R7B-Accept Recomm Development Of Convention Headquarter Hotel Adjacent To MBCCCOMMISSION ITEM SUMMARY
Condensed Title:
A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Floridi,
Accepting The Recommendation Of The City Manager, Pursuant To Request For Proposals
(RFP) No. 2015-103-Me, For The Development Of A Convention Headquarter Hotel
Adjacent To The Miami Beach Convention Center ("Project"); Authorizing The Administration
To Negotiate A Development And Ground Lease Agreement With Portman Holdings, LLC,
With Said Agreement Subject To Prior Approval By The Mayor And City Commission Before
Final Execution Thereof.
lntended Outcome Su
lmprove alliance with key business sectors, namely hospitality, arts & internationat
business with a focus on enhanced culture, entertainment & tourism.
Supporting Data (Surveys, Environmental Scan, etc.): N/A
Item Su mmary/Recommendation :
On January 29,2015 the City issued Request for Proposals No. 2015-103-ME ltne nfeyorthe Development of a Convention Headquarter Hotel Adjacent to the Miami Beach
Convention Center. A voluntary pre-proposal meeting was held on February 26,2015.
On April 10,2015 the City received proposals from Portman Holdings, LLC ("Portman") and
Oxford Capital Group/RLB Swerdling ("Oxford Capital"). On April 21,2015, the City Manager
notified oxford capital that its proposal was not responsive to the RFp.
On April 29, 2015, the City Manager via Letter to Commission (LTC) No. 176-2015,
appointed an Evaluation Committee (the "Committee"), which convened on May 7, 2015 to
consider the Portman proposal and interview the Portman team. The average score by the
Committee members was 91 on a 10O-point scale.
After reviewing the Proposer's qualifications and submission, the City Manager exercised his
due diligence and is recommending that the Mayor and City Commission authorize the
Administration to negotiate a development and ground lease Agreement with Portman
Holdinqs. LLC.
Financial lnformation:
Source of
Funds:
Amount Account
1
2
3
OBPI Total
Financial lmpact Summary:
CIerk's Office
Maria Hernandez, Extension 2584
Department Dirgctor Assistant City Manager City Ma ager
MU4!:l JLM ,J Lr
S\May\MBCC Headquarter Hotel Developer Summary
AGENOA '"U R-I BMIAMIBEACHssp 5-2o-tf271
MIAMIBEACH
City of Miomi Beoch, 1700 Convention Center Drive, Miomi Beoch, Florido 33,I39, www.miomibeochfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members
FROM: Jimmy L. Morales, City Manager
DATE: May 20,2015
SUBJECT:A RESOLUTION OF THE MAYdR AND CITY COMMTSSION OF THE
CITY OF MIAM! BEACH, FLORIDA, ACCEPTTNG THE
RECOMMENDATION OF THE CITY MANAGER, PURSUANT TO
REQUEST FOR PROPOSALS (RFp) NO. 201s-l03-ME, FOR THE
DEVELOPMENT OF A CONVENTION HEADQUARTER HOTEL
ADJACENT TO THE MIAMI BEACH CONVENTION CENTER
("PROJEGT"); AUTHORIZING THE ADMINISTRAT|ON TO
NEGOTIATE A DEVELOPMENT AND GROUND LEASE
AGREEMENT WITH PORTMAN HOLDINGS, LLC, THE SOLE
RESPONSIVE PROPOSER TO THE RFP, WITH SAID AGREEMENT
SUBJECT TO PRIOR APPROVAL BY THE MAYOR AND CITY
COMMISSION BEFORE FINAL EXECUTION THEREOF.
ADM!NISTRATION RECOMMEN DATION
Adopt the Resolution.
KEY INTENDED OUTCOME
lmprove alliance with key business sectors, namely hospitality, arts & international business with
a focus on enhanced culture, entertainment & tourism.
BACKGROUND
On January 29,2015 the City issued Request for Proposals No. 2015-103-ME (the RFP) for the
Development of a Convention Headquarter Hotel Adjacent to the Miami Beach Convention
Center. A voluntary pre-proposal meeting was held on February 26,2015.
On April 10, 2015 the City received proposals from Portman Holdings, LLC ("Portman") and
Oxford Capital Group/RLB Swerdling ("Oxford Capital"). On April 21, 2015, the City Manager
notified Oxford Capital that its proposal was not responsive to the RFp.
On April 29, 2015, the City Manager via Letter to Commission (LTC) No. 176-2015, appointed an
Evaluation Committee (the "Committee"), which convened on May 7, 2015 to interview the
Portman team and score the proposal consistent with the evaluation criteria outlined in the RFP.
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Requesf for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 2 of B
ANALYSIS
Firm Experience
The Portman proposal meets the experience requirements of the RFP. The Portman team has
extensive convention hotel development and architectural experience that includes the projects
shown below. Portman reports to have raised and developed over $6 billion and developed over
55 million square feet of real estate.
Project Name/Com pletion Date Rooms Meeting/Ballroom
SF
Hilton San Diego Bayfront Hotel (2008)
Westin Charlotte (2003)
Lane Field San Diego (Phase I under
construction; Phase ll in design)
Ritz-Carlton at Shanghai Centre (1990)
Marriott Marquis Times Square (1985)
Atlanta Marriott Marquis (1985)
Westin Peachtree Plaza Atlanta (1976)
Hyatt Regency Atlanta (1967)
Developer/Architect
Owner/Developer/
Architect
Developer/Architect
Owner/Developer/
Architect
Developer/Architect
Developer/Architect
Developer/Architect
Developer/Architect
1,190
700
800
(Phase I & ll)
700
1,892
1,663
1 ,100
1,260
165,000
44,000
31,200
(Phase I & ll)
20,300
101 ,500
160,000
29,000
180,000
Design Team Experience
John Portman & Associates ("JPA") is the lead designer for the Project. JPA was founded in 1953
and is an internationally recognized architectural and engineering firm with 75 employees. ln
addition to designing the above referenced hotel projects, JPA has also been the design architect
for the 500-room Renaissance Schaumburg Hotel and Convention Center; in 2006 and the 690-
room Shandong China Hotel & Conference Center in 2003.
ln addition to JPA, the design team is to include the local architectural firm of Revuelta Architecture
lnternational. Some of Revuelta's recent local projects include the 204-room Saxony Hotel in
Miami Beach and the 104-room/350-residential unit Epic Residences and Hotel in Miami.
JPA has also teamed with West 8, an international landscape architectural firm. Examples of West
8's landscape design projects include Miami Beach Soundscape; Madrid Rio in Madrid, Spain; and
Toronto Central Waterfront.
Finally, Portman has teamed with HDC lnternational who will assist in preliminary cost estimating,
scheduling and scope description and review. HDC has advised on multiple convention hotels,
including the Gaylord Palms Resort & Convention Center.
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Requesf for Proposals (RFP) No. 201 5-103-ME for the Development of a Convention Headquarter Hotet
May 20, 2015
Page 3 of 8
Key Terms
The Portman proposal accepts of the City's key terms, including:
. No Public Participation:
No public subsidies or public financing
Use of MBCC facilities at prevailing/market rates
. No Gambling:
Use restriction to prohibit gambling on Hotel Site
Developer/owners for term of lease may not own, operate or manage any
establishment offering gambling or wagering in Miami-Dade Countv
. Developer Funds:
All costs to develop, design, construction, equip and operate hotel
Referendum (general elections) cost
. Room Block Agreement:
Portman has agreed to the City's terms outlined in the draft Room Block Agreement.
The proposal also recognized the requirement for a voter referendum whereby 60% of voters must
approve the lease. The referendum is contemplated to occur in November 2015.
Aspirationa! City and County Employment Goals
Portman has stated their commitment to the City and County employment goals. The following
include excerpts from their response:
o "The Portman team is unequivocally capable and committed to meet or exceed the Miami
Beach and Miami-Dade County employment goals..."
o "The Portman team believes in maximizing opportunities for local, minority, women, veteran
and small business enterprises."
. "We reach out to include local businesses to supplement the knowledge brought by the
international experts on our team."
. "The Portman team will contact local and certified diversity businesses.....We pledge to
keep the City Commission informed of our efforts through the issuance of monthly reports
throughout the project schedule."
. "lt is the Portman team's desire to see hotel operations provide opportunities for
employment to City of Miami Beach and Miami-Dade County residents. We will do our part
to ensure the hotel operator selected has equal opportunity and that local outreach
programs are in place."
