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HomeMy WebLinkAboutItem #27 - Discussion ItemCITY OP MIAMI. FLORIDA IN?ER•OFFICE MEMORANDUM Honorable Members of The City Commission M. L. Reese City Manager suuECTs JANip }2 ittakietz. 1.06` goz/v 'FILM Dinner Key Auditorium Lease REFERENCEss Attached Bibliography Items 1 through4/0 LOIUREst On December 1, 1962, the City entered into a five year Lease Agreement with Mr. Gorge J. MacLean for Dinner Key Auditorium. Various extensions and amendments to the original Agreement have resulted in the current Lease which will expire November 30, 1973. From time to time the City Administration has brought to the Commission's attention, various problems surrounding the control of the Dinner Key Auditorium Lease. ),/ Repeatedly, the Lessee has failed to observe major provisions of 4vj the Lease Agreement, resulting in substantial and consistent emphasis being placed upon the Dinner Key Auditorium Lease operation by the City Administration. The City Administration again finds it necessary to bring the Dinner Key Auditorium Lease to the attention of the City Commission. Consistently, the City has experienced difficulty in administering this Lease. No single City lease agreement compares in control complexity, in that the Lessee fails to operate within the provisions of the Lease Agreement. Mr. MacLean's actions have made it extremely difficult, if not impossible, to administer the Lease Agreement. THE LEASE AGREEMENT NOW IN EFFECT LUCIDLY STIPULATES THE MANNER IN WHICH THE FINANCIAL AFFAIRS OF DINNER KEY AUDITORIUM ARE TO BE CONDUCTED. Specifically, Mr. MacLean is required to submit a monthly statement of all income earned in con- junction with the operation of Dinner Key Auditorium. Mr. MacLean has consistently ignored this provision of the Lease. The Agreement requires Mr. MacLean to pay 10% of his gross revenue from auditorium jr INDEX ITEM f'\Q. o2`A Page 1 of 4 r r ,"> CA5 1l Cfri 4 Honorable Members of The City Commission rental and to assume the cost of all utilities consummed by the auditorium. The provisions of Mr. MacLean's Agreement with the City are quite clear with reference to payments of monies due the City. Mr. MacLean has ignored this provision and has failed to make prompt payment, resulting in continued outstanding monthly balances, averaging in excess of $7, 000. Through Mr. MacLean's action, he has voided the principal of providing the City with a $5, 000 cash performance bond. THE LEASE AGREEMENT CLEARLY, PLACES THE BURDEN ON MR. MAC LEAN TO ABIDE BY ALL SANITARY LAWS, FURNISH CUSTODIAL SERVICES AND TO COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE DEPARTMENT OF POLICE, FIRE AND BUILDING. Mr. MacLean, upon entering into the Lease Agreement, accepted the responsibility for keeping the Dinner Key Auditorium in a clean, sanitary, and safe condition. However, under Mr. MacLean's management, it appears the internal appearance and operation of the Dinner Key Auditorium has deteriorated so rapidly during the past nine years that prominent civic organizations are reluctant to continue holding events in the auditorium. The lack of housekeeping and routine custodial care appear to have changed the character of Dinner Key Auditorium. It is clearly the responsibility of Mr. MacLean to provide adequate custodial care. UNDER THE PROVISIONS OF THE LEASE, THE LESSEE IS RESPON- SIBLE FOR THE DAILY APPEARANCE OF THE PARKING LOT ADJACENT TO THE AUDITORIUM. IT IS HIS RESPONSIBILITY TO SEE THAT THIS PARKING AREA IS KEPT CLEAN AND NEAT AT ALL TIMES. Documentation is included in the reference portion of this report citing the numerous occasions the City Administration has advised Mr. MacLean of Page 2 of 4 Honorable Members of The City Commission his responsibility of keeping the parking lot area clean. On one particular occasion, the 1966 Horse Show, Mr. MacLean allowed some ten days to pass before policing the garbage in the Dinner Key Auditorium parking lot; this was not until after the City Administration exercised con- tinued and special efforts to force Mr. MacLean to remove the garbage. UNDER THE PROVISIONS OF THE LEASE, MR. MAC LEAN IS SPECIFICALLY PROHIBITED FROM UTILIZING THE PARKING AREA FOR ANY OTHER PURPOSES THAN PARKING WITHOUT THE PERMISSION OF THE CITY MANAGER. The City Administration has had to exercise extraordinary efforts to force Mr. MacLean to stop utilizing the parking area for other than what it is intended. This is best evidenced by the fact that on September 7, 1971, an entire building was moved onto the Dinner Key Auditorium parking lot for storage. Despite letters advising Mr. MacLean that permission has never been granted for him to store the building on the auditorium parking lot and requesting that he remove it immediately, the building still remains in its original location, in violation of the Lease Agreement. THE LEASE AGREEMENT NOW IN EFFECT, STIPULATES THAT THERE SHALL BE NO LIVING QUARTERS, NOR SHALL ANYONE BE PERMITTED TO LIVE ON THE PREMISES. Included with this report, are documented photographs showing that individuals were, in fact, living on the premises. It was not until strong admini- strative techniques were exercised, that Mr. MacLean ceased the practices of allowing individuals to use the Dinner Key Auditorium as a domicile. Page 3 of 4 a Honorable Members of The City Commission RECOMMENDATION The City Administration has frequently advised Mr. MacLean of Ms responsibilities under the provisions of the Lease Agreement, including building maintenance and cleanliness, rentals due the City and utility payments due the City. It can only be concluded, based upon Mr. MacLean's accumulated performance and the continued difficulty the City has encountered in administering the Lease Agre ernent, that the Dinner Key Auditorium Lease is unmanageable. Clearly, Mr. MacLean is not entitled to conduct functions at the Dinner Key Auditorium while consistently failing to observe the provisions of the Lease Agreement that require him to maintain accurate records, maintain the building in a clean and respectable condition, pay all rents due the City within seven days of holding an event, and to pay all utility bills when due. The Lease Agree- ment between the City of Miami and Mr. MacLean should be terminated; the control of the auditorium, its rental arrangements, and selection of concessionaires be returned to the City immediately. The nine year history of the Agreement demonstrates that it is not compatible with normal City practices. The City cannot allow this undesirable situation to continue and, therefore, it is incumbent upon the Administration to recommend to the City Commission termination of the Lease. Page 4 of 4 • ~ .