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OF 1~EE7ING HELD ON D U L Y 2 3~ 19 9 7 ,~__
PREPARED 8Y THE OFFICE OF THE CITY CLERK
CITY HALL
WALTER FOEMAN
CITY CLERK
INDEX
MINUTES OF SPECIAL MEETING
July 23, 1997
ITEM SUBJECT LEGISLATION PAGE
NO. NO.
1. MAYOR CAROLLO SETS RULES OF DISCUSSION 1
PROCEDURES. 7/23/97
2. (A) DISCUSS PROPOSALS FROM HANGAR IN R 97-493 2-54
THE GROVE,. INC. AND GROVE HARBOR 7/23/97
MARINA AND CARIBBEAN MARKETPLACE
LTD. -- PUBLIC HEARING -- ACCEPT
PROPOSAL FROM GROVE HARBOR .MARINA
AND CARIBBEAN MARKETPLACE LTD FOR
UNIFIED DEVELOPMENT PROJECT
ENTITLED DINNER .KEY WATERFRONT
REDEVELOPMENT -- AUTHORIZE CITY
MANAGER TO .BEGIN APPRAISAL PROCESS
AND ENTER INTO LEASE NEGOTIATIONS
WITH SAID FIRM WITH STIPULATED
CONDITIONS -- BRING PROPOSED
CONTRACT FOR CITY COMMISSION
CONSIDERATION BY .FIRST MEETING OF
OCTOBER, 1997 -- FURTHER DIRECTING
CITY MANAGER TO PROVIDE CONTRACT
DOCUMENTS TO COMMISSIONERS .FIVE
DAYS PRIOR TO CITY COMMISSION
MEETING.
(B) BRIEF DISCUSSION REGARDING
POSSIBLE CONTAMINATION OF DINNER
KEY BOATYARD PROPERTY AND CITY'S
ABILITY TO RESTRICT ACCESS TO
PROPERTY.
3. COMMISSION CONGRATULATES MAYOR DISCUSSION 54-55
CAROLLO ON HIS FIRST ANNIVERSARY AS 7/23/97
MAYOR.
• •
MINUTES OF SPECIAL MEETING OF THE
CITY COMMISSION OF MIAMI, FLORIDA
*****
On the 23rd day of July, 1997, the City Commission of Miami, Florida, met at its regular
meeting place in the City Hall, 3500 Pan American Drive, Miami, Florida in regular session.
The meeting was called to order at 9:31 a.m. by Mayor Joe Carollo with the following
members of the Commission found to be present:
Mayor Joe Carollo
Vice Mayor Tomas Regalado
Commissioner J.L. Plummer, Jr.
Commissioner Wifredo Gort
Commissioner Humberto Hernandez
ALSO PRESENT:
Edward Marquez, City Manager
Linda Kearson, Assistant City Attorney
Walter J. Foeman, City Clerk
Maria J. Argudin, Assistant City Clerk
ABSENT:
A. Quinn Jones, Esq. III, City Attorney
An invocation was delivered by Mayor Carollo who then led those present in a pledge of
allegiance to the t1ag.
----------------------------------------------------------------------------------------------------------------
1. MAYOR CAROLLO SETS RULES OF PROCEDURES.
Mayor Carollo: If we can begin with... well, before we begin with the Manager's
recommendation, if I may ask staff if the different presentations that are up in front of us, if they
could be moved to the side until someone actually comes up to start making a presentation.
What I would like to do is, to start with the City Manager. If the Manager could start going
through his report to us.
July 23, 1997
----------------------------------------------------------------------------------------------------------------
2. (A)DISCUSS PROPOSALS FROM HANGAR IN THE GROVE, INC. AND
GROVE HARBOR MARINA AND CARIBBEAN MARKETPLACE LTD. --
PUBLIC HEARING -- ACCEPT PROPOSAL FROM GROVE HARBOR
MARINA AND CARIBBEAN MARKETPLACE LTD FOR UNIFIED
DEVELOPMENT PROJECT ENTITLED DINNER KEY WATERFRONT
REDEVELOPMENT -- AUTHORIZE CITY MANAGER TO BEGIN
APPRAISAL PROCESS, AND ENTER INTO LEASE NEGOTIATIONS
WITH SAID FIRM WITH STIPULATED CONDITIONS -- BRING
PROPOSED CONTRACT FOR CITY COMMISSION CONSIDERATION
BY FIRST MEETING OF OCTOBER, 1997 -- FURTHER DIRECTING
CITY MANAGER TO PROVIDE CONTRACT DOCUMENTS TO
COMMISSIONERS FIVE DAYS PRIOR TO CITY COMMISSION
MEETING.
(B)BRIEF DISCUSSION REGARDING POSSIBLE CONTAMINATION OF
DINNER KEY BOATYARD PROPERTY AND CITY'S ABILITY TO
RESTRICT ACCESS TO PROPERTY.
----------------------------------------------------------------------------------------------------------------
Mr. Edward Marquez (City Manager): Thank you, Mr. Mayor, Commissioners. Today, we are
making... hopefully a very important decision for the City and that's the leasing of the Dinner
Key Waterfront Property, redevelopment project. As you know, we have worked through a
unified development project process for picking today's respondent. Three proposals were
reviewed and evaluated. One of the proposers dropped out at the last minute and we have two
proposals up before you today. My recommendation before you has... You have before you,
two resolutions. One resolution recommends that the hanger in the Grove proposal be accepted
and that the City Manager be authorized to sign, to begin an appraisal process and to enter into a
lease negotiations with that firm and in the event that closed negotiations are unsuccessful, that
the alternate proposer he... we would start negotiations with the ultimate proposer. The other
resolution before you is just the opposite. It starts off with Grove Harbor Marina as the first
group to negotiate with and has a Hangar in the Grove as an alternate proposer. I believe both
firms to be competent and the individuals in both sets of proposals to be financially... to have the
financial wherewithal to carry off the project. So, the recommendation of the City Manager is
that both of these are viable. Now, on the review of everything that was up before me, the CPA
(Certified Public Accountant) report, the video tapes of the presentations, the actual proposals at
hand. I do have a preference as far as which group I believe has a stronger proposal. I believe
that Hangar in the Grove is the stronger of the two. And, the reasons why I believe that is as
follows. I believe that the investment that they had put into the infrastructure. The renovation of
the hangars is sufficient to meet the Department of Interior requirements. I also felt that their
business plan was more defined within the proposals, so we can see how they were going to go
about doing things. And, .overall, taking everything into account, both the optimistic pieces of
the proposal and the conservative pieces of the proposal. I thought that their financial plan was
stronger. Both proposers, either of the proposers, if once selected, we will have to negotiate and
there will be changes from the proposal to the end product. So, I have never met, I have never
seen in all of my years of evaluating proposals, I have never seen a proposal that has covered
everything from the go to. So, there will be heavy duty negotiations and I have warned both
firms to that effect. Whoever succeeds, we will let you into negotiations immediately and those
negotiations are going to be intense. If I can direct your attention to the side by side comparison.
I just want to g~ over a couple of the issues and concerns that we have had here and just
highlight some information. And, after my presentation we are going to allot, with your
permission, allot 25 to 30 minutes per proposal so that they can speak as to their proposal and,
2 July 23, 1997
• •
you know, contradict whatever I say on these side by side comparisons if they so desire. Again,
this is our viewpoint of the situation. First question, first of the concerns is, first thing I wanted
to indicate is basically the percentages-of operations of the two proposers. Grove Harbor has... is
going to end up with about 37 percent of their operations, marina oriented. Thirty-five boatyard
oriented, 28 percent marketplace oriented. Hangar in the Grove well, has a different mix. It has
47 percent marina, four percent boatyard, 49.percent marketplace. Now, it was the management
commentary here is that we have had a study in the past by MRA International that suggested
that, you know, through the charette process and all that the community wanted a people
oriented development and that the site needed to expand beyond boatyard and marina operations
in order to generate enough income to support the infrastructure needs of the project. We list out
down below what each proposer is going to be putting into the project. Grove Harbor you see a
five million dollar ($5,000,000) contribution of equity contributions. That will pay for... not
equity contributions, excuse me. Five million dollars ($5,000,000) of construction costs. That
will pay for... One point five million of that will go towards hangar restoration, one million
dollars ($1,000,000) towards slips and then you will see the listing there of the other uses.
Hangar in the Grove has nine point four million dollars ($9,400,000) being spent on construction
costs. In the management commentary section. We indicate that.... We have had an independent
consultant review what it would take to restore the two hangars to Department of Interior
specifications. And, that consultant says that for the two hangars, that amount of money is four
point seven million dollars ($4,700,000). If you look at the two proposers and this is one of the
reasons why I think Hangar is the stronger of the two, is that Hangar has more than four point
seven million dollars ($4,700,000) dedicated to that purpose. Grove Harbor does not. One of
the... in Grove Harbor's presentation, they had originally provided for more slips than we can
accommodate through out... that through permits that we subsequently obtain. So, there is an
amount of slack in the amounts. For instance, the one million dollars ($1,000,000) that's
dedicated to wet slip marina does not need to be spent on wet slip marinas because they could
only build 23 additional more slips. We have... Jack, correct me.
Mr. Jack Luft (Director, Planning and Development): Seventy. Seventy. That's right, 70 slips.
Mr. Marquez: Seventy slips. Excuse me. One of the things that we... Since the market place is
such a big component of both proposers I asked the question as to who is the consultant, how
much quality is behind the consultant, behind the marketplace concept in each of these plans.
Let's see, the credit of both proposers, they had excellent advice coming into this process for
their marketplace development. Hangar has a slight edge in this regard in that they retained their
market consultant through their period of stabilization, i.e. through lease up, whereas I did not
get that indication through Grove Harbor. The question of parking is always a consideration in
the Grove area. Grove Harbor provides 246... excuse me, provides 225 spaces in their work up.
So, that leaves a deficit of 21 spaces that they need to make up otherwise. Hangar in the Grove
provides in their work up 53... leaves unprovided 53 spaces. However, there are three spaces
that's City owned that can be deducted from this. So, when all is said and done, Hangar in the
Grove has a' 23 space deficiency in that regard. If you change the page, under the market
analysis considerations, we just... more information for you.' As to the marinas, Grove Harbor
user average wet slip rate seem reasonable. Hangar in the Grove was using a transient... relying
on a transient vessel occupancy to an unreasonable amount that we believed and we think those
numbers need to be downsized somewhat. The boatyard operations for Grove Harbor is geared
to generate two point eight million dollars ($2,800,000) in year one. With that saying the
assumption of 20 boats per week. History tells that in average, it's about 14 boats per week. As
far as the marketplace, you can see the dollar amounts in the square footage size by each one of
the proposers. Grove Harbor has the bigger marketplace of the two. Now one of the structural
problems I saw with Grove Harbor was that they started out with basically full operations in year
one and whereas Hangar in the Grove was a little bit more conservative in nature. They had a
more gradual buildup.
3 July 23, 1997
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Commissioner Gort: I am sorry, what was that again?
Mr. Marquez: Grove Harbor in their projections of numbers basically showed full operations of
ongoing in year one, whereas Hangar in the Grove had a more gradual buildup. When all is said
and done on the present value basis, the CPA firm computed that if you take what these firms are
projecting as a return to the City, the returns under the Grove Harbor scenario will be seven point
nine million dollars ($7,900,000) in today's worth value and seven point five million from
Hangar in the Grove. Again, these numbers reflect the undue optimism in certain of the numbers
that we have seen so far. The debt to equity ratios are shown below. They have all seem to be
reasonable. Grove Harbor will, in their proposal they did not put any debt service amounts.
They had... so we had to assume some debt service for them. It is our belief that they need to
have very favorable financing in order to have adequate return on investment to their investors
and in order to spin off a positive cash flow. But, that's again, our assumption because their
numbers were not in the proposal. In the Hangar and Grove's proposal, the Hangar and Grove
because they do not show any revenues the first four years, they were showing deficits. So, with
that kind of implied that they needed to put in some more equity dollars going forward. But, like
I said it from the onset, both firms, both groups of individuals seem to have ample equity
capabilities.
Commissioner Gort: Let me ask you a question. When you talk about debt services, are you
talking about debt in equity or...?
Mr. Marquez: When I talk about debt service, I am talking about they need to go out and borrow
money.
Commissioner Gort: Right.
Mr. Marquez: And, in the case of...
Commissioner Gort: I was under the impression that it was 20/80 and 30/70. I read somewhere
that. Grove Harbor was 30/70 and...
Commissioner Plummer: It's there.
Mr. Marquez: Right.
Commissioner Gort: And the other one was 20/80.
Mr. Marquez: But out of the three... That's the debt ratio. Out of the... If you look at the
70/30 split for Grove Harbor, that 70 percent represents three point five million dollars
($3,500,000) worth of debt. The debt service for that three point five million dollars
($3,500,000) was not shown... They did not assume any interest rates or any pay back period.
We had to assume it for evaluating their proposal. So, that's what I am saying is that based on
the assumptions that we used for their debt service, it seem to us that they needed very favorable
financing terms in order to have positive cash flows. Minority participation, the Grove Harbor
ownership is predominantly minority owned, 83 percent. Whereas, the Hangar in the Grove is
only eight point four percent. Design considerations. I'll have Jack describe these.
Mr. Luft: In evaluating both the site design and architectural issues, the historic preservation
officer evaluating this in the context of these national registered historic buildings felt that the
solution of Grove Harbor was not consistent with the historic character of the buildings or that of
the historic use of the waterfront and that the architectural solution was intrusive. To the benefit
of Hangar in the Grove, the site was left open and the overall design was more consistent.
However, the concern with Hangar in the Grove is that they have achieved that open area by
4 July 23, 1997
• •
moving the marketplace and the restaurant on to a pier over water. And, the concern would be
that it is difficult to permit nonwater dependent uses over the bay on a pier by virtue of Biscayne
Bay standards and DERM (Department of Environmental Resources Management) permitting
guidelines. So, in all likelihood, we would assume that those activities would move back to the
shoreline which would then introduce a structure where it is not now shown. So, that would
mitigate some of the benefits that Hangar in the Grove had. Generally speaking, we are
assuming that both proposals are restoring the hangars to Secretary of Interior standards as they
have indicated. So, that was a benefit. On Hangar in the Grove, there was a difficulty with the
access road which assumed some use of the adjacent leasehold site which we do not think is
appropriate. So that would have to reconfigured. There was some question about the Grove
Harbor's ability to construct what they have proposed particularly the land canopied area over
the marketplace on the waterfront consistent with South Florida Hurricane Building Standards.
Mr. Marquez: Well, to conclude, again, like I said. Neither one of the proposals are perfect.
There is from our review a clear preference, a stronger of the two on what they presented to us
and from their presentations. That concludes our presentation.
Commissioner Hernandez: I have a question prior to the presentations. And, I haven't seen
anything in the packages, and since we are dealing with it with the FEC (Florida East Coast)
track, if there is an environmental cleanup situation, which I have been told it's not the case in
this parcel, but that's what I have been told from Jack Luft's department. But, if it does come
up, who is going to he responsible for the cleanup?
Mr. Luft: There were tanks on the site. Those have been removed and DERM has given us...
They have monitored the site and indications are that the site is clean. However, in the
negotiations for a lease, just as we did with Parrot Jungle, just as we are doing with Dade
County, we would negotiate the cleanup costs, more than likely, you recall with Parrot Jungle the
first 200,000, I think it was the first 400,000 was theirs. The next increment of cost was ours and
after that we split 50/50. That was the negotiated agreement with that proposer. We might
approach it much in the same fashion.
Commissioner Hernandez: And, I assume this issue will come up once financing has taken place
with... in a case whether proposer gets to bid. today or tomorrow and environmental studies done,
that's when it's going to come up.
Mr. Luft: We would do a Phase II audit again, to resolve formerly and finally all those questions
and then whatever costs, if any, would be addressed in the context of those negotiations.
Commissioner Plummer: Well, I think you need to go one step further, because I hope that you
will not drop the ball. That any of those monies for removing any contamination, you have the
ability to go back to the person who created the problem. And, I would hope that we just
wouldn't write a check for it, that we would go back, as I recall with Merrill Stevens.
Obviously, Merrill Stevens had something to do with causing the contamination. I remember
when we talked about this before, they said, well it was Pan American, you know, 50 years ago
with the airplanes. But, I don't think we, the City, had anything to do with the contamination of
Merrill Stevens. I mean, that's my opinion. Now, the other point that I am trying to say is, that I
would hope that the City would not write a check for any amount of money to remove any
contamination that might be left without going to the source what I think State Statutes allows
you to do. Am I correct?
Mr. Luft: We would certainly take that direction iri our lease negotiations.
Ms. Linda Kearson (Assistant City Attorney): Yeah, we would certainly consider that, but that
would require a lawsuit. You know, you just can't automatically demand payment from the
contaminator. We would certainly take all ethnical effort to collect some...
5 July 23, 1997
•
Commissioner Plummer: Well, I think the lawsuit ought to be automatic.
Vice Mayor Regalado: Jack, was any number suggested or said in the RFP (Request for
Proposals) regarding minority participation?
Mr. Luft: Yes, we have an ordinance that this Commission has adopted that sets guidelines.
They are not a absolute requirement but -they do suggest that the City has a standard that we
prefer each of these proposers meet and points are awarded or deducted in the committee's
evaluation for meeting those standards. Obviously, in the case of Grove Harbor, they exceeded
those standards and will receive the full points. Hangar in the Grove did not and points were
deducted accordingly.
Vice Mayor Regalado: Was it mandatory or just...?
Mr. Luft: Pardon?
Vice Mayor Regalado: Was it mandatory to have...?
Mr. Luft: Yes. The points were automatic.
Vice Mayor Regalado: No, no, to have certain number, minority participation.
Mr. Luft: There is no absolute minimum requirement. It's up to the proposer to decide.
However, they do gain or lose points accordingly in the committee evaluation process.
Vice Mayor Regalado: All right.
Mr. Luft: OK.
Commissioner Gort: Mr. Manager, in C-2 I got full numbers. In C-3, I need the 40 years. I
` don't have that, it's not in my copy. Attachment C. You have the rents and taxes and rents
alone. This is what you all sent us. I don't have the 40 years result.
Commissioner Plummer: OK, and the 40 years?
