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9 -2006-26125 ResoRESOLUTION NO. ' 2006-'26125 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, FOLLOWING A DULY NOTICED PUBLIC HEARING ON FEBRUARY 8, 2006, APPROVING, BY 5/7ths VOTE, AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A LEASE AGREEMENT BETWEEN THE CITY AND MIAMI CITY BALLET, INC., FOR THE LEASE OF THE BALLET STUDIO FACILITY BUILDING, LOCATED AT 2200 LIBERTY AVENUE, MIAMI BEACH, FLORIDA; SAID LEASE SUB3ECT TO AND CONTINGENT UPON THE CITY'S PROPOSED PURCHASE OF THE BALLET BUILDING; FURTHER WAIVING, BY 5/7ths VOTE, THE APPRAISAL AND COMPETITIVE BIDDING REQUIREMENTS, FINDING SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY; AND FURTHER APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A PURCHASE AGREEMENT BETWEEN THE CITY AND THE BALLET, FOR THE CITY'S PURCHASE OF THE BALLET BUILDING. WHEREAS, Miami City Ballet, Inc. (MCB or the Ballet) is currently the Lessee under a Ground Lease from the City (as Lessor) of the City owned land located at 2200 Liberty Avenue, Miami Beach, Florida (the Ground Lease); and WHEREAS, under the terms of the Ground Lease, dated April 13, 1994, and as amended, the City initially contributed $2.5 Million Dollars, as well as the aforestated public land, toward the cost of the MCB Studio Facility Building (said Building and all improvements therein collectively referred to as the Building), which was designed and constructed, and is currently owned, occupied, operated and maintained by the Ballet (under the terms of the existing Ground Lease); and WHEREAS, the Building is an approximately 63,000 square foot facility containing the Ballet's administrative offices, school, studio space, and a gift shop; and WHEREAS, the Ground Lease has a fifty-one (51) year term, which commenced on April 13, 1996, and expires on April 12, 2047; and WHEREAS, recently, the Ballet has encountered serious financial problems which threaten its continued viability and existence, and is in need of additional funding to continue to operate; and WHEREAS, in an effort to assist the Ballet and to continue to house the Ballet's headquarters in the City of Miami Beach, and following extensive discussions and negotiations between the City Administration and the Ballet, the Mayor and City Commission, at its regular meeting on September 21, 2005, as well as the Chairman and Members of the Miami Beach Redevelopment Agency (RDA), adopted respective resolutions ratifying a term sheet prepared by the City Administration and the Ballet setting forth the following salient points: approving the City's purchase of the Ballet Building at 2200 Liberty Avenue, in the amount of $4.5 Million Dollars, subject to terms and conditions to be negotiated in a Purchase and Sale Agreement between the City and the Ballet; as part of the negotiations for the purchase of the Building, the City also agreed to advance the Ballet monies, in the amount of $550,000, from City Center/Redevelopment Area funds, to cover a portion of the Ballet's immediate operating expenses pending consummation of the transaction, and to be applied toward the proposed purchase price; the Building will be conveyed in its "as is" condition, with the City agreeing (as part of its due diligence) to do an independent survey and study to determine the condition of the structure; should the City move forward with closing--the City will assume the cost (in addition to the purchase price) of any immediate necessary capital repairs, as it deems necessary; concurrent with the negotiation of the Purchase and Sale Agreement, the City and the Ballet were also authorized to negotiate a long term Lease Agreement which, following the City's purchase and closing on the Building, would replace the current Ground Lease, and have the City lease the Building back to the Ballet, for its continued use thereunder; and WHEREAS, under the proposed new Lease, the Ballet would continue to occupy, utilize, operate and manage the Building, in accordance with the present uses and purposes of the Building, as well as subject to the minimum terms, as proposed in that certain Term Sheet, dated December 14, 2005, attached hereto and incorporated herein as Exhibit"A'; as further amended by that certain Supplemental Term Sheet, dated December 23, 2005, and attached hereto and incorporated herein as Exhibit "A-Z"; and WHEREAS, pursuant to Section 1.03(b)(3) of the Charter of the City of Miami Beach, which requires, in part, that the sale, exchange, conveyance or lease of ten (10) years or longer of City property requires approval by a majority (4/7ths) vote of the City's Planning Board (as well as 5/7ths vote of the Mayor and City Commission), the Term Sheet for the proposed new Lease, attached as Exhibit"A" hereto, was presented to the Planning Board at its regular meeting on December 20, 2005; and WHEREAS, the Planning Board approved the proposed Lease between the City and the Ballet, with the terms set forth in the Term Sheet attached as Exhibit "A" hereto, but as amended by the additional conditions requested by the Board, as set forth in the Supplemental Term Sheet attached as Exhibit "A-l" hereto; and WHEREAS, at its regular meeting on December 21, 2005, the City's Finance and Citywide Projects Committee also approved the terms of the proposed Lease, with the terms set forth in Exhibit "A" hereto, as amended by the Planning Board's additional conditions, as set forth in Exhibit "A-I" hereto; and WHEREAS, in accordance with the approved Term Sheet and Supplemental Term Sheet, the City and the Ballet have negotiated the Lease Agreement for the Building, said Lease attached as Exhibit "B" hereto; and WHEREAS, Section 82-39 of the Miami Beach City Code, governing the sale/lease of public property, requires that prior to the sale and/or lease of City property, the City Commission shall hold a public hearing, advertised not less than fifteen (15) days prior to said hearing, in order to obtain citizen input into such proposed sale and/or lease; said public hearing was duly noticed and held by the City Commission at its regular meeting on February 8, 2006; and WHEREAS, additionally, as required pursuant to Section 82-38 of the City Code, the City's Planning and Zoning Department has prepared its analysis of the proposed Lease, said written report attached as Exhibit "C" hereto; and WHEREAS, aS further permitted by Section 82-39 of the City Code, the City Manager would hereby recommend that the Mayor and City Commission waive, by 5/7ths vote, the appraisal and competitive bidding requirements for the proposed Lease Agreement, finding such waiver to be in the public interest; and WHEREAS, the City Manager would recommend that the approval of the attached Lease Agreement be subject to and contingent upon the City's purchase and closing on the Building, said closing currently scheduled for February 9, 2006; and WHEREAS, to that end, the City Manager would further recommend that the Mayor and City Commission also hereby approve and authorize the Mayor and City Clerk to execute the Purchase Agreement between the City and the Ballet, attached as Exhibit "D" hereto, and based upon the terms approved by the City Commission .on September 21, 2005. