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LTC 039-2007 Update on New World Symphony Amendment to Development Agreement lD MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC # O?J~ ~ 2-007 LETTER TO COMMISSION ("") ~ :::. ~ TO: Mayor David Dermer and Members of the City Commission -<. a " - FROM: Jorge M. Gonzalez, City Manager d ~ s Z; ~ DATE: February 9, 2007 if' ~ o - -n - SUBJECT: Update on New World Symphony Amendment to Development Agreeme!1r. :. ("") cJ1 rT\ This is to advise you of the latest developments in our negotiations with New World Symphony regarding their requested First Addendum to their Development Agreement dated January 5, 2004. -:;0 rn (") rn - <:- rn o Backaround On September 8, 2004, pursuant to the Development Agreement between the New World Symphony (NWS and/or Developer) and the City, dated January 5, 2004, the Mayor and City Commission approved Concept Plan #4 presented by the NWS; referred the issue of a Park design to the Finance and Citywide Projects Committee; recommended to maximize the number of parking spaces in the proposed public parking garage adjacent to the NWS Project; and requested the Design Review Board to conduct a preliminary design review of the Project (including the Garage) and send it back to City Commission for review and approval. Concept Plan #4 provides for Sounds pace and related support structures, including the Garage, to be situated on the City surface parking lot west of a realigned Drexel Avenue and for a public Park and function space area to occupy the lot to the east. The main entrance lobby and drop-off area for Sounds pace would be on the west side of the realigned Drexel Avenue, with support and classroom space occupying the south side of the west lot. The Garage would be located on the westem-most portion of the west lot, with entrance and egress locations to be determined. The Plan also calls for a realigned Drexel Avenue to meander eastward into the Park between Lincoln Lane and 17th Street, which provides a unique opportunity to integrate Drexel Avenue into the design of the Project site, creating a true public plaza feel and providing the ability to close the street during certain park-related events. As part of Concept Plan #4, an integrated Park component was incorporated in the Project site. Pursuant to the direction of the City Commission on September 8,2004, and consistent with the Planning Board's August 24, 2004 recommendation that the entire two (2) blocks, including the proposed Park, be designed as an integrated site, Gehry Partners LLP (Architect and/or Gehry Partners) was asked to submit a proposal and cost estimate to undertake design services for the proposed Park. A proposal was submitted for review by the Finance and Citywide Projects Committee at its meeting on October 26, 2004. The Committee recommended amending the Development Agreement between the City and NWS to expand the NWS' scope of responsibilities to include the design, development and construction of the Park; and Drexel Avenue between North Lincoln Lane and 1 idi Street and improvements adjacent to the new Garage, at the City's cost and expense, not to exceed $10,000,000; an area comprising the Jackie Gleason Theater of the Performing Arts ("JGT") LTC - New World Symphony First Addendum February 9, 2007 Page 2 entry landscaping at the City's cost and expense, not to exceed $1,150,000; and an area comprising North Lincoln Lane improvements, at the City's cost and expense, not to exceed $500,000. The City Manager emphasized the fact that even though Gehry Partners was engaged by NWS, the City would retain discretion over the design ofthe Park Project. Furthermore, NWS committed to using a Basis of Design (BODR) process, to include community design workshops in developing the plans for the Park, and requiring City Commission approval of the final Park Project design. On December 8, 2004, the Mayor and Commission held a duly noticed public hearing to consider, on first reading, a First Addendum to the Development Agreement relative to the City and NWS' respective responsibilities regarding the design and construction ofthe Park Project. At such time, the Mayor and City Commission discussed the proposed First Addendum and expressed concerns with proceeding with the Park Project, and the City's corresponding commitment of expenditure of funds for design services, without ensuring NWS commitment to proceed with its Sounds pace project. The item was officially opened and continued. The sentiment of the City Commission was that language should be provided in the Addendum that would protect and make the City whole in the event that NWS chose not to proceed with the Soundspace Project. On January 26, 2005, a meeting was held in which NWS informed the City that it was not prepared to formally announce the status of its capital campaign, pending the formalization of its funding commitments. Following the City's request for assurances that Soundspace would proceed, the parties discussed the importance of developing the Project as one integrated site and, as such, the importance of continuing the planning process without delay. The City further requested that the Gehry Partners prOVide a not-to-exceed cost estimate to prepare schematics of the Park, culminating in a Basis of Design Report (BODR). NWS clarified its position that, to the extent the Sounds pace Project failed to proceed, the City's only commitment, at risk, would be limited to the funding of the costs to prepare and present the BODR, which at that time was estimated to be approximately $400,000. A follow-up meeting was held with NWS on March 15, 2005, during which NWS announced the engagement of Hines Interests Limited Partnership (Hines) as its Project Manager. NWS also advised that it was still not ready to make any formal fund-raising announcements or proceed with an amendment to the Development Agreement. The First Addendum was subsequently put on hold until such time that NWS was prepared to proceed, and the Architect's scope could be defined relative to the Park and surrounding infrastructure improvements. In a further development, the principals of 420 Lincoln Road Associates, Inc., offered to incorporate NWS' required parking, totaling 175 spaces, into its project located at 1601 Drexel Avenue and 1600 Washington Avenue at no cost to NWS or the City. Accordingly, the Mayor and City Commission adopted a resolution on December 7, 2005, authorizing the execution of a Covenant in Lieu of Unity of Title between the NWS, 420 Lincoln Road Associates, and the City, thereby satisfying NWS' parking requirements under the City's Land Development Regulations and allowing for off-site parking by NWS. LTC - New World Symphony First Addendum February 9, 2007 Page 3 On January 9, 2006, in accordance with the timeline specified in the Development Agreement, NWS submitted preliminary plans and specifications for the Soundspace and Garage portions of the Project for review and comment by the Administration. Since the plans did not deviate from the Concept Plan that was approved by the City Commission on September 8, 2004, the City Manager authorized NWS to proceed with design development, subject to comments and concerns submitted by Planning and Zoning and other departments which reviewed the plans. Update Since the City Commission Meetinll of December 6. 2006 Since that time, NWS and the City have been working together to define the processes and refine the scope for implementing NWS' plans, as well as the City's overall vision for developing the Park and the areas surrounding the entire development site. This process has involved "redefining" the zones that were initially presented at the October 26, 2004 Finance Committee meeting, to better address the phasing and inter-relation of the various components, (i.e., the Garage, Soundspace, the Park, Lincoln Lane and Pennsylvania Avenue; defining the City's and NWS' respective scope and responsibilities relative to surrounding infrastructure and streetscape improvements; re-valuing the "build-to" cost estimates for the Garage, the Park Project and related infrastructure components; determining the not-to-exceed cost estimate to develop schematics and the BODR for the Park Project; and establishing terms and conditions relative to the development ofthe Park Project). In order to memorialize the results of these discussions, the City and NWS are finalizing a revised First Addendum, which generally provides for the following proposed amendments to the Development Agreement: Zone Designations As indicated previously, during the initial discussion at the Finance and Citywide Projects Committee on October 26, 2004, the zone designations were used to define certain add alternate components involving the Park and surrounding street and landscaping improvements, including the entry way to JGT, which on account of a separate proposal process for permanent use of JGT, was removed from the scope ofthis Project. However, in consideration of Cirque Du Soleil's recent withdrawal of its proposal for TOPA, the Finance and Citywide Projects Committee, at its meeting on November 30, 2006, concurred that the entry way landscaping be added back into the scope for the Park. The new proposed Zones correlate the three primary Project components (Parking Garage, Soundspace - now referred to as Symphony Campus and the Park), with their respective contiguous street and/or landscape improvements that would need to be permitted and phased concurrently. The two additional Zones, identified as Zone 4 - Lincoln Lane, and Zone 5 - Pennsylvania Avenue, are currently planned to be undertaken by the City as part of the City Center Right-of-Way Improvement Project, and are not within NWS' scope of work. The three (3) Zones within NWS' proposed scope of work and their respective sub-zones are summarized as follows and are illustrated in the attached Zone diagram, included as Exhibit 2 to this memorandum: LTC - New World Symphony First Addendum February 9, 2007 Page 4 Proposed Zones Zone 1 Parkinll Garalle Zone Zone 1.1 Zone 1.2* Parking Garage Garage landscaping along Lincoln Lane and Pennsylvania Ave 17th Street and Lincoln Lane streetscape and landscaping improvements contiguous with Zone 1.1 Zone 1.3* Zone 2 Symphony Campus Zone Zone 2.1 Symphony Campus (also referred to as the Developer's Improvements) Drexel Ave Realignment 17th Street and Lincoln Lane streets cape and landscaping improvements contiguous with Zone 2.1 Zone 2.2* Zone 2.3* Zone 3 Park Proiect Zone Zone 3.1 Zone 3.2 Zone 3.3 City Center Park Washington Ave Streetscape Improvements 1 ih Street and Lincoln Lane streets cape and landscaping improvements contiguous with Zone 3.1 *Zones 1.2, 1.3, 2.2, and 2.3 are defined as "Additional Improvements," and no part of Zone 3 is included in this definition. Funding Considerations One of the main objectives of the proposed First Addendum is to clearly define NWS' scope of responsibilities relative to surrounding/abutting infrastructure and streetscape improvements that will implement the City's overall vision for developing the Park Project and the surrounding area, and that need to be addressed as part of the regulatory review and permitting process pursuant to the existing Development Agreement. The City's anticipated share of costs associated with the respective Zone improvements is as follows: Zone 1.1 - Parking Garage Pursuant to the existing Development Agreement, the City was to fund an amount not to exceed $12,250 per parking space for all hard costs ($3.9 Million based on 320 spaces and $7.5 million based on 608 spaces) plus 12.5% of the hard cost per space for soft costs. While there is also a provision for a CPI adjustment (not to exceed 5%) at the time the Building Permit is issued, it should be noted that these numbers were based on comparable garage facilities that were built pre-2004. Pursuant to the City Commission's mandate noted above, the Garage is planned to maximize the number of parking spaces and to also contain certain space on the ground floor for retail uses, which makes the currently estimated parking spaces number 608. LTC - New World Symphony First Addendum February 9, 2007 Page 5 However, since the Development Agreement was executed, the area has seen considerable escalation in the cost of construction and construction materials. These cost increases, combined with the anticipated doubling in size of the Garage's original number of spaces, together result in a significant increase in the overall cost. The current cost of the Garage is estimated at $15,210,000. Based on the current required City contribution (with contractually allowed escalation) of $13,505 per space or $8,211 ,040, NWS would need to payout of