HomeMy WebLinkAbout2006-26097 Reso
RESOLUTION NO. 2006-26097
A RESOLUTION OF THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH,
FLORIDA, SETTING A PUBLIC HEARING FOR FEBRUARY
8, 2006, TO HEAR PUBLIC COMMENT REGARDING A
PROPOSED LEASE AGREEMENT BETWEEN THE CITY
AND MIAMI CITY BALLET, INC., FOR THE LEASE OF THE
BALLET STUDIO FACILITY BUILDING, LOCATED AT
2200 LIBERTY AVENUE, MIAMI BEACH, FLORIDA; SAID
LEASE SUBJECT TO AND CONTINGENT UPON THE
CITY'S PROPOSED PURCHASE OF THE BALLET
BUILDING.
WHEREAS, Miami City Ballet, Inc. (MCB or the Ballet) is currently the Lessee under
a Ground Lease from the City (as Lessor) of the City owned land located at 2200 Liberty
Avenue, Miami Beach, Florida (the Ground Lease); and
WHEREAS, under the terms of the Ground Lease, dated April 13, 1994, and as
amended, the City initially contributed $2.5 Million Dollars, as well as the aforestated public
land, toward the cost of the MCB Studio Facility Building (said Building and all
improvements therein collectively referred to as the Building), which was designed and
constructed, and is currently owned, occupied, operated and maintained by the Ballet
(under the terms of the existing Ground Lease); and
WHEREAS, the Building is an approximately 63,000 square foot facility containing
the Ballet's administrative offices, school, studio space, and a gift shop; and
WHEREAS, the Ground Lease has a fifty-one (51) year term, which commenced on
April 13, 1996, and expires on April 12, 2047; and
WHEREAS, recently, the Ballet has encountered serious financial problems which
threaten its continued viability and existence, and is in need of additional funding to
continue to operate; and
WHEREAS, in an effort to assist the Ballet and to continue to house the Ballet's
headquarters in the City of Miami Beach, and following extensive discussions and
negotiations between the City Administration and the Ballet, the Mayor and City
Commission, at its regular meeting on September 21, 2005, as well as the Chairman and
Members of the Miami Beach Redevelopment Agency, adopted respective resolutions
ratifying a term sheet prepared by the City Administration and the Ballet setting forth the
following salient points:
· approving the City's purchase of the Ballet Building at 2200 Liberty
Avenue, in the amount of $4.5 Million Dollars, subject to terms and
conditions to be negotiated in a Purchase and Sale Agreement
between the City and the Ballet;
. as part of the negotiations for the purchase of the Building, the City
also agreed to advance the Ballet monies, in the amount of
$550,000, from City Center/Redevelopment Area funds, to cover a
portion of the Ballet's immediate operating expenses pending
consummation of the transaction, and to be applied toward the
proposed purchase price;
. the Building will be conveyed in its "as is" condition, with the City
agreeing (as part of its due diligence) to do an independent survey
and study to determine the condition of the structure; should the City
move forward with closing-the City will assume the cost (in addition
to the purchase price) of any immediate necessary capital repairs, as
it deems necessary;
. concurrent with the negotiation of the Purchase and Sale Agreement,
the City and the Ballet were also authorized to negotiate a long term
Lease Agreement which, following the City's purchase and closing on
the Building, would replace the current Ground Lease, and have the
City lease the Building back to the Ballet, for its continued use
thereunder; and
WHEREAS, under the proposed new Lease, the Ballet would continue to occupy,
utilize, operate and manage the Building, in accordance with the present uses and
purposes of the Building, as well as subject to the minimum terms, as proposed in that
certain Term Sheet, dated December 14, 2005, attached hereto and incorporated herein as
Exhibit "A", as further amended by that certain Supplemental Term Sheet, dated December
23, 2005, and attached hereto and incorporated herein as Exhibit "A-i"; and
WHEREAS, pursuant to Section 1.03(b)(3) of the Charter of the City of Miami
Beach, which requires, in part, that the sale, exchange, conveyance or lease of ten (10)
years or longer of City property requires approval by a majority (4/7ths) vote of the City's
Planning Board (as well as 5/7ths vote of the Mayor and City Commission), the Term Sheet
for the proposed new Lease, attached as Exhibit "A" hereto, was presented to the Planning
Board at its regular meeting on December 20, 2005; and
WHEREAS, the Planning Board approved the proposed Lease between the City and
the Ballet, with the terms set forth in the Term Sheet attached as Exhibit "A" hereto, but as
amended by the additional conditions requested by the Board, as set forth in the
Supplemental Term Sheet attached as Exhibit "A-i" hereto; and
WHEREAS, at its regular meeting on December 21, 2005, the City's Finance and
Citywide Projects Committee also approved the terms of the proposed Lease, with the
terms set forth in Exhibit "A" hereto, as amended by the Planning Board's additional
conditions, as set forth in Exhibit "A-i" hereto; and
WHEREAS, additionally, Section 82-39 of the Miami Beach City Code, governing the
sale/lease of public property, requires that prior to the sale and/or lease of City property,
the City Commission shall hold a public hearing, advertised not less than fifteen (15) days
prior to said hearing, in order to obtain citizen input into such proposed sale and/or lease;
and
WHEREAS, pursuant to the proposed transaction between the City and the Ballet,
as set forth in this Resolution, upon the City's purchase and closing on the Building, the
Building will become City property which will be leased back to the Ballet; to that end, the
Administration requests that the Mayor and City Commission hereby set a public hearing to
hear public comment regarding the proposed new Lease of the Building to the Ballet,
pursuant to the minimum terms set forth in Exhibits "A" and "A-l", respectively.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission of the City of Miami Beach, Florida, hereby set a public hearing for February 8,
2006, to hear public comment regarding a proposed Lease Agreement between the City
and Miami City Ballet, Inc., for the Lease of the Ballet Studio Facility Building, located at
2200 Liberty Avenue, Miami Beach, Florida; said Lease subject to and contingent upon the
City's proposed purchase of the Ballet Building.
