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Consultation Report - CBRE
CONSULTATION REPORT RICKENBACKER AND MARINE STADIUM MARINAS 3301, 3311, 3501, 3511 & 3605 Rickenbacker Causeway Key Biscayne, Dade County, Florida 33149 CBRE File No. 16-397M1-181 1-1 Daniel Rotenberg, Director CITY OF MIAMI, DEPARTMENT OF REAL ESTATE AND ASSET MANAGEMENT 444 S.W. 2nd Avenue, 3rd Floor Miami, Florida 33130 wwvv.cbre.com/valuation CBRE VALUATION & ADVISORY SERVICES CBRE Valuation & Advisory Services Orlando, FL 32801 T 386-672-3339 F 407-839-3132 wwwcb re.com October 20, 2016 Daniel Rotenberg, Director CITY OF MIAMI, DEPARTMENT OF REAL ESTATE AND ASSET MANAGEMENT 444 S.W. 2nd Avenue, 3rd Floor Miami, Florida 33130 RE: Consultation Report Rickenbacker and Marine Stadium Marinas 3301, 3311, 3501, 3511 & 3605 Rickenbacker Causeway Key Biscayne, Dade County, Florida CBRE File: 16-397MI-181 1-1 Dear Mr. Rotenberg: Based on your authorization letter dated August 15, 2016, CBRE has prepared a Consultation Report of the above referenced subject property. The subject property includes five real estate parcels as follows: • 3301 Rickenbacker is the main marina parcel • 3311 Rickenbacker is the four-story office/restaurant, DBA Whisky Joes • 3605 Rickenbacker is the bathhouse, located on the north shore of the marina basin • 3501 includes a submerged land parcel in the Marine Stadium Marina, (MSM) basin and • 3511 includes the upland areas of the MSM portion of the subject. In addition to the submerged land, the 3501 parcel also includes upland area that is generally known as the Marine Stadium, which is not part of this analysis. In addition to the MSM uplands, the 3511 parcel also includes a portion of the parking lot for the Marine Stadium, which is also not part of this analysis. The reader is directed to the Aerial Photograph of the subject for a graphic description of the subject. According to Miami RFP No. 12-14-077, dated June 15, 2015, the subject property includes 53.49 gross acres and approximately 43 acres of submerged land. The purpose of this report is to identify and analyze the physical, legal and financial characteristics of the subject as they relate to its potential redevelopment, by either the City of Miami or the private sector. The format of this report will be in two parts, which are presentation Daniel Rotenberg October 20, 2016 Page 2 of baseline data and the second will be the analysis of that data. The analysis section will be an itemized presentation of redevelopment concerns cis outlined in the Letter of Engagement Page 5, (Due Diligence and Feasibility Modeling). For the client's reference, we have included the Letter of Engagement in the Addenda of this report. The first major goal of the analysis portion of this report is to discuss and analyze each of the Due Diligence items as well as citing the data sources that were used for each Due Diligence item. The second major goal is to fully vet each of the Feasibility Modeling concerns that are located on Page 5 of the letter including the sources of data used to support each analysis. These two major goals will focus on the quantitative aspects of the redevelopment plan cis well as safety and efficiency. We will not deal with the aesthetics or qualitative aspects such as architecture, etc. After the two major goals have been fully vetted, the final analysis will identify if the redeveloper/operator of the subject should be an experienced private sector developer/operator or a municipal governmental body. The two major components of this analysis are: 1. An analysis of anticipated redevelopment cost and timing as well as 2. An estimate of the stabilized Net Operating income, (NOI) from the operation of the redeveloped property. The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. We realize that this document will be a matter of public record, and as such, accessible to the public. However, no one but our client, The City of Miami may rely on the contents, analyses and conclusions contained in this report. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non -intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). CBRE 0 2016 ORE Jnr, Daniel Rotenberg October 20, 2016 Page 3 It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Jeff H. Carson, MAI, MRICS Brian L. Finned, MAI, CCIM Vice President Managing Director — Orlando/Jacksonville Cert Gen RZ 1612 Cert Gen RZ 914 Phone: (386) 672-3339 Fax: (407) 839-3132 Email: Jeff.Carson(CBRE.com Phone: (407) 839-31 17 Fax: (407) 839-3132 Email: Brian.L.Finnell@cbre.com CBRE Certification Certification We certify to the best of our knowledge and belief: 1. The statements of fad contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of any predetermined results that favors the cause of the client, the opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this report. 6. This consulting assignment was not based upon a requested result. Z. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Florida. S. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 1 a. As of the date of this report, Jeff Carson, MAI and Brian Finnell, MAI have completed the continuing education program for Designated Members of the Appraisal Institute. 11. Jeff Carson, MAI has and Brian Finnell, MAI has not made a personal inspection of the property that is the subject of this report. 12. No one provided significant real property analysis assistance to the persons signing this report. 13. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest. 14. Jeff Carson, MAI and Brian Finnell, MAI have not provided any services, in any capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. ,‘5L,,eati Jeff H. Carson, MAI, MRICS Brian L. Finnell, MAI, CCIM Cert Gen RZ 1612 Cert Gen RZ 914 CBRE Executive Summary Executive Summary Property Name Rickenbacker and Marine Stadium Marinas Location 3301, 3311, 3501, 3511 & 3605 Rickenbacker Causeway, Key Biscayne, Dade County, Florida 33149 Date of Report October 20, 2016 Date of Inspection August 24, 2016 Land Area 53.49 AC Zoning CS - Civic Space Highest and Best Use As If Vacant Mixed Use Waterfront Development As Improved Mixed Use Waterfront Redevelopment The above Highest and Best Use conclusion As Improved is best supported by private sector redevelopment and operation. Below, we have summarized some of the key advantages of private sector redevelopment 10 the city: o Construction Cost Savings: $67,000,000 to $100,000,000 o Additional City savings of $3,450,000 for parking garage o Long term land rents including base and percentage rent o Baywalk and Boat Ramp paid for by private operator o Avoidance of potentially extensive seagrass mitigation cost o Private operator pays real estate tax, insurance and all expenses o Increase financial returns to the City o Minimize the threat of risk to the City Comments In our opinion, there is an unacceptable down -side risk to the City associated with permitting the project, unknown costs of seagrass mitigation, potentially high cost over -runs, etc. There are also several significant financial benefits to a private sector waterfront specialist developing and operating the project as identified Our recommendation to the City, is to put this project back out for bid and request guaranteed annual incomes and not base rent plus percentage rents. That way, the highest guarenteed net rent bid should win the contract. CBRE 8, 2416 COM. Inc. Subject Photographs Subject Photographs C Aerial View - Combined Rickenbacker/MSM Redevelopment Parcel CBRE Subject Photographs Rickenbacker Causewa Lookin• SE Permit Only Parking Area Uncovered D Sli • Stora • e Sub'ect NE From Rickenbacker Causewa Public Parking, Not Part of Subject Fork Lift Launch Ram• CBRE Subject Photographs Uncovered Jet Ski Dry S1i. Stora•e Fairway SW of B Dock A Dock, Concrete Deckin. Section Jet Ski Launch Ram • Fairway Between Docks A and B A Dock, Wood Deckin. Section CBRE Subject Photographs B Dock, Concrete Decking Section ift ; ' Agkiikk, •••1 ,..11117 C Dock, All Concrete Decking Fixed Wood Sta.ing Sli.s vi B Dock, Wood Deckin. Section D Dock, All Concrete Decking Rental Boat Dock CBRE Subject Photographs Fuel Dock Four -Story Office/Restaurant Ships Store Interior VII Fuel Dock Office Elevated & Covered Outdoor Bar Seating Bathhouse CBRE Subject Photographs Perimeter Fencing Guard House Dry Stack Electrical Outlets "USTIP� WHISKEY :9E2 e AI 1kIV t i illU171 Pro'ect Signage Typical Utility Pedestal Downtown Miami From Sub'ect CBRE Subject Photographs MSM Uncovered Dry Sli . Stara • e MSM Covered dry Slip Storage MSM Under -Utilized Surface Storage MSM Uncovered Dr Slip Storage MSM Under -Utilized Paved Area MSM Fuelin. Station CBRE Subject Photographs MSM In/Out Staging Area MSM Masonry Utility Building 11111111111111111111.111111111111 MSM Staging Slip #10 Fire Rescue Vessel MSM Office/Bait Sho • MSM Restaurant MSM North Basin and Miami Sky -Line CBRE Table of Contents Table of Contents Certification Executive Summary Subject Photographs Table of Contents xi Market/Subject Data 1 Area Analysis 4 Site Analysis 12 Subject Improvements 13 Data Analysis 14 Due Diligence 15 Redevelopment Feasibility Modeling 50 Assumptions and Limiting Conditions 58 xi CBRE Introduction Market/Subject Data PROPERTY HISTORY Title to all five of the subject components are owned by the City of Miami. Street addresses 3301, 3311 and 3605 Rickenbacker Causeway are currently leased to Rickenbacker Marina, Inc, while 3501 and 3511 Rickenbacker Causeway are owned and operated by the city. The following is a leasing chronology of the three Rickenbacker parcels. The City of Miami leased the Rickenbacker Marina including Whiskey Joes and the bathhouse to Martin Rabin and Henry Grady, dba Marina Biscayne Inc., on July 8'h, 1977. The initial term was 20 years, with two, optional 5 year extensions. Phase l of the development included 95 wet slips among other things. Phase II included the acquisition of 50 boat cradles, et al. Phase III added 50 dry rack storage slips. Phase IV added an additional 105 wet slips, bringing the wet slip total up to approximately 200. Phase IV also included an additional 50 dry storage slips, bringing the dry storage capacity up to 150 dry slips. The initial base rent was set at 10% of the receipts of the wet and dry storage, excluding taxes. Percentage rent was charged based on all other sales at; 2% to 3% of gross receipts, depending on monthly volume, plus 2.5 cents per gallon on all fuel sales. This was a NNN lease with the tenant being responsible for all taxes, insurance and operating expenses. The property area was cited as 20.975 acres. Marina Biscayne, Inc., assigned the original lease to Michael Brandon on January 31, 1983. On June 25'h, 1986, the previous Lessee transferred its interest to Rickenbacker Marina, Inc. On January 8, 2009, the City Commission agreed to extend the existing ground lease which was to expire on January 7, 2009, to July Ph, 2016 for all of the non -dry stack areas. However, the dry stack areas were only extended to July 7'h, 2013, with three one year options to renew at the City's discretion. The minimum annual rent was set at $360,000 per year. The percentage rent was set at 1 5% of the gross receipts from wet slips plus 12% of the dry slip revenue plus 40% of any third party subleases or licenses plus 5% of any other related services plus 5% of the gross revenues at the fuel dock. This First Amendment is a NNN lease with the tenant being responsible for real estate taxes, insurance and all operating expenses. On July 30, 2009, a revocable License Agreement was signed between the City of Miami and Rickenbacker Marina, Inc, and superseded the previous agreement dated August 5, 1985. This license allows the licensee to the non-exclusive use of the parking area adjacent to the Rusty Pelican. The use fee was $500 per month, increasing by 3% per year. According to the legal description, the lease area contains 20,594 SF. On February 23, 2011, a Second Amendment was signed, changing the renewal options on the dry stack area from three, one-year options to, one, three-year option, which was exercised immediately upon acceptance of the amendment. Therefore, the entire lease for the subject was scheduled to expire on July 7, 2016, which was about two months prior to the date of this writing. CBRE Introduction On May 41h, 2011, the parties entered into a Third Lease Amendment. The effect of this modification was to exclude 522.72 SF of submerged land from the Rickenbacker lease and transfer the use of that property to the Rusty Pelican operator. INTENDED USE OF REPORT This report is to be used by the client, The City of Miami for internal decisions regarding the potential redevelopment of the subject. No other use is permitted. INTENDED USER OF REPORT We realize that this document will be a matter of public record, and as such, accessible to the public. However, no one but our client, The City of Miami may rely on the contents, analyses and conclusions contained in this report. Intended Users - the intended user is the person (or entity) who the consulting analyst intends will use the results of this report. The client may provide the consulting analyst with information about other potential users of the report, but the consulting analyst ultimately determines who the appropriate users are given the consulting problem to be solved. Identifying the intended users is necessary so that the consulting analyst can report the opinions and conclusions developed in the report in a manner that is clear and understandable to the intended users. Parties who receive or might receive a copy of this report are not necessarily intended users. It is the responsibility of the consulting analyst to the intended users identified in the report, not to all readers of the report. PURPOSE OF THE REPORT The purpose of this report is to aid the client with internal asset management decisions. SCOPE OF WORK This Report is intended to comply with the Ethics Rule and the Competency Rule, as set forth in the Uniform Standards of professional Practice, (USPAP). The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered and analysis is applied. CBRE, Inc. completed the following steps for this assignment: Extent to Which the Property is Identified The property is identified through the following sources: • postal address • assessor's records • legal description Extent to Which the Property is Inspected CBRE inspected the surface of the land parcel as well as the interior and exterior of the subject buildings. We did not inspect the roofing, plumbing, electrical, air-conditioning or mechanical 2 CBRE Introduction systems. We have assumed that these systems are compliant with local codes and are in good working condition. We also inspected the surface of the watersheet, or basin. However, we did not inspect the submerged land or any improvements below the waterline. We have assumed that these systems are compliant with local codes and are in good working condition. We have assumed that the submerged land is free of contamination and free of any organisms that might inhibit normal maintenance dredging throughout the basin. We have also assumed that all improvements below the waterline are in good working condition. Type and Extent of the Data Researched CBRE reviewed the following: • area data • subject data including; • zoning • flood zone status • demographics • water depths, etc. 3 CBRE Market Data Area Analysis Moody's Economy.com provides the following Miami -Dade County metro economic summary as of July 2016. The full Moody's Economy.com report is presented in the Addenda. 