| | | | | | | |  | Resolutions - C7 D
COMMISSION MEMORANDUM |
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| | | | | | | | | TO: | Honorable Mayor and Members of the City Commission | | | FROM: | Alina T. Hudak, City Manager | | | DATE: | December 14, 2022 | | | |
| | SUBJECT: | A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, PURSUANT TO A PUBLIC HEARING, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE OF THE CITY, AND APPROVING, IN SUBSTANTIAL FORM, (1) A LEASE AGREEMENT BETWEEN THE CITY (LANDLORD) AND TASTE BAKERY CAFÉ, LLC (TENANT) FOR USE OF APPROXIMATELY 734 SQUARE FEET OF GROUND FLOOR RETAIL SPACE LOCATED IN UNIT 4 OF 1701 MERIDIAN BUILDING CONDOMINIUM A/K/A 773 17TH STREET (DEMISED PREMISES), FOR AN INITIAL TERM OF FIVE (5) YEARS, WITH ONE (1) ADDITIONAL RENEWAL TERM OF FOUR (4) YEARS AND THREE HUNDRED SIXTY-FOUR (364) DAYS, AT THE CITY'S OPTION, FOR THE OPERATION OF AN EMPLOYEE CAFÉ THAT ALSO SERVES THE GENERAL PUBLIC; AND 2) A CONCESSION AGREEMENT BETWEEN THE CITY AND TASTE BAKERY CAFÉ, LLC (CONCESSIONAIRE), FOR USE OF AN OUTDOOR SEATING AREA, HAVING APPROXIMATELY 507 SQUARE FEET, LOCATED ADJACENT TO THE DEMISED PREMISES, AS AN ANCILLARY USE FOR THE DEMISED PREMISES DURING THE TERM OF THE LEASE; AND FURTHER AUTHORIZING THE CITY MANAGER TO FINALIZE AND EXECUTE THE AGREEMENTS. |
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| | | | | | | | RECOMMENDATION
| The Administration recommends that the Mayor and City Commission adopt the Resolution. |
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| | | | | | | | BACKGROUND/HISTORY
| The City owns the 1701 Meridian Building Condominium (Condominium, comprised of ground floor retail spaces (Units 1-4), each having their own physical address, and a four-story office building (Units 5-8, with each floor representing one unit), having a physical address of 1701 Meridian Avenue.
On May 17, 2017, the Mayor and City Commission adopted Resolution No. 2017-29866, approving a Lease Agreement (2017 Lease Agreement) between the City and Taste Bakery Café, LLC. (Tenant) for the use of the eastern 2/3rds of Unit 4 of the Condominium a/k/a 773 17th Street, having approximately 734 square feet of ground floor retail space (Demised Premises), and a Concession Agreement (2017 Concession Agreement) allowing Tenant to use an outdoor seating area adjacent to the Demised Premises, having approximately 507 square feet (Concession Area); said Agreements having a term of three (3) years commencing on November 1, 2017, and ending on October 31, 2020, with two renewal terms of one (1) year each (collectively, the 2017 Agreements). Both renewal options have been approved by the City Manager and the 2017 Agreements are set to expire on October 31, 2022.
On April 29, 2022, the City issued an Invitation to Negotiate (ITN) No. 2022-060-WG seeking responses from interested parties to establish a subsequent agreement for the operation of an employee café. However, no formal responses to the ITN were received.
On August 5, 2022, LTC# 377-2022 was issued advising the Mayor and the City Commission that the ITN had been closed, and the cone of silence had terminated. On September 14, 2022, the Mayor and City Commission approved the extension of City-awarded contracts, which included extending the current term of the 2017 Agreements on a month-to-month basis, for 120 days until February 28, 2023. Consequently, the Administration reviewed options and conducted its own search for qualified tenants, including considering Tenant, for the operation of the employee café concept under a new agreement.
At the September 14, 2022, City Commission meeting, Item C4 O was presented as a referral to the Finance and Economic Resiliency Committee (FERC) to discuss a new agreement for an employee café at 773 17th Street.
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| | | | | | | | ANALYSIS
| The Administration reached out to several café/restaurant operators who would be viable candidates for an employee café, but there was no interest in the space, predominantly due to the location and size of the Premises. In addition, staff consulted with City employees in various departments who expressed interest in Taste Bakery remaining as their café of choice. The replacement of the existing café, downtime, and loss of revenue was also taken into consideration. Staff proceeded to meet with the current Tenant (Taste Bakery Café) to review the existing concept, rental structure, menu and negotiate a new agreement for the continued operation of an employee café.
Taste Bakery Café, LLC (Tenant) has proven to be a successful operator in implementing and developing the employee café concept since 2017. The Tenant is interested in continuing with the employee café concept and will refresh the interior design of the space, streamline the customer ordering experience, and upgrade the menu to include a variety of healthy food options containing nutritional information.
