C6B-Report- Finance And Citywide Projects Committee Meeting On December 6 2011lD MIAMIBEACH ~
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMITIEE MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: City Manager Jorge M. Gonzale
DATE: January 11, 2012
SUBJECT: REPORT OF THE FINANCE AND CITYWIDE PROJECTS COMMITTEE
MEETING OF December 6, 2011.
OLD BUSINESS
NEW BUSINESS
1. A discussion of a proposed modification of the promissory note dated
February 5, 2007, between MBCDC: Meridian Place, LLC, a Florida Limited
Liability Corporation, to the Miami Beach Redevelopment Agency; and to
discuss a subordination of the City's Mortgages in favor of a mortgage
made by a commercial lending institution
ACTION
The Committee asked that the item be brought to the full Commission without a
recommendation.
Anna Parekh, Director of Real Estate, Housing, and Community Development,
presented the item.
Meridian Place was built in 1940 and had been operating as a 72-unit transient hotel,
located at 530 Meridian Avenue, which was purchased for rehabilitation by Carrfour
Supportive Housing in 2001. An August 22, 2006 appraisal by J.B. Alhale &
Assosicated, Inc., determined the "as-is" value to be $3,800,000 and the "upon-
completion" value of $6,525,000. As a result of ongoing issues with its funders, Carrfour
Supportive Housing indicated that it would no longer pursue completion of the re-named
"Sunsouth Place Apartments" project. Miami Beach Community Development
Corporation (MBCDC) was approached regarding its interest in acquiring the property to
ensure its continued availability to the community as affordable housing. To complete
the transactions, MBCDC requested funding from the City to assist in the acquisition of
the property. In July 2006, MBCDC entered into a purchase agreement with Carrfour
Supportive Housing for acquisition of the property. At that time, there was no debt
service contemplated for the RDA's $1,500,000 contribution. On October 11, 2006, the
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Agenda Item C. C 8
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Miami Beach Redevelopment Agency (RDA) approved Resolution No. 538-2006
authorizing an appropriation of South Pointe Redevelopment Area funds in the amount
of $1,500,000 to be utilized by MBCDC for the purpose of MBCDC's .acquisition and
rehabilitation of the building located at 530 Meridian Avenue to provide 34 units of
affordable housing for elderly, formerly homeless persons. On February 5, 2007, a
Mortgage and Security Agreement and a corresponding Promissory Note were executed
by MBCDC: Meridian Place, LLC, a Florida limited liability corporation (the Promissory
Note), committing to a repayment schedule in the amount of $150,000, commencing
December 31, 2011, and continuing each December 31 thereafter annually.
At the time of MBCDC's acquisition of Meridian Place, total project costs were estimated
at $6,629,000, including acquisition. Since that time, the City's regulatory processes as
well as HUD's regulations concerning the size of the units, necessitated significant
modifications to the plans, including complete reconfiguration of the floor plans to reduce
the number of units to 34, the addition of an elevator, and the configuration of the lobby
for ADA compliance. The total costs are currently projected at $8,117,797, including the
$3,800,000 acquisition cost. Until the HUD and County General Obligation Bond funds,
$355,012 and $440,431 respectively, are paid to MBCDC, the funding gap to complete
the construction of the project is $977,975. Based on the current rental income
projected for this affordable housing project, the RDA debt service which is scheduled to
commence this December and the current market value of the property, MBCDC has
been unable to obtain a commitment for private bank financing to fill the current funding
gap.
Based on cash flow projections outlined in MBCDC's Meridian Place Profoma dated
9/21/11, the annual RDA debt payments would create negative cashflow of more than
$100,000 in each of the next ten years. This position is further compounded by an
additional $1,000,000 in negative cashflow if the State debt is repaid in the year 2020, as
required. MBCDC states that if the RDA Promissory Note is modified to reflect a
deferred or forgivable status, then the project will be provided with a modest net cash
flow average of approximately $20,000 for each of the next ten years; with the exception
of the first year of operation. This also presumes that MBCDC is successful in receiving
its requested payment deferral and extended amortization of the State debt.