4 CBRE . L, Market Data MIAMI-MIAMI BEACH-KENDALL, FL - ECONOMIC INDICATORS Indicators 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Gross Metro Product {C58) 104.2 104.4 106.4 108.5 111.1 1 14.7 118.7 123.8 128.7 132.3 135.2 1 38-7 % Change -0.5 0.2 1.8 2.0 2.4 3.3 3.5 4.3 4.0 2.8 2.2 2.5 Total Employment (Ths) 985.1 1,007.3 1,031.3 1,056.7 1,089.4 1,123.4 1,140.8 1,168.1 1,196.3 1,216.3 1,222.6 1,225,7 % Change -0.3 2.2 2.4 2.5 3.1 3.7 1.6 2.4 2.4 1.7 0.5 0.3 Unemployment Rate (%) 11.1 9.4 8.4 7.6 6.9 6.1 5.4 4.6 3.6 3-4 37 4-1 Personal Income Growth (%) 7.7 4.5 3.8 0.4 5.0 5.7 5.0 6.6 8.4 6.8 4,9 4.9 Median Household Income (5 Ths) 41.7 41.4 41.6 42.2 42.9 44,7 46.0 47.8 50.3 52.3 53.7 55.2 Population (Ths) 2,508.2 2,580.1 2,611.2 2,641.9 2,668.9 2,693.1 2,728.7 2,767.0 2,806,8 2,847.1 2,887.5 2,926.6 % Change 1.8 2.9 1.2 1.2 1.0 0.9 1.3 1.4 1.4 1.4 1.4 1.4 Net Migration (000) 30.6 58,8 17.9 17.4 16.2 11.1 24.7 27.6 29.1 29.7 29.9 28.8 Single -Family Permits 941.0 962.0 1,819.0 2,266.0 2,077.0 2,800.0 3,154.7 5,954.7 7,584.7 7,819.6 7,287.7 7,357.6 Multifamily Permits 2,262.0 1,656.0 3,250.0 8,050.0 5,654.0 9,817.0 8,160.0 11,181 4 11,5628 8,973.3 8,202.8 8,604.8 Fhfo House Price {199501=100) 195.9 1831 186.1 207.9 233.6 257.9 284.0 304.1 309.1 301.2 292.2 286.9 Soarce: Moody's Economycom Recent Performance Economic growth in Miami -Miami Beach -Kendall is slowing. Though the area's jobless rate has dipped to 5.4%, the lowest since 2008, total employment has grown by just 1.6%, about half the statewide pace. After expanding at an above -average pace since the Great Recession, Miami has added fewer than 3,000 jobs in leisure and hospitality over the last year, which is below the area's 10-year average for a 12-month period. Hourly earnings have barely increased over the last year, and house prices are growing at the slowest rate since 2012. Tourism Jobs in leisure and hospitality, which make up 12% of the area's workforce, are contributing to Miami's job growth, but warning signs have emerged. Economic turmoil in Europe, political upheaval in Latin America, and warmer winters in the U.S. and Canada represent threats to tourism in South Florida. The industry may already be feeling the impact of these events as evidenced by the slower job growth and the recent decision of the massive Marriot Marquis Miami Worldcenter, which is under development near downtown, to trim 100 rooms from its planned hotel. Population growth Miami added residents last year at the slowest pace since 2008, but gains will accelerate aver the next five years. Faster growth is likely because it is originating with Hispanic residents, who make up the nation's fastest -growing ethnic group. From 2013 to 2015, Miami added more Hispanic residents than during any three-year period since 2000-2002, and the area's total population would have declined in each of the last three years if not for growth in its Latino population. Across the nation, Latinos constitute 18% of the population, but they accounted for 48% of U.S. population growth last year. Miami will sustain above -average population gains because the area will remain attractive to this fastest -growing segment of the U.S. population. 5 CBRE Market Data Manufacturing Headwinds including a strong dollar, rising energy prices, and a maturing economic recovery will cut jobs in manufacturing nationally, but factories in Miami enjoy local advantages that will grow factory employment in the short term. Port Miami is already one of eight Post-Panamax harbors in the U.S., and another is being dredged at Port Everglades in nearby Fort Lauderdale. These deepwater ports are capable of handling the largest vessels that can navigate through the recently expanded Panama Canal, ships that can ferry 21 times more cargo than Panamax vessels. Over the next several years, these South Florida harbors will attract manufacturers seeking to reduce logistics costs by locating their plants in proximity to shipments from foreign suppliers and to international markets. Producers in Miami will also benefit from the state's recently approved tax exemption for industrial machinery and equipment. The law gives a permanent tax break to manufacturers by extending a provision that was enacted in 2014 but is set to expire next year. Because the original tax exemption was scheduled to sunset after only three years, it had no significant effect on manufacturing in the state. Florida still has the smallest share of jobs in manufacturing. The now -permanent tax cut should encourage more factory owners to expand production in the state's metro areas. Conclusion In the near term, job growth in the Miami MSA will accelerate thanks in part to its large port, which is attracting jobs in trade, manufacturing and tourism. Over the forecast horizon, Miami's international character, combined with its high -skilled, bilingual workforce, will help the metro area outperform the nation in household income growth. 6 CBRE Subject Data NOAA CHART 11465-VESSEL APPROACH DEPTHS 6 16ft 11 0 9 k:k 6 5 13 8 N.,0000_ 8 • FIG2.5s16ft5M"69r r6 9 9 9 11 Sh 10 2 1 ti • ♦• ff.. � • a w . •a a • • DOME 3 T/i + 9 Ob 7 CBRE Subject Data 8 CBRE FLOOD MAP Subject Data 9 CBRE u TNIS CHIL lar. ZONING MAP 10 Subject Data CBRE Subject Data BOUNDARY SURVEY BOUNDARY r Marine Stadium Marina Unnamed Access Road Rickenbacker Marina 11 CBRE Subject data Site Analysis The following chart summarizes the salient characteristics of the subject site. SITE SUMMARY AND ANALYSIS Physical Description Gross Land Area Primary Road Frontage Secondary Road Frontage Water Frontage Water Frontage Shape Topography Zoning District Flood Map Panel No. & Date Flood Zone Adjacent Land Uses Comparative Analysis Visibility Functional Utility Traffic Volume Adequacy of Utilities Landscaping Drainage Utilities Water Sewer Electricity 53,49 Acres Rickenbacker Cswy Unnamed Road South Basin North Basin irregular Approximately 9 feet CS - Civic. Space 1208-6C04-81 L AE-9 Marine Stadium 2,330,024 SF 2,040 Feet 1,660 Feet 1,800 Feet 1,530 Feet above sea level Rating Average Average Average Assumed adequate Average Assumed adequate 11-Sep-09 Provider Miami Dade Water and Sewer Department Miami Dade Water and Sewer Department Florida Power and Light Source: Various sources compiled by CBRE DATA SOURCES The data sources used for the above includes the existing ground lease with amendments, FEMA flood maps, NOAA Chart 11465, the City of Miami GIS web site and our inspection of the subject. The road frontages and water frontages were estimated using the measuring tool on Google Earth Pro. 12 CBRE 4 2016 ORE, Inc. Subject Data Subject Improvements The following chart shows o summary of the improvements. IMPROVEMENTS SUMMARY AND ANALYSIS Property Type Subject Buildings Rickenbacker Four -Story office/Restaurant Rickenbacker Restaurant/Bar Patio Seating Rickenbacker Ship's Store Rickenbacker Bathhouse MSM office/Bait Shop/Warehouse MSM Restaurant MSM Utility Building Gross Building/Patio Areo Vessel Storage Wet Slips Dry Rack Slips Total Vessel Storage Slips Year Built Actual Age Effective Age Total Economic Life Remaining Economic Life Age/Life Depreciation Source; Various sources compiled by CBRE Mixed Use Waterfront 17,883 SF 4,500 SF 1,000 SF 900 SF 2,600 SF 4,000 SF 4,000 SF 34,883 SF 190 Slips 648 Slips 838 Slips 1980, 1983, 1985, and 2006 32 Years 25 Years 35 Years 10 Years 71.4% DATA SOURCES The building size for the four-story office/restaurant was provided from the Miami -Dade County Property Appraiser's web page. The remaining Rickenbacker building/patio sizes were provided by the operator. The vessel storage inventory was provided in the Marine operating permits for Rickenbacker and MSM. The sizes of the three MSM buildings were estimated based on the measuring tool in Google Earth Pro. No building plans or reports were provided for this analysis. COMMENTS Because the purpose of this report is to analyze the potential redevelopment of the site, the existing buildings and site improvements have not be discussed in detail. 13 CBRE Data Analysis Data Analysis In this section of the report, we have analyzed several physical, legal and financial characteristics of the subject and its potential redevelopment. We have reviewed a large volume of data for this analysis. Due to size restrictions we have not included the data in the addenda of this report. DUE DILIGENCE The due diligence section of this report includes the following sections: 1. Known Environmental Issues 2. Ingress/Egress 3. Known Geological and Topographical Issues 4. Review of the Virginia Key Master Plan 5. Zoning 6. Approach and Dock Depths 7. Demand for Boat Slips 8. Existing Use Analysis 9. Current Wet/Dry Slip Configuration 10. Feasibility of Expanding Wet Slips into the North Basin FEASIBILITY MODELING 1. Wet Slip/dry Slip matrix 2. Amenities and Services 3. Fuel 4. Marina Office/Support Facilities CONCLUSION 14 CBRE Data Analysis Due Diligence 1. KNOWN ENVIRONMENTAL ISSUES Data Sources: • Florida Department of Environmental Protection • Miami -Dade County List of Contaminated Sites — Subject Not Listed • Miami -Dade County Department of Regulatory & Economic Resources • URS Phase I Environmental Site Assessment Rickenbacker Marina Parcels • URS Phase II Environmental Site Assessment Rickenbacker Marina Parcels The subject was not identified as contaminated by any of the above County or State resources. However, Page iv of the URS Phase II report identified a previous fuel spill that has been completely rernediated with no further use restrictions. There was also an observation of potential petroleum stains at the entrance of the waste oil storage shed. A copy of the Soil Borings map is included below. 15 CBRE Data Analysis As indicated above, two of the three soil Boring/Ground Water sampling sites are located on the MSM site and SB-1/GW-1 is located on the Rickenbacker site. The conclusions to the Phase II Environmental Site Assessment are included below. 16 CBRE Data Analysis 5.2 Conclusions / Objectives Met. The results of the laboratory analyses of soil and groundwater samples have indicated that there are areas of the City of Miami Rickenbacker Marina that have been affected by the activities at the marina. The horizontal and vertical extent cif the detected parameters needs to be established. in order to design proper reriiecliation actions as needed, The affected soils in the vicinity of SB-1 G\V-1 should be evaluated to establish the extent of the arsenic in the soil. It is reconuuended that soil borings be stepped out front the area of SB-1 OW- 1, It is recommended that these borings be a minimum of ten (10) feet front SB-1 GW-1, Samples should be retained for analyses from the 0-2 foot and 2-4 foot depth intervals. A second set of samples should be collected from a distance of twenty (20) feet and analyzed as needed. The groundwater quality in the vicinity of SB-2 OW-2 and SB-3 OW-3 should be evaluated. Permanent monitoring wells for confirmation of the results presented in this report should be installed at the location of SB-2 CiW -2 and SB-3 G\V-3, Additional shallow monitor wells should be installed a niiniinuni of twenty (20) feet from the locations of SB-2 C+W-_' and SB- 3 G\V-3, in order to establish the horizontal extent of the affected area. Depending on the results. additional shallow monitoring wells may be required. The arounchvater in the area of SB-2. GIV-_' would be evaluated for arsenic. The groundwater in the area of SB-3 G'V-3 nvould be evaluated for arsenic. benzene and trichloroethene. 2. INGRESS / EGRESS Vehicular and pedestrian access to the MSM property is via a signalized driveway entrance on Rickenbacker Causeway. This driveway entrance functions as a shared access point for the Marine Stadium property, (which is not part of this analysis), and the MSM component of the subject. Vehicular and pedestrian access to the Rickenbacker component is provided by an unnamed, publicly owned and maintained two-lane, asphalt paved right-of-way, (ROW), which extends from the north side of West Bound Rickenbacker Causeway, through the subject and terminating at the Rusty Pelican Restaurant. For the remainder of this report, we will refer to this unnamed road as the "ROW". The fact that the ROW divides the Rickenbacker component and also serves as the only access to the Rusty Pelican Restaurant is problematic. The primary areas of concern are safety, efficiency and security. Since the Rickenbacker dry storage racks are on one side of the public driveway and the dry slip launch area is on the other side, each time a vessel is launched or retrieved, the fork lift operator must cross this road, potentially damaging vehicles or injuring people. Since the fork lift drivers must constantly be on the lookout for and yield the right of way to pedestrians and vehicles, the entire dry stack operation is compromised in terms of both safety 17 CBRE 20Ia CERE. I�t, Data Analysis and efficiency. However, both of these two concerns are completely mitigated by the assemblage of the Rickenbacker component and the MSM component. One negative aspect of the ROW that cannot be mitigated is the reduced level of security caused by the ability of unregulated pedestrians and vehicles to use the ROW 24 hours a day. 3. KNOWN GEOLOGICAL AND TOPOGRAPHIC ISSUES We are not aware of any geological or topographical issues that would interfere with the redevelopment of the subject. A copy of the soils map from the VKMP is included below. As indicated above, the subject soils include Urban Land soils. 4. THE VIRGINIA KEY MASTER PLAN The Virginia Key Master Plan, (VKMP), is a report of the current conditions and a conceptual master plan for a 1,000 acre barrier island known as Virginia Key. Virginia Key is located East of Downtown Miami and north of Key Biscayne. The three guiding themes are diversity of recreation, waterfront access and use and celebration of natural and cultural history. The intended design criteria include public access to the waterfront, to protect the natural resources and to implement sustainable development. A summary of the chronology of the process is included below. 18 CBRE Data Analysis VIRGINIA KEY MASTER PLAN Chronology (present to past) • July 22, 2010- Adopted by the City Commission • July 21, 2010- Approved by the Planning, Zoning and Appeals Board • July 15, 2010- Presentation to the Parks Advisory Board with no quorum • July 11, 2010- Approved by the Waterfront Advisory Board • March 27, 201C)- Dade Heritage Trust and Virginia Key Public Planning Coalition presentations at Rusty Pelican & design workshop at Virginia Key Beach Park Trust offices • October 8, 2009- Deferred by the City Commission • October 5, 2009- Approved with conditions by Waterfront Advisory Board • September 27, 2009- Urban Environmental League Design Workshop • June 17, 2009- Denied by the Planning Advisory Board • June 9, 2009- Denied by the Waterfront Advisory Board • May 20, 2009- Public Meeting #4 at Museum of Science • August 26, 2008- Public Meeting #3 at City Hall • June 20, 2007- Public Meeting #2: Community Workshop at La Salle HS. • March 29, 2007- Public Meeting #1: Presentation of Site Inventory & Analysis at Rosenstiel School of Marine & Atmospheric Science The proposed land use map below identifies the subject portions of the VKMP as "Areas to be improved and revitalized for public access and recreation". 