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HomeMy WebLinkAbout525-2006 RDA Reso Inc.RESOLUTION NO. 525-2006 A RESOLUTION OF THE CHAIRMAN AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY APPROVING A SETTLEMENT PROVIDING FOR THE EARLY TERMINATION OF THE RETAIL LEASE BETWEEN THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA), AS LANDLORD, AND ABKEY NO 17, INC., DIB/A FUDDRUCKERS, AS TENANT, DATED SEPTEMBER 8, 1999, FOR SUITES 1 THROUGH 3 AND 4 IN THE ANCHOR SHOPS, LOCATED AT 1551 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA; APPROVAL OF THE AFORESTATED SETTLEMENT SUBJECT TO AND CONDITIONED UPON TENANT'S EXECUTION AND SATISFACTION OF THE TERMS AND CONDITIONS SET FORTH IN THE LETTER AGREEMENT, DATED FEBRUARY 8, 2006, BETWEEN THE RDA AND THE TENANT; FURTHER AUTHORIZING THE CHAIRMAN AND SECRETARY TO EXECUTE A NEW RETAIL LEASE WITH THE REPLACEMENT TENANT, BBQ BEACH, INC., FOR THE ABOVE DESCRIBED RETAIL PREMISES. WHEREAS, On September 9, 1999, Abkey No. 17, Inc., d/b/a Fuddruckers (Fuddruckers or Tenant) executed a ten (10) year Retail Lease with the Miami Beach Redevelopment Agency (RDA and/or Landlord) for 6,217 square feet of space, located in the Anchor Shops of South Beach, located at 1551 Washington Ave, Suites 1-3, Miami Beach, Florida; and WHEREAS, since officially opening its doors in March, 2002, the Tenant has had a difficult time in achieving its sales expectations; and WHEREAS, on February 13, 2003, the RDA and Fuddruckers entered into a Settlement Agreement, pertaining to payment of past due rent and settlement of certain outstanding City Code requirements that Fuddruckers was required to address in order to obtain a Certificate of Occupancy (CO); and WHEREAS, since opening for business in March, 2002, Fuddruckers had been operating under a Temporary Certificate of Occupancy (TCO), which it kept extending through the County's Board of Rules and Appeals, until July 20, 2005, when the RDA and the City's Building Official finally recommended against granting any further extensions; and WHEREAS, on July 1, 2005, Tenant met with RDA staff to advise that it was unwilling to spend the necessary funds to address the outstanding City Code issues, and that it would be closing its doom by the end of the month; and WHEREAS, in accordance with Section 8.1 of the Retail Lease, the Tenant was advised that its obligations to the RDA would remain in full force and effect until an acceptable tenant was identified and approved by the Landlord; and WHEREAS,. it would be the Tenant's obligation to either procure an acceptable sublease for the remaining term of the Retail Lease, or the Tenant could remit the balance of rent due for the remaining term of the Lease; and WHEREAS, the Tenant opted to attempt to find a suitable replacement tenant for the space; and WHEREAS, in October, 2005, RDA staff was approached by Timothy Wilcox, owner of a number of successful food and beverage establishments throughout the City, who was interested in assuming the Lease, and WHEREAS, since this time, Mr. Wilcox has been negotiating to buy out the Tenant's interest in the Premises and has submitted a proposal to open an upscale barbecue restaurant in its place, to be called Bar-Be-Que Beach, to be operated by its parent company, BBQ Beach, Inc. (BBQ Beach or Proposed Tenant); and WHEREAS, subsequent to a review of the Proposed Tenant's references and financial statements, the RDA staff has proceeded to negotiate a new Retail Lease for the Premises; and WHEREAS, execution of the new Retail Lease with BBQ Beach, shall also be subject to and conditioned upon the execution of the attached Letter Agreement (Exhibit A) between the RDA and Tenant, requiring the Tenant to execute a Limited Guaranty and Suretyship Agreement (Guaranty), guaranteeing payment of one (1) year's rent plus sales tax, in the amount of $143,808, in the event that Bar-Be-Que Beach defaults on its lease during its first year of operation on the Premises; and WHEREAS, RDA staff recommends execution of the attached Letter Agreement, specifying the aforestated terms and conditions, in settlement of Tenant's Retail Lease Agreement, subject to Tenant's compliance with the terms and conditions set forth in said Letter Agreement, and further recommends that subject to Tenant's compliance with the terms of the Letter Agreement, the Chairman and Secretary execute a new Retail Lease with the Proposed Tenant. 