TITLE
RESOLUTION APPROVING AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO EXECUTE AND EXERCISE ALL RIGHTS SET FORTH IN (1) THE SECOND AMENDMENT TO THE CAMPUS LEASE (SECOND AMENDMENT) BETWEEN MIAMI-DADE COUNTY (COUNTY) AND ROYAL CARIBBEAN CRUISES LTD. (RCG) WITH AN ESTIMATED NET FISCAL IMPACT OF $260,000,000.00 IN FAVOR OF THE COUNTY, (2) THE CONSTRUCTION AGENCY SERVICES AGREEMENT BETWEEN THE COUNTY AND RCG WITH FISCAL IMPACT NOT TO EXCEED $450,000,000.00, PLUS FINANCING COSTS AND CAPITALIZED INTEREST, AND (3) THE CRUISE TERMINAL USAGE AGREEMENT BETWEEN THE COUNTY AND RCG WITH AN ESTIMATED NET FISCAL IMPACT OF $2,500,000,000.00 IN FAVOR OF THE COUNTY; WITH RESPECT TO THE SECOND AMENDMENT, DIRECTING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO PROVIDE THE SECOND AMENDMENT TO THE PROPERTY APPRAISER�S OFFICE IN ACCORDANCE WITH RESOLUTION NO. R-791-14, TO PRESENT (UPON RCG�S CONCURRENCE WITH THE TERMS THEREOF) SUCH ORDINANCE(S) OR RESOLUTION(S) AS ARE NECESSARY TO FUND THE PROJECTS CONTEMPLATED IN THE SECOND AMENDMENT IN AN AMOUNT NOT TO EXCEED $450,000,000.00, AND TO NEGOTIATE AND ENTER INTO AN AGREEMENT FOR THE COUNTY�S USE OF TEMPORARY OFFICE SPACE WITH BUILDINGS LEASED TO RCG; WITH RESPECT TO THE CONSTRUCTION AGENCY SERVICES AGREEMENT, WAIVING FORMAL BID PROCEDURES UNDER SECTION 5.03(D) OF THE HOME RULE CHARTER AND SECTION 2-8.1 OF THE CODE OF MIAMI-DADE COUNTY (CODE); WITH RESPECT TO THE CRUISE TERMINAL USAGE AGREEMENT, UPON THE ISSUANCE OF THE FINANCING CONFIRMATION, AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO TAKE ALL ACTIONS NECESSARY TO EFFECTUATE SAME, INCLUDING ENTRY INTO DESIGN-BUILD AGREEMENTS AT AN ESTIMATED COST OF $325,000,000.00 WITH REIMBURSEMENT FROM RCG IN AN AMOUNT OF AT LEAST $152,750,000.00, PLUS INTEREST AND COSTS, AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO SOLICIT AND AWARD DESIGN-BUILD AGREEMENTS UNDER THE PORTMIAMI EXPEDITE AND ACCELERATION ORDINANCE IN SECTION 2-8.2-15 OF THE CODE, AND AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO NEGOTIATE AND EXECUTE AN AGREEMENT WITH UNITED STATES CUSTOMS AND BORDER PROTECTION FOR APPROXIMATELY $2,000,000.00 FOR SECURITY EQUIPMENT; APPROVING WAIVER OF RESOLUTION R-130-06 WITH RESPECT TO ANY AGREEMENT FOR THE COUNTY�S USE OF TEMPORARY OFFICE SPACE; AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR�S DESIGNEE TO TAKE SUCH OTHER ACTS, WITHIN CERTAIN PARAMETERS, AS NECESSARY TO GIVE EFFECT TO THE AGREEMENTS CONTEMPLATED HEREIN

BODY
WHEREAS, Royal Caribbean Cruises, Ltd., d/b/a Royal Caribbean Group (�RCG�) is an established passenger cruise line, and the second-largest cruise operating in the world, with 24 percent of the cruise market share and a growing fleet of 64 ships that travel to approximately 1,000 destinations worldwide; and

