Loading...
HomeMy WebLinkAbout2008 0208 Special City Commission Meeting SUMMARY MINUTES Special City Commission Meeting Friday, February 8, 2008, 10:30 a.m. City of Sunny Isles Beach, Florida A TTENTION ALL LOBBYISTS: CITY LAW REOUIRES YOUR REGISTRATION PRIOR TO ENGAGING IN LOBBYING ACTIVITIES BEFORE CITY STAFF, BOARDS, COMMITTEES OR THE CITY COMMISSION. PLEASE CONTACT THE CITY CLERK FOR FORMS AND ADDITIONAL INFORMA TlON. AGENDA 1. CALL TO ORDER / ROLL CALL OF MEMBERS The meeting was called to order by Mayor Edelcup at 10:30 a.m., with the following officials present: Mayor Norman S. Edelcup Vice Mayor Lewis 1. Thaler Commissioner Roslyn Brezin Commissioner Gerry Goodman Commissioner George "Bud" Scholl (via Conference Call) City Manager A. John Szerlag City Attorney Hans Ottinot City Clerk Jane A. Hines, CMC 2. PLEDGE OF ALLEGIANCE Action: Sidney C. Calloway, Esq., led the Pledge of Allegiance to the flag. Mayor Edelcup made opening remarks noting that Commissioner Scholl is in attendance via conference call in order to participate in these proceedings. 3. DISCUSSION ITEMS 3A. A Discussion regarding Settlement Options for Eminent Domain Case "City of Sunny Isles Beach vs. 18100 Collins Avenue Shopping Center, Ltd. Et. AI., Case No. 04- 12891CA 10". Action: City Attorney Ottinot reported noting that the City has been involved in three (3) years of protracted litigation to finalize the condemnation of the property located at 18080 Collins Avenue, which is the Alamo site next door to Government Center, of which the City is using half the property to park City vehicles. He said that a trial for this case is scheduled for Monday, February 11,2008, however, a settlement has been reached between the City and the property owner. City Attorney Ottinot noted in the report from the City's Eminent Domain Counsel, Sidney C. Calloway, Esq., that the City has agreed to settle the case for $7 Million Dollars, inclusive of all fees and costs, which is important because under eminent domain law the City is required to pay attorney fees and all costs associated with community property. He stated in addition to the monetary compensation, the City has agreed to provide the following non-monetary benefits: 1) release and waiver of existing Code Enforcement fines (approximately Summary Minutes: Special City Commission Meeting February 8, 2008 $336,400.00) levied against RK Associates and related entities, and he noted that the Code Enforcement fines are usually settled between the City and the property owner at 10% or 5%, he doesn't know what ratio the City Manager uses at times but it varies; 2) naming the internal street, which separates the RK Associates Shopping Centers located between 170 and 171 Streets as "Ranaan Katz Boulevard"; and 3) allowing RK Associates with the ability to use two (2) colors for reverse channel signs located at its shopping centers. He said that the City's eminent domain counsel recommends approval of the settlement and he concurs with his recommendation. He also noted that the City has deposited $2,250,000.00 into the Court Registry at the time the Court had awarded legal title of property to the City. He said also that the City at that time settled its claim that Alamo Vanguard had with the City and which they have a good working relationship right now with Alamo. He stated that the City is now only required to deposit $4,750,000.00 into the Court Registry for full settlement of this case. Public Speakers: Sidney Calloway, Esq. City of Sunny Isles Beach, Florida Sidney C. Calloway, Esq., the City's Eminent Domain Counsel in this matter gave a brief history of his experience in eminent domain proceedings, and noted that this case was going on for many years before he was retained by the City in 2007. Mr. Calloway discussed his analysis of the settlement. He noted that he had a chance to work with the City's retained Real Estate Appraiser, Mark Quinlivan, who has performed many appraisals within the City in the context of valuing properties for the City. He said at the time he began this case, the owner was asking for $ 1 1 Million Dollars as the price for the market value of Parcel 1 , and he looked at Mr. Quinlivan's previous appraisals of the property and noted that the date of evaluation was April 2005 which was at the height of the real estate boom. He looked at Mark's appraisals of the property and as time went on, the appraisals went up 50-75% as was reflective of the market, which makes Mr. Quinlivan's work credible. He said he also looked at the property owner's appraisal and their valuation to try to understand why they believed the property was worth $12 Million Dollars, and he presented his analysis to City Attorney Ottinot with at least two opinions on his assessment of their analysis and their appraisal of the property, their ability to claim that the property