ACTION ITEM
SPONSOR: Teniade Broughton, Chairperson
SUBJECT:
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FINAL NEGOTIATION RELATED TO 100 W INTENDENCIA STREET
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RECOMMENDATION:
recommendation
That the Community Redevelopment Agency (CRA) authorize the Mayor to make a final attempt to negotiate a solution to G Squared Pensacola, LLC’s failure to comply with the deed restrictions set forth in the special warranty deed for the property addressed as 100 West Intendencia Street (formally 120 West Government Street) to be brought back to the CRA for approval at a future meeting. Further, that should an agreement not be reached that the Mayor be authorized to pursue legal action for the payment of liquidated damages owed and non-compliance.
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SUMMARY:
On December 5, 2016, the CRA declared the property located at 120 West Government Street surplus and available for redevelopment. Subsequently, a Notice of Disposition/Request for Proposals (RFP) was published in the Pensacola News Journal for redevelopment of the property in accordance with Chapter 163, Part III, Florida Statutes. A contract for sale of the property was awarded to Steven and Paul Grimes, managers of G Squared Pensacola, LLC (as later assigned) on September 11, 2017 in response to a development proposal received by the developer. The purchase price was $720,000. Requirements for redevelopment of the property were secured by deed restrictions within the special warranty deed. The restrictions require that the property be used only for a professional office and residential mixed use development including no less than 10 units.
Subsequent to the sale, the property was split into two parcels. The parcel to the south remains addressed as 120 West Government Street, while the parcel to the north is addressed as 100 West Intendencia Street. A Notice of Commencement was issued on August 22, 2018 for construction of a 6-unit mixed use building now known as the Imperium building. The building includes 3 commercial units with 3 two-level condominium units located above them. A certificate of occupancy was issued for completion of the Imperium on October 23, 2019. No further construction has been performed to date, leaving 4 units still to be developed. The deadline for completion of the 10 units was January 5, 2020. Since only 6 of the 10 units have been completed to-date, liquidated damages are accruing at a rate of $1,000 per day in accordance with the restrictions.
At the CRA’s February 2023 meeting, G Squared Pensacola, LLC submitted a request to modify the deed restrictions. The CRA authorized staff to further negotiate an amendment to the restrictions for its consideration at a future meeting.
Subsequent to the February 2023 meeting, however, staff was approached by a prospective buyer interested in acquiring and redeveloping the property. The buyer requested a suspension of the deed restriction for a period of sixty (60) days, beginning on April 11, 2023 to allow the buyer to complete acquisition and to re-negotiate an agreement with the CRA for redevelopment of the property. That request was accepted by the CRA on April 10th. The suspension period ended on June 10, 2023. The property was not acquired, therefore, accrual of the liquated damages resumed as of June 11, 2023. As of July 18, 2023, the day following the July CRA meeting, the amount of liquidated damages due will be $1,228,000. A schedule of the liquidated damages assessment including the suspension period is attached.
The CRA is asked to authorize the Mayor to make a final attempt to negotiate a solution to G Squared Pensacola, LLC’s failure to comply with the deed restrictions before further pursuing legal action. Should an agreement be reached it will be brought back to the CRA for approval.
PRIOR ACTION:
December 5, 2016 - The CRA declared the property located at 120 W Government Street surplus.
September 11, 2017 - The CRA approved an award of contract to G. Squared LLC. for the sale of 120 West Government Street.
September 14, 2017 - The City Council approved an award of contract to G. Squared LLC. for the sale of 120 West Government Street.
May 10, 2018 - The CRA approved a 150-day extension of the construction commencement deadline set forth in the deed conveying 120 W Government Street, terminating on September 2, 2018.
February 6, 2023 - The CRA authorized staff to negotiate the deed restrictions set forth in the special warranty deed for the property addressed as 100 West Intendencia Street (formally 120 W. Government Street) per a request from G Squared Pensacola LLC.
April 10, 2023 - The CRA authorized a suspension of the deed restriction for a period of sixty (60) days, beginning on April 11, 2023.
FUNDING:
N/A
FINANCIAL IMPACT:
An affirmative vote will authorize the Mayor to negotiate a settlement of the liquidated damages amount of $1,228,000 plus $1,000 per day until payment is made, subject to CRA approval of any settlement. If a settlement is not reached and approved by CRA, an affirmative vote will authorize the Mayor to then pursue legal action against G Squared Pensacola, LLC to recover such liquidated damages.
LEGAL REVIEW ONLY BY CITY ATTORNEY: Yes
7/7/2023
STAFF CONTACT:
David Forte, Deputy City Administrator
Sherry Morris, Development Services Director
Victoria D’Angelo, CRA Manager
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ATTACHMENTS:
1) Development Proposal - G. Squared LLC
2) Special Warranty Deed
3) Amendment Extending Construction Commencement
4) Accepted Plans
5) Location Map
6) Statement of Liquidated Damages
PRESENTATION: No end