Resolution 2023-32619RESOLUTION NO. 2023-32619
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE
ADMINISTRATION TO FINALIZE, CONSISTENT WITH THE TERMS
CONTEMPLATED IN THIS RESOLUTION, PROPOSED REVISIONS TO
THE GROUND LEASE AGREEMENT BETWEEN THE CITY OF MIAMI
BEACH AND CFC-MB I, LLC ("LESSEE"), AN ARIZONA LIMITED
LIABILITY COMPANY, FOR THE COLLINS PARK ARTIST WORKFORCE
HOUSING PROJECT (THE "PROJECT") TO REFLECT THE CITY'S
ADDITIONAL MONETARY CONTRIBUTION FOR THE PROJECT AND
FURTHER, AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE THE FINAL NEGOTIATED AGREEMENT, SUBJECT TO FORM
APPROVAL BY THE CITY ATTORNEY, PROVIDED THAT THE LESSEE
IS ABLE TO FUND ANY REMAINING FINANCING GAP AT THE TIME OF
FINANCIAL CLOSING.
WHEREAS, the City is the owner of the property located at 224 23rd Street, within
the Collins Park Cultural District (the "Property"), the current site of a 21-space surface
parking lot adjacent to the Miami Beach Regional Library and the Collins Park Garage
(G12); and
WHEREAS, on September 14, 2016, the Mayor and City Commission adopted
Resolution No. 2016-29547, selecting The Concourse Group to identify public -private
partnership ("P3") opportunities to alleviate the cost, and other burdens, on the City
associated with the development of workforce housing projects on City -owned property;
and
WHEREAS, on January 18, 2019, the City issued Invitation to Negotiate (ITN)
2019-099-KB, with a workforce housing development requirement, focused on attracting
artists and area educators to the City and encouraging proposers to incorporate dormitory
space for the Miami City Ballet, Inc. (the "Ballet"), South Florida's premier classical ballet
company and a not -for -profit cultural organization, headquartered in close vicinity of the
Property, at 2200 Liberty Avenue; and
WHEREAS, on July 17, 2019, the Mayor and City Commission adopted Resolution
No. 2019-30908, authorizing simultaneous negotiations with both ITN proposers, Atlantic
Pacific Communities, LLC and Servitas, LLC ("Servitas" or "Developer"), and following
the withdrawal from negotiations of Atlantic Pacific Communities, LLC, the City
Commission directed negotiation with Servitas, the sole remaining proposer; and
WHEREAS, pursuant to the competitive solicitation process, the City resolved to
redevelop the Property as a mixed -use residential workforce housing development that
prioritizes income -eligible artists, educators, City employees, veterans, .and other
members of the Miami Beach workforce as tenants (the "Collins Park Artist Workforce
Housing Project" or "Project"); and
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WHEREAS, on September 23, 2020, the Finance and Economic Resiliency
Committee (the " FERC") reviewed the proposed terms negotiated between the Developer
and the City Administration, and unanimously recommended that the City proceed with
the Project; and
WHEREAS, on October 18, 2020, the Mayor and City Commission adopted
Resolution No. 2020-31435, accepting the FERC's recommendation, approving the
Project term sheet, directing negotiation of a Development Agreement and Ground Lease,
and referring the Project for review by the Planning Board; and
WHEREAS, on November 17, 2020, the Planning Board unanimously passed
Resolution No. PB20-0407, transmitting the proposed Development Agreement and
Ground Lease to the City Commission with a favorable recommendation, in accordance
with the requirements of Section 1.03(b)(4) of the City Charter and the City's Land
Development Regulations; and
WHEREAS, on January 13, 2021, the Mayor and City Commission adopted
Resolution No. 2021-31553, authorizing the Development Agreement with the Developer;
Resolution No. 2021-31554, authorizing the Ground Lease for the Project; and Resolution
No. 2021-31555, authorizing a waiver of the minimum and average unit size requirements
for up to ten (10) studio units in the Project and of the City Code's parking requirements
with respect to the Project, although, ultimately, no units were designed below the
minimum and average unit size requirement; and
WHEREAS, on June 6, 2021, the Historic Preservation Board ("HPB")
unanimously approved a Certificate of Appropriateness for the Project's design and
Servitas submitted its building permit application to the City's Building Department in
September 2021; and
WHEREAS, on February 23, 2022, the Mayor and City Commission adopted
Resolution No. 2022-32053, authorizing (i) an amendment (revision) of the Ground
Lease, modifying the income -eligibility requirement for rental of the units, (ii) the First
Floor Sublease with the City as subtenant, and (iii) a cash subsidy of up to $532,451 to
cover a shortfall in permitting costs attributed to the then -applicable Sustainability Fee;
and, in exchange, Servitas agreed to cap its developer fee to $1 million, at a cost to the
Developer of approximately $600,000; and
WHEREAS, the Ground Lease revision was intended to increase projected rental
revenues generated by the Project to address a financing gap attributed primarily to rising
construction costs; and
WHEREAS, in April 2022, the City completed regulatory review of the Project's
construction plans, with payment of County and City development fees remaining as the
sole condition precedent before issuance of the building permit; and
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WHEREAS, following the City Commission's February 2022 authorization to adjust
