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NWS Development Agreement j v-V\ .,.c CITY OF MIAMI BEACH OFFICE OF THE CITY ATTORNEY MEMORANDUM TO: Robert Parcher City Clerk FROM: Raul J. Aguila First Assistant City Attorney SUBJECT: New World Symphony Development Agreement DATE: September 29,2004 Attached please find original recorded copy of the above-referenced matter. Should you have any questions or comments regarding the above, please do not hesitate to contact me. RJA\ed DEVELOPMENT AGREEMENT between CITY OF MIAMI BEACH, FLORIDA ("Owner") and NEW WORLD SYMPHONY ("Developer") Dated as of $-, 20~ <( for SOUNDSPACE PROJECT 111111111111111111111111111111111111111111111 CFN 2004R0785197 OR Bk 22639 P9S 2433 - 2528; (96p9S) RECORDED 09/09/2004 09:44:37 HARVEY RUVIN, CLERK OF COURT MIAMI-DADE COUNTY, FLORIDA TABLE OF CONTENTS Page RECITALS..,..,."."... .., ... ,., ....., .....,.....,.., .., .................... ... ,..,.""", ............., ... .....,., "..,......',.,"'., ..... 1 ARTICLE 1 DEFINITIONS ..,.....,.....,..................................""............."........."".........."",...... 2 ARTICLE 2 CONSTRUCTION ""..""..,..,..,..,..'..,..,..................,..,.........",..,......""...........,.."" 8 Section 2.1 Consistency with City's Comprehensive Plan and Zoning Regulations... 8 Section 2,2 Project Concept Plan Approva1................................................................. 8 Section 2.3 Design of the ProjectJPreliminary Plans and Specifications..................... 9 Section 2.4 Plans and Specifications .......................................................................... 10 Section 2.5 Conditions Precedent to Developer's Commencement of Construction of the Project .. ". ,.. ,..... ,.. ,.. ... ,.. ... ,..,."."""", ...........,." ,., ...."."" ......,.."", ,., ... 10 Section 2,6 Public Facilities and Concurrency........................................................... 12 Section 2.7 Commencement and Completion of Construction of the Project............13 Section 2.8 Completion of Construction of the Project..............................................13 Section 2.9 Confirmation of Land Development Regulations ....................................14 Section 2.10 Required Development Permits .................................,............................. 15 Section 2.11 Developer's Right of Termination ...........................................................15 Section 2,12 Owner Disclaimer ......................................,.............................................15 ARTICLE 3 PLANS AND SPECIFICATION,,,,,.....,,.,,,,..,,..,,,,,,,,,,,,,,,. """"..".,,. ,,15 Section 3.1 Approval and Modification of Plans and Specifications .........................15 Section 3.2 Project Budget""""""""""."""..,..............""........."",........",....,..........,,17 Section 3,3 Compliance with Requirements, Construction Standards ....................... 18 Section 3.4 Design and Decor..................................................................................... 18 ii Section 3.5 Development Dispute............................................................................... 1 8 ARTICLE OWNER PARTICIPATION."..,.".".."",..,.........,.,....,.,.,.,..."",.,....,., ..18 Section 4.1 Section 4.2 Owner's Right to Use Field Personnel.....................................................18 Owner's Right to Notice, Access and Review....................................,.... 19 ARTICLE 5 MISCELLANEOUS CONSTRUCTIONPROVISIONS.,.,.,..,.....,..,...,....",,21 Section 5.1 Section 5.2 Section 5.3 Section 5.4 Section 5.5 Art in Public Places....................".".",..........",.........""........""..,.........",21 Prevailing Wage..,..,..,..,..,.....,..,..,.".""",........"".,.....,."".....".,.,..,.....,.", 21 Construction Agreements,........... ,..,.""", ........".,., .....,., ...........,."., .......".22 Demolition of the Project Site.................................................................. 24 Construction Staging., ,., .., .., ..,..,..... ,..,.".,.' '........,."., .....,.. ,..,.......,."., .......25 ATICLE 6 FINANCING OF PROJECT CONSTRUCTION.,......,.,.,.....".".....,....... ....25 Section 6.1 Developer's Contributions ...................................................,................... 25 Section 6,2 Fees ........,..,..,.". ,..".""",..""..,....'..' .........."" ........."". ......."... ........"""...25 ARTICLE 7 INSURANCE..,.....,..,.....,..,..,.,..".,.,..,.......,.,.,.,......,....,.",..,.,."" ..25 ARTICLE 8 DAMAGE, DESTRUCTION AND RESTORATION..............,.............. ...26 Section 8.1 Section 8.2 Causualty...............,.,......................,..."."..........,.,........,.,..,.....,."""........., 26 Effect of Casualty on this Agreement ........,......................,...................... 26 ARTICLE 9 CONDEMNATION.,.""...,.".,..".,.......,..,.,.,....,.,.,...........,......,., .....26 Section 9,1 Taking ......................,..,........,.,..""..............."..,.......,.........,.,............,..".. 26 Section 9.2 Effect of Taking on this Agreement........................................................, 26 ARTICLE 10 RIGHTS OF RECOGNIZED MORTGAGEE... ......... .........,.............. ...26 Section 10,1 Notice and Right to Cure Developer's Defaults ......................................26 ARTICLE 11 NO SUBORDINATION......,.................,..........,.......................... ...28 ARTICLE 12 MAINTENANCE AND REPAIR,..".,.,.."".,.,....,.,.,....".."...,."".,.,..,28 111 Sectionl2.1 Maintenance of Project Site ....................................................,..............., 28 Section 12.2 Waste Disposal............,..,.."."""""............,.,..,.........,.........,.,............".",28 ARTICLE 13 REQUIREMENTS..,."..,.".,..."".,."....,.,..,.,......,........,.".......,.., ...29 Section 13,1 Requirements ..............,..,..,..""..,..............,..,..........",........",............."".. 29 ARTICLE 14 DISCHARGE OF LIENS.., ,..,..,..........,.., ..................... ......... ........ ..30 Section 14,1 Creation of Liens..................,.....""..,...........,....,.......,........"".. ..........",... 30 Section 14.2 Discharge of Liens ..................................................................................' 30 Section 14.3 No Authority to Contract in Name of Owner........................................... 31 ARTICLE 15 NO LIABILITY FOR INJURY OR DAMAGE, ETC...............,............ ..,32 ARTICLE 16 INDEMNIFICATION...,....,.....,..,.",...,.,....,.,...........,....."...,.,..", ...32 Section 16.1 Indemnification Generally..........................,............................................ 32 Section 16.2 Governs Agreement ..............................................................................,.. 32 Section 16.3 Survival............................................",....,..........,.........",.........",'............ 32 ARTICLE 17 CERTIFICATES BY OWNER AND DEVELOPER............................. ...32 ARTICLE 18 RIGHT TO PERFORM THE OTHER PARTY'S OBLIGATIONS...............32 Section 18,1 Right to Perform Other Party's Obligations............................................. 32 Section 18.2 Discharge of Liens .................................................................................., 33 Section 18.3 Reimbursement for Amounts Paid Pursuant to this Article..................... 33 Section 18.4 Waiver, Release and Assumption of Obligations ....................................34 ARTICLE 19 EVENTS OF DEFAULT, CONDITIONAL.......................,..................34 Section 19.1 Definition "".."".."""""""",................""".........."".............,.......,..",..... 34 Section 19,2 Enforcement of Performance; Damages and Termination....................... 36 Section 19.3 Expiration and Termination of Agreement .............................................. 36 Section 19.4 Strict Performance ................................................................................... 36 iv Section 19.5 Right to Enjoin Defaults .................,.............,................,......................... 37 Section 19.6 Remedies under Bankruptcy and Insolvency Codes ................................ 37 Section 19.7 Inspection .....,..,..'..,..,.....,.....,..""..,..,...,........,.,....,.....,.,............,.,..,.........37 Section 19.8 Owner's Defau1t.".,.."..,."..,."."."".................,..........,.,...........".,..,......... 38 ARTICLE 20 NOTICES, CONSENTS AND APPROVALS". ....".,.,....,.,.". .....,.,.,.. ,..38 Section 20,1 Service of Notices and Other Communications....................................... 38 Section 20,2 Consents and Approvals ..........................................................................39 Section 20.3 Notice of Detailed Plans ....................................................................,..... 41 ARTICLE 21 FINANCIAL REPORTS AND RECORDS......................................... ..41 Section 21.1 Books and Records, Audit Rights ............................................................ 41 ARTICLE 22 ARBITRATION,..,.....".,.....,........."..,......,......,..,.....,.,....,...,..., ....42 Section 22.1 Expedited Arbitration of Development Disputes..................................... 42 Section 22.2 Litigation....,.... .....,.....,... ..........................,..,.. ........". ........""..... ...........".44 ARTICLE 23 OWNER'S OBLIGATIONS FOR INFRASTRUCTURE............... ............44 Section 23.1 Construction of Infrastructure Improvements.......................................... 44 Section 23.2 Garage .............................................,..""...........,..,..........,'..'..........",....... 45 Section 23,3 Adjacent Property ..............................,.."".........",....,.......'",..........,...,..,. 46 Section 23.4 Park ,..,..,..,..,..,..,..,..,..,..,...........................""........"".........,..,..............,..,.47 Section 23.5 Additional Consideration ......................................................................... 47 Section 23.6 The Screen ..................................,..,..,..........,....,.........",............,..,.......... 47 ARTICLE 24 INVESTIGATIONS, ETC..,., ...,.,....". ........,...,.. .....,...,....,.,.,.. ..... ,...47 ARTICLE 25 HAZARDOUS MATERIALS",.,.,..,.."......,.,.,....."..,......,...,.,.....,.,..48 Section 25.1 General Provision....,.........................""",...........,............,............",..,.....48 Section 25.2 Survival..,..,..,..,..""",..,..,....,..,...................",.........,............""..........."",,48 v ARTICLE 26 MISCELLANEOUS...,..,.....,..,.....,....,.......,........,.,.,.......,......,.,., ...48 Section 26,1 Governing Law and Exclusive Venue..............................................,.....,. 48 Section 26,2 References ........... ,..... ,..... ,........,."."."" ...........""., .....,."" ,.......""...., .......48 Section 26,3 Entire Agreement, etc. .............................................................................49 Section 26.4 Invalidity of Certain Provisions .............................................................,. 50 Section 26.5 Remedies Cumulative .............................................................................. 50 Section 26.6 Performance at Each Party's Sole Cost and Expense ...,.......................... 50 Section 26.7 Mortgagee Charges and Fees ...........................................,....................... 50 Section 26.8 Time is ofthe Essence ............................,...........................................,.... 50 Section 26.9 Successors and Assigns............................................................................ 50 Section 26.10 Notice of Defaults ,..............,.......................................,............................ 51 Section 26,11 No Representations .......................................,............................,............. 51 Section 26.12 Corporate Obligations ......................................,........................,..............51 Section 26.13 Nonliability of Officials and Employees.................................................. 51 Section 26.14 Partnership Disclaimer ..................................,.......................................,.. 52 Section 26.15 Time Periods ,.".,'.,..,.."""",."...,.,.............,............,.,.............,.....,..,.......,52 Section 26.16 No Third Party Rights ..........,..............................,....................,............... 52 Section 26,17 No Conflict of Interest ............................................................................. 52 Section 26.18 Recording of Development Agreement ................................................... 53 Section 26.19 Duration of This Development Agreement........................,...................., 53 Section 26,20 Key Man Clause..........................,..,..,..........,....,.........",."......,..,.............54 VI DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT ("Agreement") is entered into as of the _ day of , 2003 (the "Effective Date") by and between the CITY OF MIAMI BEACH, FLORIDA ("Owner"), a municipal corporation duly organized and existing under the laws of the State of Florida, and NEW WORLD SYMPHONY, a not-for-profit Florida corporation ("Developer"). RECITALS: A. Developer has submitted a proposal to develop, construct and operate an approximately 700 seat state-of-the-art performance, educational and internet broadcast facility now known as "SoundSpace", with a footprint not to exceed 50,000 sq. ft. to be used by Developer and others for musical and other cultural performances, education, rehearsals, broadcasts, and other permitted uses, SoundSpace shall include the amenities as more particularly defined in "Developer's Improvements" herein. The descriptions of the amenities contained in these recitals are for illustrative purposes only, and where in conflict, the "Plans and Specifications," as defined herein and in the Ground Lease Agreement, shall control. B. In order to create a significant educational and cultural facility for the use and enjoyment of the residents of the City of Miami Beach ("City") and of the general public, and, further, in consideration of Developer's status as a not for profit organization which has, and shall continue, to enrich the cultural and educational fabric of the City of Miami Beach, Owner has determined that it is in the best interest of the City to accept Developer's proposal and concurrently herewith has entered into an Agreement of Lease with Developer to lease to Developer for the term and upon the conditions stated in the Agreement of Lease, that certain real property described in Exhibit A attached hereto and made a part hereof ("Land"), C, In connection with the development and construction of SoundSpace on the Land, Developer shall construct certain permanent parking facilities for the benefit of the public, including but not limited to a public municipal parking garage to be located on property owned by the Owner ("Garage Property"), and adjacent to the Land, D. Accordingly, the Parties have negotiated this Development Agreement, setting forth the Owner's and Developer's respective responsibilities with regard to the development, design, and construction of the Project and the Adjacent Property and to be located on that certain real property described collectively in Exhibits A, B, and C, attached hereto and made a part hereof (the "Development Site"), -1- NOW THEREFORE, it is hereby mutually covenanted and agreed by and between the parties hereto that this Agreement is made upon the terms, covenants and conditions hereinafter set forth. ARTICLE 1 DEFINITIONS All capitalized terms used herein and not specifically defined herein shall have the meanings ascribed thereto in the "Ground Lease" (defined below). For all purposes of this Agreement the terms defined in this Article I shall have the following meanings and the other provisions ofthis Article I shall apply: "Accounting Principles" shall have the meaning provided in the Ground Lease. "Adjacent Property" means the parcel of land owned by Owner immediately adjacent to the Land, which shall be legally described in Exhibit B, and attached hereto and made a part hereof, to be identified upon approval of the Project Concept Plan by the Mayor and City Commission. "Architect" means a person or firm licensed to operate as an architect in Miami-Dade County, Florida. "Architectural Consultant" shall mean the firm ofGehry Partners, LLP, "Building Permit" means a "Full Building Permit" as such term is defined in the Land Development Regulations, issued by the Building Department of the City, which allows building or structures to be erected, constructed, altered, moved, converted, extended, enlarged, or used, for any purpose, in conformity with applicable codes and ordinances. "Building Equipment" has the meaning provided in the Ground Lease. "Business Day" or "business day" means a day other than Saturday, Sunday or a day on which banking institutions in the State of Florida are authorized or obligated by law or executive order to be closed. "Certificate of Occupancy" means the document by that name that is required prior to the occupancy of any premises by Section 307.1 of the South Florida Building Code as amended from time to time; provided, however, that such definition shall not apply to a temporary certificate of occupancy if issued only for a period not to exceed twelve (12) months prior to the Project receiving a final Certificate of Occupancy. Such term shall include both a temporary certificate of occupancy ("TCO") and a final certificate of occupancy ("Final CO"), as the context may reqUire. "City" means the City of Miami Beach, Florida, a municipal corporation duly organized and existing under the laws of the State of Florida, -2- "City Code" means the Code of the City of Miami Beach, Florida, as amended through the date hereof. "City Commission" means the Mayor and City Commission of the City of Miami Beach, Florida the governing body of the City, or any successor commission, board or body in which the general legislative power of the City shall be vested. "City Manager" means the chief administrative officer of the City, or his or her designee. "City Hall Parking Expansion" means the expansion by Owner, at its sole cost and expense, of the existing City-owned parking facility located behind City Hall ("Expansion Property") from its current parking capacity to approximately 450-600 parking spaces. "Commence Construction" or "Commencement of Construction" means the commencement of major work (such as pilings or foundations) for construction of the Improvements in accordance with the Plans and Specifications to be performed in connection with Construction of the Project. Promptly after Commencement of Construction, Owner and Developer shall enter into an agreement acknowledging the date of Commencement of Construction. Any and all preliminary site work (including, without limitation, any environmental remediation and ancillary demolition) shall not be deemed to be Commencement of Construction, "Commencement Date" shall mean the date this Agreement and the Ground Lease commence, which shall be the date of execution of this Agreement, and upon satisfaction of the requirements of Section 26.18 herein. "Completion Deadline" means the date that is ten (10) years from the Commencement Date, "Comprehensive Plan" means the Comprehensive Plan which the City adopted and implemented for the redevelopment and continuing development of the City pursuant to Chapter 163, Part II, Florida Statutes. "Concurrency Requirements" has the meaning provided in Section 2.5(b). "Consenting Party" has the meaning provided in Section 20.2(c)(i). "Construction" or "Construction of the Project" means the construction of Developer's Improvements on the Land, and construction of the Garage on the Garage Property. "Construction Agreement(s)" means, collectively, any general contractor's agreement, architect's agreement, engineers' agreements, or any other agreements for the provision of labor, materials or supplies entered into with respect to the Construction ofthe Project, as the same may be amended or otherwise modified from time to time. "Construction Commencement Date" has the meaning provided in Section 2,8, -3- "Construction Work" means any construction work performed under any provision of this Agreement and/or the Construction Agreements with respect to the Construction ofthe Project. "Contractor" means any contractor, subcontractor, supplier, vendor or materialman supplying services or goods in connection with the Construction of the Project. "CPM" has the meaning provided in Section 4.2(b), "CPM Schedule" has the meaning provided in Section 4.2(b). "Default" means any condition or event, or failure of any condition or event to occur, which constitutes, or would after the giving of notice and lapse of time (in accordance with the terms of this Agreement) constitute, an Event of Default. "Default Date" has the meaning provided in Section 2.7. "Default Notice" has the meaning provided in Section 19,1(b). "Design Review Board" or "DRB" means the Design Review Board of the City created and established pursuant to the Land Development Regulations, or any board or body which may succeed to its function, "Detailed Plans" has the meaning provided in Section 4.2(a)(iv)(2), "Developer" means The New World Symphony, a not-for-profit Florida corporation, "Developer's Improvements" means the SoundSpace facility and related improvements to be constructed or supplied by Developer, including but not limited to all buildings or structures (including footings and foundations), the Screen, as defined in the Ground Lease, Building Equipment, infrastructure improvements and other improvements and appurtenances of every kind and description now existing or hereafter erected, constructed, or placed upon the Land (whether temporary or permanent), and any and all alterations and replacements thereof, additions thereto and substitutions therefore. "Development Agreement" (or this "Agreement") means collectively, this Development Agreement and all exhibits and attachments hereto, as any of the same may hereafter be supplemented, amended, restated, severed, consolidated, extended, revised and otherwise modified, from time to time, either in accordance with the terms of this Agreement or by mutual agreement ofthe parties. "Development Agreement Act" means the Florida Local Government Development Agreement Act, Section 163.3220, et. Seq" Florida Statutes (1998). "Development Approval" includes any final non-appealable zoning, rezoning, conditional use special exception, variance or subdivision approval, concurrency approval under Section 163.3180, Florida Statutes, or any other official action oflocal government having the effect of approving development of land. -4- "Development Arbitrator" shall have the meaning provided in Section 22.1(j), "Development Dispute" has the meaning provided in Section 3.5, "Development Site" means the real property and air rights, if any, described collectively in Exhibits A, B, and C, attached hereto and made a part hereof, and as illustrated in the preliminary Master Plan in Exhibit D, attached hereto and made a part hereof. The preliminary Master Plan shall be replaced by the Project Concept Plan, upon approval of same by the City Commission, pursuant to Section 2,2 herein. "Event of Default" has the meaning provided in Section 19.1. "Fees" has the meaning provided in Section 6.2(a). "Floor Area" means the floor area of any development (measured in square feet), as defined in, and measured in accordance with, the Land Development Regulations. "Garage" means the public municipal parking garage to be constructed by Developer for Owner and funded as set forth in Section 23.2.2 hereof, and operated by Owner at its sole cost and expense on City-owned property adjacent to the Land ("Garage Property"), legally described in Exhibit C, which Garage shall contain approximately three hundred twenty (320) parking spaces and which shall be available as a public municipal parking facility subject to the terms and conditions of this Agreement. "Garage Construction Costs" means all hard and soft construction costs incurred in connection with the development and Construction of the Garage. "General Contractor" means the general contractor for the Construction of the Project pursuant to a construction contract to be entered into by Developer and such general contractor. "Governmental Authority or Authorities" means the United States of America, the State of Florida, Miami-Dade County, the City (in its governmental as opposed to proprietary capacity) and any agency, department, commission, board, bureau, instrumentality or political subdivision (including any county or district) of any of the foregoing, now existing or hereafter created, having jurisdiction over Developer or any owner, tenant or other occupant of, or over or under the Project Site or any portion thereof or any street, road, avenue or sidewalk comprising apart of, or in front of, the Project Site, or any vault in or under the Project Site, or airspace over the Project Site. "Ground Lease" means that certain Agreement of Lease between Owner and Developer dated as of the date hereof, pursuant to which Developer (as tenant) has agreed to lease the Land from Owner (as Landlord). "Hearing" has the meaning provided in Section 22.1 (b), "Infrastructure Improvements" means work to be done by Owner at its sole cost and expense as a condition of Developer's obligation hereunder to construct the Developer's -5- Improvements, Owner shall only be responsible for Infrastructure Improvements as may be agreed upon and approved by the City Commission in connection with Developer's obligations to construct the Project and the Owner's obligations to construct and operate the City Hall Parking Expansion. "Institutional Lender" has the meaning provided in the Ground Lease. "Land" means the real property and air rights, if any, described in Exhibit A attached hereto and incorporated by reference herein, and subject to the provisions of Section 2.1 (a) in the Ground Lease, "Land Development Regulations" means Subpart B (Chapters 114 through 142) of the Code of the City of Miami Beach, Florida, as the same was in effect as of the effective date of this Development Agreement. "Loan Documents" means, collectively, any loan agreement, promissory note, mortgage, guaranty or other document evidencing or securing a loan secured by, among other collateral, Developer's interest in the Ground Lease or the Project. "Mortgage" has the meaning provided in the Ground Lease. "Mortgagee" means the holder of a Mortgage. "Notice" has the meaning provided in Section 20,l(a), "Notice of Failure to Cure" has the meaning provided in Section lO.l(a). "Operating Equipment" has the meaning provided in the Ground Lease. "Owner" means the City, acting in its proprietary capacity, and any assignee or transferee of the City of the entire Owner's Interest in the Premises, from and after the date of the assignment or transfer pursuant to which the entire Owner's Interest in the Premises was assigned or transferred to such assignee or transferee, "Owner's Consultant" means such Person as Owner may designate III writing to Developer from time to time, "Owner's Interest in the Premises" has the meaning provided in the Ground Lease, "Payment and Performance Bond" has the meaning provided in Section 2. 