Loading...
HomeMy WebLinkAboutPre-LegislationCity of Miami r~ . �,. Legislation f `11A Resolution R-17-0263 File Number: 2334 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com Final Action Date: 5/30/2017 A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), DIRECTING THE CITY MANAGER TO ISSUE A NOTICE OF DEFAULT TO FLAGSTONE ISLAND GARDENS, LLC ("FLAGSTONE") OF THE AMENDED AND RESTATED AGREEMENT TO ENTER INTO GROUND LEASE ("AMENDED AND RESTATED AGREEMENT TO ENTER") AND THE AMENDED AND RESTATED GROUND LEASE(S) ("AMENDED AND RESTATED GROUND LEASES') AS APPLICABLE, DUE TO FAILURE TO COMMENCE CONSTRUCTION AS REQUIRED BY THESE AGREEMENTS AND OTHER GROUNDS STATED HEREIN; AND FURTHER DIRECTING THAT THE CITY ATTORNEY AND INDEPENDENT AUDITOR GENERAL CONDUCT AN ANALYSIS OF THESE AND ANY OTHER RELATED AGREEMENTS WITH FLAGSTONE TO DETERMINE IF THERE ARE OTHER BREACHES. WHEREAS, the City of Miami ("City") owns certain real property at approximately 1050 MacArthur Causeway, Miami, Florida ("Property"); and WHEREAS, pursuant to applicable competitive solicitation processes, Flagstone Island Gardens, LLC ("Flagstone") was selected as the most qualified, responsive, and responsible bidder to develop and lease a mega -yacht marina and ancillary facilities such as retail, parking, hotels, and other related facilities on the Property ("Project"); and WHEREAS, the Miami City Commission, pursuant to Resolution No. 01-972, adopted on September 17, 2001, and Resolution No. 01-1028, adopted September 25, 2001, polled the electors of the City regarding leasing the Property to Flagstone for the Project and the voters approved the Project by an affirmative vote; and WHEREAS, pursuant to Resolution No. 02-1304, adopted on December 12, 2002, the City and Flagstone entered into an Agreement to Enter into a Ground Lease ("Agreement to Enter") and a form of proposed Ground Lease ("Ground Lease") dated January 1, 2003, with exhibits and attachments; and WHEREAS, subsequently, the City and Flagstone entered into certain Amendments to the above referenced Agreements; and WHEREAS, the parties thereafter, by Resolution No. 10-0402, adopted on September 23, 2010, entered into an Amended and Restated Agreement to Enter into Ground Lease ("Amended and Restated Agreement to Enter") and an Amended and Restated Ground Lease(s) ("Amended and Restated Ground Leases") dated February 1, 2010; and WHEREAS, the Project is a phased project consisting of Phase 1 - the Marina; Phase 2 — Retail/Parking; Phase 3 - Hotel 1; and Phase 4 - Hotel 4; and WHEREAS, Flagstone and the City entered into the Amended and Restated Ground Lease for the Retail/Parking Phase in August, 2016; and City of Miami Page 1 of 3 File ID: 2334 (Revision: A) Printed On: 6/13/2017 File ID: 2334 Enactment Number: R-17-0263 WHEREAS, the deadline to commence construction of the Retail/Parking Phase [as extended by Force Majeure and State of Florida Executive Order 15-173, which tolled all Development Permits for sixty (60) days and six (6) months], was May 1, 2017; and WHEREAS, Composite Attachment 3 approved by Resolution No. 10-0402, adopted September 23, 2010, and incorporated by reference in the Amended and Restated Ground Lease for the Retail/Parking Phase, defines "Commence Construction" or "Starts Construction" to mean that "all material plans and permits are approved and the act of physical construction has begun," as depicted in Exhibit "A," an excerpt from Composite Attachment 3, attached and incorporated; and WHEREAS, the Agreement to Enter continues in effect and supercedes the contrary provisions in the Ground Lease; 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 directed to issue a Notice of Default to Flagstone as to Flagstone's failure to perform any covenants, conditions, or agreements of the Amended and Restated Ground Lease, including, without limitation, the Agreement to Enter, the Amended and Restated Ground Lease for Retail/Parking and Composite Attachment 3, as applicable. These include the following: (a) Failure to commence or start construction of the Retail/Parking components in the manner required pursuant to Attachment 3; (b) Failure to close on construction loans, as required pursuant to Section 6.1.2 of the Agreement to Enter; and (c) Failure to comply with the Financial Resources and evaluation of Project requirements pursuant to Section 12.1.2 of the Agreement to Enter. Section 3. The City Manager is further directed to issue a Notice of Default stating, with particularity, the respects in which the City, as the Lessor, contends that Flagstone, as the Lessee, has failed to perform. Section 4. The Office of the City Attorney and the Office of the Independent Auditor General, with the assistance of the City Administration, are directed to review the Amended and Restated Ground Lease, the Amended and Restated Ground Lease for Retail/ Parking, and any other pending Agreements with Flagstone related thereto, to determine if there are any other current breaches. Section 5. This Resolution shall become effective immediately upon its adoption and signature of the Mayor.' 