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission, following a duly noticed public hearing on February 8, 2006, approve, by 5/7ths vote, and authorize the Mayor and City Clerk to execute a Lease Agreement between the City, as landlord, and Miami City Ballet, [nc., as Tenant, for the lease of the Ballet Studio Facility Building, located at 2200 Liberty Avenue, Miami Beach, Florida; said Lease subject to and contingent upon the City's proposed purchase of the Ballet Building; further waiving, by 5/7ths vote, the appraisal and competitive bidding requirements, finding such waiving to be in the best interest of the City; and further approving and authorizing the Mayor and City Clerk to execute a Purchase Agreement between the City and the Ballet, for the City's purchase of the Ballet Building; said purchase to be closed on February 9, 2006. PASSED and ADOPTED this 8tn crr~ CLERK RObert Parcher day of Februar, '/ , 20 6. dR David Dermer F:\atto~GUR\RESOS-ORD\Miami City Ballet - Lease Agreement Reso.doc APPROVED AS TO. FORM & LANGUAGE & FOR EXEGUTION. COMMISSION ITEM SUMMARY Condensed Title: IResolution approving and authorizing the Mayor and City Clerk to execute a Lease Agreement with the Miami City Ballet, Inc. KeV Intended Outcome Supported: IIncrease community rating of cultural activities. Issue: IShall the City approve a lease and a purchase and sale agreement with the Miami City Ballet? Item Summary/Recommendation: This item recommends the approval of a Lease Agreement with the Miami City Ballet following a Public Hearing, contingent upon the approval of the Purchase and Sale Agreement for the Miami City Ballet Building at 2200 Liberty Avenue, based on conditions approved at the September 21,2005 City Commission meeting. Additionally, the Administration recommends waiving by a 5/7ths vote the appraisal and competitive bidding requirement in the best interest of the City of Miami Beach. Advisory Board Recommendation: The Finance and Citywide Committee on September 12 and December 21, 2005 and January 19, 2006 and the Planning Board on December 20, 2005. Financial Information: Source of Amount Account Approved Funds: 2 3 4' OBPI Total Financial Impact Summary: City Clerk's Office Legislative Tracking: IPatricia D. Walker, Chief Financial Officer Sign-Offs: -- IDepartment DirectOr' [ ~~tant City Manager~L)v~/ T:~AGENDA~2006\feb0806\RegularWICB approve the tease~ummary.doc City Manager " MIAMIBEACH AGENDA ITEM DATE F{7A MIAMIBEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: FROM: DATE: Mayor David Dermer and Members c~ the CitylCommission Jorge M. Gonzale~., City Ma nager~ ~~) ~,~ February 8, 2006 SUBJECT: A RESOLUTION APPROVING, FOLLOWING A DULY NOTICED PUBLIC HEARING, AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A LEASE AGREEMENT WITH THE MIAMI CITY BALLET, INC., FOR THE BALLET'S CONTINUED USE OF THE BALLET STUDIO FACILITY BUILDING, LOCATED AT 2200 LIBERTY AVENUE, MIAMI BEACH FLORIDA; APPROVING AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A PURCHASE AND SALE AGREEMENT WITH MIAMI CITY BALLET, INC., BASED UPON CONDITIONS APPROVED BY THE CITY COMMISSION AT ITS SEPTEMBER 21, 2005 MEETING; PROVIDED FURTHER THAT THE APPROVAL AND EXECUTION OF SAID LEASE SHALL BE SUBJECT TO AND CONTINGENT UPON THE CITY'S PURCHASE AND CLOSING ON THE BALLET STUDIO FACILITY BUILDING (PURSUANT TO THE TERMS AND CONDITIONS OF THE PURCHASE AGREEMENT).FURTHER WAIVING, BY 517THS VOTE, THE APPRAISAL AND COMPETITIVE BIDDING REQUIREMENT, FINDING SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY, AS PROVIDED IN SECTION 82-3951 OF THE MIAMI BEACH CITY CODE. ADMINISTRATION RECOMMENDATION Adopt the Resolution. BACKGROUND The Miami City Ballet began in 1985 and has grown to maturity in the City of Miami Beach where it' has been located for more than twenty years. In 1986, its first performance season, the Company had a budget of $1,000,000, a troupe of 19 dancers and a handful of staff. Today in its twentieth season, the Company has grown to a budget of over $10,250,000, the troupe now includes 46 dancers, the School has 400 students and there are 70 staff for the Compan. y and School. The Miami City Ballet Studios Building, located at 2200 Liberty Ave, is an approximately 63,000 sf. building containing the offices, school and studios of the Ballet and is an anchor building in the City's Cultural Campus. It was designed and constructed by the Ballet and completed at the end of !999, at a cost of approximately $7,000,000. During 1999, the City contributed $2,500,000 towards the construction of the Building and also owns the land on which the Building was built. The Ballet has also added approximately $1,000,000 of interior finishes and improvements which includes two studios that when combined by opening an air wall between them can Create a performance ven'ue with seating for approximately 225. The City and the Ballet are currently parties to a Ground Lease Agreement, dated April 13, 1994, with a fifty-one year term which commenced on April 13, 1996 and expires on April 12, 2047. Under the terms of the Ground Lease, the Ballet owns, operates and maintains the Building which, upon expiration or termination of the Lease, reverts to the City. The Ballet has continually made the building available to the City as a polling place for elections as well as an emergency management command center during hurricanes. They have also donated or rented this facility, when available, to other arts groups, such as: New World Symphony, the Miami Light Project and the South Beach Gay Men's Chorus, as well as permitted television, film and music video production companies, and photographers doing fashion shoots to use the Building. Since 1998, through its Miami City Ballet Inner-City Outreach Program, the Ballet has partnered with several Miami Beach Schools, including South Pointe Elementary, Feinberg- Fisher Elementary and North Beach Elementary, through their Exploring Dance Program, which provides in-school residencies, conducted by the School's Outreach Faculty, to children with financial needs. The Ballet also continues to provide scholarships to attend the Miami City Ballet School to talented children with financial need. This year those scholarships have afforded forty children, of whom six are from Miami Beach, the opportunity for this enriching experience. Since the Ballet began performing at the Jackie Gleason Theater in the fall of 1995 the Ballet has donated over twenty-five thousand tickets to their performances to Miami Beach students and children's charities. Additionally, the Ballet has produced education-outreach performances for students from Miami-Dade public schools; Ballets for Young People .programming for children and families and since 1994 has performed or participated in the City's annual "Invitation to the Arts." In February 2006, they will produce Aurora's Wedding from Sleeping Beauty at the Jackie Gleason Theater of the Performing Arts. The City Manager met with the Ballet during the fall of 2004 and discussed the possibility of providing a grant to them