Clerk's Office"

R90 Status Report On The Letter Of Intent (LOI)Negotiated Between The City Of Miami
Beach, The Miami Beach Redevelopment Agency And RDP Royal Palm Hotel Limited
Partnership ("
RDP').
Office)
Manager'
s
City
ACTION: Discussion held. Mayor Dermer to meet with Mr. Peebles to give a good faith effort
to see if an agreement can be reached and to report back at the next Commission meeting.

City

of Miami Beach -

City

that this is a report on the status of the LOI and

referenced several letters Mr. Peebles has transmitted to the City. One of the letters was
distributed at today's Commission Meeting. He stated that the way he reads the letter, Mr.

Jorge Gonzalez, City Manager, stated

Peebles is asserting that his claim exceeds the amount of rent owed to the City, therefore, he
should not have to pay the City rent until such time as the claims balance out. He is proposing
to begin current rent payment as of July 1, 2003. This clearly deviates from the LOI. The
Administration is here to receive any guidance the Commission would like to give.
Discussion held.

Mayor Dermer asked if the original LOI

was

presented

to Mr. Peebles

again

would he

accept

it.

Discussion continued.
Commissioner Cruz stated that in
willing to accept the LOI

would be

Mr. Peebles

recent conversation with Mr. Peebles, he asked him if he

presented at the last Commission Meeting. He stated that

as

stated, no.

Main motion made

presented

by Commissioner

at the 4130/03 Commission

to Mr. Peebles; seconded

Bower to approve the original Letter of Intent (LOI)

Meeting without any of the changes and transmit it

by Commissioner Gross. Discussion continued.

Commissioner Cruz stated that the Mayor should meet with Mr. Peebles Commissioner Gross
agreed that the Mayor should take the original LOI to Mr. Peebles to see if he is willing to sign
it.

Steinberg stated that

potential problems
explained

Commissioner
He

the

against this because of the tolling agreement.

tolling agreement. Discussion was held.

he will vote
with the

Joel Minsker, Esq.,and the City's outside counsel, stated that the tolling agreement was to toll
the statute of limitation during negotiations. If negotiations are started and the LOI is signed,
and then negotiations breakdown, that means the tolling agreement gets terminated and if you
look at the tolling period, May 8, 2002 to the day the final negotiations are stopped, the City has

stayed

the statute of limitations. On that

day

Mr. Peebles is back to

May 8,2002.

Murray Dubbin, City Attorney, stated that the statute of limitations is in effect right now. There
are two (2)claims he is aware of that he would want to assert: 1) The environmental claims,
and 2) His claim that he was kept from examining the building before he bought it. These
Printed by the City Clerk's Office
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2003
6/Time Printed: 07
Date Printed: 6/
Source Database:

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City of

Miami Beach -

City Clerk's Office"

would be four year statutes from the date of

has run. Discussion continued.
Commissioner

agreement

Steinberg

discovery

and he stated that he thinks the statute

change the effective date of the tolling

opposed to the May 8,2002].
amendment; amendment seconded by

offered the amendment to

to be the date of the

signing

of the LOI [as

Commissioner Bower did not accept the

Commissioner Gross. Discussion continued.

the amendment: Ballot: 25;Opposed: Mayor Dermer, Vice-Mayor Garcia and

Commissioners Bower, Cruz and Smith. Amendment motion failed.

Vote

on

Jorge Gonzalez, City Manager, advised that a time frame be added

next Commission Meeting. Commissioner Bower agreed.

to the motion such

as

the

Murray Dubbin, City Attorney, stated that because of the length of time to the next Commission
meeting, the Mayor should transmit the results of his meeting with Mr. Peebles if any actions
need to be taken.
Vote

on

the main motion: Ballot Voice vote: 34;Opposed: Mayor Definer and Commissioners

Cruz, Smith and Steinberg. Motion failed.

Discussion continued.
Motion made
on

by

Commissioner Gross to instruct the

the lease; seconded

by

Commissioner

Legal Department

to collect the rent

Steinberg. Discussion continued.

Commissioner Cruz stated that Mayor Dermer, along with the City Manager, should.meet with
Mr. Peebles to establish a dialogue and see if an agreement can be reached.

Mayor Dermer stated that he would meet with Mr. Peebles and give it a good faith effort to
if an agreement can be reached and to report back at the next Commission meeting.
Commissioner

Steinberg

withdrew his second.

Reference Materials
1. Letter from R. Donahue Peebles to Mr. Jorge M. Gonzalez, dated
Palm Crewne Plaza Resort - Rent Payments

Handout

see

or

May 21, 2003, RE: Royal

2. Roll call Ballots

City Clerk's

5/
21/-R9Q.
R7B/RDA 3B and 2003
4/
30/ reference: 03
Note: 6/
03:
6/Cross-

For the record it is noted that althought the City Commission approved the Letter of Intent (LOI),
Mr. Peebles informed the City that he would not sign the LOI.

Printed by the City Clerk's Office

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2003
6/Time Printed: 07
Date Printed: 6/
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RESOLUTION NO.

200325195

MIAMI
A RESOLUTION OF THE MAYOR AND MEMBERS OF
AND
MAYOR
THE
BEACH CITY COMMISSION AUTHORIZING
OF
CITY CLERK TO AUTHORIZE EXECUTION OF THE LETTER
INTENT NEGOTIATED BETWEEN THE CITY OF MIAMI BEACH,
RDP
THE MIAMI BEACH REDEVELOPMENT AGENCY AND
AND
ROYAL PALM HOTEL LIMITED PARTNERSHIP ("RDP")
AUTHORIZING THE CITY ATTORNEY TO PROCEED IN

FURTHER
PREPARATION OF THE CLOSING DOCUMENTS TO REFLECT
THE TERMS OUTLINED IN THE LETTER OF INTENT.

