C7D - Approve Barclay Redevelopment Term Sheet

Resolutions - C7 D

COMMISSION MEMORANDUM

A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE AT ITS JULY 16, 2025 MEETING, PURSUANT TO REQUEST FOR PROPOSALS (RFP) 2023-115-KB, FOR THE REDEVELOPMENT OF THE CITY-OWNED PROPERTY LOCATED AT 1940 PARK AVENUE (THE BARCLAY) (THE "PROJECT"); APPROVING THE TERM SHEET FOR THE PROJECT, ATTACHED AS AN EXHIBIT TO THE COMMISSION MEMORANDUM ACCOMPANYING THIS RESOLUTION; DIRECTING THE ADMINISTRATION TO NEGOTIATE A GROUND LEASE WITH 1940 BARCLAY PARTNERS, LLC, CONSISTENT WITH THE TERM SHEET, WITH THE FINAL TERMS OF THE AGREEMENT SUBJECT TO THE PRIOR APPROVAL OF THE MAYOR AND CITY COMMISSION; AND REFERRING THE PROPOSED PROJECT AND ASSOCIATED AGREEMENT TO THE PLANNING BOARD FOR REVIEW, IN ACCORDANCE WITH THE REQUIREMENTS OF THE CITY CHARTER AND CITY CODE.

TITLE:

RECOMMENDATION

The Administration recommends that the Mayor and City Commission adopt the Resolution accepting the recommendation of the Finance and Economic Resiliency Committee to approve the Term Sheet for the redevelopment of the Barclay property (attached as an Exhibit), and direct the Administration to negotiate a Ground Lease with 1940 Barclay Partners, LLC, consistent with the approved Term Sheet.

The terms of the final, negotiated Ground Lease will be subject to the prior approval of the Mayor and City Commission. Additionally, the proposed Project and associated Ground Lease should be referred to the Planning Board for review, in accordance with the City Charter and City Code.

BACKGROUND/HISTORY

RFP 2023-115-KB. On November 16, 2022, the City Commission authorized the issuance of Request for Proposals (RFP) 2023-115-KB for the redevelopment of the City-owned property located at 1940 Park Avenue (the Barclay). One proposal was received from The Barclay Partners, LLC, now known as 1940 Barclay Partners, LLC (the “Developer”). The Evaluation Committee, appointed by the City Manager, scored the proposal 87 out of 100 points, in accordance with the RFP criteria.

On September 13, 2023, the City Commission directed staff to engage in parallel discussions with the Developer and the Housing Authority of the City of Miami Beach (“Housing Authority”), which entity had not submitted an RFP response but later expressed interest as an equity partner in the redevelopment.

On March 22, 2024, the Finance and Economic Resiliency Committee (FERC) recommended awarding the RFP to the Developer, contingent upon a minimum $6 million upfront payment to the City, equivalent to the Miami Beach Redevelopment Agency’s (RDA) original acquisition cost.

RFP Award. On April 3, 2024, via Resolution No. 2024-32977, the Mayor and City Commission approved the FERC recommendation, authorized negotiations, and referred the Project (including any necessary Land Development Regulations (LDR) amendments) for review by FERC, the Land Use and Sustainability Committee (LUSC), and the Planning Board.

FERC Review. On September 20, 2024, FERC reviewed a revised project proposal dated May 30, 2024, and recommended it favorably with conditions, including: (i) an earlier milestone for payment of a portion of the upfront payment and (ii) consideration of rent limitations for the market- rate units. Subsequently, the Developer prepared proposed Comprehensive Plan and City Code amendments to accommodate height and FAR increases but later requested an indefinite deferral due to anticipated lack of Committee support.

Most recently, on July 16, 2025, FERC reviewed the Developer’s updated proposal dated June 16, 2025, and voted unanimously to recommend that the City Commission approve a Term Sheet based on the revised project terms. The Term Sheet is attached to this Memorandum as Exhibit A and forms the basis of the Administration’s recommendation.

ANALYSIS

The Developer’s current proposal, as memorialized in the Term Sheet (Exhibit A), may be evaluated according to four components that have guided the City Commission’s discussion of the Project:

1. Historic Preservation

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The Barclay Plaza Hotel remains a contributing structure within both the Museum Local Historic District and the Miami Beach Architectural District. The Developer has indicated that, due to current structural conditions, full demolition of the existing Barclay structure will likely be required. In 2014, the Miami-Dade County Unsafe Structures Board issued an emergency demolition order for the Barclay. However, pursuant to a recorded 2023 Compliance Agreement with the Board, the demolition order has not been enforced by the Building Official, pending the outcome of this RFP. The RFP solicitation referenced an August 2021 feasibility study by MC Harry Associates, which concluded that the building envelope and all major systems required full replacement. The RFP also stipulated that any modifications or improvements to the building, including exterior alterations, changes to public interior spaces such as the lobby, and any attached or detached additions, would require a Certificate of Appropriateness from the Historic Preservation Board (HPB). Accordingly, the Term Sheet requires the Developer to substantially retain and preserve the exterior walls, public interior spaces, and all architecturally or historically significant features, where feasible. HPB approval is required for all new construction, including attached or detached additions and rooftop structures. If full or partial demolition is ultimately unavoidable, the Term Sheet further requires, at a minimum, the following: i. Reconstruction of the original façades along Park Avenue and Washington Avenue; ii. Rebuilding of historically significant interior lobby elements; and iii. Salvage, preservation, and reuse of original architectural materials, where possible.

