LTC 79-2002

8/15/2019 LTC 79-2002

1/12

8/15/2019 LTC 79-2002

2/12

CTYOF

MAM

BEACH

1700o n v e n t i o n

Center Drive,

Miami

B e a c h ,

F.

3 1 3 9

htp\\c.

l a m i -

b e a c h .

f1

us

Mam

Beach

R e d e v e l o p m e n t

Agency T e l e p h o n e

305)

67

7193

a c s i m i le (

305)

673

n2

Mar c h

14

0 0 2

RE:Summary

o y a l

P a l m O u t s t a n d i n g Issues

The

urposeoh is m e m o r a n d u m

is

o

utline severa l

o u t s t a n d i n g

i s s u e s

reated

to

theo y a l

Palm

Crowne

Pl a za

project.In

summary

hey

onsist

o

he

foowng

n d

are

more

t h o r o u g h l y

described

b e l o w :

Demolition

a n d

R e c o n s t r u c t i o n

of the RoyaPalm -

e v e l o p e r

is

requesting

ar e d i tto

he

P u r c h a s e

Pice

due

to

xpense

i n c u r r e d

fo r d e m o l i t i o n / r e c o n s t r u c t i o n .

Cty

o n t e n d s

poperty

was

easedas

is

th

no

a r r a n t i e s

or

e p r e s e n t a t i o n s .

P e t r o l e u m Contamination

Claim -

l a i m s

t o t a l in g $146

33

h a v e

been

pad

p u r s u a n t

to

n d e m n i f i c a t i o n

C l a u s e .

A

hirdclaim

for

a$

41 1 was

r e j e c t e d .

D e l a y

C l a i m s

C l a i m s

fo

488

ay

d e l a y

totaling $

836

5 8

have

e e n

s u b m i t t e d

to

the

ty

bu

otyee t t l e d .

D e v e l o p e r

hasoprovided

access

to

o n t r a c t o r

s

aily

r e p o r t s .

Ground

Rent -

Developer

has

failed

to

payd d i t i o n a l Rent s i n c e A u g u s t

2000

nd

isnly

p a y i n g

50%o

Base

Ren,l a i m i n g

U n a v o i d a b l e

Delay.

The

xtent

o

imeo

the

navodabeDelay

hasno

yet

been

d e t e r m i n e d .

C o n s t r u c t i o n

C o m m e n c e m e n t

Date

and

Hotel

Opening

Date -

Dispute

oveh e

Construction


D a t e

being

A u g u s t

1998

vs

ctober

1998

h i c h

a f f e c t s

rent

payments

and

hotel

o p e n i n g

date.

Financial

C o n c e s s i o n s -A

o n c e s s i o n

package

to

e t t l e

the

elay

Cam

wase g o t i a t e d

inu ly

1999

and

e v e l o p e r

reecedCty

s

proposal.

r e p a y m e n t

o

and -

a n d

Purchase

priceis$

10

illion

and

e v e l o p e r

w a n t sa

credtfo

elay

Cam

and

econstruct ion

costs

nd

p r o p o s e sto

u r c h a s eon

a

resent value

basis.

Default

N o t i c e

p u r s u a n tto

he

H o t e l

M a n a g e m e n t

A g r e e m e n t - Hoe

M a n a g e m e n t

C o m p a n y

defauted

D e v e l o p e r

and

no

oticeoefault

b e i n g

cured

has

e e n received

by

Cty,

despte

C i t y '

s

equest

for

same.

Excess

Owner

C o n t r ib u t io n -

Cty

m a i n t a i n s

Developer

must

reimburse

RD A

for

a ny

contribution

in

x c e s s

o $

10

illion,

estimated

a

02

174

Hoe

R e s t a u r a n t -

RDA

m u s t

a p p r o v e

R e s t a u r a n t o p e r a t o r

before

H o t e l

Opening

Date. e v e l o p e r

has

not

ye

ubmitted

s a m e

fo

approval.

A n c h o r

Garage

a s e m e n t

Agreement -

Rae

t r u c t u r e n e g o t i a t e d

8/15/2019 LTC 79-2002

3/12

Royal

Palm

Outstanding

Issues

January

31

2 0 0 2

Page

0f81e m o l i t i o n and


o

the

Roya

Palm

On

October

20

1998,

the

Roya

Pam

was

o f f i c i a l l y d e c l a r e d

structurally

unsound, e s u l t i n g

in

its

v e n t u a l

d e m o l i t i o n a n d

a

epl ica

built

in

its

pace

DP

R o y a l

Palm (

Developer)

m a i n ta i n s

t h a t

it

as

never

a l l o w e d

to

inspect

th e

b u i l d i n g

pio

toxecuting

o

the

D e v e l o p m e n t

A g r e e m e n t .

Throughout

the

F P

process

and

s u b s e q u e n t

negotiations,

the

Developer

and

itsrch i tectura l a n d

e n g i n e e r i n g

team

had

a c c e s s

to

heo y a l

P a lm.

As

DPwas

no

the

p r o p e r t y

owner,

n v a s i v e

t e s t i n g

was

no

e q u e s t e d p r i o r to

closng,

o w e v e r

itsno

inconsistent

wth

t a n d a r d

rea

estate

r a c t i c e s .

