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HomeMy WebLinkAbout2005-26017 ResoRESOLUTION NO. 2005-26017 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH , FLORIDA, 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., 2200 LIBERTY AVENUE, MIAMI BEACH, FLORIDA INCLUDING BUT NOT LIMITED TO THE BUILDING AND ALL IMPROVEMENTS THEREIN; FURTHER AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO NEGOTIATE A PURCHASE AND SALE AGREEMENT WITH THE MIAMI CITY BALLET, INC., SUBJECT TO FINAL APPROVAL OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH , FLORIDA; AND FURTHER AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO COMMENCE PRELIMINARY NEGOTIATIONS ON A LONG TERM LEASE OF THE BUILDING TO 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 Ballet Studios Building, located at 2200 Liberty Ave, is an approximately 63,000 sf building containing the offices, schooland studios of the Ballet and is an anchor in the City's Cultural Campus ; and WHEREAS, 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; and WHEREAS, the Ballet has continually 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 School's Outreach Faculty, to children with financial needs; and WHEREAS, the Ballet also continues to provide scholarships to attend the Miami City Ballet School to talented children with financial need; and WHEREAS, 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; and WHEREAS, the Ballet has been struggling to achieve financial stability in the short- term and sustainability in the Tong -term and, at this time, itis 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 last six 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 for financing 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 Administration 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 IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby approve 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 City Manager or his designee to negotiate a Purchase and Sale Agreement with the Miami City Ballet, Inc., subject to final approval of the Mayor and City Commission of the City of Miami Beach, Florida; and further authorizing the City Manager or his designee to commence preliminary negotiations on a long term lease of the Building to the Miami City Ballet, Inc. This resolution shall take effect immediately upon its adoption. PASSED AND ADOPTED THIS o!1s71 DAY OF rp9'4is,111,1 , 2005 AEST: CITY CLERKPOU-CICA- TO UAGE FOR EXECUTION 9_ IR .a5 Date CITY OF MIAMI BEACH COMMISSION ITEM SUMMARY Condensed Title: A Resolution Of The Mayor and City Commission of the City of Miami Beach, Florida, 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., 2200 Liberty Avenue, Miami Beach, FI; further authorizing the City Manager or his designee to negotiate a Purchase and Sale Agreement with the Miami City Ballet, Inc., subject to final approval of the Mayor and City Commission of the City of Miami Beach, Florida and further authorizing the City Manager or his designee to commence preliminary negotiations. Issue: Shall the City Commission approve 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, FI; and further authorize the City Manager or his designee to negotiate a Purchase and Sale Agreement with the Miami City Ballet, Inc., subject to final approval of the Mayor and City Commission of the City of Miami Beach , Florida and further authorize the City Manager or his designee to commence preliminary negotiations. Item Summary/Recommendation: The Administration believes that 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 for the Ballet and gain an extremely valuable asset for the City. The Administration recommends the City Commission approve the proposed Resolution. Advisory Board Recommendation: The Finance and Citywide 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. Financial Information: Source of Funds: Finance Dept. 1 :`2 3 4 I Tota l Amount Account City Clerk's Office Legislative Tracking: Patricia D. Walker Approved Sign -Offs: Department Director I Assistant City Manager I City Manager 9 GENDA ITEM R1N4 (�(/// DATE CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139 www.miamibeachfl.gov To: From: COMMISSION MEMORANDUM Mayor David Dermer and Members of the City Commission Jorge M. Gonzalez City Manager Subject: A RESOLUTION OHE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH , FLORIDA, 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., 2200 LIBERTY AVENUE, MIAMI BEACH, FLORIDA INCLUDING BUT NOT LIMITED TO THE BUILDING AND ALL IMPROVEMENTS THEREIN; FURTHER AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO NEGOTIATE A PURCHASE AND SALE AGREEMENT WITH THE MIAMI CITY BALLET, INC., SUBJECT