Resolution 2024-33447RESOLUTION NO.2024-33447
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH,FLORIDA,AUTHORIZING THE CITY MANAGER TO:(1)
EXERCISE THE RIGHT OF FIRST OFFER (ROFO)AND NEGOTIATE AND
EXECUTE A PURCHASE AGREEMENT,IN ACCORDANCE WITH SECTION 36.2
AND EXHIBIT 36.2(A)OF THAT CERTAIN AGREEMENT OF LEASE,DATED AS
OF DECEMBER 1,1999 (GROUND LEASE),BETWEEN THE CITY (OWNER)AND
LIPT COLLINS AVENUE,LLC,A DELAWARE LIMITED LIABILITY
CORPORATION (TENANT),RELATING TO TENANT'S NOTICE TO THE CITY
(OFFER NOTICE)OF ITS INTENT TO SELL TO MR PELICAN GARAGE,LLC,A
FLORIDA LIMITED LIABILITY COMPANY,ALL OF TENANT'S LEASEHOLD
INTEREST IN THE GROUND LEASE AND TENANT'S TITLE AND INTEREST IN
THE IMPROVEMENTS ON THE LAND LOCATED AT 1027-1041 COLLINS
AVENUE (LAND),CONSISTING OF A PARKING GARAGE CONTAINING 278
PARKING SPACES,PLUS 61 TANDEM SPACES WHICH COULD BE USED TO
OPERATE VALET PARKING SERVICES,AND APPROXIMATELY 3,350 SQUARE
FEET OF GROUND FLOOR RETAIL SPACE (COLLECTIVELY,THE PROJECT),
IN THE AMOUNT OF $15,000,000.00 PLUS CLOSING COSTS;AND/OR (2)
NEGOTIATE AND EXECUTE AN AGREEMENT WITH TENANT TO EXTEND THE
PERIOD IN WHICH TO EXERCISE THE ROFO,IN ORDER TO PROVIDE THE CITY
WITH THE DUE DILIGENCE PERIOD REQUIRED TO ANALYZE THE PURCHASE
OF THE PROJECT;PROVIDED,HOWEVER,THAT ANY SUCH AGREEMENTS
WOULD BE PRESENTED TO THE CITY COMMISSION FOR CONSIDERATION
AND APPROVAL.
WHEREAS,on January 5,1998,the City issued RFP No.20-97/98,seeking proposals for
the development of public-private parking facilities (the "RFP");and
WHEREAS,on April 6,1998,proposals from five (5)different development teams were
submitted and evaluated by an Evaluation Committee,and on July 15,1998,the City Commission
authorized negotiations with four (4)of the proposed development projects;and
WHEREAS,as a result of said negotiations,on October 20,1999,the Mayor and City
Commission adopted Resolution No.99-23372,approving an Agreement of Lease (the "Lease"or
"Ground Lease")and Development Agreement between the City and Pelican Development,LLC for
development of a project containing a parking garage ("Garage")with ground floor retail space
("Retail Space")not to exceed 5,000 square feet (collectively,the "Project),on the City owned land
located at 1027 Collins Avenue and 1041 Collins Avenue ("Land"),which Lease was executed on
December 1,1999,for an initial forty (40)year term,which ends on January 31,2040,with one
additional ten (10)year option (the "Term");and
WHEREAS,the Project received its Certificate of Occupancy on October 31,2002,with a
seven story Garage having 278 parking spaces,plus 61 tandem parking spaces for use in connection
with the operation of valet services ("Tandem Spaces")and the Retail Space having approximately
3,350 square feet;and
WHEREAS,pursuant to the Lease,Tenant is required to provide parking spaces for
members of the general public at garage parking rates established by Tenant,which rates cannot
not be higher than the highest rate paid by any subtenant of the Project;cannot be lower than the
parking facility rate charged by the City;and have to be comparable with parking facility rates being
charged within the City;and
WHEREAS,on or about June 1,2004,the Project was sold and transferred from Pelican
Development,LLC to Ocean Blvd II,LLC,an Indiana limited liability company;and
WHEREAS,on or about May 27,2010,the Project was sold and transferred from Ocean Blvd
II,LLC to Pelican Investment Holdings,LLC,a Florida limited liability company;and
WHEREAS,on or about December 18,2013,the Project was again sold and transferred
from Pelican Investment Holdings,LLC to LIPT Collins Avenue,LLC,a Delaware limited liability
company ("Tenant")for the total sum of $22,500,000.00 in cash;and
WHEREAS,K.T.K.L.Corporation ("KTKL")was the original owner of one of the lots ("KTKL
Lot"),which the City purchased to acquire the Land in connection with the development of the
Project;and
WHEREAS,originally,pursuant to the purchase and sale agreement between KTKL and the
City,dated as of November 18,1993,("KTKL Purchase Agreement"),as part of the consideration
for a the sale of the KTKL Lot,KTKL wanted exclusive use of 28 spaces at the Garage ("KTKL
Spaces"),and also had the right to purchase the Garage if the City did not complete the construction
of the Garage;and
WHEREAS,the construction did not occur timely,KTKL filed a lawsuit against the City,and
the parties settled the lawsuit by entering into a settlement Agreement titled "KTKL Memorandum,
approved by Agreed Order of Approval,dated July 27,1999,under which KTKL relinquished its right
to purchase back the KTKL Lot,and instead leased the KTKL Spaces back to the City based upon
a net revenue formula;and
WHEREAS,thereafter,KTKL sued to enforce the KTKL Memorandum,citing that the
payments they were receiving in connection with the KTKL Spaces were incorrect and the parties
resolved the dispute and entered into a Settlement Agreement,dated September 15,2010 ("KTKL
Settlement"),a copy of which is attached to the City Commission Memorandum accompanying this
Resolution;and
WHEREAS,pursuant to the KTKL Settlement,the City pays KTKL a fixed annual payment
