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556-2008 RDA ResoRESOLUTION NO. 556-2008 A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA) CONSENTING TO A FIRST MORTGAGE ENCUMBRANCE OF THE RDA'S INTEREST IN THE REAL PROPERTY LOCATED AT 2001 WASHINGTON AVENUE (THE ALLEN HOUSE), IN ACCORDANCE WITH THE PROVISIONS OF THAT CERTAIN LOAN AGREEMENT, NOTE, AND RESTRICTIVE COVENANT BETWEEN THE RDA AND MBCDC: THE ALLEN, LLC, DATED APRIL 30, 2007; SAID MORTGAGE IN CONNECTION WITH MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION'S (MBCDC) APPLICATION TO GREAT FLORIDA BANK FOR PERMANENT CONSTRUCTION FINANCING, IN THE AMOUNT OF $500,000, TO FUND THE REHABILITATION OF THE ALLEN HOUSE; AND FURTHER AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE ANY AND ALL DOCUMENTATION RELATED THERETO. WHEREAS, on March 14, 2007, the RDA adopted a Resolution No. 545-2007, authorizing an appropriation of $13,650,000 from City Center/Historic Convention Village (City Center) Redevelopment Agency non-TIF funding sources, to MBCDC, for the purpose of providing funds to MBCDC for the balance due in connection with its purchase of the following three properties located within the City Center RDA: 1940 Park Avenue (The Barclay); 1965-1975 Washington Avenue (The London House); and 2001 Washington Avenue (The Allen House), (hereinafter referred to as "the Properties"); and WHEREAS, Resolution No. 545-2007 further approved the terms and conditions for a Loan Agreement between the RDA and MBCDC governing the use of all funding appropriated in connection with the purchase of the Properties, which are to be restored, renovated, operated and maintained by MBCDC for the express purpose of i) preserving these historic structures within the City Center RDA, and ii) maintaining a designated number of rehabilitated/renovated units within the properties as affordable housing for low to moderate income individuals, (as provided for in, and conformance with the provisions of the City Center/Historic Convention Village Redevelopment and Revitalization Area Plan); and WHEREAS, since the acquisition of the Properties, MBCDC has been diligently conducting a phased renovation of the Properties; and WHEREAS, in order initiate renovations at The Allen House, MBCDC has applied to Great Florida Bank (the Bank) for aconstruction/permanent financing loan, in the amount of $500,000, (hereinafter referred to as "the Loan"); and WHEREAS, one of the conditions of the Loan is for the Bank to be granted a first mortgage position for the amount of the Loan; and WHEREAS, pursuant to Loan Agreement between the RDA and MBCDC: The Allen, LLC, (A Florida Limited Liability Corporation whose sole member is MBCDC), any grant, loan or other funding application made by MBCDC, that requires the RDA to subordinate its interest in the premises, requires the written consent of the RDA on a case by case basis; and WHEREAS, based on the most recent appraisal of The Allen, dated February 29, 2008, the prospective market value of the property was determined to be $3.9 Million, reflecting an increase in value of $431,000 over the original purchase price; and WHEREAS, the RDA's only exposure in agreeing to subordinaite its interest in the premises would be the difference between the amount of the Loan and the appreciated value of the property, totaling $69,000; and WHEREAS, based on a pro-forma projection of revenues and expenses received from MBCDC, it is anticipated that, at 80% occupancy, The Allen will generate enough rental income to adequately cover the debt service requirements on the Loan; and WHEREAS, based on the aforestated analysis, the Administration recommends consenting to a first mortgage encumbrance of the RDA's position in The Allen House, in connection with MBCDC's loan application to Great Florida Bank and further authorizing the Executive Director to execute any and all documentation related to the application NOW, THEREFORE, BE IT DULY RESOLVED BY THE CHAIRPERSON AND MEMBERS OF THE REDEVELOPMENT AGENCY OF THE CITY OF MIAMI BEACH, FLORIDA, that the Chairperson and Members of the RDA hereby consent to a first mortgage encumbrance of the RDA's interest in the real property located at 2001 Washington Avenue (The Allen House), in accordance with the provisions of that certain Loan Agreement, Note and Restrictive Covenant between the RDA AND MBCDC: The Allen, LLC, dated April 30, 2007; said Mortgage in connection with the Miami Beach Community Development Corporation's (MBCDC) application to Great Florida Bank for permanent construction financing, in the amount of $500,000, to