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2016-29368 Reso RESOLUTION NO. 2016-29368 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AMENDMENT NO. 3 TO THE MANAGEMENT AGREEMENT BETWEEN THE CITY AND LIVE NATION WORLDWIDE, INC (LIVE NATION) FOR THE MANAGEMENT AND OPERATION OF THE JACKIE GLEASON THEATER OF THE PERFORMING ARTS, NOW NAMED AND KNOWN AS THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON THEATER. WHEREAS, on June 22, 2007, the City entered into an Agreement with Live Nation Worldwide, Inc. (Live Nation) to manage the Jackie Gleason Theater of the Performing Arts (now named and known as the Fillmore Miami Beach at the Jackie Gleason Theater) (the "Venue"), with an initial term of ten (10) years, commencing on June 22, 2007, and ending on August 31, 2017 (the "Agreement"), and WHEREAS, on December 9, 2009 the City Commission adopted Resolution No. 2009- 27278, approving Amendment No. 1 to the Management Agreement, to authorize Live Nation to extend its hours of operation and sell alcohol at the Venue for a trial period, subject to specified conditions; and WHEREAS, on April 13, 2011, the City Commission adopted Resolution No. 2011- 27640, approving Amendment No. 2 to the Management Agreement, to permanently approve the extension of hours of operation and liquor sales at the Venue; and WHEREAS, since January 2015, the City has pursued the development of a Convention Headquarter Hotel ("Hotel Project") on approximately 2.6.5 acres of City-owned property located on the northeast corner of 17th Street and Convention Center Drive-(the "Proposed Site"); and WHEREAS, prior to the March 15, 2016 voter referendum concerning City's lease of the Proposed Site for the Hotel Project, the City and Live Nation negotiated mutually acceptable terms addressing the reconfiguration of loading docks, City's removal of a portion of the Venue known as the "Rehearsal Room," and other impacts on Live Nation's operations relating to the development of the Hotel Project; and WHEREAS, the proposed Amendment No. 3 to the Management Agreement is attached hereto as Exhibit 1 to the Commission Memorandum accompanying this Resolution; and WHEREAS, on June 3, 2015, the Finance and Citywide Projects Committee recommended moving forward with the terms of proposed Amendment No. 3; and WHEREAS, although the City's lease of the Proposed Site was not approved by 60% of the voters in the March 15, 20t6 referendum, as required by Section 1.03(b) of the City Charter, the Administration nevertheless recommends approval of Amendment No. 3 to, among other provisions, establish the terms -on which the City may remove the "Rehearsal Hall" from the Management Agreement, should the City continue to pursue development of the Hotel Project at the Proposed Site at a later 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 approve and authorize the Mayor and City Clerk to execute Amendment No. 3 to the Management Agreement between the City and Live Nation Worldwide, Inc., for the Management and Operation of the Jackie Gleason Theater of the Performing Arts, now named and known as The Fillmore Miami Beach at the Jackie Gleason Theater. PASSED AND ADOPTED this 13th day of April, 2016. ,.- Al i ;, r '/ II �� �' J�/ CA' IT � LERK ! �•0. 0\ B --,<F1144, ° /x T:\AGENDA\2011\4-13-11 anon A•• e• 0 ►o, , "doc 4' —� A { 3* :INCORP ORA1 ED f-3,.1 s PROVED AS TO J� �•W �_ •'�� .�• :� FvI�.PiU! & LANGUAGE - -_ &FOR EXECUTION r; Z3 City Attorney Q-A P Date • THIRD AMENDMENT TO MANAGEMENT AGREEMENT THIS THIRD AMENDMENT TO MANAGEMENT AGREEMENT ("Third Amendment") is made and entered into this day of , 2016 ("Effective Date"),by and between the CITY OF MIAMI BEACH, a municipal corporation organized and existing under the laws of the State of Florida, and having its principal office at City Hall, 1700 Convention Center Drive, Miami Beach, Florida 33139 (the "City"), and LIVE NATION WORLDWIDE, INC., a Delaware corporation, whose address is 9348 Civic Center Drive, Beverly Hills, California 90210 ("Live Nation"), with reference to the following. RECITALS A. City and Live Nation are parties to that certain Management Agreement, dated June 22, 2007 (as the same may be amended, the "Management Agreement"), pursuant to which Live Nation acts as the City's agent with respect to the management and operation of The Jackie Gleason Theater located at 1700 Washington Ave., Miami Beach, Florida 33139 (the "Facility"), in accordance with the terms therein. The Management Agreement has been amended twice: on or about December 9,.2009„ and on or about April 13, 2011. Legible copies of the Management Agreement, together with all amendments thereto, are attached to this Third Amendment as Exhibit "A" and made a part hereof. B. The City of Miami Beach is pursuing the development of a Convention Headquarter Hotel adjacent to the Miami Beach Convention Center ("Hotel Project") and certain other related off-site improvements. At a future date, City may elect to remove from the Management Agreement that certain portion of the Facility, which portion consists of the area marked on Exhibit "B" attached hereto and made a part hereof(hereinafter, the "Rehearsal Room") and Live Nation is willing to surrender the Rehearsal Room, on the terms and conditions of this Third Amendment. C. In consideration of Live Nation's agreements set forth herein, and to induce Live Nation to enter this Third Amendment, City desires to agree to certain financial and operational adjustments related to Live Nation's operation of the Facility, all as more fully set forth in this Third Amendment. NOW THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both parties, City and Live Nation agree as follows. 1. Recitals; Section Headings; Defined Terms. The "Recitals" paragraphs above are deemed to be part of the agreement of the parties hereto. The paragraph headings of this Third Amendment are for convenience and reference only and none of such headings shall limit or amplify the meaning, application or construction of any of the provisions of this Third Amendment. Unless specifically defined in this Third Amendment, any capitalized terms used in this Third Amendment shall have the meanings ascribed to such terms in the Management Agreement. 