7( D. "Permits and Approvals" shall mean any and all permits and final non-appealable approvals required to be issued by the City-its applicable boards, and Governmental Authorities in connection with the Construction of the Project, including, without limitation, the City of Miami Beach building permits, the final non-appealable approvals of the City of Miami Beach Planning Board, Design Review Board, as applicable, the Miami-Dade County Department of Environmental Resources Management permits, the Florida Department of Environmental -6- Protection coastal construction permit, and any utility access agreements with all applicable utility companies, "Person" means an individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, estate, trust, unincorporated association or other entity; any Federal, state, county or municipal government or any bureau, department, political subdivision or agency thereof, and any fiduciary acting in such capacity on behalf of any of the foregoing. "Planning Board" means the Planning Board of the City or any board or body which may succeed to its functions. "Plans and Specifications" means the final plans and specifications for the Project, including, foundation, structural, electrical, plumbing and HV AC plans, the finish schedule, the Project program, and such other plans and specifications customarily required to obtain a Building Permit, each as established in accordance with Article 3, as the same may be modified from time to time in accordance with the provisions of Section 3.1. "Possession Date" has the meaning provided in the Ground Lease. "Preliminary Plans and Specifications" has the meaning provided in Section 2.4(a) of this Development Agreement. "Premises" means Developer's Improvements and the Land. "Project" means Developer's Improvements and the Garage. "Project Opening Date" has the meaning provided in the Ground Lease. "Project Site" means the Land and the Garage Property. "Recognized Mortgage" has the meaning provided in the Ground Lease. "Recognized Mortgagee" means the holder of a Recognized Mortgage. "Requirements" has the meaning provided in Article 13. "Substantial Completion" or "Substantially Complete" or "Substantially Completed" means, with respect to the Project, that (1) it shall have been substantially completed in accordance with the Plans and Specifications, (2) the certificate of the Architect described in Section 2.8(c)(i) shall have been obtained, and (3) all of the Improvements therein shall have been issued Certificates of Occupancy. "Term" means the period commencing on the Effective Date of the Development Agreement and, unless sooner terminated as provided hereunder, expiring on the issuance of a Final CO and the completion of all remaining punch list items with respect to completion of the Project in accordance with the terms of this Agreement, subject, however, to survival of any -7- provIsIons of this Agreement that are expressly stated herein to survIVe such expiration or termination (as the case may be). "Unavoidable Delays" means delays due to strikes, slowdowns, lockouts, acts of God, inability to obtain labor or materials, war, enemy action, civil commotion, fire, casualty, catastrophic weather conditions, eminent domain, a court order which actually causes a delay (unless resulting from disputes between or among the party alleging an Unavoidable Delay, present or former employees, officers, members, partners or shareholders of such alleging party or Affiliates (or present or former employees, officers, partners, members or shareholders of such Affiliates) of such alleging party), the application of any Requirement, or another cause beyond such party's control or which, if susceptible to control by such party, shall be beyond the reasonable control of such party. Such party shall notify the other party not later than twenty (20) days after such party knows of the occurrence of an Unavoidable Delay. Failure to provide timely notice, as set forth herein, shall be deemed a waiver by the party alleging an Unavoidable Delay, In no event shall (i) any party's financial condition or inability to fund or obtain funding or financing constitute an "Unavoidable Delay" (except for an Institutional Lender's inability to fund, which inability is not caused by Developer) with respect to such party and (ii) any delay arising from a party's (or its Affiliate's) default under this Development Agreement or any of the Construction Agreements constitute an "Unavoidable Delay" with respect to such party's obligations hereunder. The times for performance set forth in this Development Agreement (other than for monetary obligations of a party) shall be extended to the extent performance is delayed by Unavoidable Delay, except as otherwise expressly set forth in this Development Agreement. ARTICLE 2 CONSTRUCTION Section 2.1 Consistency with City's Comprehensive Plan and Zoning Regulations, The City has adopted and implemented the Comprehensive Plan. The City hereby finds and declares that the provisions of this Development Agreement dealing with the Land are consistent with the City's adopted Comprehensive Plan and Land Development Regulations, subject to all applicable Requirements, Permits and Approvals. Section 2,2 Proiect Concept Plan Approval Developer shall submit for review and approval of the Mayor and City Commission at a regularly scheduled meeting, such Project Concept Plan alternatives as Developer and City mutually agree as deemed necessary, Each submitted Project Concept Plan alternative shall show, in sufficient detail, the layout and siting, including without limitation preliminary elevations, of the Project, including, but not limited to all buildings or structures, size of building footprints, number of stories, heights, number of parking spaces, streetscape, infrastructure improvements and other improvements and appurtenances proposed upon the Project Site, Developer agrees that its Architect will use its best efforts to (i) maximize public parking and minimize any net loss of public parking within the Development Site; (ii) enhance pedestrian -8- linkages between 1 ih Street and Lincoln Road; and (iii) optimize compatibilities with existing area, scale and architecture. The Project Concept Plan alternative review process shall commence with Developer's submission of all such alternatives to Owner, through its City Manager, no later than February 10, 2004. The City Manager shall have forty five (45) Business Days to review the Project Concept Plan alternatives, The City Manager may, as part of its review, request the submittal of additional Project Concept Plan alternatives and/or request modifications to the submitted alternatives, Upon conclusion of its review, and prior to consideration of all Project Concept Plan alternatives by the Mayor and City Commission, the City Manager shall submit all Project Concept Plan alternatives to the Planning Board, for its review and recommendation which recommendation shall be no later than four (4) months from the City Manager's approval of Developer's re-submitted Project Concept Plan alternatives, if applicable. Notwithstanding the preceding sentences, final approval of the selected Project Concept Plan (such approved alternative, "Project Design") will rest with the City Commission. In the event that Developer fails to make its submissions timely, City may, at its sole option and discretion (i) grant Developer a good faith extension for said submittal(s), or (ii) declare an "Event of Default" pursuant to Article 19 herein, except that, as to said Event under this Section 2.2 only, Developer agrees to (i) waive any rights it may have to dispute the Event of Default under Article 22 and, (ii) Developer agrees if the Event of Default cannot be reasonably remedied within thirty (30) days of notice of same from the City, the maximum cure period allowed by the City shall be ninety (90) days from the initial notice to Developer. Additionally, should the City Commission fail to select and approve one of the Project Concept Plan alternatives by the date which is twelve (12) months from the Planning Board's recommendation of same or October 1, 2005, whichever is later, then this Development Agreement and the Ground Lease shall automatically terminate and be of no further force or effect, unless the City Commission deems to grant an extension, at its sole discretion. In the event of automatic termination of this Development Agreement and the Ground Lease pursuant to this Section 2.2, each Party shall bear its own costs and expenses incurred in connection with this Development Agreement and the Ground Lease and neither Party shall have any further liability to the other. Section 2.3 Design ofthe ProiectIPreliminarv Plans and Specifications. (a) Developer shall be solely responsible for the design of the Project, and such design shall be substantially in accordance with the Project Design approved by the City Commission. Design and construction of Developer's Improvements shall be at the sole cost and expense of Developer. Design and construction of the Garage shall be as set forth in Section 23,2,1 hereof. Throughout the design, development and construction of the Project,=Developer shall be solely responsible for obtaining all final non-appealable approvals and shall use best efforts to be in material compliance with the schedule ("Schedule") attached as Exhibit G, subject to Unavoidable Delay and to timely receipt of necessary comments, recommendations, approvals or disapprovals, as applicable, from any third party, including Owner, the City, or any Governmental Authority, (b) Upon the City Commission's approval of the Project Design, Developer's Architect shall prepare a more detailed schematic design, during the course of which design process the Owner, as Landlord, and Developer and Developer's Architect shall consult together as often as necessary. After the Landlord and the Developer have agreed on the final schematic -9- design, Developer's Architect shall proceed to more fully develop the Project Design, including the preparation of the Preliminary Plans and Specifications for the Project which shall include, but not be limited to, a detailed site plan, elevation drawings of each facade, a detailed floor plan for each of the floors of the Project, a calculation of the floor areas for each floor of the Project, and a calculation of the total floor area dedicated to each use within the Project (the "Preliminary Plans and Specifications"). Developer shall submit the Preliminary Plans and Specifications to Owner's City Manager for approval within sixteen (16) months from the City Commission's selection and approval of the Project Design, The City Manager shall have sixty (60) Business Days to review the Preliminary Plans and Specifications. If Owner unreasonably disapproves the Preliminary Plans and Specifications, then Developer shall, at its election, either (i) submit Owner's disapproval to expedited arbitration pursuant to Section 3.5 and Section 22.1 as to the reasonableness of the disapproval, or (ii) submit a modification to the Preliminary Plans and Specifications to meet Owner's objections, which modification shall be submitted and reviewed as provided in Section 3.l(b). Failure of the Developer to submit Preliminary Plans and Specifications by the date which is sixteen (16) months from the date of approval of the Project Design by the City Commission, shall constitute a Default under this Development Agreement. (c) Preliminary Design Review Evaluation After obtaining Owner's approval of the Preliminary Plans and Specifications, as contemplated in subsection (b) above, Developer shall submit an application for a preliminary evaluation from the DRB, pursuant to the requirements of Section 118-253 of the Miami Beach City Code, as same may be amended from time to time. Owner shall use best efforts to expedite the DRB evaluation. The preliminary DRB evaluation shall be for informational purposes only, and shall not constitute a binding DRB approval. (d) After obtaining a preliminary DRB evaluation of the Preliminary Plans and Specifications,)Jeveloper shall submit an application for approval of the Preliminary Plans and Specifications to the City's DRB in accordance with the Schedule. Developer shall pursue approval of its application to the DRB, diligently and in good faith. Developer shall be solely responsible for obtaining all final, non-appealable approvals of the Project by the DRB. The DRB shall have no duty to approve any particular design, Section 2.4 Plans and Specifications. Upon receipt of the DRB's approval of the Preliminary Plans and Specifications for the Project, Developer shall prepare final Plans and Specifications for construction of the Project, consistent with the Preliminary Plans and Specifications, as approved by the DRB. The Plans and Specifications shall be submitted to the Owner pursuant to the Schedule, but no later than a date which is fourteen (14) months from the DRB's approval of the Preliminary and Specifications, The Plans and Specifications shall be reviewed by the Owner's City Manager solely for consistency with the Preliminary Plans and Specifications, as the same have been approved by the DRB. The City Manager shall have thirty (30) Business Days to review the Plans and Specifications. If Owner disapproves the Plans and Specifications, then Developer shall, at its election, either (i) submit Owner's disapproval to expedited arbitration pursuant to Section 3,5 and Section 22.1 as to the reasonableness of the disapproval, or (ii) submit a -10- modification to the Plans and Specifications to meet Owner's objections, which modification shall be submitted and reviewed as provided in Section 3.1(a). Section 2.5 Conditions Precedent to Developer's Commencement of Construction of the Proiect. (a) In accordance with the Schedule, Developer shall obtain a Building Permit for the entire Project no later than one (1) year_ after DRB approves the Preliminary Plans and Specifications, with the possibility of a one (1) year extension, In any event, Developer shall obtain a Building Permit within seven (7) years from the Commencement Date and Developer's failure to do so shall constitute a Default under this Agreement, unless such date is otherwise extended by the Owner, through approval of its Mayor and City Commission. However, Developer shall not Commence Construction of the Project unless and until (i) Developer shall have obtained and delivered to Owner copies of all Permits and Approvals required to Commence Construction, and (ii) Developer shall have delivered to Owner original certificates of the policies of insurance required to be carried pursuant to the provisions of Article 7 and Exhibit E of this Agreement. (b) The Parties acknowledge that the timing of construction and completion of the various parking facilities contemplated by this Agreement is critical to the success of the Project, and that it is the intent and goal of the Parties that replacement parking be provided for the parking lots which are now situated on the Land, Therefore, Owner agrees to and shall as expeditiously as possible design, develop, construct, operate and maintain, at Owner's sole cost and expense, the City Hall Expansion Parking. (c) Owner (solely in its capacity as the owner of the Project Site and not in its governmental capacity) shall reasonably cooperate with Developer in obtaining the Permits and Approvals required by Sections 2.5(a) and 2,10 and any necessary utility access agreements, and shall provide Developer with any information and/or documentation not otherwise reasonably available to Developer (if available to Owner) which is necessary to procure such Permits and Approvals and utility access agreements, Any such accommodation by Owner shall be without prejudice to, and shall not constitute a waiver of, Owner's rights to exercise its discretion in connection with its governmental functions. (d) Developer shall not Commence Construction of the Project, or any portion thereof, unless and until: (a) Owner has completed construction and begun operation of the City Hall Parking Expansion; or (b) alternate replacement parking acceptable to the City Commission has been identified by Developer; or (c) May 30, 2007, whichever occurs earlier, (e) Developer shall not Commence Construction of the Project, or any portion thereof, unless and until Owner shall have approved the Plans and Specifications, as provided in Section 2.4. However, if Developer chooses to perform any Construction of the Project on a "fast-track" basis, Developer may request the necessary approval of Owner in stages and perform that portion of the Construction Work which has been approved (provided Developer shall comply with all other conditions precedent to Commencement of Construction, as set forth in -11- this Section, with respect to such portion of the Construction Work), even if progress plans and specifications for other portions of the Construction Work have not yet been prepared. (t) Prior to Commencement of Construction of the Project, Developer shall cause the General Contractor to furnish to Owner a payment and performance bond (the "Payment and Performance Bond"), in a form reasonably acceptable to Owner, issued by a surety listed in the most recent United States Department of Treasury listing of approved sureties, guaranteeing the performance of the General Contractor under that certain guaranteed maximum price contract for the Construction of the Project. Owner may accept, in its sole and absolute discretion, for any reason and/or for no reason whatsoever, a completion guarantee from the General Contractor in substitution for such Payment and Performance Bond. Owner shall be named as a dual obligee under the Payment and Performance Bond; provided, however, Owner's rights under the Payment and Performance Bond shall be subordinate to the Recognized Mortgagee's (as defined in the Ground Lease) rights under the Payment and Performance Bond and Owner shall agree in writing with such Recognized Mortgagee that Owner shall only seek to enforce its rights under the Payment and Performance Bond if the Ground Lease is terminated and such Recognized Mortgagee fails to exercise its rights under Section 11,3 ofthe Ground Lease for the execution of New Tenant's Documents (as defined in the Ground Lease). (g) Should Developer wish to utilize a Letter of Credit instead of a Payment and performance bond, then the Letter of Credit shall be in an amount equal to one hundred percent (100%) of the cost of the Improvements plus professional design fees related to the preparation of the Construction Documents, and issued by a state or federal banking institution or an institution approved by the Finance Director of the Owner, which approval shall not be unreasonably withheld or delayed. The Letter of Credit shall insure the faithful performance by the Developer of all of its construction obligations, under the same terms and conditions as the Payment and Performance Bond described above. The Letter of Credit shall be renewed annually and shall be maintained at the City's Department of Finance during the entire term of construction and until a Final CO is issued for the Improvements, The Letter of Credit shall be reduced in amount as the work proceeds as certified by Developer's Architect, and may be terminated at such time as the Improvements are completed as evidenced by the issuance of a Certificate of Occupancy, and reasonably satisfactory evidence is provided by the Developer to the City Manager that the requirements of the Letter of Credit have been satisfactorily concluded. The form of the Letter of Credit shall be approved by the City Manager, which approval shall not be unreasonably withheld or delayed. Section 2,6 Public Facilities and Concurrencv. (a) Owner and Developer anticipate that the Project will be served by those roadway transportation facilities currently in existence as provided by state, county and local roadways, It is also anticipated that the Project will be served by public transportation facilities currently in existence, including those provided by Miami-Dade County, the City, and other governmental entities as may presently operate public transportation services within the City, Sanitary sewer, solid waste, drainage, and potable water services for the proposed Project are expected to be those services currently in existence and owned or operated by Miami-Dade County, the Miami- Dade County Water and Sewer Department, and the City, The Project will also be serviced by -12- any and all public facilities, as such are defined in Section 163.3221(12), Florida Statutes (1997), as such are described in the City's Comprehensive Plan, specifically including, but not limited to, those facilities described in the Infrastructure Element and Capital Improvements Element therein, a copy of which is available for public inspection in the offices of the Planning Department of the City of Miami Beach. The foregoing, however, shall not be deemed to be an approval of, nor shall it be deemed to relieve Developer ofthe obligation to comply with, Section 163.3180, Florida Statutes (1997). (b) Developer shall be solely responsible for obtaining all final non-appealable land use permits, including, but not limited to, all permits and approvals required pursuant to Section 163.3180, Florida Statutes (1997), with respect to concurrency requirements for roads, sanitary sewer, solid waste, drainage, potable water, parks and recreation (the "Concurrency Requirements"), Developer shall apply to the appropriate Governmental Authorities for letters or other evidence that Developer is pursuing all applicable Concurrency Requirements, and shall diligently and in good faith pursue such letters or other evidence that the Project meets all applicable Concurrency Requirements. (c) In addition, in connection with the implementation of the City Center/Historic Convention Village Redevelopment and Revitalization Area Master Plan ("Master Plan"), Developer, on behalf of Owner, shall construct the Garage, which shall be available for use as a public municipal garage facility. Section 2.7 Commencement and Completion of Construction of the Proiect. Developer shall (a) Commence Construction within ninety (90) days after all Permits and Approvals necessary for the Commencement of Construction are issued and the requirements of Section 2.5 have been satisfied (the "Construction Commencement Date") and (b) thereafter continue to prosecute Construction of the Project with diligence and continuity to completion. If, after Developer has Commenced Construction, Developer fails to diligently prosecute Construction of the Project (subject to Unavoidable Delays), and such failure continues (subject to Unavoidable Delays) for thirty (30) consecutive days after Developer's receipt of notice of such failure, Owner shall, in addition to all of its other remedies under this Agreement and the Ground Lease, have the right to seek such equitable relief (either mandatory or injunctive in nature) as may be necessary to cause diligent and continuous prosecution of Construction of the Project (subject to Unavoidable Delays) by Developer, it being understood that Construction of the Proj ect is a material inducement to Owner to enter into the Ground Lease and monetary damages shall be inadequate to compensate Owner for harm resulting from such failure. Notwithstanding anything to the contrary contained herein, if Developer fails to Substantially Complete Construction of the Project no later than ten (10) years after the Commencement Date (the "Default Date"), then the same shall constitute a Default under this Agreement and under the Ground Lease. Section 2,8 Completion of Construction of the Proiect. (a) Substantial Completion of the Project shall be accomplished in a diligent manner, m accordance with the Schedule, and in any event by the Completion Deadline, and final -13- completion of the Construction of the Project, including but not limited to completion of all punch-list items, shall be accomplished in a diligent manner thereafter, in each case in a good and workerlike manner, in substantial accordance with the Plans and Specifications (with no material deviations except as expressly permitted herein), in accordance with all applicable Requirements and, except as provided in Article 6, at Developer's sole cost and expense. (b) Upon Substantial Completion of Construction of the Project, Developer shall furnish Owner with the following: (i) a certification of the Architect (certified to Owner on the standard AIA certification form) that it has examined the Plans and Specifications and that, in its professional judgment, after diligent inquiry, Construction of the Project has been Substantially Completed in accordance with the Plans and Specifications applicable thereto and, as constructed, the Improvements comply with all applicable Requirements; (ii) if Requirements require the same, a copy or copies of the temporary certificates of occupancy for the Project (or portion thereof, as applicable) issued by the City of Miami Beach Building Department; (iii) lien waivers in form and substance reasonably satisfactory to Owner from each contractor, subcontractor, supplier or materialman retained by or on behalf of Developer in connection with the Construction of the Project, evidencing that such Persons have been paid in full for all work performed or materials supplied in connection with the Construction of the Project; (iv) a complete set of "as built" plans and a survey showing the Improvement(s) (excluding personal property) for which the Construction of the Project has been completed. Owner shall have an unrestricted license to use such "as built" plans and survey for any purpose related to the Project Site without paying any additional cost or compensation therefor, subject to copyright and similar rights of the Architect to prohibit use of designs for purposes umelated to the Project Site, as such rights exist in law or may appear in the Architect's contract, and subject to applicable public records laws, The foregoing requirement with respect to "as built" plans shall be satisfied by Developer furnishing to Owner, at Developer's expense, a complete set of Plans and Specifications, with all addenda thereto and change orders in respect thereof, marked to show all changes, additions, deletions and selections made during the course of the Construction of the Project; and (v) a Contractor's Final Affidavit in form and substance reasonably satisfactory to Owner executed by the General Contractor (i) evidencing that all contractors, subcontractors, suppliers and materialmen retained by or on behalf of Developer in connection with the Construction ofthe Project have been paid in full for all work performed or materials supplied in connection with the Construction of the Project and (ii) otherwise complying with all of the requirements under the Florida Construction Lien Law, Chapter 713, Florida Statutes, as amended, -14- Section 2.9 Confirmation of Land Development Regulations, The zoning district classification of the Land under the Lease is CCC, as defined in the Land Development Regulations. Section 2.10 Required Development Permits. (a) Developer shall be solely responsible for obtaining all final, non-appealable Development Approvals, as applicable, (b) To the best of Owner's knowledge and belief, other than the Garage, there are no reservations and/or dedications of land for public purposes that are proposed under the terms of this Development Agreement. Section 2.11 Developer's Right of Termination, Notwithstanding anything to the contrary contained herein, Developer shall have the right to be released from its liability and to terminate this Development Agreement and the Ground Lease prior to the Possession Date because (a) changes to the Project Design and/or Preliminary Plans and Specifications required by the DRB, or any other Governmental Authority (including the City), render the Project economically unfeasible in the reasonable business judgment of Developer, (b) the Project cannot meet concurrency requirements under Section 163.3180, Florida Statutes (1997), or the costs of concurrency mitigation and/or Environmental Remediation on the Project Site are, in the reasonable business judgment of Developer, economically unfeasible, (c) Developer, after good faith efforts, has been unable to obtain a Building Permit for the Project pursuant to the Plans and Specifications submitted by Developer, or (d) Owner and Developer cannot come to a mutual agreement regarding the Parties' respective shares of costs and other obligations relative to the retail portion(s) of the Garage, if required, Environmental Remediation or the Project Site, if required, and/or the Infrastructure Improvements. In the event of termination of this Development Agreement and the Ground Lease pursuant to this Section 2.12, each Party shall bear its own costs and expenses incurred in connection with this Development Agreement and the Ground Lease and neither Party shall have any further liability to the other. Section 2,12 Owner Disclaimer. This Development Agreement is not and shall not be construed as a Development Approval, Building Permit or authorization to commence development, nor shall it relieve Developer of the obligations to obtain necessary Development Approvals, Building Permits and other required permits that are required under applicable law and under and pursuant to the terms of this Development Agreement. Nothing contained in this Development Agreement shall be deemed to constitute a waiver of any fee, charge or cost imposed by the City in connection with the issuance of any Development Approval, Building Permit or other permit. -15- ARTICLE 3 PLANS AND SPECIFICATIONS Section 3.1 Approval and Modification of Plans and Specifications. (a) In accordance with Section 2.4, and prior to submitting its application for the required Building Permits, Developer shall prepare and submit to Owner (acting in its proprietary capacity as owner of the Land), the Plans and Specifications, which Plans and Specifications shall be used to obtain the required Building Permits. If such submitted Plans and Specifications are materially inconsistent with, or contain material modifications to, the Preliminary Plans and Specifications, as approved by the