HomeMy WebLinkAboutM-76-0819CITY OF MIAMI. FLORIDA
INTER -OFFICE MEMORANDUM
!O:
Joseph R. Grassie
City Manager
Charles L. Crumpton
Assistant City Manager
DATE
Su9JECT
S P 17 1976
FILE
Convention Center, Economics Consultant
REtENENCES
ENCLOSURES
BACKGROUND
On June 9, 1976, the City Commision .adopted Motion No. 76-390
"A MOTION AUTHORIZING AND DIRECTING THE CITY
MANAGER TO PREPARE A FEASIBILITY STUDY DOCUMENT
TO PROCEED WITH PRIVATE DEVELOPMENT OF AIR RIGHTS
SURROUNDING THE PROPOSED CITY OF MIAMI CONVENTION
FACILITY/UNIVrRSITY OF MIAMI CONFERENCE CENTER
INCLUDING OBTAINING THE; SERVICES OF A CONSULTANT
TO ASSIST THE ADMINISTRATIOI: IN THE DESIGN OF SUCH
DOCUMENT."
The City Manager appointed a consultant selection committee con-
sisting of James J. Connolly, Project Director for the Convention
Center, Chairman; Charles L. Crumpton, Asst. City Manager; and
John E. Gilchrist, Project Director for Watson Island.
Advertisements for Request for Proposals from qualified Economics
Consultants were placed in the four local newspapers on August 16,
1976. Six (6) submittals were received of which four (4) firms
were invited to present their proposals and professional qualifi-
cations to the Selection Committee.
Representatives of the University of Miami and the City's Archi-
tectural consultant sat in on the presentation as non voting
members.
After all four presentations had been heard, the Committee unan-
imously agreed in the selection of one of these consultants and
the University and the architect concurred with this selection.
The recommended firm is:
GLADSTONE ASSOCIATES
1401 Brickell Avenue
Miami, Florida 33131
StP 17 7975
attached hereto is a copy of their response to the City's Re-
quest for Proposal including their professional qualifications;
background and experience in this particular area; and an out-
line of their proposal.
FINANCING
Funds are available for this consulting service under the Project
Director's budget of $200,000.00 for salaries and administrative
costs for the development of this pzoje.ct..
RECOMMENDATION
That the City Commission adopt a resolution authorizing and di-
recting the City Manager to negotiate and execute a contract with
Gladstone Associates for the Economic Consulting Services necessary
for the participation of a private developer on the Convention
Center Site.
v..adsLo ie assocka,es
Economic consultants
W. Thomas Wall
Senior Vice President
August 27, 1976
w
CZ
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City Manager's Office
City Hall
City of Miami
3500 Pan American Drive
Miami, Florida 33133
RE: Economic Consulting Services for Proposed Downtown
Convention/Conference Center Commercial Facilities
Gentlemen:
Gladstone Associates is pleased to nave received a request from the City
to submit a proposal for an analysis of selected corr;rlei'ci al uses intended
to complement the pending development of a convention and conference center
in Downtown This i ettE:r responds to your request for a proposal and
sets forth the experience of the firm together with our recommended approach
for the study's execution.
EACKGkOU';D OF THE FIR';
Gladstone Associates is the largest independent economic consulting firm in
the United States, specializing in urban development and project ar.alysis.
are pleased to have wrong our clientele r.:any of the country's leading
real estate developr:ient organizations and financial institutions. Much of
tree work which we propose to under t.se for the City of Miami in relation
to the captioned assignment follows nu erous si, ilar studies we have performed
for such private or5nizations. Additionally, cf course, consulting assign-
ments performed by the firm have been undertaken for many government and
public agencies as well.
Gladstone Associates spcia1 zes in t:re analysis of real estate and ni-oject
development.. Our principal snr-vice is in the preardticn of `casi5i lit;
studies. ii,'�'se typically ircicrie two princip-,i e�Er:,r-'rrts--r:rarvet itnaiysis and
financial evaluation. Of course, As nn extentiGrl of errcagerients wherein the
preparation of such fees,;bility studics :.as required, the firer has prepared
documentation to facilita:e the identification aria the selection of private
developers of our pu'ol is -a encV clients. Moreover, we have assisted such
public clients in the process of developer negotiation.
1401 Biickell Av'nuc. Suit,' 507, Miami Fin'rna 33131, Telephone (305) 358.9500
Olrri'e% i.).0 (:1„rmr Rol 'd,r, Portsmouth, R.I.
The firm has performed numerous studies covering each one of the three
major elements contemplated for the Downtown Miami complex. We have
specific and direct experience nationally, as well as in the Miami area,
on hotel analysis, retail studies and in evaluating restaurant potentials.
