2016-29369 Reso RESOLUTION NO. 2016-29369
•
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY MANAGER TO
EXERCISE TWO (2) ONE (1) YEAR RENEWAL TERMS OF THE
AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND SERVICE
AMERICA CORPORATION D/B/A CENTERPLATE ("CENTERPLATE") FOR
CATERING CONCESSIONS AT THE CITY OF MIAMI BEACH CONVENTION
CENTER; FURTHER ACCEPTING THE CITY MANAGER'S
RECOMMENDATION AND WAIVING, BY 5/7T" VOTE, THE COMPETITIVE
BIDDING REQUIREMENT PURSUANT TO SECTION 2-367 OF THE CITY
CODE, FOR THE LIMITED PURPOSE OF APPROVING AN ADDITIONAL
TWO (2) YEAR AND THREE (3) MONTH RENEWAL TERM, AND FINDING
SUCH WAIVER TO BE IN THE BEST INTEREST OF THE CITY; AND
AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE
AMENDMENT NO. 1 OF SAID AGREEMENT, WITH SAID AGREEMENT
HAVING A TERM COMMENCING ON JULY 1, 2016, AND ENDING ON
SEPTEMBER 30, 2020.
WHEREAS, the City is the owner of the Miami Beach Convention Center (the
"Convention Center" or"Facility") located in the City of Miami Beach, Florida; and
WHEREAS, on December 12, 2012, the Mayor and City Commission approved the
issuance of Invitation to Negotiate No. 059-2013ME For Food and Beverage for the Convention
Center(the ITN); and
WHEREAS, on June 5, 2013, the City adopted Resolution No. 2013-28241, accepting
the proposal submitted by Centerplate pursuant to the ITN, and the parties thereby executed the
Agreement as of June 5, 2013.
WHEREAS, the initial term of the Agreement expires on June 30, 2016; and
WHEREAS, the Agreement provides the parties with the ability to exercise a renewal
option for two successive one year periods, through June 30, 2018; and
WHEREAS, as part of the negotiation, City staff reviewed Centerplate's financials to
determine the anticipated impact on food and beverage revenues due to the renovations of the
Convention Center, and as a result thereof, identified a potential discrepancy in the reporting of
Gross Receipts as defined in the Agreement, in the potential amount of up to $470,000 in
additional commissions due to the City since 2013; and
WHEREAS, Centerplate has disputed the City's interpretation of the Agreement, and
has maintained that it has reported Gross Receipts in accordance with the Agreement; and
WHEREAS, in a good faith effort to resolve the dispute and agree to terms for an
extension that the Administration recommends due to the need for continuity in operations
during the construction period of the Convention Center, Centerplate has offered to make a
contribution in the amount of $400,000, as part of an additional capital investment toward food
service projects at the Convention Center(such as equipment purchases and the like); and
WHEREAS, the City Manager recommends that the City exercise the remaining two (2)
one-year renewal options under the Agreement; and
WHEREAS, in view of the construction of the MBCC Project, the City Manager further
recommends waiver of the City's competitive bidding requirements under Section 2-367 of the
City Code, for the limited purpose of authorizing an additional extension of the Agreement for a
two-year and three month period, as it is in the best interest of the City to extend the Agreement
through September 30, 2020 to ensure continuity of services at the Convention Center into a
fully operational year following completion of the MBCC Project; and
WHEREAS, the proposed Amendment No. 1 to the Management Agreement is attached
hereto as Exhibit 1 to the Commission Memorandum accompanying this Resolution.
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 exercise two (2) one (1)
year renewal terms of the agreement between the City of Miami Beach and Service America
Corporation D/B/A Centerplate for Catering Concessions at the City of Miami Beach Convention
Center; further accepting the City Manager's recommendation and waiving, by 5/7th vote, the
competitive bidding requirement pursuant to Section 2-367 of the City Code, for the limited
purpose of approving an additional two (2) year and three (3) month renewal term, and finding
such waiver to be in the best interest of the City; and authorizing the Mayor and City Clerk to
execute Amendment No. 1 of said Agreement, with said Agreement having a term commencing
on July 1, 2016, and ending on September 30, .2020.
PASSED AND ADOPTED this 13th day of April,2016.
