2004-25507 Reso
RESOLUTION NO.
2004-25507
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE A THIRD AMENDMENT TO THAT CERTAIN LEASE
AGREEMENT ENTITLED, "LEASE AGREEMENT BETWEEN THE CITY
OF MIAMI BEACH AND PENROD BROTHERS, INC. FOR A PIER PARK
RESTAURANT FACILITY", FOR USE OF THE PROPERTY LOCATED AT
ONE OCEAN DRIVE, MIAMI BEACH, FLORIDA; SAID THIRD
AMENDMENT INCREASING THE PERCENTAGE RENT DUE TO THE
CITY AND CORRECTING SCRIVENER'S ERRORS IN EXHIBITS "A"
(SITE PLAN) AND "B" (LEGAL DESCRIPTION) TO THE AGREEMENT
WHEREAS, on October 2, 1985, the Mayor and City Commission adopted
Resolution No. 85-18223, approving a Lease Agreement between the City and Penrod
Brothers, Inc. (Penrod's) for the development, construction, managernent and operation of
a restaurant facility in Pier Park (the Lease Agreement); and
WHEREAS, on October 2, 1985, the Mayor and City Commission also adopted
Resolution No. 85-18222, approving a Concession Agreement, dated November 7,1985,
between the City and Penrod's for the sale of food and beverages and rental of lounging
and related equipment to service patrons within a portion of Pier Park adjacent to the
Lease Premises (the Pier Park Concession Agreement), which Concession Agreement
expired on November 4, 2001; and
WHEREAS, on March 2, 1988, the Mayor and City Commission adopted Resolution
No. 88-19178, approving the First Amendment to the Lease Agreement, thereby amending
the building footprint and appropriating funds for construction of a portion of the Pier Park
parking area; and
WHEREAS, on April 6, 1988, the Mayor and City Commission adopted Resolution
No. 88-19211, approving the Second Amendment to the Lease Agreement, thereby
revising the site plan (Exhibit A) and legal description (Exhibit B); and
WHEREAS, on November 5, 2001, the City entered into a new concession
agreement with Boucher Brothers Miarni Beach LLC, as the successful proposer pursuant
to Request for Proposals (RFP) No. 22-00/01, for the operation of beachfront concessions
on the beaches seaward of Lummus Park, Ocean Terrace and North Shore Open Space
Park, but neither said RFP nor the resulting concession agreement with Boucher Brothers
addressed the area within a portion of Pier Park adjacent to Penrod's Pier Park restaurant
facility (the Lease Premises), which had formerly (since 1985) been operated and
managed under the Pier Park Concession Agreement; and
WHEREAS, upon an initial request by Penrod's to continue to operate and manage
the concession within the aforestated portion of Pier Park adjacent to the Lease Premises,
the Administration has successfully negotiated a concession agreement (the Pier Park
Concession Agreement), and said Agreement was approved by the Mayor and City
Commission on February 25, 2004, pursuant to Resolution No. 2004- 25506 ; and
WHEREAS, pursuant to the parties' negotiation of the Pier Park Concession
Agreement, the City and Penrod's agreed to re-visit and negotiate the financial terms
governing the Lease Agreement, particularly with regard to payment of the percentage rent
due to the City, and the Concession Agreement, as approved, provides that the City and
Penrod's shall amend the Lease Agreement to reflect said renegotiated rent; and
WHEREAS, additionally, the parties wish to correct a long-standing scrivener's
error in the exhibits to the Lease Agreement referencing the building footprint (site plan)
and the legal description, to correspond with the position of the building as actually
constructed, but in no way materially altering or expanding the square footage andlor size
of the Leased Premises; and
WHEREAS, accordingly, the parties have negotiated the foregoing Third
Amendment to the Lease Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission herein approve and authorize the Mayor and City Clerk to execute the Third
Amendment to that certain Lease Agreement entitled, "Lease Agreement between the City
of Miami Beach and Penrod Brothers, Inc. for a Pier Park Restaurant Facility", for use of
the property located at One Ocean Drive, Miami Beach, Florida; said Third Amendment
increasing the percentage rent due to the City and correcting scrivener's errors in Exhibits
"A" (Site Plan) and "B" (Legal Description) to the Agreernent.
PASSED AND ADOPTED THIS 25th day of Febr ry 2
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CITY CLERK
JMG:CMC:JD:rlr
F:\DDHP\$ALL IASSET\1 OCEAN.DRIPENROD3RDLEASEAMENDMENT.RES.DOC
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
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CllY OF MIAMI BEACH
CONMISSION ITEM SUMMARY
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Condensed Title:
A Resolution, Waiving, By 5/7ths Vote, the Competitive Bidding Requirement, Authorizing A Concession
Agreement Between The City And Penrod Brothers, For The Operation Of A Concession In Pier Park
Seaward Of The Footprint Of The Penrod Pier Park Restaurant; Commencing Retroactively On October 1,
2003, And Expiring On May6, 2006, With An Option To Renew To Run Concurrently With The Term OfThe
Existing Pier Park Restaurant Lease Agreement; Said Concession Agreement Is Terminable By The City
Without Cause And For Convenience, With 180 Day Notice
A Resolution Authorizing A Third Amendment To The Lease Agreement Between The City And Penrod
Brothers For The Pier Park Restaurant Facility", Located At One Ocean Drive; Said 3rd Amendment
Increasing The Percentage Hent Due To The City And Correcting Scrivener's Errors In Exhibits "Au (Site
Plan And "B" Le al Descri tion To The Lease A reement
Issue:
Shall the City Commission approve 1) the Concession Agreement, and 2) a Third Amendment to the Lease
A reement with Penrod Brothers for the Pier Park Locations?
