City Commission - Regular Meeting

Good evening, everyone, and welcome. Today is Monday, excuse me, March 30th, 2026. The time is approximately 7 p.m. We will now call the order. This special meeting of the City of South Miami Commission. Madam Clerk, if you could please call the roll.

Yes. Mayor Fernandez. Present. Vice Mayor Corey.

Present.

Commissioner Rodriguez.

Here.

Commissioner Boniche. Here. Commissioner Kaye.

Here.

We have a call.

Thank you. If we can please all silence or turn off our cell phones. We greatly appreciate it. And then if we could please stand for a brief prayer. Dear God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference. Amen. Vice Mayor, would you listen to the pledge?

Sure.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all. Please be seated. Madam Clerk, if you could read item one on tonight's agenda.

Yes, item one. A resolution of the Mayor and City Commission of the City of South Miami, Florida, approving the term sheet with 13-4 link at Somi LLC for the City of South Miami City Hall Redevelopment Project pursuant to request for proposals RFP number CSM 2024-08 authorizing the City Manager to continue negotiations for all necessary ground leases and or project agreements for the project.

Thank you, Madam Clerk. Colleagues. We scheduled this meeting so we could go over the term sheet in detail and talk through any issues, concerns, and also vet and hopefully decide on one of two options to execute the transaction, being either a long-term lease or a potential sale of all or a portion of the assemblage. Tonight, we've got the term sheet in front of us that was 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 with us is also our outside counsel, Mr. Delgado and Mr. Fernandez here who can also help address any questions we have. Once we kind of go through the term sheet and ask any questions of counsel or staff, I thought we could then invite our developer partner to make any comments or present any proposed modifications to address issues. And then we could wrap it up, hear public comment, and have a discussion, and then hopefully take some action on either of the two options or decide that this isn't worth pursuing. Does that sound like a good way to proceed? Any objections? Okay. So with that, Mr. Manager, Mr. Attorney, if you can give us an overview of the term sheet that's in front of us this evening.

Certainly, Mayor. So just to give you an idea of what's in your packages, you have the manager's executive summary that includes an additional financial analysis. But I'm going to focus on the memorandum that was A little further down, it's dated March 30 from me and Lily regarding the term sheet, just to kind of walk you through what the big picture items are. The term sheet is essentially a listing of the different terms that would go into the eventual agreements that we call the project documents. They govern the design, the financing, the development, the operation, the stabilization, and even the eventual conveyance of the project. The structure of the deal that is proposed in this is a 99-year ground lease. And it would The eventual documents that we call the project documents would include this lease, one lease per phase, and I'll get into what the two phases are, as well as a construction management agreement, which would cover the development of the civic portion of this overall parcel. It would also include a master development agreement. And there would be other supporting documents, such as a vertical subdivision, declaration of restrictions, easements, reciprocal easements, those kinds of things. The property itself, it's this city hall property, the library parcel, Jean Willis Park, and a portion of the roadway that is between Jean Willis Park and the city hall property. So that's the overall property where the development would occur. Phase one includes all of the civic improvements, which And you'll hear other options here, but the main thrust is 54,700 square feet of civic improvements. That would include a library, that would include a police station, and then all the city hall functions. It would also include a new and reconstituted Jean Willis Park, enlarged over the size that it is now. It would also include 100 parking spaces inside the parking garage of phase one. Those would be 100 dedicated spaces for the city. So that's the civic improvements portion of phase one. The multifamily residential and mixed use portion of phase one would include approximately 335 residential units. about 5,000 to 10,000 square feet of retail and 360 parking spaces. Those 360 include the 100 that the city would be entitled to and would be paying for. Phase two, the later phase, is another 335 units, approximately 10,000 to 20,000 square feet of additional retail. So it's just a much more concentrated phase two. And it would include 550 parking spaces, which would make up the balance of the parking necessary. As far as those units are concerned, 10% of the units would be reserved for households at or below 120% of area median income, with a fifth of those units going to households at 100% of area median income. OK, talked about the civic improvements. And then how they are paid for, we'll get into later on. And I'm sure there will be questions about that. And that's actually covered in the financial portion, which the manager and the finance director put together. But in terms of how we're budgeting for this in the term sheet, The civic improvements are estimated to cost $34.7 million. That is inclusive of all the 54,700 square feet of actual civic space.

It's $35,000- Professor, if I could just interrupt you for a second. Mr. Banner, did you want to jump in with the revisions that you showed me earlier on the actually breakdown of the costs? I think they've changed slightly, Mr. Rusty. That's fine.

Yeah. So the city attorney, obviously, is going over the deal as it exists. And in that analysis, there are a couple of things that should be mentioned. I think, Mayor, that's what you're referring to. For example, in that cost, that included the cost of the library, which in the separate analysis we don't use, obviously, because that's not going to be on our ledger. There are a couple other things that we're not part of the analysis either That we are including like FF&E furniture fixtures and equipment 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 Aaron I Will be going over the deal as it as it exists right now and potentially with another concept That may accelerate some payments so included in their analysis is a construction along with a developer fee and the parking 100 parking spaces 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. OK, let's continue with, I'm sorry, I didn't mean to go out of sequence here.

I apologize. No worries. I just conflated those two issues. So let's continue. No worries. No worries.

So as presented in the term sheet, it does not include the items 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 a space, and the 4% developer fee. That price, once a budgeted price is set under the terms of the term sheet, the 13th floor would be liable for any cost overruns. That would be a GMP once that number is set. It will be designed to that 34.7. unless we want to change that number. But it will be designed to a number. So the idea is we design to a number. That's what the number is. And we move forward with that. In terms of temporary facilities, the temporary facilities under this term sheet are on the city's dime in terms of relocation and in terms of the actual temporary facilities themselves 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, 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 for late delivery of the civic improvements. So timing, promised you timing. All right, so phase one, which includes the civic improvements, 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. They would all be, 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 even the phase, yeah, yes, yes. That's correct.

We would not see the phase two lease, correct? You know, the phase two lease- The form would probably be the same.

No, it would still be day zero. It would still be day zero. It's the same day zero. All the days count from the phase one lease, but you're right. It would, the phase two lease would- I'm trying to remember. I think the Phase 2 lease would be approved. It would not change. But I don't know that it would be executed at that time. But that would still be Day 0. The way this is set up is Day 0 starts when the Phase 1 lease and all time frames run from that time. So Phase 1 would have to commence construction 36 months from that effective date. 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 nine years from the effective date. Now, 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. OK, payments generally, OK, because there'll be more focus on this, but I just want to give you kind of a flavor of what this means. At lease 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. 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. And if they have not completed it by that date, they owe the $600,000 plus an extra amount. For phase one, that extra amount is $225,000 a year. For phase two, it's $400,000 a year. That is some level of protection for the debt service that the city would incur in paying for the civic improvements. So that's what the aim of that is. That number, $600,000 per year, grows by CPI every year. Again, every year from the inception of phase one. So it's growing the entire time.

Mr. Ressio, at 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. Yes, correct.

That's right. That's right. That's exactly right.

We're not starting at $600,000.

Correct. Correct. That's right. CPI up to 5%. I should have added that. There's also a participation component. That is 4.25% of gross revenues, less the minimum rent that they're already on the hook for. Whatever that difference is, they would also owe that. There is also a one-time transfer fee. So the first time that they transfer each lease, the city would be paid the greater of $400,000 or 0.25% of the gross amount of the consideration. So whatever they sell it for, when they sell it the first time, there is another payment to the city. 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. There is a contingency in the event that we cannot come to a deal with the library, although I certainly think we can. But the timing, we have nine months to get a deal done with the library following the effective date. 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 that were to be the case. Worst case scenario, if we can't come to a deal with the library, the site plan would be modified to exclude the library parcel. That would be the situation.