The Administration recommended that the RDA loan repayment terms be restructured to
be consistent with other affordable housing grants (loans) from the City which defer the
repayment of the funding as long as the project is kept "affordable" in accordance with
HUD guidelines. The project's "affordability period" is currently thirty (30) years,
commencing at the issuance of the Final Certificate of Completion. It was also
recommended that should the deferral of the RDA repayment be approved, that the
expiration of the 30-year affordability period, the City may be given the option to either
call in the note, extend the affordability period (e.g. another thirty years), or otherwise
modify the note. Commissioner Jorge Exposito asked at what time the debt repayments
normally begin. Ms. Parekh stated that normally the City does not give debt service on
affordable housing loans; rather they are turned into forgivable grants as long as the
project is kept affordable. Chairperson Deede Weithorn asked what would happen if the
repayment is not deferred. Assistant City Manager Hilda Fernandez stated that project
would not be able to continue. Chairperson Weithorn asked how much money is left to
finish the project. Ms. Fernandez stated that there is a $900,000 funding gap.
Discussion ensued. The Committee asked that the item be brought to the full
Commission without a recommendation.
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2. Discussion concerning City Fees and Charges for Gay Pride 2012
ACTION
Item Deferred
3. Discussion and review of City's Investment Policy
ACTION
The Committee recommended that the item be brought to the full Commission
with the recommended changes.
Chief Financial Officer Patricia Walker presented and gave a brief history of the item.
On September 27, 1995 the City's Investment Policy and Procedures were officially
adopted in writing with the passage and adoption of Resolution No. 95-21726. This was
a result of the passing of Chapter 218.415 of the Florida Statues that require the
adoption of a formal written investment policy by local governments. The last
amendment to the Investment Policy was done in 2007 by the request of then Mayor
David Dermer who wanted to add certain investments that the City should not invest in.
He wanted to incorporate the State's "Protecting Florida's Investment Act" to the City's
policy. This Act prohibited the investment of public funds managed by the City in any
"Scrutinized Companies" with active business operations in Sudan or Iran, as listed by
the State Board of Administration (SBA) on a quarterly basis. Thus this Act was
incorporated into the City's Investment Policy by the adoption and passage of Resolution
No. 2007-26602 on July 11, 2007. The State of Florida, in the passing of Chapter
218.415, has allowed investment in Israeli bonds. Due to the State allowing investments
in Israeli bonds, the City will be adding the investment of Israeli bonds as an allowable
City investment. In addition, it was recommended that Section L-lnvestment Committee
was removed from the Investment Policy and replaced with the City's current practice of
using an Investment Advisor.
Chairperson Deede Weithorn suggested that the policy be reviewed on a regular basis.
Ms. Walker stated that provision will be added stating that the policy shall be reviewed
no longer than five (5) years from the last review date or at the time of a change of any
significant accounting pronouncement or change in the City's market treasury services.
The Committee recommended that the item be brought to the full Commission with the
recommended changes.
4. Discussion regarding the public beachfront concessions agreement
ACTION
The Committee recommended bringing the item to the full Commission with the
language of the old agreement regarding the renewal provision, including
benchmarks to be developed by Staff for the consideration of the Commission,
and requested that two options be presented regarding the increase to the
minimum guarantee: the greater of the Consumer Price Index (CPI) or three
percent (3%); or the lesser of CPI or three percent (3%).
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Assistant City Manager Hilda Fernandez presented the item and gave a brief synopsis of
the memo.
