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HomeMy WebLinkAboutR-84-0115J-84-61 I RESOLUTION NO. S -1 15 A RESOLUTION APPROVING IN PRINCIPLE THE APPLICATION OF HERITAGE PLACE LIMITED FOR RENOVATION AND RESTORATION OF THE OLD GFSU SCHOOL BUILDING INTO A FIVE - STORY PROFESSIONAL OFFICE BUILDING AND AUTHORIZING THE CITY MANAGER TO SUBMIT AN URBAN DEVELOPMENT ACTION GRANT APPLI- CATION TO THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FOR THE PROJECT. WHEREAS, Heritage Place Limited intends to finance a project for renovating and restoring the old Gesu school building (historic property) into a five -story professional office building that will contain 72,000 square feet of office space on a site located at 170 N.E. Second Street; and WHEREAS, the developer will restore and renovate the aforesaid Gesu school building for the purpose of offering it on a rental basis to area businesses; and WHEREAS, the project is expected to generate approximately 70 construction jobs and 200 new permanent; and WHEREAS, the total cost of the project is $4,500,000 of which $900,000 is proposed to be funded from an Urban Development Action Grant from the U.S. Department of Housing and Urban Develop- ment; and WHEREAS, Heritage Place Limited unequivocably states that unless the proposed Urban Development Action Grant or comparable funding is received, renovation and restoration of the Gesu school building cannot be completed; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The application of Heritage Place Limited for renovation and restoration of the Gesu school building into a five -story professional office building is hereby approved in principle and the City Manager is hereby authorized to proceed with the City's application for an Urban Development Action Grant from the U.S. Department of Housing and Urban Development. CITY COMMISSION MEETING OF J AN 26 1884 I;c„ v If PASSED AND ADOPTED this 26 day of January , 1984. Maurice A. Ferre MAURICE A. FERRE, Mayor ATTEST: RAL H G. ONGIE, City Crerk PREPARED AND APPROVED BY: APPROVED AS TO FORM AND CORRECTNESS: G. MIRT M MAER .L• GARCIA-PEDROSA Assistant City Attorney /4SER. ty Attorney N4--11b NRI 1_1 33 CITY OF MIAMi, FLORIDA INTER -OFFICE MEMORANDUM TO Honorable Mayor and Members of the City Commission 6 Howard V. Gary FROM City Manager DATE January 13, 1984 IPILE SUe:EC'. Urban Development Action Grant Applications REFERENCES ENCLOSURES It is recommended that the City Commission approve attached re- solutions authorizing the City Manager to submit Urban Develop- ment Action Grant (UDAG) appli- cations to the United States Department of Housing and Urban Development for the following projects: Heritage Place, Airport Seven Office Building, and Miami Interior Design Center It is not recommended that the City Commission authorize submittal of the application for the Port of Miami - South Passenger Terminal and Office Building. The federally funded Urban Development Action Grant (UDAG) program, authorized by Congress in 1976, has provided cities across the nation with an instrument with which to stimulate economic development, create new employment opportunities, and increase the tax base needed to fund essential services. Through the UDAG program, cities are able to participate with private sector developers in financing projects ranging from industrial parks to luxury hotels which, without the program, would have a slim chance of being implemented. Generally, UDAG funds which are loaned to project developers have been used in combination with conventional loans at terms structured to enable the developers to realize a reasonable return on investment. The proposed projects must result in new employment opportunities and leverage new private sector capital investment of at least 2.5 to 1 (private funding to UDAG funding). t ff City Commission Members Page 2 While UDAG funds are provided in the form of loans to project developers, they are awarded to cities on a grant basis. Funds generated through loans to developers can be used to support staff or consultants working on the UDAG program, as well as to fund eligible Community Development projects in low and moderate income target areas. Besides providing additional funds for eligible Community Development activities, UDAG's aid in increasing the tax base, cause infusion of private investment into the economy, and create temporary construction jobs and new permanent employment opportunities. The Department of Community Development was given the respon- sibility of soliciting and processing UDAG applications for the City approximately four months ago. Since then, numerous meetings have been held with real estate investors and developers in order to familiarize them with the benefits of the UDAG program. To date, staff efforts have resulted in the preliminary processing of four (4) UDAG applications which are deemed to meet or exceed the Department of Housing & Urban Development's basic evaluation criteria: 1. Port of Miami - South Passenger Terminal and Office Building. 2. Heritage Place 3. Airport Seven Office Building 4. Miami Interior Design Center The attachments to this memorandum describe the projects and provide a synopsis of the benefits which will accrue to the City as a result of HUD's approval of the UDAG assistance proposed. In brief, these projects, which have a combined value of $69,780,885, will not only increase the City's tax base and provide needed temporary and permanent employment opportunities, but will result in new income to the City which will be used to fund UDAG staff and eligible Community Development activities. This income is derived from application processing fees, UDAG loan repayments and sharing by the City in profits generated by the projects. Additionally, increased ad valorem revenue should be realized upon the projects' complet T on. Application processing fees will be used to fund costs associated with the 84-ilLS W - 0 City Commission Members Page 3 