R7F-Waive Bid-Exercise 2 One-Yr Renewal Of Agmt w-Global MBCC And Colony TheatreCOMMISSION ITEM SUMMARY
Condensed Titlel
A Resolution Authorizing The City Manager To Exercise Two (2) One (1) Year Renewal Terms Of The
Agreement Between The City And Spectra Management Group For The Operation, Management,
Maintenance, Promotion And Marketing Of The Miami Beach Convention Center And Colony Theatre;
Waiving, By 517"' Vote, The Competitive Bidding Requirement Pursuant To Section 2-367 _Of The City
Code ForThe Limited Purpose Of Approving An AdditionalTwo (2) Year RenewalTerm And Finding Such
Waiver To Be ln The Best lnterest Of The City; And Authorizing The Mayor And City Clerk To Execute
Amendment No. 2 Of Said Agreement, With Said Agreement Having A Term Commencing On October 1,
2016. And Endino On 30.2020.
The2014 Community Satisfaction Survey indicated that 64% of residents feel tourism add to their quality
of life and 39% of business owners feel the Convention Center adds to their business.
Item Summary/Recommendation:
On July 17 ,2013, the Mayor and City Commission adopted Resolution No. 2013-28276, waiving by
vote, the competitive bidding requirement finding such waiver to be in the best interest of the City, and
authorizing the City and Global to negotiate and execute a new Management Agreement. Subsequently,
the Administration entered into an agreementwith Global Spectrum with an initial term that commenced on
October 1, 2013 through September 30, 2016. The Agreement includes two (2) additional one (1) year
renewal options at the City's sole and absolute discretion. ln April 2015, Comcast Spectacor, the parent
company of Global Spectrum, realigned their venue management, food services and hospitality, ticketing,
and digital services under a singular, unified brand: Spectra.
ln light of the impending convention center renovation and expansion project, the Administration began
discussing a contract extension with Spectra in order to maintain continuity through the renovation. The
City and Spectra have negotiated the following:
o The City exercises the remaining two (2) years on the Management Agreement and extends the
Agreement for an additional two (2) years. This ensures continuity of management into a fully
operational year post-renovation. This term also aligns with that of the proposed GMCVB
agreement and creates incentive for both entities to maximize revenue opportunities for the
immediate period after renovation.. The City and Spectra agree to keep the existing financial structure of the current Management
Agreement.
The current agreement also includes a Performance Guarantee, if not achieved, that reduces the earned
incentive by up to 50% if the net operating revenue varies unfavorably from budget by more than $50,000.
Due to the uncertainty of operating climate during renovation and anticipated impact on revenue, Spectra
and the City have agreed to delete this clause from the agreement. The City Administration recommends
eliminating the Performance Guarantee because Spectra have agreed to keep all other terms and
conditions the same. Furthermore, the Administration also recommends exercising the remaining two (2)
renewal options and waiving competitive bidding to add an additional 2 years, which extends the
Agreement through September 30,2020. This ensures continuity of management into a fully operational
Financial lnformation:
$262,691 Base Mgmt Fee, plus an
incentive fee potentially equaling up to
100% ofthe Base Fee.
Convention Center Enterprise
Fund 440-0442-000354 and
Colony Theater General Fund
nt 01 1.0383 / 000354.
Financial
Clerk's Office
structure of the
Spectrum Convention Center Mgmt Agmt SUMMARY.doc
reement remain the same.