On February 21, 2001, the Mayor and City Commission authorized the issuance of a
Request for Proposals (RFP) which resulted in the selection of Boucher Brothers Miami
Beach, LLC (Boucher Brothers) for the operation and management of beachfront
concessions including beach equipment rentals, food and beverage sales, and water
sport rentals on the beaches seaward of Lummus Park, Ocean Terrace and North Shore
Open Space Park. The agreement commenced on November 4, 2001, and expired on
November 4, 2006 with an option to renew for an additional five (5) year term. An
amended and restated concession agreement was entered into on May 18, 2005, which
clarified and memorialized operational issues. An amendment to the amended and
restated concession agreement was entered into on January 11, 2006, which granted a
renewal term through November 5, 2011, and memorialized value enhancements form
the Concessionaire to the City. A second amendment to amend the amended and
restated beachfront concession agreement was executed on April 16, 2008, said
amendment providing for the addition of a concession area adjacent to Bandshell Park.
A third amendment to the amended and restated beachfront concession agreement was
executed on July 15, 2008, which provided for the reconfiguration of a fenced storage
area for storage and for a dumpster facility.
In light of satisfaction with the performance of the current concessionaire, and a desire to
ensure that the concession agreement addressed desirable items, such as non-
motorized water sports in North Beach, additional cleaning services, and the installation
of beach lockers, Staff was directed by the Commission (following the Commission
Retreat) to negotiate a new concession agreement with Boucher Brothers. The current
opportunities afforded under the existing contract, as well as other options that can
generate potential new revenue for the City, were researched and negotiated. In
addition to allowing the rental of new types of luxury beachfront equipment, servicing
new areas, and allowing for "heating' of certain foods, Boucher Brothers expressed a
willingness to develop a non-motorized water sports program in North Beach, as well as
continuing to provide (and offer additional) "Value-Added Enhancements" (VAE). The
VAE would continue to include annual donations to the City for scholarships, for
environmental programming, and in support of the promotion of the City of Miami Beach.
Additionally, the proposed new Agreement requires that the Concessionaire shall
provide, at its sole cost, support in cleanliness in Lummus Park, including the area
outside of the Concession Areas. Furthermore, under the proposed new agreement, the
Concessionaire will provide a public beachfront outdoor ashtray program and implement
a beach locker program. The proposed terms reflect a flat minimum guarantee for Year
One (same as year ten of current Agreement) and a deferred escalator that is intended
to offset the capital investment necessary to implement the non-motorized sports
concession in North Beach, the beach locker program and the additional services.
Ms. Fernandez stated that last month, the Concession Agreement was extended on a
month-to-month basis pending the review and consideration by the City Commission of a
new concession agreement, therefore, retroactive approval would be needed on this.
Discussion ensued. Commissioner Jorge Exposito asked what the timeframe was for
adding the non-motorized sports water channel. Ms. Fernandez stated that Staff will
research what the timeframe and requirements are for a non-motorized water sports
channel. The Boucher Brothers were asked for their comments on the proposed
agreement. They mentioned that they had two issues of concern for them: the renewal
language as proposed in the agenda item, and the escalator provision. On the former,
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Perry Boucher requested that the language from the last agreement be included. Ms.
Fernandez explained that the current language does not provide for an automatic
renewal, but requires further Commission action. She also added that under the previous
agreement, Boucher had to meet certain benchmarks for a renewal to even be
considered. On the latter, staff explained that the current proposed escalator is a
reduction from the flat 5% and that the CPI over the past ten years has never exceeded
2.5% (by calculations provided by Boucher), so the possibility of the escalator being
greater than 3% was not likely. Following discussion, the Committee recommended
bringing the item to the full Commission with the language of the old agreement
regarding the renewal provision, including benchmarks to be developed by staff and
included, and requested that two options be presented for the Commission's
consideration regarding the increase to the minimum guarantee: the greater of the
Consumer Price Index (CPI) or three percent (3%); or, the lesser of CPI or three percent
(3%).
5. Request for approval to issue a Request for Proposals (RFP) for security
guard services
ACTION
The Committee recommended:
• the criterion for Financial Strength be made a minimum requirement;
• the criterion for character, integrity, judgment and reputation be removed;
• five (5) points from the removed criterion be added to experience and
qualifications of the Contractor;
• five (5) points be added to experience and qualifications of the
Management Team;
• that Staff determine the location and types of enforcement assistance for
the trial basis
Procurement Director Gus Lopez presented the item and gave a brief synopsis of the
memo.
