Resolution 2021-31800 RESOLUTION NO. 2021-31800
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING THE CITY
MANAGER TO EXECUTE AMENDMENT NO. 1 TO THE LEASE AGREEMENT
DATED MAY 25, 2018 BETWEEN THE CITY(LANDLORD) AND THE COLONY
THEATER CAFE, INC. (TENANT), FOR THE USE OF APPROXIMATELY 1,371
SQUARE FEET OF CITY-OWNED PROPERTY, LOCATED AT 1040 LINCOLN
ROAD; SAID AMENDMENT APPROVING THE FIRST THREE (3) YEAR
RENEWAL OF THE LEASE, AND PROVIDING RENT RELIEF FOR THE
PERIOD FROM JANUARY 1,2021 THROUGH FEBRUARY 28,2024, IN ORDER
TO ADDRESS THE FINANCIAL IMPACT THAT THE COVID 19 PANDEMIC HAS
HAD ON TENANT'S OPERATIONS.
WHEREAS, on May 25, 2018, pursuant to Resolution No. 2017-29834, the City executed
a new lease agreement ("Lease") with the Colony Theater Café, Inc., a Florida corporation,
("Tenant"), for an initial term of three (3) years commencing retroactively on March 1, 2018 and
ending February 28, 2021, with two (2) additional three (3) year renewal terms; and
WHEREAS, the initial term expired on February 28, 2021; and
WHEREAS, the City and Tenant entered into a month to month agreement, commencing
on March 1, 2021 and ending on July 30, 2021; and
WHEREAS, prior to expiration of the initial term, the Tenant expressed an interest to
exercise the first renewal term for a period of three (3) years, with modifications to the financial
terms, siting concerns over meeting the rent requirements; and
WHEREAS,the initial base rental rate under the lease was$200.55 per square foot(PSF),
with a 2% annual increase throughout the term; and
WHEREAS, in addition to the Base Rent payment, the Tenant is subject to an annual
percentage of gross receipts payment equal to 7% of total gross receipts for the Lease Year; and
WHEREAS, Tenant has argued that Lincoln Road has been in a downward trend since
2018 and the COVID-19 pandemic has exponentially impacted foot-traffic and sales, as
evidenced by the increased vacancies along Lincoln Road; and
WHEREAS, Tenant has requested rent relief from the period from January 1, 2021
through February 28, 2024("Rent Relief Period"), abating Tenant's obligation to pay a Base Rent,
insurance, real estate taxes, use fee for the Dumpster/Storage Area, and the annual PG payment;
and replacing said obligations with a monthly PG payment equal eight percent (8%) of the total
monthly gross receipts; and
WHEREAS, in the event that the City, in the City Manager's sole discretion, approves the
second renewal term, prior to the expiration of the first renewal term, the City will review the state
of the market and determine the financial terms for the final renewal term; however, should Tenant
not be in agreement with the financial terms established by the City, Tenant shall have the option
of rejecting the approval of the final renewal term; and
WHEREAS, based upon the foregoing, the City Manager recommends that the Mayor and
City Commission approve Amendment No. 1 to the Agreement, in the form attached to the City
Commission Memorandum accompanying this Resolution as Exhibit "1"; said Amendment
approving the first renewal term and modifying the financial terms during the Rent Relief Period.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby approve and authorize the City Manager and City Clerk to execute
Amendment No.1 to the Lease Agreement dated May 25, 2018 between the City("Landlord")and
the Colony Theater Cafe, Inc. ("Tenant") for the,use of approximately 1,371 square feet of City-
owned property, located at 1040 Lincoln Road; said Amendment approving the first three (3)year
renewal term of the Lease and providing rent relief for the period from January 1, 2021 through
February 28, 2024, in order to address the financial impact that the COVID 19 pandemic has had
on Tenant's operations.
PASSED and ADOPTED THIS 2.S day of h�y 2021.