their funds the remaining difference of approximately $7 million plus any cost overruns. NWS has advised the City that they do not have the financial resources to meet this requirement and that if the City does not alter this requirement, then the entire project cannot proceed. Since the Garage has always been intended to be a City responsibility and will also be wholly owned and operated by the City, the City Administration recommends that the City assume the whole cost ofthe Garage, currently estimated at $15,210,000 (approximately $25,016 per space) for the design, development and construction of the Garage (which amount is reflected in the Capital Plan that was adopted by the City Commission on September 21, 2006). Ifthis recommendation is accepted, the City would also be responsible for any and all cost overruns associated with the Garage. It should also be noted that the Development Agreement currently provides for the City to pay NWS the Garage Costs in sixteen (16) equal monthly installments, beginning on the first day of the second month following commencement of construction on the Garage. The basis for this provision is to afford protection to the City in the event construction of the Garage does not occur. This position is also consistent with the City's standard public/private development agreements wherein the City does not put funds at risk until construction begins. However, NWS has pointed out that the original payment schedule does not accurately reflect the timing of required expenditures, and is requesting that in the event of approval of the First Addendum, at that time, the City would reimburse the NWS, in a lump sum, payment all of the costs, fees and expenses related to Zone 1 (that amount currently is approximately $41 ,000) incurred through and including the execution date ofthe Addendum and that, going forward, beginning with the execution date, NWS would be reimbursed monthly for hard and soft costs on a percentage of completion basis. In considering this request, and as noted above, the City traditionally does not put its funds at risk until construction has commenced. This request would put these funds at risk if for some reason NWS makes the decision not to proceed with the project. In exchange for this preliminary outlay of funds, NWS is willing to make the City whole in the event that the Symphony Campus Project does not proceed, by reimbursing the City for its share of the costs incurred through commencement of construction of the Garage. NWS has two qualifications of this guarantee of reimbursement by exempting its obligation to reimburse the City under the following circumstances: 1) if the City Commission imposes requirements that make the Project infeasible; and/or 2) ifthe City does not commit to a $15 Million grant-in-aid. Although a right of assignment was requested by the City in lieu of the guarantee of reimbursement, NWS has reported that Gehry Partners will not provide this right of assignment prior to construction commencement. This represents considerable movement on the part of NWS since the December 6, 2007 Commission Meeting. Finally, NWS has agreed that the City contribution for the Garage will be drawn no earlier LTC - New World Symphony First Addendum February 9, 2007 Page 6 than October 1, 2008. Additional Improvements: Zones 1.2 - Garage Landscaping along Lincoln Lane and Pennsylvania Avenue; Zone 1.3 - 17th Street Streetscape contiguous with Zone 1.1; Zone 2.2 - Drexel Avenue Realignment; and Zone 2.3 - 17th Street Streetscape contiguous with Zone 2.1 Following the directive to create an integrated Project site, the City, as described below, has budgeted $20,210,000 towards the Park Project ("Park Project Budget"), which as in the case of the Garage, is also reflected in the Capital Plan that was adopted by the City Commission on September 21, 2006. Included within the Park Project Budget is funding for the Additional Improvements to be designed, developed and constructed concurrently with the Symphony Campus and the Garage. The City estimates, and is budgeting an amount not to exceed $6,400,000 for completion of the Additional Improvements; (this cost is included in the not-to- exceed Park Project Budget of $20,21 0,000). In the event the actual cost of the Additional Improvements is less than the budgeted amount, the excess of such funds shall be available to be used for the design, development and construction of the Park itself (Zone 3). Zone 3.1 - City Center Park Based on comparable park projects throughout the City and taking into consideration the additional scope of work involvin~ the abutting streetscape improvements along Washington Avenue (Zone 3.2) and along 17 Street, contiguous with Zone 3.1 (Zone 3.3), the City, as part of its adopted Capital Plan, has established a not-to-exceed Park Project Budget in the amount of $20,210,000 for the Park Project (which amount includes the Additional Improvements in Zones 1 and 2 as noted above). Using this build-to number as a basis, included within the Park Project Budget is a not-to-exceed cost estimate to develop schematics and the BODR for the Park Project (which includes all components within Zone 3) in the amount of $1,110,000. This $1,110,000 includes approximately $29,600 to reimburse the NWS for costs, fees and expenses that NWS has already incurred in connection with Zone 3. At the December 6, 2006 City Commission Meeting, the City Commission determined to add JGT's entry way landscaping back into the scope for the Park, at an estimated additional cost of $1,150,000. This decision increased the cost for the Park from $20,210,000 to $21,360,000. Based on funding commitments for the City Center RDA, NWS and the City have agreed that funding for the Park will be available no earlier than October 1, 2009. As shall be memorialized in the proposed First Addendum, the process for review and approval of the Park Project Design will generally provide for two (2) Community Design Workshops, and for appropriate review and approval milestones (of the concept plan and plans and specifications, respectively) for the City Manager and the City Commission. The NWS, upon approval of the BODR by the City Commission, shall have the opportunity to price labor and materials and establish a final GMP, within range ofthe numbers presented in the BODR. If the final construction numbers exceed the range established in the BODR, the City will have the following options to bring the Project within budget: fund the higher amount; and/or, value engineer the Project; and/or, delete scope to bring the Project within budget. The City is also responsible for any cost overruns for the Park and Additional Improvements. LTC - New World Symphony First Addendum February 9, 2007 Page 7 With respect to the design costs for the Park itself, the NWS has also agreed that, in the event it elects not to proceed with Symphony Campus Project, it will reimburse the City for its share of costs associated with providing schematics and a BODR for the Park, which is estimated at $1.1 million. However, as in the case of the Garage, NWS qualifies this guarantee of reimbursement by exempting its obligation to reimburse the City under the following circumstances: 1) if City Commission imposed requirements make the Project infeasible; and/or 2) ifthe City does not commit to a $15 Million grant-in-aid. Although a right of assignment was requested by the City in lieu of the guarantee of reimbursement, NWS has reported that Gehry Partners will not provide this right of assignment prior to construction commencement. It should also be noted that Section 2.11 of the Development Agreement provides NWS with the right to terminate the Development Agreement and the Ground Lease prior to the Possession Date, in the event of any conditions that would render the Project economically unfeasible, including, but not limited to regulatory agency requested design changes, concurrency requirements and/or environmental remediation costs without liability or further obligation. As noted above, in the event of such termination by NWS, the proposed First Addendum revises this section of the Development Agreement to provide for reimbursement to the City of all design costs incurred in connection with the Park and the Garage. Funding Request Summary Total Budgeted Original Cost Zone Description Budget Zone 1.1 Parking Garage $4,410,000 (320 spaces @ $15,210,135 (Est 608 spaces $12,250/space + 12.5% soft @ $25,016/space + soft costs) costs) Zones 1.2, 1.3, 2.2, 2.3 - Additional Improvements $ 500,000 - (Lincoln $ 6,400,000 Lane Imol Zones 3.1, 3.3 - Park: BODR $ 400,000 $ 1,110,000 Park Imorovements $9,600,000 $12,700,000 Total $16.060,000 $35 420,000 Proposed New item - TOPA entrance landscaping $1,150,000 $0 Grant-in-Aid Initially, the NWS requested a $30 Million Grant-in-Aid for the Soundspace Project. However, in subsequent discussions, the NWS has since revised its request to $15 Million. NWS has indicated that this grant is critical to the Project proceeding at this time, and as noted earlier, is unwilling to guarantee return of any City soft costs in the event the Project fails, unless this grant is funded. It should be noted that between actual expenditures to date (including land value, studies and appraisals) and future commitments (direct and indirect capital appropriations), the City LTC - New World Symphony First Addendum February 9, 2007 Page 8 already anticipates contributing more than $70 Million towards and in support of the NWS Project, estimated as follows: Est. Land Value - NWS footprint, including planned service alley and green space (73,200 sqft @ $200/sqft) Zyscovich Study, land appraisal and related analyses (incurred cost) Est. 644-space Garage component (budgeted cost as amended) Est. Park and Additional Improvements (budgeted cost as amended) Multi-Purpose Municipal Parking Garage, excluding office space (appropriated) Total Est. City Contributions: $ 14,640,000 280,757 15,210,135 20,210,000 20.573.000 $ 70,913,892 During the December 6, 2006 City Commission Meeting, sentiment was expressed by the Commission for the City Manager to continue negotiations regarding how and when this $15 million Grant-in-Aid would be made available to NWS. NWS has continually represented that the funds needed to be available prior to the end of the project and regardless of the form of the grant, the effective yield of the funds needed to be $15 million (in effect, if City funded this amount over a period of years, then the total amount would need to exceed $15 million in order to make up for the cost of funds incurred by NWS to borrow money to build the project). Over the past two months, the City Manager and NWS have come to the following tentative agreement with regard to the $15 million Grant-in-Aid. This is offered for the City Commission's consideration: . City will prOVide $15 million in supplemental funding for the Soundspace project as it is needed. . NWS must expend $135 million towards the project before the City will release any funds. Qualifying expenditures include AlE fees, Hines fees, permits, related engineering tests and borings, construction costs. . NWS must demonstrate to the City that the project is fully funded and in balance before the City will release any funds, i.e., if the project cost exceeds $150 million, then NWS will need to show the source of the funding above the $150 million. . Funds for the Grant-in-Aid will be available no earlier than October 1, 2009 and will be provided on an "as-needed" basis. . City and NWS will split 50/50 any unspent funds, if any. . NWS will provide the City with a 180 day advance notice to City of NWS intent to draw on the Grant. NWS will follow-up with a second 60 day advance notice so that City internal processes may begin. . City contribution is subject to availability of funds in accordance with Florida Statutes and considers the potential effect of pending bills in the State Legislature. . NWS has agreed to provide the City an Option to purchase the Lincoln Theater at a price to be determined through a comparison of the City appraisal, a NWS appraisal, and a negotiation. This option will be valid through December 31, 2007. . Public Benefits for this Grant-in-Aid will follow, but have yet to be fully defined. LTC - New World Symphony First Addendum February 9, 2007 Page 9 NWS Required Parking A final outstanding issue for the project concerns the City Code required parking for the Soundspace project. Currently, the Soundspace building's required parking is satisfied by the future development of the 420 Lincoln Road project. The Commission expressed concern regarding whether or not there was a contingency provision to address NWS' parking requirement, in the