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RESOLUTION 93-20852 RESOLUTION NO. 93-20852 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE MAYOR AND THE CITY MANAGER TO ENTER INTO AN AGREEMENT WITH KPMG PEAT MARWICK FOR THE PURPOSE OF A FEASIBILITY STUDY OF THE 10TH STREET AUDITORIUM. WHEREAS, the City of Miami Beach wishes to utilize the services of KPMG Peat Marwick, for the purposes of conducting a Feasibility Study of the 10th Street Auditorium located at 1001 Ocean Drive; and, WHEREAS, the parties have negotiated a fee for these services of $35, 000. NOW, THEREFORE, BE IT DULY RESOLVED BY THE CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the City Manager is authorized to enter into a Letter of Agreement with KPMG Peat Marwick to perform a Feasibility Study of the 10th Street Auditorium located at 1001 Ocean Drive, for the fixed fee of $35, 000. PASSED and ADOPTED this 14th day of ,,, July , 1993 . • ATTEST: City Clerk IM- .4•171/ MDB:ah FORM AP"ROVED LEG9PT. ,- BY Vela ffr Date CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010 FAX: (305) 673-7782 COMMISSION MEMORANDUM NO. 3a,--9 3 TO: Mayor Seymour Gelber and DATE: July 14 , 1993 Members of the City Commission FROM: Roger M. Carlt0 City Manager SUBJECT: ART DECO HISTORIC DISTRICT CONFERENCE CENTER FEASIBILITY STUDY — RECOMMENDATION FOR AWARD ADMINISTRATION RECOMMENDATION: It is recommended that the City Commission award the Feasibility Study contract to the recommended firm of KPMG Peat Marwick. BACKGROUND: On April 13 , 1993 , the City of Miami Beach issued RFP No. 42-9293 calling for proposals of a Historic Conference Center Feasibility Study. Five (5) proposals were received. The City Manager subsequently appointed a selection. committee to review and narrow down the list. The Selection Committee received copies of each proposal and were requested to evaluate each proposal for compliance with submission requirements, documentation of qualifications, experience and capability to provide the necessary services for this agreement. The selection committee met on June 7th and rank ordered the proposals. Upon completion of the discussion, the firm of KPMG Peat Marwick was ranked first. The City Commission approved authorization to negotiate a contract with the above firm in the Commission meeting of June 16, 1993 . CONCLUSION: The City Commission is requested to give the Administration authority to award the contract to the number one ranked firm of KPMG Peat Marwick. The total cost of the study is $35, 000. A grant application in the amount of $1, 500, 000 has been submitted to the Economic Development Administration for construction of the facility. RMC:MDB:ah • AGENDAG ITEM DATE / q_ c?3 r sl t Peat Marwick • Management Consultants Barnett Tower,Suite 1600 Telephone 813 822 8521 • ' Telefax 813 822 7003 One Progress Plaza St. Petersburg, FL 33701 July 9, 1993 Ms. Mayra Diaz-Buttacavoli Assistant City Manager City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Dear Ms. Diaz-Buttacavoli: On behalf of KPMG Peat Marwick and its Hospitality Consulting Group and the Orlando based conference center programming firm of ZHA International, Inc., we are pleased to submit this revised proposal for consulting services. OUR UNDERSTANDING OF THE ASSIGNMENT Our team understands that the City of Miami Beach is seeking assistance in determining the feasibility of a conference center in the Ocean Drive area that would support forty hotel properties containing nearly 2,200 rooms. Due to the lack of meeting and dining space, most of these hotels are precluded from booking any significant group business. Preliminary interviews by the City and hotel operators in the district, indicate that some hotels have actually turned down business requiring meeting or dining space for 100 or more people. The concept of a shared conference center within walking distance of the hotels was greeted very favorably by hoteliers. We also acknowledge that the City owns an existing community center located at 10th Street and Ocean Drive which is currently under utilized. The facility has the potential to provide the opportunity to meet the needs of the hotels in the Art Deco District. The City proposes to determine if market demand exists to justify converting the community center into a conference center, and whether the existing 11,000 square foot facility may successfully be modified to meet the needs of the area. In addition, community groups have inquired as to the availability of space in such a center. The Miami Beach Chamber of Commerce and the Miami Design Preservation League have both expressed interest in the project. With the above in mind, we have designed our scope of services to address the phases of work outlined in your. Request for Proposal. While our final product is to be a written report, the process will be interactive. This will enable you to provide input, develop a complete understanding of the findings and will enable you to monitor the progress of the analysis. EINE Member Firm of Klynveld Peat Marwick Goerdeler KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 2 of 12 Our scope of services will assist you in determining the need for, and the impact of, a conference center in the Art Deco District Review Existing Data and Resources 2 Assess the Market Potential for a Conference Center in South Beach ... .... 3 Estimate Event Demand and Room Night Impact Check-Point Is Stop Study Development No Warranted Process • .. Yes 4 Develop a Building Program that Addresses the Market's Neefr ds • 5 7 Evaluate Operational Evaluate the Characteristics of the Proposed Site Project ........ ....... .