C6A -Report- Finance And Citywide Projects Committee Meeting On November 9 2012IBE
City of Miami Beach, 1700 Convention Center Drive, Miorni
COMMITTEE MEMORANDUM
TO: Mayor Matti H. Bower and Members of the City Commission
FROM, Interim City Manager Kathie G. Brooks f-.
DATE: December 12, 2012
SUBJECT: REPORT OF THE FINANCE AND CITYWIDE PROJECTS
COMMITTEE MEETING ON NOVEMBER 9, 2012
The agenda is as follows:
EMERGENCY ITEM
1. Discussion regarding a resolution authorizing: 1) an amendment to
the NSP 1 Agreement between the City and the State of Florida
Department of Economic Opportunity (DEO) and the related
Agreement between the City of Miami Beach Community
Development Corporation (MBCDC) to extend the expiration date of
both agreements to February 15, 2013; 2) to utilize unspent
administration funds in the amount of approximately $248,000 to
reduce the debt service at the Neptune Apartments in order to
reduce the rents, to modify the project budgets; and 3) to modify the
corresponding mortgages.
ACTION
To execute the aforementioned tasks, the Administration requests extensions to
both the City's Agreement with the State, and the City's Agreement with MBCDC
to reflect a new expiration date of February 15, 2013, and further recommends
that the Mayor and City Commission authorize 1.) Amendment No. 4 to the
Subgrant Agreement between the State of Florida DEC and the City modifying
the expiration date of the Subgrant Agreement from November 23, 2012 to
February 15, 2013; 2.) authorize Amendment No. 8 to the related NSP1 Agreement
between the City and MBCDC to extend the expiration date the NSP1 Agreement
from November 23, 2012 to February 15, 2013; 3.) further authorize the City
Manager or her designee to take such actions as may be required with regard to
preparing and having the Mayor and City Clerk execute modifications of
mortgages for the following NSP1 projects: The Neptune Apartments, and the
Lottie Apartments, to reflect the current budgeted amounts for each project, and
to show the allocation of unspent Administration funds towards the debt service
Agenda Item C
129
Date /d--t,J..~Il.
at the Neptune Apartments, increasing the project development allocation of the
NSP1 Program by approximately $248,000; and further authorize the Mayor and
the City Clerk to execute any documentation necessary to effectuate the
amendments to the agreements.
The Finance and Citywide Projects Committee (FCWPC) began with
Chairperson Deede Weithorn stating she wanted to add an emergency item so
that it can be taken to the Commission with a recommendation from the
Finance Committee. Commissioner Michael Gongora approved to add the
item.
Real Estate, Housing & Community Deve
presented the item. The State Department
contract with U.S. Housing and Urban
Stabilization Program (NSP) funding
Director Anna Parekh
ic Opportunity's (DEO)
nt (HUD) for Neighborhood
19, 2013. The City's
contract with the
on November 23,
h contracts be
the grant and
funding.
contract with the State DEO and
Miami Beach Development Co
2012. The State DEO has
extended through February 1
resolve the pending issue of the
Of the available $632, NSP1 ad
as of September 30,
$300,947.93. The
expending any NSP1 ad
when the current contract
State Ag
continue
units, a
$53,643.
from N
the City,
nds were
and did not anticipate
ber 23, 2012, which is
However, extending the
the Administration to
rent-ups of the sixty
ns. This will also free up
ars to pay for administrative expenses
15, 2013. Based on current
projected balance of unspent
15, 2013, will be approximately
ration has had extensive discussions with
regarding the eligible uses of the unspent
DEO has informed the City that the unexpended
d be loaned to MBCDC for either debt reduction on
, or to establish an operating reserves account for the
MBCDC has requested that the City utilize the unspent administrative funds to
provide assistance in covering its current construction budget gap in the
amount of $82,506, and/or that the City allocate the unspent administrative
funds to reduce its debt service on The Neptune Apartments.