fund the rehabilitation of The Allen House; and further authorizing the Executive Director to execute any and all documentation related thereto. PASSED and ADOPTED this 16h day of April, 2008 ATTEST: ~~ ~ APPROVED AS TO SECRETARY ~ HAI AN ~ FOR TION Hobert Parcher Matti Herrera Bow T:VIGENDA\2O08WPRIL 16\RDAIALLEN HOUSE FIRST MORTGAGE RESO.DOC ~ 19 ~t0~~ General Counsel MIAMI BEACH REDEVELOPMENT AGENCY ITEM SUMMARY Condensed Title: A Resolution consenting to a first mortgage encumbrance of the RDA's interest in the real property located at 2001 Washington Avenue (The Allen House), in accordance with the provisions of that certain loan agreement between the RDA and MBCDC:The Allen, LLC, dated April 30, 2007; said mortgage in connection with MBCDC's application to Great Florida Bank for permanent construction financing, in the amount of $500,000, to fund the rehabilitation of said property; and further authorizing the Executive Director to execute any and all documentation related thereto. mtenaea outcome Ensure Well Maintained Facilities Supporting Data (Surveys, Environmental Scan, etc.): Fifty-one percent of residents in the Community Satisfaction Survey (2007) ranked housing for households earning less than $80,000 as something the City should most ensure. Housing for elderly/seniors ranked as the second highest type of housing the City should most ensure (26% of respondents). In addition, retention of rental units was cited by 7% of the respondents as something the City should ensure. Issue: Shall the RDA authorize a first mortgage encumbrance of its interest in the Allen House in connection with MBCDC's loan application to Great Florida Bank? item summary~rcecommenaation: Since the acquisition of the three rental apartment properties in the City Center RDA, MBCDC has (in accordance with the Loan Agreements between the RDA and MBCDC), been conducting a phased renovation of the buildings, which to date has included interior upgrades in the Barclay; replacing the roofs on both the Allen House and the Barclay; engaging an architectural firm to reconfigure the London House; and, commencing the renovation of the Allen House in order to relocate tenants from the Villa Maria (a multi-family rental property owned by MBCDC, which is set to undergo a major renovation as elderly housing). In the meantime, MBCDC has also applied to the State fora $750,000 Elderly Community Housing Loan for the Allen for future, more extensive renovations to the building. In order initiate renovations at the Allen, MBCDC has applied to Great Florida Bank for aconstruction/permanent financing loan in the amount of $500,000. The proposed terms under which the Bank has agreed to provide this financing are included as an attachment to the Memorandum. Among these provisions is a requirement for the Bank to hold a first mortgage position for the amount of the loan. Pursuant to Article 2C of the Loan Agreement between the RDA and MBCDC, any grant, loan or other funding application made by MBCDC, that requires the RDA to subordinate its interest in the premises, requires the written consent of the RDA on a case by case basis. Based on the most recent appraisal of the Allen, dated February 29, 2008, the prospective market value of the property came in at $3.9 Million, reflecting an increase of $431,000 over the original purchase price, which would minimize the RDA's exposure in subordinating its position to approximately $69,000. In addition, based on the attached proforma received from MBCDC, it is anticipated that at 80% occupancy, the Allen will generate enough rental income to adequately cover the debt service requirements on the building. Based on the foregoing, the Administration recommends consenting to a first mortgage encumbrance of the RDA's position in the Allen House, in connection with MBCDC's loan application to Great Florida Bank and further authorizing the Executive Director to execute any and all documentation related to the application. Adviso Board Recommendation: N/A Financial Information: Source of Amount .Account Funds: ~ OBPI Total Financial Im act Summa N/A Ci Clerk's Office Le islative Trackin Kent O Bonde, Redevelo ment Coordinator Ext 6363 Sign-Offs: ,~ RDA Co rd nator As i ant Cit Man ger ity ager KO B H F/T / ~ ~ ~ V ~1 A ~ J~, I ~ ~ AGENDA ITEM ~~ ' ~- ! 