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HomeMy WebLinkAboutAgenda Item Summary FormAGENDA ITEM SUMMARY FORM File ID: #2575 Date: 06/29/2017 Commission Meeting Date: 01/25/2018 Requesting Department: Department of Real Estate and Asset Management Sponsored By: District Impacted: District 2 Type: Resolution Subject: Direct City Attorney - Charter Amendment - Jungle Island Purpose of Item: A Resolution of the Miami City Commission, with attachment(s), directing the City Attorney to prepare an amendment to the Charter of the City of Miami ("Charter") for consideration at the special election to be held concurrently with the general municipal election scheduled for November 7, 2017, proposing upon approval of the electorate, to amend Section 29-B of the Charter entitled "City -Owned Property Sale or Lease — Generally" to authorize the City Commission by a four —fifths (4/5ths) affirmative vote, to waive competitive bidding and authorize the City Manager to execute the Agreement to Enter into a Development Agreement("Agreement"), in substantially the attached form, between the City of Miami ("City") and ESJ JI Leasehold, LLC, a Florida Limited Liability Company ("ESJ"), amending certain terms of the existing Lease and Development Agreement between the City and ESJ ("Lease"), agreeing to enter into a Development Agreement containing certain material terms concerning the development of a themed hotel with related retail and entertainment ("Hotel"), extending the Lease by, approximately, an additional thirty nine (39) years; with such additional terms and conditions as more particularly set forth in the Agreement. Background of Item: The City is the owner of that certain tract of land on Watson Island comprising approximately 19.35 acres, commonly known as Jungle Island located at 1111 Parrot Jungle Trail, Miami, Florida (the "Land"). ESJ and the City are parties to that certain Lease and Development Agreement, as modified from time to time (as so modified, collectively, the "Lease"). The Lease was modified pursuant to, inter alia, that certain Third Modification to Lease and Development Agreement (the "Third Modification"). Pursuant to the Lease, ESJ is leasing the Land for the operation of a botanical garden and theme park attraction known as Jungle Island ("Jungle Island") and the term of the Lease has approximately 43 years remaining. ESJ desires to develop a hotel, parking structure and related improvements (collectively, the "Hotel") on the Land. The Third Modification modified the Lease definition for "Additional Improvements" to include a themed hotel and related retail and entertainment, thereby providing ESJ with the potential opportunity to develop and operate a hotel on the Land, subject to approval of the electorate in a citywide referendum, the negotiation of a Development Agreement (the "Development Agreement") mutually acceptable to the City and ESJ and further subject to the approval of the State of Florida Board of Trustees of the Internal Improvement Trust Fund and any and all applicable laws, codes and regulations. Pursuant to Section 29-B of the City Charter, the Lease by the City of waterfront land requires the approval of the electorate in a citywide referendum. The City Attorney is directed to prepare an amendment to the charter of the City of Miami ("Charter") for consideration at the special election to be held concurrently the general municipal election scheduled for November 7, 2017, proposing upon approval of the electorate, to amend Section 29-B of the Charter entitled "City -Owned Property Sale or Lease — Generally" to authorize the City Commission by a four —fifths (4/5ths) affirmative vote, to waive competitive bidding and authorizing the City Manager to execute the Agreement to Enter into Development Agreement("Agreement"), in substantially the attached form, between the City of Miami ("City") and ESJ JI Leasehold, LLC, a Florida Limited Liability Company ("ESJ"), amending certain terms of the existing Lease and Development Agreement between the City and ESJ, agreeing to enter into a Development Agreement containing certain material terms concerning the development of a themed hotel with related retail and entertainment ("Hotel"), extending the current Lease and Development Agreement between the City and ESJ ("Lease") by, approximately, an additional thirty nine (39) years; with such additional terms and conditions as more particularly set forth in the Agreement. On November 7, 1995, a referendum was approved authorizing the City to enter into the Lease relating to Jungle Island. In order to allow the development of the Hotel at Jungle Island, the City has opined that another referendum is required. In order to obtain financing for the construction of the Hotel, there is a need for an extension of the term of the Lease, which the City has opined also requires the approval of the electorate in a referendum with an amendment to the Charter Section 29B being the mechanism to do so. The parties desire to enter into this binding Agreement in order to set forth material terms of the Development Agreement, which will be negotiated and become