execute the transaction being either a long-term lease or a potential sale of all or a portion of the um assemblage. Uh tonight we've got the term sheet in front of us that was uh prepared by staff. I thought we could start with council and the city manager providing
us an overview of the term sheet walking us through it. I believe that uh with us is also our outside counsel uh Mr. Delgado and Mr. Fernet is here who can also help uh address any questions we have once we kind of go through the term sheet and ask any questions of council
or staff. I thought we could then invite our developer partner to um make any comments or present any proposed modifications to address issues uh and then we could uh wrap it up, hear public comment and have a discussion and then hopefully take some action uh on either
of the two options or decide that this isn't worth pursuing. Uh, does that sound like a good way to proceed? >> Any objections? Okay. So, with that, uh, Mr. Manager, Mr. City Attorney, if you can give us an overview of the term sheet, um, that's in front of us this evening.
>> Certainly, Mayor. So, the you have you have, just to give you an idea of what's in your packages, um, you have the manager's executive summary that includes, uh, a an additional financial analysis. Um, but
I'm going to focus on a the the memorandum that was a little further down uh dated March 30th uh from uh me and Lily um regarding the the term sheet just to kind of walk you through what the big big picture items are. Okay. Um
the the term sheet is essentially a a uh listing of the different terms that would go into the eventual agreements that are we call the project documents. They govern the design, the financing, the development, the oper operation, the stabilization, and even the eventual
conveyance of the project. Um, the structure of the deal that is proposed in this is a 99-year ground lease. Okay? And it would the eventual documents that we call the project documents would include this
lease, one lease for per phase, and I'll get into what the two phases are. um in and as well as a construction management agreement which would cover the development of the city of the civic portion of this overall parcel. Um it would also include a master development
agreement and there would be other supporting documents such as a vertical subdivision declarations restrictions easements reciprocal easements those kinds of things. Okay. The property itself uh we're it's this city hall property,
the library parcel, Gene Willis Park, and the a portion of the roadway between that that is between Gene Willis Park and the city hall property. Okay, so that's the overall property where the development would
occur. Phase one includes all of the civic improvements which are and you'll hear other options here, but but the the the main thrust is 54,700 ft of civic improvements. That would include a library, that would include a
police station and then all the city hall uh functions. It would also include a new and reconstituted Gene Willis Park uh enlarged over the size that it is now. Um, it would also include a 100
parking spaces inside the parking garage of phase one. Those would those would be 100 dedicated spaces for the city. Um, the that's so that's the civic improvements portion of phase one. The
uh the multif family residential and mixed use portion of phase 1 would include approximately 335 residential units about 5 to 10,000 square ft of retail and 360 parking spaces. Those 360 include the hundred that the that the
city is um would be uh would be entitled to um and would be paying for. Phase two, the later phase is another 335 units. Um, approximately 10 to to 20,000 square feet of additional retail. So,
it's just a much more concentrated uh phase 2 and it would include 550 parking spaces which make make up the balance of the parking uh necessary. Okay. As far as those units are concerned, 10% of the units would uh be reserved for
households at or below 120% of area median income with a fifth of those units uh going to um households at 100% of area median income. Okay. talked about the civic improvements um and then how they are paid for we'll
get into uh later on and there may be I'm sure there will be questions about that and that's actually covered in the financial portion uh which was which the manager and and the finance director uh put put together um but in terms of how we're budgeting for this in the term sheet the civic improvements are
estimated to cost $34.7 million okay that is inclusive of all the 54 4,700 ft of of actual civic space, 35,000. If >> I could just interrupt you for a second, Mr. Andrew, do you want to did you want to jump in with the the revisions that
you showed me earlier on the actually breakdown of the costs? >> Yeah. Um, >> I think they've changed slightly, Mr. Russio. That's fine. No problem. >> Yeah. So, the uh the city attorney obviously is is going over the deal as it exists. Um, and in that analysis,
there are a couple things that are uh that should be mentioned. And I think mayor that's what you're referring to. For example, in that cost u that included the cost of the library u which is which in the separate analysis we don't use obviously because that's not going to be on our ledger. Um there are
a couple other things that were not part of the analysis either um that we are including like FFN furniture, fixtures and equipment. Um there's conversation about maybe an additional floor potentially. So, that's not in in the
developers numbers. So, there's a library amount in there. And later on, um Aaron uh will be going over the deal as it as it exists right now and potentially with another uh concept that uh may accelerate some payments. Um so,
included in their analysis is is a construction along with a developer fee and the parking uh 100 parking spaces. Uh the city attorney mentioned a number that also is inclusive of the library and that's where it could get a little bit confusing. I think the mayor wanted
to note that. Um um >> okay let's continue with I'm sorry I didn't mean to go out of sequence here. I apologize. I just conflated those two issues. So let's continue with the original. >> No worries. No worries. So as presented in the term sheet it does not include uh the items that that Chip just mentioned.
But what it does include for that 34.7 is the 54,000 close to 55,000 square feet of civic improvements, the 100 parking spaces at $35,000 of space, and the 4% developer fee. Um the
that price once a budgeted price is set under the term under the the terms of the term sheet, uh the 13th floor would be liable for any cost overruns. That's that that would be a GMP. uh once that number is set um it will be designed to that 34.7
unless we want to change that number and but it will be designed to a number. So the idea is we designed to a number that's what the number is and and we move forward with that. In terms of temp temporary facilities, the temporary facilities under this term sheet are on
the city's dime uh in terms of relocation and in terms of the actual temporary facilities themselves. Uh up until delivery of the civic improvements is supposed to occur. If that is delayed
past that date, and I'll get into that date in a moment. Um if it's delayed past that date, then 13th floor would be on the hook for those costs. They would also be on the hook for liquidated damages of up to $200,000 a year uh um for late delivery of the civic
improvements. So, timing promised you timing. All right. So, phase one, which includes the civic improvements, okay, is slated to commence 36 months from the effective date. The effective date is when all the project documents get signed. The idea
is they would all come to this commission at the same time. It would all be uh if if they're approved, we move forward to execution. That's day zero. So now >> so we see the phase one lease, the CMA, the master development agreement, the reciprocal easement, and the declaration
>> and the FA even the phase Yeah. Yes. Yes, that's correct. >> We would not see the phase two lease, correct? >> Uh you know, the phase two would probably be the >> No, it would still be day zero. It would still be day zero. It was the same day zero. All the days count from the phase one lease, but you're right. It would it
would um the phase two lease would I'm trying to remember. I think the phase two lease it would be approved. It would not change. Okay. >> But I don't know that it would be executed at that time. But that would still be day zero. The way this is set up is day zero starts when the phase one
lease and all time frames run from that time. Um so phase one uh would have to be would have to commence construction 36 months from that effective date. um and they'd have to complete it five and a half years from the effective date. Phase two, again running from the same
date, would have to start on or before six and a half years after the effective date and finish 9 years from the effective date. Now, if it if they finish phase one early, there's a provision here which would require they start phase two within 12 months of that
early finish date. Okay? Payments generally. Okay? Okay? Because there there'll be there'll be more focus on this, but I just want to give you kind of a flavor of what this means. At least execution. So on day zero, there's a $500,000 payment to the city.
Then at commencement of construction for each phase, there's a separate $2 million payment for each phase once each one starts construction. And then upon completion of construction, there's a minimum annual
rent of $600,000 per phase. Okay, that minimum rent is if in the event of a delay, that minimum rent will kick in at a certain date, the dates that I told you before. Um, and the and if they have not completed it by that
date, they owe the 600 plus an extra amount for phase one. that extra amount is 225 $225,000 a year. For phase two, it's $400,000 a year. Okay, that is some level of protection uh for the for the debt service that the city would incur
in paying for the civic improvements. So, that's that's what the the aim of that is. That number $600,000 per year grows by CPI every year. Okay? again from every year from the from the inception of
phase one. So it's growing the the entire time. >> Mr. Russia, a year nine and a half, which is the delivery date for phase two, the event for phase one and phase two would be the same. So right, it's >> Yes, correct. Correctly. That's right. That's right. That's >> We're not starting at $600,000. >> Correct. Correct. That's right. Um CPI
up to 5%. Um I should have added that. There's also a participation component that is 4.25%. 25% of gross revenues less the minimum rent that that they're already on the hook for. Whatever that difference is, they would also owe that.
Okay. Uh the there is also a one-time transfer fee. So the first time that they transfer each lease, uh the city would be paid the high the the greater of $400,000 or 0.25%
of the gross amount of the consideration. So whatever whatever they sell it for when they sell it the first time uh there is there is another payment to the city. Okay. The library the library is part of this
property as I explained it's part of this agreement. We will have to enter into a long-term interlocal agreement with the library. Um be there is a contingency in the event that we cannot come to a deal with the library. Although um I certainly
think we can. Uh but the the timing we have nine months to get a deal done with the library following the effective date. Um there's an additional 12 month period where we can still work with the library to try to get a deal if we can't get it done in the first nine months.
But they would get credit. it would push off their dates a little further out if if that were to be the case. Okay. Worst case scenario, if we can't come to a deal with the library, we would uh the site plan would be modified to exclude the library parcel. Um you know that that that's the would be the situation.
>> Do we do we do we have the right to terminate in that event? >> We do not presently have a right to terminate at that point. Um zoning in terms of zoning approvals 13th floor would handle all uh zoning approvals. they accept the risk of of
getting those zoning approvals. Uh this this commission is under no duty to approve anything from a regulatory standpoint. Obviously you you can but you would be evaluating that on the basis of zoning uh and zoning criteria, right? You are not contractually bound
to approve. Um there are also okay beyond that there are generally financing and lender protections uh basically to entice a lender to and and uh uh investors to put money into this deal to make it happen.
Um we've worked with them where the city is protected but they also are are the lender would also be would also have additional protections. Um there's also the ability for them to assign and transfer. Again, there was that onetime transfer fee. Uh that's that
contemplates that this will be uh assigned at some point and transferred at some point. And uh it can it can occur on multiple time at multiple times. There are provisions for what constitutes an acceptable operator and what constitutes a rep, you know, has to
be a reputable operator. So that there is the ability for us to evaluate uh the city to evaluate uh who who would be a potential transfer. And then there are indemnity protections. Um the these are in where 13th floor is identifying the
city uh for certain things including most particularly challenges to any of the zoning approvals and and to any of the project documents. Anything that we do they uh would have they have a duty to defend that and they would they would uh use counsel of their choosing subject
to our our reasonable approval. Um now there is they do have the ability to settle with our approval and uh they also have the ability if this doesn't look like it's going in the right direction they have the ability to terminate all the project agreements under that scenario. So that's the
overview. Um I can answer any questions or we can move to the next part. >> Mr. manager, did you want to add anything or >> No, I think um um when we go over on the presentation of the offer, we can clear up a little bit more what you wanted to introduce, which is some of these
elements that maybe are not included in the analysis to break away what may be li uh uh separate from our side of ledger, which is our our costs. >> Colleagues, any questions of uh the attorney manager as to the draft term
sheet, base term sheet? None. Just I have a couple quick questions. One is I uh again we discussed this before. This is the description of the expand of the premises. I guess it's we assume here in the in the draft on page one that it may
be expanded as opposed to saying that that it does include subject to. So, if we can clean that up and then >> we'll note that >> with respect to the uh additional access road from 62nd, which would be like the eastern portion of 73rd Street.
>> Yep. >> That we've discussed. Is there any affirmative obligation on the part of the developer to pursue that um additional access? >> Not at this time. That's certainly something we could incorporate. >> Something incorporate.
>> Yep. And then I think similarly um just because I'm concerned about the feasibility of preserving the open space that we're required to I think we may need a termination right with respect to um our inability to kind of negotiate an agreement with the library.
