HomeMy WebLinkAboutR-97-0421J-97-41 1
6/18/97
RESOLUTION NO. 9 7 — 421
A RESOLUTION, WITH ATTACHMENT, APPROVING THE
ACQUISITION OF THE LEASE FOR THE HYATT HOTEL BY
THE HYATT CORPORATION OR ITS AFFILIATE ("HYATT"),
FROM AETNA LIFE INSURANCE COMPANY ("AETNA"),
SUBJECT TO THE CITY AND HYATT ENTERING INTO AN
AGREEMENT TO MODIFY THE LEASE AND ACCOMPLISH THE
OBJECTIVES SET FORTH IN EXHIBIT "A", ATTACHED
HERETO; AUTHORIZING THE CITY MANAGER TO EXECUTE A
MODIFICATION AGREEMENT AND SUCH OTHER
DOCUMENTS AS MAY BE NECESSARY TO CONSUMMATE
THE TRANSACTION CONTEMPLATED HEREIN, SUBJECT TO
THE APPROVAL OF THE CITY ATTORNEY; PROVIDING FOR
THE EXPIRATION OF THE PROVISIONS OF THIS RESOLUTION
SIXTY (60) DAYS FROM THE ADOPTION HEREOF.
WHEREAS, the City has declared Aetna to be in default under the terms of the
Lease Agreement for the Hyatt Hotel ("Lease") and the City Commission, pursuant to
Resolution No. 96-880, adopted November 21, 1996, authorized the City Attorney to
pursue all appropriate legal actions to enforce the City's rights under the Lease; and
WHEREAS, Hyatt is negotiating the acquisition of the Lease from Aetna and, with
Aetna's consent, Hyatt and the City have been negotiating the reinstatement, modification
and assumption of the Lease by Hyatt; and
WHEREAS, Hyatt has requested the City to consent to its acquisition of the Lease
and the City wishes to do so provided the Lease is modified and an agreement is reached
between Hyatt and the City to accomplish the objectives set forth in Exhibit "A", attached
hereto;
CITY COMMIssION
MEETING OF
ATTACHMENT (S) JUN 2 6 1997
CONTAINED Reeolution No,
97- 494
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NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF
MIAMI, FLORIDA:
i
Section 1. The recitals and findings contained in the Preamble to this Resolution
are hereby adopted by reference thereto and incorporated herein as if fully set forth in this
Section.
Section 2. The City hereby approves Hyatt's acquisition of the Lease for the
Hyatt Hotel from Aetna, subject to the City and Hyatt entering into an agreement to
modify the Lease and accomplish the objectives set forth in Exhibit "A", attached hereto.
Section 3. The City Manager is hereby authorized' to execute a Modification
Agreement and such other documents as may be necessary to consummate the
transaction contemplated hereby, subject to approval of the City Attorney.
Section 4. The provisions of this Resolution will hereby expire sixty (60) days
from the adoption hereof.
Section 5. This Resolution shall become effective immediately upon its adoption.
PASSED AND ADOPTED this 26th day of June 1997.
7-1-0 E CAROLLO, MAYOR
ATTE T:
vem�
WALTE E AN
CITY CLERK
' The herein authorization is further subject to compliance with all requirements that may be imposed by the City
Attorney, including but not limited to those prescribed by applicable City Charter and Code provisions.
2-
97- 421
PREPARED AND APPROVED BY:
M4, &- W-- , _�-
OLG AMIREZ-SEIJ S
ASSI TANT CITY ATTORNEY
APPROVED AS TO FORM AND CORRECTNESS:
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97- 421
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EXHIBIT "A"
1. Rent:
(a) Base Rent: The amount of Base (Minimum) Rent shall be
increased from $125,000 to $250,000.
