Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Approving And Authorizing The Appropriate City Officials To Execute The First Amendment To The Comprehensive Agreement For The Development Of Public And Private Facilities At 1301 S. Ocean Drive Between The City Of Hollywood And PRH 1301 S. Ocean Drive, LLC.
Strategic Plan Focus
Economic Vitality
Body
Staff Recommends: Approval of Resolution
Explanation:
On May 4, 2022, the City and PRH 1301 S. Ocean Drive, LLC, entered into a Comprehensive Development Agreement for the redevelopment of the City-owned property located at 1301 S. Ocean Drive, currently occupied by the Hollywood Beach Culture and Community Center. Pursuant to the Agreement, the Developer is required to construct a new and expanded community center, together with a residential component, structured parking, and necessary utility infrastructure improvements. The Project will also include enhancements and additional landscaping improvements to Harry Berry Park.
The City and the Developer now desire to enter into a First Amendment to the Agreement to authorize the development of an additional eighty-four (84) affordable Hero Housing rental units, together with one hundred twenty-six (126) market-rate condominium units, for a total of two hundred ten (210) residential units. Section 255.065, Florida Statutes, authorizes public-private partnerships for qualifying projects that serve a valid public purpose, including projects that enhance public infrastructure, promote economic development, and provide essential public services.
The Hero Housing units shall be restricted to households earning between eighty percent (80%) and one hundred twenty percent (120%) of the Area Median Income (AMI), in accordance with applicable HUD guidelines for Broward County. Occupancy of the Hero Housing units shall be prioritized for essential workforce populations, including City of Hollywood police officers, firefighters, municipal employees, healthcare workers, and educators, thereby supporting the City’s efforts to recruit and retain critical public service personnel.
The Amendment promotes economic stability and enhances the welfare of the residents. All other terms, conditions, and provisions of the Agreement remain unchanged and in full force and effect.
Fiscal Impact:
The project is designed to generate revenues to the City in a number of ways.
1. Initial Rent Payment. This is among the first payments to be made, and is defined as a payment of $10,000,000 minus the amount payable to CBRE for their work on the project, which is set forth at $969,601. So the net Initial Rent Payment would be $9,030,399.
2. Closing Rent Payment. A Closing Rent Payment is to be made, based upon 14% of the estimated sale price of the square footage. The affordable housing component is projected to sell at approximately $24 million, which a factor of 14% would result in a payment to the City of $3,360,000. The market rate units are projected to see at a total of $630,000,000; 14% of that amount would result in a payment of $88,200,000 to the City. The combined total of these two components would be $91,560,000. That amount would be offset, or reduced, by the Developer Contribution of up to $20 million as the Developer pays for construction of a community center to be included in the project, and by the net Initial Payment deposit required of $9,030,399, for an estimated net sum of cash payments from the Closing Rent of approximately $62,520,601. The City is conservatively projecting to receive 75% of that amount in the first year for a total of $46,890,451, with the balance coming in the second year.
3. Ad Valorem Taxes. Based on projected sales of $630,000,000 for the market units, and assuming 80% of that value becomes taxable value, that would mean the addition of $504 million in taxable value attributable to the market rate units. The affordable housing components, estimated at $24,000,000 and then reduced to 80% would result in $19,200,000. However, the State exemption of 75% for these units would then lower that figure to $4,800,000. The sum of the $504 million from the market rate units plus the $4.8 million from the affordable housing units would be new taxable value of $508.8 million. At the City’s current millage rate of 7.9606, that would mean an estimated ad valorem revenue to the City in the first year of $4,050,353.
4. Re-Sale. The City is entitled to a .25% fee on the re-sale of units. Assuming an estimate of 6 units being re-sold per year times the 2,777 average sf per unit times the estimate of $1800 per sf sale price results in a gross sale amount of $29,991,600. At .25% applied to that gross sale amount, the revenue due to the City would be $74,979.
5. Base Rent Payment. A base rent payment (an annual lease payment) would be payable to the City based upon $0.85 per sf on the 350,000 sf of market rate space in the project. That would represent $297,500 in the first year. This would increase by CPI adjustment annually.
6. Non Ad Valorem Assessments. These are projected to bring in $77,910 in the first year.
7. Impact Fees. There are multiple Impact Fees which will be generated by the project which are preliminarily estimated at approximately $400,000.
8. Other Revenues. There are a number of other revenue sources to the City from the Project that have not been estimated yet, including parking, venue, and building permit revenues.
Excluding the parking, venue, and building permit revenues, the other revenues listed above are estimated to bring in $60,821,592 in the first year the project is on the tax rolls.
Assuming a 3% CPI over the life of the 99-year lease of the project, this would result in revenues of $2.721 billion to the City over the 99-year term. The sum of the Initial Payment, the Closing Rent Payments, Ad Valorem Taxes, Re-Sale Fees, Base Rent Payments, Non Ad Valorem Assessments, and Impact Fees is projected to have a Net Present Value of $272.3 million for the City, using a 5% Discount Rate.
Recommended for inclusion on the agenda by:
Lisa Liotta, Development Officer
Joann Hussey, Director, CMED
Jose Cortes, Assistant City Manager