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Home My WebLink About2005-25793 Reso RESOLUTION 2005-25793 A RESOLUTION OF THE MAYOR AND CITY COMMISION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE APPROPRIATION OF ONE MILLION ONE HUNDRED TEN THOUSAND DOLLARS ($1,110,000), PLUS APPLICABLE CLOSING COSTS, FROM THE FISCAL YEAR 2004/2005 PARKING ENTERPRISE FUND TO PAY FOR THE PURCHASE OF THE PROPERTY LOCATED AT 1833 BAY ROAD, MIAMI BEACH, FLORIDA WHEREAS, 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) for a term of three years, commencing on February 1, 2001, and expiring on January 31,2004; and WHEREAS, on February 4,2004, the Mayor and City Commission, via Resolution No, 2004-25483, approved an amendment to said Lease Agreement, authorizing the City, effective February 1, 2004, to continue to lease the Property on a month-to-month basis, and further providing the City a six (6) month option to purchase the Property for $986,000 (the Option); and WHEREAS, on April 14, 2004, the Mayor and City Commission adopted Resolution No. 2004-25548, authorizing the City Administration to proceed with the purchase of the Property, at the Option Price of $986,000; and WHEREAS, the Property owner, Gloria Rosenthal, on behalf of the Gloria Rosenthal Trust, did not agree to the price proposal offered by the City, and petitioned the Court, via a request for Declaratory Judgment, to rule on the matter; and WHEREAS, the Court heard the request for Declaratory Action and set the matter for trial; and WHEREAS, the City and the Gloria Rosenthal Trust agreed to settle the matter instead of continuing litigation; and WHEREAS, on November 10, 2004, the Mayor and City Commission adopted Resolution No. 2004-25743 approving a settlement of the lawsuit styled, Gloria Rosenthal, Trustee of the Gloria Rosenthal Trust u/aJd 5-19-88, n/k/a Gloria Rosenthal Trust u/aJd 5- 14-99 v. City of Miami Beach Case No. 04-10744 CA 31, and 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, and making the aforestated settlement subject to and conditioned upon closing of the subject Property. NOW, THEREFORE BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, that One Million One Hundred Ten Thousand Dollars ($1,110,000), plus applicable closing costs, be appropriated from the Fiscal Year 2004/2005 Parking Enterprise Fund to pay for the purchase of the Property located at 1833 Bay Road, Miami Beach, Florida. PASSED AND ADOPTED THIS ,2005. Attest: j&ttt ft~ - City Clerk JMG/CMC/JD/rd F :\DDH P\$ALL IASSETI 1833BA YlAppropriation ForPu rchase, RES ,doc APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION ~ j...,~~ City Attomey ~~ Date CITY OF MIAMI BEACH COMMISSION ITEM SUMMARY lQ Condensed Title: A Resolution Authorizing the Appropriation of One Million One Hundred Ten Thousand Dollars ($1,110,000), plus Applicable Closing Costs, from the Fiscal Year 2004/2005 Parking Enterprise Fund to Pay for the Purchase of the Pro ert Located at 1833 Sa Road, Miami Beach, Florida the Pro ert . Issue: Shall the City Commission authorize the appropriation? Item Summary/Recommendation: On April 14, 2004, Resolution No. 2004-25548 was adopted, authorizing the Administration to proceed with the purchase of the Property, for $986,000, or negotiate an acceptable compromise. The City had an option to purchase the Property for $986,000, associated with an existing Lease/Purchase Option Agreement. Attempts at negotiating with the Property owner for the $986,000 price, or a compromise price were unsuccessful. The owner filed a court action, seeking a Declaratory Judgment, to determine whether the City properly exercised its "Option", The hearing for Declaratory Judgment was held, and the Court concluded that the matter should be set for trial, if the parties could not settle the matter. Subsequently, the City and the owner agreed to settle the matter in lieu of pursuing litigation. On November 10, 2004, Resolution No. 2004-25743 was adopted, approving a settlement of the lawsuit, and authorizing the execution of all necessary settlement documents, including the execution of a Purchase and Sale Agreement with the Gloria Rosenthal Trust (the Property owner), and making the settlement subject to and conditioned upon closing of the transaction. The Settlement Agreement has been executed, and the Purchase and Sale Agreement is expected to be executed upon the appropriation ofthe necessary funds for the purchase, including applicable closing costs. The Property is being purchased "as is", due to the City's ownership of the 2 contiguous lots, immediately adjacent to the Property, which if combined with the Property would provide a more developable site. The City performed its due diligence, including roof, termite, asbestos, and environmental inspections, but all costs associated with the required repairs and/or mediation to bring the Property into compliance with applicable codes have yet to be fully determined. However, it is proposed, that upon closing the purchase, that the current use of the Property remain "as is", thereby limiting any exposure to future repair requirements until such time as a comprehensive development plan for the combined site is developed. The Administration recommends that the Resolution be adopted authorizing the appropriation of $1,110,000, plus applicable closing costs, from the FY 04/05 Parking Enterprise Fund to pay for the purchase and closing costs associated with the Property. The