585-2012 RDA Reso RESOLUTION NO 585-2012
A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI
BEACH REDEVELOPMENT AGENCY APPROVING AND AUTHORIZING THE
CHAIRPERSON AND SECRETARY TO EXECUTE AMENDMENT NO.2 TO THAT
CERTAIN RETAIL LEASE AGREEMENT BY AND BETWEEN THE CITY OF MIAMI
BEACH, THE MIAMI BEACH REDEVELOPMENT AGENCY AND PENN 17, LLC.
(LESSEE), DATED SEPTEMBER 16, 2011, INVOLVING THE LEASE OF
APPROXIMATELY 7,655 SQUARE FEET OF GROUND FLOOR RETAIL SPACE
AT THE PENNSYLVANIA AVENUE GARAGE, 1661 PENNSYLVANIA AVENUE,
MIAMI BEACH, FLORIDA; SAID AMENDMENT PROVIDING FOR THE
FOLLOWING: 1) AN ABATEMENT OF ONE (1) MONTH'S RENT AND
DEFERRING AN ADDITIONAL TWO (2) MONTHS' RENT TO BE PAID BY THE
LESSEE IN LUMP SUM OR IN THIRTY SIX (36) EQUAL MONTHLY
INSTALLMENTS, COMMENCING IN THE THIRD YEAR OF THE LEASE TERM,
AND ENDING ON THE LAST DAY OF THE FIFTH YEAR OF THE LEASE TERM;
2) INCREASING THE SIZE OF THE TENANT'S ADDITIONAL AREA(STORAGE
SPACE), AS DEFINED IN SECTION 3.11 OF THE LEASE, TO INCLUDE AN
ADDITIONAL 284 SQUARE FEET (FORMERLY DESIGNATED FOR STORAGE
OF THE BUILDING'S FLOOD PANELS); 3) INCREASING THE CHARGE FOR
COMMON AREA MAINTENANCE(CAM)FROM$98,850 PER YEAR,TO$101,690,
TO REFLECT THE INCREASE IN THE SIZE OF THE STORAGE SPACE; AND 4)
PROVIDING FOR THE CONSTRUCTION OF A NEW REPLACEMENT
ENCLOSURE, AT THE TENANT'S SOLE COST AND EXPENSE, FOR THE
STORAGE OF FLOOD PANELS.
WHEREAS, on April 13, 2011, the Mayor and City Commission adopted Resolution No.
2011-27647, approving a Lease Agreement(the"Lease"), between the City,the RDA and Penn 17
LLC. (Lessee), having a term of nine(9)years and 364 days,for use of approximately 7,807 square
feet of ground level retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue,
Miami Beach, Florida,for a restaurant(primary use),with ancillary uses for a bakery,a bar/cafe, and
a book and gift shop (the "Premises"); and
WHEREAS, on February 8, 2012, the Mayor and City Commission adopted Resolution No.
2012- 0000, approving a First Amendment to the Lease, correcting the gross rentable retail space
from 7,807 square feet to 7,655 square feet, as well as providing for a corresponding reduction in
annual rent from $585,525 to $574,125, and the cost of Common Area Maintenance (CAM) from
$100,370 per year to $98,850 per year; and
WHEREAS, in consideration of certain unforeseen delays and expenses encountered in the
permitting of the Tenant's improvements, the City Administration recommends that Tenant be
granted an abatement of one month's rent, together with a deferral of an additional two months'
rent, to be paid by Tenant in lump sum or in thirty six(36) equal monthly installments, together with
the Tenant's regular payments of rent,taxes and Common Area Maintenance(CAM), commencing
on the first day of the third year of the Lease Term and ending on the last day of the fifth year of the
Lease Term; and
WHEREAS,the Lease currently permits Tenant's use of an area located beneath the garage
ramp, comprising approximately 2,230 square feet of unfinished space (the"Additional Area"); and
WHEREAS,as part of the Tenant's build out of the Additional Area,the Tenant has asked to
incorporate an existing storage room, comprising 284 square feet, located adjacent to the Additional
Area, which is currently used by the City to store the Garage's flood barrier panels; and
WHEREAS, in exchange for granting Tenant the use of the storage room (as part of the
Additional Area), the Tenant has agreed to construct, at its sole cost and expense, a new
replacement enclosure for the storage of the aforestated flood panels, subject and pursuant to the
satisfaction and approval of the Landlord; and
WHEREAS, increasing the size of the Additional Area will also result in a corresponding
increase in Tenant's Common Area Maintenance Costs(CAM), from$98,850 per year,to$101,690
annually; and
WHEREAS, the City Administration hereby recommends that the Mayor and City
Commission approve and authorize the Mayor and City Clerk to execute Amendment No. 2 to the
Lease, memorializing the aforestated terms.
