C4B-Ref- FCWPC - Request For Rent Relief From Penn 17 LLCMIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City C,,ommission
FROM: Kathie G. Brooks, Interim City Manage~A
DATE: December 12, 2012
SUBJECT: REFERRAL TO THE FINANCE AND CITYWIDE PROJECTS COMMITTEE, A
DISCUSSION TO CONSIDER A REQUEST FOR RENT RELIEF FROM PENN 17, LLC.,
REGARDING THE RETAIL SPACE AT THE PENSYLVANIA AVENUE PARKING
GARAGE
ADMINISTRATION RECOMMENDATION
Refer the item to the Finance and Citywide Projects Committee for discussion.
BACKGROUND
On April 13, 2011, the Mayor and City Commission passed Resolution No. 2011-27647, approving
a Lease Agreement, as amended on February 8, 2012, and June 6, 2012, respectively (the
Lease), having a term of nine (9) years and 364 days, between the City and Penn 17, LLC.
(Tenant), for use of approximately 7,655 square feet of ground level retail space at the
Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida, for a restaurant
(primary use), with ancillary uses for a bakery, a bar/cafe, and a book and gift shop.
On November 15,2012, the City issued a letter putting the Tenant on notice of certain compliance-
related issues, including non-payment of rent for the months of October and November. A copy of
this letter is included as Attachment A to this memorandum.
On November 21, 2012, the City received a resonse letter from Tenant's Legal Counsel, Jeffry
Ryner, a copy of which is included as Attachment B. According to letter, the Tenant is requesting
rent relief in connection with operational complications resulting from the failure of its air
conditioning system. The Tenant alleges that the current location of its air conditioning
compressors located between the first and second floor of the garage alongside the entrance ramp
is inadequate to support the size units required to cool a restaurant operation of the scale involved
in Cooper Avenue. The Tenant further alleges that this issue was not caught or addressed during
the permitting of the restaurant's plans and only became an issue once the restaurant became
operational. They say that the only solution to resolving what has become a crisis situation for the
Tenant, is to relocate all eight compressors to the roof of the garage. Initially, there was concern
that the only way to do this was to penetrate the slabs through to the roof in order to run the
condensate lines and other necessary conduit. The Architect has since determined that the
vertical opening between the two shear walls at the center of the garage have enough room to run
the air conditioning lines clear to the roof. It should further be noted that the compressors,
because of their size and weight, as well as spacing requirements, will occupy five roof-top parking
spaces.
Since resolving the air conditioning problem is critical to the restaurant's immediate operation, the
Administration has been working with the Tenant to facilitate the planning and permitting for the
Agenda Item C{{.8
52 Date J¢-~0-12
FCWPC Referral-Request from Penn 17, LLC., for additional rent relief
Commission Memorandum
December 12, 2012
Page 2 of 2
relocation of the compressors. However, the Tenant believes the City should be responsible for
sharing in the cost of relocating the compressors, as well as mitigating the impact to its business,
citing that the current location for the units was designated by the architect of the garage and
required as a location by the City during the permitting process.
The Administration and the City Attorney's Office's response to Attachment B is also included for
your reference as Attachment C. In the meantime, the Administration is requesting input from the
City's Finance and Citywide Projects Committee as to the Tenant's requests outlined in the letter.
CONCLUSION
The Administration recommends that the Mayor and the City Commission refer the matter to the
Finance and Citywide Projects Committee for discussion and further direction.
T:\AGENDA\2012\12-12-12\Referral to FCWPC Cooper Ave.doc
53
BE H
City of Miami Beach, 1700 Convention Center Drive, Miurni Boo~ h. florida 33139, www.miamibeachA.gov
REAL ESTATE, HOUSING & COMMUNITY DEVELOPMENT
lei: 673-7193-673-7033
BY CERTIFIED MAIL RETURN RECEIPT REQUESTED
November 15, 2012
Amir Ben Zion
Managing Member
Penn 17, LLC
1661 Pennsylvania Avenue, Suite 6
Miami Beach, FL 33139
Mr. Ben-Zion:
The purpose of this letter is to make you aware of a number of issues requiring immediate
attention concerning your Lease at the Pennsylvania Avenue Garage as follows:
1. Rent Payment -We have been informed by the Finance Department that the check you
on October 8, 2012, in amount of $60,259.99, in payment for October's rent has
returned by the a bank due to a stop-payment Additionally, we have not received a rent
payment for the month of November either. be aware that pursuant to Article 9.1 of the
failure to remit Rent when due, whether or not any notice or demand for payment has
been made by Landlord, you in default of the The Article further provides that
should fail to remedy such default within (5) days of Landlord's written notice, the
Landlord reserves its rights to pursue the remedies set forth in Section 9.2 of the Agreement
current amount outstanding, including penalties and charges are provided in the
following table.
