HomeMy WebLinkAboutR-79-0410$A
RFC/ rb
5/30/79
suppORINE
DOCUMENTS
FOLLOW
prises, L
1977,
as
RESOLUTION NO.
79-410
A RESOLUTION AUTHORIZING THE CITY MANAGER
TO EXECUTE AN AMENDMENT TO THE AGREEMENT
BETWEEN THE CITY AND DIPLOMAT WORLD ENTER-
PRISES, LTD:, DATED NOVEMBER 11, 1977 IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF
THE ATTACHED AMENDATORY AGREEMENT.
WHEREAS,
the City of Miami and Diplomat World Enter -
entered into into an Agreement, dated Novenber 11,
authorized by Resolution :No.:77-671, dated July 28
1977;.and
WHEREAS, under Section 41 of"the said Agreement, the
parties had agreed to make reasonable modifications °to.`the"
Agreement which will not materially adver.sely"affect .either "of
them, if requested
others; and
to do so by City bond counsel', among
WHEREAS, the City' bond counsel has requested certain
modifications to the Agreement, as "described in a letter dated.
May 18, 1979 from the law firm of Bryant, Miller and Oliver,
order
issue an opinion of tax
NOW, THEREFORE, BE
CITY OF MIAMI, FLORI"DA:
exemption;
IT RESOLVED BY THE COMMISSION OF THE
Section 1 The City Manager is hereby authorized
Amendment to the Agreement between the City and
World Enterprises, Ltd.," datedNovember 11,
with the terms and conditions
execute an
Diplomat
accordance
Agreement.
PASSED AND ADOPTED,
ST:
1977, in
otabceitEmire
ITEM NO.
this 4th day of
Ndatory
►P
June 1979.
Maurice A. Ferre
MAYO0 R
RALPH . ONtIE, CITY CLERK 6/
PREPARED AND APPROVED BY: A' '0'ED AS TO FO
RO$ERT F. CLARK
ASSISTANT CITY ATTORNEY
•
CORRECTNESS:
G
OR
CITY
F. KNOX, JR.
TTORNEY
commissioN 1
'JUN 4 1979
amiunsei 79.4
IU.!IIIIII!!P!Rl�AII IPII I!IIIIPUI,UI
1111111111111.r..........,..e....
day and year
IN WITNESS WHEREOF, the parties have executed this Agreement the
Signed, sealed and delivered in
the presence of:
As to CITY
As to DIPLOMAT -
APPROVED AS TO FORM AND CORRECTNESS:`
George F.
CITY of MIAMI (SEAL)`
DIPLOMAT WORLD ENTERPRISES, LTD.
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-(SEAL)
39. If the Fecderal Internal Revenue Service shall issue regulations
or a published ruling that would permit a management contract for "'aterm
years in excess of one,, year and compensationbased upon a percentage of gross
revenues
of the facility being managed, then DIPLOMATT shall have the right,'.
exercisable on or before'the
term of years
Commencement Cate,
but not greater than thirty (30), and at
o elect to revert back ,to 'a
the consideration pro
vided in the Agreement prior to amendment. In such event, all provisions 0
this Agreement, as hereby amended, other than the term of years and the compen-
sation shall be
right u►i
applied
in full.` force and effect. If DIPLOMAT elects to exercise its
der this paragraph, all moneys received as a Development Fee shall' be
to the moneys payable to DIPLOMAT as consideration under the Agreement.
Provided, further, that in the event the bonds described, in pare
graph 2(b) are not: issued on or prior= to
the Agreement shall become null and void
December 31, 1979; this Amendnentto
and 'the Agreement .in"its original form
shall be reinstated and in full force and effect.
40. Upon approval by the CITY and DIPLOMAT ofthe terms of the
indenture of trust relating to the Financing,. this Agreement': shall be subject
and subordinate
the terms
thereof.
41. This Agreement shall be binding upon the parties
personal representatives,
successors and assigns.
hereto, their
The terms "Articles" and
"paragraphs"ras-used herein shall be inter -changeable.
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(a) DIPLOMAT shall trot have the right to proceed with any.suit
for in
onto avail itself of any remedy whatsoever provided.
this Agreement or under the law, unless DIPLOMAT shall have
given to the CITY written notice of the alleged default, and
the CITY for a period of ten (10) days thereafter shall have
failed to correct the alleged default. If .the alleged default
1S 0
such a nature that
cannot be completely remedied'' or
cured within such ten (10) day period, then such
default shall
not be an enforceable default against the CITY, if the CITY
shall have commenced curing such default within such ten (10
day period and shall proceed with reasonable diligence and'
good faith to' complete the curing thereof. The ten (10) day
notice provision herein set forth shall be iriapplicable to any
emergency.
The CITY shall not have the right to proceed with any suit
or to avail itself of any remedy whatsoever provided for in
this Agreement: or under the law, nor shall DIPLOMAT's right to
exercise any option granted herein be deemed; to have expired,.
unless. the CITY shall have given to DIPLOMAT' written notice of
the alleged default or the failure to exercise any option, and
DIPLOt•1AT:; for a period of ten ,(10) days thereafter shall have
failed to correct the alleged default or to exercise said
option. "`If the alleged default or failure to exercise any.
option is of such a nature that it cannot be
completely; remedied
or cured or exercised within such ten ;(10). day, perio
•
then
such default or failure to exercise shall not be doemed an
enforceable default or failure of DIPLOMAT,
have commenced curing such default or undertaken .to exercise
said option within such ten (10). day period and shall proceed
with reasonable diligence and good faith, to complete the curing
if DIPLOMAT shall
and/or exercising thereof, as the case may be.
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within
and such petition shall not be vacated; or set aside or stayed
within sixty (60) days from DIPLOMAT'S receiving notice thereof;
provided, however, that the term "dissolution or liquidation
of DIPLOMAT" as used in this paragraph shall not be construed
0 include any transactions permitted by paragraph 35 hereof
provided, further, that in tho case of any transaction per
mitted.by paragraph 35 hereof, the foregoing paragraph shall
apply to the corporation which assumes DIPLOMAT's sights and
obligations under this Agreement;,
provided, however, that prior to a date thirty (30) months after the date of:
the sale of :the revenue bonds of the CITY, DIPLOMAT shall not be deemed in
default under paragraph 37(a) hereof if such event of default for cause occurs
directly by reason offorce
under paragraph
majeure nor shall there be an event of "default'
37 (b)and (c)
f the event which would have otherwise caused
the event of default is existing solely by,
"force majeure"
reason of force majeure.
The term
as used herein shall mean, without limitation: Acts of God,
strikes, lockouts or other industrial disturbances;. acts of public enemies
orders of any kind of the government of the United States or of the state o
any of.their political subdivisions or any of their departments, agencies;: or
officials, or any civil or military authority; insurrections; riots; epidemics „
landslides;
lightning; earthquake;. fire; hurricane
storms;
floods; washouts,`"
droughts; arrests;.restraint of government and people; civil disturbances;
explosions, breakage or accident to machinery, transmission pipes or canals;
partial or entire failure of utilities; or any other cause not reasonably
the control, of DIIPLOMAT.
3£3 Many of the foregoing `provisions .'of`this Agreement contain
obligations on the part of the CITY or DIPLOMAT or both. In many instances,
various rights are granted to each party consequent upon default by the other
party in
the performance of said obligations.
