HomeMy WebLinkAboutR-02-0582J-02-496
5/16/02
RESOLUTION NO. 02— b 8 2
A RESOLUTION OF THE MIAMI CITY 'COMMISSION,
WITH ATTACHMENT(S), APPROVING AN AMENDMENT TO
THE LEASE AGREEMENT, DATED MARCH 3, 1998 (THE
"AGREEMENT"), WITH FIREHOUSE IV OF MIAMI, INC.
("TENANT") FOR THE RESTAURANT AT CITY -OWNED
PROPERTY LOCATED AT 1000 SOUTH MIAMI AVENUE,
MIAMI, FLORIDA ("PROPERTY"), FOR THE PURPOSE
OF (A) INCORPORATING THE BUSINESS TERMS, AS
MORE SPECIFICALLY SET FORTH IN EXHIBIT 1
ATTACHED AND INCORPORATED, AND (B) AUTHORIZING
THE ASSIGNMENT OF THE AGREEMENT TO LARRY
HARRIS OR TO A NEW CORPORATE ENTITY OWNED AND
CONTROLLED PRIMARILY BY LARRY HARRIS;
AUTHORIZING THE CITY MANAGER TO EXECUTE THE
AMENDMENT, IN A FORM ACCEPTABLE TO THE CITY
ATTORNEY, UPON SATISFACTION OF THE FOLLOWING
CONDITIONS: (1) TENANT SHALL NOT BE IN
DEFAULT OF ITS AGREEMENT; (2) TENANT SHALL PAY
THE BALANCE OF THE OUTSTANDING RENT DEFERRED
AS A RESULT OF THE SEPTEMBER 11, 2001
TERRORISTS STRIKES; AND (3) TENANT SHALL PAY
THE OUTSTANDING BALANCE OF THE TRANSFER FEE
ASSOCIATED WITH A PREVIOUS TRANSFER.
WHEREAS, on March 8, 1998 a Lease Agreement was executed
between the City of Miami and Firehouse IV of Miami, Inc., for
the leasing, management and operation of a restaurant on
City -owned property, located at 1000 South Miami Avenue, Miami,
Florida, (the Agreement") for a term of fifteen years, with the
option to extend for two additional five-year periods; and
CITY COMMISSION
MEETING 6,F
MAY 2 3 2002
Resolution No.
®2- 582
WHEREAS, the business has been struggling over the last
three
years and
has been heavily impacted
by construction in the
area,
as well as
a lack of parking in the
area; and
WHEREAS, Tenant has elected to sell its interest in the
Agreement; and
WHEREAS, Tenant has proposed to the City an assignment of
the Agreement to Larry Harris, whom the City has found to be an
"Acceptable Operator" as defined in the Agreement, after
reviewing his qualifications and financial strength; and
WHEREAS, as a condition to accepting the Agreement, Mr.
Harris has requested certain amendments regarding the use and
rental provisions of the Agreement;
NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY
OF MIAMI, FLORIDA:
Section 1. The recitals and findings contained in the
Preamble to this Resolution are adopted by reference and
incorporated as if fully set forth in this Section.
Page 2 of 4 02— 582
Section 2. The City Manager is authorized!' to execute
an amendment to the Lease Agreement, dated March 3, 1998 (the
"Agreement"), with Firehouse IV of Miami, Inc. ("Tenant") for the
restaurant at city -owned property located at 1000 South Miami
Avenue, Miami, Florida ("Property"), for the purpose of (a)
incorporating the business terms, as more specifically set forth
in Exhibit 1 attached and incorporated, and (b) authorizing the
assignment of the Agreement to Larry Harris or to a new corporate
entity owned and controlled primarily by Larry Harris;
authorizing the city manager to execute the amendment, in a form
acceptable to the city attorney, upon satisfaction of the
following conditions: (1) tenant shall not be in default of its
agreement; (2) tenant shall pay the balance of the outstanding
rent deferred as a result of the September 11, 2001 terrorists
strikes; and (3) tenant shall pay the outstanding balance of the
transfer fee associated with a previous transfer.
Section 2. This Resolution shall become effective
immediately upon its adoption and signature of the Mayor.Z1
ii The herein authorization is further subject to compliance with all
requirements that may be imposed by the City Attorney, including but not
limited to those prescribed by applicable City Charter and Code
provisions.
zi If the Mayor does not sign this Resolution, it shall become effective at
the end of ten calendar days from the date it was passed and adopted. If
the Mayor vetoes this Resolution, it shall become effective immediately
upon override of the veto by the City Commission.