event the 420 Lincoln Road Project failed to proceed. Since the Covenant-in-Lieu-of-Unity-of-Title does not address this condition, in the event that the 420 Lincoln Road Project were not to proceed, the NWS would still have to comply with its parking requirement under the Zoning Code (175 spaces) and it is anticipated that 1) NWS would either request an Ordinance change that would then allow a request for a Waiver of Development Regulations from the City, or 2) NWS would be required to purchase, lease, or prOVide some similar interest for 175 spaces in the Garage or other property. If this issue is not resolved by the time the project is constructed, then the project will not receive legal occupancy. During the discussions between the City and NWS, NWS has indicated that it would prefer to resolve this issue prior to their commencement of construction. Guidance from the City Commission is being sought as to whether there is any preference by the Commission as to how this requirement is addressed. Conclusion Attached is the latest draft ofthe proposed First Amendment for your review. There are final elements that are still being finalized for the February 20th City Commission Meeting, so some of the language in this draft may change, although the main sentiments and deal points are properly represented in the attached draft. The City Commission expressed a desire to discuss the draft noted above and to also resolve the questions that were remaining as of the end of the December 6, 2006 meeting. Those specific issues, which have been speCifically dealt with above, were: . The specific conditions and timelines for the requested $15 million Grant-in-Aid; and, . the NWS' requested increase in the Garage Costs, to a not to exceed amount of $15,210,185; and, . as an alternative to the proposed language in the First Addendum which requires NWS to "reimburse" the City for its "soft" costs for the Park Project and the Garage, in the event NWS deems not to proceed with its Project and exercises its right to terminate the Development Agreement, providing for language in the First Addendum (to be finalized by second and final reading) which would give the City a "right of assignment" in the event (i) NWS does not proceed (pre commencement of construction) with its Project, or (ii) (post-construction) if NWS defaults prior to completion of the Project, and which would allow the City to utilize NWS' Architectural Consultant, Gehry Parnters LLP's, designs, plans, etc., and proceed on its own to build the Park and the Garage. With respect to these outstanding items, the Administration is recommending that the City fully fund the Garage costs and the Grant-in-Aid. As noted above, NWS was not able to secure the requested Right of Assignment, but has agreed to refund the City's soft costs in LTC - New World Symphony First Addendum February 9, 2007 Page 10 the event NWS decides not to proceed with the project (with the qualifications noted above). Also attached for your benefit and information is a comparison of the most substantive proposed changes in this Proposed First Amendment from the Development Agreement and the Initial amendment originally considered by the City Commission in December 2004. A current schedule for the project is the final attachment. There is scheduled a City Commission Workshop on Monday, February 12, 2007 at 6:00 PM to discuss these speCific issues, as well as the total project in general. Please feel free to call me should you require any additional information with regard to this issue. Attachments: 1) Draft Proposed First Amendment 2) Crosswalk of Substantive Proposed Changes 3) Schedule SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 FIRST ADDENDUM TO DEVELOPMENT AGREEMENT THIS FIRST ADDENDUM TO DEVELOPMENT AGREEMENT is made as of this day of , 2007 (this "First Addendum") by and between the CITY OF MIAMI BEACH, FLORIDA ("Owner" or "City"), a municipal corporation duly organized and existing under the laws of the State of Florida, and NEW WORLD SYMPHONY, a not-for- profit Florida corporation ("Developer") (the Owner and Developer, each a "Party" and collectively, the "Parties"). RECITALS A. Owner and Developer entered into an Agreement of Lease ("Lease") dated as of January 5, 2004, pursuant to which Owner leased to DeveJ()per certain real property described in Exhibit "A" attached hereto and made a part hereof (the "Land"). B. Concurrently therewith, Owner and. Developer also entered intoa.Development Agreement ("Development Agreement") dated as ofJalllJary 5,20()4, setting forth, among other things, the Owner's and Developer's respective responsibilities and agreement to coordinate and cooperate in the planning, scheduling alld approval of the ~elopment, design and construction of an automobile parking garage (the "Garage") to be located otiland adjacent to the Land, and a performance, educational and internet broadca$l; facility, togethetwithcertain related amenities, facilities and other infrastructure improvements on the Land ("Developer's Improvements"), as set forth in the Development Agreement. C. The Development Agreement provided that Owner would develop certain unspecified "Infrastructure Improvelnents" as a condition of Developer's obligation to construct the Developer's Improvements, lInd that specific Infrastructure Improvements would be identified in the future, subject to the Owner obtaining the City Commission's approval. The Infrastructure Improvements have now been identified, subject to the required approvals. D. The Development Agreement also contemplated that Owner might develop a park ("Park") or another simiJarpublicamenity on real property defined in the Development Agreemenfas the "Adjacent Properly" and re-defined herein as the "Park Project Zone." A Park has been envisioned for the Park Project Zone for some time, and is a part ofthe City's District Master Plan. E. Following the execution of the Lease and Development Agreement, the Parties have worked together to define the processes and refine the scope for implementing the Developer's plans for the Developer's Improvements on the Land and the City's overall vision for enhancing the development of the Park and the areas surrounding the Park and the Land, for the use and enjoyment by all residents of and visitors to the City of Miami Beach and by all visitors to the Project (as that term is re-defined herein). The Parties now wish to enter into this First Addendum in order to memorialize their agreements regarding their respective obligations for implementing the foregoing. C:\Documents and Scttings\cmgrhemt\Loca1 ScttingslTemporary Intem'l. FileslOLK314\First Addendum2~6~7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 NOW THEREFORE, it is hereby mutually covenanted and agreed by and between the Parties hereto that this First Addendum is made in consideration of the terms, covenants and conditions hereinafter set forth. 1. Caoita1ized Terms: Recitals. All capitalized terms not defined herein shall have the meanings given to them in the Development Agreement. For convenience, the original Article 1, entitled ''Definitions,'' of the Development Agreement is attached hereto as Exhibit "B." Hereafter, all references to the Development Agreement shall mean the Development Agreement as modified and augmented by this First Addendum, unless the context indicates otherwise. The Recitals are incorporated herein by refere~. 2. Additional and Revised Definitions. Article 1, entitled "Definitions," is amended by adding or revising the following definitions: (a) "Additional Improvements" means certain improvemet}ts to City owned real property planned for and included only withilJ,Z<>ile 1 and Zone 2, as describ~in subsection (cc) herein (but excluding Developer's Improvemtjnts and the Garage). The Additional Improvements may include streetscaping, landscaping, utilities. graphics, lighting, adjustments to curblines, sidewalks, hardscape, streetscape furniture, andilie design, development, engineering and construction of such improvements all as may be deterlIlined for each Zone in accordance with the applicable approval process and appro"Cld. budget. The Additional Improvements in Zones 1 and 2, and the improvements planned for Z<>~. 4 and 5 are, together, the "Infrastructure Improvements" addressed in Article 23 oftheDevelopment.Agreement. (b) "Change" means any proposed or approved material addition, deletion, or revision in the Work, ()r an adjustment in the Gl,!aranteed Maximum Price, or the Completion Date or other construction timetable, issued on or after the Guaranteed Maximum Price has been agreed to. (c) . "Change Order" means a document which is signed by Developer, Contract<)t; Owner and the Architect, (if required) and authorizes a Change. (d) "Devel()pment site" is amended to mean Zones 1 and 2, and in the event the Park Project is approved by the City, Zone 3 as well. (e) "Design-to Park Project Budget" means the preliminary total costs budgeted by the City for the Park Project, which is the preliminary estimate of costs, including estimated hard and soft construction costs, anticipated as of the date hereof, to be incurred in connection with the design, development and construction of the Park Project. As of the date hereof, the parties acknowledge and agree that the City has budgeted an amount not to exceed $13,800,000 for Zones 3.1, 3.2 and 3.3, and an additional $1,150,000 for Zone 3.4, for a total of $14,950,000 for the entire Park Project. (f) "Final Completion" means the date the GMP Contract has been fully performed, all the Work has been completed and a final Certificate for Payment approved by the Owner has been issued by the Architect. C:\Documents and Settings\cmgrhemt\Local Settings\Temporaty Intem~Files\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (g) "Final Garage Budget" means the final budget, as mutually agreed to by the Parties, and as approved by the City Commission prior to establishment between Developer and its Contractor of the Guaranteed Maximum Price, and representing the final hard and soft construction costs approved in connection with the design, development and construction of the Garage, as reflected in the Preliminary Garage Budget. (h) "Final Park Project Budget" means the final budget, as mutually agreed to by the Parties, and as approved by the City Commission prior to establishment between Developer and its Contractor of the Guaranteed Maximum Price, and. representing the final hard and soft construction costs approved in connection with t~ design, development and construction of the Park Project. Notwithstanding the precedillgsentence, in the event that the Additional Improvements are designed, developed and constructed for less than the "not to exceed $6,400,000" amount, then any unused funds shal) be applied by the Parties toward the design, development and construction of the Park Project,artd, accordingly, shall be added to the Final Park Project Budget. (i) "GMP Contract" means the gulIfanteed maximum price ("Guaranteed Maximum Price") contract signed with the Contractor. (j) "Garage" means the. public municipal pllrlQng garage comprising Zone 1.1 to be designed, developed and constructed by Developer for OVI'Il.