Ms Golub’s concerns over the pending Bahia Mar lease

My name is Rochelle Golub. I live at 712 Intracoastal Drive, Fort Lauderdale, FL. As an attorney, I worked in-house for 15 years with a major hotel and timeshare developer. I served on the Planning and Zoning Board for six year until May 2011 and currently sit on the Charter Revision Board.

I am writing to you today as a concerned citizen. It is my opinion considered opinion that it is premature for the Commission to proceed to the second reading of the proposed Ordinance tonight which, if passed, will replace the SBMHA with a PUD designation and “approved development plan”. The record developed at the September 16, 2009 P & Z Board meeting where the PUD application and now defunct site plan were presented speaks for itself, as does my vote. I was one of the four Board members to approve the PUD application, albeit reluctantly as noted in the meeting minutes. However, if the record before the P&Z Board were the same record as the record before the Commission today, I doubt whether I would have voted to approve the PUD application.
Even a cursory review of the record as it stands today leaves the reader confused with more questions than answers about the details of the proposed “approved development plan”. There are still important unresolved issues and conflicting assertions and undocumented promises that should be locked down before the proposed site plan is deemed approved and forms the basis for a development agreement and Lease amendments.

Here are some of my questions and observations; I am sure that all of you are asking these same questions and more of your own.

1. Who is the Applicant?
The current Amended and Restated Lease Agreement dated January 4, 1995 is between the City and Rahn Bahia Mar, LTD (the “Lease”). The public records show that in 2004 Rahn Bahia Mar, Ltd, a Florida partnership was merged into Rahn Bahia Mar, LLC, a Delaware limited liability company. However, in September 2009, before the P&Z Board , the Applicant was still listed as Rahn Bahia Mar, Ltd. The records show that the current application before the Commission is BRE/Bahia Mar Development, L.L.C. / Bahia Mar Park. This entity has no apparent nexus to the Lessee. While this may just be an administrative matter that could be rectified to the Commission’s satisfaction, shouldn’t it be fixed before the second reading?

2. Residential Units:
Why should the Commission approve residential units in the proposed PUD rezoning? The current Lease at Article 19.0 Section 1 provides that the Lessee agrees to use the leased premised “as a first class hotel-marina and resort complex, which may include … offices, apartments, and other kindred and similar businesses.” From the context of the Lease and the history of the property, “apartments” refers to transient rentals for the boating community. For example, while the Lease permits the Lessee to sublease certain portions of the marina without the City’s approval, there is no similar grant to the Lessee to sublease “apartments”. The current SBMHA zoning district, which I believe post-dates the Lease, permits residential units. I believe that many, including me, are confused about the definition of “residential units” as used in the SBMHA zoning description as compared to the claim of right by the Applicant to residential units. As used in the SBMHA, the term was apparently intended to reflect short term transient rental of apartments as permitted in the Lease. Applicant’s request for “residential units” in the PUD requires the term to permit long term real property interests vested in consumers through 2111 which they assert are contemplated in the SBMHA.

Is it sufficient reason to use the PUD to change the intended uses for the SBMHA merely because this particular Lessee claims that it needs to “sell” 28 residential units to make the economics of the proposed site plan work? What does the Commission think the value of such long-term residential units is to the City?

If the Commission determines that such “residential units” are valuable to the City and should be permitted in the Bahia Mar PUD, what will the definition of residential units be? One hundred year leases or “apartment rentals”? What are the development rules going to be? How long can a residential unit lease be? Who is the lessor? What are the rights and obligations of the residential unit lessee? What are the liabilities to the City? How will risk be apportioned and mitigated? These details should be worked out before an Ordinance is past to permit a PUD with “28 residential units” — especially as this concept appears to be precedent-setting.

Adding to the confusion about residential units and a mandatory extension of the Lease to 2111 (see discussion of Condition 1 below) is Charles Seiman’s statement to the P&Z Board in the minutes of the September 16, 2009 meeting that the proposed PUD and site plan can be completed under the current Lease whether or not additional terms and conditions are added to the Lease. The Lease was intentionally not made a part of the P&Z record. There was no reason to question Seiman’s statement at the time. This example of the shifting position of Applicant further highlights the need to make sure the details are addressed now.

