The Administration recommends that the Mayor and City Commission accept Moonlighter’s revised lease terms, subject to the following modifications:
(1) waiver of reimbursement from Moonlighter to the City for building insurance and operating expenses, contingent upon Moonlighter assuming responsibility for any increase in the City's insurance costs associated with Moonlighter's occupancy;
(2) no free monthly garage access cards (unless the Commission wishes additional funding be identified to cover such costs); and
(3) assumption of responsibility by the City for decommissioning the kitchen exhaust hoods and any hood-related work necessary to enable occupancy.
The Pennsylvania Garage building consists of 572 municipal parking spaces and approximately 7,655 square feet of ground floor retail space (“Retail Space”). In September 2011, the City executed a new lease agreement for the Retail Space with tenant Penn 17, LLC for a period of ten (10) years. When the tenant failed to make the required rent payments under the lease, the City terminated the lease in March 2015 and the tenant vacated the space in July 2015.
Since that time, the City has utilized the vacant space for various purposes such as EnerGov training, temporary offices for Code Compliance and Housing & Community Services and as a temporary location for the Miami Beach Chamber of Commerce Visitor’s Center.
In March 2017, the City engaged the Koniver Stern Group to market the Retail Space for lease. In June 2018, the City opted to change brokers and engaged CBRE, Inc. to market the space for lease. Due to a number of factors, including the Convention Center renovation, the extended closure of Convention Center Drive and the temporary closure of 17th Street, the City has received very little interest in the space and no serious leasing prospects for consideration. For example, in January 2018, CBRE received a proposal from a local Latin restaurant, Ola, located in Collins Park at 2216 Park Avenue. In part, the proposal included a City contribution of $100,000 towards interior improvements, and base rent increasing from $5.18 PSF in years 1 and 2, $5.83 PSF in year 3 and $7.77 PSF in year 4. Thereafter, assuming completion of the Convention Center hotel, the rent would be based on a percentage of revenue (to be determined).
Due to the lack of viable lease prospects at this time, and the need to relocate City departments from the 555 17th Street building in preparation for the pending construction of the Convention Center hotel, the Administration has considered the Retail Space as potential location for City offices. The Administration recognizes that this is not the best use of the space once the new Convention Center hotel is complete as this corridor will serve as a vital connector between the Miami Beach Convention Center, the new Convention Center hotel, and Lincoln Road. Additionally, Miami Dade College and Florida International University have expressed an interest in partnering with the City to utilize the space for a culinary program.
On December 21, 2018, Moonlighter Fablab, Inc. d/b/a Moonlighter Makerspace (Moonlighter) submitted a Letter of Intent seeking to occupy the Retail Space. An amended version, with revised public benefit offerings, is attached hereto as Attachment A (Amended Letter of Intent). As contained in the Overview on Page 2:
Moonlighter is a social venture that brings a S.T.E.A.M. (Science, Technology, Engineering, Arts & Math) education center, co-working space, and digital fabrication lab together in the same space. This encourages creative collaboration and innovation to occur organically - where members are constantly learning, making, and sharing ideas. By empowering the community with the technical skills they need and giving them affordable access to advanced manufacturing technologies, we prepare citizens for exponential and changing economies, and we close the digital divide by leveling the playing field and giving everyone an opportunity to harness the means of shaping their futures and the environments where they live, work and play.
Moonlighter recently obtained 501(c)3 nonprofit status registered with the State of Florida. Moonlighter has provided news articles regarding its work within the community, attached hereto as Attachments B, C and D.
Finance and Citywide Projects Committee
On January 25, 2019, the Finance and Citywide Projects Committee (FCWPC) was receptive to activating the unused Retail Space with the tech workspace collaborative, which previously operated in Wynwood. The FCWPC recommended in favor of approving a new lease for 6,720 SF, with an initial lease term of 3 years, in anticipation that the commercial leasing environment could improve upon completion of the Convention Center Hotel. Further, the FCWPC asked for an enhanced offering of public benefits, specifically regarding Miami Beach students.