NOW,THEREFORE, BE IT DULY RESOLVED BY THE CHAIRPERSON AND MEMBERS
OF THE MIAMI BEACH REDEVELOPMENT AGENCY,that the Chairperson and Members hereby
approve and authorize the Chairperson and Secretary to execute Amendment No. 2 to that certain
Retail Lease Agreement by and between the City of Miami Beach,the Miami Beach Redevelopment
Agency and Penn 17, LLC. (Lessee), dated September 16, 2011, involving the lease of
approximately 7,655 square feet of ground floor retail space at the Pennsylvania Avenue Garage,
1661 Pennsylvania Avenue, Miami Beach, Florida; said Amendment providing for the following: 1)
an abatement of one month's rent and deferring an additional two months' rent to be paid by the
Lessee in lump sum or in equal monthly installments commencing in the third lease year of the
Lease Term and ending on the last day of the fifth year of the Lease Term; 2)increasing the size of
the Tenant's Additional Area(Storage Space),as defined in section 3.11 of the Lease,to include an
additional 284 square feet, (formerly designated for storage of the building's flood panels); 3)
increasing the charge for Common Area Maintenance(CAM)from$98,850 per year to$101,690 to
reflect the increase in size of the Additional Area; and 4) providing for the construction of a new
replacement enclosure, at the Tenant's sole cost and expense, for the storage of flood panels.
PASSED AND ADOPTED THIS 6T" DAY OF JUNE, 2012.
C AIRPERSON
ATTEST:
SECRETARY
JMG:HF:KB:JC:KOB
T:\AGENDA\2012\June 6\Consent Penn 17 LLC Amendment RDA RESO.doc
APPROVED As TO
INCORP ORATED' FORM &LANGUAGE
•. :�� FOR CUTION9
2
ome Date
AMENDMENT NO. 2 TO THE RETAIL LEASE AGREEMENT BETWEEN THE
CITY OF MIAMI BEACH, THE MIAMI BEACH REDEVELOPMENT AGENCY
AND PENN 17, LLC, DATED SEPTEMBER 16, 2011, INVOLVING THE LEASE
OF APPROXIMATELY 7,655 SQUARE FEET OF GROUND FLOOR RETAIL
SPACE AT THE PENNSYLVANIA AVENUE GARAGE, 1661 PENNSYLVANIA
AVENUE, MIAMI BEACH, FLORIDA
This Amendment No. 2 (this "Amendment"), is made and executed as of this day of
2012 (the "Effective Date"), by and between the CITY OF MIAMI BEACH,
FLORIDA, a municipal corporation organized and existing under the laws of the State of Florida
(the "City"), the MIAMI BEACH REDEVELOPMENT AGENCY, a public body corporate and
politic (the "RDA"), hereinafter referred to collectively as (the "Landlord"), and PENN 17, LLC.,
a Florida corporation, whose principal place of business is located 1661 Pennsylvania Avenue,
Suite 6, Miami Beach, Florida 33139 (the "Tenant")
RECITALS:
WHEREAS, on April 13, 2011, the Mayor and City Commission adopted Resolution No.