TO FINAL APPROVAL OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH , FLORIDA; AND FURTHER AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO COMMENCE PRELIMINARY NEGOTIATIONS ON A LONG TERM LEASE OF THE BUILDING TO THE MIAMI CITY BALLET, INC. Date: September 21, 2005 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 performance 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 performance venue with seating for approximately 225. The Ballet has continually made 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 Miami City Ballet 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 February 2006, they will produce Aurora's Wedding from Sleeping Beauty at the Jackie Gleason Theater. The City Manager met with the Ballet during 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 a more 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 full build out of this space will cost approximately $1,400,000. The Administration is recommending that the City make an additional investment of approximately $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 struggling to achieve financial stability in the short-term and sustainability in the Tong -term. However, at this time they are trying desperately to solve the most severe financial crisis in their history. They have incurred approximately $2,500,000 of operating debt over the last six 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. This is comprised of: a $950,000 term loan made by a group of banks, a fully drawn line of credit of $500,000, both at prime +1/2%; and $500,000 bridge loan at prime rate, co-signed by two of the Board members. The remaining balance represents aged accounts payable and non-interest bearing loans from board members. The largest piece of this debt is funded by a group of local banks that does not want to continue toiend 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 month of September. The Ballet cites a reduction in contributions from donors as a result of a weaker economy post 2001, 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, Approximately three months into the previous fiscal year (May 2004 — April 2005) it became 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 believed 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. Commissioner Simon Cruz asked the City Administration to begin working with the Ballet during the fall of 2004 to look for financing so they might refinance their outstanding debt over a more reasonable term, pay off their aged accounts payable and establish a credit line to provide working capital sufficient 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 Tess than hopeful. During January 2005, the Ballet made a presentation to the Finance and Citywide Projects Committee (the Finance Committee) requesting that the City consent to the Ballet obtaining a leasehold mortgage to achieve this financing. The Committee was in favor of giving 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 was unable to obtain a mortgage based on the covenants of the City's ground lease which require that in a default the City would be in first position to be paid and additionally the lease restricts the ability of a lender to use the building for any purpose other than non-profit, preferably cultural. Based on our review of the Ballet's financial position, additional financing would give them only momentary relief and would not solve the structural financial issues that they have. The Ballet has indicated that without a solution to 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 Proiects Committee Meeting September 12, 2005 The Administration and representatives from the Miami City Ballet including Edward Villella, Founding Artistic Director and CEO, Pamela Gardiner, Executive Director, Mike Eidson Esq., 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 Finance Committee at their meeting on September 12, 2005 outlining the Ballet's deteriorating financial condition. The Administration proposed a financial package that would help the Ballet become financially solvent and continue in its cultural partnership with the City as follows: 1 - the City would acquire 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, and take over responsibility for the capital maintenance of the facility, and 2 — the City would make an additional investment of approximately $500,000 for capital improvements to the Studio Theater to enable the Ballet 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 of the facility which would include the building and its systems, such as: air conditioning, plumbing, electrical, roofing etc. In this regard, Brad Judd, Director of Property 