1~A 1 f-~ ~ ~ GATE - ~6 0~ m MIAMIBEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, w~ww.miamibeachFl.gw REDEVELOPMENT AGENCY MEMORANDUM TO: C i erson~and M~n~r~ofthe Miami Beach Redevelopment Agency FROM: e M. Gon~zalez~, Executive Dir or DATE: April 16, 2008 SUBJECT: A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY, CONSENTING TO A FIRST MORTGAGE ENCUMBRANCE OF ITS INTEREST IN THE REAL PROPERTY LOCATED AT 2001 WASHINGTON AVENUE (THE ALLEN HOUSE), IN ACCORDANCE WITH THE PROVISIONS OF THAT CERTAIN LOAN AGREEMENT, NOTE, AND RESTRICTIVE COVENANT BETWEEN THE RDA AND MBCDC: THE ALLEN, LLC, DATED APRIL 30, 2007; SAID MORTGAGE IN CONNECTION WITH MIAMI BEACH COMMUNITY DEVELOPMENT CORPORATION'S (MBCDC) APPLICATION TO GREAT FLORIDA BANK FOR PERMANENT CONSTRUCTION FINANCING, IN THE AMOUNT OF $500,000, TO FUND THE REHABILITATION OF SAID PROPERTY; AND FURTHER AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE ANY AND ALL DOCUMENTATION RELATED THERETO. ADMINISTRATION RECOMMENDATION Adopt the resolution. BACKGROUND On March 14, 2007, the RDA adopted a Resolution authorizing an appropriation of $13,650,000 from City Center/Historic Convention Village (City Center) Redevelopment Agency non-TIF funding sources, to MBCDC, for the purpose of providing funds to MBCDC for the balance due in connection with its purchase of the following three properties located within the City Center RDA: 1940 Park Avenue (The Barclay); 1965-1975 Washington Avenue (The London House); and 2001 Washington Avenue (The Allen House), (hereinafter referred to as "the Properties"). From this same appropriation, a total of $341,593 was allocated towards offsetting the carrying costs of the Properties for a period of one year, or until such time that MBCDC was able to secure additional funding to carry and begin renovating the Properties. The Resolution further approved the terms and conditions for a Loan Agreement between the RDA and MBCDC, governing the use of all funding appropriated in connection with the purchase of the properties, which are to be restored, renovated, operated and maintained by MBCDC for the express purpose of i) preserving these historic structures within the City Center RDA, and ii) maintaining a designated number of rehabilitated/renovated units within the properties as affordable housing for low to moderate income individuals, as provided for in, and conformance with the provisions of the City Center/Historic Convention Village Redevelopment and Revitalization Area Plan. Miami Beach Redevelopment Agency Memorandum April 16, 2008 Allen House Loan Application -Subordination consent requirement Page 2 of 3 ANALYSIS Since the acquisition of the properties, MBCDC has been diligently conducting a phased renovation of the buildings, which to date has included painting and installing new carpeting and appliances in the Barclay; replacing the roofs on both the Allen House and the Barclay; engaging an architectural firm to reconfigure the London House, to include the addition of a third floor; and commencing the renovation of the Allen House in order to relocate tenants from the Villa Maria, (a multi-family rental property owned by MBCDC, which is set to undergo a major renovation as elderly housing). In the meantime, MBCDC has also applied to the State fora $750,000 Elderly Community Housing Loan for the Allen for future, more extensive renovations to the building. In the interim and in order initiate renovations at the Allen, MBCDC has applied to Great Florida Bank for aconstruction/permanent financing loan in the amount of $500,000. The proposed terms under which the Bank has agreed to provide this financing commitment are reflected in the attached letter to MBCDC, dated January 23, 2008. Among these provisions is a requirement for the Bank to hold a first mortgage position for the amount of the loan, which is not uncommon for an institutional loan of this nature. Pursuant to Article 2C of the Mortgage Loan Agreement between the RDA and MBCDC, any grant, loan or other funding application made by MBCDC, that requires the RDA to subordinate its interest in the premises, requires the written consent of the RDA on a case by case basis. Based on the most recent appraisal of the Allen, dated February 29, 2008, the prospective market value of the property came in at $3.9 Million, reflecting an increase of $431,000 over the original purchase price. Consequently, the RDA's only exposure in agreeing to subordinate its interest in the premises would be the difference between the amount of the loan and the appreciated value, totaling $69,000. The loan is being structured as a six-month construction loan, with interest only payments for the first six months, which will then convert to permanent financing, requiring monthly payments of principal and interest during the initial five-year term based on a twenty-year amortization