Item Summa IRecommendation:
1) A Concession Agreement for the rental of lounging equipment and providing food and beverage service in
the Pier Park Concession Area, including the following: Term: Commencing retroactively on 10/01/03, and
ending on 05/06/06, with an option to renew to run concurrent with the term of the Pier Park Restaurant
Lease Agreement. Ootion: If there is no default, there are two (2) automatically renewable ten (10) year
options, unless Penrod Brothers advises the City, in writing, at least 6 months prior to the expiration of the
preceding term. In the event that the Pier Park Restaurant Lease Agreement option is not exercised by
Penrod Brothers, or the Lease Agreement is otherwise terminated, the Concession Agreement shall
automatically terminate. City Reserves right to terminate for convenience, at its discretion and without cause,
with 180 day notice. Remuneration: City to receive 5.5% of gross receipts from all sales and services within
the Leased Premises and the Pier Park Concession Area, effective October 1,2003. Rate increases to 6.5%
upon Penrod's achieving a target revenue threshold of $12,818,026 (avg. of FY2002 & FY2003 gross
receipts). Retroactive Remuneration: City will receive retroactive remuneration of 5.5% of Gross Receipts,
for the period from 11/1/01-09/30/03 totaling $767,533; $400,000 in cash over next 3 months, and $367,533
in capital improvements within the Concession Area and Pier Park (includes public restroom facility and
exterior park access signage). Penrod will also invest a minimum of $500,000, in additional capital
improvements within the Concession Area or the Pier Park Restaurant. In the event an economic downturn
Penrod Brothers may opt to irrevocably forfeit the Concession Area and revert from the proposed 5.5%
(6.5%) rate models, to the 3.5% rate provided in its original Pier Park Restaurant Lease Agreement, and the
new Concession Agreement would be null and void, as would the concurrent Third Amendment to the Lease
Agreement, and Penrod would restore the Park to the City's satisfaction.
2) The 3rd Amendment to Pier Park Restaurant Lease is required to amend the percentage rent provisions
consistent with the Concession Agreement and correct exhibits related to the footprint of Leased Premises.
The Administration recommends that the Ma or and Ci Commission Ado t the Resolutions.
Advisory Board Recommendation:
IN/A
Financial Information:
Source of Amount Account Approved
Funds: 1
D 2
3
4
Finance Dept. Total
Ci Clerk's Office Le islative Trackin
Christina Cuervo/Joe Damien
Sin -Ofts: F:\DDHP\$ALL\ASSETI1 OCEAN_DR\PenrodLeaseAmendConcessionAgreement.SUM.doc
Department Director Assistant City Manager
AGENDA ITEM
DATE
R1D
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CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
http:\\cLmiami-beach.ll.us
COMMISSION MEMORANDUM
TO: Mayor David Dermer and DATE: February 25, 2004
Members of the City Commission
FROM: Jorge M. Gonzalez (l J X
City Manager \-- ~~
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, WAIVING, BY 5/7THS VOTE, THE COMPETITIVE
BIDDING REQUIREMENT, FINDING SUCH WAIVER TO BE IN THE BEST
INTEREST OF THE CITY, AND AUTHORIZING THE MAYOR AND CITY CLERK
TO EXECUTE A CONCESSION AGREEMENT BY AND BETWEEN THE CITY OF
MIAMI BEACH AND PENROD BROTHERS, INC., FOR THE MANAGEMENT AND
OPERATION OF A CONCESSION IN THAT PORTION OF PIER PARK SEAWARD
OF THE FOOTPRINT OF THE PENROD'S RESTAURANT, LOCATED AT ONE
OCEAN DRIVE, MIAMI BEACH, FLORIDA; SAID AGREEMENT HAVING AN
INITIAL TERM OF TWO (2) YEARS, SEVEN (7) MONTHS AND SIX (6) DAYS,
COMMENCING RETROACTIVELY ON OCTOBER 1, 2003, AND EXPIRING ON
MAY 6, 2006, WITH AN OPTION TO RENEW TO RUN CONCURRENTLY WITH
THE TERM OF THAT CERTAIN LEASE AGREEMENT ENTITLED, "LEASE
AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND PENROD
BROTHERS, INC. FOR A PIER PARK RESTAURANT FACILITY"; PROVIDED
FURTHER THAT SAID CONCESSION AGREEMENT IS TERMINABLE BY THE
CITY WITHOUT CAUSE AND FOR CONVENIENCE, UPON 180 DAYS WRITTEN
NOTICE TO PENROD'S
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE A THIRD AMENDMENT TO THAT CERTAIN LEASE AGREEMENT
ENTITLED, "LEASE AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND
PENROD BROTHERS, INC. FORA PIER PARK RESTAURANT FACILITY", FOR
USE OF THE PROPERTY LOCATED AT ONE OCEAN DRIVE, MIAMI BEACH,
FLORIDA; SAID THIRD AMENDMENT INCREASING THE PERCENTAGE RENT
DUE TO THE CITY AND CORRECTING SCRIVENER'S ERRORS IN EXHIBITS
"A" (SITE PLAN) AND "B" (LEGAL DESCRIPTION) TO THE AGREEMENT
ADMINISTRATION RECOMMENDATION:
Adopt the Resolutions
ANALYSIS:
On October 2, 1985, the Mayor and City Commission adopted Resolution No. 85-18222, approving
a Concession Agreement, dated November 7, 1985, between the City of Miami Beach and Penrod
Brothers, Inc. (Penrod's) for the operation and management of beachfront concessions, including
rental of beach equipment, water recreation equipment, and food and beverage service at Pier Park,
Oceanfront Park, and Lummus Park, and the beaches seaward thereof.
