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2014-28479 Reso RESOLUTION NO. 2014-28479 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA,CANCELLING REQUEST FOR QUALIFICATIONS NO. 22-11/12 FOR THE DEVELOPMENT OF THE MIAMI BEACH CONVENTION CENTER DISTRICT (THE RFQ); CANCELLING THE SELECTION OF SOUTH BEACH ARTS, CULTURE, AND ENTERTAINMENT (SOUTH BEACH ACE) AS THE MASTER DEVELOPER SELECTED TO NEGOTIATE WITH THE CITY UNDER PHASE II OF THE RFQ; TERMINATING NEGOTIATIONS WITH SOUTH BEACH ACE;AUTHORIZING THE CITY ADMINISTRATION TO PREPARE A NEW REQUEST FOR PROPOSALS OR REQUEST FOR QUALIFICATIONS FOR DESIGN OR DESIGN-BUILD SERVICES FOR THE RENOVATION OF THE MIAMI BEACH CONVENTION CENTER ALONE;AND FURTHER DIRECTING THE CITY ADMINISTRATION TO IDENTIFY POTENTIAL SITES FOR A CONVENTION CENTER HOTEL. WHEREAS,on February 7, 2012,the City issued Request for Qualifications No. 22-11/12 for the Development of the Miami Beach Convention Center District (the RFQ); and WHEREAS, the purpose of the RFQ was to seek development and design qualifications from teams interested in submitting proposals for the development of the Miami Beach Convention Center District (the Convention Center Project), a 52 acre site of City-owned properties, including the Miami Beach Convention Center(Convention Center or MBCC); the adjacent surface parking lots;the 17th Street Garage; The Fillmore Miami Beach at the Jackie Gleason Theater; City Hall;the City-owned buildings at 555 17th Street and 1701 Meridian Avenue;the Carl Fisher Club House; and the 21St Street Community Center; and WHEREAS, the minimum project requirements to be delivered by the selected developer (the Master Developer) included expansion, renovation, and enhancements to the Convention Center (including a new Convention Center multipurpose ballroom space) and development of a Convention Center headquarter hotel (the Base Case); however, notwithstanding the Base Case, the RFQ also allowed proposers the flexibility to include other uses as part of their proposed project, including retail, residential, and other economically viable uses; and WHEREAS, the RFQ was envisioned as a two-phased process, with Phase I consisting of the evaluation and selection of proposing development teams'qualifications, and culminating with the short-listing of proposers; and WHEREAS, Phase I I consisted of(i) submittal of Master Plans and non-binding Letters of Intent (LOI) from the short-listed proposers; (ii) selection of the Master Developer by the City Commission(based upon the submitted LOI's and Master Plans); (iii)final negotiation and execution of the LOI with the Master Developer; (iv) negotiation of a Term Sheet with the Master Developer, subject to approval by the City Commission; and, in the event of Term Sheet approval, (v) negotiation of final project documents with the Master Developer, consisting of a development agreement and ground leases for Developer's development of any contemplated private uses on City land (the City Leases), and which final documents would also be subject to approval by the City Commission; and WHEREAS, as required pursuant to Section 1.03(b) of the City Charter, the City Leases would also be subject to majority approval of the voters in a Citywide referendum;and WHEREAS, under its proposed timeline, the City intended to submit the City Leases for referendum approval on November 5, 2013(following the City Commission's selection of the Master Developer, but prior to finalizing and executing the LOI, or negotiation and approval of the Term Sheet and final project documents); and WHEREAS, on December 12, 2012, the City approved Resolution No. 2012-28102, concluding Phase I of the RFQ, and accepting the recommendation of the City Manager to negotiate LOI's with the two (2)short-listed proposers, Portman-CMC and South Beach ACE; and WHEREAS, on July 17, 2013, the City approved Resolution No. 2013-28286, approving South Beach ACE as the Master Developer, and authorizing the City Manager to continue with Phase II negotiations, including final negotiation and execution an LOI, for the following project which, in addition to the renovation and expansion of the Convention Center and the new MBCC ballroom (the public components), also included development of the following private uses (the private components) pursuant to City Leases: • an 800 room convention center hotel situated on top of the existing MBCC building; • a new 17th Street Parking garage structure, to include 70,000 sq. ft. of retail and limited food and beverage on the ground floor;and • up to 20,000 sq. ft. of retail and limited food and beverage to be located north of 17th street; (collectively, the private and public components are also referred to herein as the South Beach ACE Project or the Project); and WHEREAS, on July 19, 2013, the Mayor and City Commission adopted the following Resolutions, calling for a special election on November 5, 2013,for the purpose of submitting to the City's