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HomeMy WebLinkAboutCC 2012-06-19 MinutesCity of Miami City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com Di • -sash. I° r • IN O9P I9 1i: Meeting Minutes Tuesday, June 19, 2012 9:00 AM SPECIAL MEETING City Hall Commission Chambers City Commission Tomas Regalado, Mayor Francis Suarez, Chairman Marc David Sarnoff, Vice -Chairman Wifredo (Willy) Gort, Commissioner District One Frank Carollo, Commissioner District Three Michelle Spence -Jones, Commissioner District Five Johnny Martinez, City Manager Julie O. Bru, City Attorney Priscilla A. Thompson, City Clerk City Commission Meeting Minutes June 19, 2012 9:00 A.M. INVOCATION AND PLEDGE OF ALLEGIANCE Present: Commissioner Gort, Vice Chair Sarnoff, Chair Suarez and Commissioner Spence -Jones Absent: Commissioner Carollo On the 19th day of June 2012, the City Commission of the City ofMiami, Florida, met at its regular meeting place in City Hall, 3500 Pan American Drive, Miami, Florida, in special session. The Commission Meeting was called to order by Chair Suarez at 9:00 a.m., recessed at 9: 01 a.m., reconvened at 9: 05 a.m., and adjourned at 10:54 a.m. Note for the Record: Vice -Chair Sarnoff entered the Commission Chambers at 9: 02 a.m. during the recess, Commissioner Gort entered the Commissiom Chambers at 9: 04 a.m. during the recess and Commissioner Spence -Jones entered the Commission chambers at 9: 09 a.m. ALSO PRESENT: Julie O. Bru, City Attorney Johnny Martinez, P.E., City Manager Priscilla A. Thompson, CMC, City Clerk Chair Suarez: Good morning, ladies and gentlemen. As is our practice, when I'm here at least, we start at 9 o'clock on the dot, as was advertised to you all in deference to you all who are here. Pursuant to Section 2-33(i) or 33(1) -- I'm sorry, it's L -- of the City Code, I'd like to call a special Commission meeting on June 19, 2012, at 9 a.m., to discuss the future of Jungle Island. I will -- Mr. Mayor, how are you this morning? -- I guess recess the special meeting until we have a quorum. Andl believe that we should have at least two more members of the Commission that are here, one more coming, so we'll have very close to a full body. Thank you. Thank you for your patience. [Later... Chair Suarez: Madam Clerk, for special Commission meetings, do we still have to do the invocation and is it our practice to do the invocation and the --? Priscilla A. Thompson (City Clerk): That has been your practice. That has -- Chair Suarez: Okay. Ms. Thompson: -- been the norm. Chair Suarez: Thank you. Chair Suarez: Would you lead us in the prayer, and Vice Chair, would you do the pledge of allegiance? Thank you. Invocation and pledge of allegiance delivered. Chair Suarez: Madam Clerk, I kind of liked that. I think we should make people hold hands throughout Commission meetings the whole time, from start to finish. I think that would create a Priscilla A. Thompson (City Clerk): Positive -- Chair Suarez: -- an environment of collegiality and -- City ofMiami Page 2 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 S P.1 12-00661 Ms. Thompson: -- and a positive energy flow. Chair Suarez: And at least everybody will be bound to each other so nobody can walk away, go to the bathroom, you know, and a lot of things will happen that way, good things. DISCUSSION ITEM DISCUSSION REGARDING THE FUTURE OF JUNGLE ISLAND. 12-00661 Notice to the Public.pdf 12-00661-Submittal-Overview of Jungle Island.pdf DISCUSSED Chair Suarez: Okay. I just want to clarify that this is a special Commission meeting. The reason why I called this meeting is because this is a matter of great import to the City ofMiami. It's a large financial item. But -- andl appreciate the fact that it seems that there's many members of the public and from Jungle Island who are here, and I want to thank you for coming and expressing your concern about the decision that we have to make. However, this is -- just want to be clear -- not a public hearing, so we're not going to be taking testimony from each and every member who's here. What maybe we can do is have some general or one person who would represent the collective, you know, make a statement on your behalf that kind of summarizes the sentiment of all who are here. So as soon as we have -- I think we're missing one Commissioner, andl know there's one that may not be here, so as soon as we have the fourth Commissioner, we will get started. Thank you. Wonderful. I think we're ready to go. So without further ado -- first of all, I want to welcome Commissioner Spence -Jones. I want to introduce myself. I'm the Chairman of the City ofMiami Commission, Francis Suarez. To my right is the Vice Chairman of the City ofMiami Commission, Marc David Sarnoff. And to my left is the chairman emeritus of the City Commission, W fredo Willy'Gort. City Manager, Johnny Martinez, City Attorney, Julie Bru, and City Clerk, Priscilla Thompson. The format, I'd like to give the Administration an opportunity to present some information and its recommendations. I'd like then to allow the members and the representatives of Jungle Island to make their presentation. And like I said before, I'll allow, you know, one member of the general, I guess -- it seems like most of the people here are employees -- from the employees, a representative to come up and voice their concerns and their questions. And then I'll bring it back to the Commission to hear from the Commission. And hopefully, my desire is that this will be wrapped up in a few hours and that there will be some sort of a plan of action going forward one way or the other. So without further ado, Mr. Manager, you're recognized for the record. Johnny Martinez (City Manager): I'd like to just -- Thank you, Mr. Chair. I'd like to make just a brief comment. Chair Suarez: Sure. Mr. Martinez: I want to thank the Commission for scheduling this special meeting. I know your time is super valuable and scarce, especially now during the summer. But the matter before you for discussion is regarding our super valuable tenant at Jungle Island. And the issues are, I believe, complicated. They're delicate and they're very important and worthy of this special meeting, so I just want to thank the Commission for the time to help come up with a plan of action to address this really important and delicate matter. Chair Suarez: Thank you. Mr. Martinez: And the Administration has a presentation we'd like to deliver to you. City ofMiami Page 3 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Chair Suarez: Sure, please. Ms. Bravo. Alice Bravo: Good morning. Alice Bravo, assistant City Manager. We're going to give a brief overview of the history of Jungle Island and the different agreements that they've entered into with the City, as well as some overviews of the terms that have been proposed by Jungle Island to us. So, first of all, in November of 1995, the relocation and expansion of Jungle Island was approved by the voters to bring them to the City ofMiami at Watson Island. In September of 1996, through a resolution, the City ofMiami Commission formally approved the lease and development agreement with Jungle Island for their relocation. In September of 1998, the City and Miami -Dade County entered into a joint participation agreement for a HUD (Department of Housing and Urban Development) Section 108 loan by which the City would assume 80 percent of responsibility for that loan. Now that loan was a loan for $25 million, of which, as I mentioned, the City is 80 percent responsible. The remaining balance of that loan at this time is $15.56 million, and we were here in November and the City Commission authorized us to participate in a refinancing of this loan for lower interest rates. So the 80 percent responsibility of the remaining balance is $12.448 million. At this time, both the County and the City's interest in this HUD loan are subordinated to that of a private lender that Jungle Island has received financing from. And the most recent status activity on this loan is that Jungle Island remitted payment to the City in the amount of $531,944 earlier this year as a result of interest payments due in February and the refinancing closing costs. However -- so as of this date, the -- Jungle Island is in good standing with the City with regard to any payments that are due. However, in conjunction with that February payment and the refinancing cost, there's still an outstanding balance of $169,130 that are owed to the County for the 20 percent portion of the interest and the closing costs. The first -- the lease and development agreement, as I mentioned previously, were executed September 1997. Jungle Island actually took possession October 1, 2000, and the facility opened in June of 2003. The lease term is for 45 years, with an end date of September 30, 2045, and there's a 15-year option so long as Jungle Island is not in default, taking them out to 2060. So the rent structure on this lease has a greater of minimum annual rent or percentage rent. Initially, the minimum rent was 200,000 a year. It escalated to 300, 000, 400, 000, and because they've hit the tenth year anniversary, the minimum rent is now $500, 000 a year. Based on the reported gross revenues of Jungle Island, which last year exceeded $15 million, their gross rent due now would be approximately $750,000 a year because the percentage rent is based on 5 percent of the gross revenues, and at such time that the revenues exceed $20 million, it would be 6 percent for revenues beyond 20 million. So this lease has been modified four times. The first two amendments in the year 2000 and 2002 were minor in nature, clarification of terms, clarification of legal descriptions. The third modification in October of 2008 actually provided for reinterpretation of the original lease to note that the additional improvements as defined included a theme hotel and related retail and entertainment. And this third amendment also clamed that the percentage rent to be paid on any of these additional improvements, i.e., the hotel and related retail entertainment, would be 1 percent of the gross revenue associated with those additional improvements. It also created an addition for -- a provision for sale and transfer terms, which stated that if Jungle Island were to be sold, transferred or subject of an IPO, the City would receive 3 percent of the net proceeds after payoff of outstanding debts and initial equity contributions. The fourth modification and the most recent one was June 24, 2009, and this provided for deferral of rents through April 1, 2009 through March 31, 2013. So the -- this rent becomes payable in the future. A significant portion of it -- all of it but $800,000 would be abated if the -- Jungle Island pays off the HUD loan by August 1, 2020. The amount of rent deferred to date, as of today, is two point -- roughly $2.5 million. So -- and part of the proposal that Jungle Island has presented to us provides for an exchange of debts owed to the City and the County in exchange for a profit participation in their business. So the debts that would be swapped, in essence, are the HUD loan payments made by the City and the County on behalf of Jungle Island for the past few years. Basically, the HUD payments were deferred for five years, between 2006 and 2011, with the first payment coming due earlier this year, February of 2012. So the gross amount that the City and the County have paid thus far is $17.2 million, of which City ofMiami Page 4 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 the City's share is 13.8 million. There's the deferred rent that I mentioned earlier, approximately 2.5 million. The City entered into a note with Jungle Island for a property tax payment and a loan originally worth $800, 000 that Jungle Island has been paying monthly through August 2013. The remaining balance is 250, 000. There's also a note payable to the County for past HUD payments in the amount of $4.7 million. There's another note payable to the County with regard to the interest rate associated with the HUD loan. That is an amount of $945, 000. And there is a future aviary payment to the County in the amount of $2 million that's due August 1, 2020. So these past amounts that have been paid by either the City or County or are due to the City and the County, the total for the City is 16.5 million. The total due to the County is 11.3 million. So these are the amounts that would, in essence, be swapped for a profit participation. And as part of that proposal, they would also pay off the HUD loan in full, of which the remaining balance is the 15.56 million. And just as a note, Jungle Island is obligated to make the next payment, which is approximately $2 million due in August, in a couple months. So as part of the refinancing of the HUD loan, this is the schedule of remaining payments. It basically alternates with an interest payment every February and an interest and principle payment every August that's roughly in that $2 million range, all the way through the final payment in August of 2019. So as part of Jungle Island's proposal, you can see here their existing footprint is approximately 18.6 acres. They are proposing to aggregate to that the Japanese Gardens, which is just over one acre; the boat ramp area that is City -owned property being operated by the Miami Parking Authority, roughly 4.6 acres; and the Miami Yacht Club area, which is approximately 7.7 acres. And they've also proposed that the lease term for this expanded area would be 99 years to allow for the financing of the improvements, i.e., the hotel, andl believe other attractions -- aquatic attractions and potentially a circus. So with that, given the status of the amounts owed to us and the performance we've seen with regard to a net profit participation, it's the City's recommendation that we not proceed with this proposal. Chair