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FOURTH AMENDMENT TO AGREEMENT TO ENTER INTO GROUND LEASE
(INCLUDING AMENDMENT TO THE GROUND LEASE AND ALL EXHIBITS AND
ATTACHMENTS)
THIS FOURTH AMENDMENT TO AGREEMENT TO ENTER INTO
GROUND LEASE ("Fourth Amendment to Agreement to Enter") is made as of
2009 by and between THE CITY OF MIAMI, a municipal
corporation of the State of Florida ("City„), and FLAGSTONE ISLAND GARDENS,
LLC, a Delaware limited liability company, f/k/a and successor by merger to
Flagstone Properties, LLC, a Florida limited liability company ("Flagstone").
RFr:ITAI S•
WHEREAS, the City of Miami ("City") is the owner of certain real property
located on Watson Island at approximately 1050 MacArthur Causeway, Miami,
Florida (the "Property"); and
WHEREAS, pursuant to the processes for the City's Mega Yacht Marina
and Mixed Use Waterfront Development Request for Proposal and all addenda
thereto (collectively, the "RFP"), for development on the Property of a mega -
yacht marina and related and other upland facilities (the "Project") Flagstone
Properties, LLC submitted a proposal and was selected as the most qualified
responsive and responsible bidder; and
WHEREAS, the City Commission pursuant to Resolution No. 01-972,
adopted September 17, 2001, and Resolution No. 01-1028, adopted September
25, 2001, polled the electors of the City of Miami regarding leasing the Property
to Flagstone Properties, LLC for the Project and pursuant to Referendum on
November 6, 2001 (the "Referendum") the voters returned an affirmative vote;
and
WHEREAS, Flagstone Properties LLC subsequently merged with
Flagstone Island Gardens, LLC (collectively, "Flagstone"), and pursuant to City
Commission Resolution No. 02-1304 adopted on December 12, 2002, entered
into an Agreement to Enter Into Ground Lease, with the City, dated January 1,
2003 with exhibits and attachments thereto (the "Agreement to Enter") including
the form of proposed Ground Lease (the "Ground Lease"); and
WHEREAS, the Agreement to Enter has certain conditions that must be
met for the future execution of a long-term Ground Lease with Flagstone; and
WHEREAS, the City and Flagstone agreed upon and entered into that
certain First Amendment to the Agreement to Enter Into Ground Lease and
Amendment to Form of Ground Lease dated December 12, 2004 (the "First
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Amendment To Agreement To Enter") attached hereto and made a part hereof
as Composite Exhibit "A"; and
WHEREAS, the City and Flagstone agreed upon and entered into that
certain Second Amendment to Enter Into Ground Lease dated December 8, 2006
(the "Second Amendment to Agreement to Enter") attached hereto and made a
part hereof as Composite Exhibit "A"; and
WHEREAS, Flagstone experienced delays in obtaining financing due to
the downturn in the real estate market requiring adjustments to the Lease
Deadline referred to in Section 6.2.1 of the Agreement to Enter and to the
Outside Date referred to in Section 6.2.3 of the Agreement to Enter to February
1, 2010; and
WHEREAS, the City and Flagstone agreed upon and entered into that
certain Third Amendment to Enter Into Ground Lease dated July 30, 2008 (the
"Third Amendment to Agreement to Enter") attached hereto and made a part
hereof as Composite Exhibit "A"; and
WHEREAS, the RFP contemplates that the Project may be developed by
one developer on a component by components- basis; and
WHEREAS, the City Commission on , 2009 pursuant to
Resolution No.09- , a copy of which is attached hereto and made a part
hereof as Composite Exhibit B ("Resolution No. 09- "), has duly authorized
the City Manager to negotiate and to execute the Fourth Amendment, and (ii)
Flagstone by its corporate resolution dated as of a copy of which is
attached hereto and made a part hereof as Composite Exhibit C, has duly
authorized Flagstone to enter into the Fourth Amendment; and.
