THE PORT EVERGLADES DEPARTMENT RECOMMENDS APPROVAL.
This action supports the Broward County Board of County Commissioners' (Board) 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."
As the first tenant of the Southport container terminal complex at Port Everglades, Crowley entered into a lease agreement with the Port Everglades Authority, predecessor in interest to Broward County, effective January 22, 1990, for a ten-year term. Crowley's most recent Marine Terminal Lease and Operating Agreement was approved by the Board on June 14, 2016 (Item No. PH-5). This agreement combined two separate terminals under a single agreement after Crowley's acquisition of SeaFreight Agencies (USA), Inc (SeaFreight). The agreement had an initial term of ten years with two five-year options, with an effective date retroactive to May 1, 2016. The new leasehold consisted of 99 acres, which combined Crowley’s 74-acre terminal with SeaFreight’s 25-acre terminal. Since Crowley anticipated that they would gain efficiencies from the combined terminal operations, the Agreement provided Crowley with the option to reopen negotiations to return a portion of the leasehold at any time before or within one year of completion of the Southport Turning Notch Extension (SPTNE). The Agreement authorized the Port Everglades Chief Executive/Port Director to execute any resulting amendment to the Agreement.
As result of negotiations completed on September 19, 2017, on November 2, 2017, the Port Everglades Chief Executive/Port Director executed the First Amendment to the Agreement reducing the size of Crowley’s leasehold to 78 acres, consisting of a 73.8-acre parcel and a separate non-contiguous 4.2-acre parcel. It also modified the Shipmove Rates and Minimum Annual Guaranteed Shipmoves based upon the amount of acreage surrendered.
On May 23, 2017 (Item No. 66), the Board approved an Agreement between Broward County and Moss/Kiewit, a Joint Venture, for Managing General Contractor for the Port Everglades SPTNE. Construction on this project began in March 2018, and will continue until 2023. This is a delay from the original estimated completion date of December 31, 2019.
During the negotiations with the Southport container terminal operators in 2015 and 2016, leaseholds that accounted for the land required for the SPTNE construction were agreed to by all parties. However, those leaseholds were not optimal due to the need to reduce the size of both the Florida International Terminal, LLC (FIT), and King Ocean Services Limited (Cayman Islands) Incorporated (King Ocean) leaseholds.
On October 12, 2018, representatives from Crowley, FIT, and King Ocean met with Port staff to propose modifying their respective leasehold parcels to better accommodate their operations during the construction of the SPTNE. It was agreed that separate sunshine negotiations would be held with each terminal operator. This agenda item addresses Crowley. Separate agenda items address FIT and King Ocean.
Sunshined negotiations were held with Crowley on November 7, 2018, to discuss a Second Amendment to the Marine Terminal Lease and Operating Agreement, including representatives for Crowley, Port Everglades staff, and the Office of the County Attorney.
The major elements of the proposed Amendment terms are as follows:
- Consolidation of the two separate parcels into a single 78-acre parcel with an effective date of March 1, 2019 (see Exhibit 5)
- The Minimum Annual Guaranteed Container Shipmoves for contract years four through seven is reduced from 171,600 to 165,126 shipmoves to account for delays in the SPTNE completion date that affect berth and crane availability
- County will provide Crowley with a one-time lump sum rent credit in the amount of $735,000 to compensate Crowley for the permanent improvements to the non-contiguous 4.2-acre parcel being surrendered and being made part of King Ocean's new Interim Premises, valued at $1.35M (depreciated)
- Due to delays in the projected completion date for the SPTNE, the Agreement’s provision granting Crowley the ability to terminate the Agreement if the SPTNE is not completed within six months of the projected completion date is modified to reflect the new completion date of December 31, 2022
Crowley operates the largest container terminal in Port Everglades. In Fiscal Year 2018, Crowley transported 355,211 TEUs (20-foot equivalent units) through the Port, handling more than 37% of the Port's Container Revenue Center cargo volume. This equated to $13,091,139 in revenue.
The amendment has been reviewed and approved as to form by the Office of the County Attorney. Signature pages are still being finalized and once received, will be noted in the Monday Night Memo prior to the Commission meeting. |