Furthermore,

the D e v e l o p e r

executed

the


and

e a s e

A g r e e m e n t s

w h i c h

c l e a r l y r e l i e v e the

D A

o

any

e g a l l i a b i l i t yto

h e

D e v e l o p e r

for

the

condit ion

oheRoyal

Palm

Hoehere

ae

wo

primary

d o c u m e n t s that

governthe

relationshipbetween

the

Miami

B e a c h R e d e v e l o p m e n t

A g e n c y (

the

gency ),and

RDP

R o y a l

Pam

o t e l

Limited

P a r t n e r s h i p the e v e l o p e r ) ,the

e v e l o p e r

o

the

otel. h e s e

are

the

Gound

Lease

and

the

otel D e v e l o p m e n t A g r e e m e n t .

The

g e n c y

owns thea n d u n d e r l y i n g

the

o t e l .

Tit le

to

he

buildings

onthe

l a n d

was

ransferred

toD P

by

Special W a r r a n t y

D e e d

on

May

28

998

e c t i o n

5

1

oheotel D e v e l o p m e n t

A g r e e m e n t

p r o v i d e s ,

inart,

that:

TheOwne

as

no t m a d e

and

o e s

nomake

any

r e p r e s e n t a t i o n s

asto

he

p h y s i c a l

or

s t r u c t u r a l

condition.

a l u e .

adeQuacy

o r f i t n e s s

fo

useo

any

eQuipment

ors y s t e m s

inhe

Exist inQ

Hotels,or

the

presence

on

o

bout th e E x i s t i n g

Hotels

ony

s u b s t a n c e

or

m a t e r i a l

wchis

o

ay

ereafter

be

subject

to

any

E n v i r o n m e n t a l

Laws,

n c l u d i n g ,

w i t h o u t

li m i ta t ion ,

a z a r d o u s

M ateria ls ,

or

any

other

matter

or

thng

ffecting

o

eaed

tohe Existing

Hoes

nd D e v e l o p e r herebY

e x p r e s s l y

acknowledoes

tha

no

uch

r e p r e s e n t a t i o n s

h a v e

been

a d e .

and

eveloper

f u r t h e r

a c k n o w l e d o e s

t h a titas

inspected the

E x i s t i n o

H o t e l s

and

aorees

to

a k e

the

ame

as is.inuc h c o n d i t i o n as

the

a m e

m a y be

in

on

he

date

o

e l i v e r y otheeed

thereto. [

m p h a s i s

a d d e d ]

The

Section

18

2

oh e

Ground

Lease

r o v i d e s ,

in

a r t ,

that:

e n a n t

accepts

the

r e m i s e s

in

x i s t i n o

c o n d i t i o n

and

aef

repar

and

T e n a n t

confirms

ha:xcept

for

the

e p r e s e n t a t i o n

c o n t a i n e d

in

18.

1

nd

ny ohe

representation

e x p r e s s l y

se

forth

in

ths

e a s e ) , (

i)o r e p r e s e n t a t i o n s .

s t a t e m e n t s ,

oa r r a n t i e s .

express

or

i m p l ie d . have

e e n m a d e

by

o

n

b e h a l f

o.

w n e r

wthespectto

he

r e m i s e s

orthe

t r a n s a c t i o n s c o n t e m p l a t e d byhs

ease,

thet a t u s

otitle

thereto (

e x c e p t

as

se

orth

in

x h i b i t

2

1t t a c h e d heeo

and

i n c o r p o r a t e d

by

reference

h e r e i n ) ,

the

p h y s i c a l c o n d i t i o n

thereof (

n c l u d i n g

butno

i m i t e d to

subsurface

c o n d i t io n s ) , . . .. . . [

m p h a s i s

added]

S e c t i o n

18

1nd

Exhibit

2.1

aeot

relevant

tohe

c o n d i t i o n

8/15/2019 LTC 79-2002

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Royal

Palm

Outstanding

Issues

January

31

2 0 0 2

Page

308

a t t e r s ,

i n d i c a t e that

theRD A does

not

h a v e

any

e g a l l i a b i l i t y

to

he

D e v e l o p e r

fo

h e

c o n d i t i o n

o

he

Royal

PamHoe

2

P e t r o l e u m

C o n t a m i n a t i o n

Cam

u r i n g

the

o u r s eox c a v a t i n g the

f o u n d a t i o n s

for

the

Royal P a l m ,

two

aeas

petroleum-

c on t am in a t e d

s o i l

were

uncovered

byl a r k

Construction (

o n t r a c t o r ) . In

accordance

wth

h e

i n d e m n i f i c a t i o n c l a u s e in

ection

35

o

heo t e l

Development A g r e e m e n t

b e t w e e n

the


Agency

and

R D P

Roya

Palm

Hoe,

LPe v e l o p e r ) ,

the

eveloper s u b m i t t e dtwo

e p a r a t e c l a i m s

for

re im bursement

o

he

coss

s s o c i a t e d

with

the

e m e d i a t i o n

o

the

o n t a m i n a t e d fill,

totaling $

7 8 ,

038.

P u r s u a n t toan

n a l y s i so

he

camhe

R D A has

a u t h o r i z e d

the

e i m b u r s e m e n t

of $

146,

3339

to

date.

A

hird

c l a i m

inhe

am ou n t

o $

14,

611

a s

rejected

fo

lack

o

d e q u a t e

j u s t i f i c a t i o n .