WHEREAS, in addition to its prominence as a passenger cruise line, RCG is one of the top-15 employers in Miami-Dade County, currently employing approximately 2,000 people, and employing 1,000 additional people after completion of the RCG headquarters office campus expansion improvements in jobs with average salaries exceeding $100,000.00; and

WHEREAS, to that end, on May 7, 2019, the Board adopted Resolution No. R-520-19, approving and authorizing the County Mayor or County Mayor�s designee to enter into the Campus Lease between the County and RCG, which provided for RCG�s design, construction, financing, operation, and maintenance of new office structures at PortMiami that would serve as RCG�s global and United States headquarters; and

WHEREAS, this Board has previously recognized the significant economic impact that the cruise industry has in Miami-Dade County; and

WHEREAS, for example, in Resolution No. R-381-21, the Board acknowledged, based on economic impact studies commissioned by the County, Greater Miami Convention & Visitors Bureau, and Cruise Lines International Association, that the cruise industry directly and indirectly supports many sectors of the local economy; and

WHEREAS, one such study showed that in 2019 there were approximately 1,700,000 overnight cruise visitors in Miami, who spent a combined $1,100,000,000.00 in the community on hotel, food and beverage, transportation, entertainment, and shopping; and

WHEREAS, another study showed that, in 2017, the cruise industry at PortMiami alone generated 30,088 jobs, directly or indirectly, and that the cruise industry has had a positive economic impact of approximately $5,800,000,000.00 for Miami-Dade County and generated about $190,000,000.00 in state and local tax revenues; and

WHEREAS, before the Board are interrelated and interdependent transactions that would secure the future of RCG at PortMiami, promising unprecedented cruise passenger throughput at PortMiami that would exceed, on an annual basis, the best passenger throughput volumes that PortMiami experienced before the coronavirus disease 2019 pandemic; and

WHEREAS, key to RCG�s agreement to produce such passenger throughput volumes is the County�s agreement to pursue financing of the completion of improvements to the RCG headquarters office campus, which will allow RCG to focus its post-pandemic investment on an aggressive shipbuilding program; and

WHEREAS, as the transactions are structured, to the extent the County secures financing for the completion of the design and construction of the RCG headquarters office campus within the parameters set forth in the Second Amendment to the Campus Lease (the �Second Amendment�), the County will issue a Financing Confirmation notice, which will trigger the rights and obligations set forth in the Cruise Terminal Usage Agreement and Construction Agency Services Agreement; and

WHEREAS, this Board finds that these contemplated transactions, collectively, will further important public purposes, including (without limitation) by providing for the construction of County-owned improvements to PortMiami, enhancing the prestige of and civic pride in PortMiami as the �Cruise Capital of the World� both by providing for increased cruise passenger throughput and by securing its identity as the location of the headquarters of a major passenger cruise line, securing a long-term presence of RCG at PortMiami, providing high-paying jobs within Miami-Dade County, fostering the well-established economic benefits flowing from headquartering, and providing for the economic development spurred the cruise industry; and
WHEREAS, this Board desires to accomplish the purposes set forth in accompanying memorandum, 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. Adopts as true and correct and incorporates herein the foregoing recitals and makes findings consistent therewith.

Section 2. Approves and authorizes the County Mayor or County Mayor�s designee to execute (a) the Second Amendment to the Campus Lease between the County and RCG, in substantially the form attached hereto as Exhibit A, with an estimated net fiscal impact of $260,000,000.00 in favor of the County; (b) the Construction Agency Services Agreement between the County and RCG, in substantially the form attached to the Second Amendment as Exhibit 2, with a fiscal impact to the County that shall not exceed $450,000,000.00 plus financing costs and capitalized interest; and (c) the Cruise Terminal Usage Agreement between the County and RCG, in substantially the form attached hereto as Exhibit B, with an estimated net fiscal impact of $2,500,000,000.00 in favor of the County. With respect to each of the Second Amendment, Construction Agency Services Agreement, and Cruise Terminal Usage Agreement, the Board authorizes the County Mayor or County Mayor�s designee to exercise all rights contained therein, unless expressly reserved to the Board, including rights of extension and termination.