electorate the following two (2) ballot measures- 1. Resolution No. 2013-28297, approving a ballot question which resulted from a citizen's initiative lead by the political action committee, "Let Miami Beach Decide," proposing an amendment to Section 1.03(b) of the City Charter, to increase the required voter approval of leases of certain City-owned property within the Convention Center District(and which intended to include the proposed City Leases for the South Beach ACE Project), from fifty percent (50%) to sixty percent (60%) (the Charter Amendment question); and 2. Resolution No. 2013-28298, approving a ballot question seeking approval from the City's voters, as required pursuant to Section 1.03(b) of the City Charter, of the proposed City Leases for the South Beach ACE Project (the Convention Center Project question); and WHEREAS, as part of Resolution No. 2013-28297 (calling for the election on the Charter Amendment question), the City Commission included language in the text of the approved ballot question which excluded the proposed Charter Amendment's applicabilityto the Convention Center Project; and WHEREAS,the City's language effectively excluded the proposed City Leases forthe South Beach ACE Project from the 60% approval requirement; therefore in order to pass,the Convention Center Project question would only require majority approval and WHEREAS, "Let Miami Beach Decide" objected to the City's inclusion of the aforestated language to the Charter Amendment question; and WHEREAS,the City subsequently filed a complaint for declaratory relief against"Let Miami Beach Decide", seeking a declaration from the circuit court that the Charter Amendment question (as approved by the City Commission with the City's language excluding the Convention Center Project) was proper and in compliance with Florida election law requirements; and WHEREAS, in the same lawsuit, "Let Miami Beach Decide"filed a counterclaim against the City, seeking a declaration that the Convention Center Project question was premature, and therefore improperly before the voters,since it sought approval of City Leases that had not yet been negotiated with the Master Developer, and WHEREAS, South Beach ACE subsequently joined the City as a party to the lawsuit; and WHEREAS,the City and South Beach ACE prevailed in the trial court; however, on appeal to the Third District Court of Appeal (the 3rd DCA), the 3rd DCA agreed with"Let Miami Beach Decide" holding that, in order for the City's voters to be able to cast an informed vote on the Convention Center Project question,they must be given notice of the material terms ofthe City Leases; and WHEREAS, since the City and the Master Developer had not yet commenced lease negotiations (and there were no actual City Leases for the voters to review, if they so chose),the Convention Center Project question failed to give voters this necessary information; and WHEREAS,the court ordered that the Convention Center Project question be removed from the November 5, 2013 ballot; and WHEREAS, the Charter Amendment question remained on the ballot, without the City's language(stating that the Charter Amendment did not apply to the Convention Center Project)also; and WHEREAS, on November 5, 2013, the City's voters approved the Charter Amendment question; and WHEREAS, as a result of the approval of the Charter Amendment question,the City Leases for the South Beach ACE Project now require approval by 60% of the voters in a Citywide referendum; and i WHEREAS, as a result of the 3rd DCA's opinion,the material terms of the City Leases for the Project must be negotiated, drafted, and approved by the City Commission, prior to submittal of such Leases for approval in a Citywide referendum; and WHEREAS, both the passage of the Charter Amendment and the 3rd DCA's opinion materially alter, and further delay,the timeline for the development of the Convention Center Project; and WHEREAS, as contemplated in the RFQ; as proposed by the Master Developer; and as approved by the City Commission,the South Beach ACE Project was intended to be developed as a single project,with the development of both the public and private components proceeding along on the same schedule; and WHEREAS, as a result of the 3rd DCA's decision,the material terms of the City Leases must be completed and approved prior to calling a referendum for same;this newly imposed requirement significantly delays the development of the Project which, in turn,further delays the development of the public components; and WHEREAS, assuming that the Leases (or the material terms contained therein) are approved by the City Commission, the new Charter Amendment would then require that such Leases obtain at least 60% voter approval in a Citywide referendum; and WHEREAS, if the City Leases for the South Beach ACE Project are not approved under either of the aforestated scenarios, then the result, after a multi-year negotiation process, would cause an untenable