So those are my three points. I don't if anybody else had anything they wanted to add. Nothing else. Okay, let's move on then. >> Next portion, Mr. City Attorney. >> At this point, we're the finance finance aspect to it. >> Yeah, mayor, if you want. Uh um Mr.
Um we're going to let the developer present uh their offer, >> okay, >> as it exists today and then shed some light on those numbers. Um and then and then we can like put everything on the table from that standpoint and then respond uh from from from that conversation.
>> Sounds good. So I believe we have Mr. Melendi uh joining us by Zoom. Erin, your name and address for the record, please. >> Erin Stolier with 13th Floor Investments uh 2850 Tiger 2. Thank you. >> Did we lose Ray?
>> I want to invite Ray to make a few comments before we start if you don't mind. >> No problem. Melenda, you're recognized. >> Good evening, folks. And I apologize for not being able to attend. Um I would have uh my wife would have left me if I
canceled this trip. So I apologize that this has been uh this is we've been working on this project for a very long time. And I want to congratulate the city and city staff. Uh Tony, um this has been one of the most open dialogue
uh processes with a lot of um good feedback and working together to achieve to get to a a goal that really creates an amazing partnership between the city and 13th floor. really looking forward to um building city hall and building
the next link uh link at Somi to uh rival that of uh link at Douglas. So, we're excited. Aaron's going to present some revised financial numbers based on the conversations and the cash flow considerations that uh that were
expressed to us. And so, I've uh I I I'm in better hands than you're in better hands than if I were there to be perfectly honest with you with Aaron at the helm. So Aaron, take it away. >> So Aaron, before you start, just if you could for the for the benefit of people who are new to the conversation and have
not seen the original spreadsheet, can you walk us through the issue I think your offer intends to solve for. So >> absolutely. >> Thank you. >> So it is such a pleasure to be here and I just want to echo Ray's comment. It has been a pleasure to work with staff,
with Tony, with Chip, with Alfredo. Really, really a pleasure. Incredibly pragmatic. um and thoughtful and I think what you'll see here today if we can put show on the screen um what I have on my laptop what you'll see here here today is really a result of those meetings and
those conversations so let me start with our original proposal on the left and then I'll walk you through what we are changing the original proposal this is prior to even the term sheet this is what was on our original RFP proposal so we had proposed to do a $500,000 signing
payment when we execute the agreements. $2 million upfront rent when we break ground on each one of the phases and then a $400,000 base rent per phase and a 3% participation rate. And as we
worked through, you know, the the negotiation, we've refined those numbers and we've increased those numbers. So, our revised proposal included a $500,000 payment at signing. The same $2 million uh when
each phase breaks ground. The base rent became $600,000. So, a a a notable 50% increase there. And the participation rent was also upsized from 3% to four and a quarter%. And that is what's on the term sheet.
Now when we work through the cash flows and the financial picture for the full term of the lease and we started to see you know what does it mean for the city yearbyear we've noticed that there were a few years where there was a negative
balance to the city or a shortfall and we put our heads together and and and what we'd like to propose here today is a revision to the term sheet where we basically pay an additional million3 per phase at groundbreak And what that does is that it helps
solve the the negative years so that in no event the city's bank account has a negative number. So the cash flows from the project inclusive of the signing payment, the initial rent, this additional initial payment, the base rent and the participation rent, if you
look at it in the aggregate year-over-year, there is always a positive balance on the city's account. And so our our proposal is really to add that $2.6 6 million to our offer and eliminate the transfer fee because the challenge with the transfer fee that we
had on the term sheet was a quarter of a point which represented $400,000 on the initial transfer. The challenge with that transfer fee is that it's very hard to underwrite. We can't tell you exactly when we're going to sell. Can't tell you if that's going to be at stabilization or if that's going to be two years later, three years later and it's really
hard to count it and it doesn't really help you because upfront is where you have the negative uh shortfall. And so the way we've solved it is let's pay $2.6 6 million more up front and that really solves the issue. >> So Aaron, just to to clarify, >> the original spreadsheet
that was proposed had negative cash balances. There are some early years, but the years uh 8 through 16, you had deficits between total rents and taxes estimated to be collected from the
value of the improvements, taxable value of the improvements of between $27,56 and $527,000 and 6 uh 527626. So essentially, you're saying this proposal eliminates
uh those deficits in years 8 through 16 and in the early years, which I think were years four through six from the spreadsheet I'm looking at. >> It does. And I have a page page number three on this presentation. We'll walk through exactly that. >> Great. Thank you. >> So this one, it's a little small. I'm
hope you hope hopefully you can see it but it walks you through you know the big picture financing summary from the city's perspective. So the bond principle as uh the city attorney mentioned is $34.7 million and there are
two r you know two scenarios for how to finance that. There's a 4% and the five and a half% which we can talk a little bit more about with the CFO if you'd like. But in essence, the way we thought about it is let's propose a scenario where we do half of the 4% and half of the five and a half percent. And those
are these numbers here. So effectively, because this is a 35 year bond financing, the first five years are interest only. So the payment is lower. And then 25 years, it's a the same payment, but it's amvertising. Right. >> It's 30 years, not 35.
>> 30 years. >> Okay. >> Yeah. 30 years. Then the next 25 years, it's advertising. And so can I apologize because I think it's be so we don't lose this thought. I mentioned earlier the library being in the number and correct me if I say anything out of that 347
roughly about 7 million is is library cost. Right. So I wanted to introduce it now so you kind of get the picture of the number we said earlier. Um and so sorry to interrupt. >> Correct. No no that that's a good point. This is this every number I'm showing here today includes both the cost of the library and then it includes the
totality of the revenues. And so in essence, if the library was to be deducted and there's some revenues that would be reduced, this is an aggregate picture of the whole thing. So in essence, the the interestonly payment is $1.6 million per year and the amortization payment is $2.4 million per
year. So if we do this blended strategy, the savings are in the range of $200,000 per year versus the five and a half case. So now let's go to our payments. So, we have a $7.1 million upfront payment, which is the combination of the
$500,000 upfront, the $2 million per phase, and the $1.3 million additional per phase that we brought uh to the conversation today. That is a total of 7.1 upfront. And then the ongoing payments are the 1.2 million, which is a 600,000 times two because it's two
phases. And the $82,000 is our projection of the participation rents. All that grows at 3% is our projection. And then the city's portion of property taxes for both phases is 450. So in essence, the upfront payments to the city are 7.1. And the ongoing payment to
the city starts at 1.7 and then grows with inflation from there. Important note is that the bond is a fixed payment over time. Our payments because they are tied to inflation grow over time. So in essence, you have a few years of negative and then you come positive. How do we deal with the
negative? That's how we increase the upfront so that you can draw from the upfront payments to cover the negative years until we become positive. So the the net present value of the ground lease is somewhere between 59 million at 4% discount rate to 33 million at a 5%
discount rate. Um and now I'm going to walk through the and this is the last page. Um, but I'm going to walk through a summary of what this looks like for the city for the initial period, interestonly period,
amortization periods, and then later on. And let me know if you want me to zoom into this. I don't know if you can see the actual numbers, how big they are. >> We can our screen. >> Is it okay? >> Yeah. >> Okay. So, in essence, you have let's talk about pre-ground break. This one is fairly easy. There is no bond payment because we haven't started constructing
the city facilities or drawn on the bonds. There is the $200,000 per phase at signing for a total of $500,000 and that can go on an account and earn a little bit of interest. That's it for the first preg groundbreak period. Then we go to when when we break ground, the
interest only period. So in that in in years 3 to 7, the city is paying $8.2 million of interest which includes those years of bond payments which were only uh interest only. That's 8.2 2 million. Our initial rent
plus the 1.3 we're proposing to add um and our base rents for those periods add up to $9.2 million. The projected property taxes from those phases $920,000 for a total of 10. So
effectively the city has eight going out and 10 coming in for years three to seven for a total of $1.9 million going to the city's bank account. account and we've added what uh a nominal interest rate there could be. So the city's bank account has $2.7 million associated with
this project. Then we enter into the early amortization periods and this is when the city's bond payments shoot up because now we're on mortising. So it becomes $2.4 million per year. So in that scenario, the city has $12 million total.
Our faces produce 7.4 million. Property tax is 2.5. Total revenue to the city is $9.9 million. So, there's a $2 million shortfall, but because we had 2.7 on the account, effectively the shortfall, effectively the city has $950,000
positive on the account. And then I'm not going to go through every year, but you see the picture here. Effectively, the point is the $1.3 million was really to solve for the city's pain point of not having to have a negative bank account effectively associated with this project. >> I think Commissioner Rodriguez had a
question. Can you can you can you run us through the assumptions in the early years? What uh the IO period is phase 2 assuming delivered in what year? In year 3 to 7? >> Um we are assuming I'm going to pull it up so that I can be very precise with my
answer. >> Well, if you want I'll tell you my my my question is you have in the 10 million that you're saying eight going eight going out 10 coming in. You have it from years three to seven, but that's already including
that by year three you're going to have phase two done. >> Yeah. It that's adding that's adding everything that's happening in years 3 to seven. >> Yeah. >> So it doesn't include >> only like year seven only is when the full 10 million will be coming in.
>> So the full So the 10 million is the aggregate of the fiveyear period. >> Okay. Not that's not just to be clear for everybody who may be watching this is not any annual revenue. >> But the full 10 comes in at year. Yeah. By year seven. >> The full 10 comes in. Yes. But what I
guess the question is Erin, what portion >> can you break it down by year? So So the commissioner can see what the what the cash what the cash flow is during that that fiveyear period. >> Yes. Is my my computer here still visible? >> Yes. >> Is it too small? >> No, we can see it here.
>> Okay. So effectively, you have phase one breaking ground on year three, which is $3.3 million of upfront rent payment, right? That's a 2 million plus the 1.3 that we've added here. And that delivers two years later when you start paying base rent and then
participation rent and property taxes associated with that one. And then on year five, we break ground on phase two. and phase two delivers two years later and that's when we start paying base rent and participation rent for phase phase
>> commission I think the bulk of the revenue is made up of the upfront payment per phase >> yes >> uh and then the additional 1.3 per phase >> correct >> yeah I know I got that I was just eight going out 10 coming in but the 10 comes in in year seven
>> no it does not >> in full >> well in full but you've got of that you've got >> again uh 72 7.25 million comes in in years 3, three, four, five, right? So the bulk of it is
frontloaded, I think, is how they've solved this problem for >> correct. Because we're paying $3.3 million per phase to break ground. >> So 75% of the of the money is in our account in the first three years. >> And if you would like to see a
particular year, this spreadsheet shows you yearbyear for the totality of the 102year lease. The other one is more of a summarized version where we are just adding up for the periods of time. >> Mr. Russia, just to remind us, how do we because there is a risk here that they're delayed on phase two. How do
what what what again is our protection in the draft term she receive? >> So when there are >> okay for us for our delays in terms of our relocation back into the facility, but what is the number? >> So there there are two protections, right? >> So if they deliver in year three, if
they deliver in year was it five here? uh for phase one >> for phase one. >> Yeah. For phase one, they would have >> they've got to start construction within 12 months on phase two. Correct. >> Yes, that's correct. Okay. That's right. >> So, they'll deliver 36 months or 30 months thereafter. >> Correct. Correct. Now, they do have
outside dates. >> Yeah. >> Right. Beyond that, if they're if they're, you know, delayed, um where >> if they fail to start if they fail to start in year five, >> rent becomes due after an after a certain date, right? So for >> is there an escalator for every year
they're late? >> The the rent is growing the entire time. >> Understood. >> Not the upfront. The the annual rent is growing. >> But I heard you say there was an additional penalty. >> There is there is an additional penalty when they cross certain completion dates. >> Okay. >> There's an additional penalty if they're slow on phase one. It's an it's it's
600,000 plus 225. >> If it's on phase two, it's 600,000 plus 400,000. Okay. Million bucks a year on >> essentially they are paying us the lost tax revenue. >> That's right. >> Associated with that. >> That that was the that was the concept. >> That's the intent.