It is expressly understood and
agreed that, notwithstanding anything herein contained to the contrary (except`'
as otherwise provided in this paragraph 38), each and every one_of said rights
on the; part of either party to take advantage of a failure on the part of the
other party to fulfill its said obligations shall be subject to the following
limitations:
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(a)
DIPLOMAT shall not have the right to proceed with any suit
or to avail itself of anyremedy whatsoever provided for in
this Agreement or under the law, Unless .n1PLOMAT shall have.
given to the CITY written notice of the alleged default,and
the CITY , for a period of
ten (10) days thereafter shall have
failed to correct the alleged
default. If the. alleged default
isof such a naturethat it cannotbe completely.
remedied or
cured within such ten (10) day period, then such default shall
not be an enforceable default against the
CITY, if
the CITY
shall have commenced curing such default within such ten (10)
day period and shall proceed with reasonable diligence and
good faith to complete the
notice provision herein
emergency.;
curing thereof. The ten (10)
set forth shall be inapplicable
day
o any
(b) The CITY shall not have the right to proceed with any suit
or to avail itself:of any remedy whatsoever provided for in
this Agreement or under the law, nor. shall DIPLOMAT's
right to
exercise any option granted herein be deemed to have expired,
unless the CITY shall have given to DIPLOMAT written notice o
the alleged default or the failure to exercise any option,
and
DIPL0r1AT for a period of ten (10) days thereafter shall have
failed
option.
to correct the alleged default or to exercise said
If the alleged default or,"failure to exercise any
option is of such a naturethat itcannot be completely remedied
or cured or exercised within such ten (10) day period, then
such default or failure to exercise shall not be deemedan
enforceable default or failure of DIPLOMAT, if DIPLOMAT shall
have commenced curing such default or undertaken to exercise
said option within such ten (10) dayperiod and shallproceed
with reasonable diligence and cjood faith to complete the curing
and/or exercising thereof, as the case may be.
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8A
AMENDMENT TO AGREEMENT
THIS AMENDMENT TO AGREEMENT made and entered intothis day.
under the
1979.
by and between the CITY OF MIAMI, a municipal corporation
laws of the State of Florida (hereinafter the "City"), and DIPLOMAT
WORLD ENTERPRISES LTD.
Florida or its
a limited partnership under the laws of the State of
assigns (hereinafter "Diplomat").
W I T N.E.'S S:E T'H:`
WHEREAS, the parties hereto did enter into that certain Agreement
dated the llth day o
November, 1977 (hereinafter.: the "Agreement"), wherein the
Diplomat to accomplish uniqueDeveloper-Operator functions fora,
major park development on the. City owned Watson Island; and
City engaged
WHEREAS, bond counsel engaged by the, Cityhas recommended that.
certain changes be made in the Agreement pursuant to Section 41of said Agree-
ment;
and
WHEREAS, the parties hereto desire to amend and modify the Agree-
ment in conformance with the recommendations of such counsel as hereinafter
more specifically set forth;
NOW, THEREFORE,' for and in consideration of the mutual covenants
and undertakings hereinafter set forth and
expresse
the considerations hereinafter
, the parties -:do agree that the Agreement shall be amended and restated
as follows:`-,
1977, b
AGREEMENT
THIS, AGREEMENT, made and entered into this llth day of November,
and between the CITY OF MIAMI, a municipal corporation under the laws
of the State of Florida
LTD.,
(hereinafter the "CITY"), and DIPLOMAT`WORLD ;:ENTERPRISES,'
a limited partnership under. the laws of the State of Florida (hereinafter,
"DIPLOMAT").
1977, the
WHEREAS,
W I? T N.; E S S E T• H:
by Resolution No. 77-671, dated the 28th day of July,
City has determined that there exists an urgent public need to,provide.
a major park development facility in order to assis
critical economic'
t, improve and fulfill
sports, recreational, commercial. and tourist development
needs of the City; and its citizens,
similar benefit to Dade Cpunty and the State of Florida;
which park development will also be o
and
79-410
WHEREAS, extensive expert studies and recommendations have
established that the best location for such a major park development i
the
City -owned Watson Island more particularly described on Schedule i'A"'(herein-:
after the "Property"), including any expansions, additions' and extensions,
togetherwith riparian rights to the Property; and
WHEREAS, to accomplish these unique Development -Operator functions,,
it was determined to undertake a nationwide search and public bid process
obtain a qualified Developer -Operator a
and.
the best available terms and conditions
WHEREAS, the. City determined that Dipiomat is the Developer -
qualified to undertake the Development and Operation of the
Operator which is
Property and therefore best meet the needs and goals of the City,as set forth
above; and
WHEREAS, each party hereto desires to enter into an agreement with
regard to the Property under, the terns and conditions set forth hereinafter;
NOW, THEREFORE, for and in consideration of the mutual covenants
and undertakings hereinafter
expressed, the parties
or
in connection therewith, o,
It
set forth' and the considerations hereinafter
o agree as follows::
1. The CITY engages DIPLOMAT`as.,an independent contractor to.do,.
cause. to be done the Planning, Developing and Operating of the PROPERTY; an
t use its best efforts to assist in the Financing.
s contemplated that the improvements on the PROPERTY will include a major.
recreational
and entertainment center including a themed amusement park,
specialty shopping center, marine facilities, a waterborne transportation'
terminal,
an amphibious airline termina
a municipal' heliport,
gardens,
parking facilities and related ancillary facilities. The aforesaid services
shall be referred to as the "WORK", and DIPLOMAT agrees to perform the WORK
in a good and capable manner, as set out hereinbelow.`
2. (a) "Planning" as used.herein `shall mean
(i) the obtaining from recognizod professionals in design,
architecture, engineering, construction and economics•
''
information relevant to preparing an overall design
concept and budget for the WORK;
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(ii) the obtaining of preliminary drawings and financial
feasibility reports;
(iii) all other activities necessary to determine: the type,:
character and dimension o
upon the PROPERTY;and;
the improvemefltS to be
placed
(iv) all other activities relating to plans for Developing;,
the PROPERTY.
(b) "Financing" as used herein shall mean the obtaining of an
underwriter or underwriterS satisfactory to the CIT? to under-
write an amount presently estimated at Fifty-five Million
Dollars ($55,000,000) of bonds or certificates of indebtedness
of the CITY, which shal]. be secured by a pledge by the CITY,
first, of. the Gross Revenues less Current Obligations, of
the
PROPERTY and, second, by non ad valorem taxes or revenues and
franchise fees which are not otherwise pledged sufficient to
meet the Debt Service on ,an amount ofbonds or certificates o
indebtedness not to exceed Twenty Million.; Dollars'. ($20,000,000),
and all things necessary to accomplish the commitment of such.
moneys from purchasers of such bonds or certificates of.`indebted-
ness and the closing and funding of such bonds orcertificates
relating to
of indebtedness,' and all such other activities
obtaining moneys for. Development of the PROPERTY. Nothing
herein shall be construed ,to require a pledge of ad valorem
taxes. However, subject to the financial feasibility and the
approval of the CITY, as herein defined, it
and desirable to issue,
without further
may 'be
necessary
guarantee by the CITY,
additional revenue bonds or to obtain other means of financing
the PROPERTY and/or toseparately finance or fund individual
segments of the development from other sources. It; is further
understood that any additional financing, arrangements under
this paragraph shall be designed to enlarge and enhance the
public purpose of this project, as set forth iri this Agreement.,'
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79-410
(c)
"Developing" and "Development" as used herein shall:mean 'the
arranging for and impletneriting and Causing of the construction
of all ilnprovernents resulting from the Planning that are the
subject of the Fi.nanci.ng afore -described.
(d) "Operate" and "Operating" as used herein shall mean the
managemunt and supervision of the PROPERTY.
(e) "Current Obligations" as used herein shall mean the expenses
of whatever type or character, related to Planning,
Financing, DeveloPing or operating, including, without
limiting rality of the foregoing, all *taxes and govern--
ental chargesbut excludi..ng. riebt. Service Charges
as defined with generally accepted
wo
ld be so
Service Charges"' shall mean the amount
accounting principles, as used heredieuscribed• tion
necessary to pay allthenranddebrtesd,emP
remium, if any, on the Financing and all o
loans or obligations inc respect to the PROPERTY.
(g)
the ownership or operation
thereof, incluciing investment inc
accounts all as calculated in acc
accepted ac
earnings from any source
- •
whatsoever received by the City or accrued to
_
pRopERTY and all, parts
"Gross Revenues"
the City frorrt
offte, earned on any funds or
orclance with gerieral y
. '
iiRe,lenues,, shall not include proceeds from t "Gross orrceived
hereof • condemnation awards or Prc)ceecls e
ale or other
respect to the pRoPE}rY.
