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HomeMy WebLinkAbout518-2005 RDA Reso" ~ ~. RESOLUTION NO. 518-2005 .•'. A RESOLUTION OF THE CHAIRMAN AND .MEMBERS OF THE BOARD • ~ OF THE MIAMI BEACH REDEVELOPMENT AGENCY{RDA), RATIFYING • ~ ~. ~. - - = '. ~ . , THE ATTACHED TERM SHEET SETTING FORTH THE TERMS AND: CONDITIONS FOR THE CITY'S. PROPOSED°, PURCHASE OF THE ' ~~ :LEASEHOLD IMPROVEMENTS CURRENTLY OWNED BY THE MIAMI • ~C1TY~BALLET; INC., 2200 LIBERTY AVENUE, MIAMI BEACH,. FLORIDA;. INC,L' UDING `.BUT NOT LIMITED TO ~ .THE BUILDING `AND ALL. :. IMPROVEMENTS THEIREIN; FURTHER AUTHORIZING THE EXECUTIVE :. 'DIRECTOR OR HIS DESIGNEE TO NEGOTIATE A' PURCHASE ~ AND ' . ~ SALE~AGREfMENT.WITH THE MIAMI CITY BALLET, INC., BASED UPON - THE APPROVED'TERM SHEET AND SUBJECT TO FINAL RATIFICATION '~ ° BY THE,- CHAIRMAN 'AND MEMBERS.; ,,AUTHORIZING AND - ~ APPROPRIATING AN ADVANCE IN THE AMOUNT OF $550,000 FROM - CITY.CENTER'HISTORIC.CONVENTION VILLAGE REDEVELOPMENT ' ; . ,AREA NQN - AD _ VALOREM FUNDS,. TO COVER THE. MIAMI CITY .BALLET, IND.'S OPERATING EXPENSES .THROUGH OCTOBER 19,- • 2005;:SAID AMOUNT TO :BE.APPLIED AS AN ADVANCE TOWARD THE CITY'S PURCHASE. PRICE FOR THE BUILDING AND IMPROVEMENTS UPON EXECUTION OF A PURCHASE AND,SALEAGREEMENT.WITH • • THE MIAMI CITY BALLET, INC., AND FURTHER AUTHORIZING THE EXECUTIVE DIRECTOR OR HIS. DE3I;GNEE TO COMMENCE .PRELIMINARY NEGOTIATIONS ON ANEW LONG TERM LEASE OF THE Y ~ FACILITY AND ,IMPROVEMENTS BETWEEN' THE CITY AND THE MIAMI .. CITY.BALLET, INC. WHEREAS,, the:Miami City Ballet (The Ballet} began in 1985 and has grown to: maturity. in the City of Miami .Beach, where it has been~located for more than twenty years;- - "and ". WHEREAS,-the Miami City Balle# Studios Building, located at 2200 Liberty Ave, v . is an approximately 63,000 sf building containing. the offices, school and studios of the •Ballet and is-an anchor in the City's Gultu~al~Campus'; and WHEREAS, during..1999; the City. contributed -$2,500,000 towards the construction of the Building and also owns the wand on which the Building was built; and WHEREAS, the,Ballet hascontinually.made the Building available to the City as a polling place for elections as well as an emergency management command center during hurricanes; and • WHEREAS,. since 1998, through its Miami City Ballet Inner-City Outreach Program, the ;Ballet has partnered with several .Miami: Beach ~ Schools, including South Pointe :Elementary, Feinberg-Fisher Elementary and North Beach Elementary, through their Exploring Dance Program, which provides in-school residencies, conducted by the ~S,chool's Outreach'Faculty, fo children with. financial needs; and . ~ WHEREAS,. the Ballet also continues to provide scholarships to attend the Miarn City .Ballet School to talented children with financial .need:; and . t WHEREA$,'snce the Ballet_began performing at the Jackie Gleason Theater in the ~~ Fall of'1995,. the Ballet has donated over twenty-five thousand tickets to their performances ~to Miami Beach students and children'scharities; and ~ ; WHEREAS, the Ballet has been struggling to achieve financial stability in the short- -term and sustainabilifij in the long-term and, of this time,`it is trying desperately to solve the `~ most severe financial crisis in its history; and ' WHEREAS, the Ballet has incurred approximately $2,500,000 of operating debt over ' ~ ~ the lastsix years; of this amount, approximately $1,950,000 was due August 31, 2005, on ". , - , - which the Ballet. has only been able to pay interest this year ;and ` WHEREAS, the City Administration began working with the`Ballet:during the Fall of . 2004 to look forfinancing so it might. refinance its outstanding debt over a more reasonable term; pay. off-.its aged accounts payable;`and"establish a credit line to provide working capital. sufficient to see it~through the lean part of each season; and WHEREAS, the Ballet has indicated that without a solution to this financial,crisis its alternatives would. be to close the Company or seek out a new home-that could provide. '' financial assistance; and . ~ WHEREAS, the~Adm;inistration and representatives from the Miami City Ballet made . a presentation to the Finance Committee at its meeting on'September 12, 2005 outlining . the Ballet's deteriorating financial condition; and ~ , • ~ ~~ _. WHEREAS, the Administration'recommends ratification of the attached Term Sheet ~. setting forth the terms and conditions for the City's proposed purchase of the leasehold =improvements currently owned by the~Miami City Ballet, Inc., 2200 Liberty Avenue, Miami ~. :Beach, Florida. ~ ~ . -. :: NOW; THEREFORE; BE 1T RESOLVED. BY THE CHAIRMAN AND • MEMBERS OF THE. BOARD OF THE MIAMI BEACH REDEVELOPMENT . °~ . ~ :.AGENCY, that the Chairman. and Members hereby ratify the attached Term Sheetsetting forth the terms and conditions for the City's proposed. purchase of the leasehold improvements currently owned by the Miami City Ballet,. Inc., 2200 Liberty Avenue, .Miami Beach, Florida, including but not limited to the Building and all improvements therein; further :authorizing the Executive Director or his designee to negotiate a Purchase and Sale Agreement with the Miami City Ballet, Inc., based upon the approved Term Sheet and subject to final .ratification by the Chairman And Members; authorizing and appropriating an advance in the amount of $550,000 from City Center Historic Convention Village Redevelopment Area non - ad valorem funds, to cover the Miami City .Ballet, Inc.'s operating expenses through October 19, 2005, said amount to be applied as an advance toward the City's purchase price for the Building and improvements upon execution of a Purchase and Sale Agreement with the Miami City Ballet, lnc., and further authorizing the Executive Director or his designee to commence..preliminary negotiations on anew long term lease of the facility and improvements between the City and the Miami City Ballet,. Inc. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED THIS o?~3 ~'" DAY OF ~-P,p~m ~'c ~ , 2005 -~. y N `'r ~~ y / J= ~0 r i ~ r rSE RETAR ~'- ter, ~ ~ ~, ;~ ~~- r, ,,~ s CHAIR AN APPROVED AS TO FORM &-LANGUAGE 8~ FOR' EXECUT{ON '~/ I i 4 - c Reds Gene~e un V' ~~ REDEVELOPMENT AGENCY COMMISSION ITEM SUMMARY Condensed Title: A Resolution of the Chairman and Members of the Board of the Miami Beach Redevelopment Agency (RDA), approving the attached Term Sheet setting forth the terms and conditions for the City's proposed purchase of the leasehold improvements currently owned by the Miami City Ballet, Inc. (Ballet); further authorizing the Executive Director or his designee to negotiate a Purchase and Sale Agreement with the Ballet, subject to final approval of the Chairman and Members of the Board of the RDA; authorizing and a ro riati^ an advance in the amount of $550,000 from the RDA - CCHCV Non-Ad Valorem Funds. Issue: Shall the RDA, approve the attached Term Sheet setting forth the terms and conditions for the proposed purchase of the leasehold improvements currently owned by the Ballet; and further authorize the Executive Director or his designee. to negotiate a Purchase and Sale Agreement with the Ballet; and authorize and appropriate an advance in the amount of $550,000 from RDA-CCCHCV Non-Ad Valorem Funds to be applied toward the purchase price for the facility upon execution of a Purchase and Sale Agreement, and furtherauthorize the commencement of preliminary ne otiations on a Ion term lease of the facili Item Summary/Recommendation: The Administration believes that by taking these steps to consolidate the City's ownership of the Ballet 'I Studio Building, and to provide the funding for imminent major capital replacements, we will provide a path to financial sustainability for the Ballet and gain an extremely valuable asset for the City. The Administration recommends the RDA Board a rove the ro osed Resolution. Adviso Board Recommendation: The Finance and City Wide Projects Committee directed the Administration to return to the full City Commission at its September 21, 2005 meeting with the following items: 1. Term Sheet outlining the proposed terms of the purchase and sale agreement, including a description of proposed financial covenants to be included in the proposed lease agreement; 2. Letter from each major lender stating that the payments due on loans as of August 31, had been deferred or were held in forbearance; 3. .Funding plan for future capital maintenance and replacements; and 4. .Resolution of the Ballet's Governing Board agreeing to the preliminary terms of the agreement as outlined in the Term Sheet. rmanciai mrormaLion: Source of Funds: ~~/%®~- Finance Dept. ~- ..