Chamber of Commerce Visitor Center
The Miami Beach Chamber of Commerce (MBCC) currently utilizes 935 SF within the Retail Space to house the Miami Beach Visitor's Center. Subsequent to the January 25, 2019 FCWPC meeting, Staff and Moonlighter met with Fire and Building to discuss Moonlighter’s occupancy of the Retail Space. Since Moonlighter’s occupancy will likely require a change of use (i.e., Light Industrial) for their portion of the Retail Space, in order for them to occupy the Retail Space with the Visitor’s Center, a new, fire-rated, demising wall must be constructed. Additionally, as the restrooms currently used by the Visitor’s Center are located in the proposed Moonlighter space, a separate restroom must be provided for the Visitor’s Center. This would require that a new restroom be built within the Visitor’s Center space, or that the Visitor’s Center utilize the restroom which is located outside the space, adjacent to the parking attendant’s office.
Subsequent to the January 25, 2019 FCWPC meeting, Moonlighter requested use of the entire Retail Space, including the area currently occupied by the Visitor’s Center, in order to offer all the services contemplated in their proposal. To accommodate this request and an expeditious occupancy for Moonlighter, the Visitor Center would need to be immediately relocated elsewhere until its permanent home is completed in the Convention Center hotel in approximately three years. At this time, due to a general demand for office space for City departments, Staff has been unable to identify alternative locations for the Visitor's Center.
City Commission Resolution No. 2019-30761
The proposed lease was discussed at the March 13, 2019 meeting of the City Commission, where the City Commission accepted the recommendation of the FCWPC and approved the draft lease, as attached in substantial form to the City Commission Memorandum for the March 13th item. Further, the City Commission accepted the Administration’s recommendation to construct a demising wall separating the Visitor’s Center space from the proposed Moonlighter space. The Visitor’s Center would be allowed to utilize the parking garage restroom adjacent to the parking attendant’s office and both tenants would be able to occupy the Retail Space going forward.
The Commission Memorandum’s summary of lease terms noted that Moonlighter would be responsible for its pro rata share of building insurance, operating expenses, and real estate taxes (if assessed). The draft lease, an Attachment to the March 13 Memorandum, estimated the amounts of these pro rata costs as $13,440.00 annually (or $1,120.00 per month) for Operating Expenses and $9,721.80 annually ($810.15 per month) for Insurance. The draft lease also provided that Moonlighter would be allowed to purchase eight (8) monthly vehicle access passes for the parking garage via the Parking Department. Finally, the draft lease held that Moonlighter would accept the premises “as-is” and the existing kitchen exhaust hoods and duct work from the prior restaurant use would be required to remain in place. Thus, Moonlighter would be responsible for whatever work is necessary to render the kitchen ventilation system and improvements compatible with the tenant’s new use and in order to receive a TCO.
Moonlighter’s Revised Requests
Following the March 13 City Commission meeting, Moonlighter requested that the lease contain economic terms that differed from those contained in the draft lease reviewed and approved in March by the City Commission.
In material part, the requested modifications are the following:
- Additional Rent. Moonlighter has requested waiver of any required reimbursement for its pro rata share of City costs for operating expenses and insurance (together, estimated at approximately $23,161.80 annually).
- Subsidized Parking. In lieu of the City allowing Moonlighter to purchase up to eight (8) access cards from the Parking Department at the monthly rate of $100 per card, Moonlighter requests that the City provide four (4) access cards at no charge, and if needed, Moonlighter would pay the $100 rate for the additional four access cards.
- Landlord Improvements. In addition to the demising wall which the City agreed to construct at an estimated cost of approximately $12,000, Moonlighter requests that the City be responsible for any work necessary to "decommission" the kitchen exhaust hoods to allow Moonlighter to occupy the Premises.