While two of the three NSP1 projects were 100% NSP1-funded, The
Neptune's acquisition, closing costs, and rehabilitation required additional
funding sources. The purchase price of The Neptune was $5,657,850, which
met the NSP1 purchase requirement of 1% below appraised value. In order
to facilitate MBCDC's acquisition and anticipated rehabilitation costs, on May 12,
130
2010, the City Commission approved Resolution No. 2010-27390, authorizing
the following actions:
• Reallocation of NSP1 funds in the amount of $246,898.53 from The
Madeleine project to The Neptune;
•
•
•
Utilizing the second NSP1 allocation in the amount of $4,432,328.24;
Utilizing FY2009/10 US HUD HOME funds in the amount of $650,000;
Subordination of the City's first lien position to private bank financing
acquired by MBCDC in the amount of $700,000.
MBCDC's resulting annual debt service to
The Neptune is $53,613. As of November
$686,132.52. Rents are currently $558 for
50% or less of the Area Median lnco
month for residents earning 60% or
committed to DEO that half of the
very-low income residents
other half of the units could be
between 60 to 120% of the AMI).
stated rents as approved by U.S.
residents, however,
or inability to pay the
occupied.
Pursuant to
comparab
of Lin
al Finance Bank (IFB) on
2, the loan balance was
·ncome residents who earn
("AMI"); and $722 per
The City and MBCDC
ld be reserved for
the AMI), and the
(who earn
he above-
igible
xpressed an lingness
, only 26 of the 35 units are
pie Listing Service,
within walking distance
month. Other similar size
are not of comparable value.
DEO and conducting an analysis of
, the Administration recommends
cated towards The Neptune's debt
pt "affordable" pursuant to HUD and NSP1
capab1 of some low to moderate income residents.
debt service is reduced, a further reduction of rent can
rental units may be rented for $620 per month, instead
maximum rent of $722. This reduction in rent equals an
,224 per unit or $22,032 annual savings for all 18 units.
Commissioner Gongora asked for clarification in understanding why all 17 unit
prices do not change. Real Estate, Housing & Community Development
Director Anna Parekh stated when the City received the funds, they committed
to keeping 50% of the building for residence that are very low income which by
definition make 50% of the area's median income. Assistant City Manager Max
Sklar stated the City can also choose to go down $50 on each category of rent
instead of $100 on just the low income rent.
131
Commissioner Gongora made a motion to place the item on the November
Agenda and it was seconded by Chairperson Weithorn.To execute the
aforementioned tasks, that the Administration request extensions to both the
City's Agreement with the State, and the City's Agreement with MBCDC to
reflect a new expiration date of February 15, 2013, and further recommend that
the Mayor and City Commission authorize 1.) Amendment No. 4 to the
Subgrant Agreement between the State of Florida DEC and the City modifying
the expiration date of the Subgrant Agreement from November 23, 2012 to
February 15, 2013; 2.) authorizing Amendment No. 8 to the related NSP1
Agreement between the City and MBCDC to extend the expiration date the
NSP1 Agreement from November 23, 2012 to F 15, 2013; 3.) further
authorize the City Manager or her designee such actions as may be
required with regard to preparing and havi and City Clerk execute
modifications of mortgages for the foil projects: The Neptune
Apartments, and the Lottie Apartments, budgeted amounts
for each project, and to show the Administration funds
towards the debt service at the ng the project
development allocation of the $248,000; and
further authorize the Mayor execute
documentation necessary to
ng gram for South Pointe
arketing partnerships.
ed n moving forward with the naming
p to bring back more information on
product and to look into the
to restore, manage and enhance the Parks in
ic, for the enjoyment of present and future
Max Sklar presented this item.
As you are aware, the City has been involved in efforts to maximize its
strong brand presence by partnering with corporate entities in a manner
that generates good publicity and marketing for the City, while at the same
time generating revenue or providing savings to the City. The City's
municipal marketing (also known as "corporate sponsorship") consultant,
The Superlative Group (TSG), has identified priorities for their efforts, while
other activities have been identified to be pursued internally with the City's
Development Coordinator. The City's Development Coordinator serves as
the contract support staff for TSG.