PASSED and ADOPTED this 11 th day of January
ATTEST:
tJbt r~
CITY CLERK
Robert Parcher
F:\atto\AGUR\RESOS-ORD\Miami City Ballet - Public Hearing.Reso.doc
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution setting a public hearing regarding a proposed Lease Agreement between the City and
Miami Ci Ballet, Inc.
Ke Intended Outcome Su orted:
Increase community rating of cultural activities.
Issue:
Shall the City set a public hearing regarding the proposed Lease Agreement to Miami City Ballet, Inc.
Item Summary/Recommendation:
Section 82-39 of the Miami Beach City Code, governing the sale/lease of public property, requires
that prior to the sale and/or lease of City property, the City Commission shall hold a public hearing,
advertised not less than fifteen (15) days prior to said hearing, in order to obtain citizen input into such
proposed sale and/or lease.
Upon the City's purchase and closing on the Building, the Building will become City property which will
be leased back to the Ballet; to that end, the Administration requests that the Mayor and City
Commission hereby set a public hearing to hear public comment regarding the proposed new Lease
of the Building to the Ballet, pursuant to the minimum terms set forth in Exhibits "A" and "A-1",
respectively.
Adviso Board Recommendation:
The Finance and Citywide Projects Committee, on December 21, 2005, and the Planning Board, on
December 20, 2005, both a roved the ro osed Lease A reement.
Financial Information:
Source of Amount Account Approved
Funds: 1
D .. . 2
3
4
OBPI Totll
Financial Impact Summary:
Ci Clerk's Office Le islative Trackin
Patricia D. Walker, Chief Financial Officer
Si n-Ofts:
Department Director
Assistant City Manager
City Manager
...-
to
~
MIAMI BEACH
AGENDA ITEM
DATE
G7L-
(-II-at:?
~ MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
FROM:
Mayor David Dermer and Members of the City Commission
Jorge M. Gonzalez, City Manager \ IY'-O
January 11, 2006 0
TO:
DATE:
SUBJECT:
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, SETTING A PUBLIC HEARING FOR FEBRUARY 8,
2006, TO HEAR PUBLIC COMMENT REGARDING A PROPOSED LEASE
AGREEMENT BETWEEN THE CITY AND MIAMI CITY BALLET, INC., FOR THE
LEASE OF THE BALLET STUDIO FACILITY BUILDING, LOCATED AT 2200
LIBERTY AVENUE, MIAMI BEACH, FLORIDA; SAID LEASE SUBJECT TO AND
CONTINGENT UPON THE CITY'S PROPOSED PURCHASE OF THE BALLET
BUILDING.
ADMINISTRATION RECOMMENDATION
Approve the Resolution and Set the Public Hearing.
BACKGROUND
The Miami City Ballet began in 1985 and has grown to maturity in the City of Miami Beach
where it has been located for more than twenty years. In 1986, its first performance
season, the Company had a budget of $1,000,000, a troupe of 19 dancers and a handful of
staff. Today in its twentieth season, the Company has grown to a budget of over
$10,250,000, the troupe now includes 46 dancers, the School has 400 students and there
are 70 staff for the Company and School.
The Miami City Ballet Studios building, 2200 Liberty Ave, is an approximately 63,000 sf.
building containing the offices, school and studios of the Ballet and is an anchor in the City's
Cultural Campus. It was completed at the end of 1999 at a cost of approximately
$7,000,000. During 1999, the City contributed $2,500,000 towards the construction of the
building and also owns the land on which the Building was built. The Ballet has also added
approximately $1 ,000,000 of interior finishes and improvements which includes two studios
that when combined by opening an air wall between them can create a performance venue
with seating for approximately 225. The Ballet has continually made the building available
to the City as a polling place for elections as well as an emergency management command
center during hurricanes. They have also donated or rented this facility, when available, to
other arts groups, such as: New World Symphony, the Miami Light Project and the South
Beach Gay Men's Chorus, as well as permitted television, film, and music video production
companies, and photographers doing fashion shoots to use the facility.
Since 1998, through its Miami City Ballet Inner-City Outreach Program, the Ballet has
partnered with several Miami Beach Schools, including South Pointe Elementary, Feinberg-
Fisher Elementary and North Beach Elementary, through their Exploring Dance Program,
which provides in-school residencies, conducted by the School's Outreach Faculty, to
children with financial needs. The Ballet also continues to provide scholarships to attend the
Miami City Ballet School to talented children with financial need. This year those
scholarships have afforded forty children, of whom six are from Miami Beach, the opportunity
for this enriching experience. Since the Ballet began performing at the Jackie Gleason
Theater in the fall of 1995 t~e Ballet has donated over twenty-five thousand tickets to their
performances to Miami Beach students and children's charities. Additionally, the Ballet has
produced education-outreach performances for students from Miami-Dade public schools;
Ballets for Young People programming for children and families and since 1994 has
performed or participated in the City's annual "Invitation to the Arts." In February 2006, they
will produce Aurora's Wedding from Sleeping Beauty at the Jackie Gleason Theater.
