Legislative Matter

Miami-Dade Legislative Item
File Number: 140345

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File Number: 140345

File Type: Resolution

Status: Withdrawn

Version: 0

Reference:

Control: Board of County Commissioners

File Name: RESOLUTION APPROVING AN OPTION AGREEMENT WITH MARINE SPILL

Introduced: 2/14/2014

Requester: Port of Miami

Cost:

Final Action: 4/8/2014

Agenda Date: 4/8/2014

Agenda Item Number: 8J2

Notes:

Title:

RESOLUTION APPROVING THE EXECUTION OF AN OPTION AGREEMENT WITH MARINE SPILL RESPONSE CORPORATION TO ALLOW THE COUNTY TO RELOCATE MARINE SPILL RESPONSE CORPORATION’S CURRENT LEASEHOLD TO ANOTHER LOCATION ON THE SEAPORT AT THE COUNTY’S EXPENSE, ESTIMATED TO BE AT LEAST $6.2 MILLION PLUS ANNUAL MAINTENANCE COSTS, TO ALLOW FOR THE DEVELOPMENT OF THE LAND CURRENTLY LEASED; AND AUTHORIZING THE MAYOR OR THE MAYOR’S DESIGNEE TO EXERCISE THE OPTION AGREEMENT

Indexes:

OPTION AGREEMENT

Sponsors:

NONE

Sunset Provision: No

Effective Date:

Expiration Date:

Registered Lobbyist:

None Listed

Legislative History
Acting Body	Date	Agenda Item	Action	Sent To	Due Date	Returned	Pass/Fail

Board of County Commissioners	4/8/2014	8J2	Withdrawn				P
REPORT:	Chairwoman Sosa spoke in opposition to the foregoing proposed resolution. She noted Marine Spill Response Corporation (MSRC) would be relocated to a proposed site to build a soccer stadium. Chairwoman Sosa said she believed this would be sending the wrong message to the community, and the community could not be told that building the stadium in that location would not cost the taxpayers. Commissioner Heyman spoke in opposition to the foregoing proposed resolution. She noted she did not believe the County should be responsible for relocations costs, and would prefer legitimate negotiations with newer, future land users when it was time for relocating; and that the funds remain in the County’s coffers and added to the School Board. Commissioner Edmonson concurred with her colleagues’ comments. Commissioner Edmonson directed questions to Assistant County Attorney Richard Seavey as to whether or not the Port property would revert back to the City of Miami if any portion of the property was used for anything other than Port purposes; and whether or not the Mayor would have the authority to negotiate a development project without bringing it back to the Board. Assistant County Attorney Seavey referred to a Deed restriction from the 1920’s, between the City and the County, which restricted the use of the property to maritime use. He noted some of the land that comprised part of the parcel was also State land and had a restriction which limited it to a public purpose. Assistant County Attorney Seavey said the validity of the covenant would require further research. With regard to a development project, Assistant County Attorney Seavey advised that the Mayor would have the right to exercise the option; however, there was nothing in the foregoing proposed resolution that gave the Mayor the right to develop the property without prior Board approval. He noted Section 2 of the resolution, as currently written, would have to be amended to provide that the Board preapprove any execution of the Option Agreement. Commissioner Edmonson asked whether or not the Port currently had a developer who was guaranteeing over $6.4 million to develop the property, to which Mr. Kuryla responded there was not. He noted when the developer was identified any relocation and reconstruction costs would be passed on to the developer. Commissioner Edmonson expressed concern that she was obtaining information about the Port through the media. She asked Deputy Mayor Genaro “Chip” Iglesias to request Mayor Gimenez to come before the Board at the next Commission meeting to discuss projects being planned at Port Miami, including the proposed soccer stadium. Following questions to Mr. Kuryla, Commissioner Jordan said she believed that until a developer was identified who wanted to develop the land and pay for the relocation cost, the item was prematurely before the Board, and she could not support this item. Commissioner Jordan noted she believed all relocation costs, including the land value, should be borne by the developer. In response to Commissioner Diaz’ inquiry, Assistant County Attorney Seavey confirmed that a reverter clause existed and could be activated based on the use of the property for a non-Port purpose. He noted Port purpose was not defined in the reverter clause and would require further analysis by the County Attorney’s Office. Commissioner Diaz recommended the item be brought back to the Board when non-Port use was defined. He noted there was nothing specific before the Board to which the reverter clause was attached. Deputy Mayor Iglesias commented on the reverter language that the City of Miami would be required to waive, should there be a potential conflict with the deed. He assured the Board that Mayor Gimenez would not do anything that would jeopardize the Port and/or the reverter. Deputy Mayor Iglesias acknowledged that the Port was being considered as a soccer site and noted the Administration was looking at every detail that could be advantageous or problematic. He expressed that it was anticipated that commercial development would be built on the land currently leased by MSRC, and noted Port purpose and Port use was not clearly defined as there could be different interpretations, and would specifically depend on the type of developments that may be considered. Deputy Mayor Iglesias added that the location analysis process was still ongoing. Deputy Mayor Iglesias noted the Option Agreement would be exercised at a later date; and the intent was not to expose the County financially, but with the hope that a development would absorb some of these costs. Vice Chair Bell expressed concern regarding the reverter clause, as the term “Port use” could be defined in any manner. She agreed that the item was prematurely before the Board. Mr. Kuryla suggested that the option to relocate provision be deleted and that the foregoing agreement be considered as a new agreement. Vice Chair Bell recommended the foregoing proposed resolution be withdrawn, and that a new item be presented to the Board without the option to relocate provision. It was moved by Commissioner Diaz that the foregoing proposed resolution be withdrawn. This motion was seconded by Commissioner Edmonson. Commissioner Suarez disclosed that he had represented MSRC on its Lease Agreement with the County, and was not receiving any further compensation. He noted he was informed by the former Port Director that MSRC’s move from the Port was mutually agreeable, and was not related to any of the proposed ideas for that location. Mr. Kuryla noted Commissioner Suarez was correct. Commissioner Suarez suggested before developing projects at the subject location that would compete with downtown Miami, the Administration consider that by divesting itself of public property, the County would not have to manage the property and would receive cash and tax revenues. Commissioner Bovo asked Mr. Kuryla to provide him with a copy of the reverter clause relating to non-Port development at the Port of Miami. He also asked the Administration to inform the Board whether the Port property was being considered as a potential location for the proposed soccer stadium. Commissioner Edmonson asked Deputy Mayor Iglesias to request Mayor Gimenez to come before the Board at its next meeting to discuss projects being planned at Port Miami, including the proposed soccer stadium. Commissioner Bovo asked that as part of his due diligence, Deputy Mayor Iglesias ensure the Board’s support. Upon being put to a vote, the foregoing proposed resolution was withdrawn. Chairwoman Sosa announced that she had to leave and relinquished the Chair Bell to Vice-Chair Bell.

