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M-93-0375
owl INTFR-OFFICE ME"ORANDUM - Honorable Mayor and Members nP.r_ � � of. the City Comi. msiort JUN 16 Rejection of Lighthouse Marina and Boatyard at Dinner Key Proposal Ces lio Cit nager_ Ci.ty Commission Meeting Fr'cios`"'�s of June 17, 1993 RECOMMENDATION_: - It is respectfully recommended that the City Commission adopt attached Resolution, rejecting the proposal submitted by Light- house Marina & Boatyard at Dinner Key Inc. for the unified devel- opment of the Dinner Key Boatyard & Marina property located at 2640 South Bayshore Drive, Miami., Florida. BACKGROUNQ On July 16, 1992, the City Commission, by Resolution 92-488, authorized the issuance of a Request for Proposals (11RFP11) for Unified Development ("UDP") of a full service boatyard facility, marina, and optional ancillary marine -related related use on a City owned waterfront property, selected a Certified Public Accounting ("CPA") firm and appointed members of a Selection Review Committee ("Committee") to evaluate the proposals to be submitted for this project. The Request for Proposal document was issued on August 7, 1992 and the City received one proposal on the proposal. deadline date of February 16, 1993. $�i,�w Cczli�Lit���Rv_��o�'L�IL� Recommel��Q�L The Committee received the presentation of the proposer and, after extensive analysis and discussion of the proposal, adopted a motion to recommend the approval of the proposal to the City Manager by 4/3 votes. The motion is as follows: The Committee recommends the acceptance of the proposal submitted by the Lighthouse Marina and Boatyard at Dinner Key Inc. for the development and management of the Dinner Key Boatyard & Marina contingent upon the following conditions that are successfully met by the proposer prior to the lease nego- tiations with the City: 1' 93- 3'75 J I iinnnrabl 1'i3i'} nr f n(l Tr%--.rn )p ( c of the Ci t-.y Ccmmis-�i_nn Page: 2 1. Providing a letter of commitment or irrevocable letter of credit from a financial institution to demonstrate the funds available for undertaking the proposed project, 2. Verifying accuracy of the cost esti- mates and expenses associated with the development and operation of the pro- posed project, 3 Improving the minority composition of the development entity to include more minorities, and 4. Adhering to the objectives of the development proposal to run the proper- ty primarily as a boatyard and marina. The Committee rendered a written report to the City Manager containing an evaluation of the proposal based on the specific evaluation criteria outlined in the RF'P document. I_mtependerut C PAReP_Q_rt aL cL 1 The CPA rendered its written report to the City Manager analyzing the proposals based on the financial viability of the proposed development team, its proposed financial strategies; and assessed comparatively, the short and long-range economic and fiscal return to the City and evaluated the economic feasibility of the proposed development. According to the CPA report summary the information provided in the proposal is insufficient to affirm that the proposing entity has the financial capability to effectively execute the project. A letter from the Citibank regarding the proposed financing of the project is included within the proposal. While the letter does not constitute a firm commitment to provide financing, the proposers have indicated that once the lease is granted by the City, they will post sufficient collateral to guarantee the Citibank loan. C�2 93- 375 Honorable Mayor and tlember_s of the City Commission Page 3 After taking into consideration the findings of the CPA, those: evaluations of the Committee, it seems that the proposer's abili- ty to secure financing to undertake the proposed development project is not convincing. Therefore, in order to avoid a simi- lar experience that the City had during the last UDP process, it will be prudent to recommend the rejection of the proposal stab-. mitted by Lighthouse Marina and Boatyard at Dinner Key Inc. for the unified development of the Dinner Key Boatyard & Marina property. Attachments: Proposed Resolution Selection Review Committee Final Report Certified Public Accounting Firm Report Selection Committee Minority Report 93- 375 3 11� i� utI ITEREIERT J. 11AIIEI Assistant City Manay ri May 27, 1993 Mr. Cesar 11. Odio City Manager City of Miami 3500 Pan American Drive Miami, FL 33133 Deer Mr. Odio: CE.SAR II OD10 City Manai;+ i In response to the City of Miami's Request for Proposals for the Unified Development Project ("UDP") of a full service boatyard facility, marina, and optional ancillary marine -related retail use for the Dinner Key Boatyard & Marina property, issued August 7, 1993, one response was received. The seven member Selection Review Committee ("Committee") select- ed to evaluate the proposal convened a total of two meetings and on April 12, 1993 voted to recommend to the City Manager the acceptance of the proposal received from Lighthouse Marina and Boatyard at Dinner Key Inc.. The proposal evaluation was based on the following seven criteria outlined in the RFP document: 1. Experience of the proposing entity 2. Capability of the development team 3. Financial capability 4. Financial return to the City 5. Overall design of the proposed development G. Extent of minority participation 7. Local firm(s) participation In accordance with the City of Miami Charter, Section 29-A(c) and the City of Miami Code, Section 18--52.9, enclosed is the Committee's Final Report outlining its deliberations and evalua- tion of the proposal submission. 9 93- 375 DEPARTMENT Of DEVELOPMENT AND I IOl1SING CONSLRVATION/DUI'ONT PLAZA CENTER 300 Biscayne Buidevaid Way. Suite 400-401/Miami, FL 33131 LW C.�Sci i� 11 (l�l 1 O Inge 2 on behalf of the entire committee for the Ui nner key host:yard & Marina property UnP, we appreciate the opportunity to participate with you in hr.i ncl i ng to Miami a development project which appro- priately fits with the existing waterfront uses in Coconut Grove. sincerely, James W. Wellington Chairman Enclosures 93- 375 (7 DINNER KEY BOATYARD & MARINA UNIFIED DEVELOPMENT PROJECT SELECTION REPTEE REPORT TO THE CITY MANAGER MAY 1993 93- 375 'rA}q,C.", Or [0N1`11YF|'5 pAG.r. Selection Review committee, . , ., . . . .. '. ^ .. '. . .. ,. ^ .. ^. - .^ .. ^ '' l Background . . . ' . . . . ., . . . ., . . ' ', . . , - ^ , , , . . . . ^ .^ ^ . , ., ., ' . , ,. ' . . } Proceedings , , ' , , .' .' ' , , ,, . . ' . . . , ' '. - . . .^ ' . ' ^, ', ' .' ', ' .' ,. . ., ] Evaluation Process . . . . . .' . . . ,, . . . . . ' ^ ^ ,. '^ ' ^^ '. , . , ,. . ., ,, . .. 