Concurrently, on October 2, 1985, the Mayor and City Commission also adopted Resolution
No. 85-18223, approving a Lease Agreement, dated November 7, 1985, between the City and
Penrod's for the development, construction and operation of a restaurant and associated uses at
Pier Park for a term of twenty (20) years, with two (2) additional ten (10) year options automatically
renewable at Penrod's discretion (the Pier Park Restaurant Lease Agreement).
The Concession Agreement, which was amended on August 13, 1986, via Resolution No. 86-18539
(Amendment No.1), on September 4, 1986, via Resolution No. 86-18571 (Amendment No.2), and
April 20, 1988, via Resolution No. 88-19223 (Amendment No.3), was to expire on November 4,
2000. On October 18,2000, the Mayor and City Commission adopted Resolution No. 2000-24137,
approving Amendment NO.4 to the Concession Agreement, extending its term for a period of one
year (terminating November 4,2001), to allow for the issuance of a Request for Proposals (RFP) for
the future operation of beachfront concessions on the beaches seaward of Lummus Park, Ocean
Terrace, and North Shore Open Space Park.
On February 21,2001, the Mayor and City Commission authorized the Administration to issue RFP
No. 22-00101 for the management and operation of beachfront concessions limited to the beaches
seaward of Lummus Park, Ocean Terrace and North Shore Open Space Park (the RFP). As a result
of input received from local merchant associations, and the general public at various public
meetings and workshops, and because Penrod's leased the upland portion of Pier Park for a term of
forty (40) years, said RFP was issued without the inclusion of the beaches east of Pier Park and
Oceanfront Park, which had previously been included in the 1985 Concession Agreement with
Penrod's.
Responses to the RFP were received, evaluated and recommendations regarding same were
forwarded to the Mayor and City Commission. On October 17, 2001, the Mayor and City
Commission approved and awarded a new concession agreement to Boucher Brothers Miami
Beach LLC, as the successful proposer, which became effective on November 5, 2001. In
accordance with the provisions of the RFP, the Boucher Brother's concession agreement did not
include the beaches seaward of Pier Park, or those portions of the park east of, and immediately
adjacent to the Pier Park Restaurant Leased Premises formerly addressed under the 1985 Penrod's
Concession Agreement.
Penrod subsequently approached the City and entered into discussions regarding a request to
continue servicing patrons (as it had always serviced that area through the 1985 Concession
Agreement) in the portion of the Pier Park area east of its Pier Park Restaurant, as well as the
beaches seaward thereof. In response to Penrod's request, the Administration reviewed the matter
and concluded that, since Penrod's was the original developer and long term Lessee of the upland
Pier Park Restaurant, it would be in the best interest of the City to have the same operator
(Penrod's) continue to provide concession services and operations, as were formerly provided by
Penrod's when it controlled the subject area pursuant to the 1985 Penrod's Concession Agreement.
In light of the foregoing, negotiations were commenced for two separate concession agreements: 1)
one for the beaches seaward of the dunes east of Pier Park, and 2) one for the area east of the Pier
Park Restaurant Leased Premises (Concession Area).
A. BEACH FRONT CONCESSION AGREEMENT:
On November 28, 2001, the Mayor and City Commission adopted Resolution NO. 2001-
24678, waiving by 5/7ths vote, the competitive bidding requirement and authorizing the City
Administration and City Attomey's Office to negotiate and execute a new beachfront
concession agreement with Penrod's for the management and operation of beachfront
concessions on the beaches seaward of the dunes east of Pier Park, substantially in
accordance with the following terms and conditions. The beachfront concession agreement
provides for an annual concession fee to the City of the greater of:
1) $10,000, which is the maximum that is being charged to concessions east of
privately owned uplands, or
2) 15% of the gross receipts Penrod's derives from its beachfront concession
operations. (Note: food and beverage revenue will continue to be reported and
remitted by Penrod's through its currently existing Lease Agreement for the Pier Park
Restaurant, located at 1 Ocean Drive).
Additionally, all other provisions of the beachfront concession agreement are consistent with
other concession agreements associated with beaches seaward of privately owned upland
locations, and as such will require that Penrod's comply with all aspects of the City's Rules
and Regulations for Beachfront Concession Operations.
B. PIER PARK CONCESSION AGREEMENT:
The Administration has been negotiating with Penrod's on several outstanding issues
including:
the use of area between the footprint of the Pier Park Restaurant and the dune
(Concession Area),
. the percentage of revenue to be paid to the City (both retroactively and in the future)
. that the Concession Area be completely open and accessible to the public
Said negotiations have been successfully concluded, resulting in the attached Concession
Agreement, for the operation and management of a concession for lounging equipment
rentals and food and beverage sales, in the portion of Pier Park seaward of the footprint of
the Pier Park Restaurant Lease Premises, substantially with the following terms and
conditions:
1) Term:
The Concession Agreement is to run concurrent with the term of the Lease
Agreement for the Pier Park Restaurant Facility. Accordingly, this Concession
Agreement shall be for an initial term of two (2) years, seven (7) months and six (6)
days, commencing retroactively on the first day of October, 2003, and ending on the
sixth day of May, 2006, with an option to renew to run concurrent with the term ofthe
Pier Park Restaurant Lease Agreement.