~._��-- a a DINNER KEY AUDITORIUM LEASE HISTORY r INTRODUCTION The Dinner Key Auditorium came into being after the City moved into Dinner Kny in 1947. It has been utilized as a convention hall and exhibition hall since 1950. In addition to the initial unifying of the two hangers, a restaurant and storage room have been built on the sides of the building. The auditorium is used mainly for exhibition type events where much room on one level is desired. Under the management of the City of Miami, organizations such as the Home Builders Association, Miami Police Benevolence Association, Miami Firemen Benevolence Association, Miami Herald, University of Miami, Miami Boat Show, Florida Horse Show Associ- ation, Jehovah's Witnesses, Dade County Board of Public Instruction and the Miami Board of Realtors consistently utilized the Auditorium to conduct their events. However, since Mr. George J. MacLean assumed management of the Dinner Key Auditorium, it is apparent that there has been a decline in the utilization of Dinner Key Auditorium by these groups. The Auditorium now routinely houses a flea market (regular Sunday event), circuses and boxing events. -2- The past and present Lease Agreement2' 3 afford the City of Miami "the right to use the demised premises for a minimum of fifty-five days per year." In utilizing the fifty-five days available, the City has scheduled such regular events as the Boat Show, the Home Show, Science Fair and the Miami Board of Realtors Show, plus other miscellaneous events authorized by the Commission. Several of the regular events scheduled into Dinner Key Auditorium have sought exhibition facilities elsewhere in Dade County. For instance, the Travel and Sports Show, in 1968, made the decision to move to the Miami Beach Convention Hall. The Miami Herald, on March 6, 1968, quoted Larry Perl, promoter of the Miami International Sport, Vacation, and Travel Show, as saying "Too many complaints from exhibitors and patrons about poor conditions at Dinner Key, " besides, it's drafty, dirty and you can't make the place look good." It is this public dissatisfaction with the management of Dinner Key Auditorium that has forced long time users of the Dinner Key facilities to seek accomodations elsewhere, and to divert prospective clientele from presenting shows of which the City can be proud. 2October 17, 1962 - Resolution 34005 - Accepting the bid of George J. MacLean. 3December 1, 1962 - Lease Agreement for Dinner Key Auditorium, including Concession Stand, Restaurant and Bar between George J. MacLean and the City of Miami. -3- PART I FINANCIAL By resolution,on October 17, 1962, the City Commission accepted the bid of George J. MacLean for the Lease of Dinner Key Auditorium. Final terms were reached and the subsequent Lease Agreement was entered into on December 1, 1962. 3 Under the pro- visions of the original Lease Agreement, Mr. MacLean agreed as follows: (1) Pay the City 10% of gross or $5, 000/annum whichever is greater. (2) To submit a monthly statement to the City of Miami accounting for all rental and sales items covered under the Lease Agreement. 1 (3) To provide the City a performance bond in the amount of $15, 000. 1 2October 17, 1962 Resolution 34005 Accepting the bid of George J. MacLean. 3December 1, 1962 - Lease Agreement for Dinner Key Auditorium including Concession Stand, Restaurant and Bar, between George J. MacLean and the City of Miami. -4- 10. NON .•111111..11•111 (4) To pay for all utilities. 2 The City's internal auditor conducted a year end audit for the first year ending November 30, 1963, and his analysis contained the following information: Lease Covenant 1 requires the Lessee to submit a statement of all rentals, sales and any other income pertaining to this Agreement, and to pay all monies due on or before the first day of each month. The payment for January, April, May, June, July, August, September, and October, 1963 were not submitted on time15 The report of earnings and payment for November, 1963, was due on or before January 1, 1964. Mr. MacLean failed to report income of $56. 74 representing commission on public telephones in March, 1963.15 Mr. MacLean further failed to identify income of $175 representing forfeited rent deposit of the Committee to Preserve the American Way of Life, in October, 1963.15 Additionally, the records of the 2October 17, 1962 - Resolution #34005 - Accepting the bid of George J. MacLean. 15December 30, 1963 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1963. -5- Lessee failed to identify income of $488.00 from a Christmas Party for City Employees in December, 1962.15 Covenant 2 of the original Lease Agreement requires the Lessee to provide a performance bond in the amount of $15, 000.3 As of December 26, 1963, Mr. MacLean had not complied with this provision of the Lease Agreement. 15 Covenants 6 and 7 specify minimum hours of restaurant operation. 2 The records of the Lessee indicate that the restau- rant was not open during the month of October, 1963; also, inquiries produced information that the restaurant was closed on several occasions of consecutive days duration.l5 Covenant 17 requires the Lessee to make all records available to the City of Miami's internal auditor. Records were made available to the City internal auditor, however, the records were incomplete, contradictory and not subject to verification. 15 The following examples were drawn from the City of Miami's internal audit report of the Dinner Key Auditorium Lease Agree- ment for the year ending November 30, 1963: 3 December 1, 1962 - Lease Agreement for Dinner Key Auditorium including Concession Stand, Restaurant and Bar, between George J. MacLean and the City of Miami. 15 December 30, 1963 - Audit of Dinner Key Auditorium Lease for yea. ending November 30, 1963. -6- (1) No sales reported for the January Auto Show. (2) Restaurant and lounge sales reported to the City do not agree with the sales tax returns for four months. (3) Concession sales reported to the City do not agree with the sales tax returns for two months. (4) Restaurant and bar sales checks and/or cash register tapes were available for verification for only twenty six days of the entire year. (5) Concession sales and/or cash register tapes were available for verification for the months September, October, and November only. As of December 30, 1963, the time of the first year end audit of the Dinner Key Audi- torium operation, Mr. MacLean was in arrears to the City of Miami an amount of $5, 835. 38 ($1, 009.71 auditorium rental and $4, 825. 71 for utilities). 