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. City of Miami Page 2 of 3 File ID: 2334 (Revision: A) Printed on: 6/13/2017 File ID: 2334 APPROVED AS TO FORM AND CORRECTNESS: ria daz, it}+ ttvr By �i`':i; 17 Enactment Number: R-17-0263 City of Miami Page 3 of 3 File ID: 2334 (Revision: A) Printed on: 611312017 to the second Option period shall be due upon commencement of the second Option period until the second Hotel Component reaches its Completion Date. (d) Upon entering into the Ground Lease for any Hotel Component(s) and prior to Starting Construction for any such Hotel Component(s), Flagstone shall provide a Construction Bond to the City for the full amount of the construction cost of any such Hotel Component(s). VI. ADDITIONAL AGREEMENTS CONCERNING FLAGSTONE FORFEITURE / CITY TERMINATION RIGHTS. (a) If the Marina Component does not Start Construction by 9/01/2013 or both the . Parking/Retail Components do not Start Construction by 9/01/2016, then Flagstone's rights to build any Components expires and ceases, the Agreement to Enter is terminated, City retains all Prepaid Construction/Base Rent (as consideration for the extension of time until 9/1/2013 for the Marina Component and as consideration for the extension of time until 9/1/2016 for both the Parking/Retail Components) and Flagstone must turn over to the City immediately the applicable Ground Lease(s), Flagstone also agrees to waive its defenses as to failure to begin construction against the City, immediately vacate and turn over to the City for the City's possession all of Flagstone's rights and interests in the Property and the easement areas, remove from such easement areas and from the Property all of its property of whatever kind as requested in writing by the City Manager, and immediately (i) return or sign over, as applicable, to the City all of Flagstone's rights, directly or indirectly, in the permits, plans, specifications, and all related governmental approvals, documents, instruments, and agreements as necessary related to the Property, and (ii) deliver to the City all of such permits, plans,. specifications, and all related governmental approvals, documents, instruments, and agreements which are in Flagstone's possession or in Flagstone's control. (b) If any Hotel Component does not Start Construction according to the applicable deadline under the construction schedule and the Option schedule(s) (as applicable), then Flagstone's rights to build the applicable Hotel Component expires (but Flagstone's obligations under the payment schedule for the Marina Component, the Parking/Retail Component, and any Hotel Component that is/are complying continues to the end of the applicable Ground Lease(s)). Any time Flagstone loses the right to construct a Hotel(s) Component, then Flagstone must turn over to the City immediately the applicable Ground Lease(s), Flagstone also agrees to waive its defenses as to failure to begin construction against the City, immediately vacate and turn over to the City for the City's possession .all of Flagstone's rights and interests in the applicable Hotel Component, any Hotel Ground Lease, and the related easement areas, remove from such easement areas and from the Property all of its property of whatever kind as requested in writing by the City Manager, and immediately (i) return or sign over, as applicable, to the 163 City all of Flagstone's rights, directly or indirectly, in the permits, plans, specifications, and all related governmental approvals, documents, instruments, and agreements as necessary related to the applicable Hotel Component, and (ii) deliver to the City all of such permits, plans, specifications, and all related governmental approvals, documents, instruments, and agreements which are in Flagstone's possession or in Flagstone's control. (c) Subject to Section VII(a), Flagstone may separately ground lease and separately construct the Marina Component prior to 9/1/2013 if the conditions precedent for the Marina Component are met (d) If construction is continuing during the Option period(s), then Flagstone shall pay both; Construction Rent or Base Rent in accordance with the General Rent Schedule in Section II above, and the applicable Option payments related to its choice to construct either one or two Hotel Components. VII. CROSS DEFAULTS; SEPARATE DEFAULTS. (a) During the period prior to the earlier of 96 months from 9/01/2010 (being 8/31/2018) or the date upon which the first Hotel is Open for Business, Ground Leases for the separate Major Project Components shall be cross -defaulted for any Base Rent payment defaults, Prepaid Construction/Base Rent payment defaults, and any Construction Rent payment defaults. (b) After the earlier of 96 months from 9/01/2010 (being 8/31/2018) or the date upon which the first Hotel is Open for Business, (i) the Base Rent, Percentage Rent, and all other payments to the City each year thereafter shall be apportioned to each separate Major Project Component Ground Lease for direct payments to the City by each separate Ground Lease lessee in an amount reflecting each separate Major Project Component's respective percentage share of the total Project Development Costs to that point in time, and (ii) the Ground Leases for the separate Major Project Components shall not be cross -defaulted for any defaults, including but not limited to any defaults in payments of Base Rent, Prepaid Construction Rent/Base Rent, Construction Rent, Percentage Rent, or any other Rent, with each separate lessee being solely responsible for any payment default(s) to the City. (a) Notwithstanding anything to the contrary in this Exhibit A, if the Retail/Parking Components do not Commence Construction by the 72nd month from 9/01/2010 (being 8/31/2016), then (i) there will be no crediting of Prepaid Construction/Base Rent, the City shall keep all Prepaid Construction/Base Rent received, (ii) the City can terminate the Agreement to Enter, all Ground Lease(s), and (iii) the City can take back the Marina Component, the Retail/Parking Components, any Hotel Components and the balance of the Project and the Property., VIII. STATE WAIVER. 