LTC 170-2010 Clarification Agenda Item 1(B) Renewal Option of Mngmt Agmt for Anchor Shopsm MIAMIBEACH
city of Miami Beach, 17x0 Convention Center l3rive, Miami Beaah, Florida 33139, www.miamibecachfl.gsav
LETTER TC~ ~C~M~S~IC~N
TC7: May r IVlatti,~-lerrera Braver and Members of the City Commission
FRQNI: Jo e M. Gonzalez, City Manage
i7ATE: June $, 2010
SUBJECT: Clarification -Agenda Item 1(B} -Renewal Option of the Management and Leasing
Agreement for the Retail Component of the Anchor Shops
This Letter to Commission. is intended to provide clarification ~on agenda item 1 {B}, and to provide
information relating to specific questions asked by Commissioner Tobin. The information is provided in
bullet format for ease of review.
What does the agenda item approve?
o The agenda item approves the renewal of a property management agreement for the Anchor
Shops retail spaces only. There are currently seven (7} retail spaces at the Anchor Shops. The
property management agreement does not include the management of the garage.
What are the management fees being proposed?
c~ The management fee proposed is 4°!0 of the gross lease revenues, The use of a percentage of
dross lease revenues is an industry standard„ and the industry average fee is from 3°!° to 6°!°.
In addition to the management fee, the RDA budgets for reimbursable expenses by the
property management company for costs associated with maintaining the property. These
reirnbursementslnclude, for example, the waste hauling contracts for the shape, the Fire Alarm
maintenance contract, repairs to the exterior of the retails spaces, etc. Receipts are provided
for reimbursement of these expenses.
Now much is the value of the property management agreement?
The chart below reflects the ~Y X911 g budget for management fees and reimbursable
expenses. As you can note, the 4°!° management fee totals $29,QD~.
09110
Budgeted: $29,DDD Management Fee*
31,dDCl Reimbursable Expenses
~sD,aoa
"$29,[300 = d°I° of $?25,000 grass rental income
Please refer tr column C, #1 on the section of the attached "Mr'arni Beech RedeveF~3pment
Agency, Cify Cenfer Redevelnprxienforea, Proposed ~Y 2009!9 C1 Uperafing Budget' for the
Anchor ShopslF~arking Garage ~battom of page} that reflects the budgeted $~C1,~00.
c By comparison, in (]gltl9, the Management Fee and Reimbursable expenses were budgeted at
$62,942 please refer to column A, #1 an the attached). As noted in the'RDA Agenda Memo,
the actual costs for FY {l$1CJ9 were $50,741. f?lease refer to the chart below for a breakdown.
0$ID9
Budgeted: 529,847
_33.D95
$E2,942
Actual Ex eases: 528,4flQ
22,341
$5D,741
Management Fee"`
Reimbursable Expenses
"w29,~&7 = ~°!° of $7G6,178 gross rental income
Management Fee
Reirnbursabie Expenses
Page 2 of
RDA Agenda Item 9~'B)
What is funded by this agreement?
a The Agreement funds the Property Management Company for the retail shops (via the
Management Fee} to, among other things, collect rents from the retail tenants and deposit into
the City's account (including ensuring timely payment, assessment of late fees, etc.),
maintaining the retail space common areas, supervising contracted services (sanitation., fire
alarms, janitorial), and providing tenant support as may be needed, including advocating on
behalf on the tenants with regards to any issues with the City's Parking, Code Compliance or
other Departments. The Property Management Company may also be reimbursed up to the
amount budgeted for re%mbursab(e expenses relating to the upkeep and maintenance of the
retail space. The reimbursement is far actual costs and receipts are provided.
o The management fee is used to fund a portion of the costs of three
managementfadministrative positions, and a portion of one maintenance position. The fee
does not fund any full time positions.
o This agreement does not fund the operations or management of the Anchor Shops Garage.
What are the costs of operating the Anchor Shops and Parking Garage?
o The section at the bottom of the "Mr'ami Beach Rea'evelopmenf Agency, Cr`ty Cenfer
Redevefapmenf Area, Proposed FY 2D09110 pperating Budget" attached, entitled `+Proposed
FY 2009110 Anchor Shops and Parking Garage (16t" Street Parking Garage] aperatin.q_
Budget" reflects the total revenues and operating expenses for the Anchor Shops and Garage.
The total revenueslexpenses are reflected on line #4. For FY 09110, that amount is
$3,374,589.
^ #1 reflects the total Retail Leasing management fee, which includes both the
percentage of lease (4°Io~ and the reimbursable expenses, and which is the subject of
the agenda item,
^ #2 reflects a "management fee." While this is referred to as a "managementfee," it is in
fact a reimbursement to the General Fund to pay for indirect costs associated with the
City's support of the Anchor Shops and Garage. These costs are determined through
the cost allocation analysis performed by RSM McGladrey July, 2009}.
^ #3 reflects a combined total of $998„388 allocated for two reserves: parking operations
and retail operations reserves (Column C, #3). This is noted as an operating expense
but is in fact a reserve.
^ As Hated, parking operations are budgeted at $1,802,864 for FY 09110 and reflects all
casts associated with providing this direct service. There is no additional lime item for a
management fee relating to the garage.
C[]NCLL151~31~M
A review of the FY 2{}Q9110 RCA Budget, and more specifically the Anchor Shops and Garage Operating
Budget, without a detailed explanation of the difference between the Parking operations expense, Retail
Leasing Management Pee and Management Pee, may certainly cause unintended confusion.
RDA Agenda Item 1(B} addresses specifically only the Detail Leasing Property Management agreement,
which includes a management fee and a maximum amount far reimbursable expenses. The retail leasing
property management fee structure is consistentwith the industry standard and range. We have discussed
the 4°I® fee with both the City's Broker [Lyle Stern} as well as former commissioner Saul Gross. Both
concur that the fee is within the acceptable range, appropriate and competitive.
As always, please feel free to call me should you have any questions or require additional information.
JMGlhmf