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MB RDA MINUTES FEBRUARY 6, 1985 r • MIAMI BEACH REDEVELOPMENT AGENCY MEETING February 6, 1985 - 9:00 A.M. CITY HALL COMMISSION CHAMBERS INDEX TO MINUTES OF MEETING RESOLUTION PAGE NO. NO. NONE 1. Roll Call - Meeting commenced at 9:39 A.M. , all members 1 present. 2. Acceptance of Minutes of January 23, 1985 meeting 1 3. Report of Executive Director Deputy Director gave brief oral status reports on: 2-6 1) Coast Guard Property 2) Cheezem Development Agreement 3) Newman Contract 4) Development of Regional Impact Issues 5) South Pointe Park 6) Corridor Study 7) SSDI Lawsuit. (Copy of report filed with records of meeting.) 4. Old Business a. Correspondence from Stuart Newman Associates 1, 5-6, 7 regarding South Pointe Public Relations Status Report. Discussion about first issue of South Pointe Leader publication. 5. New Business - none. 6 6. Report of Agency Attorney - Update on Seaside 6-7 Properties, Inc. v. City of Miami Beach. 7. Adjournment - 10:07 A.M. (all members present) 8 Next meeting: Wed., February 20, 1985, 9:00 A.M. EMB:pp 60 000437 MINUTES MIAMI BEACH REDEVELOPMENT AGENCY February 6, 1985 Regular meeting of the Miami Beach Redevelopment Agency was held in the City Commission Chambers, City Hall, 1700 Convention Center Drive, Miami Beach, Florida, on Wednesday, February 6, 1985, with the following members of the Redevelopment Agency present: Chairman Malcolm Fromberg Vice Chairman Ben Z. Grenald Stanley H. Arkin Alex Daoud William E. Shockett Bruce Singer Sidney Weisburd Also Present: Rob W. Parkins, Executive Director Arnold M. Weiner, General Counsel Elaine M. Baker, Secretary * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * (The meeting was called to order at 9:39 A.M.) FROMBERG: Good morning, ladies and gentlemen. I'd like to call to order the Redevelopment Agency meeting. Mrs. Baker, please call the roll. (AGENDA ITEM 1.) BAKER: Mr. Fromberg Present Mr. Grenald Present Mr. Arkin Present Mr. Shockett Present Mr. Singer Present Mr. Weisburd Present Mr. Daoud Present. All present. FROMBERG: Can I have a motion to accept the minutes of the January 23, 1985 meeting? (ITEM 2.) ARKIN: So moved. FROMBERG: Moved by Mr. Arkin, seconded by Mr. Singer. Any discussion? All in favor, signify by saying "aye". (AYE) Any opposed? The minutes have been accepted. Mr. Executive Director, do you have a report? PARKINS: Mr. Chairman and members of the Agency board, Deputy Director Fosmoen will present the report today. RICHARD FOSMOEN: Good morning. I think that the Executive Director 's Report was distributed to you this morning. I also passed out a copy of the first newsletter, South Pointe Leader, which has been distributed to approximately 700 investor and developer types around the country as well as several hundred people locally, in anticipation of the developer/investor conference coming up, scheduled for mid-March. SINGER: How many copies? FOSMOEN: We have several thousand more so if you'd like some, we can provide you with them. M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 1 An 000438 ' r SINGER: I don't know about my fellow Commissioners, but I think they would also like some copies to be dropped off. FOSMOEN: Okay, we'll get some to you today. With regard to the Coast Guard property . . . (ITEM 3.1) We attached correspondence to the report that was sent to Mr. Buckley in Washington based on the meetings that we had with him. He is revisiting the issue of how they determined highest and best use on the Coast Guard property and also taking a look at the zoning on the property as it relates to the value. We have not heard back from him yet, but he assured us that we would get some extension of time in order to, if necessary, work with the State and the County in trying to assemble some funds for acquisition. He also indicated that they would be willing to negotiate with us for certain easements and reserve rights for access to the Bay should they ultimately decide to sell a portion of that property. The Cheezem Development Agreement .. . (ITEM 3.2) For those of you who may have driven down in the South Pointe area in the last couple of days, you'll notice that Cheezem is beginning to pre-load his site for the first condominium. There'll be about a 28-foot high mountain down there within the next week. That'll sit there for approximately three months compressing the soil so they can use the slab construction. Cheezem is also targeting a major groundbreaking event some time in mid-March, around the same time that we have our developer/investor conference scheduled. The Newman Contract . . . (ITEM 3.3) We forwarded to you previously a report from Stu Newman on the status of his activities. I have seen the first cut of the audio-visual. It's being put into final form and it should be ready for viewing within the next couple of weeks. We're going to try to keep it under wraps, if you will. We're not going to go public with it until the developer/investor conference, however, obviously, Agency members will all have an opportunity to review it. We'll get it in a smaller tape format so we can sit down with you individually and review that eight minute film. Development of Regional Impact Issues . . . (ITEM 3.4) We have scheduled the public hearings necessary to abandon the previous development order. The State has communicated with us that they will withhold action until such time as they receive formal notice of that abandonment. They did, however, warn us, in writing, that that abandonment is subject to appeal. General Counsel Weiner and myself have spent some time discussing with the Agency in Tallahassee whether they intend to appeal. It's our belief that they have no basis for appealing that abandonment and I think we'll probably see a flurry of activity when they receive the formal notice for abandonment. South Pointe Park (ITEM 3.5) is moving on time and in budget. We'll give you a more complete status at the end of the month. The Corridor Studies . . . (ITEM 3.6) We've had a series of meetings with the Rediscover Miami Beach Committee, the Economic Development Council, and are scheduling a major presentation to the Agency on the 20th of this month. As to the SSDI lawsuit, (ITEM 3.7) they are still under order to make a decision whether to exercise their option or try and recapture the notes or the advances which they gave us. As of February 17, 1985, they're supposed to make a decision. We've had some limited conversations with the representatives of SSDI, or First Boston. Those conversations were about two weeks ago, I guess, and I have not heard back from them. We suggested to them that we would be willing, if they exercised their option, to work within some development parameters and assist them in expediting development on that site. To date I have not heard a response from those conversations. SHOCKETT: Mr. Chairman. FROMBERG: Yes, Mr. Shockett. SHOCKETT: On the SSDI suit, are you telling us that serious settlement negotiations have been abandoned, or for all intents and purposes have been abandoned? FOSMOEN: We made an effort to contact representatives of First Boston. We sat down in a meeting with them, described the kinds of development that in our view would make sense on that property, indicated to them where there are some lands available. You understand that they believe they have an option on properties which we subsequently leased. They believe they have rights to the bayfront. We indicated by map that there were areas where we could do M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 2 60 000439 FOSMOEN (continued) : some trading and they could, in fact, end up with almost the same amount of property that they originally optioned. We indicated to them the magnitude of development that we believed, the staff, would be reasonable on that site, and that is the last that I have heard from them. At this point, we're waiting for them to respond to us. SHOCKETT: Our position is that the judgment has been entered; no appeal has been taken from that judgment; (FOSMOEN: Correct.) and the judgment upholds their right to acquire the property and also holds the Agency responsible for payment of the $4,000,000 notes. It does not require the City to pay the $4,000,000 in notes. Is that correct? (FOSMOEN: That's correct.) So that if you follow without resolving this on other than the basis as set out in the court's order, their repayment of the $4,000,000 and whatever interest runs on that is only from the Agency and only when the Agency gets money from tax increment financing. Is that not correct? FOSMOEN: Or the sale of those properties that they had an option on. SHOCKETT: All right, now, if there's a . . . That's the next point. If they acquire the property, then they would be entitled to offset against the purchase price the money that's due them under the notes. FOSMOEN: That's correct. SHOCKETT: What is the . . . I assume now we know what the purchase price would be. What are we looking forward to? FOSMOEN: Again, .. . SHOCKETT: Let me tell you why I'm asking these questions, because I'm concerned with a February 17th deadline and the City Commission not having sufficient time to analyze recommendations made by the Administration and Counsel and I'm very much concerned about coming down to the wire and making a decision which may not be the right decision. FOSMOEN: The decision, if you will, is in their court. SHOCKETT: Right, I understand. But, they may be coming to us, as you said, (FOSMOEN: That's a (unclear, overlapping voices) there is a dispute as to what land is optioned . . . (FOSMOEN: Correct.) and so we have some problems with that or we may have potential problems with that and what you explained to us was that you made a proposal where they could acquire, although not the same land, but sufficient land to fulfill the same purpose as originally contemplated. (FOSMOEN: Correct.) Okay, I understand that but that's something that they don't have to accept. (FOSMOEN: That's true.) Okay. What are the dollars? Let's just say they exercise the option regardless of where that land is. FOSMOEN: The last appraisal that we have on that property which was done in early 1984 indicated a value or, not necessarily their option to property, but properties that would be equivalent to their option properties, of plus or minus $10,000,000, and that was discounted because whoever develops that property is going to be required to put up parking to service the marina. The net was about $17 a square foot. It was further discounted . . . the appraisal further discounted the value of the property based on its location, based on the difficulty of doing a development deal in that area, so the appraisal was $17 a square foot and the discounted value, including the parking garage, was plus or minus $7,000,000. SHOCKETT: Well, I'm not as familiar with these documents as you are, but didn't the agreement, the option agreement, that the suit was filed on, didn't that have a formula? It didn't use, as I understand it, appraisal as value. FOSMOEN: Their option included a formula. It included a