165-1999 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
L.T.C. No. 165-1999
LETTER TO COMMISSION
DATE: July 29, 1999
TO: Mayor and Members
of the City Commission
FROM: Sergio Rodriguez
City Manager
SUBJECT: ROYAL PALM CROWNE PLAZA HOTEL
As a follow-up to LTC 164-1999, attached please find the responses to the correspondence from Don
Peebles and his attorney, dated July 20, 1999 and July 23, 1999, respectively.
As previously stated, all future communication 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~ar
F:\CMGR\SALLIRARIL TCIROYPALM.FUP
attachments
c: Murray Dubbin, City Attorney
Christina M. Cuervo, Assistant City Manager
Mathew Schwartz, Assistant City Manager
Janet Gavarrete, Assistant City Manager
Lawrence Levy, First Assistant City Attorney
Kent Bonde, Redevelopment Coordinator
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
July 29, 1999
Mr. R. Donahue Peebles
Managing Member
RDP Royal Palm Hotel Limited Partnership
100 S.E. Second Street
Suite 4650
Miami, Florida 33131
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
NO. Z 463 600 003
Re: Royal Palm Crowne Plaza Hotel
Dear Don:
This letter is in response to your letter of July 20, 1999, addressed to Christina M. Cuervo,
Assistant City Manager, apparently signed by someone on your behalf, concerning the Royal Palm
Crowne Plaza Resort. Your letter raises several matters to which I feel it is necessary to respond in
order that we may create a clear record with respect to your request for a deferral of a portion of the
Rental, as such term is defined in the Agreement of Lease (the "Lease"), dated May 28, 1998,
between the Miami Beach Redevelopment Agency (the "Owner") and RDP Royal Palm Resort
Limited Partnership (the "Tenant").
In this regard, I want to be very clear that the negotiations to defer a portion of the Rental
were instituted at your request. Additionally, the City Commission agenda item for the July 21,
1999 meeting of the Mayor and City Commission was withdrawn, solely at your request, as per your
aforementioned letter of July 20, 1999.
In the course of our negotiations, you presented a delay claim to the City in the amount of
approximately $836,000. Contrary to the assertion in your letter that there is "no ambiguity as to
the City's liability," Lawrence A. Levy, First Assistant City Attorney, advised your attorney, Stuart
K. Hoffman, Esq., by letter dated June 24, 1999, that the Owner "question whether any delay
occurred, and, in any event, deny any liability arising out of any alleged delay." A copy of that letter
was provided to you. In addition, from the beginning of the negotiations, a release of any claims that
the Tenant may have had against the Owner through the date of approval of any agreement was a
f:\A 11'CN.EVL\HOT'EL\IJ'C"'l'UBU.Sl.LET
Mr. R. Donahue Peebles
July 29, 1999
Page 2
condition of any deferral of Rental, as set foith in Redevelopment Agency Memorandum No. 99-42.
I was prepared to stand by my recommendation that the members of the Owner approve the
resolution that was attached to the aforesaid Memorandum subject to addressing the Developer's Fee
(as such term is defined in the Lease), and some additional legal issues. As you are well aware, no
"agreement" could be final until approved by the members of the Miami Beach Redevelopment
Agency at a meeting duly called and held. Therefore, any references by you to an "agreement" in
your letter of July 20, 1999 are incorrect.
Your letter of July 20, 1999 clearly threatens the City with litigation. For this reason, I have
instructed my staff, and I am hereby notifying you on behalf of the City and the Agency that there
is to be no further direct communication with the City Manager's Office or any members of the City's
staff with respect to either the deferral of Rental under the Lease or with respect to the delay claim.
All communications should be conducted through your counsel with either Murray ~. pubbin, City
Attorney, or Lawrence A. Levy, First Assistant City Attorney. In addition, we will bring in outside
counsel as may be necessary in conducting any future discussions or negotiations.
Very truly yours,
~
Sergio Rodriguez
City Manager
MHD:LAL:bfg
cc: Mayor Neisen Kasdin
Vice Mayor Martin Shapiro
Commissioner Simon Cruz
Commissioner David Dermer
Commissioner Susan Gottlieb
Commissioner Nancy Liebman
Commissioner Jose Smith
Murray H. Dubbin, City Attorney
Lavvrence A. Levy, First Assistant City Attorney
Christina Cuervo, Assistant City Manager
Kent Bonde, Redevelopment Coordinator
Joel N. Minsker, Esq., Bloom & Minsker
Stuart Hoffman, Esq., Holland & Knight
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OFFICE OF THE CITY ATTORNEY
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MURRAY H. DUBBIN
City Attornev
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Telephone:
Telecopy:
(305) '673-74i
(305) 1573-700
July 28, 1999
Stuart K. Hoffman, Esq.