Proposed Hotel Program
Portman proposes to develop an 800-room convention headquarter hotel to include the following
program elements:
274
Requesf for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 4 of I
Ballroom/Meetinq Space Sq. Feet
Grand Ballroom 26,500
Junior Ballroom (2) 21,000
Breakout Meeting 47,700Total 95.200
Parking Spaces 320
Food & Beveraoe Seats
3-meal
Lobby Lounge
Pool Grille
Rooftop
Club Lounge
Cafe
300
180
130
120
92
40
The 320 parking spaces proposed adheres to the requirement in the RFP of 0.4 parking spaces
per room.
Hotel Brand
Portman has indicated they intend to consider national hotel brand/operators with an established
and consistently maintained reputation for quality operations. Brands to be considered include
Marriott, Marriott Marquis, JW Marriott, Westin, Omni, Hyatt Regency and Hilton. During
negotiations, Portman will work with the City to determine the best brand/operator for the hotel.
Development Budget and Finance Plan
Portman has estimated the preliminary development budget to be $405.5 million and intends to
finance the hotel with an estimated 60% in debt and 40o/o in equity. Portman Holdings has
indicated they plan to provide $17 million in equity, with the remaining equity to be funded by
Portman institutional relationships. The Portman proposal included construction debt financing
support letters from Regions Bank and PNC Bank and an equity support letter from China Orient
Summit Capital.
Development Schedule
Portman is estimating the hotel design to be complete in late 2016 and construction to be
complete in late 2018 with the hotel opening targeted to occur prior to Art Basel 2018.
Lease Proposal
Portman has proposed to lease the Hotel Site for a period of 99 years. Lease payments are
proposed to be the greater of a fixed schedule or 4% of gross hotel operating revenues. A
schedule of the proposed lease payments is in attached Exhibit 1. Below is a table of the total
and net present value ("NPV") of the lease payments:
Minimum Fixed Rent
Variable Rent
Percentage Rent
Over 30 Years
NPV
Total @SYo$91m $36m89m 35m
$180m $71m
Over 99 Years
NPVTotal @5%$708m $60m705m 59m
$1.48 $119m
The lease stream NPV of $1 19 million over the term of the lease equates to $149,000 per room.
This is higher than the City 2013 independent appraisal indicating a range of value from
$103,500 to $129,900 per room. Priorto executing the lease, the CityAdministration plans to
update the 2013 appraisal.
Transaction Rent
Portman has proposed the City will receive additional rent in connection with the first three sales
of the hotel to a third party if the sales price exceeds $580 million. ln those events, the City is to
receive the lesser of $2 million or 0.25o/o of the gross sales price.
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Requesf for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page 5 of B
Public Revenue lmpact
The Hotel Site is currently a parking lot that generates $263,700 annually in revenues for the City.
lf the site is developed with a hotel annual (year 4) lease and tax revenue generated is estimated
to be $22.2 million. Over time the hotel is estimated to generate:
o City: $438 million ($1Ze million NPV) over 30 years and $3 billion ($2Ze million NPV) over
99 years in lease payments, resort taxes, CRA revenues, property taxes and County CDT
allocations to the City.
. County: $1 10 million ($42 million NPV) over 30 years and $1 .25 billion ($87 million NPV)
over 99 years in convention development taxes, local option sales taxes and property
taxes.
. Schools: $60 million ($24 million NPV) over 30 years and $453 million ($40 million NPV)
over 99 years in property taxes.
o State: $264 million ($tOZ million NPV) over 30 years and $2 billion ($1ZO million NPV)
over 99 years in sales taxes.
o Total: $878 million ($3S+ million NPV) over 30 years and $6.7 billion ($586 million NPV)
over 99 years in lease payments and taxes.
Refer to attached Exhibit 2.
RFP Evaluation Committee
The Evaluation Committee (the "Committee") consisted of the following individuals:
. Randy Weisburd, Chief Operating Officer, Atlantic & Pacific Companies and Residento Larry Gragg, President and Chief Operating Officer, Codina Partnerso Tom Mooney, Planning Directoro James Goldsmith, President and CEO, Gator lnvestments and Resident*. Max Sklar, Tourism, Culture and Economic Development Director"
*James Goldsmith and Max Sklar were not able to attend the Evaluation Committee meeting.
The Committee reviewed and scored Portman's submittal based upon the criteria outlined in the
RFP. The table below represents the scores by the committee members.
Committee Member Scoring
CRITERIA Potential
Score
#1 #2 #3 Average
Score
Hotel finance plan and Proposer financial
capabilities 30 28 25 25 26.O
Proposed financial and other terms of the
Development and Ground Lease
Aoreement
25 22 25 23 23.3
Hotel program, conceptual design and
orelim inarv develooment budoet 20 18 15 18 17.0
Proposer experience and qualifications 10 10 10 10 10.0
Design team experience and qualifications 10 9 10 10 9.7
Organization plan 5 5 5 5 5.0
TOTAL 100 92 90 91 91
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Requesf for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20,2015
Page 6 of 8
CONCLUSION / RECOMMENDATION
The Administration recommends that the Mayor and City Commission authorize the Administration
to negotiate a development and ground lease Agreement with Portman Holdings, LLC, pursuant to
Request for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter
Hotel Adjacent to the Miami Beach Convention Center, with said Agreement subject to prior
approval by the Mayor and City Commission before the final execution thereof.
JLM/MTiAD/MH
T:\AGENDA\201S\May\MBCC Headquarter Hotel\MBCC Hotel Developer Memo 2015 05 20.docx
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Requesf for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
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Exhibit 1
Summary of Lease proposal
Minimum
Fixed Rent Growth
2076
2017
2018
I 2079 s583,365
2 2O2O 1,071,059 83.6%
3 2027 1,820,800 7o.o%
4 2022 2,476,287 36.0%
5 2023 2,525,813 2.0%
6 2024 2,576,329 2.0%
7 2025 2,627,956 2.0%
8 2026 2,680,4L3 2.0%
9 2027 2,734,02L 2.0%
10 2028 2,788,702 2.0%
1,7 2029 2,844,476 2.0%
t2 2030 2,907,365 2.O%
13 2031 2,959,392 2.0%
t4 2032 3,018,580 2.0%
15 2033 3,078,952 2.0%
16 2034 3,140,531 2.0%
L7 2035 3,203,341 2.Oo/o
18 2036 3,267,408 2.0%
19 2037 3,332,756 2.0%
20 2038 3,399,412 2.0%
2t-99 655,3il.,235
Total _1208,34r,091_
NPV @s% s50,462,084
Variable
Rent Growth
52s3,749
7O2,LO3 176.7%
7,498,025 L13.4%
2,790,634 46.2%
2,282,t61 4.2%
2,375,884 4.t%
2,472,923 4.1%
2,573,390 4.t%
2,677,396 4.0%
2,785,057 4.0%
2,840,758 2.0%
2,897,574 2.0%
2,955,526 2.0%
3,074,636 2.o%
3,074,928 2.0%
3,L36,427 2.0%
3,199,156 2.0%
3,263,L39 2.0%
3,328,402 2.0%
3,394,969 2.0%
654,454,9L5
Percentage
Rent Growth
5837,Lt4
7,773,L67 ttt.8%
3,318,825 8i.2%
4,666,92L 40.60/o
4,807,974 3.oo/o
4,952,2t3 3.0%
5,L0O,779 3.0%
5,253,803 3.0%
5,4LL,477 3.0%
5,573,759 3.0%
5,685,234 2.0%
5,798,939 z.o%
5,9!4,918 2.0%
6,033,276 2.0%
6,153,880 2.0%
6,276,958 2.0%
6,402,497 z.o%
6,530,547 2.0%
6,661,1_58 2.0%
6,794,387 2.0%
1,309,766,150
57,4L3,713,84s
s119,374,035
-S?os,3?L?n_
S58,911,951
Note: The minimum fixed rent adjusts up or down every 1-0 years to 55% of the prior five
year's average total rent paid.
278
Request for Proposals (RFP) No. 2015-103-ME for the Development of a Convention Headquarter Hotel
May 20, 2015
Page B of 8
Exhibit 2
Summary of Public Revenue lmpact
Over 30 yeors Over 99 years
2022 (Yr 4)Totol NPV @ 5%Total NPV @ 5%
CITY
Hotel Lease
Minimum Fixed Rent
Variable Rent
Percentage Rent (470 Gross)
Taxes
cRA City (thru 3/2044)
CRA County (thtu 3/2044)
New Resort Tax (Hotel 1%)
Resort Tax (Hotel 3o/0, F&B 2o/o)
CDT Allocation (thru 2044)
Property Taxes*
Subtotal
TY TOTAL S11.9m S438m S178m 52,967m
COUNTY
Convention Devl. Tax (370)
Local Option Sales Tax (1%)
Property Taxes*
Subtotal County
SCHOOLS (Property Tax)
OTHER PROPERTY**
STATE SALES TAX (6%)
TOTAL s22.2m 5878m Sgsqm S6,745m S586m
* 95% of general property taxes allocated to CRA through 3/2044
** Regional property tax and Children's Trust property tax
Key Assumptions:
All analysis completed on a calendar year basis
Year 1 through 10 based on developer proforma
Assumed 2%growth rate beginning in year 11 and beyond
NPV to 2016
$1.5m of County CDT allocated to City beginning in third year of hotel opening through 2044
Sources: Portman, City of Miami Beach, SAG.
52.5m
2.2m
Sgrm S30m
89m 35m
S708m
705m
S60m
59m
54.7m
1.1m
0.8m
0.8m
3.0m
1.5m
0.1m
34m
26m
30m
118m
36m
13m
16m
L2m
12m
48m
15m
4m
L,4t4m
34m
26m
229m
902m
36m
326m
119m
16m
t2m
20m
79m
16m
16m
180m 71-m
7.2m
0.8m
1.1m
0.1m
258m
54m
44m
L2m
20m
18m
4m
650m
336m
266m
44m
29m
14m
108m 1,553m 159m
2.0m 110m 42m t,252m 87m
1.5m
0.2m
5.5m
60m
7m
264m
24m
3m
107m
453m 40m
55m 5m
2,019m t76m
279
RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE CITY MANAGER, PURSUANT TO
REQUEST FOR PROPOSALS (RFP) NO. 2015-103-ME, FOR THE
DEVELOPMENT OF A CONVENTION HEADQUARTER HOTEL
ADJACENT TO THE MIAMI BEACH CONVENTION CENTER
("PROJECT"); AUTHORIZING THE ADMINISTRATION TO NEGOTIATE
A DEVELOPMENT AND GROUND LEASE AGREEMENT WITH
PORTMAN HOLDINGS, LLC, WITH SAID AGREEMENT SUBJECT TO
PRIOR APPROVAL BY THE MAYOR AND CITY COMMISSION
BEFORE FINAL EXECUTION THEREOF.
WHEREAS, Request for Proposals No. 2015-103-ME (the RFP) was issued on January
29,2015, with an opening date of April 10,2015; and
WHEREAS, a voluntary pre-proposal meeting was held on February 26,2015; and
WHEREAS, the City received proposals from the following firms: (1) Portman Holdings,
LLC ("Portman"); and (2) Oxford Capital Group/RLB Swerdling ("Oxford Capital"); and
WHEREAS, on April 21, 2015, the City Manager notified Oxford Capital that its proposal
was not responsive to the RFP; and
WHEREAS, on April 29,2015, the City Manager via Letter to Commission (LTC) No.
176-2015, appointed an Evaluation Committee (the "Committee"), which convened on May 7,
2015 to consider the Portman proposal and interview the Portman team; and
WHEREAS, after reviewing the Proposer's qualifications and submission, the City
Manager exercised his due diligence and is recommending that the Mayor and City Commission
authorize the Administration to enter into negotiations with Portman.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAM! BEACH, FLORIDA, that the Mayor and City
Commission hereby accept the recommendation of the City Manager pertaining to Request for
Proposals (RFP) No. 2015-103-ME, for the Development of a Convention Headquarter Hotel
Adjacent to the Miami Beach Convention Center; and authorizes the Administration to negotiatea Development and Ground Lease Agreement with Portman Holdings, LLC, with said
agreement subject to prior approval by the Mayor and City Commission before final execution
thereof.
PASSED AND ADOPTED this
ATTEST:
day of 2015.
APPROVED AS TO
FORM & I.ANGUAGE
& FOR EXECUTION
o 0*.[- 5 (e zl5&,0"'(-
Rafael E. Granado, City Clerk Philip Levine, Mayor
280