Item Coversheet

Committee Assignments - C4  U




COMMISSION MEMORANDUM

TO:Honorable Mayor and Members of the City Commission 
FROM:Raul J. Aguila, Interim City Manager 
DATE:March  17, 2021
 



SUBJECT:REFERRAL TO THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE TO DISCUSS AN AMENDMENT NO. 4 TO THE MANAGEMENT AGREEMENT BETWEEN THE CITY OF MIAMI BEACH AND GLOBAL SPECTRUM L.P. FOR THE MANAGEMENT OF THE MIAMI BEACH CONVENTION CENTER TO (1) EXTEND THE TERM FOR AN ADDITIONAL EIGHTEEN (18) MONTH  PERIOD WITH SUCH EXTENSION COMMENCING ON OCTOBER 1, 2022, AND ENDING ON FEBRUARY 28, 2024, TO ACCOUNT FOR IMPACTS RELATED TO THE COVID-19 PANDEMIC;  AND (2) EXPAND THE SCOPE OF SERVICES OF THE AGREEMENT TO INCLUDE THE MANAGEMENT AND OPERATION OF THE TWO CITY FACILITIES (CLUBHOUSE BUILDINGS), LOCATED WITHIN THE 21ST STREET COMMUNITY CENTER COMPLEX, (CURRENTLY KNOWN AS THE “CARL FISHER CLUBHOUSE” AND THE “LITTLE STAGE THEATER”), THE COLLINS CANAL PARK, AND PRIDE PARK; WHICH AMENDMENT NO.4 SHALL REQUIRE A WAIVER, BY 5/7TH VOTE, OF THE COMPETITIVE BIDDING REQUIREMENT IN SECTION 2-367(e) OF THE CITY CODE.

RECOMMENDATION

The City Manager recommends that the Mayor and Commission refer Amendment No. 4 to FERC to review the amendment to the contract.

BACKGROUND/HISTORY

On July 17, 2013, the Mayor and City Commission adopted Resolution No. 2013-28276, authorizing the City and Global to negotiate and execute a Management Agreement between the City and Global Spectrum, L.P., d/b/a Spectra Venue Management (“Global”) for the management of the Miami Beach Convention Center, Colony Theater (the agreement, as so amended and modified, is referred to herein as the "Agreement").

 

Subsequently, the Administration entered into a Management Agreement with Global with an initial term that commenced on October 1, 2013 through September 30, 2016, with two one-year renewal options. Pursuant to a letter dated September 23, 2016, the City and Global confirmed the City’s termination for convenience of Global’s responsibilities as manager and operator of the Colony Theatre, as permitted in subsection 12.2(c) of the Agreement.

 

In Resolution No. 2015-29191, the Mayor and City Commission approved Amendment No. 1 to the Agreement, extending the term of the Management Agreement through September 30, 2020.

 

The Miami Beach Convention Center ("MBCC") complex is nearing completion of the $620 million renovation and expansion project that is intended to reopen to great expectations from the local, regional and national communities. After many years of living and working through construction which substantially reduced the availability of MBCC for events, thereby limiting Global's ability to book events and generate revenues under the Management Agreement, the renovated center will be capable to host 500,000 square feet of renovated exhibit space, a 60,000 square foot grand ballroom, 20,000 square foot glass rooftop junior ballroom and 84 meeting rooms.

 

In September 2018, the City executed Amendment No. 2, extending the term of the Agreement for an additional two years, commencing on October 1, 2020 and expiring on September 30, 2022, for a total term of nine years, including all prior renewals and extensions.

 

Global, during calendar year 2018, advised the Administration that they incurred approximately two hundred thousand dollars ($200,000) in expenses in employee severance costs, recruiting fees and interim General Manager support costs. Global agreed that such costs could be deemed by Global as a capital contribution, to be amortized on Global’s books over the period from October 1, 2018 to September 30, 2022 ergo, the City shall not be responsible to Global for reimbursing Global for these costs, even in the event of an early termination of the Agreement.

