Tishman 130503_SBACE_MBCC LOI Part 1[1]South Beach ACE
TishmanUIAOMA
City of Miami Beach
Letter of Intent
RFQ N0. 22-11/12
South Beach ACE
TishmanUIAOMA
City of Miami Beach
Letter of Intent
RFQ N0. 22-11/12
Table of Contents
Purpose 1
Parties 1
Master Plan 2
Site Leases 10
Project Budget 13
Project Financing 14
Role of the Master Developer 17
Role of the City 23
Target Milestones 23
Termination 24
Transaction Documents 27
Exhibits 28
May 3, 2013
City of Miami Beach
Procurement Department
1700 Convention Center Drive
Miami Beach, FL 33139
South Beach ACE appreciates the opportunity to submit the attached Letter of Intent and
corresponding master plan for the Miami Beach Convention Center District. We have spent the
last six months studying the site, meeting with key stakeholders and residents and formulating a
proposal to address the present and future needs of the Miami Beach Convention Center, the
City, its residents and the region as a whole. While diverse in scope, our master plan is
designed as a cohesive venue which builds on and connects to both the historic and modern
day Miami Beach and its numerous cultural, leisure, entertainment, civic and residential assets.
Throughout this process we have remained focused on the City’s stated goals of creating a
master plan for the site that is “developed holistically, maximizing the value of the land,
economic and community benefits, and job growth.” We believe we have struck a perfect
balance between activating the site while providing significant community and public spaces
which will be used and enjoyed by residents and tourists for years to come. Perhaps most
importantly, we have created a design for the Convention Center which we have already tested
and it has proven to be both iconic in its design as well as grounded in its functionality and
ability to attract new high impact convention, trade show and meeting business.
The specifics of our proposal are described in detail in the attached LOI and master planning
documents.We look forward to partnering with you on this exciting and transformative project.
Sincerely,
Tishman Hotel & Realty UIA Management OMA
Dan Tishman Robert Wennett Rem Koolhaas
South Beach ACE
Convention District Letter of Intent Page 1
This Letter of Intent (“LOI”) outlines certain terms and conditions under which the Master Developer 1
(defined below) would renovate and expand the Miami Beach Convention Center and develop a convention 2
hotel, certain public amenities, and certain commercial and residential uses within the City of Miami Beach 3
(“City”) Convention Center District Site (“District Site” or “Site”). The summary of terms and conditions outlined 4
below is intended as an aid to the parties in negotiating the business terms of a possible transaction. The terms 5
and conditions set forth in this LOI are not intended to limit, and do not limit, any and all terms and conditions 6
that may be incorporated into the final documents and other final instruments executed in connection with any 7
final agreement reached by the parties. 8 9
1. Purpose10
City issued a Request for Qualifications No. 22-11/12 for the Development of the Miami Beach Convention 11
Center District (“RFQ”). The District Site consists of 52 City-owned acres, and is envisioned to include the 12
following components: Convention Center (“Center”) renovation; Center ballroom addition; Center meeting 13
space addition; headquarter hotel (“Hotel”); parking; outdoor public spaces; restaurants, entertainment, 14
retail, and other commercial and residential uses that are 15
economically viable and acceptable to the City. 16
2. Parties 17
2.1. City – City of Miami Beach, Florida 18
2.2. Development Team 19
2.2.1. Master Developer – The Master Developer, 20
South Beach ACE, LLC, is a to be formed special 21
purpose entity owned by and controlled by 22
affiliates of Tishman Hotel & Realty LP and UIA 23
Management LLC. 24
2.2.2. Design-Builder – An affiliate of Master Developer 25
or its members will be the primary design-builder 26
for the Public Components (defined below) if City 27
elects to do a Design Build Agreement. 28
2.2.2.1. Lead Architect – OMA will be the Lead Architect under the Design-Builder for 29
the Public Components. The Lead Architect will be supplemented by 30
convention center specialist, tvs design, and landscape architects, Michael Van 31
Valkenburgh Associates, Inc. and Raymond Jungles, Inc. (collectively, the 32
“Lead Architects”). 33
District Site
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2.2.3. Hotel Brand/Operator – Prior to execution of the Development Agreement, Master 34
Developer shall select the Brand/Operator for the Hotel, and the Hotel shall be developed 35
and thereafter operated as a Marriott, Sheraton (similar in finish and quality to the Chicago 36
Sheraton, which was developed by and continues to be owned by Tishman, and the 37
Overland Park Sheraton), Westin, Le Meridien, Omni, Hyatt, InterContinental, or Hilton 38
(each, an “Approved Brand/Operator”). Selection of brands and/or operators other than an 39
Approved Brand/Operator will require prior approval by City. 40
2.2.4. Legal – Master Developer will be represented by Bilzin, Sumberg, Baena, Price & Axelrod 41
LLP for the negotiation of the agreements contemplated herein. 42
2.2.5. Finance 43
2.2.5.1. Public Finance Underwriter – Goldman, Sachs & Co. shall be part of the City’s 44
underwriting team for the financing of the Public Components in the Traditional 45
Approach (as defined in subsection 7.1.1). Goldman, Sachs & Co. will team 46
with other underwriters selected by the City. 47
3. Project 48
3.1. Public Components – shall include the Center Renovation, Center Expansion, Center Replacement 49
Parking, Off-Site Infrastructure, and Public Amenities (all as defined below). 50
3.2. Private Components – shall include the Hotel, Hotel Parking, Residential, Retail/Restaurants, 51
Entertainment, Cultural Amenity, 17th Street Garage, and all other parking excluding the Center 52
Replacement Parking (all as defined below). 53
3.3. Approval by Referendum – Master Developer anticipates that the development of the Project shall be 54
subject to and contingent upon approval by a majority of the voters voting in a City-wide referendum. 55
4.Master Plan - Exhibit 1 provides Master Plan diagrams for three (3) scenarios: 1) Exhibit 1a is a Base Case 56
comprised only of the Center Renovation and Expansion, Hotel and Hotel Parking; 2) Exhibit 1b is the 57
Phase 1 Components (defined below) which includes the Base Case, plus other Public Amenities and 58
Private Components (set forth in subsection 4.2); and 3) Exhibit 1c is the Future Master Plan that includes 59
the Phase 1 Components and other components that are planned to be developed at a future time. 60
The Master Developer is prepared to invest in, raise financing and develop the Phase 1 Components. 61
4.1. Base Case – Master Developer does not recommend implementing the Base Case only, as this 62
option will not generate sufficient revenues to fund the renovation scope for the Center and create a 63
world class Center district with expanded resident and visitor amenities and connectivity to nearby 64
City assets. The Base Case scenario fails to maximize the City’s full potential, does not position the 65
Center and the District among the leading and cutting edge convention destinations, and does not 66
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fully revitalize the City center of Miami Beach which falls short of the RFQ’s stated intent of attracting 67
high impact conventions that will provide expanded economic impact for the City. Furthermore, the 68
proposal set forth in this LOI, including Master Developer’s ground rent proposal, is predicated on 69
the full development of the Phase I Components. 70
Base Case Components 71
4.1.1. Center Renovation and Expansion - Renovation and expansion of the Center consistent 72
with the Renovation Program summarized in Exhibit 2 and the following program areas: 73 74
Exhibit Halls 502,000
New Ballroom 60,000
New Jr. Ballroom #1 20,000
New Jr. Ballroom #2 20,000
New 10,000 SF Meeting Space 10,000
Renovated Existing Breakout Space 52,500
New Breakout Space 87,500
Total Function Space 752,000
Renovated Support Space 181,415
New Support Space 384,727
Gross Square Feet 1,318,142 75
The Center Renovation and Expansion will entail renovation of existing Center space and 76