Commissioner Gort: Right.
Mr. Marquez: Give us a second to find it on our documentation...
Commissioner Plummer: That's in this package here.
Commissioner Gort: This is for rents only. Yeah, but my copy does not have it.
Commissioner Hernandez: Jack, is it fair to assume that once the bid is awarded today or
tomorrow, that we would be responsible? And, I would like to know the status of it. And, I
know it has come before us. Of .the tenants we would be responsible of turning over this
property free and clear with no encumbrances by way of any tenancy that exists there right now.
The holdover tenants, do we have holdover tenants or are there month to month? What is the
status? .
Mr. Luft: We will let the Law Department answer that one.
- Ms. Kearson: Good morning, Commissioner. The tenants have filed a declaratory judgment
action against the City of Miami seeking a course determination that they have a right to the
July 23, 1997
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tenancy for at least the next 25 years. The earliest trial date for that particular matter will not be
until March of 1998, however, the City Attorney's office is in the process now of preparing a
motion for summary judgment. Of course, we have to take steps to get to that point. And, but
that too will take approximately two months. Therefore, any contract, you can in fact award a
contract or award development rights. However, any contract that is negotiated will clearly have
to disclose that there is a pending lawsuit that may have implications. :
Vice Mayor Regalado: But, there is no contract signed that says 25 years. Nothing of that sort.
Ms. Kearson: No, sir. No, we have,no lease agreements with them that stipulate that they have a
25 year tenancy. That's correct.
Commissioner Hernandez: Have they demanded a certain amount of square footage that they
feel that they have a right too, or is it the whole ball of wax here?
Ms. Kearson: I don't have the particulars here. I can find out for you. But, in general, what
they are saying is they have the right to be there for the next 25 years.
Commissioner Plummer: See, we made a mistake of granting them an extension to let them stay
there a little while longer and that's when we get kicked in the teeth for trying to be nice guys.
Ms. Kearson: And, I would ask that you not discuss it further now.
Commissioner Plummer: Well, let me ask you a question, all right? That Amen date was April
or May of the extension?
Ms. Kearson: I think it was April, if I am not mistaken.
Commissioner Plummer: Hello, April?
Ms. Kearson: April.
Commissioner Plummer: April lst?
Ms. Kearson: Yes.
Commissioner Plummer: Am I correct?
Ms. Kearson: That's correct.
Commissioner Plummer: My question is, does the City as the owner of that property have the
right to go put a padlock on the gate?
Ms. Kearson: No, sir.
Commissioner Plummer: Why?
Ms. Kearson: Because they have now filed action against the City of Miami.
Commissioner Plummer: Just because it's pending litigation it doesn't mean litigation is...
Ms. Kearson: It is a lawsuit, sir, that has been filed against the City of Miami.
Commissioner Plummer: So what?
7 July 23, 1997
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r
Ms. Kearson: We are enjoined from taking any other steps at this point. We can't do that.
Commissioner Plummer: I'II tell you;' you put a padlock on the gate, you are going to get in
` front of that court in a big hurry.
Ms. Kearson: You certainly would.
Commissioner Plummer: Well, I want to see...
Ms. Kearson: We don't recommend that.
Commissioner Plummer: Well,. I want to see anywhere in the law that we are enjoined from
putting a padlock on the gate.
Vice Mayor Regalado: I have checked that with some attorneys and we can do that, if we want
to.
Commissioner Plummer: Let me tell you, do we want to? You absolutely. I mean, after they
kicked me in the teeth, insulted this Commission by being nice guys and trying to help them out.
I would ask the City Attorney to find out and to justify it for me, why this City Commission
cannot go there and put a padlock on the gate.
Ms. Kearson: I certainly will.
Commissioner Plummer: Because I think it should be done. I think we ought to kick them out
and kick them out in a hurry. And, just get rid of them. Those people... when they stood before
that microphone, give us 90 days more and we will vacate without any problem. And, they file a
lawsuit, let me tell you something, my father had a name for people like that.
Ms. Kearson: Yes, sir. We will look into that. Thank you.
Mayor Carollo: Commissioner Hernandez has a motion, Commissioner Gort seconds it to
designate Commissioner Plummer to the task.
Commissioner Plummer: Padlocking.
Mayor Carollo: All in favor signify by saying "aye." It passes unanimously.
Commissioner Plummer: Of course, I will have the City Attorney go with me, but that's...
Ms. Kearson: Quinn, right? Quinn.
Commissioner Plummer: I would rather take a girl, they don't hit girls. I merely have one
question before we go into presentations. Mr. Manager, prior to your being on board and I am
not sure how many of my colleagues were here. John Brennan will remember and some others
will remember. Because there was a policy established by this City Commission that at all
times, commonly referred to as Merrill Stevens would remain as a full service boatyard. Now, if
in fact that is the case, I .question that in what I have before me when I do some very simple
mathematics, one of the proposals from what I see gives us at least 72 percent as a full service
boatyard. Where the other proposal is 51 percent. So, I guess I am really asking is, was it clear
enough and more definitive in the RFP, that this City Commission's long standing policy of a
full service boatyard was clearly indicated in the RFP? Because, I am looking at really two one
concept. A marketplace can go anywhere. It can go in the heart of Allapattah, it can go
8 July 23, 1997
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downtown Miami but a boatyard can only go one place. And, that's got to be on the water. So, I
am just asking what happened to the policy that this Commission set many years ago?
Mr. Marquez: Commissioner Plummer, I'll have Jack, talk as to the history because I wasn't
around for that.
Commissioner Plummer: I was.
Mr. Marquez: But, the numbers that are on your sheet right now reflect the percentages of
revenues that have spun off basically to the developer. And, four percent of the revenues that are
including, under the project are boatyard related because the boatyard is operating under the
Hangar in the Grove proposal. Correct me where I am wrong, Jack. But, under the Hangar in
the Grove proposal, Merrill Stevens is paying to Hangar a set lease per year of two hundred plus
thousand dollars. They are conducting boatyard operations. Looking at the detail of the Hangar
of the Grove's proposal, boatyard total revenues -- let me find it.
Commissioner Plummer: Well, you are speaking to revenues, I am talking to the first page...
Mr. Marquez: All right, I think...
Commissioner Plummer: ... where it says boatyard for Hangar is four percent.
Mr. Marquez: I know that. But, that's revenues accruing to the developer. The... and the
developer in the case of Hangar is receiving a flat, escalating but, basically a flat lease payment
of two hundred thousand dollars plus per year. The boatyard operations are generating probably
a bigger percentage if you took the gross dollar value. That's something that I would ask the
developer to explain a little bit further because there's nuances on that.
Commissioner Plummer: That's fine.
Mr. Marquez: Then they could cover that in the proposal.
Mr. Luft: Commissioner, if I may read from the RFP? "The successful proposer shall be
required to provide, enhance and maintain a "full service" boatyard facility which shall offer a
broad range of boating and marina activities comparable to other local full service facilities and
compatible with adjacent recreational uses." OK, the lease that we negotiate will, you can rest
assured, require that happen. Both proposers have proposed a full service boatyard. The
difference is, the amount of profit, the amount of total revenues as part of an income stream that
they are projecting relative to each other. That's the difference.
Commissioner Plummer: Well, you know, income streams can also be many ways.
Mr. Luft: I understand.
Mayor Carollo: Mr: Manager, any additional statements that you would like to make in your
presentation? ~
Mr. Marquez: I think the City Commission should listen to both sets of proposers and both sets
of proposers have heard my comments, so I welcome them to challenge or to vindicate me, either
way.
Mayor Carollo: The way that I would like to do it, to be fair to both groups, the group that will
begin making the presentation will be the one that closes in their final rebuttals or additional
presentation at the end. What I would like to do is, begin by having both groups give a
9 July 23, 1997
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presentation that hopefully will he somewhere in the area of 20 or 30 minutes. If there is more
time that is required for the presentation to be finished, we will let you do it within reason. As
long as we don't start getting into an hour and a half or two or presentations by each group.
Then, once both groups are finished, the Commission will ask questions, then after that process
then you can make closing statements.
Commissioner Plummer: Mr. Mayor; I don't see the need for rebuttal. I think each one should
have 20 minutes of presentation and then have 10 minutes of questions and answers and let's
make a decision. I mean, I don't see the reason... If we go into rebuttal we are going to be back
and forth back and forth back and forth. We are going t~ be here all day.
Mayor Carollo: Well, J.L., this is an important project for the City and obviously it's been an
important enough project for both of these groups here that they have taken a substantial amount
of their time, they have spent a substantial amount of dollars in finally being here today. I think
it's only fair that once both groups make a presentation, once we ask questions, make statements
that they have a chance to make a final presentation. We don't want to call it a rebuttal. So,
that...
Commissioner Plummer: Would you limit that also, then?
Mayor Carollo: The final one, we will limit it to ten to 15 minutes.
Commissioner Plummer: Fine.
Mayor Carollo: Do you want to go lots to see who begins, who finishes?
Commissioner Plummer: Flip a coin.'
Mr. Marquez: Actually, I was going to go alphabetically but...
Mayor Carollo: I have got atwo-headed Sicilian coin that I brought back, who wants to use it?
Commissioner Plummer: Do you want to Clip a coin? I'll Clip a coin for you.
Mayor Carollo: OK.
Commissioner Plummer: All right. Heads will be Grove Harbor and tails will be the other one,
right?
Commissioner Gort: What is it?
Mayor Carollo: He saw it on the air, then when he saw it he went like that... Boy, I tell you, this
guy is too much. Mr. Manager, you throw the coin. You throw the coin, Mr. Manager.
Commissioner Plummer: Why did you do that?
Mr. Marquez: Who was heads?
Commissioner Plummer: Heads was...
Unidentified Speaker: Grove Harbor.
Mr. Michael Moore: I think we are up.
10 July 23, 1997
~ •
Commissioner Plummer: Wait a minute, don't you want two out of three?
Mr. Moore: We already won two out of three.
Mr. Ramon Rasco: Good morning, Mr. Mayor, members of the Commission, ladies and
gentlemen. My name is Ramon Rasco. I am an attorney with offices at 5200 Blue Lagoon Drive
in Miami. Before getting started I would like to introduce for the record...
Commissioner Plummer: Mr. Mayor, excuse me. It was suggested made previously if you want
to think about it, that we, the Commission, go down in the audience -- you want to do that? -- so
the audience can see all of this and TV can see it?
Mayor Carollo: That will be fine. We could do it that way and then turn it around.
Commissioner Plummer: Why don't you take all of these charts, turn them around here and we
will go sit in the front seats?
Mayor Carollo: Yeah, we are going to be saving our questions..
Commissioner Plummer: 'till the end.
Mayor Carollo: ... for the end, anyway.
Mr. Rasco: Thank you, Mr. Mayor. Again, my name is Ramon Rasco, I am an attorney with
offices at 5200 Blue Lagoon Drive. Before getting started with my presentation, I would like to
introduce for the record packets with most of our boards as well as amortization schedules
showing our debt service, our exact debt service requirements which you will see we can easily
meet and exceed with a cash with the project from day one. I am very pleased to be here this
morning and very proud to represent Grove Harbor Marina and Caribbean Marketplace. This
team is very representative of our community. It is made up of diverse, hard working, successful
businessmen and community leaders who typify the values and the work ethic that has made
Miami the success and the internationally recognized City that it is today. Our team knows how
to get things quickly, efficiently and successfully and we will show you that when we get started
with this project. Of the three proposals that were originally submitted and the two that remain,
the Grove Harbor proposal remains the most throughout, the most conservative, the most
balanced and the most viable proposal before you. In short, there is no question and we will
show you this morning, that the Grove Harbor proposal is the very best proposal for this project.
Last evening we received and reviewed with great interest the Manager's report to this
Commission and his recommendation. While we agree with most of the points made by the
Manager and his professional staff, which as we read them we find that most of them are in our
favor, we strongly disagree and we think that you will too with its conclusion that Hangar's
proposal is the stronger of the two: On the contrary, we feel very strongly and I think that we
will show you that the Grove Harbor proposal is the stronger. The Manager's report gives three
principle reasons for his conclusion. Let's examine them. The first reason is, that Hangar's
investment committed to improvement to the property adequately covers the projected costs of
the historic restoration of the hangar structures. Although Hangar's proposal projects a higher
cost to improve and refurbish the small and the large hangar, the result... this is the result of their
much more intensive use of the large hangar for a nonhistorical purpose. They propose to build
an air-conditioned, multimarketplace with multiple restaurants which is significantly more
expensive and consistent with the RFP and the charette and in direct competition with the
restaurants and adjacent properties such as Monty's and the Charter House who are also tenants
to the City and will therefore be impacting the rents paid to the City by those tenants.
Additionally, they pay more for their construction because they do not have the construction and
development capability in their ownership which we have and this will make their cost of
11 July 23, 1997
~ •
construction much higher than ours. After reviewing the Manager's report we went back and
reexamined our cost projections for the historic restoration of both hangars, fully taking into
consideration the Department of Interior standards and we can confirm to you this morning that
our projections are not only reasonable but that because of our lower costs our project is much
more conservative and much more viable than Hangar's proposal. But, you will have
substantially higher and more burdensome financing and debt service costs. We project nearly
two million dollars ($2,000,000) if you include in the second line the restoration of the small
hangar as the marketplace and historic restoration of both hangars for a much, much less
intensive use. Neither one of our hangars will be air-conditioned and both hangars will much
more respond to the historic use ofthese properties. Notwithstanding and with this difference
still, our projected investment of five million dollars ($5,000,000) is substantially higher than the
minimum investment of two million dollars ($2,000,000). Two million dollars ($2,000,000) is
what the RFP required. We are proposing to invest five million dollars ($5,000,000) and we
think that is the right number for this property. It will also take us two years to build it because
we have experience, direct experience in our ownership. They will take, they say, four years to
build their project. The second reason given in the Manager's report is that Hangar's business
plan is more highly defined and conservatively constructed. We really don't know about that
and it's hard to address those very general terms. But, ultimately, in our opinion, the test of a
project's strength lies not only in the business plan but also in all of the factors that are
considered in the Manager's report plus one key element that is not, that is not addressed in the
Manager's report and that is the operator. A critical element to the success of any project in any
business is that its operators and the responsible parties have direct experience and know how
and the expertise to run them. Grove Harbor is the only team with owners who have extensive
experience in development and construction and in the management and operation of marine and
boatyard facilities. We also are the team with the highest minority participation in our
ownership, 84 percent versus less than nine percent for Hangar in the Grove which is
significantly less than the 30 percent good that was stated in the RFP. Our team also has the
experience to run the marketplace. We have principals in our team who own and operate
shopping centers and commercial rental facilities and we are the only team that since day one has
had an unwaivering commitment to this project. We have never pulled out, we have always been
here from the beginning until the very end, and we will be there. Hangar is using a number of
consultants, subcontractors and third parties very capable but all hired, not part of the ownership
team due to the lack of experience, direct experience in development and construction and in the
ownership, management and operation of marine facilities. From a financial standpoint, this
makes a development construction, management and operation of their project much more
expensive for them and puts the City at greater risk. The third reason given in the Manager's
report for his conclusion that Hangar is stronger, is that Hangar's financial plan is overall
stronger. We strongly and sincerely disagree. In order to show you that our proposal is
significantly stronger overall, particularly from an economic and financial perspective, we will
review the rest of the elements of our proposal and respectfully point out some major Claws in
Hangar's proposal Mr. Hangar hit the nail on the head, he is right on point. Our proposal has as
its foundation the use of this property as a boatyard and a marina, which are the primary uses
required by the RFP and which also came out of the Community charette and which are the most
water dependent and the most suitable and natural uses for this waterfront site. In addition, those
uses respond to the tremendous demand for marine facilities in the Dinner Key area and conform
to the historical uses of this property. In addition to the historical marine uses of the property,
Grove Harbor will provide expanded marina services which compliment existing, and not
compete with, compliment, existing marina services in the area by adding more slips for dockage
as well as other necessary services such as food service, fueling, charter boat concessions, food
service concessions, boat amenities like showers, laundry machines, restrooms etcetera, and
16,000 square feet of marina retail including boat brokerage and marine trade schools. Our
project is fully permissible today, under today's codes and laws and provides for the highest
number of wet and dry slips permitted which is just under three hundred. And, we have checked
the numbers of the original planning counsel and we can have, without having a DRI or anything
12 July 23, 1997
~ •
else a total of 265 wet and dry slips on this property which is significantly more than the 99 wet
slips that Hangar proposes. As a result, our project derives 72 percent of its revenues from
proven and successful maritime uses at this site which are based upon rental and income rates
that are already in use and accepted in the market place today as confirmed by the Manager's
report. In contrast, Hangar's projected revenues from the marina are based 100 percent, 100
percent on transient rates which is not the experience of any marina in South Florida and is,
therefore, very unrealistic and makes their projected revenues from the marina very speculative
and somewhat suspect. The bottom line, ladies and gentlemen, is that the highest and best use
for this property is for boatyard and marine facilities. These are our primary uses and the source
of approximately three quarters of our revenues. The third element proposed by Grove Hangar
for its development and operation of the property, it's a public community marketplace which
we have designed as the Caribbean Marketplace. This is the preferred of several optional uses
permitted by the RFP and the charette. In contrast, Hangar's proposal emphasizes almost as a
primary use their market place and restaurants. A Caribbean marketplace serves to integrate our
community in all. of its rich, cultural diversity and provides a traditional community market for
use by local residents and captures the early historical use of this site by Pan American Airlines
which Clew to the various Caribbean countries that will be represented in our Caribbean
marketplace. Our marketplace will create approximately 250 new jobs. I am sorry, 250 new,
small business enterprise opportunities and approximately 700 new jobs. Our consultant for the
marketplace will stay on through the leasing and as long as we need him. It's Aaron Zoretsky
(phonetic) who designed the very successful and show case Pyke's Place Marketplace in Seattle.
One of the most profitable in the country. Our team also proposes to restore the bay walk which
will open the waterfront to the public from Monty's down to the Charter House and south of City
Hall and our team will provide all of the other public amenities that are required by the RFP.