period. The interest rate on the construction loan will be based on LIBOR + 250 basis points and the rate on the permanent financing piece will be based on the five-year Treasury Bill plus 275 basis points. Based on the attached pro-forma received from MBCDC, it is anticipated that at 80% occupancy, the Allen will generate enough rental income to adequately cover the debt service requirements on the building. Based on the foregoing, the Administration recommends consenting to a first mortgage encumbrance of the RDA's position in the Allen House, in connection with MBCDC's loan application to Great Florida Bank and further authorizing the Executive Director to execute any a all documentation related to the application, JMG/H /TH/K Miami Beach Redevelopment Agency Memorandum April 16, 2008 Allen House Loan Application -Subordination consent requirement Page 3 of 3 Attachments: - Great Florida Bank Letter dated 1/23/08 -Loan Term Requirements - Appraisal First Appraisal Summary Letter dated 2/29/08 - Pro-forma Estimate of Revenues and Expenses for the Allen House. - Summary of Acquisition and Carrying Costs as of 12/31/07 T:Wgenda~2008Wpril 16~RDAWIIen House First Mortgage Consent Mem.doc Great Florida Bank _ . _. January 23`d, 2008 Roberto DaTorre, President Miami Beach Community Development Corporation -945 Pennsylvania Avenue Miami Beach, Florida 33139 Re: Construction/Pennanent financing for The Allen, a 39 Unit Affordable Rental Building Located at 2100 Washington Avenue, Miami Beach, FL 33139 Dear Mr. DaTorre: Great Florida Bank (hereinafter "the Bank") is pleased to provide you with the following terms upon which the Bank will consider financing for the above referenced (please note that this letter is an outline of general teams and conditions of the said financing and is not intended to be a comprehensive listing or commitment). Borrower: The Allen, LLC Guarantor: Miami Beach Community Development Corporation. Loan Amount: $500,000. Loan based on a minimum 1.1 SX Debt Service Coverage not to exceed 80% Loan- to-Value. Purpose: To finance the rehabilitation of a 39 unit affordable rental apartment building known as The Allen, converting to permanent financing upon completion of the rehabilitation. Collateral: First mortgage and security interest in a 39 unit affordable rental apartment building located at 2001 Washington Avenue Miami Beach, Miami-Dade County, Florida 33139 known as The Allen, parking spaces and related amenities, including assignment of all permits, leases and contracts. Term: Construction: 6 months from closing date Permanent: Five (5}years from the date of conversion Extension Option: Provided the loan is current and not in default at the maturity of the initial Five year term on the permanent loan, the borrower will have the option to extend the permanent loan for an additional Five (5) year period. www.greatfloridabank.com te: I .8ob.5 i 4.6900 P. O. Box 02858(1.;.; {v}i2,~ri~,FF.c.e>ea 3-310-~3~803ca Interest Rate: Construction: LIBOR + 250 basis points Permanent: During the initial Five year term the interest rate will be based on the 5 year Treasury Bill constant maturity rate plus 275 basis points, fixed at the day of closing at the then prevailing rate. The minimum rate to be charged on the loan will be 6.125%. At the time of the loan extension the interest rate will be adjusted based on the 5 year Treasury Bill constant maturity plus 275 basis points. Commitment Fee: Construction and Permanent: One time 1 % of the loan amount. Administrative Fee: $1,250.00 Extension Fee: .25% of the outstanding principal- balance at the time of exercising the extension option on the permanent loan. Prepayment Penalty: There is no prepayment penalty on the construction or permanent loans. Secondary Financing: Secondary financing will be permitted only with the express written consent of the bank which may be withheld in the sole option of the Bank. Any approved secondary financing will be subordinate to the Bank. Repayment: Construction: Monthly interest only payments. Permanent: Monthly principal and interest payments during the initial Five year term based on a 20 year amortization. Provided the loan is current and not in default and is extended for an additional term of Five years, monthly payments of principal and interest will be due based on the remaining 15 year amortization. Upon the maturity of the loan the remaining principal balance plus any accrued and unpaid interest will be due in full. Conditions: 1. Appraisal for the property is to be provided in foam and content satisfactory to the Bank, prepared by an appraiser acceptable to the Bank, that will support aloan-to-value no higher than 80% as renovated. Acceptance of the appraisal will be subject to loan review by the Bank's review appraiser. 