(b) Additional Rent: The "threshold" under the Lease, which has
been the impediment to the City receiving Additional Rent, will be
eliminated. This means that some Additional Rent will be due regardless
of the amount of gross sales. The amount of Additional Rent, however,
will continue to depend upon the volume of gross sales. Additional Rent
shall be based on the Rent Schedule attached hereto as Exhibit 1
2. Gross Sales: The existing disputed definition of "Gross Sales" will
be replaced by a computation of the following sources of revenue made in
accordance with the Uniform System of Accounts for Hotels. Gross sales
shall include revenues from rooms, food and beverage (from the Hotel
and the Convention Center), telephone, garage and parking, guest
laundry, other operating revenues and other rentals and other
income, all as defined by the Uniform System of Accounts for Hotels. In
order to ensure that the sources of revenue that make up "gross sales"
are not reduced (by subcontracting accounts, etc.), Hyatt has agreed that
the only accounts it will be permitted to subcontract or sublet are (i) the
ones that are currently on commission (i.e. parking concession), the
operation of the restaurant formerly known as The Esplanade, guest dry
cleaning and laundry services, vending machines, movies, safe deposit
boxes, car rentals and gift shops; and (ii) the following accounts which
currently do not provide revenues to the Hyatt: business center (faxing,
translating, typing, etc.), car rental booth (where a car rental company
rents space from the Hotel), concierge service and game room. It is
important to note that, with regard to the above mentioned accounts, the
revenues received by the Hyatt in connection therewith will be included in
"gross sales".
3. Credit: The "Credit Against Additional Rent" described in paragraph
8 of Amendment #5, in the amount of approximately $469,000, will be
extinguished.
9'7- 421
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4. Additional Rent for year 1996: Simultaneously with full execution of a
Settlement Agreement, the City will receive payment of the Additional
Rent due for the year 1996 in the approximate amount of $196,999. The
computation of Additional Rent shall be based on the amount of Gross
Sales reported by the Hyatt in its financial statement for the year 1996,
using the current formula as set forth in Amendment No. 5.
5. Deferral of Additional Rent: The provision in paragraphs 3.2 (c) and
(d) of the Lease and 2(f) and (h) of Amendment No. 5, which permits the
lessee to defer the payment of Additional Rent for up to 3 years (and 5
years for the first mortgagee), will be deleted.
6. Parking: Hyatt shall use its best efforts to assist the City in protecting
Convention Center visitors from excessive parking charges and in
securing adequate compensation from the parking concessionaire for
Convention Center events.
7. Inside Survey: The inside survey prepared in connection with
Amendment No. 5 will be completed (i.e., legal descriptions must be
added) and updated. Hyatt has agreed to pay up to $25,000 toward the
cost of the survey. We understand that the cost of the survey will not
exceed the amount of Hyatt's contribution. The City and Hyatt will agree
to reallocate space as may be required to maintain the proper
public/private use ratio required under the bond indenture.
8. Restatement of Lease: The City and Hyatt will execute a Restated
Lease, which will consolidate all amendments and "update" the Lease by
deleting all inapplicable provisions.
9. Insurance Policy: The parties will endeavor to obtain a single insurance
policy for the entire complex, naming each party and the University of
Miami as additional insureds in order to reduce the cost of the premium
and facilitate resolution of liability issues.
10. City Consultant's Invoice: Upon execution of the Settlement
Agreement, the City shall be reimbursed the total amount of its
Consultant's invoice, in the approximate amount of $80,000.
11. Effective Date: The effective date of the Settlement Agreement, for
purposes of calculation and payment of rent, shall be January 1, 1997.
Upon execution of the Settlement Agreement, Hyatt shall pay to the City
the balance of Base (Minimum) Rent for 1997.
