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HomeMy WebLinkAboutR-79-0296RESOLUTION NO. 79-296 A RESOLUTION ACCEPTING THE ;ATTACHED _PROPOSAL OF LAVENTHOL;& HORWATH A NATIONAILLYINCCONNHp EDCERTIFIED PUBLIC ACCOUNTANT FIRM SPECIAL 1HOSPITALITY ACCOUNTANCY AND FEASIBILITY TO VERIFY THE FINANCIAL VIABILITY AND .REVENUE PROOJE}JSIONSKFORHT THE CITY. OF MIAMI/UNIVERSIT Y OF INTERNATIONAL CENTER CONFERENCE/CONVENTION CENTER AND. HOTEL; ALLOCATING FUNDS 6RO�OTHE OO _CONVENTIOD IORIZITECENTER THI•; FUND IN TIIE AMOUNT OF ..$4 ,_ ITY MANAGER TO EXECUTE A CONTRACT WITH SAID FIRM. SUPPORTIVE )OCUMENTS FOLLOW" WHEREAS, the City Commission at the Commission Meeting of March 8, 1979 passed Resolution No. 79-157, Section 3 authoriz- to retain a nationally recognized Certified m specializing in hotel and, hospitality City Manager Public Accountant fir ing the feasibility that the WHEREAS, .a Selection 'Committee has recommended firm of Laventhol & Horwath be retained based upon the proposal presented at a contract amount not to exceed $46,200.00. WHEREAS, monies are available. for ., Convention Center Fund; NOW THEREFORE, BE IT RESOLVED CITY OF MIAMI, FLORIDA: Section 1. The' City Manager i the firm Laventhol Section'2. The amount of $46, from the CONVENTION CENTER FUND. Section 3. The City Manager is hereby authorized to attached proposal of said services from the BY..`THE CDOCUM4�F ILEX r+ ITEM NO. s authorized to accept the, & Horwath. 200.00 is hereby allocated enter into a contract on behalf of the City of Miami with the accountant firm of Laventhol & Horwath to verify the financial viability and revenue projections for the City of Miami/University CITY COMMISSION MEETING OF APR3 0 19‘swum '� so7929 of Miami James L. Knight InternationalCenter Conference/Con- vention Center RA APP H G . ONGIE, CITY CLERK GEOR PREPARED AND APPROVED BYs ROBERT F..CLARK, ASSISTANT CITY S TO FORM A D CO• ECTNESS: . KNOX, JR., CITY ATTOR EY "SUPPORTIVE DOCUMENTS FOLLOW" ATTY. • 7 9 - 2 9 6 Joseph.R. Grassie. City Manager Rom, ,J,a es J. roject C�7k onnolly irector • 4111'Y MI. t't..Ci t.0A M MORAP11:3i.;l»ii naJ,)ECt: Conference/Convention Center,. Financial &`Feasibility, Consultant ilV, RENCi:S1 8HcLosonm Laventhol . & Horwath Proposal At the City Commission Meeting of March 8, 1979, the Commission by Resolution 79-157, Section 3 resolved that: "The City Manager is hereby authorized to retain a nationally recognized in. hotelanenhospialiaccountancy Certified Public Accountant firm specializing for the and feasibility to verify the financial viability and projections Conference/Convention Center and Hotel." A A Selection, Committee consisting of Charles L. CruHpato15a&dOP ham meslJ. Connolld toy of the ;City ;�of'_Miami ��and ���Gary �-Graham eof Smith,; Barney, presentations made by the two C.PHorwath firms gothiconsultant teams fwere;highly ipro- Kerr '& Forster and Laventhol and.. fessional, however, the Selection Committee unanimously recommended Laventhol and Horwath in that: 1 That firm does all the Hyatt Hotel C.P.A. and work andlthereforeeis: more familiar with their management p p. Although both proposals were for approximately the same scope of work, Laventhol & Horwath were the only firm to stipulate a maxi- mum fee. The fee quoted in: the attached proposal is not to exceed $42,000 plus _10%.or-.:$4,200for out-of-pocket expenses for a total of $46,200 maximum. It is recommended that the Commission approve the execution of the Financial Feasibility Study as per the attached proposal. PROPOSAL FOR.. JAMES L. KNIGHT' INTERNATIONAL CENTER. CITY OF MIAMI MARCH.199 SUPPORTIVE DOCUMENTS _w ..� _EQL L.O W... �._. LAVENTHOL & HORWATH CERTIFIED PUBLIC ACCOUNTANTS 9 �6 LAVENTHOL & HORWATH CERTIFIED PUBLIC ACCOUNTANTS 20i''ALHAMeR4:Ci,iCLE CORAL GAeLCS, FL 33134 (305) `42=2.000 March 27,' 1979 Mr. James J. Connolly, Project Director James L. KnightInternational Center City Of Miami 150 Southeast Second Avenue Miami, Florida 33131 Dear Mr. Connolly: 0 CZ Q0— -13 1 Q In accordance with yourrequest, we are pleased. to submit this proposal to prepare a feasibility study for. the James L. Knight International Center to be developed in herein Miami, Florida. Outlined method and reporting procedures of our study and the cond- itions, time requirements and fees for our services For purposes of this study, the project will be 'considered are the objectives scope to befeasible if projected income to the. City from the Center's operation is sufficient to