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HomeMy WebLinkAboutAgenda Item Summary FormAGENDA ITEM SUMMARY FORM File ID: #8944 Date: 05/20/2021 Commission Meeting Date: 07/22/2021 Type: Resolution Subject: Amend Agreement - Jungle Island Purpose of Item: Requesting Department: Department of Real Estate and Asset Management Sponsored By: District Impacted: District 2 A Resolution of the Miami City Commission, authorizing the City Manager to execute an amendment to the Development Agreement dated April 20th, 2000 between the City of Miami ("City"), Miami -Dade County, Florida ("County") and Parrot Jungle and Gardens of Watson Island, Inc.("Prior Lessee"), in a form acceptable to the City Attorney, and after consultation with the City Attorney and the County, whereby ESJ JI Leasehold, LLC ("ESJ") is to pay a portion of the original loan of Thirteen Million Eight Hundred Twenty One Thousand Nine Hundred Twenty Three Dollars ($13,821,923) given by the City to the Prior Lessee, in a lump sum payment of Eight Million Dollars ($8,000,000) and the remaining balance of Five Million Eight Hundred Twenty One Thousand Nine Hundred Twenty Three Dollars ($5,821,923) to be reduced by Two Million Dollars ($2,000,000) if paid by January 31st, 2028 and further reduced by One Million Twenty One Thousand Nine Hundred Twenty Three Dollars ($1,021,923) if the Hotel construction is completed June 30th, 2026; and a Sixth Modification to the Lease and Development Agreement between the City and ESJ, in substantially the attached form, whereby ESJ will be given a credit of Seven Hundred Fifty Thousand Dollars ($750,000) spready equally over Three (3) years, in exchange, the breakpoints for Percentage Rent of the Park will be reduced to Eighteen Million Dollars ($18,000,000) and the breakpoint for the Hotel will be reduced to Twenty One Million Dollars ($21,000,000); with restrictions, reversions, and retention by the City of all other rights. Background of Item: 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") commonly known as Jungle Island. 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. On January 9, 2001 Miami -Dade County made a Department of Housing and Urban Development Section 108 loan to the Prior Lessee of the Property in an amount of $25 million for the construction and operation of the Parrot Jungle and Gardens of Watson Island Project ("HUD Loan"). On July 10, 2007, Resolution R-07-0405, the City Commission approved an assumption of an eighty percent (80%) interest and obligation in the HUD Loan and agreed to defer the Prior Lessee's obligation to pay the HUD Loan amounts from August 2006 through and including the payment due in August 2011. The deferred amounts previously mentioned totaling approximately $17,277,403.15, of which eighty percent (80%) is from the City and twenty percent (20%) is from Miami - Dade County, were to be made by the Prior Lessee on or before August 1, 2019 or over a period of ten (10) years with five percent (5%) interest beginning on January 1, 2020. The City's 80% portion of the payments on the HUD Loan is approximately $13,821,923 ("City's Portion"). ESJ has agreed to pay part of the City's Portion in the amount of $8,000,000, within 12 months, following the approval and execution of a Second Amendment to the Development Agreement by the City and the County, leaving the remaining balance of the City's Portion, upon the above mentioned payment, at approximately Five Million Eight Hundred Twenty One Thousand Nine Hundred Twenty Three Dollars ($5,821,923). A reduction of One Million Twenty One Thousand Nine Hundred Twenty Three Dollars ($1,021,923) of the remaining balance will be given to ESJ if the construction of the Hotel, as contemplated in the Lease, is completed on or before June 30th, 2026, as evidenced by a certificate of occupancy for the Hotel. Also, an additional reduction of Two Million Dollars ($2,000,000) of the remaining balance, as well as any and all interest, will be waived if the remaining balance, including the above mentioned reduction is not awarded, is paid in full by January 31 st, 2028. If the remaining balance is not paid in full by January 31st, 2028, the amount due will amortize over 5 years with 5% interest compounded