Miami-Dade Legislative Item
File Number: 192289
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File Number: 192289 File Type: Resolution Status: Amended
Version: 0 Reference: Control: County Commission
File Name: BERTHING AGREEMENT WITH CARNIVAL CORPORATION Introduced: 9/13/2019
Requester: Port of Miami Cost: Final Action:
Agenda Date: 9/19/2019 Agenda Item Number:
Notes: SEE 192561 FOR FINAL VERSION AS ADOPTED. SPECIAL ITEM NO. 8 Title: RESOLUTION APPROVING A PREFERENTIAL BERTHING RIGHTS AGREEMENT (AGREEMENT) BETWEEN THE COUNTY AND CARNIVAL CORPORATION (CARNIVAL) GRANTING CARNIVAL PREFERENTIAL BERTHING RIGHTS AT CRUISE TERMINAL F FOR AN INITIAL TERM OF TWENTY (20) YEARS FROM THE DATE OF SUBSTANTIAL COMPLETION OF THE CRUISE TERMINAL F IMPROVEMENTS, WITH ANTICIPATED REVENUES TO THE COUNTY OF $428,851,177.00 IN UNITARY FEE PAYMENTS OVER THE INITIAL TERM, REQUIRING THE COUNTY TO ENTER INTO A DESIGN-BUILD AGREEMENT FOR IMPROVEMENTS TO CRUISE TERMINAL F AT A COST OF APPROXIMATELY $195,000,000.00, WITH ANY COST OVERRUNS TO BE BORNE BY THE COUNTY UNLESS CAUSED BY CARNIVAL REQUESTS, AND WITH REQUIRED REIMBURSEMENT PAYMENTS FROM CARNIVAL TO THE COUNTY OF $120,342,980.00, REQUIRING THE COUNTY TO MAKE ADDITIONAL IMPROVEMENTS TO CRUISE TERMINALS D AND E BY OCTOBER 31, 2026, UNLESS TWO (2) YEARS’ NOTICE IS SOONER PROVIDED BY CARNIVAL, AND AMENDING THE EXISTING PREFERENTIAL BERTHING RIGHTS AGREEMENT CONCERNING CRUISE TERMINALS D AND E TO MODIFY THE MANNER OF INCENTIVE PAYMENTS TO CARNIVAL; AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO SOLICIT AND AWARD A DESIGN-BUILD CONTRACT FOR IMPROVEMENTS TO CRUISE TERMINALS D, E AND F PURSUANT TO SECTION 2-8.2.15 OF THE CODE OF MIAMI-DADE COUNTY, FLORIDA; WAIVING THE REQUIREMENTS OF RESOLUTION NO. R-130-06; AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO TAKE ALL ACTIONS NECESSARY TO EFFECTUATE THE AGREEMENT AND, UPON THE APPROVAL AND FULL EXECUTION OF AGREEMENTS WHEREIN MSC CRUISES S.A. AND VIRGIN CRUISES INTERMEDIATE LIMITED UNCONDITIONALLY RELINQUISH ANY PREFERENTIAL BERTHING RIGHTS AT CRUISE TERMINAL F ON OR BEFORE OCTOBER 31, 2022, AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXECUTE THE AGREEMENT FOR AND ON BEHALF OF THE COUNTY AND TO EXERCISE ALL RIGHTS CONTAINED THEREIN
Indexes: NONE
Sponsors: Rebeca Sosa, Prime Sponsor
  Esteban L. Bovo, Jr., Co-Sponsor
  Daniella Levine Cava, Co-Sponsor
  Jose "Pepe" Diaz, Co-Sponsor
  Audrey M. Edmonson, Co-Sponsor
  Sally A. Heyman, Co-Sponsor
  Eileen Higgins, Co-Sponsor
  Barbara J. Jordan, Co-Sponsor
  Joe A. Martinez, Co-Sponsor
  Jean Monestime, Co-Sponsor
  Dennis C. Moss, Co-Sponsor
  Sen. Javier D. Souto, Co-Sponsor
  Xavier L. Suarez, Co-Sponsor
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 9/19/2019 Special Item No. 8 Amended
REPORT: SEE RELATED AGENDA ITEM SPECIAL ITEM NO. 8, LEGISLATIVE FILE NUMBER 192289, FOR AMENDED VERSION