97- 421
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AETNA LEASE AGREEMENT
PROPOSED SETTLEMENT
EXHIBIT I
per_ SUMpMNI_
GROSS SALES
RENT TO CITY
CURRENT
SETTLEMENT
PROPOSED
AGREEMENT
EERIOD
1996
PROJECTION
$20,126,000
r EASEAGREEMM
$125,000 (a)
$323,184
1997
$22,000,001
$125,000 (a)
$371,000
1998
$22,660,001
$382,724 (a)
$410,600
1999
$23,339,801
$443,466
$451.388
2000
$24,039,995
$528,880
$493,400
2001
$24,761,195
$544,746
$638,672
2002
$25.504,031
$561,089
$681.242
2003
$26,269,162
$656,729
$627,149
2004
$27,067,226
$676,431
$674,434
2005
$27,868,943
$696,724
$723,137
2006
$28,705,011
$717,625
$783,876
2007
$29,566,162
$798,286
$848,462
2008
$30,453,147
$913,694
$914,986
2009
$31.366,741
$941,002
$983,606
2010
$32.307,743
$1,033,848
$1,054,081
2011
$33,276,975
$1,064,863
$1,126,773
2012
$34,276,285
$1,131,084
$1,201,646
2013
$35,303,543
$1,165,017
$1,268,142
2014
$36,362,650
$1,236,330
$1,310,506
2016
$37,453,629
$1,273,420
$1,364,141
2016
$38,677,135
$1,350,200
$1,404,857
2017
$39,734,449
$1,390,706
$1,462,722
2018
$40,926,482
$1,473,353
$1,540,864
2019
$42,154,277
$1,600,000
$1,626,799
2020
$43,418,905
$1,500,000
$1,715,323
2021
$44,721,472
$1,500,000
$1.806,503
2022
$46,063,117
$1,500,000
$1,900,418
2023
$47,445,010
$1,500,000
$1,997,151
2024
$48,868,360
$1,500,000
$2.096,785
Total
$26,106,108
$31,266,562
(a) Additional rent is credited toward the balance of the physical
plant credit which is approximately $469,000.
t�
t�N-I9-97 IS,04 FROM,MIAMI CONVENTION CENTER ID,
AETNA LEASE AGREEMENT
PROPOSED SETTLEMENT FOR CALCULATION OF GROSS SALES
CURRENT LEASE
PROPOSED SETTLEMENT
Dollar Volum
I
% of Gross
Dollar Volume (�
% of Gross
$ 0
to
1 $16,999,999
0%
$ 0
to
$22,000,000
.55%
$19,000,000+
I $22,000,000
1.6%
$22,000,001
$28,000,000
6.0%
$22,000,001
$24,000,000
1.9%
$28.000,001
$35,000,000
7.5%
$24,000,001
$26,000,000
2.2%
$35,000,001
$38,000,000
4.0%
$26,000,001
$28,000,000
2.5%
1 $38,000,001
$40,000,000
5.0%
$28,000,060
$30'000,000
2.7%
$40,000.0011
Up
7.0°!0
Page 1
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97- 421
CITY OF MIAMI, FLORIDA
INTER -OFFICE MEMORANDUM
TO: Honorable Mayor and Members DATE: June 26, 1997 FILE:
of the City Commission
SUBJECT:
E. ward M q Aetna Lease of Hyatt
FROM: City Manager REFERENCES: Hotel
ENCLOSURES: Proposed Settlement
The Hyatt Corporation is negotiating the purchase of the referenced Lease from
Aetna. The Lease is currently in default, due, mainly, to Aetna's refusal to
accept the City's definition of "Gross Sales" under the Lease. This definition in
the Lease, which has been the subject of dispute, is essential in determining the
amount of Additional Rent which the lessee must pay annually to the City.
With Aetna's consent, Hyatt and the City have been negotiating the
reinstatement, modification and assumption of the Lease by Hyatt. The parties
have tentatively agreed to the modifications outlined below.
Any modifications to the Lease must be approved by the City Commission, the
Oversight Board and the Trustee under the Trust Indenture. We have been
advised by Hyatt that the closing of the purchase of the leasehold between
Aetna and Hyatt must take place not later than June 30, 1997. Therefore, time
is of the essence.