~f and funded as set forth in Section 13 hereof, and operated by Owner at it!l$()l~(;ost and exp~se on City-owned property adjacent to the Land, legally described in EJ$ibit "C." Jt is anticipated that the Garage will have 6 stories, including 5 st9ries of covered Parking plllsqpen rooftop parking, and ground- floor retail space along 17th Street and Pennsylvania Avenue. (k) "Garage Design Costs" shall include but not limited to all costs, fees and expenses associated with the prepat~tion, design, engineering, planning, work, input and analysis by Developer JlIld all of its.lijlents, ernploy~s, contractors, consultants and professionals, including put not Jimitj)d to the< Architectural Consultant, in respect of the overall design, management and construction adll1inistration for the Garage. (1) "Park". means the public park facility that is proposed to be developed within the PlIrk Project Zone pursuant to this First Addendum. (m) "Park Project" means all of the improvements to be designed, developed and constructed within Zone 3- the Park Project Zone (including Zones 3.1,3.2,3.3 and 3.4), in accordance with the provisions of this First Addendum. (n) "Park Project Concept Plan" means the design of the Park Project prepared by the Architectural Consultant in consultation with the Developer and the City Manager to be submitted for the review of the City Commission pursuant to the provisions of Section 10 and Exhibit "D" hereof. C:\Documents and Settings\cmgrhemtlLocal Settings\Temporary Intern'3FilesIOLIG14\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (0) "Park Project Costs" means all costs, fees and expenses incurred in connection with the design, development and construction of the Park Project, all of which costs, fees and expenses are and shall be at the sole cost and expense of the Owner. (p) "Park Project Design" means the final design of the Park Project approved by the Design Review Board ("DRB"), and based upon the final "Basis of Design Report" as set forth in Section I 0 hereof. (q) "Park Project Design Costs" shall include but not limited to all costs, fees and expenses associated with the preparation, design, engineering, planning, work, input and analysis by Developer and all of its agents, employees, consult.antslllld professionals, including but not limited to the Architectural Consultant, with respect to: (i) the Park Project Concept Plan and any modifications thereof; (ii) the modifications to the draft Basis of Design Report requested by the City, in accordance with the prov~ons of this SectioIl and the Program described in Exhibit "D;" (iii) the final Basis of Design Report; (iv) the "Design-to" Park Project Budget; (v) the Preliminary Park Project Budget;(yi) Owner's. approval proceSll, Ililsubject to Section 10(f) below; and (vii) all construction administl'lltion and management. (r) "Preliminary Additional Improvements Budget" means the preliminary total costs budgeted by the City for the Mditional Improvements, including estimated hard and soft construction costs (" Additional Improvements Costs"), anticipated as of the date hereof to be incurred in connection with the design, deveIOpIll.ent and cOl1$truction of the Additional Improvements. (s) "Preliminary Garage Budget" means the total costs budgeted by the City for the Garage, as mUtl!lllly agn'lec1.to by the Parties and as approved by the City Commission, which is the preliminary estimate of costs, including estimated hard and soft construction costs ("Garage Costs"), anticipatec1 as of the date hereoft() be incurred in connection with the design, development and construction ofthe Qarage. As or the date hereof, the Parties acknowledge and agree that the City hllSbudgetedan amount not to exceed $15,210,135 for the Garage. (t) "Prelilllinary p.Jt Project Budget" means the total cost budgeted by the City for thClPark Project, as mutually agreed to by the Parties and as approved by the City CommissiOllcli)ncurrently witl'l the approval of the Park Project Concept Plan (as set forth in Section 10 hereOf), which is the preliminary estimate of costs, including estimated hard and soft construction costs, ll1lticipated as of the date thereof to be incurred in connection with the design, development and cOll$tnJction of the Park Project, including the sound system. The Parties acknowledge and agree that the Preliminary Park Project Budget shall be established in accordance with the dollar amounts set forth in the "Design to" Park Project Budget in the amount of$14,950,000. (u) "Program" means the procedure the Parties shall follow in connection with obtaining City approval of the Park Project Design, as described on Exhibit ''D.'' C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Intem~Files\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 . (v) "Project" means the Developer's Improvements, the Additional Improvements proposed to be designed and constructed in Zones 1 and 2, and the Garage; in other words, all improvements of every kind to be located in Zones 1 and 2. (w) "Project Site" means Zones 1 and 2. (x) "Substantial Completion" means the time when the Work or designated portion thereof (which the Owner agrees to accept separately) is sufficiently complete in accordance with the Contract Documents so the Owner can occupy ()futilize the Work for its intended use. (y) "Unavoidable Delays" means delays dj.\eto strikes, slowdowns, lockouts, acts of God, inability to obtain labor or materials reasonably within the~inally contracted for price range, war, enemy action, civil commotion, fire, casualty, severe''\1w'eather conditions, eminent domain, a court order which actually causes a delay (unless resulting from disputes between or among the Parties alleging an Unavoidable Delay, present or fOl'1l:!.er. employees, officers, members, partners or shareholders of such alleging Pa.rty or Affiliates, or present or former employees, officers, partners, members or sharehol4ers of such Affiliates of such alleging Party), the application of any Requirement, or another ~ beyond such Party's control or which, if susceptible to control by such Party, shall be beyoIll1the reasonable control of such Party. Such Party shall use reasonable goodtilith. efforts to notif)ttl1e other Party not later than twenty (20) days after such Party knows of the OCClli'fellce of an Ullavoidable Delay. Failure to provide timely notice, as set forth herein, shall not bedtle~ed a waiver by the Party alleging an Unavoidable Delay. In no event shall (i) any Party's finll.!l~al condition other than due to a material increase in the costs of labor or materials, or inability to fund or obtain funding or financing, constitute an. "Unavoidable Delay" (except for an Institutional Lender's inability to fund, which inability is.llot caused by Developer):with respect to such Party, (ii) nor shall any delay arising from a Party's (or its Affiliate's) defal.llt under this Development Agreement or any of the Constf\il:ti9IlAgreemerits,constitUfean. "Unavoidable Delay" with respect to such Party's obligation.shereundef.T~e timesfor performance set forth in this Development Agreement and First APdendum (other than for mol1etary obligations of a Party) shall be extended to the extent perfo~e is delayed by Unavoidable Delay, except as otherwise expressly set forth in this Developmellt Agreement. (z) "Work" means the construction and services required by the applicable contract documents, 'Whether completed or partially completed, and includes all other labor, materials, equipmeritjlnl1services provided or to be provided by the contractor to fulfill its obligations. The Work may constitute the whole or a part ofthe applicable Project. (aa) "Zone" or "Zones" mean the geographical areas in which the three (3) primary components of the Project and the Park are located, and the proposed improvements (including, without limitation, the proposed Additional Improvements and Infrastructure Improvements) within each geographical area. The Zones are generally but not legally described below and are identified on the sketch attached hereto as Exhibit "E." C:\Documents and Settings\cmgrhemt\Local Settings\Temporary IntemCSFiles\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revisian to Draft 1 st Reading 12-05-06 (i) Zone 1 - Parking Garage Zane, which means the real propert~ owned by Owner and generally described as the land baunded an the North by 17 Street, an the East by the Land, an the Sauth by Lincoln Lane and on the West by Pennsylvania Avenue. (ii) Zane 2 - Symphany Campus Zane, which means the real prapert~ owned by Owner and generally described as the land bounded an the Narth by 17 Street, on the East by the realigned Drexel Avenue, on the South by Lincaln Lane and an the West by the Garage Property. (iii) Zone 3 - Park Praject Zone, which..ltI.eIi11s the two parcels of real property owned by Owner and generally described asfollows:(A) the land bounded an the North by 17th Street, on the East by Washington Avenue, on the Sauth by Lincaln Lane and on the West by the realigned Drexel Ay.enue (Zones 3.1, 3.2.and 3.3); and (B) a partion of land surrounding part of the City's Theater of Performing Art~ ("TOP A") and bounded on the north by , on the sal.ltl1 \)y 17th Street, on the eastl>y)Vashington Avenue and an the west by (Zane 3.4). (iv) Zone 4 - Lincoln Lane Impro"ement Zane, which means the real property owned by Owner and generally described~ that portion of Lincaln Lane bordered on the West by Pennsylvania. Avenue and on the ~t to' W ashingtan Avenue. (v) Zone 5 - Pennsylvania Avenlle Improvement Zone, which means the real property awned by Owner. and gen~y described as that partian of Pennsylvania Avenl1eoordered on the North by 17th Street and on the South by Lincaln Lane. 3. Amendment Of Replacement afCert3in Sections afDevelopment Agreement. (a) l'he follo"ring sectiohor subsectians in the Develapment Agreement are deleted it! their entirety ilnd replaced with the fallowing: (b) Section 2.9, "Confirmation af Land Development Regulations," is amended by deleting it in its entirety and replacing it with the following: "The zoning district classificatian of Zanes 1, 2 and 3 is CCC, as defined in the Land Develapment Regulations." (c) Sectian 2.1O(b), "Required Development Permits," is deleted in its entirety and replaced with the fallawing: "To' the best of Owner's knowledge and belief; ather than pertaining to Zane 1, Zones 2.2 and 2.3 and Zone 3, there are no' reservations and/or dedications ofland for public purpases that are proposed under the terms of this Develapment Agreement." (d) Section 2.11, "Develaper's Right ofTerminatian" is deleted in its entirety replaced with the fallowing: C:\Documents and Settings\cmgrhemt\Local Settings\Temponuy Intem~Files\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 Notwithstanding anything to the contrary contained herein, Developer shall have the right to terminate this Development Agreement and the Ground Lease and to be released from all liability hereunder and thereunder in the event that Owner, in its proprietary capacity, imposes requirements or restrictions upon Developer's performance of its obligations as Developer hereunder, which requirements or restrictions impose an undue burden on Developer or render the Project economically unfeasible in Developer's reasonable business judgment. In the event of termination of this Development Agreement and the Ground Lease pursuant to this Section 2.11, the Owner shall reimburse Developer for all Garage Costs, Additional Improvements Costs and Park Project Costs incurredpyDeveloper on Owner's behalf, and following Developer's receipt of payment in cleared funds of all sums due hereunder, each Party shall bear its own other costs and expenses i~~\'r~ in connection with this Development Agreement and the Ground Lease and neither Party shallllave any further liability to the other. (e) Section 6.1 "Developer's Contributions" is deleted in its entirety and replaced with the following: Section 6.1 Developer's and O~'$ Contributions. Developer shall provide all of the funds necessary to complete Constructi()!1.of Developer's Improvements in Zone 2.1. Owner shall provide all of the funds necessary fl)'complete Construction of (i) all improvements within Zone 1, including the Qllrage and the Additic>nal Improvements to be located in Zones 1.2 and 1.3 of the Parking Gatage Zolle, and (ii) the Additional Improvements in Zones 2.2 and 2.3, subject to the other proyisionsofthepevelopment Agreement. As to the retail portion of the Garag?peveloper shall o!1lybe responllible for delivering to Owner, and Owner shall only be responsible for funding, a vanilla shell retail space, as defined in Exhibit "F", attached hereto. Owner shalll>e responsible for all leasing and management operations of the Garage, including the retail portion of the Garage. (f) Section 6.2 "Fees"iS deleted In its entirety and replaced with the following: Permit Fees. Developer assumes payment responsibility for any and all Permits, nQW or hereafter, required to be obtained from the City or any other Governmental Authority fotthe construction of Developer's Improvements in Zone 2.1, including without limitation, buildin.& permit applications, inspection, certification, impact and connection fees that the City may levy 1>Y or through its Public Works Department (including, without limitation, water and sewer fees).an.dthose fees, to the extent applicable, listed in the City of Miami Beach Building Department Fee Schedule, or the most current edition adopted by the City, which fee schedule is hereby incorporated by reference and made a part of this Agreement (collectively, the "Fees"). Owner shall be responsible for all Fees associated with the Garage, the Additional Improvements, the Park Project, and the Infrastructure Improvements; the amounts of all such Fees will be included in the applicable budgets. (g) Sections 23.3 and 23.4 of the Development Agreement, entitled "Adjacent Property" and "Park," are deleted in their entirety and replaced with the pertinent provisions of this First Addendum. C:\Documents and Settings\cmgrhemt\Local Settings\Temporary InterneyFiles\OLK314\First Addendum 2..06-07 rev2.doc SWM 2.07.07 revision to Draft I st Reading 12-05-06 (h) Section 10.1(t) is deleted in its entirety and replaced with the following: If there is more than one Recognized Mortgagee, only the three (3) most senior in lien Recognized Mortgagees, to the exclusion of all other Recognized Mortgagees, shall be recognized as having rights under this Article 10, unless one of such senior priority Recognized Mortgagees has designated in writing to Owner a Recognized Mortgagee whose Mortgage is junior in lien to exercise such right. 