ATTEST:
Dan Gelber, Mayor
Rafael E. Granado,/a./
tClerk �'B„
ti
INCORPgORATED.`
",T,1 . ', ^g
H.:-)d
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
CY. "7—
City Attorney 4!„ Date
Resolutions - R7 W
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Aline T. Hudak, City Manager
DATE: July 28, 2021
SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA,APPROVING AND AUTHORIZING THE CITY
MANAGER TO EXECUTE AMENDMENT NO. 1 TO THE LEASE
AGREEMENT DATED MAY 25, 2018 BETWEEN THE CITY (LANDLORD)
AND THE COLONY THEATER CAFE, INC. (TENANT), FOR THE USE OF
APPROXIMATELY 1,371 SQUARE FEET OF CITY-OWNED PROPERTY,
LOCATED AT 1040 LINCOLN ROAD; SAID AMENDMENT APPROVING THE
FIRST THREE (3) YEAR RENEWAL OF THE LEASE, AND PROVIDING
RENT RELIEF FOR THE PERIOD FROM JANUARY 1, 2021 THROUGH
FEBRUARY 28, 2024, IN ORDER TO ADDRESS THE FINANCIAL IMPACT
THAT THE COVID 19 PANDEMIC HAS HAD ON TENANT'S OPERATIONS.
SUPPORTING SURVEY DATA
n/a
Applicable Area
South Beach
Is this a"Residents Right Does this item utilize G.O.
to Know" item. pursuant to Bond Funds?
City Code Section 2-14?
No No
Strategic Connection
Prosperity- Revitalize targeted areas and increase investment.
Legislative Tracking
Property Management
Sponsor
Commissioner Michael Gongora
ATTACHMENTS:
Page 1748 of 2012
Description
❑ Memorandum
❑ Resolution
o Exhibit"1"
Page 1749 of 2012
MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Honorable Mayor Dan Geber and Members of the City Commission
FROM: Alina T. Hudak, City Manager
DATE: July 28, 2021
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING
THE CITY MANAGER TO EXECUTE AMENDMENT NO. 1 TO THE
LEASE AGREEMENT DATED MAY 25, 2018 BETWEEN THE CITY
(LANDLORD) AND THE COLONY THEATER CAFE, INC. (TENANT),
FOR THE USE OF APPROXIMATELY 1,371 SQUARE FEET OF CITY-
OWNED PROPERTY, LOCATED AT 1040 LINCOLN ROAD; SAID
AMENDMENT APPROVING THE FIRST THREE (3) YEAR RENEWAL
OF THE LEASE AND PROVIDING RENT RELIEF FOR THE PERIOD
FROM JANUARY 1, 2021 THROUGH FEBRUARY 28, 2024, IN ORDER
TO ADDRESS THE FINANCIAL IMPACT THAT THE COVID 19
PANDEMIC HAS HAD ON TENANT'S OPERATIONS.
RECOMMENDATION
The Administration recommends approving the Resolution.
BACKGROUND
On January 28th, 2009, the Mayor and City Commission adopted Resolution No. 2009-26994
approving a lease agreement between the City and Colony Theater Café, Inc. d/b/a Segafredo
(Tenant), for a 1,371 square feet City-owned facility known as the Colony Theater Café. The
initial lease term was for a period of three (3) years, commencing November 1, 2008 and ending
October 31, 2011, with two (2), three (3) year renewal terms. The lease was extended for both
renewal terms with the second and final renewal term expiring October 31, 2017.
Thereafter, the Tenant requested a new lease agreement with the City. The Administration
presented this matter at the December 16, 2016 Finance and Citywide Projects Committee
(FCWPC)meeting and the FCWPC recommended in favor of negotiating a new lease agreement
with Colony Theater Cafe.
Pursuant to Resolution No. 2017-29834 the City executed a new lease agreement with Tenant
on May 25, 2018 for an initial term of three (3)years with two (2)additional three(3)year renewal
terms commencing retroactively on March 1, 2018 and ending February 28, 2021. Subsequently,
the City and Tenant entered into a month to month agreement, commencing on March 1, 2021
and ending on July 30, 2021.