Our design for the use of this property with our two principal uses of the site being a boatyard
and marina and the third use as a marketplace, makes our proposal far more humongous,
balanced, viable and conservative and also more consistent and compatible with the surrounding
uses than Hangar's proposal. We derived as I said before and as was pointed out earlier, nearly
75 percent, 72 percent of our revenues from the marina and the boatyard and 28 percent from the
marketplace. In contrast, the other proposal derives fully one half of its revenues from a
marketplace and a restaurant and the restaurant today is an unpermittable use as Mr. Luft
explained, which again makes Hangar's revenue projections very speculative. Of critical
importance to the City of Miami today with its current crisis and at any other time is the financial
return offered to the City. Grove Harbor is the only team that has permitted from day one, from
the very day it signs the lease, to pay the City the full minimum rent of three hundred thousand
dollars ($300,000) which was required by the RFP. The other team proposes to pay much of that
after year ten. With our team's development construction and marina management expertise, we
will he in the black from the very first year of operation. We will be preleasing the project. Our
principals have done that before during our two years of construction and we fully expect that
when we open for business in year one of operation, we will have occupancy in this very prime
piece of property of at least 90 percent. Any CPA (Certified Public Accountant) can confirm the
financial projections beyond the first ten years of a project are almost meaningless. If you
examine the financial returns to the City based on our projected use of the property versus
Hangar's projected use of the property during the first ten years, the return to the City from our
project including the tax savings they were passing on to the City, exceed four and a half million
dollars ($4,500,000) in those first ten years which is almost double what Hangar will be paying
to the City. The bottom line is, that we are paying significantly higher percentage rent. For
example, in most of our revenue items, we are paying ten percent percentage rent, Hangar is
paying seven percent. In fuel revenues we are paying five percent of gross revenues, Hangar is
paying a flat three cents per gallon. Whether the fuel is one fifty a gallon or three dollars ($3) a
gallon. If you look at their boatyard revenues that... on which they are paying the City because
of sublease arrangement with Merrill Stevens, they will be paying to the City less than one
percent of the boatyard revenues that will be generated at this site. Our proposal commits to
paying the City a full ten percent on all of the revenues of the boatyard from day one. Hangar's
13 July 23, 1997
• •
projected loss in its first eight years also raised a big, red t7ag. Hangar expects to lose in excess
of four million dollars ($4,000,000) in its first eight years of operation including their four year
construction period. Will. all of Hangar's partners be willing to continue to infuse additional
capital in order to keep this project going for eight years? I don't know, perhaps. Will their
ownership be diluted? We don't know. I think the important question is, can the City of Miami
at this point in time really afford to take that gamble. Can we watch the property language for
another four years under construction and then be operating enormous loses for four years after
that? And, can the City afford such a gamble with a project that proposes a 45 foot pier with a
covered two-story structure and a restaurant that is today prohibited under applicable
environmental law? Frankly, we will caution against it. I don't think the City can risk another
failed project in this prime piece of property. The independent CPA's report questions our
team's ability to service its debt but fails to consider that Hangar's debt burden will be more than
double our. Hangar's debt burden of over seven and a half million will have to be paid with
significantly lower revenues, some of a speculative nature as pointed out before. In contrast, we
will he easily able to service our debt. We have run our number and we have run numbers with
15 percent less as requested by the City Manager which was too much a reduction. And, even at
that reduction in our revenues, we are still 100 to two hundred thousand dollars ($200,000) in the
black, in surplus from year one of operations given the fact that we know how to do this; that our
cost will be less because our use will be less; that our product is a proven product for this site
and that we have the construction and managerial expertise in our team of owners. In
conclusion, Mr. Mayor, and members of the Commission, there is no question that Grove
Harbor is the best, the most balanced, the most viable and the most compatible project consistent
with surrounding uses. It is the most responsive to the RFP and to the Community charette. It is
the best structure financially and will provide to the City the highest returns consistent with the
desires of the community. And, I believe, that there is no question that it is the stronger of the
two proposals. I will be pleased to answer any questions that you may have and I have here our
owners, our experts, our engineer, our architect to answer any questions that you may have.
Thank you, very much.
Mayor Carollo: Hold the questions until the end.
Mr. Rasco: Thank you, Mr. Mayor.
Mayor Carollo: We will wait another minute or two so the next group can get set up and begin
the presentation.
Mr. Michael Moore; Good morning, Commissioners. Good morning, ladies and gentlemen, my
name is Michael Moore, I am one of the principals in the Hangar in the Grove project. This has
been quite a process, I think it has been going on now for about ten years, back to '85. It's been
a long road, it's... there have been a few distractions along the way. I would like to take just a
few minutes this morning to tell you what I think are the two important things about the two
most important things that you have to decide in making your decision this morning. I think you
have to decide who will be involved in the project and what is proposed on that site. We have
taken our case, we know you are the decision makers, but we have taken our case to the City of
Miami Review Committee and they selected our proposal. We took our case to the Waterfront
Advisory Board, they selected our proposal. We took our case to the Marine Council, they
unanimously selected our proposal as the best proposal. We took our case to the Coconut Grove
Chamber of Commerce and they, with the exception of one vote, unanimously selected our
proposal. And, finally, we are pleased to see that the City Manager has recommended our
proposal as well. I would like to tell you first about who you will be looking to, who you will
hold accountable if you decide that our proposal is the best one here today. The principals of
this group, the people that will be writing the check, the leader is Hugh Westbrook. Hugh
Westbrook lives near by, ,he lives in Coconut Grove. He raised a family here. He literally
started his business out of his garage. He now runs a two hundred and fifty million dollars
14 July 23, 1997
• •
($250,000,000) a year business here in Miami. The head office of which is right off Biscayne
Boulevard in the heart of downtown Miami. They employ over I think, maybe over 1,100
people. They have one of the most enviable records in corporate America in terms of their hiring
practices and the way they treat people. It's a model corporation and we are pleased and proud
that Hugh Westbrook has decided to step out of his role in corporate America to become an
investor in the City of Miami. And, you have never seen him here before. But, this is something
very near and dear to him. He is a boater and he loves the water. He cares about Coconut
Grove. As I mentioned, he lives here and raised his family here. I met Hugh through the United
Way and what is called the Elexus to Tocaville Society (phonetic). I was chairman. It is the
upper eschelon of giving for that philanthropic organization and he was one of our best
members. And, I went to him to see if he would be interested in a project that was near and dear
to me. I have always loved this community and the boating aspects of this community, that's
why I moved here. I raised my family here. Both of my children in the back row there, St.
Stevens School here in Coconut Grove. I am a former member of the U.S. Sailing Center,
executive board there. I am a member of the Ocean Reef Yacht Club, the Coral Reef Yacht
Club. Former president of the Marine Council and I have always tried to do the right thing by
this community. And, we were involved instrumentally in pulling this team together. Dr.
Gomez, one of the founders of the Academy of Hospice Care Physicians, was brought in by
Hugh because they work very carefully in their life's work in the health care business.
Representative Kendrick Meek, former Captain in the Florida Highway Patrol who know works
with Wackenhut Corporation, State Representative, son of Carrie Meek, has been a lifelong
friend of Hugh Westbrook. Hugh introduced me to Kendrick Meek and said this is someone that
you are going to enjoy knowing and we would like to have him on our team here to make sure
the entire community is included in our project. Gonzo and Marisel Diaz are personal friends of
mine. Gonzo runs a health care, a parts medical supply company, here in Greater Miami. His
father before him did that in Cuba when they immigrated here, they started the business over,
very successful. Marisel has her own business, a very successful designer here in Greater
Miami. They raise their family here. They have a child in school in Coconut Grove and their
oldest daughter Veronica is, I am pleased to say, off at Princeton University, she is a swimmer.
And, they grew up right here, they also care about the Grove. They live about ten minutes from
here. So these are the people that will be writing the checks. These are the people that will he
the spiritual leaders of this project. But once we decided that we were willing to commit
ourselves financially, we then said "OK, what do we want to do, what to we want to bring before,
the Commissioners of this City to be the people that will make this thing actually come to
fruition, to life"? For some reason it's not on here but I will mention it as a starting point. I am
pleased to say that we went to Harrison Construction. Some of you know John Harrison, he is
sitting in second row back there. He is a third generation Miamian and is with his son. His son
will be the fourth generation. Jahn is a person that I have always admired in this community.
He is the president of the oldest general contractor in the State of Florida, Harrison Construction.
They did not tall off the turnip truck last week, they know what they are daing. When they say
it's going to cost four million dollars ($4,000,000). It's going to cost four million dollars
($4,000,000). We didn't like the fact that he told us that the cast of the money that we were
putting into the large hangar, that we have to put in a large hangar exceeds the total cost of the
other bidder's whole project. But, basically, Harrison Construction said, this is what it will take
to comply with the Department of Interior guidelines. John Harrison is a past chairman of the
Historical Museum of South Florida. He didn't decide to get involved in community activities
yesterday. He has deep roots in this community. His father, who compiled one of the greatest
marine collections of small boats and so forth has donated that collection to the Historical
Museum of South Florida. He is the kind of person that we wanted to be involved with us in this
project. Alan Morris, has had 76 commercial projects. All successful. No failures, no whoops,
no bait and switch. The very best that this community has to offer is Alan Morrison Company,
the people that will be running and coordinating this site. We wanted to be sure that within the
context of what we proposed we have the very best advice in terms of managing the marina. We
hired a company called Marina Management that we identified as we think the best in the world
15 July 23, 1997
in running marinas and the subtleties of running marinas. Ronnie Strowd virtually started the
entire business of Marina Management, up at Pier 66, up in probably 40 years ago, up in Ft.
Lauderdale, Florida. And, Dennis Kissman in your larger packets, you will see seven or eight
articles that we just picked at random that Dennis Kissman has authored on the management of
marinas. They are very good at what they do. They are the best. We also went out and
surveyed literally the world, in terms of marketplaces. This is a very key component of our
proposal and we have identified the two groups that we think are the best in the world. Loose
Steel who is generally recognized as the best, who has a marketplace in Kansas, and Public
Market Partners. These people literally wrote the book. We have provided all the various
review groups that have seen us so far with copies of some of their publications so they can
understand what their philosophy is. And, essentially it is, that whatever goes into a site, it has
to reflect the community. For example, the Pyke's Place Market which was referred to earlier in
Seattle, reflects that seafaring community's heritage. It's a Farmers' Market basically. This is
not what we proposed on this site. This is a community marketplace, very different. The
boatyard, we have made a relationship with Merrill Stevens. Merrill Stevens has been in
business for 112 years. One hundred and twelve years. It's one of the oldest if not the oldest
business in Florida. They know how to run a boatyard. For decades we have been talking about
the misuse of the marine community in Greater South Florida. And, one of the star works of this
community and doing the right thing and longevity and being dependable and serving this
marine community is Merrill Stevens. We have also brought in the Coconut Grove Local
Development Corporation that we think is an organization that reflects the diversity of this
community. And, they will help us as we try to develop the proper presentation, the proper
project for this very important site for this community. Our plan is for the most part a... the
name says it all, it is a marina, a boatyard and marketplace. As you can see, a large... over SO
percent of the land mass of this project is the boatyard. Why is the number four percent? It's
very simple. We, our mission, our guidance to Merrill Stevens was, we want a full working
boatyard on this site. We want you to deal with all of the needs of this boating community from
the north through the U. S. Sailing Center, the two yacht clubs, Monty's, all the way to Coconut
Grove Sailing Center and every boat that comes to Miami that needs service, we want you to be
able to deal with it from this location. And, we have... or if the vessel has a limitation, we have a
draft limitation here, you cannot have a vessel here more than... at maximum 70 feet, 65 feet,
take the work up the river. The other proposer has what is called a strategic alliance only what
they call it the Las Americas Marina on the Miami River. But, Merrill Stevens is here, they will
work on this site, but in terms of revenues we are requiring them to pay us, what translates into
four percent of our total revenue stream. How much they make is another issue. We will
culminate the property with them but that's... we believe is a driver of the entire project is a full
service boatyard: Merrill Stevens is a full service boatyard. It's ridiculous to suggest they are
not... they are anything but that. They have been that for 112 years. It's what they do, it's how
they feel their families and so forth. This is our site plan. We have some historical precedence
for a little, it's virtually a snack shop. It doesn't have to be a snack shop. If it's not approved,
fine. We will bring it ashore. We think it's a nice design feature. It may just end up being a
pavilion for the pleasure of people that come down and stroll the waterfront and want to sit out
and watch the sun rise or in the evening to watch the moon. It's a design feature, it should not be
viewed as some deal killer. It's a question of whether DERM (Department of Environmental
Resources Management) or other agencies actually approve it. We have preserved the dingy
harbor, the tender harbor. We even.. We don't think it should be paved over to get a few more
dollars in the till if we can otherwise present viable economic return to the City. We think it's a
nice place where children can come and enjoy the water and play with the dinghies and then
enjoy what the waterfront is supposed to be m this community. Slightly different perspective -
we'll get through this, I am sure - this is a slightly different perspective from the waterfront, you
can see the harbor master's office and the dingy harbor is preserved with a little bridge that we
have looked into regarding... it's a swinging bridge like the kind that you see all over Holland,
those of you who have been to Holland, and other design features. We are the only group that
does not obstruct the visitors to the bay. We are the only group that does not build additional
16 July 23, 1997
• •
buildings on this site. There are no other buildings. This is what's there now, just through a
process of adaptive reuse, they are what they are. You can see straight through the large hangar
from Bayshore to the water, that's our objective. A little bit of another scene to give you a little
bit more of sort of feeling of the place. It is principally, this is the view that is on the south side
of the building showing the bridge once again on the dingy harbor, you get a feeling for it. Our
project, we believe and the City Manager has so found, will return essentially the same revenue
stream to the City as the other project. We have agreed that we would pay the minimum from
day one. Yes, our minimum proposal showed what we think is the appropriate way to develop
this property. We are conservative. All of our numbers are conservative. Every person, every
accountant, every City finance official that has looked at our proposal has said it makes sense,
it's conservative and the numbers work. We are not going to second guess the finest marina
management company in the world who says this is the way to run this marina. Why is it high
transient? They say, well it is very simple. You do not want to just take boats from the marinas
to the South. You don't want to just take boats from Monty's to the North. You want to market
yourself to bring new boats to the area and to serve a different clientele of boats. This sign has a
site restriction. It has a size restriction on the kinds of boats that can be served there. Our
experts say that our mix of slips is the most... is the smartest approach and the one that will
work. And, that is consistently our team throughout our presentation. Let me simply conclude
and take questions by reiterating we believe that we have a solid financial commitment and
everyone who has looked at this says it is a solid financial commitment by successful business
oriented people. Our plan involves the entire community. There is no one excluded here. The
leadership is a people that care about the community, they are philanthropically minded and
civic minded people, have long deep track records in that regard. We are the only group that has
a historian on our proposal. We retained Arva Moore-Parks who we think is the finest historian
in this area. Many of you know here I am sure. She cares about this community. She has
guided our program from day one to make sure that it is completely consistent with the historical
uses of this property to the extent that we have of course been acquired to go through an
adaptable use process. But, to the maximum extent possible our program reflects the tradition of
Miami, its maritime heritage, its aviation heritage and at the same time returning the financial
return to the City. We believe it will... that it is... that we have brought to you the finest
operators and consultants that can be obtained anywhere, we are willing to discuss their
credentials with you in more detail if necessary. And, that ours is a realistic, financially viable
proposal. Thank you, so much. [APPLAUSE] Thank you.
Mayor Carollo: We will open it now for questions and or statements from the Commission.
Commissioner Gort: I have a question.
Mayor Carollo: Go ahead.
Commissioner Gort: A statement was made, the ten year differences, according to the
presentation of Group I is different from the ten years that you have given us. The ten years
revenues to the City. They got a projection of, I think it was four million.
Mr. Marquez: I have got the CPA's breakdown of the minimum rent and the taxes pieces. The
return to the City on the first ten years are the present value basis. Grove Harbor is four million
dollars ($4,000,000), Hangar in the Grove is three point one million.
Commissioner Gort: Right, but the presentation that was made to us is four point and two point
three. I want to know where the difference is.
Mr. Marquez: I don't know where the differences are either, sir.
Mr. Rasco: May I?
17 July 23, 1997
• •
Mr. Marquez: OK.
Mr. Rasco: If I may answer the question, Commissioner Gort. The CPA's projections, and I
saw them, are based on minimum rents, not on projected rents based on what each team is saying
they can and will do. If you go by minimum rents, you are betting on a failure because you only
pay minimum when the project is failing. You gross percentage rent when the project is doing
well. And, our numbers are based on gross percentage rents presented by both sides and we can
go through them and they are right here.
Mr. Marquez: OK. We have Tony Jackson from the firm of Sharpton and Bronson.
Mr. Tony Jackson: All right, yes. That is not correctly true. We have in fact included the
greater of the minimum rents or the revenue projections that they included in their ten year
projections. Or perhaps in our report dated December 24, 1996, that was not the case. But, we
have, in tact, gone back and made those calculations. Secondly, and I think there is a major
difference in their return and the return that we are coming up with, is that they are also
assuming this million dollar payment that they are going to be making, this tax savings that they
are going to make back to the City. We were instructed that those were "off site payment" and
should not be considered in putting together our financial return to the City.
Commissioner Plummer: I have a question of Harbor in the Grove. Hello? I am calling collect.
Vice Mayor Regalado: Grove Harbor.
Mr. Rasco: Grove Harbor.
Commissioner Plummer: Huh? '
Mr. Rasco: Grove Harbor or Hangar in the Grove?
Commissioner Plummer: Whoever game me this. I have a thing here about a petition for a
deceased man. I didn't find this at the funeral home.
Vice Mayor Regalado: That is your department.
Commissioner Plummer: You gave it t~ me, sir. What is it?
Mayor Carollo: They were trying to please you, Commissioner.
Commissioner Plummer: No, sir. Give me that back, please?
Unidentified Speaker: This is a copy of a letter that was taxed here by mistake.
Commissioner Plummer: OK, fine. Thank you, sir.
Vice Mayor Regalado: Is it buried yet?
Commissioner Plummer: All right...
Mayor Carollo: It just goes to show you that Plummer has always got a good eye for the dead.
Commissioner Plummer: You bet your hippy. Your dying is my living. To the group over here.
