On October 24, 2017, the City of Miami Beach entered into an agreement with Alchemy Miami Beach LLC for City Municipal Parking Garage Advertising Services (the Agreement). The initial term of this Agreement was for three (3) Contract Years. Per the Agreement, the City was to receive a Minimum Guarantee in the amount of Two Hundred Fifty thousand dollars ($250,000.00) per year, payable in monthly payments of Twenty Thousand Eight Hundred and Thirty-Three Dollars ($20,833.00).
As a result of the COVID pandemic, the City and Alchemy entered into a letter agreement on or about March 24, 2020 whereby the parties mutually agreed to “temporarily toll and suspend Alchemy’s payment obligations to the City… until such time that the City’s Emergency Measures prohibiting the general public’s access to the City-owned parking garages is lifted or expired.” A copy of the Letter Agreement is attached as Exhibit “A” hereto. The Letter Agreement also provided that once the general public is granted access to the City-owned parking garages, Alchemy’s payment obligations pursuant to the Agreement shall be “automatically reinstated, which amounts shall be pro-rated based on the date in the month access to the general public is reestablished.”
On October 1, 2020, the City’s Emergency Measures were amended to allow general public access to the City-owned parking garages. Accordingly, the period the Agreement was tolled pursuant to the Letter Agreement was March 24, 2021 to October 1, 2020. Alchemy’s payment obligations were automatically reinstated on October 1, 2020. The tolling of the payment obligations resulted in a savings to Alchemy of at least $124,998.00.
On October 26, 2020, the City notified Alchemy that general public access had been reinstated to the garage as of October 1, 2020, and that Alchemy’s payment obligations resumed on that date. The letter is attached hereto as Exhibit “B”. Despite this, Alchemy has failed to tender any amount due since March 19, 2020. Alchemy’s current past due amount, accounting for the tolling period, is $104,165, (plus all accrued interest, pursuant to Article 5.2 of the Agreement, until such time as payment is actually received by the City). Please note that Alchemy’s payment obligations, including the monthly Minimum Guarantee, have continued to accrue until the end of the Term of the Agreement.
Regarding a proposed settlement to amicably and mutually, terminate the Agreement, the City had initially proposed allowing the Agreement to expire on the expiration date of the Agreement, (on February 26, 2021), and issue a credit to Alchemy against the past due amounts it owes to the City, in exchange for the City’s ability to retain the hardware that Alchemy has installed in the garages. Alchemy has rejected this offer; indicated that it had no desire to allow the City to retain the hardware; and is not interested in any credit.
In the alternative, Alchemy offered the following counter proposal:
1. Effective February 1, 2021 Alchemy proposes that the current Agreement would convert to a revenue share Agreement.
2. Alchemy and its sub, City Media, will pay the City of Miami Beach 15% of net revenues (gross revenues minus Agency commissions not to exceed 16.667%) on a monthly basis. Payment to be made on the 15th of the following month.
3. The City will receive up to 10% of inventory on a space available basis for the City’s own use. The City will pay for production. Alchemy and City Media will post, manage and maintain the City’s advertising copy at its own cost.
4. The Term of the Agreement will be extended for one year ending on February 26, 2022.
5. If Combined Net Revenues for Alchemy and City Media is equal to or greater than $500,000 over the 12 months of the Renewal Term, Alchemy and City Media will pay the City an additional $25,000, and the Agreement would then renew for an additional year at the original base rent.