DRB, then such Plans and Specifications shall clearly indicate, by "ballooning", highlighting, blacklining or describing in writing in sufficient detail in a memorandum accompanying such Plans and Specifications, all such modifications to the Preliminary Plans and Specifications. Within thirty (30) Business Days of its receipt of such Plans and Specifications, Owner shall notify Developer, in writing, describing, with specificity, the basis for such disapproval of any material inconsistencies or material modifications of which Owner disapproves between the proposed Plans and Specifications and the Preliminary Plans and Specifications, it being agreed however, that Owner's failure to so notify Developer of its disapproval within such time period shall be deemed to constitute Owner's conclusive approval of such Plans and Specifications; provided, however, that if Owner shall notify Developer within thirty (30) Business Days following its receipt that any of such inconsistencies or modifications to the Preliminary Plans and Specifications are not indicated as required by this Section 3,l(a) or that the complexity of such changes from the Preliminary Plans and Specifications necessitates an extension of such time period to complete Owner's review, such period shall be extended to the date which is sixty (60) Business Days after Owner's receipt of the proposed inconsistencies or modifications; provided, further, however, that Owner shall not be responsible for, and shall not be deemed to have approved, any such material inconsistency or modification that is not indicated as required by this Section 3.l(a), except that when Developer advises Owner in writing, and Owner agrees with Developer in writing, that the Plans and Specifications, as approved as herein provided above, are complete and sufficient and suitable to construct, furnish and equip the entire Project in accordance with the provisions of this Agreement, such written agreement shall be deemed to constitute Owner's conclusive approval of all modifications and inconsistencies, whether or not the modifications are highlighted, in such Plans and Specifications; provided, however, that the foregoing exception relating to Owner's conclusive approval does not apply to those changes which, in Owner's opinion, (i) materially diminish any of the levels of quality of the Project, (ii) materially diminish, individually or in the aggregate, the fitness for its intended use of any of the physical components of the Project, or (iii) have a material adverse effect (a) on the ability of Developer to complete Construction of the Project or (b) on the financial feasibility of the Project. Notwithstanding anything to the contrary contained herein, Owner shall not object to any inconsistencies with or modifications to the Preliminary Plans and Specifications which are necessitated by Requirements or as a result of a drafting, coordination, mechanical or technical error in the Preliminary Plans and Specifications, -16- (b) If Developer desires to materially modify previously approved Plans and Specifications (as such may have been previously modified), Developer shall submit any such materially modified Plans and Specifications to Owner for Owner's approval. Such materially- modified Plans and Specifications shall clearly indicate, by "ballooning", highlighting, blacklining or describing in writing in sufficient detail in a memorandum accompanying such modified Plans and Specifications, all such proposed material modifications to the Plans and Specifications. Within thirty (30) Business Days of its receipt of the proposed modifications, Owner shall notify Developer in writing, with specificity of any material inconsistencies or material modifications of which Owner disapproves between the Plans and Specifications as modified and the Plans and Specifications previously approved by Owner, it being agreed however, that Owner's failure to so notify Developer of its disapproval during such time period shall be deemed to constitute Owner's conclusive approval of such Plans and Specifications; provided, however, that if Owner shall notify Developer within thirty (30) Business Days following its receipt that any of the proposed modifications to the Plans and Specifications are not indicated as required by this Section 3,1 (b) or that the complexity of the proposed modifications necessitates an extension of such time period to complete Owner's review, such period shall be extended to the date which is sixty (60) Business Days after Owner's receipt of the proposed modifications; provided, further, however, that Owner shall not be responsible for, and shall not be deemed to have approved, any such proposed modification that is not indicated as required by this Section 3.1 (b). Notwithstanding anything to the contrary contained herein, Owner shall not object to any modifications to the Plans and Specifications which are necessitated by Requirements or as a result of a drafting, coordination, mechanical or technical error in the Plans and Specifications, (c) If Owner disapproves any material inconsistencies or material modification in the Plans and Specifications from the Preliminary Plans and Specifications pursuant to Section 3,1 (a) above, or Owner disapproves any of the material modifications to or material inconsistencies in the Plans and Specifications pursuant to Section 3,1 (b) above, then Developer shall, at its election either: (i) submit Owner's disapproval to expedited arbitration pursuant to Section 3,6 and Section 22.1 as to the (a) materiality of the inconsistency or modification and/or (b) the reasonableness of the disapproval, or (ii) within thirty (30) days after receiving Owner's disapproval notice, submit revised Plans and Specifications or a revised modification to the Plans and Specifications to meet Owner's objections, which revised Plans and Specifications or revised modification shall be reviewed as provided in Section 3.1 (a) or (b), as applicable, Section 3.2 Proiect Budget (a) Within ninety (90) days after Developer's execution of the contract with its general contractor for construction of the Project, Developer shall submit to Owner for Owner's approval a pre-construction budget and development budget for the Project (the "Project Budget"). If such Project Budget is materially inconsistent with the Preliminary Plans and Specifications as approved by the DRB, then the Project Budget shall be accompanied by a memorandum in writing in sufficient detail to explain all such material inconsistencies. Approval or disapproval or modification of the Project Budget shall be governed by the provisions governing the Plans and Specifications, as applicable, as set forth in Section 3.1 above, Information copies of any material modifications to the Project Budget shall be promptly delivered to Owner. -17- (b) Developer hereby covenants and agrees that Developer shall invest or cause to be invested, not less than Fifty Million Dollars ($50,000,000) in hard construction costs, including costs of furnishings, fixtures, and equipment (FFE), and machinery for the Project. The foregoing investment amount shall be exclusive of any financial contributions by the City including, without limitation, the Garage (Garage Costs) and/or Infrastructure Improvements, as the latter may be mutually agreed upon by Owner and Developer. (c) Upon Substantial Completion of the Project, Developer shall certify to Owner that it has, in fact, expended not less than said amounts for hard construction costs. Section 3,3 Compliance with Requirements, Construction Standards, (a) Notwithstanding anything to the contrary contained herein, the Plans and Specifications shall comply with all applicable Requirements. It is Developer's responsibility to assure such compliance. Owner's approval in accordance with this Article 3.3 of any Plans and Specifications shall be deemed to be a determination by Owner that the Plans and Specifications so approved are in substantial conformity with the approved Project Concept Plan, but shall not be, and shall not be construed as being, or relied upon as, a determination that such Plans and Specifications comply with other applicable Requirements, including, without limitation, any Requirements providing for the review and approval of the Plans and Specifications by any Governmental Authority (in its governmental capacity as opposed to its proprietary capacity). (b) Construction of the Project shall be carried out pursuant to Plans and Specifications prepared by licensed architects and engineers, with controlled inspections conducted by a licensed architect or professional engineer as required by applicable Requirements. Section 3.4 Design and Decor, Notwithstanding anything to the contrary contained in this Agreement, Owner shall not have any approval rights with respect to matters of interior design or decor of the Project except to the extent the same are reflected in the Plans and Specifications. Section 3,5 Development Dispute, Any dispute or disagreement between Owner and Developer arising prior to the Project Opening Date with respect to the following matters (a "Development Dispute") shall be finally resolved in accordance with the provisions of Section 22.1: (a) Any dispute as to whether Developer's modifications to the Preliminary Plans and Specifications or the Plans or Specifications pursuant to Section 2,4 or Section 2.6, or Section 3.1 (a) or (b), respectively, are material and/or materially inconsistent and are therefore subj ect to Owner's approval; and (b) Any contention by Developer that Owner has unreasonably failed to approve or give its consent to any modifications to the Preliminary Plans and Specifications pursuant to Section 2.4 or to the Plans and Specifications pursuant to Section 2.6, Section 3,I(a) or (b). -18- ARTICLE 4 OWNER PARTICIPATION Section 4,1 Owner's Right to Use Field Personnel. Owner reserves the right, at its sole cost and expense, to maintain one (1) on-site representative (from Owner's Consultant, Owner or another entity designated by Owner) at the Project Site to conduct inspections of the Project Site (provided, however, that Owner shall be entitled to maintain additional on-site representatives from time to time to the extent reasonably necessary to perform such inspections), and Developer agrees to provide safe access to the Project Site, including, without limitation, access to inspect the Construction Work, including, without limitation, the preparation work and work in progress wherever located. No such inspection by the Owner's on-site representatives shall impose upon Owner responsibility or liability for any failure by Developer to observe any Requirements or safety practices in connection with such Construction Work, or constitute an acceptance of any work which does not comply with the provisions of this Agreement, and no such inspection shall constitute an assumption by Owner of any responsibility or liability for the performance of Developer's obligations hereunder, nor any liability arising from the improper performance thereof. The Owner's on-site representatives shall not interfere with any Construction Work being performed at the Project Site and shall comply with all safety standards and other job-site rules and regulations of Developer. Owner's on-site representative is an inspector only. The on-site representative shall make only such communications with Developer's construction manager(s), the General Contractor, its subcontractors, or any other Person involved in the Construction of the Project, as are reasonably necessary to enable such on-site representative to conduct its investigations, and in no event shall the on-site representative give directions to such Persons. Developer shall provide a reasonable work area and services for Owner's on-site representative as is customarily provided at similar construction sites. All expenses incurred by Owner's on- site representative shall be paid by Owner. Section 4,2 Owner's Right to Notice, Access and Review. (a) Developer acknowledges that Owner has appointed the Owner's Consultant as the Owner's consultant in connection with the Construction of the Project in accordance with the terms of this Agreement. In connection therewith, Developer agrees to cooperate fully with the Owner's Consultant. In furtherance thereof, Developer agrees that the Owner's Consultant, and its authorized representatives, shall have such rights of notice, access and review with respect to the Project and the Construction Agreements as is reasonably necessary to achieve the foregoing (including, but not limited to verifying on Owner's behalf that the Construction of the Project is being conducted in accordance with the terms hereof), including, without limitation, the following: (i) the opportunity for attendance by the Owner's Consultant at regularly scheduled Construction Work meetings (which shall be scheduled not less frequently than twice each month) and at any special meetings which Developer -19- deems necessary in its reasonable discretion as to change orders, delays and other material issues concerning the Project; (ii) the inspection by the Owner's Consultant of all Construction Work (in accordance with the provisions of Section 4.1); (iii) the opportunity for attendance by the Owner's Consultant at the interior design presentations given to Developer (or an equivalent presentation); (iv) the delivery by Developer to the Owner's Consultant of two (2) copies of: (1) the executed contract between Developer and the General Contractor for the Project; (2) the Plans and Specifications (and modifications thereto, with such modifications being clearly indicated, by "ballooning", highlighting, or blacklining on the Plans and Specifications or describing in writing in sufficient detail in a memorandum accompanying such modified Plans and Specifications), working and other drawings, renderings, blueprints, specifications, layouts and change orders (collectively, the "Detailed Plans"); (3) all insurance certificates required by Article 7 of this Agreement (including those of Developer and all contractors and subcontractors); (4) a monthly construction cost-to-date report reasonably acceptable to Owner; (5) all periodic (but not less than monthly) updates to the Development Budget, which updates shall show all variances; and To the extent the exercise of the Owner's rights hereunder requires the opportunity for review of any documents or the opportunity for participation in any meetings, Developer agrees, without request therefor by Owner, to promptly provide copies of such documents or notice of such meetings to owner and the Owner's Consultant, as applicable, after receipt of the same by Developer and reasonably in advance of any meetings to allow for appropriate travel arrangements to the extent practical under the circumstances. If Owner's Consultant is not in attendance, the meeting will proceed and Developer will promptly provide Owner's Consultant with minutes of the meeting. The Owner's Consultant shall not interfere with any Construction Work being performed at the Project Site and shall comply with all safety standards and other job-site rules and regulations of Developer. (b) Prior to the Commencement of Construction, Developer shall provide to Owner a construction schedule for each phase of the Project, which schedule shall be prepared using the critical path method ("CPM"; such schedule, as it shall be amended from time to time in accordance with the Construction Agreements, shall be referred to as the "CPM Schedule"), including a CPM network diagram, for use in scheduling and controlling the Construction, The CPM Schedule shall, at a minimum, show: -20- (i) the early and late start and stop times for each major construction activity; (ii) all "critical path" activities and their duration; (iii) the sequencing of all procurement, approval, delivery and work activities; (iv) manpower levels; (v) late order dates for all long lead time materials and equipment; and (vi) critical Developer and Owner decision dates, Developer shall promptly provide to the Owner's Consultant information copies of the CPM Schedule. The CPM Schedule shall (1) be revised by Developer whenever there is a material variance in the progress of the Construction from the then current CPM Schedule and otherwise at appropriate intervals, but in no event less frequently than monthly, and (2) provide for expeditious and practicable execution ofthe Construction. A copy of the CPM network diagram highlighting the completed and partially completed activities and manpower schedule shall be maintained by Developer on a current basis, at the Project Site, to accurately reflect the actual progress of the Construction and shall be displayed at all times in a manner that is readily accessible to the Owner's Consultant. Three (3) copies of the updated CPM Schedule, CPM network diagram and manpower schedule shall be delivered to the Owner's Consultant promptly after the same have been revised as required herein. The CPM network diagram shall reflect the actual progress of Construction to date. The manpower schedule shall reflect actual manpower levels each week compared to manpower levels set forth in the CPM Schedule. Developer shall keep the Owner's Consultant informed on a periodic (but not less than twice per month) basis, unless circumstances dictate the need to do so more frequently, as to actual progress made. Developer shall provide the Owner's Consultant with reasonable access to the reports, logs and other systems in which Developer records or notes the daily progress of the Construction Work. Developer shall inform the Owner's Consultant of any deviation from the CPM Schedule which, in Developer's good faith determination, is likely to cause a material delay in the Substantial Completion of the Project (as shown on the current CPM Schedule), within three (3) Business Days after such deviation becomes apparent to Developer. ARTICLE 5 MISCELLANEOUS CONSTRUCTION PROVISIONS Section 5,1 Art in Public Places, (a) Developer shall be solely responsible for the Project's compliance with the City's Art in Public Places (AIPP) legislation, as codified in Chapter 82, Article VII, Sections 82-536 through 82-612 of the City Code, and as same may be amended, However, Owner shall -21- reimburse Developer for all funds required to be expended for compliance with AIPP for the Garage, except for any AIPP costs with respect to the Excess Garage Costs, (b) Notwithstanding subsection (a) above, the Developer may request that the City Commission consider a waiver of all or a portion of the required AIPP appropriation for the Project. Section 5,2 Prevailing Wage. Developer shall pay all Persons employed by it with respect to Construction of the Project, without subsequent deduction or rebate unless expressly authorized by Requirements, not less than the relevant prevailing wage as prescribed by City of Miami Beach Ordinance No, 94-2960 (the City's Prevailing Wage Ordinance), but only to the extent such Prevailing Wage Ordinance is applicable to the construction of the Project. Section 5.3 Construction Agreements. (a) Required Clauses, All Construction Agreements which provide for the performance of labor on the Project Site shall include the following provisions (or language substantially similar thereto which is approved in advance by Owner); provided, however, that any Construction Agreement having aggregate payments of One Hundred Thousand Dollars ($100,000) or less shall not be required to include the provisions set forth in paragraph (i) below: (i) an agreement by the Contractor to provide, prior to the commencement of its portion of the work, and to maintain during the performance thereof, the insurance set forth on Exhibit 5.3(a) attached hereto and incorporated by reference herein. Such Contractor shall procure an appropriate clause in, or endorsement on, any policy of insurance carried by it pursuant to which the insurance company waives subrogation or consents to a waiver of right of recovery consistent with the release, discharge, exoneration and covenants not to sue contained herein, Original Certificates of Insurance, in quadruplicate (all of which shall be original signed counterparts) and including the City of Miami Beach, Florida (and any successor Owner), as additional insureds (the "Certificate of Insurance"), shall be furnished to Developer by Contractor prior to commencement of work, denoting all insurance required of Contractor pursuant to the terms of the Contract. The Contractor shall secure an original Certificate of Insurance from each of its sub-contractors and/or suppliers with limits of liability equal to those carried by the Contractor; (ii) "Contractor hereby waives all rights of recovery, claims, actions or causes of action against the City of Miami Beach, Florida (and any successor Owner), and their respective elected and appointed officials (including, without limitation, the City's Mayor and City Commissioners), directors, officials, officers, shareholders, members, employees, successors, assigns, agents, contractors, subcontractors, experts, licensees, Developers, mortgagees, trustees, partners, principals, invitees and affiliates, for any loss or damage to property of Contractor which may occur at any time in connection with the Project." ; -22- (iii) "To the fullest extent permitted by law, Contractor shall and does hereby indemnify and hold harmless the City of Miami Beach, Florida (and any successor Owner), and their respective elected and appointed officials (including the City's Mayor and City Commissioners), directors, officials, officers, shareholders, members, employees, successors, assigns, agents, contractors, subcontractors, experts, licensees, Developers, mortgagees, trustees, partners, principals, invitees and affiliates, from and against any and all liability, claims, demands, damages, losses, fines, penalties, expenses and costs of every kind and nature, including, without limitation, costs of suit and attorneys' fees and disbursements (collectively, "Expenses"), resulting from or in any manner arising out of, in connection with or on account of (1) any act, omission, fault or neglect of Contractor, or anyone employed by it in connection with the work or any phase thereof, or any of its agents, contractors, subcontractors, employees, invitees or licensees in connection with the work, or anyone for whose acts any of them may be liable, (2) claims of injury (including physical, emotional, economic or otherwise) to or disease, sickness or death of persons or damage to property (including, without limitation, loss of use resulting therefrom) occurring or resulting directly or indirectly from the work or any portion thereof or the activities of Contractor or anyone employed by it in connection with the work, or any portion thereof, or any of its respective agents, contractors, subcontractors, employees, invitees or licensees in connection with the work, or anyone for whose acts any of them may be liable, or (3) mechanics' or materialmen's or other liens or claims (and all costs or expenses associated therewith) asserted, filed or arising out of the work or any phase thereof other than liens or claims arising out of Developer's failure to make the required payments properly due to Contractor. In no event shall Contractor be able to seek or be entitled to consequential damages (including, without limitation, loss of profits or loss of business opportunity) for claims arising under this contract. This indemnification obligation shall not be limited in any way by: (x) any limitation on the amount or type of damages, compensation or benefits payable to Contractor under worker's compensation acts, disability benefit acts or other employee benefit acts or other insurance provided for by this contract; or (y) the fact that the Expenses were caused in part by a party indemnified hereunder, The Contractor further agrees that this indemnification shall be made a part of all contracts and purchase orders with sub-contractors or material suppliers, The indemnification agreement included in this contract is to be assumed by all sub-contractors."; (iv) (1) the right of Developer to assign to Owner, subject and subordinate to the rights of Lender, the contract and Developer's rights thereunder, at the Owner's request, without the consent of the Contractor, and (2) that without the necessity of such assignment and without thereby assuming any of the obligations of Developer under the contract occurring prior to such assignment and/or purchase order, except for Developer's payment obligations, Owner shall have the right to enforce the full and prompt performance by the Contractor of such Contractor's obligations under the contract; (v) "Contractor agrees to comply with all laws and requirements applicable to Contractor and the Project, including, without limitation, the City's Prevailing Wage Ordinance, if such provision is applicable to construction of the Project "; -23- (vi) "Upon an Event of Default by Developer resulting in a termination of that certain Agreement of Lease between Developer and Owner, dated as of the Commencement Date, pursuant to which Developer (as Tenant) has agreed to lease the Land on which the Project is to be constructed, Contractor shall, at the option of the City of Miami Beach, Florida, subject and subordinate to the rights of Lender, be terminated or Contractor will honor this agreement as if this agreement had been originally entered into with the City of Miami Beach, Florida,"; (vii) "Nothing contained in this contract is in any way intended to be a waiver of the prohibition on Contractor's ability to file liens against property of the City of Miami Beach, Florida, or of any other constitutional, statutory, common law or other protections afforded to public bodies or governments."; (viii) "Upon an Event of Default by Developer resulting in a termination of that certain Agreement of Lease between Developer and Owner, dated as of the Commencement Date, pursuant to which Developer (as Tenant) has agreed to lease the Land on which the Project is to be constructed, all covenants, representations, guarantees and warranties of Contractor hereunder shall be, subject and subordinate to the rights of Lender, deemed to be made for the benefit of the City of Miami Beach, Florida, (and the City of Miami Beach, Florida, shall be deemed to be a third-party beneficiary hereof) and shall be, subject and subordinate to the rights of Lender, enforceable by the City of Miami Beach, Florida."; (ix) "Unless and until the City of Miami Beach, Florida, expressly assumes the obligations of Developer under this contract (and then only to the extent the same arise from and after such assumption), the City of Miami Beach, Florida, shall not be a party to this contract and will in no way be responsible to any party for any claims of any nature whatsoever arising or which may arise in connection with such contract."; and (x) "Contractor hereby agrees that notwithstanding that Contractor performed work at the Project Site or any part thereof, the City of Miami Beach, Florida shall not be liable in any manner for payment or otherwise to Contractor in connection with the work performed at the Project Site, except to the extent the City of Miami Beach, Florida, expressly assumes the obligations of Developer hereunder (and then only to the extent such obligations arise from and after such assumption)." Section 5.4 Demolition of the Proiect Site. Except as necessary and as provided in the Plans and Specifications in connection with Construction of the Project or as part of a Casualty Restoration or Condemnation Restoration or as may be otherwise permitted under this Development Agreement or the Ground Lease, Developer shall not demolish any portion of the Project Site. Any demolition permitted hereunder shall be performed in accordance with all applicable Requirements. ,24- Section 5.5 Construction Staging. Construction Staging for the Project will be confined to the Project Site. All workers on the Project Site will park their vehicles at an off-site location, as not to materially impact users of the 1 ih Street Parking Garage or other adjacent public parking lots, The Parties shall agree upon one or more reasonable off-site locations. ARTICLE 6 FINANCING OF PROJECT CONSTRUCTION Section 6.1 Developer's Contributions, Developer shall provide all of the funds necessary to complete Construction of Developer's Improvements. Owner shall provide all of the funds necessary to complete Construction of the Garage, subject to the provisions of Section 23.2.2 herein; provided, however, that if the inclusion of a retail component to the Garage is required by the DRB, or other Governmental Authority, then it is in the intent of the Parties that neither Developer nor Owner shall be responsible for any costs for construction of