~ Amount ~; ~ Account - - . .: .. , : Approved 1 $550,000 City Center Historic Convention Villa eNon - Ad Valorem Funds `, 2 4. 000 City Clerk's Office Legislative Tracking: ~ Patnaa D. Walker -~ ~~ DATE !^Z11 i I I CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.miamibeachfl.gov REDEVELOPMENT AGENCY MEMORANDUM To: Chairman and Members of the Board Date: September 21, 2005 Miami Beach Redevelopment Agency From: Jorge M. Gonzalez r-r`x Executive Director V Subject: A RESOLUTION OF E CHAIRMAN AND MEMBERS OF THE BOARD OF THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA), RATIFYING THE ATTACHED TERM SHEET . SETTING FORTH THE TERMS AND. CONDITIONS FOR THE CITY'S PROPOSED PURCHASE OF THE LEASEHOLD IMPROVEMENTS CURRENTLY OWNED BY THE MIAMI CITY BALLET, INC., 2200 LIBERTY AVENUE, MIAMI BEACH, FLORIDA, INCLUDING BUT NOT LIMITED TO THE BUILDING AND ALL IMPROVEMENTS THEREIN; FURTHER AUTHORIZING THE EXECUTIVE DIRECTOR OR HIS DESIGNEE TO NEGOTIATE A PURCHASE AND SALE AGREEMENT WITH THE MIAMI CITY BALLET, INC., BASED UPON THE APPROVED TERM SHEET AND SUBJECT TO FINAL RATIFICATION BY THE CHAIRMAN AND MEMBERS; AUTHORIZING AND APPROPRIATING AN ADVANCE IN THE AMOUNT OF $550,000 FROM CITY CENTER HISTORIC CONVENTION VILLAGE REDEVELOPMENT AREA NON - AD VALOREM FUNDS, TO COVER THE MIAMI CITY BALLET, INC.'S OPERATING EXPENSES THROUGH OCTOBER 19, 2005, SAID AMOUNT TO BE APPLIED AS AN ADVANCE TOWARD THE CITY'S PURCHASE PRICE FOR THE BUILDING AND IMPROVEMENTS UPON EXECUTION OF A PURCHASE AND SALE AGREEMENT WITH THE MIAMI CITY BALLET, INC., AND FURTHER AUTHORIZING THE. EXECUTNE DIRECTOR OR HIS DESIGNEE TO COMMENCE PRELIMINARY NEGOTIATIONS ON A NEW LONG TERM LEASE OF THE FACILITY AND IMPROVEMENTS BETWEEN THE CITY AND THE MIAMI CITY BALLET, INC. Background - . The Miami City Ballet began in 1985 and has grown to maturity in the City of Miami Beach where it has been located for more than twenty years. In 1986, its first pertormance season, the Company had a budget of $1,000,000, a troupe of 19 dancers and a handful of staff. Today in its twentieth season, the Company has grown to a budget of over $10,250,000, the troupe now includes 46 dancers, the School has 400 students and there are 70 staff for the Company and School. The Miami City Ballet Studios building, 2200 Liberty Ave, is an approximately 63,000 sf ~ building containing the offices, school and studios of the Ballet and is an anchor in the City's Cultural Campus. It was completed at the end of 1999 at a cost of approximately $7;000,000. During 1999, the City contributed $2,500,000 towards the construction of the building and also owns the land on which the Building was built.. The Ballet has also added approximately $1,000,000 of interior finishes and improvements which includes two studios that when combined by opening, an air wall between them can create a f performance venue with seating for approximately 225. The Ballet has continually made II the building available to the City as a polling place for elections as well as an emergency management command center during hurricanes. They have also donated or rented this facility ,when available, to other arts groups, such as: New World Symphony, the Miami ~ Light Project and the South Beach Gay Men's Chorus, as well as permitted television, .film, and music video production companies., and photographers doing fashion shoots to use the facility. Since 1998, through its Miami. City Ballet .Inner-,City Outreach Program, the Ballet has .partnered with several Miami Beach Schools, including South Pointe Elementary, - Feinberg-Fisher Elementary and North Beach Elementary, through their Exploring. Dance Program, which provides in-school .residencies, conducted. 'by .the School's Outreach . faculty, to children with financial needs... The~Ballet also continues to provide scholarships to attend the Miatni City l3allet School to talented children with financial need. This year those scholarships have afforded forty children, of whom six are from Miami Beach., the .opportunity for this enriching experience. Since the Ballet began performing at the Jackie. Gleason Theater in the .fall of 1995 the Ballet has .donated over ,twenty-five thousand . _ ~ tickets to their performances to Miami Beach students and children's charities. .Additionally, the Ballet has produced education=outreach performances for students from ` Miami-Dade .public schools; Ballets for Young People programming for children and families and since 1994 has performed or participated in the City's annual Invitation to -~ ,- ~ , the Arts." In February2006, they will produce'Aurora's Weddingfirom Sleeping Beauty at the Jackie Gleason Theater. The.City~Managermet with the Balletduring the fall of 2004 and discussed the possibility of~providing a grant to them to be used to enhance the Studio Theater space within their facility so that it could be used as amore theatrical performance venue. The Ballet moved forward with this concept and engaged Proscenium Architecture + Interiors, Inc. to assist °, ~ in .the planning of the conversion of the existing studios. 1 and 2 into a more patron - ` ' ~ comfortable, flexible performance space and estimate the construction cost. They estimate that. the fuH build. out of this space-will cost approximately $1,400,000: The Administration is recommending than 'the City make an additional investment of approzirrtately $500;000 for capital improvements to the Studio Theater to enable the - : Ballet to begin performances in this area during early 2006. The. Ballet has been. s#ruggling to achieve financial stability in the short-term and. sustainability in the long-term. However, at this time they are trying desperately to solve ~, ~ the most severe financial crisis in their history: ~ . They have incurred approximately $2;5a0,000.of operating debt over the last six years. Of this amount approximately$1,950,000 was due August 31, 2005 onwhich the Ballet has ' on(y been able to pay interest this year. This is comprised of: a $950,000 term loan made .by a group of banks, a fully drawn lino of credit of $500,0OO,:both at prime.