Chairperson Deede Weithorn suggested that the criterion for Financial Strength be made
a minimum requirement, the character, integrity, judgment and reputation criterion be
removed and that the points be added to experience and qualifications of the Contractor
and experience and qualifications of the Management Team.
Chairperson Weithorn then asked if the City would save money if the Request for
Proposals (RFP) went out. Mr. Lopez stated that in the past, the results of the RFP have
been compared to the existing contract and if it is in the City's best interest, the City
reserves the right to renew the existing contract and reject all proposals.
Commissioner Jorge Exposito asked if the purview of the security guards could be
extended to include issuing citations. City Attorney Jose Smith stated that the issue
would be if the City would pay more to have a more qualified security guard that is able
to issue code violations. Assistant City Manager Hilda Fernandez stated that the
difference would be approximately $5 per hour for this level of officer. Chairperson
Weithorn suggested that this be tested in South Pointe Park on a trial basis.
Commissioner Exposito asked that should the City decide to move forward with this,
what the training timeframe would be. Ms. Fernandez stated that the types of
enforcement assistance would have to be narrowed down to determine the amount of
training that would be needed.
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The Committee recommended that the criterion for Financial Strength be made a
minimum requirement; the criterion for character, integrity, judgment and reputation be
removed; and that five (5) points from the removed criterion be added to experience and
qualifications of the Contractor; five (5) points be added to experience and qualifications
of the Management Team; and that Staff determine the location and types of
enforcement assistance for the trial basis.
6. Discussion pertaining to the issuance of a Request for Proposals {RFP) for
auditing services for the City's {CAFR), {OMB A-133 Single Audit), The
Miami Beach Redevelopment Agency's basic financial statements {RDA),
... (PSF), {VCA) financial statements, The Miami Beach Convention Center,
as managed by Global Spectrum, financial statements, The Children's Trust
Program, The Building Better Communities Bonds Program, and The Safe
Neighborhood Parks and Bond Program {SNP)
ACTION
Item Deferred
7. Discussion of Right-of-way recycling program
ACTION
The Committee recommended that a pilot program proposal be brought to the
January Finance & Citywide Projects Committee Meeting.
Public Works Director Fred Beckmann presented the item.
Since 2009, the City installed 74 dual recycling bins and 74 silver urban style standalone
recycling bins throughout the City's Right of Way (ROW), beach entrances, and in select
parks. The bins were financed through negotiations with the City's franchise waste
haulers. Also, through these negotiations the City's franchise waste haulers provide in-
kind solid waste and recycling pick-up. Waste haulers service the ROW waste
receptacles on a regular schedule to ensure a high level of service in City parks, beach
entrances, and ROW locations.
Currently, the City is negotiating a partnership agreement with Coca-Cola. As part of
this agreement, Coca-Cola will assist with developing signage for existing recycling bins
to improve recycling rates. All future recycling receptacles purchased by the City would
also include this updated message to create a uniform design throughout the City.
A number of companies have presented dual trash and recycling receptacle products to
the Sustainability Committee including Go Green Eco-Bins and Big Belly Solar. Both of
these companies' business models include an option to use advertising to offset the cost
of providing these public benefits. Other concerns that have been identified with
selecting new recycling receptacles include size constraints in ROW, uniformity with
current receptacles, and odor problems associated with the compacting models of
decomposing organic waste in Miami Beach's hot, humid climate. Neither the Go Green
Eco-Bins nor the Big Belly Solar bin could be installed in the standard 5-foot wide
sidewalks as they would not leave enough space to provide compliance with ADA
standards. It was also noted that both the Go Green Eco-Bins and the Big Belly Solar
design would require a concrete slab foundation for installation adjacent to the beach.
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The Florida Department of Environmental Protection regulates construction activities
west of the Coastal Construction Control Line (CCCL) and would require the City to
obtain a CCCL Permit to move forward with installing these receptacles. Bruce Renard,
President of Go Green stated that their proposal was not to place the bins on the ROW
but rather in beach areas.
