2010-27453 Reso2010-27453 ~
RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, APPROVING ON FIRST READING, A
LEASE AGREEMENT BETWEEN THE CITY AND LEONARDO SALON,
INC., FOR USE OF APPROXIMATELY 1,326.78 SQUARE FEET OFCITY-
OWNED PROPERTY, LOCATED AT 1701 MERIDIAN AVENUE, UNIT 1
(A/fK/A 765 17T" STREET), MIAMI BEACH, FLORIDA; SAID LEASE
HAVING AN INITIAL TERM OF FOUR YEARS AND 364 DAYS, WITH ONE
ADDITIONAL FIVE YEAR RENEWAL TERM, AT THE CITY'S SOLE
DISCRETION; WAIVING BY 5/7THS VOTE, THE COMPETITIVE BIDDING
AND APPRAISAL REQUIREMENTS, AS REQUIRED BY SECTION 82-39
OF THE MIAMI BEACH CITY CODE; REFERRING THE LEASE TO THE
FINANCE AND CITYWIDE PROJECTS COMMITTEE FOR DISCUSSION;
FURTHER SETTING A PUBLIC HEARING ON SEPTEMBER 15, 2010,
FOR THE SECOND READING (AND FINAL APPROVAL) OF THE LEASE
AGREEMENT
WHEREAS, on October 17, 2001 the ,City Commission adopted Resolution No.
2001-24661, authorizing the purchase of 1701 Meridian Avenue Building (a/k/a 777
Building) with the intention of preserving the retail environment on the ground floor of the
property; and
WHEREAS, on March 10, 2009, the Finance & Citywide Projects Committee
(F&CPC) recommended that any commercial leases (including renewals and/or
extensions) for use of space at the Building be handled as it is in the private sector and not
through a competitive bid process; and
WHEREAS, Leonardo Salon, Inc. has expressed interest in leasing ground floor
retail space in the Building; and
WHEREAS, the City and Tenant have negotiated the proposed Lease Agreement,
said proposed Lease Agreement having an initial term of four (4) years and 364 days,
commencing October 1, 2010 and ending September 30, 2013, with one additional five (5)
year renewal term, at the City's sole discretion; and
WHEREAS, Section 82-39 of the Miami Beach City Code, governing the sale/lease
of public property, requires a competitive bidding process, a Planning Department analysis,
and an independent appraisal to determine the value of the leasehold interest, as well as
two (2) readings of the proposed lease, with the second (and final) reading followed by an
advertised public hearing to obtain citizen input; and
WHEREAS, the Administration would hereby recommend that the Mayor and City
Commission approve the attached Lease Agreement on first reading, refer the Lease to the
F&CPC for discussion, and hereby set the public hearing on September 15, 2010, for
second reading and final approval of the Agreement; and
WHEREAS, Section 82-39 of the City Code further provides for the waiver of the
competitive bidding and appraisal requirements, by 5/7t"S vote of the Mayor and City
Commission, for leases of City land, upon a finding by the Mayor and City Commission that
the public interest would be served by waiving such conditions; the Administration would
also hereby recommend that the Mayor and City Commission approve said waiver.
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 hereby approve on first reading, a Lease Agreement between the City and
Leonardo Salon, Inc., for use of approximately 1,326.87 square feet of City-owned
property, located at 1701 Meridian Avenue, Unit 1 (a/k/a 765 17th Street), Miami Beach,
Florida for an initial term of four years and 364 days, with one additional five year renewal
term, at the City's sole discretion, and waiving by 5/7thS vote, the competitive bidding and
appraisal requirements, as required by Section 82-39 of the Miami Beach City Code;
referring the Lease to the Finance and Citywide Projects Committee for discussion, and
further setting a public hearing on September 15, 2010, for the second reading (and final
approval) of the Lease Agreement.
PASSED and ADOPTED this 14th day of July, 2010.
