REGULAR AGENDA: OLD BUSINESS 5.
|TO: ||Finance and Economic Resiliency Committee Members|
|FROM:||Jimmy L. Morales, City Manager|
|DATE: ||July 24, 2020|
|SUBJECT:||DISCUSSION REGARDING THE APPRAISAL REPORTS IN CONNECTION WITH THE MARINA PARK PROJECT(PROJECT), PROVIDED BY CBRE, INC. (CBRE) AND WALTER DUKE + PARTNERS, INC. (WALTER DUKE), REGARDING THE FAIR MARKET VALUE OF THE DEVELOPMENT RIGHTS OF THE UPLAND RESIDENTIAL PARCEL AND THE FAIR MARKET RENTAL VALUE OF THE MARINA AND ASSOCIATED COMMERCIAL SPACE |
|The City of Miami Beach (“City”) engaged two independent appraisers, namely CBRE, Inc. (“CBRE”) and Walter Duke + Partners, Inc. (“Walter Duke”). The appraisers were directed to independently estimate the fair market value of the development rights in connection with the sale of upland residential parcel (“Residential Parcel”) and the fair market rental value for the marina lease, including approximately 45,000 gross square feet of accessory restaurant, retail and office space located on the upland parcel (“New Marina Lease”).|
CBRE’s May 20, 2020 appraisal valued the Residential Parcel at $80 million, and Walter Duke’s June 2, 2020 appraisal valued the Residential Parcel at $70 million. Additionally, both appraisers’ reports have determined that the current fair market annual rate of the New Marina Lease to be 10% of gross revenue for the marina operations and upland accessory uses, 35% of parking revenue, and $0.04 per gallon for fuel sales, which is commensurate with the current negotiated terms for the New Marina Lease. As the City's 10% percentage rent in 2019 under the existing lease amounted to approximately $1,740,000, the City anticipates that once the Project is completed, with new tenant space and additional capital improvements, the New Marina Lease would result in increased rent to the City.
On June 24, 2020, at first reading/public hearing of the proposed transaction, the City Commission requested that both appraisers evaluate the changes to the residential development since it was first proposed in March, 2020 (i.e., with the increased height and narrower tower) to determine if such changes resulted in a material change to the appraisals. The updated CBRE appraisal, dated July 13, 2020, concluded that the taller tower resulted in a change from $80 Million to $87 Million, and the Walter Duke appraisal, dated July 10, 2020, concluded that the taller tower does not result in any change to the appraised value of $70 Million. The chart below provides a comparison of the updated values of the fair market value of the development rights as determined by the appraisers.
|The updated appraisals of $87 million and $70 million are very much in line with the $55 million in cash and the updated minimum spends for the $22.5 million in guaranteed capital investments in the City-owned upland facilities, even without considering the benefits from the other components of the entire transaction, such as the updated minimum spends for the Marina Improvements -- which have been increased from $35 million to $40 million or the value to the City of outright ownership and control of the completed 1.0 acre public park, which will be dedicated for the benefit of the general public.|
|Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14?|| ||Does this item utilize G.O. Bond Funds?|
|Yes|| ||No|| |