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 over the next two years which include: 1) $500,000 for 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 $500,000 for capital improvements to 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 appointment of both the City Manager and the City's Chief Financial Officer as voting members of the Ballet's Governing Board. This amount would allow the Ballet to pay off their existing debt, loans and aged accounts payable which total approximately $2.5 million and it would provide them with a working capital fund of approximately $2 million to get them through the financially lean 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 revenues were generated and contributions are received. In addition to debt service savings, the Ballet would no 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 "Ca16 Ballet", in the lobby of the Ballet Studios Building, with Bom Dia, one of the largest coffee producers in Brazil. Bom Dia wants to develop the Cafe as the North American 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 Cafe. 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 visitors. As previously mentioned, the Ballet would develop and perform two additional series which will be exclusive to the City at this time. First, a Contemporary Dance Series where audiences would be able to enjoy high quality contemporary dance in the intimate setting 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 2006) 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 performances to include the newly renovated Colony Theater along with the Byron -Carlyle Theater. (See Exhibit C.) These programs would be performed by dancers in their existing Company with choreography not currently in the Ballet's repertoire. To achieve this 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 extensive 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 add the Young People's Program in 2006-2007. (See Exhibits D-1 and D-2.) The Company has committed to perform as a resident company at the new Miami Performing Arts Center (MPAC) and the City is engaged in discussions with the Cirque du Soleil to reconfigure the Jackie Gleason Theater of the Performing Arts for their year- round performances. It is expected that this venture will 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 they were "Presented by the City of Miami Beach". The Finance Committee engaged in a lengthy discussion of the proposal and the severity of the Ballet's financial condition. 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 annual funding into a reserve for that purpose; 2- The Committee did not agree to fund the $500;000 for capital improvements to the Studio Theater at this time and suggested that the Ballet might pursue this project at 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 insure that the Ballet would operate within its available financial resources in the future and not incur debt to meet its operating requirements; 4- Commissioner Cruz requested that the Ballet provide evidence from their lenders that the payments due on loans as of August 31 had been deferred or were held in forbearance while the terms of the City's acquisition of the Ballet Studios Building were negotiated; and 5- In regard to the urgency of the Ballet's current cash flow needs the Committee suggested that the full Commission could approve an advance at their September2l, 2005 meeting, that would be applied 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 until the 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 31, 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.) Subseauent Discussions with the Ballet During discussions following the Finance Committee meeting, 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 FY2006 and $53,200 in FY2007 ($10,000 per program for three performances and $13,300 per program for four performances) and would have provided an opportunity to 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. Villella 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 because 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 Administration's concurs with the Ballet's concern regarding their financial capacity at this time to 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 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; 2 — that the City provide, $740,000 to fund imminent major capital replacements 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; 3 — that the City engage VFA to formally assess the costs 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. We 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 for the Ballet and gain an extremely valuable