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RESOLUTION NO. 2003-25381
A RESOLUTION OF THE MAYOR AND THE CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE
EXECUTION OF A MANAGEMENT SERVICES AGREEMENT FOR
THE MIAMI BEACH CONVENTION CENTER AND THE JACKIE
GLEASON THEATER OF THE PERFORMING ARTS BETWEEN
THE CITY AND SMG, FOR A TERM OF THREE (3) YEARS WITH
TWO ONE YEAR EXTENSION OPTIONS.
WHEREAS, on September 7, 1990 the City of Miami Beach issued a Request for
Proposals (RFP) for the management of the Miami Beach Convention Center (MBCC) and
the Jackie Gleason Theater of the Performing Arts (Gleason), and the bid was awarded to
Spectacor Management Group (SMG); and
WHEREAS, on December 19, 1990, the City of Miami Beach entered into a
Management Services Agreement with SMG for the management of the MBCC and the
TOPA; and
WHEREAS, the Agreement was for an initial term of three-years, commencing on
January 1, 1990, and ending December 31, 1993 and on June 30, 1993, the City exercised
its option to extend the Agreement for two successive one-year terms covering the period
of January 1, 1994, through December 31, 1995; and
WHEREAS, on April 19, 1995, the City Commission approved the waiver of formal
bidding procedures for the Management Contract, thus extending the Management
Services Agreement with SMG, and approving a new Agreement for the period of October
1, 1995, through September 30, 1998; and
WHEREAS, on December 5, 1997, the City of Miami Beach authorized RFP No. 5-
97/02, seeking proposals from qualified firms for the management and operation of MBCC
and/or TOPA; and
WHEREAS, on April 1 , 1998, the City Commission authorized a Resolution for the
Administration to enter into negotiations for a Management Services Agreement with the
recommended firm of SMG pursuant to the recommendation of the City Manager and the
Evaluation Committee
WHEREAS, on July 15, 1998, the Mayor and City Commission adopted Resolution
98-22850 authorizing execution of an Agreement with SMG for three (3) years with two (2)
one year renewals and on September 5, 2001, the Mayor and City Commission adopted
Resolution No. 2001-24573 approving the two (2) one year extensions which will expire on
September 30, 2003; and
WHEREAS, since the Agreement does not provide for any further renewal options,
on July 31 , 2002, an item was referred to the Finance and Citywide Projects Committee to
discuss the future management of the MBCC and TOPA and on October 25, 2002, the
Committee met and recommended the Administration issue a RFP seeking qualified firms
for the management and operation of the MBCC and TOPA; and
WHEREAS, on August 27,2002 and November 19, 2002, the Convention Center
AdvisoryBoard discussed the future management and operation of the MBCC and TOPA
and adopted motions at both meetings recommending the City negotiate a no bid contract
to the current operators due to the lack of qualified competitive operators worldwide and
SMG's proven track record, their professional management and operational expertise; and
WHEREAS, on January 8, 2003, the Mayor and City Commission adopted
Resolution No. 2003-25107, which authorized the issuance of a RFP for the management
and operation of (1) the MBCC and the Gleason, or (2) the Gleason only, with an option to
manage and market other City Cultural Facilities to include but not limited to: the Byron-
Carlyle Theater, the Rotunda, the Acorn Theater, the bandshell and/or the Colony Theater.
Each proposal was required to submit fee proposals for the optional City facilities; and
WHEREAS, RFP No. 33-02/03 was issued on February 24, 2003 and on March 28,
2003, the City received two (2) proposals: 1) Waterford Hotel Group, Inc.; and 2) SMG.
The Administration in consultation with the City Attorney's Office, determined that
Waterford's proposal was deemed non-responsive; and
WHEREAS, on July 2, 2003, the Mayor and City Commission adopted Resolution
No. 2003-25260, approving the recommendation of the City Manager and approving the
selection of SMG, as the successful proposer pursuant to request for proposals (RFP) No.
