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RESOLUTION NO. 2004-25743
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING A
SETTLEMENT OF THE LAWSUIT STYLED, GLORIA
ROSENTHAL. TRUSTEE OF THE GLORIA ROSENTHAL
TRUST u/a/d 5-19-88. n/kla GLORIA ROSENTHAL TRUST
u/a/d 5-14-99 V. CITY OF MIAMI BEACH CASE NO. 04-
10744 CA 31; AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE ANY AND ALL NECESSARY
SETTLEMENT DOCUMENTS, INCLUDING BUT NOT
LIMITED TO THE EXECUTION OF A PURCHASE AND SALE
AGREEMENT BETWEEN THE CITY (BUYER) AND THE
GLORIA ROSENTHAL TRUST (SELLER) FOR THE
PROPERTY LOCATED AT 1833 BAY ROAD, MIAMI BEACH,
FLORIDA; FURTHER MAKING THE SETTLEMENT
SUBJECT TO AND CONDITIONED UPON CLOSING OF THE
SUBJECT PROPERTY
WHEREAS, on May 12, 2004, Plaintiff, Gloria Miller Rosenthal, filed a Complaint
for Declaratory Judgment, styled Gloria Rosenthal, Trustee of the Gloria Rosenthal Trust
u/a/d 5-19-88, n/k/a Gloria Rosenthal Trust u/a/d 5-14-99 v, Citv of Miami Beach Case No,
04-10744 CA 31, seeking a court determination on whether or not the City properly
exercised its option to purchase the property located at 1833 Bay Road, Miami Beach,
Florida (the Property), and occupied by the City, as Tenant, pursuant to a Lease
Agreement with Gloria Miller Rosenthal, as Landlord, dated January 31, 2001, and as
amended on February 4, 2004 (First Amendment to the Lease Agreement); and
WHEREAS, the lawsuit further sought a court determination whether another
purchase and sale contract for the Property, entered into on March 22, 2004, between the
Plaintiff and Tamron Properties, LLC,) met the criteria, as established in the First
Amendment to the Lease Agreement, (i) that it be a "binding" contract, and ii) and that the
potential purchaser (Tamron) be a "pre-approved" and "qualified" buyer; in the event that
said contract did comply with the aforestated provisions, the effect would be to render the
City's option to purchase the Property null and void; and
WHEREAS, Plaintiff also sought attorney's fees and costs; and
WHEREAS, subsequent to the filing of the above-styled lawsuit, the parties thereto
entered into settlement negotiations; Plaintiff presented a settlement offer to the City,
wherein the City would be entitled to purchase the Property for $1,080,000; additionally,
Plaintiff and the City would agree to split the brokerage commission, in the amount of
$60,000, ($30,000 payable by the City and $30,000 payable by the Plaintiff), and all parties
would pay their respective attorney's fees and costs; and
WHEREAS, the City has determined that accepting Plaintiff's settlement offer is in
the best interest of the City; and
WHEREAS, the City hereby further makes its acceptance of the aforestated
settlement subject to and conditioned upon (i) execution by the parties hereto of a
Purchase and Sale Agreement, setting forth the terms and conditions governing the sale of
the Property to the City, and (ii) closing of the subject Property.
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 approve a settlement of the lawsuit styled, Gloria Rosenthal. Trustee
of the Gloria Rosenthal Trust u/a/d 5-19-88. n/k/a Gloria Rosenthal Trust u/a/d 5-14-99 v.
Citv of Miami Beach Case No, 04-10744 CA 31; authorize the Mayor and City Clerk to
execute any and all necessary settlement documents, including but not limited to the
execution of a Purchase and Sale Agreement between the City (Buyer) and the Gloria
Rosenthal Trust (Seller) for the property located at 1833 Bay Road, Miami Beach, Florida;
and further make the aforestated settlement subject to and conditioned upon closing of the
subject Property,
PASSED and ADOPTED this 10th day of Nove
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CITY CLERK
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F:\DDHP\$ALLIASSET\1833BAYlApproval To Purchase.RESDOC
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CITY OF MIAMI BEACH
COMMISSION ITEM SUMMARY
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Condensed Title:
A Resolution Approving a Setllement of the Lawsuit Styled, Gloria Rosenthal, Trustee of the Gloria
Rosenthal Trust u/a/d/5-19-88. n/k1a Gloria Rosenthal Trust u/a/d 5-14-99 v. City of Miami Beach Case
No. 04-10744 CA 31; Authorizing the Mayor and City Clerk to Execute any and all Necessary Setllement
Documents, including but not Limited to the Execution of a Purchase and Sale Agreement between the City
(Buyer) and the Gloria Rosenthal Trust (Seller) for the Property Located at 1833 Bay Road, Miami Beach,
Florida; Further Makin the Setllement Sub'ect to and Conditioned U on Closin on the Sub'ect Pro e
Issue:
I Shall the City Commission authorize the purchase of the Property?
