HomeMy WebLinkAboutCRA-R-20-0001 NR Investments 11 LLC_Final TIF Proposal with Exhibitsi
NRINVESTMENTS
1111 PARK CENTRE BLVD #450 MIAMI, FL 33169 PHONE (305) 625 0949 NRINVESTMENTS,COM
BERGER SINGERMAN
October 15, 2019
Via Hand -Delivery
Mr. Jason Walker, Executive Director
Omni Community Redevelopment Agency
Historic Firehouse #2, 2nd Floor
1401 N. Miami Avenue
Miami, FL 33136
Re: NR Investments 11 LLC — Tax Increment Rebate & Grant Proposal for 17' Street
Apartments
Dear Mr. Walker:
Our firm represents NR Investments 11 LLC (hereinafter, the "Applicant" or "Developer"), the owner of
the property located within the Omni Community Redevelopment Agency ("CRA") boundaries at 70 & 90 N.E. 17th
Street and 1642 N.E. lst Avenue, Miami, Florida, Miami, Florida (the "Property").
Developer formally submits the enclosed proposal for the CRA's consideration in support of a mixed -use
project Developer intends to construct on the Property. The project will consist of ground floor retail (approx. 6,000
sq. ft.), office (approx. 30,000 sq. ft.), and 252 multi -family, residential rental units (the "Project"). In exchange for
the CRA's financial support, as outlined hereinbelow, Applicant shall agree to restrict the rents of ALL 252
residential units within the Project through 2047 (assuming the anticipated extended life of the CRA extends at least
through 2047) via the imposition of a Declaration of Restrictive Covenants (the "Covenant"). The Applicant's
request of the CRA and proceeds realized pursuant to the rebate of property taxes equal to the percentage of the
increase paid during the term of the agreement (the "Incentive Agreement") will be used to off -set the losses
occasioned from the restricted rents and to off -set the costs of the City building permit fees, County water & sewer
connection charges, and City & County impact fees.
The proposal is consistent the strategic plan and goals of the CRA Redevelopment Plan (2019 Amendment)
which seek to expand the supply of affordable and workforce housing within the CRA boundaries. Affordable and
workforce housing units forming part of the Project will provide needed housing inventory to critical employees
within the Miami market, including: (i) hospitality service workers; (ii) teachers (median annual salary: $46,000);
(iii) police officers (avg. base annual salary: $53,715); (iv) firefighters (avg. annual salary: $54,9430; (iv) registered
nurses (avg. annual salary: $56,925); and (v) recent college graduates (avg. starting salary: $50,004).
We look forward to your favorable consideration of this request and the CRA board's approval of the same.
Cc: Anthony Balzebre, Assistant Director
Isiaa Jones, Esq., Chief Legal Officer
Nir Shoshani, NR Investments, Inc.
Terry Wellons, NR Investments, Inc.
Kristofer Nelson, NR Investments, Inc.
Sincerely,
JwvLe r E. For
Javier E. Fernandez, Esq.
9366740-1 1450 BRICKELL AVENUE I SUITE 1900 I MIAMI, FLORIDA 33131
t: (305) 755-9500 I f: (305) 714-4340 I WWW.BERGERSINGERMAN.COM
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17th Street Apartments Project
RATIONALE FOR CRA ASSISTANCE
Miami's downtown skyline is a picture of construction, as new condos and apartments are built throughout
our burgeoning City. But the expansion experienced in the current real estate cycle is misleading as the City faces
one of the nation's most severe crisis of housing unaffordability stemming from the dual problem of high housing
costs and comparably low wages.
Today, Greater Miami's housing stock suffers from a significant supply mismatch. The local market has a
glut of expensive housing and not nearly enough affordable housing. While we have seen the construction of
expensive condos to the point of over -supply, not nearly enough affordable and workforce housing has been built to
meet market's demand. While thousands of new housing units have been developed within the City and thousands
more are slated for development within the CRA alone, most of the units built are market -rate or high -end luxury
units.
Further compounding the current mismatch is a lack of general housing starts in the metropolitan market.