19 CBRE Data Analysis re MY COOPITTtCOuaTT. AMO LANDS- NOT TO IR ALTIRII NIITUUIC AND INVIROM■ TO TO ■I I •NO R*MITALISIb FOR fU*LIC ACCEII AND ■ICRIATIOU ROADIIAT AND •EDE1TRIANII/111 CIRCULATION IMPAIR MR imr-� The following is an exhibit from the VKMP showing the existing conditions of the subject and surrounding areas. 20 CBRE Rusty Pelican Restaurant Data Analysis 5.7 Marine Stadium and Basin Area Properties . Existing Conditions Rickenbacker Marina Dry -Stack Boat Storage Miami Marine Stadium & Parking Miami Rowing Club and Swirn Gym Mast Academy The conceptual plan for the subject and the surrounding area is included below. Legend 1. Lookout point 2. Rusty Pelican 3. Parking Garden 4. Exr sting, Rickenbacker Marina 5. Proposed ne. Marina expansion 6. Rickenbacker Causes -.!ay 7. Fresh Market 8. Fishing Charter Dorf, 9. Fountain 10. Rusty Pelican bridge 11. Hwracio's restaurant 12. Parking structure %%fith retail finer 13. Pedestrian walkway 14. Dry stack storage 15. Marine Exhibition Center 16. Miami Marine Stadium 17. Marine Stadium entrance pima 18. Hobie beach 19. Open green field 20. Swim Gym 21. Rowing Club 22. Mast Academy 21 CBRE e+ 2014 CBL L. Data Analysis 5. ZONING The following chart summarizes the subject's zoning requirements. ZONING SUMMARY Current Zoning Uses Allowed By Right, Warrant or Exception CS - Civic Space Food Service, General Commercial, Marine Related Commercial, Open Air Retail, Recreational Facility, Infrastructure, Utilities and Marina. Zoning Change Not likely Category Zoning Requirement Source: Planning & Zoning Dept, Miami 21 was enacted by Ordnance 13114 on October 22, 2009. According to the current zoning map for the City of Miami, the subject is zoned CS, Civil Space. CS is a zoning designation that is used to identify City owned property that is leased to tenant -operators. "CS is a zone with mainly outdoor area dedicated for functioning for community purposes." The use of this space is intended to provide land and businesses that serve the needs of the public and cannot be used for any use that is not open to the public such as private condominiums. The following is an excerpt from Article 6, Table 13. MIAMI 21 AS ADAPTED - MAY 2015 ARTICLE 6. TABLE 13 SUPPLEMENTAL REGULATIONS (CONTINUED) c • CIVIC CS -CMG SPAc PENSRY WA) WIA a- CiViC ItISIMMON DENSITY OF ABUTTPNG ZONE 0-1i) -civic itsIfliniON HOU.TnrNSTTJCT 150 UNITS PER ACRE BOATS HOUSEBOAT HOUSE BARGE Occupant' u' privale pleasure crafts and hcueocats Or house barges shell tvx be allowed except tell Moe epeoincaty grandratner d and rtyliated by 9tdnance atr-e32. adopted Oa t,ber 24. 199l Occupancy of private pleasure raafG and holr;waca:.- or Igor'» bargee shall not be a33wed eo *A1 Fs Pica0 speorcany randla^ red and rcgrtated by Otdmanrd e1c,'32 000pterf alasier 24. 199t Occupancy ar private p6eue crafts and homebaam notr-e bale: '.'!fait not be atlowe except tot Mow epeaycary grar4aeeted end regrd1ed by Ordnano e10932 adapted October 24. 1991 DOCKS Eeensat of Ondx. and Pies rib Biscayne Bay are Ula14o11 el axis and piers tree P.k caytre Bey are E,1msn;n of coos and isms rift Biscayne P.ay are PIERS brMiled 10 35 to l ,yeeve by Exo>,pcan a 600 feet tmrirran enema,: of darks and :tiers into Biscayne limited to 35 feet However. by Exception a &1 fee maximum erteriWen d docks aril piers alto Biscayne Write,:tp 35 feet HDw1v►1. by Expep(xn a SIXfeet maximum extenwon of docks and piers ir0o Biscayne Bay may be o11ceed Bay may be allowed. Bay may be afbwed EV1 on of docks arrd Piers into ether waterway: o Extension 01 docks and Piers into otaa waterways is Extensor of docks end Pier into Ober wetmraye as In ited to I0 trot or 19': of the oath of the waterway. landed to 10 tee, win of the with of Pre waletway. Mined to i0 feet oe 1 C% o1 fie wash of the vrate!way. whichever to loss. However. by Exception funnel whet ewer Is ins. However. by Exception further whichever is less However. by Exception heftier twenpan maybe opprcvcd. 5.,.t i In apptoval hum all et1ay101 may In approved. 'eubjoI to approval `ran all el1eneco my be approved, s0f40.c to apptovw tern applicable agendas applicable agenaes all applicable agenoeo According to the land lease from the City of Miami to the Company, the permitted uses include a very wide variety of public commercial uses including restaurant, retail, marina and many others. A complete list can be found in the land lease document. The following are the uses permitted by R-Right, E-Exception and W-Warrant or Administrative Process. 22 CBRE 2016 :=Pie. oc Data Analysis MIAMI 21 AS ADOPTED - MAY 2015 I7FNBIIY (UNI1S PER ACRE RESIDENTIAL SINGLE FAMILY RESIDENCE COMiU14IT1 RESIDENCE ANCLARY AFT TWO FAMILY RESIDENCE MULTI FAMILY MOUSING DORMITORY NOW. OFFICE LVE . WORK WORK LIVE LODGING BED a BREAKFAST NOTE, OFFICE OFFCE COMMERCIAL Nlto RELATED C �N.41RCYL ESTAB ENl F. TA ^,VET F 4: A3LSHMENT ENT E ,T.1 A'0.11".,T ES -AS - ADuLT F,x ESTAEELIE-A'.EN: ALC 04C' BEVERA=E SERVICE ESTAB. GENERALCOVMERCrAL MARINE RELATEDCOAIMERCULL ESTAB. OPEN AIR RETA,L PLACE OF ASSEMBLY RECREATIOWL ESTABLISHMENT CIVIC COMVLLNIrr LUY RECREATIONAL FA ILTY RELIGIOUS FACILITY REOTONA, ACTIVITY COMPLEX CIYfL SUPPORT CO1WL'hr' 5,JP'C4T FAC_7TY I'.IFRAS T RLC "ARE MA10R FACET., MARINA PULL PAR. It* RESCUE %LESSON ^RANSrr FACILITIES 13 SUB-URSAN R L 0 S 9 11 R R R R R R R R R E E E E E 14 URBAN GENERAL R L O 35 N R R R R R R R F R R R R E E R R R R R w R R R R R R E E R R w w R R E R R w w W w E w w ARTICLE 4. TABLE 3 BUILDING FUNCTION: USES T5 URBAN CENTER R L 0 45 65 R R R R R R R R R R R R R R R R E 14 R R R R R R w Yr R R R E E R w w w w R R R R w w E R E R w w w w w E w w E w E w w T5 URBAN CORE R L O 150' 150' R R R R R R R R R R R R R R R R R R E R E R R R R R R w R R R R E E W R R w yr w W E R 1i R R w W E R E R E w w 1Y Yr E 1V w E Nf w E W C CIVIC LS CI C4410 NIA 150' R F E R R R E R w E R E R w R E R w w W E w w E R E E E yr E Y; R E R E R E R 0 D.STR'iT1 D7 D2 D3 06 WA WA R R „r R R R R R R w E E E R R W R R R R R w R R w R R w R R R R R W R R w w R w E E E R R R R R w E w w R R w Section 4.8 of the VKMP is included below for reference. 23 CBRE t 2316 CARE. Inc. Data Analysis 4.8 Zoning The City of Miami new Code (Miami 21) ncludes the following zone designations 10 the City owned areas on Virginia Key. T t . Natural Transect Zones (T1) A Natural Transect IT 1) Zone is a zone for environmental conservation a. A T1 Zone is to be left in an essentially natural stale. Modification or the natural conditions shall be according to Local. State and Federal guidelines. Public access to TI areas may be limited if it presents a threat to wildlife and plant life within the areas. b In a le Zone, improvements shall serve solely to protect natural elements Any paved, graveled, mulched, boardwalk or othenwse improved surface or any habitable, enclosed or air eonditlonea space shall be kept to the minimum scale neces ..11y to fulfill Its purpose. Such improvements including but not limited to: screened or glassed enclosures, pathways, fencing, gatehouses, lighting. toilet fatllliles parking areas. etc. may be allowed by process of Exception. Only activities and improvements which reinforce the natural character shall be allowed and upon a finding that there Is no negative eltect to lice environment based on a sludy of potential environmental impacts 10 be prov€ led by the applicant. CS - 5.7.1 Civic Space Zones (CS) 5.7.1.1 Development in a Civic Space Zone should have a minimum of fifty percent (50%) of Its perimeter enhonting a Thoroughfare Civic Space sites shall be entered directly from a Thoroughfare 5,7.1.2 Development in Civic space Zones shall be consistent with the standards in Article 4, Tables 3. 4, and 7 5.7.1.3 One or more Buildings may be built in each Civic Space. Building floor area shall not exceed twenty-five percent (25%) of the lot area of the Civic Space, and shall support tine principal use of the Civic Space 5.7.1.4 In Civic Spaces. Buildings shall conform to regulations of the most restrictive Attuning Transect Zone. except as shown by City of Miami's Parks and Public Spaces blaster Plan. Other adjustments to Me regulations shall he approved by process 01 Exception 5.7.1,5 All Community facility and Recreational Facility Uses shall be 0ovemment awned or operated only Ct - 5.7.2 Civic Institution Zones(CI) 5.7.2.1 Development in a Civic Institution Zone shall have a minimum of one (I) Frontage enfronting a Thoroughfare and should have Its pisrnaiy entrance from a Thoroughfare. 5.7.2.2 Development in Civic Institution Zones shall be consistent with the standards In Article 4, Tables 3 and 4. 5.7.2.3 A Civic Institution Lot may have one ( I) or more Buildings, 5.7.2.4 Civic Institution Development shall be permitted by process of Exception. 24 CBRE G 30J 6 CBar. In. Data Analysis 6. SUBMERGED LAND DEPTHS A bathymetry survey showing the south basin water depths is included below. As indicated above, the controlling depth into the Rickenbacker basin is about 8 feet of depth as depicted by the blue shaded areas west of the south basin. The current basin depths range from 7 to 8 feet in the west opening to about 5 feet under the slips near the north and east sides of the basin, where alluvial deposits build up. A typical dockside depth requirement for most power vessels in the 30 to 80 foot range would be 5 to 8 feet deep. However, most boaters prefer dockside depths of at least 7 feet deep or more. In our opinion, the existing depths in the south basin are adequate for vessels in the 80 LF range. However, the redevelopment of the south basin would likely benefit from some maintenance dredging along the north and east sides of the south basin. A colored survey of the water depths in the north basin are depicted in the following exhibit. The blue shaded areas are 8 to 9 feet deep and the green shaded areas are 5 to 6 feet deep. 25 CBRE Data Analysis Assuming that this drawing is correct, the limiting depth for the portion of the north basin adjacent to the subject would be about seven feet deep, which would be an adequate dockside depth for vessels in the 70 Lineal Feet, (LF) range. Waterward access from the subject, out to the Atlantic Ocean is provided by the Intracoastal Waterway, (ICW). South of the subject, the ICW is maintained at an average depth of 10 to 11 feet out to the nearest inlet, which is Bear Cut, (which can be a bit tricky due to the fact that the deepest part of the channel meanders and is poorly marked). Bear Cut is located between Virginia Key to the north and Key Biscayne to the south. The preferred ocean access is the ICW, north of the subject, where easy access out to the Atlantic Ocean is provided by the ICW, north to the Port of Miami and out Government Cut. It is our opinion that waterward access to the subject is good. 7. MARINA MARKET STUDY The market analysis forms a basis for assessing market area boundaries, supply and demand factors, and indications of financial feasibility. Primary data sources utilized for this analysis include: • National Marine Manufacturers Association, "Recreational Boating Statistical Abstract" • US Coast Guard • Department of Highway Safety and Motor Vehicles • Association of Marina Industries • Marine Dock Age Industry Trends, 26 CBRE e :r l d CCI L lo-._ Data Analysis • Rental Surveys of Competitive Properties • Dozier's Waterway Guide • Marinas.com • Claritas Demographic Data • Interviews With Local Market Participants • The County Property Appraiser • Subject Property Data NATIONAL MARINE MARKET According to the most recent edition of the National Marine Manufacturers Association, (NMMA), Recreational Boating Statistical Abstract, the NMMA Statistical Abstract and the Recreational Boating Economic Study, recreational boating continues to be a very important factor to the U.S. economy. The following is a snapshot of the current market position and trends in the boating industry. • U.S. expenditures on boats. engines, accessories, and related costs totaled $3 ;.4 billion in 2014 • Annual retail Sales 01 new boats. engines & marine accessories in the Liss. totaled $1 iti.4 hilli,'n in 21114 • New hoatsales w.:r,. tipi1 tr ;1,,100units in 2i114 • New traditional powerboat sales increased r .4') to 171.500 units in 2014 • New sailboats sold at retail u1, nosed 11 Q X to 7.100 units. • New personal watercraft sales increased 21:01. to 47.U00 uits. • , it imports totaled `2. 3 billion. up 7.2'k, in 2014; units were tip 17.7% to 794.1 74 • .iw h. •,it exports totaled ..2. I billion. down 0.r % in 2014: units were down 6.71:. to 208.'132. • Total engine sales ineludint+ tophnt. outboard, Inboard and sterndnve engines_ were 241,200 units. up 3 4'X, in 2014 • Outboard engines sales were up 4 5% to 218.400 units. retail sales reached 52..E billion. up 8.6`k, • Aftermarket accessory sales totaled i5.1') billion in 2014. an increase of 14.7`ka. • Americans are liking to the water. 1 ; 7 of the ! ,; adult p. pulation-87..3 million Americans — participated in recreational boating at least ,.no ni ?i) i 4. • Mats are uniquely made in America 04 of pt,wt rhttt, scold in the t_Y.S are m.ttli ni the 1.1.S • There wvcre an estimated 12 million registered boats in the U.S. in 2014 • , •1 boats on the water (powerboats. personal watercraft, and sailboats) in the 1J S_ are less than 2n ltiet. • 1:i t..LIIiUted 040.500 pre -owned boats i powerboats. personal watererafi. and sailboats) were sold in 2014. • Itoa1iti , is pint -tank. a 'middle-class filr:lyle as 71 ;% of American boat owners have a household income less than S100.000 Below, we have presented several tables, charts and exhibits depicting the boating industry in the United States. 27 CBRE :or, Cecr. Data Analysis 1.2.1 Recreational boating participation {3lxtilap Ixirticiltatlovl m 2014 was rdatively unchanged Irani 2013 In 2014. 35 7% of respondnllta w@nt bating cc'rre;ponding to 87 3 milhon :adult Anlenean:, taut-[ f.MIESAKRERAPCChRMSt TABLE 1 21 Recreational boating participation 2005 2000 2007 2000 2004 2010 2011 2012 2013 2014 fiery n1 fyttripArr 1r'aex:rlmad rI ln-realkval ,g 2i) 2 14.5a. 7R.3k 32:4 % ..d eq. 35.7'K bunting tit Fast raa_e w pasl 1 r rexenON fy.;s P rip Nnl Il'orr.Ipalad n txra4ng f% 0% 24 7,31 I % 't to,. 2 I el. 21 /Y 20.0% adult Gut not iItl17ntcn ai Ailn I'1sticiparll 011R rrrl rFlnKlpaVd la ttuca4 n,ul ba7t!tx7 El xi a lulb TOTAL =0 3% 37 i 42 A, •14 ,% 43 E). 3t .,% 4 a 5 113.81. 41 rt; 4,5% 100.0% 100A% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100,0% 10DA% CHART 1.2.1 Recreational boating participation Intl# i0 irr,. r ▪ KB NONNI ■ PAS: r'Ai1110lWi1 ■CM1tNT PN 14Ctr'ANT The data table above shows that nationally, the current participation in recreational boating at 35.7% is well above the 2006 percentage, which was only 26.0%. Therefore, the popularity of and demand for boating has increased significantly over the past several years. 28 CBRE Data Analysis 1.4 Boating parlicipatlon by region li '0I 4 18 0rri or current panes In'.d 4r tto Nunn Algntr; rh}en, 1011o414 d dr1ee11 ter the inland r 117 '9 4 and Gfeal ISres retpon 116 8"1..) R7€'r7i nal defiriAon.4 ran he Shire a'r the 5-d ; ) v=cc nemic.T e:.go4.ftw IABLE 1.4 Boating participation by region TOTAL 2005 2096 2037 2008 2009 2010 2011 2012 2013 2014 Household residence by region jie3: lakM• ,75k '9.5% 126% '8 3% 199% '9.5% 18.6k 19.i% 17.3k 17.1% 01.347 1.:'t A0% 1819% 19.4% l944_ 197•'>i 11.K% 18_5% 18.i% 16.71% nee.: ;SSa. 3A% 14I,% 126% 14.31 131% 15.E% 15.6% 15.6% 15.1% Grecoal '028. 06% s0'% 72!1 9.3!1 1000% 8.6%. 