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HomeMy WebLinkAbout2005-25880 Reso ~ RESOLUTION NO. 2005-25880 A RESOLUTION OF THE MA VOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, IN ACCORDANCE WITH THE REQUIREMENTS OF SECTIONS 163.3220 - 163.3243, FLORIDA STATUTES, ALSO REFERRED TO AS THE "FLORIDA lOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT", APPROVING, ON FIRST READING, A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND AR&J SOBE, llC (a/kla POT AMKIN/BERKOWITZ) FOR THE DEVELOPMENT OF THE PROJECT, PRESENTl V REFERRED TO AS "5TH AND ALTON" , CONTAINING APPROXIMA TEL V 179,000 SQUARE FEET OF RETAil AREA; A SUPERMARKET; AN APPROXIMATEl V 1081 SPACE PARKING GARAGE; PARK-AND- RIDE TRANSIT FACILITY, INCLUDING AN INTERMODAU TRANSPORTATION COMPONENT; AND SURROUNDING STREETSCAPE AND PUBLIC INFRASTRUCTURE TO SERVE THE PROJECT, BOUNDED BV lENOX AVENUE ON THE EAST, ALTON ROAD ON THE WEST, 6th STREET ON THE NORTH AND 5th STREET ON THE SOUTH, IN MIAMI BEACH; FURTHER SETTING THE SECOND PUBLIC HEARING FOR SECOND (AND FINAL) APPROVAL OF THE DEVELOPMENT AGREEMENT; FURTHER DIRECTING THE ADMINISTRATION TO PREPARE A RESOLUTION GRANTING A WAIVER OF DEVELOPER'S REQUIRED ART IN PUBLIC PLACES CONTRIBUTION FOR THE PROJECT, WITH SUCH WAIVER TO BE CONSIDERED BY THE CITY COMMISSION ON SECOND AND FINAL READING OF THE DEVELOPMENT AGREEMENT. WHEREAS, on June 7,2000, the Mayor and City Commission adopted Resolution No. 2000-23963, designating the area bounded by 6th Street to the North, 5th Street to the South, Alton Road to the West and Lenox Avenue to the East, as a Brownfield area to promote the environmental restoration and economic redevelopment of the area; and WHEREAS, since July 2002, the Administration has been meeting with representatives of the site, generally located on 5th Street and Alton Road, owned by the Potamkin family, to address a joint development opportunity and to review a preliminary site plan for a five (5) level mixed-use retail complex, including a public parking garage and a supermarket (the Project); and WHEREAS, in accordance with the City Commission's directive and the community's identified needs, the City's interest in the Project's development was primarily focused on achieving the public benefit of locating a supermarket, exploring transit and excess parking opportunities, and developing a gateway project at one of the City's main arterial entryways; and .,-" WHEREAS, over the past two (2) years, the Project has been reviewed on several occasions by various City Committees including the Finance & Citywide Projects Committee, Transportation and Parking Committee, Design Review Board and Historic Preservation Board; and WHEREAS, having taking into consideration the recommendations from these Committees, the parties have reached agreement on a majority of the substantive terms and conditions that would govern the City's joint participation, including the identification of Federal Transit Administration (FTA) funding, as a potential source for the City's capital contribution to the Project; and WHEREAS, on April 5, 2004, the Developer, AR&J SOBE, LLC, and its Projectteam and City staff met with the FTA in Atlanta to review FTA funding requirements; the FTA expressed favorable comments in its initial review of the Project and indicated the City would need to place emphasis on the transit elements of the Project, focusing on their location, cost and use, and transit user profiles to determine the Project's eligibility for FTA funding; and WHEREAS, in addition, as reported in May 2005 to the City Commission, the City and Developer have continued to address other issues including: Floor Area Ratio (FAR), Alley Vacation, Park and Ride Transit Facility components, Art in Public Places, Planning Board - Conditional Use and rising construction costs; and WHEREAS, as part of the ongoing negotiations, many areas of uncertainty continued to arise, affecting the ongoing Project negotiations; namely: (1) the FTA funding requirements and pending approval by FTA; and (2) the rising cost of construction, and its impact on the City's financial contribution to the Project; and WHEREAS, these issues were discussed by the Finance Committee on October 26, 2004, and resolved as set forth below: . FT A: Since the outcome of the FT A funding eligibility will not be confirmed until sometime in the future, the Developer is facing timing constraints to determine whether or not to proceed with the City, or independently, in the proposed Project. The Finance Committee recommended that the City commit to proceed with the Project irrespective of FTA funding eligibility. In other words, if FTA deems the project is not wholly or in part eligible, the City will be committing non FTA funding, preferably South Pointe RDA funds, in order to guarantee the City's participation in the Project from the onset; . Construction Cost Estimates: As to the rising cost of construction, on August 25, 2004 and September 14, 2004, the Developer submitted a take-off analysis of the estimated construction cost of the parking component of the proposed Project, which was prepared by the Developer's consultant Moss and Associates. The Developer also conducted an area analysis and calculated a percentage cost per square foot, which yielded a higher value for the garage. The Developer's analysis reflected a revised construction cost estimate of $20,7 41/per space (based on percentage allocation) and $18,025/per space based on the Moss Take-off analysis; The City had previously negotiated a $14,500/per space cost contribution to the project, which represented a $7,250,000 capital contribution based on 500 spaces. The new cost estimates submitted by the Developer represent an over 24-43% increase in the City anticipated contribution to the Project; The City engaged its Program Manager, URS, to review and perform an independent analysis of the Moss and Associates Take-off analysis (submitted by the Developer) and ofthe construction costs submitted. As a result, URS submitted revised construction cost estimates and reallocations, as deemed necessary, and URS determined the per space cost, without any alteration to the proposed Project design, would be approximately $16,262/per space; and WHEREAS, the Finance Committee discussed the reality of rising construction costs and felt it was appropriate to modify the City's capital cost contribution accordingly, due to the Developer's guarantee to assume any construction cost overruns; and WHEREAS, the rise in costs is mitigated by the Developer's guarantee to assume the construction risk associated with any future cost increases or construction change orders not dictated by the City and/or any FT A requirement; and WHEREAS, based on the revised construction cost estimates and Developer's assumption of the aforestated risks, the Finance Committee recommended committing to the revised City capital contribution to the Project of $9,500,000, as cited above; and WHEREAS, City and Developer will jointly operate and maintain the Park and Ride Transit Facility; and WHEREAS, annual operating expenses of the garage will be shared by Developer and City; further, net revenues or operating losses will be shared on a pro-rata basis based on the ownership of spaces; and ' WHEREAS, the Agreement contains provisions for post-construction termination by Developer, in which event City shall be reimbursed its contribution plus four percent (4%) annual simple interest or the Fair Market Value of its portion of the Project; and WHEREAS, City and Developer agree that the City's contribution to the Project is fifty-six percent (56%) of the cost of the Project, and further agree that fifty-six percent (56%) shall be the formula applied to determine Fair Market Value in the event of termination; and WHEREAS, the Developer has requested a waiver of the Art in Public Places contribution pursuant to the provisions of the Art in Public Places Ordinance; and / ./ WHEREAS, on December 8, 2004 the Mayor and City Commission set the first public hearing to consider the aforestated Development Agreement, on First Reading; and WHEREAS, the Administration recommends that the Mayor and City Commission approve the Development Agreement on First Reading, and set the Second (and final) Public Hearing for May 18, 2005; and WHEREAS, the Administration further recommends that the Mayor and City Commission direct the Administration to prepare a Resolution granting the request for a waiver of the Developer's Art in Public Places contribution to be considered by the Mayor and City Commission concurrent with the second and final reading of the Development Agreement. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that in accordance with the requirements of Sections 163.3220 - 163.3243, Florida Statutes, also referred to as the "Florida Local Government Development Agreement Act", the Mayor and City Commission hereby approve, at the first of two duly noticed Public Hearings, the attached Development Agreement between the City of Miami Beach and AR&J Sobe, LLC (AIKIA Potamkin/Berkowitz) for the development of the Project, presently referred to as "5th and Alton", containing approximately 179,000 square feet of retail area; a supermarket; an approximately 1070 space parking garage; park-and-ride transit facility, including an intermodal/transportation component; and surrounding streetscape and public infrastructure to serve the Project, bounded by Lenox Avenue on the East, Alton Road on the West, 6th Street on the North and 5th Street on the South, in Miami Beach; further setting the second (and final) public hearing for approval of the Development Agreement; and further directing the Administration to develop a Resolution granting a waiver of the Developer's Art in Public Places required contribution for the Project, with such waiver to be considered by the City Commission on second and final reading of the Development Agreement. PASSED AND ADOPTED this 20th ATTEST: " \. .,,-0 , - .' - . ~i~~ .crr.Y CLERK l~..obert Parcher David Dermer APPROVED ÞS TO FORM & LANGUAGE & FOR EXECUTION JMGITH/rar T:\AGENDA\2005\Apr2005\RegulerlPotamkin. RES, doc ~~ City Attome~ If -/ r..