avenue and 16th Street in the
City.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby approve the Development Agreement on First reading for purposes of setting
a second public hearing on June 23, 1999 and further setting a public hearing, pursuant to Section
82-36 through 82-40 of the Code of the City Miami Beach, on June 23, 1999, for approval ofthe
Lease Agreement between the City of Miami Beach and 16th Street Partners LLC, to lease the site
located at Washington Avenue and 16th Street.
PASSED and ADOPTED this 9th day of June, 1999.
111
MAYOR
ATTEST:
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CITY CLERK
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
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CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
http:\\ci.miami-beach.f1.us
CITY OF MIAMI BEACH
TO:
FROM:
SUBJECT:
COMMISSION MEMORANDUM NO. L(-?.~ -~
Mayor Neisen O. Kasdin and
Members of the City Co ission
DATE: June 9, 1999
Sergio Rodriguez
City Manager
A RESOLU ON OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING ON FIRST READING,
THE DEVELOPMENT AGREEMENT, IN ACCORDANCE WITH THE
REQUIREMENTS OF THE FLORIDA LOCAL GOVERNMENT
DEVELOPMENT AGREEMENT ACT, BETWEEN THE CITY OF MIAMI
BEACH AND 16TH STREET PARTNERS LLC, FOR DEVELOPMENT OF
THE SITE LOCATED AT WASHINGTON AVENUE AND 16TH STREET,
AND SETTING THE SECOND PUBLIC HEARING FOR CONSIDERATION
OF THE DEVELOPMENT AGREEMENT ON JUNE 23, 1999, AND
PURSUANT TO SECTION 82-36 THROUGH 82-40 OF THE CODE OF THE
CITY OF MIAMI BEACH, ON JUNE 23, 1999, FOR APPROVAL OF THE
LEASE AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND 16TH
STREET PARTNERS LLC, TO LEASE THE SITE LOCATED AT
WASHINGTON AVENUE AND 16TH STREET.
RECOMMENDATION:
Approve the Development Agreement on first reading for purposes of setting a second public
hearing on June 23, 1999.
BACKGROUND:
On January 5, 1998, the City of Miami Beach issued RFP 20-97/98, seeking proposals for the
development of Public-Private Parking facilities. On April 6, 1998, proposals from five (5) different
development teams were submitted and evaluated by an Evaluation Committee. On July 15, 1998,
the City Commission authorized negotiations commence with four (4) of the proposed development
projects as follows:
Site 1: Municipal Parking Systems
Site 2: Municipal Parking Systems
Site 3: Park One, Inc.
Site 4: Lincoln Place
-Michigan and 17th Street
-Lenox Avenue and 17th Street
-Collins Avenue and 10th Street
-Washington Avenue and 16th Street
AGENDA ITEM
~'A
~-9-99
DATE
June 9, J 999
Commission Memorandum
Page 2
On September 10, 1998, the City issued RFP 111-97/98, to evaluate the four (4) municipal surface
parking lots proposed for the development of Public-Private Parking facilities. On September 23,
1998, the City Commission authorized the Administration to contract with HNTB to conduct such
an evaluation ofthe proposed developments. On February 3, 1999, the City Commission referred
Phase I ofHNTB's report and recommendations, regarding the proposed Public-Private Development
Proposals, to the Finance and Citywide Projects Committee, which met on February 25, 1999.
On March 3, 1999, the City Commission accepted the Finance and Citywide Projects Committee's
report to phase the development projects and directed the Administration to begin negotiations for
Site 1 and Site 4 and to begin discussions with Site 3 to try to work out the differences and allow for
possible agreement on terms that can be presented back to the Committee. On April 14, 1999, the
City Commission directed the Administration to negotiate with Park One for the 10th Street Public-
Parking Garage site while stating that the City was not waiving its rights to proceed on its own,
should the negotiations be unsuccessful.
To facilitate the negotiations, the City Attorney engaged the firm of Bloom & Minsker to assist and
draft the attached Ground Lease Agreement and Development Agreement.
