Due to the onset of the COVID-19 pandemic, effective March 21, 2020, the City closed all City-owned parking garages to the general public, which the parties agrees triggered Section 13.1(b) (“Force Majeure”) of the Agreement, which provided that “neither party shall be obligated to perform hereunder and neither party shall be deemed to be in default if performance is prevented by earthquake; hurricane; flood; act of God; direct act of terrorism; or civil commotion occurring which renders at least fifty percent (50%) of the City Garages unusable.”
In accordance with the City’s contractual obligations under Section 13.1(b) of the Agreement, the City suspended Alchemy’s MG payment obligation 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”, which agreement is memorialized in a letter agreement dated March 24, 2020 (“Letter Agreement. A copy of the Letter Agreement is attached as Exhibit “A”. The Letter Agreement also provided that once the general public is granted access to the City-owned parking garages, Alchemy’s payment obligations of the MG 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, and Alchemy’s payment obligations pursuant to the Letter Agreement automatically reinstated on October 1, 2020. The tolling of the payment obligations resulted in a savings to Alchemy of $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 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 $104,165.00, plus all accrued interest, pursuant to Article 5.2 of the Agreement, until such time as payment is actually received by the City.
In an effort to amicably, and mutually, terminate the Agreement, the City had initially proposed allowing the Agreement to expire on the expiration date of the Agreement, and issue a credit to Alchemy against the past due MG 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 rejected this offer, and had indicated that it had no desire to allow the City to retain the hardware.
On February 24, 2021, the Neighborhood and Quality of Life Committee referred the agreement to the City Commission with a recommendation to continue the contract on a month-to-month basis and have staff continue a discussion with Alchemy to negotiate an amendment to the contract.
On March 2, 2021, the City issued a Notice of Default to Alchemy (attached as Exhibit "C") to which the City received the attached (Exhibit “D”) Rejection of the City's Notice of Default. On March 6, 2021, the Agreement expired on its own terms when City did not exercise its exclusive right to extend the Agreement for an additional year in accordance with Section 2(b) of the Agreement.
On March 17, 2021, counsel for Alchemy sent a letter to the City rejecting the City’s Notice of Default, alleging that the then imposed restrictions on the parking garages from 12:01 AM until 6:00 AM, consistent with the City’s Emergency Orders, constituted a closure of the garages, attached as Exhibit “E”.
On April 1, 2021, counsel for the City responded to Alchemy’s March 17, 2021 letter, reiterating that the Agreement had expired and that Alchemy was in default of the Agreement at the time the Agreement expired, with Alchemy owing the City $104,165.00, including interest, for past due payments, the letter is attached as Exhibit “F”. The City’s correspondence further provided that Alchemy’s payment obligation was automatically reinstated on October 1, 2020, in accordance with the Letter Agreement, despite the curfew because the general public had complete access to the City Garages for the entirety of business hours, the hours of operation during the garage’s highest and best viewing value, and cars may be parked in the garages when the curfew is in place from 12:01 am to 6:00 am meaning.
Additionally, the City’s April 1, 2021 letter provided that the City was amenable to opening discussions with Alchemy in an effort to amicably resolve all outstanding issues alleged by the parties and asserted that Alchemy had ten (10) days to respond to the City’s proposal based on the following: options: (1) Alchemy pay the City $35,000.00 and allow the City to retain all the hardware that Alchemy has installed in the City Garages, in exchange for full mutual releases from Alchemy and the City; or (2) upon Alchemy’s payment of the full past due amount of $104,165, the City Manager is prepared to present an item to the Mayor and City Commission to recommend that the City reinstate the Agreement, based on the proposal initially provided by Alchemy, which includes, converting the Agreement from a minimum guarantee to a revenue share format.
On April 9, 2021, counsel for Alchemy rejected the City’s proposal, and provided the city with the following counterproposal:
1. Alchemy agrees to pay the City $50,000.00 in settlement of all past due obligations upon execution of a mutually acceptable agreement.
2. The City agrees that the Agreement will be amended to a revenue share format and that the City will exercise both one year renewal options for a total term of two years.
• In year one, Alchemy and its sub under the Agreement, City Media, will pay the City 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.
• In year two, Alchemy and its sub, City Media, will pay the City 20% 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. In any given month the City will receive up to 10% of Alchemy and City Media inventory on a space available basis for the City’s own use. The City will be responsible to pay for production, Alchemy will post, manage and maintain the City’s advertising copy at its own cost.
4. If combined Net Revenues for Alchemy and City Media is equal to or greater than $400,000.00 over the first 12 months, Alchemy and City Media will pay the City an additional $25,000.00 at the
Following consideration of Alchemy’s counter-offer, the City Administration recommended rejecting the counter-offer.
Alchemy has stated that, due to the impacts of COVID-19, Alchemy has suffered a material reduction in advertising revenues and thus was not able to comply with the MG for the period from October 2020 through the end of the term of the Agreement. Additionally, Alchemy points that access to the City Garages was restricted to the City’s COVID-19 related curfew following the reopening the Parking Garages on October 1, 2020 as the general public’s ingress and egress to the Parking Garages remained impeded during the hours of 12:00 AM through 6:00 AM, until April 12, 2021, when the curfew was ultimately lifted.
On May 12, 2021 Vice Commissioner Gongora sponsored Item C7K on the City Commission Agenda recommending that the City approve a waiver of the amounts owed by Alchemy to the City for the period from October 2020 through February 2021, in the total amount of $104,165.00, and provide Alchemy with thirty (30) days, beginning on June 1, 2021, to remove all of its advertising panels, hardware and equipment from the parking garages. Additionally, the item sought to direct the City Manager to retract, in writing, the Notice(s) of Default issued to Alchemy dated March 2, 2021 and April 1, 2021.
At the May 12, 2021 City Commission meeting, following a discussion of Item C7K, the Mayor and City Commission referred the item to the Finance and Economic Resiliency Committee for consideration.