HomeMy WebLinkAboutR-91-0509d,
J-91-521
6/27/91
RESOLUTION NO.
A RESOLUTION, WITH ATTACHMENT(S), APPROVING
THE SELECTION OF THE SAWYER'S WALK LTD. AS
THE SUCCESSFUL PROPOSER FOR THE UNIFIED
DEVELOPMENT OF CITY -OWNED BLOCKS 45, 55 AND
56 LOCATED IN THE SOUTHEAST OVERTOWN/PARK
WEST COMMUNITY REDEVELOPMENT DISTRICT
("PROPERTY"), SUBJECT TO THE SAID PROPOSER
PRODUCING SUFFICIENT EVIDENCE TO DEMONSTRATE,
PRIOR TO THE APPROVAL OF THE LEASE AGREEMENT,
ITS FINANCIAL CAPABILITY TO SUCCESSFULLY
UNDERTAKE AND COMPLETE THE PLANNING AND
DESIGN, CONSTRUCTION, LEASING AND MANAGEMENT
OF RESIDENTIAL AND COMMERCIAL USES ON SAID
PROPERTY; AUTHORIZING AND DIRECTING THE CITY
MANAGER TO NEGOTIATE A LEASE AGREEMENT, IN A
FORM ACCEPTABLE TO THE CITY ATTORNEY, WITH
SAID PROPOSER TO INCLUDE CERTAIN TERMS AND
CONDITIONS (MORE PARTICULARLY DESCRIBED
HEREIN) AND TO COMPLY WITH THE CITY'S
MINORITY PROCUREMENT PROGRAM ORDINANCE
REQUIREMENTS AND OTHER APPLICABLE LAWS; AND
FURTHER DIRECTING THE CITY MANAGER TO PRESENT
THE NEGOTIATED AGREEMENT TO THE CITY
COMMISSION FOR ITS REVIEW, CONSIDERATION AND
APPROVAL PRIOR TO ITS EXECUTION.
WHEREAS, on July 12, 1990, by Resolution No. 90-548, the
City Commission authorized the issuance of a Request for
Proposals ("RFP") for Unified Development ("UDP") of residential
and commercial uses for the Southeast Overtown/Park West Blocks
45, 55 and 56 property ("Property"), selected a Certified Public
Accounting ("CPA") firm and appointed members of a Selection
Review Committee ("Committee") to evaluate the proposals as their
duties are prescribed by local law; and
WHEREAS, the RFP for the Property was issued on
July 30, 1990, and contained specific evaluation criteria to be
used by the CPA and Committee; and
WHEREAS, one proposal was received by the City in response
to the RFP on January 18, 1991, the published date for receipt of
proposals; and
WHEREAS, due to his departure from the Metropolitan Dade
County Transit Agency, Mr. Carlos Bonzon was represented by
Mr. Aurelio Rodriguez, of the same Agency, on the Committee; and
'ATTACHMENTS
CONTAINED
CITY commmmoif
MEETING of
Jul. 11 in
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war
WHEREAS, the CPA rendered its written report to the City
Manager analyzing the proposals based on the financial viability
of the proposed development team, its proposed financial
strategies, and assessed comparatively, the short and long-range
economic and fiscal return to the City and evaluated the economic
feasibility of the proposed development; and
WHEREAS, the Committee received the presentation of the
proposer and, after extensive analysis and discussion of the one
proposal, rendered a written report to the City Manager
containing an evaluation of the proposal based on the specific
evaluation criteria in the RFP document that included the
experience of the development team including, without limitation,
experience on similar projects, the capability of the development
team, the proposer's financial capability and level of financial
commitment, previous experience in the Southeast Overtown/Park
West Redevelopment District, overall project design, extent of
minority participation and involvement of previous property
owners of Blocks 45, 55 and 56; and
WHEREAS, the City Manager, after taking into consideration
the findings of the CPA, those evaluations of the Committee,
including personal interviews conducted with the proposer, is
recommending the selection, in principle, of the Sawyer's Walk
Ltd. proposal; and
WHEREAS, in accordance with the City's UDP process as
outlined in Charter Section 29-A(c) and Code Section 18-52.9, the
City Manager has transmitted to the City Commission his
recommendations including the written reports, from the
aforementioned CPA and Committee;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY
OF MIAMI, FLORIDA:
Section 1. The Sawyer's Walk Ltd. is hereby selected in
principle as the successful proposer for the Unified Development
of the City -owned Blocks 45, 55 and 56 located in the Southeast
Overtown/Park West Community Redevelopment District subject to
the said proposer producing sufficient evidence to demonstrate,
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prior to the approval of the Lease Agreement, its financial
capability to successfully undertake and complete the planning
and design, construction, leasing and management of"residential
and commercial uses on said Blocks 45, 55 and 56.
Section 2. The City Manager is hereby authorized and
directed to negotiate a lease agreement/, in a form acceptable
to the City Attorney, with said proposer for the Unified
Development of the Southeast Overtown/Park West flocks 45, 55 and
56 property.
Section 3. The said negotiated agreement is required to
comply with the City's Minority Procurement Program Ordinance
requirements and other relevant laws and to include, but not be
limited to, the following terms and conditions:
-- provisions committing the successful proposer to
the full extent and corresponding level of
expenditures for all capital improvements included
in the proposal;
-- the immediate commencement upon execution of the
Lease Agreement, of all capital improvements to
the site, as included in proposal, including but
not limited to:
- provisions of fire protection; conformance of
all facilities with life, safety, and handicap
access requirements as well as mandated
environmental safeguards;
- accommodation of all parking requirements on -
site;
- construction of all project elements and
amenities as proposed; and
- acquisition of all permits and approvals
necessary to carry out the work;
-- provision of complete plans and specifications
(construction documents) by licensed architects
and engineers for all work to be performed at and
upon the site;
-- provision that all development rights shall be
forfeited if development does not occur by agreed
upon date; and
-- compliance with such other terms and conditions
which are necessary or practicable to further the
best interest of the City of Miami as determined
by the City Administration, with concurrence of
the City Attorney's Office.
The herein authorization is further subject to compliance with
all requirements that may be imposed by the City Attorney,
including but not limited to those prescribed by applicable
City Charter and Code provisions.
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Section 4. The City Manager is further directed to
present the negotiated agreement to the City Commission for its
review, consideration and approval prior to its execution.
Section 5. This Resolution shall become effective
immediately upon its adoption.
PASSED AND ADOPTED this llth day of 93a-lY , 1991.
CITY CLERK
PREPARED AND APPROVED BY:
c. �.
9INK. KEA ON
ASSISTANT CITY ATTORNEY
APPROVED AS TO FORM AND CORRECTNESS:
A Ai -A I,- �777
JgRGE L. ERNANDEZ
CITY ATTO NEY
LKK:gb:M2324
XAVIER 4. ,WAREZ ,
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June 14, 1991
Mr. Cesar H. Odio
City Manager.
City of Miami
3500 Pan American Drive
Miami, FL 33133
Dear Mr. Odio:
CESAR H. 01310
City Manager
In response to the City of Miami's Request for Proposals ("RFP")
for'the Unified Development Project ("UDP") of mixed residential
and commercial uses for the S.E. Overtown/Park West Blocks 45, 55
& 56 property, issued July 30, 1991, one response was received.
