HomeMy WebLinkAboutM-98-0475CITY OF MIAMI. FLORIDA
EX4FER-OFF➢C
TC : Honorable Mayor and Members
of Lhc C!Ly Cui=ission
FROM
Jose G=cia-Pedrosa
City Managcr
22
April28, 1998
DATE : FILE:
SUBJECT: Parrot Jungle Section 108
Loan
REFE19GNOC3:
ENCLOS'JRE5:
As directed at the April 14, 1998, commission meeting, an analysis of the Parrot Jungle
Section 108 Loan Application for $25 million has been performed and a recommendation is
presented hereon for your considetatinn_ Attached you will find two analyses completed by
Erdal Donmez, Development Coordinator for the CRA and Bob Nachlinger, consultant to the
City_ Additionally, T have attached a letter proposal submitted by our external auditors,
KPM6, detailing their fees and providing an overview of the scope of work entailed to
perform such an analytic_
RACKr12.C_IUND
Ry way of background, it should be noted that Parrot Jungle and Gardens, Inc. of Watson
Island ("Parrot Jungle') executed a lease with the City of Miami on September 2, 1997. Said
lease identifies Parrot Jungle's financial obligations in Section 4.2 wherein it states the lessee
shall ``secure sufficient capital to construct the leasehold improvements..." and "shall expend
no less than (a combined $26.3 million)...". Furthermore, Section 4.3(ii) of the Lease,
Delivery of Possession of Subject Property, states that "The City Manager shall have
received the commitment or commitments for the construction and/or permanent financing.",
In May of 1996, Parrot Jungle approached the City of Miami to explore the possibility of
utilizing a CD Float Loan to finance the project improvements_ The CD Float Loan required
Parrot Jungle to obtain a commitment letter from a bank collateralized by a stand-by letter of
credit, which was never evidenced- Thereafter, Parrot Jungle approached the County to
explore utilizing their Section 108 Loan capacity to provide financing for the project. Parrot
Jungle's initial financing request was for $21 million and has subsequently been increased to
$25 million. The County considered this loan application based on the project's regional
impact and benefit.
On February 3, 1998, the Board of County Lommissioners conditioned their approval of the
application for the Section 108 Loan to Parrot Jungle on 1) the City's agreement to substitute
itself as the guarantor or the Section 108 Loan upon dissolution of the City's Finamiul
Oversight Board, and 2) subordination of the City's lease payments from Parrot Jungle to the
County's Section 108 Loan guarantee.
9 8 - 475
CITY MANAGER MRC Fax:3054161910 May 5 '98 17:23 P.02r20
At the February 3, 1998, County Commission meeting, the Board of County Commissioners
questioned why this application was before them as opposed to being presented as a City
application. At that time, the County Commission was advised that the City did not consider
Parrot Jungle's application for Section 108 due to the City's fiscal crisis. As a result of that
response, the County Commissioners then proffered the condition subsequent providing for
the City to substitute itself as a guarautor for 80% of the loan upon dissolution of the
Financial Oversight Board. No discussion evolved regarding the application's merits based
upon the projece's regional impact and its community -wide benefits.
ANALYSIS
As revised, the financials show the project is viable. "i he assumptions are reasonable and in
some places conservative. The project has a significant regional impact. Ins addition to the
jobs that will be created, economic benefits will accrue to the tourist and visitor indusixy,
countywide.
An analysis of the actual and projected income for Parrot Jungle for years 1994-2009 is
attached. This analysis reveals an annual percentage growth consistent with historical growth
rates. Parking and banquets represent new revenue sources that are incorporated into the
projections and represent approximately 21% of total revenues.
Conservatively, while revenues have doubled, cost of sales, as a pci- ventage of total revenues,
has increased from 13% to approximately 16%. Operating expenses are also projected at a
higher percentage of sales.
The available income for years 1998, 1999 and 2000 are insufficient to fund the costs of the
Section 108 Loan. This shortfall is funded by a $2.9 million capitalized interest reserve built
into the loan amount_ Moreover, the prujGt:,tions rcflut a S39,000 operating deficit during
1998 which should be funded by Parrot Jungle.
In summary, assumption of 80% of the County loan at the conclusion of the 4' year, totals
$19,840,000. Debt service coverage for the total loan amomt is projected to be 2.3 times in
that year and therefore, the project is deemed viable.
Additional recommendations are as follows:
• Economic incentives through the Wages Program, the Urban Jobs Credit Program or
otl-ier grant progr=u should be pursued and required as a Part of the Section 108 Loan
Agreement, thereby reducing fixed operating expenses and ensuring a direct benefit to the
local job market.
98- 4 elt 5
CITY MANAGER MRC Fax:3054161910 May 5 '98 17:23 P.03`20
• Based upon any additional resources that may be dedicated to this project through
economic incentives ur other grant programs, the loan amount should be reduced
accordingly_
• This loan is subject to the review and approval by HUD and any additional conditions or
wllatcml that HUD may requirc.
• The ruiul Pwticipation Agrccmcat between Miami -Dade County and the City should be
modified to provide for the City to substitute itself as a guarantor for a maximum of 80%
of the Comity's Loan gutaranteo provided that the County Loan is current and no event of
default is in existence under the County Loan at such time as the Guarantee Replacement
occurs.
RE COIDd NDAT1ON
Based upon the reports submitted and an internal discinsion with our consultant, the Mayor's
Chief of Staff and the CRA staff, it is recommended that the City approve the joint
participation agreement as modified and ennditioned upon no existence of an event of default
at the time of substitution.
JGP:CMC:sg
98- 475
CITY MANAGER MRC Fax:305416191C May 5 '98 17:23 P.04/20
.IOINT PARTICIPATION AGREEMENT -
BE Eca
MIAMI-DADE COUNTY AND CITY OF MIAMI
M THE
PARROT JUNGLE AND GARDENS OF WATSON ISLAND, INC.
SECTION 109 LOAN QUARANTIE APPLICATION
THIS JOINT PARTICIPATION AGREEMENT ("Agreement") made this day
of , 1998, by and between Miami -Dade County ("County"), a political subdivision of
the State of Florida, acting by and through the County Manager, with the approval of the Board
of County Commissioners, and the City of Miami ("City"), a municipal corporation of the State of
Florida, acting by and through the City Manager, with the approval of the City Commission.
ECITAL
WHEREAS, the Miarni-Dade County Board of County Commissioners has indicated its
intent to authorize the County Manager to apply for a Section 108 Loan Guarantee ("Loan") fl uin
the U. S. Department of Housing and Urban Development ("HUD" ), for Parrot Jungle and
Gardens of Watson Island, Inc. ("Parrot Jungle") in the amount of Twenty-five Milliun Dollars;
and
WHEREAS, such intent is subject to several conditions which directly impact the City of
Miami;
NOW THEREFORE, in consideratiun of the foregoing, the County and the City do
hereby covenant and agree to the submission of the County's Loan application, subject to the
following terms and conditions:
1. The County Lori shall be provided to Parrot Jungle only until surh time as the
State of Florida Financial Oversight Board overseeing the City is dissolved or four (4) years from
the date of approval by HUD of the County"s Loan application, whinhever- first occurs, and the
We diseredef that it can apply and substitute itself as a guarantor for
City has determined, � ,
a maximum of eighty per cent (80°.10) of the County's Loan guarantee ("Guarantee Replacement");
provided that the County Loan is current and no event of default is in existence under the Caunty
Luau at such time as the Guarantee ReRlacexnent arcurs.
2. Pursuant to a Collateral Assignment of Lease Payments to be executed by and
between the County, City, and Parrot Jungle, until such time as the Guarantee Replacement
occurs, in the event of a monetary default ("Default") by Parrot Jungle under the terms of the
County Loan, the City's financial obligation in reducing the amount of said Default shall be to
pay to the County a proportionate amount of the amount owed by Parrot Jungle ("Default
Payment") based upon the ratio between the amount of the lease payments to be paid to the City
by Parrot Jungle ("Lease Payments") as set forth in that certain Lease and Development
98- 475
CITY MANAGC-R MRC Fax:305416191C May 5 '98 17:23 P.05i20
Agreement between the City of Miami, Florida and Parrot Jungle and Gardens Inc. dated
September 2, 199'/ ("Lease Agreement"), exclusive of the City's payments to the internal
Improvement Trust Fund, and the amount the County shall, receive from Parrot Jungle for the
Miami -Dade Zoo Aviary. In nu event shall the City's proportionate amoi.int of the Default
Payment exceed the Lease Payments, exclusive of the payments the City is obligated to make to
the State of Florida Inter nal Improvement Trust Fund pursuant to that certain Partial Modification
of Restrictions to Deed No.. 19447 dated August 18, 1997.
3. Notwithstanding the provisions set forth in Paragraph 2 hereof, the County Loan
shall be expressly subject and subordinate to all conditions and covenants of the Lease Agreement
and to the rights of the City in connection with Parrot Jungle's development of the project known
as "Parrot Jungle & Gardens of Watson Island."
LN W%rMESS WHERVOF, this Agreement has been executed by the duly authorized
officials of Miami -Dade County and the City of Miami, Florida.
ATTEST: MIAMI-DADE COUNTY, a political subdivision of
the State of Florida
By..
County Clerk Merrett R. Steirheim
County Manager
ATTEST: CITY OF MIAMI, a municipal corporation of the
State of Florida
By:
Walter J. Foeman Jose Garcia- Pedrosa
City Clerk City Manager
APPRO V ED AS TO FORM
AND CORRECTNESS:
Alejandru vlarello
City Attorney
LKK/W243
I.KK: W243-LKK-ictii AU=mdnt2.ddx:
98- 475
CITY MANAGER MRC Fax:305416191C
APR-24—'98 FRi 29:58 jII:HMSTDOF?NHNcL
May 5 '98 17:24 P,06/20
!CL NQ; "fco rQ.J.
790 N. liome,te.Ad 314.
Houmte&J, FL 33030
(305) 247.1801
]VACSYAflHH.IRCOW"R SHIMlf� Il'
DATU- W — 24 `5y
TO: CAO is W,4-
FROM. w.i�i ...�i- ■
v4f.4"Of 1149 "•' fitirl•Nling IN.' o1wrl):
98- 4'75
1 4/24198 10�OZ'
ParrotJungle and Gardens Inc.
o 9
Analysis
of Actual and Projected Income
For the Years ended Deoemoer 31,1904 through 2009
o °u
(coo)
-1g94
Actual
- -----
Pr*cted
1
-9-�-
1998
9
2000
2001
7 T
2004
ZgQ5
'006
�007
200E
2009
Admissions
1.762
2,003
2,142
2,551
2.889
3.271
4,891
6,331
6,352
6,024
7,738
8,852
9,118
10,166
10.673
11,738
Food
652
669
723
725
761
779
1,870
2,238
2,681
3,188
3.428
3,804
4,034
4,298
4,677
4,025
Merchandise
591
616
755
743
806
873
1,479
1.960
2,243
2.622
2.622
3,133
3.313
3,616
3,763
3.950
Parking
701
868
946
1,473
1,517
1,608
1,657
2,067
2,171
2,236
BaiquAts
2.115
2,306
2.514
2.740
2,822
2,991
3,147
3,273
3.437
3.640
a
Special Events
148
105
207
292
395
539
1,237
1,448
1,687
1,933
2,070
2,277
2,452
2,619
2,022
2,981
Ln
Pictures
26
63
63
132
234
416
177
193
210
229
250
272
297
324
352
384
Misc.