+1/2%; and ' - $500,000 bridge loan at prime rate, co-signed by two :of the Board members. Tfie remaining balance represents aged accounts. payable- and noninterest bearing loans #rom board members. The largest piece of this-debt is funded by a group of local banks- . ~ that does not want fo continue to lend to~ the Ballet. The Banks wanted the outstanding amount~paid over 5 years; however, the Ballet -has no way to,fund the repayment over ~, ~. that term. The Ballet's cash balances'have deteriorated and they are very concerned that they will not be able to cover payroll and other minimal operating expenses through the most#h of September: .The Ballet cites a. reduction in contributions from donors as a ,. .. ; ., ~ ~. - ; result of a weaker economy post 200.1, .reductions or eliminations of government support. ; ' to the.arts, as well as more intense competition, most notably from the Miami Performing, °. Arts Center, for contributions from a finite pool of donors, as the major reasons for their ; ' ' ~ decreasing revenues. . . =. Approximate{y three months into the previous"fiscal year (May 2004 - April 2005) it ~ ~. ti'ecame apparent to the Ballet that they~would -not be able to~achieve their contributed" . ` '~ income goal' and. they immediately reduced their operating budget. At that time' they •~ ~~ s, "be ieved that they could survive this crisis by restructuring their debt with a"mortgage,. payable over 20-30 years, coupled with providing additional fundraising strength, drastic . ' . reducing their budget-and seeking an annual subsidy from the City. . • °. -. ,° ~ CommissionerSiman Cruz"asked the City Administration to: begin working with the-Ballet during the-fall of 2004 tolook for financing so they might refinance their outstanding debt over a mare reasonable term, pay off their aged accounts payable and establish a.credit `"~ ~. line to provide working capfalsufficient to see them.through the lean-part of each season. ' -The City facilitated a meeting for the Ballet with .the City's financial advisor and bond ~" ,. counsel to see if a conduit financing was a viable option. During the meeting the facts $ that were presented by the Ballet quickly led to the conclusion That this was not a viable option and the likelihood of obtaining financing from any lending institution looked less . ;. than. hopeful, , .. .. During January 2005, the Ballet made a presentation to the Finance: and Citywide . a - : - Projects Committee (the Finance Committee} requesting" that the City consent to the . Ballet obtaining a lea"sehold mortgage to achieve this financing. The Committee.was in favor ofgiving consent to a leasehold mortgage subject to the terms and conditions of the actual mortgage. Although the Ballet continued to pursue this option with a number of - `different financial institutions, the Ballet wasunable to obtain a mortgage based on the ~ - ' covenants of the City's ground lease which require that in a default the'Citywould tie in .:first position to be paid and additionally the tease" restricts the ability of a lender to use the building for any purpose other than non-profit, .preferably .cultural. _ . Based onourreview of the Ballet's financial position; additional fnancing would give them `only momentary relief and ;would not solve the structural financial issues that they have. " ~ ~ 'Th'e. Ballet has indicated that without a•solution Ito this financial crisis their alternatives.. ' .would be to close the Company or seek out a new home that could provide financial ` assistance. Finance-and Citywide Projects Committee Meeting September 12 2005 ., . ~: , . - Tt~e "Administration and representatives from the.:Miami City Ballet including Edward - Vlllella, Founding. Artistic ,Director and CEO, Pamela Gardiner, Executive Director, Mike • .Eidson Bsq., President of the Miami City Ballet Board of Trustees, Rosalind Richter, Vice . President and member of Board of Trustees, and Mark Rosenblum, General Manager - ~ - . made a.presentation to.the Fin'ance~Committee at their meeting on September 12, 2005 - outlining the "Ballet's deteriorating financial condition. The Administration proposes! a .. . ~. , r ,. .. financial package that would help the Ballet become financially solvent and continue in -its ` cultural partnership. with the Gity as: foNows; - ~ ~1. -the City would acquire the~:8altet's interest in the Miami CitySallet Studio ' - Building-for $4.5 M and lease it back to the Ballet, at a rent of $1 a year; with erms similar'to the ground lease with the .New World. Symphony, and take over responsibility for the capital. maintenance of the facility, and- - 2'- #he:City would make'an additional investment of approximately $500;000 .:for capital improvements to the Studio Theater~to enable the Balle# to begin performances in this area during early 2006. (See Exhibit E.) Under this proposal, the City would buy the Ballet's interest in the" Miami City Ballet Studio Building for $4:5 M,_and lease it back to the, Ballet, at a rent of $1, a -year; with terms . similar'to the ground lease with the New World Symphony. The City:would.also take over. responsibility for the capital maintenance ofthe facility which would include the building and itssystems, such as: air.conditioning, plumbing, electrical, roofing etc. !n this regard, Brad,Judd, Director of Praper#y Management, visited the .Ballet Studios Building and prepared an assessment of the.condition of the facility and its systems which reflects an estimated $740,000 of capital maintenance and replacements that are necessary averthe next two years which include: l) $500,OOOfor a new roof; 2) $175,000 for replacement of five`rooftop air'conditioning-units; and 3) $65,000 for pressure-cleaning, waterproofing and painting the" exterior of the building. (See Exhibit F.) _. . - Further,`the Administration recommended that the City make an additional investment of ` ~ =approximately $540,000 for capital improvements o the Studio Theater to enable the ` -. . ~ Ballet to begin performances in this area during early 2006. ,The City also would provide input and review of-the Ballet's annual budget and would maintain financial oversight ' through the appointrnent:of both the City Manager and the City's Chief Financial Officer - asvoting members. of the,Ballet's Governing Board. . ~ This arnountwould aNow.the Ballet to payoff fheir.existing debt; loans and aged accounts. . a,payable which'totalapproximately $2.5 million and~it would provide them with a working capital fund of approximately. $2 million to gel them. through the financiallyiean months at the beginning of each season for payroll, licenses, costumes, music:and repetiteurs for- ` the "upcoming season. The Ballet would return these funds to their working capital fund ' ' during the year as revenue's were generated and contributions are received. In addition to -debt service savings, the Ballet would na:longer need, to fund building maintenance, . .repairs.,-and. replacement of building equipment, which would .also .generate significant _ , _ savings for them over the upcoming years:, (See Exhibits A-1' and A-2.) ~~ ~` .Additionally, the Ballet ...proposed to generate incremental revenues, through. additional program. performances in the enhanced Studio Theater, the Colony Theater and the Byron.-Carlyle Theater which are discussed. in more detail in the next paragraph. They ' . indicated that they were also pursuing the development of the "Cafa Ballet", in the lobby e ° ° . of the t3allet Studios Building, with Bom Dia, one of the.largest coffee 'producers in, Brazil. l3om Dia wants to develop the Cafe as the North Ameriican launch location for their limited . edition coffees. The-terms of this partnership are yet to be negotiated however; Bom Dia . has initially indicated that they would fund the capital,improvement costs for the Cafo. The :Ballet hoped to~be able to serve beer and wine along with .light meals, snacks and desserts and provide a place for park and library visitors to enjoy refreshments, along with its own students, patrons and~vsitors. . a . , : ~ As previously mentioned; the Ballet would develop and perform two additional series which will be exclusive~to the City at this ime. First, a Contemporary Dance Series where ` audiences would be able fo enjoy high quality contemporary dance in the intimate sefting - that the enhanced Studio Theater would provide.. The Ballet explained their plan' to develop-and produce two Contemporary programs for their upcoming 2006 (Sep 2005 May 200ti) season. (See Exhibit B.) The programs would expand to include a Young People's Program in their 2007 season (Sep 2006 -May 2007) designed especially for ` young audiences, and they would expand their pertormances to include. the newly renovated Colony Theater:along with the: Byron-Carlyle Theater. (See Exhibit C.)1'hese programs would be performed by dancers' in their existing Company with choreography _ ,not currently