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Res No 154-02-11503RESOLUTION NO. 154-02-11503 A RESOLUTION OF THE MA YOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO FINANCE; RATIFYING A $2,439,944.52 LOAN TO MRP PROPERTIES FOR THE DESIGN AND CONSTRUCTION OF A PUBLIC PARKING GARAGE PROJECT LOCATED AT S.W. 73 rd STREET; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, on November 20, 2001, the Mayor and City Commission approved Ordinance no. 35-01-1766 authorizing the City Manager to execute a lease agreement with Mark Richman Propel1ies, Inc. (MRP) for a parking garage project; and, WHEREAS, the lease agreement with MRP Propel1ies provides for the City to secure the project financing and to make MRP Properties a loan to cover MRP's share of the project costs; and, WHEREAS, on Januruy 15, 2002 the Mayor and City Commission authorized the City Manager and the City Attomey to enter into negotiations with the Florida Municipal Loan Council for a pennanent loan for an runount not to exceed $8,500,000.00 for the design and construction of the project and for refmancing the property which constitutes MRP's contribution to the project; and, WHEREAS, on May 17, 2002 the City received a project loan in the runount of $6,500,000 from the Florida Municipal Loan Council; and, WHEREAS, the loan documents evidencing a loan to MRP Properties to cover MRP's share of constmction costs and projected related costs in the runount of $2,439,944.52 were distributed to each Commissioner on June 19, 2002 for their review and comment. NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA; Section 1. The loan by the City to MRP Propel1ies in the runount of $2,439,944.52 and the loan documents evidencing the loan are ratified. Section 2. This resolution shall take effect immediately upon approval. Additions shown by underlining and deletions shown by overstrikffig. Res. No. 154-02-11503 PASSED AND ADOPTED this 15 th day o·r.,oct~b;2002. CIYCLERK READ AND APPROVED AS TO FORM: -?:/6~/Jd& CITY ATTORNEY • APPROVED: ~~ MAYOR COMMISSION VOTE: 5-0 Mayor Robaina: Yea Vice Mayor Russell: Yea Commissioner Wiscombe: Yea Commissioner Bethel: Yea Commissioner Feliu: Yea \ \Dell_ 6100\Documents\City of South Miami\0022-023\14923.doc Page 2 of2 TO: MEMORANDUM Mayor and City Commission City of South Miami FROM: Luis R. Figueredo DATE: September 16, 2002 RE: 73 rd Street Parking Garage Project -Loan to MRP Properties, Inc. The lease agreement approved by the City Commission authorizes the City to make a loan to Mark Richman Properties, Inc. ("MRP") to enable MRP to co-develop a mixed use parking structure project. In order to assess MRP's ability to repay the loan and the strength of Mr. Richman's personal guaranty, we retained Mr. John Pell, a certified public accountant, to undertake an analysis of Mr. Richman's financial statement. Gibraltar Bank also performed its own analysis of Mr. Richman's financial records. Both concluded that based upon the financial records submitted, Mr. Richman currently has the financial ability to repay the loan. The Commission was apprised of the findings regarding the financial analysis performed. In light ofthe City's commitment under the lease agreement to provide project financing together with the due diligence performed regarding Mr. Richman's financial capability, we were directed to proceed with the loan closing. On Wednesday, June 12, 2002, the City of South Miami provided MRP with project financing in the form ofaloan in the amount of $2,439,944.52. Copies of the closing documents were transmitted to each Commissioner on June 19, 2002~ The closing documents consisted of the following: 1. Settlement Statement; 2. Loan Agreement; 3. Promissory Note; 4. Mark Richman's Personal Guaranty; 5. Mortgage securing the loan; 6. Corporate documents authorizing Mark Richman Properties, Inc. to obtain the loan; and 7. Title Insurance Policy. The purpose of this resolution is to simply ratify the loan previously authorized by the City Commission. Ordinance No. 35-01-1766 provided that the City CommiSSion would have the opportunity to approve the lease to MRP. Attachment: Ordinance No. 35-01-1766 r 'I pt O' ORDINANCE NO. __ 03_5_-_0_1 -_1_7_6_6_ f AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF . SOUTH MIAMI, FLORIDA, RELATING TO CONTRACTS; APPROVING A LEASE