to be used to enhance the Studio Theater space within their Building so that it could be used as a theatrical performance venue. The Ballet moved forward with this concept and engaged Proscenium Architecture + Interiors, Inc. to assist in the planning of the conversion of the existing studios I and 2 into a more patron - comfortable, flexible performance space and estimate the construction cost. They estimate that the full build-out of this space will cost approximately $1,400,000. The Administration is recommending that the City make an additional investment of approximately $500,000 for capital improvements to the Studio Theater to enable the Ballet to begin performances in this area during early 2006. The Ballet has been struggling to achieve financial stability in the short-term and Sustainability in the long-term. However, at this time they are trying desperately to solve the most severe financial crisis' in their history. TheY have incurred approximately $2,500,000 of operating debt over the last six years. Of this amount, approximately $1,950,000 was due August 31, 2005, on which the Ballet has only been able to pay interest this year. This is comprised of: a $950,000 term loan made by a group of banks; a fully drawn line of credit of $500,000, both at prime +1/2%; and a $500,000 bridge loan at prime rate, co-signed by two of the Ballet Board members. The remaining balance represents aged accounts payable and non-interest bearing loans from board members. The largest piece of this debt is funded by a group of local banks that does not want to continue to lend to the Ballet. The banks wanted the outstanding amount paid over five years; however, the Ballet has no way to fund the repayment over that term. The Ballet's cash balances have deteriorated and they are very concerned that they will not be able to cover payroll and other minimal operating expenses through the season. The Ballet cites a reduction in contributions from donors'as a result of a weaker economy, post 2001; reductions or eliminations of government support to the arts; as well as more intense competition, most notably from the Miami Performing Arts Center (for contributions from a finite pool of donors), as the major reasons for their decreasing revenues. Approximately three months into the previous fiscal year (May 2004 - April 2005), it became apparent to the Ballet that they would not be able to achieve their contributed income goal and they immediately reduced their operating budget. At that time they believed that they could survive this crisis by restructuring their debt with a mortgage, payable over 20-30 years, coupled with providing additional fundraising strength, drastically reducing their budget and seeking an annual subsidy from the City. Commissioner Simon Cruz asked the City Administration to begin working with the Ballet during the fall of 2004, to look for financing so they might refinance their outstanding debt over a more reasonable term, pay off their aged accounts payable, and establish a credit line to provide working capital sufficient to see them through the lean part of each season. The City facilitated a meeting roi' the Ballet with the City's financial advisor and bond counsel to see if a conduit financing was a viable option. During the meeting the facts that were presented by the Ballet quickly led to the conclusion that this was not a viable option, and the likelihood of obtaining financing from any lending institution looked less than hopeful. During January 2005, the Ballet made a presentation to the Finance and Citywide Projects Committee (the Finance Committee) requesting the City's consent to the Ballet obtaining leasehold mortgage to achieve this financing. The Committee was in favor of giving consent to a leasehold mortgage, ,subject to the terms and conditions of the actual mortgage. Although the Ballet continued to pursue this option with a number of different financial institutions, the Ballet was unable to obtain a mortgage which would of course have to be subordinate to the covenants of the Ground Lease which, in part, requires that in the event of a default, the City would be in first position to be paid. Additionally, the lease restricts the ability of a lender to use the Building for any purpose other than a non-profit, preferably cultural, use. Based on the City Administration's review of the Ballet's financial position, additional financing would give them only momentary relief and would not solve the structural financial issues that they have. The Ballet has indicated that without a solution to this financial crisis, their alternatives would be to close the Company or seek out a new home that could provide financial assistance. Finance and Citywide Projects Committee Meeting of September 12, 2005 The Administration and representatives from the Miami City Ballet, including Edward Villella, Founding Artistic Director and CEO; Pamela Gardiner, Executive Director; Mike Eidson Esq., President of the Miami City Ballet Board of Trustees; Rosalind Richter, Vice President and member of the Board of Trustees; and Mark Rosenblum, General Manager, made a presentation to the Finance Committee at their meeting on September 12, 2005, outlining the Ballet's deteriorating financial condition. The Administration proposed a financial package that would help the Ballet become financially solvent and continue in its cultural partnership with the CitY as follows: The City would acquire the Miami City Ballet Studio Building from the Ballet for $4.5 M, and lease it back to the Ballet, at a rent of $1 a year, and take over responsibility for the capital maintenance of the Building; and 2..The City would make an additional investment of approximately $500,000 for capital improvements to the Studio Theater to enable the Ballet to begin performances in this area during early 2006. With regard to the City's responsibility for the capital maintenance of the Building which would include the building and its systems, such as air conditioning, plumbing, electrical, roofing etc., Brad Judd, Director of Property Management, visited the Building and prepared an assessment of the condition of the facility and its systems, which reflects an estimated $740,000 of capital maintenance and replacements that are necessary over the next two years and includes: 1) $509,000 for a new roof; 2) $175,000 for replacement of five rooftop air conditioning units; and 3) $65,000 for pressure-cleaning, waterproofing and painting the exterior of the Building. The City also would provide input and review of the Ballet's annual budget and would maintain financial oversight through the appointment of both the City Manager and the City's Chief Financial Officer as voting members of the Ballet's governing Board of Trustees. This amount would allow the Ballet to pay off their existing debt, loans and aged accounts payable which total approximately $2.5 million, and it would provide them with a working capital fund of approximately $2 million to get them through the financially lean months at the beginning of each season for payroll, licenses, costumes, music and repetiteurs for the