Suarez: Thank you. Anything further? Okay, Mr. May, would you like to make a presentation on behalf of Jungle Island? Brian May: Sure. Can I use this podium? Chair Suarez: Either one, wherever you feel more comfortable. Mr. May: Mr. Chairman, members of the Commission, Mr. Mayor, Mr. Manager. I want to first of all thank you for your time, andl want to thank you for calling this special meeting so that we could, you know, discuss a very important issue for the City ofMiami -- for the residents of the City ofMiami, for you, as the policymakers, and also for Jungle Island. I have with me today Bern Levine and Ron Krongold, who are the principals of Jungle Island, and they're here obviously due to their concern. We also have with us today a number of our employees, I will say 31 percent of which are employed -- are from the City ofMiami, actually live in the City of Miami, and they're here obviously to show their support as well, and we appreciate that. I'd like to start by saying that we're here today because Jungle Island is really at a crossroads and its future really is at stake. And I will give -- I want to give Bern Levine and Ron Krongold a lot of credit because they started discussions long before I was involved, back in February of 2011, really expressing their concerns with the state of Jungle Island and the ability of Jungle Island under its current conditions to move forward. And there primarily is one very significant problem in terms of the project being able to sustain itself in its current condition, and that is that, as you've seen from the Commission -- from the Administration's presentation, the project is -- it is mired in debt, all right. And as we look back, there are all kinds of reasons for that, first and foremost of which is that the project really hasn't had a full chance to really stabilize and mature as a project. They were kind of hit with the tail -end of the tourism downturn after September 11. The project started to get stabilized -- it was actually doing fairly well and was beginning to move forward and got hit by the great recession in 2008, which has kind of continued forward. And as we all know, at about this time last year, there was the tunnel construction project that basically opened up on the front door of the island. Despite all of that, City ofMiami Page 5 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Jungle Island has been able to modestly increase its revenues since its inception in 2003, has paid over $5 million in property taxes since that time, and has paid over three and a half million dollars in rent to the City. Now there have been tough times. There's been tough times making the HUD payment. There's been tough times making the property tax payments on the property. And sincerely, from the principals, I want to express on behalf of Jungle Island to the City their appreciation for the City being such a good partner. And actually, we want to extend that to the County as well because, you know, this really is a partnership. At times it's not a pleasant one for the City. We appreciate that. We understand that. But the City's been a good partner, and it's stepped up when it's needed to. And by the same token, I think Jungle Island has really, at every turn, tried to put their best foot forward. So, again, starting in February of 2011, they came to discuss really what is a major problem, which is the project is mired in debt; and in order for it to sustain itself, one very important thing has to happen, and the debt has to be either paid down or it has to be restructured or a combination thereof. And what we have brought forward in terms of a term sheet, which frankly is a product of negotiations that have taken place really primarily since February of this year with the Mayor and with the Administration, is we have a proposal to come forward; and in exchange for being able to further develop the property to include a hotel and for the ability to include within its footprint some additional property, not necessarily today, but when that -- when those properties could become available, as well as in exchange for this City and the County taking its past debts, which the Administration outlined for you, and converting them into a profit participation in the project, Parrot Jungle and Jungle Island would come forward with in excess of fifteen and a half million dollars, really close to about sixteen million dollars, to pay off the HUD loan going forward in full. And that really is kind of the main point and we would call it the attraction point, for lack of a -- sorry for the pun, but for an attraction point for what we're proposing, which is we would actually propose to take the taxpayers and the City ofMiami and the County off the hook for the HUD loan payments going forward by paying that loan off in total upon approval, and when I say approval, approval of a referendum. In addition to that, we would include within that initial payoff amount the outstanding balance on the property tax loan, which the Administration outlined earlier, which was originally $800, 000. Today it's about $249, 000. Included in that initial payment, we would pay off that property tax payment to the City. All other debts would be converted into a profit participation and that basically would have to be approved by the voters of the City ofMiami. Now we would be doing all this to make the project sustainable going forward, and there's one very important point in that. In order for it to be sustainable going forward, the project has to be further developed as more of a destination and less as a regional attraction. And by that we mean -- as you've seen from the Administration's presentation again, the Jungle does have the right to develop a hotel on the property, themed hotel with some ancillary retail and attractions, and they would certainly want to see that to fruition and actually make that happen. The only way that that will happen is if, first and foremost, we are able to restructure the debt, as I have -- as I've just outlined. The only way that additional capital will come into the project to pay off the HUD loan and to further develop and -- the project itself is if we can actually extend the lease term from 49 years to 99 years. The reason for that is the improvements that we're proposing, first and foremost, which would be a hotel. That is the only way that we can finance that endeavor is we need to have a longer lease term. So really, what we're asking you as Commissioners today is there are really two different ways, I guess, to look at how we move forward. One is, you know, a situation where there is something negative, which would be a default, which sets off a whole chain of reactions that, you know, both the City and its Administration would have to look at and Jungle Island and its primary lender, which is HSBC (Hongkong and Shanghai Banking Corporation), would have to look at. We would rather not really talk about those things. We would rather talk about a more positive way forward, which is what I just outlined, which is take a referendum to the public to extend the lease term, allow for further development, allow for a larger footprint, again, not necessarily today, but in the future, that if you look at the map on the screen will clearly show you the intent of which is we believe we could develop something that would be a destination by virtue of making the north side of the island something that's very cohesive. And we have tried to reach out to our friends at the yacht club. We really haven't had any detailed discussions from them but I want to give them some City ofMiami Page 6 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 comfort that we're not simply after their property. What we would be doing is trying to incorporate them into a larger plan for the north side of the island that would, in essence, help preserve them and help them be more sustainable going forward as part of a larger attraction and destination. And again, that is not something that we necessarily see as having to be done today, but can be done as we move forward. But the important thing is we would have the -- we would have to have the rights within the lease amendment to incorporate that property going forward at some point in time. So again, our proposal is to take the taxpayers off the hook, to try to get the City and the County out of the obligation of having to pay a HUD loan going forward if we cannot make those payments by paying it off in full, paying off the property tax loan, taking all other debts and converting them into profit participation, attracting additional capital to build that hotel and actually build out a greater destination on the north side of the island. I, again, want to say we really do appreciate the Administration's focus and attention on this since February. We have worked very hard. We actually had a term sheet, drafts going all the way back to March. We were really shooting for May 10 to try to get this on an agenda. It didn't work out. We understand that. But we're here trying to put our best foot forward, and we're trying to put our best foot forward to make the Jungle sustainable, which again, is build out an attraction on the north side of the island that provides a lot of benefits to the community and, if properly developed going forward, can provide a real destination for families coming here. And we also want to do this, obviously, for our employees because they have a lot at stake. You know, there's -- over 400 of them are full-time. Again, 31 percent of them live within the City ofMiami. There's about 30 percent of them that are in empowerment zone areas. And we think this is really important, and we appreciate your time. Andl know some other things may be said and there'll be a discussion, andl would like to have the ability to potentially come back to the podium if -- Chair Suarez: Sure. Mr. May: -- appropriate, Mr. Chairman. Chair Suarez: Absolutely. Mr. May: Thank you. Chair Suarez: Is there anyone else from your organization that would like to speak on this issue? I want to try to keep things relatively condensed. I know Commissioner Spence -Jones has to leave -- Mr. May: Sure. Chair Suarez: -- at 10: 30 -- Mr. May: Sure. Chair Suarez: -- andl want to give the Commissioners an opportunity to -- Mr. May: Let me say -- I want to say one other thing before we step away. There primarily have been two -- there are two really sticking points, okay, in the negotiations that have taken place. And you know, quite frankly, it's remarkable that we're actually this close because we're really not far off from actually having something that can be workable. The two sticking points are that the City really and the Mayor and the Manager really want Jungle Island to make the August payment, okay, under the HUD loan, which is about $2 million. And under our proposal, Mr. Chairman, as you know, we would put that money into escrow, and should the referendum pass in November and the state waiver be approved, which obviously we're confident about, or we wouldn't be standing here, that money would be released. The Administration wants us to just make that August payment. The problem that we have with that is that we were very clear back in February when the Mayor and Administration said to us, look, there will be no further City ofMiami Page 7 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 negotiations unless you make the February payment. And we said, okay, we would. And also said there wouldn't be any further discussions unless we basically agreed to include in our proposal a full payment of the HUD loan, which we did. And so since then, we've made a lot of progress, a lot of details have been filled in, but the sticking point is is we have not been able to agree to make the August payment because we simply don't have the means by which to make that payment today; and our investors, unless they see a real opportunity to get those dollars back in a future project, aren't necessarily want to put that up, you know, and have it lost and at risk. And the second issue has been that while -- what we have offered is a profit participation in the term of net profits, okay, again, primarily driven by our investors, and the Administration and the Mayor have been, I think, pretty consistent that they would like a percentage of gross profits, in essence, an additional rent going forward, which is, as you all know, right now Jungle Island pays 5 percent of gross revenues to the City and they would want that augmented, essentially. So I wanted to put that on the record. And again, we come here with our best foot forward, and we're willing to entertain any questions you may have, and we look forward to further discussions. Thank you. Chair Suarez: Thank you, Mr. May. Okay. Is there anyone else who's a stakeholder here? I think saw some people in the front row. Are you a stakeholder? Okay. I'm going to -- Yes, I'm going to give you guys -- if it's okay with you, I'm going to give you guys a few minutes to present your position. I don't think there's -- is there anyone here from the Outboard Club? No? The same -- Unidentified Speaker: They don't seem to be present. Chair Suarez: Okay, that's fine. And there's no one here from the Japanese Gardens, correct? Commissioner Spence -Jones: That's us. That's us. Chair Suarez: That's us, okay. Yes, you're raising your hand, sir. Alan Rigerman: (UNINTET ,T IGIBT ,F) member of the public. Chair Suarez: This is not a public discussion item. This is not a public discussion item, I'm sorry. I said that at the beginning. Okay. Mr. Rigerman: (UNINTET,TIGIBT,F). Chair Suarez: I'll give you -- sir, I'll give you two minutes. Mr. Rigerman: That's fine. Chair Suarez: Okay, come on up. You're the next contestant. Mr. Rigerman: (UNINTET,T IGIBT ,F), but that's up to you. Chair Suarez: Okay, two