delay in the long-awaited renovation of the Convention Center, and WHEREAS, at this time, the City and South Beach ACE have still not finalized the terms of an LOI; and WHEREAS, in response to the aforestated changed circumstances, at the City Commission meeting on January 15, 2014, Mayor Philip Levine presented a memorandum to the City Commission, attached and incorporated as Exhibit"A" hereto, recommending that, as a result of the passage of the Charter Amendment question, as well as the impact of the 3r DCA's opinion on the Project, the City Commission separate, or "de-couple," the public components, and proceed promptly with the renovation of the Convention Centeralone; and WHEREAS,proceeding with the renovation of the Convention Center is critical and needs to be expedited; and WHEREAS, for the reasons set forth in this Resolution and in the Mayor's memorandum, continuing along the project path established in the RFQ would significantly delay the renovation of the Convention Center, since the RFQ contemplated that the public and private components be developed as one project; and WHEREAS, since the City owns the Convention Center, it may proceed with the renovation of the facility without the need for a Charter referendum; and WHEREAS, the City also has the ability to fund the renovation of the Convention Center alone; and WHEREEAS, while the City Commission may ultimately determine that the Convention Center renovation should also include the development of a Convention Center hotel,the City needs to consider the renovation and the hotel as separate projects (albeit perhaps proceeding on concurrent tracks); and, WHEREAS, the City Commission may also consider alternate sites for a proposed Convention Center Hotel, other than on top of the Convention Center (as proposed in the South Beach ACE Project); and WHEREAS, given the material changes in circumstances, and the need to de-couple the public components in order to expedite the development of the Convention Center first,the Mayor's memorandum recommended that the City Commission consider cancelling the RFQ and, in the alternative, issue a new Request for Proposals or Request for Qualifications for design or design- build services for the renovation of the Convention Center alone; and WHEREAS, at the same time the City Administration should be directed to lookto identify alternate sites for the proposed development of a Convention Center Hotel at a future date. 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 cancel Request for Qualifications No. 22-11/12 for the development of the Miami Beach Convention Center District (the RFQ), and cancel the selection of the South Beach Arts, Culture, and Entertainment (South Beach ACE) as the Master Developer selected to negotiate with the City under Phase II of the RFQ;terminate negotiations with South Beach ACE; authorize the City Administration to prepare a new Request for Proposals or Request for Qualifications for design or design-build services for the renovation of the Miami Beach Convention Center alone; and further direct the City Administration to identify potential sites for aConvention Center Hotel. /S� PASSED and ADOPTED this y day of O h r 2014. '9C) MAYO ATTEST: - `S•.�' '' INCORP ORATED: CITY CLORK ' '••.• ��`' �•r _' APPROVED AS TO F:\ATTO\AGUR\RESOS-ORD\Convention Center Reso(1-23-14).doc F-/ 26 FORM &LANGUAGE &FOR At EX UTION 13 -~.Cit to ey TD* Exhibit "A' 1 Gib MIAMI BEACH City of Miami Beath,1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Members of the City Commission FROM: Mayor Philip Levine DATE: January 15, 2014 SUBJECT: MIAMI BEACH CONVENTION CENTER DISTRICT PROJECT(MBCC PROJECT) INTRODUCTION During my campaign for Mayor,there was a lot of discussion and debate about the scale, design, and overall program of the mixed-use MBCC Project, yet there was never any dispute about the need to renovate the Convention Center itself, as well as the Center's essential and significant role in the City's -and Miami-Dade County's- economy. While realizing the imperative to renovate the Convention Center, I have always had significant concerns with tying that process into the larger private development of City- owned land, as contemplated in the City's RFQ for the development of the 52 acre Miami Beach Convention Center District. Additionally, recent legal events have created the possibility of a further delay to the renovation of the Convention Center(which has already been in the planning stages since 2007). For these reasons, I believe the City Commission needs to reconsider the current program in a way which prioritizes and expedites the renovation of the MBCC in keeping with the desires of the community. RECENT EVENTS On July 17, 2013, the City Commission adopted Resolution No. 2013-28286, selecting South Beach ACE (SBACE) as the`Master Developer"for the MBCC mixed-use project under Request for Qualifications No. 22-11/12. The project proposed by SBACE includes the