AGlffi.E¥ENT BETWEEN THE CITY AND MARK RICHMAN PROPERTIES, INC., FOR THE GRANTING' OF AIR RIGHTS ABOVE MRP PROPERTY TO THE CITY, THE LEASE BY MRP OF CERTAIN CITY PROPERTY AND THE CO-DEVELOPMENT OF A PARKING STRUCTURE PROJECT AT SW 73 STREET BETWEEN SW 58 COURT AND S8 AVENUE; PROVIDING FOR SEVERABILITY, ORDINANCES IN CONFLICT, AND AN EFFECTIVE DATE: WHEREAS, the city of South Miami is the owner of property located at S.W. 73 rd Street on the south, S.W. S8 th Avenue on the east, S.W. 58 ih Court on the west and an alleyway on the north, which is currently used for surface parking; and, WHEREAS, the Mayor and City Commission, desiring to develop a multi-use parking facility on the property, issued a Request for Proposals on June 20, 1997; and, WHEREAS, the response by SPG Phase One, Ltd. was selected by the Mayor and City Commission, the parties engaged in extensive negotiations over the terms and conditions of the agreement for the construction and management of the parking facility, and the City approved a lease agreement between the City and SPG; and, WHEREAS, the lease agreement allows SPG to assign the lease to Mark Richmond Properties, Inc. and the City has re-negotiated the lease to provide that MRP will deed the air rights over its property to the City, the City will lease additional ground space to MRP for retail use, and the parties will co-develop a parking structure on the property; and, WHEREAS, this lease agreement will be subject to approval by the City' of applications for development approval of the property, such as special exceptions, funding of the development by the Florida Municipal Loan Council or other lender acceptable to the City, a detennination of credit-worthiness of Mr. Richmond· in connection with any private guarantee for repaY!D~nt of funds borrowed by the City, and delivery of a release of liability by SPG and its priricipals; and, WHEREAS, the Mayor and City Commission have determined that it is in the bests interests of the City of South Miami to enter into the proposed Agreement. Page 1 of2 Additions shown by underlining and deletions shown by O'lerstrikiHg. , 'I " NOW, ,THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITyi;:i,~!.~:;;'!:~L'" COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA: Section 1. ,The Lease' Agreement between the City of South Miami and Mark, Richman Properties, Inc, dated November' -' 2001, which is annexed to this ordinance; is approved; provided, however, this lease, the lease between the City and SPG Phase I, the assignm~nt of the SPG Phase I lease to MRP Properties, Inc. and the release of claims by SPG Phase I shall be 'delivered simultaneously at a closing of this transaction. Section 2. The City Manager is authorized to execute the Agreement on behalf of the City of South Mi~. Section 3. If any, section, clause, sentence, or phrase of this ordinance is for any reason held invalid or unconstitutional by, a court of competent jurisdiction, the holding shall not affect the Validity of the remaining portions of this ordinance. Section 4. All ordinances or parts of ordinances in conflict with the provisions of this ordinance are repealed. ' Section 5. This ordinance shall take effect immediately upon approved. PASSED AND ADOPTED this 20 day of November ,20Q.1. CITYCLERK . MAYOR 1 st Reading -Nov. 6, 2001 2nd Reading -Nov. 20, 2001 (as amended) COMMISSION VOTE: 5-0 READ AND APPROVED AS TO FORM Mayor Robaina: Yea ~I 6, GaJ/o~ Vice Mayor Fetiu: Yea , -CQmmissioner Wiscombe: Yea Commissioner Bethel: Yea CITY ATTORNEY I Commissioner Russell: Yea Page 2 of2 Additions shown bv underlininl! and deletions shown bv OYeFst:ilEiBg. Excellence, Integrity, Inclusion . . MEMORANDUM To: Mayor and City Commission Date: From: Charles D. Scurr /,;1 If [Cto-"'r1 City Manager &~ REQUEST November 19,2001 (Updated) Agenda Item # 14 Lease Agreement with Mark Richman Properties, Inc. AN ORDINANCE OF THE MA YOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO CONTRACTS; APPROVING A LEASE AGREEMENT BETWEEN THE CITY AND MARK RICHMAN PROPERTIES, INC., FOR THE GRANTING OF AIR RIGHTS ABOVE MRP PROPERTY TO THE CITY, THE LEASE BY MRP OF CERTAIN CITY PROPERTY AND THE CO-DEVELOPMENT OF A PARKING STRUCTURE PROJECT AT SW 73 RD STREET BETWEEN 58 TH COURT AND 58 TH AVENUE; PROVIDING FOR SEVERABILITY, ORDINANCES IN CONFLICT, AND EFFECTIVE