33-02/03, and further authorizing the Administration to enter into negotiations with SMG,
subject to submission of a five year operational, marketing and budgetary plan, for the
management and operation of the MBCC, the Gleason and the optional City facilities; and
WHEREAS, on September 2, 2003, the Convention Center Advisory Board
reviewed the terms of the negotiated agreement as outlined below and set forth in the
attached draft Agreement, with particular emphasis on the incentive fee calculation and the
scope of services, and adopted a motion to recommend approval to the City Commission;
and
WHEREAS, on September 10, 2003, the Mayor and City Commission authorized a
thirty (30) day extension to allow SMG's counsel to finalize their review of the draft
Agreement and finalize negotiations relative to SMG's capital contribution and scholarship
fund contribution.
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 approve the resolution authorizing the execution of a Management Services
Agreement for the Miami Beach Convention Center and the Jackie Gleason Theater of the
Performing Arts between the City of Miami Beach and SMG for a term of three (3) years
with two (2) one year extension options.
f1ldu,,--
,2003.
PASSED AND ADOPTED this 15th day 0
DASTO
FORM & lANGUAGE
& FOR EXECUTION
CI Y CLERK
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JMG/CMC/rar
T:\AGENDA\2003\oct1503\regular\ConvCtrMGleason.RES.doc
CllY OF MIAMI BEACH
CONMISSION ITEM SUMMARY
m
Condensed Title:
A Resolution authorizing the execution of a Management Services Agreement for the Miami Beach
Convention Center and the Jackie Gleason Theater of the Performing Arts between the City and SMG, for
a term of three (3) years with two one year extension options.
Issue:
Shall the City adopt the Resolution authorizing the execution of a Management Agreement between the
City of Miami Beach and SMG for a term of three (3) years with two one year extension options?
Item Summary/Recommendation:
The Mayor and the City Commission should approve the resolution authorizing the execution of a
Management Services Agreement for the Miami Beach Convention Center and the Jackie Gleason Theater
of the Performing Arts between the City of Miami Beach and SMG for a term of three (3) years with two (2)
one year extension options.
Adviso Board Recommendation:
Finance and Citywide Proiects Committee - October 25, 2002 - recommended the Administration issue a
RFP seeking qualified firms for the management and operation of the MBCC and TOPA.
Convention Center Advisorv Board - August 27,2002 and November 19, 2002 - adopted motions at both
meetings recommending the City negotiate a no bid contract to the current operators due to the lack of
qualified competitive operators worldwide and SMG's proven track record, their professional management
and operational expertise.
Convention Center Advisorv Board - September 2, 2003 - reviewed the terms of the negotiated agreement
as set forth in the attached draft Agreement, with particular emphasis on the incentive fee calculation and
the sco e of services, and ado ted a motion to recommend a roval to the Ci Commission.
Financial Information:
Source of
Funds:
D
Finance Dept.
Ci Clerk's Office Le islative Trackin
Christina M. Cuervo
Si n-Offs:
Department Director
T:\AGENDA\2003\ocI1503\regular\ConvCtr-Gleason.SUM.doc
AGENDA ITEM
DATE
l7r
II-/S:~~
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.cLmiami-beach.f1.us
COMMISSION MEMORANDUM
From:
Mayor David Dermer and Date: October 15, 2003
Members of the City Commission
Jorge M. Gonzalez \ ~~
City Manager U
A RESOLUTION OF THE MAYOR AND THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE EXECUTION OF
A MANAGEMENT SERVICES AGREEMENT FOR THE MIAMI BEACH
CONVENTION CENTER AND THE JACKIE GLEASON THEATER OF THE
PERFORMING ARTS BETWEEN THE CITY AND SMG, FOR A TERM OF
THREE (3) YEARS WITH TWO ONE YEAR EXTENSION OPTIONS.
ADMINISTRATION RECOMMENDATION
To:
Subject:
Approve the resolution.
ANALYSIS
On September 7, 1990 the City of Miami Beach issued a Request for Proposals (RFP) for
the management of the Miami Beach Convention Center (MBCC) and the Jackie Gleason
Theater of the Performing Arts (Gleason). The bid was awarded to Spectacor
Management Group (SMG).