upcoming season. The Ballet would return these funds to their working capital fund during the year as revenues were generated and contributions are received. In addition to debt service savings, the Ballet would no longer need to fund building maintenance, repairs and replacement of building equipment, which would also generate significant savings for them over the upcoming years. Additionally, the Ballet proposed to generate incremental revenues, through additional program performances in the enhanced Studio Theater, the Colony Theater and the Byron- Carlyle' Theater which are discussed in more detail in the next paragraph. They indicated that they were also pursuing the development of the "Cafb Ballet", in the lobby of the Ballet Studios Building, with Bom Dia, one of the largest coffee producers in Brazil. Bom Dia wants to develop the Cafb as the North American launch location for their limited edition coffees. The terms of this partnership are yet to be negotiated; Bom Dia has initially indicated that they would fund the capital improvement costs for the Cafb. The Ballet hoped to be able to serve beer and wine along:with light meals, snacks and desserts and provide a place for Collins Park and library visitors to enjoy refreshments, along with its own students, patrons and visitors. As previously mentioned, the Ballet would develop and perform two additional series which will be exclusive to the City at this time. First, a Contemporary Dance Series where audiences would be able to enjoy high quality contemporary dance in the intimate setting that the enhanced Studio Theater would provide. The Ballet explained their plan to develop and produce two Contemporary programs for their upcoming 2006 (Sep 2005 - May 2006) season. The programs woald expand to include a Young People's Program in their 2007 season (Sep 2006 - May 2007) designed especially for young audiences, and they would expand their performances to include the newly renovated Colony Theater along with the Byron-Carlyle Theater. These programs would be performed by dancers in their existing Company with choreography not currently in the Ballet's repertoire. To achieve this goal, the Ballet has brought back David Palmer and Yanis Pikieris, former Miami City Ballet principal dancers, and Founding Artistic Directors of Maximum Dance Company. These gentlemen have extensive experience as dancers, choreographers and arts administrators and would work with the Company full-.time, to develop and implement the Contemporary Dance Series this season and would add the Young People's Program in 2006-2007. The Company has committed to perform as a resident company at the new Miami Performing Arts Center (MPAC) and the City is engaged in discussions with the Cirque du Soleil to reconfigure the Jackie Gleason Theater of the Performing Arts for their year-round performances. It is expected that this venture will continue to be profitable for the Ballet; however, the Ballet has agreed only to perform at a financially self-sustaining level. Additionally, the Ballet offered to acknowledge at their performances at the MPAC that they were "Presented by the City of Miami Beach". The Finance Committee engaged in a lengthy discussion of the proposal and the severity of the Ballet's financial condition. The Committee made the following recommendations: 'Commissioners Saul Gross and Richard Steinberg recommended that in addition to the $4,500,000 purchase price for the Building, the City fund the necessary $740,000 of capital maintenance and replacements recommended by Mr. Judd; however, it was requested that the Ballet pay for future capital maintenance and replacements and provide annual funding into a reserve for that purpose; , The Committee did not agree to fund the $500,000 for capital improvements to the Studio Theater at this time and suggested that the Ballet might pursue this project at a later date; o Commissioner Steinberg requested that the Administration work with the Ballet to outline financial covenants to incorporate into the Lease Agreement that would help insure that the Ballet would operate within its available financial resources in the future and not incur debt to meet its operating requirements; , Commissioner Cruz reciuested that the Ballet provide evidence from their lenders that the payments due on loans as of August 31 had been deferred or were held in forbearance while the terms of the City's acquisition of the Building were negotiated; and , In regard to the urgency of the Ballet's current cash flow needs the Committee suggested that the full Commission could approve an advance at their September 21, 2005 meeting, that would be applied toward the City's Purchase Price for the Building. This advance would supplement operating funds for the Ballet pending consummation of the proposed transactic~n. The Committee directed the Administration to return to the full City Commission at its September 21, 2005 meeting with the following items: ° A Term Sheet outlining the proposed terms of the Purchase and Sale Agreement for the acquisition of the Building including a description of proposed financial covenants to be included in the proposed Lease Agreement; ° A letter from each major lender stating that the payments due on loans as of August 31, had been deferred or were held in forbearance while the terms of the City's acquisition of the. Building were negotiated; 3. A funding plan for future capital maintenance and replacements; and ° A Resolution of the Ballet's governing Board of Trustees agreeing to the preliminary terms of the agreement as outlined in the Term Sheet. (The Governing Board of the Ballet provided an original copy of this Resolution dated September 19, 2005.) Subsequent Discussions with the Ballet During discussions following the September 12, 2005 Finance Committee meeting, the Ballet stated that they do not foresee the financial capacity in the near future to provide funding for future capital maintenance and replacements as well as provide the funding to produce the programs (Contemporary and Young People's Series) that the City has requested. Additionally, the Ballet has indicated that the proposed investment of $500,000 by the City in enhancements to the Studio Theater would have permitted the Ballet to generate additional revenues by performing in their Studio Theater at an estimated savings of $30,000 in FY 2006 and $53,200 in FY 2007 ($10,000 per program for three performances and $13,300 per program for four performances), and would have provided an opportunity to generate some additional revenues from the proposed Cafb Ballet. Mr. Villella has indicated that in the absence of funding from the City for the Studio Theater he can not afford and therefore can not commit to producing the two new series that the City has requested. Further, Mr. Villella further indicated that in the absence of enhancements to the Studio Theater should the Ballet not be able to perform at the Performing Arts Center because they can not operate at a financially self-sustaining level, there was no facility on Miami Beach large enough to stage the Company's regular active repertory of