processing of UDAG applications, while UDAG repayments of principal and interest and income generated by shared profits will be used to fund Community Development activities in the City's Community Development Target Area neighborhoods. (Please see Attachment "A".) As has been indicated above in this memorandum, and as indicated on the attached data sheets for each proposed project, it is my opinion based on the financial factors that each application, if funded by U.S. HUD, would afford significant benefits to the City. However, it is also my opinion that the City's assistance in developing a major office facility on the Port of Miami would not be in the overall best interest of the City of Miami. One quite important issue of public policy is whether the City wants to assist and encourage the development of major, highrise office structures on the Port; this assumes great importance relative to the height of structures east of Biscayne Boulevard in the Downtown area and use of the publicly owned Port for private purposes not previously envisioned. An additional factor in formulating this recommendation is the probability that the City of Miami has no authority to exercise its municipal powers on the Port. At great expense the City acquired the Florida East Coast property to link Bayfront and Bicentennial Parks. The guiding philosophy is this effort was the provision and preservation of a continuous open, green area along the bayfront in Downtown, a vista devoid of view obstructing high rises. Development of an approximately 200' high structures (17 stories atop an approximately three-story high terminal) would obviously detract from this view. It is noted that the tallest permanent structure on the Port presently is a passenger terminal and administration building fifty to sixty feet in height. The Port of Miami was transferred to Dade County by the City of Miami to be used for a public purpose, i.e., a publicly developed, owned and operated seaport. Though the Port would gain, at a minimal cost, a new passenger terminal capable of handling two cruise ships, it appears that the primary purpose of the project is development of its office/retail portion. For instance, the entire project would comprise 350,132 gross square feet. Of the total gross square footage, the privately controlled office/retail areas comprise 304,532 square feet (87%) V City Commission Members Page 3 processing of UDAG applications, while UDAG repayments of principal and interest and income generated by shared profits will be used to fund Community Development activities in the City's Community Development Target Area neighborhoods. (Please see Attachment "A".) As has been indicated above in this memorandum, and as indicated on the attached data sheets for each proposed project, it is my opinion based on the financial factors that each application, if funded by U.S. HUD, would afford significant benefits to the City. However, it is also my opinion that the City's assistance in developing a major office facility on the Port of Miami would not be in the overall best interest of the City of Miami. One quite important issue of public policy is whether the City wants to assist and encourage the development of major, highrise office structures on the Port; this assumes great importance relative to the height of structures east of Biscayne Boulevard in the Downtown area and use of the publicly owned Port for private purposes not previously envisioned. An additional factor in formulating this recommendation is the probability that the City of Miami has no authority to exercise its municipal powers on the Port. At great expense the City acquired the Florida East Coast property to link Bayfront and Bicentennial Parks. The guiding philosophy is this effort was the provision and preservation of a continuous open, green area along the bayfront in Downtown, a vista devoid of view obstructing high rises. Development of an approximately 200' high structures (17 stories atop an approximately three-story high terminal) would obviously detract from this view. It is noted that the tallest permanent structure on the Port presently is a passenger terminal and administration building fifty to sixty feet in height. The Port of Miami was transferred to Dade County by the City of Miami to be used for a public purpose, i.e., a publicly developed, owned and operated seaport. Though the Port would gain, at a minimal cost, a new passenger terminal capable of handling two cruise ships, it appears that the primary purpose of the project is development of its office/retail portion. For instance, the entire project would comprise 350,132 gross square feet. Of the total gross square footage, the privately controlled office/retail areas comprise 304,532 square feet (87%) 84°-11 H ev a City Commission Members Page 4 while the customs/passenger lounge areas are 45,600 square (13%). (The attached analysis by the Planning Department discusses the potential impact of this project on existing and planned office development in the Downtown area.) Further, it is important to note that in our discussions with Dade County on the bridge - tunnel issue, the use of seaport land for private development purposes was never a stated factor. The present high volume of vehicular traffic, coupled with the restrictive capacity of the existing two-lane bascule bridge, cause a prohibiting influence mitigating against near future growth of the Port was stated to be the primary reason for opting for a bridge instead of the costlier, longer to finance and build tunnel. It appears that, coincidentally, both the five -lane bridge's and this project's completion would coincide. An additional factor to consider here is that a portion of the City -owned FEC Tract is needed to construct a new bridge. Though at this time a formal legal opinion has not been rendered by the City Attorney, it is my understanding that the City of Miami is precluded by Florida Statute from exercising