effective if the referendum regarding the Charter Amendment for the development of the Hotel and the extension of the term of the Lease (the "Hotel Referendum") is approved by the electorate. The Agreement provides that ESJ must spend no less than fifty million ($50,000,000.00) dollars on the development of the Hotel, spend seven hundred thousand ($700,000) dollars towards improvements and maintenance of the Ichimura- Miami Japanese Gardens and develop a green energy educational facility focusing on wind and solar energy with a minimum cost of five hundred thousand ($500,000.00) dollars with additional terms and conditions specified in the Agreement. Budget Impact Analysis Item is Related to Revenue Item is NOT funded by Bonds Total Fiscal Impact: Real Estate and Asset Management Office of Management and Budget Office of Management and Budget City Manager's Office City Manager's Office Legislative Division Office of the City Attorney Office of the City Attorney City Commission Legislative Division Office of the City Attorney Office of the City Attorney City Commission City Commission Reviewed B Mark Burns Everton Garvis Christopher M Rose Alberto N. Parjus Daniel J. Alfonso Maricarmen Lopez Maricarmen Lopez Maricarmen Lopez Nicole Ewan Valentin J Alvarez Maricarmen Lopez Maricarmen Lopez Nicole Ewan Maricarmen Lopez Department Head Review Budget Analyst Review Budget Review Assistant City Manager Review City Manager Review Legislative Division Review Deputy City Attorney Review Approved Form and Correctness Meeting Legislative Division Review Deputy Attorney Review Approved Form and Correctness Meeting Meeting Completed 06/29/2017 2:55 PM Completed 06/29/2017 5:14 PM Completed 06/29/2017 8:27 PM Completed 06/30/2017 12:24 PM Completed 06/30/2017 3:39 PM Skipped 07/11/2017 4:54 PM Skipped 07/11/2017 4:54 PM Skipped 07/11/2017 4:54 PM Completed 07/13/2017 9:00 AM Completed 07/17/2017 5:21 PM Skipped 07/26/2017 2:08 PM Skipped 07/26/2017 2:08 PM Completed 07/27/2017 9:00 AM Completed 01/25/2018 9:00 AM City of Miami Legislation Resolution City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 2575 Final Action Date:1/25/2018 TO BE WITHDRAWN. A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), DIRECTING THE CITY ATTORNEY TO PREPARE AN AMENDMENT TO THE CHARTER OF THE CITY OF MIAMI, FLORIDA ("CHARTER") FOR CONSIDERATION AT THE REFERENDUM SPECIAL ELECTION TO BE HELD ON , PROPOSING, UPON APPROVAL OF THE ELECTORATE, TO AMEND SECTION 29-B OF THE CHARTER ENTITLED "CITY -OWNED PROPERTY SALE OF LEASE -GENERALLY," TO AUTHORIZE THE CITY COMMISSION BY A FOUR -FIFTHS (4/STHS) AFFIRMATIVE VOTE, TO WAIVE COMPETITIVE BIDDING AND TO AUTHORIZE THE CITY MANAGER TO EXECUTE THE AGREEMENT TO ENTER INTO A DEVELOPMENT AGREEMENT ("AGREEMENT"), IN SUBSTANTIALLY THE ATTACHED FORM, BETWEEN THE CITY OF MIAMI ("CITY") AND ESJ JI LEASEHOLD, LLC ("ESJ") AMENDING CERTAIN TERMS OF THE EXISTING LEASE AND DEVELOPMENT AGREEMENT BETWEEN THE CITY AND ESJ INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING MATERIAL TERMS: EXECUTION OF THE AGREEMENT FOR ADDITIONAL IMPROVEMENTS ON THE 19.35 ACRES OF CITY OWNED WATERFRONT PROPERTY WITH ESJ TO MODIFY THE CURRENT REMAINING LEASE TERM ("TERM") OF FORTY THREE (43) YEARS AND EXTEND THE TERM FROM 2060 TO 2099; PROVIDE ONE PERCENT (1%) RENT FROM ANNUAL GROSS REVENUE FROM A $50,000,000.00 HOTEL, WITH A ONE HUNDRED THIRTY (130) FOOT MAXIMUM HEIGHT, SUBJECT TO CITY DESIGN APPROVAL AND SUCCESSFUL ZONING CHANGES, AND AN EIGHTEEN (18) MONTH RENT ABATEMENT; PROVIDE PARKING, RETAIL/RESTAURANT AND MEETING ROOM SPACE; PROVIDE AN ICHIMURA-MIAMI JAPANESE GARDENS SEVEN HUNDRED THOUSAND DOLLAR PAYMENT ($700,000.00); PROVIDE A $500,000.00 GREEN ENERGY EDUCATIONAL FACILITY; ESTABLISH A RESERVE ACCOUNT FOR CAPITAL REPAIRS OF TWO HUNDRED THOUSAND DOLLARS ($200,000.00) PER YEAR; IMPLEMENT A THREE PERCENT (3%) TRANSFER FEE OF GROSS SALES; AND FURTHER IMPLEMENT AN APPROXIMATE ONE PERCENT (1%) REFINANCING FEE; WITH RESTRICTIONS, REVERSIONS, AND RETENTION BY THE CITY OF ALL OTHER RIGHTS. WHEREAS, the City of Miami ("City") is the owner of that certain tract of land on Watson Island comprising approximately 19.35 acres and located at 1111 Parrot Jungle Trail, Miami, Florida ("Property"); and WHEREAS, ESJ JI Leasehold, LLC ("ESJ") and the City are parties to that certain Lease and Development Agreement, as modified from time to time (as so modified, collectively, the "Lease") for the Property; and WHEREAS, pursuant to the Lease, ESJ is leasing the Property from the City for the operation of a botanical garden and theme park attraction known as Jungle Island ("Jungle Island"); and WHEREAS, the Lease was modified pursuant to, inter alia, that certain Third Modification to the Lease and Development Agreement ("Third Modification") and modified the Lease definition for "Additional Improvements" to include a themed hotel and related retail and entertainment, thereby providing ESJ with the potential opportunity to develop and operate a hotel on the Property, subject to approval of the electorate in a citywide referendum, the negotiation of a Development Agreement ("Development Agreement") mutually