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City AttorneyP Date
AMENDMENT NO. 1 TO THE AGREEMENT BETWEEN THE CITY OF MIAMI BEACH
AND SERVICE AMERICA CORPORATION D/B/A CENTERPLATE FOR CATERING
CONCESSIONS AT THE CITY OF MIAMI BEACH CONVENTION CENTER
This Amendment No. 1 is made effective as of July 1, 2016 ("Effective Date"), by and
MIAMI BEACH, FLORIDA, a municipal corporation having its
between the CITY OF MIA P P
principal office at 1700 Convention Center Drive, Miami Beach, Florida, 33139 ("City"),
and Service America Corporation d/b/a CENTERPLATE, a Delaware corporation whose
address is 2187 Atlantic Street, Stamford, CT 06902 ("Concessionaire" or "Centerplate"),
and hereby amends the Catering and Concessions Services Agreement dated as of June
5, 2013 (the "Agreement"), as follows:
BACKGROUND
The City is the owner of the Miami Beach Convention Center (the "Convention
Center" or "Facility") located in the City of Miami Beach, Florida.
On June 5, 2013, the City adopted Resolution No. 2013-28241, accepting the
proposal submitted by Centerplate pursuant to the ITN, and the parties thereby executed
the Agreement as of June 5, 2013.
The initial term of the Agreement expires on June 30, 2016.
The Agreement provides the parties with the ability to exercise a renewal option for two
successive one year periods, through June 30, 2018. In view of the City's construction of
the Miami Beach Renovation and Expansion Project, and the Convention Center's
Construction Period Booking Policy, which will result in a significant reduction in
operations at the Facility, the City desires to grant Concessionaire an additional
extension of the term, through September 30, 2020, and to modify certain other terms
and conditions of the Agreement, as set forth herein.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties intending to be legally
bound, hereby agree as follows:
1. The aforesaid recitals are true and correct and incorporated by reference
herein.
2. Unless otherwise expressly stated herein, all capitalized terms shall have
the respective meanings ascribed in the Agreement.
3. The renewal term of this Agreement ("Renewal Term") shall commence on
July 1, 2016 and shall expire at midnight on September 30, 2020 ("Termination Date"),
unless earlier terminated pursuant to the provisions of this Agreement.
4. It is anticipated that substantial areas of the Facility will close for
renovations during the Renewal Term. The complete Facility "Re-Opening Date" shall
occur on the date that a TCO is obtained for the Facility Halls A, B, C and D and the new
North Ballroom, or on the date that the Facility Halls A, B, C and D and the new North
Ballroom are otherwise substantially completed such that events open to the general
public may take place therein. The City currently anticipates that the Re-Opening Date
shall occur on or about October 1, 2018. If the actual Re-Opening Date occurs after
October 8, 2018, the Renewal Term shall be extended on a monthly basis for every
month that the Re-Opening Date is delayed. For purposes of illustration only, if the Re-
Opening Date is October 8, 2018, the Termination Date shall remain September 30,
2020; if the Re-Opening Date is October 9, 2018, the Termination Date shall be October
30, 2020; if the Re-opening Date is November 1, 2018, the Termination Date shall be
November 30, 2020.
5. Section 4.2 is hereby deleted and replaced with the following:
4.2. Additional Capital Investment. Concessionaire shall directly invest
$400,000.00 ("Additional Investment") toward food service capital projects
("Additional Investment Expenditures"), with the nature and scope of such
Additional Investment Expenditures to be made by mutual agreement of the
parties. Concessionaire shall procure up to twenty-five percent (25%) of
Additional Investment ($100,000.00) within fifteen (15) days after the parties agree
to such items, and shall invest the remaining seventy-five percent (75%) of the
Additional Investment, ($300,000.00) on mutually-agreed Additional Investment
Expenditures, sixty (60) days prior to the opening of the new North Ballroom to the
public.
6. Section 43 is deleted in its entirety and replaced with the following:
4.3. Amortization Schedule/ Title.
(a) Amortization Schedule. All Additional Investment Expenditures shall be
amortized and/or depreciated pursuant to Generally Accepted
Accounting Principles.