92% 10.24. 90% No m Artvi: ' 3 2% ' 268. 12 8.i t 5 11'%, 13_6% 12_7% 15.0% 12.011 13.h` 1754 kll a Alie'n;: • I : +il 4% 11 1_% 10 44 9 E5, 9_2% 93% 9 7% 98% 9.01. Spoil Ass*: .'i^= •311, •.1.,% '6 1 7: •5.5K 11i I±Tr. I ! V, 1539' TOTAL 100.0% 10011% 100.00. 100.01 100.0!. 100.0% 100.00. 100.0% 100.08. 1000% CrieRENT PARTICIPANT 2005 2006 2007 22000 2004 2010 2011 2012 2013 2014 Heuseheld roaderroe by region fine lama, 198% 21 ±% :16% 218% 29 I% Y.' 2% 195:% 2101 19.0% 16 t. mini 182% 27.5% 16.6% '81% 'y4% li 2% 1i0% I66,51'. 18.2%. 172% Psritr 138% 12711 '15% '124. '2OK 11,4% 14r8; 16.9% 180% 145% Goc; 1 10.1-.1% 9.61% 99% 64% 9.I% II.311 82% 1121 11.2% 7.8% !Vol MA.... 13 % 9.35.. 12 9T1 ' 4 9% 112*11 13 4% 16.11% is 0% 13.7% 1e.9%1 1.44,44a'or ' 10% 85!. 10.f% 9.7% 9 2% 9.9% 8.8E% 9.11. 8.2% 02% Smith Al s'4K ' 3 64: 14 e!. 16 8% 19.5% r 9.0% 14.E% 15 ()`: 15.2% 13.3% 15.9% TOTAL. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.01. 100.05. 100.00 PAST PA871C1PANT 2005 209 2007 2009 e900 A010 e2811 2012 ,2012 2014 Household residence by region G.alxkE•s •7tit '92% 193% '75% :al% 17cs. 189 215% 18R% 1112% hiat14 20 21. 20.2% 21 E1h :^..0% 19 4% 24 2% 21 •-% 22.01. :1 2% 182% Pviic 1693. 15.2% :29% 12.0P. 12A 14 fo% 171% 15.8% 15.2% i6.491. Gal Caw 1100% ' 1-7% 101% 4 Vs, 9.11. 4.5% 8 C% 7 .o. 91% 1.5% Tti 4.113" Gr ' 1951 i 1 5% 921. 13. 7% 11.2% 10 O. El Fi. 91I7 1151i. 15.f% PAr. Anew 102% 1a r.1ti ' 1,2% 9 3% 91 8.I% 6 9% an 7 7% 620 Sei81A1oot% '25% '2.0% 151% I4.8% 160% 1611 15.8% 14.;%. 16.2% 15.1% TOTAL 100.01 100S% 100.0% 100.01. 100.0% 100.00. 100.01 100.00. 100.01 100,016 NON-PAIITICtPAN1 2005 2006 2007 2008 2000 2O1{1 2011 2012 2013 2014 Housebsld residence by region f:es1Lates f14% 18.54. 16. 1r7.61 18.0% 18.11 Ii4L. lei% 14.61% 16.2% bard 19.09,1 18.1% 18,5% 19.E+5. Ii_A 18 1% 164% 16.01 i8.01 151". 4t19: 16.1%. '3.0% 1649. 134!. 14.2% 136% 1611% 14.i4. 15.2% 14.9% Gu111::.1s1 10.21 1070. 10,,6 751. 941. 10.1% 9.2% r081 1001. 11.01'i N. til /Marlw t4 1% 15.815. 1391 16 1% 144% 13.6% 15.3% 132% 16 18. 180% M.j Mae: 1 J N1 11 ?!. 11 0% 1 I.814 11 ". 9 6% 11 _ % 11.14, 11 P'.5 0.3% si.ults *Brio: t 1 20. ' 3 80. 12 5% 14 3%i 1=. 11 16.6% 112% 14 6% 15.7"$ 15.0% TOTAL 106.0% 100.0% 100_0% 100.01. 1000'. 100.0% 100.0% 100.0% 100 0% 100.01 As indicated above, boating participation by region is led by the North Atlantic Region. Occupancies and rental rates in the North Atlantic region are among the strongest in United States as evidenced by prepaid annual contracts, waiting lists and relatively high transient rental rates. 29 CBRE Data Analysis 1.9 Boating activities Fishing remained the nog popular or1-lmard astiviy among a wrest parIKiparrts. In 2014. 55.2% of current participants fished while boating. 42.6%swam. and 34.6% entertained larnir and friends. MACE FORESINITxEUAP.CIOOJRC TABLE 1.9 Activities current participants engaged in while boating i:URRENT PARTICIPANT 2005 2110E 20117 2000 2009 21110 21111 2012 2013 2014 Firliirxl 43.5% 36.2% 51.7% 542%, 51.7% 595% F,1.7% 62,9% 57.8% 552% Swimming 3C, f t 43 7% 40.3% 39.0'r 41 3%• 43 6% 44 7% 42.G% Eriteleniulyfannlyrhxnlit 31 6% 25,2% 209% 368% 37.7% 29.9% 329% 34.8% 341% 34.6% Crumng 51119E 32.4% 34.V. i74% 32.7% 326% 37.:4'. 365% 35_5% 32.9% SightsEeing 31.4% 22,0%. 30.4% 20.2% 29.5% 23.6% 31 7% 32.0% 39 4% 29.6% huntradunti 214% 16.4% 28.3% 31.7% 39.0% 214% 284% 20.13% 294% 29A% Nature e1tin,.rrition 24.6% 18.4% 210% 25 7% 23.4% 26.0% 28 3% 29 3% 27 1 % 22.15 rutvral - -- - - - 20 it. 178% 18.8% Canrong - 3.4% 1' 4.0% 15.9% 15.5% 17 5% 20 9% 21.4% 19.39E 15.8% Healing-relaleri special events 11.2% 114% 10.5% 12 1 % 15.2 % IA" 13 7%. 14.8% itsyakuu3 - 26% 79% 9.2% 10.1% 112% 129% 152% 12i% 14.3% Waibrsuinq 17 4% 8.9 , 1(3.5% 16 7% 15.9% 15 3% 16.6% 16.89E t4.6% 13.3% Snorkeling 6.995 3.8% 7.4% 8.4% 6.0% 8.3% 9.2% 11 4% 11 1 % 11.8% Wakeboaren xn 6.6% 5.1 % 8 6 % 10 6% 11.4% 7.9% 9 0% 9 4% 6 8% 9.9% Owl watrr paltry) i.5,% 9.5% 12 :3% 11 4% it 7%, 12 4% 16 r0. 1O'Pi1 9.8% Priming 4.0% 8.7% 5.6% 8 6% 929E 13 0% 9 4% 94% Sleening ahn3rd 1.3% 9.5% 10.7% 8.1% 8.1% 10 5% 11.ri% 8 75 9.4% Punting 0.4% 14% 2.0% 4.6% 2.1% 5.9% 5.7% 71% 64% 7.0% 61wimhx related enlertamrnenl 1 4% 2.6% 21% .12'% 3.4% 4.0% 6.5% 4 9 60% 7.0% Scula r5uing 2.8% 2.8% 2.8% 5095 3.8% 4 85 8.4% 6 7% 5 7% SA% Racing 2.9% 0.85 2 2%. 3 655 2,1 % 3,4% 2 5% 4 9% 36% 3,5% Whitswetetr:n11111 1 8% '8% 3.6%, 3,2% 28% 28% 31% 219w 2.1% (AIR it I':;. 1 95. i 5% 4 R% .5.2% 5 I% 1 0% I A% 7 7% 1,0% I,. dervoilsipoker rule_ 1. ` . 1 9% 1.6% 1 2% 2 6% 2 6% 1 i9'0 1.1:a Fishing remains the most popular activity. Therefore, in most regions, those marinas that are located proximate to fishing and the other top 5 activities will enjoy a natural competitive advantage over other area marinas without such proximity. From 2005 to 2012, the average number of boating days declined from a national average of 33 days per year down to 20 days per year. This steady decline can be attributed to the recession. However, the most recent data shows that in 2013 the average number of boating days took an upturn for the first time in eight years. 30 CBRE MI6 CBRE. Inc. Data Analysis 3.1 Key economic indicators Real GDP arew'2 4% In 2014 after growing 2.2% in 2013 The Increase prlmnrlly reflected gains in inventor investment Personal spending and exports C09119094 10 grow In 2014 The latest survey of professimal forecasters predicts GDP Ira grey 3,2% In 2015 Capacity William!' lichen up rn 2014. averaging T9.1 % and capping helm( at an Index high of 79.5%, Average hourly earnings for private :actor jobs in 2014 were up Sri 28 Iran 2013 and ended the year at $20-7? The 12 month average change In CDIEumel pnces less Ioo'J and energy was up 1.1.1 % in 2014. The actual cora inflation rate averaged 1.6'2% In 2014. in Ih11 mil 1110 F€rd's (Machos Industrial production gained an average 0 4% with growth to 10 of 12 months in 2014 Producer prices on all products less food and energy averaged a 0.1 % gain In 2014. mirroring the consumer price index Unemployment dmftped 10 a six -year Met 5 6% at trig end of 2014. wi1113.1 million lobs aoo.oa to nonfarm payrolls Sa, usuvi l++ USD4 V7f7S TABLE 3.1 a Gross Domestic Product j% change) 2191 2002 2003 2004 2e0S 2006 2007 2008 2009 2010 2011 2012 2013 2014 01 ' 1.1. :i I v ;' 1° .' `3% 4'3% 49% 02% 2I% 5 4% I f% 1 !:% 2.3'i 21% -2.1% 02 : 1't 2.2% 3 f3% 70% 21g I A 31% 20% -05% 39% 2go; 1n 18% 4.8% 03 I.14 211% s , I% ; 4% 04% 7 t% 19% 13% 2 I% 0.e% 5% 4.5% 5.0% 04 11% (13% 411W 2?,A 23% 22% 14% 8.2% 2.9% 7 !A 4F% 1 t% 7yin 22% CHART 3.1 a Cross Domestic Product (°) change) 89% c n% 40% 2CI% 011% 70% 4 Q1, E 0A ae ;:mace eel `:4 '01, '09 '0/ '08 09 10 '11 13 14 a l II 1 09691143 ■'SI GOND 011 1tE11 ■ I)4013WARS ER ■ T011Rni 01MTrn The above key economic indicators provide an indication of the direction and velocity of American disposable income. As indicated above, the national GDP has been positive since Q2 of 2011. This is a very positive indication of potentially increasing disposable income, especially in the light of the growing popularity of boating in the United States region. 31 CBRE Data Analysis TABLE 3.1c U.S. average hourly earnings 2002 2003 2004 2005 2006 2007 2006 2009 2010 2011 2012 2013 2014 J,nuuy $I•' / $1F-i �1✓'.0 S15141 SI64;' Sit 09 `i'i S1641 `;IEl89 $1930 Sl15/ S1994 120.40 lcbrurly CI4 0 51', 3 S15y1 51593 S1648 S111C VT 8O S194f, S1891 SI93I $I0b9 SI999 $2044 March S14.82 S; 27 535.5E 315.9/ SI6t1 5lf?> S118/ S1850 S1892 S1931 41965 S200? MOO aol VA 51`. °( S15.59 51601 516134 511.28 51192 518.51 518411i 5I936 $19./0 S2004 $24,52 14ay S1488 $I;..° Sty-64 S1604 Mel, SI/34 SI/98 S1V,3 51901 41942 $1969 S006 0055 June 51494 SI!,:16 S1561 S1608 $16/;' Sit 41 518.04 5181.•1 S10114 5194? $1912! 5(J1? some Jury 514.98 $II:) 413 515./0 $16.15 51618 51148 S18.11 $18,E0 S1906 S19 r0 519./6 5201A Nu l4rtblst 51!,0? 51E47 SI!._/A $16I7 51683 Slir.,1 S1618 S18Ef, S1911 $1949 $19/5 51018 120,38 :Snuranitier Sr: CT Sib 47 $15/8 51619 $168/ SI/:,i S1821 $18/1 S1914 $19>1 S19/9 'S70.2? $dO,g1 (1cto! r $I' 12 S11,4? S1'J.81 SIG.:µ S16.94 S1/51827 5laib S19"T1 $1916 41961 'S7026 120.72 Nuvelnbel 5151'.a SI,4/ SIb84 31631 S1698 SI/64 51837 S18.81 S19.23 S1951 $198'a S20.31 $20.77 Daronbcr S1!r21 51!.,1f 5(59/ SIG SC SI/05 St//0 $t838 S1884 S1972 $1951 S1991 S2f124 $20.fl CHART 3.1c U.S. average handy earnings S2.1 I S20 S18 S16 $14 SI �Ir '01 '08 09 10 14 Y.uRCE. IM The above data show that while the popularity of boating is increasing, the average hourly earnings data supports the ability of the average hourly wage earner to afford a boating lifestyle. 32 CBRE 7016 COIF. Inc. Data Analysis TABLE :1.1 d Cure Consumer Price index d3 change) 2002 2003 2004 2005 2005 2007 2008 2009 2010 2011 2012 2013 20t4 January 0?% 02`. 0.2% 02% 0.2% 02'1, 03% 0.2% 01% 0.2% 0?% 0?% 0.1% 1rdx:swy 02% 0I% 012% U7% 0,'i 01% 01% 0216 0.0% 0A 01% 02% 0.1% 1.1.,rth 01% 00% 03'k 04% 02% 0I% U % 07'% 00% 01% 024i. 01% 02% Aen1 03% 0.0% 0' 00% 07% 0"06 01X 0"% 00% 07% 0'r% 00% 02% lany 02% 0_2% 02'% 0 1'. 01 o 1% 02% 01% 01% 0 02% 0 1% O.2% AM! 01% 0_I% 02%, o0. D.7% O?% 02% 01% 0.1% 0.2% 02% 02% 0.1% Juh 0:°'. 0.2% 0.1% 0I% 0.2% 0,2% 0.3% 01% 0.1% 0.2% 01% 02'. 0.1% August 03% 0,1% 0.1% 0I% 0.2% 0.2% 0.2.% 01% 01% 03% 01% 02'Y 0.1% Sry,(nn,tr:r 31% 0.1% 03% 01% 0,2% 02% (1.1% 0 "10 01% 01% 0.7'K 0.1% 0,1% (ktubu• 0 1% 0.2% 0.2% 0 3% 02% 0.2% 00% 0 2% 0.1'% 0.2% 0.2% 0 1% 0K llwarnbc, 0:%. 0,0% 0.2% U7% 0,1% 0?% 0.1% 0 1% 0.1% 0.2% 0.1% 0.2% 0.1% Dxember 01% 03.1% 0.2% 0.1'% 01% 0.2% 0.0% 01% 01% 0,2% 0.1% 0.2% 0.1% CHART 3.1d Core Consumer Price Index (% change) 04%, Core Consumer Price Index, dhangej 03 '34 '05 00 111 I1 17 1.1 BOURCE' UBOL As identified by the consumer Price Index, the relative cost of goods has increased at about one to two tenths of one percent per month for the past few years. TABLE 3.211 Relait unit sales: annual tale of change TOTAL TRADITIONAL R11s BOATS POWERBOATS INFLA1ABLE& DWOs SAILBOATS 1906 1.'1% 4 fu. 413% 4 11.2% 11191 (I. (% 91!. 9 Ps 9':. -34.0% 1098 131.1% S 2 % b "': 261 %. 38 1 %, 1140 i. (% 04% 5.5Q 18.5% 3(10% 2000 0.15L 09% 41% - 13.2% 7 1% 2001 0 4% 10 2% u "% 12 11% 16 3% 2(02' i1.4! 3 3% 2 9% 2.0'% 15_,J% 2003 6 0% 5 0% 7 5% - 1 6% 4 9% 200.1 101% 28% 4 1% 36% 14% 39'% 2005 1.1% O4% 02!. 4,1k 0.9% 2006 2.6% 14% 4.t"% 166% 25% 101% 2001 01% b4% 81% 11 t% 7R% 82%, 2000 26.2% 224% 242'L 21% 2110, 311% 019 24.9% 256% 744'% 23,3% 299% 35.1% 2010 11, 1 .. 94%, 121.1% 65% 204% MI t I 0.4% 1 2% 31% 70% 2012 12. 101% 104% 1'02% 283% 201:! 18.1N 2 4% 1.9% 2.3% 5.101. 2014 10.4% 9.5% 6.4% 4.6% 21.0% 33.9% The final component in our national marine market supply and demand analysis is an annual review of marine retail sales. The effects of the 2007 recession can clearly be seen as the percentage of new boat sales went negative from 2005 to 2010. It can also be seen that the demand for Total Boats in the United States has returned to positive and growing levels 33 CBRE Data Analysis immediately after 2010. The increase in total boat sales in 2014 increased by nearly 10% in 2014 over the previous year. 7.4 US. stale reCrEatloln i tiaal registrations U . t1031 root-Maliixts drr.hud 0 7°ale 2'013 cr.:Altlally romrmittu hal at 12 nldlxal Itie t:'p !mo !tarxs 151 [v}3t tegri!ra'tirxts In 2013 WEi-C irtctrarxle9 trorn ; r!1 r . mitt ttr 9466010 Or I:atiltIrma. Wt1 G1 rntw d rip the second snot from laxih. blot foglaratpxl rI Callt+xm13 Intretlsed S F% Item 71rt:' 40 ;a113 nr1t1 polled Mlrrlt0ula rNo 71rr1 horn soond oal Litt legao nto kWh from third 03.3orstrati' In Imlh R1mi„ ,aata and 11415zigan declined nr:4xoxuiiaioi 1% m 2813 compared to ?tit,). 14nv to Iry IA110 slates In 2013 was atknns3whit graved tram 21rd to 1 nth wrlh a I09. r14roa50 m rettrlrattlxis c irmarod In 201:2 Y...+.C1 VdCG TABLE 7.4 U.S. slate recreational boat regletrahms 2013 % CRI IGE 0.8Malkin STATE 7064 2006 2006 2007 2008 2909 2019 2011 2012 2013 '13 n '12 1 f 1.r,i. 946[1.1 'i37 lc9 101 ,S: WI E&) 'oil Wi wt.' .:-'+1 414 =.. 34'! F hr j R! 1 878:748 0 4 % CAti, ; f534 35C 5163 J,a 993 0 96C.831 8441,3 3.C:4!4,i 81 G [0: 39=, 2d'l `1E Wt woo ,19. 1.444K:4 a,3.14o +5,3 400 9:31 PM 495. 967446 611.713, 813.47E auto' 43/7411181714 t It 1714193n 0444_4,, 4iai'43 8251.520 830.;4'1, gin/Sr 411.00. 317C+t3< 103Xti drMOik itss15 10%. I. 74sct+tr 905.46; t;.J 10i4 Fi3S.1!•' 13I1, 614 446 6: 5.: A14 . i53 ' 8? .143 vtm.3. 643,649 • 15% E 74.4E 61677!i tit 4Et6 S4i.311 5'310,56.7 5971n 6.3.t8.4 S 5X 1.•1A S+S.0E4• 57S,4 0Ei Sao 4a41,41 NI. (ES, 416 763 4.3601, 442.24G 136 544 4:5 5:48 135.491 4,41.741. 46:i 5E4 NOW I it Wm 4!9!DYE Ss:§1E 197971 194,02t Ns,V' 170I6' '.i5EPA dp7.1€r8 16253:4 4581eil I4% 11 Oho 4!4irk. 11: t:, 1Q.:SE i15228 44$.566 42491: UP 1'C' tr.* 141.F'1' 44041 Ig9, 1tt 1*.rt1.1:yprrs 1%946 '5,2184 :VON' 3•15.,.E4. 1:5,E74 x ..863 40;112.4E 39:.5844 7917't num 1:4. 1 r lieovi0r4ro 1.4.019 34919 344 too 341.477 376.316 11i r4: 366.772 331509 33.' 4 t 37901 4199 12 1;4,414 an -,..,:. ala:'12 3%S?I 3e4,944 20444 0,7_0h4 3539E." 37,346 3i'' r', 319.811 10% 1? Was 393. 192641. 133615 379414 378.276 3733/30 310.5" air. , 3612,771 310,163 15.61, i4 kur9era ,;a is 3y:18lie 3'?l364 331 49 3[L'.'53 332.1'1 32214' 302,971 0Mt 307.181 0a% 15 1hsa;11.'' ?26iro 324,4.7E 3?1.76: i 2.7E! 314.134 77 194 337.:71 345.7t4 Nun I.0il4 15 0141i0r4t - - 7E5 1,^ ::I45S 211.1TE 277.555 773776 211.3'3 2%5.528 2t,0.374 2135,621 10. 17 r in'e9 ,. . " =.4t :FC 14 r71 475 .K9.361 : 5E I tb 2.5'1004 250, 3: 268.167 Of I, t>• Vi./ota . I. - . .:': N+ 261440 .'44.212 7o1,;115 745940 74';_47.t :.3H1373 231,661 10% 19 A1Wama. 5':. . t. �11 'y'9LSO ?I0194., 194II4 19E8[b 2C15,9:1 2€10.911, 199.ia10 231.408 19.0% rli Wtcr'.ga. Nk.+_. : 793 2 7413"7 7713149 /64 399 ?M.945 727921 234.8d3 :3 654 221,183 Ol:i fl 4134te +3.i3 -' 4-46 1ta.576 211.411 :7133i :N1.424 31.945 211.Ai 214.4141 244,0.9 01% !2 k#a ry'4 14;1 4I 023 214 435 ?I3.f117 231 34'' 744 190 700.14, 311,143 7354.1t. 210,I18 !3 77 ;3 0,4erorru 21Yi949 'P913 216416 7.13,755 453.082 1436,319 304457 199,157 111.1J09 1*101 3.1% 71 liarpan3 2453)1.1 725E/7 20!2,17 7(03172 455207 196.50E 191.759 18Q623 1856''6 111,544 77% 25 ttetN+ed'7 1104E1 '1625.' 1:7It r76.7t6 '73051 11 ,5.34 IFS.? . 171.43E 1/52% 174218 0E% 7e ')o r '47, 144 1514 1 'yy,03/ t54,447 480,410. ICE:t.,7 171531 171.053 tt3O.i85 1114594 151. Ilex,kx-,etl .'rt).Ri43 ;991':p3 2th9E7 '33,t4? t,3<,399 I73,1W 164,750 166.01 lk;<1.:p1. 15071 3.811 ;It 55i r'.,rFts •4.3t})'_1 141(,'1ii '4t151e te,41M 'r51+n t4:.Frr5 IV4....7 134i991 439.17.1 437,188 'I in. .'4 r/r-.i rary. 2041.. 16 ;118 4En : M.43.11 I3215 i t0t 317 144.316 156.71E 166,7d3 ITI.6547 130 19% Mar.. 447294 '46343 '45373 144.670 14).791 1*.165 13572E 131.065 179.221 115111 2.0% 1Fyrk. 94. '! 1 i11, 173.21E ' 12,846 100.657 106 938 t t tin 106.679 4066502 3Ng13 1:?S. 's.' I:srw!',,R r++9S • ;r 145100, I03,514 rleCIO 1092,1 t1$i15 105,409 102057 f111/ 205. 33 !ran15 of t.'2 1010 '02ma la' 294 '00,.81 93.33 %ACC' 94713 01.557 W.976 PM t05. 31 14:4+mM 7763E 52.921 53 311 83.777 83 240 31 660 83,032 34.17' 86.741 1401I 111Z A, 6tbtr 53624 [had? 1143,464 91,617 09026 934,01 61662 44.20 35.149 85,718 0014. 36 ':m1 %..];_; 941512 91361 93.1Z5 9.130 '.s722 91124 8922ai21, .011 1.2% woo., 96t,I7 07745 96rst, 93930 91047 6657:' 89376 72.64t aslivi 11132 201. 35 ltrWCialudi 52.9e" it4% •i4035 63519 46.067 51 6E9 5t35 47531 6:.ia1 08y301 10.5l, 30 I1144 '4.-•d? i130 5 it;,Q1 16,01. 73.4:19 i:.155 75:71 5,127 $5115 46,8112 401. 