HomeMy WebLinkAboutCRA-R-19-0046 NR Investments 11, LLC_Final TIF ProposalN R I N V E S T M E N T S
1111 PARK CENTRE BLVD #450 MIAMI, FL 33169 PHONE (305) 625 0949 NRINVESTMENTS,COM
BERGER SINGER -MAN
October 15, 2019
Via Hand-De&very
Mr. Jason Walker, Executive Director
Omni Community Redevelopment Agency
Historic Firehouse #2, 2" d Floor
1401 N. Miami Avenue
Miami, FL 33136
Re: NR Investments 11 LLC — Tag Increment Rebate & Grant Proposal for 171 Street
Apartments
Dear Mr. Walker:
Our firm represents NR Investments 11 LLC (hereinafter, the "Applicant" or "Developer"), the owner of
the property located within the Omni Community Redevelopment Agency ("CRA") boundaries at 70 & 90 N.E. 17t'
Street and 1642 N.E. lgt Avenue, Miami, Florida, Miami, Florida (the "Pro e ").
Developer formally submits the enclosed proposal for the CRA's consideration in support of a mixed -use
project Developer intends to construct on the Property. The project will consist of ground floor retail (approx. 6,000
sq. ft.), office (approx. 30,000 sq. ft.), and 252 multi -family, residential rental units (the "Project"). In exchange for
the CRA's financial support, as outlined hereinbelow, Applicant shall agree to restrict the rents of ALL 252
residential units within the Project through 2047 (assuming the anticipated extended life of the CRA extends at least
through 2047) via the imposition of a Declaration of Restrictive Covenants (the "Covenant"). The Applicant's
request of the CRA and proceeds realized pursuant to the rebate of property taxes equal to the percentage of the
increase paid during the term of the agreement (the "Incentive Agreement") will be used to off -set the losses
occasioned from the restricted rents and to off -set the costs of the City building permit fees, County water & sewer
connection charges, and City & County impact fees.
The proposal is consistent the strategic plan and goals of the CRA Redevelopment Plan (2019 Amendment)
which seek to expand the supply of affordable and workforce housing within the CRA boundaries. Affordable and
workforce housing units forming part of the Project will provide needed housing inventory to critical employees
within the Miami market, including: (i) hospitality service workers; (ii) teachers (median annual salary: $46,000);
(iii) police officers (avg. base annual salary: $53,715); (iv) firefighters (avg. annual salary: $54,9430; (iv) registered
nurses (avg. annual salary: $56,925); and (v) recent college graduates (avg. starting salary: $50,004).
We look forward to your favorable consideration of this request and the CRA board's approval of the same.
Sincerely,
JwvLe v' E. Fer
Javier E. Fernandez, Esq.
Cc: Anthony Balzebre, Assistant Director
Isiaa Jones, Esq., Chief Legal Officer
Nir Shoshani, NR Investments, Inc.
Terry Wellons, NR Investments, Inc.
Kristofer Nelson, NR Investments, Inc.
9366740-1 1450 BRICKELL AVENUE I SUITE 1900 1 MIAMI, FLORIDA 33131
t: (305) 755-9500 1 f: (305) 714-4340 1 WWW.BERGERSINGERMAN.COM
17th Street Apartments Project
RATIONALE FOR CRA ASSISTANCE
Miami's downtown skyline is a picture of construction, as new condos and apartments are built throughout
our burgeoning City. But the expansion experienced in the current real estate cycle is misleading as the City faces
one of the nation's most severe crisis of housing unaffordability stemming from the dual problem of high housing
costs and comparably low wages.
Today, Greater Miami's housing stock suffers from a significant supply mismatch. The local market has a
glut of expensive housing and not nearly enough affordable housing. While we have seen the construction of
expensive condos to the point of over -supply, not nearly enough affordable and workforce housing has been built to
meet market's demand. While thousands of new housing units have been developed within the City and thousands
more are slated for development within the CRA alone, most of the units built are market -rate or high -end luxury
units.