Rtr
Max Sklar, ext. 6116
E MIAMIBEACH D^rE lo -2/-lY234
g MIAMI BEACH
City of Miomi Beoch, 1700 Convention Cenier Drive, Miomi Beoch, Florido 33 ,l39, www.miomibeochfl.gov
COMMISSI MEMORANDUM
TO:Mayor Philip Levine and Members of the City
FRoM: Jimmy L. Morales, City Manager
DATE: October 21, 2015
SUBJECT: A RESOLUTION OF THE MAYDR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FI,ORIDA, AUTHORIZING THE CITY
MANAGER TO EXERCTSE TWO (2) ONE (1) YEAR RENEWAL TERMS
OF THE AGREEMENT BETWEEN THE CITY AND SPECTRA
MANAGEMENT GROUP FOR THE OPERATION, MANAGEMENT,
MAINTENANCE, PROMOTION AND MARKETING OF THE MIAMI
BEACH CONVENTION CENTER AND COLONY THEATRE; WAIVING,
BY SNTH VOTE, THE COMPETITTVE BIDDING REQUIREMENT
PURSUANT TO SECTION 2.367-OF THE CITY CODE FOR THE
LTMTTED PURPOSE OF APPROVTNG AN ADDTTTONAL TWO (2) YEAR
RENEWAL TERM AND FINDING SUCH WAIVER TO BE IN THE BEST
INTEREST OF THE CITY; AND AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE AMENDMENT NO. 2 OF SAID AGREEMENT,
WITH SAID AGREEMENT HAVING A TERM COMMENCING ON
OCTOBER 1, 2016, AND ENDING ON SEPTEMBER 30,2020.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
CONTRACT FUNDING
Funding is available from Convention Center Enterprise Fund, which funds the operation of the
Miami Beach Convention Center.. $262,691 per year, escalating by Consumer Price lndex - All Urban Consumers (CP|-U)
- U.S. City Average, but not to exceed (capped at) 3o/o. Management fee will be
allocated to each facility as follows:o Miami Beach Convention Center: $245,991o Colony Theater: $16,700
Funding is provided to the City by Spectra, per contract as follows:. Scholarship contribution = $ 15,000 (annually). Senior Dances
BACKGROUND
On September '10, 2008, the City Commission approved Resolution No. 2008-26888 which
approved an agreement between the City and Global Spectrum, L.P. for the Management of the
Miami Beach Convention Center, Colony Theater, and Byron Carlyle Theater. The Agreement
was for an initial three (3) year term commencing on October 1, 2008, and ending on
September 30, 2011, with two (2) one-year renewal options, exercisable with ninety (90) days
prior written notice, at the sole and absolute discretion of the City. Please note that on April 15,
2011, the City terminated Global Spectrum's rights and responsibilities with respect to the
= $ 25,000 (annual estimate)
235
Convention Center Management Agreement
City Commission Meeting
October 21, 201 5
Page 2 of 4
operation and management of the Byron Carlyle Theater following the City Commission's
approval of a management agreement with Broward Stage Door Theater. On September 14,
2011, the City Commission adopted Resolution No. 201 1-27728 extending the Management
Agreement for an additional two (2) years.
On July 17,2013, the Mayor and City Commission adopted Resolution No. 2013-28276, waiving
by 5/7th'vote, the competitive bidding requirement finding such waiver to be in the best interest
of the City, and authorizing the City and Global to negotiate and execute a new Management
Agreement. Subsequently, the Administration entered into an agreement with Global Spectrum
with an initial term that commenced on October 1,2013 through September 30, 2016. The
Agreement includes two (2) additional one (1) year renewal options at the City's sole and
absolute discretion.
ln April 2015, Comcast Spectacor, the parent company of Global Spectrum, realigned their
venue management, food services and hospitality, ticketing, and digital services under a
singular, unified brand: Spectra.
ln the current fiscal year (FY 14115) Spectra is projected to improve Net Operating lncome by
more than $500,000. This was accomplished while also maintaining or improving customer
service and facility maintenance standards. During this time period, Spectra also played a key
role in drafting an Amended and Restated Convention Center Booking Policy and helped to
move it through the approval process with all stakeholders. Spectra has also assisted with
GMCVB contract negotiations and has been instrumental in the Convention Center renovation
project ensuring the project meets all operational requirement for facility users. They also
successfully negotiated new license agreements or termination agreements with Art Basel in
Miami Beach, Miami lnternational Boat Show and INDA. These were particularly challenging
negotiations due to the phasing plan and construction schedule for the renovation project.
The following reflects the payments to and from Spectra since they first started managing the
Center.
