ANALYSIS OF THE PROPOSED VACATION
The City holds a right-of-way dedication to the following areas:
(1) a portion of Ocean Terrace, running from the centerline of 74th Street and the northern right-of-way line of 75th Street, consisting of a sixty (60) foot wide right-of-way, and containing approximately 25,200 square feet in total lot area; as shown on as shown on the Plat of the Townsite of Harding, recorded in Plat Book 34, Page 4 of the Public Records of Miami-Dade County (the “Harding Townsite Plat”);
(2) the north half of 74th Street, between Ocean Terrace and Collins Avenue, which consists of a 30-foot wide right-of-way containing approximately 8,880 square feet in total lot area; and
(3) a portion of 75th Street, between Ocean Terrace and Collins Avenue, which consists of a 40-foot wide right-of-way containing approximately 11,840 square feet in total lot area (collectively, (1) through (3) above, the “City Right-of-Way Areas”, each as shown on the Harding Townsite Plat).
The City Right-of-Way Areas are depicted in the sketch attached as Exhibit "A" hereto.
Various entities controlled by and affiliated with the principals of Ocean Terrace Holdings, LLC, namely, G & V Realty, LLC, 7400 Ocean Terrace, LLC, 7410 Ocean Terrace, LLC, 7420 Ocean Terrace Investment, LLC, 7436 Ocean Terrace, LLC, 7450 Ocean Terrace, LLC, and 7441 Collins Avenue Investment, LLC (collectively, the “Developer”) own the properties abutting or in the vicinity of the City Right-of-Way Areas; which parcels are known as 7401, 7409, 7421, 7433, 7435, 7437, 7439, 7441, and 7449 Collins Avenue, and 7400, 7410, 7420, 7430, 7436, and 7450 Ocean Terrace (collectively, the "Property").
The vacation of the City Right-of-Way Areas would result in the City vacating approximately 45,920 square feet of existing right of way in accordance with the plat. Specifically, by virtue of the vacation, the right-of-way reverts to the abutting property owners to the centerline of the street, except that (1) with respect to 75th Street, which is located on the edge of the plat, the entire 40 feet of the 65 foot right of way, that was initially contributed by the predecessor owner of the abutting property along 75th Street, would revert to the Developer by operation of law (see, e.g., Pelican Creek Homeowners, LLC v. Pulverenti, 243 So. 3d 467 (Fla. 5th DCA 2018)); and (2) with respect to Ocean Terrace, the full 60 foot width of the Ocean Terrace right of way would revert to the Developer, as the Developer is the abutting property owner on the west side of Ocean Terrace (thereby entitling Developer to reversion of the western 30 feet to the centerline of Ocean Terrace) and Developer will, pursuant to the terms of the proposed Development Agreement, reserve the reversionary interest in the eastern 30 feet of Ocean Terrace. 
 As part of the Development Agreement, Developer will quit claim to the City its fee interest in the platted public reservation area abutting the east side of Ocean Terrace (described in Exhibit “A-1”), subject to a reservation of the reversionary interest in the eastern 30 feet of the Ocean Terrace right of way.
The Developer intends to develop the Property as a mixed-use residential and commercial development in accordance with the requirements of the Ocean Terrace Overlay District (collectively, the "Proposed Development"), pursuant to a Florida Statute Chapter 163 development agreement to be entered into between the City and the Developer (the “Development Agreement”). The Proposed Development would be developed as a unified development site. In conjunction with Proposed Development, the Developer is requesting that the City vacate the City Right-of-Way Areas abutting 7401, 7441, and 7449 Collins Avenue and 7400, 7410, 7420, 7430, 7436, and 7450 Ocean Terrace, and has submitted its application to the City's Public Works Department with respect thereto, to permit Developer to utilize the F.A.R. associated with the City Right-of-Way Areas within the Developer’s Project (but with the City Right-of-Way Areas to continue to be used for pedestrian and vehicular travel).
As part of the Proposed Development, the Developer would develop, design, permit and construct, at the Developer’s sole cost and expense (with the exception of certain City fees, as set forth below), certain park and streetscape improvements between 73rd Street and 75th Street having a value upon completion of approximately $15 million, thereby implementing the vision of the Neighborhood Design Plan (“Park/Streetscape Project”).