annually, with payments beginning February 1st, 2028 Additionally, pursuant to Resolution R-09-0180, the Prior Lessee of the Property was granted a forty eight (48) month deferment of rent in the amount of $400,000.00 per year for an aggregate amount of $1,600,000.00 from April 1, 2009 to March 31, 2013, and if the HUD Loan were to be paid in full on or before August 1, 2020, the Deferred Rent minus $800,000 and any taxes or other fees due to the City would convert to and become a permanent abatement, with the $800,000 and any corresponding taxes and fees becoming due on or before December 31, 2020. The HUD Loan has been paid in full and within 60 days following the approval of this Resolution by the Miami City Commission, ESJ has agreed to pay off the remaining portion of the Deferred Rent at the discounted rate of $852,000.00 which is inclusive of sales tax. The deadlines set forth above, shall be extended in the event of (i) force majeure, including but not limited to a natural disaster or future pandemic unrelated to Covid-19, or (ii) declaration of a state of emergency, not including the current one regarding Covid-19. The City's Department of Real Estate and Asset Management is recommending that the City accept these discounts in an effort to collect a majority of a long outstanding debt and enable ESJ to obtain the necessary financing to complete the construction of the hotel and additional improvements required in the Lease, as well as improving the City's position on future rents from ESJ. Budget Impact Analysis Item is Related to Revenue Item is NOT funded by Bonds Item has NOT an Expenditure Total Fiscal Impact: $13,821,923 Department of Real Estate and Asse Review Completed Department of Risk 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 Office of the City Attorney City Commission 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 Office of the City Attorney Office of the City Clerk Reviewed B t Management 05/07/2021 9:14 AM Ann -Marie Sharpe Pedro Lacret Leon P Michel Fernando Casamayor Arthur Noriega V Valentin J Alvarez Jacqueline Lorenzo Barnaby L. Min Victoria Mendez Todd B. Hannon Valentin J Alvarez Jacqueline Lorenzo Barnaby L. Min Nicole Ewan Valentin J Alvarez Jacqueline Lorenzo Barnaby L. Min Todd B. Hannon Nicole Ewan Victoria Mendez City Clerk's Office Anthony Barcena Risk Review Budget Analyst Review Budget Review Assistant City Manager Review City Manager Review Legislative Division Review ACA Review Deputy City Attorney Review Approved Form and Correctness Meeting Legislative Division Review ACA Review Deputy Attorney Review Meeting Legislative Division Review ACA Review Deputy Attorney Review Meeting Meeting Approved Form and Correctness Rendered Department Head Completed 05/07/2021 9:43 AM Completed 05/11/2021 2:53 PM Completed 05/11/2021 3:36 PM Completed 05/11/2021 6:56 PM Completed 05/12/2021 9:24 AM Completed 05/13/2021 9:55 AM Completed 05/27/2021 9:54 AM Completed 05/27/2021 11:40 AM Completed 06/01/2021 12:15 PM Completed 06/10/2021 9:00 AM Completed 06/10/2021 11:54 AM Completed 06/15/2021 9:50 PM Completed 06/15/2021 10:02 PM Completed 06/24/2021 9:00 AM Completed 06/28/2021 11:58 AM Completed 06/28/2021 12:21 PM Completed 06/28/2021 3:28 PM Completed 07/08/2021 9:00 AM Completed 07/22/2021 9:00 AM Completed 07/22/2021 8:38 PM Completed 07/23/2021 5:45 PM City of Miami Legislation Resolution Enactment Number: R-21-0319 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 8944 Final Action Date:7/22/2021 A RESOLUTION OF THE MIAMI CITY COMMISSION AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE AN AMENDMENT TO THE DEVELOPMENT AGREEMENT DATED APRIL 20, 2000, AS AMENDED AND ASSIGNED, BETWEEN THE CITY OF MIAMI ("CITY"), MIAMI-DADE COUNTY ("COUNTY"), AND ESJ JI LEASEHOLD, LLC ("ESJ"), IN A FORM ACCEPTABLE TO THE CITY ATTORNEY AND SUBJECT TO APPROVAL BY THE COUNTY, PROVIDING FOR ESJ TO PAY A PORTION OF THE AMOUNTS DUE TO THE CITY PURSUANT TO THE DEFERRAL OF PAYMENTS APPROVED BY RESOLUTION NO. R-07-0405 IN A LUMP SUM PAYMENT OF EIGHT MILLION DOLLARS ($8,000,000.00) AND PROVIDING THAT THE REMAINING BALANCE WILL BE REDUCED BY ONE MILLION TWENTY ONE THOUSAND NINE HUNDRED TWENTY THREE DOLLARS ($1,021,923.00) IF THE HOTEL CONSTRUCTION IS