Resolution 2022-32136 RESOLUTION NO.' 2022-32136
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA AUTHORIZING THE CITY MANAGER TO DECLINE,
IN WRITING, THE RIGHT OF FIRST OFFER TRANSACTION, AS REQUIRED
_ PURSUANT TO THE TERMS OF SECTION 36.2 OF THE AGREEMENT OF
LEASE (GROUND LEASE) BETWEEN THE CITY (OWNER) AND CLPF —
LINCOLN, LLC (TENANT), INVOLVING THE SALE OF THE PROJECT
LOCATED AT 1691 MICHIGAN AVENUE (THE LINCOLN) FOR THE TOTAL
PURCHASE PRICE OF $92,500,000; FURTHER, RESCINDING RESOLUTION
NO. 2014-28486, WHICH AUTHORIZED AN AMENDMENT TO THE GROUND
LEASE FOR THE PURPOSE OF DEVELOPING A MINIATURE GOLF PROJECT
AT THE LINCOLN WHICH WAS NEVER DEVELOPED.
WHEREAS, on January 5, 1998, the City issued RFP No. 20-97/98, seeking proposals
for the development of Public-Private Parking Facilities; and
WHEREAS, on July 7, 1999, the Mayor and City Commission adopted Resolution No.
99-23236, approving the Agreement of Lease and the Development Agreement between the City
and Lincoln Plaza Partners, LLC, for the development of a mix-use project, located at Michigan
and Jefferson Avenue, between Lincoln Lane and 17th Street(the "Land"); and
WHEREAS, an Agreement of Lease was executed between the City, as Owner/ground
lessor, and Lincoln Plaza Partners LLC, a Florida limited liability company, as Tenant/ground
lessee, dated September 1, 1999 ("Ground Lease"), under which Ground Lease Tenant agreed
to develop a commercial project, consisting of an office building, a parking garage, and ground
floor retail space (collectively the "Project"), which Project is currently located at 1691 Michigan
Avenue, and commonly referred to as "The Lincoln" (the Land and Project shall be collectively
referred to herein as the "Premises"); and
WHEREAS, pursuant to the Ground Lease, Tenant leases the land from the City and
Tenant holds ownership and title to the Project, and upon the expiration of the Ground Lease,
ownership of, and title to the Project automatically vests in the City, without the payment of
consideration therefor; and
WHEREAS, the Ground Lease has an initial term of 50 years, expiring September 30,
2052, plus two automatic renewal options for 20 years each (unless the Tenant is in default or
notifies the City within the last twenty-four(24)months of the end of the term in question, indicated
they will not exercise their option); and
WHEREAS, on December 20, 2000, the Mayor and City Commission adopted Resolution
No. 2000-24220, approving the sale of the Project and the Assignment and Assumption of the
Ground Lease from Lincoln Plaza Partners, LLC to LNR Jefferson, LLC, which entity later
changed its name to The Lincoln, LLC; and
WHEREAS, on or about July 18, 2006, The Lincoln LLC sold the Project and assigned its
leasehold interest in the Land to Lincoln Miami Beach Investments, LLC, a Delaware limited
liability company; and
WHEREAS, on November 17, 2006, Lincoln Miami Beach Investment, LLC changed its
name to 01K Lincoln Miami Beach Investment, LLC, and thereafter, on June 17, 2009, merged
with 1691 Michigan Ave Investment LP, a Delaware limited liability partnership; and
WHEREAS, on February 12, 2014, the Mayor and City Commission approved Resolution
No. 2014-28486, authorizing the Mayor and City Clerk to execute Amendment No. 1 to the Ground
Lease, modifying the Scope of Use under the Ground Lease by reducing the minimum number of
parking spaces required'for the parking garage facility, from 700 to 645 spaces; increasing the
minimum number of parking spaces required to be maintained at all times for use by the general
public from 100 to 155 parking spaces; and further increasing the monthly parking spaces for
members of the general public from 50 to 75, in connection with the development of a miniature
golf project at the sixth floor of the garage with the subtenant, City Middle, LLC; and
WHEREAS, the miniature golf project was never developed; therefore, Amendment No. 1
was never executed; and