5 APPENDIX A. Area Location Map/.Site Location Map y ���� ^" ��� � « �» `�YAIRCTIOIT RI?ViIYT (1011MI`I" TY MEMBERS OP THE-- PUB;,IC JAMES W. WL:1,L1 Nt T0H, Chairman Director Miami River Information Service ELI M. FEINI3ERG President EMI1 & Associates, Inc. KEVIN F. KOTE Biologist, Marine Facilities Program Metro -Dade County - DERM DAVID D. RAY President SeaStar Corporation MI,MBERS OIL' THE CITY_ WARREN BUTLER Assistant the City Manager City Manager's Office RAUL DE LA TORRE Manager Dinner Key Marina ALLAN I. POMS Chief Architect Public: Works Department Support fitaff_ ERDAL DONMEZ Financial Services Coordinator Department of Development & Iiousing Conservation /z -1- 93- 375 JACK LtJ FT Development Coordinator - Department of Development. & Ilousi_ng Conservation MARI A PERIZ Project Representative Department of Development & !lousing Conservation RAFAEL O. DIAZ Deputy City Attorney Law Department ANNE WHITTAKER Minority/Women Procurement Officer General Services Administration Department -2- 13 93- 375 J Resolution No. W-488 adopted on ii)ly lt-), l9{-2 authorized the i s-'u'Ince. of a Tf eq11E'3t f or 111 O1)nsaI s ( 11R1'11 [ or t:l1e U11 i f i ed Development of a full sE--i -vlcC' hoat_yard fal lty, lllarina, and optional ancillary marine -related i-et-ai1 t I s e on .gin a111)Y'oximat.eIy 1.0.88 acre of City owned water runt located at 2640 South Bayshore Drive, Aliami, Florida. The City Commission, through Resolution No. 92-488, appointed seven members to a Selection Review Committee ("Committee") charged with evaluating proposals in response to the City's RFP and to render a written evaluation of its findings to the City Manager as required by City of Miami Charter Section 7.9-A(c) for Unified Development Projects. Resolution No. 92--488 further selected Arthur Andersen & Co., Certified Public Accounting ("CPA") firm, with the minority firm of Sharpton, Brunson & Co. to analyze the financial capability, commitment, and projections of the proposal submissions. The RFP document issued August 7, 1992, sought a unified develop- ment package from a private entity to include planning and de- sign, construction, leasing and management of a boatyard and marina and marine -related uses. The Lighthouse Marina and Boatyard at Dinner Key Inc. proposal was the only response that the City received on the proposal submission date of February 1.6, 1993. PROCEEDI14GS The Committee, appointed by the City Commission, held a total of two (2) meetings. Throughout the proceedings, the Committee observed requirements as set forth in the "Government in the Sunshine" Law and "Public Records" Act. All meetings were adver- tised and recorded. The first sleeting of the Committee was held on March 16, 1993. At this time, the Committee was briefed or, the Unified Develop- ment Project process and its responsibilities for evaluating the proposal submission. The Department of Development staff in- formed the Committee with respect to the Lighthouse Marina and Boatyard at Dinner Key Inc. proposal's compliance with the sub- mission requirements in the RFP document. The second meeting of the Committee was held on April 12, 1993, at which time the principal developer and chief architect for the Lighthouse Marina and Boatyard at Dinner Key Inc. presented the overall development plan for the proposed full service boatyard facility, marina, and optional ancillary marine -related retail -3- 93- 3 75 use. ` he fle�.�el fq)ne.nt: team al �;�� ar�<;t!�t �,ei quest_ion- 0 i I PC t,P(I by tare Comm i ttee i n ttre areas of p? opinent find f i nanC i ng . At this meeting, the representatives of CPA team i nti-oduc:ed the preliminary analysis of the 1,igllthouse Marina 111d Boatyard at Dinner Key Inc. proposal, stressing the financial aspect of the proposed development. The CPA t-eam advised the Committee that financial information, presented by the proposer in its proposal to the City, could not necessarily he considered a firm financial commitment with respect to the undertaking of this development project. The C.ity's Minority and Women Procurement officer informed the committee i.n reference to the proposal compliance with the minority participation goals outlined in the RFP docu- ment. -4- /S 93- 375 T;VAT,T1AT'TC)11 T'R()("T'!; "' Ci ty of Poi am i C )a i-ter 'ecti on 29-h (c) , Un i f i ed Devel opment Projects, requires the Committee to "evaluate each proposal based only on the evaluation criteria appIicab le to the Selection Review Committee and contained in the Request for Proposals". Section V7 of. the RFP document included an extensive outlay of the criteria that would be used to evaluate the proposals. The evaluation criteria was as follows: 1. Experience of the proposing entity .......... 150 2. Capability of the development team .......... 200 3. Financial_ Capability ........................ 20% 4. Financial Return to the City ................ 200 5. Over-all design of the proposed development ...15% G. Extent of Minority Participation ............ 100 7. Local firm(s) participation ................. 69 Total Maximum Points 1060 The above matrix was established to evaluate, rank and recommend proposals submitted in response to said RFP. Nevertheless, the Committee had only one propose] to consider, therefore, each member of the Committee evaluated all relevant components of the proposal and voted without assigning points according to the matrix illustrated above. IiLCQMMENDhTION_ The following motion was adopted by the Committee by 4/3 votes: The Committee recommends the acceptance of the proposal submitted by the Lighthouse Marina and Boatyard at Dinner Key Inc. for the development and management of the Dinner Key Boatyard b. Marina contingent upon the following conditions that are successfully met by the proposer prior to the lease nego- tiations with the City: 1. Providing a letter of commitment or irrevocable letter of credit from a financ'al institution to demonstrate the funds available for undertaking the proposed project, / 6 -5- 93- 375 ME \7PY. i f yi nf t.ht� mates and expenses �!ssc��� i at�d with the level opment and ot)Ql-at: ion of the posed project, 3 Improving the minority composition of the development ent: i ty to include more minorities, and 4. Adhering to the objectives of the development proposal to run the pro��er- ty E)r_ imari ly as a I)Mltyard and marina . AlI correspondence between the Committee, City Staff, Arthur Andersen & Co.; proposal documents; supplemental materials; tape recordings of the Committee meeting; and any other materials related to the Dinner Key Boatyard & Marina project are on file and available at the City of Miami I)epartment of Development and Housing Conservation, Development Division. 93- 375 /7 W—.M- Ilk 1 t 1 T T} • M7_►�� • 1 � _ � �� k 1� -- � Its l �•� i -- _ �-�� I � - _ r., . # 1Tllh r S awT. UowN T0Wt! MIAMI rr, - - --� �1- F>_.-AGLER ST. ©Av -- w. z W, FLAGUE ST. _ _ _ _ - _ - �. — ;F� 1 ONT� . ,C ARK NOco , S.W.-� --T—AIMIAMI-. `T.R I�------- �.' ui An in ��� .RICKENO KIP — V"A - _- -- - - - - - ---- r - CAUSEWAY -ice r rn 4,�y� N,N� • ,: �-- �a•�= F- n 1 R 0 AV. �Cl >-! 'FAIfl V i �C, ,I ' ISLE v ,..CITY ♦9ALL 2640 SOUTH BAYSHORE DRIVE PROPERTY KEY MARIHA Biscayne Say � \ ' — M I A M I C ITY LIMITS _J ~CORAL GABLE Ll 'TiS � PPE4131X A. Area Location Map r 9, 3 — r� 1 lHAY L HISGAY < YACHT CLUB Entry s }�A A1R COCONUT GROVE SAILING CLUB X U CORAL REEF VIRRiCK YACHT CLUB GYM '-`MONTY TRAINERS 2640 SOUTH BAYSHORE DRIVE PROPERTY 0 GRO`'E. KEY MARINA CITY OF MIAMI CITY HALL APPENDIX A L7 M Site Location Map 0 DINNER KEY MIARINA� I ... n INiI"i I I, 111 II1II' ' ' 1 1 1 11' 'i I111 11 '1111�+ I I ' 1 .111,1 , 11 .11 0 CITY OF MIAMI UNIFIED I)I?VEI.,OPMEN'I' PROJECT 2640 SOU'PII P,AYSiIORE I)RIVI? itl:l'Olt'I' `I'() 1,11L. CI'II' MANAGER Prelmrcd For: Mr, Cesar 11. Offlo April 25, 1993 Prepared BY: ARTHUR ANI)ERSEN Real Estate Services Group One Biscayne 'Power, Suite 2100 Miami, Florida 33131 93- 375 A�; April 251, 1993 Mr. Cesar 11. Odio City Manager City of Miami P.O. Box 330708 Miami, Florida 33233-0708 Bear Mr. Odio: „nl, ' ItNt P.I,.nnt I I. ; 41 44 li;tll Attached is our evaluation and analysis of the proposal for the Unified Development Project , .2640 South Bayshore Drive, Miami, l:lo6da. The purpose of our engagement was to evaluate the proposal submitted using the CPA firm evaluation criteria outlined in the request for proposals and our contract. These criteria include the experience and capability of the proposer, the financial viability of the development team, the proposed financing strategies and the comparative short and long range returns to the City. We were also to assess the proposer's market analysis and evaluate the economic feasibility of the proposed development. The procedures we performed included: Reading of the request for proposal; Reading of the individual proposal; Attendance at the review committee meeting; - Attendance at the proposer's oral presentation; and Discussions with representatives of the development team. Our report is based solely on the information included in the proposal and supplernented by comments of a clarifying nature only made during discussions with the proposers. Although we have reviewed the projections and assumptions included in the proposal, our purpose was not to validate individual amounts or assumptions but to evaluate the proposal as a whole. We have not compiled or examined any of the prospective Financial information included in the proposal. Accordingly, we do not express an opinion or any other form of 93- 375 N Of')' of Rliarni Aril 25. 