46 1,4044.,iw s3 ; :1 75_6th 6' 915 Ile.: dd.9i0 93.3914 521(5 4.7,955 5461: 43,419 1814. 41 VW V. 'm 6: ,1 rt1: 1i 470172 53,CE1 49.930 57 415 64:542 64.75..7 1,7 C4ir' 84$4 85% 47 114:4144, 41 77119 519155 13I,564 501169 61,573 62.910 574191 5E,1.41 6$116 1I9. 43 tleutn him r.1'-.1918 514'30 93410 4%F'.1 04.:)41 5h U74 St3.01S 10.14d4:i s7 ;'It 41 A'xska t, 1:" 4952:' 07. 4N 4F534 40,59E 49.89' 91219 4517 4180.19s 4i 4 4a1: . ; r 2n 59.957 93.ti95 57 519 06.453 53 464 50.864 5[i.45/4 48,127 11.391 '11:. WW1 a'trot A_i;'' 43893 43,311 G?615 42.524 :7,5to 45at ":. 47;,45.1 win ? i % 47 5o,sWxa 35 7 3,' 360f3 38754 35100 3311)4 36544 373442 374E9 3.64, 31881 5414 dr4 V41rrlrrni 37.4'9t I% 3219[- 31.462 32,429 30.4at' 3"i.:+t5 75007 28.967 3l1 I 3c5. 49 W,044..r,„ 26.69,4 16.27U .'539E 25956 77743 77.955 25240 70.564 78.1.2,7 31,141 1159. 50 t!axs 13 :I '5 30? ' ; +30 16 094 1, 434 16.769 145. 13,375 14 r£!c 144/ 1 15 I n:1 i 2.47t1; 157,3 :t?-- 263)0 7072 7 .115 30t7 7 9_ ;,,5 pµa 7285, i's. I Frc,-. .. SOf't i=7: 'i9'41 1157r ",'.,;. -,,r. •'777 ;'.,T4 tz, 7e(lr. r0101. U.S. 12.181.471 12.942414 12.741325 12.876S4 12/92/91 12 721.541 12.138,92E 12173.955 121111.43E 12.01 PfRCENTCHANGE .0.1'. 134. .155. 1.04. .1.d: 02% 429. -219; -0fie 47% The above data table shows the total number of boating registrations by state. Florida remains at the top of the chart, followed this year by California, Minnesota, Michigan, and Wisconsin to round out the top five. 34 CBRE 201n PHI. N,, Doto Analysis *0* National Marine Manufacturers Association flil'1Ina.crJ TOTAL ANNUAL ECONOMIC IMPACT OF PLCREAI IONAL BONINC: tlN T 1 2 1. 5 BILLION ECONOMIC SIGNIFICANCE OF RECREATIONAL BOATING IN THE UNITED STATES RECREATIONAL BOATS IN THE USA TOTAL BOATS 17,11451 15655414 IIOATS lt,tat N/ Dowerboals Ina AN{ K903Is HOW/ROM PER MAT 9,9.221 1,2%424 249403 P(41,6 ROAT isl{09 82' 1.4 • leg bwr b<+ kosKeadMats as=eamea Pi Imescdcie I15C5 RFC RFATIONA.L BOATING CREATES JOBS IN —NE USA TOTAL BOATING JOBS 331,526 Bail ;Sat Ing 52 A85 Motor 2 Entane Migr. TA'. Picessonit&gile2,1Igr. i9,L'2 (*elm "%de/km 45.311 Boas Services 1r:QI+4 • 11•1BULDINI • rISSANOLLWAIS • N63611)14W h<GP_ • BOU S81Ni1 • 104110UESIM ESTIMATED JOBS IMPACT OF RECREATIONAL BOA—]NG-REL ATED SPENDING' IN THE USA 312,803 EST. TOTAL JOBS 963,818 EST. TOTAL EA1OR LONE Est. Dire41 Imam, ESI.In-i•e:1 f1 nT` EA.1ru s;r 539.9 49.9 183 177,421 INDIRECT JO 4l'�7y2,y.594 DIRE!T,ie.; Number of Recreational Boats` Rer; all�,l:�a Boating Ii11$05711 Businesses Total Jobs Annual kecrea:iolial Bo9aang-Rela:ed Spending .AILBL0'- 2 iIHEI 6; o 6� PECR6A—I0NAI. BOATING -RELATED BUSINESSES IN THE USA TOTAL BUSINESSES hJr18hr• i i N+A4 1 Engine trig. Aaa3o1), ISupplies Mgr. balms JWhab+Sikrs LEI Serri[es 34,833 241 3,SSa 5,4E6 24,46 RECREATIONAL BOATING INDUSTRY SALES IN TNT= USA tucks Boat Bu�EBing Mote J EngineMigt. Arrascory f Supplie 516.2 TOTAL PIFGR.SALES SUS P,•zler r 04,11 ler S20.6 703E1401 TOTAL RETAIL goyim SALES $61.3 • 6csi'6gM • 1010 1111 1i • C.TOREN;k • IIEW IPS ItORSERvIE 12,182,157 34,833 963,818 $51.4!JILL.. • &kituktufc • PIRSJAS#AfSAL S • ►f'uirg1FOI5 IIkr1 • Bsk131p'A+3 • ,C,5iffieViIk. $6.6 BELL ION $8.1 BILL JN 1918.2 B6 ION 82.0.6 BILLON 4o.i' BILLION Soft awaris[abi iffi40.4114wrfz KchifL'Ceilal►CAg7B36ye�'1FiK 35 CBRE 2016 CBAE. Inc. Data Analysis NATIONAL MARINE MARKET - CONCLUSION The marine industry has a profound effect on the US economy with $51.4 billion in total boating related sales. New boats, engines and accessories accounted for $30.9 billion. The popularity of boating has increased from 2006 to the present. At the same time, the average annual hourly wage has increased modestly. All of the data sets indicate that the American family is recovering from the recession of 2007 and that many have re-entered boating after a three to five year hiatus. Based on the above data and analysis, it is our opinion that nationally the boating industry will strengthen steadily throughout the foreseeable future. 36 CBRE ro; ceet. �� Data Analysis STATE AND LOCAL MARINE MARKET ANALYSIS National Marine Manufacturers Association TOTAL ANNUAL ECONOMIC IMPACT OF RECR[ATIONAL BOATING: ECONOMIC SIGNIFICANCE OF RECREATIONAL BOATING IN FLORIDA $10.35 BJLLtoN RFCREATIONAI BOATS IN FLORIDA TOTAL BOATS' 165,21J 0fit51£10, BBR'S Bfri.e11 r It tiL 727342 Pgl(s 47.7 Salltcals a4.94 at Boat 21,765 4OJZ afa1D5 PER MAl 1.8 •?Gt4 ttatS3n ilswo twat 3, glow !V la?; in tt Lfol RFCRFATIONAI BOATIN0 CREATES JOBS IN FLORIDA TOTAL BOATING JOBS 13,158 tklor: Engt(te Ntgr- SRO 1 Stmagl5unpleslg 4,771 Delet5/ Yha04.465 6,754 Boa Selwo3 27511 oatii301-1!.. ......11111117.11111:11111b leek a& Number ofRerreaional boat' Recrea:ianal Boating Industry Businesses Total Jobs Annual Re reational Bothnq-Related Spending E1twIkMOATr 8 4% 11% 3% • Wawa • k ylitt ` • Wife tie •trAI ut;SiPPIE ESTIMATED JOBS IMPACT OF PgCRFATIONAI. BOATING-RFLATFD SP NDING IN FLORIDA 27,015 12,752 RIF;fICr' I�BS EST. TOTAL JOBS EsI. r0iAt Left INWNf Ee.Dire4Incone 14.Ireted hte: tte 11.1140(1 Income SSi,134.1 IL4T2.4 5 11.1815 15,104 INDIAECIJ 40.833 DIRECT JORt +ITNER MOAT' RECREATIONAL BOATING -RELATED BUSINFsSES IN FLORIDA TOTAL BUSINESSES 5,539 Ecal eulmng 1` MnlafO1911l4M1IF 23 k !Q Y 1 Smelt egt. 432 I>ealrr. ! 731 4 2J RFCRFAT IONA1 BOATING INDUSTRY SALES IN FLORIDA Boakfuning mittictra Si,9547 WAor/&One019'• 11603 Acrxdsery Supok MDgr. 18979 TOULNEGB.SAWES SLOUJ fmalEt 1 fttestais 13,331.7 TOTAL RETAIL & SERVICES SALES $9$D3 DIENKtEiat • FI KGP. • ItiisI.it7JA(15 • %C1$1PP(IE tiFe 865,287 :5,539 82,752 $4.3 N11 . • ens IAm r • O rArti F5 (IFBs • IAOMHEI& #61 • 841.1 sta142. • ll� Jrtnits • 1 S1.954.7 4LLON 6160.5 MLLK3N Es897.9 mutant ss.381.7 MLLCN 8,508.0 MLUIDN 11111 ene In OR !am »4k: ,,I*hi 1114,144,4Wk4e�nran 37 CBRE Data Analysis LOCAL DEMOGRAPHIC ANALYSIS The subject is located in the Miami -Dade market. In its current condition, the subject is a likely candidate for redevelopment due to the older, sub -optimal improvements that are situated on such an excellent location. A baseline analysis for marinas and mixed use waterfront properties can be determined based on demographic data including population shifts and income patterns. Below, we have included a radius map and demographic data for the subject. Radius Map Hialeah Gardens Hialeah (826 ?7 rG53) Miami Springs 348 (920 968i Westchester s27)) Coral Gabl South Miami Pinecrest Palmetto Bay Google 9a4) North Miami Miami Shores Bal Harbour Surtside lvl jail miles Fisher is 38 Map data ©2016 Google CBRE Data Analysis Demographic Data CBRE 330 1 RiCKENBACKER CSWY t+ PONhATION 1 t4.18 3 Miles, 5 Mom., P! Y-F1, P.0,4,111g1 0! Ptp 5 5 I 1 .•1.110' P42; Cilt4V0 ;fat,' 0 00.2 2:14, 1.ti21 G, qat, 0 00** 1-1;)LISEHOI DS i/0.149 99 663 73 475 50 :83 2 32.1, 2137% 320.138 343,193 289.4211 249.662 s 634r 44si 2k, 1 f, t-4',,,,,,,,,,,019,. C.,,,,,,,,r vex, b-;;,,,Tki", 45 936 I 44,297 2921 Hunf,,,..),.. F.,,!- YtNI, PlOiffC.N04. 0 51 190 159.4'78 .5•10 H,,,,,,,n1," 1..".0,, le- 0 30 357 126,805 3000 fir...:,,00,1-ti Cirl$JS 0 22 432 106,848 4-.10 71!I 4,./11,4!Hth!.?"‘,7l C-' vtI' 7021 11.11,1 i-10,yr,!-1010 C;r0,,,11? 9.30!" s 1OUSEH01.0 INCOME 0 00'..si 0.00% 3 61% 2 19% 1 835i- 1 50% 0 00 197 2 17 /C.1 6 2...,eidi.9:1,..2"isks nii,nsoi- .50 581 761 558.181 i'02/ toot...a-tit- !-!c .,,oki 1,,,:!..,,r,,, 50 5E9.578 674.551 516 /..Iiio,ii, H.,-..x,f0,40 !,171p..,v :JO ',IF, I 750' 536,930 2971 %I!!.i,it!, .ir!.il-,'!!.ii.i !,tirl,r,,, 50 S59.009 544.748 s 6 !-4,. GA.0, 1!,:.,r1,,,, 539.405 542 136 531.309 A.:2I 0,, (10.0.a i.,,c3,,,,., 339.405 545353 S34.253 HOUSING UNITS - 2016 Housing Units s.. Otte, ••L: I 20/9 0,.,•,,or Ikrualed 11 U'i4 I)cc, 18!ihol!..rig "I.-. EDUCATION O 57.714 176.411 O 1+4,1N 11 /84 20 .1'. 32,114 182% O NaN 45 929 ;9 t'i,, 144 29/ RI 8% O NaN 11 810 20 61.,, 38.649 21 9' O NaN '15 1'9 59 1% 105,649 5'4 9E 2016 Papulat.on 25 end Over 4 70,401 241.748 3 75 0% 24 345 34 5A,. 104.140 43 1,1k. 1-'411u- 1 25 (1.9, :CS )88 50 i'',, 81.829 36 314 i — PLACE OF WORK 868 9 298 104 38 The current 2016 population for the 5-mile radius surrounding the subject provides a population estimate of 320,138 people. The historic population growth rate was 1.63% and the projected growth rate is estimated to be 1.44%. Considering the percentage of water area in the 5-mile radius, the population data suggests a relatively dense population that continues to grow at a healthy rate. 39 CBRE Data Analysis The current number of households in the 5-mile radius is 144,297. The historic growth rate was 1.83% and the projected growth rate for households is estimated at 1.50%. The current average household income in the 5-mile radius is $68,181 and the per capita income is $31,309, suggesting two or more income earners per household. The estimated current vacancy rate for housing units in the 5-mile radius is 18.2% and the corresponding occupancy rate is 81.8%. The percentage of owner -occupied housing units was 21 .9% and the percentage of renter occupied housing units was 59.9%. Demographic Conclusion Based on the foregoing demographic data, the 5-mile radius surrounding the subject is described as a densely developed middle income urban and suburban area that reflects healthy growth in population and households. These characteristics are expected to continue over the foreseeable future. Barriers to Entry The primary barrier to entry into the local marina market is a lack of good vacant waterfront development sites. Over the past 3 years wet slip occupancies have increased and many marinas are at full capacity with waiting lists. All of the marina operators that we interviewed told us that they have long wailing lists, especially for vessels in the 40 foot to 80 foot range. With increasing financial feasibility, but a lack of good waterfront locations, many existing marina operators are looking at the benefits of renovating or replacing existing marina facilities or increasing their existing storage capacity in order to take full advantage of the increasing demand for wet and dry boat storage. Therefore, the primary barrier to entry is lack of good waterfront land. Demand Generators Vessel storage options include covered and uncovered wet slips, wet slip lifts, enclosed dry slips, covered and uncovered outdoor dry slip storage, surface storage and an -trailer storage. The demand for these boat storage options within the market is a function of the demographics discussed earlier. The demand for a specific location includes many convenience aspects such as proximity of the marina to one's household, proximity to popular fishing and family destinations, proximity to the nearest inlet, the pricing of wet versus dry storage, quality of the facility, fuel prices, etc. In summary, vessel slip tenants in the Miami marine marketplace are demanding convenience and service. Full service marinas with on -site restaurants, night life, family recreational amenities and retail components have a significant competitive advantage over limited service or no service marinas. Current marina design calls for an "All Inclusive" mixed use waterfront boating experience. Our interviews with local dock masters, general managers and owners indicated that customer demand was almost equally split between fishermen, pleasure cruisers and family pleasure boaters. 40 CBRE ,]In ceJt. 1, Data Analysis VESSEL REGISTRATION ANALYSIS The following discussion illustrates some specific details regarding the demand for boating in Florida as measured in vessel registrations. In this analysis the larger market area is defined cis Palm Beach County, Broward County and Miami -Dade County. On the date of this writing, the most recent data available was 2015. State and County Vessel Registration The following data was gathered from the Florida Department of Highway Safety and Motor Vehicles. STATE AND COUNTY VESSEL REGISTRATION Year Florida Palm Beach Broward Miami -Dade 2004 982,907 44,560 49,470 57,256 2005 1,010,370 45,350 51,105 58,894 2006 1,024,375 44,964 51,375 60,763 2007 1,027,043 44,416 50,823 63,324 2008 1,010,359 45,294 40,227 58,880 2009 982,470 42,517 45,373 63,161 2010 946,579 41,158 42,976 61,357 2011 922,491 39,512 42,687 60,458 2012 901,969 38,363 42,131 60,572 2013 896,632 38,142 41,657 61,537 2014 899,635 37,780 42,072 63,319 2015 915,713 38,276 42,671 65,322 Source: Florida Dept of Highway Safety and Motor Vehicles From 2013 through 2015 vessel registration increased at the state level. However, the Miami - Dade submarket has been steadily increasing since 2011. 41 CBRE c. 2010 �iRF. inc. Data Analysis Occupancies for wet slips and dry racks in the tri-county area started increasing again about four years ago. This is due in part to vessels that are registered out of the state and many times out of the country. Many of these vessels are owned by "Snow Birds" that live in Florida from October through April and then return to their homes up north or overseas during the summer months. Miami -Dade Segregated Vessel Length Analysis CBRE has provided the following segregated demand/trend analysis for the local market. The data was provided by the Florida Department of Highway Safety & Motor Vehicles. Miami -Dade County Segregated Vessel Registration 2014 2015 % Change Class A-1: Under 12 ft. 13,032 13,869 6.4% Class A-2: 12 to 16 ft. 5,999 5,957 -.7% Class 1: 16 to 26 ft. 28,372 28,840 1.6% Class 2: 26 to 40 ft. 10,433 10,851 4.0 Class 3: 40 to 65 ft. 2,056 2,234 8.7% Class 4: 65 to 1 10 ft. 432 491 13.7% Class 5: 110 ft. Plus 37 42 13.5% Canoes 352 361 2.6% Dealer Boats 738 763 3.4% Commercial Vessels 1,868 1,914 2.5% Total 63,319 65,322 3.2% The total vessel registrations for Miami -Dade County increased by 3.2% from 2014 to 2015. However, the astounding components of this data set are the percentage increases in vessels from 40 LF up to 65 LF as well as the 65 LF to 110 LF and the longest length category, which is 110 LF and above. These are the three largest vessel categories and yet, they also reflect the 42 CBRE •s, 20I6 CCU, Inc Data Analysis highest percentage increases of any size category. This is a clear indication that within the Miami -Dade County market, there is definitely a substantial influx of larger vessels. As indicated above, the vessel registrations for 2014 and 2015 suggest that approximately one half of the total registrations are for vessels that are 16 to 26 LF in length. Many of these boats that used to be stored in wet slips, now can be stored in dry slips due to the larger fork lifts and longer dry slips. Biscayne Bay Marina Submarket We have personally inspected all of the comparables used in this analysis and interviewed the owner, operator, general manager or the dock master for each property. Those marinas selected for this analysis are included on the map and data table below. 43 CBRE Data Analysis SUMMARY OF MARINA RENTALS Comp_ Wet Shp No. Pro•ert Nome Location Wet Sjj•s Wet Sr• Runts Oecu. on D or Surface Sli-s D Rents D 51i• Occu-an 1 Haulove- Fork Marina 15000 Collins Avenue, 0 NA NA 250 $23-533 100% Miami Beach 2 Keystone Paint Marina 1950 NE 135th Street. 