Holland & Knight LLP
701 Briekell,
Suite 3000
Miami, Florida 33131
VIA CERTIFIED U.S. MAIL p"
RETURN RECEIPT REOUESTED
Re: Royal Palm Crowne Plaza Resort
Dear Stuart:
This letter is in response to your letter of July 23, 1999 addressed to the City of Miami Beach
and the Miami Beach Redevelopment Agency. Your letter alleges a default of Section 6.4 of the
Development Agreement between the Miami Beach Redevelopment Age:J.cy (the "Owner") and RDP
Royal Palm Hotel Limited Partnership (the "Developer").
With respect to your allegation that the projeet has been delayed for fifty-eight (58) days as
a result of the City's alleged default to "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 project," please be advised that the City categorically and absolutely denies any
such default.
As you may be aware, a meeting was held with Mr. R. Donahue Peebles, representatives of
the Construction Manager for the Project, and the engineer of record, peer review engineer, and the
engineering firm that is doing the work on the post-tension aspects of the construction on Tuesday,
July 27, 1999, which meeting was a follow-up to a meeting held on Friday, July 23, 1999, with the
staff of the Building Department and various City and RDA employees with Mr. Peebles. The City
reiterates the instructions given to your elients' engineers in both of those meetings that with respect
to the post-tension design, the shop drawings for floors 1 through 4 must be submitted as a package
rather than floor by floor.
1700 Convention Center Drive - Fourth Floor - Miami Beach, Florida 33139
Stuart K. Hoffman, Esq.
July 28, 1999
Page Two
The City denies that any default has occurred on its part. To the contrary of your allegation,
City employees in the Building Department have worked nights and over a holiday weekend on the
Royal Palm Crowne Plaza Resort project, which has, in fact, been put ahead of other projects that
are pending review.
Very truly yours,
MHD:LAL:bfg
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cc: Via certified mail, return receipt requested:
Ellen Smith, Esq.
Bass Hotels and Resorts
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
RDP Royal Palm Hotel Ltd. Partnership
c/o Peebles Atlantic Development Corp.
Suite 4650
100 S.E. 2nd Street
Miami, Florida 33131
Attn: R Donahue Peebles, President
RDP Royal Palm Hotel Ltd. Partnership
c/o Peebles Atlantic Development Corp.
2600 Virginia Avenue, North
Suite 606
Washington, D.C. 20007
Attn: S.P. Newell, Executive Vice President
Bloom & Minsker
1401 Brickell Avenue
Suite 700
Miami, Florida 3313 1
Attn: Joel M. Minsker, P.A.
P:\Ano.u~~LIT
OFFICE OF THE CITY ATTORNEY. 1700 CONVENTION CENTER DRIVE. MIAMI BEACH, FLORIDA 33139
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RDP ROYAl. PAI.,1\t1 HOTEL, LP
100 SE Second Slreet, Suite 4650
Mlami,fL 33131
Tel: 305-995-5330 Fax: 305-995-5340
July 20, 1999
VIA FACSIMILE &f.JJS MAll.
Ms. Christina eu ervo
.Assistant City Managa
City of Miami Beach
1700 Convention Center Drive
Mi:uni Beach, FL 33139
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Rc: Roval Palm Crow71e Plaza Hotel
Dear Christina:
As you are aware, you and your team have been working diligently with us since
Decemhcr, 1998 to negotiate an agreement that woul(~ among other things, modify the
Lease and provide for a deferral of a portion of the ground rent fOi the above-rcfCl'enced
project.
Two weeks ago it appeared that we had reached a tentative agreement to conclude our
negotiations and the City administnltion submitted an oulline of that agreement to the
City Commission fill'tts July 14, 1999 mccting. Final action on the approval was
deferred until the July 21, 1999 Commission meeting. As a result of the Commis::ion's
deci~;on to defer the matter, we have had an opportunity to discuss nuther tbe proposed
agreement with our lenders and counsel.
Yau will recall that one of the last !SSl.lCS to be rcsolvcd in our discussions related to
environmental damages incurred by us as a result of contaminated soil on the property.
The proposed agreement provided fi)r RDP Ruyal Palm Hutt::l, Limited Partnership to
waive its rights to nearly $1,000,000 in Environmcntal D:.ullages (as defined in th,~
Lease); Envinmmt::ntal Damages that are expressly covered under the City's
ind~mniCicatioll as set fOlth in Section 35.3 of our Lease. For your reference, T havt:.'
enclosed a copy of this s(..'(..'tion (see subsections 35.3 (b) and (c)), as well as the section of
the Lease that define!> "Environmental Damages". As YOll can see, thcre is no ambiguity
as to the City's liability in this matter.