WHEREAS, the parties have negotiated the attached Fourth Amendment
to the Agreement to Enter (the "Fourth Amendment") to provide for a modification
of certain conditions precedent to Flagstone's taking possession of the Property
on the Possession Date, as defined in the Agreement to Enter, modifications of
certain other conditions regarding construction on a component by component
basis, the total time period for construction, and Phased Development Rent
payments related thereto for each Major Component under and as defined in the
Ground Lease, and to provide for any corresponding amendments that are now
required to the Third Amendment, as set forth below; and
WHEREAS, Resolution No. 09- also authorizes the City Manager
after consultation with the City Attorney to negotiate and to execute such further
amendments to the Agreement to Enter and to the Ground Lease, as may be
necessary from time to time and to accomplish constructionon a by component
basis, provided that such amendments are not substantial and ` (a) are in
accordance with the RFP; (b) are in accordance with the voter Referendum; (c)
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would result in no revenue reduction to the City; and (d) would not extend the
construction period past the sixty (60) month period; and
WHEREAS, the parties have determined that in order for the Project to be
constructed on a component by component basis, the related necessary
operative provisions of the Agreement to Enter shall remain in place and upon
the Possession Date shall become a continuing Exhibit U to the Ground Lease
until such time as all construction has been completed on all of the components
and all necessary requirements have been met.
NOW, THEREFORE, in consideration of Ten and No/100 Dollars and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged by the parties, City and Flagstone agree as follows:
AGREEMENTS
1.Recitals and Incomorations. The foregoing recitals and all exhibits and
attachments hereto are true and correct and are incorporated herein as if set out
in full and incorporated in the body of this Fourth Amendment to Agreement to
Enter.
2.Defined Terms. All capitalized terms used but not defined in this Fourth
Amendment to Agreement to Enter shall have the meanings ascribed to them in
the Agreement to Enter or the Ground Lease, except as otherwise amended
hereby.
3.Amendments to Agreement b Enter. The Agreement to Enter is hereby
amended as follows:
A. Article 2: Nature of this Agreement; Ground Lease Attached: Sections 2.1 and 2.2
of the Agreement to Enter are hereby amended and shall now read as follows:
Section 2.1 Nature of this Agreenvmt This Agreement constitutes an agreement to
enter into a ground lease upon the terms and conditions set forth herein. This
Agreement shall not constitute a lease of any portion of the Property and shall
not impose any encumbrance on the Property nor entitle Flagstone or any other
Person to file a lis pendens in connection with this Agreement or any alleged
breach or default hereunder. The term of this Agreement shall commence upon
the Effective Date and shall automatically terminate upon the Lease Delivery
Date unless sooner terminated in accordance with the terms hereof (except for
(i) any provisions hereof that expressly survive such termination and (ii) any
provisions hereof and Exhibits hereto that are required to remain operative in
order for the Property to be developed, constructed, and completed on a
component by componentbasis, which provisions shall survive such termination
to become part of the Ground Lease as a new Exhibit U that becomes effective
upon the Lease Delivery Date and shall remain in effect as necessary).
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Such Exhibit U is set forth below in the amendments to the Ground Lease and
becomes a part of this Fourth Amendment as incorporated and attached hereto.
Section 2.2 Ground Lease. Attached as Exhibit C is the form of Ground Lease
which (i) the parties have fully negotiated and approved, (ii) has been approved
by the City Commission at a regularly scheduled meeting, and (iii) the parties
intend to execute and deliver to each other, subject to the satisfaction, written
waiver, or written deferral of the conditions precedent set forth in ARTICLE 4 and
ARTICLE 6 of this Agreement.