1993 assurance on any of the prospective financial information cm assumptions included in the proposal. This report is intended solely for the use of the City of Miami and the. R.evicnV Committee and should not he used for any other purpose, including financing for the Unified Development. This resrriction is not intended to Unlit the distribution of this report which, upon acceptance by the City of Miami, is a matter of public record. We sincerely appreciate this opportunity to be of service to the City of Miami. Very truly yours, _2_ M (TIT t)F N I I A N I I UN11,I1":U 1)ENTIJ)PNIFN'I' t RO,II?CT 2640 SOUT11 11AYSIIOIZE DRIVE - TABLE, OIL CON E-NTS I. lntroducti►►n............................................. . if. Executive Summary ........................................ I III. Organization Structure, Financial Capability and Proposed Financing of Capital Casts .......................... 3 IV. Experience of Proposer and Capability of Development "Team ....................................... 6 V. Construction Costs ......................................... S VI. Economic Viability and Evaluation of Assumptions ................. 9 VII. Economic Return to the City ................................ 11 VIII. Other Benefits to the City ......................... I ........ 12 ADDENDA Addendum I: Proposed Organizational Structure for the Operating Entity Addendum II: Proposed Organizational Structure for the Development Team Addendum III: Letter from Citibank to the Proposers Regarding Financing Addendum IV: Proposer's schedule: Estimated Construction Costs 01�13 93- 375 U ciry of iIfinrr?I l IN r1LO1 UGI 10N t j�ril 5, 140.E roject I'he City of Miami Ills invited interested t o;ltar 1litlics cf�l cihty,l lm.iriwi can d UPltcl 2(iO(1Olscluure proposals fc,r devciopnlcnt of ri full sciti�icc b y proposedThe will be feet of ancillary marine -related retail usc. pcl�ty IOc ►tedat 2640 Sor thBayshoret 11►r rivc approximately IO.HIi acres of waterholit plc)Unil YProls Mianli (tile "Unified Dcvelopnlcnt"). A Rcclllcst for Hof Miaed mi crncAugust 7,velopt19921�c1i`he relating to the project was issued by tile y RIP outlines information to he included in the proposals and the proposal evaluation criteria. Following the Unified I)evclopnlelit resolution, the City of Miami Colninissioil appointed a Review Corminitice to evaluate the proposals within the criteria ria established Manager. As the turther -Tile i2eview Comini,lee is to provide a written repo Y Specified in the resolution, the Conlnlissioil selected Arthur Andersen & Co. to analyze each t proposal relative. to certain criteria contained ill the, One proposal was received by the City it Key,c. tThis ilrepZirt'is based ilproposer otlwas Lighthouse Marina and Boatyard at Minn }', I proposal documents and comillellis of a claiify)i`s�!I,l-'l ves c f our firmade by resentatives of the ploposCr during subse(Irlent discussions will] represent, The renvainder of this report outlines our tindii'6evalu�irte6�rrA s(unullary cifloll ourpresented fi ldii 6 its response to the Rf�P criteria which we were to included in the Executive Sunlrllary. Jl, E CUTIVE SUMMARY Organization Structure, Financial C.1Jl411)ility and Proposed Financing of Capital Costs ner The proposed development entity would be "LiglltIl ols �lM j(rlinaon rJanuary at 7rd19�3at ?rnihe Key„ The company was incorporated in the state Project Manager would be Ms, Patricia Byrne and, once o�eiofOthe erations Manager.na and 'File operations would be overseen by Ms. Byrne in the capacity p proposer intends to operate the wet and dry boat stc��dg17,000facilities s luareand feet of retclilgasoline `space addition, they plan to rent the boatyard, restaurant, to other operators. 6�y 93- 375 (`it; of Miami AP117 25, % 9 Q3 The proposal includes a bahilice sheet audited by a certified paahlic accomiting firm showing total assets for the proposing entity (4 $100.500. Of the total, $100,000 consists of notes payable, the entity's total equity as of' February 10, 1993 was $500. The information provided in the proposal is insufficient to affirm that the proposing entity has the financial capability to effectively execute the project. A letter from Citibank regarding the proposed financing of the project is included within the proposal. While the letter does not constitute a firm commitment to provide financing, the proposers have indicated that once the lease is granted by the City, they will post sufficient collateral to guarantee the Citibank loan. Experience of Proposers and Capalaility of the Develop tile nt Team As noted above, Ms. Patricia Byrne will act as Project Manager and Operations Manager. Ms. Byrne has approximately 15 years of significant experience in marina management. While Ms. Byrne appears to possess significant marine -related experience, no other resumes of individuals with professional marine -related experience were submitted with the proposal. Based on the information provided, the proposing entity does not appear to have the extensive depth of experience which would he expected for operators of a prime, first-class facility such as that proposed for the Dinner Key site. Construction Costs The proposal includes an analysis of estimated costs to be incurred in connection with construction of improvements at the site. Total construction costs for the development are estimated at $3,246,000. The construction expenses shown in the proposal lack sufficient assumptive detail to evaluate the reasonableness of the costs projected. Economic Viability and Evaluation of Assumptions The proposal includes pro forma operating information for a 10-year period beginning with the completion of construction. The projection was not examined by a certified public accounting firm. The pro forma income statement projects revenue of $1,223,901 during the first full year of stabilized operations, (year two). The pro forma projects aggressive occupancies for the wet and dry boat storage and the restaurant and retail space. These projections appear to be supported by market data provided by two independent market studies. The expenses shown on the pro forma operating statement lack sufficient assumptive detail to evaluate the reasonableness of the costs projected. In addition, the pro forma indicates 93-- 375 ��� !'1fr' rrf ltintrti ,,Aril 25, 199-3 that the Icase payment to the City is "7'o I3e. Negotiated '111ercforc it is not possible to fully evaluate the economic viability of the project. I?coiionlic Ret►irn to the City The value of calrital improvements made to the Unified Development site, projected lease payments and property tax payments represent the most significant economic benefits to the City. Capital improvements are discussed in a subsequent section of this report. i_ease payments and property tax payments to the City will also constitute a significant return from the project. However, the pro forma indicates that the lease payment to the City is 'To Be Negotiated". Therefore it is not possible to fully evaluate the economic return to the City I ntil the lease terrl►s are agreed upon. Other Ilcnefits to the City Certain other benefits tcz the City will be provided by the proposer, such as payment of permits, beautification of the site, and rent revenue for the City's wet slips while the marina is under construction. Other benefits set forth by the proposer include: • Creation of approximately 50 new jobs; • Community Outreach Apprenticeship program; • Joint training program with Dade County Schools; • Offer to provide osprey nesting itrea; • Offer to construct 150-seat amphitheater; • Offer to extend bayfront walkway to connect to Monty Trainer's; and • Construction of a non-funciioning decorative lighthouse as part of the restaurant. 