•:••••••• • • 6 Q Estimate the 8 - Estimate the Estimate Operating Development Cost& Project's Impact Revenues and Expenses Funding Requirements on Area Hotels i KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 3 of 12 SCOPE OF SERVICES STEP 1 - Review Existing Data and Resources Upon selection and receipt of authorization to proceed, we will meet with appropriate client representatives to: • Develop direct lines of communication between the consulting team and the client • Develop an understanding of background, history, and key issues • Confirm goals and objectives of the study • Review data you may have related to the project • Identify appropriate contacts and resources necessary to ensure complete assessment of issues and specific data • Obtain information and data from client representatives and governmental agencies As part of this initial step, we will interview the City of Miami Beach staff, the Art Deco Hotel Association, the Miami Beach Hotel and Motel Association, the Greater Miami Convention and Visitors Bureau, the Miami Beach City Center Citizens Advisory and Technical Committee, Spectacor Management Group, Miami Beach Development Corporation, Ocean Drive Association and others as appropriate. STEP 2 - Assess the Market Potential for a Conference Center in the South Beach Area The assessment of trends occurring in the potential demand sectors is a critical step in the analytical process. Facility design, staffing, funding and the operations of a facility are tied to the existing and future event needs that a facility is expected to accommodate. Consequently, we will devote significant efforts in this stage of the engagement. Specifically, we will: A. Analyze the characteristics of the small meetings market in Dade County —We will analyze the characteristics of the small meeting market in Dade County, specifically for the South Beach hotel market, utilizing information from the Greater Miami Convention and Visitors Bureau, meeting planners, and hotel operators. B. Assess the South Beach area hotel market and the potential impact of a conference center —We will identify those hotels in the South Beach area which would most likely utilize a centralized meeting facility. As part of our analysis, we will evaluate the current market segmentation of these properties and determine their • • 1411116 Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 4 of 12 potential to attract small meeting business if a conference center is constructed. Through interviews with hotel operators, we will estimate the number of room nights that are lost due to limited or lack of meeting space in the respective properties. This portion of the analysis will also evaluate the level of service and the amenities needed in the proposed conference center to allow these hotels to compete successfully for this business. C. Survey the local user market —We will survey potential users to determine their interest in utilizing the facility. The surveys will be directed at both small meeting planners and hotel managers. The survey will be conducted via telephone interviews. We have found that a focused interview procedure is more effective than mass surveys which many firms have conducted. Fairly often, survey respondents know nothing of the area, may not meet in the region and/or cannot physically be accommodated by the proposed project. Consequently, a mass survey process can lead to erroneous conclusions. By focusing the interview process we can explore, in detail, why potential users may or may not utilize the proposed facility. Our findings will outline the kind of groups that will utilize the facility and their attitudes and comments regarding the facility and the market. D. Analyze competitive and comparable facilities —We will utilize our extensive database of facility information to determine the type of events that occur in other facilities and how they might, or might not, work in this project. Our analysis will include nearby hotels with conference facilities, other conference centers in the South Florida area and comparable cities with historic districts and inventories of small historic hotel properties. In addition, we will outline which of these cities, if any, have developed a centralized meeting facility or similar concept shared by hotels with limited or no meeting space; how booking conflicts are mitigated; and whether the hotels share a centralized hotel reservation system which could be housed at the facility. We have recently worked in South San Francisco, Charleston, SC; Savannah, GA; and other similar cities that will provide a starting point for our research. E. Analyze community attributes —We will analyze community attributes, such as hotel supply, access,restaurants, entertainment, local transportation and other attributes to determine if the Area offers the required attributes that other successful areas offer. KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 5 of 12 STEP 3 - Estimate Event Demand and Room Night Impact Based upon the preceding analysis, we will have the necessary information to develop demand projections for the facility. We will estimate potential demand in terms of square footage requirements, number of events, event length, attendance, room block requirement and length of stay by major event types, for a five (5) year period. CHECK-POINT - If it is determined that there is not sufficient demand that would warrant a conference center, we can stop the study process. If it is determined that there is sufficient demand that would warrant construction and/or renovation, we will proceed as follows. STEP 4 - Develop a Facility Program that Addresses the Market's Needs Based on the results of the