Miami-Dade Legislative Item
File Number: 131632
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File Number: 131632 File Type: Resolution Status: Adopted
Version: 0 Reference: R-689-13 Control: Board of County Commissioners
File Name: LEASEHOLD PURCHASE AND SALE AGREEMENT PRC INVESTMENTS MGMT Introduced: 8/19/2013
Requester: Public Housing and Community Development Cost: Final Action: 9/4/2013
Agenda Date: 9/4/2013 Agenda Item Number: 8K1
Notes: Title: RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO ENTER INTO A LEASEHOLD PURCHASE AND SALE AGREEMENT IN THE AMOUNT OF $7,160,000.00 BETWEEN MIAMI-DADE COUNTY AND PRC INVESTMENTS AND MANAGEMENT, LLC FOR THE SALE OF THE COUNTY’S LEASEHOLD INTEREST IN PENINSULA EDISON PLAZA; AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO TAKE ALL ACTION NECESSARY TO ACCOMPLISH THE SALE OF SAID LEASEHOLD INTEREST
Indexes: LEASEHOLD PURCHASE AND SALE AGREEMENT
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 9/4/2013 8K1 Adopted P
Finance Committee 8/27/2013 3M Forwarded to the BCC by the BCC Chairperson with a favorable recommendation P
REPORT: Assistant County Attorney Geri Bonzon-Keenan read the foregoing proposed resolution into the record. Ms. Linda Carroll, Attorney, 514 West Flagler Street, Suite 900, Miami, attorney representing Edison Marketplace Group, LLC (Edison), noted that her client owned the land upon which the leasehold estate, the shopping center sits. She said the ground lease contained a provision requiring that a notice of sale must be given to Edison and that Edison had the first right of refusal to match any proposed purchase price. Ms. Carroll noted that both she and Edison requested documentation related to the proposed transaction since July 2013; however, only a copy of the bid and the proposed lease was provided. She said the lease referred to a confidentiality agreement and other transactional documentation which was not included, noting that she was informed by Mr. Gregg Fortner, Executive Director, Public Housing and Community Development Department (PHCD) that those documents were not included because they were not written. Ms. Carroll said Edison needed these documents in order to exercise their 30 day first right of refusal provision and questioned the Board’s ability to approve this contract without having access to the complete documentation. Ms. Carroll pointed out that the proposed buyer, PRC Investments and Management, LLC, was incorporated in February 2013 and was not sufficiently experienced in commercial business matters. Chairman Bovo inquired whether this issue would be subject to any potential litigation, and if so, how members of this Committee should proceed. Assistant County Attorney Shannon Summerset-Williams responded that the lease was reviewed and that it was not the County Attorney’s opinion that Edison had the right of first refusal under the terms of the lease. She noted; however, that the County Attorney’s office advised PHCD to provide Edison with the requested information, the proposed purchase price, and a first right of refusal offer. Chairman Bovo asked for an explanation as to the purpose of the foregoing proposed resolution. Assistant County Attorney Summerset-Williams clarified that the County made a loan to an entity; that the County’s security on the loan was a leasehold mortgage; that the entity defaulted on the loan; and that the County foreclosed on their interest in that loan. She said that the sale of the leasehold interest went out for a Request for Information (RFI) and that the highest and best offer from that solicitation was being presented for the County to sell the interest of the tenant in the leasehold. Chairman Bovo inquired whether the County was in the business of lending money. Assistant County Attorney Summerset-Williams responded that this was a United States Department of Housing and Urban Development (HUD) Section 108 loan; that the County was the borrower; and that the County subsequently loaned funds to various entities for economic development purposes. She said that the County borrowed funds from the federal government to lend to other parties and was ultimately responsible for these funds, even though they served only in a pass through capacity. Commissioner Moss commented that Edison had the ability to review and respond to the RFI just like anyone else and inquired whether Edison expressed any interest to do so. He also questioned the amount of time since Edison was presented with the purchase offer. Mr. Fortner responded that the RFI was published in a manner consistent with all County solicitations. He noted the purchase offer, amount and terms were provided to Edison over 30 days ago. Commissioner Heyman inquired whether Mr. Fortner agreed with Ms. Carroll’s allegation that she did not receive the requested documentation. Mr. Fortner responded that Edison was sent the amount and terms of the highest bid on July 25, 2013. He noted that additional information was subsequently requested by Edison which was timely provided to them within a few days. Mr. Fortner explained that the schedule of payments was not provided because it was normally prepared after the Board approved the transaction, noting that this proposal was for all-cash transaction and did not require a schedule of payments. Chairman Bovo inquired whether the documents as noted by Mr. Fortner were received by Edison or