County Attorney 9/17/2019 Assigned Miguel A. Gonzalez

Office of Agenda Coordination 9/17/2019 Assigned County Attorney 9/19/2019
REPORT: Revised reso and memo

County Attorney 9/17/2019 Assigned Office of Agenda Coordination 9/17/2019

County Attorney 9/16/2019 Assigned Miguel A. Gonzalez 9/17/2019

County Attorney 9/16/2019 Assigned Office of Agenda Coordination 9/16/2019
REPORT: Item returned

County Attorney 9/13/2019 Assigned Miguel A. Gonzalez 9/13/2019

Office of Agenda Coordination 9/13/2019 Assigned County Attorney 9/19/2019
REPORT: Port- Pending Cmte Assignment- CAO- Miguel Gonzalez- Sponsor is Vice-Chairwoman Sosa- Pleae print this item in Color

Jack Osterholt 9/13/2019 Assigned Office of Agenda Coordination

Legislative Text


TITLE
RESOLUTION APPROVING A PREFERENTIAL BERTHING RIGHTS AGREEMENT (AGREEMENT) BETWEEN THE COUNTY AND CARNIVAL CORPORATION (CARNIVAL) GRANTING CARNIVAL PREFERENTIAL BERTHING RIGHTS AT CRUISE TERMINAL F FOR AN INITIAL TERM OF TWENTY (20) YEARS FROM THE DATE OF SUBSTANTIAL COMPLETION OF THE CRUISE TERMINAL F IMPROVEMENTS, WITH ANTICIPATED REVENUES TO THE COUNTY OF $428,851,177.00 IN UNITARY FEE PAYMENTS OVER THE INITIAL TERM, REQUIRING THE COUNTY TO ENTER INTO A DESIGN-BUILD AGREEMENT FOR IMPROVEMENTS TO CRUISE TERMINAL F AT A COST OF APPROXIMATELY $195,000,000.00, WITH ANY COST OVERRUNS TO BE BORNE BY THE COUNTY UNLESS CAUSED BY CARNIVAL REQUESTS, AND WITH REQUIRED REIMBURSEMENT PAYMENTS FROM CARNIVAL TO THE COUNTY OF $120,342,980.00, REQUIRING THE COUNTY TO MAKE ADDITIONAL IMPROVEMENTS TO CRUISE TERMINALS D AND E BY OCTOBER 31, 2026, UNLESS TWO (2) YEARS’ NOTICE IS SOONER PROVIDED BY CARNIVAL, AND AMENDING THE EXISTING PREFERENTIAL BERTHING RIGHTS AGREEMENT CONCERNING CRUISE TERMINALS D AND E TO MODIFY THE MANNER OF INCENTIVE PAYMENTS TO CARNIVAL; AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO SOLICIT AND AWARD A DESIGN-BUILD CONTRACT FOR IMPROVEMENTS TO CRUISE TERMINALS D, E AND F PURSUANT TO SECTION 2-8.2.15 OF THE CODE OF MIAMI-DADE COUNTY, FLORIDA; WAIVING THE REQUIREMENTS OF RESOLUTION NO. R-130-06; AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO TAKE ALL ACTIONS NECESSARY TO EFFECTUATE THE AGREEMENT AND, UPON THE APPROVAL AND FULL EXECUTION OF AGREEMENTS WHEREIN MSC CRUISES S.A. AND VIRGIN CRUISES INTERMEDIATE LIMITED UNCONDITIONALLY RELINQUISH ANY PREFERENTIAL BERTHING RIGHTS AT CRUISE TERMINAL F ON OR BEFORE OCTOBER 31, 2022, AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXECUTE THE AGREEMENT FOR AND ON BEHALF OF THE COUNTY AND TO EXERCISE ALL RIGHTS CONTAINED THEREIN

BODY
WHEREAS, this Board desires to accomplish the objectives set forth in the accompanying memorandum,

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

Section 1. Approves a preferential berthing rights agreement (the “Agreement”) between the County and Carnival Corporation (“Carnival”), in substantially the form attached to the accompanying memorandum, granting Carnival preferential berthing rights a Cruise Terminal F with an initial term of twenty (20) years from the date of substantial completion of the Cruise Terminal F improvements, plus two (2) optional renewal terms exercisable by Carnival of seven (7) years each, with anticipated revenues to the County of $428,851,177.00 in unitary fee payments over the initial term; requiring the County to enter into a design-build agreement for improvements to Cruise Terminal F at an estimated cost of approximately $195,000,000.00, with any cost overruns (unless caused by Carnival requests) to be borne by the County, and with required reimbursement payments from Carnival to the County of $120,342,980.00; requiring the County to make additional improvements to Cruise Terminals D and E by October 31, 2026, unless
two (2) years’ notice is sooner provided by Carnival; and amending the existing preferential berthing rights agreement approved by this Board pursuant to Resolution No. R-1196-98 (and as amended by Resolution Nos. R-697-10, R-343-11, and R-160-15) to modify the manner of incentive payments to Carnival.

Section 2. Authorizes the County Mayor or County Mayor’s designee to solicit and award a design-build contract for improvements to Cruise Terminals D, E and F pursuant to PortMiami Expedite and Acceleration Ordinance in Section 2-8.2.15 of the Code of Miami-Dade County Florida. their placement on an agenda of the Board.

Section 3. For the reasons stated in the accompanying memorandum and in the best interests of the County, waives the requirement of Resolution No. R-130-06 that the Agreement be executed prior to its placement on an agenda of the Board.

Section 4. Authorizes the County Mayor or the County Mayor’s designee to take all actions necessary to effectuate the Agreement and, upon the approval and full execution of agreements wherein MSC Cruises S.A. and Virgin Cruises Intermediate Limited unconditionally relinquish any preferential berthing rights at Cruise Terminal F on or before October 31, 2022, authorizes the County Mayor or the County Mayor’s designee to execute the Agreement for and on behalf of the County and to exercise all rights contained therein.

HEADER
Date:

To: Honorable Chairwoman Audrey M. Edmonson
and Members, Board of County Commissioners

From: Carlos A. Gimenez
Mayor

Subject: Resolution Approving Cruise Terminal F Preferential Berthing Agreement between Miami-Dade County and Carnival Corporation, and Improvements to Cruise Terminal F, Authorizing the County Mayor of the County Mayor’s Designee to Award the Cruise Terminal Project Pursuant to the Terms of the Port Miami Expedite Ordinance

STAFF RECOMMENDATION
Recommendation
It is recommended the Board of County Commissioners (Board) adopt the accompanying resolution authorizing the execution of the Cruise Terminal F Preferential Berthing Agreement (Agreement) between Miami-Dade County (County) and Carnival Corporation, (Carnival) including improvements to Cruise Terminal F, and waive, in the best interests of the County, the requirements of Resolution No. R-130-06 and authorize the County Mayor or the County Mayor’s Designee to solicit and award a design build contract for the Cruise Terminal improvements in accordance with the terms of the PortMiami Expedite and Acceleration Ordinance.

Scope
The Port is located within District 5, which is represented by Commissioner Eileen Higgins. The impact of this agenda item is countywide, as the Port is a regional asset and generates employment for residents throughout Miami-Dade County.

Background
PortMiami and Carnival have shared a long and prosperous relationship over the last 47 years. Carnival began operations from Miami in 1972 and has continued to grow its business ever since. Carnival has always been a leader in Miami in terms of passenger movements and has played a major role in making PortMiami the Cruise Capital of the World.

Carnival Corporation is the largest cruise company in the world with a fleet of 102 vessels, operating nine cruise brands: Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Cunard, AIDA Cruises, Costa Cruises, P&O Cruises (UK), and P&O Cruises (Australia).