Only 4 percent of the metro area's housing units have been built since 2010. By contrast, some of America's most
dynamic and fastest -growing metros have constructed more than 10 percent of their housing stock since 2010.
While a new and growing community, Miami's housing supply is increasing at the pace of older, more built -out
metropolitan areas, like Boston, and Rust -Belt metropolitan areas, like Cincinnati and St. Louis.
Six in 10 employed adult residents of Greater Miami are housing cost -burdened, meaning they spend more
than 30 percent of their incomes on housing — the highest rate of any large metropolitan area in the nation. Racial
and ethnic minorities, as well as our community's low-income service workers, shoulder a disproportionate share of
the burden of today's housing crisis. The following facts provide chilling insight into the scope and impact of the
current crisis:
• More than 40% of the Miami metro's households are renters — ranking 8"' among all large U.S. metros
on this metric. Between 2010 and 2016, Greater Miami has seen its proportion of renter households
grow by nearly 2% annually.
• Miami's renter population is disproportionately African American and Hispanic with 55% of black
households and 48% of Hispanic households renting, compared with just over 25% of white households.
■ Greater Miami's median rents are increasingly unaffordable. As of October 2018, the median rent for
Greater Miami was $2,095 — the eighth highest in the nation behind communities like Denver, Portland,
Dallas and Austin. Said median rent requires an annual household income of not less than S83,800 for such
rent to be "affordable" or for the household not to be "cost -burdened."
■ Miami's low-income service class — workers in low -skill jobs like retail, food service and home care which
make-up more than 50 percent of the region's workforce — is severely cost -burdened. Miami's service
class faces the greatest rental cost burdens among all classes with just under $11,000 in annual income left-
over after paying rent — the 5th worst rate among large metropolitan areas in the nation.
• Miami has the highest proportion of cost -burdened renters in the nation by a significant margin. More
than half (53%) of renters spend 35 percent or more of their household income on rent. Greater
Miami's renters have the least amount of money left over after paying for housing of any large metro.
Miami's renters have, on average, less than $16,000 left over after paying their rent. Far less than the
$30,000 or so in take-home income that renters in Washington, D.C. and Boston have left over after paying
for their housing.
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17th Street Apartments Project
CONSISTENCY WITH CRA REDEVELOPMENT PLAN
Chapter 4 of the CRA proposed amendment to the Redevelopment Plan (2019) reaffiinis the importance of
the development of affordable housing to the economic vitality of the CRA. With regard to projects assisted by the
CRA (from which it excepts projects it seeks to support to provide workforce, low, or very -low income housing), it
identifies among its community benefits priorities the "inclusion of an appropriate amount of below -market rate
units," specifically workforce housing units (at less than 140% AMI) and units for low-income residents (less than
80% AMI). Among the policy reasons articulated for such community benefits requirement are: (i) preservation of
the affordability of the neighborhood; (ii) prevention of existing resident displacement; and (iii) provide area
workers an opportunity to live near work.
On page 4-32 of the amended Redevelopment Plan, the CRA has noted that housing affordability is one of
the key programs for the CRA to undertake. A thriving community is one where residents in all phases of life with
varying types of employment can live in one area. To that end, the CRA outlined the following programmatic
methods it can employ to increase the supply of affordable housing:
To Assist For -Profit Housing Providers in the CRA could:
2) Pay some portion of development costs such as impact or permit fees
3) Provide a direct cash subsidy in the form of a rebate equal to a percentage of the
increases in taxes paid over a defined period of time after completion if affordable units
are provided.
In addition to the above programmatic methods to expand the supply of affordable housing, the CRA has identified
the following goal on page 5-56 of the Redevelopment Plan:
6) Housing Affordability The CRA should fund established and creative new ways to increase
the stock of workforce and lower income affordable housing within the district.
GOALS:
a) Create project -specific developer incentives to ensure that new or significantly
redeveloped residential projects in the CRA contain a sufficient number of units that are
affordable to the target populations.
