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Res. No. 013-05-11992RESOLUTION NO. 13 - 0 5 -1 1 992 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO LITIGATION; APPROVING A SETTLEMENT AGREEMENT BETWEEN THE CITY AND MARK RICHMAN PROPERTIES, INC.; PROVIDING AN EFFECTIVE DATE. WHEREAS, Mark Richman Properties, Inc. (MRP) filed a complaint against the city, styled Mark Richman Properties, Inc. v. City of South Miami, Case no. 03-07058 - CA-24 (Fla. 11`' Cir. Ct. 2003), alleging the breach of a contract to jointly develop a mixed use parking garage and retail building; and WHEREAS, the city denies the material allegations of the complaint but, nevertheless, desires to avoid protracted and expensive litigation; and, WHEREAS, the parties desire to settle the claims on the basis of allowing MRP to develop the mixed use facility in a manner consistent with the terms and conditions set forth in the Settlement Agreement. NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA; Section 1. The settlement agreement dated February 1, 2005, which is annexed and made a part of this resolution as App.1 is approved. The city manager is authorized to execute the settlement agreement on behalf of the city. Section 2. This resolution shall take effect immediately upon approval. PASSED AND ADOPTED this /day of February, 2005. ATTEST: OW) a ' CITY CLERK ) READ D L i 1 FORM: m � OR _ COMMISSION VOTE- 4 -0 Mayor Russell: Yea Vice Mayor Palmer: Yea Commissioner Birts- Cooper: Yea Commissioner Sherar: absent Commissioner Wiscombe: Yea Additions shown by underlinine and deletions shown by eve t- g. SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF SOUTH MIAMI, A FLORIDA MUNICIPALITY, AND MARK RICHMAN PROPERTIES, INC. WHEREAS, Mark Richman Properties, Inc. ( "MRP ") and the city of South Miami (the "city ") entered into a lease agreement to co- develop a project consisting of public parking and retail space, and WHEREAS, on or about December 17, 2002 the city's commission decided not to proceed with the development of the project; and WHEREAS, on March 21, 2003, Mark Richman Properties, Inc. filed a complaint against the city styled: Mark Richman Properties, Inc. v. City of South Miami, Case No. 03- 07058 -CA -24 (Fla. 11`h Cir. Ct. 2003); and WHEREAS, the parties desire to enter into this comprehensive settlement agreement to dispose of the litigation and to provide for the development of the mixed used structure; and NOW, THEREFORE, in consideration of the sum of Ten and No /100 Dollars ($10.00), paid by the city of South Miami to Mark Richman Properties, Inc., and the exchange of other valuable consideration, the receipt and legal sufficiency of which is acknowledged by the parties, the parties agree as follows ( "Agreement "): Page 1 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. 1. The MRP lease agreement dated March 5, 2002 will be cancelled and each party will release the other from any and all obligations there under and all claims of any kind and causes of action related in any manner to said agreement and /or related in any manner to the lawsuit bearing Case Number 03- 07058- CA -24, and said lawsuit will be dismissed with prejudice by MRP immediately upon the execution of the Lease Agreement and the issuance of the building permit for the Parking Structure, with each party bearing its own fees and costs. MRP agrees that it will not perform any site work that interferes with the operation of the existing city parking lot prior to dismissing the lawsuit referenced in this paragraph. The city and MRP shall join in a formal stay of Case Number 03- 07058 -CA -24 pending the execution of the Lease Agreement and the issuing of the building permit or the termination of this Agreement. 2. The Promissory Note dated June 12, 2002 and executed by MRP in favor of the city of South Miami shall remain in full force and effect as well as all mortgages and security interests relating thereto. The parties stipulate and agree that the current principal sum due from MRP to the city under said note is $2, 419,359.90 and the next payment due under said note is $103,080.00 and is due on April 1, 2005 (the "Promissory Note "). Any default under the Promissory Note by Page 2 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. zlle� 04 MRP shall be a default under this Agreement. Termination of this Agreement shall not relieve MRP of its obligations under the Promissory Note. 3. MRP and the city shall enter into a new lease agreement for the CSM retail space, and parking garage, the lease agreement is attached hereto as exhibit "A ". The city shall own the air rights over MRP's property. 