2. Borrower will provide the Bank with an Environmental Phase I Site Assessment (or Phase II if applicable) in foam and content acceptable to the Bank from an environmental fine acceptable to the Bank. In the event an environmental site assessment is provided to the Bank that has been ordered by an individual or company other than Great Florida Bank, the Bank will require a Reliance Letter be provided from the environmental firm. ;vww.greatflo~-idaba~k.com tei: I.8c6.5I4.G900 PC7. Bcx 028580 ._ I~iariu;ikiorida 33:10?-~58L,~=. C. I. _ Borrower will provide evidence of all appropriate insurance coverage (i.e. hazard and extended coverage, wind, fire, flood and liability) in form and content and in an amount acceptable to the Bank. 4. Construction loan is based on the following Sources & Uses of Funds: Source: GFB Construction Loan $500,000 Uses: Rehabilitation $348,394 llisurance, Interest Reserve, Soft Costs $151,606 Total $500,000 5. Borrower will provide verification of affordability restrictions. 6. Borrower will provide copies of leases and operating statements for the property. 7. Escrow for taxes and insurance will be required. 8. Subject to no adverse or material change of the financial condition of the Borrower or Guarantor prior to closing. Subject to no change in ownership or control of the property without prior consent of the Bank. 9. All costs associated with this loan shall be paid by the Borrower, inclusive of all legal fees. 10. Borrower to maintain account relationship with the Bank. 11. Additional terms and conditions may be required as the terms and conditions provided herein may not be all inclusive, as they are based on preliminary information submitted by the borrower. This letter provides a basic outline of the terms and conditions upon which the Bank would consider making a loan, and does not constitute a commitment by Bank to make a loan nor does it obligate the Bank in any manner. The foregoing letter does not include the details of such terms and conditions which may be required by Bank in a loan commitment, including but not limited to, due on sale provisions, default rate of interest, prohibitions or subordinated liens, application of insurance and condemnation proceeds, assignment of leases, waivers and subordinations by the guarantors, financial covenants and the form and content of financial statements, certain promulgated title policy endorsements, environmental indemnifications, the procedures for any restrictions on loan disbursements, and specific provisions regarding arbitration of disputes. Any loan commitment must be written and must state that it is a commitment and any other oral or written communications shall not constitute a loan commitment. This letter shall in no event constitute a "credit agreement" as defined in Section 687.0304, Florida Statutes. www.greatfloridabank.corri tel: 1.8c6.514.6900 P.O. Box 028580;_ Niian~i.; tl~,;da 3'102=£3580. Great Florida Bank is very pleased to review this financing with you. If the teens outlined herein are acceptable to you, please signify your approval where indicated below and return a copy of this letter and a check in the amount of $8,000 for the appraisal to my attention by January 31S`, 2008. Any overage of funds not used for the appraisal will be applied towards the origination fee. Should you have any questions or comments, please contact me at (305) 756-2393, or via email at eblancotrue(a~greatfloridabank.com. To proceed with this loan request, please acknowledge below and return executed copy along with the above-requested items and check to the Bank. Very truly yours, Fx~ii 53Qar f ~,/ ~~ •bi Bl nco-T e SVP/Director of Community Development .~ .L'ecde~c ~' M rk Leider Senior Vice President/Credit Policy Accepted and agreed this ~_ day of ~au.~ a , 2008. By: - As: Q~-~ ~ -~~.