B. Article 6: Execution and Delivery of Ground Lease. Sections 6.1, 6.1.1., 6.1.2,
6.1.8, 6.1.13, and 6.1.15 of the Agreement to Enter, as previously amended by
the Third Amendment, are hereby further amended and shall now read as
follows:
Section 6.1. Conditions Precedent to Execution and Delivery of Ground Lease. Within
fifteen (15) days after the satisfaction of all of the following conditions precedent
(or within fifteen (15) days after the written waiver or written deferral for
construction of the Project on a component by -component basis by the Chief
Executive Officer in his or her sole and absolute discretion of any such conditions
precedent that are not satisfied), the City and Flagstone hereby agree to execute
four (4) duplicate original counterparts of the Ground Lease, in form and
substance attached hereto as Exhibit C for delivery to each party hereunder (the
"Lease Delivery") (it being understood and agreed that: (i) the date of execution
and delivery of the Ground Lease by the latter of the parties hereto to so execute
shall be referred to herein as the "Lease Delivery Date"; and (ii) the Ground Lease
shall become effective and commence on the Lease Delivery Date) and,
notwithstanding the execution and delivery of the Ground Lease the necessary
terms and conditions of this Agreement to Enter as set forth in Exhibit U to the
Ground. Lease shall remain in effect for construction of the Project on a
component by component basis. Notwithstanding the above, the Chief Executive
Officer, in his or her sole and absolute discretion, and knked _ ,
6.1.2, 6.1.3, 6.1.6, 6.1.7, raT9and-6.4.4 4, shall allow Flagstone to meet any or
all of the referenced conditions precedent for each Major Project Component on
a component by component basis.
Section 6.1.1. Constnxtion Plans and Specifications. The Chief Executive Officer
shall have received and approved in his or her good faith, reasonable discretion
plans and specifications for the development and construction of the Project (the
"Construction Plans and Specifications") which shall be in sufficient detail in order for
Flagstone to obtain foundation permits by AstebeF 31; 2499, January 1, 2011, for
at least two (2) Major Project Components (other than the Marina), which
Construction Plans and Specifications shall be in accordance with the Project
Approvals. Flagstone shall submit on a component by component basis, for
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each Major Project Component such Construction Plans and Specifications that
shall contain sufficient detail in order for the Chief Executive Officer to determine,
using the Schedule of Values, the proposed Construction Budget and the GMP
Contract(s) described in Section 6.1.6 hereof, that the Project can be completed in
accordance with the MUSP Approval and the Hotels can be constructed as four
or five star hotels or better, as defined in the American Automobile Association
("AAA") hotel rating standards, within the Construction Budget.
Section 6.1.2. Closing of Construction Loan(s); Other. (a) For each Project
Component, Flagstone shall have closed its Initial Construction Loan with an
Approved Initial Construction Lender (as defined in the Ground Lease), which
financing thereunder, together with the amount of Initial Equity Requirement,
shall be sufficient to complete the development and construction of tine that
Project Component and to fund any shortfalls in operations that may exist for that
Project Component prior to Project Stabilization. Flagstone shall also be
satisfied, in its sole discretion, with negotiations concerning financial incentives
and entitlements available under federal, state, county or local law. Flagstone
shall supply the Chief Executive Officer written evidence satisfactory to the Chief
Executive Officer in his or her reasonable judgment of the availability of the
Construction Loan Closing for the Marina Component prior to execution of the
Ground Lease.
(b) For the remaining Project Components (Retail/Parking, Hotel A and Hotel B),
evidence of construction fundina availabilitv for all remainina Proiect Components
Section 6.1.8. Consbm lion Schedule. (a) Flagstone shall provide the following: (i)
Florida Department of Transportation and City approvals for site utility work by
ApFil , 2 January 1, 2012; (ii) apply to the City for Foundation Permits and
commence utility relocation work by july 1, 2009 January 1 2012; and (iii) obtain
Dade County Class I Permit for the Marina no later than November 28, 2008 in
order for the Chief Executive Officer to receive and approve in his or her good
faith, reasonable discretion the detailed schedule for development and
construction of the Project Components and related infrastructure, including,
without limitation, the anticipated commencement and completion of major
components of the work. Flagstone may accelerate all or any portions(s) of such
schedule without the Chief Executive Officer's approval; provided that Flagstone
provide written notice to the Chief Executive Officer of such acceleration.