1 2. Recapture of Rehearsal Room. (a) City may, upon delivery to Live Nation of at least sixty (60) days' prior written notice ("Recapture Notice"), recapture possession of the Rehearsal Room, as of 5:00 p.m. Eastern Time on any date designated by City set forth in such Recapture Notice ("Recapture Date"). Not later than the Recapture Date, Live Nation shall surrender possession of the Rehearsal Room to City in substantially the same condition it is in as of the Effective Date of this Third Amendment, reasonable wear and tear and damage caused by casualty excepted. Upon such surrender, City shall accept possession of the Rehearsal Room and the Rehearsal Room shall be deemed removed from the definition of"Facility" for all purposes. (b) The decision by City whether or not to recapture the Rehearsal Room shall be in City's sole and absolute discretion. (c) Upon Live Nation's receipt of the Recapture Notice, Live Nation may incur capital improvement costs in order to reconfigure/alter portions of the Facility other than the Rehearsal Room, in Live Nation's discretion, to accommodate catering operations. Upon Live Nation's completion thereof, Live Nation shall be entitled to credit its out-of-pocket costs incurred in connection therewith from any amounts payable by Live Nation to City pursuant to the Management Agreement, not to exceed Fifty Thousand Dollars ($50,000.00). (d) Upon Live Nation's surrender of the Rehearsal Room, City shall be solely responsible for taxes, insurance, maintenance expenses, and operating costs with respect to the Rehearsal Room, including, but not limited to, security. 3. Adjustments to Required City Distribution. (a) The third paragraph from the end of Section 3.2 of the Management Agreement (which paragraph begins with "The Required City Distribution...") is hereby deleted and replaced in its entirety with the following: The Required City Distribution amount for the first Fiscal Year of the First Renewal Term shall equal the greater of either (a) $1,222,512.00 or (b) $1,000,000.00 increased by the percentage increase between the CPI published for June 2007 and the CPI published for June 2017. (For illustration purposes, if such percentage increase in CPI is 23%, then the Required City Distribution amount for the first Fiscal Year of the First Renewal Term would be $1,230,000.00.) Beginning January 1, 2019, and on each January 1 thereafter during the First Renewal Term, the Required City Distribution amount shall be increased by a fixed amount equal to two percent (2%) of the amount of the Required City Distribution in effect for the preceding Fiscal Year. (b) As of the-Recapture Date, Live Nation shall receive a credit toward sums payable by Live Nation to City pursuant to the Management Agreement in the amount of 2 $250,000 for each full Fiscal Year then remaining in the Term, and pro-rated for any partial Fiscal Year, plus all full and (pro-rated) partial Fiscal Years during any extension option exercised by Live Nation. For the avoidance of doubt, such credit shall be in the sum of $250,000 with respect to the full Fiscal Year in which the Recapture Date occurs and also with respect to each full Fiscal Year thereafter, and pro-rated for any partial Fiscal Year. Accordingly, if the Recapture Date occurs at any time during a given Fiscal Year after Live Nation has already paid the full amount of the Required City Distribution for such Fiscal Year, then the City will refund to Live Nation the appropriate credit amount due pursuant to this Section 3(b). 4. Chilled Water Costs. As part of Live Nation's operational responsibilities pursuant to the Management Agreement, Live Nation incurs certain costs related to chilled water at the Facility. Retroactive to January 1, 2016, and continuing thereafter throughout the Term of the Management Agreement and all extensions thereof, Live Nation shall receive a credit for such chilled water costs in the fixed annual amount of$165,000. The credit for chilled water costs shall be applied by City as follows: City will refund to Live Nation $165,000 with respect to calendar year 2016 chilled water charges, in the form of a credit toward the calendar year 2016 Required City Distribution; then, for chilled water charges incurred with respect to each calendar year following 2016, City shall, at the City's discretion, but with prior written notice to Live Nation, either cause the applicable agency to which Live Nation pays for chilled water to waive the appropriate $165,000 of chilled water charges with respect to the Facility, or the City may pay for such chilled water costs directly and on Live Nation's behalf, or the City may allow Live Nation to. offset $165,000 against the Required City Distribution. If the Term expires or is terminated prior to such credits being applied (pro-rated for any partial calendar year), City and Live Nation shall reconcile such amounts promptly, whereupon City shall promptly pay to Live Nation any then-remaining amount of such credit earned prior to the effective date of termination. 5. Event Ticket Surcharges and Community Benefit Fund. Subparagraph (g) of Section 2.4 of the Management Agreement is hereby amended to add an additional twelve (12) Facility rental waivers in connection with live theater productions, in accordance with the City's Resolution No. 2014-28732 attached as Exhibit "C" hereto. From and after the Effective Date hereof, Live Nation shall have the right (to be exercised in Live Nation's sole discretion) to create a capital improvement/repair reserve fund designated for capital improvements and/or repairs to the Facility ("Facility Reserve Fund"). For the avoidance of doubt, Live Nation may impose ticket surcharges, other than the surcharge for the Community Benefit Fund, to raise such funds for the Facility Reserve Fund (or it may obtain such funds from other sources), but the funds dedicated to the Facility Reserve Fund shall be separate from any ticket surcharges that are required to be deposited into the Community Benefit Fund. No funds required to be deposited into the Community Benefit Fund shall be diverted to the Facility Reserve Fund. Live Nation may use any funds in the Facility Reserve Fund for any ordinary and necessary repairs to the Facility, and, with City's reasonable approval, any capital improvements to the Facility. Upon the expiration or earlier termination of the Term of the Management Agreement, the then- remaining balance of the Facility Reserve Fund shall be released to City, net of amounts which are then-payable by City to Live Nation (if any). 