1.  A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, FOLLOWING SECOND READING/PUBLIC HEARING, AN AMENDMENT NO. 2 TO THE LEASE BETWEEN THE CITY (LESSOR) AND EHDOC COUNCIL TOWERS LIMITED PARTNERSHIP (LESSEE), IN CONNECTION WITH THE CITY'S LEASE OF AIR RIGHTS FOR AFFORDABLE ELDERLY HOUSING AT COUNCIL TOWERS SOUTH, LOCATED AT 1040 COLLINS AVENUE, MIAMI BEACH, FLORIDA, TO AMEND THE CURRENT LEASE TO INCORPORATE CERTAIN HUD REQUIREMENTS AND MODIFICATIONS NECESSARY FOR HUD TO INSURE THE MORTGAGE LOAN THAT WILL REFINANCE THE PROPERTY AND PAY FOR THE AGREED UPON IMPROVEMENTS, INCLUDING EXTENDING THE LEASE TERM TO JULY 8, 2076 BY EFFECTIVELY EXERCISING THE RENEWAL OPTION CONTAINED IN AMENDMENT NO. 1; AND FURTHER AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 2 BETWEEN THE CITY AND LESSEE.

2.  A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING, FOLLOWING SECOND READING/PUBLIC HEARING, AN AMENDMENT NO. 2 TO THE LEASE BETWEEN THE CITY (LESSOR) AND EHDOC COUNCIL TOWERS LIMITED PARTNERSHIP (LESSEE), IN CONNECTION WITH THE CITY'S LEASE OF AIR RIGHTS FOR AFFORDABLE ELDERLY HOUSING AT COUNCIL TOWERS NORTH, LOCATED AT 1040 COLLINS AVENUE, MIAMI BEACH, FLORIDA, TO AMEND THE CURRENT LEASE TO INCORPORATE CERTAIN HUD REQUIREMENTS AND MODIFICATIONS NECESSARY FOR HUD TO INSURE THE MORTGAGE LOAN THAT WILL REFINANCE THE PROPERTY AND PAY FOR THE AGREED UPON IMPROVEMENTS, INCLUDING EXTENDING THE LEASE TERM TO JULY 8, 2076 BY EFFECTIVELY EXERCISING THE RENEWAL OPTION CONTAINED IN AMENDMENT NO. 1; AND FURTHER AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AMENDMENT NO. 2 BETWEEN THE CITY AND LESSEE.

This project aligns with the 2020 strategic prosperity connection to revitalize targeted areas and increase investment.  The Administration recommends that the Mayor and City Commission adopt the Resolution approving Amendment No. 2 to the Lease between the City and EHDOC Council Towers Limited Partnership in order to enable them to obtain the requisite financing to proceed with the renovation of the elderly housing project.  

The City of Miami Beach (“Lessor”) and EHDOC Council Towers Limited Partnership, as assignee of Miami Beach Senior Citizens Housing Development Corporation, Inc., as assignee of Senior Citizens Housing Development Corporation of Miami Beach (“Lessee”), are parties to two separate, but similar, lease agreements, both dated July 9, 1976 (collectively “Leases”).  The Leases are for the air rights located above the City-owned properties located at 533 Collins Avenue (“Council Towers South”) and 1040 Collins Avenue (“Council Towers North”).  Council Towers South is a 12 story building consisting of 125 units and approximately 115,231 square feet.  Council Towers North is a 12 story building consisting of 125 units and approximately 115,036 square feet.  Both properties were completed in 1979 and offer quality affordable housing for low-income senior citizens.

On August 31, 2017, representatives from Lessee met with the Administration to discuss an amendment to the lease regarding Lessee’s request for the City to grant a new renewal option of the leases.  The renewal option would be for a period of fifty (50) years, to be effective at the end of the current term (i.e. July 9, 2026), subject to compliance with the terms of the Leases.  The additional term was necessary in order to facilitate the refinancing and renovation of both properties.  The renovations will include, but not be limited to, site work, exterior façade work, new windows, interior common areas and office renovations, apartment renovations, and building systems (e.g., elevators, roof, electric, plumbing, water pumps, generators, fire alarm systems, etc.).

