Resolution 2018-30378RESOLUTION NO. 2018 -30378
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. 2018 - 238 -KB, FOR THE
DEVELOPMENT OF A CONVENTION HOTEL ADJACENT TO THE
MIAMI BEACH CONVENTION CENTER ( "PROJECT "); AUTHORIZING
THE ADMINISTRATION TO NEGOTIATE A DEVELOPMENT AND
GROUND LEASE AGREEMENT WITH MB MIXED USE INVESTMENT,
LLC, WITH SAID AGREEMENT SUBJECT TO PRIOR APPROVAL BY
THE MAYOR AND CITY COMMISSION BEFORE FINAL EXECUTION
THEREOF.
WHEREAS, on April 13, 2016, the Mayor and City Commission established the
Mayor's Ad Hoc Blue Ribbon Steering Committee on the Convention Center Hotel (the
"Committee "), chaired by Commissioner Arriola and Vice - chaired by Commissioner Rosen -
Gonzalez; and
WHEREAS, on February 14, 2018, the Mayor and City Commission considered the
Committee's report regarding potential options for a Convention Center Hotel development,
including options with respect to a proposed Hotel's location, size, height, and related issues
such as traffic mitigation, and the like; and
WHEREAS, on February 14, 2018, the Mayor and City Commission directed the
Administration to prepare a Request for Proposal ( "RFP ") that incorporated the various options
discussed; and
WHEREAS, on May 17, 2018, the Mayor and City Commission approved Resolution
No. 2018 - 30310, authorizing the issuance of an RFP for the Convention Center Hotel (with
respect to "Option A ", for a lease of the approximately 2.55 acre site located adjacent to the
Convention Center; and
WHEREAS, Request for Proposals No. 2018 - 238 -KB (the RFP) was issued on May 17,
2018, with an opening date of June 14, 2018; and
WHEREAS, a voluntary pre - proposal meeting was held on May 24, 2018; and
WHEREAS, the City received a proposal from MB Mixed Use Investment, LLC, a joint
venture between Turnberry and Terra Group with the registered operating name of "Miami
Beach Connect "; and
WHEREAS, on June 7, 2018, the City Manager via Letter to Commission (LTC) No. 323-
2018, appointed an Evaluation Committee (the "Committee "), which convened on June 21, 2018
to consider the proposals and conduct oral presentations; and
WHEREAS, after reviewing the Proposer's qualifications and submission and the
deliberations of the Evaluation Committee, the City Manager has exercised his due diligence
and is recommending that the Mayor and City Commission authorize the Administration to enter
into negotiations for a Development and Ground Lease Agreement with MB Mixed Use
Investment, LLC, for the reasons set forth in the City 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 accept the recommendation of the City Manager pertaining to Request for
Proposals (RFP) No. 2018 - 238 -KB, for the Development of a Convention Hotel Adjacent to the
Miami Beach Convention Center; authorize the Administration to negotiate a Development and
Ground Lease Agreement with MB Mixed Use Investment, LLC, with said agreement subject to
prior approval by the Mayor and City Commission before final execution thereof.
PASSED AND ADOPTED this 0? day of vc;/ 2018.
ATTEST:
Rafael E. Granado, City Clerk
an Gelber, Mayor
APPROVED AS TO
FORM & LANGUAGE
& FOR EXEC 1•N
MAMBEACH
Resolutions - R7 E
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Raul J. Aguila, City Attorney
DATE: July 2, 2018
SUBJECT: 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. 2018-238 -
KB, FOR THE DEVELOPMENT OF A CONVENTION HOTEL ADJACENT TO THE
MIAMI BEACH CONVENTION CENTER ( "PROJECT "); AUTHORIZING THE
ADMINISTRATION TO NEGOTIATE A DEVELOPMENT AND GROUND LEASE
AGREEMENT WITH MB MIXED USE INVESTMENT, LLC, WITH SAID
AGREEMENT SUBJECT TO PRIOR APPROVAL BY THE MAYOR AND CITY
COMMISSION BEFORE FINAL EXECUTION THEREOF.