ATTEST:
~~
.Robert Parcher, CITY CLERK atti Herrera ower, MAYOR
JMG\HMF\AP\rlr
F:~RHCD~$ALUECON~$ALLWSSET777-17th Street~Leonardo SaloMLeonardo Lease Agreement.lst Reading.RES.doc
APPROVED A3 TO
FORM & LANGUAGE
CUTION
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7
COMMISSION ITEM SUMMARY
Condensed Title:
Request for approval for a Lease Agreement between the City and Leonardo Salon, Inc., for use of 1,326.78 SF of City-
ownedproperty located at 1701 Meridian Avenue, Unit 1 (a/k/a 76517th Street), for a term of 4 years and 364 days, with one
additional five year renewal term, waiving by 5/7thg vote the competitive bidding and appraisal requirements as required by
Section 82-30, referring the Lease to the Finance Committee for discussion, and setting a public hearing on September 15,
2010, for second reading and final approval of the Lease.
K_~Intended Outcome Supported:
Increase resident satisfaction with the level of services and facilities.
Supporting Data (Surveys, Environmental Scan, etc.):
Approximately 40% of retail businesses surveyed, rank Miami Beach as one of the best places to do business and 61 % of
the same group would recommend Miami Beach as a place to do business.
Issue:
Should the Ci Commission a rove the lease a reement?
teem summa ~Recommenaation:
FIRST READING
On October 17, 2001, the City Commission adopted Resolution No. 2001-24661, authorizing the purchase of the 1701
Meridian Avenue Building with the intention of preserving the retail environment on the ground floor of the property.
On March 10, 2009, the Finance & Citywide Projects Committee (F&CPC) recommended that any commercial leases
(including renewals and/or extensions) for use of space at the Building be handled as it is in the private sector and not
through a competitive bid process. The City and Leonardo Salon have negotiated a proposed lease for renovation and use of
ground floor retail space at 765 17t" Street that recently became vacant. The terms are as follows:
• Square Footage: 1,326.78 per updated 2007 survey;
• Term: Four years and 364 days, with one additional five year renewal term;
• Rent: $43.00 PSF, $57,051.54 annually;
o Base Rent: $40,600.86 annually, payable monthly @ $3,383.41, with 3% annual increase;
o Additional Rent: $16,450.68 annually, payable monthly @ $1,370.89 to offset City's operating expenses and
insurance costs;
• Security Deposit: Prior to execution of the Lease, the Tenant will furnish the City a Security Deposit in the sum of
$14,262.54 (equal to three months of Rent and Additional Rent costs).
The average PSF cost of other ground floor Tenants in the Building is $42.00.
Section 82-39 provides for the waiver of the competitive bidding and appraisal requirements, by 5/7ths vote of the Mayor and
City Commission, upon a finding by the Mayor and City Commission that the public interest would be served by waiving such
conditions. A Planning Department analysis finds that the use of this space is consistent with the land use designation
contained in the Comprehensive Plan. It is recommended that the Mayor and Commission approve the proposed lease per
the negotiated terms and that the proposed lease be referred to the Finance Committee prior to a second reading, public
Adviiso Board Recommendation:
Finance & Ci wide Projects Committee, October 21, 2008 and March 10, 2009.
Financial Information:
Source of Funds: Amount Account
n/a 1 n/a
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
~ Anna Parekh, extension 7193
Sign-Offs:
Anna Parekh, Department Director Hilda M. rnand z, Assistant City Mana r Jorge M. Gonzalez, City Manager
AP HF ~ JMG
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g+ MIAMIBEACH
~~
AGENDA. ITEM R ~'/E
DATE ~-Ifl'!y
m MIAMIBEACH
City of Miami Beath, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
DATE: July 14, 2010 FIRST READING
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY MMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING ON FIRST READING, A LEASE
AGREEMENT BETWEEN THE CITY AND LEONARDO SALON, INC., FOR USE
OF APPROXIMATELY 1,326.78 SQUARE FEET OFCITY-OWNED PROPERTY,
LOCATED AT 1701 MERIDIAN AVENUE, UNIT 1 (A/K/A 765 17T" STREET),
MIAMI BEACH, FLORIDA; SAID LEASE HAVING AN INITIAL TERM OF FOUR
YEARS AND 364 DAYS, WITH ONE ADDITIONAL FIVE YEAR RENEWAL
TERM, AT THE CITY'S SOLE DISCRETION; WAIVING BY 5/7THS VOTE, THE
COMPETITIVE BIDDING AND APPRAISAL REQUIREMENTS, AS REQUIRED
BY SECTION 82-39 OF THE MIAMI BEACH CITY CODE; REFERRING THE
LEASE TO THE FINANCE AND CITYWIDE PROJECTS COMMITTEE FOR
DISCUSSION; FURTHER SETTING A PUBLIC HEARING ON SEPTEMBER 15,
2010, FOR THE SECOND READING (AND FINAL APPROVAL) OF THE LEASE
AGREEMENT
KEY INTENDED OUTCOMES SUPPORTED
Increase resident satisfaction with the level of services and facilities.