said retail portion, and the Parties shall use best efforts to apportion such costs to a third party. Section 6,2 Fees. (a) Citv Permit Fees, Developer assumes payment responsibility for any and all Permits, now or hereafter, required to be obtained from the City for the construction of the Developer's Improvements and the Garage, which include, without limitation, building permit applications, inspection, certification, impact and connection fees that the City may levy by or through its Public Works Department (including, without limitation, water and sewer fees) and those fees, to the extent applicable, listed in the City of Miami Beach Building Department Fee Schedule" or the most current edition adopted by the City, which fee schedule is hereby incorporated by reference and made a part of this Agreement (collectively, the "Fees"), Developer shall remain responsible for payment of the Fees notwithstanding any and all modifications or changes in price structure as imposed by the City or any other Governmental Authority authorized to impose such Fees. (b) Non-Citv Permit Fees. Developer shall assume responsibility for payment of all fees charged by Governmental Authorities relating to Developer's Improvements and the Garage. (c) Owner's Fees. Owner shall be responsible for payment of any and all fees, both City Permit Fees and Non-City Permit Feesl relating to the Infrastructure Improvements! ARTICLE 7 INSURANCE Developer shall, in accordance with Exhibit E, attached hereto and made a part hereto, and the Ground Lease, carry or cause to be carried the insurance required in said Exhibit E and -25- under Section [7,10] of the Ground Lease, including the relevant provisions of Sections [7.2, 7,3,7,6 and 7.14] of the Ground Lease, ARTICLE 8 DAMAGE, DESTRUCTION AND RESTORATION Section 8.1 Casualty. If the Project Site is damaged or destroyed in whole or in part by fire or other casualty, the provisions of the Ground Lease applicable to damage or destruction by fire or other casualty to the "Premises" described under the Ground Lease shall govern the rights and obligations of Developer, Owner and any Recognized Mortgagee hereunder. Section 8.2 Effect of Casualty on this Agreement. Except as provided in Section 8.1 or the Ground Lease, this Development Agreement shall not terminate, be forfeited or be affected in any manner, by reason of any damage to, or total or partial destruction of, or untenantability of the Project Site or any part thereof resulting from such damage or destruction. ARTICLE 9 CONDEMNATION Section 9.1 Taking. If all or any portion of the Project Site is taken for any public or quasi-public purpose by any lawful power or authority by the exercise of the right of condemnation or eminent domain or by agreement among Owner, Developer, any Recognized Mortgagee and those authorized to exercise such right, the provisions of the Ground Lease applicable to such taking of the "Premises" described under the Ground Lease shall govern the rights and obligations of Developer, Owner and any Recognized Mortgagee hereunder, Section 9.2 Effect of Taking on this Agreement. Except as provided in Section 9,1 or the Ground Lease, this Development Agreement shall not terminate, be forfeited or be affected in any manner, by reason of any taking of the Project Site or any part thereof. ARTICLE 10 RIGHTS OF RECOGNIZED MORTGAGEE Section 10,1 Notice and Right to Cure Developer's Defaults. (a) Owner shall give to the Recognized Mortgagee a copy of each notice of Default at the same time as it gives notice of such Default to Developer, and no such notice of Default shall -26- be deemed effective with respect to any Recognized Mortgagee unless and until a copy thereof shall have been so received by or refused by such Recognized Mortgagee, All such notices to a Recognized Mortgagee shall be sent as set forth in Section 11.4(a) of the Ground Lease. Owner shall also give the Recognized Mortgagee notice ("Notice of Failure to Cure") in the event Developer fails to cure a Default within the period, if any, provided in this Agreement for such cure, promptly following the expiration of such period (i.e., an Event of Default). (b) The Recognized Mortgagee shall have a period of sixty (60) days after receipt of the Notice of Failure to Cure, in the case of any Event of Default, to (1) cure the Event of Default referred to in the Notice of Failure to Cure or (2) cause it to be cured, subject to the same additional time periods provided to Developer pursuant to the provisions of Section 19,1 (b) unless such default is not susceptible of being cured by a Recognized Mortgagee (i,e" defaults stated in Section 19.1(e), (f) and (g)). Nothing contained herein shall be construed as imposing any obligation upon any Mortgagee to so perform or comply on behalf of Developer. (c) Owner shall accept performance by a Recognized Mortgagee of any covenant, condition or agreement on Developer's part to be performed hereunder with the same force and effect as though performed by Developer. (d) Notwithstanding any other provision of this Agreement, no payment made to Owner by any Recognized Mortgagee shall constitute the Recognized Mortgagee's agreement that such payment was, in fact, due under the terms of this Agreement. (e) Notwithstanding the foregoing provisions of this Section 10.1, if a Recognized Mortgagee fails (for any reason) to cure any Event of Default by Developer within sixty (60) days following receipt of the Notice of Failure to Cure regarding such Event of Default, then Owner may, but shall be under no obligation to, perform the obligation of Developer the breach of which gave rise to such Event of Default (including, without limitation, the performance of any of the obligations of Developer under any Construction Agreement), without waiving or releasing Developer from its obligations with respect to such Event of Default. Developer hereby grants Owner access to the Premises in order to perform any such obligation. Any amount paid by Owner in performing Developer's obligations as provided in this Section 1O.1(e), including, without limitation, all costs and expenses incurred by Owner in connection therewith, shall be reimbursed to Owner within thirty (30) days following Owner's demand therefore, together with a late charge on amounts actually paid by Owner, calculated at the Late Charge Rate from the date of notice of any such payment by Owner to the date on which payment of such amounts is received by Owner. (f) If there is more than one Recognized Mortgagee, only that Recognized Mortgagee, to the exclusion of all other Recognized Mortgagees, whose Recognized Mortgage is most senior in lien shall be recognized as having rights under this Article 10, unless such first priority Recognized Mortgagee has designated in writing to Owner a Recognized Mortgagee whose Mortgage is junior in lien to exercise such right. (g) A Recognized Mortgagee shall have the other rights and obligations described in Article 11 of the Ground Lease, -27- ARTICLE 11 NO SUBORDINATION Owner's Interest in the Premises, including, without limitation, Owner's interest in the Ground Lease and this Agreement, as the same may be modified, amended or renewed, shall not be subject or subordinate to (a) any Mortgage now or hereafter existing, (b) any other liens or encumbrances hereafter affecting Developer's Interest in the Premises and Developer's interest in this Development Agreement or (c) any sublease or any mortgages, liens, or encumbrances now or hereafter placed on any subtenant's interest in the Project Site. Developer's Interest in the Premises and this Development Agreement and all rights of Developer hereunder are and shall be subject to the Permitted Exceptions as set forth on Exhibit 2.3(b) to the Ground Lease. ARTICLE 12 MAINTENANCE AND REPAIR Section 12.1 Maintenance ofProiect Site, (a) Maintenance and Repair. (i) Developer shall take good care of, and keep and maintain, the Project Site in good and safe order and condition, and shall make all repairs reasonably necessary to keep the Project Site in good and safe order and condition, (ii) Developer shall not commit, and shall use all reasonable efforts to prevent waste, damage or injury to the Project Site, except with respect to the Construction of the Project (but subject, however, to the provisions of Section 12.1(a)(i)). (b) Cleaning of Proiect Site. Developer shall keep reasonably clean and reasonably free from rubbish all areas of the Project Site. (c) Other Areas. Developer shall promptly rectify any damage or interference caused by Developer to any improvements, equipment, structures or vegetation outside of the Project Site which is owned or controlled by Owner or the City. The City or Owner shall promptly rectify any damage or interference caused by the City or Owner to the Project Site, Section 12.2 Waste Disposal. Developer shall dispose of waste from all areas of the Project Site in accordance with Requirements and in a prompt, sanitary and aesthetically reasonably inoffensive manner, -28- ARTICLE 13 REQUIREMENTS Section 13.1 Requirements. (a) Obligation to Comply. In connection with any Construction Work, and with the maintenance, management, use, construction and operation of the Project Site and Developer's performance of its obligations hereunder, Developer shall comply promptly with all Requirements, without regard to the nature of the work required to be done, whether extraordinary or ordinary, and whether requiring the removal of any encroachment (but Developer may seek to obtain an easement in order to cure an encroachment, if permitted by Requirements), or affecting the maintenance, use or occupancy of the Project Site, or involving or requiring any structural changes or additions in or to the Developer's Improvements and regardless of whether such changes or additions are required by reason of any particular use to which the Project Site, or any part thereof, may be put. No consent to, approval of or acquiescence in any plans or actions of Developer by Owner, in its proprietary capacity as Owner, or Owner's designee shall be relied upon or construed as being a determination that such are in compliance with the Requirements, or, in the case of construction plans, are structurally sufficient, prudent or in compliance with the Requirements. Failure of this Development Agreement to address a particular permit, condition, term or restriction shall not relieve the Developer of the necessity of complying with the law governing said permitting requirements, conditions, term or restriction. (b) Definition, "Requirements" means: (i) any and all laws, constitutions, rules, regulations, orders, ordinances, charters, statutes, codes, executive orders and requirements of all Governmental Authorities having jurisdiction over a Person and/or the Project Site or any street, road, avenue or sidewalk comprising a part of, or lying in front of, the Project Site or any vault in, or under the Project Site (including, without limitation, any of the foregoing relating to handicapped access or parking, the Building Code of the City and the laws, rules, regulations, orders, ordinances, statutes, codes and requirements of any applicable Fire Rating Bureau or other body exercising similar functions, and the City's Art in Public Places Ordinance ); (ii) the temporary and/or permanent certificate or certificates of occupancy issued for the Project Site as then in force; (iii) the requirements of the City's of Miami Beach Prevailing Wage Ordinance, if applicable; and (iv) any and all provisions and requirements of any property, casualty or other insurance policy required to be carried by Developer under this Agreement. -29- ARTICLE 14 DISCHARGE OF LIENS Section 14.1 Creation of Liens. (a) Developer shall not create, cause to be created, or suffer or permit to exist (1) any lien, encumbrance or charge upon this Agreement, the Project Site or any part thereof or appurtenance thereto, which is not removed within the time period required pursuant to Section 14.2(i); (2) any lien, encumbrance or charge upon any assets of, or funds appropriated to, Owner; or (3) any other matter or thing whereby Owner's Interest in the Premises or any part thereof or appurtenance thereto might be materially impaired, Notwithstanding the above, Developer shall have the right to execute Mortgages and other loan documents, subleases and other instruments (including, without limitation, equipment leases) as provided by, and in accordance with, the provisions ofthe Ground Lease. (b) Owner shall not create, cause to be created, or suffer or permit to exist (i) any lien, encumbrance upon this Agreement, the Ground Lease or the income therefrom (except as expressly provided in the Ground Lease), the Project Site, or any part thereof or appurtenance thereto, which is not removed within the time period required pursuant to Section 14.2; (ii) any lien, encumbrance or charge upon any assets of, or funds appropriated to, Developer; or (iii) any other matter or thing whereby Developer's Interest in the Premises any part thereof or appur tenant thereto might be materially impaired. Section 14,2 Discharge of Liens. (a) If any mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including tax liens, provided the underlying tax is an obligation of Developer by the Requirements or by a provision of this Development Agreement) is filed against the Project Site or any part thereof, or if any public improvement lien created, or caused or suffered to be created by Developer shall be filed against any assets of, or funds appropriated to, Developer or Owner, Developer shall, within thirty (30) days after Developer receives notice of the filing of such mechanic's, laborer's, vendor's, materialman's or similar statutory lien or public improvement lien, cause it to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise, However, Developer shall not be required to discharge any such lien if Developer shall have (i) furnished Owner with, at Developer's option, a cash deposit, bond, letter of credit from an Institutional Lender (in form reasonably satisfactory to Owner) or other security (such as a personal guaranty or title company indemnity) reasonably satisfactory to Owner, in an amount sufficient to pay the lien with interest and penalties; and (ii) brought an appropriate proceeding to discharge such lien and is prosecuting such proceeding with diligence and continuity; except that if, despite Developer's efforts to seek discharge of the lien, Owner reasonably believes that a court judgment or order foreclosing such lien is about to be entered or granted and so notifies Developer, Developer shall, within ten (10) days of notice to such effect from Owner (but not later than three (3) Business Days prior to the entry or granting of such judgment or order of foreclosure), cause such lien to be discharged of record or Owner may -30- thereafter discharge the lien in accordance with Section 18.2 and look to the security furnished by Developer for reimbursement of its cost in so doing. Notwithstanding anything to the contrary contained in this Section l4.2(a), in the case of a public improvement lien which provides for installment payments as a means of satisfying such lien, Developer shall be required only to pay, on a timely basis, all installments when due, (b) Notwithstanding anything to the contrary contained in Section l4,2(a), if any mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including tax liens, provided the underlying tax is an obligation of Developer by the Requirements or by a provision of this Development Agreement) is filed against the Project Site or any part thereof or Developer's Interest in the Premises or Owner's Interest in the Premises as a result of any action of Owner, its officers, employees, representatives or agents, Owner shall, within thirty (30) days after Owner receives notice of the filing of such mechanic's, laborer's, vendor's, materialman's or similar statutory lien, cause it to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise. However, Owner shall not be required to discharge any such lien if Owner shall have (i) furnished Developer with, at Owner's option, a cash deposit, bond, letter of credit from an Institutional Lender (in form reasonably satisfactory to Developer) or other security (such as a personal guaranty or title company indemnity) reasonably satisfactory to Developer, in an amount sufficient to pay the lien with interest and penalties and (ii) brought an appropriate proceeding to discharge such lien and is prosecuting such proceeding with diligence and continuity; except that if, despite Owner's efforts to seek discharge of the lien, Developer reasonably believes that a court judgment or order foreclosing such lien is about to be entered or granted and so notifies Owner, Owner shall, within ten (10) days of notice to such effect from Developer (but not later than three (3) Business Days prior to the entry or granting of such judgment or order of foreclosure), cause such lien to be discharged of record or Developer may thereafter discharge the lien in accordance with Section 18.2 and look to the security furnished by Owner for reimbursement of its cost in so doing. Section 14.3 No Authoritv to Contract in Name of Owner, Nothing contained in this Article 14,3 shall be deemed or construed to constitute the consent or request of Owner, express or implied, by implication or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement of, alteration to, or repair of, the Project Site or any part thereof, nor as giving Developer any right, power or authority to contract for, or permit the rendering of, any services or the furnishing of materials that would give rise to the filing of any lien, mortgage or other encumbrance against Owner's Interest in the Premises or any part thereof or against any assets of Owner. Notice is hereby given, and Developer shall cause all Construction Agreements to provide, that to the extent enforceable under Florida law, Owner shall not be liable for any work performed or to be performed at the Project Site or any part thereof for Developer or for any subtenant or for any materials furnished or to be furnished to the Project Site or any part thereof for any of the foregoing, and no mechanic's, laborer's, vendor's, materialman's or other similar statutory lien for such work or materials shall attach to or affect Owner's Interest in the Premises or any part thereof or any assets of Owner. The foregoing shall not require Developer to request advance waivers of lien from contractors or subcontractors. -31- ARTICLE 15 NO LIABILITY FOR INJURY OR DAMAGE, ETC. The provisions of Article 17 of the Ground Lease shall be applicable to this Agreement as if the references to the "Premises" in such Article 17 were references to the "Project Site". ARTICLE 16 INDEMNIFICATION Section 16,1 Indemnification Generally, The provisions of Article 18 of the Ground Lease shall be applicable to this Agreement as if the references to the "Premises" in such Article 18 were references to the "Project Site" Section 16.2 Governs Agreement. The provisions of this Article 16 shall govern every other provision of this Agreement. The absence of explicit reference to this Article 16 in any particular provision of this Agreement shall not be construed to diminish the application ofthis Article 16 to such provision. Section 16,3 Survival. The provisions of this Article 16 shall survive the expiration of the Term of this Agreement. ARTICLE 17 CERTIFICATES BY OWNER AND DEVELOPER Upon request for reasonable purposes, either party shall provide a written statement to the requesting party certifying as to the relevant information required pursuant to Article 27 of the Ground Lease with respect to this Agreement and the date to which amounts payable hereunder by either party have been paid, ARTICLE 18 RIGHT TO PERFORM THE OTHER PARTY'S OBLIGATIONS Section 18.1 Right to Perform Other Party's Obligations. (a) If an Event of Default shall occur, Owner may, but shall be under no obligation to, perform the obligation of Developer the breach of which gave rise to such Default, without waiving or releasing Developer from any of its obligations contained herein, provided that Owner shall exercise such right only in the event of a bona fide emergency or after five (5) Business Days' notice, and Developer hereby grants Owner access to the Project Site in order to perform any such obligation, -32- (b) If a default by Owner under this Agreement shall occur and be continuing beyond any applicable grace period, Developer may, but shall be under no obligation to, perform the obligations of Owner (other than those which are governmental as opposed to proprietary obligations) the breach of which gave rise to such default, without waiving or releasing Owner from any of its obligations contained herein, provided that Developer shall exercise such right only in the event of a bona fide emergency or after five (5) Business Days' notice to Owner or the City, as applicable. Section 18.2 Discharge of Liens. (a) If Developer fails to cause any mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including tax liens, provided the underlying tax is an obligation of Developer by the Requirements or by a provision of this Development Agreement) to be discharged of record in accordance with the provisions of Article 14, Owner may, but shall not be obligated to, discharge such lien of record either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, (b) If Owner fails to cause any mechanic's, laborer's, vendor's, materialman's or similar statutory lien (including, tax liens, provided the underlying tax is an obligation of Developer by the Requirements or by a provision of this Development Agreement) to be discharged of record in accordance with the provisions of Article 14, Developer may, but shall not be obligated to, discharge such lien of record either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings. If Developer's Interest in the Premises (or any portion thereof) is threatened or a material interest of Developer is impaired, Developer may also, if Owner has not done so (or bonded such lien), compel the prosecution of an action for the foreclosure of such lien by the lienor and the payment of the amount of the judgment in favor of the lienor with interest, costs and allowances, Section 18.3 Reimbursement for Amounts Paid Pursuant to this Article. (a) Any amount paid by Owner in performing Developer's obligations as provided in this Article 18, including all costs and expenses incurred by Owner in connection therewith, shall constitute additional Rental under the Ground Lease and shall be reimbursed to Owner within thirty (30) days of Owner's demand, together with a late charge on amounts actually paid by Owner, calculated at the Late Charge Rate from the date of notice of any such payment by Owner to the date on which payment of such amounts is received by Owner, (b) Any amount paid by Developer in performing Owner's obligations as provided in this Article 18, including all costs and expenses incurred by Developer in connection therewith, shall be reimbursed to Developer within thirty (30) days of Developer's demand, together with a late charge on amounts actually paid by Developer, calculated at the Late Charge Rate from the date of notice of any such payment by Developer to the date on which payment of such amounts is received by Developer, -33- Section 18.4 Waiver, Release and Assumption of Obligations, (a) Owner's payment or performance pursuant to the provisions of this Article 18 shall not be, nor be deemed to constitute, Owner's assumption of Developer's obligations to pay or perform any of Developer's past, present or future obligations hereunder, (b) Developer's payment or performance pursuant to the provisions of this Article 18 shall not be, nor be deemed to constitute, Developer's assumption of Owner's obligations to pay or perform any of Owner's past, present or future obligations hereunder. ARTICLE 19 EVENTS OF DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES, ETC. Section 19.1 Definition. Each of the following events shall be an "Event of Default" hereunder: (a) an Event of Default under the Ground Lease shall have occurred and be continuing beyond any applicable cure period, including any cure period applicable to a Recognized Mortgagee; or (b) if Developer shall default in the observance or performance of any term, covenant or condition of this Agreement on Developer's part to be observed or performed and, if no cure period is expressly provided for herein, Developer does not remedy such Default within thirty (30) days after notice by Owner of such Default (the "Default Notice"), or if such a Default is of such a nature that it cannot reasonably be remedied within thirty (30) days (but is otherwise susceptible to cure), and if, Developer does not (i) within thirty (30) days after the giving of such Default Notice, advise Owner of Developer's intention to institute all steps necessary (and from time to time, as reasonably requested by Owner, Developer shall advise Owner of the steps being taken) to remedy such default (which such steps shall be reasonably designed to effectuate the cure of such Default in a professional manner), and (ii) thereafter diligently prosecute to completion all such steps necessary to remedy the same; or (c) to the extent permitted by law, if Developer admits, in writing, that it is generally unable to pay its debts as such become due; or (d) to the extent permitted by law, if Developer makes an assignment for the benefit of creditors; or (e) to the extent permitted by law, if Developer files a voluntary petition under Title 11 of the United States Bankruptcy Code, or if Developer files a petition or an answer seeking, consenting to or acquiescing in, any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future Federal bankruptcy code or any other present or future applicable Federal, state or other bankruptcy or insolvency statute or law, or seeks, consents to, acquiesces in or suffers the appointment of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of Developer, of all or any -34- substantial part of its properties, or of all or any part of Developer's Interest in the Premises, and the foregoing are not stayed or dismissed within one hundred fifty (150) days after such filing or other action; or (f) to the extent permitted by law, if, within one hundred fifty (150) days after the commencement of a proceeding against Developer seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future Federal bankruptcy code or any other present or future applicable Federal, state or other bankruptcy or insolvency statute or law, such proceeding has not been dismissed, or if, within one hundred eighty (180) days after the appointment, without the consent or acquiescence of Developer, of any trustee, receiver, custodian, assignee, sequestrator, liquidator or other similar official of Developer, of all or any substantial part of its properties, or of all or any part of Developer's Interest in the Premises, such appointment has not been vacated or stayed on appeal or otherwise, or if, within one hundred eighty (180) days after the expiration of any such stay, such appointment has not been vacated; or (g) if a levy under execution or attachment in an aggregate amount of Two Hundred Thousand Dollars ($200,000) (as adjusted for inflation in accordance with the Ground Lease) at anyone time is made against the Project Site or any part thereof or rights appertaining thereto (except for a levy made in connection with actions taken by Owner (other than holding Owner's Interest in the Premises)), or this Agreement and such execution or attachment is not vacated or removed by court order, bonding or otherwise within a period of sixty (60) days, subject to Unavoidable Delays after such levy or attachment. In the event of a Default which with the giving of notice to Developer and the passage of time would constitute an Event of Default, Owner's notice to Developer shall state with specificity the provision of this Agreement under which the Default is claimed, the nature and character of such Default, the facts giving rise to such Default, the date by which such Default must be cured pursuant to this Agreement, if applicable, and, if applicable, that the failure of Developer to cure such Default by the date set forth in such notice will result in Owner having the right to terminate this Agreement. With respect only to Development Disputes, Owner's allegation of a Default shall be subject to expedited arbitration in accordance with the provisions of Article 22, provided Developer shall initiate any such arbitration within the applicable grace period provided in this Section 19.1 or within ten (10) Business Days after receipt of Owner's notice if no such grace period is provided therein. Notwithstanding the foregoing, no