- z . "IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT - To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth, social security number and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents." w~vvr.greatflor~dabank..:om tei: 1.866.514.69 C0 P.O. Box 028580:~_Mriana~,cH:or;~ia X3:102-B580c: RELEASE OF INFORMATION I , D~ ~ d !f? ~ ,hereby authorize any and all Federal, State and Local governmental or civil agencles, consumer reporting agencles, and Individuals who may have information on me in their records or files or by virtue of personal knowledge, to release such information as may legally be released under the Freedom of Information Act, the Fair Credit Reporting Act and other applicable Federal or State laws including a criminal. history background and/or Driving Record or Abstract. Any searches conducted will be used for business purposes as permitted under the aforementioned statutes. I understand that any-and all information released to Kohn & Company, Inc. d/b/a Graymark Security Group by any agency, institution or individual shall be made known exclusively to Great Florida Bank. Further, I do hereby release, absolve, and agree to forever hold harmless, Kohn & Company, Inc. d/b/a Graymark Security Group, their officers, agents, contractors and employees and Great Florida Bank, their officers, agents, contractors and employees, as well as any and all agencies, persons and/or institutions who furnish information on me, from any and all liability, This also applies to any and all suits, actions, or causes of actions at law, claim, demand or liability which I, my successors, assigns, heirs, executors or administrators have now or may ever have resulting directly, indirectly or remotely from said agencies, institutions or individuals having furnished information. r/Z~il~ SIGNATURE DATE The following information is used for identification and statistical purposes. It is not used in any manner considered discriminatory under EEOC guidelines. PRINT ALL REQUESTED INFORMATION NAME: ~~ TUld f LAST FI MI MAIDEN SOCIAL SECURITY NUMBER: ~ ~` ~ -` ~~ `I- G~%~-~? ~, STREET ADDRESS Imo. ~ f~i CITY Cost Center #: ~~ U~ DATE OF BIRTH: /U/ ~ / ~ ~~ ~ RACE: (J~' SEX: y ~ f ~~~~ ~ ~~~~ - 3c~~~ TELEPHONE Please provide previous addresses for the past seven (7) years: ~ STREET ADDRESS Cllr STREET ADDRESS STREET ADDRESS DRIVER'S LICENSE: _ ~ ~G~ -- '~~ f -- ~ ~ -.3(ps - NUMBER ' r 3 Security Group STATE ZIP CODE ~- :.~%~~ STATE ZIP CITY STATE ZIP CITY STATE ZIP ~~ STATE EXP. DATE 7301 Northwest 4~h Street, Suite 110, Fort Lauderdale, Florida 33317 • (954) 581-5575 • (800) 881-3242 • (954) 581-5750 info@graymarksecurity. com ~. ~~~ ASELF-CONTAINED APPRAISAL REPORT OF THE ALLEN HOUSE APARTMENTS LOCATED AT 2001 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA 33139 Appraisal No. 5813.FH FOR Great Florida Bank c/o Ms. Michelle Garcia-Sanchez Commercial Loan Administration 15050 NW 79~' Court, Suite 200 Miami Lakes, Florida 33016 BY APPRAISALFIRST, INC. 8525 N.W. 53 Terrace, Suite 110 Miami, Florida 33166 r r r AppraisalFirst, inc. Florida's Appraisal Company MIAMI 8525 N.W. 53rd Terrace, Suite 110 Miami, Florida 33166 Phone: (305) 470-2100 Febru 29 20 Fax: (305) 470-2159 ~ e 08 E-mail: miami_residentialQappraisalfirstinc.com Commercial: (305) 470-2107 Commercial Fax: (305) 470-2105 Great Florida Bank E-mail: miami_commercialQa appraisalfirstinc.com c/o Ms. Michelle Garcia-Sanchez Commercial Loan Administration 15050 NW 79`~ Court, Suite 200 Miami Lakes, Florida 33016 Re: The Allen House Apartments, a proposed affordable housing renovation project, located at 2001 Washington Avenue, Miami Beach, Florida 33139. Dear Ms. Garcia-Sanchez: As requested, I have prepared the attached self-contained appraisal report containing 138 pages plus addenda, of the above referenced property. The purpose of this appraisal report was to estimate: 1) the "As Is" Market Value, of the subject property, in fee simple title, as of February 15, 2008; and 2) the Prospective Market Value of the subj ect property, upon completion ofthe proposed renovations and upon reaching stabilized occupancy, as a rental apartment-hotel project, in fee simple title, as of an estimated date of completion or August 1, 2008, as ofthe current date of appraisal~or February 15, 2008;. Market Value may be defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Great Florida Bank c/o Ms. Michelle Garcia-Sanchez Page Two The subject property consists of a 9,625 square foot, mixed use zoned, irregular shaped, site located on the northeast corner of Washington Avenue and 20~' Street, lying within the Collins Park section of the South Beach district of Miami Beach, Florida. The property is located across from the Miami Beach Convention Center. The site is improved with athree-story, "L", shaped, "Art Deco", style apartment-hotel building that was originally completed in 1940. The improvements, which are vacant and under going renovations, was previously utilized as anapartment-hotel. Because of the buildings previously poor condition and a fire, prior to 2007, it has been vacant for over two years. The building contains a total gross area of 17,641 