132
Efforts have focused on identifying potential municipal marketing partners
and opportunities for partnership, and reaching out to these potential
partners to gauge interest. The current economic conditions have impacted
the marketing budgets for many large corporations with histories of
engaging in these types of partnerships; municipal marketing efforts are
funded principally from marketing budgets, as they serve the primary
purpose of promoting the corporation's brand and/or product. Not
surprisingly, corporate marketing budgets have been impacted and are
often the first affected when cost-cutting measures are initiated. While we
continued to pursue various efforts in municipal ng, as you know,
we made considerable progress in the area of ive/Official citywide
beverage partner, resulting in the te ive, non-alcoholic
beverage sponsorship with Coca-Cola
The terms
over 20
toward
negotiate
The Com
Committee
they initiated
with the
cash contribution
I contribution
recommended TSG
pany a return to the FCWPC.
,000 annually was not sufficient
support to offset the City's
company was subsequently
to the South of Fifth Neighborhoods
Beach United. Both organizations passed
elling public land for naming rights or using public
. SOFNA also stated the city should instead
On August TSG advised the City that Carnival Corp withdrew
their proposal and was no longer interested in pursuing naming rights for
South Pointe Park.
The Parks and Recreation Department has begun researching the option of
establishing a foundation or a conservancy that would be dedicated to
augmenting the funding sources now supporting the City's parks and
recreation system.
133
Assistant City Manager Max Sklar stated they will not move forward in the
intermediate with naming rights since there is no interest and introduced
the sunscreen product.
Licensed Sunscreen Product ("Official Miami Beach Sunscreen")
Since the July 26, 2012 FCWPC meeting, TSG has continued negotiations
for a licensed sunscreen product. TSG advised prospective proposers of
the City's interest in an Exclusive Sunscreen Partner and the availability of
opportunities from this partnership. In addition to information on volumes,
venues, current pricing, etc., TSG also advised the prospective proposers
of our interest in securing a partner that a minimum annual
guarantee, as well as a percentage of net sales to be credited
against the minimum guarantee. TSG a minimum ten-year
term for the partnership which is not onl with typical exclusive
partnerships, but also creates an i pective proposer -
as the selected partner will have extended time -
sufficient to amortize any capital lish the new
brand's presence in the market.
Proposed Terms:
Terms have been
Energizer (Banana
delineate the respo
Agreement.
is,
ponsorship fee ($150,000), 4%
ual sponsorship fee, marketing
of Miami Beach brand, and
Rescue. There have been no
City at this time.
Agreement with TSG, TSG is entitled to
reements (to include contract monitoring).
paid to TSG will be calculated once the payment
for the cash components of the agreement above.
types of partnerships, there are certain expectations
of the City's role. In addition to supporting the efforts of expanding the
sales of the products through our concession locations and in our venues-
something that is mutually beneficial -Banana BeaU Hawaiian Tropic
identified in their proposal certain areas of support that would be required
from the City. Other components include: recognition of the partnership as
the official sunscreen of Miami Beach; waiver of certain permit and
application fees for a limited number of special events and sampling events
on public property (mutually agreed upon); provision of tickets for events at
City venues to the sponsor for their use (as may be available); rounds of
134
golf (mutually agreed upon), recognition on all Ocean Rescue vehicles
(trucks, ATV's, jet skis) as an Official Product of Miami Beach Ocean
Rescue, as well as advertising in MB Magazine and at the City's Alton
Road Billboard.
Sponsor will have the opportunity to replace towels at beach concession
locations (at Sponsors cost), Opportunity to replace and/or provide
umbrellas at pool and tennis locations with Sponsor logo (at Sponsor cost),
Opportunity to provide towels to staff at City pool locations with Sponsor
logo (at Sponsor cost), Opportunity to replace Ocean Rescue stand up
paddle boards including Sponsor logo (at Sponsor
Commissioner Exposito stated that the
business with need to be contacted in
what's going on due to these potential
the services they are currently
figures of what the City would
there is a lot of information in the
to be reworded and the sunscreen
brought before the Commission.
the City currently does
decision to advise them of
an immediate impact on
to see some actual
orn stated that
able and needs
ed before it is
hey have pursuing
the direction City has
discussion. Miami Beach
nt to consider naming
not moving forward
s against. Chairperson
approach and likes the
options. A motion was made by
back to the next meeting with more
to not move forward with the naming
Gongora.
