A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER AND AUTHORIZING THE ADMINISTRATION TO COMMENCE NEGOTIATIONS WITH TWO OF THE FIRMS THAT SUBMITTED BIDS IN RESPONSE TO REQUEST FOR PROPOSALS (RFP) 2021-173-KB FOR MIXED-USE DEVELOPMENTS INCORPORATING CLASS A OFFICE SPACE WITH RESPECT TO CITY-OWNED PARKING LOTS P25, P26, AND P27; AND FURTHER, REFERRING THE PROPOSED PROJECTS AND ANY ACCOMPANYING AMENDMENTS TO THE CITY’S LAND DEVELOPMENT REGULATIONS TO THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE, THE LAND USE AND SUSTAINABILITY COMMITTEE, AND THE PLANNING BOARD FOR REVIEW, IN ACCORDANCE WITH THE REQUIREMENTS OF THE CITY CODE.

It is recommended that the Mayor and City Commission approve the Resolution authorizing the Administration (a) to negotiate a ground lease and a development agreement with TPC (as defined in the Analysis section below) in respect of parking lot P27 (Option 3) to include terms consistent with the requirements of the RFP and such other terms of TPC’s bid for Option 3 as are acceptable to the City and, if the Administration is unable to agree on principal terms with TPC within the required timeframe, directing the Administration to cease negotiations with TPC and commence negotiations in respect of parking lot P27 with Integra (as defined in the Analysis section below); and (b) to negotiate a ground lease and a development agreement with Integra (as defined in the Analysis section below in respect of parking lots P25 and P26 (Option 5) to include terms consistent with the requirements of the RFP and such terms of Integra’s bid for Option 5 as are acceptable to the City and, if the Administration is unable to agree on principal terms with Integra within the required timeframe, directing the Administration to cease negotiations with Integra and commence negotiations with TPC in respect of parking lots P25 and P26. The Resolution also refers each item to the Finance and Economic Resiliency Committee  and to the Land Use and Sustainability Committee for appropriate review.   Any final agreement will require approval by the Mayor and City Commission.  

The City Commission has expressed an interest in diversifying the City’s economy and its revenue sources by capitalizing on the economic growth opportunities presented by the current and projected business growth in the region, particularly by making a concerted effort to attract the financial services and technology industries. To do so, the City Commission has discussed the need to increase Class A office space inventory throughout the City.

While the definition of Class A office space is somewhat subjective and may vary depending on the source, the Building Owners and Managers Association International generally defines Class A office space as those office buildings that attract premier office users. Typically, Class A office space rents are above average for the area as the buildings offer high-quality finishes, state-of-the-art systems, top-notch amenities, and have a definitive market presence.

At its December 11, 2019 meeting, the City Commission discussed the possibility of making available surface parking lots North of Lincoln Road to developers to promote the development of Class A office space in the city center area. To gauge interest from the development community, the City Commission directed staff to issue a request for letters of interest for the development of Class A office space on surface parking lots P25, P26, and P27.

On October 9, 2020, the Administration issued Request for Letters of Interest 2021-029-KB (RFLI) seeking expression of interest from developers interested in building Class A office developments on the surface parking lots P25, P26 and P27 immediately North of Lincoln Road. The RFLI yielded significant interest, including expression of interest from eighteen (18) respondents, four (4) of which were companies based outside of Florida.

Based on the results of the RFLI, on February 19, 2021, the Finance and Economic Resiliency Committee (FERC) recommended the Administration seek City Commission authorization to prepare a Request for Proposals (RFP) for ground leases and development agreements for the development of Class A office space on the three surface parking lots (P25, P26 and P27). On February 24, 2021, the City Commission also discussed the results of the RFLI and directed the Administration to include all three surface parking lots as well as the 17^th Street parking garage (parking garage G5) in the forthcoming RFP.

On March 17, 2021, the City Commission adopted Resolution No. 2021-31617, authorizing the preparation of an RFP for mixed-use development incorporating Class A office space at three City-owned sites along Lincoln Lane North and the 17th Street parking garage (G5). On April 8, 2021, the Administration conducted a public industry meeting to promote the RFP and solicit industry input on the proposed projects. Eighty-five (85) participants (excluding City staff

and consultants) attended the industry meeting.

The goals of the RFP included:

(1) encouraging the development of Class A office space to meet the growing demand from targeted industries;

(2) providing world-class commercial space in concert with increasing market demand;

(3) maintaining parking capacity while providing alternative and sustainable transportation and mobility options;

(4) transforming and activating North Lincoln Lane from a service alley to a vibrant and

pedestrian-friendly street with amenities that will enhance the urban experience; and

(5) connecting the Convention Center District with Lincoln Road.