The Committee recommended that a pilot program proposal be brought to the January
Finance & Citywide Projects Committee Meeting.
8. Discussion on FPL Franchise Payments to the City of Miami Beach
ACTION
None Required
Assistant City Manager Duncan Ballantyne presented the item.
The City's current thirty (30) year non-exclusive franchise agreement with Florida Power
& Light (FPL) expires on January 22, 2012. Since January 2011, representatives of the
City Manager and City Attorney's Office have been negotiating the terms and conditions
of a new franchise agreement with FPL. A public workshop was held on November 28,
2011 at the Miami Beach Golf Course Clubhouse to discuss the terms of the proposed
new agreement. A major concern at the workshop was the 30-year term, which,
notwithstanding the City's continuous efforts to reduce, FPL indicated could not be
modified. Residents from Sunset Islands 3 & 4 neighborhood addressed concerns
regarding the difficulties surrounding the process of undergrounding. The Committee
discussed the calculation of the current and proposed franchise payments. Chairperson
Deede Weithorn opened the floor to public comment which included requests for
research regarding the process of undergrounding.
9. Discussion on Outsourcing of Lincoln Road mall Maintenance Services
ACTION
The Committee asked that a detailed analysis about the positions that would be
eliminated by the outsourcing of Lincoln Road Mall maintenance services be
completed before the item is brought to the full Commission and that staff reply to
the public records request by CWA.
Chairperson Deede Weithorn was concerned about positions being eliminated by the
outsourcing of Lincoln Road Mall maintenance services. Fred Beckman, Public Works
Director, stated that anyone that gets displaced due to the outsourcing will be placed in
another job within the City. Chairperson Weithorn then asked for more detail about the
positions that would be eliminated including how many positions and if any of the
employees holding those positions would be retiring in the near future. The Committee
asked that detailed analysis about the positions that would be eliminated by the
outsourcing of Lincoln Road Mall maintenance services be completed before the item is
brought to the full Commission. Discussion ensued. Commissioner Jonah Wolfson
asked Richard McKinnon, Communications Workers of America (CWA) President Local
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3178, what he was seeking to understand from the detailed analysis being asked for.
Mr. McKinnon stated that he would like to show the difference in cost between
outsourcing the maintenance services and having City employees provide the
maintenance services was minimal. CWA Secretary Jonathan Sinkes added that union
workers that work on Lincoln Road have not been sent out in several weeks because
parts necessary to complete the work orders are not available. Discussion ensued. The
Committee requested a Letter to Commission regarding open work orders and the
Standard Operating Procedures for obtaining supplies. Chairperson Weithorn opened
the floor to public comment which included requests for a workshop for the business on
Lincoln Road to discuss policy changes. The Committee recommended a workshop be
held with both business and property owners to discuss the scope of current Lincoln
Road maintenance services as well as the possibility of out sourcing the maintenance
services.
Additional Item (not on agenda): Discussion regarding towing permits
ACTION
The Committee directed Staff to meet with the towing companies before the
December 14, 2011 Commission Meeting to work on the unresolved issues and
bring their recommendations or policy questions to the Commission meeting.
Chairperson Deede Weithorn asked that the Administration bring the item to the
December 14, 2011 Commission Meeting. Assistant City Manager Jorge Gomez stated
that a memo had been drafted stating that the contract was to continue on a month-to-
month basis, the issues that have not reached a conclusion were outlined, and asked for
the Commissions to refer the item to the appropriate committee. Mr. Gomez then asked
that the Commission give their direction regarding the unresolved issues at the
December 14, 2011 Commission Meeting. Chairperson Weithorn recommended that
Administration meet with the towing companies before the Commission Meeting to try to
resolve the outstanding issues so that the policy decisions could be made and the item
can move forward. The Committee directed Staff to meet with the towing companies
before the December 14, 2011 Commission Meeting to work on the unresolved issues
and bring their recommendations or policy questions to the Commission meeting.
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