asset for the City. JMG: POW Attachments: Exhibits A-1 and A-2 — Miami City Ballet Schedule of Proposed Budgetary Savings Included in the Revised Operating Budget for FY2006 Exhibit B - Miami City Ballet Proposed Budget for Contemporary Series FY 2006 Exhibit C — Miami City Ballet Proposed Budget for the Contemporary and Young People's Series FY 2007 Exhibits D-1 and D-2 - Miami City Ballet FY2005 Actual Results of Operations; FY2006 Revised Operating Budget and FY 2007 Proposed Operating Budget and Assumptions Exhibit E - Miami City Ballet Studio Theatre Upgrade Project Budget Exhibit F — Preliminary Status of the Miami City Ballet Building, a report prepared by Brad Judd, Director, Property Management Division Exhibit G — Term Sheet Exhibit H -H1 - Letters from each major lender stating that the payments due on loans as of August 31 had been deferred or were held in forbearance Exhibit I - A funding plan for future capital maintenance and replacements JMG: PDW 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 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 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 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 - $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 Date - 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) No Brokers. City and Ballet represent that there are no real estate brokers entitled to a commission in connection with the transaction. (f) (g) 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 extends through (to be determined) - "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 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 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 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 calculated by dividing the escalated cost of the equipment, system or component to be replaced by its useful life. Such funds shall be held in escrow until such repairs are required. Additionally, preventive maintenance for the HVAC system, Elevators and Fire Alarm and Sprinkler systems shall be funded annually. (iii) Fiscal Responsibility — The Ballet shall work with the City Manager and Chief Financial Officer to establish financial policies that would help insure that the Ballet would operate at all times within its financial resources and would not incur debt to meet its operating requirements. These policies could include a requirement to budget operating expenses at a percentage of estimated revenues such that there is a contingency factor built in to each year's budget. Miami City Ballet Schedule of Proposed Budgetary Savings Included in the Revised Operating Budget for FY 2006 Board Approved Operating Expenses (FY 2006) $10,318,884 SAVINGS: Term Leen Interest ($850,000) Bridge Loan Interest ($500,000) Line of Credit Interest ($500,000) 23,750 12,500 12,500 Interest on Additional Borrowing 75,000 Fees on Additional Borrowing 40,000 FecIIlty Repair & Maintenance Property Insurance ADDITIONAL EXPENSES: MCB Contemporary Series (Net) Revised Operating Expenses (FY 2006) 20,000 10,000 15,000 $10,140,134 Operating Income (FY 2006) $10,282,358 Additional Interest Income 25,000 Revised Operating Income (FY 2006) $10,287,358 REVISED NET INCOME $147,224 Exhibit Al I,IUI ,1,111+. ,Itil:lll F1i4C1t1 Fkridai Arclahord parity Cranium/ MIAMI CITY BALLET OPHELIA & JUAN Jt. ROCA CENTER 9900 LIBERTY AVEHVE MIAMI BEACH, FLORIDA 33139 PHONE: (305) 929.7000 FAX 1305) 929.7002 C•MAIL. admin-IlnOmlamlclty0.11e1.orB A OPV O' Itil QrtIr1AL tCGi;lAnllON AND r(NANCIAL INIOINAIIO' MAY FE 01M1.0 Ikt)M II' yIr 'Inv QI r0Nb)lMlt a}V,CIS Or IAt1111G TOl!•r,tt PPO ,.,. ,L !,inns, tut :IA11 kCUil T,nitOn DCIS N'vT Ifwin CUD O.ir Miu, ArM1)OVA, of I)I ,NMLr4DAt.rN Li let l*nil Ted STL'OrI S6LLEL9SEC6 '- 131 1H6 A.ID MMIN 90:LT 600E/80/60 MIAMI CITY BALLET Exhibit A2 BEGINNING CASH BALANCE REVENUE Earned Revenue Subscriptions & Singles Nutcracker Contemporary Series Young People's Series Boutique / P&H Tour School Investment Other Total Earned Revenue Contributed Revenue Directors Individuals Corporations Foundations Government Events - Net Total Contributed Revenue Sub -Total Revenue Less: Contingency . Total Revenue EXPENSE Program Services Company & Artistic New Production Production Tour School Total Program Services Supporting Services Marketing Development General & Administrative Interest Total Supporting,Services Total Expense Net Income (Loss) (BOARD APPROVED) OPERATING BUDGET FY 2006 $0 $2,840,000 945,000 0 0 100,000 968,316 760,500 75,000 55,000 $6,743,816 $425,000 2,300,000 250,000 625,000 636,325 400,000 $4,636,325 510,380,141 0 510,380,141 $2,531,386 198,500 2,696,239 535,302 961,254 $6,922,681 $1,302,630 842,082 1,066,919 184,572 $3,396,203 510,318,884 $61,267 (REVISED) OPERATING BUDGET FY 2006 $0 $2,840,000 945,000 54,000 0 100,000 968,316 760,500 100,000 55,000 $5,822,816 $425,000 2,375,000 250,000 625,000 636,325 400,000 54,711,325 $10,534,141 117,783 510,416,358 $2,611,386 232,500 2,701,239 535,302 961,254 57,041,681 $1,326,130 842,082 998,419 60,822 $3,227,453 $10,269,134 $147,224 BUDGET ADJUSTMENTS FY 2006 50 $0 554,000 $0 $0 $0 $0 $25,000 50 $79,000 $0 575,000 $0 $0 $0 $0 575,000 $164,000 $117,783 $36,217 $80,000 $34,000 $5,000 $0 $0 $119,000 $23,500 $0 (568,500) ($123,750) (5168,750) (549,750) 585,967 Miami City Ballet Proposed Budget for Contemporary Series FY 2006 Earned Revenue (2 Programs/3 Performances Each) Contributed Revenue EXPENSES: Program Directors Artistic .(licensing Ballets, Repetiteurs Fees, etc...) Production Marketing GSA Net Income (Loss) $54,000 75,000 80,000 34,000 5,000 20,000 3,500 1,500 ($15,000) Exhibit B IkhAO FIIII1.1 Ills11( Oil(I1)1 ln(c►nat onarrw /Wilford Dana Compnv MIAMI CITY BALLET' OPHELIA 1. JUAN )s. HOCA CIER 4400 LIBERTY A7ENUE MIAMI BEACH, FLORIDA 33139 PHONE: (30S) 929.7000 FAX (303) 929.7904 EMAIL- bdmIn.JtnOr,,I.mICItrbelltt.ol5 n rrlrl 01 1HL OIiICIAL ILGI:'IA11011 AHD iJHANC1r.l Iw: QlMAIIQN ,vnl sE nP;A•N(0 117* 141 alvIs,ON Cr/ (O3.51r+1{I iT Yv17Sg {rr CnI1 ;DIA rrIC 099.1)3 7314 WIT., N In( 6(ATC lI9'0T11fT ON 901.3 1401 IA+rtr II,DOR.TNIIt I, Ail•110vm. G; 2110/...!NIIAlr(114 PT !N( 1,1•1( Mtn 8IL ' ON S6,1%026 • 131 tE AID 1 N i I W 90:L1 S00Z/eO/60 Miami City Ballet Proposed Budget far the Contemporary & Young People's Series FY 2007 Earned Revenue: 3 Contemporary Programs & 1 Young People's Program $100,000 147,500 Contributed Revenue EXPENSES: Program Directors & Benefits Artistic (Licensing Ballets, Repetlteurs Fees, etc,,,) Production 100,000 80,000 20,000 PA 35,000 7,500 5,000 SO Box Office/House Management CSA Net Income (tam) Exhibit C MIAMI CITY 9ALLET OYNELIA • JUAN Jr. OCA (ENTCp 4200 LIIIEIITY AvENUE MIAMI EEACM, rLORJDA 33139 PHONE (305) 949.7000 FAX (305) 940.7000 E-MAIL. nOmin•flnernlemlclt►bailrl,org A (Orr 01 7IL QIIICIA) 1!015.1/;TI0N Ano IIWANC1AL t0/0101AiICH M•lJ AL /)►,IAIHF9 11.1M IHL L'lv.,'QN !,1 f ONtUNIL Li RVlr(,111 TNI, IOII .I ILI //V 11$ 71St •ITH N TML !1m1C 1E0I5TTAr 0.1 5075 nCl ,11 rlCri,enl,;)•l„7N V. to -di i0p BtL•ON S6[4E1,950E6 1311kl8 &OD &IIWtiIIJ 90:4T SO© /B0/60 MIAMI CITY BALLET BEGINNING CASH BALANCE REVENUE Earned Revenue Subscriptions & Singles Nutcracker Contemporary Series Young People's Series Boutique / P&H Tour School Investment Other Total Earned Revenue Contributed Revenue Directors Individuals Corporations Foundations Government Events - Net Total Contributed Revenue Sub -Total Revenue Less: Contingency Total Revenue EXPENSE Program Services Company & Artistic New Production Production Tour School Total Program Services Supporting Services Marketing Development General & Administrative Interest Total Supporting Services Total Expense Net Income (Loss) (ACTUAL RESULTS) OPERATING BUDGET FY 2005 $0 $2,646,184 919,123 0 0 90,862 1,136,411 715,060 42,115 125,640 $5,675,395 $411,992 2,471,855 267,131 826,662 613,153 281,605 $4,872,398 $10,547,793 $10,547,793 $2,416,988 394,125 2,646,854 771,383 993,469 $7,222,820 $1,325,938 876,005 1,019,044 103,985 $3,324,973 $10,547,793 $o (REVISED) OPERATING BUDGET FY 2006 $0 $2,840,000 945,000 54,000 0 100,000 968,316 760,500 100,000 55,000 $5,822,816 $425,000 2,375,000 250,000 625,000 636,325 400,000 $4,711,325 $10,534,141 117,783 Exhibit D 1 (PROPOSED) OPERATING BUDGET FY 2007 $147,224 $3, 055,000 1,026,750 75,000 25,000 126,750 1,200,000 760,500 150,000 77,500 $6,496,500 $500,000 2,625,000 350,000 725,000 636,325 . 600,000 $5,436,325 $11,932,825 135,908 $10,416,358 $11,796,917 $2,611,386 232,500 2,694, 739 535,302 961,254 $7,035,181 $1,326,130 842,082 1,004,919 60,822 $3,233,953 $10,269,134 $147,224 $3,215,567 330,000 3,117,915 660,302 1,010,335 $8,334,119 $1,541,865 1,023,462 1,033,378 0 $3,598,705 $11,932,825 $11,316 Miami City Ballet FY 2006 Revised Operating Budget FY 2007 Proposed Operating Budget Assumptions FISCAL YEAR 2000 40 Dancers f 37.5 Rehearsal d Performance Weeks Exhibit D2 2 Contemporary Series at MCB Budding (3 performances In each series f may add shows) (ESTIMATE: 1,440 seats at 537.50/ticket = 554,000) All Maln Stage Performances et the Jackie Gleason Theater No Cost of Living Increases far Dancers E Staff FISCAL YEAR 2007 I 51 Dancers 141.5 Rehearsal & Performance Weeks 3 Contemporary Series -- 2 at MCB Building / 1 et Colony Theater (4 performances in each series) (ESTIMATE: 2,000 Beets at 837.50/ticket = 575,000) 1 Young People's Program