2001-24393 RESO
RESOLUTION NO.
2001-24393
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
AUTHORIZING THE CITY MANAGER TO APPROVE THE FIVE-YEAR
RENEWAL OPTION TO THE AGREEMENT WITH VOLUME SERVICES
AMERICA FOR EXCLUSIVE FOOD AND BEVERAGE SERVICES AT THE
MIAMI BEACH CONVENTION CENTER AND THE JACKIE GLEASON
THEATER OF THE PERFORMING ARTS; SAID RENEWAL OPTION TO
BE EXERCISED SUBJECT TO AND CONTINGENT UPON THE
FOLLOWING CONDITIONS: VOLUME SERVICES AMERICA SHALL
PROVIDE THE CITY WITH AN ADDITIONAL $350,000 IN COMMISSION
REVENUE FROM THE MICROSOFT GLOBAL BRIEFING CONFERENCE,
TO BE HELD AT THE MIAMI BEACH CONVENTION CENTER JULY 7-
17,2001; THE COMMISSION RATE IN THE AGREEMENT SHALL BE
INCREASED GENERATING AN ADDITIONAL $3,008,300 IN
COMMISSION REVENUE; VOLUME SERVICES AMERICA SHALL
MAKE A CAPITAL INVESTMENT TO THE MIAMI BEACH
CONVENTION CENTER AND THE JACKIE GLEASON THEATER OF
THE PERFORMING ARTS OF $1,250,000; AND SHALL MAKE A
COMMITMENT TO ENHANCE SERVICES AND INTEREST IN OUR
COMMUNITY THROUGH THE ESTABLISHMENT OF A SCHOLARSHIP
PROGRAM; SAID FIVE-YEAR RENEWAL OPTION COMMENCING ON
MARCH 1,2002, AND ENDING ON FEBRUARY 28, 2007.
WHEREAS, on December 17, 1986, the City entered into an Agreement with Volume
Services America for the preparation and delivery of food and beverage services for the Miami
Beach Convention Center and the Jackie Gleason Theater of the Performing Arts (the Agreement);
and
WHEREAS, the Agreement with Volume Services America has two renewal option terms
of five-years each; and
WHEREAS, the Agreement currently expires in March 1,2002; and
WHEREAS, Volume Services America approached the Administration in January 2001 to
request that the City exercise the first renewal option term ofthe Agreement; and
WHEREAS, the Administration and Volume Services America have negotiated the
following as conditions precedent to the City's exercise of the five-year renewal option term; said
term commencing on March 1,2002, through February 28, 2007:
1
. The City will receive $1,250,000 for such capital investments, as to be determined
by the City and Volume Services America, in the Miami Beach Convention Center
and the Jackie Gleason Theater of the Performing Arts; and
. A new Proposed Commission Rate Schedule to the Agreement will be as follows:
* $0 to $ 4 million 28.5%
* $4 to $ 7 million 30.0%
* $7 to $ 8.5 million 32.0%
* $8.5 to $10 million 33.0%
* $10 million and above 35.0%
The proposed Commission Rate will potentially generate $3,008,300 in additional
Commission Revenue to the City for the period of March 1,2002, through February
28,2007, based on current revenue and sales projection for the facilities over the next
five-years; and
. The City will be assured a minimum commission guarantee of $1,250,000 million
annually, which is in excess of the actual commission realized over the last five-years
by approximately $301,000 per year. The current minimum commission guarantee
is $500,000 annually; and
. A Reserve fund of I .5% of net sales for small wares and equipment replacement to
fund continuous facility reinvestment will be established; and
. An additional commission rate increase of 8% of net sales associated with the
Microsoft Global Briefing Conference to be held at the Miami Beach Convention
Center in July 2001. The current Commission Rate paid by Volume Services
America to the City is 17.5 percent of net sales. The proposed commission rate of
25.5% (8% increase) of sales applies to all food and beverage related to Microsoft
Global Briefing. This is estimated to generate an additional $350,000 in commission
revenue to the City; and
. At the request of the Administration, Volume Services America will establish a
$ I 00,000 scholarship program to allow City of Miami Beach needy minority students
to pursue a career in the field of contract food service and hospitality industry; and
. Menu price changes will require prior approval of the City; and
. The quality of service and food will continue to be of a quality expected by the users
of the facility.
