R7A-Joint Execute Third Amendment To Lease Agreement w- Penn 17 LLCCOMMISSION ITEM SUMMARY
Condensed Title:
A Resolution approving and authorizing the Mayor and City Clerk to execute a Third Amendment to that certain Retail Lease
Agreement by and between the City of Miami Beach, the Miami Beach Redevelopment Agency (Collectively, Lessor), and
Penn 17, LLC (Lessee), dated September 16, 2011, involving the lease of approximately 7,655 square feet of ground floor
retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida; and, further approving,
following a duly noticed Public Hearing as required by Section 142-362 of the City of Miami Beach Code, an entertainment
component, which will be added as an additional use of the Leased Premises in conjunction with Tenant's re-opening and re-
branding of such Premises.
Key Intended Outcome Supported:
Increase resident satisfaction with the level of services and facilities.
Supporting Data (Surveys, Environmental Scan, etc.):
Approximately 40% of retail businesses surveyed, rank Miami Beach as one of the best places to do business and 61% of the
same group would recommend Miami Beach as a place to do business.
Issue:
I Shall the City Commission authorize the Administration to finalize for execution Amendment No. 3 to the Lease Agreement?
Item Summary/Recommendation:
The Administration recommends that this item be opened and continued.
The Tenant requested rent relief in connection with operational complications resulting from the alleged failure of its air
conditioning system. On December 20, 2012, and January 24, 2013, the Finance & Citywide Projects Committee (FCWPC)
considered proposed terms and conditions for restructuring the Tenant's rent payments. The FCWPC expressed support for
providing some level of relief to the Tenant, but not at the risk of turning the City's position upside down and subject to the
inclusion of specific release language absolving the City of any liability regarding Tenant's cost overruns and claims related to
loss of business. The FCWPC further recommended in favor of modifying the Lessee's rent schedule. Subsequently, the
Tenant provided a preliminary business plan which proposes that the restaurant, when re-opened by July 2013, will house
three individual concepts: an anchor restaurant facing 1 ih Street, involving the Tenant's relocation of its Bond Street
Restaurant; a celebrity chef late-night fast casual eatery in the center section of the space, and a lounge/bar in the existing bar
area (Lounge Bar).
On March 13, 2013, the Mayor and City Commission, in conjunction with the RDA, passed and adopted resolutions accepting
the FCWPC recommendation pertaining to a proposed Amendment No. 3 to the Lease, and recommending that, as part of
said amendment, the rent schedule be revised as illustrated on Exhibit "A" to this item's Commission Memorandum. Since the
new business concept contemplates including entertainment, which is not a permitted use in the CCC civic and convention
center district, the Commission and RDA further ratified the setting of a public hearing, as required under Section 142-362 of
the City Code to approve such use. The public hearing was scheduled for April 17, 2013.
While the Administration intended to proceed with the April 1 ih public hearing and the related presentation of a draft
Amendment No. 3 to the Lease, in light of pending non-compliance issues described in the Commission Memorandum,
it is recommended that the public hearing be opened and continued.
Adviso Board Recommendation:
Source of Funds: Amount
Financial Impact Summary:
RHCD Director Assistant c·
AP MAS
MIAMI BEACH 437
Account
AGENDA ITEM R' A
DATE 4-1 J-13
& MIAMI BEACH -
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and M
DATE: April 17, 2013 OPEN AND CONTINUE
SUBJECT: A RESOLUTION OF THE MA OR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, AP ROVING AND AUTHORIZING THE MAYOR AND
CITY CLERK TO EXECUTE A THIRD AMENDMENT TO THAT CERTAIN RETAIL
LEASE AGREEMENT BY AND BETWEEN THE CITY OF MIAMI BEACH, THE
MIAMI BEACH REDEVELOPMENT AGENCY {COLLECTIVELY, LESSOR), AND
PENN 17, LLC {LESSEE), DATED SEPTEMBER 16, 2011, INVOLVING THE LEASE
OF APPROXIMATELY 7,655 SQUARE FEET OF GROUND FLOOR RETAIL SPACE
AT THE PENNSYLVANIA AVENUE GARAGE, 1661 PENNSYLVANIA AVENUE,
MIAMI BEACH, FLORIDA; AND FURTHER APPROVING, FOLLOWING A DULY
NOTICED PUBLIC HEARING AS REQUIRED BY SECTION 142-362 OF THE CITY
OF MIAMI BEACH CODE, AN ENTERTAINMENT COMPONENT, WHICH WILL BE
ADDED AS AN ADDITIONAL USE OF THE LEASED PREMISES IN CONJUNCTION
WITH TENANT'S RE-OPENING AND RE-BRANDING OF SUCH PREMISES.
ADMINISTRATION RECOMMENDA!.!Q!i
The Administration recommends that this item be opened and continued.
BACKGROUND
On April 13, 2011, the Mayor and City Commission adopted Resolution No. 2011-27647,
approving a Lease Agreement (which was subsequently amended on February 8, 2012, and
again on June 6, 2012), having a term of nine (9) years and 364 days, between the City, the
RDA (collectively, the Lessor or Landlord) and Penn 17, LLC. (Lessee or 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 (Premises), for a restaurant (primary
use), with ancillary uses for a bakery, a bar/cafe, and a book and gift shop (the initial lease and
all amendments thereto are hereinafter referred to as the Lease). The Tenant opened Cooper
Avenue Restaurant on the Premises on September 24, 2012.
On November 15, 2012, the City put the Tenant on notice of certain compliance-related issues,
including non-payment of rent for the months of October and November, 2012.
On November 21, 2012, the City received a letter in response to its 11/15/12 letter from
Tenant's legal counsel, Jeffrey Ryner, requesting rent relief in connection with operational
complications resulting from the failure of the air conditioning system on the Premises. The
Tenant alleged that the current location of the air conditioning compressors, located between
the first and second floor of the garage alongside the entrance ramp, was inadequate to support
the size units required to cool a restaurant operation of the scale involved in Cooper Avenue.