Event of Default shall be deemed to have occurred until such time as Owner shall have given Developer notice of the occurrence of an Event of Default; provided, however, if Developer shall dispute, in accordance with the provisions of Article 22, Owner's assertion that an Event of Default has occurred within ten (10) Business Days after the giving of such notice by Owner, an Event of Default shall not be deemed to have occurred and Owner shall not be permitted to exercise any rights against Developer stated herein to arise out of an Event of Default until such time as the Arbitrator or a court, if applicable, has determined that an Event of Default has occurred. -35- Notwithstanding anything to the contrary contained herein, Owner shall be entitled to seek any injunctive or other equitable relief that may be available to Owner during the pendency of any Default. Section 19.2 Enforcement of Performance; Damages and Termination, If an Event of Default occurs, Owner may elect to (a) enforce performance or observance by Developer of the applicable provisions ofthis Agreement or (b) recover damages for breach of this Agreement or (c) in the circumstances described in Section 19.3(a), terminate this Agreement pursuant to Section 19,3(a). Owner's election of a remedy hereunder with respect to an Event of Default shall not limit or otherwise affect Owner's right to elect any of the remedies available to Owner hereunder with respect to any other Event of Default. Section 19.3 Expiration and Termination of Agreement. (a) If an Event of Default occurs under the Ground Lease which results in a termination of the Ground Lease, this Agreement shall terminate. If such termination is stayed by order of any court having jurisdiction over any case described in Sections 19.1(e) or 19.1(f) or by federal or state statute, then, following the expiration of any such stay, or if the trustee appointed in any such case, Developer or Developer as debtor-in-possession fails to assume Developer's obligations under this Agreement within the period prescribed therefor by law or within thirty (30) days after entry of the order for relief or as may be allowed by the court, Owner, to the extent permitted by law or by leave of the court having jurisdiction over such case, shall have the right, at its election, to terminate this Agreement on five (5) days" notice to Developer, Developer as debtor-in-possession or the trustee. Upon the expiration of the five-day period this Agreement shall expire and terminate and Developer, Developer as debtor-in-possession and/or the trustee immediately shall quit and surrender Developer's Interest in the Premises and possession thereof. (b) If this Agreement is terminated as provided in Section 19,3(a), Owner may, without notice, re-enter and repossess Developer's Interest in the Premises and may dispossess Developer by summary proceedings, writ of possession, proceedings in bankruptcy court or otherwise, subject to applicable Requirements, Section 19.4 Strict Performance. No failure by Owner or Developer to insist upon strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy available to such party by reason of the other party's default or an Event of Default, shall constitute a waiver of any such Default or Event of Default or of such covenant, agreement, term or condition or of any other covenant, agreement, term or condition. No covenant, agreement, term or condition of this Agreement to be performed or complied with by either party, and no default by either party, shall be waived, altered or modified except by a written instrument executed by the other party. No waiver of any Default or Event of Default shall affect or alter this Agreement, but each and every covenant, agreement, term and condition of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent Default. Developer's compliance .36- with any request or demand made by Owner shall not be deemed a waiver of Developer's right to contest the validity of such request or demand, Section 19,5 Right to Enioin Defaults, With respect to Development Disputes and all other disputes, in the event of Developer's Default or an Event of Default, Owner shall be entitled to seek to enjoin the Default or Event of Default and shall have the right to invoke any rights and remedies allowed at law or in equity or by statute or otherwise, except to the extent Owner's remedies are expressly limited by the terms hereof. With respect to Development Disputes and all other disputes, in the event of any default by Owner of any term, covenant or condition under this Agreement, Developer shall be entitled to seek to enjoin the default and shall have the right to invoke any rights and remedies allowed at law or in equity or by statute or otherwise, except to the extent Developer's remedies are expressly limited by the terms hereof. Each right and remedy of Owner and Developer provided for in this Agreement shall be cumulative and shall be in addition to every other right or remedy provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, except to the extent Owner's remedies and Developer's remedies are expressly limited by the terms hereof, and the exercise or beginning of the exercise by Owner or Developer of any one or more of the rights or remedies provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by Owner or Developer of any or all other rights or remedies provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, except to the extent Owner's remedies and Developer's remedies are expressly limited by the terms hereof. Section 19.6 Remedies under Bankruptcy and Insolvency Codes. If an order for relief is entered or if any stay of proceeding or other act becomes effective against Developer, Developer's Interest in the Premises, or Developer's interest in this Agreement, or Owner, Owner's Interest in the Premises, or Owner's interest in this Agreement, as applicable, in any proceeding which is commenced by or against Developer or Owner, as applicable, under the present or any future Federal Bankruptcy Code or in a proceeding which is commenced by or against Developer or Owner, as applicable, seeking a reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any other present or future applicable federal, state or other bankruptcy or insolvency statute or law, Owner or Developer, as applicable, shall be entitled to invoke any and all rights and remedies available to it under such bankruptcy or insolvency code, statute or law or this Agreement (except to the extent Owner's remedies and Developer's remedies are expressly limited by the terms hereof). Section 19.7 Inspection. Without in any way limiting Article 4, Owner and its representatives shall have the right, upon twenty-four (24) hours prior notice to Developer, to enter upon the Project Site to conduct inspections for the purpose of determining whether a Default or an Event of Default has occurred, provided that Owner shall be accompanied by a representative of Developer and provided further that such entry shall not unreasonably interfere with the Construction of the -37- Project. Developer agrees to make a representative of Developer available to accompany Owner on any such inspection. Section 19.8 Owner's Default. In the event of any default by Owner hereunder, not caused by Owner Excusable Delays (as hereinafter defined), Developer shall give Owner written notice specifying such default and Owner agrees to promptly commence the curing of such default and to cure such default within thirty (30) days after receipt of the aforesaid notice; provided, however, that if such default cannot reasonably be cured within said thirty (30) day period, then Owner shall cure any such default diligently and as quickly as reasonably practicable under the circumstances and shall have a reasonable period of time within which to cure such default so long as Owner is so proceeding. If Owner fails to cure any default during the applicable curative period, Developer, at any time after the expiration of such curative period, shall have the right to seek damages against Owner and/or to exercise any other remedy provided in this Agreement or available to Developer at law or in equity, As used herein, the term "Owner Excusable Delays" shall mean Owner's failure~ to perform any obligation of Owner hereunder by reason of one or more of the following causes, to- wit, governmental restrictions, regulations or ordinances (other than those restrictions, regulations or ordinances over which Owner, as a governmental entity, exercises control), strikes, lockouts, acts of God,~ war, terrorism, riots, gross negligence or the willful misconduct of Developer, or any other cause, similar or dissimilar to the foregoing and whether or not now in the contemplation of the parties hereto, beyond the reasonable control of Owner, other than the financial inability of Owner, provided that Owner takes reasonable steps to so minimize the effect of any such circumstance, in which event the required period for Owner's performance for any obligation hereunder shall be extended for a period equal to the length of the delay caused by such Excusable Delays. Owner agrees to make a good faith effort to notify Developer of any Excusable Delays affecting the performance by Owner of its obligations under this Agreement and the estimated delay to result therefrom, ARTICLE 20 NOTICES, CONSENTS AND APPROVALS Section 20.1 Service of Notices and Other Communications. (a) In Writing. Whenever it is provided herein that notice, demand, 'request, consent, approval or other Communication shall or may be given to, or served upon, either of the parties by the other (or any Recognized Mortgagee), or whenever either of the parties desires to give or serve upon the other any notice, demand, request, consent, approval or other communication with respect hereto or to the Project Site, each such notice, demand, request, consent, approval or other communication (referred to in this Section 20,1 as a "Notice") shall be in writing (whether or not so indicated elsewhere in this Agreement) and shall be effective for any purpose only if given or served by (i) certified or registered U.S, Mail, postage prepaid, return receipt requested; (ii) personal delivery with a signed receipt; or (iii) a recognized national courier servIce, addressed as follows: -38- if to Developer: New World Symphony 541 Lincoln Road Miami Beach, FL 33139 Attention: Chief Executive Officer with a copy to: Robert I. Weissler, Esq. Patricia G. Welles, Esq. Stearns Weaver Miller Weissler Alhadeff & Sitterson, P,A. 150 W. Flagler Street Suite 2200 Miami, FL 33130 if to Owner: City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Attn: City Manager with a copy to: City of Miami Beach City Attorney 1700 Convention Center Drive Miami Beach, Florida 33139 Any Notice may be given, in the manner provided in this Section 20.1, (x) on either party's behalf by its attorneys designated by such party by Notice hereunder, and (y) at Developer's request, on its behalf by any Recognized Mortgagee designated in such request. (b) Effectiveness, Every Notice shall be effective on the date actually received, as indicated on the receipt therefor or on the date delivery thereof is refused by the recipient thereof (c) References. All references in this Agreement to the "date" of Notice shall mean the effective date, as provided in the preceding subsection (b). Section 20,2 Consents and Approvals. (a) Effect of Granting or Failure to Grant Approvals or Consents. All consents and approvals which may be given under this Development Agreement shall, as a condition of their effectiveness, be in writing, The granting by a party of any consent to or approval of any act requiring consent or approval under the terms of this Development Agreement, or the failure on the part of a party to object to any such action taken without the required consent or approval, shall not be deemed a waiver by the party whose consent was required of its right to require such consent or approval for any other act. (b) Standard, All consents and approvals which may be given by a party under this Development Agreement shall not (whether or not so indicated elsewhere in this Development -39- Agreement) be unreasonably withheld or conditioned by such party and shall be given or denied within the time period provided, and if no such time period has been provided, within a reasonable time. In furtherance of the foregoing, in determining whether Owner has acted reasonably in not giving its consent or approval, the trier of fact shall take into consideration (for so long as Owner is the City or any Governmental Authority) that Owner is a political body governed by elected officials or persons that are appointed, directly or indirectly, by elected officials. Upon disapproval of any request for a consent or approval, the disapproving party shall, together with notice of such disapproval, submit to the requesting party a written statement setting forth with specificity its reasons for such disapproval. (c) Deemed Approval. (xi) If a party entitled to grant or deny its consent or approval (the "Consenting Party") within the specified time period shall fail to do so, then, except as otherwise provided in Section 20.2(c)(ii) below, and provided that the request for consent or approval (and the envelope in which such request is transmitted to the extent permitted by the carrier) bears the legend set forth below in capital letters and in a type size not less than that provided below, the matter for which such consent or approval is requested shall be deemed consented to or approved, as the case may be: FAILURE TO RESPOND TO THIS REQUEST WITHIN THE TIME PERIOD PROVIDED IN THE DEVELOPMENT AGREEMENT BETWEEN CITY OF MIAMI BEACH, FLORIDA AND NEW WORLD SYMPHONY SHALL CONSTITUTE AUTOMATIC APPROVAL OF THE MATTERS DESCRIBED HEREIN WITH RESPECT TO SECTION [FILL IN APPLICABLE SECTION] OF SUCH DEVELOPMENT AGREEMENT. Notwithstanding anything to the contrary contained in Section 20.2( c )(i) above, if the "Owner" hereunder and the matter, other than a matter referred to in Section 20.2(c)(iii) below, to be consented to or approved requires the consideration of the City Commission, as applicable (whether pursuant to requirements or the written opinion of the City Attorney) then, provided Owner gives Developer notice of such requirement within the time period provided for such consent or approval, such matter shall not be deemed approved or consented to unless Owner shall fail to respond to Developer's request by the date which is five (5) Business Days after the first regular meeting of the City Commission which occurs no earlier than ten (10) days following the receipt of such request (or second request, as applicable); but in any event not later than sixty (60) days following such request (or second request), as applicable. (ii) Owner hereby agrees, for so long as the City shall be the "Owner" hereunder, that, subject to Requirements, the City Manager, as applicable, shall be authorized to grant consents or approvals on behalf of the City with respect to Section 2.6( c) and Article 3 and Article 7. (iii) The foregoing provisions of this Subsection shall not be construed to modify or otherwise affect a party's right to arbitrate or litigate, as applicable, the failure of a -40- party to act reasonably in granting or denying a request for consent or to timely respond to a request for a consent, but such right to arbitrate or litigate, as applicable, shall not serve to delay the time period within which a grant or denial of such request is required hereunder, (d) Remedy for Refusal to Grant Consent or Approval. If, pursuant to the terms of this Agreement, any consent or approval by Owner or Developer is alleged to have been umeasonably withheld, conditioned or delayed, then any dispute as to whether such consent or approval has been unreasonably withheld, conditioned or delayed shall be settled by arbitration or litigation, as applicable. In the event there shall be a final determination that the consent or approval was unreasonably withheld, conditioned or delayed so that the consent or approval should have been granted, the consent or approval shall be deemed granted and the party requesting such consent or approval shall be entitled to any and all damages resulting therefrom, subject to the limitations provided in this Agreement. (e) No Fees, etc, Except as specifically provided herein, no fees or charges of any kind or amount shall be required by either party hereto as a condition of the grant of any consent or approval which may be required under this Agreement (provided that the foregoing shall not be deemed in anyway to limit Owner acting in its governmental, as distinct from its proprietary, capacity from charging governmental fees on a nondiscriminatory basis). (f) Governmental Capacity. Notwithstanding anything to the contrary contained in this Section 20,2, the City shall not be required by this Development Agreement to give its consent to any matter arising from or in connection with this Development Agreement when the City is acting in its governmental capacity. Section 20.3 Notice of Detailed Plans, Notwithstanding anything to the contrary contained in this Agreement (including without limitation Articles 2, 3, 4 and 5): (a) Copies ofthe Detailed Plans shall be submitted to Owner's Consultant. (b) Copies of all Notices to Owner pursuant to Articles 2,3,4 and 5 (whether or not such Notice includes Detailed Plans) shall be distributed to Owner's Consultant. Section 21,1 ARTICLE 21 FINANCIAL REPORTS AND RECORDS Books and Records, Audit Rights. (a) Developer shall at all times during the Term keep and maintain (separate from any of Developer's other books, records and accounts), accurate and complete records pertaining to the construction of the Project and such other matters referenced in this Agreement, in accordance with the Accounting Principles with such exceptions as may be provided for in this Agreement. Owner and its representatives shall have, during normal business hours and upon reasonable advance notice, access to the books and records of Developer pertaining to the Project -41- for the purpose of examination and audit (including copying), including books of account properly reflecting the construction of the Project. (b) The obligations of Developer under this Article to maintain, and to provide Owner and its representatives access to, the books and records related to the Project shall survive the expiration of this Agreement for a period of seven (7) years. (c) The right of Owner to audit the books and records of Developer pertaining to the Project, including, without limitation, the books of account regarding the Construction Work, shall be governed by the provisions of [Article 28] of the Ground Lease as if such books and records were specifically described in such [Article 28] as being part of the "books and records" described in such [Article 28]; provided, however, copying of all such "books and records" shall specifically be allowed. ARTICLE 22 ARBITRATION Section 22.1 Expedited Arbitration of Development Disputes. (a) If Developer or Owner asserts that a Development Dispute has arisen, such asserting party shall give prompt written notice thereof to the other party and to the Development Arbitrator. (b) The Development Arbitrator shall no later than five (5) Business Days after receipt of such notice, hold a preliminary, informal meeting with Owner and Developer in an attempt to mediate such Development Dispute. If such Development Dispute shall not be resolved at that meeting, the Development Arbitrator shall at such mediation meeting establish a date, not earlier than five (5) Business Days after the mediation hearing nor later than twenty (20) Business Days after the mediation hearing for a hearing (a "Hearing") to be held in accordance with this Agreement to resolve such Development Dispute. (c) Developer and Owner shall have the right to make one (1) written submission to the Development Arbitrator prior to any Hearing. Such submission shall be received by the Development Arbitrator and the other party not later than two (2) Business Days prior to the Hearing Date. The parties agree that no discovery (as the term is commonly construed in litigation proceedings) will be needed and agree that neither party nor the Development Arbitrator shall have discovery rights in connection with a Development Dispute, (d) Each Hearing shall be conducted by the Development Arbitrator. It is the intention of the parties that the Hearings shall be conducted in an informal and expeditious manner, No transcript or recording shall be made, Each party shall have the opportunity to make a brief statement and to present documentary and other support for its position, which may include the testimony of not more than four (4) individuals, two (2) of whom may be outside experts. There shall be no presumption in favor of either party's position. Any procedural matter not covered herein shall be governed by the most recent edition of the CPR Rules for the -42- Arbitration of Business Disputes and the Florida Arbitration Code to the extent not inconsistent with the CPR Rules and this Section 22.1. (e) The Hearings shall be held in a location selected by the Development Arbitrator in Miami-Dade County, Florida. Provided the Development Arbitrator is accompanied by representatives of both Developer and Owner, the Development Arbitrator may, at its option, visit the work site to make an independent review in connection with any Development Dispute. (f) Once it has been determined by the Development Arbitrator or by agreement of the parties with respect to any Development Dispute that Developer's proposed modifications are material with regard to, or materially inconsistent with, the Preliminary Plans and Specifications or the Plans or Specifications pursuant to Section 3.1 the Development Arbitrator shall take into account, in determining whether Owner has acted unreasonably in failing to grant an approval or consent as described in Section 3.6(b) such factors as he deems relevant which are not inconsistent with this Agreement (including items I through 7, below), which in all events shall include the following factors: (1) Owner does not have any approval rights with respect to the matter of interior design and decor of the Project except to the extent the same is reflected in the Preliminary Plans and Specifications or pursuant to Section 3,6(b). (2) The Project shall be a first class cultural and educational facility constructed in a manner and with such quality as is consistent with other comparable first class projects of similar age, and set forth in the original approved Preliminary Plans and Specifications or the original approved Plans and Specifications (without regard to changes thereto). (3) The mutual goal of Developer and Owner that Project Construction Costs overruns shall be minimized. (4) The mutual goal of Developer and Owner that the Construction of the Project be completed within approximately five (5) years from the Possession Date. (5) Applicability of any Requirement. (6) The magnitude of the modification to the previously approved Preliminary Plans and Specifications or Plans and Specifications, as applicable. (7) The magnitude of the consistency or inconsistency from the previously approved Preliminary Plans and Specifications or Plans and Specifications, as applicable, (g) Pending resolution of the Development Dispute, Developer may not implement the matter which is the subject of such Development Dispute. (h) The Development Arbitrator shall render a decision, in wntmg, as to any Development Dispute not later than two (2) Business Days following the conclusion of the -43- Hearings regarding such Development Dispute and shall provide a brief written basis for its decision not later than five (5) Business Days thereafter. As to each Development Dispute, the Development Arbitrator's decision shall be limited to (i) whether or not Developer's proposed modification(s) to the Preliminary Plans and Specifications or the Plans or Specifications pursuant to Section 3.1 is material, (ii) whether or not Developer's proposed modification(s) to the Preliminary Plans and Specifications or the Plans or Specifications pursuant to Section 3,l(a) or (b), respectively, is materially inconsistent, (iii) whether or not Owner has unreasonably failed to approve or give its consent to any modifications to the Preliminary Plans or Specifications or the Plans and Specifications pursuant to Section 3.l(a) or (b); and/or (iv) whether or not Developer or Owner is entitled to any extension of time for performance. The Development Arbitrator may not award any other or different relief, (i) The decision of the Development Arbitrator shall be final and binding on the parties for all purposes and may be entered in any court of competent jurisdiction, (j) The parties shall cooperate to select an independent, neutral, professional firm having experience in the development or construction of similar cultural facilities to serve as the arbitrator (the "Development Arbitrator"). If the parties cannot agree, then any party may ask the CPR Institute for Dispute Resolution to select a substitute who will act as Development Arbitrator ofthat Development Dispute, Section 22.2 Litigation. Any dispute between the parties, other than a Development Dispute, shall be subject to litigation and not arbitration. ARTICLE 23 OWNER'S OBLIGATIONS FOR INFRASTRUCTURE AND PARKING Section 23.1 Construction of Infrastructure Improvements. 23,1.1 The parties acknowledge that the construction, development and use of the Project and the City Hall Parking Expansion will provide mutual benefits to both parties by enhancing the use of all of such facilities as well as of the Adjacent Property, Therefore, the parties agree to coordinate and cooperate in the planning, scheduling and approval of the design, construction and operation of these facilities. 23.1.2 As an inducement to Developer to develop and construct the Project, Owner shall, at Owner's sole cost and expense, design and construct such Infrastructure Improvements, as shall be agreed to and approved by the City Commission, for and relating to Developer's design and construction of Developer's Improvements, as set forth herein, Owner shall undertake and complete the design, development and construction of the agreed upon Infrastructure Improvements, in such time, order and manner as Owner and Developer may mutually agree upon. Owner shall not be obligated to fund and/or design, develop and construct any Infrastructure Improvements that have not been agreed to in writing by the City, -44- 23,1.3 Owner agrees to and shall as expeditiously as possible design, develop, construct, operate and maintain, at Owner's sole cost and expense, the City Hall Expansion Parking. Section 23.2 Garage, 23,2,1 Developer shall design and construct, at Owner's cost and expense as set forth in Section 23..2.2 below, the Garage to be located on the Garage Property, which Garage shall be of sufficient capacity to accommodate approximately 320 cars. Notwithstanding the preceding sentence, and as set forth in Section 2.2 herein, Developer agrees that the design of the Garage will maximize public parking and minimize any net loss of public parking within the Development Site and, at in minimum, shall consider the incorporation of such design elements including but not limited to the addition of an extra floor. The Parties acknowledge that the timing of construction and completion of the Garage is critical; therefore, Developer agrees to and shall, as expeditiously as reasonably possible, obtain Substantial Completion of the Garage prior to completion of Developer's Improvements. 