TO: Mayor and Commissioners
FROM: Lynn Gelin, City Attorney
DATE: September 22, 2020
Title
CONSIDERATION OF AMENDMENT NO. 1 TO THE PARKING FACILITY AND EASEMENT AGREEMENT AND PROJECT COVENANT FOR THE 4TH AND 5TH DELRAY (IPIC), SPECIFICALLY REMOVAL OF THE REQUIRED CORPORATE HEADQUARTERS RELOCATION AND PUBLIC TERRACE AREA.
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Recommended Action:
Recommendation
Motion to approve Amendment No. 1 to the Parking Facility Easement and Agreement and Project Covenant subject to approval by the Community Redevelopment Agency (“CRA”).
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Background:
At its meeting of January 20, 2016, the Site Plan Review and Appearance Board (“SPRAB”) approved the Class V site plan for the iPic movie theater, offices, and retail for the project known as "4th & 5th Delray" located at 25 SE 4th Avenue, Delray Beach, Florida (“Site”). As a condition of site plan approval, the applicant was required to record a covenant related to the various obligations to be undertaken. As part of the Parking Facility Easement Agreement and Project Covenant ("Agreement"), the Developer (“iPic”) agreed to relocate its corporate headquarters as well as allow non-exclusive public use of the upper level, fourth floor terrace garden area and provide corresponding access to the public for use of same ("Public Terrace"). The covenants for the corporate headquarters and the Public Terrace were included in the Agreement approved by the City Commission on March 3, 2017.
Article V of the Agreement, “Relocation of Developer’s Corporate Headquarters,” requires the Developer to relocate its corporate headquarters to the Site within one-hundred eighty (180) days after the final certificate of occupancy is issued for the office portion of the Project. Developer filed for bankruptcy protection on August 5, 2019. Since then, there has been little activity in those proceedings and no indication that Developer will be relocating its corporate headquarters to the Site.
Article VI of the Agreement, “Public Terrace,” granted the City of Delray Beach with a non-exclusive easement for the general public to use the Public Terrace and a non-exclusive easement to access the Public Terrace. The conditions of the Public Terrace include the following: that there would be no charge to the public or City for its use; that the Public Terrace would be maintained by the Developer; that the Public Terrace would be open, at a minimum, Monday through Friday from 9AM to 5PM and all other times the Developer's customers, guests, etc. were allowed to use the Public Terrace. As part of the terms of the Agreement, the Developer is not permitted to rent or lease the Public Terrace for commercial, public, or private events separate and apart from the use of the movie theater.
Delray 4th & 5th has approached the City to seek relief from the sections V and VI of the Agreement. Recently, a corporation has expressed interest in relocating its corporate headquarters to the fourth floor; however, the easement for the public terrace poses a security concern due to the potential of allowing the public in an area near an active corporate headquarters. If permitted, this corporate headquarters would bring an additional one hundred (100) employees to the City’s downtown. However, an amendment to the Agreement would be necessary.
In consideration for the amendment to the Agreement, Delray 4th and 5th has proposed to reduce the CRA’s annual maintenance payments for the parking garage from $75,000 annually to $50,000 annually with zero allowance for CPI increases, in addition to forgiving the annual maintenance payments for years 2019, 2020, and 2021. This Amendment No. 1 to the Agreement would be contingent on the CRA’s approval of the foregoing. The CRA is scheduled to consider this matter at its meeting on September 29, 2020.
City Attorney Review:
Approved as to form and legal sufficiency.
Financial Impact:
None to the City.