COMPLETED BY JUNE 30, 2026 AND WILL FURTHER BE REDUCED BY TWO MILLION DOLLARS ($2,000,000.00) AND ACCRUED INTEREST WILL BE WAIVED IF PAID IN FULL BY JANUARY 31, 2028; FURTHER AUTHORIZING THE SUBORDINATION OF SUCH AMOUNTS OWED TO THE CITY TO ESJ'S INSTITUTIONAL FINANCING FOR THE HOTEL CONSTRUCTION; FURTHER AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE A SIXTH MODIFICATION TO THE LEASE AND DEVELOPMENT AGREEMENT DATED SEPTEMBER 2, 1997, AS AMENDED AND ASSIGNED, BETWEEN THE CITY AND ESJ, IN A FORM ACCEPTABLE TO THE CITY ATTORNEY, WHEREBY ESJ WILL BE GIVEN A RENT CREDIT OF SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000.00) SPREAD EQUALLY OVER THREE (3) YEARS, PROVIDING THAT THE BREAKPOINT FOR PERCENTAGE RENT OF THE PARK WILL BE REDUCED TO EIGHTEEN MILLION DOLLARS ($18,000,000.00) AND THE BREAKPOINT FOR PERCENTAGE RENT OF THE HOTEL WILL BE REDUCED TO TWENTY ONE MILLION DOLLARS ($21,000,000.00) WITH RESTRICTIONS, REVERSIONS, AND RETENTION BY THE CITY OF ALL OTHER RIGHTS; FURTHER AUTHORIZING THE CITY MANAGER TO ACCEPT FROM ESJ AN AMOUNT EQUAL TO APPROXIMATELY EIGHT HUNDRED FIFTY TWO THOUSAND DOLLARS ($852,000.00) AS FULL PAYMENT OF THE OUTSTANDING RENT AND TAXES DEFERRED PURSUANT TO RESOLUTION NO. R-09-0178; RATIFYING, APPROVING, AND CONFIRMING THE CONSENT TO THE YGRENE LOAN DATED AUGUST 9, 2017; FURTHER AUTHORIZING THE CITY MANAGER TO NEGOTIATE AND EXECUTE ANY OTHER RELATED DOCUMENTS AS MAY BE NECESSARY TO ACCOMPLISH THE PROPOSED TRANSACTIONS, ALL IN FORMS ACCEPTABLE TO THE CITY ATTORNEY. WHEREAS, the City of Miami ("City") is the owner of that certain tract of land on Watson Island located at 1111 Parrot Jungle Trail, Miami, Florida ("Property"); and WHEREAS, the City leased the Property to Parrot Jungle and Gardens, Inc. ("Prior Lessee") by way of that certain Lease and Development Agreement dated September 2, 1997, which was thereafter modified, assigned to, and assumed by the current tenant, ESJ JI Leasehold, LLC ("ESJ") (collectively, "Lease"); and WHEREAS, pursuant to Resolution No. R-00-264, the City Manager was authorized to execute a development agreement with Miami -Dade County ("County") and the Prior Lessee establishing the terms and conditions of the Prior Lessee's repayment of the HUD Loan, as hereinafter defined, and the City's future involvement as guarantee replacement of eighty percent (80%) of the County's obligation, subject to the City's approval of all loan documents, which was executed on or around April 20, 2000 and thereafter modified, assigned to, and assumed by ESJ (collectively, "Development Agreement"); and WHEREAS, on January 9, 2001, the County made a loan guaranteed by the United States Department of Housing and Urban Development pursuant to the Section 108 Loan Guarantee Program to the Prior Lessee in an amount equal to twenty-five million dollars ($25,000,000.00) for the construction and operation of the project referred to in the Lease as Parrot Jungle and Gardens of Watson Island ("HUD Loan"); and WHEREAS, on July 10, 2007, pursuant to Resolution No. R-07-0405, the City Commission approved the City's assumption of eighty percent (80%) of the County's interest and obligation in the HUD Loan and approved the deferral of the Prior Lessee's obligation to pay the HUD Loan amounts due from August 2006 through and including the payment due in August 2011 ("HUD Loan Deferral"); and WHEREAS, the HUD Loan Deferral authorized the deferral of approximately seventeen million two hundred seventy-seven thousand four hundred three dollars ($17,277,403.00) due and payable on August 1, 2019 unless extended, in which event such amount plus interest at the rate of five percent (5%) would be due and payable in installments beginning on January 1, 2020; and WHEREAS, the City's interest in the payments due by ESJ under the HUD Loan Deferral equals approximately thirteen million eight hundred twenty-one thousand nine hundred twenty-three dollars ($13,821,923.00) plus the interest accrued ("City's Portion"); and WHEREAS, ESJ has agreed to make an eight million dollar ($8,000,000.00) partial payment of the City's Portion to the City paid in a lump sum within twelve (12) months following the City's execution of a Second Amendment to the Development Agreement, in