2) Option:
Provided that the Penrod's as Concessionaire or Lessee under the Pier Park
Restaurant Lease Agreement, is not in default, this Concession Agreement shall
have two (2) ten (10) year options for renewal. Such options shall be considered
automatically renewed unless Penrod's advises the City Manager, in writing, at least
six (6) months prior to the expiration of the preceding term that it does not wish to
exercise the option.
Additionally, in the event that Penrod's, as Lessee under the Pier Park Restaurant
Lease Agreement, does not exercise its option to renew said Lease Agreement, or
said Lease Agreement is terminated, for any reason whatsoever, then this
Concession Agreement shall automatically terminate,.
3) Termination for Convenience:
Notwithstanding the initial term or option terms above, the Concession Agreement is
terminable for convenience by the City, at its discretion, and without cause, upon 180
days written notice to Penrod's.
4) Financials:
The financial issues are addressed as three separate items: i) Financial
remuneration going forward from the commencement date of the Concession
Agreement; ii) Retroactive remuneration (in cash and capital improvements) for the
period from November 5, 2001 to September 30, 2003; and iii) Other capital
improvements to Concession Area andlor Leased Premises.
i) Remuneration:
Penrod's has agreed to remit to the City a rate of 5.5% of gross revenue
derived from all sales and services both within the Lease Premises and the
Pier Park Concession Area, effective as of October 1 ,2003. Said rate shall
increase to 6.5% upon evidence of Penrod's achievement of a target
revenue threshold equal to the average of the fiscal year 2002, and fiscal
year 2003 annual gross receipts, said average has been calculated at
$12,818,026.
ii) Retroactive Remuneration:
Penrod's has agreed to the following retroactive remuneration payable to the
City, based on a 5.5% rate of Gross Receipts, for the period from November
1,2001 through September 30,2003, totaling $767,533, as bllows:
ii-a) $400,000 in cash, payable to the City in accordance with the
following schedule:
i. $100,000 already received by the City on February 6,2004
ii. $100,000 no later than April 1, 2004
iii. $100,000 no later than May 1, 2004
iv. $100,000 no later than May 31,2004
ii-b) The remaining balance of $367,533 is to be applied towards capital
improvements within the Concession Area and Pier Park, including
but not limited to design and construction of an outdoor public
restroom facility to service Pier Park patrons and exterior signage at
each entranceway to the Park to be approved by the City.
iii) Other Capital improvements:
Penrod's will also make capital improvements, in an amount not less than
$500,000, either within the Concession Area or within the Pier Park
Restaurant Leased Premises.
5) Reverter In The Event Of Economic Downturn:
In the event there is a downturn in the economy that would directly create a financial
situation that could not be overcome using the proposed 6.5% rate model, Penrod's
may, with proper advance notice, to the City, opt to irrevocably forfeit the Concession
Area; revert to payment of its original 3.5% rate provided in its original Pier Park
Restaurant Lease Agreement. The new Concession Agreement entered into with
regard to the Concession Area would be null and void, as would be the concurrent
Third Amendment to the Lease Agreement; Penrod's would return to the legal
description under the original Lease Agreement (which only includes the footprint of
the Pier Park Restaurant); and the Concession Area would be restored by Penrod's
to a satisfactory condition, as determined by the City.
6) Operational and Land Use Issues:
a) No cover may be charged for patrons entering the Concession Area as said
area will remain and continue to be treated as public park property.
b) Amount of foliage, landscaping buffers, and number of lounging beds, chairs,
tables and other barriers has been reduced to ensure that there are clear
paths of access to the Concession Area, as well inclusion of adequate
signage indicating that the Concession Area is part of Pier Park, and as such
is open and fully accessible to the public, whether or not a member of the
public wishes to partake in the concession services offered by Penrod's or
not. The intent of the parties is to modify, reduce and/or remove obstacles
and barriers that would limit public access and foster the perception of
"privatization" of the Concession Area and to ensure that the Pier Park
property remain accessible to the public from all sides. A detailed site plan is
attached to the Concession Agreement for the City's review and approval,
and Penrod's will be responsible to undertake any and all further corrective
work.
c) Storage areas and storage of equipment along the north property line of the
Park have been addressed and included as part of the aforementioned site
plan.
d) A comprehensive hurricane evacuation plan, including off-site storage of
chairs, tables, lounge chairs, and any and all temporary structures, has been
provided.
e) Signage at all frontages of the Concession Area (Ocean Drive, beachside,
north side by Bently Beach and south side on street end) shall be erected
indicating that it is a public park area and publiC beach access is available.
f) Consumption of alcohol within the Concession Area will be permitted, but
sale andlor dispensing of alcohol (i .e. placement of bars or other dispensing
facilities) within the park will not be permitted.
g) A fee schedule detailing the proposed rates for lounge equipment rentals,
subject to the City's approval, will be submitted by Penrod's.
h) Any special events andlor film and print activities taking place within the
Concession Area will be subject to all applicable permitting requirements,
including the City's Special Event guidelines. Any revenues derived from
said activities, or any other business operations conducted within the
Concession Area, will be considered as part of the gross receipts pursuant to
the Concession Agreement and Lease Agreement, as amended.