minutes. Mr. Rigerman: This is three minutes long but -- Chair Suarez: Okay, three minutes. Madam Clerk, if you can give him three minutes, please. Mr. Rigerman: Andl hate to do this, but I'm going to read and read quickly. Chair Suarez: Sure. Thank you. City of Miami Page 8 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. Rigerman: Alan Rigerman, 17910 North -- wrong glasses. Alan Rigerman, 17910 Northwest 84th Avenue, in the unincorporated community of Palm Springs North. Mr. Mayor, who I assume is listening, Commissioners, the Monkey Jungle and the Parrot Jungle go back to the '30s. Some ten years later, along comes the Serpentarium, with the late Bill Haast. These were notable attractions throughout the United States. Miami was known for these. When people came to Miami, people would look at these attractions because -- you know, I don't have to read this. Because of what happened with Parrot Jungle trying to Make a living'back -- I don't remember the date. It's down here. They approached the Commission, Miami -Dade Commission, to be able to hold events on their property and build. The neighbors didn't like the idea. The Parrot Jungle, as you all know, entered into whatever agreements it entered into and metamorphosed into Jungle Island. Here's the thing. This is something that helps to make Miami a world -class city. I mean, my God, I won't be around to see it, but can you imagine a destination hotel, not for gambling, but for the wildlife for the Parrot Jungle, for everything this might offer in the future. In addition, I'd like you to be aware that I've known Bern Levine -- known of him and known him since 1971, when Dr. Levine bought out Bill Chase's wildlife. In any event, he has been in the forefront of keeping these animals, displaying them, making them available to the public, hands on. Where else can autistic children, disabled children, children from schools in the inner city see and have a firsthand experience with these animals? You know, I was talking to Dr. Levine before this meeting and we both, him in one way, me in another -- and I'm going to end this in about 20 seconds -- he has been fortunate. Me, I came down here in '65, and my entire life has been with wildlife and teaching high school. And my God, what I have been fortunate enough to hold, keep, live with andl still do it. So I want to thank you for listening to me. Chair Suarez: Thank you, sir. Mr. Rigerman: The young lady that's with me is happy as can be because she's not going to speak, but I'm going to drag her to the Florida Wildlife Commission meeting and there she '11 speak. Chair Suarez: Thank you, sir. Mr. Rigerman: Ma'am, gentlemen, thank you. Chair Suarez: And thank you for respecting the time constraints. Mr. Rigerman: You got it. Chair Suarez: I appreciate that. And -- Applause. Chair Suarez: Okay. Thank you, guys. Okay, so -- and let me just explain for the benefit of the people who -- no. Let me just explain for the benefit -- for the people who are here. The reason why we do special Commission meetings is because we cannot have discussions outside of this forum. So, primarily, they're for us to discuss the matters and the business of the City ofMiami. These events take multiple meetings for them to be consummated, let's say, for lack of a better word, and there are a variety of other opportunities where the public has an opportunity to come in and voice their concerns regarding whatever business the City ofMiami is considering. So I don't want you to get the impression that we're trying to shut the public out. On the contrary, we're trying to discuss this in the open so that the public can become informed, and then later on when the public has an opportunity to make its points and case, they're well informed and they can make informed case and decision. So is there anyone from Miami Yacht Club? How much time do you need? City ofMiami Page 9 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Donita Leavitt: I'm going to be very brief. Chair Suarez: Two minutes? Five minutes? Two minutes? Okay. Thank you. Actually, give her three minutes 'cause we gave the last speaker three minutes. Thank you. Ms. Leavitt: Thank you very much, Chairman. My name's Donita Leavitt. I am the commodore for the Miami Yacht Club. Just very briefly, I know that the gentleman from Parrot Jungle said they've reached out. That's not taken place. This is the first that I'm seeing that they want to consume our site, our location, also consume other public areas of the island that will shut off public access to the waterfront area, which we value greatly. Commissioner Spence -Jones: Can you speak a little louder in the mike? Chair Suarez: Into the mike. Commissioner Spence -Jones: Yeah, 'cause it's kind of hard to hear you. Ms. Leavitt: Okay, apologize. Commissioner Spence -Jones: No problem. Ms. Leavitt: As I was saying, this will consume our location and the public area. It will cut off public access. It will shut down our programs. We have -- in fact, Commissioner Sarnoff has already, several months ago, presented awards to our sailors. We do have Olympic class sailors that we are training at that location. We have -- we are in discussions with the Veterans Administration to increase our programs to assist those folks who have served us overseas with programs at our location. Our club's been around for about 85 years or so, and we've been in that location since the mid-1940s. We'd like to stay there. We also would like to engage you in a discussion extending our lease as well and extending our programs and the possibility of further extension. We are compassionate to the Parrot Jungle situation. I am compassionate to the plight and the employees and everyone sitting here who wants Parrot Jungle to survive. We are open to discussion with them. We have not been approached at this point. I think maybe one of our other members would like to speak as well, if that's allowable. Chair Suarez: I'll give you the balance of your time, a minute and a half. Ms. Leavitt: Okay. Chair Suarez: Okay. Ms. Leavitt: Thank you. Chair Suarez: Thank you. Applause. David Neblett: Hello. My name is David Neblett. I've been a member of the Miami Yacht Club for nine years. And what wouldjust like to add to what our commodore has stated is that the Miami Yacht Club started in Miami in 1927. And from approximately 1934 through the '70s, the City and the Mayor have sponsored a number of events with the Yacht Club, both within the City boundaries and also internationally. The other thing that the commodore touched upon butl think is very vital for everybody here to understand is that the Miami Yacht Club is a center for this city and for this state for youth services, for the ability of citizens to access and use the waterfront and is a very vital location within the City to be able to give access to children and provide special activities, including youth sailing. So I think that the Commission should take City of Miami Page 10 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 that into account, andl think that it's a little bit unjust for Parrot Jungle, who is essentially a bad business venture, to try to assume a very stable business venture and a community service that has been around since 1927. Thank you. Chair Suarez: Thank you, sir. Applause. Chair Suarez: Guys, if you can -- I know it's hard, but if you can refrain from clapping, I would appreciate it, just so we can keep things moving. Andl want to thank you all for respecting the time constraints. You know, we all have a lot of things going on and I'm sure you guys want to get back to what you do. So now I'm going to bring it back to the Commission. I'd like to first recognize the Vice Chairman, who is the district Commissioner, and hear for his thoughts, and we'll go across the dais and get the other Commissioners' thoughts and questions, and hopefully I can wrap it up and we can go home soon. Vice Chair Sarnoff Thank you, Mr. Chair. I don't think anybody here wants Jungle Island to be in the position it's in, andl don't think anybody here -- is extremely concerned with the amount of money the City has invested and where we find ourselves. The reason I wanted to have this meeting is I wanted to hear in the event Jungle Island is not there, what does it look like? What are our actions? In other words, this Commission decides not to make any of these modifications, what I want to understand is where we will be from an employment standpoint, from their standpoint, from a standpoint legally, Madam -- andl understand you want to couch yourself carefully 'cause I don't want to put you in a bad position. And Mr. Manager, then I want to understand what goes on with this property, for how long? Do we go out to another referendum? Do we -- what happens and what is your plan 'cause I want to have a plan. I don't want to just, you know, find ourselves with something that no longer exists or it exists on a subpar basis. What does tomorrow look like? So I'll start with the Manager. What does tomorrow look like if Jungle Island doesn't make the payment? Mr. Martinez: How it look like is going to depend much on the legal protections that we have and what path we use -- we choose to take. One scenario is there'll be another operator and the people that are in the audience would be re-employed again. Having said that, I know Julie is going to be very couched in her comments regarding how we may look like later down the line depending on what legal path or protections that we have in place. I don't want to say a whole lot regarding that, but it looks -- it's very likely that another operator will be in place and maybe later -- we may have to upfront some of the money in order to recoup it later and put out an RFP (Request for Proposals) and develop the, you know, entire site. I don't know what that path is today. Vice Chair Sarnoff We -- some Commission, I don't know if it was this Commission -- I know it wasn't this Commission, andl don't actually think it was the Commission I was on either, but I understand there's been a subordination of the HSBC -- I want to say it right. The HSBC now -- Chair Suarez: Has a priority interest. Vice Chair Sarnoff Thank you. Real estate lawyers get this right. -- have a priority interest on our land for how much money? Chair Suarez: I think it's 10 million, if I'm not mistaken. Ms. Bravo: I believe that outstanding balance is in the $11 million range. Vice Chair Sarnoff All right, so HSBC has a lien right on our property for $11. Is that a fair descriptor? City of Miami Page 11 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Julie O. Bru (City Attorney): Not on the property; on the leasehold interest. Vice Chair Sarnofff. On the improvements. Ms. Bru: The leasehold interest. Their leasehold. Their lease. Vice Chair Sarnofff. In a practical sense, to the average citizen, what does that mean? Ms. Bru: Well, they have a lease for a term certain and their -- the creditor, the bank, the private creditor has a security against that leasehold interest. So, you know, if there were to be a default -- andl guess you asked legally what would happen, you know. Obviously, at this point we've been concentrating more than anything on trying to negotiate and respond to their proposals, so all our efforts right now have been geared towards that. But we are prepared, and we have reviewed all the documents that provide security for both the County and the City with respect to this tenant and this debtor. So in the event that there is a failure -- in the event that Parrot Jungle doesn't make the August payment, first of all, the County, who is their creditor, would have to decide how it wants to proceed. Based on what the County decides to do, the City has certain rights under that participation agreement. Their financial -- the financial institution, who is their private lender, also has the right to cure and step into their shoes and perform. So there's a lot of protections built into the three primary creditors: the City, the County, and the bank. And eventually, one of these creditors are going to -- is going to assume the control of the asset, and one of these creditors will make sure that that asset is performing in order to satisfy the debt. Vice Chair Sarnofff. Well, I want to yield to the Chair, butl want to follow up for a second. Chair Suarez: Yeah. Vice Chair Sarnofff. In order for the City of Miami to control that property, would the City of Miami have to pay the $11 million to HSBC? Ms. Bru: If the City were to default the tenant under the lease and foreclose -- or if the County were to foreclose on the mortgage that is securing the $25 million HUD loan, there will always be some kind of workout that would have to take place with the lender who has the priority position. At this point, obviously, it's too premature to discuss what could that workout be, whether it involves payment or attorning to that lender and continuing to make the payments out of the rents and profits of the lease. That's something that would need to be discussed. But whoever takes over, whether it's the County or the City, would take over subject to that lien and that debt being in place with respect to the leasehold interest. Chair Suarez: Madam Attorney -- and the Vice Chair, if I may -- I think the reason why we're here is because we're reaching a couple of Armageddon/Doomsday deadlines, one being the August payment, the other one being if we were to make some sort of a deal, it would have to go to referendum in November and there're time deadlines associated with that. I think what the Vice Chair is saying -- andl echo his sentiments and I'm sure my colleagues do as well -- is that if we don't go forward with this -- I think part of the reason why we're doing this here today is to start analyzing what are the other options and what is the plan from the City's