438
City Commission Memorandum
Penn 17, LLC-Retail Lease Amended Rent Schedule
April17, 2013
Page 2 of 5
As a solution, Tenant requested permission to relocate all eight compressors to the roof of the
garage, (which relocation, if accomplished, will occupy five roof-top parking spaces).
On December 12, 2012, the City Commission referred the Tenant's request for rent relief to the
City's Finance and Citywide Projects Committee (FCWPC) for discussion, subject to the Tenant
remitting all outstanding rent amounts due for October, November and December. Subsequent
to the City Commission meeting, the Tenant informed staff that it wasn't in a position to remit
rent for the three-month period, and instead remitted a wire transfer for the October, 2012 rent.
On December 17, 2012, the Tenant informed staff that it had closed Cooper Avenue
Restaurant, with the intent of re-opening in February 2013 under a new name and concept.
The Administration requested review of the matter by the FCWPC at its December 2012
meeting.
At the December 20, 2012 FCWPC meeting, the Tenant presented its request to reduce its rent
payments by 50% over the next twelve (12) months; apply two months of the three-month
security deposit it had paid at Lease execution towards the back rent due for November and
December's rent; and have the City share in the cost of relocating the compressors to the roof
of the garage, the cost of which was estimated to be approximately $65,000. The Tenant also
indicated that it would prefer to address the relocation of the compressors as well as the kitchen
exhaust venting (as was requested by the New World Symphony) at the same time and under
one engineering contract.
The FCWPC was in favor of entertaining a deferral of the Tenant's rent, but for period of less
than twelve months. It was not in favor of a rent abatement or relinquishing a portion of the
requested security deposit, unless the Tenant could provide a Letter of Credit or performance
bond. The FCWPC directed staff to negotiate terms for a rent deferral to present to the City
Commission, and to also incorporate release language absolving the City of any liability with
regards to any claims made by the Tenant concerning construction delays and/or issues
concerning the relocation of the HVAC compressors, as well as the kitchen exhaust venting.
The FCWPC also recommended holding off on taking further legal action, which would include
formally putting Tenant on notice of default, pending the outcome of negotiations. The Tenant
was also asked to provide an estimated time frame for re-opening the restaurant.
As is outlined in the March 13, 2013 Commission Memorandum, after conducting extensive
negotiations with the Tenant and returning to the FCWPC in January, staff proposed:
1) applying fifty percent (50%) of the security deposit, in the amount of $71,765 towards
back-due rent amounts owed for November and December 2012, totaling $112,635;
leaving a balance of $40,870 (Back Rent) to be repaid in six (6) equal monthly
installments commencing on July 13, 2013 and ending on January 14, 2014;
2) granting an abatement of fifty percent (50%) of the Base Rent and Common Area
Maintenance (CAM) due for the six (6) month period commencing January 13, 2013
through July 12, 2013;
3) reimbursement of that portion of the security deposit applied to the Back Rent, in the
amount of $71,765, to be repaid in twelve (12) equal monthly installments commencing
in the fifth year of the Lease Term and ending on the last day of the fifth year of the
Lease Term;
4) granting a deferral of fifty percent (50%) of the Base Rent and CAM for the six (6) month
period, commencing July 13, 2013 through January 14, 2014 ("Deferral Period"), to be
repaid by the Tenant in twenty four (24) equal monthly installments, commencing in the
439
City Commission Memorandum
Penn 17, LLC-Retail Lease Amended Rent Schedule
April17, 2013
Page 3 of5
sixth year of the Lease Term and ending on the last day of the seventh year of the Lease
Term.
The Tenant rejected the above proposal, saying that "what we truly need is to start the
repayment schedule in 2014 and concentrate on building the business in 2013." During further
discussions, the Tenant expressed that it doesn't anticipate being back in operation and
generating cash flow until at least mid-2013.
Given the impasse on the negotiations, the Administration was unable to present a
recommendation to the City Commission at the January 2013 meeting, and instead reported
back to the FCWPC on January 24, 2013, to request further direction on how to proceed.
Prior to the FCWPC meeting, staff demanded on January 16, 2013, that Tenant remit payment
of outstanding Resort Tax to the City in the amount of $9,295.43 (based on the Tenant's own
reconciliation dated January 8, 2013). Staff also required that half of January's rent, in the
amount of $28,158.87, plus applicable sales tax, be paid as a condition precedent to the matter
being re-discussed at FCWPC on January 24, 2013. On January 18, 2013, Tenant hand-
delivered two checks: one in the amount of $9,295.43 representing payment of the outstanding
Resort Tax; and one in the amount of $30,003.20 representing 50% of the January rent plus
sales tax.
On January 24, 2013, the FCWPC expressed support for providing some level of relief to the
Tenant, but not at the risk of turning the City's position upside down. The FCWPC was against
allocating 50% of the security deposit toward the outstanding rent due for November and
December, 2012, and instead only recommended releasing one-third of the security deposit, in
the amount of $47,844, leaving a balance of $64,791, to be repaid commencing in January,
2014 (as requested by the Tenant). The FCWPC further recommended in favor of the terms, as
proposed by staff, including:
1) applying one-third (1/3) of the Lessee's existing security deposit, representing
$4 7 ,844, towards Base Rent owed for the month of November, 2012;
2) deferring $8,474 for Common Area Maintenance (CAM) for November, 2012, and
Base Rent plus CAM for December 2012, leaving a balance in the total amount of
$64,791 (Back-Due Rent) to be repaid in twelve (12) equal monthly installments
commencing in January 2014 and ending in December 2014;
3) granting an abatement of 50% of the Base Rent and Common Area Maintenance
(CAM) due for the six (6) month period commencing January 13, 2013 through July 12,
2013;
4) granting a deferral of fifty percent (50%) of the Base Rent and CAM for the six (6)
month period, commencing July 13, 2013 through January 14, 2014 ("Deferral
Period"), to be repaid by the Tenant in twenty four (24) equal monthly installments,
commencing in the sixth year of the Lease Term and ending on the last day of the
seventh year of the Lease Term;
5) Reimbursement of the security deposit amount applied to back rent in the amount of
$47,844, to be repaid in twelve (12) equal monthly installments commencing in the fifth
year of the Lease Term and ending on the last day of the fifth year of the Lease Term.