Page 3 of 4
®2- 582
PASSED AND ADOPTED this 23rd day of Ma
ATTEST:
PR SCILLA A. THOMPSO
CITY CLERK
APPRO�DAS FO �ANDCORRECTNESS:
&ElWNtB,W-VILARELLO
C Y ATTORNEY
W6242:tr:LB
2002.
0
w(-MANUEL A. DIAZ, bi
.
04
Page 4 of 4
02- 582
PROPOSED TERMS FOR AMENDMENT NO.2 EXHIBIT I
TO THE LEASE AGREEMENT BETWEEN THE
CITY OF MIAMI AND FIREHOUSE IV OF MIAMI, INC.
1) Amend the definition of "Restaurant Operations" to read as follows:
"Restaurant Operations" means all services associated with the preparation, service and
sale of food and beverages, including alcoholic beverages, delicatessen, bakery, cafes, tea
rooms, entertainment (excluding adult entertainment), private banquets, catering, parties,
cigar smoking, art shows, happy hour, and such other activities ancillary to the sale of
food and beverage including sales of merchandise related to the business conducted on
the Premises including the sale of food items such as meat seafood, produce, candy and
ice cream, newsstands, sale of flowers, and sale of specialty cookware, china and
crockery.
2) The Minimum Annual Rent for the initial lease term shall remain the same.
Commencing with lease year 5 (March, 2003), the percentage would be reduced from
11% to 6.5%. The breakpoint will not increase in year 7 as originally stated in the lease
and will remain at $2,400,000 for lease years 7 through 9. Thereafter, the breakpoint
shall be adjusted every 3 years by 9% in keeping with the current escalations. Below is a
table outlining the proposed rent during the initial lease term:
LEASE
YEAR
column 1
MIMINUM
ANNUAL RENT
column 2
ANNUAL
PERCENTAGE RENT
column 3
BREAKPOINT
column 4
1
$ 57,375
plus 11% over
$2,200,000
2
$ 76,500
plus 11% over
$2,200,000
3
$ 76,500
plus 11% over
$2,200,000
4
$ 83,385
plus 11% over
$2,400,000
5
$ 83,385
plus 6.5% over
$2,400,000
6
$ 83,385
plus 6.5% over
$2,400,000
7
$ 90,890
plus 6.5% over
$2,400,000
8
$ 90,890
plus 6.5% over
$2,400,000
9
$ 90,890
plus 6.5% over
$2,400,000
10
$ 99,896
plus 6.5% over
$2,600,000
11
$ 99,896
plus 6.5% over
$2,600,000
12
$ 99,896
plus 6.5% over
$2,600,000
13
$107,896
plus 6.5% over
$2,850,000
14
$107,896
plus 6.5% over
$2,850,000
15
$107,896
plus 6.5% over
$2,850,000
02- 582
3) In lieu of having the property reappraised for purposes of establishing rent for the
renewal options, the following is the proposed rent for the renewal terms:
LEASE
YEAR
column 1
MIMINUM
ANNUAL RENT
column 2
ANNUAL
PERCENTAGE RENT
column 3
BREAKPOINT
column 4
16
$132,607
plus 7.0% over
$3,100,000
17
$132,607
plus 7.0% over
$3,100,000
18
$132,607
plus 7.0% over
$3,100,000
19
$143,192
plus 7.0% over
$3,350,000
20
$143,192
plus 7.0% over
$3,350,000
21
$143,192
plus 7.0% over
$3,350,000
22
$154,729
plus 7.0% over
$3,650,000
23
$154,729
plus 7.0% over
$3,650,000
24
$154,729
1 plus 7.0% over
$3,650,000
25
$167,305
1 plus 7.0% over
$4,000,000
4) Lessee shall expend no less than $300,000 to remodel and upgrade the kitchen, provide
new kitchen equipment, new restaurant furnishings and fixtures, update interior finishes,
paint the entire exterior of the building, and construct a new storefront on the northern
face of the building to create a pedestrian friendly coffee bar area. Lessee shall submit
the proposed plans for these improvements to the City Manager for his review and
approval. Lessee shall comply with all laws associated with construction of the
improvements including, but not limited to, any requirements that may be imposed by the
Historic and Environmental Preservation Board. Lessee shall provide a performance
bond, letter of credit or other form of security acceptable to the City Manager,
guaranteeing the performance of these improvements. The contractor(s) performing
these improvements shall be required to provide insurance in the amounts and types as
may be required by the City of Miami's Risk Management Department.