WHEREAS, on January 13, 2016, the Mayor and City Commission adopted Resolution
No. 2016-29268, declining the Owner's Reciprocal Right of First Refusal and approving the sale
of the Project to CLPF-Lincoln, LLC, a Delaware limited liability company ("Tenant"), subject to
the Administration's successful completion of its evaluation of the proposed purchaser; and
WHEREAS, the Ground Lease was further assigned to Tenant by an Assignment and
Assumption of Ground Lease dated April 8, 2016 (the Ground Lease, as amended and assigned,
shall be referred to as the "Lease"); and
WHEREAS, The Project contains three principal uses: (i) a parking garage with 709
parking spaces, (ii) 43,166 square feet of ground retail space, and (iii) 118,658 square feet of
office space; and
WHEREAS, on April 5, 2022, the City received an Offer Notice pursuant to Section 36.2
of the Lease, notifying the City that Tenant desires to sell its leasehold interest in the Premises;
and
WHEREAS, pursuant to Section 36.2(b) of the Lease, Tenant will not consummate any
offer from a third party to purchase the Tenant's estate in the Premises ("Right of First Offer
Transaction") until the earlier to occur: (i) the expiration of 45 days following Owner's receipt of
this Offer Notice, or(ii) receipt by Tenant of a notice by Owner declining to consummate the Right
of First Offer Transaction; and
WHEREAS, The Offer Notice contained the following information:
Owner of Ground Lease: City of Miami Beach
Seller: CLPF-Lincoln, LLC
Purchase Price: $92,500,000 cash transaction; and
WHEREAS, in accordance with Article 36.2 of the Lease, the City has until May 20, 2022
to elect, in writing, whether or not to consummate the Right of First Offer Transaction, at the same
price and upon such other material terms set forth in the Offer Notice ("Offer"); and
WHEREAS, the cost to reconstruct a facility of this size with a mixed-use concept will cost
approximately$36M, plus tenant Improvements and leasing fees; and
WHEREAS, considering that the Offer materially exceeds the cost to construct a City-
owned parking, office, and retail facility and that the Premises will revert back to the City at the
end of the Lease term,the City Manager recommends that the City decline the Right of First Offer
Transaction; and rescind Resolution No. 2014-28486, that approved Amendment No. 1 to the
Lease, for the purpose of developing a miniature golf project at The Lincoln which was never
developed; and
WHEREAS, following the City's rejection of the Right of First Offer Transaction, pursuant
to Section 10.5("Required Notices")of the Lease, the proposed transfer and/or sale of the Project
requires written notice to the City, as Owner, with the identity of the transferor, transferee, nature
of the transaction, percentage of interest conveyed and such other information requested by the
City ("Notice of Sale"); and
WHEREAS, since the City will have sixty (60) days to respond to the Notice of Sale, the
City Administration will then submit the proposed sale of the Project for approval by the City
Commission, subject to the City Administration conducting its due diligence, at the sole expense
of Tenant, to investigate whether or not the proposed purchaser qualifies as a "Permitted Buyer"
under Section 10.3 of the Lease.
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 authorize the City Manager to decline, in writing, the Right of First Offer
Transaction, as required pursuant to the terms of Section 36.2 of the Agreement of Lease(Ground
Lease) between the City (Owner) and CLPF — Lincoln, LLC (Tenant), involving the sale of the
Project located at 1691 Michigan Avenue (The Lincoln) for the total purchase price of
$92,500,000;further, rescind Resolution No. 2014-28486,which authorized an amendment to the
Ground Lease for the purpose of developing a miniature golf project at The Lincoln which was
never developed.
PASSED and ADOPTED this q day of May 2022.