2. Discussion ing The Issuance of Request for Proposals (RFP)
for Catering nd Concession services for the Miami Beach
Convention Center
ACTION
The Committee recommended issuing the Request for Proposal (RFP) under
Option 2 that states the management agreement expires September 30, 2013
where a new RFP could be issued for Management and Catering/Concession
Services combined. In an effort to provide the City with maximum flexibility, the
Administration recommends allowing bidders to submit proposals for both or any
135
portion {Management or Catering/Concession Services) of the RFP.
Assistant City Manager Max Sklar gave a brief history of the item and stated that
the current Management Agreement for the Convention Center with Global Spectrum
expires September 30, 2013. There are currently two (2) convention center
management companies in the United States: Global Spectrum and SMG. Which for
eighteen (18) years (1990 -2008) SMG managed the Miami Beach Convention Center
for the City. In 2008 Global Spectrum was awarded the contract following a competitive
bid process and has managed the convention center since October 2008. The current
agreement between the City and Global Spectrum does not have any additional renewal
provisions.
It should also be noted that currently SMG has a
with Broward County for the Broward County Co
their agreement with Broward County expires
year renewal term at Broward County's
provision that restricts SMG from su
management agreement for the ope
(1 00) mile radius of Fort Lauderdale
agreed to by Broward County.
Assistant City Manager Max S
and beverage (catering and con
also need to issue an RFP for
have an agreement in prior to
restriction that
of a Request
determine if
contract. If both
the RFP. Howeve
management agreement
. The current term of
, with an additional 1 0
agreement includes a
into a similar
a one hundred
County or
to issue a new for food
is desired the City would
with sufficient time to
ht of the 100 mile radius
recommends issuance
the convention center to
:nr~,relc:t~fl in bidding on this
dministration recommends issuance of
interest the City Commission could
g with a lengthy RFP process.
September 30, 2013 a new RFP
I Concession Services combined. In an
urn flexibility, the Administration recommends
for both or any portion (Management OR
. Attached is a draft of an RFP for your
biggest change in the RFP was the Scope of Services.
Scopes of Services: The Management and Operations of
the Convention nd the Food and Beverage of the Convention Center.
Proposers can submit proposals for both or only one of the aforementioned Scope of
Services. The City has the right to separately award for each Scope of Services or
awards both Scope of Services to one proposer if it is deemed to be in the best interest
of the City. Separate evaluation criteria and processes are specified for each scope.
Chairperson Weithorn opened the floor for comments. John Page Chief Operating
Officer of Global Spectrum stated they have been pleased with the results they have
achieved over the last 4 years and that they were able to turn a profit last year. With
respect to the RFP options, there might be another consideration for an in house food
and beverage operation that Global Spectrum offers to others were Global Spectrum
136
hires staff that flows through the existing operations. It would be a standalone entity not
involved in the contractual negotiations with the City that would be interested in bidding.
Bobby Sanchez of Aramark stated the importance issuing the RFP immediately.
Commissioner Gongora made a motion to move forward with Option 2 and was
seconded by Chairperson Weithorn. Option 2 states the management agreement
expires September 30, 2013 where a new RFP could be issued for Management and
Catering/Concession Services combined. In an effort to provide the City with maximum
flexibility, the Administration recommends allowing bidders to submit proposals for both
or any portion (Management or Catering/Concession Services) of the RFP.
3. Discussion regarding disposition of s
ACTION
The Committee recommended bidd
minimum price and using an e-procu
it is to be brought before the Com
for the transaction.
Public Works Director Fred
tnit:io;alities with a
is donated,
get approval
City Manager or his/her
become unsuitable for
have the authority to
agency, or not-for-profit
r public if the donation serves a
best interest of the city, and the value
2010 which outlines the process for
an auction (Attachment A). It basically
arrive, the older ones are returned to Fleet
rement, contacts an auctioneer to facilitate
revenue for the City. Such was the case with an
held on September 29, 2012 which generated
The City Commissi a number of occasions voted to donate vehicles to other
governmental agen causes. Most recently in 2010, the Commission voted to
donate a surplus ambulance to Peru and two (2) others as part of the City's Haiti Relief
efforts.
As part of each fiscal year's budgeting process, a replacement list of vehicles and
equipment is prepared and included.