Legislative Tracking
Office of the City Manager /Procurement
ATTACHMENTS:
Description
❑ Memo to Commission
❑ Resolution
❑ Attachment A - MB Connect Presentation
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MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Dan Gelber and Members df the City commission
FROM: Jimmy L. Morales, City Manager
DATE: July 2, 2018
SUBJECT: 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. 2018 - 238 -KB, FOR THE
DEVELOPMENT OF A CONVENTION HOTEL ADJACENT TO THE
MIAMI BEACH CONVENTION CENTER ( "PROJECT ");
AUTHORIZING THE ADMINISTRATION TO NEGOTIATE A
DEVELOPMENT AND GROUND LEASE AGREEMENT WITH MB
MIXED USE INVESTMENT, LLC, A JOINT VENTURE BETWEEN
TURNBERRY AND TERRA GROUP, WITH SAID AGREEMENT
SUBJECT TO PRIOR APPROVAL BY THE MAYOR AND CITY
COMMISSION BEFORE FINAL EXECUTION THEREOF.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
On April 13, 2016, the Mayor and City Commission established the Mayor's Ad Hoc Blue Ribbon
Steering Committee on the Convention Center Hotel (the "Committee "), chaired by Commissioner
Ricky Arriola and Vice - chaired by Commissioner Kristen Rosen - Gonzalez.
On February 14, 2018, the Mayor and City Commission considered the Committee's report
regarding potential options for a Convention Center Hotel development, including options with
respect to a proposed Hotel's location, size, height, and related issues such as traffic mitigation,
and the like. At the February 14, 2018 City Commission meeting, the Mayor and City Commission
directed the Administration to prepare a Request for Proposal ( "RFP ").
On May 16, 2018, the Mayor and City Commission approved Resolution No. 2018 - 30310,
authorizing the issuance of an RFP for the Convention Center Hotel for a lease of the approximately
2.6 acre site located adjacent to the Convention Center.
On May 17, 2018 the City issued Request for Proposals No. 2018 - 238 -KB (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 May 24, 2018.
On June 7, 2018 the City Manager, via Letter to Commission (LTC) No. 323 -2018, appointed an
Evaluation Committee (the "Committee ").
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Resolution Accepting Manager's Recommendation for RFP No. 2018- 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
Page 2 of 11
On June 14, 2018 the City received a responsive proposal from MB Mixed Use Investment, LLC, a
joint venture between Turnberry and Terra ( "Miami Beach Connect ").
On June 21, 2018, the Evaluation Committee convened to consider the responsive proposal and
conduct oral presentations. The Proposer's presentation to the Evaluation Committee is included
as Attachment A. The Evaluation Committee's advisory rankings are discussed more fully below.
NEED FOR A CONVENTION CENTER HOTEL
The City of Miami Beach has been contemplating the development of a convention center hotel for
more than two decades. In that span, the City has solidified its brand as an international destination
for tourism, arts and culture, shopping, dining and entertainment. The City of Miami Beach is
currently engaged in a public construction project that includes a complete renovation and
expansion of the Convention Center. This state -of- the -art building will enable our City to compete
for world -class events and meetings.
A hotel adjacent to the Miami Beach Convention Center is the next step in creating a highly
competitive convention destination. The hotel will have a dramatic impact on the ability to book
conventions and events that generate hotel room nights and spending throughout the city. The
following summarizes the key impacts:
• Competitive Landscape — Out of the 30 top U.S. convention destinations, Miami Beach is
one of four that currently does not have a headquarter hotel attached or adjacent to its
convention center. The other three cities include: Ft. Lauderdale, which is in the process of
developing a hotel; Los Angeles, which is also in the process of developing a hotel; and New
York, which does not need a headquarter hotel in view of the significant hotel inventory in
the nearby Broadway District. With the addition of a convention hotel for the Miami Beach
Convention Center, Miami Beach will be truly competitive as a convention destination.