Orioinal Aoreement Current Aqreement
Payment to
Soectra Actual Actual Actual Actua!Actual Actual Proiected
2008/09 2009/10 2010t11 2011t12 2012113 2013t14 2014t15
MBCC $ 241.600.00 $ 241.600.00 $ 244.257.60 $ 251,585.28 s 256.617.00 $ 241.599.96 s 245.707.20
Colony $ 16,700.00 $ 16.700.00 $ 16,883.70 $ 17.390.21 $ 17.738.04 $ 16.700.04 $ 16.983.96
Byron $ 16,700.00 $ 16,700.00 $ 9,848.86
lncentive"***s 148.500.00 s 140.250.00 $ 248,802.33 $ 252.111.00 $ 90,405.00 $ 121 .000.00
Total $ 423.500.00 s 415.250.00 $ 270.990.16 $ 517.777.82 $ 526,465.04 $ 348,705.00 $ 383,691.16
Pavment to CMB
Performance
Guarantee s 76.897.00 $ 646.334.69
Caoital s 375.000.00 $ 200,00.00
Scholarshio $ 12.500.00 $ 12.500.00 $ 12.500.00 $ 12.500.00 $ 12.000.00 s 15.000_00 s 15.000.00
Senior Dances $ 10,923.00 $ 15.685.00 s 18.128.00 $ 29.799.00 s 23.228.OO
Total $ 454,397.00 $ 12,s00.00 $ 669,757.69 28,185.00 $ 30,628.00 $ 244.799 $ 38.228.00
236
Convention Center Management Agreement
City Com mission Meeti ng
October 21, 201 5
Page 3 of 4
ANALYSIS
ln light of the impending convention center renovation and expansion project, the Administration
began discussing a contract extension with Spectra in order to maintain continuity through the
renovation. The City and Spectra have negotiated the following:
. The City exercises the remaining two (2) years on the Management Agreement and
extends the Agreement for an additional two (2) years. This ensures continuity of
management into a fully operational year post-renovation. This term also aligns with that
of the proposed GMCVB agreement and creates incentive for both entities to maximize
revenue opportunities for the immediate period after renovationo The City and Spectra agree to keep the existing financial structure of the current
Management Agreement.. Base Management Fee: Current fee of $262,691 will be adjusted by the change in CPI
starting September 1,2015 and in all subsequent years.. lncentive Fees: No change from the current agreemento "':"'fi:3'!1T::J";,:!:"-,?hTjSTffi;fl,"#?:il,i8
",,
ten areas (up to
2.5 each)
Up to 5 percentage points based on survey return rates. Must get
minimum return rate of 55% to earn any points.o'''1"'fl
io",Hy.T.:,",lll#rtT'l"",li,i,Tjia??T11ffi l',t;:,,..anypointso Maintenance and lmprovement of Facility and Capital Equipment- Up to 15o/o of
base management feeo Discretionary - Up to 5o/o of base management fee. Performance Guarantee: The current agreement provides for a reduction of earned
incentives (up to a max of 50%), in the event that net building operating income varies
unfavorably from budget by greater than $50,000 (adjusted for circumstances outside
the control of Spectra). Due to the uncertainty of operating climate during renovation,
Spectra and the City have agreed to delete this clause from the agreement.
As you can see, fifty percent (50%) of the lncentive Criteria requires Spectra to generate at least
$17 million in gross operating revenue, which remains unchanged from the current agreement.
However, during construction the number of events taking place in the Convention Center has
been reduced and Spectra is not able to book additional events. They are currently projecting
gross revenue during construction to be between $6 million and $9 million depending on the
year. Therefore, they will not generate near $17 million in gross revenue or have the ability to
earn 50% of the potential incentive.
The current agreement also includes a Performance Guarantee, if not achieved, that reduces
the earned incentive by up to 50% if the net operating revenue varies unfavorably from budget
by more than $50,000. The City Administration recommends eliminating the Performance
Guarantee because Spectra have agreed to keep all other terms and conditions the same.
Furthermore, the Administration also recommends exercising the remaining two (2) renewal
options and waiving competitive bidding to add an additional 2 years, which extends the
Agreement through September 30, 2020. This ensures continuity of management into a fully
operational year post-renovation.
237
Convention Center Management Agreement
City Com mrssion M eeti ng
October 21, 2015
Page 4 of 4
CONCLUS!ON
The Administration recommends authorizing the City to exercise the remaining two (2) renewal
options and waiving competitive bidding to add an additional 2 years, which extends the
Agreement through September 30, 2020 of the agreement between the City and Global
Spectrum, for the operation, management, maintenance, promotion and marketing of the Miami
238
RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY MANAGER TO
EXERCTSE TWO (2) ONE (1) YEAR RENEWAL TERMS OF THE
AGREEMENT BETWEEN THE CITY AND GLOBAL SPECTRUM, L.P.