10-1
W
41
M
318
M
M
322
378
j3j
4S7
815
65633
620
687
745
M..
ro
z
Total lnccme
33 660
3.833
4.�i1
4.762
6.393
fijX
12.74g
1
17�Oii
19.545
21,112
23,452
24,581
26.8Bt
28,682
30,499
11
Anmml Percentage Growth
Admissions 1.137 1.069 1.191 1.132 1.132 'iA95 1.090 1.192 1.090 1.118 1.144 1.030 1.116 1.060 1.100
A
FD3d
1.026
1.051
1.003
1.037
1.037
2.401
1.222
1.173
1.181)
1.C76
1.110
1.080
1.065
1.088
1.=
�g
Merchandise
1.042
1.226
0.984
1.064
1.084
1.694
1.258
1.206
1.169
1.C76
1.110
1.057
1.061
1.071
1.050
iz .
Parking
1.238
1.090
1.557
1.030
1.060
1.030
1.241
1.050
1.330
r 61
Banq ueta
1.090
1.090
1.090
1.030
1.060
1.052
1.040
1.050
1.030
o
Special Events
0.7D9
1.071
1.411
1.364
1.364
2.295
1.171
1.185
1.146
1.071
1.100
1.077
1.068
1.078
1. D56
pkwm
2.038
1.199
2.095
1.774
1.774
0.427
1.090
1.088
1.D90
1.002
1.088
1.092
1.091
1.086
1.091
6
Misc.
1.016
0.881
0.935
O.DW
0.000
0.875
1.154
1.174
1.153
1.071
1.103
1.093
1.101
1 A,38
1.084
Total Income
1.077
1.iO4
1.126
1.1331
1,149
2.058
1.146
1.164
1.149
1.080
1.111
1.164
1.094
1.033
1.067
m
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Parrot Jungle and Gardens Inc
Analysis of Actr.ai and Projected Expense
For the Years ended December 31,1994 through 2009
(000)
Actual
Pna)ected
994 1�95 19E6
1
j
19
200]
2C0
2002
2QO
L—
0
�¢
07
2008
Cosa of Sales
Food
284
298
313
609
613
761
870
929
1.039
004
1,113
1.277
1,344
McTbandise
264
277
291
621
781
942
1,101
1,185
1.316
1.392
1,476
1.580
1.659
Banquets
529
677
626
085
706
748
787
819
86D
685
Special Events
371
435
508
580
621
6833
738
786
847
695
Plclums
41
43
Ai
44
4A
53
51
62
69
74
81
08
96
Total COGS
614 477 561
589
610
6W9
2.074
2.454
2"
3_,293
3.503
3.655
4.093
4,3:i5
486
4.i79
Gross Profit
3.046 3.356 3.680
4.173
4,775
§,W
10,675
1Z i6g
14,131
10,252
17,609
10,697
2-3,488
22.646
23 9s2
N,620
Operating Experses:
Adrerbsing
193
353
280
246
275
40D
446
609
596
670
726
810
850
92C
879
1.048
Audio EgWpment
6
3
7
13
12
12
11
12
15
17
18
20
21
22
24
26
Bad Debt
6
2
0
0
5
5
6
7
9
10
10
12
12
13
'4
15
Bank Charges
21
28
36
38
40
45
50
57
67
75
81
91
95
103
109
117
Cash o erfshort
6
1
0
2
1
1
1
2
2
2
2
2
3
3
3
3
Ccnhact Secvrlti
0
45
29
33
56
60
'63
175
204
234
253
251
295
323
343
366
Untributions
2
7
4
11
8
6
3
3
3
4
4
6
5
6
6
6
Delivery
18
0
16
16
19
22
28
32
37
42
45
51
53
57
61
65
DL®a & Subscriptions
24
i8
32
30
30
29
28
32
37
42
45
51
53
57
61
65
Education Expense
?
4
1
0
15
30
13
is
18
20
22
24
26
28
299
32
Equipment tease
1
1t
30
10
11
13
15
16
18
19
20
22
23
Feed & Medlical Sup.
42
49
61
125
9C
100
116
133
166
174
189
211
221
230
256
273
Fikn Expense
13
19
27
32
4C
65
102
116
126
138
150
164
178
194
212
231
Insurance
71
70
83
88
100
130
147
168
196
226
243
270
283
310
329
351
Malting
31
81
83
83
60
40
9
10
12
13
14
16
17
i8
19
20
Maintenance 11i ;repair
61
67
82
90
110
175
283
323
378
425
461
614
540
534
621
665
Mileage
7
6
6
6
7
8
10
10
12
i2
13
14
16
.9
Paarot Jungle and Gardens Ina
(D)
Anaiysis of Actual and Projeded Expense
11 '
Fx the Years ended 13eceadw 31,1994
through
2009
C
(000)
�F
Actual
Projected
j99d
1993
_
_
19�7
1
1 999
LOOD
2001
2002
2d
2004
2Q0$
M
2007
M
M
Misccellanous
28
28
22
29
30
30
30
35
41
4E
60
55
58
63
67
71
,;•
Office Supplies
27
20
35
24
30
35
43
49
57
64
69
73
81
88
93
100
Party rentals
1
1
1
38
25
28
30
80
94
105
114
127
134
145
154
165
Payroll'
1,788
1,639
1,737
1.629
1,675
1,760
3,756
3,782
3,983
4,281
4,382
4.825
6,082
5,494
5.943
6,195
a
Payroll Services
52
231
238
249
265
30-)531
554
670
603
811
379
712
778
828
883
-
Postage
8
10
6
10
12
15
19
21
25
28
30
34
35
38
41
43
`n
Printing
26
e8
39
79
90
120
183
210
245
281
304
338
354
387
411
439
Prof. Fees - Acct,
37
40
43
48
49
49
51
52
64
56
57
59
61
-
Prof. Fees -•Comput_
32
45
55
67
77
89
102
111
123
US
141
150
160
j
Prof Fees- Legal
34
so
4D
25
26
27
27
28
29
30
31
22
33
Prof. Fees - Other
55
99
89
25
15
8
2
2
2
3
3
3
4
4
4
4
Prd. Fees - Vet
2
4
4
4
6
6
7
8
8
$
9
9
'10
Rent Expense
12
18
38
21
24
28
32
34
38
40
43
46
49
Supplies
72
39
60
62
50
40
39
46
52
69
64
71
75
81
86
92
Travel
14
11
17
17
16
12
18
19
22
26
27
30
31
34
36
38
Unforms
15
15
19
18
25
35
54
62
72
83
90
10D
105
114
122
130
-
Utilities
137
131
L4
1 g2
180
M :,)qQ
309
318
328
338
346
358
369
380
391
�g
o �
Ta l Operating
2.764
3-09
3.142
3.261
3.451
3.936
f•58Q
t'.962
'T.359
8.241
jMA
9.d88
9.Q75.