On October 15, 1998, the Board approved Resolution No. R-1196-98, authorizing the execution of a Cruise Terminal Agreement with Carnival. This agreement had a 15-year term with a five-year renewal option. The agreement provided the Port with significant guaranteed passenger volumes and revenues.

On June 15, 2010, the Board approved Amendment No. 1, via Resolution No. R-967-10, which approved the execution of the optional renewal period early and an extension of the Term for another five years through FY 2018. The Amendment outlined Minimum Annual Guarantees to the County and incorporated the concept of a Unitary Fee which consists of charges for dockage, wharfage and water. It also provided a Marketing Incentive to Carnival through shared parking revenue.

On May 3, 2011, the Board approved Amendment No. 2, via Resolution No. R-343-11, which guaranteed the then-latest newbuild, Carnival Breeze, to homeport at PortMiami. Amendment No. 2 also committed the Port to make certain terminal improvements to Cruise Terminal D and provided additional marketing incentives based on Carnival’s passenger throughput.

On February 3, 2015, the Board approved Amendment No. 3, via Resolution No. R-160-15, which guaranteed the then-new Carnival Vista to homeport at PortMiami, and extended the term of the Agreement by an additional 10 years to September 30, 2028, with one seven-year renewal option. As a result of this Agreement, the County made certain capital improvements at Cruise Terminals D and E in order to accommodate Carnival’s vessels.

Carnival is once again embarking upon a new-build program with 19 new vessels scheduled to be delivered by 2022. Carnival has expressed its desire to homeport one of Carnival Cruise Line’s XL Class vessels at PortMiami beginning in October 2022. In addition, Carnival wishes to homeport at least one additional XL Class vessel at PortMiami by October 2026. The XL class vessels have a capacity of 6,500 passengers and will be powered by liquefied natural gas (LNG).

In order to accommodate Carnival’s growth at PortMiami, and specifically its XL Class vessels, the parties have agreed to invest in improvements to renovate and expand Cruise Terminal F so that Carnival may have preferential berthing rights at a renovated and expanded Cruise Terminal F (in addition to its current preferential berthing rights at Cruise Terminals D and E). The County will make the necessary improvements via a Design-Build Agreement that includes renovations at Cruise Terminal F at an estimated cost not to exceed $175 million, of which $65 million will be reimbursed by Carnival. In return, Carnival shall be obligated to homeport at least one XL Class ship at Cruise Terminal F for a minimum period of three years, commencing upon Substantial Completion of the Cruise Terminal F Improvements Project (Project) scheduled for October 31, 2022 (Substantial Completion), and has committed to a 20-year agreement with two seven-year optional renewal periods.

The improvements to the existing Cruise Terminal F are necessary to meet the growing demand of the cruise industry and allow the Port to expand its cruise terminal capacity. The renovated Terminal F will open opportunities for additional cruise business from Carnival. This agreement combined with Carnival’s Cruise Terminals D and E agreement will yield 2,250,000 annual passenger movements at PortMiami. In exchange for the additional guaranteed passenger movements, Carnival will receive marketing incentives consistent with those in its Cruise Terminal D and E Agreement (parking revenue and supplemental market incentive based on passenger throughput).

This agreement allows the County to retain berthing rights on Mondays and Fridays at a terminal of Carnival’s choice (Cruise Terminal D, E, or F) for one Disney cruise ship from October 1, 2023 to September 30, 2025. In order to convey preferential berthing rights at Cruise Terminal F to Carnival, concurrent items are being presented separately to the Board today, amending or terminating the agreements of other cruise lines that currently have preferential berthing rights at Cruise Terminal F.

In order to accommodate a second XL Class vessel, the County must make additional improvements to Cruise Terminals D and E that consist of bulkhead repairs, concourse extensions and passenger boarding bridge modifications. Upon the earlier of (i) October 31, 2026 or (ii) two years from the County’s receipt of written notification from Carnival that it is committing to homeport an additional XL Class vessel at Cruise Terminals D or E, the County must complete these additional improvements. These additional improvements are anticipated to cost approximately $20 million and is included in the project budget.