repay debt obligations incurred the Center. by, the City for ;the purpose of developing Wewill, prepare projections purpose based upon a market of incomeavailable for this study and financial analysis o, the operations of the Center a portion of the through a private offering, we with certain regulations pertaining to the preparation of projected balance sheets and source and application of funds which we will conduct. Because financing for this project will be will be sought required to comply statements. These elements of our work are described in this proposal. We appreciate the opportunity to present this proposal and look forward to working with you. As indication of your acceptance'of this proposal, please send us'a letter authorizing us to begin the work as described within this ". proposals and a check for $10,000 as our retainer. Very truly yours,. MBB:cn MBB:cr Maurice B. Burritt, Principal "SUPPORTIVE DOCUMENTS FOLLOW„ TABLE '.OF CONTENTS PROJECT DESCRIPTION.•...•••....•' Phase The, Convention/Conference Center Market Study and Financial Analysis PAGE . 1-2 Phase II: The Hyatt Regency Hotel Market 10-15 Study and: Financial Analysis...••• •• Phase III:The Parking Garage Financial .,.••16-1 Analysis: •••..•. ....•.•• Phase IV: Combined Projections and Financial; .`1920 Viability.......'..,:... COiMiUNICATION AND . REPORTING PROCEDURES • • • •21-23 2 4- 2 INVESTME NT IN L&H SERVICES.... "SUPPORTIVE DOCUMENTS FOLLOW voloovomornimamialm••••••••••.1•••.111.•••••••••••••=1.0 • James J. Con The subject of our study will be the James L. Knight International Center to be developed on a site located along the Miami River west of Southeast Second• Avenue in Miami, Florida. The Center will consist of four primary elements e City of Miami Convention Center f James L. Knight Conference Center to be operated by the University of Miami • Hyatt Regency Hotel (630 rooms) Parking Structure (988 spaces) This project is being developed jointly by the City of. Miami and Miami Center Associates. Fjnanciflg for the Convention/Conference Center and the parkingstructure, will be provided by the City, of Miami and through a private offering sale by the City of Lease Revenue Notes. Financing for the Hyatt Regency Hotel will be provided in equity by Miami Center Associates and through a first, mortgage committed by Massachusetts Mutual life Insurance Company. Uppo RT! Vt. F,L' � 9y niNI IMOM 1111O1•11 1I111111.1 APPROACHTO THE ENGAGEMENT: : PHASE I CONVENTION/CONFERENCE CENTER MARKET : STUDY. AND FINANCIAL ANALYSIS "SUPPORTIVE Fp���W,7`S Mr. James J. .Connolly -4- art 011, . PURPOSE AND SCOPE OF THE STUDY The objectivesof our study will be to project the Potential market demand for the proposed Convention Center from conventions, exhibits, trade shows, consumer shows, banquets and other sources of business. Percentages. of Participants who would be non- residents and thus require hotel accomodations. those who would be local residents. Revenue that could be generated from Convention. Hall and Meeting Room Rentals,, food and beverage. sales, utility services and other identifiable sources. versus Expenses that would be required to operate the., Convention Center for ten years. Net operating results of the Convention Center its first ten years of operation. The study we propose will be divided into two phases: for The market study and the financial analysis.`'The major components of each.phase are described in the following paragraphs. II MARKET. STUDY, "SUPPORTIVE DOCUMENTS FOLLO V" Our project team will meet with the project director f ofieldwork to discuss the the proposed his staff at the start o our planned facilities and concept of operations for and A.000•••-11111111II..IIIIII uI I I III Mr. James J. Connolly -5- March 27, 1979 Convention Center. During this Will review.any prior studies analysis and extract certain verified data as appropriate. In addition, we will review information that the director has compiled pertinent to the market. Our goal in this orientation process will be to maximize our use of relevent,.documented data that has been collected Previously in order to minimize our additional research. Thus, our work program will be designed to supplement existing data and enable us to reach conclusions regarding the market viability of the proposed Convention Center. The primary segments of our market study are described below. Site and Area Analysis orientation process we that` are pertinent to our project we will assess