164 Medina, Anna Subject: FW: Flagstone statement From: Ken Russell <krussell@miamigov.com> Date: Friday, May 12, 2017 at 1:55 PM To: "Jones, Joyce" <JJones@miamigov.com>, "Hannon, Todd" <thannon@miamigov.com> Subject: FW: Flagstone statement I placed this discussion item on the agenda today because I'm frustrated. It has been more than 15 years since the City of Miami and our voters gave the right to develop our public land on Watson Island to Flagstone. Ever since, we've entertained a litany of excuses as to why very little of the project voters approved has been built. At this moment we have before us what I think is a pretty clear issue -- Flagstone had a deadline to have all its material permits approved and actually begin construction by May 1 of this year. I understand they moved some dirt around a few days before to try to convince us that construction had begun. Not the first time they've done that, by the way. But their phased permit, which allows them to begin building before the master permit is finally approved, actually expired back in March and was not reinstated until May 4. Three days late? No - it's 15 years and three days late. Fifteen years we've been waiting for Flagstone to deliver what it promised. Here's what the Miami Herald wrote in December of 2002: "The project, approved in concept by city voters last year, would convert 10 acres of land into a bustling neighborhood - with two five-star hotels, a fish market and a yacht marina. It's expected to be complete in about three years." Back then, the City was looking to attract signature projects that would pump up our local economy. Midtown didn't yet exist. Wynwood as we know it today didn't exist. Downtown and Brickell were a shadow of their current form. We didn't have the arsht, the Frost, the Perez Museums. Most of all, we didn't have the congestion and infrastructure needs that we do now. And yet here we are, 15 plus years later, still talking about Flagstone. At this point, I have to ask, is Flagstone even relevant anymore to the vision of what our public land on Watson Island could and should be? Is this project - should it ever be built and I'm pretty skeptical about that -- what Miami needs and deserves? The Voters spoke back then, but if they spoke today, what would they say? If we were to plan that space right now, I would advocate for an RFP that has the developer implementing a multimodal transit hub that connects and finances the Baylink and water taxis. It could be the point of public transit to all of the best amenities on the island. It could be a beautiful green space that would give the most amazing views of our downtown skyline. But the voters don't have a say. Unless this developer is in default, and I believe that they are. In Paragraph Vl.a ofr the Amended and restated Agreement to enter into the Ground lease from 2010, it states, "if ... the Parking/Retail Components do not Start Construction by 9/01/2016 (extended by Governor's executive order to May 1 of this year), then Flagstone's rights to build any Components expires and ceases, the Agreement to Enter is terminated. City retains all Prepaid Construction/Base Rent". The Phrase "Begins Construction" is defined in Exhibit A of Composite Attachment 3 of the same agreement. The phrase "Start Construction shall mean that all material plans and permits are approved and issued and the actual act of physical construction has begun. Furthermore, in paragraph VII. A of the same agreement, it states that "If the Retail Parking Components do not Commence Consruction by the 72nd month from 9/01/2010 (being 8/31/2016 and now May 1, 2017) then there will be no crediting of Prepaid Construction/base Rent, The City shall keep all Prepaid Construction Base Rent Received, the City can terminate the Agreement to Enter, all Ground Leases, and the City can take back the Marina Component... and the balance of the project and the property. The phased permit expired and was not renewed before the date. The master building permit has not yet been obtained. The City has lost millions in undervalued rent. The only silver lining is that we can now look at the land in the context of our needs today. I hope for your support in giving the voters this long overdue chance. I move that we direct the administration to issue a notice of default, and that our city attorney and auditor general conduct an analysis of the various agreements to see if there are other breaches as well.