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 hereby approve a settlement, providing for the early termination of the Lease Agreement between the Miami Beach Redevelopment Agency (RDA), as Landlord, and Abkey No 17, Inc., d/b/a Fuddruckers, as Tenant, dated September 8, 1999, for Suites 1 - 3 in the Anchor Shops, located at 1551 Washington Avenue, Miami Beach, Florida; further approving the aforestated settlement subject to and conditioned upon Tenant's execution and satisfaction of the terms and conditions set forth in the attached Letter Agreement, dated February 8, 2006, between the RDA and the Tenant; and authorizing the Chairman and Secretary to execute a new Retail Lease with the replacement tenant, BBQ Beach, Inc., for the above-described retail premises. PASSED and ADOPTED this 8th day of_February, 200 SECRETARY Robert P~archer JMG\CMC\KOB t:~,genda~2006\Feb06\Fudd tuckers Res.doc AIRMAN David Dermer APPROVED~~ FORM&LANGUAGE & FOR EXECUTION Condensed Title: REDEVELORMENT AGENCY MEMORANDUM ITEM SUMMARY A Resolution approving a settlement, providing for the early termination of the Lease Agreement between the RDA as Landlord and Abkey No. 17, Inc., d/b/a Fuddruckers as Tenant, dated September 8, 1999, for suites 1 through 3 and 4 in the Anchor Shops, located at 1551 Washington Avenue, Miami Beach, Florida; approval of the aforestated settlement subject to and conditioned upon Tenant's execution and satisfaction of the terms and conditions set forth in the Letter Agreement, dated February 8, 2006, between the RDA and the Tenant; and further authorizing the Chairman and Secretary to execute a new retail lease agreement with the replacement tenant, BBQ Beach, Inc., for the above described retail premises. Key Intended Outcome Supported: IIncrease resident satisfaction with the level of services and facilities Issue: IShall the RDA authorize execution of the Letter Agreement between the Redevelopment Agency and Abkey No. 17, Inc., as well as authorize execution of a new lease agreement with BBQ Beach, Inc., subject to satisfaction of the terms set forth in the aforestated Letter Agreement? Item Summary/Recommendation: In July, 2005, Fuddruckers informed the RDA that due to its historically poor sales performance, it was not willing to invest the necessary funds to address certain long outstanding code requirements in order to obtain its Certificate of Occupancy and that it anticipated closing its doors at the end of the month. In accordance with the Lease Agreement, the Tenant was advised it had two choices - to procure an acceptable replacement tenant for the remaining term of the Lease Agreement, or remit the balance of rent due for the remaining 5-year term of the Lease. The Tenant opted to attempt finding a replacement tenant for the space. In October, 2005, the RDA was approached by Tim Wilcox, owner of a number of successful food and beverage establishments throughout the City, including Liquor Lounge Cafb in the Anchor Shops, who was interested in leasing the Premises. Since this time, Mr. Wilcox has been negotiating to buy out the Tenant's interest in the Premises and has submitted a proposal to open an upscale barbecue restaurant in its place, to be called Bar-Be-Que Beach. Subsequent to a review of the Company's references and financial statements, the Administration has proceeded to negotiate a new lease agreement for the Premises. Execution of the new proposed lease is subject to and conditioned upon the execution of the attached proposed Letter Agreement between the RDA and Abkey No. 17, Inc. which specifies the terms and conditions by