Miami-Dade Legislative Item
File Number: 120500
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File Number: 120500 File Type: Resolution Status: Adopted
Version: 0 Reference: R-270-12 Control: County Commission
File Name: PENINSULA EDISON PLAZA SECTION 108 LOAN Introduced: 3/14/2012
Requester: Public Housing and Community Development Cost: Final Action: 3/20/2012
Agenda Date: 3/20/2012 Agenda Item Number: 14A1
Notes: Title: RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXPEND FUNDS, AND TAKE ANY OTHER ACTIONS AS AUTHORIZED BY THE LOAN DOCUMENTS, TO PROTECT THE COUNTY’S INTEREST AS LEASEHOLD MORTGAGEE IN THE PENINSULA EDISON PLAZA PROJECT
Indexes: SECTION 108 LOAN
Sponsors: Audrey M. Edmonson, Prime Sponsor
Sunset Provision: No Effective Date: Expiration Date:
Registered Lobbyist: None Listed


Legislative History

Acting Body Date Agenda Item Action Sent To Due Date Returned Pass/Fail

Board of County Commissioners 3/20/2012 14A1 Adopted P

County Mayor 3/15/2012 Additions

County Attorney 3/14/2012 Assigned Shannon D. Summerset 3/15/2012

County Mayor 3/14/2012 Assigned County Attorney 4/3/2012
REPORT: PHCD - Dept. will request waiver to 3/20 BCC - Shannon Summerset assisted - Comm. Edmonson Sponsor - pending cmte

County Mayor 3/14/2012 Assigned Jack Osterholt 3/14/2012

Legislative Text


TITLE
RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXPEND FUNDS, AND TAKE ANY OTHER ACTIONS AS AUTHORIZED BY THE LOAN DOCUMENTS, TO PROTECT THE COUNTY’S INTEREST AS LEASEHOLD MORTGAGEE IN THE PENINSULA EDISON PLAZA PROJECT

BODY
WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that the County Mayor or the County Mayor’s designee is authorized to expend funds, as set forth in the accompanying memorandum, and take any other actions as authorized by the loan documents, to protect the County’s interest as leasehold mortgagee in the Peninsula Edison Plaza Project.

HEADER
Date:

To: Honorable Chairman Joe A. Martinez
and Members, Board of County Commissioners

From: Carlos A. Gimenez
Mayor

Subject: Peninsula Edison Plaza Section 108 Loan

STAFF RECOMMENDATION
Recommendation
It is recommended that the Board of County Commissioners (BCC) approve the attached resolution authorizing the County Mayor or the County Mayor’s designee to expend up to $400,000 in Empowerment Zone (EZ) program income to cover delinquent property taxes for 2008 and 2009 for the Peninsula Edison Plaza facility.

Additionally, this item will authorize the County Mayor or the County Mayor’s designee to take any other actions as authorized by the loan documents, to protect the County’s interest as leasehold mortgagee in the Peninsula Edison Plaza.

Scope
The Peninsula Edison Plaza is located at 6261 N.W. 7th Avenue, Miami, Florida, 33150 in Commission District 3.

Fiscal Impact/Funding Source
It is recommended that EZ program income of up to $400,000 be utilized to cover 2008 and 2009 delinquent taxes for the Peninsula Edison Plaza facility. Although the EZ Program expired on September 30, 2010, program income funding is being generated from existing EZ loans.

Based on information received from the Tax Collector’s Office, the 2008 and 2009 taxes totaling $366,356.07 must be paid by March 31, 2012 to avoid the eventual sale of the property through the tax deed process. If payment of the 2008 and 2009 delinquent taxes is not received by March 31, 2012, the tax certificate holder may apply for tax deed and consolidate all of the outstanding taxes due.

Once a tax deed application is processed, the Clerk of Courts will schedule and conduct the tax deed sale. The total amount due will be accruing 1.5 percent interest per month until the date of the sale. If the property is sold through the Tax Collector’s process, and the lease is terminated, the County stands to lose its $10.397 million in Section 108 and other funding sources including Community Development Block and Venture Capital Funds. It is important to note that an estimated total of $665,233.81 (inclusive of 2010 and 2011 delinquent taxes) is currently outstanding, but $366,356.07 must be paid by March 31, 2012 to avoid the loss of the property.

Track Record/Monitor
Peninsula Edison Plaza (the Borrower) is in default of the Florida Leasehold Mortgage, Assignment of Leases and Rents and Security Agreement (the “Mortgage”) executed on January 31, 2006 with the County (the Lender). As of March 6, 2012, the Borrower has failed to pay lender principal, interest (not including default interest) and late charges in the amount of $1,716,326.98 and has defaulted under the Mortgage securing the Note.
The Department of Public Housing and Community Development will be responsible for monitoring this activity.

MANAGER'S BACKGROUND
Background
The BCC adopted Ordinance 99-94 which authorized the submission of an application to the United States Department of Housing and Urban Development (US HUD) for a Section 108 Loan in the amount of $40 million for the sole purpose of creating a Revolving Loan Fund (RLF) program for designated Target Urban Areas (TUA). It was anticipated that the a RLF program could result in assisting TUA business participation in the County’s economic growth and in the creation of at least 1,200 jobs of which 51 percent would be made available to low- and moderate-income persons. Pursuant to US HUD requirements, the County pledged its future Community Development Block Grant (CDBG) entitlement grant awards as collateral for the repayment of the Section 108 loan.