(b) Title to Facility Goods. All costs associated with acquiring the tangible
Facility Goods or Additional Investment Expenditures purchased with
the Additional Investment shall be included in such Additional
Investment. Title to all such tangible Facility Goods or Additional
Investment Expenditures shall remain in Concessionaire, until the earlier
of: (i) the respective Additional Investment Expenditures are fully
amortized (subject to the limitations for amortization as set forth in
subsection (a) above), or (ii) until City's payment of the amount required
pursuant to Section 9.5(a). When the Additional Investment
Expenditures have been fully amortized (subject to the time limitations
for amortization as set forth in subsection (a) above), or upon payment
of the amount required to be paid by City pursuant to Section 9.5(a), all
right, title and interest in and to all Facility Goods or Additional
Investment Expenditures acquired with the Additional Investment shall
vest in the City.
7. Section 4.4 of the Agreement and all other aspects of the Additional
Investment and Additional Investment Expenditures shall remain in full force and effect.
8. No Minimum Annual Rent shall be owed to the City during the Renewal
Term. All references to the Minimum Annual Rent in Sections 5.1, 5.2 or other sections
of the Agreement are hereby deleted.
9. Section 5.3 Commissions is hereby modified as follows: (i) Concessionaire
shall pay Commissions to the City in the amount of twenty percent (20%) of all Gross
Receipts; and (ii) the step-scale tiers of 20% to 40% Commissions based on achievement
of specified annual Gross Receipt thresholds are hereby eliminated.
10. The definition of Gross Receipts in Section 1(v) is hereby modified as
follows (with additions appearing as underlined and deletions as strike throughs):
"Gross Receipts" shall mean the total amounts received by the
Concessionaire from the provision of Services hereunder, whether
arising from sales, rentals, license fees, concessions fees,
administrative fees, or other payments, and whether evidenced by
cash, check, credit, charge account or otherwise, and shall include,
without limitation, the amounts received from the sale of all Food and
Beverage Items at the Facility, together with the amount received
from all orders taken or received at the Facility, whether such orders
be filled from there or elsewhere, less only: (1) the amount of any
federal, State, or local sales or other such tax collected in connection
with the sale of Food and Beverage Items and paid to the
appropriate Governmental Authority; (2) the amount of any gross
receipts tax, rent tax or similar tax; (3) gratuities, fees or other
charges collected by or for the benefit of Concessionaire's
employees as ,part of their compensation; (4) the amount of any
Sales made to the City, or to a third party at the request of the City;
(5) service or discount charges or fees on credit or debit card sales;
(6) bulk or other sales not in the ordinary course of business; (7)
sales or rentals made by Concessionaire at cost; (8) meals
consumed by Concessionaire's on-duty personnel at no cost to such
personnel; (9) amounts received by Concessionaire from wardrobe
checking.
For purposes of clarification, any and all service charges and/or administrative fees
collected by Concessionaire prior to the Effective Date of this Amendment are excluded
from Gross Receipts, provided, however, that after the Effective Date of this Amendment,
all such service charges and/or administrative fees collected by Concessionaire shall be
included as part of the Gross Receipts.
11. Section 5.5, Capital Reserve Fund, is hereby deleted in its entirety.
12. Section 5.6, Marketing Reserve Fund is hereby deleted and replaced with
the following:
Section 5.6. Marketing Reserve Fund. Beginning thirty (30) days following the Re-
Opening Date, and each Contract Year on an annual basis thereafter during the
Renewal Term, Concessionaire shall contribute to the Marketing Reserve Fund an
amount equal to the greater of $50,000 or one percent (1%) of all Gross Receipts.
The Marketing Reserve Fund shall be used by Concessionaire to promote the food
and beverage offerings (catering, concessions, etc.) at the Facility. Expenditures
made with the Marketing Reserve Fund must be mutually agreed upon by
Concessionaire and City, in writing, prior to any such expenditure being made.
Unused amounts in the Marketing Reserve Fund shall be carried forward from
year to year. Any funds remaining in the Marketing Reserve Fund at the end of
the Renewal Term shall be paid to the City. Concessionaire will furnish the City
Manager annually (no later than September 1 of each Contract Year) with a
statement of amounts expended from the Marketing Reserve Fund during the
preceding Contract Year.
