2004-25751 Reso
RESOLUTION NO. 2004-25751
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, SETTING THE FIRST
PUBLIC HEARING, IN ACCORDANCE WITH THE REQUIREMENTS
OF SECTIONS 163.3220 -163.3243, FLORIDA STATUTES, ALSO
REFERRED TO AS THE FLORIDA LOCAL GOVERNMENT
DEVELOPMENT AGREEMENT ACT, ON WEDNESDAY, JANUARY
12,2005, TO CONSIDER APPROVING, ON FIRST READING, A
PROPOSED DEVELOPMENT AGREEMENT BETWEEN THE CITY
OF MIAMI BEACH AND AR&J SOBE, LLC (a1k1a
POT AMKIN/BERKOWITZ) FOR THE DEVELOPMENT OF THE
PROJECT, PRESENTLY REFERRED TO AS "5TH AND ALTON",
CONTAINING APPROXIMATELY 179,000 SQUARE FEET OF
RETAIL AREA AND A SUPERMARKET; AN APPROXIMATE 1070
SPACE PARKING GARAGE; PARK-AND-RIDE TRANSIT FACILITY,
INCLUDING AN INTERMODAUTRANSPORTATION COMPONENT,
AND SURROUNDING STREETSCAPE AND PUBLIC
INFRASTRUCTURE TO SERVE THE PROJECT, BOUNDED BY
LENOX AVENUE ON EAST, ALTON ROAD ON WEST, 6th STREET
ON NORTH AND 5th STREET ON THE SOUTH, IN MIAMI BEACH.
WHEREAS, on June 7, 2000, the Mayor and City Commission adopted Resolution
No. 2000-23963, designating the area bounded by 6th Street to the North, 5th Street to the
South, Alton Road to the West and Lenox Avenue to the East, as a Brownfield area to
promote the environmental restoration and economic redevelopment of the area; and
WHEREAS, since July 2002, the Administration has been meeting with
representatives of the site generally located on 5th Street and Alton Road, owned by the
Potamkin family, to address a joint development opportunity and to review a preliminary
,site plan for a five (5) level mixed-use retail complex, including over 900 parking spaces
and a supermarket (the Project); and
WHEREAS, in accordance with the City Commission's directive and the
community's identified needs, the City's interest in the Project's development was primarily
focused on achieving the public benefit of locating a supermarket, exploring transit and
excess parking opportunities, and developing a gateway project at one of the City's main
arterial entryways; and
WHEREAS, over the past two (2) years, the Project has been reviewed on several
occasions by various City Committees including Finance & Citywide Projects Committee,
Transportation and Parking Committee, Design Review Board and Historic Preservation
Board; and
WHEREAS, with the recommendations from these meetings, the parties have
reached agreement on a majority of the substantive terms and conditions that would
govern the City's joint participation, including the identification of Federal Transit
Administration (FTA) funding, as the primary source forthe City's capital contribution to the
project; and
WHEREAS, on April 5, 2004, the Developer and its Project team and City staff met
with the FTA in Atlanta to review FTA funding requirements; the FTA expressed favorable
comments in its initial review of the Project and indicated the City would need to place
emphasis on the transit elements of the Project, focusing on their location, cost and use,
and transit user profiles to determine the Project's eligibility for FT A funding; and
WHEREAS, in addition, as reported in May 2005 to the City Commission, the City
and Developer have continued to address other issues including: Floor Area Ratio (FAR),
Alley Vacation, Park and Ride Transit Facility components, Art in Public Places, Planning
Board - Conditional Use, FT A funding eligibility and rising construction costs; and
WHEREAS, as part of the ongoing negotiations, many areas of uncertainty
continued to arise, affecting the ongoing Project negotiations; namely: (1) the FT A
requirements and pending approval by FT A, and (2) the rising cost of construction, and its
impact on the City's contribution to the Project; and
WHEREAS, these issues were discussed by the Finance Committee on October 26,
2004, and resolved as set forth below:
. FT A: Since the outcome of the FT A funding eligibility will not be confirmed until
sometime in the future, the Developer is facing timing constraints to determine
whether or not to proceed with the City, or independently, in the proposed Project.
The Finance Committee recommended the City would commit to proceed with the
Project irrespective of FTA funding eligibility. In other words, if FTA deems the
project is not wholly or in part eligible, the City will be committing non FT A funding,
preferably South Pointe RDA funds, in order to guarantee the City's participation in
the Project from the onset;
. Construction Cost Estimates: As to the rising cost of construction, on August 25,
2004 and September 14, 2004, the Developer submitted a take-off analysis of the
estimated construction cost of the parking component of the proposed Project,
which was prepared by the Developer's consultant Moss and Associates. The
Developer also conducted an area analysis and calculated a percentage cost per
square foot, which yielded a higher value for the garage. The Developer's analysis
reflected a revised construction cost estimate of $20,741/per space (based on
percentage allocation) and $18,025/per space based on the Moss Take-off analysis;
The City had previously negotiated a $14,500/per space cost contribution to the
project, which represented a $7,250,000 capital contribution based on 500 spaces.