A schedule reflecting the revised rent schedule, as recommended by FCWPC, is included as
Exhibit "A" to this memorandum. Tenant has paid 50% of the January, February, and March
2013 Base Rent and CAM.
440
City Commission Memorandum
Penn 17, LLC-Retail Lease Amended Rent Schedule
April17, 2013
Page 4 of 5
The FCWPC again requested that any agreement with the Tenant be subject to the inclusion of
release language absolving the City of any liability. As requested by Commissioner Libbin
during the January 24, 2013 FCWPC meeting, Tenant provided the Administration with its
preliminary business plan for re-opening the Leased Premises, which Tenant anticipates re-
opening by July 2013. The Premises will house three individual concepts: an anchor restaurant
facing 1 ih Street, involving the Tenant's relocation of its Bond Street Restaurant; a celebrity
chef late-night fast casual eatery in the center section of the space; and a lounge/bar in the
existing bar area. Since the lounge/bar component proposes an entertainment use
(combination of a deejay and live music}, which is not a main permitted use in the Civic and
Convention Center (CCC) zoning district, a public hearing is required under Section 142-362 of
the City Code to approve such use.
On March 13, 2013, the Mayor and Commission adopted Resolution 2013-28167 in conjunction
with the Redevelopment Agency's (RDA) Resolution 592-2013, which accepted the FCWPC
recommendation pertaining to a proposed Amendment No. 3 to the Lease, and recommending
that, as part of said amendment, the rent schedule be revised as outlined above and as further
illustrated on Exhibit "A" to the memorandum. The Commission and RDA also set a public
hearing for April 17, 2013, regarding Lessee's proposal to add an entertainment component as
an additional use.
During the March 13th discussion, the City Commission requested that Amendment No. 3 also
include the following items which are being developed by the City Attorney's office and which
will be executed at the time that Amendment No. 3 is executed:
• a general release by Tenant waiving any claims against the City including those with
regards to the ventilation and to the relocation of air conditioning;
• additional clause that Tenant admits and acknowledges that, but for approval of the
Third Amendment, it is in default of the Lease;
• additional language regarding an "expedited" eviction procedure and, to the extent
possible, to include certain waivers of defenses by Tenant.
The Tenant was also requested to provide a release in conjunction with the City's preliminary
approval of the proposed revised rent schedule.
ANALYSIS
While the Administration intended to proceed with the April 17th public hearing and the related
Commission's consideration of a draft Amendment No. 3 to the Lease, it is now recommended
that the Commission open and continue the public hearing.
As of the date of the writing of this memorandum, the Tenant does not anticipate being able to
solidify its concept plan, much less provide a site plan as requested by staff, in time to submit
the necessary information for Commission consideration. The Tenant has also expressed an
unwillingness to install a vestibule area within the Premises as required by the Planning
Department in consideration of the new entertainment component. The Tenant expressed that
the vestibule poses a significant hardship and also informed staff that it may reconsider the
concept. The Tenant added that it had already met with representatives of the New World
Symphony (NWS}, who stated that NWS has no issues with respect to the entertainment license
being requested by the Tenant. Tenant provided us with a confirmation letter from NWS dated
March 18, 2013, which is attached hereto as Exhibit "C."
441
City Commission Memorandum
Penn 17, LLC-Retail Lease Amended Rent Schedule
April17, 2013
Page 5 of 5
In the meantime, additional non-compliance items are pending. Several construction-cost
related items are addressed in the Notice of Non-Compliance letter dated March 27, 2013,
which is attached as Exhibit "B" to this memorandum, and include: 1) the City has no record of
Tenant's second deposit into the Tenant's Construction Fund, as required by the Lease; 2) The
Tenant Construction Fund was expressly intended to pay hard costs, but the Tenant used two
disbursements for soft costs instead of for hard costs; 3) Discrepancies were noted in a
reconciliation of disbursements; 4) Tenant did not require its contractor to provide unconditional
performance and payment bonds covering the total value of Tenant's work; and 5) the City has
received formal notification of two claim notices, as well as a Notice of Lien, for non-payment of
work and/or materials related to Tenant's improvements. The Tenant was given until Tuesday,
April 2, 2013, to provide specific information and cure measures, and staff has informed Tenant
that failure to do so may result in the Tenant being placed in default.
Subsequently, but on the same date (March 2ih), the City and RDA were served with a
Complaint from A.R.T Drywall South, Inc.; one of Tenant's sub-contractors demanding payment
from the City in the amount of $52,7 40, for work performed by the Subcontractor on the Leased
Premises.
Furthermore, the Tenant has not made progress in obtaining a building permit to relocate the air
conditioning compressors. Plans were submitted, however, the building permit fee has not been
paid and Tenant has not addressed comments from the Building Department. However, it is
relevant to note that Tenant requested that the relocation of the air conditioning units be
coordinated in conjunction with the reconfiguration and relocation of the kitchen exhaust.
While the Tenant verbally informed staff that it does not anticipate being able to remedy the
outstanding construction claims by April 2nd or by April 1 ih, the Tenant has expressed it wishes
to proceed with Amendment No. 3 to the Lease. Staff has reiterated that any further action is
contingent on the resolution of outstanding contractual issues.
CONCLUSION AND RECOMMENDATION
The Administration recommends that this item be opened and continued. The Public Hearing is
being held in conjunction with a related, Amendment No. 3 to the Lease, which is not ready for
consideration by the City Commission in light of pending matters outlined above.
