Background:
The subject property is a vacant 3-acre site located at 1577 Sunset Strip, Sunrise Florida 33313 between NW 15th Street and NW 16th Street, referred to as “Sunset Strip Square”. This property was identified as an opportunity site in the East Sunrise Improvements Master Plan to introduce visible new housing styles more responsive to current market conditions in ways that take advantage of the walkability of east Sunrise.
In addition, the Master Plan’s suggestion to include a live/work concept embraces the existing entrepreneurial culture of the neighborhood and encourages microbusiness and small business development as a way to grow household wealth and prosperity. This site provides a unique opportunity to be a catalyst that will stimulate community revitalization.
On October 13, 2020, the City Commission authorized the City Manager, via Resolution No 20-113, to tender offers and counter offers in writing concerning the Property, provided the sale price is not less than the Property’s appraised value. The interested buyer is New Urban Communities, a company that has a strong reputation throughout South Florida as one of the most successful developers of urban infill and redevelopment projects. New Urban Communities has sixteen completed projects and another three currently underway. Their projects range from less than one acre to 145 acres in size and include residential, mixed-use, and commercial developments of widely varying sizes and designs.
New Urban Communities is proposing a residential development project with 28 two-story, 3-bedroom, 2.5 bath single family detached homes with rear loaded garages and covered front porches. Additionally, at least three (3) of the homes will be live/work units. The project has a robust affordable housing component, community area, and public art. The proposed project satisfies the vision from the East Sunrise Improvements Master Plan and is intended to be compatible with the surrounding neighborhood.
The Commission had previously requested that the Agreement include a claw-back or other similar provision in the event that the Buyer does not commence construction on the property. Staff evaluated numerous options to provide similar protections for the City and the attached Agreement includes the following safeguards:
- Establishes that closing will only take place after all land use approvals are in place and building permits of at least 3 homes are ready for issuance.
- This ensures that once the closing occurs, no additional permitting requirements are necessary and construction should commence shortly after closing.
- Requires the Buyer to obtain a Loan Commitment Letter prior to closing for the financing of the property purchase, site development costs, and vertical construction costs.
- This provides reasonable assurance that the Buyer has the appropriate financing in place to deliver the project.
- In the event Buyer fails to close on the Loan within sixty (60) days from Closing, Seller shall have the right to purchase the Real Property from Buyer in the amount of the Purchase Price.
- This provides a claw-back provision if Buyer does not close on the loan within 60 days. Once the Buyer closes on the Loan, a claw-back provision does not provide any benefit. However, once the loan is closed, construction will commence shortly after since permits are issued and financing is completed.
- Includes an exhibit with provisions to be included within a development agreement which provide a detailed overview of the proposed project.
- A developer agreement will ensure the project is developed in accordance with the City’s vision.
The site is currently zoned CF, Community Facilities, with a Future Land Use designation of Low (5) Residential. The City’s consultant performed an appraisal on the property in March 2020. The appraisal was based upon the hypothetical scenario that the property be rezoned to allow for 10 residential units per acre, for a total of 30 residential units. The appraisal for the property based upon the above hypothetical scenario was $1,950,000. However, this appraisal does not reflect true current market value since land use and zoning only allow 5 residential units per acre.
Therefore, the City requested the consultant to update the appraisal for the following two scenarios:
- Current “As Is” value of the land is based upon the current land use and zoning of the property with 5 residential units per acre. The current appraised value of land is $975,000.
- Hypothetical condition of the property based upon the proposed development of the property consistent with the proposed plan by New Urban Communities with 28 single-family units. The consultant also reviewed and considered the developer’s pro forma as part of the appraisal. Actual fair market value of the land based upon the hypothetical scenario is between $1,030,000 and $1,230,000. Furthermore, the appraisal identifies that the affordable housing conditions equate to approximately $25,000 per unit, which would result in a gross sales revenue reduction of $700,000 for the property. Taking this into account, the affordable housing component results in an adjusted value between $360,000 and $560,000.
City staff has negotiated a sale price of $500,000 for the property which includes affordable housing restrictions on 90 percent of the residential units. This negotiated purchase price is in-line with the updated appraisal scenarios mentioned above. The Sunset Strip Square project is expected to be the first new residential project in eastern Sunrise in many years and the project is intended to create significant interest in the marketplace due to the unique planning concepts and superior quality of the proposed development.
The City would likely be able to obtain a higher sale price for the property by constructing a more traditional townhome project, which would allow for a few additional residential units. Any higher density for this site would not be compatible with the adjacent single-family neighborhood. Additionally, removing the affordable housing restrictions and providing for full market rate units would likely provide a higher sales price.
The Agreement for Sale and Purchase is between the City of Sunrise ("Seller") and New Urban Sunset Strip LLC ("Buyer"), transferring ownership of the Sunset Strip Square Property bearing tax folio ID 4941-35-01-0102 and located at 1577 Sunset Strip, Sunrise, Florida.
The Ordinance authorizes the Mayor and appropriate City staff to execute documents and take all actions required to effectuate the sale of City property.
Staff recommends the approval of the purchase and sale agreement as presented.