Pursuant to the provisions of City Ordinance 92-2783 (the "Shapiro Ordinance"), the lease of any
City-owned property for a period of five years or more, including option periods, is subject to the
following conditions:
· a Planning Department analysis
· a public hearing to obtain citizen input
· an advertised public bidding process
· an independent appraisal to determine the fair market or rental value of the property
Said Ordinance further provides that except for the public hearing and the Planning Department
analysis, the above referenced conditions may be waived by a 5/7ths vote of the City Commission
upon a finding that the public interest would be served by waiving such conditions. A public hearing
will be held on June 23rd, 1999, and the Planning Department analysis of the proposed Lease
Agreement will be included for City Commission consideration on said date; therefore no waivers
are requested at this time.
Approval Timelines:
On May 26, 1999, the City Commission held a public hearing and approved the Development
Agreement on first reading for both Site 1 and Site 4. Due to an error in the public notice for the
hearing on Site 4, the City Commission will re-consider approval of the Development Agreement
on first reading again on June 9, 1999, to ensure all technical requirements are met.
June 9, 1999
June 22, 1999
June 23, 1999
-Approval of Development Agreement on First Reading
-Review by Planning Board
-Approval of Development Agreement and Lease Agreement
June 9, 1999
Commission Memorandum
Page 3
Development Re~ulations:
In accordance with the Florida Local Government Development Agreement Act, the City of Miami
Beach and 16th Street Partners LLC are entering into a Development Agreement to address, among
other things:
· the proposed development at the site
· the development regulations applicable to the site
· improvements to be constructed by the developer (tenant)
· the timeframe by which the developer (tenant) shall obtain all building permits and complete
construction, subject to unavoidable delays.
The City Commission must hold two public hearings to enter into a Development Agreement. This
resolution will approve the Development Agreement on first hearing and will set the second public
hearing on June 23, 1999.
The subject City land is presently zoned Government Use (GU). The proposed public-private
developments represent private or joint government/private uses in the GU district. Pursuant to
Section 142-423 of the City Code, any such use requires review by the Planning Board prior to
approval by the City Commission. On June 22, 1999, the developers will present their proposed
development projects to the Planning Board, outlining the uses and setting forth the applicable
development regulations.
Pursuant to Section 142-425 of the City Code, the City Commission must confirm the development
regulations that apply as a result of such proposed private or joint government/private use to be the
average of the requirements in the surrounding districts, as determined by the Planning and Zoning
Director. The Planning and Zoning Director has determined that the development regulations for
CD-3 will apply to this site and said development regulation is confirmed in the Development
Agreement.
CONSULTANT RECOMMENDATIONS:
HNTB evaluated the proposals and recommended that the City should not sell its property to the
developers at any of the sites but should instead negotiate leases wherein:
· the guaranteed lease payments should be in the neighborhood of 10% of the market value of
the City owned land based on the ultimate zoning of the property.
the term of the land leases should be in the average of 40 to 45 years in order to allow the
developer to achieve a reasonable profit and the City retain control of its property.
the City should also obtain additional monthly payments based on gross revenues (profit
sharing) generated by the overall development.
· require the developer at each site to pay the City a lump sum amount for the estimated or
actual losses in parking revenue during the time the site is inoperable for parking.
· require the developer to purchase (as opposed to leasing air rights at) the two parcels under
private ownership prior to commencing with the development and then have the developer
lease the retail space to the current tenants.
June 9, 1999
Commission Memorandum
Page 4
APPRAISALS:
The appraisals of the Public-Private Parking projects were completed on March 19, 1999, by 1. B.
Alhale & Associates Inc., and are based on the highest and best use of the property as of March 15,
1999.
Site 1: Michigan Site 2: Site 3: Site 4: Washington
& 17th St. Lenox & 17th St. Collins & 10th St. & 16th St.
Appraised Value: $5,070,000 $2,800,000 $2,600,000 $3,900,000
Highest & Best
Use @ 3/15/99
Proposed Less than highest TBD Less than highest Site has limitations
Development: and best use and best use affecting ability to
develop the highest
and best use
without additional
land.