square feet and 42 rental units. The property was purchased in April, 2007, as a bulk package comprising three similar style buildings within close proximity to the subject property, by the Miami Beach Community Development Corporation (MBCDC). The MBCDC with the support of the City of Miami Beach purchased three buildings in the immediate City Center area (Collins Park). The MBCDC appropriated $14,700,000 from the City's RDA funds to purchase the buildings and operate them as Affordable Housing. Two of the properties the London House(1965 & 1975 Washington Avenue) and The Barclay (1940 Park Avenue) where operational and producing income. Basically the City of Miami Beach appropriates funds as part of its Redevelopment Agency (RDA) towards the purchase of real estate within designated re-development districts. The City Center Area, which includes Collins Park, is in such a district. The City in concert with private investment rehabilitates existing facilities for public use. The City appropriates the funds for purchase and private investors or designated non-profit, privately operated, agencies, in this case the MBCDC, perform the rehabilitation or renovation of the structure in conformance with City development codes. The non-profit entity then operates and maintains the property. As a further incentive the developer receive tax credits. The site, building and unit sizes were obtained from: the property survey completed by Hardone Professional Land Surveyors and Mappers, dated February 27, 2007; and the architectural floor plans completed by Manny Reus, dated January 29, 2008. The measurement for the building was verified by the appraisers at the time of inspection. The provided development program calls for a partial rehabilitation of the existing structure to the extent that it once again becomes income producing. The MBCDC is planning to rent the units to elderly tenants as affordable housing. The groups initial efforts to repair the building where put on hold because the City denied permits citing that the building required more substantial upgrades than what was originally proposed. The MBCDC than hired said architect to produce the necessary plans to comply with the City's building codes. The result was a substantial increase in the renovation ~ budget. Great Florida Bank c/o Ms. Michelle Garcia-Sanchez Page Three The renovation work, which is underway, includes: upgrading the buildings systems (i.e. electrical and plumbing); providing ADA accessible units; vertical accessability via an elevator and handicap ramp; update the life safety systems (i.e. fire protection); and perform cosmetic repairs such as carpeting the units and common areas, installing kitchenettes and appliances, installing new wall HVAC in the units and a central system-for the common areas, installing new windows and interior painting. Also as part of the scope of work three of the smaller units will be combined to minimum size criteria, as per the zoning code. Upon completion the unit count will be 39. The building is structurally sound so most of the current work will include interior repairs, upgrades and modifications. More substantial renovations to the electrical, plumbing and other mechanical systems will be completed at a later date. The provided current renovation budget is $405,394. The estimated construction time was 8 months. Work has been underway for approximately two months and about $225,000 in costs have been incurred. It is anticipated that the completion date will be _in six months or by August, 2008. __ Upon completion the renovated 39 units will be 100% occupied with elderly residents relocated from a nearby facility. Because this is a specific use that is operated as anon-profit entity it does not meet the criteria of Highest and Best Use, as per a financially feasible or economically viable use. The actual rents, which will be fixed via several government programs including Section 8 Housing, are considerably lower than market indications. Therefore as part of the scope of work the subject property will be appraised as a typical apartment-hotel building commensurate with the provided level of renovation work. In this locale apartment buildings include a more transient clientele and can, therefore, also be termed as a rooming house style hotel. The rental market on South Beach is strong with vacancy rates at about 5% for typical apartments and 10% for apartment-hotels. It is presumed that under this market oriented scenario stabilized occupancy will also be achieved upon completion of the renovation work. An apartment-hotel differs