2013-28240 Reso RESOLUTION NO. 2013-28240
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, APPROVING THE TRANSFER, AS SUCH TERM IS DEFINED IN
THE LEASE AGREEMENT (THE LEASE) BY AND BETWEEN THE CITY OF MIAMI
BEACH, THE MIAMI BEACH REDEVELOPMENT AGENCY (COLLECTIVELY,
LANDLORD), AND PENN 17, LLC (TENANT), OF A 100% CONTROLLING
OWNERSHIP INTEREST IN PENN 17, LLC FROM THE CURRENT
MANAGERS/MEMBERS, AMIR BEN-ZION AND RAMON CHERSTVOV
(TRANSFERORS), TO THE PROPOSED PURSHASERS OF PENN 17; ROMAN
CHERSTVOV AND OBK PROJECT LLC (TRANSFEREES); WITH APPROVAL OF
SUCH TRANSFER SUBJECT TO AND CONTIGENT UPON THE PARTIES'
EXECUTION OF AMENDMENT NO. 3 TO THE LEASE AND, FURTHER,
SATISFACTION BY TRANSFEREES OF THE FOLLOWING CONDITIONS (TO BE
SATISFIED PRIOR TO AND AS A CONDITION OF LESSOR'S EXECUTION OF
AMENDMENT NO. 3: 1) PAYMENT 'OF OUTSTANDING RENT FOR THE MONTHS
OF MAY AND JUNE, 2013; 2) SATISFACTION OF ANY AND ALL LIENS AGAINST
THE LEASED PREMISES INCLUDING, WITHOUT LIMITATION, LIENS AND/OR
CLAIMS FILED BY A & P AIR CONDITIONING AND CORS-AIR; 3) DISMISSAL,
WITH PREJUDICE, OF THE LAWSUIT FILED BY A & P AGAINST THE CITY TO
COLLECT THE A & P LIEN; 4) RE-PAYMENT OF THE REMAINING BALANCE OF
RENT AND CAM FOR NOVEMBER AND DECEMBER 2012, IN THE AMOUNT OF
$120,519.98; 5) REPLACEMENT OF THE REQUIRED $50,000 MINIMUM BALANCE
INTO THE TENANT CONSTRUCTION FUND; 6) RE-LOCATION, AT TRANSFEREES'
SOLE COST, OF THE LEASED PREMISES A/C UNITS TO THE ROOF OF THE
PENNSYLVANIA GARAGE; AND 7) EXECUTION OF A GENERAL UNCONDITIONAL
RELEASE IN FAVOR OF THE CITY AND RDA; AND FURTHER WAIVING, BY
5/7THS VOTE, THE FORMAL COMPETITIVE BIDDING REQUIREMENTS, FINDING
SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY, AND AUTHORIZING
THE CITY MANAGER, OR HIS DESIGNEE, TO NEGOTIATE AND EXECUTE AN
AGREEMENT WITH HALLORAN CONSTRUCTION, INC., IN AN AMOUNT NOT TO
EXCEED $250,000.00, TO ADDRESS THE RELOCATION OF THE KITCHEN
EXHAUST VENTING SYSTEM INSTALLED BY PENN 17, LLC.
WHEREAS, on April 13, 2011, the Mayor and City Commission adopted Resolution No.
