Item Coversheet

Redevelopment Agency - RDA  1.




COMMISSION MEMORANDUM

TO:Honorable Mayor and Members of the City Commission 
FROM:Jimmy L. Morales, City Manager 
DATE:May  8, 2019
 

10:00 a.m.

SUBJECT:

A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA), AMENDING RESOLUTION NO. 640-2019, WHICH APPROVED A LEASE BETWEEN THE RDA (LANDLORD) AND MOONLIGHTER FABLAB, INC. (TENANT) FOR APPROXIMATELY 6,720 SQUARE FEET OF RETAIL SPACE, LOCATED AT 1661 PENNSYLVANIA AVENUE, TO REFLECT THE FOLLOWING MODIFICATIONS TO THE ESSENTIAL LEASE TERMS: (I) WAIVING TENANT’S REQUIREMENT TO PAY OPERATING AND INSURANCE COSTS, IN THE APPROXIMATE ANNUAL SUM OF $23,200.00 AND (III) REQUIRING THE RDA TO BE RESPONSIBLE FOR DECOMMISSIONING AND MAINTAINING THE EXHAUST HOODS LOCATED AT THE RETAIL SPACE. JOINT CITY COMMISSION AND REDEVELOPMENT AGENCY


RECOMMENDATION

The Administration recommends that the Chairperson and RDA Members 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.

 

 

HISTORY

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:

  1. 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).                                                                                           
  2. 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 now 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.                                                                                                      
  3. 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.

ANALYSIS

 

1.    Additional Rent. Like traditional commercial leases, the passing through of Operating Expenses is typical in City leases because it reimburses the City for the costs associated with maintaining its facilities.  Tenants are assessed in proportion to the building space they lease. Of the approximately thirty agreements the City currently holds with nonprofit and governmental entities, most groups reimburse the City for operating expenses, even when they do not pay base rent.  The exceptions include UNIDAD, O Cinema, MBCC Visitor Center, Commissioner Higgins at City Hall, and the PAL facility (for this property only, the City contributes half of the costs to maintain the facility). The Administration recommends that the City assume these costs, as this is a short-term lease and, upon completion of the Convention Center hotel, the City anticipates renting the space at fair market rates including reimbursement of full operating expenses.

 

2.       Subsidized Parking. Currently, there are two cultural entities provided parking as part of their agreements for use of City facilities, and the costs are budgeted by specific City departments. Miami New Drama's Management Agreement provides for six (6) parking spaces in the surface lot at Lenox & 17th (P25). Miami New Drama provides comprehensive budgetary and financial performance reporting in addition to satisfying extensive marketing and programming requirements at the Colony Theater.  The second entity is MBCC, who is provided two (2) access cards at the Penn Garage (G9) as part of its lease for the Visitor’s Center.  The City's bond financing precludes it from offering free parking, therefore, if the Commission desires not to charge Moonlighter, the Commission may direct the Administration to identify funds as an economic development initiative.

 

3.       Landlord Improvements. The demising wall between the Visitor’s Center and the Demised Premises has been submitted for a Purchase Order by Property Maintenance. It is unknown the additional costs the City would incur if assuming responsibility for additional construction and maintenance work related to the kitchen equipment.  At the time of agenda publication, Staff had meetings scheduled the week of May 8th Commission with a ventilation system contractor and fire suppression engineers to determine what is necessary to render the system compliant for Fire Department approval. Accordingly, in anticipation of direction from the Commission, the Administration has begun the process to address the hoods in order to enable Moonlighter to occupy the space and the City can maintain the equipment going forward.

 

Other than the three foregoing items, the basic terms and conditions contained in the proposed lease have not been modified (including the public benefits, which remain the same):

 

  • Demised Premises:     Approximately 7,655 square feet

 

  • Use:     S.T.E.A.M. education center, co-working space, and digital fabrication lab

 

  • Term:   Three (3) years, with two (2) renewals of one (1) year each, at the City’s option

 

  • Termination for Convenience:     180 days

 

  • Rent:    $1.00 annually

 

  • Building Operating Expenses:    Tenant is responsible for none.