(b) The Marina Component shall commence construction by the Promised
Commencement Date and shall be completed within twenty-four (24) months
from the Promised Commencement Date. For the remaining Project Components
(Retail/Parking, Hotel A, and HotelB), construction shall commence by January
1. 2012. with evidence of construction. fundina availability for all remainina Proiect
Components to have been provided to the Chief Executive Officer by June 30,
2011.
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Section 6.1.13. Proiect Approvals. Before entering into the Ground Lease,
Flagstone shall have obtained the The Partial Modification of Restrictions, MUSP
Approval, and NOPC Approval_ By January 1, 2012, foundation permits for at
least two (2) Major Project Components (other than the Marina) (the "Foundation
Permifis") shall have been issued by the applicable Governmental Authorities for
the Project (the Partial Modification of Restrictions, the MUSP Approval, the
NOPC Approval, and the Foundation Permits being collectively, the "ProjeLt
Approvals"). The Project Approvals shall not be deemed to have been issued
unless and until any and all appeals periods as provided by law shall have
expired without an appeal, objection or challenge having been filed, or, if filed,
when such objection, challenge or appeal has been dismissed or resolved finally
and conclusively to the satisfaction of the Chief Executive Officer in his or her
reasonable judgement.
Section 6.1.15 Tnzt Agreement Within thirty (30) days after the opening to the
publicof the first Project Component to receive its temporary Certificate of
Occupancy, Flagstone and City shall have executed four (4) counterpart originals
of the "Trust Agreement" for the "Civic Arts Endowment Trust" to be created for
the Project (which is referred to in Section 26.2 of the Ground Lease), which
shall be in form and substance reasonably acceptable to the parties.
C. Exhibit C: Form of Ground Lease: Article Incorporation, Exhibits, and Definitions,
Section 1.5, Article V Rent and Security Deposit, Sections 5.1 and 5.4 of Exhibit C:
Form of Ground Lease with certain exhibits #wmto are hereby amended and shall
now read as follows:
Section 1.5 Defined Terms:
(w) "Open for Business':_ means that applicable Major Project Component is open
for business to the general public, as evidenced by the issuance of a temporary
Certificate of Occupancy for such Major Project Component: provided, however,
that (a) the Retail/Parking Space shall be deemed "Open for Business" when at
least sixty percent (60%) of the net rentable area thereof is occupied by the
Space Tenants and is open for business to the general public, as evidenced by
the issuance of any applicable temporary Certificate(s) of Occupancy, and (b) for
Occupancy..
Section 5.1 Construction Rent and Phased Development Rent
(a) Construction Rent: Commencing on the first (1S) day of the first full month
following the Possession Date, and ending on the day preceding the earlier of (a)
the Occupancy Date of the last Project Component completed if such is a hotel,
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or (b) the Promised Completion Date for all Project Components completed on a
component by component basis, Lessee shall pay to Lessor Construction Rent in
the amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000) per annum
payable in advance on the first day of each month in equal monthly installments
of EIGHTY-THREE THOUSAND. THREE HUNDRED AND THIRTY-THREE
($83,333.33) (the "Corstimbon Renf').
Phased Development Rent. Commencing on the first (1St) day of the month after
the first month in which the first Project Component is Open for Business and for
the day preceding the earlier of (a) the Occupancy Date of the last Proiect
Component completed if such is a hotel, or (b) the Promised Completion Date for
all Proiect: Components completed on a component by component basis, Lessee
payable in advance on the first day of each month in equal monthly installments
("Phased Development Rent") as follow:
(i) Marina Component: Fifty -One Thousand Dollars ($51,000) per annum, being
Four Thousand. Two Hundred and Fiftv Dollars ($4250) per month; and
(ii) Retail/Parking Component: Two Hundred and Twenty -Seven Thoi
Dollars ($18,917) per month; and
(iii) Hotel B: One Hundred and Seventy
annum.