the site in terms of its relative advantages as a location for a Convention Center. This will include an analysis of the supportive nature of surrounding and proposed land use, existing and planned local traffic Patterns (including the proposed rapid transit and people mover systems) ,` and available services. "SUPPORTIVE DOCUMENTS General Market. Characteristics FOLLOW" LOW " We will investigate trends in economic and demographic factors in the general market area to determine the economic environment within which the proposed center would operate as well as likely market sources and generators.; Mr. James J. Connolly -6- March 27, 1979 Particular attention will be given to those economic indices which would be most relevant the proposed Convention Center. Supply and Demand Analysis to the sucess of Based on the detailed work program that we develop after the orientation meetings, we will conduct study of the markets that are available to the proposed Convention Center. At this point, we envision that our investigation will include the following: Interviewswith the Miami Convention Bureau to gather available data. A review'of information contained in L&H professiona] libraries in selected major off icesthroughout the United States to obtain existing convention data and avoid duplication. Interviews with representatives of competitive convention centers to obtain information on market: utilization and operating performance... Interviews with selected meeting planners to profile demand characteristics:and determine their attitudes toward meeting 'in Miami. An accumulation of applicable secondary data from sources that currently deal with the convention market such as: "SUPPORTIVE DOCUMENTS FOLLOW„ Mr. James J. Connolly -7- M ch 27,'l979 i The International Association of Convention ureaus American Society of"AssociationExecutives World Convention Dates Magazine Successful Meetings'- Directory of Conventions Chambers of Commerce and Tourism_ Bureaus. State and national studies pertaining to travel patterns, convention and meeting activity attendance Relevant professional and trade Publications and "SUPPORTI\ DOCUMENT association FOLLOW" Other publications dealing directly or with convention activities. In addition ,considering the relationship indirectly the.University o Miami Conference Center and the proposed Convention Center. it will be necessary for us to interview the University,` Conference Staff to obtain their opinions related to the projecte use of the .Conference = Center. It is our understanding that the University of Miami Conference: Center will be located within the Convention Center complex and will function as a separate entity operated by. the University. Thus, for our projections related to the Mr. James J. Connolly -8ffk OP' - March 27, 1979 Convention Center, we need only determine the number of times: the University would require more conference space is available within the Conference Center and how much space would be required annually. than Our discussions related to the utilizationof the Conference Center will also enable us to project the demand for hotel rooms that would be generated by. the Center and the food', and beverage services that would be required. These factors would be considered in our analysis of the proposed Hyatt Regency Hotel. In addition to research concerning "the "convention market, we will investigate the opportunities. for, use of the proposed for other events,. including: Convention` Center Trade shows Cultural events Exhibits Political events Banquets Other community uses Projected' Utilization 'SUPPORTIVE DOCUMENTS FOLLOW" Based on our market analysis we will project utilization of the proposed. Convention Center for the first ten operating; years. Those will consist of detailed projections of utilization for the first five years of operation to include a breakdown of event types, e.g. convention, cultural events, exhibitions, and other sources of significant patronage. Mr. James J. Connolly 011 March, 1979 For the sixth through the tenth year of operating, utilization annual event days will b projected on the basis? of III. FINANCIAL ANALYSIS Based upon the results of our market study we will prepare pro 7'ections of operating income and expenses for the first 10 years of operation. Our projections will include the estimates of: the effects of inflation on major revenue and expense categories at rates currently anticipated. Bases for the financial projections and key