perspective. So to the extent that maybe that analysis hasn't been done to date, I think going forward we have to really start putting together something from a legal perspective, from an administrative perspective. You know, how is this going to play out. Andl think that's the only way we can make an educated decision, one way or the other. So I don't know if that -- Vice Chair Sarnofff. Well -- andl wanted to drill just a little bit, then I'll yield to the other Commissioners and to the Chair. But we have an $11 million obligation which must be satisfied City of Miami Page 12 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 in order for us to control the property. Is that a fair description? Ms. Bru: The obligation is secured by the leasehold interest, so it's not the City's obligation. It's the obligation of whatever profits and rents and assets can be realized from that -- from the leasehold interest. Vice Chair Sarnoff. Here's my question, and you should be able to answer it. In order for Johnny Martinez to control that asset, he has to at least be in a position to take out, maybe not in total, but the $11 million obligation so that he could relet the premise. Ms. Bru: There would have to be some sort of workout with that lender, yes. Vice Chair Sarnoff. Okay. So -- and we know right now it's $11 million, whether they took 90 cents, 80 cents, 60 cents, 50 cents, or thought Johnny could do it for 20 cents, which I don't know why they would, but understood. That's the HSBC obligation. Now with regard to the HUD loan, what is left on the HUD loan? Ms. Bravo: Fifteen point five six million dollars. Vice Chair Sarnoff. So 15 million, of which we're responsible for 80 percent of it, which would be -- Ms. Bravo: Roughly 12. Chair Suarez: Twelve. Vice Chair Sarnoff. -- $12 million. So, potentially, in order for us to gain control of this property, we're looking at $23 million. Is that a fair descriptor? Ms. Bru: To the extent that the HUD loan is guaranteed by a leasehold mortgage, which is a lien on the leasehold estate, yes. There would have to be some sort of satisfaction of that debt in order to fully, free and clear, control that asset. Vice Chair Sarnoff. So this City would -- then would have to -- to control the asset, we potentially face a $23 million liability to secure control in reletting, rethinking, whatever you'd like to describe it as, reposturing that asset. Ms. Bru: Unless there could be some assumptions that can be worked out with the private lender and/or HUD where the real estate continues to have that debt, but secured by a new operator or whatever. But it -- Vice Chair Sarnoff. One last issue then. If we -- what do they pay in taxes annually, approximately a million dollars? Ms. Bravo: Approximate. Vice Chair Sarnoff. All right. So then, if we were to gain control of that asset, we would then also have to pay a $1 million annual payment for taxes? Chair Suarez: We don't get -- Vice Chair Sarnoff. Well, I don't know 'cause we'd be operating it as a business. That's why I'm curious. Chair Suarez: Right. City of Miami Page 13 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Vice Chair Sarnoff. And -- Chair Suarez: That's why I didn't initially -- Vice Chair Sarnoff. No, no, no. I -- Chair Suarez: But -- 'cause -- Vice Chair Sarnoff. -- you were going to say, what a minute. If the City operates it -- Chair Suarez: -- because I think what happens is you have a leasehold interest -- you have a bank that has a security interest on the leasehold interest. So if there's a default, the bank can call the lease and can -- I'm sorry, subrogate its rights to the leaseholder and become the lessee because their -- that's their protection. So they would then have to pay the taxes, the bank. I mean, I -- that's the way -- Vice Chair Sarnoff. And -- but -- and I know this is a moving -- Chair Suarez: It is. Vice Chair Sarnoff. -- it's a moving issue because then the bank could theoretically lease it to the City. The City then could theoretically sublease it to somebody else -- Chair Suarez: Sure. Vice Chair Sarnoff. -- and there are a lot of things that could happen. Chair Suarez: Sure. Vice Chair Sarnoff. But what I want to understand is this asset has a liability attached to it of $23 million and $1 million annually. Chair Suarez: Right. Vice Chair Sarnoff. That's -- I want to make a decision eyes wide open, which is there is a potential that $23 million would have to be satisfied in a going forward basis, and then a $1 million annual payment. That's all want to understand. So as much as the deal -- I'm not overly impressed with their -- the deal parameters either, but I certainly read the deal parameters andl sort of give the Manager credit because he gave us whatl call a Donald Rumsfeld one page -- Chair Suarez: Executive summary. Vice Chair Sarnoff. -- summary, which I could read one page, and it was a very nice job. I know what the deal is. What I want to understand is ifI don't make this deal, what am I facing? Andl don't mean me. I mean the citizen, taxpayers, andl mean the Administration. So I'll yield. These are the questions I wanted to understand today, which is you take no action, Mr. Commissioner, or you take the action you think you're going to take prudently, what does tomorrow look like. Chair Suarez: Thank you. Vice Chair Sarnoff. Thank you, Mr. -- City of Miami Page 14 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Chair Suarez: Commissioner Gort. Commissioner Gort: No. My understanding is the proposal -- I'm not impressed with it either. Also, at the same time, the new investors need to understand the use of the hotel, it's got certain use. You also have Miami 21. But I do believe the same as you do. I think we need a B plan because they agree -- we might agree to take it to the voters. What happens if the voters vote against it? We're in the same ship. So we do need a B plan and we need to start working on it. Commissioner Suarez: Commissioner. Commissioner Spence -Jones: Much said, much said. I have a couple things, Mr. Chairman -- Chair Suarez: Yes, ma'am. Commissioner Spence -Jones: -- that I'd like to at least put on the record. I just want to be clear that this is not about -- andl want -- when I see people come out to support items, I want them to understand this is not about y'all. This is not about your jobs. This is not about the monkeys. This is not about the parrots. This is not about people. This is simply about a business deal that has gone wrong. Andl wanted to really kind of elaborate on the business deal gone wrong because I think that sometimes we can get so caught up in, you know, the presentation or things that are presented and not really -- the people watching it or even the staff members truly understand what we're discussing. So I just want to simplifi, it so that the folks listening and the folks that have come here to hear what's going on -- 'cause I'm sure that part of the reasons why you're here is because you want to make sure you have a job tomorrow and you have your families to take care of. So I think we have a responsibility to at least speak to you so you understand what's going on. In a nutshell, this simply is -- it's like a marriage that's on the rocks and it's been on the rocks for a very, very long time. Now it's up to us to make a decision or evaluate, you know, whether or not this marriage can work. Now just listening to presentations on both sides and listening to a few of my Commissioners, you know, the reality is we have to evaluate the pros and cons in both situations. When I think about the pros in this instance, I think about, of course, the jobs, the attractions that are for the City, and of course, the outstanding debt that we have that needs to be handled. But when I think about all the cons, to me the list just goes on and on and on. Andl think that we have to really, you know, evaluate whether or not it makes sense. So I have a couple of questions for the Administration because I need for them to put this stuff on the record so we could all be clear. My first question for Johnny is have we explored all other options to sever the relationship? Mr. Martinez: As Brian -- Commissioner Spence -Jones: I just want -- no. I'm not -- Mr. Martinez: Yes. Commissioner Spence -Jones: -- talking about them. I'm talking about if Brian is out of the picture, Parrot Jungle's out of the picture, have we began to look at all the other options open to us to address, perhaps, some of the concerns that Commissioner Sarnoff has mentioned, which is the outstanding debt, you know, how we would address the employees. Have we looked at all the other options? Mr. Martinez: We've kind of brainstormed it at 30, 000 feet. We haven't, you know, drilled down into the details. Andl understand we have legal protections and there's cer -- a myriad of paths that we can take, but we haven't narrowed that down yet. Commissioner Spence -Jones: Okay, so -- but the options that you've looked at, has any of them addressed some of the issues that Commissioner Sarnoff just mentioned, meaning the 22 million City of Miami Page 15 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 outstanding, whatever, debt? Have we --? Ms. Bru: IfI may, Commissioner. Commissioner Spence -Jones: Sure. Ms. Bru: Andl have advised the Manager to proceed very -- Commissioner Spence -Jones: Cautiously. Ms. Bru: -- cautiously at this time because, you know, we do have an ongoing business concern, and they have a favorable relationship with their, you know, creditors and the people with whom they conduct business and we wouldn't want to be at this point interfering with any of that. So, unfortunately, you know, at this point, really, it's premature for us to be able to really get into the nitty-gritty of seeing what could happen with a creditor who has a senior right to us and the County because I think that would not be appropriate. But we're prepared to do so if the occasion arises in the future. Commissioner Spence -Jones: Okay. Let me just say this 'cause I think it's important to say this, 'cause I think they also need to be clear that we're not taking a vote today. We're just listening to the issue, so there's not going to be a vote today. So this has to come back to the City Commission, and all of the City Commissioners will be up here to discuss the item. I think that it's imperative, though, you know, if I'm going to make a decision about something, Madam City Attorney, or Mr. City Manager, I would like to know all of our options because, to me, I think the way that it's being presented is a little unbalanced. Because I can't sit and listen to, you know -- on one end, the house is on fire and if -- and it seems like it's always on fire. The house is always on fire in the City ofMiami. So -- and we're always left holding the bag trying it figure out, okay, what do we do. I would like to start -- for us to start being a little bit more proactive in, okay, here are three other solutions that can address our problem. Andl think that we have some very qualified people, you know, our CFO (Chief Financial Officer), Henry. I mean, all of these folks are here, you know, for a reason. So I think that we need to utilize them. Before this item comes in front of us, I would like to have a serious analysis done on how we can address the outstanding debt if we're no longer going to have the relationship with Parrot Jungle. 'Cause if not, this is an unfair argument because on one end you're saying, hey, you got 22 million and then on (UNINTELLIGIBLE), I don't know what you got. So we can't really make a decision on that. So here are my just very direct questions that want to be very clear on and would like to make sure the Administration comes back, and if this item does come back in front of the City, which I'm assuming it will, then hopefully we can have all these answers -- these questions answered. So I already got the first question answered, which is what happens if the City forecloses on JI (Jungle Island), and you're saying then -- I'm assuming that we would assume the debt and then we would figure out what our next steps is in handling the debt, and that is the other option that we discussed, okay. So one of the biggest issues I had and concerns we had in my office was centered around the job creation portion of this. Andl don't know if Mensah can really speak to this, butt would like to know -- because we keep talking about jobs, but want to know if we've actually met our objective. How many jobs were actually required -- were they actually required to create and how many did they actually create? Do we have an answer to that? Andl thinkl can help you out, George. George Mensah (Director, Community Development): Yes. Commissioner Spence -Jones: So -- I know that the -- Mr. Mensah: George Mensah, director of Community Development. The actual -- as you know, the HUD Section 108 loan was actually done by the County because the County is the one who are responsible for the job creation component. City ofMiami Page 16 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: Right. Mr. Mensah: So the last time that I asked the County, they indicated to me that the jobs that was required to be hired has already been hired. Commissioner Spence -Jones: Okay, so since you can't really answer the question 'cause you're actually answering a third party -- Mr. Mensah: Yes. Commissioner Spence -Jones: -- I would like from -- somebody from Parrot Jungle to answer 'cause I don't want to have people in the audience here and we're saying we're creating jobs but the question becomes did we meet our commitment. Because to my understanding, the commitment was 400 jobs and those jobs was supposed to be 51 percent low- to moderate -income folks. I'm not talking about vendors. I want to be clear. I'm not talking about vendors that were hired and then they created the