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99-23179 RESO RESOLUTION NO. 99-23179 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 Comras Company of Florida, Inc., and Lennar Partners, Inc. (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 of the Lease Agreement between the City of Miami Beach and 16th Street Partners LLC. to lease the site located at Washington A venue and 16th Street. PASSED and ADOPTED this 26thday of May, 1999. ~11 MAYOR ATTEST: \(cl,-,J' V Mdl'-/ CITY CLERK Ai'1'kQVt:D AS TO FORM & LANGUAGE t;, FOR EXECUTION 1ft~ .' ;" ~ SR/CMC/rar T:\AGENDA\1999\MA Y2699\REGUlAR\COMRAS,RES CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 http:\\ci.miami-beach.fl.us TO: FROM: SUBJECT: COMMISSION MEMORANDUM NO....3...8.1..::9'1 Mayor Neisen O. Kasdin nd Members of the City C DATE: May 26.1999 Sergio Rodriguez City Manager A RESOLU ION 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 submiiied 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 I: 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 AGENDAITEM~ DATE 5- 2.L.-Cfq May 26, /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 of the proposed developments. On February 3,1999, lhe 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 I 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 10'h 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 23'd, 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. ... ........ Approvat Timelines: .~. May 26, 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 Development Regulations: In accordance with the Florida Local Govemment Development Agreement Act. the City of Miami Beach and 16th Street Partners LLC are entering into a Development Agreement to address, among other things: May 26. 1999 Commission Memorandum Page 3 . 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 Devetopment 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 ofthe 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 als1l-bbt'liin additional monthly payments based on gross revenues (profit sharing) generatedtiy 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. APPRAISALS: The appraisals of the Public-Private Parking projects were completed on March 19. 1999, by J. B. Alhale & Associates Inc., and are based on the highest and best use of the property as of March 15. 1999. May 26, /999 Commission Memorandum Page 4 Site 1: Michigan Site 2: Site 3: Site 4: Washington & 17" St. Lenox & 17'h St. Collins & 10" SI. & 16" 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 I, 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%-Lennar Partners, Inc. .. --.... Project Description: .~ 604 space garage 43,424+ sfretail 111.975 sf office Project Cost: $32,424,507 Funded Equity: $10,555,389 Lease Term: 50 years with 2. 20-year extension options Fee upon Execution: $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.) May 26, /999 Commission Memorandum Page 5 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) .. . ....... ~" Re-appraisals: Real Estate Taxes: "" 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. $17S,OOO/annually (This fee represents the City's projected loss ofrevenue on the site. We are requiring developers to compensate City for this loss during construction. or 2 years from possession date.) $250,000 for lease years 1-5 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 ofthe 10th lease year and every 5th lease year thereafter, based upon the lesser of 12% or the cumulative CPI over the previous 5 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 2.5% 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 15. 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. 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. 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. May 26. /999 Commission Memorandum Page 6 Parking Rates: Garage parking rates shall not be less than the City/Agency rales 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 ofthe 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. &ill 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,OOO/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 lea!;e ye'iir and is estimated to total $3.7 million over the 25 year term. ~. 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. .', .. . . May 26, 1999 Commission Memorandum Page 7 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 ofan estimated total project hard cost of$21,691,839. the estimated total initial tax bill will be $587,415. Ofthis 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 offee 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 I) Sale. Assi~ment. 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 D, S. Government; or genocide. violence. hatred or animosity toward persons based on race religion, creed. sexual orientation or national origin. " ,- -..--- 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 ofthe Code of the City of Miami Beach. SR/C~~Trar T:IAGBNDA\I999\MA Y2699\REGULAR\COMRAS:Z. WPD -, . ',. . , ' EXHIBIT 1 LINCOLN PLACE 16th Street and Washington A~enue WASHINGTON AVENUE I- w w a:: I- lI'I :J: I- -0 c < o a:: Z ...I o U z :J NOT INCLUDED NOT INCLUDED .. .~....-~. -,,', COLLINS AVE NlJE z -----, ---------- -Ill ,-,~ "- . , . DEVELOPMENT AGREEMENT between CITY OF MIAMI BEACH, FLORIDA ("Owner") and 16th STREET PARTNERS LLC ("Developer/Tenant") SUBMITTED UNDER SEPARATE COVER -_.:-._':--,-~ ~---~:'--"---:"'._~ . ......< '. " ." ". ". . "... " .. ~ .... . CITY OF MIAMI BEACH NOTICE OF INTENT TO CONSIDER DEVELOPMENT AGREEMENT AT PUBLIC HEARING NOTICE IS HEREBY GIVEN that the first of two public hearings will be held by the City Commission of the City of Miami Beach, Florida, on Wednesday, May 26,1999 at 2:30 'p.m., or as soon thereafter as possible, in the City Commission Chambers. Third Floor, City Hall, 1700 Convention Center brive. Miami Beach, Florida, to consider and enter into a proposed ground lease (the "Ground Lease"') and a development agreement (the "Development Agreement") both between 16th Street Partners, L.L.c. and the City of Miami Beach in accordance with the requirements of the Florida Local Government Development Agreement Act with respect to property located at the southwest corner of 16th Street and Washington Avenue. Miami Beach, Florida. The project includes a parking garage of approximately 195,000 square feet and approximately 604 spaces, an office building of approximately 110,000 square feet, and approximately 33,000 - 40.000 square feet of retail to be developed on the property at a maximum height of 100 feet. The Floor Area Ratio for the project is approximately 2.75. The foregoing information is provided pursuant to the requirements of Section 163.3225. Fla. Stat. Inquiries concerning the proposed Amendment to the Development Agreement should be directed to the Office of the City Clerk. (305) 673-7411. Copies of the proposed Amendment to the Development Agreement are available for inspection, and may be obtained pursuant to 9119.07, Fla. Stat.. during normal business hours in the Office of the City Clerk, City Hall, 1700 Convention Center Drive, Miami Beach. Florida. All persons are invited to appear at this meeting or be represented by an agent. or to express their views in writing addressed to the City of Miami Beach City Commission % the City Clerk. 1700 Convention Center Drive, First Floor. Miami Beach. Florida 33139. Pursuant to Section 286.0105, Fla. Stat.. the City hereby advises the public that: If a person decides to appeal any decision made by the City Commission with respect to any matter considered at this meeting or hearing, such person must insure that a verbatim record of the proceedings is made. which record includes the testimony and evidence upon which the appeal is to be based. This notice does not constitute consent by the City for the introduction or admission of otherwise inadmissible or irrelevant evidence. nor does it authorize challenges or appeals not otherwise allowed by law. In accordance with the Americans with Disabilities Act of 1990, all persons needing special accommodation to participate in this proceeding should contact the City Clerk's Office no later than four days prior to the proceeding, telephone (305) 673-7411 for assistance; if hearing impaired. telephone Florida Relay Service numbers (800) 955-8771 (TDD) or (800) 955-8770 (VOICE), for assistance. PLEASE PUBLISH IN LOCAL SECTION ON WEDNESDA Y MAY 19 DISPLAY AD. PLEASE PROVIDE PROOF.