The Project and accompanying request seek financial support from the CRA to underwrite the development of
residential units, specifically for low-income and workforce households, and asks the CRA to provide the Applicant
with a project -specific incentive.
1111 PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
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17th Street Apartments Project
PROJECT DESCRIPTION
The Developer proposes to enter into a public -private partnership with the CRA to advance its goal of
developing much -needed affordable and workforce housing units within the redevelopment area. Applicant
proposes to construct a 29-story tower on land it purchased over the course of the last three years which will consist
of a mixed -use project comprised of the following elements: (i) 252 multi -family residential units; (ii) approximately
30,000 sq. ft. office use; and (iii) approximately 6,000 sq. ft. of ground floor commercial use (the "Project").
Applicant proposes to assist the CRA in advancing its Redevelopment Plan goal by restricting rents of ALL the
residential units within the Project through the life of the CRA is outlined hereinbelow. The rent restrictions
proposed will ensure that the Developer make residential units available to low-income households and households
who can afford "workforce" rents, more specifically teachers, police officers, firefighters, nurses, and recent college
graduates, among other professions.
The Project represents the Developer's latest investment in the Omni "Arts + Entertainment District" — a
dynamic urban residential neighborhood connecting the CRA & downtown Miami with the Wywood Arts District
and the Design District. With the surrounding growth, the Arts + Entertainment District has seen growth in its
residential, culinary, entertainment and nightlife offerings, but substantial land remains undeveloped and a number
of buildings remain dilapidated within the district evidencing the continued "slum & blight conditions" within the
CRA. Applicant's CANVAS project, a new art -inspired condominium offering a "bohemian luxe" lifestyle
immersed in the local art, culinary & cultural scene, has served to anchor the district's ascendant trajectory.
Beyond its project investments within the redevelopment area, NR Investments, Inc., has invested
approximately $2 million in efforts to beautify the Arts & Entertainment District, attract new businesses and retailers
to the area, and deliver high -quality arts, music and community programming, including "The Miami Flea," a pop-
up market, and a "Moonlight Grooves," a music series held on CANVAS's backyard, among others.
Given the Project's location just north of downtown Miami, it is conveniently accessible via multiple
modes of transit, including: (i) the MetroMover via the "School Board Station" on N.E. 15th Street; (ii) the City's
free trolley system; and (iii) Virgin Trains' service at Grand Central Station. The inclusion of the proposed
affordable and workforce dwelling units in the Project will provide residents convenient access to employment
opportunities via mass transit servicing greater downtown Miami area and portions of the South Florida region via
inter -city passenger rail service.
Illustrative Project renderings and floor plans are enclosed as Exhibit "A".
1111 PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
9366610-1
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17th Street Apartments Project
REQUESTED PROJECT ASSISTANCE
The Applicant makes the following request based on the assumption the CRA will be extended to 2047':
2047 CRA Expiration Date
• Proposed Residential Restrictions: Applicant proposes to rent -restrict 252 residential units — 188 studio
units, 60 one -bedroom units and 4 two bedroom units— as set forth in the "Project Information Sheet" attached
hereto as Exhibit "B." Said rent -restrictions will be remain in place from the date the Residential portion of
the Project is placed in-service (as evidenced by the issuance of a temporary certificate of occupancy or
certificate of occupancy for a residential dwelling unit) through the date of the CRA's anticipated term
extension (2047). The Applicant will be permitted to adjust the maximum rent per unit for each unit type
consistent with the rate schedule adopted by the Corporation for "Multifamily Rental Programs" for Miami -
Dade County. The Developer will impose a covenant setting forth the rent restrictions and the minimum
number of rent -restricted units by type. The covenant shall grant the enforcement rights to the CRA through
the extended term of the CRA (2047).