()s .. Date · . CITY OF MIAMI BEACH COMMISSION ITEM SUMMARY m - Condensed Title: In accordance with the requirements of Sections 163.3220 - 163.3243, Florida Statutes, also referred to as the "Florida Local Government Development Agreement Act", it is recommended that the Mayor and City Commission approve at the first of two duly noticed Public Hearings, a Development Agreement between the City of Miami Beach and AR&J Sobe, LLC (a/kIa Potamkin/Berkowitz) for the Development of the Project, presently referred to as "Sth and Alton", containing approximately 179,000 square feet of retail area, a supermarket and an approximate 1 081 space parking garage and associated transit facility, including a transit dedicated component, an integrated parking garage, vertical transportation, ramps, ventilation, etc., and surrounding streetscape and public infrastructure to serve the project, bounded by Lenox Avenue on the East, Alton Road on the West, 6th Street on the North and Sth Street on the South, in Miami Beach and further setting the second and final public hearing for approval of the Development Aareement. Issue: Shall the Mayor and City Commission approve the Development Agreement, set the second and final public hearing, and direct the Administration to prepare a resolution granting the Art in Public Places waiver? Item Summary/Recommendation: Concurrent with the negotiations, the Potamkin/Berkowitz group has received approval to implement a signage overlay district to permit effective signage for the Supermarket and for the retail tenants within the Project and the project has also received DRB/HP approval. While support for the Project is generally widespread, comments have been made concerning the economic viability of the parking operation and ingress/egress challenges to the site. The parties will continue to seek further community outreach with area businesses/residents as part of the FTA Environmental Assessment process. A Resolution to vacate the alley located on the site was approved by the City Commission on February 23, 200S. Related to the Development Agreement, is the required contribution from the Project to Art in Public Places (AiPP). The present AiPP Ordinance requires all City projects to make a financial contribution to support ongoing and future operations and acquisitions of the City's AiPP program. The most common application for the Ordinance has been to City projects that are City-owned and constructed, however, the Ordinance also pertains to Capital Construction Projects where the City is a partner, therefore this project falls under the Ordinance. A decision will need to be made as to whether or not to waive the Project's AiPP contribution. The Developer has continually maintained that he will not entertain funding any portion of the AiPP fee, if a waiver is not granted. Instead, Developer has committed to install a major piece of art at the entrance of the project, and Mr. and Mrs. Alan Potamkin have represented that they have promised gifts to the Bass Museum. Other salient points further addressed in the memo, listed here, include the following: the Developer has the right to terminate the Agreement, City staff analysis indicate the Garage will likely require operational subsidies from the Parking Enterprise in the first few years, the Project may have difficulty in securing full funding from the FTA, Developer has the right to lease up to 1S0 "City" spaces for its operational requirements, City is purchasing S35 parking spaces, of which, 438 are considered excess parking. The Administration recommends that the Mayor and City Commission approve the Development Agreement on first reading, set the second and final public hearing, and direct the Administration to prepare a resolution granting the requested Art in Public Places waiver. Adviso Board Recommendation: Finance & Citywide Projects Committee: December 22. 2003: September 14. 2004 - engage the City's own consultant to review and analyze the newly submitted construction costs estimates; October 26. 2004 - due to rising construction costs, modify the City's capital cost contribution accordingly, due to the Developer's guarantee to assume any construction cost overruns; Februarv 14. 2005 - recommendation to proceed in finalizing the Development Agreement. Transportation and Parkina Committee - February 2, 2004, March 1, 2004, September 27, 2004 Desian Review Board & Historic Preservation Board - August 17, 2004 - Project Approved AiPP - Januarv 18. 2005 - motion to grant the requested waiver; Februarv 1S. 2005 - motion granting the waiver was reconsidered and the Committee recommended that the re uested waiver not be ranted. Financial Information: Source of Amount Account Approved Funds: 1 I I 2 Finance Dept. Total City Clerk's Office Legislative Tracking: I Tim Hemstreet Si n-Offs: Department Director Assistant City Manager Manager AGENDA ITEM DATE R'7F 4-ao-o~ CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.miamibeachfl.gov To: From: Subject: COMMISSION MEMORANDUM Mayor David Dermer and Members of the City Commission Jorge M. Gonzale- ~ City Manager ~ L Date: April 20, 2005 A RESOLUTION OF THE MAYOR AND C COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, IN ACCORDANCE WITH THE REQUIREMENTS OF SECTIONS 163.3220 - 163.3243, FLORIDA STATUTES, ALSO REFERRED TO AS THE "FLORIDA lOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT", APPROVING, ON FIRST READING, A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND AR&J SOBE, lLC (a/kla POTAMKIN/BERKOWITZ) FOR THE DEVELOPMENT OF THE PROJECT, PRESENTLY REFERRED TO AS "5TH AND ALTON" , CONTAINING APPROXIMATELY 179,000 SQUARE FEET OF RETAil AREA; A SUPERMARKET; AN APPROXIMATELY 1081 SPACE PARKING GARAGE; PARK-AND-RIDE TRANSIT FACILITY, INCLUDING AN INTERMODAU TRANSPORTATION COMPONENT; AND SURROUNDING STREETS CAPE AND PUBLIC INFRASTRUCTURE TO SERVE THE PROJECT, BOUNDED BY lENOX AVENUE ON THE EAST, ALTON ROAD ON THE WEST, 6th STREET ON THE NORTH AND 5th STREET ON THE SOUTH, IN MIAMI BEACH; FURTHER SETTING THE SECOND PUBLIC HEARING FOR THE SECOND AND FINAL READING OF THE DEVELOPMENT AGREEMENT; FURTHER DIRECTING THE ADMINISTRATION TO PREPARE A RESOLUTION GRANTING A WAIVER OF DEVELOPER'S REQUIRED ART IN PUBLIC PLACES CONTRIBUTION FOR THE PROJECT, WITH SUCH WAIVER TO BE CONSIDERED BY THE CITY COMMISSION ON SECOND AND FINAL READING OF THE DEVELOPMENT AGREEMENT. ADMINISTRATION RECOMMENDATION Approve on First Reading, set the date, time and place for a Public Hearing and consideration of the Second and Final Reading, and direct the Administration to prepare a resolution granting the requested Art in Public Places waiver. ANALYSIS On June 7, 2000, the Mayor and City Commission adopted Resolution No. 2000-23963 designating the area bounded by 6th Street to the North, 5th Street to the South, Alton Road to the West and Lenox Avenue to the East (also known as the "Potamkin Site"), as a Brownfield area to promote the environmental restoration and economic redevelopment of the area. April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 2 of 18 Since July 2002, the Administration has been meeting with representatives of the site generally located on 5th Street and Alton Road, owned by the Potamkin family, to address a joint development opportunity and to review a preliminary site plan for a five (5) level mixed-use retail complex, including over 900 parking spaces and a supermarket. In accordance with the City Commission's directive and the community's identified needs, the City's interest in the project development was primarily focused on achieving the public benefit of locating a supermarket, exploring transit and excess parking opportunities, and developing a gateway project at one of the City's main arterial entryways. Over the past two (2) years, the proposed project has been reviewed on several occasions by various City Committees including Finance and Citywide Projects Committee, Transportation and Parking Committee, Design Review Board and Historic Preservation Board. With the recommendations from these meetings, the parties have reached agreement on the substantive terms and conditions that would govern the City's joint participation, including the identification of Federal Transit Administration (FTA) funding, as a potential contributing source, for the City's capital contribution to the project. While support for the Project is generally widespread, at both the Transportation and Parking and Finance and Citywide Projects Committee, the public raised some concerns on the economic viability of the parking operation and ingress/egress challenges to the site. The parties will continue to seek further community outreach with area businesses/residents as part of the FT A Environmental Assessment process. It should be noted, however, that a Pro Forma done by the City's