On December 19, 1990, the City of Miami Beach entered into a Management Services
Agreement with SMG for the management of the MBCC and the TapA. The Agreement
was for an initial term of three-years, commencing on January 1, 1990, and ending
December 31, 1993. On June 30, 1993, the City exercised its option to extend the
Agreement for two successive one-year terms covering the period of January 1, 1994,
through December 31, 1995. On April 19, 1995, the City Commission approved the waiver
of formal bidding procedures for the Management Contract, thus extending the
Management Services Agreement with SMG, and approving a new Agreement for the
period of October 1, 1995, through September 30, 1998.
On December 5, 1997, the City of Miami Beach authorized RFP No. 5-97/02, seeking
proposals from qualified firms for the management and operation of MBCC and/or TaPA.
On April 1, 1998, the City Commission authorized a Resolution for the Administration to
enter into negotiations for a Management Services Agreement with the recommended firm
of SMG pursuant to the recommendation of the City Manager and the Evaluation
Committee. On July 15, 1998, the Mayor and City Commission adopted Resolution 98-
22850 authorizing execution of an Agreement with SMG for three (3) years with two (2) one
year renewals. On September 5, 2001, the Mayor and City Commission adopted
Resolution No. 2001-24573 approving the two (2) one year extensions which will expire on
September 30, 2003.
Agenda Item
Date IIJ -/s-() ~
October 15, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 2 0(6
Since the Agreement does not provide for any further renewal options, on July 31, 2002,
an item was referred to the Finance and Citywide Projects Committee to discuss the future
management of the MBCC and TaPA. On October 25, 2002, the Committee met and
recommended the Administration issue a RFP seeking qualified firms for the management
and operation of the MBCC and TapA.
On August 27, 2002 and November 19, 2002, the Convention Center Advisory Board
discussed the future management and operation of the MBCC and TaPA and adopted
motions at both meetings recommending the City negotiate a no bid contract to the current
operators due to the lack of qualified competitive operators worldwide and SMG's proven
track record, their professional management and operational expertise.
On January 8, 2003, the Mayor and City Commission adopted Resolution No. 2003-25107,
which authorized the issuance of a RFP for the management and operation of (1) the
MBCC and the Gleason, or (2) the Gleason only, with an option to manage and market
other City Cultural Facilities to include but not limited to: the Byron-Carlyle Theater, the
Rotunda, the Acorn Theater, the bandshell and/or the Colony Theater. Each proposal was
required to submit fee proposals for the optional City facilities.
RFP No. 33-02/03 was issued on February 24, 2003 with an opening date of March 21,
2003, which was subsequently changed to March 28, 2003 as a result of questions and
request for additional information from interested proposers. A pre-proposal conference to
provide information to firms considering submitting a response was held on March 7,2003.
On March 28, 2003, the City received two (2) proposals: 1) Waterford Hotel Group, Inc.;
and 2) SMG. The Administration in consultation with the City Attorney's Office, determined
that Waterford's proposal was deemed non-responsive.
On July 2, 2003, the Mayor and City Commission adopted Resolution No. 2003-25260,
approving the recommendation of the City Manager and approving the selection of SMG,
as the successful proposer pursuant to request for proposals (RFP) No. 33-02/03, and
further authorizing the Administration to enter into negotiations with SMG, subject to
submission of a five year operational, marketing and budgetary plan, for the management
and operation of the MBCC, the Gleason and the optional City facilities.
On September 2, 2003, the Convention Center Advisory Board reviewed the terms of the
negotiated agreement as outlined below and set forth in the attached draft Agreement, with
particular emphasis on the incentive fee calculation and the scope of services, and
adopted a motion to recommend approval to the City Commission.
On September 10, 2003, the Mayor and City Commission authorized a thirty (30) day
extension to allow SMG's counsel to finalize their review of the draft Agreement and
finalize negotiations relative to SMG's capital contribution and scholarship fund
contribution.
October 15, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 3 0'6
Contract Terms:
The parties have reached agreement on the contract terms which are outlined below.
