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HomeMy WebLinkAboutCRA-R-06-0021 Back-upOD c4. r. FILLING STATION LOFTS/THE INTREPID REAL ESTATE COMPANY REQUESTED IMMEDIATE GRANT - $846,300.00 1. Deep Injection Storm Water Wells — DERM required $ 70,000.00 2. Sidewalks and Utilities Site Work $383,000.00 3. Electric Duct Bank — FPL required $245,000.00 4. Temporary Power Pole Relocation— FPL & OSHA required $ 36,000.00 5. NE Miami Place Street Improvements — City Public Works required $100,000.00 6. Removal of Bell South Lines from FPL Poles -Bell South required $ 3,300.00 TOTAL: $846,300.00 %J� ✓f - -. JTII Y June 5, 2006 Mr. Frank K. Rollason, Executive Director Omni Redevelopment District CRA 49 NW 5v' Street, Suite 100 Miami, Florida 33128 RE: REQUEST FOR GRANT FOR FILLING STATION LOFTS PROJECT Dear Mr. Rollason: Request for Grant: Please accept this letter as an official request for an immediate grant from the Omni Redevelopment District Community Redevelopment Agency in an amount not to exceed $850,000.00 to Filling Station Lofts, LLC, for the purpose of providing financial assistance necessary to construct required infrastructure improvements to enable the Filling Station Lofts project to proceed. The Filling Station, on 1657 N Miami Avenue, is not only necessary for the execution of the project, clearly in line with the CRA's Mission but more importantly represents a tremendous opportunity for the CRA to truly provide the key push that allows a strategic `cornerstone' project in a long abandoned and impoverished neighborhood with the appropriate additional resources required to create a critical mass of high quality development and potentially 'tip' the neighborhood in the correct direction. I. Neighborhood: It's got a long way to go. As Intrepid our only business directive in Miami has become the enhancement of the area immediately West of the PAC and currently focused on 17t' street between North Miami Ave and NE 2nd Ave. Currently that neighborhood considering Omni West is without residents, has numerous abandoned structures, filthy motels that serve as centers for drug abuse, homeless assistance shelters, garbage, prostitution and empty lots. It is also not without numerous press articles heralding the future development to come but is wholly without the physical manifestation of such efforts. As a fact, east of 14th street and West of Northeast 2rd Ave; the only serious value adding risk capital invested into the neighborhood was done by this development group in the creation of an industrial Loft building called Parc Lofts (www.narclofts.com). Marketplace, yesterday and today: Miami Dade has become pop culture national and international media darling; thanks in part to the intelligent redevelopment of South Beach it has increased not only tourism dollars but it has brought the international glamour to our City in a way that has never been experienced nor was expected. Miami has grown ferociously and experienced unprecedented levels of capital infusion. This massive growth market left Miami Beach with a complete renaissance but the City of Miami; specifically it's Urban Core, only received private sector redevelopment dollars at what is now the tail end of the red hot real estate market cycle that was fueling the creation of place in south beach. Today the Media is focused on Miami has a overheated real estate market that is due for a strong correction. That correction has already begun. The irrational exuberance and red hot dollars are probably gone for a long while. As cities across the United States are realizing, continued suburban sprawl does not make a great city. Many cities realize the enormous asset a well-defined urban core can be to a metropolitan area from the county level. Most cities derive its character and brand from its area of high density. It attracts businesses and hence jobs, tourism and other positive externalities. Miami's downtown is a large canvas waiting to be painted. It glory days several decades in it's past is now giving birth to an important Performing Arts Center (PAC'). Surrounding the PAC sits our neighborhood with the only new investment going to the waterfront and Biscayne Blvd. There are still large clusters of drug dealers, prostitutes and homeless. The area continues blighted. The free markets through the massive real estate bull market, with 12+ years of sustained growth under its belt, was not enough to redevelop the area. We are entering into a new era with the potential for limited risk averse private sector dollars, if the City of Miami and Miami Dade County wishes to deliver on the promise to it's tax payers; fostering the correct environment for the growth of a 24 hour downtown it must form a true public private partnership going forward. Public & Private Partnership: The proof is in the pudding. The dollars an entrepreneur can garner on the open market for non waterfront urban infill and redevelopment in