assumptions underlying inflation estimates for the operating period covered by our analysis will be made explicit in the financial section of the written report. " UPPO ENE' �n. i " piii IU•11I11 ■N arse s J . Connolly APPROACH TO THE . ENGAGEMENT: PHASE II THE HYATTREGENCY HOTEL MARKET STUDY AND FINANCIAL PROJECTIONS JU PPORT1VE. DOCUMENTS„ FOLLOW .uu iIU James J. Connolly Mar,h 27, 1979 `i_, I. PURPOSE AND SCOPE OF THE STUDY The primary objectives of our, study will be ,to: Determine the market feasibility of the propose 630 room Hyatt Regency Hotel and comment on the appropriateness of the food and beverage facilities and other amenities in meeting the needs of the market. Project annual occupancy and average the proposed hotel for the first ten years of operation. ?repare projections of room rates, for estimated operating results r the first ten operating years. To achieve these overall objectives, will be divided into two parts:'. the market financial analysis. The major components are described in the following paragraphs. II. MARKET STUDY Our market study for the work steps designed to d rooms and is directed convention planners, commercial travelers Cumulatively, these steps will enable us to clusions`regarding the overall market hotel on the proposed` site. Our market determine specifically include to the needs the following: the study: we propose study and the of each part DOCUMENTS FOLLOW proposed hotel will include a variety of trends in demand the and preferences of and tourists. reach con for potential. for; analysis will Mr. James J. Connolly -12- arch 27 1979" Site and Area Analysis We will, conduct an analysis of the site and the surrounding area in order to evaluate their impact on future lodging trends. We will investigate such factors as ease of the site, visibility, the supportive nature ofsurrounding' land use 'and planned development within the area. Zoning other local regulations and environmental considerations will not be included as part of this analysis. access.to General Market Characteristics We will investigate trends in economic and demographic in the general market area to determine the economic environ- ment within which the proposed hotel would operate as well as likely market sources and generators. particular be given to those economic indices which would be and o the success of the proposed hotel. Supply and Demand`Analysis factors attention will most relevant The supply and demand, analysis': will be designed' to identify. trends in the supply of and demand for roomS in the market area and demand situation.` Subsequently, Project the future supply and we will reach a determination as to the viabilityof the proposed hotel. The inputs to this analysis will include the followings 6SUP RTIVE- �:s=�� aines :J. Connolly 13 Mar; a. Trend of Business Reports published a monthly For many years Laventhol & Horwath has: Trend of Business report on the Florida 'Lodging • which includes an analysis of the Miami market area. Thus, from our existing files we will provide considerable 'information on area supply and demand patterns. This information will be supplemented Industry by further investigation of relevant competitive properties and other sources as outlined below. b. Census of Existing and Proposed Facilities We will develop a census ofall hotel/motel-facilities in the market area as well as those under construction, planned or rumored. To the extent that the information is available -the census will include the following factors: name location number of rooms room •rates. - 'annual and- seasonal occupancy patterns market mix of guests type'and class of food,: beverage and -meeting facilities other ' arnenities offered.. Secondary` Research The primary research will be supplemented with existing secondary sources of inforrnati�fl. This will include .such items as the tourism reports published by the Florida.. Department of Commerce, meeting and convention statistics::. Mr. James J. Connolly wtie4i1,0,41.5tk2X'iR00.14AllftakiatiOXifei DEtWL,PktRYINAItSIVS -14- March, 1979 published by '`Meetings and Conventions" magazine and other sources.. Based on the information obtained in the various procedures discussed above, we will be in a position to arrive market, conclusions regarding the proposed hotel. procedure will 1. Determine the current be as follows.. We will: Our basic'` overall market demand': for rooms in the competitive area and the 'share of market demand -that is generated