Broward County Commission Regular Meeting
Director's Name: Joseph Morris
Department: Port Everglades Division: Business Development
Information
Requested Action
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(This is the first of two required public hearings. The second public hearing will be held on September 4, 2025.)
MOTION TO APPROVE Second Amendment to the Marine Terminal Lease and Operating Agreement between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated, retroactive to March 31, 2025, to acknowledge the exercise of both Option Terms; separate land rent from container shipmove rates; set rent, container shipmove rates, and the annual minimum guaranteed payment from the Final Premises Effective Date through the last day of the Option Terms; redefine eligible cargo for negotiated rates; revise the Final Premises leasehold boundaries and the Final Premises Effective Date; update berth/crane and maintenance terms; establish a transition period and a relocation deadline; provide additional payment credits; and update various other provisions.
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Why Action is Necessary
Pursuant to Section 32.5.b. of the Broward County Administrative Code, two Public Hearings are required for amendments to marine terminal leases exceeding five years within the Restricted Use Zone.
What Action Accomplishes
Allows for the consideration of the Second Amendment to the Marine Terminal Lease and Operating Agreement between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated. This is the first of two Public Hearings. The second Public Hearing will be held on September 4, 2025. No action is required on this motion.
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Previous Action Taken
None
Summary Explanation/Background
THE PORT EVERGLADES DEPARTMENT RECOMMENDS APPROVAL.
This action supports the Broward County Board of County Commissioners’ (“Board”) Value of “Building partnerships and working collaboratively with others to meet shared objectives,” and the Goal of “Ensuring economic opportunities and a sustainable economy, with an emphasis on Broward’s lower and middle class.”
On December 8, 2015 (Item No. PH-1), the Board approved a Marine Terminal Lease and Operating Agreement (“Agreement”) between Broward County and King Ocean Services Limited (Cayman Islands) Incorporated (“King Ocean”) that established a 10-year term, retroactive to October 1, 2015, with two five-year renewal options. Pursuant to the Agreement, King Ocean was required to move from their previous location at the Port to three different locations in the Midport and Southport areas of Port Everglades (“the Interim Premises”) on the Interim Premises Effective Date, and then to a single location in Southport (“the Final Premises”) on the Final Premises Effective Date, which was the intended date of substantial completion of the Port Everglades Southport Turning Notch Extension (“SPTNE”) Project. To synchronize contract milestones with project progress, the Board approved the First Amendment to the Agreement on February 26, 2019 (Item No. 34), which, among other things, reset the Interim Premises Effective Date to March 1, 2019, the Final Premises Effective Date to December 31, 2022, and authorized Port Everglades Chief Executive/Port Director to further modify the Final Premises Effective Date by written notice. Following the SPTNE Project’s substantial completion on March 31, 2025, which included 40.9 acres of new container terminal yard to be occupied by King Ocean, the Chief Executive/Port Director exercised that authority and, by formal letter, designated April 1, 2025, as the Final Premises Effective Date, directing King Ocean to occupy the Final Premises in accordance with the Agreement.
Five sunshined negotiation meetings were held with King Ocean to discuss the terms of the Second Amendment to the Agreement. The first two meetings were held on July 21, 2022, and September 9, 2022. While preliminary terms were agreed to during those negotiations, they were not finalized and negotiations were suspended. On February 1, 2024, King Ocean acquired Seacor Island Lines LLC, a company that provided service primarily to and from the Bahamas using smaller landing craft-sized vessels from Port Laudania. As part of that acquisition, King Ocean moved these services to the Port, and requested additional land be included in the Final Premises leasehold to accommodate the additional business. After a number of fact-finding meetings, negotiations were held on February 14, 2025; March 10, 2025; and April 2, 2025. Participants included representatives from King Ocean, Port Everglades staff, and the Broward County Attorney’s Office. Pursuant to Section 315.18, Florida Statutes, the meetings were closed to the public.
The primary business terms of the proposed Second Amendment are as follows:
• Term: King Ocean exercises both five-year renewal options, extending the Agreement through September 30, 2035.
• Leasehold (Final Premises): The Final Premises are redefined and expanded from approximately 40.9 acres to approximately 57.8 acres to account for the growth in King Ocean’s business since the Agreement was approved in 2015 (see Exhibit 2). The Final Premises consists of land parcels referred to as King Ocean West, the Turning Notch Property, and Grid 22.
• Access: Effective April 1, 2025, King Ocean was granted access to the Turning Notch Property for the limited purposes of relocation and completion of initial above ground permanent improvements. Operational use of the Turning Notch portion of the Final Premises is prohibited until the earlier of (i) issuance of a Temporary Certificate of Occupancy by the City of Hollywood, or (ii) 240 days following April 1, 2025, which period may be extended by up to 120 days with written approval from the Chief Executive/Port Director. During this Transition Period, King Ocean will retain access to its existing Midport and Southport locations that were part of the Interim Premises, but is required to fully vacate those premises within 60 days after the conclusion of the Transition Period or be subject to the applicable Grid rates as set forth in the Port Everglades Tariff No. 12. Effective April 1, 2025, King Ocean was granted access to Grid 22 and King Ocean West for operational purposes.