Would you go back please, Mr. Moore, through... I didn't quite understand your relationship
i g July 23, 1997
• ~
with Merrill Stevens as to the four percent? Is Merrill Stevens basically an independent operator
and only four percent of their money goes to you which then in turn comes to us? Would you go
a little bit deeper into that for me, please?
Mr. Moore: Yes, Commissioner. We are guaranteeing the City the minimum that's required.
Which essentially our guarantees are effectively the same as the other proposers. That's the
proposer is guaranteeing that to the City. Now, how...
Commissioner Plummer: Either that or you couldn't bid. So we understand that.
Mr. Moore: Yes. Yes, Mr. Commissioner. Now, the way we have handled the situation with
the boatyard component is that we though rather than getting into, do they make this money or
that money or do they serve this vessel or that vessel. For example, you know, if a vessel were
moved up the river should that revenue have come to Dinner Key. We decided to eliminate that
concern by simply saying to Merrill Stevens, we want a full service boatyard on this site, all
disciplines that go into a full service boatyard, and we want you to tell us your number for what
that will cost us. In other words, we want you to be our partner but we want to know what
number does that represent to us. And, that's where the four percent of revenue figure comes
from. It is, they are paying us two hundred thousand dollars ($200,000) a year and that's the
number we are using and which translates to the four percent of gross revenues.
Commissioner Plummer: That would not increase at all or decrease on their gross?
Mr. Moore: The... that would not decrease or increase or decrease on the gross. I mean,
obviously we could renegotiate with them if we cared to. We don't think...
Commissioner Plummer: I am not trying to renegotiate anything. I am merely asking what's
here now, if in fact the four percent is what the City is going to be getting in its return or are we
getting four percent of what the total gross of Merrill Stevens annual are? That's why I am
asking the...
Mr. Moore: It is not four percent of Merrill Stevens' total gross. Because just like in the other
proposal where the Las Americas has a marina on the Miami River, Merrill Stevens has a marina
on the Miami River.
Commissioner Plummer: I understand...
Mr. Moore: So, we are not concerned with their gross. What we have said is that we would like
them to provide a full service marina on the site, full service boatyard and the amount of money
that we have negotiated with them, which we think properly ret7ects realistically what boatyards
make, and we know boatyards. They are low margin operations. They are two hundred
thousand...
Commissioner Plummer: So, it's a two hundred thousand dollar ($200,000) item regardless of
their gross?
Mr. Moore: This is correct.
Commissioner Plummer: OK.
Mr. Moore: Whether they are below it or above it.
Commissioner Plummer: So, in other words, the City is looking to the boatyard operation at
maximum, minimum standard two hundred thousand throughout the contract.
19 July 23, 1997
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Mr. Moore: The City is going to get a full service boatyard whether Merrill Stevens makes no
money there or lots of money there. You are going to get a full service boatyard, that is correct.
Commissioner Plummer: In the years to come, would it not be conceivable that the gross of the
operator whether it's Merrill Stevens or someone else would he higher and that in fact the City's
portion would be higher?
Mr. Moore: All of our evidence, all of our markets indicate that is a remote possibility, that the
margins for boatyards is so low. That there is really not that much to he made in that regard.
That real cash machine here are the wet slips and other ancillary type services which would be
part of the City's gross number upon which we would pay a percentage. The boatyard operation
is a marginal operation. It is a service operation. It is provided to the City of Miami, the people
of Miami. We think two hundred thousand dollars ($200,000) is a very fair, even highend
percentage, a highend number.
Commissioner Plummer: Thank you.
Commissioner Hernandez: Mr. Moore, I would like you to comment on Sharpton and Bronson's
comments in reference to the economic feasibility of your development referenced transient
revenues. They felt that it was very optimistic, the numbers you were using based on 100
percent transient and I would like you to comment on that, on why you would obviously disagree
to their comments on that.
Mr. Moore: Absolutely. First, let me say, this is the only component of our project, of any in
any way, shape or form that's ever deemed to be overly optimistic. But, notwithstanding that,
you are absolutely correct, they did say that. We believe... What we have relied on is Marina
Management, their expertise, their entire business is managing marinas. They believe that when
you consider the whole of this area from the north to the south, the number of boats in the area,
the type of operation that will be conducted on that site, specifically a repair facility. You don't
go to Dinner Key for repairs. You don't go to Monty's for repairs. But, when you consider a
repair facility that has an upside, a shoreside operations like this site will have, like... including
the fuel dock, including the amenities that will he put there, the marketplace and so forth, and
further considering the fact that we have draft restrictions there that are fairly substantial. The
largest boat you can get in there is... the boats that you are going to see there are in the 30 foot to
60 foot range. Given all those factors and the market survey that our experts did, we will stand...
we stand by our position. It's guess work to some extent. On the City's part and our part and on
Bronson's part. But, we stand by what Ronnie Strowd and Dennis Kissman who are experts in
this area, the experts in fact, say will be the experience we will have at that site. It's just that
simple.
Commissioner Hernandez: If somebody would want the need to have permit dockage is there a
facility for permit, or are you just going to be dealing with transient?
Mr. Moore: I think that what... that's a good question because that gets into the subtleties of
running a marina. In other words, you got to know how reliable, do you understand your
business so that you can actually grant the permanent dockage to someone but still have the
right... the availability of docks for the transients. You are actually now talking about increased
revenues and I don't... It's hard to... the complexities, it's like looking at Monty's and you look
at all those boats and what you have to understand is, those are boats for sale. So, it's the
perpetual boat. It's a different boat but it's always a boat. Well, our marina people say there
will be room for permanent moorage, permanent dock as long term leases and so forth. And,
that's a nice income stream to get. That's in addition, frankly, to the way we are looking at this,
the marina side of this project.
20 July 23, 1997
i t
Commissioner Hernandez: Transients will pay more than permanent dockage?
Mr. Moore: Transients do pay more.
Commissioner Hernandez: Right. That's how we do it here.
Mr. Moore: Yes, they do.
Commissioner Hernandez: Let me ask you a question on, in reference to site design that I would
like you to comment on. I made some notes and I personally spoke to DERM in reference to site
design. According to them they have told me that the restaurant that is in your rendering is
including the pier vending would have to be relocated, that they cannot be built according to
where you have put it in your designs.
Mr. Moore: Right.
Commissioner Hernandez: What do you intend to do about this, or do you intend to challenge
DERM?
Mr. Moore: First, of all it has to be a little bit of a stretch to call it a restaurant. It's a small
snack bar facility. The question is, is it water related, is it water dependent? These are the kind
of issues that DERM uses to... We have been in close contact with DERM. We have lawyers
who do this for a living. The... one of the ways that you get this sort of feature for the City of
Miami is, can. you prove that historically, in the historical context there was something at that
site that looks like what you propose to do today. Arva Moore-Parks has identified an over the
water restaurant that was used on that site in the very early days of the City of Miami, on that
very site and that restaurant would actually move the principle state on that site up and down the
coast serving the construction gangs that were building the City of Miami in the late... early
1900s.
Vice Mayor Regalado: But, if...
Mr. Moore: So, we have historical presence. If the question is, will we get approval, the answer
is, we do not know. That's a process. There is a lot of people who are basically trying to
prejudge what DERM is going to do, we are going to give it a shot. We think it's a nice feature
that people will like it and they will enjoy the water. Whether we get it or not, we don't know.
If we don't get it, we are going to move it shoreside.
Vice Mayor Regalado: How would that impact the whole project if you have to move it in?
Mr. Moore: It won't impact it. It's a small .area, we would just simply relocate it to the
shoreside. It's... we have a lot of open space. Over half of our site is the boatyard, but the other
halt of the site is, for the most part, open space. And, we would just put it in one of the... in
some of the open space. We would have to consult with the architects to make sure it looks, you
know, attractive and so forth. Essentially, what the other groups are doing.
Commissioner Plummer: You're saying that it's going to... Are you finished?
Vice Mayor Regalado: I just want to ask the Manager, when is the City going to start getting
payment, if we were to resolve this immediately and you will draw up the contract, what is your
timetable for payments?
Mr. Marquez: We would hopefully start to contract... I mean negotiations immediately. How
long that takes, I imagine that would be about a month process. And, as to the actual timing, it's
21 July 23, 1997
• •
a negotiable item between us and the parties. But, the City of course, is going to push for a
quick a payment as possible.
Vice Mayor Regalado: It is clear however, that we can proceed with this without taking into
account the suit that has been filed?
Ms. Kearson: Certainly. Yeah, as I said. We have it disclosed and they are aware that there is a
pending lawsuit but we can proceed to negotiate with them. That's correct.
Commissioner Plummer: Mr. Manager, on this sheet, and I have so many of them up here, I
don't know who gave me what. Is that your sheet?
Mr. Marquez: Oh, yes. That is from the CPA firm.
Commissioner Plummer: One firm says it's going to take them four years to build, and I think
the other firm said it was going to take them two years to build, correct? Now, as I look at this,
the first column shows the first four years, they are only going to pay us one hundred thousand
dollars ($100;000) a year. I thought the minimum, annual guarantee was three hundred
thousand.
Mr. Jackson: As I mentioned previously, we have done a rework of those numbers and I thought
they were passed out to everybody. Whereby there is a guaranteed minimum from Hangar of
three hundred thousand dollars ($300,000) a year.
Mayor Carollo: But, but... the question that I have is, when you say you have done a rework,
was that after the initial bids were opened and looked at or...?
Mr. Marquez: Mr. Mayor, may I answer you on that? As part of the process there were certain
questions that were raised... they did the presentations. Staff had questions that we wanted them
to respond to. We formerly sent the same letter out to the three firms with those questions and
saying in the case of Grove Harbor there was a concern of staff that, you know, the permitting
came in less than the.., what they had proposed in wet slips. So, we have asked them to rerun the
numbers based with a 15 percent reduction of revenues. The question was... Comment was
raised, made by Mr. Westbrook in the presentation that their proposal will commit to a minimum
lease payment from day one as opposed to what was in the proposal and we wanted to verify if
that indeed was factual and we committed to that. And that...
Commissioner Plummer: But, why was I given this sheet of paper?
Mr. Marquez: That was the... That was from the original CPA's report...
Mr. Jackson: Would you...?
Mr. Marquez: ... That was from the original CPA's report that provoked these questions that
were raised. What we are handing out right now, is the modified sheet that takes into account
the responses that we got from the proposals.
Mr. Jackson: Yeah, and again, that... the original sheet you are looking at, Commissioner, there
is an excerpt from our December 24, 1996 report. Since that time the Manager... the City
Manager has asked for clarifications, points of clarifications, based on the responses that we
received. From the proposers we have incorporated those responses and to our findings.
Commissioner Plummer: You know, this... something is totally out of character here. First of
all, I don't know why they gave us this one. And, this one was based on the assumption of 12
percent, and now the new one is based on the assumption of six percent.
22 July 23, 1997
• •
Mr. Marquez: All right, I... They are consistent between the proposers, there is no hanky-panky
in trying to sway one way or the other.
Commissioner Plummer: I didn't say a word about hanky-panky. '
Mr. Marquez: Oh, I know that.
Commissioner Plummer: I am asking why is one based on 12 percent, one is based on six
percent...
Mr. Marquez: Because when...
Commissioner Plummer: ... and then I look up here and this is a proposed minimum rent and the
new one now says proposed minimum rent and taxes?
Mr. Marquez: Because when I asked the CPA firm to rerun the numbers, I asked them to change
the discount rate from 12 to six percent because six percent is a more realistic expectation of
inflation.
v
Commissioner Plummer: Then explain to me, in the old document of which I will refer to as the
old document, you show that 40 years Hangar in the Grove is at one million nine. And, yet in
the new document you show 40 years Hangar in the Grove at seven million five. That's one hell
of a difference.
Mr. Jackson: Well, again, I don't know if you are looking at half of an apple.
Commissioner Plummer: I am looking at the documents given to me by the City. These are not
my documents, I didn't find these at the funeral home and I am still...
Mr. Jackson: Well...
Commissioner Plummer: ... I am asking the question, let's use Grove Harbor.
Mr. Jackson: Well... -
Commissioner Plummer: On Grove Harbor, the old number on the old sheet is two million four
and on the new sheet is seven nine. Now, you know to me five million dollars ($5,000,000) is
still a lot of money?
Mr. Jackson: Are you looking at the sheet that says proposed minimum rent and taxes?
Mr. Marquez: All right, sir...
Commissioner Plummer: Sir, I am looking at the two documents handed to me by the Manager,
OK.
Mr. Marquez: The explanation for that is this, it's... when you... what you are looking at are
present value amounts. The difference between...
Commissioner Plummer: I assume it's apples to apples.
Mr. Marquez: Well, between the...
23 July 23, 1997
• •
Commissioner Plummer: Except six percent and twelve percent.
Mr. Marquez: Well, the six percent and twelve percent makes up the difference between the
two. That and coupled with the fact that we have changed the beginning year numbers for
Hangar in the Grove from one hundred thousand to three hundred thousand.
Commissioner Plummer: When did this so called "new document" become a reality? Was it...?
Mr. Marquez: This was handed to me by the CPA today. And, we passed it out.
Commissioner Plummer: And, you did this when?
Mr. Jackson: I did this...
Mr. Marquez: Yesterday.
Mr. Jackson: I changed... the final change came in where we reduced the discount rate from 12
to six percent. And, I was asked to make that calculation on yesterday.
Commissioner Plummer: By who?
Mr. Marquez: By me.
Mr. Jackson: By the City Manager.
Commissioner Plummer: For what purpose?
Mr. Marquez: Because 12 percent is an unrealistic number for inflation. You are looking at a
revenue stream over 40 years. The CPA used 12 percent in his original work up~,of numbers. I
said...
Commissioner Plummer: You know
Mr. Marquez: ... that was unrealistic, so I suggested...
Commissioner Plummer: You know, Mr. Manager, you and Sharpton are both CPA's, but when
I look at the old document at 12 percent... Let's use from the year... 22 year down to 40. It
remains constant at three hundred thousand dollars ($300,000). Year 22, here in the new
document, starts at 581 and in year 40 is up to 702.
Mr. Jackson: Right, and that is because the proposal states that we should use the greater of the
minimum rents on the payment that the proposers have in their proposals. So, in that stead, in
the year one of operations Grove Harbor has. a minimum... has guaranteed a minimum rent of
three hundred thousand. However, in their proposal, in their payment to the City they are
projecting they are going to be paying five hundred and ninety-one thousand. So, in that case we
had to use the greater of the...
Commissioner Plummer: But didn't that hold true on the old document?
Mr. Marquez: On the old document he used only minimum rate.
Mr. Jackson: Because in the old document and there was some lingering confusion over whether
there was going to be the availability of wet slips.
24 July 23, 1997
i f
Commissioner Plummer: Let me ask this question. Have both of the applicants seen the so
called "new document" and do they concur and agree?
Mr. Marquez: All right, we just handed out the new document to Grove Harbor. I don't believe
Hangar in the Grove has one. We would ask them that question right now.
Mr. Rasco: I have just seen it, Mr. Plummer. And, I am not... I am almost as confused as you
are about this. I... you know, again think using minimums is unrealistic and betting on failure.
They add the taxes in here, the taxes that are going to be paid to the City but, I see both
proposals as being comparable in terms of improvements. Yet, their taxes that they show as
being paid to the City are about twice as much in their projections as our taxes but the taxes are
going to be the taxes whatever they are. I don't think the real estate taxes to the City should be...
should play a part in this. I think what should play a part in this is the rent that each project is
paying to the City.
Commissioner Plummer: Mr. Sharpton. In the old document.... what...? More or less. ,
Mr. Jackson: Mr. Jackson. Mr. Jackson.
Commissioner Plummer: In the old document, sir. From... the minimum rent is the minimum
rent, correct?
Mr. Jackson: Guaranteed minimum rent, yes, sir.
Commissioner Plummer: Guaranteed minimum rent was three hundred thousand dollars
($300,000).
Mr. Jackson: Right.
Commissioner Plummer: No more no less, that's what minimum means.
Mr. Jackson: Right.
Commissioner Plummer: In the old document, you showed Grove Harbor, three hundred
thousand consistent 40 years.
Mr. Jackson: Yes, sir.
Commissioner Plummer: In Hangar in the Grove, in the old document, from year 11 to year 20,
you show three hundred and seventy-two thousand seven hundred and twenty-seven.
Mr. Jackson: That's correct.
- Commissioner Plummer: Was that to make up for the first four years they didn't pay?
Mr. Jackson: Right. In their proposal they asked for a deferral of the guarantee that they didn't
make to be deferred over years 11 to 20.
Commissioner Plummer: So, now where are we this time?
Mr. Jackson: This time... Again, based on a point of clarification, that the City Manager has
asked that they make... and the letter was circulated to all the parties. They asked again, Mr.
Westbrook made a... in the oral, made a representation that they would be amenable to guarantee
the City three hundred thousand from day one. Therefore, we went back and we recalculated the
2$ July 23, 1997
•
financial term based on that point of clarification. Because, and again, they originally in their
proposal is which we calculated the old document from. It stated that they were going to be
paying one hundred thousand for the first four years..But, based...
Commissioner Plummer: So, then it went to three hundred thousand after negotiations?
Mr. Jackson: No, sir. In the oral presentation Mr. Westbrook made a representation that they
will be amenable to doing that. And, therefore, the review committee asked for a point of
clarification on that issue, which again the request was circulated to all the proposing parties.
And, based on that point of clarification we again, recalculated the financial return based on
those responses.
Mr. Rasco: Mr. Plummer, may I?
Commissioner Plummer: Surely, sir. I am sure everybody has the right to speak.
Mr. Rasco: Thank you.
Commissioner Plummer: I am still lost, I want to tell you, OK. If you put something in writing
and now you are saying that at a later time you can orally change it, to me that's negotiating a
proposal. Now, did the other group have the same right in their oral presentation to up their... I
mean if we are playing a .game upmanship, did they have the opportunity, the same opportunity
knowing it was available to say, well we would like a part minimum rent.
Mr. Rasco: You can't do that sir. Excuse me, but you just can't do that.
Commissioner Plummer: Sir, I am not speaking to you, thank you. I pay this man.
Mr. Luft: Commissioner, the original RFP which seems like a very long time ago and approved
by this Commission allowed for and it said that proposers may choose if they wish to defer the
rent payments for the initial years of buildup, OK.
