Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Authorizing The Appropriate City Officials To Execute The Attached Purchase And Sale Agreement Among Cosac Homeless Assistance Center, Inc. And Sean A. Cononie (Cosac And Cononie Collectively Referred As The "Seller") And The City Of Hollywood (The "Buyer"). (A 5/7ths vote is required on this item.)
Body
Staff Recommendation: Approval of the attached resolution which authorizes the Purchase and Sale Agreement, including Exhibit H which outlines a Post-Closing Agreement.
Explanation:
With development momentum returning to South Florida, Federal Highway has the opportunity to become a signature commercial corridor strategically located between Aventura and Fort Lauderdale. The recently completed West Lake Commons has brought new and exciting retail uses to the north at Sheridan and is complemented by the construction of the CIRC to the south (where the former Townhouse Apartments once stood) overlooking ArtsPark at Young Circle. The Regional Activity Center (RAC) has been expanded, targeted Police initiatives have shown significant success, new zoning for the corridor is in place, and an attractive streetscape design is underway further positioning the street for exciting private sector investment. In addition, the Public Works Department has hired Maintenance Technicians for the Federal Highway area (streets and alleys) to assist with trash and property appearance. For Federal Highway to reach its full potential, it is imperative the City take the necessary steps to acquire the property currently housing the Cosac Homeless Assistance Center along with other properties in Hollywood owned and operated by Cosac and/or Sean A. Cononie. At the same time, it is equally important the City insures the operations are prohibited from relocating elsewhere in Hollywood. (It should be noted that this is not the first time the City of Hollywood has sought to relocate Cosac from Federal Highway. In 2002, the City went to court with the Cosac Foundation with the allegation that Cosac was operating in violation of the requirements of the Zoning Code. The Court found in Cosac's favor determining Cosac was operating a hotel which was a permitted use in the district rather than a homeless shelter which would not have been permitted.)
Cosac Homeless Assistance Center, Inc. ("Cosac") is a nonprofit corporation that owns and operates a homeless shelter at 1203 N. Federal Highway in the City of Hollywood, Florida ("City"). Cosac is also the owner of three residential properties in the City and two timeshares on Hollywood Beach. Management of the corporation consists of a Board of Directors comprised of three Directors including Sean A. Cononie, Mark W. Targett, and Lois Cross (deceased). As an individual, Mr. Cononie ("Cononie") owns four residential properties in the City which he rents to Cosac.
Pursuant to ongoing discussions among Cosac, Cononie, and the City, the parties have negotiated a Purchase and Sale Agreement ("Agreement") that provides for a sale of the Cosac and Cononie properties to the City and the termination of leased properties in Hollywood. A key condition to the City's purchase of the properties is the requirement that Cosac, Cononie, and Targett enter into a Post-Closing Agreement whereby Cosac, Cononie, and Targett shall not, either directly or indirectly, engage in certain activities anywhere within the City of Hollywood as detailed in the Post-Closing Agreement. A purchase and sale agreement is mutually beneficial to the parties given it will provide the opportunity for Cosac, Cononie, and Targett to achieve future growth plans outside the City of Hollywood and for the City to enhance economic development along the Federal Highway corridor, avoid additional City costs due to decreased volume of public safety calls at the shelter, and return properties to the tax rolls.
The proposed Agreement provides for a $487,200 deposit due upon signing which will be held in escrow with the Buyer's Attorney, a 45 day inspection period, a closing within six months, execution of the Post-Closing Agreement (included in the Agreement as Exhibit "H"), and a conveyance by a Special Warranty Deed.
There are two components to the transaction. First is the purchase of the eight parcels and two timeshares. The real estate will be delivered vacant and free of any leases. The four parcels owned by Cosac Foundation are located at 1203 North Federal Highway, 550 N 66 Terrace, 2323 Cleveland Street, and 901 NW 70th Terrace. Cosac's two timeshares (for a total of three weeks) are at Hollywood Sands Resort and Hollywood Beach Resort. The four properties owned by Sean Cononie are located at 2131 Cleveland Street, 2534 McKinley Street, 7508 Grant Court, and 1936 Garfield Street. (To reach agreement, some of the properties' agreed upon purchase price exceed the appraised values but remain within the realm of reasonableness.) The Agreement also requires the termination of certain leased property being used by Cosac and/or Mr. Cononie, most notably 1109 North Federal Highway, immediately south of the Cosac Homeless Assistance Center, which is the site of recent significant expansion of accessory uses associated with the Cosac.