7) Eventualitv of Non-Aareement to Business Terms:
In the event that this Concession Agreement is not approved, Penrod's has agreed,
at its sole cost and expense, to restore the area to a condition satisfactory to the
City, as a public park, within a time period established by the City.
8) Lease Aoreement Amendment:
In accordance with the financial terms agreed to in the Pier Park Concession
Agreement, the parties need to amend similar terms governing percentage rent in
the Pier Park Restaurant Lease Agreement. The Pier Park Restaurant Lease
Agreement is being concurrently amended as follows:
a) Penrod's shall remit to the City a rate of 5.5% of gross receipts derived from
all sales and services within the Pier Park Restaurant Leased Premises (as
well as the Pier Park Concession Area), retroactively effective as of October
1, 2003. Said rate shall increase to 6.5% upon evidence of Penrod Brother's
achievement of a target revenue threshold equal to the average of the fiscal
year 2002 and fiscal year 2003 annual gross receipts, said average has been
calculated at $12,818,026.
Additionally, the City and Penrod's wish to correct a long-standing scrivener's
error in the exhibits to the Pier Park Restaurant Lease Agreement
referencing the building footprint (site plan) and the legal description, to
correspond with the position of the building as actually constructed, but in no
way materially altering or expanding the square footage andlor size of the
Leased Premises; and
C. LEGAL ANALYSIS:
The City Attomey's Office has carefully scrutinized the attached Concession Agreement and
Third Amendment to Lease Agreement for compliance with the applicable Miami-Dade
County and City Charter provisions governing disposition of park property, as follows:
1) MIAMI-DADE COUNTY CHARTER (ARTICLE 6):
Article 6 of the Miami-Dade County Charter, entitled "Parks, Aquatic Preserves, and
Preservation Lands", generally requires that there shall be no permanent structures
or commercial advertising erected in a public park or private commercial use of a
public park or renewals, expansions, or extensions of existing leases, licenses, or
concessions to private parties of public park property, unless each such structure,
lease, license, renewal, expansion, extension, concession, or use shall be approved
by a majority vote of the voters in a County-wide referendum. Notwithstanding the
preceding sentence, however, Section 6.02 therein, entitled "Restrictions and
exceptions", provides that the provisions of Article 6 (including the aforestated
restrictions) shall not apply to "mini and neighborhood parks"; except that mini or
neighborhood parks may not be leased or sold unless a majority of the residents
residing in voting precincts any part of which is within 1 mile of the subject mini or
neighborhood park authorize such sale or lease by majority vote in an election.
Section 33H-3 of the Miami-Dade County Code defines a "mini park" as one "which
has small passive open space areas typically less than one acre in size... ." A
"neighborhood park" is defined as a park "which is typically from one (1) to ten (10)
acres in size and considered a walk-to facility...."
Pier Park, in its entirety, is approximately between 4-5 acres; the proposed
concession area contemplated herein is a little over an acre. For purposes of Article
6 of the County Charter, Pier Park falls within the County's definition of a
"neighborhood park." Thus, if the transaction was a sale or lease of the area it would
be subject to approval by a vote of residents residing in precincts with one mile. The
Concession Agreement in no way contemplates a sale or lease of Pier Park.
Penrod's is merely being given the right to operate a concession service, providing
beach rental and food and beverage services within a designated concession area in
an approximately one (1) acre portion of the Park. Additionally, the Concession
Agreement is terminable without cause and for the City's convenience, upon 180
days prior notice to Penrod's.
The proposed Third Amendment to Lease Agreement, only has the effect of (i)
memorializing the renegotiated financial terms between the parties, and (ii)
correcting a long standing scrivener's error in the legal description of the property.
No extension or expansion of the Lease Premises is involved, and the said Premises
continue to reflect the boundaries of the Restaurant facility, as constructed pursuant
to the original 1985 Lease Agreement. The 1985 Lease Agreement itself predates
the effective date of Article 6 of the County Charter. Article 6 states that it "shall not
be construed to illegally impair any previously existing valid written contractual
commitments or bid bonds or bonded indebtedness."
2) MIAMI BEACH CHARTER (SECTION 1.03(b)):
Section 1.03(b) of the Miami Beach City Charter, entitled "Alienability of property",
provides that the "the only limitation concerning alienability of City-owned property is
the restriction ofthe sale, exchange, conveyance or lease offive (5) years or longer
(including option periods) of park, recreation, or waterfront property in the City of
Miami Beach while it is being used for such public purpose, unless such sale,
exchange, conveyance or lease is approved by a majority vote of the voters in a City-
wide referendum.
As the proposed Third Amendment to Lease Agreement does not contemplate any
sale, exchange, conveyance, or lease of the Lease Premises, beyond the rights
conveyed in the 1985 Lease Agreement, Section 1.03(b) of the City Charter does not
apply.
The proposed Concession Agreement does not contemplate a sale, exchange or
lease of the concession area. The sole determination is whether the Concession
Agreement is a "conveyance," as contemplated under Section 1.03(b) of the City
Charter.
The Agreement specifically states that neither a leasehold interest or any other
property interest is intended to be conveyed through the Concession Agreement.
