2003-25331 Reso
RESOLUTION NO. 2003-25331
A RESOLUTION OF THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA,
AUTHORIZING THE EXTENSION OF THE EXISTING
MANAGEMENT SERVICES AGREEMENT FOR THE MIAMI
BEACH CONVENTION CENTER AND THE JACKIE
GLEASON THEATER OF THE PERFORMING ARTS
BETWEEN THE CITY AND SMG, FOR A PERIOD NOT TO
EXCEED THIRTY (30) DAYS, PENDING SMG COUNSEL'S
REVIEW OF THE NEW NEGOTIATED MANAGEMENT
AGREEMENT, AND FINAL NEGOTIATION ON SMG'S
PROPOSED CAPIT ALlSCHOLARSHIP CONTRIBUTION TO
THE CITY.
WHEREAS, on September 7, 1990, the City issued a Request for
Proposals (RFP) for the management of the Miami Beach Convention Center
(MBCC) and the Jackie Gleason Theater of the Performing Arts (Gleason); and
the RFP was awarded to Spectacor Management Group (SMG) as the top-ranked
proposer; and
WHEREAS, on December 19, 1990, the City entered into a Management
Services Agreement with SMG for the management of the MBCC and the
Gleason; and
WHEREAS, the Agreement was for an initial term of three (3) years,
commencing on January 1, 1990, and ending December 31, 1993; on June 30,
1993, the City exercised its option to extend the Agreement for two successive
one-year terms, covering the period of January 1, 1994, through December 31,
1995; and
WHEREAS, on April 19, 1995, the City Commission approved by 5/7ths
vote, the waiver of formal bidding procedures and authorized the execution of a
new Management Agreement with SMG, for the period of October 1, 1995,
through September 30, 1998; and
WHEREAS, on December 5, 1997, the City authorized RFP No. 5-97/02,
seeking proposals from qualified firms for the management and operation of
MBCC and/or the Gleason; and
WHEREAS, on April 1, 1998, the City Commission approved Resolution
No. 98-22706, authorizing the Administration to enter into negotiations for a new
Management Agreement with SMG, as the top ranked proposer; and
WHEREAS, on July 15, 1998, the Mayor and City Commission adopted
Resolution No. 98-22850, authorizing execution of an Agreement with SMG for
three (3) years with two (2) one year renewals; and on September 5, 2001, the
Mayor and City Commission adopted Resolution No. 2001-24573, approving the
two (2) one year extensions, which will expire on September 30, 2003; and
WHEREAS, since the Management Agreement with SMG does not provide
for any further renewal options, on July 31, 2002, an item was referred to the
Finance and Citywide Projects Committee to discuss the future management of
the MBCC and the Gleason and, on October 25, 2002, the Committee met and
recommended that the Administration issue an RFP seeking qualified firms for the
management and operation of MBCC and the Gleason; and
WHEREAS, on January 8, 2003, the Mayor and City Commission adopted
Resolution No. 2003-25107, which authorized the issuance of an RFP for the
management and operation of (1) the MBCC and the Gleason; or (2) the Gleason
only; with an option to manage and market other City Cultural Facilities (to include,
but not limited to, the Byron-Carlyle Theater, the Rotunda, the Acorn Theater, the
bandshell and/or the Colony Theater); and .
WHEREAS, RFP No. 33-02/03 was issued on February 24, 2003, and on
March 28, 2003, the City received two (2) proposals: 1) Waterford Hotel Group,
Inc.; and 2) SMG; the Administration, in consultation with the City Attorney's
Office, determined that Waterford's proposal was non-responsive; and
WHEREAS, on July 2, 2003, the Mayor and City Commission adopted
Resolution No. 2003-25260, approving the recommendation of the City Manager
and approving the selection of SMG, as the successful proposer pursuant to the
RFP, and further authorizing the Administration to enter into negotiations with
SMG, subject to submission of a five year operational, marketing and budgetary
plan; and
WHEREAS, pending. execution of the new Management Agreement, it is
necessary to extend the prior Agreement, for a period not to exceed thirty (30)
days, pending SMG counsel's review of the new Agreement and final negotiation
on SMG's proposed capital/scholarship contribution to the City.