2
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission authorize the City Manager to approve the five-year renewal option to the Agreement
with Volume Services America for exclusive food and beverage services at the Miami Beach
Convention Center and the Jackie Gleason Theater of the Performing Arts; said renewal option to
be exercised subject to and contingent upon the following conditions: Volume Services America
shall provide the City with an additional $350,000 in Commission Revenue from the Microsoft
Global Briefing Conference, to be held at the Miami Beach Convention Center July 7-17, 2001; the
Commission Rate in the Agreement shall be increased generating an additional $3,008,300 in
Commission Revenue; Volume Services America shall make a capital investment to the Miami
Beach Convention Center and the Jackie Gleason Theater of the Performing Arts of$I,250,000; and
shall make a commitment to enhance services and interest in our community through the
establishment of a scholarship program; said five-year renewal option commencing on March I,
2002, and ending on February 28, 2007.
PASSED and ADOPTED this 16th day of May, 2001.
ATTEST:
\;
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- MAYOR
~r~
CITY CLERK
JMG:Mit
T:IAGENDA\200 1 \MA Y1601IREGULARIVOLSERAM.RES
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
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uate
3
VC-:lLUJVIE
SEI~VIC:ES
AIVIER.IC:A
Miami Beach Convention Center
Financial Prooosal (in ODD's)
May 7, 2001
Financial Perfonnance ~ Historical Review
Fiscal Year 1996 !2.2l 1998 1999 2000 Total
Net Sales $3,353.8 $4,814.0 $3,554.6 $5,377.1 $5,349.1 $22,448.6
Conunission $706.8 $849.9 $699.9 $996.4 $992.6 $4,245.6
21.10/0 17.70/0 19.70/0 18.5'% 18.60/0 19.10/0
Financial Perfonnance - Future Projection
Fiscal Year ~ 2002 2003 2004 ~ 2006 Total (2002 - 2006)
Net Sales $8,700.0 $5,512.0 $5,813.6 $6,046.1 $6,288.0 $6,691.3 $30,351.0
Commission (Current Rate) $1,652.5 $1,052.8 $1,110.4 $1,154.8 $1,201.0 $1,278.0 $5,797.0
Commission (Proposed Rate) $2,002.5 $1,593.6 $1,684.1 $1,753.8 $1,826.4 $1,947.4 $8,805.3
Net Gain (proposed Rate) $350.0 $540.8 $573.7 $599.0 $625.4 $669.4 $3,008.3
Blended Conunission Rate 23.0% 28.9%. 29.00/0 29.0%. 29.00/0 29.10/0 29.00/0
Facility Reserve Fund (1.5%) $82.7 $87.2 $90.7 $94.3 $100.4 $455.3
Increase (proposed over Current)
Increase (Above with Fac. Reserve)
21.20/0
51.4%
59.20/0
51.70/0
59.50/0
51.90/0
59.70/0
52.10/0
59.90/0
52.4 0/0
60.20/0
51.90/.
59.70/0
Financial Tenns - Proposed
Capital Investment (projects) $1,250.0
Commission Rate Schedule
$0 - $4 Million 28.50/0
$4 - $7 Million 30.00/0
$7 - $8.5 Million 32.00/0
$8.5 - $10 Million 33.00/0
$10 Million - Above 35.00/0
Minimum Conunission Guarantee $1,250.0
Comparative Overview
Fiscal Year 1996 - 2000 2001 2002 - 2006
Net Sales $22,448.6 $8,700.0 $30,351.0
COlmnission to Facility $4,245.6 $8,805.3
Facility Reserve Fund $455.3
Total Return to Facility $9,260.6
Current Scheduled 2001 Return $1,652.5
New 2001 Income $350.0
Total Income 2001 $2,002.5
Blended Conunission Rate
1996 - 2000
19.10/0
~
23.00/0
2002 - 2006
29.00/0
EXHIBIT A
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EXHIBIT B
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VOLUME SERVICES AMERICA
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May 10,2001
01 HAY 10 P113:34
Mayra Diaz-Buttacavoli
Assistant City Manager
City of Miami Beach
City Hall, 4th Floor
1700 Convention Center Drive
Miami Beach, Florida 33139
'I' ,.
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OFFICE
Dear Mrs. Diaz-Buttacavoli:
With acceptance of our agreement, the City of Miami Beach will partner with the premier contract
foodservice company in the nation, Volume Services America. Since 1987, we have provided
financial, operations and community support that has kept the Miami Beach Convention Center and the
Jackie Gleason Theater on the leading edge offoodservice trends and revenue growth. Recent events
such as Pow Wow, Bank Administration Institute, NMMA Boat Show and IAEM have yielded
positive customer feedback. Additionally, 1999 and 2000 have gamered the highest commission
returns to date to the City of Miami Beach.