The seven member Selection Review Committee ("Committee") select-
ed to evaluate the proposal convened a total of three meetings
and on April 24, 1991 voted to recommend to the City Manager the
acceptance of the proposal received from Sawyer's Walk Inc.. The
proposal evaluation was based on the following seven criteria
outlined in the RFP document:
1. Experience of the Proposer
2. Capability of the Development Team
3. Financial Capability, Level of Financial Commit-
ment
4. Previous S.E. Overtown/Park West Redevelopment
Experience
5. Overall Project Design
6. Extent of Minority Participation
7. Previous Property Owners'on Blocks 45, 55 & 56
In accordance with the City of Miami Charter, Section 29-A(c) and
the City of Miami Code, Section 18-52.9, enclosed is the
Committee's Final Report outlining its deliberations and evalua-
tion cf the proposal submission.
DEPARTMENT Of DEVELOPMENT/DUPONT PLAZA CENTER/300 Biscayne Blvd. Way, Suite 400
Miami, FL 33131/(305) 579-3366 f,
TELECOPIER: (305) 371-9710 9 1— 509
91- 509
Cesar H. Odio
Page 2
On behalf of the entire Committee for the S.E. Overtown/Park West
Blocks 45, 55 & 56 property UDP, we appreciate the opportunity to
participate with you in bringing to Miami an impressive redevel-
opment project which so appropriately fits with the existing
redevelopment activities in our downtown area.
Sincerely,
Georg Knox
Chai n
Enclosures
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SOUTHEAST OVERTOWN/PARK WEST
COMMUNITY REDEVELOPMENT DISTRICT
BLOCKS 45, 55 & 56
UNIFIED DEVELOPMENT PROJECT
SELECTION REVIEW COMMITTEE
FINAL REPORT TO THE
CITY MANAGER
JUNE 1991
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TABLES OF CONTENTS
PAGE
Selection Review Committee ................................. 1
Background .................................................. 3
Proceedings ................................................. 5
Evaluation Process .......................................... 5
APPENDIX A. Area Location Map/Site Location Map
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SELECTION REVIEW COMMITTEE
GEORGE KNOX, Chairman
Attorney at Law
Kubicki, Draper, Gallager & McGrane, P.A.
EVONNE RAGLIN
President
Evonne Raglin & Associates
MANUEL RIVERO
Executive Director
East Little Havana CDC
AURELIO RODRIGUEZ
Assistant Director
Metro -Dade Transit Authority
0
JACK LUFT
Development Coordinator
Department of Development
MATTHEW SCHWARTZ
Executive Director
Downtown Development Authority
ELBERT L. WATERS
Assistant Director
Planning, Building & Zoning
Support Staff
Erdal Donmez
Financial Services Coordinator
Department of Development
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Arline Hodgson
Information Officer
Department of Development
Linda K. Kearson, Esq.
Assistant City Attorney
Law Department
Anne Whittaker
Minority/Women Procurement Representative
General Services Administration
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BACKGROUND
Resolution No. 90-548 adopted on July 12, 1990 authorized the
issuance of a Request for Proposals ("RFP") for the Unified
Development of mixed residential and commercial uses for City
blocks 45, 55 & 56, located in the Southeast Overtown/Park West
("SEOPW") Redevelopment District (see Appendix A).
The City Commission, through Resolution No. 90-548, appointed
seven members to a Selection Review Committee ("Committee")
charged with evaluating proposals in response to the City's RFP
and to render a written evaluation of its findings to the City
Manager as required by City of Miami Charter Section 29-A(c) for
Unified Development Projects. Resolution No. 90-548 further
selected Arthur Andersen & Co., Certified Public Accounting
("CPA") firm, with the minority firm of Bustamante, Nunez &
Manrara to analyze the financial capability, commitment, and
projections of the proposal submissions.
The RFP document issued July 30, 1990, sought a unified
development package from a private entity to include planning and
design, construction, leasing and management of mixed commercial
and' residential uses. The Sawyer's Walk Ltd. proposal was the
only response that the City received on the proposal submission
date of January 18, 1991.
PROCEEDINGS
The Committee, appointed by the City Commission, held a total of
three (3) meetings. Throughout the proceedings, the Committee
observed requirements as set forth in the "Government in the
Sunshine" Law and "Public Records" Act. All meetings were
advertised and recorded.
The first meeting of the Committee was held on February 20, 1991.
At this time, the Committee was briefed on the Unified
Development Project process and its responsibilities for
evaluating the proposal submission. The Department of
Development staff informed the Committee with respect to the
Sawyer's Walk Ltd. proposal's compliance with the submission
requirements in the RFP document.
The second meeting of the Committee was held on April 2, 1991, at
which time the principal developer and chief architect for the
Sawyer's Walk Ltd. presented the overall development plan for -the
proposed apartments, condominiums and ancillary retail space.
The development team also answered the questions directed by the
Committee.
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At this meeting, the representatives of CPA team introduced the
preliminary analysis of the Sawyer's Walk proposal, stressing the
financial aspect of the proposed development. The CPA team
advised the Committee that the proposer needed to furnish
additional financial commitment information with respect to the
undertaking of this development project.
The third and final meeting of the Review Committee was held on
April 24, 1991. The City's Minority and Women Procurement
Representative informed the committee in reference to the
proposal compliance with the minority participation goals
outlined in the RFP document. The Committee also had an
opportunity to ask questions of the proposer in the areas of
project development and financing.
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EVALUATION PROCESS
City of Miami Charter Section 29-A(c), Unified Development
Projects, requires the Committee to "evaluate each proposal based
only on the evaluation criteria applicable to the Selection
Review Committee and contained in the Request for Proposals".
Section VI of the RFP document included an extensive outlay of
the criteria that would be used to evaluate the proposals. The
evaluation criteria was as follows:
1. Experience of the Proposer ..................
2. Capability of the Development Team ..........
3. Financial Capability, Level of
Financial Commitment ...... .. .............
4. Previous Southeast Overtown/Park
West Redevelopment Experience ..............
5. Overall Project Design .. ... ...............
6. Extent of Minority Participation ............
7. Previous Property Owners of Blocks
45, 55 & 56................................
15%
15%
20%
10%
20%
10%
10%
100%
The above matrix was established to evaluate, rank and recommend
proposals submitted in response to said RFP. Nevertheless, the
Committee had only one proposal to consider, therefore, each
member of the Committee evaluated all relevant components of the
proposal and voted without assigning points according to the
matrix illustrated above.
The following was the conclusion of the evaluation process
adopted by the members of the Committee unanimously:
The Committee recommends the proposal of
Sawyer's Walk Ltd. with the conditions that
prior to the contract negotiations the
proposer will present to the City:
1. Supplemental information on the ability
of the development team to raise the
equity necessary to obtain financing
for the project is needed, and
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2. Additional information as to timing,
phasing and absorption of the proposed
development program.
All correspondence between the Committee, City Staff, Arthur
Andersen & Co. and Sawyer's Walk Ltd.; proposal documents;
supplemental materials; tape recordings of the Committee meeting;
and any other materials related to the Blocks 45, 55 & 56 are on
file and available at the City of Miami Department of Development
and Housing Conservation, Development Division.