("GLOBAL") FOR THE OPERATION, MANAGEMENT, MAINTENANCE,
PROMOTION AND MARKETING OF THE MIAMI BEACH CONVENTION
CENTER AND COLONY THEATRE; WAIVING, BY \NTH VOTE, THE
COMPETITIVE BIDDING REQUIREMENT PURSUANT TO SECTION 2-367
OF THE CITY CODE, FOR THE LIMITED PURPOSE OF APPROVING AN
ADDTTTONAL TWO (2) YEAR RENEWAL TERM, AND FINDING SUCH
WAIVER TO BE IN THE BEST INTEREST OF THE GITY; AND
AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE
AMENDMENT NO. 2 OF SAID AGREEMENT, WITH SAID AGREEMENT
HAVING A TERM GOMMENCING ON OCTOBER 1 ,2016, AND ENDING
ON SEPTEMBER 30,2020.
WHEREAS on September 10, 2008, the City Commission approved Resolution No.
2008-26888, which approved a Management Agreement between the City and Global
Spectrum, L.P. ("Global") for the Management of the Miami Beach Convention Center,
Colony Theater, and Byron Carlyle Theater (the "Management Agreement"); and
WHEREAS, on July 17 ,2013, the Mayor and City Commission adopted Resolution
No. 2013-28276, authorizing the City and Global to negotiate and execute a new
Management Agreement; and
WHEREAS, subsequently, the Administration entered into an agreement with Global
with an initialterm that commenced on October 1,2013 through September30,2016. The
Agreement includes two (2) additional one (1) renewaloptions atthe City sole and absolute
discretion; and
WHEREAS, City is currently proceeding with the Miami Beach Renovation and
Expansion Project("MBCC Project"), and construction of the MBCC Projectwillreducethe
availability of the Convention Centerfor events from December 15,2015 through June 30,
2018, thereby limiting Global's ability to generate revenues under the Management
Agreement; and
WHEREAS, in April 2015, Comcast Spectacor, the parent company of Global,
realigned its venue management, food services and hospitality, ticketing, and digital
services under a unified brand now known as "Spectra Management Group"; and
WHEREAS, the Administration recommends that the City exercise the remaining
two (2) one-year renewal options under the Management Agreement; and
WHEREAS, in view of the construction of the MBCC Project, the Administration
further recommends waiverof the City's competitive bidding requirements of Section2-367
of the City Code, for the limited purpose of authorizing an additional extension of the
Management Agreement for a two-year period, as it is in the best interests of the City to
239
extend the Management Agreement through September 30,2020 to ensure continuity of
management of the Convention Center into a fully operational year following completion of
the MBCC Project; and
WHEREAS, the Administration recommends that the City Commission adopt the
attached Amendment to the Management Agreement with Global for the operation,
management maintenance, promotion and marketing of the Miami Beach Convention
Center.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CIry
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby authorize the City Manager to exercise two (2) one (1) year renewal
terms of the Agreement between the City and Global Spectrum, L.P. ("Global") for the
operation, management, maintenance, promotion and marketing of the Miami Beach
Convention Center and Colony Theatre; waiving, by 5l7tn vote, the competitive bidding
requirement pursuant to Section 2-367 of the City Code, for the limited purpose of
approving an additional two (2) year Renewal Term, and finding such waiver to be in the
best interests of the City; and authorizing the Mayor and City Clerk to execute Amendment
No. 2 of said agreement, with said agreement having a term commencing on October 1,
2016, and ending on September 30,2020.
PASSED and ADOPTED this day of ,2015.
ATTEST:
Philip Levine, Mayor
Rafael E. Granado, City Clerk
APPRO/ED AS TO
FORM & I-ANGUAGE
& FOR D(ECITNON
t0-q-9
CltyAtbne, /iAf
T:\AGENDA\201S\OctobeATCED\October 21\Global Spectrum Convention Center Mgmt Agmt RESO.doc
240
AMENDMENT NO. 1 TO THE MANAGEMENT AGREEMENT BETWEEN THE CITY
OF MIAMI BEACH AND GLOBAL SPECTRUM L.P. FOR THE MIAMI BEACH
CONVENTION CENTER AND COLONY THEATER
This Amendment No. 1 to the Management Agreement, is made and entered into this
day of 2015, by and between the CITY OF MIAMI BEACH,
FLORIDA, a municipal corporation having its principal office at 1700 Convention Center
Drive, Miami Beach, Florida, 33139 (City), and GLOBAL SPEGTRUM, L.P., a Delaware
limited partnership, whose current address is 3601 S. Broad Street, Philadelphia, PA