by' tourists, commercial travelers and convention delegates. Identify growth rates for:. each market segment based on the various factors studiedin the market analysis that will impact the future demand for hotel rooms. . Estimate the extent to which new convention demand. could be attracted to Miami because of the new Convention/Conference Center. Project the future need for additional rooms on the present and ;;anticipated future supply of rooms and the projected market demand and project the occupancy level, average rate and occupancy factors for the double ased Hyatt Regency Hotel for the first ten °years of operation. "SUPPORTIVE DOCUMENTS ENTS FOLLOW" FINANCIAL ANALYSIS Based upon the results of our. market study we;,will prepare projections of operating income and expenses for. the first ten years of operation. Our projections will include estimates of the effects o inflation on major revenue and expense categories rates currently anticipated. Bases for the financial;' projections and key assumptions underlying inflation estimates for the operating periods covered by our analysis will be made explicit in the report; financial section of the final written "SUPPORTIVE DOCUMENT FOLLOW» Mr. James J. Connolly APPROACH TO. THE ENGAGEMENT:, PHASE 'III THE PARKING GARAGE FINANCIAL ANALYSIS 0 IVE A4 c" ...t Er` L i 4 i `S re •� ti.U? {.1 � j7 i �,.,. F Mr. James J. Connol' w -17- March 2' 1979 . .SCOPE AND PURPOSE OF THE STUDY The parking garage which will be constructed on the Northwest corner of the Convention Complex will contain 988 parking spaces and will be connected to the Convention Center and hotel through a covered pedestrian walkway. A study of the garage and certain retail space contained therein, has been completed by Conrad and Associates, a professional company specializing in such facilities. The underwriters have agreed usage and expense projectionsof the garage as authorized in the Conrad Associates report. We intend to do this.. The income rates that -are commenserate with the off-street rates of the Miani Off-street Parking Authority. However this garage facility will be under the control of the Convention:. Center and not the Parking Authority. Therefore, he parkin rates need not conform with those of the Parking. Authority. that L&H can accept the estimated from the garage was projected based on Parking It will be our task to prepare revised income projections and statements of projected income and 'expenses for a ten year period. 'SUPPORTIVE II. MARKET ANALYSIS DOCUMENTS FOLLOW Our approach i We will: review the rates to be charged an this segment of our work will be as follows.:: Mr. James J. Connolly -18- Review the Conrad and Associates report in detail and discuss it as required with the authors...:., Review the income projections done by the Project Director. Review the reasonableness of parking rates in view of charges in other facilities and considering the demand and supply of parking spaces in the area. • Analyze the. square footage of retail space to be included in structure and estimate rental inco me. III. FINANCIAL . ANALYSIS Based on the Conrad. and Associates report covering the demand for, and expense of operating the parking facilities,' and our revenue projection for parking and retail space, we will prepare, a statement of income and expenses for the first ten operating years. "SUPPORTIVE DOCUMENTS FOLLOW" Mr. James J. Conno11%,. -19- 1 1 1 APPROACH TO THE -ENGAGEMENT: Phase IV Consolidated .Projections and Financial 'Viability •'SUPPORTIVE DOCUMFNTS pril I (-.1t,%/17 i Center and the parking garage. We James J. Connolly In this phase of our. study we will prepare a combined statement of: income for the ten. year period commencing: completionof the 'project (assumed to be two years from this date) and a consolidated statement of application of funds. We will a consolidated financial summary, a balance sheet, cash'. flow and fund balances for a'12 year-period'commencing with the issuance of the revenue notes. A summary. of notes and assurciptions to the projected financial'statements w i11 b'e included with the source and also prepare will consider the appropriate computations with regard tocurrent assets and current liabilities for the.Convention/ the study of 'Conference the Hyatt Regency Hotel, we will provide for the lag time between the accural of rentals due the city and the payment thereof. The need for appropriations from the reserve fund will be, reflected on the consolidated