in the Ballet's repertoire..To achieve Phis goal, the Ballet 'has brought back David Palmer- and .Yanis PikieriS, former Miami-City Ballet principal dancers, and Founding Artistic Directors of Maximum Dance Company.. These gentlemen have ` ~ extensile experience as dancers,. choreographers and arts administrators and would work ' ~ ,.. with the Company full-time, to develop and implement the Contemporary Dance Series this season and would addahe,Young People's Program in 2006-2007. {See Exhibits'D-4~ . ~. and D-2.) .. _ . ~,. . ;. ,The Company has committed. to perform as a resident company at~the new Miami Performing Arts Center (MPAC) andahe City is engaged in discussions with the Cirque du , Soled to reconfigure the Jackie Gleason. Theater of the Performing Arts. for their year- ~ound.performances. ~ It:is expected that this ver~fure wiU.continue to be profitable.for the Ballet; however,'the Ballet has agreed only to perform at a financially.self-sustaining level: Additionally,-the Ballet offered to acknowledge at their performances at the MPAC that #hey,were "Presented by the:City of Miami Beach". ' ' ~ , The Finance Committee engaged,in a'lengthy discussion ofthe proposal and the severity, of he Ballet's financial co~di#ion..The Committee made~the following recommendations: ~~' ,. ~: ~ 1- Commissioners Saul Gross. and .Richard. Steinberg recommended. that in - addition to the $4,500,000; that the City fund the necessary- $740,000 of capital. . .,.,.:maintenance and replacements recommended by Mr. Judd, however, it was , -~ - requested•that the, Ballet pay for future capital maintenance and replacements . `and:provide annualfunding into a reserve for thatpurpose; . • ' 2- -The Committee did not agree to fund the $500,000 far capital improvements to - the Studio Theater at this time and suggested that the Ballet migh# pursue this projectat a later date; _ , • 3- Commissioner Steinberg requested that the Administration work with the Ballet to outline financial covenants to incorporate into the agreement that would help. insurethat the Ballet would operate within its available financial resources in the future acid not incur debt to meet its operating requirements; 4-:Commissioner Cruzrequested that the Ballet-provide evidence from their . ~ lenders that the payments due on loans as of August 31 had been deferred or were field in forbearance while the terms of the City's acquisition of the Ballet : Studios Building were negotiated; and ~- In regard to the urgency of the Baileys current cash flow needs the Committee suggested 'that the ful! Commission. could approve an advance ~at their September 21, 2005 meeting, that would beapplied-toward the City's purchase price.for the facility upon execution of a ,purchase and. sale agreement. This . 'advance would supplement operating funds for the Ballet untilthe specific terms of the purchase and sale agreement could be negotiated. • • The Committee directed the Administration to return to the full City Commission at its September 21, 2005 meeting with the following items: • 1- A Term Sheet outlining the proposed terms of the purchase. and. sale agreement for the acquisition of the Ballet's interest in the building including a description.. of proposed financial covenants to"be included in the proposed `lease agreement (See Exhibit G); • 2- A letter from each major lender stating. that the payments due on .loans as of . ~ August S1, had been deferred or were held in forbearance while the terms of the City's acquisition of the~Ballet Studios building were negotiated (See-Exhibit H-H1');' 3- A funding plan for future capital maintenance and replacements (See Exhibit I); and .. 4- A resolution of the~Ballet's Governing Board agreeing to the preliminary terms of • the agreement as outlined in the Term Sheet. (The Governing Board of the Ballet is scheduled to meet and consider the sale of the building to the City on Monday Sep. 19, 2005:) - ~. Subsequent Discussions with the Ballet • During,discussions:fohowing the Finance Committee meetings the Ballet stated that they do not foresee the financial capacity in the near future to provide funding for.future capital maintenance and. replacements as well as provide the funding to produce the programs (Contemporary and Young People's Series) that the City has requested: • ' Additionally, 'the Ballet has indicated that-the. proposed investment of $500,000 by the City in enhancements to the Studio Theater would have permitted the Ballet to generate ; additional revenues by performing in their Studio Theater at an estimated savings of $20;000 in 1=Y2006 and.$53;200 in ~Y2407 ($10,000 per program for three performances _~ and $.13,300 per program for four performances) and would-have provided an opportunity . ' ~ ' #o generate some additional revenues "from the proposed; Cafe Ballet. Mr. Villella has indicated that, in the absence of funding. from the City for the Studio Theater. he can not . ~ afford and therefore can not commit to producing the two. new series that~the-City has requested. Further, Mr. Villeila further indicated that in the absence of enhancements to the Studio Theater should the"Ballet not be able to perform at.the Performing Arts Center bocause they can not operate at a financially self-sustaining level, there was no facility on" Miami Beach large enough to stage the Company's regular active repertory of programs. :. The Adminis#ration's concurs with the Ballet's concern regarding their financial capacity at tfiis'fime io develop and produce these additional .programs and continue to meet their existing obligations, As such, the Administration recommends that: 1 -the City of Miami'. Beach acquire the Ballet's interest in the Miami City Ballet. Studio Building far $4,5 M and lease it back to the Ballet, at a rent of $1 a year, "" ~ ~ with terms similar to.the ground lease with the New World Symphony; 2°-that the City provide, $740,000 to fund imminent major capital replacements which cansistof; roof replacement - $500,040; five rooftop air conditioning units - $175;000, and pressure-cleaning, waterproofing, and painting of the building .exterior - $65;000;. . . ~ ~ ` 3 -that the City.engage VFA to formally assess the casts of lifecycle;maintenance " . for the Ballet building and determine a consistent method of allocating building ~. capital maintenance and replacement costs at that time; and " ., 4-.that the City's. requirement to develop and .produce the Contemporary and - Young People's Programs and the Ballet's request to enhance the Studio ` ~ .Theater be.deferred at this time. ' W .. ~ .e believe_by taking these steps. to consolidate the City's ownership of the Ballet Studio .. - .Building; and to provide the ,funding for imminent. major capital replacements, we will - provide a path. to`financial sustainability #or'the Ballet and gain an extremely valuable asset `far. the City. JMG: PDVIJ .. TERM SHEET Background and. Purpose: The.Miami City Ballet, Inc. ("Ballet") is'-the lessee under a Ground Lease with the City of Miami Beach as lessor of 'City-owned land located at 2200 Liberty Avenue. In 1999., the ~ City contributed $2,500,000 towards the °cost of constructing the building for the Ballet; (hereinafter. the ' ~ building and all improvements thereon .are referred to as ; ' ~. the. "Building"). The Building was completed in-1999. The . Ballet, has encountered financial .problems recently and is . . iR need of additional funding: Efforts to obtain institutional financing have been unsuccessful. The transactions addressed' in this Term Sheet are intended to provide'the " ~ Ballet with additional funds and to allow the: City to acquire title to the Building. - Proposed"Transactions: The City proposes to purchase the Building- on the following terms: (a) Purchase Price: $4.5 million to 'be applied as follows: ~ (i) $2,500,000 to pay off the existing debts ' ~ - ~ of the Ballet (including $950,000 term loan, $500,000 fully drawn line _of credit, $500,000 bridge loan plus $550,000 in aged accounts :payable and non-interest ' ' bearing loans from ,Ballet's, Board of Directors), (ii) $2,000.;000 to be used by .Ballet to fund aworking - capital reserve account. for operating expenses ' ~ during financially.lean months, and (iii) $740,000 to fund imminent major capital replacements! repairs - ~ which. consist :of: roof replacement - $500,000; five- . rooftop air conditioning units - $175,000, and . . pressure-cleaning, waterproofing; and painting of the - ~ building exterior - $65,000. ,. . (b) Title. City is to acquire good and marketable title to . 