"„Costs' ascosts defined
Section 159. 02 (13) , Florida st,at.utes , including but not limited to:
(i) all
acdilvaerrgetiss,incgosatnsdP Pirh°tme°r.atal°tIlaarild_erxafPc_cellIsIser2c;:bla)t:illg
to
Financings as set forth in Para9 PwORK;
'developer fees attributable to the
PPORTIV
SU.
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DOCUMENTS
FOLLOW"
(iv) Working capital for opening costs, payroll and related
costs
(v) reserve funds and contingency funds requiredby the bond
underwriter or underwriters;
(vi) costs
relocation of:
(a) chalk Seaplane facility now on the PROPERTY;
(b) Ileliport now on the PROPERTY;
(c) Non-profit marine clubs now on the PROPERTY;`
(d)
Japanese International Gardens
(vii) ' ` all insurance premiums,
now on the PROPERTY;
including but not limited to
'public liability insurance, property damage, productand.
food. liability, marine, special event and fire and extended
coverage insurance,
(viii) all miscellaneous expenses. necessary. for Planning,
Financing,, Developing and Operating the PROPERTY; and
(ix)
Current Obligations,' Debt. Service Charges and
Reserves.
Replacement
(i) "Management" as used herein shall mean the direction of the
enterprise contemplated hereby and it shall include every
power necessary or properto conduct and carry on the business
described in Article 1 hereinabove.
(j) "Project" as used herein shall mean all improvements placed
in, -;on,over, under, or upon the. PROPERTY.
(k) "Commencement Date" as used herein shall mean that date when
DIPLOtilAT.shall .have ;caused substantial completion of develop-
ment and DIPLOMAT shall have commenced Operation of the PROPERTY.
(1) "City" as used herein shall mean the. City Commission, or the
appropriate official or branch of the CITY government,as
required by the Charter or Code of the .CITY "to take whatever
action is required by, the terms of::this ;Agreement.
4 3. DIPLOMAT has caused the completion of such Planning as is
in Article 2(a), subparagraphs,(i) and (ii) above, and did submit such materia
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defined
to the CITY.
The CITY thereupon promptly reviewed
DIPLOMAT that it approved the material in whole.
such Planning
and notified:.
d. 'DIPLOMAT is responsible for the payment of all expenses through
FeUruary,197f3,;when the CITY was advised by bond counsel of the desirability
of obtaining a revenue ruling from the IRS, such payment to be for those ser-
vices
outlined in paragraph 2 (a) above and include, but are not
following:
limited ;,to, the
(a) Design, . architectural and engineering fees and expenses;
(b) Economic consultant's fees and expenses;
(c) Legal fees and expenses;
(d) Underwriters' fees and expenses;
(e). Other consultants' fees and expenses;
(f) Documentation and reimbursable expenses;
(g) Travel and communication, costs; and
(h) Supplies and miscellaneous related expenses.
Subsequent to such date, all Costs expended by DIPLOMAT thereafter
shall be charged to the CITY's account and reimbursed to the extent legally'
available from bond proceeds, interim financing, or other CITY funds.
5 At such time as the "funding of the Financing or any interim
shall have occurred, DIPLOMAT shall", subject' to the approval of the CITY,,>
loan
cause the preparation
(a)
or obtain
construction working drawings;
(b) final construction specifications;,;
(c).
complete bidding documents
(d) cost estimates; and:
"SUPPORTIVE
DOCUMENTS
FOLLOW
subject to
•(e) approvals and permits from all governmental authorities
having jurisdiction :over the PRoPRPTY (other than those
enumerated in Article 18, which" the CITY .sshall have obtained
in CITY's',name).
As soon as the `above shall have been completed, DIPLOMAT" shall,
the approval of the CITY
(a) advertise in the name of the CITY for ,construction bids
in accordance with the drawings,
described in Article S;"
specifications "and documents
(b)'' evaluate and recommend to the:City' Commission "contractors
as a result, of such bids;
(c) obtain required permits for Development (other than those
enumerated in Article 18, which the CITY shall have obtairted
in CITY' s name) ;
(d) provide an affirmative action program; an
(e) supervise Development and obtain Certificates of Occupancy
upon completion ofconstruction any improvements.
7. DIPLOMAT -shall -be primarily responsible for thedayto"day
operations of the PROPERTY not inconsistentwit• h"paragraph 1 herei"nabove' and
further shall negotiate and recommend to the CITY agreements and"documents
necessary to accomplish the following matters, but"not limited the reto,which
approval, execution,. acknowledgment,verification and deli very' of such agree
ments
and documents shall not be unreasonably withheld by the.. City r1anager or
his designee:
(a) The subdivision, development, improvement, management,'
operation or use of all or any part of the PROPERTY in
accordance with approved plans;
(b) The leasing or licensing of all or any part of the PROPERTY
in accordance with approved plans;
(c) The granting of easements or rights of way in accordance
with approved plans;
(d)" The borrowing of money and incurring of other obligatiofls
for the development and operation of the PROPERTY in
accordance with approved plans;
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79-410
(0)
The employment, the fixing of compensation of, overseeing ; and
discharging agents and employees of the CITY;'
(f) The entering into of construction or other contracts;•
(g) The entering into of contracts for management o
'the PROPERTY;
arts;, o
(h) 'I'he making of tax elections. under Internal Revenue Service
regulations; and
(i);
The making or causing be made of surveys, studies an
similar matters
PROPERTY.
o determine the highest and best use of the
From and after the Commencement Date,
the PROPERTY`. for a period of five,
terminate a
PROPER'.1'
above,
(5) years,
provided in paragraph 10(b).
DIPLOMAT shall Operate
subject to the
CITY 's right to.
The partiesagree that if DIPLOMAT shall be Operating the
at the completion of the fourth (4th) year
they shall' meet the purpose of negotiating new, agreement and each
party 'shall
as are
bargain
in good faith
as provided
n paragraph 8
o negotiate such . agreement on such terms
reflecting of the then existing conditions and neither party shall be
bound to the inclusion in such new agreement of the terms or conditions of
this Agreement.
from the
10. (a) The CITY shall pay DIPLOMAT as a'; development fee five (5)
percent of all costs of the construction of the PROPERTY,
payable as follows:
(i) one-third (1/3) of the fee: shall beypayable• on the
execution of each contract for construction such fee
then due and payable shall be based on the amount of
the contract subject execution.
(ii) The balance of the fee shall be paid on the basis o
two-thirds (2/3) of 50
payment thereafter. made.'
f each :construction 'requisition
The parties understand and agree that the development fee shall come
unds available from the Financing (subject:to the documents authorizing
such Financing) and such other funds,`if any, available from any governmental.
unit, and the development fee shall be included as a cost, as defined in •paragraph.
2, subparagraph (h)
hereinabove.
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"SUPPORTIVE
DOCU >;I ENTS
FOLLOW"
The development fees herein payable shall be limited to the con
strUction cost contemplated by the initial financing and as described in the
Official Statement to be approved in connection with the marketing
described in paragraph 2 (b) herein
the
f the bonds
In the event said construction cost exceeds
amount described above, DIPLOMAT. shall not be,entitled `to any additional
fees by virtue o
c
t
such increase; provided, however, that if such additional cost
f construction results from changes in; the Project required by the CIT? after
ompletion of matters contained in paragraph `5 herein, DIPLOMAT shall be entitled
odevelopment fees relating to the additional cost at the rate provided above.`
(b)
The CITY shall be obligated in all events
forth .herein)
(other ; than as se
pay DIPLOMAT a fixed management
fee in an amount
equal to DIPLOMAT's Accrued 1nnua1 Earnings as set forth below:
(i) The first year of the term, the sum of Four,Million
($4,000,000);
(i) The second year of the term, the sum of Three Million
Two Hundred Thousand Dollars ($3,200,000);
Dollars
(iii) The third year of the term,' the sum of. Two Million Four
Hundred Thousand Dollars ($2,400,000);
(iv) The fourth year of the term, the sum o
Hundred Thousand Dollars ($1,600,000) and
One Mihlion 'Six:
(v) The fifth year of the term, the sum of Eight Hundred
Thousand Dollars ($800,000);.;
The CITY shall be obligated to pay each year's Accrued Annua
Earnings quarterly in amounts at least equal to Two Hundred Thousand: Dollars
($200,000) per quarter. In' the
have not been paid in
event the Accrued Annual Earnings of any year
full by the' CITY within ninety (90) days. following the
end of such year, the balance shall be paid by the CITY,- at
amounts commensurate with the rate by which the
Accrued Annua]. Earnings;
and accrued and'(L3) the succeeding quarter.
herein,
least quarterly, in
CITY made payment of such
during (A) the year in which such amounts wereearne
The` CITY shall have the right, notwithstanding the term provided
to terminate. this, Agreement and the CITY' s obligations hereunder on any
anniversary
of the Commencement Date of Operation without any Cause, pro
vided•'only that the' CITY shall (i) provide no less than ninety (90) days'
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default
amour
written notice thatit has elected to terminate prior to any such anniversary
date and ,'(ii)pay the balance, if any, of the Accrued Annual Earnings earned.
and accrued by`:DIPLO4AT prior to such notice and remaining unpaid upon expira
tion of the notice period.