2011-27647, approving a Lease Agreement (the "Lease"), between the City, the RDA and Penn
17 LLC. (Lessee), having a term of nine (9) years and 364 days, for use of approximately 7,807
square feet of ground level retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania
Avenue, Miami Beach, Florida, for a restaurant (primary use), with ancillary uses for a bakery, a
bar/cafe, and a book and gift shop (the "Premises"); and
WHEREAS, on February 8, 2012, the Mayor and City Commission adopted Resolution
No. 2012- 0000, approving a First Amendment to the Lease correcting the gross rentable retail
space from 7,807 square feet to 7,655 square feet as well as providing for a corresponding
reduction in annual rent from $585,525 to $574,125 and the cost of Common Area Maintenance
(CAM) from $100,370 per year to $98,850 per year; and
WHEREAS, in consideration of certain unforeseen delays and expenses encountered in
the permitting of the Tenant's improvements, the City Administration recommends that Tenant
be granted an abatement of one month's rent, together with a deferral of an additional two
months' rent, to be paid by Tenant in lump sum or in thirty six (36) equal monthly installments,
together with the Tenant's regular payments of rent, taxes and Common Area Maintenance
(CAM), commencing on the first day of the third year of the Lease Term and ending on the last
day of the fifth year of the Lease Term; and
WHEREAS, the Tenant's Lease currently provides for use of an area located beneath
the garage ramp comprising approximately 2,230 square feet of unfinished, space, (the
"Additional Area"); and
WHEREAS, as part of the Tenant's build out of the Additional Area, the Tenant has
asked to incorporate an existing storage room comprising 284 square located adjacent to the
Additional Area, which is currently used to store the Garage's flood barrier panels; and
WHEREAS, in exchange for granting Tenant the use of the storage room (as part of the
Additional Area), the Tenant has agreed to construct, at its sole cost and expense, a new
Amendment No. 2
Penn 17, LLC Lease Retail Lease
replacement enclosure for the storage of the aforestated flood panels, subject and pursuant to
the satisfaction and approval of the Landlord; and
WHEREAS, increasing the size of the Additional Area will also result in a
corresponding increase in Tenant's Common Area Maintenance Costs (CAM) from $98,850 per
year to $101,690 annually.
NOW THEREFORE, in consideration of the mutual promises and conditions contained
herein, and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. The above Recitals are true and correct and incorporated herein by reference.
2. Section 8 of the Lease Summary, entitled "Gross Rentable Area of Premises/
Retail Space" is amended as follows:
Approximately 7,655 rentable square feet (in Suite G, as also shown in Exhibit "B"), plus
2,230 2,514 square feet for Additional Area (Exhibit "B-1").
3. The schedule in Section 18 of the Lease Summary, entitled "Cost Pass-
Throughs" is amended as follows:
Common Area Maintenance (CAM) Monthly/Annual
Lease Year Cost per Square Foot Payment
1 $10.00
$10,169/mo - $101,690/yr
2-10 See Note (*) See Note (*)
Note (*) Beginning on the second anniversary of the Lease Commencement Date, and
at the beginning of each succeeding year thereafter during the Term of the Lease, the
CAM rate shall be adjusted to reflect the actual pro-rata share of Property Taxes and
Insurance costs incurred by the Landlord during the previous calendar year.
4. Section 2.8 of the Lease, entitled "Landlord's Lien" shall become Section 2.10
5. A new Section 2.8, entitled "Rent Abatement" shall be added and
incorporated into the Lease and shall state as follows:
2.8 Rent Credit - Commencing retroactively on June 1, 2012, Tenant shall be entitled to
a one (1) month's abatement of Minimum Rent (of the June 2012 rent), in the amount of
$47,844 plus applicable state sales tax.
6. A new Section 2.9, entitled "Rent Deferral" shall be added and
incorporated into the Lease and shall state as follows:
2.9 Rent Deferral- Commencing on July 1, 2012, Tenant shall be entitled to a deferral of
two (2) months' Minimum Rent (of the July and August 2012 rent), in the amount of $95,688
plus applicable state sales tax. Said deferred rent shall be paid by Tenant in a lump sum or in
thirty six (36) equal monthly installments of $2,658 each, together with (and in addition to)
2
Amendment No. 2
Penn 17. LLC Lease Retail Lease
Tenant's ongoing regular payment of rent, taxes and Common Area Maintenance (CAM),
commencing (if paid in installments), on the first day of the third year of the Lease Term and,
ending on the last day of the fifth year of the Lease Term.
7. The last sentence in Section 3.11 of the Lease, entitled "Additional Area (Storage
Space)", shall be amended as follows:
In consideration of this, the Tenant shall be permitted to use 2-,2,39 2,514 square feet,
and shall allow the balance to be used by the Landlord, at no charge to the Landlord.
8. Section 3.13, entitled "Tenant's Parking", shall become Section 3.14
9. A new Section 3.13, entitled "Flood Panel Storage" shall be added and
incorporated into the Lease and shall state as follows:
3.13 Flood Panel Storage -Tenant at its sole cost and expense, shall cause the
construction and installation of a replacement storage enclosure for the flood panels to be
located in the area identified in Exhibit B-1 of the Lease. The plans for the storage enclosure
shall be subject to the Landlord's, City Manager's (or his/her designee) review and approval.