Section 3. With respect to the Second Amendment:
(a) Directs the County Mayor or County Mayor�s designee to provide a copy of the Second Amendment to the Property Appraiser�s Office in accordance with Resolution No. R-791-14.
(b) Directs the County Mayor or County Mayor�s designee, upon RCG�s concurrence with the terms thereof, to present such ordinance(s) or resolution(s) as are necessary for the issuance of the debt required to finance the projects contemplated in the Second Amendment. The County Mayor or County Mayor�s designee is further authorized to issue the Financing Confirmation once the County Mayor or County Mayor�s designee has raised sufficient funds, in an amount not to exceed $450,000,000.00, for the design and construction of the project contemplated in the Second Amendment. Alternatively, if the County Mayor or County Mayor�s designee is unsuccessful in raising sufficient funds as set forth in the preceding sentence, the County Mayor or County Mayor�s designee is authorized to deliver notice of such occurrence to RCG.
(c) Authorizes the County Mayor or County Mayor�s designee to negotiate and enter into an agreement for the use of temporary office space within one or more buildings leased to RCG; provided, however, that such agreement shall adhere to the parameters set forth in the Second Amendment.

Section 4. With respect to the Construction Agency Services Agreement, finds it in the best interest of the County to and hereby waives formal bid procedures under section 5.03(D) of the Home Rule Charter and section 2-8.1 of the Code of Miami-Dade County by a two-thirds vote of the Board members present to approve the Construction Agency Services Agreement between the County and RCG.

Section 5. With respect to the Cruise Terminal Usage Agreement, upon the issuance of the Financing Confirmation:
(a) Authorizes the County Mayor or County Mayor�s designee to take all actions necessary to effectuate the Cruise Terminal Usage Agreement, including entry into a design-build agreement for the construction of the cruise terminals contemplated in the Cruise Terminal Usage Agreement, at an estimated cost to the County of $325,000,000.00, with reimbursement from RCG in the amount of at least $152,750,000.00, plus interest and costs;
(b) Authorizes the County Mayor or County Mayor�s designee to solicit and award design-build agreements for improvements to Cruise Terminal G and Berth 10 pursuant to the PortMiami Expedite and Acceleration Ordinance in section 2-8.2.15 of the Code of Miami-Dade County, Florida; and
(c) Authorizes the County Mayor or County Mayor�s designee to negotiate and execute an agreement with United States Customs and Border Protection (�CBP�) for approximately $2,000,000.00 for the reimbursement of CBP�s costs in connection with security equipment (including services, maintenance, and recurring expenses) for Cruise Terminal G, consistent with similar agreements previously approved by the Board through Resolution Nos. R-910-21 and R-293-21; and

Section 6. Approves the waiver of Resolution No. R-130-06, with respect to the execution by all non-County parties of any agreement for the County�s use of temporary office space within building(s) leased to RCG.

Section 7. Authorizes the County Mayor or County Mayor�s designee to take any other acts as necessary to give effect to the agreements contemplated herein; provided, however, that such acts shall (1) be consistent with the disclosures in the memorandum and the delegations set forth in this resolution; (2) not put the County in any less favorable position, financially or otherwise, than that outlined in the accompanying memorandum, this resolution, and the agreements accompanying this resolution; (3) not contravene the policy, intent, or purpose of the Board as expressed in any of its legislative enactments; and (4) as applicable, be reduced to writing and subject to the approval of the County Attorney�s Office as to form and legal sufficiency.

