ANALYSIS:
A ‘Contributing’ building, structure, improvement, site, or landscape feature means one which by location, scale, design, setting, materials, workmanship, feeling or association adds to a local historic district's sense of time and place and historical development. The property at 1260 is classified as a ‘Contributing’ building. The property at 1234 is classified as a ‘Non-Contributing’ building; however, this classification, from 1989, was based solely on the year of construction. Based on discussions with Planning Department staff, it is likely that the Historic Preservation Board (HPB) could consider re-classifying the building to ‘contributing’. Regardless of the classification of either structure, Historic Preservation Board approval is required for any demolition (full or partial), as well as any significant alteration. A minimum of 5 affirmative votes from the 7 member board is required to approve any demolition request.
The Administration discussed with the property owner, entering into an agreement, authorizing the City to pursue a preliminary evaluation of the 1234 property with HPB, with a City option to purchase both properties, at a pre-determined price. The property owner has stated a willingness to consider the sale of the 1260 property exclusively only in the event that the HPB findings do not permit the 1234 building to be demolished. In that case the property owner has requested that the City provide a parking allowance for the 1234 building tenants within the development of the 1260 property. If the City decides to sell the commercial portion of either property, the property owner also requested the Right of First Refusal. The agreement could also be structured with a commercial “sell back” provision of the commercial space at the outset. An economic agreement with the property owner would be established before the City proceeded with the HPB application.
As an alternative option, the City could convert the 1234 property to workforce housing with or without ground floor commercial space, and develop the 1260 site with parking, ground floor commercial space and/or workforce housing.
The combined sites, as well as the properties to the north, east and south are zoned CD-2 (Commercial Medium Intensity District) and to the immediate west the zoning district is designated RO (Residential Office). The Planning Department recommends that a height limit of 55’ works best, particularly given the close proximity of very low scale, historic residential buildings to the immediate west (across Drexel Avenue). Ideally, a step back along the west side of the building, from Drexel Avenue, should be explored. Active uses are required at the first floor facing Washington Avenue and 13th Street. The Planning Department also recommends, the existing building at 1234 Washington Avenue should be retained, preserved and restored. However, depending what historic research uncovers, the façade of 1260 Washington Avenue may be able to be modified.
Existing Leases
The property owner has advised the City that there are existing commercial leases for both buildings. The City’s agreement would need to be subject to the owner’s termination of existing leases, as past experience with condemnation on the part of the City has resulted in the City paying increased values for property.
The possible exception would be in the event that the City decided to retain the 1234 property for workforce housing with ground floor commercial space. The City could decide to maintain existing leases until they expire. Additional due diligence would be required on the existing leases, prior to deciding on this option.
Capital Costs and Operating Proformas
The attached tables (Exhibit I and II) reflect the comparisons of various scenarios for the combined sites, 1234 and 1260. Exhibit I presents two alternatives, A and B, addressing different layout options for the combined sites. Alternative A presents six scenarios assuming that the building at the 1234 property is maintained along with only the façade of the building at the 1260 property. Alternative B presents four scenarios assuming that the building at the 1234 property is demolished and only the façade of the 1260 building is maintained. Exhibit II also addresses the options presented in Exhibit I, but also accounts for the estimated commercial sell back credit of each of the presented scenarios. These tables analyze preliminary conceptual design options that best utilize the site. The alternatives address the proposed height of the structures, the property value, the estimated gross areas for parking, commercial and housing and the associated estimated costs. In addition, these tables account for a preliminary estimate of total number of net parking gains and anticipated cost per net space. Furthermore, Exhibit II also accounts for commercial sell back. The average cost per square foot (PSF) for commercial sell back was derived from information provided by two local appraisers, whom advised that the commercial sell back for properties along Washington Avenue, range from $800 - $1,000 PSF. It was determined that an average of $900 PSF would be suitable for the development of this conceptual analysis.
The proforma analysis (Exhibit III and Exhibit IV) was prepared based on certain parking operational assumptions and projections. Exhibit III addresses the proforma analysis for the options presented in alternative A, inclusive of the estimated commercial sell back credit, and Exhibit IV addresses the options presented in alternative B. The calculations presented model anticipated results of transactions executed at market rates and rates authorized by current City of Miami Beach parking ordinance. The operational expenses presented are solely a representation of parking operational expenses for this pro-forma exhibit.
It should be noted that the estimated cost of the workforce housing options range between $3.7 million and $16.9 million, depending on the option selected.
In the event that the 1234 building needs to be maintained and the City wishes to pursue purchase of both properties, scenarios A2 and A6 would provide the greatest level of parking with the lowest cost per space, and would also provide for workforce housing. They also provide the greatest return.
In the event that the 1234 building can be demolished, scenario B3 provides the greatest level of parking in conjunction with workforce housing, and is the second lowest cost per space, however, it also has the lowest return. Option B2 which has a lower cost per space and a greater return, does not provide for any workforce housing.
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