from a traditional hotel, in that, tenants typically rent units on either a weekly or monthly basis rather than on a daily basis. In addition, the level of service offered with anapartment-hotel is considerably lower than a traditional hotel. Typically there is no maid service and the FF&E is limited to bedroom furnishings, possible a chair and table and kitchenette. As such, the operating expenses resemble more of an apartment operations rather than a hotel. This appraisal has been made in accordance with the Standards of Practice and Code of Ethics of the Appraisal Institute, the guidelines according to USPAP, standard 2-2 (a), and FIRREA. As such, it includes a complete discussion of data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analysis is also included throughout the report and addenda. When appraising a n apartment-hotel building the applicable approaches to value include the Cost, Sales Comparison and Income Capitalization Approaches to value. A Cost Approach will not be included because the existing improvements are 68 years in age. Great Florida Bank c/o Ms. Michelle Garcia-Sanchez Page Four The most applicable method ofappraising anapartment-hotel project on Miami Beach is the Income Capitalization Approach. In addition a Sales Comparison Approach will be included to help estimate the "as is" and prospective market values as well as provide additional support for the Income Capitalization Approach. This approach is considered to be less reliable because very few sales of operating apartment-hotels have occurred over the past few years. The depth of discussion contained in this report is specific to the needs of the client and for the intended use of financing. The appraiser is not responsible for unauthorized use of this report. The value opinion reported is qualified by certain definitions, limiting conditions and certifications which are set forth on pages 124 through 128 of this report. This appraisal report is in compliance with the minimum standards of the Uniform Standards of Professional Appraisal Practice (USPAP), Title XI of FIRREA and the appraisal instructions as set forth by Great Florida Bank. A copy of the engagement fetter is included in the addenda. By virtue of our investigation and analyses, it is the opinion of the appraisers, that the "As Is"Market Value of the subject property, in fee simple title, as of February 15, 2008, is: THREE MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS ($3,650,000) By virtue of our investigation and analyses, it is the opinion of the appraisers, that the Prospective Market Value of the subject properly, upon completion of the proposed renovations and upon reaching stabilized occupancy, as a rental apartment project, in fee simple title, as of an estimated date of completion or August 1, 2008, as of the current date of appraisal or February 15, 2008, is: THREE MILLION NINE HUNDRED THOUSAND DOLLARS ($3,900,000) Respectfully submitted, "~ Frank Hornstein, MAI State Certified General Real Estate Appraiser, No. RZ 1376 AnnaMaria Chavoustie, MAI State Certified General Real Estate Appraiser, No. RZ 0323 r r r Property Type: Report Type: Intended Use: Intended User: Location: Land Size: Improvement Description: Floor Area Ratio: EXECUTIVE SLJMIVIARY An apartment-hotel building that will operate with 39 .residential units. Self-Contained To help render a decision on financing. Great Florida Bank 2001 Washington Avenue, Miami Beach, Florida 33139 9,625 square feet. Improvement Type: Quality: Current Condition: Proposed Condition: No. of Stories: Apartment Type: Construction: Year Built: Gross Building Area Per SF: Total Existing Units: I, Proposed No. Units: Unit Mix (Overall): Efficiency - 1/1 Units - Average Unit Size: Net Living Area: Apartment-Hotel Building Class "C"/Good Poor Average Three Interior corridors w/ elevator. Concrete and wood frame 1940 17,641 42 39 36 @ 222 to 370 square feet 3 @ 444 square feet 318 square feet 12,420 square feet 1.83 (17,641SF / 9,625 SF) r r i 1 i 1 i i 1 1 1 1 I I I Folio Number: Zoning: Census Tract: Flood Zone: Marketing/Exposure Time: Date of Valuation: VALUE INDICATIONS: Land Valuation: Insurable Value: Sales Comparison Approach: Prospective Market Value - "As Is" Market Value - Income Capitalization Approach: Prospective Market Value - "As Is" Market Value - EXECUTIVE SUMMARY (Continued) 02-3234-016-0020 MXE, a mixed use entertainment district by the City of Miami Beach, Florida. 42.02 AE, as per community number 120651, Panel Number 0184J, dated March 2, 1994. 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