330-99 RDA
RESOLUTION
330-99
A RESOLUTION OF THE CHAIRMAN AND MEMBERS OF THE MIAMI
BEACH REDEVELOPMENT AGENCY, AUTHORIZING THE
ADMINISTRATION TO ENTER INTO A SETTLEMENT AGREEMENT
BETWEEN THE REDEVELOPMENT AGENCY AND LOEWS HOTEL
CORPORATION, PROVIDING FOR A $140,000 REDUCTION IN THE
DEVELOPER'S FEE, PAYABLE TO LOEWS IN ACCORDANCE WITH
THE ANCHOR GARAGE DEVELOPMENT AGREEMENT, IN EXCHANGE
FOR TERMINATING LOEWS' OBLIGATIONS UNDER THE RETAIL
SP ACE MASTER LEASE AGREEMENT.
WHEREAS, on July 17th, 1996, the Miami Beach Redevelopment Agency, the St. Moritz
Hotel Corporation and Miami Beach Redevelopment, Inc., (collectively, "Loews"), executed the
Lease Agreement, the Hotel Development Agreement, and other related agreements for the
development and operation of the Loews Miami Beach Hotel; and
WHEREAS, among the agreements executed was a Development Agreement between the
Redevelopment Agency and St. Moritz Hotel Corporation to develop the Anchor Shops and Parking
Garage and a Retail Space Master Lease Agreement between the Redevelopment Agency and Miami
Beach Redevelopment, Inc., for the retail space in the Anchor Shops; and
WHEREAS, at the Redevelopment Agency Board meeting on July 7, 1999, the
Administration reported that St. Moritz Hotel Corporation was willing to reduce the Developer's
Fee in order to resolve certain outstanding issues relative to the construction of the garage, including
but not limited to substitution of the storefront system and window tinting; and
WHEREAS, the Developer and the Administration have continued to negotiate an
acceptable settlement solution, which has resulted in the Developer offering to reduce its fee by 50
percent for a total of$140,000, in exchange for terminating its obligations under the Retail Space
Master Lease Agreement; and
WHEREAS, since the Retail Space Master Lease Agreement is a component agreement of
the Loews Hotel Development Agreement, the City Attorney is reviewing conditions in the
agreements in"order to amend the Master Lease Agreement.
NOW, THEREFORE BE IT DULY RESOLVED BY THE CHAIRMAN AND
MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY, that the Chairman
and Members of the Miami Beach Redevelopment Agency authorize the Administration to enter
into a Settlement Agreement between the Redevelopment Agency and Loews, providing for a
$140,000 reduction in the Developer's Fee (as defined in the Garage Development Agreement),
payable to Loews in accordance with the Garage Development Agreement, in exchange for
terminating Loews' obligations under the Retail Space Master Lease Agreement.
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'CHAIRMAN
PASSED AND ADOPTED this 17th day of Nov. , 1999
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SECRETARY
Resolution No. 330-99
F:\A rrO\LEVL\RESO&ORD\Loews2Resolulion. wpd
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
ll:l2.:JJ
Date
Miami Beach
Redevelopment Agency
1700 Convention Center Drive
Miami Beach, Florida 33139
Telephone: (305) 673-7193
Fax: (305) 673-7772
REDEVELOPMENT AGENCY MEMORANDUM NO. 99- ~S
November 17, 1999
TO:
Chairman and Members of the
Miami Beach Redevelop ent Agency
FROM:
Sergio Rodriguez
Executive Director.
SUBJECT:
A RESOLUTIO OF THE CHAIRMAN AND MEMBERS OF THE MIAMI
BEACH REDEVELOPMENT AGENCY, AUTHORIZING THE
ADMINISTRATION TO ENTER INTO A SETTLEMENT AGREEMENT
BETWEEN THE REDEVELOPMENT AGENCY AND LOEWS HOTEL
CORPORATION, PROVIDING FOR A $140,000 REDUCTION IN THE
DEVELOPER'S FEE, PAYABLE TO LOEWS IN ACCORDANCE WITH
THE ANCHOR GARAGE DEVELOPMENT AGREEMENT, IN EXCHANGE
FOR TERMINATING LOEWS' OBLIGATIONS UNDER THE RETAIL
SPACE MASTER LEASE AGREEMENT.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution
ANALYSIS
At the Redevelopment Agency Board meeting on July 7, 1999, the Administration reported that
St. Moritz Hotel Corporation (Loews), the Developer of the Anchor Garage and Shops, was willing
to reduce the Developer's Fee to $200,000 from $282,000 in exchange for terminating its obligations
under the Development Agreement as well as the Retail Space Master Lease Agreement. The
Developer's proposal essentially contemplated a monetary resolution of all outstanding issues relative
to the garage construction including the substitute storefront system and the window tinting.