Further compounding the current mismatch is a lack of general housing starts in the metropolitan market.
Only 4 percent of the metro area's housing units have been built since 2010. By contrast, some of America's most
dynamic and fastest -growing metros have constructed more than 10 percent of their housing stock since 2010.
While a new and growing community, Miami's housing supply is increasing at the pace of older, more built -out
metropolitan areas, like Boston, and Rust -Belt metropolitan areas, like Cincinnati and St. Louis.
Six in 10 employed adult residents of Greater Miami are housing cost -burdened, meaning they spend more
than 30 percent of their incomes on housing — the highest rate of any large metropolitan area in the nation. Racial
and ethnic minorities, as well as our community's low-income service workers, shoulder a disproportionate share of
the burden of today's housing crisis. The following facts provide chilling insight into the scope and impact of the
current crisis:
■ More than 40% of the Miami metro's households are renters — ranking 8! among all large U.S. metros
on this metric. Between 2010 and 2016, Greater Miami has seen its proportion of renter households
grow by nearly 2% annually.
■ Miami's renter population is disproportionately African American and Hispanic with 55% of black
households and 48% of Hispanic households renting, compared with just over 25% of white households.
■ Greater Miami's median rents are increasingly unaffordable. As of October 2018, the median rent for
Greater Miami was $2.095 — the eighth highest in the nation behind communities like Denver, Portland,
Dallas and Austin. Said median rent requires an annual household income of not less than $83.800 for such
rent to be "affordable" or for the household not to be "cost -burdened."
■ Miami's low-income service class — workers in low -skill jobs like retail, food service and home care which
make-up more than 50 percent of the region's workforce — is severely cost -burdened. Miami's service
class faces the greatest rental cost burdens among all classes with just under $11,000 in annual income left-
over after paying rent — the 5th worst rate among large metropolitan areas in the nation.
■ Miami has the highest proportion of cost -burdened renters in the nation by a significant margin. More
than half (53%) of renters spend 35 percent or more of their household income on rent. Greater
Miami's renters have the least amount of money left over after paying for housing of any large metro.
Miami's renters have, on average, less than $16,000 left over after paying their rent. Far less than the
$30,000 or so in take-home income that renters in Washington, D.C. and Boston have left over after paying
for their housing.
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17th Street Apartments Project
CONSISTENCY WITH CRA REDEVELOPMENT PLAN
Chapter 4 of the CRA proposed amendment to the Redevelopment Plan (2019) reaffirms the importance of
the development of affordable housing to the economic vitality of the CRA. With regard to projects assisted by the
CRA (from which it excepts projects it seeks to support to provide workforce, low, or very -low income housing), it
identifies among its community benefits priorities the "inclusion of an appropriate amount of below -market rate
units," specifically workforce housing units (at less than 140% AMI) and units for low-income residents (less than
80% AMI). Among the policy reasons articulated for such community benefits requirement are: (i) preservation of
the affordability of the neighborhood; (ii) prevention of existing resident displacement; and (iii) provide area
workers an opportunity to live near work.
On page 4-32 of the amended Redevelopment Plan, the CRA has noted that housing affordability is one of
the key programs for the CRA to undertake. A thriving community is one where residents in all phases of life with
varying types of employment can live in one area. To that end, the CRA outlined the following programmatic
methods it can employ to increase the supply of affordable housing:
To Assist For -Profit Housing Providers in the CRA could:
2) Pay some portion of development costs such as impact or permit fees
3) Provide a direct cash subsidy in the form of a rebate equal to a percentage of the
increases in taxes paid over a defined period of time after completion if affordable units
are provided.
In addition to the above programmatic methods to expand the supply of affordable housing, the CRA has identified
the following goal on page 5-56 of the Redevelopment Plan:
6) Housing Affordability The CRA should fund established and creative new ways to increase
the stock of workforce and lower income affordable housing within the district.