1 I 1 48-5290 ("G loba l").
RECITALS
WHEREAS, the City and Global are parties to a Management Agreement, dated
October 7,2013, pursuant to which the City engaged Global to manage and operate the
Miami Beach Convention Center and Colony Theater; (the Management Agreement, as
so amended and modified, is referred to herein as the "Agreement"); and
WHEREAS, the initial term of the Agreement was three (3) years, ending on
September 30, 2016, subject to the City's right to extend the term for an additional two
(2) years; and
WHEREAS, the City desires to exercise its right to extend the term of the
Agreement for an additional two (2) years, commencing on October 1,2016, and ending
on September 30, 2018, and the City desires to extend the term of the Agreement for an
additional two (2) years, commencing on October 1, 2018, and ending on September 30,
2020, subject to making further amendments to the Agreement as described herein, and
Global desires to accept such amendments and extension of the term as provided
herein; and
WHEREAS, capitalized terms used herein and not defined herein shall have the
meaning given to such terms in the Agreement.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements herein contained, and other good and valuable consideration, in receipt and
adequacy of which are hereby acknowledged and intending to be legally bound, the City
and Global hereby amend the Agreement as follows:
1. The aforestated recitals are true and correct and incorporated by
reference herein.
2. Pursuant to Section 3.2 of the Agreement, the City hereby
exercises its right to extend the Term for an additional two (2) year period (a "Renewal
Term"), with such Renewal Term commencing on October 1, 2016, and ending on
September 30,2018. Global hereby accepts such extension, and the parties hereby
confirm that the Renewal Term shall commence on October 1, 2016, and end on
September 30, 2018.
3. The City hereby extends the Term for an additional two (2) year
period (the "2018 Renewal Term") with such 2018 Renewal Term commencing on
October 1, 2018, and ending on September 30, 2020. Global hereby accepts such
241
extension, and the parties herebyconfirm thatthe 2018 Renewal Term shall commence
on October 1, 2018, and end on September 30, 2020.
4. Effective upon execution hereof, Section 8.4(b) of the Agreement,
regarding Performance Guarantees, is deleted in its entirety, as follows::
_(g) fer any eentr e
prejeeted in the Appreved Budget; if the aetuat Net Operating Prefit
aehieved fer sueh year is mere than $50;000 less than the Net
Operating tess aehieved fer sueh year is mere than $5S000 greater
than the Net Operating tess prejeeted in the Appreved Budget; then the
lneentive Fee earned by Glebal fer sueh Centraet Year shall be redueed
furpeses et tnis s
Year, shall mean either (i) if the Appreved Budget refleets a prejeeted
Net Operating Prefit, the ameunt by whieh the Net Operating Prefit
preieeteO in tne nppr
preiected Net Oper
in sueh year, The "Cap" shall mean fifty pereent (50%) ef the lneentive
Fee aetually earned by Glebal in the applieable eentraet Year,
Netwithstanding the feregeing, the lneentive Fee shall net be redueed te
the extent Glebal's failure te aehieve the applieable benehmark is due te
ieu+e
eperating er malntenanee requirements impesed by the City after
5. No Further Modifications. Except as provided in this Amendment
No. 2, the Agreement remains unmodified and in full force and effect. All references to
the Agreement in the Agreement or in any other document referencing the Agreement
shall be deemed to refer to the Agreement as amended hereby.
(REMAINDER OF PAGE LEFT INTENTIONALLY BLANK)
242
IN WITNESS WHEREOF, this Amendment has been duly executed by
the parties hereto as of the day and year first above written.
ATTEST:CITY OF MIAMI BEACH, FLORIDA
Rafael E. Granado, City Clerk Philip Levine, Mayor
GLOBAL SPEGTRUM, L.P.
ATTEST:
Chief Operating Officer
Secretary
Print Name
APPRO'ED AS TO
FORM & I.ANGUAGE
&FOR E)(ECUTION
MolnksCryAbncy r${ ene
243