Parking Department (discussed below) does indicate that the garage will likely require operating subsidies in its first few years. Concurrent with the negotiations, the Potamkin/Berkowitz group has received approval to implement a signage overlay district to permit effective signage for the Supermarket and for the retail tenants within the Project and the project has also received DRB/HP approval. As reported in May 2004 to the City Commission, the City and Developer have continued to address other issues including: Floor Area Ratio (FAR), Alley Vacation, Termination Rights, Park and Ride Transit Facility components, Art in Public Places, Planning Board - Conditional Use, FTA funding eligibility and rising construction costs. Due to the extended negotiations regarding the terms of the Development Agreement, the Alley vacation (Resolution No. 2005-25827) was considered and approved by the City Commission on February 23, 2005 independent of the Development Agreement (Attachment "A"). The City will retain an option to obligate Developer to include the Transit Facility Dedication area and finishes, at City expense. The Alley vacation contains the following reverter conditions: i. In the event Developer does not enter into a supermarket lease (as defined in the proposed Development Agreement) on or before eighteen (18) months after the Effective Date of the Agreement or Construction Commencement, whichever comes first; ii. I n the event Developer does not commence construction of the Project on or before September 1, 2006; April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 3 of 18 iii. In the event the Project is substantially modified from the Project approved by the Historic Preservation Board and Design Review Board, as referenced in the respective Board Orders issued in August 2004; and As part of the ongoing negotiations, many areas of uncertainty continued to arise affecting the success of the negotiations; namely, (1) the FTA requirements and pending approval by FTA and (2) the rising cost of construction, and its impact on the City's contribution to the project. These issues were discussed by the Finance and Citywide Projects Committee on October 26, 2004 and resolved as set forth below: Maior Issues: Federal Transit Administration (FT A) On April 5, 2004, the Developer and its project team, and the Administration met with the Federal Transit Administration (FTA) in Atlanta to review FTA funding requirements. The FT A expressed favorable comments in its initial review of the project and indicated the City would need to place emphasis on the transit elements of the project, focusing on their location, cost and use, and transit user profiles to determine the project's eligibility for FTA funding. Additionally, the parties would need to explore to what degree the Federal funding restrictions apply to the privately funded, non-transit portion of the project. Furthermore, the FTA funding has an extensive community and stakeholder participation process, culminating in the mandatory submittal of an Environmental Assessment (EA) Report identifying potential social, economic or environmental impacts that may arise as a result of the project, and measures to mitigate these potential impacts. It is anticipated that this process will span a 3-4 month period. To address the FTA issues, it was deemed to be in the parties' mutual best interest to commence and conduct the required FTA Environmental Assessment (EA). On May 24, 2004 the Mayor and City Commission passed Resolution No. 2004-25574 to establish an RFQ for the professional architectural and engineering services related to the preparation of the Environmental Assessment report, as required by the Federal Transit Administration. RFQ 38-03/04 was issued on July 30, 2004. Only one response was received and the Evaluation Committee met on October 26, 2004 and recommended rejecting all bids and re-advertising a new RFQ. The new RFQ received three proposals. On January 26, 2005 the Evaluation Committee reviewed the new responses and ranked the firm of HDR Engineering first, URS Corporation second and Geotech Environmental third. An item to authorize negotiations to the top-ranked firm accompanies this reading of the Development Agreement. FT A eligibility will be determined as a joint development project and must reflect the project as a transit oriented development. As part of the City improvements, in addition to the City's park and ride spaces, certain transit elements will be incorporated, owned and paid for by the City, including items such as transit station pedestrian connections and access links between transit services and the project (i.e. expanded right of way area fronting April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 4 of 18 Alton, 6th Street and 5th Street), safety and security equipment, vertical access links (i.e. elevators and ramps), transit information center, signage, etc. While the City has incorporated the aforementioned transit elements, FT A will review the Agreement and assess the City's control and availability of the transit facility to render an eligibility decision. The Development Agreement, on file in the City Clerk's Office, reflects the Developer's required restrictions on the use of garage to assure sufficient parking for the retail area. As such, FTA will scrutinize the ultimate control and availability of parking for transit users to determine eligibility for federal funding. With the additional language incorporated by the Developer, FTA funding eligibility may be limited. Since the outcome of the FT A funding eligibility will not be confirmed until sometime in the future, the Developer faced timing constraints to determine whether or not to proceed with the City, or independently, in the proposed joint venture. The Finance and Citywide Projects Committee recommended that the City should commit to proceed with the project irrespective of FTA funding eligibility. In other words, if FTA deems the project is not wholly or in part eligible, the City will be committing non FT A funding, preferably South Pointe RDA funds, in order to guarantee the City's participation in the project from the onset. We have attempted to incorporate language expressing the intent of the parties to provide public transit parking, to mitigate any such FT A scrutiny. However, by the mere inclusion of any use restrictions, as required by Developer, full FT A funding eligibility for this project can no longer be assured. Therefore, the Agreement reflects, the City's commitment to proceed with the project, regardless of award of FT A funding for the City's capital participation. CONSTRUCTION COST ESTIMATES As to the rising cost of construction, on August 25, 2004 and September 14, 2004, the Developer submitted a take-off analysis of the estimated construction cost of the parking component of the proposed project, which was prepared by the Developer's consultant Moss and Associates. The Developer also conducted an area analysis and calculated a percentage cost per square foot, which yielded a higher value for the garage. The Developer's analysis reflected a revised construction cost estimate of $20,741/per space (based on percentage allocation) and $18,025/per space based on the Moss Take-off analysis. The City had previously negotiated a $14,500/per space cost contribution to the project, which represented a $7,250,000 capital contribution based on 500 spaces. The new cost estimates submitted by the Developer represent an over 24-43% increase in the City anticipated contribution to the project. As a result, these findings were reported informally to the Finance and Citywide Projects Committee on September 15, 2004 and the Committee concurred with the Administration's recommendation to engage the City's own consultant to review and analyze the newly submitted construction costs estimates. April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 5 of 18 The City engaged URS Corporation to review and perform an independent analysis of the Moss and Associates Take-off analysis and of the construction costs submitted. As a result, URS submitted revised construction cost estimates and reallocations, as deemed necessary, and URS determined the per-space cost, without any alteration to the proposed project design, would be approximately $16,262/per space. On October 15, 2004, the City and the Developer met to review the revised construction cost estimates and URS' findings. At this meeting, the parties agreed that based on URS' revised estimate of $16,262/per space and the increased number of spaces in the project (Le. 1070 total spaces at the time of proposal; City allocation is 50%, or 535 spaces), the City's capital contribution to the project would be as follows: Developer Request $8,700,170 395,327 333.333 $9,428,830 $9,500,000 535 spaces @ $16,262/per space Additional Transit Components (elevator pit and shaft to Alton Road and Bus Stop) Lost Value (due to City requested set back on Alton representing loss of 1,000sf) TOTAL The Finance and Citywide Projects Committee discussed the reality of rising construction costs and felt it was appropriate to modify the City's capital cost contribution accordingly, due to the Developer's guarantee to assume any construction cost overruns. The rise in costs is mitigated by the Developer's guarantee to assume the construction risk associated with any future cost increases or construction change orders not dictated by the City and/or any FT A requirement. Based on the