renovation and expansion of the MBCC; a privately owned 800 room hotel designed on top of the Convention Center, including 30,000 square feet of retail within the hotel; 20,000 square feet of privately owned retail onRublic land north of 17'h Street; 70,000 square feet of privately owned retail within the 17 Street Garage; and a public park located within the area known as the"P Lot" adjacent to the MBCC. The private components of the project(the hotel and retail portions)would be developed by SBACE on City-owned land and leased to the Developer for a term of ninety-nine (99)years. Under the City's Charter, the leases of City land for the private components must be approved by the voters in a Citywide referendum. On September 20, 2013, the Third District Court of Appeal (3 d DCA) in the case of Let Miami Beach Decide vs. Cb of Miami Beach, removed the lease approval question from the November 5, 2013 ballot. The court held that in order to approve the proposed leases of City land to the Developer under the City Charter provision, voters must be advised of the material terms of the leases that they were being asked to approve. Agenda Item 987 Date !-/s N Miami Beach Convention Center District Project(MBCC Project) January 15,2013 Page 2 of:3 Because these terms had not yet been negotiated, the court concluded that, without this necessary information, the lease approval ballot question must be removed from the ballot. To date, the City and SBACE have yet to finalize the terms of, or execute, the non- binding Letter of Intent(LOI) under Resolution No. 2013-28, nor have the parties commenced negotiations on a term sheet, development agreement, or any of the 99 year leases for the hotel and retail components. Further, on November 5, 2013, voters overwhelmingly approved a Charter amendment which would require a 60% (rather than majority) voter approval before the sale, lease exceeding 10 years, exchange or conveyance of any City-owned property within the Convention Center Campus. The area defined as the"Convention Center Campus' in the Charter amendment includes the City properties within the Convention Center District site described in the RFQ; and would therefore require that the proposed 99 year leases for the private components of SBACE's project now be approved by 60°x6 of the voters. PROGRAM RECONSIDERATION The aforementioned change in circumstances requires reconsideration of the previously defined program. The current design proposed by SBACE combines the private hotel and the public MBCC facility into one building. The newly mandated requirement of negotiating and approving a lease(containing all material terms), prior to its approval by voter referendum, as well as the 60%voter approval now required under the City Charter, could delay the renovation of the MBCC indefinitely if the hotel and Convention Center are combined. Bifurcating the program by decoupling the public from the private uses would expedite the renovation of the Convention Center itself, since neither a lease nor a referendum would be required If the project were to remain a stand-alone building wholly controlled by the City. Decoupling the projects, therefore, will significantly accelerate the renovation of the MBCC. It also eliminates any risk that a referendum on the hotel and retail components would delay or terminate the Convention Center renovation. PROJECT FUN_ I appreciate that the purpose of the mixed-use development in the RFQ was to generate private funds to subsidize the renovation of the Convention Center. Fortunately, the City currently has the ability to secure funding for the renovation and expansion of the public project. Funding sources for the Convention Center renovation and expansion include: the Miami-Dade County General Obligation Bond ($53.6 million), the additional 1% resort tax (estimated at$230.4 million with collections beginning in 2015) and future dedicated revenues from the existing RDA through 2022 estimated at$71.2 million). These sources total approximately$355.2 million and do not require an RDA extension by the County. Additionally, the Parking Enterprise Fund can support up to$145 Million in future Parking Revenue Bonds for public parking. Furthermore, through better design and value engineering, I believe we can deliver a new and improved Convention Center for less than the $500 million budget estimated thus far. MAYOR'S RECOMMENDATION In order to assure that the renovation of the Convention Center remains the City's priority, I recommend the following for the City Commission's consideration: 988 Miami Beach Convention Canter District Project(MBCC Project) January 15,2013 Page 3 of 3 1. Approve a motion to rescind Resolution No. 2013-28, and terminate negotiations with SBACE. 