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 hereby approve and authorize a thirty (30) day extension to
the existing Management and Operation Agreement with SMG, for MBCC and the
Gleason, to allow SMG's counsel to finalize its rev<<3W 0 the new Agreement, and
finalize negotiations relative to SMG's capital 06nthbut on and scholarship fund
contribution. I V /
PASSED AND ADOPTED this 10th day oflptem 003.
ID
ERMER, MAYOR
APPROVED AS TO
FORM & LANGUAGE
& FO ECUTION
5'&-
Date
A~bt f U~
ROBERT PARCHER, CITY CLERK
cn"Y OF'MIAMI'BEACH
COMMISSION ITEM SUMMARY
m
Condensed Title:
A Resolution authorizing the extension of the existing Management Services Agreement for the Miami
Beach Convention Center and the Jackie Gleason Theater of the Performing Arts between the City of
Miami Beach and SMG, for a period not to exceed 30 days, pending SMG counsel's review of the
negotiated Agreement and final negotiation on SMG's proposed capital/scholarship contribution to the City.
Issue:
Shall the City adopt the Resolution extending the existing Management Agreement between the City of
Miami Beach and SMG for a period not to exceed 30 days, pending SMG counsel's review of the
negotiated Agreement and final negotiation on SMG's proposed capital/scholarship contribution to the City?
Item Summary/Recommendation:
The Mayor and the City Commission should approve the resolution authorizing the extension of the existing
Management Services Agreement for the Miami Beach Convention Center and the Jackie Gleason Theater
of the Performing Arts between the City of Miami Beach and SMG for a period not to exceed 30 days,
pending SMG counsel's review of the draft Agreement and final negotiation on SMG's proposed
capital/scholarship contribution to the City.
Adviso Board Recommendation:
Finance and CityWide Proiects Committee - October 25, 2002 - recommended the Administration issue a
RFP seeking qualified firms for the management and operation of the MBCC and TapA.
Convention Center Advisory Board - August 27, 2002 and November 19, 2002 - adopted motions at both
meetings recommending the City negotiate a no bid contract to the current operators due to the lack of
qualified competitive operators worldwide and SMG's proven track record, their professional management
and operational expertise.
Convention Center Advisory Board - September 2, 2003 - reviewed the terms of the negotiated agreement
as set forth in the attached draft Agreement, with particular emphasis on the incentive fee calculation and
the sco e of services, and ado ted a motion to recommend a roval to the Ci Commission.
Financial Information:
Source of Amount Account Approved
Funds: 1
D 2
3
4
Finance Dept. Total
Ci Clerk's Office Le islative Trackin
Christina M. Cuervo
Si n-Ofts:
Department Director
Assistant City Manager
City Manager
L
AGENDA ITEM R.1~
DATE 9 -fOri),
T:\AGENDA\2003\sep1 003\regularlConvCtr-Gleason. SUM. doc
"
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
www.cLmiami-beach.fl.us
COMMISSION MEMORANDUM
From:
Mayor David Dermer and Date: September 10, 2003
Members of the City Commission
Jorge M. Gonzalez a'l A ~
City Manager I/'" - 0
A RESOLUTION F THE MAYOR AND THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE EXTENSION OF
THE EXISTING MANAGEMENT SERVICES AGREEMENT FOR THE
MIAMI BEACH CONVENTION CENTER AND THE JACKIE GLEASON
THEATER OF THE PERFORMING ARTS BETWEEN THE CITY AND
SMG, FOR A PERIOD NOT TO EXCEED 30 DAYS, PENDING SMG
COUNSEL'S REVIEW OF THE NEW NEGOTIATED MANAGEMENT
AGREEMENT, AND FINAL NEGOTIATION ON SMG'S PROPOSED
CAPITAL/SCHOLARSHIP CONTRIBUTION TO THE CITY.
To:
Subject:
ADMINISTRATION RECOMMENDATION
Approve the resolution.