jobs because, to my understanding, that is not accepted from HUD. So I want to just be clear how many jobs are actually created, Brian. Mr. May: The total employees, Commissioner, that I have in front of me here are 633 employees; 404 of them are full-time equivalents and 229 are part-time. Commissioner Spence -Jones: Okay. Auditor General, can you please -- do you mind? I just want him to elaborate on it. Mr. Auditor General, can somebody please elaborate for us, since I know George could not really give us that info. But I understand that you still are required to, you know, at least audit what they're doing. Lewis Blake: Good morning. Lewis Blake, auditor general's office. Our procedures are still ongoing. We can't really render an opinion or come to conclusions. But from records we got from the Community Development Department, biannually Jungle Island is supposed to submit employee reports, a listing of employees. And when we analyzed the listing for -- as of year-end 2011, we saw 418 FTE, or full-time equivalent, employees and 191 of those were from Jungle Island. The rest were from nine vendors. Commissioner Spence -Jones: Okay, so -- Okay, let's back it up. So, really, the number is -- the number of jobs created is from Jungle Island, not for outside vendors. Andl want to be clear from George, as far as the HUD regs are concerned, can those jobs be created from vendors or can they be created from the proprietor? Mr. Mensah: George Mensah, director of Community Development. The jobs that the auditor general is talking about actually is not the Section 108 jobs. Those were handled by the County, so these are not HUD jobs. These are the jobs -- when Jungle Island came in in 2009, in May to get the $800, 000 loan, one of their requirements was that they maintain those jobs at 51 percent. So those jobs -- there was no stipulation that it should either be vendor or non -vendor or everything. They said that they should maintain that 400 jobs and 51 percent of those has to be low-income. So it wasn't -- it's different from the Section 108 requirement is what I'm trying to say. Those jobs that the auditor general is talking about is not related to Section 108 at all. That's what I want to put for the record. Commissioner Spence -Jones: Okay, but I just want to be clear. And again, 'cause we've had this discussion -- so this communication applies across-the-board for any related -- any relationship we have with HUD regarding our requirements or their regs. Mr. Mensah: If you -- City of Miami Page 17 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: So -- Mr. Mensah: Okay. Commissioner Spence -Jones: Just want to be clear. Mr. Mensah: Sure. Commissioner Spence -Jones: So -- Mr. Mensah: Job creation -- Commissioner Spence -Jones: -- are they required to create the jobs from Parrot Jungle's side or is it permissible under the vendor side of it? Mr. Mensah: It is permissible on the vendor side. IfI give you -- Commissioner Spence -Jones: I'm glad you put that on the record. Mr. Mensah: Yes. Commissioner Spence -Jones: Okay. Mr. Mensah: IfI give you $1 million so that you can hire someone, if you hire a contractor that creates ten jobs, those ten jobs has been created by virtue of the $1 million that I gave to you, so those jobs can be counted. We do that on our contract with the technical assistance providers on our CDBG (Community Development Block Grant) loan. When we give money to, let's say, Contractor Resources to provide jobs, Contractor Resources do not employ people, but Contractor Resources assist contractors to get jobs. So those jobs that the contractors created are then counted as job creation. So -- and yesterday when I was meeting with the staff I indicated that that is indeed the case. A vendor job that is created is counted as created because of the fact that by virtue of putting that money in the business, that vendor would not have been hired in the first place and that job would not have been created. Commissioner Spence -Jones: Well, thank you for putting that on the record. Mr. Mensah: Yes. Commissioner Spence -Jones: I just want to be clear. So despite the auditor general's questions on the calculations of the job, are we saying that the City still accepts the job numbers by --? I just want to be clear -- Mr. Mensah: Yes. Commissioner Spence -Jones: Okay, so we still accept them. Mr. Mensah: Yes. Commissioner Spence -Jones: Okay. All right. All right, let me move on to my other questions. Would the changes requested by Jungle Island have to go back in front -- This is you, Brian. You can come back up. -- of the State of Florida for approval of a waiver if extended? That might be you or that might be -- I just want to be clear. No, I'm saying Johnny or Alice. I don't know if you know the answer. Mr. May: It's -- that's really -- it's the City's waiver, so the City would have to answer that, but I City of Miami Page 18 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 believe the answer is yes. Commissioner Spence -Jones: Okay. Ms. Bravo: Basically, the property of Watson Island was deeded to the City from the State with a public purpose requirement, so any additional amenities that are provided there or businesses, we would have to go to the Board of Internal Improvement Trust Fund, the trustees, which is basically the governor cabinet, for approval of a further modification of the deed restriction waiver we already have. Commissioner Spence -Jones: Okay. So we would have to definitely do that. Chair Suarez: Yes Ms. Bravo: Yes. Commissioner Spence -Jones: We would have to, okay. Ms. Bravo: Yes. Commissioner Spence -Jones: All right, just a couple more. Okay, I know that in the -- and l just want to be clear, Alice. Again, we talked about this marriage that has gone wrong, like all of the things that have been issues in this marriage. I want to just have -- be very clear on all of the passes that the City has actually given Jungle Island to correct it -- to correct the marriage, to get the marriage back on the right track. Can you at least put on the record so that we're clear of the issues that we've had to address since Parrot Jungle has been -- Ms. Bravo: All right. Commissioner Spence -Jones: -- with the City? I know what they all are, but I just want you to put them on the record. Ms. Bravo: Right. First and foremost, it was in 2007 where the City agreed to amend the development agreement and the City and County jointly agreed to that. And so, basically, the City and the County made the HUD loan payments on behalf of Jungle Island between 2006 and 2011. And the total payments on the City's side is 13.8 million, and the payments made by the County amounts to 3.4 million. Commissioner Spence -Jones: Okay, out of that 13 million, how much has the Jungle Island actually paid? Ms. Bravo: No, zero of that amount. That's the part that the City paid towards the HUD loan on behalf of Jungle Island. Commissioner Spence -Jones: Okay, and -- Mr. Martinez: That's part of the 16 million. Commissioner Spence -Jones: Okay. Ms. Bravo: And Jungle Island is supposed to pay that amount back either by 2020 or they have an option for a payment plan with a 5 percent interest rate to make monthly payments between the years 2020 and 2030. Commissioner Spence -Jones: Okay, so we've been in this marriage for how long now? City of Miami Page 19 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Ms. Bravo: Since -- the voters approved it in 1995. Commissioner Spence -Jones: So -- and officially -- Chair Suarez: Seventeen years. Commissioner Spence -Jones: Huh? Chair Suarez: Seventeen years. Commissioner Spence -Jones: We've been in this marriage for 17 years, and they haven't paid one dime? Ms. Bravo: They paid rent in the early years, and then we -- Commissioner Spence -Jones: How much rent did they pay in the early years in this 17-year marriage? I'm sure you know, Brian. Mr. May: I do, actually. I want to just correct the record. The marriage really started in terms of making the -- Commissioner Spence -Jones: Payments. Mr. May: -- payments on rent. Commissioner Spence -Jones: Until -- Mr. May: Started in 2003. Commissioner Spence -Jones: So -- all right. Mr. May: It's not exactly 17 years; it's more like 8 years. And the number is about $3.6 million in rent. Commissioner Spence -Jones: Okay. Mr. May: Just rent. Commissioner Spence -Jones: So at this point in our eight year marriage -- Mr. May: Eight -year marriage -- Commissioner Spence -Jones: Right. Mr. May: -- so far. Commissioner Spence -Jones: -- we've -- they've paid 3 million and we've had to carry the -- hold the bag for how much? Ms. Bravo: Well, on the HUD loan, we've paid 13.8 million on their behalf. It's a total of 17.2 million between the County and ourselves for the HUD loan. In 2009 we amended their lease to allow them to defer rent payments. Those deferred rent payments as of today represent close to $2.5 million. So that rent is not due until December 31, 2020, but in April of 2013, next year, they shall start paying monthly rent payments. City of Miami Page 20 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: So can I ask you this question. The 13 million that we paid, right, does that include the additional 800k we paid for the taxes? Ms. Bravo: No. I'm getting to that. That's next. Commissioner Spence -Jones: Brian, I mean -- Mr. May: We've paid -- Commissioner Spence -Jones: -- so -- well, let me -- Mr. May: -- almost 500,000 of that back. Commissioner Spence -Jones: Okay, so -- Ms. Bravo: Right. Commissioner Spence -Jones: -- let her finish. Go ahead. Ms. Bravo: So in May of 2009 the City entered into a property tax loan to Jungle Island for an amount of $800, 000, and they were to pay that in monthly installments between September of '09 and August of 2013, so the remaining balance of that is 250, 000. They are up-to-date on those payments. Commissioner Spence -Jones: So they are -- on the loan? Ms. Bravo: Yes, on the property tax loan. Commissioner Spence -Jones: So all together, it was $800, 000 that we had to front because they didn't have the monies to pay it back then, correct? Ms. Bravo: Correct. Commissioner Spence -Jones: And all together, they haven't paid a dime at all for the HUD loan? The City's had to basically take it out of its coffers to make sure that we satisfy HUD? Ms. Bravo: Correct. Commissioner Spence -Jones: That's basically what you're saying in a nutshell? Ms. Bravo: Correct. Commissioner Spence -Jones: Okay, so -- Mr. May: Commissioner, could l just make a point that think is important -- Commissioner Spence -Jones: Brian -- can I ask you a question, Brian, since we can all talk? Mr. May: Sure. Commissioner Spence -Jones: It just seems like you have the most difficult clients. Why do your clients always want it all? Mr. May: Actually, they're all very nice people. They're all very nice people. City of Miami Page 21 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: You must be very special. Mr. May: No, no. I'm really not. IfI could just make one point, though, and it's an important point that the Administration and Alice just pointed out, which is the money that is past due, the 13.4 million on the HUD loan, that would have to be paid to the City in 2020. Correct, Alice? Ms. Bravo: Correct. Mr. May: And whatever is not paid, there's a 5 percent interest rate going forward to make payments between 2020 and 2030. And that is characterized today as debt. What we are proposing, which actually is, we believe, beneficial to the City, is that we would begin making payments on those past due amounts as soon as we can get our development plan in place by virtue of your profit participation, additional profit participation in the project. So in other words, the past debt that is currently due under our current agreed upon -- you know, the amendment in 2007, that would be pushed back, okay -- instead of it being pushed back, which is the current deal, we would actually be accelerating that forward and start paying that a lot sooner based on a profit participation rather than have it characterized as debt. What hurts our ability to attract additional investment into the property is the fact that it's characterized as debt. Commissioner Spence -Jones: Okay. Mr. May: It's a big problem. So I just want to make that point so, you know, the more we all understand, I think, the better, you know -- Ms. Bravo: And -- Commissioner Spence -Jones: Okay. Mr. May: -- informed everybody is. Ms. Bravo: -- what the City proposed was instead of a profit participation was some type of gross revenue participation. Commissioner Spence -Jones: Oh, no. Definitely, we going to -- that's -- definitely gross participation is on the table. This other stuff I don't know what we're talking about, so I know that we're not going to -- even if we considered it, gross participation would have to be a part of it. So as far as the marriage is concerned, that's one thing that's just not even -- I don't think is an option. So -- but let -- thank you, Brian. Mr. May: You're welcome. Commissioner Spence -Jones: Okay. So let me just go on to one of the things that I have a concern about. You know, I have a real big issue when I see good people trying to do the right thing or good people that have done the right thing and then, for whatever reason, they're not -- they're being pushed aside. Let me just say what I mean by that. I don't know that much about the Miami Yacht Club. I guess my first time just actually really meeting them was when Commissioner Sarnoff honored you guys with the kids that have sailed all over the world. I just -- and l just -- I asked Henry a few seconds ago 'cause I wanted to be clear, you know, how long you guys have been there. To my understanding, you've been there like a hun -- what, since 1927, correct? Been there for -- Unidentified Speaker: In that location since