the Project's unit mix of income -eligible tenants, economic conditions, including rising
interest rates and increasing costs of construction have continued to impact the
development budget and, as a result, the Developer's ability to achieve financial closing;
and
WHEREAS, to bolster the financial viability of the Project, the Administration
suggested that the City Commission consider various fee waivers that would help reduce
costs for the Project and potentially encourage affordable and workforce housing projects
generally; and
WHEREAS, on March 9, 2022, the City Commission referred discussion to the
FERC regarding the elimination of additional development -related fees for affordable and
workforce housing projects; and
WHEREAS, on March 15, 2022, the Affordable Housing Advisory Committee
passed a motion in support of exempting affordable and workforce housing from the
Sustainability Fee; and
WHEREAS, on April 6, 2022, the City Commission referred to the Land Use and
Sustainability Committee ("LUSC") a discussion about amending the Land Development
Regulations to exempt workforce projects from payment of the City's Mobility Fee; and
WHEREAS, on June 22, 2022, the City Commission accepted the May 27, 2022
recommendation of the FERC and the June 6, 2022 recommendation of the LUSC, and
referred legislation to the Planning Board to reduce development -related fees, with the
goal of increasing the city's affordable and workforce housing stock; and
WHEREAS, on July 22, 2022, at the FERC Budget Briefing, the Committee
discussed how rising interest rates and escalating construction costs had led to an
additional Project financing gap of approximately $2.85 million and the FERC
recommended that the City Commission consider a cash infusion to bridge this gap; and
WHEREAS, on July 26, 2022, the Planning Board discussed the Project and
provided a favorable recommendation of an ordinance to reduce development -related
City fees for affordable and workforce housing (the "Fee Exemption Ordinance"); and
WHEREAS, on July 25, 2022, the City Commission approved Resolution No.
2022-32261 authorizing the November 8, 2022 ballot question seeking approval by the
City's residents to issue up to $159 million in general obligation bonds (the "Arts and
Culture G.O. Bonds") to improve facilities programmed and/or operated by arts and
cultural institutions throughout the city for multiple capital projects; and
WHEREAS, on September 28, 2022, the City Commission approved Resolution
No. 2022-32337, adopting the FY 2023 Capital Budget, including $2.85 million in gap
financing for the Project, as recommended on July 22, 2022 at the FERC Budget Briefing;
and Ordinance No. 2022-4513, authorizing the Fee Exemption Ordinance; and
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WHEREAS, on November 8, 2022, Miami Beach residents voted and approved
the Arts and Culture G.O. Bonds, which included an amount of $4 million to be contributed
toward the cost of the buildout of the Miami City Ballet's second -floor dormitory at the
Project; and
WHEREAS, -the Administration has incurred approximately $23,000 in upfront pre -
development expenses related to Project due diligence, negotiation and approvals, and
upon financial closing and release of funds associated with the issuance of bond
financing, the Project will reimburse to the City approximately $23,000 in City upfront pre -
development expenses incurred up to this point; and
WHEREAS, during the predevelopment phase of the Project, the Administration
and Servitas identified and pursued several means to reduce Project costs and to
supplement project funding, including, but not limited to:
Miami -Dade County Impact Fee Exemption Ordinance: Ordinance No. 22-80 was
adopted on July 7, 2022 by the Miami -Dade County Board of County
Commissioners (BCC) to benefit affordable and workforce housing development,
which, along with a credit for existing development on the Property, led to a 78%
reduction in the County's impact fee assessment for the Project reflecting
$329,399 in savings; and
City of Miami Beach Fee Exemption Ordinance: on September 28, 2022, the Mayor
and City Commission adopted Ordinance No. 2022-4513, waiving certain
development -related fees for affordable and workforce housing projects, which
reduced development -related fees for the Project in the aggregate amount of
approximately $1.26 million; and
City Contribution: as recommended by the FERC and approved by the City
Commission via Resolution No. 2022-32337, the FY 2023 Capital Budget includes
a financial contribution of up to $2.85 million, which $2.85 million is an advance
that will be reimbursed to the City from Project net revenues on an annual basis
until fully reimbursed; and
Arts and Culture G.O. Bond Contribution — Miami City Ballet: on July 25, 2022, the
City Commission approved Resolution No. 2022-32261 authorizing the November
8, 2022 ballot question seeking approval by the City's residents to issue up to $159
million in general obligation bonds to improve facilities programmed and/or
operated by arts and cultural institutions throughout the city for multiple capital
projects, including $4 million to be contributed toward the cost of the buildout of
the Miami City Ballet's second -floor dormitory at the Project, and on November 8,
2022, Miami Beach residents voted and approved the Arts and Culture G.O.
