Ana Alvarez

Chief Planning Officer

Andrew Thompson

Chief Financial Officer

Neysa Herrera

Director of CRA & Economic Development

First Amendment to the Interlocal Agreement Among Broward County, The City of Oakland Park, and the Oakland Park Community Redevelopment Agency for the Sky Building Project, Formally known as Oakland Park Square.

Issue Statement: On May 23, 2019, the City of Oakland Park, the Oakland Park Community Redevelopment Agency (CRA), and Broward County entered into an interlocal agreement (ILA) for the Sky Building Project, formerly known as Oakland Park Square Redevelopment Project. Per the agreement requirements, the City provides annual updates to the County regarding the development's progress. The Sky Building is under construction and is expected to obtain its Certificate of Occupancy in 2025. To meet the milestones, the City requested an extension to the ILA between the City, CRA, and the County, resulting in the First Amendment to the ILA.

Recommended Action: Staff recommends that the CRA Board adopt a resolution authorizing the CRA Executive Director to execute the First Amendment to the Interlocal Agreement among Broward County, the City of Oakland Park and the Oakland Park Community Redevelopment Agency for the Sky Building, formerly known as Oakland Park Square Redevelopment Project. 

Background:

During the planning phases of the Sky project, the City approached the County for assistance to ensure the financial viability of the project.  As the City was converting public land into revenue-generating property through ad valorem taxes, the County joined this effort and entered into an Interlocal Agreement (ILA) with the City. The ILA provided gap funding in accordance with City's agreement with the Project developer, amounting to $1,100,000 from anticipated County tax revenues.

Since the ILA's approval, significant progress has been made on the development, albeit with setbacks. The COVID-19 pandemic, rising construction costs, increased interest rates for financing, and supply chain challenges have negatively impacted the Sky Building Project, similar to other development projects throughout the County. These challenges necessitated various amendments to the development program and agreements between the City and the Developer, delaying the project's critical path timeline.

During the 2022-2023 reporting period, it was discovered that the project would be subject to a School Board Mitigation Fee (SBEM). This fee, arising from a 2005 tri-party agreement between the School Board and Broward County, was unexpected and resulted in an unanticipated $1 million increase over the typical school impact fee for residential development. The City pre-funded this fee to ensure the development's feasibility, which required additional negotiations and amendments to the development agreement.

These unforeseen challenges have collectively resulted in delays to the project. The Sky Building is nearing completion and is expected to obtain its Certificate of Occupancy in 2025.

The term of the Agreement is for a period of ten (10) years from the effective date, ending in 2029. However, a provision in Exhibit A - Schedule of Payment, Section 1.2, states, “that City/CRA agrees that should the Project not meet the milestone within six (6) years after the Effective Date of this Agreement, no funds will be transferred by County.”  With the certificate of occupancy for the Sky Building expected in the first quarter of 2025, the property will not be placed on the tax roll until 2026, exceeding the 6-year limit for the project to meet the key milestone 1.1 (d), “Appearance of the entire Project on the Broward County Property Appraiser's ad-valorem tax roll”.

The City has requested a three (3) year extension to the agreement, extending the  termination date of September 30, 2032, with the same three (3) year extension made to Section 1.2.  This extension will allow the City to realize the full value of the $1.1 million financial contribution from the County, to be paid in annual installments equivalent to County' s share of ad valorem taxes each year.

The County has provided the attached First Amendment to the Interlocal Agreement among Broward County, the City of Oakland Park and the Oakland Park Community Redevelopment Agency for the Sky Building, formerly known as Oakland Park Square Redevelopment Project.  Upon approval by the City Commission, the County will submit the agreement to the County Commission for approval.

Note that the City Commission Agenda for this meeting includes the same item for approval by the City Commission.