ANALYSIS
Prior to expiration of the Agreement,the Tenant expressed an interest to exercise the first renewal
term for a period of three(3)years,with modifications to the financial terms. Accordingly, the City
and Tenant entered into a month to month agreement,commencing on March 1, 2021 and ending
Page 1750 of 2012
Colony Theater Café-Lease Agreement
July 28, 2021
Page 2 of 4
on July 30, 2021. The Tenant has expressed concerns in meeting the current rent requirements
under the Agreement. The initial base rental rate was $200.55 per square foot (PSF) with a 2%
annual increase throughout the term. In addition to the base rent, the Tenant is subject to an
annual percentage of gross receipts payment equal to 7% of total gross receipts above their
annual base rent calculation.
Per the renewal option of the Agreement,the landlord conducted a property appraisal (April 2021),
which determined the market rent structure at this location to be$250.91 PSF. This number was
primarily derived from demand and existing leases for tenants currently opened and operating on
Lincoln Road. The table below indicates tenancy comparables utilized in the appraiser's valuation
analysis. It is important to note, these comparables are based on pre-existing leases and not
post pandemic leases.
LINCOLN ROAD LEASE COMPARABLES
Itg
a I
H J LL H
_ J tll + W
Property ! re F Ww i A z °t
NO. !Address j o I ? z i COMMENTS
S (Subject
Property
1 904 Lincoln Confidential' 2020 2,668 $130.00 i This is a five month lease of a pop-up
Road I space.This w as a gross lease,which w e
have adjusted downward by$20.00 per
square foot to reflect a triple net lease.
2 l616 Lincoln Confidential i 2019 j 1,800 $211.54 Net !The operating expenses at this property
jRoad f I were$38psf.
3 900 Lincoln Rd Confidential 2017 ! 4,544 $263.00 t Net The( operating expenses at this property
I {were$50 psf.
I {
4 920 Lincoln Confidential 2017 1,200 $320.00 Net i The operating expenses at this property
l paid I w ere$35 psf.This was a srra0 restaurant
!space.
5 1612 Lincoln Confidential2017 650 $330.00 Net ;This space has directfrontageon Lincoln
1Road
I � {
{
Low . 650 $130.00 {!{
High i 4,544 i $330.00
Average I 2,131 $250.91
Complied by Cushman&Wakefield Regional
The Tenant has argued that Lincoln Road has been in a downward trend since 2018 and the
COVID-19 pandemic has exponentially impacted foot-traffic and Tenant sales. Furthermore, this
is observed by the increased vacancies along Lincoln Road which thrives predominately on the
tourist markets. The Tenant feels they would need a percentage of gross receipts agreement for
six (6) years at eight (8%) percent of the total monthly gross receipts in order to weather the
impact and regrow its market base.
The Administration has taken into consideration the current state and past trends of Lincoln Road
and opined that a six-year percentage of gross sales agreement would be excessive. The future
stabilization and growth of Lincoln Road cannot be determined based on the recent impact of the
pandemic. Nevertheless, the Administration recognizes that the Tenant has been significantly
affected and would recommend exercising the first option of three years at a percent of gross
sales. Furthermore, in the event the City, in the City Manager's sole discretion, approves the third •
renewal term, the City (prior to this term expiring) will reevaluate the state of the market and the
trend of Lincoln Road to further determine if a restructure of the rents should be considered to the
third and final renewal of three years. At that time, the Tenant may reject the option if Tenant is
Page 1751 of 2012
Colony Theater Café-Lease Agreement
July 28, 2021
Page 3 of 4
unable to meet the required rent structure proposed by the City. Notwithstanding the foregoing
negotiations, the City, at the City Manager's sole discretion, may opt not to approve the second
renewal term.