15 "December 30, 1963 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1963. -7- A At the end of each subsequent year's operation at the Dinner Key Auditorium, Mr. MacLean's records were audited 15,16,17,18,19,20,21,22 by the City's internal auditor. It was the finding of the internal auditor in each of the years that the opera- tion was served that Mr. MacLean was consistently in violation with covenants of the Lease Agreement, consistently, Mr. MacLean has been financially in arrears with payments to the City. Exhibit 2-1 is an itemized statement of monthly transactions recorded 15December 30, 1963 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1963. 16 January 14, 1965 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1964. 17January 4, 1966 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1965. 18 December 15, 1966 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1966. • 19 Janua ry 4, 1968 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1967. 2QJanuary 8, 1969 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1968. 21 January 14, 1970 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1969. 22 February 18, 1971 - Audit of Dinner Key Auditorium Lease for year ending November 30, 1970. -8- A A in the account of George J. MacLean for the Lease of Dinner Key Auditorium. It should be noted, as demonstrated by Exhibits 2-1, that Mr. MacLean has had arrears of monies due the City since December 31, 1962, the end of the first month's lease operation, through November 30, 1971, when this study was completed, in amounts ranging from a minimum of $1, 393. 74 to a maximum of $16, 605.19. Mr. MacLean has been advised by the City Admini- stration of his financial arrears consistently since the inception of the Lease. (See Exhibits 3-1, 3-5, 3-10, 3-14, 3-34, 3-35, 3-36, 3-38, 3-39, 3-48, 3-49, 3-53 and 3-56) The most recent correspon- dence to Mr. MacLean is a letter of December 2, 1971, from M. L. Reese, City Manager, advising Mr. MacLean that he is still in arrears in an amount of $4, 308. 96 plus the amounts due the City for November and December rentals. 78 The utilities consumed by Dinner Key Auditorium are clearly defined in the original and subsequent Lease Agreement as being the responsibility of George J. MacLean. Mr. MacLean has consistently been in arrears in Ms payment of utilities to the City. The following (Table I) has been excerpted from the year end audits conducted by the City of Miami's internal auditor showing the amount that is due the City at the end of each year's operation. 78December 2, 1971 - Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, acknowledging receipt of partial monies due the City of Miami and advising of the amounts still owed the City. -9- TABLE UTILITY PAYMENTS OVERDUE AS OF END OF T1fE YEAR AUDIT Year Ending Amount Overdue 1963 $4, 825. 67 1964 2, 678. 51 1965 7, 842. 85 1966 12, 148. 83 1967 2, 856. 51 1968 4, 695. 03 1969 3, 238. 75 1970 5, 895. 00 Source: Year End Audit Reports, 1963, 1964, 1965, 1966, 1967, 1968, 1969, and 1970. -10- It should be noted that the Lease Agreement specifically stipulates that utilities are payable monthly. Apart and separate from Mr. MacLean's financial obligation to the City is the obligation he incurs to City employees for their performance in an off -duty capacity. During the first year of operation, Mr. MacLean secured the services of off -duty police officers for a "Jive Session" sponsored by Exotic Records and held at Dinner Key Auditorium on September 1, 1963. The police officers were not compensated for their work by Exotic Records, nor were they compensated by Mr. MacLean. On September 16, 1964, Mr. P. W. Andrews, Assistant City Manager, corresponded with Mr. MacLean concerning payment due off -ditty ,rr ;;e officers for an event that was held over one year ago. 27 On October 15, 1964, Mr. MacLean responded to Mr. Andrews' letter stating, "After thorough investigation of the individuals and their assets and ability to pay, my attorney advises me that it is impossible to collect. Consequently, the police and others will have to write off these monies as a bad debt". 28 27September 16, 1964 - Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning payment to City of Miami's off duty police officers for services rendered during the"Jive Session", sponso red by Exotic Records on September 1, 1963. 28October 15, 1964 - Letter to P. W. Andrews, Assistant City Manager, from George J. MacLean, advising that it is impossible to collect the payment due off duty police officers for the above mentioned event. -11- A similar problem occurred in conjunction with the International Circus held at Dinner Key Auditorium from November 26, to December 5, 1971. Police officers and fire inspectors served in an off -duty capacity at the circus. They were paid by check drawn on the Miami Beach First National Bank, signed by Titto Stanfield, International Circus, Inc. The check was subsequently returned for non -sufficient funds. It was not until after the City initialed legal procedings to acquire the monies due the fire and police officers that Mr. MacLean agreed to pay the monies due. It can generally be summarized that Mr. MacLean has con- sistently- been delinquent in his financial obligation owed the City of Miami under the provisions of the original Lease Agreement entered into December 1, 1962, and subsequent amendments and extensions. It is clearly defined in all Lease Agreements that Mr. MacLean owes the City 10% of the gross revenue, not less than $5, 000 per year, and that he must substantiate his rental receipts by accurate records. Additionally, he is responsible for the payment of all utilities consumed by Dinner Key Auditorium. The City of Miami's auditor has consistently found in each of the year end audits that Mr. MacLean is deficient in his payments due the City. The internal auditor's summarization of the accounts receivable ledger -12- j for Mr, George J. MacLean for the rental of Dinner Key Auditorium has continuously shown that Mr. MacLean has had an outstanding balance owed the City of Miami since the end of the first months operation, December, 1962. -13- IIYIIM.111i 1III IIIIII i a PART II BUILDING MAINTENANCE AND HOUSEKEEPING Early in the history of the Dinner Key Auditorium Lease Agreement, the City Administration found it necessary to identify to Mr. MacLean, major areas in which he was not satisfying Ms obligation to the City under the provisions of the existing contract (See Exhibits 1-3, 1-6 and 1-8). On November 5, 1964, the City Manager received a memorandum from the Property Manager identifying discrepancies found on an inspection conducted November 4, 1964. The Lease Agreement in effect on the date of the inspection, specifically refers to the condition and cleanli- ness of the interior of the bui'., .