As reported on April 28, 1999, staff prepared a projected project cashflow analysis in order to
reconcile the fair market value and the annual rent payable to the City, based upon the proposed
value in use.
ANALYSIS:
Based on the consultant recommendations and based on the appraisals submitted, the Administration
has conducted negotiations for three (3) of the four (4) projects, as prioritized by the City
Commission. (Negotiations for Site 2 will commence upon completion of negotiations with the
proposers on Site 1, Site 3, and Site 4, if so directed by the City Commission.)
The recommended negotiated terms of the proposed project are delineated below.
TERMS:
Owner:
Lincoln Place. Washington & 16th St.
City of Miami Beach
Developer/Tenant:
16th Street Partners LLC
Principals:
50%- The Comras Company of Florida, Inc.
50%-LNR Partners, Inc.
Proj ect Description:
604 space garage
43,424+ sf retail
111,975 sf office
Proj ect Cost:
$32,424,507
June 9, 1999
Commission Memorandum
Page 5
Funded Equity:
Lease Term:
Fee upon Execution:
Possession Date:
Security Deposit:
CO Date:
Rent during Possession
Date thru Construction Period:
Base Rent at Delay Date:
Delay Date:
Base Rent Adjustments:
Percentage Rent:
(as a percentage of gross revenues)
$10,555,389
50 years with 2, 20-year extension options
$50,000 (This fee re-coups the City's out of pocket costs and
represents the up-front fee while the developer obtains
permits and approvals prior to possession date. City continues
to operate surface parking lots during this period.)
One year from execution
Upon possession, one year of base rent will be provided as
security deposit until CO date.
Earlier of date upon which TCO/CO is obtained or 2 years
from possession date.
$ 175,000/annually
(This fee represents the City's projected loss of revenue on
the site. Weare requiring developers to compensate City for
this loss during construction, or 2 years from possession date.)
$250,000 for lease years I-S increasing to $300,000 for lease
years 6-10.
Earlier of CO Date or 2 years from possession date, not
subject to unavoidable delays.
Base rent will be adjusted at the end of the 10th lease year and
every Sth lease year thereafter, based upon the lesser of 12%
or the cumulative CPI over the previous S year period.
At the earlier of (i) a sale of the project, or (ii) beginning in
Year 9, and every Lease Year thereafter, percentage rent of
2.S% of gross revenues will be calculated in addition to base
rent. Only in Lease Year 9, percentage rent will be payable if
the Developer has achieved its cumulative return on equity
(language to be drafted in the Lease Agreement) and, if
not, such amount of percentage rent will be payable, in equal
installments over five years, in Lease Years 11 through Lease
Year IS. Beginning in Year 10, and every year thereafter
percentage rent will be due and payable at the end of each
year (i.e. 2.5% of gross revenues) payable in the first month
of 11 th Lease Year and every year thereafter.
June 9, 1999
Commission Memorandum
Page 6
Re-appraisals:
If developer exercises extension options, the land will be re-
appraised, based upon the terms set forth in the Lease
Agreement, to determine the new base rent based upon the
value in use in the 49th year and 69th year. The Base Rent will
never be less than the prior year's base rent.
Real Estate Taxes:
Included and defined as Additional Rent in the event taxes are
abated, waived or exempted. If taxes are reduced as a result
of decline in property values in the area, this provision will
not apply.
Parking Rates:
Garage parking rates shall not be less than the City/Agency
rates or more than the highest garage parking rates charged in
Miami-Dade County.
Subordination:
City agrees to subordinate percentage rent to debt service
payments on first mortgage, but not base rent.
Sale/Refinancing:
Developer has the right to sell project, subject to certain
criteria (i.e. purchaser must have a minimum of $20 million
in equity, track record, no litigation with City, etc.).
Right of First Refusal:
City/Developer has the right of first refusal to purchase
other's interest in the Project.
Environmental Matters:
Property is leased "as is" and developer is responsible for
remediation
Financial Return to the City:
The financial return to the City consists of rent (base rent, percentage rent and additional rent), real
estate taxes (the property is currently tax exempt) and additional private land that will revert to the
City at the termination of the lease. Additionally, the project will provide approximately 180 net
new parking spaces in the area and will provide new Class "A" office space, for which there is a
demand, that will attract private corporations to anchor and revitalize the city center. Such
investment serves as a catalyst and perpetuates a strong economic impact for our community.