programs. The Administration's concurs with the Ballet's concern regarding their financial capacity at this time to develop and produce these additional programs and continue to meet their existing obligations. As such, the Administration recommends that: 1. The City of Miami Beach acquire the Ballet's interest in the Miami City Ballet Studio Building for $4.5 M and lease it back to the Ballet, at a rent of $1 a year; , That the City provide, $740,000 to fund imminent major capital replacements which consist of: roof replacement - $500,000; five rooftop air conditioning units - $175,000, and pressure-cleaning, waterproofing, and painting of the building exterior- $65,000; , That'the City engage YFA to formally assess the costs of lifecycle maintenance for the Ballet building and determine a consistent method of allocating building capital maintenance and replacement costs at that time; and . That the City's requirement to develop and produce the Contemporary and Young People's Programs and the Ballet's request to enhance the Studio Theater be deferred at this time. The Administration believes that by taking these steps to consolidate the City's ownership of the Ballet Studio Building, and to provide the funding for imminent major capital replacements, the City will provide a path to financial sustainability for the Ballet and gain an extremely valuable asset for the City. City Commission Meeting of September 21, 2005 At the City Commission' Meeting of September 21, 2005 the Commission approved the Administration's recommendation to acquire the Ballet Studios Building for $4.5 million without the studio theater and to provide an estimated. $740,000 to fund the cost of the imminent major capital replacements of the roof, air conditioning units and for pressure- cleaning, waterproofing, and painting of the Building exterior. The Commission also deferred the discussion of the requested $500,000 for the Studio Theater and released the Ballet from the requirement to set aside funding for capital maintenance and replacements of $90,000 per year for the 'first three (3) years of the proposed new lease term. Planning Board meeting of December 20, 2005 Pursuant to Section 1.03(b)(3) of the Charter of the City of Miami Beach, which requires that the sale, exchange, conveyance or lease often (10) years or longer of City property requires approval by a majority (4/7ths) vote of the City's Planning Board (as well as 5/7ths vote of the Mayor and City Commission), the Term Sheet for the proposed new Lease, attached as Exhibit "A", was presented.to the Planning Board at its regular meeting on December 20, 2005. The Planning Board approved the proPosed Eease between the City and the Ballet, with the terms set forth in the Term Sheet attached as Exhibit "A", but as amended by the additional conditions requested by the Board, as set forth in the Supplemental Term Sheet attached as Exhibit "A-I" Finance and Citywide Projects Committee Meeting of December 21, 2005 On December 21,2005, the City's Finance and Citywide Projects Committee also approved the terms of the proposed Lease, with the terms set forth in Exhibit "A", as amended by the Planning Board's additional conditions, as set forth in Exhibit "A-I". Additionally, the Committee clarified that the escalation factor to be used for increasing the annual maintenance component shall be based upon the cost of replacement Building components and not an annual CPI increase. City Commission Meeting of January 11, 2006 At the City Commission Meeting of January 11, 2005, the Commission approved the Administration's recommendation to set a public hearing to hear public comment regarding the proposed new Lease of the Building to the Ballet, pursuant to the minimum terms set forth in Exhibits "A" and "A-I", respectively, said Lease contingent upon the City's purchase and closing on the Building. Finance and Citywide Projects Committee Meeting of January 19, 2006 On January 19, 2006, the City's Finance and Citywide Projects Committee approved the public benefits, as set forth on Exhibit B to be included in the Lease Agreement as proposed by the Ballet. JMG/PDW T:V~GENDA~006\feb0806\Regular~vlCB Comm Memo approve the lease.doc PUBLIC BENEFITS Commencing with the 2006-2007 season, and for each successive season thereafter throughout the term of the Lease, Miami City Ballet ("MCB") will organize and administer the following programs exclusively for the residents of Miami Beach: , Provided that the new Contemporary Dance Series is financially self- sustaining during the 2005-2006 season, MCB will continue to produce this series each season. The series will include a minimum of 2 programs each season, with 3 performances of each program. , MCB or its school will produce at least one Young People's Program, per season for children and families. , MB (My Beach/My Ballet) Days at MCB: For each month that the dancers are on contract, MCB will designate a special day, for Miami Beach residents only, to attend a rehearsal in its studios. Miami Beach ID and advance reservation will be required. , Free attendance at a rehearsal for the Miami City Ballet School's annual Student Showcase program. Miami Beach ID and advance reservation will be required. o The Miami City Ballet School will award at least ten (10) financial scholarships each season to talented children with financial need who are residents of Miami Beach. , Arts students (music, dance, visual arts, etc.) enrolled at Miami Beach High School may sign up to attend a free studio rehearsal. , MCB will give a minimum of 100 free tickets to each of its performance series (Programs 1 through 4 and "The Nutcracker) at MPAC, or in the event MCB is no longer performing at MPAC, at the nearest successor South Florida venue, to Miami Beach-based charitable organizations that serve children and seniors. , Miami Beach residents who are registered voters will receive a 10% discount in the MCB gift shop. ! MCB will provide 26 complimentary tickets per Program to the City of Miami Beach for each of MCB's performance series at MPAC and 18 complimentary tickets per Program to the City of Miami Beach for each of MCB's performance series at the Byron-Carlyle, the Colony Theater and the Ballet Studios Building. CITY OF MIAMI BEACH OFFICE OF THE CITY AI-rORNEY MEMORANDUM TO: FROM: SUBJECT: DATE: Chairperson and Members of the City of Miami Beach Planning Board Patricia Walker, Chief Financial Officer Raul .1. Aguila, First Assistant City Attorney Term Sheet for Proposed Lease Agreement between Miami City Ballet, Inc. (MCB or the Ballet) and the City of Miami Beach, Florida (City) for the MCB Studio Facility Building, and all improvements therein (collectively, the Building), located at 2200 Liberty Avenue, Miami Beach, Florida December 14, 2005 Pursuant to the direction of the Chairperson and Members of the Planning Board at its last regular meeting on October 25, 2005, at which time the Board considered a request by the City, pursuant to Section 1.03(b)(3) of the Charter of the City of Miami Beach, requesting approval of a proposed Lease Agreement between the City and the Ballet, for the Ballet's