Item Summary/Recommendation:
The City and the Landlord have negotiated and agreed to the terms and conditions of the attached
Purchase and Sale Agreement, in the total amount of $1,11 0,000, (Purchase price of $1,080,000
and real estate brokerage commission of $30,000), which is subject to a 35 day "due diligence"
period, during which the City, may cancel and terminate the offer, without cause or penalty.
During said "due diligence" period, the City will conduct a Phase 1 environmental audit, as well as
other inspections to determine compliance with current and applicable regulatory codes. In the
event there are violative conditions found, the City had indicated to Seller that they must correct
said violations, or negotiate adjustments to the purchase price accordingly. A draft of the
proposed Agreement was forwarded to the Seller, who through its legal counsel, verbally advised
the City, that despite the "due diligence" period, this was intended to be an "as is, where is"
transaction, and Seller would not assume additional costs (or contemplate reduction in purchase
price) for any corrective work that may be required.
If the transaction is closed as expected, it is not anticipated that the City will incur any significant
rehabilitation costs upon initial occupancy. However, based on preliminary inspections,
effectuating corrective action of existing violations may trigger code required upgrades to the
building, the costs of which have been preliminarily estimated not exceed $100,00D.
Notwithstanding this estimated amount, a final estimate cannot be determined until conclusion of
the assessment of the Property, during the due diligence period; at which time the City may
determine whether to proceed with closing or (should final costs estimates be deemed prohibitively
high) terminate the transaction.
The Administration recommends adoption of the Resolution.
Advisory Board Recommendation:
IN/A
Financial Information:
Source of
Funds:
Approved
D
Finance Dept.
$1,110,000
Assistant City Manager
City Manager
F:\DDHP\$ALLIASSE1\1833BAY\Approval To Purchase,SUM,doc
AGENDA ITEM ----F< 7 H
DATE~
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH. FLORIDA 33139
www.ci.miami.beach.fl.us
To:
From:
Subject:
COMMISSION MEMORANDUM
Date: November 10, 2004
Mayor David Dermer and
Members of the City Commission
Jorge M. Gonzalez ~ ~
City Manager (/,,- 0
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING A SETTLEMENT OF
THE LAWSUIT STYLED, GLORIA ROSENTHAL. TRUSTEE OF THE
GLORIA ROSENTHAL TRUST ulaJd 5-19-88. n/k/a GLORIA
ROSENTHAL TRUST ulaJd 5-14-99 v. CITY OF MIAMI BEACH CASE
NO. 04-10744 CA31; AUTHORIZING THE MAYOR AND CITY CLERK
TO EXECUTE ANY AND ALL NECESSARY SETTLEMENT
DOCUMENTS, INCLUDING BUT NOT LIMITED TO THE EXECUTION
OF A PURCHASE AND SALE AGREEMENT BETWEEN THE CITY
(BUYER) AND THE GLORIA ROSENTHAL TRUST (SELLER) FOR THE
PROPERTY LOCATED AT 1833 BAY ROAD, MIAMI BEACH,
FLORIDA; FURTHER MAKING THE SETTLEMENT SUBJECT TO AND
CONDITIONED UPON CLOSING OF THE SUBJECT PROPERTY,
ADMINISTRATION RECOMMENDATION
Adopt the Resolution,
ANALYSIS
The Lease Aqreement
On January 31,2001, the Mayor and City Commission adopted Resolution NO.2001-24250
approving a Lease Agreement between the City of Miami Beach (Tenant) and Gloria Miller-
Rosenthal (Landlord) for continuing the use of the property located at 1833 Bay Road,
Miami Beach, Florida (the Property), The Property, includes the first floor (approximately
3,232 square feet) currently housing the City's Parking Department Sign Division, the
second floor (approximately 3,232 square feet) which had been used to accommodate
certain Police Department operations (which were relocated to Historic City Hall in April
2004), and the use of the rear yard (approximately 4,000:t square feet). The Lease had a
term of three years, commencing on February 1,2001, and expiring on January 31, 2004.