GOALS. -
a) Create project -specific developer incentives to ensure that new or significantly
redeveloped residential projects in the CRA contain a sufficient number of units that are
affordable to the target populations.
The Project and accompanying request seek financial support from the CRA to underwrite the development of
residential units, specifically for low-income and workforce households, and asks the CRA to provide the Applicant
with a project -specific incentive.
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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17th Street Apartments Project
PROJECT DESCRIPTION
The Developer proposes to enter into a public -private partnership with the CRA to advance its goal of
developing much -needed affordable and workforce housing units within the redevelopment area. Applicant
proposes to construct a 29-story tower on land it purchased over the course of the last three years which will consist
of a mixed -use project comprised of the following elements: (i) 252 multi -family residential units; (ii) approximately
30,000 sq. ft. office use; and (iii) approximately 6,000 sq. ft. of ground floor commercial use (the "Project').
Applicant proposes to assist the CRA in advancing its Redevelopment Plan goal by restricting rents of ALL the
residential units within the Project through the life of the CRA is outlined hereinbelow. The rent restrictions
proposed will ensure that the Developer make residential units available to low-income households and households
who can afford "workforce" rents, more specifically teachers, police officers, firefighters, nurses, and recent college
graduates, among other professions.
The Project represents the Developer's latest investment in the Omni "Arts + Entertainment District" — a
dynamic urban residential neighborhood connecting the CRA & downtown Miami with the Wywood Arts District
and the Design District. With the surrounding growth, the Arts + Entertainment District has seen growth in its
residential, culinary, entertainment and nightlife offerings, but substantial land remains undeveloped and a number
of buildings remain dilapidated within the district evidencing the continued "slum & blight conditions" within the
CRA. Applicant's CANVAS project, a new art -inspired condominium offering a "bohemian luxe" lifestyle
immersed in the local art, culinary & cultural scene, has served to anchor the district's ascendant trajectory.
Beyond its project investments within the redevelopment area, NR Investments, Inc., has invested
approximately $2 million in efforts to beautify the Arts & Entertainment District, attract new businesses and retailers
to the area, and deliver high -quality arts, music and community programming, including "The Miami Flea," a pop-
up market, and a "Moonlight Grooves," a music series held on CANVAS's backyard, among others.
Given the Project's location just north of downtown Miami, it is conveniently accessible via multiple
modes of transit, including: (i) the MetroMover via the "School Board Station" on N.E. 15t' Street (ii) the City's
free trolley system; and (iii) Virgin Trains' service at Grand Central Station. The inclusion of the proposed
affordable and workforce dwelling units in the Project will provide residents convenient access to employment
opportunities via mass transit servicing greater downtown Miami area and portions of the South Florida region via
inter -city passenger rail service.
Illustrative Project renderings and floor plans are enclosed as Exhibit "A".
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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171h Street Apartments Project
REQUESTED PROJECT ASSISTANCE
Given that the term of the life of the CRA remains as -yet undetermined, the Applicant makes the following
request and alternate proffer of affordability based on the two (2) potential dates upon which the CRA may
terminate:
2047 CRA Expiration Dater
Proposed Residential Restrictions: Applicant proposes to rent -restrict 252 residential dwelling units — 177
studio dwelling units and 75 one -bedroom dwelling units — as set forth in the "Project Information Sheet"
attached hereto as Exhibit `B." Said rent -restrictions will be remain in place from the date the Residential
portion of the Project is placed in-service (as evidenced by the issuance of a temporary certificate of
occupancy or certificate of occupancy for a residential dwelling unit) through the date of the CRA's
anticipated term extension (2047). The Applicant will be permitted to adjust the maximum rent per unit for
each unit type consistent with the rate schedule adopted by the Corporation for "Multifamily Rental
Programs" for Miami -Dade County. The Developer will impose a Covenant setting forth the rent
restrictions and the minimum number of rent -restricted units by type. The Covenant shall grant the
enforcement rights to the CRA through the extended term of the CRA (2047).