THE FIRM' S MIAMI OFFICE
Gladstone Associates maintains, as one of its three principal offices, a
full -service capability in Miami, on Brickell Avenue. This office serves
the southeastern region of the U. S., including Florida and has been
principally responsible for execution of all of the firm's work within the
City of Miami and the State over the past several years. At present, of
course, Gladstone Associates is under contract to WRT for the preparation
of the City of Miami's Comprehensive Neighborhood Development Plan and the
Miami office is responsible for this work program. Further, the Miami office
has performed studies in each one of the designated functional areas intended
for development Downtown as part of the convention/conference complex.
BROAD EXPERIE';CE OF THE FIR;' I;1 DO'. TOWN AND CENTRAL AREA DEVELOPMENT
Gladstone Associates has performed an extensive number of studies similar to
the feasibility and implementation program pending for Downtown Miami. In
dozens of cetropolitan areas and coi;munities throughout the United States,
large and small, the firm has been involved dewily in the analysis of real
estate opportunities, the integration of those opportunities with the desired
results froni the standpoint of public policy, and in implementation. Landmark
work perfoi'm,ed by the firm has included the analysis of revitalization potentials
for Oennsylvania Avenue, the major central arterial in the nation's Capitol.
Downtown revitalization work has also been performed over many years in the City
of Eoston, with dramatic results, as well as in other communities. For example,
in the city of Rockville, Maryland, downtown re -use included a major shopping
center --the financing vehicle for which was designed by Gladstone Associates
and resulted in public ownership.
DOSNlOZ DEVELOPMENT EXPERIENCE IN FLORIDA
Gladstone Associates has been privileged to have executed numerous consulting
assignr,e!1ts within the past year covering downtown development opportunities
in cities throughout the state of Florida. Work has been performed in Daytona
Beach, Or endo, St. Petersburg, and previously, in the City of Miami. Current-
ly, the fire. is conducting two central business district studies for cities in
the State, Clearwater and North Miami. Commercial development opportunities
similar to those vi su31 i zed for Downtown Miami have represented the functional
elements of the e studies typically.
HOTEL FEASIiILi`Y STUDIES
Gladstone Associates has performed many feasibility studies for transient
accood3tions throughout to United States and abroad. These engagements
include work for developer's such as Gerald D. Hines Interests (Developer's of
the famous "Galler'ia" in Houston, Texas, --containing the Houston Oaks hotel),
Gladstone aveocialas / 1401 Brickell Avenue, Suite 502, Miami, Florida 33131 / Telephone (305) 353.9500
international hotel developers such as Sefri (based in Paris, France and for
whom we have performed analyses of luxury hotel potentials), as well as hotel
operators including Holiday Inns and others. Increasingly, according to
industry trends, hotel operators are less inclined to be the owners of the
realty and that developer -financed and owned hotel properties are only managed
by operating companies. Our extensive experience in hotel analysis positions
us to fully understand not only the feasibility issues associated with hotel
operations but also the complex real estate factors involved in implementation.
The firm has conducted numerous hotel and motel studies throughout the State
of Florida in many locations, including the City of Miami. We recently con- .
pleted a preliminary feasibility study for a proposed major hotel in Downtown
Miami and, over the past few years have under taken other hotel feasibility
studies within the Central Miami area.
RETAIL SHOPPING ANALYSIS
Gladstone Associates has do extensive experience in retail trade analysis and
shopping center development. Clients of the firm include some of the nation's
largest retailers (e.g. Federated Department Stores, J. C. Penney, etc.) and
developer -investors -owners of shopping center facilities (e.g. Arlen Properties,
The Rouse Company, Taubman Company, etc.). Studies have typically covered the
spectrum of retail analysis --including store location studies, shopping center
development feasibility studies and analyses of specific merchandise and
merchandising potentials. Gladstone Associates is privileged to have executed
one of the largest retail studies ever undertaken in the United States --for
a special croup of retailers including Sears, J. C. Penney, Wards, Federated,
Allied, Nay Co., Nacy's, and Broadway -Hale --analyzing the financial character-
istics of retail facilities.
Of course, as part of the firm's Florida office practice, numerous retail
studies throughout the State and within the Miami area have been conducted.
RESTAURANT AALYSIS
As part of the firm's experience in project analysis and in evaluating
commercial potentials, the firm has conducted restaurant studies. There
are three basic categories of restaurant: convenience, standard, and
specialty. A standard restaurant typically has a "captive" i 3rket and is
subject to specific analysis accordinsly, whereas specialty restaurants
catering to a widely -based clientele frequently are not subject to market
analysis per se. O4inq to its proximity to the conference/convention center,
a restaurant which might be containeed within that facility would undoubtedly
experience a large portion of its trade from a captive source.