111. ORGANIZATION ST uicrul t;, FINANCIAL CAPABILITY AND PRoI'oSTt) FINANCING OF CAPITAL COSTS The proposal for the Unified Development Project includes a description of the organization of the entity proposing to be the developer and lessee of the site. The proposed development entity would be "Lighthouse Marina and Boatyard at Dinner Key". The Project Manager would be Ms. Patricia Byrne and once opened, the marina and boatyard operations would be overseen by Ms. Byrne in the capacity of Operations Manager. A graphic depicting the proposer's organizational structure is included in the Addenda. According to information submitted in the proposal, the proposer, Lighthouse Marina and Boatyard at Dinner Key, Inc., was incorporated in the state of Florida on January 7, 1993 -3- 93- 3; 5 Wim Ci!y {)f Miami April 2.5, 144.1 with a total of 1,000 shares. To date, lilt) "'►Ming shires in the corporation have been issr►ed, 900 remain available for issue. No non -voting shares have been issued. The 100 voting shares are (listribwed as follows: _Sliarch►►lder Patricia Y. Byrne 2147 Wolftrap Ct. Vienna, VA 22182 I tarry Ward 900 N. Ocean Blvd. Pompano Beach, FL. 33062 Rosina Ward 900 N. Ocean Blvd. Pon►pano Beach, FL 33062 James A. Dugsin 900 N. Ocean Blvd. Pompano Beach, FI. 33062 Mary C. Dugan 900 N. Ocean Blvd. Pompano Beach, FL 33062 Nando DiFilippo Jr. 3485 N. Moorings Way Miami, FL 33133 Allan H. Applestein 7600 Red Road South Miami, FL 33143 Title Shares President 20 Vice President / ltt Secretary I)irector 16 Vice President 1() Director 16 Director 14 Stockholder 14 The Corporation Statement submitted within the proposal indicates that the corporation is not authorized to do business in Florida. In subsequent discussions, representatives of the proposer Have indicated this was a typographical error and that the entity is in fact authorized to conduct business in Florida. -a- 93- M �� ('ifs' of Afinylli APTIf 25, 1903 During the construction phase of development, tilt proposer will contract with technical firms for the physical renovation of the facility. `more proposed development tearll for the renovation consists of the following: Project Nhillagemen I Architects General Contractor Structural Engineer Engineer - (Civil, electrical, mechanical & Plumbing) I_igllthollse Marina anti i3omyard at Dinner Key, inc.:. Denis Arden Architects, Inc. J.J. Shane, Inc. NI.A. Stiaicz & Associates Ace Engineering Corporation An organizational chart depicting the proposed developmcnt entity is included in the Addenda. The City of Miami's Request for Proposals requires subinissiuti of "complete and substantiated evidence of the proposer's financial capacity to undertake the project proposed," but does not specify the form of presentation. An audited balance sheet for the proposing entity was included in the proposal. The balance sheet indicates that the proposing entity had assets of $100,500 as of February 10, 1993. Of this total, $100,000 consists of two notes made to the proposing entity by two of its shareholders, each in the amount of $50,000, payable upon demand with interest of six percent per annual. "Thus the proposing entity's total shareholders' equity was $500 as of February 10, 1993. The proposal includes a letter from Citibank regarding the proposed financing of the project. The letter does not constitute a firm commitment to provide financing. As is prudent business practice, the lender must ascertain that the lease was awarded, that building permits will be issued, that all applicable financial data is thoroughly reviewed, and must perform other credit underwriting procedures before a loan caul be granted. A copy of the letter from Citibank to the proposers is included in the Addenda. The information provided in the proposal is insufficient to affirm that the proposing entity has the financial capability to effectively execute the project. However, during their verbal presentation, representatives of the proposing entity indicated that once a lease is finalized, they would provide sufficient collateral to secure the Citibank loan to finance the project. -5- 93- 375 E EA ( rfl' of rlfin►ral 4pril 25, 1993 IV. E'Xl'EJRIFeN(:E' of PRot'oSF'.R AND CAPABILUT of Tltt�, 141YELol'NIENT'I't:ANt t'roject Ivlpnagernent. The proposer, Lighthouse Marina and Boatyard at Ironer Key, Inc., has indicated that Ms. Patricia Byrne will act as Project Manager and Operations Manager. According to her Resume and Experience Pro file submitted in the proposal, Ms. 13yrne lras approximately 15 years experience in marina management. In 1977, she became general partner and the General Manager of Washington Channel Ltd. Partnership which developed a marina facility in Washington, D.C. During Ms. Byrne's tenure, this entity: • Designed and developed a 350-slip full -service marina; • Constructed a 7,000 square foot office building and a I,0O0 square foot cocktail lounge; • Remodeled and refurbished a 120-seat full -service restaurant; • Built a 120-space commercial parking lot; and • Designed and constructed a niohile pump -out system available to every boat in the marina. Ms. Byrne's responsibilities included management of the marina, office building and leases, and a commercial parking lot from 1977 until the sale of the Washington Channel Ltd. Partnersliip in 1990. During the period of 1979 to 1990, Ms. Byrne was also involved with other marine -related entities. In 1979, she co-founded and served as General Manager and Vice President of Marine Management, Inc. This entity operated two Washington, D.C. area facilities for the National Park Service, the Fort McNair Yacht Basin on the Anacosta River and the James Creek Marina. In 1982, Ms. Byrne co-founded and became ice -President and General Manager of Gangplank Boat Sales, Inc., a new boat dealer and used boat brokerage. In 1987, Ms. Byrne co-founded TCR Boat Charters, Inc. and became Vice -President and General Manager. Ms. Byrne recently purchased TCR Boat Charters, which continues to operate the 60-foot motor yacht "Afnrta". Ms. Byrne's credentials appear adequate to develop and operate the proposed facility at Dinner Key. The only area where Ms. Byrne may lack sufficient experience is that she has not previously operated a boatyard. However, the strength of her other marine -related experience would appear to mitigate any lack of experience specific to boatyard management. -6- 93- 375 c�'? ( Wy o Afirl r?, Apull 215, 199.E While Patricia 13yrrnc appears to possess signilicmit inmIfic-related experience, no other resumes of individuals with professional tn,irinc-related experience werc submitted with the: proposal. During; their verh,d presentation, the proposers indicated that several among them had extensive general business experience and that they were longtime marine hobbyists. Based on the information provided, the proposing entity clues not appear to have the