Requested Financial Assistance: Applicant requests a cash grant of $5.5 million (approximately $21,825
per unit) and a rebate of 95% of the TIF collected by the Omni CRA. Developer anticipates that the rebated
tax increment will amount to approximately $8.5 million in gross receipts (or $3_9 million in present value)
to off -set: a) an estimated $17.8 million in rent losses (gross) ($8.2 million in present value), b) the reduction
in property value due to the rent restriction (beginning at over $11.1 million and increasing annually to over
$17.9 million by 20147 and c) the more than $2_6 million in estimated permit fees, water & sewer connection
charges, and impact fees to be assessed at the initiation of the Project. Applicant requests that the cash grant
be provided at time of the issuance of the Project building permit. See Exhibit "C" attached hereto.
' This proposal anticipates the CRA will be extended at least through 2047. If the CRA is not extended
beyond the current expiration of 2030, the Developer respectfully requests to receive the same cash grant and rebate
rate. Accordingly, the Developer will continue to restrict all 252 Units through 2038 (8 years after TIF rebate would
end), but will restrict less units at the lower 3 rent levels.
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17th Street Apartments Project
APPLICANT EXPERIENCE & QUALIFICATIONS
NR Investments 11 LLC, is a subsidiary of NR Investments, Inc. ("NR"), a privately held real estate
investment company. Each of the company 's principals and senior executives has extensive experience in real estate
capital markets, acquisition, asset management, development, construction and risk management. NR believes in
fostering cultural movements and communities in undiscovered areas, and in making their buildings the beacons of
their renaissance.
NR specializes in acquiring developing, repositioning, and managing real estate assets in major markets
throughout the world. The company has acquired more than 10 million square feet of office and residential space
across the globe. Over the past 18 years, NR has purchased, developed, repositioned and sold over $700 million of
multifamily and commercial real estate assets.
Recent Development Experience
• Filling Station Lofts: In January 2013, NR stepped back into the Miami market with the acquisition and
subsequent completion of the Filling Station Lofts, an 81-unit loft -style apartment building.
• CANVAS Condominiums: In November 2013, NRI closed on the 1.07 acre CANVAS condominium site.
NR constructed a 37-story, 513 unit residential condominium tower that received its final certificate of
occupancy (C.O.) in 2018 and has to -date sold -out approximately 95% of its residential units.
• 14th Street Development: In May 2014, NR closed on the 0.78-acre "14th Street" development site. The
project remains in the planning stages with the expectation of a mixed -use tower with more than 500
residential dwelling units.
Qualifications of Principals
• Nir Shoshani — Principal. Prior to forming NR in 2001, Mr. Shoshani held the title of President at TiS
America, Inc., a subsidiary of Top Image Systems Ltd. (NASDAQ: TiSA), a publicly traded, high-tech
fiun headquartered in Israel with operations around the globe. Mr. Shoshani is a graduate of the Belgrano
School of Business in Buenos Aires.
• Ron Gottesmann — Principal. Prior to founing NR in 2001, Mr. Gottesmann worked as a mortgage broker
overseeing the operation of GFI Mortgage Bankers Inc. of New York. With Mr. Shoshani, Mr. Gottesmann
leads NR which today is a fully integrated development firm which owns and manages a wide variety of
real estate, including large scale office buildings, commercial shopping centers, and multi -family housing.
Under Mr. Gottesmann's leadership, the fiun has maintained a consistent focus on property repositioning
via the acquisition of underperfouning buildings in high visibility locations rehabilitating them to their full
potential through extensive renovation and management restructuring.
• Terry Wellons — C.O.O. Mr. Wellons serves as the Chief Operating Officer at NR. He leads the United
States team directing a group of highly experienced attorneys, accountants and portfolio and property
managers. He has a background in finance and as a real estate attorney, serves as lender's counsel and
representing buyers and sellers of real estate, aids NR in each aspect of NR's business, effectively
negotiating and gauging the legal and financial risks involved with each transaction. Mr. Wellons holds a
degree in finance from Florida International University and a law degree from Nova Southeastern
University.