Do we have the right to terminate in that event?

We do not presently have a right to terminate at that point. In terms of zoning approvals, 13th floor would handle all zoning approvals. They accept the risk of getting those zoning approvals. This commission is under no duty to approve anything from a regulatory standpoint. Obviously, you can, but you would be evaluating that on the basis of zoning and zoning criteria. You are not contractually bound to approve. There are also okay beyond that there are generally financing and lender protections basically to entice a lender to and investors to put money into this deal to make it happen. We've worked with them where the city is protected, but the lender would also have additional protections. There's also the ability for them to assign and transfer. Again, there was that one-time transfer fee. That contemplates that this will be assigned at some point and transferred at some point, and it can occur on multiple times. There are provisions for what constitutes an acceptable operator and what has to be a reputable operator. So there is the ability for us to evaluate, the city to evaluate who would be a potential transferee. And then there are indemnity protections. These are where 13th floor is indemnifying the city for certain things, including most particularly challenges to any of the zoning approvals and to any of the project documents, anything that we do, they have a duty to defend that. And they would use counsel of their choosing, subject to our reasonable approval. Now, they do have the ability to settle with our approval. And 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 of the project agreements under that scenario. So that's the overview. I can answer any questions or we can move to the next part.

Mr.

Manager, did you want to add anything?

No, I think when we go over on the presentation of the offer, we can clear up a little bit more what you wanted to introduce, which was some of these elements that maybe are not included in the analysis to break away what may be library separate from our side of the ledger, which is our costs.

Colleagues, any questions of the attorney and manager as to the draft term sheet, base term sheet? none just I have a couple quick questions one is I again we discussed this before this is the description of the expand of the premises I guess it's we assume here in the draft on page one that it may be expanded as opposed to saying that it does include subject to so if we can clean that up and then note that with respect to the additional access road from 62nd, which would be like the eastern portion of 73rd Street that we've discussed, is there any affirmative obligation on the part of the developer to pursue that additional access?

Not at this time. That's certainly something we could incorporate.

I think it's something we should incorporate. And then I think similarly, 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 our inability to kind of negotiate an agreement with the library. So those are my three points. I don't know if anybody else had anything they wanted to add. Nothing else? OK, let's move on then. Next portion, Mr. City Attorney.

At this point where it's the finance aspect to it.

Yeah, if you may, if you want. Mr. Riverall? We're going to let the developer present. their offer as it exists today, and then shed some light on those numbers. And then we can put everything on the table from that standpoint, and then respond from that conversation.

Sounds good. So I believe we have Mr. Melendi joining us by Zoom. Aaron, your name and address for the record, please.

Aaron Stolyar with 13th Floor Investments, 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.

Mr. Milani, you're recognized.

Good evening, folks. And I apologize for not being able to attend. My wife would have left me if I canceled this trip. So I apologize. This is we've been working on this project for a very long time and I want to congratulate the city and city staff. Tony, this has been one of the most open dialogue processes with a lot of good feedback and working together to achieve to get to a goal that really creates an amazing partnership between the city and 13th floor. We're really looking forward to. building City Hall and building the next Link at SOMI to rival that of 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 were expressed to us. And so I'm in better hands, and 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.

Sorry, before you start, just if you could, 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? 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 and thoughtful. And I think what you'll see here today, if we can show on the screen what I have on my laptop, what you'll see here today is really a result of those meetings and those conversations. 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 rent. And as we worked through 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. When each phase breaks ground, the base rent became $600,000, so a notable 50% increase there. And the participation rent was also upsized from 3% to 4.25%. 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 year by year? 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 what we'd like to propose here today is a revision to the term sheet where we basically pay an additional million three per phase at ground break. And what that does is that it helps solve 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 proposal is really to add that $2.6 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 tell you if that's going to be a 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 shortfall. And so the way we've solved that is let's pay $2.6 million more upfront, and that really solves the issue.

So Aaron, just to clarify, the original spreadsheet that was proposed had negative cash balances. There are some early years, but the years 8 through 16, you had deficits between total rents and taxes estimated to be collected from the value improvements, taxable value improvements, between twenty seven thousand fifty six dollars and five hundred and twenty seven thousand dollars and six five twenty seven six twenty six so Essentially you're saying this proposal eliminates those deficits in Years eight through sixteen and in the early years, which I think were years four through six from the spreadsheet Yeah, it does and I have a page page number three on this presentation.

We'll walk through exactly great.

Thank you. Mm-hmm

So this one, it's a little small. 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... the city attorney mentioned, is $34.7 million. And there are two scenarios for how to finance that. There's the 4% and the 5.5%, 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 at the 4% and half at the 5.5%. 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 the same payment, but it's amortizing, right?

It's 30 years, not 35.

30 years. OK, sorry. Yeah, 30 years. The next 25 years, it's amortizing.

Aaron, can I apologize? Because I think it's B, 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 34.7, roughly about 7 million is library cost, right? So I wanted to introduce it now so you kind of get the picture of the number that we said earlier. And so I'm sorry to interrupt.

Correct. No, no, that's a good point. 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 were 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 interest only 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 5 and 1 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 to the conversation today. That is a total of 7.1 upfront. And then the ongoing payments are the $1.2 million, which is the 600,000 times 2, 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 net present value of the ground lease is somewhere between $59 million at 4% discount rate to $33 million at a 5% discount rate. And now I'm going to walk through the, and this is the last page, but I'm going to walk through a summary of what this looks like for the city for the initial period, interest only 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. Is it OK? Yeah. OK. So in essence, you have, let's talk about pre-groundbreak. 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 face 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 pre-groundbreak period. Then we go to when we break ground, the interest only period. So in years three to seven, the city is paying $8.2 million of interest, which includes those years of bond payments, which were only interest only. That's 8.2 million. Our initial rent plus the 1.3 we're proposing to add 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. And we've added what 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 amortizing. 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 taxes, $2.5 million. Total revenue to the city is $9.9 million. So there's a $2 million shortfall. But because we have $2.7 million on the account, 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 Account effectively with this project.

I think Commissioner Rodriguez had a question Can you can you run us through the assumptions in the early years? What the io period is phase two assuming delivered in what year in your three to seven?

And we are assuming I'm gonna 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 I

You have in the $10 million that you're saying, eight going out, ten 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, that's adding everything that's happening in years three to seven.

Yeah.

So it doesn't include that.

So it's really like year seven only is when the full $10 million will be coming in.

So the $10 million is the aggregate of the five-year period. Just to be clear, for everybody who may be watching, this is not any annual revenue.

But I'm saying the full 10 comes in by year seven. The full 10 comes in, yes.

I guess the question is, Aaron, what portion... Can you bring it down by year? So the commissioner can see what the cash flow is during that five-year period.

Yes. Is 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 revenue. rent payment, right? That's the two 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 two.

Commissioner Rodriguez, I think the bulk of the revenue is made up of the upfront payment per phase and then the additional 1.3 per phase. Correct.

Yeah, no, I got that. I was just eight going out, ten coming in, but the ten comes in a year seven.

No, it does not. In full. Well, in full, but of that you've got, again, $7.25 million comes in in years three, three, four, five, right? So the bulk of it is front-loaded, I think is how they've solved this problem for us.

Correct, because we're paying $3.3 million per phase to break ground.

So 75% 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 year by year for the totality of the 102-year lease. The other one is more of a summarized version where we are just adding up for the period of time.

Mr. Rushdie, just to remind us, how do we, because there is a risk here that they're delayed on phase two. How do, what again is our protection in the draft term sheet against a delay?