23,2,2 Owner's contribution toward funding the construction of the Garage shall be as follows: (i) Owner will fund (i) an amount not to exceed $12,250 per parking space for all hard construction costs, and (ii) 12.5% of the not to exceed per parking space cost in subsection (i) for all so-called "soft costs" (all hard and soft costs referred to as "Garage Costs"). The Garage Costs shall be inclusive of, but not be limited to, the City's total funding contributions for Concurrency Requirements, the City's Prevailing Wage Ordinance, if applicable, and all costs in connection with all zoning, permit matters, and requirements imposed by Governmental Authorities. (ii) In the event that Developer's design, plans and specifications for the design, development and construction of the Garage exceed the Garage Costs, Developer shall be solely responsible for payment of all excess costs ("Excess Garage Costs"). (iii) The established not to exceed per parking space cost of $12,250 shall be adjusted at the time the Building Permit is issued for the Garage by any increase in the Consumer Price Index (CPI) Urban Consumers, Miami-Fort Lauderdale SMSA, as published by the U.S. Department of Labor's Bureau of Labor Statistics for the month of October 2003, as compared with the index for the month in which said Building Permit is issued for the Garage. In the event Developer does not receive a Building Permit for the Garage by May 30, 2007, the aforestated CPI adjustment thereafter shall be capped at an amount not to exceed five (5%) percent annually, until such time as a Building Permit for the Garage is issued. (iv) The Parties agree to adjust the Garage Costs on the basis of the actual number of parking spaces shown on the final "as built" Plans and Specifications for the Garage, delivered at the time of completion of construction and delivery to the Owner, (v) Owner shall pay to Developer the Garage Costs in sixteen (16) consecutive equal monthly installments, beginning on the first day of the second month following Commencement of Construction, and continuing until all of the Garage Costs determined to be due and owing as -45- of the time the Building Permit was issued, have been paid. Upon Developer's submission to Owner of the final "as built" Plans and Specifications for the Garage, any additional Garage Costs which may be due and owing as a result of the actual number of parking spaces constructed exceeding the number anticipated at the time the Building Permit was issued, shall be paid in full by Owner to Developer, All payments shall be made in cleared U.S. funds. (vi) The construction of the Garage shall be deemed to have been completed in substantial accordance with the approved Plans and Specifications, as they may be modified, notwithstanding that minor adjustments may be required by Developer or minor errors or omissions may require correction, provided that such adjustments and corrections are made within a reasonable amount of time after discovery of same. Section 23.2.3 Possession of Garage bv Owner. Entry into possession of the Garage by Owner, as evidenced by the use thereof by Owner (the date such use first occurs being the "Garage Possession Date"), will constitute acknowledgment by Owner that the Garage is in the condition in which Developer was required to deliver the Garage under the terms of this Agreement and the Lease and that Developer has performed all of its obligations relating to construction of such Garage, except for (i) those defects, if any, in construction from the Plans and Specifications, other than latent defects therein, set forth on a written list ("punch list") to be delivered by Owner to Developer within thirty (30) days after the date Developer advises Owner that the Garage is ready for possession, and (ii) those latent defects therein as to which Owner notifies Developer, in writing within twelve (12) months of the Garage Possession Date, With respect to the Garage, at the expiration of such twelve (12) month period, Developer shall assign to the Owner any warranty rights obtained from contractors, subcontractors and suppliers which remain outstanding at such time. Developer shall, upon receipt of the list referred to in subparagraph (i) hereof, commence to correct all such defects which require correction in order for the construction of the Garage to comply in substantial accordance with the approved Plans and Specifications, as modified, if applicable, and the applicable provisions ofthis Agreement. Section 23.3 Adiacent Property, The Parties acknowledge and agree that the Adjacent Property is at the time of execution of this Agreement used as a municipal surface parking lot, and because of its proximity to the Project, the manner in which the Adjacent Property is or may be used from time to time will have a direct and material effect on the use and value of the Project. In consideration ofthe foregoing and of the consideration reserved by it under this Agreement, Owner, covenants and agrees with Developer, its successors and assigns that: 23.3.1 Owner will use all reasonable efforts to advise Developer of any proposed and/or ongoing planning and implementation efforts relating to the construction of improvements to and the use upon the Adjacent Property. 23.3.2 Developer agrees that to the extent reasonably possible, all utilities serving the Garage shall be provided through systems which are separate from those serving tenant improvements and any structures appurtenant thereto. To the extent such utilities are separately -46- metered, Owner shall pay the cost of such utilities directly to the authority or utility providing the same. The cost of repair and maintenance of all utility systems serving the Garage shall be the sole responsibility of Owner, Section 23.4 Park. Owner may develop the Park or, in the alternative, another similar public amenity, including but not limited to, a pedestrian boulevard or promenade, utilizing all or a portion of the Adjacent Property, all at the sole cost and expense of Owner. In the event Owner does develop the Park, or other similar public amenity, Owner shall strive to operate and maintain the Park or other public amenity at a municipal standard of quality that will ensure its preservation as a unique and special natural resource for use and enjoyment by all residents of and visitors to the City and to the Project. Owner will use reasonable efforts to advise Developer as to the design and configuration of the Park or other public amenity, which shall be, subject to the review and approval by the City of the proposed location, amenities, layout, design and construction schedule. Section 23.5 Additional Consideration, Developer, in consideration of Owner's approval of the dollar ($1.00) per year that under the Ground Lease and Owner's other significant financial contributions, and in recognition of Owner's cooperation and other contribution~ to the success of the Project, agrees to provide each Lease Year during the Lease Term the additional benefits to Owner and to the City as described on Exhibit E attached hereto and made a part hereof. Section 23,6 The Screen. Developer shall design, construct and thereafter maintain the Screen, as defined in the Ground Lease, at its sole cost and expense. The Parties shall define their respective programming and operational responsibilities with respect to the Screen in an exhibit to the Ground Lease in accordance with Section 6.2 of the Ground Lease. The Parties agree that there shall be no commercial advertising permitted for display on the Screen. ARTICLE 24 INVESTIGATIONS, ETC. To the extent required by Requirements, Developer shall cooperate fully and faithfully with any investigation, audit or inquiry conducted by any Governmental Authority that is empowered directly or by designation to compel the attendance of witnesses and to examine witnesses under oath, or conducted by a Governmental Authority that is a party in interest to the transaction, submitted bid, submitted proposal, contract, lease, permit, or license that is the subject of the investigation, audit or inquiry. In addition, Developer shall promptly report in writing to the City Attorney of the City of Miami Beach, Florida, any solicitation, of which Developer's officers or directors have knowledge, of money, goods, requests for future employment or other benefit or thing of value, by or on behalf of any employee of Owner, City or -47- other Person relating to the procurement or obtaining of this Development Agreement by Developer or affecting the performance of this Development Agreement. ARTICLE 25 HAZARDOUS MATERIALS Section 25.1 General Provision. The provisions of Article 31 of the Ground Lease shall be applicable to this Agreement as if the references in such Article 31 to "Owner", "Developer" and the "Premises" were references to Owner, Developer and the Project Site, respectively. Section 25.2 Survival. The provisions of this Article 25 shall survive the expiration or sooner termination of this Agreement. ARTICLE 26 MISCELLANEOUS Section 26.1 Governing Law and Exclusive Venue, This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, both substantive and remedial, without regard to principles of conflict of laws, The exclusive venue for any litigation arising out of this Agreement shall be Miami-Dade County, Florida, if in state court, and the U.S. District Court, Southern District of Florida, if in federal court. The exclusive venue for any expedited arbitration arising out of this Agreement shall be as specified in Article 22 herein. BY ENTERING INTO THIS AGREEMENT, DEVELOPER AND OWNER EXPRESSLY WANE ANY RIGHTS EITHER PARTY MAY HAVE TO A TRIAL BY JURY OF ANY CIVIL LITIGATION RELATED TO, OR ARISING OUT OF, THIS AGREEMENT AND/OR THE GROUND LEASE. Section 26.2 References. (a) Captions. The captions of this Development Agreement are for the purpose of convenience of reference only, and in no way define, limit or describe the scope or intent of this Development Agreement or in any way affect this Development Agreement. All captions, when referring to Articles or Sections, refer to Articles or Section in this Development Agreement, unless specified otherwise. (b) Table of Contents. The Table of Contents is for the purpose of convenience of reference only, and is not to be deemed or construed in any way as part of this Agreement. (c) Reference to Owner and Developer. The use herein of the neuter pronoun in any reference to Owner or Developer shall be deemed to include any individual Owner or Developer, and the use herein of the words "successors and assigns" or "successors or assigns" of Owner or -48- Developer shall be deemed to include the heirs, legal representatives and assIgns of any individual Owner or Developer. (d) City's Governmental Capacity, Nothing in this Agreement or in the parties' acts or omissions in connection herewith shall be deemed in any manner to waive, impair, limit or otherwise affect the authority of the City in the discharge of its police or governmental power. (e) Reference to "herein," "hereunder", etc, All references in this Agreement to the terms "herein", "hereunder" and words of similar import shall refer to this Agreement, as distinguished from the paragraph, Section or Article within which such term is located. (f) Reference to "Approval" or "Consent", etc. All references in this Agreement to the terms "approval", "consent" and words of similar import shall mean "reasonable written approval" or "reasonable written consent" except where specifically provided otherwise, Section 26.3 Entire Agreement. etc. (a) Entire Agreement. This Development Agreement, together with the attachments hereto, contains all of the promises, agreements, conditions, inducements and understandings between Owner and Developer concerning the development and construction of the Project on the Project Site and there are no promises, agreements, conditions, understandings, inducements, warranties or representations, oral or written, express or implied, between them other than as expressly set forth herein and in such attachments thereto or as may be expressly contained in any enforceable written agreements or instruments executed simultaneously herewith by the parties hereto. Notwithstanding anything to the contrary set forth in this Agreement, the terms of this Agreement shall supersede the terms of any Letter of Intent. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall represent one instrument. (b) Waiver, Modification, etc. No covenant, agreement, term or condition of this Development Agreement shall be changed, modified, altered, waived or terminated except by a written instrument of change, modification, alteration, waiver or termination executed by Owner and Developer, No waiver of any Default or default shall affect or after this Agreement, but each and every covenant, agreement, term and condition of this Agreement shall continue in full force and effect with respect to any other then existing or subsequent Default or default thereof. (c) Effect of Other Transactions, No Mortgage, whether executed simultaneously with this Agreement or otherwise, and whether or not consented to by Owner, shall be deemed to modify this Agreement in any respect, and in the event of an inconsistency or conflict between this Agreement and any such instrument, this Agreement shall control. Section 26.4 Invalidity of Certain Provisions. If any provision of this Agreement or the application thereof to any Person or circumstances is, to any extent, finally determined by a court of competent jurisdiction to be invalid and unenforceable, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is held invalid and -49- unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Section 26,5 Remedies Cumulative, Each right and remedy of either party provided for in this Agreement shall be cumulative and shall be in addition to every other right or remedy provided for in this Agreement, or now or hereafter existing at law or in equity or by statute or otherwise (except as otherwise expressly limited by the terms of this Agreement), and the exercise or beginning of the exercise by a party of anyone or more of the rights or remedies provided for in this Agreement, or now or hereafter existing at law or in equity or by statute or otherwise (except as otherwise expressly limited by the terms of this Agreement), shall not preclude the simultaneous or later exercise by such party of any or all other rights or remedies provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise (except as otherwise expressly limited by the terms of this Agreement). Section 26.6 Performance at Each Party'S Sole Cost and Expense. Unless otherwise expressly provided in this Agreement, when either party exercises any of its rights, or renders or performs any of its obligations hereunder, such party shall do so at its sole cost and expense, Section 26.7 Mortgagee Charges and Fees. Developer shall pay any and all fees, charges and expenses owing to a Recognized Mortgagee in connection with any services rendered by it as a depositary pursuant to the provisions of this Agreement. Section 26,8 Time is of the Essence, Time is of the essence with respect to all matters in, and requirements of, this Development Agreement as to both Owner and Developer including, but not limited to, the times within which Developer must commence and complete Construction ofthe Project. Section 26,9 Successors and Assigns. The agreements, terms, covenants and conditions herein shall be binding upon, and inure to the benefit of, Owner and Developer, and, except as otherwise provided herein, their respective successors and permitted assigns. If, while City is the Owner hereunder, the City shall cease to exist, the City, by its signature hereto, hereby agrees to be bound with respect to all of the terms, covenants and conditions of Owner hereunder and Developer agrees to recognize the City as Owner hereunder. There can be no assignment by Developer of its rights or obligations hereunder or its interest in this Agreement, except Developer may assign all its rights hereunder to a Recognized Mortgagee as security for the performance of Developer's obligations under the Loan Documents, This Development Agreement, however, shall automatically transfer in connection with a transfer of Developer's (as Tenant) interest in the Ground Lease in accordance with the provisions of the Ground Lease. -50- Section 26.10 Notice of Defaults. Notwithstanding anything to the contrary set forth in this Development Agreement, under no circumstances shall any party to this Development Agreement lose any right or benefit granted under this Agreement or suffer any harm as a result of the occurrence of any Default or default of such party as to which Default or default such party has not received notice thereof from the other party. Section 26.11 No Representations. Owner and City have made no representations herein as to the condition ofthe Project Site. Section 26,12 Corporate Obligations. It is expressly understood that this Development Agreement and obligations issued hereunder are solely corporate obligations, and, except as otherwise provided in Article 15 that no personal liability will attach to, or is or shall be incurred by, the incorporators, stockholders, officers, directors, elected or appointed officials (including, without limitation, the Mayor and City Commissioner of the City) or employees, as such, of Owner or Developer, or of any successor corporation, or any of them, under or by reason of the obligations, covenants or agreements contained in this Agreement or implied therefrom; and, except as otherwise provided in Article 15, that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer, director, elected or appointed officials (including, without limitation, the Mayor and City Commissioner of the City) or employee, as such, or under or by reason of the obligations, covenants or agreements contained in this Agreement or implied therefrom are expressly waived and released as a condition of, and as a consideration for, the execution of this Agreement. Section 26.13 Nonliabilitv of Officials and Emplovees, Except as otherwise provided in Article IS, no member, official or employee of Owner shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by Owner or for any amount or obligation which may become due to Developer or successor under the terms of this Agreement; and, except as otherwise provided in Article IS, any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such Person, under or by reason of the obligations, covenants or agreements contained in this Development Agreement or implied therefrom are expressly waived and released as a condition of, and as a consideration for, the execution of this Development Agreement. Section 26.14 Partnership Disclaimer. Developer acknowledges, represents and confirms that it is an independent contractor in the performance of all activities, functions, duties and obligations pursuant to this Development Agreement. -51- The parties hereby acknowledge that it is not their intention to create between themselves a partnership, joint venture, tenancy-in-common, joint tenancy, co-ownership or agency relationship for the purpose of developing the Project, or for any other purpose whatsoever. Accordingly, notwithstanding any expressions or provisions contained herein, nothing in this Agreement, the Ground Lease or the other documents executed by the parties with respect to the Project shall be construed or deemed to create, or to express an intent to create, a partnership, joint venture, tenancy-in-common, joint tenancy, co-ownership or agency relationship of any kind or nature whatsoever between the parties hereto. The provisions of this Section 26.14 shall survive expiration ofthis Development Agreement. Section 26.15 Time Periods, Any time periods in this Agreement of less than thirty (30) days shall be deemed to be computed based on Business Days (regardless of whether any such time period is already designated as being computed based on Business Days), In addition, any time period which shall end on a day other than a Business Day shall be deemed to extend to the next Business Day. Section 26,16 No Third Partv Rights, Nothing in this Development Agreement, express or implied, shall confer upon any Person, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement; provided, however, that a Recognized Mortgagee or its Designee (as such term is defined in the Ground Lease) shall be third party beneficiaries hereunder to the extent same are granted rights hereunder. Section 26.17 No Conflict of Interest. Developer represents and warrants that, to the best of its actual knowledge, no member, official or employee of the City has any direct or indirect financial interest in this Development Agreement nor has participated in any decision relating to this Development Agreement that is prohibited by law. Developer represents and warrants that, to the best of its knowledge, no officer, agent, employee or representative of the City has received any payment or other consideration for the making of this Agreement, directly or indirectly, from Developer. Developer represents and warrants that it has not been paid or given, and will not payor give, any third person any money or other consideration for obtaining this Agreement, other than normal costs of conducting business and costs of professional services such as architects, engineers, and attorneys, Developer acknowledges that Owner is relying upon the foregoing representations and warranties in entering into this Agreement and would not enter into this Agreement absent the same. Section 26.18 Recording of Development Agreement. Within fourteen (14) days after the Parties execute this Development Agreement, the City shall record this Development Agreement with the Clerk of the Circuit Court of Miami-Dade County. The Developer shall submit a copy of the recorded Development Agreement to the State of Florida's Land Planning Agency within fourteen (14) days after this Development Agreement -52- is recorded. This Development Agreement shall become effective only after (i) it has been recorded in the Public Records of Miami-Dade County, and (ii) thirty (30) days have elapsed after the State of Florida Land Planning Agency's receipt of a copy of the recorded Development Agreement. The Developer agrees that it shall be responsible for all recording fees and other related fees and costs related to the recording and delivery of this Development Agreement as described in this Section 26.18. The provisions hereof shall remain in full force and affect during the term hereto, and subject to the conditions of this Development Agreement shall be binding upon the undersigned, and all successors in interest to the parties to this Development Agreement. Whenever an extension of any material deadline is permitted or provided for under the terms of this Development Agreement, at the request of either party, the other party shall join in a short-form recordable Memorandum of Agreement confirming such extension to be recorded in the Public Records of Miami-Dade County. Section 26.19 Duration of This Development Agreement. The duration of this Development Agreement shall not exceed ten (10) years from the date first written above; provided, however, that the duration of this Development Agreement may be extended by mutual agreement of the Owner and Developer. During the term of this Development Agreement, the City's laws and policies governing the development of land in effect as of the date hereof shall govern development of the Land. The City may apply subsequently adopted laws and policies to the Project only if the City has held a public hearing pursuant to Section 163.3 225, Florida Statutes, and determined: (a) they are not in conflict with the laws and policies governing this Development Agreement and do not prevent development of the land uses, intensities, or densities in this Development Agreement; or (b) they are essential to the public health, safety, or welfare, and expressly state that they shall apply to a development that is subject to a development agreement; or (c) they are specifically anticipated and provided for in this Development Agreement; or (d) the City demonstrates that substantial changes have occurred III pertinent conditions existing at the time of approval of Development Agreement; or (e) this Development Agreement is based on substantially inaccurate information supplied by Developer. Section 26.20 "Kev Man" Clause. The Parties herein acknowledge that Developer's selection of Gehry Partners,LLP as Developer's Architectural Consultant for the Project (hereinafter "Architectural Consultant") is an integral and primary consideration toward Owner's decision and incentive to approve and allow the design, development and construction of the Project on its property, and to negotiate, execute and approve this Agreement and the Ground Lease. Developer agrees and acknowledges that it is the intent ofthe Owner that the Project be designed, recognized and accepted as a Frank -53- Gehry building, and Developer shall use its best efforts to assure that the Architectural Consultant is retained, in whatever manner necessary, to achieve that intent. The continuing, ongoing and active participation of the Architectural Consultant is thereby required up to and including Substantial Completion. In the event that the Architectural Consultant is no longer contractually associated with Developer, or otherwise ceases to participate in the design, development, and construction of the Project, then Developer shall immediately notify Owner, and Owner shall have prior written approval as to any replacement architect or architectural consultant subsequently offered by Developer. [EXECUTION ON FOLLOWING PAGE] -54- EXECUTION IN WITNESS WHEREOF, Owner and Developer intending to be legally bound, have executed this Development Agreement as of the day and year first above written. WITNESSES: ~ J~,~ Print Name: k~1f ((//~"-.J I BEACH, FLORIDA, a municipal th State of Florida ~'E/~ Print Name: /(.,{ffl; . fllrjAlt'Z-- p~ [SEAL] STATE OF FLORIDA ) )ss: COUNTY OF MIAMI-DADE ) fA. The foregoing instrument was acknowledged before me this. /4 day of ,&L2 , by 1J:h//;Y ~r~/,""as Mayor, and ~kr.,t ~~as City Clerk of the CITY OF MIAMI BEACH, FLORIDA, a municipal corporation of the State of Florida, on behalf of such municipal corporation. They are personally known to me or produced valid Florida driver's licenses as identification My commission expires: .IfZ~W4~/ Notary Public, State of Florida /1_ Print Name: ~C/A::; Co qd1/~/7 [i~...............".................. .~.r'AULA~~. i ~'4IJ..i ElCIlIIw '- ~..'" ""-"'" ..............~ ......., APPROVED AS TO FORM & LANGUAGE & FOR exeCUTION ~ -55- WITNESSES: THE NEW WORLD SYMPHONY, a not-for- profit Florida corporation &l~ ri t Name: .\Jo- By: ~ ~.. Print Name:.J<:u{~ _ c-::> \J. 1/'\\.lf'\O"' r.~~ By: STATE OF FLORIDA ) )ss: COUNTY OF MIAMI-DADE ) The foregoing instrument was acknowledged before me this ~ day of .J;t:mIu-lHb/, r:2ooc{ , by Howard Herring, as President and CEO, and LAv~e ttJvrrN , as Secretary, of THE NEW WORLD SYMPHONY, a not-for-profit Florida corp6ration, on behalf of such corporation. They are personally known to me or produced valid Florida driver' li,,,,,,,,, '" ;d'ntifioat;on. t:zu..e... !1u). My commission expires: OFRCiiilNOTAAYS SANDRA G ORTIZ N * COMMISSION NUMBEp . "7 ~ DDoS14S1 1<- 0 o<$:' MY DOMMISSION EX?I F FI. J"~~~J,&006 F:\atto\$ALLlLiz\NWS Dev Agr(12-9-03 Revision - Final).doc -56- List of Exhibits Exhibit A Legal Description of Land Exhibit B Legal Description of Adjacent Property Exhibit C Legal Description of Garage Property Exhibit D Preliminary Master Plan Proposed upon Development Site (to be replaced by approved Project Concept Plan) Exhibit E Additional Consideration from Developer Exhibit F Insurance Required of Developer's Contractor Exhibit G Schedule -57- EXHIBIT A LEGAL DESCRIPTION OF LAND -58- EXHIBIT B LEGAL DESCRIPTION OF ADJACENT PROPERTY -59- EXHIBIT C LEGAL DESCRIPTION OF GARAGE PROPERTY -60- EXHIBIT D PRELIMINARY MASTER PLAN PROPOSED UPON DEVELOPMENT SITE (TO BE REPLACED BY APPROVED PROJECT CONCEPT PLAN) -61- EXHIBIT E ADDITIONAL CONSIDERATION FROM DEVELOPER -62- EXHIBIT F INSURANCE REQUIRED OF DEVELOPER'S CONTRACTOR I. Worker's compensation insurance covering all employees of the Contractor as required by the laws of the State of Florida and employer's liability insurance of not less than One Million Dollars ($ 1,000,000) per occurrence. 2. Comprehensive general liability insurance in an amount of not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) annual aggregate covering personal injury and property damage. Such coverage shall include, but not be limited to, the following: 1. Blanket contractual liability insurance covering all indemnity or hold harmless agreements. 2. Protective liability insurance for the operation of the Independent Contractors. 3. XCU coverage (explosion, collapse or damage to underground property). 4. Products and completed operations (for two year extension beyond completion of project). 3. Excess umbrella liability insurance with a limit of not less than Twenty-Five Million Dollars ($25,000,000) per occurrence and in the aggregate in excess of the above mentioned insurance; which shall be required only in any "wrap up" policy. a) Developer may cause the insurance listed in this subsection (i) to be provided through an overall "wrap up" policy, in lieu of individual policies provided by Contractors. b) Comprehensive automobile insurance in an amount of not less than Two Million Dollars ($2,000,000) combined single limit for bodily injury and property damage covering all owned, non-owned or hired vehicles, trailers or semi-trailers, including any machinery or apparatus attached thereto. 