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HomeMy WebLinkAboutcover memoCITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM f/c- -19 05') TO : FROM : Honorable Mayo' _& Members of/tl June 28, 2004 DATE : FILE ty Commiss' n e Arriola ity Manager SUBJECT : 2003 Grand Prix Americas: Settlement & Release Agreement REFERENCES: ENCLOSURES: RECOMMENDATION: It is respectfully recommended that the City Commission adopt the attached resolution authorizing the City Manager to execute a settlement and release agreement with Raceworks, LLC for its outstanding financial obligations to the City of Miami in connection with the 2003 Grand Prix Americas. Pursuant to the terms of the agreement, the City will receive $53,444.22 for the outstanding obligations totaling $104,401.05. BACKGROUND: On May 22, 2002, the City of Miami ("City"), the Bayfront Park Management 'Trust ("Trust"), and Raceworks, LLC ("Raceworks") executed a Revocable License Agreement ("Agreement") to conduct motor vehicle racing events in Downtown Miami. Raceworks, at the end of each Event Weekend, is required to remit to the City its Use Fee, Ticket Fee, and payment for costs of the improvements pursuant to the Revocable License Agreement. In September, Raceworks was granted a Motor Sports Racing Permit for the weekend of September 26thi — 28th, 2003. Following the Event Weekend, Raceworks was required to remit to the City a total of $104,401.05. The amount outstanding consists of the following: • City Use .Fee • City Ticket Fee • Damage to the Race Perimeter $21,100.00 $10,5 54.00 $72,747.05 Shortly following the 2003 Event Weekend, reports were widely circulated that Raceworks, LLC and Championship Auto Racing Team (CART) would be seeking bankruptcy protection from creditors due to losses sustained as a result of the 2003 Grand Prix Americas and other series events. In order to mitigate the City's potential exposure, the administration exercised the City's right to draw upon a Letter of Credit secured prior to the Event Weekend. The draw totaled $47,790, the proceeds of which were utilized for: the pressure cleaning of the baywalk, promenade, and sidewalks at Bayfront Park; debris removal; replacement of damaged Light poles; and the replacement of palm trees along Biscayne Boulevard. Pursuant to Section 57 of the Agreement —Restoration of Public Property — at the end of each Use Period and/or upon termination of the Agreement, Raceworks' is responsible for the restoration of public property, personal property, and fixtures of the City or Trust to the same condition which it was in prior to its use by the Licensee. Shortly following the completion of the Event Weekend on September 28th, the City identified an additional $72,747.05 of damage to the Race Perimeter. The needed improvements consist of the following: replacement/improvements of curbing, gutters, and sidewalks; reinstallation of Burle-Marx pavers; pavement restoration; replacement of bollards; and landscaping. Earlier this year, Raceworks approached the City, the Trust, and Miami Parking Authority with a work-out offer of 40 cents on the dollar to satisfy their outstanding financial obligations. Following some negotiation, Raceworks agreed to the following settlement offer: ■ Raceworks agreed to forfeit it claim to a payment to the City of $19,473.00 for police and fire surcharges which were mistakenly assessed. • Payment of $.60 on the dollar for the balance of $84,928.05 or a payment of $50,956.83. ■ Payment conditioned on securing a waiver from the Miami Parking Authority and Trust releasing Raceworks of its obligation to pay more than the agreed upon $.40 on the dollar pursuant to its agreement with both entities. The City successfully secured the needed waiver from the Miami Parking Authority, but our request before the Trust's Board of Directors died for lack of a second. Following our failure to secure the Trust's support, the City agreed to the Licensee's initial offer of $.40 on the dollar. The terms of the settlement offer are outlined in an attached letter (Exibit "A") and also reflected in the copy of the Compromise, Settlement, and Release Agreement (Exhibit "B") executed by Raceworks provided herein. Pursuant to this settlement agreement the City will: ■ Retain the $19,473.00 in police and fire surcharges erroneously charged to Raceworks. " Payment of $.40 on the dollar for the balance of $84,928.05 or $33,971.22 for the balance of the outstanding financial obligations. " Total compensation of $53,444.22 — approximately 51% of the total financial obligations outstanding. Attached please also find an e-mail forwarded to the Office of the Auditor General (Exhibit "C") regarding the total number of tickets bartered/sold by the Licensee during the 2003 Grand Prix Americas. The Auditor General has questioned whether Raceworks should be required to remit an additional $4,794 in Ticket Fees for tickets issued to Motorock as part of its sponsorship arrangement and listed in the "Phone TIX" column of the Ticket Master Final Settlement Report. As per the attached correspondence, the administration agrees with the Auditor General's findings, but has chosen to forgo our claim given that we had previously agreed to settlement terms with the Licensee. We would ask for your favorable consideration and support for this proposed settlement agreement. JA/A S