3. Conditions to approval of PUD.
There are currently 30 conditions to the approval of the PUD rezoning. DRC is still reviewing and making comments. You are still reviewing the details of the Application. The Applicant is still meeting with neighborhood groups and the Boat Show owners. My reading of many of the conditions show them to be dangerously vague making the drafting of the development agreement and any lease revisions a mine field for the City. Is the Commission comfortable with the wording of the current conditions and the timing of a second reading of a work in progress? Is the Commission comfortable that it will have no control of phasing?
More specifically, I make the following observations about the Conditions of Approval as currently drafted:
• 1(1) and (2): These subsections of Condition 1 require the Commission to amend the current Lease and to extend the current Lease to 2111. Is the Commission certain that such an extension is in the best interest of the City? What is the benefit to the City? If the Applicant takes the position that it will not undertake to improve the Bahia Mar site absent a Lease extension through 2111 and the Commission determines that such an extension is not in the best interest of the City, then the PUD rezoning is moot!
By approving the Ordinance on second reading, the Commission is obligated to extend the Lease through 2111. It appears from the record that the only reason Applicant demands an extension of the Lease from 2062 to 2111 is to heighten the perceived value of the residential units offered to consumers. Applicant has stated it needs the residential units to make the development work economically. This seems contradictory to its claims of financial wherewithal. And, outside of Applicant’s assertions, there is no evidence that the inclusion of deed or long-term leased residential units in a hotel development creates enhanced financial stability for the developer. Does the Commission believe that the only way to develop the property is with residential units? Is Applicants’ claim of financial need a good enough reason to extend the current Lease beyond 2062?
It makes one wonder whether Rahn Bahia Mar, LLC ever intend to honor its obligations under the terms of the Lease to operate and maintain the property as a first class hotel and marina through 2062? Is the Commission comfortable that it can ensure that public purposes will be served by the proposed site plan through 2111 and overcome the conclusion that the mandatory lease extension is all about creating perceived value for “residential units”?

• 1 (after insert of new (6) and (7). What does this mean? How will it practically be enforced if you adopt the “plain meaning” of the words? Once the PUD is approved and construction commences, what is the penalty for Lessee failing to host the Boat Show?

• 2. It is interesting that a small private event (2-350 people) at the wedding pavilion can shut down public access to the Park for 25 calendar days and have sound amplification. There is no definition of “calendar days” other than that they do not include the Boat Show or Boat Parade. What about holidays? Is the third paragraph about the wedding pavilion contradictory to the second paragraph with respect to limitation of public access?

• 3. Should the Beach Community Center be available to the public for purposes other than regularly scheduled neighborhood association meetings?

• 7. Why does the list of permitted uses in the Bahia Mar PUD include such uses as a movie theater or performing arts theater? Does the inclusion of such uses affect the parking and traffic analysis? Why is a bed and breakfast dwelling included?

• 10. Who sets the fees for slip rentals? Are there caps?

• 12. This condition gives Applicant unfettered control over the order of development and the timing of the completion of public improvements. Does the Commission want input to the order in which the phases are developed? It is noted that at the P&Z Board hearing, Applicant did not reserve this right to control phasing.

In the discussion of the phases, where is the renovation of the Bahia Mar Hotel which was listed as part of the PUD/site plan development?

• 14. This language makes the issuance of a CO for the commercial buildings mandatory and not discretionary with the City if the Applicant fails to complete the public improvements. Is this loss of leverage in the City’s best interest?

• 18. Does the Commission wish to provide the City Attorney with any other guidance with respect to valet parking agreements? Does the Commission desire to cap self-parking fees to use the park and public improvements?

• 24. It is interesting to note that this condition was drafted as if the lease extension through 2111 was at the discretion of the Commission. Yet Condition 1 makes the lease extension a mandatory requirement for PUD approval.

• 27. Perhaps it should also be stated that no additions outside the footprints of the approved buildings can be built in the PUD.

4. Who is the “well capitalized investor” and what kind of financial assurances will be provided?

The vacant Trump Tower on Fort Lauderdale Beach should remind us every day of putting faith in a famous name and not paying sufficient attention to the potential risks of failure of major development undertakings. And what about the major renovation and new garage approved for the old Holiday Inn on Sunrise? As noted above, the Applicant is not Blackstone or LXR or the franchisor of the Waldorf Astoria flag. Yet, Applicant keeps implying that those deep pockets are going to be responsible for the Bahia Mar redevelopment. When specifically asked about what financing was in place for the proposed PUD site plan, Applicant’s representatives have stated that they will still need to seek financing once the PUD is approved. Rosy pictures have been painted about the “well capitalized investor” – but who and where is he or she? Is this just another promise to get the PUD approved?

5. Hotel standards.
Throughout the PUD application process, Applicant has touted the proposed hotel as a Waldorf Astoria. Nonetheless, the hotels in the PUD are described as “existing” and “luxury”. Is the Commission satisfied with that description? Should standards of luxury be determined before the adoption of the PUD? Should concessions about room rates and room blocks for the Boat Show and other City events be established before the PUD is read for the second time?

6. Bahia Mar.
At the first reading of the Ordinance, Applicant indicated an intention to reflag the Bahia Mar Hotel as a Doubletree Hotel. Does the Commission want to preserve the good will established by the name “Bahia Mar”?

In conclusion, Condition 13 provides that within 9 months either DRC gives final approval to the site plan or Condition 1 documents are completed. This Condition makes it imperative that the Commission asks more questions of staff and legal and provides adequate and specific guidance to staff and legal about the proposed site plan and the development plan and the lease agreements. If you believe there is more to do, the second reading of the Ordinance is premature.

Respectfully submitted,
Rochelle Golub