Ultimately, to implement the foregoing, the City Commission would need to approve three major components for the Proposed Development:
(1) the vacation of the City Right-of-Way Areas (subject to an irrevocable easement in favor of the City, for subsurface utilities and pedestrian and vehicular travel), following the Planning Board’s approval of the vacation pursuant to Section 1.03(b)(4) of the City Charter;
(2) the Development Agreement, specifying the terms and conditions for the development of the Proposed Development and the Park/Streetscape Project; and
(3) amendments to the City’s Future Land Use Map and Zoning Map (as discussed more fully below).
As the three components of the Development are interrelated, the three components will “travel” together and be considered by the City Commission on the same date(s).
The Planning Department’s analysis of the proposed vacation, pursuant to Section 82-38 of the City Code, is attached as Exhibit “B” hereto.
The appraisal of the City Right-of-Way Areas valued the land and associated Floor Area Ratio (F.A.R.) of the City Right-of-Way Areas at $11,000,000, and is attached as Exhibit “C” hereto.
The City’s preliminary cost estimate of the design and construction of the proposed Neighborhood Design Plan is $14.8 million, and is attached hereto as Exhibit “D.”
The Developer’s proposal to complete the Park/Streetscape Project, with a value of approximately $15 million (consistent with City’s cost estimate in Exhibit “D”), is well in excess of the $11 million appraised value of the City Right-of-Way Areas.
Economic Development Analysis
The City’s economic development consultant has analyzed the anticipated economic benefits associated with the proposed Project. The consultant’s report is attached as Exhibit “E.”
Conditions of the Proposed Vacation; Key Terms of the Development Agreement
The vacation of the City Right-of-Way Areas would be conditioned on the Developer’s execution of a Development Agreement which contains the following key terms:
(1) Development of the Project.
Developer’s Proposed Development will be developed based on, and in accordance with, the requirements of the Ocean Terrace Overlay District as set forth in Sections 142-870 and 142-870.1 of the City Code. Within the Ocean Terrace Overlay District, the maximum height of a main use residential building shall not exceed 235 feet, and the maximum height of a main use hotel building shall not exceed 125 feet. Architectural projections will comply with the terms of the Development Agreement and other applicable provisions of the City’s Land Development Regulations. The current main permitted uses in the Ocean Terrace Overlay District are (a) apartments; (b) apartment/hotels; (c) hotels; (d) commercial; and (e) uses that serve alcoholic beverages. Package alcohol stores are prohibited in the Ocean Terrace Overlay District.
(2) Developer to Design and Construct the Park/Streetscape Project for the City.
Developer shall develop, design, permit, and construct, at its sole cost and expense, the Park/Streetscape Project; provided, however, that the City would be responsible for the zoning application fees, in the amount of up to $80,000, and would waive any fees for the City/Streetscape Project for which a waiver is permitted under the existing City Code, as set forth below.
The Development Agreement will include initial approval by the City Commission of the Concept Plan for the Park/Streetscape Project, which Concept Plan was designed by renowned landscape architect Raymond Jungles, and is attached as Exhibit “F.” The design for the Park/Streetscape Project shall be subject to regulatory approval by the Historic Preservation Board (“HPB”). Further, in recognition that the design of the Park/Streetscape Project may evolve during design development, the Development Agreement will require the City Manager’s approval of the final plans and specifications for the Park/Streetscape Project (and any modifications thereto).
(3) Timeframe for Completion of Project and Park/Streetscape Project.
As set forth in the table below outlining the various timeframes set forth in the Development Agreement, the Developer has proposed to complete the Park/Streetscape Project in two phases, with Phase 1 to be completed within 48 months following the Effective Date of the Development Agreement (the date the agreement is executed by the Parties and recorded), and with Phase 2 to be completed within 96 months following the Effective Date. The City will not issue a temporary certificate of occupancy (TCO) or certificate of occupancy (CO) for the Proposed Development until the Developer has completed the Park/Streetscape Project.
As the Proposed Development is an important component for realizing the economic development benefits the City has long desired for the Ocean Terrace neighborhood and North Beach, as part of the Development Agreement, Developer has agreed that it will apply for a building permit for the Proposed Development not later than 96 months following the Effective Date. As the parties’ negotiations are on-going, the foregoing timeframes are subject to further refinement, as the Administration desires to improve upon the proposed terms and realize the completion of the Proposed Development and the Park/Streetscape Project at the earliest possible date, particularly as all of the foregoing deadlines are subject to extension for force majeure, as well as economic force majeure for a maximum period of up to 36 months, pursuant to the terms of the proposed Development Agreement.