6. Suspension of Complimentary Tickets. Subparagraph (d) of Section 2.4 of 3 the Management Agreement is hereby deleted in its entirety, and, accordingly, the Complimentary Tickets perquisite set forth in such subparagraph (d) shall be deemed terminated as of the Effective Date of this Third Amendment. 7. Hours of Alcohol Service. Section 2.1 (b) of the Management Agreement is hereby amended to permit alcohol beverage sales and service until 2 a.m. in connection with any Event at the Facility, including, but not limited to, New Year's and Winter Music Conference. Consistent with Amendment No. 2 to the Management Agreement, the Facility shall close to the public no later than 3:00 a.m.; accordingly, all patrons within the Facility shall also leave the Facility by 3:00 a.m. 8. Bottle Service. From and after the Effective Date hereof, and in connection with any Events at the Facility, Live Nation may cause "bottle service" to be offered to Facility patrons provided, however that there shall be no alcoholic beverage service (including, without limitation, bottle service) after 2:00 a.m., and the Facility shall be closed to the public no later than 3:00 a.m. As used herein, "bottle service" shall be deemed to mean the lawful sale and service of liquor by the bottle. The purchase of bottle service typically includes a reserved table for the patron's party and mixers of the patron's choice. Bottle service can include the service of a VIP host. 9. DJ/EDM Programming. From and after the Effective Date hereof, there shall be no operating hours restriction in connection with Electronic Dance Music (EDM) Events and DJ-headlined Events at the Facility other than any restrictions set forth in the City Code, and provided, however that there shall be no alcoholic beverage service (including, without limitation, bottle service) after 2:00 a.m., and the Facility shall be closed to the public no later than 3:00 a.m. 10. Valet Parking Charges. From and after the Effective Date hereof, Live Nation shall have the right to pre-sell and/or package valet parking with Facility admission ticket sales. The price for such valet parking services shall be $20 per vehicle, of which $5 may be retained by Live Nation and $15 will be distributed to City or City's contracted valet parking operator, as designated by City. In the event the City Commission, in its sole and absolute discretion, elects to increase the price for valet parking services, the City shall notify Live Nation and Live Nation will be entitled to increase the valet parking fee to such authorized price and to retain an amount equal to 25% of the gross selling price thereof. 11. Convention Center Headquarter Hotel Development. (a) Live Nation hereby acknowledges that a portion of the Facility and the surrounding area may undergo construction, including demolition of the Rehearsal Room, reconfiguration of the Facility's loading docks, demolition of the 555 17th Street building and construction of the Hotel Project in the area bounded roughly by Convention Center Drive to the East, the Facility to the West, 17th Street to the South, and the Convention Center to the North. Live Nation further acknowledges that all such construction might be undertaken by City and/or by a third-party, and that the City might not be in privity of contract with any of the construction 4 contractors for the Hotel Project, and accordingly might not have any control or responsibility for the contractors or the schedule or performance of the construction of the Hotel Project. (Whether or not the Hotel Project is developed by City or by a third party, such Hotel Project developer is referred to herein as the "Hotel Developer".) (b) If at any time during the Term of the Management Agreement, or any extension thereof, City authorizes the Hotel Project to be constructed, the City will provide Live Nation with regular monthly updates with regard to Hotel Developer's progress with respect to identifying financing for the Hotel Project, development of the design documentation for the Hotel Project and the design documentation for the demolition of the Rehearsal Room and/or any re-construction/restoration of the Facility and its loading dock areas (the "Facility Improvements"), as well as the anticipated schedule for obtaining all required regulatory approvals and permitting for the Facility Improvements and the Hotel Project. (c) Prior to City's approval, in its proprietary capacity, of plans for the Facility Improvements (the "Plans"), City shall provide legible copies of the Plans to Live Nation for its input. Live Nation's input may include comments with respect to potential impacts on the functionality or operability of the Facility as an entertainment venue and performing arts center, provided, however, that Live Nation acknowledges and agrees that the Plans contemplate and will provide for a smaller footprint for the Facility and its loading dock and surrounding areas, substantially as shown on Exhibit "B". As part of City's approval of the Plans, in its proprietary capacity, City shall not provide its approval of the Plans unless the City Manager is reasonably satisfied that the Plans will provide for a functional Facility that is operable for its intended purposes as an entertainment venue and performing arts center, consistent with Live Nation's operations at the Facility (excluding the Rehearsal Room) and consistent with the provisions of this Third Amendment. Any comments to such plans that Live Nation may reasonably have shall be transmitted to City's designated Hotel Project Representative (initially, Jeff Sachs) for the City Manager's review and consideration. (d) Further, City shall not approve the Plans unless such Plans, at a minimum, provide for the Facility edge impacted by any recapture and/or demolition of the Rehearsal Room, to be re-constructed/restored to an architectural whole