1. Rent:
(a) Base Rent: The amount of Base (Minimum) Rent has been
increased from $125,000 to $250,000.
(b) Additional Rent: The "threshold" under the Lease, which has
been the impediment to the City receiving Additional Rent, will be
eliminated. This means that some Additional Rent will be due regardless
of the amount of gross sales. The amount of Additional Rent, however,
will continue to depend upon the volume of gross sales. Additional Rent
shall be based on the Rent Schedule attached hereto as Exhibit 1
2. Gross Sales: The existing disputed definition of "Gross Sales" will
be replaced by a computation of the following sources of revenue made in
accordance with the Uniform System of Accounts for Hotels. Gross sales
shall include revenues from rooms, food and beverage (from the Hotel
97-- 4211
and the Convention Center), telephone, garage and parking, guest
laundry, other operating revenues and other rentals and other
income, all as defined by the Uniform System of Accounts for Hotels. In
order to ensure that the sources of revenue that make up "gross sales"
are not reduced (by subcontracting accounts, etc.), Hyatt has agreed that
the only accounts it will be permitted to subcontract or sublet are (i) the
ones that are currently on commission (i.e. parking concession), the
operation of the restaurant formerly known as The Esplanade, guest dry
cleaning and laundry services, vending machines, movies, safe deposit
boxes, car rentals and gift shops; and (ii) the following accounts which
currently do not provide revenues to the Hyatt: business center (faxing,
translating, typing, etc.), car rental booth (where a car rental company
rents space from the Hotel), concierge service and game room. It is
important to note that, with regard to the above mentioned accounts, the
revenues received by the Hyatt in connection therewith will be included in
"gross sales".
3. Credit: The "Credit Against Additional Rent" described in paragraph
8 of Amendment #5, in the amount of approximately $469,000, will be
extinguished.
4. Additional Rent for year 1996: Simultaneously with full execution of a
Settlement Agreement, the City will receive payment of the Additional
Rent due for the year 1996 in the approximate amount of $196,999. The
computation of Additional Rent shall be based on the amount of Gross
Sales reported by the Hyatt in its financial statement for the year 1996,
using the current formula as set forth in Amendment No. 5.
5. Deferral of Additional Rent: The provision in paragraphs 7.4 of the
Lease and 8 of Amendment No. 5, which permits the lessee to defer the
payment of Additional Rent for up to 3 years (and 5 years for the first
mortgagee), will be deleted.
6. Parkin : Hyatt shall use its best efforts to assist the City in protecting
Convention Center visitors from excessive parking charges and in
securing adequate compensation from the parking concessionaire for
Convention Center events.
7. Inside Survey: The inside survey prepared in connection with
Amendment No. 5 will be completed (i.e., legal descriptions must be
added) and updated. Hyatt has agreed to pay up to $25,000 toward the
cost of the survey. We understand that the cost of the survey will not
z 9'7- 421
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I
exceed the amount of Hyatt's contribution. The City and Hyatt will agree
to reallocate space as may be required to maintain the proper
public/private use ratio required under the bond indenture.
8. Restatement of Lease: The City and Hyatt will execute a Restated
Lease, which will consolidate all amendments and "update" the Lease by
deleting all inapplicable provisions.
9. Insurance Policy: The parties will endeavor to obtain a single insurance
policy for the entire complex, naming each party and the University .of
Miami as additional insureds in order to reduce the cost of the premium
and facilitate resolution of liability issues. Currently the City pays
approximately $275,000 in insurance premiums.
10. City Consultant's Invoice: Upon execution of the Settlement
Agreement, the City shall be reimbursed the total amount of its
Consultant's invoice, in the approximate amount of $80,000.
11. Effective Date: The effective date of the Settlement Agreement, for
purposes of calculation and payment of rent, shall be January 1, 1997.
Upon execution of the Settlement Agreement, Hyatt shall pay to the City
the balance of Base (Minimum) Rent for 1997.
9'7— 421 3