10,786
11,462
12,185
M �
f ?
Tomt Operating -'talk
M
538
02
13
j&A
4,,,,- 9,�
c 8
LM
L 1
%M
101Q9
10 Aj3
11.780
12.468
13,435
Nan -Operating:
Bank Loan P31
525
1,063
1,063
1,380
1.380
1,380
1,383
1,280
1.380
1,380
1,380
1,380
1,350
License Fee
15
200
200
637
731
851
977
1,C67
1,207
1,27b
1,413
1,515
1,530
Property Tax
206
160
146
117
100
75
350
350
350
360
560
350
350
350
350
350
Metro zoo
25
25
50
59
za
75
1A
m
100
v
Total Nor -Operating
206
160
148
657
�363
1,338
2.392
2M7¢
?,012
3 080
3 218
3.320
3.460
�v
x
Available for 108 Loan
76
137
390
255
-39
273
1I 3
2.712
3.945
5.254
8.15$
�.097
7.433
8
9.975
H
U
0
" L
I
fl
Parrot Jungle and Gardens Inc.
0 3
Analysis
of Actual and Projected Expense
For the Years ended Oecember
31, • 994 through 2009
r +
(000l
a:r
Actual
Projected
1994
19i}5
,Q¢
�
Z
2 6Q 1
M
03
2W4
2005
2006
2OD7
2208
2009
U)
cv
Available far 108 Loan
7$
13o
330
?
273
1.7C3
2.,12
"s.94S
5.254
6.153
7.097
7,433
8.342
9.148
9.9°5
Annual P8I105Loan
5"
1,45C
1,813
2,013
2,148
2,273
2,488
2.682
2,860
3,019
3.160
3,283
v
Less: CaplaNzed Interest
fA4
1.45C
ff&
4
Q
9
0
0
0
0
0
0
u�
Net 106 Loan P8I
0
C
4,269
2,013
2,148
2,273
2,486
2,682
2.860
3,Dt9
3,160
3,283
�•
m
NetCas6Flaiw
Q
-3
27;
434
M
1,797
2298A
3.872
4.415
4573
S_,,,523
598
6.6a2
u
Times Overage
1.342
1.347
L4U
2311
2.477
L646
2.598
2.529
2.895
3.038
Non -Cash Expenses:
Depreciation
220
193
130
1+43
160
150
2.720
2,720
2,720
2,720
2,720
2,7320
2,720
2,720
2,723
2,720
Amortization
0
1
Q
0
0
0
200
2t10
200
20
M
0
0
0
0
0
o
Total Non -Cash
220
M
1X
Ig
.N
ICO
Zkj
UA2
1920
2.920
2.920
2 '2
2720
7 0
?i
Z. )
Nei Income (Loss)
-144
-58
200
112
-189
123
-2,488
xx21
-1,123
61
752
1,695
1,863
2.803
3,288
3,972
Lr a
Ln
o
x•
LL-�
m
U H
LL
/s
V
Cr ^�1
Q
U
V
i
Parrot Jungle and Gardens Inc.
it
Analysis of Actual and Projected Revenue and (Expense
For the Years ended December 31,1994 through 2009
Notes on pkttin W Prolec>rions-
1
Revenues:
OC)
The AdrWsslon estimates for the first full year o= operations (2000) seem reasonable based on itte increases empecbd due to location.
The estimates for food sales, merchandise sales, special events, picture revenue and miscellaneous are In line with prior years sales on a
per capita basis.
The revenue estimates for parking and kanquet sales are new and unproven revenue soumoes. These two revenue sources are estimabei to
produce $2.8 miM"ron or 22% of the total estimated mavenue of the facility for the year.
Gogt of Goods Sold:
While revenue estimates are douoled, the estimates for the cost of goods sold have not remained as a constant pe►oentaga of revenues. The
estimates of this cost grow from 13%at the present location to 10% of gross sales atthe Watson Island Location. The projections
supplied by the Parrot „ungle have been adjusted to remcve labor costs from the estimates.
Overetingl Emensea:
Operational costs for the facility are projected to be higher at the rwv facility.
The fixed vs. variable costs of the faciiily are approximately 15% fixed and 85% variable. This will allow Management to adjust operations if
attendance or other revenue estimates do not meet projections.
Revenue available 11or the 108 Loan:
The arailable revenues ftx years 1998, 1999 wid 21M are insufficient to find the costar of the Section WO Loan.
This OxxVial is funded by the $2.9 million capitalized Interest reserve built into the loan amoant.
Recornmendattons:
The City should be aderpsately seaffed with the assumption of 809E of the 108 Loan In 2003. Debt servioe crmerage is projected to be
over 2.3 tunes in that year.
Some of theoperational masts of the facNitycould be reduced tlhma qh varloua economic inowAves; such as the Urban Jobs Credit Progrem,
Wages Program, Dept. of Commence Loan Funds and avrnerous alai programs.
