C7G - Approve Padel Courts at 5th & Alton

Resolutions - R7 G

COMMISSION MEMORANDUM

RECOMMENDATION

The Administration recommends the Mayor and City Commission adopt the Resolution.

BACKGROUND/HISTORY

On May 18, 2005, the Mayor and City Commission adopted Resolution No. 2005-25899, approving a Development Agreement between the City and AR&J Sobe, LLC (“Developer”) for the creation of a multi-level commercial building and parking garage at Fifth Street and Alton Road (the “Property”) through a public-private partnership as a condominium (the “Project”).

On December 29, 2009, the Developer recorded the Declaration of 5th & Alton Condominium (the “Declaration”), formally establishing the respective ownership, rights, and management responsibilities of the City and Developer within the garage and condominium. In 2012, the Developer’s interests were acquired by Fifth & Alton LLC (“Edens”), which now holds the majority

of the Condominium Units and is responsible for ongoing operations, capital improvements, and upkeep of the property.

The garage, which is part of the 5th & Alton Condominium, contains 1,087 parking spaces—500 owned by the City and 587 owned by the developer. The City’s 500 spaces, along with the bus stop facing Alton Road, are documented in a Special Warranty Deed recorded in Official Records Book 27292, Page 396 (Folio No. 02-4203-352-0030), and those City spaces remain exempt from ad valorem real estate taxes. The developer owns the remaining 587 parking spaces, the retail space, and all other portions of the Property other than designated Units and Common Elements (as defined in the Declaration), and the Developer-controlled units are subject to taxation as private property.

Recently, Edens entered into a new agreement with MB Padel LLC attached hereto as Exhibit “C” in order to activate the southern portion of the 7th floor of the garage for the development of up to ten (10) padel courts and a clubhouse or amenity structure not having more than 2,000 square feet. This facility will feature the sale of padel-related merchandise and provide food and beverage service, offering a new recreational amenity and retail experience for the community, subject to City approvals.

As a result of this proposed padel facility, Edens seeks approval of an amendment to the Declaration approving the development of up to ten (10) padel courts and a related clubhouse or amenity structure, and authorizing the redesignation and exchange of certain 7th-floor parking spaces so the project can be constructed entirely over Developer-owned spaces while protecting the long-term interests of both Edens and the City.

ANALYSIS

Edens, as the owner of the Developer-Controlled Units, proposes to activate and repurpose the southern portion of the 7th floor (roof level) of the Garage for a new padel sports and recreation venue. Subject to and conditioned upon the City and Edens entering into the proposed Amendment No. 1 to the Declaration (“Amendment”), a draft copy of which is attached hereto as Exhibit “A”, Edens, as landlord, has entered into a Shopping Center Lease Agreement dated November 16, 2023 with MB Padel LLC (“Padel Tenant”), as tenant, for use of premises (“Padel Premises”) which is comprised of the southernmost half (approximately) of the rooftop level (i.e. the 7th floor level) of the Garage. The Shopping Center Lease (“Padel Lease”) with MB Padel LLC, enables the construction and operation of up to ten (10) padel courts, along with a clubhouse or amenity structure (not exceeding 2,000 square feet), retailing padel-related merchandise and offering food and beverage service (the “Padel Ball Development”). This proposal is contingent upon the City’s approval of Amendment No. 1 to the Declaration and the completion of all required regulatory approvals.

The padel area currently includes thirty-one City-owned spaces on the 7th floor. To locate the project entirely over Developer-owned spaces, Edens requests an exchange of sixty-two (62) spaces: the City will receive thirty-one (31) Developer-owned spaces elsewhere in the garage, and Edens will receive thirty-one (31) City-owned spaces on the roof level (as reflected in Exhibit “B”), preserving each party’s total space count. The exchange will be finalized by Special Warranty Deeds, and the City will continue to own 500 tax-exempt spaces.

Proceeds from the padel operations will be included in overall garage revenues, with the City receiving forty-six (46%) percent consistent with its pro rata ownership share. The project will activate the rooftop, add recreational amenities, support nearby retail, and the City retains

flexibility to require reversion to parking after the initial eight-year lease term if needed for future intermodal transportation or municipal parking needs.

The Administration supports the proposal as a way to maximize garage use and financial performance, expand community amenities, and safeguard the City’s parking interests and revenue streams.

FISCAL IMPACT STATEMENT

N/A

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

N/A

CONCLUSION

The Administration recommends that the Mayor and City Commission approve, in substantial form, Amendment No. 1 to the Declaration of 5th & Alton Condominium (5th & Alton Condominium) between the City and Fifth & Alton (Edens), LLC, which condominium includes a parking garage with parking spaces owned by the City (“City Spaces”) and parking spaces owned by Edens (“Developer Spaces”); said Amendment (i) approving the development of up to ten (10) padel courts and related clubhouse or amenity structure not having more than 2,000 square feet, for the sale of padel-related merchandise and equipment and offering food and beverages over developer spaces located on the 7th floor level of the garage (“Padel Ball Development”), subject to Edens securing all required regulatory approvals; (ii) redesignating sixty-two parking spaces on the 7th floor level of the parking garage, so that the City will own thirty-one parking spaces which were previously owned by Edens and Edens will own thirty-one parking spaces which were previously owned by the City so that the padel ball development may be constructed completely over developer spaces, with the proceeds from the operation included in the parking revenues for the garage; further, authorize the City manager to finalize the Amendment; and further authorize the City Manager and City Clerk to execute the Amendment, any deeds related to the exchange of parking spaces in the garage, and any other documents or agreements related to this matter.

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

Facilities and Fleet Management

Sponsor(s)

Co-sponsor(s)

Condensed Title

Amendment 1/Fifth & Alton, LLC, Approve Padel Courts & Redesignate 62 Parking Spaces in Garage. FF

Previous Action (For City Clerk Use Only)