>> Yeah. >> Okay. >> Questions about that? >> Sorry. You're continue. >> No, that that pretty much covers I mean the the >> Sorry, we're going to recognize Commissioner K. >> I know we were just talking about
assumptions and all that. Um I just there was a conversation with our consultant uh regarding the discount rate and the um the inflation rate. >> Why don't we let him finish his presentation? We'll come back to that. >> I wrote a note.
>> This is really the the last page. I do have um a sensitivity uh >> Oh, there you go. Thank you. >> A sensitivity to show the var. So the two main assumptions for net present value that drive the the the number are what you assume for rent growth over the
next 100 years and what you assume for discount rate right which is what rate are you discounting those future cash flows to get your present value. So there was a discussion about what is the right discount rate and the right rent
growth to use. Um, we've used 3% for rent growth and I think the city's consultant was more comfortable with a more conservative two and a half percent. I think if we actually took the time today to look at the historical Miami date county and we found that it's
closer to 4% since the 1970s. So that's like 40-year track record, 50-y year track record. And then you can also make the argument that this is a good part of town. So a good part of town is probably even better than than the natural that the natural you know gross average of
Miami date county. So we think that 3% is fine uh is a fair assumption. And then the other one is discount rate. And when we think about discount rate the thing to keep in mind is that in the ground lease context where you have a very high base guaranteed rent those
payments are senior to everything. They're senior to the ground. They're senior to the mortgage. They're senior to equity. they're senior to everything. So they are very very secure. So we think a discount rate on the lower end makes sense because of that. Um versus some other ground leases where there may
be some uh profit participation that's really more more subjective. Here having a high guaranteed rent it's something that the city will absolutely get. So we think a discount rate of five makes sense. But um what we've shown here is
the net present value of a ground lease versus the net present value of a sell case in um in the various ranges of inflation or rent growth here and discount rates here. So the table on the
bottom really gives you the delta between the ground lease and the sale. meaning how much better is the ground lease than the sale from a net present value perspective. So assuming the more conservative assumptions it's $8 million better and assuming the less
conservative assumptions is $36 million better. So somewhere in >> Aaron read a footnote at the bottom. >> What's the footnote? >> Breaking news apparently. Is that your CL? Is that Claude running in the background? Aron sorry mayor >> yeah you're recognized sir
>> one of the other questions on the assumptions here is that we are um using the interest rate from the go for the whole 30 years in this presentation correct >> for this we are using a blended
>> oh it's blended >> blended 50% of the bond amount at 4% and 50% of the bond amount at 5 and a half% >> okay that wasn't Clear. Thank you, >> Aaron. Anything further? >> I'm sorry. >> No further questions.
>> So, the G the GO the GOB uh limitations that we're going to take is roughly what is 50% of what? 34 million. No, it's actually >> 17 17 and a half. >> But that's the full 34, right? >> 34 divided by two. Yeah. Yeah. >> But the library are we using the GO for
the libraries? >> No. So I think I think I think we would be I mean I my my thought would be we would only finance the amount of our contribution which would be I think uh in the maners would 4.1 million plus the
construction management fee on that number correct or 4.1 million sorry so you would >> 41 okay >> it's only on the 8.8% % of the value. Okay. >> So 4.1 would be uh would be included in that 34.7. So the other
>> $3 million would come off the top. So we're looking at a $31 million. >> But for these assumptions, we're at 34 and a half. Right. >> Correct. >> Right. >> Correct. >> And the reason I want to bring that up to my colleagues is that one of the discussion items that I want to have with everybody is the extra floor, which
this would be Wait, time out. Repeat that. >> So there, we're going to go let's let's let's focus on this and we'll ask there's a I we had the conversation about having a four-story city hall building or a fivetory city hall building with an extra 12,400 square
feet on the fifth floor. That could be in the shortterm lease to third parties as additional income for the city. And over the long term provides us the optionality if we need to grow into more space, we have that extra floor for future growth. So that is an option we have to decide on if we want to pursue
that as part of the financing and the execution of the project. >> Okay. >> That's not that's not in the base term sheet. Correct. >> It is not. >> It is not. Okay. >> It is not. There's a ability to add that extra floor um with the understanding that that extra floor would be for future city expansion.
>> Okay. >> Can I just ask? >> Yes ma'am. You're recognized. >> It's more to Commissioner K. >> Yes. Have a colle. >> So were you extrapolating that then that extra floor would eat up that difference between the 20some and the 34 if we kind
of took the library out of play. >> Mr. Manager, correct me if I'm wrong, but we just said that the the library would account to $4.1 million. What was the number? I'm sorry. >> 7.257. >> The 4.1 is the value of the 8 8.8% of the total deal is the value. The library
is roughly about 6 uh $9 million. Call it $7 million. So really for purposes of that if you want to forget the 34 that includes the library if you're going to use it like part of our our debt our portion uh is about 27 a.5 million
if you add seven for an additional four now you're up to 34 >> we're back to the original number >> and there's some other things that I said earlier are not included that I would Mr. when Aaron's done I I I will share you know the FFNE and and so yeah value of initial floor seven library is
about seven okay questions of Mr. where anyone good? >> Yes, ma'am. You're recognized. >> Um, when you're talking about the timing and and tell me we're going to discuss
it later if we are, would we stay here until demolition happens and then move out like or would we just move out? So uh originally when uh the proposal came in um it was contemplated the way the site plan has at that point was that
uh we would stay here once there were some revisions to the site plan to accommodate what we needed. Uh it required us to uh move and and demolish. Uh so there's a relocation cost that we don't really know at this point what that would be because we would have to figure out what what's what would be the cost of the space that we need. So
that's not even in this equation. >> Yeah. But would we be leaving month one or month 36? You know, they're they're going through all this stuff in the meantime. >> We would be leaving. We would be leaving before day zero. So they give they have to give us notice 90 days before day zero at which time we have to be have
abandoned the premises. >> Okay. So 90 days before day zero. >> Yeah. >> Perfect. >> That's for the notice period. We can leave up the day before day zero. Yeah. Correct. >> Yes sir. >> So Mr. manager. Are we are we going to able are we going to talk about that at all today? Is that something that we're
prepared to talk about different options for moving anything like that? >> No, we have not. I mean as well or no >> FFN. Yes, we have an FF number. We do not have a relocation cost number. >> Correct. And and we know I mean from from the standpoint of the non-p police activity is pretty easy to fix, right?
Uh police is the one that complicates it a little bit as as as it relates to which space may be able to accommodate it. um what's out there that would take care of our needs and we'll get creative. We may have to go into hybrid type of model so we don't have a one per one station and we'll get creative.
>> Police the police one is a little bit more more tricky. So not ready to do a deep dive today but FFN as the mayor mentioned we've done some calculations. >> Yeah it was just for the public and everybody understands there is a plan for police. Well there will be we'll come up with a plan and understanding >> we there will be no no breakin
operations. We don't have that luxury. >> Mr. Russio. >> Yeah. One quick clarification, it's not day zero. It would be after day zero. It would be sometime uh between day zero and commencement of construction. >> Okay. >> Is when the 90 days would be triggered. >> Yeah. So it wouldn't be we wouldn't have to leave right right on day zero.
>> Okay. Thank you for the clarification. >> Yeah. >> Further questions? >> Nope. Okay. Thank you, sir. Uh Mr. Manager, do you want to walk us through the add-ons and other issues? >> Certainly. Um, so as a as I mentioned earlier and just
as a refresh in the calculations that that you did see u and Aaron jump in if I you say something that doesn't match your your uh spreadsheet with breaking news let me know. Um uh so we have the city the construction cost and I'll call the con construction management uh
that's included. Uh the the 100 parking spaces is included. Um what uh was not included uh was FFN. Uh we have some estimates uh roughly about $2.2 million variation on that. Um FFNE for police
environment is different than FFNE for general office. U the extra floor that we talked about if the the the floor plate on that it's about 12,400 ft. So there's an estimate about 6,800 call it 7 $7 million. Uh the other uh issue that that is not in the calculation which we
raised was uh and I'm sorry 68 6.8 8 million on the extra floor plus construction fee brings it to about 7.1 just to correct the number I'm providing you. And then and we talked about the uh the interlocal that we had with the county which uh would generate 8.8%
uh of value of the deal to the county. Um and so the issue there is as the mayor mentioned you know paid up front. So we have to account for that in in our initial cost and borrowing um or if it's something that spread over time. I believe mayor I think you may have said that you prefer to do the upfront if if
I misspoke. >> I'm sorry I was distracted with something else. >> The payment to the county u we I gave the value of 1 million which is the 8.8%. I think you have mentioned that you prefer to do that up front. >> Um so if we have to borrow we have to account for that. So, in uh revising the
numbers from the standpoint of the deal, although this said 34 million with the library, I'm just going to talk about our portion including construction and all these line items that I talked about, you're looking at about 40 million.5. So, 41 million would be the
out of pocket. Again, just to be clear, what the model that Aaron presented um has construction construction management costs and the uh 100 parking spaces. So, the additional floor FFN and the library
portion is not included in in that model. So, that's why we're making you aware of that. There's an extra cost there that would have to um go into, you know, our financing and borrowing. Obviously, that changes a little bit. uh what happens uh although uh as a developer has come forward to
restructure the deal to to help the city from the standpoint of uh averaging out and ha having positive cash flow throughout um this changes that a little bit because additional burden now you know there could be different ways in dealing with that potentially um and we
can try and mitigate forward sometimes but I just wanted to kind of put it on the record mayor I think I think that's what you wanted me to share for the most part I believe and certainly you're happy to Sure. Any questions? And you know, I just I'll take the moment now that I have the mic just to thank
certainly 13th floor and um the extraordinary effort to do something on your anniversary uh vacation Ray and certainly Aaron and team uh certainly in Corwell the architect as well have been a great great group to partner with very transparent and I certainly appreciate
you know their their transparency and sharing of information this effort obviously from our city attorney to finance and Alfredo and Sam and the team. So happy to answer questions um that that haven't been addressed yet. >> Thank you. Yes. Uh let's I think
Commissioner Rodriguez had one then I'll recognize you. Commissioner Bonich. >> Um I to the manager just one of the items we should also account that's not part of the number would be audiovisisual which we obviously will be using and low voltage.
