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 City Mayor and 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 (2) additional 10-year renewal options automatically exercised at the Tenant’s discretion.

On February 25, 2004, the City 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 (1) 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” or the “Committee”) to discuss the upcoming expiration of the Agreement between the City of Miami Beach and Penrod Brothers, Inc. (“Nikki Beach Lease”). Said Agreement 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 in the area.

On January 27, 2023, the item was discussed at FERC. The Committee directed City Administration to consider the following options and return to the March 31, 2023, FERC meeting with an update as contained and detailed below:

• Engage community partners who possess a proven track record and are reputable operators. Administration is to schedule meetings with other successful operators in the City.  Preliminary meetings were conducted with Boucher Bros. and the Penrods team on February 7, 2023, and on March 10, 2023, respectively to review their initial perspective on the future of Nikki Beach.
  
  

•  Obtain two (2) appraisals for the property.  Administration has engaged two (2) appraisers, CBRE and Cushman and Wakefield to conduct these studies which should be completed by April 1, 2023.

• Conduct a facility conditions assessment of the property.  Administration has engaged The Gordian Group to conduct the assessment, which should be completed by July 2023.

•  Administration to meet with neighborhood association(s) and provide a vision plan based on suggestions from the area residents. The Administration is working with the City’s Neighborhood Affairs Division to coordinate needed meetings throughout the month of March. On March 7, 2023, the Administration met with neighbors and business operators of the South of Fifth Neighborhood, some of which are current members of the South of Fifth Neighborhood Association (SOFNA). The sentiment expressed by the residents is that both the business and residential sectors want to see a change.  The residents also conveyed that under the current operator, they are concerned with safety, noise, and crowd control. Furthermore, the residents indicated that they oppose the redevelopment of the property to a high-rise development and would like to see a more high-end beach club style concept with amenities. They indicated that a high-end beach club concept similar to the Soho Beach House, would enhance the neighborhood and be more complimentary with the transformation that the South of Fifth Neighborhood has experienced over the last 15+ years.

The Administration recommends the Finance and Economic Resiliency Committee consider and discuss the foregoing.  It is in the 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.