The City Manager met with the Ballet during the fall of 2004 and discussed the possibility of
providing a grant to them to be used to enhance the Studio Theater space within their facility
so that it could be used as a more theatrical performance venue. The Ballet moved forward
with this concept and engaged Proscenium Architecture + Interiors, Inc. to assist in the
planning of the conversion of the existing studios 1 and 2 into a more patron - comfortable,
flexible performance space and estimate the construction cost. They estimate that the full
build out of this space will cost approximately $1,400,000. The Administration is
recommending that the City make an additional investment of approximately $500,000 for
capital improvements to the Studio Theater to enable the Ballet to begin performances in
this area during early 2006.
The Ballet has been strliggling to achieve financial stability in the short-term and
sustainability in the long-term. However, at this time they are trying desperately to solve the
most severe financial crisis in their history.
They have incurred approximately $2,500,000 of operating debt over the last six years. Of
this amount approximately $1,950,000 was due August 31, 2005 on which the Ballet has
only been able to pay interest this year. This is comprised of: a $950,000 term loan made by
a group of banks, a fully drawn line of credit of $500,000, both at prime +1120.10; and
$500,000 bridge loan at prime rate, co-signed by two of the Board members. The
remaining balance represents aged accounts payable and non-interest bearing loans from
board members. The largest piece of this debt is funded by a group of local banks that does
not want to continue to lend to the Ballet. The Banks wanted the outstanding amount paid
over 5 years; however, the Ballet has no way to fund the repayment over that term. The
Ballet's cash balances have deteriorated and they are very concerned that they will not be
able to cover payroll and other minimal operating expenses through the month of
September. The Ballet cites a reduction in contributions from donors as a result of a
weaker economy post 2001, reductions or eliminations of government support to the arts, as
well as more intense competition, most notably from the Miami Performing Arts Center, for
contributions from a finite pool of donors, as the major reasons for their decreasing
revenues.
Approximately three months into the previous fiscal year (May 2004 - April 2005) it became
apparent to the Ballet that they would not be able to achieve their contributed income goal
and they immediately reduced their operating budget. At that time they believed that they
could survive this crisis by restructuring. their debt with a mortgage, payable over 20-30
years, coupled with providing additional fundraising strength, drastic reducing their budget
and seeking an annual sub'sidy from the City.
Commissioner Simon Cruz asked the City Administration to begin working with the Ballet
during the fall of 2004 to look for financing so they might refinance their outstanding debt
over a more reasonable term, pay off their aged accounts payable and establish a credit line
to provide working capital sufficient to see them through the lean part of each season. The
City facilitated a meeting for the Ballet with the City's financial advisor and bond counsel to
see if a conduit financing was a viable option. During the meeting the facts that were
presented by the Ballet quickly led to the conclusion that this was not a viable option and
the likelihood of obtaining financing from any lending institution looked less than hopeful.
During January 2005, the ~allet made a presentation to the Finance and Citywide Projects
Committee (the Finance Committee) requesting that the City consent to the Ballet obtaining
a leasehold mortgage to achieve this financing. The Committee was in favor of giving
consent to a leasehold mortgage subject to the terms and conditions of the actual mortgage.
Although the Ballet continued to pursue this option with a number of different financial
institutions, the Ballet was unable to obtain a mortgage based on the covenants of the City's
ground lease which require that in a default the City would be in first position to be paid and
additionally the lease restricts the ability of a lender to use the building for any purpose other
than non-profit, preferably cultural.
Based on our review of the Ballet's financial position, additional financing would give them
only momentary relief and would not solve the structural financial issues that they have. The
Ballet has indicated that without a solution to this financial crisis their alternatives would be
to close the Company or seek out a new home that could provide financial assistance.
Finance and Citywide Proiects Committee Meetina September 12. 2005
The Administration and representatives from the Miami City Ballet including Edward Villella,
Founding Artistic Director and CEO, Pamela Gardiner, Executive Director, Mike Eidson Esq.,
President of the Miami City Ballet Board of Trustees, Rosalind Richter, Vice President and
member of Board of Trustees, and Mark Rosenblum, General Manager made a presentation
to the Finance Committee at their meeting on September 12, 2005 outlining the Ballet's
deteriorating financial condition. The Administration proposed a financial package that
would help the Ballet become financially solvent and continue in its cultural partnership with
the City as follows:
1. The City would acquire,the Ballet's interest in the Miami City Ballet Studio Building for
$4.5 M and lease it back to the Ballet, at a rent of $1 a year, with terms similar to the
ground lease with the New World Symphony, and take over responsibility for the capital
maintenance of the facility, and
2. The City would make an additional investment of approximately $500,000 for capital
improvements to the Studio Theater to enable the Ballet to begin performances in this
area during early 2006.
Under this proposal, the City would buy the Ballet's interest in the Miami City Ballet Studio
Building for $4;5 M and lease it back to the Ballet, at a rent of $1 a year, with terms similar to
the ground lease with the New World Symphony. The City would also take over responsibility
for the capital maintenance of the facility which would include the building and its systems,
such as: air conditioning, plumbing, electrical, roofing etc. In this regard, Brad Judd, Director
of Property Management, visited the Ballet Studios Building and prepared an assessment of
the condition of the facility and its systems which reflects an estimated $740,000 of capital
maintenance and replacements that are necessary over the next two years which include: 1)
$500,000 for a new roof; 2) $175,000 for replacement of five rooftop air conditioning units;
and 3) $65,000 for pressure-cleaning, waterproofing and painting the exterior of the building.