Miami's downtown area specifically; Park West, Omni West and Southeast Over town is not sufficient to compensate for the risk or perhaps with today's costs, to provide any return at all. The government has always been instrumental in creating the correct set of factors to cultivate an environment that can spark redevelopment in strategic yet troubled areas; it must now focus it's attention so that entrepreneurs can play P on a level playing field and be incentivized to direct their dollars on the areas as determined by the City and the CRA to be of strategic value. If not, for the foreseeable future, high quality capital will be focused on the waterfront, Coral Gables and other specialized zones already containing sufficient levels of amenities and critical mass. As it stands today; entrepreneurs in the Omni CRA receive few to no advantages over investors in areas such as Brickell or Coral Gables. They do, on the other hand, have numerous disadvantages. Our Experience in the Area: In 2001-2002 my company became extremely interested in purchasing land in and around the PAC. For a number of reasons we decided to purchase on 17th street near North Miami Avenue. The local development community said that we were crazy and that nobody will ever live or work in that area; at least not for a long time. We proceeded to develop a project called Parc Lofts, flying the face of convention and the market, delivering an untested product in a terrible neighborhood, hoping to attract those residents in Miami that wish to live in a new type of dwelling unit: the true industrial loft. We proceeded to experience a tremendously difficult process, which was convincing people to purchase units in the neighborhood. They purchased lofts for two reasons: a. unique product; b. for the dream of the future of the area. Today Parc Lofts stands as the ONLY example of new construction authentic loft living that grants a user with an industrial living space similar to those found in: NYC, San Diego, Chicago, Buenos Aires and Barcelona etc and now in South Florida. It is a unique project. As it stands today; $25MM dollars later it stands alone in an ocean of blight with the PAC months from opening it's doors to the public. Furthermore, as the developer, the project was not profitable from a financial perspective but was a great learning experience, and something to be proud of. We owned several other parcels with some partners and decided that there must be a profitable way to develop the area. We began the Filling Station (www.fillingstationmiami.com); an environmentally polluted site which we cleaned up successfully, with the motivation of being able to create a critical mass of unique and funky loft buildings, laying the seeds for a new alternative neighborhood in Miami giving credibility to the PAC and downtown. The Filling Station has it stands today is a project that received great media attention as it broke with convention not only in location, product type but also in terms of marketing and pricing. It was seen as expensive for the neighborhood. Those prices today do not even cover our construction cost without incurring the costs of bonds, general contractors, the cost of land, soft costs like architects, engineers and the like. The area has a ceiling in terms of the maximum price customer/buyers will pay for product till there is a critical mass and a true sense of place. It is the Chicken and the Egg. As it stands today; as a developer, we are not in any way better off putting our efforts and resources into the CRA areas versus Coral Gables or Miami Beach but the prospects for profit are much higher in Coral Gables and Miami Beach. The economics don't work; Uncle Sam must level of playing field temporarily to help an extremely strategic area gain some traction. Parc Lofts was the first bold and creative small step but is currently at risk of becoming another 'Omni Mall' failure story. A dream that would not work. Parc Lofts and the area are at a crucial tipping point where it could 'tip' towards rapid improvement or another decade of neglect and lost dreams. Our Vision of the Neighborhood: We imagine a mid rise neighborhood of great electricity and life. An eclectic heterogeneous mixture of cultures, bohemians, creative individuals and firms, entrepreneurs, executives, musicians, studios, light manufacturing of crafts, the young and old yet young at heart. A true creative urban melting pot. A neighborhood with a character all of it's own; not represented anywhere in Miami. An area that celebrates urban living in Florida at it's best. II, Why the Filling Station is Extremely Important for the Future of the Area: 1. 