13. Section 5.7, Scholarships, is hereby deleted in its entirety.
14. Notwithstanding any provision in Section 6.8 to the contrary,
Concessionaire shall not be responsible for equipment repairs or maintenance at the
Facility during the period of construction prior to the Re-Opening Date, provided,
however, that Concessionaire shall be responsible, at its sole cost and expense, for
repairs and maintenance of the temporary kitchen equipment referenced in Exhibit A
hereto and utilized by Concessionaire during the construction period. Concessionaire
shall use the temporary kitchen agreement in accordance with the provisions of Exhibit A
attached hereto, and shall comply with all requirements therein.
15. The parties understand and agree that the Facility will undergo substantial
renovations during the Renewal Term. Notwithstanding anything to the contrary in the
Agreement, Concessionaire shall be permitted to take such renovations into account in
the management of its costs during the construction period prior to the Re-Opening Date.
16. Other than its own customary operating expenses, Concessionaire shall not
be responsible for any costs or expenses incurred by the City or its vendors and other
third parties due to any delay of the Re-Opening Date.
17. Except as expressly set forth in this Amendment No. 1, all other terms and
conditions set forth in the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment No. 1 to the Agreement has been duly
executed by the parties hereto as of the day and year first above written.
ATTEST: CITY OF MIAMI BEACH, FLORIDA
By:
Rafael Granado, City Clerk Philip Levine, Mayor
ATTEST: SERVICE AMERICA CORPORATION
d/b/a CENTERPLATE
By:
Corporate Secretary Name:
Title:
Date:
APPROVED AS TO
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City Attorney Rpc Q ate
Exhibit A
RENTAL EQUIPMENT/TERMS OF USE
Background
Baring Industries ("Baring Industries") is a subcontractor to Clark Construction Group, LLC on the Miami
Beach Convention Center Renovation and Expansion Project. Baring has entered into a rental agreement
with Mobile Kitchen Systems, LLC ("MKS"), for the rental of certain kitchen and other specified
equipment ("Equipment"). MKS, through Baring, has delivered the Equipment to the Project Site. The
Equipment has been made available to the City for use by Concessionaire. The following terms and
conditions memorialize Concessionaire's agreement with respect to the use of the Equipment.
1. CITY'S LICENSE TO USE THE EQUIPMENT. Concessionaire agrees to use the Equipment
subject to the terms and conditions set forth herein.
2. RECEIPT & INSPECTION OF EQUIPMENT. Concessionaire has inspected the Equipment
prior to taking possession thereof, finds it in good working order, and suitable for Concessionaire's
and City's needs. City and Centerplate are familiar with the proper operation and use of each item
of Equipment. Centerplate has inspected all hitches, bolts, safety chains, hauling tongues and other
devices and materials used to connect the Equipment to City's towing vehicle, if any.
3. USE OF EQUIPMENT. Concessionaire shall not use or allow any other party to use the
Equipment: (a) for an illegal purpose or in an illegal manner, (b) without a license, if required
under any applicable law, or (c) by any person who is not qualified to operate it. Concessionaire
shall comply with all applicable municipal, state, and federal laws, ordinances and regulations
(including O.S.H.A.), which may apply to the use of the Equipment. Concessionaire shall check
filters, oil, fluid levels and tire air pressure, and shall clean and visually inspect the Equipment
daily and to immediately notify City when Equipment needs repair or maintenance.
4. MALFUNCTIONING EQUIPMENT. Should the Equipment become unsafe, malfunction or
require repair, Concessionaire shall immediately cease using the Equipment and immediately
notify City. If such condition is the result of normal operation, pursuant to the terms of their
agreement, Baring Industries or MKS will repair or replace the Equipment with similar Equipment
in working order, if such replacement Equipment is available. Baring Industries has no obligation
to repair or replace Equipment rendered inoperable by City's or Concessionaire's misuse, abuse or
neglect of the Equipment.