Ms. Carroll. Ms. Carroll responded that the documents required under the ground lease were not received. Mr. Fortner clarified that the terms and amount of the last, best and final offer was provided. Assistant County Attorney Summerset-Williams commented that the County did not have an obligation; however, even under the interpretation of Edison, the County met the obligation by sending them the entire offering, noting Edison was provided information on who made the offer, the offer amount, the payment terms and the opportunity to match the offer. Ms. Carroll explained that the County was presently the lessee of the property because they placed a bid at the foreclosure sale. She referenced Attachment 2 of the Ground Lease Agreement; Paragraph 13 entitled Transfer of Interest on Page 40, noting that all of the documents were not received and that some documents were received in redacted version as mentioned by Mr. Fortner. Ms. Carroll said she subsequently wrote to the County Attorney’s Office and to Mr. Fortner reminding them that Edison was entitled to the documents. She noted she received a purported contract that referred to other documents which did not exist. Mr. Carroll said Edison was prepared to bring the matter to court inasmuch as the buyer sent a purchase offer to the County in early May 2013, which was before the County put the proposal out to bid. Commissioner Heyman inquired whether the County met its contractual obligations pursuant to County legislation and whether the County and its departments performed in a timely manner. Assistant County Attorney Summerset-Williams responded that to the best of her knowledge, the County met its contractual obligations and performed in a timely manner. She clarified that Ms. Carroll was provided with a full un-redacted copy of all documents, subsequent to the redacted copy. Ms. Carroll confirmed that she received the un-redacted copy. Commissioner Heyman pointed out and Assistant County Attorney Summerset-Williams confirmed that the County could not provide information referenced in a contract that had not yet happened. Commissioner Heyman commented that the requirements changed because the proposed buyer offered an all-cash deal which did not require a payment plan or a structured loan. Assistant County Attorney Summerset-Williams clarified that if the County was under the obligation to provide Edison the information so that they had the right of first refusal, the other information would allow them to match the terms of the proposed buyer. She noted this was a cash offer and the County provided Edison with the price, the party making the offer, and the payment terms. Commissioner Heyman inquired whether Edison or Ms. Carroll was informed that the purchase was an all-cash transaction and an offer of first refusal to beat that deal. Assistant County Attorney Summerset-Williams confirmed that the proper notification was provided. Mr. Fortner clarified that the offer and the terms were provided over thirty days ago. Commissioner Heyman inquired whether the County performed fully to its obligations, the process was carried out in good faith, legally and in accordance with all applicable rules designed to be favorable to business. Assistant County Attorney Summerset-Williams responded that the County believed it did more than it was obligated to do and the process was properly implemented. Commissioner Moss asked the County Attorney to clarify the obligation even though they stated that there was no obligation. Assistant County Attorney Summerset-Williams clarified that the County Attorney’s office did not believe the County had an obligation under the lease to offer Edison the right of first refusal; even though the County did so, along with the terms which they needed to either meet or beat the offer. Commissioner Heyman asked whether Edison responded to the offer to meet or beat the best offer. Mr. Fortner responded that there was no counter offer received from Edison in response to the initial letter that was hand delivered and that the 30 day timeframe had expired. Assistant County Attorney Summerset-Williams confirmed that Edison did not counter or beat the offer and the contract subject to the foregoing proposed resolution was properly performed. Ms. Carroll noted that Edison did not want to litigate; however, requested information as to the date the RFI was advertised and why the County needed to approve future assignments if its involvement was completed upon selling the lease and no County financing was involved. Hearing no further questions or comments, the Committee members proceeded to vote on this proposed resolution, as presented. SPECIAL NOTE: Chairman Bovo submitted a memorandum dated August 28, 2013, entitled, "Request to Waive Items to the September 4, 2013 Meeting of the Board of County Commissioners." The Clerk of the Board received the appropriate memorandum from Chairwoman Sosa dated August 28, 2013 entitled "Request to Waive Items to the September 4, 2013 Meeting of the Board of County Commissioners" approving Chairman Bovo's waiver request.
County Attorney 8/19/2013 Assigned Shannon D. Summerset 8/19/2013
County Mayor 8/19/2013 Assigned County Attorney 9/17/2013
REPORT: PHCD - Attorney: Shannon Williams - Sponsor: Comm. Edmonson - pending cmte assignment - Attachment: Agreement
County Mayor 8/19/2013 Assigned Russell Benford 8/19/2013
Legislative Text

