2011-27622 Reso RESOLUTION NO. 2011 -27622
A RESOLUTION OF THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH,
FLORIDA, APPROVING AND AUTHORIZING THE
MAYOR AND CITY CLERK TO EXECUTE A SECOND
AMENDMENT TO THE AGREEMENT FOR SALE AND
.PURCHASE OF REAL PROPERTY, DATED APRIL 14,
2010, BETWEEN THE CITY AND AMERICAN RIVIERA
REAL ESTATE COMPANY (SELLER), FOR THE REAL
PROPERTY LOCATED AT 340 23 STREET, MIAMI
BEACH, FLORIDA; SAID AMENDMENT 1) REDUCING
THE PURCHASE PRICE BY $100,000; 2) PROVIDING
FOR AUTOMATIC TERMINATION OF THE
AGREEMENT IF CLOSING DOES NOT OCCUR BY
APRIL 21, 2011; AND 3) INCLUDING A FULL AND
UNCONDITIONAL RELEASE FROM LITIGATION BY
BOTH PARTIES.
WHEREAS, on April 14, 2010, the Mayor and City Commission approved
Resolution No. 2010 - 27377, approving an Agreement for Sale and Purchase of Real
Property (the Agreement) between the City (Buyer) and American Riviera Real Estate
Company (Seller), for the real property located at 340 23 Street, Miami Beach, Florida
(the Property), in the amount of $4,975,000 (Purchase Price), for the purpose of
constructing a public parking facility; and
WHEREAS, the City had a thirty (30) day Inspection Period to determine whether
to proceed with the purchase and, if the City elected to proceed, the Closing was to
occur ten (10) days after expiration of the Inspection Period, or May 24, 2010; and
WHEREAS, the City conducted a Phase 2 environmental assessment on the
Property, which identified environmental problems for which the City must pay
remediation costs estimated at $225,000 if the City purchases the Property; and
WHEREAS, on August 2, 2010, City and Seller entered into a First Amendment
to the Agreement, pursuant to which Seller was granted an extension of the title cure
period until August 20, 2010 (Extended Title Cure Date), and the Closing Date . was
extended to September 1, 2010; and
WHEREAS, the First Amendment further provided that if the title objections were
not cured by August 20, 2010, the City could elect either to (i) waive the title objections
and proceed to Closing, or (ii) terminate the Agreement; and
WHEREAS, Seller again failed to cure the title problems by the Extended Title
Cure Date (August 20, 2011); however, the City elected not to pursue termination of the
Agreement at that time; and .
WHEREAS, in order to obtain clear and marketable title to the Property, Seller
was required to file a suit to quiet title to eliminate any claims that might be made on the
Property; the title company also approved the form of the quiet title suit; and
WHEREAS, Seller has represented to the City that it expects to obtain a final
Summary Judgment on the suit to quiet title by mid - March, and expects to be in a
position to close by the end of March, after all appeal periods have expired; and
WHEREAS, City prepared a Second .Amendment to the Agreement, further
extending. of the title cure period and Closing Date, and providing for a $250,000
Purchase Price reduction; and
- WHEREAS, the Second Amendment was transmitted to Seller on August 25,
2010; with a cover e-mail stating that the City continued to reserve any and all rights
under the Agreement, including its right to terminate, if the Second Amendment was not
signed and returned promptly; and
WHEREAS, Seller refused to execute the Second Amendment, as .submitted by
the City; and
WHEREAS, a revised Second Amendment, which eliminated the Purchase Price
reduction but retained the provision that extended the title cure 'period to September 10,
2010, and the Closing Date to September 14, 2010, was transmitted to Seller on
September 2, 2010, but Seller again refused to sign the revised Second Amendment;
and
WHEREAS, in January 2011, the Administration was informed by attorneys
representing Everbank that Seller's leasehold interest in the Property was in foreclosure
by Everbank; and
WHEREAS, although the Purchase Price being paid by the City is sufficient for
the Seller to pay off the Everbank mortgage, the Seller is contesting the foreclosure and,
accordingly, is unwilling to pay the full amount demanded by Everbank to obtain a
Satisfaction or Release of Mortgage, further delaying closing on the Property; and
WHEREAS, on February 15, 2011, the Administration met with Seller to discuss
the status of the title issues; the pending foreclosure action; and to finalize a Second
Amendment; and
WHEREAS, on February 16, 2011, the City sent the Seller a revised Second
Amendment (which included the terms discussed at the 2/15/11 meeting), and requested
that Seller sign and return the document by close of business on Friday, February 18,
2011; and
WHEREAS, the terms of the revised Second Amendment included: a. Purchase
Price reduction of $250,000; a further extension of the title cure period to March 22,
2011; a Closing Date to occur on March 31, 2011; a provision requiring the Everbank
mortgage to be satisfied or released at Closing; and a general release (whether the
Closing occurs or not); and
WHEREAS, Seller executed the Second Amendment, but only after making
changes, which included: revising the Purchase Price reduction to only $75,000, and
removing the general release in case the Closing does not occur; and
WHEREAS, on February 23, 2011, the Administration informed Seller that its
changes to the Second Amendment were unacceptable, but that it would still be willing
,. to proceed with placing the Amendment on the March 9 City Commission Meeting
agenda, as originally drafted and proposed by the City on February 16th, except for the
City's concession to a Purchase Price reduction to $200,000; and
WHEREAS, on February 25, 2011, Seller informed the City that it would only
agree to a Purchase Price reduction of $100,000; and
WHEREAS, on March 2, 2011, the" Administration provided the Seller with
another opportunity to .execute the Second Amendment, requesting that Seller execute
the Amendment prior to close of business on March 4, 2011; and
WHEREAS, March 5, 2011, the City received an e-mail from Seller's counsel
stating that, notwithstanding its refusal to execute the Second Amendment (as presented
by the City): (1) it was still proceeding to resolve the outstanding title issues, via the suit
to quiet title, and (2) it was pursuing a settlement with Everbank; and
WHEREAS, on March 9, 2011, Seller offered a revised Second Amendment that:
(1) reduces the Purchase Price by $100,000, (2) automatically terminates the Agreement
if Closing does not take place by April 21, 2011, and (3) includes a full and unconditional
release from litigation by both parties; and
WHEREAS, the City Commission considered the proposed Second Amendment
at its March 9, 2011 meeting and approved same, subject to the conditions set forth in
this Resolution.
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 and authorize the attached Second Amendment to the
Agreement for Sale and Purchase of Real Property, Dated April 14, 2010, between the
City and American Riviera Real Estate Company, for the Real Property located at 340
23 Street, Miami Beach, Florida; said Amendment: (1) reducing the Purchase Price by
$100,000; (2) providing for automatic termination of the Agreement if Closing does not
take place by April 21, 2011; and (3) including a full and unconditional release from
litigation by both parties.
PASSED AND ADOPTED this 9th day of March, 2011.
ATTEST
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Rafael E. Granado ti Herrera Bower, Mayor
City Clerk �,.. ' Iy
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COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution terminating the Purchase and Sale Agreement Dated April 14, 2010 between the City
and American Riviera Real Estate, LLC., for the real property located at 340 23` Street, Miami Beach.
Key Intended Outcome Supported:
Improve Parking Availability
Supporting Data (Surveys, Environmental Scan, etc.): Only 21% of residents and 28% of
businesses rate the availability of parking in Miami Beach as being the right amount.
Issue:
Shall the Mayor and City Commission terminate the purchase and sale agreement to acquire 340 23`
Street, for the purpose of constructing a municipal garage in the Collins Park Neighborhood?
Item Summary /Recommendation:
This Purchase and Sale Agreement was approved by the Mayor and City Commission on
April 18, 2010, and the anticipated closing was set to occur on July 1, 2010. Through no fault
of the City, the closing has been continuously delayed, and issues have arisen that the
Administration was unaware 'of at the time the Agreement was approved, including the
inability of Seller to provide clear title and the pending Everbank foreclosure action.
The Administration has been patient and reasonable with the Seller throughout this process.
The City agreed to pay a significant premium for this Property in order to receive a clear title
with a fast closing. Due to the delays associated with this transaction the City was notable to
include this project in the sale of revenue bonds approved by the Mayor and Commission for
parking projects, and more importantly, the development of parking for this neighborhood is
again delayed.
Due to the complications associated with this transaction, the Administration recommends
that the Mayor and City Commission approve the Resolution; terminate the Purchase and
Sale Agreement between the City of Miami Beach and American Riviera Real Estate, LLC;
and authorize the City Manager and City Attorney to take any and all such actions, as
required, in order to effectuate this termination.
Advisory Board Recommendation:
Finance and Citywide Project Committee; March 25, 2010
Financial Information: Funds previously appropriated from:
Source of Amount Account
Funds: 1
2
3
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Kevin Crowder, City Manager's Office
Sign -Offs:
D artment Director Assista t ity Manager CA Manager
KC JGG JMG
MIAM111BEACH AGENDA ilTE.M R - 7 E
DATE
f
m MIAMI BEA
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
MEMO# COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: March 9, 2011
SUBJECT: A RESOLUTION OF THE MAYOR— ND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, TERMINATING THE AGREEMENT FOR
SALE AND PURCHASE OF REAL PROPERTY, DATED APRIL 14, 2010,
BETWEEN THE CITY (BUYER) AND AMERICAN RIVIERA REAL ESTATE'
COMPANY (SELLER), FOR THE REAL PROPERTY LOCATED AT 340 23
STREET, MIAMI BEACH, FLORIDA; AND FURTHER AUTHORIZING THE
CITY MANAGER AND CITY ATTORNEY TO TAKE ANY AND ALL
ACTION(S), AS REQUIRED, IN ORDER TO EFFECTUATE SAID
TERMINATION.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On April 14, 2010, the Mayor and City Commission approved Resolution" No. 2010 -
27377, approving an Agreement for Sale and Purchase of Real Property (the
Agreement) between the City (Buyer)) and American .Riviera Real Estate Company
(Seller), for the real property located at 340 23r Street, Miami Beach, Florida (the
Property), in the amount of $4,975,000 (Purchase Price) for the purpose of constructing
a public parking facility. The Purchase Price included a considerable premium based
upon the expectation that there would be a quick closing and seller would deliver
marketable and insurable title to the Property.
The Agreement was executed on April 14, 2010. Pursuant to the terms, the City had a
thirty (30) day Inspection Period to determine whether to proceed with the purchase. If
the City elected to proceed, the Closing was to occur ten (10) days after expiration of the
Inspection Period, or May 24, 2010.
Unfortunately, Seller did not have good, marketable and insurable title to the Property,
and the original title insurance commitment reflected numerous title problems. The City
sent a timely written objection to those problems, thereby allowing the Seller to delay the
Closing during a 90 day title cure period. Seller was unable to cure title during the title
cure period.
During this time, the City also conducted a Phase 2 environmental assessment on the
Property, which identified environmental problems for which (if closing occurs) the City
must pay remediation costs estimated at $225,000. Notwithstanding, the Agreement
Commission Memorandum
March 9, 2011
American Riviera Real Estate
Page 2
allows the City to terminate the Agreement if the City determines, in its sole opinion, that
the remediation costs are unusually expensive.
On August 2, 2010, City and Seller entered into a First Amendment to the Agreement
pursuant to which Seller was granted an extension of the title cure period until August
20,2 010 (Extended Title Cure Date), and the Closing Date was extended to September
1, 2010. The First Amendment further provided that if the title objections were not cured
by August 20, 2010, the City could elect either to (i) waive the title objections and
. ` proceed to Closing, or (ii) terminate the Agreement. The First Amendment also allowed
the City the continued right to terminate the Agreement, at any time prior to Closing, in
the event that the City determined, in its sole opinion, that the environmental remediation
costs on the Property were unusually expensive.
Seller again failed to cure the title problems by the Extended Title Cure Date (August 20,
2011). At that time, the Administration evaluated the various options that were available
to the City, including termination of the Agreement, but, in good faith to Seller, decided
not to pursue that option at that time. Notwithstanding the City's decision not to pursue
termination of the Agreement at that time, it consistently advised Seller, in writing, that its
election was in no way to be construed as a waiver of the City's right to terminate the
Agreement, or of any other right or remedy available to the City under the Agreement, as
a result of Seller's failure to perform.