The `CITY, shall also have the right ;to terminate this Agreement and
the CITY'sobligations hereunder at any, time for Cause, provided only that the
CITY shall (i) provide no less than thirty (30) days' written notice that it
has elected to terminate and set out a date (no greater than sixty (60)'days.
from
(ii)
delivery of such notice) when such termination
the CITY' is obligated to pay to the clate o
pay only those amounts which
such termination,
the obligation
and any Accrued Annual Earnings
of the CITY. shall b
The .term
s used
deemed to b
shall be effective; anc'
which are not then currently
liquidated damages.
n this paragraph 10 shall mean an event of,
as defined in paragraph 37 hereinafter..,
"Accrued Annual Earnings" as used in this paragraph 10 shall mean the.
t payable by the CITY to DIPLOMAT during a year beginning
Date
anniversary thereof. Such .amountshall represent the agreed
market value of the servicesto be rendered by DIPLOMAT to or on behalf
or
ment
fair
of the CITY
with the Commence
for such year.
11. DIPLOMAT agrees to Operate the PROPERTY inaccordancewith
first class amusement
and recreational
facilities in
standards customary of
the United States.
DIPLOMAT shall provide in its recommended annual, operating budget
for
the iunusement Theme Park Area, an ;ainount
of no less thanfive, percent
of said budget, for live show entertainment and presentations of all types,
cultural activities and functions.
12. The CITY agrees during the period of.Operation by DIPLOMAT
including
to promote the Operation and the PROPERTY in CITY advertising,
and to provide
traffic control. and off -site security relating t
adequate directional signs,
parking and ancillary facilities associated with the PIOPERT?, as defined below,
for visitors, guests and invitees of the PROPERTY.
13. The CITY agrees that it shall., at times and in a manner not
or erect, as the case
to impede, the Development of the PROPERTY,; install, place
-10-
"SUPPORTIVE
DOCUMENTS
1'O•L.;W„
may be, upon the PROPERTY in accordance with the construction working drawings
and final construction specifications approved bythe CITY, each of the following:
purpose o
(a) Sanitary sower, storm sewer, water, electric and gas1ines.
(b) Paved surface parking for approximately2,600 cars.
(c) On -off access ramps and roadways from the PROPERTY to
MacArthur Causeway; and traffic signals as may be required`
from such ramps and roadways.
(d) Pedestrian overpass and service roads
(e) Ferry docking slips.
(f) Wharf docking area.
(g) Hulkheading,and shoreline improvements for marine facilities.
(h). Relocation and regrading of MacArthur Causeway as, if and
when it may be relocated upon the PROPERTY, subject to avail-
ability o£ funds.
(i) Site work and fill as may be required by design; and applicable
flood criteria of, governmental authorities' having jurisdiction
thereover.
The CITY agrees to use its best efforts, to obtain funds for the
causing each`. and; all of the above specified items to be completed
in a good and workmanlike manner.
14. This Agreement establishes DIPLOMAT as the Planner,, Financial
Consultant
Developer and Operator of the PROPERTY. The parties intend that
DIPLOMAT be an independent contractOr and not an employee
agents ,of DIPLOMAT` shall attain no rights or benef±ts under the
or Pension Ordinances of the CITY, nor any rights generally
afforded classified or unclassified employees ofthe.CITY, nor shall DIPLOMAT
its employees; be entitled to Florida Workmen's.Compensation.benefits as an
employee of the CITY.- It is intended that tho CITY shall permit DIPLOMAT to
Operate the PROPERTY without undue inter.ference"in, clay to day management;However, from time to time, the CITY may monitor the: business conducted on the
anassure, itself as' to DI PLOt1AT'. s manaclemen t thereof.
employees and
Civil Service
or
PROPERTY
-11-
of the : CITY, and the
4,
with generally
provide all information" that DIPLOMAT
shall request for such
mutually
1 The CITY agrees that it shall cause to be kept complete and.
accurate books and records relating to;the Operation of thePROPERTYin accordance
accepted accounting principles and DIPLOMAT shall promptly
shall have which the CITY or its
accountants
undertaking. Independent Certified Public Accountants,
agreeable to the CITY and DIPLOMAT, shall be selected from time to time
by the parties
a
and such Certified Public Accountants shall perform such services
s to the two parties shall appear adequate for the purpose of determining.
current Obligations, Debt Service Charges, Gross Revenue Costs, Replacement
and such other information relating to revenues and disbursements as
may be relevant to the business of DIPLOMAT. and the Work on the PROPERTY.
Reserves,
1G• In all, of the foregoing undertakings no third party shall have
any rights against DIPLOMAT under this Agreement except as may be specifically
provided herein.
in accordant
covenants
17 The CITY shall, when Financing or interim loans are obtained
e with this Agreement, act -expeditiously '•to:
(a) Cause,execution and implementation of: funding; an
(b)" From time to time, when requested by DIPLOMAT, make.: payments'""
or cause them to be made
Planning
The CITY
where such payments
are related to
Financing, Developing or Operating the Work.
agrees that it shall accept any
reasonable. or customary
and limitations imposed by any underwriter or lender as, to suc
Financing.,
18. From and after the execution of this Agreemerlt,
t ,,the request
of DIPLOMAT and subject to the availability," thereof, the CITY shall make avail-
able to DIPLOMAT those of the CIrIY's administrative resources and staff as ma
be necessary for the purpose o
of the
the CITY
assisting DIPLOMAT in the orderly Development
Work.
In this regard and without limiting the' generality of
shall use its best efforts to assist DIPLOMAT to obtain," in the naive
of the CITY, approvals from the, following (if requested by DIPLOMAT).:
(a) Florida Department of Environmental Regulation (DER).
(b) Florida Department of Natural Resources (DNR) (through DER).
-12
the foregoing,
•
permit
Department of Administration in association with the
(c) Florida;
South Fierida`Ftegional Planning Council (bRI).
(d) ri Floda-South Florida Water Management District.
(e)'Florida `Department,of Transportation(DOT)" (including"reloca •
-
tion of MacArthur Causeway, Watson Island portion).
(f) : U.S. Corp of Engineers (COE).`
(g) U.S. Coast. Guard and Dade County Port Authority.!
(h) U.S. Federal Aviation"Agency (FAA).
(i) Metropolitan Dade County.
The CITY shall, free of cost, obtain approvals of all licenses,
, and the like required from Departments of
anything
primary
to the contrary in',this Article
responsibility to obtain
subparagraphs
the approvals
(a) through (i), inclusive.
19. DIPLOMAT shall supervise the Development of the Work
the completion thereof
the CITY. Notwithstanding
contained, DIPLOMAT, shall have the
enumerated` in this"Article'as
with reasonable dispatch, having regard for
and size ofthe business venture contemplated under this Agreement. The CITY
that DIPLOMAT may utilize "fast track" construction.. methods, and the
and cause
recognizes
CITY,
if requested by DIPLOMAT,
the ' complexity
agrees to cooperate and assist DIPLOMAT so that
such method maybe effectively used.
parties to'
20 Many of the provisions in this Agreement require one of the
act or notify the other; without specifying; the time. allowed therefor.