the mid-40s. Commissioner Spence -Jones: Mid-40s. And for the most part, you pay your rent, you know. And despite the same concerns they've had even with the tunnel, you've done that. You know, City of Miami Page 22 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 you've done, for the most part, everything right, you know, and we haven't had to really run you down for anything. I'm sure that -- now that Henry's there now, I'm sure that part of him being there now is to evaluate whether or not, you know, financially we should be getting a little bit more from it, but for the most part, you guys have been living up to your commitment in this marriage, you know. So part of my concern is when I'm hearing you talking about, you know, the expansion and all of the things that you want to do and you include a whole different group that, quite frankly, has not been at the table, you know, to discuss this issue, I just think it's a little disrespectful, okay. So that's just my own -- that's my own opinion. No claps. My own -- Applause. Commissioner Spence -Jones: No claps, no claps, no claps. That's my own opinion. I mean, I really feel as though, you know, when you have people that are doing the right thing, you have to figure out a way to work with them. And if that hasn't happened, then you need to work on that 'cause that -- Mr. May: Sure. Yeah. Commissioner Spence -Jones: -- it's just not right. Mr. May: And look, that's a very valid concern and it's well taken. But a couple things to put on the record is that there were efforts to reach out, okay, but more importantly, what we propose in our term sheet is very specifically says the following, what we are proposing in order to go forward is not contingent upon having the yacht club property. It is something that we have always viewed as if there is something that we can work out with the yacht club, we would sit down and have those discussions. But if it doesn't work for them and it doesn't make sense for them and it's not an offer or an agreement where we all work together and everybody benefits, it's not something that Jungle Island has to have in order to move forward. Commissioner Spence -Jones: Right. And -- Mr. May: So I just want that to be clear 'cause there's been a lot of sort of -- made about that, about us sort of pushing them aside, absolutely not the case. It was never the intent, never will be the intent for us to try to displace them somehow, some way unilaterally. It's always been in the context of trying to find something cooperative that would work for everybody. So I just want Commissioner Spence -Jones: So -- Mr. May: -- that to be clear. But I -- point well taken. Commissioner Spence -Jones: -- my question becomes, if they -- you guys can't come to an agreement -- 'cause, clearly, what you're presenting to us is what you feel is an option, you know, to redevelop the island, right -- that portion of the island. If they cannot -- you guys cannot come to an agreement, then how do we resolve their issue? Mr. May: There is no issue -- Commissioner Spence -Jones: Okay. Mr. May: -- that know of. Commissioner Spence -Jones: All right, so in other words, you will continue on without them being affected at all by it. City of Miami Page 23 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. May: Absolutely. Commissioner Spence -Jones: Okay, all right. I'm just going to make a recommendation on the floor and -- to both groups so now we don't have to say, you know, I've tried to reach out and they didn't respond. So now -- I just want to make sure I have some agreements from both parties, the yacht club and from you guys, that you guys will at least sit down and have a discussion so that if this item comes back in front of us, then you can come back and say, yeah, we sat down, we agreed, or we don't agree, you know, but I think that is important, especially if they're your neighbors. Mr. May: Totally agree. And Commissioner, there's also one other point that I want to make, which is super important. We do not see by the time that we could have the lease amendment to the Commission that we would have something completely worked out with the yacht club. All we would ask in our lease is the ability to include the yacht club property if and when we can work with the yacht club to work together to do something cooperative. So we see it as an issue that's going to require a lot of ongoing discussion and shouldn 't be something that's required to be completely worked out by the time this was to come forward because whatever lease language we would envision would be something that if they wanted to say, no. Look, we don't want to do this. We'll just continue forward as we are. We understand that, and that's why in our term sheet it's always been a situation where it's not contingent, right, on our ability to move forward is not having the yacht club property. Commissioner Spence -Jones: But Brian, you can understand what their concern would be. Mr. May: Absolutely. Commissioner Spence -Jones: I mean -- Mr. May: Sure. Commissioner Spence -Jones: --from the standpoint -- if it doesn't really matter, then why put it in there? Mr. May: Because it would -- if we have it in a lease amendment that went before the State, it would absolutely not require us another time for all of us, which it's your state waiver, not ours. Commissioner Spence -Jones: Right. Mr. May: It would save you a lot of time and expense if it's in the lease as an option that could be included at any time later. It doesn't require that you have to go back to the State. Commissioner Spence -Jones: You said one word in there, expense. So if it has to go back to the State, which it will have to at this point, how much is it going to cost the City to have to do that? Mr. May: I have no idea. You'd have to ask -- Commissioner Spence -Jones: City -- Mr. May: -- the City that. Commissioner Spence -Jones: -- how much does it cost to -- for the state waiver? I just -- I'm just curious 'cause you mentioned expense. Ms. Bravo: Well, it's a process where basically you work with FDEP (Florida Department of Environmental Protection). They would like to see what's being proposed -- City of Miami Page 24 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: I know, but what's the dollar amount? Ms. Bravo: -- how public purpose is -- It's travel and time of staff to go up there. Commissioner Spence -Jones: Also, all right. So not a fee? Ms. Bravo: But at the end, the State may require a percentage of the revenue to be paid to the State and we would propose that Jungle Island would bear that cost. Commissioner Spence -Jones: Okay, so y'all would pay that. Mr. May: Well, we would pay that if the State would agree that we pay it. Commissioner Spence -Jones: Okay. Mr. May: What happened in the Flagstone situation is the State basically said, no. The City has to pay it, not the leasehold. Commissioner Spence -Jones: And how much did the City pay? Mr. May: I don't know what City paid. Commissioner Spence -Jones: City, how much did we pay in Flagstone? Ms. Bravo: The State required 15 percent -- Mr. May: Which was always the deal. Ms. Bravo: -- under Flagstone. Commissioner Spence -Jones: Okay. Mr. May: Which was always the deal, so they didn't increase it at all. Commissioner Spence -Jones: Okay. So can you just put that on the record? You -- the fact that you guys will sit down -- not necessarily come up with an agreement, but at least have a conversation. Ms. Leavitt: Yes, Commissioner. We are very open to listening to what they have to say. This is the first I'm seeing that brilliant red line around our location, and yeah, it is a bit ominous for us to see that and go what are you doing to us and our history and what we 're trying to do and what we're trying to achieve going forward, which will be very beneficial to our community. We are open to listening to them should they come to us. At this point, all I've heard prior to this meeting is rumor that they wanted to have a conversation. So I can say on behalf of Miami Yacht Club, we are listening and we can come to the table and have a discussion. Don't know what the outcome's going to be -- Mr. May: Of course not. Ms. Leavitt: -- 'cause I have to answer to my board too -- Mr. May: Absolutely. Ms. Leavitt: -- and my members so. City of Miami Page 25 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. May: Understood. Ms. Leavitt: But -- Commissioner Spence -Jones: At least we have a start. Ms. Leavitt: We're listening, yes. Commissioner Spence -Jones: Okay, all right. Ms. Leavitt: Thank you. Commissioner Spence -Jones: Thank you. In closing -- Mr. Chairman, thank you for allowing -- for indulging me. Chair Suarez: We always do. Commissioner Spence -Jones: I -- you know, I have some -- I've always been a supporter of Parrot Jungle, so let's be clear on that. So it's never really been about that. I just -- I have some big concerns on -- with the number of passes or the number of times that we have basically covered them. And you know, with the City being in the position that it is and financially with the City, you know, for the most part, we're responsible for 80 percent of the loan. I mean, it seems like this is just a bad deal from day one, you know. Andl know that we're in it and we have to address it and we have to work through it, but I just think based upon our conversations, you know, with staff regarding this issue, you know, we have to make a decision as to whether or not enough is enough, you know. In this marriage that we've had for the last eight years, you know, has it been more giving than taking or taking than giving, andl think we know the answer in this scenario. The City has been basically giving the whole time and not much giving being -- happening on the other side. So that's my concern. Andl understand that we are, you know, in a bad situation andl know that we have to try to resolve it, but the thing that really bothers me the most out of the discussion -- andl have to say it -- is it almost feels like when we actually got this item for this hearing today, that it was almost like, okay, well, you either take it or leave it. That's what it felt like to me. It felt like, you know, if you don't do this, Commissioners, then we're not going to do anything, which, to me, I think that if we're looking at this partnership and we're looking at this marriage, I think that we've done everything we could possibly do to help save Parrot Jungle. And then in the end, for it to all boil down to this particular moment where we have to make a decision and you're telling us, okay, well, if you don't do this, then we're not going to do anything and then you're going to be stuck. Andl just think that's a little unfair. And I'm just telling you -- and not only are you saying, okay, well, help us get through this situation, but now you want more land, now you want more time. I don't know what else you want after that. You want my grandkids and they [sic] kids? So I just -- and you know, Brian, I could be a lot tougher on this issue than I'm being right now. I'm trying to send a very solid message to you so that when you come back in front of the City Commission, you come back with something that's fair, really. Because right now the way that it's -- you know, then not only that, you're saying, oh, yeah, they're there, but they're not really there. Now on top of that, you're being disrespectful. So I just really hope that the next time that this comes back in front of us, that you guys have thought -- carefully thought this out, that you have respected the Administration because I know they've been going back and forth with you on this issue, andl know that this has not been an easy process for them. Our CFO, our budget folks and Henry and all these folks, I mean, they work very hard and their jobs, at the end of the day, is to make sure that we're not left holding the bag, you know. So this whole issue of gross and net, I mean, that should not even be a conversation after all the considerations that the City has given Parrot Jungle. City of Miami Page 26 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. May: Absolutely. And Commissioner, I want you to understand that your comments are well taken and we appreciate them. But there's a real important point to be made here, and that is we're not coming with a solution or proposal that is hat in hand, completely hat in hand. In fact, we're coming with a proposal that actually contributes $16 million on day one to get rid of your obligation to have to pay that HUD loan and so -- Commissioner Spence -Jones: Brian, Brian, Brian. Mr. May: -- I just wanted to say that. Commissioner Spence -Jones: Brian, I wouldn't -- I'm just going to say this. I wouldn't go there. Let me tell you why I wouldn't go there -- andl was -- we was going to let it smooth on out and that's it. Mr. May: Okay. Commissioner Spence -Jones: You know, I kind of gave you an out, but don't -- Mr. May: I'll step away. Commissioner Spence -Jones: -- add onto the out, okay. And what I'm saying to you is, don't tell me you're giving me 16 when you already owe me 15 'cause we've been paying for it. So you're not really doing us a favor. You're going to give me the 15 -- the extra 15 that we already paid, 'cause we need it. Mr. May: But Commissioner -- Commissioner Spence -Jones: Don't go there. Mr. May: No, I'm not going there. I'm just saying the only reason that we're here today is because we -- just like the Administration, I think you all believe that we're at a point where we have to do something because we -- Commissioner Spence -Jones: Brian. Mr. May: -- are not in a position to be -- Commissioner Spence -Jones: Brian. Mr. May: -- able to do that going forward. Commissioner Spence -Jones: Brian, and what I'm saying to you, in the midst of all of this -- and please don't take it the wrong way -- but