a form acceptable to the City Attorney, and further subject to review, approval, and execution by the County; and WHEREAS, subject to ESJ's payment and the City's receipt of the eight million dollars ($8,000,000.00) noted above, the remaining balance of the City's Portion will be approximately five million eight hundred twenty-one thousand nine hundred twenty-three dollars ($5,821,923.00) plus the interest accrued ("City's Remaining Portion"); and WHEREAS, the City has agreed to subordinate the City's Remaining Portion to the institutional lender that provides financing for the hotel construction and holds a first leasehold mortgage over ESJ's leasehold interest in the Property; and WHEREAS, in the event ESJ completes construction of the hotel as required by the Lease on or before June 30, 2026 ("Hotel Deadline") as evidenced by a temporary or permanent certificate of occupancy, the City shall forgive and reduce one million twenty-one thousand nine hundred twenty-three dollars ($1,021,923.00) of the City's Remaining Portion; and WHEREAS, the City shall grant ESJ an additional forgiveness and reduction of two million dollars ($2,000,000.00) of the City's Remaining Portion and shall further forgive any and all interest accrued therein in the event that the City's Remaining Portion, as may have been reduced and forgiven, is paid in full by January 31, 2028; and WHEREAS, if the City's Remaining Portion is not paid in full by January 31, 2028, the City's Remaining Portion, as may have been reduced subject to compliance with the Hotel Deadline, will amortize over five (5) years with five percent (5%) interest compounded annually and with payments beginning February 1, 2028; and WHEREAS, the Lease provides for the City to receive percentage rent equal to five percent (5%) of Gross Revenues up to twenty million dollars ($20,000,000.00) and six percent (6%) of Gross Revenues over twenty million dollars ($20,000,000.00) ("Park Percentage Rent"); and WHEREAS, the Park Percentage Rent shall be amended to equal five percent (5%) of Gross Revenues up to eighteen million dollars ($18,000,000.00) and six percent (6%) of Gross Revenues over eighteen million dollars ($18,000,000.00); and WHEREAS, the Lease further provides for the City to receive additional percentage rent equal to five percent (5%) of hotel revenues exceeding the Hotel Base Rent, which is defined in the Lease and with such breakpoint growing periodically throughout the term of the Lease ("Hotel Percentage Rent"); and WHEREAS, the Hotel Percentage Rent shall be amended to equal five percent (5%) of hotel revenues exceeding twenty-one million dollars ($21,000,000.00), which breakpoint shall not grow throughout the term of the Lease; and WHEREAS, pursuant to Resolution No. R-09-0178, the Prior Lessee was granted a forty-eight (48) month deferment of rent in the amount of four hundred thousand dollars ($400,000.00) per year for an aggregate amount of one million six hundred thousand dollars ($1,600,000.00) from April 1, 2009 through March 31, 2013 ("Deferred Rent"); and WHEREAS, pursuant to Resolution No. R-09-0178, if the HUD Loan were to be paid in full on or before August 1, 2020, the Deferred Rent minus eight hundred thousand dollars ($800,000.00) ("Deferred Rent Remaining") would convert to and become a permanent abatement, with the Deferred Rent Remaining and any corresponding taxes and fees due on or before December 31, 2020; and WHEREAS, ESJ has certified to the City that the HUD Loan has been paid in full on or before August 1, 2020; and WHEREAS, within sixty (60) days following the approval of this Resolution by the Miami City Commission, ESJ shall pay off the Deferred Rent Remaining at the discounted rate of approximately eight hundred fifty-two thousand dollars ($852,000.00), which is inclusive of sales tax; and WHEREAS, the deadlines set forth above shall be extended in the event of (i) force majeure, including but not limited to a natural disaster or future pandemic unrelated to the Novel Coronavirus ("COVID-19") or (ii) declaration of a state of emergency, not including any state of emergency regarding COVID-19; and WHEREAS, the City's Department of Real Estate and Asset Management ("DREAM") recommends that the City accept