purchase price on the southern portion, a sale, if you will, of the southern portion of the property, south of Hope and Rebecca, and it included a lease with an option to buyon the northern • portions of Hope and Rebecca. The southern portion, of course, the value was based on a long-term development plan, which would M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 3 60 000440 FOSMOEN (continued) : have enhanced the value of that property. The northern portion, the option price, was based on a percentage of gross spread over time for a very intensive development on that end. So, if indeed they exercise their option, Mr. Shockett, I'll defer to Arnold for a legal opinion, it's my impression that we're going to be into a long, protracted dispute about what in fact is the value. SHOCKETT: Okay, so the $7,000,000 that you're talking about is just what one appraiser said the property was worth, but that's not necessarily the amount of money that the City would realize if they exercised their option to acquire the property? FOSMOEN: That's correct, and, again, I suspect we'll be into a long protracted dispute about what that number really is. SHOCKETT: I seem to recall at one time that if you follow the formula that was included in the option, that that property could be in the neighborhood of $20,000,000 and that it would be economically .. . It wouldn't be feasible, economically, to acquire it under the option. FOSMOEN: I don't think that the court was really clear on what the value of that property was. SHOCKETT: It didn't have to determine value. It just said you have the right to acquire it under the option, whatever the option says, then that . . . FOSMOEN: But the option was for additional properties than what we're able to deliver. We have subsequently leased properties that they had an option on . . . SHOCKETT: Those are the problem areas. Do you anticipate that this thing is going to be settled or is it something that we're going to be involved in litigation for another . . . ? WEINER: Mr. Shockett, I anticipate that it's going to be settled. I . . . By virtue of the . . . I attended some, at least one of the meetings with Mr. Fosmoen and as a result, if I just might give it to you from a lawyer 's perspective, these folks were told in no uncertain terms that we were not threatened by the fact that they may exercise the option, but in fact were hoping upon hope that that's precisely what they'd do because that would create development, and they were sent back encouraged to work out a deal and to do whatever it would take to get the property developed. We have not heard back from them, as Mr. Fosmoen has indicated. I would suspect that the scenario from this point would run thusly: in order to protect their interests, they would, in fact, give us notice of their intention to exercise the option on or before February 17th. That's the only way they can protect their option. At that point, it would be the City's position that if they don't post money, that the money that represents the judgment is in fact the money posted and then we would proceed on that schedule. The court also included in its judgment a paragraph that I think is very important to dwell on just for a second, and that's that the court said that there is no incumbency on the City to deliver property that the Agency didn't own or it didn't own, which essentially means that, for example, in Parcel A there was contemplated within that option that Alton Road would have been relocated and the area between relocated Alton Road and the existing parcel would be available and was part of the option package. The City has no requirement and truly intends, at least as far as we're concerned, not to condemn that property on their behalf. In addition, there's other property, which under the old development plan would have been the area for canals which, under the new guideline, is not available for canals, which increases the land area. So, all of these adjustments were anticipated by the drafters of the judgment and certainly by the court when the court said that it would not make the City condemn this additional property, and inherent in the court's judgment, in the judgment that the court entered, was the realization that there would be a period of negotiation which I, quite frankly, imagine because of the dollars involved, is going to be tough negotiation. But, at this point, the City is the holder of the value and I don't think that we're going to be going into those negotiations, particularly with our hat in our hand. M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 4 60 000441 FROMBERG: Any other questions, gentlemen? SHOCKETT: I just want to point out that if this thing is resolved, then maybe you can make that known to the other party that it's going to be difficult for the Commission to make a decision to approve the settlement without having ample time to review it. WEINER: We'll certain make that known to counsel and I'm sure Mr. Fosmoen will to the principals. DAOUD: Mr. Chairman. FROMBERG: Mr. Daoud. DAOUD: In reference to this news release that went out, how many copies were sent out, Dick? FOSMOEN: So far, we've distributed in excess of a thousand. DAOUD: Let me point something out that Rob and I . . . FOSMOEN: Oh, I'm sorry. Are you talking about the South Pointe Leader or DAOUD: No, this one that came in our packet for the Redevelopment Agency. (ITEM 4.a.) FOSMOEN: Oh, I'd suspect far fewer than that. This was a news release, not a quarterly newsletter kind of thing. So it was directed at the media. DAOUD: In the agenda review, if you'll turn to page three, it's "RENAISSANCE", page 2, on the top. I wanted to point this out, Rob and I picked it out. It says, "The agency-- consisiting . . . " (sic) . I think they spelled consisting wrong. FROMBERG: They did. DAOUD: And where they have . . . Unfortunately, it's in front of Malcolm's name where they put it, so it's noticeable and with the Mayor's Ad Hoc Committee . . . where it was placed. Committee is spelled wrong. You know, Rob and I picked this up and I'll tell you something, following along with the comments that were made, I'm a little bit disappointed, quite candidly, and I know Rob was, too, that news releases like this aren't checked by the ad people that we hired, to make sure they're corrected. It's small things like that, when they're sent out to lots of newspapers, that really don't look good. SHOCKETT: I have to second that. I'll tell you I was disturbed at the last meeting because our ad agency didn't follow up with the opening of Deco Plaza and we were told that that just slipped through the cracks. These people should be . . . I see . . . and it's sloppy work and it doesn't give the . . . instill confidence in the Agency and what we're doing. This newsletter is a professional newsletter. I haven't read it for typographicals, but I have to join in with that. I'm disappointed. We stuck our necks out. We should be getting first-class material. WEISBURD: I agree. I made this comment to the Manager when we had our Agenda review, that "City fathers", "City voters," it doesn't tell the story. It's like, let's get the thing out and do it sloppy. I think instead of saying "City voters", even just saying "The citizens of Miami Beach voted to approve . . . " makes a little bit more sense and it gives a little bit more impact. "City fathers" . . . Say the City of Miami Beach Commission. I mean, tell them what you want to say instead of "fathers". It doesn't give the oomph that I think needs to be done and that piece of literature that went out, I think that should have been judged before it went out also. There are some concerns I have with it, also. DAOUD: Dick, can I just ask a question on this. M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 5 60 000442 FOSMOEN: I'll certainly raise those issue with (unclear, overlap) You're right (unclear, overlap) DAOUD: Can I go ahead and ask. We have now our own place, our own public relations department. Is there any chance, because I know the Administration's got plenty of work to do, is there any chance our public relations, our in-house people, could start to review some of this material and just have a checks and balance? I'll tell you the truth, this to me, you know, Rob, and we talked about this yesterday, this to me is really unacceptable. We're talking about a fantastic project and two small typo errors that appear one before the Mayor's name and one afterwards instills the fact that it's not professional. PARKINS: You're certainly accurate that we ought to have our own public affairs folks review these materials, Commissioner, and we'll see that that occurs in the future and I know that Dick will be talking to Mr. Newman about this as well. FROMBERG: Okay, I think the point's been made, gentlemen, and I thank you for bringing it up. Anything else you want to ask of Mr. Fosmoen? (no response) Thank you. I have just one other question. Do we have any estimate . . . We know that, as I recall, Cheezem must exercise his option by May of 1985, and I know that there's no reason why he would want to do that prior to that because obviously that's when he has to come up with the purchase price of the land. The things that he is doing now, pulling of the permits, and the work that he's doing, seems to indicate a very positive prediction that he's going to go forward with the project. Do you have any idea of how much money he's invested so far in this project over the last six months, say, in order to get ready for Phase One? FOSMOEN: To do all of the plans and specifications, and if you include his in-house staff time, it's obviously a cost to him, his architectural work, all of the engineering work that's been done, the pre-loading of the site, the kinds of commitments he's currently making for the grand opening, I've got to say Mr. Chairman that he's into this for at least a half a million dollars on that first tower. And that wouldn't even cover, I think, the advertising campaign that he went through. FROMBERG: I understand that Hank Meyer is going to be working with him on the ground breaking ceremony? FOSMOEN: That's correct. FROMBERG: Has the Commission been . . . I know I have some information . . . When is that date? FOSMOEN: We do not have a date certain. We are attempting to have it on March 14th, which is the evening preceding the developers' conference. The problem with that is that if it rains then Friday becomes the next available day and it's sort of a difficult thing to do on a Friday, so they're working on either the 14th or the 18th. FROMBERG: Okay, thank you, Mr. Fosmoen. Mr. Parkins, is there any other report that you want to give? PARKINS: No, sir, we have no other business to bring before you. FROMBERG: Is there any old business. PARKINS: None to report. FROMBERG: Any new business? PARKINS: No other new business, sir. FROMBERG: Mr. Weiner, do you have any report? WEINER: The report that I'd like to make is that in the case of Seaside Properties, Inc. , et al v. City of Miami Beach. (ITEM 6.) After a hearing M.B.REDEVELOPMENT AGENCY - 2/6//85 Page 6 60 000443