The City then proceeded to prepare a Second Amendment to the Agreement. In
consideration for City's agreement to keep the transaction alive, and for a further
extension of the Title Cure Period and Closing Date, the terms of the Second
Amendment provided for a $250,000 Purchase Price reduction (approximately 5 %). The
City's reduction of the Purchase Price is reasonable considering that, pursuant to the
initial negotiations (and as an incentive for the City to enter into the Agreement with
Seller), the City agreed to pay a significant premium for this Property in order to receive
clear title with a quick Closing, which did not occur.
The Second Amendment was transmitted to Seller on August 25, 2010, with a cover e-
mail stating that the City continued to reserve any and all rights under the Agreement,
including its right to terminate, if the Second Amendment was not signed and returned
promptly.
The Seller did not want to reduce the Purchase Price and - therefore refused to execute
the Second Amendment. A revised Second Amendment, which eliminated the Purchase
Price reduction but retained the provision that extended the title cure period to a
specified outside date (September 10, 2010), and the Closing Date to September 14,
2010, was transmitted to Seller on September 2, 2010, but Seller still refused to sign the
revised Second Amendment. The reason for Seller's refusal to sign this time was that a
Second Amendment would not be necessary, since the Closing would occur by early
September 2010. The Closing did not occur at that time, and the Second Amendment
remained unexecuted by the Seller.
At this time, Seller has eliminated many of the title problems. The remaining problems
relate to the fact that certain parties in the chain of title have died (and, in turn, some of
their heirs have died). Accordingly, a quiet title suit was necessary to eliminate any
claims they might have to the Property. The title company has approved the form of the
Commission Memorandum
March 9, 2011
American Riviera Real Estate
Page 3
quiet title suit that names as defendants four individuals plus various "unknown heirs ".
All of the four individuals have been served with the complaint to .quiet title. The
unknown heirs were served by publication. As of this date, no answers have been filed
by any of the defendants. Seller has represented to the City that it expects to obtain a
final summary judgment by mid -March and expects to be in a position to close by the
end of March, after all appeal periods have expired.
In January 2011, the Administration was informed by attorneys representing Everbank
that Seller's leasehold interest in the Property was in foreclosure by Everbank. Although
the Purchase Price being paid by the City is sufficient for the Seller to pay off the
Everbank mortgage, the Seller is contesting the foreclosure and, accordingly, is unwilling
to pay the full amount demanded by Everbank to obtain a Satisfaction or Release of
Mortgage; further delaying closing on the Property.
On February 15, 2011, the Administration met with Seller to discuss the status of the title
issues; the pending foreclosure action; and to finalize a Second Amendment. Following
the meeting, on February 16, 2011, the City sent the Seller a revised Second
Amendment (which included the terms discussed at the meeting), and requested that
Seller sign and return the document by close of business Friday, February 18, 2011 (for
timely placement on the March 9 th City Commission Meeting agenda).
The terms of the revised Second Amendment included:
• a Purchase Price reduction of $250,000;
• a further extension of the Title Cure Period to March 22, 2011;
• Closing Date to occur on March 31, 2011;
• a provision requiring the Everbank mortgage to be satisfied or released at
Closing; and
• a general release whether the Closing occurs or not.
Seller executed the Second Amendment, but only after making significant changes,
which are not acceptable to the Administration and City Attorney's Office; including:
revising the Purchase Price reduction to only $75,000, and removing the general release
in case the Closing does not occur.
On February 23, 2011, the Administration informed Seller that its changes to the Second
Amendment were unacceptable, but that it would still be willing to proceed with placing
the Amendment on the March 9 th City Commission Meeting agenda, as originally drafted
and proposed by the City on February 16, except for the City's concession to a Purchase
Price reduction to $200,000 (as opposed to the originally proposed $250,000). On
February 25, 2011, Seller informed the City that he would only agree to a final Purchase
Price reduction of $100,000. Notwithstanding, the City's other concerns have still not
been addressed — i.e. the Seller still has not agreed to provide a general release if
Closing does not occur; has not committed to obtain a satisfaction or release of the
Everbank mortgage; and the Seller's proposed Purchase Price reduction came with
conditions attached to it. In summary, the Second Amendment, as revised by Seller, is
unacceptable to the City Administration and City Attorney.