, 2-2 -$ .—___,
Dan Gelber, Mayor
ATTEST:
MAY 1 0 2022 ,,,,,
Rafael E. ranado, City Clerk 's
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APPROVED AS TO
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City Attorney Iv_ Date
Resolutions -C7 G
MIAMI BEACH
COMMISSION MEMORANDUM
TO,: Honorable Mayor and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: May 4,2022
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA AUTHORIZING THE CITY MANAGER TO
DECLINE, IN WRITING, THE RIGHT OF FIRST OFFER TRANSACTION,
AS REQUIRED PURSUANT TO THE TERMS OF SECTION 36.2 OF THE
AGREEMENT OF LEASE (GROUND LEASE) BETWEEN THE CITY
(OWNER) AND CLPF — LINCOLN, LLC (TENANT), INVOLVING THE SALE
OF THE PROJECT LOCATED AT 1691 MICHIGAN AVENUE (THE LINCOLN)
FOR THE TOTAL PURCHASE PRICE OF $92,500,000; FURTHER,
RESCINDING RESOLUTION NO. 2014-28486, WHICH AUTHORIZED AN
AMENDMENT TO THE GROUND LEASE FOR THE PURPOSE OF
DEVELOPING A MINIATURE GOLF PROJECT AT THE LINCOLN WHICH
WAS NEVER DEVELOPED.
SUPPORTING SURVEY DATA
n/a
FINANCIAL INFORMATION
n/a
Applicable Area
South Beach
Is this a"Residents Right Does this item utilize G.O.
to Know" item, pursuant to Bond Funds?
City Code Section 2-14?
No No
Legislative.Tracking
Facilities and Fleet Management
ATTACHMENTS:
Description
❑ Memo
Page 309 of 1451
❑ Resolution
❑ Exhibit A
3
Page 310 of 1451
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139,
www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Honorable Mayor Dan Gelber and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: May 4, 2022
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA AUTHORIZING THE CITY MANAGER
TO DECLINE, IN WRITING, THE RIGHT OF FIRST OFFER
TRANSACTION, AS REQUIRED PURSUANT TO THE TERMS OF
SECTION 36.2 OF THE AGREEMENT OF LEASE (GROUND LEASE)
BETWEEN THE CITY(OWNER)AND CLPF-LINCOLN, LLC (TENANT),
INVOLVING THE SALE OF THE PROJECT LOCATED AT 1691
MICHIGAN AVENUE (THE LINCOLN) FOR THE TOTAL PURCHASE
PRICE OF $92,500,000; FURTHER, RESCINDING RESOLUTION NO.
2014-28486,WHICH AUTHORIZED AN AMENDMENT TO THE GROUND
LEASE FOR THE PURPOSE OF DEVELOPING A MINIATURE GOLF
PROJECT AT THE LINCOLN WHICH WAS NEVER DEVELOPED.
BACKGROUND
On January 5, 1998, the City issued RFP No. 20-97/98, seeking proposals for the development
of Public-Private Parking Facilities. On July 7, 1999,-the Mayor and City Commission adopted
Resolution No. 99-23236, approving the Agreement of Lease and the Development Agreement
between the City and Lincoln Plaza Partners, LLC, for the development of a mix-use project,
located at Michigan and Jefferson Avenue, between Lincoln Lane and 17th Street(the"Land").
An Agreement of Lease was executed between the City, as Owner/ground lessor, and Lincoln
Plaza Partners LLC, a Florida limited liability company, as Tenant/ground lessee, dated
September 1, 1999 ("Ground Lease"), under which Ground Lease Tenant agreed to develop a
commercial project, consisting of an office building, a parking garage, and ground floor retail
space(collectively the"Project"),which Project is currently located at 1691 Michigan Avenue,and
commonly referred to as"The Lincoln"(the Land and Project will be collectively referred herein to
as the "Premises"). Pursuant to the Ground Lease, Tenant leases the land from the City and
Tenant holds ownership and title to the Project, and upon the expiration of the Ground Lease,
ownership of, and title to the Project automatically vests in the City, without the payment of
consideration.