construction of new space for the Center as follows: 77 78
Light Renovation 439,960 79
Heavy Renovation 189,605 80
New Construction with Existing 138,315 81
New Construction (not including loading aisles) 550,262 82
Total 1,318,142 83 84
Note that the concourse and meeting South meeting space can combine to form 130,000 85
square feet of contiguous exhibit space adjacent to the 502,000 square feeet exhibit halls, 86
bringing the total to 632,000 square feet. 87
4.1.2. Center Replacement Parking – If only the Base Case is developed, all existing surface 88
parking is maintained and will continue to be available to the public. 89
4.1.3. Hotel - 90
4.1.3.1. Hotel Building - An 800-room convention hotel with 55,000 sf of net rentable 91
meeting space (including a 20,000 sf ballroom and 15,000 sf Jr. ballroom), 63 92
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guest room suites, 540 restaurant/lounge seats, a spa and fitness center, and 93
pool deck amenities. 94
4.1.3.2. Food & Beverage Venue - Additional food and beverage programming for the 95
Hotel of approximately 40,000 sf which would otherwise be located within the 96
Hotel structure is currently planned to be included in an adjacent building. One 97
of the principal objectives of segregating this food and beverage programming 98
from the Hotel structure is to increase connectivity between the Hotel/Center 99
guests and Lincoln Road by fostering Hotel and Center guests to exit the 100
Center and walk south towards the Food & Beverage Venue and closer to 101
Lincoln Road. 102
A summary of the Hotel program is provided in Exhibit 4. See Exhibit 5 for Hotel and 103
Convention Center floor plans and elevations. 104
4.1.4. Hotel Parking – If only the Base Case is developed, the Hotel will work with the City to 105
identify a location within the District Site for the development of a parking garage to satisfy 106
the Hotel parking requirements. 107
4.2. Phase 1 Components - In addition to the Base Case Components in subsection 4.1, Phase 1 108
Components of the Project will include: 109
4.2.1. Cultural Amenity – Approximately 18,000 sf is planned to be developed near the Hotel to 110
house a Cultural Amenity for the District Site. The Cultural Amenity will be financed by the 111
Private sector and is included in the Private Components project budget. 112
4.2.2. 17th Street Garage – The 17th Street Garage, which currently includes 1,450 public spaces, 113
will be renovated by replacing a portion of the public parking spaces with retail/restaurants 114
(approximately 59,500 sf). The displaced parking spaces and additional parking spaces will 115
be relocated to two (2) additional parking levels above the existing 17th Street Garage 116
structure. Upon renovation, the 17th Street Garage will have a total of 1,750 public parking 117
spaces. Master Developer and City will work together to identify a location within the 118
District Site to accommodate a portion of the City’s fleet management operation. 119
4.2.3. Theater – City requested in the RFQ that Master Developer include The Fillmore Miami 120
Beach at the Jackie Gleason Theater (“Theater”) in the Master Plan. Based on the input 121
received from the community, Master Developer has developed a vision for the Theater that 122
maintains the existing Theater but refurbishes it with upgrades to restore the Theater to its 123
original design and make improvements that enhance the District. Master Developer’s 124
vision for the Theater also includes potentially opening the back of the facility to allow for 125
interaction between the outside and inside of the Theater. Upon completion of the 126
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refurbishment, it is anticipated that the Theater will continue to have approximately 2,700 127
seats. 128
The Theater is currently encumbered by a Management Agreement with Live Nation. Live 129
Nation has expressed a willingness to enter into negotiations to potentially restructure the 130
Management Agreement, but only after City has selected the Master Developer for the 131
Project. Master Developer will work with the City, post-selection, to implement this plan for 132
the Theater. It is anticipated that the costs associated with the refurbishment of the Theater 133
will be supported by the new economic terms to be negotiated with Live Nation or with Live 134
Nation’s successor upon modification or expiration of the term of the Management 135
Agreement. The landscaping improvements shown in the Master Plan can be 136
accomplished without modifying the management agreement and are included in the 137
landscape budget. 138
4.2.4. Gleason Name – Master Developer will continue to honor the Gleason name by maintaining 139
the Theater and its existing name and refurbishing the Theater as described above. 140
4.2.5. Residential –261 residential units are to be developed in the “P-Lot” area (See also financial 141
assumptions for rental vs. condo units in subsection 5.4). 142
4.2.6. Public Amenities – Approximately 28 acres out of the 52 acres of ground area of the District 143
Site will be redeveloped into unrestricted public parks and other outdoor public areas, 144
including (a) a recreational area to the north of the Center that will include the preservation 145
of the historic Carl Fisher Clubhouse and house a new community center that will replace 146
the existing community center; (b) a landscaped extension of the Miami Beach Botanical 147
Garden on the band between the residential development on the P-Lot and the Center; (c) 148
park areas in between the new residential buildings on the West portion of the P-lot; (d) 149
significant public open space in the band south of the Center; (e) the widening of the public 150
pedestrian area along Washington Avenue; and (f) open spaces to be created in 151
conjunction with creating retail on Pennsylvania Avenue between 17th Street and Lincoln 152
Lane. A summary is provided in Exhibit 18. The costs of the Public Amenities will be 153
shared by the City and the Master Developer as reflected in the Project budget set forth in 154
Section 6 below. 155
4.2.7. Hotel Parking - The Hotel requires 848 parking spaces per code. The parking requirements 156
of the Hotel will be satisfied in two areas: 1) a 500 space parking garage to be developed 157
by Master Developer and located under the plaza south of the Hotel; and 2) use of 348 158
spaces in a 1,388 space parking garage to be developed by City in air rights over the 159
loading docks and adjacent land north of the Center. The parking garage in (2) above will 160
provide for 1,388 public parking spaces of which 1,040 represent the Center Replacement 161
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Parking upon full development of the Phase 1 components. The Hotel and the Center will 162
enter into an agreement for the Hotel to have use of 348 of the 1,388 public parking spaces, 163
in a form that would allow the Hotel to meet its parking requirements when added to the 164
parking spaces located in the parking garage in (1) above. The Hotel will pay the City for 165
the use of the 348 spaces pursuant to terms and conditions to be agreed upon post 166
selection. Please refer to Exhibit 6 for a site plan of the District Site depicting the proposed 167
location for the parking garages described in this section. 168
4.2.8. Center Replacement Parking - The 1,040 public parking spaces currently available in the 169
two (2) surface parking lots will be replaced in the parking garage described in paragraph 170
4.2.7(2) above. 171
4.2.9. Additional Parking – Taking into account joint parking opportunities, total parking spaces on 172
the site are planned as follows: 173
Spaces Financed Use
Convention Center Replacement 1,388 Public Public*
17th Street Garage 1,750 Private Public
Hotel 500 Private Public
Residential on P-Lot 503 Private Private
4,141
* Hotel will have a right to use 348 of these spaces to meet its parking requirements 174
4.2.10. City Hall – City Hall is not to be redeveloped as part of the Phase 1 Components. However, 175
Master Developer will propose improvements to the landscaping and exteriors of City Hall in 176
a manner consistent with the Master Plan, subject to further negotiation and approval by the 177
City. Funding for these improvements is included in the Project budget for the Public 178