October
November
Total Due:
Date Due Base Rent CAM
10/14/2012 $ 47,843.75 $ 8,474.00
11/14/2012 $47,843.75 s 8,474.00
$ 95,687.50 $ 16,948.00
Penalties {1) Addt'l Fees(:Z)
$ 3,660.65 $ 25.00
$ $
$ 3,660.65 $ 25.00
Sales Tax
$ 4,198.49
$ 3,942.24
$ 8,140.73
Note (l) -5% of past due amount(s) plus 1.5% of any amount past due by more than 15 days
Note (l) -Bonk fee for returned check
Total Due
s 64,201.89
$ 60,259.99
2. Expiration of your Temporary Certificate of Occupancy (TCO)-We have been notified by the
Department TCO #12276 that was issued on September 24, 2012 for your Lease
Premises expired on November 8, 2012. It is critical that you immediate action to apply for
an extension or risk being shut down.
54
Amir Ben Zion
Penn 17, LLC
November 15, 2012
Page 2 of 2
Additionally, while not as critical as first two issues, I would to take this opportunity to remind
you that certain deliverables also remain outstanding concerning the close-out of construction at
the Premises as follows:
3. Tenant's Construction Obligations -Section 5.2(j) of your requires that upon
"Substantial Completion" of Tenant's Work and approval of the Premises for use and occupancy
by the appropriate governmental authorities, the Tenant shall furnish the Landlord with the
following:
• a certificate of use and/or occupancy issued by the City and other evidence
satisfactory to Landlord that Tenant has obtained the governmental approvals
necessary to permit occupancy;
• a notarized affidavit from Tenant's contractor(s) that all amounts due for work
materials furnished in completing Tenant's work have been paid for;
• releases of lien from any subcontractor or material supplier that has given
Landlord a Notice to Owner pursuant to Florida Law see attached copy of
one such Notice issued by Atlantic Shutters, Inc); and
• as-built drawing of the Premises, with a list and description of all work performed
by the contractors, subcontractors and material suppliers.
4. Tenant's Construction Deposit-Section 5.2(n) of your Lease requires that Construction
Deposit, (as provided for in the Agreement included as Exhibit F to your Lease), shall
not be reduced to less than $50,000, until time that the Tenant's work has been
substantially completed, as determined by the Landlord, in its sole and reasonable discretion.
The Agreement further provides that such remaining Construction Deposit balance shall not be
released until the City issued a final Certificate Occupancy (CO), with proofthat all permits
have been closed, together with final lien waivers and contractor's affidavit reflecting that all
contractors, subcontractors, laborers and material men have been paid in full.
Since time is the essence, please remit payment of past due rent, penalties and additional
fees in the amount of as in the above table, and provide us with
responses to items 2 through 4 this letter, by no later than end of business on m~~~(L
In the event that the Landlord does not receive payment your
will refer this matter to the Legal Department for further action.
govern yourself accordingly.
Anna Parekh
Director
C: Kathie Brooks, Interim City Manager
Max Sklar, Acting Assistant City Manager
Raul Aguila, Assistant City Attorney
Kent 0. Bonde, Redevelopment Coordinator
Attachment
F:!$Aii\RHCD\Asset\PennsylvanJeAve Garage Lesses\Penn 17, LLC!Lelter of Notice Nov 15.doc