Once a number of vehicles are replaced, an auction is planned to generate revenue and
free up needed storage space. A vehicle/equipment auction involves completing a wide
range of tasks that starts weeks in advance of the actual auction day. Pre-auction
activities include: preparation of final list of vehicle/equipment to be auctioned; special
137
packaging/palletizing of surplus or obsolete parts and equipment; collection and
verification of all serial and equipment numbers; transportation of all inoperable or non-
road rated equipment to the auction site; and complete vehicle/equipment
decommissioning work which can be extensive:
• Removal of safety equipment from Police vehicles such as: light
bars, flashing lights, gun rack, prisoner partition, siren, security
device, gun rack, radio equipment, etc.
• Removal of rear plastic prisoner transport seat in police interceptors
• Re-installation of original manufacturer rear seat in Police
interceptors
• Re-connect horn in Police interceptors
• Removal of graphics from vehicles
• Removal of fuel management
• Removal of license plate
Additional resources are required with
Parking Department for vehicle storage
Miami Beach Auto Tag Agency for col
security purposes. There is also a meeting
to coordinate vehicle ide , auction
keys and titles in the auction
on buyer trucks
ination with the
for an auctioneer,
Department for
s day
all vehicle
le matches number on purchase
inventory" form for each vehicle or
Fixed Assets. The overall process is labor
with The Public Group, LLC to provide for an online
Equipment is posted on the company's website:
ng is performed in real time. Photographs as well as
a deadline for bids. Automatic auction extensions are built
into their Public P product. If a bid is placed within 3 minutes of the designate
end time, the end time will extend for an additional 3 minutes. This ensures a true
"auction" environment and guarantees that every vendor has the opportunity to place his
or her best bid. Detailed reports are also produced and provide an audit trail of each
bid. This process may prove more advantageous for specialty or emergency equipment
as well as odd items such as surplus obsolete parts.
In some instances, a piece of equipment is traded in during the acquisition of a
replacement.
The vendor provides a quoted price for the trade-in. The price quote is compared with
138
the values from on-line auction sites for the same equipment in like condition. If the
values are similar, the equipment is used as a trade-in. If the values are not comparable,
the auction company is consulted to determine the typical pricing that might be received
at a live auction. The best return on the original investment is targeted.
In the past, the City has gotten request for donations to acquire some of the City's
vehicles from other municipalities. Commissioner Exposito stated that the City is one of
the biggest benefactors of reciprocal agreements with other municipalities and that he
had discussed with the Chief of Police how to donate a vehicle to a smaller municipality
that always assist the City. Interim City Manager Kathie G. Brooks added that if it is
donated it should be taken to Commission for approval. mmissioner Exposito stated
they would want to limit this to the smaller municipa provide in kind services to
the City and Commissioner Weithorn added that should limit the number of
vehicles it wants to donate.
services.
municipalities
Commissioner
municipalities
using an e-p
ACTION
looking into the online
equipment. If other
not have to strip
disposing of a
be used as a
asked for
rst because it not clear.
offer the equipment with a
stated that perhaps some
the City with in kind
will reach out to
is to be auctioned.
be bid out to other
al Officer Walker stated they will be
everyone to see the bids making the
I e.
roving funding, in an amount not
the relocation of the kitchen exhaust
the Pennsylvania Avenue garage retail
:l'u"\n~:.r Avenue
The Committee adopting a resolution appropriating an amount not
to exceed $250,000 to provide the greatest amount of flexibility to remedy the
situation.
Real Estate, Housing & Community Director Anna Parekh presented the item.
Subsequent to the opening of the Cooper Avenue restaurant it has been determined that
there is odor in the alleyway between the garage and concert hall. While it is not known
if the odors do permeate the inside of the performance hall, the Administration is
exploring options for the relocation of the vents.
139
Therefore, on September 21, 2012 the Tenant's Architect, Design 3 Architecture,
(Architect) presented two options for redirecting the Tenant's exhaust in order of
feasibility, complexity and cost as follows:
Option 1 -Total Estimated Minimum Cost: $59,000
The most feasible, the least complex and most cost-effective approach provides for
maintaining the existing location of the exhaust fans on the cover slab over the garbage
room. This provides for a stable working platform by which to maintain and service the
fans and duct work. The ducting and exhaust vent lead the exterior of the building
facing the New World Symphony's loading dock, 90 degrees to the
north and discharge directly above the garage on 1 ih Street.