1111 PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 INVESTMENTS.COM
9366610-1
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17th Street Apartments Project
EXHIBIT "A"
PROJECT RENDERINGS & FLOOR PLANS
1111 PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 1NVESTMENTS.COM
PROPERTY RENDERINGS
PROPERTY RENDERINGS
PROPERTY RENDERINGS
PROPERTY RENDERINGS
PROPERTY RENDERINGS
17th Street Apartments Project
Developer/Applicant:
Contact Person:
Telephone:
E-mail:
Project Address:
EXHIBIT "B"
Omni CRA
Grant and Tax Increment Recapture Agreement
Project Information Sheet
Uni 17th Street, LLC
Terry Wellons, Manager
(305) 625-0949
terryRnrinvestments. com
70 & 90 N.E. 17th Street and 1642 N.E. 1st Avenue, Miami, Florida
Property Information
Prior Year Taxable Values
Folio Numbers
Existing Building
Size
Lot Size
2019
2018
2017
01-3136-005-
0320
4,451 sq. ft.
5,250 sq. ft.
$877,250
$797,500
a $869,535
01-3136-005-
0310
3,743 sq. ft.
4,775 sq. 11.
$900,410
$818,555
$798,098
01-3136-005-
0330
0 sq. ft.
12,600 sq. ft.
$1,428,889
$1,298,990
$1,180,900
Total:
8,194 sq. ft.
22,625 sq. ft.
$3,206,549
$2,915,045
$2,848,533
Type of Project:
Construction Commencement:
Project Construction Completion Date:
Mixed Use (Retail, Office, Multi -Family Residential)
July 1, 2020
January 1, 2023
Project Construction Cost: $53,257,241
Estimated Adj. Taxable Value (T1F Basis): $36,139,475
Residential Units:
Office Square Footage:
Retail Square Footage:
252 Units
41,288 sq. ft,
4,413 sq. ft.
Property Acquisition Date: September 2016 and April 2019
Total Acquisition Cost: $4,775,000
Projected Residential Rent (Per Unit Type): Studio - $1,747 / 1BD - $2,224 / 2BD - $2,750
17th Street Apartments Project
Proposed Affordability Restrictions:
2047
Unit Type
Total Units
Maximum
Rent
Studio- 60%
10
$889
Studio- 80%
19
$1,186
Studio- 100%
29
$1,483
Studio-120%
38
$1,179
Studio- 140%
92
$2,075
1BD- 60%
3
$953
1BD- 80%
6
$1,271
1BD- 100%
9
$1,589
1BD- 120%
12
$1,906
1BD- 140%
30
$2,224
2BD-140%
4
$2,670
Total:
252
-
N 0.
17th Street Apartments Project
EXHIBIT "C"
FINANCIAL ANALYSIS
1111 PARK CENTRE BLVD #450, MIAMI, FL 33169 PHONE (305) 625 0949 1NVESTMENTS.COM
CAA/Developer Retainage:
Growth Rate:
Miami- Municipal Operating
Mlami-Dade County -Operating
NR Investments 11 LLC
Project: 17th Street Apartments
2047 Financial Analysis
95%
1,02
Millage Rate Taxable Value 120191 Taable Value (@ C.O.) Adj. Taxable Value Tay Receipts (Net) CAA T)F(95%) CAA Retained TIF (65%1 County Clawback (353S)
7.4365 53,206549 341,821,023 538,664,474 5287.528 5273.152 5177,549 595,603
4.6669 $3,206,549 541,871,023 538,664,474 ' 5180,445 6171,421 5111,424 559.997
Total Receipts: 5467,972 3444,573 5208,972 5155.601
Tan Years
2023 2024 2025 2026 2027 2028 2029 2030 Total
TIF to CM: 5289,972 5294,752 5300,647 5306,660 5312, 93 5319.049 $325,430 $331,939 52,480,242
TO to Developer: 5274.524 5210,014 $285,615 0291,327 5207,153 5303,096 5309,150 5315,342 52,356,230
