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164-1999 LTC " 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 164-1999 L.T.C. No. LETTER TO COMMISSION DATE: July 26, 1999 TO: Mayor and Members of the City Commissi n SUBJECT: ROYAL P FROM: Sergio Rodriguez City Manager Attached please find correspondence from Don Peebles requesting that his request for deferral of rent payments be removed from Commission consideration. Separately, the City/Agency is also in receipt of correspondence, attached hereto, notifying the City/Agency of default in connection with RDP Royal Palm Hotel Limited Partnership's Development Agreement. The correspondence specifically cites a default in connection with Section 6.4 of the Development Agreement which states: "The City shall make reasonable efforts to provide for expedited handling of all review board hearings and/or permit requests made to it by Developer relating to the Construction of the Proj ect." The City Attorney's Office is reviewing this correspondence and preparing a response denying any such claim of default. Please be advised that all future communications with Don Peebles, in connection with this project, should be directed through the City Attorney's Office. If you have any questions, please contact me. SR/C~brar F:\CMGRISALLIRARILTClROYP ALM.DEF attachments c: Murray Dubbin, City Attorney Christina M. Cuervo, Assistant City Manager Mathew Schwartz, Assistant City Manager Janet Gavarrete, Assistant City Manager Ronnie Singer, Assistant City Manager Lawrence Levy, First Assistant City Attorney Kent Bonde, Redevelopment Coordinator o , ,. ~ U I ~ ~ 1 lit. 1 J ; o!;;: r.il J U;) <J <J;);) J o! U PAD C 4;a 002 :", ROl) ROYAL PAl,;,\,{ HOTEL, LP 100 SE Second Stn:d, Suite 4650 Mlaml,fL 33131 Tel: 305-995-5330 Fax: 305-995-5340 July 20, 1999 .j VIA (1'ACSTMILE 8f,J.TS MAll, Ms. Christina Cuervo Assistant City Managa City of Miami Beach 1700 Convention Center Drive Mi,uni Beach, FL 33139 Rc: Roved Palm Crnwlle Plaza Hotel Dear Christina: As you a.re aware, you and your tea.m have been working diligently with us since Decemher, 1998 to negotia.te an agreement that woul(~ among other things, modify the Le<lsc and provide for a deferral of a pOliion of the ground rent for the above-referenced project. Two weeks ago it appeared that we had reached a tentative agreement to conclude our negotiations and the City auministmtiun submitted an outline ofthat agreement to tht:: City Comm.issionfhr its July 14, 1999 meeting. Fillal action on the approval was deferred until the July 21, 1999 Commission meeting. As a result of the C0l11111is::ion's decision to defer the matter, we have had a.n opportunity to discuss further the proposed agreement with our lenders and counsel. You will recall that one ofthe last issues to be resolved in our discussions related to environmental damages incun'ed by us as a result of contaminated soil on the property. The proposed agreement provided fi)r RDP Royal Palm Hotd, Limited P<lrtnership to waive its rights to nearly $1,000,000 in Environmental Damages (as defined in th,: Lease); l':nvironmt:.'lltal Damages that are expressly covered under the City's inuemni fication as set fOlth in Section 35.3 of Ollr Lease. For your reference, T hav!:: enclosed a copy of this sedion (see subsections 35.3 (b) and (c)), ac; well as the section of the Lease that defines "Environmenta! Damages". As you can see, there is no ambiguity as lo the City's liability ill this marter. UI.''''UI~l:J J.L:J:., J..}.....; r.""l-~ .}U.);;);;);).:)..)