2015-29029 Reso RESOLUTION NO. 2015-29029
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE CITY MANAGER, PURSUANT TO
REQUEST FOR PROPOSALS (RFP) NO. 2015-103-ME, FOR THE
DEVELOPMENT OF A CONVENTION HEADQUARTER HOTEL
ADJACENT TO THE MIAMI BEACH CONVENTION CENTER
("PROJECT"); AUTHORIZING THE ADMINISTRATION TO NEGOTIATE
A DEVELOPMENT AND GROUND LEASE AGREEMENT WITH
PORTMAN HOLDINGS, LLC, WITH SAID AGREEMENT SUBJECT TO
PRIOR APPROVAL BY THE MAYOR AND CITY COMMISSION
BEFORE FINAL EXECUTION THEREOF.
WHEREAS, Request for Proposals No. 2015-103-ME (the RFP) was issued on January
29, 2015, with an opening date of April 10, 2015; and
WHEREAS, a voluntary pre-proposal meeting was held on February 26, 2015; and
WHEREAS, the City received proposals from the following firms: (1) Portman Holdings,
LLC ("Portman"); and (2) Oxford Capital Group/RLB Swerdling ("Oxford Capital"); and
WHEREAS, on April 21, 2015, the City Manager notified Oxford Capital that its proposal
was not responsive to the RFP; and
WHEREAS, on April 29, 2015, the City Manager via Letter to Commission (LTC) No.
176-2015, appointed an Evaluation Committee (the "Committee"), which convened on May 7,
2015 to consider the Portman proposal and interview the Portman team; and
WHEREAS, after reviewing the Proposer's qualifications and submission, the City
Manager exercised his due diligence and is recommending that the Mayor and City Commission
authorize the Administration to enter into negotiations with Portman.
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 accept the recommendation of the City Manager pertaining to Request for
Proposals (RFP) No. 2015-103-ME, for the Development of a Convention Headquarter Hotel
Adjacent to the Miami Beach Convention Center; and authorizes the Administration to negotiate
a Development and Ground Lease Agreement with Portman Holdings, LLC, with said
agreement subject to prior approval by the Mayor and City Commission before final execution
thereof.
PASSED AND ADOPTED this Ia day of �� 2015.
f..
ATTEST: ..wm■ILINI
�' ...
///,; , / .
: .--,, if %.. ' t . _it/ '
-♦ r� APPROVED AS TO
afael E. rang t., erk :tomb* 1301ip l ev'-e, ,,,ro FORM &LANGUAGE a, 0,,,_.i = •ORATED.: � � �'
INCORP ,x /
&FOR EXECUTION 5 ((2415
c.%rI
/.. ��,� �lj d .e• City Attorney Dote
41144
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida,
Accepting The Recommendation Of The City Manager, Pursuant To Request For Proposals
(RFP) No. 2015-103-Me, For The Development Of A Convention Headquarter Hotel
Adjacent To The Miami Beach Convention Center ("Project"); Authorizing The Administration
To Negotiate A Development And Ground Lease Agreement With Portman Holdings, LLC,
With Said Agreement Subject To Prior Approval By The Mayor And City Commission Before
Final Execution Thereof.
Key Intended Outcome Supported:
Improve alliance with key business sectors, namely hospitality, arts & international
business with a focus on enhanced culture, entertainment &tourism.
Supporting Data(Surveys, Environmental Scan, etc.): N/A
Item Summary/Recommendation:
On January 29, 2015 the City issued Request for Proposals No. 2015-103-ME (the RFP) for
the Development of a Convention Headquarter Hotel Adjacent to the Miami Beach
Convention Center. A voluntary pre-proposal meeting was held on February 26, 2015.
On April 10, 2015 the City received proposals from Portman Holdings, LLC ("Portman") and
Oxford Capital Group/RLB Swerdling ("Oxford Capital"). On April 21, 2015, the City Manager
notified Oxford Capital that its proposal was not responsive to the RFP.
On April 29, 2015, the City Manager via Letter to Commission (LTC) No. 176-2015
P Y 9 ( ) 176-2015,
appointed an Evaluation Committee (the "Committee"), which convened on May 7, 2015 to
consider the Portman proposal and interview the Portman team. The average score by the
Committee members was 91 on a 100-point scale.