financial summary; balance sheet and cash flow. In UppORTIVE ;_ L' Ly L.0 f t 1 arr�es �7. Gortnolly; at:d 27i L7!7 REPORTING PROCEDURES Mr. James J . Connofjy We will prepare a detailed written report for inclusion, with any circular relating to the revenue notes. W anticipate working closely with representatives of Barney, Harris,Upman'& Company,Incorporated, so that the scope and format of our report will suit: the information. requirements. Our study and financial projections contained therein will be based on estimates, assumptions and other available to us during. the conduct of our study, the sources and bases of which will bestated in the appropriate sections of the report. No effort will be made to determine the possible effects ;on this project of present or future federal, state or local legislation relating to environmentalor ecological matters or interpretations thereof. Since the projections will be based on estimates and assump- tions ertainty and variation subject to unc, tions..which are inherently depending upon evolving .events, we will not represent them as results that will actually, be achieved. The terms of this engagement are such that we have no obligation to revise the study or the projected financial results: to reflect events -or,conditions which occur subsequent `. to the date of this study. However, we will beavalable to discuss the necessity of; revision in view .of changes in the economic or market factors affecting the proposed project. Smith information >uPPoRTIVE OCL!MENTS 'JLL.LVV"' e .. Mr. James J. Conno11,4,, -23- You have informed us that you intend to includeour study in an offering circular for the purpose of soliciting investments in this project. You have further advised us that it is intended that the securities will be exempt from the registration and prospectus -delivery requirements of the Securities Act of 1933. You have further informed usthatyou will retain legal counsel experienced in such offerings to guide you in this offering. You have agreed that before our study is released in the, Official Statement, your legal counsel will furnish us withan opinion to the effect that the offering is exempt from the registration provisions of ,the ed. Securities Act of 1933, and that you have adopted and follow appropriate procedures to ensure compliance with that rule. The letter will also indicate the nature and extent of any and review requirements of applicable state authorities. filing All proofs. of offering material must be submitted to us for; approval prior to reproduction or publication. "SUPPORTIVE DOCUMENTS FOLLOW" Mr. James J. C nnolly svPp s RIVE, �O� i� ii F : \ Mr. James J. Connolly -25- Marti 27, 1979 W TIMING Weestimate that this engagementwill take to 10 weeks from the date our proposal is signed. Assuming your acceptance of this the, next few days, we will issue a final 1979. We will, however,' report no later than June have our financial analysis and cash flow projections. from proposal during written 1, ready by May 15. We will present these projections" in a letter which will be suitable to the City Comm- ission and to the underwriters so that they may: proceed with their planning. FEES AND EXPENSES Our fees for the time required tocomplete in part by the complexities of the market and which will be available to us. Based on our project plan,: we estimate our fee for the completion of this engagement will range from $40,000to $42,000 plus of pocket expenses such as computer costs, and the preparation expenses. Out services outlined will be based on the our study which will be determined thedata telephone, typing Should less time be required than we now anticipate, you would, of course, be billed a lesser amount. Every effort will be made to keep our time to the minimum consistent with the requirements of the engagement. 41r. James J. Connol»? -26- March 27, 1979 Our fee estimate is subject to revision for making necessary,;: amend ments to the study to reflect changes in capitalization � a�� or financing. Billings will be rendered every two weeks are payable upon presentation. If at any point the course ofthe study our findings lead us to a negative conclusion concerning the feasibility ro ect of. the project, or. � if the p is terminated; we will meet 7 If theproject terminated with you to discuss our findings. decision is made to discontinue our study, our fee or if the incurred will be based upon the time and out -of pocket expenses o _that. date. MBB:cn