BACKGROUND
On October 17, 2001, the City Commission passed Resolution No. 2001-24661 authorizing the
purchase of the building at 1701 Meridian Avenue (a.k.a. 777 Building) in orderto address the City's
ongoing need for administrative office space expansion. At the time, the preservation of a retail
environment on the ground floor of the property was considered and it was determined that retention
of the retail space was conducive to maintaining and enhancing the pedestrian character of the
linkage between Lincoln Road Mall and the Civic/Convention Center area.
At the October 21, 2008 meeting of the Finance & Citywide Projects Committee (F&CPC), and
subsequently at their meeting of March 10, 2009, and following a comprehensive review of the City's
office space use, the Committee agreed with City staff s recommendation that usage of the ground
floor of 1701 Meridian Avenue Building remain a primary use for commercial retail space.
Additionally, the Committee recommended that any commercial leases (including renewals and/or
extensions) for use of space at the Building be handled as it is in the private sector and not through
a competitive bid process.
ANALYSIS
On June 8, 2010, Koniver Stern Group, the City's contracted real estate broker, presented the City
with a Letter of Intent (LOI) on behalf of Leonardo Salon, Inc., who expressed an interest in the
Commission Memorandum
Leonardo Salon, Inc.
July 14, 2010
Page 2 of 6
ground floor retail space located at 1701 Meridian Avenue, Unit 1 (a/k/a 765 17th Street), formerly
occupied by Steve's Hair Salon which is currently vacant and available. Leonardo Salon is a Miami
Beach based hair salon established in 2001 and currently operating at 701 Lincoln Road, #109.
Koniver Stern recommended that the City consider the proposed lease terms based on the City's
ability to secure a viable .tenant during this economic time and at a competitive PSF rate. The
average PSF rate for ground floor retail in the Building is $42.00.
The Administration proceeded to negotiate a proposed lease agreement for City Commission
approval. A summary of the proposed lease terms are as follows:
TENANT: Leonardo Salon, Inc., a Florida corporation.
DEMISED PREMISES: 1,326.78 SF on the ground floor of the 777 Building, located at 1701
Meridian Avenue, Unit 1 (a/k/a 765 17th Street).
TERM: Initial term of four (4) years and 364 days, with one (1) additional five (5) year
renewal option, at the City's sole discretion.
LEASE COMMENCEMENT DATE: October 2, 2010.
RENT COMMENCEMENT DATE: The earlier of (i) 60 days from Lease Commence Date or, (ii)
the date Tenant opens for business.
RENT: $43.00 PSF; $57,051.54 annually;
BASE RENT: $40,600.86 annually, payable in monthly installments of
$3,383.41. Base Rent shall be increased annually, on the anniversary of the
Commencement Date of the Lease, in increments of three (3%) percent per
year.
ADDITIONAL RENT: $16,450.68 annually, payable in monthly installments
of $1,370.89. Any increase in Operating Expenses and Insurance will result
in an increase to Tenant's proportionate share.
PARKING: Tenant may request from the City's Parking Department, the use of no more
than three (3) parking spaces. Rates for said spaces are subject to change,
and are currently $70 per month plus applicable sales tax.
SECURITY DEPOSIT: Prior to the execution of the Lease, Tenant will furnish the City with a
Security Deposit in the sum of $14,262.54 (equal to three months Rent and
Additional Rent costs).
USES: The Demised Premises shall be used by the Tenant solely for the purposes
of operating a hair salon, including retail sales of related items. The Demised
Premises shall be open a minimum of five days a week (Tuesday-Saturday)
from 10:OOAM to 6:OOPM.
IMPROVEMENTS: No significant improvement and/or build-out are anticipated.
INSURANCE: Tenant shall comply with the following insurance requirements throughout
the Term:
Commission Memorandum
Leonardo Salon, Inc.