The new cost estimates submitted by the Developer represent an over 24-43%
increase in the City anticipated contribution to the project;
The City engaged URS to review and perform an independent analysis of the Moss
and Associates Take-off analysis submitted by the Developer and of the
construction costs submitted. As a result, URS submitted revised construction cost
estimates and reallocations, as deemed necessary, and URS determined the per
space cost, without any alteration to the proposed project design, would be
approximately $16,262/per space; and
WHEREAS, the Finance Committee discussed the reality of rising construction costs
and felt it was appropriate to modify the City's capital cost contribution accordingly, due to
the Developer's guarantee to assume any construction cost overruns; and
WHEREAS, the rise in costs is mitigated by the Developer's guarantee to assume
the construction risk associated with any future cost increases or construction change
orders not dictated by the City and/or any FTA requirement; and
WHEREAS, based on the revised construction cost estimates and Developer
guarantee, the Finance Committee recommended committing to the revised City capital
contribution to the project of $9,500,000 as cited above; and
WHEREAS, accordingly, the Administration would recommend that the Mayor and
City Commission set the public hearing to consider the aforestated Development
Agreement, on First Reading.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the First Public Hearing
be set, in accordance with the requirements of Sections 163.3220 - 163.3243, Florida
Statutes, also referred to as the Florida Local Government Development Agreement Act,
on Wednesday, January 12, 2005, to be held in the City Commission Chambers located at
1700 Convention Center Drive, Third Floor, Miami Beach, FL 33139, to consider approving,
on First Reading, a proposed Development Agreement between the City of Miami Beach
and AR&J Sobe, LLC (A/K/A Potamkin/Berkowitz) for the Development of the Project,
presently referred to as "5th and Alton", containing approximately 179,000 square feet of
retail area and a supermarket; an approximate 1070 space parking garage; park-and-ride
transit facility, including an intermodal/transportation component, and surrounding
streetscape and public infrastructure to serve the project, bounded by Lenox Avenue on
East, Alton Road on West, 6th Street on North and 5th Street on the South, in Miami
Beach.
PASSED AND ADOPTED this 8th day of December, 2004.
~d PtU~
CITY CLERK
ATTEST:
JMG/CMC/rar
T:\AGENDA\2004\DecOB04\Regular\Potamkin.RES.doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
1Jc~ Ll.~&t~
CITY OF MIAM1 BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
Set the First Public Hearing, in accordance with the requirements of Sections 163.3220 - 163.3243, Florida
Statutes, also referred to as the Florida Local Government Development Agreement Act, on Wednesday,
January 12, 2005, to consider approving, on First Reading, a proposed Development Agreement between
the City of Miami Beach and AR&J Sobe, LLC (AlKJA Potamkin/Berkowitz) for the Development of the
Project, presently referred to as "5th and Alton", containing approximately 179,000 square feet of retail area
and a supermarket and an approximate 1070 space parking garage and park-n-ride transit facility,
including an intermodal/transportation component, an integrated parking garage, vertical transportation,
ramps, ventilation, etc., and surrounding streetscape and public infrastructure to serve the project, bounded
by Lenox Avenue on East, Alton Road on West, 6th Street on North and 5th Street on the South, in Miami
Beach.
Issue:
Shall the Mayor and City Commission set the First Public Hearing?
Item SummarY/Recommendation:
Concurrent with the negotiations, the Potamkin/Berkowitz group has received approval to implement a
signage overlay district to permit effective signage for the Supermarket and for the retail tenants within the
Project and the project has also received DRB/HP approval.
While support for the Project is generally widespread, at both the Transportation and Parking and Finance
and Citywide Projects Committee, the public raised some concerns on the economic viability of the parking
operation and ingress/egress challenges to the site. The parties will continue to seek further community
outreach with area businesses/residents as part of the FTA Environmental Assessment process.
Concurrent actions required to finalize a Development Agreement include negotiation of a:
. Declaration of Restrictions and Reciprocal Easement Agreement ("DR&REA") that will govern the parties
and the operation and management of the public garage within the project.
. Application for Vacation of Alley.
Subject to these conditions, the Administration recommends setting the Public Hearing to approve the
Development Agreement on First Reading on January 12, 2005. The Second Public Hearing will include
the Citv Commission's consideration of the DR&REA and Vacation of AIIev.
Advisorv Board Recommendation:
Finance & Citywide Proiects Committee - December 22, 2003 and October 26, 2004
Transportation and Parkino Committee - February 2, 2004 and March 1, 2004
Desion Review Board & Historic Preservation Board - August 17, 2004
Financial Information:
Source of
Funds:
D
Finance Dept.