The Agreement merely grants Penrod's the privilege andlor license to provide certain
services consistent with beachfront concession operations, as well as the sale of
food and beverages, upon the concession area. The Agreement further requires
Penrod's to acknowledge that said services must be provided within the context of a
public park and that, as such, the concession area is open and available to the
public. The transaction does not grant Penrod's any sort of property right typically
associated with a fee interest, created by either a sale or exchange of property, or a
leasehold interest. The rights granted by the Concession Agreement are more in
keeping with the rights granted pursuant to the issuance of a license and, like a
license, those rights are revocable upon 180 days notice to Penrod's.
Although Section 1. 03(b) of the City Charter does not define the term "conveyance",
Article II of the City Code, which governs the sale or lease of City property, and
which sets forth stringent requirements to be complied with prior to the sale andlor
lease of City property (including but not limited to, competitive bidding; Planning
Department analysis, appraisal; and public hearing), does define the term. In Article
II, Section 82-36, which defines what constitutes a "sale" of City property for
purposes of applying the requirements of Article II, a sale is defined as "any
conveyance, transfer, gift, exchange or other transaction in which legal title
passes from the City to any person or entity... ." [Emphasis Supplied]. Further,
Section 82-36 also specifically exempts concession agreements from compliance
with the City Code procedures governing salellease of City property. Finally,
Merriam-Webster's Colleoiate Dictionary (9th ed. 1991), defines a "conveyance" as
"an instrument by which title to property is conveyed... .".
Section 1.03(b) of the City Charter is intended to impose an additional level of
scrutiny, beyond the requirements for sale andlor lease of City property in Article II of
the City Code, with regard to the disposition of park and waterfront property in the
City. However, upon reading the definition of the term "conveyance" in Article II,
Section 82-36, as well as Webster's definition of a "conveyance", it is clear that the
type of "conveyance" intended to trigger the requirements of Section 1.03(b) is one
where the intent is that the City convey legal title or a leasehold interest of five (5)
years or more to another entity. The attached Concession Agreement does not rise
to the level prescribed by Section 1. 03(b) of the Charter and is similar in nature to the
numerous beachfront concessions which exist and have existed in the past.
The Administration recommends that that the Mayor and City Commission waive by 517ths vote, the
competitive bidding requirements, finding such waiver to be in the best interest of the City, and 1)
approve a Concession Agreement by and between the City of Miami Beach and Penrod Brothers,
Inc., for the rental of lounging equipment and for providing food and beverage service in the Pier
Park Concession Area, Miami Beach, Florida, and 2) approve a third Amendment to the Lease
Agreement between the City of Miami Beach and Penrod Brothers, Inc. for the restaurant property,
also located at One Ocean Drive, Miami Beach, Florida.
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F:\DDHP\$ALL IASSE1\1 OCEAN.DRIPENRODLEASEAMENDCONCESSIONAGREEMENT.MEM.DOC
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THIRD AMENDMENT TO THE LEASE AGREEMENT
BETWEEN THE CITY OF MIAMI BEACH
AND
PENROD BROTHERS, INC.
This Third Amendment to the Lease Agreement, dated November 7, 1985, by and
between the City of Miami Beach, a Florida municipal corporation (herein after referred to
as "Lessor" or "City"), and Penrod Brothers, Inc., a Florida corporation (herein after referred
to as "Lessee" or "Penrod's"), for the property located at One Ocean Drive, Miami Beach,
Florida (Premises), is entered into this 25th day of February, 2004.
WITNESSETH
WHEREAS, on October 2, 1985, the Mayor and City Commission adopted
Resolution No. 85-18223, approving a Lease Agreement between the City and Penrod
Brothers, Inc. (Penrod's) for the development, construction, management and operation of
a restaurant facility in Pier Park (the Lease Agreement); and
WHEREAS, on October 2, 1985, the Mayor and City Commission also adopted
Resolution No. 85-18222, approving a Concession Agreement, dated November 7, 1985,
between the City and Penrod's for the sale of food and beverages and rental of lounging
and related equipment to service patrons within a portion of Pier Park adjacent to the
Lease Prernises (the Pier Park Concession Agreement), which Concession Agreernent
expired on Novernber 4, 2001; and
WHEREAS, on March 2, 1988, the Mayor and City Commission adopted Resolution
No. 88-19178, approving the First Amendment to the Lease Agreement, thereby amending
the building footprint and appropriating funds for construction of a portion of the Pier Park
parking area; and
WHEREAS, on April 6, 1988, the Mayor and City Commission adopted Resolution
No. 88-19211, approving the Second Amendment to the Lease Agreernent, thereby
revising the site plan (Exhibit A) and legal description (Exhibit B); and
WHEREAS, on Novernber 5, 2001, the City entered into a new concession
agreement with Boucher Brothers Miami Beach LLC, as the successful proposer pursuant
to Request for Proposals (RFP) No. 22-00101, for the operation of beachfront concessions
on the beaches seaward of Lummus Park, Ocean Terrace and North Shore Open Space
Park, but neither said RFP nor the resulting concession agreement with Boucher Brothers
addressed the area within a portion of Pier Park adjacent to Penrod's Pier Park restaurant
facility (the Lease Premises), which had formerly (since 1985) been operated and
managed under the Pier Park Concession Agreement; and
WHEREAS, upon an initial request by Penrod's to continue to operate and manage
the concession within the aforestated portion of Pier Park adjacent to the Lease Premises,
the Administration has successfully negotiated a concession agreement (the Pier Park
Page 1
Concession Agreement), and said Agreement was approved by the Mayor and City
Commission on February 25, 2004, pursuant to Resolution No. 2004- ~ ~S Ob ; and
WHEREAS, pursuant to the parties' negotiation of the Pier Park Concession
Agreement, the City and Penrod's agreed to re-visit and negotiate the financial terms
governing the Lease Agreement, particularly with regard to payrnent of the percentage rent
due to the City, and the Concession Agreement, as approved, provides that the City and
Penrod's shall amend the Lease Agreement to reflect said renegotiated rent; and
WHEREAS, additionally, the parties wish to correct a long-standing scrivener's
error in the exhibits to the Lease Agreement referencing the building footprint (site plan)
and the legal description, to correspond with the position of the building as actually
constructed, but in no way materially altering or expanding the square footage and/or size
of the Leased Premises; and
WHEREAS, accordingly, the parties have negotiated the foregoing Third
Amendment to the Lease Agreement.
