Broward County Commission Regular Meeting
Director's Name: Joseph Morris
Department: Port Everglades Division: Director’s Office
Information
Requested Action
title
MOTION TO APPROVE Third Amendment to Port Everglades Passenger Cruise Terminal and Berth User Agreement between Broward County and Royal Caribbean Cruises Ltd. to extend the period during which the Parties must agree on rates for the first option term, modify the Capital Cost Recovery Charge (“CCRC”) provision and acknowledge full payment of the CCRC by Royal Caribbean Cruises Ltd.; and authorize the Mayor and Clerk to execute same. (Deferred from September 5, 2024 - Item No. 11)
body
Why Action is Necessary
Broward County Board of County Commissioners' approval is required for the Third Amendment to the Port Everglades Passenger Cruise Terminal and Berth User Agreement between Broward County and Royal Caribbean Cruises Ltd.
What Action Accomplishes
Approves the Third Amendment to the Port Everglades Passenger Cruise Terminal and Berth User Agreement between Broward County and Royal Caribbean Cruises Ltd.
Goal Related Icon(s)
☒County Commission
☐Go Green
☐MAP Broward
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.”
Royal Caribbean Cruises, Ltd. (“RCL”) has been homeporting cruise ships at Port Everglades operating under the Royal Caribbean International, Celebrity Cruises, and Silversea brands for many years through a series of agreements with Broward County dating back to 1999. On June 6, 2017 (Item No. 61), the Board approved a Passenger Cruise Terminal and Berth User Agreement (“User Agreement”) with RCL, which commenced on January 1, 2018, and runs through September 30, 2026. The User Agreement provides RCL with two additional option terms. The first option term is for a four-year period ending September 30, 2030. The second option term is for a five-year period ending on September 30, 2035. Each option term requires at least six months’ notice prior to the end of the then current term.
On June 12, 2018 (Item No. 68), the Board authorized the County Administrator to approve the First Amendment to the User Agreement once final terms and conditions were agreed to. On July 3, 2018, the County Administrator approved the First Amendment, which implemented a capital cost recovery charge, to be paid by RCL, to reimburse the County for a portion of increased costs associated with the design, expansion, and construction of improvements to Cruise Terminal 25.
On February 21, 2023 (Item No. 13), the Board approved the Second Amendment to the User Agreement that modified the Additional Capital Cost for Cruise Terminal 25 improvements, recognized and implemented an uncontrollable force as a result of the COVID-19 pandemic, and added a Work Letter covering the discussion of improvements to Cruise Terminal 29.
On May 14, 2024, RCL sent a letter to the County expressing its intent to exercise the first option term of four years, potentially extending the User Agreement through September 30, 2030 (see Exhibit 1). RCL also requested that the same terms and conditions in the User Agreement carry over into the first option term, noting, however, that negotiating any changes to the Port User Charge (“PUC”) and Guaranteed Annual Minimum Billable Passenger Movements would not be appropriate until the parties agree on terms for the redevelopment of Cruise Terminal 29. Given that the User Agreement requires those business terms to be agreed to within 120 days of the option term being exercised, an amendment is required.
Representatives from RCL, the Port, and the Office of the County Attorney held sunshined negotiations for the Third Amendment to the User Agreement on August 14, 2024, to discuss several topics to be addressed in the proposed amendment. The primary business terms of the proposed Third Amendment to the User Agreement are as follows:
• Confirms receipt of RCL’s notice of its intent to exercise the first Option Term of the User Agreement, potentially extending the term through September 30, 2030.
• Extends the deadline, from 120 days after notice of intent to exercise the first Option Term, to December 31, 2025, to agree to: (i) RCL’s Annual PUC Guaranteed Payment to the County for the first Option Term; (ii) the amount of the PUC to be paid to the County by RCL for the first Option Term; and (iii) the Guaranteed Annual Minimum Billable Passenger Movements for the first Option Term. Such deadline can be extended by mutual agreement between RCL and the Port Director.
• Provides that the User Agreement will expire on October 31, 2028 (on the same terms and conditions already set forth in the User Agreement (i.e., rates shall continue to adjust each Contract Year as stated in Articles 5 and 6)), if RCL and the County are unable to come to terms by the deadline previously noted.
• Adjusts the Additional Capital Cost for Cruise Terminal 25 to reflect the actual costs of the project and recognizes that full payment of the Additional Capital Cost has been made.
• Confirms that the Work Letter for Cruise Terminal 29 remains in effect until discussions are completed on improvements to that terminal.
• Adds miscellaneous provisions to cover new federal, state, and local requirements.
RCL has consistently exceeded its annual PUC guaranteed payments throughout the term of the Agreement. Actual revenue from RCL for its activities within Port Everglades from January 1, 2018, through December 31, 2023, totaled $137,482,197, with additional guaranteed minimum revenue of approximately $63,123,428 expected through the end of the current term of the Agreement on September 30, 2026.
The Third Amendment has been reviewed and approved as to form by the Office of the County Attorney. The Third Amendment is under final review within RCL, and receipt of signature pages will be noted in the Monday Night Memo prior to the Commission meeting.
Source of Additional Information
Joseph Morris, Chief Executive and Port Director, Port Everglades Department, (954) 468-3516
Glenn A. Wiltshire, Deputy Port Director, Port Everglades Department, (954) 468-3504
Fiscal Impact
Fiscal Impact/Cost Summary
While the guaranteed annual minimum billable passenger movements, PUC, and PUC guaranteed payment will not be determined until the negotiations on the business terms for the first Option Term are completed, applying the existing agreement business terms through the first Option Term would result in an additional $104,553,112 of guaranteed revenue to the County. The County will also receive additional revenue for any passenger movements above the guaranteed annual minimum billable passenger movements.