Simon Cruz, as
WHEREAS, over the past year, the Administration, Vice-Mayor
and outside counsel, Joel
appointed liaison by the City Commission, the City Attorney
to address the outstanding
Minsker, have met with Don Peebles and his representatives

issues in connection with the

Royal

and
Palm Crowne Plaza Hotel (RDP);

the progress of
WHEREAS,on November 13,2002,the City Commission discussed
issues at that time and
the negotiations and was provided a summary of the outstanding
and the proposed
issues
since that date,the parties have continued to address the salient

negotiated

terms

are

and
summarized and reflected in the Letter of Intent (LOI);

Environmental Delay Claim/Sales

WHEREAS, the LOI addresses: 1)Back Rent/
condominium/hotel/upon
Taxes; 2) Conversion of the Shorecrest Hotel to timeshare
i.
e
.
$
in
Price
10,
000
0
00,
plus the annual return;3)amending
full,
payment of the Purchase
Block
requirement, as defined,from
the Convention Center Agreement to reduce the Room

350 rooms to 257 rooms per day, as the Royal Palm contains 257 rooms;4)Refinancing;
Release of all
5)FFE Reserve; 6)Outstanding Disputes; 7)Restaurant Agreement; 8)
the
Garage Easement
Claims by RDP, RDA and City of Miami Beach; 9)Amendments to
Fee from RDP to Agency and a Facility
Agreement to eliminate the payment of a Use
the provision that requires RDP's
Usage Payment from Agency to RDP annually,deleting
Self Park Rate; 10)Beach Concession
approval of the garage operator, and defining the
Indemnification; 13)
Termination; and

Attorneys Fees; 12) Special

Agreement; 11)
and
providing for 14)Tolling Agreement amongst the parties;

and issues,pending
WHEREAS, based upon the resolution of all outstanding claims

allow the conversion of the

the settlement with Clark Construction, and the agreement to
condominium/hotel/only upon payment in full of the
Shorecrest Hotel to a timeshare,
of the Board adopt the
Purchase Price, it is recommended the Chairman and Members

attached resolution.

NOW,THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND MEMBERS

OF THE MIAMI BEACH CITY COMMISSION, that the Mayor and City Clerk hereby
authorize the execution of the Letter of Intent negotiated between the City of Miami Beach,

Redevelopment Agency and RDP Royal Palm Hotel Limited Partnership

and further authorizing the City Attorney to proceed in preparation of the closing

the Miami Beach

documents to reflect the terms outlined in the letter of intent.

PASSED and ADOPTED this 30th

day ol

03.

ATTEST:

TY CLERK
JMG/
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APPROVED A~
TO
FORM & LANGUAGE
FOR EXECUTION

CI'IY COMMISSION
aGENDA ITEM SUMMARY

Condensed Title:
A Resolution authorizing

Mayor and City Clerk to authorize execution of the Letter of Intent negotiated
Hotel
the City of Miami Beach, the Miami Beach Redevelopment Agency and RDP Royal Palm
the
of
in
to
the
preparation
and further authorizing
proceed
City Attorney
Limited Partnership ("
RDP")

Ibetwn

closing

the

documents to reflect the terms outlined in the Letter of Intent.

Issue-'
Shall the
Intent?

Item

of the Letter of
Mayor and Members of the Miami Beach City Commission authorize the execution

Summary/Recommendation:

Based upon the resolution of all outstanding claims and issues, pending the settlement with Clark, and the
condominium/hotel/
only upon
agreement to allow the conversion of the Shorecrest Hotel to a timeshare,
it is recommended the Chairman and Members of the Board adopt the
Purchase
of
the
in
full
Price,
payment
attached resolution.

Board Recommendation:

Advisory
A

IN/

Financial Information:
Account

Amount

Source of
Funds:

Approved

2
3
4
Finance

City Clerk's

Christina

Total

Dept.

Office

Legislative Tracking:

m. Cuervo

Sign-Offs:
Department

Director

Assistant

LO] doc
CITY.
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City Manager

CITY OF

MIAMI

BEACH

CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI

BEACH, FLORIDA 33139

www.
gov
miamibeachfl.

COMMISSION MEMORANDUM

Mayor David

To:

Dermer and

Members of the

City

Date: April

30,2003

Commission

Jorge M. Gonzalez ~ ~
City Manager

From:

A RESOLUTION OF THE MAYOR AND MEMBERS OF THE MIAMI BEACH

CITY COMMISSION AUTHORIZING THE MAYOR AND CITY CLERK TO

Subject:

AUTHORIZE EXECUTION OF THE LETTER OF INTENT NEGOTIATED

BETWEEN THE CITY OF MIAMI BEACH, THE MIAMI BEACH
REDEVELOPMENT AGENCY AND RDP ROYAL PALM HOTEL LIMITED
AND FURTHER AUTHORIZING THE crrY
PARTNERSHIP ("RDP")
ATTORNEY TO PROCEED IN PREPARATION OF THE CLOSING
DOCUMENTS TO REFLECT THE TERMS OUTLINED IN THE LE'rTER OF

INTENT.

Administration Recommendation:
Adopt the Resolution.

Analysis:

well aware, over the past year,the Administration,ViceMayor Simon Cruz, as

outside
and
counsel, Joel
appointed liaison by the City Commission, the City Attorney
Minsker, have met with Don Peebles and his representatives to address the outstanding
issues in connection with the Royal Palm Crowne Plaza Hotel (RDP).

As you

are

On November 13, 2002, the City Commission discussed the progress of the negotiations
and was provided a summary of the outstanding issues at that time. Since that date, the
terms
parties have continued to address the salient issues and the proposed negotiated
Intent
(
Letter
of
LOI).
are summarized below and reflected in the attached

1)

Environmental
Back Rent/

Delay Claim:

specifically referenced in the attached LOI,norwill it be reflected in

the final closing documents, as reported on November 13, 2002, the parties
and environmental
agree to unavoidable delays attributed to reconstruction
damages during 488 days that will be applied to back rent prior to Hotel Opening
for a total reduction of $
326,664
Date, thereby reducing the rent due by 50%
Lease
the
Agreement. ( Refer to
during such time period, as permitted in
279,
62
996.
totaling $
Attached Worksheet) The remaining "Unpaid Back Rent",
rent
Said
claims.
environmental
the
to
a
credit
will be applied as
outstanding
the
land.
of
Price
return on the Purchase
credit will not apply to the 8%

Although

not

April 30, 2003

City Commission Memorandum
Royal Palm - Letter of Intent
Page 2 of 5
of the "Unpaid Back Rent",
RDP agrees to reimburse the City/RDA for 50%
approximately $140,000,from net receipt of funds upon settlement with Clark
the "Clark Credit").
Rent from the Hotel Opening Date ( May 2002-April 30, 2003) totaling
469,583.will be paid within five (5)days from the last execution of the LOI.
41
RDP's Counsel has submitted a Request for Technical Assistance Advisement
TAA)regarding the payment of sales tax on the ground lease rental payments,
for which a response is still pending from the Office of the General Counsel of
the State of Florida. RDP will pay a portion of the sales taxes pursuant to the
last
pending TAA request on the full amount of Rent within five (5)days of the
execution of the LOI. If the final TAA has not been received prior to the City's
June 20,2003, submission of sales tax to the State, RDP will provide any unpaid
on the total Rent by June 15,2003. Upon receipt and
amount to equal a full 7%
pursuant to the TAA,the City will refund a portion of the sales tax, if applicable.

2)

Shorecrest Hotel:

Upon Payment of the Purchase Price

the City/RDA will agree to amend:

e. 000
$
in full, i.
10,
000,plus the annual return,

The Declaration of Covenants and Restrictions to allow for the Shorecrest

condominium/hotel/
property to be sold as a timeshare.
The Declaration of Covenants and Restrictions to allow for the property to be
released from a unity of title and RDP will provide a Covenant in lieu of Unity of
Title as described in Section 118-5 of the Miami Beach City Code.

be amended to reduce the Room Block

the Royal
requirement, as defined, from 350 rooms to 257 rooms per day, as
257
rooms.
Palm Hotel contains

The Convention Center

RDP is

responsible

to

Agreement will

comply

with all

applicable zoning requirements

in

connection with the sale of the Shorecrest Hotel Condominium units.

3)

Refinancinq:
Within 5 years, RDP will refinance the Recognized Mortgage with
refinancing occurring every 10th Lease year thereafter.

subsequent

Apd130, 2OO3
City Commission Memorandum
Royal Palm - Letter of Intent
Page 3 of 5

4)

FFE Reserve:
The FFE Reserve requirements for the Royal Palm and the Shorecrest Hotels
will be amended to mirror the Loews Hotel Agreement commencing in the
second Lease Year that sets forth:
Lease Year
1
2
3
4

5)

Percentage of Hotel Revenues

0%
1%
2%
3%
4%

Outstanding Disputes:
within
RDP agrees to cure all outstanding disputes (list attached as Exhibit "B")
30 days of the execution of the LOI. The outstanding liens/claims or other
will
" lark Disputes")
obligations with Clark Construction (listed separately as the C
be satisfied upon settlement of litigation with Clark,at which time the Completion
Guarantee can also be satisfied. Any future defaults will immediately terminate
the LOI.

6)

Restaurant

Agreement:

agree to eliminate the Restaurant Agreement Requirement and

will allow RDP to construct a Spa, additional meeting space or other ancillary
Hotel uses, subject to all applicable zoning requirements. The corresponding
300,000 Letter of Credit requirement has been eliminated.
The

7)

City/RDA

Release of all Claims

by RDP, RDA and City of Miami Beach

In consideration of the terms negotiated herein, the parties agree to release all
claims against each other upon execution of the Closing Documents.

8)

Garage Easement Agreement:

City/RDA has agreed to delete Section 4 of the Garage Easement

and
Agreement that provides for the payment of a Use Fee from RDP to Agency
clarification
For
RDP
annually.
a Facility Usage Payment from Agency to
and
Fee
the
Use
represent an equivalent
Payment
Facility Usage
purposes,
exceed $
revenues
12
. million; at
the
amount (i.
gross parking
e.a wash)up until
of the gross revenues
46%
which time,the Agency was obligated to pay RDP 6.
that exceed $
12
. million in the form of an additional Facility Usage Payment. For
the last fiscal year 2002, the Garage reflected gross parking revenues of
1,
052
785,and had the Hotel been opened during the same time period, RDP
795. This will represent
would have been entitled to receive approximately 3
$ 7,
The

Apd130, 2OO3
City Commission Memorandum
Royal Palm - Letter of Intent
Page 4 of 5

recurring savings to the City/RDA as long

exceed $
1.
2 million, which is the breakeven point.
an

annual

The

provision

that

requires

RDP's

approval

as

the

of the garage

Garage

Revenues

operator

has been

deleted.
to define the Self Park Rate,as set forth in the
Easement Agreement, as the rate charged to the general public at the
Facility and identified as the Maximum Daily Rate.

The

9)

parties

have

Beach Concession

agreed

Agreement:

Concurrent with the sale of the Shorecrest Hotel

concession fees will apply.

10)

Garage
Garage

Property, applicable beach

Attorneys Fees:

60,000
City/RDA' legal fees up to the first $
agreed to reimburse the s
Settlement.
with
this
in
connection
counsel
outside
the
City's
charged by
RDP has

11 )

Special Indemnification:
RDP shall indemnify the City/RDA from any third party challenges in connection
with the amendment proposed herein, except for challenges arising out of the
settlement of back rent, environmental claims, delay damages and the Clark

Credit.

12)

Completion

Guarantee:

Guarantee will be terminated upon delivery of the Certificate by

the Architect and the Final CO, which are pending to comply with the terms of

13)

The

Completion

the

agreement.

Termination:
The LOI may be terminated by either party if the Closing Documents have not
been executed within six (6)months of execution of the LOI.

14)

Standstill:
In connection with the execution of the LOI, a Tolling Agreement is attached as
Exhibit "D"that will establish a period, the "Tolling Period",during which the
resolve the
parties can continue to negotiate and finalize Closing Documents to
without
claims
litigation.
Royal Palm's potential claims and the Agency/City
and/or
laches
of
the
that
the
the
allegations
parties agree
Tolling Period,
During

April 3O, 2OO3

City Commission Memorandum
Royal Palm - Letter of Intent
Page

5 of 5

and the statute of limitations are tolled as to the outstanding issues

between the parties. The Tolling Period shall commence as of May 8,2002, as
this was the date the City Commission first discussed and authorized
negotiations on the conceptual settlement terms, and shall terminate 31 days
delivers advance written notice to the other party of its desire to
after either

estoppel

party

terminate same, or

automatically

upon execution of the

Closing Documents.

The most substantive changes from the items presented to the City Commission in
November 13, 2002, relate to the s
City/RDA' agreement to release of the Shorecrest
condominium/hotel/
upon full payment of the Purchase Price in full,
Property for timeshare,
i.
e. $
negotiated position upon payment of the
million, instead of the

10

previously

$ 5 million within five years. Additionally,the

Shorecrest portion of the Purchase Price,of 4.
elimination of the excess Facility Usage Payment will represent an annual recurring
savings to the Anchor Shops Garage/RDA.

Based upon the resolution of all outstanding claims and issues, pending the settlement
with Clark, and the agreement to allow the conversion of the Shorecrest Hotel to a
condominium/hotel/only upon payment in full of the Purchase Price, it is
timeshare,
recommended the Mayor and Members of the Miami Beach City Commission adopt the
attached resolution.

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I
I

LETTER OF INTENT
TO AMEND ROYAL PALM

CROWNE PLAZA RESORT AGREEMENTS

Royal Palm Crowne Plaza Hotel

RDP Royal Palm Hotel Limited Partnership ("
RDP")

Subject:
Parties:

City

of Miami Beach (the

Miami Beach
Date:

"City")

Redevelopment Agency (the "Agency")

2003

RECITATIONS:

May 28, 1998, the parties entered into an Agreement of Lease regarding the
on Exhibit "
A"
("
attached hereto and made a part hereof as if
land more fully
Land")
fully set forth herein, as recorded on July 1, 1998 in Official Records Book 18170, at Page 0893,
in the Public Records of Miami-Dude County, Florida ("
Lease").
A.

On

described

B.

Royal

Subsequent

to the

recording

of the Lease, RDP

began

the construction of the

Palm/
Shorecrest Crowne Plaza Hotel ("
Hotel").

During the construction of the Hotel, RDP encountered structural problems with
original Royal Palm Hotel and soil contamination problems regarding the Land which allegedly resulted in certain construction delays. A dispute arose amongst the parties regarding the
aforesaid problems and delays resulting in RDP's refusal to pay certain Rental due under the
Lease and the Agency's refusal to pay claims related to said contamination and alleged construcC.

the

tion

delays.
D.

The

parties respectively deny

them,whether asserted

or

and

dispute

all such claims and

allegations against

unasserted.

parties, wishing to avoid litigation and amicably resolve all matters existing
between them, entered into negotiations regarding the aforesaid disputes. This letter sets forth
the understanding reached as a result of such negotiations. Capitalized terms which are not
defined in this Letter of Intent to Amend Royal Palm Crowne Plaza Resort Agreements ("
LOI")
shall have the meanings ascribed to them in the existing, applicable documents. "Agency"
means, as appropriate, the Agency or the City or both, as the case may be.
E.

The

Agency and Owner in their desire to maintain and fulfill their commitment to pmvide the African American community with opportunities in the hospitality industry, are willing
to amend the Royal Palm Crowne Plaza agreements subject to the Hotel's continuing compliance
with the Convention Center Agreement which provides, among other things, that the Hotel
F.

make available Hotel facilities and services for support of

the Convention Center events and to undertake joint marketing efforts.
owner

and its

successors

1.

and

assigns

BACK RENT AND REAL ESTATE TAXES:

Back Rent Prior To The Hotel

1.1

Opening Date. RDP

and the

Agency

agree that unavoidable delays attributed to the environmental and reconstruction

delays occurred prior to the Hotel Opening Date. RDP has previously paid
e.,from October 31,
128,373.in Back Rent prior to the Hotel Opening Date; i.
38

Agency shall retain said amount in full settlement

of all amounts due for Back Rent for the period prior to May 15, 2002.
Additionally, RDP shall pay within five (5)days from the last execution of this
LOI any and all applicable sales tax due and owing on said amount plus any
interest and penalty assessed by the State of Florida against the City and/or the
Agency for failure to pay applicable sales tax on said amount prior to the Hotel
Opening Date.
2000 to

the

May 14, 2002, and

Clark Credit. Subject to the conditions set forth in this Section 1.2,
RDP shall pay to the Agency an amount up to $00
140,000. the
("Clark Credit")
it
settles
its
sales
tax
and
when,
if,
present litigation with The
plus applicable
Clark Construction Group styled RDP Royal Palm Hotel, LP,Et Al.vs. The Clark
1.2

Construction

Group,

Inc.

vs.

Arquitectonica

International

Corp.,Et Al.,U.S.

013
M
iddlebrooks
130District Court, Southern District of Florida, Case No. CIVin
the Clark
final
or
if
it
obtains
a
nonappealable judgment
Clark Litigation")
ten
(
10)days of its
Litigation. RDP shall pay this amount to the Agency within

extent, either the settlement or the judgment

RDP pays its attorneys' fees and costs for the Clark
Lease entitled "Late Charges" shall not apply to the
payment of the Clark Credit. The application of the Clark Credit shall be treated
as additional Bank Rent which shall be due only if the conditions set forth in this

receipt of funds from, and

provides excess funds after
Litigation. Article 4 of the

to the

Any amounts paid to the Agency

return calculation
under this Section 1.2 shall not apply to the eight percent (8%)
of the
as a component of the Purchase Price as defined in Section d)(
36.
1(
iii)
This provision shall survive the payment of the Purchase
Lease (the "Return").
Section

are

met and then

only

to that extent.

Price.
1.3

Date. RDP shall pay the

from the last execution of this LOI the sum of

Back Rent After The Hotel

Opening

Agency within five (5)days

Post Opening
469,
41,
583.plus applicable sales tax,representing the Back Rent ("
Back Rent")
from the period of May 15, 2002 to April 1,2003.

parties acknowledge that the 2002 real

estate taxes on the Improvements
unpaid and that said taxes are being
appealed. On or before the date the Closing Documents are executed, RDP shall
provide to the Agency proof that it has complied with the requirements of Section
1.4

Real Estate Taxes.

The

are

said taxes. Further, to the extent that sales taxes are due
real estate taxes which were the responsibility of RDP prior to the date of the

of the
32.2(
b)
on

Lease

as

to

2-

Pementages of Hotel Revenues

Lease Year

0%

1%

2%

4%

5 and thereafter

6.

SHORECREST RESTAURANT:

Article 33 of the Lease. Article 33 of the Lease shall

and to pemfit in the
be amended to delete therefrom subsections (a)through (f)
the construction ora
for
the
Restaurant
(
area originally contemplated
the "Space")
6.1

Changes

to

spa, additional meeting space or other improvements for any reasonable hotel
purpose that will benefit the operation of the Hotel; provided, however, that such

zoning ordinances. The

Space shall be as reasonably
determined by the RDP and the Operators ( defined below) of the respective
facilities. Subsection ( g)shall be amended to relate to any Operator. The
amended Lease shall provide that such facilities shall not be subject to any further
approval by the Agency except as provided in paragraphs 6.3 and 6.5,below, but
the use and operation of said facilities shall be consistent with that of a first class
uses are

permissible

under all

applicable

local laws and

sizes and dimensions of all such facilities within the

hotel.

solely responsible for, and shall pay,

at its sole cost and expense, any parking impact fees and any other costs,
including but not limited to concurrency fees, permit fees and the like resulting
Fees and Costs. RDP shall be

6.2

from the

new

facilities.

Condominium Unit. If the Space is located on the

Shorecrest Land, and if RDP elects to create a condominium unit for the Space as
pemfitted under the terms of the Lease, RDP shall cause the Declaration of
the sale or lease of the Space unit
Condominium to contain provisions that (i)
The

6.3

shall be

subject

Space

to the

in accordance with the

as a

the Space unit shall be operated

Agency's approval and (ii)
in paragraph 6 of this LOI.
referred
to
standards
quality

NonDisturbance

6.4

Agreement. Upon request

of RDP, the

Agency

nondisturbance agreement in favor of a third party Space operator

containing terms generally found in such agreements in form and
an "Operator")
content reasonably acceptable to the Operator and the Agency, but the term of
shall execute

( the expiration of the third

longer than the earlier to occur of i)
twenty (20)years.
party Space agreement or (ii)
which shall be

no

6.5

Operator Agreement.
operated by an Operator pursuant to

In the event the

Space is managed

or

an agreement between RDP and Operator,

said agreement shall be deemed to be Sublease under the Lease requiring Agency

4-

of the Lease, the agreement shall contain

10.
2(
v)
approval under Section a)(
to
the
standards
operation and physical condition of the Space
pertaining
quality
which shall be enforced by RDP, which standards and the selection of the
Operator shall be subject to approval by the Agency.

EXISTING DISPUTED ITEMS:

7.

List Of

7.1

Disputed Items. Exhibit "B"entitled "List of Disputed

incorporated by reference herein as a list of the cur-

Items"is attached hereto and

rent

disputed items

under the Lease and other related documents

last execution of this LOI ("

RDP

as

of the date of

Items").

Curing of RDP Items.

thirty (30)days from the date
7.2

RDP shall

cure

all of the RDP Items

on or

of execution of this LOI except for those

attached hereto and specifically incorporated herein.
items listed in Exhibit "C"

before

RELEASES OF ALL CLAIMS BY

RDP~THE AGENCY

AND THE

CITY:
RDP Claims. RDP shall waive and release any and all alleged
environmental
damage claims and any other claims of any kind
delay claims,
whatsoever against the City and/or the Agency arising or accruing prior to the
date of execution of the Closing Documents upon the execution of the Closing
8.1

Documents.
8.2

Agency and City Claims. The Agency and the City shall waive

and release their Owner's excess contribution claim and any other claims of any
kind whatsoever against RDP upon the execution of the Closing Documents.

Acknowledgement. Provided that all of the temxs and conditions

of this LOI have been satisfied by all parties, the amendment to the Lease shall
contain a written acknowledgment that all alleged claims and other alleged
8.3

defaults have been cured, settled and or waived, that all controversies between the
parties have been settled and that the Lease is in good standing and in full fome
and effect.
9.

GARAGE EASEMENT AGREEMENT:

9.1

to

provide

for and

A.

B.

be amended

as

appropriate

parties shall have no further obligation for the payment of Use

Facility Usage Payments and no such payments are due either

The

Fees and

party

Garage Easement Agreement shall

incorporate the following concepts:

The

as

of the date of the execution of this LOI.

The words "and

approved by

deleted.

5-

Grantee" in Section

5(
a) shall

be

RDP shall have

C.

Hotel guests and

Section

D.

no

affirmative

obligation

to

use

the

Garage

for its

employees.

9(
a)shall

Garage Easement Agreement

provisions contained in any of the

be deleted and the

shall be removed from any

cross

default

Hotel related documents.

the rates charged to the

park rate" shall mean (i)
general public at the Garage facility and identified as the maximum daily
rate or (ii)
the valet rate charged by the Royal Palm Hotel at RDP's
The term "self

E.

election.
The remainder of the

9.2

Garage

Easement

Agreement shall remain in

full force and effect.

In

9.3

the event that RDP creates

hotel condominium

on

the

Shorecrest Land, then, in that event, the parties to this LOI agree that there are no
rights or agreements under the Garage Easement Agreement which will be
transferred to the Shorecrest Hotel Condominium unit
10.

CONCESSION AGREEMENT UNDER THE LEASE:

Fee

10.1

Payment. RDP shall pay the Concession Fees due and owing,

if any, under the Concession

or

owners.

Agreement described in Exhibit

14.5 of the Lease

before five (5)days after the last execution of this LOI. The

now aware

of any such

10.2

occupational

outstanding

parties

are

on

not

fees.

License Fees. RDP shall pay or cause to be paid the corresponding

license fee in colmection with the beachfront concession operation

for the Hotel.

