Miami-Dade Legislative Item
File Number: 121366
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File Number: 121366 File Type: Resolution Status: Before the Board
Version: 0 Reference: Control: County Commission
File Name: ARSHT CENTER RE: WATER DAMAGE Introduced: 7/2/2012
Requester: Department of Cultural Affairs Cost: Final Action:
Agenda Date: 7/17/2012 Agenda Item Number: 8C1
Notes: TLL- 7/2/2012 Title: RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXPEND FUNDS UP TO $5,000,000 TO REIMBURSE THE PERFORMING ARTS CENTER TRUST, INC., A FLORIDA NON PROFIT CORPORATION, FOR REPAIRS TO THE ADRIENNE ARSHT CENTER, SUBJECT TO SATISFACTION OF CERTAIN CONDITIONS; DELEGATING TO THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE THE AUTHORITY TO DETERMINE THE VALUE OF ALTERNATIVE FORM OF SECURITY IN LIEU OF BOND TO BE PROVIDED TO THE COUNTY BY THE PERFORMING ARTS CENTER TRUST, INC., SUBJECT TO CERTAIN PARAMETERS SET FORTH IN THIS RESOLUTION; AND DIRECTING COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO PREPARE AN APPROPRIATE AMENDMENT TO THE FISCAL YEAR 2011-12 COUNTY BUDGET TO EFFECTUATE THE FOREGOING
Indexes: NONE
Sponsors: Audrey M. Edmonson, Prime Sponsor
Sunset Provision: No Effective Date: Expiration Date:
Registered Lobbyist: None Listed


Legislative History

Acting Body Date Agenda Item Action Sent To Due Date Returned Pass/Fail

Board of County Commissioners 7/17/2012 8C1 Withdrawn
REPORT: (SEE AGENDA ITEM 8C1 SUBSTITUTE; LEGISLATIVE FILE NO. 121462.)

Board of County Commissioners 7/3/2012 14A4 4 Day Rule Invoked
REPORT: In response to Chairman Martinez’ inquiry regarding the contractors for the Adrienne Arsht Center, Assistant County Attorney Geri Bonzon-Keenan advised that the contractors for the Arsht Center comprised a joint venture between Odebrecht Construction and the Haskell Company, with Ellis Don as the minority firm. Chairman Martinez asked what caused the water damage to the Arsht Center; whether the County was insured; and why $5 million were being requested from Convention Development Tax (CDT) receipts. Ms. Lisa Martinez, Senior Advisor, Office of the Mayor, said that staff was finalizing a contract with a forensic engineering firm, through an expedited process, to analyze the cause of the water damage to the Arsht Center. She noted this was a three-phase project consisting of remediation, demolition and rebuilding. Ms. Martinez said the Performing Arts Center Trust, Inc. (PACT) had not been able to demolish the walls that were damaged and this made it challenging to define the work scope in the final budget. She noted the $5 million being requested was an “up to” amount as the County’s insurance policy contained a $5 million deductible. Ms. Martinez said the PACT had a Business Income Interruption Insurance policy and had informed the County Administration that the work being done was a viable claim that could be submitted by the County. She noted staff did not have a solidified budget on this project and was on a time-sensitive timeline regarding the work to be performed. Ms. Martinez indicated that the County had a $7.65 million subsidy for the PACT that was approved by the County Commission; however, staff needed to obtain approval to spend additional funds on this project. Chairman Martinez noted he was inclined to four-day rule this proposed resolution. Commissioner Suarez asked who was responsible for the damage, and Ms. Martinez responded that the County was contracting with a forensic engineer to determine responsibility. Commissioner Suarez noted he also was inclined to four-day rule this proposal. In response to questions from Commissioner Bell, Ms. Martinez said that the County contributed $7.65 million annually to the Arsht Center; the requested funds were for up to an additional $5 million; and the water damage occurred on May 20, 2012. Following the foregoing discussion, Chairman Martinez invoked the four-day rule.