The RFP allowed for proposals for the development of the following four sites (or a combination of sites as further defined below):

Surface Parking Lot P25

Lot P25 is approximately 37,116 square feet (0.85 acres) and currently provides 86 public parking spaces. The land is zoned GU (Government Use) and, therefore, development capacity is based on the average of the zoning regulations (including height and FAR) in the surrounding zoning districts, in this case, CD-2 (Commercial Medium Intensity) and CD-3 (Commercial High Intensity). The FAR is dependent on the development’s lot size and the mix of uses. The maximum height will also average CD-2 (max 60 feet) and CD-3 (max 80 feet) district regulations. As a standalone site, lot P25 is less than 45,000 square feet and, if developed as a standalone site, it would have a maximum FAR of 1.87 yielding 84,150 square feet in floor area and a maximum height of 70 feet.

Surface Parking Lot P26

Lot P26 is approximately 48,863 square feet (1.12 acres) and currently provides 106 public parking spaces. The land is zoned GU (Government Use) and is limited by the adjacent zoning, CD-3 (Commercial High Intensity). Within the CD-3 zoning district, the maximum height is 80 feet, and properties larger than 45,000 square feet have a maximum FAR of 2.75. Therefore, development on the entire site could reach a maximum floor area of 134,373 square feet with a maximum building height of 80 feet.

Surface Parking Lot P27

Lot P27 is approximately 60,202 square feet (1.38 acres) which offers a total of 151 parking spaces to the public. The land is zoned GU (Government Use) and is limited by the adjacent zoning, which is CD-3 (Commercial High Intensity). Within the CD-3 zoning district, the maximum height is 80 feet, and properties larger than 45,000 square feet have a maximum FAR of 2.75. Therefore, development on the entire site could reach a maximum floor area of 165,555 square feet

17th Street Garage (G5)

17th Street parking garage is approximately 2.9 acres and contains 1,460 parking spaces among five parking levels, including the rooftop. The property is zoned CCC, Convention Center District. The maximum FAR is 2.75, and the maximum height is 100 feet. The City’s Parking and Sanitation Departments currently utilize portions of the garage for operations.

The RFP allowed bidders to submit proposals for one or more of the following options:

Option 1: Parking Lot P25 only

Option 2: Parking Lot P26 only

Option 3: Parking Lot P27 only

Option 4: Parking Garage G5 only

Option 5: Parking Lots P25 and P26 combined

Option 6: Parking Lot P27 and Parking Garage G5 combined

Option 7: Parking Lots P25, P26, P27, and Parking Garage G5 combined

Some relevant requirements of the RFP include:

Priority Uses.

The proposed project must encompass Class A Office space for at least fifty percent (50%) of the available FAR for each Site Option. Project proposals must include a fully activated liner of retail, restaurant, personal service, or similar active uses, along the entire ground floor portions of the project facing a street, sidewalk, or Lincoln Lane North. Such liner requirement shall have a minimum depth of 50 feet. The only exceptions to this liner requirement shall be access points for vehicles and emergency access for pedestrians.

Displaced Parking.

Existing parking spaces displaced by the development(s), in addition to any parking requirements in the City Code applicable to the proposed development, must be included in the proposal(s) submitted and detailed in a project phasing plan to avoid disruption. Developer should stage project schedule to minimize the number of parking spaces displaced during project development. Bidders may propose in-kind replacement parking available to the public at municipal parking rates. Proposals, including Parking Garage G5 must demonstrate prioritized parking replacement as part of a project phasing plan.

Voter Referendum Required for Approval of Lease(s).

Pursuant to Section 1.03(b)(2) and (3) of the City Charter, the possible lease of the surface lots (P25, P26, and P27) would require approval by a majority of the voters (i.e. greater than 50%) voting in a City-wide referendum (Referendum). The possible lease of the 17th Street Parking Garage (G5) would require approval by 60% of the voters voting in a Referendum. The City will not place the Referendum question(s) on the ballot until the development agreement and ground lease between the City and one or both Developer(s) in respect of the applicable Option(s) are finalized and approved by the City Commission. The City anticipates including one or both Options on one or more Referendum questions to be included on the November 2022 election ballot. At the City Commission’s sole discretion, the Referendum could potentially be scheduled for a special election on a different date, provided that (1) the development agreement and lease for the applicable Option(s) are finalized and approved by the City Commission and (2) the Developer pays its pro-rated share (based on total number of questions on the ballot) of the costs of a special election (approximately $400,000). Each applicable development agreement and ground lease shall be contingent upon voter approval in accordance with the City Charter. If the Referendum is not successful in respect of a particular Option, the corresponding development agreement and ground lease shall be null and void.