Economic Development & Port Miami Committee	3/13/2014	3C	Forwarded to BCC with a favorable recommendation				P
REPORT:	Assistant County Attorney Monica Maldonado read the foregoing proposed resolution into the record. Commissioner Jordan inquired about the intent of the foregoing proposed resolution, and asked the Port Director to explain why they were relocating the Marine Spill Response Corporation (MSRC). Mr. Bill Johnson, Director, Port Miami responded that currently MSRC was housed on 6.6 acres of land in a facility which was oversized for their current needs; the property, he noted, would be put to better use. Mr. Johnson pointed out that the Port’s budget was not able to provide funding for the move; if a move took place Port staff would work with whichever developer or entity utilizing the real estate in an effort to make it revenue neutral to the county. Responding to Commissioner Zapata’s inquiry regarding property taxes on the parcel, Mr. Johnson pointed out that the taxes on this parcel of land amounted to approximately $30,000 and part of the negotiation was that the property would be owned by the county which would also represents a loss of $30,000 of revenue taxes. Commissioner Zapata inquired about the criteria for executing this relocation and what would drive the decision to relocate. Mr. Johnson explained that Port staff had a viable immediate need for the subject property, and he would serve and execute the option and he would ensure that whichever entity or developer were prepared and responsible for the incurred cost of the relocation which was approximately $30,000. Mr. Johnson suggested that the relocation costs be negotiated into the overall package. Commissioner Zapata expressed his concern about any relocation costs over the approximate $30,000 and noted that he wanted to be certain there were not any surprise costs. Commissioner Diaz inquired further about the relocation costs, and pointed out that he felt the costs would amount to well over $30,000. Mr. Johnson explained that $30,000 covered moving the contents out of the warehouse to a new warehouse on the Port and reiterated that the next entity purchasing the property would be responsible for these moving costs. Commissioner Diaz expressed his concern noting that upon viewing a photograph of the warehouse, if this warehouse was full of equipment it would cost much more than $30,000 to move its contents. Responding to Commissioner Diaz’ concerns Mr. Johnson explained that currently the warehouse was not full, this warehouse had been completely downgraded to a regional center, a minor response center so the inventory was one fifth of what the warehouse was originally designated for; therefore, he noted the relocation costs were not that great. Commissioner Diaz noted that he was uncomfortable with this resolution and asked Deputy Mayor Jack Osterholt and Mr. Johnson to brief him and any other commissioners this needed clarification on the full details of this proposed resolution. Hearing no further questions or comments, the Committee proceeded to vote.

