HomeMy WebLinkAboutCRA-R-09-0019 Backup•
•
•
EaGreenbergTraurig
Memorandum
TO: Mr. James Villacorta, Executive Director
Community Redevelopment Agency
FROM: Lucia A. Dougherty, Esq.
Mario J. Garcia -Serra. Esq.
DATE: October 14, 2008
RE: 9th Street Mali Improvements and Madison Condominium
Background Information
On September 2, 2005, the CRA entered into a "Covenant Running With the Land
Agreement", (the "Agreement"), regarding the apartment building located at 801 North Miami
Avenue presently known as the Madison Condominium, (the "Property"), which memorialized
the obligations of each party as a result of the sale of the CRA's interest in the Property to the
then Lessee, Bayview Towers Associates, LLC (the "Developer"). The Agreement required the
Developer to construct certain improvements for the 9th Street Mall area which, at the time, was
in very poor condition and subject to considerable vandalism and vagrancy. The Agreement
required the Developer to spend at least $300,000 on the 9th Street Mall improvements. In the
event that the apartment building was converted to the condominium form of ownership, the
Developer was also obligated to pay the CRA 7% of the gross purchase price, as defined in the
Agreement, of each unit with a minimum guaranteed payment of $2,100,000. In reality, the
Developer spent nearly $1.2 million so as to construct the 9th Street Mall improvements
according to the specifications and preferences of the CRA. While the Developer could have
opted to have only done superficial improvements to the 9th Street Mall at a lower cost, the
Developer agreed to all of the CRA's preferences which resulted in a greatly improved public
space. The CRA has been paid over $3,600,000 as a result of its 7% share of each condominium
unit sale and the $500,000 paid upon execution of the Covenant and is expecting to earn
approximately an additional $2,000,000 as a result of future sales.
Additionally, during the course of constructing the 9th Street Mall improvements, it was
realized that part of the 9th Street Mall was actually Iocated upon land owned by the Developer
on both sides of 9th Street. The Developer has indicated that it is willing to convey this land,
which is approximately 25,000 square feet in total area with an estimated value of $1,000,000, to
the City in exchange for partial reimbursement of the monies expended for the 9th Street Mall
improvements.
Since the Developer spent considerably more money than was originally contemplated
for the 9th Street Mall improvements and is willing to convey land to the City for the 9th Street
MIA 180245182v2 November 19, 2008
•
•
•
To: Mr. Jim Villacorta, Executive Director
Community Redevelopment Agency
From: Lucia A. Dougherty, Esq.
Mario J. Garcia -Serra, Esq.
Date: October 14, 2008
Re: 9th Street Mall Improvements and Madison Condominium
Page 2
Mall, and the CRA has collected considerably more than what was originally contemplated as a
result of its 7% share of each sale, the Developer and CRA staff have discussed and agreed upon
certain proposed amendments to the Agreement so as to facilitate the following goals:
• Permit the Developer to continue selling the condominium units at a competitive price
without having to reduce prices to such an extent that it affects the appraised value of
already sold units and nearby properties.
• Reimburse the Developer for a portion of the cost of the 9th Street Mall improvements.
• The conveyance of the 9th Street Mall land that is currently owned by the Developer to
the City.
Proposed Revisions to the Agreement
In order to achieve the above stated goals, the following revisions to the Agreement are
proposed:
Section 2.4 Budget. Simultaneously with the submission of the
Plans to the Executive Director, Bayview shall submit to the
Executive Director for its review and approval, a detailed budget
reflecting all hard costs anticipated to be incurred by Bayview in
connection with the completion of the Mall Improvements in
accordance with the Plans (the "Budget"). The Budget will reflect
that Bayview anticipates expending not less than Three Hundred
Thousand Dollars (S300,000) » and not more than Six
Hundred Thousand ($600,000) « in hard costs to complete the
Mall Improvements in accordance with the Plans. The CRA's
approval of the Budget shall be limited to confirming that the hard
costs for completing the Mall Improvements in accordance with
the Plans will not be less than Three Hundred Thousand Dollars
($300,000). Bayview shall provide to the Executive Director such
additional backup information as the Executive Director may
reasonably request to enable the Executive Director to analyze the
Budget. The Executive Director shall have twenty (20) business
days after receipt of the Budget to approve same, which approval
shall not be unreasonably withheld. If the Executive Directors fails
to respond in writing within twenty (20) business days after
submission of the Budget, same shall be deemed approved. In the
event of disapproval, the Executive Director shall specify the
MIA 180245182v2 November 19, 2008
•
•
•
To: Mr. Jim Villacorta, Executive Director
Community Redevelopment Agency
From: Lucia A. Dougherty, Esq.
Mario J. Garcia -Serra, Esq.
Date: October 14, 2008
Re: 9th Street Mall Improvements and Madison Condominium
Page 3
specific reasons for such disapproval. In the event of disapproval,
the Executive Director shall specify the specific reasons for such
disapproval In the event of disapproval, Bayview shall revise the
Budget to address the comments and concerns of the Executive
Director and resubmit a revised Budget to the Executive Director
in accordance with the procedure outlined above for the original
submission until same is approved by the Executive Director. The
Executive Director and Bayview shall in good faith attempt to
resolve any disputes regarding the Budget.