Restaurant studies performed by Gladstone Associates have included work for
both private and.public clients. As part of our recent analysis of the re-
use potentials (as a world trade centcr)of Coral Gables' famed Biltrncre Hotel,
a restaurant operation i•l.ts analyzed in terms of market potential and financial
feasibility. Gladstone Associates has been retained as consultants to the City
of St. Petersburg to analyze financial and development issues associated with
Gladstone associates / 1401 Br,ckeli Avenue, Suite SO2, M,dmi, Florida 33131 / Telephone (305) 358-9500
the restaurant (and retail) operations on the city -owned pier and, particularly,
in establishing negotiating relationships with the restaurant's operator, the
Marriott Corporation. These are but two examples of the firm's experience in
restaurant analysis in Florida but other work has been performed as well in
numerous locations throughout the United States. Additionally, a vice president
of Gladstone Associates has been an active and successful restaurateur and ha3
intimate and deep knowledge about this highly specialized business.
MIXED -USE DEVELOPMENTS
Gladstone Associates would regard real estate development issues as being
critical to the success of this proposed complex. Factors of scale, timing,
physical inter -relationships, financial structure and associated features
are visualized as being important elements of the analysis and of the process
of attracting and negotiating with prospective developers. The project as
visualized would fall into the category of one of the nation's most significant
emarging real estate trends: mixed -use developments. Throughout the United
States new (as well as older) mixed -use developments have become an important
focal point for Xetropolitan area development and, particularly, in forming the
nucleus for a new generation of activity in downtown areas. Gladstone Associates
has performed many mixed -use development feasibility studies and, perhaps most
significantly, has recently authored d definitive text on the subject. Enclosed
with this proposal (but for whi cn return would be appreciated) is "mixed -Use
Developments: New Ways of Land Use," Technical bulletin 71, published this
year by the Urban Land Institute. The work represented by this publication --
and its contents --will be of a special interest to the readers of this proposal
in regard to the development visualized for Downtown Miami.
* * * * * * * * * * * * * * * * * * * * * * * * * * *
Further description of the firm's work experience accompanies this letter.
Also enclosed is a resume of the undersigned, who would be the principal in
charge of the assignment (as manager of the Miami office), should Gladstone
Associates be awarded the study. Immeoi,;tely following is a statement of
recommended approach covering technical elements of the study to be performed.
very much appreciate the opportunity to submit this proposal and look
forward to the prospect of its discussiorrlith ene—Cttyas convenient.
�
Sipco �el; '
/ ' ,/ / /�1
L62/ tom
%✓✓✓~ d W. ,rth o ma s Wall
Senior Vice President
WTW:yjh
Encl.
Gladstone associates / 1401 Brickell Avenue. Suite. 502, Miami, Florida 33131 / Telephone (3051 358.9500
APPROACH TO THE STUDY
Gladstone Associates views the work to be performed as comprised of three
major elements:
-An analysis of the market potentials and financial characteristics
for the project's three major elements: hotel, shopping, and
restaurant
-An analysis of the real estate development economics which results
in a proforma program, tested overall for development practicality
and financial feasibility, which can result in the organized and
successful creation of the complex,...and
-Assistance in the procedures to attract, select and negotiate with
a developer who would produce the complex.
The first of these three items, the technical analysis, is quite straight-
forward. The outline immediately below sets forth an appropriate approach.
TECHNICAL ANALYSIS
I. HOTEL
A. Market Analysis
7. Historical occupancy levels existing downtown and Miami area
Hotels
2. Composition of transient clientele
-Business travelers
-Tourists
-Convention/Conference attendees
3. Rate structure and pricing elasticity (by type of clientele)
-including group rates
4. Future competition: new hotels in area
5. Demand analysis:
-"captive" i ar;:et--f ron Conference/Convention business
-other domand and trade potentials
6. Analyze other convention and conference center hotels as
examples, prototypes
-successes, failures in other cities
-operating and physical plant features
7. Design a hotel Program for do,into•.in Conference/Convention
Center Cor lex
-Bedroom Typos and „six
-Room rate structure
-Public area space quantification
-Food u Beverage
-Entertainment
•
• Meeting
-Lobby
-Commercial
-"Back room" space quantification
-Project occupancy rates
Financial Evaluation
Consult with project architect
-overall physical design concept
-accommodation studies (given market analysis
recommendation on space)
-including parking
-Building and improvement costs
2. Consult with City on prospective developer
-City sells site
-City leases Ground
-City retains ground, sells
-etc., etc.
3. Establish financial mode for hotel
.uho pays for what costs?
- who con.L.rols what equity?
-who owns, leases what facilities?
-Now much debt required, from what
at what cost?