10. Exhibit B-1 entitled "Site Plan and Location of Additional Area (Storage Space)"
shall be replaced with a revised Exhibit B-1, as attached hereto.
11. Except as amended herein, all other terms and conditions of the Agreement shall
remain unchanged and in full force and effect.
WITNESS WHEREOF, this Amendment has been duly executed by the parties hereto
as of the day and year first above written.
ATTEST: CITY OF MIAMI BEACH, FLORIDA
City Clerk Mayor
day of 2012.
i
Amendment No. 2
Penn 17, LLC Lease Retail Lease
ATTEST: MIAMI BEACH REDEVELOPMENT AGENCY
Secretary Chairperson
day of 12012.
PENN 17, LLC.
ATTEST:
President
Secretary
Print Name
day of 2012.
APPROVED AS TO
FORM &LANGUAGE
FOR ECUTION
t me r, Date
r
4
REDEVELOPMENT AGENCY ITEM SUMMARY
Condensed Title:
A Resolution approving a Amendment No.2 to that certain Retail Lease Agreement by and between the City of Miami Beach,
the Miami Beach Redevelopment Agency and Penn 17, LLC., (Tenant) dated September 16, 2011, involving the lease of
approximately 7,655 square feet of ground floor retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue,
Miami Beach,Florida(the Lease); said Amendment No.2: 1)abating one (1)month's rent and deferring an additional two(2)
months' rent to be repaid by the Tenant in thirty six(36)equal monthly installments from year three to five of the Lease,together
with regular payments of rent,taxes and Common Area Maintenance(CAM)costs,commencing in the first day of the third Lease
Year of the Lease Term;2) increasing the size of the Tenant's Additional Area(Storage Space),as defined in section 3.11 of the
Lease,to include an additional 284 square feet,currently designated for storage of the building's flood panels;3)increasing the
charge for Common Area Maintenance(CAM)from$98,850 per year to$101,690 to reflect the increase in size of the Additional
Area; and 4)constructing,at the Tenant's sole cost and expense,a new replacement enclosure for the storage of flood panels,
subject and pursuant to the satisfaction and approval of the RDA.
Key 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:
Shall the RDA approve Amendment No. 2 to the Lease Agreement?
Item Summa /Recommendation:
The lessee has been diligently engaged in the process of developing their leased space.While the lessee was afforded time prior
to when rent payments would begin, the lessee encountered unanticipated delays and requested the City consideration of an
additional rent abatement.Additionally,the Lessee requested a modification of the their Additional(Storage)Area,to incorporate
an additional 284 square feet of space, currently used for storage of the garage facility's flood panels. Such modification will
result in a corresponding increase in Common Area Maintenance(CAM)costs of$2,840 annually for the Lessee,and in turn this
will require construction of a new storage enclosure in the garage to store the panels at the Lessee's sole cost and expense.The
request was taken to the Finance and Citywide Projects Committee at its meeting on May 19,2012,at which time the above was
discussed and the request considered.
The Administration recommends entering into Amendment No. 2 to the Lease Agreement, providing for:
1. An abatement of one(1)month's rent and deferral of an additional two(2)months' rent to be paid by the Tenant in
lump sum or in thirty six(36)equal monthly installments, together with regular payments of rent,taxes and Common
Area Maintenance(CAM)costs,commencing on the first day of the third lease year of the lease term and ending on the
last day of the fifth lease year,to address the unanticipated delays encountered by the lessee;
2. An increase in size of the Tenant's Additional Area(Storage Space),as defined in section 3.11 of the Lease,to include
an additional 284 square feet, currently designated for storage of the building's flood panels, to provide additional
storage space for the lessee;
3. An increase in the charge for Common Area Maintenance (CAM) from $98,850 per year to $101,690 to reflect the
increase in size of the Additional Area; and 4) construction of a new replacement enclosure for the storage of flood
panels, at the Tenant's sole cost and expense and subject to the satisfaction and approval of the RDA,to secure the
appropriate rent for the increased space.