extensive breadth of experience which would he expected for operators of a prime first-class facility such as that proposed for the. Dinner Key site. Architect. Denis Arden Architects, Inc. is the proposed architectural firm for the project. Based on the information provided in the proposal, this firm has significant prior marina - related design experience, including: • Ports of Iona, Dort Myers, I-T • Islandia Master Plan, Islandia, FL • Crawl Key Marina, Marathon, FL • Plaza Venctia Phase 1, Miami, FL • Quayside Boat Moorings, Mianii, Fl, • Teraina hotel, Miami, FL, • Cricket Club, Miami, FL I3ased on the information provided, Denis Arden Architects appears to have the experience and requisite skills for this project. General Contractor. J.J. Shane, Inc. is the proposed General Contractor for the project. Based on the information submitted in the proposal, this firm has the following prior, relevant experience: • Dinner Key Marina, Miami, FL - Restoration Phase I, rehabilitation of commercial piers; • Monty's Bayshore Marina, Miami, FL - Structural work and post -hurricane repairs; • Omni Guideway, Miami FL - Metromover extension project; and • 27th Avenue Drawbridge, Dade County, FL - State project No. 87240-3531 -7- d 93- 3"75 City ref Arif1m; (_ether construction cxperience my J.J. `;mane inc im!es: • Pratt & Whitney jct testing stand, 1984; • Lonestar cement kiln, gcar change; • Part of Miamm gantry cranes, 1983; • Nliami International Airport - People Mover System, 1986; • Bascule leaf bridges over the Intracoastal and Fast Sunrise Blvd., 1986; Bayside. Specialty Center, 1980; • Burger King World I leadquartcrs, Mianri F1 , 1987.1988; • Merrill Stevens Dry Dock, Miami River, 1986; • Florida Power & L.igilt Company office building, Juno Beach, FL, 1985; • Monty's Landing, Coconut Grove, FL; and • Community Recycling Plant, Miand Fl— pr.il 7 �, .1 Q03 Based on the information provided, J.J. Shane, Inc. appears to have the experience and requisite skills for this project. Structural Engineer. M.A. Suarez & Associates will serve as structural engineers for the project. As detailed in the proposal, M.A. Suarez and Associates have participated in numerous marine -related construction projects and appears to have the requisite skills and experience for this project. Civil, Electrical, Mechanical and 1'lumbint►. Ace Engineering Corporation will serve as civil, electrical, mechanical and plumbing engineers. 'The reference statement for this firm indicates that Ace Engineering has been the engineering consultant for the Coral Gables architectural firrn, Porttrondo Perrotti Architects since 1985, performing 98 I;ercent of the firm's engineering services. The firm also performs 90 percent of the engineering services for the Miami architectural firm A.J. Verde Architects. Landscape Architect. O'Leary Design Associates is the proposed landscape architect for the project. The firm is owned by William C. O'Leary and has offices at 8525 S.W. 92 Street, Strite C11, Miami, FL 33156. O'Leary Design Associates acted as consultant and Landscape Architect for Bal Harbor Village for ten years. The firm also acted as consultant and Landscape Architect for the City of North Miami. Beach for three years. V. C0Ns'r1tUC1'I0N COSTS The proposal for the Unified Development includes an analysis of estimated costs to be incurred in connection with construction of improvements at the site. The following 93-- 375 � OfY (tf Affor►►i I p it J_ ?, 1 93 scl)ccli le Contains estimated c(mStructican casts submitted by the prr)poser. All information w;as obtained fiOnt the [m)[losa1. Estimated ("onstruclion Costs Item Cost Wet Slips $965,000 Dry Storage 475,000 Fuel 125,000 Retail / Restaurant 596,000 Paving; 170,000 Coinnion Areas 403,000 Other Costs 272,000 Financing; Cast 240,000 Total 3+ 246 Q00 It should be noted that the proposer's schedule Estimated Corisnuctiorr Costs indicates Conimon Area construction costs of $703,000. However, when the items are added, they amount to $403,000, as follows: Estimated Connn on Area Construction Casts Common Area Item Gust Shower Stalls $30,000 Seawall 273,000 Bay-,valk 40,000 Landscaping; 45,000 Lighting 15,00( Total 403 Q00 During subsequent discussions, representatives of the proposer indicated there was a typographical error and that the correct amount was $403,000, The proposal does not indicate, nor is there any other evidence that competitive bids were obtained to derive the estimated construction costs for renovating the project. Further, the construction expenses shown in the proposal lack sufficient assumptive detail to evaluate the -9- `, �` 9 10 Ctfv. of rlai0n1i A.Pril 25, 1993 reasrynableness of the costs projected. A copy of the proposer's schedule 1:stirnated Constmction Costs is included in the Addenda. V1. ECONONtIC VIABILITY AM) EVALUATION OF ASSuNIPTIONS This Portion of tl)e report contains a sur)ui)ary of the principal revenues and expenses forecasted by the proposer. The Purpose of the following information is to summarize the major aspects of the proposer's projected operating results, compare the projected results with the market data provided, and to evaluate the economic viability of the Proposed operations. The Proposal includes pro forma operating information for a 10-year Period, beginning with completion of construction. The projection was not examined by a certified public accountant. The pro forma operating results assume a five percent increase in revenues and expenses each year. The proposer intends to operate the wet and dry storage facilities and the gasoline sales. They propose to rent to other operators the remaining facilities, which include the restaurant, retail space and boatyard. A market analysis to support the pro forma operating results for the marina and dry storage was prepared by Professional Marine Associates, Inc. of Tort Lauderdale, Florida. A second market analysis was prepared by Appraisal and Real Estate Economics Associates, Inc., (AREEA) of Miami, Florida to support the restaurant and retail space projections. The proposer shows (lie following major revenue categories for the first full year of lease -tip (year two): Percentage of Description Revenues Wet Slips 37% Dry Storage 23 Gas & Diesel 7 Restaurant 6 Retail Space 15 Boatyard 13 Total 101%, Totals do not add due to rounding. -10- 93- 375 .3 Cif -t. of Mialm April 1 t, 1003 The proposers project dry and wet storrge c►ccupancics of fi, percent during; the first year arld then 95 percent in subsequent years. The proposer acknowjcdf;es that the first year occupancy is aggressive, but plans an aggressive pre -selling effort. The t)5 percent s�at►ilized occupancy is also aggressive., but is within tite range achieved at comparable facilities as presented in the market study. Rental rates for the retail space and the restaurant are supported with market data presenter] in the proposal. The retail rental rates, projected to be $10 per square loot are at the high end of rates achieved at the comparable facilities discussed in the market study. The rental rate for the restaurant, the greater of' seven percent of sales or $15 Per square foot is also at the high end of rates paid by comparable facilities. While the rental rates for the retail space and the restaurant are aggressive, they are not unreasonable. The proposers project 100 Percent occupancy for the retail space throughout the entire l0-year projection period. This seems overly aggressive. /lnrturtl fuel sales were projected at 340,000 gallons at a gross margin of $.25 per gallon, for a total gross margin of $95,000. The volume of fuel sales is not well supported with market data. However, the related gross margin appears reasonable. The