continued use, operation, and management of the Building located at 2200 Liberty Avenue; said Lease subject to and commencing upon the purchase of the Ballet Building by the City. At that time, the Board continued the item, and requested that the Administration and City Attorney's Office return with a detailed term sheet, outlining the terms and conditions of the proposed Lease. Accordingly, the Administration and City Attorney's have prepared the following term sheet, which addresses the substantive points, terms and conditions, of the proposed Lease. The proposed Lease is of course subject to the City's purchase and closing on the Building, and (in addition to approval of the Planning Board by 4/7ths vote) the Mayor and City Commission's approval of the Lease Agreement, by 5/7ths vote. 1) Background and Purpose: The Ballet is currently the Lessee under a Ground Lease from the City (as Lessor) of the City owned land located at 2200 Liberty Avenue, Miami Beach, Florida. Under the terms of the Ground Lease, dated April 13, 1994, and as amended, the City initially contributed $2.5 Million Dollars, as well as the aforestated public land, toward the cost of the Building, which was designed and constructed, and is currently owned, occupied, operated and maintained by the Ballet (under the terms of the Ground Lease). The Building is an Exhibit "A" approximately 63,000 square foot facility containing the Ballet's administrative offices, school and studio space. The Ground Lease has a fifty-one (51) year term, which commenced on April 13, 1996, and expires on April 12, 2047. The rent is $100.00 a year, with the Ballet also responsible for all costs associated with operation and maintenance (capital and day-to- day), utilities, licenses and permits, and taxes and assessments. Recently, the Ballet has encountered serious financial problems which threaten its continued viability and existence, and is in need of additional funding to continue to operate. Efforts by the Ballet to obtain institutional funding have been unsuccessful. :In an effort to assist the Ballet, the City Administration has been engaged in discussions with the Ballet since the Fall of 2004; on September 12, 2005, the Ballet made a presentation to the City's Finance Committee, outlining its deteriorating financial condition. At the City Commission meeting on September 21st, 2005, both the IVlayor and City Commission and the Chairman and Members of the Miami Beach Redevelopment Agency adopted resolutions ratifying a term sheet prepared by the Administration and MCB setting forth the following: approving the City's proposed purchase of the Ballet Building at 2200 Liberty Avenue, subject to terms and conditions to be negotiated in a Purchase and Sale Agreement between the City and the Ballet; authorizing a purchase price for the Building, in the amount of $4.5 IVlillion Dollars; the Purchase Price would be utilized by the Ballet to pay off its existing debt and to fund a working capital account for operating expenses during financially lean months, and (as further set forth in Section 6 hereto) to fund a capital maintenance and replacement fund. (The Building is to be conveyed in its "as is" condition. Prior to closing on the Building, the City will finalize a study, outlining imminent/necessary capital repairs, which are intended to be financed by the City.); the City also advanced the Ballet monies, in the amount of $550,000, from City Center/Redevelopment Area funds, to cover a portion of the Ballet's immediate operating expenses (to allow it to continue to operate in the short term, pending consummation of the transaction with the City). The aforestated amount is to be applied as an advance (deposit) toward the City's purchase of the Building. :In the event the closing falls through, the amount is secured by a lien against the Building; concurrent with the negotiation of the Purchase and Sale Agreement, the City and the Ballet were also authorized to negotiate the proposed long term Lease Agreement whereby, following the City's purchase of the Building, the City would lease back the Building to the Ballet, for its continued use thereunder. Essentially, while the ownership of the Building would be transferred from the Ballet to the City, the City would lease back the Building to the Ballet, and the resulting new Lease (for the Building) would have terms substantially similar to the current Ground Lease; certainly, it is the parties' intent that the Building continue to be utilized, operated and managed by the Ballet in accordance with the present uses and purposes of the Building. 2) Lease Term: The current Ground Lease with the Ballet is for a term of fifty-one (51) years, which commenced on April 13, 1996, and shall terminate on April 12, 2047. In the proposed new Lease, the Ballet has requested as long a term as possible; ideally, they would like a ninety-nine (99) year term. The Administration has recommended the Ballet's proposed ninety-nine (99) year term, to be broken up as follows: the initial term shall be for a term of forty (40) years (which is the remainder of the existing term under the Ground Lease), and thereafter, the new Lease shall have renewal terms in ten (10) to fifteen (15) year increments. 3) Rent: Under the current Ground Lease, the Ballet owns the Building and pays the City a nominal annual rent, for lease of the City-owned land upon which the Building sits, of $100.00 per year. Under the new Lease for the Building, the parties have agreed to a nominal annual rental amount of $1.00 per year. :In addition to the payment of the nominal rent above, the Ballet will continue to be responsible for the following additional charges/payments: all sales and use taxes (if any); all utilities; water and sewer charges; license and permit fees; service charges or special assessments; real estate taxes (if any); all cost for staffing and operating the Building for the intended uses, as well as all costs for the Ballet's respective maintenance 4) 5) responsibilities (See Section 6). The Lease Premises: The new Lease premises shall be defined as the footprint of the Ballet Building, located at 2200 Liberty Avenue, which is an approximately 63,000 square foot structure currently containing the Ballet's administrative offices, school, and studios. Uses: The Ballet shall continue to use the Building for the continued operation of its dance studio(s), school, and offices; additional permitted uses of the Building shall also include the same uses which were contemplated and approved pursuant to the Ground Lease and which include, but are not limited to, a Ballet Museum, cafe, restaurant, gift shop, practice rooms, performance halls, and any other use (s) consistent with a regional ballet company. Any additional uses of the Building, other than those permitted above, or which would not be consistent with the management and operation of a ballet company, must be approved in writing by the City prior to commencement of same. 6) Maintenance Responsibilities: Under the Ground Lease, as the owner of the Building, the Ballet was responsible for all maintenance associated with the Building (capital and day- to-day, as well as exterior and landscaping). Since (upon purchase by the City) the Building will become a City asset, the City agrees to assume responsibility for ongoing maintenance and repair of major capital and infrastructure items including, but not limited to, the roof, HVAC system, the plumbing and electrical system, and the exterior walls and landscaping. Notwithstanding the preceding sentence, while the City shall assume the work and physical responsibility for the aforestated maintenance obligations, the Ballet will be responsible for funding any and all costs for same, through the creation of the funds set forth in subsections (1) and (2) below. The Ballet shall also continue to be responsible for the day-to-day interior maintenance, housekeeping, day-to-day repairs, and garbage disposal and pick-up for the Building, and shall be required to keep the Building in good condition, ordinary wear and tear excepted. 