4. MRP and the city Manager will work cooperatively to complete the design for the parking garage structure. The parties agree to retain Arquitectonica to complete the project design work. The city agrees to contribute up to $200,000 to complete the design and construction plans and MRP shall be responsible for any additional costs associated with the design or with the construction plans. MRP shall be solely responsible for all costs associated with the design and the construction of the tenant improvements. For purposes of this Agreement "tenant improvements" shall include any and all design, and construction work within or related to the retail space except for the following: (i) all exterior walls, exterior windows and exterior doors; (ii) exterior lighting, security, emergency and fire installations; (iii) sprinkler systems; (iv) exterior mounted HVAC pads and equipment (v) plumbing rough outs to individual bays; (vi) electrical boxes to bays; all concrete work and pre - fabricated concrete components; and the parking area floor /retail roof MRP shall not be obligated to include any design elements that Page 3 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. 4A,� ( 9 cause MRP's share of the project costs to exceed $7.5 million ( "MRP cap "). In addition, MRP shall continue to be responsible for the debt service on the $2.5 million Promissory Note referenced in paragraph 2 of this Agreement. In the event the city, in its sole discretion decides to require additional design elements that are estimated to cause the project costs to exceed the MRP cap, the city shall assume financial responsibility for the additional debt service on project costs estimated to be in excess of the MRP cap in order for the additional design elements to be incorporated in the final design. 5. The project design shall incorporate the following features a. The facility will consist of a 5 -level mixed -use retail and parking garage facility consisting of approximately 24,500 square feet of retail space, and approximately 380 parking spaces. Approximately 15,900 ( + / -) square feet will be city retail space. b. The ground level floor shall be comprised of retail space and approximately 17 parking spaces dedicated to short-term parking. C. The fifth level is estimated at 80 spaces and shall be dedicated parking for the retail tenants. 6. If the project as described in paragraph 5 of this Agreement cannot be designed and constructed within the MRP cap, and MRP does not agree to be Page 4 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. �Y responsible for additional costs, then the city and MRP shall be relieved of all obligations under this Agreement. The parties understand that circumstances may make the development or construction of the project and meeting the requirements of paragraph 3 of this Agreement unfeasible. These circumstances include, but are not limited to, failure to obtain required approvals from the city of South Miami such as required special exceptions and/or failure to jointly resolve easement disputes and /or inability to obtain an acceptable design meeting the height and parking space and retail space specifications of paragraph 3. In the event the project cannot be designed and constructed in substantial and material conformity to the MRP cap and the design criteria set forth in paragraph 3 and MRP has decided not to be responsible for the additional costs; the city or MRP, may terminate this Agreement. If the City shall fail or refuse to grant the required approvals for the Project, including but not limited to, required special exceptions, this Agreement shall immediately terminate and the City and MRP shall be relieved of all obligations under this Agreement. 7. MRP shall be responsible for the construction of the project and shall be solely responsible for delay in completion of the project. The parties understand and agree that construction will commence upon the issuance of building permits and proceed through the certificate of occupancy. MRP will use Page 5 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. its best efforts to minimize construction related impacts on the surrounding community during the holiday season from November 1st through January 2nd. MRP is required to complete construction and obtain a temporary or permanent certificate(s) of occupancy for the entire project no later than eighteen 18 months from the date of issuance of the building permit. In the event MRP fails to meet this deadline, MRP shall be obligated to pay the city $26,916.00 per month until the certificate(s) of occupancy are issued. Further, in the event the required certificate(s) of occupancy are not obtained within twenty -four (24) months of the issuance of the building permit, the city may in its sole discretion take over responsibility for completion of the project. MRP shall be responsible for all additional costs necessary to complete construction and obtain the certificate(s) of occupancy. The timeframes for performance contained in this paragraph shall be tolled in the event of Unavoidable Delay as defined in the Lease Agreement including, but not limited to, an Act of God, Force Majeure, acts of terrorism or the filing of a legal proceeding to resolve any easement dispute related to the project. The cost of defending or filing any proceeding to resolve the easement dispute related to the dedicated alleyway shall be home by the city. 8. MRP shall select the contractor that it determines has the requisite experience and capability necessary to construct the project. MRP understands Page 6 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. that the construction contractor and the construction documents shall be subject to the reasonable approval of the city Manager. 