• Client Demands — The City and the Greater Miami Convention and Visitors Bureau
(GMCVB) have reached out to the Convention Center's target market and continue to
receive feedback that many convention planners will only consider Miami Beach for their
event if there is an attached hotel. With a hotel, the City will finally have an opportunity to
book these events. Art Basel has also expressed strong support for the hotel.
• Center Bookings — Case studies in other destinations that have expanded /renovated their
convention center, and developed a convention hotel, have shown material increases in
convention bookings. Average convention room night impact increased 42 %. The City and
GMCVB have already established increased convention center booking goals to be
implemented once the hotel is approved.
• Area Hotel Impact — City staff has studied the impact on existing hotels when a new
convention hotel opens. In cities where new convention hotels have been developed, hotel
room night demand exceeded the increase in room night supply within 1 to 3 years.
• Room Rate Driver - City staff has analyzed the times of year when Miami Beach realizes
its highest hotel rates. Other than New Year's Eve and large sporting events, many of the
high rate periods coincide with convention center events. More conventions booked means
more high -rate periods, which means more hotel revenues, equating to more tax revenues
that support City services.
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Resolution Accepting Manager's Recommendation for RFP No. 2018- 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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• Traffic —The convention hotel is critical to change the Convention Center's booking mix from
"drive -in" consumer and trade shows to "fly -in" conferences and conventions. This should
reduce the traffic impact of the convention center by reducing the number of daily trips.
• Contractual Room Block — One of the challenges with booking the Convention Center is
that the City has no room block agreements with any hotels in the area, including large -scale
hotels capable of providing large enough group room blocks to support convention events.
Room commitments are critical to attracting premier conventions. The proposal provides
for a Room Block Agreement, requiring the Hotel to commit 80% of its rooms to citywide
events that are to occur at least 30 months in the future and, among other things, include
price protection to ensure a fair rate is offered. This is a game changer for Miami Beach.
• Tax Impact— The Hotel will pay convention development, resort and property taxes that go
to the City described in further detail in the analysis below.
• Increased Dedicated County Funding — Miami -Dade County is contractually obligated to
increase its Convention Development Tax funding to the City of Miami Beach by up to $1.5
million annually through 2044 — only if a convention hotel is developed. This totals $31.5
million more to the City.
• Art in Public Places — The hotel will contribute $3.2 million of the budget to the City's Art in
Public Places fund, to be used for Art in Public Places projects in the City.
The advantages of developing the proposed convention hotel are substantial and complement the
City's investment in the MBCC Renovation and Expansion Project. I truly believe that our
investment in the Convention Center, coupled with a new convention hotel, will catapult Miami
Beach into a leadership position in the convention market. Failure to build an adjacent headquarter
hotel will diminish the return on our investment in the Convention Center.
ANALYSIS
I first want to address any concern that the City received only one proposal for the hotel project. In
2015, we also received a limited response (only two) despite a much longer procurement process;
One responsive proposal for the hotel (Portman's proposal), and a second bidder who was
disqualified because they requested a $25 million subsidy, contrary to the RFP. As you may know,
communities seeking a convention center hotel usually (if not always) have to provide a subsidy by
way of free land, tax benefits /rebates, cash grants or some combination thereof. Our RFP indicated
that there would be no subsidy of any kind. That requirement significantly shrinks the applicant pool.
This issue was discussed in last year's Hotel Blue Ribbon committee, with committee members
acknowledging that the City may have to consider providing a subsidy in order to attract serious
bidders. Fortunately, we have received a proposal from a qualified team that requires no subsidy.
The 60% referendum requirement is also a significant challenge to qualified bidders, especially
since the last one failed to achieve voter approval in 2015. Given opportunities elsewhere,
developers are averse to investing substantial time, energy and money in a proposed project that
then has to be approved by a super majority of the voters. Finally, the City received an unsolicited
proposal in April from a group proposing a management agreement structure (which would not have
required a referendum under the City's charter), but the City Commission decided that they
preferred the ground lease approach and wanted to work towards a November 2018 referendum.