 

In  2019, as the Convention Center administrative services became operational, Global identified the potential to utilize the Global annual contribution of $15,000, including $242,750 collected from 2004 to 2018,  to the City for an annual scholarship to be used for local area hospitality internships. This could be a one-of-a-kind, on the job hospitality training opportunity, that could lead to permanent and/or seasonal employment of the next generation of Convention Center leadership.

 

In addition, the Administration recommended, and the City Commission approved, a non-reimbursable capital contribution by Global, in the total amount of $200,000;  approving the use of $15,000, including a balance of $242,750 collected from 2004 to 2018, from Global's annual contribution to the City for an annual internship program with Global leadership; increasing Global's annual cash flow for operation from $500,000 to $1,000,000; and modifying other provisions of the Global Agreement which are operationally obsolete relating to the Colony Theater.


ANALYSIS

Shortly after the execution of Amendment #3, Global agreed to assume to manage and maintain Collins Canal Park and Pride Park, including the mangroves along Collins Canal within the footprint of the park for an annual fee of one hundred twenty thousand dollars ($120,000), comprised of seventy-five thousand dollars ($75,000) in connection with the management and maintenance of the green spaces and forty-five thousand dollars ($45,000) in connection with the management and maintenance of the mangroves. Likewise, with the active construction/renovation of Collins Canal Park, Global agreed to manage and maintain the two City facilities, formerly the Carl Fisher Clubhouse and Little Stage Theater/Annex (Clubhouse Buildings) for the purposes of dining and catering facilities that will compliment existing client options for the utilization of the .   The food and beverage management and operations of the two facilities is currently proposed for award to Centerplate. The expected completion of the construction /renovation of the facilities, is February 2021.

 

Additionally, as the MBCC received a Temporary Certificate of Occupancy in April 2020, and the calendar of events was robust, the convention and conference industry and community engagements came to an abrupt halt. Due to the COVID-19 pandemic, most, if not all, MBCC scheduled events were cancelled in the MBCC. Moreover, in service to the community the MBCC was converted to an Alternative Care Facility – which wasn’t activated, and the adjacent street serve a drive-up COVID-19 testing site.  However, construction of Pride Park and the Clubhouse Buildings have concluded or close to conclusion.

 

To ensure continuity of operations during the upcoming critical years, with the distribution of COVID-19 vaccines and the hopeful return of international and domestic conventions, conferences and destination meetings, symmetry of the management and maintenance of the MBCC campus, it is the Administrations recommendation to further extend the term of the agreement for a period that is coterminous with a force majeure period due to COVID-19, approximately eighteen (18) months, which would extend the Global term  commencing on October 1, 2022, and ending on February 28, 2024.

 

Accordingly, the Administration recommends a referral to the Finance and Economic Resiliency Committee review the term sheet, site plan, proposed menus and more for consideration of  a waiver recommendation, by 5/7th vote, of the competitive bidding requirement in Section 2-367(e) of the City Code, as being in the best interest of the City, and approval of an amendment adding, to the scope of the Global Agreement, the management and maintenance of Collins Canal Park, the Clubhouse Buildings, and Pride Park for a total amount, not to exceed, $120,000 annually.    

SUPPORTING SURVEY DATA

To be determined

FINANCIAL INFORMATION

To be determined

CONCLUSION

The Administration recommends a referral to FERC to review the following recommendations (1) waiver the formal competitive bidding requirement, by a 5/7ths vote, as permitted under Section 2-367(e) of the City Code, as being in the best interest of the City; (2) approval, in substantial form,  Amendment No. 4 to the City's agreement with Global; (3) the addition to the scope of the agreement, the management and maintenance of Collins Canal Park, Pride Park and the Clubhouse Buildings for the total cost of $120,000 annually; and (4) approval of the extension of the term of the agreement for an additional three year period commencing on October 1, 2022 and expiring on February 28, 2024.  

Applicable Area

South Beach
Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? Does this item utilize G.O. Bond Funds?
No No 

Strategic Connection

Prosperity - Develop the Convention Center campus.
Legislative Tracking
Tourism and Culture

ATTACHMENTS:
Description
Spectra Amendment No 4 Proposal
Spectra Amendment No. 4 Draft Term Sheet