Going forward, another five years will produce greater returns to the city as well as renewed facility
investment. Volume Services America will continue to set the industry benchmarks in food quality,
presentation, service and operations management.
Our plan for the continuation of premium food and beverage services is outlined as follows:
o Fixed commission rates for all food and beverage categories, with step-scale rent increases
based on increasing sales tiers, effective March 1, 2002. Step-scale rent increases are presented
as follows:
$0 - $4,000,000
$4,000,000 - $7,000,000
$7,000,000 - $8,500,000
$8,500,000 - $10,000,000
$10,000,000 - above
28.5% rent
30.0% rent
32.0% rent
33.0% rent
35.0% rent
o Reserve fund of 1.5% of sales for small wares and equipment replacements to fund continuous
facility reinvestment.
o Additional commission rate increase of 8.0% of net sales associated with Microsoft Global
Briefing (July 2001).
current agreement between Volume Services America and the City of Miami Beach is
currently 17.5% of net sales, which represents an increase of 7.5% above existing
contract rates
proposed adjusted commission rate of 25.5% of sales applied to all food and beverage
related to Microsoft Global Briefing
Miami Beach Convention Center. 190 I Convention Center Drive. Miami Beach. FL 33139
Telephone: 305-672-0006 . Facsimile: 305-538-4802
o Guaranteed minimum annual rent of$I,250,000.
o Total Capital Investment of $1,250,000 to be spent on improvements to the food service areas
and equipment for the Miami Beach Convention Center and the Jackie Gleason Theatre.
o Scholarship Fund of $100,000 offered to City of Miami Beach resident students pursuing a
career in the field of hospitality foodservice management.
o Volume Services America Corporation will depreciate all capital from date of disbursement
until February 28, 2012.
o Quality of service and food will continue to be of the quality expected by the users of the
Miami Beach Convention Center and the Jackie Gleason Theatre.
Volume Services America's plan for contract renewal will enable the City of Miami Beach to continue
its mutual partnership with the leading contract foodservice company in the industry. Through our
facility experience, customer relationships and compelling financial/ capital offer, we will maximize
the commission returns to the City.
Should you have any further questions, please feel free to contact Michael, George or myself.
Sincerely,
/lf~
C.T. Nice
Senior Vice President, Operations
Miami Beach Convention Center. 1901 Convention Center Drive. Miami Beach, Florida 33139 . (305) 672-0006
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
http:\\ci.miami-beach.fl.us
TO:
FROM:
SUBJECT:
COMMISSION MEMORANDUM NO.
3l!rO{
Mayor Neisen O. Kasdin and
Members ofthe City Commission
Jorge M. Gonzalez \.~
City Manager C}'" 0
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
AUTHORIZING THE CITY MANAGER TO APPROVE THE FIVE-YEAR
RENEWAL OPTION WITH VOLUME SERVICES AMERICA, WHICH
PROVIDES THE CITY WITH AN OPPORTUNITY TO ENHANCE THE
CURRENT AGREEMENT WITH AN ESTABLISHED QUALITY FOOD
SERVICE COMPANY, AN ADDITIONAL $350,000 IN COMMISSION
REVENUE FROM MICROSOFT GLOBAL BRIEFING CONFERENCE, AN
INCREASE IN COMMISSION RATE GENERATING AN ADDITIONAL
$3,008,300 IN COMMISSION REVENUE, A CAPITAL INVESTMENT TO
THE FACILITIES OF $1,250,000, AND A COMMITMENT TO ENHANCE
SERVICES AND INTEREST IN OUR COMMUNITY THROUGH A
SCHOLARSHIP PROGRAM.
DATE: May 16, 2001
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On December 17, 1986, the City of Miami Beach entered into an Agreement with Volume Services
America for the preparation and delivery of food and beverage services for the Miami Beach
Convention Center and the Jackie Gleason Theater of the Performing Arts. This Agreement with
Volume Services America allowed the City to receive twenty-five percent on alcohol and
concessions sales, eighteen percent on restaurant sales and ten percent on catering. As a result, the
blended average of these percentages to the City over the past five-years has been approximately an
eighteen percent return. Additionally, Volume Services America was required to make a capital
investment of $4.5 million dollars towards the outfitting of equipment in the Miami Beach
Convention Center and the Jackie Gleason Theater of the Performing Arts, principally the kitchen
and dining facilities.