After reviewing the Proposer's qualifications and submission, the City Manager exercised his
due diligence and is recommending that the Mayor and City Commission authorize the
Administration to negotiate a development and ground lease Agreement with Portman
Holdings, LLC.
Advisory Board Recommendation:
N/A
Financial Information:
Source of Amount Account
Funds: 1
2
3
OBPI Total
Financial Impact Summary:
City Clerk's Office Legislative Tracking:
Maria Hernandez, Extension 2584
Sign-Offs:
Department Director Assistant City Manager City Ma ager
MHO% JLM
T:\AGENDA\2015\May\MBCC Headquarter Hotel\MBCC Hotel Developer Summary 2015 05 20.docx
AGENDA ITEM n� J
MIAMI BEA H
C 5-2-0—(C
DATE
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members of he City Co ission
FROM: Jimmy L. Morales, City Manager ._-----
1
DATE: May 20, 2015
SUBJECT: A RESOLUTION OF THE MAY.R AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE CITY MANAGER, PURSUANT TO
REQUEST FOR PROPOSALS (RFP) NO. 2015-103-ME, FOR THE
DEVELOPMENT OF A CONVENTION HEADQUARTER HOTEL
ADJACENT TO THE MIAMI BEACH CONVENTION CENTER
("PROJECT"); AUTHORIZING THE ADMINISTRATION TO
NEGOTIATE A DEVELOPMENT AND GROUND LEASE
AGREEMENT WITH PORTMAN HOLDINGS, LLC, THE SOLE
RESPONSIVE PROPOSER TO THE RFP, WITH SAID AGREEMENT
SUBJECT TO PRIOR APPROVAL BY THE MAYOR AND CITY
COMMISSION BEFORE FINAL EXECUTION THEREOF.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
KEY INTENDED OUTCOME
Improve alliance with key business sectors, namely hospitality, arts & international business with
a focus on enhanced culture, entertainment & tourism.
BACKGROUND
On January 29, 2015 the City issued Request for Proposals No. 2015-103-ME (the RFP) for the
Development of a Convention Headquarter Hotel Adjacent to the Miami Beach Convention
Center. A voluntary pre-proposal meeting was held on February 26, 2015.
On April 10, 2015 the City received proposals from Portman Holdings, LLC ("Portman") and
Oxford Capital Group/RLB Swerdling ("Oxford Capital"). On April 21, 2015, the City Manager
notified Oxford Capital that its proposal was not responsive to the RFP.
On April 29, 2015, the City Manager via Letter to Commission (LTC) No. 176-2015, appointed an
Evaluation Committee (the "Committee"), which convened on May 7, 2015 to interview the
Portman team and score the proposal consistent with the evaluation criteria outlined in the RFP.
Request for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 2 of 8
ANALYSIS
Firm Experience
The Portman proposal meets the experience requirements of the RFP. The Portman team has
extensive convention hotel development and architectural experience that includes the projects
shown below. Portman reports to have raised and developed over $6 billion and developed over
55 million square feet of real estate.
Project Name/Completion Date Role Rooms Meeting/Ballroom
SF
Hilton San Diego Bayfront Hotel (2008) Developer/Architect 1,190 165,000
Westin Charlotte (2003) Owner/Developer/ 700 44,000
Architect
Lane Field San Diego (Phase I under Developer/Architect 800 31,200
construction; Phase II in design) (Phase I & II) (Phase I & II)
Ritz-Carlton at Shanghai Centre(1990) Owner/Developer/ 700 20,300
Architect
Marriott Marquis Times Square (1985) Developer/Architect 1,892 101,500
Atlanta Marriott Marquis (1985) Developer/Architect 1,663 160,000
Westin Peachtree Plaza Atlanta (1976) Developer/Architect 1,100 29,000
Hyatt Regency Atlanta (1967) Developer/Architect 1,260 180,000
Design Team Experience
John Portman & Associates ("JPA") is the lead designer for the Project. JPA was founded in 1953
and is an internationally recognized architectural and engineering firm with 75 employees. In
addition to designing the above referenced hotel projects, JPA has also been the design architect
for the 500-room Renaissance Schaumburg Hotel and Convention Center; in 2006 and the 690-
room Shandong China Hotel & Conference Center in 2003.