'the. Building. , - (c) Closing bate -est. October 19, 2005. ~" ~ ~ _ (d) Inspection Period: City has the right to inspect the Building prior to Closing to determine whether it is - acceptable. City's review may. include :title review, survey matters, physical. inspections and all other, matters of concern to City. If City is not satisfied, ,City has the option to terminate the Contract. ' • e (e) No Brokers. City and Ballet represent that there are no real estate brokers entitled to a commission in connection with the transaction. a {f) Lease Amendment.. Following closing, -the City will proceed to negotiate an amendment to the. existing Ground Lease with the Ballet: (i) include the Property ~`as -part of the leased ° premises; (ii) provide for rent of one dollar: per year; . ' , (iii) provide for a lease term that exfends through (to be.deterrnined) - "Lease Expiration Date";:., _ (iv) -provide a mechanism for City .Manager and .: City's. Chief Financial Officer to be members of . ballet's: Board. and to have input and review of Ballet's annual budget and to :have financial .° oversight (g) Financial Covenants. These three terms will be - included in-the PROPOSED AMENDMENT TO THE , Ground Lease: - " ~ (i) Working Capital Reserve - The Working ' Capital Reserve Fund will.. be ,established with .L • ~ an original amount of $2,:000,..000.. Any funds. _ ,. ~ with drawn from the Working Capital Reserve Fund .shall be returned to the Fund within the .. ~. ~ fiscalyear borrowed, such that at the beginning. • - - of each fiscal year the Fund balance has been - returned to the original amount. Interest earned on the Fund. during any year may be withdrawn at any time during the year that.. the Fund' exceeds the original. Fund Balance and _ used for any legal Board approved purpose. (ii) Capital Maintenance and Replacement Fund -The Ballet shall establish -and contribute - ~ annually to a Fund for the• repair and. /or replacement of building equipment, systems and components. The annual contribution shall be calcalated by dividing the. escalated . ~ - cost of the equipment, system or comporienYto ' ; i . Y ~ ~ • t~liarnl Clt :~Sallat . Exhibit A1~ " ,~ y i ; Schedule of Proposed .Budgetary Savings, ~ ~ I~~ `~ .; ~. ~' ~ :~ ~lncluded in the Revised ~petating Budget for FY 2006.. Bo9rd Approved 4pereting Expenses, (fY 2006} $10,318,884 ~H L ~ ~ ~ ~ . ~_. . - ~ irN+lo .I~.iri!~ . ~. .nrin a~fiuu, , " `. SAYlNOS: , . - - l~'landai ' 23,750 . ` -. Term. i:oen Interest ($950,000) - '" ,9 ~r+•an! A/Y . _ Bridge LoanEntereat{3500,000) ~ 12,5W ft„npngy Line of,Credit Interest (3500,000) ._ ~ 12,500 ' `- Interest on Addltlanal f3orrowing ~ ,. 75,000 Fees on Additional 8orrowmg ~ 40,000 - i. , e - ". Fecllfty Aepalr $ Maintenance - ~ ~ ~ 20,000. .. • ° Property Insurance 10;000... - .. ~.. . AbI11tI0NAL EXPrEN5E5: ~ ~ . f, , !. • , ~. MCB Canternpdrery $drles (Net) . 1'S,OOD y ~, ` ~ : RevlSed OperBling Expanses (~Y 2006) ~ ~IiQ;140,134 .-,~ ~ ~Operatin0 Income (FY 2006) ~ ,5310,262,358- ~ . : ~ • - -: .. AddltionJ~l tnterest tncome ~ 25,000. ,. ~ . ~ . . Revised:Qperatrng tracome• (~Y 20D6) ~ 310.287.359 " . "~ - - • REVISED NET t~lCOMi: ~ 5147,224 .. , . , ~ - ,. . _.:- ' _ ° I . _ . ,. _ - i - - ., •. - .; , , MIAMI'C777 BA6lEt OPH£~Iw 6 JVAN J:. RO(A CENTER YRD9,L~dBRiY AYE~I;NE Mi/IASI B£rCH, r10R1'DA 33 r39 ~ PHONE.~3951 9Y9•7000 FaR,(305'J .4P9.70C9 C•MAIL admlrrdn®mlamlclty0oliel.ofg ..,. A for• q, t1rYfTlrlrfht tLE;li11h11ON.ANG fiNApCIAL'IN1QIp,~TIGV,2.4Y (~f. Qr1A1NL•} ,*c;al If•! Ui'v }IOr •~1 , pgiua{Y 51-4~LIt (rr,~r,,.n,G - ~ ~ ~ ` . ~ TOIt•r YLi n,rn ..,;•~ryY r,fn.in !n[~;Inf( kFpi4TInTiUt+ C`G•i NUi iM, i1> SuCDT:~taniiT i, ~r~~lnv~, Dt rkl :•sa*G UL'r•r~fin YT Irl '.T ~~~~ ~ -~ ~ ~~ [@Q 6T ' UI J SETL,:£G9501^5 ~- 13~`lyti tl I ~ I VJti 1 W 90 ~ Zi ST~c•ie0~ E~: ~ . • ~ .. , 9 M1A-MI CITY BALLET ~ F Ex~ibit`A2 . . (BOARD APPROVED). .(REVISED) OPERATING OPERATING BUDGET , " BUDGET. :BUDGET ADJUSTMI~NTS . FY..Z006 .. ,;FY 2006 FY 200~r BtGINNING CASH`BALANCE ~ $0 .. $p - t - REVENUE z _ ~ . • , Earned Revenue. Subscriptions ~ Singles .. .. ~ $2,840,000 $2,840;000 $0 N~tcracker 945,000 ~ .945,000. $0 ,Contemporary Series ~ ~ 0• 54,OOU $54;000 ;Young People`s Series p - ~ 0 $0. Boutique % P&H ' 100,000 ~ 100,000 $0 Tour ~ 968;316 `~ 968,31'6 $0. . Schoot ~ 760,500 760,500 $0 . ' • Investment 75,000 ~ 100,000 $25,000 Other 55.,000, 55,000 $0 Total Earned Revenue ~ $5;743,816 - $5,822,815 $79,000 Contributed`Rsvenue ~ , " Directors $425,000. $425,000 $0, ~. individuals ~ . ~ 2,300,000 2,375,000 $75;000 . - Corporations . ~ 250,000 ~ 250,000 $0 . Foundations , ~. 625,000'. 625,000 $0 Government 636,325 $36;325 ~ $0 - Events -Net 400,000 _ 400,000 ' $0 - _ .Total Contributed Revenue ~ $4,636,325 $4,711,325 $75,000 • -Sub-Total Revenue $10,380,141 $10,534,141 ~a154,000 `, L+?ss; .Contingency 0 ~ 117,783 $117,783 TotaC Revenue ~ $10,380,141 $10,4'16,358 $36,217 EXPENSE • . program Services Company & Artistic $2,531,386 $2,611,386 $80 000 ,.New Prpduction ~ ' 198,500 232,500 , $34 000 ~ Production ~ 2,696,239 ~ 2,701,239 , $5 000 Tour ~ 535,302 535,302 , $0 . ~ .School . 961,254 961,254 $0 Total Program Services .. $6,922,681 $7,041,681 $119,000 Supporting Services- Marketing Development ° $1,302;630 '.` $1,326,130 ~ $23,500 .General & Administrative ~ ~ 842,082 1,066;919 842,082 99$,419 $0 ($68 500) interest 184,572 60,822 ~ , ($123 .750) Total Supporting Services $3,396,203 • $3,227,453 , . ($468,750) Total Expense , ~ . $10,348,884 ~ 310,269,134 ($49,750) .. - ' 'Net Income (Loss) _~ $61,257 $147,224 .' .. $65,967 ,. Mlarni Clty Ba!let. ~ ~ Exhibit B .Proposed eudg~t for Cor~temporary'Serles M lAM f ._ :. ~ FY 2x06 . . EJ~m d Revenge" 2 Pro remsl3 Pertorma-TCes EBCh 554.000 ~ ~ ~,~ ~ ~ ~ , e ( A ) --- ' !911AA nlLII.A __ ~nrl:nt )ait;It ., ~ CgJ~trlbuted"Revenue ~ 75,Oo0 ~ F7~,rd~. . Iracn+nriegn!!Ir- A~r•l~u,~rd Drtna ' -, . EXPENSES: r:oalpa~rT - - ° prcprem Dlre~t~rs , " ~ 80,000 Attlstic, (Llcensing Ballets, Repetltaurs Fees, etc..,} ~ 34,000 • ' L ,. ..: Produ+rtlon ~. .5,000 . ' ~ , Marheting ~ ~ ~ ~ 2t3,000 • . BoJi OfllcelHouse Management - 3,500 :`. G Bt~A ~ ,: " ~ 1.500, . fYot'tncorna .{l,oas) " ,. .. , _ .. ,. - ~;. .. f31v,0001 . ~ - ~.. ." MfAMJ CITY AAClE7 'O-HFiIA E JUAH •J;. aOCA CEN1fA ' YY00 IIBEIITY AvENVF M~AMF sE/ICN, TLORIGn )3134. i,HONE: {:3051 9YO.P000 FAX 5303) oYV•i0 ' 0R E•MAIf, edmin.llnibmlYmlcltr0elltl"or g ' .. ~. Mf1 01 1ML C,{/ICIAI AtL15'1RSiON. nl/t1-rlNArl (.~kl Irt~GJMAiMN RM , }?•?A;rt W.Q ~!^ti 1F1: pl YlilpN :~i (.aNyq MLC ~)~hVl^r} i~Y Cnfl~Uf i' . ' +4U. frCC,0V0 ~)S Tl}t w,in N InC S~iF*[ at G~STt GT Pn D4RS NO: ~e~rlY i1,DC~::i!M[+~f., AYPRn~r, c7t Yii QiwM!~rp~ii ~fN 4 `1'N( Sl+fl - 'C0~ '; 8T 1' '~[JN S5l ~f-: o~l?:FE ~ 1:91"1tiH h 4 1 :~ T iJH J LJ 9i~J a. i SL~~c-BBD%6E . I i Miami City Ballet Exhibit C Proposed budget for the Contemporary 8 Young People's Series ~ I~~ FY 2007 ~ I ~ 11 BAll~l Earned Revenue: .