20 $20.00 100% 300 516.00 I00% Miami, FL 3 Sea Isla Menne 1635 N. Boyshore Drive, 220 520435 96% 0 NA NA Miami, FL 4 Miomorina 401 Biscayne Boulevard, 130 518-534 100% 0 NA NA Miami, FL 5 Miami Beech Marina 300 Allan Reed, Miami 400 $28-565 100% NA NA NA Beads, FL 6 Rickenbodrer Morino 3301 Rickenbacker Gswy, 190 535-540 100% 378 530.00 100% Key Biscayne, FL 7 Marine Stadium Marino 3501 Rickenbacker Cswy, 0 NA NA 296 517.25-519.50 95% Key Biscayne, FL 8 Prime Morino Miami 25505 Bayshore, Drive, 87 528-550 100% 0 NA NA Coconut Grove, FL 9 Grove Harbour Manna 2640Sauth Bayshore Drive, 60 536.00 90% 266 $35-$45 95% Coconut Grove, FL 10 Dinner Key Merino 3500 Pan American Drive, 582 SI 9-536 100% 0 NA NA Miami, FL Subject Ridtenbedrer and MOM 3301 and 3501 Rickenbadser 190 535-540 100% 674 $1 7.25-530.00 98% Cswy, Key Biscayne, FL Complied by CORE Within this data set, all of the marinas were reported to be at or very near 100% occupancy and all of the marinas had a waiting list that was organized by slip size. The highest demand in this submarket is for wet slips in the 40 LF to 110 LF range and dry slips in the 30 to 50 LF range. Marina Market Conclusion The demographics of the subject neighborhood are very positive, suggesting steady growth over the next five years. The vessel registration data for the state and the county showed increasing vessel registrations over the past 2 years and this trend is expected to continue. For the Miami market, most marinas have seen increases in rental rates and occupancies for most slip sizes and types over the past three years. We expect the existing pent up demand to be met with development of additional wet slip and dry slip inventory over the next few years. We expect occupancy rates to remain at near capacity. Finally, we also expect waiting lists to remain the norm for most public access marinas. 8. COMPARATIVE ANALYSIS OF THE SUBJECT AS IMPROVED The Rickenbacker and MSM marinas currently operate at a competitive disadvantage due the size, design, age and condition of the subject improvements. Wet Slips As discussed in the Miami -Dade Segregated Vessel Length Analysis, the largest increases in vessel registrations in Miami -Dade County are occurring in vessel from 40 LF and above. Therefore, 44 CBRE 0 2016 CBRE Inc. Data Analysis marinas with slips smaller than 40 LE are not optimally designed to take advantage of the trends in the current market. South Basin The south basin is currently improved with 190 under -sized wet slips. The water depths in this basin range from 5 feet deep up to 8 feet deep. The optimal redevelopment of this component would require removal of most of the improvements from the basin and maintenance dredging down to a uniform depth of 8 or 9 feet, which is consistent with the approach depth from the west. According to the RFP, the successful bidder will maintain a wet slip inventory of 190 wet slips within the south basin. Based on the design and slip lengths used, this requirement will likely require the south basin to be extended to the west. For reference, the Client is directed to the depth chart for the south basin that was included in a prior section of this report. In our opinion, reducing the slip number combined with increasing the slip length/width in order to accommodate increasing demand for larger vessels is supported by the market. The probability of successful permitting as well as the cost of dredging and mitigation is a permitting and engineering challenge and not within our area of expertise. In our opinion, this question should be fully vetted by experienced professionals prior to taking any action regarding the redevelopment of the subject. Dry Slips Demand for dry slips has also changed in the south Florida market over the past few years. Due to advances in technology, fork lift operators now have the opportunity to lift heavier and longer vessels and store them in large conventional boat houses that meet or exceed high wind requirements. Vessels can also be stored in automated boat houses. This technology is not widely used in the industry as of yet. However, we are aware of several operating examples of automated boat houses. This automated storage option appears to offer several advantages over traditional boat houses that are served by fork lifts. Among these potential advantages are safety, convenience, reduced labor and equipment cost, efficiency and vessel density. This storage option functions much like a vending machine, where a boat owner can retrieve his vessel 24 hours a day based on a secure retrieval code. In our opinion, the optimal development of this component would include a state of the art automated boat house. However, because this technology is relatively new, delivery and installation of an automated boat house by a proven and experienced manufacturer should be carefully considered. 45 CBRE s.JI,LE.��� Data Analysis 9. DESCRIPTION OF THE CURRENT WET AND DRY SLIPS BOUNDARY SURVEY Fixed Conc. Docks The existing wet slips at the Rickenbacker property include a combination of concrete fixed piers as well as fixed wooden docks. The concrete docks are old and in below average condition for this market. The date of construction is estimated at about 1977, which is consistent with the original lease. Based on our inspections, it is our opinion, that an additional section was added onto Docks A and B at some later date. The foundation of Docks A, B, C and D includes a system of prestressed concrete pilings, supporting concrete, or concrete/wood decking. The decking improvements include electric utility connections that are well out of date as well as water spigots, fire suppression systems and mooring hardware. Most of the vessels back into their slips. Access to these vessels is provided by individual gangways, which are not favored by the market. A much more typical vessel access is via finger piers extending down the sides of each vessel. The construction components of the fuel dock appear to be similar in age and construction to Docks A, B, C and D. Based on the data available, these docks are about 40 years old and, in our opinion have reached the end of their economic life. The fixed wood docks in the Rickenbacker basin are much newer and are in good condition. However, these docks are very minor when compared to the redevelopment of the entire assembled Rickenbacker and MSM site. Therefore, they would likely be removed as part of the redevelopment. In order to achieve an optimal wet slip docking system, the existing wet slips should be replaced by a system of floating concrete docks with high quality deck fixtures such as 46 CBRE Data Analysis metered utility pedestals, metered water spigots, night lighting, security equipment, WiFi and pumpout facilities. The existing dry slips on the combined property include a variety of 2, 3, and 4 level covered and uncovered dry rack systems. The age of these rack systems is unknown. However, based on our inspection, these racks appeared to be between 20 and 30 years old. On the MSM property, we noted sagging support beams, corrosion and footings that have been raised or lowered over time. As far as storage efficiency is concerned, these older racks do not represent the highest and best method of vessel dry storage. In our opinion the open dry racks have reached the end of their economic life. In order to achieve an optimal dry slip storage and retrieval system, the existing dry racks should be replaced by an automated boat house that is capable of housing 600 to 900 vessels under one roof. This boat house would be capable of servicing vessels up to 45 LF. 10. WET SLIP EXPANSION FEASIBILITY Below, we have presented the wet slip expansion issues that would affect the feasibility of developing at least 300 additional wet slips in the north basin. Based on the three RFP responses, it is physically possible to locate 300 wet slips above the 26.25 acres of submerged land within the north basin. The north basin as identified in the RFP contains 26.25 acres and is currently unimproved. According to the RFP, this 26.25 acre submerged land parcel is proposed for at least 300 additional wet slips. The water depths in this area are predominantly 8 feet deep. The optimal development of this component would include wave attenuation, floating wet slips and dry slip staging areas for the automated boat house. Dredging down to a uniform depth of 8 or 9 feet, which is consistent with the approach depth from the west would also be warranted. However, there is an abundance of sea grasses in this area as indicated in the exhibit below. 47 CBRE 20 n CCR,E, c. Data Analysis Due to the heavy concentrations of seagrasses in the existing south basin, the submerged area west of the south basin and in the north basin, it is our opinion that public outcry will make permitting in this areas verty difficult. Environmental issues are very contentious and can stall or kill a new development. Based on the number of public hearings that have already been held, any potential developer can expect significant opposition to any sea grass disturbance. In addition to long delays in permitting, especially in the the north basin, the risk of extreemly high dredging and mitigation costs suggest that development of the north basin may not be permittable or financially feasible. Based on the sea grasses located in the existing south basin, it is our opinion that it will not be feasible to develop the north basin. Even the redevelopment of the south basin will be lengthy and very expensive. The probability of successful permitting as well as the cost of dredging and the requirement of mitigation are permitting and engineering problems that have not been undertaken. Without knowing if the redevelopment of the north or south basins is permitable, no financial analysis can be conducted. The ability to assess if permitting is possible and an estimate of the costs associated with such permitting and mitigation and dredging are not within our area of expertise. In our opinion, this question should be fully vetted by experienced professionals prior to taking any action regarding the redevelopment of the subject. 48 CBRE 14 2016 CP E.1 Data Analysis Conclusion and Risk Assessment In our opinion, there is a very high risk of financial loss to the City associated with hidden costs and a very lengthy permitting process associated with the redevelopment of the south basin and the development of the north basin. Based on these risk factors alone, it is our opinion that the City should not undertake the risks and unknown costs associated with attempting to develop and operate the subject. Rather, the private sector is better suited to redevelop based upon their marina specific experience and expertise. 49 CBRE 2616 Cer. inc. Assumptions and Limiting Conditions Redevelopment Feasibility Modeling 1 WET AND DRY SLIP DESIGN We have reviewed all three of the RFP responses. The diagrams are included below. Suntex 1 it i' i ihlli# hi iIM t s II ICI 01wiih tF # r i i'Y ji III 1 As depicted above, the Suntex design incorporates the following featrures: South Basin North Basin Traditional Boat House Total Planned Slips 190 wet slips provided, 190 slips required 364 wet slips provided, 300 slips required 820 dry slips provided, 648 slips required 1,374 slips provided, 1,138 slips required 50 CBRE L'2016 Mtt. Mr_ Assumptions and Limiting Conditions RCI retain, e, lsNng txstngs t� z= ` _:,rrvrr..iii ice .j harbormaster- o`org bay u4:14. Boot St.e+ter + ,r.,Pd'rrtg -rk-w� As depicted above, the RCI design incorporates the following vessel storage quantities: South Basin North Basin Automated Boat House Total Planned Slips 162 wet slips provided, 190 slips required 151 wet slips provided, 300 slips required 973 dry slips provided, 648 slips required 1,286 slips provided, 1,138 slips required 51 CBRE 20) CARE. lnc. Assumptions and Limiting Conditions Rickenbacker/Tifon nr{rrcn 11 PHASE 7 -. VS15711,06 &MIN 5O,SICE 1,110,- gr. 4U 17 1bN Sk • 18 :1(I7 EC 18 1080 13:5 E1 14 171fl 17, 110 Sl04 Tii 1OTA4S 17 YJ 1418 i r7c 115. II IMF: 14 a p}IA5l1 MIPMI MFNN4 STA111IIM MSIN ..................... ............ ).i"Ar4'.c^Eth flee ST11544. 7GT4LS As depicted above, the Rickenbacker design incorporates the following vessel storage quantities: South Basin North Basin Automated Boat House Total Planned Slips 139 wet slips provided, 190 slips required 310 wet slips provided, 300 required 1,000 dry slips provided, 648 slips required 1500 slips provided, 1,138 slips required 2 AMENITIES AND SERVICES The potential amenities and services that would be optimal for a world class facility at the subject would include the following: • Wet slips in the 40 LF to 110 LF range • An automated boat house • High speed digital fueling facilities, dispensing REC 90 gasoline and diesel fuel • Dock mounted utility pedestals offering metered 30, 50 or 100 amp electric and water • WiFi service throughout the facility 52 CBRE 82 2016 C4E, Inc. Assumptions and Limiting Conditions • Sewage Pumpout facilities • Clean marina certification • Clean air conditioned restrooms, • Showers and laundry facilities • An adult pool with swim -up bar and a family oriented pool • 24 hour security personnel as well as security cameras • One or more restaurants • Tiki bar • Maintenance and repair services 3 FUEL As indicated above, a world class facility would include two fueling stations capable of dispensing REC 90 gasoline and diesel from multiple high speed dispensers. One fueling station would be placed prominently at the west end of the south basin in order to attract area boaters as well as tenants of the marina. The second station would be placed adjacent to the boat house launch area so as to efficiently service the boat house tenants. 4 MARINA OFFICE AND SUPPORT FACILITIES An administrative office will be required to accommodate the management and marina staff. This should be a multi -story building that is centrally located relative to the south basin and the boat house. The ship's store should be located on the first floor. A Captain's Lounge could be located on the second floor and the General Manager's office on the top floor. The general manager's office would have 360 degree views of the entire marina. 