Components. 179
4.2.11. On-site Traffic Improvements – The Master Plan includes the following on-site traffic 180
improvements: (a) streetscape improvements to create a new landscaped median on 17th181
Street that will provide connectivity to Lincoln Road and calm the traffic impact on 17th182
Street. The costs of these on-site traffic improvements are included in the Project budget 183
for the Public Components. 184
4.2.12. Off-site Traffic Improvements: The Master Plan includes the following off-site traffic 185
improvements: (a) static signage at causeway entries; (b) digital signage indicating parking 186
occupancies (and infrastructure to provide parking lot data in Center and Hotel parking 187
garages, City Hall garage, and the 17th Street Garage); and (c) RFID Controlled Bollards to 188
limit through traffic at Palm View and Bayshore (3 locations). The costs of these off-site 189
traffic improvements are included in the Project budget for the Public Components. 190
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191
4.3. Future Components - In addition to the Base Case and Phase I Components, the Master Plan 192
includes the option for the potential development of eighty (80) for-rent residential units above the 193
17th Street Garage. 194
4.4. Traffic Plan – Exhibit 7. 195
4.5. Phasing – 196
4.5.1. Methodology - 197
For the Center to remain as an operating facility throughout the project, construction is required to be 198
phased to accommodate the meeting schedule, and there will be a cost associated with this. This 199
phasing premium can be approached in one of three ways: 200
Add a percentage over trade cost. In this approach, the owner does not know whether there 201
is too little or too much allocated to cover the cost because there is no detail on the specific 202
methodology of the phasing or how the cost premium would break down. 203
Embed the phasing premium in the pricing of the individual elements of the project. In this 204
approach, the owner again does not know whether there is too little or too much allocated to 205
cover the cost and, in addition, the component costs are not shown for what they are really 206
worth. 207
Develop a logistics plan that implements the design relative to the current meeting schedule 208
and then specifically identify the added costs associated with implementing the phasing. 209
Master Developer has chosen this approach. 210
4.5.2 Approach – 211
Master Developer’s approach to the phasing of the Project will enable the Center to remain in 212
operation throughout the construction period. As requested by the operator of the Center, 213
500,000 sf of exhibit space, 130,000 sf of meeting space and 1,040 parking spaces will be 214
available for all shows when necessary. Exhibit 8 provides diagrams to show these phasing 215
plans; in general, Master Developer’s phasing is as follows: 216
Construct two temporary meeting facilities, one to the north and the other to the south, 217
connected to the east concourse to replace the existing meeting space in the west 218
concourse which will be demolished. 219
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Redevelop the 17th Street Garage with retail and 300 additional parking spaces. 223
Construct the new west exhibit hall (“Hall C”) with a new 60,000 sf ballroom, plus two 20,000 224
sf junior ballrooms above (collectively, “West Halls”), as well as new loading docks and 225
1,000 spaces of the parking garage on the north side of the Center and in the interstitial 226
space above Hall C and below the ballrooms. 227
Refurbish the Center’s interior areas in phases between peak demand times in close 228
coordination with the Center. 229
Create a new temporary concourse along the south side of the exhibit halls to provide 230
access to Hall C and Halls A and B. 231
Once the West Halls are complete, remove the north temporary meeting rooms, complete 232
north parking structure to 1,388 spaces and construct the new community center and 233
landscaping. 234
Perform a renovation of the east concourse and meeting rooms in coordination with the 235
Center, phasing this construction to maintain access. 236
The Hotel, Residential, Cultural Amenity, retail, all remaining open space and parks and 237
Theater all are scheduled to be completed within six months of the completion of the Center. 238
4.5.3 Cost Premium 239
Based on the detail provided in Exhibit 8, and as generally stated above, the estimated phasing 240
premium for the Center is approximately $38 million in total construction cost. This is comprised of 241
three main categories: (A) interior building premiums, (B) central plant premiums, and (C) temporary 242
meeting space. 243
(A) The interior building premiums are approximately $13 million and consist of building a temporary 244
meeting concourse to be used by the public during construction, which makes up about half of 245
this cost, and additional costs for temporary partitions, public protection and building protection. 246
(B) The central plant premiums are approximately $11 million. If the Center did not need to operate 247
during construction, the existing equipment would be relocated and reused. However, since the 248
Center will be operational, approximately 75% of the equipment needed will have to be 249
purchased, in order to keep the existing equipment running the Center during construction while 250
the central plant is relocated from its current position. There is a minimal salvage value for this 251
existing equipment, which is incorporated into the overall budget. 252
(C) The temporary meeting space premium is approximately $14 million. In order to maintain the 253
existing client meeting schedule as reviewed with the Center operator, approximately 80,000 SF 254
of temporary meeting space is required. 255 256
4.6. LEED Certification – All components of the Master Plan will achieve a LEED Certification. 257
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5.Site Leases – See Exhibit 9 for a diagram of each site to be leased and Exhibit 10 for a summary of all 258
lease payments including a conservative financing case which assumes Pro Forma growth until 259
stabilization, and then 2% stabilized growth, and a Pro Forma scenario which includes Pro Forma 260
assumptions throughout the term. All site leases will be executed by component after Master Developer has 261
provided evidence reasonably satisfactory to the City that the Master Developer can obtain any required 262
financing. 263
5.1. All Leases – The following will govern all leases 264
5.1.1. Lease payments are paid as an operating expense prior to any debt or equity. 265
5.1.2. The financing for the Public Components and the Private Components are interdependent 266
to be viable. Accordingly, City, Master Developer, public underwriter and private lender(s) 267
will work together to ensure that the entire Project financing can be closed simultaneously, 268
including providing satisfactory evidence to City and the bond purchasers that the Lease 269
payments will commence when necessary to fund the debt payments on the financing for 270
the Public Components. 271
5.1.3. Lease payments will be paid semi-annually, 30 days prior to the semi-annual bond 272
payments. 273
5.1.4. In addition to such other termination provisions as may be negotiated between the parties in 274
the final agreements, a lease will terminate if there is a material change to an agreed upon 275
stated use without City’s reasonable approval. 276
5.1.5. For the Hotel, and in addition to such other termination provisions as may be negotiated 277
between the parties in the final agreements, lease will terminate if the Room Block 278
Agreement is terminated for reasons attributable solely to Hotel Owner or if the Hotel is no 279
longer operated by an approved Hotel Brand/Operator without City’s reasonable 280
approval. 281
5.1.6. The leases will be effective upon closing of the financing and, in addition to such other 282
termination provisions as may be negotiated between the parties in the final agreements, 283
will be terminated if the closing has not occurred by December 15, 2015 (subject to 284
standard extensions for force majeure events, material adverse changes and delays in the 285
schedules set forth in this LOI not attributable to Master Developer, among others). 286
5.1.7. The leases will contain other standard ground lease terms and conditions, including notice 287