ANAL YSIS
On September 7, 1990 the City of Miami Beach issued a Request for Proposals (RFP) for
the management of the Miami Beach Convention Center (MBCC) and the Jackie Gleason
Theater of the Performing Arts (Gleason). The bid was awarded to Spectacor
Management Group (SMG).
On December 19, 1990, the City of Miami Beach entered into a Management Services
Agreement with SMG for the management of the MBCC and the TOPA. The Agreement
was for an initial term of three-years, commencing on January 1, 1990, and ending
December 31, 1993. On June 30, 1993, the City exercised its option to extend the
Agreement for two successive one-year terms covering the period of January 1, 1994,
through December 31, 1995. On April 19, 1995, the City Commission approved the waiver
of formal bidding procedures for the Management Contract, thus extending the
Management Services Agreement with SMG, and approving a new Agreement for the
period of October 1, 1995, through September 30, 1998.
On December 5, 1997, the City of Miami Beach authorized RFP No. 5-97/02, seeking
proposals from qualified firms for the management and operation of MBCC and/or TapA.
On April 1, 1998, the City Commission authorized a Resolution for the Administration to
enter into negotiations for a Management Services Agreement with the recommended firm
of SMG pursuant to the recommendation of the City Manager and the Evaluation
Committee. On July 15, 1998, the Mayor and City Commission adopted Resolution 98-
22850 authorizing execution of an Agreement with SMG for three (3) years with two (2) one
year renewals. On September 5, 2001, the Mayor and City Commission adopted
September 10, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 20f6
Resolution No. 2001-24573 approving the two (2) one year extensions which will expire on
September 30,2003.
Since the Agreement does not provide for any further renewal options, on July 31,2002,
an item was referred to the Finance and Citywide Projects Committee to discuss the future
management of the MBCC and TOPA. On October 25,2002, the Committee met and
recommended the Administration issue a RFP seeking qualified firms forthe management
and operation of the MBCC and TOPA.
On August 27, 2002 and November 19, 2002, the Convention Center Advisory Board
discussed the future management and operation of the MBCC and TOPA and adopted
motions at both meetings recommending the City negotiate a no bid contract to the current
operators due to the lack of qualified competitive operators worldwide and SMG's proven
track record, their professional management and operational expertise. .
On January 8,2003, the Mayor and City Commission adopted Resolution No. 2003-25107,
which authorized the issuance of a RFP for the management and operation of (1) the
MBCC and the Gleason, or (2) the Gleason only, with an option to manage and market
other City Cultural Facilities to include but not limited to: the Byron-Carlyle Theater, the
Rotunda, the Acorn Theater, the bandshell and/or the Colony Theater. Each proposal was
required to submit fee proposals for the optional City facilities.
RFP No. 33-02/03 was issued on February 24, 2003 with an opening date of March 21 ,
2003, which was subsequently changed to March 28, 2003 as a result of questions and
request for additional information from interested proposers. A pre-proposal conference to
provide information to firms considering submitting a response was held on March 7, 2003.
On March 28, 2003, the City received two (2) proposals: 1) Waterford Hotel Group, Inc.;
and 2) SMG. The Administration in consultation with the City Attorney's Office, determined
that Waterford's proposal was deemed non-responsive.
On July 2, 2003, the Mayor and City Commission adopted Resolution No, 2003-25260,
approving the recommendation of the City Manager and approving the selection of SMG,
as the successful proposer pursuant to request for proposals (RFP) No, 33-02/03, and
further authorizing the Administration to enter into negotiations with SMG, subject to
submission of a five year operational, marketing and budgetary plan, for the management
and operation of the MBCC, the Gleason and the optional City facilities.
On September 2, 2003, the Convention Center Advisory Board reviewed the terms of the
negotiated agreement as outlined below and set forth in the attached draft Agreement, with
particular emphasis on the incentive fee calculation and the scope of services, and
adopted a motion to recommend approval to the City Commission.
Contract Terms:
The parties have reached agreement on the majority of the issues, which are outlined
below. However, SMG's counsel has not finalized their review of the draft Agreement and
a final point of negotiation concerns the capital contribution and scholarship fund. SMG's
'.