these amendments and discounts in an effort to collect a majority of a long outstanding debt and enable ESJ to obtain the necessary financing to complete the construction of the hotel and additional improvements required in the Lease, as well as improving the City's position to ensure future continued rent payments from ESJ; and WHEREAS, the Lease provides for ESJ to develop a green energy educational facility on the Property if the Master Permit for the hotel was issued and the City executed the documents required for the Lessee to obtain funding from PACE or similar green energy program; and WHEREAS, on August 9, 2017, the Director of DREAM executed a consent on behalf of the City authorizing ESJ to enter into an agreement with Ygrene Energy Fund, Inc. for the financing of certain improvements and for the provision of certain energy related cost savings, with such financing paid through annual assessments added to ESJ's tax bill for the Property ("Ygrene Loan"); 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 Manager is authorized' to negotiate and execute an amendment to the Development Agreement, in a form acceptable to the City Attorney and subject to approval by the County, providing for ESJ to pay a portion of funds owed by ESJ under the HUD Loan Deferral in an amount equal to eight million dollars ($8,000,000.00) paid in a lump sum and providing for the forgiveness and reduction of the HUD Loan Deferral in an amount equal to one million twenty one thousand nine hundred twenty three dollars ($1,021,923.00) if the hotel is completed by June 30, 2026 and providing for the forgiveness and reduction of the HUD Loan Deferral in an amount equal to an additional two million dollars ($2,000,000.00) plus accrued interest if the remaining amounts due on the HUD Loan Deferral are paid by January 31, 2028. Section 3. The City Manager is further authorized' to negotiate and execute such agreements, all in forms acceptable to the City Attorney, as may be reasonably required by ESJ's institutional lender to subordinate only the City's Remaining Portion to the institutional lender that provides financing for the hotel construction and holds a first leasehold mortgage over ESJ's leasehold interest in the Property, notwithstanding anything to the contrary in the Lease. Section 4. The City Manager is further authorized' to negotiate and execute a Sixth Modification to the Lease and Development Agreement between the City and ESJ, in a form acceptable to the City Attorney, whereby ESJ will be given a rent credit of seven hundred fifty thousand dollars ($750,000.00) spready equally over three (3) years, providing that the breakpoint for the Park Percentage Rent will be reduced to eighteen million dollars ($18,000,000.00) and the breakpoint for the Hotel Percentage Rent will be reduced to twenty one million dollars ($21,000,000.00) with restrictions, reversions, and retention by the City of all other rights. Section 5. The City Manager is further authorized' to accept from ESJ an amount equal to approximately eight hundred fifty-two thousand dollars ($852,000.00) as full payment of the outstanding rent and taxes deferred pursuant to Resolution No. R-09-0178. Section 6. The City's consent to the Ygrene Loan is hereby ratified, approved, and confirmed and the provisions of the Lease prohibiting the same, including without limitation Sections 6.2 and 29.2, are hereby waived for the sole and exclusive purpose of permitting the subject Ygrene Loan. There shall be no other waiver of any Lease provisions nor shall such consent be construed to relieve ESJ from the full and faithful observance and performance of its 1 The herein authorization is further subject to compliance with all legal requirements that may be imposed, including but not limited to, those prescribed by applicable City Charter and City Code provisions. covenants and obligations as provided in the Lease. Section 7. The City Manager is further authorized' to negotiate and execute any and all other related documents as may be necessary to accomplish the proposed transactions, all in forms acceptable to the City Attorney. Section 8. This Resolution shall become effective immediately upon its adoption. APPROVED AS TO FORM AND CORRECTNESS: