C7A - Amend Miami New Drama Lease

Resolutions - C7 A

COMMISSION MEMORANDUM

TITLE:

A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE TO AMEND THE LEASE AGREEMENT BETWEEN THE CITY (LANDLORD) AND MIAMI NEW DRAMA, INC. (TENANT); SAID AMENDMENT, IN MATERIAL PART, TRANSFERRING FROM THE CITY TO TENANT THE RESPONSIBILITY FOR THE CONSTRUCTION OF THE IMPROVEMENTS FOR THE COLLINS PARK CULTURAL FACILITY, LOCATED IN THE CITY-OWNED COLLINS PARK GARAGE AT 340 23RD STREET; FURTHER, APPROVING THE TERM SHEET ATTACHED TO THE CITY COMMISSION MEMORANDUM ACCOMPANYING THIS RESOLUTION, CONTAINING THE ESSENTIAL TERMS OF THE AMENDMENT; AND FURTHER, AUTHORIZING THE CITY MANAGER TO NEGOTIATE THE AMENDMENT AND A CORRESPONDING GENERAL OBLIGATION BOND FOR ARTS & CULTURE (“GOBAC”) GRANT AGREEMENT, CONSISTENT WITH THE TERM SHEET, WITH THE FINAL AGREEMENTS BEING SUBJECT TO THE PRIOR APPROVAL OF THE MAYOR AND CITY COMMISSION.

RECOMMENDATION

The Administration recommends that the Mayor and City Commission authorize the Administration to prepare a Lease Amendment and corresponding General Obligation Bond for Arts & Culture (“GOBAC”) Grant Agreement with Miami New Drama, Inc. for the Collins Park Cultural Facility, based on the material terms outlined in the attached Term Sheet, with all final agreements subject to the approval of the City Commission.

BACKGROUND/HISTORY

Lease Approval  January 27, 2021: The Mayor and City Commission waived competitive bidding to accept an unsolicited proposal submitted by Miami New Drama, lnc. (MiND) for approximately 16,000 square feet of ground floor space, including interior space and exterior terrace areas, in the city-owned Collins Park Garage at 340 23rd Street. The proposal outlined the development of MiND’s primary performance venue and headquarters, including a 200-seat black box theater, rehearsal space, dressing rooms, and administrative offices, as well as ancillary commercial uses, including a standalone restaurant/café (the "Project").

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October 27, 2021: Resolution No. 2021-31914 approved the initial Lease Agreement between the City (Landlord) and MiND (Tenant), whereby MiND committed to independently funding its design and architectural services, while the City provided

funding and construction for buildout improvements, contingent on a $250,000 Tenant Contribution and appropriation of a $4.75 million Landlord Contribution.

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April 18, 2022: The Lease Agreement was executed.

Revised Funding Allocation November 2022: Miami Beach voters approve the GOBAC Program, which included a revised allocation of $7.67 million to the Project, following revision of Project buildout cost estimates.

July 26, 2023: Resolution No. 2023-32713 formally allocated $7.67 million, satisfying the City's funding commitment under the Lease.

Lease Modification Request August 6, 2024: MiND submitted a request to the City Manager for material modifications to the delivery model, including transferring full responsibilities for construction management and project execution to the Tenant, as well as increasing the Landlord Contribution from $4.75 million to $7.604 million, aligning with the GOBAC allocation.

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September 11, 2024: the Administration recommended the Mayor and City Commission, refer the Project to the Finance and Economic Resiliency Committee (FERC) for further discussion.

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November 8, 2024: the FERC transmitted a favorable recommendation of proposed Lease modifications, including conversion of the Project’s funding allocation into a GOBAC Program grant.

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November 20, 2024: In parallel with ongoing discussions on proposed Lease modifications, Resolution No. 2024-33398 approved the installation of a temporary artistic window covering. This installation, funded by the City, not only highlights MiND’s performances but also enhances the exterior aesthetics of the vacant leased premises.

ANALYSIS

The following sections outline the risks, key operational safeguards, and City oversight mechanisms relevant to the proposed Lease Amendment.

Programmatic and Cultural Value

The Project is envisioned as a cornerstone activation of the Collins Park Cultural District. Anchored by MiND’s arts programming, the facility is expected to drive year-round public engagement through theatrical performances, educational initiatives, and community events.

Under the executed Lease, the GOBAC allocation was intended to fund capital improvements related to the buildout of the Collins Park Cultural Facility, with the City retaining full control and oversight over Project execution.

While MiND has demonstrated success managing the programming of the Colony Theatre, development of a new cultural facility introduces different levels of operational and financial complexity. Therefore, any approval of the proposed Lease Amendment and associated Grant Agreement should be contingent upon financial safeguards, measurable performance benchmarks, and continued City oversight.

Shift in Project Delivery Model MiND’s request represents a significant shift from a city-managed construction model to one led by the Tenant. While this may ease administrative burden and potentially expedite delivery, it introduces risks commonly associated with third-party construction management, such as reduced City oversight on budgeting, construction quality, and project scheduling.

Although the G.O. Bond for Arts and Culture Program includes limited-scope grants, for example, funding theater equipment or digital upgrades, those grants do not compare in scale or complexity, and there is currently no precedent within the program for delegating full construction management responsibilities for a City-owned facility to a third-party grantee.

Accordingly, the proposed Lease Amendment and Grant Agreement would establish a precedent for capital delivery in publicly owned facilities and should be carefully evaluated for long-term implications.

Proposed City Safeguards To mitigate risks associated with the tenant-led construction management model, the Administration and MiND jointly developed critical safeguards to preserve the City’s financial and operational interests:

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execution of a Grant Agreement that incorporates provisions typically found in construction agreements, including reimbursement protocols, documentation standards, and performance expectations; inclusion of a cross-default clause linking the Lease and Grant Agreement to strengthen enforcement mechanisms; retention of City oversight rights with approvals at major design milestones (30%, 60%, 90%, and final construction drawings); required approval of draw requests by the City liaison, with accompanying backup documentation; and mandating that MiND employ a Construction Manager at Risk (CMAR) under a Guaranteed Maximum Price (GMP) contract, including cost containment and approval provisions.

Outstanding Considerations

1. Project Delivery Risk The Administration recommends that any deviation from a City-managed delivery model undergo a thorough evaluation of the Tenant’s capacity to manage scope, cost, and quality assurance. Although MiND has demonstrated a strong record in cultural programming, it has limited experience in overseeing large-scale, municipal capital improvement projects.

2. AiPP Waiver Request MiND must request a waiver from the City’s Art in Public Places (AiPP) contribution requirement. The G.O. Bond is subject to public bond covenants; accordingly, the waiver may be in the City’s best interest to ensure full allocation of available resources to core Project elements.

Term Sheet The Administration and MiND have developed a Term Sheet for a proposed Amendment to the Lease Agreement (Attachment A), which incorporates several key terms to protect the City’s financial and operational interests.



FISCAL IMPACT STATEMENT

City Financial Contribution: • $7.604 million in G.O. Bond Grant funding already appropriated. • No additional contribution is proposed. • Consistent with the original Lease, MiND remains solely responsible for all architectural and engineering (A&E) costs that exceed $250,000. This measure ensures that any overrun beyond this threshold is borne entirely by the Tenant.

Risk Mitigation Measures: • 10% of the Grant to be retained by the City as a contingency during construction, separate from the 5% contingency contained in the GMP Agreement. • 20% of project scope identified as discretionary for potential value engineering. • City retains final approval of key construction documents and disbursement drawdowns.

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

CONCLUSION

The Administration recommends that, upon careful evaluation of these implications, the City Commission authorize the Administration to negotiate the Lease Amendment and associated GOBAC Grant Agreement, with MiND, in alignment with the attached Term Sheet and subject to final City Commission review and approval.

Applicable Area

South Beach

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? Yes

If so, specify the name of lobbyist(s) and principal(s): Miami New Drama, Inc. / Nick Richberg

Department

Economic Development

Sponsor(s)

Co-sponsor(s)

Condensed Title

Accept Rec/Amend Lease Agreement w/ Miami New Drama, 340 23rd Street. ED

Previous Action (For City Clerk Use Only)