David Martin received a preliminary blessing from the City Commission’s Finance Committee for his proposed Miami Beach Marina development though Commissioners urged the developer and Administration to continue to negotiate the financial terms to ensure the best possible deal for the City. Martin, co-founder and President of Terra Group, is proposing to invest $35 million to upgrade the marina over 30 years along with the purchase of air rights to the property at 300 Alton Road through an upfront payment to the City. On Friday, he indicated he was willing to increase his purchase price from $50 million to $55 million and add another $15 million to be spent on increasing the resiliency aspects of the site.
The numbers put him more in line with two appraisals the City obtained on the air rights – one at $70 million, the other at $80 million.
Martin wants to build a 275,000 sq. ft. residential tower with 60 units on the site. Earlier this month, he presented two options for the tower to the Commission's Land Use Committee, one at a height of 224 feet, the other at 285 feet. The taller building allows for slightly more green space and a more open view corridor.
Ultimately the project requires voter approval as it involves a long-term lease of City-owned property (the marina), the sale of air rights for a City-owned property (300 Alton Road), and a potential increase in Floor Area Ratio (FAR or density) for the tower.
Assistant City Manager Eric Carpenter noted the current marina lease has 32 years left – two years remaining on the lease plus three 10-year extensions solely at the discretion of operator Suntex which is working with Martin on the proposal.
The City is “basically locked in for the next 32 years” in a lease that has “no requirements for significant capital investment and some significant costs that the City is incurring that are offsetting a large portion of our gross revenue,” he said.
“We’d really like to renegotiate this lease deal,” Carpenter told Committee members. Martin wants the lease to run for 99 years.
Other advantages to the deal, Carpenter said, include “a significant cash payment to the City for the air rights to the upland property [and] improvements of the existing commercial retail property that is there that was built back in the 80s and is in dire need of a facelift.”
“All of these things together create an opportunity to make a world class marina out there that would generate significant revenue for the City.” He described the project as “something that really could be transformational for this property.”
Martin outlined his proposal which also includes baywalk improvements and a minimum one-acre at-grade marina Bayfront park and a “neighborhood-oriented” retail and office component reduced in square footage by 20% from its current footprint.
In addition to the increased purchase price for the air rights and the additional improvements, he has also increased the minimum annual rent guarantee for the marina from $1 million to $1.9 million which includes $250,000 allocated to parking along with annual CPI increases. The current marina lease provides a minimum rent guarantee of $320,000.
In response to questions from the Committee about the deal structure, Deputy City Attorney Rafael Paz said the City would want to frontload the infrastructure improvements “as much as possible in the next 5 to 10 years” and detail a minimum amount that would be spent on the different components of the project.
Martin said the closing of the sale on the air rights would occur after Design Review Board (DRB) approval though he said he was “exploring with City staff how we can get accelerated payment to the City prior to DRB approval and actually close sooner.” He said he was anticipating an “outside date of two years to get DRB approval."
In discussions with the City, he said, “They implored upon us, get to the $70 million [appraisal number], try to accelerate the timing of this closing.” The “value creation,” he noted is upon plan approval but he acknowledged the City’s request to accelerate payment and added, “Hopefully, post Finance Committee, we will resolve that to your satisfaction.”
Committee member David Richardson said, “We’re in the middle of an economic crisis with COVID-19.”
“I’m not going to support any project unless I think it’s good for the community, regardless of the economy,” he said, “But I do support this project and I want to react favorably to it.”
As the City begins to put together its budget for the coming fiscal year, Richardson said, “We’re going to have to make some tough choices in the very near future… and if I have some feelings of certainty regarding cash flow, if this project were to move forward, then that may cause me to be a little more flexible… in terms of what we might have to cut in terms of additional staff or not bringing people back.”
“I do think it’s a good project for the City,” he said as he urged both sides to continue working on the terms “to see if there’s a way that we can get to some cash flow funding even if it’s at the end of the next fiscal year” following a voter referendum.
Martin responded, “You have my commitment” to work on it.
Committee member Mark Samuelian said, “On the surface there clearly is a lot to like and I remain open-minded.” He did question the length of the lease saying, “That’s a really long time… that’s a pretty big give is my reaction.”
Carpenter said the developers will have to make a substantial investment in the property. “They felt very strongly that they needed to be able to spread the amortization of those capital expenditures over a significant period of time.”
Martin added, “Construction financing is also a strong consideration for that lease term as well.”
“What I love about this is, candidly, it’s in the hands of the voters,” Samuelian said. “I trust our voters to do the right thing.” He said he wanted to explore the purchase price further and urged more negotiation to “make sure we’re getting the absolute best deal for the City.”
He also sought assurances that Martin is continuing his plans for community outreach which has been challenging given the coronavirus pandemic. Martin indicated he believed the developers would have an opportunity to share the plans more fully with the community in an appropriate manner that allowed for social distancing during the first week in June.
After the presentation, Committee members heard from Craig Shapiro, attorney for Monty’s, the current restaurant tenant on the site. “I heard nothing about Monty’s remaining,” he said.
Shapiro said Monty’s has a “lease through 2051” that includes a “non-disturbance agreement with the City as well.”
“What we’ve heard is Monty’s doesn’t seem to be part of this redevelopment group and that is a tremendous concern,” he said.
Committee Chair Ricky Arriola told Shapiro, “Monty’s is clearly a cherished business in our community, longstanding good valued partners of our City. We don’t know exactly how we’re going to sort this out but you won’t be ignored.”
Richardson asked Paz to respond to the lease question. “Does Monty’s have a lease with the City of Miami Beach or is Monty’s a sublessee?”
Paz said Monty’s “does not have a lease with the City” but is a sublessee to the current lessee. The initial term of their lease expires at the end of next year “and they would have the same renewal periods that the current lessee has but only if the current lessee exercises those renewals,” he noted.
Paz said the City did grant Monty’s a non-disturbance agreement if the City were to default or terminate the lessee “but that only comes into play if the current lessee is defaulted or terminated.”
At the end of last year, various news reports indicated an affiliate of Suntex Marinas filed suit to remove Monty’s alleging it is owed back rent and claiming the restaurant has racked up 300 health code violations since 2013.
With a tight timeline to make the November 2020 ballot which Martin has indicated he prefers, the Finance Committee gave preliminary approval to the deal terms, directing the Administration to continue with negotiations before coming to the full Commission in June.
Next stop, another discussion at the Land Use and Sustainability Committee meeting on Tuesday and the Planning Board in June.
In order to make the November ballot, the item would need two readings at the City Commission level before end of July.
The full details as presented to the Finance Committee can be found here.
David Martin’s Proposed Miami Beach Marina Development Gets Preliminary Blessing from Key Committee:
Ultimately the project will need voter approval
More comprehensive study recommended to better define indirect revenue and costs
Assemblage includes three existing historic properties with plans for new residential tower