2011-27647, approving a Lease Agreement (the "Lease"), between the City, the RDA
(collectively, City/RDA or Landlord) and Penn 17 LLC. (Tenant), having a term of nine (9) years
and 364 days, for use of approximately 7,655 square feet of ground level retail space at the
Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida, for a
restaurant (primary use), with ancillary uses for a bakery, a bar/cafe, and a book and gift shop
(the "Leased Premises" or "Premises"), which Lease was subsequently amended by First
Amendment to the Lease (Resolution No. 2012-0000) and Second Amendment to the Lease
(Resolution No. 2012-27925); and
WHEREAS, the Premises, which housed the Cooper Avenue Restaurant, have been
closed since December 17, 2012; and
WHEREAS, following Tenant's request for a rent reduction and other relief, on
December 20, 2012, and January 24, 2013, the City's Finance & Citywide Projects Committee
(FCWPC) expressed support for providing some level of relief to the Tenant, subject to the
inclusion of specific release language absolving the City of any liability regarding Tenant's cost
overruns and claims related to loss of business, and therefore recommended in favor of the
following terms: 1) applying one-third (1/3) of the Tenant's existing Security Deposit,
representing $47,844, towards Base Rent owed for the month of November, 2012; 2) deferring
$8,474 for Common Area Maintenance (CAM) for November, 2012, and Base Rent, plus CAM,
for December 2012, in the total amount of $64,792 (Back-Due Rent); 3) approving an
abatement of 50% of the Base Rent and Common Area Maintenance (CAM) due for the six (6)
month period commencing January 13, 2013 through July 12, 2013; 4) deferring fifty percent
(50%) of the Base Rent and CAM for the six (6) month period, commencing July 13, 2013
through January 14, 2014 ("Deferral Period"), to be repaid by the Tenant in twenty four (24)
equal monthly installments, commencing in the sixth year of the Lease Term and ending on the
last day of the seventh year of the Lease Term; and 5) providing for re-payment by Tenant of
the one-third security deposit in the amount of $47,844 and re-payment of the Back-Due Rent
for November and December, 2012, in the amount of$64,791, to be repaid in twelve (12) equal
monthly installments commencing in the fifth year of the Lease Term and ending on the last day
of the fifth year of the Lease Term.
WHEREAS, on March 13, 2013, Mayor and City Commission adopted Resolution No.
2013-28167 (in conjunction with RDA Resolution No. 592-2013), accepting the FCWPC's
recommendation, and approving, in concept, the proposed terms for an Amendment No. 3 to
the Lease (which amendment, upon future final approval by the City/RDA, would include a
limited rent reduction and deferral plan, as well as a plan for Tenant's re-opening of the
Premises); and
WHEREAS, as further consideration for the City Commission's adoption of Resolution
No. 2013-28167, and conceptual approval for the rent reduction and deferral schedule, the
City/RDA required (and Tenant agreed to provide) a general release from Tenant, releasing the
City/RDA from any and all claims under the Lease; and
WHEREAS, Tenant's plan to re-open the Premises included a plan to "re-brand" the
Premises under a different restaurant concept, which proposed including an entertainment
component (i.e. Tenant contemplated using part of the Premises as a lounge, featuring a
combination of a deejay and live music); and
WHEREAS, as required by City Code Section 142-362, the proposed entertainment use
requires City Commission approval, following a duly noticed public hearing; accordingly, as part
of its approval of Resolution No. 2013-28167, the City Commission set a public hearing for April
17, 2013, to consider approval of Tenant's proposed entertainment use; and
WHEREAS, as of April 17, 2013, Tenant had not been able to solidify its plans for re-
opening the Premises and resolving other outstanding Lease issues; in order to allow Tenant
more time to resolve such outstanding issues, the City agreed to continue the public hearing
(and consideration of Amendment No. 3)to May 8, 2013; and
WHEREAS, on May 8, 2013, following Tenant's execution and delivery(on May 3, 2013)
of the general release to the City/RDA, the City opened and continued the public hearing (and
consideration of Amendment No. 3)to June 5, 2013; and
WHEREAS, thereafter, Tenant failed to adequately resolve the following outstanding
Lease issues: 1) Tenant failed to satisfy and/or otherwise resolve two (2) liens that had been
placed on the Premises (one of these liens resulting in the filing of a lawsuit against the City to
reclaim the unpaid monies); and 2)Tenant breached the Work Letter and Escrow Agreement by
failing to maintain its required minimum $50,000 Construction Deposit in the Lease Construction
Fund; and (3) failed to pay the May and June, 2013 rent; and (4) Tenant's managing member,
Amir Ben-Zion, advised the City, on May 15, 2013, that it had no intention of re-opening the
Leased Premises; and (5) unbeknownst to the City/RDA and without their required approval
under the Lease, subsequent to the execution of the Lease, Tenant's managing member, Mr.