with finishes and structural components that are reasonably compatible with the finishes and quality existing at the Facility prior to the demolition. (e) City shall not permit any demolition or re-construction/restoration of the Facility Improvements until such time as the City Manager has approved, following input from Live Nation: (1) a schedule for the construction of the Facility Improvements that takes into account Live Nation's planned schedule of events, performances and operations at the Facility, and (2) a process for updating such schedule, as may be reasonably required from time to time (whether such updates involve Live Nation's operations or the general contractor's progress with construction). Such schedule will, to the extent possible, identify dates, if any, where significant construction activity is expected to occur that may preclude the scheduling of any performances at the Facility. (f) At all times during the construction of the Hotel Project and at all times during the 5 Facility Improvements, the City shall require Hotel Developer, and its contractor(s) (and any subcontractors of either of them), to cause no Material Disruption (as defined in Section 11(i) below) to Live Nation's operations, including, but not limited to, any performance or event at the Facility, and as necessary, the City shall enforce the applicable provisions of any agreements in connection therewith. (g) City shall provide Live Nation with thirty (30) days advance written notice of commencement of construction of the Facility Improvements and the Hotel Project. Subject to the terms of this Third Amendment, City reserves the right to stop service of the HVAC, electric, sanitary, elevator (if any), or other systems or utilities serving the Facility, or to stop any other services required by City under the Management Agreement, as amended, whenever and for so long as may be necessary to detach any such services from the Rehearsal Room (upon recapture thereof in accordance with this Third Amendment) and/or to install such services to the Hotel Project; provided, however, the day-of timing of any and all such service interruptions shall be coordinated by City with an on-site representative of Live Nation (initially, the Facility general manager) so as to minimize the impact of such service interruptions upon the Facility operations. Notwithstanding anything to the contrary, City shall not permit any such planned service interruptions to be scheduled to occur (or actually to occur) for two hours prior to, during, and for two hours following any performance or publicized event within the Facility, in accordance with the schedule pursuant to Section 11(e)herein. (h) Live Nation acknowledges that during the Hotel Project there may be times where normal construction activities may create normal construction noise, normal construction vibration, normal construction dust, or other normal construction-related environmental impacts that may be observable to Live Nation in the course of its operation of the Facility. Live Nation further acknowledges that the construction of the Hotel Project may require modifications to Live Nation's operations from time to time, such as changes involving the entry, egress, loading, and circulation spaces in and around the Facility that may include, but may not be limited to the creation of temporary partitions/passages within or around portions of the Facility that may occur within or adjacent to areas of active construction, the relocation of entry or exiting doors, the reconfiguration of specific loading docks, parking and other temporary adjustments to the movement of people and freight through the Facility. During the construction of the Hotel Project, matters requiring modifications to Live Nation's operations at the Facility shall be coordinated and planned, with reasonable input from Live Nation and with the assistance, as necessary, of City's Hotel Project Representative. Live Nation acknowledges that the conditions identified in this Section 11(h) are an anticipated element of the use of the Facility during the Hotel Project construction and, as such do not constitute a "Material Disruption" of the operations of the Facility such that closure of the Facility is required pursuant to Section 11(i). (i) A "Material Disruption" of the operation of the Facility shall mean any construction activity of City, Hotel Developer and/or contractors related to the Hotel Project that either (A) results in a cancellation or relocation (in either instance, out of necessity) of an Event, or Run (as such terms are defined in the Management Agreement), or (B), for a continuous period of not less than twenty-four (24) hours, either (1) renders the Facility inaccessible or precludes the safe ingress/egress therefrom such that a regulatory agency having jurisdiction would require closure of the Facility, (2) renders the Facility uninhabitable or unfit for use, or (3) causes the cessation 6 of utilities at the Facility. Live Nation shall have the right, in its reasonable discretion, to close the Facility during any period when day-to-day venue operations actually experience, or are reasonably anticipated to experience, a Material Disruption. Live Nation shall provide written notice to the City of such Material Disruption within twenty-four (24) hours of its occurrence, with a brief explanation of the events giving rise thereto, to permit City the opportunity to verify whether City and/or Hotel Developer and/or the Hotel Project contractors were the cause of the Material Disruption. (j) If City verifies that Live Nation is required to close the Facility on one or more occasions due to Material Disruptions caused by City and/or Hotel Developer and/or the Hotel Project contractors, then Live Nation shall receive a credit against amounts payable by Live Nation to City pursuant to the Management Agreement equal to the sum of all of the following: (1) a pro-rated per-diem amount of the then-applicable Required City Distribution for the duration of all such Facility closure(s), plus (2) a pro-rated per-diem amount of all other fixed costs incurred by Live Nation to operate the Facility (net of the chilled water credit set forth above in Section 4 of this Third Amendment), including, but not limited to, the salaries of all full time and part time personnel, plus (3) any and all out-of-pocket expenses incurred by Live Nation in connection with the cancellation of any and all Events, including, but not limited to, talent guarantees, marketing costs and costs related to personnel who are paid on an Event-by- Event hourly basis. (k) City shall cause each of the Hotel Developer and the general contractor for the Facility Improvements to provide Live Nation with a certificate of insurance naming Live Nation as an "additional insured" on its liability insurance policy(ies), for all work involving the Facility Improvements. 