July 14, 2010
Page 3 of 6
Comprehensive General Liability in the minimum amount of $1,000,000 per
occurrence for bodily injury and property damage. The City of Miami Beach
must be named as additional insured parties on this policy, subject to
adjustment for inflation.
Workers Compensation and Employers Liability coverage in accordance with
Florida statutory requirements.
All-Risks property and casualty insurance, written at a minimum of 80% of
replacement cost value and with replacement cost endorsement, covering all
of Tenant's personal property in the Demised Premises (including, without
limitation, inventory, trade fixtures, floor coverings, furniture and other
property removable by Tenant under the provisions of this Agreement) and
all leasehold improvements installed in the Demised Premises by or on
behalf of Tenant, subject to adjustment for inflation.
PROPERTY TAXES: Tenant shall pay its proportionate share of the property tax bill. Any property
tax payment shall be payable by Tenant immediately upon receipt of notice
from the City. Tenant's property taxes payments are included within
Additional Rent costs.
UTILITIES: Tenant retains sole responsibility for all utilities (not included as part of
Operating Expenses) including electric, janitorial, Internet and telephone
services.
MAINTENANCE
AND REPAIR: Tenant shall be responsible for day-to-day maintenance and repairs of the
Demised Premises, including, without limitation, all fixtures, appurtenances,
equipment, furnishings and HVAC system.
CONCLUSION
Section 82-39 of the Miami Beach City Code, governing the sale/lease of public property, provides
that the lease of any City-owned property, including renewal option periods, requires the following:
1) a public bidding process;
2) Planning Department analysis (see attached Exhibit A);
3) an independent appraisal to determine the value of the leasehold interest;
4) two (2) readings of the proposed lease; and
5) a public hearing to obtain citizen input.
Section 82-39 further provides for the waiver of the competitive bidding and appraisal requirements,
by 5/7cns vote of the Mayor and City Commission, upon a finding by the Mayor and City Commission
that the public interest would be served by waiving such conditions.
The proposed lease terms are within the range of comparable spaces in the area, and reflect the
current economic reality. Tenant's use is consistent with prior uses on the ground floor of the
Building and the surrounding commercial area. Given the economic environment that has produced
a high inventory of vacant retail space in the 33139 zip code, the Administration recommends that a
lease agreement with Leonardo Salon, Inc., for use of the ground floor commercial retail space with
the proposed terms, as delineated herein, be approved on first reading. Additionally, the
Administration recommends that the City Commission waive by 5/7ths vote, the competitive bidding
and appraisal requirements, as required by Section 82-39 of the Miami Beach City Code, refer the
Commission Memorandum
Leonardo Salon, Inc.
July 14, 2010
Page 4 of 6
Lease Agreement to the next available F&CPC meeting for discussion prior to second reading, and
set a public hearing on September 15, 2010, for the second reading (and final approval) of the
Lease Agreement.
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T:WGENDA~2010Uu1y 14~Regular~Leonardo Lease Agreement.1st Reading.MEM.doc
Commission Memorandum
Leonardo Salon, Inc.
July 14, 2010
Page 5 of 6
EXHIBIT A
PLANNING DEPARTMENT
INTEROFFICE MEMORANDUM
ro: Anna Parekh, Real Estate, Housing & Comm. Development Director
FaoM: Richard G. Lorber, Acting Planning Director~~L _ --
DATE: July 14, 2010 y\ ~"~~~~~m
SUBIECT: Analysis of Proposed Lease Agreement for LEONARDO SALON, INC.
15` Floor, 1701 Meridian Avenue, Unit 1 (a.k.a. 765 17th Street)
Pursuant to your request, this memorandum will serve as a planning analysis of the
proposed lease agreement between the City and LEONARDO SALON, INC.. (Tenant),
for the use of approximately 1,326.78 square feet of retail space on the 1$` floor of the
City-owned building located at 1701 Meridian Avenue, Unit 1 (a.k.a. 765 17th Street),
said lease agreement for an initial term of four (4) years and 364 days, with one (1)
additional five (5) year renewal terms, at the City's sole discretion.
Section 82-38 of the Code of the City of Miami Beach requires that any proposed sale or
lease of City-owned land be analyzed from a planning perspective so that the City
Commission and the public are fully apprised of all conditions relating to the proposed
sale or lease. The following is an analysis of the criteria delineated in the Code:
1. Whether or not the proposed use is in keeping with city goals and
objectives and conforms to the city comprehensive plan.