Commissioner Plummer: And, I have no argument with that.
Mr. Luft: And, that was a choice that they could make. In Hangar in the Grove they chose to
use that option, Grove Harbor did not. The proposals were submitted on August 30th. A few
weeks later the City's financial situation changed dramatically. At that point, we began
negotiations with Parrot Jungle and this Commission said that they would not accept deferred
rents which Parrot Jungle also proposed. And that, in light of the City's financial crisis, that was
not an option, it was unacceptable. Subsequent to that, presentations were made by the
proposers and I think the only explanation you can have is that because of changed
circumstances in the City, Mr. Westbrook took the liberty of responding to those circumstances
in suggesting that in light of the City's financial condition he was going to offer, if we so chose,
the guaranteed minimum rent from the first year.
Commissioner Plummer: Jack, that's not my problem.
Mr. Luft: Right.
Commissioner Plummer: My problem is, did the other group have the same opportunity to know
that that _was available if we went in, for example, into a bidding war, and they wanted to offer
four hundred thousand. Did they have that opportunity to do such? Are they aware that they
could do that if they wanted and that they did... that they knew it and they chose not to do it,
that's all I am asking. Did we have a fair level playing ground for both sides to have the same
26 July 23, 1997
i 1
opportunity to make that thing? I have no problem if they wanted to deter rent and that was
there. All I am saying is, was it a fair and level playing ground for both sides? That's my
question.
Mr. Marquez: The answer... they might. not have picked up on it, but it was a fair, level playing
ground. What we had sent, we sent one letter with all of the requests to all three firms and that
one letter had what we were asking of each of the parties.
Commissioner Plummer: They had the right to up their minimum rent if they wanted and they
chose not to?
Mr. Rasco: No, sir.
Mr. Luft: No.
Mr. Jackson: But, in the case of Grove Harbor it actually, in redoing the calculation it was to
their benefit. Because, again, it wouldn't have really made a difference in their case because
their proposed rent to the City was five hundred, way in excess of five hundred thousand. So,
they got the benefit of the inclusion of the five hundred thousand instead of the three hundred
thousand that we originally had in there. So, it was to their benefit that that change was made. I
mean, and it would not have... and I can't speak for Grove Harbor, but unless they would have
said that we were going to raise our minimum rents up to six hundred thousand, that was the
only way that it would have made a difference in this situation. They actually came out almost
three hundred thousand dollars ($300,000) to the betterment in the first year.
Mayor Carollo: Let's here from them now...
Commissioner Hernandez: Yeah.
Mayor Carollo: ... and see what they have to say.
Mr. Rasco: Thank you, sir. I think we need to clarify this thing. The RFP said that the
minimum required rent per year was three hundred thousand dollars ($300,000). That was there
for all proposers. The RFP also said that each proposer had the option, as Mr. Luft said, to defer
part of that three hundred thousand dollars ($300,000) to later years. We chose not to do that.
We chose to offer and we stand by it, the minimum three hundred thousand dollars ($300,000)
from day one of the lease during our two year construction period and then we will be paying
more once the percentage rent kicks in and we start operations in year three. They... their
proposal which they are bound to by bidding law, they can't change their proposal. One thing is
to clarify and another thing is to modify. They can't modify their proposal. Their proposal said
they were going to pay one hundred thousand dollars ($100,000) per year of the first four years.
This new sheet, new document that you call it, Mr. Plummer, is incorrect. They do not pay three
hundred thousand dollars ($300,000) in the first four years. They pay one hundred thousand
dollars ($100,000) per their proposal. Then...
Commissioner Plummer: That's not what I have.
Mr. Rasco: Then they say, if required by the City. This is what their proposal says, if required
by the City not... we will absolutely do it, but if required by the City we will pay the deficit of
eight hundred thousand dollars ($800,000) after year ten. Year ten. This is substantially
different and substantially to the detriment of the City. We are paying the full three hundred
thousand dollars ($300,000) as required by the RFP from day one and that's what you have got
to compare. When they were sent a letter saying "would you consider doing this" they were
asked... they were offered the opportunity to increase their bid. We were not. We were not
27 July 23, 1997
• ~
offered that opportunity. We were told reduce your revenues by 15 percent, that's what we were
told. And, we don't have to reduce them by 15 percent because we can build 265 slips there
without any problem. We can build all 284 that we proposed with a permit from the South
Florida Regional Council. So, we don't have to reduce our revenues. We were never given the
opportunity to increase our offer to the City.
Mayor Carollo: Well, why on the papers that I have here it says that you have to reduce the wet
slips by 22 slips, I believe it is?
Mr. Rasco: Because the City requested permitting for 122 slips. We had offered 144 slips in our
proposal and we stand by that and we can do that. We can build a... we offered to build 144 wet
slips versus their 99. One hundred 140 dry slips to their zero.
Mayor Carollo: But, my question to you is, is it the City's position that by law you cannot build
the additional 22?
Mr. Rasco: No, I think, as I understand it... Perhaps, Mr. Luft can explain it better.
Mr. Luft: We indicated in the RFP that the City was currently applying at that time for 144 slips.
We went through an exhaustive process with about 12 agencies and were able to achieve only
122. That was the final number that we were told by the State and local permitting agencies that
the maximum we could get for wet slips. We then...
Mayor Carollo: Do you have that in writing from the State?
Mr. Luft: Yes, we do.
Mayor Carollo: OK.
Mr. Luft: We have 122 slips maximum, permitted for wet slips. In addition, while this process
was going on we have pursued a binding letter of vested rights for all slips, wet and dry to
remove from any DRI calculations for either proposer or any proposer a historical number that
would not be counted in a DRI because of their existing prior to DRI regulations. We have
succeeded in getting a binding letter of vested rights from the Department of Community Affairs
for 90 slips, wet and dry. Fifty wet, 40 dry. So, 90 can be subtracted immediately from an DRI
calculations. The combined threshold, the 100 percent threshold for DRI slips, wet and dry is
150. So, adding the 90 which will not count to the 150 for combined wet and dry, you come up
with 240. Their proposal was for 144 and 40 combined, 184 slips. Pardon?
Mr. Rasco: Two eighty-four.
Mr. Luft: Excuse me, 284. We have 122 permitted wet and 90 total vested. So that means we
can count on 240, not the 284. So, we asked them based upon the 100 percent threshold, permits
in hand and binding letters in hand, to consider what was permittable, not what was conjecture
on the DRI application which no one could assure and that was the 15 percent reduction.
Mayor Carollo: OK, it's your contention that you feel you could apply for a DRI process to
increase that to the level that you originally proposed?
Mr. Rasco: That is correct. But, we don't think we need to do that because we can achieve 255
without applying for a DRI application which is a very lengthy and costly process. The other
reason we chose 144, Mr. Mayor, is because the RFP said that there would be 144 available,
permitted by the City. And, permitted by the State. That later changed after the RFP came out
and our proposals were in.
28 July 23, 1997
• •
Mr. Luft: No, sir. Read the RFP carefully. It said that the City was pursuing and anticipated
144, however, no assurances could he made because no permits were in hand and that was a
qualified number. And, that's very clear on the RFP.
Mr. Rasco: I stand corrected. I stand corrected. But, it was... they were pursuing 144. That's
what the RFP said.
Mayor Carollo: But, your contention is that you could still go up to 265?
Mr. Rasco: Yes, sir.
Mayor Carollo: Without going through...
Mr. Rasco: DRI.
Mayor Carollo: ... several years for a DRI process?
Mr. Rasco: That's correct. We have two years of construction in which to resolve this, sir.
Mr. Moore: I would like to clarify the point about the three hundred thousand dollar minimum
rent. We have always from day one guaranteed three hundred thousand dollars ($300,000)
minimum rent. What we did, as an gpinion, is state that we would prefer to defer in the first four
years, that's all. But, we have... but we always said, but we will pay three hundred thousand
from the go to, if the City so requires, that's all. And; I think it's just that simple. Now, how the
City ran its internal numbers is another issue. I will say this, their numbers have never been
reduced by the way, for what we now know to be an inflated number on the wet slips, which...
you know, also ultimately changed their numbers, but, I guess, that's another point.
Commissioner Plummer: Mr. Moore, I was not questioning, sir, what your proposal was, I was
questioning the document handed to me by the City which showed...
Mr. Moore: Right.
Commissioner Plummer: ... the hundred thousand for four years.
Mr. Moore: Right. And, I have not seen that yet, sir.
Commissioner Plummer: That's what I was questioning.
Mr. Moore: Yeah.
Mayor Carollo: Mr. Manager, this one page that has an assumption of the MPV at six percent,
was this done by the City of Miami?
Mr. Marquez: Yes, sir.
Mayor Carollo: OK, now, on this assumption, do we have the correct numbers that they were
asked to adjust their numbers by? °
Mr. Marquez: I am assuming that you... in the corner it says proposed minimum rent plus taxes?
Right here.
Mr. Jackson: Upper left hand corner.
29 July 23, 1997
• •
Mayor Carollo: Yeah, proposed minimum rent and taxes.
Mr. Marquez: All right. Let me walk through and Tony Jackson help me with this. What's on
this is for Hangar in the Grove, starts off with... it's the sum of the minimum rent plus the taxes.
Minimum rent being defined as three hundred thousand or the projected amount whichever is
greater.
Mr. Jackson: Right.
Commissioner Plummer: Stop for one second because you now have me totally confused. You
are saying that they are going to be paying the taxes and the difference of a minimum rent comes
to a total of three hundred thousand?
Mr. Jackson: No, no, no. They are going to be paying...
Commissioner Plummer: I am asking. He said minimum rent and taxes would be three hundred
thousand dollars ($300,000). Are they paying three hundred thousand dollars ($300,000) the
first year plus the taxes? I am assuming taxes are ad valorem?
Mr. Jackson: Right.
Mr. Marquez: If you look at Hangar in the Grove there is three hundred thousand dollars
($300,000) each of those years for the first four years, that's the minimum rent amount. Taxes
kick in in year five.
Mr. Jackson: Right, because they do not have a calculation of taxes in their proposal for year
one through four.
Commissioner Plummer: Well, then how can you measure apples to apples?
Mr. Jackson: Well, again, we have to go by what they have on their proposals. If they choose
not to have property taxes in their proposals one through four, we cannot go back to them and
say, you want... I think you need to put taxes in there. In this case of Grove Harbor they decided
that they would put taxes in there and I can't as an independent consultant, I can't go to the
proposers independently and say, you need to put taxes in there. I mean, this is what they had in
their proposal and this is what I had to run with.
Commissioner Plummer: Yeah, but your title at the top of this page says, proposed minimum
rent and taxes.
Mr. Jackson: And after...
Commissioner Plummer: And if I were to read, and I am no genius when it comes to CPAing,
three hundred thousand to me would be the taxes .and the minimum rent.
Mr. Jackson: That is correct.
Commissioner Plummer: But it's not the case.
Mr. Jackson: Yes, sir. It is the case. That is what the Hangar in the Grove is saying that they
are going to pay rent and taxes for years one through four.
Mr. Marquez: Commissioner Plummer, we could have clarified it a little bit...
30 July 23, 1997
• •
Commissioner Plummer: So, then they are not paying...
Mr. Jackson: They are not...
Commissioner Plummer: Is the minimum in the RFP say rent and taxes or minimum rent?
Unidentified Speaker: Rent.
Commissioner Plummer: Well, they are not paying it then.
Mr. Marquez: The assumption that they made is, that they are not paying any taxes until a CO is
issued on the property.
Commissioner Plummer: To hell they say.
Mr. Marquez: Well, that's their assumption in the proposal and that's what the... We could have
clarified this by putting proposed minimum rent plus taxes, percent in the proposal.
Commissioner Plummer: In other words, I'll pay taxes when I get ready.
Mr. Marquez: When you get a CO on your property.
Mr. Luft: That's when taxes are assessed.
Commissioner Plummer: OK.
Commissioner Hernandez: I have a question for you on...
Mr. Marquez: Yes, sir.
Commissioner Hernandez: The City of Miami currently holds in an account some money,
FEMA (Federal Emergency Management Agency) monies for refurbishing or construction of a
C-wall or docks that were damaged during the hurricane.
Mr. Marquez: Yes.
Commissioner Hernandez: How does this work, twofold? How does this work hand in hand the
construction phase, the City part with what these proposers, both of them are pertaining to do
here and second of all, does the City have enough monies to do this project, do what they are
suppose to?
Mr. Luft: The.. Let me answer the second one first. The City did not have enough funds of the
FEMA funds to construct the 52 slips based upon the bids received. Public Works Department is
now reapplying to FEMA which is their right under the FEMA reps to submit the bid numbers to
make a case for a higher FEMA allocation. FEMA will pay for the actual cost of replacement of
the 52 slips. They have to be comfortable with the bids as an accurate market ret7ection of real
costs. We are making that case now, we believe that that case is a good one and that we will
ultimately receive the FEMA dollars sufficient to build the 52 slips. Our effort was to proceed as
quickly as possible to build those 52 slips. We the City. So that at the point of our turning the
property over for possession there would be an income stream immediately that would generate
revenue back to the City rather than waiting at some future point for the developer to begin. The
developer will have the right upon completion of our 52 slips and their construction of the site to
add up to the 122 permits in hand, should they so desire, which is the proposal of Grove Harbor.
31 July 23, 1997
~ •
Commissioner Hernandez: So, the lack of funds would not stall the actual development of this
project?
Mr. Luft: We believe that the funding issue will be resolved shortly and that the City will be
independently able to proceed with construction well in advance of any realistic data of
possession for this property, for a private proposer thereby accelerating the income stream back
to the City. '
Commissioner Hernandez: I have a question for Mr. Moore. You stated in your presentation
that there will be no, in your proposal, there will be no additional really construction of new per
se structure...
Mr. Moore: Right.
Commissioner Hernandez: ... building. Why then, according to your numbers you are almost
doubled, it takes you double the amount of time for construction or total development of your
project?
Mr. Moore: It's almost exclusively related to the Department of Interior requirements for
restoring these historical buildings. It runs the numbers off the charts. We had to... we brought
in specialists to advise us who analyzed the buildings, the foundations, the gutter's, the skin,
everything, you know, what does it mean that we have to do this, the windows. How do you
treat these windows that are now broken and kind of hanging on and all rusted out? And, the
answer is, you have got to fabricate new window frames and do all these incredible things, the
numbers go off the charts. Harrison Construction was in charge of-that and they have done
historic rehabilitation before. And, that's what it's related to. It's not infrastructure, it's not
building some sort of fancy infrastructure inside there. There are much more detailed drawings
by the way in the City records. That's not what it's about. The small hangar of course, will be
restored and that's going to be a machine shop, as it was when Pan Am operated it. But, the cost
is related to the historical rehab. So, it's just that simple.
Mr. Luft: Commissioner, we the City, after Hurricane Andrew and before this RFP process
began commissioned a top to bottom engineering analysis of the restoration of all the structures
on the waterfront including Virrick Gym. So, that we had at the outset of this and it was
included in the appendixes of the RFP, the engineers cost estimates which showed for the Virrick
Gym, it would be about one point one seven million dollars. For the large hangar it would be
about two point nine million, not encountering contractor markup and one point two or three
million for the small hangar. If you add contractor markup and profit, the total cost for the
restoring of the two hangars according to our CMC engineers was in the neighborhood of four
point five million dollars. As a bench mark against that, we have just received bids last week on
the Virrick Gym and they came in within ten percent of those engineers estimates for Virrick
Gym, that one point zero million. So we feel those numbers are pretty accurate to achieve the
Secretary of Interior standards regardless of what you do with the buildings. That's why our
initial reaction was one of concern about the level of investment that the Grove Harbor had
projected of one and a half million for the restoration of those hangars. We need to be assured
that that is going to be sufficient to meet those standards that we are requiring and. have indicated
in the RFP.
Commissioner Hernandez: I have one last question for Grove Harbor. It does concern me and I
am looking at this... There is a huge difference and I would like to know why you guys are so
much lower in the restoration of those hangars? I believe you have one point five almost one
point six million dollars.
32 July 23, 1997
• •
Mr. Rasco: For the large hangar and we have the number for the small number for the small
hangar in the marketplace in the next line and that's going to be about three hundred thousand or
four hundred thousand additional in there. So, we are close to two million, is our estimate on the
restoration of both hangars and basically our buildup is a lot less intense than theirs. So, that
accounts for a lot of the difference in the cost. The other...
Mayor Carollo: Excuse me.
Mr. Rasco: Yes, sir.
Mayor Carollo: What is a lot less intense than theirs?
Mr. Rasco: Our use of the large hangar. It's much less intense. It's going to be for dry stack
boat storage as opposed to basically an air-conditioned multi place with, you know, food courts,
restaurants and things like that. The other difference as I understand it, I haven't seen that report
that the City got, but that four and a half million dollars ($4,500,000) I understand includes also
the historic restoration of the Virrick Gym.
Mr. Luft: No, sir. No. Four and a half is just hangars C and D which is the large hangar and the
machine shop on this site.
Mr. Rasco: And, it does not include...?
Mr. Luft: No, it does not. Virrick Gym is a separate number.
Mr. Rascc: Well...
Mr. Luft: Those numbers were in... were offered to you as backup appendixes material and
indicated in the RFP. All of those reports are on file with the City and have been since day one.
Mr. Rasco: Those are, what I can say is, those are consultant reports. Our people have looked at
this and we feel very confident that we can do it for what we say.
Commissioner Gort: My question was, in new constructions, do you think you can meet the
guidelines of the Department of Interior?
Mr. Rasco: Yes, sir.
Commissioner Gort: With less money and less time?
Mr. Rasco: Yes, sir. Yes, sir, we do.
Commissioner Gort: You know about all the regulations and so on?
Mr. Rasco: Yes, we do. Our architect Mr. Albazar (phonetic) is involved in a number of
historical restorations right here in the City of Miami, has experience with that. One of our
owners Mr. Kristoff has restored historical buildings in Miami Beach, has experience with. that.
We also have Mr. Felix Lima, and Mr. Alan Lima who don't have direct historical restoration
experience but have extensive construction and development experience.
Commissioner Gort: Thank you.