and cure periods for events of default and standard lender/leasehold mortgagee 288
protections. 289
5.2. Hotel – Master Developer will jointly lease Site 4 and the air rights of Site 1 from the City for 99 290
years. Lease payments will begin upon opening (i.e., issuance by City of a Temporary Certificate of 291
Occupancy for the entire Hotel) of the Hotel, but in any event no later than December 2018 292
(assuming the Timeline described in Section 8.3.4 and subject to standard extensions for force 293
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majeure events, material adverse changes and delays in the schedules set forth in this LOI not 294
attributable to Master Developer, among others). The Lease payments for each operating year of 295
the Hotel will be in an amount equal to the greater of the Base Rent or the Percentage Rent 296
described below: 297
5.2.1. Base Rent: 298
Year 1 of operations $1,500,000 299
Year 2 of operations $3,000,000 300
Years 3 – 10 of operations $3,500,000 301
Years 11 – 20 of operations $4,500,000 302
Thereafter Increases 10% every 10 years 303
This Base Rent equates to total payments over the term of $605.0 million, or $76.1 million 304
NPV at 5% or $95,164 per room. 305
5.2.2. Percentage Rent: The Percentage Rent for each operating year of the Hotel will be 306
determined based on the gross revenues of the Hotel operation. Percentage Rent will be in 307
an amount equal to: 308
Years 1-10 of operations 3% of Hotel gross revenues 309
Year 11 of operations and thereafter 3.5% of Hotel gross revenues 310
Percentage Rent, assuming market growth upon stabilization, equates to total payments 311
over the term of $3,942.3 million, or $145.1 million NPV at 5% or $276,582 per room. Using 312
our financing case which assumes market growth, followed by 2% growth upon 313
stabilization, equates to total payments over the term of $220.6 million, or $21.6 million NPV 314
at 5% or $27,008 per room. 315
Master Developer’s operating projections for the Hotel reflect Percentage Rent exceeding 316
Base Rent commencing in the first year of operations. 317
5.2.3. 1,000-Room Hotel – At the City’s request, Master Developer has evaluated increasing the 318
room count of the Hotel to 1,000. Under that scenario, Master Developer would be willing 319
to increase the Hotel base rent by $1,000,000. The total base rent for the Hotel, including 320
this increase, equates to total payments over the term of $742 million, or $94.9 million NPV 321
at 5% or $95,000 per room. Please refer to Exhibit 3 for a description of the impact this 322
change in Project scope could have on the financial plan for the Project. 323
5.3. 17th Street Garage – The Master Developer will lease Site 5 from the City for 99 years. Lease 324
payments will begin once Master Developer takes possession of the Site, which will occur upon 325
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issuance of a Full Building Permit by the City for Master Developer’s proposed renovation of the 326
facility (Date of Possession). Annual lease payments for the period commencing on the Date of 327
Possession and during construction will be equal to the facility’s net operating income for the trailing 328
12-month period ending on the Date of Possession. Upon the earlier to occur of (a) the 30-month 329
anniversary of the Date of Possession; and (b) the date on which the retail is 90% occupied, lease 330
payments will increase to the greater of (i) a base rent equal to $6,000,000 per year or (ii) a 331
percentage rent equal to 10% of the annual gross revenues of the 17th Street Garage operation. The 332
base rent will increase by 10% every 10 years commencing on the 10-year anniversary of the date 333
on which the lease payments increased to the greater of base rent or percentage rent. This Base 334
Rent equates to total payments over the term of $928.0 million, or $133.0 million NPV at 5%. 335
5.3.1. Residential (17th Street Garage) – As described in Section 4.3 of this LOI, the Master 336
Developer has proposed to develop eighty (80) for-rent residential units above the 17th337
Street Garage. Lease payments will begin upon opening of the Residential project on the 338
17th Street Garage (i.e., issuance by the City of a Temporary Certificate of Occupancy for 339
the entire residential development on the 17th Street Garage). Lease payments will be in an 340
amount equal to the greater of (i) a base rent equal to $200,000 per year or (ii) a 341
percentage rent equal to 4.5% of the annual gross revenues of the 17th Street Garage 342
residential project. The base rent will increase by 10% every 10 years commencing on the 343
10-year anniversary of the opening of such residential project. This Base Rent equates to 344
total payments over the term of $31.4 million, or $4.6 million NPV at 5% or $58,236/unit. 345
Please refer to Exhibit 3 for a description of the impact that this Future Component could 346
have on the financial plan for the Project. 347 348
5.4. Residential (P-Lot) - The Master Developer will lease Site 2 from the City for 99 years. Lease 349
payments will begin upon opening of the Residential project on the P-Lot (i.e., issuance by the City of 350
a Temporary Certificate of Occupancy for the entire residential project on the P-Lot). Lease 351
payments will be in an amount equal to the greater of (i) a base rent equal to $800,000 per year or 352
(ii) a percentage rent equal to 4.5% of the annual gross revenues of the Residential project. The 353
base rent will increase by 10% every 10 years commencing on the 10-year anniversary of the 354
opening of the Residential project. This Base Rent equates to total payments over the term of 355
$120.0 million, or $16.1 million NPV at 5% or $61,521/unit. If the different buildings that compose 356
the residential component on the P-Lot open on different dates, the base rent will be distributed 357
among the buildings in the proportion of that the number of units on each building bears to the total 358
number of units to be developed on the entire P-Lot and the base rent allocated to each building will 359
commence upon the opening of the subject building. 360
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5.4.1. Residential Land Purchase – The value of the fee simple interest over the P-Lot far exceeds 361
the value of its leasehold interest. If City were willing to sell the P-Lot, the purchase price of 362
the property would exceed the value of the P-Lot ground lease proceeds by approximately 363
$19 million. In addition, City would also receive higher levels of real estate taxes from condo 364
units than from for-rent units. Please refer to Exhibit 3 for a description of the incremental 365
impact that selling the P-Lot could have on the financial plan for the Project. 366
5.5. Cultural Amenity – The Master Developer will lease Site 3 from the City for 99 years. The Lease 367
Agreement will provide for $1 rental payments per year. The Cultural Amenity building is designed to 368
maximize access to the public areas of the District Site by having a footprint of only 5,300 square 369
feet for a building of 18,000 total square feet. 370 371
6.Project Budget – Exhibit 11 provides a detailed summary of the budget for each component of the Master 372
Plan. A summary is as follows (Public Components costs exclude capitalized interest, debt service reserves 373
and other issuance costs): 374
Public
Center Renovation $244,710,264
Center Expansion 212,375,317
Subtotal 457,085,581
Outdoor Public Areas/Canal/Earthworks 60,692,155
Public Parking 57,882,435
Phasing 49,102,846
Total $624,763,017
52%
Private
Hotel Complex (Including Parking & Ancillary F&B) $390,895,559
17th Street Garage Parking & Retail 49,873,218
P-Lot Residential/Parking 112,437,198
Cultural Amenity 6,327,321
Public Areas 10,540,039
Community & Info Centers 8,000,000
Relocated Office Space 5,000,000
Total $583,073,335
48%
TOTAL $1,207,836,352375
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Convention District Letter of Intent Page 14
All costs related to improving Public Components structures to support Private Components are costs of the 376
private sector and not included in any Public Components budget. 377
7. Project Financing 378
7.1. Public Components – The Public Components will be financed as described herein. Exhibit 19 sets 379
