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 December 10, 2024.)
MOTION TO APPROVE Second Amendment to Marine Terminal Lease and Operating Agreement between Broward County and Horizon Terminal Services LLC, to provide for lease expiration on November 30, 2024 (instead of on December 31, 2025), waive rent for the period from October 9, 2024, through November 30, 2024, and waive the Annual Minimum Guaranteed Payment for Lease Year 7 (January 1, 2024 - November 30, 2024).
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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 where the demised premises are within the Restricted Use Zone.
What Action Accomplishes
Provides for the first of two public hearings for consideration of the Second Amendment to Marine Terminal Lease and Operating Agreement between Broward County and Horizon Terminal Services LLC, to provide for expiration on November 30, 2024 (instead of on December 31, 2025), waive rent for the period from October 9, 2024, through November 30, 2024, and waive the Annual Minimum Guaranteed Payment for Lease Year 7 (January 1, 2024, through November 30, 2024).
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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 January 23, 2018 (Item No. 7), the Board approved a Marine Terminal Lease and Operating Agreement (“Marine Terminal Lease”) between Broward County and Horizon Terminal Services LLC (“Horizon”) for ±8.67 acres of land and 27,560 square feet of warehouse space in the Midport area of Port Everglades for a five-year term commencing on January 1, 2018 (see Exhibit 2). The lease limited the use of the land to a modern ocean-going vehicle processing, motor vehicle, and heavy project cargo terminal yard facility. On December 1, 2020 (Item No. 11), the Board approved the First Amendment to the Marine Terminal Lease, amending certain business terms, including increasing the premises from ±8.67 acres to ±13.6 acres and extending the term for three years to a new expiration date of December 31, 2025. On May 21, 2024 (Item No. 13), the Board approved a Consent to Sublease between Broward County, as Landlord, Horizon, as Lessee and Sublessor, and Rehoboth Terminal, LLC, as Sublessee, for a portion of the leased premises.
The Horizon Marine Terminal Lease includes a minimum annual guarantee of 46,408 cargo units moving through the terminal. While Horizon exceeded the guaranteed throughput from contract years 2019 to 2022, in contract year 2023 their throughput dropped to 23,356 units. A further decline in throughput to 11,946 units in the first nine months of contract year 2024 prompted Port staff to engage Horizon regarding the possibility of an early lease termination. During sunshined negotiations on October 21, 2024, the parties reached an agreement to terminate the Marine Terminal Lease as of November 30, 2024; waive rent for the period from October 9, 2024, through November 30, 2024; and waive the Annual Minimum Guaranteed Payment for Lease Year 7 (January 1, 2024, through November 30, 2024). Port staff has identified alternative uses for the premises that are aligned with current port user demands and anticipates the land will be repurposed as cargo yards immediately upon regaining possession.
The Notice of Public Hearing was published twice (November 1, 2024, and November 8, 2024), and such notice for the second public hearing on December 10, 2024, will be published twice prior to the second public hearing (November 27, 2024, and December 4, 2024), pursuant to the applicable provisions of Chapter 94-429, Laws of Florida (see Exhibit 3).
The Second Amendment to Agreement 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 Division, Port Everglades Department, (954) 468-3706
Fiscal Impact
Fiscal Impact/Cost Summary
Total lost revenue from the reduced term of the Agreement and waiver of the Annual Minimum Guaranteed Payment is estimated to be $1,778,000. However, new business activities are estimated to generate $3,420,000 over the same time period, generating an estimated net revenue increase of $1,642,000.