3

Deay

Claims

The

D e v e l o p e r

is

amng

construction

d e l a y s

stemming

from

the

s o i l c o n t a m i n a t i o n , com pr i s i n g

42days

and

structural d e f i c i e n c i e s ,

n e c e s s i t a t i n g

the

demolition

a n d

rebu i ld ing

o

the

e v e n - story

Royal

Palm,

toaing

184

d a y s ,

pe

the

e v e l o p e r ' s

ecords.

T h e

D e v e l o p e r

is

also claiming

an

dditional

262

d a y s

in

t r u c t u r a l

d e l a y s

a s

a

esut

oity's

p l a n

a p p r o v a l /

p e r m i t t i n g

p r o c e s s .

The

nly c l a i mtoa ve

a

o l l a r

amount

a s s o c i a t e d

wth

t

s

the

42-day

sol-

c o n t a m i n a t i o n

claim,

or w h i c h

the

D e v e l o p e r

is

claiming $3 6 ,

085.

In

o r r e s p o n d e n c e d a t e d

June

24

1999the

ity

Attoney

denied

any

liability

fo r

the

e l a y

claim.

A s

i n d i c a t e d

ine a r l i e r

r e p o r t sto

h e

RDA

oard,

o u t s i d e

counsel

a n d

c o n s u l t a n t s

have

e e n

retained

toetermne

the

x t e n t (

if

any

of

the

ity/

Agency

s

x p o s u r e /

l i a b i l i t y

wth

r e s p e c t

to

he

Developer'

s

clams.

xtensive d o c u m e n t a t i o n ,

including

b ut not

limited

to

ritical

p a t h s c h e d u l e s ,

contractor

andsub

o n t r a c t o r

daye p o r t s ando n t r a c t u a l

andinsurance d o c u m e n t s were

requested

o

the

e v e l o p e r . W h i le

most

o f

hese

ocuments

were delivered, the

ontractor

has

refused to m a k e avalabeits

ub-contractor

d a i l y

reports,

h i c h

theCtys o n s u l t a n t s

beieve

ill

r e f l e c t

c e r t a i n

c o n c u r r e n t d e l a y s

u n r e l a t e d

to

he

o n t a m i n a t i o n ) ,

w h i c h the

Contractor

has i n c l u d e d

inh e

c l a i m .

A

final

d e t e r m i n a t i o n

as

to

any

e r i t

o

he d e l a y s claimedmayot

be

ossible

until

the

nd

of

the

r o j e c t .

With

r e s p e c t

to

he

Developer'

s

la im

for

thetructural

revisions,

the

u i l d i n g D e p a r t m e n t made

every

effortto

r e v i e w

the

pans

as

xpedit iously as

p o s s i b l e ,

considering

tha

herewee

ve r 40

m e e t i n g s

r e q u i r e d

with

the t r u c t u r a l

I n s p e c t o r

aone

between

p r i l

and

D e c e m b e r ,

1 9 9 9 . P a r t i a l

r e v i s i o n s

to

he

structural

d r a w i n g s

were s u b m i t t e don

l o o r -

byl oo r b a s i s

due

o s i g n i f i c a n t

d e f i c i e n c i e s

in

hee s i g n

othe

post-

e n s i o n

s y s te m .

4round Rent

TheRen

ommencement

was to

occur on

the

a r l i e r o (

1

he H o t e l

Opening

Date

o (

the

ate whch

is

wenty-four (

24

o n t h s

after

the

o n s t r u c t i o n

C o m m e n c e m e n t Date.

Todate,theHotel

h a s

not

opened

a n d

the

twenty-

four (24onths

h a s e l a p s e d . Thee a s e

A g r e e m e n t

h o w e v e r ,

also p r o v i d e s

foh e

Developer

to b e g i n

p a y i n g the

RDA

Base

Rent, in

the

a m o u n t

of $

8/15/2019 LTC 79-2002

5/12

Royal

Palm

Outstanding

Issues

January

31

0 0 2

Page

4

o

8

w e n t y -

ou ( 24

onths

after the

Construct ion


Date.

h e L e a s e

Agreem ent

a l s o

p r o v i d e s fo

th e

D e v e l o p e r

to

nly pay

50%

h e

Base

Rent

a n d A d d i t i o n a l

Ren

in

he

e v e n t

oan

n a v o i d a b l e

D e l a y

for

a

e r i o d

equa

to

h e

peiodothe

U n a v o i d a b l e

Delay .

Ina c c o r d a n c e

wth

his

provision,

andas

ndcated

p r e v i o u s l y ,

the

Developer h a s

c l a i m e d

Unavoidable

D e l a y s

on

accountohe c o n t a m i n a t e d soil

and

t r u c t u r a l m o d i f i c a t i o n s

due

tohe r e p l a c e m e n t

o

he

7-

t o r y

tower,

fora

total

a

oao488

days

as

ollows:

Soil


S t r u c t u r a l (

demo &

r e c o n s t r u c t i o n )

S t r u c t u r a l ( pan r e v i e w )

42

ays 184

days262

a y s

Tota:

8 8

d a y s

On

October

30

2000,

the

e v e l o p e r

began

remtting

onthly

p a y m e n t s o $967, e q u i v a l e n t

to

0 %o

theBase

ent),a s e d

upon

an

ctober

30


D a t e ,

whch

theRD A

hasno

g r e e d

ishe C o n s t r u c t i o n


Date

ase s c r i b e d

below.