which the RDA shall consent to the termination of the Tenant's lease. The Administration recommends approving the settlement terms and conditions set forth herein, providing for early termination of the Retail Lease Agreement with Fuddruckers and approving the Proposed Retail Lease Agreement with the replacement tenant, BBQ Beach, Inc., Inc., subject to satisfaction of the terms and conditions set forth in the aforementioned Letter Agreement. Advisory Board RecOmmendation: I N/A Financial Information: Source of Amount Account Approved Funds: 1 OBPI Total Financial Impact Summary: City Clerk's Office Legislative Tracking: I Kent Bonde Sign-Offs: DePartment Director Assistant City Manager T:~AGENDA~2006\feb0806\consent\F uddruckers Summary.doc MIAMIBEACH City Manager AGENDA ITEM DATE MIAMIBEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov REDEVELOPMENT AGENCY MEMORANUM TO: Mayor David Dermer and Members of the City Commission FROM: Jorge M. Gonzalez, City Manager DATE: February 8, 2006~ SUBJECT: A RESOLUTION OF THE CHAIRMAN AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY, FLORIDA, APPROVING A SETTLEMENT PROVIDING FOR THE EARLY TERMINATION OF THE RETAIL LEASE BETWEEN THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA), AS LANDLORD, AND ABKEY NO 17, INC., DIBIA FUDDRUCKERS, AS TENANT, DATED SEPTEMBER 8, 1999, FOR SUITES 1 THROUGH 3 AND 4 IN THE ANCHOR SHOPS, LOCATED AT 1551 WASHINGTON AVENUE, MIAMI BEACH, FLORIDA; APPROVAL OF THE AFORESTATED SETTLEMENT SUBJECT TO AND CONDITIONED UPON TENANT'S EXECUTION AND SATISFACTION OF THE TERMS AND CONDITIONS SET FORTH IN THE LETTER AGREEMENT, DATED FEBRUARY 8, 2006, BETWEEN THE RDA AND THE TENANT; FURTHER AUTHORIZING THE CHAIRMAN AND SECRETARY TO EXECUTE A NEW RETAIL LEASE WITH THE REPLACEMENT TENANT, BBQ BEACH, INC., FOR THE ABOVE DESCRIBED RETAIL PREMISES. RECOMMENDATION Adopt the Resolution. ANALYSIS Abkey No. 17, Inc., d/b/a Fuddruckers has been a tenant at the Anchor Shops since September 9, 1999, occupying 6,217 square feet along Washington Avenue, for a term of 10 years at an annual rate of $125,707 ($20.23/sq.ft). On February 13, 2003, the RDA and Fuddruckers entered into a Settlement Agreement, pertaining to payment of past due rent and certain outstanding code requirements that Fuddruckers was required to address in order to obtain a Certificate of Occupancy (CO). Since opening for business in March, 2002, Fuddruckers had been operating under a Temporary Certificate of Occupancy (TCO), which it kept extending through the County's Board of Rules and Appeals, until July 20, 2005, when the RDA and the City's Building Official finally recommended against granting any further extensions. On July 1, 2005, Betty Amos of Fuddruckers met ,with RDA staff to advise that due to its poor performance, Fuddruckers was unwilling to spend the necessary funds to address the outstanding code issues and that it would be closing its doors by the end of the month. In accordance with Section 8.1 of the Lease Agreement, the Tenant was advised that its obligations to the RDA (Landlord) shall remain in full force and effect until an acceptable tenant is identified and approved by the Landlord. As such, it would be the Tenant's obligation to either procure an acceptable sublease for the remaining term of the Lease February 8, 2006 Redevelopment Agency Memorandum Fuddruckers' Early Lease Termination Page 2 of 3 Agreement, (as has been cione in the past with other tenants at the Anchor Shops), or the Tenant could remit the balance of rent due for the remaining 5-year term of the Lease, which at the time of the meeting, was estimated at approximately $719,000. The Tenant opted to attempt finding a suitable sublease for the space. Subsequent discussions between the Tenant and various restaurant chains failed to yield any results, until October, 2005, when Miami Beach Development Corporation (Property Manager) informed the RDA that Tim Wilcox, owner of a number of successful food and beverage establishments throughout the City, including