forth Goldman, Sachs’ underwriting analysis for the Project financing. 380 381
7.1.1. The following summarizes the sources and uses: 382
Sources
County G.O. Bonds $53,600,000
Resort Tax Bonds Repaid by:
1% HOT Tax 2014 Cash 10,726,123
Project Related Proceeds1 566,163,287
Parking Bonds 73,887,161
Total Sources $704,376,571
1) Includes project resort tax, RDA and CDT generated proceeds
Uses
Project
Convention Center $506,188,427
Outdoor Public Areas/Canal/Earthworks 60,692,156
Public Parking 57,882,436
Subtotal 624,763,019
Capitalized Interest 22,694,370
Debt Service Reserve 46,793,772
Underwriter Fees 5,721,661
Total Uses $699,972,822
Excess Proceeds $4,403,749
7.1.2. Approach – Under this approach the City will utilize the remaining funds from the County 383
G.O. Bond commitment and will issue taxable or tax-exempt bonds to provide funds for the 384
Public Components, excluding the Center Replacement Parking. The Center Bonds will be 385
repaid from the new 1% Resort Tax, Project generated land lease payments, excess 386
proceeds in the RDA available to fund District capital projects, the $4.5 million CDT 387
allocation and Resort Tax generated by the Project. These bonds will be secured by the 388
City-wide Resort Tax. The Parking Bonds are to fund the Center Replacement Parking and 389
are to be repaid from parking revenues and secured by the system-wide Parking Enterprise 390
Fund. 391
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Convention District Letter of Intent Page 15
7.1.3. See Exhibit 12 for a summary of this approach for the Phase 1 Components including 392
sources and uses, projected revenue streams, debt service payments, lost parking revenue 393
funding, Capital Reserve funding, Center operating shortfall funding, net revenues, and 394
coverage under a conservative financing scenario and our Pro Forma assumptions. 395
7.1.4. Center Bonds – The City will issue 30-year tax-exempt bonds currently estimated to be 396
$566 million. The average annual debt service payment under this approach is estimated 397
to be $33 million based on today’s interest rates of 4.11%. The debt service will be repaid 398
by the new 1% Resort Tax, Project generated land lease payments, excess proceeds in 399
the RDA available to fund District capital projects, the $4.5 million CDT allocation and the 400
Resort Tax generated by the Project. In addition, these Bonds will be secured by the City-401
wide Resort Tax Income. 402
7.1.5. Public Parking Bonds – The City will finance Center Replacement Parking through the 403
Parking Enterprise Fund. Net parking revenues are estimated exceed the cost of public 404
parking debt service. The City will issue 30-year tax-exempt bonds currently estimates to 405
be $74 million. The average annual debt service payment under this approach is estimated 406
to be $4.6 million based on today’s interest rates of 4.26%. 407
7.1.6. Center Maintenance – It is recommended that once the Center is open, the City ramp up 408
over the first five (5) years to reserve $3 million annually (increasing annually 2% thereafter) 409
to provide for capital expenditures and Center maintenance. This will provide for the Center 410
to be maintained in a fashion consistent with the standard of maintenance at other First-Tier 411
convention centers (including but not limited to the Orlando/Orange County Convention 412
Center and the San Diego Convention Center). This amount has been accounted for in the 413
overall finance plan and is funded by the Project generated revenues. 414
7.1.7. Public Amenities Maintenance –Master Developer will deliver to the City a budget for the 415
cost of maintaining the Public Areas (Maintenance Budget) and an operating and 416
maintenance plan for the Public Areas (Plan) for the City’s approval. Master Developer 417
estimates the Maintenance Budget to be $1.3 million per year increasing by 2% per annum 418
for basic maintenance. City and the Private Components will enter into a cost sharing 419
agreement to allocate the Maintenance Budget proportionately. The maintenance costs 420
associated with special events programing are not included in Master Developer’s estimate 421
for the Maintenance Budget. At the option of the City and the Private Components, Master 422
Developer is prepared to provide maintenance services for the Public Amenities pursuant to 423
the Maintenance Budget and the Plan. The Maintenance Budget has been accounted for in 424
the overall finance plan for the Public Components and the Private Components. A 425
summary is provided in Exhibit 12h. 426
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Convention District Letter of Intent Page 16
7.1.8. Lost Parking Revenues – The financial plan takes into account the replenishment to the City 427
net parking revenues totaling $3.8 million annually from the 17th Street Parking Garage and 428
surface parking lots lost from the development of the Phase 1 Components during both 429
construction and operations. 430
7.1.9. Operating Subsidy – The financial plan takes into account the potential of a $1.5 million 431
annual operating subsidy. However, Master Developer believes this assumption to be 432
overly conservative. Master Developer in conjunction with Johnson Consulting, a renowned 433
convention center consultant, analyzed the operations and financial performance of the 434
Center and prepared projections for its performance after implementing the Phase 1 scope. 435
In 2012, the Center had a $78,000 profit and since 2009 it has lost between $185,000 and 436
$1.3 million annually. Our projections, which take into account that the Center Expansion 437
is of profitable meeting and ballroom space (not exhibit space), anticipate the Center to be 438
profitable. We are available to review our projections in detail with City. Master Developer 439
recommends reducing the Operating Subsidy reserve by $500,000 which would at a 440
minimum generate $8.25 million of additional bond proceeds for the Project or free bond 441
capacity to use for other City needs. Please refer to Exhibit 3 for a description of the impact 442
this reduction could have on the financial plan. 443
7.1.10. Public Finance Underwriter fees not to exceed 75 basis points of gross proceeds they 444
underwrite. 445
7.1.11. Additional Sources of Bondable Proceeds – Master Developer has identified the following 446
additional sources of bondable proceeds which are not currently included in the financing 447
plan described in this Section 7 but could be used to increase proceeds for the Project or 448
free bond capacity to use for other City needs. Please refer to Exhibit 3 for a more detailed 449
description of the impact on the financial plan of these alternatives. 450
7.1.11.1. Term of Bonds – Per City’s direction, the financing plan described in this LOI 451
assumes that City will issue 30-year bonds based on an assumption that the 452
useful life of the Center will be 30 years. Given City’s plan to establish a well-453
funded CapEx reserve to cover scope beyond typical carpet and furniture 454
replacement, Master Developer believes that the useful life of the Center will be 455
longer than 30 years. If City opted to issue 35-year bonds, City could raise 456
$35.5 million of additional bond proceeds for the Project. 457
7.1.11.2. RDA Extension (City) – The financing plan described in this LOI assumes that 458
the RDA will expire in 2022. If the RDA is extended through 2044 to be 459
coterminous with the term of the Center bonds, City could raise $103.7 million 460
in additional bond proceeds supported by City’s portion of the subject taxes. 461
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Convention District Letter of Intent Page 17
7.1.11.3. RDA Extension (County) – The financing plan described in this LOI assumes 462
that the RDA will expire in 2022. If the RDA is extended through 2044 to be 463
coterminous with the term of the Center bonds, City could raise $90.7 million in 464
additional bond proceeds supported by the county’s portion of the subject 465
taxes. 466
7.1.11.4. Reinvestment of DSRF – City will establish a debt service reserve fund (DSRF) 467
of approximately $41 million in connection with the issuance of the public debt 468
for the Project. At City’s request, the financing plan described in this LOI 469
assumes that the funds on deposit in the DSRF will earn interest at a rate of 1% 470