is worth $ 1 2 Million Dollars was hinged in part on land sales that occurred in the mid Miami Beach area, as well as the Rascal Plaza property that was assembled with two or three other parcels to pull together the real estate for the Epicure Project. He said that gave us the ability to challenge the valuation of the property at $ 1 2 Million Dollars, primarily because the Rascal Plaza property and that sale which was about $13 Million Dollars, which did not conclude until January 2007 well after the April 2005 date of valuation and also the two other sales that were used by the property owner to justify this $12 Million Dollars included a couple of other sales that represented assemblages of property that was used in connection with the Fontainbleau expansion of its hotel and condominium development, and the third sale was similar to that. He noted that they did not find any single parcel sales that were comparable to the subject property that the property owner used that established the $ 1 3 Million Dollars valuation. He said that they strongly challenged that Parcel 1 was worth $ 12 Million Dollars or even $ 1 1 Million Dollars. The property owner has maintained that to this date. He tried to put the City in a position where the City has alternatives. He noted that he believe the property is worth $3,750,000.00, that is a credible number. He said that he believes the settlement proposal we have in front of us today, represents the property owner's assessment that it makes more sense to settle the case today than to leave the case in the hands of a 1 2-personjury who very well may agree with the City's position. 2 Summary Minutes: Special City Commission Meeting February 8, 2008 Mr. Calloway said the other thing that they tried to do in this case is to look at not just the Ci ty' s best case scenario, in our case a trial would be $3.75 Million, that is our best case, he feels good about it but at the same time he cannot make any guarantees that you will reach that number, juries do unpredictable things. He said it is not unreasonable if a jury came back after a 7 -9day trial and decided that they believe the property was worth $6-7 Million Dollars, but he would be really surprised if they came back and said the property was worth $ 1 2 Million as the property Owner suggests. City of Sunny Isles Beach, Florida Mr. Calloway said that his recommendation that the City is being reasonable in a settlement at this amount. He said this is an offer by the property owner to accept $7 Million as an all- inclusive settlement, the property Owner has incurred tremendous costs in this case but it is not the City's responsibility at this point. He said the second most important thing he wants the Commission to take from this in addition to the fact that a $7 Million Dollar settlement is reasonable, is that prejudgment interest has accrued since 2005. He said that prejudgment interest is the amount of interest that you will have to pay to a property owner that essentially makes the property owner whole in terms of the value of the property that was taken from him. We essentially deposited in April, $2.25 Million Dollars as our good faith estimate of the value of Parcel l. If you assume that we have agreed to settle the case and have established a value for Parcel I at something more than the $2.25 Million Dollars, the interest that you are going to pay is going to be the difference between the amount that you put in the deposit into the registry and the amount that you finally settle at. The other aspect of prejudgment interest that is important is the rates which are extremely high, when we started in 2005 the rate was 9%, today it is II %, the difference between what you will ultimately have to pay them that principal amount and the interest rate combined, deserves some consideration in terms of understanding that number is a heavy duty number and it has come up over time. He said a $7 Million Dollar settlement tells him essentially equates a value to Parcell at roughly $5.2 Million Dollars, and again ajury could be $6 Million or $7 Million would be totally reasonable. Based on the value of Parcel I being $5.2 Million Dollars, prejudgment interest from April 2005 to the end of 2005, the full years of 2006 and 2007, prejudgment interest is roughly $896,000.00. Some of that interest we believe was unnecessarily incurred because of the delays in the court sanctioned continuances since March but that number will continue to go up absent final judgment or until you reach final judgment. Mr. Calloway said attorney's fees based on this proposal roughly equates to $800,000.00. That number is driven by a statutory formula that the State has that is in Florida law relative to how attorney's fees are calculated in condemnation matters. If you add the $5.2 Million, the $896,000.00 in prejudgment