Administration recommends adootion of the Resolution. Advisory Board Recommendation: I N/A Financial Information: Source of Amount Account Approved Funds: 1 $1,110,000 Parking Enterprise Fund D 2 3 4 Finance Dept. Total $1,110,000 c I\genda Item Date R7I - I-/;l-O~ Assistant City Manager F:\DDHP\$ALLIASSEn1833BA YlAppropriationForPurchase,SUM.doc CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.cl.miami-beach.fl.us COMMISSION MEMORANDUM To: Mayor David Dermer and Members of the City Commission Date: January 12,2005 Jorge M, Gonzalez \ ~ City Manager U ~~ 0 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE APPROPRIATION OF ONE MILLION ONE HUNDRED TEN THOUSAND DOLLARS ($1,110,000), PLUS APPLICABLE CLOSING COSTS, FROM THE FISCAL YEAR 2004/2005 PARKING ENTERPRISE FUND TO PAY FOR THE PURCHASE OF THE PROPERTY LOCATED AT 1833 BAY ROAD, MIAMI BEACH, FLORIDA. ADMINISTRATION RECOMMENDATION From: Subject: Adopt the Resolution. ANALYSIS On January 31, 2001, the Mayor and City Commission adopted Resolution No.200 1-24250 approving a Lease Agreement between the City of Miami Beach (Tenant) and Gloria Miller-Rosenthal (Landlord) for the City's continued use of the property located at 1833 Bay Road, Miami Beach, Florida (the Property), for a term of three years, commencing on February 1,2001, and expiring on January 31,2004. On February 4,2004, the Mayor and City Commission, via Resolution No. 2004-25483, approved an amendment to said Lease Agreement, authorizing the City, effective February 1, 2004, to continue to lease the Property on a month-to-month basis, and further providing the City a six (6) month option to purchase the Property for the Option Price of $986,000 (See attached November 10, 2004, City Commission Memorandum for detail and full history related to this matter). On April 14, 2004, the Mayor and City Commission adopted Resolution No. 2004-25548, authorizing the City Administration to proceed with the purchase of the Property, at the Option Price of $986,000, or negotiate an acceptable compromise. The Administration initially pursued the purchase at the Option Price of $986,000 which was not accepted by the Rosenthal Trust, and attempts at negotiating a compromise price were also unsuccessful. 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". The hearing for Declaratory Judgment was held, and the Court concluded that the matter should be set for trial, if the parties could not settle the matter. Subsequently, the City and the Gloria Rosenthal Trust agreed to settle the matter in lieu of pursuing litigation. On November 10, 2004, the Mayor and City Commission adopted Resolution No. 2004- 25743 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, and 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 and the Gloria Rosenthal Trust for the Property, and making the aforestated settlement subject to and conditioned upon closing of the transaction. The Settlement Agreement has been executed. The Purchase and Sale Agreement is expected to be executed upon the Mayor and City Commission's appropriation of the necessary funds for the purchase of the Property, including applicable closing costs. The Property is being purchased "as is", and deemed in City's best interest, in light of the fact that the City also owns the two (2) contiguous lots, immediately adjacent to and south of the Property, which if combined with the subject Property would serve to provide a more developable site. The City has proceeded to perform its due diligence review, including roof, termite, asbestos, and environmental inspections, but all costs associated with the required repairs, mediation and/or improvements to bring the Property into compliance with applicable codes have yet to be fully determined. However, it is proposed, that upon closing of the purchase transaction, that the current use of the Property remain "as is", thereby limiting any exposure to future repair requirements until such time as a comprehensive development plan is determined for the combined site. The Administration recommends that the Mayor and City Commission adopt the attached Resolution authorizing the appropriation of One Million One Hundred Ten Thousand Dollars ($1,110,000), plus applicable closing costs, from the Fiscal Year 2004/2005 Parking Enterprise Fund to pay for the purchase of, and the closing costs associated with the Property located at 1833 Bay Road, Miami Beach, Florida. JMG:~JD:rd F:\DDHP\$ALL IASSET\ 1833BA YlAppropriation ForPurchase.MEM.doc CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.ci.miami-beach.ll.us To: From: Subject: COMMISSION MEMORANDUM Date: November 10,2004 Mayor David Dermer and Members of the City Commission Jorge M. Gonzalez ~ c.r--- City Manager d...... 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 u1a1d 5-19-88. n/kIa GLORIA ROSENTHAL TRUST ulald 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. 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::1: 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 151 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 Party 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 Attomey 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 of the 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 ofthe 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 ofthe property located at 1833 Bay Road, Miami Beach, Florida. JMG:dtf&:JD:r1r F:\DDHP\$ALL lASSEn 1833BA YlApprovalloPurchase.MEM( c),doc