September 10, 2003
Commission Memorandum
MBCC and TOPA Management and Operation
Page 3 0(6
proposal delineated the following:
. a $400,000 capital contribution to be amortized on a non-cash basis over 15
years. Should SMG be terminated prior to the end of the amortization period,
the succeeding management entity would be responsible for repaying SMG the
unamortized portion of its contribution. Additionally, if SMG is selected to
operate the additional City facilities, SMG proposed to increase said
contribution by an additional $100,000.
The City's Bond Counsel has advised that any amortization of SMG's proposed capital
contribution in excess of the term of the Agreement would be "perceived to be a restraint
as to the City's ability to cancel the contract" from a tax law perspective, as it applies to
Management Contracts involving use of tax exempt bond-financed facilities, such as the
Miami Beach Convention Center.
As such, and limited to a five (5) year amortization concurrent with the Agreement term,
SMG has revised its capital contribution proposal to $250,000 and an additional $62,500, if
the optional facilities are elected. The City has requested an additional contribution
towards the Scholarship Fund and this amount has yet to be determined, if any. SMG
purports that the capital contribution outlined above is intended for the City's use as it
deems appropriate, which may include the continuation of the scholarship fund. As a point
of reference, during the renewal term of SMG's current contract, an annual capital
contribution of $33,000 and an annual scholarship contribution of $15,000 applied. Over a
five (5) year period, these respective amounts would total $165,000 and $75,000 for
comparative purposes.
Additionally, SMG's counsel has not finalized their review of the draft Management
Services Agreement as attached hereto.
It is recommended that until such time as the aforestated issue is finalized, that the Mayor
and City Commission extend the term of the existing Agreement for 30 days to October 31,
2003, pending a final resolution of the capital/scholarship contribution. It is anticipated that
the final agreement will be presented at the next scheduled City Commission meeting on
October 15, 2003.
In anticipation of the October 15, 2003 meeting, the following are the relevant contract
terms that have been developed:
1. Term: A term of three (3) years with an option for two (2) additional one (1) year
periods at the City's discretion, i.e. October 1, 2003 - September 30,2006 with two
one year extensions to September 30, 2007 and September 30,2008 respectively.
"
September 10, 2003
Commission Memorandum
MBCC and TaPA Management and Operation
Page 4 of6
2. ManaQement and Operations
The selected proposer will be responsible for the complete management and
operation of the Miami Beach Convention Center and the Jackie Gleason Theater of
Performing Arts. The selected proposer shall furnish all management, supervision,
labor, and services consistent with generally accepted operations of a first-class
Convention Center and/or Theater, and shall be responsible for the maintenance of
the buildings and equipment and marketing of the facilities management of various
product and service providers; coordination of facilities utilization and scheduling.
The City has established certain goals and objectives to guide the management and
operation of the City facilities as set forth in the RFP and included by reference in
the Agreement. In addition, the City has established specific standards of
operation, (Exhibit "C"), which constitute a framework for the management of the
Facilities by a private management firm.
3. Optional Facilities:
The Contract further sets forth that the City, at its sole discretion and option, to elect
to negotiate with the successful operator to manage and/or market other City
cultural facilities such as the Byron-Carlyle Theater, the Acorn Theater, the
Rotunda, the bandshell and/or the Colony Theater, during the term of their contract,
at an additional increase to the Management Fee of $50,000/year.
4, Base Manaqement Fee
$295,000 annually, increasing by CPI annually, representing a 6.7% increase over
the current Management Fee of $275,836.
5. Incentive Fee
100% of Management Fee based upon the following criteria:
(i) Maintenance of Facility and Capital Equipment - twenty (20) percentage
credits.
(ii) Financial Performance - thirty (30) percentage credits.
Attainment of Net Operating Loss/Profit
reflected in Approved Budget
10 points
Improvement of 5% over Net Operating
Loss/Profit reflected in Approved Budget
20 points
Improvement of 10% over Net Operating
Loss/Profit reflected in Approved Budget
30 points
(iii) Customer Satisfaction - twenty (20) percentage credits.