Shorecrest Condominium. In the event that RDP creates a hotel

condominium on the Shorecrest Land, then, in that event, RDP shall pay (or cause
the Shorecrest hotel condominium association to pay) the corresponding
10.3

applicable beach concession fees consistent with those

private owners of hotel and condominium properties.
11.

fees

charged

other

upland

CLARK CONSTRUCTION LITIGATION LIENS:

The

which may

liens, including liens filed or

be filed by subcontractors, relating solely to the Clark Litigation, if

existing

Clark

Litigation

liens and future

shall not be considered an

any, against the leasehold interest of RDP in the Lease
Event of Default under any of the Hotel Documents so long as RDP diligently and
its claims to resolve all issues under the Clark
faith continues to
in

prosecute
good
that nothing contained herein shall relieve RDP
however,
Litigation; provided
its responsibility to remove these liens and to resolve those matters contained
either by resolution of the Clark Litigation or otherwise.
Exhibit "C",

6-

of

in

12.

ATTORNEYS FEES:

Each party shall bear its own legal fees relating to this LOI and the
Closing Documents except that RDP shall reimburse the Agency at the time of the
execution date of the Closing Documents its legal fees up to the first $
60,000

250.00.
charged by Bloom & Minsker, P.L.,based upon an hourly rate of $
for
statements
to
RDP
detailed
shall
professional services
provide
Agency
reimbursement.
showing time and activity on a daily basis supporting said
13.

ADDITIONAL

TERMS~CONDITIONS

AND ISSUES NOT COV-

ERED IN THIS LOI:

Because of the complex nature of the documents involved and the changes
as a result of this LOI,RDP, the Agency and the City shall have
considered
being
the right to raise additional terms and conditions and issues not covered in this
LOI and which are not inconsistent with the terms of this LOI as the actual draft-

ing

of the documents

14.

occurs

and continues.

SPECIAL INDEMNIFICATION BY RDP:

indemnify and hold harmless and shall provide defense for the
Agency and the City by counsel reasonably acceptable to the Agency and the City
regarding any and all matters arising out of, or relating directly or indirectly to,
any challenges by any third parties to this LOI and the Closing Documents except
for those challenges arising out of the Clark Credit, the payment and partial
waiver of Back Rent and the settlement of alleged delay claims attributed to the
environmental damage and reconstruction delays referred to in paragraph 1.1 of
RDP shall

this LOI.
15.

COMPLETION GUARANTEE:
15.1

the

The

Completion

Agency and

Guarantee

to the

given

the
to

and

City acknowledge that the Guarantor under

the Agency and the City shall be terminated
the City of the certificate by the Architect

Agency
20) of said Guarantee and Final CO's are issued as
ii)of said Guarantee. In all other respects, Guarantor
contemplated by Section 2(

upon delivery
described in Section
has

complied

with its

obligations

under the Guarantee. The

is tolled until said certificate is delivered and the Final CO's

16.

Completion Deadline
are

issued.

DECLARATION OF COVENANTS AND RESTRICTIONS:

16.1

The

parties acknowledge

Purchase Price to the

Agency shall

that the

payment in full by

not temfinate the Declaration.

7-

RDP of the

CLERICAL CHANGES TO THE LEASE AND RELATED EXIST-

17.

ING DOCUMENTS:

Nonsubstantive clerical changes such

notice

rected

provisions and grammatical

in the Closing Documents.

errors

as

current

mailing addresses

in the

in the Hotel Documents shall be

cor-

GENERAL:

18.

Agreements. Upon execution of this LOI by RDP, the

approval of the terms hereof by the appropriate Agency and City governing
bodies and the execution of this LOI by the appropriate Agency and City officials,
the Closing Documents shall be drafted. The Closing Documents will contain,
among other things, representations, warranties, conditions, covenants and
s hereof.
indemnities and the like typical in similar transactions, subject to the teni~
due
to
the
that
to
this
LOI
the
complexity of the
Furthermore,
recognize
parties
have
been covered
issues
structure of these transactions, not all of the major legal
by this LOI. The consummation of the transactions contemplated hereby is conditioned upon the negotiation and execution of the Closing Documents with
temis, provisions and conditions mutually acceptable to RDP, the Agency and the
City as well as the obtaining of all necessary lender approvals and the satisfaction
18.1

of the

Definitive

with all other agreements and matters necessary or desirable with

contemplated hereby. The parties shall comply with all
laws, statutes, regulations and requirements and performance by the

parties

respect

to

the transactions

applicable
Agency, the City and RDP under this LOI and the Closing Documents shall be
subject thereto. The following is a list of the documents which may need to be
amended or created (said list is not meant to be inclusive of all required agreements and additional agreements shall be executed by the parties to this LOI as
required:
LIST OF AGREEMENTS
A.

GROUND LEASE AMENDMENT

C.

CONVENTION CENTER AGREEMENT AMENDMENT

DECLARATION OF COVENANTS AND RESTRICTIONS

AMENDMENT

F.

GARAGE EASEMENT AMENDMENT

AGENCY'S RELEASE OF CLAIMS
CITY'S RELEASE OF CLAIMS

G.

RDP'S RELEASE OF CLAIMS

H.

SPECIAL INDEMNIFICATION BY RDP

TERMINATION OF COMPLETION GUARANTY

D.
E.

I.

UCC FINANCING STATEMENTS - to

amended by Ground Lease Amendment

J.

K.

ESCROW AGREEMENT.

8-

renew

as
lease s
UCC-I'

18.12 LOI In Effect. This LOI shall remain in effect as provided hereinabove provided that RDP shall maintain the Lease and related existing documents
in good standing and free of any defaults (the parties agreeing that the issues covered elsewhere in this LOI shall not be deemed defaults for purposes of this para-

of which shall automatigraph 18.12)during the pendency of this LOI;the failure

force and effect other
cally result in this LOI being terminated and of no further
LOI.
than the specific binding paragraphs as provided in paragraph 18.4 of this

Privileged Settlement Communication. This LOI is a privileged

settlement communication except for the specific binding paragraphs as provided
in paragraph 18.4 of this LOI. The remainder of this LOI is strictly inadmissible
18.13

408, Florida Statutes and Rule

for any purpose pursuant to Section 90.
Federal Rules of Evidence.