Section 2.11 Expenditure for Mall Improvements. Bayview
acknowledges that Bayview is obligated to expend not less than
Three Hundred Thousand Dollars ($300,000) » and not more
than Six Hundred Thousand Dollars ($600,000) « in hard
construction costs to complete the Mall Improvements in
accordance with the Final Plans. To the extent that Bayview has
expended less than Three Hundred Thousand Dollars ($300,000) to
complete the Mall Improvements, Bayview shall be obligated to
pay to the CRA the difference between the amount actually
expended by Bayview as confirmed by the Executive Director and
the Consulting Engineer and Three Hundred Thousand Dollars
($300,000) (the "Short Fall") within thirty (30) days written
demand by the CRA. If the Short Fall is not paid within thirty (30)
days of written demand from the CRA, then in such event the CRA
shall be entitled to draw the Letter of Credit in an amount equal to
the Short Fall, as its sole remedy. »In the event that Bayview
expends more than Six Hundred Thousand Dollars ($600,000)
to complete the Mall Improvements, the CRA shall be
obligated to pay Bayview the difference between the amount
actually expended by Bayview as confirmed by the Executive
Director and the Consulting Engineer and Six Hundred
Thousand Dollars ($600,000) (the "Excess Amount") by
providing a credit equivalent to one-half of the Excess Amount
against the next portions of the Deferred Purchase Price which,
pursuant to Section 3.1 of this Covenant, are due to the CRA
upon the closing of each Unit, and one-half of the Excess
Amount by wire transfer of good U.S. funds within 30 days
from the date hereof.
***
MIA 180245782v2 November i9, 2008
•
•
To: Mr. Jim Villacorta, Executive Director
Community Redevelopment Agency
From: Lucia A. Dougherty, Esq.
Mario J. Garcia -Serra, Esq.
Date: October 14, 2008
Re: 9th Street MaII Improvements and Madison Condominium
Page 4
+ Analysis
Section 2.16 Conveyance of Land to City for 9th Street Mall.
The land owned by Bayview and affiliated entities which is
part of the 9th Street Mall and more particularly described in
the attached Exhibit "E" shall be conveyed to the City of
Miami upon the transfer of the first half of the Excess Amount
required by Section 2.11.
***
Section 3.1 Payment of Deferred Purchase Price.
Notwithstanding anything contained in the Lease to the contrary,
and notwithstanding the termination of the Lease subsequent to the
conveyance of the Property to Bayview, in the event that Bayview
converts all or a portion of the Property to condominium and sells
all or any portion of the 355 existing residential apartments as
residential, or commercial condominium units (each a "Unit"),
Bayview agrees to pay to the CRA seven percent (7%) of the Gross
Purchase Price, as defined hereafter, paid by a purchaser for each
Unit (the "Deferred Purchase Price"), which Deferred Purchase
Price shall be due and payable to the CRA simultaneously with the
closing of each Unit » except as provided below. «. The term
"Gross Purchase Price" shall mean the total purchase price paid by
the purchaser of such Unit including the costs for any upgrades
included in the purchase contract.
The Deferred Purchase Price shall not be payable in
connection with the sale or transfer of Units under the following
circumstances: (i) the issuance of a certificate of title in connection
with the foreclosure, by the mortgagee of the Property and/or the
mortgagee of the tenant's leasehold estate in the Property, or (ii)
the execution and delivery of a deed in lieu of foreclosure to the
mortgagee of the Property and/or the tenant's leasehold estate in
the Property, provided however, the obligation of the Bayview or
an successor to pay the Deferred Purchase Price shall be applicable
to the subsequent sale of Units after the issuance of a certificate of
title or deed in lieu of foreclosure, » or (iii) in the event that a
credit is due to Bayview pursuant to Section 2.11 of this
Covenant.
MIA 180245182v2 November 19, 2008
•
•
To: Mr. Jim Villacorta, Executive Director
Community Redevelopment Agency
From: Lucia A. Dougherty, Esq.
Mario J. Garcia -Serra. Esq.
Date: October 14, 2008
Re: 9th Street Mall Improvements and Madison Condominium
Page 5
Each of the proposed revisions is intended to help realize one of the goals stated above.
The total costs of the 9th Street Mall improvements will be split in half between the Developer
and the CRA with the Developer still paying more than double of its initial commitment and the
CRA's share of the costs being provided one-half in cash and one-half as a credit against
potential future monies owed to the CRA. The CRA' s foregoing of its 7% share of the Deferred
Purchase Price in order to reimburse half of the 9th Street Mall improvement costs will have the
added benefit of relieving the Developer of the pressure to decrease the sales price of units in
order to generate income. In exchange for this reimbursement, the City will be conveyed a
sizeable amount of land which is necessary to ensure public ownership of the entire 9th Street
Mall. The proposed revisions to the Agreement will adequately compensate the Developer for
the excess monies which were spent to properly complete the 9th Street Mall improvements,
without having to artificially drive down unit sale prices any further, and permit the conveyance
of the remaining privately owned sections of the 9th Street Mall to the City for public use and
enj oyment.
Attached to this memo for your review is an itemized summary of the construction costs
for the 9th Street Mall improvements as well as a breakdown of the monies earned to date and
projected for the future for the CRA as a result of its 7% share of each unit sale and sketches and
legal descriptions of the land proposed to be conveyed to the City for the 9th Street Mall.
MIA 180245182v2 November 19, 2008