>> Yeah. Typically well in some of the FFN it's it's somewhat accounted for. In this case, we have sort of state-of-the-art technology in in this space that we would want to repurpose and uh >> take it with us with the chairs. >> We will before we demolish, we'll we'll we'll take, you know, the the from the
standpoint of uh how we run the meetings and how it's wired. Some of the stuff can be repurposed. Some of the equipment that we have in the closets, I mean, it's it's it's really up to date. >> Don't forget the vault, please. >> The vault? >> Yes, please. >> I'm scared to go in that vault. Um, so there may be a component there we may
have to add that that um we may not account for given a piece of equipment that we may not be able to transfer into the new chambers but uh we're pretty state of the art here and has made a the city has made a good investment as it relates to that. um you're in the business so you know that there may be some additional cabling or things like
that that are not >> and there's always upgraded cabling correct six cat six to who knows by the time we do this correct >> where it'll be at there's going to be a cost for removal and reinstallation so just may not break the bank but it's just still
>> we'll have artificial commissioners >> will be holograms >> yeah exactly >> but just you know money that we're still going to have to account for >> understood Commissioner Wish. >> Okay, just so that I'm clear, we went
from 34 to 27, then possibly adding back the seven if there's an extra floor taking us back to 34 plus these things. If I heard you correctly, you said it would be approximately 40. >> 40.5, call it 41. >> Okay, thank you. >> And and if you take the 34 that's in the
spreadsheet and forget that it includes the seven for the library and just make it our cost, we would need seven and a half to that 34, right? And then and that sort of changes that >> and commissioner to >> I think one thing for us to consider because we will have successive budgets
between now and the day we go to market. I mean depending on what our revenue looks like, we could pay for some of this out of pocket. So we could we could certainly reserve the $2.1 million, right, for furniture and fixtures and just pay that as opposed to borrowing
it. So, we do have those options, but I think worst case we're looking at, you know, $41 million. >> Yeah. >> Okay. >> Mayor, also, I mean, just for thought along those lines, I said that maybe there's some things that we can do. You know, we have a couple capital projects that that maybe, you know, aren't ready
to move forward, but maybe could be part of the GOB because parks related, nothing to sell building, but we have cash that we've allocated. If we wanted to pay down some things, we could that way to make the deal uh uh fit better as it relates to, you know, being upside down a little bit on outer years for a number of years if we have to go up to
the 40.5 41 million. >> Vice Mayor, thank you. in consideration because we'll talk about this a little bit later about the additional floor. I was curious if we have any numbers on uh how much square footage we have right now
with city hall and the police station and if we do have any immediate plans for staffing up for the density that we're adding uh to the downtown or any idea of a projection that we could have into the future. >> And and and my sorry for the diversion a
little bit. Uh, I also want to thank Manny and Albert from providing a lot of legal support and something that's a very complicated deal and helping with with our team. Um, Vice Mayor, I'm going to have to look back at my notes on the current police headquarters because I think that was your question. I don't
remember the number off the top of my head. >> Um, so we'll we'll look for that while we're here and try to give you that number. uh as it relates to long-term I mean uh the issue of an additional floor I think would be a a good long-term strategy for the city given that the way this has been I think we've been pretty
efficient in the allocation of space as you know we brought in our consultant as well that worked on the prior police department and and had worked on those spaces so knew that really well um but depending on what happens in the city both from a density standpoint and or geographic uh uh some point density you
can take you can take on uh because it's very concentrated although that generates additional calls. The GE geographic expansion, for example, going to the north and annexation that creates a responding issue, maybe additional zone. And so there's definitely an additional uh workforce on the police side is not a onetoone because obviously
they're out on the field. They're not in an office, but by ratio, you're going to end up needing support positions that end up, you know, additional detective uh and things like that that do expand the police department. So therefore, the additional four certainly would give the
city a strategic uh advantage as it relates to be able to accommodate that expansion at some point. Uh because it I think it'll come either by virtue of geographic expansion and or density. >> Great. Thank you. And again, just for if if we do end up looking up anywhere,
just the square footage of city hall and the police station would be great reference for >> as proposed or as current. >> Current. >> Current. Okay. Okay. Commissioner K, you recognize Uh, mayor, I'm sorry. Our city attorney looked up on the property appraiser says that
>> the combined city hall police shows 28,210 >> and we're proposing for this building >> 40 42 roughly 41 and change. >> Okay. >> Okay. >> And that's not inclusive of the library. That's a separate
>> Yeah. >> Mr. Manager, um, can you just repeat some numbers for me? The FFN was at 2.2 million. 2.16 >> 2.16 >> 2.16 >> Yes, sir. >> correct. >> And what was the other numbers that we in we included in that >> extra floor u with construction 4%
construction management uh 7 7 >> 7.092 >> 7.1 >> million. >> But what is that? What is that? >> Additional floor. >> Oh, you're talking about the additional floor. No, no, I'm talking about Oh, that's going to the additional floor at 41. >> I'm giving you the line items that weren't I thought that's you were asking the line items that were not included.
So FFNE 2.160 additional floor with construction management 7092800 and then the value of the 8.8% um as as prepared financially was a net present value with a 5% discount rate of 4.1.
>> So you're welcome. >> You recognize yes. While we're talking about square footage, I think it's important for us to consider looking back to look forward a second. I think part of the issues that we ended
up having with the idea of the police department is that it just kind of grew grew grew. And there are people who do that for a living, space planners or whatever. And I'm certain that they exist for government
offices. So I would appreciate if rather than us kind of leading a charge on what we would necessarily want, we actually contract somebody whose job that is so
that we have a dialogue with that person so we don't end up, you know, with like the swan dive bathroom that's, you know, 500 square feet or what. Not that that would happen here, but that we don't run into those things because I think that checks and balance is is
important for what we're doing. I'm not quite sure if the doctor part of you studied that. So that's where I'm kind of kicking it out like, well, no, it's true. I don't know. >> No, yeah, I don't know what I don't know. >> It's a good point. We But he's on it.
>> Yeah, it certainly wouldn't be the doctor side of me. Um, but thank you. Um we did bring on board uh as as exactly for the reasons that you stated, right? Somebody that who who's in that space and does that have for a living and and Mr. Eddiea um who was part of the group
that designed the the previous police headquarters. Um so he very intimate with the spaces because a lot of it was conversations, you know, and seeing exactly what the needs were. also being mindful of our accredititation and some of the things that that that are important to make sure that we account
for that as it as a space as we design spaces. Um so we brought them on board to do an assessment uh of it. Now obviously there's a lot of work done on the prior police headquarters and and this footprint is smaller than that but we took from that uh certain things that
the city learned and so we took that work product uh our chief and his team took a look at that design. some of those things were uh made more efficient because there was, you know, maybe a room that could be multi-purpose and and and serve two functions uh instead of dedicating two separate rooms. Um so
they did look at that and that's how we ended up with the proposed square footage. We did that with city hall as well. Um Eddie, well the 13th floor team did did it originally uh a little bit more general in nature. sure they they walked the spaces and they and then we fine-tuned that uh when Eddie came in
and we did a space planning exercise where he took a look at our functions and how it was laid out and actually provided us and that's how we ended up with about 20,900 for city hall and 21,000 for the police headquarters. uh I would intend to bring him on board.
Remember that this is had not been designed necessarily yet and so we would bring him on board to serve as an owner's rep so we get into the design and the allocation of spaces that that we have that expertise in house to help us through that process. >> Thank you.
>> Further questions uh Mr. Manager I don't know as we you know one of the choices that we're being asked to consider is adding this additional square footage. So I don't know if you know one of the opportunities I I think there's an opportunity to you know in the near term obviously rent that at market and I'm
assuming the way to understand what we would need to get by way of a minimum return on that is roughly the cost of our debt as a percentage of uh the cost of construction. So, if if we're borrowing at we're borrowing at a
blended 5%, right? We need to get uh 28 $29 in rent uh triple net. I don't know if that's something Erin, am I thinking about it the right way or Mr. Melendi? >> Okay. >> Correct. >> Okay. Which so I think it's a pretty safe assumption that we could get well
beyond $29 a square foot triple net in this market. >> Certainly with with the intention that that um >> you shake your head. No, I'm sorry. expansion. >> This is for expansion of city hall. >> No, un understood. I think there's but I
think there's there's a Well, I >> look does it make does it make it again makes that floor taxable? Correct. To make the whole building taxable. >> Oh, correct. >> Okay. So, >> unless we do Can we do a condo? Sorry. >> No, it's not a condo. It's just that that the property appraiser will treat that floor distinctly. Will not Well,
the whole building will not become taxable if we rent the one floor. It also it also influences the what our ultimate intention is influences the what what the bond >> whether the where the bond where that portion of the bond is taxable or non- taxable. Correct. Understood. So >> but the point the point being whatever
the whatever the cost of the carry I think it's a pretty >> it's a pretty you know sure bet if we decide to go third party that we're going to easily exceed the cost of the carry for that extra square footage. I think it's >> if you needed to pivot. >> Correct. I think it's worth doing for that reason. The other thing is there's
also the opportunity that we haven't really studied which is Mr. Manager how much of our functions that are externalized in other spaces could be consolidated in the building. So I would think you know maybe parks could be if it's appropriate some some parks employees could be returned to city hall
which allows us to take space that's built up and dedicate it back to green space or put it back into service for recreation. >> So I think those are things that we really maybe have not fully studied but it provides us that opportunity as well. >> Yeah. So, Mr. Mayor, in this case, uh, public works and parks, uh, were not
sort of given a space. They were given a shared space. Yep. Obviously, we have directors and staff that come, but u, so that could still be something that the city may contemplate potentially about bringing certain people in house, uh, that would require that space. >> Correct. So, those are again, just wanted to highlight that it provides us
to get more potential operational flexibility that we can design into how we want to how we want to organize ourselves. Um, that's all I had by way of comments or questions. I think um, let's open it up for the public. You
hear public comment, that's that's fine. And I think we've all heard all the information. I think for the public, if there's anyone who wants to speak on this item, they've got the benefit of that information. We can invite them up. So, if there's any member of the public, this is not a public hearing, but we're going to invite any member of the public who would like to address this commission on the project or the
potential project to please come forward at this time. Mr. board and you've been waiting patiently, so I'll recognize you to start. >> I have a couple of questions. I, as I listen to this, I assume we're still talking about two 17s story buildings
and one five. Is that correct? >> Two two 16story buildings, one fourstory building with the possibility of adding a fifth story. Yes, sir. >> Okay. I've always when I first heard of this, I've always had the question, where is there a place in the city of
South Miami that could house this administration or this political and administration, the building and the police department? And I am now assuming, and I'm wrong,
that the five-story building will probably be built first, then you all will stay stay here and then move into the new building in the library also. >> Sir, no. So, no, we the I think the the way the site plan has evolved, unfortunately, uh we would have to
relocate temporarily, but we would be we would come back onto the property first. So, you'd have the you'd have the city hall building uh brought back onto the >> I feel for whoever's looking to find a place for the size of this temporarily. I just haven't ever seen
I've tried to JRE Lee was about the only place I could think of, but now I understand that's coming down too. But, uh I was just curious as to what the city and the library I guess the city hall and library will be in the same buildings.
>> Yes, sir. So they did have the library on the ground floor. >> Last question I have u are you keeping the ownership of the property or are you selling the property? >> The the the deal that was presented was the deal that was presented just
discussed is to keep the ownership and lease two two portions of the property for 99 years. The balance would stay in public public control. Well, in closing, I just have to say as an educator, you're always very glad to see one of your former students succeed,
and I thought he did a very good job tonight making the presentation. And I'm sorry all of these old teachers couldn't be here to see it. >> Thank you, sir. >> Is there anyone else who'd like to address uh this commission in public remarks? Please come forward. Mr. Kelly,
is you making a way up or you good? Okay. Anyone else? Okay. With that, we'll we'll close public remarks. Is there anyone online, Madam Clerk? No. Okay. Mr. Melendi, do you want to say anything before since we've taken away from your spouse here
on your on your anniversary trip? >> Only that I want to thank everybody and just on the on the additional 12,000 square foot space. Um, it's always been my kind of idea that the city should have room to grow when you're building a
state new state-of-the-art office building. The city will grow over time. And I think it's it's important you can you can cash flow that over time and then at the right time expand, but you don't have to make that decision today. I know that that's more of a financial decision that needs to be wrapped up at
some point. But adding a floor to that building for us wouldn't be complicated uh in the design process. We will we will design foundations in the early portion so we can contemplate that as we go forward and you guys can uh you and your PDA can decide that along with
CHIP's uh guidance um at a later date. We're happy to be a resource. We're happy to bring you the commercial office brokers to help inform you in that in that way and however we can. We're we're happy to be helpful. Thanks everybody for your your time and your patience on this process.
