THE PORT EVERGLADES DEPARTMENT RECOMMENDS APPROVAL.
This action supports the Broward County Board of County Commissioners' Value of "Ensuring economic opportunities for Broward's diverse population and businesses" and the Goal to "Increase the economic strength and impact of revenue-generating County enterprises balancing economic, environmental and community needs."
Horizon Terminal Services LLC (Horizon) is a wholly-owned subsidiary of Höegh Autoliners (Höegh), a port and terminal operator and auto processor headquartered in Jacksonville, FL. Höegh is one of the world's leading "roll on/roll off" vessel operators, carrying two million standard car units annually worldwide. In early 2016, Horizon purchased SC Line/Fast Terminals, which operated at Port Everglades on a 5.73 acre grid parcel in Southport since 2012. The acquisition of the terminal business was part of Höegh's strategic investment in the Caribbean and Central American markets. Horizon has identified Port Everglades as the natural choice for auto Original Equipment Manufacturers (OEMs) for both import and export of motor vehicles.
Horizon's Southport grid site had a capacity to handle approximately 15,000 cars, heavy machinery, and other pieces of equipment annually, and Horizon projects the potential for an increase to 40,000 - 45,000 vehicles and other equipment types annually over the next five years. Horizon has imported over 4,300 new General Motors (GM) vehicles from Mexico since OEM operations started at the end of May 2017. These are the first shipments of new imported vehicles to move through the port in many years. Horizon has also exported over 2,000 new Honda vehicles manufactured in the United States, which began arriving at Port Everglades by rail in August 2017. Exports moving through Port Everglades create additional job opportunities and support the US balance of trade. Additionally, ocean carriers are seeing the benefit of using Port Everglades as a transhipment point for vehicles manufactured in Mexico but destined to South American markets, with almost 400 OEM vehicles being transshipped through Port Everglades in November and December 2017.
On August 22, 2017 (Item No. 120), the Board approved Port staff's recommendation to waive the competitive selection requirements for Marine Terminal Lease and Operating Agreements pursuant to Section 32.10 of the Broward County Administrative Code, and authorized the Port Everglades Chief Executive/Port Director to enter into negotiations with Horizon for a new Marine Terminal lease in the Midport area of Port Everglades.
A single Sunshined negotiation meeting was held on October 24th, 2017, with representatives from Horizon and staff from the Port Everglades Department and the Office of the County Attorney. The primary business points of the agreement are as follows:
- The term of the agreement is for five years retroactive to January 1, 2018.
- The lease consists of two non-contiguous parcels located in the Midport area of Port Everglades, totaling 8.67 acres, made up of a 5.67 acre parcel and a three acre outparcel. The lease also includes 27,560 sq. ft. of warehouse area (see Exhibit 3).
- The annual land and warehouse rent is $1.06 per square foot. The rent will increase annually over the term of the Agreement, after the first year, by the greater of CPI or 3%. The warehouse rent takes into account Horizon's commitment to invest approximately $630,000 for infrastructure needed to establish a new auto processing facility on the leasehold, with infrastructure valued at an estimated $410,000 remaining as permanent improvements to the property at the end of the lease term, effectively increasing the value of the parcel to the Port.
- All permanent improvements to the 5.67 acre parcel and warehouse space shall be at Horizon's sole cost and expense. Horizon is not permitted to make any permanent improvements on the three acre outparcel.
- The County retains the right to relocate Horizon to a different parcel or parcels of similar size during the lease term to account for future development needs in Midport. The County will be responsible for all reasonable expenses associated with moving Horizon from the 5.67 acre parcel and warehouse, and Horizon will be responsible for all reasonable expenses associated with a move from the 3.0 acre parcel.
- Horizon has agreed to a Minimum Annual Guarantee (MAG) of 29,500 cargo units at an initial rate of $7.50 per unit. The per unit rate will increase annually over the term of the Agreement after the first year by the lesser of CPI or 3%. A Unit for the purposes of this Agreement is derived using a Tons to Unit Conversion Schedule, with each unit representing two short tons (4,000 lbs.) of cargo. The use of cargo units allows for a consistent rate for all types of break bulk cargo that may be handled by Horizon through the terminal, compared to tariff rates which vary by cargo type.
- All other marine services and charges applicable to Horizon's operations at Port Everglades will be billed in accordance with Port Everglades Tariff No. 12.
- Horizon will provide a payment bond of $335,000 in a form approved by the County.
Based on an economic impact analysis completed by Martin Associates, it is estimated that Horizon's operations at Port Everglades at MAG levels is anticipated to support 132 direct, induced and indirect jobs for Broward County residents with a total wage and salary income impact of almost $10.9 million. Local businesses will receive almost $7.3 million in sales revenue from providing services to the ocean cargo activity. This does not include the value of the cargo moving through the Port. A total of over $1 million of state and local tax revenue is estimated to be generated annually as a result of the cargo activity through Horizon's operations at Port Everglades (see Exhibit 4).
The Marine Terminal Lease and Operating 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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Glenn A. Wiltshire, Deputy Port Director, Port Everglades Department, (954) 468-3504
Loren Fourness, Property Manager, Business Administration Division, Port Everglades Department, (954) 468-3518
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Horizon Terminal Services, LLC's projected total rent revenue over the five-year term of the proposed Marine Terminal Lease and Operating Agreement will be $2,280,496, with additional projected maritime related revenue totaling $5.78 million over the same period. |