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LTC 243A-2006 re: Revised Attachments for LTC 243-2006 & MIAMI BEACH OFFICE OF THE CITY MANAGER LTC # 243A-2006 lETTER TO COMMISSION FROM: Mayor David Dermer and Members of the City Commission Jorge M. Gonzalez, City Manager ~,;-~ October 13, 2006 () 0 Revised Attachments for L TC#243-2006 TO: DATE: SUBJECT: The Letter to Commission regarding summary sheets for the Term Sheet offers to operate the Jackie Gleason Theater have been updated with more accurate information. All of the updates are in regard to the 1 O-year summary of financial value for each of the respective companies. In each case, the amount of the potential value to the City was understated. The revised sheets have been updated to provide a more realistic picture of each proposal as presented by the respective company and as interpreted by the City. Please keep in mind that the attached sheets are summaries of each offer and not an analysis or discussion of same. Please feel free to contact me with any questions or concerns that you may have. Attachments C: Jose Smith, City Attorney C") ....., ~ -l c= -< 0'" ::0 0 ('") ("") m r- ...... 0 ,.,.1 ;0 (.oJ m ;x: (J) .." < 0 :x m "Tl Co.) 0 -n .. n .r:- rrI Parties Concept Project Proposed Use - Types of Events Form of Agreement Proposed Term Base Compensation to CMB Bonus/Percentage Rent/Facility Fees Real Estate Taxes Project Investment AEG Live LLC (AEG) and City of Miami Beach (City) Traditional performance venue with diverse venue bookings using existing seating capacity of 2,700 Improvements include sound and lighting systems; orchestra pit; concession areas; electrical upgrades for audio & lighting; acoustical treatments; emergency system linkages & interfaces; and marquee signage. 140 ticketed events per year with attendance projected to total 246,000 by 2008. Types of Events include Award Shows, Holiday Festivals, Community Nights, Consumer Shows, Concerts, Family Shows, Festivals, Film Premieres, Film Festivals, Meeting/Catering Events, Speaking Association, Television Productions, Theatrical Productions, Trade Shows Management Agreement Initial 1 0 year term and two (2) five-year options, up to 20 years; Termination Right for AEG after 2 years if AEG sustains losses in excess of $500,000 in a year. $250,000 per year, adjusted by CPI after 2008 City will retain 100% of all facility fees ($1.50 per ticket), estimated to be $300,000 by 2008. City will receive 50% of the ticketing convenience charge rebate received from Ticketmaster, estimated to be $242,000. $0, theater is currently exempt from property taxes. If venue becomes taxable, then City pays property taxes. City: $0 Other: $2,000,000 . The City may use venue rent free 10 days per year; the City reimburses operating expenses. . 60-80 free tickets for seniors and students (per event). . Assume commitment to Invitation to the Arts Festival with annual event advertising. . Work with local schools to provide after school programs. Naming Rights . AEG will have the right to sell naming rights. City will receive 50% of any naming rights revenue based upon the assumption that name in title sponsorship will be approved by the City Commission. Social/Community Benefits Sponsorship $0 Maintenance AEG will be responsible for day-to-day operational maintenance, as well as minor fixture and small equipment replacement up to an amount to be determined. City will be responsible for all capital renewal and replacement for the theater. Insurance AEG will obtain spectator and general liability insurance; the City will continue to be responsible for property insurance. Operations AEG shall provide all event-related operations and pay all event related expenses Corporate Guaranty All obligations will be guaranteed by AEG Live, LLC Art in Public Places TBD 10 Year - Total Value Rent Facility Charge Taxes Incremental Parking Community Benefit Private Investment Maintenance Cost deduct Sum $15,220,000 Parties Concept Project Proposed Use - Types of Events Form of Agreement Proposed Term Base Compensation to CMB Bonus/Percentage Rent/Facility Fees Real Estate Taxes Project Investment Live Nation Worldwide, Inc. and its subsidiaries (LVN) and the City of Miami Beach (City) Live performance venue with flexible seating to allow for a variety of entertainment options, such as comedy and live concerts Improvements include: seating re-configuration with re-grade on ground floor to create terraced, general admission floor areas (2,750 total event capacity); updated auditorium finishes; updated draperies, lighting and paint in the lobby; new bars, lighting, finishes and furnishings to create an upscale atmosphere and more points of sale; $200,000 allowance for a significant new exterior sign; update and reconfiguration of dressing areas and band accommodations. Projected 120 events in the first full year of operation with potential to grow to 150 to 180 events per year. Projected to grow past 240,000 tickets per year in 2008. Public entertainment, live entertainment, public assembly, bar and/or restaurant and anciliary uses. Proposed types of entertainment include concerts, comedy acts, private rentals, television broadcasts, artist recording studio, filming events Lease or Management Agreement Initial 15 year term with two (2) five-year options, up to 25 years $1,000,000 per year, 2% escalator per year $1 per ticket after 240,000 tickets per year (excludes community benefit fund program tickets, charitable events, third party rentals). $2,000 per event above 200 events (same exclusion) $0, theater is currently exempt from property taxes. If venue becomes taxable, then City pays property taxes. City: $0 Others: $3,500,000 . The City may use venue rent free twice per year for City events, once per year for charitable use; once per year for Play Ground Review event; the City reimburses operating expenses; L VN keeps f&b revenue; no sponsorship violation; no concerts. .Annual