So when there are.

For us, for our delays in terms of our relocation back into the facility.

But what is the number? So there are two protections, right?

If they deliver in year, what was it, five here?

For phase one. For phase one. Yeah, for phase one.

They've got to start construction within 12 months on phase two, correct?

Yes, that's correct.

That's right. They'll deliver 36 months or 30 months thereafter?

Correct, correct. Now, they do have outside dates, right, beyond that if they're, you know.

If they fail to start in year five?

Rent becomes due after a certain date, right?

So for face- And is there an escalator for every year they're late?

The rent is growing the entire time. Not the upfront. The annual rent is growing.

I thought I heard you say there was an additional penalty.

There is an additional penalty. When they cross certain completion dates, there's an additional penalty. If they're slow on phase one, it's $600,000 plus $225,000. If it's on phase two, it's $600,000 plus $400,000. A million bucks a year.

Essentially, they're paying us the lost tax revenue associated with that.

That was the concept.

That same tent. Questions about that? Sorry, Aaron, continue.

No, that pretty much covers, I mean, the...

Sorry. Here, we're going to recognize Commissioner Kaif. I know we were just talking about assumptions and all that. I just, there was a conversation with our consultant regarding the discount rate and the inflation rate. Why don't we let him finish his presentation and we'll come back to that. I wrote a note, I'll come back to that.

This is really the last page. I do have a sensitivity. Oh, there you go. Thank you. Yeah, a sensitivity to show the various. So the two main assumptions for net present value that drive 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. We've used 3% for rent growth, and I think the city's consultant was more comfortable with a more conservative 2.5%. I think if we actually took the time today to look at the historical Miami-Dade County, and we found that it's closer to 4% since the 1970s, so that's like a 40-year track record, 50-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 the natural gross average of Miami-Dade County. So we think that 3% is fine. It's 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 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. versus some other ground leases where there may be some profit participation that's really more subjective. Here, having a high guaranteed rent, it's something that the city will absolutely get. So we think a discount rate of 5 million cents, but what we've shown here is the net present value of a ground lease versus the net present value of a sell case 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 list 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, it's $36 million better. So somewhere in that range. I'm hearing a footnote at the bottom.

What's the footnote? Breaking news, apparently. Is that Claude running in the background?

Sorry, Mayor.

Yeah, you're recognized, sir.

And one of the other questions on the assumptions here is that we are using the interest rate from the GOB for the whole 30 years in this presentation, correct?

For this, we are using a blended 50% of the bond amount at 4% and 50% of the bond amount at 5.5%. Okay. That wasn't clear. Thank you.

Aaron, anything further?

I'm sorry.

No, further questions. So the GOB limitations that we're going to take is roughly, what is 50% of what, 34 million? No, it's actually less than that.

17, 17 and a half.

But that's the full 34, right?

34 divided by 2, yeah, yeah.

But the library, are we using the GOV for the libraries?

No, so I think we would be, I mean, my thought would be we would only finance the amount of our contribution, which would be, I think, in the managers, 4.1 million plus the construction management fee on that number, correct? Or 4.1 million, sorry. So you would... 4.1, okay.

It's only on the 8.8% of the value.

So 4.1 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 34.5, 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 that number.

Wait, time out. Repeat that.

So we're going to go, let's focus on this and we'll ask. We had the conversation about having a four-story city hall building or a five-story city hall building with an extra 12,400 square feet on the fifth floor. That could be in the short term leased 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 in the base term sheet, correct? No, it is not. It is not, okay.

It is not. There's the ability to add that extra floor with the understanding that that extra floor would be for future city expansion.

Correct.

Okay. Can I just ask something?

Yes, ma'am, you're recognized.

So it's more to Commissioner Kaye. Yes, have a call. So were you extrapolating that then that extra floor would eat up that difference between the 20-something 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 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% of the total deal is the value. The library is roughly about $6.9 million. Let's 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 debt, Our portion is about $27.5 million. If you add seven for an additional floor, 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 want to mention. When Aaron's done, I will share the FF&E. And so yeah, value of an additional floor is seven. Library is about seven.

OK. Questions of Mr. Soler? Anyone? Mr. Rodriguez? Good? Yes, ma'am. You're recognized.

When you're talking about the timing, and tell me we're going to discuss it later if we are, would we stay here until demolition happens and then move out? Or would we just move out?

So originally, when the proposal came in, it was contemplated the way the site plan at that point was that we would stay here. Once there were some revisions to the site plan to accommodate what we needed, it required us to move and demolish. 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 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 going through all this stuff in the meantime.

We would be leaving before day zero. So they have to give us notice 90 days before day zero, at which time we have to abandon 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 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. FFNE as well or no? FFNE, yes.

We have an FFNE number.

We do not have a relocation cost number. Correct.

And we know, I mean, from the standpoint of a non-police activity is pretty easy to fix, right? Police is the one that complicates it a little bit as it relates to which base may be able to accommodate it. 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 models so we don't have a one per one station and we'll get creative the police one is a little bit more more tricky so I not really do a deep dive today but FF&E as the mayor mentioned we've done some calculations 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 break in operations. We don't have that luxury. Mr. Messier?

Yeah, one quick clarification. It's not day zero. It would be after day zero. It would be sometime between day zero and commencement of construction.

OK.

It's when the 90 days would be triggered. Yeah. So we wouldn't have to leave right on day zero.

OK. Thank you for the clarification. Yeah. I was interested. Further questions? No? OK. Thank you, sir. Mr. Manager, do you want to walk us through the add-ons and other issues?

Certainly. So as I mentioned earlier, and just as a refresh, in the calculations that you did see, and Aaron, jump in. If you say something that doesn't match your spreadsheet with breaking news, let me know. So we have the city, the construction costs, and I'll call a construction management. That's included. The 100 parking spaces is included. WHAT WAS NOT INCLUDED WAS FFNE. WE HAVE SOME ESTIMATES, ROUGHLY ABOUT $2.2 MILLION VARIATION ON THAT. FFNE FOR POLICE ENVIRONMENT IS DIFFERENT THAN FFNE FOR GENERAL OFFICE. THE EXTRA FLOOR THAT WE TALKED ABOUT, THE FLOOR PLATE ON THAT IS ABOUT 12,400 SQUARE FEET, SO THERE'S AN ESTIMATE OF ABOUT 6800, CALL IT $7 MILLION. The other issue that is not in the calculation which we raised was, and I'm sorry, $6.8 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 we talked about the interlocal that we have with the county, which would generate 8.8% of value of the deal to the county. And so the issue there is, as the mayor mentioned, paid upfront, so we have to account for that in our initial costs and borrowing. Or if it's something that's spread over time, I believe, Mayor, I think you may have said that you prefer to do the upfront, if I misspoke.

I'm sorry, I was distracted with something else.

The payment to the county, I gave the value of $4.1 million, which is the 8.8%. I think you have mentioned that you prefer to do that up front. So if we have to borrow, we have to account for that. So in 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 has construction, construction management costs, and the 100 parking spaces. So the additional floor, FFNE, and the library portion is not included in that model. So that's why we're making you aware of that. There's an extra cost there that would have to go into our financing and borrowing. THAT CHANGES A LITTLE BIT WHAT HAPPENS, ALTHOUGH AS A DEVELOPER HAS COME FORWARD TO RESTRUCTURE THE DEAL TO HELP THE CITY FROM THE STANDPOINT OF AVERAGING OUT AND HAVING POSITIVE CASH FLOW THROUGHOUT, THIS CHANGES THAT A LITTLE BIT BECAUSE OF ADDITIONAL BURDEN. THERE COULD BE DIFFERENT WAYS IN DEALING WITH THAT POTENTIALLY AND WE CAN TRY TO MITIGATE FOR IT SOMEHOW, BUT I JUST WANTED TO PUT IT ON THE RECORD. Mayor, I think that's what you wanted me to share for the most part, I believe. And certainly you're happy to answer any questions. And I'll take a moment now that I have the mic just to thank certainly 13th floor and the extraordinary effort to do something on your anniversary vacation, Ray, and certainly Aaron and team. 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 in this effort obviously from our city attorney to Finance and Alfredo and Sam the team so happy to answer questions That that haven't been addressed yet

Thank you, yes. I think Commissioner Rodriguez had one, then I'll recognize you, Commissioner Bonnich.