Option 2-Total Estimated Minimum Cost: $1
The most complex and costliest of the
of the anticipated operational disruption
involves the complete relocation and
south and then west to discharge over th
would also require the of an
storage enclosure, to relocate the
through the ducting.
(primarily in terms
involved},
, extending it
ue. This
panel
exhaust
2 as the only choice, as it
alley.
rection of the vents, the
original construction budget of the
that can be made available to proceed
2, the Administration recommended
amo not to exceed $250,000 to provide the
Admin
Manager
permitting an
this issue in the most feasible manner. The
the City Commission authorize the Interim City
with the Tenant to proceed with the design,
modifications, based on either Option 1 or 2.
ucting a peer review of Options 1 and 2 in order to
ability and effectiveness as well as verify and possibly
value-engineer the ates associated with each option. The analysis will also
explore other available solutions, if any, including, but not limited to, options for the New
World Symphony to consider, such as the installation of a commercial air curtain over its
loading dock door.
Commissioner Exposito stated that he is concerned with there being ongoing cost and
wants to make sure if its' done that it's done the right way to insure it's not a problem
that continues to persist in the future. Chairperson Weithorn stated it needs to be a
solution with the best way to disperse the exhaust and recommended a do not exceed
number for the engineers and experts to present a cost analysis so that it is fixed the
140
right way. Commissioner Exposito made a motion to allow the $250,000 and was
second by Commissioner Gongora.
5. Discussion regarding amending Ordinance No. 1605, The
unclassified Employees Salary Ordinances of the City of Miami
Beach, Florida (The "Ordinance"}, by amending the salary ranges
and establishing compensation provisions for the City Manager and
the Attorney; Discussion regarding creating a new subsection for
Pay Grade 26
ACTION
The Committee recommended sending the
both versions of the contract to include
compensation provision for the City
Commission with
not include it for the
City Attorney Jose Smith
Charter, the attached
for the City Manager and
the City
"compensation for the
nance. As similarly
, the "City Manager's
ordinance".
2002, the City Manager and the City
amended to provide a minimum
$198,100 for both positions.
v,-...... v3, salary Grade 26 for the City Manager and
that minimum and maximum salary ranges
'" ""''nrnission".
sets the base salary range between $162,916 to $263,126
and incentives to be determined.
Commissioner asked if the City's pay was in line with other
municipalities and requested data on making sure the incentives are proper.
Interim City Manager Kathie G. Brooks stated that it is not uncommon for some
City Managers to get term life, full medical and full health for their family as part
of their compensation package. City Attorney Smith will provide both versions of
the contract with and without Commission options. A motion was made by
Commissioner Gongora to send it back to the December meeting with both
versions of the contract and seconded by Commissioner Exposito.
141
6. Discussion regarding the issuance of RFP for Call Centers and
including a local preference so as to provide the highest level of
service possible
ACTION
The Administration recommends the issuance of the RFP for Call Center Services.
Chief Financial Officer Patricia Walker presented the item. That the City of Miami
Beach (the City) would like to solicit responses qualified firms to provide
Call Center services to various departments of of Miami Beach. The City
wishes to hire a company that provide a offsite call center to
receive calls for the Finance, Parking, E Center (EOC) and
other departments, as needed. This include all the necessary
resources required to achieve a low
It is anticipated that the s
contract with an initial term
additional two (2}, one-year ~vt~n<HI
the City for a term
to renew for an
scretion.
Chief Financial Officer
Wolfson pulled the item
also placed a discussion
Agenda which was referred
on to state that issioner
012 Commission Agenda and
12, 2012 Commission
Projects Committee. In a
subsequent he firm be required to be
that options might
the Local Preference
located in
be li
Ordin
RFP that
ACTION
cerns will existing language in the
firms to be located in the Miami
to move this item as is and it was
dment to the lease between the City
c. located at 767 17th Street, said
a proposed additional use of the leased
to grant necessary access to additional
a corresponding rent adjustment
The Committee asked that a standby letter of credit be issued for the
contractor's liens which have been filed. To determine a proportionate
share for use of the restroom and determine the appropriate CAM fees to
be charged and bring it back to the Finance and Citywide Committee with
the methodology used to calculate the fees.