Each party agrees that the ether shall have a'reasonable time to accomplish
such act or
provide such notification, giving consideration :to the attendan
circumstances in_each case.
2].. Many of the provisions of this Agreement require that approval
be obtained by one party from the other to a plan, program,' recommendation, or
proposed act.
(b) withheld.
and/or the City
and DIPLOMAT
No such approval sha]1 beeither unreasonably (a) delayed, o
accelerate action, action, the CITY shall confer upon a committee
Manager the power and authority to"give or withhold consents„
and any third persons may rely upon such consents. The CITY
agrees that the City Manager may appoint the Project Director for Watson' Island
to assist the City Manager in the functions" aforedescribed.'""
-13-
22. Immediately upon execution of this Agreement, the CITY shall,
without the use of funds derivedfrom
all governmental authorities
commencing
priority studies
ad valorem sources, make application to.
•
having jurisdiction>thereover for the purpose o£
for design and constructionof a people mover system
for the PROPERTY connecting to.(a)._tile Downtown People Mover System, Phase,.
(b)
the proposed Waterborne Transportation System, (c) shuttle bus routes
throughout. Dade
County, and (d)
off -site parking facilities. Thereafter, at}`
the request of DIPLOMAT, the CITY shall make
such ' applications,
r authorize
for the purpose of providing orderly, and effective road,
water or other transportation systems to and from the "PROPERTY during the term
DIPLOMAT so to do,
of this Agreement.
23. The CITY' shall provide to the Project,
any equipment, land,
committed without charge,` and the CITY shall provide all services which the CITY
n a; best efforts basis,
supplies' and'services.reasonably available
provides to the CITY's taxpayers, off -site storage facilities,
nursery,
and not otherwise
warehouse,
shop, disposal, maintenance, dockage facilitiesand-such-other`services
not otherwise committed which are beneficial to the Development and Operation
of the PROPERTY and which are likely to
Operation.
able
reducethe cost of Development and
24`. Throughout the term of this Agreement, the CITY may have avail
it funds, grants, services, or guarantees from other governmental
authorities
PROPER
shall
CITY)
which will, or might in the judgment of DIPLOMAT, enhance the
PROPERTY, the Work, or the Operation. When requested by DIPLOMAT, the CITY
(so long as the CITY shall not be required to expend any "mones of the
make such applications or authorize DIPLOMAT to
so do in, the CITY'
name, and to use such funds, grants, services, and guarantees for promoting the
successful
If any such
Planning, Financing, Development and Operation of the PROPERTY.
benefit shall become available prior to the Conunencemcnt Date,
DIPLOMAT may amend any documents relating
their amendment for the purpose of utilizing
Planning or Development, or cause
such benefits and/or utilizing
so much of the'$55,000,000 Financing referred to in Article
(b) above,
as shall be saved thereby for further;
-14-
•
subparagraph
enhancing the PROPERTY.
'SUPPORTIVE
DOCUMENTS
FOLLOW„
PROPERTY for
(a)
25.. Inasmuch as DIPLOMAT shall Operate the business known as the
a period of time cluring which changes may occur by reason
alternations ;ofmethodso
destruction,.o
mend. from time to
improvements on
merchandising,
(c)eminent domain, the parties agree that DIPLOMAT shall.recom-
time to., (a) maintain or upgrade all or any part of the
the PROPERTY, and/or (b) replace, rebuild, build or enlarge
any improvements' on the PROPERTY.
rebuilding, building, or enlargement is substantial,
in
paragraphs..
and
If such maintenance,
upgrading, replacement,
(a) the format
in this Agreement
(b) new financing shall be obtained mutually. agreeable t
26. The CITY agrees that if bond counsel
established
shall be followed,
o the parties.
selected by the CITY for
the Financing shall require a ruling from the Internal Revenue
issuing its validating opinion letter
the CITY ,shall '.promptly notify
date that the CITY shall have received notice by i
y suspend further action
requirement,.
provided.
DIPLOMATm
Service prior
to
o the underwriter or underwriters, then
DIPLOMAT thereof and ninety
If DIPLOMAT so proceeds
0
all expenses o
(90) days from the
s bond counsel of such
proceed as in this
Agreement
any type and character from
such date shall be deemed to be Costs incurredafter the obtaining" of a bond
commitment or commitments under Article .4`above.
bond issue
If the said bond counsel shall not issuean opinion
that the proposed
or issues is/are exempt from taxation under the Internal Revenue Acts,
then in effect, DIPLOMAT may elect to sell the reports,documents and informa-
tion prepared by DIPLOMAT, orcaused .to be prepared by DIPLOMAT, as provided in
Article 2(a) above,
a price
and 10(a) and elsewhere
o the CITY,
equal to ninety percent
Costsof whatever type and character paid, advanced or incurredlby DIPLOMAT`$..
for the Work or any portion thereof. Notwithstanding the'`above, however,
DIPLOMAT:may elect to submit to the CITY recommendations for ,financing, aeven'
of
(b) partial or total damage "'or
nd the CITY agrees to purchase said material
(90%) of all payments and disbursements and
though the said bond counsel shall not issue his opinion of tax exempt status, ,
and the CITY shall approve such financing if it shall be in substantial accordance
with Financing as defined in
Article 2(b) above.
27 The parties hereto agree to deliver promptly as needed, all`
instruments and documents necessary to effectuate
the obligations and agree
•
-15-
ments of the parties hereto, one unto thwother, and each Party represents and
warrants that it has full power and authority to enter into this Agreement and
and perform all of the obligations on its part to be performed hereunder.
assume
condition or
28. Each party may waive the strict performance of any covenant,
representation made hereunder with approval
Any sUch waiver,
f the other Tarty.
however, shall be made in writing, and waiver of
condition or representation shall not be considered a waiver
condition or representation.
one covenant,
any other
29. The CITY shall not sell or transfer the PROPERTY or
covenant,
assign_ ..
this Agreement, in whole or in part, except to another governmental agency and
only as permitted by the bondholders after legal request for such consent by
the CITY, and only if such assignment shall have no adverse effect o
n the position
of DIPLOMAT. ;-
30. The CITY shall obtain or furnish to DIPLOMAT at the PROPERTY
the foregoing,.,
all utilities (including,. without limiting the generality
electricity, sanitary sewerage, water, gas) at the CITY's net bulk volume :cost.
nd remain an equal opportunity employer
31. DIPLOMAT agrees .to bea
throughout the term of this Agreement.'
32. Notices relating to this Agreement shall be in writing by
Certified Mail, Return Receipt Requested, to the names and addresses ofeach
r to such other names and addresses as may be,?
of the parties listed below, o
determined from time to time:
TO THE CITY: =city of Miami.
City Hall
3500 Pan American ,Drive
Miami, Florida 33133
Attention: City Manager
��! , MEN •�•�O DiplomatWorld Enterprises,'Ltd.
1212 CityNational.Bank:Building
FOLLOW" Miami, Florida 1130
Attention: RonalddL. Fine, General Partner
"SUPPORTIVE
Du
DIPLOMAT:,
33. Any controversy or
Agreement, or the breach thereof,
claim, % arising out o
r relating to;.this
shall be settled by arbitration in accordance,.
with the rules of the American Arbitration Association, and judgment upon the
award
may be entered in any, court having jurisdiction thereof.;;;
-16
and
to be
3.4. The parties hereto intend that this Agreement:may be severable,
any part or provision is determined by a court of highest jurisdiction
inoperative
ineffective
or riull and void, then the balance of this
Agreement shall remain in full force and effect.
tions conta
shareholders only those parties who are
such corporation,
35, DIPLOMAT may assign this Agreement and the rights and obliga-
fined herein to a corporation, which shall initially have as its
partners of DIPLOMAT.
The controlo
however, shall be limited during the term of this Agreemen
or this Agreernent as
corporation
extended, to the following classes:
(a) Family members and lineal. descendants of partners of DIPLOMAT.