The monthly rental terms of the current Lease are as follows:
• Base Rent-$18,987
• Property Taxes -$2,529
• Insurance- $85
• Dumpster Room -$638
o Total yearly rent of$264,000
• Per the current lease, Tenant is to pay seven percent (7%) of Tenant's
gross receipts for each contract year, less the total paid annual Base
Rent amount for such contract year. This represents approximately
$3.8M in yearly sales. However, Tenant has not reached this threshold
and the 7% has not been paid. Tenant is currently generating
approximately$1.5M in yearly sales.
For contract year 2020/21 the Tenant was unable to meet full rental obligations due to the COVID-
19 pandemic and the loss impact of tourism on Lincoln Road. Although the Tenant received rent
abatement of$188,961 from the City as part of the COVID-19 relief, the sales are not yet strong
enough to sustain the current rents under the Agreement. The Tenant has continued making
monthly payments in good faith in the amount of$5,000 monthly until the renewal negotiations
are completed.
This Amendment will include the following essential terms:
• The first renewal term will commence retroactively on March 1, 2021 and end on February
28, 2024
• The current rent structure stipulated above will be replaced with eight percent (8%) of
monthly gross receipts, retroactively commencing January 1, 2021.
o Tenant is projected to pay approximately$156,000/year in gross revenues or$156
PSF, reflecting a reduction of approximately$108,000/year in rent
o As Tenant's sales grow, so will Tenant's monthly rent
o Lincoln Road is currently holding an average of 55% to 60% occupancy
o The COVID-19 pandemic and Delta Variant continue to strain the tourism and retail
markets, with no indication this trend will improve over the next year or two
• Landlord will evaluate the market and determine new rent structure for third and final term
120 days prior to expiration
CONCLUSION
Based upon the foregoing, it is recommend that the Mayor and City Commission adopt the
Resolution approving and authorizing the Mayor and City Clerk to execute Amendment No. 1 to
the Agreement; said Amendment approving the first renewal term for a period of three years and
providing rent relief for the period from January 1, 2021 through February 28, 2024, in order to
address the financial impact that the COVID-19 pandemic has had on Tenant operations.
Attachments
Exhibit"I"—Amendment No. 1
Page 1752 of 2012
Colony Theater Café-Lease Agreement
July 28, 2021
Page 4 of 4
Resolution
Page 1753 of 2012
AMENDMENT NO. 1 TO LEASE
BETWEEN
THE CITY OF MIAMI BEACH
AND
COLONY THEATER CAFE, INC. D/B/A SEGAFREDO
This Amendment No. 1 (Amendment)to Lease Agreement, dated May 25, 2018 (Lease),
by and between the CITY OF MIAMI BEACH,a municipality existing under the laws of the
State of Florida, having its principal place of business at 1700 Convention Center Drive,
Miami Beach, Florida 33139 (Landlord), and COLONY THEATER CAFE, INC. a Florida
for profit company, d/b/a Segafredo Zanetti Espresso, having its principal place of
business at 1040 Lincoln Road, Miami Beach, FL 33139(Tenant), is entered into this
day of , 2021 (Effective Date):
RECITALS
WHEREAS, pursuant to Resolution No. 2017-29834 the City and Tenant executed
the Lease on May 25, 2018; and
WHEREAS,the initial term of said Lease was for three(3)years,commencing March
1, 2018 and ending February 28, 2021, with two (2)options of three(3)years each; and
WHEREAS, the initial term expired on February 28, 2021; and
WHEREAS, the City and Tenant entered into a month to month agreement,
commencing on March 1, 2021 and ending on July 30, 2021; and
WHEREAS, prior to expiration of the initial term, the Tenant expressed an interest
to exercise the first renewal term for a period of three (3)years, with modifications to the
financial terms, siting concerns in meeting the current rent requirements under the Lease
based upon the financial impact of the COVID-19 pandemic and the current economic
trend for Lincoln Road; and
WHEREAS, pursuant to the Lease, Tenant pays Base Rent with a 2% annual
increase throughout the term; use fee for the Dumpster Storage Area in the amount of
$637.50 per month; Operating Expenses (Real Estate Taxes and Insurance); and an
annual percentage of gross receipts (PG) rent payment of 7% of total gross receipts for
each Lease Year; and
WHEREAS, Tenant has requested rent relief for the period retroactively
commending January 1, 2021 and continuing throughout the first renewal term
commencing March 1, 2021 and ending on February 28, 2024("Rent Abatement Period")
during which period the Base Rent, use fee for Dumpster/Storage Area, Operating
Expenses, and the annual PG payment shall be abated and the PG payment shall be
modified to equal eight percent (8%) of gross receipts and payable on a monthly basis;
and
WHEREAS, in the event that the City, in the City Manager's sole discretion,
approves the second renewal term, the City, prior to the end of the first renewal term, will
review the state of the market and determine the financial terms of the Lease; however,
EXHIBIT
p.