12. Facility Certification. In accordance with the Miami-Dade County Code ("Code"), the Facility was due for certification, or re-certification, by the "Building Official" (as defined in the Code) prior to the commencement of the Management Agreement. At City's sole cost and expense, City shall, within 180 days after the Effective Date of this Third Amendment, satisfy the requirements of the Code with regard to the certification, or re-certification, of the Facility. City and Live Nation shall meet and confer in good faith within sixty (60) days after the City completes the Facility inspection required in connection with such certification (or re- certification, as applicable). Any Facility conditions which date back to prior to the commencement of the Term of the Management Agreement shall be solely City's responsibility and expense to repair in order to pass certification in accordance with the Code. Responsibility for any Facility conditions which date back a date which was on or following the commencement of the Term of the Management Agreement shall be determined in accordance with the obligations set forth in the Management Agreement with respect to Facility maintenance and repair. 13. Notice of Violation. The City is in receipt of a violation concerning certain Facility conditions that pre-dated the Management Agreement Term. A copy of the notice pertaining to such violation is attached hereto as Exhibit "D" and made a part hereof. Any and all costs and expenses related to the remediation of Facility conditions referenced in such notice shall be the sole responsibility of City. 7 14. Notice Address for Live Nation. The address for purposes of receipt of set forth in Section 15.7 of the Management Agreement is hereby notices by Live Nation s Management to be as follows. To Live Nation: Live Nation Worldwide, Inc. 7060 Hollywood Blvd. Los Angeles, California 90028 Attn: Michael Grozier With copy to: Live Nation Worldwide, Inc. 7060 Hollywood Blvd. Los Angeles, California 90028 Attn: Sheila Small, Chief Counsel [remainder of page intentionally blank] 8 15. Entire Amendment. This Third Amendment sets forth the entire agreement of the parties with respect to the subject matter hereof. All prior or contemporaneous understandings and discussions, whether written or verbal, are entirely superseded by this Third Amendment. Except as amended by the express provisions of this Third Amendment, the terms and conditions of the Management Agreement remain in full force and effect. IN WITNESS WHEREOF, this Third Amendment has been duly executed by the parties hereto as of the Effective Date first above written. CITY OF MIAMI BEACH, FLORIDA, a municipal corporation of the State of Florida By: Philip Levine, Mayor ATTEST: By: Rafael E. Granado, City Clerk APPROVED AS TO FORM & LANGUAGE &FOR EXECUTION: By: x, 106-- 3 City Attorney [signatures continue on next page] 9 LIVE NATION WORLDWIDE,INC., a Delaware corporation By: Print Name: Its: ATTEST: By: Print Name: Its: 10 EXHIBIT ►►A" COPY OF MANAGEMENT AGREEMENT AND ALL AMENDMENTS THERETO (TO BE INSERTED) • • 11 EXHIBIT "B" DEPICTION OF THE "RECAPTURE AREA" ((USE PLAN SHOWING CONTEMPLATED HOTEL PROJECT FOOTPRINT -- TO BE INSERTED) • 12 EXHIBIT "C" CITY RESOLUTION NO. 2014-28732 (TO BE INSERTED) 13 EXHIBIT "D" NOTICE OF VIOLATION (ATTACHED) 14 R V 15UU]121 NOV • • ez WING DEPARIAIEi I 170C Co97rt'L on Ce lee r.liarni Bra_r rI�3•& .wrx T arrazaachil gay NOTICE OF VIOLATION Ycletur: Omer: CITI'OF MIAMI KF..ACH CITY OF MIAMI BEACH. FLA BAY Si I ORR C[.L:L3 COURSE. EU BAY SHOR.L CLL.f•CU()RSE MIAMI C_ MIAMI FL 33125-371 Case Iniormatiun: Case.Nu; RS'15001121 Dacc 117134,' 1L5 Sub-Ty pu; STR1ICT Fees(if npplice,k): Sn_00 Property Address; 500 17TH ST ProximityfUnit; 2A1( MERIDIAN AV:1641;15H PIINN Perntilg= hays to Comply: 30 You most mkt the never ry acticin(s) o re-rest cr KIi niDoi a Llle violatiou(s);end contyit t the L IL e.tor listed baluvr. I f you do not coma Iy w it 1. II 30 dints' born rcceiF•1 liotice,tie City ot-Miam`_I teat HMI i bring Department will Ole cI1fl ges and present this k::a>.q 1r?F012 the eotirrning agency h:'v iui .iurisdwtion. I f you inI end in;:'.I1's permit in res?onse to this violation,a copy cif E11.2 violation notice nnet'on 4urjlied to-Iv_Building C1r.Ftile..rranr. Any linen or tees incurred tenni 'his vinlaci:on th remain o'J19t;Irnlins-will result ins lien bin p1:1cec'0II II.e ltiltincrry. '�- ? Received Ely: MAI AA ' Signatures: "-;� fiP,LSI B1JILDLNG INSPL!CI'O1 t 306•673-7610 Printed Name: f +� YIO LAT1Q*IIS) Unit!I GENRL I, ,W11.6 MAINTENANCE: ALL BUILDINGS,STRUCTURES,ELlsCTRUCAL,GAS:MEC'Fri ANIt'AI•AND PLLIMBINC SY`TEMS,ROTH EXISTINI3 AND yE}4',AND ALL PARTS THEIREOF,.yI L,A1.1,RF: MAINTAINED A SAFE AND 8ANITARVCONDITION. ALL Li h,411kSAFF,CFU•ARDSWHICH ARE REQUIRED U Ti IF.TECHNICAL CODES WHEN COAST RIJC.TED,ALTERED OR ItH.P.ATRED; SHAI.L 1W MAINTAIIwED IN Cool)WOi1KINC;ORDER. THE OWNER,Oft IDS T]ESIf1NATED A4il;N'l, SHALL RE RESPUN1EtLt: ut•MT, MAINTENANCE OF DU LLD]NGS,STRUCTURES.ELECTRICAL, GAS, A. 1(:Al,ANT)PLUMBING SYSTENIS, NOTICE OF VIOLATION'SSUED.Fillmore Theatre Evidence cf spell'ig concrete eipneers in some areas or the bu rding.Need to aubrrllt a roport within 30 days,signed and Sealed I y an ongincerto eve ivatethe structure lagetherwith rrethodsQI rEQalrs. Nee 1 COMMISSION ITEM SUMMARY Condensed Title: A Resolution Approving Amendment No. 3 To The Management Agreement Between The City And Live Nation Worldwide, Inc (Live Nation) For The Management And Operation Of The Jackie Gleason Theater