H o w e v e r noa y m e n t

o

d d i t i o n a l

Rent

has

been madeto

date,

and

the

e v e l o p e r waso t i c e d on

January

10, 0 0 2

to

emit

such

a y m e n t s by

mnhnd.

The RD A

hasls o not acknowledged

the

extent and/ or

vaidity

o

the

e l a y

c l a i m .

Therefore,

th e

Rent

o m m e n c e m e n t

Date

a n d the

extent

othe

n a v o i d a b l e

delay must still

be

s c e r t a i n e d

and

ageed

oAo t i c e

o

e f a u l t

was

ssued

tohe Developer

fo r failure

to

r em i t

renoru g u s t and S e p t e m b e r ,

2000.

o t w i t h s t a n d i n g theeduction to

ren

forunavoidable

deays

he

ul

m o u n t

o

BaseRennd

A d d i t i o n a l

Rent

is

ue

and

a y a b l e

the

daehch

is

42

o n t h s

after

c o n s t r u c t i o n c o m m e n c e m e n t

which

w o u l dbe

ebruay

002.

5)



Date

and Hotel

O p e n i n g

Dae

P u r s u a n t

to

the D e v e l o p m e n t

A g r e e m e n t ,

the

Developerhasorty-

two (

42) onths

from

the

onstructon

C o m m e n c e m e n t d a t e

to

compete

the

Project.

The

RD A

and

D e v e l o p e r

h a v e

no

yet

greed

to

h e C o n s t r u c t i o n

Co mme n ce me n t

D a t e .

The

R D A

m a i n t a i n s

that

Construction

C o m m e n c e m e n t occurred

on

u g u s t

4

1998

r o u n d b r e a k i n g

Day),

based

p o n th e fact

tha

a

f o u n d a t i o n

permit

was

ssued

to

theontractor

onuly10

1998,and

that

building

d e m o l i t i o n s h o r i n g / bracing, test

piles

and p r o d u c t i o n piles

were

proceeding as

the

e g i n n i n g

o

August,

9 9 8 .

The

eveloper

c o n t e n d s thatC o n s t r u c t i o n C o m m e n c e m e n t o c c u r r e d onOctober

30

998,

sixty

d a y s

after

issuance

o

the

DEP

CC L

p e r m i t .

Based

on

an

ugust 1998 C o n s t r u c t i o n


D a t e

F e b r u a r y

2002

is

he

e a d l i n e

for c o n s t r u c t i o n c o m p l e t i o n .

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Royal

Palm

Outstanding

Issues

January

31

2002

Page

50

86inancial

Concess ions

As

resu

ofthe

u n e x p e c t e d

d e m o l i t i o n

and

replacement

othe

Roya

Pam

he

d e v e l o p e r

c l a i m e d

e c o n o m i c

hardship

d u e

to

he

aleged

i n c r e a s e inonstruction

c o s t s

a s s o c i a t e d

with

the

e c o n s t r u c t i o n

ohe7~oy

tower

as

well

as

the


delays

ssociated

with

the

p r o t r a c t e d

p r e -

d e v e l o p m e n t s c h e d u l e

fo

the

hoe.

n

rder

to

e v e r a g e

additional financing

for

the

project ,

the

e v e l o p e r

appr oac hed

th e

Cty

RDA

r e q u e s t i n g

a

e f e r r a l

o

n n u a l

ground

lease

p a y m e n t s

for

25ears a nd a b a t i n g

pay ment

of

the

Use

e e

for its

share

o

park ing

s p a c e s inh e 16th Street

Garage.

Since the

RDA

s

debt

e r v i c e

o b l i g a t i o n s

preclude

any

c o n c e s s i o n s

on

ayment

o

the

r o u n d lease,

the

A d m i n i s t r a t i o n

informed

the

deveoper

that

the

ony

p t i o n

a v a i l a b l e

fo

o n s i d e r a t i o n was

th e

a b a t e m e n t

othe garage Use

Fee

in

xchange

for

the

RDA

not

p a y i n g

the

e v e l o p e r

the

facility

U s a g e

Fee.

An

agenda

tem

as

r e p a r e d

fo

uy

9 9 9

Cty

o m m i s s i o n

considerat ion

which

the

Developer

requested

be

w i t h d r a w n .

The

D e v e l ope r r e j e c t e dther o p o s a l .7

r e p a y m e n t

o

a n d A r t i c l e

36

u t l i n e s

the

u r c h a s e

o

w n e r '

s

Interest

inhe p r e m i s e s

by

enanta n d

p r o v i d e s

fo

a

Voluntary P u r c h a s e

oaa n d a t o r y

P u r c h a s e

ahe $

10

i l l i o n

a g g r e g a t e

purchase

price ($

5

5

illion

fohe R o y a l

Palm

a n d $4.5i l l i o n

for

theh o r e c r e s t ) .

The

M a n d a t o r y

P u r c h a s e

must

occur

atthe

earlier

oa

Saeo

h e

Hotel

o r

the

x p i r a t i o n

o

25

ears

from

he H o t e l O p e n i n g

Date.

aid

p u r c h a s e

price

of $

10

million

is

s u b j e c t

to

n

annual

8%

eturn

c o m m e n c i n g

on

theotel

OpeningDate.