County Mayor	2/27/2014		Assigned	County Attorney	4/8/2014
REPORT:	Changes to reso and memo made by Richard Seavey. If any attachments were provided with the original, please keep.

County Attorney	2/27/2014		Assigned	Richard Seavey

County Attorney	2/21/2014		Assigned	Richard Seavey

County Mayor	2/14/2014		Assigned	Jack Osterholt		2/14/2014

County Mayor	2/14/2014		Assigned	County Attorney	4/8/2014
REPORT:	Port Miami - pending cmte - no sponsor required - Attachment: Option Agreement

Legislative Text

HEADER
RESOLUTION APPROVING THE EXECUTION OF AN OPTION AGREEMENT WITH MARINE SPILL RESPONSE CORPORATION TO ALLOW THE COUNTY TO RELOCATE MARINE SPILL RESPONSE CORPORATION�S CURRENT LEASEHOLD TO ANOTHER LOCATION ON THE SEAPORT AT THE COUNTY�S EXPENSE, ESTIMATED TO BE AT LEAST $6.2 MILLION PLUS ANNUAL MAINTENANCE COSTS, TO ALLOW FOR THE DEVELOPMENT OF THE LAND CURRENTLY LEASED; AND AUTHORIZING THE MAYOR OR THE MAYOR�S DESIGNEE TO EXERCISE THE OPTION AGREEMENT

BODY
WHEREAS, this Board desires to accomplish the purposes outlined in the accompanying memorandum, a copy of which is incorporated herein by reference,

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MIAMI-DADE COUNTY, FLORIDA, that this Board:

Section 1: Approves The Option Agreement between Miami-Dade County and the Marine Spill Response Corporation in substantially the form attached hereto and authorizes the Mayor or the Mayor�s Designee to execute the Option Agreement for and on behalf of Miami-Dade County; and

Section 2: Authorizes the Mayor or the Mayor�s to exercise the Option Agreement as described therein, including approving and authorizing the Mayor or the Mayor�s Designee to execute The New Lease in substantially the form attached as Exhibit D to the Option Agreement.

HEADER
Date: April 8, 2014To: Honorable Chairwoman Rebeca Sosa
and Members, Board of County Commissioners

From: Carlos A. Gimenez
Mayor

Subject: Resolution Approving an Option Agreement to Miami-Dade County to Enter Into
a New Lease Agreement with Marine Spill Response Corporation to Relocate the
Current Leasehold to Conform to the Port of Miami�s Master Plan Approved by

STAFF RECOMMENDATION
Recommendation
It is recommended that the Board of County Commissioners (Board) approve the accompanying Resolution (a) approving the Option Agreement for Miami-Dade County to Enter into a New Lease Agreement with Marine Spill Response Corporation (�Option Agreement�) (b) authorizing the Mayor or the Mayor�s Designee to Execute the Option Agreement, and (c) authorizing the Mayor or the Mayor�s Designee to exercise the Option provided for in the Option Agreement as provided in the Option Agreement. If exercised, the Option Agreement allows for: 1)�the on-port relocation and reduction in size of the Marine Spill Response Corporation (�MSRC�) leasehold, including its warehouse; 2) the reduction in size of MSRC�s leasehold; and 3) the potential relocation of the MSRC Responder vessel�s berth (�MSRC Berth�) to a new or alternate berth location.

Scope
PortMiami is located within District 5 � Commissioner Bruno A. Barreiro. The impact of this agenda item is countywide as PortMiami is a regional asset and generates employment for residents throughout Miami-Dade County.

Fiscal Impact/Funding Source
Miami-Dade County will not be fiscally impacted by the proposed Option Agreement unless it elects to exercised the relocation option allowed by the Option Agreement (�Option�). Should the County execute the Option, the Seaport Department commits to build MSRC a replacement warehouse as outlined in the Option Agreement and pay for the reasonable relocation costs incurred by MSRC. The replacement warehouse is estimated to cost $6,200,000 to construct. While the relocation costs are expected to be modest, they have not yet been estimated. The Seaport Department also will have the duty to maintain some elements of the warehouse. These costs are estimated to be minimal for a new warehouse, but are otherwise capped at $72,000 annually during the first five years of the contract and $96,000 annually during the five years available under the final option to renew. The County also currently assesses approximately $30,000 in property taxes (including School Board millage) currently on MSRC�s warehouse because it is owned by MSRC. If the Option is exercised the new warehouse would be owned by the County, so the County would no longer be able to assess ad valorem taxes on the property. The Option Agreement would also allow the Seaport to relocate the MSRC Berth to one of several pre-identified areas on Port. This cost could be minimal, involving mostly fencing, or it could involve substantial investment should the Seaport Department decide to create a new MSRC Berth.