age 1756 of 2012
should Tenant not be in agreement with the financial terms established by the City, Tenant
shall have the option of rejecting the approval of the final renewal; and
WHEREAS, on the Mayor and City Commission adopted Resolution
No. , approving Amendment No.1 to the Lease, approving the first renewal
of the Lease and approving rent relief during the Rent Relief Period, as more particularly
set forth herein.
NOW THEREFORE, in consideration of the mutual promises and conditions
contained herein, and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the Landlord and Tenant hereby agree to amend the Lease as
follows:
1. ABOVE RECITALS.
The above recitals are true and correct and are incorporated as part of this
Amendment.
2. MODIFICATIONS.
The Agreement is hereby amended (deleted items struck through and inserted
items underlined)as follows:
(a) During the period from January 1, 2021 to February 28, 2024 ("Rent Relief
Period"), the following additional Rent Payments shall be abated:
(1) Base Rent, as defined in Section 3.1
(2) Property Tax Payment, as defined in Section 3.2.1.2 and
(3) Insurance costs for the building, as defined in Section 3.2.1.3
(b) During the Rent Relief Period, Section 3.4 of the Lease shall be deleted in its
entirety and replaced with the following:
3.4 Percentage of Gross
3.4.1 Tenant shall pay the Landlord a monthly percentage of gross receipts
(PG)payment, in an amount equal to eight percent(8%)of gross receipts
for each month, due by the 15th day of the following month.
3.4.2 The term "gross receipts" is understood to mean all income received by
the Tenant from all sales made by Tenant of food, beverages and
merchandise, in on or from the Demised Premises, inclusive of the
receipts generated by the sidewalk café (less returns or refunds),
excluding amounts of any Federal,State or City sales tax, governmental
imposition,assessment, charge or expense of any kind, collected by the
Tenant from customers and required by law to be remitted to the taxing
or other governmental authority.
Notwithstanding the foregoing, "gross receipts" shall also not include
any of the following:
2
Page 1757 of 2012
(a) •ratuities to em•to ees •aid b Tenant's •atrons or customers
(even if included in the check to the patron or customer);
(b) food and beverages served to employees of Tenant at no cost;
(c) food and beverages provided by way of promotions or promo
check; or
(d) a walkout(i.e. a meal served but not paid for).
3.4.3 On or before the fifteenth (15th)of each month during the initial term, or
any approved renewal term, Tenant shall prepare and deliver to Landlord at
the place where rent is payable a copy of Tenant's Sales and Use Tax Return
(Form DR-15CS or DR15-EZ) filed with the Florida Department of Revenue
reporting Gross Sales made from the Demised Premises during the preceding
calendar quarter, which shall be broken down by month or such other
documentation approved by Landlord.
(1) A new Section 14.3(Inspector General Audit Rights)is hereby added to the Lease,
as follows:
14.3 Inspector General Audit Rights.
14.3.1 Pursuant to Section 2-256 of the Code of the City of Miami Beach,the City has
established the Office of the Inspector General which may, on a random basis,
perform reviews, audits, inspections and investigations on all City contracts,
throughout the duration of said contracts. This random audit is separate and
distinct from any other audit performed by or on behalf of the City.