(hereinafter "Partners").
(b) Personal representatives or heirs of Partners, or their
successors..
(c) "Such other persons, associations or corporations as shall be
permitted by the CITY, which permission the CITY shall not
unreasonably refuse or. withhold.
Upon the assignment
o the corporation and; the
assumption by that--
DIPLOMAT's obligations, the obligations of DIPLOMAT shall cease.,
Except as provided.-hereinahove, no assignment shall be permitted.
36. The parties agree to make any reasonable modifications to this
Agreementwhich`will not -materially adversely affect either of them,if requested
so to do by anyunderwriter: of the Financing, any lender, CITY's bond approving
counsel, or`CITY' s independent auditor.
this Agreeme
it is
37. The following shall be "events of default for cause" under
nt and the term "event of default for cause" shall mean,'wtfenever
used in this Agreement, any one or more of the followinga?
(a) Failure to achieve the Commencement Date by not later than
the date of the sale of the revenue
(b)
twenty-four (24) monthsfrom
bonds of the. CITY;
Failure by DIPLOMAT to perform any of its covenants,duties,
obligations or promises herein contained and failure by...
DIPLOMAT toremedy the same within thirty (30) days after the
-17-
and if
to be
34. The parties.hereto intend that this Agreement may be severable,
any part or provision is determined by a court of highest
inoperative', ineffective, or null and void, then :the balance of this
Agreement shall remain in
full force and effect.
jurisdiction.
DIPLOMAT may assign this Agreement and the rightsand obliga-
tions contained herein to a corporation, which
shareholders only those parties
shall initially have as its
who are partners of DIPLOMAT. The control of.
however, 'shall be limited during the term of this Agreemen
such corporation, t
or this Agreement as extended, to the following classes:
Family members and lineal descendants of partners of DIPLOMAT
(a)
(hereinafter "Partners").
(b) Personal representatives or heirs of Partners,. or their
successors.
(c) Such other persons, associations or corporations as shall be
permitted by the CITY, which permission the CITY shall not.
unreasonably refuse or withhold.
Upon the assignment to the corporation and
corporation of DIPLOMAT's obligations,the obligations
Except as provided:hereinabove, no assignment shall
•
the"assumption'by that
of- DIPLOMAT. shall cease.
be permitted.
36. The parties agree to make any reasonable modifications to'this
Agreement which
will not materially adversely affect either ofthem, if requested
so to do by any underwriter
of the Financing, any lender, CITY's;.boncl approving
counsel, or CITY' sindependent auditor.
this
it is
37. The
following shall be "events of,default for cause" under
Agreement and the term "event of default for cause" shall mean,,wIrenever`'
used in this Agreement, any one or moreof the following:
(
Failure.
•
o achieve the Cotnmenceinent Date by not later
twenty-four (24)
than
months from the date of the sale the revenue
bonds of the CITY;:.
(b) Failure by DIPLOMAT to perform any of its 'covenants,` duties,
obligations or promises herein contained 'and failure by,
DIPLOMAT to .remedy the same within thirty; (30) days after the
111 1111I 11111
-17-
CITY shall have given to DIPLOMAT written notice specifying
such neglect or failure (or within such additional period,
if'any, as may be reasonably required tocure such neglect
or.
failure if DIPLOMAT is proceeding with due`` diligence to cure
such;`neglect or"failure);
(c) From and after the first anniversary of the Commencement
Date, Gross Revenues of the PROPERTY minus Current Obligations
shall not be less than 100% of Debt Service Charges in the first
year following the said anniversary date and 120% thereafter
for each •three consecutive calendar quarters or four calendar
quarters in any twelve (12) month period, provided that the
foregoing calculations shall be made pursuant to generally
accepted accounting principles, excluding depreciation as a
Current Obligation.`
(d) Dissolutionor liquidation of DIPLOMAT or filin
by_ DIPLOMAT
of .a voluntary petition in bankruptcy,
or failure by DIPLOMAT promptly to lift any execution,
such significance as will materially
ment or attachment o
impair its ability to carry on
or PROPERTY, or the commisSipfl by DIPLOMAT of any act o
or adjudication of DIPLOMAT as a bankrupt, or
garnish-
•
bankruptcy,
assignment by
the: Operation of the Project
DIPLOMAT for the benefit of its creditors, or
the entry by •
DIPLOMAT into an agreement of composition with
its, creditors or the approval bya court of competent j
diction of a petition applicable to DIPLOMAT
uris-
in any proceeding
instituted under the General Bankruptcy
an similar act
that may hereinafter
for its reorganization
Act, as amended, or undery
be enacted, or the filing, of any party other than DIPLOMAT of
a petition or the appointment. of a receiver in liquidation or ,
a trustee with respect to DIPLOMAT or a petition against
DIPLOMAT in bankruptcy ,.'insolvency or for a reorganization,
compromise, adjustment or other relief andor. the laws
United States or any state relating to the relief: of
-1
of the
debtors
and such petition shall not be vacated or set aside -or stayed
within 'sixty- (60) days from DIPLOMAT"s
provided,, however, that the term`."dissolution or `liquidation
receiving notice thereof;
of DIPLOMAT" as used it this paragraph shall not be construed
to include any transactions permitted: by paragraph 35 hereof
provided, further, that in the case of any transaction per -
mated by paragraph 35
hereof, the foregoing paragraph; shall
apply tothe corporation which assumes DIPLOMAT'Srights and
obligations under this Agreement;
provided, however, .that prior to a date thirty (30)months after the date of
the sale of:the 'revenue bonds of the CITY, DIPLOMATshall not be -deemed in
default under paragraph
37(a) hereof if such event of default for cause occurs
directly by reason of force majeure nor shall there be an eventof default
under paragraph 37(b) and (c) if the event which would have otherwise caused
reason of forcesmajeure. The term
majeure"`as used herein shall mean, without limitation: Acts of God,
the event of default is existing.. solely by
"force
strikes, lockouts or other' industrial disturbances; acts ofpublic enemies;
orders o
any of
£ anykind of "the government of the United States or of the state or
their subdivisions or any of their
political ' departments, ager �cies;or_,
officials, or
any:. civil or military authority; insurrections; riots;
landslides; lightning; earthquake;. -fire; hurricanes; storms; floods;.
droughts; arrests;
explosions
epidemics
was nouts;,
restraint of government and people; civil disturbances;
breakage or accidenttto machinery, transmission pipes or canals;
partial or entire failure
within the control of DIPLOMAT.
of utilities; or any other cause not reasonably
38. Many of the foregoing provisions of. this Agreement contain`
obligations on the part o
various rights
the CITY or DIPLOMAT` or both. In. many instances,
are granted to each party consequent upon default by the other
party in the performance of said obiigations.
It is expressly understood anc
agreed that, notwithstanding anythingherein contained to the contrary (except,
as otherwise provided in this paragraph 38), each and; every one of said rights
on . the part of either
other, Party< to fulfill'
limitations•
party to take advantage of a failure on the part of the
its said obligations. shall be'subject .to the following;
19-
(a)
DIPLOMAT shall not have the right to proceed with any suit
or to avail itself of any remedy whatsoever provided for in
this. Agreement or under the law, unless DIPLOMAT shall have
;given•
to the CITY written notice of the alleged default,and
the CITY for a period of ten
failed to correct the alleged
is of such a nature that
cured within such ten
(10)
days thereafter shall have
default.
cannot be completelyremedied or
If the alleged, default
(10) day period, then such default.' shall
not be an enforceable default against the CITY, if
the CITY
shall have commenced curing such default within such ten (10)
day period and shall procecd with reasonable -diligence and
good faith to complete the .curing thereof. 'The ten (10) day
notice provision herein setforth shall. he inapplicablc to any
emergency: `=
(b) The CITY shall not have the right t
or
o avail itself'o
proceed with any suit
any remedy whatsoever provided for in.
this Agreement or under the law, nor shall DIPLOMAT's right to
exercise any option
granted herein be deemed to have
expired,.
unless the CITY shall have given to DIPLOMAT written notice of
the allegeddefault' or the failure. to exercise ;any option,,
DIPLOMAT' fora period
of ten (10) days
and
thereafter shall have
failed to correct the alleged default or to exercise said
option. If the alleged default or failure to exercise an
option isof such a nature that it cannot, be.completely remedied
or cured or exercised within such ten (10) day period, then
such default or failure to exercise shall not be deemed; an
enforceable default or failure of DIPLOMAT, if DIPLOMAT shall
have conunenced curing such default or undertakento exercise,
said option within such ten
(10) day period and shall proceed
with reasonable diligence and good faith to compl.ete the curing
and/or exercising thereof, asthe case may be.