NOW, THEREFORE, Lessor and Lessee have agreed to enter into this Third
Amendment to the Lease Agreement, and amend such Lease as follows:
1. That certain agreement between the City and Penrod Brothers, Inc., entitled
"Concession Agreement between City of Miami Beach, Florida, and Penrod
Brothers, Inc. for Management and Operation of a Concession in a Portion of Pier
Park", as approved on February 25,2004, by Resolution No. 2004- z,.C.rOb ,
and having an effective date of October 1, 2003, is attached herein and
incorporated hereto as "Exhibit C".
2. Article 13.3, entitled "Percentage Rent", is deleted in its entirety and replaced with
the following:
13.3 Minimum Guarantee (MG):
Commencing on October 1, 2003, and thereafter on May 7 of each year during the
term of this Lease, as well as any renewal terms, the Lessee shall pay to the City an
annual Minimum Guarantee (MG) equal to a percentage of Lessee's gross receipts.
The MG shall be payable as monthly percentage rent to the City by the fifteenth (15)
day of each month for the preceding month, and said payment shall be
accompanied by a statement of gross receipts for the preceding month. At the time
of delivery to the City of the Annual Statement of Gross Receipts, as required
pursuant to Article 15, Lessee shall also pay to the City any adjustment due the
City.
13.3.1
For purposes of calculation of any payment and/or increase of MG, as
set forth below, and any other term and condition of this Lease
relating to the MG, the parties herein acknowledge and agree that,
Page 2
13.3.2
13.3.3
13.3.4
cornmencing on October 1, 2003, the base MG dollar amount is
established at $400,000 (annual base MG). Commencing on May 7,
2004, the MG shall be automatically increased, by five percent (5%)
per year, from the previous year's MG. Commencing on May 7, 2006,
and every fourth Lease year thereafter, the City shall review Lessee's
annual gross receipts and recalculate the MG to an amount equal to
seventy-five (75%) percent of six and one half (6.5%) percent of the
prior three (3) Lease year averages of gross receipts. Said adjusted
MG shall be payable as established pursuant to Article 13.3 above,
and the annual five (5%) percent increase shall continue to apply to
the recalculated MG amount.
Commencing on October 1, 2003, and thereafter on May 7 of each
Lease year, in the event that the amount equal to six and one half
(6.5%) percent of Lessee's gross receipts, as such terrn is defined in
Article 13.3.3 below, does not meet the MG amount, as established
pursuant to Article 13.3.1, then the Lessee shall also pay an
additional lump-sum amount to the City, equal to the difference
between the percentage of gross receipts amount and the MG
amount, as established pursuant to 13.3.1; said amount payable in
full at the time of delivery to the City of the Annual Statement of Gross
Receipts, or no later than June 30, of each Lease year during the
term, including renewal terms, of this Lease.
The term "gross receipts" is understood to mean all income, whether
collected or accrued, derived by Penrod's (whether as Lessee herein
or as Concessionaire under the Pier Park Concession Agreement, as
attached in Exhibit C hereto), or any licensee, sub-concessionaire, or
sub-tenant of Penrod's (whether as Lessee herein or as
Concessionaire under the Pier Park Concession Agreement), from all
business conducted upon or from the Premises, as such term is
defined in this Lease, or frorn the Concession Area, as such .term is
defined in the Pier Park Concession Agreement, including but not
limited to receipts from sale of food, beverages, alcoholic beverages,
rental of lounging and related equipment, sale of merchandise, rental
of space, including percentage rents, or from any other source
whatsoever. The term "gross receipts" shall exclude amounts of any
Federal, State, or City sales tax, or other governmental imposition,
assessment, charge or expense of any kind, collected by Penrod's
and required by law to be remitted to the taxing or other governmental
authority.
Prorated MG from October 1, 2003 to Mav 6. 2004.
Notwithstanding anything contained in this Article 13.3, City and
Lessee agree that the MG for the period from October 1, 2003
through May 6, 2004 shall be Two Hundred Thirty Nine Thousand
Page 3
13.3.5
13.3.6
13.3.7
Three Hundred Forty Four ($239,344) Dollars. This sum represents
the prorated amount based upon the annual base MG offour hundred
thousand ($400,000) dollars.