Although the Police operations were to be relocated (and were relocated in April 2004) as
mentioned above, the future location of the Parking Department Sign Division had yet to be
determined, thus the Administration negotiated a month-to-month extension with the
Property owner so the respective operations could remain on site until the respective
relocation of each,
The Amendment to Lease (with Option to Purchase)
On February 4, 2004, the Mayor and City Commission, via Resolution No. 2004-25483,
approved an Amendment to the Lease Agreement, authorizing the City, effective
February 1, 2004, to continue to lease the Property on a month-to-month basis, In April
2004, the City exercised its option to terminate the use of the 2nd Floor Space previously
occupied by Police operations, The terms and conditions, at the current time, provide for
the following:
. The City pays the Landlord, as compensation for use of the 1 sl Floor, and one-half
(1/2) of the rear yard, of the Property, the sum of five thousand dollars ($5,000) per
month, plus two hundred fifty dollars ($250) per month representing an increase in
real property taxes and insurance (as reported by Landlord) for the years 2001
through 2003,
. The City and/or Landlord may, at their sole discretion, without cause, terminate the
month-to-month tenancy upon giving the other party sixty (60) days prior written
notice of its intentions,
Option to Purchase
Due to the following conditions, the Administration negotiated an Option to purchase the
Property, an option already included in the previously existing lease agreement:
. The Property is located adjacent to two (2) City-owned municipal parking lots, thus
in combination therewith, same may provide the City with an enhanced opportunity,
in the future, to develop the site, either on its own or via a public/private venture,
. In the past, the City invested upwards of $75,000 in improvements and upgrades to
the Property and the City has the opportunity to continue to take advantage of the
improvements previously made,
. If the City purchases the Property, there are certain modifications to the Property,
including accessibility upgrades, that would be required to bring the Property into
compliance with current code(s).
As such, the City negotiated, an extended and more specific option to purchase,
which includes:
. The City reserved the right to purchase the Property, for $986,000 (the
"Option Price"); the amount equal to the average between the Landlord's
asking price of $1 ,050,000, and that reflected in the City procured appraisal
which placed the value at $922,000;
o within six (6) months of executing the extension; or
o until such time as the City notifies Landlord in writing of its intention
not to purchase; or
o until such time as the Landlord enters into a "binding" Purchase and
Sale Contract for the sale of the Property with a "pre-approved and
qualified" third party (with the City reserving the right to match the
amount of said third party offer and purchase the Property),
whichever occurs first.
o in the event the Landlord enters into a binding Purchase and Sale
Contract for the sale of the Property with a pre-approved and
qualified third party, and the City had not exercised its right to
purchase the Property at that time, and the Purchase and Sale was
not consummated with said third party, the City's rights to purchase
the Property would continue as provided above,
Except as herein delineated, all terms and conditions of the original Lease, dated
January 31,2001, remained in full force and effect.
The Third Partv Offer
On March 23, 2004, the City received from Gloria Rosenthal a copy of a contract for
purchase and sale of the Property for $1,185,000, which she had received from
prospective buyer Tamron Properties (Tamra Sheffman, principal), On April 6, 2004, the
matter was presented to the Finance and Citywide Projects Committee, which reviewed the
item and requested the Administration to provide a cost estimate for any improvements
which may be required to bring the Property into compliance with applicable codes, and
further referred the item for a full discussion, by the Mayor and City Commission,
On April 14, 2004, the Administration presented the Mayor and City Commission, a
preliminary cost estimate and sought direction as to whether, or not, to pursue the
purchase of the Property, and if so, at what price?
Discussion ensued as to whether, or not, Tamron met the threshold criteria in the City's
option, of being "a pre-approved and qualified third party", and whether the offer was
binding upon Tamron. The Administration deemed that Tamron was not "pre-approved and
qualified", based on the fact that the only documentation provided to the City from any
lending institution was a "...preliminary commitment letter...presented for discussion
purposes.. ," and not a binding mortgage loan commitment. Moreover, the Administration
deemed the offer was not fully binding upon Tamron, since the offer included a thirty (30)
day "due diligence" clause that allowed Tamron to terminate the offer without penalty, and
without cause, within said 30 day period.