The group that had submitted the unsolicited proposal chose not to respond to the RFP. In light of
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Resolution Accepting Manager's Recommendation for RFP No. 2018- 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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the foregoing factors and history, there is no guarantee that a less compressed timetable would
have generated additional responsive proposals
Developer Experience
The proposer. MB Mixed Use Investment, LLC, a joint venture between local Miami Beach
companies Turnberry and Terra Group, with a registered operating name Miami Beach Connect
( "MB Connect "), meets and exceeds the qualifications requirements of the RFP. MB Connect's
team has extensive convention hotel development and architectural experience that includes the
projects listed below. As indicated in the proposal, Terra Group has raised and developed over $4
billion and over 4.5 million square feet of residential and commercial real estate. Turnberry has
raised and developed over $7 billion and over 20 million square feet of retail, 7,000 residential units,
1.5 million square feet of Class A office space and several hotels and resorts. The team has been
involved in developing or financing the following projects:
• $260 million development of the 533 -room JW Marriott Nashville (under construction, 2018)
• $1 billion renovation of the 1,594 -room Fontainebleau Miami (2008)
• $4 billion development of the SoLe Mia North Miami Beach mixed use complex (under
construction)
• $110 million development of the 220 -room Boston Courtyard (2018)
• $200 million development of the 685 -room Turnberry Isle Miami Resort (under construction,
2018)
• $230 million expansion of the Aventura Mall (2017)
• $339 million development of the 70 -unit Eighty Seen Park residential tower, Miami Beach
(under construction, 2019)
• $584 million development of the 274 -unit Park Grove residential tower, Coconut Grove
(under construction)
• $332 million development of the 99 -unit Grove at Grand Bay residential towers, Coconut
Grove (2016)
• $75 million development of the10 -unit Glass residential tower, Miami Beach (2015)
• $60 million development of the Mary Street commercial tower, Coconut Grove (under
construction, 2019)
Design Experience
Arquitectonica is the lead designer for the Project. Arquitectonica was founded in 1977 and is an
internationally recognized architectural firm founded and based in Miami. Arquitectonica has
designed several convention center hotels, including the following:
• 3,800 -room Revel Hotel Atlantic City (2012)
• 1,700 -room City of Dreams Hotel Macau (2009)
• 1,200 -room Hilton Americas Houston (2003)
• 1,000 -room Sheraton Downtown Phoenix (2008)
• 1,004 -room Grand Hyatt San Antonio (2008)
• 1,000 -room The Cosmopolitan Hotel Las Vegas (2010)
• 850 -room Westin Times Square New York (2002)
• 311 -room Westin Lima
Arquitectonica has also teamed with ArquitectonicaGEO, an international landscape architectural
firm affiliated with Arquitectonica and based in Miami. Examples of ArquitectonicaGEO's landscape
design projects include East Hotel at Brickell City Centre, Hyde Midtown Hotel & Residences, SLS
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Resolution Accepting Manager's Recommendation for RFP No. 2018 - 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2. 2018
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Lux Hotel & Residences, Mandarin Oriental Hotel at Taikoo Hui Complex (Guangshou, China), and
Perez Art Museum Miami (PAMM).
Finally, MB Connect has teamed with Local Office Landscape Architecture, to serve as chief architect
of the Hotel project's resiliency plan, to protect built environments and natural ecosystems from the
risks of climate change, rising seas and weather disturbances.
Proposed Hotel Program
MB Connect proposes to develop an 800 -room convention headquarter hotel to include the following
program elements:
Ballroom /Meeting Space Sq. Feet Food & Beverage Seats
Ballroom 20,000 Restaurant Club 400
Junior Ballroom (2) 16,300 Lobby Lounge 150
Breakout Meeting 23,118 Pool Grille 65
Support 37,120 Lobby Bar 100
Total 96,538
Parking Spaces: 320
Guest Rooms Units Sq. Feet Sq. Feet/Unit
Standard 735 257,250 350
Suites 55 33,310 606
Hospitality Suites 10 6,830 1,708
Guest Support 88,860
Total 800 386,250 375
The 320 parking spaces proposed adheres to the City Code requirement of 0.4 parking spaces per
room.
