ANALYSIS:
I. Summary of the Proposed Project
1. The City currently owns the five parcels outlined in red on Exhibit "A" (Parcel Map) which contain 83 surface parking spaces.
2. North Beach Town Center Development, LLC ("Developer") owns the parcels outlined in yellow on Exhibit "A."
3. The portion of the project between Abbott and Byron would consist of two separate structures, consisting of 121,693 SF of retail in four stories and an approximately 459-space parking garage. Approximately 359 of the parking spaces would be gated public parking spaces in a separate City-owned parking structure (the “Town Center Garage”), and 100 of the parking spaces would be for the sole use of the ground floor retail tenant on the Developer's property, which is projected to be a grocery store. The Town Center Garage property would also include approximately 4,934 sq. ft. ground floor restaurant/retail space.
4. The portion of the project between Abbott and Harding would consist of existing office buildings at 42,456 SF, and new a 134-unit residential building with 42,538 SF of ground floor retail uses and a 275-space parking garage, to serve the residential building and office tenants. City’s participation in the project between Abbott and Harding would be limited to City’s conveyance of the City-owned property located therein.
5. The City would convey its five parcels to Developer, and Developer would convey its parcels outlined in blue on Exhibit “A” to the City, for use for the 359 space Town Center Garage.
6. Developer will be responsible for designing, developing, permitting and constructing the 359-space City-owned Town Center Garage, with the City to reimburse Developer for the costs, based on the final negotiated terms, as outlined in this term sheet.
7. Once the Developer completes the construction of the Town Center Garage, the City will condominiumize the City-owned parcels (outlined in blue in Exhibit “A”), with the City to own the 359 space Town Center Garage, and the Developer to own the 4,934 sq. ft. ground floor retail space.
II. Direction Provided by the Finance Committee / Revised Term Sheet
At the February 23, 2018 and March 13, 2018 Finance Committee meetings, the Committee reviewed the Developer’s proposed term sheets, and among other comments, provided the feedback to the Developer with respect to the main open issues, including with respect to (1) the number of municipal parking spaces required at the Town Center Garage, taking into account parking demand trends and other planned parking projects in the vicinity; (2) the proposed two (2) hour free parking, which the Finance Committee would only recommend if for a limited term of years; and (3) the need to incorporate City’s design criteria to provide flexibility for potential future conversion to other uses, if parking demand continues to decline in the future.
Based on the direction provided at the March 13, 2018 Finance Committee meeting, and the parties’ continued discussions, the Developer’s revised Term Sheet is attached hereto as Exhibit “B.”
A. Two (2) Hour Free Parking for Limited Term of Years.
The most significant revision in the Term Sheet relates to the 2 hour free parking. The Developer’s Term Sheet now provides, in pertinent part:
· City will provide, for a period of ten years, two-hour free parking rights at the Town Center Garage, through a ticket validation system, for the benefit of Developer’s retail tenants in the Developer’s adjacent property between Abbott and Byron only (the “Retail Tenants”);
· Developer to pay the City the amount of the operating losses, if any, at the Town Center Garage, and $66,000 (for the replacement of the net revenue associated with the existing City-owned surface parking lots (collectively, the “Operating Payment”), for the entire ten year period during which 2 hour free parking is provided;
· Commencing on the fifth (5th) anniversary of the date the Town Center Garage is open to the public, and continuing thereafter until the 10th anniversary of the opening of the Town Center Garage, if the Developer’s Retail Tenants occupy more than an average of 70% of the floor area in the Developer’s retail building in any given calendar year, then the Developer shall pay the City for the value of all parking tickets validated for the Retail Tenants in that year, based on City’s then-applicable standard garage parking rates.
· The 2 hour free parking provisions shall terminate after ten years, after which all parking shall be made available at the City’s then applicable parking garage rates.
B. Additional Public Benefit for Education.
In addition to the compensation to the City in consideration for the various benefits Developer will receive under this transaction, the Developer has also now proposed an additional public benefit in support of the City’s efforts to fund educational enhancements in the City. Specifically, Developer now proposes an additional contribution to the City of $125,000, in the form of an annual payment of $25,000 for five years, for after school programs at the Biscayne Elementary School in North Beach. The payments would commence upon issuance of full building permit for the Project.