TIF to 004e10798430): 5225,851 5219,399 5213,130 5207,041 5201,125 5195,379 $189,799 5134,374 51,636,095
Tay Years
2031 7032 2033 2034 2035 2036 2037 2038 Total
TIF to CIA: 5321,648 5328,081 5334.693 5841,336 534.8,163 5355,126 5302,228 5369,473 52,760,699
TIF to Developer: 5305,566 5311,677 5317,911 5324,269 5330,754 5337.370 5344,117 6350,999 42,622,664
TIF to Developer{PVI: 5170,151 3165,285 5160.567 5155,373 5151,522 5149,193 5142,988 5138.902 51,232,591
Tay Years
2039 2040 2041 2042 2043 2044 2045 2046 2047 Total
TIF to 6001 5376,062 5384,400 $392,088 $399,929 5407.928 5416,087 5424,403 6432,896 $441,554 $3,676,153
TIF to Developer: 5368.019 5365.180 5372,483 5379,933 5387,532 $395.282 5401,188 S411,252 5419,477 $3,492,345
OF to Developer(PV): 5134,934 5131 078 5127,333 $123,635 5120,151 5116.728 5111,333 5110,153 $167,006 51,084,102
Tota1T1F MGM 58,917,093
TIF to Developer. 58,471,238
TIF to Developer (AV): 53,953,167
Avg. Market Rent (studio):
Target Market Rent(16D):
Target Market Rent (21O):
$1,767
52,224
$2,750
Yeakyl9D
Total Units Total Studio Units Mae. Studio Rent Studio Rent Loss 8/1.1 Y early Stud14 Rent Lass Total16.am D U0110 Max. lap Re18D Rent Loss YearlRent...8D RentTotal280 Units Max. 28D Rent 180 Rent Loss Rent Loss
13 10 5889 (5858) 15102,9601 5953 151,2717 (545,756)
25 19 51,186 (0561) ($127,998) 6 51,271 (5953) 068,616)
38 29 0,483 15264) (591,8721 9 51,589 (S6351 (568,9801
50 38 51,779 50 56 12 $1,906 (5318) (545,7921
126 92 52,075 50 50 30 $2,224 50 13 i2.670 (080) ($3,840)
Total Studio Rent Loss: (5522,760) Tota11RD Rent Loss: ($226,744) Tota11B0 Rent Loss: ($3,840)
Tax Years
2023 2024 2025 2016 2027 202 2029 2030
Annual Rent 0030: (5555,324) (5566,630) (5577,759) (5589,314) (5601,101) (5613,123) (5625,385) (5637,893) (94,766,329,
Annual Rent 11s9(00): 15456,860) ($943,813) 15431.133) 15418,8151 (5696,860) ($295,226) 12883,432) 15372,963) 153,309,595)
Valuation loss (511,106,680) i 1511,328,610 011,555,167) (511.786,20) 1512,022,011) 1512,262,451) ($12,507,700) (312,757,854)
Taw Years
2031 2032 2033 2034 2035 2039 2037 2038 Total
Annual Rent 6e11: (5650,651) (5650,664) (5576,9371 15690,476) (5701,285) (5718.2711 (5732.738) (5747,393) (55584,514)
Annual Rent 1e11(80): (5362307) ($351,955) (5341,899) (5322,131) 15322,6411 (53136423i 0306,468) (5295,769) (57-624,592)
Valuation loss (313,013,011) (513,273,272) (513,538,7371 013,805,5121 1516,085.7021 (514,367.416) (514,654,764) (914,947,860)
Tax Yeats
2039 2040 2041
2042 2043 2044 2045 2046 2047 Total
Annual Rent 1470: 15762,341) 15777,588) ($793,123) (5809,002) (5825,182) 15841,686) ($858,5201 (5675,990) 115993,204) (57,436,3521
Annual Rent Less (eV): (7252,318) 15279,109) (5271,1351 (5263,383) 15255,863) (5248552) 15241,4511 (2234,552) (52233831 (52,396,7501
Valuation loss ($15,246,817) 1515,551353) 1515,862,768) (516,180,044) S516,503,645) (614833,718) 4517,170,392) 1517,513,1100( 1517,864,076)
Weighted AMI ResiriMon of Bottom
5. of Units
99 84,
Total Rent Loss: ($17,787,1941
Total Rent Loss ON): L58,238,037)