DATE. . • BACKGROUND & ANALYSIS Project History The City of South Miami first issued a Request for Proposals in June 1997 for the municipal parking lot located at SW 73 rd Street and SW 58 th Avenue. In September 1997, the City Commission awarded the proposed project for the design, construction, leasing and management of the mixed-use development and parking garage to SPG Phase One . . -The initial project was for a mixed-use parking garage that included the folloWing: • Area -Only the City of South Miami Parking Lot, not including the Richman Property; • Parking Spaces • Total Spaces -257 • City Replacement Parking -73 .! " ,., " '., • Code Required Parking -58* (* Includes shared parking credit, does not include Metrorail credit) • Net New Parking Available 100% -126 • Net New Parking Available Nights & Weekends -133 • Mixed Uses • Retail- • Office- . 15,000 S~ 8,000 SF • Residential-o Units The project has experienced a series of changes, evolutions and delays. On February 6, 2001, the City Commission approved a Lease Agreement with SPG for "Version 7" of the Project. The "Final SPG Mixed Use Project" included the following: • Area -The City of South Miami Parking Lot and the Richman property; • Parking Spaces • Total Spaces -442 • City Replacement Parking -73 • Code Required Parking -148* (Includes shared use credit; does not include Metrorail credit) • Net New Parking Available 100% -221 • Net New Parking Available Nights & Weekends -314 • Mixed Uses • Retail @ 28,200 SF • Office @ 29,434 SF • Residential @ 0 Units The geometry of the final project included the following: • Ground Lever -Retail • Second Level-100% Municipal Parking • Third Level -100% Municipal Parking • Fourth & Fifth Level-50% Office; 50% Parking • Roof -100% Parking The height of the building would have been approximately 59 feet. The allowable height in the Hometown District is 56 feet. The project, as expected in a garage facility, might have included maximum lot coverage and might have required a number of special .. exceptions, which would have been the subject 0f a·separate planning/zoning process and approvals. Since the approval there has been no pennitting, design or construction activity . The lease approved by the City Commission allows SPG to assign the lease to Mark Richman Properties, Inc. Mr. Richman and representatives of SPG have indicated that 2 ." :. " '. the parties are interested in the lease assignment. 'The assignment and revised lease are the subject of this Ordinance. The Richman Project The Richman Project includes the following: • Area -The City of South Miami Parking Lot and the Richman proper.ty; • Parking Spaces (Two Story/Three StorylFour Story and Rooftop . Configuration) .• Total Spaces -250 / 350 / 450 • City Replacement Parking -73 • Code Required Parking -60 • Net New Parking Available 100% -117 /217/317 • Net New Parking Available Nights & Weekends -117/217/317 • ' Height (Approximate) -26' /36' /46' • Mixed Uses • Retail @ 19,845 SF • Office @ 0 SF • Residential @ 0 Units The geometry of the final project includes the following: • Ground Level-Retail and Municipal Parking • Second Level-100% Municipal Parking • Third and Fourth Levels (Optional) -100% Municipal Parking • Roof -100% Municipal Parking The project is very similar to the project proposed by the Red-Sunset Merchants Association ' Conceptually the project is quite straightforward: • The City will be responsible for the costs of construction of the parking garage. The City will have full control over the operation and maintenance of the parking garage. The City will retain all revenues from the parking garage. • Richman will deed to the City the air rights above the Richman Property. Richman will be responsible for the costs of construction of the retail space on . the Richman Property. Richman wilJ be responsible for the costs of construction, less a $100,000 credit, for the retail space on the City Property. Richman will receive the revenues from the retail space. • The term of the Lease is 50 years. At the end of 50 years the City retains ownership of the air rights above Richman ~d the City will gain control of the retail on the City property. Richman retains ownership of the retail on Richman Property. 3 .":' -. '. • The City will obtain, through the Florida League of Cities, bridge and long term financing· for the entire project. Richman will repay the City its proportionate share. Richman will guarantee repayment of his portion of the costs. Financial Considerations Luis Figueredo of the City Attorney's Office has prepared a memorandum detailing the framework of the Lease agreement (Attachment A), as well as a financial pro-forma· (Attachment B). The financial pro-forma is based on very conservative assumptions. Under these conservative assumptions the net income for the City would be an expense of $34,000 in the first year of operation. If the $75,000 in parking meter revenue the City currently receives froIll: the surface parking lot is considered the City's net financial position could be impacted under a most conservative case scenario by up to $100,000 the first year. The conservative financial projections are based on daily revenue of $2 day per space and ticket revenue based on a 10% per space per day violation rate. It is expected that both of these factors will exceed this projection by at least 50%. Rev.enue from the current surface meter operation exceeds $3.00 per day and it is likely that revenue from the new facility will at least equal $3.00 per day. Similarly, current parking violations exceed 10% and it is likely that violations in the new facility will exceed 10% and be closer to 20%. These less conservation and more likely assumptions would yield increases in . revenue that could put the facility in a break-even position in the first year or two of operation. It should be noted that the City would be placing a loan instrument with the Florida League of Cities for the project. It is likely that the City will be· required to pledge a portion of the parking r<!venue stream for the project. This is standard and a pledge of revenue does not alter the cash flow of the City or the project. The City retains full control over all aspects of the parking system. This includes hours of operation, rates, etc. Hometown Plan and Parking Considerations .-The Hometown Plan envisions vibrant mixed· uses downtown. A central and vital component of the realization of the Hometown Plan is the provision of an "Infrastructure Parking Facility". This facility is contemplated to provide parking for the existing merchant base and provide a supply of parking for future growth. 4 ',: 'j"' " " '. The Richman Project achieves these objectives. it is a very straightforward project that is essentially an infrastructure parking facility with the required retail on the first floor. The Project will include approximately250 parking spaces with the two story and rooftop configuration. The design would include the structural support to add an additional two floors that could provide ~p tqtal of 450 spaces. The cost and disruption of building these additional floors in the future are important and significant factors. The cost per space for the additional floors would be considerably higher al).d there could be a disruption to the exiting facility during the period of construction. Staff is, therefore, currently analyzing the cost benefit and need to provide one additional floor at this time. It is anticipated that a final recommendation will be made during the design process when the actual construction costs are more fully developed. Other Cons"iderations The schedule for the project has been developed to accommodate the downtown merchants and businesses. Construction would not commence until February 2003, after the Holiday Season. The City and Richman also recognize that this facility will be a "signature" aIld important element of the downtown area. Every effort will be made to have the architectural design completed in an exemplary manner. The City will be issuing a competitive RFP for the design of the facility. It is also anticipated that the competitive "Construction Manager at Risk" procedure will be used for construction. It should be noted that one of the City's requirements is the provision by Rjchman of a general release from SPG releasing the City from any and all causes of actions, claims, demands or alleged drunages arising from or related to the original RFP issued by the City. Finally, it should be noted that this garage facility may, dependent upon the design, require special exceptions for items such as lot coverage. There is no special exception required for height. Special exceptions will be considered by the City separately through the planning and zoning process. RECOMMENDATION Approval is recommended. Attachments 5 ". INCOME Year 2 Year 3 Year 4 YearS Year 6 Year 7 Year 8 Year 9 Year 10 Parking melers (150 spaCes) est. $2 per day. (3%). $109,500 $112,785 $116,168 $119,653 $123,242 $126,939 $130,747 $134,669 $138,709 Decal parking (100 spaces $30 per month-3% annual increase $36,000 $37,080 $38,192 $39,337 $40,517 $41,732 $42,983 $44,272 $45,600 Ticket revenue est. $12 per day-10% of meters ticketed daily. $65,700 $67,671 $69,701 $71,792 $73,945 $76,163 $78,447 $80,800 $83,224 Gross Income $211,200 $217,536 $224,061 $230,782 $237,704 $244,834 $252,177 $259,741 $267,533 Expenses $52,500 $54,075 $55,697 $57,367 $59,088 $60,860 $62,865 $64,745 $66,687 O&M 250x210/year/3% • Utilities cost per space-$60 Maintenance cost per space-$60 Insurance cost per space-$30 Supplies cost per space-$18 Miscellaneous cost per space-$12 Administrative cost per space-$30 .. Net before debt service $158,700 $163,461 $168,364 $173,415 $178,616 $183,974 $189,312 $194,996 $200,846 Debl-3 million@5%/30 years $193,254 $193,254 $193,254 $193,254 $193,254 $193,254 $193,254 $193,254 $193,254 .- Net Income . ($34,554) ($29,793) ($24,890) ($19,839) ($14,638) ($9,280) ($3,942) $1,742 $7,592 11.19.01 PROPOSED LEASE SUMMARY 1. Tenant: Mark Richman Properties ("MRP") 2. Landlord: C!ty of South Miami 3. Guarantor: Mark Richman (see paragraph 10) 4. Demised Premises: (a) The municipal parking lot lo~ated at S.W. 7r d Street, S.W. 58 th Avenue, and S.W. 58 th Court together with the air rights over the Mark Richman Property located at the comer ofS.W. 73 rd Street and S.W. 58 th Court, in the City of South Miami. (b) Pennitted use: mixed use retail and parking garage building. 5. Air Rights: MRP will deed the air rights to the City. 6. Assignment from SPG: SPO under the lease agreement with the City specifically reserved the right to assign the Project to MRP. MRP shall obtain a formal assignment to develop the Project from SPG. 7. Release: MRP will secure a general release from SPG releasing the City from any and all causes of action, claims, demands or alleged damages arising from or related to the Request for Proposal issued by the City of South l\1iami. A copy of the Release language is attached. 8. Tax Abatement: During the lease term, the City shall abate its share of the ad valorem taxes assessed against the 11..345 square feet of retail to be locate_d on the City's property. ' 9. Lease Agreement with l\tIRP: MRP proposes to enter into a lease agreement with the City. A. Initial Tenn. The initial term of the lease agreement with Richman Properties will be for 50 years. There is no renewal option. B. Ownership of the Building. The City of South Miami owns the parking structure; including the air rights over the Richm~n P,roperty. C. Alleyway Considerations. The proposed Project as reconfigured should not impact the alleyway immediately behind Dabby Properties. . D. Easement. MRP shall grant the City a perpetual non-exclusive easement for seven parking spaces located on ground level which are partially situated on MRP's Parcel. 0 ••• Page 1 of3 " ".~' ,", .~:; . "";. " :.' . .... :: '. '. E. Thirty Decal Spaces. The City will provide Richman the first option to acquire 30 decal spaces for his tenants at the then prevailing rates. As consideration for the easement, the City will reduce the rate charged for seven parking spaces to account for MRP" ownership interes~ in the seven ground level spaces. F. Rent Payments. The . rent payments for MRP will be calculated to be . sufficient to allow for the repayment of MRP' s share of the principal and interest of the Project loan. 10. Financing: The City of South Miami shall procure the Project loan to finance the design and construction of the Project. The City can pledge its parking revenues to obtain the Project financing. MRP will pledge the rental income earned from the retail space. Mark Richman will also personally guarantee MRP's share of the bridge loan. The remainder of MRP's share of the loan will be secured by the Lease, the New MRP Building and the MRP Land. The bridge loan will be used to allow MRP to pay for project related costs (including its share of the architectural and engineering fees), refinance the MRP property (this allows the City to be in first position as the secured creditor) and to pay for the City's share of architectural and engineering fees. The parties anticipate that the pennanent financing for construction would be qbtained in November, 2002. The application for bridge financing will take approximately 45-60 days to process and fund. Bank of America will require that certain commission approvals be in place to ensure that the Project is viable before funding. Approval of the new lease agreement with MRP should be sufficient. 