Lease.

The maximum lease term for any of the Options is 99 years and each ground lease would be structured as a “triple net” lease, with lessee to be solely responsible for all real estate taxes, utilities, assessments or other public charges, insurance, maintenance, and all other costs and expenses associated with the operation of the applicable Project.

Prevailing Wages and Local Workforce Requirements.

Pursuant to Section 31-27 of the City Code, the rate of wages and fringe benefits, or cash equivalent, for all laborers, mechanics, and apprentices employed by any contractor or subcontractor on any Project, shall not be less than the prevailing rate of wages and fringe benefit payments or cash equivalence for similar skills or classifications of work, as established by the Federal Register, in the City of Miami Beach, Florida. Pursuant to Section 31-40 of the City Code requires the demonstration of reasonable efforts to promote employment opportunities for local Miami-Dade County residents and seek to achieve a project goal of having thirty percent (30%) of all construction labor hours performed by Miami-Dade County and City of Miami Beach residents.

Art in Public Places.

Developer shall comply with the City’s Art In Public Places (AIPP) program requirements under Section 82-536 through 82-612 of the City Code, as applicable, and shall contribute to the City’s Art in Public Places Fund the total amount of 1.5% of the “construction cost” of the Project development costs, as such term is defined in Section 82-537 of the City Code, no later than date of execution of the Project General Contract by Lessee and the Project General Contractor, as required by the City Code.

On June 23, 2021, the Mayor and City Commission approved the issuance of Request for Proposals (RFP) 2021-173-KB for mixed-use developments incorporating Class A office space on City-owned parking lots P25, P26, P27, and parking garage G5. RFP responses were due and received on January 12, 2022. The City received proposals from the following three (3) firms:

·       Infinity Collective LLC.

·       Lincoln Road Holdings LLC, a joint venture between The Peebles Corporation, Baron Corporation and Scott Robins Companies, Inc. For clarity, Lincoln Road Holdings LLC is referred to as TPC and its proposal is referred to as the TPC proposal, as TPC is the submitting firm.

·       Lincoln Road Property Owners, L.P., a joint venture between Integra Investments, Starwood Capital, and The Comras Company. For clarity, Lincoln Road Property Owners, L.P. is referred to as Integra and its proposal will be referred to as the Integra Investments proposal, as Integra Investments is the submitting firm.

The firms submitted proposals for the following options included in the RFP:

Option 1 (Parking Lot P25) – Infinity Collective

Option 3 (Parking Lot P27) – Integra Investments and TPC

Option 4 (Parking Garage G5) – TPC

Option 5 (Parking Lots P25 and P26) – Integra Investments and TPC

Option 6 (Parking Lot P27 and Parking Garage G5) – TPC

Option 7 (Parking Lots P25, P26, P27 and Parking Garage G5) – TPC

No proposals were received for Option 2 (Parking Lot P26).

On February 1, 2022, the Evaluation Committee appointed by the City Manager convened to consider the proposals received. The Committee was comprised of Monica Beltran, Director, Parking Department; Ozzie Dominguez, Asset Management Division Director, Facilities and Fleet Management Department; Paul Freeman, Resident, Palm View Neighborhood; David Gomez, Assistant Director, Capital Improvement Projects Department; Rogelio Madan, Chief of Community Planning and Sustainability, Planning Department; Sara Patino, Treasury Manager, Finance Department; and Lyle Stern, President, Lincoln Road Business Improvement District. The Committee was provided an overview of the project information relative to the City’s Cone of Silence Ordinance and the Government Sunshine Law. The Committee was also provided with general information on the scope of services and a copy of each proposal. Each bidder provided an oral presentation to the Committee for each option submitted. The Committee was instructed to score and rank each proposal pursuant to the evaluation criteria established in the RFP (qualifications, programming, design & resiliency, public benefits, and financial proposal).

The RFP stipulated that proposals would be evaluated against other “like” proposals submitted for each Site Option. For example, proposals submitted for Option 1 would be evaluated against other proposals for Option 1, and Proposals submitted for Option 2 would be evaluated against other proposals for Option 2, and so forth. The RFP further stipulated that the award of any option would be at the City Commission’s sole discretion.