at Colony Theater (4 performances) (ESTIMATE: 1,000 seats et 525.O0lticket = 525,000) ' All Main Stage Performances al the MPAC Program I (Orchestra) Ticket Income: 15% Increase: MPAC / 5% Increase: BCPA 8. KC (Increased SaIBs/PrIce) Cost of Living Increases For Dancers & Staff MIAvl CITY BAII[T aa/le 11 I 1,+ i H It )IIIt111 Honda.; 1n)nnatimlally- AcrGlimtd Dann Company MIAMI C11Y SALLET OPHELIA 1 JUAN h. ROCA CENTEI 4400 LIBERTY AVENVE MIAMI DEACN, FLORIDA 33139 PHONE; (303) 9119.7000 FAX (30S) 099.70011 E•MAII admin.11n9mlan(I01vbellet.0,3 A Cil►• Of 1H; Off1C1AL ILGISItAIIVN AND r16ANCIAI IN1014ATION 7AY IF D1.1AINED IIOM INC L'Iti SIUV 01 IONiVMtI ±IIVICC. D' CAILIflo '[1(1 Tls1 600 .37 77)1 WTIHIN I'll iii All Rt01a17ATr. r DOTS NOT IM' V I. nDUISIMtNI. APP1•JVA{ YI I(LUMMLNDATION or TIIC ,IA1C P0n BTL'Or4 S6LL>=L9S0>=6 f 13-11U0 M.ID 1I4 IW 90:4T S00Z'80%60 Miami City Ballet Studio Theatre Upgrade Project Budget Air Conditioning System Compressor, Condenser, Handler, Duct Work Scenic Elements Legs Borders Scrim Window Coverings Breather Masking Curtain & Rigging Pipe Grid Rear Projection Screen $107,000 10,620 9,610 2,610 1,000 1,000 50.000 15,250 6,375 EiecWcel E=lements Instruments (Light Fixtures, Towers) 60,000 Sound Elements Equipment Acoustical Treatment 0 er Consulting Project Labor (installation Fess, etc...) Miscellaneous TOTAL 25,000 75,000 35,000 75,000 26,335 $500,000 Exhibit E i MIAMI CITY BLLJ CRAA41t% L VIII:'1L 0 itt731 M rid, fnt!/natflind ly. Ardrumrd Dana Colodny MIAMI CITY RALLET OPNLL$A d JUAN 15. ROLA CENTER 4000 LIRERTY AVENUE MIAMI REACH, FLORIDA 33139 PHONE. (305) 9E9.7000 FAX 1303) 9r9.J00! EMAIL edmIn•fingrntom)cItpbellet.o,p A carr O; 1Nk C1:SICIA; IEcIyt,ArrbN Aro 'INANC At INIQG.NA1fQe1 MAY J: (WAIVED ;1711, it CON:Umre Srtvl:tL 1v CA1tINe; IQII 11t1 Yr,4•i,5 131* WIIIIIH INE 51AIL 5!3 111ATION UOEI 1101 IMPLY kN9104:t Mkh T, At'ITCivA' 171 RfrONnILN5A1,011 UT 11“, Alt Sop BT4'014 SGGGE69S0 6 4- 13T)17.0 AIM IWtl(490:. t Sse &o'6© THE CITY OF MIAMI BEACH PROPERTY MANAGEMENT DIVISION 1245 MICHIGAN AVENUE MIAMI BEACH, FLORIDA 33139 (305) 673-7630 fax (305) 673-7963 Exhibit F To: Patricia Walker September 9, 2005 Chief Financial Officer From: Brad A. Judd RPA, FMA, CGC Director, Property Management Subject: Preliminary Status of the Miami City Ballet Building As you and the City Manager requested, Property Management performed a preliminary inspection yesterday of the Miami City 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 Systems 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 Electrical System except for general maintenance requirements Roof For a 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. 1 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 cost estimate 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 Energy Manaeement Systems There are three RTU's (roof top units) on the main roof, 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 for roof_ mounted equipment in a salt air environment, it is safe to estimate that all units will have to be replaced within the 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 for the replacement of all five units on the roof of the Miami City Ballet is $175,000.00. This includes equipment cost, crane, labor, drawings and miscellaneous contingencies. The energy management system is s Trane Tracer Summit system with graphics. All components appear to be on line. There was one undetermined alarm showing at the time. Plumbing Systems 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 or the installation of a domestic water pump to provide additional water pressure to the upper floors. 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 the 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 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 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. 1 hope this helps, 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 TREMCO of Audit Report , 02001 Tremco Incorporated Prepared for City Of Miami Beach General Conditions Clty Of Miami Beach Miami City Ballet Miami City Ballet 9/9/2005 General Conditions City Of Miami Beach Roof Name Square Feet Inspection date: Inspector Description ph IQ 011rR.Jalei foal_ iCkkAh.Jlli.1.1 ftANINJ1 Main Roof 35,000 9/8/2005 Ricardo Moncada Year Installed Roof Rating Leakage 2000 Poor D Miami City Ballet Coal Tar Pitch SUR 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 1.5" Iso board fully adhered 1/2" Fiberboard fully adhered 3-4 plies of fiberglass adhered in coal tar pitch Flood coat and gravel Cipro/ly;ui.lso ai:.114 -Extensive blistering -Open flashing laps -Cracks on the parapet walls -Deficient caulking