expenses shown on the pro forma operating statement lack sufficient assumptive detail to evaluate the reasonableness of the costs projected. In addition, the pro forma indicates that the lease payment to the City is "To Be Negotiated". Therefore, it is not possible to fully evaluate the economic viability of the project. V11. EcONOtt11C RETURN TO THE CITY The most significant economic benefits to the City are the value of the capital improvements to the Unified Development site, property tax payments and annual lease payments. Capital improvements are discussed in Section V and amount to $3,246,000. The pro forma income statement projects property tax payments as follows: Year l $30,351 Year 2 31,869 Year 3 33,462 Year 4 35,135 Year 5 36,892 Year 6 38,736 Year 7 40,673 Year 8 42,707 Year 9 44,842 Year 10 47,084 i / - 11 - �s 93- 374 O(J. r?j illirrrrti April .?S, I P9.1 The proposal indicates that the lease terns arc "To 13e Negotinte.d". It is not possible to evaluate the overall economic return to tilt, Oty until the proposed lease payments have peen determined. Vlll. O't'itFIR Bt.NF" FITS TO THE CITY I'he proposer has outlined various benefits to the City in addition to proposed capital improvements, projected rent and property taxes. These include such items as payments for hermits, rent revenue for wet slips while constrnlction at the site is in progress, enhanced beautification of the site, minority and affirmative action Plans and others. Below is a summary of other benefits set forth by the proposers. • Creation of approximately 50 new jobs; • Community Outreach Apprenticeship Program; Joint training program with Dade County Schools; • Offer to provide osprey nesting area; • Offer to construct 150-scat amphitheater; • Offer to extend bayfront walkway to connect to Monty Trainer's; and Construction of a non-functioning decorative lighthouse as part of the restaurant. -12- 93- 375 S_S ADDEINDA 3(o 93- 375 I I I I I A I..I I 11 I I II I I DEVELOPMENT ENTITY "LIGHTHOUSE MARINA AND BOATYARD AT DINNER KEY" PROJECT MANAGER PAT BYRNE ARCHITECTS DENIS ARDEN ARCHITECTS INC. STROCTURKL 1EMGINEZI (CIVIL 11"06CAPE ZUGIItEER ELECT. MEC2. 6 IKRCHIT?= PLUMBING) M.A. SUAREZ L ACE ENGINEERING O'LEARY DESIGN ASSOCIATES. CORP. ASSOCIATES RETAIL GEJIERAL CONTRACTOR J.J. SHANE, ZNC. SUBLEASE BOATYARD SERVICE FACILITY OPERATIONS XANAGE2 PAT BYRNE MARINA I LEASING OPERATIONS OPERATIONS MARXET ING QPSRA'; 1C N:; I 11I-rllllll 1111.!,I'llI Ill nliplIllljJr- I Ills "II 11llll Illl''1 yll 11111'1l''lllll'III ljlll� 11�11iilij-11I1111111 I��1g1��,���'�lsl rll'P�jjll�1ll1IIIprrI�III,IIlIPJlillllilliljlqlllrl11�lpll'mjl�li111� �� 1�11 1 -1 11jjj Jill I,IIgill ���� ADDENDUM I. PROPOSED OItGANUATIONAL STIMCIAME FOR THE OI'ER.ATING [:Nl'I'I'Y 93- 375 37 ADDENDUM II. PROPOSED ORGANIZATIONAL STRUCTURE FOR THE IDEVELOPNIENT TEANI '39 93 375 ORGANIZATIONAL_ CHART CITY OF MIAMI 93- 375 ADDENDUM 111. [,Is'rrER FROM CITIBANK TOTHE HE PROPOSERS I'zLY;ARDING FINANCING 93— 3'75 'el/ ri ovf;;rrri Th,-.4:1• ,n ,• ?,fiam,, F(nr,ftn 3.1131 7-el: 305 373 9200 Far'.105.177 902) February 13, 1993 Mr. Nando DiFilippo Jr. Mr. Harry �.; . ward nr. James Dugan Mr. Allan Applestein 3495 N. Moorings Way Coconut Grove, F1 53133 Re: Lighthouse Marina and Boatyard at Dinner. Key, Inc. Gentlemen: ?NF U716ANK I'RIV.ATE BANt We have previously discussed with you the possibility of Citibank N.A. making a loan in the principal amount of $3,000,0oo to Lighthouse Marina and Boat Yard at Dinner Key, Inc., a Florida Corporation (the "Company") for the purpose of malting capital improvements to the marina property owned by the City of Miami which has been referred to generally as the Merrill stevens Marina. This marina property is located on Biscayne Bay in the area of Miami referred to as Coconut Grove and comprises approximately 10 acres of land. Based on our conversations and review of the project we would be ready, willing, and able to consider a loan in the aggregate principal amount of $3,300,000 to Lighthouse Marina & Boatyard, Inc. Pursuant to, among other things, the following conditions: 1. satisfactory completion of Citibank's credit due diligence and review process, which includes approval by our appropriate credit committee. 2. The terms and conditions of the operating lease given to the company by the City of Miami for the operation of the marina property must be acceptable to Citibank. please recognize that among other things, if we believe the operating lease will not allow tht company to generate sufficient cash flow to pay back the principal and accrued interest of our loan, we simply have no interest in making it. yO2 93- 375 1-Aq!-Iire t:hat_ the i.r,d.i_vidu l shaxelaolr_lers of t fin company personally guarantee t_fre l.C) H.e ma-ke to thF willp requite rre In order to secure .such personal c,zazant�aes, t�� quite that each of.' such Shareholders pledge and/or provid4 us with a security interest in collateral acceptable to us at our sale discretion. 4. The term of any Loan granted based on our current lending guidelines will not ba longer than 5 years. We will consider interest only loans with a balloon payment at the end of such 5 year period provided the loan remains fully collateralized with collateral acceptable to the bank in its sole discretion. To the extent that the cash glow of the company is sufficient to pay down the principal of the during this period, loan we are prepared to release collateral to the extent of principal pay down. 5. The interest rate of the loan will be determined at the time the .loan is made, but if the loan is fully collateralized then we would be prepared to consider our prime rate plug 2% as the interest rate plus a fee for making the loan that will not be less than 11. Additionally, the borrowers/guarantors would pay all or Citibank's out of and the like. pocket costs relative to the loan such as attorneys fees Please feel free to contact me if any part of thisproposal needs to be discussed or clarified further. We are anxious to turn this proposal into a loan agreement and we look forward to a long and mutually beneficial relationship with all of you. Very truly yours Sharon F ley Mice President ADDENDUM IV. I'ROPOSER'S SCHEDULE: ESI'IMAI'ED CONS'I'liucriON COS'C5 93- 375 ME ESTIMATED CC)NS T RUCTtCirl (,OSTS WET SLIPS Approved 62 slips fVevv 31 slips Demolition D—RYST, CRAGE 8uiiding Renovation (348,500 x 5 00 Travel Lift Piers ) Lifts Racks (80 x boo FUEL Docks/building System RETAIL / RESTAUURANT Retail - Renovation Restaurant PAVING COMMON AREAS Showers Seawall SaYwalk Landscaping Lighting (18,500 x 16.00) (85,000 x 200) OTHER COSTS Legal Arch ite MVEnginsedng Permits Signags Contingency 3% FINA`_ N�CII_NG, p ,T •: too Its of 25, 00t) 100.0()0 125,000 290,000 300.000 596,000 170,000 $s- i fir 93` ":75 Eli M. Feinberg PRFGIDF.NI DINER KEY BOATYARD &: MARINA UNIFIED DEVELOPMENT PROJECT (THE "PROJECT") SELECTION REVIEW COMMITTEE (THE "COMMITTEE") MINORITY REPORT TO THE CITY MANAGER /1/ p 93- 375 EMF & Associates, Inc. Government Affairs Consultants One Datran Center 9100 South Dadrland Boulevard, Suite 900 Miami, Florida 33156 305/662-9641 Fax 305/670.4842 1. Introduction On April 12, 1993, the Committee met to consider the only proposal submitted for the Project, the proposal (the "Proposal") submitted by Lighthouse Marina & Boatyard at Dinner Key, Inc., ("Lighthouse"). It was obvious from the outset of the meeting that several of our members shared similar concerns for the seemingly inadequate and incomplete nature of the Proposal. A number of questions were asked of Lighthouse with a view towards alleviating the concerns expressed by the members of the Committee. Unfortunately, Lighthouse did nothing to alleviate our fears. Instead, most of our fears were simply confirmed by their lack of preparation and their insensitivity for the legi.mitate concerns of the Committee with regard to the very substance of their Proposal, including issues of financial ability, experience, cost assumptions, financial return to the City and minority representation. A/7 93- 375 A 1 tll�ltxrah Committee shoT,rer.t their (Ii.spJe:Icl.ir_e for the Proposal by voting to approve it by the slim marain of 4 to 3. Having suffered through the Dinner Key Boatyard fiasco, it is imperative that the City be extremely leary of those who would arrive overnight with false promises and little, if any, substance, and have the City blindly hand over to them one of its most beautiful and valuable assets. We strongly believe and recommend that the Proposal be rejected outright. The following analysis will serve to summarize our principal concerns with respect to the Proposal. 