Mayor Carollo: If I can ask a handful of questions on the financing side. I heard a statement in
Grove Harbor's presentation that the losses that weie estimated by Hangar in the Grove for the
first eight years was some four million dollars ($4,000,000), is that correct, or not?
33 July 23, 1997
• •
Mr. Jackson: Yes, that is correct.
Mayor Carollo: How are you anticipating being able to cover those losses?
Mr. Jackson: Well, the... those loses would have to be covered by increased equity contributions
which I think that the City Manager eluded to. They would have to be funded by increased
equity contributions on behalf of the principals.
Commissioner Plummer: [inaudible]
Mr. Jackson: Excuse me.
Mayor Carollo: No, no, no. We are talking about the principals.
Mr. Jackson: No the principals.
Mayor Carollo: The principals.
Mr. Marquez: That's a question I would like to have the principals answer.
Mayor Carollo: A major concern because that's where we get paid from.
Mr. Moore: Again, as we said...
Mr. Marquez: Go ahead.
Mr. Moore: As said from the beginning, our entire program is ultraconservative. Ernest and
Young has helped us with this program. We are prepared to make the additional investment.
We have projected the.. you know, I don't know of any project that sort of jumps starts from
zero... day one, and generates half a million dollars of revenue right out of the box which is what
the other side is estimating. We are trying to be realistic here. If we can do better than this, rest
assured with the debt service and so forth, we will do better. These are conservative estimates.
But we have confirmed to the City that we will cover the short fall through debt, a further debt or
further equity. It is just that simple. That's what you got to anticipate and you have to assume
the worst, which is what we have done. And we will turn on the... you know, we will turn on the
fuel pumps, we will get the wet slips operating as soon as possible. If you go back and look at
the FEMA, just the FEMA story that's in a nutshell what you are anticipating these sorts of
projects. We have relied again on Harrison Construction, on our architects, on our consultants to
say what is a realistic type of proposal. When we say we are going to put in ten million dollars
($10,000,000) we are going to put in ten million dollars ($10,000,000). We say it's going to be
done in two years, it will be done in two years. We are not going to say to you we are going to
have it up and running in one year. So, we are going to have to go into pocket is what it comes
down to. It's the principals not the consumer.
Mayor Carollo: In, Mr. Manager, the percentages that we are getting in a wide variety of areas, I
heard the figures ten percent versus seven percent. Can you give us some more information on
that please? Plus, if you could clarify how much each is paying per gallon on fuel?
Mr. Luft: I'll have them answer those details. Let me remind you that the City will as per the
RFP conduct a complete independent fair market appraisal of the winning proposal. We will
look at actually what they are proposing to build. The income streams involved and the matter
what they have proposed. That fair market proposal, appraisal, will establish the actual minimum
rent for... and the percentages for those various categories. So, there will be an independent
34 July 23, 1997
look at that to assist this Commission in coming up with those numbers. Right now what we
have is their proposal.
Mayor Carollo: But, still Jack, if there is one proposal that is offering seven and another
proposing ten, I want to get clarified what is it that they are offering seven versus ten on and
what is the more or less annual difference to the City on the first ten years that we estimate, plus
on the fuel side.
Mr. Marquez: We can give you relatively quickly, I believe, but with the CPA's help, the total
return to the City on a gross basis you know, all the dollars that come into the City over the first
ten years by proposal.
Mayor Carollo: Well, that's what I am really more interested in, in the first ten years. You start
getting out too far and it's really major estimates that we are putting down. Now, if I could ask
you another question, Mr. Manager. On your last assumption of six percent, the first ten years
for Hangar in the Grove is three million one hundred and three thousand one twenty-three ten.
For Grove Harbor Marina it is four million seventy-three thousand seven hundred and twenty-
four dollars and eighty-six cents ($4,073,724.86). It's about one million dollars difference in
your calculations there. Yeah, on the first ten years. Is this the numbers that you feel are the
accurate numbers versus what they have given us in their projected return between the two
projects for the first ten years that was some two million two hundred and forty thousand, thirty-
five thousand difference?
Mr. Marquez: What's.on that sheet is a million dollars ($1,000,000) difference in present day
value over the first two years ret7ects their proposals as adjusted. And, I mean, that if we... like...
Mayor Carollo: You are saying in total dollars or present value?
Mr. Marquez: Well, in total dollars and in present value amounts. We just don't have a total off
of the sheet for the total dollar amount.
Mayor Carollo: So, in other words this projectory return first ten years, you feel that these
numbers are not as accurate as the ones you are giving me here?
Mr. Jackson: Yes, and a different factor also.
Mayor Carollo: Excuse me.
Mr. Jackson: A different factor in the Grove Harbor's calculations that they are including one
hundred thousand dollars ($100,000) per year of the tax savings on the Virrick Gym. And, again
our analysis do not include those tax savings that are supposedly going to be remitted to the City
because we were instructed not to. They are "oft site" payments that they do not relate directly
to the project.
Mayor Carollo: Those hundred thousand dollars ($100,000) they would give it directly for the
upkeep, the running of Virrick Gym, that site. Is that my understanding or...?
Mr. Marquez: That's our understanding. But, that one hundred thousand dollars ($100,000) is
also my understanding that there is a process that it must go through before that becomes a
reality. So, that's one of the reasons why we did not count it.
Mayor Carollo: OK, so that's the reason you haven't counted.
Mr. Jackson: Right.
35 July 23, 1997
• •
Mayor Carollo: But that another million dollars ($1,000,000) then?
Mr. Marquez: That's a potential return..
Mayor Carollo: OK, so that's basically what the major difference would lie then?
Mr. Jackson: Yes, that would be the major difference. And, I think the... another difference
would be that I think they may be discounting it 12 percent, I am not sure, I hadn't really looked
at it in detail. And, we are doing six percent. So there is a difference that will come out just
because of the discount factor used.
Mayor Carollo: What are you discounting it at, in this projectory return here, Ed?
Mr. Rasco: We did not discount it at all for either one. We just used the gross dollars being paid
each year in the first ten years by both proposals. We did not use any discount factor. Our four
and a halt million dollars ($4,500,000) includes three hundred thousand dollars ($300,000) of the
tax savings not a million dollars ($1,000,000) which is the four two plus the three hundred
thousand you see there. We are estimating very conservatively that, because of the historical
restoration, we will achieve a tax savings of sixty thousand dollars ($60,000) per year. Our
proposal from day one offered to pay the City 50 percent of those tax savings.
Commissioner Plummer: How much are the estimated taxes? I assume you estimated them
somewhere along the line?
Mr. Jackson: Yes, we did. I don't have the accumulative amount for you but I can certainly...
there is a page that you have that... he doesn't have. J
Commissioner Plummer: Just, while you are looking for that, let me go on the record of one
thing, all right. This entire document was delivered to us, I think, last night. I found it this
morning. I just want to go on the record that all of this entire document was delivered at best last
night. I saw it as I was pulling out of my driveway this morning. I just want you to know that,
OK?
Ms. Diane Johnson: The committee report had been delivered back in December.
Commissioner Plummer: I understand that. I understand that but all the rest of these
calculations were not.
Unidentified Speaker: Yours were not.
Commissioner Plummer: OK, how much are the proposed taxes?
Mr. Jackson: And again, these amount are coming directly from the proposers. Again, the
amounts that they are including in their proposal, we cannot take 100 percent of that because that
is the total, the County is going to get their share. We are assuming that we are going to get 50
percent of that. So, what we have done, we have taken their gross taxes, what they have in their
proposals, and 50 percent is going to accrue to the City. And, that is the amount that we have in
the property tax page.
Commissioner Plummer: It's not 50 percent taxes. If they are using the total ad valorem only
one-third comes to the City. I mean, I am beginning to wonder where all these numbers and
assumptions have come from. Because I am assuming that you are also assuming that taxes are
going to go up.
36 July 23, 1997
• •
Mr. Jackson: Yes, we are.
Commissioner Plummer: That's why I am asking, how much of this is assumed are the taxes
coming to the City when you tell me.proposed minimum rent and taxes, OK?
Mr. Luft: Commissioner, understand that the County tax assessor's office will first start with the
actual lease that we sign and the terms of that lease. That's where they begin their appraisal
process, that doesn't exist yet. That's to he negotiated. Once they have that lease in hand, they
will then project on an income basis, a commercial value for the property. It is really not directly
related to the cost of improvements. It's an income analysis for a commercial use. Based on that
income analysis they will deduct the value of the lease as the ground rent to arrive at an
improvement value and a tax assessment. But, that's a process that will be conducted entirely by
the assessor's office which none of us can control and which will be dependent upon the lease
we sign. -
Commissioner Plummer: Let's use year one. I am assuming where you show Grove Harbor at
four hundred and forty-five thousand dollars ($445,000), that one hundred and forty-five
thousand above the minimum is taxes. Am I assuming the assumption is correct?
Mr. Jackson: Where we show Grove Harbor of having four hundred and forty-five thousand, of
that three hundred thousand and ninety-five thousand seven hundred twenty-two of that relates to
their rent that they are going to be paying to the City. Again, we are talking about the greater of
the guaranteed minimum of three hundred thousand or what they actually have in their proposal.
In this case, they are going to give the City three hundred and ninety-five thousand dollars
($395,000).
Commissioner Plummer: OK.
Mr. Jackson: OK, that, coupled with the fifty thousand dollars ($50,000) of taxes of property
taxes, gets up to the four hundred and forty-five thousand which we base of present value
calculation from.
Commissioner Plummer: Now, do it in reverse for me, OK.
Mr. Jackson: Now, do it in reverse for you.
Commissioner Plummer: In reverse. First year Hangar in the Grove.
Mr. Jackson: First year...
Commissioner Plummer: You are showing a three hundred thousand dollar ($300,000)
minimum and taxes. Breaking it down for me on their projection what of that is rent and what of
,-. that is taxes?
Mr. Jackson: Three hundred thousand of that is.rent. There are no taxes.
Mayor Carollo: There is no taxes involved in that at all?
Mr. Jackson: No taxes in that first four...
Commissioner Plummer: So, they are going to defer their taxes and they can do that legally?
Mr. Marquez: No, they are assuming that they will not pay taxes until the construction is
complete in year four.
37 July 23, 1997
~ •
Commissioner Plummer: Even though we have awarded it and there is a bid... that they have
been the awardee?
Mr. Luft: All structures built, private, public, anywhere only go on the tax rolls when they are
completed and given a CO. Condominiums, Shopping Centers whatever. Depends on when you
assume that CO is going to be issued and January one of that year is when it goes on the tax
rolls.
Mr. Marquez: You know...
Commissioner Plummer: Again, reiterate for me what the Mayor just said. In the first ten years,
the difference between the two projects is how much difference to the City?
Mayor Carollo: Approximately one million dollars ($1,000,000).
Commissioner Plummer: A million dollars ($1,000,000). Is that a...
Mayor Carollo: That's not including the one hundred thousand that was just discussed before.
Commissioner Plummer: Is that a true statement?
Mr. Jackson: Is that...? Were you talking about on a present value basis or a gross basis?
Commissioner Plummer: We are talking about money in the bank.
Mayor Carollo: Accumulative and not present values, that's correct.
Mr. Jackson: Right, accumulative net present value basis. Based on our report the difference is
going to he a little bit over a million dollars ($1,000,000).
Mayor Carollo: Again, that's not including the one hundred thousand that was mentioned.
Mr. Jackson: That is correct.
Mayor Carollo: When can we determine the hundred thousand, if that is something that the City
can take advantage of or not? Or has that been determined or not?
Mr. Jackson: Well, again that is something that could happen. I mean, we are talking tax savings
and who knows if that is one hundred percent or what is going to happen with that. And, again,
my simply...
Mr. Marquez: I also believe it takes the Department of Interior review process to go through, so
we can't give you an answer to that.
Mayor Carollo: OK. Both groups on that particular question if they would like to address it?
Mr. Rasco: Mr. Mayor. Let me go back to the RFP. The RFP laid out the rules for which there
are tax savings on the incremental values added to real property when you do historic restoration.
We said in our proposal that of that tax savings, whatever it is, whether it's one, one hundred a
million, whatever it is, we are going to pay the City 50 percent of that in rent as long as we have
those tax savings. We have conservatively estimated those tax savings in the choice that we
handed up today at sixty thousand dollars ($60,000) per year over a ten year period. We made a
flat sixty thousand per year. We didn't discount; we didn't re-think; we just said, t7at sixty
38 July 23, 1997
• •
thousand per year. That means that if we save sixty thousand per year in the first ten years, we
will he paying the City on top of our percentage rent thirty thousand dollars ($30,000) per year in
additional rent. That's what our proposal said, that's what we are committed to do and that's
what that chart shows.
Mr. Moore: We have no way of knowing what is inside these numbers, but we know that our
investment in the property will result in about eight million dollars ($8,000,000) or more revenue
to the City of Miami based on the added additional taxes, ad valorem taxes. Because ad valorem
is based on...
Commissioner Plummer: No, sir. I don't think you are even close when you figure thirty-two.
They are thirty-two thousand a mil.
Mr. Moore: Right. You know, again, it's the accountants and you know, I can't...
Commissioner Plummer: But, excuse me. That's the total taxation. The total taxation is thirty-
two thousand a mil is rough, OK? And, I don't see where it's even close with the numbers that
you are using but, I mean...
Mr. Moore: Well...
Commissioner Plummer: ... your numbers are your numbers.
Mr. Moore: These numbers, let's reiterate, these numbers are again, we are sort of getting
locked into what I...
Commissioner Plummer: Too many sets.
Mr. Moore: Well, we certainly are getting a lot into something that we believe, what we have
considered to he a minimum guarantee to the City which we think is provable. We will also pay
seven percent of revenues and we believe that our revenues build, OK. So we believe that these
are the most, this is the most conservative bottom line for Hangar in the Grove whereas it
arguably is the most optimistic for Grove Harbor. Let me explain. If you look at one of their
cash cows, if you want to get into this, you know, the whole, you know, they will be on the
minimum that we are guaranteeing. And, looking at theirs, it's essentially their maximums.
They will not build because you don't build on dry stack storage. If you look at Grove Key
Marina next door here, you look at about 30 boats in one hangar and there is about 20 boats in
the other hangar, they don't dry stack at all. Their proposal is a dry stack storage operation
inside the large hangar. Our experts say it doesn't work at all, don't know how they came to
this. But, even if you just say well, forget that let's look at Grove Key Marina and see if it
makes any sense. Why doesn't Grove Key Marina stack, they don't stack at all. In fact, their
proposal has more stack storage inside the large hangar than Grove Key has outside on that large
rack, it doesn't make sense to us. Moreover, they are assuming 100 percent use and 45 feet in
length. Forty-five feet boats stacked up, I mean, it just does not... it's not rational because in...
Moreover are you taking away from the marina to the South? These numbers also project... If
we look at their numbers and they say, well we are getting... I mean, if you want to get into... I
think we are just getting into the slide of... that's going well beyond minimum guarantees. I
looked at their marina operation and I say well, how does that affect, how does the fact that their
largest, one of the larger shareholder is operating the Miami Beach Marina, I mean, you know...
What is the percentage going to be, is it going to be there or it is going to be here? We are
giving you minimum guarantees. We have one marina that will be operated by the best marine
operator in the world, and that's what you are going to get paid, at a minimum. But, I don't
know how this... you know, they are giving you what I think is the maximum guesstimation
based on 100 percent occupancy, 45 foot boats, life is very good when you start doing that. If
39 July 23, 1997
• •
we start adding dry stack storage and so forth, the numbers go off the charts but that's not a
minimum guarantee to you. We are going to give you seven percent of our gross revenues.
Commissioner Plummer: That's what I want to ask you.
Mr. Moore: In addition to the three hundred thousand.
Commissioner Plummer: Don't move. Who game me this?
Mr. Moore: Someone handed it to me moments ago. L..
Commissioner Plummer: I got to go back now predicated on statements you made previously.
According to this, Hangar in the Grove, three hundred thousand or seven percent of all revenues,
I am assuming that's gross revenues.
Mr. Moore: That is correct.
Commissioner Plummer: OK. You indicated to me before that of the marina operation by
Merrill Stevens, now is that just the marina or is that the boatyard and marina?
Mr. Moore: Boatyard, not marina.
Commissioner Plummer: OK, boatyard only. Correct?
Mr. Moore: Correct.
Commissioner Plummer: All right. The City is showing you with ten percent. You are telling
me it was four percent.
Mr. Moore: No sir. This ten percent is the Grove Harbor...
Commissioner Plummer: Oh, I am sorry. OK, so that's theirs, not yours.
Mr. Moore:.But, let me ask you a question, if I may, Commissioner Plummer. If you say ten
percent is that ten percent of the Las Americas Marine on the Marine River or is that ten percent
from this site?
Commissioner Plummer: Well, I am about... Sir, I am going to ask that. I am going to ask that.
Well, you know I am going to.ask the same thing of Merrill Stevens through you, of course. Is,
how much are they going to take up the river as to them how much they are going to take? I
mean, I don't want the City to be up the river, OK?
Mr. Moore: OK, the answer on that is, and that's exactly why we structured ours based on some
of your questions back in 1985, I think it was. One of your concerns at that time was that work
would be somehow funneled up the river and that, therefore, the City would not get it's fair share
of that work. Because if you are paying on a percentage of gross revenues and you put the gross
up the river, then the City is not getting its fair share. We met that concern by simply saying, we
looked at the boatyard operations and we see about a three percent profit margin. We understand
what the volume of work is at Merrill Stevens. We sat down with them and we have concluded
that very reasonable payment by them to serve this community is two hundred thousand dollars
($200,000) a year. It doesn't... They will do what they have to do to serve this community. You
will not have to worry about work being tunneled to another site. That was your concern in
1985.
40 July 23, 1997
•
Commissioner Plummer: It still is, OK?
Mr. Moore: You won't have to worry about that.
Commissioner Plummer: And, I don't know how, unless somebody stands out there with a video
camera that we are going to know how much they take up the river, if they do and how much
you take up the river if you do. I don't know how you are going to say that is, you know... Mr.