Advisory Board Recommendation:
Finance &Citywide Projects Committee—May 19, 2012—Recommended approval
Financial Information:
Source of Funds: n/a Amount Account
1 n/a
Financial Impact Summa
Secretary's Office Legislative Tracking:
Anna Parekh/Kent Bonde, extension 7193
Sign-Offs:
Department Director Assis t Dir Executive Director
AP IM JMG
T:WGENDA\2012Uune 6,2012\Consent\Penn 17 LLC Agreement Amendment RDA Summ.doc
IMAGENDA ITEM
MIAMIBEAC W DATE 61 -, Z
® MIAMI BEACH
City of Miami Beath, 1700 Convention Center Drive, Miami Beach, Florida 33139,www.miamibeachfl.gov
REDEVELOPMENT AGENCY MEMORANDUM
TO: Chairperson and Members of the Miami Beach Redevelopment Agency
FROM: Jorge M. Gonzalez, Executive Director
DATE: June 6, 2012
SUBJECT: A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI
BEACH REDEVELOPMENT AGENCY,APPROVING AND AUTHORIZING THE
CHAIRPERSON AND SECRETARY TO EXECUTE AMENDMENT NO. 2 TO
THAT CERTAIN RETAIL LEASE AGREEMENT BY AND BETWEEN THE CITY
OF MIAMI BEACH, THE MIAMI BEACH REDEVELOPMENT AGENCY AND
PENN 17, LLC. (LESSEE), DATED SEPTEMBER 16, 2011, INVOLVING THE
LEASE OF APPROXIMATELY 7,655 SQUARE FEET OF GROUND FLOOR
RETAIL SPACE AT THE PENNSYLVANIA AVENUE GARAGE, 1661
PENNSYLVANIA AVENUE, MIAMI BEACH, FLORIDA; SAID AMENDMENT
PROVIDING FOR THE FOLLOWING: 1) AN ABATEMENT OF ONE (1)
MONTH'S RENT AND DEFERRING AN ADDITIONAL TWO(2)MONTHS' RENT
TO BE PAID BY THE LESSEE IN LUMP SUM OR IN THIRTY SIX(36) EQUAL
MONTHLY INSTALLMENTS, COMMENCING IN THE THIRD YEAR OF THE
LEASE TERM,AND ENDING ON THE LAST DAY OF THE FIFTH YEAR OF THE
LEASE TERM; 2) INCREASING THE SIZE OF THE TENANT'S ADDITIONAL
AREA(STORAGE SPACE),AS DEFINED IN SECTION 3.11 OF THE LEASE,TO
INCLUDE AN ADDITIONAL 284 SQUARE FEET (FORMERLY DESIGNATED
FOR STORAGE OF THE BUILDING'S FLOOD PANELS); 3)INCREASING THE
CHARGE FOR COMMON AREA MAINTENANCE (CAM) FROM $98,850 PER
YEAR, TO $101,690, TO REFLECT THE INCREASE IN THE SIZE OF THE
STORAGE SPACE; AND 4) PROVIDING FOR THE CONSTRUCTION OF A
NEW REPLACMENT ENCLOSURE, AT THE TENANT'S SOLE COST AND
EXPENSE, FOR THE STORAGE OF FLOOD PANELS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
On April 13, 2011,the Mayor and City Commission passed Resolution No.2011-27647, approving a
Lease Agreement(the Lease), having a term of nine(9)years and 364 days, between the City, the
RDA and Penn 17, LLC (Tenant), for use of approximately 7,807 square feet of ground level retail
space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida,for a
restaurant(primary use), with ancillary uses for a bakery, a bar/cafe, and a book and gift shop (the
Premises). The space was initially built to be able to be subdivided to accommodate up to seven
tenants. However, since the opening of the facility in October, 2010, the City's Broker, Koniver
Stern, received very little interest from retail tenants. Instead, most inquires came from three food
and beverage businesses, one of which culminated in an initial offer for the space. However, the
offer was almost as soon withdrawn once the prospective tenant realized the extensive challenges
Redevelopment Agency Memorandum
Penn 17, LLC- Retail Lease Amendment No.2
June 6,2012
Page 2 of 5
and costs associated with re-engineering the space for use as a restaurant, as well as the
architectural impediments to venting the kitchen exhaust.
