HomeMy WebLinkAboutSubmittal-Mayor Regalado to Commission regarding FlagstoneLitgof4
TOMAS P. REGALADO
MAYOR
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Date: January 27, 2010
To: The Honorable Members of the City Commission
From: Mayor Tomas Regalado
RE: Flagstone
3500 PAN AMERICAN DRIVE
MIAMI, FLORIDA 33133
(305) 250-5300
FAX (305) 854-4001
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As you know, Flagstone in good faith released $501,000 to the City to fulfill their Consideration
of Use payment obligations through January 30, 2010. Since that time, my staff and I have had
numerous conversations with Flagstone regarding terms for a Fourth Amendment to the
Agreement to Enter that would grant Flagstone an extension to commence construction on two of
the major components of the Islands Gardens Project in exchange for Consideration of Use
payments to the City during the extension.
After weeks of negotiation and due diligence, I have asked Flagstone to present the attached
letter offer to the city which embodies terms for a Fourth Amendment that I believe are fair and
reasonable to both the City and Flagstone. In light of the current economic environment and the
realities and expense of pursuing alternative uses for the property at this time, I believe this
proposal to be in the best interest of the City. The proposal affords Flagstone with a realistic
extension of time to begin construction on two major components of the Project (the Marina and
Retail Parking Components), while at the same time providing the City with an average
Consideration of Use Payment in excess of $500,000 annually. It is important to note that in an
effort to ensure the Project is financeable and remains attractive to lenders and investors as the
economy recovers, which is of great importance to both the City and Flagstone, the
Consideration Rent payments to the City once Flagstone begins construction of two major
components of the Project.
The letter proposal is attached for your review. The following is a summary of its major
provisions:
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• Flagstone will have an extension of 36 months commencing on February 1, 2010 to begin
construction on the Marina and Retail/Parking components of the Project.
• During the extension, Flagstone will pay "Consideration of Use" payments to the City on
a monthly basis as follows:
a. $300,000 during the first 12 months, $25,000 per month;
b. $500,000 during the next 12 months, $ 41,666.66 per month;
c. $750,000 during the last 12 months, $62,500 per month.
• After 36 months, or upon Flagstone starting both the Marina and Retail/Parking
components (whichever occurs first), Flagstone will pay the City Construction Rent at an
annual rate of $1,000,000 per year.
• The total amount of Consideration of Use payments made to the City during the
extension period will be credited against Construction Rent on a monthly basis at a rate
of $30,000 per month.
• Flagstone agrees to not require any notice of default in the event of non-payment of the
"Consideration of Use" payment.
• Flagstone also agrees to waive its defenses as to non-payment against the City and to turn
all permits and plans over to the City immediately.
• The City agrees to support the financing activities and development activities of
Flagstone.
• Flagstone agrees to cooperate with the City's due diligence efforts with regard to
understanding the financing and development activities undertaken by Flagstone.
It is my recommendation that we move forward and accept this proposal from Flagstone. If the
Commission concurs, I recommend that the Fourth Amendment be brought to the Commission at
its meeting in February for approval.
Cc: Pete Hernandez, City Manager
Julie Bru, City Attorney
Priscilla Thompson, City Clerk
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