-g. Paragraph 27 specifically states that. "the Lessee will keep in good condition, during the con- tinuation of the term herein, described interior of said demised premises and area thereof, including the building, doors, windows and awnings, if any, and will keep the same in good sound clean 3December 1, 1962 - Lease Agreement for Dinner Keay Auditorium including Concession Stand, Restaurant and Bar, between George J. MacLean and the City of Miami. -14- condition and repair. Ordinary wear and tear, fire, hurricane or other actions of God alone excepted, and will not suffer or per - emit any strip or waste of demised premises". 3 With reference to the maintenance of the facility's interior, the following items were discovered to have been neglected. 29 (1) Broken stools in the restaurant area. (2) Missing accoustical ceiling in the restaurant area. (3) Broken tile on floor in the restaurant area. (4) Kitchen equipment rusted. (5) Silverware rusty. (6) improper electrical panel (violation of the City Code). (7) One fourth of the overhead lights not working. (8) Dry commode (health hazard). 3December 1, 1962 - Lease Agreement for Dinner Key Auditorium, including Concession Stand, Restaurant and Bar, between George J. MacLean and the City of Miami. 29November 5, 1964 - Memorandum to M. L. Reese, City Manager, from R. F. Heiken, Property Manager, concerning an inspection of the Dinner Key Exposition Building - substantiating photographs are on file in the City Manager's Office. -15- Paragraph 31 of the original Lease Agreement further stipulates, "that there shall be no living quarters, nor shall anyone be permitted to live in or cook within the above described premises. " 3 During the November 4, 1964, inspection, definite evidence was discovered and graphically recorded that living quarters were being maintained. The City Manager's file contains polaroid photographs taken during the inspection specifically identifying the living facilities. �9 In reference to the cleanliness of the building as well as fire hazard condition, the following discrepancies were identified. A polaroid picture was made and is on file in the office of the City Managed() (1) Conbustible materials stored underneath stage. (2) Mattresses on floors in several locations. (3) Opened can goods partially empty in the kitchen area. (4) Empty beer cans in lockers. (5) Commodes left unflushed with human waste. (6) General area was rat infested. 3 December 1, 1962 - Lease Agreement for Dinner Key Auditorium, including Concession Stand, Restaurant and Bar, between George J. MacLean and the City of Miami. 29 November 5, 1964 - Memorandum to M. L. Reese, City Manager, from R. F. Helken, Property Manager, concerning the inspection of the Dinner Key Exposition Building - substantiating photographs are on file in the City Manager's Office. -16- • • The inspection was appropriately culminated with the statement from the Property Manager to the City Manager that "in general, there is no word that can be used to effectively describe the absolute filth that exists. The polaroid pictures which are attached do not dipict the actual scene. "29 The Assistant City Manager communicated with Mr. MacLean by letter noting all areas in which Mr. MacLean was not abiding by the particular sections of the Lease Agreement with reference to building maintenance and cleanliness. 30 Two weeks hence, Mr. MacLean's response was by letter, indicating that "we recognize that there is room for improvement in our housekeeping habits and we will make a sincere effort to accomplish this. " However, on March 16, 1965, the City Property Manager, again conducted an inspection of the Dinner Key Auditorium Parking Lot and discovered that an unauthorized concession stand was in operation adjacent to the �9November 5, 1964 - Memorandum to M. L. Reese, City Manager, from R. F. Helken, Property Manager. concerning an inspection of the Dinner Key Exposition Building - substantiating photographs are on file in the City Manager's Office. 30November 6, 1964 - Letter to George J. MacLean from P. W. Andrews, Assistant City Manager, concerning arrangements that were arrived at during an inspection of Dinner Key Auditorium on November 5, 1964. -17- auditorium. Mr. MacLean was notified of this fact, advised that it was not in accordance with his Lease Agreement and was requested to immediately move the concession stand33 On July 22, 1965, the City Manager personally inspected the parking area, directly behind the auditorium and found Mr. MacLean again in violation of the Lease Agreement by allowing the storage of carnival equipment. Additionally, the City Manager observed the unsightly condition of paper and cans strewn about and an old soft drink storage chest and portable bleacher equipment poorly stored. Mr. MacLean was requested by letter to immediately remove the semi -trailer truck storing carnival equipment, and clean up the exterior of the Dinner Key Auditorium.34 Correspondence has been continuous from the City Manager to Mr. MacLean concerning items of interior building maintenance and interior and exterior cleanliness, similar in nature to those discrepancies listed above. Documentary photographs have been taken and brought to the attention of Mr. MacLean (See Exhibits 3-13, 33 March 16, 1965 - Letter to George J. MacLean, Dinner Key Auditorium, from R. F. Helken, Property Manager, concerning an unauthorized, portable concession stand in operation adjacent to the auditorium. 34 July 22, 1965 - Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager concerning the unauthorized storage of carnival equipment in the parking area directly behind the Dinner Key Auditorium. -18- t 41104 3-16, 3-1?, 3-19, 3-20, 3-21, 3-22, 3-23, 3-28, 3-30, 3-43, 3-46, 3-47, 3-49, 3-50, 3-51, 3-55 and 3-57) in an effort to make him cognizant of his obligation, and do what is necessary for him to comply with the Lease Agreement. In addition to the correspondence concerning cleanliness and maintenance to Mr. MacLean, the City has received correspondence from private individuals, and from public corporations concerning their dissatisfaction with the condition of Dinner Key Auditorium. Mr. Bill Ward, Service Sales Manager of the Miami Herald Publishing Company, communicated his opinion of Dinner Key Auditorium to M. L. Reese, City Manager, on January 27, 1970; "...the general cleanliness of the facility is abominable. There are piles of dirt on the floors, in the corners, and generally throughout the building. The men and women's rooms are hazardous to health and are not fit for a pig sty. It seems to me to be a crying shame to bring the general public into a City owned facility under these conditions. "47 Another severe complaint regards the "unsightly destruction of many parking spaces by those bleacher seats right out in the middle of the parking lot. It seems to me that some provisions could be made to 47January 27, 1970 - Letter to M. L. Reese, City Manager, from Bill Ward, Service Sales Manager, the Miami Herald Publishing Company, concerning his dissatisfaction with the condition of Dinner Key Auditorium. -19- move these at least where they do not destroy the physical configuration of the facility and, at the same time, do not destroy more parking spaces which the exhibitor certainly is paying to be able to utilize. "19 On February 17, 1970, the City Manager received a duplicate copy of a letter from Avril Lewendon addressed to the Ice Follies Administration concerning his dissatisfaction with the Dinner Key Auditorium, specifically two major items: One, "instead of a regular padded seat in the area chosen by us, we were offered dirty old bleachers, complete with splinters... 1,20 The second exception was the filth of the ladies restroom. "Just inside of the main entrance, it was filthy and most certainly would not pass inspection by a health department. I have traveled many miles, both here and in Europe, and have never seen such a disgusting place in my life, just plain stinking filthy. "20 Additional correspondence concerning dissatisfaction with the management of Dinner Key Auditorium has been received by the City Manager (See Exhibit 49). 20February 17, 1970 - Letter from Avril Lewendon to Thomas K. Scalien, President of Ice Follies Administration, concerning dissatisfaction with the condition of Dinner Key Auditorium. -20- Closely akin to building. housekeeping and maintenance are the instances general safety requirements have not been afforded the public when utilizing the facility. On July 26, 1968, a fire occurred in conjunction with an event at Dinner Key Exposition Hall. An inspection was made by the Chief of Fire Prevention, City of Miami Fire Department, a fire photographer and members of the Property Management Office on Monday, July 29, 1968. Four major discre- pancies were discovered (Substantiating photographs on file in the Office of the City Manager). (1) The Fire occurred in apparent living quarters which are not permitted by the terms of the Lease. 44, b (2) An eight inch block wall had been breached between locker rooms and office space in the north portion of the building (not permitted by the terms of the Lease Agreement). 44, 6 44August 5, 1968 - Letter to George J. MacLean, Dinner Key Auditorium, from R. F. Heiken, Property Manager, itemizing four major discrepancies found during a fire prevention inspection substantiating photographs on file in the City Manager's Office. 6November 13, 1967 - Resolution 39157 - Authorizing and directing the City Manager to execute a lease agreement commencing December 1, 1967, for a period of three years. Agreement never executed. -21- (3) Panic hardware was missing from some exit doors, while other hardware was in need of repair. 44 (4) General cleanup is very apparently needed. 44 It was necessary to advise Mr. MacLean, by letter, on June 17, 1970, concerning the potentially unsafe and explosive set created in and around Dinner'Key Auditorium during the presentation of rock and roll events. "The seating, while completely safe and adequate for a sedate crowd watching another type of event, becomes dangerous when a maximum crowd of excited young people began to jump and dance on it during a rock and roll show. Also, the seating is limited, which creates crowd control problems when young people arrive to purchase box office tickets and are told that the event is sold out. The doors and windows in the structure are not suitable for handling the crowds of size and composition often encountered. "63 Mr. MacLean has periodically received correspondence from the City of Miami relating to the safety of the Auditorium and copies of that correspon- dence are included in the reference portion of this report (see Exhibits 44August 5, 1968 - Letter to G orge J. MacLean, Dinner Key Auditorium, from R. F. Helken, Property Manager, itemizing four major discrepancies found during a fire prevention inspection - substantiating photographs on file in the City Manager's Office. -22- INN 48, 50, 52, 53, 54 and 76). Where applicable, substantiating photographs were taken and are on file in the Office of the City Manager. The numerous instances cited snakes it abundantly clear that Mr. MacLean has consistently failed to adhere to the provisions of the Lease Agreement pertaining to building cleanliness and safety. The City Administration has not met with success in persuading Mr. MacLean to comply with the Lease Agreement. 63June 17, 1970 - Letter to George J. MacLean, Dinner Key Auditorium from M. L. Reese, City Manager, concerning unsafe conditions in and around Dinner Key Auditorium. -23- )^1 PART III LEASE AGREEMENTS Since the time the City Commission accepted the bid of George J. MacLean for the Lease Agreement of Dinner Key Auditorium, 2 it has been the policy of the City to make the management of Dinner Key Auditorium as simple as possible. Mr. MacLean's responsibilities under the Lease Agreement were clearly defined in the original Lease Agreement of December 1, 1962.3 The first major difficulty encountered by Mr. MacLean was providing the City a $15, 000 performance bond, as agreed to in Paragraph 2 of the original Lease Agreement, as identified previously in this report. In fact, Mr. MacLean failed 2October 17, 1962 - Resolution 34005 - Accepting the bid of George J. MacLean. 3December 1, 1962 - Lease Agreement for Dinner Key Auditorium, including Concession Stand, Restaurant, and Bar, between George J. MacLean and the City of Miami. -24- to post a performance bond during the entire first year of operation, therefore, on March 4, 1964, a resolution was introduced by Mr. Aronovitz and was subsequently adopted by the Commission to substitute the original Lease Agreement by allowing Mr. MacLean to deposit with the City of Miami, an amount of $5, 000 in lieu of the cash performance bond. 4 On November 13, 1967, the City Commission adopted Resolution 39157 directing the City Manager to enter into an agreement beginning December 1, 1967, and terminating November 30, 1970, for the lease of Dinner Key Auditorium. The Agreement was drawn up, was approved by the law department, the City Manager, and the City Clerk; however, Mr. MacLean never signed the rental agreement' No reason for not signing, nor any exception 4March 4, 1964 - Resolution #35442 - Permitting a cash bond in lieu of a performance bond from G•vorge J. MacLean. 