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GAMARTNERS
CITY OF MIAMI
RFP REVIEW
SOUTHEAST OVERTOWN
PARK WEST REDEVELOPMENT
BLOCKS 45, 46 & 56
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GA/PARTNERS
One Biscayne 'i�nver
Suite 2100
A unit of the Miami. Florida 3.m i
ARTHUR ANDERSEN & CO. Telephone (305) 374.3700
Real Estate Services Group Facsimile 005) 789.2573
April 8, 1991
Mr. Cesar Odio
City Manager
CITY OF MIAMI
35 Pan American Drive
Miami, Florida 33133
Re: RFP Review:
Southeast Overtown/Park West Redevelopment
Blocks 45, 55 & 56
Dear Mr. Odio:
In accordance with our contract dated March 14, 1990, we have prepared this report in
response to the Request for Proposals (RFP) for the above captioned redevelopment area.
Our work included the following:
• A review of the RFP for the Unified Redevelopment of Blocks 45, 55,
& 56 to identify those issues which any proposer must address;
• A review of the proposer's submission to evaluate the following:
• • prior experience and overall capability of the
development team, specifically as it pertains to the
proposed redevelopment;
• • organizational structure, financial capability, and
proposed financing strategies, including the review of
pertinent financial data to the extent it is included in the
submission and whether it was compiled by a certified
public accountant;
• • economic viability of the project and evaluation of
market and cash flow analyses, prepared by the
proposer, including the evaluation of market and
financial assumptions and their reasonableness based on
current market conditions;
• • economic return to the City to be measured in terms of
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GAMARTNERS
Mr. Cesar Odio, City Manager April 8, 1991
CITY OF MIAMI
lease payments, property taxes and any other financial
returns, deemed appropriate; and
• Attendance at all the Review Committee meetings, and preparation of
this independent report to be submitted to the City Manager.
The procedures we performed to complete the above included:
• Review of the RFP;
• Review of the Sawyer's Walk response to the RFP;
• Attendance at all Review Committee meetings;
• Interviews with the representatives of Sawyer's Walk, the proposed
redevelopment program for Blocks 45, 55 & 56;
• Interviews with management of other redevelopment projects to
evaluate the performance of the relevant markets; and
• Interviews with other experts to obtain information relating to the
operation of residential developments within redevelopment areas.
Our report is based on the information provided by the proposers, and supplemented by an
interview with key personnel. In addition, we conducted limited market research in order
to validate the market -based assumptions included in the proposer's submission. We have
not conducted a full market analysis, nor have we prepared a detailed prospective financial
analysis for the above captioned redevelopment project.
Our evaluation of the market and financial support presented by the proposer assumes that
the City of Miami will arrange for the development of the 7th and 9th Street Malls and the
redevelopment of the historic district area on a timely basis. Further delays in the
development/redevelopment of these areas may impact the ability of the proposer to achieve
reasonable levels of performance.
In addition to the above, our evaluation assumes that current litigation affecting the parcels
under study will be resolved quickly and efficiently in order to provide a reasonable start-up
date for the proposer. Any delays, or decisions in favor of the plaintiff, may also impact the
estimated performance levels.
This report is intended solely for the use of the City of Miami and the Review Committee
and should not be used for any other purpose, specifically for financing the Unified
Redevelopment project. This restriction is not intended to limit the distribution of this
report which, upon acceptance by the City of Miami, is a matter of public record.
IPM
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GA/PARTNERS 40
Mr. Cesar Odio, City Manager April 8, 1991
CITY OF MIkM[
The report is based on assumptions and estimates which are subject to uncertainty and
variation. These estimates are often based on data obtained in interviews with third parties,
and such data are not always completely reliable. In addition, the proposer's assumptions
as to the future behavior of consumers and the general economy are highly uncertain and
therefore, we make no warranty of any kind that the estimates, prepared by the proposer
and evaluated in this report, will in fact be achieved.
We sincerely appreciate this opportunity to be of continued service to the City of Miami.
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GAMARTNERS
TABLE OF CONTENTS
RFP REVIEW
SOUTHEAST OVERTOWN/PARK WEST REDEVELOPMENT
BLOCKS 45, 55 and 56
Page Number
EXECUTIVE SUMMARY ...................................... 5
PROPOSER'S EXPERIENCE .................................... 11
ORGANIZATIONAL STRUCTURE, FINANCIAL CAPABILITY,
AND FINANCING STRATEGY REVIEW ......................... 13
Organizational Structure ................................... 13
Financial Capability ....................................... 14
Proposed Financing Strategy ................................ 16
Evaluation..............................................17
MARKET AND FINANCIAL ASSUMPTIONS ....................... 19
Pricing Conclusions ....................................... 19
Absorption Conclusions ................................... 20
Stabilized Occupancy ...................................... 21
Stabilized Revenues & Expenses ............................. 22
ECONOMIC RETURN TO THE CITY ............................ 24
PropertyTaxes .......................................... 24
Ground Lease...........................................25
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EXECUTIVE SUMMARY
Our research and evaluation of available information yielded the following information:
• The proposer of the Sawyer's Walk development is comprised of
Sawyer's Walk, Ltd. (the Developer), the Liebman Melting Partnership
(Architect) and Harris Construction Corporation (General Contractor).
The Developer has extensive experience in similar projects including
Poinciana Village, a neighboring project. References indicated high
regard for the Developer and deemed them to be very reliable. The
Architect has had the necessary experience in several rental and mixed -
use developments, all of which have been in the New York area. The
General Contractor has many years of experience, predominantly in
large construction projects. References have also been positive.
• Financial information submitted by the proposer is based on
representations made by the development team. No independent
verifications were made, and the information was not compiled by a
CPA. An evaluation of the financial statements of members of the
general partnership indicates a lack of sufficient asset liquidity to
contribute significant equity investment. Additional cash is expected to
be available, based on successful sales at Poinciana Village, and
through several investors involved in prior developments of the
General Partner. However, no information regarding these potential
investors was provided. Also, no information on Sawyer's Walk Ltd.'s
limited partners was included in the proposal.
• The market and financial evaluation yielded the following:
• • Anticipated unit pricing for the various apartments to be
built on Blocks 45 and 56 indicated that the pricing of
one, two, and three- bedroom apartments at rental rates
of $635, $800 and $1,000 per month, respectively,
appears reasonable, based on the current market
performance and assumptions as to the viability of the
Redevelopment Area.
• • Proposed pricing of the condominium units to be
developed on Block 55 of the one, two, and three -
bedroom condominium units is $60,000, $73,000, and
$87,000, respectively. Based on current pricing
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GA/PARTNERS
conditions in the market, these prices are about 5 to 10
percent higher than those currently being achieved in the
market. However, taking into consideration that
anticipated future area development will enhance market
conditions, (particularly the proposed development on
Blocks 45 and 56), and assuming the condominiums to
be developed on Block 55 will not be available for at
least three years, these pricing conclusions appear
reasonable.