4. Citv's Obligations Regarding Infrastructure Improvements. The City has refined its plans for the construction and development of certain public improvements to City-owned property located within Zones 1,2,3,4 and 5. (a) The Additional Improvements to CitY~owned property in Zone I and Zone 2 (but specifically excluding the Developer's Improvements tape constructed by Developer within Zone 2.1 - the Symphony Campus), together with the imPl"9vements to City- owned property in Zones 4 and 5 are designated to l'le. the "Infr~tructure Improveme!lts" referred to in Article 23 of the Development Agreement. UpolI.timely (l()ll1pletion of perfurmance of all of Owner's obligations regarding the Infrastructure ImPl"9vements,Owner shall have satisfied in full all of its obligations under Section 23.1 of the original Development Agreement. (b) The Additional Improvements planned iliZ9ne I and Zone 2 constitute portions of the "Infrastructure Improvements"iteferred to in$ection 23 of the original Development Agreement and designated in this AddendullJ......The City's planned improvements within Zones 4 and 5 are not included withinth~definition9:f"Additional Improvements" but are included within the definition of "Infrastruct1.lte Improvements." (c) Because the coordinated construction, development and use of the Project and the Additional ImprovementswiU provide mutual benefits to both parties by enhancing the availability and \Jse of all ofthe Developer's Improvements as well as other Property owned by the City, QwlierhasIequested,and Developer has agreed, that Developer shall cause to be designed,<developedlUkl.constructed, at Owner's sole cost and expense, the Additional Impro~nts in accordance with the Project Plans and Specifications and the Preliminary Additiowl.rnprovements Budget. 5. l;~mes I and 2. Sections 23.2.2 and 23.2.3 of the Development Agreement are deleted in their entil'ety and replaced with the following: (a) Garage Costs: Additional Improvements Costs. Owner's obligation to fund the design, development and construction of Zone I and Zones 2.2 and 2.3 is described below, subject to the provisions in Section 13 herein: (i) Owner will fund an amount not to exceed $15,210,135 for the Garage Costs, as reflected in the Preliminary Garage Budget. Owner will fund an amount not to exceed $6,400,000 for the Additional Improvements Costs, as reflected in the Preliminary Additional Improvements Budget. The Garage Costs and Additional Improvements Costs shall be inclusive of; but not be limited to, the City's total funding C:\Documents and Settings\cmgrhemtlI.ocal Settings\Tempornry lntem'8Fi1es\OLK314\First Addendum 2<l6'l7 rev2.doc SWM 2.07.07 revision to Draft 1 sl Reading 12-05-06 contributions for Concurrency Requirements, the City's Prevailing Wage Ordinance, if applicable, and all costs in connection with all zoning, permit matters, and requirements imposed by Governmental Authorities, subject to the other terms of the Development Agreement as they pertain to Zones 1,2.2 and 2.3. . (ii) The Parties agree that the design, development and construction of the Additional Improvements planned for Zones 1.2, 1.3, 2.2 and 2.3, shall be included within the definition of "Project" and "Project Site", respectively, and therefore included within the scope of Owner's obligation to fund and Deyeloper's submissions and performance of its obligations pertaining to design, development and construction, under the original Development Agreement. . (iii) Owner shall pay to Developer the Garage Costs and the Additional Improvements Costs in the manner set forth in Section 13 herein. (b) Zone 2.2. The construction of the Developer's Improvemelltswithin Zone 2.1 of the Symphony Campus Zone will require the4isplacement, re-routing and rebuilding (such work, collectively, "Realignment") of that portiQ.J:l9f Drexel Avenue that is between Lincoln Lane and 17th Street in Miami Beach ("Drexel") itrZ9ne 2.2. Owner has agreed that the Drexel Avenue Realignment is part of the Additional Iri1PI'9vements for which Owner is responsible, and that such work constitutes tinljmprovements wUhinZone 2.2, and Developer has agreed to perform such Drexel Avenue RealigtlUltlllt on Owner's behalf at Owner's sole cost and expense. 6. Zone 4 -theLiUQQln Lane Improvement Zone. The design, development and construction of all improvement~rplanned for Zone 4, and all costs in connection therewith, including but not limitedJo fees due to Architectl.1~ Consultant, are solely the responsibility of Owner. Zone 4 is a part 9f thel:lesthetically integrated project contemplated in this First Addendum, and the parties a.gr~ to cOorditlate,cooperate and consult with one another in the planning,@sign,devel9pmenfllhd. construction (including, without limitation, commencement of construction) of all Zone 4 improvements. 7. Zone 5 - the ~sylvania Avenue Improvement Zone. The design, development and construction of all improvements planned for Zone 5, and all costs in connection therewith, including, but not limited to fees due to Architectural Consultant, are solely the responsibility of Owner. Zone 5 i~.a part of the aesthetically integrated project contemplated by this First Addendum, and the parties agree to coordinate, cooperate and consult with one another in the planning, design, development and construction (including, without limitation, commencement of construction) of all Zone 5 improvements. 8. Develooment of Park Project. (a) Owner has determined to develop the Park Project as contemplated herein, and the Parties hereby agree that Developer will serve as developer of the Park Project on behalf of Owner and shall cause the Park Project to be designed, developed and constructed on behalf of the Owner and at the sole cost and expense of the Owner, subject to the terms and conditions C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Intern~Fi1es\OLK314\First Addendum2-06"'()7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 as set forth herein. Developer will select, at its sole discretion, all contractors, including a general contractor, and all subcontractors, consultants and other Persons (each a "Contractor" and collectively, "Contractors") Developer deems necessary to complete the Park Project in accordance with the provisions of this First Addendum and the Development Agreement. (b) Developer's obligations pertaining to the Park Project are limited to the design, development and construction of the improvements located or to be located within the Park Project Zone, subject to the provisions of Section 13 herein, and specifically exclude any obligation or responsibility or liability whatsoever for any otherpfOperty or Zone, unless otherwise provided in the Development Agreement, or agreed to in writing by the Parties. 9. Park Proiect Design. (a) Developer and Owner wish to enhance the benefits to the City, the Owner and the Developer of an integrated vision and design for the development ofth~.Project and the Park Project, and therefore Developer, with Own~r'$)c:onsent, has selected GehtyPartners, LLC, as the architectural consultant for the Park Project.<.T<lhty~ll.{tners, LLC, and all necessary specialists and consultants who Gehty Partners, LLCr~~ires to complete the Park Project Design, including but not limited to specialists and con$tl.1tants in the areas of acoustics, performance venues, architecture and engineering, shall be refel'l"ed to hereafter as "Architectural Consultant." Owner further acknowledges that Developer has se~~ed, with Owner's consent, Hines Interests Limited Partnership to act on behalf e>fDeveloper lIS the Project and Park Project manager. (b) OwIler and Developer acknowledge and agree that the design, development and construction oftl1e Project and.the Park Project as an aesthetically integrated project in accordance withthe single design vision oftl1e Architectural Consultant will maximize the benefits of the Project and thePlp"k))roject to the City of Miami Beach. Accordingly, Owner and Developer t4rtiJ.er ackn()WJedgeat1d agree. that the completion of the design, construction and developm~()ftbif}lark Projectpwsuant to th.eterms and provisions of this First Addendum and in acco~dance with tht\~k Project Design is integral to the current design, construction and develop~nt of the ProjectlU\d that the OwIler's election not to proceed with the Park Project (as further des<:ribed in SectiO)l;s 10(c) and lO(d) below) may materially and adversely affect Developer's ability to meet its projected time frames for design, construction and development of the Project. (c) .M:weover, any delays in Developer's ability to meet the Schedule andlor the Construction Conunencement Date andlor the completion date for the Project, andlor any other deadline for the Project, which delays arise from Owner's election not to proceed with the Park Project, shall be treated as an "Unavoidable Delay" pursuant to the Development Agreement and this First Addendum. 10. Procedure for Park Proiect Design AoorovaL (a) The approved Park Project's Final Basis of Design Report to be obtained as outlined in Exhibit "D" shall be the approved Park Project Concept Plan referred to herein. C:\Documents and Settings\cmgrhemt\Loca1 Settings\Temporary IntemtI(Jiles\OLK314\First Addendum2~6-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (b) The Developer shall use the Design to Park Project Budget as the cost basis as described and approved in the Park Project Concept Plan. The costs, fees and expenses for such design and preparation work shall not exceed the dollar amount allotted for such work as set forth in the Design to Park Project Budget. Following approval of the Park Project Concept Plan pursuant to the Program described in Exhibit "D." Developer and the City Manager, on behalf ofthe Owner, acting in a proprietary and not regulatory capacity, shall meet to commence the preliminary review process. Developer shall comply with the schedule of approvals outlined in the Program described in Exhibit "D." (c) In the event the City Commission fails to select and approve a Park Project Concept Plan, or it elects not to proceed with the Park PrC)j~jmmediately thereafter the Owner shall notify the Developer in writing in accordance with Artic.l~ 20 of the Development Agreement of the Owner's intent to terminate those portio~ of this First~endum which relate to the Park Project, specifically Zone 3. Within thirty (30) days after Develop'er's receipt of the Owner's notice of intent to terminate the applicable portions of this First Addenqum, the Owner shall reimburse Developer for all Park Project DesignCosts incJ,llTed by DeveloJ)et,which Park Project Design Costs shall not exceed the sum of $l,HO,OO(j (unless Owner consents to an increase in writing), but subject to Section 1O(f) below... Following Developer's receipt of payment in cleared funds of all sums due hereunder, thostlportions of this First Addendum pertaining to the Park Project shall terminat~ and shall therealter. .shall have no force or effect, and neither Party shall have any further rights or obligations to ~. other pertaining to the Park Project under this First Addendum except as set forth~rein. (d) Notwithstanding Owner's lllection l1ofto proceed with the Park Project, Owner's funding obligations associated with Zones 1 and 2 will remain in full force and effect in accordance with the DllvelopmentAgreement and this First Addendum. Termination of such portions of this First Adt.lelldum regarding the Park Project shall not in any respect operate to terminate, modify, amend.or affect lI1lY (jther of the respective rights and obligations of the Parties undert.l1i~~irst Addefi4tUn, the Devel()pment Agreement or the Lease, all of which shall continue to be in fuUf9rce alldeffect. Further, notwithstanding such termination hereunder, Owner.