Notwithstanding Article 13.3.2, upon execution of this Third
Amendrnent, and effective retroactively to October 1, 2003, Lessee
shall make a monthly MG payrnent in an amount equal to five and one
half (5.5%) percent of Lessee's gross receipts. The rnonthly 5.5% MG
payment amount shall be increased to the required six and one half
(6.5%) percent MG payment amount (Article 13.3.2), upon the City's
sole determination that Penrod's, both as Lessee herein and as
Concessionaire under the Pier Park Concession Agreement, has
achieved the "target revenue threshold"; said term herein defined as
the amount equal to the average of the Fiscal Year (FY) 2001/2002
(October 1-September 30) and Fiscal Year 2002/2003 gross receipts
(as said term is defined in Article 13.3.3).
The parties agree that the target revenue threshold is herein
established as the sum of $12,818,026. This sum is based on the
average of gross receipts for FY 2001/2002, which equals the sum of
$12,222,358, and FY 2002/2003 gross receipts, which equals
$13,413,695.
Upon Lessee's achievement of the target revenue threshold, Lessee
shall pay the lump sum arnount to the City, equal to the difference
between the 5.5% and 6.5% for the Lease year in which the target
revenue threshold was met; said amount payable in full at the time of
delivery to the City of Lessee's Annual Statement of Gross Receipts.
Thereafter, Lessee shall continue to make MG payments in the
required amount of 6.5% of Lessee's gross receipts, as provided by
this Article.
Reverter in the Event of Economic Downturn.
In the event that Penrod Brothers, Inc., acting as Concessionaire
pursuant to the Pier Park Concession Agreement (Exhibit C), deerns
that, as a result of a downturn in the economy, a financial hardship
has occurred for Penrod's (as Concessionaire) such that Penrod's is
no longer financially able to remit the MG amount required in Article
13.3.2 of this Lease, Penrod's shall provide the City Manager with a
minimum of one hundred eighty (180) days written notice of its intent
to terminate the Pier Park Concession Agreement as a result of
changed economic circumstances. Upon terrnination of said
Agreement, City and Penrod's agree to amend this Lease, if required,
to provide that (i) Penrod's shall no longer be obligated to pay the
6.5% MG amount under the Lease, and (ii) that Penrod's shall resurne
payment under this Lease of the maximum amount equal to 3.5% of
Page 4
gross receipts (said 3.5% amount being the amount referenced in the
Lease prior to execution of this Third Amendment by the parties).
Additionally, in the event of termination of the Pier Park Concession
Agreement pursuant to this Article 13.3.7, Penrod's shall immediately
surrender the Concession Area, as defined therein, and restore same
to a satisfactory condition, as shall be determined solely by the City in
its reasonable discretion and judgment.
3. Article 14, entitled "Gross Receipts", is deleted in its entirety, and the definition of
"gross receipts" shall be as defined in Article 13.3.3.
4. "Revised Exhibit A" and "Revised Exhibit B" are hereby replaced, respectively, with
a new Exhibit A, entitled "Site Plan", and a new Exhibit B, entitled "Description of
Property". Both the new Exhibits A and B reflect the footprint of the Pier Park
Restaurant, as actually constructed. Neither the revised Site Plan nor Legal
Description in any way, either expressly or by implication, expand andlor enlarge
nor contract and/or lessen the Leased Premises, but serve only to correct any
inaccuracies in past legal descriptions and/or site plans reflecting the Prernises.
5. Except as otherwise specifically amended herein, all other terms and conditions of
the Lease Agreement between the Lessor and Lessee shall remain in full force and
effect. In the event there is a conflict between the provisions provided herein and
the Lease Agreement, the provisions of this Third Amendrnent shall govern.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendrnent to
the Lease Agreement to be executed by their duly authori officials on the day first
above indicated.
IAMI BEACH
ATTEST:
~~
CITY CLERK
_..-,.....-.-...
MAYOR
Witnesses:
PENROD BROTHERS, INC.
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F:\DDHP\$ALLIASSE1\1 OCEAN.DR\Penrod.3rdLeaseAmendment.LEASE.doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
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EXHIBIT A - SITE PLAN
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Page 6
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EXHIBIT B - LEGAL DESCRIPTION
A parcel of land located in the easterly extension of lots 1, 2, 3, 4, and 5 of Block 112,
OCEAN BEACH ADDITION No.4, recorded in Plat Book 3, Page 151 of the Public
Records of Miami-Dade County, Florida, described as follows:
Commence at the point of intersection of the easterly extension of the north line of Lot 3 of
said Block 112 and the Erosion Control Line of the Atlantic Ocean; thence run westerly,
along the easterly extension of the north line of said Lot 3 for a distance of 133 feet; thence
northerly at right angle with the north line of said Lot 3 for a distance of 18 feet to the
POINT OF BEGINNING of the portion of land herein described; thence westerly, parallel to
the north line of said Lot 3 for a distance of 65 feet; thence northerly at right angle with the
north line of said Lot 3 for a distance of 36 feet; thence westerly, parallel to the north line of
said Lot 3 for a distance of 71 feet; thence southerly at right angle with the north line of
said Lot 3 for a distance of 71 feet; thence easterly, parallel to the north line of said Lot 3
for a distance of 36 feet; thence southerly, at right angle with the north line of said Lot 3 for
a distance of 115 feet; thence easterly 18 feet north (rneasured at right angle) and parallel
to the south line of Lot 5 of the above mentioned Block 112 for a distance of 100 feet;
thence northerly, at right angle with the south line of said Lot 5 for a distance of 150 feet to
the POINT OF BEGINNING.
Page 7