To the manager, just one of the items you should also account that's not part of the number would be audio visual, which we obviously will be using, and low voltage.

Yeah, typically, well, in some of the FFNE, it's somewhat accounted for. In this case, we have sort of state-of-the-art technology in this space that we would want to repurpose. Just take it with us, with the chairs.

We will.

Before we demolish, we'll take, you know, from the standpoint of how we run the meetings and how it's wired, some of this stuff can be repurposed. Some of the equipment that we have in the closets, I mean, it's really up-to-date.

Don't forget the vault, please. The vault?

Yes, please. I'm scared to go in that vault. Yeah. So there may be a component there we may have to add that we may not account for, given a piece of equipment that we may not be able to transfer into the new chambers. But we're pretty state of the art here. The city has made a good investment as it relates to that. You're in the business, so you know that there may be some additional cabling or things like that that are not captured.

And there's always upgraded cabling. Correct. 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 mr winnie's

Okay, just so that I'm clear, we went from 34 to 27 and 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 if you take the $34,000 that's in the spreadsheet and forget that it includes the $7,000 for the library and just make it our cost, we would need another $7,500 to that $34,000, right? And that sort of changes the dynamic.

And Commissioner, 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 dollars right for furniture and fixtures 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 dollars 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 of capital projects that maybe aren't ready to move forward, but maybe could be part of the GOB because they're parks related, 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 fit better as it relates to being upside down a little bit on outer years for a number of years, if we have to go up to the $40.5 million, $41 million. DAVID ROSENBERG JR.: 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 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 to the downtown, or any idea of a projection that we could have into the future?

And in my, sorry for the diversion a little bit, I also want to thank Manny and Albert for providing a lot of legal support in something that's a very complicated deal and helping with our team. 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. So we'll look for that while we're here and try to give you that number. As it relates to long-term, I mean, the issue of an additional floor I think would be 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 had worked on those spaces, so knew that really well. But depending on what happens in the city, both from a density standpoint and or geographic, At some point, density you can take on because it's very concentrated, although that generates additional calls. The geographic expansion, for example, going to the north and annexation, that creates a respondent issue, maybe additional zone. And so there's definitely an additional workforce. On the police side, it's not a one-to-one 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 additional detective and things like that that do expand a police department. So therefore the additional four certainly would give the city a strategic Advantage as it relates to be able to accommodate that expansion at some point Because it I think it'll come either by virtue of geographic expansion and or density great Thank you And again just for 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, you recognized

Mayor, I'm sorry. Yes, please. 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? 42 roughly, 41 and change. Okay.

Okay. That's not inclusive of the library, that's a separate. Yeah. Okay.

Mr. Manager, can you just repeat some numbers for me? The FF&E was at 2.2 million?

2.16. 2.16? Yes, sir. Correct.

And what was the other number that we included in that?

Extra floor with construction, 4% construction management, 7.1. 7.092. 7.1. Million. But what is that?

Additional floor. Oh, you're talking about the additional floor. No, I'm talking about, oh, that's going to the additional floor at 41.

Yeah, I'm giving you the line items that weren't, I thought that's what you were asking, the line items that were not included. So FF&E, 2.160, additional floor with construction management, 7092,800. And then the value of the 8.8% 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 with like the swan dive bathroom that's 500 square feet or whatnot, that that would happen here, but that we don't run into those things because I think that checks and balances 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.

I don't know what I don't know.

It's a good point, but he's on it. Yeah, and certainly wouldn't be the doctor if it's side of me. But thank you. We did bring on board, exactly for the reasons that you stated, somebody who's in that space and does that for a living, and Mr. ,, who was part of the group that designed the previous police headquarters. So he, very intimate with the spaces, because a lot of it was conversations and seeing exactly what the needs were. Also being mindful of our accreditation and some of the things that are important to make sure that we account for that as we design spaces. So we brought him on board to do an assessment of it. Now, obviously there was a lot of work done on the prior police headquarters, and this footprint is smaller than that. But we took from that certain things that the city learned. And so we took that work product. Our chief and his team took a look at that design. Some of those things were made more efficient because there was maybe a room that could be multipurpose and serve two functions instead of dedicating two separate rooms. 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. THE 13th FLOOR TEAM DID IT ORIGINALLY. A LITTLE BIT MORE GENERAL IN NATURE. THEY WALKED THE SPACES AND THEN WE FINE-TUNED THAT 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. THAT'S HOW WE ENDED UP WITH ABOUT 20,900 FOR CITY HALL AND 21,000 FOR THE POLICE HEADQUARTERS. I would intend to bring them on board. Remember that this has not been designed necessarily yet, and so we would bring them on board to serve as an owner's rep so we can get into the design and the allocation of spaces that we have that expertise in-house to help us through that process.

Thank you.

Further questions?

Mr. Manners, 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. 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 the cost of construction. So if we're borrowing it at Barring on a blended 5%, right? We need to get $29 in rent, triple net. I don't know if that's something, Aaron, am I thinking about it the right way or Mr. Melendi? Okay. That's correct. Okay, which I think is a pretty safe assumption that we could get well beyond $29 a square foot triple net in this market.

Certainly with the intention that... You can shake your head no, I'm sorry. Expansion...

This is for expansion of City Hall.

No, understood. I think there's a short term. Does it make it, again, it makes that floor taxable, correct? Does it make the whole building taxable?

Oh, correct. Unless we do, can we do a condo? Sorry.

No, it's not a condo. It's just that the property appraiser will treat that floor distinctly. Just the floor. Well, the whole building will not become taxable if we rent that one floor.

It also influences the, what our ultimate intention is, influences what the bond, whether that portion of the bond is taxable or non-taxable.

Correct. Understood. The point being, whatever the cost of the carry, I think it's a pretty 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.

If you need it 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. Vanders, how much of our functions that are externalized in other spaces could be consolidated in the building? So I would think maybe parks could be, if it's appropriate, 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 recreation. So I think those are things that we really maybe have not fully studied, but it provides us that opportunity as well.

Yeah, it is. Mr. Mayor, in this case, public works and parks We're not sort of given a space they were given a shared space Yeah, obviously as we have directors and staff that come but so that could still be something that the city may contemplate Potentially about bringing certain people in house That would require that space correct So those are again just want 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 yourself That's all I had my way of comments or questions I think

Let's open it up for the public and hear public comment. 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 write them up. So if there's any benefit for the public, this is not a public hearing, but we're going to invite any member of the public who'd like to address this commission on the project or the potential project to please come forward at this time. Mr. Ward, I know you've been waiting patiently, so I'll recognize you to start.

I have a couple of questions. As I listen to this, I assume we're still talking about two 17-story buildings and one five. Is that correct?

Two 16-story buildings, one four-story 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 administration of the building and the police department? And I am now assuming, and if I'm wrong, that the five-story building will probably be built first, then you all will stay here and then move into the new building in the library also.