07/20/9:) '1LIt, lJ;-l~ t..u JU;)<J<J;);)J.!U
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Page 2
Upon further discussion with our contractors, consulLants and Holland Knight, our le::gul
counsel, W~ arc convinced th.\t the City is fully liable for thcse damages and we expect to
be fully reimbursed hy the Agency. Thus, upon reilectioD. it would be imprudent ::or us
to proceed with further negotiations with the City tliat invulves .l waiver of these ciaims.
Th(;rcfore, 1 must request that Administration remove the proposcd agreement frOTl the
July 21, 1999 Cornmissioll1llceting. '
With regard to the environnn.iltal indenmity, our counsel will be communicating v'ith the
City directly in an effort to achieve a prompt resolution to this matl~r and.will be
suhmitting additional documentation confIrming our damages relative to the second soil
cuntamination. T am disappointed that we have not yet helm able to reach a mutLLaily
acccptahle resolution of all issues pertaining to the Royal Palm project
T appreciate all of your time and el10rt in advancing negotiations thus far, and lo()~
lOl"W'ard to continuing to work with you on this and oth(..r matters ill the future. ..
inccrely,/.')
~@)
R. Donahue Pechlcs
Managing Member
'RDP/gi
cc: Simon Cruz, Commissioner, City of Miami Beach
David Dermer, Conunissioner, City of Miami Beach
Susan Gotllieb, Commissioner, City oi'Miami Beach
Nancy Liebman, Commissioner, City ofMh!mi B~ach
Martin Shapiro, Commissioner, City of Miami Bc.'\ch
Jose Smith. Cummissioner, City of Miami Beach
07:20/99 TLE 1:J:-lJ F.U J059955J-l0
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manufacture, processing, distribution. use, treannent, storage, dispos'::u, tr,lnSpori or handling of
Hazardous Materials; and
(ii) all Requirements pertaining to the protection of th: health and safi~ty of
employees or che public;
(c) "Environment" shall mean soil, surface waters. ground waters, land, stream
sediments, surface or subsurface strata and ambient air;
(d) "EnvirorunenW Condition" shall mean any condition with re>pectto the Prer.ilises,
whether or not yet discovered, which.' could or does result iri. '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 otter property o\Xt'ner or
operator in the vicinity of the Premises or any activity or operation formerly conducted by any
Person on or off the Premises;
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(e) "Environmental Damages" shall mean all claims, judgmenti, damages (including
punitive damages), losses, penalties. fines, liabilities (including strict liat.ilicy), encumbrances,
liens, costs and expenses of investigation and defense of any claim, wilether or not such is
ultimately defeated, and of any settlement or judgment, of whatever kind 01 nature, continge:nt or
otherwise, macured or unmarured, foreseeable or unforeseeable, any of whi:h are incurred at any
time as a result of the assessment, monitoring, remediation or mitigation of an Environmental
Condition (and shall include any damages for the failure to do so), includirg, without liml~Ltion,
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 studies or reports and the perfonnance of any remedial, abatement, containment,
closure, restoration or monitoring work;
(f) .Permit" shall mean any environmental permit, license, approval, consellt or
authorization issued by a federal, state or local governmental or quasi-go\.ernmental entity;
. .".. (g) "Release" shall mean any releasing, seeping. spilling, leakin.~. 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 which requires
action to prevent or mitigate damage to the Environment which may result from such Release.
I
Section 35.2. Use of Ha7:lrdolls Mnterials,
Tenant shall not cause or permit any Hazardous Material to be brought on, kept or used
in or about the Premises except as necessary or useful to Tenant's business and in compliance with
all Environmental Laws.
A;\J'NM\CMB\GLEASE.I 5(EXECUTlON.\ )\1 0-16-97 127
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Section 35.3. Indernn ific;JrioQ.