 

  • Public Benefits:      As detailed below, these have not changed:

 

 

STEAM Education
Supporting Science, Technology, Engineering, Arts, and Mathematics education to students throughout Miami Beach.

 

  • 1 Free field trip each year for up to 35 students from each public school in Miami Beach:
    • North Beach Elementary
    • South Pointe Elementary
    • Biscayne Elementary
    • Treasure Island Elementary
    • Fienberg/Fisher K-8 Center
    • Nautilus Middle
    • Miami Beach Senior High
      • Approx. Value $18,000 Over 3 Years

       

  • 20% off any additional field trips for each public school in Miami Beach.
    • Approx. Value of up to $102,000 Over 3 Years

     

  • 10% off after school programming to all Miami Beach students.
    • Approx. $15 off per session package per child.

     

  • Free Bi-Annual Professional Development Workshops for Miami Beach teachers and Rec Staff.
    • 50 Participants Per Session / 100 Per Year / 300 Total over 3 Yrs
      • Approx. value up to $75,000

       

  • Annual Internships for School Credit for MB High School Students. 5 Students in Spring and 5 Students in Fall semester each year. Internship provides Advanced Manufacturing STEAM Basics Certification.

 

  • Tour of Makerspace and introduction to The Fairchild/NASA national design challenge for all IT Academy Students in Miami Beach High.

 

  • Partner with Miami Beach Chamber of Commerce to provide free use of space for business development workshops or economic development events bi-annually.

 

  • Contingent upon success of fundraising efforts: 
    • Scholarships for 50 needs-based students to attend Summer STEAM Camps at Moonlighter (Approx. $15,000 needed)
    • Scholarships for after-school sessions for low income/needs-based Fienberg/Fisher + Biscayne Elementary students with transportation included from the school.
    • Paid Summer internship programs for MB High School Students.
    • On-Site STEAM programs at Miami Beach Schools subject to availability of necessary on-site equipment.

     

Urban Placemaking / Arts Activations

10% off design and fabrication services for civic/arts installations. Partnering with local Miami Beach institutions to activate public spaces and/or support arts initiatives with the digital fabrication lab. Work with local artists to nurture emerging talent.Artisans and Innovators in Residence. A residency program that supports creatives with the resources they need to build their innovative concepts. 1 free studio space per quarter for a selected person or team based on project proposal submission. (4 Innovators per Year, 12 total over 3 Years) Residencies that wish to continue their work after receive a free year of basic membership to the fabrication lab.

 

Community Workshops

Our workshops teach the basic and safety use of various advanced manufacturing equipment, hand tools, and design software available in the lab. All Miami Beach residents will have an exclusive discount (with Photo ID confirming MB residence) to all community workshops.

  • 10% off all-ages maker workshops for Miami Beach residents.
  • Average savings of $500 per year per maker.

 

Moonlighter Memberships

Memberships are a low-cost solution for people interested in learning how to use digital fabrication techniques and tools to build their ideas. Starting at just $35, it provides a low barrier to entry for new ideas to be tested before committing to more expensive manufacturing methods.

Community Benefit Venue Waiver
Exhibition space can be granted to cultural and educational organizations for exhibitions, fundraisers, workshops, and events that support the advancement of the mission.

Fourth Industrial Revolution Lecture Series
A lecture series bringing in experts in the fields of Internet of Things, Machine Learning, Artificial Intelligence, Robotics, Automation, Autonomous, Alternative Energies, Advanced Manufacturing and Construction, Maker Education, and other relevant topics to advance workforce development in the region, preparing the city for industry.

CONCLUSION

Following prior authorization to execute a lease, Moonlighter has requested additional modifications, but RDA approval is necessary to modify economic terms. Given the City's interest in activating the vacant space and the public benefit anticipated from Moonlighter’s proposed collaboration with City schools, the Administration recommends that the Chairperson and Members of the RDA modify the previous resolution.

Legislative Tracking
Economic Development
Sponsor
Sponsored by Commissioner Ricky Arriola

ATTACHMENTS:
Description
Attachment A - Amended LOI
Attachment B - Children's Camps
Attachment C - 3D Printing
Attachment D - Fairchild Grant
Resolution