The

8%

eturn

is

p a r t i a l l y

ofsetby

a

provisionto

credt

the

Tenant

fo

ase,

d d i t i o n a l and

i n c e n t i v e

rent

paid

to

dae

by

the

D e v e l o p e r

a g a i n s t

the

purchase

price. N o t w i t h s t a n d i n g

the

o l u n t a r y

p u r c h a s e

price

is

et $

10

million

and

th e A g r e e m e n t

does

no

provide

fo

ny d i s c o u n t

on

his

purchase

p r i c e

for

early

p a y m e n t . P u r c h a s e

o

the

remises

prior

oHotel

Opening

Dae

w o u l d mean

that

the

Developer

forgo

p a y m e n t

o

the8%eturn

to

the

ty

8

efault

Not i ce p u r s u a n t

to

o t e l

M a n a g e m e n t

A g r e e m e n t

On

D e c e m b e r

7

001

h e

Cty

e c e i v e d

n o t i c e

othe

e c o n d d e f a u l t

under th e

M a n a g e m e n t Agreement

f r o m

Town

P a r k

Hoel

C o r p o r a t i o n .

On

January

10

002,

th e

Cty

a s k e d

the

Developer

toprovidethe

ty

wth

noice

o

its

cure

o

such default.

To d a t e ,

the

D e v e l o p e r

has

no

povided

u c h

noice.

In

Article

16

o

the

g r e e m e n t

o

ease

e t w e e n

M i a m i

Beach


A g e n c y

he

g e n c y ) ,

and

RDP,

datedasf

May28

1998(

theease ),

RDP c o v e n a n t e d

to

ause

the

o t e l

tobe

perated

and

anaged

e x c l u s i v e l y

byhe

Hoe

M anager

in

ccordancewth

he

terms

nd c o n d i t i o n s

o

t h i s

L e a s e ,

i n c l u d i n g , w i t h o u t

limitation,

Article

6n dths

rticle, p u r s u a n t

to

r i t t e n M a n a g e m e n t

8/15/2019 LTC 79-2002

7/12

Royal

Palm

Outstanding

Issues

January

31

2002Page

6 0 '

8nder S e ct i o n

25.

1(

)

othe

Lease,

vent

o

e f a u l f is

defined,

m o n g

otherthngss

a

e f a u l t

in

he

observanceop e r f o r m a n c e ofany term

c o v e n a n to

o n d i t i o n

o

h is

L e a s e

on

e n a n t '

s

artto

eobserved

o

e r f o r m e d (

oher

h a n

theo v e n a n t s for

the

a y m e n toental oras

x p r e s s l y

set f o r t h

below)

and

Tenant

shall

fal

to

emedy

such

D e f a u l t

within

t h i r t y (

30

days

after

notice

by

w n e r

of

such

Default (

h e

D e f a u l t

Not ice ) ,

rif

uch

D e f a u l t

is

o

u c h a

ature

that it

a n n o t

r e a s o n a b l y

be

emedied

w i t h i n

thrty (

30ays (

but

i s

otherwise

s u s c e p t i b l e

to

ure),e n a n t

shall

not (

i

ithin

thirty (

30aysf t e rthe

i v i n g

o

u c h

Default

N o t i c e ,

advise

O w n e r

o

Tenant'

s

n t e n t i o n

to

institute

al

t e p s (

and

from

imetoime;s r e a s o n a b l y

r e q u e s t e d

by

wner,

Tenant

h a l l

advise

Owneroheteps

being

taken) e c e s s a r y

to

remedy

s u c h Defaut (h i c h such s t e p s shallbee a s o n a b l y

d e s i g n e d

to

ffectuate

the c u r e

o

uchDefault

in

a

r o f e s s i o n a l

m a n n e r ) ,

and (ii

h e r e a f t e r

diligently

p r o s e c u t e

to

c o m p l e t i o n

al

such

teps

n e c e s s a r y

to

e m e d y

the

sameThe

g e n c y s h o u l d

treat

any

t e r m i n a t i o nohea n a g e m e n t Agreement a sa

efault

u n d e r

the

ease,

unless

such

t e r m i n a t i o n

is

cured

w i t h i n

the a p p l i c a b l e

tmee r i o d setforth a b o v e . Again,to

d a t e ,

no

n o t i c e

ouchcue

hasbeen

r e c e i v e d

by

the

Cty

9xcess

O w n e r

C o n t r i b u t i o n Article6,Sect ion

6

{),o

the

e v e l o p m e n t

Agreement

p r o v i d e s

fo

the

wner'

soao n t r i b u t i o n

no

o

e x c e e d $10,

000,000,

e x c e p t

as

r o v i d e d

inection63

which outlines

the

w n e r 's

bigation

toa y City

and

Non-City

p e r m i t

f e e s .Article 6o esno

r e f e r e n c e

costs

i n c u r r e d

pursuant

to

the

i n d e m n i f i c a t i o n clause.

