Miami Beach Approves Construction Contract for Miami Beach Convention Center Project -- Renovations to Building Begin in December

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1 City of Miami Beach, 1700 Convention Center Drive, Miami Beach, FL 33139, OFFICE OF COMMUNICATIONS, Nannette Rodriguez Tel: , PRESS RELEASE FOR IMMEDIATE RELEASE May 20, 2015 Miami Beach Approves Construction Contract for Miami Beach Convention Center Project -- Renovations to Building Begin in December May 20, 2015, Miami Beach, FL: The City of Miami Beach entered into a contract with Clark Construction to renovate and expand the Miami Beach Convention Center tonight at its Commission meeting. The contract provides for a five-month period where the design of the project can advance to a point where Clark can provide a guaranteed maximum price to the City. Reaching this point is an important milestone for the project, noted Miami Beach Mayor Philip Levine. Our plan is to be under construction the day after Art Basel ends in early December. The City Commission approved the agreement with Clark following a recommendation by Miami Beach City Manager Jimmy Morales. Our due diligence revealed that the Clark fee was on the low side of comparable projects and that Clark is a leader in renovating and expanding convention centers, said Morales. Clark s proposal to the City indicated they led the construction of several convention centers, including those in Orlando, Palm Beach, Boston, Chicago, Los Angeles, Nashville, and San Antonio. Clark Construction President Sid Jordan will lead the efforts for the project. We have a team of 20 people who will start working on the project immediately. This is a complicated project but we are up to the challenge, noted Jordan. We look forward to bidding the project to the local trade contractors beginning this fall and continuing into next year. The City contract requires Clark to publicly bid the trade contracts under an open book process, to ensure the City receives competitive pricing for the $500 million construction project. The Miami Beach Convention Center renovation and expansion project encompasses the comprehensive renovation of the center to current Class-A standards. The revitalized center is being designed by Denver-based Fentress Architects and will offer 500,000 square feet of contiguous exhibit space, a 60,000 square foot grand ballroom, three 20,000 square feet junior ballrooms, 67,000 square feet of breakout meeting spaces, 880 on-site parking spaces and 12 acres of surrounding parks and landscaped areas. Miami Beach Convention Center is planned to be ready for a grand opening by Art Basel ### To request this material in alternate format, sign language interpreter (five-day notice required), information on access for persons with disabilities, and/or any accommodation to review any document or participate in any city-sponsored proceedings, call and select 1 for English or 2 for Spanish, then option 6; TTY users may call via 711 (Florida Relay Service). We are committed to providing excellent public service and safety to all who live, work and play in our vibrant, tropical, historic community.