408,

Any statements made by any party to

this LOI contained in this LOI have been made solely for the purpose of resolving
all matters existing between the parties to this LOI. All parties to this LOI recog18.14 Statements

Against

Interest.

other
nize and agree that any such statements may not be correct as applied to any
to
this
all
to this LOI and more specifically,
parties
person or entities not a party
as applied to
LOI recognize and agree that any such statements may not be correct
the Clark

Litigation.
and
Recording Fees and the Like. RDP shall pay all recording fees
all of the Closing Documents or any other documents contemplated by

18.15
the like for

this LOI.
where
18.16 Waiver of Jury Trial. All of the Closing Documents shall,
applicable, contain a waiver of jury trial provision.
The Convention Center Agreement shall be
18.17 Cross Default.
in the
amended to provide that a default in the Declaration shall be a default

Convention Center Agreement.

CONTINUED

ON NEXT

10-

PAGE]

AGREED AND ACKNOWLEDGED:

RDP ROYAL PALM HOTEL LIMITED
PARTNERSHIP, a Florida limited partnership

By: PADC HOSPITALITY CORPORATION I, Dated:

a Florida corporation, as General Partner

2003

By:
Name: R.Donahue Peebles
Title: President
MIAMI BEACH REDEVELOPMENT

AGENCY

By:

Dated:

2003

Dated:

2003

Name: David Dermer

Title: Chaimtan
Attest:
Name: Robert Parcher

Title: Secretary
APPROVED:

CITY OF MIAMI BEACH

By:
Name: David Dermer

Title:Mayor
Attest:
Name: Robert Parcher

Title: City Clerk

I1-

EXHIBIT B"
is

The

following
Agreement:

list of

outstanding disputes regarding

the Hotel

Development

ARTICLE 2. CONSTRUCTION
2.
3. Completion of Construction of the Proiect
b) Upon Substantial Completion of Construction of the Project Developer shall
furnish the Owner with the following:
E necessary to use and operate the Hotel in
vi) evidence that all FF&
accordance with Ground Lease,Management Agreement, Plans and
Specs, and the Development Budget has been installed in the Hotel

Developer will provide evidence

to

satisfy

Owner.

ARTICLE 4 OWNER PARTICIPATION

4.
2. Owner's Ri.qht to Notice, Access and Review
a) (v) the delivery by Developer to the Owner of two (2)copies of:
1) all agreements with contractors (that will be provided upon
settlement with Clark Construction),subcontractors, suppliers,
vendors and other Persons supplying materials or services in
connection with the Construction of the Project in excess of
which shall
Two Hundred Fifty Thousand Dollars ($
250,000),
be aggregated with respect to each Person supplying materials
or

5)

services;

all drawdowns of

equity

and loan

proceeds

under the Loan

Docs.

7)
8)

Updated Development Budget

all interior design control books

ARTICLE 5. MISCELLANEOUS CONSTRUCTION PROVISIONS

Names of Contractors, Materialmen, etc. -Developer shall furnish to Owner,with a
5.2
list of each contractor, subcontractor, vendor and supplier who is performing any
$ 00,000 (except for FF&
E)...
labor or supplying material in excess of 5

The items listed in Article 4 and Article 5 above,will be satisfied by the Developer's
delivery of an itemized "Project Cost Summarization" and Debt/Equity Capital
regarding the Project.
Investment
Project Capitalization Recap")

Summary ("

The

following

is

list of

outstanding disputes regarding the Agreement of Lease:

ARTICLE 11 .MORTGAGES
11.13. Reflnancin.q of Debt
its Debt in the
b) Refinancin.q Not Related to a Default - If Tenant refinances
the Net
ordinary course of business,and not related to any Event of Default,
Refinancing Proceeds shall be applied in the following order:
Interest in the
i) to Owner to pay the Purchase Price for Owner's

Premises;

C"
EXHIBIT "
LIST OF CLARK CONSTRUCTION ITEMS

EXHIBIT C"

CLARK EXHIBIT)
following is a list of outstanding Clark
Development Agreement:

The

issues

disputes regarding the Hotel

ARTICLE 2. CONSTRUCTION
2.
3. Completion of Construction of the Project
b) Upon Substantial Completion of Construction of the Project Developer shall
furnish the Owner with the following:
i) certificate of the Architect re: Substantial Completion
iii) lien waivers in form and substance reasonably satisfactory to Owner,
other than Clark Construction lien waivers that will be provided upon

v)

settlement with Clark Construction

Contractor's Final Affidavit,to be provided upon settlement with Clark
Construction

ARTICLE 4 OWNER PARTICIPATION

4.
2. Owner's Riqht to Notice, Access and Review
CPM Schedule")
b) The final critical path method ("

Developer will provide the last CPM Schedule provided by Clark in the
Developer's possession. To the extent the Final CPM Schedule is provided as a
result of the settlement of litigation with Clark, the Developer will provide same.

The

ARTICLE 14.DISCHARGE OF LIENS

14.2 Discharqe of Liens
or similar statutory lien
materialman's,
vendor's,
laborer's,
a) If any mechanic's,
Developer shall cause it
including tax liens)is filed against the Project Site...
to be discharged. However, Developer shall not be required to discharge
any such lien if Developer has furnished Owner with,at Developer's
cash deposit, bond, letter of credit from an Institutional Lender

option,a
or

other

security.
by Clark Construction, the Developer agrees that upon
of litigation with Clark Construction, all liens will be discharged.

As to liens filed
settlement

42
d
oc
2F:~=
LL~
RDAVoyalpalm
ng~.%~.
C
HRISTIN\Clark Exhibit B 03.