After further consideration and negotiations, the Administration has selected Taste Bakery Café, LLC to continue as the Tenant for the employee café concept. Attached hereto as Exhibit A is the Letter of Intent (LOI), containing the below basic terms and conditions of the proposal:
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Lease Term:
Renewal Option:
Commencement Dates:
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The term of this Lease shall be for a period of five (5) Years.
One (1) renewal option for four (4) years and three-sixty-four (364) days, at the City's option.
The Lease Commencement and Rent Commencement Date shall be the earlier of: 1) March 1, 2023, or 2) the date Tenant and Landlord execute the new Lease Agreement.
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Minimum Base Rent
Schedule:
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Initial Term
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Year(s)
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Annual Rent/SF
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Annual
Rent
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1
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$41.00
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$30,094.00, plus applicable sales tax
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Rent to increase 3% per year during the Lease Term.
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Security Deposit:
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The amount of $5,000.00, which is currently being held by the City from Tenant under the 2017 Lease Agreement shall be transferred to the new Lease Agreement.
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Operating Expenses:
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Tenant shall pay its pro rata share of Real Property Taxes, Property Insurance and Common Area Maintenance expenses, which are currently estimated to be $12.85 per square foot. Operating Expenses will be effective on the Rent Commencement Date.
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Concession Area:
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Tenant shall be required to execute a Concession Agreement co-terminus with the Lease Agreement, at no additional cost to Tenant, which are the same terms that exist under the 2017 Concession Agreement in connection with the use of the Concession Area.
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Permitted Use:
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The Demised Premises shall be used by Tenant solely for the purpose(s) of operating a cafe, with the primary objective being to provide the City of Miami Beach employees with healthy food choices at a price which is discounted by forty percent (40%) off the approved price schedule and menu options, attached to the City Commission Memorandum accompanying this Resolution as Exhibit B ("Menu/Price Schedule"), while also permitted to sell to the general public.
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Additional Services:
Hours of Operation:
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Tenant shall provide:
- A forty percent (40%) discount on the purchase price
of all food and beverages from any Taste Bakery Café location, within the City of Miami Beach to City employees with an active and verified City of Miami Beach issued employee identification ("Employee ID"); whether the purchase was made onsite or ordered for delivery.
- Tenant will also provide a free coffee or tea with the purchase of any item.
- Tenant will include City employees as part of their Rewards program to be eligible for a ten ($10) dollar credit to be used exclusively on the employee’s birthday week at any Taste Bakery Café location.
- Tenant will provide healthy conscious food, fruits and quick snacks.
The City will reimburse Tenant a maximum of Two Hundred Thousand and 00/100 Dollars ($200,000.00) * per contract year towards the City Employee Discount at the following rates:
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Annual City
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Maximum Annual
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Reimbursement
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Employee Purchases
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Reimbursement
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Rate
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$0-$422,400
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$ 168,960.00
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40%
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$422,400-$629,333.33
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$ 31,040.00
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20%
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Greater than $629,333.33
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$0.00
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0%
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*The Maximum reimbursement will be revisited at the Lease option term to determine cost of living increases.
Once the Maximum reimbursement amount is reached, Tenant will continue to provide the City Employee Discount without reimbursement from the City.
Mon-Fri: 7AM-5PM
Weekends: 8AM-2PM
Tenant may consider opening in the evening until 9pm or 10pm, if there is enough demand from City Employees who work in the evening that want to eat at Taste.
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Guarantor(s):
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Full personal guaranty shall be required by all owners and spouses.
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FINANCE AND ECONOMIC RESILIENCY COMMITTEE RECOMMENDATION
At the October 31, 2022, Finance and Economic Resiliency Committee (FERC) meeting, the Administration presented the terms and conditions set forth above. The FERC recommended in favor of approving a new Lease Agreement with Taste Bakery Café, LLC, for a period of five (5) years, with one renewal option of four (4) years and three hundred and sixty-four (364) days at the City’s option. |
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| | | | | | | | SUPPORTING SURVEY DATA
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| | | | | | | | FINANCIAL INFORMATION
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| | | | | | | | CONCLUSION
| Based upon the foregoing, the City Manager recommends that the Mayor and City Commission accept the recommendation of the Finance and Economic Resiliency Committee, and approve in substantial form a new Lease Agreement and Concession Agreement with Taste Bakery Café, LLC, a copy of which are attached hereto as Exhibit C and Exhibit D respectively, to bring an employee café concept to City employees, while continuing to serve the general public at the City-owned property located at 1701 Meridian Avenue, Unit 4 (a/k/a 773 17th Street) for a term of five (5) years, with one (1) additional renewal term of four (4) years and three hundred sixty-four (364) days, at the City’s option.
Exhibits
Resolution
A- Letter of Intent (LOI)
B- Menu
C- Lease Agreement – Draft form
D- Concession Agreement – Draft form |
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| | | | | | | | Applicable Area
| | South Beach |
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| | | | | | | | | 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 | |
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| | | | | | | | Legislative Tracking
Facilities and Fleet Management |
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