Hotel Brand
MB Connect has indicated it intends to consider national hotel brand /operators with an established
and consistently maintained reputation for quality operations. Brands to be considered include those
owned by Hyatt, Hilton and Marriott.
Development Budget and Finance Plan
MB Connect has estimated the preliminary development budget to be $362.1 million and intends to
finance the hotel with an estimated $235.4 million, or 65% in debt, and $126.7 million or 35% in
equity. The MB Connect proposal included financing references from JP Morgan Chase, Wells
Fargo, HSBC, Citibank and United Overseas Bank, as well as regional lenders such as Regions
Bank and Florida Community Bank. The Proposer team has indicated it intends to fund up to $20
million in equity for the Project, with the remaining capital to be raised from third -party investors. The
development budget and finance plan are consistent with that used in other similar hotel
development projects.
Development Schedule
If the voters approve the lease in November of 2018, design and development would commence
thereafter, and the proposer anticipates the Hotel would open in September of 2022.
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Convention Hotel Adjacent to the Miami Beach Convention Center
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Lease Proposal
MB Connect has proposed to lease the Hotel Site for a period of 99 years. Lease payments are
proposed to be the greater of an annual minimum fixed rent, or 2.5% 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
2027 (Yr 5) Total NPV @ 5% Total NPV @ 5%
Minimum Fixed Rent $2.0m $71 m $27m $560m $45m
Variable Rent 1.3m 55m 22m 403m 35m
Percentage Rent (2.5% Gross) S3.3m $126.2m $48.8m $963.7m $80.3m
In FY17, the P29 parking lot where the Hotel will be located generated $104,634 in revenues.
This modest revenue is in sharp contrast to the revenues anticipated under the proposed lease
for the Hotel Project, whereby the City is projected to be paid $3.3 million annually by Year 5.
This amount is projected to grow annually with hotel room rate growth through the percentage
rent payment. Assuming a modest 2% annual growth after the 1 0-year pro -forma period, the City
is projected to be paid $80.3 million for the site, the net present value of the lease payments. This
equates to $31.5 million per acre, $724 per square foot, or $100,375 per room.
The City has engaged an independent appraiser, Blazejack and Associates, to complete its
appraisal for the leased property, and the appraisal will be provided to the City Commission prior
to its final approval of the Development and Ground Lease Agreement.
• MB Connect has accepted the City's key lease terms, including: The proposed Hotel is designed to
a height of 185 feet, which is the same height as the Lincoln Road "clock tower" at 407 Lincoln
Road;
• Developer is to fund all costs to develop, design, construct, equip and operate the hotel, with no
City funding or financing;
• Lessees may not own, operate, or manage any establishment offering gambling or wagering in
Miami -Dade County;
• Proposer has agreed to adhere to the City's terms outlined in the City's proposed Room Block
Agreement.
Transaction Rent
MB Connect has proposed the City will receive additional rent in connection with the first three
sales of the Hotel to a third party, and proposes for the City to receive the lesser of $2 million or
0.25% of the gross sales price (with the City continuing to receive all rent and other payments
due to the City throughout the term of the lease). This transaction rent is not common in the
industry, particularly where, as here, the City provides no funding or financing for the project (and
thereby takes no development risk).
Employment Projections
During the construction and development phases of the Project, the Proposer estimates to
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Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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create1,900 full -time equivalent jobs. Once the hotel has reached a stabilized level of operation, the
hotel is estimated to employ 724 full -time workers.