J LM\MS\AP\KOB
Attachments
T:\AGENDA\2013\April 17\Penn 17 Retail Lease CMB Memo.doc
442
Jan :l4 :lU 1.:s
l Repayment of remaining Nov/Dec 2012 balance ($64.791)
l Repayment of July 2012 and August2012 rent ($95,688.00) per
cond Amendment
Repayment of security deposit ($47.844}
Repayment of July 2013 through December 2013 deferred rent
71,!06.231
Penn 17, LLC Rent Schedule
Lease Commencement: October 13, 2011 Rent Commencement: Aprlll4. 2012
Current Proposed
L~a~!l Y!IS!r; 2 Rent Rent Total Monthly Total Monthly
!lase Rent Repayment CAM Abatement Deferment Payment Payment
01/13/13 $ 47.843.75 $ $ 8.474.00 $ (28, 158.881 $ $ 56.317.75 $ 28,158.87
02/13/13 $ 47.843.75 $ $ 8.474.00 $ (28. 158.88) $ $ 56.317.75 $ 28,158.87
03/13/13 $ 47.843.75 $ $ 8.474.00 $ (28, 158.88) $ $ 56,317.75 $ 28.158.87
04!13/13 $ 47,843.75 $ $ 8,474.00 $ (28, 158.881 $ $ 56,317.75 $ 28.158.87
05/13/13 $ 47.843.75 $ $ 8,474.00 $ (28, 158.88) $ $ 56.317.75 $ 28,158.87
06!13/13 $ 47,843.75 $ $ 8.474.00 $ (28, 158.88) $ $ 56.317.75 $ 28.158.87
07!13/13 $ 47.843.75 $ $ 8,474.00 $ $ (28. 158.88) $ 56.317.75 $ 28.158.87
08/13/13 $ 47.843.75 $ $ 8.474.00 $ $ (28.158.881 $ 56.317.75 $ 28,158.87
09/13/13 $ 47,843.75 $ $ 8.474.00 $ $ (28. 158.88) $ 56.317.75 $ 28,158.87
Total: $ 430,.593.75 $ $ 76,266.00 $ (1611,9.53.28} $ {114,476.64} s 506.859.75 $ 253,429.83
Curren! Proposed
l!i!a~~~ Yfi!Q[; :! Rent Rent Total Monthly Total Monthly
Base Rent Repayment (1 and 2) CAM Abatement Deferment Payment Payment -IIlli $ 49.279.06 $ 2,658.00 $ 8.474.00 $ $ (28,876.53) $ 60.411.06 $ 31.534.53
11!13/13 $ 49.279.06 $ 2.658.00 $ 8.474.00 $ $ (28.876.53) $ 60.411.06 $ 31.534.53
12/13/13 $ 49.279.06 $ 2,658.00 $ 8.474.00 $ $ (28.876.53) $ 60.411.06 $ 31.534.53
Ol/13/14 $ 49.279.06 $ 8,057.00 $ 8,474.00 $ $ $ 65,810.06 $ 65.810.06
02/13114 $ 49.279.06 $ 8.057.00 $ 8.474.00 $ $ $ 65.810.06 $ 65.810.06
03/13/14 $ 49.279.06 $ 8,057.00 $ 8.474.00 $ $ $ 65,810.06 $ 65,810.06
04/13/14 $ 49.279.06 $ 8.057.00 $ 8.474.00 $ $ $ 65,810.06 $ 65,810.06
05!13/14 $ 49.279.06 $ 8.057.00 $ 8.474.00 $ $ $ 65.810.06 $ 65,810.06
06/13/14 $ 49.279.06 $ 8,057.00 $ 8,474.00 $ $ $ 65.810.06 $ 65,810.06
07 !13/14 $ 49.279.06 $ 8.057.00 $ 8.474.00 $ $ $ 65.810.06 $ 65,810.06
08/13/14 $ 49,279.06 $ 8,057.00 $ 8.474.00 $ $ $ 65,810.06 $ 65,810.06
09!13/14 $ 49.279.06 $ 8,057.00 $ 8.474.00 $ $ $ 65.810.06 $ 65.810.06
Total: $ 591.348.72 $ 110,487.00 s 101,688.00 s $ (86,629 . .59} s 773,.523.72 s 686.894.13
Current Proposed
L!i!a~!'l Y!'!Qr; 4 Rent Rent Total Monthly Total Monthly
Base Rent Repayment (1 and 2) CAM Abatement Deferment Payment Payment • 11&1111 J I $ 50,757.43 $ 8,057.00 $ 8.474.00 $ $ $ 67,288.43 $ 67,288.43
11113/14 $ 50.757.43 $ 8.057.00 $ 8,474.00 $ $ $ 67.288.43 $ 67,288.43
12/13/14 $ 50.757.43 $ 8.057.00 $ 8,474.00 $ $ $ 67.288.43 $ 67,288.43
01 !13/15 $ 50.757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
02/13/15 $ 50,757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61,889.43
03/13/15 $ 50.757.43 $ 2,658.00 $ 8,474.00 $ $ $ 61.889.43 $ 61.889.43
04/13115 $ 50,757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
05/13115 $ 50,757.43 $ 2,658.00 $ 8,474.00 $ $ $ 61.889.43 $ 61,889.43
06/13/15 $ 50,757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
07/13/15 $ 50,757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
08/13/15 $ 50.757.43 $ 2.658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
09/13/15 $ 50,757.43 $ 2,658.00 $ 8.474.00 $ $ $ 61.889.43 $ 61.889.43
Total: $ 609,0119.16 $ 48,093.00 $ 101,688.00 s s s 7.58.870.16 s 758.870.16
Page 1 of2
EXHIBIT A
443
Jan :l4 :lU 1 J
~
1) Repayment of remaining Nov/Dec 2012 balance j$64.791)
2) Repayment of July 2012 and Augusl2012 rent!$95,688.00) per
>econd Amendment
(31 Repayment of security deposit j$47,8441
(4) Repayment of July 20131hrough December 2013 deferred rent
$171,!06.23!