$grees that it sfudlretainZone 3.1 of the Park Project Zone as a municipal surface parkingl()t or a park or similar public amenity, for the term of the Lease. This provision shall survive tetnlination of those portions of this First Addendum pertaining to the Park Project and shall continuetobe binding onthe parties for the term of the Lease. (e) Upon the City Commission's approval ofa Park Project Concept Plan, the Developer and the Architectural Consultant shall prepare a more detailed design, during the course of which design process the Owner, Developer and Architectural Consultant shall consult together as often as necessary. Within 150 Calendar Days following the City Commission's approval of the Park Project Concept Plan, the Architectural Consultant and Developer shall submit a more fully developed project design to the Owner for review and approval. This further developed project design shall include, but not be limited to, fully detailed landscape drawings, detailed sidewalk and streetscape improvements, public walkways, entertainment venue details, projection and sound equipment details and specifications, utility improvements and any other improvement related to the Park Project (the "Preliminary Plans and Specifications"). C:\Ilocuments and Settings\cmgrhemtlLocal Settings\TemporaIY Intemt'files\OLK314\First Addendum2'{)6'{)7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (t) The Preliminary Plans and Specifications submitted to the Owner within the 150 Calendar Day design period shall be reviewed by the Owner's City Manager within 60 Calendar Days from receipt of said Preliminary Plans and Specifications. If the originally submitted Preliminary Plans and Specifications are consistent with the approved Park Project Concept Plan, but Owner rejects the Preliminary Plans and Specifications and requires the Architectural Consultant to revise or redesign the Preliminary Plans and Specifications, then in addition to the Owner's obligation to reimburse Developer for all Park Project Design Costs as set forth in subparagraph 1O( c) herein, and notwithstanding the "cap" on the Park Project Design Costs of $1,11 0, 000 under the circumstances described therein, all costs associated with the revision, redesign and resubmission of the Park Project Concept Plan shall be borne solely by the Owner, and the "cap" of $1,110,000 shall not apply. (g) Upon obtaining the Owner's approval of the>preliminary Plans and Specifications, Developer shall submit an application fOl' approval of the Preliminary Plans and Specifications to the City's DRB. Developer shall pwsue approval of the application to the DRB with the assistance of the Owner acting diligently and ip. good faith. (h) Upon receipt of the DRB's apProval of the Preliminary Plans and Specifications (the "Park Project Design"), the ArchitecturalC()nsultant shall prepare Final Plans and Specifications for construction of the Park Project consisteritwith the approved Park Project Design. The Final Plans and Specificationsshallpe submitted to(he()wner within 180 Calendar Days from receipt of the DRB's approval of the.I>ll1"k Project Design. The Final Plans and Specifications shall be reviewed by the Owner's City~er solely for consistency with the Park Project Design, as the Sl\lUehave been approved by theDRB. The City Manager shall have 60 Calendar Days to reyiew the Final Plans and Specifications. If the originally submitted Final Plans and Specificati<>l1$ are consi$tent with the approved Preliminary Plans and Specifications, but Owner rejects the FiJW Plans aIId Specifications.and requires Developer to revise or redesign the Final Plans and Specil:i.e~ti()!l$,t~llJ!.. in addition to the Owner's obligation to reimburse Developer f9LaJlJ>lIff Project (;psts as set ft:>rthin subparagraph 10 herein, and notwithstanding any other. . provision ..l1erein, ancl $pecifically notwithstanding the Preliminary Park Project Budget,'.all costs associat~with Developer's revision, redesign and resubmission of the Final Plansah4!Specifications shall be borne solely by the Owner, and Owner shall promptly reimburse Developer for same. 11. Final Park Project Budget. Prior to Developer's execution of the GMP Contract with its general COntfl\ctor for construction of the Park Project, Developer shall submit to Owner for Owner's approval a proposed Final Park Project Budget. If such proposed Final Park Project Budget is materially inconsistent with the Preliminary Park Project Budget, then the proposed Final Park Project Budget shall be accompanied by a memorandum in writing in sufficient detail to explain all such material inconsistencies. Approval or disapproval or modification of the Final Park Project Budget shall be governed by the provisions governing the Plans and Specifications, as applicable, as set forth in Section 10 above. Information copies of any material modifications to the Final Park Project Budget shall be promptly delivered to Owner. (a) Notwithstanding anything to the contrary contained herein, if, upon review of the Final Park Project Budget, Owner determines, in the exercise of Owner's reasonable C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Intemf'1iles\OLK314\First Addendum 2~6-O7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 business judgment, that changes to the final Park Project Design and/or Plans and Specifications required by the DRB, or any other Governmental Authority, exceeds the budget acceptable to the City and renders the final Park Project Design, as approved by the City, economically unfeasible, Owner and Developer shall value engineer the Park Project Design so that the cost to construct the revised Park Project Design acceptable to Owner does not exceed the budget amount that is acceptable to Owner. If, after value engineering the final Park Project Design, Owner will not approve a design that is within the budget amount that is acceptable to Owner, then Owner may terminate those portions of this First Addendum pertaining to the Park Project. Within thirty (30) days after Developer's receipt of the Owner's notice of intent to teI1llinate the Park Project, the Owner shall reimburse Developer in full for all Park Project GOsts incurred by Developer. Following Developer's receipt of payment in cleared funds ofllllsums due hereunder, those portions ofthis First Addendum pertaining to the Park Project shall terminate and shall thereafter shall have no force or effect, and neither Party shall havel\l1yfurther rights pr obligations to the other pertaining to the Park Project under this First Addendum except as setfprth herein. The provisions of Section 10(d) herein shall apply. (b) Notwithstanding anything contained in this First Addendum or the Development Agreement, the Parties acknowledge andtlgree that (i) the Final Park Project Budget shall represent the total amount of funding which the. Owner has determined to make available for the development, design, and <;Qnstruction ofthe'fJarlc Project and, accordingly, the Final Park Project Budget shall not be>~~ded and/or inci"~sed without the express authorization of the City Commission. The Deve1pper shall noLbe liable to Owner or any Contractor or other third party for payment of any portion()~)l1e costs, fees or expenses properly incurred by Developer on behalf of Owner in .C()nnection With the Park Project provided such costs, fees or expenses. are Within, and in accordance with, the Final Park Project Budget. Moreover, Developer~hall have no. obligation or. duty whatsoever to incur costs or expenses which would cause the Pllotk Project Design Costs to~ceed the Final Park Project Budget. (c) Except as otherwise setforth in this Addendum to the contrary, the general procedures and reqUi!ements set. .forth in the Development Agreement pertaining to the construction of the Gata.ge and Developer's Improvements shall apply to construction by Developer. of the Additiorlallmprovements and the Park Project, including but not limited to Sections 2.$(e), (f) and (g),.!Uld [Sections 3.2.1, 3.3, 3.4] [NOTE: check accuracy of section numbers] and lIS. otherwise applicable to construction in general. 12. Grant-In-Aid: Reimbursement Agreement. The Parties agree that it is in the best interests of the City, it.Sresidents, the Owner and the Developer for the Project to be built and operated as envisioned in the Lease and the Development Agreement. Consequently, in full understanding and acknowledgement that each party's agreement to perform its respective obligations is expressly conditioned upon the other party's agreement to perform its obligations, and the obligation of each to perform is mutually contingent upon the other's perfonnance, and that but for the agreement and perfonnance of each, this First Addendum could not succeed, the Parties agree as follows: (a) Owner hereby grants to Developer and agrees to pay to Developer a grant- in-aid ("Grant") in the aggregate sum of$15,000,000 in the manner and at the times described in C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Intemr:files\OLK314\First Addendum2-Q6-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 Exhibit "G" attached hereto and made a part hereof. Receipt of the Grant is critical to the success of the Project. The Grant is made and shall be used for the sole purpose of defraying a portion of the Developer's capital expenses of developing and constructing the Developer's Improvements. The Grant and all sums paid or to be paid hereunder are not and shall not be deemed to be part of or included within, but are separate and apart and in addition to, any and all other financial obligations of Owner contemplated in the Lease. or the Development Agreement as amended by this First Addendum. 13. Funding. Owner's funding of costs of the Garage, thl:1Additional Improvements and the Park Project, if applicable, shall be in accordance with theterins of this First Addendum and approved final budgets for said improvements, and shall be ml\delas follows: (a) All costs and fees attributable to workperformed\)y Developer on behalf of Owner shall be identified, tracked, accounted f\)r,invoiced and pall! separately from Developer's Improvements Costs, in a manner that clearly distinguishes OWner's costs from Developer's Improvements Costs. Owner shall haye tb,e right to make payment byj;heck or wire transfer to the Developer. (b) Within thirty (30) days after the Part1es'.execution of this First Addendum, Owner shall fund directly to Developer in a lump sum !lay~~nt all of the costs, fees and expenses incurred through and including the execution datepf this First Addendum by Developer on the Owner's behalf in connection With ?()nes 1 and 3, as detailed on Exhibit "H" attached hereto. (c) Secti()n 23.2.2(v) of the original Development Agreement is hereby revised to state that within thirty (30) days after the Parties' execution of this First Addendum, the funding processfot~ Garage!Project and the P/lIlI. Project may commence. Developer shall be entitled to be paid bythl:1 OWllerperiodic progress payments ("partial payments"), not more frequently tlu!.1l pnce per 1t1()l1th, f()rthe following portions of the Work completed and acceptablet() the O'wrler: (i) For soft costs associated with the design, development and construction of the Garage, the Additional Improvements and the Park Project, including butllOt limited to the Work of the Architectural Consultant and other consultants and professionals, and associated with the Work under the applicable budget then in effect, and (ii) For hard costs associated with the design, development and construction ofthe Garage, the Additional Improvements, and the Park Project, including but not limited to the portions ofthe Work performed under the applicable budget then in effect. (iii) Partial payments shall be in an amount equal to the amounts paid by Developer for such portions of the Work. C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Intem:r4'iles\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (iv) Such partial payments of hard costs shall constitute advances against the GMP Contract until final payment is made and accepted. No partial payment approved nor made shall constitute an acceptance of any Work completed not in accordance with the approved final Plans and Specifications and/or the final approved budgets. (v) The Developer may make applications for periodic progress payments during construction by submitting to the Owner on or before the fifth (5th) day of each month (but not more often than once a month) an>itemized application for payment ("Requisition") for those items properly payable hereunder. Each Requisition shall be submitted in a form acceptable to both Parties, arid shall be accompanied by evidence of proper application of all prior payments, .including without limitation, as to hard costs, an unconditional partial waiver oflien,.p.-olllthe Gell~.Contractor and each subcontractor, in form and substance satisfactorytCl the Owner, covering the full amount of all past payments for direct construction costs through the date ofsll.