Bonds; and
Miami -Dade County Documentary Stamp Surtax Loan: on August.26, 2022, the
Developer applied for Miami -Dade County Documentary Stamp Surtax Funding,
which was sought to provide funding of up to $2 million, but in January 2023,.
Servitas received notification that the Project was not recommended for funding;
and
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WHEREAS, on November 16, 2022, the City Commission adopted Resolution No.
2022-32411, approving and authorizing a revised Ground Lease incorporating two
previously approved capital contributions by the City as funding sources for Project
development and financing: (1) the Lessor Direct Capital Cost Contribution in the amount
of up to $2.85 million, as an advance to be repaid to the City from Project Net Available
Cash Flow and (2) the Lessor Arts and Culture G.O. Bond Cost Contribution in the amount
of up to $4 million which will be funded as a grant that is not reimbursable to the City; and
WHEREAS, on February 21, 2023, project underwriter Citigroup Global Markets,
Inc. launched a limited public offering of the tax-exempt revenue bonds, bifurcated and
marketed as senior debt and subordinate debt, but the Project has been unable to achieve
financial closing due to limited investor interest in the subordinate debt; and
WHEREAS, the Project continues to experience a funding gap in the amount of
approximately $3 million; and
WHEREAS, the Developer has agreed to defer its developer fee of $1 million until
the Project has a positive cash flow; and
WHEREAS, to close the remaining $3 million gap, the City Commission desires to
further revise the unexecuted Ground Lease to reflect an additional capital direct
contribution of up to $3 million, resulting in a total Lessor Direct Capital Cost Contribution
of up to $5.85 million instead of up to $2.85 million (with the first instalment of $850,000
paid at financial closing to be used to pay for any Project expenses and the second and
final installment of up to $5 million to be used solely to pay for Project construction costs
to be paid no later than 45 days after the Project achieves 50 percent completion, as
evidenced by applications for payment received by the Developer from its general
contractor); and
WHEREAS, to help ensure the realization of a significant City project that aims to
ameliorate the attainable housing crisis, the Mayor and City Commission endorse a
revision to the Ground Lease to reflect an additional direct capital contribution of $3
million.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, hereby approves and
authorizes the Administration to finalize, consistent with the terms contemplated in this
Resolution, proposed revisions to the Ground Lease Agreement between the City of
Miami Beach and CFC-MB I, LLC, an Arizona limited liability company ("Lessee"), for the
Collins Park Artist Workforce Housing Project (the "Project") to reflect the City's additional
monetary contribution of up to $3 million to be used solely to pay for Project construction
costs; and further, authorizes the Mayor and City Clerk to execute the final negotiated
Ground Lease, subject to form approval by the City Attorney, provided that the Lessee is
able to fund any remaining financing gap at the time of financial closing.
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PASSED and ADOPTED THIS 17th day of May 2023.
ATTEST:
JUN 13 2023
-4- 1101 4 q q
RAFAEL E. GRANADO, CITrCL8FfKZUZJ
DAN GELBER, MAYOR
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
-I�L--23
City Attorneys We
0
New Business and Commission Requests - R9 Y
MIAMI BEACH
COMMISSION MEMORANDUM
TO.: Honorable Mayor and Members of the City Commission
FROM: Commissioner David Richardson
DATE: May 17, 2023
SUBJECT -STATUS UPDATE, WITH POSSIBLE ACTION, ON THE COLLINS PARK
ARTIST WORKFORCE HOUSING PROJECTAND RELATED FUNDING.
SUPPORTING SURVEY DATA
N/A
FINANCIAL INFORMATION
N/A
Applicable Area
South Beach
Is this a "Residents Right
to Know" item, pursuant to
City Code Section 2-14?
Yes
Legislative Tracking
Commissioner David Richardson
Does this item utilize G.O.
Bond Funds?
No
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