The Ground Lease has an initial term of 50 years, expiring September 30, 2052, plus two
automatic renewal options for 20 years each, unless the Tenant is in default or notifies the City
within the last twenty-four (24) months of the end of the term in question, indicated they will not
exercise their option.
Page 311 of 1451
Commission Memorandum
1691 Michigan Avenue
Page 2 of 3
On December 20, 2000, the Mayor and City commission adopted Resolution No. 2000-24220,
approving the Sale and Assignment and Assumption of the Ground Lease from Lincoln Plaza
Partners, LLC to LNR Jefferson, LLC. On October 5,2005, LNR Jefferson, LLC changed its name
to The Lincoln, LLC.
On or about July 18, 2006, The Lincoln LLC sold the Project and assigned its leasehold interest
in the Land to Lincoln Miami Beach Investments, LLC, a Delaware limited liability company.
On November 17, 2006, Lincoln Miami Beach Investment, LLC changed its name to 01K Lincoln
Miami Beach Investment, LLC, and thereafter,on June 17,2009, merged with 1691 Michigan Ave
Investment LP, a Delaware limited liability partnership.
On February 12, 2014, the Mayor and City Commission approved Resolution No. 2014-28486,
authorizing the Mayor and City Clerk to execute Amendment No. 1 to the Ground Lease,
modifying the Scope of Use under the Ground Lease by reducing the minimum number of parking
spaces required for the parking garage facility, from 700 to 645 spaces; increasing the minimum
number of parking spaces required to be maintained at all times for use by the general public from
100 to 155 parking spaces;and further increasing the monthly parking spaces for members of the
general public from 50 to 75, in connection with the development of a miniature golf project at the
sixth floor of the garage with the subtenant, City Middle, LLC. City Middle, LLC never developed
the miniature golf project; therefore, Amendment No. 1 was never executed.
On January 13, 2016, the Mayor and City Commission adopted Resolution No. 2016-29268,
declining the Owner's Reciprocal Right of First Refusal and approving the sale of the Project to
CLPF-Lincoln, LLC, a Delaware limited liability company ("Tenant"), subject to the
Administration's successful completion of its evaluation of the proposed purchaser. The Ground
Lease was further assigned to Tenant by an Assignment and Assumption of Ground Lease dated
April 8, 2016(the Ground Lease, as amended and assigned, shall be referred to as the "Lease").
The Lincoln Project contains three principal uses: (i) a parking garage with 709 parking spaces,
(ii)43,166 square feet of ground retail space, and (iii) 118,658 square feet of office space.
ANALYSIS
On April 5,2022,the City received an Offer Notice pursuant to Section 36.2 of the Lease, notifying
the City that Tenant desires to sell its leasehold interest in the Premises.
Pursuant to Section 36.2(b)of the Lease, Tenant will not consummate any offer from a third party
to purchase the Tenant's estate in the Premises("Right of First Offer Transaction")until the earlier
to occur: (i)the expiration of 45 days following Owner's receipt of this Offer Notice, or (ii) receipt
by Tenant of a notice by Owner declining to consummate the Right of First Offer Transaction.
The Offer Notice contained the following information:
Owner of Ground Lease: City of Miami Beach
Seller: CLPF-Lincoln, LLC
Purchase Price: $92,500,000 cash transaction
In accordance with Article 36.2 of the Lease,"Owner's Reciprocal Right of First Refusal", the City
Page 312 of 1451
Commission Memorandum
1691 Michigan Avenue
Page 3 of 3
also has the right to elect, in writing, whether to consummate the Right of First Offer Transaction,
at the same price and upon such other material terms set forth in the Offer Notice ("Offer"). The
City has until May 20, 2022 to exercise in writing whether or not to consummate the Right of First
Refusal.
The cost to reconstruct a facility of this size with a mixed-use concept will cost approximately
$36M, plus tenant improvement and leasing fees. Considering that the Offer materially exceeds
the cost to construct a City-owned parking, office, and retail facility and that the Project will revert
to the City at the end of the Lease term, the City Manager recommends that the City decline the
Right of First Offer Transaction.