7) 8) To that end, it is the City's intent to guarantee the ongoing maintenance, repair, and upkeep of the Building by including the following covenant into the proposed new Lease Agreement: Capital Maintenance and Replacement Fund - The Ballet will be responsible for funding a reserve for the long term capital maintenance of the Building. The current estimate for the annual funding of this reserve is $90,000; however, at the September 21, 2005 City Commission meeting a motion was made by Commissioner Gross and approved by the City Commission to waive the Ballet's obligation to fund the reserve for the first three (3) years of the new Lease term. Insurance Requirements: Since (upon purchase by the City), the Building will become a City asset, it will be included under the City's Self :Insurance Fund. Notwithstanding the preceding sentence, the new Lease shall continue to require that the Ballet maintain, throughout the term therein, the following Minimurn ]:nsurance Requirements: Comprehensive General Liability :Insurance, in an amount not less than One Million Dollars ($1,000,000), combined single limits; Comprehensive Public Liability :Insurance, against any liability for bodily injury, death, and property damage, in an amount not less than One Million dollars ($1,000,000), combined single limits; Excess Liability coverage with limits of not less than Two Million Dollars ($2,000,000); Workers Compensation in at least the minimum amounts required by Florida law; All insurance coverage shall name the City of Miami Beach, Florida, and the Miami Beach Redevelopment Agency as additional insureds. ]:ndemnification/Hold Harmless: :In addition to the required minimum insurance coverages in Section 7 above, the Ballet shall continue (as currently required under the Ground Lease) to indemnify and hold the City harmless against all liabilities, expenses and losses incurred by the City as a result of the Ballet's failure to perform any covenant required to be performed by the Ballet under the proposed Lease; or any accidents, injury or damage which shall happen in or about the Building or appurtenances, or resulting from the condition, maintenance or operation of the Building by the Ballet; or failure of the Ballet to comply with any requirements of any governmental authority. The Ballet shall also, upon (9) demand by the City, and at the Ballet's sole cost and expense, resist or defend such action, claim, or proceeding, in the City's name, if necessary, by such attorney as the City shall approve, which approval shall not be unreasonably withheld. Evens of Default by the Ballet: Each of the following events shall constitute events of default by the Ballet · under the Lease: (lO) Any monetary failure of the Ballet to pay any rent or other additional charges/payments due under the Lease after the same shall become due, provided that the City shall give written notice to the Ballet and the Ballet shall have a thirty (30) day cure period; Abandonment of the Building; Non-monetary defaults - any failure of the Ballet to perform any term, condition, or covenant of the Lease for more than sixty (60) days after written notice of such default shall have been given to the Ballet by the City; or Bankruptcy - failure of the Ballet to cure, within sixty (60) days of the occurrence of any of the following: ii) iii) Ballet shall become bankrupt or shall file any debtor proceedings; Ballet shall take or have taken against it a petition in bankruptcy, or for the appointment of a receiver; or Ballet makes an assignment for the benefit of creditors. In the event of a default, the City may avail itself of any and all remedies, at law or in equity, as it deems necessary to cure the default and to compensate it for damages resulting from the default, including but not limited to terminating the Lease. In the event of termination of the Lease, all rights and interest of the Ballet in and into the Building and every part thereof shall cease and terminate and the City may (in addition to any and all other rights and remedies) re-enter and re-take the Building. Assignment or Sublease: There shall be no assignment or sublease of all or any portion of the Lease without the prior written consent of the Mayor and City Commission. (11) City Participation: The Ballet agrees that it shall appoint the City Manager and the City's Chief Financial Officer as voting members to its Board of Trustees for each and every year of the term of the Lease. Additionally, the City Manager and the City's Chief Financial Officer shall have input and review of the Ballet's annual budget, as well as continued financial oversight. In addition to the aforestated substantive points of the proposed Building Lease, the City will of course include any and all standard boiler-plate language that is included in, and made a part of, all agreements for leases of City-owned property. :In addition to the approval of the Planning Board, and the 5/7ths approval of the Mayor and City Commission, the proposed Lease shall also be subject to compliance with the City Code requirements pertaining to leases of City-owned property, which requirements include (among others) approval of the final Lease Agreement following a noticed public hearing. Additionally, the City'Code requires a Planning Department analysis of the proposed Lease; said analysis was previously prepared by the Planning Department and is included separately as a supplemental attachment to this item. F:\atto~AGUR\MEMOS\Miami City Ballet - Term Sheet.doc CITY OF MIAMI BEACH OFFICE OF THE CITY ATTORNEY MEMORANDUM TO: FROM: SUBJECT: DATE: Mayor David Dermer and Members of the City Commission Raul J. Aguila, First Assistant City Attorney Trish Walker, Chief Financial Officer SUPPLEMENT to that certain Term Sheet, dated December 14, 2005, for Proposed Lease Agreement between the City and Miami City Ballet, Inc., for the Lease of the Ballet Studio Facility Building, located at 2200 Liberty Avenue, Miami Beach, Florida. (Incorporating Planning Board comments from December 20, 2005 Meeting) December 23, 2005 Pursuant to the Planning Board's consideration and approval of the above- referenced proposed Lease Agreement between the Ballet