Office of the Chairperson 7/2/2012 Additions 7/3/2012

County Attorney 7/2/2012 Assigned Geri Bonzon-Keenan

County Mayor 7/2/2012 Assigned County Attorney 9/4/2012
REPORT: CULT AFFAIRS (ASST. COUNTY ATTY: GERI KEENAN) (PENDING CMTE ASSIGNMENT (WAIVER REQ PENDING FOR JULY 3 BCC) (BCC SPONSOR: VICE CHAIR EDMONSON)

County Mayor 7/2/2012 Assigned Lisa Martinez 6/22/2012 7/2/2012

Legislative Text


TITLE
RESOLUTION AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXPEND FUNDS UP TO $5,000,000 TO REIMBURSE THE PERFORMING ARTS CENTER TRUST, INC., A FLORIDA NON PROFIT CORPORATION, FOR REPAIRS TO THE ADRIENNE ARSHT CENTER, SUBJECT TO SATISFACTION OF CERTAIN CONDITIONS; DELEGATING TO THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE THE AUTHORITY TO DETERMINE THE VALUE OF ALTERNATIVE FORM OF SECURITY IN LIEU OF BOND TO BE PROVIDED TO THE COUNTY BY THE PERFORMING ARTS CENTER TRUST, INC., SUBJECT TO CERTAIN PARAMETERS SET FORTH IN THIS RESOLUTION; AND DIRECTING COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO PREPARE AN APPROPRIATE AMENDMENT TO THE FISCAL YEAR 2011-12 COUNTY BUDGET TO EFFECTUATE THE FOREGOING

BODY
WHEREAS, this Board previously adopted Resolution No. R-141-08 which, among other things, ratified execution of Amendment Number Six to the Amended and Restated Operating Management Agreement (the “Amended Agreement”) between the County and the Performing Arts Center Trust, Inc. (the “PACT”) for the operation of the Adrienne Arsht Center for the Performing Arts of Miami-Dade County (the “Arsht Center”); and

WHEREAS, in accordance with the Amended Agreement, the PACT has the authority and the responsibility over the day to day operations of the Arsht Center, including the procurement of all necessary contractors for the maintenance and repairs of the Arsht Center; and

WHEREAS, the PACT has procured and is in the process of procuring contractors for the repair of considerable water damage to the Arsht Center; and

WHEREAS, at this time the Board wishes to authorize the funding of such repair so as to not impede the continued operation of the Arsht Center in its fall season and yet reserving the County’s rights under the Amended Agreement; and

WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum from the County Manager, a copy of which is incorporated herein by reference,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that:

Section 1. The foregoing recitals are incorporated in this resolution and are approved.

Section 2. This Board hereby authorizes the County Mayor or the County Mayor’s designee to expend up to $5 million from the amount allocated to the PACT in Fiscal Year 2011-12 for operational support of the facility, excess Convention Development Tax funds and/or the Convention Development Tax Shortfall Reserve, if necessary, to reimburse the Performing Arts Center Trust, Inc. for any required assessment, demolition, repair and/or reconstruction of the Arsht Center, subject to satisfaction of all of the following prior to the disbursement of funds: (a) for each contract subject to the requirements of Section 255.05 receipt by the County from the PACT of an alternative form of security in lieu of bond as required by Section 255.05, Florida Statutes, and in a form and value determined by the County Mayor or the County Mayor’s designee as set forth in Section 3 below; (b) for each contract subject to the requirements of Section 255.05 receipt by the County of documents evidencing that, prior to the commencement of work or purchase of supplies, the contractor(s) hired to perform the repair and restoration work has executed, delivered and recorded in the public records, a statutory payment and performance bond as required by Section 255.05 of the Florida Statutes in the full amount of the contract price naming the County and the PACT as dual obligees; (c) receipt by the County of releases of liens and claims from all contractors and subcontractors performing any work; and (d) receipt by the County of a written acknowledgment by an authorized representative of the PACT that the County’s agreement to fund the repairs is not a waiver of its rights under the Amended Agreement.

Section 3. The County Mayor or the County Mayor’s designee is hereby delegated the authority to determine the value of the alternative form of security in lieu of bond to be provided by the PACT for each contract subject to the requirements of Section 255.05, subject to the parameters set forth in the accompanying Mayor’s memorandum.

Section 4. The County Mayor or the County Mayor’s designee is hereby directed to prepare the appropriate budget amendment to the County’s Fiscal Year 2011-12 budget to effectuate the foregoing and to bring such amendment back to the Board for its approval as part of the end-of-year budget amendment process.