Penn 17, LLC Rent Schedule
Lease Commencement: October 13.2011 Rent Commencement: April 14. 2012
Curren! Proposed
l~gse Y~ar: li I! en! Rent Total Monthly Total Monthly
Base Rent Repayment (2 and 3} CAM Abatement Deferment Payment Payment
IR::!I! $ 52,280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63.412.15 $ 67,399.15
11/13/15 $ 52,280.15 $ 6,645.00 $ 8.474.00 $ $ $ 63,412.15 $ 67,399.15
12/13/15 $ 52.280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63,412.15 $ 67,399.15
01 !13/16 $ 52,280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63,412.15 $ 67,399.15
02!13/16 $ 52.280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63,412.15 $ 67,399.15
03/13/16 $ 52,280.15 $ 6.645.00 $ 8.474.00 $ $ $ 63.412.15 $ 67.399.15
04/13/16 $ 52.280.15 $ 6,645.00 $ 8.474.00 $ $ $ 63.412.15 $ 67,399.15
05/13/16 $ 52,280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63.412.15 $ 67,399.15
06/13!16 $ 52.280.15 $ 6.645.00 $ 8.474.00 $ $ $ 63.412.15 $ 67.399.15
07/13/16 $ 52,280.15 $ 6,645.00 $ 8,474.00 $ $ $ 63,412.15 $ 67,399.15
08/13/16 $ 52.280.15 $ 6,645.00 $ 8.474.00 $ $ $ 63.412.15 $ 67.399.15
09/13/16 $ 52,280.15 $ 6,645.00 $ 8.474.00 $ $ $ 63,412.15 $ 67,399.15
Total: $ 627,361.80 $ 79.740.00 s 101,688.00 s s $ 760,945.80 s 808,7119.80
Current Proposed
Li!.l~i Yi!.lG' Rent Rent Total Monthly Total Monthly
Base Rent Repayment {4) CAM Abatement Deferment Payment Payment • !IM1' • $ 53,848.56 $ 7,129.43 $ 8,474.00 $ $ $ 62,322.56 $ 69,451.99
11!13/16 $ 53.848.56 $ 7,129.43 $ 8,474.00 $ $ $ 62,322.56 $ 69.451.99
12/13/16 $ 53,848.56 $ 7,129.43 $ 8,474.00 $ $ $ 62,322.56 $ 69,451.99
01!13/17 $ 53,848.56 $ 7.129.43 $ 8.474.00 $ $ $ 62.322.56 $ 69.451.99
02/13/17 $ 53,848.56 $ 7.129.43 $ 8,474.00 $ $ $ 62,322.56 $ 69.451.99
03/13/17 $ 53,848.56 $ 7,129.43 $ 8.474.00 $ $ $ 62,322.56 $ 69.451.99
04/13/17 $ 53.848.56 $ 7,129.43 $ 8.474.00 $ $ $ 62,322.56 $ 69,451.99
05/13/17 $ 53,848.56 $ 7.129.43 $ 8,474.00 $ $ $ 62,322.56 $ 69.451.99
06/13/17 $ 53,848.56 $ 7,129.43 $ 8.474.00 $ $ $ 62,322.56 $ 69.451.99
07113/17 $ 53,848.56 $ 7,129.43 $ 8.474.00 $ $ $ 62.322.56 $ 69,451.99
08/13117 $ 53,848.56 $ 7,129.43 $ 8.474.00 $ $ $ 62.322.56 $ 69.451.99
09/13/17 $ 53,848.56 $ 7,129.43 $ !!,4/4.00 $ $ $ 62,322.56 $ 69,451.99
Total: s 646,182.72 s 85,553.16 s 101,688.00 $ $ $ 747,1170.72 $ 833,423.1111
Current Proposed
leQSi Yiar: 7 Rent Rent Total Monthly Total Monthly
Base Rent Repayment (4) CAM Abatement Deferment Payment Payment -• $ 55.464.02 $ 7,129.43 $ 8,474.00 $ $ $ 63,938.02 $ 71.067.45
11 !13!17 $ 55.464.02 $ 7,129.43 $ 8.474.00 $ $ $ 63,938.02 $ 71.067.45
12/13/17 $ 55.464.02 $ 7,129.43 $ 8,474.00 $ $ $ 63,938.02 $ 71.067.45
01/13/18 $ 55,464.02 $ 7,129.43 $ 8.474.00 $ $ $ 63.938.02 $ 71.067.45
02!13/18 $ 55.464.02 $ 7,129.43 $ 8,474.00 $ $ $ 63,938.02 $ 71.067.45
03!13/18 $ 55,464.02 $ 7.129.43 $ 8,474.00 $ $ $ 63.938.02 $ 71,067.45
04/13/18 $ 55.464.02 $ 7,129.43 $ 8,474.00 $ $ $ 63,938.02 $ 71,067.45
05/13/18 $ 55.464.02 $ 7,129.43 $ 8.474.00 $ $ $ 63,938,02 $ 71,067.45
06!13/18 $ 55,464.02 $ 7,129.43 $ 8,474.00 $ $ $ 63,938.02 $ 71.067.45
07113/18 $ 55,464.02 $ 7,129.43 $ 8.474.00 $ $ $ 63,938.02 $ 71.067.45
08/13/18 $ 55.464.02 $ 7.129.43 $ 8,474.00 $ $ $ 63.938.02 $ 71.067.45
09/13/18 $ 55,464.02 $ 7.129.43 $ 8.474.00 $ $ $ 63,938.02 $ 71,067.45
Total: s 665,568.24 s 85,553.16 $ 101,681!.00 $ s s 767,256.24 $ 852,809.40
Page 2 ol2
444
(9 MIAMI BEACH
City of Miami leach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachR.gov
REAL ESTATE, HOUSING & COMMUNITY DEVELOPMENT
Tel: (305) 673-7193-(305) 673-7033
March 26, 2013
Mr. Amir Ben Zion
Managing Member
Penn 17, LLC.
1661 Pennsylvania Avenue, Suite 6
Miami Beach, FL 33139
Jeffrey A. Rynor, Esq.
Mitrani, Rynor, Adamsky & Toland, P.A.