Further, the Administration recommended that the City make an additional investment of
approximately $500,000 for capital improvements to the Studio Theater to enable the Ballet
to begin performances in this area during early 2006. The City also would provide input and
review of the Ballet's annual budget and would maintain financial oversight through the
appointment of both the City Manager and the City's Chief Financial Officer as voting
members of the Ballet's Governing Board.
This amount would allow the Ballet to payoff their existing debt, loans and aged accounts
payable which total approximately $2.5 million and it would provide them with a working
capital fund of approximately $2 million to get them through the financially lean months at the
beginning of each season for payroll, licenses, costumes, music and repetiteurs for the
upcoming season. The Ballet would return these funds to their working capital fund during
the year as revenues were generated and contributions are received. In addition to debt
service savings, the Ballet would no longer need to fund building maintenance, repairs and
replacement of building equipment, which would also generate significant savings for them
over the upcoming years.
Additionally, the Ballet proposed to generate incremental revenues, through additional
program performances in the enhanced Studio Theater, the Colony Theater and the Byron-
Carlyle Theater which are discussed in more detail in the next paragraph. They indicated
that they were also pursuing the development of the "Cafe Ballet", in the lobby of the Ballet
Studios Building, with Bom Dia, one of the largest coffee producers in Brazil. Bom Dia wants
to develop the Cafe as the North American launch location for their limited edition coffees.
The terms of this partnership are yet to be negotiated however; Bom Dia has initially
indicated that they would fund the capital improvement costs for the Cafe. The Ballet hoped
to be able to serve beer and wine along with light meals, snacks and desserts and provide a
place for park and library visitors to enjoy refreshments, along with its own students, patrons
and visitors.
As previously mentioned, the Ballet would develop and perform two additional series which
will be exclusive to the City at this time. First, a Contemporary Dance Series where
audiences would be able to enjoy high quality contemporary dance in the intimate setting
that the enhanced Studio Theater would provide. The Ballet explained their plan to develop
and produce two Contemporary programs for their upcoming 2006 (Sep 2005 - May 2006)
season. The programs would expand to include a Young People's Program in their 2007
season (Sep 2006 - May 2007) designed especially for young audiences, and they would
expand their performances to include the newly renovated Colony Theater along with the
Byron-Carlyle Theater. These programs would be performed by dancers in their existing
Company with choreography not currently in the Ballet's repertoire. To achieve this goal, the
Ballet has brought back David Palmer and Yanis Pikieris, former Miami City Ballet principal
dancers, and Founding Artistic Directors of Maximum Dance Company. These gentlemen
have extensive experience as dancers, choreographers and arts administrators and would
work with the Company full-time, to develop and implement the Contemporary Dance Series
this season and would add,the Young People's Program in 2006-2007.
The Company has committed to perform as a resident company at the new Miami
Performing Arts Center (MPAC) and the City is engaged in discussions with the Cirque du
Solei I to reconfigure the Jackie Gleason Theater of the Performing Arts for their year-round
performances. It is expected that this venture will continue to be profitable for the Ballet;
however, the Ballet has agreed only to perform at a financially self-sustaining level.
Additionally, the Ballet offered to acknowledge at their performances at the MPAC that they
were "Presented by the City of Miami Beach".
The Finance Committee engaged in a lengthy discussion of the proposal and the severity of
the. Ballet's financial condition. The Committee made the following recommendations:
1. Commissioners Saul Gross and Richard Steinberg recommended that in addition to the
$4,500,000, that the City fund the necessary $740,000 of capital maintenance and
replacements recommended by Mr. Judd, however, it was requested that the Ballet pay
for future capital maintenance and replacements and provide annual funding into a
reserve for that purpos~;
2. The Committee did not agree to fund the $500,000 for capital improvements to the
Studio Theater at this time and suggested that the Ballet might pursue this project at a
later date; .
3. Commissioner Steinberg requested that the Administration work with the Ballet to outline
financial covenants to incorporate into the agreement that would help insure that the
Ballet would operate within its available financial resources in the future and not incur
debt to meet its operating requirements;
4. Commissioner Cruz requested that the Ballet provide evidence from their lenders that
the payments due on ,loans as of August 31 had been deferred or were held in
forbearance while the terms of the City's acquisition of the Ballet Studios Building were
negotiated; and
5. In regard to the urgency of the Ballet's current cash flow needs the Committee
suggested that the full Commission could approve an advance at their September 21,
2005 meeting, that would be applied toward the City's purchase price for the facility upon
execution of a purchase and sale agreement. This advance would supplement operating
funds for the Ballet until the specific terms of the purchase and sale agreement could be
negotiated.
The Committee directed the Administration to return to the full City Commission at its
September 21,2005 meeting with the following items:
1. A Term Sheet outlining the proposed terms of the purchase and sale agreement for the
acquisition of the Ballet's interest in the building including a description of proposed
financial covenants to be included in the proposed lease agreement;
2. A letter from each major lender stating that the payments due on loans as of August 31,
had been deferred or were held in forbearance while the terms of the City's acquisition of
the Ballet Studios building were negotiated;
3. A funding plan for future capital maintenance and replacements and .
4. A resolution of the Ballet's Governing Board agreeing to the preliminary terms of the
agreement as outlined in the Term Sheet. (The Governing Board of the Ballet is
scheduled to meet and consider the sale of the building to the City on Monday Sep. 19,
2005.)
SubseQuent Discussions with the Ballet
During discussions following the Finance Committee meeting, the Ballet stated that they do
not foresee the financial capacity in the near future to provide funding for future capital
maintenance and replacements as well as provide the funding to produce the programs
(Contemporary and Young People's Series) that the City has requested.