-20-
39.
If the Federal Internal Revenue Service shall :issue,
or a published ruling that would permit a management contract
egui`ations
for a term o
years in excess of oneyear and compensation based upon a percentage of gross
revenues of the facility being managed, then 'DIPLOMAT _shall have the right,,
exercisable on or before the Commencement Date, to elect to revert back to a
term of years, but not greater than thirty (30), and at the consideration pro-`
vided in the Agreement prior. to amendment. In such event, all provisions of
this Agreement, as hereby amended, other than the term of years and the compen-
sation shall be in full force
and effect.
right under this paragraph, all moneys
applied to the moneys payable t
graph 2(b)
the Agreement
Provided,
If DIPLOMAT elects to exercise its
received as a Development
DIPLOMAT
further, that in the
Fee shall be
s';consideration under the .Agreement
event
the bonds described in para`
are not issued' on or prior to December 31, 1979, this ;Amendment to
void and the Agreement
shall become null and
shall be reinstated and
in full force and effect.
inits original form
40. Upon approval by the CITY and DIPLOMAT of the terms of the
indenture of trust relating t
and subordinate to the terms
the Financing, this Agreement'; shall be subject
thereof.
4l. This Agreement shall be binding upon the parties:` hereto,. their
personal representatives, successors and assigns.
The terms "Articles" and
"paragraphs",'as-used herein shall be inter -changeable.'
-21
day and year
ATTEST
IN WI7'NL5S WHERLOF, the parties have executed this Agreement the
first above written.;
City, Clerk
Signed, sealed sealed. and delivered . in..
the presence: of:
As to.. CITY
As to' DIPLOMAT
APPROVED AS TO FORM AND . CORRECTNESS :
George F.
Knox, Jr.,, City Attorney
CITY OF MIAMI
City Manager
(SEAL)
By
GeneralPartner
"SUPPORTIVE
DOCUMENTS
FOLLOW"
CITY O PilAMi. rt.01110A
INTER-or:\7.7s. NiEMORAINICUM
TO:
Joseph R. Grassie
City Manager
FROM: R. L. Fosmoen
Assistant City Manager
May 30, 1979 FILE!
* 'ThniEcrt Watson Island Development
ENCLOSURES:
On May 8, 1979 the City received a letter from its bond counsel, Bryant, Miller,
Olive, requesting instructions from the City as to the procedure they should follow
in attempting to reach a final determination on the tax exempt status of the proposed ,
revenue bonds for Watson Island. That letter was forwarded to the City Commission
on May 24, 1979,and indicated that the current agreement did not allow tax exempt
status for the Watson Island Project. The attorneys provided us a basic outline of
conditions they felt would be appropriate in order for them to issue an opinion that
the Watson Island bonds are indeed tax exempt. We have proceeded to negotiate an
amended agreement with Diplomat World Enterprises which tracks those guidelines as
provided by Bond Counsel. A copy of that revised agreement is attached for the
Commission's review and approval.
This revised agreement was negotiated in the presence of and with the participation to m
of the City's bond counsel, the underwriters and their counsel, and Diplomat WorTA
Enterprises.
The basic changes of the previous agreement are as follows:
1. Services by DWE are now viewed in two stages; first DWE will function as the
City's developer for the project and will receive a developer fee in the amount
of 5% of the construction costs of the project. Secondly, upon completion of
construction, DWE will function as the operator of the project for the City for
a term limited to five years with the option that the contract can be cancelled
without cause at the end of each year. For this operating service, DWE will re-
ceive a fixed fee equivalent to the projected return as provided for in the ori-
ginal agreement. The fixed fee represents $12M over the term of the contract.
2. All Watson Island project employees will be employees of the City.
3. Any future agreement beyond five years must be negotiated at an arm's length
basis. There is. no presumption that the terms of this agreement would carry into
additional or subsequent operating agreements.
4. The amendment provides that should IRS rules Permit the original agreement
prior to the date of construction completion that we will revert to the original
agreement.
OF,
Also enclosed you will find an agreement between the City and the underwriters,
Prescott, Ball, Turben and Blythe Eastman Dillon & Company, Inc. As you know,
the City has applied for a UDAG grant in the amount of $10M from the Department
of Housing and Urban Development for Watson Island. HUD requires as a precedent
to consideration and approval of this grant a commitment from the underwriters
that they will purchase and/or place $55 M in revenue bonds. The attached agree-
ment between the City and the underwriters constitutes a commitment on the part
of the underwriters to meet this UDAG requirement. It also commits the City to
use the above underwriters in the placement of $55M of revenue bonds upon approval
of the UDAG grant. Fees to the underwriters would be paid from bond proceeds
and are contingent upon sale of bonds.
Also enclosed is a resolution for Commission consideration which re -states the
intent of the City to issue $55M in revenue bonds. The Department of HUD has re-
quested that this be included in our submission package for the UDAG application.
Further, you will find a proposed agreement between the City and Economics Research
Associates that provides for an update of their economic feasibility study, the
most recent version of which is dated April, 1978, and for the preparation of a pro-
cedures manual which will spell out in detail the responsibilities and obligations of
both the City and DWE in the developmental and operational phases. It is anticipated
that this procedures manual will be a binding agreement between the City and DWE,
and will be entered into and agreed upon prior to bond sale. It is our opinion
that such a document is necessary given the magnitude and complexity of this project.
The fee for the above service to be provided by ERA is $23,000, plus reimbursable
expenses, to be paid from the Watson Island project account.
The above actions are necessary on the part of the City Commission in order to
qualify the City for consideration of the UDAG grant. The deadline for submission
of the above materials to HUD is no later than June 15, 1979. The UDAG grant is
necessary in order to meetthe inflationary costs which haveaccrued to the project
as a result of delays of IRS in providing the City an advanced ruling of tax exempt
status as contemplated by the original contract.
(8 B)
(8 C)
(8B)
IIIIIIIIIIIIIIIIIIIIIII IIIII II IIIIIIII■IIIIit IIIIuIl�illo�■uII"I
LAW OFFICES
BRYANT, MILLER AND OLIVE
C. FARRIS BRVANT
WILTON R. MILLCR
W. ROBERT OLIVE, JR.
/00 BARNETT BANK BUILDING
TALIDAHAS4F:K, FLORIDA 32301
(9041 222•86( 1
May 1
Mr. Joseph R. Grassie,;City Manager
City of Miami
City Hall
3500 Pan American Drive
Miami, Florida33133
Watson Island Project
Re:
Dear Mr. Grassie:
•
Pursuant to the Power of Attorney vested in this firm by the City
dated March 29, 1978, we filed with the InternalRevenueService a
request for an advance ruling to determine if the. provision of the
contract between the City and Diplomat. World ;'Enterprises (DWE)
as manager ofthe Project. would affect the tax status . of the
interest in the hands of the holders of bonds proposed to be
issued by the City under terms;, of the ; contract. Accordingly, we
requested and were granted :an. Internal,Revenue Service (IRS) staff
conference at which we were advised informally that the .subject, of
"management contracts" is a matter recently undertaken by the
IRS staff for technicalstudy and that current tentative
guidelines are to the effect that inanageraent contracts (i) must be
terminable annually, (ii) must be based on a flat fee as opposed
to apercentage of revenues derived under terms .:of such an
agreement, .and (iii)must be based on arms length negotiations..