acceptable to the City and ESJ and further subject to the approval of the State of Florida Board of Trustees of the Internal Improvement Trust Fund and any and all applicable laws, codes and regulations; and WHEREAS, ESJ desires to develop a hotel, parking structure and related improvements (collectively, the "Hotel") on the Property and requires an extension on the term of the Lease, which has approximately forty three (43) years remaining, in order to obtain the financing necessary for the construction of the Hotel; and WHEREAS, the City and ESJ desire to enter into an Agreement to Enter into a Development Agreement ("Agreement"), which will modify the current remaining lease term ("Term") of forty three (43) years and extend the Term from 2060 to 2099; providing rent payment of one percent (1 %) of annual gross revenue from a new privately funded hotel development with a minimum cost of fifty million dollars ($50,000,000.00), with a maximum height of one hundred thirty (130) feet and a design subject to City approval and successful zoning changes, with said one percent (1 %) rent being in addition to the currently received greater of annual rent of five hundred two thousand one hundred sixty eight dollars ($502,168.00) and percentage rent from Jungle Island revenue, with said one percent (1%) rent abated for the first eighteen (18) months to allow for stabilization; providing parking spaces sufficient to meet zoning code requirements; further providing ancillary improvements consisting of retail and/or restaurant space of up to ten thousand (10,000) square feet and meeting room space of up to thirty thousand (30,000) square feet; with the aggregate payment of seven hundred thousand dollars ($700,000.00) towards the Ichimura-Miami Japanese Gardens ("Japanese Gardens") for construction of a walkway to Jungle Island, necessary repairs and maintenance of the Japanese Gardens; development of a green energy educational facility focusing on wind and solar energy at a minimum cost of five hundred thousand dollars ($500,000.00); establishing a reserve account for capital repairs of two hundred thousand dollars ($200,000.00) per year; implementing a transfer fee of three percent (3%) of gross sales, less the outstanding principal balance of all debt owed by ESJ to an unaffiliated third party and transaction costs, if the Property is transferred or assigned; further implementing a refinancing fee of one percent (1 %) of the refinancing loan proceeds, less all third party costs, expenses, amounts required to fully repay the debt being refinanced and all refinancing proceeds not disbursed to ESJ investors, should the Property be refinanced after the initial refinancing; and WHEREAS, pursuant to the Charter of the City ("Charter") Section 29-B entitled "City Owned Property Sale or Lease -Generally", and Subpart A, Section 3(f)(iii), entitled "Powers", the City will need two (2) independent appraisals affirming the fair market value of the Agreement; and WHEREAS, the Lease with ESJ will be subject to such other restrictions, reversions, and retention by the City of all other rights; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section. Section 2. The City Attorney is directed to prepare an amendment to the Charter of the City of Miami ("Charter") for consideration at the Referendum Special Election to be held concurrently with the General Municipal Election scheduled for November 7, 2017, proposing upon approval of the electorate, to amend Section 29-B of the Charter, entitled "City -Owned Property Sale or Lease — Generally," to authorize the City Commission by a four —fifths (4/5ths) affirmative vote, to waive competitive bidding and to authorize the City Manager to execute the Agreement, in substantially the attached form, between the City and ESJ amending certain terms of the existing Lease including, but not limited to, the following material terms: execution of the Agreement for additional improvements on the 19.35 acres of City owned waterfront property with ESJ to modify the current remaining Term of forty-three (43) years and extend the Term from 2060 to 2099; provide one percent (1%) rent from annual gross revenue from a $50,000,000.00 hotel, with a one hundred thirty (130) foot maximum height, subject to City design approval and successful zoning changes, and an eighteen (18) month rent abatement; provide parking, retail/restaurant and meeting room space; provide a Japanese Gardens $700,000.00 payment; provide a $500,000.00 green energy educational facility; establish a reserve account for capital repairs of two hundred thousand dollars ($200,000.00) per year; implement a three percent (3%) transfer fee of gross sales; and further implement an approximate one percent (1 %) refinancing fee; with restrictions, reversions, and retention by the City of all other rights. Section 3. This Resolution shall become effective immediately upon its adoption and signature of the Mayor.' APPROVED AS TO FORM AND CORRECTNESS: 1 If the Mayor does not sign this Resolution, it shall become effective at the end of ten (10) calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission.