20130930 SM2MIAMI BEACH
Special City Commission Meeting
SUPPLEMENTAL MATERIAL 2
City Hall, Commission Chambers, 3rd Floor, 1700 Convention Center Drive
September 30, 2013
Mayor Matti Herrera Bower
Vice-Mayor Edward L. Tobin
Commissioner Jorge R. Exposito
Commissioner Michael G6ngora
Commissioner Jerry Libbin
Commissioner Deede Weithorn
Commissioner Jonah Wolfson
City Manager Jimmy L. Morales
City Attorney Jose Smith
City Clerk Rafael E. Granado
Visit us at www.miamibeachfl.gov for agendas and video "streaming" of City Commission Meetings.
ATTENTION ALL LOBBYISTS
Chapter 2, Article VII, Division 3 of the City Code of Miami Beach entitled "Lobbyists" requires the
registration of all lobbyists with the City Clerk prior to engaging in any lobbying activity with the City
Commission, any City Board or Committee, or any personnel as defined in the subject Code
sections. Copies of the City Code sections on lobbyists laws are available in the City Clerk's office.
Questions regarding the provisions of the Ordinance should be directed to the Office of the City
Attorney.
SUPPLEMENTAL AGENDA
R5-Ordinances
RSD An Ordinance Amending Part I, Subpart B, Article IX, Related Special Acts, Of The Miami
Beach City Code Entitled "Pension System For Disability And Retirement Of Members Of Police
And Fire Departments"; Implementing Provisions Of The 2012-2015 Collective Bargaining
Agreements Between The City And Fire Fighters Of Miami Beach, IAFF Local1510, And Miami
Beach Fraternal Order Of Police, William Nichols Lodge No.8; Amending Section 62 Entitled
"Definitions"; Amending Section 63 Entitled "Source Of Monies For Fund; Computation Of
Liability; Use And Investment Of Fund"; Amending Section 65 Entitled "Computation Of
Creditable Service; Service Record"; Amending Section 66 Entitled "Service And Disability
Benefits Generally"; Amending Section 67 Entitled "Cost Of Living Adjustment"; Amending
Section 79 Entitled "Deferred Retirement Option Plan"; Amending Section 82 Entitled "Military
Service"; Creating A New Section 88 Entitled "Benefits For Members Hired On Or After
September 30, 2013, Providing For Severability; Repealing All Ordinances In Conflict Therewith;
And Providing For An Effective Date. 5:04p.m. Second Reading Public Hearing
(Sponsored by Commissioner Deede Weithorn)
(Legislative Tracking: Human Resources)
(First Reading on September 11, 2013)
(Memorandum & Ordinance)
1
Supplemental Agenda, September 30, 2013
R7 • Resolutions (Continued)
R7Q A Resolution Approving The Terms Of A License Agreement Between The City And Destination
Brands For An Exclusive Miami Beach Sun Care Line, Which Is Attached As Exhibit "A," With Said
Agreement Having An Initial Term Of Five (5) Years; And Authorizing The Mayor And City Clerk To
Execute The Final Agreement; Provided, However, That In The Event That The Final Negotiated
Agreement Includes Any Term Or Terms Which Substantially Deviate From The Approved
Substantive Terms (As Referenced In The Attached Exhibit "A"), Or Contain New And/Or Additional
Terms Which, In The City Manager And City Attorney's Opinion, Materially Alter The Proposed
Transaction, Then Requiring That The Final Negotiated Agreement To Be Brought To The City
Commission For Its Consideration.
(Tourism, Culture And Economic Development)
(Memorandum)
R9 • New Business and Commission
R9A The Committee Of The Whole Will Meet At 5:00p.m. On September30, 2013 At The City Manager's
Office Large Conference Room To Discuss The Florida Third District Court Of Appeal Decision In: Let
Miami Beach Decide v. City Of Miami Beach And SBACE. LLC, Third District Court Of Appeal, Case
#3D 13-2243; Lower Tribunal Case No. 13-025234 CA 13.
(City Attorney's Office)
(Revised Item)
2
ii
COMMISSION ITEM SUMMARY
Condensed Title:
An Ordinance Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Amending Part I, Subpart 8, Article lx,
Related Special Acts, Of The Miami Beach City Code Entitled "Pension System For Disability And Retirement Of Members Of
Police And Fire Departments"; Implementing Provisions Of The 2012-2015 Collective Bargaining Agreements Between The
City And Fire Fighters Of Miami Beach, IAFF Local 1510, And Miami Beach Fraternal Order Of Police, William Nichols Lodge
No. 8; Amending Section 62 Entitled "Definitions"; Amending Section 63 Entitled "Source Of Monies For Fund; Computation Of
Liability; Use And Investment Of Fund"; Amending Section 65 Entitled "Computation Of Creditable Service; Service Record";
Amending Section 66 Entitled "Service And Disability Benefits Generally"; Amending Section 67 Entitled "Cost Of Living
Adjustment"; Amending Section 79 Entitled "Deferred Retirement Option Plan"; Amending Section 82 Entitled "Military Service";
Creating A New Section 88 Entitled "Benefits For Members Hired On Or After September 30, 2013, Providing For Severability;
Repealing All Ordinances In Conflict Therewith; And Providing For An Effective Date.
Ke Intended Outcome Su orted:
Item Summa_ry/Recommendation:
Second Reading
The Commission ratified a three-year labor agreement. October 1, 2012 through September 30, 2015, between the City and the
IAFF on July 17, 2013. On September 11, 2013, the City Commission adopted a resolution ratifying an amended three-year
labor agreement covering the period of October 1, 2012 through September 30, 2015, between the City and the FOP. Included
in the individual agreements are significant pension changes for both current and future employees that will yield short-term and
long-term recurring savings. The pension changes include the following for current employees: Final Average Monthly Earnings
(FAME) will be based on the 3 highest years; the maximum benefit is capped at 85 percent of pensionable earnings,
grandfathering anyone who has already exceeded that percentage to a maximum of 90 percent; 5-year vesting period, buy
back of prior creditable service limited to two years of military service with a maximum benefit multiplier of 6percent; elimination
of the ability to utilize accrued leave to purchase additional benefits. maximum overtime applied toward pensionable earnings
not to exceed 300 hours; implementing the retiree cost of living adjustment (COLA) while participating in the 5 year Deferred
Retirement Option Plan (DROP) with the ability to receive a one-time leave settlement payout while in DROP; a benefit
multiplier of 3% for the first 20 years and 4 percent thereafter, 47 is the minimum retirement age for pre-July 2010 employees
and 48 for post-July 2010 members.
The changes for new employees hired on or after September 30, 2013 also include: all new hires will become members of the
plan immediately upon employment, employee contribution will rise to 10.5 percent of pensionable earnings, FAME will be
based on the highest 5 years. In addition, no employee will be permitted to transfer from the general employee's pension plan
into the Fire and Police Pension Plan. In addition, the City Commission adopted the Budget Advisory Committee's
recommended pension policies and guidelines at the July 17, 2013 City Commission meeting. The relating policies are also
included in the proposed amendment to the Fire and Police Pension ordinance.
Adviso Board Recommendation:
ust 29, 2012
Source of Amount
Funds: 1 FY2012/2013
$0
!Yi FY20 13/2014 Reduction of the City's Annual Required Contribution
2 ($5.66 Million) attributed to pension changes.
3 FY2014/2015 Reduction of the City's Annual Required
($6.02 Million) Contribution attributed to pension changes.
OBPI Total ($11.68 Million)
Financial Impact Summary: The projected 30-year net present value savings for these changes is estimated at
approximately $140 million. The Actuarial Impact Statement by Buck Consultants is provided as Attachment 1 and the
Actuarial 30 year analysis is provided as Attachment 2. The estimated 5-year impact is a savings of $32.02 million.
The total savings for FY2013/2014 is $5.66 million, of which, approximately $430,000 has already been recognized in
the October 1, 2012 adopted Actuarial Valuation Report (see Attachment 3).
City Clerk's Office Legislative Tracking:
Sylvia Cres_p_o-Tabak, Human Resources Director
Si n-Offs:
C9 MIAMIBEACH 3
DA ITEM RS D
DATE =.!£3Q-:13__
I
~ MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
CO MISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and M
FROM Jimmy L. Morales, City Manager j-t---.:
DATE: September 30, 2013 SECOND READING
SUBJECT: AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, AMENDING PART I, SUBPART B, ARTICLE IX, RELATED SPECIAL
ACTS, OF THE MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM FOR
DISABILITY AND RETIREMENT OF MEMBERS OF POLICE AND FIRE DEPARTMENTS";
IMPLEMENTING PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF MIAMI BEACH, IAFF
LOCAL 1510, AND MIAMI BEACH FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS
LODGE NO.8; AMENDING SECTION 62 ENTITLED "DEFINITIONS"; AMENDING SECTION
63 ENTITLED "SOURCE OF MONIES FOR FUND; COMPUTATION OF LIABILITY; USE
AND INVESTMENT OF FUND"; AMENDING SECTION 65 ENTITLED "COMPUTATION OF
CREDITABLE SERVICE; SERVICE RECORD"; AMENDING SECTION 66 ENTITLED
"SERVICE AND DISABILITY BENEFITS GENERALLY"; AMENDING SECTION 67
ENTITLED "COST OF LIVING ADJUSTMENT"; AMENDING SECTION 79 ENTITLED
"DEFERRED RETIREMENT OPTION PLAN"; AMENDING SECTION 82 ENTITLED
"MILITARY SERVICE"; CREATING A NEW SECTION 88 ENTITLED "BENEFITS FOR
MEMBERS HIRED ON OR AFTER SEPTEMBER 30, 2013, PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN CONFLICT THEREWITH; AND
PROVIDING FOR AN EFFECTIVE DATE.
ADMINISTRATION RECOMMENDATION
The Administration recommends adopting the ordinance.
BACKGROUND
The City's workforce is divided into seven salary groups: (1) those covered by the American Federation
of State, County and Municipal Employees, Local1554 (AFSCME) bargaining unit; (2) those covered by
the Communications Workers of America, Local 3178 (CWA) bargaining unit; (3) those covered by the
Government Supervisors Association of Florida/OPEIU, Local 100 (GSA) bargaining unit; {4) those
covered by the Fraternal Order of Police, William Nichols Lodge No. 8 (FOP) bargaining unit; (5) those
covered by the International Association of Fire Fighters, Local 1510 (IAFF) bargaining unit; (6) those
employees who are at-will and are known as unclassified; and (7) "Others" (classified service employees
not represented by a bargaining unit).
4
City Commission Memorandum
September 30, 2013
Fire and Police Pension -1st Reading
Page 2 of6
On September 30, 2012, the three-year collective bargaining agreement between the City of Miami
Beach and the IAFF (covering the period of October 1, 2009 through September 30, 2012) expired.
Negotiations for a successor agreement began on September 19, 2012. On July 17, 2013, the City
Commission ratified a three-year collective bargaining agreement covering the period of October 1, 2012
through September 30, 2015, between the City of Miami Beach and the IAFF, subject to the IAFF
ratifying the agreement among their membership, which if passed, would determine the effective
ratification date. Subsequently, on August 7, 2013, the IAFF confirmed the passage of the contract by
the majority of their voting membership.
On September 30, 2012, the three-year collective bargaining agreement between the City of Miami
Beach and the FOP (covering the period of October 1, 2009 through September 30, 2012) also expired.
Negotiations for a successor agreement began on September 19, 2012. On July 19, 2013, the City
Commission ratified a three-year collective bargaining agreement covering the period of October 1, 2012
through September 30, 2015, between the City of Miami Beach and the FOP, subject to the FOP ratifying
the agreement among their membership, which if passed, would determine the effective ratification date.
The agreement ratified by the City Commission included two substantive changes (which were made
from the dais and approved by a vote of 6:1) from the terms that were tentatively agreed upon between
the City and the FOP. These changes included implementing for all members, excluding any current
police sergeants or police lieutenants, that the total maximum pension benefit could not exceed eleven
percent of the member's salary upon retirement and implementing a voluntary fitness program on a
quarterly basis available to all FOP bargaining unit members. Based on the changes made on the floor
during the City Commission meeting, the FOP and the City renegotiated certain provisions of the contract
that was ratified on July 19, 2013. On September 11, 2013, the City Commission adopted a resolution
accepting the amended2012-2015 collective bargaining agreement with the FOP that had been
previously ratified on July 19, 2013.
In the adopted FY 2012/13 budget, employee givebacks represented $3.782 million in savings
(approximately $3 million in the General Fund) which were to be allocated among the seven salary
groups. The methodology to allocate the givebacks for each salary group was the proportionate share of
the City's total costs for pension and health benefits for FY 2012/13, as in recent years these have been
major personnel expenditure cost drivers. However, no significant savings were achieved for FY
2012/13 from any employee group covered by a bargaining unit.
The prior collective bargaining agreements (October 1, 2009-September 30, 2012) between the City
and IAFF and the City and FOP, included a number of pension changes for the Fire and Police Pension
Plan that were implemented in 201 0; however, these pension changes did not significantly impact
existing employees and were insufficient to address the short term and increasing benefit cost which, in
recent years, has represented the fastest growing cost in the City's budget. The adopted October 1,
2012 Actuarial Valuation Report for the Fire and Police Pension Plan estimates the City's Annual
Required Contribution (ARC) payable October 1, 2013, to be $41.08 million. This represents an increase
of $1.8 million in the Fire and Police Pension Plan when compared to last year.
The City initially proposed the Budget Advisory Committee's (BAC) August 29, 2012, recommendation of
a hybrid plan for new and non-vested employees in the Fire and Police Pension Plan. The BAG
recommendation was anticipated to save $2.5 million in year one and a $74 million net present value
over thirty years based on the October 1, 201 0, Valuation Report data. The City's actuary updated the
estimated figures based on the October 1, 2011, Valuation with an estimated savings of $3.6 million in
year one.
5
--~----~----~ ---
City Commission Memorandum
September 30, 2013
Fire and Police Pension -1st Reading
Page 3 of6
The Administration received direction from the City Commission to negotiate changes to the Fire and
Police Pension Plan that would generate a savings of $6-$8 million from the City's ARC in the first year.
In addition, any negotiated pension changes would need to yield recurring, annual savings from the City's
ARC, as well as a reduction to the Unfunded Actuarial Accrued Liability (UAAL).
ANALYSIS
After numerous negotiations, the City reached agreements with both the IAFF and the FOP which
include significant pension changes for both current and future employees who participate in the Fire and
Police Pension Plan. These changes include the follow:
Pension Adjustments/Changes
(Note: The effective date for the following proposed changes is September 30, 2013. unless otherwise
noted.)
• Final Average Monthly Earnings (FAME)-Effective September 30, 2015, the FAME for current
IAFF and FOP bargaining unit employees hired prior to September 30, 2013, will be based on the
average of the three (3) highest years; and employees hired on or after September 30, 2013, will
be based on the average of the five (5) highest years.
• Maximum Benefit-Currently, the maximum pension benefit for post May 1993 members is 90
percent of pensionable earnings. Effective September 30, 2013, the maximum benefit will be
reduced to 85 percent of pensionable earnings for all post May 1993 members. Employees, who
as of September 30, 2013, have attained a pension benefit of 85 percent or higher, are eligible to
continue to earn the 90 percent maximum benefit. In addition, any police officer member who was
hired due to a consent decree shall also be grandfathered and may continue to earn the 90
percent maximum benefit.
• Vesting-The vesting period was reduced from ten to five years.
• Prior Creditable Service-Currently, upon completion of ten years of creditable service (vesting)
with the City, employees can purchase prior creditable service of up to two years of full-time
public safety service as a public safety officer prior to City employment, up to four years of military
service and up to an additional six percent multiplier on the additional creditable service years
purchased; however, the maximum benefit purchased cannot exceed twelve percent. Effective
September 30, 2013, all bargaining unit employees participating in the Fire and Police Pension
Plan will be limited to purchasing only up to two years of military service, at three percent each
year for a maximum benefit of six percent. The employee will pay the equivalent of their
employee contribution amount in effect at the time of purchase (1 0 percent per year of purchase
for employees hired prior to ratification of their respective collective bargaining agreement and
10.5 percent per year of purchase for all employees hired thereafter).
• Probationary Period and Contribution of Pensionable Earnings -All new hires will become
members of the Fire and Police Pension Plan effective upon their hire date and will start
contributing 10.5 percent of their pensionable earnings immediately.
6
City Commission Memorandum
September 30, 2013
Fire and Police Pension -1st Reading
Page 4 of6
• Overtime. Off-dutv. Accrued Leave and Other Pavs-In the past, employees were able to apply
unused sick and/or vacation time for inclusion in their salary for pension purposes at the
equivalent rate of their employee pension contributions. For example: for each $100 of unused
sick and/or vacation time (at the member's hourly rate), $90 was applied toward their FAME and
$10 contributed to the pension fund.
As a result of recent changes in Florida statutes, accrued leave can no longer be used to
increase pension benefits and the application of overtime toward the FAME is limited to a
maximum of 300 hours. As part of the agreement between the City and the FOP, the definition of
salary excludes any payments relating to hazardous duty pay, domestic partner tax credit
reimbursements, and any payments to police officer members for voluntarily participation in a
physical fitness assessment program offered by the City.
• Deferred Retirement Option Plan (DROP) and Retiree COLA -Currently bargaining unit
employees hired prior to July 14, 2010, receive a 2.5 percent annual retiree COLA, unless they
entered the DROP after September 1, 2012, and forfeited the retiree COLA for years three and
four in the DROP.
Bargaining unit employees hired on or after July 14, 2010, are eligible to receive a 1.5 percent
annual retiree COLA.
Any member who joins the DROP on or after September 30, 2013, will be eligible to receive a
retiree COLA each year that they participate in the DROP. The rate at which the member earns
his/her annual retiree COLA shall be based on hire date (2.5 percent for all pre-2010 members
and 1.5 percent for all post-201 0 members).
• DROP and Leave Payouts-Effective October 1, 2013, any bargaining unit member currently
participating in the DROP, or who enters the DROP, may elect to request a full or partial payment
of earned sick and vacation leave balances up to the maximum amount stipulated in each of the
respective collective bargaining agreements and applicable pension ordinance. Eligible
employees will have until June 30 of each year to exercise this option, and receive payment
during the first pay period ending in October of the same year. Any amount paid out to an
employee upon entering the DROP will be deducted from the cap for their maximum leave payout
upon leaving the DROP.
• Miami Beach Emplovees' Retirement Plan (MBERP) Service Transfer-Upon ratification of the
collective bargaining agreement, MBERP members will not be eligible to transfer creditable
service time from MBERP to the Fire and Police Pension Plan if they are subsequently employed
in a classification covered by the IAFF or FOP bargaining units.
• Retirement Age-Under the current contracts, employees hired prior to July 14 2010, can retire
at either the rule of 70 (age plus creditable years of service) or at age 50. Effective September
30, 2013, employees hired before July 14, 2010, may retire based on the rule of 70 with a
minimum age of 4 7. Employees hired on or after July 14, 2010, may retire based on the rule of 70
with a minimum age of 48.
However, because some members who have already purchased additional creditable service
may reach the maximum benefit of 85 percent prior to age 47, the City has agreed that upon
reaching maximum pension benefit, the employees will cease making their pension contribution
and their FAME will freeze at the same time.
7
City Commission Memorandum
September 30, 2013
Fire and Police Pension-1st Reading
Page 5 of6
• Benefit Multiplier-Effective September 30, 2013, the benefit multiplier for all bargaining unit
(IAFF and FOP) members shall be three percent for years one through twenty, and four percent
per year thereafter.
Changes for New Employees Hired After Ratification
• Employee pension contribution; 10.5% of pensionable earnings
• FAME; 5 highest years
• Enter directly into the Fire and Police Pension Plan upon hire date (vs. currently enter upon
successful completion of probationary period (12 months for Firefighter and 18 months for
Police Officer).
According to Buck Consultants, the actuary for the Fire and Police Pension Plan, the aforementioned
changes that have been agreed to by both FOP and IAFF are projected to generate savings as follows:
ARC Savings Unfunded Liability Savings
(in Millions) (in Millions)
Year1 $5.66 $24.36
Year2 $6.02 $24.23
Year3 $6.35 $23.51
Year4 $6.99 $29.95
YearS $7.00 $34.44
YearS $8.66 $40.22
Further, the projected 30-year net present value savings for these changes is estimated at
approximately$140 million. The Actuarial Impact Statement by Buck Consultants which represents the
savings to the City's ARC payable on October 1, 2013 is provided as Attachment 1. It should be noted
that the Actuarial analysis for all of the negotiated pension changes for FOP and IAFF has since been
revised from when it was presented at first reading during the September 11, 2013 City Commission
meeting. The negotiated terms and conditions with both the IAFF and the FOP included a retiree COLA
adjustment in years three and four of the five year DROP for all members who enter the DROP on or
after September 30, 2013., Although this benefit was negotiated with both the IAFF and the FOP, the
actuaries initial analysis failed to take this into account. The actuary has revised the thirty year Actuarial
analysis to include this negotiated benefit and is provided as Attachment 2.
At the July 17, 2013 City Commission meeting, the City Commission adopted a number of policies and
guidelines relating to the City's two pension plans (Attachment 2). Therefore, included in the proposed
amendments to the Fire and Police Pension ordinance are the following pension policies:
• The City shall fund at least the normal cost of pension. If this exceeds the amount of the
actuarially determined annual required contribution, the excess should be placed in a pension
stabilization fund, to be made available for future pension shortfalls.
• The City should require 5, 10 and 20 year projections of required pension contributions as part of
the annual actuarial valuations for each of the City's pension plans. These projections shall be
based on the current actuarial assumptions for each plan. The projections shall be updated to
reflect the cost of any proposed benefit enhancement before the City Commission agrees to the
8
City Commission Memorandum
September 30, 2013
Fire and Police Pension -1st Reading
Page 6 of6
enhancement. The cost of these studies shall be funded separately from the annual contribution
to the pension plan
• There shall be an experience study of each of the City's pension plans' actuarial assumptions
performed by an actuary that is independent from the pension board. The experience study
should be conducted at least once every three years to compare actual experience to the
assumptions. The independent actuary shall make recommendations for any changes in
assumptions based on the results of the experience study, and any deviations from those
assumptions by the pension boards shall be justified to the City Commission.
CONCLUSION
The terms and conditions of the ratified three year labor agreement between the City and IAFF and the
agreement with the City and FOP includes significant changes to pension benefits for current employees
that will result in long-term, recurring pension savings. Based on the Actuarial Impact Statement provided
by Buck Consultants (Attachment 1 ), the total pension Plan savings for both Fire and Police which,
include changes for future employees, will yield a savings of ($5.66 million) in FY 2013/14 and a savings
of ($6.034) in FY 2014/15, for a total savings of ($11.694) million over the term of the contacts, and $140
million in net present value savings over thirty years. It should be noted that on September 19, 2013, the
Fire and Police Pension Board adopted the October 1, 2012 valuation report. This report included a
revised salary assumption attributed to the zero salary cost of living adjustments for both IAFF and FOP
applicable in FY 2012/2013 and FY 2013/2014. This revised assumption reduced the City's ARC
payable on October 1, 2013, by approximately $430,000. The initial impact statement provided at the
September 11, 2013 Commission meeting included this as part of the total savings ($5.66 million)
applicable for FY 2013/2014. Since the salary assumption has already been included in the adopted
valuation report, the revised impact statement reflects a savings of ($5.24). However, the pension
changes agreed to by the IAFF and the FOP still results in a total savings for FY 2013/2014 of $5.66
million. The actuary has provided written confirmation which is included as Attachment 3.
As previously stated, the City and IAFF ratified a three-year labor agreement August 17, 2013. On
September 11, 2013, the City Commission adopted a resolution accepting the amended 2012-20151abor
agreement between the City and FOP. On September 11, 2013, the FOP confirmed that the
membership ratified the agreement with 62 percent of the voting membership in favor of the contract.
The Administration recommends adopting the ordinance in order to effectuate the pension changes that
were agreed upon with both the IAFF and the FOP.
T:IAGENDA\2013\September 11 \September 30 HR Items \Fire and Police Pension Ordinance\Fire and Police Pension 2nd Reading Memo. doc
9
ATTACHMENT 1
buck consultants
September 26, 20 13
CONFIDENTIAL
Mrs. Celia B. Locke
Executive Director
City Pension Fund/Firefighters & Police Officers
City of Miami Beach
1691 Michigan Avenue, Suite 355
Miami Beach, FL 33139-2573
A Xerox Company
Actuarial Impact Statement for Ordinance Amendments to the City Pension Fund for
Police Officers and Firefighters in the City of Miami Beach
Dear Celia:
This letter provides the estimated actuarial impact of the changes negotiated with the Police
Officers and Firefighters bargaining units that will affect the Ordinance relating to the City
Pension Fund for Police Officers and Firefighters in the City of Miami Beach (Pension Fund)
effective September 30, 2013.
Summarized below are the plan changes and the cost impact of these changes. The following
changes will become effective September 30, 2013 unless otherwise stated below.
• The average monthly salary for members hired prior to July 14, 2014 and retiring on or
before September 30,2015 shall be based on the average of the two highest paid years of
the member prior to the date of retirement or termination. Members hired prior to July
14,2014 and retiring after September 30,2015 shall be based on the average ofthe three
highest paid years of the member prior to the date of retirement or termination. Members
hired on or after July 14, 20 I 0 but prior to September 30, 2013 shall be based on the
average of the three highest paid years of the member prior to the date of retirement or
termination. Members hired on or after September 30, 2013 shall be based on the average
of the five highest paid years of the member prior to the date of retirement or termination.
• Members retiring after September 30, 2013 shall be entitled to receive upon retirement a
monthly pension payable for life equal to (1) 3% of the members average monthly salary
for each year of the member's first 20 years of creditable service computed on a pro rata
basis to the nearest month, provided in no event shall a member's benefit multiplier for
creditable service earned before October 1, 2013 be reduced plus (2) 4% of the members
average monthly salary for each year of the member's creditable service in excess of 20
years computed on a pro rata basis to the nearest month.
10
Ms. Kathie Brooks
September 4, 2013
Page 2
• Members benefit shall not exceed 85% of the members average monthly salary provided
however that benefit for May 1993 members shall not exceed 80% of their average
monthly salary and provided also that any member who has an accrued benefit in excess
of 85% of their average monthly salary on September 30, 20 I3 shall not exceed 90% of
their average monthly salary.
• In addition to the rule of 70, members hired before July 14, 20 I 0 must attain age 4 7 to be
eligible for retirement and members hired on or after July 14, 2010 must attain age 48 to
be eligible for retirement. Notwithstanding the preceding sentence, any police officer
member hired pursuant to a consent decree may retiree when the sum of the member's
age and creditable service equals at least 70.
• Any member hired prior to July 14, 20 I 0 who completes a buyback of prior creditable
service prior to September 30, 2013 and reaches the maximum pension benefit of 85% of
average monthly salary prior to attaining age 4 7 will have their contribution cease of the
date such employee reaches the 85% maximum pension benefit and his/her final average
monthly salary will be frozen on the same date.
• If any member eligible for benefits terminate his/her employment on or after September
30, 2013 after having completed at least 5 years of creditable service but prior to attaining
age 50 years (or after having completed one year of creditable service, but before
attaining age 55 and completing l 0 years of creditable service for a May 1993 member),
and does not withdraw his accumulated contributions in the System, such a member shall
be entitled to receive upon attaining age 50 (age 55 of his termination of employment, if
later, for a May 1993 member) a monthly pension payable for life.
• Members of the System hired prior to September 30, 2013 shall contribute l 0% of their
salary to the Pension Fund. Members of the System hired on or after September 30, 20 13
shall contribute 10.5% oftheir salary to the Pension Fund.
• Members will no longer be able to purchase an additional multiplier or pre-employment
public safety service as a police officer or firefighter.
• Effective September 30, 2013, members with at least 5 years of creditable service under
the System may contribute an additional amount of l 0% for those hired prior to July 17,
2013 and 10.5% for those hired on or after July 17, 2013 to receive credit for their pre-
employment military service. A member may purchase up to two years of such pre-
employment military service at a 3% multiplier for each year. The purchase of pre-
employment military service must be completed the later of 36 months following
September 30, 2013 or the date the member completes 5 years of creditable service.
11
Ms. Celia B Locke
September 26, 2013
Page 3
• The benefits of members hired before July 14, 2010, and the beneficiaries of such
members, shall be increased by 2.5 % annually, commencing on the anniversary date of
the member's retirement, except that members who enter the DROP on or after
September 1, 2012 and before September 30, 2013, and participate in the DROP for six
months or longer shall receive a zero percent (0%) cost of living adjustment for the third
(3 rd) and fourth (4th) annual adjustment dates. The benefits of members hired on or after
July 14, 2010, and the beneficiaries of such members, shall be increased by 1.5 %
annually, commencing on the anniversary date of the member's retirement.
• Pensionable salary shall exclude overtime pay in excess of 300 hours per calendar year,
payments used for unused sick and vacation leave, hazardous duty pay (when paid),
payments relating to domestic partner tax credit reimbursement, and payments to police
officer members for voluntarily participating in a physical fitness assessment program
offered by the City.
• No creditable service shall be provided under this System for periods of service in
another City retirement plan, nor shall any transfer of service or credit from another City
retirement plan be allowed.
• Police officer member's compensation for off-duty services, in combination with
overtime pay not exceeding 300 hours per calendar year, shall not exceed II% of the
highest annualized pay rate for the same salary rank that the member is in at the time of
retirement. The II% limitation shall not apply to any member who holds the rank of
sergeant or lieutenant on September 30, 2013, or any police officer promoted to the rank
of sergeant prior to the date the 2013 Certified Police Sergeant Promotional Register
expires in 2015.
• Extension of Ranges for Firefighter I, Police Officer, Sergeant of Police and Police
Lieutenant effective April 1, 2015 (Proposed Maximum includes the 3% COLA payable
on October l, 2014 and 5% additional Step effective April 1, 2015 for eligible members)
Current Current Proposed Proposed
Minimum Maximum Minimum Maximum*
Firefighter I -45,139.11 74,745.85 45,139.11 80,837.64
Day Shift
Police Officer 53,309.01 75,033.33 53,309.01 81,148.55
Police Sergeant 78,748.42 86,852.71 78,748.42 93,931.21
Police 86,852.71 I 00,532.31 86,852.71 108,725.69
Lieutenant
12
Ms. Celia B Locke
September 26, 20 13
Page4
Actuarial Impact
The proposed changes will be enacted during fiscal year 20 13, so changes to required
contributions will be based on October I, 2012 actuarial valuation with funding to commence in
fiscal 2014. The actuarial impact shown in this letter is based on the October 1, 2012 actuarial
valuation. All assumptions and methods are consistent with the October 1, 2012 actuarial
valuation, with one exception. Due to the cap in pensionable salary excluding overtime hours in
excess of 300 hours, we expect there would be a change in the load for overtime and other pays
used to compute pensionable pay from base pay. To reflect this, we changed the load for
overtime and other pays from 18% to 16%.
Following is the actuarial impact of the proposed changes:
Current Proposed
Plan Plan Change
Annual Cost
Normal Cost $15,069,445 $13,828,117 ($1,241,328)
Amortization 23,986,250 22,832,807 (1,153,443)
Interest Adjustment 3,297,845 3,106,263 (191,582)
Expected Service Buyback 2,778,819 127,363 (2,651 ,456)
Administrative Expense 697,141 697,141 Q
EOY Total Annual Cost $45,829,500 $40,591,691 ($5,237 ,809)
Expected Member Contributions $4,631,365 $4,631,365 $0
Expected Share Plan Contributions 120,549 120,549 0
EOY Estimated City Contributions 4110771586 351839)77 0
EOY Total Annual Cost $45,829,500 $40,591,691 ($5,237 ,809)
Annual Cost (as a % of Projected Payroll)
Total Required Contribution 98.95% 87.65% (11.30%)
Expected Member Contributions 10.00% 10.00% 0%
Expected State Contributions 0.26% 0.26% 0%
Expected City Contributions 88.69% 77.39% (11.30%)
The above impact assumes that State contributions available to offset the City's contribution will
not be affected by these changes. The Division of Retirement will review the treatment of State
contributions upon their review of the actuarial impact statement.
13
-----------~----------
Ms. Celia B Locke
September 26, 20 13
Page 5
Data, assumptions, Methods and Plan Provisions:
The calculations contained in this study are based on the data, assumptions, methods and plan
provisions used for the October l, 2012 actuarial valuation of the System. The salary scale
assumption has been reduced to reflect the cost of living freeze reference above. 1 am an
Enrolled Actuary and meet the qualification standards of the American Academy of Actuaries to
render the actuarial opinion contained in this letter.
Actuarial Certification
The calculation of the actuarial impact for the plan changes were performed in accordance with
the standards of practice prescribed by the Actuarial Standards Board. The member data,
assumptions, and methods are the same as those shown in the Actuarial Valuation Report as of
October 1, 2012, with the exception of the load for overtime and other pays discussed above. I
am a Member of the Academy of Actuaries and meet the Academy's qualification standards to
issue this Statement of Actuarial Opinion.
Please let us know if you have any questions or need anything further.
Sincerely,
Joseph L. Griffin ASA, EA, MAAA, FCA
Director, Consulting Actuary
cc: Mr. David Campbell-Buck Consultants/ Atlanta
Mr. Steward Sainvil-Buck Consultants/ Atlanta
P \Retm:;~m~:nt\M•ann Beach F1rc and Police\20 13\L"niOn Pricing\Correspondenc.e\20 l3 Umon NegohatlOn Pricmgs Resuhs.-Scenar1o 5 docx:
00993·0001 RETOJ
14
~ (II Appendix A City Pension Fund for Firefighters and Police Officers in the City of Miami Beach Union Pricing Summary Current Year Year 1 Year 2 Yearl Year4 Impact of Total Changes lncrease/(Decrease) in Normal Cost (1,471,000) (1,562,000) (1,654,000) (1,603,000) (1,859,000) lncrease/(Decrease) in Unfunded Accrued Liab1lity (24,360,000) (24,232,000) (23,513,000) (29,945,000) (34,440,000) lncrease/(Decrease) in Annual Required ContributiOn (ARC) (5,656,000) (&,019,000) (6,351,000) (6,987,000) (7,886,000) Net Present Value of 30 Year ARC Changes (139,585,000) Page 1 of4 YearS Year6 (1,825,000) (1. 714,000) ( 40, 223.000) (46,354,000) (8,654,000) (9,332,000) Year7 (1,707,000) (52,225,000) (10,096,000) BuckConsultants 9/26/2013 l> -1 -1 l> n J: s m z -1 1\)
~ 0') Appendix A City Pension Fund for Firefighters and Police Officers in the City of Miami Beach Union Pricing Summary YearS Year9 YearlO Year 11 Year 12 Impact of Total Changes lncrease/(Decrease) in Normal Cost (1,586,000) (1.439,000) (1,272,000) (1,350,000) (1,022,000) lncrease/(Decrease) in Unfunded Accrued Liability (58,269,000) (63,967,000) (69,645,000) (75,115,0001 (80,780,000) Increase/( Decrease) in Annual Required Contribution (ARC) (10, 784,000) (11,463,000) (12,152,000) (13,126,0001 (13,720,000) Net Present Value of 30 Year ARC Changes Page 2 of4 Year 13 Year14 (731,000) (812,000) (85,604,000) (89,551,000) (14,226,000) (15,242,0001 Year lS (655,000) (94,379,000) (16,158,000) BuckConsultants 9/26/2013
~ ........ Appendix A City Pension Fund for Firefighters and Police Officers in the City of Miami Beach Union Pricing Summary Year16 Year 17 Year 18 Year 19 Year ZD Impact of Total Changes Increase/( Decrease) in Normal Cost (45,000) 38,000 657,000 960,000 1,551,000 Increase/( Decrease) in Unfunded Accrued Liability (98,612,000) (100,402,000) (101,525,000) (100,272.000) (97, 745,000) Increase/( Decrease) in Annual Required Contnbut1on (ARC) (16,447,000) (17,128,000) (17,376,000) (17,829,000) (17,903,000) lllet Present Value of 30 \'ear ARC Changes Page3 of4 Year l1 Year22 2,012,000 1,642,000 (93,195,000) (86,865,000) (17,983,000) (18,832,000) Year 23 1,881,000 (81,397,000) (19,184,000) BuckCansultants 9/26/2013
~ co Appendix A City Pension Fund for Firefighters and Police Officers in the City of Miami Beach Union Pricing Summary Year24 Year ZS Year26 Year Z7 Year28 Impact of Total Change5 lncrease/(Decrease) in Normal Cost 2,008,000 2.061.000 2,099.000 2,177,000 2,255,000 lncrease/(Decrease) in Unfunded Accrued Uability (75,427,000) (68.644,000) (61.075,000~ (52.557,000) (42,748,000) lncrease/(Decrease) in Annual Required Contribution (ARC) (19,583,000) (20.011.000) (20,394,000~ (20,659,000) (20, 799,000) Net Present Value of 30 Year ARC Changes Page 4 of 4 Year 29 2,319,000 (31,493,000~ (20,844,000~ Year30 2,381,000 (18,841,000) (20,823.000) BuckConsultants 9/26/2013
ATTACHMENT 3
buckconsultants
September 27, 2013
Carla Maglio Gomez
City of Miami Beach
Human Resources Assistant Director
1700 Convention Center Drive
Miami Beach, FL 33139
A Xerox Company
Reconciliation of Change to the Annual Reguired City Contribution for FY2014 for the
City Pension Fund for Firefighters and Police in the City of Miami Beach
Dear Ms. Gomez:
Outlined below is a summary of the change in the fiscal year 2014 City Annual Required
Contribution (ARC) for the City Pension Fund for Police Officers and Firefighters in the City of
Miami Beach (Pension Fund). The change in the ARC is a result of the negotiations with both
the Police Officer and Firefighters union which led to amendments in the Ordinance and changes
to the assumptions based on the expected salary increases over the three year period of the
bargained agreements.
Change in the Annual Roouired Contribution
We presented the preliminary ARC in February of $41,505,104 which was prior to any
negotiated savings with the Unions. The final valuation report presented and adopted by the
Board on September 19, 2013 showed a reduced ARC of$41,077,586. This ARC reflected only
the COLA concession ofO% for fiscal years 2013 to 2014 and a 3% COLA for fiscal year 2015.
This was the only the change that could have been reflected in the valuation report since the
proposed ordinance changes had not yet be passed by the City Commission.
The change in the COLA is considered an assumption change and is appropriately reflected in
the valuation report. All changes requiring an amendment to the ordinance have to be reflected in
an actuarial impact statement. The actuarial impact statement submitted shows a final ARC for
fiscal year 2014 of $35,839,777 and assumes that the proposed changes to the ordinance will be
passed by the City Commission on or before September 30, 2013. The assumption change
reflected in the actuarial valuation (savings of $427k) in combination with the actuarial impact
statement savings of$5,237k) reflects a total fiscal year 2014 ARC savings of$5.66m.
Table A shown on the next page shows a reconciliation of the total fiscal year 2014 ARC
savings.
200 Galleria Parkway NW, Suite 1900 • Atlanta, GA 30339-5945
770.955.2488 • 770.933.8336 (fax)
19
Ms. Carla Maglio Gomez
September 27, 2013
Page 2
TABLE A
Change in Annual Required Contribution for Fiscal Year 2014
I. ARC (preliminary at Feb 2013)
2. ARC (per valuation report)
3. Initial Savings (0% COLA FY13&14, 3% COLA FY15)
4. ARC (based on Impact Statement)
5. Additional Savings
6. Total Savings
Actuarial Impact Statement
$41,505, I 04
$41,077,586
($427,518)
$35,839,777
($5,237,809)
($5,665,327)
Per Florida Statutes any change that is made to an ordinance that results in a change in the
pension benefits paid to members of a retirement system has to be documented via an Actuarial
Impact Statement. The Actuarial Impact Statement shows the change in the annual required
contribution resulting from the changes in the pension plan ordinance. The Actuarial Impact
Statement has to be prepared and submitted to the Florida Division of Retirement in the
Department of Management Service for documentation purposes.
As a result, the changes negotiated with the Police Officers and Firefighters unions earlier this
year were split to show the changes that had to be documented in an Actuarial Impact Statement
($5.23m) and the changes reflected in the valuation report ($0.43m) that were not required to be
documented in the Actuarial Impact Statement. As shown above, the sum total of both savings
was $5.66m for fiscal year 2014.
Very truly yours,
i2l~
Consultant
DC:cj
C·\Miam.l Beach Fire and Polio;;:e\2() I 3\Corre.spOndc:nceiReconciliation of ARC FY20 14.docx
20
ORDINANCE IMPLEMENTING PENSION PROVISIONS OF
2012-20151AFF AND FOP COLLECTIVE BARGAINING AGREEMENTS
ORDINANCE NO. ___ _
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, AMENDING PART I,
SUBPART B, ARTICLE IX, RELATED SPECIAL ACTS, OF THE
MIAMI BEACH CITY CODE ENTITLED "PENSION SYSTEM
FOR DISABILITY AND RETIREMENT OF MEMBERS OF
POLICE AND FIRE DEPARTMENTS"; IMPLEMENTING
PROVISIONS OF THE 2012-2015 COLLECTIVE BARGAINING
AGREEMENTS BETWEEN THE CITY AND FIRE FIGHTERS OF
MIAMI BEACH, IAFF LOCAL 1510, AND MIAMI BEACH
FRATERNAL ORDER OF POLICE, WILLIAM NICHOLS LODGE
NO. 8; AMENDING SECTION 62 ENTITLED "DEFINITIONS";
AMENDING SECTION 63 ENTITLED "SOURCE OF MONIES
FOR FUND; COMPUTATION OF LIABILITY; USE AND
INVESTMENT OF FUND"; AMENDING SECTION 65 ENTITLED
"COMPUTATION OF CREDIT ABLE SERVICE; SERVICE
RECORD"; AMENDING SECTION 66 ENTITLED "SERVICE
AND DISABILITY BENEFITS GENERALLY"; AMENDING
SECTION 67 ENTITLED "COST OF LIVING ADJUSTMENT";
AMENDING SECTION 79 ENTITLED "DEFERRED
RETIREMENT OPTION PLAN"; AMENDING SECTION 82
ENTITLED "MILITARY SERVICE"; CREATING A NEW
SECTION 88 ENTITLED "BENEFITS FOR MEMBERS HIRED ON
OR AFTER SEPTEMBER 30 2013, PROVIDING FOR
SEVERABILITY; REPEALING ALL ORDINANCES IN
CONFLICT THEREWITH; AND PROVIDING FOR AN
EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA:
Section 1. Effective September 30, 2013, Section 62 of Part 1, Subpart B, Article IX,
Related Special Acts ofthe Miami Beach City Code, is amended to read:
Section 62. Definitions
The following words, terms and phrases, when used in this article, shall have the
meanings ascribed to them in this section, except where the context clearly indicates a
different meaning:
* * *
1
21
Employee means any full time employee who is certified as a firefighter as a condition of
employment in accordance with section 633.35, Florida Statutes. and whose duty it is to
extinguish fires, to protect life or to protect property, and any full time employee who is
certified or required to be certified as a law enforcement officer in compliance with
section 943.1395, Florida Statutes, who is vested with authority to bear arms and make
arrests, and whose primary responsibility is the prevention and detection of crime or the
enforcement of the penal, criminal, traffic, or highway laws of the state. regular member
of the police department or fire department vlbo has attained regular civil service status in
sueh department under the official classifications of positions in tlte classified sen.·ice of
tlte City, having a rank in such department otlter than civilian rank and other than the
classification of school guard. Unless they have never held classified positions v1ith the
City, the chiefs of the police and fire departments shall be considered Employees for the
pl:trfloses of this System.
* * *
Salary, for the purpose of determining member contributions under this System, means
the member's base pay, longevity pay, overtime, shift differential and extra compensation
allowance such as uniform allowance, before reduction for the picked-up member
contributions and before reduction for any amounts contributed in accordance with
sections 125 or 457 of the Internal Revenue Code. Notwithstanding the preceding
sentence, effective September 30, 2013, Salary shall exclude overtime pay in excess of
300 hours per calendar year, payments for unused sick and vacation leave, hazardous
duty pay (when paid), payments relating to the domestic partner tax credit
reimbursement, and payments to police officer members for voluntarily participating in a
physical fitness assessment program offered by the City. However, for periods prior to
October 1, 2000 and solely with respect to May 1993 Members, the term "Salary" shall
refer only to base pay and longevity pay, excluding any payment of overtime, shift
differential or extra compensation allowance such as uniform allowance, but determined
before reduction for the picked-up member contributions and before reduction for any
amounts contributed in accordance with sections 125 or 457 of the Internal Revenue
Code. For purposes of determining the amount of a member's benefit under the System,
Salary shall mean the amount determined under this section as modified by the provisions
of section 66 under which the benefit is being provided. Notwithstanding anything herein
to the contrary, a member's Salary taken into account for any purpose under this System,
including for purposes of determining the amount of a member's benefit and his
contribution to this System, shall not exceed the limitation set forth in section 401(a)(l7)
of the Internal Revenue Code as adjusted for changes in the cost of living by the
Secretary of the Treasury of the United States. However, for employees who were
members before the first plan year beginning after December 31, 1995, the limitation on
Salary shall not be less than the amount which was allowed to be taken into account
under this article as in effect on July 1, 1993.
* * *
2
22
Section 2. Section 63 of Part I, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Sec. 63.
fund.
Source of moneys for fund; computation of liability; use and investment of
* * *
(b) Each member of this System hired before September 30. 2013 shall contribute 10%
of his Salary to the Fund. Each member of this System hired on or after September 30,
2013 shall contribute 1 0.5% of his Salary to the Fund. The City shall, solely for purposes
of complying with section 414(h) of the Internal Revenue Code, pick up contributions
required to be made by the members under this System. The contributions so picked up
shall be treated as employer contributions for purposes of determining their tax treatment
under the Internal Revenue Code.
(c) All computations of liability in connection with the System shall be based on tables
and rates approved by the Board. The Board shall designate an actuary for the System
who shall recommend such tables and rates for adoption by the Board. The actuary
designated by the Board, on the basis of such tables and rates, shall recommend to the
Board the amounts required to be paid into the System by the City under subsection (a) of
this section. Effective September 30, 2013, there shall be an experience study of each of
the City's pension plans' actuarial assumptions performed by an actuary selected by the
City. The experience study should be conducted at least once every three years to
compare actual experience to the assumptions. The actuary selected by the City shall
make recommendations for any changes in assumptions based on the results of the
experience study, and any deviations from those assumptions by the pension boards shall
be justified to the City Commission. Effective September 30, 2013, the City shall require
5, 10 and 20 year projections of required pension contributions as part of the annual
actuarial valuations for each of the City's pension plans. These projections shall be based
on the current actuarial assumptions for each plan. The projections shall be updated to
reflect the cost of any proposed benefit enhancement before the City Commission agrees
to the enhancement. The cost of these studies shall be funded separately from the annual
contribution to the pension plan.
(d) There shall be a complete actuarial evaluation prepared by the actuary at least every
three years, and the City shall make such adjustments in its contributions as shall be
shown to be required by such actuarial evaluation. The money required to meet all the
obligations of this System over and above the personal contributions from members, is a
Liability and obligation of the City. The expenses of the System shall not be separately
budgeted so long as the method is permitted by law. The City commission shall levy
annually, in the manner provided by law, upon all taxable property within the City, such
millage on the assessed valuation thereof as is necessary to produce the amounts required
to be contributed by the City to this System. Effective September 30, 2013, the City shall
fund at least the normal cost of pension. If this exceeds the amount of the actuarially
3
23
determined annual required contribution, the excess should be placed m a pensiOn
stabilization fund, to be made available for future pension shortfalls.
* * *
Section 3. Section 65 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Sec. 65. Computation of creditable service; service record.
(a) A member's Creditable Service shall include all periods of employment as an
Employee for which contributions have been made to this System in accordance with
subsection (b) below and section 63(b)time of actual work fur whieh v,'ages or salaries
'<vere received by the member ift the serviee of the fire or police department tm:d,
ftotwithstaRding anything to the contrary ift this artiele, all time served ift the unclassified
service of the City as proYided iA seetion 70, vvhether it be provisional, probationary or
regular work or employment, aftd whether or fl:Ot such periods are iHterrupted, together
with all service in the uniformed services of the United States required to be included
under section 82; provided, however, that only periods of service in the uniformed
services of the United States for which the member makes the member contributions as
provided for in section 82 shall be Creditable Service for purposes of computing the
amount of the member's benefit from the System. Notwithstanding any provision to the
contrary, in no event shall the same period of service be counted more than once as
Creditable Service under this System, and in no event shall a member receive Creditable
Service under this System for any period of service for which credit has been received
under any other defined benefit retirement plan established by the City.
(b) Employees who become members of this System in order to receive credit for service
rendered prior to their becoming a member shall make contributions to the Fund in the
amount such member would have contributed had he been a member during the period of
service for which credit is being purchased. In order to receive such credit, employees
shall make payment within six months after becoming a member or within such other
period as may be provided in a bargaining agreement covering the member. No
Creditable Service shall be provided under this System for periods of service in another
City retirement plan, nor shall any transfer of service or credit from another City
retirement plan to this System be allowed. 1-iotwithstRAdiHg the feregeing, aHy employee
vibo tffiftsfers to this System whereby the accumulated total credit iH any other t3eftsioH
system of the City is transferred to this System, then aHd in that event, all of the
creditable service time in such other system shall be coAsidered Creditable Service time
under this System, and sueh emt3loyee Heed make AO additional contributioH for time
credited.
(c) The Board shall establish the service record of all employees who may be entitled to
participate in the benefits ofthis System, and shall keep a record thereof.
(d) Members ·.vith teft ( 1 0) or more years of creditable service may purehase additioftal
creditable service under the System for up to t\vo (2) years of full time public safety
24
se£¥ice as a la>.v enforeemeffi officer or firefighte£ prior to City employment, provided the
member is not entitled to receive a benefit for such service under another pension plan,
and f'u:rthe£ pro·tided that the memeer may aot purchase a eomained total of more than
four (4) years of creditable service for prior pualic safety service and prior military
service, and furtlier subject to limitations cofl:tained in see. 66(j). The cost for each yea:F of
creditable service for prior public sa-fety service purchased shall "be the same rate as
provided ia see. 82(13) for the pureft.ase of prior militaey sePliee, vtitfl: tfl:e eost proraf:ed for
fractional years of service. For purposes of this purcft.ase, an employee may use tfl:e value
of accrued sick and/or annual leave, valued at the employee's hourly rate a4: the time of
purchase. The purchase of additional creditable service provided in this suBsection (d),
must "be completed within thirty six (36) mofl:ths follov;ing September 30, 2010, or vtithin
thirty she (36) months followiag a meniber's completion of ten (10) years of creditable
service under the pension plan, vlhiehever occurs later for the member. If a member does
not complete tfl:e purchase of additioaal creditable se£¥ice proYided in this suasection (d)
within the thirty six month period, he/she shall not be eligible for such purchase in the
future.
(e) No:F.vithstanding the provisions of section 65(d) and section 82(b), the purchase of
additioaal creditable se£¥ice for prior public safety service pursuafl:t to section 65(d), and
the purchase of additional creditable service for years of active militaey service prior to
City employrnefl:t pursuafl:t to section 82(b), must be completed ·.vithin thirty she (3 6)
months following [ratification date]September 30, 2010, or v;ithin thirty six (36) months
following a memaer's completion often (10) yea:Fs of creditable service under the pension
plan, whichever occurs later for the meniber. If a member does aot complete the purchase
of additional creditable service as provided in section 65(d) or section 82(b) within the
thirty siJt month period, he/she sft.all not be eligible for such pureft.ase in the future.
Section 4. Section 66 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 66. Service and disability benefits generally.
(a) The Board shall, upon application retire members meeting any one of the following
requirements:
(1) The attainment of age 50.
(2) Permanent and total disability incurred in line of duty in the police or fire
department, or in the unclassified service as provided in section 70, irrespective of the
number of years of Creditable Service;.
(3) Permanent and total disability incurred other than in the line of duty, after five years
of Creditable Service.
5
25
( 4) The sum of the member's age and Creditable Service equals at least 70 and the
member retires on or after October 1, 1998; provided, effective September 30. 2013, a
member hired before July 14, 2010 must attain age 47 to be eligible for retirement under
this paragraph (4); and a member hired on or after July 14,2010 must attain age 48 to be
eligible for retirement under this paragraph ( 4); and provided further. any member hired
prior to July 14, 2010 who completes a buyback of prior Creditable Service prior to
September 30, 2013 and reaches the maximum pension benefit of 85% of average
monthly Salary prior to attaining age 4 7. the employee contribution shall cease on the
date such employee reaches the 85% maximum pension benefit. and his/her final average
monthly Salary will be frozen on the same date. Notwithstanding the preceding sentence,
any police officer member hired pursuant to a consent decree may retire when the sum of
the member's age and Creditable Service equals at least 70.
(5) Only for periods prior to October 1, 2000 and only in the case of a May 1993
Member, the attainment of age 55 with at least 10 years of Creditable Service.
(b) A member who attains eligibility for retirement under subsection (a) above on or
before September 30, 2013, other thaR a May 1993 Member who retires prior to Oetober
1, 2000, shall be entitled to receive upon retirement under subsection (a), a monthly
pension payable for life equal to:
(1) Three percent of the member's average monthly Salary for each year of the member's
first 15 years of Creditable Service, being computed as to a part of a year on a pro rata
basis to the nearest month; plus
(2) Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 15 years, being computed as to a part of a year on a pro
rata basis to the nearest month.
(c) A member who does not attain eligibility for retirement under subsection (a) above
on or before September 30, 2013 shall be entitled to receive upon retirement under
subsection (a), a monthly pension payable for life equal to:
( 1) Three percent of the member's average monthly Salary for each year of the member's
first 20 years of Creditable Service, being computed as to a part of a year on a pro rata
basis to the nearest month; provided in no event shall a member's benefit multiplier for
Creditable Service earned before October 1, 20 13 be reduced; plus
(2) Four percent of the member's average monthly Salary for each year of the member's
Creditable Service in excess of 20 years, being computed as to a part of a year on a pro
rata basis to the nearest month.
A May 1993 Member who retires prior to Oetober 1, 2000, shall be eRtitled to receive
l:l}')OR retiremeRt l:lRder subsectioR (a) a moRthly peRsian payable fur life equal to three
6
26
perceftt ofthe member's avemge monthly Salary for eaeh year of the memher's Creditable
Service, heing computed as to part of a year oa a pre rata basis to the aea:rest moath.
(d) For purposes of determining a member's benefit, the average monthly Salary of
members who attains eligibility for retirement under subsection (a) above on or before
September 30, 2015 the member shall be based on the average of the two highest-paid
years of the member prior to the date of retirement or termination, or the average of the
last two paid years of the member prior to the date of retirement or termination,
whichever produces the greater benefit for members employed by the City before May
19, 1993, and shall be based on the average of the three highest paid years of the member
prior to the date of ef retirement or termination for May 1993 Members. Effective
September 30. 2015. the average monthly salary for members hired before July 14. 2010
who do not attain eligibility for retirement under subsection (a) above on or before
September 30, 2015, shall be based on the average of the three highest paid years of the
member prior to the date of retirement or termination. Members hired on or after July 14.
2010 but prior to September 30. 2013, shall be based on the average of the three highest
paid years of the member prior to the date of retirement or termination. Members hired on
or after September 30. 2013, shall be based on the average of the five highest paid years
of the member prior to the date of retirement or termination. For purposes of such
calculation, Salary shall be the Salary upon which the member's contribution to the
System was computed, as provided in paragraphs (1) and (2) below:
(1) With respect to a firefighter member employed before May 19, 1993, and retiring on
or after October 1, 1994, the inclusion of overtime in the member's Salary for the two
highest-paid years or last two years, as the case may be, shall be limited in each year to
an amount which, when combined with compensation for off-duty services and the value
of any accrued sick and/or vacation leave that is included in a member's Salary for
pension contribution and benefit purposes, is equal to 11% of the highest annualized pay
rate for the same salary rank that the member is in at time of retirement. Effective July
14, 2010, all compensation received by a firefighter member who is eligible for overtime
pay and who receives pay for off-duty services performed after that date for which
compensation is received through the City shall be included in such member's Salary for
pension contribution and benefit purposes; provided, in no event shall such compensation
for off-duty services, in combination with any overtime pay and the value of any accrued
sick and/or vacation leave included in a member's Salary for pension contribution and
benefit purposes, exceed 11% of the highest annualized pay rate for the same salary rank
that the member is in at time of retirement. For firefighter members who are eligible for
overtime pay and who retire on or after September 30, 2010, upon reaching eligibility for
retirement, a member may elect to apply unused sick and/or vacation leave for inclusion
in the member's Salary for pension contribution and benefit purposes, at a cost of 1 0% of
the value of the unused sick and/or vacation leave (at the member's current hourly rate).
Provided, in no event shall the value of such unused sick and/or vacation time, when
combined with any overtime pay and compensation for off-duty services included in a
member's Salary for pension contribution and benefit purposes, exceed 11% of the
highest annualized pay rate for the same salary rank that the member is in at time of
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retirement. Notwithstanding the foregoing, effective September 30, 2013. overtime pay in
excess of 300 hours per calendar year, payments for unused sick and vacation leave,
hazardous duty pay (when paid), and payments relating to the domestic partner tax credit
reimbursement. shall be excluded from a firefighter member's Salary for pensiOn
contribution and benefit purposes.
(2) With respect to a police otlicer member employed before May 19, 1993, and retiring
on or after October 1, 1994, the inclusion of overtime in the member's Salary for the two
highest paid years or last two years, as the case may be, shall be limited in each year to an
amount which, when combined with compensation for off-duty services and the value of
any accrued sick and/or vacation leave that is included in a member's Salary for pension
contribution and benefit purposes, is equal to 70% of the difference between the
member's annualized pay rate at retirement and the highest annualized pay rate for the
next higher salary rank; but in no event shall such member's accrued benefit on his date
of retirement be less than the benefit he had accrued as of September 30, 1994,
determined under the terms of the System in effect on that date. Effective July 14, 2010,
all compensation received by a police officer member who is eligible for overtime pay
and who receives pay for off-duty services performed after that date for which
compensation is received through the City, shall be included in such member's Salary for
pension contribution and benefit purposes; provided, in no event shall such compensation
for off-duty services, in combination with any overtime pay and the value of any accrued
sick and/or vacation leave included in a member's Salary for pension contribution and
benefit purposes, exceed 70% of the difference between the member's annualized pay rate
at retirement and the highest annualized pay rate for the next higher salary rank; but in no
event shall such member's accrued benefit on his date of retirement be less than the
benefit he had accrued as of September 30, 1994, determined under the terms of the
System in effect on that date. For police officer members who are eligible for overtime
pay and who retire on or after September 30, 2010 and before September 30, 2013, upon
reaching eligibility for retirement, a member may elect to apply unused sick and/or
vacation leave for inclusion in the member's Salary for pension contribution purposes, at
a cost of 10% of the value of the unused sick and/or vacation leave (at the member's
current hourly rate). Provided, in no event shall the value of such unused sick and/or
vacation time, when combined with any overtime pay and compensation for off-duty
services included in a member's Salary for pension contribution and benefit purposes,
exceed 70% of the difference between the member's annualized pay rate at retirement and
the highest annualized pay rate for the next higher salary rank; but in no event shall such
member's accrued benefit on his date of retirement be less than the benefit he had accrued
as of September 30, 1994, determined under the terms of the System in effect on that
date. Notwithstanding the foregoing. effective September 30. 2013. overtime pay in
excess of 300 hours per calendar year, payments for unused sick and vacation leave.
hazardous duty pay (when paid), payments relating to the domestic partner tax credit
reimbursement, and payments for voluntarily participating in a physical fitness
assessment program offered by the City shall be excluded from a police officer member's
Salary for pension contribution and benefit purposes; and in no event shall compensation
for off-duty services, in combination with overtime pay not exceeding 300 hours per
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calendar year, exceed 11% of the highest annualized pay rate for the same salary rank
that the member is in at time of retirement. Provided, the 11% limitation in the preceding
sentence shall not apply to any member who holds the rank of sergeant or lieutenant on
September 30, 2013, or any police officer who is promoted into the position of police
sergeant prior to the date the 2013 Certified Police Sergeant Promotional Register expires
in 2015.
(e) Notwithstanding anything in this section to the contrary. the benefits provided in this
section shall not exceed 90% of the member's average monthly Salary as defined in
subsection (d) of this section; provided, however, that the benefits for May 1993
Members shall not exceed 80% of such Salary. Notwithstanding the foregoing. effective
September 30, 2013. the benefits provided in this section shall not exceed 85% of the
member's average monthly Salary as defined in subsection (d) of this section; provided,
however, that the benefits for May 1993 Members shall not exceed 80% of such Salary;
and provided further, the benefit of any member who has an accrued benefit in excess of
85% of average monthly Salary as defined in subsection (d) of this section on September
30, 2013 shall not exceed 90% of such Salary.
(f) The minimum pension for a member retiring for permanent and total disability under
subsection (a)(2) of this section shall be 85% of the member's Salary at the time of
disability retirement; provided, however, that the minimum pension for a May 1993
Member shall be 75% of such Salary. The minimum pension for a May 1993 Member
retiring for permanent and total disability under subsection (a)(3) of this section shall be
50% of the member's Salary at the time ofthe disability retirement.
(g)
W If any member eligible for benefits under this article shall terminate his employment
before September 30, 2013 after having completed at least I 0 years of Creditable Service
but prior to attaining age 50 years (or after having completed one year of Creditable
Service but before attaining age 55 and completing I 0 years of Creditable Service for a
May 1993 Member), and does not withdraw his accumulated contributions in the System,
such member shall be entitled to receive upon attaining age 50 (age 55 or his termination
of employment, if later, for a May 1993 Member) a monthly pension payable for life in
accordance with the provisions of subsection (b) (or subsection (c) for a May 1993
Member) of this section; provided, however, the benefit so determined shall be reduced
for a May 1993 Member by 10% multiplied by the difference between the member's
years of Creditable Service at his date of termination and I 0. If the member dies prior to
attaining age 50 (age 55 or his termination of employment, if later, for a May 1993
Member), no benefit shall be payable under subsection (b) (or subsection (c) for a May
1993 Member); instead, the member's estate shall be entitled to all moneys contributed by
the member to this System together with accumulated interest on that sum at the rate of
three percent per annum computed until the date of payment to the member's estate.
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(2) If any member eligible for benefits under this article shall terminate his employment
on or after September 30, 2013 after having completed at least 5 years of Creditable
Service. but prior to attaining age 50 years (or after having completed one year of
Creditable Service but before attaining age 55 and completing 10 years of Creditable
Service for a May 1993 Member), and does not withdraw his accumulated contributions
in the System, such member shall be entitled to receive upon attaining age 50 (age 55 or
his termination of employment, if later, for a May 1993 Member) a monthly pension
payable for life in accordance with the provisions of subsection (b) (or subsection (c) for
a May 1993 Member) of this section; provided, however, the benefit so determined shall
be reduced for a May 1993 Member by 10% multiplied by the difference between the
member's years of Creditable Service at his date of termination and I 0. If the member
dies prior to attaining age 50 (age 55 or his termination of employment, if later, for a May
1993 Member), no benefit shall be payable under subsection (b) (or subsection (c) for a
May 1993 Member); instead, the member's estate shall be entitled to all moneys
contributed by the member to this System together with accumulated interest on that sum
at the rate of three percent per annum computed until the date of payment to the member's
estate.
(h)
(1) Notwithstanding anything in this section to the contrary, the minimum monthly
pension payable for the 1ife of any member who was employed prior to July 1, 1976 and
who retires after attaining age 50 and completing at least 15 years of Creditable Service
or after meeting the requirements of subsection (a)(3) or (a) (4) ofthis section 66 shall be
equal to:
(A) Three percent ofthe member's average monthly Salary for each of the first 20
years of his Creditable Service, being computed as to a part of a year on a
pro rata basis to the nearest month; plus
(B) Two and three-quarters percent of the member's average monthly Salary for
each of his years of Creditable Service in excess of 20, being computed as to
a part of a year on a pro rata basis to the nearest month.
(2) For purposes of this subsection (h) the member's average monthly Salary shall be the
Salary upon which the member's contribution to the System was computed for the two
highest paid years of the member prior to his date of retirement.
(3) Notwithstanding anything to the contrary, benefits provided under this subsection (h)
shall not be more than 85% of the average monthly Salary used to compute the benefit
under this subsection.
(4) The minimum pension for a member retiring under this subsection (h) for permanent
and total disability shall be 75% of the member's Salary at the time of his disability
retirement.
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(i) Nothing in this section shall be construed to prevent the City manager or the Board
from initiating action for the compulsory retirement of a member eligible for retirement,
prior to such age, where such member is considered to be unfit for the proper
performance of his duties because of physical or mental incapacity. Upon certification by
the medical board designated by the Board pursuant to section 76G) that such member is
mentally or physically incapable of proper performance of duties, the member shall be
automatically retired. Any member who is compulsorily retired by an act of the Board
shall have the right to appeal such retirement to a court of proper jurisdiction. The
member shall defray his own expense in his appeal of such compulsory retirement.
U) Members with ten ( 1 0) or more years of creditable service may also p1:H'chase up to an
additiofl:al six percent (6%) benefit multiplier ifl aeem:daAce •vrith this subsection. A
member may purchase up to an additioAal six percent (6%) benefit multiplier if the
additional creditable service for prior public safety p1:H'chased pursuant to sec. 65(d) or
prior military service pursuant to see. 82(b) does Aot e}(ceed a eombifl:ed total of tvlo (2)
years; and a member may purchase an additional tfiree percent (3%) benefit multiplier if
the additioflal creditable sef¥ice for prior public safety service purchased pUfsuant to sec.
65(d) or prior military seFYice pursuant to see. 82(b) does not exceed a combined total of
thTee (3) years. The cost for each additiofl:al thTee perceat (3%) benefit multiplier
purchased shall be the same as the cost for each year of prior military service purchased
in accordance with see. &2 (b). For the purpose of this purchase, aA emfJioyee may use the
value of accrued sick andlor ar.nualleave, .,,alued at the employee's hourly rate at the time
of purchase. The purchase of an additional benefit multiplier provided in this subsection
U), must be completed withifl thirt)' siJ( (36) moaths follovring September 30, 2010, or
withiA thirty six (36) months following a member's completion of ten (10) years of
creditable service under the System, \vfl:iehever oecUfs later for the meml'ler. If a member
does not complete the purchase of an additional benefit multiplier as provided in this
subsection (d) '>vithie the thirty six month period, he/she shall fl:Ot be eligil'lle fur sueh:
purehase il'l the future.
Section 5. Section 67 of Part I, Subpart B, Article IX, Related Special Acts ofthe Miami
Beach City Code, is amended to read:
Section 67. Cost-of-living adjustment.
(a) In the case of a pensioner who was employed by the City prior to May I9, 1993, or a
beneficiary of such a member who has been receiving a pension for at least one year
under the System as of October I, 1989, or any subsequent October I, the amount of
pension payable to him under the System as of such October I, other than a pension
payable under subsection 66(h)of the System, shall be increased by 2 Y2% of the amount
payable to him under the System.
(b) In the case of a pensioner who was a May I993 Member, or a beneficiary of such a
member, who has been receiving a pension for at least one year under the System as of
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October 1, 1994, or any subsequent October 1, the amount of pension payable to him
under the System as of such October 1, determined without regard to any cost of living
increase previously granted under this section, shall be increased by 1 Y:!%.
(c) In the case of a pensioner who has been receiving a benefit under subsection 66(h) of
the System for at least three years as of July I, 1982, or any subsequent July 1, the
amount payable to him under the System as of such July l shall be increased as of the
next following October 1 by 2%.
(d) In the case of a pensioner or beneficiary who retires after October 1, 1988, under the
System or after October 1 of any subsequent year and who therefore must wait more than
12 months for his first increase, the amount of pension payable to him as of the October 1
next following the first anniversary of the commencement of his pension shall be
increased by a specified percentage, as defined in this subsection, of the amount payable
to him under the System multiplied by a fraction, the numerator of which is the number
of months for which his pension under the System has been paid and the denominator of
which is 12. The specified percentage shall be 2V2% for members and their beneficiaries
and 1 V2% for May 1993 Members and their beneficiaries.
(e) For purposes of determining the one-year requirement of subsections (a) and (b) of
this section and the three-year requirement of subsection (c) of this section, the pension
commencement date for a beneficiary receiving a pension as the result of the death of a
retired member who was receiving a pension at the time of his death shall be the date on
which the retired member began to receive his pension.
(f) The provisions of this section shall not apply in the case of a member of the System
who elected in writing prior to the earlier of his date of retirement or January 1, 1990, to
waive his membership in the Police Officers' and Fire Fighters' Supplemental Pension in
accordance with the provisions of section 78-246 or 78-247 of Chapter 78 ofPart II ofthe
Miami Beach City Code as in effect at such date.
(g) Effective September 30, 2010, for members who retire on or after that date, the cost
of living adjustment provided in this Section 67 shall be applied annually on the
anniversary date of the member's retirement.
(h) Notwithstanding the provisions of subsections (a) through (g) above, effective
September 30, 2013 the benefit of members hired before July 14, 2010, and the
beneficiaries of such members, shall be increased by 2.5% annually, commencing on the
anniversary date of the member's retirement, except that members who enter the DROP
on or after September 1, 2012 and before September 30, 2013, and participate in the
DROP for six months or longer shall receive a zero percent (0%) cost of living
adjustment for the third (3rd) and fourth (4th) annual adjustment dates.
(i) Notwithstanding the provisions of subsections (a) through (g) above, effective
September 30. 2013 the benefit of members hired on or after July 14. 2010, and the
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beneficiaries of such members, shall be increased by 1 .5% annually, commencing on the
anniversary date of the member's retirement.
Section 6. Section 79 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 79. Deferred Retirement Option Plan (DROP).
(a) Eligibility. Any active member of the System may enter into the DROP on the first
day of any month following the date upon which the member first becomes eligible for a
normal service retirement, subject to the provisions of this section 79
(b) Conditions of eligibility. Upon becoming eligible to participate in the DROP, a
member who enters the DROP before September 1, 2012 may elect to enter that program
for a period not to exceed 36 months. Notwithstanding, DROP participation for members
who enter the DROP before September 1, 2012 may not continue beyond the date when
the member's combined years of creditable service and time in the DROP equals 352
months (387 months for members who were members prior to July 1, 1976). Members
who enter the DROP on or after September 1, 2012 shall be eligible to participate for a
period not to exceed sixty (60) months. Notwithstanding, for those members who enter
the DROP on or after September 1, 2012, participation may not continue beyond the date
when the member's combined years of creditable service and time in the DROP equals
408m months (390 moftths fur members hired after July 14, 201 0). Provided also that
participation in DROP shall require the member to complete and submit the following
prior to start of DROP payments:
1. Such forms as may be required by the Board or Plan Administrator. Election of the
DROP is irrevocable once DROP payments begin.
2. A waiver and an irrevocable resignation from employment with the actual date of
termination being the date designated by the member as the end of his/her DROP
participation. The administration and timing of execution and delivery of the waiver and
resignation forms shall meet the requirements of the Age Discrimination in Employment
Act and the Older Worker's Benefits Protection Act, as same may be amended from time
to time.
(c) Conditions of employment for DROP participants. Members shall be subject to
termination of employment while in DROP to the same extent as they were in their pre-
DROP status. A member who has elected the DROP remains an employee during the
DROP period and receives all the benefits of being an employee during the DROP
period, except any form of pension contribution.
(d) Effect of DROP Participation.
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1. A member's creditable service and his/her accrued benefit under the System shall be
determined on the date of his/her election to participate in the DROP first becomes
effective.
2. The member shall not accrue any additional creditable service while he/she IS a
participant in the DROP, or after termination of participation in the DROP.
3. A DROP participant is not eligible for disability benefits from the Plan.
4. A member may participate in the DROP only once.
5. Effective with the start date of a member's DROP participation, contributions to the
Pension Plan by the member and the normal cost contribution to the Pension Plan by the
City, on behalf of the member, shall cease.
(e) Payments to DROP account. A DROP account shall be created for each member who
elects to participate in the DROP. A DROP account shall consist of amounts transferred
to the DROP from the Plan, which include the monthly retirement benefits, including any
future cost of living increases, that would have been payable had the member elected to
cease employment and receive .a normal retirement benefit upon commencing
participation in the DROP, and earnings on those amounts. Provided, members who enter
the DROP on or after September 1, 2012 and before September 30, 2013 shall receive a
zero percent (0%) cost of living adjustment for the third (3rd) and fourth (4th) annual
adjustment dates, regardless of whether the member remains in the DROP for the
maximum five-year period. Provided further, any such member who exits the DROP
within six (6) months following the date of DROP entry, shall be eligible for the cost of
living adjustment as otherwise provided in section 67"
(f) DROP account earnings.
I. Members may direct their DROP account balance to any of the investment options
offered and approved by the Board. Any losses incurred by the participant shall not be
made up by the City or the Pension Plan. The selection of these programs shall be made
by the participant on forms provided by the Board. Any and all interest and or earnings
shall be credited to the participant's DROP account.
2. A member's DROP account shall only be credited or debited with earnings while the
member is a participant in the DROP and, depending on the DROP Account Payment
Options selected, after the member dies, retires, or terminates employment with the City
of Miami Beach.
(g) Payment of DROP account funds. Upon termination of a member's employment (for
any reason, whether by retirement, resignation, discharge, disability, or death), the
retirement benefits payable to the member or to the member's beneficiary shall be paid to
the member or beneficiary and shall no longer be paid to the member's DROP account.
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No payments will be made from the DROP account until the member terminates
employment.
(h) DROP account payment options. Following the termination of a member's
employment, the member shall select one of the following options to begin to receive
payment from his/her DROP account. Said selection shall occur no later than 30 days
prior to the end of the DROP participation period or within 30 days following the
termination of a member's employment if said termination of employment occurs prior to
the end of the DROP participation period:
1 . Lump sum: All accrued DROP benefits, plus interest, shall be paid from the DROP in
a single lump sum payment.
2. Partial lump sum: A member designated portion of accrued DROP benefits, plus
interest, shall be paid from the DROP in a partial lump sum payment with the remainder
being directly rolled over into an eligible retirement plan.
3. Direct rollover: All accrued DROP benefits, plus interest, shall be paid from the
DROP directly to the custodian of an eligible retirement.
4. Other method(s) of payment that are in compliance with the Internal Revenue Code
and adopted by the Board.
(i) Death of DROP participant. If a DROP participant dies before his/her account
balances are paid out in full, the participant member's designated beneficiary shall have
the same rights as the member to elect and receive the pay-out options set forth in
Paragraph (h), above. DROP payments to a beneficiary shall be in addition to any other
retirement benefits payable to the beneficiary.
(j) Administration of DROP accounts.
1. The Board shall make such administrative rules as are necessary for the efficient
operation of DROP, but shall neither create any rule that is inconsistent with the this
section 79, nor any rule that would be a mandatory subject of collective bargaining.
2. At all times, the DROP will be administered so that the System remains qualified
under the Internal Revenue Code and is in compliance with the Internal Revenue Code
and applicable laws and regulations.
(k) A member who enters the DROP on or after September 30, 2013 shall retain the
earned balance of accrued sick and vacation leave as of date of entry into the DROP. and
shall continue to earn sick and vacation leave during the DROP period, in accordance
with the collective bargaining agreement between the City and IAFF, and between the
City and FOP, as applicable. While in the DROP. the member shall have the one-time
option of receiving payment for accrued sick and/or vacation leave. up to the maximum
payout upon separation of employment allowed by the applicable collective bargaining
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agreement; provided, the member shall retain at least one hundred twenty (120) hours of
accrued sick leave after such payment. The one-time election to receive payment of leave
balances shall be made in any one year of the DROP, by notifying the City no later than
June 30 of that year (unless an alternate date as determined by the City and the president
of the respective bargaining unit). Payment will be made after the first pay period ending
in October of the same year. Upon final separation from employment with the City, a
member who has participated in the DROP shall be eligible to receive payment for the
balance of all accrued sick and vacation leave as of the date of final separation, up to the
maximum provided in the collective bargaining agreement, as reduced by the prior
payout, if any. In no event shall payments for accrued sick or vacation leave be included
in such member's Salary for the purposes of contributions and benefits under the System.
Section 7. Section 82 of Part 1, Subpart B, Article IX, Related Special Acts of the Miami
Beach City Code, is amended to read:
Section 82. Military service.
(a) Any member of the System or any probationary employee in the fire or police
department who is absent from the service of the City because of service in the uniformed
services of the United States (as defined in the Uniformed Services Employment and
Reemployment Rights Act of 1994) who returns to the service of the City having applied
to return while his reemployment rights were protected by law, shall be entitled to all
retirement rights and privileges under this system if such member, or such probationary
employee after he becomes a member, contributes the amount such member or
probationary employee would have contributed had he been a member during the period of
service in the uniformed services for which credit is being purchased, and creditable
toward service retirement as provided in this section. The amount of any such
contributions shall be determined based on the member's Salary in effect immediately prior
to such period of absence and the terms of the System in effect at that time. The member
shall make any such payments to the System during a repayment period equal to the lesser
of (i) three times the member's period of absence for service in the uniformed services or
(ii) five years. The repayment period shall begin on the later of (i) the date the member is
reemployed by the City and (ii) the date the City notifies the member of his rights under
this section.
(b) A member Effective September 30, 2013, members, who have has at least~ ;w years
of Creditable Service and 'tvho is entitled to receive benefits under the System on the
applicable effective date, may contribute an additional amount to the System in order to
receive service credit for his years of active military service in the U.S. Army, Navy, Air
Force, Marines or Coast Guard occurring prior to their fti.s date of employment with the
City. A member may purchase up to twotffitf years of such service. The price for each such
year shall be 10% (10.5% for members hired on or after September 30, 2013) of the
aggregate of the member' sfti.s Salary during the 12 calendar months immediately preceding
the date of such purchase; and such price shall be prorated accordingly if a member's
election includes a fractional year of service. Any additional benefits attributable to service
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purchased under this subsection (b) shall be at the benefit multiplier rate of 3% per year of
Creditable Service, with a total maximum additional benefit of 6% based on two years of
Creditable Service purchased determined in aeeordanee vt'ith the tliree pereent 'Benefit rate
as deseribed in seetion 66(b)( 1) or 66(A:)( 1 )(A), as the ease ma)' be. The purchase of
Creditable Service under this subsection (b) must be completed within 36 months
following September 30, 2013, or the date a member completes 5 years of Creditable
Service, whichever occurs later. A member who does not complete and fully pay for the
purchase of Creditable Service under this subsection (b) within 36 months following
September 30, 2013. or the date a member completes 5 years of Creditable Service. if later,
shall not receive Creditable Service for more than the amount for which payment has been
made, and shall not be eligible to purchase Creditable Service for prior military service in
the future.
Section 8. A new Section 88 of Part 1, Subpart 8, Article IX, Related Special Acts of the
Miami Beach City Code, is created to read:
Section 88. Benefits for members hired on or after September 30, 2013.
Notwithstanding any other provision of the System, the pension benefits for members hired
on or after September 30. 2013 shall be as provided in the sections 61 through 86. except
as follows:
(a) The benefit multiplier shall be three percent (3%) for each year of creditable service
for the first 20 years of service, and four percent ( 4%) for each year of creditable service
after 20 years of creditable service.
(b) The normal retirement date shall be as provided in sec. 66, except that a member must
attain age 48 to be eligible for "Rule of 70" retirement.
(c) Final average monthly salary shall be based on the five (5) highest paid years or last
five (5) years as the case may be, prior to retirement or separation from employment.
(d) The cost ofliving adjustment shall be one and one-half percent (1.5%) annually.
Section 9. Conflicts and Severability.
(a) All Ordinances, and parts of ordinances, in conflict herewith shall be and
the same, are hereby repealed.
(b) In the event any article, section, paragraph, sentence, clause, or phrase of
this Ordinance shall be adjudicated invalid or unconstitutional, such adjudication shall in
no manner affect the other articles, sections, paragraphs, sentences, clauses or phrases of
this Ordinance, which shall be and remain in full force and effect as fully as if the item so
adjudged invalid or unconstitutional was not originally a part hereof.
Section 10. Effective Date. This Ordinance shall take effect ten days following
adoption, except as otherwise specified herein.
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PASSED and ADOPTED by the City Commission of the City of Miami Beach
this __ day of , 2013.
Mayor
Attest:
(Seal)
1st Reading -
2nd Reading -
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APPROVED AS TO
FO~l>A 8, LANGUAGE
& FOR EXECUTiON
(...) CD MIAMI HERALD I MiamiHerald.com NE THURSDAY, SEPTEMBER 19, 2013 I 13NE MIAMI BEACH CITY OF MIAMI BEACH NOTICE OF A SPECIAL·CITY COMMISSION MEETING AND PUBLIC HEARINGS * NOTtCE.IS HEREBY given that a Special Commission Meeting regarding the Second Public Hearings to consider the adoption of the Millage Rate and Budget for FY 2013/2014 will be held by the City Commission of the City of Miami Beach, Florida, on Monday, September 30, 2013, commencing at 5:00 p:m., in the Commission Chambers, 3rd Floor, City Hall, 1700 Convention Center Drive, Miami Beach, Florida to consider the following; 5:01p.m. A Resolution Adopting: 1) The Final Ad Valorem Millage Of 5.8909 Mills For General Operating Purposes, Which Is Six And Eight-Tenth Percent (6.8%) More Than The "Rolled-Back" Rate Of5.5158 Mills; And 2) The Debt Service Millage Rate Of 0.2529 Mills for Fiscal Year (FY) 2013/14. 5:01p.m. A Resolution Ado'pting Final Budgets For The General, G.O. Debt Service, RDA Ad Valorem Taxes, Enterprise, And Internal Service Funds For Fiscal Year (FY) 2013/14. 5:02p.m. . A Resolution Of The Board Of Directors Of The· Normandy Shores Local Government Neighborhood Improvement District Adopting The Final Ad Valorem Millage Of 1.2687 Mills For Fiscal Year (FY) 2013/14 For The Normandy Shores Local Government District, Which Is Nineteen Percent (19.0%) Mora Than ll1a "Rolled-Back" Rate Of 1.0664 Mills. 5:02p.m. A Resolution Of The Board Of Directors Of The Normandy Shores Local Government Neighborhood Improvement District Adopting The Anal Operating Budget For Fiscal Year {FY) 2013/14. 5:03p.m. A Resolution Adopting The Final Capital Improvement Plan For Fiscal Years (FY) 2013/14-2017118 And Adopting The Final Capital Budget For FY 2013114. 5:03p.m. . . · A Resolution Adopting Fiscal Year {FY) 2013/14 Finai"Budgats For Spacial Revenue Funds For Resort Tax; The 7th Street Parking Garage Operations; The 5th And Alton Parking Garage Operations; Art In Public Places (AIPP), Tourism And Hospitality Scholarship Program, Green! Sustalnability Funds, Waste Hauler Additional Services And Public Benefrt Contribution Funds, Education Compact Funds, Red Light Camera Funds. And Emergency 911 Funds. 5:03p.m. A Resolution Adopting The Final Budget Of $1,200,000 From Fiscal Year (FY) 2013/14 People's Transportation Plan (PTP) Funds And $87,000 From (FY) 2013114 South Beach Concurrency Mitigation Funds, To Fund The Final Operating Budget For The South Beach Local In Miami Beach~ And Further Adopting The Final Budget Of $301,000 From FY 2013114 People's Transportation Plan Funds For Administrative And Technical Operating Expenditures, As Part Of The Five Percent {5%) Allowable For Administrative Assistance And Technical Assistance. · 5:03p.m. A Resolution Authorizing The Adoption Of The Miami Beach Cultural Arts Council's Fiscal Year (FY) 2013114 Final Budget In The Amount Of $1 ,470,000. 5:03p.m. A Resolution Adopting The Fiscal Year (FY) 2013/14 Police Spacial Revenue Account Final Budget In Th11 Amount Of $75,000 For The Purchase Of Those Items Set Forth In Exhibit "A," And Such Account Funded By Unclaimed Evidence Currently Held In The Pollee Special Revenue Account. · .5:03p.m. A Resolution Adopting The Police Confiscation Trust Fund Final Budget For Fiscal Year (FY) 2013/14 In The Amount 01 $724,000, To Be Funded From Stale Confiscated Funds In The Amount Of $235,000 And Federal Justice Confiscated Funds In The Amount Of $489,000, For The Appropriation And Expenditure Of Those Items Set Forth In Exhibit "A," Which Shall Be Funded Through The Police Confiscation Trust. 5:03p.m. A Resolution Adopting The Fiscal Year (FY) 2013/2014 Police Training & School Resources Fund Final Budget In The Amount Of $35,000. 5:03p.m. Resolution Adopting The Second Amendment To The General Fund, Enterprise. Internal Service Fund, And Special Revenue Fund Budgets For Fiscal Year (FY) 2012/13. 5:03p.m. A Resolution Adopting And Appropriating The Fourth Amendment To The Police Confiscation Trust Budget For Fiscal Year 2012/2013 In The Amount Of $10,000, To Be Funded From The Proceeds Of State Confiscated Funds, For The Appropriation And Expenditure Of Those Items Set Forth In Exhibit "A," Which Shall Be Funded Through The Police Confiscation Trust Fund. 5:04p.m. 1. Ordinance Amending Chapter 50 Of The City Of Miami Beach Code, Entitled "Fire Prevention And Protection," By Amending Section 50-4 Thereof, Entitled "Enforcement By Fire Inspectors; Notice Of Violation," To Add Citations And Implement New Fine Schedule Related To Fire Code Violations; By Amending Section 50-5 Thereof, Entitled "Annual Fire Prevention And Fire Safety Inspection Permit" To Include The Night lnsplolction Fee Previously Adopted Under Section 102.379 Of The City Code. · 2. Ordinance Amtmding Chapter 102 Of The Code Of The City Of Miami Beach, Entitled "Taxation," By Deleting The. Nightclub Fee Set Forth In Section 102.379, Entitled "Schedule Of Taxes, Effective October 1, 2009". 5:04p.m. Ordinance Amending Chapter 50 Of The Code Of The City Of Miami Beach, Entitled "Fire Prevention And Protection," By Creatipg Section 50-8 Thereof, To Be Entitled "Fire Alarms, Regulations, Pena~ies, Enforcement" To Estab)).;t, • \. Requirements And Fines For False Fire Alarms. 5:04p.m. An Ordinance Amending Appendix A, Entitled "Fee Schedule" For Subsection (A) Of Section 110-168, Entitled "Sanitary Sewer Service Charge," Of Chapter 110 Of The Miami Beach City Code, Entitled "Utilities," Article IV, Entitled "Fees, Charges, Rates And Billing Procedure"; Division 2 Thereof. Entitled "Rates, Pees And Charges," To Increase The Sanitary Sewer Service Charge Imposed By The City. 5:04p.m. -Ordinance Amending P.art I, Subpart B, Article IX, Related Special Acts, Of The Miami Beach City Code Entitled "Pension System For Disability And Retirement Of Members Of Police And Fire Departments"; Implementing Pro~islons Of The 2012-2015 Collective Bargaining Agreements Between The City And Fire Fighters Of Miami Beach, IAFF Local1510, And Miami Beach Fraternal OrdAr Of Police, William Nichols Lodge No.8; Amending Section 62 Entitled "Definitions"; Amending Section 63 Entitled "Source Of Monies For Fund; Computation Of Liability; Use And Investment Of fund"; Amending Section 65 Entitled "Computation Of Creditable Service; Service Record"; Amending Section 66 Entitled "Service And Disability Benefits Generally"; Amending Section 67 Entitled "Cost Of Living Adjustment"; Amending Section 79 Entitled "Deferred Retirement Option Plan"; Amending Section 82 Entitled "Military Service"; Creating A New Section 88 ,Entitled "Benefits For Members Hired On Or After September 30, 2013.. ·
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COMMISSION ITEM SUMMARY
Condensed Title:
Resolution Approving A License Agreement Between The City And Destination Brands For An Exclusive Miami Beach Sun Care Line, Which is Attached As
Exhibit "A", With Said Agreement Having An Initial Term Of Five (5) Years; And Authorizing The Mayor And City Clerk To Execute The Final Agreement;
Provided, However, That In The Event That The Final Negotiated Agreement Includes Any Term Or Terms Which Substantially Deviate From The Approved
Substantive Terms (As Referenced In The Attached Exhibit "A"), Or Contain New And/Or Additional Terms Which, In The City Manager And City Attorney's
Opinion, Materially Alter The Proposed Transaction, Then Requiring That The Final Negotiated Agreement To Be Brought To The City Commission For Its
Consideration.
; and Maximize Miami Beach as a Destination Brand.
The City Administration has been pursuing a sunscreen license agreement since late 2012. The Administration has negotiating with BLIII Holdings, who
acquired the North America rights to Rayito de Sol and Tortulan brands, regarding a Miami Beach Licensing Agreement. BLIII proposes the creation of an
entirely new brand and line of sun care products that leverage key elements of Miami Beach. BLIII in partnership with the City of Miami Beach, would utilize its
network of domestic and international development and sales experts to bring the Miami Beach Brand to the global consumer with unique, high quality
products that represent Miami Beach. Products would be manufactured in Florida at state of the art facilities. BLIII has begun doing research on product
development including pricing, packaging, consumer focus groups, logo development, quality control, and distribution. During their research they have also
been able to put together sales forecasts, estimated costs, and their plans for successful market penetration. The results of their focus groups, research and
industry meetings were overwhelmingly positive and Destination BLIII remains very interested in moving forward with a contract for an exclusive sunscreen
licensing agreement with the City.
In exchange for the City's agreement to license the Miami Beach brand to BUll/Destination Brands for the sole purpose of developing, manufacturing,
marketing and distributing the Miami Beach Sun Care Line as the exclusive and official sun and skin care brand of the City, the Administration and
BUll/Destination Brands have negotiated the attached License Agreement (Exhibit 1), which proposed terms are summarized as follows:
• Initial term of five (5) years with Destination Brands, which is a wholly owned subsidiary of BLIII Holdings.
• Renewal terms of three (3) years each as follows:
• First renewal at the sole discretion of Destination Brands.
• Second renewal at the sole discretion of the City.
• Three (3) additional renewal terms mutually agreed upon by both parties.
• Public Benefits will include the following:
• Up to one percent (1 %) of proceeds of the sale of each product will go towards funding beach cleanups and sun protection education.
• A minimum of 500 units of sunscreen annually for the City's lifeguards.
• All photographic, video and other marketing and advertising footage must be real depictions of Miami Beach and take place in Miami Beach.
• City to have 40% representation on Advisory Board.
• Minimum annual marketing investment of ten percent (1 0%) of gross revenue.
• City to have right to audit throughout the term of the Agreement and for a period of five (5) years after either termination or expiration of the
Agreement.
As you may recall, the City previously was negotiating royalty payments ranging from 25% • 75% on a tiered schedule based on Net Profit. However, as
negotiations proceeded the Administration and Destination Brands could not agree on the final definition of Net Profit and research revealed that standard
license agreements base royalty payments from Net Sales. As a result, negotiations resumed on a Net Sales basis and Destination Brands has agreed to pay
City royalties as follows:
• 9% of Net Sales until sales reach $150,000
• 6% of Net Sales from $150,001 -$1 ,000,000 in sales
• 3% of Net Sales beyond $1,000,001.
• Net Sales is defined as: Gross Sales less returns, quantity discounts (including unsalable, Coop, slotting/stocking fees), but no deduction made for other
discounts or uncollectable accounts. No costs incurred in the normal manufacture, sale, distribution or exploitation of the product shall be deductible from
any royalties.
• Royalty payments begin to accrue on January 1, 2015.
• In the event the City terminates the agreement, City agrees to not compete/license Miami Beach Logo in the sun care category for a period of 2 years
after the termination of the agreement
• In addition, the City has the ability to terminate if net sales of the Goods fails to reach $150,000 by the end the first Term, with thirty (30) days written
notice to Licensor.
It is recommended that the Mayor and Commission approve the proposed License Agreement with Destination Brands.
Finance and Citywide Projects Committee reviewed the proposal on May 13, 2013, July 8, 2013 and August 21, 3013 and expressed support for the license
a reement.
Financial Information:
Source of Funds: I I Amount I Account I Approved
I NSP I I I I I
Financial Impact Summary: Royalty payments would begin after 12 months of distribution.
City Clerk's Office LeQislative Tracking:
Max Sklar, Ext 6116
Sign.Offsn A 'j ~ 1\
I II #0~ "' .. ~·· Directo!.---j Assista?'fity Manager I \\ City Manager
If'~ / I ~ I \: 1-fV\ -z__j / I I
I
A~DAITEM R7Q MIAMI BEACH 41 DATE 'f-310-13
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miom,beochfl gov
COMMISSION MEMORANDUM
TO: Mayor Matti H. Bower and Members
FROM: Jimmy L. Morales, City Manager
DATE: September 30, 2013
SUBJECT RESOLUTION OF THE MAYOR A D CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, APPROVING THE TERMS OF A LICENSE AGREEMENT
BETWEEN THE CITY AND DESTINATION BRANDS FOR AN EXCLUSIVE MIAMI
BEACH SUN CARE LINE, WHICH IS ATTACHED AS EXHIBIT "A", WITH SAID
AGREEMENT HAVING AN INITIAL TERM OF FIVE (5) YEARS; AND
AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE THE FINAL
AGREEMENT; PROVIDED, HOWEVER, THAT IN THE EVENT THAT THE FINAL
NEGOTIATED AGREEMENT INCLUDES ANY TERM OR TERMS WHICH
SUBSTANTIALLY DEVIATE FROM THE APPROVED SUBSTANTIVE TERMS (AS
REFERENCED IN THE ATTACHED EXHIBIT "A"), OR CONTAIN NEW AND/OR
ADDITIONAL TERMS WHICH, IN THE CITY MANAGER AND CITY ATTORNEY'S
OPINION, MATERIALLY ALTER THE PROPOSED TRANSACTION, THEN
REQUIRING THAT THE FINAL NEGOTIATED AGREEMENT TO BE BROUGHT TO
THE CITY COMMISSION FOR ITS CONSIDERATION.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
The City Administration has been pursuing a sunscreen license agreement since late 2012 and
has provided periodic updates to the Finance and Citywide Project Committee (FCWPC) at
several meetings throughout the 2013 calendar year. Initially those discussions focused on a
proposal from Energizer who initially was interested in pursuing a licensing agreement with the
City, but has since determine they are only interested in a sponsorship agreement with a flat
annual fee. Estimated total value of the proposed Exclusive Sunscreen Partnership with
Energizer over the term of the agreement was $ 1 ,500,000, inclusive of an annual sponsorship
fee ($150,000}, marketing program to promote product and the City of Miami Beach brand.
However, once you subtract the Annual Commission fee to The Superlative Group {TSG) and
other negotiated benefits the net annual revenue to the City was approximately $115,000 or
$1,150,000 over the ten (1 0) year term. Additionally, Energizer had negotiated additional
marketing benefits with an annual value in excess of $500,000. Although Energizer was not
ultimately interested in a license agreement with the City, they were also concerned with the
resources they would need to invest to develop and sell this brand.
Pursuant to the terms of the City's Agreement with TSG, TSG is entitled to 15% commission on
gross revenue between $0 -$250,000, and 12% commission on gross revenue generated
between $250,001 -$500,000 for the City by TSG. The potential revenue generated from this
proposed agreement combined with the gross revenue from the Coca-Cola agreement, entitles
TSG to 12% commission. TSG is also entitled to 10% commission on budgeted cost avoidance
measures as further defined in the agreement, which could be up to an additional $8,050 for
TSG annually.
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City Commission Meeting
Official Sun Care License Agreement
September 30, 2013
Page 2 of 6
In April 2013, the City was directly approached by Rayito De Sol regarding their interest in an
exclusive licensing partnership and development of Miami Beach Sunscreen. The
Administration has negotiating with BUll Holdings, who acquired the North America rights to
Rayito de Sol and Tortulan brands, regarding a Miami Beach Licensing Agreement.
PROPOSED LICENSING PARTNERSHIP-BLIII HOLDINGS
Rayito De Sol was established over 70 years ago in Argentina as a family run business. Today
Rayito De Sol is the #1 sun care brand in Argentina and is the #1 selling bronzing sunscreen in
Brasil. It has been available in over 10 other countries including Mexico, Venezuela, Ecuador
and Paraguay and recently expanded to offer its sunscreen, bronzer, and instant color
collections in the United States. Rayito De Sol products are currently available at ULTA, Kerr
Drug, Del Haize, H-E-B and Airport Newslink as well as their online store.
BUll Holdings is locally owned and locally operated by the Leon family, a fourth generation
Cuban American entrepreneurial family with experience in diverse industries. BUll entered into
the sun care and skin care industries in 2011 by acquiring the North America rights to Rayito de
Sol and Tortulan brands, top-selling Latin American brands with over seventy years of history
and heritage.
BUll proposes the creation of an entirely new brand and line of sun care products that leverage
key elements of Miami Beach. BUll in partnership with the City of Miami Beach, would utilize its
network of domestic and international development and sales experts to bring the Miami Beach
Brand to the global consumer with unique, high quality products that represent Miami Beach.
Products would be manufactured in Florida at state of the art facilities.
BUll has begun doing research on product development including pricing, packaging, consumer
focus groups, logo development, quality control, and distribution. During their research they
have also been able to put together sales forecasts, estimated costs, and their plans for
successful market penetration.
Based on an initial USA market launch and reaching an achievable market share within three to
five years, BUll proposes a partnership agreement whereby net profits would be shared
between the City of Miami Beach and BUll. BUll estimates this distribution could be valued in
excess of $1 million USD annually by year's three to five of the venture.
BUll believes that together with the City, they can position the Miami Beach Brand as a leader
in destination branding and products and help connect consumers all over the world to the City
of Miami Beach. Since the May FCWPC meeting, BUll has continued their consumer focus
groups and research and also attended the ECRM trade show in July to gauge interest from
retailers for a potential Miami Beach Sun Care product line. The results of their focus groups,
research and industry meetings were overwhelmingly positive and BUll remains very interested
in moving forward with a contract for an exclusive sunscreen licensing agreement with the City.
PRODUCT QUEST MANUFACTURING, LLC
Destination Brands has partnered with Product Quest Manufacturing, LLC (Product Quest) to
produce, package and fulfill orders for the Miami Beach Sunscreen. Product Quest
manufactures over-the-counter sunscreen, health and beauty care products on a contract basis.
Its services include research and development, production, designing and packaging,
warehousing, fulfillment, and sales and marketing. The company offers drugs in the nasal and
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City Commission Meeting
Official Sun Care License Agreement
September 30, 2013
Page 3 of6
ear care categories, as well as beauty products, including skin lotions, cosmetics, and
shampoos. It also markets and sells Scherer Labs branded healthcare products in the United
States and internationally. Product Quest was named by CVS as 2013 supplier of the year.
Product Quest was founded in 1996 by John Regan and is based in Daytona Beach, Florida.
More than 15 years later, Product Quest is a multi-million dollar operation with two locations
capable of producing more than 60 million units a year. They are also a fully licensed over-the-
counter (OTC) drug manufacturer with over 200 employees. Mr. Regan has more than 31 years
experience in managing manufacturing companies and launched his career with Hawaiian
Tropic in Daytona Beach, FL.
Product Quest services include private label and contract manufacturing. These services
include the following:
• Turnkey product development, manufacturing and shipping programs
• A Ia carte contract manufacturing services
• Full service research and development
• Full service graphics & packaging design
• Complete logistics & fulfillment support
Assistant City Manager Kathie Brooks and Tourism, Culture and Economic Development
Director Max Sklar, visited Product Quest facilities in Daytona Beach in July 2013. The
manufacturing facility in Daytona Beach is 170,000 square feet with 17 production lines,
research and development and quality control regulatory labs. Based on the visit and
subsequent discussions with Product Quest the Administration feels confident that Product
Quest is the right partner for Destination Brands to contract with for the Miami Beach
Sunscreen.
PRODUCT
The exclusive and official sun and skin care brand of the City will be manufactured with salt
water, sea foam, sea kelp, sand, and other high quality products and sea elements representing
the Miami Beach brand. The initial product line will include a sport spray {SPF 50), Sunscreen
(SPF 30 and 15), Daily Sea Foam Wash, Daily Exfoliant, as s line of sunless tanning products.
Attached are images of the initial product line.
FINANCE AND CITYWIDE PROJECTS COMMITTEE
The FCWPC discussing the proposal at their May 13, 2013 meeting and expressed the
importance of having a high level of quality control and that all advertising promotes the Miami
Beach community in a positive light. The FCWPC passed a motion recommending the
Administration proceed with the analysis and negotiations with BUll and to bring this item back
to a future FCWPC meeting.
The FCWPC also discussed this at their July 8, 2013 meeting the Administration provided a
brief explanation of both the negotiation with Energizer, and then the negotiations with BUll.
The Committee recommended only pursuing the licensing agreement with BUll because the
Energizer proposal limited revenue to a maximum of $150,000 annually.
At the August 21, 2013 FCWPC the Administration provided an update and summary of the
proposed terms with BUll. The Committee expressed support for a sunscreen license
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City Commission Meeting
Official Sun Care License Agreement
September 30, 2013
Page 4 of6
agreement, but requested to see the definition of Net Profit, which, at the time of the Committee
meeting, was still being negotiated between both parties. There was also a request to compare
this proposal against other similar agreements.
LICENSE AGREEMENTS
In a typical licensing agreement, the licensor grants the licensee the right to produce and sell
goods, apply a brand name or trademark, or use patented technology owned by the licensor. In
exchange, the licensee usually submits to a series of conditions regarding the use of the
licensor's property and agrees to make royalty payments. A license under intellectual property
commonly has several components beyond the grant itself, including a term, territory, renewal
provisions, and other limitations deemed vital to the licensor.
In most cases, it is to the licensor's advantage to have a shorter rather than a longer term. If the
licensing arrangement is successful, a shorter term will give the licensor an opportunity to
negotiate a higher royalty rate before renewing the license agreement. As a compromise, the
licensor and the licensee may agree to a short initial term with an automatic renewal if certain
sales or royalty targets are met, or, alternatively, to a longer term with an automatic termination
if specific sales or royalty targets are not met.
Industry norm for royalty rates can range from 2% to 20% of the licensee's net rsales. Rates will
vary depending on the type of licensed property, the type or types of licensed products to be
manufactured, the current or anticipated demand for the licensed products, and the track record
of the licensor. Entertainment and sports properties and single event properties tend to
command higher royalty rates than fashion, art and corporate trademark properties. Food
products tend to yield a lower rate due to the generally low profit margins in the food industry.
The royalty rate for any particular licensing deal will depend on a variety of factors, including:
• Consumer recognition of the licensed property
• Television, movie, publishing or other current or anticipated exposure for the licensed
property
• The licensed products on which the licensee will be authorized to use the property
• The territory and channels of distribution offered to the licensee
• The extent to which there are other supporting licenses in place
• The start date and term of the license
• Retailer interest in the licensed property and/or licensed products
Staff researched and reviewed agreements from private brands, as well as the City of New York
who is the leader in municipal licensing and has been able to use their best practices in
negotiations with BLII L
SUMMARY OF NEGOTIATED TERMS WITH DESTINATION BRANDS I BUll HOLDINGS
In exchange for the City's agreement to license the Miami Beach brand to BUll/Destination
Brands for the sole purpose of developing, manufacturing, marketing and distributing the Miami
Beach Sun Care Line as the exclusive and official sun and skin care brand of the City, the
Administration and BUll/Destination Brands have negotiated the attached License Agreement
(Exhibit 1 ), which proposed terms are summarized as follows:
• Initial term of five (5) years with Destination Brands, which is a wholly owned subsidiary
of BUll Holdings.
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City Commission Meeting
Official Sun Care License Agreement
September 30, 2013
Page 5 of6
• Renewal terms of three (3) years each as follows:
o First renewal at the sole discretion of Destination Brands.
o Second renewal at the sole discretion of the City.
o Three (3) additional renewal terms mutually agreed upon by both parties.
• Intellectual Property: Royalty Payments will be for the Licensing of the Miami Beach
Logo (as represented in the typestyle/font) and for the designation as the worldwide,
exclusive and official sun care brand of the City of Miami Beach.
• Minimum annual marketing investment of ten percent (1 0%) of net revenue.
• Destination Brands responsible for design, research, development, sales,
manufacturing, distribution, and account management.
• City of Miami Beach agrees to promote the designated brands at no cost through its
government-access communication resources upon availability and provided such
promotion does not violate any federal, state and/or local laws or any other policies or
agreements.
• Public Benefits will include the following:
o Up to one percent (1 %) of proceeds of the sale of each product will go towards
funding beach cleanups and sun protection education.
o A minimum of 500 units of sunscreen annually for the City's llfeguards.
• All photographic, video and other marketing and advertising footage must be real
depictions of Miami Beach and take place in Miami Beach.
• City to have 40% representation on Advisory Board.
• City to have right to audit throughout the term of the Agreement and for a period of five
(5) years after either termination or expiration of the Agreement of all books and records
relating to the Agreement to verify accuracy thereof. All costs of City audits will be a
cost of the Agreement and must be paid by Destination Brands.
As you may recall, the City previously was negotiating royalty payments ranging from 25% -
75% on a tiered schedule based on Net Profit. However, as negotiations proceeded the
Administration and Destination Brands could not agree on a definition of Net Profit. Based on
the research from standard license agreements the City and Destination Brands negotiated
royalty payments from Net Sales. Although the percentage of royalty payments is lower than
originally presented, this is better because the City will receive royalties before costs incurred in
the normal course of business are deducted.
As a result, negotiations resumed on a Net Sales basis and Destination Brands has agreed to
pay City royalties as follows:
o 9% of Net Sales until sales reach $150,000
o 6% of Net Sales from $150,001-$1,000,000 in sales
o 3% of Net Sales beyond $1,000,001.
o Net Sales is defined as: Gross Sales less returns, quantity discounts (including
unsalable, Coop, slotting/stocking fees), but no deduction made for other
discounts or uncollectable accounts. No costs incurred in the normal
manufacture, sale, distribution or exploitation of the product shall be deductible
from any royalties.
o Royalty payments begin to accrue January 1, 2015.
o In the event the City terminates the agreement, City agrees to not
compete/license Miami Beach Logo in the sun care category for a period of 2
years after the termination of the agreement.
In addition, the City has the ability to terminate if net sales of the Goods fails to reach $150,000 by the
end the first Term, with thirty (30) days written notice to Licensor.
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City Commission Meeting
Official Sun Care License Agreement
September 30, 2013
Page 6 of6
Please note that the City and Destination Brands have commenced negotiations with the
Boucher Brothers with regard to the sale of the Miami Beach sun care product line. Section
16.5 of City's agreement with the Boucher Brothers does require the Boucher Bothers to sell
only the products under the City's exclusive endorsement and/or sponsorship agreement.
However, the City's desire is to work with the Boucher Brothers to sell the Miami Beach sun
care product at all of their concessions in Miami Beach (public and private) and at their
concession operations throughout the rest of the country. Therefore, the City and Destination
Brands have been negotiating mutually beneficial terms for Boucher Brothers. Those
negotiations are ongoing and have been very positive.
Destination Brands has already invested considerable funding in research and product
development in order to have the product ready to go to market in 2014, something Energizer
was not interested in doing.
CONCLUSION
In reviewing other municipal sponsorship or licensing agreements in place or that have been
negotiated in the past in other cities or public institutions, it is difficult to find a similar contract to
compare. For example, New York City has numerous license agreements for a variety of
trademarks they own, but there is no comparable agreement for a municipal sun care line and
this seems to be the first of its kind in the public sector.
The licensing proposal from Destination Brands offers the City the potential to achieve higher
net proceeds than the Energizer proposal while developing a Miami Beach branded sun care
line with broad distribution. This, in itself, has a tremendous value toward building the City's
brand and increase awareness of the destination.
Destination Brands continues negotiating with retailers, but is on a very tight timeline to
manufacture the product and fulfill orders in order to have the product to market by January
2014. In order to not jeopardize the business the Administration has finalized negotiations with
Destination Brands in order to have the attached license agreement ready for the City
Commission's consideration.
Therefore, the Administration recommends the Mayor and City Commission approve a license
agreement between the City and Destination Brands for an exclusive Miami Beach sun care
line, with substantive terms described more specifically in Exhibit "A," with said Agreement :::tJJ;erm m five (5) yearn
T:IAGENDA\2013\September 30\Sunscreen BUll Holdnigs License Agreement MEMO. doc
47
48
~ CD MB exfoliating sand Prepares skin, extends tan Anti-photo-aging releases melanin With antioxidants 2014 PRODUCT LINE MB seawater MB Triple sea kelp Instant cooling gel Minerals Proteins vitamins to nourish skin Seaweed natural sunscreen (IR) Rehydrates, replenishes proteins minerals lost in heat, sun MB fragrance SPORT protection Long lasting protection, instant drying MB sea foam, aquamarine life Calming soothing Minerals and proteins to rejuvenates skin With Vitamins A,C,E Therapeutic UVA/UVB, 80min UVA/UVB, 80 antiaging ... .. .. . .... .... ..,..._ ..,... ..... .1. .......... --,....,.. . ...-....-...,..,.....
50
CJ'I ....:.. m -SOBE Nights Sunless Line Sunless Sea Spray MB beach scent Gradual color Instant Color Sunless Glow Lotion MB beach scent Instant color gradual glow
Sklar, Max
From:
Sent:
To:
Cc:
Subject:
Importance:
Good morning:
Fernandez, Alex
Friday, September 27, 2013 9:58AM
Morales, Jimmy; Smith, Jose; Granado, Rafael
Weithorn, Deede; Monserrat, Marcia; Moya Denham, Maria; Cardillo, Lilia; Sklar, Max
Sunscreen Licensing Agreement
High
Commissioner Weithorn would like to refer an item to the September 30th City Commission agenda regarding our municipal
marketing partnership for sunscreen licensing. This item was discussed during the August 21st, 2013 meeting of the Finance
Committee. The Committee was presented with Miami Beach branded sunscreen by BUll Holdings, the North American rights holder
of Rayito de Sol, a top-selling Latin American brand distributed in North America. BUll Holdings together with its partner, Product
Quest Manufacturing, is interested in developing a Miami Beach branded sun care line. In exchange for the City's agreement to
license the Miami Beach brand to BUll, the Committee directed the Administration to finalize negotiating the terms on page three of
item 2F of the August 21st, 2013 Finance Committee agenda. These terms were to be presented at the regularly scheduled
September meeting of the City Commission which Commissioner Weithorn was unable to attend. To avoid further delays,
Commissioner Weithorn requests that the negotiated terms be presented for approval of the City Commission at the next City
Commission meeting scheduled for Monday, September 30th, 2013.
Please contact Commissioner Weithorn's office with any questions and/or concerns. Please accept this email in lieu of a
memorandum.
Alex J. Fernandez,
Commissioner Deede Weithorn's Office
Office of the Mayor & Commission
City of Miami Beach
1
52
EXHIBIT "A"
License Agreement
THIS AGREEMENT is made this __ day of , 2013 by and between
the City of Miami Beach, with a principal place of business at 1700 Convention
Center Dr., Miami Beach, FL 33139 ("Licensor"); and Destination Brands
International, LLC, a Florida Limited Liability Company with a principal place of
business at 11501 S.W. 40th Street, 2nd Floor, Miami, FL 33165 ("Licensee").
WHEREAS Licensor has adopted and used the trademark "Miami Beach" and
Licensor intends to adopt the Marks M.B.: (the "Marks") for non-medicated sun care
preparation and skin preparations with which it has used the Marks since at least
as early as 1921; and
WHEREAS Licensor owns a federal registration for the Mark for the above-
mentioned goods, U.S. Trademark Registration No. 4,204,713, which registration
was granted on September 11, 2012; and Licensor owns (INSERT :MARKS); and
WHEREAS the Marks, due to Licensor's long and widespread use and promotion of
the Marks and the goods and services for which it is used, has become well-known
and recognized by the general public and associated in the public mind with
Licensor; and
WHEREAS Licensee desires to utilize the Marks upon and in connection with the
manufacture, sale and distribution of the goods hereinafter described:
NOW, THEREFORE, in consideration of the mutual promises herein contained, and
for good and valuable consideration, receipt of which is hereby acknowledged by the
parties, it is hereby agreed:
1. GRANT OF LICENSE:
(a) Goods. Upon the terms and conditions hereinafter set forth, Licensor hereby
grants to Licensee, and Licensee hereby accepts the right, license and privilege to
utilize the Marks upon and in connection with the manufacture, sale and
distribution of the following goods: non-medicated sun care preparations, non-
medicated skin care preparations (the Goods).
(b) Territory. The license hereby granted extends worldwide.
(c) Term. The term of the license hereby granted shall commence on the
~~~----day of , 2013 and shall continue until the
53
________ day of ________ , 2018, unless sooner terminated m
accordance with the provisions hereof.
(d) Renewal: The License Agreement may be renewed as follows:
1. Licensee has the sole discretion to renew for one (1) additional
three (3) year term following the termination of the initial term.
2. Licensor has the sole discretion to renew for one (1) additional
three (3) year term following the termination of the first renewal term.
3. Following the second renewal term, the license may be renewed
for three (3) additional three (3) year terms upon mutual agreeable
terms.
2. TERMS OF PAYM:ENT:
(a) Rate. Licensee agrees to pay Licensor as royalty as follows:
1. A sum equal to nine percent (9%) of net sales by Licensee or any of its
affiliated associated or subsidiary companies of the Goods covered by this
Agreement up to the first $150,000 of net sales;
2. A sum equal to six percent (6%) of net sales by Licensee or any of its
affiliated, associated or subsidiary companies of the Goods covered by this
Agreement between $150,001 and $1,000,000 in net sales; and
3. A sum equal to three percent (3%) of net sales by Licensee or any of its
affiliated, associated or subsidiary companies of the Goods covered by this
Agreement above $1,000,001 of net sales.
4. The term "net sales" shall mean gross sales less quantity discounts
(including unsalable, coop, slotting and stocking fees) and returns, but no
deduction shall be made for cash or other discounts or uncollectible
accounts. No costs incurred in the manufacture, sale, distribution or
exploitation of the Goods shall be deducted from any royalty payable by
Licensee.
5. Royalty payments shall begin to accrue twelve (12) months from the
start of sales or January 1,2015 whichever is sooner.
(b) Periodic Statements. Within days after the initial shipment of
the Goods covered by this Agreement, and within 90 days of the end of each
calendar year Licensee shall furnish to Licensor complete statements certified to be
54
accurate by Licensee showing the number, description and gross sales price of the
Goods, as well as itemized deductions from gross sales price and net sales price of
the Goods distributed and/or sold by Licensee during the preceding calendar
quarter, together with any returns made during the preceding calendar quarter. For
this purpose, Licensee shall use the statement form attached hereto, copies of which
form may be obtained by Licensee from Licensor. Such statements shall be
furnished to Licensor whether or not any of the Goods have been sold during the
preceding calendar quarter.
(d) Royalty Payments. Royalties shall be due within ninety (90) days following the
end of the calendar year in which they are earned, and payment shall accompany
the statements furnished as required above. The receipt or acceptance by Licensor
of any of the statements furnished pursuant to this Agreement or of any royalties
paid hereunder, or the cashing of any royalty checks paid hereunder shall not
preclude Licensor from questioning the correctness thereof at any time, and in the
event that any inconsistencies or mistakes are discovered in such statements or
payments, they shall immediately be rectified and the appropriate payment made
by Licensee. Payment shall be in U.S. funds. Domestic taxes payable in the licensed
territory shall be payable by Licensee.
3. EXCLUSIVITY:
(a) The License granted herein shall be exclusive to Licensee for use of the Marks in
connection with the Goods.
(b) It is agreed that if Licensor conveys an offer to Licensee to purchase any of the
Goods in connection with a premium, giveaway or other promotional arrangement,
Licensee shall have ten days within which to accept or reject such an offer. In the
event that Licensee fails to accept such offer within the specified ten days, Licensor
shall have the right to enter into the proposed premium, giveaway or promotional
arrangement using the services of another manufacturer, provided, however, that in
such event Licensee shall have a three day period within which to meet the best
offer of such manufacturer for the production of such Goods if the price of such
manufacturer is higher than the price offered to Licensee by Licensor. Licensee
agrees that it shall not, without the prior written consent of Licensor, (i) offer the
Goods as a premium in connection with any other product or service, or (ii) sell or
distribute the Goods in connection with another product or service which product or . . . serviCe 1s a prem1um.
4. GOODWILL: Licensee recognizes the great value of the goodwill associated with
the Marks, and acknowledges that the Marks and all rights therein and the
goodwill appurtenant thereto belong exclusively to Licensor.
5. LICENSOR,S TITLE AND PROTECTION OF LICENSOR'S RIGHTS:
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(a) Licensee agrees that it will not during the term of this Agreement, or thereafter,
attack the title or any rights of Licensor in and to the Marks or attack the validity
of this license. Licensor hereby agrees to indemnify Licensee and undertakes to hold
it harmless against any claims or suits arising solely out of the use by Licensee of
the Marks as authorized in this Agreement, provided that prompt notice is given to
Licensor of any such claim or suit and provided, further, that Licensor shall have
the option to undertake and conduct the defense of any suit so brought and no
settlement of any such claim or suit may be made without the prior written consent
of Licensor.
(b) Licensee agrees to assist Licensor to the extent necessary in the procurement of
any registration for or to protect any of Licensor's rights to the Marks, and Licensor,
if it so desires may commence or prosecute any claims or suits in its own name or in
the name of Licensee or join Licensee as a party thereto. Licensee agrees to assign
the mark Miami Beach, Federal Trademark Serial number 85904 724 to Licensor
upon execution of this agreement. Licensee shall notify Licensor in writing of any
infringements or imitations by others of the Marks on Goods the same as or similar
to those covered by this Agreement which may come to Licensee's attention, and
Licensor shall have the sole right to determine whether or not any action shall be
taken on account of any such infringements or imitations. Licensee shall not
institute any suit or take any action on account of any such infringements or
imitations without first obtaining the written consent of the Licensor to do so.
6. INDEMNIFICATION BY LICENSEE AND PRODUCT LIABILITY
INSURANCE:
(a) Licensee hereby agrees to indemnify Licensor and undertakes to defend Licensee
and/or Licensor against and hold Licensor harmless for any claims, suits, loss or
damage arising out of any allegedly unauthorized use of any trademarks, patent,
process, idea, method or device by Licensee in connection with the Goods covered by
this Agreement or any other alleged action by Licensee and also from any claims,
suits, loss or damage arising out of alleged defects in the Goods.
(b) Licensee agrees that it will obtain, at its own expense, Commercial General
Liability on a comprehensive basis, including Personal Injury Liability and
Products/Completed Operations, in an amount not less than $5,000,000 combined
single limit per occurrence, for bodily injury and property damage. from a
recognized insurance company which has qualified to do business in the state of
Florida, providing adequate protection, at least in the amount of $5,000,000, for
Licensor (as well for Licensee) against any claims, suits, loss or damage arising out
of any alleged defects in the Goods. In addition, Licensee agrees that it will obtain
at its own expense Professional Liability Insurance in an amount not less than
$1,000,000 with the deductible per claim, if any, not to exceed 10% of the limit of
liability.
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As proof of such insurance, a fully paid certificate of insurance naming Licensor as
an insured party will be submitted to Licensor by Licensee for Licensor's prior
approval before any Goods is distributed or sold, and at the latest within thirty days
after the date first written above; any proposed change in certificates of insurance
shall be submitted to Licensor for its prior approval. Licensor shall be entitled to a
copy of the then existing certificate of insurance, which shall be furnished to
Licensor by Licensee.
(c) As used in the first two sentences of this paragraph 6, and for purposes of
determining liability to "Licensor," Licensor shall include the officers, directors,
agents and employees of the Licensor, or any of its subsidiaries or affiliates, any
person(s) the use of whose name may be licensed hereunder, the package producer
and the cast of any radio and/or television program whose name may be licensed
hereunder, and any producer of packaging or material pursuant to such license.
7. QUALITY OF MERCHANDISE:
(a) Licensee agrees that the Goods covered by this Agreement shall be of high
standard and of such style, appearance and quality as to be adequate and suited to
their exploitation to the best advantage and to the protection and enhancement of
the Marks and the goodwill pertaining thereto, that such Goods will be
manufactured, sold and distributed in accordance with all applicable federal, state
and local laws, and that the manufacture, sale and distribution shall not reflect
adversely upon the good name of Licensor or any of its programs or the Marks.
(b) Licensee shall, before selling or distributing any of the Goods, furnish to
Licensor free of cost for its written approval a reasonable number of samples of each
Goods, its cartons, containers, packing and wrapping material. The quality and
style of such Goods as well as of any carton, container, packing or wrapping
material shall be subject to the approval of Licensor. Such approvals shall not be
unreasonably upheld.
(c) Annually, after Licensee has commenced selling the Goods and upon Licensor's
written request, Licensee shall furnish without cost to Licensor not more than Five
Hundred (500) additional random samples of each Goods being manufactured and
sold by Licensee hereunder, together with any cartons, containers, packing and
wrapping material used in connection therewith.
(d) Licensee shall contribute up to one percent (1 %) of proceeds of the sale of
each product towards funding beach cleanups and sun protection education.
8. LABELING:
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(a) Licensee agrees that it will cause to appear on or within each Goods sold by it
under this license and on or within all advertising, promotional or display material
bearing the Marks, the symbol and any other notice desired by Licensor and, where
such Goods or advertising, promotional or display material bears the trademarks or
service Marks, appropriate statutory notice of registration or application for
registration thereof. In the event that any Goods is marketed in a carton, container,
packing or wrapping material bearing the Marks, such notice shall also appear
upon that carton, container, packing or wrapping material. All proposed packaging
of the Goods bearing the Marks shall be submitted to Licensor for approval of the
appropriate use of the Marks and statutory notice. Such approval shall not be
unreasonably withheld. Approval by Licensor shall not constitute a waiver of
Licensor's rights or Licensee's duties under any provision of this Agreement.
(b) Licensee agrees to cooperate fully and in good faith with Licensor for the purpose
of securing and preserving Licensor's (or any grantor of Licensor's) rights in and to
the Marks. In the event there has been no previous registration of the Marks and/or
Goods and/or any material relating thereto, Licensee shall, at Licensor's request
and expense, cooperate in the effort to register such a copyright, trademarks or
service Marks in the appropriate class in the name of Licensor. It is agreed that
nothing contained in this Agreement shall be construed as an assignment or grant
to the Licensee of any right, title or interest in or to the Marks, it being understood
that all rights relating thereto are reserved by Licensor, except for the license
hereunder to Licensee of the right to use and utilize the Marks only as specifically
and expressly provided in this Agreement. Licensee hereby agrees that at the
termination or expiration of this Agreement Licensee will be deemed to have
assigned, transferred and conveyed to Licensor any rights, equities, goodwill, title
or other rights in and to the Marks which may have been obtained by Licensee or
which may have vested in Licensee in pursuance of any endeavors covered hereby,
and that Licensee will execute any instruments requested by Licensor to accomplish
or confirm the foregoing. Any such assignment, transfer or conveyance shall be
without other consideration than the mutual covenants and considerations of this
Agreement.
(c) Licensee hereby agrees that its every use of the Marks shall inure to the benefit
of Licensor and that Licensee shall not at any time acquire any rights in the Marks
by virtue of any use it may make of the Marks.
9. PROMOTIONAL MATERIAL:
(a) Licensor agrees that Licensee's Goods shall be designated the worldwide,
exclusive and official sun care product of Licensor.
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(b) In all cases where Licensee desires artwork involving Goods, which are the
subject of this license, the cost of such artwork and the time for the production
thereof shall be borne by Licensee. All artwork and designs involving the Marks, or
any reproduction thereof, shall, notwithstanding their invention or use by Licensee,
be and remain the property of Licensor and Licensor shall be entitled to use the
same and to license the use of the same by others.
(c) Licensor agrees to promote the Goods at no cost through its government
access communication resources upon availability, provided such promotion does
not violate any federal, state and/or local laws and policies and other said terms and
agreements. Licensor shall have the right, but shall not be under any obligation, to
use the Marks and/or the name of Licensee so as to give the Marks, Licensee,
Licensor and/or Licensor's programs full and favorable prominence and publicity.
(d) Licensee agrees not to offer for sale, advertise or publicize any of the
Goods hereunder on radio or television without prior written approval of Licensor,
which Licensor may grant or withhold in its unfettered discretion. Licensee agrees
that any visual marketing, including, but not limited to, photography, video and
film must be real depictions of Miami Beach and take place in Miami Beach
(e) Licensee agrees to annual invest a minimum of ten percent (10%) of net
revenue toward the marketing and promotion of the product.
10. DISTRIBUTION:
(a) Licensee agrees that during the term of this license it will diligently and
continuously manufacture, distribute and sell the Goods covered by this Agreement
and that it will make and maintain adequate arrangements for the distribution of
the Goods.
(b) Licensee agrees to sell to Licensor such quantities of the Goods at as low a rate
and on as good terms as Licensee sells similar quantities of the Goods to the general
trade.
11. RECORDS:
(a) Licensee agrees to keep accurate books of account and records covering all
transactions relating to the license hereby granted, and Licensor and its duly
authorized representatives shall have the right at all reasonable hours of the day to
an examination of these books of account and records and of all other documents
and materials in the possession or under the control of Licensee with respect to the
subject matter and terms of this Agreement, and shall have free and full access
thereto for these purposes and for the purpose of making extracts therefrom.
Licensor, Licensee shall at its own expense furnish to Licensor a detailed audited
statement prepared annually by an independent certified public accountant
59
showing the number, description, gross sales price, itemized deductions from gross
sales price and net sale price of the Goods covered by this Agreement distributed
and/or sold by Licensee to the date of Licensor's demand. All books of account and
records shall be kept available for at least five (5) years after the termination of this
license.
(b) Public Records. Licensee understands that the public shall have access al all
reasonable time to City contracts, subject to the provisions of Chapter 119, Florida
Statutes, and agrees to allow access by the City and the public to all documents
subject to disclosure under applicable law.
12. BANKRUPTCY, VIOLATION, ETC.:
(a) If Licensee shall not have commenced in good faith to manufacture and
distribute in substantial quantities all the Goods within three months after the date
of this Agreement or if at any time thereafter in any calendar month Licensee fails
to sell any ofthe Goods (or any class or category of the Goods), Licensor, in addition
to all other remedies available to it hereunder, may terminate this license with
respect to any Goods or class or category thereof which have not been manufactured
and distributed during such month, by giving written notice of termination to
Licensee. Such notice shall be effective when mailed by Licensor. In addition, if net
sales of the Goods fails to reach $150,000 by the end the first Term, Licensor may
terminate this license with thirty (30) days written notice to Licensor.
(b) If Licensee makes an assignment for the benefit of its creditors or if Licensee
discontinues its business, the license hereby granted shall automatically terminate
forthwith without any notice whatsoever being necessary. In the event this license
is so terminated, Licensee, its representatives, trustees, agents, administrator,
successors and/or assigns shall have no right to sell, exploit or in any way deal with
or in any Goods covered by this Agreement or any carton, container, packing or
wrapping material, advertising, promotional or display material pertaining thereto,
except with and under the special consent and instructions of Licensor in writing,
which instructions it shall be obligated to follow.
(c) If Licensee shall violate any of its other obligations under the terms of this
Agreement, Licensor shall have the right to terminate the license hereby granted
upon ten days' notice in writing, and such notice of termination shall become
effective unless Licensee shall completely remedy the violation within the ten-day
period and satisfy Licensor that such violation has been remedied.
(d) Termination of the license under the provisions of this paragraph shall be
without prejudice to any rights, which Licensor may otherwise have against
Licensee. Upon the termination of this license, notwithstanding anything to the
contrary herein, all royalties on sales theretofore made shall become immediately
due and payable and no minimum royalties shall be repayable or avoidable.
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13. FINAL STATEMENT UPON TERMINATION OR EXPIRATION: Sixty days
before the expiration of this license and, in the event of its termination, ten days
after receipt of notice of termination of the happening of the event which terminates
this Agreement where no notice is required, Licensee shall furnish to Licensor a
statement showing the number and description of Goods on hand or in process.
Licensor shall have the right to take a physical inventory to ascertain or verify such
inventory and statement, and refusal by Licensee to submit to such physical
inventory by Licensor shall forfeit Licensee's right to dispose of such inventory with
Licensor retaining all legal and equitable rights Licensor may have in the
circumstances.
14. DISPOSAL OF STOCK UPON TERMINATION OR EXPIRATION: After
termination of the license under the provisions of paragraph 12, Licensee, except as
otherwise provided in this Agreement, may dispose of Goods which are on hand or
in process at the time notice of termination is received for a period of sixty days
after notice of termination, provided advances and royalties with respect to that
period are paid and statements are furnished for that period in accordance with
paragraph 2. Notwithstanding anything to the contrary herein, Licensee shall not
manufacture, sell or dispose of any Goods covered by this license after its expiration
or its termination based on the failure of the Licensee to affix a notice of copyright,
trademark or service mark registration or any other notice to the Goods, cartons,
containers, packing or wrapping material, advertising, promotional or display
material, or if the Licensee has departed from the quality and style approved by
Licensor pursuant to paragraph 7.
15. EFFECT OF TERMINATION OR EXPIRATION: Upon and after the expiration
or termination of this license, all rights granted to Licensee hereunder shall
forthwith revert to Licensor. Licensee will refrain from further use of the Marks or
any further reference to it, direct or indirect, or use of any Marks deemed by
Licensor to be similar to the Marks in connection with the manufacture, sale or
distribution of Licensee's products, except as provided in paragraph 15. Licensor
agrees that for a period of two (2) years from the termination date, it shall not
license to others the use of the Marks in connection with the manufacture, sale or
distribution of the Goods.
16. LICENSOR'S REMEDIES:
(a) Licensee acknowledges that its failure (except as otherwise provided herein) to
commence in good faith to manufacture and distribute in substantial quantities any
one or more of the Goods within three months after the date of this Agreement and
to continue during the term hereof to diligently and continuously manufacture,
distribute and sell the Goods covered by this Agreement or any class or category
thereof will result in immediate damages to Licensor.
(b) Licensee acknowledges that its failure (except as otherwise provided herein) to
cease the manufacture, sale or distribution of the Goods or any class or category
61
thereof at the termination or expiration of this Agreement will result in immediate
and irremediable damage to Licensor and to the rights of any subsequent licensee.
Licensee acknowledges and admits that there is no adequate remedy at law for such
failure to cease manufacture, sale or distribution, and Licensee agrees that in the
event of such failure Licensor shall be entitled to equitable relief by way of
temporary and permanent injunctions and such other further relief as any court
with jurisdiction may deem just and proper.
(c) Resort to any remedies referred to herein shall not be construed as a waiver of
any other rights and remedies to which Licensor may be entitled under this
Agreement or otherwise.
17. EXCUSE FOR NONPERFORMANCE: Licensee shall be released from its
obligations hereunder and this license shall terminate in the event that
governmental regulations or other causes arising out of a state of national
emergency or war or causes beyond the control of the parties render performance
impossible and the Licensee so informs the Licensor in writing of such causes and
its desire to be so released. In such event, all royalties on sales theretofore made
shall become immediately due and payable and no minimum royalties shall be
repayable.
18. NONDISCRIMINATION: Licensee represents and warrants to the City that
Licensee does not and will not engage in discriminatory practices and that there
shall be no discrimination in connection with Licensee's use of the Marks on account
of race, color, sex, religion, age, handicap, marital status, national origin, or sexual
orientation.
19. CONFLICT OF INTEREST: Licensee is aware of the conflict of interest laws of
the City of Miami Beach, Miami-Dade County, Florida (Miami-Dade County Code,
Section 2-11.1 et, seq.) and of the State of Florida as set forth in the Florida
Statutes, and agrees that it will fully comply in all respects with the terms of said
laws and any future amendments thereto.
Licensee further covenants that no person or entity under its employ,
presently exercising any functions or responsibilities in connection with this
Agreement has any personal financial interest, direct or indirect, with the City.
Licensee covenants that, in the performance of this Agreement, no person or entity
having such conflicting interest shall be utilized in respect to services provided
hereunder. Any such conflict of interest(s) on the part of Licensee, its employees or
associated persons, or entities must be disclosed in writing to the City.
20, WAIVER OF JURY TRIAL: The parties hereby knowingly, irrevocably,
voluntarily and intentionally waive any right either may have to a trial by jury in
respect of any action, proceeding or counterclaim based on this License Agreement,
or arising out of, under or in connection with this License Agreement or any
amendment or modification of this License Agreement, or any other agreement
62
executed by and between the parties in connection with this License Agreement, or
any course of conduct, course of dealing, statements, (whether verbal or written) or
actions of any party hereto. This waiver of jury trial provision is material
inducement for the City and Licensee entering into this subject transaction.
21. ATTORNEYS' FEES: If it becomes necessary for the City or Licensee to enforce
their respective rights under this License Agreement or any part hereof through
litigation, Licensee and City agree that the prevailing party shall be entitled to
recover from the other party all costs and expenses of such litigation, including a
reasonable attorneys' fee and costs, for all trial and appellate proceedings.
22. NOTICES: All notices and statements to be given, and all payments to be made
hereunder, shall be given or made at the respective addresses below:
To Licensor:
City of Miami Beach
1700 Convention Center Drive
Miami Beach, FL 33139
Attn: Jimmy Morales, City Manager
AND
City of Miami Beach
1700 Convention Center Drive
Miami Beach, FL 33139
Attn: Jose Smith, City Attorney
AND
City of Miami Beach
1700 Convention Center Drive
Miami Beach, Florida
Attn: Max Sklar, Tourism, Culture, & Economic Development Director
To Licensee:
Destination Brands International, LLC
11501 S.W. 40th Street, 2nd Floor,
Miami, FL 33165
Attn: Marcos Perez
Unless notification of a change of address is given in wr1tmg, and the date of
mailing shall be deemed the date the notice or statement is given.
63
---------------------------
23. NO JOINT VENTURE: Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers, and Licensee shall have no
power to obligate or bind Licensor in any manner whatsoever.
24. NO ASSIGN1\1ENT OR SUBLICENSE BY LICENSEE: This Agreement and all
rights and duties hereunder are personal to Licensee and shall not, without the
written consent of Licensor, be assigned, mortgaged, sublicensed or otherwise
encumbered by Licensee or by operation oflaw. Licensor may assign the Marks, but
shall furnish written notice of assignment.
24. NO WAIVER: None of the terms of this Agreement can be waived or modified
except by an express agreement in writing signed by both parties. There are no
representations, promises, warranties, covenants or undertakings other than those
contained in this Agreement, which represent the entire understanding of the
parties. The failure of either party hereto to enforce, or the delay by either party in
enforcing, any of its rights under this Agreement shall not be deemed a continuing
waiver or a modification thereof and either party may, within the time provided by
applicable law, commence appropriate legal proceedings to enforce any or all of such
rights. No person, firm, group or corporation other than Licensee and Licensor shall
be deemed to have acquired any rights by reason of anything contained in this
Agreement, except as provided in paragraphs 6 and 20.
26. ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties relating to the subject matter hereof, and all prior proposals,
discussions or writings are superseded hereby. The terms of this License shall be
binding upon and shall inure to the benefit of the parties and their successors, heirs
and assigns.
27. LIMITATION OF LIABILITY: The City desires to enter into this Agreement
only if in so doing the City can place a limit on its liability for any cause or action
for breach of this Agreement, so that its liability for any such breach never exceeds
the sum of $10,000.00. Licensee hereby expresses its willingness to enter in this
Agreement with a $10,000.00 limitation on recovery for any action for breach of
contract. Accordingly, the City shall not be liable to Licensee for damages to
Licensee in an amount in excess of $10,000.00, for any action for breach of contract
arising out of the performance or non-performance of any obligations imposed upon
the City by this Agreement. Nothing contained in this paragraph or elsewhere in
this Agreement is in any way intended to be a waiver of the limitation placed upon
the City's liability as set forth in Florida Statutes, Section 768.28.
IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed as of the day and year first written above.
City of Miami Beach
64
By ________________ __
Matti Herrera Bower, Mayor
City Clerk
Destination Brands International, LLC
By: ____________ _
Mark Koondel, Member
Dated: ______ _
Sep 27, 2013 10:55
65
RESOLUTION TO BE SUBMITTED
66
R9 -New Business and Commission
R9A The Committee Of The Whole Will Meet At 5:00 p.m. On September 30, 2013 At
The City Manager's Office Large Conference Room To Discuss The Florida Third
District Court Of Appeal Decision In: Let Miami Beach Decide v. City Of Miami
Beach And SBACE. LLC, Third District Court Of Appeal, Case #3D13-2243;
Lower Tribunal Case No. 13-025234 CA 13.
(City Attorney's Office)
(Revised Item)
67
Agenda Item R9A
Date 9-307~
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