\Zh waiver of lien, and an unconditional final waiver oflien infoW1.and sub~tance satisfactory~the Owner, from each subcontractor who, as of the mostre.c<'nt pll.yment, had completed the work covered by its subcontract, covering the full a:l1l.plJl1t due each subcontractor, and a consent of surety. Developer shall also furnish such'(}tber supporting evidence as Owner may reasonably require to establish the .cost or value ()f'tI1t: improvements and equipment for which each hard costs payment is to be and has been maqe. (vi) Each Requisition forha1'dco~tsshall be based upon the most recent schedule of ValWJs submitted bytbe General C~:mtractor. The schedule of values shall allocate theentire(Ju~anteed MaXimum Price among the various portions of the Work. The schll<lule of values shall be prepared in such form and supported by such data to substantiate itsa<;curacYlls the Owner may reasonably require. This schedule, unless objected to by the ()wner,sha11 be used as a basis for reviewing the Developer's Requisition. Requisitioll.s shall shOWtbe percentage completion of each portion of the Work as oftheend of the period covered by the Requisition. (d) The ()wner, within thirty (30) calendar days after receipt of the Requisiti(')ll,.",ill pay an apJ)Jtoved Requisition to the Developer for such amount as the Owner determines to be properly due,iand if it objects to and withholds funding for any item or amount, shall state in writing the reasons for such action. The Developer, after receipt of an objection to funding, shall disprOVe or ClIre such objection or the Parties shall otherwise work in good faith to resolve such objecti(')tt..Each claim, question, difficulty or dispute which cannot be resolved by mutual agreement of the Owner and Developer shall be resolved in accordance with the procedure set forth in Exhibit "f' attached hereto. 14. Substantial Completion: Final Completion. The construction of individual improvements within a Zone or other portion of the Garage or Additional Improvements or the Park Project may go forward and be completed in accordance with different schedules, Permits and Approvals. Therefore, the portions of work within a Zone or portion of the property and permitted by different Permits and Approvals shall be deemed to have been completed in substantial accordance with the approved Plans and Specifications thereot; as they may be C:\Documents aud Settings\c_hemt\Local SettingslTemporary Internfl~iles'OLK314IFirst Addendum2<l6<l7 rev2.doc SWM 2.07.07 revision to Draft I st Reading 12-05-06 modified from time to time upon mutual agreement of the Parties, notwithstanding that minor adjustments may be required by Developer or minor errors or omissions may require correction, provided that such adjustments and corrections are made within a reasonable amount of time after discovery of same. Owner shall be solely responsible for all costs, fees and expenses properly incurred by Developer in connection with this Section. As such portion of Work under such Permits and Approvals is completed, Developer shall submit to Owner the final "as built" plans and specifications for such portions of Work within a Zone or portion of the property, and any additional costs which may be due and owing shall be paid in full by Owner to Developer within thirty (30) calendar days after such submittal. All payments sballhe made in cleared U.S. funds. (a) When the Developer determines that there has\)een achieved Substantial Completion of Work constituting a portion of the Garage or the Additiot!al}mprovements or the Park Project which the Owner agrees to accept separately,. the Developersball submit same to Owner for acceptance, together with: (i) A Temporary Certifica._e: of Opeupancy (TCO) Or Temporary Certificate of Completion (TCe), as applicable, for the. Work duly issued by the Governmental Authority having jurisdiction thereof; (ii) The Architect's Certificate of Substan_ial Completion stating that on the basis of observations and inspectiOO$,t~ referenced Work has been substantially completed in accordance with the Plans and Specifications in all material respects; and (iii) A Requisition for payment for sUch Work. Upon the Owner's. approval thereof, Owner shall pay the Requisition in accordance with the provisions of this Addendum. (\)) When .tI1e. Developer has received from the Contractor: a Final Contract()l'sAffidavitlUlli.FinalL~en Waivers in accordance with Chapter 713, Florida Statutes; a writ_~illotice that the Work is ready for final inspection and acceptance; and a final application for paym~t! Developer and Architect will promptly make such inspection, and when Developer determines~t Final Compl~ion of the Work has been achieved, the Developer shall submit same to Owner for acceptance, together with: (i) A Final Certificate of Occupancy (CO) or Final Certificate of Completion (CC); as applicable, for the Work duly issued by the Governmental Authority having jurisdiction thereof; (ii) The Architect's Certificate of Final Completion, approved by the Developer, stating that on the basis of observations and inspections, the Contract has been fully performed and all the Work has been completed in accordance with the Plans and Specifications in all material respects, and that the entire balance found to be due the Contractor and noted in the final Certificate is due and payable; (iii) A final Requisition for payment; C:\Documents and Settings\cmgrhemt\Loca1 Settings\Temporary IntemM'iles\OLK314\First AddendumZ-Q6-Q7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (iv) Copies of all agreements, Permits, and Licenses, and all insurance policies or certificates, if any, pertaining to the completed Work; (v) All manufacturers,' suppliers' and subcontractors' warranties duly assigned to the Owner, and all maintenance and operating instructions if any, pertaining to the completed Work. (c) Upon receipt of the foregoing, and approval of the Certificate of Final Completion, Owner shall pay all sums due and owing to Developer, including all retainage. (d) Owner's entry into possession of any p~ttion of the Garage or the Additional Improvements or the Park Project, as evidenced by<the use thereof by Owner (the date such use first occurs being the "Possession Date" as to thtfl'ortion()~pied), will constitute acknowledgment by Owner that the occupied portion isirtthe condition irt~/1ich Developer was required to deliver it under the terms of the Development Agreement andtl:lll-tpeveloper has performed all of its obligations relating to the d~sign, development and constl"Uction thereof Owner agrees that in the event of discovering any defei;tive W ol"k in construction.fi'om the Plans and Specifications, including latent defects, Owner willloQk.only to the warranties assigned and transferred to it from Developer. Developer shall have no liability for any defective Work, and Owner acknowledges and agrees that it will look solely to 1:he contractors, subcontractors and suppliers for relief in connection with anyclahn.lIrising from any~ef~cts. Owner shall be solely responsible for all costs, fees and expenses ioouITlld by Developer in connection with this Section. 15. Changes to Work: Change Orders; Owner Consent. The Parties understand that during the constructiqllphase of tile Garage, the Additional Improvements and the Park Project, situations may arise that wouldl"t!quire Changes. to be made to the Work, the Plans and Specifications, the Completion Dllte, the. Final ParkPtoject Budget, the Final Garage Budget, the Final Additio~ ~lIl.l'rovemel'1ts~udget,. or other similar matters ("Changes"). Changes shall be dealt with.hrthefoIl6\ving two (2}ways. (a) Draw. Against Contingency. The Final Park Project Budget, the Final Garage Buliget and the Final Additiortal Improvements Budget each will include a construction contingency re.serve ("Contingency"), which shall be in addition to any construction contingency reserve included within the Guaranteed Maximum Price. This contingency amount will not be disclosed to third Plu1ies. The proposed Contingency shall'be in an amount which the Developer believes, in its best jU<1gtnent, is reasonable to cover construction-related costs which were not specifically foreseeable or quantifiable as of the date the GMP Contract, including but not limited to the following: correction of minor defects or omissions in the Work not caused by the Developer's negligence; cost overruns due to the default of any subcontractor or supplier; minor changes caused by unforeseen or concealed site conditions; and minor changes in the Work not involving adjustment in the Guaranteed Maximum Price or extension of the Completion Date and not inconsistent with the intent of the Plans and Specifications and the Development Agreement. C:\Documents and Settings\cmgrhemt\Local Settings\Temporary Interntt1iles\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 (i) Draws may be charged against the Contingency only with the Owner's written consent, which shall not be unreasonably withheld or delayed. The Contingency excludes, and shall not be used for, costs incurred to demobilize and remobilize due to suspensions ordered by the Owner, or for Owner-requested Changes to the scope of the Work, or for costs associated with Unavoidable Delays, all of which are to be treated only by Change Order. (ii) Upon making a draw against the Contingency, the Developer shall increase the relevant budgeted line items by the amount of the draw, and decrease the Contingency line item accordingly. The Developer shall m.aihtain records satisfactory to the Owner to document each draw against the Contingency. (b) Change Orders. As material site issues.and/or UlI&voidable Delays arise, the Developer shall coordinate the processing of Chl\ilgeorders and willJlegotiate, for final approval and execution by Owner, all Change Orders with Contractor. To the. eJctent reasonably possible, Developer shall submit a proposed Ch811geQrder to Owner within a rel\SPllable period of time prior to commencement of Work relating tOl\ilY prop~ Change that is not properly eligible for payment from the Contingency. Requests forllllyChange Order shall be submitted on a change order form acceptable to Owner, signed by DeV~.lgrer, the General Contractor, and, if required by Owner, also by the Architectural Consult81l.t.;. and shall include a written description of the proposed Change, the jllstifi()lltiQn therefor andllJ,lpporting documentation. At its option, Owner may require Developer to provide additional evidence satisfactory to Owner of the cost and time necessary to complete the propose<iCi1ange.. The appropriate Budget and/or Project Schedule, as applicahle. will be revisedifnecessarytol'eflect approved Change Orders. (i) In the event, by reason of an Unavoidable Delay or otherwise, the Owner requests a'(:hange tj) the scope of WQr!l: or systems, kinds or quality of materials, finishes or equipment; or .theOwner orderslUl acceleration or resequencing of Work; or the O~~r.requires$cOl>e changesl() be made to the Park Project, the Additional Improvemettts.