TOLLING AGREEMENT
This

between the RDP

Miami Beach ("

the
referred to

as

Palm Hotel Limited

Royal

and
Palm")

the "Royal

made this __

is
Agreement")
Tolling Agreement ("

the Miami Beach

Partnership

appropriate

Beach

Agency

and the City of

Redevelopment Agency (the "Agency")

The Royal Palm, the Agency, and

City").

well

and the

as

City

of Miami Beach

the circumstances

WHEREAS the

claims

appropriate

state

as

City

surrounding

and the

those contended

by

the

the Royal
regarding (i)

against

the

Agency

and the

the

of the

the

WHEREAS the Parties have

Palm

to

the

shall be

assert, in

collectively

United States Court

Agreement of

the RFP issued

"Royal

Royal

engaged

Royal
same

Lease among the

by the City of Miami

Palm's Potential

Palm in
or

Palm (the

Beach for

and
Claims");

to

United States Court and/or

related transactions

and

surrounding

and
"Agency/City Claims");

and wish to continue to engage in settlement

Palm's Potential Claims that may be

brought by

the Agency/City Claims that

City, and (ii)

may be

the

Royal

brought by

Agency and/or the City against the Royal Palm; and

WHEREAS the Parties desire to establish

they
the

City

Agency contend they, or each of them, have grounds

against
out

arising

court

concerning

center hotel (the

counter-claims

or

circumstances

discussions

the

court, certain potential federal and/or state claims against the Miami

state

development of a convention

assert

Peebles, collectively,
(

the "Parties."

and/or

the

,
2003,
by and

of

and R. Donahue

WHEREAS, the Royal Palm contends it has grounds

Parties, as

day

can

consider and

explore

Agency/City Claims

the

without

possibility

litigation.

period ("the Tolling Period")during

of resolving the

Royal

which

Palm's Potential Claims and

covenants and conditions set forth

NOW, THEREFORE, in consideration of the mutual

herein, the Parties agree

as

follows:

1.

The recitals above

2.

This

are

incorporated herein by reference.

Agreement shall be effective

The Tolling Period shall

Date").

Effective

and shall terminate

as

commence as

provided in paragraph 4,below.

Date and the termination date shall be referred to

The Parties agree that the

3.

limitations

are

tolled

upon execution and

during

the

Tolling

as

The

all Parties (the

May 8, 2002 (the "Tolling Date")

period

of time between the

Tolling

the "Tolling Period".

as

of laches and/or

allegations
Period

of

delivery by

to the

Royal

estoppel

and the statute of

Palm's Potential Claims and the

Agency/City Claims.
4.

may terminate this

Any Party

Agreement

advance written notice to the other Parties. This

day

after

temfinate

delivery

automatically

Intent to Amend

the

Royal

at

part of

interest

such time

This

Agreement

as

all of the

waiver of any

the

validity

Agency/City

Claims.

bring suit, or

6.

This

paragraph

or

an

over

defined in the Letter of

parties.

not be

to the

construed

as an

Parties. This

liability

admission

not

standing

Royal Palm's Potential Claims

counterparts.

on

against

Agreement does

the Parties, venue, the Parties'

of any of the

may be executed in

Agreement shall

admission of fact, law, and/or

right presently available

Agreement

thirty-first 3
( 1st)

Agreements between RDP, the Agency and

Agreement shall

justifiability

the

This

9 below.

and delivered to all

regarding jurisdiction

on

Closing Documents, as

does not constitute

any of the Parties. This

or as a

in

provided

by giving thirty days'

time

Agreement shall expire

Pahn Crowne Plaza Resort

constitute any admission

the

as

City,have been duly authorized, executed

5.

the

of such notice

at any

or

to

any of

This

7.

Agreement

and the

obligations

of the Parties hereto may not be

amended, modified, extended, or renewed in any respect, except by

each of the Parties and the Parties agree that this
between the Parties

equitable

bars

commence

on

the

This

against

9.

10.

Agreement

to limit the time

purporting

within which either party may

the other.
covenants contained herein

are

subsidiaries, affiliates, parent

assigns.

Any notice under this Agreement shall be in writing and shall be delivered by

overnight courier,certified mail

the

constitutes the entire

and shall inure to the benefit of the Parties hereto, their

and

writing duly executed by

of any and all statutes of limitation, contractual bars,

Agreement and all terms, provisions and

companies, successors

to

tolling

other time bars

any lawsuit

8.

binding

or

regarding

Agreement

altered,

The

following

or

any other method that verifies the date of delivery.

Royal Palm shall

serve

Agency with written notice under this Agreement

the

address:

Miami Beach Redevelopment Agency

General Counsel
1700 Convention Center Drive, 4th Floor
Miami Beach, Florida 33139
Tel: (
305)673-7470

7002
Fax: (305)673-

With

copy to:

Joel N.Minsker,Esq.
Bloom & Minsker, P.L.
1110 Brickell Avenue, 7th
Miami,Florida 33131

Floor

3716800
Tel: 305)
(
3445
Fax: (305)908-

11.

the

following

The

Royal

address:

Palm shall

serve

the

City with

written notice under this

Agreement to

City of Miami
City Attorney

Beach

1700 Convention Center

Drive,4th Floor

Miami Beach, Florida 33139

Tel: (
305)673-7470
Fax: (305)6737002

With

copy to:

Joel N.Minsker, Esq.

Bloom &

Minsker,P.L.
Floor

1110 Brickell Avenue, 7th

Miami,Florida 33131
Tel: (305)3716800
Fax: (305)9083445

The

12.

Agreement to

the

Agency

following

Marty

and the

City shall

serve

the

Royal Palm with written notice under this

address:

L.Steinberg, Esq.

Stuart K.Hoffman, Esq.

HUNTON & WILLIAMS
Mellon Financial Center, Suite 2500
1111 Brickell Avenue

Miami,Florida 33131
Tel: 305)
(
8102500
Fax: 305)
(
8102460

The

13.

authority

approval

signatories

to bind the

of the

to this

respective

City Commission

Palm Hotel Limited

Agreement acknowledge

Parties except that the

and board members of the

Partnership
By:PADC Hospitality Corporation, I,as GP
RDP

Royal

City

that

and the

they

have the

Agency will require

Agency.

Miami Beach

Redevelopment Agency

By:

By:

David Definer, Chairman

D~
ed:

Dated:
ATTEST:

Robert

requisite

Parcher, Secretary

the

City of Miami

Beach

By:
David Dermer, Mayor

R.Donahue Peebles

Dated:

Dated:

ATTEST:

Robert Parcher,

City Clerk

F:
C.
B.\
hMinsker\.
M
Crowne
Plaza\Tolling Agreement Minsker V2.DOC