-iU r :l. U '"' lfLJ UUJ If .. ' C. Cuervo Page 2 Upon fhrther discussion with our contractors, consulLan1s and Holla.nd Knight, our legal counsel, we are convinced that the City is fully liable lor these damages and we expect ta be fully reimbursed by thc Agency. Thus, upon rcllection, it would bl:: imprudent ::or us to proceed with further negotiations with the City that involves a waivcr of these ciaims. Th(;re!ore, 1 must request thal Administration remove the praposcd agreement fron the July 21, 1999 CODlmission meeting. With regard 10 the environmt.iltal indemllity, our counsel will be communicating v'jth the City directly in all effort to achieve a prompt resolution to this maUer and will be submitting additional documentation confirming our damages relative to the second soil contamination. T am disappointed that we have not yet belm able to reach a ll1utuaily aeceptahle resolution of all issues pert.1.ining to the Royal Palm project. I appreciate all o[your tiroe and elTort in advancing negotiations thus far, and loo~ 10rward to continuing to work with you on thi!'i and other matters in tlJe future. :;;~@) R. Donahue Peebles Managing Member RDPlgj cc: Simon Cruz, Commissioner, City of Miami Beach David Demler, Commissioner, City of Miami Beach Susan GoUlieb, Commissioner, City of Miami Beach Nancy Liebman, Commissioner, City ofMiumi Beach Martin Shapiro, Commissioner, City of Miami Beach Jose SmitlJ, Commissioner, City of Miami Beach 7 ,1 Ot',' ~U/gg I'll!:. 1J:,lJ r.U JU5~~55J,lU P :\. D C tfD OO! manufacture, processing, distribution, use, treatment, storage, disposhl, tr.lllSPOri or handling of Hazardous Material:); and (ii) all Requirements pertaining to the protection of th: health and safety of employees or the public; - (c) "Environment" shall mean soil, surface waters, ground waters, land, stream sediments, surface or subsurface strata and ambient air; .i (d) "Envirorunental Condition" shall mean any condition with re5pecuo the Premises, whether or not yet discovered, which' could or does result in any Environmental Damages, including any condition resulting from the operation of Tenant's business or the operation of the business of any subtenant or occupant of the Premises or that of any otl':er property Owne:r or operator in the vicinity of the Premises or any activity or operation formc:rly conducted by any PerSOll on or off the Premises; i , (e) "Environmental Damages" shall mean all claims, judgmenr::, damages (including punitive damages), losses, penalties, fines, liabilities (including strict lial:.iIity), encumbranc:es, liens, costs and expenses of investigation and defense of any claim, wtlerher or nor such is ultimately defeated, and of any settlement or judgment, of whatever kind 01 nature, contingent or otherwise, marured or unmatured, foreseeable or unforeseeable, any of wbi:h are incurred at any time as a result of the assessment, monitoring, remediation or mitigatioD of an Environmental Condition (and shall include any damages for the failure to do so), includirg, without limitation, fees incurred for the services of attorneys, consultants, contractors, expert), laboratories and all other costs incurred in connection with investigation and remediation, including the preparation . of any feasibility srudies or reports and the perfonnance of any remedial, abatement, conuinment, closure, restoration or monitoring work; (f) "Permit" shall mean any environmental permit, license, ipproval, consent or aurhorization issued by a federal, scate or local governmental or quasi-go\ernmental entity; - .". (g) "Release" shall mean any releasing, seeping. spilling, lealcin.~, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of a Hazardous Material into the Environment; and (h) "Threat of Release" shall mean a substantial likelihood of a Release wbieh requires action to prevent or mitigate damage to the Environment which may result from such Release. I Section 35.2. Use of Hazardous Materials. Tenant shall not cause or permit any Hazardous Materia.l to be brought on, kept or us<:d, in or about the Premises except as necessary or useful.to Tenarit's business aDd in compliance with aU Environmental Laws. A:\JNM\CMB\G LEAS F.. I 5(EXECl.rrION. 1)\10-16.97 127 .. I r-- ............ .........."'tv .