2 COMMISSION ITEM SUMMARY Condensed Title: A Resolution Of The Mayor And City Commission Of The City Of Miami Beach, Florida, Approving And Authorizing The Mayor And City Clerk To Execute A Construction Manager At Risk Agreement With Clark Construction Group, LLC ("Clark"), Pursuant To Request For Proposals (RFP) No ME, For Construction Manager At Risk Services For The Miami Beach Convention Center Renovation And Expansion lmprove alliance with key business sectors, namely hospitality, arts & international business with a focus on enhanced culture. entertainment & tourism. Supporting Data Environmental Scan, etc N/A Item Summary/Recommendation : On February 11,2015, the City Commission elected to re-bid the Project under a Construction Manager-at-Risk (CMR) prqect delivery method, an approach that allows for the continued development of the design for the Project with the benefit of input from the Construction Manager prior to establishment of the Guaranteed Maximum Price (GMP) for the Project, currently anticipated to occur on or about October, On March 2, 2015 a request for proposal was issued, advertised and ed to national and local construction management firms. Only one proposal was received from Clark Construction ("Clark"). On April 15,2015, the City Commission authorized the Administration to eliminate the RFP Evaluation Committee and open Clark's sealed proposal, to permit the City Manager to proceed with the due diligence process and make a recommendation to the City Commission concerning award. On April 29, 2015, the City Commission accepted the recommendation of the City Manager to award the RFP to Clark and authorized the Administration to enter into negotiations with Clark, subject to prior approval of the final agreement by the Mayor and City Commission. The Construction Manager at Risk Agreement attached and incorporated as Exhibit "A" hereto, provides for the Construction Manager to perform Pre-Construction Phase Services; creates a process for the development of a Guaranteed Maximum Price ("GMP") for the Project, subject to City Commission approval of a GMP Amendment; fixes the Construction Manager's Overhead and Profit Fee for the duration of the Project; and establishes the contract terms and provisions that detail the City's and the Construction Manager's rights and responsibilities with respect to the Project, including with respect to the construction phase and post-construction phase of the Project. GMR Fee Proposal Clark initially proposed a CMR fee equating to 3.95% of the work they manage. This equated to a fee of approximately $19 million based on the current budget. Clark has agreed to reduce their fee to 3.8% of the work they manage, or to $18.3 million based on the current budget. Pre-Guaranteed Maximum Price ("GMP") Services Proposal Clark initially proposed a Pre-GMP Services Fee of $3,669,799. The Pre-GMP Services Fee has been reduced to $2,594,073, a reduction of $1,075,726 (assuming a successful GMP negotiation). lf a successful GMP cannot be reached, the City is to pay an additional $400,000 demobilization fee. The Administration recommends the adoption of the Resolution. Advisory Board Recommendation: Financial lnformation: Source of Funds: (<ul qbpr Amount Account 1 $2,s94,073 Fund Line of Credit 2 Total $2,594,073 Financial lmpact Summary: N/A Department Dirpctor Assistant City Manager City al?qer MHflH.W,,hPW JLM lvt :\AGENDA\20 1 5\May\MBCC\CMAR Agreement Agreement Execution - SUMMARY MIAMIBEACH AGENDA R7A onre 'IE" 5-Zo-(S-

3 MIAMIBEACH City of Miomi Beoch, 1700 Convention Center Drive, Miomi Beoch, Florido 33139, COMMISSION MEMORANDUM TO: Mayor Philip Levine and Members the City FROM: Jimmy L. Morales, City Manager DATE: May 20,2015 SUBJECT: A RESOLUTION OF THE MAYOR1AND CITY GOMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AND AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE A CONSTRUCTION MANAGER AT RISK AGREEMENT WITH CLARK CONSTRUCTTON GROUP, LLc (,,CLARK"), PURSUANT TO REQUEST FOR PROPOSALS (RFp) NO ME, FOR CONSTRUCTION MANAGER AT RISK SERVICES FOR THE MIAM! BEACH CONVENTION CENTER RENOVATION AND EXPANSION PROJECT ("PROJECT"). ADMINISTRATION REGOMM ENDATION Adopt the Resolution. FUNDING $2,594,073 Fund Line of Credit KEY INTENDED OUTCOME lmprove alliance with key business sectors, namely hospitality, arts & international business with a focus on enhanced culture, entertainment & tourism. BACKGROUND On February 11,2015, the City Commission elected to re-bid the Project under a Construction Manager-at-Risk (CMR) project delivery method, an approach that allows for the continued development of the design for the Project with the benefit of input from the Construction Manager prior to establishment of the Guaranteed Maximum Price (GMP) for the Project, currently anticipated to occur on or about October, On March 2,2015 a request for proposal was issued, advertised and ed to national and local construction management firms. Proposals were due on April 9,2015. Only one proposal was received from Clark Construction ("Clark"). On April 15, 2015, the City Commission authorized the Administration to eliminate the RFP Evaluation Committee and open Clark's sealed proposal, to permit the City Manager to proceed with the due diligence process and make a recommendation to the City Commission concerning award. On April 29, 2015, the City Commission accepted the recommendation of the City Manager to award the RFP to Clark and authorized the Administration to enter into negotiations with Clark, subject to prior approval of the final agreement by the Mayor and City Commission. 116