53 CBRE ;015 CM. m._ Assumptions and Limiting Conditions CAPITAL REQUIREMENTS Based on the three RFP responses, the capital requirements for the redevelopment of the subject are summarized below: • Suntex $85,342,590 • RCI $98,850,000 • Rickenbacker $67,470,000 As indicated above, the three bids generally range from $67,000,000 to $100,000,000. FINANCIAL ANALYSIS Based on the RFP requirements, the 10 year base rent plus percentage rent that were provided for the three projects are summarized below. • Suntex $34,847,030 • RCI $24,740,367 • Rickenbacker/Tifon $41,529,515 The greatest return as provided by the respondents is the Rickenbacker bid at $41,529,515. It is interesting to note that the Rickenbacker development supported the lowest capital obligation and yet the highest 10 year return. As an extension of the above, the gross rents that were provided for the full 45-year initial term as summarized below. • SunTex $341,145,025 • RCI $284,225,018 • Rickenbacker $379,598,116 Based on these estimates, a reasonable return to the city should be $285,000,000 to $380,000,000 over the initial 45 year lease term. As a test of reasonableness, we have conducted an analysis of the project, assuming City development and management. Our assumptions for the stabilized revenue analysis are consistent with the RFP requirements as revised and dated February 1, 2016 and are included below: 490 wet slips, average length 60 LF, average rent $40.00 per LF/Mo. = $14,1 12,000 648 dry slips, average length 30 LF, average rent $35.00 per LF/Mo. = $8,164,800 40,000 SF of retail space at $35.00 per LF, NNN = $1,400,000 10,000 SF restaurant space at $55.00 per SF = $550,000 54 CBRE Assumptions and Limiting Conditions Total Rental Income Total Rental Income is estimated at $24,226,800. Net Fuel Sales Income Net fuel sales income is estimated at 60,000 gallons per month, at $0.50 per gallon. Potential Gross Income — Public Sector Operator Based on the above assumptions, the Potential Gross income for the project as a public sector project could expect to generate a potential gross income of $24,586,800 at stabilization. Vacancy and Collection Loss The average occupancy rate at the comparable marina projects was reported to be 95% to 100% with a waiting list. In actual practice, all marinas experience some seasonal or specific lag vacancy between seasonal contracts or individual tenants. It is our opinion that a reasonable vacancy and collection loss for the wet and dry slip revenue would be 5%. There is no vacancy and collection Toss deducted from fuel sales profit. There is currently no retail space available for rent on Virginia Island. The average retail vacancy in the Biscayne Corridor is 4.3% and the average vacancy in Coconut Grove submarket is 4.5%. We have estimated the vacancy and collection loss to be subtracted from the Potential Gross Income from retail and restaurant operation is 5%. The total vacancy and collection loss is $1,21 1,340 Effective Grass Income Affective Gross Income is summarized below: Potential Gross Income $24,586,800 Vacancy and Collection $1,21 1,340 Effective Gross Income $23,375,460 Operating Expenses The operating expenses for a mixed use waterfront property similar to the subject typically run between 45% and 60%. We would expect the operating expense ratio for a new facility to be at the lower and of the range. Therefore, stabilized operating expenses have been estimated at 50% of effective Gross income, which is equal; to an operating expense estimate of $1 1,687,730. Net Operating Income The stabilized net operating income for the project is estimated at $11,687,730 per year, increasing at 3.00% per year, after the first three years. 55 CBRE Assumptions and Limiting Conditions Stabilized Income and Expense Summary DIRECT CAPITALIZATION SUMMARY - AS IS Revenue Wet Slips Dry Slips Retail Space Restaurant Space Total Rental Revenue Net Fuel Sales Net Revenue Vacancy - Rental Revenue Only Effective Gross income Operating Expense Ratio Net Operating Income Slips or SF 490 Slips 648 Slips 40,000 SF 10,000 SF Size Rent/LF/Mo % of Revenue 60 LF $40.00 58.2% 30 LF $35.00 33.7% $35.00 5.8% $55.00 2,3% 60,000 Gal/Mo 5.00% $0.50 Total $14,112,000 $ 8,164,800 $1,400,000 $550,000 100.0% $24,226,800 $360,000 $24,586,800 -$1,211,340 $23,375,460 50.0% $11,687,730 Compiled by CBRE Ten -Year Cash Flow Analysis The 10-year cash flow model for the subject including appreciation after stabilization and two and one half years of income loss at the beginning of the 10 year term. In the cash flow model below, the Year 1 Revenue Loss is the construction cost. The Year 3 Revenue Loss is the Rent Loss during Year 3. Our calculations are summarized below. 10-YEAR CASH FLOW MODEL Year Base Year NOI 1 $0 2 $0 3 $11,687,730 4 $11,687,730 5 $12,038,362 6 $12,399,513 7 $12,771,498 8 $13,154,643 9 $13,549,282 10 $13,955,761 Appreciation 0.00% 0.00% 0.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Current Year NOI $0 $0 $11,687,730 $12,038,362 $12,399,513 $12,771,498 $13,154,643 $13,549,282 $13,955,761 $14,374,434 Revenue Loss ($67,000,000) $0 ($5,843,865) $0 $0 $0 $0 $0 $0 $0 Total ($67,000,000) $0 $5,843,865 $12,038,362 $12,399,513 $12,771,498 $13,154,643 $13,549,282 $13,955,761 $14,374,434 $31,087,358 Compiled by CBRE 56 CBRE Assumptions and Limiting Conditions Based on the foregoing, the 10 year cash flow from the three private sector marina specialists ranged from $24,740,367 up to $41,529,515. Due to the cost of construction, the 10-year cash flow for the City is $31,087,358. In our opinion, the following discussion of downside risk provides sufficient evidence to preclude the City from being the developer/operator of the project. DOWNSIDE RISK The winning bidder also assumes all risks with respect to construction cost over -runs. One example of a potentially significant cost over -run combined with the very real probability of permit denial, is the development of the north basin. Based on very little data, we have learned that the mitigation cost for the 26+/- acre north basin could cost between $26,250,000 up to $39,375,000. We would not suggest that the city incur the risk of this potential downside risk. CONCLUSION Based on the foregoing data and analysis, it is our opinion that the three bidders are all very experienced marina developer/operators. Due to the competitive nature of the bidding process, the quantities of improvements, capital costs and revenues within the three RFP responses varied significantly. It is our conclusion that the initial capital costs combined with the significant downside risk of construction cost over -runs pose an unacceptable level of risk for the City. Therefore, we recommend that the City reissue an amended RFP, limiting participation to the above bidders. 57 CBRE Assumptions and Limiting Conditions Assumptions and Limiting Conditions 1. CBRE, Inc. through its analyst (collectively, "CBRE") has inspected through reasonable observation the subiect property. However, it is not possible or reasonably practicable to personally inspect conditions beneath the soil, under the water and the entire interior and exterior of the improvements on the subject property. Therefore, no representation is made as to such matters. 2. Unless otherwise expressly noted in the Report, CBRE has assumed that: (i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect marketability or value. CBRE hos not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subject property) and makes no representations regarding title or its limitations on the use of the subject property. Insurance against financial loss that may arise out of defects in title should be sought from a qualified title insurance company. (ii) Existing improvements on the subject property conform to applicable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in good working order with no major deferred maintenance or repair required; and the roof and exterior are in good condition and free from intrusion by the elements. CBRE has not retained independent structural, mechanical, electrical, or civil engineers in connection with this report and, therefore, makes no representations relative to the condition of improvements. CBRE analysts are not engineers and are not qualified to judge matters of on engineering nature, and furthermore structural problems or building system problems may not be visible. It is expressly assumed that any owner or operator would obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems. (iii) Any proposed improvements, on or off -site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Hazardous materials are not present on the subject property. CBRE is not qualified to detect such substances. The presence of substances such as asbestos, urea formaldehyde foam insulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no air or development rights of value may be transferred. CBRE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly offect the value of the subject property. (vii) All required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based. (viii) The subject property is managed and operated in a prudent and competent manner, neither inefficiently or super -efficiently. (ix) The subject property and its use, management, and operation are in full compliance with all applicable federal, state, and local regulations, laws, and restrictions, including without limitation environmental laws, seismic hazards, flight patterns, decibel levels/noise envelopes, fire hazards, hillside ordinances, density, allowable uses, building codes, permits, and licenses. (x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property's compliance with the ADA, notwithstanding any discussion of possible readily ochievoble barrier removal construction items in the Report. (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property. Unless otherwise expressly noted in the Report, no issues regording the foregoing were brought to CBRE's attention, and CBRE has no knowledge of any such facts affecting the subject property. If any information inconsistent with any of the foregoing assumptions is discovered, such information could have a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. CBRE assumes no responsibility for any conditions regarding the foregoing, or for any expertise or knowledge required to discover 58 CBRE Assumptions and Limiting Conditions them. Any user of the Report is urged to retain an expert in the applicable fields) for information regarding such conditions. 3. CBRE has assumed that all documents, data and information furnished by or behalf of the client, property owner, or owner's representative are accurate and correct, unless otherwise expressly noted in the Report. Such data and information include, without limitation, numerical street addresses, lot and block numbers, Assessor's Parcel Numbers, land dimensions, square footage area of the land, dimensions of the improvements, gross building areas, net rentable areas, usable areas, unit count, room count, rent schedules, income data, historical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordingly, if any such errors are subsequently made known to CBRE, CBRE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, relevant calculations, and conclusions of the Report and should immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report. 4. CBRE assumes no responsibility (including any obligation to procure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit. 5. All furnishings, equipment and business operations have been disregarded with only real property being considered in the Report, except as otherwise expressly stated and typically considered part of real property. 6. Any cash flows included in the analysis are forecasts of estimated future operating characteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in the Report, including such cash flows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predictions of the future. Actual results are affected by a number of factors outside the control of CBRE, including without limitation fluctuating economic, market, and property conditions. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections. 7. The Report contains professional opinions and is expressly not intended to serve as any warranty, assurance or guarantee of any particular value of the subject property. Other appraisers may reach different conclusions as to the value of the subject property. Furthermore, market value is highly related to exposure time, promotion effort, terms, motivation, and conclusions surrounding the offering of the subject property. The Report is for the sole purpose of providing the intended user with CBRE's independent professional opinion of the value of the subject property as of the date of the Report. Accordingly, CBRE shall not be liable for any losses that arise from any investment or lending decisions based upon the Report that the client, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to assume any of these risks. Nothing contained in the Report shall be construed as any direct or indirect recommendation of CBRE to buy, sell, hold, or finance the subject property. 8. No opinion is expressed on matters which may require legal expertise or specialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters. 9. CBRE assumes no responsibility for any costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance. 10. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Repoli. It is the responsibility of the user of the Report to read in full, comprehend and thus become aware of all such assumptions and limiting conditions. CBRE assumes no responsibility for any situation arising out of the user's failure to become familiar with and understand the same. 11. The Report applies to the property as a whole only, and any pro ration or division of the title into fractional interests will invalidate such conclusions, unless the Report expressly assumes such pro ration or division of interests. 12. The allocations of the total value estimate in the Report between land and improvements apply only to the existing use of the subject property. The allocations of values for each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use. 13. The maps, plats, sketches, graphs, photographs, and exhibits included in this Report are for illustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report. 14. The Report shall not be duplicated or provided to any unintended users in whole or in part without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Exempt from this restriction is duplication for the internal use of the intended user and its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of 59 CBRE Assumptions and Limiting Conditions any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall not be published, in whole or in part, in any public document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall not be made available to the public or otherwise used in any offering of the property or any security, as defined by applicable law. Any unintended user who may possess the Report is advised that it shall not rely upon the Report or its conclusions and that it should rely on its own appraisers, advisors and other consultants for any decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user. 60 CBRE �ambert Advisory October 18, 2016 Mr. Dan Rotenburg Director City of Miami Department of Real Estate Asset Management 444 S.W. 2nd Ave Miami, FL 33130 Dear Mr. Rotenburg: Lambert Advisory (Lambert) has completed its peer review of the Virginia Key Marina Feasibility Study (VKM Study) CBRE completed as of Octobers, 2016. In preparation for the peer review Lambert reviewed the Virginia Key Master Plan, Resource Mapping and Water Depth Survey completed by Olin Hydrological Solutions, as well as in-house research and fieldwork information completed by Lambert over the past two years and more specifically completed for this review. The VKM report essentially breaks down into four key subparts for purposes of our review: o Market Analysis of the Opportunity to Redevelop the Marinas on Virginia Key; o Physical Conditions/Physical Constraints Based Upon Available Information; o Redevelopment Financial Modeling; and, o Recommendations. We address each of these in order as to the reasonableness of the CBRE findings and conclusions. Overview of CBRE Findings - Market The CBRE market assessment finds that there is adequate demand to support 490 reconfigured wet slips and 648 dry storage slips in a enclosed multistory facility on Virginia Key fora total 1,138 wet and dry slips. The demand for both dry and wet slips is being driven by growing boating registrations at virtually every length of vessel, but particularly in relative terms among boats larger than 45-feet which almost exclusively require being docked in the water rather than in dry storage. Likewise, even without accounting for pent up demand, the growth of registered vessels between 32' and 45' means that there are an increasing number of boats which generally cannot be trailered and therefore need to be in a dry storage facility or wet slip marina. The CBRE market assessment found there was virtually no vacancy in competitive marinas and monthly lease