HEADER
Date: To: Honorable Chairman Jose �Pepe� Diaz
and Members, Board of County Commissioners From: Daniella Levine Cava
Mayor
Subject: Resolution Approving Cruise Terminal Usage Agreement between Miami-Dade County
and Royal Caribbean Cruises Ltd. d/b/a Royal Caribbean Group; Authorizing Award
and Management of Cruise Terminal G and Berth 10 Projects to the terms of the
Seaport Expedite & Acceleration Ordinance; Authorizing the Negotiation and Execution
of a Memorandum of Agreement with US Customs & Border Protection for Security
Equipment; Approving the Second Campus Lease Amendment between the County and RCG

STAFF RECOMMENDATION
Executive Summary
This item seeks approval of (1) a Cruise Terminal Usage Agreement (�Cruise Terminal Usage Agreement�) between the Miami-Dade County (the �County�) and Royal Caribbean Cruises, Ltd.. d/b/a Royal Caribbean Group (�RCG�); (2) the Second Campus Lease Amendment (�Second Campus Lease Amendment�) between the County and RCG; (3) authorization to negotiate and execute an agreement with United States Customs and Border Protection (�CBP�) for the reimbursement of costs incurred by CBP in connection with security equipment (including services and maintenance) for the new Cruise Terminal G (�CTG�); and (4) adds the CTG project and Berth 10 project to the list of capital improvement projects under the Miami-Dade Seaport Department Capital Improvement Programs Expedite and Acceleration Ordinance (�Seaport Expedite Ordinance�) set forth in Section 2-8.2.15 of the Code of Miami-Dade County (the �Code�).

Approval of the items in the Resolution will among other things:
* Add approximately 12,000 permanent direct, indirect, and induced cruise related jobs and,

* Add an additional 1,000 employees at RCG�s campus with $100 million in annual wages and,

* Generate 66,350,000 more contractually obligated passenger movements at PortMiami and,

* Construct new CTG and portions of Berth 10 estimated at $325 million through County funded projects and,

* Have RCG contribute 47% of project costs compounded at 6.5% for interest and costs and,

* Complete RCG�s Global Campus capped at $450 million in County-funded project costs including any improvements at the existing 1050 and 1080 buildings that collectively exceed $11.5 million and,

* Increase Campus lease payments by 125% of the County�s project costs including the financing costs for the campus project and,

* Generate 9,634 estimated construction jobs from these projects and,

* Generate $2.8 billion in net County revenues after considering all debt service costs, incentives, credits, CBP security equipment, offsets and capital contributions, during the term of the Agreements and extensions and deducting the net revenues from the existing RCG Agreements for the Campus and CTG replaced with these items.

Recommendation
It is recommended that the Board approve the accompanying resolution to:

1. Approve the Cruise Terminal Usage Agreement between the County and RCG, providing for the construction of a new CTG and Berth 10. This agreement is for a 36-year term inclusive of three 7-year extensions. As part of the Cruise Terminal Usage Agreement, the County agrees to undertake the CTG and Berth 10 capital improvements projects, not to exceed $325 million, with RCG reimbursing the County 47% of project costs with interest and issuance costs (with certain provisions that could result in a reimbursement of 53% of project costs) via a capital recovery surcharge fee.

2. Authorize the County Mayor or the County Mayor�s designee to competitively procure and contract for capital improvements in connection with the design and construction of new CTG and Berth 10 projects under the terms of the Seaport Expedite Ordinance.

3. Authorize the County Mayor or County Mayor�s designee to negotiate and enter into an agreement with CBP for combined one-time and recurring expenses not to exceed $2 million for equipment, services, and maintenance of security equipment necessary for CTG.

4. Approve the Second Campus Lease Amendment to the Campus Lease, providing for the County to fund the project. The Amendment consisting of rental revenues over the 50-year term, inclusive of two 5-year extensions, includes the repayment of 125% of the capital construction costs, including financing costs over the first 30-years of the term. In consideration, in part, of RCG�s significant commitments made in the Cruise Terminal Usage Agreement to the County, financing the completion of the campus improvements for RCG�s global headquarters at PortMiami will be undertaken by the County up to a maximum project investment of $450 million.

5. In the best interest of the County, waive formal bid procedures under Section 5.03(D) of the Charter and Section 2-8.1 of the Code to select RCG as the County�s construction agent for the construction of the RCG campus improvements.