4 Request for Proposals (RFP) No ME for Construction Manager at Risk Seryrces May 20,2015 Page 2 of 5 The negotiated Construction Manager at Risk Agreement attached and incorporated as Exhibit "A" hereto, provides for the Construction Manager to perform Pre-Construction Phase Services; creates a process for the development of a Guaranteed Maximum Price ("GMP") for the Project, subject to City Commission approval via a GMP Amendment; fixes the Construction Manager's Overhead and Profit Fee for the duration of the Project; and establishes the contract terms and provisions that specify the City's and the Construction Manager's rights and responsibilities with respect to the Project, including with respect to the construction phase and post-construction phase of the Project. ANALYSIS Key Contractual Terms The attached contract includes the following key contractual terms: 1. Comprehensive scope of services for Pre-Construction Phase Services, Construction Phase Services, and the Post-Occupancy/Close-out Phase; 2. Process and timeline for development of the Guaranteed Maximum Price for the Project based on 65% completed Construction Documents, subject to City Commission approval of a GMP Amendment; 3. Competitive "open book" trade bidding for work performed by Subcontractors and Suppliers; 4. Detailed provisions for Quality Assurance/Quality Control to ensure City's quality requirements are met; 5. Schedule requirements and specified damages for failure to achieve key Art Basel milestones, as well as liquidated damages in the amount of $15,000 per day for failure to timely achieve Substantial Completion (currently anticipated to be May 31, 2018); 6. Shared savings split in the event the final cost of the Project is certified to be within the GMP, with 75% of savings to City and 25o/o to Construction Manager; 7. Obligation to develop plans for local workforce hiring to maximize the employment of City of Miami Beach and Miami-Dade County residents, with periodic reporting to measure success; and 8. Detailed audit rights in favor of City of Miami Beach and Miami-Dade County (in accordance with Miami-Dade County General Obligation Bond grant requirements). CMR Fee Proposal Clark initially proposed a CMR fee equating to 3.95% of the work they manage. This equated to a fee of approximately $t9 million based on the current budget. Clark has agreed to reduce their fee to 3.8% of the work they manage, or to $18.3 million based on the current budget. lnitial anecdotal research indicated CMR fees typically ranged from 2.75o/o to 3.0%. Detailed research has revealed that actual fees are typically higher. Below is a summary of comparable CMR fees for local and national projects: 117

5 Requesf for Proposals (RFP) No ME for Construction Manager at Risk Seryices May 20, 2015 Page 3 of 5 Year* Const. Cost Fee Miami Marlins Ballpark HunUMoss JV 2012 $620m 3.15o/o Miami Science Museum Suffolk Current $109m 3.5o/o Boston Conv. & Expo Center ClarUHubert Hunt 2004 $463m < 3.95% Amway Center Orlando Hunt 2010 $480m < 4o/o Orlando Performing Arts Center Balfour Beatty 2014 $200m < 4o/o Orlando Phase V HunVClark JV 2003 $520m 4% Phoenix CC Expansion Hunt 2008 $552m 4o/o Music City Center Nashville Clark 2013 $372m 4.25o/o McCormick Place HQ Hotel Clark Current $335m 4.50o/o McCormick Place Events Center Clark Current $142m 5.250/o MIA South Terminal MIA North Terminal *Date Completed Parsons- Odebrecht Parsons- Odebrecht 2007 $840m 60/o 2014 $1,450m 60/o ln cases where "<" is indicated, meaning less than, the recall the exact fee percentage. project manager contacted could not While the fee is higher than the City's budget of 3o/o or $14.6 million, the additional fee will not increase the maximum construction budget of $500.3 million. The additional fee will be funded from contingencies that are built into the current construction budget. Pre-Guaranteed Maximum Price ("GMP") Services Proposal The CMR Contract incorporates three key contractual phases: 1. The contract that the City Commission is considering focuses on; i) the CMR Fee, ii) a fixed price to not exceed for Pre-GMP services (May 2015 through October 2015), and iii) the general contractual terms and conditions. 2. ln October of 2015, the City Commission will consider a "GMP Amendment" that will be the result of the pre-gmp services, a five-month process to agree upon a GMP, including Clark's long{erm staffing costs to manage the construction. 3. The project will then be competitively bid over the next several months. Any savings as a result of the competitive bidding, below the GMP, is contemplated to be spilt 75o/o lo the City and 25% to Clark. The $400+ million worth of construction trade subcontracts will be competitively bid pursuant to an "open book" contracting process. ln addition, the bidding of the trades following the GMP Amendment in October,2015 will be based on much further-completed design packages, thereby bringing greater certainty to the bid 118