revised construction cost estimates and Developer guarantee, the Finance and Citywide Projects Committee agreed to commit to the revised City capital contribution to the project of $9,500,000 as cited above, which in turn results in a per-space cost of $16,395. FundinQ for Park and Ride Transit Facilitv: As described above, the City has negotiated to contribute $16,395.03/space within the garage (Le. also referred to as Transit Facility). It is anticipated that the Transit Facility will contain approximately 1081 spaces within which the City will own 535 spaces to serve the public transit uses and supermarket, and Developer will own 546 spaces serve the retail and supermarket uses. Additionally, the City will fund an additional amount and own the transit elements referenced above. Funding for the City's Transit Facility Contribution will be provided by available FTA funding, to the extent eligible ($6,475,000 available and an additional $1.38 million awarded in 2005) and/or South Pointe RDA funds. FTA funding requires a minimum 20% match by the City, for the FTA approved components, if any. April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 6 of 18 Floor Area Ratio (FAR) and ReQuired ParkinQ As reported on March 17,2004, a prior review ofthe Developer's architectural schematics indicated that a portion of the excess public parking might result in the project exceeding the permissible FAR of 2.0. Further plan revisions have resulted in a zoning compliant project and an increase in the number of City spaces. A provision in the Development Agreement has been negotiated giving the City a fixed number of spaces (535 spaces as described below) to purchase within the project, subject to finalizing the ultimate project uses. A potential issue that may arise that is, as of yet not contemplated in the Agreement is how to address the required parking in the event that a restaurant (or other more intensive use) locates in the Project. Should the situation arise, it will need to be addressed by either allowing the Developer to purchase, or otherwise mitigate Parking requirements under the code, or the use will not be permitted. The Agreement also provides for the Developer to retain a priority right to purchase up to 150 additional spaces on a monthly basis to meet operational parking deficiencies from the City's Excess Parking inventory. Again, this clause may reduce or limit FTA funding eligibility. Ownership Retail Required Supermarket Excess Parking Total Parkin Re uired Parkin er 468 78 0 546 0 97 438 535 468 175 438 1081 Park and Ride Transit Facilitv Operations and ManaQement: The Park and Ride Transit Facility will be operated and maintained through the joint efforts of the City and the Developer. The City will provide the operating personnel for the Transit Facility through its contract for attendants and cashiers. The Developer will provide for the acquisition and coordination of all maintenance and other operating and maintenance services. It is expected that revenues will be generated through the use of the Transit Facility by the public, both hourly and on a permit basis, as well as from customers of the retail spaces. Additionally, the Developer will make an annual contribution to revenue of approximately $290,000 to offset the retail validation program (# of spaces x 12 months x $55 per month). This amount will escalate at an annual rate of 2.5% beginning after the third year of operation. It is anticipated that additional revenues may be earned through the use of the facility, by the public, decal parkers, valet operators in the evening after retail operating hours or parking for special events, which result in excess of 1000 new available spaces during peak nighttime hours. A Pro Forma prepared by the Parking Department is included as Attachment "B" to this memorandum. The Pro Forma prepared by the Parking Department indicates that the Garage operation is projected to require operating subsidies in its first few years. The Pro Forma is based on a reasonable analysis of the information available to us presently and assumes a similar rate structure and usage pattern to other system facilities. As has been discussed with the April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 7 of 18 Developer, there may be alternate rate structures and operating methods that may produce a different result as more experience is gained with this specific facility and operating relationship with the Developer. While early pro forma analysis may predict revenue shortfalls, the long-term parking demand in the South Beach and South of Fifth areas is expected. It is both parties' intent to make maximum and efficient use of the structure. As this facility has very complicated operational characteristics and it has a unique location to best serve as a park and ride facility at the entrance to the City, we will need to monitor the operations and revenue and expenses closely, and routinely make the appropriate modifications to the operations and rate structure. The annual operating expenses of the garage (381,886s.f.) will be shared by the Developer and the City. The portion of expenses for the operation and maintenance of the retail common areas (29,611 s.f.) will be paid solely by the Developer. Net revenues will be shared on a pro-rata basis based on the ownership of spaces (City 49.5%/Developer 50.5%). Should the Transit Facility operating expenses exceed the total revenues earned from all parking spaces, including the annual contribution towards revenue from the Developer, the resulting loss will also be shared on a pro-rata basis based on the ownership of spaces. Art in Public Places Related to the Development Agreement, is the required contribution from the Project to Art in Public Places (AiPP). The present AiPP Ordinance requires all City projects to make a financial contribution to support ongoing and future operations and acquisitions of the City's AiPP program. The most common application for the Ordinance has been to City projects that are City-owned and constructed, however, the Ordinance also pertains to Capital Construction Projects where the City is a partner, therefore this project falls under the Ordinance. This project is the first instance where a public/private joint development will come under the AiPP Ordinance, which was revised in 2001 to include such agreements. At the time of the revision, it was contemplated that those projects where the City was the landowner, such as Lincoln Place and The Lincoln, would be affected. In this instance, however, the City is not, and will not be the landowner. The City is essentially acquiring an interest in certain elements of the project through a condominium instrument. The Developer has requested a waiver of the AiPP obligation pursuant to the provisions of the Ordinance. A decision will need to be made as to whether or not to waive the Project's AiPP contribution. The Developer has continually maintained that he will not entertain funding any portion of the AiPP fee, if a waiver is not granted. In consideration of this request for waiver, the Developer is committing to install a major piece of art at the entrance of the project (as depicted in the Project Concept Plan) by local artist Romero Britto, which the Developer has valued at $500,000. Furthermore, Mr. and Mrs. Alan Potamkin have represented that they have promised gifts to the Bass Museum with a declared value of $600,000, and Developer has requested these donated works be considered as part of the waiver request. The estimated AIPP contribution would have been approximately $490,000, based on an estimated $32,000,000 project cost. If the April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 8 of 18 Project were developed without public participation, no Art in Public Places contribution would be required. As referenced in the Development Agreement and above, the City has advised that the proposed project constitutes a public joint development, and that the AIPP 1 %% will apply to the Project construction cost. If the AIPP is not waived, according to the Developer, it will render this transaction economically infeasible and he has stated that he will not contribute to the fee. Should the City wish to waive this fee, the Administration recommends that the Commission direct the Administration to draft a Resolution granting the requested waiver. This resolution waiving the AIPP contribution can then be submitted for approval concurrent with the second reading of the Development Agreement for the Commission's consideration. On January 18, 2005, the Developer made a presentation to the AiPP Committee, which adopted a motion approving the waiver conditioned upon the Developer working with the AiPP Committee to select the appropriate artist and location of artwork. On February 4, 2005, the Cultural Arts Council approved a motion requesting that the AiPP Committee reconsider their recommendation to waive the 1.5% AiPP requirement for this project, and further that CAC representatives attend the AiPP Committee's reconsideration. The motion further stated that the Cultural Arts Council opposed waiving the AiPP requirement. This issue was discussed at the February 14, 2005 Finance and Citywide Projects Committee meeting; however, following the Finance and Citywide Projects Committee meeting, the AiPP Committee reconsidered this item on February 15, 2005, pursuant to the request of the Cultural Arts Council, and voted to recommend denial of the waiver and further