So no, I think the way the site plan has evolved, unfortunately, we would have to relocate temporarily, but we would come back onto the property first. So you'd have the city hall building brought back onto the site.

I feel for whoever's looking to find a place for the size of this temporarily, I just haven't ever seen it. I've tried to. J.R.E. Lee was about the only place I could think of, but now I understand that's coming down too. But I was just curious as to what the city and the library, I guess the city hall and library would be in the same building?

Yes, sir. So it is the library on the ground floor.

Last question I have, are you keeping the ownership of the property or are you selling the property?

The deal that was presented, this discussed, is to keep the ownership and lease two portions of the property for 99 years. The balance would stay in 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 WOULD LIKE TO ADDRESS THIS COMMISSION IN PUBLIC REMARKS? PLEASE COME FORWARD. MR. KELLY, ARE YOU MAKING YOUR WAY UP, OR ARE YOU GOOD? ANYONE ELSE? OKAY, WITH THAT, WE'LL CLOSE PUBLIC REMARKS. IS THERE ANYONE ONLINE, MADAM CLERK? NO, OKAY. MR. ROLANI, DO YOU WANT TO SAY ANYTHING BEFORE, SINCE WE'VE TAKEN AWAY FROM YOUR SPOUSE HERE ON YOUR ANNIVERSARY CHIP?

only that I want to thank everybody and just on the on the additional 12,000 square foot space. It's always been my kind of idea that The city should have room to grow when you're building a new state-of-the-art office building. The city will grow over time, and I think it's important. 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 in the design process. We will design foundations in the early portion so we can... contemplate that as we go forward. And you guys can, you and your DAIS can decide that along with Chip's guidance 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 way. And however we can, we're happy to be helpful. Thank you to everybody for your time and your patience on this process. Thank you and happy anniversary. Thank you. Thank you.

Okay, colleagues, how do we want to proceed with the discussion? Do you want to go left to right? Okay, we'll start on the other end, right to left. Comments? Yeah. Anyone want to go first? Any volunteers? I guess I'll start. Okay.

When we've had the discussions of selling versus leasing, it has always been my intent to keep the property in the city of South Miami. When we see the net present values of the properties and the sale versus leasing, it was really a no-brainer in my thought process. I think that just future... Our thought process as commissioners and mayors here for the city of South Miami is really to think about the future. And I think this is how we maintain the ability to do more for the city by keeping property internal and not selling. So I'm glad that, and I give thanks to 13th floor for being financially and fiscally creative in going through this process to make sure that it was feasible for the city to look into this and really take it to what it's worth. So I appreciate that. I did have a question before we move on. Assuming we vote and it's in the positive mirror, maybe we can talk about what the next steps look like. Because for the information of our public, We vote today. If it's in the affirmative, what does that look like? What are the next steps? If it's in the negative, what does that look like? I just wanted to make sure that the public understands what's going on there.

Let's take that question right to the city attorney so it informs the conversation. If we adopt today's 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 a significant, I mean, luckily we have Manny and Albert to help us through that, and we have willing partners in Ray and Aaron to work through this, and they're counsel, they're very able counsel, so we'd get at it, we'd probably be back in, after several months, bringing back all of those documents to you. And they would all be presented to you at the same time. So you're voting at one time for, it'll be separate votes, but for all of them.

So is it possible we could do this or have this back on an agenda either late June or early July before we get into our... I prefer not to do this during budget season.

Yeah, we could certainly shoot for that to get it complete. Aaron, you think we could 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 it. That's right. The substance is here. Turning this into a room will be very easy.

It really is the most comprehensive term sheet we've seen on these ground leases. It really is.

Is that your polite way of saying it's been a painful process to get here?

Not at all.

It's been a very collaborative process. I was just being a smartass. Sorry. Okay. Commissioner Kaya, sorry to recognize you 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.

So you're in favor of leasing as an amenity to your terms?

Yes, I would be.

OK. Do you want to go next?

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. Aaron's worked. Mr. Melendez 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, from my perspective and my humble opinion is to sell the phase one property and Mr. Ward we would still own the municipal building land and the park which is 32,000 square feet why do I why am I in the camp of selling that land many reasons so we have a budgetary number that's here and we have payments that we have to make But those payments, as we've already been through, don't really take into account the additional floor, the FF&E, the relocation costs that it's going to cost us to relocate for a certain amount of years. Like I said, AV, the county, we have to revenue share with them, and we're looking at a $41 million build-out. If we do the 50% revenue bond and 50% GOB, we will be taking out $20 million out of our GOB. That's a big number out of our GOB. 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 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, we have a net present value of that we, I actually think is off because we have across the street a closing that's gonna happen in July that's a one acre parcel selling for $22 million. Phase one here is a two acre parcel. So if we wait and delay, postpone this a little bit, do that closing, then we truly have TAKING THE MOST WE CAN OUT OF THIS PROPERTY. WHAT THAT VALUE WOULD BE, 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 wanna do with Miami-Dade County Public Schools. We have the opportunity to do great things now. And for me, also, we're setting up the future, like Commissioner Gaya said, 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 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. I'm sorry. Can you elaborate on that point? Just the way the funds are used. Maybe nothing happens. Maybe the funds are used for things that don't necessarily... build growth for the city. You know, we have Gibson. You're talking about the GOB being... No, no, I'm saying 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 future commissions would handle that money. I'm just giving you an example. That's just one thing. It just... I really feel that our options are much greater. 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 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 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, 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 selling and doing great things now for our residents now. So 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. We can always visit phase two. We could do lease or we can sell it as well. 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 thoughtful insights. I think I'm also in the camp of supporting the lease and supporting this lease. I've seen some numbers in the past. Obviously, the original left a little bit too much 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 of years. And I would hate to be hamstrung with having to pay back this loan if, for whatever reason, the project didn't come online fast enough. But I was encouraged by the checkpoints that we have in this lease and by the extra fees that will be paid. So I do believe that the lease is the best option and to I I respect 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 And Fisher In in taking what Commissioner Rodriguez said into account I know that we had some kind of valuation of on this property, and can we share that so that we have it while we're having this discussion?

Yeah, it was $38 million, roughly. $30 million?

$38. $38 for both?

For both, correct, yeah. OK. Now, just to clarify, and I'm not the math guy here, Either Alfredo or maybe Aaron can correct me, but when I look at their projected discounted value at 4 and 5%, which I'm assuming if I added both and divided by two, and assume we had a blended rate at 4.5%, it's $44.5 million is the valuation of the original lease structure. I'm not sure what it is 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 $22.25 million for each sellable parcel. So roughly in the order of magnitude of what I think we are all hoping would be the comp, which is phase two for Avalon. So I'm sorry. I just wanted to throw that out there first. Yes, sir.

If I may, Mayor, one thing to take into account 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.

I'm sorry meaning yes, please the cash flows that they're carrying into 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 you're saying it would be adding 34 million dollars to our number.

So you're saying you're saying that I'm not sure I understand that, but you're saying that to take your original deal that was upside down in years 8 through 26. I'm sorry, I don't want to hijack your time.

No, that's okay because this is...

I thought this is what you were asking. Yes. Respectfully. 31.8 at a discount rate of 5% plus the 34, you're saying? Correct. Is that how we should look at the total valuation? Correct. Okay. Alfredo, you want to explain that to me?

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 dollars 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 dollars and

So math, man. Oye, you're complicating my life. 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. 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. OK. Then when we're looking at us moving.

Is that net of the taxes or inclusive of the taxes?

Blah, blah, blah.

Inclusive of the taxes. OK. So can you break that out for me? No. OK. Sorry. Continue.