it's -- you know, for you to say I'm basically doing -- we're doing you a favor -- Mr. May: Not at all. Commissioner Spence -Jones: Let me finish. Mr. May: I'm not saying that. Commissioner Spence -Jones: We're going to take the debt -- handle the outstanding debt, but you didn't mention about what the City's already paid out of its coffers that needs -- are you going to give us back the 15 that we already gave you? City of Miami Page 27 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. May: Yes. Commissioner Spence -Jones: You -- the 15 plus the 16? Mr. May: Yes. Mr. Martinez: Well, they -- Mr. May: That's what the plan is. Mr. Martinez: -- they're going to get -- if what they want -- Mr. May: That's the whole idea. Chair Suarez: And then some, correct? Mr. Martinez: -- happens, they're going to get rid of the -- Mr. May: Yeah. Mr. Martinez: -- 15 million HUD right off the books, which he says we're on the hook -- or that metaphor of the hook. I could go all day with that, but let's look at the -- Mr. May: Well, we're on the hook. Mr. Martinez: And a participation agreement to the 16million that we're out of pocket, that's part of the participation agreement, whether it's net or gross, to pay that back. Commissioner Spence -Jones: So -- I want to be clear -- all together, you're giving us 30 million? Mr. May: More than that potentially. Mr. Martinez: More than that. Commissioner Spence -Jones: Thirty million plus -- Mr. Martinez: Two million -- well, about thirty-four million. Chair Suarez: Well, let me ask this question. Does the -- after -- I know the answer to it, but I want to put it out on the record. After whatever was in arrears is paid by this participation agreement -- Mr. Martinez: It continues. Chair Suarez: -- does it stop or does it continue? Mr. Martinez: Continues. Chair Suarez: So theoretically speaking, we could be making money on this deal forever? Mr. Martinez: Yeah, if we go to the profit -- Chair Suarez: Okay. City of Miami Page 28 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Mr. Martinez: -- the net gross. Chair Suarez: Thank you. Mr. Martinez: I mean, gross, not net. Chair Suarez: Gross, gross. Commissioner Spence -Jones: Gross. Chair Suarez: Yeah, right. Okay. Mr. Martinez: If it's net, we'll never see a penny. Commissioner Spence -Jones: Just in closing -- right. Right, we'll never see a penny. So I just want to be clear in closing. So my biggest issue and concern at this point is we definitely -- please do not come here without talking gross. That's really what my bottom line concern is because of everything we put out. Mr. May: Understood. Commissioner Spence -Jones: That's it. Chair Suarez: Thank you. I'm not going to talk about gross. I'm going to talk about some other things. You know, one -- I've listened to what all my colleagues have had to say. Couple of things that kind of strike me and bothered me a little bit, to be honest with you, is this notion of a bad marriage because the fact of the matter is, if it's a bad marriage, we have no one to blame for it but ourselves. Commissioner Spence -Jones: I know. Chair Suarez: Because in July 2007, this Commission, which I was not a member of -- Commissioner Gort: We were not. Chair Suarez: Right, many of us were not a member of -- authorized the deferral of $17 million of HUD loan payments. So I don't know what the Commission was thinking at the time but, you know, it's -- if -- we're equally to blame, at the very minimum. Then in June 24, 2009 -- I was not a member of that Commission. I was probably thinking about running for office, a decision I'm right now potentially regretting a little bit, but -- we agreed to defer another $2.5 million. So that's about $20 million that this Commission, this body, this government has decided to defer, so I mean, I think we have no one to blame but ourselves for that. Mr. Martinez: We had a bad marriage counselor. Commissioner Spence -Jones: And Commissioner Suarez, since you bringing it up, I just want to be -- Chair Suarez: Sure. Commissioner Spence -Jones: -- very clear 'cause the only people that could have been remotely sitting up here is these two Commissioners. So you can understand when you hear my passion around this issue that we're not going to continue to go down the wrong road. Chair Suarez: Oh, I appreciate that. City of Miami Page 29 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Commissioner Spence -Jones: So when you -- so I think that me communicating to Brian and to the Parrot Jungle folks that we've already given them several passes in this bad marriage. So the question becomes not only do you now want -- already I've given you several -- given you two chances. Now you're saying, oh, I want you to give me three, plus I want more land, plus I want more time. So, at the end of the day, you're right. We made a decision back then to save a situation, but we don't have to continue to be in something that's not good or healthy for us. Chair Suarez: Yeah. And by the way, you know, I would like to have an uninterrupted time to talk so -- Commissioner Spence -Jones: Go ahead. I just want to make sure -- Chair Suarez: -- going forward 'cause I have --- Commissioner Spence -Jones: No problem. Chair Suarez: -- some points that I want to make so -- Commissioner Spence -Jones: No problem. I want you to make them. Chair Suarez: You know, what is at stake here -- andl'm not really deciding one way or the other today --I want to listen to what everybody has to say andl think have -- is -- which is very different from what took place in 2007 and 2009. 2007 and 2009 there were amendments not to make payments. What we have before us here is an amendment to make a payment and essentially get the City off the hook for debt that it's going to have to pay in the future. Andl am sure you're very sensitive to the fact, as am I, of what those Section 108 -- and I think the Vice Chairman made a point about it in the last Commission meeting, andl actually read the minutes where it said, you know, the impact of not having those Section 108 funds is something that we are obviously very, very passionate about and we don't want that to happen. You know, I think a lot of financial analysis still has to be done going forward. We have revenue that's generated as a result of the Miami Yacht Club. We have revenue that's generated as a result of the Miami Parking Authority, andl haven't gotten any analysis as to how that would be impacted by this decision. We obviously -- first of all, I want to thank the auditor for being here. This is the first time in the two years that I've been elected that the auditor has actually come to a Commission meeting and given us advice on a decision andl think that's a practice that we should continue because we have our City Attorney, we have our City Clerk. There are other constitutional officers, andl think it's important when we have financial issues that we have our auditor here and analyzing them and giving his perspective. So I want to talk about what Commissioner Sarnoff said in the newspaper, which is this is a bad deal, andl'm not so sure that there's a good way out of it. That's something that really stuck with me. I actually did read the paper when I was in Europe. And you know, it's -- you know, from my perspective, having just gotten here a couple years ago, there's been a variety of bad deals that we've been saddled with, debts that we've had to deal with, deficits that we've had to deal with, and we've had to make some very, very, very difficult choices. We've had three consecutive budget years with multimillion dollar deficits. My first one was 115, my second one was like 62, andl think this one is about somewhere in the $35 million range. So, you know, we've had to make a lot of very, very difficult decisions as a result of -- you know, it'd be nice if we would have been adequately reserved at this point when times were tough, but we're not because decisions were made prior to me getting here that dwindled our reserves from, you know, 120, $140 million to 13 to $20 million that we currently have right now. You know, one of the things that concerns me and that worries me is, you know, we're talking a lot about the past of the deal, we're talking a lot about what would happen if this deal comes together and what kind of implications, but we're not really talking that much about the future of this property. And one of the things that worries me, concerns me, to be quite honest with you -- I think we're airing it all out here, everybody's having an opportunity to City of Miami Page 30 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 air out their thoughts and concerns -- is I don't want this to become another Miami Marine Stadium, you know. I don't want this to be a property that for the next 20, 30, 40 years is abandoned, waterfront property, priceless property, and that's something that really, really concerns me. I mean, obviously, we have -- andl know there's been much debate and discussion about the Flagstone deal, but, you know -- and by the way, if we decide to go the route of default, you know, we'll have a perfect case analysis of the two because in the one case, we did a modification to the agreement. We got, I think, two hundred and something thousand unbudgeted dollars, andl believe the Flagstone group has been current and making all their payments since that time. So we've gotten -- continue to generate revenue from that property versus being in litigation, having no one there, having to go through a very cumbersome process to replace the person. So you know, I think what happens sometimes in the public is they simplin, these things, and these things, obviously, as you can see today, are not simple. They're extremely complicated. They involve Charter provisions. They involve referendums, you know. This is not a straightforward, simple situation. Obviously, I think we all know where the public sentiment is andl think, you know, the Commissioner expressed it very well. I think the public is -- you know, and just in e-mails that I've received and in interviews that I've done, I think they're very wary of us doing anything that is seen as a forgiveness or a continuing -- you know, a continuing generosity. And the City ofMiami, as we all know, is really not in a position to be all that generous. We are struggling to make ends meet, under reserved, and we have employees -- we have about 3, 700 employees who have -- whose pay and benefits have been cut drastically over the last few years. So all of that is the context with which we make decisions. We don't make decisions only in the narrow context of one deal. We're looking at it in the context of how this organization operates and thrives. You know, I think we've covered pretty much everything else. I mean, there's -- you know, there could be specifics that could get into now, butt think, you know, one of the things thatl talked about with the Administration is the escrow option versus them making the payment in August. And you know, to me it came down to whether getting some more clarity on who the investor was and things of that nature because you have to differentiate, in my opinion, the investor from the operator. If I'm the investor and I'm looking at a situation where there's an investment opportunity to essentially bail out the City from a bad deal and then use that and whatever concessions are gained from that to generate money, that has to be separated from an owner/operator who maybe hasn't been able to operate it at a profit. I think, by the way, there has to be more analysis done on that. I didn't hear any compelling evidence on that issue, so I look forward to the auditor general's office having a completed report because I think we need to kind of drill down and see and make sure that we 're comfortable saying that this owner/operator cannot make this payment and is not profiting in any other way from this venture, for other companies, subsidiaries, ancillaries, vendors who are profiting, where the money could come from to make the payment in August. So I think there has to be some, you know, drilling down of that. Those are just basically my thoughts, you know, kind of stream of consciousness just based on what everybody has said here and the things that they've thought of. You know, again, I think we're reaching an Armageddon point and that's the reason why I was persuaded to call this special meeting. It's a big deal. It's a lot of money at stake for the City ofMiami, and if we're going to do something, we have to do it -- you know, not on an emergency basis but on a pretty expedited basis because we have an August payment coming. We have a November election if we're going to put it on the ballot. So I think it was important for us to have this open discussion. Sometimes we agree on some things. Sometimes we disagree. It's not -- you know, we don't always have to see eye to eye on every single thing, but I think the discussion is healthy. And you know, hopefully the Administration will put together a plan for what will happen if we do not decide to go forward with this and look at the other deal parameters and obviously have conversations with the Miami Yacht Club to see if maybe something more complete can be presented to this Commission at a regular Commission meeting where all the Commissioners are present. If that can happen, great. If it can't happen, then, you know, we're going to need that Plan B real quick. Thank you. Let me recognize the Vice Chair and then we'll recognize Commissioner Spence -Jones. Vice Chair Sarnoff You know, this scenario reminds me of the movie 127 Hours. It's the movie City ofMiami Page 31 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 where James Franco plays true to life someone who's trapped -- was rock climbing and fell in a crevice and he had to decide when it was time to