301 Arthur Godfrey Road, PH
Miami Beach, FL 33140
Copy sent via electronic mail, receipt requested to:
amlr.ben-zion@fcsnv.com; amir@fcsny,gom;
shai@cooperavenue.com
JRvnor@mitrani.com
RE: Work Letter and Escrow Agreement (Work Letter) by and between the City of
Miami Beach, Miami Beach Redevelopment Agency (collectively "Landlord"), and
Penn 17, LLC ("Tenant"), and Mitrani, Rynor, Adamsky & Toland, PA ("Escrow
Agent"), dated August 29, 2011
NOTICE OF NON-COMPLIANCE
Dear Sirs:
As you know, Landlord and Tenant are currently negotiating a proposed Third Amendment to
Lease, which is scheduled to be presented to the Mayor and City Commission at its April 171h
meeting. Since, throughout the course of negotiations (which have included various
presentations before the City's Finance and Citywide Projects Committee and, most recently,
consideration by the City Commission of the proposed rent abatement and deferral schedule at
the March 13, 2013 City Commission meeting), the City Commission has been clear and
consistent that, aside from the issues being negotiated, the Tenant must be otherwise in good
standing and free from defaults on the other provisions of the Lease (not at issue in the
negotiations). Accordingly, in preparation for pmsentation of the Third Amendment at the April
City Commission meeting, the City Administration has been reviewing the remaining Lease
terms to ensure that Tenant has been complying with same.
To this end, the purpose of this Notice is to advise you of certain compliance-related issues
related to the above-referenced Work Letter which require your immediate attention, as follows:
1. Article 1, Section 2. -The City has no record of Tenant's second deposit into the Tenant
Construction Fund, in the amount of $500,000. This amount should have been deposited on or
before 45 days after August 29, 2011 (the Effective Date of the Work Letter). The Escrow Agent
was to have provided the City with written notice after receipt of such payment. Based on the
statement received from the Escrow Agent, dated March 12, 2013, and attached as Exhibit "A"
hereto, it appears the initial $500,000 {the first half of the Tenant Construction Fund) was
deposited into the Tenant Construction Fund (hereinafter TCF) on Sept 19, 2011. However, the
only other deposit made into the TCF occurred on February 7, 2012, in the amount of
$150,797,1eaving a balance due of $349,203.
EXHIBIT B
445
Amir Ben Zion
Penn 17, LLC
March 26, 2013
Page 2 of4
Action Required: Within seven (7) days of the date of this Notice, Tenant must provide City
with proof of payment (and deposit with Escrow Agent) of the remaining balance due into the
TCF. Failure to do so constitutes a default under the Work Letter and, consequently, the Lease.
2. Article 1, Section 2. -The TCF was expressly intended only to pay actual "Hard Costs" of
Tenant's construction work. No portion of the TCF was to be used to fund "Soft Costs," as
same are defined in Article I, Section 2, page 2 of the Work Letter. Based on our review of
Exhibit "A," there are two (2) disbursements that were not approved by the City that were used
to pay for items specifically defined as Soft Costs as follows:
Table 1
Date CkNo Payee Amount Memo
03/20/12 1567 City of Miami Beach Bldg Dept ttir 222.92
Permit Fees
03/20/12 1568 Citv of Miami Beach Bldg Dept 8,604.43 Concurrency Fees
Total 0,827.35
Action Required: In accordance with Article I, Paragraph 2, on page 2 of the Work Letter, "All
Soft Costs shall be paid as and when due from Tenant's own funds other than the Tenant
Construction Fund." Accordingly, the aforestated Soft Costs, in the amount of $60,827.35, must
be replaced in the TCF.
3. Based on the City's reconciliation of the TCF, which reconciliation is attached as Exhibit "B"
hereto, the following discrepancies were noted:
(i) As of May 9, 2012, the City reflects the receipt of requests for payment (I.e .. in the form of
Draw Requests approved by the City), totaling $723,266. However, the TCF Statement (Exhibit
"A") only reflects disbursements/payments made by Tenant totaling $650,797, for a net
difference of $72,469. The difference appears to lie in three (3) Draw Requests that were
approved by the City, but were never disbursed from the TCF, totaling $133,196.64 (and as
noted in Table 2 below); coupled with the two unauthorized payments, in the amount of
$60,827.35, referenced in Table 1 of this Notice.
Table 2
Date ~ae Amount Memo I
10/27/11 kvBuilders $ 6,800.00 Labor & materials I
12/14/11 Halloran Construction $ 25,848.00 Labor & materials I
01/24/12 Halloran Construction $100,548.64 Labor & materials I
Total $133,196.64
(ii) Pursuant to the City's reconciliation in Exhibit "B," and subject to Tenant's compliance with
Action Items 1 and 2 hereof, the TCF should reflect a balance of $276,733, pending Tenant's
submission of any additional Draw Requests to be approved by the City.
Additionally, you should also be aware that Section 5.2 (n) of the Lease Agreement by and
between the City of Miami Beach, the Miami Beach Redevelopment Agency and Penn 17, LLC,
dated September 16, 2011 (the "Lease"), specifically requires that in no event shall the
Construction Deposit into the TCF be reduced to Jess than $50,000, until such time as the
Tenant's work has been substantially completed, as determined by the Landlord, in its sole and
446
Amir Ben Zion
Penn 17, LLC
March 26, 2013
Page 3 of4
reasonable discretion; and, shall only be released upon issuance of a final Certificate of
Occupancy (CO), with proof that all permits have been closed, together with final lien waivers
and contractor's affidavit reflecting that all contractor's, sub-contractors, laborers and
materialmen have been paid in full.
Action Required: Tenant and Escrow Agent shall provide written clarification, within seven (7)
days of the date of this Notice, as to the discrepancies between the TCF statement (Exhibit "A")
and the City's reconciliation Exhibit "B"); such clarification, confirming that the aforestated
balances remain in the TCF.
4. Article 3, Section 3. -Tenant shall require its Contractor to provide unconditional
performance and payment bonds covering the total value of Tenant's work issued by a surety
acceptable to Landlord. Said bonds shall be issued for each subcontractor, contractor or
materialman furnishing material or providing labor or services to the Premises and shall (i) name
Landlord as an additional obligee, (ii) be in an amount. in form and content. and issued by
sureties, satisfactory to Landlord and (iii) be in compliance with applicable laws.
Action Required: Tenant shall provide, within seven (7) days of the date of this Notice, copies
of any and all, performance and payment bonds as required.