Traffic
The Proposer has engaged Kimley Horn as its traffic engineer and mobility consultant for the
Project. The proposal highlighted MB Connect's commitment to ensure the Convention Center
District is accessible to all current and future modes of transportation and that pedestrian safety
is a priority. The proposal was reviewed by the City's Traffic and Transportation staff with
experience in access management and traffic operations. While no formal queuing analysis or
traffic analysis was provided as part of the proposal, one of the advantages identified in this plan
is the internalization of queueing by utilizing the majority of the footprint of the site for car, valet
and ridesharing drop -offs; and truck loading operations separate and apart from visitor entries.
This design will reduce the possibility of spillback from the drop -off operations into 17th Street
and Convention Center Drive.
During construction, the proposer will need to submit a Maintenance of Traffic (MOT) that also
minimizes impacts to 171h Street and Convention Center Drive and will also be required to include
a plan that addresses off -site parking arrangements for construction workers and Hotel
employees (after completion of construction).
Resiliency
MB Connect has developed a conceptual hotel design that is resilient and adaptable. The proposal
accounts for changing conditions throughout the building's expected useful life, while
accommodating the needs of the community today. For example, the building is proposed at a raised
elevation that protects the building from expected rises in sea levels in the future but its design
maintains the street's existing walkability by providing stepped transitions, landscaping and shade
at the sidewalk level. Similarly, several floors are designed to adapt to changing conditions, such as
the double height retail spaces on the ground level that can allow for higher finished floor elevations
in the future and the adaptable upper floors that can transition in use and shape as needed.
The building design also capitalizes on industry best practices and innovative technology to
institutionalize sustainability in its operations. The foundation of the building's operational
sustainability is the Leadership in Energy and Environmental Design (LEED) certification, of which
the proposed design is anticipated to achieve LEED Gold. In achieving LEED Gold, the building will
be constructed using sustainable materials, utilize fixtures that reduce energy and water use, and
rely on renewable energy systems including a solar roof and a geothermal system for air conditioning
and hot water, among other green building practices. The design also weaves green and blue
infrastructure designs throughout the building, including bioswales and a cutting -edge blue roof that
retains stormwater for reuse on -site. Native vegetation is also a cornerstone of the design and is
used to lower the groundwater levels around the property, to capture additional stormwater, and to
create beautiful vistas. The integrated design approach used by the MB Connect team is consistent
with the recommendations in the South Florida Regional Climate Compact Regional Climate Action
Plan and the city's work with the 100 Resilient Cities network.
Public Sector Benefits
A summary of the public revenue impact of the Hotel is attached hereto as Exhibit 2. In addition
to the land lease, the Hotel will pay City Resort Taxes and Property Taxes. In addition, the County
has agreed to increase he Convention Development Tax funding to the City once a headquarter
hotel is opened. Upon stabilization, total lease and tax payments are estimated to be $10.3 million
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Convention Hotel Adjacent to the Miami Beach Convention Center
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to the City. The value of this revenue stream over the lease term is $223 million net present
value.
The hotel will also pay County, school, and State sales taxes. All told, the hotel is estimated to
generate $20.9 million in annual public revenues upon stabilization, equating to $514 million net
present value over the term of the lease.
Additionally, MB Connect has proposed to discuss with the City additional consideration in the
form of a 1% "voluntary special assessment" on room revenues, to be dedicated to fund joint
marketing efforts to promote the Convention Center, Convention Center Hotel, and tourism in the
City. If implemented, this assessment could generate $1.3 million annually upon stabilization.
Subject to further discussion and negotiation, the Administration supports the 1% assessment or
fee for marketing purposes.
RFP EVALUATION COMMITTEE
The Evaluation Committee (the "Committee ") consisted of the following individuals:
• Paul Freeman, Mayor's AD Hoc Blue Ribbon Steering Committee on the Convention
Center Hotel, & Resident of Palm View Neighborhood
• Laurence A. Herrup, Chairman, Convention Center Advisory Board
• David Martinez, Director, Capital Improvements Projects Office, City of Miami Beach
• Jonathan Plutzik, Owner, The Betsy Hotel
• Randy Weisburd, Chief Operating Officer, Atlantic & Pacific Companies, & Resident
• Margarita Wells, Assistant Director, Environment and Sustainability Department, City of
Miami Beach, & Resident
• John Woodruff, Chief Financial Officer, Finance Department, City of Miami beach
The Committee conducted an extensive 95- minute Q & A with MB Connect's team and City staff
covering a wide range of aspects of the proposed project. The Committee then scored the
proposal based upon the criteria outlined in the RFP. High marks, at or above 90, were
received from all participants. The table below represents the scores by the committee
members.