• • The proposer's estimates of monthly absorption of
apartment units at Blocks 45 and 56 do not distinguish
absorption levels by unit type (i.e. one -bedroom, two -
bedroom, and three -bedroom). However, estimates of
overall absorption pace for rental apartments appear
reasonable, and are within levels achieved in the market.
• • Estimates of anticipated monthly absorption levels for
the condominium units proposed for Block 55, were not
included in the proposer's submission. However, during
further discussions with the developer, we were informed
that an overall absorption pace of approximately four to
five units per month was anticipated. Interviews with
management at Poinciana Village revealed that while an
average of two units per month were sold, only 0.5 units
per month actually closed and are currently occupied.
Acknowledging the effects the planned new
developments on Blocks 45, 55 & 56 would have on the
area's marketability, this absorption should increase. In
light of the Poinciana Village experience, and assuming
an absorption pace of three to four units per month, the
sell -out period for Block 55 would be five to seven years.
Assuming the sales and development for this Block
would not occur until Poinciana Village achieved a near
sell -out, the development and completion of the
condominium project would be delayed further. We
could not evaluate the impact of this extended
absorption period, as no development cash flow analysis
was provided in the submission.
• • Anticipated stabilized occupancy levels for the rental
apartments to be developed on Blocks 45 and 56 have
been estimated to reach a level of 95 percent in the
calculation of cash flows, based on information provided
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in the submission. Through discussions with
management at Biscayne View Apartments and other
professionals involved in financing, leasing, and
appraising rental apartment dwellings in redevelopment
areas, the 95 percent occupancy/5 percent vacancy rate
appears reasonable, assuming the area continues to be
redeveloped as planned.
• • Anticipated total revenues for Blocks 45 and 56 include
revenue from the rental of apartments and commercial
space, and revenue from coin laundry operations. A
summary of our comments follows:
• • • Based on assumptions regarding rental
revenue derived from leasing apartments,
anticipated stabilized revenue has been
calculated to be $1,621,600 per year per
Block. This differs only slightly with total
revenue estimates provided in the
submission.
• • • The proposer estimates that revenue
derived from the leasing of commercial
space is $14,100 per month per Block.
However, based on the assumptions used
by the development team in this analysis,
which include the availability of 20,800
square feet of net leasable space per
Block, an annual net lease rate of $7.00
per square foot per year, and a stabilized
occupancy rate of 80 percent, stabilized
annual revenue generated is approximately
$116,000 or $9,700 per month for each of
the Blocks 45 and 56. Assumptions used
to generate these estimates were deemed
reasonable, based on limited market
research. While a difference exists, it does
not impact the ability of the project to
generate positive cash flows. Revenue
generated from the operation of the
laundry facilities were based on $7.00 per
month per occupied unit, which also
appears reasonable.
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• • Total operating expenses for both Blocks 45 and 56 have
been estimated by the proposer to be $3,000 per unit, or
approximately 30 percent of total revenues. Based on
our evaluation, we believe a more reasonable basis for
operating expenses at the subject apartment projects is
between 35 and 40 percent of total revenues. Again,
while a difference exists when utilizing a 37.5 percent
operating expense ratio, the project generates positive
cash flows after covering operating expenses, property
taxes, and debt service.
• • Revenues resulting from the development of Block 55
have been presented by the developer to include total
revenue of $19,018,000 from the sale of condominium
units. No development cash flow analysis for the
development and absorption periods was presented in
the submission. In addition, operating expenses for this
Block have not been presented. The developers
indicated that operating expenses will likely be included
in the association fees.
• The following table outlines the estimated property taxes for the
project. No years are provided, as the proposal did not provide any
indication as to when the development would occur, be completed or
be absorbed.
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ESTIMATED FUTURE PROPERTY TAXES
UNIFIED REDEVELOPMENT PROJECT
BLOCKS 45, 55, & 56
(Rounded)
Property Taxes
Allocated to
Total
Estimated
Estimated
Total
Redevelopment
Property Taxes
Cost of
Assessed
Property
District (City
to City of
Blocks
Construction(1)
Value 2
Taxes 3
and County)(4)
Miami 5
45
$9,443,300
$6,799,200
$204,000
$109,600
S 81,200
55
13,980,000
10,065,600
302.000
162.200
120.200
56
9,443,300
6,799,200
204,000
109.600
81,200
(1) Represents only hard construction costs. Costs of Construction was provided in the proposer's
submission and supplemented with information provided by American Capital Resource, Inc.,
a consultant to the proposer.
(2) Based on conversations with representatives from the City of Miami, assessed value is estimated
to be 72 percent of the estimated cost of construction.
(3) Property taxes are estimated, utilizing a millage rate of $30 per $1,000 of assessed value.
(4) Allocation is based on 95 percent of S16.%75 per $1,000 of assessed value.
(5) City of Miami property tax allocation is calculated utilizing a rate of S11.9376 per $1,000 of
assessed value.
• While no formalized ground lease expense has been established for
Blocks 45 and 56, American Capital Resource, Inc. has estimated the
ground lease payment to be approximately $500 per unit, per year.
Based on the lease agreement at the neighboring Arena Towers, lease
payments during the early years are relatively insignificant. No lease
agreement has been established for Block 55 either, and no payments
have been included in the proposer's submission. The proposer has
assumed that the lease agreements would be similar to those which the
City has already implemented in the area.
Based on our research, evaluation, and findings summarized above, we recommend that the
City require and evaluate the following information prior to committing the development
rights for Blocks 45, 55 & 56 to Sawyer's Walk, Ltd.:
• Supplemental information on the ability of the proposer to raise the
equity necessary to obtain financing for the project is needed. Since
the submission did not contain support on the availability of equity to
commit to this project, and taking into consideration today's lending
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environment, we believe that the proposer should present a clear,
verifiable plan for raising the equity required for the project. Adequate
equity and some reasonable financing commitments should be
demonstrated to mitigate the risk on the part of the City.
• Obtain additional information as to the timing, phasing, and absorption
of the proposed development. While absorption schedules for the
development of Blocks 45 and 56 (rental apartments) were provided,
specific development years were not identified. No information was
included for the proposed condominium development on Block 55.
The development strategy is particularly important due to the
following:
• • the size of the project, the number of Blocks involved
and the market support that exists for the individual
development components;
• • the ability to plan financing and equity requirements;
and
• • the need to appropriately time and coordinate the
estimated future absorption of the various projects,
including the Poinciana Village development, currently
under construction.
• Obtain an itemization of the operating expenses for Blocks 45 and 56.
The submission included total operating expenses as a single item.
• Additional information on the common area amenities for Blocks 45
and 56 is needed. Our understanding is that rental apartment unit
dwellers will be permitted to use the facilities to be developed on Block
55. However, these may not be available concurrently, and based on
the anticipated phasing of this development, the delay as to when the
amenities will be available, could potentially affect marketability of
Blocks 45 and 56.
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— GAMARTNERS
PROPOSER'S EXPERIENCE
The proposer is comprised of the following organizations:
Developer: Sawyer's Walk, Ltd.