>> Thank you and happy anniversary. Thank you. Thank you. >> Okay, colleagues, uh, how do we want to proceed with the discussion? Any Do you want to go left or right? And >> Okay, we'll start we'll start on the other end. Right to left. So, >> well, comments. >> Yeah. Who wants to Anyone want to go
first? >> Any volunteers? >> I guess I'll start. Um, when we've had the discussions of selling versus leasing, it has always been, you know, my intent to keep the property in the city of South Miami. Um,
when we see the net present values of the properties and the and the sale versus leasing, um, it was really a no-brainer in my in my in my thought process. I think that just future like our our our thought process as commissioners and
mayors here for the city of South Miami is really to think about the future. Um and I think this is how we maintain the ability to do more uh for the city by keeping property internal and not selling. So, I'm glad that um and I give
thanks to 134 for being uh financially and fiscally uh creative um in going through this process to make sure that it was feasible for the city to uh look into this and really take it into what it's worth. So, I appreciate that. Um I
I did have a question before we move on. assuming we vote and it's in the positive mayor maybe we can talk about what the next steps look like. Is it, you know, cuz for the for the information of our public like >> we we vote today. If it's in the
affirmative, uh, what does that look like? What are the next steps? If it's in the negative, what does that look as well? So, like I just wanted to make sure that >> let's take that question right to city attorney and we can so it informs the conversation. So if we adopt today's re resolution adopting or approving the
term sheet with whatever modifications, what happens next? >> We proceed to finalize all of the project documents and we bring them back to you all for approval. >> And then what would you anticipate rough timing of that would be? I'm assuming
that's going to be your next question. It's it's it's a significant I mean luckily we have Manny and Albert to help us through that and we have willing partners in in Ray and Aaron uh to to work through this and and their their council their very able council. So um
we'd get at it we'd probably be back in in after several months bringing back all of those documents to you and they would all be presented to you at the same time but you know so so you're all voting you're voting at one time for you know it'll be separate votes but for all of them. So, is it possible we could do
this or have um this back on an agenda either late June or early July before we get into our >> Yeah, we prefer not to do this y >> during budget season. >> Yeah, we could certainly shoot for that to to get it out to get it complete. >> Uh Aaron, you think you think we can do
that? >> Absolutely. I think this term sheet is the most comprehensive term sheet I've ever done. It's like 40 34 pages. I think we just add a few whereas clauses and we're done with the lease. So >> that's right.
>> The substance the substance is here that turning this into agreements will be very easy. >> It really is the most comprehensive term sheet we've seen on these ground leases. Um it it really is. >> Is that your polite way of saying it's been a painful process to get here? >> Not not at all. It's been a very
collaborative process. >> I was just being just being a smartass. Sorry. >> Okay. Commissioner Kai, sorry you're recognized again. No, that's all I just wanted to thank everybody involved, the manager, the attorneys, our attorneys, everybody included. So, thank you so much. >> Yeah. So, you're you're in favor of of
leasing as an? >> Yes, I would be. >> Okay. You want to go next? Yeah. >> Yeah. >> So, the options that we face are lease and sale. And to be quite honest, I
don't think there's a wrong answer. There's definitely positives on both sides. I know Commissioner Gaya has worked on the numbers. Erin's worked. Uh Mr. Melendi has worked on the number. Everybody's scrambled. Alfredo's worked
on numbers. The manager, city attorney, everybody to make this work. I on the other hand think from my perspective and my humble opinion is to sell the phase one
property and and Mr. Ward, we would still own the municip the municipal building land and the park which is 32,000 square feet. Why do I why am I in the camp of of selling that land? Many reasons. So, we have a budgetary
number that's here and we have payments that we have to make, right? But those payments, as we've already been through, don't really take into account the additional floor, the FFNE, the relocation costs that it's going to cost
us to relocate for a certain amount of years. The, like I said, AV, the county, we have to revenue share with them, and we're looking at a $41 million buildout. If we do the 50% revenue bond and 50% um
GO, we will be taking out $20 million out of our GO, right? That's a that's a big number out of our GO. So the way I see it is by selling the property, this would be
probably the last and only opportunity for this city to take in a an enormous amount of capital that I really feel would be historic and we can do many great things. I think our options to set
this city in a trajectory of just growth and like I said just be historic is by selling the land because right now we don't truly have like we have a an am
uh a net present value of that we I actually think is is off because we have across the street a closing that's going to happen in July. That's a 1acre parcel selling for $22 million. Phase one here is a 2 acre
parcel. So if we wait and delay, you know, postpone this a little bit, do that closing, then we truly have taken the most we can out of this property. What that value would be, I I I don't know. But if you think about it
roughly, let's say, just to throw numbers, $25 million. We've already paid for more than half of our municipal building on just phase one with the possibility of paying it off in full in phase two. That leaves our GOB full. We
can go do Sunset Drive. We can go do our parks plan that we want to do with Miami Day County School Public Schools. We have the opportunity to do great things now. And for me also, we're setting up the future like like
Commissioner Guy said. And and again, there's no wrong answer, but we're also setting it up for somebody that we don't know who's the next city manager. We don't know who's the next uh commission. For all we know, all our hard work goes to waste. I'm not saying it is. I'm just
saying there's that possibility that that can happen when we >> What's I'm sorry, can you elaborate on that point? I'm not >> just the way the funds are used. you know, maybe maybe nothing happens. Maybe the funds are used for things that don't necessarily um build growth for
the city. Um you know, we have Gibson. >> You're talking about the GO So the GOB being >> No, no. I'm saying in the Yeah. With the lease, as you get later later on in the lease, the city makes more and more money. What I'm saying is we don't know how how
future uh commissions would would handle that money. That's that I'm just giving you an example. That's just one thing. >> It just I I I really I really feel that um our options are much greater. You
know, our our I I'll put I'll also say this. Sorry, I'm going back. Our residents have voted for us to come in and I guess I'm the last one that got put up here. And every I I would say a good majority of the people that I
talked to all wanted to see our downtown thrive. And this gives by selling and taking in that capital. We can give our residents now, not residents 20 years from now, which have we don't know who will still be here, but give our residents now who
put us here and show them that we're going to build this great city for you now because we are able to take in that money and that capital. So for me, it this is an opportunity for us to just be, you know, be that commission that
people can look back on and say they're the ones that set the city on a totally different trajectory. And South Miami has become a city that nobody expected because we've taken in so much capital. It's a once in a-lifetime opportunity, I think, because once we go lease, we'll
never have that opportunity again. We don't have another piece of land that's valued like these two pieces of land are. So for me, I am on the camp of of selling and doing great things now for our residents now. >> So you want you want to sell phase one or both phases?
>> I would say we can start with phase one >> and see where we are >> and then see where we are and we can always visit phase two. You know, we could do lease or we can sell sell it as as well. you know, see what the value is at that point in time and see what we all decide.
>> Continue on. Vice Mayor, >> thank you very much and thank you guys for your uh uh thoughtful insights. I think I'm uh I'm I'm also in the camp of supporting the lease and supporting this lease. I've uh seen some numbers in the past. Obviously, the original left a
little bit too much of a of a deficit, and there certainly is a greater risk in us doing the lease than the sale and covering at least the first couple years. Um, and I would hate to be hamstrung with um, you know, uh, having to pay back this loan if for whatever
reason the project didn't come online fast enough. But I was encouraged by the uh checkpoints that we have in this lease and by the extra fees that'll be paid. So I do believe that the lease is
the best option and uh to I I respect uh Commissioner Rodriguez's points, but also you know the the the voters did authorize this as a lease as well and not a sale. So I also trust that in them as well. So,
Madam Fisher, >> in in taking what Commissioner Rodriguez said into account, I know that we had some kind of valuation on this property and can we share that so that we have it while we're having
this discussion? >> That was it was $38 million roughly. >> $30 million. >> 38 >> 38 for both. >> For both. Correct. Yeah. >> Okay. Now, I I just just to clarify, and I'm not the math guy here, so either Alfredo or maybe Aaron can correct me,
but when I look at their projected discounted value at four and 5%, which I'm assuming if I added both and divided by two and assume we had a blended rate at four and a half%, it's 44.5 million is the valuation of this of the original le structure. I'm not sure what it is
with under the revised numbers that were discussed today. Maybe Aaron if you can give us that delta that would be helpful but that comes out to about 22 22.25 million for each you know sellable parcel. So roughly in the order of magnitude of what um I think we are we
are all hoping would be the comp which is um phase two for Avalon. So, I'm sorry. I just want to throw that out there first. >> And and >> yes, sir, >> if I may, mayor, um, one thing to take into account, um, the NPV that Mr.
Rodriguez is referencing is net of the city facilities. So, you have to add, if you want to make it comparable, you have to add the $34 million to the comparable that he used across the street. >> Net. I'm sorry. Meaning, yes, please. >> Cash flows. the cash flows that we are
bringing to net present value >> are net of paying the bond cost for building the city facilities. >> So one way to think about it would be that the net present value is really the net present value of those cash flows >> plus the city facilities that you are getting as part of the deal. So we'll be
adding $34 million to our number. So, you're saying you're saying and I'm not sure I understand that, but you're saying let's to take your original deal that was upside down in years 8 through 26. I'm sorry. I don't want to hijack. >> That's okay because this is >> I thought this is what you were asking.
I'm only so respectfully 31.8 at a discount rate of 5%. Plus the 34 you're saying? >> Correct. >> Is that we should look at the total valuation? >> Correct. >> Okay. >> Alfred, you want to explain that to me? >> Yeah. Somebody give me a total number. Can you just give me like a total
number? Hey, if you split this in half in the world that you're selling, blah blah blah. >> Yeah. So, effectively, you have $34 million for facilities that our project is effectively paying for. And then the net present value of every additional
cash flow beyond what's going to cover the facilities adds up to another $34 million. >> So, math man. O, you're complicating my life. >> Okay. Um, right now we have piece one. Let's pretend it's $20 million. We have piece two, let's pretend it's another
$20 million. Okay. You're saying to those $40 million, we need to add another 30 something million because that's what the true value is. >> Correct. I'm saying the true value is 68. So in essence, each phase is like $34 million. >> Thank you.
>> Okay. Then when we're looking at us moving >> can I is that net of the taxes or inclusive of the tax? >> Blah blah blah >> inclusive of the taxes. Okay. So can you break that out for me? >> Oh okay. Sorry. Continue.
>> Yeah you do that. I'll ask like an hopefully easier question. Um so we are not taking into account here as Mr. the word said where would we end up? So are
we trying to even find like a even if it's a pie in the sky number of what that would add to this overall budget of 41 million. So, I'm pretending right now, let's say we have to find 30,000 square feet and we're going to be in
that 30,000 square feet for three years and the budget for that is going to be $17. You know, are are we doing that math right now so that when we are looking at this, we're taking that into account?
>> We have not gone to the extent that you're talking about. Obviously, we have had discussions on it, but as it relates to finding opportunities and its square footage cost and outfitting that and things like that, we have not done that yet. Um, obviously we understand that that's a number that we have to include
in this. Um, but I think that that number won't keep deal from happening is the way I approached it. >> If we tackle these other things, this deal would go forward and we know that we have to address for that, right? Um, so it's an important number. I I just felt like uh these other numbers really
are the core that would make this deal move forward or not. >> Okay. And when we're taking into account that square footage, you said something that I thought was very interesting and I know this is not the word that you used, but would we be looking at opportunities for like flexible
staffing? So, some positions would be work from home while this happens. >> Yes, Commissioner. I mean I what I would uh be mindful of that we may have limited opportunities as it relates to spaces and we have to be creative >> and I have to solve for the for the police department because you know I can
you could give me a Wi-Fi and I can work anywhere. Right. >> Exactly. >> But um so we would have to be creative that maybe if we have limited spaces um one of the things that we would consider potentially is hybrid you know hybrid staffing so we don't have to do a one for one replacement potentially. And you
know that's one of one of many things that we can try and think of. Um we're not there yet necessarily, but yes, we will figure out how to make it work um to provide the service that's needed and those that come obviously transact some of the business that they do here as far as the public um and some of the back of
house stuff doesn't necessarily be have to be at public. So we'll look from temporary trailers to hybrid staffing to even some properties that may not be exactly within the city border but could be a few blocks away. Uh we will we will be creative. >> Okay. Thank you. and and and I'm sorry
and on the police side we also have to kind of be somewhat creative from an operational standpoint things that we do now because of the facility that we have and the sally port and we may have to sort of uh be mindful of that and change you know how we do some of those things just for that interim period.