Following the City's rejection of the Right of First Offer Transaction, pursuant to Section 10.5
("Required Notices")of the Lease,the proposed transfer and/or sale of the Project requires written
notice to the City, as Owner, with the identity of the transferor, transferee, nature of the
transaction, percentage of interest conveyed and such other information requested by the City
("Notice of Sale"). The City will have sixty(60)days from receipt of the Notice of Sale to consent
to the sale. Following receipt of the Notice of Sale, the City Administration will submit the
proposed sale of the Project for approval by the City Commission, subject to the City
Administration conducting its due diligence, at the sole expense of Tenant,to investigate whether
or not the proposed purchaser qualifies as a"Permitted Buyer" under Section 10.3 of the Lease.
CONCLUSION
Based upon the foregoing, the City Manager recommends that the Mayor and City Commission
adopt the Resolution approving and authorizing the City Manager to decline, in writing, the
Owner's Right of First Refusal, relating to the purchase of The Lincoln for the total sales price of
$92,500,000.00, as required pursuant to the terms of Article 36.2 of the Agreement; and
rescinding Resolution No. 2014-28486, that authorized an amendment to the Lease, for the Q ;,.._
purpose of developing a miniature golf project at The Lincoln which was never developed.
Attachments
Resolution
"A"Offer Notice from Tenant
Page 313 of 1451
Exhibit A
FAILURE TO RESPOND TO THIS REQUEST WITHIN THE TIME PERIOD
PROVIDED IN THE LEASE AGREEMENT BETWEEN CITY OF MIAMI BEACH,
FLORIDA AND CLPF — LINCOLN, LLC SHALL CONSTITUTE AUTOMATIC
APPROVAL OF THE MATTERS DESCRIBED HEREIN WITH RESPECT TO
SECTION 36.2 OF SUCH LEASE AGREEMENT.
April 5,2022
Sent Via UI'S and Hand Delivery
City of Miami Beach
City Manager
1700 Convention Center Drive
Miami Beach, Florida 33139
City of Miami Beach
City Attorney
1700 Convention Center Drive
Miami Beach, Florida 33139
Bloom&Minsker
Suite 700
1401 Brickell Avenue
Miami,Florida 33131
Attention:Joel N. Minsker,P.A.
Re: Lease Agreement (as amended and assigned, the "Lease") between CITY OF MIAMI
BEACH, FLORIDA, a municipal corporation duly organized and existing under the laws of
the State of Florida ("Owner"), and CLPF — Lincoln, LLC, a Delaware limited liability
company (successor in interest to 169] Michigan Ave Investment LP) ("Tenant"), dated
t �• September 1, 1999, with respect to the property located at 1691 Michigan Avenue, Miami
Beach, Florida(the"Premises");capitalized terms used but not otherwise defined herein have
the meanings given such terms in the Lease.
Dear Sir or Madam:
Pursuant to Article 36.2(a)of the Lease, Tenant hereby notifies Owner that Tenant desires to sell
its leasehold interest in the Premises. This notice constitutes an Offer Notice described in Article
36.2(a) of the Lease. Pursuant to Article 36.2(b) of the Lease, Tenant will not consummate any
offer from a third party to purchase the Premises until the earlier to occur of(i)the expiration of 45
days following Owner's receipt of this Offer Notice,or(ii)receipt by Tenant of a notice by Owner
declining to consummate the Right of First Offer Transaction. In the event that Owner elects not
to consummate the Right of First Offer Transaction,Tenant kindly requests that Owner promptly
provide a written statement to Tenant of such intention by countersigning in the applicable
signature block below.
Page 317 of 1451
Pursuant to Section 36.2(a) and Exhibit 36.2(a)of the Lease,the terms of this Offer Notice are as
follows:
I. Purchase Price-$92,500,000
2. Closing fate—The closing of the purchase shall take place on a date designated by Tenant,
but in any event not less than sixty(60)days nor more than ninety(90)days following the
date Tenant executes a purchase agreement with Owner. If Owner-declines to be the
purchaser of this Right of First Offer Transaction,Tenant will likely consummate the sale
to a third party at an earlier date.