On March 2, 2011, the Administration provided the Seller with another opportunity to
execute the Second Amendment, requesting that Seller execute the Amendment prior to
close of business on March 4, 2011. The Administration informed the Seller that failure
1
Commission Memorandum
March 9, 2011
American Riviera Real Estate
Page 4
to execute the Second Amendment would result in the Agreement being placed on the
March 9 City Commission Agenda with a recommendation to terminate.
On March 5, 2011, the City received an e-mail from Seller's counsel stating that,
notwithstanding its refusal to execute the Second Amendment (as presented by the
City): (1) it is still proceeding to resolve the suit to quiet title, and (2) is pursuing a
settlement with Everbank. Seller has proposed the following alternative: No Purchase
Price reduction, but a Closing Date of March 31, 2011. (Note: It is important to note that,
in previous discussions, the Seller had agreed to a Purchase Price reduction of
$100,000).
ALTERNATIVES
The transaction could still close with the following terms: (1) a Purchase Price reduction
of $100,000 (as previously proffered by Seller); (2) automatic termination of the
Agreement if Closing does not occur on March 31, 2011; and (3) a general release
whether or not Closing occurs.
If the City Commission terminates the Agreement, the following alternatives could be
pursued:
1. The Administration and City Commission have previously discussed other
alternatives to provide parking in the area, including alternatives that do not require a
joint venture or land assemblage, and potential discussion of a joint venture project
with the Gansevoort Hotel. The Administration will review these and other
possibilities- and return to the Finance and Citywide Projects Committee for further
direction.
2. The City owns two surface parking lots along 23 Street on either side of Liberty
Avenue. These two lots are behind the Miami City Ballet building and the Regional
Library building, respectively. It is plausible to construct a traditional garage on these
two lots, provided the City is willing to vacate Liberty Avenue, since the garage would
need to cross this street. The City issued an RFQ for an architect for this concept
and Arquitectonica was selected. However, this process was stopped before an
agreement for services was brought to the City Commission in order to enter into
discussions with ARRE. An alternative to this concept is to construct robotic parking
garage(s) on one or both of the two surface lots.
CONCLUSION
This Agreement was approved by the Mayor and City Commission on April 14, 2010,
and the anticipated Closing was set to occur on May 24, 2010. Through no fault of the
City, the Closing has been continuously delayed, and issues have arisen that the
Administration was unaware of at the time the Agreement was approved; including the
inability of Seller to provide clear title and the pending Everbank foreclosure action.
The Administration has been patient and reasonable with the Seller throughout this
process and has continuously proceeded in good faith. Despite the fact that, in entering
into this Agreement, and in reliance on Seller's statements during the negotiations, the
City agreed to pay a significant premium for this Property in order to receive clear title
Commission Memorandum
March 9, 2011
American Riviera Real Estate
Page 5
with a fast closing. Due to the delays associated with this transaction, the City was not
able to include this project in the sale of revenue bonds approved by the Mayor and
Commission for parking projects and, more importantly, the development of parking for
the Collins Park neighborhood is again delayed.
As previously stated, this proposed transaction could still close with the following terms:
(1) a Purchase Price reduction of $100,000 (as previously proffered by Seller); (2)
automatic termination of the Agreement if Closing does not occur on March 31, 2011;.
and (3) a general release whether or not Closing occurs.
If these terms are unacceptable to the Seller, due to the complications associated with
this transaction, and the numerous delays (through no fault of the City) that have
prevented, and continue to prevent, the parties from Closing, the Administration would
recommend that the Mayor and City Commission approve the Resolution; terminate the
Agreement; and authorize the City Manager and City Attorney to take any and all such
actions, as required, in order to effectuate such termination.
JMG /JGG /kc
TAWGENDA\2011 \3- 09- 11\ARRE Memo.docx
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