Pursuant to City Charter Sec. 13.03, the purchase of real property by the City requires one independent qualified appraisal for the purchase of any property, a second appraisal if the first exceeds $250,000.00, and approval by a 5/7th vote of the total commission membership. Accordingly, the required appraisals were obtained and are attached to the Resolution as Exhibits "C-1 through C-9" respectively. The purchase price for the eight properties and two timeshares (Cosac and Cononie combined) are $2,521,800. The City intends sell the parcels to offset the cost of the purchases. Where warranted, the City will demolish the buildings and present the parcels for redevelopment.
The second portion of the transaction is for $2,298,200.00 as consideration for the Post-Closing Agreement which provides for the relocation of Cosac, Cononie, and Targett from the City of Hollywood and the prohibition of certain activities for a thirty year period. The cost of the Post-Closing Agreement will be offset, in part, by the reduction of Public Safety calls, higher property values, and the increased potential for quality redevelopment. From 1/1/13 to 7/11/14, there were 411 Fire Calls for Service and 234 Police Calls for Service at 1203 Federal Highway for a combined total of 645 Public Safety calls during this eighteen month period. This high number of calls does not include other Public Safety calls received near the property. (For example, from January 01, 2014 to August 21, 2014 there were 374 Police Calls for Service between Taft Street and Young Circle.) See Attachment 1. Real Estate experts have opined that redevelopment opportunities and property values will increase when the Homeless Shelter relocates to larger quarters outside the City limits. (See Attachment 2 which includes a letter from Paul Lambert, Lambert Advisory Services, on the redevelopment potential of Federal Highway along with informal emails from the professional appraisers retained by the City to conduct the two required independent appraisals for 1203 North Federal Highway which commented on the impact this operation has on nearby property values.)
Although Cosac and Mr. Cononie will be relocating their current clients to their new location outside of Hollywood, the need to serve Hollywood's homeless population will continue. The City of Hollywood's Homeless Outreach Program was staffed as of May 27th of this year and is housed under the Hollywood Police Department. The Homeless Program Coordinator, a Licensed Clinical Social Worker, has been developing program framework, policies, protocols, and partnerships with service provider agencies, as well as delivering direct services, like outreach and case management. Street outreach is conducted by the Coordinator while accompanied by a police officer. The Coordinator assesses each homeless individual's needs and provides case management to address those needs and resolve barriers to shelter. The goals of the program are: (1) Long-term reduction in the City of Hollywood's homeless population, (2) Improved perception of quality of life expressed by the community, and (3) Cost-saving for efficiency of solution. The overall objective is to end the cycle of homelessness. (A full presentation regarding the program's framework will be presented at a future Commission meeting.)
While resale of the real estate parcels, increased investment and the collection of (higher) property taxes in subsequent years will help offset the cost to purchase the properties and execute the Post-Closing Agreement, the monies needed are not insignificant. The combined cost is $4,820,000. Staff proposes to borrow $5 million (using tax exempt bonds with an interest rate of 3 per cent) for a twenty year period to pay for the transaction and associated costs. Beginning July 2015, the guaranteed base rent for Margaritaville will increase by $500,000 annually which will more than cover the estimated $340,000 required for debt service. (See the companion items related to Notice of Intent to Borrow and a Budget Adjustment to provide the deposit monies which will be reimbursed with borrowing proceeds.)
Given the above mentioned benefits to the City, approval of the Purchase and Sale Agreement, is recommended upon the terms and conditions set forth in the Agreement.
Recommended for inclusion on the agenda by:
Cathy Swanson-Rivenbark, City Manager
Frederick J. Hopkins, Director of Real Estate