MOTION TO ADOPT Resolution No. 2017-467 directing the County Administrator to publish Notices of Public Hearings to be held on October 17, 2017, and November 7, 2017, at 10:00 a.m. in Room 422 of the Governmental Center, 115 S Andrews Ave., Fort Lauderdale, FL, to consider approval of Lessor's Consent to Assignment of Amended Lease from Colorado Boxed Beef Co. to CBBC Real Estate Holdings, Inc. and Consent to Encumber Leasehold Interest for a five-acre ground lease at Broward County’s Port Everglades.
ACTION: (T-10:21 AM) Approved.
VOTE: 7-0. Mayor Sharief was not present during the vote. Commissioner Bogen was not present.
ACTION: (T-10:41 AM) Mayor Sharief requested being shown voting in the affirmative. (Refer to minutes for full discussion.)
VOTE: 8-0.
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THE PORT EVERGLADES DEPARTMENT RECOMMENDS APPROVAL.
This action supports the Broward County Board of County Commissioners' Value of "Ensuring economic opportunities for all people and businesses in Broward" and Goal to "Increase the economic strength and impact of revenue-generating County enterprises balancing economic, environmental, and community needs."
On April 9, 1980, the Port Everglades Authority, predecessor in interest to the Broward County Board of County Commissioners (Board), entered into a ground lease, as amended, with Primlaks (U.S.A.), Inc., predecessor in interest to Port Everglades Cold Storage, Inc. (Cold Storage), for a period of fifty years to construct and operate a refrigerator/freezer facility on five acres of port land located at 3205 SE 19th Avenue at Port Everglades (see Exhibit 1). The current land lease expires on April 30, 2032. On December 31, 2015, Cold Storage merged into Colorado Boxed Beef Co. (Boxed Beef), a Florida corporation. Boxed Beef is requesting the County's consent to assign the land lease to CBBC Real Estate Holdings, Inc. (CBBC), a Delaware corporation (see Exhibit 2). Boxed Beef has also requested the County's consent to encumber its leasehold interest to allow Lessee to execute a leasehold mortgage, and to further assign its interests in the amended lease to a wholly-owned subsidiary of CBBC on or before May 1, 2018.
Boxed Beef, founded in 1975, is a leading distributor of refrigerated and frozen food products-the company was ranked 6th of Florida’s Top Privately-Held Companies in 2013 by the Tampa Bay Business Journal. Boxed Beef supplies its customers with beef, pork, poultry, lamb, veal, seafood, cheese, vegetables, lunch meat, and a variety of dry products. Boxed Beef customers include the leading independent and chain retailers, cruise lines, food service distributors, the United States military, amusement parks and other food outlets throughout the United States and internationally, making more than 6,000 deliveries per week. Boxed Beef owns and operates a 78,250 square foot warehouse with five cold chambers for frozen foods on the Port Everglades leasehold.
Boxed Beef had also previously indicated an interest in extending the term of its current ground lease. Port staff met with representatives from the County Attorney's Office and Boxed Beef in sunshined negotiations on September 18, 2017 to discuss the assignment request as well as the potential for an extension to the ground lease. Port staff provided Boxed Beef with a lease term extension proposal, however, following negotiations, Boxed Beef's representatives deferred its request for a lease extension. Staff also discussed the request to encumber the leasehold interest to allow CBBC to execute a leasehold mortgage, and to further assign its interests in the amended lease to a wholly-owned subsidiary of CBBC.
Port staff has reviewed the assignment application, and has determined that the proposed assignee meets the criteria for assignment and that the proposed assignment is in accordance with past practice. Staff’s due diligence included corresponding with the proposed assignee's representative to clarify requirements, and reviewing the proposed assignee's corporate status, business history/experience, financial documents and creditworthiness. In addition, no safety or environmental violations were found in reviewing the company’s record.
As part of its due diligence process for the assignment, Boxed Beef identified unpaid ad valorem tax bills for calendar years 1997, 1998, 1999 and 2000 relating to the improvements on the leasehold. The taxes assessed for that four year period totaled $444,759, but with the statutory delinquent interest added now totals $1,875,523. These tax bills had been addressed and billed to the County as property owner and not the tenant. Boxed Beef has paid and is current on all ad valorem taxes assessed since then. Given a five year statute of limitations under Florida Statutes Chapter 95, the outstanding tax amounts for these years is not collectible. Further, upon expiration of the lease term, the improvements on the leasehold will become County property and be immune from taxation under Florida law. Per discussions with Records, Taxes, and Treasury Division Staff, the ad valorem tax roll reconciliation will be addressed in the 2017 Errors and Insolvencies Report that will be submitted to the Board for its approval in August 2018.
Based on the above, Port staff recommends approval of the Assignment of the Amended Lease to CBBC and consent to the Leasehold Mortgage, with the additional provision that CBBC may assign its interest in the Amended Lease to a wholly-owned subsidiary of CBBC on or before May 18, 2018, with the prior written approval of the Port Everglades Chief Executive/Port Director.
The Consent to Assignment Agreement has been reviewed by the Port Everglades Risk Manager and approved as to form by the Office of the County Attorney.
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