By way of background, SMG's proposal delineated the following:
. a $400,000 capital contribution to be amortized on a non-cash basis over 15
years. Should SMG be terminated prior to the end of the amortization period,
the succeeding management entity would be responsible for repaying SMG the
unamortized portion of its contribution. Additionally, if SMG is selected to
operate the additional City facilities, SMG proposed to increase said
contribution by an additional $100,000.
The City's Bond Counsel has advised that any amortization of SMG's proposed capital
contribution in excess of the term of the Agreement would be "perceived to be a restraint
as to the City's ability to cancel the contract" from a tax law perspective, as it applies to
Management Contracts involving use of tax exempt bond-financed facilities, such as the
Miami Beach Convention Center.
As such, and limited to a five (5) year amortization concurrent with the Agreement term,
SMG has revised its capital contribution proposal to $250,000 and an additional $62,500, if
the optional facilities are elected. SMG proposes to pay the $250,000 contribution, with
$150,000 payable upon execution and $100,000 payable upon renewal. The City has
requested an additional contribution towards the Scholarship Fund and SMG has agreed to
provide an additional $10,000 payable annually, for a total additional contribution of
$50,000 over the term of the Agreement. The capital contribution outlined above is
intended for the City's use as it deems appropriate. As a point of reference, during the
renewal term of SMG's current contract, an annual capital contribution of $33,000 and an
annual scholarship contribution of $15,000 applied. Over a five (5) year period, these
respective amounts would total $165,000 and $75,000 for comparative purposes.
The following are the relevant contract terms that have been negotiated:
1. Term:
A term of three (3) years with an option for two (2) additional one (1) year periods at
the City's discretion, i.e. October 1, 2003 - September 30,2006 with two one year
extensions to September 30,2007 and September 30,2008, respectively. Although
a 30 day extension to the existing Agreement was approved on September 10,
2003, in an effort to conform to fiscal year calendars and in consideration of SMG's
capital and scholarship contributions, it is deemed in the parties best interest to
approve a retroactive commencement date of October 1, 2003.
2. Manaqement and Operations:
SMG will be responsible for the complete management and operation of the Miami
Beach Convention Center and the Jackie Gleason Theater of Performing Arts.
SMG shall furnish all management, supervision, labor, and services consistent with
generally accepted operations of a first-class Convention Center and/or Theater,
October 15, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 4 of6
and shall be responsible for the maintenance of the buildings and equipment and
marketing of the facilities management of various product and service providers;
coordination offacilities utilization and scheduling. The City has established certain
goals and objectives to guide the management and operation of the City facilities as
set forth in the RFP and included by reference in the Agreement (refer to Section
2.4). In addition, the City has established specific standards of operation, (Exhibit
"C"), which constitute a framework for the management of the Facilities by SMG or
a private management firm.
3. Optional Facilities:
The Contract further sets forth that the City, at its sole discretion and option, to elect
to negotiate with the successful operator to manage and/or market other City
cultural facilities such as the Byron-Carlyle Theater, the Acorn Theater, the
Rotunda, the bandshell and/or the Colony Theater, during the term of their contract,
at an additional increase to the Management Fee of $50,000/year. (refer to Section
2.2(b))
4. Food and Beveraqe Manaqer:
The parties have included a clause on the negotiated contract, if the City requires,
SMG will include within its management team a member with Food and Beverage
background to supervise Centerplate. Initial discussions indicate that SMG will
assign a food and beverage manager from its corporate offices to be headquartered
from Miami Beach. (refer to Section 2.3(b))
5. Base Manaqement Fee:
$295,000 annually, increasing by CPI annually, representing a 6.7% increase over
the current Management Fee of $275,836.
6. Incentive Fee: (refer to Section 4.3)
100% of Management Fee based upon the following criteria:
(i) Maintenance of Facilitv and Capital Equipment - twenty (20) percentage
credits.
(ii) Financial Performance - thirty (30) percentage credits.
Attainment of Net Operating Loss/Profit
reflected in Approved Budget
10 points
Improvement of 5% over Net Operating
Loss/Profit reflected in Approved Budget
Improvement of 10% over Net Operating
Loss/Profit reflected in Approved Budget
20 points
30 points
October 15, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 50'6
(iii) Customer Satisfaction - twenty (20) percentage credits.