17`h street has become important due to Bayview Marketplace, Parc Lofts and the waterfront development on street. It stands a chance of creating a true complete East — West pedestrian corridor and serve as an example of successful high quality urban inflll in Miami. The area behind the PAC is extremely strategic for not only the whole downtown but for the county. The area West of Biscayne Blvd rapidly requires a critical mass of residents to lend credibility to the product and neighborhood; to give people hope. Currently Parc Lofts is the only project in the area and could stand to be the only project for a long time. Filling Station is the next step that will validate the dream, create a secondary source of tax revenues for the city and give hope to other entrepreneurs that there is a future in the area. The Filling Station, as a semi high profile project, represents the follow up on what should not become a one hit wonder (Parc Lofts). 2. The Filling Station will be featured prominently in the Media and already has been mentioned in the Wall Street Journal bringing tangible evidence of progress to the PAC West quarters. It should be success story not a story of the failure of the system to promote small and medium sized efforts to revitalize neighborhoods. 3. The Filling Station incorporated elements of New Urbanism and has lively retail spaces and sidewalk life oriented design elements, 4. If we can get Filling Station built, our company can continue to expand our development of the area; not via a large Disney land style mega project but building -by -building moving in an aggressive yet organic manner. Without the Filling Station our program will be over. 5. Our Buyers/End User. Our buyers tend to be members of what is referred to in numerous books as the creative class. They have traditionally and historically been some of the most instrumental and proactive people in cleaning up areas 2 rapidly serving as an initial base of customer for local retailers, mom and pop business and a deterrent to crime. For the most part, other than a recent and exciting resurgence of art galleries in Wynwood, this group has agglomerated in Miami Beach and North Miami. The high-rise mega projects do not appeal to them at any income level. Why do We Need the Grant and What is it For?: Essentially we believe that their should be a comprehensive program for the first series of developers who are willing to invest in high quality and sustainable projects in the area North of 13`h, South of 17th street and West of North East 2nd Ave and to North Miami Avenue. That program should provide sufficient economic assistance such that capital is attracted to the neighborhood. Once a sufficient number of projects are complete the program can be closed as growth can occur organically from the core created by the program. Parc Lofts and the Filling Station represent the first two large high quality efforts in the area meant to attract people in a sustainable manner to the area and create true infrastructure for the future. Unfortunately, the Filling Station cannot wait for a comprehensive program. Due to the tremendous run up of construction costs nationally and internationally the projects economics have become dire and the project is on the verge of cancellation. The developer, myself, has forgone the majority of our share in the profits to maintain the financing of the project with the hopes of finding a solution. Internally we created a program that would allow the project to continue but has one of it's components it requires a grant from the CRA to offset costs associated with the infrastructure that does not exist in the area and other site costs which benefit the public as a whole. The complete grant we are asking for ($2,605,962.00) is essentially to keep the project alive but more importantly to take a key step in using the resources and charter of the CRA to assist in Tipping a tremendous project for the neighborhood and for the future of Miami's downtown in the right direction. Parc Lofts and Filling Station broke all of the market rules bravely entering the neighborhood and is attempting to deliver on part of the dream of the PAC; the CRA is now a crucial component of the program. Below is an itemized list of items that represent the 'Use of CRA Funds': A. Utilities and Other Such Neighborhood Improvement. It has historically been the job of government to provide the following, moreover for emerging or blighted area with hopes of redevelopment: 1. Sidewalks and utilities connections $382,841 2. Drainage wells $69,000 3. FPL duct bank $286,470 4. Bellsouth $113,283 5. Streetscape $129,000 6. Street pavers $18,500 7. Street repair $109,465.40 Unless you have a project in the $100MM+ dollar range (mega project) small and medium sized high quality projects, that add character and substance to cities cannot afford to pay for these improvements. B. EPA Environmental Clean Up: Removal and clean up of contaminated underground tanks $71,383 C. Neighborhood Redevelopment Pioneer Grant $1,426,000 1. To include Building permit $130,000 2. Dade County impact fees $133,000 3. WASA impact fees $113,000 4. Insurances $800,000 5. and material price escalation $250,000 Sincerely, 3