4. Builder's Risk Insurance (standard "All Risk" or equivalent coverage) in an amount not less than the cost of construction, written on a completed value basis or a reporting basis, for property damage protecting Developer, Owner, Developer's general contractor, and any Recognized Mortgagee, with a deductible of not more than Fifty Thousand Dollars ($50,000), subject to adjustment for inflation (except as to flood and windstorm, with regard to which the deductible shall be a commercially reasonable amount). 5. Comprehensive automobile insurance in an amount of not less than Two Million Dollars ($2,000,000) combined single limit for bodily injury and property damage covering all owned, non-owned or hired vehicles, trailers or semi-trailers, including any machinery or apparatus attached thereto. -63- RESOLUTION NO. 2003-25332 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING IN SUBSTANTIAL FORM, AS ATTACHED HERETO, ON SECOND PUBLIC READING, IN ACCORDANCE WITH THE REQUIREMENTS OF SECTIONS 163.3220 - 163.3243 FLORIDA STATUTES, ALSO REFERRED TO AS THE FLORIDA LOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT, A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE NEW WORLD SYMPHONY, A NOT -FOR-PROFIT FLORIDA CORPORATION, FOR THE DESIGN, DEVELOPMENT AND CONSTRUCTION OF THE SURFACE PARKING LOTS, BOUNDED BY 17TH STREET TO THE NORTH, NORTH LINCOLN LANE TO THE SOUTH, WASHINGTON AVENUE TO THE EAST AND PENNSYLVANIA AVENUE TO THE WEST, FOR DESIGN, DEVELOPMENT AND CONSTRUCTION OF AN APPROXIMATELY 50,000 SQUARE FOOT EDUCATIONAL, PERFORMANCE AND INTERNET BROADCAST FACILITY WITH AN EXTERIOR SCREEN ("SOUNDSPACE"), AND AN APPROXIMATELY 320-SPACE (+/-) PUBLIC PARKING GARAGE FACILITY; FURTHER APPROVING SAID DEVELOPMENT AGREEMENT SUBJECT TO AND CONTINGENT UPON THE PARTIES' RESPECTIVE BOND COUNSEL'S REVIEW OF THE AGREEMENT AND THE GROUND LEASE AGREEMENT BETWEEN THE PARTIES; SAID REVIEW TO BE ON AN EXPEDITED BASIS. WHEREAS, concurrent with completion of the first phase of the 17'h Street Master Plan study by Zyscovich, Inc., in October, 2001, (Master Plan), the Administration has been in negotiations with the New World Symphony (NWS) regarding its proposed lease of an approximately 50,000 square foot parcel of land, to be identified on a portion of the 17th Street Surface Parking Lots, to accommodate the development and construction of an approximately 50,000 square foot educational, performance, and internet broadcast facility with an exterior screen, and an adjacent 320-space (+/-) public parking garage; and WHEREAS, concurrent with the negotiation of the aforestated Development Agreement, the City and the NWS have also negotiated a Ground Lease Agreement regarding NWS' proposed lease of an approximately 50,000 square foot educational, performance and internet broadcast facility with an exterior screen, referred to as "SoundS pace"; and WHEREAS, concurrent with the negotiations, the NWS has and continues with its outreach initiative, scheduling meetings with various Citywide committees to advise on the Symphony's expansion plans and to obtain community input relative to the proposed Project; and WHEREAS, since January, 2003, NWS has presented its plans and proposed terms before the Cultural Arts Council, the Lincoln Road Marketing Association, the Convention Center Advisory Board, the Tuesday Morning Breakfast Club, the Parking and Transportation Committee, the Land Use and Development Committee and the Finance and Citywide Projects Committee; and WHEREAS, on July 2nd, 2003, the City Commission voted to expand the scope of the Development Agreement to encompass the east surface lot as well, in order to provide the NWS' Architect, Gehry Partners, with greaterftexibility in the design of the Project; and WHEREAS, on July 16, 2003, the Finance and Citywide Projects Committee voted to support the Project subject to certain conditions, including: 1. the Development Agreement defines the minimum level of investment by the NWS relative to the hard construction costs of the Project; 2. that the Project's Architect will endeavor to maximize the number of parking places in the design and layout; and 3. that further consideration be given to the City's proposed level of investment in NWS' parking component; and WHEREAS, the Agreement defines the minimum level of investment by the NWS relative to the hard construction costs of the Project as $40 Million, inclusive offurnishings, fixtures and equipment; and WHEREAS, pursuant to an analysis of comparable parking structures, the City has determined that its maximum contribution associated with the construction ofthe estimated 320-space parking facility, shall not exceed $12,250 per space plus 12.5% for soft costs (inclusive of any Prevailing Wage requirements and all site development costs, permit and concurrency fees), subject to annual CPI escalations; and WHEREAS, on July 30, 2003, following a duly noticed Public Hearing, the Development Agreement was approved by the City Commission on first reading; and WHEREAS, the Administration would herein recommend that the Mayor and City Commission approve the attached Development Agreement, in substantial form, subject to and contingent upon the parties' respective bond counsel's review of said Agreement and the Ground Lease Agreement. 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 in substantial form, as attached hereto, on second public reading, in accordance with the requirements of Sections 163.3220-163.3243, Florida Statutes, also referred to as the Florida Local Government Development Agreement Act, the attached Development Agreement between the City of Miami Beach and the New World Symphony, a Florida not-for-profit corporation, for the design, development and construction of the surface parking lots, bounded by 17tn Street to the north, North Lincoln Lane to the south, Washington Avenue to the east and Pennsylvania Avenue to the west, for construction of an approximately 50,000 square foot educational, performance, and internet broadcast facility with an exterior screen {"Soundspace"}, and an approximately 320-space {+/-} public parking garage facility; further approving said Development Agreement and the Ground Lease Agreement between the parties, subject to and contingent upon the parties' respective bond counsel's review of the Agreement, said review to be on an expedited basis. PASSED and ADOPTED this 10th day of September, 2003. '/J;f-~: #ALit?/ j/I((;- MAYOR A11C(t f!tL~ CITY LERK JMG:CMC:kob T:\Agenda\2003\spe03\NWS_DevAgreemenUes.doc _~~"f-'1"'<'ItP" APPROVED ASTO FORM & LANGUAGE . FOR EXECUTION ~ f1rJ/l CITY OF MIAMI BEACH COMMISSION ITEM SUMMARY m Condensed Title: A Resolution approving in substantial form, on second and final reading, the proposed Development Agreement between the City of Miami Beach and New World Symphony, a not-for-profit organization, for the development of the surface parking lot, bounded by 1 ih Street to the north, North Lincoln Lane to the south, Washington Avenue to the east and Pennsylvania Avenue to the west; further approving said Development Agreement subject to and contingent upon the parties' respective bond counsel review and approval of the Ground Lease Agreement. Issue: Concurrent with completion of the first phase of the 1ih Street Master Plan study (Master Plan) by Zyscovich, Inc., in October, 2001, the Administration has been in ne~otiations with the New World Symphony (NWS) regarding its proposed lease of a portion of the 1i Street Surface Parking Lot to accommodate its Soundspace design concept (the Project). In accordance with the provisions of Ordinance No. 92-2783 (Shapiro Ordinance), the lease of any City- owned property for a period of more than five years, including option years is subject a public hearing process, a planning analysis, a public bidding requirement and appraisal requirements. The Development Agreement was approved on first reading by a 6-t01 vote at a Public Hearing held on July 30,2003. This Resolution calls for approval of the Development Agreement on second and final reading. A separate Resolution calls for approval of a Lease Agreement between the City and the NWS and authorizes the City Commission to waive, b 5/7th vote, the com etitive biddin and a raisal re uirements. Item Summary/Recommendation: The Administration recommends approving, on second and final reading the proposed Development Agreement between the City of Miami Beach and New World Symphony. Adviso Board Recommendation: Cultural Arts Council - March 7, 2003 Lincoln Road Marketing Association - March 11, 2003 and July 8, 2003 Convention Center Advisory Board - April 29, 2003 Transportation and Parking Committee - May 13 and June 3, 2003 Land Use and Development Committee - July 14, 2003 Finance and Citywide Projects Committee - April 21, June 17 and July 16, 2003 Town Hall Meeting - July 29, 2003 Ci Commission Public Hearin - Jul 30, 2003 Financial Information: Amount to be expended: Source of Funds: D T:\AGENDA\2003ISept1 OlregularINWS_Agreement_sum 1. c AGENDA ITEM DATE ~-:;r q-O~7)3 CITY OF MIAMI BEACH CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH. FLORIDA 33139 www.ci.miami-beach.fl.us To: From: Subject: COMMISSION MEMORANDUM Mayor David Dermer and Members of the City Commission Jorge M. Gonzalez J.. .~. City Manager . ~ , A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING IN SUBSTANTIAL FORM, AS ATTACHED HERETO, ON SECOND PUBLIC READING, IN ACCORDANCE WITH THE REQUIREMENTS OF SECTIONS 163.3220- 163.3243 FLORIDA STATUTES, ALSO REFERRED TO AS THE FLORIDA LOCAL GOVERNMENT DEVELOPMENT AGREEMENT ACT, A DEVELOPMENT AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND THE NEW WORLD SYMPHONY, A NOT-FOR-PROFIT FLORIDA CORPORATION, FOR THE DESIGN, DEVELOPMENT AND CONSTRUCTION OF THE SURFACE PARKING LOTS, BOUNDED BY 17TH STREET TO THE NORTH, NORTH LINCOLN LANE TO THE SOUTH, WASHINGTON AVENUE TO THE EAST AND PENNSYLVANIA AVENUE TO THE WEST, FOR CONSTRUCTION OF AN APPROXIMATELY 50,000 SQUARE FOOT EDUCATIONAL, PERFORMANCE AND INTERNET BROADCAST FACILITY WITH AN EXTERIOR SCREEN ("SOUNDSPACE"), AND AN APPROXIMATELY 320-SPACE (+/-) PUBLIC PARKING GARAGE FACILITY; FURTHER APPROVING SAID DEVELOPMENT AGREEMENT SUBJECT TO AND CONTINGENT UPON THE PARTIES' RESPECTIVE BOND COUNSEL'S REVIEW OF THE AGREEMENT AND THE GROUND LEASE AGREEMENT BETWEEN THE PARTIES, SAID REVIEW TO BE ON AN EXPEDITED BASIS. Date: September 10, 2003 ADMINISTRATION RECOMMENDATION Adopt the Resolution ANALYSIS Concurrent with completion of the first phase of the 17th Street Master Plan study (Master Plan) by Zyscovich, Inc., in October, 2001, the Administration has been in negotiations with the New World Symphony (NWS) regarding its proposed lease of a portion of the 17th Street Surface Parking Lot to accommodate its Soundspace design concept (the Project). As envisioned, the proposed 50,000 square foot facility will provide state-of-the-art communication and media capabilities with a 700-seat (+/-) performance space, classroom/educational, rehearsal and broadcast space. In addition to providing a world- renowned, state-of-the-art facility, another focal point for the community, and the basis for considering the facility's location on this site, is that it will incorporate giant video screen(s) on one or more facades of the building, allowing the public to view live and recorded broadcasts from around the world. The Master Plan contemplates situating the facility on the west surface lot, just to the north of the existing NWS Theater on Lincoln Road. On March 11, 2003, the NWS announced its hiring of world renowned architect, Frank Gehry September 10, 2003 City Commission Memorandum NWS - Development Agreement Page 2 of 6 of Gehry Partners, to design the Project. Frank Gehry will lead a consulting team that will also include Zyscovich Architects, Nagata Acoustics, Theatre Project Consultants and Donnell Consultants. On January 8, 2003, the Administration referred an item to the Finance and Citywide Projects to specifically address several issues, including but not limited to, the lay-out and design of the proposed facility; the consideration for the ground lease; the amount of the City's contribution towards the design and construction of the parking structure to partially serve the facility's needs; the timing for the construction of replacement parking that will be displaced by the project (City Hall expansion lot); and the configuration and use of the east surface lot. On April 21, 2003, the Administration presented a summary of preliminary terms to the Finance and Citywide Projects Committee, which has served as a basis for negotiations towards a Development and Lease Agreement. At the time, certain key issues identified above were addressed as follows: . Desiqn: the lay-out and design of the proposed facility has not been finalized pending Frank Gehry's review of the site and presentation of optimal siting alternatives. To this end, It should be noted that Gehry Partners will conduct a design workshop at a specially scheduled meeting of the City Commission to present preliminary design options. . Rental: the consideration for the ground lease was discussed and the NWS proposes non-monetary contributions comprised of direct economic benefits, with an estimated value of approximately $5.7 Million consisting of the following: . Educational contributions - $250,000 . Free public presentations - $280,000 . Smart Card discount program for residents - $4.9 Million . Programming of the projection screens - $200,000 . Free concert for the City - $50,000 Additional indirect economic impacts, include job creation, cultural economic benefits and visitor attraction and spending, in lieu of rental payments. · Bridqe Tender House: NWS' design team will explore options for relocating the Bridge Tender House from its present location in front of the Wolfsonion Building to a location near or on the development site. NWS will also pay for two full-time positions to staff the facility at an estimated value of $70,000 to $80,000, inclusive of benefits. · Parkinq Cost: the amount of the City's contribution towards the design and construction of the parking structure to serve the facility's needs, in whole or in part, was discussed and the concept of the City capping its contribution at a fixed total cost and NWS assuming responsibility for any overage due to design or construction risk was supported; · Construction Sequencinq: the timing for the construction of replacement parking that will be displaced by the project (City Hall expansion lot) was also discussed and the Administration purported that negotiations contemplated replacement parking being built prior to any displacement on the surface lots; and · Adiacent Lot: the configuration and use of the east surface lot was also discussed September 10, 2003 City Commission Memorandum NWS - Development Agreement Page 30'6 and members ofthe public expressed concern regarding displacing ancillary parking that serves the 300 and 400 block of Lincoln Road. The Committee passed a motion expressing their support for the proposed project and directing Administration to proceed with their efforts of securing a lease with the New World Symphony at a rental rate of one dollar a year plus the in kind economic impacts the City will receive by the completion of said project for a long term lease, contingent on the following: all displaced parking being replaced and additional parking lots/garages being built to accommodate increased parking necessities; the City will operate all new garages as part of the City of Miami Beach Parking Program; and, review by the Transportation and Parking Committee, and the Land Use and Development Committee. Concurrent with the negotiations, the NWS has and continues with its outreach initiative, scheduling meetings with various Citywide committees to advise on the Symphony's expansion plans and to obtain community input. On July 29, 2003 a town hall meeting was held at the Lincoln Theater where the Project was well received. On June 17, 2003, the Administration provided the Finance and Citywide Projects Committee with an updated term sheet, at which time the cost of parking remained to be negotiated, and it was reported that the intent was to have a Development Agreement drafted in time for the first reading at the Public Hearing which was held during the July 30, 2003 Commission meeting. Commissioner Smith recommended that the Agreement contain a "drop-dead date" provision, requiring that in the event the Project fails to proceed within a specified time frame from the date the NWS takes possession of the site, the site reverts back to the City. In addition, the NWS should provide evidence annually of its ongoing financial capacity to operate and maintain the Project. Additionally, the Committee asked for the following items: an update concept plan/sketch ofthe proposed facility and adjacent parking, incorporating the modified parking plan forthe east lot with an enhanced pedestrian linkage and greenway between 1 th Street and Lincoln Road, a design reflecting compatibility with the area scale and architecture, further community outreach with the area hotels and Lincoln Road businesses/property owners, and an operating pro-forma for Soundspace. From a parking capacity perspective, the NWS in conjunction with City staff, prepared a parking capacity overview that provided a review of the existing conditions, projected future parking capacity and construction sequencing. The following chart summarizes the most current expectations revising the projected number of spaces at the 17th Street surface lots and reducing the number of projected spaces at City Hall Expansion Garage due to the potential Intermodal Component. The chart does not project the future development of the P-Lot. September 10, 2003 City Commission Memorandum NWS - Development Agreement Page 4 0'6 Parking Lots Existing Number Proposed Number Proposed Number Spaces Spaces (low end) Spaces lhiah end\ 17'" Street 508 320 400 Surface Lots City Hall 152 450 600 Expansion Garaae Total 660 770 1,000 Less: 660 660 Existina spaces: Net Gain of spaces: 110 340 At the City Commission meeting on July 2,2003, during the setting of the aforementioned Public Hearing, the Commission voted to expand the area scope of the Development Agreement, to encompass both surface lots, thereby providing Frank Gehry, the project architect and designer, a greater degree of flexibility in the design and layout of Soundspace, the parking facility, the green space and other aspects of the proposed Project. Since this time, the Administration has been working with the NWS to finalize the Development and Lease Agreements, addressing the following issues: . Pursuant to an analysis of comparable parking structures, the City has determined that its maximum contribution associated with the construction of NWS' estimated 320-space parking facility, shall not exceed $12,250 per space plus 12.5% for soft costs (inclusive of any Prevailing Wage requirements and all site development costs, permit and concurrency fees), subject to annual CPI escalations. NWS will pay for any incremental costs associated with Garage design and construction, thereby mitigating the City's construction risk. If ground floor commercial accessory use/retail space is required, the parties agree to meet and negotiate respective responsibilities. . On the July 2 Commission Agenda, there was a referral item to the Planning Board concerning a proposed amendment to the "CCC" Development Regulations to allow for waiver of Development Regulations for parking so no encumbrance of Garage is required. The legislative intent is that all parking displaced by the Project shall be replaced and required parking will be provided. Consideration for this waiver will be NWS' funding for public parking costs in excess of the City's cap. The Planning Board meeting was held on July 29, 2003, where the proposed amendment was not approved. The item was subsequently brought to the City Commission on July 30, 2003, for the first of two public hearings. The Commission voted to open and continue the first hearing to September 10,2003. On August 26, 2003, the Planning Board did not reach discussion on this item. The actual waiver will be considered at a subsequent meeting. . In accordance with the provisions of Ordinance No. 92-2783 (Shapiro Ordinance), the lease of any City-owned property for a period of more than five years, including option years is subject a public hearing process, a planning analysis, a public September 10, 2003 City Commission Memorandum NWS - Development Agreement Page 5 of 6 bidding requirement and appraisal requirements. The Development Agreement was approved on first reading at a Public Hearing held on July 30, 2003. This Resolution calls for approval of the Development Agreement on second and final reading. A separate Resolution calls for approval of a Lease Agreement between the City and the NWS and authorizes the City Commission to waive, by 5/71h vote, the competitive bidding and appraisal requirements. . In order for the NWS' plans to proceed, the City must proceed with the construction of the City Hall expansion garage. To this end, on July 30, 2003, the City Commission authorized an amendment to the existing Agreement between URS Corporation-Southern and the City of Miami Beach to provide program management services for the design and construction of a multi-purpose municipal garage facility to be constructed in the parking lot adjacent to City Hall, in an amount not to exceed $1,003,882. CIP is also placing an item on the September 10 Commission Agenda, requesting authorization to proceed with an RFQ for programming and design aspects of the parking facility. To the extent that the City Hall Expansion Garage is not completed by May 1,2007, NWS has requested the ability to proceed with the construction of its Project. . Section 3.2(b) of the Agreement defines the minimum level of investment by the NWS relative to the hard construction costs of the Project as $40 Million, inclusive of furnishings, fixtures and equipment. It should noted that during the Public Hearing on July 30, pertaining to the first reading of the Development Agreement, certain members of the public insisted that the NWS should consider locating its project on the surface parking lot located on the west side of the Theater of the Performing Arts. Bernard Zyscovich informed the Commission that this alternative site was not viable for a number of reasons including: . Logistically, it would not work for the New World Symphony as instruments and other equipment would have to be transported between the Lincoln Theater and the new facility. The NWS requires Sound Space to be adjacent to Lincoln Theater. . From an urban perspective it would not work, as one of the main objectives is to create a linkage between the Convention Center and Lincoln Road. Putting Sound Space on the TOPA lot would not achieve this objective. . From an architectural standpoint, Frank Gehry would not be interested in pursuing project that would be constrained between the Convention Center's loading area and the back wall of TOPA. A letter has since been received from Frank Gehry, which further elaborates on the constraints of the alternate site. A copy of this letter will be submitted under separate cover. The City Commission voted six-to-one to approve the Development Agreement on first reading. Since the Ground Lease and Development Agreements have undergone extensive negotiation and numerous revisions up until the submission deadline for this Commission Agenda, it should be noted that the Agreements are being submitted in substantial form, September 10, 2003 City Commission Memorandum NWS - Development Agreement Page 6 of 6 pending final review and approval by the respective parties' bond counsels. This includes a compliance review of the Parking Revenue and Convention Development Tax (CDT) Bond provisions, of which a portion of the proceeds were used to fund the construction of the surface lots. CONCLUSION The Term Sheet summarizing the terms of the Development Agreement is attached to this memorandum as well as an updated economic impact statement. The Administration recommends approval of the Development Agreement in substantial form, as attached hereto, on Second and Final Reading; further approving this Development Agreement subject to and contingent upon the parties' respective bond counsel review and approval of the Agreement. JMG/~:KO~ T:\AGENDAI2D03IsepI1 DlregularINWS_AgrremenLmem.doc Attachment EXHIBIT C Sounds pace Impact Statement Revised August 2003 The creation and operation of Soundspace will provide significant benefits to the City of Miami Beach and its citizens. As described below, the returns to Miami Beach, in terms of revenues, jobs, publicity, education, culture, and business opportunities will far outweigh its investment in land, additional parking and, should it be realized, the costs of creating and operating a surrounding park. Soundspace will also provide the New World Symphony with unique opportunities to expand its educational and cultural activities to benefit every citizen of Miami Beach. The most significant of these opportunities include: Soundspace Smart Card Corresponding with the opening of Soundspace, the link with residents of Miami Beach and the cultural community will be a "Smart Card". Working together, the City of Miami Beach and NWS will create a redemption and distribution system for these cards. All cardholders will have frequent, discounted access to selected Soundspace presentations and other Miami Beach cultural venues. The Smart Card program will be publicized prominently in the opening season of Soundspace in hopes that it would become a new and efficient way to promote and track increased attendance for NWS and other Miami Beach cultural organizations. NWS currently presents, and will continue to present over 16 free concerts and 36 paid- admission concerts annually. Soundspace will allow NWS to expand its offerings to the public, including the development of a series of short presentations, ranging from 15 to 20 minutes to as long as an hour, that will combine local live music making with electronic transmissions from all major music centers in this country and around the world. Internet2 also makes it possible to broadcast musical events from other parts of the world that would not necessarily use NWS fellows and coaches. Assuming each presentation could be repeated eight times per weekend over ten weekends of the season, this totals 80 new events in the inaugural season of Soundspace. NWS might charge $5 per adult admission to these presentations, but they would be free to Smart Card holders, providing Miami Beach residents up to $280,000 in value annually. Each Smart Card will also hold $50 of value that can be applied for discounts to select ticketed Soundspace offerings. Given the current population, this puts $4.9 million directly into the hands of Miami Beach residents. NWS will work with the appropriate City of Miami Beach departments to incorporate similar discounts to other select cultural organizations to enhance the value of the Smart Card for a citywide marketing effort with trackable annual performance measures. NWS in the Schools NWS currently offers mentoring opportunities to students in Miami Beach schools with programs such as the Music Mentor Program, In-School Performances and Instrumental Coaching Sessions. Area elementary and middle schools often host In-School Performances while NWS fellows frequently coach students at Miami Beach Senior High. The use of Internet2 by NWS in master classes and concert settings provides students with greater accessibility to artists and composers around the world. In preparation for the opening of Soundspace, NWS proposes to meet with representatives of every Miami Beach school to develop customized educational programs for the benefit of their students. Using the worldwide reach of Internet2, Soundspace will provide Miami Beach students with greater access to artists and teachers from around the world. Skill- based instrumental training, broader work in the social context of artistic activity, and exposure to cutting edge technology will stimulate the imaginations of each and every student in the Miami Beach school system. These activities will take place in Soundspace as well as in the individual schools. The commitment of NWS resources for these programs will exceed $250,000 annually. Video Programming for Park NWS is prepared to provide regular video programming for the park throughout the year. This programming will take many formats, from broadcasting entire NWS concerts and portions of concerts, to special events and other creative video presentations. Programming for the park will also feature other cultural organizations, local to international, and can include anything from dance to film to other forms of musical and visual art presentation. The commitment of NWS resources for this programming will be at least $200,000 annually. The City of Miami Beach will work with NWS to develop specific seasonal events