CITY MANAGER'S RECOMMENDATION
After reviewing the qualifications and submissions of MB Connect's proposal, and after considering
the deliberations and rankings of the Evaluation Committee, and exercising my due diligence
consistent with Section 2 -369 of the City Code, I recommend that the Mayor and City Commission
authorize the Administration to enter into negotiations with MB Connect.
The MB Connect proposal reflects a thoughtful response by a qualified local team and incorporates
significant feedback provided by the City Commission and the Mayor's Ad Hoc Blue Ribbon Steering
Committee on the Convention Center Hotel, including with respect to:
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Committee Member Scoring
CRITERIA
Potential
Score
#1
#2
#3
#4
#5
#6
#7
Average
Score
Proposer Qualifications
15
15
15
15
15
15
15
15
15
Design Team Qualifications
10
10
10
10
10
10
10
10
10
Financial Plan & Terms and Preliminary Budget
35
30
30
30
30
30
32
30
30
Programming
15
10
15
13
12
14
13
12
13
Conceptual Design anc Resiliency
25
25
25
22
25
24
24
25
24
TOTAL
100
90
95
90
92
93
94
92
92
CITY MANAGER'S RECOMMENDATION
After reviewing the qualifications and submissions of MB Connect's proposal, and after considering
the deliberations and rankings of the Evaluation Committee, and exercising my due diligence
consistent with Section 2 -369 of the City Code, I recommend that the Mayor and City Commission
authorize the Administration to enter into negotiations with MB Connect.
The MB Connect proposal reflects a thoughtful response by a qualified local team and incorporates
significant feedback provided by the City Commission and the Mayor's Ad Hoc Blue Ribbon Steering
Committee on the Convention Center Hotel, including with respect to:
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Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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1. A maximum height of 185 feet;
2. 800 rooms, the Greater Miami Convention Visitor's Bureau (GMCVB's) as well as the
Mayor's Blue Ribbon panel recommended target room number to support room blocks for
convention events;
3. An efficient approach to vehicle circulation and traffic, by using the majority of the footprint
of the site to internalize pickup and drop -offs, and to minimize impacts to 17th Street and
Convention Center Drive;
4. A design that is compatible with the renovated MBCC and the surrounding area;
5. The utilization of a world class architect to produce an iconic design as requested by the
Mayor's Blue Ribbon panel;
6. A resilient design that incorporates the use of solar power, green and blue infrastructure,
native vegetation, and water & resource conservation; and
7. A financial proposal that provides the City with significant revenues, without any City funding
or financing for the project.
I recognize that the construction and eventual operation of the Hotel will impact surrounding
neighborhoods. As such, staff will work actively with each of these areas to see how we can minimize
each impact, address infrastructure and other improvements that could assist those neighborhoods
and ensure the City, developer and the eventual hotel operator are responsive to the community.
CONCLUSION
Based on the foregoing, the City Manager recommends that the Mayor and City Commission
authorize the Administration to negotiate a development and ground lease Agreement with MB Mixed
Use Investment, LLC, pursuant to Request for Proposals (RFP) No. 2018 - 238 -KB 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.