Additionally, the Ballet has indicated that the proposed investment of $500,000 by the City in
enhancements to the Studio Theater would have permitted the Ballet to generate additional
revenues by performing in their Studio Theater at an estimated savings of $20,000 in
FY2006 and $53,200 in FY2007 ($10,000 per program for three performances and $13,300
per program for four performances) and would have provided an opportunity to generate
some additional revenues from the proposed Cafe Ballet. Mr. Villella has indicated that in
the absence of funding from the City for the Studio Theater he can not afford and therefore
can not commit to producing the two new series that the City has requested. Further, Mr.
Villella further indicated that in the absence of enhancements to the Studio Theater should
the Ballet not be able to perform at the Performing Arts Center because they can not operate
at a financially self-sustaining level, there was no facility on Miami Beach large enough to
stage the Company's regular active repertory of programs.
The Administration's concurs with the Ballet's concern regarding their financial capacity at
this time to develop and produce these additional programs and continue to meet their
existing obligations. As such, the Administration recommends that:
1. The City of Miami Beach acquire the Ballet's interest in the Miami City Ballet Studio
Building for $4.5 M and lease it back to the Ballet, at a rent of $1 a year, with terms
similar to the ground lease with the New World Symphony;
2. That the City provide, $740,000 to fund imminent major capital replacements which
consist of: roof replacement - $500,000; five rooftop air conditioning 'units - $175,000,
and pressure-cleaning, waterproofing, and painting of the building exterior - $65,000;
3. That the City engage VFA to formally assess the costs of lifecycle maintenance for the
Ballet building and determine a consistent method of allocating building capital
maintenance and replacement costs at that time; and
4. That the City's requirement to develop and produce the Contemporary and Young
People's Programs and the Ballet's request to enhance the Studio Theater be deferred
at this time.
We believe by taking these steps to consolidate the City's ownership of the Ballet Studio
Building, and to provide the funding for imminent major capital replacements, we will provide
a path to financial sustainability for the Ballet and gain an extremely valuable asset for the
City.
City Commission Meetino of September 21. 2005
At the City Commission Meeting of September 21, 2005 the Commission approved the
Administration's recommendation to acquire the Ballet Studios Building for $4.5 million
without the studio theater and to provide an estimated $740,000 to fund the cost of the
imminent major capital replacements of the roof, air conditioning units and for pressure-
cleaning, waterproofing, and painting of the building exterior. The Commission also deferred
the discussion of the requested $500,000 for the Studio Theater and released the Ballet
from the requirement to set aside funding for capital maintenance and replacements of
$90,000 per year for the' first three years of the new lease term.
Plannina Board meetino December 20. 2005
Pursuant to Section 1.03(b )(3) of the Charter of the City of Miami Beach, which requires that
the sale, exchange, conveyance or lease of ten (10) years or longer of City property requires
approval by a majority (4/7ths) vote of the City's Planning Board (as well as 517ths vote of
the Mayor and City Commission), the Term Sheet for the proposed new Lease, attached as
Exhibit "A", was presented to the Planning Board at its regular meeting on December 20,
2005. The Planning Board approved the proposed Lease between the City and the Ballet,
with the terms set forth in the Term Sheet attached as Exhibit "A" , but as amended by the
additional conditions requested by the Board, as set forth in the Supplemental Term Sheet
attached as Exhibit "A-1".
Finance and Citywide Proiects Committee Meetino December 21. 2005
On December 21,2005, the City's Finance and Citywide Projects Committee also approved
theterms of the proposed Lease, with the terms set forth in Exhibit "A", as amended by the
Planning Board's additional conditions, as set forth in Exhibit "A-1"; and
Additionally, Section 82-39 of the Miami Beach City Code, governing the sale/lease of public
property, requires that prior to the sale and/or lease of City property, the City Commission
shall hold a public hearing, advertised not less than fifteen (15) days prior to said hearing, in
order to obtain citizen input into such proposed sale and/or lease. Therefore, upon the City's
purchase and closing on the Building, the Building will become City property which will be
leased back to the Ballet; to that end, the Administration requests that the Mayor and City
Commission hereby set a public hearing to hear public comment regarding the proposed
new Lease of the Building to the Ballet, pursuant to the minimum terms set forth in Exhibits
"A" and "A-1", respectively.
JMG/PDW
T:\AGENDA\2006~an11 06\consent\Miami City Ballet - memo.doc
CITY OF MIAMI BEACH
OFFICE OF THE CITY ATTORNEY
MEMORANDUM
TO: Chairperson and Members of the City of Miami Beach Planning Board
FROM: Patricia Walker, Chief Financial Officer
Raul J. Aguila, First Assistant City Attorney
SUBJECT: Term Sheet for Proposed Lease Agreement between Miami City Ballet, Inc.
(MCB or the Ballet) and the City of Miami Beach, Florida (City) for the MCB
Studio Facility Building, and all improvements therein (collectively, the
Building), located at 2200 Liberty Avenue, Miami Beach, Florida
DATE: December 14, 2005
Pursuant to the direction of the Chairperson and Members of the Planning Board at
its last regular meeting on October 25, 2005, at which time the Board considered a request
by the City, pursuant to Section 1.03(b )(3) of the Charter of the City of Miami Beach,
requesting approval of a proposed Lease Agreement between the City and the Ballet, for
the Ballet's continued use, operation, and management of the Building located at 2200
Liberty Avenue; said Lease subject to and commencing upon the purchase of the Ballet
Building by the City. At that time, the Board continued the item, and requested that the
Administration and City Attorney's Office return with a detailed term sheet, outlining the
terms and condi"tions of the proposed Lease. Accordingly, the Administration and City
Attorney's have prepared the following term sheet, which addresses the substantive points,
terms and conditions, of the proposed Lease. The proposed Lease is of course subject to
the City's purchase and closing on the Building, and (in addition to approval of the Planning
Board by 4/7ths vote) the Mayor and City Commission's approval of the Lease Agreement,
by 5/7ths vote.