seal around roof mounted windows. Scan History Work History N/A Some repairs have been done in the past to the roofs and to the windows •!L IH wmd.Jliu:Ii[.Jll Not Available p►1a•J•llLIllatllr%1111.11 kill Even though the roof is performing at an acceptable level, the possibilities of a premature failure are high. It will either fail from open blisters allowing water into the system, or a blow off during a storm. The probability of this roof system lasting as long as it was expected are minimum. The reason the building does not leak everywhere is because not all blisters have been punctured yet and you have a concrete slab. The replacement time will be dictated by the risk you are willing to take. Seal open laps at flashings Waterproof parapet walls Urgency items Main Roof 9/912005 Roof Photos City Of Miami Beach Overview. The blisters that are present on the roof surface are not very high in dimension, but they are wide and long. Unfortunately, that makes it difficult to avoid stepping on them. 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. Main Roof Miami City Ballet 919/2005 Roof Photos City Of Miami Beach Pitch pans and penetrations are deteriorated. The mastic used in this pitch pan is rigid and is splitting. This corner flashing lap by one of the windows is open. There is no reinforcement on the flashing lap. There are debris on the roof that when accumulated can block the drain. This flashing lap was repaired by applying a bead of mastic over it. The repair should have Included a reinforcing membrane. One can also see a crack on the parapet wall. Main Roof Miami City Ballet 9/9/2005 Budget By Facility City Of Miami Beach_ Miami City Ballet Roof Area Budget Budget Budget $ Expended$ Main Roof 'Minding Summary 2005. Replacement $500,000 $500,000 919/2005 3o Summary of Building Inspection Report Condition Estimate Timeframe Electrical and Fire Alarrn Systems Very Good Roof . Poor $500,000 2 years Blistered membrane HVAC and Energy Management Systems Poor $175,000 2 years 5 rooftop units - corrosion on condenser Plumbing Systems Good General Conditions Exterior • Fair $65,000 2 years Pressure cleaning, waterproofing and Painting Interior Well — maintained condition Very Good Conclusion The building is a'wonderful structure with suburb hurricane and structural protection elements. While 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 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. Exhibit G 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 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 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: (1) $2,500,000 to pay off the existing debts of the Ballet (including $950,000 term loan, $500,000 fully drawn Zine of .credit, $500,000 bridge loan plus. $550,000 in aged accountspayable and non-interest bearing loans. from Ballet's Board of Directors), (ii) $2,000,000 to beused 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 - $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 Date - 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) No Brokers. City and Ballet represent that there are no real estate brokers entitled to a commission in connection with the transaction. (g) 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 extends through (to be determined) - "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 Financial Covenants. These three terms will be included in the PROPOSED AMENDMENT TO THE Ground Lease: (1) 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 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 calculated by dividing the escalated cost of the equipment, system or component to be replaced by its useful life. Such funds shall be held in escrow until such repairs are required. Additionally, preventive maintenance for the HVAC system, Elevators and Fire Alarm and Sprinkler systems shall be funded annually. (iii) Fiscal Responsibility — The Ballet shall work with the City Manager and Chief Financial Officer to establish financial policies that would help insure that the Ballet would operate at all times within its financial resources and would not incur debt " to meet its operating requirements. These policies could include a requirement to budget operating expenses at a percentage ,of 'estimated revenues such that there is a contingency factor built in to each year's budget. . 09:14:05 IYED 12:19- FAX 305 375 (1544 SEP -14-2005 4E0 10:24 AM,WTBF CORAL, GABLES IVartltertl trui+t Ft1►ttk 5y5.Biftrnurc wary. ('urol'tiihleN. 11. with, i 11.tG :4Cis.