being Fourteen Thousand Six Hundred and Sixty -Seven Dollars ($14,667) per
(iv) Hotel A: Five Hundred and Forty -Six Thousand Dollars ($546,000) per annum,
being Forty -Five Thousand, Five Hundred Dollars ($45,500) per month,
Section 5.4 Ground Lease Security Deposit
(b) Amount Simultaneously upon the execution hereof for the Marina Component,
Lessee shall either (i) deliver to the City the amount of $2,000,000 one million
fifty-one thousand dollars ($1,051,000) (the "Cash Deposit") or ii) provide to
Lessor, at Lessee's sole cost and expense, the LOC Deposit, which shall be in
the amount of $2,000,000 one million fifty-one thousand dollars ($1,051,000) (the
Cash Deposit or the LOC Deposit, as applicable, shall hereinafter be referred to
as the "Security Deposit"). Upon commencement of construction of any of the
remaining Proiect Components (Retail/Parking, Hotel A, "and/or Hotel B), the
Lessee shall increase the `Security Deposit and deliver to the City any additional
amount(s) on a component by component basis as follow:
(i) Retail/Parking Component: Two Hundred and Twenty -Seven Thousand Dollars
($227,000); and
(ii) Hotel B (4 -Star) Component: One Hundred and Seventy -Six Thousand Dollars
($176,000); and
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(iii) Hotel A (5 -Star) Component: Five Hundred and Forty -Six Thousand Dollars
($546;000).
Notwithstanding the foregoing, Lessee shall be permitted to utilize any
combination of Cash Deposit or LOC Deposit so long as the Security Deposit
equals $2,009,000 in the aggFegate the amounts required above at such times as
required above. Any LOC Deposit held by Lessor or Cash Deposit held by
Escrow Agent (as defined in that certain Agreement to Enter into Ground Lease
between the Parties having an effective date of January 1, 2003) as security
under such Agreement to Enter into Ground Lease, shall be credited toward such
$2,000,000 required Security Deposit amount(s) as applicable (and Lessee shall
authorize Escrow Agent to transfer such Cash Deposit, if applicable, directly to
Lessor as part of the Security Deposit upon the mutual execution and delivery of
this Lease).
Exhibit C: Form of Ground Lease: Exhibit I: Permitted Title Exceptions: Needs tD be
updated by IF
bit C: Form of Ground Lease: Exhibit K: List of
Walled by Flagstone so that there is only one list
Exhibit C: Form of Ground Lease: Exhibit P: Organizational Documents: To be updated
by Flapstior�e
Exhibit C:Form of Ground Lease: Mbit Q: Provisions Not Applicable to Private
Lender. This Exhibit Q is hereby deleted as no longer applicable.
Certificate of Occupancy.
Exhibit C: Form of Ground Lease: DevelopnwAand Construction Rider. The
Development and Construction Rider shall be amended to reflect a sixty (60)
month construction period and to reflect construction on a component by
component basis, with such changes of definitions as are necessary, including
but not limited to the definitions of Promised Commencement Date and Promised
Completion Date.
the Ground
Kecution of the
related necessary operative provisions of the Agreement to Enter which shall
remain in olace andWonthe Possession Date shall become a continuinq Exhibit
U to the Ground Lease until such time as all construction has been completed on
Exhibit U shall also contain the reauirements of Resolution No. 09- _ which
authorizes the City Manager after consultation with the City Attorney to negotiate
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in accordance with, the voter Referendum: (c) would result in no revenue
reduction to the Citv: and "(d) would not extend the construction period oast the
sixty (60) month period.
4.Ratificationsand Acknowledamwits. City and Flagstone hereby ratify and confirm
the Agreement to Enter (and all exhibits and attachments thereto including but
not limited to the form of the Ground Lease) and acknowledge and agree that the
Agreement to Enter as previously amended by the First Amendment to
Agreement to Enter, the Second Amendment to Agreement to Enter, and the
Third Amendment to Agreement to Enter remains in full force and effect without
modification, except as specifically set forth in this Fourth Amendment to
Agreement to Enter, and without default by either party. City and Flagstone
further confirm, acknowledge, and agree that this Fourth Amendment also
amends the terms and conditions of the Ground Lease and the exhibits and
attachments thereto as indicated herein.