Rent
The negotiated terms represent a fair market return on the appraised value of the land in the form of
base rent and percentage rent. In addition, to the $50,000 fee upon execution of the Agreement and
the rent of$175,000/year during construction, base rent in the amount of$250,000/year will be due
and payable two years after possession. The base rent escalates to $300,000/year at the end of the
5th lease year, thereafter, escalations to base rent occur every 5 years. The total base rent payments
over the first 25 years, total $8.4 million. Percentage Rent commences at the earlier of a sale of the
project or during the 9th lease year and is estimated to total $3.7 million over the 25 year term.
June 9, 1999
Commission Memorandum
Page 7
The terms provide a return to the City that would enable the Developer to stabilize the project and
allow the City to begin to participate in a percentage (2.5%) of gross revenues, during the 9th Lease
Year. Based upon a 25 year operating proforma for the project, the aggregate City return over the
first 25 year period represents $12.5 million. The Developer's aggregate return during the same
period, totals $78 million. (Note: This return is calculated over 25 years and not over the 90 year
lease term.)
The Lease Agreement further provides that any abatement or waiver of real estate taxes will be paid
as "Additional Rent" to the City in the event that tax exemptions are granted for the land and
improvements. The land is currently tax exempt, but non-public uses on municipal land are subject
to ad valorem taxes pursuant to State Statute. This Agreement provides that any change in law
would require the Developer to pay an amount equal to the taxes in the form of Additional Rent.
Real Estate Taxes
Additionally, the City will benefit from the projected annual real estate taxes that will be paid to the
City. It is projected that of an estimated total project hard cost of $21,691,839, the estimated total
initial tax bill will be $587,415. Of this amount, $162,667 will represent the City's annual tax share
and $124,117 will represent the County's annual increment payable to the Redevelopment Trust
Fund, as a result of the property's location in the City Center Redevelopment District. In FY 2023
the City will no longer benefit from the County increment due to the expiration of the term of the
Redevelopment District. Tax payments to the City over the first 25 year period are estimated to total
$7.5 million, inclusive of the County increment.
Land Contribution
The Developers are also contributing approximately 30,000 sf of additional land to the aggregate
project of which 10,000 sf (Resnick Site) consists of air rights and 20,000 sf of fee simple interest
in land (Fedco Site and back of Resnick Site). This land will be deeded to the City upon possession
date and will become part of the premises that revert to the City upon termination of the Lease
Agreement. (See Exhibit 1)
Sale. Assignment. Transfer & Subletting
The Lease Agreement provides that City consent will be required in the event of a sale, assignment,
transfer or sublease to a "Permitted Buyer," if the Permitted Buyer does not meet certain criteria.
The Permitted Buyer is a real estate investor, pension fund or developer and the criteria set forth in
the Lease Agreement consists of the following:
· Must meet minimum equity requirement of $20 million
· Must not be owned by a foreign instrumentality
. Has not been in litigation with the City over the past 7 years
. Cannot be owned by an individual who has been convicted or is under indictment for
felonies
. Has not filed for bankruptcy during the past 7 years
· Must have a minimum of 5 years operating history
· Must not be an advocate or have as its stated purpose: resistance against the U. S.LGovernment; or genocide, violence, hatred or animosity toward persons based on
race religion, creed, sexual orientation or national origin.
June 9, 1999
Commission Memorandum
Page 8
RECOMMENDATION:
It has been determined that the development proposals presented herein require Planning Board
review prior to final City Commission approval. As a result, the second hearing of the Development
Agreement and the public hearing required for the Lease Agreement should be set for June 23, 1999.
Therefore, it is recommended that the Mayor and City Commission approve the Development
Agreement on first reading for purposes of setting a second public hearing on June 23, 1999, and to
consider approval of the Lease Agreement pursuant to the requirements of Section 82-36 through
82-40 of the Code ofthe City of Miami Beach.
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