Ben-Zion, transferred a 50% interest in Penn 17 LLC, to a Mr. Roman Cherstvov.
WHEREAS, on or about May 14, 2013, the City was notified of a sale proposal to sell
Mr. Ben-Zion's 50% managing interest in Penn 17 LLC (the Tenant entity), to a new entity, OBK
Project LLC (OBK), whereby Penn 17 LLC would continue as the Tenant under the Lease
(without Mr. Ben-Zion as a manager member), and Mr. Cherstvov and OBK would each have a
fifty percent(50%) membership interest in the Tenant entity; and
WHEREAS, in consideration of the City's agreement to set aside Tenant's default;
approval of OBK as a new owner/member of the Tenant entity (along with Mr. Cherstvov);
approval of a limited entertainment use on the Premises (which use, as proposed by Tenant,
would be in conjunction with, and only during; operation of the restaurant); and approval and
execution of Amendment No. 3 (including the limited rent reduction and deferral schedule
conceptually approved pursuant to City Resolution No. 2013-28167 and RDA Resolution No.
592-2013), Tenant agreed to:
1. pay the past due rent for May and June, 2013 and subsequent rent/Lease
obligations;
2. allow the disbursement of the outstanding balances of rent for November and
December, 2012 from the Security Deposit, and replenishing said disbursement over
a period of six (6) months, commencing on October 1, 2013, and ending March 1,
2014;
3. re-deposit the minimum required $50,000 Construction Deposit into the Tenant
Construction Fund (under the Escrow Agreement);
4. be solely responsible for paying and prosecuting the work related to Tenant's prior
request to re-locate the Premises' air conditioning units to the roof of the
Pennsylvania Avenue Garage;
5. resolve and/or otherwise satisfy any outstanding contractor and sub-contractors liens
against the Premises; and
6. provide the City/RDA with an updated general release, releasing City/RDA from any
and all claims under the Lease.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby approve the transfer, as such term is defined in the Lease Agreement (the
Lease) by and between the City of Miami Beach, The Miami Beach Redevelopment Agency
(collectively, Landlord), and Penn 17, LLC (Tenant), of a 100% controlling ownership interest in
Penn 17, LLC from the current managers/members, Amir Ben-Zion and Ramon Cherstvov
(transferors), to the proposed purchasers of Penn 17, LLC, Roman Cherstvov and OBK Project
LLC (Transferees); with approval of such transfer subject to and contingent upon the parties'
execution of Amendment No. 3 to the Lease, and further satisfaction by Transferees of the
following conditions (to be satisfied prior to and as a condition of Landlord's execution of
Amendment No. 3: 1) Payment of outstanding rent for the months of May and June, 2013; 2)
Satisfaction of any and all liens against the Leased Premises including, without limitation, liens
and/or claims filed by A & P Air Conditioning and Cors-Air; 3) Dismissal, with prejudice, of the
lawsuit filed by A & P against the City to collect the A & P lien; 4) Re-payment of the remaining
balance of Rent and CAM for November and December 2012, in the amount of $120,519.98,
from the Security Deposit, and replenishing said disbursement over a period of six (6) months,
commencing on October 1, 2013, and ending March 1, 2014; 5) replacement of the required
$50,000 minimum balance into the Tenant construction fund; 6) Re-location at Transferees' sole
cost, of the Leased Premises a/c units to the roof of the Pennsylvania Garage; and 7) Execution
of a General unconditional release in favor of the City and RDA; and further waive, by a 5/7ths
vote, the formal competitive bidding requirements, finding such waiver to be in the best interest
of the City, and authorize the City Manager, or his designee, to negotiate and execute an
agreement with Halloran Construction, Inc., in an amount not to exceed $250,000, to address
the relocation of the kitchen exhaust venting system installed by Penn 17, LLC.
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PASSED AND,ADOPTED THIS 5TH DAY OF JUNE, 2013.
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CITY CLERK �'•.
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