1) Background and Purpose:
The Ballet is currently the Lessee under a Ground Lease from the City (as
Lessor) of the City owned land located at 2200 Liberty Avenue, Miami Beach,
Florida. Under the terms of the Ground Lease, dated April 13, 1994, and as
amended, the City initially contributed $2.5 Million Dollars, as well as the
aforestated publiC land, toward the cost of the Building, which was designed
and constructed, and is currently owned, occupied, operated and maintained
by the Ballet (under the terms of the Ground Lease). The Building is an
Exhibit "A"
approximately 63,000 square foot facility containing the Ballet's
administrative offices, school and studio space. The Ground Lease has a
fifty-one (51) year term, which commenced on April 13, 1996, and expires on
April 12, 2047. The rent is $100.00 a year, with the Ballet also responsible
for all costs associated with operation and maintenance (capital and day-to-
day), utilities, licenses and permits, and taxes and assessments.
Recently, the Ballet has encountered serious financial problems which
threaten its continued viability and existence, and is in need of additional
funding to continue to operate. Efforts by the Ballet to obtain institutional
funding have been unsuccessful.
In an effort to assist the Ballet, the City Administration has been engaged in
discussions with the Ballet since the Fall of 2004; on September 12, 2005,
the Ballet made a presentation to the City's Finance Committee, outlining its
deteriorating financial condition. At the City Commission meeting on
September 21st, 2005, both the Mayor and City Commission and the
Chairman and Members of the Miami Beach Redevelopment Agency adopted
resolutions ratifying a term sheet prepared by the Administration and MCB
setting forth the following:
· approving the City's proposed purchase of the Ballet Building at 2200
Liberty Avenue, subject to terms and conditions to be negotiated in a
Purchase and Sale Agreement between the City and the Ballet;
· authorizing a purchase price for the Building, in the amount of $4.5
Million Dollars; the Purchase Price would be utilized by the Ballet to
payoff its existing debt and to fund a working capital account for
operating expenses during financially lean months, and (as further set
forth in Section 6 hereto) to fund a capital maintenance and
replacement fund. (The Building is to be conveyed in its "as is"
condition. Prior to closing on the Building, the City will finalize a
study, outlining imminent/necessary capital repairs, which are
intended to be financed by the City.);
· the City also advanced the Ballet monies, in the amount of $550,000,
from City Center/Redevelopment Area funds, to cover a portion of the
Ballet's immediate operating expenses (to allow it to continue to
operate in the short term, pending consummation of the transaction
with the City). The aforestated amount is to be applied as an advance
(deposit) toward the City's purchase of the Building. In the event the
closing falls through, the amount is secured by a lien against the
Building;
· concurrent with the negotiation of the Purchase and Sale Agreement,
the City and the Ballet were also authorized to negotiate the proposed
long term Lease Agreement whereby, following the City's purchase of
the Building, the City would lease back the Building to the Ballet, for
its continued use thereunder.
Essentially, while the ownership of the Building would be transferred from the Ballet
to the City, the City would lease back the Building to the Ballet, and the resulting new
Lease (for the Building) would have terms substantially similar to the current Ground
Lease; certainly, it is the parties' intent that the Building continue to be utilized, operated
and managed by the Ballet in accordance with the present uses and purposes of the
Building.
2) Lease Term:
The current Ground Lease with the Ballet is for a term of fifty-one (51) years,
which commenced on April 13, 1996, and shall terminate on April 12, 2047.
In the proposed new Lease, the Ballet has requested as long a term as
possib~; ideally, they would like a ninety-nine (99) year term. The
Administration has recommended the Ballet's proposed ninety-nine (99) year
term, to be broken up as follows: the initial term shall be for a term of forty
(40) years (which is the remainder of the existing term under the Ground
Lease), and thereafter, the new Lease shall have renewal terms in ten (10)
to fifteen (15) year increments.
3) Rent:
Under the current Ground Lease, the Ballet own the Building and pays the
City a nominal annual rent, for lease of the City- wned land upon which the
Building sits, of $100.00 per year. Under the new Lease for the Building, the
parties have agreed to a nominal annual rental mount of $1.00 per year.
In addition to the payment of the nominal rent ab ve, the Ballet will continue
to be responsible for the following additional ch rges/payments:
· all sales and use taxes (if any);
. all utilities;
· water and sewer charges;
· license and permit fees;
· service charges or special assessments;
· real estate taxes (if any);
· all cost for staffing and operating the Building for the intended uses,
as well as all costs for the Ballet's respective maintenance
responsibilities (See Section 6).
4) The Lease Premises:
The new Lease premises shall be defined as the footprint of the Ballet
Building, located at 2200 Liberty Avenue, which is an approximately 63,000
square foot structure currently containing the Ballet's administrative offices,
school, and studios.
5) Uses:
The Ballet shall continue to use the Building for the continued operation of its
dance studio(s), school, and offices; additional permitted uses of the Building
shall also include the same uses which were contemplated and approved
pursuant to the Ground Lease and which include, but are not limited to, a
Ballet Museum, cafe, restaurant, gift shop, practice rooms, performance
halls, and any other use (s) consistent with a regional ballet company.