5. RETURN OF EQUIPMENT,DAMAGED AND LOST EQUIPMENT. At the expiration of the
Rental Period in the agreement between Baring and MKS, City shall permit Baring Industries to
return the Equipment to MKS. Concessionaire shall be responsible for damage to the Equipment
caused by the negligence or willful misconduct of Concessionaire while the Equipment is in
Concessionaire's possession and control. City shall return the Equipment to Baring in the
condition and repair as when delivered to City, subject to reasonable wear and tear, as defined
below. If the Equipment is returned in a damaged or excessively worn condition, Concessionaire
shall be responsible for the reasonable cost of repair and pay rental on the Equipment at the regular
rental rate until all repairs have been completed.
6. FOR USE BY QUALIFIED TECHNICIAN ONLY. The Equipment may be used only by
Concessionaire's qualified employees and/or agents and in strict accordance with the use
contemplated herein. City shall keep the Equipment in City's or Centerplate's sole custody and
shall not permit the Equipment to be used in the violation of any county, municipal, state, federal,
or regulatory laws or ordinances.
7. REASONABLE WEAR AND TEAR. Reasonable wear and tear of the Equipment shall mean
only the normal deterioration of the Equipment caused by ordinary and reasonable use(8 hours per
day, 40 hours per week). The following shall not be deemed reasonable wear and tear: (a) damage
resulting from lack of lubrication or maintenance of necessary oil, water and air pressure levels; (b)
except where Baring Industries or MKS expressly assumes the obligation to service or maintain the
Equipment, any damage resulting from lack of service or preventative maintenance suggested in
the manufacturer's operation and maintenance manual; (c) damage resulting from any collision,
overturning, or improper operation, including overloading or exceeding the rated capacity of the
Equipment; (d) damage in the nature of dents, bending, tearing, staining and misalignment to or of
the Equipment or any part thereof; (e) wear resulting from use in excess of shifts for which rented;
and (f) any other damage to the Equipment which is not considered ordinary and reasonable in the
equipment rental industry. Repairs to the Equipment shall be made to the reasonable satisfaction of
Baring Industries and in a manner, which will not adversely affect the operation, manufacturer's
design or value of the Equipment.
8. INSURANCE REQUIREMENTS. Concessionaire shall maintain in full force and effect
insurance covering all Equipment rented, from all sources, for full replacement cost (without
deductions for depreciation), except vehicles which are at actual cash value, and for loss of use
(rentals) of the Equipment. Concessionaire shall deliver to City and Baring Industries, upon
request, evidence of the insurance coverage, by way of a Certificate of Insurance satisfactory to
Baring Industries, showing Liability Coverage, Property Insurance and Workers Compensation
Insurance maintained by Concessionaire, as applicable. Such insurance shall be written by
reputable insurers acceptable Baring Industries, and shall be primary.
9. KITCHEN AND CATERING EQUIPMENT. Equipment must be returned in its original clean
state or cleaning charges will apply at $265.00 per man-hour plus materials. Concessionaire shall
be responsible for replacement of equipment due to damage through negligence of the
Concessionaire, or if due to acts of god, as well as security,upkeep,maintenance,and repairs to the
Equipment while in its possession.
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Authorizing The City Manager To Exercise Two(2)One(1)Year Renewal Terms Of The Agreement Between The City Of
Miami Beach And Service America Corporation D/B/A Centerplate For Catering Concessions At The City Of Miami Beach Convention
Center; Waiving, By 5/7th Vote, The Competitive Bidding Requirement Pursuant To Section 2-367 Of The City Code, For The Limited
Purpose Of Approving An Additional Two (2) Year And Three (3) Month Renewal Term, And Finding Such Waiver To Be In The Best
Interest Of The City;And Authorizing The Mayor And City Clerk To Execute Amendment No. 1 Of Said Agreement,With Said Agreement
Having A Term Commencing On July 1,2016,And Ending On September 30,2020.
Key Intended Outcome Supported:
Maximize Miami Beach as a Destination Brand
Supporting Data(Surveys, Environmental Scan,etc.):
N/A
Item Summary/Recommendation:
The City entered into an Agreement with Service America Corporation for the preparation and delivery of food and beverage services for
the Convention Center and the Jackie Gleason Theatre("JGT"), dated December 17, 1986(the"Original Concession Agreement"). The
Original Concession Agreement provided an initial fifteen (15) year term, commencing on March 1, 1987, and ending on February 28,
2002. On December 12, 2012, the Mayor and City Commission approved the issuance of Invitation to Negotiate No. 059-2013ME For
Food and Beverage for the Convention Center(the ITN). On April 17, 2013, the City Commission adopted Resolution No. 2013-28194
authorizing the Administration to enter into negotiations with the second and third ranked proposers,Centerplate and Aramark.On June 5,
2013,the City adopted Resolution No.2013-28241,accepting the proposal submitted by Centerplate pursuant to the ITN,and the parties
thereby executed the Agreement as of June 5,2013.