HEADER
Date:

To: Honorable Chairman Joe A. Martinez
and Members, Board of County Commissioners

From: Carlos A. Gimenez
Mayor

Subject: Request for Authorization to Allocate Funds for Continued Assessment and Required Repairs to the Adrienne Arsht Center (Arsht Center) for the Performing Arts of Miami-Dade County

STAFF RECOMMENDATION
It is recommended that the Board of County Commissioners (Board) authorize the allocation of up to $5 million to be funded from the annual amount allocated to the Performing Arts Center Trust, Inc. (PACT) for operational support of the Arsht Center, excess Convention Development Tax (CDT) receipts, if any, and/or the Convention Development Tax Shortfall Reserve to be used only as required for the assessment, demolition, and reconstruction of the damage to the Arsht Center as detailed in the June 20, 2012 status report to the Board (attached), subject to satisfaction of conditions precedent. A budget amendment to the County’s Fiscal Year 2011-2 budget effectuating the foregoing will be prepared and presented to the Board for approval as part of the end of year budget amendment process. In addition, it is recommended that the Board delegate to the Mayor or his designee the authority to determine the value of the alternative form of security in lieu of performance bond to be provided to the County by the PACT for each contract subject to the requirements of Section 255.05, Florida Statutes.

Scope of Agenda Item
This resolution allows for funding to be allocated to repair damage to the Arsht Center. While the facility is located in District 3, it serves the entire County.

Fiscal Impact/Funding Source
Currently, the County provides a subsidy of $7.65 million from the Convention Development Tax (CDT) to support the facility on an annual basis, and additional funding ($344,000 in FY 2011-12) to support education programs, capital expenditures and an endowment, depending on the amount of funding available. It is anticipated that some portion of the subsidy may be available to fund some of the repair costs. Adequate revenue from CDT collections to fund all or a portion of the balance may be available by the end of the fiscal year. Funding is available from the Convention Development Tax (CDT) Shortfall Reserve to cover any remaining deficiency. An appropriate amendment will be included in the end-of-year budget amendment to adjust the source of funds.

Track Record/Monitor
The Department of Cultural Affairs, the Internal Services Department, and the Office of Management and Budget will monitor the use of these funds.

MANAGER'S BACKGROUND
Background
This recommendation and update to the previously issued June 20, 2012 status report to the Board is provided to inform the Board of the necessary actions taken to date in response to the ongoing work of the PACT, in collaboration with the County’s professional staff, to identify the causes of, and develop and implement a plan of action to address the water damage to the Arsht Center that occurred on May 20, 2012.

As noted in the June 20, 2012 status report, in accordance with the Operating and Management Agreement, the PACT has the authority and responsibility over the day to day operations of the facility, including the procurement of all necessary contractors for the maintenance and repairs of the facility. In order to ensure the necessary level of diligence and scrutiny, our County staff will continue to work closely with the PACT in the review and approval of all scopes of work and expenditures incurred to complete this work. The County will work with the PACT to ensure that we take every possible step to protect our interest, including recovery from insurance policies.

The County and the PACT continue to aggressively pursue reimbursement options from our respective insurance carriers. The PACT has a Business Income Insurance policy with Chubb Group Insurance Companies (Chubb) and the coverage for the building is provided under the County’s insurance program. While we advance this claims process, the time-sensitive nature of the work to assess and repair the damage at the Arsht Center is the central reason for recommending that the Board approve an “up to” amount to provide the resources necessary to cover project-related expenditures. The $5 million allocation requested represents the value of the County’s deductible and will be accessed only as needed and subject to a strict review of all proposed project expenditures.

To date, the following is an update on progress with this work:
1. County staff is finalizing a contract with a forensics engineering firm to determine the cause of the event.
2. The PACT has taken the necessary steps to contain the water intrusion problem in the impacted areas.
3. Phase 1 of the remedial work, which consists of the initial repairs and dehumidification, has been substantially completed. The projected cost for this phase was originally estimated at $1.3 million. As a result of our review, County and PACT staff were able to reduce this cost to $1.15 million.
4. Phase 2, which is the demolition work, has commenced and is expected to be completed by late July. The scope of work and cost estimate for this phase are being finalized at this time, taking into account the unique and complex features of this facility. A very preliminary “order of magnitude” estimate of $1.4 million was provided in the June 20, 2012 report. As in Phase 1, our continued review has resulted in a revised estimate of $1 million. The Internal Services Department and the Office of Management and Budget are closely reviewing and verifying the scope and costs for this phase before authorizing any reimbursement of project expenditures by the PACT staff.
5. As mentioned in the June 20, 2012 status report, Phase 3 is the reconstruction of the impacted area and will require time and specialized expertise to develop a reliable cost estimate. Given the extent of the water damage, additional damaged areas may be revealed during the demolition phase and this uncertainty makes it difficult to provide a definitive cost estimate for Phase 3 at this time. In addition to hiring a forensic engineer to assist with this phase, staff will be working with the PACT staff to ensure that they solicit competitive cost proposals for the reconstruction.