>> Okay. And then when it comes to me for lease versus sale, you know, originally I I was in the sale camp. I'm not necessarily in either camp at this
point. I I think it's I'm trying to think of a nice way >> to say it. >> Nothing. I You know what? I when I look at this, they both have pluses and minuses. you know, do we want to be a landlord forever? Maybe not. You look at the cash flow that comes along with
that. It's it's attractive. You know, what does that mean in 20 years? I'm not sure. Um, but I think either one of them could be great for us. Am I, you know, sell or lease lease
lease? Not not necessarily. you know, I'm going to kind of, for lack of the right word, lean on you a little bit because while I have a clear understanding of where we're going and
what that means, I I think I'd like to hear what what you have to say. >> Sure. So um I look I think we we embarked on this journey to ask the public to give us the flexibility to consider this option which we did not have under the
charter and they were gracious enough to trust us to to evaluate this. I think we've uh want to compliment our team and and the development team. I think we have exhaustively looked at every alternative. I have, as you have, gone from no way in hell would ever sell a
phase to I'm concerned about the debt service gap and maybe it's more prudent as Commissioner Rodriguez to pocket some cash and then figure out what you want to do in phase two. Uh, and then I had a long conversation with Mr. from Millennia, which I appreciate, which really helped me understand the senior
position that we were in relative to uh debt and the fact that equity would very quickly step in and fill the breach if in fact there was a performance default on their payment, which was my biggest concern to take on $40 million of potential debt and have them not make
timely payments. So, I think in understanding that, internalizing, I think that is a very I mean, there's a huge waterfall of people that would take a large haircut by not paying us timely. I think then, you know, you'd have to be in a very cataclysmic environment close to like a 2008 for that to remotely
happen. I don't think we're going to find ourselves there. Well, you know, knock on wood, hopefully ever again in our lifetime. Um, I I you know, I think that I asked this question because I I you know, have always chased a little bit at the conflation of the value of the future
tax, right, as part of the valuation of the deal. I appreciate you breaking it out, but I think this helps us see that there's probably about $11 million of value attributable to the future stream of tax payments over the life of the lease. And this tells us we're getting
about $26 million or $27 million a phase, which I think Commission Rodriguez, for me, the the reason I'm going to sign on the lease execution is we've been at this. If we want to sell, remember, we procure this solicitation
as a lease option. We would have to go back and invite our partner to do a P3 submitt potentially and then we would have to decide whether their offer was richer than this or as rich as this and whether this was a just value for us. If
not, we could have to go back out to market and at least give people a chance to profer an alternative. I I mean I think this is a great burn in the hand. Uh I think this has been a great partner to work with. Uh, and I say that because they've been, not to mention, we have
great counselors, you know, and Mr. Fernandez, Mr. Delgado, uh, Larry, you know, um, Lenny Beerman, and, uh, and, uh, you know, Barry, what's Barry's last name? >> Abramson. >> Abramson, thank you. As well as our team. I think we've been well advised. We've understood every potential
scenario, and I think that, um, this is a a prudent deal, right? Um, uh, could it be slightly better? Maybe, right? Uh but I think it's one that certainly is not going to give me any any um headaches if we pursue this. I think
over the long term gives us significant upside, right? Because today if we sell, we're taking the value at a snapshot moment in time and we may be selling early in what could be a a market. If we really believe in the future South Miami, I think as we all do, Commissioner Rodriguez, the thing I
would say to kind of counter your point is that if if the future is as bright and we are trying to uh curry investment, this structure is going to allow us to benefit from that growth uh you know uh most accreatively over the long term. Uh I think we do need to kind
of put a cap on what we want to take out of the GO to fund that. I certainly do not want to take $20 million. It's just going to mean that our cost of capital is going to be blended at a slightly different rate. But we can certainly say no more than $15 million, right? In any scenario. And
certainly I think you know as much as I'd like to see a tennis center built at Dant Park that would create a building there worthy of the park I think it probably would be the short-term or more prudent use of those dollars to you know buy down the cost of the debt uh that we would take on in connection with this
pro this project so that the financials are healthy the healthiest they can be in the near term and in the long term for us. Uh so I'm I'm a proponent of leasing um and I would I would certainly want to just consider that as the
preferred alternative. Any further conversation? Commission, do you want to follow? >> I actually Yeah. So, one of my concerns is that and I and I look at our our our CFO because in order to make our debt service payments, we have to take into
account our the rent and the money we we obtain from 13th floor CRA money. We have to also take into account that we're getting a 4.5 interest on the money that's in there. things could change. Interest does change and I think
>> but they have been changing in this marketing right now what's happening overseas. >> Um and there was one other one was there to is there something else that goes or on time but I'm saying to to to cover the debt service it's those three things that all
>> do we are we we're not factoring in a CRA contribution into this at all. So just Yeah. So you are correct. It's >> Oh, and um and the advorum. >> Yeah. >> The property taxes. So those four things all have to line up in order to make the
payments. God forbid one is not in line. >> Yeah. >> Then the city is going to have find itself in a in a place where we have to get that money to cover the debt service. At the end of the day, if we want to grow, we want to do all the great things that we all want
to do. If we're like this and strapped trying to make the payments on one building, we're not going to be able to grow everywhere else. Sunset Drive is going to cost us $15 million. Where are we going to come up with that? We want to do all the things with the park where
Palmer Park, how are we going to pay for that? How we going to pay if we want we've always wanted to do an expansion to uh Gibson? How are we going to pay for that? We we we talk about growth maybe in the future, but we're not going to grow now.
That's for sure. We take on this project as a lease. We're not growing anytime soon. At least five, six, seven years. >> I I don't I mean I don't I don't agree. uh simply because you know we can still let's assume we capped we capped this at
$15 million. We still have I would say conservatively $25 million of capacity >> that's coming online. >> We have to pay that debt service. >> Correct. >> Yeah. >> Yeah. Well, that debt service comes out of our recurring revenue that we've been working on for the last three years to make sure our budget has a a surplus once we retire. The only debt we have
outstanding which is retired this October. So I think we we we are we have over the last year tried to create capacity in the budget. Forget about revenues of this project just to borrow that money to start on the go program. Now
again, I I've not been a proponent of taking GOB dollars for this project, but I think if it buys I'd also don't want to borrow at 5 a.5% when I can save 150 basis points and save us, you know, $11 million in debt service, right? Which is
more than what we would need to improve Palmer Park and probably another park. So I think that's I think that's the trade-off here. I think you know um you know I think uh money you know the
current Iran debacle aside and I'll call it a debacle my own personal opinion and what it's doing to markets right that aside markets hopefully in 12 months are stabilized again and debt is still for municipalities with a healthy balance sheet which we are one right and a
decent credit environment debt is still cheap and so I think we would be prudent to borrow in this environment, right? I think that's the biggest mistake the state has made the last 20 years. We've been paying down premium debt or we could be, you know, investing future revenues today in critical
infrastructure needs. That's kind of what the idea of our bond program was. And we've been forced at the voters have allowed us to get ahead of even having projects identified for those dollars. Um, and what we've done is created maximum optionality for ourselves, right? so that we're not forced to sell,
which is the position that the city found itself when they looked at this project the last time in 2022, right? Uh we didn't go to the voters to ask them for permission to do a long-term lease. We were forced to do a disposition and I mean I think um that's a good thing. I
don't think there's a right answer, Commissioner Rodriguez. I don't I don't you know I have been I was in your position um four weeks ago. I was having a conversation with the manager. I think the right decisions is to sell a phase, but I don't think the default risk is
um nearly as significant as I thought it was when I understood where we were from a from a uh position on the capital stack, right? We're ahead of the lender uh which is the most conservative investor in the deal and we are you know
ahead of the unsecured creditor which is the equity investors in the project. all those people if they see the sponsor not performing are going to step in and start to make at least the minimum rent payments so that we can uh so they can preserve the right to
flip the position to another approved sponsor. So I that's how I see the transaction you know I don't know if our council wants to kind of they you know Fernand has done with it done this with Dal before and a number of other jurisdictions. I don't know if you want to add anything from a perspect perspective in terms of the security
position that we're in relative to relative to default performance risk. Yes, sir. >> And be before I may >> um >> there is I mean there is another option where we don't have to go back to market and and and re and I'll ask the city
attorney this with an option of uh lease with lease with an option to sell. we wouldn't have to go back to because we're technically still doing the lease RFP, but now we can adding the option to
sell. Let's say after a year or two, we give the developer an option that at year one they have the option to purchase the property. We still start off as a lease. >> So what you're what you're describing would be at their option, they would
have the option to trigger a purchase. they would have a certain amount of time to do. Yeah. I by year one you have to >> it's not something we have we had contemplated nor did I mean >> taking advantage of both options. >> I think I think the difficult >> hybrid approach.
>> Yeah. I think I think the I think the challenge with that approach is you know they get to choose when they >> exercise we tell >> no I know but they're going to I mean if they see so you know we don't I don't know you know I I' I'd welcome some thoughts from council on this or you
know um because if we give them the optionality and it looks like the trend is positive and they're going to have better insight onto the trend than certainly we are they're going to choose to exercise the option and lock us in on a value less than what we would see over the life the lease. So, I I'm just concerned about that process because I'm
going to assume that people that are in this business and do this for a living are smarter about exercising those rights than I'm going to be. Uh but that's just my my my uninformed assumption. >> Yeah. Just just legally speaking, I I
would be concerned about going beyond the RFP. I think Yeah, we'd have to look at the RFP to see if we can if we can fit that into that. I understand what you're saying, Commissioner Rodriguez, about it's still being a lease, but there's a there there's an end, there's an out that
turns into a sale, which is not really what was bid, you know. So, that that would be my concern. I'd have to look at that. I I I don't think I I can't answer that right now. >> Fernandz, you can come up to the the microphone and just name and address of the record, please.