55
by the we
301 Arthur Godfrey Rd
Penthouse
Miami Beach Fl 33140
T 305.358.0050
F 305.358.0550
www.mitrani.com
Fort lauderdale Office
2400 N Commerce Pkwy
Suite 302
Weston FL 33326
A. Rynor
Ln:nor(i.vmitroni .com
MIT I RYNOR
ADAMSKY TOLAND
ATTORNEYS
November 21,2012
FACSIMILE and
305.673.7002
U.S. MAIL
Jorge Gomez
HM
Kathie G. Brooks
City Manager
City of Miami Beach
Asst. City Manager
jorgegomez(ij).miamibeachf1.gov
1700 Convention Center Dr.
Miami FL 33139
Max Sklar
Acting Asst. City Manager
maxsklar(~miamibeachfl.gov
The Zion Group-AVENUE RESTAURANT
Dear Ms. Books, Mr. Gomez and Mr. Sklar:
As you know, I represent The Ben Zion Group regarding
Restaurant adjacent to Lincoln Road.
Cooper A venue
The Ben Zion Group is an extremely successful and experienced restaurant/hotel
operator that has achieved well recognized success Miami and Miami Beach
for over ten years. The Town House Hotel, Bond restaurant, Gigi
restaurant, Bardot night club and South Street restaurant are a testament to the
Group's genius. The Group's restaurant design concepts embrace
functionality and are visually spectacular and complement their culinary artistry.
Unfortunately, opening of Cooper Avenue beginning on October 2012 has
been completely compromised due to very serious air conditioning problems.
We have out to the City of Miami Beach to facilitate solutions, whereby
the air conditioning units can be re-positioned in the Garage, so that they can
operate effectively. The issue is very time sensitive because large portions of the
restaurant experience 82 to 85 degree temperatures. Thus eliminates the ability of
the bakery to properly operate, compromises working conditions the
kitchen and creates an uncomfortable environment for the patrons who may never
56
City Manager's Office
City ofMiami Beach
Nov. 21, 2012
Page 2
MITRANI RY OR
ADAMSKY T LAND
ATTO E Y S
return. Instead of Restaurant focusing on the client experience, it is dealing
with customer service issues, high employee turnover and exhaustion. It is
axiomatic, that you never get a second chance to make a first impression. The
Group's professional team, despite their best efforts, cannot make sweating while
eating out, a pleasant experience.
Cooper A venue is fully invested in the success of the restaurant. The original
budget was $3.4 million, but $5 million was invested to build the restaurant
possible. During the due diligence period, Cooper A venue conducted several
meetings with the City Miami Beach. The City made it very clear that the air
conditioning units were required to be placed on the lower floor ramp and
specifically were not approved to be set on the roof, due to the City's design
restrictions. Today, although the City has agreed to fully cooperate and allow the
movement of conditioning units, the process is still moving slowly. As a
result, the same issues that were complained about in October are still present
today and have continued to substantially undermine the success of the
Restaurant. The air conditioning cannot handle more than a minimum of
customers and therefore the initial opening, instead of providing a foundation for
success has become an on-going saga of failure, through no fault of Cooper
Avenue.
Cooper A venue is trying very hard to survive, but the financial burden is being
placed entirely on its shoulders. Cooper A venue has been pouring significant
amounts of money into operating expenses to overcome the air conditioning
failure. We are also exploring the legal liability of all of our contractors. We are
requesting that the City work with Cooper A venue so that we can create a win-
win situation. Therefore, we request the following:
• The security deposit be applied to the October, November and
December rent. We are simply asking that the escrow deposit be
expedited to cover these three months of rent. As you know, these
funds are designated already to act as a credit at the end of the second
and third year.
• Beginning January, 2013 that Cooper Avenue provided a fifty
(50%) rent abatement for twelve (12) months. This will allow
City to participate in ameliorating some of the issues associated
with the air conditioning.
57
City Manager's Office
City of Miami Beach
Nov. 21,2012
Page 3
MITRANI RYN R
A AMSKY T LA
A TORNEYS
• The cost to move exhaust and air conditioning will shared by the
parties through good faith negotiations, and help facilitate a
resolution with the New World Symphony.
the length of the lease, the obvious upgrade the Restaurant provides to
Lincoln Road and favorable impression the Restaurant will make, once the air
conditioning is fixed, its survival benefits everyone.
This is a matter. Therefore we are requesting to be placed on
City of Miami Beach December commission meeting agenda.
Kindly respond to me by Wednesday November
hearing from you.
Very truly yours,
Jeffrey A. Rynor
Jeffrey A. Rynor
58
2012. I look forward to
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