2. Zoning and Design Compatibility

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The current design proposal has been reduced in scale and no longer includes requests for additional FAR or building height beyond what is permitted under the GU zoning designation. While the revised design is more compatible with the surrounding historic district, it remains subject to full compliance review for setbacks, unit sizes, parking, landscaping, resiliency standards, and other applicable requirements under the City Code. The Developer has indicated an intention to seek waivers, variances, and/or exemptions from certain requirements, potentially including Payment in Lieu of Parking and Art in Public Places contributions. These requests will be detailed for City Commission consideration during preparation of the Ground Lease.

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3. Housing Affordability

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Earlier iterations of the project included workforce and affordable housing units supported by FAR and height incentives. The current proposal, however, is predominantly market-rate.

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Senior Residential Units. The City will require at least seven (7) units reserved for households earning at or below 80% AMI, with at least one household member 62 years or older. These units will be coordinated with the Housing Authority’s voucher program.

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Restricted Residential Units. To expand affordability commitments, the City seeks to require that a minimum of 15% of market-rate units (no fewer than 15 units) be designated as Restricted Residential Units. These units must be offered at the lesser of market rate rent or levels affordable to households earning up to 160% AMI, enforceable by a restrictive covenant for the full 99-year Ground Lease. Monthly rent for these units shall not exceed 30% of gross monthly income for a household at 160% AMI, consistent with the recommendation of the City’s Finance and Economic Resiliency Committee (FERC).

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Integration and Quality Requirements. All Restricted and Senior units must (i) include a mix of unit types and sizes, (ii) be distributed across multiple floors, and (iii) be indistinguishable in design and finish from market-rate units.

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Transient Use Restriction. All residential units will be subject to a minimum lease term of 12 months. Short-term and transient rentals are expressly prohibited.

4. Financial Compensation to the City

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$2 Million Rent Payment. The Developer will provide a $2 million ground lease payment. The City proposes that the $2 million payment be structured in two $1 million installments: $1 million due upon HPB/Planning Board approval and $1 million due on the Possession Date (when Developer takes control of the property). This milestone- based structure strengthens early City cash flow and incentivizes timely Developer progress on approvals.

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No City Subsidy. Notably, the Project will be privately financed and does not require any City subsidy. While the proposal does not include recurring rent or revenue sharing, it relieves the City of the ongoing costs of maintaining a deteriorating structure and restores the Property to the tax rolls.

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Policy Rationale. Given the critical need for rental housing in Miami Beach, the Administration recommends forgoing annual rent in exchange for the activation of a blighted property and the delivery of new rental housing, without requiring City financial assistance.

Additional Term Sheet Components

1. Ground Lease Structure

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Triple-net lease: Developer assumes all operating expenses, taxes, insurance, and maintenance. Term: 51 years initial, plus two 24-year extensions (up to 99 years total), exercisable only if the Developer is not in default.

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2. Retail and Public Benefits Commitments

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A minimum of 1,000 sq. ft. of ground-floor retail with activated frontage to enhance street-level activity. Public benefits explicitly include: new long-term attainable housing, retail activation, resiliency and sustainability measures, landscaping enhancements, and improved safety and lighting at a currently blighted site.

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3. Project Milestones and Timing

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The Term Sheet establishes strict milestones for: HPB/Planning Board approvals, building permit issuance, construction commencement, and substantial completion. These provisions ensure the project moves forward expeditiously. Failure to meet deadlines may trigger City remedies, including termination and liquidated damages.

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4. City Protections

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Non-subordination: City’s ownership remains senior to any financing. AS-IS property acceptance: Developer assumes all environmental and resiliency- related costs. Termination rights: City may terminate upon Developer default; Developer termination rights are limited and require reimbursement of City-incurred costs.

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FISCAL IMPACT STATEMENT

While the proposal does not include recurring rent or revenue-sharing, it provides:

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A $2 million one-time payment Relief from ongoing maintenance costs Activation of a deteriorating, underutilized public asset Future ad valorem tax revenues and economic activity.

The Developer is not requesting any City subsidies or grants, making the proposal fiscally neutral with potential long-term benefits.

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

CONCLUSION

The Project, as outlined in the Term Sheet, reflects a scaled-down design that aligns more closely with the character of the surrounding historic district. While it includes limited restricted housing and reduced financial compensation to the City, it requires no City subsidy and offers an immediate and viable opportunity to redevelop and activate a deteriorating asset, introducing new rental housing and retail that will enhance the vitality of the Collins Park neighborhood.

Accordingly, the Administration recommends that the Mayor and City Commission adopt the Resolution, approve the Term Sheet, and direct the negotiation of a Ground Lease consistent with its terms, subject to final City Commission approval.

Applicable Area

South Beach

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Economic Development

Sponsor(s)

Co-sponsor(s)

Condensed Title

Accept Rec/Approve Term Sheet, Redevelopment Of 1940 Park Avenue (The Barclay). ED

Previous Action (For City Clerk Use Only)