Any additional uses of the Building, other than those permitted above, or
which would not be consistent with the management and operation of a
ballet company, must be approved in writing by the City prior to
commencement of same.
6) Maintenance Responsibilities:
Under the Ground Lease, as the owner of the Building, the Ballet was
responsible for all maintenance associated with the Building (capital and day-
to-day, as well as exterior and landscaping).
Since (upon purchase by the City) the Building will become a City asset, the
City agrees to assume responsibility for ongoing maintenance and repair of
major capital and infrastructure items including, but not limited to, the roof,
HV AC system, the plumbing and electrical system, and the exterior walls and
landscaping. Notwithstanding the preceding sentence, while the City shall
assume the work and physical responsibility for the aforestated maintenance
obligations, the Ballet will be responsible for funding any and all costs for
same, through the creation of the funds set forth in subsections (1) and (2)
below.
The Ballet shall also continue to be responsible for the day-to-day interior
maintenance, housekeeping, day-to-day repairs, and garbage disposal and
pick-up for the Building, and shall be required to keep the Building in good
condition, ordinary wear and tear excepted.
To that end, it is the City's intent to guarantee the ongoing maintenance,
repair, and upkeep of the Building by including the following covenant into
the proposed new Lease Agreement:
· Capital Maintenance and Replacement Fund - The Ballet will be
responsible for funding a reserve for the long term capital
maintenance of the Building. The current estimate for the annual
funding of this reserve is $90,000; however, at the September 21,
2005 City Commission meeting a motion was made by Commissioner
Gross and approved by the City Commission to waive the Ballet's
obligation to fund the reserve for the first three (3) years of the new
Lease term.
7) Insurance Requirements:
Since (upon purchase by the City), the Building will become a City asset, it
will be included under the City's Self Insurance Fund. Notwithstanding the
preceding sentence, the new Lease shall continue to require that the Ballet
maintain, throughout the term therein, the following Minimum Insurance
Requirements:
· Comprehensive General Liability Insurance, in an amount not less
than One Million Dollars ($1,000,000), combined single limits;
· Comprehensive Public Liability Insurance, against any liability for
bodily injury, death, and property damage, in an amount not less than
One Million dollars ($1,000,000), combined single limits;
· Excess Liability coverage with limits of not less than Two Million
Dollars ($2,000,000);
· Workers Compensation in at least the minimum amounts required by
Florida law;
· All insurance coverage shall name the City of Miami Beach, Florida,
and the Miami Beach Redevelopment Agency as additional insureds.
8) Indemnification/Hold Harmless:
In addition to the required minimum insurance coverages in Section 7 above,
the Ballet shall continue (as currently required under the Ground Lease) to
indemnify and hold the City harmless against all liabilities, expenses and
losses incurred by the City as a result of the Ballet's failure to perform any
covenant required to be performed by the Ballet under the proposed Lease;
or any accidents, injury or damage which shall happen in or about the
Building or appurtenances, or resulting from the condition, maintenance or
operation of the Building by the Ballet; or failure of the Ballet to comply with
any requirements of any governmental authority. The Ballet shall also, upon
demand by the City, and at the Ballet/s sole cost and expense, resist or
defend such action, claim, or proceeding, in the City/s name, if necessary, by
such attorney as the City shall approve, which approval shall not be
unreasonably withheld.
(9) Evens of Default by the Ballet:
Each of the following events shall constitute events of default by the Ballet
under the Lease:
· Any monetary failure of the Ballet to pay any rent or other additional
charges/payments due under the Lease after the same shall become
due, provided that the City shall give written notice to the Ballet and
the Ballet shall have a thirty (30) day cure period;
· Abandonment of the Building;
· Non-monetary defaults - any failure of the Ballet to perform any term,
condition, or covenant of the Lease for more than sixty (60) days after
written notice of such default shall have been given to the Ballet by
the City; or
· Bankruptcy - failure of the' Ballet to cure, within sixty (60) days of the
occurrence of any of the following:
i) Ballet shall become bankrupt or shall file any debtor
proceedings;
ii) Ballet shall take or have taken against it a petition in
bankruptcy, or for the appointment of a receiver; or
iii) Ballet makes an assignment for the benefit of creditors.
In the event of a default, the City may avail itself of any and all remedies, at
law or in equity, as it deems necessary to cure the default and to
compensate it for damages resulting from the default, including but not
limited to terminating the Lease. In the event of termination of the
Lease, all rights and interest of the Ballet in and into the Building and every
part thereof shall cease and terminate and the City may (in addition to any
and all other rights and remedies) re-enter and re-take the Building.
(10) Assignment or Sublease:
There shall be no assignment or sublease of all or any portion of the Lease
without the prior written consent of the Mayor and City Commission.
(11) City Participation:
The Ballet agrees that it shall appoint the City Manager and the City's Chief
Financial Officer as voting members to its Board of Trustees for each and
every year of the term of the Lease. Additionally, the City Manager and the
City's Chief Financial Officer shall have input and review of the Ballet's annual
budget, as well as continued financial oversight.
In addition to the aforestated substantive points of the proposed Building Lease, the
City will of course include any and all standard boiler-plate language that is included in, and
made a part of, all agreements for leases of City-owned property. In addition to the
approval of the Planning Board, and the 5/7ths approval of the Mayor and City Commission,
the proposed Lease shall also be subject to compliance with the City Code requirements
pertaining to leases of City-owned property, which requirements include (among others)
approval of the final Lease Agreement following a noticed public hearing. Additionally, the
City Code requires a Planning Department analysis of the proposed Lease; said analysis
was previously prepared by the Planning Department and is included separately as a
supplemental attachment to this item.