T:\AGENDA\2004\DecOB04\RegulanPolamkin.SUM.doc
Manager
AGENDA ITEM
C7L
/2.-1-oy
DATE
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.mlamibeachfl.gov
Mayor David Dermer and Date: December 8. 2004
Members of the City Commission
Jorge M. GOnZalezJ~
City Manager . U
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, SETTING THE FIRST PUBLIC HEARING, IN
ACCORDANCE WITH THE REQUIREMENTS OF SECTIONS 163.3220-
163.3243, FLORIDA STATUTES, ALSO REFERRED TO AS THE FLORIDA
LOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT, ON
WEDNESDAY, JANUARY 12, 2005, TO CONSIDER APPROVING, ON
FIRST READING, A PROPOSED DEVELOPMENT AGREEMENT
BETWEEN THE CITY OF MIAMI BEACH AND AR&J SOBE, LLC (a1k1a
POT AMKIN/BERKOWITZ) FOR THE DEVELOPMENT OF THE PROJECT,
PRESENTLY REFERRED TO AS "5TH AND ALTON", CONTAINING
APPROXIMATELY 179,000 SQUARE FEET OF RETAIL AREA AND A
SUPERMARKET AND AN APPROXIMATE 1070 SPACE PARKING
GARAGE AND PARK-N-RIDE TRANSIT FACILITY, INCLUDING AN
INTERMODAU TRANSPORTATION COMPONENT, AN INTEGRATED
PARKING GARAGE, VERTICAL TRANSPORTATION, RAMPS,
VENTILATION, ETC., AND SURROUNDING STREETSCAPE AND PUBLIC
INFRASTRUCTURE TO SERVE THE PROJECT, BOUNDED BY LENOX
AVENUE ON EAST, ALTON ROAD ON WEST, 6th STREET ON NORTH
AND 5th STREET ON THE SOUTH, IN MIAMI BEACH.
RECOMMENDATION
To:
From:
Subject:
COMMISSION MEMORANDUM
Adopt the Resolution.
ANALYSIS
On June 7, 2000, the Mayor and City Commission adopted Resolution No. 2000-23963
designating the area bounded by 6th Street to the North, 5th Street to the South, Alton Road
to the West and Lenox Avenue to the East, as a Brownfield area to promote the
environmental restoration and economic redevelopment of the area.
Since July 2002, the Administration has been meeting with representatives of the site
generally located on 5th Street and Alton Road, owned by the Potamkin family, to address a
joint development opportunity and to review a preliminary site plan for a five (5) level
mixed-use retail complex, including over 900 parking spaces and a supermarket. In
accordance with the City Commission's directive and the community's identified needs, the
City's interest in the project development was primarily focused on achieving the public
benefit of locating a supermarket, exploring transit and excess parking opportunities, and
developing a gateway project at one of the City's main arterial entryways.
December 8, 2004
City Commission Memorandum
Potamkin/Berkowitz - Setting Public Hearing
Page 2 of 4
Over the past two (2) years, the proposed project has been reviewed on several occasions
by various City Committees including Finance & Citywide Projects Committee,
Transportation and Parking Committee, Design Review Board and Historic Preservation
Board. With the recommendations from these meetings, the parties have reached
agreement on a majority of the substantive terms and conditions that would govern the
City's joint participation, including the identification of Federal Transit Administration (FT A)
funding, as the primary source, for the City's capital contribution to the project.
On April 5, 2004, the Developer and its project team and City staff met with the FT A in
Atlanta to review FTA funding requirements. The FTA expressed favorable comments in
its initial review of the project and indicated the City would need to place emphasis on the
transit elements of the project, focusing on their location, cost and use, and transit user
profiles to determine the project's eligibility for FTA funding.
In addition, as reported in May 2004 to the City Commission, the City and Developer have
continued to address other issues including: Floor Area Ratio (FAR), Alley Vacation, Park
and Ride Transit Facility components, Art in Public Places, Planning Board - Conditional
Use, FTA funding eligibility and rising construction costs.
As part of the ongoing negotiations, many areas of uncertainty continued to arise affecting
the success of the negotiations; namely, (1) the FT A requirements and pending approval
by FTA and (2) the rising cost of construction, and its impact on the City's contribution to
the project. These issues were discussed by the Finance Committee on October 26, 2004
and resolved as set forth below:
1) FTA
To address the FTA issues, it was deemed to be in the parties' mutual best interest to
commence and conduct the required FT A Environmental Assessment (EA) and evaluate
the ability to apply for additional funding through FTA's competitive grant application
process. Thereby, the City would proceed in obtaining approval and assurance that the
project qualifies as an FT A eligible funded project and seek to maximize the grant funding
available for the City's improvements, since FT A regulations will apply to the public portion
of the project, at a minimum.