5) The City will permit the premises to be closed for operation for six months from the date
of execution of Amendment No. 2 for the renovation of the property. This six month
period may be extended up to an additional six months if construction and renovations
are not completed due to reasons beyond Lessee's control.
6) The Minimum Annual Rent for the first six (6) months following execution of
Amendment No. 2 in the amount of forty-one thousand six hundred ninety-two dollars
50/100 ($41,692.50) shall be abated in consideration of the additional leasehold
improvements being made by Lessee. Lessee shall remain liable for any Florida State
Use Tax that may be due on said abated amount.
7) Section 10.1(a) shall be amended to permit the Lessee to sublease up to 40% of the total
square footage of the building situated on the Premises.
02- 5822
CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
I I
TO: Honorable Mayor and DATE : MAY 15 FILE
Members of the City Commission
SUBJECT: Firehouse IV of Miami, Inc.
o e
FROM: City Manager REFERENCES:
City Commission Agenda
ENCLOSURES: May 23, 2002
RECOMMENDATION:
It is respectfully recommended that the City of Miami Commission adopt the attached Resolution
approving an amendment to the Lease Agreement between the City of Miami and Firehouse IV
of Miami, Inc. (the "Tenant"), at the City owned property located at 1000 South Miami Avenue,
Miami, Florida ("Property"), dated March 3, 1998 (the "Agreement"), for the purpose of : (i)
incorporating the business terms set forth in Exhibit I hereto, substantially in the form describe
therein, and (ii) authorizing the assignment of the Lease Agreement to Larry Harris or to a new
corporate entity owned and controlled primarily by Larry Harris. The Resolution further
authorizes the City Manager to execute the Amendment, in a form acceptable to the City
Attorney, upon satisfaction of the following conditions: (1) Tenant shall not be in default of its
agreement; (2) Tenant shall pay the balance of the outstanding deferred rent which deferment
was granted as a result of the September 11, 2001 terrorists strikes; and (3) Tenant shall pay the
outstanding balance of the Transfer Fee associated with a previous transfer.
BACKGROUND:
On March 8, 1998, the City and Firehouse IV of Miami, Inc. executed an Agreement for the
leasing, management and operation of a restaurant on City -owned property located at 1000 South
Miami Avenue, Miami, Florida. The Agreement is for a term of fifteen (15) years with an option
to extend for a two (2) additional five (5) year periods. During the fifteen (15) year period, the
Tenant agreed to pay a Minimum Annual Rent plus 11 % over certain breakpoints.
The business has been struggling over the last three years and has been heavily impacted by
construction in the area. Additionally, the restaurant has no parking and as land has been taken
for development purposes, identifying property for parking has become more difficult and more
costly. As a consequence, the current owners have elected to sell their interest in the lease.
Tenant has approached the City to propose an assignment of the Agreement to Larry Harris, who
the City has found to be an "Acceptable Operator" as defined in the Agreement, after reviewing
his qualifications and financial strength (copy of Mr. Harris' resume is attached hereto). Mr.
Harris is looking to implement a business concept to turn the property into an upscale Spanish
02-- 582
Honorable Mayor and
Members of the City Commission
Page 2
restaurant, first of its kind in Miami. He is also looking into some retail activity on the first floor
to compliment the restaurant operations such as a coffee shop, delicatessen, or newsstand. Mr.
Harris goal is to stimulate and maximize the pedestrian activity in the area. Mr. Harris will be
investing between $300,000 and $500,000 in improvements to the property that are necessary to
implement his new concept.
As a condition to accepting the lease, Mr. Harris has requested certain amendments regarding the
use and rental provisions. After considering Mr. Harris' proposal, the parties have negotiated the
attached terms to amend this Agreement.
It should be noted that in accordance with the existing lease, the City shall be paid $1,000 prior
to the effective date of the transfer for internal cost and expenses incurred by the City related to
the transfer, plus 7% of the Net Sale Proceeds or 4.5% of any and all consideration paid to
Tenant in connection with the transfer. Based on same, the City will receive a minimum of
$67,500 in connection with this transfer.
FISCAL IMPACT
There is no financial impact to the current general fund of the City since (1) the minimum
base rent shall remain the same and the existing tenant has never paid percentage rent
during the past three years since they have never reached the breakpoints established in
the lease; 2) the loss of rental revenue from the six month rent abatement in the amount of
$ 41,692.50 will be offset by the receipt of the Transfer Fee in the estimated amount of
$67,500.
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CAG`DB:LB:PK:eb Memo CC Amendment to the Lease Firehouse N
02- 582