Based on this information, the Administration was directed to pursue the purchase at the
option price of $986,000, or negotiate an acceptable compromise, In a letter to Rosen and
Switkes (legal counsel for Gloria Rosenthal) dated April 19, 2004, and in accordance with
the directive received, the City exercised its "Option", at the $986,000 option price, but said
offer was rejected, via Ms, Rosenthal's legal counsel, who advised the City that the
"Option" period had expired upon their presentation of the Tamron offer to the City, and
that the only recourse for the City, was to match the terms and conditions, including the
$1,185,000 price, of the Tamron offer, via the City's "Right of First Refusal",
Attempts at negotiating a compromise price were unsuccessful, and Ms, Rosenthal,
through her legal counsel, filed a court action, seeking a Declaratory Judgment, to
determine whether or not the City properly exercised its "Option", or whether the Tamron
contract was "binding" and whether Tamron was a "pre-approved and qualified" buyer, The
hearing for Declaratory Judgment was held, and Judge Peter Lopez, opined that the
Tamron offer was "binding", however, the issue of whether Tamron was "pre-approved and
qualified", should be set for trial, if the parties could not settle the matter.
The parties continued to negotiate during the litigation process and on October 13, 2004, at
a duly noticed and scheduled Executive Session, the City Manager and City Attorney
presented to the Mayor and City Commission a final compromise offer, which would also
serve to settle the litigation and proceed with the acquisition, The compromise offer, which
was approved at said Executive Session, for the purchase price of $1,080,000, plus
$30,000 (% of the full real estate brokerage commission, as negotiated, of $60,000, and
approximately equivalent to 5.5% of the City's purchase price) to compensate the real
estate brokers (Tamra Sheffman of Royal Palm Realty and Tony Ulloa of the Keyes
Company) associated with the Tamron offer.
The City and the Gloria Rosenthal Trust have agreed to the terms and conditions of the
attached Purchase and Sale Agreement, in the total amount of $1,110,000, (Purchase
price of $1,080,000 and the City's share of the real estate brokerage commission of
$30,000), and is subject to a 35 day "due diligence" period, which allows the City during
such time period, to cancel the Agreement, at its sole discretion. During said "due
diligence" period, the City, amongst other things, will conduct a Phase 1 environmental
audit, and termite, asbestos, and roof inspections, as well as other inspections to
determine compliance with current and applicable municipal, county, state and federal
regulatory codes.
A draft of the proposed Purchase and Sale Agreement was forwarded to the Seller with the
aforestated terms and conditions, including the 35 day "due diligence" period, during which
the City anticipates to make a final determination as to the general condition of the building
and identify potential environmental issues associated therewith, In the event there are
violative conditions found, the City had indicated to the Seller that they should correct said
violations, or in the alternative, negotiate adjustments to the purchase price accordingly.
The Seller, through its legal counsel, verbally advised the City, that despite the "due
diligence" period afforded, that this was intended to be an "as is, where is" transaction, and
Seller would not assume the additional costs (or contemplate a reduction in purchase
price) for any corrective work that may be required.
If the transaction is closed as expected, upon assuming possession of the Property, it is
not anticipated that the City will incur any significant rehabilitation costs, However, based
on preliminary inspections of the Property, effectuating corrective action of existing violative
conditions may trigger code required upgrades to the building, the costs of which have
been preliminarily estimated not to exceed $100,000. However, notwithstanding this
estimated amount, a final cost estimate cannot be determined until conclusion ofthe City's
assessment of the Property, during the due diligence period; at which time the City may, of
course, determine whether to proceed with closing or (should final costs estimates be
deemed prohibitively high) terminate the transaction. These findings and results of the due
diligence can be reported on December 8, 2004 to the City Commission to determine
whether to proceed with the transaction,
The Administration recommends that the Mayor and City Commission approve the
attached Purchase and Sale Agreement with the Gloria Rosenthal Trust for the purchase
of the property located at 1833 Bay Road, Miami Beach, Florida,
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F:\DDHP\$ALL IASSETI 1833BA YlApproval toPurchase,MEM( c).doc