Yeah, you do that. I'll ask an hopefully easier question. So we are not taking into account here, as Mr. Ward 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. Are we doing that math right now so that when we are looking at this, we are 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 core footage cost and outfitting that and things like that, we have not done that yet. Obviously, we understand that that's a number that we have to include in this. But I think that that number won't keep the deal from happening is the way I approach it. If we tackle these other things, this deal would go forward, and we know that we have to address for that. So it's an important number. I just felt like these other numbers really are the core that would make this deal move forward or not.

OK. 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 flexible staffing? So some positions would be work from home while this happens?

Yes, Commissioner. I mean, what I would 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 police department because, you know, I can, you can give me a Wi-Fi and I can work anywhere, right? Exactly. So we would have to be creative that maybe If we have limited spaces, one of the things that we would consider potentially is hybrid staffing so we don't have to do a one-for-one replacement potentially. And that's one of many things that we can try and think of. We're not there yet necessarily. But yes, we will figure out how to make it work. 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. And some of the back of house stuff doesn't necessarily have to be as 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. We will be creative.

OK. Thank you.

And I'm sorry, 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 be mindful of that and change how we do some of those things just for that interim period.

OK. And then when it comes to me for lease versus sale, originally I was in the sale camp. I'm not necessarily in either camp at this point. I'm trying to think of a nice way.

Just say it.

Nothing. You know what? When I look at this, they both have pluses and minuses. Do we want to be a landlord forever? Maybe not. You look at the cash flow that comes along with that, it's attractive. What does that mean in 20 years? I'm not sure. But I think either one of them could be great for us. Am I sell, sell, sell, or lease, lease, lease? Not necessarily. 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 think I'd like to hear what you have to say.

So, look, I think 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 evaluate this. I think we want to compliment our team 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 I ever sell a phase two. 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. And then I had a long conversation with Mr. Mulaney, which I appreciate, which really helped me understand the senior position that we were in relative to 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. is to take on $40 million of potential debt and have them not make timely payments. So I think an 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'd have to be in a very cataclysmic environment close to a 2008 for that to remotely happen. I don't think we're going to find ourselves there. Well, knock on wood, hopefully ever again in our lifetime. I asked this question because I have always chased a little bit the conflation of the value of the future tax 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, Commissioner Rodriguez, for me, the reason I'm going to side 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 submittal, 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 proffer an alternative. I mean, I think this is a great bird in the hand. I think this has been a great partner to work with. And I say that because they've been, not to mention we have great counselors, you know, and Mr. Fernandez, Mr. Delgado, Larry, you know, Lenny Bierman and, 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 this is a prudent deal. Could it be slightly better? Maybe. But I think it's one that certainly is not going to give me any headaches. If we pursue this, I think, over the long term, it gives us significant upside. 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 market. If we really believe in the future of South Miami, I think as we all do, Commissioner Rodriguez, I think I would say to kind of counter your point is that if the future is as bright and we are trying to career investment, this structure is going to allow us to benefit from that growth most accretively over the long term. 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 fifteen million dollars right in any scenario. And certainly I think, you know, as much as I'd like to see a tennis center built at the South Park, that would create a building there worthy of the park. I think it probably would be the short term, a more prudent use of those dollars to, you know, buy down the cost of the debt that we would take on in connection with this project. So that The financials are healthy, the healthiest they can be in the near term and in the long term force. Uh, so I'm a proponent of leasing. Um, and I would, I would. Certainly want to see us consider that as the preferred alternative. Any further conversation?

Do you want to actually? Yeah, so. One of my concerns is that, and I look at our CFO, because in order to make our debt service payments, we have to take into account the rent and the money 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...

They have been changing in this market right now.

Even what's happening overseas. And there was one other... Is there something else that goes or... On time. But I'm saying to cover the debt services, those three things.

I don't know. We're not factoring in a CRA contribution into this at all.

So you are correct. And the ad valorem. The property taxes. Those four things all have to line up in order to make the payments. God forbid one is not in line, then the city is going to find itself 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. A 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, Palmer Park. How are we going to pay for that? How are we going to pay if we've always wanted to do an expansion to Gibson? How are we going to pay for that? We talk about growth maybe in the future, but we're not going to grow now. That's for sure. If we take on this project at the least, we're not growing anytime soon. At least five, six, seven years.

I don't agree, simply because 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, 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 surplus once we retire. The only debt we have outstanding, which is retired this October. So I think 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 GOV program. Now, again, I've not been a proponent of taking GOV dollars for this project. But I think if it buys, I also don't want to borrow at 5.5% when I can save 150 basis points and save us $11 million in debt service, which is more than what we would need to improve Palmer Park and probably another park. So I think that's the trade-off here. I think, you know, you know, I think money, you know, The current Iran debacle aside, and I'll call it a debacle in my own personal opinion, and what it's doing to markets, 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 that is still cheap, and so I think we would be prudent to Borrow in this environment right because the biggest mistake the state has made the last 20 years we've been paying down premium debt Well, we could be you know investing future revenues today and critical infrastructure needs that's kind of what the idea of our bond program was and And we've been forced that the voters have allowed us to get ahead of even having projects identified for those dollars. And what we've done is created maximum optionality for ourselves, right? So 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? 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 that's a good thing. I don't think there's a right answer, Commissioner Rodriguez. I was in your position four weeks ago. I was having a conversation with the manager. I think the right decision is to sell a phase. But I don't think the default risk is nearly as significant as I thought it was when I understood where we were from a position on the capital stack. We're ahead of the lender. which is the most conservative investor in the deal, and we are ahead of the unsecured creditor, which is the equity investors in the project, all those people, if they see the sponsor not performing, are gonna step in and start to make at least the minimum rent payments so that we can, so they can preserve the right to flip the position to another approved sponsor. So that's how I see the transaction You know, I don't know if our council wants to kind of, you know, Fernandez has done this with Doral before and a number of other jurisdictions. I don't know if you want to add anything from a perspective in terms of the security position that we're in relative to a default performance risk.

Yes, sir. Before that, if I may. Yeah, go ahead. There is, I mean, there is another option where we don't have to go back to market and re, and I'll ask the city attorney this, with an option of 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 it. Yeah, by year one, you have to. It's not something we had contemplated, nor did, I mean. Taking advantage of both options.

I think the challenge with that approach is, you know, they get to choose when they exercise. 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'd welcome some thoughts from council on this or, you know, because If we give them the optionality and it looks like the trend is positive and they're going to have better insight into 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 of the lease. So I'm just concerned about that process because I'm going to assume the people that are in this business and do this for a living are smarter about exercising those rights than I'm going to be. But that's just my uninformed assumption.

Yeah, just legally speaking, 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 fit that into that. I understand what you're saying, Commissioner Rodriguez, about it still being a lease, but there's an end, there's an out that turns into a sale, which is not really what was bid. So that would be my concern. I'd have to look at that. I don't think I can answer that right now.

Mr. Fernandez, you can come up to the microphone. And just name and address for the record, please.

Sure. Manny Fernandez, 1110 South Greenway Drive, Coral Gables, Florida, counsel for the city in connection with this matter. I think that optionality is a problem because I think that the less he's going to exercise it if it's convenient for them. And then I think you lock yourself into potentially a worse situation than, if you look at the history on this, The valuation in terms of what the rent is and the additional payments had 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 an additional increase today to do away with the, proposed to do away with the the profit participation. I can't comment on all of these numbers 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, Tony, Horacio. You know, it's a function of also keeping control of the property in terms of long term, the relationship of being in the ground lease position, and a greater level of control. Because once you sell a parcel off, I mean, I guess there are certain things we could structure in terms of an option to take the property back if development does not occur by some outside date. But as the mayor correctly pointed out, in the ground lease situation, actually, I don't know if it was the mayor or if it was Aaron, but somebody pointed out that in the ground lease, 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... a long term for extensions by reason of force majeure or if a lender comes in and unfortunately in order to make these things financeable you always have to create 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 parcel

Can I ask a follow-up question? Just, you know, again, the useful life of this building is not going to be arguably 99 years. So at some point, a successor owner may need to recapitalize the building. You know, that may require them to want to extend the term. So 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 market or even just enhance economics generally?