interests, and the $800,000.00 you have a little less than $50,000.00 which should represent the amount that would be left over to pay their costs, but that is not the City's responsibility to worry about how much they should be paid for their costs, as this $7 Million Dollars is all-inclusive, the property Owner has the discretion and the obligation to split that money any way they see fit. Mr. Calloway said in swnmary, that this has been an ardnous challenge for the City and again absent a final judgment, and that we are set for trial on Monday, and we are ready for trial, the trial is anticipated to be 7-9 days, whether we win at trial, whether we lose at trial, chances are we would find ourselves in a post-trial appeal, and that is not an unreasonable or unlikely scenario, not given this case. He said that Mr. Katz has demonstrated that he does not need 3 Summary Minutes: Special City Commission Meeting February 8, 2008 the $7 Million Do liars or the $12 Million Dollars, he is not in this fight Over money necessary, so even if we were to win the case, Mr. Katz would probably appeal the case if he felt the judge made an error that affected the outcome of the trial that suggested that we won, and so the issue of the appeal is not an unlikely scenario that he believes that underscores the reasonableness of the settlement and the costs associated to that relati ve to additional fees that they would have to be paid. He said that he feels that this would be a good settlement on behalf of the City. City of Sunny Isles Beach, Florida Mayor Edelcup thanked Mr. Calloway for the sununation that he made of this and made a complicated issue a lot clearer for our Commissioners. Mayor Edelcup recognized that Mr. Ranaan Katz came into the room and is now attending this hearing. Commissioner Scholl asked City Attorney what he would estimate OUr legal fees to date are, and City Attorney Ottinot said he would estimate in just legal fees, between $150,000 to $200,000. Commissioner Scholl said that we are prepared for trial now which is scheduled on Monday which will be ano ther 7 days of trial and the possibili ty of an appeal according to Mr. Calloway, and City Attorney Ottinot said that is correct, if we went to trial on Monday, the legal fees will increase, and Mr. Calloway is prepared for trial, and he noted that his time and efforts which is part of the trial is not eVen part of this equation. Commissioner Scholl asked what percentage of Code violations do we typically waive, and City Attorney Ottinot said generally you have a settlement around 5% or 10% of the total amount of fines, and with respect to this case, at one time there was a settlement for $30,000 that settled all the existing Code violations on Mr. Katz' property. Commissioner Scholl asked if we are opening oursel ves up to selecti ve enforcement claims by other property owners when we give Mr. Katz a card out against the one side rule. City Attorney Ottinot said no, that we have a unique situation in this case, in fact, Mr. Katz has given more away than the settlement that we have done in the past, Mr. Katz settlement was through mediation, in fact Mr. Katz wanted more than $7 Million Dollars, so we were able to use the Code Enforcement fine as a leverage to get to the number that was acceptable to the City. Commissioner Scho II asked when will we get possession of the property, based on the tenant, and City Attorney Ottinot said that we have a lease agreement with Vanguard/Alamo, and in 2009 we have a right to teminate that lease agreement however, we would have to compensate them as part of the settlement in this eminent domain case, we had settled the lease-hold interest for that property for around $450,000.00, and we have paid between $ 150- 180, nevertheless, Vanguard is paying rent to the City which is around $6,000 _ $7,000 a month for using 50% ofthe property. There is a payment formula within the lease contract and we will also have to provide them with relocation costs under Florida law. Commissioner Scholl said the law is written in such a way that for the property owner it really doesn't pay not to fight, and it should be that way simply because we don't want the government indiscriminately going out and taking people's property, it is an onerous process for the government to take property, at the Same time there is a process in place, and the property owner has the right to take the government to the max, and because ultimately he is getting his fees paid, so with that in mind, he is in favor of the settlement. Commissioner Brezin said when she put the facts together as to what our overall costs would be, and there is a certain amount of gam ble involved when you go before a jury, and she came to the conclusion that she would favor the settlement, and she thanked Mr. Calloway for 4 Summary Minutes: Special City Commission