9. MRP will be responsible for building the project according to the plans and specifications prepared by Arquitectonica and approved by the city. MRP agrees that the construction funding for the project shall be based on a standard construction draw schedule approved by the city. At such time as construction commences, MRP shall be responsible for completing construction of the project, regardless of the cost. MRP shall be responsible for all cost overruns, change orders (except for change orders requested by the city), costs of delays and acts of nature, expenses which cause the MRP cap to be exceeded ( "Over Cap Funds ") and shall not be reimbursed by the city for such Over Cap Funds. Failure by MRP to assume financial responsibility for the Over Cap Funds as provided in this Paragraph 9 shall constitute an event of Default and the city may in its sole discretion terminate all agreements and take legal action to foreclose on the MRP property. The city is entitled, in its reasonable discretion, to demand and be provided with proof of MRP's ability to secure additional funding from a lending source if prior to the commencement of construction the parties determine that Over Cap Funds are needed to pay for these costs. Page 7 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. 10. MRP shall furnish the city with a commercially acceptable payment and performance bond. MRP shall require that all sub - contractors with contracts in excess of $100,000 be bonded. 11. MRP shall obtain construction project insurance and all other forms of insurance of the types and in the amounts typically required for projects of this nature by governmental entities and shall name the city as an additional insured. 12. The city shall have the right but not the obligation to oversee the construction of the project to ensure that it is being constructed in accordance with The Florida Building Code as applicable in Miami -Dade County as well as retaining all rights the city has regarding construction within city boundaries. 13. The parties agree that the city's share of the project costs will be capped at $1 million. The parties acknowledge that the city has already spent $337,116.37 on project related costs. At such time as the city expends an additional $662,883.63 the city will have expended $1 million dollars and the parties will stipulate and agree that the city has already expended this sum and satisfied its obligation under this paragraph. MRP will be responsible for all additional costs of building the facility and the debt service on all city funds (including the existing Florida Municipal Loan Council Revenue Bond issue funds Page 8 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. / 4, � \ OA� used in this project other than the $1 million referred to in this section) used in the development, design and construction of this project up to the MRP cap. 14. The lease agreement for the parking structure shall have a term of 50 years. 15. MRP shall pay the city a minimum guaranteed retail" rent payment , oh dpi.( PRu l�U� equal to $76,000 per annum, payable on a monthly basis equal to $6,333 in 04 addition to the payment of all debt service on the League of Cities Bond Issue (other than the $1 Million referred to above). The rental payments of $6,333 shall commence upon the issuance of a temporary certificate of occupancy. Payment of the debt service shall commence as to the amount drawn on the League of Cities Bond Issue and any other debt on the date the funds are drawn and shall be payable in accordance with the principal and interest payment schedule established by the Florida Municipal Loan Council for the city of South Miami pursuant to the issuance of Florida Municipal Loan Council Revenue Bonds, series 2002A. Interest shall be paid at the same rate as the city's rate of interest on the bonds together with a pro -rata share of all the total amount of the borrowing so as to include amortized expenses of the bond, and all costs associated with the Bond, according to the bond closing documents provisions. This provision shall be construed so that MRP is not subsidized by the city and pays its full share of Page 9 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. .,--n, ( J* borrowing expenses such that, for example, if the funds used by MRP for the project represent 30% of the funds borrowed in the Bond Issue then a full 30% of all interest and all expenses associated with the Bond Issue shall be paid by MRP. In the event MRP fails to make any such payments when due the city shall be entitled to seek an award of damages in the full, accelerated amount of the anticipated payments reduced to present value and termination of the Lease to MRP according to the terms of the Lease, including but not limited to all periods for cure of default. The city shall be provided with a second Mortgage on the MRP property (in the form attached hereto as Exhibit `B" to secure all obligations contained in this Agreement at the time of the first request for a draw of Bond Issue funds by MRP for payment of and costs associated with the Project. MRP represents and warrants that it holds good title, free and clear of any encumbrances to the property other than the first mortgage payable to the city. 16. MRP agrees and acknowledges that the parking garage, except for the fifth floor, shall be exclusively used for public parking, and that none of the spaces shall be specifically or exclusively allocated for the retail space. 17. Under the lease agreement MRP agrees to remit to the city 12.5% of all gross parking revenues in excess of $150,000 annually. Page 10 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. z'�� ( j) 18. Under the lease agreement the city shall retain the rights to set the parking meter rates and to decide the hours of operation for the public parking Nim 19. The city also reserves the right to police and administer tickets in the parking garage. All of the ticket revenue shall belong to the city. 20. For purposes of maximizing the gross parking revenues generated by the parking garage, the city shall authorize MRP to charge a flat parking rate," er�oti, S•av 21. The city agrees that to complete the construction of the facility, the city shall, authorize additional financing up to $2.5 million over the $8.5 million project financing previously approved to the extent such funds are available from the Florida Municipal Loan Council and MRP shall be responsible for debt service on the additional funds in the same manner as set forth above in regard to the Florida Municipal Loan Council Bond Issue. To the extent the city uses funds which are not borrowed from the Florida Municipal Loan Council, MRP shall pay interest on the additional funds at the actual rate paid by the city in the same manner as set forth above in regard to the Florida Municipal Loan Council Bond Issue. If the city has been unable to secure the additional funding referred to above when the building permit application is ready for submission to the Page 11 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. appropriated City and County departments the application submission shall be delayed and MRP shall have the right to terminate this Agreement. 22. The city agrees to waive its share of real estate taxes on the new retail space for the term of the lease. 23. MRP will continue to be responsible for ad valorem taxes on the retail space located on the MRP property. In the event that the public parking garage is subject to ad valorem taxes, the ad valorem taxes will be the responsibility of MRP. The city, however, agrees to waive its share of any ad valorem taxes on the LecvsC public parking garage during the term of the NfimsgertwFk Agreement. MRP shall be financially responsible for the remaining ad valorem taxes. 24. By entering into this agreement, the city does not in any way admit liability or waive any defenses it has or had, to the claims, or admit any of the allegations of the complaint. 25. By entering into this agreement, the city is not precluded from exercising its police powers and the parties specifically acknowledge that the city and its agencies and departments and commissions and employees and agents and the City Council are not obligated by this agreement to take or refrain from taking any actions or positions relating to this project and that the sole remedies in the Page 12 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. w� event of an adverse action shall be those remedies available to all citizens and property owners seeking similar relief or benefits from the city. 26. In any action or proceeding to enforce the terms of this Settlement Agreement, the prevailing party shall be entitled to an award of its reasonable attorney's fees (at a rate not to exceed $300 per hour), paralegal expenses and costs (collectively referred to as expenses), including expenses of investigation, pre -trial discovery, trial to a court, jury or arbitrator, post -trial and appellate proceedings, and collection. [Signature Page to Follow] Page 13 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc. Dated this /'?I -day of 12005. At d to: CITY F OUTH I B By: �M. Menendez Maria V. Dav city Clerk city Manager Approved as to Form and Legal Sufficiency: _ Lu' Figueredo city Attorney Attested to: By: i ert name of witness G'e o H e 6 /yl�hc/ Its: ,J7�' [insert title (corporate secre(ary, vice-president; treasurer)] CORPORATESEAL MARK ICHMAN PROPERTIES, INC. By: [i e t na �-s' g party] Its: [insert title of signing party] Page 14 of 14 Settlement Agreement by and between the City of South Miami And Mark Richman Properties, Inc.