rates for the better quality marinas in the market were between $30 to more than $40 per linear foot of boat length/month for wet slips and roughly $25 to $40+ per linear foot/month for dry slips. Based upon current market conditions, the CBRE report indicates that average achievable lease rates in a modern Virginia Key marina would be $40 per linear foot/month for boats in wet slips and $35 per linear foot/month of boats in dry storage given the excellent location of the marina with unimpeded access to open water, as well as the fact that the marina will be a modern amenitized facility. The average length of boat is projected by CBRE to be 60 feet in wet slips and 30 feet in dry slips and achievable occupancy would be 95 percent in both wet and dry facilities. Mr. Dan Rotenburg Our Peer Review Findings - Market Although we believe that it is important that CBRE provide additional guidance as to the mix of slips as it relates to length, as well as detail the type of slip features (i.e. type of electrical service, infrastructure on the pedestal) and appropriate mix of marina amenities so that the City would have a baseline against which to compare private partner proposals or help define a capital plan for its own needs, our data and information indicate that the CBRE conclusions as it relates to monthly rates average , boat length, and occupancy are reasonable. Unlike virtually any other real estate use in the City of Miami, there is a widening gap between demand for slips and dry storage facilities and supply. The permitting and regulatory bar is so high as it relates to the development of new marinas and even the redevelopment of existing marinas that the pace of new marina facilities has not kept up with the growing number of registered vessels in South Florida. Additionally, given that older marinas were built in an era where smaller boats were kept in the water and slips were often designed to accommodate these smaller vessels, the need for new slips to accommodate larger vessels (over 60 feet in length) is particularly acute. As a result, we like CBRE have concluded there is adequate demand for a reconfigured wet slip and dry storage marina to accommodate up to 1,138 total vessels. Overview of CBRE Findings— Physical & Environmental Conditions/Constraints As is the case with our firm, CBRE repeatedly states in its report that they do not possess the engineering, environmental and related expertise to assess the physical and environmental conditions which will promote or limit the redevelopment of various elements of the Virginia Key marina and drive what could be substantial mitigation costs. However, based upon data which was provided by the City from what appears to be a credible third party analysis (Resource Mapping and Water Depth survey completed by Olin Hydrological Solutions), the CBRE report highlights several specific areas associated with the physical and environmental conditions of the basins which are likely to substantially impact design and cost. The first of these is the existing water depth which range from 5 to 8 feet in the South Basin and 5 to 9 feet in the North Basin, CBRE indicates that these depths generally allow for the docking of vessels up to 80-feet in length, although limited to areas where 8 or 9 feet depths can be found. As a result, CBRE indicates that any new redevelopment of the South Basin in particular to accommodate larger vessels which is where the greatest gap in supply exists necessitates the dredging of the area to a uniform depth of 8 to 9 feet. However, and based upon CBRE's review of the environmental conditions reports provided by the City, the extensive presence of seagrass throughout the South and North basins are likely to make the permitting of dredging in either of these areas both a very lengthy and very expensive process, Indeed, CBRE raises the issue of the likelihood that completing the necessary dredging may not be possible due to the seagrass constraints, Our Peer Review Findings — Physical & Environmental Constraints After reviewing the same information provided by the City to CBRE associated with water depths we are very much of the same opinion as CBRE as to the need to conduct dredging in both basins to accommodate larger vessels. It is more valuable from a revenue perspective to dock these larger vessels given they cannot be accommodated in dry storage. This is in contrast to the smaller vessels which are docked in the South Basin today and can be more readily and more cost effectively housed in a building on racks given current technology/engineering. Likewise, we believe the extensive presence of seagrass throughout the basins is going to make redevelopment exceedingly expensive. Our recent work for Port Miami identified an area of seagrass which was nowhere near as extensive as the one found within the North and South basins, and the cost to mitigate this area and associated dredging to accommodate a marina added $28 million dollars in additional cost making the 2 Mr. Dan Rotenburg development of a marina which could accommodate large vessels infeasible. We do not have the same level of concern as CBRE that the project may not be able to be permitted under any circumstances given the extensive presence of seagrass, but we do believe the relative cost to mitigate could very well lead to the same practical result. Given this, and based upon the information that we have been provided, we question the viability of the RFP's initial program requirements and subsequent proposals which were submitted to the City in response to RFP as it relates to the redevelopment of the slips in the South Basin and extensive wet slip development in the North Basin. It is important to note, that the constraints on wet slip redevelopment and development associated with dredging and seagrass will have little to no impact on developing a more efficient/safe upland dry storage marina. The vessels to be housed in a dry storage facility will have a maximum length of 45 feet (the majority will be less), and when in water draw less than the minimum depths currently found in the basins. As noted earlier, there is significant demand to support dry storage expansion on Virginia Key. Overview of CBRE Findings — Redevelopment Financial Modeling The CBRE report includes a financial analysis which compares the development of the South and North Basins as proposed by the three respondents to the City's RFP in comparison to a scenario where the City would undertake the redevelopment. Among the RFP respondents, the cost of development ranges from $67 million to $100 million, not inclusive of mitigation and environmental constraints. Utilizing the low end range of the capital costs ($67 million, not including mitigation/environmental), and without consideration of debt leverage, the CBRE report finds that the City would achieve net revenue over a 10-year period of $31 +/- million; or, the middle range of the three RFP responses. Our Peer Review Findings — Redevelopment Financial Modeling While the CBRE financial analysis is logical and clear in its structure, we believe it is unwise to rely upon the CBRE financial analysis for any decision making by the City given the high level of unknowns with regard to capital costs and mitigation costs which, as CBRE readily acknowledges, is beyond the ability of CBRE to provide or estimate with any precision without more specific engineering or environmental analysis. Even the three private proposals received by the City under the prior RFP process provide little guidance given that they contained great variability in estimated capital costs, ranging from $67 million to $100 million and cost per slip which vary by as much as 72 percent between the proposals. If the City does decide to proceed with its own redevelopment of the marina, we strongly recommend hiring a marine engineer and seagrass mitigation expert to estimate the capital cost of redeveloping the marina per the recommendations of the CBRE market study (with some further detailing of slip mix and amenities/features) and the range of cost and time associated with permitting, mitigating the seagrass and subsequent dredging. The analysis completed by CBRE also did not take into account the benefits of leverage/debt. When comparing between a number of private proposals the relative debt terms are not a factor. However, the potential utilization of tax exempt financing by the City if it were to develop and own the recreational marina without a private partner, all else being equal, could be 3 to 4 percentage points greater than if a private lessee were to develop the marina with taxable debt at lower coverage ratios. Of course, the guiding phrase in the ability to achieve and maintain the additional benefit associated with tax exempt vs. taxable debt are the words "all else being equal," The City would have to maintain the same ability to permit, design and manage the construction, establish market based salaries and achieve market operating costs, and establish a market based fee schedule which would float (no pun intended) with the broader market conditions without being subject to user review and input. 3 Mr. Dan Rotenburg Overview of CBRE Conclusions/Recommendations Based upon the CBRE analysis, CBRE draws several key conclusions and makes several recommendations: The market continues to be strong and the scale of the project as detailed within the City's earlier RFP and by each of the respondents to the RFP can be supported and perform well from a market perspective; • There is a high degree of risk in the project, not as a result of the market, but as a result of the potential inability and cost to dredge and mitigate the associated impacts on seagrass both in the South and North Basins. The dredging is necessary for redevelopment because the market opportunity for in water slips requires providing broad access to a wide range boats above 40 feet in length which require deeper depths throughout the marina than the marina currently provides; • Given the high degree of risk and associated unknowns, CBRE recommends the City transfer this risk to a private lessee who will be responsible for undertaking the analysis to determine an execution of mitigation, dredging and construction and the lengthy permitting process; and, • The City should ask respondents to submit a set absolute guaranteed rent rather than a base rent plus percentage rent to easily measure comparable financial returns between respondents. Our Peer Review of CBRE Conclusions/Recommendations As noted earlier, we concur with CBRE regarding the strength of the market and ability of the market to absorb an expanded wet slip and dry storage marina on Virginia Key. While we are more agnostic than CBRE as to who develops the marina (private lessee vs. City) considering there are arguments on both approaches as long as the City is able to treat its marina operation as an enterprise function of the City, in this particular case we strongly lean towards the private lessee model given the inherent high risk associated with permitting and unknowns associated with seagrass and dredging costs. The marina market is especially strong not because marina investors have not recognized the market opportunity; the marina market is as strong as it is because of the tremendously high bar regulators have placed on permitting or expanding wet slip (and only to a modest lesser degree, dry storage) which has significantly limited supply. Despite the three proposals submitted to the City indicating broad redevelopment of the existing South Basin and development of a substantial number of new wet slips in the South and North basins, the limited information we have reviewed raises concern that these wet slips will be able to be delivered as proposed. We also caution the City that it should not believe that because it is a municipality, it could have an easier time working through the County, State and Federal approval processes. If the City were to decide it may want to develop the marina on its own, we would recommend the City engage in discussions with our past municipal clients of Miami -Dade County, PortMiami, the City of Ft. Lauderdale among others to better understand the level of scrutiny the permitting agencies placed on these public entities as they pursued redevelopment or expansion of marine facilities. Given the time and cost of going through the permitting process and a likelihood of not being successful in delivering substantially expanded marina facilities, we concur with CBRE that the time, cost, and effort required would best be shouldered by a private partner rather than by the City. The only place where the City may consider 4 Mr. Dan Rotenburg redeveloping new dockage is related to the dry storage facilities which are likely not dependent upon seagrass removal or dredging. However, even in the case of dry storage, a private operator will view the dry storage as an early program element which can be implemented prior to the wet slip redevelopment and in turn provide cash flow to support the permitting process. Dry storage is likely a necessary aspect of the operators entire business plan. Likewise, the City in order to realize the returns noted earlier, would still need to operate the dry storage as an enterprise, establishing pricing, wage rates, and other costs of operation consistent with the market as opposed to being driven by existing city policies or subject to debate and user input. As it relates to the structure of the agreement between the City and private operator we would recommend the following conditions: In contrast to CBRE, we believe that the City's land lease be structured as base, plus percentage rent; or, structured as the greater of base rent or percentage rent. We have read far too many older long term ground leases over the past several years, both private/private leases and public/private leases where base rents with a set increase are wildly off the market 30 or 40 years after they were written. The addition of percentage rent or greater of base or percentage can help protect against this. However, if the City elects to structure the lease as base rent only, then we recommend the lease incorporate periodic rent re -openers to ensure the City is achieving maximum applicable revenue based on prevailing market conditions. As it relates to redevelopment opportunities, we recommend the lease include a "reverter clause" after 48 to 60 months to ensure that the wet slips revert back to the City should the private operator be unable to deliver the permits and associated project's redevelopment expansion as proposed. The reverter could apply to the wet slips only if the dry storage has been completed, but given the unknowns associated with seagrass mitigation and dredging, we believe the ability of the City to take back the wet slip elements of the project and rethink its redevelopment/revitalization is important after a reasonable period to obtain approvals and to begin construction has elapsed. The City should likewise insure through its agreements with the selected private partner that the City be provided on a regular basis all correspondence and material associated with the permitting process including any studies and reports produced by the investor group. We thank you for allowing us to prepare this peer review. Should you have any questions, please contact me at any time. Regards, Paul Lambert Managing Principal CC. LeeAnn Korst, CBRE Michael McShea, CRBE Jeff Carson, CBRE Jason Spalding, CBRE 5