The evaluation process resulted in the proposers being ranked by the Evaluation Committee as indicated below (also see Attachment A).

Option 1 (Parking Lot P25) – Infinity Collective, sole proposer.

Option 3 (Parking Lot P27) – TPC, top-ranked, and Integra Investments, second-ranked.

Option 4 (Parking Garage G5) – TPC, sole proposer.

Option 5 (Parking Lots P25 and P26) – Integra Investments, top-ranked, and TPC, second-ranked.

Option 6 (Parking Lot P27 and Parking Garage G5) – TPC sole proposer.

Option 7 (Parking Lots P25, P26, P27, and Parking Garage G5) – TPC sole proposer.

Note: for Options 4, 5, 6, and 7, TPC did not include Tab 3, the required section on programming.  Although TPC was not deemed nonresponsive for this deficiency, it could not receive the 25 points available for this qualitative criterion.

A summary prepared by Colliers, the City’s consultant, of the options proposed by each firm is included in Attachment B. 

I have reviewed the submissions and the Evaluation Committee process and considered the assessments of staff and the City’s consultant. The Evaluation Committee found the qualifications of the proposing teams to be impressive, particularly the qualifications of the Integra Investments and TPC teams which both have extensive experience in the development of Class A office space and are familiar with the Miami Beach economic and development landscape. The Evaluation Committee was also impressed by the world-class designs of the Integra Investments and TPC teams.

The Administration understands that the information presented herein is preliminary and based solely on the proposals received. As is typical in these developments, the City must undergo extensive negotiations with each proposer to arrive at final agreements. Further detailed information will be provided to the City Commission as the negotiations proceed.

After reviewing the proposed options and considering the Evaluation Committee’s process and rankings, I believe the best options for the City to pursue at this time are Option 3 (Parking Lot P27) and Option 5 (Parking Lots P25 and P26). In the Administration’s opinion, Options 3 and 5 offer the best combination of Class A office space, retail space, and revenue, as well as probability for success in the required voter referendum. While the scores received by TPC and Integra from the Evaluation Committee for these options were close, TPC had an edge for Option 3, and Integra achieved a higher score in respect of Option 5.  Accordingly, I believe the Administration should proceed with negotiations with TPC in respect of Option 3, and with Integra in respect of Option 5. 

Below is a summary of each option submitted by the top and second-ranked proposer for each option.

Option 3 (Parking Lot P27)

Option 5 (Parking Lots P25 and P26)

Infinity Collective’s lone proposal for Option 1 does not seem to maximize Class A office space compared to Option 5 and considering Option 1 would eliminate Option 5 from being considered. Additionally, the revenue yield proposed by the Option 1 proposal is significantly less in respect of P25 than the top-ranked proposer for Option 5.

The other options for which proposals were received (Options 4, 6, and 7) include demolishing and rebuilding the 17^th Street Parking Garage (Garage G5). It is important to note that the upcoming construction of the convention center hotel will require the garage to be utilized for construction worker parking during the day, so proceeding with this project before completion of the convention center hotel could create logistical and parking issues.  Further, any Project involving Garage G5 would require approval by 60% of the voters and even if this is presented as a separate item and the Project would necessarily be phased, if voters are concerned about proceeding with Garage G5 at the same time the hotel is being constructed,  this could jeopardize a successful referendum outcome for Options 3 and 5. Finally, only one team submitted proposals for any option that included the G5 Garage. As such, the Administration is not able to assess, in a competitive manner, the best the market has to offer for the options that include the G5 Garage. Therefore, the Administration does not believe it is prudent to pursue Options 4, 6, or 7 at this time.

Completing contract negotiations with two different bidders on these complex projects within the timeframe necessary to meet the deadline(s) for placing these items on the November ballot is very ambitious.  The Administration suggests proceeding with both negotiations with the understanding that one will likely move first which may be the best result due to concerns related to taking all three lots out of service simultaneously.  The Administration also recommends that if negotiations reach an impasse with one of the firms, then it should have the Commission’s authorization to negotiate both Options 3 and 5 with the other firm. It is also important to note the TPC’s Option 3 and Option 5 proposals incorporate residential units. Inclusion of a residential element was not precluded by the RFP, but such an element was not contemplated in proposals from any of the other bidders. If the Mayor and the City Commission are inclined to allow for the negotiation of a Project that includes residential units, the Administration respectfully suggests that short term rentals must be entirely excluded the Project. Additionally, the Administration has considered that if both Projects are successful at Referendum, the Projects will need to be phased to limit the adverse impacts to parking availability in the area.