-•---- nruF rult.u 3 Contemporary Programs d. ~ Young People's Program $100,000 '"""~ ""("` ffonAr) larsaenonQlh~ ContNbutad Revenue 147,500 ~~i,M~A D,*mr Can~mny dcpExsES: Program Directors 8 Beneflts ?o0,00tl Artistic (Licensing 8allete,`Repetiieurs Fees, etc...) 80,000 Productlort 20,000 MerkaNng 35,000 box pFt7ce-t•louse Management ~&A Net Income ~Loaa) 7,500 5, 000 SO M1AMt clrr BA~lE7 O-HFLtA 1. JOAN 1=. RpCA tENrER 4900 tIIfERtr AVENUC m(AMI BEACH. FI,pR10A 33i]v -MONE~ (305) OY9.7000 FAX (305) 940.7004 E~~AIE~ ~Omin•tlnpm~ymlcltrballtt.pr4 A S7~• Vt fY( Q111[IAl 1!G1~'It.iION AND TINAnCr~L lir F^J 1MA~I~i+ K. t.V +,I ~)f.IAINFO (1~M INS I?I V~S~(~N ~~1 !rNtiII NiY Sr'IVIJj: py C~IIINI. ~Oli t~lC 004 ~)5 ~1Sr vi*e •I tt+i :Ut[ I: G~Sn4r OM DbiS T.P~ A~~i~ cnDOYSi r{~•r w6nYpvn nr ki !q Mwl h.l~ll f!N 9Y tN~. :i•i, r~~ FT/.'f 0-J CGJ.I.C~I gCC1CF. r. 171'Wp 1 1 1'~ TLIM 11.1 Qf1: l T ~ CGiRi /4Ai C!~ MIA~M! CITY BALLET ~ Exhibit D 1 . ~ ~ . ~ ~ ~ (ACTUAL RESULTS) ' (REVISED) (PROPOSED) - OPERATING OPERATING- OPERATING • BUDGET BUDGET - BUDGET . FY 20115 FY 2006 FY 2007 ' :,,BEGINNING CASH BALANCE $0 $0 $147,224 REVENUE° Earned i2evenue' _ :.Subscriptions & Singles - $2,646,184 ~ $2,840,000 $3,055;000 ' Nutcracker 919,123. 945,000 1,026,750 . . >, Contemporary Series 0 54,000. 75,000 Young people's Series ~ 0 0 ~ 25;000 Boutique i P&H 90,862 900,000 426,750 Tour ,, • ~ 1,.1..36,411 968,316 1,200,000 ' School 715,060 760,500 760,500 Investment 42;115 900,000 ~ 150,000 - Other 125,640. 55,000 77,500 Total Earned Revenue SS,675,395 $5,822,816 56,496,500. - .Contributed Revenue . Directors $411,992:. `$425,000 $500,000 Individuals ~ 2,471,855 2,375,000 2,625,000 Corporations - - _ 267;1.31 ~ 250,000 - 350,000 Foundations 826,662 625,000 725,000 .Government ~ 613,153 636,325' 636,325 . Events -Net 281,$05. 400,000 600,000 Total. Contributed .Revenue ~ 4,872,398 x4,711,325 $5,43ti,325 • Sub-Total Revenue $10,547,793 ~ $1:0,534,-141. $11,932,825 • Less: Contingency 917,783. 1$5,908 Total Revenue $10,547,.783 $10,41.6,356 $11,796;917 -EXPENSE Program Services' Company & Artistic $2,416,988 $2,ti11,386 $3,215,567 `New Production • '~ " 394,125 232,500 330;000 Productlon 2,646,854 ~ 2,694,739 3,117,915 ,. Tour ~ 774,383 535,302 6ti0,302 . .. School ~ ~ •993,469. 961,254 ~ 1,010,335 Total Progranm Services $7,222,820 $7,035,181 $8,334,119 Supporting-Services Marketing $1,325,938 $'1,926,130 ~ $9,544 865. °Development: ~ 876,005 842,082 , • 1,023,462 GeneratBAdministrative " 1.,099,044 9.;004,999 • 9,033 378 Interest ~ ' 103,985 - 60,822 , 0 ~ 1 ~ ' Total Supporting Services -X3,324,973: $3,233,953 . $3,598,705 Total Expense $10,547,793 510,269,134 $11,932,825 i Net Income (Loss] $0 $147,224 $11,31G ! ' , ~ Mlaml Clty Batlet FY 2006 Revised Operating Budget ~ FY 2007 Proposed Operating Budget ))' Assumptions FISCAL YEAR 2DQi3 I. I 46 Dancers 137.5 Rehearsal a Performance Weeks Exhibit D2 MIAMI CITY BAtlfl :!>*un n Irr- irlilnl )mhTe 1•YorraGci 1m.rnarroartdY- Arr4rigrrrl Dense !:am~an~ 2 Contemporary Series at MCB Building (3 petiarmances In each series !may add shows} (ESTIMATE: 1,440 seats at 537.50/tickei = $54,1)00} All Meln Stage Performances at the Jackie Gleason Theater No Cast of Uving Increases for Dancers 8 Staff FISCAL YEAR 2607 -~ ~.. - 51 Dancers / 4f .5 Rehearsal ~ Performance Weeks 3 Contemporary Series -- 2 at MCt3 Building l 1 at Colony Theater (4 performances in each series} (ESTIMATE: 2,000 seats at $37.50ltfcket = $75,040) 1 Younp People's Program at Colony T'tteater (4 performances} (ESTIMATE: 1,000 seats et SZ5,40JifCket a $25,000) Aq Main Stage PEUfartnences at the MPAC Prograrn 1 (Orchestra} Ticket Income: 15% Increase: MPAC / 556 increase: BCPA 8. KC (Increased Salee/Price) Cast of Living Increases for Dancers ~ Staff MIAMI CITY Or~.~LEr O-HEtI>+ A lunr+ 1s. ROCn CENTER Y4vD uBERty wENVE MIAMI DEnCN, rtORIDn 37139 PHONE: (J051 OY9•T000 fAA (;051 oR9.10oQ E•M~II: admin.Nnpm+a++11UtTbaUet.o-9 ~ CMr 61 1Mr (rf rl(~il i(Gliff AllGN LNp .'ihpr+(Gl INIOI~nhON MAY FF pF1n IMr,~ ,NjN 7N[ Doti' 61bV nl I+yN SI'M{{I iCRvI C(i b+ CnlUflr+ ~~+I~ ~b`E+ tlo0 ~~; ~),Y •'I~Nir+ If,t i'~A11 -.f 013rrnt~pn 9CF5 eot ,M~1r irrOV¢,t n+L ,+I, s.vr,yv~, u~ r(~o+..Ml nDAlivN Dr rU[ :~r.Tt bCaA OT l • ftl.+ CG./ ! C.+ C+CAt'C ~ 1711F{Cr 1 I T'i T 1.M T I.I 4q ~ i T C[~7/GA!r;A Exhibit F ._..~ `~~' To: From: THE CITY OF MIAMI BEACH PROPERTY MANAGEMENT DIVISION 1245 MICHIGAN AVENUE MIAMI BEACH, FLORIDA 33139 (305) 673-7630 fax (305) 673-7963 Patricia Walker Chief Financial Officer Brad A. Judd 1ZPA, FMA, CGC Director, Property Management Subject: Preliminary Status of the Miami City Ballet Building September 9, 2005 As you and the City Manager requested, Property Management performed a. preliminary inspection yesterday of the Miami Ciiy Ballet Building to provide information on the existing condition of the facility. In addition to HVAC systems, plumbing systems, and electrical systems, other items such as energy management systems inspections and a preliminary roof survey inspection were also performed, We also looked at existing maintenance contracts and service agreements to better understand how the facility has been maintained in the past. The following are the findings: Electrical and Fire Alarm 5ysteims . The Electrical system in this building is overall in very good working condition. The Switchgear and Electrical Panels are manufactured by Siemens and all are in very good working condition. All lighting fixtures, exit signs and emergency lighting were also found in good working condition with the exception of some minor ballast or lamp replacements. Also the Simplex Fire Alarm system was just. certified in August 2005.. Although this inspection was basically a visual inspection all panels and the switchgear were checked for any heating problems and none were present. In conclusion I do not anticipate any major problems with the EIeetricat System except for general maintenance requirements Roof Fora relatively young roof, the waterproofing membrane presents a blistering condition that is severe and extensive. You can find blisters that are 3-4 feet wide by 4-6 feet long and they are located throughout the roof area. This condition allows the roof membrane to continue to perform until the blisters get punctured, which is not an uncommon occurrence on roofs that have equipment mounted on the surface. Maintenance personal would walk through the roof to get to the equipment and step on the blisters causing a rupture on the membrane. You can find blisters under the walk-pads installed around most of the roof mounted equipment. The other area of concern is that with the presence of such large blisters, the roofing membrane is not acting as an integral assembly. The membrane has separated from the substrate and the possibility of a wind uplift failure is increased. The areas where the blisters exist are weaker than the rest of the roof and might fail to resist the wind uplift force of a storm, causing a catastrophic failure due to a roof blow off. Even though this roof might still be under warranty, the warranty will not cover the blisters. I have attached a copy of a quick roof audit survey we had performed by Tremco yesterday afternoon that provides more detail on these findings. A costestimate of $500,000'has been provided for the replacement of the roof and should be considered necessary in the next couple of years. HVAC and Enerev Management Systems •There are three RTU's {roof top units) on the maiaroof, two split air conditioning units, and assorted exhaust fans. All outdoor air conditioning units appear functional. All air conditioning units on the roof have extensive corrosion problems on the condenser coils. One of the RTU's has a section on ..fins missing and oil stains. around the missing fins .section, indicative of a previous refrigerant leak :repair. Because the units were installed without special corrosion protective coatings, That would be typical in our specifications-far roof mounted equipment in a saltair environment, it is safe to estimate that all unitswill-have to be replaced withinthe next two years, with the exception of the air Handling unit. All internal HVAC components were found to be operational and in good condition. The estimate fore the replacement of .all five units on the roof of the Miami City Ballet is $l 75,000.00. This includes equipment cost, crane, labor, drawings and miscellaneous contingencies. 