To

dae

heRDA

as

pad

12, 5 7 5 ,576

o

h i c h $

12

0 2 , 1 7 4 does

no

nclude

e r m i t

fees

F P

coss

and

indemnity

coss

T h e r e f o r e , the

e v e l o p e r

s h o u l d

reimbursethe

Ownerfo

2

0 2 ,

174

of

a d d i t i o n a l c o n t r i b u t i o n s

not

provided

f o r

intheg f e e m e n t r e p r e s e n t i n g th e

Owner '

s

o n t r i b u t i o n

a b o v e $

10mllion.

d d i t i o n a l l y , $

121,

4 3

has

been

pad

in

emediation

c o s t s .

10

Hotel

R e s t a u r a n t

Pursuant

toA r t i c l e

33the

Lease,

the e s t a u f a n t

in

h e

Shorecrest

H o t e l m u s t

be

p en

to

he

u b l i c

fO

u s i n e s s

within

1 2 0

days

o

th e

Hotel

O p e n i n g D a t e .

I n a s m u c h

as

r t i c l e

33

e q u i r e s

tha

election

o

he

estaufant

and

R e s t a u f a n t Operatof

shall

be

subject

to

approval of

theAgency,

we

ave

asked

h e

Developer

on a n u a r y

10

o

a d v i s e

us

in

riting,

s

to

our

rogress

in

e c u r i n ga

Restaurant

O p e f a t o r .

11)

n c h o r G a r a g e Easement

A g r e e m e n t Rae

Structure

The

a te

s t r u c t u r e

in

fec

ahe

A n c h o r

G a r a g e

waseveloped

in

c c o r d a n c e

with

the

a r a m e t e r s established

in

the

a f a g e E a s e m e n t A g r e e m e n t ,

to

rovide

s u f f i c i e n t

g r o s s revenues

to

cover

o p e r a t i n g

and m a i n t e n a n c e

coss

ebt

service

and

e v e n u e

s h a r i n g

o b l i g a t i o n s

o

the

facility.

C o n s i d e r a t i o n

w a s

a l s o given

to p r o v i d i n g c o m p e t i t i v e

shor t -

term

d a i l y

r a t e s

a n d

weekend

and

e v e n i n g

f lat

8/15/2019 LTC 79-2002

8/12

Royal

Palm

Outstanding

Issues

January

31

2002

P a g e

70'

8

o u r s and $

8.

00

o r up

o24

hours.

In

order

to

rrive

a

he

day

elf-

park

ate,

two

a c t o r s

were

c o n s i d e r e d : t h e p a r k i n g

rates

charged

byselect

hotels

in

he area,ncluding

th e

L o e w s

Hotel,

n d

the rates

n e e d e d

to

be

harged

tothe

o e w s

and

the

r o w n e

P l a z a

fo

use

f

the

spaces

in

thegarage.

Pursuant

tothe

terms

o

he

a s e m e n t

Agreem ents,

the

RDA

annot

charge

L o e w s or

Crowne

Pla la

m o r e

than

50ercent

o

the

s t a b l i s h e d

sef-

park

rate (

per

s p a c e )

fo

se

o

her

paces.

To

hs

ay,

Loews

n d the

A d m i n i s t r a t i o n

have

d i f f e r e n c e s

over

the

n t e r p r e t a t i o n

o

he

ef-

ark

rate

as

d e f i n e d

in

he

A g r e e m e n t .

Since

the

opening

o

the

garage,

the

RDA

h a s

been

c h a r g i n g

L o e w s $

9

0

er

space,o

0

e r c e n t

o

h e

daily

sef-

a r k

rate

o$

18

00.

o e w s

contends

that

h e y s h o u l d

be

p a y i n g

50

e r c e n t

o

the

o u r l y

rate

and

o

necessar i l y

50

e r c e n t

of the

daly

se-

a rk

rate.

Boh

o e w s

and

the

d m i n i s t r a t i o n

a g r e e

h o w e v e r ,

that

due

o

the

l o g i s t i c a l

c o m p l i c a t i o n s

in

t rack ing

usageof

the

paces

on

an

hourly

bas is ,

p a y i n ga

lat

rate

for

the

highest

nu mb er

os p a c e s

used

pe

day

oupled

wth

an

c c e s s

card

u l t i p l e -

part

ticke

system

was

theo s t

viable s o l u t i o n .

R e v e n u e

Sharina

O b l i a a t i o n s

U n d e r

the

e r m s

o

the

a s e m e n t

agreement

with Loews

for

use

o

he

g a r a g e ,

L o e w sis

ntitled

to

h e

u s e

o

6 0

s p a c e s for

which

the RDA

r e c e i v e s

an

up

r o n t

a n n u a l

use

fee of

580

000

n

a d d i t i o n

to

a y i n g

p a r k i n g

c h a r g e s for

their

use

o

p a c e s

a

a

ate

ot

to

xceed

50

ercent

o

the

s t a b l i s h e d

sef-

park

rate

for

each

space

used for vaet

operat ions.

Under

a

e p a r a t e

e a s e m e n t

a g r e e m e n t

between

the

DA

and

RD P

Royal P a l m

Hotel,

Ltd., (

r o w n e

Paza ),

a

i m i l a r formula

w a s

applied.

For

se

o

174

spaces, C r o w n e

P l a z a

wll

pay $

56,

600

n n u a l l yup

ront

as

use

fee,ind d i t i o n

toa r k i n g

charges

for

each

space

u s e d

a

the

a m e rate

as

L o e w s .