its muni- cipal authority on the Port. If this understanding is correct, present zoning of the Port (Waterfront Industrial) cannot be en- forced, nor would the City be allowed to control the building permit process; at this time Miami, no longer issues occupational licenses to Port -based operations. In short for all practical purposes this project becomes synonymous to a project located in Homestead as regards Miami's authority. Thepublic policy question here is whether this particular application would be a proper exercise of the City's ability to seek UDAG financing. Though UDAG's hold considerable potential for financial gain to the City, in this particular instance, it is my opinion that other issues are of greater importance, causing this recommen- dation to not approve submitting the Port of Miami - South Passenger Terminal and Office Building UDAG application. It is important to point out that HUD's approval of the three remaining applications will in no way impede the City's ability to secure UDAG assistance for other projects, including developments proposed by the private sector in the City's Community Development target areas, as there is no cap on the level of UDAG assistance Miami is eligible to receive. Two public hearings have been scheduled to provide an opportunity for public comment on these UDAG applications. The first hearing will be held on January 16, 1984, at the City Administration 84-I..5 T IN City Commission Members Page 5 Building, and the second will January 26, 1984, at which time to authorize submission of the ment of HUD. The applications than January 31, 1984. be before the City Commission on the Commission will be requested applications to the U.S. Depart - must be submitted to HUD no later 84-IL ILS E) G (Attachment "A") Eligible Community Development Activities Eligible Community Development activities are those that either benefit low -and -moderate income persons or prevent or eliminate slum and blight and otherwise meet specfic eligibility guidelines. Activities eligible to receive Community Development funding are the following: - Acquisition - Disposition - Public facilities and improvements - Clearance activities - Interim assistance - Relocation - Removal of architectural barriers - Rehabilitation and preservation activities Residential rehabilitation Commercial rehabilitation Code enforcement Historic preservation - Economic development activities - Planning and Administrative costs 84..-Lis I . - M N U1 CITY OF MIAMI DEPARTMENT OF COMMUNITY DEVELOPMENT URBAN DEVELOPMENT ACTION GRANT PROGRAM FIRST ROUND APPLICATIONS - FY '84 1. Combined Development Cost 2. Total Private Financing Required 3. Total UDAG Financing Required 4. Total Return to City on UDAG's (Loan Principal/Interest, Profit Participation, Fees) 5. New Real Estate Taxes Generated (City)* 6. Total Number of Jobs Generated: Temporary (Construction) 895 Permanent (New) 1,471 $ 69,780,885 56, 055,885 13,725,000 50,795,450 8,271,000 *Amount based on 1983 millage rate during the term of the given loan. • CITY OF MIAMI DEPARTMENT OF COMMUNITY DEVELOPMENT URBAN DEVELOPMENT ACTION GRANT PROGRAM (UDAG) 1. Name: Heritage Place (Listed on the National Register as an historic building). 2. Developer: Heritage Place Limited, a Florida limited partner- ship composed of the following principals: John P. Fullerton, Julio S. Diaz, John C. Harrison, Jr., Osmond C. Howe and Stephen H. Smith. 3. Type of The project consists of the renovation and restora- Project: tion of the old Gesu School building into a five (5)-story professional office building with a gross area of 72,000 sq. ft. 4. Location: Control of land: Twenty-five (25) year lease with an option to extend to ninety-nine (99) years if developer proceeds with Phase II and is approved by the Archdiocese. The site is located at 170 N.E. Second Street. 5. Zoning: HC-1 (Historic Conservation). 6. Total Development Cost $ 41500,000 7. Project Financing: UDAG $ 900,000 Private Debt Financing 2,600,000 Equity 1,000,000 8. Number of Jobs Created: Construction 70-80 Permanent 35 9. Terms of UDAG Assistance/Return to City a) 1% loan amount at closing $ 91000 b) 15-year loan @ 6% interest 8101000 c) 25% of net available cash flow 291,200 d) At the end of loan term: - Principal Repayment 900,000 - 25% of net sale proceeds 1,076,000 Subtotal $3,086,200 Real Estate Taxes Generated* 524,000 Total Benefit to City $3,612,000 *First year estimated tax increase, $28,207. Assumed appreciation, 3% compounded yearly. V. I CITY OF MIAMI DEPARTMENT OF COMMUNITY DEVELOPMENT URBAN DEVELOPMENT ACTION GRANT PROGRAM (UDAG) 1. Name: Heritage Place (Listed on the National Register as an historic building). 2. Developer: Heritage Place Limited, a Florida limited partner- ship composed of the following principals: John P. Fullerton, Julio S. Diaz, John C. Harrison, Jr., Osmond C. Howe and Stephen H. Smith. 3. Type of The project consists of the renovation and restora- Project: tion of the old Gesu School building into a five (5)-story professional office building with a gross area of 72,000 sq. ft. Control of land: Twenty-five (25) year lease with an option to extend to ninety-nine (99) years if developer proceeds with Phase II and is approved by the Archdiocese. 4. Location: The site is located at 170 N.E. Second Street. 5. Zoning: HC-1 (Historic Conservation). 6. Total Development Cost $ 4,500,000 7. Project Financing: UDAG S 900,000 Private Debt Financing 2,600,000 Equity 1,000,000 8. Number of Jobs Created: Construction 70-80 Permanent 35 9. Terms of UDAG Assistance/Return to City a) 1% loan amount at closing $ 91000 b) 15-year loan @ 6% interest 810,000 c) 25% of net available cash flow 291,200 d) At the end of loan term: - Principal Repayment 900,000 - 25% of net sale proceeds 1,076,000 Subtotal $3,086,200 Real Estate Taxes Generated* 524,000 Total Benefit to City $3,6121000 *First year estimated tax increase, $28,207. Assumed appreciation, 3% compounded yearly. 84--15