Recognizing the importance of ensuring that all repairs are completed in time for the opening events of the fall season at the Arsht Center and that the cause of the water damage is remedied immediately so as to not cause further damage to the facility, County staff has been working diligently with staff of the PACT to ensure that this goal is met. This includes determining the cause of the damage, reconstructing the affected portions of this facility, as well as repair of systems that may have led to this damage. To help meet this goal, County staff has identified the immediate need to retain the services, on an emergency basis, of a forensic engineer. The forensic engineer will assist the team in determining the cause(s) of the recent water intrusion, identifying any additional potentially vulnerable areas in the Ballet Opera House as well as the Concert Hall and providing a corrective plan of action in order to prevent similar incidents from occurring in other areas of the facility. Additionally, the resulting forensic report will help refine the full scope of repairs, related cost estimates and liability for the damages.

As between the County and the PACT, the Operating and Management Agreement assigns responsibility between the parties for repairs to the Arsht Center. In an effort to move forward expeditiously and without regard to these provisions at this time, the County has agreed to provide funding for the repairs as set forth herein. Notwithstanding the County’s agreement to fund the repairs, the County has not waived any of its rights under the Operating and Management Agreement. Accordingly, as a condition of reimbursement, the PACT will include as part of each pay requisition an acknowledgement that it understands that the County’s agreement to fund the repairs is not a waiver of its or the PACT’s rights under the Operating and Management Agreement.
As noted in the June 20th memo, the PACT must provide a payment and performance bond in accordance with the provisions of Section 255.05, Florida Statutes for the each contract for repairs subject to the requirements of that statute. In lieu of a payment and performance bond, the PACT may provide to the County cash as an alternative form of security. It is recommended that the Board delegate to the Mayor or his designee the authority to determine the value and sufficiency of the security for each contract subject to the requirements of Section 255.05. In determining the sufficiency and value of the alternative security the Mayor will consider the nature, history and financial capabilities of the PACT, the contractual obligations secured by the alternative security and the contractual safeguards in place to protect payments to persons performing the work. It has been our practice to reimburse PACT for payments made in connection with the repairs rather than to issue advance payments. The recommendation is made that we continue this policy. This will further reduce the potential liability to the County and will also be considered when determining the value and sufficiency of the alternative form of security from the PACT. The receipt by the County of the alternative form of security shall be a condition to reimbursement.
As an additional security and in conformance with the requirements of Section 255.05, Florida Statutes, prior to any reimbursement for the work, the PACT shall provide to the County documents evidencing that, prior to the commencement of the work or purchase of supplies, any and all contractors hired by the PACT to perform the work has executed, delivered and recorded in the public records a statutory payment and performance bond in the full amount of those contracts naming the PACT and the County as dual obligees. Lastly, the PACT shall also provide to the


County releases of liens and claims on bonds from all contractors, subcontractors and suppliers performing any work or supplying any materials. Receipt of such releases shall also be a condition to reimbursement.

While both the County and the PACT continue to aggressively pursue reimbursement options from our respective insurance carriers, an allocation from the Board is necessary to allow for project-related expenditures to continue without delay. The County, the owner of the Arsht Center, and the PACT, the facility’s operator, continue to address all aspects of this situation, from repairs to insurance reimbursements, in close collaboration. We share the central objective of restoring the Arsht Center to the level of building quality established for this world-class facility while carefully managing the effectiveness of the work, containing costs, and aggressively pursuing all available remedies for reimbursement of associated costs. A report will be provided to the Board every two weeks until this issue is resolved.
Attachment

___________________________
Lisa M. Martinez, Senior Advisor



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