Event and Auction for Community Needs consisting of autographed memorabilia of the performing acts at the JGT . Resident Ticket Program - Live Nation will make 100 tickets for specified events available for purchase 2 days early to City residents .Community Benefit Fund - Live Nation will continue the current discounted ticket program for senior citizens and students w/o City contribution .Free booking/programming Consultation to City for Byron Carlyle and Colony Theaters .20 tickets to City for each event. Naming Rights If naming rights are approved by City and Theater name is changed from "Jackie Gleason" then Live Nation will share 25% of net naming rights with City Social/Community Benefits Sponsorship $0 Maintenance Live Nation will cover all costs, including capital plant renewal and replacement Insurance Live Nation will cover all costs Operations Live Nation will cover all costs Corporate Guaranty Provided by Live Nation Worldwide, Inc. Art in Public Places TBO Rent FaCility Charge Taxes Incremental Parking Community Benefit Private Investment Maintenance Cost deduct 10 Year - Total Value Sum $11,000,000 $0 $0 $3,500,000 $6,000,000 $3,500,000 $0 $24,000,000 Parties Concept Project Proposed Use - Type of Event Form of Agreement Proposed Term Base Compensation to CMB Bonus/Percentage Rent/Facility Fees Real Estate Taxes Project Investment Social/Community Benefits Naming Rights A joint venture consisting of Cirque du Soleil, Inc. with its affiliated partners (CDS) and the City of Miami Beach (City) Permanent Cirque du Soleil Show, with related facilities including a theme restaurant, show related retail boutique, theme lounge, and special events venue that provides both private and public live entertainment, which can be operated as a nightclub up to three nights a week. Economic Development project that converts the Jackie Gleason Theater and the adjacent 555 building into a multi-purpose entertainment complex. Includes the complete renovation of the theater and adjacent 555 buildings to accommodate the proposed uses. Current components include a 1,700 seat theater, 250 seat theme restaurant with a related 300 seat lounge, and a 600 to 1,500 person special event area for private rentals that will open as a live entertainment or nightclub venue for the public up to three nights a week. Permanent theater venue for a CDS live show production with a projected 430 shows annually; theater adjacent concessions and merchandising retail; theme restaurant and lounge; special event area for private and public functions; surrounding gardens. The proposed show is anticipated to qualify as a partially nude establishment under the City Code and state law. A development agreement for the development and constructon of the project; and a lease agreement for the use and operation of the project. Initial term of 15 years with 10 year subsequent renewals up to 50 years. There are two related, substantive agreements, one for the show and one for the lease on the property. Both include a termination right: for the Show if after two years the expenses exceed revenues for 12 consecutive months; for the lease after 4 years if expenses exceed revenues for 12 consecutive months. If either is involved, the term ends no later than year 15. $4,200,000 (estimated) in year 1, based on percent of gross show ticket sales and other revenues (boutique, VIP, food & beverage, restaurant, lounge, special event, etc.). $6,100,000 (estimated) in year 6, based on a percent of gross show ticket sales, which increases this year, and other revenues (boutique, VIP, food & beverage, restaurant, lounge, special event, etc.). $1,100,000 (estimated, based on $2 per ticket) for years 1 through 5; $1,400,000 (estimated, based on $2.50 per ticket) for years 6+. This is a facility surcharge on each ticket sold. $1,500,000 (estimated for all overlapping jurisdictions) CDS is responsible for payment of all taxes. City: $40,000,000 to $45,000,000 County: $15,000,000 to $10,000,000 Others: $75,000,000 . $1,000,000 (estimated, based on 1 % of project revenues) to social programs on Miami Beach (at least 50%) and in developing countries. Proposed programming to focus on youth-at-risk, cultural programs to promote/support emerging talents, in- school/extracurricular activities for youth. . Availabilty of rehearsal nights for fundraising opportuntiies for non-profit organizations . The City shall have booking rights (subject to availability) to the special events area for City use. . 4 premium seats per performance for City use. Not applicable ~~ Sponsorships Maintenance Insurance Operations Corporate Guaranty Art in Public Places Revenue generated by sponsorships and non-facility naming rights shall be used toward capital construction costs during the development phase and towards debt service and building maintenance during operation phase. CDS is responsible for all regular, "day to day" maintenance activities, such as painting, carpeting, filter replacement, light bulb and fixture replacement, etc., as well as minor equipment and machinery replacement. City maintains responsibility for replacement of capital equipment and machinery in the project,' the cost of which are funded through the facility fee. CDS shall maintain all risk casualty insurance, including windstorm (unless not commercially available) & flood; general commercial liability; business interruption insurance; performance insurance; auto liability insurance; worker's compensation insurance; intellectual property. CDS is responsible for all operational requirements. All obligations will be guaranteed by CDS and its joint venture partners. $1,500,000 projected value of proposed public art to be in and paid for by the project. 10 Year - Total Value Rent Facility Charge Taxes Incremental Parking Community Benefit Private Investment Maintenance Cost (deduct) $54,600,000 $12,400,000 $15,000,000 $15,000,000 $10,000,000 $75,000,000 ($10,000,000) Sum $172,000,000