14.3.2 The Office of the Inspector General is authorized to investigate City affairs and
empowered to review past, present and proposed City programs, accounts,
records, contracts and transactions. In addition, the Inspector General has the
power to subpoena witnesses, administer oaths, require the production of
witnesses and monitor City protects and programs. Monitoring of an existing
City project or program may include a report concerninq_whether the project is
on time, within budget and in conformance with the contract documents and
applicable law. The Inspector General shall have the power to audit,
investigate, monitor, oversee, inspect and review operations, activities,
performance and procurement process including but not limited to project
design, bid specifications, (bid/proposal)submittals. activities of the Tenant, its
officers, agents and employees, lobbyists, City staff and elected officials to
ensure compliance with the contract documents and to detect fraud and
corruption. Pursuant to Section 2-378 of the City Code, the City is allocating a
percentage of its overall annual contract expenditures to fund the activities and
operations of the Office of Inspector General.
14.3.3 Upon ten (10) days written notice to the Tenant, the Tenant shall make all
requested records and documents available to the Inspector General for
inspection and copying. The Inspector General is empowered to retain the
services of independent private sector auditors to audit, investigate, monitor,
oversee, inspect and review operations activities, performance and
procurement process including but not limited to project design, bid
specifications, (bid/proposal) submittals, activities of the Tenant its officers,
3
Page 1758 of 2012
agents and employees, lobbyists, City staff and elected officials to ensure
compliance with the contract documents and to detect fraud and corruption.
14.3.4 The Inspector General shall have the right to inspect and copy all documents
and records in the Tenant's possession, custody or control which in the
Inspector General's sole judgment, pertain to performance of the contract,
including, but not limited to original estimate files. change order estimate files,
worksheets, proposals and agreements from and with successful
subcontractors and suppliers,all project-related correspondence,memoranda,
instructions, financial documents, construction documents, (bid/proposal) and
contract documents, back-change documents, all documents and records
which involve cash, trade or volume discounts, insurance proceeds, rebates,
or dividends received, payroll and personnel records and supporting
documentation for the aforesaid documents and records.
14.3.5 The Tenant shall make available at its office at all reasonable times the
records, materials, and other evidence regarding the acquisition (bid
preparation) and performance of this Agreement, for examination, audit, or
reproduction, until three (3)years after final payment under this Agreement or
for any longer period required by statute or by other clauses of this Agreement.
In addition:
(a) If this Agreement is completely or partially terminated, the Tenant shall
make available records relating to the work terminated until three(3)years
after any resulting final termination settlement; and
(b) The Tenant shall make available records relating to appeals or to litigation
or the settlement of claims arising under or relating to this Agreement until
such appeals, litigation, or claims are finally resolved.
14.3.6 The provisions in this section shall apply to the Tenant, its officers, agents,
employees, subcontractors and suppliers. The Tenant shall incorporate the
provisions in this section in all subcontracts and all other agreements executed
by the Tenant in connection with the performance of this Agreement.
14.3.7 Nothing in this section shall impair any independent right to the City to conduct
audits or investigative activities. The provisions of this section are neither
intended nor shall they be construed to impose any liability on the City by the
Tenant or third parties.
RATIFICATION.
Except as amended herein, all other terms and conditions of the Lease shall
remain unchanged and in full force and effect. In the event there is a conflict
between the provisions of this Amendment and the Lease, the provisions of this
Amendment shall govern.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
4
Page 1759 of 2012
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their appropriate officials, as of the date first entered above.
FOR LANDLORD: CITY OF MIAMI BEACH
ATTEST:
By:
Rafael E.Granado, City Clerk Alina T. Hudak, City Manager
Date
FOR TENANT: COLONY THEATER CAFE, INC.
ATTEST:
By: •
Secretary President
Print Name Print Name
Date
5
Page 1760 of 2012