The initial term of the Agreement expires on June 30, 2016. The Agreement provides the parties with the ability to exercise a renewal
option for two successive one year periods,through June 30,2018. In view of the City's construction of the Miami Beach Renovation and
Expansion Project, which will result in a significant reduction in operations at the Facility, the City desires to grant Concessionaire an
additional extension of the term,through June 30, 2020, and to modify certain other terms and conditions of the Agreement, as set forth
herein.This extension will ensure continuity of services at the Convention Center into a fully operational year following completion of the
MBCC Project.
As part of the negotiation, City staff was reviewing financials to determine anticipated impact on gross revenue due to the renovations of
the Center and identified a potential discrepancy in the report gross revenue. Upon further investigation, staff believes gross revenues
were underreported, which would have resulted in approximately$470,000 in commissions due to the City over the first 3 years of the
current agreement. Centerplate does not agree with the City's interpretation and is resolute that they reported gross revenues as per the
definition of the agreement. However, in a good faith effort to resolve this and agree to terms for an extension, Centerplate has offered to
make a contribution of$400,000 as part of an additional capital investment toward food service projects.
The City and Centerplate have negotiated the following:
• The City exercises the remaining two (2) years on the Catering and Concession Services Agreement and extends the
Agreement for an additional two(2)years and three(3)months.
• The City currently anticipates that the Re-Opening Date shall occur on or about October 1,2018.To the extent, if any,that the
actual Re-Opening Date occurs more than thirty(30)days after October 1,2018,the Renewal Term shall be extended in thirty
(30)day increments between October 1,2018 and the actual Re-Opening Date.
• Centerplate will invest$400,000 toward food service capital projects.
• The Minimum Annual Guarantee of One Million Dollars is deleted and there will be no Minimum Annual Guarantee required due
to the significant loss of revenue throughout the renovation of the facility.
• Throughout the term of the Agreement,the City will receive a fixed Commission in the amount of 20%. All Step Tiers set forth in
the Agreement(other than the 20%commission percentage set forth herein)are deleted.
• The definition of Gross Receipts is being clarified so that any and all service charge and/or administrative fees collected by
Concessionaire prior to the Effective Date are excluded from Gross Receipts. However, going forward service charge and/or
administrative fees collected by Concessionaire are considered Gross Receipts.
• Concessionaire shall be responsible, at its sole cost and expense, for repairs and maintenance of the temporary kitchen
equipment utilized by Concessionaire during the construction period.
The Administration recommends that the Mayor and City Commission adopt the Resolution.
Advisory Board Recommendation:
N/A
Financial Information:
Amount Account
Source of Funds: 1 N/A N/A
Financial Impact Summary: The Minimum Annual Guarantee of$1 Million is being eliminated and replaced with a straight 20%
commission paid on all gross revenue as a result of the loss of revenue anticipated due to the reduction in event activity during the
renovation of the Convention Center.