Meeting February 8, 2008 reinforcing her feelings hecause eVen though she felt fairly secure in her decision it Was very nice to have it justified by all the facts that he presented today, and she thanked City Attorney Ottinot as well for a job well done. City of Sunny Isles Beach, Florida Vice Mayor Thaler thanked Mr. Calloway for an excellent presentation. He said one poin~ and it was broUght out on Commissioner Scholl's question as to the cost of the City itself, and the time that has not been mentioned yet of OUr key people in OUr Legal Departmeot. He said the total cost is in eXcess of your $50,000 that Was left over on the oumber. In goiog through all the oumbers he Comes up very close to the numbers that Mr. Calloway laid out and then including going forward, if we Were to go forward, and also have the additional challenges and there is no question in his mind that the $7 Million Dollars is a very good settlement for the City to take at this point, and therefore we will be able to move on and utilize the efforts of both the Commission and our attorneys in new and additional projects. Commissioner Goodman thanked Mr. Calloway for his excellent presentation, and he also feels that it is a good settlement, it took a long time, and he congratulated staff, but the only thing he questions is the $336,000.00 in reference to the City when they say they reduced the fines to 10% and he doesn't feel that is fair or reasonable because when people get summons and they ignore them, and by reducing the fines it causes difficulty for other people who obey the law, so this number was put down and it becomes part of this agreement, and that is the part that he thinks needs lOOking at in the future. He said he agrees to the agreement, he thinks it is a fair agreement, the presentation was excellent, he learned a lot from it. Mayor Edelcup said he is very pleased with the proposed settlement, it has been a long time, it has been an arduous four years, and certainly We and Mr. Katz needs to put this behind us, and if We were to continue this in court more likely or not we would still be here years from now under some appeal process that neither We or he would have initiated, and time and money, interest, and labor of all of our people would have been involved in really a fruitless adventure to satisI)> OUr ego or his ego, and he feels that We have finally arrived at a figure that he believes is fair and just for all parties. He said in reference, when We bOUght the Galbutt property which today is Heri tage Park, we paid approXimately the same per acre for that as we are now paying per acre for this, and in his background when he Was trying to come up with a number for settlement he Was using that as a benchmark which he doesn't think the appraisers had factored in because it came after the fact, and so in total in settling all these other issues are minor points in the greater good for both Parties and he has no problem in reCOmmending that We move forward and make this an official acceptance for this proposal. 3B. A Resolution of the City Commission of the City of Sunny Isles Beach, Florida, Approving a Settlement in the Case of City of Sunny Isles Beach vs.18100 Collins Avenue Shopping Center, Ltd. Et. AI., Case No. 04-12891CA 10; Providing for the City Manager and the City Attorney with the Authority to Do All Necessary Things to Effectuate this Resolution; Providing for an Effective Date. Action: City Clerk Hines read the title. Vice Mayor Thaler said that there was a oote aod a letter sent out with two colors 00 it, is there a palette that has been established, or how do we establish the colors, aod City Attorney 5 SummaI}' Minutes: Special City Commission Meeting February 8, 2008 - Ottinot said that it is the same Process that We utilize now, the shopping center owner will submit the proposed colors to staff, and those two colors will be the color that he will utilize, the process has not changed, management will approve the colors, and he will have to Comply with the request he submits if he is approved. Commissioner Brezin moved and Vice Mayor Thaler seconded a motion tn approve the resolution. Resolution No. 2008-1218 Was adopted by a voice vote of 5-0 in favor. City of Sunny Isles Beach, Florida Mayor Edelcup said that the motion has been approved, We are uo longer litigants, as Soon as we can get this into its legal proper fonn We can finally move forward, and be asked Mr. Katz if he would like to address us now that we have made the vote. Ranaan Katz thanked the Commission for the Vote, and he said tbat We can all focus on the important things now, and let's start a new leaf today. 4. ADJOURNMENT . Mayor Ede!cup adjourned the meeting at 11 :30 a.m. , ,. Respectfully submitted by: ' " ~ .~:~~- Jane A. Hines, CMC, City Clerk APProved by the City Commission on Feb. 21, 2008 ~~" / 6