On August 2, 1985, the City issued Request for Proposal (RFP) No. 202-84/04 for the development, construction, management and operation of a restaurant facility in Pier Park. In response to the RFP, on October 2, 1985, the Mayor and City Commission adopted Resolution No. 85-18223 approving a Lease Agreement (Lease) between the City (Landlord) and Penrod Brothers, Inc. (Penrods or Tenant) for the sole purpose of constructing and operating a dining facility, disco, cocktail lounge, and/or banquet facility for an initial term of twenty (20) years expiring May 6, 2006, with two additional ten (10) year option periods automatically renewable at the Tenant’s discretion. On February 25, 2004, the Mayor and the City Commission adopted Resolution No. 2004-25506 approving a Concession Agreement (Concession) with Penrods for the portion of Pier Park immediately adjacent east of the restaurant (Nikki Beach). The initial term of the Concession Agreement commenced retroactively on October 1, 2003, with the original term expiring on May 6, 2006, with one option to renew and to run concurrent with the terms of the Pier Park Restaurant Lease Agreement.

On March 7, 1988, Amendment No. 1 to the Lease was executed, providing for construction of a parking lot, paving, security wall, curbing, drainage, lighting, irrigation and landscaping.  The City designated eighty-eight (88) parking spaces for the restaurant and the remaining sixty-one (61) parking spaces would be available for public use ("Metered Parking”). On April 8, 1988, Amendment No. 2 to the Lease was executed, approving a modification to the building footprint and legal description to reflect the actual site survey. On February 25, 2004, Amendment No. 3 to the Lease was executed, modifying the financial terms for Penrods to pay the City an annual minimum guarantee equal to 6.5% percent of the Lessee’s gross receipts during the term of the Lease Agreement, as well as any renewal terms.  

On October 26, 2022, at the request of Commissioner Ricky Arriola, the Mayor and City Commission approved the referral of Item C4 L to the Finance and Economic Resiliency Committee (FERC) to discuss the upcoming expiration of the Nikki Beach Lease. The Agreement between the City of Miami Beach and Penrod Brothers, Inc. is set to expire on May 7, 2026 with no further renewal options remaining.  On October 25, 2022, Penrod’s legal representatives noticed the City with a formal letter confirming that while the current Lease Agreement with the City does not expire for several years, they are eager to discuss the future of the site with the City. Penrods is interested in negotiating a new lease with the City for a refreshed concept, which would be more consistent with the current demographics of the area (Exhibit A).

The Administration is currently conducting a real estate market analysis to determine valuation of the property. Additionally, a facility conditions assessment is being conducted in order to provide a comprehensive report of the building's condition and infrastructure. 

The Administration recommends it is in City's best interest to follow the formal competitive solicitation process and issue a Request for Proposals (RFP) for the best possible use and viable concepts for the operation and management of this City site. 

Attachments:

Referral memo - Item C4 L

Exhibit A - Letter from Penrods

Exhibit B - Lease and Amendments