for the balance of the thirty year period,through 2032,which amount goes up by 3%each year;and
WHEREAS,when Tenant purchased the Project,Tenant paid the City $250,000.00 as
consideration for the City agreeing not to use the 28 KTKL Spaces,as Tenant needed the use of
those spaces for its operations and the City was not using those spaces;and
WHEREAS,on November 7,2024,Tenant provided Owner with a Notice of Sale that
Tenant intended to sell 100%of its leasehold interest in the Project (the "Sale"),and upon the request
of the City Attorney's Office,provided the purchase and sale price as follows:
Owner of Ground Lease:
Seller:
Proposed Purchaser:
Purchase Price:
City of Miami Beach;
LIPT Collins Avenue,LLC;
MR Pelican Garage,LLC,a Florida limited liability company;and
$15,000,000.00;and
WHEREAS,in accordance with Section 36.2 of the Lease ("Owner's Reciprocal Right of
First Refusal"),the City has the right to elect,in writing,within 45 days after Owner's receipt of the
Offer Notice (i.e.Monday,December 23,2024),whether or not to consummate the Right of First
Offer Transaction,at the same price "in cash"and upon such other material terms set forth in the
Offer Notice;and
WHEREAS,the Retail Space,currently subleased to E.D.Y.,Inc.,a Florida corporation and
Hedyc,LLC,a Delaware limited liability company,related entities to the original retail subtenant,E.
Levy Corporation,Inc.(collectively,"Retail Subtenant"),is currently used as a surf and bathing suit
apparel retail store,with the sublease expiring on August 31,2027;and
WHEREAS,the Retail Subtenant's sublease is a gross lease;therefore,Retail Subtenant
pays rent,in the total sum of $25,000.00/month and $300,000.00/year,and is not responsible for
payment of real estate taxes,insurance or operating expenses of the Project;and
WHEREAS,for the calendar year 2023,the Project earned a total of $2,285,214.00,with a
net operating loss of $30,432.00,including $270,567.00 in bad debt and depreciation/amortization
of $621,676.00,as evidenced from the 2023 Statement of Operating Revenues and Expenses,
attached to the City Commission Memorandum accompanying this Resolution;and
WHEREAS,the City of Miami Beach parking garage rates are set forth in Appendix A of
the Miami Beach City Code and are below market for the benefit of its residents,visitors and
surrounding businesses,and include $1.00 per hour for residents and $2.00 per hour for the general
public,as opposed to the hourly rates being charged at the Garage,which include $4.00 per hour
for five hours ($20.00)during weekdays and $5.00 per hour for five hours ($30.00)during the
weekend;and
WHEREAS,in determining whether or not to recommend exercising the Owner's
Reciprocal Right of First Offer,City staff reviewed and compared revenue figures from the City-
owned and managed 7"Street Parking Garage,located at 270 7"Street ("7 Street Garage")to
estimate potential revenue for the subject Project based upon City parking rates;and
WHEREAS,for fiscal year 2023-2024,the 7 Street Garage generated approximately
$2,344,000.00 in gross operating revenues,and incurred operating expenses in the approximate
amount of $2,100,000.00 (including approximately $245,000.00 in repair costs),for a total net profit
of approximately $244,000.00,which based upon 646 parking spaces,produced a net revenue of
$380.00 per parking space;and
WHEREAS,based on fiscal year 2024 gross operating revenue per space for the 7 Street
Garage,the City estimates that it will generate approximately $106,000.00 in net revenues from the
Garage (278 spaces x $380.00=$105,640.00),without including revenue from a valet parking
service;and
WHEREAS,should the City Commission authorize the operation of a valet service by the
City's valet service operator at the Project,the City could use the Tandem Spaces for such operation,
which would generate additional revenues for the Project;and
WHEREAS,during calendar year 2023,the City received rent,in the amount of
$111,848.76,plus percentage rent equal to 2.5%of the Project revenue (based upon gross revenues
for the year from the Project),in the amount of $60,259.07,totaling approximately $172,000.00,plus
the City's portion of the ad-valorem property taxes for the Project,in the approximate amount of
$90,000.00,for a total approximate amount of $262,000.00;and
WHEREAS,additionally,during calendar year 2023,the City paid the annual KTKL
Settlement payment,in the amount of $136,133.08,which means that the City netted approximately
$126,000.00 ($262,000 -$136,133.08 =$125,866.92)for the Project for calendar year 2023;
however,the City would need to continue to pay the KTKL payments through 2032 regardless of
whether or not the City purchased the Project;and
WHEREAS,for comparison purposes,assuming the City owned/operated the Project in
2023,the City would have received $300,000.00 from the Retail Subtenant plus approximately
$106,000.00 in net operating revenues from the operation of the Garage (based upon FY 2024
revenues for the 7 Street Parking Garage),for a total annual revenue of approximately $406,000.00,