during the first 3 years of the term of the bonds and 1.5% interest for the 471
remainder of the term. If City opted to invest the DSRF in a AA Guaranteed 472
Investment Contract, currently available at 2.8%, the net present value of the 473
additional investment income generated by the DSRF would be $9.85 million. 474
7.2. Private – Master Developer will secure debt and equity financing for the Private Components. The 475
Private Components are planned to be financed with approximately $297 million in debt and $286 476
million in equity. 477
7.2.1. Equity – The Private Components require an investment of approximately $286 million in 478
equity. Tishman has a long-standing relationship with MetLife having partnered with them 479
on multiple projects for over 25 years. Master Developer and MetLife intend to fund 100% 480
of the equity required for this Project, with MetLife funding 70% – 80% of that amount 481
subject to a final plan and transaction structure as negotiated with and ratified by City and 482
Master Developer, satisfactory cost, budgets and underwriting and securing all approvals 483
required under MetLife’s corporate governance, as set forth in the letter attached hereto as 484
Exhibit 13. Master Developer would fund the remaining 20% – 30% of the equity. 485
7.2.2. Debt – The Private Components require a debt financing in the amount of approximately 486
$297 million. Master Developer has long-standing relationships with multiple lending 487
institutions that have expressed a willingness to provide debt financing for new projects in 488
which the Master Developer is involved. (See Exhibit 14). 489
7.2.3. Approved Brand/Operator Contribution – One or more of the Approved Brand/Operators 490
have expressed a willingness to fund a Brand/Operator Contribution. 491
8. Role of the Master Developer 492
8.1. Community Involvement – Master Developer will continue to engage the community to gain input into 493
the Master Plan as it evolves. Master Developer and the City will mutually agree upon a schedule 494
and process in the Development Agreement for periodic community involvement. 495
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Convention District Letter of Intent Page 18
8.2. Referendum –City will fund the direct costs of undertaking the Referendum (i.e., printing ballots, 496
staffing voting locations, counting votes, etc.). Master Developer will work with other stakeholders to 497
organize and raise funding for the campaign for a vote in favor of the Project in the Referendum. 498
8.3. Public Components 499
8.3.1. Design Review – Master Developer shall comply with the City’s regulatory design review 500
process and shall be responsible for obtaining and securing all final non-appealable design 501
approvals for all components of the Project. In addition, the Master Developer and the City 502
shall mutually agree in the Development Agreement on a schedule and process that will 503
provide City, its professional staff, and its consultants (all acting in the City’s proprietary 504
capacity) with the opportunity to provide periodic input and approvals throughout the design 505
phase of all of the Project components. The final design shall be consistent with the Master 506
Plan to be approved by the City Commission. No material changes may be made to the 507
City-approved Master Plan without prior City approval. 508
8.3.2. Master Developer will work with City to determine the City’s preferred construction delivery 509
method for the Public Components. City has suggested that all Public Components will be 510
delivered by the Master Developer through a Guaranteed Maximum Price or a Design-Build 511
Agreement. Master Developer is prepared to do either option. The Public Component 512
Project Budget is the Master Developer’s best estimate of total Project costs at this 513
conceptual stage of design. Key elements of the process will include: 514
8.3.2.1. GMP Process – Following execution of the Development Agreement, Master 515
Developer and its design team (including, without limitation, its Lead Architect) 516
will work with the City and its advisors to assess options and determine the final 517
design and program specifications for the Public Components, based upon the 518
Master Plan to be approved by the City Commission. As part of its 519
responsibilities under the Development Agreement, Master Developer will 520
advance the design and engineering for the Public Components, coordinate the 521
pre-construction logistics and develop, bid, and ultimately present the GMP to 522
City for approval. Upon completion of the tasks described in the immediately 523
preceding sentence, City and Master Developer will enter into a guaranteed 524
maximum price (“GMP”). The GMP will provide the City, as a third party 525
beneficiary, with all necessary safeguards including, without limitation, 526
indemnification, and naming the City as additional insured and co-obligee on 527
the payment and performance bonds. 528
8.3.2.2. Pre-GMP Costs – Pursuant to the Development Agreement, Master Developer 529
will be reimbursed a fixed maximum of $53 million for all pre-construction costs 530
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Convention District Letter of Intent Page 19
(developer, design, construction manager, etc.) incurred prior to the execution 531
of the GMP or the Design-Build Agreement. This amount assumes the 532
Timeline for the development of the Public Components outlined below. 533
8.3.2.3. Maximum Fees – Fees within the Development Agreement will not exceed the 534
following:535
8.3.2.3.1. Master Developer – totaling $18 million: 536
–Development Management Fee – 1.5% of project costs before 537
financing, excluding the Development Management Fee itself, 538
currently estimated to be $9 million assuming the Timeline 539
outlined below. 540
–Development Reimbursables – 1.5% of project costs before 541
financing, currently estimated to be $9 million assuming the 542
Timeline outlined below 543
8.3.2.3.2. Construction Manager – 2.5% ($11 million) of trade costs, 544
phasing and escalation assuming the Timeline outlined below. 545
Construction manager will be reimbursed for General Conditions 546
in addition to the fee. 547
8.3.2.3.3. Lead Architect Fee (for all firms defined as “Lead Architects” – 548
4.25% or $20 million, assuming the Timeline outlined below. All 549
other design consultants will be competitively bid. 550
All fees and bond costs are included in the Project budget and are provided for 551
in the Project’s sources and uses. 552
8.3.2.4. Cost Savings – Any cost savings realized by development of the Public 553
Components will be shared 50% to the City and 50% to the Master Developer. 554
8.3.3. City Construction Oversight – City will engage a third-party to monitor Master Developer’s 555
progress and ensure the Project is delivered as agreed upon in the Design-Build 556
Agreement. Included in the Center budget is an allowance for these costs of 1% of Project 557
Costs. 558
8.3.4. Timeline – Exhibit 16 summarizes the targeted timeline for the development of the Public 559
Components. The Public Component Project Budget assumes this timeline. 560
8.4. Private Components 561
Master Developer will design, build, finance, and operate (or arrange the operation of) the 562
Private Components. 563
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Convention District Letter of Intent Page 20
8.5. Future Development within District Site – The Lease Agreements for the Private Components will 564
provide Master Developer with the right to approve any future projects proposed within the District 565
Site that may have an impact on the Private Components. 566
8.6. Disadvantaged Business Contracting Goal – Master Developer will contract no less than 20% of the 567
trade cost value with businesses owned by small, local, minority, women and/or other disadvantaged 568
groups. 569
8.7. Convention Center Operations – Master Developer will work closely with the manager of the Center 570
to coordinate its construction work in a manner that will allow the Center to remain in operation 571
throughout the construction cycle. The Convention Center will continue to be operated and 572
managed by Global Spectrum, or its successors, as may be determine by the City in its sole 573
discretion. 574
8.8. City Cost Funding – Upon the later to occur of (a) the execution of the Development Agreement; or 575