It some of the above grant programs are awarded, the 108 Loan may be reduced by a reduction in the required arnount to the capRallized
Interest IF operational kxxww is NgW and the abmill y to fund interest m m illy exists, the 108 Loan could be reduced by $2.9 mUm
The City could act as a facilitatof to assist the Willy bo form a parMership with the cruise Industry.
CITY MRNAGER MRC Fax:3054161910 May 5 '98 17:25 P.12f20
')r M!Aral. FL ZR:f �
INTER -OFFICE MEMORANDUM Ul;FIl`
7i
Jose Garcia -Pedrosa LA'S April 20, 1998
City Manager
Review of Section 108
Loan Application
r
Hilda Teje '1� REFERENCES
Director
EvG_oSuR�s
Community Redevelopment Agency
Pursuant to your request, Erdal D8nmez, Development Coordinator for the
Community Redevelopment Agency reviewed the Section 1.08 Loan Application
far the new Parrot Jungle and Gardens development at Watson Island, and
prepared the attached summary report for your consumption.
We hope that the report will he of value. Should you have any questions, please
advise.
Enclosure
CC' Arthur E. Teele Jr.. Chairman
Community Redevelopment Agency
98- 475
CITY MANAGER MRC Fax:3054161910 May 5 '98 17:25 P.13/20
SECTION 108 LOAN APPLICATION FOR
PARROT JUNGLE AND GARDENS AT WATSON ISLAND
In accordance with the request of the City Manager, we have reviewed the
Section 108 Loan Application ("Application") for the financing of the new Parrot
Jungle development at Watson Island ("Project'). The Application has been
approved by Metropolitan Miami -Dade County ("County") with a number of
conditions; one of which is requesting the City of Miami ("City") to take over at
least 80 percent of the original loan amount as soon as the City is financially able
to do so.
Parrot Jungle and Gardens, Inc. ("Developer'') originally requested a loan of $21
million, as referenced in the latest version of the Application. As a result of
further negotiations between the Developer and County, the parties agreed to
increase the loan capacity, from $21 million to $25 million. Although the County
is yet to conduct a new public hearing to formalize such action. we are assuming
the loan amount of $25 million for the purpose of this review and analysis.
Section 108 Loan Program has been established by the US Department of
Housing and Urban Development ("HUD") for the purpose of providing financial
assistance, to qualifying private projects with a defined public -purpose objective.
The Application has been prepared for the Section 108 Loan Program
consideration on the basis of creating employment opportunities for low -and -
moderate income level persons living in nearby neighborhoods.
The Application is a well -organized document with all supporting exhibits and
relevant materials, addressing all requirements of HUD with respect to the
Section 108 Loan Program. The following is a summary of salient issues in
connection with the Project, as well as the Project's merit in qualifying for the
Section 108 Loan Program for funding_
I. Project
The new Parrot Jungle and Garden at Watson island is a $47 million
development proposed on approximately 18 acres of land leased by the City for
45 years, with an additional 15 years extension. The Project is strategically
situated next to downtown Miami, between the two major tourist centers of Miami
and Miami Beach. The project will greatly enhance the appearance of Watson
Island and help the City's effort to bolster the redevelopment of the rest of the
island for appropriate uses.
98- 475
CITY MANAGER MRC Fax.305416191C
May 5 ' 98 17 : 26 P.14/20
It. National Objective
As referenced above, the Application is qualifying the proposed Project for the
Section 108 Loan Program on the basis of creating employment opportunities for
low -to -moderate income level persons. Typically, attractions and arrrusernent
parks create many positions for low-income persons. The Project is projected to
create job opportunities for 603 persons, in all employment categories; of that
approximately 482 (80%) will be for persons within the low -to -moderate income
level_ In addition, the Developor promises to make employment solicitation
efforts targeting primarily low-income persons by working with Private industry
Council, Jobs for Miami, City's Neighborhood .lobs Office, and other work
placement programs that focus on assistance to residents of City and County
Community Development Target Areas (please see Attachment 1 - Projected
Employment by Years).
III. Loan Amount/Term/Repayment Schedule
The Application is currently considered for a $25 million Section 108 Loan, with a
tern of 20 years_ The proposed repayment schedule is structured to include
applicable interest payments based on 7.25% average rate, and principal
reductions beginning in Year 4, with the initial amount of $200,000, increasing on
a yearly basis until Year 11, and continuing with equal payments of $2 million
thereafter until Year 20.
One of ttie allvaritages of the Section 108 Loan Program is the degree of
flexibility associated with the repayment of the loan. HUD encourages the
prospective applicant to propose a loan repayment schedule, within certain
framework, and present it for approval_ The proposed repayment schedule
seems consistent with HUD guidelines for Section 108 Loan program (please see
Attachment 2 — Proposed Section 108 Loan Guarantee Repayment Schedule).
IV. Collateral Requirements
CDBG entitlements are typically used as main collateral for Section 108 Loans
for terms up to 10 years. In instances when the term of the loan exceeds 10
years, additional guarantees are required in order to fully collateralize the subject
loan. The proposed Section 108 Loan for the Project has a loan term of 20
years; therefore, HUD will require additional guarantees such as a lien on the
improvements, etc.
In the event the Developer defaults on the Section 108 Loan obligations, the City
is obligated to service the debt; otherwise, HUD will take the debt service amount
2
98-- 475
CITY MANAGER MRC Fax:3054161910 May 5 '98 17:26 P.15/20
from the City's annual CDBG entitlements. Consequently, it is crucial to secure
collateral sufficient to cover all obligations and annual project revenue adequate
to service the debt.
