Broward County Commission Regular Meeting
Director's Name: Andrew J. Meyers
Department: County Attorney
Information
Requested Action
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MOTION TO AUTHORIZE County Administrator to approve and execute an agreement addressing, on terms she determines are in the best interest of the County and after consultation with the County Attorney, the County’s objections to the assumption and assignment of Broward County’s contracts for the purchase of electric transit buses from Proterra, Inc., to Phoenix Motor, Inc., in the matter of Proterra, Inc., Case No. 23-11120, pending before the U.S. Bankruptcy Court for the District of Delaware, subject to approval by the Office of the County Attorney as to form and legal sufficiency.
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Why Action is Necessary
Board approval of this item would authorize the County Administrator to approve and execute the above-referenced agreement, which is still being finalized. Execution of the agreement may be required at a time that does not permit timely Board approval of the agreement.
What Action Accomplishes
Authorizes the County Administrator to approve and execute the agreement.
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Previous Action Taken
Summary Explanation/Background
The County entered into contracts whereby the County would purchase 42 electric buses from Proterra, Inc. (Proterra), which would manufacture, deliver, and provide warranty service on the buses. To date, Proterra has delivered, and the County has paid for, some but not all of the 42 buses ordered. Last year, Proterra filed its Chapter 11 bankruptcy petition. As part of its bankruptcy, Proterra has obtained approval of the court to assign the County’s contracts to Phoenix Motor, Inc. (Phoenix).
Broward County Transit (BCT) staff is concerned about Phoenix’s ability to meet the warranty and other obligations to the County for buses that have been delivered and those that are still to be delivered under the Proterra contracts. Accordingly, the County has objected to Phoenix’s assumption of the Proterra contracts without what the Bankruptcy Code calls “adequate assurance of future performance.” The Office of the County Attorney has been working with BCT to resolve the concerns regarding adequate assurance of future performance by negotiating an agreement with Proterra and Phoenix.
The County and Proterra reached agreement on the main terms after the February 6 agenda was distributed. The final agreement is still being negotiated. Due to deadlines set in the sale order (from Proterra to Phoenix), this matter will likely need to be resolved before the Board’s February 20 meeting.
If this item is approved, the County Administrator will be authorized to approve and execute an agreement addressing, on terms she determines are in the best interest of the County and after consultation with the County Attorney, the County’s objections in Proterra’s bankruptcy, subject to approval of the agreement for form and legal sufficiency by the Office of the County Attorney.
The Office of the County Attorney will be distributing a confidential memorandum providing further information on this matter.
Source of Additional Information
Nathaniel A. Klitsberg, Transportation Surtax General Counsel, 954-357-7600
Fiscal Impact
Fiscal Impact/Cost Summary
The agreement is expected to result in a reduced purchase price for the remaining buses.