2. Approve a motion to reect all proposals received pursuant to RFQ No. 22-11112 on the grounds that the 3 DCA's ruling and the new Charter amendment have significantly changed the circumstances and presumptions in the RFQ. 3. Approve a motion directing City staff to issue a new solicitation for design and/or construction services for the renovation and addition. The motion would include: a. Scaling down the scope of the previous master plan by removing any requirement for retail or other private commercial uses. The elements of the renovated Convention Center, however, should include 500,000 sq.ft. of existing exhibit space, the addition of a ballroom, additional meeting room capacity, and adequate back-of-house facilities and state-of-the-art technology. b. Further study the requirement for the development of a hotel at a future date. The study would reconsider the number of rooms, site location, and deal structure. The study would be taking place in tandem with the renovation of the Convention Center, but would be an independent process which would not cause a delay to the Convention Center project. Any hotel should be exclusively financed with private sector dollars. c. Incorporate a 25-year, 3-day level of stormwater service outside of the right-of- way and set minimum elevations that take into account the height of sea level rise based upon current projections. The City will also require features that protect the site from storm surge and require stormwater storage on-site. CONCLUSION Due to the immediate availability of funding for the public components of the Convention Center renovation project, and the desire to expedite the project and not allow a referendum to dictate the schedule, phasing, and ultimate design of the Center itself, I request that the City Commission approve this motion, as recommended. Cc: City Manager City Attorney T:%GENDA12014Uanuary\MBCCIMBCC Mayor's Memorandum.docx 989 MIAMI BEACH City of Miami Beath, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Members of the City Commission FROM: Mayor Philip Levine DATE: January 15, 2014 SUBJECT: MIAMI BEACH CONVENTION CENTER DISTRICT PROJECT (MBCC PROJECT) INTRODUCTION During my campaign for Mayor, there was a lot of discussion and debate about the scale, design, and overall program of the mixed-use MBCC Project, yet there was never any dispute about the need to renovate the Convention Center itself, as well as the Center's essential and significant role in the City's - and Miami-Dade County's - economy. While realizing the imperative to renovate the Convention Center, I have always had significant concerns with tying that process into the larger private development of City- owned land, as contemplated in the City's RFQ for the development of the 52 acre Miami Beach Convention Center District. Additionally, recent legal events have created the possibility of a further delay to the renovation of the Convention Center (which has already been in the planning stages since 2007). For these reasons, I believe the City Commission needs to reconsider the current program in a way which prioritizes and expedites the renovation of the MBCC in keeping with the desires of the community. RECENT EVENTS On July 17, 2013, the City Commission adopted Resolution No. 2013-28286, selecting South Beach ACE (SBACE) as the "Master Developer" for the MBCC mixed-use project under Request for Qualifications No. 22-11/12. The project proposed by SBACE includes the renovation and expansion of the MBCC; a privately owned 800 room hotel designed on top of the Convention Center, including 30,000 square feet of retail within the hotel; 20,000 square feet of privately owned retail on public land north of 17th Street; 70,000 square feet of privately owned retail within the 17t Street Garage; and a public park located within the area known as the "P Lot" adjacent to the MBCC. The private components of the project (the hotel and retail portions) would be developed by SBACE on City-owned land and leased to the Developer for a term of ninety-nine (99) years. Under the City's Charter, the leases of City land for the private components must be approved by the voters in a Citywide referendum. On September 20, 2013, the Third District Court of Appeal (3rd DCA) in the case of Let Miami Beach Decide vs. City of Miami Beach, removed the lease approval question from the November 5, 2013 ballot. The court held that in order to approve the proposed leases of City land to the Developer under the City Charter provision, voters must be advised of the material terms of the leases that they were being asked to approve. Agenda Item R C Date /-/S-/Y Miami Beach Convention Center District Project(MBCC Project) January 15,2013 Page 2 of 3 Because these terms had not yet been negotiated, the court concluded that, without this necessary information, the lease approval ballot question must be removed from the ballot. To date, the City and SBACE have yet to finalize the terms of, or execute, the non- binding Letter of Intent (LOI) under Resolution No. 2013-28, nor have the parties commenced negotiations on a term sheet, development agreement, or any of the 99 year leases for the hotel and retail