The Application includes the foliowing assets valued at $81 million in aggregate
for collateral uses associated with the proposed loan:
o Total Project improvements that are valued at $47 million (from construction
estimates);
❑ 45 year land lease witn a 1 b year extension valued at $2U million (supported
by an appraises obtained by the City);
❑ Parrot Jungle's Goodwill appraised at $14 -million (supported by appraisal
obtained by the Developer).
it is important to note that the Developer is also in the process of securing a bank
loan in the amount of $12.5 million, which will likely have a first lien on all
collateral. Nevertheless, a disvounted value of the proposed assets, even at
50%, results in enough resources to satisfy both private loan and the Section 108
loan.
V. Sources and Uses of Funds
The Project is one of the largest publicly sponsored development efforts in
downtown Miami since the opening of the Bayside Marketplace. According to the
Application, the total development cost, inclusive of all pre -development, soft,
and hard construction, currently exceeds $41 million. The Section 108 Loan
makes up the lamest component of the financing matrix The balance of the
project funding sources include a private bank loan of $12.5 million, Developer's
equity of $3 million, and a number of private corporate sponsors' interests valued
at $6.8 million.
Uses of Funds
o Development Cost t47.3 million
Sources of Funds
n Section 108 Loan $25.0 million
u Private Lender $12.5 million
o Corporate Sponsors $ 6.8 million
Developer's Equity $ 3.0 million
Total $47.3 million
C]
98- 475
CITY MPNRGER MRC Fax:305416191C
May 5 '98 17:26 P.16f20
The Section 108 Loan Program is intended to work as a gap -financing vehicle for
qualifying commercial projects. A defined financing gap could range anywhere
from 1 to 100 percent, depending on the relative risk of the proposed
development, and willingness of the private lender to underwrite a loan for such
project. The proposed $25 million Section 108 Loan makes up an approximately
53 percent of financing which is considered reasonable by HUD standards for
projects of such magnitude (please see Attachment 3 - Sources and Uses
Stetement).
VI. Project Pro forma and Projections
The Project is probably the most widely appreciated development endeavor of
private and public partnership undertaken for a long time. All local
establishments, including the City, County, GMCC, Greater Miami Visitors and
Convention Bureau, and local media have shown enthusiastic support for the
development of the Project. As such there is little or no argument about the
nature of the Project, or its suitability for the proposed location at Watson Island.
However, the Projects financial feasibility is of utmost concenm for the City, in
light of the lease agreement the City has signed with the Developer for the use of
Watson Island land, and the City's consideration to take out at least 80 percent of
the County's Section 108 Loan for the Project.
The Application provides a comprehensive financial pro -forma about the Project
from the 2-year construction period through the first 10 years of operation. The
pro -forma has been built upon the historical experience of the existing Parrot
Jungle facility in PineGrest, with certain adjustments made to reflect the financial
impact of new uses, such as banquet facilities, larger restaurants, and
merchandise sales, etc. In addition, certain oonsiderations have been made to
reflect Watson Island's accessibility in attracting more visitors.
Furthermore, future attendance projections were independently supported by a
market study conducted by W. H. Bierberbach & Associates, a consulting firm
specializing in the theme park industry, based on average growth in attendance,
impact of new introduced attractions, and overall impact of the growth of tourism
industry in Miami -Dade County.
A pro -forma prepared based on anticipated future business activity is usually a
major concern for any lender who is considering a loan commitment One could
easily question the reliability of such projections and reasonableness of
supporting assumptions. However, the Project's pro -forma is probably a rare
exception, since it is built upon the nistorical experience of the existing Parrot
4
98- 475
CITY MANAGER MRC Fax:305416191C May 5 '98 17:27 P.17/20
Jungle operations, and all relevant future projections, supported by independent
sources with reasonable assumptions.
According to the pro -forma, the Project will be in a position to meet all of its
obligations, including servicing of all private and public debt from the first of year
of its operations (please see A#achment 4 — Profit and foss Projections).
VII. Conclusions
The Application contemplates the development of a first-class botanical garden
and visitor attraction on Watson Island. The actual development program
includes over 10 acres of gardens, open space and natural exhibits, two
amphitheaters for the exhibitions of various shows and presentations, as well as
first class banquet and educational facilities. Its impact on the future
redevelopment of Watson Island is substantial. Although.. the intention of this
analysis is not as much as the approval of the Project, but the viability of a $25
million Section 108 Loan assistance, in connection with the Project, presented to
the County for consideration.
Again, the Application is a well -prepared document with all relevant attachments
addressing the requirements of HUD in connection with the Section 108 Loan
Program. The Projects pro -forma and projections indicate sufficient resources to
repay the loan as presented in the Application. However, the issue of ratifying
the Application for consideration by HUD, for a County sponsored $25 million
Section 108 Loan, 80 percent of which guaranteed by the City, is a policy issue
which needs to be addressed by the City Commission.
5
98- 475
0-1
Year
I Year 1999
Parrot
Attachment I
and
New
2 3 4
)00 200
.2002':
Ad Err
Rate of Growth
ToUl Payrd Costs
240
iW
74%1
8936
100%
$3BW520-
-$-4-5-6-i.2-95-'-U5.-i6-2.-373--i5.420,492
- aweliny*W3
No* AilradMs ftodwS4 in Yenta 3. 5 and
New Atkeao" are expected to b000t jotn.
Aww"s Revenue Grawlh Rate ig
wow
Prod cow a 15%
Too I
-M" CAW%
Annew cash iv 35 "a a st Welke
9
—1h by we adoWnli
lc%
peryear
Sk'an
Watson
yy Yes m
Now
I am
4-13 473
SIA
4"
%
Protected Jobs Growth
800
40)
203
.......... . . . . .