Manager, you made a statement to me before when I asked you what you were going to do on
this item, and you said putting apples to apples and oranges to oranges that these things were two
of the most diversed that you every saw. You know, it would have been so simple just to go on
gross revenues. I really, I wish we would have done that in the RFP. Because it's just not apples
to apples. And, I... You know, and the Mayor asked a question before, I think we have got to
remember that there is one big diversity here in the fact that Hangar in the Grove is anticipating
they are going to charge sixteen dollars and twenty cents ($16.20) a foot per month. But, the
other group is going to be charging ten dollars ($10) per foot per month. I mean there is a big
difference there and I think that's, you know, they are saying they are going to lose eight, the
first eight years they are going to lose money. And, yet they are charging not double but they are
charging 60, 70 percent more per foot. And, I understand what they are projecting it on. One is
transient and the other one is not. So, you know, if this thing... it's just nowhere near apples to
apples. Nowhere.
Mr. Luft: Let me...
Commissioner Plummer: I guess really the bottom line, if you want to go to the bottom line, is
that there is a difference of a halt a million dollars ($500,000) at the end of the 40th year. I
guess that's...
Mayor Carollo: But the... Well, no, no. It's not accurate Commissioner...
Commissioner Plummer: It's not?
Mayor Carollo: ...it's present value, not present value.
Commissioner Plummer: It's a 40 year lease.
Mayor Carollo: Yeah, in the 40 year lease, that's what we have.
Commissioner Plummer: That's correct.
Mayor Carollo: Actual dollar amounts will be different. The gap will be much greater in dollar
amounts. This is the net present values what we have before us.
Commissioner Plummer: I hear you.
Mayor Carollo: That's the difference.
Commissioner Plummer: But, I am looking at what the City did in an annalization.
Mayor Carollo: The... Going over something that you mentioned, maybe I missed the statement
that was previously made. The sixteen plus dollars that the Hangar in the Grove will be charging
for transient boats, are you anticipating that the whole marina is going to be for transient slips so
that you could charge that amount or what percentage of it will be for that?
41 July 23, 1997
• •
Mr. Moore: We are not. What they have, I think what they have focused here on is the... some
sort of an average. I don't know exactly how the number was obtained but our experts tell us that
on the mix transient and long term...
Mayor Carollo: Sixteen dollars ($16).
Mr. Moore: It's 16. But, you have to factor in what are you getting for that. And, one of the
things that you are getting is the ability to be right there where your boat can be worked on,
cleaned up and, you know, you walk off the boat, the boat is taken care of, you come back to the
boat, it's there for you, you don't have... there is no transient. So you do command higher rents
if you want to do that. Also, what kind of boat are you trying to serve? You don't want to be
taking away from the City's marina to the south. We are not necessarily competing with the
Monty Trainers to the north. So, it's a very... it's more complicated than just falling to a bottom
line.
Mayor Carollo: I understand that, it just seems that this is a real wide gap, sixteen plus dollars
versus ten on the average.
Mr. Moore: Well, I think that if the ten dollar ($10) is based on what is obtained out at Miami
Beach, I just don't think that's necessarily a comparable for Coconut Grove. I just...
Mayor Carollo: What are we making here at Dinner Key, Jack, on the average?
Mr. Luft: It's thirty cents a foot per day.
Mayor Carollo: Thirty cents a foot per day. But, what does that come to in actual dollars per
foot in comparing it...
Mr. Luft: Well, that would be nine, almost nine to ten dollars ($10) depending on the days in the
month.
Mayor Carollo: Nine plus...
Mr. Luft: Per foot per month. The concern was that our marina at Dinner Key has had
traditionally a very little transient demand. But then again that's by enlarge a product of the fact
that there are few slips available because it is a long term rental. We don't know because it
depends on the management approach whether it is realistic to assume 100 percent transient
occupancy. We believe, our marina managers tell us that if the transient occupancy can be
achieved it is to the benefit to the City that we not be competing with our long term rentals at the
adjacent public marina. That would be the preferable approach. The question is, is it realistic?
The approach seems to hinge on whether you can achieve enough transient docking at a part of
the marina operations, the boatyard servicing which is essentially a transient nature, not a long
term because you bring your boat in and have it fixed. Which would extent the reach of the
service of the boatyard into slips in the marina as a total service. Then both sides could do that
easily enough. I think the more conservative projection clearly is Grove Harbor in assuming
only the ten dollars ($10), if they can actually rent more slips in the marina at the sixteen dollars
($16). I am sure they would be happy to do that. I'd also like to correct one point that was just
made. The Grove Harbor proposal is about 100 boats in the large hangar which is substantially
less than what Grove Key has in the outdoor racks. They do have quite a bit more than that, they
stack four high and two sets of racks, _it's well over 100 boats there. So this is fewer boats than
Grove Key.
Mayor Carollo: Thank you. What would be tiie approximate, Mr. Manager, net present value of
one hundred thousand dollars ($100,000) per year for ten years?
42 July 23, 1997
•
Mr. Marquez: Approximately one million dollars ($1,000,000).
Mayor Carollo: Pretty close to the million still you think with the first ten years? I don't think it
would be.
Mr. Marquez: No, excuse me. It would be eight hundred thousand.
Mayor Carollo: Yeah, that's what I thought. Somewhere seven fifty, eight hundred thousand?
Mr. Marquez: Uh-huh.
Mayor Carollo: Any...?
Commissioner Plummer: My final question. These documents that we have here, they are not...
Dinner Key Waterfront Development side by side comparison. These were done by you?
Mr. Marquez: Yes, sir.
Commissioner Plummer: There are no later documents to on besides these? These are the final
documents to go on?
Mr. Marquez: Yes, sir.
Mayor Carollo: Any further comments or statements by the members of the Commission at this
point in time before we let them close on their final presentations or any rebuttals they will like
to make? OK.
Commissioner Plummer: I have no... right now. The question has been asked are you opening it
up to the public?
Mayor Carollo: If we are going to take a vote today then that will be the last thing that we would
do before we take a vote today. That's the will of the Commission.
Vice Mayor Regalado: Mr. Mayor, I think that - if I may? -that we should vote today and
finish, resolve this issue.
` Mayor Carollo: That's...
Commissioner Plummer: In all due respects, I guess...
Mayor Carollo: That's why we placed it in the way that we did in the agenda.
Commissioner Plummer: In all due respects, the reason I really asked is, I have another meeting
in these chambers at two thirty.
Commissioner Gort: I have a luncheon appointment.
Mayor Carollo: I have got a meeting now at twelve fifteen myself. So, let's what we could do
or see what we can cancel.
Commissioner Plummer: Hey, I am just... someone asked out there, I think it was John, asked is
the public going to be able to speak and I told him, I didn't know. All right.
- 43 ~ July 23, 1997
• •
Mr. John Brennan: I am sure I could... J.L.
Commissioner Plummer: Yeah, God help us.
Mayor Carollo: Well, before we vote, the public always has a right to speak.
Commissioner Plummer: All right.
Mayor Carollo: No'matter how bias it might be for one group or another. And, I am sure both
groups brought their cheerleaders along. I think the one group over here, Grove Harbor begun
the presentation~so they get to close. So, the other group, Hangar in the Grove could begin the
closing presentation. Yeah, ten to fifteen minutes each.
Mr. Moore: It won't take that long, Commissioner. Thank you very much. I just want to say
that what we are trying to do is assemble the... Perhaps one of the finest group of people from
this community we think ever put together to try to serve this City. I think if you think about it
you probably have never seen most of these people before you. They are not the sort of... They
are citizens first that run their own business but they have come together to try to do something
right for this City. We are going to create a place here if we are selected that you will be proud.
That looking back 40 years from now you will say it was one of your finest moments and one of
your best decisions. You will be agreeing with four or five other groups that have gone through
the process that we went through here today. The review committee, we were like a pointer to or
something. I mean four bases points away from the Atlantic Financial, I mean the Atlantic
Clipper Foundation and with their pulling out we were selected effectively by the City's review
committee. Coconut Grove Chamber said we are the group they prefer, unanimously. Marine
Council, the Waterfront Advisory Board. I am told the Village Council had effectively voted to
support us. It's... we heard a lot about money and I understand the City is in monetary straits
these days, that's one of the reason that we are trying to participate, frankly. But, before we talk
about money, I want to say we are not building other buildings on this site. We are going to
build something that is consistent with what the charette process and the other consultants for the
City said they wanted. And we are going to restore these buildings and it's not by accident that
our numbers are in line with what the consultant to the City's numbers were. It's the way it
works. It's what it's going to cost. We are accurate, we are conservative people. We have a
historical orientation. This counts for something too. It's not all about money. We are the only
group that preserves the tender harbor because that's the sort of thing that people can touch and
feel and enjoy. It's not just a bottom line analysis. And, I understand the pressure you are
under. But, I want you to consider that when you say, well, let's look at the difference and in 40
years it's eight hundred thousand dollars ($800,000) difference that our proposal is conservative.
Every person that has looked at that from the accountants to the City Manager and everybody in
between has said our proposal is conservative. The only part of that whole entire proposal that
has ever been attacked has been over optimistic, I think the words were, is the marina numbers.
Yet, the people we... that gave us those numbers are the best in the world. We pulled them in out
of the Fort Lauderdale area because they already have 14 or 15 marinas that they are managing.
That they are consulting on, not managing but consultants to. They actually do have three or
tour that they manage in other parts of the country that a bank hired them to manage. So, we can
debate about whether it's realistic or unrealistic, but I want you to know that at the end of the
day, our proposal is conservative and we believe it will build to something very special and
proper for this community, something you can be very proud of looking back. We thank you for
letting us participate in the process and thank you again.
Mr. Rasco: Mr. Mayor, on behalf of our team I also want to thank you for letting us participate
and I want to commend your professional staff. This is not an easy job. I spent many, many
hours going through those two proposals and they are difficult to dissect. Mr. Moore said that
there were two things that you have to decide on, in his opening presentation and that is one,
44 July 23, 1997
•
who will be involved and second what will tie placed on the property. And, he went on to talk to
talk about Mr. Westbrook and himself and the others in esteem. And, I can tell you, I don't
know Mr. Westbrook but I know of his fine and impeccable credentials. Michael Moore used to
be my partner at Holland and Knight and he is a wonderful individual. Marisela and Gonzo Diaz
are my friends and they are wonderful people. They are all very, very, fine people. But, this is
not about who has tine people or not. We have wonderful people on our team. We have the
Limas, we have Carlos Lacasa, we have Manty Satiates Morse, we have Bob Kristoff, Carl
Strauss. These are also very fine people who live and serve this community. The issue is not
whether or not they have fine people in their team, they certainly do. The issue is experience.
Do they have the experience and the know how to run this marina and to build it. And, I submit
to you that we are far more experienced on all counts. In construction, in development, 'in
operation on marinas than they are. A lot is made about transient rates and there is not one
marina, Bob Kristoff can tell you, there is not one marina in South Florida that operates
anywhere more than ten or 15 percent on transient rates. Those rates are simply not realistic.
There was a lot of discussion about the boatyard and whether we were taking our revenues up
stream to the river. Our strategic alliance with Las Americas will provide that all of our bidding
for all their work will come through us and that we will pay you a full ten percent on those
revenues versus... In their situation, their two hundred thousand dollars ($200,000) is what they
receive and then they will pay you seven percent of that which winds up tieing less than one
percent of the revenues. The second thing that Mr. Moore said at the beginning, is what will be
placed on the property. And the RFP required as primary uses a marina and a boatyard. And,
that is what we are going to be doing. Three-quarters of our property is going to be dedicated to
that, that is what the City needs, that's what the RFP and the charette said and that's what you
have to decide on. That and the know how of the people that are involved in this thing. Thank
you, very much.
Mr. Bruce Reep: My name is Bruce Reep. I have been involved with this project since the
beginning with the charette. All the workshops with the Planning Department. Numerous
meetings the community has been involved. I have as many concerns that Commissioner
Plummer has. First of all, my address is 3530 East Ferry Street, Coconut Grove. One of the
main concerns that I have looking at both of the visual as well as the presentations, is a boatyard.
This boatyard is consistently and you heard how they said, how it's... in the past how many
boats had been on the hard. It has averaged over 50 boats in the hard for the last five years. You
had something that you saying, you are endowed or you are endeavored for a certain amount up
to 40. We have a great need. We did a survey four years ago of over 2,800 boats in the
Biscayne Bay area over 28 feet. We have a great need for these boats to tie repaired. And, what
I am very concerned about is that the RFP says it very specifically on page 28, that the primary
use for this property shall be a boatyard. And, now what I see happening is half of the boatyard
going to a market and it says also on page 30 of the RFP that no secondary or ancillary uses shall
supplant or replace the primary use. And, I see it being replaced by that amount of boats. And,
by the way, it says a full service state of the art boat repair yard for doing full service work.
Stackables is not a boatyard. That is a stackable storage area. A boat repair area, we have the
need in this community and I hope everybody understands this to have a minimum of 30 boats in
the hard up there. So, I hope that whoever... I am not for either side or anything, I am just
saying in your decision process see who meets up to the requirements of the RFP. I have a
couple of other little concerns. The amount of space being set aside, there is the historical factor
next door at Virrick Gym. The amount of money that they have calculated and the amount of
time it's going to take to do just the windows is phenomenal. I am concerned that anybody
thinks they are going to get the historical qualifications, the Department of Interior to meet up to
that in two years. It is going to he a very time consuming thing. And, I am concerned that you
also...
Mr. Walter J. Foeman (City Clerk): The two minutes is up, Mr. Mayor.
45 July 23, 1997
• •
Mayor Carollo: Thank you, very much. Mr. Brennan, two minutes.
Mr. Brennan: Mayor, Commissioners, I have got two small points. My name is John A.
Brennan, for the record, for those who don't know me and I live up the hill here. The first, and I
think most important part of this whole operation is, that the Commission and the City staff
promised the public that this hearing would be held when the public could show up. You don't
have a dozen members of the public, the staff from both people are here. I wish it could have
been otherwise. I am... on the Waterfront Board I would turn my hat around and I am here just
to reiterate what Michael Moore said that the Waterfront Board supported.
Mayor Carollo: John, excuse fora minute. You can stop the clock for one second. The last
thing. that I want is for anybody to say that this Commission took a vote today without giving the
public the right to speak. If those allegations are going to be coming up, I just assumed advertise
it and do it tomorrow, I think we could advertise it today still or if not we could advertise it for
Friday and we'll come back briet7y, listen to anybody that would want to talk on it and we could
take a vote. This is too important for the City. So that after we take a vote and regardless which
side wins for anyone to be accusing us of not having giving the public the right to express
themselves. I just want the Commission to think about it so that once the people that are here
from the public finish speaking we could decide on what to do.
Vice Mayor Regalado: Mr. Mayor, was it announced as a public hearing or...?
Mayor Carollo: It should have been advertised as both...
Mr. Foeman: No, Mr. Mayor.
Mayor Carollo: ... in the advertisement that we had, otherwise we could not take it...
Mr. Foeman: It was advertised as a Commission Workshop/Special Commission meeting.
Mayor Carollo: That's what we instructed. And, we advertised it as a Commission Workshop...
Mr. Foeman: That's right.
Mayor Carollo: ... and Special Commission meeting. That's clear the public can speak, correct?
Mr. Foeman: I'll defer to the Law Department.
Ms. Kearson: Certainly at a Commission meeting you can always allow the public to speak and
it has been advertised as a special meeting, that's correct.
Commissioner Hernandez: But, we could take a vote?
Mr. Kearson: And, you also state that legislation may result from this meeting. So, it was very
clear.
Mayor Carollo: And, that was made clear at the last meeting that we agreed that this will take
place today.
Mr. Brennan: I did not intend to stop the progress of the meeting. My intent was that the public
should have been advised that it would be... the meeting would be held after six o'clock when
most of the people who are working people, they are not lucky to be retired like myself can be
here, as you can see. Anyway, I will wrap that part of it up and let you make that decision.. I
wanted to point out what my Waterfront Board had on that the Waterfront Board did select
46 July 23, 1997
• •
Hangar in the Grove as Michael Moore pointed out as being the better operation for the City, and
I thank you for your time.
Mayor Carollo: Thank you, John. Go ahead, sir.
Mr. Carl Lemieux: Thank you. My name is Carl Lemieux, I live at 3035 Truck Street in
Coconut Grove and I participated in the charette process in the past and was part of the
participants that recommended that a full service boatyard be established here in Coconut Grove.
Having had a boat on the seawall when that boatyard was first opened up and having the seen the
activities in that boatyard over the past several years, I can say from first hand experience that
what this community needs is a good, full service boatyard. I appreciate the scrutiny that Hangar
in the Grove got by the Commissioners, I wish we could have done the same with the other
vendor because I am much more confident in Hangar in the Grove and what they are going to
give back to the community and what they are going to allow us, to have there, which is to
maintain the historical significance of those hangars. And, as a citizen and a voter I definitely
throw my hat in the ring for them. Thank you.
Mr. Alex Alamo: Good afternoon, my name is Alex Alamo. I live at 3400 Pan American Drive,
I am Pier 3, slip 13. There is definitely a need here for a full service boatyard and one that's are
going to address the needs of the people within our community. Also, there is a need to have
reasonable boat rates. Sixteen dollars and twenty cents ($16.20) per foot is just not possible for a
lot of us. Also, dry storage. We need dry storage. There is people who is storing boats in
storage places in Kendall because they can't. have dry storage facilities. And, also I think, we
need a team that's committed to this project. One that isn't coming in and then deciding they
don't want to play and then coming back in and then deciding to change numbers. So, with that,
I hope that you guys favor Grove Harbor Marina. Thank you.
Ms. Joyce Nelson: Joyce Nelson. 2535 Inagua, in Coconut Grove. I am not connected with
any group but I have worked on this project since its inception which was July of '93. So, we
are in our fourth year~of working on Dinner Key. Of course the faces of the Commission have
changed several times and unfortunately...
Commissioner Plummer: Correct. Over the years I look better.
Mr. Nelson: That's right J.L., no beard. And, I guess a lot of you haven't seen the progress of
the four years other than reading the newspapers but I have intimately worked on this week after
week and having been on the RFP committee to write the RFP. Having been on the charettes.