5. To date, the City has received formal notification of two (2) claim notices, as well as a Notice
of Lien, for non-payment of work and/or materi.als related to Tenant's Improvements as noted in
Table 3 below:
Table 3
Date Contractor/Supplier Amount Correspondence
10/27/11 Cors-Air $ 3,001.92 Notice of Non-Payment
12/14/11 Art Drywall $53,927.00 Notice of Non-Payment
01/24/12 M P Fires top Corp $ 7,900.00 Notice of Lien
Action Required: Any lien, or notice of non-payment for labor or materials on account of
Tenant's Work, shall be deemed if not removed, satisfied or transferred to bond, an Event of
Default under the Work Letter and the Lease Agreement Accordingly, Tenant must provide to
the City, within seven (7) days of the date of this Notice, documentation of payment or other
form of satisfaction of the outstanding claims enumerated in Table 3 above.
Again, while Landlord continues to work with Tenant toward preparation and presentation (in
April) of the Third Amendment to the Lease, I (again) emphasize that the City Commission's
final consideration and approval of the Third Amendment, which we intend to present at the
April17, 2013 City Commission meeting is predicated upon the condition that Tenant, but for its
failure to pay rent in the amounts currently required under the Lease, is in good standing and
free from default with respect to other Lease provisions (including, without limitation, the terms
and conditions of the Work Letter, which is incorporated as an exhibit to the Lease).
It is therefore imperative that you promptly provide the City with the information requested
herein, including any cure measures required by the City, so that we may advise the City
Commission (when presenting the Third Amendment) that the Tenant is complying with the
terms of the Work Letter. Accordingly, please respond to the City's "Action Required" items, as
447
Amlr Ben Zion
Penn 17, LLC
Msroh 26, 2013
4of4
forth by no seven (7) from the of this or by April 2, 2013.
Failure to do so may result in the being in default under the Work Letter
Anna IJ!:IIrAwn
Director
AP:KOB
Attachments
Cc: Kathie
Max
Raul Aguila,
Interim City Manager
Assistant City Manager
Deputy City Attorney
448
Penn 17, I..LC
Exhibit A -Tenant Construction fund -Statement of Activity
!'a~ I
Oat. ~~ ~ ~,.,....
og/II)/91JI1 Depoill Wlmiu; soo,ooo.ooCR 500,000.00
mf.H011o82,'il11002114 PllO:
ElcroW Agl'&llllellt Amlr Ben
Zion
O'J/07/'J.Ol'J. De!,ull llleominslfire OPt 4)0,'1\16.1111Cll. 6so,1!)6.8Q
l!i0li0'1IzCooo2!)8; ORG:
40087611046, Pew117 W:.
1111 Nl141 St. Mla111l, PL
3S137llai.Ziou i'MII!7 •
l.llorow
Os/RO/'J.OI2 lfltl l'mnlt tee ilWioe lii,Ua!l.gADll lisllms.go CllyoiM!amlll~~acli llld8. Depl.
Os/00/&.o!ll. 15611 (!(mcmTWcy fee 4ti.61.144SDB 589.96947 l'Uy of Mlallll ~ J14 Dept.
Os/21/ROIR 1570 Pllymwl oolnvoloUt·12497 43.404-00DB 546.s6547 Amerleoa POOIII!qutpmezt
04/0ll/2012 15711 JIIIYJTIMI on !lmllce n 31!4.0'/S.OODB 162.49047 Mnllonn Cml&lruetloo Corp.
U-DI40 1 111-aou, 12-DOOg,
l..t·OOSaRIV, J2-D08IIC,
12-Dil$9(1
04/0'J/AOJA 1.679 lCII!ten lliiW!ll.lleut ·lnv. 15,000,000.11 87.490-47 Allleri!lan Pood iqulpmut
,100
DIJ/(19/2012 1649 Jlll.llme!l! on Invoice lll36 87.490o47Dll o.oo Alnerit.all flood F.qniplllfllll Co
'1'ol!ll Dt:podl!ll 6so,')'96.82CR
Totlll~l 6,so,796.8RDD
Cl•BalanllCI $0.00
449
~ CJ'I 0 EICHIBITB mwq aJNSII!liCIION BJND om I!ECONQ! '!"MI!! Penn17,UC Construdion Beckmlnl Balance: I.-Ice Dace 10/27/2011 12/14/2011 01/24/2012 03/06/20l2 03/20/20]2 03/21/20U 03/29/20]2 03/30/2012 05/C19/20l2 Supplier Sky Builders Halloran Construction HaUoran Construction Halloran Construction CMB Building Dept CMB Building Dept Halloran Construction American Food Equipment American Food Equipment Total~ ~to Date: Oesaipdun. l..ilbor & materials Labor & materials labor & materials Labor & materials Permit fees Concurreocy fees Labor & materials Kitchen/restaurant equipment Kitdlen/restaurant equipment Not>!: (l) Reflects balance as of last payment request received on 5/C19/2012 $ $ $ $ $ $ $ s $ s $ Authorized Via CMB 6,800.00 $ 25,948.00 s 100.,548.64 $ 43,404.00 s $ $ 384,075.00 $ 75,000.00 $ 87,490.47 $ 723,266.11 $ PmtsMade ~TCF $ $ s 43.404.00 $ 12.222.92 $ 48,604.43 $ 384,075.00 $ 75,000.00 s 87,490.47 $ 650,196.82 $ ···~•rr '*" Per ConUact Per~ Apnt DifJaence $ 1.000,1100.00 $ 650,7!16.82 $ 349,203.18 Difference 6,800.00 $ 993,200.00 s 650,796.82 $ 342.403.18 25,948.00 $ 967,252.00 s 650,796.82 s 316,455.18 100,548.64 $ 866,703.36 s 650,796.82 s 215,906S4 s 823,299.36 $ 607,392.82 $ 215,906.54 (12,222.92) s 823,299.36 s 595,169.90 s 228,129.46 (48,604.43) s 823.299.36 $ 546,565.47 s 276,733.89 s 439.224.36 s 162,490.47 s 276,733.89 s 364.224.36 s 87,490.47 s 276,733.89 s 276,733.89 s (0.00) s 276,733.89 s $ s 72,.469.29 $ Z76,733.89 s $ (276,733.89)
< .. • -
Jeffrey A. Rynor, Esq.