1 2 3 4 5 6 7 8 9
Project Year
CITY MPNRGEF MRC Fax:3054161910 May 5 '98 17:27 F,19/20
Attachment 1
X§K
1
2
3
4
5
8
7
5
9
10
11
12
13
14
15
18
17
18
19
20
Totals
Principal
$0
!4
$0
32W.000
$350,OW
$500,000
i750,0W
$1.000.0w
$1,2S0,0oo
$1,500,000
$1,T50.000
$2,000.000
$2,000,000
$2,000,000
$2,000,000
$2.000,000
$2,OW,000
$1,700,000
loin Amount
Amount Sonvwsd 1 st Year
Amount Borrowed 2nd Year
Term (Years)
$543,750
$1,450.000
$1,812,500
$1,812,5W
$1,798,000
$1,772.MS
$1,730.375
S1,5M,OW
$1,eMAW
$1,518,876
$1,410,126
$I .M.250
$1,138260
$993,250
$80250
$703,260
$50.260
$413.250
SM.250
$123,250
2 .4
$ 25,000,000
i 151000.000
i 10,000,000
20
7.Z914
Total
S543,750
$1,450,000
$1,812,500
52,012,5W
$2,148,000
$2,272,WMS
$2,4aa,375
32,852,000
82,sss,500
$3,01$,$75
$3,180,125
$3.203,260
$3.1382M
sz. 93.M
$2,848,250
$2,703,260
$2.55kM
$2.413,250
$2,268.260
$1,823,260
$15,000.000
$ 25.000,000
$25.000,000
$24,800,000
$24,450,OW
S23,9W,000
W23,2W,OW
$22,200,000
$2000.000
$19,450,000
$17.700.000
$15,700,000
513,700,OW
$11,700,000
$9,700,000
$7,700,000
$5,700,000
$3.700,000
$1,700,000
$0
98- 475
C TTY MPNRGER MRC Fax :3054161910 May 5 ' 98 17 : 27
Atcachmeat 3
Parrot Jungle Gardens Q Watson Island
Sources and Uses Statement
rces:
Section 108 Loan Guarantee
Bank Financing
Corporate Sponsors
Parrot Jungle's Equity
Total
Uses:
Priii-0avelopment Cost
Expenses Associated with Project Proposal, Legal
Financial. Marketing and Other Expenses
Soft cost:
Ront ! $200,000/year
L"el Accounting Fees
AnchiieduraMginaarfng/Landuaping
Developer's Overhead
Constmichan Loan Fees
C mefta ian Loan Application
Insurance
Construction Administnation
Marketing and AdvertiskV
Gmphk Design and Soups
Con3ultent Fees
Furniture, Fudu ms and Equipment
Japanese Garden Relocation
Soft Cosa Contingency
Total Soft Cost
Hard Cost
General Conditions
Site W0rWLsndsrfra1WLagoocVR1verlMtsc.
Parking
Main PfazafAdmin/Education/Fntry Faefties
Parrot CafidEmporium/Anirttal Can Factilltyr
Maintermve/Warshousing
Parrot Dowt 1000 Ssets
Jungle Theater 800 Seats
Exhibit and Plant Nursery Structure
Picnic Pavilion/Play+ground and Support F*W t 3
Terradumftndoor Exhibitsf500 Seas Theater/Food Court
Banquet ono Saleroom Facilfts
Transient Boat Dockage and Beach FactiW*s
Japanese Tea douse
Hard Cost Contingency
Total Nand Cost
Total Soft i Hard Cost
Intorest Reserve (Section 100 Loan)
Interest Reserv4 (Sank Loan)
Total Esdmated Interest Aeeerve
Total Developttnertt Cost
$12,500,000
$6.787,500
$3.000,000
Phase 1
$400,000
5150,o00
$1.8=000
sm,000
3800,000
6-100,000
$150,000
$370.000
5400,000
$200,000
$150,000
$1,400,000
3300,000
$920,000
t7'.4W0 m
`j • 1a
.c . •a4
$2.700,000
91,400,000
$1,000,00o
51,500,11m
$900,000
P. 20/20
Phase 2
$3,000,000
$1,200,000
$100,000
$3,000,000
52,500,000
$1,300,000
s2w,om
$2.515,000 SM.000
$22.755,000 ss,15%000
53DAT5,000
$2.900,000
$ t .062, 500
$3,962,500
s12,1301000
98- 475
tiLL1L.I11114:t1L H
Parrot Jungle & Gardens, Inc.
At Watloa Island
Prcfk W Um Pro)41edms
1M im
22"
NK
M4
ems:
mi
si
im
an H
A�4wdarc4
--I
M+Ya
M4.0"
396.760
432,464
4-1,39L
435.332
_
S14,if4
S30,104
551.301
$14,914
596.1
C7 .n
91.000
99190
1031(7
11 T i41
121.393
123.666
i 12.326
l )l.127
�r 6691
144.71 t
1491. 3
+1 !
453.000
11S,9ia
fAii6
.23i
506.1If
N).)]0
66Z,i)tl
]S
_ Z1.S9I
n
m
I 4.9911250
3 S.M.463
3 6051.310
1 4913,30
3 1.139.171
3 1,152;224
1 91117.791
3 10.164,747
1 10.472.914
S
11.'.1J j 70
fao6
l.Sf2,sm
1,913,a00
2.751.547
2,323,343
3jft577
36171,04
3.510,203
3,790245
41124,475
faa41l4w4a1
271.5%
302,495
129.091
30.311
1?1.714
42V69
465,39s
501,211
$31,936
601.=�
S4ws�aadr.
1,47UR
1.039,113
2243,430
2r672.110
2XI22,156
1,137011
31313331
1.514.590
1.162s79
1.950tn
lrlq
100.70C•
161.913
9*1025
1.473.003
1.517,M
1r60/326
1,656.515
2.067.406
2,170.7Ts
l.Mi
bxt-w
2.11JIM
2,3Kl"
Z513,723
2.739,058
302%)S6
2,79 AU
3,147.4%
3.273,393
1.40.416)
3.144!