less the City's portion of the ad-valorem property taxes for the Project,in the approximate amount of
$90,000.00 (approximately a third of the total ad-valorem real estate tax bill for the Project of
$300,000.00),for a net amount of $316,000.00 for calendar year 2023,without considering any
additional income from valet services;and
WHEREAS,the Property Appraiser's Office has valued the City's Land at $10,570,000.00
and the Project improvements at $5,300,000.00;however,the cost to construct the Project
improvements today would be significantly higher;and
WHEREAS,the purchase price of $15,000,000.00 equates to the construction cost of
approximately $53,956.84/space based upon 278 parking spaces,which is close to the construction
cost estimated by the City's CIP Department,in the approximate amount of $48,500.58/space,
without including the cost to purchase the land,and assuming land would be available in the vicinity
of the Pelican Garage;and
WHEREAS,pursuant to the Development Agreement among the City,The Ballet Valet
Parking Company,Ltd.("Ballet Valet")and the contractor for the Project,Ballet Valet has the option
to purchase the 7"Street Garage by indicating such intent for a period of thirty (30)days on the date
which is 30 years after the date the City opened the 7"Street Garage for service,which is anticipated
to be approximately April 2026;and
WHEREAS,Ballet Valet has advised the City that it intends to exercise this purchase option,
in which case the City will lose control over the use for the 7"Street Garage,as it could be
redeveloped,and the garage parking rates for the existing garage or future garage component will
be increased to market rates;and
WHEREAS,although the City Administration is in the process of negotiating an agreement
with Ballet Valet for the possible preservation of the 7"Street Garage as a public parking facility,the
parties have not reached an agreement to date;and
WHEREAS,in order to incentivize the construction of residential developments,the City is in
the process of considering,and is anticipating to approve,development regulations allowing up-
zoning and parking waivers for proposed developments along Washington Avenue ("The
Washington Avenue Residential Program"),which developments will include incentives to use micro
mobility devices;however,the demand for parking will also increase;and
WHEREAS,in addition to residents and visitors,businesses in the surrounding area of the
Project will need affordable parking for its employees;and
WHEREAS,considering the possible loss of the 7"Street Garage,which will remove 646
parking spaces from the City's stock of affordable public parking spaces,the purchase of the Project
would serve to address the City's immediate need for affordable parking for the surrounding areas
of the Project,without the City having to purchase land or navigate the development process,
including development costs and delays customary of these types of projects;and
WHEREAS,based upon the foregoing,the City Administration recommends authorizing the
City Manager to:(1)exercise the Right of First Offer (ROFO)and negotiate and execute a purchase
agreement,in accordance with Section 36.2 and Exhibit 36.2(a)of the Ground Lease,relating to
Tenant's Offer Notice for the sale of the Project,in the amount of $15,000,000.00 plus closing costs;
and/or (2)negotiate and execute an agreement with Tenant extending the period in which to exercise
the ROFO,in order to provide the City with the required due diligence period to analyze the purchase
of the Project;provided that any such agreements would be presented to the City Commission for
consideration and final disposition.
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:(1)exercise the Right of First Offer (ROFO)and negotiate and execute a
purchase agreement,in accordance with Section 36.2 and Exhibit 36.2(a)of that certain Agreement
of Lease,dated as of December 1,1999 (Ground Lease),between the City (Owner)and LIPT Collins
Avenue,LLC,a Delaware limited liability corporation (Tenant),relating to Tenant's notice to the City
(Offer Notice)of its intent to sell to Mr Pelican Garage,LLC,a Florida limited liability company,all of
Tenant's leasehold interest in the Ground Lease and Tenant's title and interest in the improvements
on the land located at 1027-1041 Collins Avenue (Land),consisting of a parking garage with 278
parking spaces,plus 61 Tandem Spaces which could be used to operate valet parking services,and
approximately 3,350 square feet of ground floor retail space (collectively,the Project),in the amount
of $15,000,000.00 plus closing costs;and/or (2)negotiate and execute an agreement with Tenant to
extend the period in which to exercise the ROFO,in order to provide the City with the required due
diligence period to analyze the purchase of the Project;provided,however,that any such
agreements would be presented to the City Commission for consideration and approval.
PASSED and ADOPTED this 11"day of December,2024.
Steven Meiner,Mayor
ATTEST:
APPROVED AS TOFORM&LANGUAGE
R EXECUTION
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