()!".the Garag~ after the Guaranteed Maximum Price has been established, all costs pertaini1l8 to orll.Ssociated with making such Changes shall be the sole responsibility of OWner and may not and shall not be funded from the Contingency nor froritthe Final Budgets. Such costs for which Owner shall be responsible include those costs illcurred when.the Owner's Change Order regarding one portion of the Developl'llent Site causes additional costs to be incurred for any other portion of the DevelopmenfSite. . Owner's obligation to fund such costs shall be in addition to and not part of its obligation to fund the scheduled amounts contained in the Final Park Project Budget, the Final Garage Budget, and the Final Additional Improvements Budget. (ii) Change Orders submitted to Owner in accordance with this Section 15 shall be reviewed and approved by Owner in a timely and reasonable manner. Developer shall at all times maintain, for inspection by Owner, a full set of working drawings ofthe Improvements. C:\Documents and Settings\cmgrh_\Local SettingslTemporary lnternr8'ilesIOLK314IFirst Addendum2'()6'()7 rev2.doc SWM 2.07.07 revision to Draft 1st Reading 12-05-06 16. Casualty DamagelDestruction of Park ProjectlPark Proiect Zone. Following the Park Project Zone Possession Date, in the event the Park Project and/or the Park Project Zone shall be damaged or destroyed, in whole or in any material way, as determined by Owner, by fire, hurricane, flood or other casualty (hereinafter, collectively referred to as the "damaged property"), Owner, at its sole option and discretion, shall have the right to elect not to repair or restore the damaged property. (a) Notwithstanding the foregoing, in the event (i) Owner elects not to restore or repairiP-edamaged property; and (ii) Developer gives written notice to OWner within sixty (60) Calendar Days of the casualty that Developer is willing to repairftestore the damaged property with its own funds; and (iii) Within six (6) months f()llowing such notice, Developer proves, to Owner's sole satisfaction and discretion, that it hli$adequate funds immediately available to effect the repair/restoration; and (iv) Owner and Developer, each acting in its reasonable discretion, agree within sixty (60) Calendar DaYII after Owner deems that Developer has demonstrated that it has adequate funds to eft'eC!;th~ repair/restoration, to the conditions, timing, plans, procedures, contractors, subcontra.ct<<;)l"l\, disbursement mechanisms and other matters with re$pect to the repair/restoration, Developer sha11be entitled to effect the repair/restoration with its own funds. Developer shall commence and complete sucllrepair/restoratiollwithin a reasonable period of time. (b) Further,. in the event neither Owner nor Developer elects to repair or restore the damagedpr9perty,as. set forth above, Owner shall remove all above-ground improy~ents and debris from the Park Project Zone, and return the Park Project Zone to a safe and sightly condition with a reasonably level grade, within a reasonable period of time. 17. Miscellaneous. (a) Compliance with Comprehensive Plan. The Owner has adopted and implemented the Comprehensive Plan. The Owner hereby finds and declares that the provisions of this First Addendum and the Development Agreement dealing with the Land and the Park Project Zone and the approval of any Park Project Design shall be consistent with the Owner's adopted Comprehensive Plan and Land Development Regulations, subject to all applicable Requirements, Pennits and Approvals. (b) Counteroarts. To facilitate execution, the Parties hereto agree that this First Addendum may be executed in counterparts as may be required and it shall not be necessary that the signature of; or on behalf of; each Party, or that the signatures of all persons required to bind any Party, appear on each counterpart; it shall be sufficient that the signature of; C:\Documcnts and Settings\cmgrhemt\I.ocal Settings\Temporary Intemf9'iies\OLK314\First Addendum 2-06-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 or on behalf of; each Party, or that the signatures of the persons required to bind any Party, appear on one or more of such counterparts. All counterparts shall collectively constitute a single First Addendum. (c) References. All references in the Development Agreement to the "Agreement" shall hereafter mean and refer to the Development Agreement as amended by this First Addendum. If there is a contradiction between the terms of the Development Agreement and this First Addendum, then the terms of this First Addendum shall control. Facsimile signatures appearing hereon shall be deemed an original. (d) Effect of First Addendum. Except as mqdiij~(1 herein, the Development Agreement remains in full force and effect. In the event of any collflict or ambiguity between the Development Agreement and this First Addendum, this Fir~ AddendUm shall control. 18. Exhibits. The following exhibits are attached to this First Add~!l(ium and made a part hereof. [Signatures commence on following page} C:\Documents and Settings\cmgrhemtlI.ooal Settings\Temporary Int~iles\OLK314\First Addendum2~6~7 reV2.doc SWM 2.07.07 revision to Draft 1st Reading 12-05-06 EXECUTION BY OWNER IN WITNESS WHEREOF, Owner and Developer intending to be legally bound have executed this First Addendum to Development Agreement as of the day and year first above written. WITNESSES: CITY OF MIAMI BEACH, FLORIDA, a municipal corporatiot:\()fthe State of Florida By: Print Name: ATTEST: Print Name: By: [SEAL] STATE OF FLORIDA ) )ss: COUNTY OF MIAMI-DADE ) The foregoing instrument was acknowledged before me this day of ,by , as Mayor, and ,as City Clerk9f.the CITY OF:MIAMI BEACH, FLORIDA, a municipal corporation of the State of Florida, on behalf of such municipal corporation. They are personally known to me or produced valid Fl()rida driver's licenses as identification My commission expires: Notary Public, State of Florida Print Name: C:\Documents and Settings\cmgrhemtlLocal Setlings\Temporary Int<m!'files\OLK314\First AddendumZ-Q6-Q7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 EXECUTION BY DEVELOPER WITNESSES: THE NEW WORLD SYMPHONY, a not-for- profit Florida corporation Print Name: By: Howard Hefl'il1g,President and CEO Print Name: ATTEST: By: , Secretary [CORPORATE SEAL] STATE OF FLORIDA ) )ss: COUNTY OF MIAMI-DADE ) The foregoing instrument was acknowledged before me this _ day of . , by HQward Herri!1g, as President.and CEO, and , as Secretary, ofTHE NEW WORLDStMPHqW, a not-for-pt(jfit Florida corporation, on behalf of such corporation. They are perso~y ktiovmtQ ll.ll) Qr produced valid Florida driver's licenses as identification. My corillltjssion expires: Notary Public, State of Florida Print Name: C:lDocuments and Settings\cmgrheml\Local SettingslTemporary Intenl!2'ilesIOLK314IFirst Addendum2'()6.()7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 List of Exhibits Exhibit "A" Legal Description of Land Exhibit "B" Article 1 - Definitions from Original Development Agreement Exhibit "c" Legal Description of Garage Property Exhibit "D" Procedure for Obtaining Park Project Approval Exhibit "E" Sketch ofImprovement Zones Exhibit "F" Definition of Vanilla Shell Retail Space Exhibit "G" Tenns of Payment of Grant-in-Aid Exhibit "H" Costs, Fees and Expenses Incurred by Developer Through 2007, in connection with the park Project and thlilGarage Project Exhibit "I" Dispute Resolution Procedures C:\Documents and Settings\cmgrhemt\l.ocal Setlings\Tempornry lnten'!'files\OLK314\First Addendum2'{)6'{)7 rev2.doc SWM 2.07.07 revision to Draft I st Reading 12-05-06 Exhibit "F" Definition of Vanilla Shell Retail Space Vanilla Shell Retail Space" shall mean a construction space preparedpy the Developer for the Owner which shall include (i) concrete slab floor broom swept, (ii) weat:hertight space including all storefront, glass windows, insulated exterior walls and concret!;leeiling slab, (iii) no demising walls between retail spaces or interior partitions shall be instalfed"(iv) one exterior door per retail space, (v) central electrical room with one retail eleCtrical service (vi) one 3" empty electrical conduit from the demising line of each retai~space to thec!llltral electrical room, (vii) one 2" empty electrical conduit from the deminsing line of each retaiL~t>/l.ce to the central fire alarm room, (viii) fire protection main line ins~l1ed above the typical eeili!1~. elevation of each retail space and capped, (ix) a 2" diameter do~~tic waterlit1e with shut offvldve installed above the typical ceiling elevation of each retail space, ("'~ 1".capped sanitary sewer stub out in one location to each retail space capped, (xii) a dedicated~ation on the roof of the Garage for retail tenants' HV AC condenser units and a obstruction freep.!J.thfrom this dedicated location to each retail space for tenants' installation of:H;YA-C piping for th~~uipment, (xii) no gas service shall be brought to any retail space, (xiii) nO g~~.trap shall bellf':lvided for any retail space, (xiv) normal fresh air and exhaust air Ilril1es shall be ~AAi~~d for each retail space with blank off plates, (xv) no large kitchen exhaust duct or path shall be pnlvided from any retail space to the exterior of the garage. C:\Documents and Settings\cmgrhemt\Local Settings\Temporary In~iles\OLK314\First Addendum2"()6-07 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 Exhibit "G" Tenns of Payment of Grant-in-Aid (a) Owner shall pay the Grant to Developer,bY check or wire transfer as follows: [terms still being negotiated] (b) Developer is also pursuing a gtlU)t-in-aid in the aggregate sum of $30,000,000 ("County Grant") from Miami-Dade County ("the County")t'orthe purpose of defraying a portion of the Developer's capital e"Jlenses of developing and!~nstructing the Developer's Improvements. Receipt of the CountyO!l1pt is critical to the success~fthe Project. Pursuant to Section 13(c) below, Owner agrees to make~.rio<1icprogress payments to Developer for the Park Project Design Costs, Garage Design Costs,l!Ild Additional Improvements Costs. Developer agrees that in the event it is notable to obtain frOI'l1:tb~. County a commitment to make the County Grant, which commitment is r~liOnably satisfactorytopeveloper and to Owner, and such inability to obtain the County's conunitmentpauses Devel<lper to have to terminate the Lease and Development Agreement, then Devel~.s.~ll.ll become obligated to and shall promptly reimburse Owner for the Park Project Design CO$t$l1pd Garage Design Costs incurred by Developer and funded bY<.:)wner through the date oftermlnation, without demand by Owner. At its sole discretion,Devel()pt:t will commence work on the Park Project Design and Garage Design at suc:ll~time aflJ)eveloper deeJJis reasonable and appropriate in order to minimize its potentiallill,~ity forreimbursementof design costs. (el . ... In the eventthe C()Ull.tyagrees timely to make the County Grant, but prior to the Commencement ..of Construction Developer terminates the Ground Lease and the Deve19~ent AgreementftltllIlY reason other than as set forth in Section 2.11, as restated herein, DeveloPel'~1 become obligated to.and shall promptly reimburse Owner for all of the Park Project Des~Costs and Garage Design Costs funded to Developer by Owner through that date, without demalldby Owner. C:\Documents and Settings\cmgrhemt\Loca1 Settings\Temponuy In~i1es\OLK314\First Addendum 2..Q6..Q7 rev2.doc SWM 2.07.07 revision to Draft 1 st Reading 12-05-06 Exhibit "I" Resolution ofDis~utes: To prevent all disputes and litigation, it is agreed by the parties hereto that CONSULTANT shall decide all questions, claims, difficulties and 4isplltes of whatever nature which may arise relative to the technical interpretation of ~. Contract Documents and fulfillment of this Contract as to the character, quality, amoulltlUld"lI.i,pe of any work done and materials furnished, or proposed to be done or furnished untl;er or, bYiirl;:ason of, the Contract Documents and CONSULT ANT's estimates and decisiol1~u'l?onall claimS, <Jl.lestions, difficulties and disputes shall be final and binding to the extel1t provided in SectioniJ7.2. Any claim, question, difficulty or dispute which cannot be rllsolved by mutual agreem~tof CITY and CONTRACTOR shall be submitted to CONStJ1:l'.~J'H in .\>lIiting within tW(lllty-one (21) calendar days. Unless a different period of time is set~ herein, CONSULTANT shall notify CITY and CONTRACTOR in writing of CONSULT~f$ decision within twenty-one (21) calendar days from the date of the submission of the claim, ql1~tion, difficulty or dispute, unless CONSULTANT requires additional timet(l~t?er information?fallow the parties to provide additional information. All nontechnicalwmit1i~trative dispute&shall be determined by the Contract Administrator pursuant to the timeperi()ds1>tQy~ded herein. During the pendency of any dispute and after a determination thereof,CONfRAC'1'(>~CONSULTANT and CITY shall act in good faith to mitigatellllY.potential damages includinglltilization of construction schedule changes and alternate means of cO\lostruction. In the event thedeterminatio~. of a disputcunder this Article is unacceptable to either party hereto, the party objectitt~to thed~i~ation must notify the other party in writing within ten (10) d~~sofife(leipt of the\i\>llitten detertnination. The notice must state the basis of the objection and must beaccompaniec1.hy a statement that any Contract Price adjustment claimed is the e~tirlladjustment to \\il1ich the ()\)j!\lCVng party has reason to believe it is entitled to as a result of the d~ination. Within sixty (60) days after Final Completion of the Work, the parties shall participa.te in mediationJo address all objections to any determinations hereunder and to attempt to preveQt litigation.')'he mediator shall be mutually agreed upon by the parties. Should any objection not ge resolved in mediation, the parties retain all their legal rights and remedies provided under Stattilaw. A party objecting to a determination specifically waives all of its rights provided hereunder, including its rights and remedies under State law, if said party fails to comply in strict accordance with the requirements of this Article. C:\Documents and Settings\cmgrhemt\Local Settings\Temporary IntenJ!f(files\OLK314\First Addendum 2..()6-O7 rev2.doc "'::l ="T1Z 9!oG)-.o ~ -r::: U;.... ... A)-CD m 8 m:t>.. ~ 3 ,,,,,::;: 3~g-=. ;:::;'-:e:aro crec:::::l !:..3o "-- - Q) etzS" ~~~!2 .... 0-(1) a. 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