• Rent Structure: This amendment decouples the previously bundled container shipmove rate that included the land rent, crane usage, and certain marine charges, and replaces that with separate charges as follows:
o Midport and Southport Land Rent: King Ocean will pay $0.96 per square foot rent for the Midport and Southport locations from April 1, 2025, through September 30, 2025, after which the rate rises to $0.9888 per square foot. The monthly rent for those locations will be reduced for any land within those locations that is surrendered prior to the end of the Transition Period. Once the Transition Period ends, King Ocean has a 60-day rent-free window at Midport and Southport to complete its relocation onto the Turning Notch Property, after which any area not properly and timely surrendered will be billed at the Port Everglades Grid rates published in Port Everglades Tariff No. 12.
o King Ocean West Land Rent: King Ocean will pay $0.96 per square foot through September 30, 2025, at which point the rent increases to $1.41 per square foot with annual 3% increases thereafter.
o Turning Notch Property Land Rent: Rent for the Turning Notch Property commences on the first calendar day following the end of the Transition Period (unless it is used for operational purposes, which would start rent). Rent for the Turning Notch Property for the period starting on April 1, 2025, through the end of Contract Year 11 (October 1, 2025 - September 30, 2026), is based on a rate of $1.41 per square foot, with annual 3% increases thereafter.
o Grid 22 Land Rent: Rent for Grid 22 for the period starting on April 1, 2025, through the end of Contract Year 11, is based on a rate of $1.41 per square foot, with annual 3% increases thereafter.
• Shipmove Rate: $59.50 per container loaded or unloaded from a ship from April 1, 2025, through the end of Contract Year 11 (up from the current $49.23), with annual 3% increases thereafter.
• Minimum Container Guarantee (“MCG”): 107,500 container shipmoves in Contract Years 11-15, increasing by 2,500 shipmoves each year for Contract Years 16-20 to reach 120,000 container shipmoves by Contract Year 20. The current MCG is 72,000 container shipmoves.
• Volume Incentive Discount: Rate discount of $10.00 per shipmove will apply to the first 20,000 shipmoves above the MCG, with the discount increasing to $16.00 per shipmove for each additional shipmove thereafter.
• Payment Bond: The required payment bond or irrevocable letter of credit from King Ocean is increased from $350,000 to $1,618,087.
• Proprietary Cargo: Eliminates previous restrictions on cargo eligibility for negotiated shipmove rates. All containerized cargo handled by King Ocean is eligible for the negotiated shipmove rate. Previously, cargo not tied to King Ocean’s own service was charged higher Port Tariff rates. Notwithstanding, containerized cargo that was handled at another Port Everglades terminal within the prior 12 months before moving to King Ocean will not be eligible for volume incentive discounts for a period of one year.
• Capital Expenditures: The Port will provide up to $3,000,000 in rent credits to King Ocean for certain approved permanent capital improvements completed prior to March 31, 2027, and documented by receipts. These improvements include a gate house and scale complex, US Department of Agriculture inspection platform, office building, and 300 electric plugs for refrigerated cargoes.
• Berth/Crane Use:
o Until the Final Premises Effective Date
§ King Ocean has preferential access to:
§ One berth in Southport
§ One berth in Midport
§ One container crane at each location
o Starting on the Final Premises Effective Date
§ King Ocean’s preferential berth use shifts to:
§ Berths 30B & 30C for lift on/lift off cargo (Lo/Lo)
§ Berth 33B for roll on/roll off cargo (Ro/Ro)
o Starting on the Final Premises Effective Date and until the end of the Transition Period
§ King Ocean will have preferential use of two cranes in Southport and one crane in Midport.
o After the Transition Period
§ King Ocean will have preferential use of three cranes in Southport.
• Maintenance: A new Exhibit is added to clearly define the distribution of maintenance and repair responsibilities between the County and King Ocean.
• Minimum Container Guarantee (MCG) Shortfall: A new provision was added providing the Chief Executive/Port Director the authority to take back and reduce the acreage included in the Final Premises if King Ocean has an MCG shortfall for two consecutive contract years.
• Termination of Cargo Payment Credit: The $10 per shipmove credit being provided to King Ocean since 2017 as part of their movement to the Interim Premises will be terminated at the earlier of the end of the Transition Period or February 28, 2026.
• Miscellaneous Provisions: Provisions addressing Insurance, Audit Rights and Retention of Records, County Business Enterprise Goals, Limited Warranty for the Turning Notch Property Improvements, and numerous other federal, state, or County requirements were added or updated as appropriate.
King Ocean has provided regular container services to the Caribbean, Central America, and northern South America from Port Everglades since 1994. Over the past ten Fiscal Years, King Ocean has handled more than 2.3 million twenty-foot equivalent units (TEUs) of containerized cargo, generating approximately $84 million in revenue for Port Everglades. In Fiscal Year 2024 alone, TEU volume increased by 15% compared to Fiscal Year 2023.
By the end of the term, the economic impact of the proposed Second Amendment is estimated to support 1,858 total jobs, of which 618 are direct jobs, 656 are indirect jobs, and 583 are induced jobs. A total of $173,048,000 in annual personal income is expected to be generated from these jobs. The annual impact on business services revenue is projected to be approximately $226,866,000. State and local taxes of $17,415,000 are expected to be generated annually. The economic impact is based on the MAG and will increase for any shipmoves exceeding the MAG (see Exhibit 3).
The Notice of Public Hearing for this Board action was published twice (August 11, 2025, and August 18, 2025) pursuant to the applicable provisions of Chapter 94-429, Laws of Florida (see Exhibit 4).
The Second Amendment has been reviewed and approved as to form by the Office of the County Attorney.
Source of Additional Information
Jorge A. Hernández, Director of Business Development, Port Everglades Department, (954) 468-3501
Stacie Warren, Assistant Port Property Manager, Business Development, Port Everglades Department, (954) 468-3706
Fiscal Impact
Fiscal Impact/Cost Summary
The total guaranteed revenue from the Final Premises Effective Date through the term of the Agreement is estimated to be $123,456,944, including land rent and MCG payments for container shipmoves. Any cargo throughput exceeding the MCG will generate additional revenue.