'I'he:energy management system is:s Trane Tracer Summit system with graphics. All components appear to be on line. `T'here was one undetermined alarm showing at the time. Plumbing Sysfems .. ~ ~ . All plumbing systems were found in good operational condition. Water pressure was found to be low on the third floor of the. building. This issue could be .resolved with adjustments of the backflow prevention'system orthe installation of a domestic water pump to provide additional water pressure. to the.upperfloors. . General Conditions The building. is in need of pressure cleaning,- waterproofing, and paint. The building concrete eyebrows have some minor cracking that allows-water to fall to the sidewalks below. A reasonable estimate for all'of this work should be approximately $65,000 and should be completed in the next two years. - . . All interior components of fhe building were found to be in very good and maintained condition including windows:and interior and exterior doors,- .Conclusion 'The building is a wonderful structure with suburb hurricane and structural protection elements. ~ , ` ~ While the stafl^at the building readily. admits that the building has had a serious lack of maintenance - the building it has stood up very well by itself The contracts that are in-place were developed to -. basically provide the ability to have someone to call-in~the event of a system failure rather than ` comprehensive routine or preventative. maintenance service agreements. With the exception of the items mentioned in this report that should be seriously considered for replacement in the next two . " ~ years,~the building is a very good property. We have also obtained a complete set of blueprints of the building for our records: ` I hope thishelps, you and the City Manager in the understanding of the facility's current conditions. If you have any "questions, please do not hesitate to-call me at #7630.. ` BAJ ~ ' ., - Genecat Cartditions ~_ . . , - Cily Of Miami $each Miami City Ballet. Roof Name Main Roof ~ Year Installed 2000 Square Feet 35,000 Roof Rating 'Poor Inspection `date; . 9It3121)05 Leakage ~/ - ~ ~ Inspector' Ricardo Moncada" - • • 'Coat Tar t'itch BUR membrane with gravel finish • - The roof present and extensive and severe condition of blistering. Even • ' " ~ though most of the blisters have not been punctured yet,. the wind uplift .. ~ resistance of the system is compromised through this condition. - .: .. Concrete Deck 9.5" lso board fully adhered ~ " . , 912" Flbert~oard fully adhered 3-4.plies of,fiberglass adhered in coal tar pitch . ;Flood coat and grave! ~ ' - • - - • • ~ "~, ~ -Extensive blistering -Open~ftashing laps ' -Cracks on the parapet walls -Deficient caulking seal around roof mounted windows. ` - _. ' ~~ 'Same repairs have been done in the past to the roofs and to the windows Not Available `,~• - + • . :.Even though the roof is performing at an acceptable level, the possibilities of a prema#ure failure are-high. 'If will either fail tram open blisters allowing water into the system, or a-b[ow off during a storm. ,. ' The prababiiity of this roof system lasting as bng as it was expected are - _ minimum. The reason the building does not teak everywhere is because not all blisters have been punctured yet and you have a concrete stab. The replacement time wiq be dictated by the risk you are willing to take. ,• Seal open laps at fiashings • " Waterproof parapet walls . Main f2oof 9/8/2005 . ' - .Roof ;Photos ,' .. . City Of Nilaml Beach :Miami City flatlet _ _,. ' `Overview. The blisters that are present on .. ~~ ts'''~." - ' . . = the'roof sur#ace are not very-.high in, ~}``~~ „~ .._ ._ . ... ~ _ .:. dimension, but they are wide and long. `"` '~"""- ~ ~ ~~ UnforEunately, that:makes it difficult to ` . •` avoid.. stepping on them. __ - -.'d There are blisters under the walk pads . ' ' around the roof•mounted equipment. . There are: some flashing laps that are ~ - ' ` ,' ~ open. The laps do not have a reinforcement strip.. . . ' '.' '~ . ' The caulking repair on'the windows was ~ : • - done without removing the deteriorated _ - ~ ""'_ , , _. ., .. ' .caulking first. ~, . . : _. , ,: - ~ .. . _ ~. - .. . - .. _ _ ~ _ . a ~ '~ Main ttaof . . . . _ ~. 919J2005 , Jn , Roof Photos .City Of Miami Beach Miamf City Ballet v PEtch pans ahd penetrations are " ~ .: ...{~' . ~-- ~r':~w-„:: .'~~'~. deteriorated. The mastic used in this pitch' ;. ' ~~ ~ ~ ~ ,~ ?% Y• ~ `~_'' pan is ngid and;is splitting. '^ • ~;:-r *;~: ~ '' '`~= F ~R+ - '~"r ~f~"~ r ~f .~ .~+ '.Pl~ •.t This comerflashing lap_by one of the ~ ~;~: ~ ~ ~ . '`~" ~ . windows is open. There is no >.~c = ~~ ~'~~ reinforcement on the flashing. lap. _ ~~ '`°' `~ a~~~~ ' ~. ~ ~~~e' ~ ti , ,There are debris on the roof that~when accumulated can block the drain. "Y' t.~ s a` ~. Thls flashing iap was repaired by applying '~°'~~ "~ a ;bead of mastic over if. The repair should' _ t ~ ~ ,have included a reinforcing membrane, ' One can also see a-crack on the parapet waU: • ~~ .~. 4 05• .. ~1... .. - ..o w i .~~ t r _ ,~_- ~ . ' Main Roof 9t9/2405 Summa of 8uildln Ins action Re ort Condition Estimate Timeframe .: ~Eiectrical and l=ire Alarm Systems Very Good Roof ~ ~ Poor $500,000 2 years • . Blistered membrane HVAC and Eneray Management Systems Poor $175,000 2 years 5 rooftop unRts -corrosion on condenser, . . Plumbing Systems Good . Genera!' Conditions - Exterior ~ ~ l=air $65,000 2 years ' Pressure cleaning; waterproofing and • Painfing . 'Interior Very Good . 'Well -maintained condition • ~ Conclusion • The building is a wonderful structure with suburb hurricane and structural protection elements, Whale the staff at the building readily admits that the building has had a serious lack of maintenance the building it has stood up very well by itself. The contracts, that are in-place • were-developed to basically provide- the ability to have someone to call fn the event of a -system failure ..rather than comprehensive routine or preventative maintenance .'service agreements. With the exception of the items mentioned in this report that should be seriously considered,:for eplacement in the, next two years, he building is a very good property. • ~ ~~ `.. ,. . 'Exhibit ~G . . TERM SHEET ~; Back round.. and Pur ose: The Miami City Ballet, Inc. ("Ballet") ~is the lessee under a - • ~ . ' ~ Ground tease. with the City of Miami Beach as lessor of ~. City-owned land located. at 2200 Liberty,Avenue. In 1999, . the City contributed' $2,500,000 towards the cost of - constructing the building for the .Ballet, (hereinafter the - ~ building and all improvements thereon are referred to as : the "Building"). The Building was completed. in 1999. The Ballet has :encountered financial problems recently and is . - • - in need of additional funding. Efforts to obtain institutional. .. financing have been unsuccessful. The• transactions addressed in this. Term Sheet are intended to provide the • • . - Balle# with additional funds. and to allow the City to acquire . title to the Building... . Proposed Transactions:. The City proposes #o purchase the Building on the . ' `following terms: • (a) Purchase Price. $4.5 million to be applied as follows: (i) $2,500,000 to pay off the existing debts A of the Ballet (including $950,000 term loan, $500,000 .