C. Remaining Open Issue Relating to Potential Future Conversion of Garage for Other Purposes if Parking Demand Continues to Decline.
In a prior iteration of the term sheet presented to the Finance Committee, the Developer accepted the provision that the Town Center Garage will be designed in a way that the garage can be converted to other uses after an initial period of fifteen years, i.e., if parking demand continues to decline. This period of fifteen years was specifically intended to provide City with the flexibility to respond to parking demand trends, as in the last two years alone, parking usage within the City has decreased approximately 20%.
Developer now proposes an initial term of twenty years during which the City cannot make any changes with respect to the operation of a City-owned garage on City-owned property.
The Administration recommends proceeding with the fifteen year period, as previously proposed by the Developer, as fifteen years is the maximum period of time recommended for the City to be “locked in” and assume the risks of underutilization for a City-owned garage, without the contractual ability to take action as may be deemed necessary in the City’s best interests. As this is a policy decision, direction on this final remaining open issue is requested.
D. Concept Design Criteria for Future Garage Conversion for Other Uses.
At the March 13, 2018 meeting, the Finance Committee requested details as to how a design could accommodate potential future uses. Such design criteria includes, at a minimum:
· Increased floor-to-floor heights;
· Maximized flat area floor plates;
· Reduced vehicular ramp footprints in order to minimize future non-convertible areas;
· Structural design to accommodate change of use (increased loading);
· Inclusion of vertical plumbing/waste chases or core for future use;
· Potential inclusion of larger elevator shaft to accommodate future cargo elevator; and
· Utility connection points for future use.
With respect to floor-to-floor heights, the term sheet provides for a minimum nine (9) foot clear. This is the bare minimum that is necessary, below which any conversion would be physically impossible to achieve. The Administration’s preference is for a ten (10) foot clear, which is the standard the City is applying to its own projects.
E. Additional Information Requested by the Finance Committee.
At the March 13, 2018 Finance Committee meeting, the Committee requested additional information, a copy of which is attached hereto, as follows:
1. A pro forma for the Town Center Garage, attached as Exhibit “C.”
2. Comparative pro formas/financial statements for the Sunset Harbour Garage, the 5th and Alton Garage, and the Collins Park Garage, attached as Exhibit “D.”
3. Parking demand analysis for the 72nd Street lot, attached as Exhibit “E.”
F. Funding for Design and Construction.
The Administration has identified the funding for the City Costs for the Town Center Garage, with funds to be de-appropriated from the West Avenue Parking Garage and 2660 Collins Avenue Garage, as the garages are being removed from the capital improvement program. If the Finance Committee recommends approval of the Term Sheet, recommendation for a capital budget amendment would also be needed.
G. Next Steps and Pending Legislative Changes.
As the transaction involves a sale of City-owned property, pursuant to Section 1.03(b)(4) of the City Charter, and Section 82-37 of the City Code, the transaction will require approval by a 4/7ths vote of the Planning Board, and a 6/7ths vote of the City Commission. The Development Agreement will require approval of the City Commission following two readings/public hearings.
If the Finance Committee favorably recommends the proposed term sheet, the Finance Committee’s recommendation will be presented to the City Commission for consideration at the April 11, 2018 City Commission meeting.
The term sheet would thereafter be presented to the Planning Board on April 17, 2018, in accordance with Section 1.03(b)(4) of the City Charter. Based on the final term sheet, the parties would finalize the Development Agreement for two readings/public hearings as soon as possible thereafter.
In addition, the Project will require the following legislative changes:
· Comp Plan amendment and LDR amendment to implement the F.A.R. increase to 3.5;
· Comp Plan amendment and LDR amendment to rezone GU properties;
· Comp Plan amendment and rezoning, if Developer requires rezoning of the Developer’s properties to TC-1 (Developer to specify if Developer is proposing any new uses or height increases); and
· Ordinance to increase the height for the City parking garage to 75 feet.