Managing upwards of 120 accounts, Volume Services America provides every type of catering, retail
dining, restaurant, club, suite and merchandise service. Volume Services America service teams can
be found at various convention and civic centers, stadiums, arenas, amphitheaters, theme parks and
AGENDA ITEM
R'lL
:f-11I -0 I
DATE
Commission Memorandum
Volume Services America
May 16,2001
Page 2
other entertainment venues throughout North America. The proposed plan for Agreement renewal
will enable the City of Miami Beach to continue its mutual partnership with one of the leading
contract food service companies in the industry. Through Volume Services America's facilities
experience, customer relationships, and renewal proposal the City will maximize its commission
returns and diminish any future disruptions that could be caused by changing the food service
provider.
The Agreement with Volume Services America has two renewal options of five-years each. The
Agreement currently expires in March I, 2002. Volume Services America approached the
Administration in January 2001 to request a five-year renewal to the Agreement. The proposal
presented an opportunity for the City to receive an additional $350,000 in commissions from the
Microsoft Global Briefing Conference this summer. In an effort to take advantage of the additional
commission for this summer, the Administration engaged in negotiations with Volume Services
America.
The City Administration has reviewed the food service commissions received by other convention
facilities and therefore recommends an extension to the current Volume Services America
Agreement as negotiated because of its favorable return to the City in comparison to other facilities
and to the current commission received at the facility. If this renewal is not approved the additional
commission of$350,000 from Microsoft will not be eamed by the City. The City Administration
and Volume Services America have negotiated the following proposal for a five-year option renewal
that would commence March 1,2002 through February 28, 2007: (See Exhibit A).
. The City will receive $1,250,000 for capital investment in the Miami Beach Convention
Center and the Jackie Gleason Theater of the Performing Arts.
. The Proposed Commission Rate Schedule will be as follows:
* $0 to $ 4 million 28.5%
* $4 to $ 7 million 30.0%
* $7 to $ 8.5 million 32.0%
* $8.5 to $10 million 33.0%
* $10 million - and above 35.0%
The proposed commission rate will potentially generate $3,008,300 in additional commission
revenue to the City for the period of March I, 2002 through February 28, 2007. Based on
current revenue and sales projection for these facilities over the next five-years.
. The City will be assured a minimum commission guarantee of $1 ,250,000 million annually,
which is in excess of the actual commission realized over the last five-years by
approximately $301,000 per year. The current minimum commission guarantee is $500,000
annually.
Commission Memorandum
Volume Services America
May 16, 2001
Page 3
. A Reserve fund of 1.5% of net sales for small wares and equipment replacement to fund
continuous facility reinvestment will be established. Net sales is defined as gross sales net
of sales tax.
. An additional commission rate increase of 8% of net sales associated with the Microsoft
Global Briefing Conference in July 2001.
The current commission rate paid by Volume Services America to the City of Miami Beach
is 17.5 percent of net sales. The proposed commission rate of25.5% (8% increase) of sales
applies to all food and beverage related to Microsoft Global Briefing. This is estimated to
generate an additional $350,000 in commission revenue to the City.
. The total rate ofreturn to the City is estimated at 35% annually. This return is computed as
follows:
Blended commission rate
Facility reserve fund
Depreciation
Total rate of return
29.0%
1.5%
4.5%
35.0%
The City conducted a survey of other convention facilities. The blended commission rate
ranged from approximately 19.8% to 29.3%. The current blended commission rate received
by the City is 19%. The total rate of return earned in other facilities ranged from 27.0% to
30.9%. (See Exhibit B).
. At the request of the City Administration; Volume Services America will establish a
$100,000 scholarship program to allow City of Miami Beach minority students to pursue a
career in the field of contract food service.
. Menu price changes will require prior approval of the City.
. The quality of service and food will continue to be of a quality expected by the users of the
facility.
On May 8, 200 I, the Convention Center Advisory Board reviewed the proposed renewal option. The
Board recommended on a six to one vote to approve the renewal option.
In conclusion, the five-year renewal of the Volume Services America Agreement provides the City
with an opportunity to enhance the current Agreement with an established quality food service
company, an additional $350,000 in commission revenue from Microsoft, an increase in commission
rate generating an additional $3,008,300 in commission revenue, a capital investment to the facilities
of $1,250,000, and a commitment to enhance service and interest in our community through a
scholarship program.
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