5.1-leadings. The captions and headings contained in this Fourth
Amendment to Agreement to Enter are for convenience of reference only and
shall not affect the construction of interpretation of this Fourth Amendment to
Agreement to Enter.
6.AmerxkTw s. No amendment of any provision of this Fourth
Amendment to Agreement to Enter or the Agreement to Enter shall in any event
be effective unless it is in writing and signed by party against whom enforcement
is sought.
7.Severability. Any provision of this Fourth Amendment to Agreement to
Enter which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision beyond such extent or in any other jurisdiction. It
is the intention of the parties to this Fourth Amendment to Agreement to Enter
that if any provision of this Fourth Amendment to Agreement to Enter is capable
of two constructions, one of which would render the provision void and the other
of which would render the provision valid, the provision shall have the meaning
which renders it valid.
8.13inding Effect; Assignmenis. This Fourth Amendment to Agreement to
Enter shall be binding upon and inure to the benefit of the City and Flagstone and their
respective successors and permitted assigns.
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9.Goveming Law. This Fourth Amendment to Agreement to Enter shall be governed by,
and construed in accordance with, the laws of the State of Florida, without application of
its conflict of law principles.
10.Entire Agreement The Agreement to Enter and the Ground Lease, as amended by
the First Amendment to Agreement to Enter, the Second Amendment to Agreement to
Enter, the Third Amendment to Agreement to Enter, and this Fourth Amendment to
Agreement to Enter, together with all easement agreements, license agreements, the
Ground Lease, and the Subordination, Non -Disturbance and Attornment Agreements
executed in connection therewith or otherwise contemplated thereby, embody and
constitute the entire understanding between City and Flagstone, and all prior or
contemporaneous agreements, understandings, representations, and statements, oral
or written, with respect thereto are merged therein.
11.Counlerparls. This Fourth Amendment to Agreement to Enter may be
executed in any number of counterparts, all of which taken together shall constitute one
and the same instrument and any party hereto may execute this Fourth Amendment to
Agreement to Enter by signing any such counterpart.
IN WITNESS WHEREOF, City and Flagstone have executed this Third Amendment to
Agreement to Enter into Ground Lease as of the date set forth above.
ATTEST: THE CITY OF MIAMI, a municipal
corporation of the State of Florida
By:
Priscilla A. Thompson, CMC
City Clerk
APPROVED AS TO INSURANCE
REQUIREMENTS:
By:
Lee Ann Brehm
Risk Management Administrator
Bv:
Pedro G. Hernandez
City Manager
APPROVED AS TO FORM AND
CORRECTNESS:
By:
Julie O. Bru
City Attorney
FLAGSTONE ISLAND GARDENS LLC, a
Delaware limited liability company
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By: FLAGSTONE DEVELOPMENT
CORPORATION,
a Delaware corporation,
Its Managing Member
By:
Mehmet Bayraktar
President
Witness: _
Print Name:
Address:
Witness: _
Print Name:
Address:
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this day of
2009, by Mehmet Bayraktar, President of Flagstone Development
Corporation, a Delaware corporation, as Managing Member of Flagstone Island
Gardens, LLC, a Delaware limited liability company, on behalf of the companies.
Personally Known
Produced Identification
Type of Identification
Produced
or
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COMPOSITE EXHIBIT A
Agreement to Enter Ground Into Ground Lease, First Amendment, Second Amendment, and
Third Amendment
To be provided upon document execution
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COMPOSITE EXHIBIT B
CITY COMMISSION RESOLUTION NO. ADOPTED
To be provided upon document execution
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COMPOSITE EXHIBIT C
FLAGSTONE CORPORATE RESOLUTION
To be provided upon document
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