Of The Performing Arts, Now Named And Known As The Fillmore Miami Beach At The Jackie Gleason Theater. Key Intended Outcome Supported: N/A Supporting Data(Surveys, Environmental Scan,etc.): N/A - Item Summary/Recommendation: On June 22, 2007,the City entered into an Agreement with Live Nation Worldwide, Inc. (Live Nation)to manage the Jackie Gleason Theater of the Performing Arts, now named and known as the Fillmore Miami Beach at the Jackie Gleason Theater, with an initial term of ten (10) years, commencing on June 22, 2007, and ending on August 31, 2017 (the "Agreement"). The Agreement restricted Live Nation from serving food or beverages after midnight. Live Nation subsequently requested an amendment to the aforestated food and beverage restriction as there are a number of potential events it has been unable to book (due to this restriction) and the City Commission subsequently adopted Resolution No. 2009-27278 on December 9, 2009 approving Amendment No. 1 to the Management Agreement, which permitted Live Nation to extend hours of operation and liquor sales at the Venue for a trial period, subject to conditions. On April 13, 2011, the City Commission approved Amendment No. 2 (Resolution No. 2011-27640), which permanently approved the changes. 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. In evaluating potential sites, it was possible that the hotel could impact the rehearsal hall / backstage performance space and loading dock of the Fillmore. Therefore, the Administration began preliminary conversations with Live Nation to discuss the potential impact of this to their operations and negotiate mutually acceptable terms if the City were to proceed with the Convention Center Hotel at this location following the March 2016 referendum. This item was discussed at the February 2, 2015 Finance Committee and staff was directed to further negotiate with Live Nation and bring the item back to the March 2, 2015 Finance Committee meeting. On June 3, 2015, the Finance and Citywide Projects Committee recommended moving forward with the proposed amendment adding that there be a rent waiver(and for other fixed cost) if the building were to close due to construction/demolition of the Jackie Gleason Theater. Now that the results of the convention center hotel referendum have been tabulated, the Administration has completed negotiations with Live Nations for the amendment to the Management Agreement. Since the City is still pursuing a convention center hotel, but a final site has not been selected or approved,the agreement includes language that will allow the City to recapture a portion of the facility and the surrounding area with notice to Live Nation if needed. The negotiated and recommended amendments are summarized in the attached memorandum. The Administration recommends that the Mayor and City Commission adopt the Resolution. Advisory Board Recommendation: The Administration submitted this matter to the Finance and Citywide Projects Committee and the item was discussed on February 2015, March 2015,April 2015, and June 2015 meetings. On June 3,2015,the Committee recommended the City Commission approve the proposed amendments. Financial Information: Amount Account Source of Funds: 1 N/A N/A Financial Impact Summary: This amendment would reduce the annual Required City Distribution by$165,000 annually. If the convention center hotel were to be developed on a site that requires the recapture of the Fillmore rehearsal hall,then the RCD would be further reduced by$250,000. City Clerk's Office Legislative Tracking: Max Sklar,ext.6116 Sign-Offs: / Departm, /•ire• or Assistant Ci nager City Ma!, •_r MA E%�IP KGB ;i,- T:\AGENDA\2016\April\T \Live Nation\Live Nation Mgmt Agrmt SU M.docx I MIAMIBEACH AGENDA ITEM - DATE 7 13—IC MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov CQMMISSION MEMORANDUM TO: Honorable Mayor and Members of e City Co f-' ission FROM: Jimmy L. Morales, Cit Manager DATE: April 13, 2016 SUBJECT: A RESOLUTION OF THE MAYO- AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING AMENDMENT NO. 3 TO THE MANAGEMENT AGREEMENT BETWEEN THE CITY AND LIVE NATION WORLDWIDE, INC (LIVE NATION) FOR THE MANAGEMENT AND OPERATION OF THE JACKIE GLEASON THEATER OF THE PERFORMING ARTS, NOW NAMED AND KNOWN AS THE FILLMORE MIAMI BEACH AT THE JACKIE GLEASON THEATER. BACKGROUND On June 22, 2007, the City entered into an Agreement with Live Nation Worldwide, Inc. (Live Nation) to manage the Jackie Gleason Theater of the Performing Arts, now named and known as the Fillmore Miami Beach at the Jackie Gleason Theater, with an initial term of ten (10) years, commencing on June 22, 2007, and ending on August 31, 2017 (the "Agreement"). The Agreement restricted Live Nation from serving food or beverages after midnight. Live Nation subsequently requested an amendment to the aforestated food and beverage restriction as there are a number of potential events it has been unable to book (due to this restriction) and the City Commission subsequently adopted Resolution No. 2009-27278 on December 9, 2009 approving Amendment No. 1 to the Management Agreement, which permitted Live Nation to extend hours of operation and liquor sales at the Venue for a trial period, subject to conditions. On April 13, 2011, the City Commission approved Amendment No. 2 (Resolution No. 2011- 27640) which approved the following changes to the agreement: 1. Any sale, distribution, and or service of food and beverages, including alcohol, at the Venue shall cease at no later than 2:00 AM. 2. The Venue will be closed to the public no later than 3:00 AM; accordingly, all patrons within the Venue should also leave by 3:00 AM. 3. No DJ performances shall be allowed for extended hours. The following is a summary of existing Terms of the Management Agreement: Term - The Term of the Agreement is 10 Years, with one 5-year renewal option at the discretion of Live Nation. There is a second 5-year renewal option upon mutual agreement. The initial Term began on Thursday, June 21, 2007 and ends on August 31, 2017. Live Nation has a window to notify the City of its intent to renew which is no earlier than August 31, 2015 and no later than 270 days prior to August 31, 2017. City Distribution — There is