The Option Agreement would be exercised by the Mayor or the Mayor�s designee only if the County wished to use land currently leased by MSRC for commercial development or other purposes. In that event, it would be the County�s intention to pass the relocation costs, including construction of the warehouse, to a future developer. Similarly, the MSRC Berth would be relocated only if its present area is required by a developer, potentially for use as a bay walk or marina. Again, it would be the Seaport�s intention to pass the relocation cost of the MSRC Berth to a future developer. Nonetheless, the County would have the continuing obligation to pay for certain maintenance costs for the new warehouse and MSRC Berth.

Track Record/Monitor
MSRC entered into a Ground Lease Agreement with Miami-Dade County in 1991, which is forty (40) years in length, inclusive of MSRC options to renew. MSRC is in good standing with the Seaport. The Seaport Department staff members responsible for monitoring the Option Agreement are Juan Kuryla, Port Director Designee, and Kevin Lynskey, Assistant Port Director, Business Initiatives.

MANAGER'S BACKGROUND
Background
On September 16, 1991, the Board of County Commissioners approved, through Resolution R-1015-91, the Ground Lease Agreement (�Original Lease�) between MSRC and the Seaport. The original lease provided for MSRC�s lease of an 8.69 acre parcel located at the Port of Miami for a term of 20 years, with four (4) renewal options of five (5) years each. It required MSRC to improve the parcel by constructing a warehouse and office space, as well as a bulkhead for berthing MSRC�s vessel. These improvements were valued in the range of $6.8 million at the time of their construction. MSRC is a not-for-profit corporation created by companies in the oil industry in response to the Exxon Valdez grounding and resulting oil spill. The facility located at PortMiami was originally designed to be a primary regional response facility for oil spills. It no longer has this �regional� designation and is, consequently, capable of being accommodated on a smaller parcel with a smaller warehouse.

The Original Lease has been amended twice and renewed once. In December, 1992, the lease was Amended and Restated (�Restated Lease�) to modify the description of the parcel to be leased to include, among other things, the MSRC improvements. On March 6, 2007, the Board approved Resolution R-250-07, reducing the size of the leasehold by 2.35 acres (the Original Lease, the Restated Lease and its amendments are referred to as the �Current Ground Lease�). On February 21, 2013, MSRC exercised the first five (5) year renewal options under the Current Ground Lease, extending the Current Ground Lease through May 31, 2018.

The Port of Miami 2035 Master Plan, approved in December of 2011 by the Board (Resolution R-1055-11), proposes that the land currently leased by MSRC be used for commercial development. The Master Plan analysis concluded that this land, situated on the southwest corner of the Port across from Bayside Marketplace, is not well suited for cruise or cargo operations as most passenger and cargo ships calling at the Port currently cannot access the area due to water depth restrictions. The land has consequently been used over time to house accessory facilities, to accommodate overflow operations and construction staging, and for flat lot parking. In order to provide the Port with an additional funding stream, the Master Plan proposed that the area be used for commercial development. The site has also come under consideration recently for the proposed potential expansion of Major League Soccer in Miami.

In order to prepare for future development, Port staff and MSRC representatives have been discussing the proposed relocation as part of the Option Agreement since 2011, which allows the County to, among other things, relocate the existing MSRC warehouse to one of three identified locations on the Port, or to an area mutually agreed upon by MSRC and the County. It also allows the County to relocate the berth for the Responder vessel to one of three identified areas, or to a berth site mutually agreed upon by MSRC and the County. Importantly, the Option Agreement also allows the Seaport to assign the relocation responsibilities to a transferee (e.g., developer).

MSRC�s parcel is currently 6.6 acres, which includes a warehouse of approximately 59,000 square feet, a laydown area � used for preparation of equipment and supplies to be loaded on MSRC�s vessel in the event of a spill � of 130,000 square feet, and a 300 foot berth. The Option Agreement substantially reduces the required footprints of the new warehouse and office space (27,600 square feet) and laydown area (11,250 square feet); the berth dimensions remain the same length as under the existing contract. Consequently, the Option Agreement allows the Seaport to recapture approximately five (5) acres for alternative uses.

Currently MSRC pays $1.00 per square foot of land leased annually with modest escalators throughout the renewal periods. Under the Option Agreement, MSRC would retain the square foot rental rates of its existing agreements. These favorable rates were established in consideration of the large capital improvement expenses MSRC incurred constructing its current warehouse and berth. The Seaport and MSRC entered into this agreement after a long period of cooperative conversations following the release of the 2035 Master Plan.

DELEGATED AUTHORITY
In accordance with Section 2-8.3 of the Miami-Dade County Code related to identifying delegation of Board authority, there are no authorities beyond those specific in the resolution which include the authority for the Mayor or designee to execute the Agree and to exercise any cancellation or renewal provisions.

_______________________________
Jack Osterholt, Deputy Mayor