In February, 2011, the City's Broker was able to secure the interest of the current approved Tenant,
whose background in the restaurant industry is well suited to taking on the cost of building out the
space,which at the very least would have to include the installation of a grease trap, additional sub-
grade plumbing and, as noted above, venting of the kitchen exhaust, none of which were provided
for in the design of the space.
For this reason,the Resolution approving the Lease with Penn 17, LLC also approved the execution
of a Pre-Lease Due Diligence Review Agreement, granting the Tenant a maximum of six(6)months
following approval of the Lease, in which to reserve its leasing rights while advancing design and
plan development, and consulting with the City's Planning and Building Departments in order to
ascertain the feasibility of obtaining a full building permit prior to actual commencement of the
Lease. The Pre-Lease Agreement expired on October 13, 2011. It contained two milestones:
requiring the Tenant to have a)entered into a contract with a licensed architect/engineer; and, b)to
have submitted a complete application for a building permit, evidenced by the issuance of a building
permit process number by August 13, 2011. However, due to the aggressiveness of the schedule
involved, as well as the complexity associated with addressing some of the design issues, including,
but not limited to,the installation of grease traps, additional sub-grade plumbing and kitchen exhaust
venting,the Tenant was unable to meet this deadline. Consequently,the Tenant was faced with two
options, automatic termination of the Lease and forfeiture of its $25,000 Pre-Lease deposit to the
City, or electing to execute the Lease and crediting the$25,000 towards its security deposit, albeit
without the benefit of a building permit in place. On August 29, 2011, in accordance with the
provisions of the Pre-Lease Agreement, the Tenant elected to proceed with the execution of the
Lease, committing to an October 13, 2011 Commencement Date as well as establishing a
$1,000,000 escrow construction fund. Shortly after the execution of the Lease,the Tenant formally
engaged Design 3 Architects (Architect) to further develop and finalize the plans for permitting.
The execution of the Lease also provided the Tenant with legal control of the site and the ability to
formally commence the permitting process. However, since plan development was still in process,
the Building Department allowed the Tenant to start off by submitting partial plans for review and
approval. In order to expedite work at the Premises and in consideration of the extensive and
delicate scope involved in the demolition and sub-grade work that needs to precede the interior
build-out, the Tenant's Contractor, Halloran Construction, applied for a separate permit for partial
interior demolition of the space, which was approved by the Building Department on January 19,
2012. Demolition of the slab began the week of January 23, 2012, in preparation for the installation
of additional plumbing fixtures, grease trap structures and other utilities necessary for restaurant's
operation. The Master Permit for the interior build-out of the space was finally issued on March 23,
2012, based on which the Contractor estimates substantial completion by late August, 2012.
On February 8, 2012, unrelated to the plan development and permitting process, the City and the
RDA approved Amendment No. 1 to the Lease Agreement, adjusting the square footage of the
Premises from 7,807 square feet to 7,655 square feet, in response to a formal survey of the space
that was conducted as part of City's condominiumization process to preserve the tax exempt status
of the municipal parking garage portion of the building. The Amendment further reduced the
Tenant's annual base rent from $585,525 to$574,125, as well as the Common Area Maintenance
(CAM) costs from $100,370 per year to $98,850 per year. The monthly rent is currently $47,844
plus CAM in the amount of$8,237.
2
Redevelopment Agency Memorandum
Penn 17, LLC-Retail Lease Amendment No.2
June 6, 2012
Page 3 of 5
ANALYSIS
1) Proposed One-Month Rent Abatement and Deferral of Two Months' Rent
As noted earlier, the Pre-Lease Agreement committed the Tenant to an aggressively ambitious
schedule by which to submit plans for permitting, especially given the uncertainty associated with
some of the unknown design and structural issues involved in converting a space not built for use as
a restaurant. Clearly, in electing to proceed with the Lease,the Tenant had some level of assurance
that these challenges could in fact be resolved, but couldn't be sure of the timing involved since the
Architect was only formally engaged upon execution of the Lease.
As plan development progressed, it became apparent that some of the challenges in converting the
space proved considerably more complex and time-consuming than originally anticipated,
particularly related, but not limited to, the engineering and permitting of the venting for the kitchen
exhaust; installing not one but a system of multiple grease traps;the build-out of the storage room
and particularly the design of the structural slab; restoration of the existing structural slab in the
Premises following partial demolition to install the plumbing; and addressing additional flood-
proofing criteria. The plans have also undergone extensive revisions to address comments and
concerns raised by the Building Department, as well as certain other regulatory agencies,as part of
the permitting review process.
