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."
King Ocean Services Limited (Cayman Islands) Incorporated (King Ocean) has operated regular container ship services to the Caribbean, Central America, and the north coast of South America from Port Everglades since 1994 under the terms of a Marine Terminal Lease and Operating Agreement approved in June, 1994 by the Port Everglades Authority, predecessor in interest to Broward County. The most recent Marine Terminal Lease and Operating Agreement was approved by the Board on December 8, 2015 (Item No. PH-1). The agreement had an initial term of ten years with two five-year options, with an effective date retroactive to October 1, 2015. This long-term agreement included provisions which allowed for the construction of the Port Everglades Southport Turning Notch Extension (SPTNE), including the relocation of King Ocean's marine terminal in Southport to Interim Premises during the construction. This resulted in a reduction of King Ocean's Southport leasehold from a single 33.8-acre parcel to separate non-contiguous 15.6-acre and 18.4-acre parcels, reducing the efficiency of their cargo operations. King Ocean's leasehold also includes a 7.3-acre parcel in Midport.
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 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 leaseholds.
On October 12, 2018, representatives from Crowley Liner Services, Inc (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 King Ocean. Separate agenda items address Crowley and FIT.
Sunshined negotiations were held with King Ocean on November 6, 2018, and November 26, 2018, to discuss a First Amendment to the Marine Terminal Lease and Operating Agreement, including representatives for King Ocean, Port Everglades staff, and the Office of the County Attorney.
The major elements of the proposed Amendment terms are as follows:
- The land parcel described as "Interim Premises" is redefined and increased from 41.3 acres to 46.7 acres with an effective date of March 1, 2019. As originally defined, the Interim Premises was comprised of three separate parcels: a 7.3-acre parcel in Midport and two non-contiguous parcels in Southport: 15.6 and 18.4 acres. The amended Interim Premises are comprised of the same 7.3-acre parcel in Midport, the same 18.4-acre parcel in Southport, and a new 21-acre parcel in Southport (see Exhibit 5). This 21-acre parcel includes 12.5 acres being surrendered by FIT as a result of the termination of a separate one-year lease. The 15.6-acre parcel, which formed a part of King Ocean’s original Interim Premises, is being surrendered, and forms part of FIT’s new 46.6-acres Interim Premises
- Due to delays in the projected completion date for the SPTNE, the Agreement’s provision granting King Ocean 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
- The County will provide King Ocean with a rent credit in the amount of $60,000 to reimburse King Ocean for its cost and expense associated with improvements to a U.S. Customs inspection dock and the installation of a portable truck scale on the new 21-acre parcel
- The agreement's provision permitting early termination for convenience is deleted
In Fiscal Year 2018, King Ocean transported 239,234 TEUs (20-foot equivalent units) through the Port, handling nearly 22% of the Port's Container Revenue Center cargo volume. This equated to $7,702,874 in revenue.
The amendment has been reviewed and approved as to form by the Office of the County Attorney. |