Requested Financial Assistance: Applicant requests a cash grant of $6_5 million (approximately $26,000
per unit) and a rebate of 95% of the TIF collected by the Omni CRA. Developer anticipates that the
rebated tax increment will amount to approximately $8_5 million in gross receipts (or $3_9 million in
present value) to off -set the estimated S18 million in rent losses (gross) ($8_3 million in present value) and
the more than $3_2 million in estimated permit fees, water & sewer connection charges, and impact fees to
be assessed at the initiation of the Project. Applicant requests that the cash grant be provided at time of the
issuance of the Project building permit. See Exhibit "C" attached hereto.
' This proposal anticipates the CRA will be extended at least through 2047. If the CRA is not extended
beyond the current expiration of 2030, the Developer respectfully requests to receive the same cash grant and rebate
rate. Accordingly, the Developer will continue to restrict all 252 Units through 2038 (8 years beyond the current
term of the CRA), but will restrict 19 fewer units at the lowest three (3) rent levels.
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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17th Street Apartments Project
APPLICANT EXPERIENCE & QUALIFICATIONS
NR Investments 11 LLC, is a subsidiary of NR Investments, Inc. ("W ), a privately held real estate
investment company. Each of the company's principals and senior executives has extensive experience in real estate
capital markets, acquisition, asset management, development, construction and risk management. NR believes in
fostering cultural movements and communities in undiscovered areas, and in making their buildings the beacons of
their renaissance.
NR specializes in acquiring developing, repositioning, and managing real estate assets in major markets
throughout the world. The company has acquired more than 10 million square feet of office and residential space
across the globe. Over the past 18 years, NR has purchased, developed, repositioned and sold over $700 million of
multifamily and commercial real estate assets.
Recent Development Experience
■ Filling Station Lofts: In January 2013, NR stepped back into the Miami market with the acquisition and
subsequent completion of the Filling Station Lofts, an 81-unit loft -style apartment building.
■ CANVAS Condominiums: In November 2013, NRI closed on the 1.07 acre CANVAS condominium site.
NR constructed a 37-story, 513 unit residential condominium tower that received its final certificate of
occupancy (C.O.) in 2018 and has to -date sold -out approximately 95% of its residential units.
■ 14`h Street Development: In May 2014, NR closed on the 0.78-acre "14' Street" development site. The
project remains in the planning stages with the expectation of a mixed -use tower with more than 500
residential dwelling units.
Oualifications of Principals
■ Nir Shoshani — Principal. Prior to forming NR in 2001, Mr. Shoshani held the title of President at TiS
America, Inc., a subsidiary of Top Image Systems Ltd. (NASDAQ: TiSA), a publicly traded, high-tech
firm headquartered in Israel with operations around the globe. Mr. Shoshani is a graduate of the Belgrano
School of Business in Buenos Aires.
Ron Gottesmann — Principal. Prior to forming NR in 2001, Mr. Gottesmann worked as a mortgage broker
overseeing the operation of GFI Mortgage Bankers Inc. of New York. With Mr. Shoshani, Mr. Gottesmann
leads NR which today is a fully integrated development firm which owns and manages a wide variety of
real estate, including large scale office buildings, commercial shopping centers, and multi -family housing.
Under Mr. Gottesmann's leadership, the firm has maintained a consistent focus on property repositioning
via the acquisition of underperforming buildings in high visibility locations rehabilitating them to their full
potential through extensive renovation and management restructuring.
Terry Wellons — C.O.O. Mr. Wellons serves as the Chief Operating Officer at NR. He leads the United
States team directing a group of highly experienced attorneys, accountants and portfolio and property
managers. He has a background in finance and as a real estate attorney, serves as lender's counsel and
representing buyers and sellers of real estate, aids NR in each aspect of NR's business, effectively
negotiating and gauging the legal and financial risks involved with each transaction. Mr. Wellons holds a
degree in finance from Florida International University and a law degree from Nova Southeastern
University.