I think once you get out past a certain date in terms of the ground lease, you know, you're, nobody, well, not a lot of people here are going to be here for another 50 or 60 years. I definitely will not be. Leave it for yourself.

Levi says he'll be here.

But 50 years, 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're not looking at just these are 10-year loans, which is typically the way you're going to finance this. The capital markets looks at it as, what kind of term would this be amortizable over? And the answer to that is generally 30 years. So if you're under 50 years left in a ground lease, you're looking at one opportunity to amortize it or two opportunities to amortize 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, any savvy developer is going to come looking for the opportunity to extend the term of the 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, 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 GOB is freed up, right? So that gives us the opportunity at 20 to 30 years to do a lot more with this property. And even still currently, we have a 45, let's say we use the 20 million from the GOB. We have 45 allocated 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 GOB, we have to really think about how we're gonna 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 any of that GOB money to go pay for, which I agree with you, Commissioner Rodriguez, that we want to use some of that GOB, some of it, to go do the Sunset Place infrastructure. We all agree that's 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 hawk 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? And that's all really important. 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 way did we ever tell our residents that if we go pull a $20 or $30 million GOB 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 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. So I'll leave it like that.

I agree with that. And remember, the bond was also sold as a parks bond.

It was. I sold it. Mr. Fernandez, just one last question. I mean, and Mr. Stoller, I know we've advanced the exit transaction fee in this first sale, right? Is it, I mean... If there was a successor buyer and they were to exit, would it make sense for us to include that transaction fee for a second-generation sale?

Again, I don't know if any of you have any underwriting for it. 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, We are going to bring dollars forward and allow you to, and basically use that to smooth out the deficit so there are no projected deficits on the pro forma. But that's a first sale. And we could see, as Mr. Fernandez said, his comment, multiple transactions, multiple refinancings. And so, I mean, is it uncommon, is it unfinanceable to have 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, and I'll ask, I'll recognize you, Aaron.

I would say it's less typical, and I think that from the perspective of From the perspective of the developer's perspective, it has a chilling effect or it has a downward effect in terms of the purchase price that they're going to realize when they sell, which is a primary thing that we're putting on my developer's council hat, which I wear often, is the way that I would look at it. You could structure something where you provided a... some sort of a fee based on some sort of above a certain profit amount or something in connection with a sale and then exclude the first sale from it. But I suspect Aaron is going to have his reasons why that doesn't work.

And I hear Mr. Miller chiming in as well. Yeah.

Can we take that for a minute? Thank you. So if I may, the challenge is that we've pushed the model to where this is today. Today, this deal is an out-of-the-money deal. We've got to go chase equity to bring the equity into the deal. Obviously, in the pre-construction, this pre-development phase, we're going to put in all the funding to get us to a ground break. But at some point, we will bring equity. The equity markets at that time, today won't work. The deal doesn't pencil. Will we think it will within the next year, year and a half? The challenge is equity. It doesn't know what it's going to pay out. It doesn't know 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 sign on to a deal. It's a challenge. Well, sorry, I apologize. That's a bad word. But they will look at it that way, and they will see it as a penalty that they can't underwrite. To Aaron'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 is just to give you a sense of scale. When we originally put up the term sheet, it wasn't a term sheet, a one-time fee. It was a quotable 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- Just being a little piggish.

I'm sorry. No harm in trying, so.

Benefit of the people, good job buddy.

Anybody else have any thoughts or comments? Okay, is there a motion we want, 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, do we wanna make a decision on the fifth floor? On the what? The fifth floor, in terms of the underwriting for the model.

Under the term sheet, you don't have to make that decision yet.

It allows us to make that decision by when?

I believe you have three months after the execution of the project documents to make that determination.

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, for one, would just say let's just underwrite it today because, I mean, to me, our cost of capital and, you know, prospective 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, you know, you've got like a two-to-one margin on what you're seeing in terms of minimum rents in this market.

But I'll leave it up to my colleagues. I'm okay with that as well.

So, yes, sir.

Is it possible for us to get more information on that? Sure. Because we do have time. Just, again, like square footage, necessity.

Let's leave it as presented in the base term sheet, then. OK. Can I say something? You're recognized, yeah.

Thank you. 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 caveat to that, I think Mr. Russ, you 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, 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, may not always make the best decisions. That's one of those things where I think we need to certainly set the example. And I think once we show the revenue potential, if in fact it gets built and the numbers are what we expect them to be, it's going to make it very hard for people to pivot to occupying that space with anything but a for-profit company. OK. But we should think about guardrails going forward to protect our downside there. Yes, sir. Any other modifications that we want to consider?

If I may? Yeah. With the building, I mean, I think we should underwrite the fifth floor from now. I don't know what we're going to wait for. 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 get the numbers? I share your enthusiasm.

So, okay. So it seems like Commissioner Kaya, you, myself, and Commissioner Moniz 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 require the fifth floor. Um, further modifications we want to discuss. I would like to see a modification of 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 connect, you know the intersection where South Miami Hospital is? Essentially build out, we had talked about that connection east to west, 262nd. It's an enhanced circulation.

The one that might be going through the garage?

Correct, that's exactly right.

Okay, and- I actually have a question. Yes, please, go right ahead. Can I just say something?

Question or comment on that?

A question.

Oh, we've got a handout by Mr. Melendi. Okay, hold on. Do you want to go first, sir? Express any reservation about that?

This falls under the no good deed goes unpunished, because I believe that was one of my ideas. It was. Congratulations. I loved it. So I see that. So I just, I don't love best efforts. It makes it very, I love commercially reasonable, and we're all going to work together to get there. Yes. I'm not an attorney, but I'm going to play one for a little while.

Okay, thank you.

Oh, boy.

I just wanted to address so it doesn't continue to kind of linger out there. I was trying to impress my wife who's listening, by the way. That was very impressive. That was very impressive for her benefit.

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 phase two?

I think I'd like to make sure it's there for the benefit of the project day one.

OK.

Mayor, if I may? Yes, sir. I'm sorry. My apologies. Rodriguez and then Kai. I got to make my list.

So I don't want to see Ray's laptop going over that balcony, 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, the term sheet, can you address that, Mr. Rossio, what the term sheet provides for right now? I think it does provide for attempts to preserve it initially. Remind me. No.

No, it does not. The term sheet is silent on the ultimate disposition of the Silva-Martin building. I would tell you the site plan would guide that.

Okay. So do we want to express a preference?

I mean, I don't know. What are the options? Are we moving the building? Are we keeping the building?

Well, the building's moving. I mean, as the site plan is currently 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. Sorry, Mr. Melendi is recognized, if you want to clarify. Well, he's very quick on raising the hand. He's got that feature down.

I found the button. So we have every intention of, we want to celebrate the Sylvan Martin building. I don't know that we have space in the current site plan as configured to maintain the entire site plan or 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 of different conversations and I think we could take many parts of that building and add them onto the new site a city office building and the library and celebrate that building in many different ways. We can rebuild a portion of it with a children's reading room in the library. We can make the front entry portal part of the stone. We can use the stone and the trusses and the entry feature. So there's a lot of ways that we could do this and celebrate the Sylvia Martin building without rebuilding the entire building, which would be very difficult.