(b) the passing of the referendum Master Developer will reimburse the City $1,000,000 for consulting 576
and legal costs related to this transaction. In addition, the Development Agreement will include the 577
costs for City oversight of the Public Components delivery described in Section 8.3.3. 578
8.9. Proposal Costs – Any costs associated with preparing the Master Developer’s proposal will be a cost 579
of the Master Developer and will not be charged back to the City. 580
8.10. Room Block Agreement – Hotel Owner shall enter into a Room Block Agreement consistent with the 581
following key terms: 582
8.10.1. A City-wide Event is an event requiring a three-night stay with at least 1,500 guest rooms 583
on peak with at least 115,000 gross square feet of convention space. 584
8.10.2. Room Block 585
8.10.2.1. For City-wide Events that are to occur at least 30 months in the future, Hotel 586
Owner will make available for City-wide Events eighty percent (80%) of all 587
guest rooms (and associated suites, ballroom, meeting rooms, etc.) for up to 14 588
nights per calendar month subject to standard hotel booking patterns for peak 589
room blocks. 590
8.10.2.2. For City-wide Events that are to occur between 18 and 30 months in the future, 591
Hotel Owner will make available for City-wide Events eighty percent (80%) of all 592
guest rooms (and associated suites, ballroom, meeting rooms, etc.) if rooms 593
and space are available and will make available for City-wide Events eighty 594
percent (80%) of all guest rooms (and associated suites, ballroom, meeting 595
rooms, etc.) for one consecutive four-day period each month for City-wide 596
Events. The Hotel Owner will determine the four-day period.597
8.10.3. Room Block Release 598
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Convention District Letter of Intent Page 21
8.10.3.1. City/GMCVB will provide Hotel Owner a list of Known Release Dates on a 599
periodic basis (not less than semi-annual) listing all future dates the Center 600
cannot be utilized for City-wide Events dues to maintenance, move in/out 601
periods, or any other reason. Hotel Owner will be free to book 100% of the 602
rooms on any of these dates. If a Known Release Date is removed on a 603
subsequent list, the date(s) will fall back under this room block agreement 604
unless the Hotel Owner has already booked such dates(s) for in-house groups. 605
8.10.3.2. Hotel Owner can seek a release of rooms from City for in-house groups in the 606
30 months and out period, and such release will be given unless (i) 607
City/GMCVB is actively negotiating with another group for the period covered 608
by the request for release or (ii) City/GMCVB has historically booked the dates 609
covered by the request for release to a City-wide Event. If a release is given 610
and a subsequent City-wide Event desires to use the previously released dates, 611
Hotel Owner will use its best efforts to accommodate the needs of the proposed 612
City-wide Event. 613
8.10.4. Room Block Pricing 614
8.10.4.1. Hotel Owner shall submit its Initial Offer to participate in a City-wide Event room 615
block at a rate determined in Hotel Owner’s sole discretion. 616
8.10.4.2. Hotel Owner shall submit each January 1 a Minimum Event Block Rate 617
Schedule and Special Event Block Rate Schedule for each day for the next five 618
years. 619
8.10.4.3. The Minimum Event Block Rate Schedule shall be 110% of Owner’s good faith 620
forecast of the group room rates that will be included in the pro forma budget or 621
that are used in projections or forecasts by Owner in making its decisions, and 622
planning for, group bookings in the operation of the Hotel. 623
8.10.4.4. The Special Event Block Rate Schedule shall be 100% of Owner’s good faith 624
forecast of the group room rates that will be included in the pro forma budget or 625
that are used in projections or forecasts by Owner in making its decisions, and 626
planning for, group bookings in the operation of the Hotel. 627
8.10.4.5. For up to 14 nights per calendar month, if prior to acceptance of the Initial Offer, 628
City reasonably and in good faith believes that it might be in the City’s best 629
interest to compel the Hotel Owner to offer a City-wide Event an alternative rate 630
structure, City may elect to require the Hotel to offer a rate lower than the rate 631
in the Initial Offer, but in no event lower than the rate in the Minimum Event 632
Block Rate Schedule. If the City-wide Event occurs beyond the five-year 633
schedule, the Minimum Event Block Rate shall be determined using an usual 634
21 South Beach ACE Letter of Intent
South Beach ACE
Convention District Letter of Intent Page 22
and customary industry inflation factor as reasonably agreed upon by Hotel 635
Owner, Operator and City. 636
8.10.4.6. For up to six City-wide Events per year, if prior to acceptance of the Initial Offer 637
City reasonably and in good faith believes that it might be in the City’s best 638
interest to compel the Hotel Owner to offer the City-wide Event an alternative 639
rate structure, City may elect to require the Hotel to offer a rate lower than the 640
rate in the Initial Offer, but in no event lower than the rate in the Special Event 641
Block Rate Schedule. If the City-wide Event occurs beyond the five-year 642
schedule, the Special Block Rate shall be determined using an usual and 643
customary industry inflation factor as reasonably agreed upon by Owner, 644
Operator and City. City-wide Events utilizing this clause count toward the 645
maximum 14 nights per month subject to this room block commitment. 646
8.10.5. The Room Block Agreement will constitute a restriction against the Hotel Site, running with 647
the land and binding on all successors in title, and shall be superior to all deed of trust liens 648
against the Hotel Site. 649
8.10.6. Term shall continue until the earlier to occur of the following events: (i) the Convention 650
Center is no longer designated by the City as its principal convention center, or (ii) the 651
Convention Center is no longer operated and maintained in a manner consistent with other 652
first-class convention centers. 653
8.11. Use and Access Agreement for Ballroom – Hotel Owner and City shall enter into a Ballroom Use and 654
Access Agreement post-selection. This agreement will provide Hotel Owner with the non-exclusive 655
ability to book the Center ballrooms and meeting space within a relatively short booking window on 656
terms and conditions to be agreed upon with City. 657
8.12. Convention Center Booking Policy – It is recognized that the renovation/expansion of the Center and 658
development of the Hotel is being done in an effort to increase the room night impact on the 659
community. It is also recognized that the Center’s and Hotel’s success is dependent upon booking 660
City-wide Events generating room nights. Therefore, City shall modify the Center Booking Policy, to 661
minimize the impact of the non-room night generating events included in the definition of First Priority 662
Events. While the Center will use its best efforts to accommodate these non-room night generating 663
events, such events may need to move their dates if a City-wide Event can be booked. The modified 664
Center Booking Policy will require approval of the Convention Center Advisory Board and the City 665
Commission. 666
8.13. City Community Benefit Fund – In the event that the Master Developer leases the Theater from the 667
City:668
8.13.1. Ticket Surcharge – Master Developer agrees to continue to fund the City Community 669
Benefit Fund by collecting a $1.50 per ticket surcharge on ticketed public events at the 670
22 South Beach ACE Letter of Intent
South Beach ACE
Convention District Letter of Intent Page 23
Theater. Collections will be deposited in the City’s Community Benefit Fund and utilized for 671
discounted ticket program for senior citizen and student residents of the City. 672
8.13.2. Resident Ticket Program – Master Developer agrees to continue to provide a resident ticket 673
program, providing City residents priority access to up to 100 tickets per event. Master 674
Developer will determine which events are available for this program and the resident 675
purchasing the tickets will pay the full ticket price and any applicable surcharge or 676
commissions. 677
9. Role of the City 678