6November 13, 1967 - Resolution #39157 - Authorizing and directing the City Manager to execute a lease agreement commencing December 1, 1967, for a period of three years. Agreement never executed. of the new Agreement was ever formally brought tb the City Manager or the City Commission. On June 12, 1969, Mr. MacLean personally appeared before the City Commission to discuss basketball at Dinner Key Audi- torium. It was his proposal that the City financially participate 4, in the upgrading of Dinner Key Auditorium. The capital improve- ? ment was to attract the Floridian Basketball Team. There are fifteen pages of extractions from the minutes of the June 12, 1969, meeting concerning the upgrade of Dinner Key Auditorium, culminated by Resolution 40723, authorizing the expenditure of $15, 000 from the contingent fund for Dinner Key Auditorium refurbishment in order to accomplish the execution of an agreement with the Miami Floridians and University of Miami for basketball games to be played in the Auditorium. 8 7June 12, 1969 - Minutes of the Commission Meeting whereby George J. MacLean is requesting the City to financially participate in upgrading Dinner Key Auditorium to attract the Floridian's Basketball Team. 8June 12, 1969 - Resolution 40723 - Authorizing the expenditure of $15, 000 from the contingent fund for Dinner Key Auditorium improvements in order to accomplish the execution of an agreement with the Miami Floridians and University of Miami for basketball games to be played at said facilities. '"1 r"1 Mr. MacLean appeared before the Commission again on January 8, 1970, requesting reimbursement of expenses he incurred. Again, after lengthy discussion, 11 the City Commission adopted Resolution 41213 to reimburse Mr. MacLean in an amount not to exceed $14, 900 for the refurbishment of Dinner Key Auditorium. 11 Mr. MacLean was subsequently reimbursed $12, 600 for his actual! expenses incurred. 11 Since being reimbursed, Mr. MacLean has made no additional request for reimbursement under the provisions of Resolution 41213. Immediately following the adoption of Resolution 41213, M. L. Reese, City Manager, made the proposal that another Resolution be adopted, which would amend Mr. MacLean's contract so the City would be reimbursed within seven days after an event is held, the percentage that the City is due. Mr. MacLean formally agreed and it is included in the minutes of the meeting, "I would agree to that, certainly". Subsequently, Resolution 41214 amended the existing Lease Agreement to provide that the City be reimbursed the amounts due within seven days after holding the various events at Dinner Key Auditorium. 12 Again, as pointed out in this report, Mr. MacLean 11January 8, 1970 - Resolution 41213 - Directing that George J. MacLean be reimbursed for expenses incurred, an amount not to exceed $14, 900 for the refurbishing of Dinner Key Auditorium. 12January 8, 1970 - Resolution 41214 - Amends the Lease Agreement to provide that the City be reimbursed the amounts due within seven clays after holding the various events at Dinner Key Auditorium. .27 -2S'- eiL do_ has failed to pay the City the monies due within the specified time (see internal auditor's year ending reports for 1963, through 1970, inclusively). It can be concluded from Mr. MacLean's performance of his obligations under the Lease Agreements he entered into with the City of Miami, that he has continuously been in violation of Paragraph 13, providing the Lessee pay for all utilities,10 and Paragraph 15, requiring the Lessee to maintain and furnish the City with all pertinent data pertaining to his operation. There have been major violations of Paragraph 14, requiring the Lessee to furnish all custodial and janitorial services required to maintain the auditorium in a clean and sanitary condition. 10 Documentation shows that Mr. MacLean has had numerous violations of Paragraph 18 (complying with all applicable rules and regulations of the Building Department and the Department of Public Safety (police and fire division) of the City of Miami for the purpose and use for which he 10 intends to have this building). 10 November 21, 1969 - Lease Agreement for Dinner Key Auditorium, including Concession Stands, Restaurant and Bar for the six year period beginning December. 1, 1967, and ending November 30, 1972. i Paragraph 28 of the current Lease Agrcerpent provides that, in the event the Lessee should not pay the rent or comply with other terms of the Lease Agreement, then the City shall have the right to terminate. 10 Paragraph 29 also provides that the Lessee agrees to pay the City reasonable Attorney's fees. 10 t Therefore, it is the recommendation of the City Admini- stration that the Lease of the Dinner Key Auditorium to Mr. George J. Mac Lean be terminated immediately under the provisions of Paragraph 28 of the Lease Agreement now in effect. Mr. MacLean has clearly demonstrated that he does not and will not abide by the provisions of the Lease Agreement. He continually: (1) has been in arrears of monies due the City for rental of Dinner Key Auditorium, (2) has been in arrears of monies due the City for utilities consumed by Dinner Key Auditorium, (3) has failed to abide by the provisions of Lease Agreements requiring that he provide all janitorial services at the Auditorium, 10November 21, 1969 - Lease Agreement for Dinner Key Auditorium, including Concession Stands, Restaurant and Bar, for the six year period beginning December 1, 1967, and ending November 30, 1973. (4) has failed to furnish the City all pertinent data pertaining to his operation and (5) has used the parking areas for other than approved purposes. No other Lease Agreement in the City's history has caused comparable problems. The Lease Agreement with Mr. MacLean has gone from being difficult to manage to its current situation of being unmanageable and, therefore, it is incumbent upon the City Administration to recommend that the Lease Agreement be cancelled. romiN BIBLIOGRAPHY (1) December 20, 1962 City Attorney's advice on Dinner Key Auditorium Lease Agreement, including supporting documents. (2) October 17, 1962 Resolution 34005 - Accepting the bid of George J. MacLean. (3) December 1, 1962 Lease Agreement for Dinner Key Auditorium including Concession Stand, Restaurant and Bar between George J. MacLean and the City of Miami. (4) March 4, 1964 Resolution 35442 - Permitting a