>> Manny Fernandez, uh 1110 South Greenway Drive, Portable, Florida. council for the uh for the city in connection with this matter. I think that optionality is a problem because I think that uh you know the lei is going to exercise it if it's
convenient for them and then I think you lock yourself into potentially a worse situation then if you look at the history on this the the valuation in terms of what the rent is and the additional payments have moved significantly from where we
started. I think in the beginning we were talking $400,000 a year per phase. There's been additional the amount of the upfront payments has been increased. There's there's an additional increase today to to do away with the proposed to
do away with the uh the profit participation. Um, I can't comment on all on all of these numbers and and the projections, but I think that the ground lease as currently structured is much
more attractive than what we initially began discussing. I think that's a fair statement. Uh Tony, you rescue and um you know it's it's it's a function of also keeping control of the property in
terms of long-term uh the relationship of of being in the in the ground lease position and and a and a greater level of control because once you sell a parcel off, I mean, I guess there's certain things we could we
could structure in terms of u an option to take the property back if development does not occur by some outside date. But um as as the mayor correct correctly pointed out in in the ground lease situation um actually I don't know if it was the
mayor or if it was Aaron but um somebody pointed out that in in the ground lease you're you're ahead of everything. You're ahead of real estate taxes, you're ahead of mortgage payments, everything else. And even though there are some provisions in here for
um a a long-term uh for for extensions by reason of force majour or if a lender comes in and unfortunately in order to make these things financable, you always have to create uh opportunities for the lender to extend out the dates and we've
dealt with that in this document. But I think that the city has more control over the over the project from a ground lease perspective than it does if it just sells off the bars. C can I ask a followup question? Um just
you know again the useful life of this building is not going to be arguably 99 years. So at some point the a a successor owner may need to recapitalize the building. You know that would may require them to want to extend the term. So that that I would say is it fair to say in your experience that gives us
another chance to negotiate and approve the terms on the ground lease if we find ourselves falling behind the behind market or even just enhanced economics generally. >> I think once you get out past a certain date in terms of the ground lease uh you know you're nobody well not a lot of
people here are going to be here for another 50 or 60 years. Um >> I definitely will not be. So for yourself, >> but at 50 >> Levi says he'll be here. >> But 50 50 years on once there's less than 50 years left on a ground lease,
you reach this sweet spot where people start talking about because if you look at it from a capital markets perspective, they they they're not looking at just these are 10-year loans, which are is typically the way you're going to finance this. The capital
markets looks at it as what kind of term would this be amvertisable over and the answer to that is generally 30 years. So if you're under 50 years left in a ground lease, you know, you're you're looking at, you know, one opportunity to
amortize it or two opportunities to advertise it before you run up against the end of the lease. So I think that once there's 40 50 years left in the ground lease, people definitely, you know, any savvy developer is going to to to come looking for the opportunity to
extend the terminal lease and redo something. >> Yes. Go ahead. >> No, I was just going to add to that. You know, at 30 years and we're at 25 30 years with the cash flow analysis showing that we're going to be cash heavy, which we can help repay down some of these loans.
>> We have a retiring date at that let's say it's at 20 I'd say 30 years we have not only a revenue capacity with a bond that we can use there and our GB our go is freed up right so that gives us the opportunity at 20 to 30 years to do a lot more with
this property um and even still currently we have a 45 let's say we use the 20 million from the go we have a 45 allocated uh for whatever we feel we want to do if anything at all but whatever we decide to do with the rest of the money with the GO, we have to
really think about how we're going to pay for that, right? So, the thing is that for this particular property, we know how it's being paid for, right? If we use if we use any of that GO money to go pay for, which I agree with you, uh, Commissioner Rodriguez, that we want to use some of that GO, some of it, to go
do the Sunset Place infrastructure. We all agree that's number one, number one priority above city hall, but we have the opportunity to have that still there and figure out how we're going to pay for it, right? fiscally responsive. We're going to talk about fiscally hawkked over there, but we're all on the same page. We want to figure out how if
we use the GOB, not just because it's there, but how do we pay for it, right? Um, and that that's all really important. If we're using if we're using impact fees or we're using any of these bonus structure fees that we're doing in downtown, we want to use some of the allocation to go ahead and pay that for
infrastructure on Sunset Drive. If we're going to go talk about parks, which is the next big conversation we're about to have, it's going to be great, right? But in no no way did we ever tell the our residents that if we go pull a 20 or $30
million GO to go do parks and not have the opportunity to pay for it where their tax mill rate could go up, that's unacceptable, right? And I think that that we are all bonded by that by not increasing the mill rate because that's not what we signed up for. So, we just got to be extra careful on whatever it
is we use the GOB moving forward is that we have a way to pay for it. >> I'll leave it like that. >> I I I I agree with that. And remember, the bond was also sold as a parks bond. >> It was I sold it. >> Um, Mr. F, just one last question. I
mean, I and again, Mr. Stler, I I know we've advanced the exit transaction fee in this first sale, right? Is it does it I mean if there was a successor buyer and they were to exit would it make
sense for us to include that a transaction fee for a second second generation sale again I don't know the underwriting for >> can you can you repeat that because I didn't understand the structure of that >> so for example so right now what they have done to help us kind of bridge the gap in the short term is say look that
exit you would earn rather than earn the exit on a prospective sale Right. We are going to bring dollars forward and allow you to and and basic use that to smooth out the deficit so there are no projected deficits on the proform right
but that's a first that's a first sale and we could see as Mr. Fernanda said his comment, you know, multiple transactions, multiple refinancings. And so, I mean, is it uncommon? Is it unfinancable to have an a transaction
fee on a second exit, right, by a successor developer again? So, just I don't know if you've seen that before or >> I'll ask I'll recognize you, Erin. >> I I would say it's less typical. Um and I think that um from the perspective of
um you know you from the perspective of the developers perspective uh it it has a chilling effect or it has a downward effect on in terms of the purchase price that they're going to realize when they sell which is a primary thing that you know putting on
my developers council hat which I wear often is is the way that the way that I I would look at it. Um, you could structure something where, you know, you you provided a a um some sort of a fee
based on some sort of above a certain profit amount or something in connection with a with a sale and then exclude the first sale from it. Um, but I I suspect Aaron is uh going to have his reasons why that doesn't work. Can I hear I hear
I hear chiming in as well. Ray, can we take a Thank you. So, so if I may, the the the challenge is the we've pushed the model to where this is today. Today, this deal is an out-ofthe- money deal. We've got to go
chase equity um to bring the equity into the deal. Obviously, in the pre-construction, this pre-development phase, we're going to put in all the all the funding to get us to a groundbreak, but at at some point, we will bring equity. The equity markets at that time, it today won't work. The deal doesn't
pencil. will we think it will within the next year or year and a half. The challenge is equity. It doesn't know what it's going to pay out. It doesn't know what the what the what what their profits are going to be. They're making assumptions and when you tax them with a exit fee, it makes it very hard for them
to to sign onto a deal. >> Well, sorry. I apologize. That's a bad word. >> But it it they will look at it that way and they will see it as a penalty that they don't they can't underwrite. to Erin's earlier point, they can't underwrite it because they don't know
what the exit's going to be. It's very difficult. >> Understood. >> The only other thing I would add to that to that is just to give you a sense of scale. When we originally put on the term sheet, the one time it was on the term sheet, a onetime fee was a quarter of a point and it was estimated to be
$400,000 >> and the upfront payments are $2.6 million. So, in essence, it's like six transfer fees. So it kind of already includes the >> it's being a little pigish. I'm sorry. >> No harm no harm in trying. So
>> benefit of the people. >> Anybody else have any thoughts or comments? Okay. Is uh is there a motion we want? Is there are there any modifications we want under either scenario? First of all, lease or sale that we want incorporated.
>> What did we talk about here? So let's let's let's do we want to make a decision on the on the fifth floor? the fifth floor in terms of our the underwriting for the model. >> We don't have >> under the term sheet. You don't have to make that >> it allows us it allows us to make that
decision. How >> you have I believe you have three months after the the execution of the project documents. Correct. >> To make that determination. >> Okay. So, we could potentially kick that into the fourth quarter of this year. >> Okay. We can make it sooner if we want at some point. I mean I I I for one
would just say let's just underwrite it today because I mean to me at our cost of capital and you know perspective perspective rents I'm going to look at it as a market opportunity in the near term even if it becomes taxable. I think it's uh you know you've got like a two
to one margin on what you're seeing in terms of minimum rents >> I agree >> in this market. So >> but I'll leave it up to my colleagues. I'm okay with that as well. >> So yes sir. Is it is it possible for us to get more information on that? Do you have time? Just again like >> let's leave it let's leave it as let's
leave it as presented in the in the base term sheet then. Okay. But >> can I say something >> you recognize? Yeah. >> Thank you. I I think that if we do end up doing that floor, we have to be extremely mindful that we
don't say, "Oh, we're going to give it to this nonprofit and this nonprofit and this nonprofit." Because realistically, when the day comes that we need the space, the optics of kicking out a nonprofit are horrid. So I think that we would
have to agree that that's not something that we're interested in doing because the back end of that >> the only the only the only the only caveat to that I think Mr. Russ can correct me if I'm wrong. We could try to restrict our ability to do that but any successor commission can change that.
>> Yes. >> So we can't we can't we can't forever bind anybody. I would love to be able to because I share I share some cons. I mean some of the concerns some of the reasons I also agree with my colleague here about a sale is you remove some
optionality from future commissions you know may not always make you know the best decisions that's one of those things where you know I think we need to certainly set the example and I think once we show the revenue potential if in fact it gets built you know and the
numbers are what we expect them to be it's going to make it very hard for people to pivot to um occupying that space with any anything but a for-profit company. Yeah. >> Okay. >> But we should think about guardrails going forward for to protect protect our
downside there. >> Yes, sir. Any any other modifications that we want to consider? >> I if I may. >> Yeah. >> Um with with the building, I mean, I I think we should underwrite the fifth floor from now. I I don't know what
we're going to wait for. There's no I mean, the option is to do it. We're going to have to grow. We're going to have to do it. Once you build the building, it's done. There's no going back. So, we might as well move ahead and get the numbers going. Why wait till later to to get the number? >> I I I
share your enthusiasm. So, okay. So, it seems like Commissioner Kay, you, myself, and Commission want to see us incorporate that now. Commissioner Corey, no disrespect intended. Okay. So, let's modify the term sheet to assume that we're going to or require the fifth
floor. Um, further modifications we want to discuss. I I would like to see a modification to the term sheet that provides an affirmative obligation on the part of the developer to use best efforts to procure the access road to complete 73rd Street, the eastern
portion. So we have additional access to the site. This is the uh connect, you know, the intersection where South Miami Hospital is essentially build out. We had talked about the that connection east to west 262nd to enhance circulation. that might be
going through the garage. >> Correct. That's that's exactly right. >> Okay. And >> have a question. >> Yes, please. >> Can I can Can I just say something? >> Question or comment on that? >> A a question. >> Oh. Oh, we got a hand out by Mr. Meendi. Okay. Hold on. You want to go first,
sir? Express any reservation about that? >> This This falls under the no good deed goes unpunished because I believe that was uh one of my ideas. >> I loved it. >> So, um I see that. So, I I just I don't love best efforts. It makes it very It's
a I love reasonable and we're all going to work together to get there. Yes. Not not I'm not an attorney, but I'm gonna play one for a little while. >> Okay. Thank you. >> Oh, boy. >> Stay at a holiday. >> I just wanted I just wanted to address so it doesn't continue to kind of link linger out there. Okay. >> I was trying to impress my wife who's
listening, by the way. >> By the way, that was very impressive. That was very impressive for her benefit. Um, so would we be looking for this to happen when phase two is done or are we looking for them to give us like an access road
before? >> I think I'd like to I'd like to make sure it's there for the benefit of the project day one. >> Okay. >> Okay. >> Mayor, if I may. >> Yes, sir. >> Oh, sorry. My my apologies. Rodriguez and then Kai. >> I gota I gotta make my list. So, I I
don't want to see Ray's laptop going over the that balcony. Uh, but I'm going to bring up a question that is going to be asked of us. It's already been asked of us and we have to make a decision on what we're going to do with the silver Martin building.
>> So, I think this I think this um the term she can you address that Mr. Russio what the term sheet provides for right now? I think it does provide for uh attempts to preserve it initially. Remind me. >> No, the term sheet is silent on on the ultimate disposition of the silver
Martin building. I would tell you the site plan would guide that. >> Okay. >> So, do you want to express a preference? >> I I mean I don't I don't know what are the options. Do are we moving the building? Are we keeping the building? >> Well, the building's the moving the building's moving. I mean, as the site
plan is currently uh configured. So, let's be clear about that. I mean, if we're going to advance the proposal that they've outlined thus far conceptually, the building's moving. Mr. Roger. Sorry, Mr. Melendi is recognized if he wants to clarify. >> Well, he's very quick on raising the hand. He's got that feature down.