6 Requesf for Proposals (RFP) No ME for Construction Manager af Rlsk Seryices May 20, 2015 Page 4 of 5 process and pricing that better reflects the costs actually required to complete the Project. Clark initially proposed a Pre-GMP Services Fee of $3,669,799. The Pre-GMP Services Fee has been reduced to $2,594,073, a reduction of $1,075,726 (assuming a successful GMP negotiation). lf a successful GMP cannot be reached, the City is to pay an additional $400,000 demobilization fee. Below summarizes the changes in the Pre-GMP Fee: -lnif"rsl Fropp"s:! $ Staffrng Ng_egliete{ pgnlragt $2,167,898. Reduced hours to provide for /31 only. Added senior oversight & permit expediter for non-city permits. $160,000 average annual comp. $255,000 average comp + burden. $256,271 reduction 530,530 Expenses $326,1 75. Postponed trailer costs to post GMP. Reevaluated travel expenses. $204,355 reduction 715,000 Fee $100,000. $615,000 reduction 3,669, S u btota l Demobilization 2,594,073. $1,075,726 reduction 1$2,500 ooofufs;t 400,000. Paid only if do not come to agreement on GMP $3,669,799 Tctal $2,994,073 $675,726 reduction 119

7 Requesf for Proposals (RFP) No ME for Construction Manager at Risk Servrces May 20, 2015 Page 5 of 5 The negotiated fee assuming a successful GMP negotiation is $94,073 higher than the City's budget of $2.5 million. The additional fee will not increase the maximum construction budget of $500.3 million. The additional fee will be funded from contingencies that are built into the construction budget. CONCLUSION / RECOMMENDATION The Administration recommends that the Mayor and City Commission direct the Administration to execute the attached Construction Manager At Risk Agreement with Clark Construction Group, LLC ("Clark"), pursuant to Request for Proposals (RFP) No ME, for construction manager at risk services for the Miami Beach Convention Center Renovation and Expansion Project ("Project"). Attachments: Exhibit A - Construction Manager At Risk Agreement with Clark Construction Group, LLC JLM / MT / AD/ MH T:\AGENDA\201S\May\MBCC\CMAR Agreement with Clark Construction\MBCC CMR Agreement Execution - MEMO.docx 120

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9 Request approval to execute the Construction Manager At Risk Agreement with Clark Construction Group pursuant to RFP No ME, for the Miami Beach Convention Center Renovation and Expansion Project 2

10 CMR Pre GMP Fees CMR Fees Design Development Complete 100% Core & Shell CDs 65% CDs overall 100% CDs May July Aug Oct Feb DD Cost Estimate Preliminary GMP $500.3m GMP $450m± Competitive Bidding 3

11 Proposed Negotiated Savings Staffing $2,424,269 $2,167,898 -$256,371 Expenses 530, , ,355 Fee 715, , ,000 Subtotal 3,669,799 2,594,073-1,075,726 Demobilization * 0 400, ,000 Total $3,669,799 $2,994,073 -$675,726 * Only Paid if do not reach agreement on GMP Amendment. 4

12 Initial proposal: 3.95% ($19.0m) Year Opened Const. Cost Fee Miami Marlins Ballpark Hunt/Moss JV 2012 $620m 3.15% Miami Science Museum Suffolk Current $109m 3.5% Boston Conv. & Expo Center Clark/Hubert Hunt 2004 $463m < 3.95% Amway Center Orlando Hunt 2010 $480m < 4% Orlando Performing Arts Center Balfour Beatty 2014 $200m < 4% Orlando Phase V Hunt/Clark JV 2003 $520m 4% Phoenix CC Expansion Hunt 2008 $552m 4% Music City Center Nashville Clark 2013 $372m 4.25% McCormick Place HQ Hotel Clark Current $335m 4.50% McCormick Place Events Center Clark Current $142m 5.25% MIA South Terminal Parsons-Odebrecht 2007 $840m 6% MIA North Terminal Parsons-Odebrecht 2014 $1,450m 6% Budgeted $14.6m, incremental costs to be funded by construction contingency 5

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14 Request approval to execute the Construction Manager At Risk Agreement with Clark Construction Group pursuant to RFP No ME, for the Miami Beach Convention Center Renovation and Expansion Project 7