(4) Developer to Grant Easements in Favor of City For the Public’s Continued Use of the City Right-of-Way Areas.
At the time of the closing for the City’s conveyance to the Developer of the City Right-of-Way Areas, Developer shall grant a perpetual, non-revocable utility, roadway and pedestrian access easement in favor of the City, for the City’s continued use of the City Right-of-Way Areas for public vehicular and pedestrian use and access, as modified by the Park/Streetscape Project.
(5) Developer to Provide the City with Bond or Lender Agreement to Guarantee Completion of the Park/Streetscape Project.
As the City would have vacated the City Right-of-Way Areas prior to Developer’s completion of the Park/Streetscape Project, Developer has agreed to provide the City with a bond or a lender recognition agreement, in a form acceptable to the City, to secure Developer’s obligations and permit the City to step in and complete the Park/Streetscape Project in the event the Developer fails to do so.
In addition to the foregoing, among other terms and conditions intended to protect the City’s interest in the Park/Streetscape Project, the Developer’s construction contractor for the Park/Streetscape Project shall be required to (1) indemnify the City as provided in the Development Agreement; (2) name the City as an express intended third-party beneficiary of the construction contract; and (3) name the City as a co-obligee on a performance and payment bond for the Park/Streetscape Project.
(6) Developer to Convey Its Fee Interest in the Public Reservation Area Located East of Ocean Terrace.
Developer shall convey to the City any right, title and interest the Developer has in the public reservation area depicted in Exhibit “A-1, ” provided, however, that in such deed, Developer has proposed that it would reserve its reversionary interest in the eastern 30 feet of the Ocean Terrace right of way, as well as the upland rights for a maximum of 175 feet, for a beachfront concession, to be offered through the City’s beachfront concessionaire, the Boucher Brothers Miami Beach, LLC, subject to the terms of the Development Agreement. The issues relating to proposed beachfront concession rights for the Developer’s project, if any, are currently the subject of on-going negotiations, and are likely to be refined further prior to the City Commission’s consideration of the proposed agreement.
(7) Timing for Key Project Milestones and Completion of the Park Streetscape Improvements.
The Development Agreement will include timeframes for the various deliverables and submittals set forth in the Development Agreement. The Developer’s proposed timeframes, representing the key steps in the development process, are included in the Agreement and summarized below:
Effective Date of Development Agreement
Following second reading, the date the Development is fully executed by all parties, and recorded.
HPB Hearing for the Park/Streetscape Project and the Proposed Development
Developer will endeavor to have the zoning applications for the Park/Streetscape Project and the Proposed Development heard by the City's Historic Preservation Board within 12 months following the Effective Date of the Development Agreement, but the failure to do so will not be deemed an event of default.
Completion of Phase 1 of Park/Streetscape Project
Phase 1 will be completed within 48 months following the Effective Date of the Development Agreement.
Completion of Phase 2 of Park/Streetscape Project
Phase 2 will be completed within 96 months following the Effective Date of the Development Agreement.
Closing (the date for City’s conveyance of Right of Way Areas to the Developer, and Developer’s conveyance of its Interest in Public Reservation Area, and easements and other agreements/bonds required under the Development Agreement
The Closing will take place not later than 10 business days after the Developer obtains (i) all final, non-appealable zoning approvals for the Proposed Development, and (ii) all final, non-appealable permits and approvals needed to commence construction of the Park/Streetscape Project.
Completion of the Proposed Development
Within 96 months following the Effective Date, subject to one 36-month extension if Developer has completed Phase 2 of the Park/Streetscape Project within the timeframes set forth in the Development Agreement and has then commenced construction of the Proposed Development.
Duration of Development Agreement
10-year initial duration following the Effective Date, with Developer requesting (subject to on-going negotiations) one automatic 15-year extension if Developer completes the Park/Streetscape Improvements within the timeframes set forth in the Development Agreement.
(8) Application Fees.