Mitrani,Rynor, Admasky
& Toland, PA lb=:=========================
301 Arthur Godfrey
PH
Miami Beach, FL 33140
D &pi'IISIIMaU c Return RecelptforMerchandlsf!
D
' 2. Ar!lcle'Number 7006 2150 DODD 6285 5625
· ~from·~ lablll) .. r PS Form 3811, Febr\lary 2004 I.
DomiiS!lO Retum RIIOIIlPt
; 1. Artlcle Adcii'EI8lled to:
Mr. Amir Ben Zion
Managing Member
1661 Pennsylvania A
Suite 6
D. I& dellvll}' add!8!18 dlfte19!1t from Item 1? Yes
If YES, ental' dellveiy addreaa below: [J No
Miami Beach, FL 33139
1
a. Miele Number
(llansfer from SBrllce IBbel) 7005 1B20 0007 1115 6345
1: PS Form 3811, February 2004 Domestic Rslum Receipt
451
'.
Filunder
Ted Arlson
Officers
Nelsen Kasdln, Chair
Rose Elltn Greene, Vke Chair
Marla de Annas, Treasurer
Robart Moss, Secretary
Board of Trustees
Sari Agatston
Sheldon T. Anderson
Madeleine Arison
Sarah S. Arlson
Matthew W. Buttrick
Adam CarUn
Bruce E. CUnton
Stanley Cohen
Casey Cummings
Peter J. Dolara
Susan S. Dubin
Joseph Z. Fleming
Howard Frank*
Stanford Freedman
C. Thomas Greene
Bruce W. Greer
Harry M. Hersh
Robert E. Hoffman•
Richard M. Jacobs
Gerald Katcher"'
R. Kirk Landon ... _ ......... Maflfl.:lilUie"·-.,······-····
Enrique Lerner Rals
Richard L. Levltt
Helene Llndenfeld
Albert R. MoUna, Jr.
WILUam L. Morrison
Sandra R. Muss
Patricia M. Papper
Peter G. Robbins
Jeffrey T. Roberts
Martin Rozenblum
Richard T. Sanz
Sheldon D. Schneider*
Diane S. Sepler
Edward Manno Shumsky
Richard Skor
Paul H. Stebbins
Judy Welser*
Sherwood M. Welser*
JadyWolfe
Richard J. Wurtrnan
Counsel to the Board
Bruce jay Colan
•Indicates fonner Chair
New World Symphony
America's Orchestral Academy
Michael Tilson Thomas, Artistic Director
March 18, 2013
Mr. Shai Ben-Ami
Penn 17 LLC
Re: Cooper Avenue/New Concept
Dear Shai:
This letter will confirm that we have discussed your new plans for
the space formerly occupied by Cooper Avenue in the
Pennsylvania Garage.
Based on this discussion, and in the expectation of future on-going
-.. mutoal·co-ope-ration·oetween vow' ope'fatrng staffanifNws· to-· · .. -· ·
ensure that your activities do not adversely affect NWS events and
Wallcastsl NWS has no issues with respect to the entertainment
license you need to complete your regulatory and code approvals.
D v: J. Phillips
nior Vice President and Chief Financial Officer
500 17th Street, Miami Beach, FL 33139·1862
305.673.3330 Fax 305.673.6749 www.nws.cdu
452
EXHIBIT C
IDE MIAMI HERJ\lll I Miam!Heraldxom
MIAMI BEACH
City ol Miami Beach, 1700 Convention Center Drive,
Miami Beach, florida 33139. www.mlamioooohll.gov
CITY OF MIAMI BEACH
NOTICE OF PUBLIC HEARING
NOTICE IS HEFIEEIY given that public will be
held by the Mayor and City Commission of City of
Miami Beach, Florida, In the City Commission Chamber1l,
3"' floor, City Hall, 1700 Convention Oo!nter Drive,
Miami Beach, Florida, on Wednesday, April 11, 201$,
at 10:00 a.m., during both the City Commission Mooting
and the Miami Beach Redevelopment Agency Meeting, to
consider, In accordance with Section 142-362 of the Cl1:y
Code, a proposed Change of Use Involving that certain
Retail Lease Agreement by and between tim City of
Miami Beach, the Miami Beach Redevelopment Agency
lcr>lhr:t''"lv Lessor) and Pmm 17, LLC, dated
<:;~'"'''""h"' 16, 2011 , Involving the lease
7,655 square feet of ground floor retail space at the
Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue,
Miami Beach, Rorida; said Change of Use tc Include an
entertainment component which Is not listed as a main
perrnl1:ted use in the Civic and Convention Center (CCC)
zoning district
may be directed to the City's Asset Management
at (305) 673-7193.
INTI:RESTED PARTIES me invited to appear at this
meeting or be represented by an agent or to express their
views In writing addrossed to the City Commission c/o
the City Clerk, 1700 Convention Center Drive, 1" Floor,
City Hall, Miami Beach, Florida 33139. This mooting may
be opened and continued, and under such circumstances
additional legal notice would not be provided.
Rafael Granado, City Clerk
City of Miami Beach
Pursuant to Section 286Jl101i, Fla. Stat, the City hereby
advises the public that: if a person decides to appeal any
decision made by the City Commission and/or the Miami
Beach Redevelopment Agency with respect to any matter
considered at Its meeting or h.s hearing, such person
must ensure that a verbatim record ot the Is
made, which record Includes
upon which the appeal Is to be; based. notice does
not constrlute consent by thD City for the Introduction
or admission of otherwise inadmissible or Irrelevant
evidence, nor does It authorize challenges or appeals not
otherwise allowed by law.
To request this material In accessible lom~at, sign
language Interpreters, Information on access lor persons
wl1:h disabilities and/or any accommodation to review
any document or participate In any City-sponsored
proceeding, please contact us five days In advance at
tlf~l-"7411 {volGa) or TIY users may also call the
Relay Service at 711,
Ad #770
453
TIRIRSDAY, APRil. 4, 2013 I _l3NIE
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454