On May 24, 2004 the City Mayor and Commission passed Resolution No. 2004-25574 to
establish an RFQ for the professional architectural and engineering services related to the
preparation of the Environmental Assessment report, as required by the Federal Transit
Administration.
RFQ 38-03/04 was issued on July 30,2004. A Pre-RFQ Submission Conference was held
on August 17, 2004 and the Evaluation Committee will be meeting October 26, 2004.
Since the outcome of the FT A funding eligibility will not be confirmed until sometime in the
future, the Developer is facing timing constraints to determine whether or not to proceed
with the City, or independently, in the proposed joint venture. The Finance Committee
recommended the City would commit to proceed with the project irrespective of FT A
funding eligibility. In other words, if FTA deems the project is not wholly or in part eligible,
December 8, 2004
City Commission Memorandum
Potamkin/Berkowitz - Setting Public Hearing
Page 3 of 4
the City will be committing non FT A funding, preferably South Pointe RDA funds, in order
to guarantee the City's participation in the project from the onset.
2) CONSTRUCTION COST ESTIMATES
As to the rising cost of construction, on August 25, 2004 and September 14, 2004, the
Developer submitted a take-off analysis of the estimated construction cost of the parking
component of the proposed project, which was prepared by the Developer's consultant
Moss and Associates. The Developer also conducted an area analysis and calculated a
percentage cost per square foot, which yielded a higher value for the garage. The
Developer's analysis reflected a revised construction cost estimate of $20,741 /per space
(based on percentage allocation) and $18,025/per space based on the Moss Take-off
analysis.
The City had previously negotiated a $14,500/per space cost contribution to the project,
which represented a $7,250,000 capital contribution based on 500 spaces, The new cost
estimates submitted by the Developer represent an over 24-43% increase in the City
anticipated contribution to the project.
As a result, these findings were reported informally to the Finance Committee on
September 15, 2004 and the Committee concurred with the Administration's
recommendation to engage the City's own consultant to review and analyze the newly
submitted construction costs estimates.
The City engaged URS to review and perform an independent analysis of the Moss and
Associates Take-off analysis and of the construction costs submitted. As a result, URS
submitted revised construction cost estimates and reallocations, as deemed necessary,
and URS determined the per space cost, without any alteration to the proposed project
design, would be approximately $16,262/per space.
On October 15, 2004, the City and the Developer met to review the revised construction
cost estimates and URS' findings. At this meeting, the parties agreed that based on URS'
revised estimate of $16,262/per space and the increased number of spaces in the project
(i.e. 1069 total spaces; City allocation is 50%, or 534 spaces), the City's capital contribution
to the project would be as follows:
Developer Request
$8,683,908
395,327
333,333
$9,412,568
$9,500,000
534 spaces @ $16,262/per space
Additional Transit Components
(elevator pit and shaft to Alton Road and Bus Stop)
Lost Value
(due to City requested set back on Alton representing loss of 1,000sf)
TOTAL
The Finance Committee discussed the reality of rising construction costs and felt it was
appropriate to modify the City's capital cost contribution accordingly, due to the
Developer's guarantee to assume any construction cost overruns. The rise in costs is
mitigated by the Developer's guarantee to assume the construction risk associated with
December 8, 2004
City Commission Memorandum
Potamkin/Berkowitz - Setting Public Hearing
Page 4 of 4
any future cost increases or construction change orders not dictated by the City and/or any
FT A requirement.
Based on the revised construction cost estimates and Developer guarantee, the Finance
Committee recommended committing to the revised City capital contribution to the project
of $9,500,000 as cited above.
Concurrent with the negotiations, the Potamkin/Berkowitz group has received approval to
implement a signage overlay district to permit effective signage for the Supermarket and for
the retail tenants within the Project and the project has also received DRB/HP approval.
While support for the Project is generally widespread, at both the Transportation and
Parking and Finance and Citywide Projects Committee, the public raised some concerns
on the economic viability of the parking operation and ingress/egress challenges to the site.
The parties will continue to seek further community outreach with area
businesses/residents as part of the FT A Environmental Assessment process.
Concurrent actions required to finalize a Development Agreement include negotiation of a:
. Declaration of Restrictions and Reciprocal Easement Agreement ("DR&REA") that
will govern the parties and the operation and management of the public garage
within the project.
. Application for Vacation of Alley.
Subject to these conditions, the Administration recommends setting the Public Hearing to
approve the Development Agreement on First Reading on January 12, 2005. The Second
Public Hearing will include the City Commission's consideration of the DR&REA and
Vacation of Alley.
JMG/CMC/rar
T:\AGENDA\2004\DecOB04\Regular\Potamkin.MEM.doc