F:\atto\AGUR\MEMOS\Miami City Ballet - Term Sheet.doc
CITY OF MIAMI BEACH
OFFICE OF THE CITY AlTORNEY
MEMORANDUM
TO: Mayor David Dermer and
Members of the City Commission
FROM: Raul J. Aguila, First Assistant City Attorney
Trish Walker, Chief Financial Officer
SUBJECT: SUPPLEMENT to that certain Term Sheet, dated December 14, 2005, for
Proposed Lease Agreement between the City and Miami City Ballet, Inc., for
the. Lease of the Ballet Studio Facility Building, located at 2200 Liberty
Avenue, Miami Beach, Florida.
(Incorporating Planning Board comments from December 20, 2005 Meeting)
DATE: December 23, 2005
Pursuant to the Planning Board's consideration and approval of the above-
referenced proposed Lease Agreement between the Ballet and the City for the Ballet
Building located at 2200 Liberty Avenue, Miami Beach, Florida, at its regular meeting on
December 20, 2005, the Board approved the item subject to the following additional
conditions being incorporated into the proposed new Lease. It should be noted that,
following the Planning Board meeting, the foregoing conditions were also presented, in
conjunction with a full discussion of the above-referenced proposed Lease, to the Finance
and Citywide Projects Committee of December 21, 2005 and, together with the terms set
forth in the initial Term Sheet, dated December 14, 2005, were approved by the
Committee.
The additional terms imposed by the Planning Board pursuant to its approval of the
proposed Lease are as follows:
· With regard to Section 2 of the Term Sheet (dated December 14, 2005), the
Planning Board, while not opposed to the proposed ninety-nine (99) year
term requested by the Ballet (said term having an initial term of forty (40)
years and, thereafter, renewal terms of ten (10) or fifteen (15) year
increments) requested that, with regard to the parties' exercise of the
renewal terms, there be criteria provided in the Lease (as shall be negotiated
between the City and the Ballet) for exercise of said renewal terms, so that
the terms are not exercised automatically without Administrative review of
Exhibit "A-i"
.,
any criteria. Additionally, the Ballet should be obligated to provide the City
with prior written notice of its intent to exercise any renewal term.
· With regard to Section 5 of the December 14, 2005 Term Sheet, which
contemplated that one of the permitted uses for the Building would be to
allow the Ballet to operate and maintain (whether directly or through a sub-
concessionaire) a cafe/restaurant, the Board recommended that, while it did
not object to the Ballet operating and maintaining a cafe as an ancillary or
accessory use to the facility (similar to those currently operated within the
Bass Museum of Art and the Wolfsonian Museum), the term "restaurant"
should be deleted.
· With regard to Section 6 of the December 14, 2005 Term Sheet, which
requires the Ballet to establish a Capital Maintenance and Replacement Fund,
to be funded annually throughout the term of the Lease by the Ballet, in the
amount of $90,000, for the purpose of securing funds for the long term
capital maintenance of the Building, at the September 21, 2005 City
Commission meeting, a motion was made and accepted to waive the Ballet's
obligations to fund said reserve for the first three (3) years of the new Lease
term. The Planning Board, however, opined that the $90,000 Ballet
contribution for the first three (3) years should not be waived. However,
while the Ballet would not be excused from the financial obligation to make
said payments for the first three (3) years of the Lease term, the payments
(totaling $270,000) could be apportioned over the initial forty (40) year term
of the Lease. Additionally, the Planning Board recommended, and the City
Administration concurred, that the $90,000 annual contribution have an
annual CPI adjustment.
· The Planning Board requested that a provision be included in the proposed
Lease that, in the event of destruction of the Building as a result of a force
majeure (hurricane, fire, or other Act(s) of God), the City would have no
obligation to rebuild the Building. At the Finance and Citywide Projects
Committee, the Ballet concurred with the Board's condition, but requested
that the Lease also contain language which would allow the Ballet, in such an
event, to rebuild the facility at its sole cost and expense. As the Ballet's
request was not inconsistent with the Board's condition, the Administration
and City Attorneys Office do not object to the inclusion of this language.
· Finally, the Planning Board requested that, upon the City's purchase and
closing of the Building (and hence upon the Building becoming a City asset
and therefore "City property"), it comply with the City's Ordinance for
Naming of Public Facilities, Monuments, and Memorials.
As required pursuant to Section 1.03(b )(3) of the Charter of the City of Miami Beach,
the Planning Board approved the above-referenced proposed Lease Agreement between
the Ballet and the City, subject to the terms and conditions set forth in the Term Sheet,
dated December 14, 2005, and as amended by the Board's additional conditions, as set
forth in this Supplement. The December 14, 2005 Term Sheet, as amended by this
Supplement, was also approved by the Finance and Citywide Projects Committee at its
December 20, 2005 meeting, with the recommendation that the presentation of the
proposed new Lease proceed to the City Commission. Accordingly, it is the Administration's
intent to proceed with setting the required public hearing for the Mayor and City
Commission's consideration of the proposed Lease.
Should you have any questions or comments regarding the above, please do not
hesitate to contact me.
RJAjed
c: Jorge Gomez, Planning Director
F:\atto\AGUR\MEMOS\Miami City Ballet - Supplemental Term Sheet.doc