T h e

hotels

are

required

to

r o v i d e

24

hour

n o t i c e

to

r e s e r v e

the spaces

for t h e i r

use

or

valet

parking

o

hoe

guests

or

for

v e n t s .

The

69emaining

s p a c e s

p l u s

any

p a c e s

not

reserved

by

he

hoes

ill

be

ava i l ab le

for p u b l i c

park ing . T h e

E a s e m e n t

A g r e e m e n t s

aso

provide

fo r

L o e w s and

C r o w n e

P l a z a

to

haren

the

r o s s

revenue

stream

g e n e r a t e d

by

the

garage

on

he

basis

o

wo-

i e r e d

s y s t e m .In

th e

first

te,

the

hotels

r e c e i v e

a

e r c e n t a g e o

gross

r e v e n u e

up

to

heir

respect ive

annual

u s e

fees,

calculated

as41

7

ercent

of

the

firs $

,

390

0 0

ingross

e v e n u e s

fo

Loews

a n d

13

05

ercent

o

h e

firs $

00,

000

in

gross

e v e n u e s

fo r

Crowne

Plaza.

In

the

econd

tier,

Loews

eceves

28

pecen

o

r o s s

r e v e n u e s

in

x c e s s

o

1

90

0 0

and

Crowne

l a z a

r e c e i v e s

6

46

ercent

o

ross

evenues

ove $

1

2

i l l i o n .

In

e s s e n c e

h e

first-

ier

is

intended

asa

r e d i t

a g a i n s t

the

annua

use

ee.

2)


E a s e m e n t

The

d m i n is t r a t io n

went

to

reat l e n g t h s

to

acilitate

c o n s t r u c t i o n

access

to

he

Developer'

s

te

wo

o p t i o n s

were

pursued

e x t e n s i v e l y ,

i n c l u d i n g

access

via

the

i ty '

s

i g h t -

o-

w a y

a

5h

treet

and

use

o

h e Public

Pedestrian

Easement

A r e a '

a

6th. .

Street,

located

b e t w e e n the

R o y a l

P a l m

and

th e

L o e w s

Hotel p r o p e r t i e s .

S i n c e

initial

n e g o t i a t i o n s

between

L o e w s

a n d

the

o y a l

Pam

ailed

to

r o d u c e

8/15/2019 LTC 79-2002

9/12

Royal

Palm

Outstanding

Issues

January

31

2 0 0 2

Page

0f8

A d m i n is t r a t io n

w a s

d i r e c t e d

by

h e

C o m m i s s i o n

to

seek

a

e n e w a l

o

the

e g o t i a t i o n s between the L o e w s

and

the

o y a l

Palm

tog r e e

on

a

u t u a l l y

a c c e p t a b l e use

of

the

16htreet

a c c e s sroueThe

d m i n i s t r a t i o n c o o r d i n a t e d

a

series

of

meetings

to

enegotiate

th e

c o n d i t i o n s

o

n

g r e e m e n t

with

the

w o

partiesto

ccess

the

RoyaP a l m c o n s t r u c t i o n

steoo n s t r u c t i o n

material

and

q u i p m e n t

deliveries

and

n l o a d i n g

t h r o u g h

the

16th

Sree

Public

e d e s t r i a n

E a s e m e n t

Area

o

x p e d i t e

th e

Hoe

s

c o n s t r u c t i o n s c h e d u l e .

As

a

esult

o

h e

negotiations,

a

icense

Agreement

was

e x e c u t e d

on

ay

1

0 0 0 , al lowing R o y a l

Pam

tot i l i z e

the

asement

Aea

or


related

p u r p o s e s for

a

e r i o d

that

sha e r m i n a t e

o n the

earlierof (

)

thes s u a n c e

o

c e r t i f i c a t e

o

c c u p a n c y forthe R o y a l

Palm

Hotel

or, (

b

a r c h

31

0 0 1 , p l us

sxy

a y s for

completion

o

he

improvements

to the

Easement

Area.

The

i m p r o v e m e n t s

toh e

Easement

Aea

ae

to

onsist

o

e c o r a t i v e i n t e r l o c k i n g

pavers

andscaping,

i r r i g a t i o n

l ight ing,

a n d

other

e c o r a t i v e

features.

In

order

to

minimize

the

mpactto

Loews,ther o p o s e d

A g r e e m e n t

c o n t a i n s

c e r t a i n

mit igat ion

p r o v i s i o n s

including

the

ability

for L o e w s

to

s s e s s l i q u i d a t i n g

d a m a g e s for

the

mount

o

timhat

the

project

e x c e e d s

the

e r m i n a t i o n

dae

ven though

the

p r o j e c t

has

x ce e d e d

the

March

31001,

d e a d l i n e ,

by

e v e n

m on ths

a n d co un t i n g , L o e w s

hasnot

exercised

t h i s

o p t i o n .

It

h o u l d

be

noed,

hat

c c o r d i n g

to

the

Roya

Palm,theg r e e m e n t

allows

t he m

to

a ve

approximately

o n e

hundred

and

wenty (

1 2 0 )

days

ofthe

e v e l o p e rs

a n t i c i p a t e d


8/15/2019 LTC 79-2002

10/12

0~

1 3 / 0 a f

08

6

385-

4 1-

2487

LU

8/15/2019 LTC 79-2002

11/12

I \

t;

i 1 3 /

2ea,

0 S :

56

UKIS

B t L S E R A ,

LC

305

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487

R o y a l

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ort

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Page

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J

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of

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8/15/2019 LTC 79-2002

12/12

Miami

Beach

Redevelopment

Agency

1700o n v e n t i o n

Center

Drive,

Miami

B e a c h ,

FI.