cut off his arm. The question just is, at what point did he have to cut off his arm. Andl just can't even imagine what that must be like when you make that conscious decision, you know, for me to live, I've got to cut off this arm. This is just a parallel thought. At one point does a bad deal just end and what point do you make that decision? You make that decision informed. You make that decision when you have an alternate plan of succession. You make that decision so you know what tomorrow looks like. And you have to make that decision in strong consultation with your attorney because -- andl think Spence [sic] kind of knows this 'cause she's been up here long enough to know. We get into a legal battle, it's going to be a long, drawn -out battle. Just think it will be. And on the other hand, I would -- I'd rather right this ship today so that somebody sitting in Spence's [sic] seat two year -- two Commissioners from now, sitting in Sarnoffs seats [sic] two Commissioners from now has something out there that they're extremely proud of. So, you know, I just want you to know that met with a lot of people on this. I met with Carlos Migoya because I thought, as a banker, he has dealt with this distressed property and has dealt with scenarios like this. I talk -- took advice from him. I've went to bankruptcy attorneys andl took advice from them. I just want to point one thing out to Jungle Island. I think the Administration has done a reasonably good job at analyzing where we are and the two requirements that they have to move forward andl share their sentiment with moving forward. I don't know that there's not a way that you can't become the proper operator that you want to become, but I think you have to right the ship to make the ship sail. I think you have to decide to get your arm out of the crevice, maybe with some aid of -- from us. But I think it's really incumbent upon you all to tell us why it is your Plan A is better than Plan B. Andl don't know that you've completely done that. You've set some parameters down. You've put down some numbers, but I haven't seen a vision. I haven't seen your vision as to what you think this particular -- I guess it would be the south -- I guess it's -- I guess the north -- I guess it's the north point of the island -- what it would look like when you're done with your vision. And then how do you incorporate -- or do you incorporate a Miami Yacht Club 'cause on the very -- on the other hand, why don't I have the Miami Yacht Club, which has paid all its rent, take you over? I mean, I could justifiably in my own mind suggest that. Commissioner Spence -Jones: That's what I'm saying. Vice Chair Sarnofff. I could -- Miami Outboard's not here. I don't know how they're doing, but -- andl'm not suggesting that. I actually think -- Chair Suarez: You guys got 30 million (UNINTET,TIGIBT,F) laying around somewhere? Thirty million maybe? Ms. Leavitt: (UNINTET,TIGIBT,F) Chair Suarez: Okay. Vice Chair Sarnofff. And my only point in this whole conversation is to say it's complicated, it's tough. I think the Administration has done a reasonably good job. I think you need to come a lot closer to the Administration's recommendations I think for this Commissioner to move forward. And from the Administration's standpoint, I really do need to see what tomorrow looks like. And by the way, same criticism of you: I really need to see what does tomorrow look like 'cause I don't know what your tomorrow looks like, what numbers on a page. I mean, Commissioner Spence -Jones is going to have to sell this to her community. She's not going to sell it with numbers on a page. She's going to say, this is the vision. This is what they're going to do. These are the people are going -- And everybody's got a different parameter -- but these are the people they're going to employ. This is how they're going to make it better. They're going to pay this back. I mean, it's there, but it's not really there. Andl think it all starts with what does this look like tomorrow. What is -- I'm going to use you for the person, you know. But what is Brian May's vision for Jungle Island? Well, but it is yours. You're the presenter. What is City of Miami Page 32 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Bern Levine's? What is Ron Krongold's? What is Jungle Island Inc.? What is Jungle Island LLC (Limited Liability Company)? You want me to name them all? I can name them all. I could name all the single purpose entities you have out there. What is the vision so thatl can go back to District 2 and say to them, I had a horrible choice to make? I didn't have a good choice to make in 2007. I didn't have a good choice to make in 2009. I'll take the criticism from the Chair. Because I always thought that was going to stop the bleeding, andl didn't like any of the -- I'm not going to like the decision I'm going to make in the next couple of weeks and it may be a no decision. That's a decision in and of itself. But in order for me to make an informed decision, what does tomorrow look like? Andl merely mean that from an architectural standpoint. What does it look like? I think the Yacht Club's got to be curious what do they look like. How do they get incorporated into your plan? Are they a part of it? Are they not a part of it? And to the Yacht Club, show us a plan. If you've been paying your rent out there, maybe you're Plan C, 'cause I can't wait to see Plan B from the Administration 'cause my concern -- and by the way, I will not make my decision based on the fact that we have, I think it's 25 million -- no, $26 million of liabilities out there. I'll take the hit ifI need to as a Commissioner. I'll take the hit now so that two Commissioners from now can turn around and say there's something really great out here. Thank you. Chair Suarez: Commissioner Gort. Commissioner Gort: Let me tell you, this, I think it went to the voters about 10 years ago or 13 years ago. The voters voted for it because it was going to be profitable for the City ofMiami. The City ofMiami was going to benefit quite a bit. So now we coming back 17 years later. We're going to take it to the voters again. My personal feeling is, we need a lot more information, first of all, to convince us that this is the right deal for the City ofMiami. One of the things we're looking for within the City ofMiami is reoccurring revenue 'cause we need it. We have employees. We got to meet payrolls. We got to meet a lot of expenses that we have, so we have to make sure. Now this has to go to the voters. Now the voters are going to have to vote on it, and there's going to be several things in that elections [sic] that are going to be very confusing. They better have a better understanding what's going to happen in the City ofMiami, how this is going to benefit the City ofMiami, and how they going to benefit themselves. I believe that's going to be very important. So you have to be crystal clear what's going to go in front of the voters and what's going to come in front of us. I think -- like it was stated before, I think the City has worked very close with Parrot Jungle to stay alive and we would love to see it stay alive, but we'd like to see a good deal though 'cause if not, you're not going to sell it. The voters got to vote on this if we do approve it and it's a good deal, but you got to convince them just as you have to convince us. Thank you. Chair Suarez: Commissioner Spence -Jones, bring us home. Commissioner Spence -Jones: Let me just say this. First of all, Mr. Chairman, I want to say to you that I really pride -- have a much respect for this Commission. And Commissioner Sarnoff andl served on a different Commission prior to this, andl can honestly say that the synergy that we have on this Commission is a very special Commission. Everything that we all have to bring to the table is very unique. So for me, I'm always going to respect your leadership and the Commission, so that's -- I want to be clear on that. I -- Chair Suarez: Thank you. Commissioner Spence -Jones: -- think it's really important as you get older in this or -- Chair Suarez: Yes. Commissioner Spence -Jones: -- you go through this process -- City ofMiami Page 33 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Chair Suarez: I'm aging quickly. Commissioner Spence -Jones: -- you learn, okay. Andl can tell you -- I'm not going to call myself an older Commissioner now, but I think that I have enough stripes to know, you know, that at this point in my life -- Chair Suarez: Appreciate it. Commissioner Spence -Jones: -- on the Commission, I'm much stronger and I'm much wiser than what I used to be. So whatever deal that came in front of us, you know, four years ago, five years ago, you know, you go into it wanting to do the right thing. Chair Suarez: And to be fair -- Commissioner Spence -Jones: Let me finish. Now you said -- Chair Suarez: I'm going to let you finish -- Commissioner Spence -Jones: -- don't you interrupt me. Chair Suarez: -- now. Now I'm going to let you finish. Commissioner Spence -Jones: I didn't say not one -- Chair Suarez: There you go. True. Good point. Touche. Commissioner Spence -Jones: Okay. So I want you to understand that, you know, a lot of times, you know, when you vote on a -- and especially when you're a neophyte Commissioner, you're trying to believe everything that is put forth because you want it to go right. Chair Suarez: Of course. Commissioner Spence -Jones: You want it to be good. Chair Suarez: Of course. Commissioner Spence -Jones: But when you keep doing the same thing over and over and over again, then it becomes your responsibility as a leader -- that's why people voted for you -- to make the right decision. If that means, like you said, cut the arm off you cut the arm off you know. So -- Chair Suarez: Definitely. Commissioner Spence -Jones: -- I'm not going to make a decision up here -- I never will make a decision up here based upon, you know, a mistake that I feel was made four or five years ago. I'm going to make a decision based upon what I know is right today. So I just -- I want to -- I really want to say that to you because I don't ever want you to feel, you know -- When you leave andl leave and Willy leaves and Commissioner Sarnoff leave, believe me, there are going to be some deals that we have voted on because we understood the plea of the individual that came in front of the mike and the circumstances were different at the time. Chair Suarez: That may not pan out, right. Commissioner Spence -Jones: Back then in the City ofMiami when these items came in front of us, the City was -- City ofMiami Page 34 Printed on 7/23/2012 City Commission Meeting Minutes June 19, 2012 Chair Suarez: In much better shape. Commissioner Spence -Jones: -- had -- I'm not going to say had an abundant cash flow, but we were doing all right -- Chair Suarez: All right. Commissioner Spence -Jones: -- so we could make those type of decisions. Now we're in a different boat altogether. So I just want, you know -- it's really important, you know, for us to understand when we make decisions about things or say things about whatever issues, it's based upon our experience with an issue. So that's what you heard from me today. I agree with Commissioner Sarnoff and Commissioner Gort and yourself that I think that when this stuff comes back in front of us, I think that we need to understand our options. I think before when we made decisions, we were not even looking at other options. Andl can't say if there's not someone out there that would write a $30 million check. I don't know that. Andl think that we have to rely on our Administration to at least provide us with those options, as Commissioner Sarnoff said a B and a C. I think that that's their responsibility and it's our responsibility to ask that it happens. It's not to just give them another pass. So I just really wanted to say that 'cause I think that it's important to say that. I don't want us to have disagreements -- I mean, we're not going to always agree on the dais -- Chair Suarez: Right. Commissioner Spence -Jones: -- but the respect part of it should always be consistent, you know. So I just really wanted to say that. So Brian, I just think that, hopefully, when you bring this stuff back to us, that all of the things that we've requested for today actually happens, you know, and that you really sit down and come up with something that makes sense for the City and makes sense for your neighbors 'cause that's what it's about in the end, it's us being able to find -- come together with a plan that makes sense. Chair Suarez: Thank you. And I think you're right. I think -- I agree with everything you said, actually, andl think times were different then. Commissioner Spence -Jones: Yeah. Chair Suarez: You know, they -- you know, the economy was much better. The City was in better position financially. I just -- I didn't want to give the impression that -- you were kind of saying it was a bad marriage. I didn't want to give the impression it was the fault of only one party. Just like you don't like when something is said in a way that kind of pushes out somebody, which I agree with as well, I didn't want to give the impression that it was the fault of only one party. It's the fault of both parties. Usually, when it's a bad marriage, there's usually the fault of both parties, at least -- not always, but sometimes. So I just wanted to provide a little more context to that. But you're right. I think times were different. Maybe I would have made that decision at the time. I don't know. I sincerely hope and pray that when I'm gone, none of the decisions that I make end up being bad decisions, but you never know. I mean -- Commissioner Spence -Jones: It happens. Chair Suarez: -- it happens. Okay, meeting adjourned. The meeting adjourned at 10: 54 a.m. City of Miami Page 35 Printed on 7/23/2012