In consideration for the Developer's commitment to complete the Park/Streetscape Project, and in recognition of Developer’s prior payment of $206,835.00 (as per invoice number 00091435) to the City in zoning application fees for the Proposed Development, Developer has proposed that the City cover the zoning application fees for both the Proposed Development and the Park/Streetscape Project, the maximum total amount of which would be $80,000. Developer has also requested the waiver of any other City fees relating to the Park/Streetscape Project, to the extent any such waiver is currently permitted under the City Code (i.e., without requiring any legislation to provide for any such waiver).
In addition, Developer has requested that in the event the City Commission, at its sole discretion, adopts any amendments to the City’s Land Development Regulations to provide any credit or refund for previously paid zoning application fees, the Development Agreement will provide the Developer with the right to obtain any such credit or refund for the corresponding portion of the application fees previously paid by the Developer for the Proposed Development (the total of which amounted to $206,835).
Except with respect to the foregoing, Developer shall be responsible for all other governmental fees applicable to the Proposed Development and the Park/Streetscape Project.
Although Developer initially requested use of portions of the 75th Street parking lot for staging, Developer has been responsive to the concerns raised by the Planning Board and the City’s Land Use and Development Committee, and has agreed to withdraw its request to use any portion of the parking lot for staging. Instead, Developer has agreed to the following:
(a) During construction of the Park/Streetscape Project, the Developer and its contractors will have the right to use the areas within Phases I and II of the Park/Streetscape Project as staging areas and lay-down yards in connection with the construction of the Park/Streetscape Project.
(b) During construction of the Proposed Development, the Developer and its contractors will have the right to use the area within Phase II of the Park/Streetscape Project as staging areas and lay-down yards in connection with the construction of the Proposed Development.
(c) The City will budget and appropriate, from the General Fund, the amounts necessary to pay the Parking System for the costs of 100 monthly parking passes for use by the Developer and its contractors during construction of the Park/Streetscape Project and the Proposed Development, subject to the not-to-exceed amount of $300,000. The monthly parking passes will be utilized at the following City-owned parking lots: (i) Collins Avenue and 75th Street, provided, however, that the maximum of 25 parking spaces may be utilized at this location at any time, with the remainder available for parking for the general public; (ii) 299 72nd Street (until such time as the commencement of construction at this location); (iii) 8040 Collins Avenue; (iv) 8300 Collins Avenue or such other City lots as the City may designate.
The proposed Concept Plan includes an area of approximately 2,000 square feet, designated for use as an outdoor café serving the general public. The Development Agreement will provide that if the café is approved by the HPB, the Developer would have the right to operate the café generally consistent with the sidewalk café permit requirements as set forth in Chapter 82 of the City Code, and in accordance with the minimum standards, criteria and conditions set forth in Sections 82-385 to 82-388 of the City Code.
(11) Transfers or Assignments of the Proposed Development and Park/Streetscape Project Prior to Completion.
Developer has agreed to retain day-to-day management and operational control of the delivery of the Park/Streetscape Project at all times until its completion.
With respect to transfers of ownership interests in its Proposed Development, Developer has indicated during recent negotiations that it may be amenable to a prohibition on transfers or assignments effecting a sale of the Proposed Development prior to the Closing (unless such transfer is approved by the City Commission), but has requested that it be permitted to transfer or assign any interest in the Proposed Development, including a sale of the entire project, without City Commission approval after the Closing, provided Developer at all times retains operational control of delivery of the Park/Streetscape Project until its completion. The Administration and Developer are continuing their discussions regarding this matter.
Summary of Open Negotiation Points.
As noted above, although the parties are in agreement as to the core elements of the proposed transaction (which terms shall be incorporated as conditions of the vacation of the City Right-of-Way Areas), the Administration has not concluded its negotiations for the Development Agreement, or its final position or Administration recommendation as to the following terms:
1) Earlier timeframes for the overall duration of the Development Agreement;
2) Beachfront concession rights for the Developer and annual financial terms thereof; and
3) Application fees and waiver of City fees for the Park/Streetscape Project to the extent currently permitted under the City Code.