Sp.cn1 E%UU 1 SpanM7lNp
3.216.34!
1.44,174
1~7
1.932,701
zM1541
X277,399
2.451.732
2,610,114
k122,009
1991 -
34ro41140MA
214,501
322,361
373.410
46.016
467,523
MOM
M3,236
620,222
641.411
1.
Isar.
1il001
192930
21%294 _
2M220
249a10
272.736
296941
323.563
39704
.N_
TOWMfew
O 0
S 12.741,746
1 1441S,102
S 17011AR
S M-1W4,14
i H.112.01i
I 11.4i3.M
3 24.59012)
i &M161
S 3,M),p20
3
30.Vil1 X
CN
[l1
A
food
S 43! S30
S 341.5"
3 649,027
3 IM423
3 817.543
3 932,1K
3 "1"
i 1046.108
1 1,110,131
3
1-191 - I
loo6aid
69.37i
7Sr619
17,424
80.60
91.929
106.742
116.30
126.92C
134.23+
IWO)
SM�dr4
421,076
741,121
943.241
1.101.m
1,1356306
Llls,f63
1.391.S23
1,416.121
1.530,32?
1,659 lQ
6avta.uWAFeed .5074LAW
1.017,501
1353,044
1,256,162
1,3N,979
1.01,073
1.495.74)
1.573,741
1,616,691
1,713,53:
l.-10 �j
Sp.trlE.u+w1so; LWtaw'4 O.1AU;
141.921
20.904
1.011,976
1.159,4,21
1,I41.749
1,UC433
1.411,039
I,Sli,2:9
1.693.106
1,'I6
tatusa
__
44,25)
431212
$2�]
S7,3DS
i7.163
f3,917
74,212
1g191
14,171
96
7atal44"al.aln
0 0
S 2�9736S1
3 3,414,419
3 1,995,102
3 4138,16S6
3 'JAL%?
3 S.2i3.639
3 5.614,4S6_
3 5,931_17'
_
S 6.156.921
1
66S-
Craft praRi _
EfflI�SIS:
0 0
f 4.771.0®
S l l.14Q61 ]
i 15.016.330
3 14i9iS.727
3 16.2l6.TS!
Ii IN 00T_
}1.97f.969
I 20l12,297
i 22,226,191
5,
:3 041
�,1j�1
mG
ii►a44sa0?1rta1r�111 3
15g000 3 )00,000
S 446.04
3 509,471
3 5931391
3 SB/722
3 726.210
3 109159T
S 349,9.1
3 919,561
1 919,914
1
1,p+1
4.u6,►6�paa4]'141.1JRep
11.110
1XW9
14.1116
16.ff"
18,011
20146
21.150
72.8i1
14,151
16Oj
3dDabt
6,4:S
7,332
1.169
91639
10,451
11.6$1
12,151
13,23)
14.4131
1,u--
9mt Saws C %"
49.98
54,974
66,533
74,393
81.21)
90,S31
95,04t
102.635
109.464
111
C»11 Ow9w4a
1.337
1.526
11713
2.006
Z175
$42!
I.S46
2,744
2J)2
] VI
Carmol3ms"Gumd
152.913
175,33'
30.140
234.533
213,354
211.441
295.015
322,5a
341.956
let ..
C400*410ma
2,546
2,929
3,422
3.049
4,174
4E8?
4,315
5.215
5.616
et0
Dd my Smat
27,617
31,111
31.176
41,117
45.344
SQS31
$3.069
57,41!
61.111
4.
own ASku
21.319
31.921
37.192
41.935
45.344
Asn
S3,092
$7.442
61,144
6'
E"W=Egwm
30.600
13.441
1s.341
17,929
20.164
21.1N
24,310
21,W4
2l.6S1
29,4:6
Y,-
BOWMs11*aa4
30.000
9,914
_ 11,24s
13,142
-'14782
15.020
17,876
11,150
20,291
11.645
! --I
fad & M." SUw- we
116,218
132,681
L55.065
174,424
L39.136
230.85)
221;347
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Pate 7
CITY MANAGER MRC Fax:305416191C May 5 '98 17:31 P.03iO3
MOEN
Peat Marwick LLa
One Biscayne Tower
suite:19w
2 South Biscayne Boulevard
Miami. FL 33131
April 17, 1998
Ms. Christina Cuervo
Assistant City Manager
City of Miami, Florida
444 S.W. ind Avenue, 1 Oth Floor
Miami, Florida 33131
Dear Ms. Cuervo:
Telephone 305 358 2300
Teiefax 305 577 0544
This leter is in response to your request of KPMU Peat Marwick LLP to perfuLin an
examination and render an opinion on the profit and loss projections of the Parrot Jungle
and Gardens, Inc. at Watson Island, in connection with their Housing and Urban
Development Section 108 loan application.
The scope of an engagement of this type would require the evaluation of each
hypothetical assumption and the determination of the likely outcome of each assturaption
that was used to prepare the forecast. This type of work would be very extensive and
extremely costly to the City. The initial estimate of tirne to perform a project of this
nature would be in excess of 500 hours.
As an alternative to the aforementioned engagement, the City may consider an
engagement to perform certain agrcud-upon procedures in accordance with the standards
established by the American Institute of Certified Public Accountants. An engagement to
apply certain agreed -upon procodw-cs is one in which an accountant i_c engaged to issue a
report on findings based upon specific subject matter of specified accounts or items of the
financial forecast. In an engagement of this type, the accountant dots not perform an
audit and does not provide an opinion or negative assurance. or any form of comfort
relating to the fair prrWcctation of the specified accounts or items of the financial forecast,
the validity or reasonableness of the assumptions used or the likely outcome of each
assumption.
So" Ftpada!jU,aw6::: Uror 475
u.., �.. ..,r "', ........ Mwrry Trot I atrAxrl,114 wwr'. !'.urn 4epc h r