Miami Beach approves Boucher Brothers’ Nikki Beach proposal
Despite some opposition from residents, Miami Beach elected officials narrowly approved a proposal byBoucher Brothers and Major Food Group to take over the Nikki Beach Club site in the city’s South of Fifthneighborhood.
The city commission voted 4-3 Thursday night to authorize City Manager Alina Hudak to negotiate a new 10-year lease with the joint venture to take over the city-owned property at 1 Ocean Drive when the agreementwith the current operators, Jack and Lucia Penrod, expires in 2026.
The decision marks the end of a contentious procurement battle that began in April when city commissionersinitially awarded Miami Beach-based Boucher Brothers a no-bid, non-binding term sheet for Nikki BeachClub, a restaurant-and-entertainment venue the Penrods have controlled for 38 years. A month later, the citycommission rescinded its decision amid complaints from residents, and ordered a competitive biddingprocess.
“I know in my heart that this was a fair process,” said commissioner David Richardson, who voted yes. “It wasobjective. At the end of the day, the city administration has recommended an operator we know and hasbeen a responsible operator for many, many years.”
Boucher Brothers, which has a longstanding contract to provide beach chairs and other concessions inMiami Beach, and Major Food Group beat three other proposals by The Group, RH (formerly known asRestoration Hardware) and Tao Group Hospitality.
However, the Penrods have a pending lawsuit and a court petition against the city, alleging Miami Beachofficials violated procurement rules in initially going with Boucher Brothers and for rejecting its proposalbecause they submitted it 15 minutes after a city-imposed deadline.
A “flawed” competitive process
Commissioner Steven Meiner, who voted no, said the city’s process in finding a new operator for 1 OceanDrive was flawed from the beginning. “We started offon the wrong foot,” Meiner said. “There was such anoutcry from our residents that the commission voted again to open it up for bid. It ultimately soured theprocess.”
In addition to Richardson, Mayor Dan Gelber and commissioners Ricky Arriola and Kristen Rosen Gonzalezvoted for the Boucher Brothers and Major Food Group, which owns and operates fancy restaurants such asCarbone at 49 Collins Avenue in Miami Beach. The New York-based firm is also partnering with DavidMartin’s Terra to develop a 58-story condominium in Miami’s Edgewater.
Commissioners Laura Dominguez and Alex Fernandez joined Meiner in voting no.
Boucher Brothers and Major Food Group are offering the city annual payments equaling 10 percent of theproposed new beach club’s gross operating revenue, or $4 million per year. The payments would increaseby 3 percent each year with Miami Beach receiving about $41 million during the 10-year term, a city memostates. Executives for the two companies also have cozy relationships with some city officials, at timeshelping them score reservations for beach concessions and at Major Food Group restaurants, according tocity emails the Penrods obtained in discovery for their lawsuit.
The joint venture is proposing a $26 million renovation of the existing building that would include a pool, awellness center and spa, a “kids corner” and a beach concession area, according to bid documents. Theproposal also includes Sadelle’s, an all-day dining restaurant by Major Food Group.
Rush to pick Boucher Brothers and Major Food Group
Ahead of the meeting, RH CEO Gary Friedman issued a statement that the city’s selection of BoucherBrothers and Major Food Group “certainly seemed rushed.” He also said “the final outcome will remainuncertain for some time” due to the Penrods’ litigation, the upcoming election and the current lease that stillhas more than two years left.
“We continue to believe in our vision for One Ocean Drive,” Friedman said. “And we hope that the people ofMiami Beach will be given a meaningful opportunity to have a voice in defining the future of thisirreplaceable public property.”
RH submitted a proposal that offered the city the most money: a minimum guaranteed rent of $333 millionover the life of a 30-year lease. The Santa Monica, California-based firm also proposed investing $150 millionto $170 million in redeveloping the existing two-story building.
The Group, a New York-based hospitality company that is opening Le Jardin Boucherie in Miami Beach, alsoproposed tearing down Nikki Beach Club and replacing it with a $36 million three-story restaurant andcultural theater, a beach concession area and a “lagoon” for wellness programming. The Group offered thecity $3 million in annual rent, increasing by 10 percent every five years for a 30-year lease.
Paula Allen was among several South of Fifth residents who criticized the city’s decision to go with BocuherBrothers and Major Food Group. “The city manager’s recommendation [came out] in a very short time,” Allensaid. “It didn’t seem clear or transparent why there is such a rush to give Boucher Brothers more business.”