4) Permitted transfers of ownership interest in the Proposed Development prior to completion
It is the Administration’s intent to continue its dialogue with the Developer with respect to the terms of the Development Agreement, and to resolve the foregoing issues prior to the City Commission’s consideration of the terms of the Development Agreement. To this end, it is the Administration’s aim to accommodate the Proposed Development and the Park/Streetscape Project to the extent possible, while also protecting the City’s interests, particularly as such interests may relate to the use or operation of public spaces for which the City has a paramount interest.
Proposed Amendments to City’s Comprehensive Plan and Land Development Regulations.
Finally, the Property is currently located within the Ocean Terrace Overlay District, and the two separate underlying zoning districts are designated as CD-2, “Commercial Medium Intensity,” and MXE, "Mixed-Use Entertainment.
The proposed Development Agreement contemplates that the City Commission will approve amendments to the City’s Future Land Use Map and Zoning Map, to: (a) amend the Future Land Use Map to change the designation of the portions of the City Right-of-Way Areas designated PF, “Public Facility,” and ROS, "Recreation and Open Space," to the Future Land Use categories of CD-2, “Commercial Medium Intensity” and MXE, "Mixed-Use Entertainment"; and (b) amend the City’s Zoning Map to rezone the City Right-of-Way Areas from the current zoning classification of GU, “Government Use District,” to CD-2, “Commercial Medium Intensity” and MXE, "Mixed-Use Entertainment," and extending the boundary of the Ocean Terrace Overlay Zone to encompass the City Right-of-Way Areas.
As set forth above, the foregoing amendments will be heard together with the Vacation Resolution and approval of the Development Agreement, as the three components of the Proposed Development are interrelated.
Planning Board and Land Use and Development Committee Recommendations.
At the May 21, 2019 meeting of the Planning Board, the Planning Board unanimously recommended adoption of the LDR Amendments, and provided the requisite approval of the vacation, pursuant to Section 1.03(b)(4) of the City Charter. Separately, the Planning Board recommended that additional terms be included as part of the Development Agreement, namely (1) that the street end design feature at the end of 74th Street be incorporated into Phase 1 of the Park/Streetscape Project; (2) that a passenger drop-off and pick-up location be incorporated into 75th Street; (3) that a plan be created for the 75th Street Parking lot so that it can be planned concurrently with the Ocean Terrace Project and the Park/Streetscape Project; and (4) that north-south beachwalk connectivity be maintained throughout the construction process.
At the May 22, 2019 meeting of the Land Use and Development Committee (“LUDC”), the LUDC favorably recommended the adoption of the LDR Amendments, and recommended that several items be further negotiated (including the items recommended by the Planning Board). In an effort to be responsive to the comments raised by the Planning Board, LUDC and the public, Developer has agreed to all of the additional negotiation items, which include the following:
1. The street end design feature located on or about Ocean Terrace and 74th Street shall be completed as part of Phase 1 of the Park/Streetscape Project.
2. As part of the Park/Streetscape Project, Developer shall design and construct the side streets (73rd Street, 74th Street and 75th Street, from Collins Avenue to Ocean Terrace) to provide for an integrated and cohesive design aesthetic for the Park/Streetscape Project.
3. Developer shall ensure that the Preliminary Plans and Specifications address accessibility needs for elderly and/or disabled persons. The Park/Streetscape Project shall be designed to ensure that public access to the City’s beaches is maintained.
4. Developer’s Preliminary Plans and Specifications for the Park/Streetscape Project shall provide for a “reasonable flow” for ingress/egress of vehicles on 75th Street, with a proposed solution that may include either a drop-off loop or other turn around at the east end of 75th Street, or any other similar proposed solution as may be approved by the City Manager at the City Manager’s sole discretion, to ensure vehicular access to the 75th Street parking lot and/or access for drop-offs to the beach.
5. Developer’s Preliminary Plans and Specifications shall provide for ingress/egress for vehicles accessing the St. Tropez property located at 7330 Ocean Terrace and shall incorporate any comments with respect to ingress/egress as may be provided by the City Manager. Notwithstanding any other provisions in the Development Agreement to the contrary, the portions of the Plans and Specifications for the Park/Streetscape Project relating to ingress/egress for the St. Tropez shall be subject to approval by the City Manager or by the City Commission, at the City Commission’s sole discretion.
6. During construction of Phase 1 of the Park/Streetscape Project, Developer shall ensure there is continuous north/south beach walk access at all times, unless otherwise approved in writing by the City Manager.