moved to ask the City Commission to direct the Developer to work with the AiPP Board to select the appropriate artist and location of artwork. The Committee was concerned that the purpose of the revisions to the Ordinance was to build the AiPP fund, and that this request would set a precedent for future requests that would be contrary to the original intent of the revisions. The Developer expressed his intent, as reflected in the attached agreement, to proceed with the Britto artwork and waiver request despite AiPP's motions. Development Aareement and Declaration of Condominium The attached Development Agreement sets forth the parameters and terms and conditions pursuant to which the Developer will proceed with construction of the Project and the City will provide capital contributions. The Declaration of Condominium reflects the terms under which the parties will operate upon completion of the project. The salient terms of the Development Agreement and the Declaration of Condominium (the "Declaration") negotiated between the parties are summarized below. Specific issues concerning this transaction are elaborated on below, due to the complex nature of the relevant agreements, and to highlight areas of importance to the City Commission. April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 9 of 18 The important milestones and aspects in the Development Agreement include: · Developer AR&J SOBE, LLC (Limited Liability Company comprised of Jeff Berkowitz, Alan Potamkin and Robert Potamkin) · City Unit City Spaces (including City Supermarket Spaces and City Non-Supermarket Spaces, City Elevator, City Common Area and City Transit Dedication Area). · Developer Unit Developer spaces (including Developer Retail Spaces and Developer Supermarket Spaces), Retail Area and Developer common areas. · Project Concept Plan The project as currently approved by DRB/HPB contains approximately, 179,000 square feet of retail area; a supermarket; an approximately 1081 space parking garage; park-and-ride transit facility, including an intermodall transportation component; and surrounding streetscape and public infrastructure to serve the project, bounded by Lenox Avenue on the east, Alton Road on the west, 6th Street on the north and 5th Street on the south, in Miami Beach. · Effective Date Date Development Agreement is approved and signed. · Outside Date Earlier of 18 months from Effective Date or Commencement of Construction. · Building Permit Application 32 weeks from approval of Development Agreement/Effective Date, · Construction Commencement No later than 60 days from issuance of building permit or 18 months from Effective Date. · Construction Completion Earlier of 24 months following Construction Commencement date or September 1, 2007, subject to unavoidable delays. · Termination Rights (Prior to Construction Commencement) No later than 18 months from Effective Date, Developer can terminate Agreement if for various reasons project, as designed, is not viable. City can terminate if Developer has not obtained building permit or commenced construction before September 1, 2006, However, once Developer has provided Construction Application Notice (Le. Developer's notice of procuring loan), City will have 45 days thereafter to exercise such termination. April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 10 of 18 . AiPP Developer is requesting a waiver of applicability of City's AiPP Ordinance, as specified in the City Code 82-536 through 82-612, In consideration, the Developer is proposing to provide an entryway art work by Romero Britto valued by the Developer at $500,000 and additional representation by Mr. and Mrs. Alan Potamkin that they have promised gifts with a declared value of $600,000 to the Bass Museum of Art. In accordance with the City's AiPP Ordinance, the Developer presented their request for waiver to the AiPP Board on January 18, 2005, The AiPP Board recommended approval of the waiver conditioned upon the Developer working with the Board to identify an appropriate piece of artwork for this specific site. On February 15, 2005, the AiPP Board reconsidered the item and voted to recommend denial of the waiver. The Developer has stated his intent is to proceed with the Britto artwork despite AiPP's motion. (Section 5.1) · FT A Requirements An ongoing issue between the City and Developer has been compliance with and determination of eligibility by FT A. On October 26, 2004, one of the key provisions addressed by the Finance and Citywide Projects Committee was whether the City will proceed with the project irrespective of FTA funding eligibility. Therefore, the Agreement provides that City and Developer will cooperate to apply and comply with FTA requirements, However, the City's obligation to proceed with this Agreement is no longer contingent upon approval by FTA. Therefore, City shall be obligated to commit alternate funds to project (tentatively contemplated to be South Pointe RDA funds). · Construction Staging Staging for the project will be confined to project site and construction workers will park off-site to minimize adverse impacts on neighboring residential areas. · Alley Vacation Alley Vacation was approved by the City Commission on February 23, 2005, subject to a reverter in the earlier event that construction does not commence and/or if a supermarket Lease is not secured and a restrictive covenant memorializing same will be recorded by Developer. If City terminates Development Agreement or decides not to proceed with project, but Developer proceeds with substantially the same project, Alley Vacation will still be effective in exchange for Public Benefits. · City's Obligation to Fund During construction, even if Developer defaults, City is committed to fund project so long as the lender is funding. In the event offoreclosure, lender is obligated to repay City full capital contribution and a return of 4%. April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 11 of 18 · Condominium City/Developer will share in costs of establishing project as a condominium in order to ensure City units may be tax exempt. City and Developer agree to share in costs of establishing condo (estimated at total of $30K) and documentary stamp costs to be incurred at time of conveyance of City units (estimated at total of $90K), · Public Benefits As specified in the Alley Vacation Agreement, Developer agrees to include a grocery store with not less than 40,000 sf with a minimum term of 10 years, which will obligate tenant to initially open for business. If grocery ceases to operate, Developer shall use diligent and good faith efforts to pursue a new lease with a new grocery store and if Developer is unsuccessful, City shall at its option be entitled to locate another grocery tenant subject to same terms and conditions. This provision shall terminate upon expiration of grocery lease but not earlier than 10 years, · Developer Default during Construction If Developer defaults during construction, City's remedies are: 1) enforce specific performance by Developer, 2) recover damages equal to City's Capital Contribution together with interest. · City's Transit Facility Contribution City shall fund a fixed cost of $16,395.03 per parking spaces for 535 parking spaces ("City Spaces") plus an additional amount of $395,327 for the City Elevator and "Transit Facility Dedication Area Finishes" (a not to exceed 20% contingency is factored into the Agreement Definition) plus $333,333 for the "Transit Facility Dedication Area", for a total City contribution of $9,500,000. The Developer has assumed all construction risk and is responsible for any cost overruns in connection with the project. Important to note, the City will fund construction draws concurrent with Developer's Lender Disbursements. The City will have a guarantee from Developer and Owner to complete construction, however City will not have a lien or security interest in Project until substantial completion is achieved, at which time Developer will convey City spaces, City Elevator and Transit Facility Dedication Area to City. . Construction Guarantee Alan Potamkin, Robert Potamkin and Jeffrey Berkowitz jointly and severally, will guarantee Developer's performance as provided for in the Development Agreement. . Hazardous Materials City assumes no liability or obligation pursuant to the Brownfield Site Rehabilitation Agreement. Additionally, April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 12 of 18 City assumes no liability for any environmental contamination associated with the construction of the Project. Liability will only be applied prospectively based on respective parties responsibility. The important milestones and aspects in the Declaration of Condominium include: . Condominium Declaration The Declaration sets forth the intention and understanding of the parties relative to the future operation of the Garage (lithe Transit Facility"). City and Developer agree Garage will be available for public parking purposes, subject to Developer's rights to reserve and/or limit access to Developer Spaces. . Operation, Maintenance, Repair & Replacement o City will operate Garage and Developer will maintain Garage in first class condition. o City shall initially purchase and install all parking equipment (estimated cost $646,466 not including security cameras, monitors and recorders) and Developer will reimburse City half of the initial cost, amortized over 1 ° years utilizing the 1 ° year T -bill rate, on annual basis over 10 year