THE PORT EVERGLADES DEPARTMENT RECOMMENDS APPROVAL.
This item supports the Commission's Vision and Goals for "Unlimited Economic Opportunities," to increase the economic strength and impact of Port Everglades, the Broward County Convention Center and the Fort Lauderdale-Hollywood International Airport in a sustainable manner; balancing economy, environment, and the community.
King Ocean Service De Venezuela, S.A. and King Ocean Services, Ltd. (King Ocean) have operated regular weekly multiple container cargo ship services to the Caribbean, Central America, and the north coast of South America since 1994 under the terms of a Lease and Operating Agreement (Agreement) approved in June 1994 by the Port Everglades Authority as predecessor in interest to Broward County. Over the ensuing years, that Agreement was amended by the Broward County Board of County Commissioners (Board) on six occasions to account for the exercise of two five-year options and modifications to operating parameters. The final amendment under that Agreement, approved by the Board on September 23, 2008 (Item No. PH-8), provided for the relocation of King Ocean’s 22.84 acre leasehold from Midport to Southport in order to provide the required parking and site circulation for the Terminal 18 expansion to serve the Oasis-class cruise ships.
On January 10, 2012 (Item No. 13), the Board approved a new two-year Marine Terminal Lease and Operating Agreement between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated (Terminal Agreement), that expanded their leasehold from 22.84 acres to 33.84 acres of land in Southport effective February 1, 2012 through January 31, 2014, and a new two-year Lease Agreement between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated (Office Agreement) for office space on land in Southport containing 4,047 square feet effective February 1, 2012 through January 31, 2014. On November 12, 2013 (Item No. 12), the Board approved a two-year extension of the Office Agreement and the Terminal Agreement, modifying the lease terms and extending the expiration dates to January 31, 2016.
King Ocean is a productive container carrier/terminal operator at Port Everglades, generally exceeding Port-wide throughput per acre. In Fiscal Year 2013, the annual throughput per leased acre for King Ocean totaled nearly 3,600 20-foot equivalent units (TEUs), compared with the Port-wide average of 3,300 TEUs per acre. King Ocean has been fiscally responsible and averaged approximately $4.2 million annually in maritime revenue for the Port over the last two years. King Ocean’s services (weekly fixed-day sailings to Netherlands Antilles, Venezuela, Colombia, Costa Rica, Guatemala, Honduras, and Panama) are also key to the Port’s market penetration strategies, and are a significant factor in Port Everglades’ position as the number one South Atlantic seaport in containerized ocean cargo trade with the north coast of South America. King Ocean is also partnered with Hamburg Sud, an important worldwide carrier based in Hamburg, Germany, in a weekly service to the Netherland Antilles (Aruba, Curacao, and Bonaire). King Ocean is second only to Crowley Liner Services in TEU throughput at Port Everglades. King Ocean also operates Caribbean container service out of Terminal Island in Miami. King Ocean’s FY2013 throughput of approximately 140,000 TEUs (20-foot Equivalent Units for ocean containers) of container cargo at Port Everglades supported 977 direct, induced, and indirect jobs for area residents as well as another 24,961 importer, exporter, and distribution related jobs state-wide. Personal income associated with all supported jobs total $897.6 million. The total value of the economic activity related to King Ocean is approximately $3.2 billion (see Exhibit 4). This Amendment would add two new weekly container services and an estimated 25,000 new container shipmoves annually (47,500 TEUs).
When Sea Star recently announced the cancellation of their Port Everglades service to Puerto Rico for business reasons, King Ocean immediately notified the Port of their interest in leasing the land previously used by Sea Star to relocate their Caribbean container service to Port Everglades. A sunshined negotiations meeting was conducted May 5, 2014 to discuss the terms for the relocation of their Caribbean services to Port Everglades.
The key business points of the proposed Second Amendment to the Marine Terminal Lease and Operating Agreement are as follows:
- Add an additional 7.31 acres of land to their lease in the Midport area of Port Everglades as shown in Exhibit A of the Amendment to accommodate additional container volume.
- For the remaining eight months of Contract Year 3, additional annual rental fees of $137,946 will be generated, paid in monthly installments of $17,243.25, based on a lease rate of $.65 per square foot annually.
- For Contract Year 4, additional annual rental fees of $232,385.94 will be generated, paid in monthly installments of $19,365.50, based on a lease rate of $.73 per square foot annually.
- Upon approval of the Second Amendment, the Minimum Guarantee Payment will be increased to $3,432,000 annually, an increase of $552,000 per year for the remainder of the extension term. The increase is an additional 12,000 container shipmoves per contract year at a rate of $46 per move.
- All other terms and conditions of the current Terminal Agreement will remain the same.
The Amendment has been reviewed by the Risk Management Division and approved as to form by the Office of the County Attorney. |