Architect: The Liebman Melting Partnership
General Contractor: Harrison Construction Corporation
The following paragraphs provide a brief discussion on each:
• DEVELOPER: The principals of the general partnership have extensive
first-hand experience in the development, construction and marketing of
projects similar to the one described in the proposal. The most significant
experience is that three of the principals of the general partnership are
presently developing Poinciana Village Condominiums, on a parcel
adjacent to the proposed project.
Conversations with the references provided in the submission indicated the
highest regard for the developer, including its ability to meet budgets and
construction schedules, deemed "very reliable, cooperative and
knowledgeable", "highly recommended". One reference emphasized that
"experience in the area was essential for the project to succeed, and that
no one has more experience that the developer."
• ARCHITECT: The proposer indicated that the architect was selected for
this project due to his understanding of, and experience in, designing
mixed -use urban projects. The firm's understanding of and experience in
designing mixed -use urban projects. The firm's experience relevant to this
project includes:
• • Design of Spring Creek, a low-rise, high density rental
housing development in South Brooklyn. The project
contains 765 rental units for low to moderate income
families.
• • Design of Shorehaven, a low rise housing development
including 1,183 residential units, retail space, and other
community centers such as day care.
• • Design of Mitchell Terrace, a 67-unit mid -rise apartment
building in the Bronx.
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GAMARTNERS
The architect's extensive list of projects seem to indicate that it has the
necessary experience to successfully work on this project. Further,
according to the proposal, the architect is registered to practice in the
State of Florida.
GENERAL CONTRACTOR: This company is the successor of a well
known general contractor in South Florida whose key personnel have many
years of experience. The contractor has successfully completed large
construction projects, however, its multi -housing residential construction
experience is limited.
Conversations with the provided references, indicate that the contractor is
held in the highest esteem by its customers. Comments made included
"good at meeting budgets and reasonable", "very ethical", and highly
recommended", and references found the contractor to be very
knowledgeable and professional.
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GAMARTNERS
ORGANIZATIONAL STRUCTURE, FINANCIAL CAPABILITY,
t
AND FINANCING STRATEGY REVIEW
i -
-� Organizational Structure
The submission for the Unified Redevelopment Project for Blocks 45, 55 & 56 includes a
description of the organizational structure. The name of the proposer is Sawyer's Walk,
Ltd., a to -be -formed Florida limited partnership. The proposer's general partner is a Florida
corporation, named Indian River Investment Communities, Inc. The general partner will
own two percent of Sawyer's Walk, Ltd.
The general partner is comprised of the following:
Percentage
Name
Ownership
Ted H. Weitzel,
25%
President
John C. Harris, Jr.
25%
Horace C. Davis
25%
Vice President
Randall J. Weitzel,
25%
Vice President
100%
Source: Sawyer's Walk proposal;
proposer submission.
- 13.
91. -- .509
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GAMARTNERS
} The ownership of the proposed limited partnership is as follows:
Name Share Capitalization
Indian River Investment
Communities, Inc. 2%
William Sawyer 2 (1)
Bernice Sawyer 2 (1)
Bernice S.Watson 2 (1)
Indian River Investment
Communities, Inc. (the
general partner) and
William Sawyer, jointly 92 (2)
100%
(1) The proposal indicates that these three limited
partners made a capital contribution of $33,333.33
each to Sawyer's Walk, Ltd. However, no actual cash
contribution has been made, nor is expected. These
three limited partners have been given "credit" for
their investment in a prior venture to develop the
site.
(2) The capital investment of the general partner in
Sawyer's Walk, Ltd. is stated at $33,333.33. This
amount represents a credit for development and
start-up services to be provided; however, no actual
cash was received.
Source: Sawyer's Walk, a proposal; proposer submission.
Financial Capability
No financial statements were included in the submission for Indian River Investment
Communities, Inc., the general partner. However, financial statements for each of the
shareholders of the general partner were included. Comments regarding these follow:
TED H. & RUTH WEITZEL: A balance sheet as of October 1, 1990,
indicates total assets of $1,844,210 and a net worth of $1,312,317.
Approximately 67 percent of the assets listed in their balance sheet are
comprised of investments and amounts due from various real estate
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GA/PARTNERS
development companies and partnerships which the Weitzels' either
own or control. If these properties were excluded from their balance
sheet, their net worth would be $68,008. The cash indicated in the
—j balance sheet is $11,300, which is less than one percent of the total
assets. The liability listed in the balance sheet for estimated income
! _ taxes is for taxes due for 1989 and 1990. The balance sheet does not
include a reduction from the net worth for estimated income taxes on
sale of assets, as required by generally accepted accounting principles.
The balance sheet was not compiled by a certified public accountant.
• JOHN C. & VIRGINIA P. HARRISON, JR.: A financial statement as
of January 14, 1991, shows total assets of $1,163,400 and a net worth
of $912,900. Various real estate investments and the personal
residence represent 79 percent of total assets. The cash indicated in the
balance sheet is $10,000, which is less than one percent of total assets.
The financial statement does not include a reduction from net worth
for estimated income taxes on sale of assets. The financial statement
was not compiled by a certified public accountant.
• HORACE C. & R. BARBARA DAVIS: A personal financial statement
as of October 1, 1990, indicates total assets of $1,024,510 and a net
worth of $581,090. Various real estate investments and the personal
residence represent 80 percent of the total assets. The cash indicated
in the financial statement does not include a reduction from net worth
for estimated income taxes on sale of assets. The financial statement
was not compiled by a certified public accountant.
• RANDALL J. & ROBIN C. WEITZEL: A personal financial statement
as of October 1, 1990, shows total assets of $1,083,630 and a net worth
of $813,936. Approximately 55 percent of the total assets are
comprised of investments and amounts due from various real estate
development companies and partnerships in which Ted and Ruth
Weitzel are also investors. If these properties were excluded from
their financial statement, their net worth would be $219,371. The cash
and cash equivalents listed in the financial statement total $58,305,
which is 5.4 percent of total assets. The financial statement does not
include a reduction from net worth for estimated income taxes on sale
of assets. The financial statement was not compiled by a certified
public accountant.
There was no financial information included in the proposal for any of the limited partners
of Sawyer's Walk, Ltd.
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E
r
G MARTNERS
Y
Proposed Financing Strategy
The submission presents two financing strategies. One strategy is for the development of
the 246 condominium units on Block 55. The other two parcels, Block 45 and Block 56, will
be for rental apartments and will use a financing strategy different from that of Block 55.
• BLOCK 55 - 246 CONDOMINIUM UNITS: The submission does not
specify the amount of equity that will be provided by Sawyer's Walk,
Ltd. It states that the equity will be derived from funds to be invested
by the principals and from the limited partnership. The affidavit of
capital contributions included in the submission states that the limited
partners will make no future capital contributions to the limited
partnership. The implication is that if additional equity is needed, it will
have to come from new limited partners, which have not been
identified. The construction costs are proposed to be financed by a
loan to be arranged under the auspices of Homes for South Florida,
Inc. which represents a consortium of local banks. No specific loan
amount is stated. Southeast Bank, N.A., a member of the consortium,
has indicated in a letter of interest, considering a construction loan for
this project. However, this letter does not represent a firm financing
commitment.