6. Direct the County Mayor or County Mayor�s designee to provide a copy of the Second Campus Lease Amendment to the Property Appraiser�s Office in accordance with Resolution No. R-791-14.

7. Direct the County Mayor or County Mayor�s designee to appoint staff to monitor compliance with the Cruise Terminal Usage Agreement; the development and construction agreements for new CTG and Berth 10 capital projects; the memorandum of agreement with CBP; and the Second Campus Lease Amendment, including the associated Construction Agency Services Agreement.

8. Waive Resolution No. R-130-06 with respect to the finalization and execution of any agreement for the County�s use of temporary office space within building(s) leased to RCG. A waiver of Resolution No. R-130-06 is necessary as the terms of such agreement will depend on subsequent events; accordingly, that agreement has not been prepared but will be subsequently prepared, in accordance with the parameters set forth in the accompanying resolution.

Delegated Authority
This item authorizes the County Mayor or County Mayor�s designee to:

(1) execute the Cruise Terminal Usage Agreement and to exercise all County rights conferred therein, including rights of extension or termination;

(2) execute the Second Campus Lease Amendment and to exercise all County rights conferred therein, including rights of extension or termination;

(3) negotiate and enter into a memorandum of agreement for the CBP equipment necessary for CTG, in an amount not to exceed $2 million, consistent with the similar agreements approved by the Board in Resolution Nos. R-910-21 and R-293-21;

(4) negotiate and enter into an agreement for the use of temporary office space within one or more buildings lease to RCG, subject to the parameters set forth in the Second Amendment; and

(5) take any other acts as are necessary to give effect to the Cruise Terminal Usage Agreement, Second Campus Lease Amendment, and memorandum of agreement; provided, however, that such acts shall (a) be consistent with the disclosures in the memorandum and the delegations set forth in this resolution; (b) not put the County in any less favorable position, financially or otherwise, than that outlined in the accompanying memorandum, this resolution, and the agreements accompanying this resolution; (c) not contravene the policy, intent, or purpose of the Board as expressed in any of its legislative enactments; and (d) as applicable, be reduced to writing and subject to the approval of the County Attorney�s Office as to form and legal sufficiency.

Scope
PortMiami is located within District 5, represented by Commissioner Eileen Higgins. 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
The combined net positive fiscal impact over and above the County�s existing Campus and Cruise Terminal G Agreements (after debt service, credits, incentives, and any other offsets) from the agreements in this item is $2.8 billion ($2.5 billion from the Cruise Terminal Usage Agreement plus $260 million from the Second Campus Lease Amendment).

The funding sources for the projects will be from new debt issuances of the Seaport Department with the strategic use of Department funds, commercial paper, and other short-term financing instruments during the development cycle (including potential future grants for the cruise facilities).

Risk Mitigation
All long-term agreements relying on future performance contain an element of risk. These agreements, for which approval is sought, limit risk where possible and include,
* Maximum cost caps on the projects. Terms providing for project descoping or RCG increasing their capital contribution if budget increases materialize.

* Capital Recovery Surcharge (CRS) payments to the County for RCG�s portion of capital contributions, which will survive all events, including termination and force majeure.

o Under the Cruise Terminal Usage Agreement, force majeure includes, acts of God, unusual weather, pandemics, an act of state or war, public emergency, strikes, boycotts, picketing, work stoppages, or labor troubles of any other type (whether affecting the County, RCG, or their subsidiaries, divisions, affiliates, or contractors or subcontractors) or due to causes or conditions not caused or contributed to by the County, RCG, or their agents.

o Force majeure generally will not result in the termination of CRS payments, as the Cruise Terminal Usage Agreement provides that the CRS payment obligation is terminated only upon a County default resulting in termination of the agreement or upon total destruction of the terminals accompanied by a County decision not to reconstruct same.

o In addition, the Cruise Terminal Usage Agreement provides if RCG�s portion of the capital contribution cannot be repaid through the CRS (e.g., in the event of reduced passenger volumes), RCG is required to repay its portion of the capital contribution through any other means reasonably acceptable to the County within the same time frame (or sooner) as provided in the Cruise Terminal Usage Agreement.