2. Financial Capability/Financing Capital Costs No financial statements were submitted on behalf of any of the principals of Lighthouse. In fact, the only financial statement submitted with the proposal was for Lighthouse. This statement reflects a shell corporation with a nominal amount of cash. Amusingly, in order to show some net worth in Lighthouse, the statement also reflects two (2) shareholder notes of $50,000 each. We attribute no value to these notes and believe that their 2 /Y � 93- 37 5 5 1 ilC ] il.r 1 (''tl i T1tC)t'1 k>idcl. i.ng Tyr oc pss anr3 sJJggt,cts a tot7J lac) of regard on the part of Lighthouse for the professionalism and level sophistication of those of us involved in the review process. Having presented no financial informationl on the principals of Lighthouse, and illusory financial information on Lighthouse itself, Lighthouse next presents their fictional financing plan/strategy Finding a willing lender for any project in today's environment is very difficult. Financing this Project, in particular, should prove to be even more difficult due to the very unique ue nature of the businesses underlying the Project. The underwriting criteria on a project of this nature is very tricky. Notwithstanding the aforementioned factors, Lighthouse would have us believe that (i) they will obtain the financing, and (ii) the financing will be based on unobtainable terms such as 100% financing (no equity), interest only payments (pro-formas reflect no principal payments for 10 years) and a 35 year loan amortization. 3 f O a non-}?iri�linq, fa1.m lett.et' fr.nm Citilaat,}, ��rc in�lucjec? with the Prop©sa]_. It is our strong opinion that Lighthouse has completely failed to provide the financial information necessary to give the City even the most minimal level of comfort_ with respect to Lighthouse's ability to develop and operate the Project. We have no information as to the financial position of Lighthouse's principals, Lighthouse is a shell corporation and the financing strategy proposed by Lighthouse is straight out of Alice in Wonderland. Finally, we add that it is impossible for us to find any reasonable basis to assume that Lighthouse will be able to secure the $1,0o0,000 Bond or Letter of Credit required by the Request for Proposal. We believe that the foregoing concerns necessarily led the CPA team reviewing the Proposal to conclude that the financial information presented by Lighthouse "could not necessarily be considered a firm financial commitment with respect to the undertaking of this development pro-iect" (See Committee Final Report to the City Manager). 4 .�A 93- 3'75 Light house iExper_ience We also found no comfort in the experience level of Lighthouse to undertake this Project. Again, the oral presentations provided the Committee by members of Lighthouse gave us no reassurance. First, it should be noted that the weakness of the financial information presented by Lighthouse is a strong indication, in and of itself, of the lack of their familiarity with and experience in a project of this nature. Second, the only person involved with Lighthouse who appears to have any experience whatsoever with this type of project is Pat Byrne. Although she lists her experience with a Washington, D.C. company who developed similar projects, it is unclear to us whether or not she was a principal of that company or merely an employee. Her presentation to the Committee left us with little confidence in the strength of her experience and, thus, in her ability to develop and successfully operate the Project. In addition, even if we were to assume that Ms. Byrne has the required experience, it is nevertheless disconcerting to us that we are being asked to award this 5 9 3 - 375 ,,�-i T? hntl i Tl(-1Y Ulm TTotn}in, 7,r7 th eyl),?H.-nre. T4r)YPovclT-, w take note and are baffled by the fact that Ms. Byrne a.s not a director of Lighthouse. As such, one could reasonably be concerned with the exact role to be played by Ms. Byrne in the establishment and execution of policy for Lighthouse. Clearly, Nis. Byrne's position with Lighthouse will be completely subject to the will of its directors. Third, as mentioned earlier in this report, Lighthouse is a shell corporation. In fact, the Proposal lists the corporate address for Lighthouse as the home address of one of its shareholders. Incredibly, the Proposal also reflects the fact that Lighthouse is not authorized to do business in the State of Florida. Two other factors are of concern to us. First, the majority of the owners and principals of Lighthouse are from out of town and have little or no ties to Miami. Second, the corporate statement for Lighthouse shows that a majority of its shares have yet to be issued. If Lighthouse intends to bring in additional shareholders, why was this fact (along with their names) not disclosed with their Proposal? 0 93-- 375 .5-;2° 'i h- r-,Yprnr.. in I!( I 1 t 0Tr, niin 1.1 f'�,�C�,-� X'1 c, j nrt c_cr�sr?l_t nt:s prof ]_des gt:E>>.rnc3s fnr. acictit ona_1 concpz-n. T;�e consultants appear to have little experience with this type of project:. For example, the most recent project reflected in the Project Architect's list of projects was performed over ten (10) years ago (1_982). Further, the Project Architect Lists as references individuals for whom he has designed zoological and housing projects. The Landscape Architect lists no private jobs. In fact, his experience is principally in the area of consulting rather than with actual hands-on, direct projects. The Mechanical/Electrical Engineer dial not even submit a resume/experience statement. Moreover, contrary to the requirements of the Request for Proposal, none of the consultants submitted Pictures illustrating their experience in similar projects. The consultants also failed to submit copies of City and County licenses. In fact, the State of Florida licenses submitted by most of the consultants expired February 28, 1993. Further, none of the consultants provided a litigation statement and none of the consultants provided any financial information. In fact, what little 7 93- 375 � PyPol_-i nt-l{. t.}lpy- r 1 r7 .1. 1 Wit: pT..CIj nt,x. r of it 1101 SM,-) I ) -V Si 7,E' and �'C OI)R , Finally, proposals submitted in response to prior Requests, for Proposals on this Project have included consultants in the fields of civil engineering, seawall contracting, plumbing contracting, security and marine consultants. These and other disciplines are noticeably absent from the Proposal. 