Customer surveys - SMG shall retain, at its sole cost, an independent
'.
September 10, 2003
Commission Memorandum
MBCC and TaPA Management and Operation
Page 50f6
research firm, which shall be approved by the City but which approval shall
not be unreasonably withheld, to develop a customer satisfaction research
program from which incentive program will be administered.
Included in the City's evaluation pursuant to this subsection (iii) will be
considered of SMG's supervision and monitoring of the food and beverage
operations in the Facility, attention to quality controls, levels of service and
performance standards.
(iv) Bookinq Events at the Facilitv. The City shall award SMG up to twenty (20)
percentage credits for booking events at the Facility based on the following
table:
Convention Center - up to 10 points
65 actual events held during a Fiscal Year
or 48% Occupancy Rate
2.5 points
70 actual events held during a Fiscal Year
or 52% Occupancy Rate
5 points
75 actual events held during a Fiscal Year
or 56% Occupancy Rate
7.5 points
80 actual events held during a Fiscal Year
or 60% Occupancy Rate
10 points
Theater - up to 10 points
180 use days held during a Fiscal Year
3 points
195 use days held during a Fiscal Year
6 points
210 use days held during a Fiscal Year
10 points
(v) Discretionary. The City shall award SMG up to ten (10) percentage credits
as determined by the City in its sole discretion. The City may take into
account, but not be mandated by, the following: extraordinary quantifiable
and measurable creative initiatives that directly result in SMG securing new
City-wide business for the City of Miami Beach during the off season period;
and/or demonstration and integration of new strategic SMG technically
advanced corporate resources to the benefit of the tourism and/or cultural
community of Miami Beach; and/or serves to development of new or
enhanced revenue streams for Facility use and services, as otherwise
determined by City.
6. Capital Contribution
'. .
September 10, 2003
Commission Memorandum
MBCC and TaPA Management and Operation
Page 6of6
SMG will contribute $250,000 to the City to be utilized at the City's sole discretion
and will be amortized on a non-cash basis by SMG over the 5 year term of the
Agreement. If City elects for SMG to manage the optional facilities, SMG will
contribute an additional $62,500 or a pro-rated portion if such election takes place
after the first year.
7. Scholarship
SMG shall contribute $ , annually during the Term of the Agreement, and
any Renewal Term thereof, towards the establishment of a scholarship fund for
qualifying in-need Miami Beach residents pursuing a career in Facility Management
and/or the Hospitality and Tourism Industry. Said fund will be administered by the
City and applicants will be reviewed and recommended by SMG.
8. Five Year Plan
As directed by the Mayor and City Commission and as set forth in Section 2.3(r)(ii),
5.3(e) and 2.3(1) of the Agreement (see attached), SMG has agreed to submit a
strategic five (5) year plan that addresses the Facility capital needs, operating
budget and marketing and promotional strategy, respectively.
As part of this five (5) Year Plan, SMG will collaborate with City on the development
of a comprehensive marketing plan inclusive of vision and mission, goals,
objectives, tactical strategies and action plans that demonstrate the highest degree
of due diligence and research analysis to position the first class destination and its
competitive advantage as destination of choice for conventions, trade shows,
corporate meetings, consumer shows, events and other key customer targets
identified in the plan. Fulfillment of the strategic marketing plan will further SMG's
commitment to maximize sales and marketing outreach areas for the Facility. As
set forth in the RFP, this 5 year plan will also position the Facility in anticipation of
the completion and opening of the new Performing Arts Center in Downtown Miami.
Pursuant to the City's direction, SMG will execute initiatives as submitted in its
proposal, dated March 26, 2003, submitted in response to RFP # 33-02/03.
CONCLUSION:
The Mayor and the City Commission should approve the resolution authorizing the
extension of the existing Management Services Agreement for the Miami Beach
Convention Center and the Jackie Gleason Theater of the Performing Arts between the
City of Miami Beach and SMG for a period not to exceed 30 days, pending SMG counsel's
review of the draft Agreement and final negotiation on SMG's proposed capital/scholarship
contribution to the City.