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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17th Street Apartments Project
EXHIBIT "A"
PROJECT RENDERINGS & FLOOR PLANS
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
PROPERTY RENDERINGS
PROPERTY RENDERINGS
PROPERTY RENDERINGS
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Developer/Applicant:
Contact Person:
Telephone:
E-mail:
EXHIBIT "B"
Omni CRA
Tax Increment Recapture Agreement
Project Information Sheet
NR Investments 11 LLC
Terry Wellons, C.O.O.
(305) 625-0949
terry a nrinvestments.com
171h Street Apartments Project
Project Counsel: Javier E. Fernandez, Esq.
Berger Singerman LLP
1450 Brickell Avenue, 19" Floor
Miami, FL 33131
Phone: (305) 982-4088
E-mail: jfernandezabereersingmerman.com
Project Address: 70 & 90 N.E. 17" Street and 1642 N.E. I" Avenue, Miami, Florida
Property Information
Prior Year Taxable Values
Folio Numbers
Existing Building
Size
Lot Size
2019
2018
2017
01-3136-005-0320
4,451 sq. ft.
5,250 sq. ft.
$877 250
$797,500
$869 535
01-3136-005-0310
3,743 sq. ft.
4,775 sq. ft.
$900 410
$818,555
$798 098
01-3136-005-0330
0 sq. ft.
12,600 sq. ft.
$1,428,889
$1,298,990
$1,180,900
Total:
8,194 sq. ft.
22,625 sq. ft.
$3,206,549
$2,915,045
$2,848,533
Type of Project:
Construction Commencement:
Project Construction Completion Date:
Project Construction Cost:
Estimated Adj. Taxable Value (TIF Basis):
Residential Square Footage:
Office Square Footage:
Retail Square Footage:
Property Acquisition Date:
Total Acquisition Cost:
Projected Residential Rent (Per Unit Type):
Mixed Use (Retail, Office, Multi -Family Residential)
July 1, 2020
January 1, 2023
$41,871,023
$38,664,474
218,369 sq. ft.
30,019 sq. ft.
4,583 sq. ft.
September 2016 and April 2019
$4,775,000
Studio - $1,721 / 1BD - $2,094
I I l I PARK CENTRE BLVD 4450, MIAMI, FL 33169
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171h Street Apartments Project
Proposed Affordability Restrictions:
2047
Unit Type
Total Units
Maximum Rent
Studio
18
$889
Studio
9
$1,186
Studio
9
$1,483
Studio
52
$1,179
Studio
89
$2,075
IBD
8
$953
HID
4
$1,271
IBD
4
$1,589
IBD
23
$1,906
IBD
36
$2,224
Total:
252
-
I I l I PARK CENTRE BLVD 4450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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17th Street Apartments Project
EXHIBIT "C"
FINANCIAL ANALYSIS
I I I I PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
NR Investments 11 LLC
Project: 17th Street Apartments
2047 Financial Analysis
CRA/Developer Retainage:
95%
Growth Rate:
1.02
Millage Rate
Taxable Value (2019)
Taxable Value (@ C.O.)