a Required City Distribution due to the City at the beginning of each Live Nation Fiscal Year. Since the Live Nation FY runs from January 1st to City Commission Meeting Live Nation Management Agreement April 13, 2016 Page 2 of 6 December 31St, the first year was prorated. Prorated distribution in the first year was $525, 000 and is currently $1,152,636. Excess Distributions — The City may also qualify for Excess Distributions, depending upon the performance of the venue. These Distributions are due by March 1 of the subsequent year, if achieved. To date, they have never been achieved. Food and Beverage Restrictions — Pursuant to Resolution No. 2009-27278 (Amendment No. 2), Live Nation may not sell, distribute, or serve food and/or beverages after 2am. Alcohol may not be sold in bottles. Parking - The City reserves all rights to parking. Live Nation provides access rights to the porte-cochere area for valet parking purposes. However, the City and Live Nation had until June 21, 2008 to negotiate a pre-purchase Parking Agreement, if either party so desired. Although Live Nation attempted to negotiate a Parking Agreement, the prior administration did not pursue it. Number of Events — Live Nation is required to have a minimum of 50 events by 17 different artists in any full year from January to December. Any booking that runs in excess of 30 days must be approved in writing by the City Manager. Maintenance — Live Nation has responsibility for all maintenance and upkeep, including capital renewal and replacement, for the facility. Free City Use — The City has the right to use the facility two times per year without paying rent. However, the City does need to pay all other operating charges. Free Charitable Use — The City has the right to use the facility for a charitable use two times a year without paying the rental fee. However, the City does need to pay all other operating expenses. Playground Review—The City has the right to use the facility on the Tuesday, Wednesday, and Thursday of the second week of Jul for the Playground Review throughout the Y July Y9 9 Term pursuant to the same rules as above. Complimentary Tickets —The City will receive 26 tickets in the upper 30% price range for every event. School Tickets—The City shall be eligible to receive up to 28 tickets for performances promoted by Live Nation, subject to availability (meaning that if the show sells out, then likely there will be no tickets). Similarly, the 28 tickets may be spread out over a run, meaning that if an artist does more than one show, then the 28 tickets may be split between all the shows. Community Benefit Fund — The Community Benefit Fund at the Jackie Gleason Theater was established by Resolution No. 83-17447 to provide discounted show tickets to senior citizen and student residents. It is funded by a $1.50 surcharge on each ticket sold. The fund's purpose was further defined by Resolution No. 92-20454 to "present and promote performances, programs, shows and entertainment at reduced prices or free admission for the residents of Miami Beach." Resolution No. 98-22762 created the Community Benefit Fund Rent Waiver program, which We ore committed to providing excellent public service and safety to all who live, work, and ploy in our vibrant, tropical, historic community. City Commission Meeting Live Nation Management Agreement April 13, 2016 Page 3 of 6 pays the operator for theater rental fee waivers for up to twelve non-profit organizations per calendar year. Live Nation is required to collect the surcharge on behalf of the City and remits payment monthly. The agreement also includes a rent waiver program, funded by the Community Benefit Fund. The City and Live Nation are authorized to grant 12 rent waivers to non-profit organizations annually. The Agreement sets the rental fee for these community group rentals at $3,000, which is paid by the Community Benefit Fund. If the fund ever gets to the point where it will not meet these obligations, then the surcharge may be adjusted to address the shortfall. The current balance in the Community Benefit Fund is $764,542. CONVENTION CENTER HOTEL 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. In evaluating potential sites, it was possible that the hotel could impact the rehearsal hall / backstage performance space and loading dock of the Fillmore. Therefore, the Administration began preliminary conversations with Live Nation to discuss the potential impact of this to their operations and negotiate mutually acceptable terms if the City were to proceed with the Convention Center Hotel at this location following the March 2016 referendum. This item was discussed at the February 2, 2015 Finance Committee and staff was directed to further negotiate with Live Nation and bring the item back to the March 2, 2015 Finance Committee meeting. There are several items that the Administration did not recommend including the following: • Paying for an option to recapture and demolish the rehearsal hall whether or not the final plan required demolition, which was proposed for $250,000 and would have been in addition to another$100,000 if the City exercised the option; • use of Community Benefit Fund for capital repairs; • reset of the Required City Distribution from $1,171,659 to $1,000,000; • extension of the expiration term of the contract whenever there are construction impacts beyond 30 days; • construction interruption credit as a result of the convention center redevelopment. This item was originally recommended by the Administration, but the Finance Committee did not support this item and has since been removed from the Administration's recommendation; and • allowing Live Nation to pre-purchase parking at the 17th Street Garage was originally part of the Administration's recommendation, but has since been removed because the Finance Committee did not support this request. The Committee discussed this subject at their March 2015 meeting and recommended bringing this item back to the Finance Committee after Administration has re-negotiated the contract terms. Committee members focused much of their comments on the construction interruption credit and that is should only apply if and when the hotel construction impacts operations