City Clerk's Office Legislative Tracking:
Max Sklar, ext.6116
Sign-Offs:
Department: r- • Assistant Cit 4J-nager City M n er
MAS P KGB..F JL
T:\AGENDA\20161April\T‘ED\ ve Nation\Live Nation Mgmt Agrmt SUMM.docx
MIAMIBEAcH AGENDA ITEM K
IMF DATE 4-13-l
tril MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members the City ••mmission
FROM: Jimmy L. Morales, City Manager I ,,r���
DATE: April 13, 2016
SUBJECT: A RESOLUTION OF THE MAYO ' AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY MANAGER TO EXERCISE
TWO (2) ONE (1) YEAR RENEWAL TERMS OF THE AGREEMENT BETWEEN
THE CITY OF MIAMI BEACH AND SERVICE AMERICA CORPORATION D/B/A
CENTERPLATE FOR CATERING CONCESSIONS AT THE CITY OF MIAMI
BEACH CONVENTION CENTER; WAIVING, BY 517TH VOTE, THE COMPETITIVE
BIDDING REQUIREMENT PURSUANT TO SECTION 2-367 OF THE CITY CODE,
FOR THE LIMITED PURPOSE OF APPROVING AN ADDITIONAL TWO (2) YEAR
AND THREE (3) MONTH RENEWAL TERM, AND FINDING SUCH WAIVER TO BE
IN THE BEST INTEREST OF THE CITY; AND AUTHORIZING THE MAYOR AND
CITY CLERK TO EXECUTE AMENDMENT NO. 1 OF SAID AGREEMENT, WITH
SAID AGREEMENT HAVING A TERM COMMENCING ON JULY 1, 2016, AND
ENDING ON SEPTEMBER 30, 2020.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
KEY INTENDED OUTCOME SUPPORTED
Maximize Miami Beach as a Destination Brand
BACKGROUND
The City entered into an Agreement with Service America Corporation for the preparation and
delivery of food and beverage services for the Convention Center and the Jackie Gleason
Theatre ("JGT"), dated December 17, 1986 (the "Original Concession Agreement"). The
Original Concession Agreement provided an initial fifteen (15) year term, commencing on
March 1, 1987; and ending on February 28, 2002. On May 16, 2001, the City Commission
adopted Resolution No. 2001-24393, which exercised a renewal option to the Original
Concession Agreement for an additional five (5) year term, which expired February 28, 2007.
On April 11, 2006, the City issued Request for Proposals No. 22-05/06, to Provide
Professional Food and Beverage Facilities Management Services at the Facility (the "RFP").
On September 6, 2006, the City adopted Resolution No. 2006-26316, awarding the RFP to
Centerplate. On December 12, 2012, the Mayor and City Commission approved the issuance
of Invitation to Negotiate No. 059-2013ME For Food and Beverage for the Convention Center
(the ITN).
Food and Beverage Concession Agreement—Miami Beach Convention Center
Commission Memorandum
April 13, 2016
Page 2
On April 17, 2013, the City Commission adopted Resolution No. 2013-28194 authorizing the
Administration to enter into negotiations with the second and third ranked proposers,
Centerplate and Aramark. On June 5, 2013, the City adopted Resolution No. 2013-28241,
accepting the proposal submitted by Centerplate pursuant to the ITN, and the parties thereby
executed the Agreement as of June 5, 2013.
The initial term of the Agreement expires on June 30, 2016.
The Agreement provides the parties with the ability to exercise a renewal option for two
successive one year periods, through June 30, 2018. In view of the City's construction of the
Miami Beach Renovation and Expansion Project, which will result in a significant reduction in
operations at the Facility, the City desires to grant Concessionaire an additional extension of
the term, through June 30, 2020, and to modify certain other terms and conditions of the
Agreement, as set forth herein.
This extension will ensure continuity of services at the Convention Center into a fully
operational year following completion of the MBCC Project. This recently extended facility
management services with Spectra Management, as well as valet services with First Class
Parking for the same amount of time and in order to maintain stability throughout construction.
ABOUT CENTERPLATE
Centerplate, Inc. is a food vending corporation in Spartanburg, SC that operates in North
America, primarily at sports arenas. Centerplate was formerly known as Volume Services
America, Inc., and was originally a division of The Flagstar Companies. In 1995, Flagstar,
which was controlled by private equity firm, Kohlberg Kravis Roberts (KKR), sold Volume
Services to The Blackstone Group. Volume Services changed its name to Centerplate in 2004,
when the company completed an IPO. In 2009, Centerplate again became a private company
following its merger with an affiliate of Kohlberg & Company. Aramark's sales volume for their
2012 fiscal year was $837 million.
Centerplate operates foodservice for 10 NFL, three major league baseball, three NHL, two
NBA and over two dozen minor league baseball and hockey teams, along with dozens of other
sports, entertainment and convention facilities, including six of the top ten most active
convention centers. Centerplate currently provides food and beverage services to 39
convention and Exposition centers, 31 arenas and multi use facilities, 20 theaters and
performing arts facilities, 22 parks and cultural attractions, 74 professional, college and minor
league teams and a variety of other specialty venues in North America.