As a result of these delays, it is anticipated that the opening date, originally planned for April, 2012,
is now pushed back to late August. However, the Lease Agreement, in acknowledgement of the
Tenant's originally anticipated schedule and level of investment, currently provides a six-month rent
credit, with rent payments that formally commenced on April 13, 2012. It bears noting that in
addition to the unanticipated delays associated with the permitting process, the Tenant has stated
that it also anticipates a corresponding increase in the cost of the project.Additionally, in anticipation
of the April opening date, the Tenant already proceeded to hire the restaurant's executive staff and
started its payroll on March 1st. Based on the foregoing, the Tenant is requesting an additional
three-month rent credit to offset these additional and unforeseen expenses.
In considering the Tenant's request, the Administration does not believe that difficulties associated
with the actual permitting review process should be a factor for consideration, particularly since the
City has already granted the Tenant a 12-month period in which to preempt and address these very
issues and since the issues encountered aren't necessarily uncommon for a project of this nature on
Miami Beach. However, based on the chronology of events since the approval of the Lease and
Pre-Lease by the City Commission on April 14, 2011, the Tenant's claim concerning the extensive
amount of additional time involved in addressing and permitting some of the larger, unanticipated
regulatory requirements may provide justification for granting a portion of the additional rent credit.
Therefore, out of consideration of the Tenant's ongoing commitment and level of investment in the
Restaurant Space, staff supports an abatement of one-month's rent, together with a deferral of an
additional two months' rent, to be paid in lump sum or in thirty six (36) equal monthly installments
together with the Tenant's regular payments of rent,taxes and Common Area Maintenance(CAM),
commencing in the third year of the lease term and ending on the last day of the fifth year of the
lease term.
3
Redevelopment Agency Memorandum
Penn 17, LLC- Retail Lease Amendment No.2
June 6, 2012
Page 4 of 5
2) Modification of Tenant's Additional Area (Storage Space)
The Tenant's Lease currently provides for use of an area located beneath the garage ramp
comprising approximately 2,230 square feet of unfinished, and until recently, inaccessible space(as
reflected in the floor plan included as Exhibits "A" and"A-1"to this memorandum). Pursuant to the
Lease, the Tenant is in the process of building out this area to render it usable for walk-in
refrigerated food and beverage storage, dry storage, certain food preparation and for general
deliveries. The Tenant's work includes creating an access door, installing lighting, electricity,
plumbing, life-safety systems, pouring floor slab and installing refrigerators and storage enclosures.
Immediately adjacent to this area is an existing 284 square foot storage room used to store the
building's flood barrier panels. In order to properly level and tie in with the existing slab under the
panel storage room, the Tenant's work mandated the removal of the interior walls in this space,
which in effect squares off the entire space beneath the ramp as one contiguous area. While the
Tenant's plans provide for restoration of the City's storage panel room in the same location, the
Tenant is instead proposing to retain and incorporate this space as part its storage area and to
construct, at its sole cost and expense, a new floor-to-ceiling enclosure for the City in an alternate
and unused space located on the ground floor of the garage (reflected in the attached floor plan).
The proposed modification of the storage area not only improves its overall functionality, but also
greatly compensates for the loss of headroom towards the back of the space where the slope of the
ramp meets the new slab. The proposal was welcomed by both Parking and Property Management
since the new flood panel storage would not only be significantly more accessible than its current
location, but would also preclude interfering with deliveries and restaurant staff going about its work
in the storage area. The Building Department has also conceptually approved this modification.
Pursuant to the Lease, the Tenant currently pays the established Common Area (CAM) rate of
$10.00 per square foot for use of the storage space. The additional 284 square feet will increase
CAM by$2,840, from $98,850 to $101,690 annually. In acknowledgment of the significant added
value created by the Tenant's build-out of this previously unusable area of the garage,staff supports
and recommends approving this minimal modification and amending the Lease accordingly.