Liquor Lounge Cafb in the Anchor Shops, was interested in assuming the lease. Since this time, Mr. Wilcox has been negotiating to buy out the Tenant's interest in the Premises and has submitted a proposal to open an upscale barbecue restaurant in its place, to be called Bar-Be-Que Beach. Subsequent to a review of the proposed business plan, financial references and other background information submitted by Mr. Wilcox, the Administration has proceeded to negotiate a new lease agreement for the Premises (the Proposed Lease). The Proposed Lease shall be for an initial term of ten years, with one ten-year renewal option, starting at a minimum annual rent of $143,808, ($23/sq.ft.), for years' one through five and escalating to $165,309 ($27/sq.ft.) for years' six through ten. All costs associated with tenant improvements to the premises and other connections and services are the responsibility of the replacement tenant, including but not limited to, addressing all outstanding code issueS existing at the time of lease execution. It should be noted however, that the RDA has agreed to fund an equitable share of the cost associated with screening the kitchen exhaust vent located on top of the west elevator tower, since this issue is a result of a pre-existing design flaw in the building, which placed the exhaust duct inside the elevator tower. It should be noted that this was one of the outstanding code issues that Fuddruckers was to address with the participation of the RDA. The RDA's cost shall not exceed 50% of the cost of the screening project, which based on preliminary drawings has been estimated at $15,000. Additionally, as part of the Proposed Lease, the new tenant will be required to execute an unconditional completion warranty for the retail space improvements. The Rent Commencement date starts on the day the new tenant occupies the premises, with an option to abate rent for the first two months (60 days), to allow for the design, permitting and build-out of the interior improvements. Such abatement shall be prorated over a twelve (12) month period' thereafter, so that the rent abatement shall be fully amortized in equal monthly amounts over such twelve (12) month period. A one-month security deposit and one-month prepaid rent are requirements of the Proposed Lease. Execution of the Proposed Lease is subject to and conditioned upon the execution of the attached proposed Letter Agreement between the P, DA and Fuddruckers, requiring Fuddruckers to execute a Limited Guaranty and Suretyship Agreement (Guaranty), guaranteeing payment of one (1) year's rent plus sales tax, in the amount of $143,808, in the event that Bar-Be-Que Beach defaults on its lease during its first year of operation in the Premises. It should be noted that Fuddruckers actually continued to remit rent from the time it closed in August through the month of November, 2005. However, it has not remitted February 8, 2006 Redevelopment Agency Memorandum Fuddruckers' Early Lease Termination Page 3 of 3 rent since this time and currently owes three months rent and applicable sales tax, in the amount of $33,945 as of February 1, 2006. Fuddruckers has committed to paying all past due rent upon execution of the Settlement Agreement. To be certain, language has been added to the Agreement, subjecting its validity to payment of all past due rent. The Administration recommends approving the settlement terms and conditions set forth in the attached proposed Letter Agreement, providing for early termination of the Retail Lease Agreement with Fuddruckers and approving the Proposed Retail Lease Agreement with the new tenant, BBQ Beach, Inc., subject to satisfaction of the terms and conditions set forth in the aforementioned Letter Agreement. JMG/THKOB T:~GENDA~006\feb0806\consent\Fuddruckers Space.rnem.doc Enclosures: Proposed Letter Agreement - between RDA and Abkey No. 17, Inc. Limited Guaranty and Suretyship Agreement - by Abkey No. 17, Inc. Proposed Lease Term Summary - between RDA and BBQ Beach, Inc.