at the Fillmore. As a result of the direction from the March Finance Committee meeting, the Administration continued discussions with Live Nation. The Administration was provided information to support their monthly net revenue calculations for their rentals in the rehearsal hall. In addition, Live We are committed to providing excellent public service and safety to all who live, work, and play in our vibrant, tropical, historic community, City Commission Meeting Live Nation Management Agreement April 13, 2016 Page 4 of 6 Nation requested a one-time credit of $50,000 to offset the cost of building out additional catering space. The rehearsal hall is used for catering to support approximately 60 events per year. On June 3, 2015, the Finance and Citywide Projects Committee recommended moving forward with the proposed amendment adding that there be a rent waiver (and for other fixed cost) when the building is closed due to construction/demolition of the Jackie Gleason Theater. The following summarizes the amendments, which are being proposed and recommended: FINAL Agreed Upon Amendments DEAL POINTS LN has the option to exercise the first Renewal Option, which would continue the Agreement until August 21, 2022.The second Renewal Option,September 1, 2022 -August 31, 2027, Term to remain subject to mutual agreement. LN has a window to notify the City of its intent to renew the first option,which is no earlier than August 31, 2015 and no later than 270 days prior to August 31, 2017. Based on net revenue generated from both exclusive and non- exclusive use of the rehearsal hall space, IF the City recaptures Required City Distribution(RCD) the Rehearsal Hall,a reduction of$250,000 annually in the RCD is recommended. Chilled Water Credit Annual credit toward RCD for chilled water charges of$165,000. LN to receive a one-time credit of up to$50,000 in capital Capital Improvement improvement costs incurred to accommodate catering Contribution operations due to loss of rehearsal hall,only in association with the future hotel development. Clarify that the ten (10)year CPI adjustment in the contract which would be effective in 2017, is a 10-year true-up as CPI Adjustment opposed to an adjustment of the Required City Distribution in addition to the 2%annual increase paid every year. If the facility closes on one or more occasions associated solely with the hotel development, the Administration agrees and Construction Interruption recommends that Live Nation should receive a pro-rated per diem credit against the annual RCD payment equal to the duration of all such closure(s). Live Nation shall have the right (to be exercised in Live Nation's sole discretion)to create a capital improvement/repair reserve fund designated for capital improvements and/or repairs to the Ticket Fund Facility. However, LN may not use the Community Benefit Fund for this purpose, but may impose an additional ticket surcharge, other than the surcharge for the Community Benefit Fund. We are committed to providing excellent public service and safely to all who live, work, and play in our vibrant, tropicol, historic community. City Commission Meeting Live Nation Management Agreement April 13, 2016 Page 5 of 6 Food &Bev Restrictions Allow LN to offer bottle service for all events. Allow LN to sell alcohol past midnight, until 2am,for New Year's Midnight Restrictions Eve and Winter Music Conference. LN is currently allowed to sell alcohol past midnight until 2am except on New Year's Eve and during Winter Music Conference. Allow LN to book DJ/EDM events without restriction. The DJ and EDM Programming current Management Agreement allows LN to book DJ and EDM events, but requires them to conclude by midnight. Allow LN to increase valet charge from $15 to$20 and allow LN Valet Parking pre-sell and package valet parking with ticket sales and retain additional revenue. Garage Parking Not recommended Given the administrative requirements associated with the implementation of the City's Complimentary Ticket Policy, which Complimentary Tickets was adopted via Resolution No. 2014-28638,the Administration recommends removing this requirement from the Management Agreement. Resolution 2014-28732 adopted on September 10, 2014,which approved the Cultural Affairs Strategic Plan. This approval included changes to the Fillmore Community Benefit Fund rent g Y Community Benefit Fund tY waiver ,ram ro including the addition of 12 waivers restricted p g g to live theater productions. This would bring the total to 24 rent waiver grants available. The below chart reflects the impact of the Administration's recommendations. 2016 Projected Req. City Distribution $ 1,195,093 Chilled Water Credit $ (164,000) Subtotal $ 1,031,093 Total $ 1,031,093 Add'I Revenue Potential Bottle Service $ 36,000 Parking Revenue $ 65,000 Revenue Total $ 101,000 • Please note the chart does not reflect potential credits/refund against the Required City Distribution as a result of the construction of the convention center hotel or any closures to the Fillmore during the Convention Center Renovation and Expansion Project. We are committed to providing excellent public service and safety to all who live, work, and play in our vibrant, tropical, historic community. City Commission Meeting Live Nation Management Agreement April 13, 2016 Page 6 of 6 Now that the results of the convention center hotel referendum have been tabulated, the Administration has completed negotiations with Live Nations for the amendment to the Management Agreement. Since the City is still pursuing a convention center hotel, but a final site has not been selected or approved, the agreement includes language that will allow the City to recapture a portion of the facility and the surrounding area with notice to Live Nation if needed. CONCLUSION The Administration recommends approving the attached Resolution and Amendment No. 3 to the Management Agreement between the City and Live Nation for the management and oper t' n • the Jackie Gleason Theater. P 1 , JLM: B: j T:WGENDA\20161April\TCED\Live Nation\Live Nation Mgmt Agrmt MEMO.docx We ore committed to providing excellent public service and safety to all who live, work, and play in our vibrant,tropical, historic community.