period. o Parking in Garage will be a) validated parking (limited to 2 hours), b) decal/access card parking for retail space employees, c) decal access card parking for transit users and other third parties, d) special event permit parking, and e) timed ticket parking. o Parking rates will be established by mutual agreement, on a sliding scale, to discourage long term parking. · Full Occupancy 120 days after the earlier of a) one year after substantial completion or b) 90% of the Retail Space is initially occupied. · Public Passes Upon Full Occupancy, parties will meet quarterly to determine extent of decal/access cards to be provided based on parking operation experience within Garage. · Parking Garage Spaces The Parking Garage will contain approximately 1081 spaces broken down as follows: Developer City 546 spaces 535 spaces 1,081 spaces April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 13 of 18 · Required Parking Spaces · Validated Parking · Garage Management & Operation · Termination Rights (After Construction Completion) Developer 468 required spaces for retail 78 required Supermarket spaces 546 Developer spaces City 438 excess spaces 97 required supermarket spaces 535 City spaces As described above, 643 spaces (Developer spaces and City supermarket spaces) are code required parking for the project, as currently contemplated. The Declaration provides the Developer with a priority right to purchase 150 additional Public Passes (Le. excess spaces) to satisfy operational needs, at a cost of $55/month, subject to a 2.5% annual adjustment commencing following the third anniversary of Full Occupancy. Customers, employees and occupants of retail space shall be entitled to park in Garage free of charge. Customers will be limited to a two (2) hour validation period. The Developer will contribute approximately $290,OOO/annually (approximately $55/space per month for retail required spaces), subject to a 2.5% annual adjustment commencing following the third anniversary of Full Occupancy in consideration for such use and validation. City and its subcontractors will manage and operate garage and City cannot delegate this responsibility to another third party unless said third party operates more than ~ of the City garages. The Agreement also provides the Developer with a Right of Termination Post Construction. This Right is contained in Section 4{c)(viii) of the Exhibit E, Material Provision of Declaration (Page 84 of the attached Development Agreement). During the first 18 months after Full Occupancy, the Developer has the right to terminate the Agreement at his sole discretion and for any reason that the Developer determines is reasonable. Following 18 months, the Developer retains the Right to Terminate the Agreement at his sole discretion, but must follow a specific series of steps aimed at resolving any issues causing the Developer to want to terminate the Agreement. In the end, however, the Developer retains the sole right to determine that the relationship is not April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 14 of 18 working and to terminate the Agreement. In the event of termination under this Section, the City will receive its contribution plus four percent (4%) annual simple interest or the FMV of its portion of the project as determined in the Agreement. A schedule showing this payment is attached as Attachment A to the memo. · Fair Market Value (FMV) Retail customers are unable to find available parking spaces and the parties are unable to resolve the operational conflict. The parties have agreed to a formula and process that determines the Project's FMV. Essentially, the City's contribution to the Project comes to fifty-six percent (56%) of the cost of the Garage portion of the Project, including land. In the event the Agreement is Terminated, the FMV of the City's portion, or excess parking spaces, will be determined by a specified appraisal procedure. This "Market" value, as established by the appraisals, will then be multiplied by 56% to determine the FMV due to the City. The FMV formula is referred to in the "Termination Rights", "Right of First Refusal", and "Condemnation" Sections. · Parking Deficiency · Revenues/Expenses of Garage An allocation of operating expenses based on the parties' proportionate ownership of Garage and the expense allocation formula for garage vs, retail has been agreed to by the parties. Developer shall establish and submit an annual operating budget 60 days prior to end of each calendar year, subject to City's approval. · Taxes Developer shall pay all taxes on Developer Unit and City will pay all taxes on City Unit. Developer will cooperate with City to obtain exemption from real estate taxes. If the City Unit or any portion thereof is taxed, the City will be responsible for said payment. It is anticipated that the City supermarket spaces will be taxed, at the City's expense. Developer has agreed that if the supermarket would cease to exist, Developer will pay taxes associated with the required spaces for any alternate proposed use in the supermarket retail area, unless the exemption for the City's non-supermarket spaces is eliminated. · City Supermarket Spaces (if supermarket ceases to exist) City Supermarket Spaces will have a 10 year useful life. If Supermarket ceases to exist prior to 10 years, and a April 20, 2005 City Commission Memorandum PotamkinÆerkowitz - Development Agreement Page 15 of 18 substitute supermarket cannot be located, then for balance of the remaining 10 years, the LandlordlTenant will be required to (1) pay the monthly $55/fee, as adjusted by CPI, for the number of the parking spaces required by Zoning, or (2) buy back spaces at City's cost plus a return equal to the City's actual earnings over the period of time remaining in the 10 years. (e.g. If the supermarket ceases in the 6th year and can not be replaced, and option #2 is exercised, the Developer would utilize the CMS's average yield for the 1 st 6 years (say 6%) and apply it to the last 4 years of the useful life. Example-CMS Cost plus (6% times 4). After the 10 year useful life has expired, if the supermarket use ceases and is not replaced, there are no further obligations on Developer's part to replace/or to pay for the replacement user's code required parking. · Insurance Developer will procure insurance and City will share cost of insurance to the facility. · Condemnation City shall not be entitled to share in any portion of Condemnation Award, except to the extent of the Fair Market Value (FMV) calculation, as defined above, but not less than the City's Capital Investment. The City does have the right to be present during condemnation proceedings and the right to discuss such with the Developer. · Developer's Right of First Refusal City shall offer Developer Right of First Refusal at the greater of 1) City's Transit Facility Contribution plus 4% return or 2) FMV, as defined above. The Right of First Refusal shall not apply to any conveyance by the City to a successor governmental authority. · City's Right of First Offer In the event Developer sells property, City shall have 10 business days to elect in writing whether to pursue transaction, and an additional 30 days to negotiate terms. Termination RiQhts Due to the complex nature of this transaction, the Agreement includes an initial termination date, in which either party may terminate the Development Agreement. This specific Termination Rights are addressed in Articles 2.11 and 2.12 of the Agreement and pertain generally to "pre-construction" issues that arise between the execution of the Development Agreement and the Commencement of Construction. Qualifying events generally relate to economic viability of the project for the Developer, and issues regarding Public Purpose for the City. April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 16 of 18 The Agreement also provides the Developer with a Right of Termination Post Construction. This Right is contained in Section 4(c)(viii) of the Exhibit E, Material Provision of Declaration (page 84 of the Development Agreement). During the first 18 months after Full Occupancy, the Developer has the right to terminate the Agreement at his sole discretion and for any reason that the Developer determines is reasonable. Following 18 months, the Developer retains the Right to Terminate the Agreement at his sole discretion, but must follow a specific series of steps aimed at resolving any issues causing the Developer to want to terminate the Agreement. These include meetings to discuss operational alternatives, which may include limited ticket parking, increased timed ticket parking rates, and a reduced number of public passes. In the end, however, the Developer retains the sole right to determine that the relationship is not working and to terminate the Agreement, but not before all other options have been attempted, including the developers leasing of 150 public passes for a minimum of 30 days. The parties have agreed to a formula and process that determines the Project's Fair Market Value (FMV). Essentially, the City's contribution to the Project comes to fifty-six percent (56%) of the cost of the Garage portion ofthe Project, including land. In the event the Agreement is Terminated, the FMV of the City's portion, or excess parking spaces, will be determined by a specified appraisal procedure. This "Market" value, as established by the appraisals, will then be multiplied by 56% to determine the FMV due to the City. The FMV formula