Consistent -The property is located within the CD-3 high intensity commercial
future land use category, and surrounded generally by the CD-3 high intensity
commercial future land use category. The proposed use is for retail space for a hair
salon. The lease agreement between the City and the proposed tenant is consistent
with the future land use category description contained in the Comprehensive Plan.
2. The impact on adjacent property, including the potential positive or
negative impacts such as diminution of open space, increased traffic, noise level
or enhanced property values, improved development patterns and provision of
necessary services. Based on the proposed use of the property, the city shall
determine the potential impact of the project on city utilities and other
infrastructure needs and the magnitude of costs associated with needed
infrastructure improvements. Should it become apparent that further evaluation
of traffic impact is needed, the proponent shall be responsible for obtaining a
traffic impact analysis from a reputable traffic engineer.
Consistent -The property subject to the lease is in the existing 1701 Meridian
Avenue building, and previously was used as a hair salon as well. There would be no
diminution of open space as no new construction is being proposed. No additional utility
or infrastructure is expected to be necessary.
3. A determination as to whether or not the proposed use is in keeping with a
Commission Memorandum
Leonardo Salon, Inc.
July 14, 2010
Page 6 of 6
Proposed Lease -Leonardo Salon, Inc.
1Sr Floor, 1701 Meridian Avenue, Unit 1
July 14, 2010
Page 2
public purpose and community needs, such as expanding the city's revenue base,
creating jobs, creating a significant revenue stream, and improving the
community's overall quality of life.
Consistent -The proposal will accrue approximately $40,600.86 per year in rent,
plus operating expenses to the City, and there is a potential to create additional jobs.
The revenue stream generated will also help defray the cost of maintenance needs of
the Building.
4. Determination as to whether or not the development is in keeping with the
surrounding neighborhood, will block views or create environmental intrusions,
and evaluation of the design and aesthetic considerations of the project.
Consistent - The surrounding neighborhood consists of the 17th Street
commercial corridor and the City of Miami Beach City Hall. This office on the 1st floor of
the building will not be out of character with the surrounding uses. View and
environmental considerations are not applicable.
5. The impact on adjacent properties, whether or not there is adequate
parking, street and infrastructure needs.
Consistent -The previous use on this property was also a hair salon, therefore,
there should be no negative impact on adjacent properties. As this use is existing, and
is adjacent to a parking garage, there are no issues with respect to required parking. No
further infrastructure needs are anticipated.
6. A determination as to whether or not alternatives are available for the
proposed disposition, including assembly of adjacent properties, and whether the
project could be accomplished under a private ownership assembly.
Not applicable -This is a City-owned property, of which this proposed use is a
small portion of the available space. No assembly of land is necessary, nor would such
be under private ownership.
7. Within the constraints of public objectives, the department should examine
financial issues such as job generation, providing housing opportunities, and the
return to the city for its disposition of property.
The proposed lease agreement will help to defray the cost of maintenance of the
building. No housing opportunities will be created.
8. Such other issues as the Planning Department may deem appropriate in
analysis of the proposed disposition.
Idot applicable -The Planning Department has no other issues it deems
appropriate to analyze for this proposal.
RGUrgI
F:IPLANI$ALL\GEN_CORR\INTEROFF\Leonardo Salon planning analysis.docx
July 8, 2010
Ms. Hilda M. Fernandez
City. of Miami Beach
1700 Convention Center Drive
Miami Beach, FL 33139
Re: 777 17th Street retail space for Leonardo Salon
Dear Hilda:
Koniver Stern endorses the City. of Miami Beach moving forward with the above referenced
lease. The reasons are: i) the tenant is able to move in and start operating with limited
renovations; 2) the tenant is an established tenant on Miami Beach for 10 years; 3) .the retail
space is B/C space and currently the general retail market is not robust. We are recommending
the space to be leased at $43.00 per square foot based upon the location being an end-cap and
also being smaller in size.
Based on all these factors, Koniver .Stern recommends that the City lease the retail space at 777
17~' Street to Leonardo Salon.
Thank you.
Lyle B. Stern
1665 Washington Avenue, Penthouse
Miami Beach, Florida 33139
T (305) 532-6100 F (305) 532-6101
www. koniversterngroup.com