market analysis, the consulting team will develop a facility program that can address the needs of the target markets identified. Both KPMG Peat Marwick and ZHA International Inc., will be involved in this process. Factors to be addressed include: ■ Space requirements ■ Storage space ■ Seating requirements ■ Parking and traffic circulation ■ Lobbies and pre-function areas ■ Loading and trash docks ■ Ceiling heights ■ Expansion strategies ■ Kitchen space ■ Other factors as appropriate STEP 5 - Evaluate the Proposed Site The location of a conference center is an important factor in a meeting planner's decision making process. Consequently, the evaluation of the proposed site for the facility is a key factor in determining the feasibility of the project. Both KPMG and ZHA will be involved in the evaluation of the existing auditorium site. The analysis will evaluate several criteria and each criteria will be weighted based on importance. The evaluation will include the following factors. KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 6 of 12 Site Marketability Site Size Proximity to area hotels Ability to accommodate facility needs Hotel rooms within walking distance Ability to accommodate surface parking Hotel rooms within shuttle distance Ability to accommodate structure Distance to airport parking Proximity to retail and restaurants Ingress and egress Ability to accommodate expansion Site Access Site Rehab Costs Via truck Demolition(if any) Via pedestrian Site preparation Nearby traffic Surface parking Off-site parking Structure parking Other as appropriate STEP 6 - Estimate the Conversion Costs and Funding Requirements Based on completed conference center construction cost information, adjusted to the Miami Beach level, ZHA will estimate the order of magnitude of costs to renovate the existing facilities. Factors to be addressed include: • Design • Other Fees and Expenses • Site development • Contingencies • Construction • Other factors as appropriate • Furniture, Fixtures and Equipment KPMG will use the estimate of costs to evaluate funding requirements and identify possible funding methods. This area is where we differentiate ourselves among our competitors. We have recently helped several clients through the financing stage including the Charlotte Convention Center (in Certificates of Participation - COPs), the Cobb County Convention Center in Atlanta (Revenue Bonds), the Myrtle Beach Convention Center (COPs), McCormick Place in Chicago (Revenue Bonds) and various facilities in Dade County Florida (Revenue Bonds). The staff that assisted these clients will work on this engagement. Based on this experience, we will work closely with you to identify and evaluate alternative methods to finance the operating deficit and fund the project. Our experience includes KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 7 of 12 establishing funding plans that has included local, state and even federal sources. Our relationships with the financing community will enable us to provide you with up-to-date financial market information that will enable you to develop a funding plan that can be well received by potential funding sources. STEP 7 - Evaluate Operational Characteristics of the Project We will outline various operational concepts that can and/or should be implemented. Areas to be discussed include: • Recommendations of who is to market/sell conference center and who is to operate the facility. • Mission statement - to guide the overall direction of the project. • Booking policies at area hotels and the center - to implement the mission statement. • Centralized reservations system and coordination with existing community hotel and visitor assesments. • Management- to determine if public or private management best implements the mission. • Operations recommendations to market, sell and operate the center. • Marketing - to outline responsibilities and goals. We expect to have input from the various groups involved in marketing the area including the Greater Miami Convention and Visitors Bureau, the Miami Beach Hotel and Motel Association, the Ocean Drive Association, Miami Beach Development Corporation, and other similar groups. STEP 8 - Estimate Operating Revenues and Expenses Based on the information provided by the market analysis, historical operating data and comparable facility operating data, we will estimate operating revenues and expenses over a five year period, both with and without dining facilities. The analysis shall include and define all major assumptions and alternatives regarding projected revenues and expenses as follows: . . . - . , . ANNIP Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 8 of 12 Revenues Expenses Space Rental Staffing Equipment rental Benefits User labor charges Contracted services Food&beverage revenues/commissions Utilities Parking revenues Insurance Other revenues, as appropriate Repairs and maintenance Advertising/promotions Capital reserves Other expenses, as appropriate STEP 9 - Estimate the Project's Impact on Area Hotels The final step in our analysis will estimate the impact the proposed conference center will have on South Beach hotel operations. We will utilize the projection of room night information from Step 3 in addition to average daily rates in the area and expense ratios to determine the impact on hotels on a per room night basis. SUMMARY OF FINDINGS Upon completion of the above tasks, we will present our findings to city and community leaders in the form of an oral presentation and a brief written report. TIMING Studies of this type typically take eight to twelve weeks to complete. The study will be an interactive process. We