is referred to in the "Termination Rights", "Right of First Refusal", and "Condemnation" Sections. In the event of termination under this Section, the City will receive its contribution plus four percent (4%) annual simple interest or the Fair Market Value of its portion ofthe project as determined in the Agreement. A schedule showing this payment is attached as Attachment "C" to the memo. This schedule demonstrates how the City's discount (the portion of value attributable to land) was calculated. Thirty percent (30%) of the project's Floor Area Ration (FAR) is surplus parking, therefore, 30% was applied to the land value. This value was then applied on a per space basis, resulting in a land value per space of $11,413, and a total per space value of $29,238. Therefore, the City's is contributing 56% of the total value (cost) per space. Additionally, Attachment A shows the value of the City's contribution per year per the "floor" of 4% simple interest and the corresponding per space value for that year after factoring in the City's discount. The Administration has also provided projected market value for an excess parking space, with 6% growth in the first four years and 3% growth subsequently. Based on these estimates it is likely that in the event of termination, the payment to the City will trigger the Fair Market Value calculation rather than the floor of 4%. Planning Board - Conditional Use The Potamkin site is 50 feet away from the RM-1 Residential District (600 Lenox) and 70 feet from a residential use (1050 6th Street) and therefore Section 130-69.5 of the City Code will apply, requiring Conditional Use approval by the Planning Board to operate past midnight. The City and Developer will jointly schedule a future item for consideration by the Planning Board to address this issue, as it is contemplated that the Transit Facility will be operational 24/7. April 20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 17 of 18 Sec. 130-69.5. Additional requirements. In addition to any other requirements regarding parking garages and parking lots contained herein, and except where a parking garage or lot is accessory to a residential use and located on the same lot, all parking garages and lots located within 100 feet of a residential use or district that intend to operate after midnight, shall obtain conditional use approval from the planning board before obtaining a building permit or occupational license. Finance and Citywide Proiects Committee - February 14. 2005 On February 14, 2005, a Special Finance and Citywide Projects Committee meeting was held to review the terms presented herein, the application for alley vacation and the outstanding issues. The Committee recommended the parties proceed to finalize negotiations. At this meeting, the Administration summarized the terms of the Agreement and the Declaration of Condominium, and further discussed the request for the Art in Public Places waiver. There were some concerns raised about the possibility that the project may be deemed ineligible for FTA funding, and discussion of the potential use of South Pointe RDA funds in that instance. Further discussion ensued regarding the Developer's termination rights, including a discussion of the legal issues involved in using public funds for the public purpose of building the proposed garage. There was sentiment from the Committee that there was concern about the termination rights, but that overall the project and Development Agreement appeared to be a "win-win" for both the Developer and the City, given the value obtained in acquiring 535 City-owned public parking spaces without land costs at the entrance to the City. CONCLUSION Although this project is based on a complicated Development Agreement, there are many compelling reasons supporting approval on first reading. The City has no land cost associated with the construction of a park and ride facility at the entrance to the City, which represents a discount of 44%, and risk is eliminated by the Developer's Guaranteed Maximum Price. Also, the Developer is constructing the project, rather than the City, and the City will operate the facility. The City expects to utilize a portion of Federal Transit Administration funding that has been awarded to the City. This project will activate the western end of Fifth Street, redevelop a designated brownfield, create over 500 jobs, and attract retail stores that do not currently exist in Miami Beach, as well as secure a five-year community request through the establishment of a supermarket in that neighborhood. Ultimately, the City will have a facility that accomplishes the items previously listed, with a risk-free investment with secured delivery of the project. If at some point in the future the Developer exercises his termination rights, the end result will be the return of the City's investment plus a minimum of 4% interest, a more likely return based on fair market value, and the facility and the majority of the identified benefits will still be in place. Therefore, in accordance with the requirements of Sections 163.3220 -163.3243, Florida Apri/20, 2005 City Commission Memorandum Potamkin/Berkowitz - Development Agreement Page 18 of 18 Statutes, also referred to as the Florida Local Government Development Agreement Act, it is recommended that the Mayor and City Commission approve at the first of two duly noticed Public Hearings, a Development Agreement between the City of Miami Beach and AR&J Sobe, LLC (AIKIA Potamkin/Berkowitz) for the Development of the Project, presently referred to as "5th and Alton", containing approximately 179,000 square feet of retail area, a supermarket; an approximate 1081 space parking garage; park-and-ride transit facility, including an intermodal/transportation component, and surrounding streetscape and public infrastructure to serve the project, bounded by Lenox Avenue on East, Alton Road on West, 6th Street on North and 5th Street on the South, in Miami Beach. JMGITH/KC/rar T:\AGENDA\2005\Apr2005\Reguler\Potamkin,MEM, doc Attachments A - Resolution No. 2005-25827 B - Pro Forma C - Fair Market Value D - Development Agreement - Under Separate Cover · Attachment "A" , RESOLUTION NO. 2005-25827 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, FOLLOWING A DULY NOTICED PUBLIC HEARING TO HEAR PUBLIC COMMENT ON SAME, APPROVING AND AUTHORIZING TIlE VACATION OF AN ALLEY, CONTAINING APPROXIMATELY 7,800 SQUARE FEET AND LOCATED ADJACENT TO THE PROPOSED AR & J SOBE, LLC (AlK/A POT AMKINIBERKOWITZ) PROJECT AT 5TH STREET AND ALTON ROAD, IN FAVOR OF THE APPLICANT (AND DEVELOPER OF THE PROJECT), AR & J SOBE, LLC; WAIVING, BY 5/7THS VOTE, THE COMPETITIVE BIDDING AND APPRAISAL REQUIREMENTS, PURSUANT TO ARTICLE II, SECTION 82-36 THROUGH 82-40 OF THE MIAMI BEACH CITY CODE, FINDING SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY; PROVIDED FURTHER THAT THE CITY'S APPROVAL OF THE AFORE STATED VACATION IS SUBJECT TO AND CONTINGENT UPON AR & J SOBE, LLC'S SATISFACTION OF THE CONDITIONS SET FORTH IN THIS RESOLUTION, AND COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE ATTACHED VACATION AGREEMENT; AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE ATTACHED VACATION AGREEMENT AND ANY AND ALL DOCUMENTS TO EFFECTUATE THE V ACA TION, INCLUDING A QUITCLAIM DEED, SUBJECT TO FINAL REVIEW OF SAME BY THE CITY ATTORNEY'S OFFICE. WHEREAS, on June 7, 2000, the Mayor and City Commission adopted Resolution No. 2000- 23963, designating the area bounded by 6th Street to the North, 5th Street to the South, Alton Road to the West, and Lenox A venue to the East, as a Brownfield area to promote the environmental restoration and economic redevelopment of the area; and WHEREAS, since July 2002, the Administration has been meeting with representatives of the site generally located on 5th Street and Alton Road, owned by the Potamkin family, to address a joint development opportunity and to review a preliminary site plan for a five (5) level mixed-use retail complex, including approximately 1081 parking spaces and a supermarket (the Project); and WHEREAS, in accordance with the City Commission's directive and the community's identified needs, the City's interest in the Project development is primarily focused on achieving the respective public benefits of locating a supermarket, exploring transit and excess parking opportunities, and developing a gateway project, at one of the City's main arterial entryways; and WHEREAS, over the past two (2) years, the proposed Project has been reviewed on several occasions by various City Committees including Finance & Citywide Projects Committee, Transportation and Parking Committee, Design Review Board, and Historic Preservation Board; and WHEREAS, the City is the holder of a public right-of-way easement and an alley adjacent to the Project, containing approximately 7,800 square feet (the Alley); and WHEREAS, in consideration of the public benefits being provided by Developer in the Project, the Developer has made a request and submitted an application, in accordance with the City's Guidelines for Vacation or Abandonment of Streets or Other Rights of Way, and pursuant to Section 82-36 through 82-40 of the City Code (Ordinance No. 92-2783), for vacation of the Alley; and WHEREAS, pursuant to Resolution No. 2005-25805, and as required by Section 82-37 of the City Code, the Mayor and City Commission held a duly noticed public hearing on February 23, 2005, to hear public comment regarding the proposed Alley vacation; and WHEREAS, additionally, as