~ - ~ fully drawn line of credit, $500,000 .bridge loan plus ' $550,000 in aged accounts payable and non-interest • bearing. loans from Ballet's Board of Directors), (ii) . ' ~ . $2,000,000 to be used by Ballet to fund a working capital ,reserve account for operating. expenses during financially lean months,, and (iii) $740,000 to • fund imminent major capital replacements/ repairs which consist. of: roof replacement - $500,000; five rooftop .air conditioning. units - '$1.75,000, 'and - - pressure-cleaning, waterproofing, and painting of the . building' exterior - $65,000: - {ki) "Title. City is to acquire good and maYketable title to . the Building. • (c) -Closing Date -est. October 19; 2005. - `x ~ (d) Ins ection Period. City has the. right to inspect the • • Building prior to Closing to determine whether it is " acceptable. City's review may .include title review, survey matters, physical inspections and all other ` " ~ ~ matters of concern to -City. If City is not satisfied, I ' ~ City has the option to terminate .the Contract. • .: _ ~ .": ~: (e) No Brokers. City and Ballet represent that there are " ' ~ - no real estate brokers entitled to a commission in connection with the .'transaction. ` (f): Lease Amendment. Following closing, the City wilt proceed to negotiate an amendment to the existing ' Ground Lease.with the-Ballet: - . ` - (i) ' include the Property as .part. of the. leased .premises; - .. . - (ii) provide for rentof one dollar.per year; _ ' ..., " .~ (iii) provide fora Jease term that extends through. '. (to be determined) - "Lease Expiration Date"; . ' (iv) provide a mechanism for City Manager and ' City's Chief finan`ciaf Officer to be members of ' Ballet's Board and to have input and review of ' -. Ballet's annual budget and to. have financial . - ~ . ~ oversight . ' (g) 'Financial Covenants: These. three terms' will be " included in tle. PROPOSED AMENDMENT. TO THE " Ground. Lease:. (i) Working .Capital .Reserve - The Working Capital Reserve Fund will be established with - an original amount of $2,000,000. Any funds ' ~ with drawn from the Working Capital Reserve . ~ fund shall be returned to the .Fund within the . fiscal year borrowed, such. that at the beginning . of each fiscaf year the Fund balance has been returned to the original amount. Interest . , earned on the Fund during any year .may be withdrawn at any time. during the year .that the Fund exceeds the original Fund. Balance an_d. used for any legal .Board approved purpose. - (ii) Capital Maintenance and Replacement Fund - ~ -The Ballef shall establish and contribute annually to a Fund for the repair .and /or replacement of building equipment, systems - _ and components. The annual contribution shall be calculated .by dividing the escalated cost of the equipment, system or component to j .. ':. .. .. R - 5Et'-i4-zoa~:°W~0 io:24. ahl NTBF ccR~lr cABtss Fax Nu. su~5~arr~s • Nnnhen-'11ti+.rt K~utk ~ -Exhibit H 3v; Bifitnar- wuy C~u•ul ~iahlr•~ t'1++rida~ )ir is u ~1art~exz~'I~~st .. ,. ~ ~ , S~pictnbcr 4; 2t1~3 - • , ~Mr. Lcwvis S. Eidson, President ' • Baard oFt7ircctors :viiami C1ty Haliet, lnc. • . 2200 Lihetty Avetsue - ' Miestii B~ac}t„ Fiorida 3 31..3.4, ~ • - Iier 5500,Ot)0lyn~ oi't:redle • Wt: are.plcas';:d to advise.you that Northern Trust Bank of i~loritla, N.A..has epprovwd tltc • • shatt~tram ran¢wal of tht S5UU,000 linC ateTedit which matured oti August 31, Zt)03. , Tht: new maturity date wilt be ivovembrr 30, 30US and atl at?t¢r tct'tns and .condttians ` a •tcntan the sane WC will be contacting,you in oriier to. asratt~e the signit~~ of the . teitcw;l! documents. ` Should you have ,anyquestiotis, please do not hesitate to cohtact rote at (305y 579-7"118. • S%nccrely. ' • ~ _ ~~- c~t'sna Ccndc ' Vice President ~ . ' ~ ~ ~ ~' lJpnhun l'rna LLan- ..1 Rh:rt. ~~. n ., r r•hulty o4n.d wn.d,arr +.i N~nhcrn T+o„ CArtx~r,dwn. l'hi.vgn Meu,GCr Fnlf: F.p,~Iilpor,n~; !.ender Q .~ ..., r f ~ VCS uG ~, 200 9PL.' Old . b4595L£50.~6 < 1313 Jll I O I kltJ IW bi? :0T 500ZiDTi50 " • - . - •. . . ,. . ~'~ ":.'. .. iiarii::: ti~AC1-IU~"ll'A, Scp~ctnbet 9, 20U5 . ~ ~ ' Niirhael BidsQn, Presideat ~ . - :Board of Directors. .. Miami Gity Ballet , . 'C/o Colson Hicks Eidson , _ • , 255 Aragon Avenue, 2"d Floor. - °~. Coral Gahles, Flotida.3? ! 34 . Re:: Outstanding Loan Facilities: (I) Lottn evidenced by Rcnewai Protnisso;y - Note From Miami City Ba{let, Inc. ("MC$"~ to favtar o~'Wachovia Bank, National Association {then "Hank"}, dated as. of August 22, 200 ! , in the ` original principal amount of 5500,000.00; as modified by Modification of - ~ Renewal Pcomissc+ry Noce, by and between .MCB and the i3atlk, dt+ted ss . ~ of lone 30; 2002 and by those cettaut letters dated September 8, 2003 end ~ :~ September 2T, 2004 ("Facility One"); {z) Loan e:~•ideneed by Consolidated " Renewal Prom,issvey Note, dated as vfAugus112, 20D 1 from MCB' in ' frivor of Bank, in the otgixtal principal $movttt.a f S 1.,600,000, as tnadified . , : by Modiflcatiotr of Consolidated lZenewal Promissory Note, by-.and " F between MCB and the Sank, dated as of Dcrrcmbe- Z7, 200z,`Second. .~ ' . ~ • Modification of Consolidated Renewal I'rottlissory Note, by artd between _ MCB artd the BanJc, uate;d as of June 26, 20V3, and !'hind Modification' of , " Consolidated Renewal.Promissory Note: lyy and between MCl3 and the Bank,.. dated t39 oFMart:h 31, 2005 {"Facility Twa") " Dear Mr.Iridsart; The outstanding priucipal balance udder F•~cihry Qne is currently ' ~ $500,000. The entire vutstatlding principal baJattce at~d a}Ltlrtt-ued interest under. ' F4cility One aze due and payable at this time: . . The ourstiutduzg principal balance undex Facility "Two.is currently .5950,000. The entire outstanding pt7ttcipal balance an4 aEl accrued interest under. ' e Fticility'Iwo are due and payablE at Ibis tune, " , This is to advise that it is presently the intention of the Ba~Jc to exirnd tiie - maturity date for the Facilities to November 30, 2005; provided, i~owever tl3*: . $B(11C'S agreement tv extend t$e maturity date far the f=acilities to Novctnber 3R, ' 20115 is coeditianed vn the satisfaction of the following prerot;ditions: (i) receipt by the Bank of the consent of the participant lehdet5 in~the Facilities to the. £~A ~L"ON dtrS@SLrS[~6 F 131'13 A.Lr~ Lwtitw .. bz:@i SOQ~ibiiE© . - Trust Dank-af rlorlda ("NTB") to rile exkensian of that certain Debt Subordination - Agreement by and betweciz the Bartfc and NTB, dated as of Mardt 3 1.1005, ' together with joinders thereto ftvtrt Ronald 1r, Essetman and Lewis S. Eidson, Jc. and (i!i) the agreements of MCB that , by.no )stet than October 15, 2tJ05, MCD shall present to the Bank, t;or consideration by the Bank and the participant '. lenders in the Facilities; a reah9tia and ctediblc plan for the payrnettt of thr Facilities; (iv) a!} the tetras and condirinns dtttitig this period wit! remain the same except those mvdifted expressly by this lettrc _ 1'n the wvettt t(ie forgoittg preconditions tv the cxtctaior- oCthe maturity <, date for the Facilities shaft -.riot b¢ satisfied, then the Bank reser,res its.' rights anti ' ~. remedies setfortl~ in the loan docutne~nts to piotect the interest of the Bunk and the.participatitsglenders in the Facilities, . ~ .. Very~uvly'yours .. - WACHDWIA SANK, National Assoctatioa ~ ~-u=~~ . ~ ~ Name: Jo3eph F. Fortunato . Titfe: Seater Vice Prestderit ~. Cc: John Safranek, Director of Finance = lVlerk Rosetybhtnt, General Manager ,,/ . . .. b~9tJ 5~L'[]N v,SF3SL~56~5 E 13~'1d$ .~,il7 ltJyJW bZ:OT SOaZ~bY/6B -: ~ r ~ ,Funding Plan for Future Caa tat Maintenalnce and Rea :` alacements . . Exhibit i . ' ~ Long Term.Capital Replacement Costs ~ ~ ~ _ ~ ' Useful _Average Annual Inflation Rate Cosh Life r5. ~ 3°/u 4%. 5% ' Roof $ , ,. 500,000 20 $25;750 $26,000 $26;250 HVAG `175,000 15 12,017 12,133 12,250 Pressure,Cleaning, Painting + Water 65;000 7 9,564 9',657 9,750 ' . 47,331 47,790 48;250 • Annual Maintenance Contracts for: $35,000 - $50,000 .. 35,000 42,500 50,000 A/C • ' Annual Contribution $ 82,331 90,29,0 $ 98,250 - ~levators = .. ~ . Min. Max. .. ~ Fire Alarms Sprinklers ' .. . Useful. CapftatReplacements25+y~ Life rs 'Electrical $ Eire Alarm . 25 yrs . ` . 'Plumbing 25 yrs . . .Elevators 25-30 yrs._