Attachment A — MB Connect Presentation to Evaluation Committee on 6 -21 -18
T:IAGENDA12018107 July\July 21MBCC Hotel1MBCC Hotel Developer Memo.docx
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Resolution Accepting Manager's Recommendation for RFP No. 2018- 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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Exhibit 1
Summary of Lease proposal
Minimum Percentage
Fixed Rent Growth Variable Rent Growth Rent Growth
1 2023 $400,000 $1,998,255 $2,398,255
2 2024 800,000 100.o% 1,956,400 -2.1% 2,756,400 14.9%
3 2025 1,200,000 50.0% 1,829,542 -6.5% 3,029,542 9.9%
4 2026 1,600,000 33.3% 1,552,523 -15.1% 3,152,523 4.1%
5 2027 2,000,000 25.0% 1,263,216 -18.6% 3,263,216 3.5%
6 2028 2,040,000 2.0% 1,321,112 4.6% 3,361,112 3.0%
7 2029 2,080,800 2.0% 1,381,146 4.5% 3,461,946 3.0%
8 2030 2,122,416 2.0% 1,449,176 4.9% 3,571,592 3.2%
9 2031 2,164,864 2.0% 1,507,914 4.1% 3,672,778 2.8%
10 2032 2,208,162 2.0% 1,574,800 4.4% 3,782,962 3.0%
11 2033 2,252,325 2.0% 1,606,296 2.0% 3,858,621 2.0%
12 2034 2,297,371 2.0% 1,638,422 2.0% 3,935,794 2.o%
13 2035 2,343,319 2.0% 1,671,191 2.0% 4,014,510 2.0%
14 2036 2,390,185 2.0% 1,704,615 2.o% 4,094,800 2.0%
15 2037 2,437,989 2.0% 1,738,707 2.0% 4,176,696 2.0%
16 2038 2,486,749 2.0% 1,773,481 2.0% 4,260,230 2.0%
17 2039 2,536,484 2.0% 1,808,951 2.o% 4,345,434 2.0%
18 2040 2,587,213 2.0% 1,845,130 2.0% 4,432,343 2.0%
19 2041 2,638,958 2.0% 1,882,032 2.0% 4,520,990 2.o%
20 2042 2,691,737 2.0% 1,919,673 2.0% 4,611,410 2.0%
r
21 -99 518,891,349 370,059,102 888,950,451
Total $560,169,920 $403,481,683 $963,651,603
NPV @5% $45,095,161 $35,205,066 $80,300,227
Note: Every five (5) years, the Minimum Fixed Rent will be reset to the greater of (a) the
existing Minimum Fixed Rent , or (b) 60% of the average of the actual rent paid
during the past five (5) years
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Resolution Accepting Manager's Recommendation for RFP No. 2018 - 238 -KB for the Development of a
Convention Hotel Adjacent to the Miami Beach Convention Center
July 2, 2018
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Exhibit 2
Summary of Public Revenue Impact
Over 30 years Over 99 years
2027 (Yr 5) Total NPV @ 5% Total NPV @ 5%
CITY
Hotel Lease
Minimum Fixed Rent $2.0m $71m $27m $560m $45m
Variable Rent 1.3m 55m 22m 403m 35m
Percentage Rent (2.5% Gross) $3.3m 126m 49m 964m 80m
Taxes
CRA City (thru 3/2044)
CRA County (thru 3/2044)
New Resort Tax (Hotel 1 %)
Resort Tax (Hotel 3 %, F &B 2 %)
CDTAllocation (thru 2044)
Property Taxes*
Subtotal
0.9m 21m 10m 21m 10m
0.7m 16m 8m 16m 8m
0.8m 30m 12m 228m 19m
3.2m 122m 47m 935m 78m
1.5m 32m 15m 32m 15m
0.1m 15m 4m 250m 13m
7.0m 236m 96m 1,482m 143m
CITY TOTAL
$10.3m $362m $145m $2,446m $223m
COUNTY
SCHOOLS (Property Tax)
OTHER PROPERTY **
STATE SALES TAX (6 %)
TOTAL
2.1m 117m 41m 1,210m 82m
1.2m 45m 18m 340m 29m
0.1m 5m 2m 41m 3m
7.2m 278m 107m 2,120m 177m
$20.9m $808m $313m $6,158m $514m
* 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 2019
$1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044
Sources: Developer, City of M iami Beach, JLL
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