FINANCE AND CITYWIDE PROJECTS COMMITTEE RECOMMENDATION
At the May 17th meeting of the Finance and Citywide Projects Committee (F&CWPC), staff
recommended approving an abatement of one (1) month's rent and a deferral of an additional two
(2) months' rent,to be paid in lump sum or in thirty six(36)equal monthly installments together with
the Tenant's regular payments of rent,taxes and Common Area Maintenance(CAM),commencing
in the third year of the lease term and ending on the last day of the fifth year of the lease term. Staff
further recommended approving the modification of the Tenant's Additional(Storage)Area,which as
noted above, will provide for an additional 284 square feet of space, a corresponding increase in
CAM of $2,840 annually and is conditioned upon construction of a new enclosure to store the
facility's flood panels.
The F&CWPC wanted to be sure that in light of the City's investment to improve Pennsylvania
Avenue, that the use of the sidewalk for outdoor seating by the Tenant would include substantive
maintenance requirements. The Administration informed the Committee that the Tenant's use of the
sidewalk would be governed by a separate sidewalk cafe permit which is subject to very specific
maintenance and cleanliness-related standards and conditions set forth in the City's Sidewalk Cafe
Ordinance,which generally include, but are not limited to maintaining the area of the sidewalk,curb
and gutter, immediately adjacent to the restaurant/cafe clear of dirt and debris during hours of
operation and again at close of business each day; pressure cleaning the floor surface on which the
outdoor seating area is located at the close of each business day; and maintaining tables, chairs,
umbrellas and any other sidewalk cafe furniture in a clean, attractive and orderly appearance and in
4
Redevelopment Agency Memorandum
Penn 17, LLC-Retail Lease Amendment No.2
June 6, 2012
Page 5 of 5
good repair at all times.
The F&CWPC recommended in favor of amending the Lease Agreement as proposed.
CONCLUSION AND RECOMMENDATION
Pursuant to the action of the Finance Committee, staff recommends approving a Second
Amendment No. 2 to the Lease Agreement between the Tenant and the RDA to reflect such
recommendations as follows:
1) Granting the Tenant a one (1) month rent abatement and deferring an additional two (2)
months' rent to be paid by the Tenant in lump sum or in thirty six (36) equal monthly
installments together with regular payments of rent,taxes and Common Area Maintenance
(CAM) costs, commencing in the third year of the Lease Term and ending on the last day
of the fifth year of the Lease Term;
2) Increasing the size of the Tenant's Additional Area(Storage Space), as defined in section
3.11 of the Lease, to include an additional 284 square feet, currently designated for
storage of the building's flood panels;
3) Increasing the charge for Common Area Maintenance (CAM) from $98,850 per year to
$101,690 to reflect the increase in size of the Additional Area; and
4) Constructing, at the Tenant's sole cost and expense, a new replacement enclosure for the
storage of flood panels, subject and pursuant to the satisfaction and approval of the RDA.
Upon acceptance of the proposed modifications, the annual rent (excluding the approved one-
month abatement and two-month deferral) will be $675,815 or $56,318 monthly,(comprising
$47,844 per month in base rent and $8,474 per month in CAM).
JMG\HMF \KOB
Attachmen s
T:\AGENDA\2012\June 6\Consent\Penn 17 Retail Lease Amendment 2.RDA MEM.doc
5
_�,s ��ree.e+tee.'®e''.�aeeae s■�e J-1
--�
la go,"_//7 i
LLJ
�;� '.'I�i– I _ � 1 ::C ��f if J ���'� I -• -X �1
-j o
ffgoal–
CL
LU
_
r
/.r/,'C
H is U)
r ��:– ==WIF-= Ii�. f-f"- f r •; '/f;� �j , fir•/�' .,
W ■-- r f f f 11 I� /1
2 �Z
—�1 ✓ J 1 J /,;�f c ----
W
i r
fie ------_ — — - -- Q ----- ;
Oz 0 0
0
0 M
a. 0.
I
LU
w
Li
UJ
CL
lu w
Z02
g U)
X 0 rFl
LU J� I ti "Lil Llil LJ
',`�sA�samt�I i I r r j i 1 � � ' �` 11; i
T-7
z
cn
—-——-—-—-—-—-
CL
0
0
li ��� a
U- 0 0
0
LU
Lo
0\\�
C.) 0
C.) iK
Cb -j w
CL
C/) Z \�,NA,\I
T.- LU W /11111 1//771
Z02
z < <
w M (r)
Mo <
7TMTFM
I ii t
"Ll, ILI,
cn
uj
cc
-j 1 Ul
<
Z JT�l
W1.7
Cl) Q II