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DEC -07--2001 18:37 CITY ATTORNEYS OFFICE 305 415 1801 P.01/05
CITY OF MIAMI 0
CITY ATTORNE'Y'S OFFICE
MEMORANDUM
TO: Mayor and Members of the City C is on
FROM: Alejandro Vilarello, City
DATE: December 7, 2001
RE: Interlocal Agreement bet,
City Commission Mee '
ben the City and DDA for a Charter School
of December 13, 2001
For your information, please find attached a copy of the above -referenced
memorandum that addresses issues that will be introduced as a discussion item at
the City Commission meeting of December 13, 2001.
cc: Carlos A. Gimenez, City Manager w/attach.
Walter J. Foeman, City Clerk, w/attach.
,11,t 28
DEC -07-2001 18:37 CITY ATTORhEYS OFFICE 305 416 le01 P.02/06
CITY OF MIAMI
CITY ATTORNEY'S OFFICE
MEMORANDUM
TO: Members of the Charter School Committee of DDA
Patti Allen, Executive Director, DDA
FROM: Olga Ramirez-Seijas, Assistant City Attorney
DATE: December 7, 2001
RE: Interlocal Agreement between the City and DDA for a Charter School
City Commission Meeting of December 13, 2001
The referenced item has been placed on the agenda for the December 13, 2001 City
Commission meeting as a discussion item. The discussion of this item will include consideration
of the terms that are being proposed and negotiated. The administration will not be asking the
City Commission to approve the Interlocal Agreement, as drafted, because it cannot recommend
execution of a document which terms have not been agreed upon.
Neither our office nor the Office of Asset Management has had an opportunity to review
the subleases that have been negotiated between DDA and the developer, nor any of the bank
commitment or related documents, which we received 2 days ago. Similarly, the City has not
had an opportunity to discuss, or negotiate with DDA and the developer, several key issues, such
as a reasonable return to the City in the event that the property is used for the alternative
governmental purposes, as authorized under the agreement. While the City has agreed to lease
the property to DDA, free of rent, for the operation of a charter school, the same would not apply
if the use of the property would generate greater revenues to the lessor under the Premise Lease.
We must agree on a reasonable share of such revenues, if the property is ever used for purposes
other than a charter school.
Similarly, we are concerned that the Charter for the school has not yet been approved.
The Interlocal Agreement provides for its termination if the school does not open by September
1, 2002. We need more information regarding the effect of this termination clause on the
construction loan. That is, we need assurances that the lender and/or the developer will assume
all risks. The "Governmental Purpose" use is not available if the school does not open.' Again,
the sole intent of the City in entering into a rent-free lease agreement with DDA is to facilitate
the establishment of a charter school.
Based on the above-mentioned unresolved issues, the administration decided not to
proceed with a resolution seeking approval to execute the Interlocal Agreement.
1 We note that the Preliminary Letter of Commitment issued by Union Planters Bank, a copy of which we received
yesterday afternoon, refers to the project as "an office haUding with 43,000 square feet of leasable area to be used as
a charter school."
DEC -07-2001 le:37 CITY PT70RNEYS OFFICE 305 416 1801 P.03/06
Re: Memo to Mem of the Charter School Committee, DIG Page 2
and Patti Allen�ecutive Director December 7 2001
Enclosed is a Term Sheet which today will be distributed to the Commissioners to assist
them in evaluating the terms of the proposed Interlocal Agreement. Notwithstanding that the
item has been placed for "discussion" purposes, a resolution may ensue.
The administration intends to ask the Commission to authorize the execution of
application(s) for permit(s) in order to not interfere with the construction of the project.
It would be a good idea for DDA, the Charter School, and the developer to be present at
the meeting to address any issues that may come up.
I am available to discuss any of the "unresolved issues". The more we can accomplish
prior to the meeting, the better.
Please feel free to call me at (305) 416-1837.
ORS/sl
c: Chairperson Johnny Winton
Alejandro Vilarello, City Attorney
Dena Bianchino, Assistant City Manager
Lori Billberry, Director, Asset Management
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DEC -07-2001 18 37 CITY ATTORNEYS OFFICE 305 416 1801 P.34/06
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1.
PROPOSED INTERLOCAL AND LEASE AGREEMENT
BETWEEN CITY OF MIAMI AND DOWNTOWN DE'V'ELOPMENT AUTHORITY
TERM SHEET
BASIC BUSINESS TERMS.
1. Parties: The City of Miami, as Lessor, and the Downtown Development
Authority, as the Lessee.
2. Premises: A portion of the property known as the Dust Bowl,
consisting of approximately 1.4266 acres.