4. Analyze operating characteristics
-Room sales revenue stream from
- Compute other revenues; Food &
commerical space; Wise; other
-Compute departmental operating costs
-Determine ",louse Profit,". other "bottom
financial results
5. Analyze Real Estate implications
operation
-allow for management fee
-Total project costs
6. Determine Financial Feasibility
.-Residual ground values supportable
-Debt service coverage
-Equity and investment returns
-Tax shelter potentials
RETAIL - SHOPPING
A. Market Analysis
1. Analyze "captive" market
2. Analyze "normative" market
-Miami area residents
-transients (esp. foreign)
3. Establish merchandise mix and space program
4. Project annual sales volumes
B. Financial Evaluation (similar to process for hotel)
1. Determine construction costs
2. Identify real estate interests (e.g. own vs. lease)
3. Establish financing mode
-il-
relationship(s)
or leases air rights
facility
source(s),
of the proposed hotel
market analysis
Beverage; meeting
line"
of development and
if contract -managed
rooms;
4. Project revenues and expenses
S. Compute debt service
6, Calculate "bottom line"
-return to land
-return to equity
III. RESTAURANT
A. Market Analysis
1. Evaluate successes and failures of restaurant operations in
other convention/conference centers throughout the country.
2. Program facility for subject complex
Number of seats, "covers", etc.
-Recommend quality, character; etc.
B. Financial Evaluation
1. Establish construction costs (confer with architects)
2. Determine real estate program
▪ Physical space envelope in relation to other project
elements
-relate particularly to food and beverage operations
which may be necessary fo its financial feasibility
3. Establish lease terms and revenue projections
4. Compute " pro fora"
-revenues
-operating and other costs (e.g. real estate taxes)
- determine financing mode and debt service
-calculate returns to equity and other financial
criteria
VA
REAL ESTATE ISSUES
AND
DEVELOPER SOLICITATION PACKAGE
Implicit within the technical tasks described above is a series of real
estate issues to be analyzed. The feasibility of a given land -use crust
relate to the overall develo;!:r nt progra:r and associated issues of ownership,
operation, financing, and legal form. These questions would be fully addressed
and issues related to a satisfactory solution resolved as part of the study.
The consultant mould expect to work closely with the City's staff in develop-
ing a real estate program for the Co,,,plex and in relating to corrmitr2ents which
have been or will be made for the operation of the Conference and Convention
Center.
Lastly, Gladstone Associates would prepare a suitable package describing the
feasibility of the intended uses and setting forth appropriate terms and
conditions to which prospective d::velopers would respond. We would also
establish guidelines for developer selection criteria and otherwise assist'
the City in preparing negotiating strategies. It is impossible to specify
exactly what the content of this element of the work program would consist
of in advance, prior to examining the real estate potentials, so these
strategies and criteria would be developed out of the preceding work
program tasks. Gladstone Associates, of course, has extensive experience
in working with public agencies to develop a package of attractive and
responsible project criteria and to assist the client in identifying,
screening, and negotiating with developers. Of course, the firm's extensive
experience in the real estate industry may assist in identifying individuals
and organizations who might care to assume a role in the execution of the
Complex proposed for Downtown Miami.
STUDY TIMETABLE
It is anticipated that the overall work program contained w.ithin•this•proposal
would require between sixty and seventy-five days to complete. Individual
elements of the study may, of course, be produced at intervening points
during the course of the study.
W. THO,MAS WALL
Senior Vice President
A member of the firm since 1967, Mr. Wall is currently in charge
of its regional office operations in Miami, Florida. As Senior Vice
President and a director of Gladstone Associates, he has been prin-
cipally responsible for the conduct of :any of the firm's major
consulting assignments within and uutside the United States. These
assignments have embraced such areas as regional economic analysis,
housing, urban development, impact analysis, fiscal evaluation, tourism
projects and new communities development.
Mr. Wall has had particular responsibility for developing
advanced technolog;es employed by the firms in the area of demographic
and economic -base analysis. His more recent assignments include the
supervision of comprehensive analyses of large-scale projects through-
out the southeastern United States, Florida and the Caribbean.
His extensive professional career includes prior economic consult-
ing in association with Dr. Preston Martin, retired Chairman of the
Federal Home Loan Bank Board. He was farrerly an executive with the
housing and urban development su5sidiary of International Basic Economy
Corporation, a Rockefeller -founded investment firm active in Latin
America and other developing nations.
Mr. Wall is a cum laude graduate of The University of Southern
California where he specialized in urban economic development and
related fields of academic study. He is also a frequent lecturer
before university, public and business groups in this country and
in Latin America.
Gtaustono aasociates / 1401 Lirrci.c: Avornto, Smto 5O2.': rurnr, F;orrlOa 33131 / Tete'�h ne �( c o ( ,5i 35895rm