In addition to JPA, the design team is to include the local architectural firm of Revuelta Architecture
International. Some of Revuelta's recent local projects include the 204-room Saxony Hotel in
Miami Beach and the 104-room/350-residential unit Epic Residences and Hotel in Miami.
JPA has also teamed with West 8, an international landscape architectural firm. Examples of West
8's landscape design projects include Miami Beach Soundscape; Madrid Rio in Madrid, Spain; and
Toronto Central Waterfront.
Finally, Portman has teamed with HDC International who will assist in preliminary cost estimating,
scheduling and scope description and review. HDC has advised on multiple convention hotels,
including the Gaylord Palms Resort & Convention Center.
Request for Proposals(RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 3 of 8
Key Terms
The Portman proposal accepts of the City's key terms, including:
• No Public Participation:
— No public subsidies or public financing
— Use of MBCC facilities at prevailing/market rates
• No Gambling:
— Use restriction to prohibit gambling on Hotel Site
— Developer/owners for term of lease may not own, operate or manage any
establishment offering gambling or wagering in Miami-Dade County
• Developer Funds:
— All costs to develop, design, construction, equip and operate hotel
— Referendum (general elections) cost
• Room Block Agreement:
— Portman has agreed to the City's terms outlined in the draft Room Block Agreement.
The proposal also recognized the requirement for a voter referendum whereby 60% of voters must
approve the lease. The referendum is contemplated to occur in November 2015.
Aspirational City and County Employment Goals
Portman has stated their commitment to the City and County employment goals. The following
include excerpts from their response:
• "The Portman team is unequivocally capable and committed to meet or exceed the Miami
Beach and Miami-Dade County employment goals..."
• "The Portman team believes in maximizing opportunities for local, minority, women, veteran
and small business enterprises."
• "We reach out to include local businesses to supplement the knowledge brought by the
international experts on our team."
• "The Portman team will contact local and certified diversity businesses We pledge to
keep the City Commission informed of our efforts through the issuance of monthly reports
throughout the project schedule."
• "It is the Portman team's desire to see hotel operations provide opportunities for
employment to City of Miami Beach and Miami-Dade County residents. We will do our part
to ensure the hotel operator selected has equal opportunity and that local outreach
programs are in place."
Proposed Hotel Program
Portman proposes to develop an 800-room convention headquarter hotel to include the following
program elements:
Request for Proposals(RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 4 of 8
Ballroom/Meeting Space S q. Feet Food & Beverage Seats
Grand Ballroom 26,500 3-meal 300
Junior Ballroom (2) 21,000 Lobby Lounge 180
Breakout Meeting 47,700 Pool Grille 130
Total 95.200 Rooftop 120
Club Lounge 92
Parking Spaces 320 Café 40
The 320 parking spaces proposed adheres t o t h e requirement in the RFP of 0.4 parking spaces
per room.
Hotel Brand
Portman has indicated they intend to consider national hotel brand/operators with an established
and consistently maintained reputation for quality operations. Brands to be considered include
Marriott, Marriott Marquis, JW Marriott, Westin, Omni, Hyatt Regency and Hilton. During
negotiations, Portman will work with the City to determine the best brand/operator for the hotel.
Development Budget and Finance Plan
Portman has estimated the preliminary development budget to be $405.5 million and intends to
finance the hotel with an estimated 60% in debt and 40% in equity. Portman Holdings has
indicated they plan to provide $17 million in equity, with the remaining equity to be funded by
Portman institutional relationships. The Portman proposal included construction debt financing
support letters from Regions Bank and PNC Bank and an equity support letter from China Orient
Summit Capital.
Development Schedule
Portman is estimating the hotel design to be complete in late 2016 and construction to be
complete in late 2018 with the hotel opening targeted to occur prior to Art Basel 2018.