-."1..),. o.JV..J~.;)..Jvo)""lV J:' ..I. 1) C if:] 005 Section 35.3. Indernnific;\rioQ. (a) Tenant hercby indemnifies and holds hannless the Owner Inde1l1lified Parties from and against any and aH Envirorunental Damages to the Premises during the: tenn of this Lease, except to the cxtent any such EnvirOrunental Damage is caused, pennitted, aHowed, suffered or contributed to, directly or indirectly, by any of the Owner Indemnified Parties prior to the Commencement Dare. Such Obligation of Tcnant shaH include the bunlen aod expellSe of defending aH claims. suirs and adntinistrative proceedings (with counsel reasonably satisfactory to Owner), eVen if soch claims. suits or proceedings are groundless, fals,. or fraudulen~ and conducting all negotiations of any description, and paying and discharging, when and as the same become due, any and aH jUdgments, penalties or other sums due against any of the Owner Indemnified Parties. Tenant's obligations shall not apply with respect to EnvirolllIlen<aJ Damages reSUlting from Environmental Conditioos existing in the Land prior to t1:e execution hereof (regardless of whether the same were caused by any of the Owner Indemnified Parties). Without limiting the foregoing, if the presence Or Release on Or from the Prnnises cau;ed or Permitted by T enam reSUlt' in contamination of the Prcmi.<es, T enan[ shaH promptly talce a; I actions at its sole cOS[ and expense as are necessary to remediate the Premises in compliance "ith Environmental Laws in effect from time to time and to comply with any requirement" Imposed by any Governmental Authorities; provided that Owner's approval of such actions shaH first be obtained, which approval shall not be unreasonably withheld. (b) Owner hereby indemnifies and ho Ids hannless the Tenant lndenlDified Parties from and against any and all Environmental Damages resulting from Environmen<aJ Conditions existing prior to the Commencement Date, but only in the Land and specificaJy excluding the Improvements. Such obligation of Owner shaH include the burden and expem e of defending all claims, suits and administrative proceedings (with counsel reasonably satisfactory to Tenant), eVen if such claims, suits or proceedings are groundless, false Or fraudulent, and cooducting all negotiatious of any description, and paying and discharging, when and as the same become due, aoy and all jUdgments, penalties or other sums due against any of the Tenant lmlemnificd Parties. (c) Notwithsranding anything to the contrary contained herein, OW",r agrees to talce such action as .necessary to inunediarely remove the underground storage rank:(,), if any, located on the Premises; to expeditiously Undertake such further assessment, remediation, and mOnitoring of the soil and ground water Impacted by the Release from such tank(s), ifany, as required under applicable EnVironmental Laws; and to talce such action as necessary [0 ob"in a No Further Action determination from DERM or DEP, if required under Environmental Laws. Owner shall use reasonable efforts to Undertake the work described in thj" Section 35.3(c) in such a manner as [0 minimize disruption [0 and to avoid delaying Temar's !.Iaos to renovate and develop che Premises. Owner agrees that in connection wirh the work described in chis Sectio:l 35.3(c) it will provide to Tenant all correspondence, repons, Studies and other documents eXCJanged between A.Vl'ir.t\CMBlGLEASE.! 5(EXECllTION./)\IO_16_97 128 JUL 23 1999 13:13 FR HOLLRND KNIGHT LLP 305 789 7613 TO 7732~61886~1~305 P.01/03 L.aw Olfic:es '" HOLLAND & KNIGHT LLP 701 BrickeU AvcnU9 Suite 3000 P.O. Box 015441 (ZIP 33101-5441) MianU, Florida 33131 305-314-8500 FAX 305-789-7799 FACSIMILE TO: Lawrence A Levy NAME COl\l.IP Ao.'lY /FIRM Miami CITY (305) 673-7002 FAX NUMBER Florida STATE TELEPHONE NUMBER FROM: Stuart K. Hoffman NAJ.