* The CRS is set to be 47% of the CTG and Berth 10 cost plus interest and costs compounded at 6.5%. The Agreement, starts the CRS at 53% only lowering it to 47% if the first extension, guaranteeing an additional seven-years of the revenues is exercised early.

* RCG guarantees this will be their largest revenue deal in the Caribbean Basin for the first five years and is contractually obligated to increase the revenues, if necessary, for the County to retain that position.

* RCG indemnifies the County for any of the previous works completed for the campus.

* RCG will deposit $10,000,000 pre-paid rent or letter of credit when the Campus Lease commences that remains in place until ten years of on-time lease payments have occurred.

* There is a cross-default provision to incentivize timely meeting all campus lease obligations. If there is a default on the lease the County can, at its own option, accelerate all extensions on the Cruise Terminal Usage Agreement or cancel the Cruise Terminal Usage Agreement. This reduces the likelihood, primarily in the case of bankruptcy or insolvency proceedings, that the campus lease agreement will be discharged with RCG retaining the benefit of the revenue-generating Cruise Terminal Usage Agreement.

* In the unanticipated event of a full default on the lease, RCG is required to fully satisfy the lease component for the financing plus 25% and pay the next two years of the scheduled rent.

* The Department will also be seeking risk management advice on potential additional insurance riders specific to these County funded campus and CTG projects. This could include riders that reduce the County�s deductible in the event of a loss, including hurricane events and business interruption. If these policies are determined to be warranted, their cost would reduce the net positive fiscal impacts, though minimally.

A. Cruise Terminal Usage Agreement
The Cruise Terminal Usage Agreement provides the County with a Minimum Annual Guarantee (�MAG�) ranging from its current 600,000 annual passenger movements during a development period increasing to 1.5 million annual passenger movements upon substantial completion of CTG (estimated for early FY 2027) and further increasing to 2.1 million annual passenger movements from years 11 through the conclusion of the 36-year term, which is inclusive of three 7-year extensions exercisable by RCG. Approval of the Cruise Terminal Usage Agreement will generate a net positive fiscal impact to the County of $2.5 billion, after debt service, shared parking revenue rebates and marketing incentives paid to RCG and deducting the net revenues of the current CTG Agreement with RCG that expires in 2033. Once RCG�s passenger traffic reaches 2.1 million annual passenger movements plus RCG�s approximately 1.55 million annual passenger movements at Cruise Terminal A, the Port�s guaranteed passenger movements will exceed our record
Fiscal Year 2019 volumes by 22%.

RCG pays a unitary fee per passenger movement which combines wharfage, dockage, and harbor fees. The unitary fee increases 3% compounded annually over the life of the Agreement as shown in Exhibit B of the Cruise Terminal Usage Agreement.

As provided for in the existing Cruise Terminal Agreement, the County will provide RCG parking revenues and an annual marketing incentive, consistent with other cruise line agreements. The value of the parking incentive is anticipated to range between $1.4 million and $4.9 million per year during the term, including extensions. The marketing incentive is anticipated to range between $2.9 million and $6.4 million per year during the term, including extensions.

Under the Cruise Terminal Usage Agreement, capital costs associated with the construction of the CTG and Berth 10 improvements are capped at $325 million, excluding the cost of the roadwork and the marine improvements for Berth 10, which will be borne by the County of up to $178.9 million listed in the Multi-Year Capital Plan previously approved by the Board. The County will recover 53% of the $325 million, unless RCG exercises its first option to renew and extend the Cruise Terminal Usage Agreement early, in which case the County will recover 47% of the $325 million, in each case through a capital recovery surcharge (�CRS�) imposed on passenger movements occurring on and after October 1, 2024 (on all RCG passengers other than Cruise Terminal A passengers) requiring a minimum amount of annual CRS payments. The CRS also includes interest and costs compounded at 6.5% in addition to the repayment of the capital. The reimbursable portion of the County�s capital contribution is unsecured, but is otherwise
irrevocable and survives all other events, including force majeure and termination.