programming by other Miami Beach cultural organizations, at their expense, particularly for the summer season, whether or not such programming actually includes NWS. Concerts for the City With the opening of Soundspace, NWS would be pleased to provide at least one full orchestra concert annually for the direct benefit of the City of Miami Beach. Whether this takes the form of a holiday concert for Miami Beach residents, a special concert for City employees, or is part of a major joint promotional and/or fund raising event for Miami Beach's cultural arts program(s), the possibilities are endless. Based on fees NWS commands for performances while on tour, each such concert is worth at least $50,000 to the City. Bridge Tender House As currently envisioned, the Bridge Tender House is to serve as a central place for the public to obtain information about, and/or purchase tickets to events being held by Miami Beach-based cultural organizations. NWS' architect will explore options for locating the Bridge Tender House on or near the development site. Regardless of the selected location, NWS will provide the necessary professional staff to operate the Bridge Tender House during regular opening hours, to be mutually decided upon with the City. NWS will work with the City and other cultural organizations to identify a corps of volunteers that could serve as additional support staff. Assuming the Bridge Tender House is open from noon to midnight seven says a week, two full-time positions would be valued at $70,000 to $80,000 annually, inclusive of benefits. All other operating expenses of the Bridge Tender House - utilities, maintenance, insurance, etc. - will remain the City's responsibility. Leveraging NWS Investment in its Technology Infrastructure There are multiple opportunities for the City to utilize NWS' planned technology infrastructure in ways that would directly benefit the City and its employees. These opportunities could include: . Using Soundspace as a venue for City employees to participate in remote seminars or other professional development sessions at least two to four times annually without the payment of any rental fee (direct out-of-pocket costs incurred in connection with such uses shall be paid by the City). An example of this might be having the City's Fire and Police Departments participate in training courses provided by the federal Department of Homeland Security without the City having to incur the expense of sending personnel to another city. Another example would be providing broader participation to City employees at conferences around the country, again without the cost of travel, hotels and per diem for each person. These opportunities will be subject to the scheduling needs of NWS. Since these are opportunities that must be explored, their value cannot be quantified at the present time. . Using Soundspace as an enhancement to the Convention Center and incorporating it into the Convention Center's marketing materials as appropriate. Clients desiring or requiring sophisticated Internet and video capabilities will have the opportunity to rent Soundspace. This will increase opportunities for the Convention Center to attract more business that either might go elsewhere, or require significantly higher costs for equipment rental. The value to the city can be measured in terms of additional convention business. . Upgrading the City's IT infrastructure capacity at far less than market value. NWS could make available to the City the extremely high bandwidth capacity planned for Soundspace. This capacity will be measured in multi-gigabits, possibly at the OC12 or higher level. This will provide an opportunity for the City to link its IT system to the Internet via NWS' connection. While there would still be investment by the City for its own equipment and making the connections to NWS, the bandwidth costs will be a fraction of what they otherwise would be if the City were to purchase the same capacity on its own. At current costs, this capacity is easily valued in excess of $100,000 annually. Soundspace will also provide other direct and indirect benefits to the City of Miami Beach. These include: Economic Impact . NWS will invest a minimum of $40 million in the construction of Soundspace. The construction phase will generate additional jobs and income for the local community. NWS will partner with the City of Miami Beach to explore, develop, purchase, and maintain appropriate RIMS II Multipliers from the US Department of Commerce, Bureau of Economic Analysis in order to calculate the annual impact this project will have on the local economy. . Using published multiplier statistics for estimating economic value based on local spending, NWS' current operating expenditures of $7.3 million supports close to 300 full-time equivalent jobs in the Miami-Dade County region generating personal income of nearly $7 million, and over $300,000 in direct local government revenue each year. Much of this impact accrues directly to Miami Beach. Once constructed, Soundspace will increase NWS' operating budget by close to $2 million annually, creating over 75 new jobs and nearly $2 million in personal income for Miami-Dade and increasing government revenues proportionately. These figures do not include the impact of audience ancillary spending, which is discussed below. . NWS already brings over 20,000 visitors to Miami Beach each year to experience live concerts. While a certain amount of concert activity will shift from the Lincoln Theatre to Soundspace, overall concert activity will increase. NWS expects the new facility to have a positive affect on concert attendance, by drawing more local residents and an increased number of visitors. To be designed by a world-renowned architect, the facility itself will become a destination for many people. . According to the "2001 Profile of Visitors to Greater Miami and the Beaches," published by the Greater Miami Convention and Visitors Bureau, South Beach ranks as the #1 destination for all visitors to South Florida. Using statistics published by the GMCVB, a modest increase of 10,000 visitors could generate in excess of $2 million in additional visitor spending on lodging, meals, transportation, entertainment and shopping per year, more than half of which would likely be spent directly on Miami Beach. . American's for the Arts June 2002 publication "Arts & Economic Prosperity" identified cultural tourists as being far more lucrative to local markets than traditional tourists - they spend nearly 40% more, are more inclined to use hotels and stay longer, and are more likely to shop. Using these figures, the 10,000 additional visitors cited above could generate significantly more additional visitor spending than as calculated using GMCVB statistics. . The national American's for the Arts study cited above was based on in-depth market research in 91 communities nationwide, including Miami-Dade County. According to the Miami-Dade County Cultural Affairs Council, the 128 Miami-Dade based, non-profit cultural organizations generate economic activity - including the value of voluntary services and capital expenditures - of $2.69 for each dollar they spend. Using this multiplier, Soundspace should generate nearly $100 million in economic activity during its construction and first year of operation and over $5 million annually thereafter. . While recognizing that Miami Beach is already a well-established tourist destination, it is instructive to note that the activities ofthe Guggenheim Museum in Bilbao generated a four-fold increase in direct tourist expenditures, area GDP and jobs for the Basque Country in 1997, the year the facility opened, and this increased level of economic impact has been sustained each succeeding year. Bilbao has now become a major tourist destination. Given the number of visitors to South Florida and the percentage that cite South Beach as their #1 destination, even a modest increase in the number of visitors to South Florida will provide substantial and direct benefits to the economy of Miami Beach. It is not difficult to argue that South Beach will see its share of domestic and international visitors increase substantially more than cited above once a signature building is constructed. . If a park is constructed to surround a Soundspace fitted with a giant exterior screen, the local economy will receive a further boost, as park activities and screen broadcasts will draw more and more people to the northern edge of the Art Deco District, directly benefiting the merchants and restaurants in the Lincoln Road area. Publicity The work of an internationally recognized architect designing a signature building should generate articles in the top 50 American and the top 100 international daily newspapers, as well as coverage by all major feature, news, travel, and lifestyle magazines. With each national and international article about Soundspace, Miami Beach will increase its market penetration. This coverage will begin with the announcement ofthe architect and continue for at least a decade after completion of the building. Press coverage for new music presentation formats will be equally powerful with major musical figures joining New World fellows and guest artists through Internet2 transmissions. Examples of cultural marketing enhancing city and/or regional tourism include the Philadelphia Art Museum, MassMOCA, Boston Museum of Fine Art, and the Guggenheim Museum in Bilbao, Spain. Culture Existing and new Miami Beach arts organizations will have the opportunity to use Soundspace, thereby expanding and enriching their cultural activities. The Lincoln Theatre will also become a more accessible venue for other arts organizations, contributing to the City's reputation as a major arts-friendly community. By shifting certain concert activity to Soundspace, NWS will free up prime dates within the calendar for use by other arts organizations. NWS regularly limits or turns away dozens of organizations each year, from the Miami Symphony Orchestra, the Miami Film Festival and the Florida Philharmonic, to many independent organizations, who at present cannot get some or all of the dates they want due to NWS activities. NWS would be pleased to work with the City of Miami Beach to offer reduced rental rates at the Lincoln Theatre for small or emerging arts organizations as part of the City's cultural facilities management program. Business The City of Miami Beach and the Convention Center will have access to Soundspace for an agreed number of events per year. No other city government or convention center will have access to media as powerful as Internet2. NWS, the City, the Convention Center, and the Greater Miami Convention & Visitors Bureau can work together to market the destination bringing leaders in all fields to selected events in the Soundspace facility. Convention related events could be staged each year to promote the Center to potential clients and/or add value to the conventions that choose Miami Beach. The first use allows the Convention Center to increase its visibility without the cost of staff travel. The second addresses the ever increasing demand for high speed, high quality communications, branding the Miami Beach Convention Center one of the most unique in America. NWS will collaborate with the City of Miami Beach, Convention Center, and the Greater Miami Convention & Visitors Bureau to create a strategic business plan to incorporate Soundspace into future convention proposals. Summary NWS will invest at least $40 million in the building and development of Soundspace, and increase its operating budget by an estimated $2 million annually. Rapid improvement in technology will require steady high-cost capital and operating investment. Standard economic analysis demonstrates that the impact these investments will have on the local economy will be significant. This commitment of resources by a cultural institution is unprecedented in Miami Beach. If NWS is to make the most of this opportunity going forward, we need the City of Miami Beach to be a full contributing partner. The returns to Miami Beach, in terms of revenues, jobs, publicity, education, culture, and business opportunities will far outweigh its investment in land, additional parking and, should it be realized, the costs of creating and operating a surrounding park. - I I I I I I I I - - I - - - I I I I >- _2 ~fi J~ :e JC::J ~...I en ~Ci! 0- q== ~ "S;:Z ~W_ ...2 LL ATTACHMENT 4- OPERATING PROFORMA ~~~~ 0000 0 008000 0 0 0 C) 8 00 08 0 8 C) 00 0 0 5~0~ c5 0 c:igc:ic:ic:i c;j c;j C) 0 o alOO a a "J"J .... .... o. ~ ..- ,.... ... .... ~ N N ..... 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C?, N N ~ N CID iO' - iii ~ - ~ Z W :E ~ Q Z W TERM SHEET Revised September 3, 2003 Owner/Landlord: City of Miami Beach Developer/Tenant: New World Symphony (NWS) Developer NE (Designers): Frank Gehry (collaborating w/Bernard Zyscovich) Key Man Clause has been included (Section 26.20 of Development Agreement) Developers Corporate Status: 501 (c)(3) Development Site: the two (2) surface parking lots, bounded by 1 yth street to the north, North Lincoln Lane to the south, Washington Avenue to the east and Pennsylvania Avenue to the west, defined as "Development Site" and collectively includes: "Land", "Garage Property" and "Adjacent Property". . "Land" is defined as land and air rights under Ground Lease for Soundspace project. . "Garage Property" is the land under the public garage facility within the Project. . "Adjacent Property" is the undeveloped portion of the site adjacent to the Land and Garage Property. . "Premises" is collectively the Land and Tenant Improvements. . "Landlord's Improvements" are defined as Garage. Infrastructure Improvements and City Hall Parking Expansion collectively. . "Project" is defined as Developer's Improvements and the Garage. Project Site: Defined as Land and Garage Property. Legal Descriptions: Actual legal description(s) for Soundspace and Public Garage ("Project") to be finalized upon approval of Project Design. (Recitals of Development and Lease Agreement). Project Description: . Approximately 50,000 sf. footprint for "Soundspace", an approximately 700 seat educational, performance & internet broadcast facility with an exterior screen ("Tenant Improvements"). (Programming of screen addressed in Section 6.5 of Lease) . Approximately 320f: space parking garage facility ("Garage Property"). . Designers will look aggressively at ability to add additional floor of parking in an effort to mitigate any net loss of parking in surface lots. (Section 2.2 of Dev. Agrmt.) . Designers will provide Project Concept Plan(s) looking at optimal siting alternatives within the Development Site, utilizing its best efforts to (i) minimize any net loss of public parking within the Development Site, (ii) enhance pedestrian linkages between 1ih Street and Lincoln Road, and (iii) optimize compatibility with existing area scale and architecture. (Section 2.2 of Dev. Agrmt.) Project Cost/Responsibilities: Soundspace: Minimum Hard cost contribution of $40 million inclusive of F, F & E - NWS to design and construct on ground lease w/City. (Section 3.2.6 of Dev. Agrmt.) Parking: City will fund $12,250/per space plus 12.5% for soft costs (inclusive of any Prevailing Wage Requirements and all site development costs, permit and concurrency fees), subject to annual CPI escalations, (annual CPI capped at 5% after May 30, 2007, if building permit has not yet been obtained), as maximum contribution from City of Miami Beach for an estimated 320 spaces (with potential to maximize number of spaces). NWS will design and construct/CMB to own/operate as public municipal garage. NWS will pay for any incremental costs associated with Garage construction and design, thereby mitigating construction risk. (Section 23.2 of Development Agreement) Parking Operations: City will own and operate garage at City set rates. Commercial Accessory Use: A stand alone garage with frontage on street may require that 1 sl floor frontage is occupied by commercial accessory use Le. retail, etc. Parties agree to evaluate optimal frontage uses when preliminary plans and specs are finalized and apportion the parties' responsibilities to build to the extent the frontage is not incorporated into the project. (Section 6.1 of Dev. Agrmt.) Development Agreement Term: Not to exceed 10 years from commencement date, and may be mutually extended by parties. (Section 26.19 of Dev. Agrmt.) Ground Lease Term: 55 years from completion; four 10 year renewal options (Article 2 of Lease Agreement) Parking Requirements: City will propose amendment to CCC Development Regulations to allow for. waiver of Development Regulations for parking so no encumbrance of Garage is required. (Note: The Legislative intent is that all parking shall be replaced and required parking will be provided.) Consideration for waiver will be NWS' funding for public parking costs in excess of City cap. (Not included in either Agreement) Construction Sequencing Commencement: - Replacement parking must be built before displacement of either parking lot for construction of garage. The City Hall Expansion Garage, must be built and completed, or an alternate acceptable replacement parking location(s) must be identified, prior to NWS's commencement of Garage and Developer Improvements. However, if the City Hall Expansion Garage is not substantially complete by May 30, 2007, NWS may proceed with possession/construction of the Developer Improvements, conditioned on the NWS having obtained a building permit and having issued a notice to proceed to its Contractor, and the City would agree to identify an alternate acceptable replacement parking locations (for instance, by segregating spaces within the P-Iot. (Section 23.1.3 of Dev. Agrmt.) Construction Staging: Construction staging for the Project will be confined to the Project site and construction workers will park at off site location, thereby not impacting current users in 17th Street Garage or adjacent lots. (Section 5.5 of Dev. Agrmt.) Art in Public Places (AIPP): Public Space in Soundspace: Underground Utilities: Construction/Perm itti ng: Commencement Date: Preliminary Master Plan: Project Concept Plan: Project Design: Preliminary Plans and Specs: Plans and Specs: Building Permit: Possession Date: Construction Completion: Base Rent: As the proposed Project constitutes private use on public land, the AIPP 1%% will apply to NWS project construction cost (per proposed revisions to Ordinance). However, as provided in the AIPP Ordinance, NWS may seek a waiver of all or a portion of the required appropriation from the City Commission. (Section 5.1 of Development Agreement) NWS agrees to create a public component to the facility which educates the public on its use and provides the public with a visitor attraction even when the facility is not being utilized or a performance is not programmed. (Section 5.1 of Development Agreement) Developer will relocate any underground utilities on the Development site, if necessary. Parties agree to design and construct certain "Infrastructure Improvements" such as streetscape, etc. to be mutually agreed upon by the parties. (Section 23.1.2 of Development Agreement) Execution Date of Agreement Attached to Dev. Agreement as Exhibit D NWS will submit alternative Project Concept Plan no later than February 10, 2004 to be reviewed by Planning Board and approved by City Commission; (Section 2.2 of Development Agreement) Approved alternative project concept plan to be approved the later of 12 months from Planning Board recommendation or October 1, 2005. (Section 2.2 of Development Agreement) To be submitted within 16 months of approval of Project Design for DRB approval. (Section 2.3 of Development Agreement) To be submitted 14 months from DRB approval. (Section 2.4 of Development Agreement) One year from DRB approval but in any event no later than 7 years from Commencement Date (Section 4.3 of Lease and Section 2.4 of Development Agreement) City commences operation of City Hall Expansion Garage or May 30, 2007, whichever is earlier. (Section 2.5(d) of Development Agreement) No later than 10 years from Commencement Date, subject to unavoidable delays. "Completion Deadline" as defined in Development Agreement. $1/year. (Section 3.2 of Lease Agreement) , ' Public Benefits: Real Estate Taxes: Bond/Finance Requirements: Change in Use: Prohibited Uses: Environmental Matters: NWS commits to provide the attached public benefits (Exhibit "C" to Lease Agreement) In the event Ad Valorem taxes are assessed, NWS will be obligated to pay as to Tenant Improvements but not as to Land (Section 3.3 of the Lease Agreement) Subject lots were improved utilizing County/City funding (TECCA; Convention Center and Parking Revenue Bonds). The proposed project is private use, and there is no adverse impact on the. bond covenants and the tax exempt status of the bonds as there is no payment for use of the land. (Section 3.5 of Lease Agreement) If NWS ceases to operate Soundspace for the purposes contemplated under the Development Agreement and Ground Lease, or moves its principal place of business and operation from the City, an acceptable substitute public use will be mutually agreed upon by the parties or the facility will automatically revert to City, for public purpose use. (Article 6 of Lease Agreement) NWS shall in no way use the facility for any purpose/use that would impair status/integrity of this and other public funds initially used to improve the lots. (Section 6.4 of Lease Agreement) Any such change in use will be treated as a default under the Ground Lease. (Article 22 of Lease Agreement) Property is leased "as is" and NWS is responsible for any required environmental remediation within their respective portion of the project site. Notwithstanding anything to the contrary contained herein, the NWS shall have the right to terminate the agreement prior to the Possession Date and to terminate the Development Agreement and the Ground Lease prior to the Possession Date because the costs of remediation are, in the reasonable business judgment of the NWS, render the Project economically unfeasible. City will pay for remediation costs in connection with the garage property if parties cannot agree on respective remediation costs, then the Concurrency/Traffic Analysis: Right of First Refusal: Right to Mortgage: Sale, Assignment, Transfer & Subletting: Performance Rentals: Covenant to fund Operations: Agreement can terminate. (Article 31 of Lease Agreement) NWS will be obligated to perform a traffic analysis and mitigate and meet all concurrency requirements. Notwithstanding anything to the contrary contained herein, the NWS shall have the right to terminate the agreement prior to the Possession Date and to terminate the Development Agreement and the Ground Lease prior to the Possession Date, because the Project cannot meet concurrency requirements or the costs of concurrency mitigation are, in the reasonable business judgment of the NWS, render the Project economically unfeasible. (Section 2.6 of Development Agreement) City has the right of first refusal to purchase NWS's interest in the Premises. (To be inserted in Lease Agreement) NWS may mortgage its leasehold interest but cannot encumber City's fee simple interest. (Article 11 of Lease Agreement) No sale, assignment or transfer will be permitted, other than a foreclosure transfer. Subleases permitted only consistent with permitted uses and not permitted without prior written approval of City. (Article 10 of Lease Agreement) Facility may be rented for performances or events by other organizations/corporations without prior written consent of City. ("Sublease(s)" Definition in Lease Agreement) NWS will provide evidence annually of its ongoing financial capacity to operate and maintain Soundspace. NWS must also provide an annual budget prior to the beginning of each fiscal year with a rolling five year projection and an Annual Review by an independent financial professional, acceptable to City. NWS will provide an annual certified audited financial statement. (Proforma attached) (Section 6.3 of Lease Agreement) Performance Bond: F:\cmg"$AllICHRISTlNINWS TERM SHEET 9-3.2003.doc Prior to commencement of construction, NWS shall cause G.C. to furnish City with payment and performance bond or Letter of Credit. (Section 2.4(f) & 2.4(g) of Development Agreement) CITY OF MIAMI BEACH Office of the City Manager Letter to Commission No. &d7.... nnn.~ ~ To: Mayor David Dermer and Members of the City Commission Date: September 8, 2003 From: Jorge M. Gonzalez ';.- (~---1 City Manager ! _ ' I ' Subject: NEW WORLD SYMPHONY - ALTERNATE SITE - FRANK GEHRY LETTER In connection with items R7F and R7G on the September 10, 2003 City Commission Agenda relative to the New World Symphony, attached please find a letter from Gehry Partners, LLP regarding the Alternative Site also known as TOPA Lot. The letter summarizes Frank Gehry's findings and the limitations imposed by the alternate site. If you have any questions, please contact me. JMG\eMC\rar F:\cmgr\$All\L TC-03\NWS GehryLetters.CMC.rar.doc c: Christina M. Cuervo, Assistant City Manager David Kelsey Supplemental Information - 9/10/03 City Commission Agenda Agenda Item Date Rlf" -I It:1G ')""'/0-05 Gehry Partners, LLP Frank Gehry Jim Glymph Randy Jefferson Terry Bell Edwin Chan G C'orge l-o'lel1.gcr Marc S.lette Craig We"b September 5, 2003 Howard Herring President and CEO New World Symphony 541 Uncoln Road Miami Beach, FL 33139 Via E-mail howardh@nws.org Dear Howard, After careful consideration of the documents I received under the David Kelsey cover letter, I must tell you that limitations of the alternate site make it unacceptable for the following reasons: 1. The visual Impact of a structure sited within the Master Plan area is powerful. The building and surrounding developments will be visible from Uncoln Road, Washington Avenue, 17th Street, and the Convention Center. In contrast, the alternate site hides Soundspace from Washington Avenue and Lincoln Road. 2. The alternate site forces Soundspace between two buildings, restricting the number of facades, a needless limitation given the several areas we are considering on the Master Plan site. 3. On the alternate site, access to the bullding would be constrained, an especially important fact in light of your desire to make the structure an integral part of the Miami Beach experience for residents and visitors. 4. There should be a rational nexus between Soundspace and Lincoln Road. The program for Soundspace calls for audiences to move directly from Lincoln Road to Soundspace performances. Such an impulse decision demands proximity. Likewise, we want the audience to spill onto Lincoln Road after performances. Such a natural flow of foot traffic demands near proximity. 5. There is a functional correlation between Sounds pace and the Lincoln Theatre. As I understand the program, the Lincoln Theatre will still be in daily use for rehearsals. Movement of musicians and instruments across a major thoroughfare to the alternate site makes little sense when the Master Plan site has only Lincoln Lane as a minor barrier. 50undspace is intended to be an extension of the New World Symphony campus. A similar consideration is the size of Soundspace as it is defined. At the further distance of the alternate site, the building will likely be forced to accommodate program functions currently housed in the Lincoln Theatre. Increased size will mean increased construction cost. 6. The screen on the side of Sounds pace will be an Integral part of the architecture as well as a focal point for the public space surrounding the building. On the alternate site, such a grand public statement is impossible because there is no outdoor public viewing area. :2541 Beatrice Street. Los Angeles, California 90066 Tel: 310.482.3000 Fa.: 310.482.3006 OR BK 22639 PG 2528 LAST PAGE Gehry Partners, LLP 7. We recognize that parking is a major issue in Miami Beach as it is in all urban areas. I have reviewed the Master Plan and find that It addresses the future parking needs of the City. My experience tells me that the fears about parking indicated by the alternate site material are unwarranted. As you know from our past conversations, I can only undertake a small fraction of the projects proposed to me. I chose Soundspace because it is building that will influence the future of music, support the Important work of the New World Symphony, and have a lasting impact on the City of Miami Beach. You and the City of Miami Beach are about to make a major investment In the project. You should give it every chance for success. That begins by giving me the latitude to select a building site as the Master Plan allows, not in a restricted area proposed in the alternate plan. 12541 Beatrice Street. Los Angeles, California 90066 Tel: 310.482.3000 fax: 310.482.3006