Lease Proposal
Portman has proposed to lease the Hotel Site for a period of 99 years. Lease payments are
proposed to be the greater of a fixed schedule or 4% of gross hotel operating revenues. A
schedule of the proposed lease payments is in attached Exhibit 1. Below is a table of the total
and net present value ("NPV") of the lease payments:
Over 30 Years Over 99 Years
NPV NPV
Total @ 5% Total @ 5%
Minimum Fixed Rent $91m $36m $708m $60m
Variable Rent 89m 35m 705m 59m
Percentage Rent $180m $71m $1.4B $119m
The lease stream NPV of$119 million over the term of the lease equates to $149,000 per room.
This is higher than the City 2013 independent appraisal indicating a range of value from
$103,500 to $129,900 per room. Prior to executing the lease, the City Administration plans to
update the 2013 appraisal.
Transaction Rent
Portman has proposed the City will receive additional rent in connection with the first three sales
of the hotel to a third party if the sales price exceeds $580 million. In those events, the City is to
receive the lesser of$2 million or 0.25% of the gross sales price.
Request for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 5 of 8
Public Revenue Impact
The Hotel Site is currently a parking lot that generates $263,700 annually in revenues for the City.
If the site is developed with a hotel annual (year 4) lease and tax revenue generated is estimated
to be $22.2 million. Over time the hotel is estimated to generate:
• City: $438 million ($178 million NPV) over 30 years and $3 billion ($278 million NPV) over
99 years in lease payments, resort taxes, CRA revenues, property taxes and County CDT
allocations to the City.
• County: $110 million ($42 million NPV) over 30 years and $1.25 billion ($87 million NPV)
over 99 years in convention development taxes, local option sales taxes and property
taxes_
• Schools: $60 million ($24 million NPV) over 30 years and $453 million ($40 million NPV)
over 99 years in property taxes.
• State: $264 million ($107 million NPV) over 30 years and $2 billion ($176 million NPV)
over 99 years in sales taxes.
• Total: $878 million ($354 million NPV) over 30 years and $6.7 billion ($586 million NPV)
over 99 years in lease payments and taxes.
Refer to attached Exhibit 2.
RFP Evaluation Committee
The Evaluation Committee (the "Committee") consisted of the following individuals:
• Randy Weisburd, Chief Operating Officer, Atlantic & Pacific Companies and Resident
• Larry Gragg, President and Chief Operating Officer, Codina Partners
• Tom Mooney, Planning Director
• James Goldsmith, President and CEO, Gator Investments and Resident*
• Max Sklar, Tourism, Culture and Economic Development Director*
*James Goldsmith and Max Sklar were not able to attend the Evaluation Committee meeting.
The Committee reviewed and scored Portman's submittal based upon the criteria outlined in the
RFP. The table below represents the scores by the committee members.
Committee Member Scoring
CRITERIA Potential #1 #2 #3 Average
Score Score
Hotel finance plan and Proposer financial 30 28 25 25 26.0
capabilities
Proposed financial and other terms of the
Development and Ground Lease 25 22 25 23 23.3
Agreement
Hotel program, conceptual design and 20 18 15 18 17.0
preliminary development budget
Proposer experience and qualifications 10 10 10 10 10.0
Design team experience and qualifications 10 9 10 10 9.7
Organization plan 5 5 5 5 5.0
TOTAL 100 92 90 91 91
Request for Proposals(RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 6 of 8
CONCLUSION / RECOMMENDATION
The Administration recommends that the Mayor and City Commission authorize the Administration
to negotiate a development and ground lease Agreement with Portman Holdings, LLC, pursuant to
Request for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter
Hotel Adjacent to the Miami Beach Convention Center, with said Agreement subject to prior
approval by the Mayor and City Commission before the final execution thereof.