4. Construction Costs Lighthouse failed to submit evidence necessary for the Committee to properly evaluate and verify the accuracy of their development cost estimates. In fact, by their own admission, the Project consultants provided no cost estimates to Lighthouse. Nevertheless, our own cursory review of their development costs discloses numerous problems. First, a number of costs have been completely omitted. Construction of the large (and expensive) lighthouse, which will purportedly house the restaurant, is not reflected. Figures for items such as security, sprinklers, code compliance, accounting, loan closing costs and advertising are also non-existent. sy 93- 375 TT' �, 3c?- .ti.on, there ar.e a number_ of_ costs which are reflected, but a ppear to be grossly understated. Examples include their estimates for (;) repairing the existing slips and building the proposed 31 new wet slips (Lighthouse suggests both jobs will cost the same); (ii demolition of existing slips; ) g P; (iii) building renovation,, (only $5.00 per square foot J ) (iv) retail spaces (only $16.0o per square foot) ; (v) seawall (only $273,0o0) , (vi) parking/paving (proposed parking spaces alone should exceed their proposed figure for this item); (vii) lighting (only $15,000); and (viii) financing costs (mathematically impossible - $3.3 million over 2 years at a oo interest rate). In conclusion, it appears to us that their development budget was not based on .real figures. Rather, the same was pieced together in order to merely arrive at a pre -designed, specific number without, once again, any regard for reality. �• Economic Viabilit The economic viability of the Proposal is also of grave concern. The "market study" submitted by Lighthouse was prepared by one of its own principals. g 9- 375 1S`� 13 .t. rcl 1 st 1C�'1_ll �)f=1r111�. a rr fif �'i:t; 1p 11 0 �tUC7i.t' ubmitto{ i.11 Tnsteact , ] t Ta._.o c _1.y x'. response to pri_or. Requests for Proposals. Recognizing the fact that an up -date of these prior reports was "prudent", the Lighthouse report simply makes reference to and "washes over" changed conditions such as economic recessions, luxury taxes, boating industry declines, and, of course, Hurricane Andrew. The operating pro-formas submitted by Lighthouse are also troublesome. operating expenses appear to be understated. Again, Lighthouse provided no substantiation to the committee for its cost assumptions. However, we believe that costs such as taxes, office expenses, maintenance, security and advertising (the Proposal itself emphasizes a proposed, intensive marketing/advertising plan) are understated. Inversely, revenues, appear to be grossly exaggerated. Prior Request for Proposals for the Project permitted 300 dry slips, whereas the current Project allows for only s0 dry slips (a difference of about $650,000 per year). Yet, operationally the Proposal suggests that the Project will be equally as profitable as those proposals submitted in years past. Moreover, the Proposal assumes that significant revenues will be F� •�� �3 : - 375 (1-Y -,, r)(l f 7-CIT?) 'ln oypa1nc-,1 nn of t h- -Y i 1 nq n171r)),Ai' r) f G?nt, s:t ips. Lighthouse mak—s these aGr,timpt, i cns a ti i.l.c f=) i.l_ inq to provide any reasonable basis to conclude that the construction of these additional wet slips will in fact be permitted by all appropriate regulatory agencies. Further., unsubstantiated assumptions include (i) an 85% occupancy during the first year of the Project and 95% occupancy thereafter, in everything except retail; (ii) 100% occupancy in retail; (iii) average boat length - 45 feet. 6. Economic Return to the City_ This is perhaps the most disturbing section of the Proposal. The report provides no basis for us to gauge the economic return to the City. The Proposal does not specify an amount of base or percentage rent proposed to be paid by Lighthouse. This is left for "future" negotiations. Interestingly enough, however, the Proposal is quite specific with respect to the concessions Lighthouse expects to receive from the City. For example, Lighthouse expects to pay no rent during the first two years of the lease term. Moreover, Lighthouse expects 11 7 93-- 37'5 19 firs Irnr-ni_",7 a tt�tli. 'Il,ai_-m-r)t, cif c�n0,0( anr111al1y. furthermore, 1.,i.ghthouse is unwilling to commit to its "proposed" capital improvement expenditure by tying the same to the results of a TERM assessment report and the city's recovery of insurance or other proceeds for the repair of the Project site for damage to the site due to Hurricane Andrew. In fact, Lighthouse proposes to reduce their proposed investment by the amount of any such proceeds recovered by the City. Inasmuch as it has recently been reported that the City expects to receive approximately $1.5 million from the Federal Emergency Management Agency for the repair of the docks and the seawall at the site, we presume that this will trigger a dollar for dollar reduction in the total amount of capital investment which Lighthouse has otherwise "committed" to spend. We are appalled by the fact that the Proposal fails to commit to a rental figure, a lease term and a capital expenditure amount. 7. Minority Representation/Affirmative Action This is yet another area in which Lighthouse would 12 �I 33- 375 af.fi.rmzti.ve action plan submitted with the Proposal. no plan at all. Rather, the submission is merely a series of self-serving statements. They provide no history and no formal plan. Second, Lighthouse would have us believe that it is a minority -owned company by virtue of its 52% female ownership. Upon closer review, however, one learns that of the 52% female ownership, 32% is in fact owned by the wives of two of Lighthouse's male principals. We found no African -American or Hispanic participation in Lighthouse. Moreover, minority representation among the Project consultants is also lacking. 8. conclusion The Proposal was the only proposal received for the Project. This fact alone should not be persuasive in approving or rejecting the Proposal. Rather, it is our opinion that the Project should be approved or rejected on its own merits. We believe that it is this principle exclusively which separates the Majority and Minority opinions of the committee. The Majority opinion of the Committee is in reality 13 9 3 - 375 .14 rq n (III 'II i f i �(I r'iI(�rlt c cart-IIt !)f t.}'1- 1 , T1_C 1 eC(—)Ii Tn1'r'd I )?I i pri n T l nq tnn T)rripo-a I lipon (a) Lighthouse satisfying the City of the fact that funds will he available to undertake the I1r_oject; (b) verifying costs estimates and expenses with regard to the development and operation of the Project; (c) improving the minority representation of Lighthouse; and (d) adhering to the objectives of the development proposal. It is obvious to us that this contingent, weak recommendation from the Majority is but an endorsement of our. Minority opinion and the concerns expressed throughout this report. Unlike the Majority, however, we believe that a proposal which on its face: a. Fails to provide the most minimal financial information; b. Fails to substantiate and verify cost, expense and revenue assumptions; c. Fails to include minorities; and d. Fails to set forth any basis to gauge the economic return to the City, is a proposal which is destined to fail. We strongly adhere to the belief that this Proposal is so replete with fiction and so lacking in responsibly addressing and providing the most basic and fundamental information, 14 66 93- 375 U 5 lint- it q7-aVr- l.tl ji7st.l r'P t.r) t ltr- 1)t r.3r31 ?I(1 prOr"r-cc cif the City of Miami to permit th..s rrt'oi p a Secr.)TO chrlll :,e at correcting (or, i.n effect, re-stibmi.tting the Proposal). Rather, we would recommend that the City reject the Proposal, undertake the repairs at the site with funds to be received from F.E.M.A. and consider either operating the Project itself or seeking a management contract for the operation of the site. ELI M. FEIN3ERG WARREN BUTLER 15 93- 375