LTC 216-2023 Collins Park Artist Workforce Housing Projects Update #3MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # LETTER TO COMMISSION
TO:
FROM:
DATE:
SUBJECT:
Honorable Mayor Dan Gelber and Members of the City Commission
Alina T. Hudak, City Manag~
May 9, 2023
Collins Park Artist Workforce Housing Project Update #3
This Letter to Commission ("LTC") provides a status update regarding the Collins Park Artist Workforce
Housing Project (the "Project").
Background
L TC 032-2023 (Project Update #1) dated January 25, 2023 and L TC 092-2023 (Project Update #2)
dated February 23, 2023 provided information on the status of the Project, which includes 80 workforce
housing units, dormitory space for the Miami City Ballet dance education program, and street-level retail
space for cultural activation at 224 23° Street. This public-private partnership (P3) relies on the City for
a portion of development costs, with residual income paid to the City throughout the lease term and
building ownership transferring to the City following satisfaction of debt service.
Per the Ground Lease and Development Agreement, approved by City Commission Resolutions 2022-
32411 and 2021-31553 respectively, the Project development costs will be funded largely by proceeds
from tax-exempt revenue bonds issued by the Miami-Dade County Industrial Development Authority
("IDA"). In addition, to infuse necessary gap funding, the City Commission authorized a reimbursable
direct contribution of $2.85 million ("City Capital Contribution"), as approved in the FY 2023 Capital
Budget, and a non-reimbursable $4 million grant contribution utilizing proceeds from the Arts and
Culture General Obligation (G.O.) Bond, as approved by the Miami Beach electorate in the November
8, 2022 Special Election.
To serve as Project underwriter, responsible for marketing the bonds to generate development
financing, Servitas initially selected Citigroup Global Markets, Inc. ("Citigroup"). On February 21, 2023,
Citigroup launched its limited public offering for $30,840,000 Series 2023A Bonds (senior debt) and
$3,255,000 Series 2023B Bonds (subordinate debt). Citigroup marketed the bonds to high-yield
investors, i.e., qualified institutional buyers and accredited investors with experience in financing
workforce housing projects.
Status Update
On March 7, 2023, the Miami-Dade County Board of County Commissioners ("BCC") unanimously
approved Resolution R-208-23, reapproving the issuance of the IDA bonds, as required by the federal
Tax Equity and Fiscal Responsibility Act (TEFRA). On March 10, 2023, Servitas and the Miami City
Ballet executed a first amendment to the Ballet's dormitory lease, which provided the Ballet with building
naming rights and revised the monthly rent owed resulting from the modified development schedule.
216-2023
Collins Park Artist Workforce Housing Project Update #3
May 9, 2023
Page 2 of 2
According to Citigroup, since launching the limited public offering on February 21, 2023, 41 investor
firms accessed the documents electronically, resulting in subsequent discussions with ten (10)
interested investors. Citigroup reported significant investor interest in the senior debt offering, but limited
interest in the subordinate debt, due in part to the economic condition of financial markets over the past
year and decreased market confidence in the wake of recent, high-profile bank failures. Investors also
provided positive investor feedback with respect to the City's commitment and contribution to the
Project.
Next Steps
Citigroup's public offering has been marketed for more than two months without achieving desired
results and adding to delay in Project development. As Citigroup has been unable to sell the subordinate
debt, nor propose viable alternatives, Servitas is considering pursuing bond financing without
Citigroup's participation as Project underwriter.
Raymond James approached Servitas with a proposal to achieve the bond financing by eliminating the
subordinate debt and instead funding the approximately $3.25 million gap using a Property Assessed
Clean Energy ("PACE") loan. If this approach is selected and Servitas elects to work with Raymond
James as Project underwriter, IDA approval would be required and could occur at the June 14, 2023
IDA meeting. Servitas is investigating whether incorporation of PACE financing would require an update
to the Ground Lease.
The Project is building permit-ready, has obtained a guaranteed maximum price (GMP) construction
agreement, and an executed lease with the Miami City Ballet, therefore, financial closing of the Project
can be achieved once funding is secured and with execution of the Ground Lease.
The Administration will continue to update the City Commission regarding progress toward financial
closing of the Project. Questions regarding the foregoing may be directed to Rickelle Williams, Assistant
City Manager at rickellewilliams@miamibeachfl.gov.
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