JLM/ MT/AD/MH
T:\AGENDA\2015\May\MBCC Headquarter Hotel\MBCC Hotel Developer Memo 2015 05 20.docx
Request for Proposals(RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 7 of 8
Exhibit 1
Summary of Lease proposal
Minimum . Variable Percentage
Fixed Rent Growth Rent Growth Rent Growth
2016 - - -
2017 - - -
2018 - - -
I 1 2019 $583,365 $253,749 $837,114
2 2020 1,071,059 83.6% 702,103 176.7% 1,773,161 111.8%
3 2021 1,820,800 70.0% 1,498,025 113.4% 3,318,825 87.2%
4 2022 2,476,287 36.0% 2,190,634 46.2% 4,666,921 40.6%
5 2023 2,525,813 2.0% 2,282,161 4.2% 4,807,974 3.0%
6 2024 2,576,329 2.0% 2,375,884 4.1% 4,952,213 3.0%
I 7 2025 2,627,856 2.0% 2,472,923 4.1% 5,100,779 3.0%
8 2026 2,680,413 2.0% 2,573,390 4.1% 5,253,803 3.0%
9 2027 2,734,021 2.0% 2,677,396 4.0% 5,411,417 3.0%
10 2028 2,788,702 2.0% 2,785,057 4.0% 5,573,759 3.0%
11 2029 2,844,476 2.0% 2,840,758 2.0% 5,685,234 2.0%
12 2030 2,901,365 2.0% 2,897,574 2.0% 5,798,939 2.0%
13 2031 2,959,392 2.0% 2,955,526 2.0% 5,914,918 2.0%
14 2032 3,018,580 2.0% 3,014,636 2.0% 6,033,216 2.0%
15 2033 3,078,952 2.0% 3,074,928 2.0% 6,153,880 2.0%
16 2034 3,140,531 2.0% 3,136,427 2.0% 6,276,958 2.0%
17 2035 3,203,341 2.0% 3,199,156 2.0% 6,402,497 2.0%
18 2036 3,267,408 2.0% 3,263,139 2.0% 6,530,547 2.0%
19 2037 3,332,756 2.0% 3,328,402 2.0% 6,661,158 2.0%
20 2038 3,399,412 2.0% 3,394,969 2.0% 6,794,381 2.0%
21-99 655,311,235 654,454,915 1,309,766,150
Total $708,342,093 $705,371,752 $1,413,713,845
NPV @5% $60,462,084 $58,911,951 $119,374,035
Note: The minimum fixed rent adjusts up or down every 10 years to 55%of the prior five
year's average total rent paid.
Request for Proposals(RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 8 of 8
Exhibit 2
Summary of Public Revenue Impact
�Y p
Over 30 years Over 99 years
2022(Yr 4) Total NPV @ 5% Total NPV @ 5%
CITY
Hotel Lease
Minimum Fixed Rent $2.5m $91m $36m $708m $60m
Variable Rent 2.2m 89m 35m 705m 59m
Percentage Rent (4% Gross) $4.7m 180m 71m 1,414m 119m
Taxes
CRA City (thru 3/2044) 1.1m 34m 16m 34m 16m
CRA County (thru 3/2044) 0.8m 26m 12m 26m 12m
New Resort Tax (Hotel 1%) 0.8m 30m 12m 229m 20m
Resort Tax (Hotel 3%, F&B 2%) 3.0m 118m 48m 902m 79m
CDT Allocation (thru 2044) 1.5m 36m 16m 36m 16m
Property Taxes* 0.1m 13m 4m 326m 16m
Subtotal 7.2m 258m 108m 1,553m 159m
CITY TOTAL $11.9m $438m $178m $2,967m $278m
COUNTY
Convention Devl. Tax (3%) 0.8m 54m 20m 650m 44m
Local Option Sales Tax (1%) 1.1m 44m 18m 336m 29m
Property Taxes* 0.1m 12m 4m 266m 14m
Subtotal County 2.0m 110m 42m 1,252m 87m
SCHOOLS (Property Tax) 1.5m 60m 24m 453m 40m
OTHER PROPERTY** 0.2m 7m 3m 55m 5m
STATE SALES TAX (6%) 6.6m 264m 107m 2,019m 176m
TOTAL $22.2m $878m $354m $6,746m $586m
*95%of general property taxes allocated to CRA through 3/2044
**Regional property tax and Children's Trust property tax
Key Assumptions:
All analysis completed on a calendar year basis
Year 1 through 10 based on developer proforma
Assumed 2%growth rate beginning in year 11 and beyond
NPV to 2016
$1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044
Sources:Portman,City of Miami Beach,SAG.