and the City for the Ballet Building located at 2200 Liberty Avenue, Miami Beach, Florida, at its regular meeting on December 20, 2005, the Board approved the item subject to the following additional conditions being incorporated into the proposed new Lease. It should be noted that, following the Planning Board meeting, the foregoing conditions were also presented, in conjunction with a full discussion of the above-referenced proposed Lease, to the Finance and Citywide Projects Committee of December 21, 2005 and, together with the terms set forth in the initial Term Sheet, dated December 14, 2.005, were approved by the Committee. The additional terms imposed by the Planning Board pursuant to its approval of the proposed Lease are as follows: With regard to Section 2 of the Term Sheet (dated December 14, 2005), the Planning Board, while not opposed to the proposed ninety-nine (99) year term requested by the Ballet (said term having an initial term of forty (40) years and, thereafter, renewal terms of ten (10) or fifteen (15) year increments) requested that, with regard to the parties' exercise of the renewal terms, there be criteria provided in the Lease (as shall be negotiated between the City and the Ballet) for exercise of said renewal terms, so that the terms are not exercised automatically without Administrative review of Exhibit "A-I' any criteria. Additionally, the Ballet should be obligated to provide the City with prior written notice of its intent to exercise any renewal term. With regard to Section 5 of the December 14, 2005 Term Sheet, which contemplated that one of the permitted uses for the Building would be to allow the Ballet to operate and maintain (whether directly or through a sub- concessionaire) a cafe/restaurant, the Board recommended that, while it did not object to the Ballet operating and maintaining a caf~ as an ancillary or accessory use to the facility (similar to those currently operated within the Bass IVluseum of Art and the Wolfsonian Museum), the term "restaurant" should be deleted. With regard to Section 6 of the December 14, 2005 Term Sheet, which requires the Ballet to establish a Capital Maintenance and Replacement Fund, to be funded annually throughout the term of the Lease by the Ballet, in the amount of $90,000, for the purpose of securing funds for the long term capital maintenance of the Building, at the September 21, 2005 City Commission meeting, a motion was made and accepted to waive the Ballet's obligations to fund said reserve for the first three (3) years of the new Lease term. The Planning Board, however, opined that the $90,000 Ballet contribution for the first three (3) years should not be waived. However, while the Ballet would not be excused from the financial obligation to make said payments for the first three (3) years of the Lease term, the payments (totaling $270,000) could be apportioned over the initial forty (40) year term of the Lease. Additionally, the Planning Board recommended, and the City Administration concurred, that the $90,000 annual contribution have an annual CPI: adjustment. The Planning Board requested that a provision be included in the proposed Lease that, in the event of destruction of the Building as a result of a force majeure (hurricane, fire, or other Act(s) of God), the City would have no obligation to rebuild the Building. At the Finance and Citywide Projects Committee, the Ballet concurred with the Board's condition, but requ. ested that the Lease also contain language which would allow the Ballet, in such an event, to rebuild the facility at its sole cost and expense. As the Ballet's request was not inconsistent with the Board's condition, the Administration and City Attorneys Office do not object to the inclusion of this language. Finally, the Planning Board requested that, upon the City's purchase and closing of the Building (and hence upon the Building becoming a City asset and therefore "City property"), it comply with the City's Ordinance for Naming of Public Facilities, Monuments, and Memorials. As required pursuant to Section 1.03(b)(3) of the Charter of the City of Miami Beach, the Planning Board approved the above-referenced proposed Lease Agreement between the Ballet and the City, subject to the terms and conditions set forth in the Term Sheet, dated December 14, 2005, and as amended by the Board's additional conditions, as set forth in this Supplement. The December 14, 2005 Term Sheet, as amended by this Supplement, was also approved by the Finance and Citywide Projects Committee at its December 20, 2005 meeting, with the recommendation that the presentation of the proposed new Lease proceed to the City Commission. Accordingly, it is the Administration's intent to proceed with setting the required public hearing for the Mayor and City Commission's consideration of the proposed Lease. Should you have any questions or comments regarding the above, please do not hesitate to. contact me. POA/ed c: ]orge Gomez, Planning Director F:\atto~AGUR\MEMOS\Miami City Ballet - Supplemental Term Sheet.doc ~Ii:5 Miamiherald.¢on~ i ThE NiA#I Ht:,'~JiLD I THURSDAY, JANUARY 19, 2006 I -~ MIAMIBEACH C TY OF MIAMI' BEACH NOTICE OF A PUBLIC HEARING NOTICE IS HEREBYgiven that a public hearing will be held by the City Commission of the City of Miami Beach, in the Commission Chambers, 3rd floor, City Hall, 1700 Convention Center Drive, Miami Beach, Florida, on Wednesday, February 8, 2006 at 3:00 p.m., to Hear Public Comment Regarding A Proposed Lease Agreement Between The City And Miami City Ballet, Inc., For The Lease Of The Ballet Studio Facility Building, Located At 2200 Liberty Avenue, Miami Beach, Florida; Said Lease Subject To And Contingent Upon The City's Proposed Purchase Of The Ballet Building. INQUIRIES may be directed to the Finance Department at (305) 673-7466. INTERESTED PARTIES are invited to appear at this meeting, or be represented by an agent, or to express their views in writing addressed' to the City Commission, c/o the City Clerk, 1700 Convention Center Drive, 1st Floor, City Hall, Miami Beach, Florida 33139. This meeting may be opened and continued and, under such circumstances additional legal notice would not be provided. Robert E. Parcher, City Clerk City of Miami Beach Pursuant to Section 286.0105, Fla. Stat., the City hereby advises the public that: if a person decides to appeal any decision made by the City Commission with respect to any matter considered at its meeting or its hearing, such person must ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. This notice does not constitute consent by the City for the introduction or admission of otherwise inadmissible or irrelevant evidence, nor does it authorize challenges or appeals not otherwise allowed by law. To request this material in accessible format, sign language, interpreters, information on access for persons with disabilities, and/or any accommodation to review any document or partiCipate in any city-sponsored proceeding, please contact (305) 604-2489 (voice), (305) 673-7218(TTY) five days in advance to initiate your request. TTY users may also call 711 (Florida Relay Service). (Ad #354)