components. Further, on November 5, 2013, voters overwhelmingly approved a Charter amendment which would require a 60% (rather than majority) voter approval before the sale, lease exceeding 10 years, exchange or conveyance of any City-owned property within the Convention Center Campus. The area defined as the "Convention Center Campus" in the Charter amendment includes the City properties within the Convention Center District site described in the RFQ; and would therefore require that the proposed 99 year leases for the private components of SBACE's project now be approved by 60% of the voters. PROGRAM RECONSIDERATION The aforementioned change in circumstances requires reconsideration of the previously defined program. The current design proposed by SBACE combines the private hotel and the public MBCC facility into one building. The newly mandated requirement of negotiating and approving a lease (containing all material terms), prior to its approval by voter referendum, as well as the 60% voter approval now required under the City Charter, could delay the renovation of the MBCC indefinitely if the hotel and Convention Center are combined. Bifurcating the program by decoupling the public from the private uses would expedite the renovation of the Convention Center itself, since neither a lease nor a referendum would be required if the project were to remain a stand-alone building wholly controlled by the City. Decoupling the projects, therefore, will significantly accelerate the renovation of the MBCC. It also eliminates any risk that a referendum on the hotel and retail components would delay or terminate the Convention Center renovation. PROJECT FUNDING I appreciate that the purpose of the mixed-use development in the RFQ was to generate private funds to subsidize the renovation of the Convention Center. Fortunately, the City currently has the ability to secure funding for the renovation and expansion of the public project. Funding sources for the Convention Center renovation and expansion include: the Miami-Dade County General Obligation Bond ($53.6 million), the additional 1% resort tax (estimated at $230.4 million with collections beginning in 2015) and future dedicated revenues from the existing RDA through 2022 estimated at $71.2 million). These sources total approximately $355.2 million and do not require an RDA extension by the County. Additionally, the Parking Enterprise Fund can support up to $145 Million in future Parking Revenue Bonds for public parking. Furthermore, through better design and value engineering, I believe we can deliver a new and improved Convention Center for less than the $500 million budget estimated thus far. MAYOR'S RECOMMENDATION In order to assure that the renovation of the Convention Center remains the City's priority, I recommend the following for the City Commission's consideration: Miami Beach Convention Center District Project(MBCC Project) January 15,2013 Page 3 of 3 1. Approve a motion to rescind Resolution No. 2013-28, and terminate negotiations with SBACE. 2. Approve a motion to reject all proposals received pursuant to RFQ No. 22-11/12 on the grounds that the 3rd DCA's ruling and the new Charter amendment have significantly changed the circumstances and presumptions in the RFQ. 3. Approve a motion directing City staff to issue a new solicitation for design and/or construction services for the renovation and addition. The motion would include: a. Scaling down the scope of the previous master plan by removing any requirement for retail or other private commercial uses. The elements of the renovated Convention Center, however, should include 500,000 sq. ft. of existing exhibit space, the addition of a ballroom, additional meeting room capacity, and adequate back-of-house facilities and state-of-the-art technology. b. Further study the requirement for the development of a hotel at a future date. The study would reconsider the number of rooms, site location, and deal structure. The study would be taking place in tandem with the renovation of the Convention Center, but would be an independent process which would not cause a delay to the Convention Center project. Any hotel should be exclusively financed with private sector dollars. c. Incorporate a 25-year, 3-day level of stormwater service outside of the right-of- way and set minimum elevations that take into account the height of sea level rise based upon current projections. The City will also require features that protect the site from storm surge and require stormwater storage on-site. CONCLUSION Due to the immediate availability of funding for the public components of the Convention Center renovation project, and the desire to expedite the project and not allow a referendum to dictate the schedule, phasing, and ultimate design of the Center itself, I request that the City Commission approve this motion, as recommended. Cc: City Manager City Attorney T:WGENDA\2014\.JanuaryNBCC\MBCC Mayor's Memorandum.docx