Commissioner Rodriguez, did you have a specific idea that you wanted to incorporate into the term sheet?

No, not necessarily. I just know that it's important to our residents. I don't know it is, and that's ultimately who we respond to. So there may be kickback if we don't salvage the whole building. I mean, I think Mr. Melendi's options are good options, but 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? Do we want the developer to bring us back a proposal that shows the preservation in whatever form is most feasible? Either 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 if the building could be relocated off-premises?

It could. I mean, it's going to be basically deconstructed and reconstructed. Yeah. It would be my...

The rear side, obviously, was an addition, but the study that was done years ago by that company that came in, obviously, was moving the building. You're thinking about moving it to Dr. Bissell?

Yeah. No. That's a new tennis building? New tennis building. That's a new tennis building. It'd be better than the current one. That was quick. By a light years building. We just saved 3.4 million. Well, actually, no, it might cost us more. That's more moving. We're still moving the sidewalk to...

Yeah, I know. Sorry, Mr. Manager, what were you thinking?

No, just if that option is open.

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. Melendez, does that sound fair? If we want to relocate, 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. Does that seem reasonable?

Yes, absolutely.

OK, all good?

OK. Commissioner Cahay, are you recognized?

Mr. Attorney, do we have anywhere in the term sheet that we're discussing the actual construction of said 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 cost structure of the building at $34 million. What does that include? Is that in the term sheet?

So the cost structure is included in the term sheet. That 34-7 was solved for, was the result of the evaluating the site plan that was put together that includes that basement structure. And Aaron Ray, if I'm speaking From being inaccurate, please let me know. 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. That 34-7 is inclusive of that. That's correct? That's correct. OK. That's correct. But is that in the term sheet? The actual site plan is not.

Is it actually called out that way?

The actual site plan is not. The 34-7 is. It does not call out the basement, but that would be part of the project document. They would refer to a site plan.

I guess my question is the 34-7. Yes. Does it include the actual cost of construction? That is the actual cost, including basins and everything that we've included.

Yes, it includes hard install.

I'm not understanding how we're marrying that.

That's all. I've got a hand up, and I've got two people talking to each other here in an open colloquy. So let's clarify. Mm-hmm. OK, I think right now we have a cost figure, but we have not incorporated a reference to the conceptual site plan that we have approved. So maybe we should have in the term sheet a provision that requires that the plan be evolved consistent with the conceptual site plan, which is estimated to cost I would say not 34-7 inclusive of the library, which the city elements are 31-7 because we're talking about a $3 million contribution from the county. I think it was $7 million that was represented the library would cost. Right. Okay, $4 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 the 34-7 includes that. 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 FF&E. The FF&E. Correct. So 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. Melendi, 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, would that tremendously offend you? 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 no offense to the prior iteration of the plan for the site, it was a very densely built out site. I think this provides us, we've gone and decided to go more vertical, which opens up more green space that can be activated or used by the public. I think we lose that optionality. I think it's fair to say if we don't have the library site. Do you agree with that?

Yeah. So what I would ask is the opportunity to, and I get it, if 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 a considerable amount of money between now and the time we're ready to break ground, 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. There's just different options, and I'd hate to just throw the baby out with the bathwater simply because we couldn't get the library. I think we will be successful in collecting with the library, but... But it's a good discussion that we should be having.

And again, you'd be fine with us reserving the right to approve or deny that modification before?

You have that now. So yes, I think that's right. I mean, I think Tony's going to add the current site plan as a concept. What I would ask is, 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 the site plan is relatively in the condition of what's approved or part of the lease document, that that would be, I'm not saying it has to be approved because I don't think you can do that, but if we submit a site plan that is reasonably in the manner of which it's attached to this ground lease, then 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 lawyers, thoughts on language that we can artfully include as a modification that addresses that contingency?

I think along the lines of what Mr. Mulaney was saying that just provide that the plan is based on the notion that it will include this, the library. And then if it's not, then the developer just has the ability to propose 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. OK. OK.

I'm OK with that.

Thank you. Thank you, Ray. Colleagues, anything else? Okay. It looks like we have four votes that are for leasing. And Mr. Rodriguez's preference is to sell at least one phase. So I'm going to assume we're going to keep the term sheet in the posture of a lease. Fair?

I say yes because literally if If we were then to hold on to the sale, I think this kind of falls apart. And to borrow Ray's term, we'd be throwing out the baby with the bathwater. So 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 don't see everybody else switching to sell. So it would be silly to say I'm going to hold out for sell, you know?

Okay, so we'll keep it in a lease posture. One last comment is curious. On page 11, in the security for completion of construction of the civic improvement section?

Yes.

We've identified 13th floor fund five LP as the acceptable guarantor. And there's a proviso that they have a net worth equal greater to the civic improvements budget and unencumbered liquid assets equal to or greater than 25% of the civic improvement budget. We describe liquid assets, but have we, do I read that language to mean that they are a pre-approved guarantor, we've already confirmed that, or that confirmation of those conditions needs to be verified?

So that needs to be acceptable. That will need to be verified.

Okay. Yes. I don't know if we need some language, you know, 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. With 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. We're going to make a modification to the library parcel itself that it is, as opposed to the premises, maybe expanded to include. It would say that something along the lines of the premises include. There will be an affirmative duty for the developer to obtain access, commercially reasonable efforts to procure access road to 62nd Avenue. Again, their plan includes that. 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 tacitly approved by this commission. We'll identify it by name. We might even add it as an exhibit. The Silva-Martin building would be either preserving the building, portions of the building, or elements of the building, or potentially relocation option. Would that be at the city's expense, or is that a 50-50, a potential relocation of the Silva-Martin building if it was to be relocated off-site? I didn't catch. I don't have that blank.

I would imagine it would be at our expense, no?

I would think if it's off-site. Yep. And then in terms of the budget, the budget for the civic improvements would be a total cost less the amount the county has to contribute to the library. And we will be adding the fifth floor. And then finally, the site plan will be based on the library being included. Developer can propose a revised site plan acceptable to the city. If it's not acceptable to the city, the city can terminate.

Those are the modifications. Any questions on the modifications? I had one other question, and this is to Mr. Melendi. The term sheet reads there's a Hometown Heroes program. and it reads that the developer's basically charged with developing a marketing plan for targeting those renters. I'm just asking, is that something that we're 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 department that would kind of put the program together 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.

OK. Yeah. Yes, sir, you're recognized. City attorney, in the term sheet, is there an affordable workforce housing aspect? There is.

What is it, 10 units? It's 10% of the total number of units, so 67 units, would have to be at the workforce level at 120%. And then a 5th of those would have to be a 100% ami.

Okay.

Those are the 2 levels. Okay.

So I'll just finish off by saying, you know, obviously I've made my argument towards the way I thought this was best way to go. My colleagues have decided that it's a, you know, the lease is the better option for the city. So. My anniversary gift to mr. Melendi because I know it was important for him to get a unanimous vote I will I'll support the lease To give him his unanimous vote Okay, thank you Is there a motion to adopt the approve the term sheet with the modifications discuss I move it is there a second I

I'll second. A motion by Commissioner Kaye, a second by Vice Mayor Corey. Madam Clerk, if you can call the roll, please.

Yes, Commissioner Kaye. Yes. Commissioner Rodriguez. Yes. Commissioner Bonish. Yes. Vice Mayor Corey. Yes. Mayor Fernandez. Yes. And I'm passed as amended 5-0.

Thank you. Let's get cracking on the documents. Thank you, everyone. Thank you. Seeing no further business before this commission, we stand adjourned. Mr. Malendi, to you and your wife, happy anniversary again. Thanks for being on.

Thank you, guys. Thank you.