will discuss preliminary findings throughout the project. In advance of client work sessions, appropriate materials would be submitted in order to communicate our findings and conclusions. Upon completion of the study, we will issue a draft report for your review. Upon mutually agreed upon review comments, we will issue our final report. + , , KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 9 of 12 We have budgeted several meetings as part of our scope of services. They are: Kick-off meeting with the client group 1 Day Field work meetings: 1 Week City and County Officials Existing facility management Convention and Visitors Bureau Chambers of Commerce Potential local corporate users and industry participants Others as identified Work session with client group to discuss preliminary findings 1 Day Formal work sessions and presentation(s) to client group 1 Day ESTIMATED FEES We have estimated professional fees and expensess based on our familiarity with the steps required to complete the project. It is consistent with what we have been paid in similar studies. KPMG ZHi Total 1 - Review Existing Data and Resources 2- Assess the Market Potential of a Conference Center in the South Beach Area 3 - Estimate Event Demand and Room Night Impact Subtotal Step 1-3 $25,000 $0 $25,000 4 - Develop a Facility Program that Address the Market's Needs 5 - Evaluate the Proposed Site 6- Estimate the Physical Modifications Costs and Funding Requirements Subtotal Step 4-6 2,000 5,000 7,000 7 - Evaluate Operational Characteristics of the Project 8- Estimate Operating Revenues and Expenses 9 - Estimate the Project's Impact on Area Hotels Subtotal Step 7-9 3,000 0 3,000 $30,000 $5,000 $35,000 Invoices will be based on hours worked to date multiplied by our standard billing rates. Invoices will be submitted throughout the engagement and will be due upon receipt. KPMG KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 10 of 12 requires a retainer in the amount of$15,000 to begin this engagement. Our fee is not contingent upon our analysis and all progress bills for fees and expenses are to be paid before we issue our draft and final reports. Accounts unpaid after 30 days are delinquent and subject to interest charges at the rate of 1-1/2% per month. CLIENT RESPONSIBILITIES To enable KPMG and ZHA to efficiently complete the project, it is assumed the City will: 1. Enable KPMG to plan trips to Miami Beach in advance to take advantage of lower airfares. 2. Help schedule fieldwork meetings with existing facility management, Convention and Visitors Bureau, Chambers of Commerce and others as identified. 3. Provide historical operating revenue and expense information for the past two fiscal years. The information provided should be of a level of detail similar to that outlined in Task 8 of this proposal. 4. Provide historical organization structure and staffing levels for the past two fiscal years. 5. Provide historical event information. 6. Provide a listing of event turnaways (if maintained). 7. Provide a listing of area hotels outlining number of rooms, area of city, committable rooms (if available), average daily rates (if available) and meeting space. CONTRACTUAL CONDITIONS The following conditions are in accordance with our Firm's policy. Should you have any questions concerning any of the conditions, please feel free to call us. The findings and recommendations of our research will reflect analyses of primary and secondary sources of information. Estimates and analyses presented in the report will be based on economic trends and market assumptions which are subject to variation. Our financial 'w PNAMPeat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 11 of 12 analysis will be made from information provided by the market analysis and from information provided by management. Our work is for internal planning use by the City and is restricted from distribution to any third party. If third party uses (for financing, etc.) are contemplated, we will issue a separate engagement letter outlining the applicable conditions pertaining to this portion of our work. The City is responsible for representations about its plan and expectations and for disclosure of significant information that might affect the ultimate realization of the projected results. We will have no responsibility to update our report for events and circumstances occurring after the date of our report. If for any reason you wish to terminate our work during the course of the engagement, you reserve the right and we would terminate our engagement immediately and only bill you for the fees and expenses incurred to date. It is understood in accepting this proposal that neither fees nor payment of expenses is contingent upon the result of the engagement. The proposal and attachments are confidential. Reproduction or use for other than the purposes intended is prohibited without prior written approval. We look forward to working with you on this important project. Should you have any questions, please do not hesitate to call me at 305-789-2642. Very truly yours, KPMG Peat Marwick Jeff Sachs, Manager Convention, Sports and Entertainment Consulting KPMG Peat Marwick Ms. Mayra Diaz-Buttacavoli July 9, 1993 Page 12 of 12 AUTHORIZATION TO PROCEED If the services described in the foregoing proposal are in accordance with your requirements and are acceptable, please indicate by signing below. Signature Ii Date S./(-11413 Title City Manager ATTEST: •cist„,_ City Clerk Uic1li11Nk1L RESOLUTION NO. 93-20852 Authorizing the Mayor and the City Manager to enter into an agreement with KPMG Peat Marwick for the purpose of a feasibility study of the 10th Street Auditorium.