The improvements to Cruise Terminals D, E, and F (the “Terminal Improvements Project”)will be completed by way of a design-build project which will be advertised in accordance with the standard County procurement process. The County intends to issue a design-build solicitation based on the project’s design criteria package, the scope of which is detailed in Exhibit F of the Agreement. In order to facilitate the Port meeting its contractual obligation to complete the Cruise Terminal F expansion by October 31, 2022, it is recommended that the Board authorize the County Mayor of the County Mayor’s Designee to solicit and award a design-build contract for the construction of the Terminal Improvements Project, pursuant to the PortMiami Expedite and Acceleration Ordinance.

Finally, for a proposed period of 12 months from the effective date of this Agreement, the parties agree to commence negotiations for an agreement to design and construct additional port improvements, relating to a parking garage containing up to 5000 spaces and amenities for Port users or visitors, to be located in an area adjacent to Cruise Terminals D, E and F. Should the parties reach an agreement on terms for the garage and amenities, an item will be presented to this Board for its consideration.

Fiscal Impact/Funding Source
Commencing upon Substantial Completion of the Project, Carnival will provide the County with a Minimum Annual Guarantee equivalent to 750,000 Carnival passenger movements at Cruise Terminal F each fiscal year throughout the initial 20-year term. Carnival has the option to extend the agreement for two additional periods of seven years each. This Agreement is expected to generate $15,960,000 in gross unitary fee revenues during Fiscal Year 2022-23 which will increase at a rate of three percent compounded annually throughout the term. The initial 20-year term will yield $428,851,177 in gross unitary fee revenues to the County. Should Carnival exercise all optional extensions, the County will receive $921,373,617 in gross unitary fee revenues as indicated in Exhibit C of the Agreement.

The Terminals’ D, E and F improvements to accommodate two XL Class vessels are estimated to cost no more than $195 million. The County’s reimbursable contribution towards the construction of the Project by Carnival is $65 million plus costs and interest calculated at 6.5 percent. The County has agreed to advance the Carnival Contribution in an amount not to exceed $65 million, to be reimbursed via a capital recovery surcharge of $2.67 per passenger movement at Cruise Terminals D, E, and F, commencing 90 days after the effective date of this Agreement, as detailed in Exhibit D of the Agreement. In addition to its $65 million principal contribution, Carnival has agreed to fund the entire cost of aesthetic improvements on the North façade to include at minimum, decorative lighting and installation of a multimedia mesh that will allow the County to place visual content on the North facing façade, as depicted in Exhibit G of the Agreement. Should the County and Carnival agree that the cost of these aesthetic improvements will be advanced by the County, Carnival will be assessed an additional capital recovery surcharge to cover such costs.

Funding for the Project shall be allocated from the Port’s Fiscal Year 2020, 2021, and 2022 capital budgets using available proceeds from the Port’s commercial paper program, capital reserves, bond proceeds, grants, and tenant reimbursements.

Track Record/Monitor
The Seaport Department staff members responsible for monitoring the Agreement are Hydi Webb, Deputy Director; Elizabeth Ogden, Assistant Port Director, Capital Development; Andy Hecker, CFO; and Basil A. Binns, II, Assistant Port Director, Business Development.

Delegated Authority
This item authorizes the County Mayor or County Mayor’s designee to execute the Cruise Terminal F Preferential Berthing Rights Agreement on behalf of Miami-Dade County and to exercise, approve, or deny (as applicable) any cancellation rights, termination rights, berthing requests, and/or other County rights conferred in the Agreement and authorizes the County Mayor or the County Mayor’s designee to issue a solicitation and subsequent award of a design-build agreement for the Cruise Terminal F Improvements Project, subject to ratification by the Board in accordance with the Port Miami Expedite Ordinance.





______________________________
Jack Osterholt
Deputy Mayor



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