required by Section 82-38 of the City Code, a Planning Deparbnent Analysis has been prepared with regard to the proposed Alley vacation; said analysis is attached and incorporated as Exhibit "A" to this Resolution; and WHEREAS, the Adminis1ration would recommend that the Mayor and City Commission approve the requested Alley vacation in favor of the Developer, AR & J SOBE, LLC, subject to and contingent upon the Developer's satisfaction of the following conditions: 1) AR & J SOBE, LLC's full compliance with the tenns and conditions of the Vacation Agreement, by and between the City and AR & J SOBE, attached and incorporated as Exhibit "B" hereto; 2) In addition to AR & J SOBE's compliance with the terms and conditions of the attached Vacation Agreement, that the proposed Alley Vacation be subject to the following possible reverter and/or reconveyance provisions: (i) In the event Developer does not enter into a supennarket lease (as defined in the attached Vacation Agreement) on or before eighteen (18) months after the Effective Date of the Vacation Agreement or Commencement of Construction, as defined therein, whichever comes first; (ii) In the event Developer does not Commence Construction of the Project on or before September 1, 2006, subject to extension for Unavoidable Delays; (iii) In the event the Project is substantially modified from the Project approved by the Historic Preservation Board and Design Review Board, as referenced in the respective Board Orders issued in August 2004 (interior reconfigurations to change. or reduce parking areas and/or add/reconfigure leaseable space shall not be deemed a modification of the Project approved as aforestated, except where any such interior reconfigurations (i) may result in a change to the Project Floor Area Ratio (F.A.R.) beyond that which is permitted as of the Effective Date of the Vacation Agreement, and/or (ii) may result in a modification to the Project exterior façadelelevations from those approved in the attached August 2004 Board orders); (iv) Provided City has timely exercised its option to purchase same, in the event that Developer does not dedicate and convey the Transit Facility Dedication Area to the City on or before the Commencement of Construction. The City shall not be obligated to fund any costs of Developer's Project construction costs (hard and/or soft costs) except if it elects to acquire the Transit Facility Dedication Area and have Developer install the Transit Facility Dedication Area Finishes (as defined in the Vacation Agreement) and/or Elevator, as provided in the Vacation Agreement. In the event that the cost of construction of the Transit Facility Dedication Area, Transit Facility Dedication Area Finishes, and (should the City so opt) the Elevator exceed the City's contribution(s) for same, as set forth in this Vacation Agreement, Developer shall be solely responsible for payment of, and shall pay, all excess costs. The amount to be paid by City at the time of dedication shall be the maximum amount that Developer could be entitled to, but Developer shall, within thirty (30) days after Substantial Completion of the Project, provide to City a reconciliation of the actual hard and soft costs of the Transit Facility Dedication Area Finishes and Elevator and a check for any refund owed to City on account thereof. The City shall fund its contribution to the Transit Facility Dedication Area, Transit Facility Dedication Finishes, and (should it so opt) the Elevator at the time of the dedication and conveyance of the Transit Facility Dedication Area to the City, which will take place no later than the Commencement of Construction of the Project and the issuance by the City Manager of the recordable instrument(s) stating that the Conditions provided for in Paragraph 4 of the Vacation Agreement have occurred, such that no further reversion of the Alley to the City is possible; and WHEREAS, the City's Public Works Department has received and reviewed the Developer's application for vacation of the Alley, and has determined that the Developer has complied with the submission requirements therein; and WHEREAS, additionally, as permitted by Section 82-39 of the City Code, the Administration would recommend that the Mayor and City Commission waive, by 5/7ths vote, the competitive bidding and appraisal requirements, finding that the public interest would be served by such waiver. 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, following a duly noticed public hearing to hear public comment on same, approve and authorize the vacation of an Alley, containing approximately 7,800 square feet and located adjacent to the proposed AR & J SOBE, LLC (aIkIa Potamkin/Berkowitz) Project at 5th Street and Alton Road, in favor of the Applicant (and Developer of the Project), AR & J SOBE, LLC; waiving, by 5/7ths vote, the competitive bidding and appraisal requirements, pursuant to Article n, Section 82-36 through 82-40 of the Miami Beach City Code, finding such waiver to be in the best interest of the City; provided further that the City's approval of the aforestated Alley vacation is subject to and contingent upon AR & J SO BE, LLC's satisfaction of the conditions set forth in this Resolution, and compliance with the terms and conditions of the attached Vacation Agreement; authorizing the Mayor and City Clerk to execute the attached Vacation Agreement and any and all documents to effectuate the Alley vacation, including a quit claim deed, subject to final review of same by the City Attorney's office. PASSED and ADOPTED this 23rd day of February, 2005 ~1fkwt- rÓA-~ CITY CLERK A TIEST: F:\atto\AGUR\RESOS-ORD\5th and Alton (potamkin) Vacation Reso (Revised 2-22-05).doc APPROVED AS TO FORM & LANGUAGE & F R exECUTION 4li4DIÎ Potamkin Protorma.AttachmentB.x1s Attachment "8" CITY OF MIAMI BEACH PARKING DEPARTMENT P&B OPERATING ASSUMPTIONS/COMPARISIONS City's Developer's Share Share 49.5% 50.5% REVENUE TENANT CONTRIBUTION $ 290,000 TRANSIENT - 32 X 1.5 @ $1.00 X 365 $ 17,520 MONTHL Y- 138 x $60 x 12 $ 99,360 VALET -150 spaces x $45 x 12 (11p-7a) $ 181,000 VALIDATIONS TOTAL REVENUE $ 587,880 EXPENSES PAYROLL PAYROLL TAXES WORKERS COMP HEAL THIWELFARE UNIFORMS PROF SVS SUBTOTAL PARKING A TT/SUPERVISORS $ 280,525 $ 138,860 $ 141,665 TELEPHONE $ 3,000 $ 1,485 $ 1,515 UTI LlTI ES/ELECTRICITY $ 45,600 $ 22,572 $ 23,028 R&M MAINT SALARIES $ - $ - $ - JANITORIAL $ 60,000 $ 29,700 $ 30,300 LOT SWEEPING $ 18,000 $ 8,910 $ 9,090 LOT LIGHTING $ - $ - ELEC REPAIRS $ 5,000 $ 2,475 $ 2,525 CLEANING SUPPLIES $ 5,000 $ 2,475 $ 2,525 HVAC MAINT/REP $ 4,500 $ 2,228 $ 2,273 SVS CONTRACTS FIRE EXT $ 1,500 $ 743 $ 758 FIRE ALARM MONITORING $ 1,800 $ 891 $ 909 EMERGENCY GENERATOR $ 3,662 $ 1,813 $ 1,849 PRESSURE CLEANING $ - $ - $ - EQUIPMENT RENTAL & REPAIRS $ - $ - $ - LICENSE $ 400 $ 198 $ 202 TICKETS $ 8,000 $ 3,960 $ 4,040 SIGNAGE $ 1,000 $ 495 $ 505 COURIER SERVICE $ 6,716 $ 3,324 $ 3,392 PEST CONTROL $ 1,000 $ 495 $ 505 STORM WATER $ 4,600 $ 2,277 $ 2,323 WATER/SEWER $ 7,200 $ 3,564 $ 3,636 SECURITY $ 200,000 $ 99,000 $ 101,000 ELEVATOR MAINT $ 3,000 $ 1,485 $ 1,515 FIRE SAFETY EQIP $ - $ - $ - TRASH REMOVAL $ 3,500 $ '1,733 $ 1,768 FIRE ALARM/SPR MONITORING $ 3,000 $ 1 ,485 $ 1,515 LlAB INS $ - $ - $ - PRINTINGfTlCKETS ETC. $ 8,000 $ 3,960 $ 4,040 MGT FEES $ 17,636 $ 8,730 $ 8,906 MARKETING $ 3,000 $ 1 ,485 $ 1,515 TOTAL EXPENSE $ 695,639 $ 344,342 $ 351,298 , PROFIT/(LOSS) $ (107,759) $ (53,341) $ (54,418) LOT LIGHTING INCLUDED IN UTILITIES EQUIPMENT RENTAL & REPAIRS - NIA MANAGEMENT FEE 3% OF GROSS Attachment "C" Column A Column B Column C Fair Market Value Determination Total Space Value must Projected Value - $ 19,269,068 Cost for Entire Garage (Moss) CMS exceed this estimated market $ 8,771 ,325 CMB Garage Contribution Base amount for FMV value for an excess 1,081 Total Parking Spaces Year Value to apply parking space $ 17,825 Cost per Space 2005 $ 16,395 $ 29,277 535 City Spaces 2006 $ 17,051 $ 30,448 $ 31,033 97 City Supermarket Spaces 2007 $ 17,707 $ 31,619 $ 32,895 438 Surplus Spaces 2008 $ 18,362 $ 32,790 $ 34,869 546 AR&J Spaces 2009 $ 19,018 $ 33,961 $ 36,961 2010 $ 19,674 $ 35,132 $ 38,070 248,842 Project FAR 2011 $ 20,330 $ 36,303 $ 39,212 74,653 Surplus Parking 2012 $ 20,986 $ 37,474 $ 40,389 30% Surplus Parking Share of FAR 2013 $ 21,641 $ 38,645 $ 41,600 2014 $ 22,297 $ 39,816 $ 42,848 2.67 Lot Size (Acres) 2015 $ 22,953 $ 40,988 $ 44,134 116,305 Lot Size (Sq Ft) 2016 $ 23,609 $ 42,159 $ 45,458 $ 175 Boymelgreen Comp Sale PSF 2017 $ 24,265 $ 43,330 $ 46,821 $ 20,353,375 Land Value 2018 $ 24,920 $ 44,501 $ 48,226 2019 $ 25,576 $ 45,672 $ 49,673 30% Surplus Parking Land Allocation 2020 $ 26,232 $ 46,843 $ 51,163 $ 6,106,013 Surplus Parking Land Value 2021 $ 26,888 $ 48,014 $ 52,698 $ 11,413 Land Value Per Space 2022 $ 27,544 $ 49,185 $ 54,279 2023 $ 28,199 $ 50,356 $ 55,907 2024 $ 28,855 $ 51,527 $ 57,584 $ 16,395 City Contribution per Space 2025 $ 29,511 $ 52,698 $ 59,312 2026 $ 30,167 $ 53,869 $ 61,091 $ 29,238 Value per Space 2027 $ 30,823 $ 55,040 $ 62,924 2028 $ 31,478 $ 56,211 $ 64,812 56% City Share of Space Value 2029 $ 32,134 $ 57,383 $ 66,756 44% City Discount 2030 $ 32,790 $ 58,554 $ 68,759 Years 1-4 6% Years 5+ 3% Column A represents the value of the City's investment with 4% annual simple interest. Column B represents the appraised value that a parking space must exceed to trigger Fair Market Value at the time of tennination. Column C represents the projected market value of an excess parking space.