2011-1004 Special City Commission Meeting

Home Browse Search

Summary Minutes: Special City Commission Meeting October 4, 2011 Sunny Isles Beach, Florida does the cap have any bearing on it because do you think the tenant would ever accept responsibility for the property without knowing what the environment is. He asked ifthe prior property owner is in line for any liability on this, and City Attorney Ottinot said no, we purchased this property through eminent domain, and so that wipes out any prior chain oftitle or liability issues. He said they had some discussion with the tenant today and to a certain degree he believed our cap was too low and so his interest is to protect the issue but they are still negotiating. Mayor Edelcup said if it exceeds $150,000 this contract is perhaps back to square one subject to termination or renegotiation depending on the cost of the environmental, and so that is a caveat that we all have to recognize. Commissioner Aelion said he has concerns on this lease because it is a long term "marriage" that the City, if approved, is going to go into with this entity, and it allows assignment of subletting. To that end, there was a 25% exposure on the present tenants that goes into effect. He has asked for 51 % voting interest of a name of said entity however he has not seen any solid financial history of this company that have had such structures already within the City. This is going to be the first within the City, we don't have another office building that has been there that we can have a track record from. We also have the issue of us holding a note for 25 years of the major portion of the sale which is $4.5 Million, and this entity can go into a marriage with another entity and the City will have to deal with it if something happens, because this is not going to be strictly a lease per owner of landlord, this is going to be a unit that the present landlord is going to sell. With that intent he is buying to be able to ensure that he is going to be able to in fact complete that portion of 70% or higher so that he can have a comfort level of rentable profit, and at this point he has reservations with it. Vice Mayor Thaler said that Commissioner Aelion is not the only one, he did have two phone calls and he was stopped on the street for that exact point. The people of Sunny Isles Beach were not thrilled with the fact that we were financing something for 25 years, and Commissioner Aelion said it is closer to 30 years. Vice Mayor Thaler said that the people said it was wrong for the City to finance something for that length of time. City Manager Cohen said your concern about the assignment on pages 27 - 28, what we are requiring here for the assignment is a much higher threshold than the Milton deal. In the Milton deal they could transfer with only the retention of25% of voting interest in the deal. City Attorney Ottinot said that he had met with him prior and he suggested 51 %. City Manager Cohen said this is a considerably higher threshold, double in essence. Regarding the representation that we are financing this deal, we specifically changed the deal structure so that we were not in the position of being a banker, we are not holding a note on this, we are renting the property. We are simply allowing them to improve the property and then to pay us rent for that property which is exactly what we have offered at the Gateway site as well. Commissioner Aelion said his point is that we have a long term lease with Tony Roma, that is a rock solid institution, and at the end of the day the factor remains regardless if you call it a lease or something else, the City will still be owed that money and you don't know which entity is going to be not only liable but also will survive, and so the risk factor is there. If anything could be done to not only lower the risk factor but for the City to have much less exposure for this length of time he thinks in all interest for the City is to have another 3