33139htp\\

L m i a m i -

b e a c h .

f1us

Mam

Beach


Agency

T e l e p h o n e (

305)

673

1 9 3

Facs im i le (305

673.7772

March

20

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Chistina

M

C u e r v o ,

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City

Manager

F R O M :

Ken

O

onde, e d e v e l o p m e n t

C o o r d i n a t o r

REoya

Pam-

Summary

o

e f a u l t s ,

P o t e n t i a l

Defaults,

and

D i s p u t e s

D E F A U L T S

U N D E R

L E A S E A G R E E M E N T

1

Failure

to

pay

Baseent (

ony

50%aid

f r o m

Ot

2000

o

Nov

2001)

2

Fa i lure

to

ay

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Rent3enant h a s

f a i l e d

to

rovide

C e r t i f i c a t e s o

Tenant (

pe

Article

27)

stating t h a t

no

h a n g e s

have

been

made

to

its

a r t n e r s h i p

ag reement;

h a t

the

Substantial

C o n t r o l l i n g

Interest

in

Tenant

is

wned

by

African-

m e r i c a n

Persons;

and

u t l i n i n g

the

b l i g a t i o n

o

heTenan

s

artners

tound o p e r a t i n g

deficits

a n d

Tenant

sa r t n e r s ' obligations

to

ach

ohe

E F A U L T

UNDER

E V E L O P M E N T

A G R E E M E N T

4e v e l o p e r

has

failed

to

r o v i d e

a

certi f icate

o

h e

A r c h i t e c t

regarding S u b s t a n t i a l C o m p l e ti o n , lien

w a i v e r s ,

a

o m p l e t e

s e t

o

as

bult

pans

and

a

urvey,

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na

Affidavit,

and

v i d e n c e

thall r e q u i r e d

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as

been

i n s t a l l e d .

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D E F A U L T S

UNDER

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LEASE

A G R E E M E N T

5

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m u s t open

a

e s t a u r a n t

in

the

h o r e c r e s t

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w i t h i n

120

a ys

o

he

Hotel

O p e n i n g

Date.

Tenant

has

no

e s p o n d e d

to

u r

1

10

2 r e q u e s t

for

in format ion

r e g a r d i n g

its p r o g r e s s

in

securing a

R e s t a u r a n t

O p e r a t o r .

6

W

av e

no

e v i d e n c e that

t e n a n t

has

e e n

pa~

gsales

tax

on

e n t .7

roperty

t a x e s

fo0 0 1

in

the

amuns

o

92

59.12l u s

102,

106.

30

wll

e

delinquent

on

April

1,

00 2

and

o

e

d e n c e

o

ayment

h a s

been

mde

8

here

is

novidence

o

i n s u r a n c e

in

u

e c o r d s . O U T S T A N D I N G

D I S P U T E S

D e m o l i t i o n

and


o

h e

Rova

Pam-e v e l o p e r

ise q u e s t i n g

a credit

to

the

u r c h a se

Pice

u e to

e x p e n s e

incurred

fore m o l i t i o n /

reconstruction.

C i t y c o n t e n d s

p r o p e r t y

w a s

l e a s e d

as

is

etroleum


C l a i m -

Claims

totaling $

4 6 ,333

av e

been

pad

pursuant

to

n d e m n i f i c a t i o n

C l a u s e .A

hrd

claim

br $

4,

611as

r e j e c t e d .

Deav

Cam

l a i m s

for

a

88 delay

t o t a l i n g

836,058

have

been

submitted

to

h eCty

bu

ot

yee t t l e d .

D e v e l o p e r

has

no

provided

a c c e s s

to

c o n t r a c t o r '

s

aly

e p o r t s .



Dae

n d

Hotel

O o e n i n g

Dae-

ity

h a s

d e t e r m i n e d

date

o

o n s t r u c t i o n m m e n c e m e nttoe

August

4998 - -

the

ateo

the

r o u n d

Breaking

C e r e m o n y . F i n a n c i a l

C o n c e s s i o n s -

A

o n c e s s i o n

package

toetle

he

Deay

Cam

asnegotiated

in

ul y

1999

and

D e v e l o p e r rejected

C i t y '

sroposal.

r e o a v m e n t

oand -

Land

urchase

price

is

10

llion

and

Developer

wants

a

credit

for

Delay

C l a i m a n d r e c o n s t r u c t i o n

costs and p r o p o s e s

to

purchase

on

a

r e s e n t '

lBue

basis.E x c e s s

Owner

C o n t r i b u t i o n -

City maintains D e v e l o p e r

ms

e i m b u r s e

R D A

foany

o n t r i b u t i o n

in

x c e s so $0i l l i o n , estimated

a $

20 2 ,

174.

n c h o r

G a r a a e

E a s e m e n t A a r e e m e n t -

R a t e

s t r u c t u r e

n e g o t i a t e d

b e t w e e n

theL o e w sand

ity

must

Documents

LTC 79-2002