10. Cost Sharing: The costs of the design and construction of the Project will be shared as follows: (a) The parties will participate in the design and construction costs of the Project in proportion to eat:h party's gross area occupation of the Project. - (b) The Landlord will pay 100% of the costs of construction of additional parking levels on the Parking Structure which may be constructed at a future date. (c) The Landlord vvill contribute $100,000 towards Tenant's share of the construction costs of the shell of the Project. (d) MRP will pay 100% of the costs associated with demolishing the Old MRP building. (e) Tenant will pay its proportionate share of the fees associated with obtaining the bridge and long tenn financing based on its percentage of the Borrowings. (f) Tenant will pay 100% of the cost of the retail space build out of the Replacement MRP Building and the Premises. ." Page 2 of3 ,-:: . (g) " . " , . Landler~ will pay 100% efthe cest efthe parking structure finishes. 12. Design and Construction: The City "vill prepare requests fer propesals fer the selectien ef an architect and a construction management firm. 13. Commencement of -Construction: The parties estimate that construction will commence in January-February, 2003. No. heliday season construction which impacts the retail shops by severally impacting traffic t10w wiiI Q~cur. .' 14. Project Name; The City agrees to consult with 1-'1RP to select a name for the Project. • • Page 3 of3 1 RESOLUTION NO. _____ _ 2 3 4 A RESOLUTION OF THE MAYOR AND CITY COMMISSION 5 OF THE CITY OF SOUTH MIAMI, FLORIDA, RELATING TO 6 FINANCE; RATIFYING A $2,439,944.52 LOAN TO MRP 7 PROPERTIES FOR THE DESIGN AND CONSTRUCTION OF A 8 PUBLIC PARKING GARAGE PROJECT LOCATED AT S.W. 73 rd 9 STREET. 10 11 12 WHEREAS, on November 20, 2001, the Mayor and City Commission 13 approved Ordinance no. 35-01-1766 authorizing the City Manager to execute a 14. lease agreement with Mark Richman Properties, Inc. (MRP) for a parking garage 15 proj ect; and, 16 17 WHEREAS, the lease agreement with MRP Properties provides for the 18 City to secure the project financing and to make MRP Properties a loan to cover 19 MRP's share of the project costs; and, 20 21 WHEREAS, on January 15, 2002 the Mayor and City Commission 22 authorized the City Manager and the City Attorney to enter into negotiations with 23 the Florida Municipal Loan Council for a permanent loan for an amount not to 24 exceed $8,500,000.00 for the design and construction of the project and for 25 refinancing the property which constitutes MRP's contribution to the project; and, 26 27 WHEREAS, on May 17, 2002 the City received a project loan in the 28 amount of $6,500,000 from the Florida Municipal Loan Council; and, 29 30 WHEREAS, the loan documents evidencing a loan to MRP Properties to 31 cover MRP's share of construction costs and projected related costs in the amount 32 of $2,439,944.52 were distributed to each Commissioner on June 19, 2002 for 33 their review and comment. 34 35 NOW THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY 36 COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA; 37 38 Section 1. The loan by the City to MRP Properties in the amount of 39 $2,439,944.52 and the loan documents evidencing the loan are ratified. 40 41 Section 2. This resolution shall take effect immediately upon approval. 42 Additions shown by underlining and deletions shown by o'lerstriking. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 PASSED AND ADOPTED this 15 th day of January, 2002. ATTEST: APPROVED: CITY CLERK. MAYOR COMMISSION VOTE: READ AND APPROVED AS TO FORM: Mayor Robaina: Vice Mayor Feliu: Commissioner Wiscombe: CITY ATTORNEY Commissioner Bethel: Commissioner Russell: \ \Dell_ 6100\Documents\City of South Miami\0022-023\14923.doc Page 2 of2