9.1. Height – After the passing of the public referendum, City will agree to increase the height limitation 679
for the development of the Hotel and the Residential development on the Site consistent with the 680
Master Plan set forth on Exhibit 17, up to 195 feet for the Hotel and 120 feet for the Residential 681
development. 682
9.2. Public Parking – City will operate and maintain the public parking in a manner consistent with other 683
City parking garages. The parking garage over the loading docks and to the north of the Center is 684
proposed to be joint use for the Hotel and the Center. Master Developer and City will agree on the 685
terms and conditions governing the Hotel use of the garage and payment therefor. 686
9.3. Beach Access – Master Developer intends to provide beach access to its Hotel guests, whether by 687
bidding for a concession on beachfront property where City is the upland owner or by negotiating 688
with one of the private owners of beachfront upland property. 689
9.4. Public Art Requirement – After the passing of the public referendum, City will agree to reduce the 690
requirement for investment in public art for the Public Components from 1.5% to 0.75% of 691
construction costs. Given the magnitude of the Project, an investment in public art of 0.75% of 692
construction costs will result in a sizable investment of $3.2 million by the Project. In addition, 693
Master Developer is proposing to invest $6.9 million in the Cultural Amenity which brings an 694
additional art element to the District Site and the City of Miami Beach.695
9.5. City Cooperation –City will fully cooperate with efforts to (a) secure federal, state, and local 696
economic incentives in support of the Master Plan, (b) expedite permitting required to develop the 697
Master Plan, (c) process any required Planning, DRB, HP Board approvals related to the Master 698
Plan, and (d) educate the Miami Beach electorate about the referendum. Nothing herein shall be 699
construed to waive or limit the governmental authority of the City, as a political subdivision of the 700
State of Florida, to regulate the Master Developer or the development of the Master Plan. 701 702
10.Timeline – Below is a summary of certain target milestones contained in the Timeline set forth on Exhibit 703
16.704
10.1. Referendum – November 2013 705
23 South Beach ACE Letter of Intent
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Convention District Letter of Intent Page 24
10.2. Development Agreement Execution (forms of Lease Agreement for each Private Component and of 706
the Room Block Agreement to be attached as exhibits to the Development Agreement) – January 707
2014 708
10.3. Convention Center 709
10.3.1. Design Start – January 2014 710
10.3.2. Construction Start – March 2015 711
10.3.3. Completion – February 2018 712
10.4. Private Components 713
10.4.1. Hotel Completion – August 2018 714
10.4.2. 17th Street Garage Completion – September 2015 715
10.4.3. Theater – Eight (8) months of construction. Scheduled to open with Hotel. 716
10.4.4. Cultural Building – Sixteen (16) months of construction. Scheduled to open with Hotel. 717
10.4.5. P-Lot Residential – Twenty (20) months of construction. Scheduled to open with Hotel. 718
10.5. Other Public Components 719
10.5.1. Community Center Building, North Park, and all North Park areas – December 2017. 720
10.5.2. Remaining Public Parks and open spaces (beyond North Park) – Scheduled to open at or 721
about Hotel opening. 722
11. Termination 723
11.1. Phase I Private Component Financing Completion Date – December 31, 2015 (subject to standard 724
extensions for force majeure events, material adverse changes and delays in the schedules set forth 725
in this LOI not attributable to Master Developer, among others). 726
11.2. Public Financing – December 31, 2015 (subject to standard extensions for force majeure events, 727
material adverse changes and delays in the schedules set forth in this LOI not attributable to Master 728
Developer, among others). 729
11.3. Financing Completion Date – In addition to such other termination provisions as may be negotiated 730
between the parties in the final agreements, City will have the right to terminate the Development 731
Agreement if private financing (and all Master Developer provided equity) for the Phase 1 Private 732
Components is not secured in a form reasonably acceptable to City by December 31, 2015 (subject 733
to standard extensions for force majeure events, material adverse changes and delays in the 734
schedules set forth in this LOI not attributable to Master Developer). 735
24 South Beach ACE Letter of Intent
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Convention District Letter of Intent Page 25
11.4. Hotel Construction Start Date – In addition to such other termination provisions as may be negotiated 736
between the parties in the final agreements, City will have the right to terminate the Development 737
Agreement if Base Case construction has not begun by December 31, 2015 (subject to standard 738
extensions for force majeure events, material adverse changes and delays in the schedules set forth 739
in this LOI not attributable to Master Developer, among others). 740 741
12. Miscellaneous 742
12.1. Governing Law – This LOI shall be governed by and construed in accordance with the laws of the 743
state of Florida. This LOI sets forth the entire agreement between the parties in regard to the subject 744
matter hereof and supersedes any and all prior agreements between the parties in regard to the 745
subject matter hereof. The federal district courts for the State of Florida and the state district courts 746
located in Miami-Dade County, Florida shall be the exclusive places of venue in regard to any 747
dispute arising out of this LOI. 748
12.2. No Representations – Except as expressly set forth in the Development Agreement, neither party 749
shall be deemed to have made any representations, warranties or guaranties to the other regarding 750
the Project, including, without limitation, any future financial performance to be derived from 751
investment in the Project. 752
12.3. Use of Estimates – All square footage, dollar and other figures included in this LOI represent the 753
Project team’s best estimates based on the conceptual designs shown and current market conditions 754
and are subject to revision as the master plan evolves post-selection and changes in market 755
conditions.756
12.4. Tourism Economy Impact of Project – City has advised that the RFQ requirement to include an 757
analysis of the impact of the proposal on the Miami Beach tourism economy is not required because 758
City’s consultant will conduct the economic impact analysis for both teams’ proposals so that the 759
analyses will have common assumptions. 760
12.5. LOI – The parties agree to sign this LOI promptly after City Commission approval. 761
12.6. Exclusivity – As a material inducement for the Master Developer to conduct due diligence with 762
respect to the Project and to expend money negotiating the Development Agreement and the other 763
Transaction Documents, City agrees that upon selection of the Master Developer pursuant to RFQ 764
22-11/12 that the City will negotiate exclusively with the Master Developer with respect to the 765
development of the Project. 766
12.7. Binding Provisions – This LOI is an expression of the parties’ intent with regard to the Project. It is 767
understood and agreed that this LOI will not, except as provided under the Exclusivity paragraph 768
above, under any circumstances, whether at law or in equity, be or be deemed to be a binding 769
25 South Beach ACE Letter of Intent
South Beach ACE
Convention District Letter of Intent Page 26
agreement, and that no such binding agreement between City and Master Developer shall exist 770
unless and until a mutually satisfactory Development Agreement is executed and delivered by both 771
Master Developer and City 772 773
774 775
[Remainder of Page Left Blank; see Following Page for Signatures] 776 777
26 South Beach ACE Letter of Intent
South Beach ACE
Convention District Letter of Intent Page 27
SIGNATURES 778 779
SOUTH BEACH ACE, LLC 780 781
By: ___________________________________ 782
Name: 783
Title:784 785
CITY OF MIAMI BEACH 786 787
By: ____________________________________ 788
Name: 789
Title:790 791 792
27 South Beach ACE Letter of Intent