3. Deed:Title—At the closing,Tenant shall convey to the Owner(i)all of Tenant's right,title
and interest in and to the Premises by a special warranty deed and(ii)all of Tenant's right,
title and interest in art to this Lease by an assignment of lease. The form of such deed and
assignment of lease shall be mutually acceptable to Tenant and Owner but shall not in any
event provide for any representations by Tenant other than a representation that Tenant has
not theretofore transferred or assigned the items being transferred or conveyed thereby and
representations and warranties customarily contained in a special warranty deed. Tenant's
interest in the Premises and the Lease shall be conveyed to Owner subject to all liens
encumbrances and other matters then affecting the title thereto and any state of facts a
survey may reveal(but in all cases subject to Tenant's obligations under Section 2.2 of the
Lease). Tenant shall also execute all other documents customarily used in real estate
transactions in Miami-Dade County, Florida.
4. Rem; Prorations — At the closing of the purchase, all Rental and/or Impositions shall be
prorated through the date of closing and paid by the party entitled thereto. If Owner
declines to be the purchaser of this Right of First Offer Transaction, the expenses will be
customarily prorated as in other real estate transactions in Miami-Dade County, Florida,
including buyer receiving a credit with respect to Tenant's post-closing obligations under
existing space leases for tenant inducement costs.
5. Expenses—Each:party shall pay its own attorneys' fees. All title charges recording fees,
survey charges and other expenses incurred in connection with.the purchase shall be paid
by Owner. Tenant shall pay transfer taxes(including documentary stamp taxes and Miami-
Dade County surtax)payable in connection with the purchase. If Owner declines to be the
purchaser of this Right of First Offer Transaction,then in a sale transaction to a third party
purchaser, (i) Tenant shall pay transfer taxes (including documentary stamp taxes and
Miami-Dade County surtax)and the recording fees relating to any title clearing documents
necessary to consummate the sale,Tenant's attorneys' fees,any fees and expenses required
to be paid to Owner for its consent, any brokerage commission due to the broker used in
the transaction,and SO%of escrow fees and(ii)the third party purchaser shall pay fees and
premium for title insurance,survey charges and 50%of escrow fees.
If you have any questions or need additional information,feel free to contact us at 214-775-7668.
[Signature Page Attached]
2
Page 318 of 1451
Sincerely,
CLPF—LINCOLN,LLC,
a Delaware limited liability company
By: Clarion Lion Properties Fund Holdings,L.P.,
a Delaware limited partnership
Its:Sole Member
By: CLPF-Holdings,LLC,
a Delaware limited liability company
Its:General Partner
By: Clarion Lion Properties Fund Holdings REIT,
• LLC,a Delaware limited liability company
Its: Sole Member
By: Clarion Lion Properties Fund,LP, •
a Delaware limited partnership
Its: Managing Member
By: Clarion Partners LPF GP,LLC,a
Delaware limited liability company
Its: General Partner
By: Clarion Partners,LLC,
a New•York limited liability company
= Its: Sole Member a
By: 9,0g,
,
Name: Jon elb
Title: Authorized Signatory
WITH COPIES TO:
City of Miami Beach
City Manager
1700 Convention Center Drive
Miami Beach,Florida 33139
City of Miami Beach
City Attorney
1700 Convention Center Drive
Miami Beach,Florida 33139
3
Page 319 of 1451
Bloom &Minsker
Suite 700
1401 Brickell Avenue
Miami, Florida 33131
Attention: Joel N. Minsker, P.A.
•
A--_.
a a .• e a =.
4
Page 320 of 1451
The City of Miami Beach, Florida does hereby elect NOT to consummate the Right of First Offer
Transaction set forth in this Offer Notice.
CITY OF MIAMI BEACH,FLORIDA,
a municipal corporation of the State of Florida
By:
Name:
Title: •
5
Page 321 of 1451