PuooaLgf A e ent: To provide to DDA the property on which to
develop, establish, operate and maintain the Downtown Miami Charter School,
4. Use of Pro ert ; The use of the property is a charter school and other uses
normally incident thereto such as pre-school and after-school care, after school
and weekend classes and programming, camps (including summer camps) and
lectures and workshops for parents and educators. (See Item II.1 below).
5. Rent: There will be no rent due to the City as long as the property is used as a
Charter School. (See Item 11.2 below).
6. Term: Thirty (30) years from the date the Charter School begins operation.
7. Pa rmeot, sf impasitions: DDA shall require the Charter School to pay taxes
and special assessments. If the transaction or the property is immune or exempt
from taxation, then, so long as the City provides municipal services to the
property the Charter School will be required to pay a PILOT.
S. Other Agreements_ Relating to the Construction. Oneration and Management of
the Charter School: The City will not be involved in any aspect of the
establishment, construction, operation or management of the Charter School,
Instead, DDA will create (or has created) a non-profit organization to hold the
charter and operate the school. The construction, operation and management of
the school will be governed by separate agreements to be entered into by DDA
and the corresponding parties. It is anticipated that the agreements will be as
follows:
(i) Sublease Agreement between DDA and the Charter School.
(ii) Ground 'Lease Agreement between the Charter School and the Developer
which will authorize the Developer to build the Improvements and
mortgage the leasehold in order to obtain the financing for construction of
the improvements.
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DEC --07-2001 18:37 CITY PTTORNE`S OFFICE 305 416 1801 P.05/06
• 0 12/6/01
(iii) Premise Lease from the Developer to the Charter School which will lease
to the Charter School the constructed facility.
The Interlocal will authorize DDA to enter into all necessary agreements provided
that they are consistent with the Interlocal Agreement.
9. Others Ten ns:
(i) The City shall retain the right to relocate the parking areas servicing the
Charter School to another suitable location (it is anticipated that the
parking will be relocated under the expressway). In such case, the new
parking facilities servicing the charter school may be managed by the City
or a third party which may charge reasonable rates for the use of the
parking areas.
(ii) The City will have the right to approve structural changes or changes to
the footprint of the Improvements.
H. TERMS THAT HAVE NOT BEEN AGREED:
Use of Piro ert: Construction of the improvements is being financed by an
institutional lender pursuant to an agreement with the developer and neither the
DDA nor the City will have any financial responsibility for repayment. For this
reason the lender and the developer require assurances that the property may be
used for other "governmental purposes" in the event of (i) a foreclosure, (ii) the
student enrollment in the charter school is insufficient to cover debt service, or
(iii) state funding per student decreases from its current rate, Therefore, the
Interlocal Agreement provides for a primary and alternate use, as follows:
(a) Primary Use: The authorized and primary use of the property is a
charter school and other uses normally incident thereto such a5 pre-school
and after-school care, after school and weekend classes and programming,
camps (including summer camps) and lectures and workshops for parents
and educators.
(b) Alternate Use: In the event of a foreclosure, or a reduction of state
funding to the charter school or insufficient enrollment, the lender (or its
assignee) or the developer may use a portion or all of the property for
Governmental Purposes, which is defined as "structures, uses and
activities required for performance of a governmental function, including
federal, state and local government offices, cultural, religious or
educational activities, auditoriums, libraries, museums and galleries,
neighborhood or community centers and educational facilities."
2. Special -Provisions a licable to AIternate Use: The City proposes that if the
property is used for "Governmental Purposes" and not Charter School, then the
following provisions should apply:
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DEC -07-2001 17:37 CITY ATTORNEYS OFFICE 3os 416 1801 P.06/06
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(i} Rent: The City should receive rent if the Property is used for
Governmental purposes to the extent that the revenues from the
Governmental Purpose are greater than the revenues from the charter
school use.
(ii) Foreolosure: In the event of a foreclosure, the City wants the
Interlocal to specifically provide that the City may pay off the loan and
terminate all subleases.
(iii) Buy -Out: The City proposes that if there is a substantial
reduction of state funding per student, or if the student enrollment after 3
years of operation is insufficient to pay the debt service, so that the
developer would be permitted under the Agreement to convert the use of
the property to Governmental Purposes, then the City will have the right to
buy-out the developer's interest and terminate all leases.
3. Temination: In the event that the Charter School does not begin operation by
September 1, 2002, the City wants to have the right to terminate the Interlocal
Agreement, which will result in the termination of all subleases. This is
particularly important because as of the date of this Tenn Sheet the Charter for the
school has not yet been issued. It is also important because the City has been
informed that if the school is not completed by August 2002, the Charter, if
issued, will be revoked.
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