The Administration worked with Lessee to provide provisions in the lease extension agreement, including, but not limited to: 1) enhancements to generator capacity to ensure continued operation of HVAC, elevators, life safety systems, etc. after a tropical storm or hurricane for a period up to 96 hours after loss of power; 2) criteria for condition of building/units at the end of the extended term; 3) compliance with Miami Dade County 40 year recertification requirements, and subsequent 10 year recertification requirements; 4) proactive management and compliance with the required Miami-Dade County annual registration of eligible tenants for the County’s Emergency Evacuation Assistance Program (EEAP) for the elderly and/or disabled individuals and 5) compliance with required Miami Beach registration of other residents who need some type of daily assistance to live on their own, including completion of annual assessment form.

Pursuant to Resolution 2018-30280 (South Tower) and Resolution 2018-30281 (North Tower), on May 8, 2018, the Lessor and the Lessee entered into Amendment No. 1 to both Leases, subject to the consent and approval of the US Department of Housing and Urban Development (“HUD”).

Following the execution of Amendment No. 1, Lessee has requested that the City enter into Amendment No. 2 to the Leases to incorporate certain modifications to the Lease in order to comply with current HUD requirements necessary for Lessee to obtain a Mortgage Loan.

Lessee has requested that the Leases be amended again to incorporate certain HUD requirements and modifications necessary for HUD to grant its consent and approval of Amendment No. 1 on both Leases, approve the assignment of the Leases and to agree to insure the Mortgage Loan that will refinance the properties and pay for the agreed upon improvement. These requirements, modifications and HUD consents are incorporated into the proposed Amendment No. 2 drafted for each Lease, attached hereto as Exhibit A (South Tower) and Exhibit B (North Tower). 

In order for HUD to insure the loan to refinance the properties and to consent to Amendment No. 1 to the Leases HUD requires that the HUD provisions found in Section 34 of the current Leases be replaced by the requirements found in the HUD Lease Addendum – Multifamily, form HUD - 92070 (“Lease Addendum”) which is attached to each Amendment No. 2.  The Lease Addendum replaces and restates the HUD requirements currently found in Section 34 of the Leases. Amendment No. 2 specifically removes HUD’s right to purchase good and marketable fee title to the demised premises, within twelve (12) months after acquiring the demised premises found in Section 34, part 2 of the Leases. Currently HUD has the right to purchase the South Tower premises for $236,110 and the North Tower for $212,500.

Section 34 of the Leases requires that HUD consent to any modification of the Lease and Section IX of Amendment No. 1 to the Leases requires that HUD consent to Amendment No. 1 pursuant to Section 34 and Section 20 of the Lease.  HUD has agreed to consent to the modifications of, and Amendments to, the Leases, the Assignment of the Leases and to insure the refinance mortgage loan secured by the leasehold estate upon the adoption of Amendment No. 2 to the Leases.  The HUD consent is found in Section 17 of the Lease Addendum attached to each Amendment No. 2.

Pursuant to federal statute, HUD requires that the term of a lease for a loan insured pursuant to Section 221(d)4 of the National Housing Act must be either (1) for a period of not less than 99 years and the term is renewable, or (2) for a period having a period of not less than 10 years to run beyond the maturity date of the mortgage.  The proposed maturity date of the mortgage loan is in 2061. Accordingly, Amendment No. 2 proposes an initial term ending in 2076, which amendment will effectively exercise the renewal option approved in Amendment No. 1.

In addition, HUD guidance requires that the lease conform with the applicable HUD regulations and incorporate the Lease Addendum.  In this case HUD has agreed to modify the Lease Addendum by waiving the HUD right to purchase the fee interest found in Section 7.  HUD also modified the Lease Addendum to reflect that the lease involves air rights.  The adoption of Amendment No. 2 will satisfy the HUD requirements for insuring the mortgage loan. 

Material Lease Modifications

Lessee:  EHDOC COUNCIL TOWERS LIMITED PARTNERSHIP, a Florida limited partnership, as assignee of Miami Beach Senior Citizens Housing Development Corporation, Inc., as assignee of Senior Citizens Housing Development Corporation of Miami Beach.

Term:  Commencing July 9, 1976 and ending July 8, 2076.

Renewal Options:  Lessee shall have no option to renew the Lease upon expiration of the term.

This item was approved on first reading at the February 12, 2020 Commission meeting.  The Administration recommends in favor of executing Amendment No. 2 to the Lease Agreements for Council Towers South and Council Towers North, with EHDOC Council Towers Limited Partnership, in accordance with the above stipulated terms and conditions.