TITLE
RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO ENTER INTO A LEASEHOLD PURCHASE AND SALE AGREEMENT IN THE AMOUNT OF $7,160,000.00 BETWEEN MIAMI-DADE COUNTY AND PRC INVESTMENTS AND MANAGEMENT, LLC FOR THE SALE OF THE COUNTY�S LEASEHOLD INTEREST IN PENINSULA EDISON PLAZA; AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO TAKE ALL ACTION NECESSARY TO ACCOMPLISH THE SALE OF SAID LEASEHOLD INTEREST

BODY
WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference; and
WHEREAS, Miami-Dade County has a leasehold interest in the property located at 6261 N.W. 7th Avenue in Miami, Florida, District 3 (Folio #�s 01-3113-094-0020, 01-3113-094-0030 and 01-3113-094-0040) (hereinafter referred to as �the Property�) by virtue of foreclosing on its leasehold mortgage; and
WHEREAS, the buildings and improvements to the Property were funded with United States Department of Housing and Urban Development Section 108 funds; and
WHEREAS, the leasehold mortgagor of the Property has defaulted on the Section 108 loan; and
WHEREAS, the County has foreclosed on its leasehold interest in the Property: and
WHEREAS, on May 15, 2013, the County�s leasehold interest in the Property was up for public sale; and
WHEREAS, the public sale generated no bidders; and
WHEREAS, On July 11, 2013, Miami-Dade County completed a procurement process to solicit a Request for Information and PRC Investments and Management, LLC was the respondent with the highest and best offer; and
WHEREAS, the leasehold interest in the Property is not needed for County purposes; and
WHEREAS, it is in the best interest of the County to facilitate the sale of the leasehold interest in the Property to continue to improve the lives of the residents and the community as a whole by selling its interest to a buyer with commercial management experience; and
WHEREAS, the Board desires to approve the Plan for the purposes outlined in the memorandum from the County Mayor which accompanies this Resolution and is incorporated in this Resolution by reference,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that:
Section 1. The foregoing recitals are incorporated in this resolution and are approved.
Section 2. This Board hereby authorizes the County Mayor or the County Mayor�s designee to enter into a Leasehold Purchase and Sale Agreement with PRC Investments and Management, LLC, in substantially the form attached; and further authorizes the County Mayor or the County Mayor�s designee to take all actions necessary to accomplish the sale of leasehold interest in said Property.

HEADER
Date: To: Honorable Chairwoman Rebeca Sosa
and Members, Board of County Commissioners From: Carlos A. Gimenez
Mayor

Subject: Resolution Authorizing the Execution of a Leasehold Purchase and Sale Agreement between Miami-Dade
County and PRC Investments and Management, LLC for Peninsula Edison Plaza Shopping Center

STAFF RECOMMENDATION
Recommendation
It is recommended that the Board of County Commissioners (Board) authorize the County Mayor or County Mayor�s designee to execute a Leasehold Purchase and Sale Agreement (Purchase Agreement) between Miami-Dade County (County) and PRC Investments and Management, LLC (PRC), for Peninsula Edison Plaza (Edison Plaza) in the amount of $7,160,000.00 and to complete the sale transaction as set forth in the Purchase Agreement.

Scope
Edison Plaza is a shopping center located at 6261 NW 7th Avenue, Miami, Florida, 33150. The gross square footage of Edison Plaza is 81,400 with 75,197 square feet as leasable (92 percent of the gross square footage.). The property is located in District 3, represented by Miami-Dade County Commissioner Audrey M. Edmonson. Edison Plaza is anchored by Presidente Supermarket and supported by Family Dollar and Rainbow Fashions. Additional franchise tenants include GameStop, Wingstop and Footlocker stores. The 2013 building values located on the property are $4.02 million.

Fiscal Impact/Funding Source
PRC has deposited $780,000.00 in escrow, as a demonstration of its commitment to purchase the leasehold interest. The agreed upon sale price is $7,160,000.00, which will be used to pay-down the County�s Section 108 debt used to fund this and other Section 108 projects in Targeted Urban Areas. Part of the collateral for the Section 108 debt is the County�s annual allocation of Community Development Block Grant (Block Grant) Entitlement funds, which are administratively managed by Public Housing and Community Development Department (Department). If the Section 108 debt is not paid, the United States Department of Housing and Urban Development (Housing and Urban Development) can authorize the non-payment amount to be withheld from the next year�s Block Grant allocation.
The Leasehold Purchase and Sale Agreement (Attachment 1) can be terminated at any time before the Closing (a) by mutual consent of the Seller and Buyer; (b) by Buyer, upon written notice to Seller, if Seller has breached any representation, warranty, covenant or agreement, such breach has had, either individually or in the aggregate, a Material Adverse Effect, and such breach is either not capable of being cured prior to the Closing or, if such breach is capable of being cured, is not so cured within ten (10) days of notice by Buyer to Seller of such breach; or (c) by Seller, upon notice to Buyer, if Buyer has breached any representation, warranty, covenant or agreement, and such breach is either not capable of being cured prior to the Closing or, if such breach is capable of being cured, is not so cured within ten (10) days of notice by Seller to Buyer of such breach.