>> I found the button. Um, so we have every intention of we we want to celebrate the Silver Martin building. I I don't know that we have space in the current site plan as configured to maintain the entire site plan or the the entire building as it would encroach into the park and the green space that we want to
preserve. But we think there's a lot of different ways. We've had a couple different conversations and I think we could take uh many parts of that building and add them onto the the new uh city city office building and the library and celebrate that building in
many different ways. It could be even a ch we can rebuild a portion of it with a ch children's reading room in the library. We can make the front entry portal part of the stone. We could use the stone and the trusses and the entry feature. So, there's a lot of ways that we could do uh that we could do this and celebrate the Sylvia Martin building
without building the entire building, rebuilding the entire building, which would be very difficult. >> Did you want did you have a specific idea that you wanted to incorporate into the turkey sheet? >> No, not not not necessarily. I just know that it's important to to our residents. I don't know. It is. And that's
ultimately who we respond to. So, um there may be kickback if we don't salvage the whole building or I mean I I I think uh Mr. Melendy's options are are good options, but >> you know, >> okay,
>> I'm not the one that's going to make the final decision. >> Do we want to explore options to preserve some all or a portion of the building? We want the developer to bring us back a proposal that shows the preservation in whatever form is most feasible either
for for the entirety of the building, a portion of the building or elements of the building. >> Yes, sir. Yes. >> Would you leap over the idea of uh if the building could be relocated off premises? >> It could. I mean, it's going to be it's going to be basically deconstructed and
reconstructed. That would be my >> the rear side obviously was an addition and but the study that was done years ago by that company that came in obviously was >> you think about moving to Dunville >> building. Yeah. >> Uh go >> that's the that's the new tennis building. >> New tennis building. >> That's the new tennis building. >> It'd be it'd be better than the current
that was >> by light years. >> We just saved Actually. >> Yeah, I know that the uh so sorry Mr. Manager. What were you thinking? No, just if if if that option is >> I I I'm I'm fine with language that
addresses the preservation on site in part, whole, or elements of it and the option for or a relocation option. And I think maybe if there's a relocation option, I would say we should be required to conceptualize that and provide it to the developer so they can
figure out what the cost is. Mr. Melend, does that sound fair? If we want to relocate, we'll we'll we'll solve for that issue. you can give us ideas on how we can either preserve it on site, preserve portions of it, or preserve elements of it. That seem reasonable. >> Yep. Yes, absolutely. >> Okay. All good.
>> Okay. Commissioner Cay, you recognized. >> Uh Mr. Attorney, do we have anywhere in the term sheet that we're discussing the actual construction of said um municipal building? for example, the options of having like maybe I wasn't sure if it
was put into the actual term sheet, the basement options, the the cost structure of the building at 34 34 million like is that >> what does that include? Is that in the term sheet? So the the cost structure is included in the term sheet that 347 was
was solved for was the result of the the evaluating the site plan that was put together that includes that basement structure and uh uh Aaron Ray if you if you if I'm speaking from being inaccurate, please let me know. Um but
that was based on the site plan that you all had reviewed that had been presented to you that evolved over time that included the basement parking. >> Okay. I just want to make >> that 347 is inclusive of that. That's correct, >> Mr. >> That's correct. >> Okay, >> that's correct. >> But is that in the term sheet? Like is there
>> the the actual site plan called out that way? >> The actual site plan is not. The 347 is um it does not call out the basement. Uh but that would be part of the the project document. They would refer to a >> site. I I guess my question is the 347 >> Yeah. >> Does it include the actual cost of
construction? That is the actual cost including bases that we've included. Yes, it includes hard. >> I'm not I'm not understanding how we're married. That's all. >> Let's let's let's I've got a hand up and I've got two people talking to each other here in an open call. So, let's let's let's clarify. >> Mhm. >> Right. I think right now we have a cost
figure. >> Yep. >> But we have not incorporated a reference to the conceptual site plan. >> That's right. >> That we have approved. So maybe we should have in the term sheet, right? >> Certainly do that. >> A provision that requires that the plan be consistent with the conceptual site plan, right? Which is estimated to cost.
I would say uh not 347 inclusive of the library >> of which the city elements are uh 317 because we're talking about a $3 million contribution from the county since it's I think it was $7 million that was represented the library would cost
>> right >> okay four million of which >> yes >> $4.1 million which we're underwriting >> right it also includes 100 parking spaces in the phase one garage >> correct >> that that the 347 includes That's right. >> Okay. What it does not include is the
additional floor. >> It does not include the additional floor. It does not include >> and the FFN. >> The FFN. >> Correct. >> So why don't we why don't we reflect the total cost less the amount that the county has to contribute for the library.
>> Total cost less. Okay. >> Make sense? And tie that to the conceptual site plan from a cost perspective. Okay, thank you for the question. Further questions or comments as to modifications?
Mr. Meendi, I want to ask you a question. If we ask for a termination right because we're not able to reach an agreement with the library. Uh would that would that you know tremendously offend you? I mean I my thinking my thinking for asking for
it sir is that I think part of the public benefit that we're trying to preserve here is the open space and you know no offense to the prior iteration of the plan for the site it was a very densely built out site right I think this provides us we've gone decided to
go more vertical which opens up more green space uh that can be activated or used by the public uh I think we lose that optionality I think it's fair to say if we don't have the library site is that you agree with that? >> Yeah. So, so what what I would ask is
the opportunity to and I get it. If you lose the we can't get the library site, we're going to have a challenge hitting the green space. What I would ask is the opportunity to revise because we're going to spend considerable amount of money between now and and the time we're ready to break ground. Um, I would ask
that we have the ability to revise and submit a new site plan that captures that tries to incorporate the full park and the library. Maybe the library eats into the retail into our retail and it's in the ground floor of one of the buildings. We there's just different options and I'd hate to just throw the baby out with the bath water simply
because we couldn't get the library. I I think we will be successful in collective with the library, but but it's a good it's it's a good discussion that we should be having >> and and again, we you'd be fine with us reserving the right to approve or deny that modification before >> Yeah, correct. You have that now. So, yes, I I think that's right. I mean, I
think Tony's going to add the the current site plan as a concept. What I would ask is um you've you've mentioned it, you know, you could have a different commission. What I would ask in that sense is if the site plan so long as a site plan is relatively in the condition
of what's approved or part of the lease document that um that that would be not saying it has to be approved because I don't think you can do that. But if we sub we submit a site plan that is is reasonably in the manner of which it's
attached to this ground lease then um that termination right shouldn't be there in case there's a new commission that just changes the direction completely. >> Okay. >> I think that's a fair request. >> Okay.
to my lawyer's thoughts on language that we can artfully include as a modification that addresses that contingency. >> I think >> sorry >> I think along the lines of what Mr.
was saying that just provide that the uh the plan is based on the notion that it will include it will include this the the library and then if it's not then the uh developer just has the ability to
propose a a revised site plan that has to be acceptable to the city and if it's not acceptable to the city then the city has the right to terminate the agreement. >> That's fair. >> Okay. >> Okay. >> Thank you. Thank you, Ray.
Um, colleagues, anything else? Okay, it looks like we have four folks that are for leasing. Uh, and I guess preference express preference is to sell at least one phase. Um, so I'm going to assume we're
going to keep the term sheet in the posture of a lease. Fair. >> I I say yes because Literally, if if we were then to hold on to the sale, I think this kind of falls apart. And I and to borrow Ray's term, we'd be
throwing out the baby with the bath water. Y >> So it because of that then I say yes. I mean, both of them are good ideas. I think Commissioner Rodriguez brought up a lot of very valid points that I think
we all really need to think about, but I I don't see everybody was switching to sell. So, it would be silly to say I'm going to hold out for sale, you know. >> Okay. So, we'll keep it in a lease
posture. Um, one last comment. I just curious the the on page 11 in the security for completion of construction of the civic improvement section. >> Yes. We've identified 13 floor fund 5 LP as
the acceptable guarantor and there's a proviso that they have a net worth equal or greater to the civic improvements budget and unencumbered liquid assets equal to or greater than 25% of the civic improvement budget.
Um we describe liquid assets but have we do I read that language to mean that they are pre-approved guarantor? We've already confirmed that or that that guarante that confirmation of those conditions. >> Yes. >> Needs to be verified. >> So
that'll be acceptable. >> That will need to be verified. Yes. Yes. >> I don't know if we need some language, you know, >> but but we are >> or that'll be addressed in the in the >> that will be addressed in the project documents. That's fine. That's right. Okay. >> Okay. That's all I had. So >> Okay. Okay. Would those as the
modifications? Any other? >> Okay. So, Mr. Russia, just before we entertain a motion, can you read back the modifications? >> Absolutely. So, the first is uh we're going to make a modification to the library parcel itself uh that it is
uh as opposed to the premises maybe expanded to include. would say that something along the lines of the premise include um the uh there will be an affirmative duty for the developer to obtain access u commercially reasonable uh efforts to to procure access road to
62nd Avenue. Uh again, their plan includes that. So they're they're that's what they would be implementing. Speaking of the plan, we would tie it to the specific conceptual site plan that was reviewed and uh you know, passively approved by by this commission. Um, we'll identify it u by name. We might
even add it as a as an exhibit. Um, the uh the silver Martin building would be uh uh pres either preserving the building, portions of the building or elements of the building or potentially relocation option. Um, would that be at the city's expense or is that a or is
that a 50/50 the a potential relocation of the silver Martin building if it was to be relocated off site? I didn't catch I don't I have that blank. >> I would imagine be at our expense though. >> I I would think if it's offsite. >> Yep.
>> And then in terms of the the budget, the uh the budget that the uh for for the pro for the civic improvements would be the total cost less the amount the county has to contribute to the library. Um and we will be adding the fifth floor
and then finally plan is based on library being incl the the the site plan will be based on the library being included. Uh developer can propose a revised site plan acceptable to the city. If it's not accessible to city can those are >> those are the modifications. Any questions on the modifications?
>> I I had one other question and this to Mr. that we the the term sheet reads there's a hometown heroes program and it reads that the developers basically charged with developing a marketing plan uh for targeting those renters. Is it I'm just
asking is that something that we're better doing better off doing as a city or is that something that you want to ultimately retain responsibility for? >> We can do it either way. We'll have a property leasing uh department that would sit that would kind of put the program together and and all of the
collateral that we would then share with the city and then I think in partnership with the city we would ask that you disseminate to your hometown heroes and help kind of >> get the word out. >> Okay. >> Yeah. >> Yes, sir. You're recognized.
>> Um uh city attorney in the in the term sheet. >> Yes. Is there uh an affordable uh workforce housing aspect? What is it? 10 units. >> There is it's it's 10% of the total number of units. So 67 units would have to be at at the workforce level at the
120%. >> And then a fifth of those would have to be at 100% AMI. >> Okay. >> Those are the two levels. >> Okay. So I I I I'll just finish off by saying, you know, obviously I've I've I I made my argument towards the way I thought this was best way to go. um my
colleagues have decided that it's a it's a it's a you know the lease is the better option for the city. So you know my my anniversary gift to Mr. Melendi because I know it was important for him to get uh a unanimous vote. I will I'll support the lease to give him his uh
unanimous vote. >> Thank you. Okay. Um >> thank you. >> Everyone understand the modifications? We're good. Is there a motion to adopt the approve the term sheet with the modifications discussed? >> I'll move it. >> Is there a second?
>> A second. >> Okay. So, have a motion by Commissioner Cay. A second by Vice Mayor Corey. Madam clerk, if you can call the role, please. >> Yes. Commissioner Cay, >> yes. >> Commissioner Rodriguez, >> yes. >> Commissioner Bonish, >> yes. >> Vice Mayor Corey, >> yes. >> Mayor Fernandez, >> yes.
>> It passes amended 5. >> Thank you. Let's get cracking on the documents. Thank you, everyone. Uh, with that, >> thank you. >> Seeing no further business before this commission, we stand a jury. Mr. Melendi, to you and your wife, happy anniversary again. Thanks for being on. >> Thank you guys. Thank you.