\1E (305) 789-7732 TELEPHONE N"U'1vmER 3 TOTAL NUMBER OF PAGES andudinr Cover Sheet) 1!ESSAGE: FOR THE RECORD: DATE: 07/22/1999 URGENCY: r: SUPER RUSH U RUSH L) REGt}LAR FAXED BY; CLIElST #: 61886 AMOUNT: MATTER;:: 1 CONFIRJ.VIED: 1': YES ! I NO NAME: TIME; ML'\ I "~""07.. vI Atlant:l BooitDn Fort Lauderdale J:Jclc,toavillo: r....keland Melbo\m1tl Mexico City Miami N.... York North.rn v~ Orlamlu .Providllncu SanFZ'lU1Cieca SL PctllnlbU%'( TlLllAha..'W:e TlI:aI;Ill W.lIdwu;ton.1>.C. Wllat Palm B'!lIl:h If you did not receive all of the pages or .find that they an! illegible. please c:all (305) 314-8500 CONFIDE~"TIALITY NOTICE: : This facsimilll, alon: with any documents. tiles. or attachmenu, may contain information that is coIUiden~.privileged.or otherwise eXGunpt from disclosure. If you are Dot the intended. recipient. Or a person responsible for delivering it to the intended recipient, you are henby Dotified that any disclosure. copying. printin~, distribution or use of any information cont.ai.ned in or attached to this facsimile hi STRICTLY PROHIBITED. I!you have received this facsimile in error, please immediate!). notify u.s by facsimile or b)' telephone at the numbers statild above. and destroy the original fac:sUnile and its attachments without reading. printing, or saving in any manner. Your cooperation is appreciated. Thank you. JUL 23 1999 13:13 FR HOLLAND KNIGHT LLP 305 789 7613 TO 7732~61886~1~305 P.02/03 .... '. 'I Law Olfla:s HOLLAND & KNIGlIT LLP AlJantI Boston Fort Lauderdale Jacksonville lakeland Melbourne Miami Mexico City New York Nofthem VirginIa Orlando Providence SiJI FIdIIdsco Sl Petersburg' T a11ahasse8 T c1l11l4 Washingtcn. D.C. West Palm Beach 701 Bricllell A-enue. Suite 3000 P. O. BaJC 0150441 (ZIP 33101-5441) MIami. Rorida 33131 305-374-8500 FAX 305-789-7799 WWIW.hkIaw.cam July 23, 1999 SIUART K. HOFFMAN Direct Tclcpbooc and .fu No. 305-789-1732 lIw:.mec Addtess: shol'l'nwl@hJcIaw.com VIA FEDERAL EXPRESS Miami Beach Redevelopment Agency Executive Director 1700 Convention Center Drive Miami Beach, Florida 33139 Miami Beach Redevelopment Agency General Counsel 1700 Convention Center Drive Miami Beach, Florida 33139 " Miami Beach Redevelopment Agency City Manager 1700 Convention Center Drive Miami Beach, Florida 33139 Miami Beach Redevelopment Agency City Attorney 1700 Convention Center Drive Miami Beach, Florida 33139 ~......... Joel N. Minsker, Esq. Bloom & Minsker, P.A. 1401 Brickell Avenue Suite 700 Miami, Florida 33131 Re: Hotel Developmem: Agreement Between Miami Beach Redevelopment Agency and RDP Royal Pahn Hotel Limited PartDership Dear Ladies and Gentlemen: This is a notice sent to you pursuant to Section 20.01 of the above-captioned Hotel Development Agreement. On behalf of RDP Royal Palm Hotel Limited Partnership, you are hereby advised Chat the Miami Beach Redevelopment Agency is in default of the above-captioned Hotel Development Agreement for failure to comply with its obligations under Section 6.4 of the Agreemem which states as follows: ~~~ ~~ ~~~~ ~~.~~ r~ MULLAND KNIGHT LLP 305 789 7613 TO 7732~61886~1~305 P.03/03 'j Miami Beach Redevelopment Agency Joel N. Minsker, Esq. July 23, 1999 Page 2 The City shall m.a.kc reasonable efforts to provide for expedited handling of all review board hearings and/or permit requests made to it by Developer relating to the Construction of the Project. - / As a result of the failure as the Agency and the City to comply with said Section 6.4, the development and construction of the Project has been delayed for fIfty eight (58) days and it is anticipated that, under present circumstances, the delay may reach eighty (80) or more days. This has resulted in substantial damages in construction costs. lost revenues, additional interest and odIer soft costs. Please be advised that the Tenant is in the process of determining its damages incurred to date and will be providing that information to you under separate cover. in an effort to encourage the City [0 comply addition, the undersigned requested the assi resolve the problem. However, the City an cc: l\.olL'\l #8151:131 vI ** TOTAL PAGE.03 **