Customer surveys - SMG shall with input and approval from the City develop
a customer satisfaction research program from which incentive program will
be administered.
Included in the City's evaluation pursuant to this subsection (Hi) will be SMG's
supervision and monitoring of the food and beverage operations in the
Facility, attention to quality controls, levels of service and performance
standards.
(iv) Bookinq Events at the Facility. The City shall award SMG up to twenty (20)
percentage credits for booking events at the Facility based on the following
table:
Convention Center - up to 10 points
65 actual events held during a Fiscal Year
or 48% Occupancy Rate
2.5 points
70 actual events held during a Fiscal Year
or 52% Occupancy Rate
5 points
75 actual events held during a Fiscal Year
or 56% Occupancy Rate
7.5 points
80 actual events held during a Fiscal Year
or 60% Occupancy Rate
10 points
Theater - up to 10 points
180 use days held during a Fiscal Year
3 points
195 use days held during a Fiscal Year
6 points
210 use days held during a Fiscal Year
10 points
(v) Discretionary. The City shall award SMG up to ten (10) percentage credits
as determined by the City in its sole discretion. The City may take into
account, but not be mandated by, the following: extraordinary quantifiable
and measurable creative initiatives that directly result in SMG securing new
City-wide business for the City of Miami Beach during the off season period;
and/or demonstration and integration of new strategic SMG technically
advanced corporate resources to the benefit of the tourism and/or cultural
community of Miami Beach; and/or serves to development of new or
enhanced revenue streams for Facility use and services, as otherwise
determined by City.
October 15, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 60f6
7. Capital Contribution: (refer to Section 5.10(a))
SMG will contribute $250,000 to the City to be utilized at the City's sole discretion
and will be amortized on a non-cash basis by SMG over the 5 year term of the
Agreement. The contribution will be payable $150,000 upon execution and
$100,000 upon renewal. If City elects for SMG to manage the optional facilities,
SMG will contribute an additional $62,500 or a pro-rated portion if such election
takes place after the first year, payable in consistent installments.
8. Scholarship: (refer to Section 5.1 O(c))
SMG shall contribute $10,000, annually, for a total of $50,000, during the Term of
the Agreement, and any Renewal Term thereof, towards the establishment of a
scholarship fund for qualifying in-need Miami Beach residents pursuing a career in
Facility Management and/or the Hospitality and Tourism Industry. Said fund will be
administered by the City and applicants will be reviewed and recommended by
SMG.
9. Five Year Plan: (refer to Section 2.4)
As directed by the Mayor and City Commission and as set forth in Section 2.3(r)(ii),
5.3(e) and 2.3(1) of the Agreement (see attached), SMG has agreed to submit a
strategic five (5) year plan that addresses the Facility capital needs, operating
budget and marketing and promotional strategy, respectively.
As part of this five (5) Year Plan, SMG will collaborate with City on the development
of a comprehensive marketing plan inclusive of vision and mission, goals,
objectives, tactical strategies and action plans that demonstrate the highest degree
of due diligence and research analysis to position the first class destination and its
competitive advantage as destination of choice for conventions, trade shows,
corporate meetings, consumer shows, events and other key customer targets
identified in the plan. Fulfillment of the strategic marketing plan will further SMG's
commitment to maximize sales and marketing outreach areas for the Facility. As
set forth in the RFP, this 5 year plan will also position the Facility in anticipation of
the completion and opening of the new Performing Arts Center in Downtown Miami.
Pursuant to the City's direction, SMG will execute initiatives as submitted in its
proposal, dated March 26, 2003, submitted in response to RFP # 33-02/03.
CONCLUSION:
The Mayor and the City Commission should approve the resolution authorizing the
execution of a Management Services Agreement for the Miami Beach Convention Center
and the Jackie Gleason Theater of the Performing Arts between the City of Miami Beach
and SMG for a term of three (3) years with two (2) one year extension options.
JMG/CMC/rar
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