Centerplate, operating as Volume Service America, has been providing food and beverage
service for the City at the Miami Beach Convention Center since December 17, 1986.
ANALYSIS
In light of the impending convention center renovation and expansion project, the
Administration began discussing a contract extension with Centerplate in order to maintain
continuity through the renovation. As part of the negotiation, City staff was reviewing financials
to determine anticipated impact on gross revenue due to the renovations of the Center and
identified a potential discrepancy in the report gross revenue. Upon further investigation, staff
believes gross revenues were underreported, which would have resulted in approximately
$470,000 in commissions due to the City over the first 3 years of the current agreement.
Centerplate does not agree with the City's interpretation and is resolute that they reported
Food and Beverage Concession Agreement—Miami Beach Convention Center
Commission Memorandum
April 13, 2016
Page 3
gross revenues as per the definition of the agreement. However, in a good faith effort to
resolve this and agree to terms for an extension, Centerplate has offered to make a
contribution of $400,000 as part of an additional capital investment toward food service
projects. This capital investment has been included as part of the agreed upon terms, which
are detailed later in this memorandum.
The City and Centerplate have negotiated the following:
• The City exercises the remaining two (2) years on the Catering and Concession
Services Agreement and extends the Agreement for an additional two (2) years and
three (3) months. This term aligns with the extension approved by the City Commission
October 2015 for Spectra Management that creates incentive for both entities to
maximize revenue opportunities for the immediate period after renovation. Again, this
also ensures continuity of management into a fully operational year post-renovation.
• It is anticipated that substantial areas of the Facility will close for renovations during the
Renewal Term. The complete Facility "Re-Opening Date" shall occur on the date that a
TCO is obtained for the Facility Halls A, B, C and D and the new North Ballrooms, or
on the date that the Facility Halls A, B, C and D and the new North Ballrooms are
otherwise substantially completed such that events open to the general public may
take place therein. The City currently anticipates that the Re-Opening Date shall occur
on or about October 1, 2018. To the extent, if any, that the actual Re-Opening Date
occurs more than thirty (30) days after October 1, 2018, the Renewal Term shall be
extended in thirty (30) day increments between October 1, 2018 and the actual Re-
Opening Date.
• Additional Capital Investment: Centerplate will invest $400,000 ("Additional
Investment") toward food service capital projects ("Additional Investment
Expenditures"); with the nature and scope of such Additional Investment Expenditures
to be made by City in its sole and absolute discretion.
• Minimum Annual Guarantee: The Minimum Annual Guarantee of One Million Dollars is
deleted and there will be no Minimum Annual Guarantee required due to the significant
loss of revenue throughout the renovation of the facility.
• Centerplate currently pays the City commission percentage ranging from 20% to 40%
based on Gross Receipts earned. Throughout the term of the Agreement, the City will
receive a fixed Commission in the amount of 20%. All Step Tiers set forth in the
Agreement (other than the 20% commission percentage set forth herein) are deleted.
• The definition of Gross Receipts is being clarified so that any and all service charge
and/or administrative fees collected by Concessionaire prior to the Effective Date are
excluded from Gross Receipts. However, going forward service charge and/or
administrative fees collected by Concessionaire are considered Gross Receipts.
• Concessionaire shall be responsible, at its sole cost and expense, for repairs and
maintenance of the temporary kitchen equipment referenced in Exhibit 1 hereto and
utilized by Concessionaire during the construction period. Concessionaire shall use
the temporary kitchen agreement in accordance with the provisions of Exhibit 1
attached hereto, and shall comply with all requirements therein.
Food and.Beverage.Concession Agreement—Miami Beach Convention Center
Commission Memorandum -
April 13, 2016
Page 4
CITY MANAGER'S RECOMMENDATION
• The Administration recommends authorizing the City to exercise the remaining two (2) renewal
options and waiving competitive bidding to add an additional 2 years and 3 months, which
extends the Agreement through September 30, 2020 of the agreement between the City and
Centerplate, for food and beverage catering and concessions services at the .Miami Beach
Conv-,ion Center.
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