Adj. Taxable Value Tax Receipts
(Net)
CRA TIF (95%)
CRA Retained TIF (65%) County
Clawback (35%)
Miami - Municipal Operating
7.4365
$3,206,549
$41,871,023
$38,664,474
$287,528
$273,152
$177,549
$95,603
Miami -Dade County - Operating
4.6669
$3,206,549
$41,871,023
$38,664,474
$180,443
$171,421
$111,424
$59,997
Total Receipts:
$467,972
$444,573
$288,972
$155,601
Tax Years
2023
2024
2025
2026
2027
2028
2029
2030
Total
TIF to CRA:
$288,972
$294,752
$300,647
$306,660
$312,793
$319,049
$325,430
$331,939
$2,480,242
TIF to Developer:
$274,524
$280,014
$285,615
$291,327
$297,153
$303,096
$309,158
$315,342
$2,356,230
TIF to Developer (PV):
$225,851
$219,399
$213,130
$207,041
$201,125
$195,379
$189,796
$184,374
$1,636,095
Tax Years
2031
2032
2033
2034
2035
2036
2037
2038
Total
TIF to CRA:
$321,648
$328,081
$334,643
$341,336
$348,163
$355,126
$362,228
$369,473
$2,760,699
TIF to Developer:
$305,566
$311,677
$317,911
$324,269
$330,754
$337,370
$344,117
$350,999
$2,622,664
TIF to Developer (PV):
$170,151
$165,289
$160,567
$155,979
$151,522
$147,193
$142,988
$138,902
$1,232,591
Tax Years
2039
2040
2041
2042
2043
2044
2045
2046
2047
Total
TIF to CRA:
$376,862
$384,400
$392,088
$399,929
$407,928
$416,087
$424,408
$432,896
$441,554
$3,676,153
TIF to Developer:
$358,019
$365,180
$372,483
$379,933
$387,532
$395,282
$403,188
$411,252
$419,477
$3,492,345
TIF to Developer (PV):
$134,934
$131,078
$127,333
$123,695
$120,161
$116,728
$113,393
$110,153
$107,006
$1,084,482
Total TIF to CRA:
$8,917,093
TIF to Developer:
$8,471,238
TIF to Developer (PV):
$3,953,167
Avg. Market Rent (Studio):
$1,747
Target Market Rent (1BD):
$2,224
Total Units
Total Studio
Units
Max. Studio Rent
Studio Rent Loss P/U Yearly Studio
Rent Loss
Total 1BD Units
Max. 1BD Rent
1BD Rent Loss Yearly 1BD Rent Loss
26
18
$889
($858)
($185,328)
8
$953
($1,271)
($122,016)
13
9
$1,186
($561)
($60,588)
4
$1,271
($953)
($45,744)
13
9
$1,483
($264)
($28,512)
4
$1,589
($635)
($30,480)
75
52
$1,779
$0
$0
23
$1,906
($318)
($87,768)
125
89
$2,075
$0
$0
36
$2,224
$0
$0
Total Studio Rent Loss:
($274,428)
Total 1BD Rent Loss:
($286,008)
Tax Years
2023
2024
2025
2026
2027
2028
2029
2030
Annual Rent Loss:
($560,436)
($571,645)
($583,078)
($594,739)
($606,634)
($618,767)
($631,142)
($643,765)
($4,810,205)
Annual Rent Loss (PV):
($461,072)
($447,899)
($435,101)
($422,670)
($410,594)
($398,862)
($387,466)
($376,396)
($3,340,061)
Tax Years
2031
2032
2033
2034
2035
2036
2037
2038
Total
Annual Rent Loss:
($656,640)
($669,773)
($683,168)
($696,832)
($710,768)
($724,984)
($739,483)
($754,273)
($5,635,922)
Annual Rent Loss (PV):
($365,642)
($355,195)
($345,046)
($335,188)
($325,611)
($316,308)
($307,271)
($298,491)
($2,648,752)
Tax Years
2039
2040 2041 2042 2043 2044 2045
2046 2047 Total
Annual Rent Loss:
($769,359)
($784,746) ($800,441) ($816,449) ($832,778) ($849,434) ($866,423)
($883,751) ($901,426) ($7,504,807)
Annual Rent Loss (PV):
($289,963)
($281,678) ($273,631) ($265,813) ($258,218) ($250,840) ($243,673)
($236,711) ($225,439) ($2,325,967)
Total Rent Loss:
($17,950,933)
Building Permit Fees:
$359,355
Total Rent Loss (PV):
($8,314,780)
WASD Connection Charges:
$240,218
City Impact Fees:
$1,249,002
Net Gain/Loss to Developer:
($9,479,695)
County Road Impact Fees:
$1,349,260
Net Gain/Loss to Developer (PV):
($4,361,613)
Total Fees & Charges:
$3,197,836