Since the current tentative guidelines are ;contrary, and diametri-
cally opposed to the private ruling received by the Inter -American
Center Authority ("Interama") on nearly . the same factual _ circum-
stances in the early part of 1974, we requested a.,.conference with
the Director of the Individual Tax Division ' under whose .auspices
this ruling request rests.:, Accordingly, we met with the Director,
to amplify and orally present the basis of the request and; to
explain why the Watson ,Island project should be;'distinquished"from
current general guidel'ine policies particularlyin light of the
Interama ruling. The. Director acknowledged the position of the
IRS in the Interama,:ruling but stated the IRS had subsequently
changed its unpublished position as to the general treatment: of
management .contracts' as a categorial subject irrespectiveof the
Interama'ruling.
1979.
Mr. Joseph R. Grassie
May 18, 1979
Page Two
Contemporaneously with our efforts, Congress enacted "the .Revenue
Act of - 1978which provides, in part, that the IRS must act on
advance ruling requests made subsequent to January 1, 1979.within
six months after the filing of a request and in the event this
does not ' happen or the ruling is negative, " the taxpayer may apply
to the Tax Court for a declaratory judgment. To come within the
purview of the Act the request must -,be:filed on or after January
1, 1979, without provisions for grandfatheriflg pending requests.
The IRS on December 21, 1978, announced Revenue Procedure 79-4
changing the minimal filing requirements for advance private
rulings, which published ruling requires matters not required when
we filed our request on behalf of the City. Because we could not
merely withdraw and refile our requestsubsequent to January 1,
1979 :under. Revenue Procedure 79-4, we withdrew the ruling request
without prejudice to avoid the possibility of an adverse or.
delayed ruling, without the right of judicial review provided in
the Revenue Act of_'1978.
On consideration by the various law firms involved in 'this matter,
it is their consensus that the IRS, irrespective ofthe ;'prior
ruling in the Interama. .financing,; will not change in the near.
future their current tentative guidelines asset forthabove
relating to management; contracts and the City's ruling request if
re -submitted under the present contractual terms would result in a
negative response.
Based on the foregoing, we respectfully advise the City that. if it
desires to immediately proceed with the issuance of non-taxable
Revenue Bonds it must modify its contract with DWE to conform with
the guidelines set forth., herein,_ which is permissible under
Section 41 of the contract which provides:
"Section 41., The parties agree to make any
reasonable modifications to this Agreement
which will, not 'materially. adversely affect
CITY' s
eithere=of .�them_�:if �_-requested so =to do by__any
underwriter, of *hp Fj`nancina, any lender,,'
CITY'sbond
independent auditor."
If this course is followed by conforming the contract
aforementioned general tax policies of the United States,
request be done pursuant ; to the provisions of Section'"
financing could conceivably be completed by the latter
September 1979.
to the
which we
41, the
part ", of
Mr. Joseph R. Grassie
May 18, 1979
Page Three
To facilitate an understanding of the
perimeters of certain of the terms of
keeping with the ' herein stated tax
following general guidelines:
erc
parties as to permissible
a :management agreement in
policies,` we offer the
1.;An initial contract term, commencing on the date
completion of the project, of five (5) years is permissible
terminable without cause at the option of the City at the end
each anniversary date of the contract.
2. The management fee or contractual consideration for
operation of the project must be based on a fixed fee schedule as
opposedto a varying amount based on a percentage of. revenues
derived from operation of the project.
The, contract must benegotiated a
any interlocking:;relationship" between the
or their officers or their employees.
4. Renewals of the management
are permissible if renegotiated
conditions or terms.
of
if
of
armslength without
managing entities,
between the parties
any predetermine
5. Except as to executive employees of the manages,
employees of licensed- vendors and lessees, persons employed to.
operate the project should be employees of the City.
6. The parties may engage in a separate and independent
agreement for management and supervision during the development
and construction;; phase of the project under any.. terms and
conditions mutually agreeable.
There are three other possible alternatives which are set fort.h
below but. which will continue the adverse inflationary impact upon
the project and do not offer any assurance of ultimate success:
1. Refile the request with; the existing contract terms, with
certain reasonable expectation.; that the IRS would not rule within
six months or would rule adversely, whichif pursued would lead to
protracted and uncertain litigation in the. United States Tax
Courts.
2. Seek "a special act of Congress providing for the tax
exempt status of Bonds financing the Watson. "Island Project. •-• We
would anticipate IRS opposition to such legislation and; more than
a year of effort beforepassage or not could occur.
Mr. Joseph R. Grassie
t4ay 18, 1979
Page Four
3. Seek general legislation in; Congress changing. Section-103
o'f the: Internal .Revenue, Code of 1954, as. amended. Also, we would
anticipate IRS opposition tosuch legislation and more than a:year
of effort before passage or not could occur.
We appreciate your attention tothis matter and
request instruction as'towhich course to follow.
incerely,
W . obert 0
WRO/mj s` ;-
cc: Mr. George F. Knox, Jr., City Attorney
City of .Miami.
17 East Flagler Street
Miami, Florida 33131
Mr. John Gilchrist, Project Director.
City of Miami;
150 S.E.,2nd Avenue
Miami, Florida 33131
Mr. Ronald L. Fine, General Partner
Diplomat 'World Enterprises,, Ltd.
1212 city National Bank Building
Miami, Florida 33131
Mr. Donald Chadwick,. Partner
Prescott, Ball & Turben
900 National ;City' Bank. Buildin
Cleveland, Ohio 44114,
respectfully
C. FARRIS BRYANT
WILTON R. MILLER - W R03ERT OLIVE, JR,
HUGH M. TAYLOR._
Mr. Joseph R. Grassie,
City of Miami
City Hall
3500 Pan ArneriCarl Drive
Miami,. Florida 33133
Re: Watson Island Project
Dear Mr. Gras le:
LAW OFFICES
BRYANT, MILLER AND OLIVE
700 BARNETT BANK BUILDING
TALI ANASSNE. $LONTDA 32301
(g04►22241511 •
In regard to the captioned matter, we offer the following as
amplification of this firms letter of May 18, 1979 concerning
those provisions of the letter relating to management compensation
for fees during the operational' phase of the Project. Management
fees may be stated in terms of annual accrued earnings payable
over a period of years without regard to termination if based on a
fixed :amount.
If you have any questions concerning the letter of May 18,
1979• or this supplemental letter thereto, please contact the
undersigned.
WROjr/mjs'
cc:
ere l•yr
W. Robert
Mr.:George F. Knox, Jr., City Attorney
City of ;Miami •
17 East Flagler Street
Miami, Florida 33131.
lr. John Gilchrist, Project Director
City of Miami
1.50''S.E..' 2nd Avenue;
Miami, Florida 33131
Mr. Ronald L. Fine, General Partner
D.iplomot` World Enterprises, Ltd.
1212.City National Bank Building
14.iami, ;Florida 33131
Mr. ,Donald .Chadwick, Partner
Prescott, Ball & Turben
900 National City Banc Building
Cleveland, Ohio 44114
1II11I1I1I111111I PiUMOIIMI
LAW O%:ICES
C. rAHa1Sb4YANTy
WILTON hMILLt l
; RO$Hff OLIVE, JR,:-
NUG4+A-TAYLOH
I nvAN'r, MIL.LEIt AND OLIVE
7001)44HE TT DANK HUILOING
190411 22:1 00 1
May 30, 1979
Mr. Joseph R. Grassie, City Manager
City ofMiami
City Hall
3500 Pan American Drive
Miami, Florida 33133`.
Re: Watson Island Project
Dear Mr. Grassie:
We have reviewed the ;form ;of the Amendment to the Agreement
dated November 11,a1977 between Diplomat "World :`Enterprises,
Ltd. and theCity of "Miami submitted to us this date. It
is our present opinion that the Amendment to Agreement
meets the Guidelines setforth inthis"firm's letter of. May
18, 1979 as amended and presents a basic document, assuming
the adoption of satisfactorybond documents and upon entry
of a judgment validating the bonds, on which our opinion
may: be rendered to this effect "that "the interest on the
bonds issued to, finance the project contemplated by the
Amendment is exempt frorn. Federal taxation under Present
statutes, regulations, and rulings.