$29 77tN1 Northern rust • September 9, 2005 Mr. Lewis S. Eidson, President Board of Directors Miami City Ballet, Inc. 2200 Liberty Avenue Mi rili Beach, Florida 33139 Re: 5500,000 line of credit Dear Mr. Eidson: PLUS INTERNATINAL tgj uua FAX NU. 1Uy5Ly 1144 r uct vc / Exhibit H 'We Etre pleased to advise you that Northam Trust Bank of Florida, N.A.has approved the short-term renewal of the 5500,000 line of credit which natured on August 31, 2005. The new maturity date will be November 30, 3005 and all other terms and conditions remain the lame Wu wi11 be contacting you in order to arrange the signing of the renewal documents, Should you have any questions. please do not hesitate to contact me at (305) 529-7718 Sincerely, ears Condc Vice President i.u.,t Uk,, .0 l.1..:1. .• u wholly 'pww:I A..n..J{nip 1.1 NVKIIHW Truo r..,' e.11tl'n, C111:•:IFII Mcu b r Fnlr, N..01104;144 Lender fl VoGOG4ES0 6 ( .L 11dQ AIM IW1-jIW ve:9T SOW/PT/60 09/1.4/05 wEv 1i i -AA au 4/3 U341 rLL1.11 • - •• • September 9, 2005 Michael Eidson, President Beard of Directors Miami City Ballet C/o Colson Hicks Eidson 255 Aragon Avenue, 2'4 Floor Coral Gables, Florida 33134 '• Re: OutStanding Loan Facilities (1) Loan evidenced by Renewal Promissory Note from Miami City Ballet, Inc. ("MCB') in favor of Wachovia Bank, National Association (the "Bank"), dated as of August 22, 2001, in the original principal amount of 5500,000.00, as modified by Modificanon of Renewal Promissory Note, by and between MCB and the Bank, dated as oflune 30, 2002 and by those certain lettersdated September 8, 2003 and SePteinber 2 I,'2004 ("Faciliry One"); (2) Loan evidenced by Consolidated Renewal Promissory Note, dated as of August 22, 2001 from MCB in favorof Bank, in the original principal amount of S1,600,000, as modified by Modification of Consolidated Renewal'Promissory Note, by and between MCB and the Bank, dated as of December 27, 2002, Second Modification of Consolidated Renewal Promissory Note, by and between MCB and the Bank, dated -as of June 26, 2003, and Third Modification of ConsOlidated Renewal Promissory Note; byand between MCB and the. 13ank, dated as of March 31, 2005 ("Facility Two") Dear Mr. Eidson: The .outstandins pricicipal balance under Fneiliry One is currently 5500,000. The entire outstanding principal balance and all accrued interest under Facility One are due and payable at this time. The our.standing principal balance under Facility Two is currently 5950,000. The entire outstanding principal balance and all accrued interest under Facility 'No art due and payable at this &rte. This is t� advise that it is presently the Intention of the Bank to extend the marurity date for the Facilities to November 30, 2005; provided, however the Bank's agreement to extend the maturity date for the Facilities to November 30, 2005 is conditioned on the satisfaction of the following preconditions: (i) receipt by the Bank of the consent of the participant lenders in the Facilities to the: 171..SOGGtSOUt 1311dAlID IWVIW OZ:OT Geleertotrea 09/14/t)5 'WED 12:19 FAX 305 375 UO44 numa 1LYinnon111vnL. t O . SZL'ON Trust Hank of Florida ("NTB") to the extension of that certain Debt Subordination Agreement by and between the Bank and NTB, dated as of March 31, 2005, together with joinders thereto from Ronald E. Essetman and Lewis S. Eidson, Jr. and (ill) the agreements of MCB that , by no later than October 15, 2005, MCH shall present to the Bank, for' consideration by the Bank and the participant senders in the Facilities, a realistic and credible plan for the payment of the Facilities, (iv) all the terms and conditions during this period will retrain the same except those modified expressly by this letter., . In the event the forgoing preconditions to the extension of the maturity date for the Facilities shall not be satisfied, then the Bank reserves its' rights aid remedies set.forth in the loan documents to protect the interest,of the Bank and the participating lenders in the Facilities, -- - verytratyyours, . . WACHOVIA BANK, National Association Name: Joseph F. Portunato' Title: Senior Vice President Cc: John Safranek; Director of Finance Mark.Rosenbluat, General Manager r/ vrSOSL£50£5 - 13116S AIM I WH I W t': 01 S00Z.'bii66 Fundina Plan for Future Capital Maintenance and Replacements Exhibit 1 Long Term Capital Replacement Costs Roof HVAC Pressure Cleaning, Painting + Water Useful Cost Life ( vrs) 500,000 20 175,000 15 65,000 7 Annual Maintenance Contracts for: $35,000 - $50,000 NC Annual Contribution Elevators Fire Alarms Sprinklers Capital Replacements 25+ yrs Electrical & Fire Alarm Plumbing Elevators Useful Life (yrs) 25 yrs 25 yrs 25-30 yrs Average Annual Inflation Rate 3% 4% 5% $ 25,750 12,017 9,564 47,331 $ 26,000 12,133 9,657 47,790 $ 26,250 12,250 9,750 48,250 35,000 42,500 50,000 $ 82,331 $ 90,290 $98,250 Min. Max.