BLOCKS 45 tic 56 - 356 RENTAL UNITS: The submission does not
specifically state the amount of equity investment that will be required
from Sawyer's Walk, Ltd. However, the financing proposal prepared
by American Capital Resource, Inc. (a consulting firm assisting the
developer in obtaining FHA insured loans for the development of the
rental apartments) indicates that each Block will require an equity
investment of $1.1 million.
The additional financing for each Block would be provided by a
mortgage insured by the Federal Housing Administration. The
projected amount of the mortgages for each Block would be
$10,741,500.
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GAMARTNERS 0
SUMMARY OF FINANCING STRA,rEGIES
Cost
or
Proposed
Required
Block Pro ect
Loans
Equity
55 $16,606,507
N11
N/I
45 $11,225,934
$10,741,500
$484,434
56 $11,225,934
$10,741,500
$484,434
NIL Not Indicated
Both Block 45 and 56 are shown as requiring an additional equity in the form of a letter of
credit in the amount of $614,530 for a total required equity per Block of $1.1 million dollars.
No information as to the source of required equity was provided.
Evaluation
The financial information in the proposal is based on the representations of the individuals
mentioned above. Each of the shareholders of the general partner was interviewed to obtain
explanations of the items listed in their financial statements; however, no independent
verifications have been made.
None of the financial statements of the members of the general partner indicate sufficient
liquid assets to make a significant equity investment. Mr. Ted Weitzel indicated in an
interview that cash would become available from the sale of various real estate projects,
including Poinciana Village, and would be transferred to Sawyer's Walk, Ltd. In addition,
several investors in prior developments with Mr. Weitzel have expressed to him their desire
to invest in Sawyer's Walk, Ltd. Mr. Weitzel indicated that his ability to proceed with this
project depended on the successful completion and sell -out of current phase of current
phase of Poinciana Village.
Southeast Bank was not specific in their letter, expressing an interest to consider the
construction loan for Block 55. The bank indicated verbally that they have the highest
regard for Mr. Weitzel and his organization, which have demonstrated a very thorough
knowledge of the market in the development of Poinciana Village. The bank indicated that
Mr. Weitzel's track record is considered excellent, and it would weigh heavily in any
evaluation made of their application for a loan. We understand that Southeast Bank is
currently experiencing financial difficulties and is seeking merger or sale opportunities. If
this is indeed the case, the bank's ability to provide financing for the proposed development
on Block 55 could be impaired. This, coupled with a letter of interest which does not reflect
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GAMARTNERS
A
a commitment to the project, indicates the need for additional support for both the debt and
equity requirements of the project.
i
k The financing for Blocks 45 and 56 is more complicated and requires several steps, including
obtaining the FHA insurance commitment, the certification from the Florida State Housing
Finance Agency (or a local equivalent) as a rental project qualifying for a nontaxable interest -
mortgage and selling the mortgage in the money markets. American Capital Resource, Inc. _
has indicated that this process could take as much as a year to complete, but that the
probability of obtaining the financing is considered good, once the FHA insurance is
obtained.
While the capital financing strategy seems appropriate and reasonable for this Unified
Redevelopment Project, the most critical issue still to be addressed is that of developer
equity. Particularly in today's lending environment, we believe a more comprehensive
program of how they intend to raise the equity should be required before further
negotiations with the City occur.
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�i
i
'. GAIMARTNERS
-i
c
MARKET AND FINANCIAL ASSUi1IPTIONS
As part of our engagement, we evaluated the underlying assumptions outlined in the
_i submission for the proposed Sawyer's Walk development, compared these with current local
market conditions and evaluated certain key indicators common to other redevelopment
areas.
For this part of our evaluation, we evaluated the estimates of unit pricing, monthly
absorption levels, stabilized occupancy levels, and stabilized revenues and expenses for each
of the three Blocks proposed for development. Blocks 45 and 56 are discussed jointly, as
they involve the same development program. Development timing issues were not
addressed in the submission, and were not detailed in further discussions with the proposer.
As a result, our evaluation, particularly as it relates to pricing and absorption, is based on
current market conditions and, other than the specific redevelopment efforts described in
the RFP and the submission, no future supply and demand conditions were considered.
The following details this evaluation.
Pricing Conclusions
Blocks 45 and 56
As indicated in the submission, Blocks 45 and 56 will be developed as rental apartments
which, once completed, will each offer 49 one -bedroom, 89 two -bedroom, and 40 three -
bedroom apartments, with 800, 1,050, and 1,250 rentable square feet of living space,
respectively. The proposer anticipates monthly rental rates for these units to be $635, $800,
and $1,000 per month, or $0.79, $0.76, and $0.80 per rentable square foot per month,
respectively.
Based on the current market conditions and pricing at two apartment complexes within the
same redevelopment district, specifically Arena Towers and Biscayne View Apartments,
estimated pricing of the individual units at Blocks 45 and 56 appears reasonable.
Block 55
Block 55 is a planned condominium development, to be developed adjacent to Poinciana
Village, a neighboring condominium project currently under development by the proposer
of the Unified Redevelopment Project for Blocks 45, 55 & 56. While the type and mix of
units vary slightly from the proposed development for Block 55, Poinciana Village provides
a good comparable.
Upon completion, Block 55 is anticipated to include 24 one -bedroom, 124 two -bedroom, and
98 three -bedroom units, for a total of 246 units. The one -bedroom units will contain
approximately 800 square feet of living space and are priced at $60,000, or $75.00 per square
foot. The two -bedroom units will contain approximately 1,100 square feet of living space
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GA/PARTNERS
and will be priced at $73,000, or $66.36 per square foot. The three -bedroom units will
contain approximately 1,300 square feet of living space for a price of $87,000, or $66.92 per
_ square foot. These prices have not been distinguished by floor, and are assumed to
represent the average price of each unit type.
Based on current pricing conditions in the market, the sales prices for the condominium
units, as outlined by the developer, are higher than those currently being achieved in the
market. However, taking into consideration that anticipated future area development will
enhance market conditions, and that the condominiums to be developed on Block 55 will
not be developed until Poinciana Village nears sell -out, which is estimated to be at least
three years, we believe these pricing conclusions are reasonable.
Absorption Conclusions
Blocks 45 and 56
The proposer has submitted an absorption schedule which demonstrates the number of
rental units to be leased on a monthly basis. From our evaluation, we noted the following:
• The number of occupied apartments stabilizes within 18 months at
each Block;
• During the first six months of the rental program, monthly absorption
for each Block ranges from 10 to 11 units per month;
• During the second six months of the rental program, monthly
absorption for each Block ranges from 14 to 15 units per month; and
• During the third six months of the rental program, monthly absorption
for each Block is three units per month.
Based on our review of monthly absorption levels at Arena Towers (11.5 units per month)
and Biscayne View Apartments (14.9 units per month), the proposed absorption rates for
Blocks 45 and 56 appear reasonable, assuming the common area facilities and amenities are
available, and redevelopment efforts continue. Again, development timing was not
addressed in the submission; however, assuming no other development occurs, it appears
that the market could support the simultaneous development of Blocks 45 and 56.
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V GAMARTNERS
Block 55
While no specific absorption schedule has been prepared for Block 55, the development
team indicated condominium sales should occur at a rate of four to five units per month.
