Broward County Commission Regular Meeting
Director's Name: Joseph Morris
Department: Port Everglades Division: Business Development
Information
Requested Action
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MOTION TO APPROVE First Amendment to Lease Agreement between Broward County, as landlord, and Chiquita Fresh North America L.L.C., as tenant, retroactively extending the lease term through October 31, 2026, adding one two-year option term, setting the applicable rates, and adding auditing rights and miscellaneous provisions; and authorize the Mayor and Clerk to execute same.
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Why Action is Necessary
Multi-year lease agreements and amendments thereto require Broward County Board of County Commissioners’ approval.
What Action Accomplishes
Approves the First Amendment to the Lease Agreement between Broward County, as landlord, and Chiquita Fresh North America L.L.C. as tenant, retroactively extending the lease term through October 31, 2026, adding one two-year option term, setting the applicable rates, and adding auditing rights and miscellaneous provisions.
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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.”
Since 2004, Chiquita Fresh North America L.L.C. (“Chiquita”) has operated a ripening, storage, and distribution center for bananas located at a Port-owned warehouse in the Southport area of Port Everglades (see Exhibit 2) under successive lease agreements. The most recent agreement, approved by the Board on February 7, 2023 (Item No. 12), retroactively provided for a three-year term ending on October 31, 2024. In January 2024, the parties began discussions to renew the agreement. However, those discussions were only recently concluded after a number of changes by Chiquita. Chiquita has remained in possession on a hold-over basis with the County’s consent, paying double rent while the parties negotiated updated terms.
The primary business terms of the proposed First Amendment to the Lease Agreement (“Amendment”) are summarized as follows:
• Term: Retroactively extends the Initial Term of the lease agreement two years to now expire on October 31, 2026, with one additional extension term of two years being available to Chiquita to exercise at least 90 days prior to the end of the Initial Term.
• Monthly Rent: Increases the monthly rent 20% from $69,363 per month in Lease Year 3 (November 1, 2023 - October 31, 2024) to $83,235 per month in Lease Year 4 (November 1, 2024 - October 31, 2025). The rent for Lease Year 5 and beyond will be subject to an annual increase that is the greater of 3 percent or the Consumer Price Index - All Urban Consumers for the Miami-Fort Lauderdale area (All Items) (“CPI”).
• Rent Credit: Chiquita has paid excess rent due to payment of double rent since the previous term expired on October 31, 2024. The County will retain the excess rent and apply it as a credit against future Chiquita rent obligations.
• Audit Rights and Retention of Records: The Amendment adds a new section addressing County audit rights and retention of records, but the provision deviates from the County’s standard provision by making it clear that the section does not give the County the right to audit Chiquita’s general financial records and accounts, but the County can request and review financial records related to the lease agreement. The underpayment penalty was also removed. The County Auditor’s Office reviewed and approved the updated language.
In Fiscal Year 2024, Port Everglades generated an additional $1,209,953 in ancillary revenue from Chiquita-owned cargo. This cargo movement accounted for 41,954 20-foot equivalent units (TEUs), representing approximately 3.9% of the Port’s total annual containerized throughput.
The Amendment has been reviewed and approved as to form by the Office of the County Attorney. The Agreement is still being routed within Chiquita for final approval, and the receipt of signature pages will be noted in the Monday Night Memo prior to the Board meeting.
Source of Additional Information
Jorge A. Hernández, Director, Business Development Division, Port Everglades Department, (954) 468-3501
Stacie Warren, Assistant Property Manager, Business Development Division, Port Everglades Department, (954) 468-3706
Fiscal Impact
Fiscal Impact/Cost Summary
The County is projected to receive $2,027,608 in rent revenue during the initial two-year term extension. If the optional two-year extension term is exercised, estimated total rent revenue would increase by an additional $2,151,089, for a four-year total of $4,178,697, but could be higher if the CPI exceeds 3% during the period.