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(a) Tenant hereby indemnifies and holds h.lImless the Owner Indennified Panies from
and against any and all Envirol""encal Damages to the Premises during th" teOIl of this Lease,
except to the extent any such Environmental Damage is caused, permitted, allowed, suffered or
contributed to, directly or indirectly, by any of the Owner Indemnified Patties prior to the
Commencement Dace. Such Obligation of Tenant shall include the burden and expense of
defending aU claims. suilS and administrative prOCeedings (with counsel re'Sonabl)' sacisfactorv
to Owner), even if such claims. suilS or proceedings are groundless, false. or fraUdulent, and
conducting all negotiations of any description. and paying and diSCharging. when and a., the same
become due, any and all jUdgments, penalties Or other sums d~e against any of the Owner
hillemnIfied Parties. Tenant's Obligations shall not apply with respect to Environmental Damages
reSUlting from Environmen"'l Conditions existing in the Land prior to tl:e execution hereof
(regardless of whedler the =ne were caused by any of the Owner Indemnified Panies). Without
limiting the foregoing, if the presence or Release on or from Ule Premiscs cau ;ed or Pennjtted by
T ellltlt resUlt' in contlntination of tile Premi'es, T ellltlt shall promptiy take aJ actior" at its sole
COst and expense as are necessary to remediate the Premises in compliance v,ith EnvironmenraI
Laws in effect from time to time and to comply with any requiremen"' imposed by any
Governmental Authorities; provided that Owner's approval of such actions sha!1 fir;t be obtainod,
which approval shall not be unreasonably withheld, .
(b) Owner hereby indemnifies and holds harmless the Tenant Inde:Ilnified Panies from
and against any and aU Environmental Damages resulting from Envirocmental Conditions e:Usting
prior to the Commencement Date, but only in tile Land and specificaJy excluding dle
Improvements. Such obligation of Owner shall inchu.!e the burden and expeme of defending all
ciaizns, suits and administrative prOCeedings (with counsel reasonably satisfactory to Tenant), eVen
if such cIaizns, suits or proceedings are groundless, false Or fraUdulent, "ill conducting all
negotiations of any description, and paying and discharging, when and as the same become due,
any and all jUdgments, penalties or other sums due against any of the Tenant Indemnified Panies.
(c) NotWithstanding anYthing to the contrary contained herein, OW"'r agrees to take
snch action as .necessary to immediately remove the nndergronnd storage tank(O. if any, located
on the Premises; to expeditiously undertak:e such further assessment, remediation, and monitoring
of dle soil and ground Water impacted by the ReI..se frOm such tank(s), if any, as required under
applicable Environmental Laws; and to tal(e such action as necessary to ob" in a No Further
Action determination from DERM or DEl>, if required under Environment>! Laws.
Owner shaIl use reasonable efforts to undertake tile work described in tm, s.ction 35.3(c)
in Such a manner as to minimize disruption to and to a void delaying Tenant's ! lans to renovate
and develop me Premises.
Owner agrees that in connection with the work described in this Seetin 1 35.3(c) it will
provide to Tenant all correspondence. repons, srudies and other documents exc,anged between
.~. VN:11'C.\181GLEASE. I 5(EX;:C1iTTON. 1)1 J O-/6-9i 128
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305 789 7613 TO 7732~61886~1~305 P.02/03
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HOLLAND & KNIGIIT LLP
AlJantl
Boston
Fert Lauderdale
Jactsonville
Lake/and
Melbourne
Miami
Mexico City
New Yorlc
Northam VirginIa
Orlando
Providence
San Francisco
Sl Petersburg'
Tall~
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Washingtcn, D.C.
west Palm Beach
701 Brickell Avenue. Suile 3OllO
P.O. Bax0154041 (ZIP 33101-5441)
Miami, Rerida 33131
305-374-a500
FAX 305-789-7799
_.IIIdaw.clllTI
July 23, 1999
Sl1JART K. HOFFMAN
Direct Tclcpbooe and .Fu No.
305-789-7732
lruauc:t Address:
sholfman@bkI~'" . com
VIA FEDERAL EXPRESS
Miami Beach Redevelopment Agency
Executive Director
1700 Convcmion Center Drive
Miami Beach, Florida 33139
Miami Beach Redevelopment Agency
General Counsel
1700 Convention Cenrer 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. Minslcer, Esq.
Bloom & Minsker, P.A.
1401 Brickell Avenue
Suite 700
Miami, Florida 33131
Re: Hotel Development Agreement Between Miami Beach Redevelopment Agency
and RDP Royal Pahn Hotel Limited Partnership
Dear Ladies and Gentlemen:
This is a notice sem 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
that 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
Agreement which states as follows:
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305 789 7613 TO 77321::618861::1 /::305 P. 03....0:3
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Miami Beach Redevelopment Agency
Joel N. MiDsker, Esq.
July 23, 1999
Page 2
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
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 other soft costs.
Please be advised that the Tenant is in the process of detennining its damages
incurred to date and will be providing that information to you under separate cover.
We regret that we must take this step. bu e T,enant has done everything it could
in an effort to encourage the City to comply ith ~'ts obligations under Section 6.4. In
addition, the undersigned requested the assi . of the City Aaorney' s Office to help
resolve the problem. However, the City an e Age y has failed to adequately respond.
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