Having been on the review committee to select the proposers. I had a very open mind in trying
to make this exactly what the public wanted from the charettes and that's why the RFP was
written as it is. The Hangar in the Grove was one point away from Atlantic Clipper in the ratings
of the three proposers. So, now we only have two. So, they were selected as the number one
entry into this process. The RFP accounts for approximately 30 percent rating for esthetics and
design. This was very important to the people in Coconut Grove that this project would look like
it's supposed to look with restoring the hangars. It's not just how the financial plan is going to
work because that is your job, you are the financial people that are assessing this. But, let's not
forget how it looks because long term, a good project that looks good will last a lot longer.
The...
Mayor Carollo: Sorry, Joyce. Thank you.
Commissioner Plummer: Mr. Mayor, may I suggest that the City Clerk inform people when they
have 30 seconds left and that will give them a good idea to wind down.
Mayor Carollo: That's when the...
47 July 23, 1997
• •
Mr. Foeman: The beep said 30 seconds, Commissioner.
Commissioner Plummer: I still think if you had told them that, they would realize it.
Mayor Carollo: If you could go ahead and do that so that they can realize when the buzzer starts
ringing they got 30 seconds left. Anybody else that would like to address the Commission?
Anyone else? Then the public section of this meeting is now closed. What is the will of the
Commission? .
Vice Mayor Regalado: Mr. Mayor, I think most of the people that were really involved has
spoken. This meeting was advertised. There was even an article in the papers, this morning
papers in Spanish, in the Spanish edition and in the English edition. And, it was very visible in
both newspapers. It was reported in the radio, the calendars, the different calendars. I would
hope that this Commission would decide to vote and bring to the residents of Miami something
that had to be done for so much time. And, that we can do things for the City of Miami. So, I
would rather vote now if this is the will of the Commission. If not, I would rather have an
afternoon session after six and vote after the afternoon session. But, I think that it is symbolic
that we don't delay, that we don't defer, that we don't postpone. This is what we have been
doing here and because there are many issues that we have to deal with and it seems that the
residents of the City of Miami are used to this Commission of deferring, delaying, postponing.
If this is the will of the Commission, I am ready to vote right now. If not, I am ready to come
back this afternoon, if possible after six because I have to be...
Commissioner Hernandez: Mr. Mayor, I am.... If it's a motion that the Vice Mayor is putting on
the table and if it is not, it is my will at this point in time to further the process and vote at this
point in time and not wait until six o'clock. So, I am ready to vote myself.
Mayor Carollo: Well, let me say this to my colleagues. I think that we have scrutinized both
proposals extremely extensive, not just here today but for some time. At the same time, the
question as far as the public not having been informed of the meeting today, I think that we have
informed the public when we announced that we would not only have a workshop but we would
have a Special Commission Meeting that we could take action, the public has been informed.
And, certainly I would say that the bulk of the people that wanted to address this Commission
are here today. Whether we have another meeting at 6:00 p.m., or not I really don't think that
we will get too many other people than the ones that have come here today. Unless both sides
calling their supporters to come to the Commission and that certainly would probably be a
possibility. But, I would like to congratulate, not only Hangar in the Grove and Grove Harbor
but also Atlantic Clipper that withdrew. I think that all three groups are groups that are
legitimate. All three have solid proposals that were presented. The one that had received the
highest recommendations decided to withdraw. We had two left and I think either one would be
fine groups, they would do an adequate job for the City of Miami. But, we have to choose one.
We can't have two of you running the place and that's a decision that we have to come to. There
are several key factors that we have to take into consideration. One of them obviously and I
don't think there is any secrets of what the City has been going through is whom can provide the
most revenue the quickest to the City. That's a key factor for us. Secondly, there have been
points brought up that I think could be argued either way on both groups on whether some
numbers are very conservative or maybe not even realistical. One that certainly caught our eyes
out here was the amount of dollars that's being calculated by one group o the slips of sixteen
plus dollars versus ten for the other as the administration told us; what we are charging here at
Dinner Key is under ten dollars ($10). There's a difference of what we charge here to what the
other group proposed of anywhere from 60 plus t~ 70 plus percent in price. There, of course,
was some arguments brought up by the other group that maybe one group is being too optimistic
in feeling that in the first year they can produce "X" amount of dollars of revenue as they
48 July 23, 1997
•
presented. Both of the two arguments that were brought up that I just described, I think, deserve
consideration by this Commission when we vote. But, what I am seeing and this is one area that
once we take a vote that I am want to make sure on either group that wins that the administration
gets a guarantee from them, that whatever the amount that it is going to cost, whether it's five
million, nine million, I don't care what it is to fix up those hangars the way that they need to be
fixed up, that either group will spend the money on that. As far as this vote is concerned, I
cannot ignore the fact that on present day value out of the two groups that we have to choose
from one is over one million dollars ($1,000,000) in the first ten years than the other. This is net
present dollars, not actual dollars, if you include the dollars, it's even more. That's what the
dollars are worth today. At the same time, even though it's not a guarantee as the administration
stated to us, it certainly seems that there is a very strong possibility that we can receive the offer
that one group made of some hundred thousand dollars or so per year on the tax rebate. So,
having said that, I will give the floor to my other two colleagues that haven't expressed
themselves yet.
Commissioner Gort: Let me tell you, I feel that somehow we have to change our system. When
you look at the paperwork that we have, the proposal was answered on August 30, 1996. It has
taken us almost a year to make a decision. I think somehow... I got to send my congratulations
to all three groups and I can see why one of the groups will drop out. When yora are in the
private sector and you have to make certain commitments and millions of dollars you are going
to have to pay interest for those millions of dollars. Somehow we have to change our process
and Mr. Mayor, you know, I am ready to vote on it today. I think we have to vote today. I think
we can no longer... And, what I can see is, my understanding is one of the main worries that
staff had, is to make sure and the public, that the buildings are maintained historically. And, I
think, my understanding is any final decisions with the contractor will have to come m front of
us. At the same time the Planning Department and the Zoning Department, Building Department
will have to issue permit and they are the ones that will have to oversee to make sure that the job
can be done. So, I am ready to vote today.
Commissioner Plummer: First of all, let me say that I think inspite of one group saying their
group is better than the other group and the other group saying their group is better than their
group, I think the City is fortunate, we have good people on both sides. So, I want to establish
the record there. I have no problems with voting now or at six o'clock. I can't conceivably
think that my mind would be changed and it's not trying to cut out of public hearing. To me, as I
read over the documents presented to us by the Manager, the one issue that I have said all the
way along and I have said from day one, in the Manager's words, one company put greatest
emphasis on marine related uses. To me, that is important.
Vice Mayor Regalado: Mr. Mayor, I am ready to introduce a motion in order to vote if we are
ready.
Mayor Carollo: The floor is open for any motions.
Vice Mayor Regalado: I would like to introduce a motion to approve the resolution accepting the
proposal received from Grove Harbor Marina and Caribbean Marketplace.
Commissioner Hernandez: Second the motion.
Mayor Carollo: There is a motion by Vice Mayor Regalado, second by Commissioner
Hernandez.
Commissioner Plummer: Under discussion.
Mayor Carollo: Under discussion.
49 July 23, 1997
• •
Commissioner Plummer: I think it needs to be said very clear, that the awarding today is not an
award. The decision today is nothing more than sending to the Manager in rotation, if necessary,
to go to a binding contract. I want to make sure that the City Manager understands this one vote.
When it comes back to me again, I don't want yesterday's paper and tomorrow's paper or the
day before's paper. I want final documents and I don't want them the day before the
Commission meeting is going to vote on a final document. The primary is five days, not in our
hands, we invoke the rule. I didn't invoke the rule this morning because the most important
thing that you do regardless is in fact in the final negotiations and coming down to the contract.
I think that is the most important factor and as far as I am concerned, I just want to make sure
that that contract gets in our hands where we have the opportunity to study it, to ask questions
and, of course, without question, the public will have the right to speak at that time when that
contract comes back before us.
Commissioner Gort: I would like to second what J.L., is stating. And also, you have to make
sure that all promises, all commitments that have been made is part of the contract. And, that
they are realistic.
Mayor Carollo: Madam City Attorney, instead of a motion, I think it will be more appropriate to
make a resolution accepting the proposal received from Grove Harbor Marina Caribbean
Marketplace, Ltd.
Ms. Linda Kearson (Assistant City Attorney): That's...
Mayor Carollo: Can....?
Commissioner Plummer: We have both. We have two.
Mayor Carollo: Yeah, well, we had it~for both
Ms. Kearson: Yes, that's correct.
Mayor Carollo: ... maybe before but that's really what we need to do, is to make a resolution...
Ms. Kearson: Accepting a proposal received from Grove... '
Mayor Carollo: Accepting a proposal. And, this stipulates clearly what we are approving, that
we are not giving anyone any rights per se, that we have to do the deal with them. They have to
sit down and negotiate with the City in good faith.
Ms. Kearson: That's correct.
Commissioner Plummer: Well, madam City Attorney, is that absolute? I would assume that the
decision assuming this vote is going to be for Grove Harbor. They do have a vested right of first
sitting down with the Manager...
Mayor Carollo: Oh, absolutely, they have that.
Ms. Kearson: Oh, absolutely.
Commissioner Plummer: Oh, OK, all right...
Ms. Kearson: But they have no vested rights in the property is what...
50 July 23, 1997
•
Commissioner Plummer: OK, all right.
Ms. Kearson: ... the Mayor was alluding to.
Commissioner Plummer: Yeah.
Mayor Carollo: Let me read it for the record to see if the maker and seconder of the motion and
I agree with it. This is how it was dratted by the City Attorney's office and the exact wording on
the resolution was given to us for both parties. Depending on which one would win was the only
change that was made, the name. This is a resolution accepting the proposal received from
Grove Harbor Marina and Caribbean Marketplace, Ltd., submitted August 30, 1996 for the
unified development project entitled "Dinner Key Waterfront Redevelopment" and authorizing
the City Manager to begin the appraisal process and enter into lease negotiations first with said
firm. And, in the event that such negotiations are unsuccessful, then with the alternative
proposer Hangar in the Grove, Inc., directing that said lease agreement be in a form acceptable to
the City Attorney be in compliance with applicable City Charter and Code provisions and be
subject to final approval of the City Commission. Further providing that in the event an
agreement which is .fair and reasonable to the City cannot be reached except it's otherwise
provided herein, the City Manager may discontinue negotiations and this selection process shall
terminate without financial or legal liability to the City.
Vice Mayor Regalado: That's what I said.
Commissioner Plummer: It doe"s go a step further, Madam City Attorney. As I remember the
rules and regulations it goes with "A" first. If he cannot negotiate with "A" he goes to "B" and
cannot go back to "A".
Ms. Kearson: That's correct.
Commissioner Plummer: If he cannot negotiate with "B" all are thrown out and we start from
scratch. So that needs to be understood. Well, that's the way the resolution reads, sir.
Commissioner Plummer: OK.
Mayor Carollo: OK.
Ms. Kearson: And, we also further state that there are no contractual obligations until such time
as the contract is consummated.
Commissioner Plummer: Now, where is the padlock?
Mayor Carollo: Any further statements, questions by the Commission before we vote?
Vice Mayor Regalado: No, Mr. Mayor. My motion was
resolution accepting the proposal received from Grove Harbor.
word that you read.
Mayor Carollo: So, we are voting upon the resolution as read?
Vice Mayor Regalado: Absolutely.
Mayor Carollo: Can you call the roll call, please?
Mr. Foeman: Yes, Mr. Mayor.
precisely a motion to approve a
So, it is the same exact word, by
51 July 23, 1997
~ •
Commissioner Plummer: Mr. Manager, I want to put you under the clock. Give me a reasonable
period of time, no later than you will have that contract back to the City, to the Commission for
approval. Thirty days, 45 days?
Mr. Edward Marquez (City Manager): September 31st. (Phonetic)
Commissioner Plummer: I don't want it... December 31st?
Mr. Marquez: September 31st.
Commissioner Plummer: Oh, I thought you wanted December 24th.
Mr. Marquez: There is a legal process that precedes...
Commissioner Plummer: Give me a date, I am giving you as much latitude, somewhat latitude.
I mean, is 30 days reasonable?
Mr. Marquez: No, sir.
Commissioner Plummer: You have got nothing to do during the month of August.
Mr. Marquez: Absolutely not. I have got absolutely nothing to do. .
Mayor Carollo: Well, gentlemen, I am sorry, I hate to forewarn you now. We will all be on call
for the month of August for any meetings that we need.
Commissioner Plummer: Yeah, well, you call me long distance because that's what it's going to
be.
Mayor Carollo: Well...
Vice Mayor Regalado: No recess.
Commissioner Plummer: Give me a reasonable time, I am...
Mr. Marquez: We would like to say probably October. "
Mr. Luft: October. I need to...
Commissioner Plummer: Oh, my God. August, September, the 1st of...
Mr. Luft: Commissioner, we need a month to fairly conduct an appraisal, fair market appraisal.
Commissioner Plummer: Are your talking about October 1st?
Mr. Luft: We need a fair market appraisal, then we have got to negotiate...
Commissioner Plummer: Are you talking about October 1st?
Mr. Luft: The first meeting in October whenever that is.
Commissioner Plummer: I would prefer sooner, but I will accept that as the drop dead date, OK.
I would assume if it is possible to get the clock running faster that we can do it hopefully in
September.
52 July 23, 1997
• •
Mr. Luft: Obviously, if we can meet the advertising deadlines and timetables for putting it on
the September meeting, we will strive to do that. But...
Commissioner Plummer: You can always meet those deadlines by putting it in the advertising
and withdrawing or cancelling it at the time of the Commission meeting.
Mr. Marquez: Commissioner Plummer, we do have a budgetary process in the month of
September. We do have an Oversight Board accepting the budget, you know, findings of this
Commission and everything else.
Commissioner Plummer: I gave you as much latitude as you wanted.
Mr. Marquez: Well, OK, then...
Commissioner Plummer: But, I just want a drop dead date that we can assume it's going to be
no later than.
Mr. Marquez: All right, how about November? _
Mayor Carollo: Ed, let me be honest with you and I appreciate you letting us know all that you
have. But, let me say this to you, if we don't have sufficient people or sufficient qualified people
to get us as quickly as we can through these process, then get them, or get rid of the ones that we
have that can't handle it. Because for next year and the year after, we are going to be having one
RFP after another, major projects coming on board. And, frankly, this here is one of the smallest
ones that we have had comparing to what's going to be coming on board. So, we better have the
people that can handle this, since it's going to be a lot more than one or two or three projects at a
time.
Commissioner Plummer: I also want to tell you that I have got some ideas that I want you to
pursue in the negotiations because I am assuming in negotiations you have the right to up the
ante, OK.
Mr. Luft: Oh,-certainly.
Commissioner Plummer: And, I have got some definite ideas about upping that ante.
Mr. Luft: But, let me also add that we have to do a Phase II. I would assume the proposer would
want a Phase II audit on this site and you know there is a lot of technical information between
appraisals and environmental audits that will take time to unravel. We, hopefully won't be a
problem but that's why we asked for the time.
Mayor Carollo: OK, I call the question. Call the roll.
53 July 23, 1997
• ~
The following resolution was introduced by Vice Mayor Regalado, who moved its adoption:
RESOLUTION NO. 97-493
A RESOLUTION ACCEPTING THE PROPOSAL RECEIVED FROM GROVE
HARBOUR MARINA AND CARIBBEAN MARKETPLACE, LTD., SUBMITTED
AUGUST 30, 1996, FOR THE UNIFIED DEVELOPMENT PROJECT ENTITLED:
"DINNER KEY WATERFRONT REDEVELOPMENT", AND AUTHORIZING THE
CITY MANGER TO BEGIN THE APPRAISAL PROCESS AND ENTER INTO
LEASE NEGOTIATIONS FIRST WITH SAID FIRM, AND, IN THE EVENT THAT
SUCH NEGOTIATIONS ARE UNSUCCESSFUL, THEN WITH THE ALTERNATIVE
PROPOSER, HANGER IN THE GROVE, INC., DIRECTING THAT SAID LEASE
AGREEMENT BE IN A FORM ACCEPTABLE TO THE CITY ATTORNEY, BE IN
COMPLIANCE WITH APPLICABLE CITY CHARTER AND CODE PROVISIONS,
AND BE SUBJECT TO FINAL APPROVAL OF THE CITY COMMISSION;
FURTHER PROVIDING THAT IN THE EVENT AN AGREEMENT WHICH IS FAIR
AND REASONABLE TO THE CITY CANNOT BE REACHED, EXCEPT AS
OTHERWISE PROVIDED HEREIN, THE CITY MANAGER SHALL DISCONTINUE
NEGOTIATIONS AND THIS SELECTION PROCESS SHALL TERMINATE
WITHOUT FINANCIAL OR LEGAL LIABILITY TO THE CITY.
(Here follows body of resolution, omitted here and on file in the Office of the City
Clerk.)
Upon being seconded by Commissioner Hernandez, the resolution was passed and
adopted by the following vote:
AYES: Commissioner J.L. Plummer, Jr.
Commissioner Wifredo Gort
Commissioner Humberto Hernandez
Vice Mayor Tomas Regalado
Mayor Joe Carollo
NAYS: None.
ABSENT: None.
Mayor Carollo: Thank you, both groups for...
----------------------------------------------------------------------------------------------------------------
3. COMMISSION CONGRATULATES MAYOR CAROLLO ON HIS FIRST
ANNIVERSARY AS MAYOR.
----------------------------------------------------------------------------------------------------------------
Vice Mayor Regalado: Excuse me. Before we leave, there is a reminder that we need to make
here. One year ago today, Joe Carollo was elected Mayor of the City of Miami. So we want to
wish him a happy anniversary, and I think we have got a cake.
[APPLAUSE]
Commissioner Plummer: Javier, forgot the cake.
54 July 23, 1997
Mayor Carollo: Yeah, he sent the cake, right? It's a ticket.
Commissioner Plummer: He forgot the cake.
Mayor Carollo: We'll blow this for Santa Rosalia, right? Thank you. Thank you.
THERE BEING NO FURTHER BUSINESS TO COME BEFORE THE CITY
COMMISSION, THE MEETING WAS ADJOURNED AT 12:43 P.M.
JOE CAROLLO
MAYOR
ATTEST:
Walter J. Foeman
CITY CLERK
Maria J. Argudin
ASSISTANT CITY CLERK
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55 July 23, 1997