Track Record/Monitor
PRC has agreed to enter into a Purchase Agreement with the County. The purchase price for the leasehold interest is $7,160,000. Upon execution of the Purchase Agreement, the County will convey and assign to PRC all of its rights, title and interests in the lease and sublease. Craig Clay, Chief Financial Officer of the Department will be responsible for monitoring this agreement.

MANAGER'S BACKGROUND
Background
The Board adopted Ordinance 99-94 on July 27, 1999 which authorized the submission of an application to the Housing and Urban Development for a Section 108 Loan in the amount of $40 million for the sole purpose of creating a Revolving Loan Fund (Fund) program for designated Target Urban Areas. It was anticipated that the Fund program could result in assisting Targeted Urban Areas 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 Housing and Urban Development�s requirements, the County pledged its future Block Grant entitlement grant awards as collateral for the repayment of the Section 108 loan.

Based on the pledge of the County�s Block Grant allocation, the eligibility requirements for projects to be funded through the Targeted Urban Areas revolving loan fund program was 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 Housing and Urban Development executed a contract on August 9, 2001, which governed the administration and underwriting requirements of all loans through the Fund program.

As a result of the $40 million Section 108 Loan Commitment from Housing and Urban Development, 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 (Peninsula) for the construction of a shopping center. Peninsula was the developer, property manager and owner of Peninsula Edison Plaza. Peninsula was also the tenant in the Ground Lease (Attachment 2) between Peninsula and Edison Marketplace Group, LLC (Edison), executed on November 22, 2004. The $7.2 million that was awarded by the County to Peninsula was secured by a mortgage on the Ground Lease.

On February 1, 2012, Edison issued the first of two Notice of Defaults (Attachment 3) to Peninsula for failing to pay past due rent and to pay past due real estate taxes. Additionally, Peninsula defaulted on the County�s Section 108 loan. More specifically, Peninsula (1) failed to pay all sums due under the mortgage and promissory note; (2) failed to pay all taxes due for 2008 and 2009 in the total amount of approximately $366,356.07; and (3) failed to maintain property, general comprehensive liability, and rent insurance. Peninsula also defaulted under the construction loan agreement executed between Peninsula and the County dated January 31, 2006 because they failed to submit semi-annual financial statements for 2008 through 2011, and failed to demonstrate the creation of 206 jobs with at least 51 percent being held by persons of low- to moderate-income.

On March 7, 2012, the County notified Peninsula and Otis Pitts, Jr, as guarantor, of the events of default (Attachment 4) and demanded that they make the payments that were due or the County would foreclose on the mortgage. The following occurred thereafter:

* On March 20, 2012, the Board approved Resolution No. R-270-12 authorizing the County Mayor or the County Mayor�s designee to expend up to $400,000 in Empowerment Zone (EZ) program income to cover the delinquent property taxes and to 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 Edison Plaza.

* On March 29, 2012, Edison entered into an Extension and Stay Agreement for six months with the County to extend the cure period in order to allow sufficient time for the County to pay the past due real estate taxes and pay any and all real estate taxes and insurance premiums as they may come due or prevent any additional tax deed sales from occurring. The County also agreed to begin legal proceedings to foreclose on its mortgage with Peninsula.

* On April 5, 2012, the County filed a foreclosure action against Peninsula and requested the appointment of a receiver, who was eventually appointed by the court on May 9, 2012.
* On April 10, 2013, the court awarded a judgment in favor of the County in the amount of $13,021,313.00.

* On May 15, 2013, the property was scheduled for public sale. However, there were no bidders at the sale. A certificate of sale was issued on May 20, 2013 by the County Clerk�s Office.

* On June 21, 2013, the Department solicited a Request for Information (RFI) (Attachment 5) for Edison Marketplace. The Department received five responses.

* On July 10, 2013, the RFI closed and the Selection Committee met on July 11, 2013 to review the final highest and best offers. Upon receipt of final offers from all eight respondents, the Selection Committee recommended to the Board of County Commissioners PRC Investments and Management, LLC as the highest and best offer.

The approval of the item will allow the County to recoup $7,160,000.00 of its investment in Edison Plaza and allow the County to pay back the Section 108 funds drawn for this project to Housing and Urban Development. Further, the sale of the leasehold interest is necessary and in the public interest to facilitate the growth and creation of business enterprises in Miami-Dade County as it will ensure that Edison Plaza continues to operate and provide services and jobs to residents of the area. If the Board does not approve the sale of the leasehold interest, PRC will remove its commitment and initial escrow deposit of $780,000.00.

Attachments



_______________________________
Russell Benford, Deputy Mayor



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