Based on the pledge of the County’s CDBG allocation, the eligibility requirements for projects to be funded through the TUA RLF program were designed to limit the County’s participation under the program to the most appropriate and viable projects in need of “gap” financing. The County and US HUD executed a contract on August 9, 2001, which governed the administration and underwriting requirements of all loans through the RLF program. For each $35,000 of financial assistance, it was anticipated that at least one new permanent job would be created.

In July 2005, the County was notified by US HUD that the Section 108 Program Commitment would expire on September 30, 2005. As a result of the $40 million Section 108 Loan Commitment from US HUD, a total of 15 businesses were assisted including Peninsula Edison Plaza. A total of $7.2 million was awarded by the County to Peninsula Edison Plaza, LLC for the construction of the Plaza. The Edison Marketplace is a shopping center located on NW 62nd Street and 7th Avenue. The gross square footage of Edison Marketplace is 81,400 with 75,197 square feet as leasable (92 percent of the gross square footage.). Edison Marketplace is anchored by Presidente Supermarket and supported by Family Dollar and Rainbow Fashions. Additional franchise tenants include GameStop, Wingstop and Footlocker stores. The 2011 assessed value for the property is $6.6 million; however, the property has not been appraised for several years. The County plans to obtain an updated appraisal as soon as possible.

The developer, property manager and owner of Edison Marketplace is Peninsula Edison Plaza, LLC. Peninsula Edison Plaza, LLC (lessee) entered into a ground lease executed on November 22, 2004 with Edison Marketplace Group, LLC (lessor) for the property.

To date, the borrower has (i) failed to pay all sums due under the Mortgage at the time and in the manner provided in the Promissory Note made by Borrower to Lender on January 31, 2006; (ii) failed to pay all taxes due for the premises (as defined in the Mortgage), specifically property taxes for 2008, and 2009 in the total amount of approximately $366,356.07 as set forth in Section 2 of the Mortgage; (iii) failed to maintain property, general comprehensive liability, and rent insurance as set forth in Section (3)(a) of the Mortgage; and (iv) received a Notice of Event of Default of the Ground Lease Agreement between Edison Marketplace Group, LLC and Borrower, which Notice of Default was dated February 17, 2012.

As of March 6, 2012, the Borrower has failed to pay the Lender principal, interest (not including default interest) and late charges in the amount $1.716 million and has defaulted under the Mortgage securing the Note as set forth above. The Borrower is also in default of the Construction Loan Agreement executed between the Borrower and the Lender dated January 31, 2006. The Borrower has failed to submit semi-annual financial statements for 2008 through 2011, as required by Article IV, Section 13; and has failed to demonstrate the creation of 206 jobs with at least 51 percent being held by persons of low- to moderate-income, as required by Article VII, Section (1)(k).

In addition, pursuant to Article VII, Section 1(I) of Construction Loan Agreement, if by February 1, 2012 at least 51 percent of the 206 jobs created by Borrower are not held by persons of low- to moderate-income, the entire outstanding balance of the Loan, together with any prepayment penalty, shall become due and payable within sixty (60) days of written notice. In a letter dated March 7, 2012 (copy attached), the Borrower was notified that in the event the Borrower fails to cure the Events of Defaults, within the thirty (30) day cure period, the Lender shall foreclose upon the leasehold mortgage, otherwise enforce and protect its security for the Note, and seek any and all remedies available to Lender at law or equity.

Additionally, the County entered into a Forbearance Agreement with the Borrower on March 23, 2009, whereby the County agreed to accept a reduced monthly payment for nine months. Following the expiration of the Forbearance Agreement, the Borrower failed to commence its regular monthly payment in the amount of $52,891.55, which was due to begin on January 1, 2010. As of February 29, 2012, approximately $10.397 million is owed by the Borrower to the County.

The approval of the item will allow the County to pay delinquent taxes with the Empowerment Zone program income and will also allow the County to take the necessary action as authorized by the loan documents to protect the County’s interest as leasehold mortgagee in the Peninsula Edison Plaza facility. In addition to the 2008 and 2009 taxes, the Borrower also owes taxes for 2010 ($161,469) and rent to the Edison Market Group, LLC ($146,000). The Borrower has failed to pay the Lender principal, interest (not including default interest) and late charges in the amount of $1.716 million. In addition, the City of Miami also provided a Loan to the Borrower.

If the Borrower fails to cure the Events of Default, the County will foreclose on the loan and operate the shopping center. The revenues generated from the shopping center will be used to cover operating expenditures including rent payments, property taxes, insurance, and the Section 108 debt service payments. To the extent additional funds in excess of operating revenues are needed to address outstanding issues for the property, future item(s) will be presented to the BCC for approval.


_______________________________
Deputy Mayor





Honorable Chairman Joe A. Martinez
and Members, Board of County Commissioners
Extension of the term of the Expedited Purchasing Program (EPP)
Page 2


Honorable Chairman Joe A. Martinez
and Members, Board of County Commissioners
Page 3




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