The Administration recommended that without additional consideration in the form of a greater
concession in the developer's fee and/or Loews agreement to maintain and install the storm shutters
over an extended period oftime at no cost to the City/Agency, the Board should decline acceptance
of the Developer's proposal.
Since this time, the Developer and the Administration have continued to negotiate an acceptable
settlement solution, which has resulted in the Developer offering to reduce its fee by 50 percent for
a total for a total of$140,000. Since the Garage Development Agreement essentiallv ifiliemnifies
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S()UTti 1)()1~f: Agenda Item 3 f5
~edevelC)pment Ulstrict
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Date
1\ -\,-99
the Developer except to the extent of any gross negligence or willful misconduct, it is doubtful that
Loews will concede more than what is currently being offered, While the $140,000 amount proposed
by Loews cannot fully remedy such issues as the substitute storefront/shutter system, it does however
come closer to bridging the material cost difference between the shutter system and the originally
specified impact resistant glass, It was previously reported to the RDA Board, that the cost to
replace the shutter system with impact resistant glass has been estimated in excess of $350,000, The
cost to remedy the tinting issue has been estimated at $52,000.
As with its initial proposal, Loews has agreed to maintain the personnel overseeing the completion
of the Loews Hotel to assist the City/RDA with the close-out of the Garage project and provide
complete accounting records of the project.
In exchange for reducing the Developer's Fee for the Garage project, Loews will terminate its
obligations under the Retail Space Master Lease Agreement, leaving the RDA responsible for
leasing and managing the Anchor Shops, This additional responsibility will be mitigated to a certain
extent, since 82 percent of the retail space is already leased and the balance is under negotiation,
Under the existing Master Lease Agreement, the Redevelopment Agency has already been
responsible for coordinating and/or undertaking the maintenance and repair of the facility, while
Loews has been serving as the City/RDA's leasing agent.
As part of this agreement, Loews will also address certain outstanding issues including:
1) Continuing to facilitate/establish the process by which the tenants facing Collins Avenue
can replace the tinted glass windows with an acceptable clear glass alternative which
complies with Dade County product approval. The Developer has been working with its
Mechanical Engineer and the City's Building Department to obtain approval for an acceptable
clear glass alternative to the existing tinted glass, As of the writing of this report, the approval
was pending a letter from the Engineer certifYing that the replacement glass actually complies
with applicable energy rating requirements.
2) Resolving any outstanding financial claims by any of the sub-tenants relative to the build-
out of the retail spaces, ParadizzolBiker's Image has submitted a claim to the Master Tenant
for approximately $18,000 for work they claim had to be done since their space was not
ready upon occupancy, This matter is currently being assessed by the Developer
3) Continuing to negotiate any outstanding/pending lease proposals, As of the date of this
report there are three pending leases involving the remaining available retail space for a total
3,636 feet. These proposals include South Beach Makeup, Inc" involving 752 square feet
at $22 per square foot; South Beach Ice Cream, involving 721 square feet at $30 per square
foot, and Stadlander Operating Company, (an upscale pharmacy/drugstore) interested in
leasing 2,163 square feet at a rate of$30.00 per square foot.
In relinquishing its obligations under the Master Lease Agreement, Loews will not receive its 5%
share of the lease revenues, resulting in an estimated $30,000 in annual savings for the CitylRDA.
Under the tenus of the Master Lease Agreement, Loews remits 95% of gross rents to the City/RDA
and retains 5% for administrative and overhead costs. Since the City/RDA may legally be precluded
from paying leasing commissions directly, Loews has offered (as part of this settlement), to continue
paying lease commissions subject to being reimbursed by the City/RDA.
Since the Retail Space Master Lease Agreement is a component-agreement of the Loews Hotel
Development Agreement, the City Attorney is reviewing provisions/conditions in the agreements
in order to amend and/or terminate the Master Lease Agreement.
To this end, it is recommended that the Redevelopment Agency Board authorize the Administration
to enter into a Settlement Agreement with Loews, providing for a $140,000 reduction in the
Developer's Fee payable to Loews, in accordance with the Anchor Garage Development
Agreement, in exchange for terminating Loews' obligations under the Retail Space Master Lease
Agreement,
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T:IAGENDA\1999\NOY1799\RDAILOEWS MEM