Real Estate, Housing & Community Director Anna Parekh presented this item.
On September 15, 2010, the Mayor and City Commission passed Resolution
142
No. 2010-27488, approving a Lease Agreement between the City and Massage
Partners, Inc. ("Tenant") for the use of approximately 1802.89 square feet of
City-owned property, located at 1701 Meridian Avenue, Unit 2 (a/kla 767 171h
Street), Miami Beach, Florida (Leased Premises) as stated in Section 7 of the
Lease Agreement, the Leased Premises shall be used by the Tenant only for
the purpose(s) of providing therapeutic massage services, facials, and any other
products or services authorized pursuant to Tenant's Franchise Agreement with
Massage Envy Franchising, LLC ("the Franchisor"). Any additional uses shall
be subject to the prior written approval of the City Manager, in his sole and
reasonable discretion. Furthermore, pursuant to Subsection 8.C.2 of Tenant's
Franchise Agreement, the Tenant shall not offer , give away or otherwise
provide any services or products not authorized
The Tenant has requested permission
Leased Premises to include nail salon s
("Proposed Nail Salon Space") 1nr.:=1rRc
separated by partition walls from
provides massage services.
the nail salon customers.
Administration and the
also required by the
to obtain the applicable
itional restroom facilities located in
in order to comply with both
requirements of the City. The
the Lease to allow an additional use
ant the non-exclusive, revocable use of the
on the 2nd Floor of the 1701 Meridian
, su to reaching an agreement with the Tenant
as subject to the resolution of outstanding contractors'
itting issues.
After Koniver Stern Group, the brokerage firm which
in the lease transaction with the Tenant, the
Administration determined that compensation for the expanded use and
additional space requested by Tenant is in order. Tenant currently pays a
base rental rate of $27.60 per square foot for the Leased Premises, plus
operating/maintenance (CAM) expenses at $4.00 per square foot, and also
escrows funds for real estate taxes for the retail space monthly, at the
current rate of $7.78 per square foot, and insurance costs at a rate of .90 per
square foot. In order to determine the additional rent for use of the
restrooms on the second floor of 1701 Meridian Avenue, the cost may be
calculated based upon the size of the restrooms, which is 1 04 square feet for
143
the men's room and 144 square feet for the women's room. The combined
square footage of 248 square feet would be subject to base rent plus CAM,
but would not be subject to real estate taxes or insurance costs. Accordingly,
the rent for the expanded use and additional square footage would be $7,837
per year (248 sf x $31.60), payable in monthly installments of $653.
The Tenant performed extensive renovations to the space, and in
consideration of the Tenant's improvements, the City delayed rent
commencement for one year after Lease commencement. The Tenant
improvements were conducted by Tenant's contractors, one of whom filed
two Claims of Lien against the leasehold in $66,300.67 by the
Tenant. The City placed the Tenant on ult. The Tenant in turn
filed a Contest of Lien. The City, ection 15 of the Lease
Agreement, requested the Tenant to City with security in the
amount of $99,451.00 immediately the Claim of Lien. On
October 31, 2012, the contractor that negotiations
are ongoing with Massage Pa offered to pay
$40,000 of the $66,300.67. of this
memorandum, this issue not paid the
contractor and has not
Real Estate, Housing
recommending to autho
premises, non-exclusive
floor of the
stated they are
use of the demised
s located on the 2nd
,..,, ..,,g"'"" the rent per the
conferring with Koniver
the City in the lease
that the combined square footage of
rent plus CAM, but it should not
costs. Accordingly, the rent for
footage would be $7,837 per year
installments of $653. City Attorney Jose
have filed liens for work done on the
an action in circuit court in which the Tenant
If the lien has expired, an issue still exists on
between the contractor and tenant. Chairperson
ant should get a stand by letter of credit and determine a
proport1 use of the restroom to determine the appropriate CAM
use. Com requested it be brought back to the FCWP meeting
with a recom as to how to determine the fees. City Attorney Smith also
stated that the needs to speak to the Tenants insurance to make sure it
covers any individual in case of an accident
144