This was reportedly based on the current sales pace at Poinciana Village of two units per
month. However, interviews with Poinciana Village management revealed that actual sales _
of these condominiums began on, or about March 1, 1988, and to date, only 19 units have
closed. Assuming a selling period of 36 months, this represents approximately 0.5 units per
month. These slow sales have been attributed to the lack of development in the surrounding
area, as Poinciana Village is isolated from other redevelopment to the east and south. With
the development of Blocks 45, 55, and 56, the 7th and 9th Street Malls, and the
redevelopment of the historic district, management expects monthly sales to increase
dramatically.
Based on the above considerations, coupled with previous conclusions on pricing for the
units one, two and three -bedroom condominium units, the estimated monthly sales pace
proposed for units on Block 55 appear strong. However, even if three to four units per
month are sold, it would take five to seven years to completely sell -out the project. Taking
into consideration the need to achieve a near sell -out of Poinciana Village prior to beginning
development on Block 55, the time to complete this project is extended further.
While estimates of development timing, phasing, and absorption were not incorporated into
the proposer's submission, we recommend that further consideration be given to the
development of condominiums on Block 55. If the condominiums remain part of the
development program, we recommend that the rental apartments on Blocks 45 and 56 be
developed first, in order to increase the activity in the area and perhaps spurn further
absorption and sales of the Poinciana Village project. In addition, flexibility in the design
of Block 55 should be incorporated into the proposal in order to be able to respond to
market forces at the time this development occurs. However, since Block 55 is planned to
contain all of the amenities for the Unified Redevelopment Project for Blocks 45, 55 & 56,
it is imperative that if this development is delayed, the amenities be available elsewhere
within the project.
Stabilized Occupancy
As part of our evaluation, we analyzed stabilized occupancy levels for the rental projects
planned for Blocks 45 and 56. Each are expected to reach a stabilized occupancy level of
95 percent over an 18 month period, beginning at the date of completion of construction.
In a separate schedule included in the submission, stabilized occupancy levels have been
shown to reach a level of 93 percent as required by the Federal Housing Authority.
However, the developers anticipate each Block will achieve stabilized occupancy levels of
95 percent and have based cash flow estimates on this level.
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}
GAMARTNERS r
Arena Towers and Biscayne View Apartments have not yet achieved stabilized occupancy
levels due to their recent entry into the market; however, discussions with management at
Biscayne View Apartments indicated that an overall stabilized occupancy level of 95 percent
is reasonable for a quality apartment complex, and that the apartments to be developed at
Blocks 45 and 56 could reach a 95 percent occupancy level, providing all planned
development for this area occurs during the development and absorption of units.
Assuming all future development/redevelopment occurs in the S.E. Overtown/Park West
area, we believe that a 95 percent stabilized occupancy level (5 percent stabilized vacancy
rate) is attainable.
Stabilized Revenues and Expenses
We evaluated the revenues and related expenses in the format provided. It should be noted
that while no specific development periods were identified, the proposal reflected a 3.5
percent inflation factor. Because timing was not addressed, inflation was omitted from our
evaluation.
Blocks 45 and 56
Revenue items for Blocks 45 and 56 include revenue derived from the leasing of apartment
units and commercial space, and the operation of the coin laundry facility. The proposer
has excluded revenue from additional parking.
Revenue from rental properties, based on the pricing and absorption estimates outlined in
the submission, results in a stabilized annual rental revenue of approximately $1,621,600 per
Block. This varies only slightly from our evaluation due to rounding. The differences are
immaterial.
Based on information presented in the response to the RFP, 20,800 square feet of leasable
commercial space will be included in both Blocks 45 and 56. The proposer assumed that
this space will be leased at a rate of $7.00 per rentable square foot (RSF) per year, (net of
expenses), and will achieve a stabilized occupancy level of 80 percent. Based on discussions
with area management, a rate of $7.00 per RSF is conservative, but reasonable, given the
uncertainty of the market area. Occupancy levels also appeared to be reasonable. Based
on these estimates, stabilized annual revenue for the leasing of commercial space is
estimated to be approximately $116,500 per Block or approximately $9,700 per month per
Block. This differs significantly with the $14,100 per month revenue estimate used in the
monthly revenue calculation presented by the proposer for each Block; however, the
difference does not affect the economic viability of the project.
Net revenue from coin laundry operations has been estimated at $7.00 per month per
occupied rental unit. Based on conversations with American Capital Resource, Inc., the
preparer of the financial estimates, this figure is consistent with other rental properties in
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GAMARTNERS
redeveloped areas. As such, stabilized annual laundry revenue has been estimated at
approximately $14,200 per year for each Block.
The operating expenses provided in the submission are presented on a dollar amount per
unit, and have not been broken down to reflect individual expense item amounts. Total
operating expenses for Blocks 45 and 56 have been estimated at $3,000 per unit, or 31
percent of total rental revenue. Based on discussions with American Capital Resource, Inc.,
this includes $2,500 per unit for operating expenses and $400 to $500 per unit for the ground
lease. Exclusive of the ground lease, this represents 26 percent of total rental revenues.
We compared the estimates prepared by American Capital Resource, Inc. to those currently
being achieved at Biscayne View Apartments, and found that their while total expenses,
including their ground lease, were originally estimated at 30 percent of total revenues, since
then, have been revised to 40 percent, due to increased costs associated with security
personnel and monitoring systems. Arena Towers' budget was not available.
In addition to our discussions with American Capital Resource, Inc. and Biscayne View
Apartments, we evaluated expenses at other rental apartments in redevelopment areas, and
found that expenses are generally about 40 percent of total revenue, excluding ground lease.
As such, the estimated operating expenses included in the submission appear low, with a
more reasonable expense estimate for Blocks 45 and 56 ranging between 35 and 40 percent
of total revenues. Utilizing a 37.5 percent, this results in annual expenses of approximately
$657,000 for each Block, in a stabilized year of operations, or approximately $3,900 per
occupied unit, and represents $125,000 more than the estimates prepared by American
Capital Resource, Inc. The impact of this adjustment would be on future lease payments
to the City, which are expected to be based on a percentage of net cash flow after developer
profit, and does not appear to affect the economic viability of the project.
Block 55
A summary of revenue and expenses related to the sale and operation of the condominium
development on Block 55 were not provided in the proposer's submission. Additionally,
revenue and expense items for Poinciana Village were not available or deemed comparable.
Total revenue from the condominiums at Block 55 is expected to include revenue from the
sale of units. Any maintenance fees collected would be applied to the annual cost of
maintaining the developments. Further, no commercial space is planned. Based on the
number of units expected to be developed at Block 55, total revenue derived from the sale
of condominiums is estimated by the proposer to $19,018,000, and will be received
throughout the absorption period to begin no less than three years from today. As a
developer cash flow analysis for the period of development and absorption was not provided,
the impact of an extended sales pace on the economic viability of the project can not be
evaluated.