JMG/CMC/rar
T;\AGENDA \2003\sep 1 003\regularlConvCtr.Gleason .MEM.doc
SECTION 2.3 AND 5.3 of AGREEMENT
2.3 Specific Services.
Without limiting the generality of the foregoing, SMG shall have sole right
and authority to:
(I) engage in such advertising, solicitation, and promotional activities, as
SMG deems necessary to market the Facility for conventions, trade shows
and public entertainment shows. SMG shall not actively engage in the
selling of advertising inventory and product rights for the Facility without
the prior written approval of the City Manager or his designee. SMG shall
work with the Greater Miami Visitor and Convention Bureau and/or other
appropriate facility providers as determined by the City Manager or his
designee, to market the Facility and engage in all future activities
necessary to develop and maintain current and relevant strategic
marketing plans. In addition to the foregoing, SMG shall, from time to
time, revise the marketing plan specifically for the Facility as SMG
determines is necessary or appropriate to maintain the currency of such
plan, and SMG shall solicit comments from the City and the appropriate
various boards and committees outlined in Section 2.3(n) below. SMG
also shall submit to the City not later than September 30, 2003 (i) a
strategic five (5) year plan for the marketing and promotion of the
Convention Center, addressing those items as more particularly set forth
on Exhibit "C" attached hereto, and (ii) a strategic five (5) year plan for the
marketing and promotion of the Theater, addressing those items as more
particularly described on Exhibit "D" attached hereto; and implement the
recommendations and findings contained therein.
In connection with its activities under the terms of this Agreement, SMG
will be permitted to use the logo and brand identity of the City of Miami
Beach, as approved by the City Manager or his designee.
(r) maintain the Facility in the most efficient manner consistent with other
similar first class facilities and immediately inform the City of any condition
of which SMG becomes aware which SMG believes impairs the structural
soundness or sound operating condition of the Facility or otherwise
adversely affects the ability of SMG to perform under this Agreement. It is
understood that the City will make its own determination as to the
structural soundness of the Facility or any defect that might be noted by
SMG and as to the necessity for repair. The City will, subject to
appropriation, make available funds necessary to correct such condition
within such time as is required under the circumstances and as the City
deems any repair or correction necessary.
(i) SMG shall have the right to act with consent of the
City in situations which SMG determines to be an emergency with respect to the
safety, welfare and protection of the general public, including spending or
'.
.
. ,
committing funds held in the Facility accounts described in Section 5.6 below
even if such expenses are not budgeted, provided, however, SMG shall have no
obligation under any circumstance to spend or commit funds other than funds
then available in such Facility accounts for any such purpose. Immediately
following such action, SMG shall inform the City of the situation and the action
taken and the City shall pay SMG, for deposit into such Facility accounts, the
amount of funds, if any, spent or committed by SMG pursuant to this
subparagraph (i) in excess of budgeted amounts.
(ii) It is hereby acknowledged by SMG and the City that
SMG has heretofore provided to the City a five (5) year long range Capital
Equipment and Capital Improvement Project Plan ("Capital Projects Plan") for the
Facility for the Fiscal Year period commencing Fiscal Year 2003-04 and ending
Fiscal Year 2007-08. SMG shall assist the City in the planning, oversight, and
administration of such Capital Projects Plan.
(iii) In accordance with the "Analysis of the Potential
Expansion of Convention Facilities in Greater Miami and the Beaches" study
dated November 5, 2001, SMG will assist with design and operational consulting
in connection with any proposed Convention Center Expansion Project.
5.3 Annual Budqet; Cash Flow Budqet.
(e) On or prior to August 31, 2003, SMG will submit to the City
Manager or the Mayor and the City Commission a five (5) year financial proforma
setting forth a projected annual operating budget for the next five (5) full Fiscal
Years. For sake of clarity, the parties hereto hereby acknowledge and agree that
the foregoing five (5) year budget projection shall not be used in the calculation
of SMG's annual incentive fees (Financial Performance category) under Section
4.2 (a)(ii).
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