cash bond in lieu of a performance bond from George J. MacLean. (5) March 11, 1964 Amended Lease Agreement consistent with Resolution 35442. (6) November 13, 1967 Resolution 39157 - Authorizing and directing the City Manager to execute a lease agreement commencing December 1, 1967, for a period of three years. Agreement never executed. (7) June 12, 1969 (8) June' 12, 1969 Minutes of the Commission Meeting whereby George J. MacLean is requesting the City to financially participate in upgrading Dinner Key Auditorium to attract the Floridian's Basketball Team. Resolution 40722 - Extending the Dinner Key Auditorium Lease Agreement until November 30, 1973. (9) June 12, 1969 Resolution 40723 - Authorizing the expenditure of $15, 000 from the contingent fund for Dinner Key Auditorium improvements in order to accomplish the execution of an agreement with the Miami Floridians and University of Miami for basketball games to be played at said facilities. (10) November 21, 1969 Lease Agreement for Dinner Key Auditorium, including Concession Stands, Restaurant and Bar, for the six year period beginning December 1, 1967, and ending November 30, 1973. (11) January 8, 1970 Resolution 41213 - Directing that George J. MacLean be reimbursed for expenses incurred, an amount not to exceed $14, 900 for the refurbishing of Dinner Key Auditorium. (12) January 8, 1970 Resolution 41214 - Amends the Lease Agreement to provide that the City be reimbursed the amounts due within seven days after holding the various events at Dinner Key Auditorium. (13) February 2, 1970 Amendment to Lease Agreement authorized by Resolution 41214. (14) December 6, 1971 Memorandum from the Director of Internal Audit to City Manager recording the Monthly Transactions of the Accounts Receivables from December 31, 1962, to November 30, 1971. (15) December 30, 1963 Audit of Dinner Key Auditorium Lease for year ending November 30, 1963. (16) January 14, 1965 Audit of Dinner Key Auditorium Lease for year ending November 30, 1964. (17) January 4, 1966 Audit of Dinner Key Auditorium Lease for year ending November 30, 1965. (18) December 15, 1966 Audit of Dinner Key Auditorium Lease for year ending November 30; 1966. • (19) January 4, 1968 Audit of Dinner Key Auditorium Lease for year ending November 30, 1967. (20) January 8, 1969 Audit of Dinner Key Auditorium Lease for year ending November 30, 1968. (21) January 14, 1970 Audit of Dinner Key Auditorium Lease for year ending November 30, 1969. (22) February 18, 1971 Audit of Dinner Key Auditorium Lease for year ending November 30, 1970. (23) July 10, 1963 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning an 80% decline in revenue over prior years experience. (24) July 18, 1963 Letter to P. W. Andrews, Assistant City Manager, from George J. MacLean, Dinner Key Auditorium, advising that the 80% drop in revenue was due to "new people, inexperienced in the type of com- modities, poor and inoperative equipment, plus from limited egress and ingress to the concession stands..." (25) January 30, 1964 Memorandum from M. L. Reese, City Manager, to the City Commission recommending a change in Resolution 33530, allowing forty-five days between competing shows, rather than sixty days. (26) January 30, 1964 Memorandum from M. L. Reese, City Manager, to the City Commission, Subject, George J. MacLean, Dinner Key Auditorium Lease - Review of year end audit to November 30, 1963. (27) September 16, 1964 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning payment to City of Miami's off duty police officers for services rendered during the "Jive Session", sponsored by Exotic Records on September 1, 1963. (28) October 1, 1964 Letter to P. W. Andrews, Assistant City Manager, from George J. MacLean, Dinner Key Auditorium, advising that it is impossible to collect the payment due off duty police officers for the above mentioned event. (29) November 5, 1964 Memorandum to M. L. Reese, City Manager, from R. F. Helken Property Manager, con- cerning an inspection of the Dinner Key Exposition Building . substantiating photographs are on file in the Citr Manager's Office. (30) November 6, 1964 Letter to George J. MacLean from P. W. Andrews, Assistant City Manager, concerning arrangements that were arrived at during an inspection of Dinner Key Auditorium on November 5, 1964. (31) November 19, 1964 Letter to P. W. Andrews, Assistant City Manager, from George J. MacLean, Dinner Key Auditorium, itemizing results of a health inspection, hook up of an electric stove and the housekeeping habits. (32) February 1, 1965 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning year end audit of Lease and deficiency in amounts collected. (33) March 16, 1965 Letter to George J. MacLean, Dinner Key Auditorium, from R. F. Helken, Property Manager, concerning unauthorized, portable concession stand in operation adjacent to the auditorium. (34) July 22, 1965 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning the unauthorized storage of carnival equipment in the parking area directly behind the Dinner Key Auditorium. (35) October 8, 1965 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, itemizing four discrepancies existing on the grounds of the auditorium - substantiating photographs on file in the Office of the City Manager. (36) January 13, 1966 (37) January 26, 1966 (38) April 19, 1966 (39) February 10, 1967 (40) January 9, 1968 (41) July 22, 1968 (42) July 26, 1968 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning arrears due the City for the operation during the third year of the Lease Agreement. Letter to George J. MacLean, Dinner Key Auditorium, from R. F. Helken, Property Manager, concerning broken jalousie windows separating the restaurant from the main auditorium. Memorandum to file from P. W. Andrews, Assistant City Manager. Photographs showing that garbage had not been removed from the Miami Horse Show, an event which took place on April 2, and 3, 1966. Photographs on file in the Office of the City Manager. Letter to George J. MacLean, Dinner Key Auditorium, from R. F. Heiken, Property Manager, concerning objections of the City relating to lease covenant. Five exhibitions are listed. Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning arrears in payments due the City for the operation of Dinner Key Auditorium during the fifth year of the Lease Agreement. Photographs on file in the Office of the City Manager itemizing housekeeping discrepancies in the area immediately surrounding Dinner Key Auditorium. Photographs on file in the Office of the City Manager itemizing housekeeping discrepancies and other discrepancies found on the interior :)f Dinner Key Auditorium. (43) July 29, 1968 (44) August 5, 1968 Photographs on file in the Office of the City Manager itemizing housekeeping discrepancies and other discrepancies found on the interior of Dinner Key Auditorium. Letter to George J. MacLean, Dinner Key Auditorium, froth R. F. Heiken, Property Manager, itemizing four major discrepancies found during a fire prevention inspection - substantiating photographs on file in the City Manager's Office. (45) June 5, 1969 Photographs of discrepancies found on the interior of Dinner Key Auditorium. (46) December 19, 1969 Letter to George J. MacLean, Dinner Key Auditorium, from R. L. Jennings, Property Manager, concerning arrears due the City in the operation of Dinner Key Auditorium. (47) January 27, 1970 Letter to M. L. Reese, City Manager, from Bill Ward, Service Sales Manager, the Miami Herald Publishing Company, concerning his dissatisfaction with the condition of Dinner Key Auditorium. (48) January 29, 1970 Memorandum to Dewey Yates, Chief of Fire Prevention, from P. D. Saunders and B. F. Giles, Fire Commission, concerning the violation of the Code of the City of Miami in conjunction with an event held at Dinner Key Auditorium on January 28, 1970. (49) February 4, 1970 Letter to M. L. Reese, City Manager, front Russell Nahrn, President, Trade Show Presen- tation, Inc., concerning his dissatisfaction with the management of Dinner Key Auditorium during the Miami International Travel Camping Show. (50) February 9, 1970 Memorandum to W. R. Bailey, Director of Finance, from P. W. Andrews, Assistant City Manager, concerning violations of the Code of the City of Miami at Dinner Key Auditorium - substantiated by a letter to Mr. MacLean, Dinner Key Auditorium from C. G. Galloway, Bureau of Fire Prevention. 36. (51) February 17, 1970 Letter from Avril Lewendon to Thomas K. Scallen, President of Ice Follies Administration, concerning dissatisfaction with the condition of Dinner Key Auditorium. (52) March 12, 1970 Photographs on file in the Office of the City Manager itemising housekeeping and other discrepancies found on the interior of Dinner Key Auditorium. (53) March 20, 1970 Letter to George J. MacLean from C. G. Galloway, Bureau of Fire Prevention, concerning Mr. MacLean's failure to correct previously identified dangerous conditions. (54) March 23, 1970 Letter from L. L. Kenney, Fire Chief, to George J. MacLean, Dinner Kerr Auditorium, requesting Mr. MacLean to correct discrepancies noted by the Fire Marshall at the Blood, Sweat and Tears Event, held in the Dinner Key Auditorium on March 7, 1970. (55) April 2, 1970 (56) April 2, 1970 (57) April 24, 1970 (58) May 1, 1970 Memorandum from M. L. Reese, City Manager, to the City Commission concerning the Dinner Key Auditorium Lease. Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, advising Mr. MacLean of his violations of the of the Lease Agreement in many respects. Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, advising of further outstanding financial obliga- tions owed to the City of Miami. Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, concerning arrears due the City of Miami for utilities and sewage disposal. (59) May 4, 1970 Memorandum from M. L. Reese, City Manager, to the City Commission advising of communica- tions with George J. MacLean, Lessee of Dinner Key Auditorium, placing him on notice that certain acts are required by him in order to comply with the provisions of the Dinner Key Auditorium Lease Agreement. (60) May 19, 1970 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, advising Mr. MacLean of the need to fulfill Ms financial obligation to the City of Miami. (61) May 25, 1970 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, advising of arrears due the City of Miami for utility bills. (62) May 28, 1970 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, objecting to the performance of the Grand Funk Railroad. (63) June 17, 1970 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning unsafe conditions in and around Dinner Key Auditorium. (64) July 22, 1970 Memorandum from M. L. Reese, City Manager, to the City Commission concerning an incident that occured June 21, 1970, in conjunction with a rock and roll event. (65) November 2, 1970 Photographs on file in the Office of the City Manager itemizing housekeeping and other discrepancies found on the interior of Dinner Key Auditorium. (66) November 9, 1970 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning the use of the Auditorium for living quarters. --\(6?) November 24, 1970 Mernorandutn to Alan H. Rothstein, City Attorney, from M. L. Reese, City Manager, concerning Lease violattuns at Dinner Key Auditorium. (68) January 26, 1971 photographs on file in the Office of the City Manager itemizing housekeeping discrepanLies in the area immediately surrounding Dinner Key Auditorium. (69) January 26, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from P. W. Andrews, Assistant City Manager, con- cerning poor housekeeping in the area immediately surrounding Dinner Key Auditorium. (70) March 16, 1971 (71) May 11, 1971 Letter to George J. Mac Lean, Dinner Key Auditorium, front M. L. Reese, City Manager, concerning arrears owed to the City of Miami. Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning con- tinued non-compliance with any of the Lease provisions mentioned in the March 16, 1971 Letter. (72) June 4, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning non- compliance with the Lease Agreement. (73) August 3, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning non- compliance with the Lease Agreement. (74) August 13, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning financial arrears owed the City of Miami. (75) October 5, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, itemizing financial deficiencies still owed the City of Miami. (76) November 23, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from Robert E. Ferencik, Director of the Building Department, concerning defective bleacher seats. (77) November 30, 1971 Letter to George J. MacLean, Dinner Key Auditorium, from M. L. Reese, City Manager, concerning non- compliance with the Lease Agreement. (78) December 2, 1971 Letter to George J. MacLean, Dinner Key Auditorium from M. L. Reese, City Manager, acknowledging receipt of partial monies due the City of Miami and advising of the amount still owed the City. (79) December 7, 1971 Memorandum to file from P. W. Andrews, Assistant City Manager, photographic history of the conditions existing at Dinner Key Auditorium during the holding of the International Circus lrvent scheduled from November 26, - December 12, 1971. -41-