NNE
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GA/PARTNERS
ECONOMIC RETURN TO THE CITY
- Our evaluation includes estimating the economic benefits to the City of Miami as a result
of the proposed developments on said parcels. Based on conversations with the Department
of Development for the City of Miami, there are two main economic benefits resulting from
development of these Blocks. These are property taxes and ground lease revenue. Property
taxes have been estimated based on millage rate information provided by City of Miami
representatives, however, ground lease revenue was not calculated or evaluated, as no lease
structure was provided in either the RFP or the proposer's submission. As such, our
presentation is limited to a summary of the ground leases currently in force in the area.
Property Taxes
The estimated property taxes to be generated by the proposed development of Blocks 45,
55, and 56 are based on estimated construction costs, provided by the proposer and their
consultants, and an estimate of assessed value. Applying the appropriate millage rates, and
allocating collections, resulted in the calculations presented in the table below:
ESTIMATED FUTURE PROPERTY TAXES
UNIFIED REDEVELOPMENT PROJECT
BLOCKS 45, 55, & 56
(Rounded)
Property Tares
Allocated to
Total
Estimated
Estimated Total
Redevelopment
Property Taxes
Cost of
Assessed Property
District (City
to City of
Blocks
Construction(1)
Value (2) Taxes 3
and Countv)(4)
Miami S
45
S 9,443,300
S 6,799,200 $204,000
$109,600
$81,200
55
13,980.000
10,065,600 302,000
162,200
120,200
56
9,443,300
6.799,200 204,000
109,600
81,200
(1) Represents only hard construction costs. Costs of Construction was provided in the proposer's
submission and supplemented with information provided by American Capital Resource, Inc.,
a consultant to the proposer.
(2) Based on conversations with representatives from the City of Miami, assessed value is estimated
to be 72 percent of the estimated cost of construction.
(3) Property taxes are estimated, utilizing a millage rate of $30 per S1000 of assessed value.
(4) Allocation is based on 95 percent of the rate S16.9575 per S1,000 of assessed value.
(S) City of Miami property tax allocation is calculated utilizing a rate of $11.9376 per S1,000 of
assessed value.
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r GA/PARTNERS
Ground Lease
While the RFP did not specify a minimum annual lease payment, it did require that
estimates of prospective ground lease payments be incorporated into the submission. No
estimates were provided; however, American Capital Resource, Inc. did incorporate a lease
payment in the lump sum operating expenses projected for Blocks 45 and 56. Based on
discussions with the Department of Development, estimates of ground lease revenue should
be similar to the leases currently in force within the subject redevelopment district.
Blocks 45 and 56
As indicated by the proposing developer's estimates, the portion of expenses attributed to
a ground lease is approximately $400 to $500 per unit or between $71,200 and $89,000 per
year based on information provided by American Capital Resource, Inc. The bases of these
estimates are their past experiences on projects in other redevelopment districts. In the
Qvertown Redevelopment District, there are currently two lease agreements with the City,
Arena Towers and Biscayne View Apartments. The Department of Development has
provided us with a copy of the ground lease agreement for Arena Towers Apartments as an
example of a lease agreement in the Redevelopment District. The agreement calculates
the annual rental amount to be:
a) An annual basic rental of one dollar per year for each of the first five
rental years following the rent commencement date of the lease or six
rental years, if the first rental year is less than three months in
duration; and
b) Beginning in the sixth rental year after the rent commencement date
(or the seventh rental year if the first rental year after the rent
commencement date is less than three months), annual basic rental of
one tenth of one percent (0.1%) of project revenues and 100 percent
of all net cash flow in excess of an additional, cumulative,
compounding, ten percent cash distribution on developer equity.
Block 55
Again, no ground lease was presented for Block 55, the condominium development.
Currently in force, is the existing ground lease for Poinciana Village, the project in which the
development team is currently involved. In this lease agreement, the developer and/or
condominium association covenants and agrees to pay the City during the lease term, as
rental for the property in its possession, an annual basic rental as follows:
a) five thousand dollars ($5,000) for each of the first three rental years
following the rent commencement date; and
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1" GAMARTNRRS
b) ten thousand six hundred twenty five dollars ($10,625) per year for
rental years 4 through 6; and
c) sixteen thousand two hundred fifty dollars ($16,250) per year for rental
years 7 through 10; and
d) twenty one thousand eight hundred seventy five dollars ($21,875) per
year for rental years 11 through 14; and
e) twenty seven thousand five hundred dollars ($27,500) per year for
rental years 15 through 20; and
f) thirty three thousand one hundred twenty five dollars ($33,125) per
year for rental years 21 through 24; and
g) thirty three thousand seven hundred fifty one dollars ($33,751) per year
for rental years 25 through 34; and
h) with the commencement of year 35, the property shall be reappraised
to determine the rentals payable for rental years 35 through the
expiration of the lease term.
The developer has indicated that this lease agreement has allowed him to competitively price
the units and has not been a significant issue in the selling of Poinciana Village. However,
we were unable to define the years these payments would be received, as the proposal did
not include a development or absorption time line.
- 26.
CITY OF MIAM1, FLORIDA
INTER -OFFICE MEMORANDUM
• 10.
TO Honorable Mayor and Members DATE JUN 2 71991 FILE .
of to City Commission
SUEUECT Recommendation of
The Sawyer's Walk Ltd.
Proposal
FROM : REFERENCES .
Cesar H. Odio
City Manager ENCLOSURES City Commission Meeting
of July 11, 1991
It is respectfully recommended that the City Commission adopt
attached Resolution, approving the proposal submitted by the
Sawyer's Walk Ltd. for the Unified Development of the City Blocks
45, 55 & 56 located in the Southeast Overtown/Park West; further
authorizing 'the City Manager to negotiate a Land Lease and
Development Agreement for the said property.
The Department of Development & Housing Conservation request that
the City Commission select the proposal of Sawyer's Walk Ltd. as
the successful proposal for the Unified Development of the
Southeast Overtown/Park West Blocks 45, 55 & 56 property.
On July 12, 1990, the City Commission, by Resolution 90-548,
authorized the issuance of a Request for Proposals ("RFP") for
Unified Development ("UDP") of residential and commercial uses
for the Southeast Overtown/Park West Blocks 45, 55 & 56 property,
selected a Certified Public Accounting ("CPA") firm and appointed
members of a Selection Review Committee ("Committee") to evaluate
the proposals to be submitted for this project.
The Request for Proposal document was issued on July 30, 1990 and
the City received one proposal on the proposal deadline date of
January 18, 1991.
The Committee received the presentation of the proposer and,
after extensive analysis and discussion of the proposal, rendered
a written report to the City Manager containing an evaluation of
the proposal based on the specific evaluation criteria outlined
in the RFP document.
The CPA rendered its written report to the City Manager analyzing
the proposals based on the financial viability of the proposed
development team, its proposed financial strategies; and assessed
comparatively, the short and long-range economic and fiscal
return to the City and evaluated the economic feasibility of the
proposed development.
/D-
91- 509
Honorable Mayor and Members
of the City Commission
Page: 2
After taking into consideration the findings of the CPA, those
evaluations of the Committee, including personal interviews
conducted with the proposer, it is hereby recommended that the
The Sawyer's Walk Ltd. be selected as the successful proposer for
the Unified Development of the Southeast Overtown/Park West
Blocks 45, 55 & 56 project.
Attachments:
Proposed Resolution
Selection Review Committee Final Report
CPA Report