B. Second Campus Lease Amendment

The Second Campus Lease Amendment will generate an estimated net positive fiscal impact of $260 million after debt service, credits for County use of RCG space, other offsets described, and the net revenues of the existing lease being replaced with this item. The County�s maximum investment in the campus improvements will not exceed $450 million for project costs plus financing costs including capitalized interest, other costs and maintaining adequate reserves to be incorporated into the lease payments.

The construction of CTG requires the demolition of the port�s administration complex that was constructed in 1963. Rental revenues might decrease for tenants that are not relocated on port and is currently estimated at up to $560,000 of annual rent revenues for up to 6 years or $3.36 million. The port will also credit RCG for the relocation of the port�s temporary offices within the RCG campus (or in downtown locations leased by RCG). If the port occupies existing RCG space for the maximum period, the credit is estimated at a total of $3.49 million over the six years. The net fiscal impact of the Agreements and Amendments includes these items.

The Second Campus Lease Amendment also provides for RCG�s temporary leasing of 500 parking spaces within Parking Garage K, with estimated total additional revenues from the temporary leasing arrangement of $1,204,884 and is also included in net fiscal impact.

As a publicly owned building, the County shall have the right to utilize the Campus for community events which are not primarily intended to showcase or promote competing cruise ship companies. When making requests to access space on the Campus, the County shall be entitled to notify the tenant of its request for specific components of the communal portions of the Campus (e.g., auditorium, cafeteria, etc.) for such community events and requires the tenant�s confirmation that the requested area is available.

C. CBP Memorandum of Agreement
The anticipated fiscal impact of the memorandum of agreement with CBP for security equipment for CTG is estimated, based on prior similar projects, at approximately $2 million. These costs will consist of one-time and recurring costs, including upgrade costs, at an estimated annual average upgrade cost of $77,000. The costs associated with the memorandum of agreement will be funded through the use of Seaport funds, including its commercial paper program and future revenue bond issuances.

Track Record/Monitor
The Seaport Department staff members responsible for monitoring the agreement are Andy Hecker, Deputy Port Director; Elizabeth Ogden, Assistant Port Director, Capital Development; George Andrews, Assistant Port Director, Strategy and Economic Development; and Becky Hope, Assistant Port Director, Planning, Environment, Resiliency.

Background
RCG is the second-largest cruise operator in the world, with 24% of the market share and a growing global fleet of 64 ships traveling to approximately 1,000 destinations and catering to multiple segments of the cruising public, including families and luxury travelers. Royal Caribbean International continues to be one of the fastest growing cruise lines in the world, with 12 new ships on order from 2022 through 2027. In October 2022, RCG announced details of its new Icon-class vessels currently under construction with the first Icon-class ship debuting in January 2024 from PortMiami; announcement of that new vessel led to record-breaking first-day bookings for RCG.

With almost 100% of vessels back in service, the post-pandemic cruise industry continues to show the expected signs of strength and resiliency as cruise travel continues to trend upward. The consensus among industry experts is that passenger numbers will surpass pre-pandemic levels by the end 2023, and possibly increase 10%-12% or more in 2024. Cruise tourism in the Caribbean region has seen a 42% passenger growth in the last decade. On November 3, 2022 RCG reported on its earnings call that its vessel occupancy for the Caribbean Basin was at 105%.

Consistent with this growth, by 2031, the Cruise Terminal Usage Agreement, combined with guarantees with the other cruise lines holding preferential berthing rights at PortMiami, will result in a higher guaranteed passenger count than PortMiami experienced in its record-breaking 2019 cruise season. Specifically, in 2019, PortMiami�s record-breaking year, PortMiami welcomed approximately 6.8 million passengers. Upon approval of the Cruise Terminal Usage Agreement, by 2031, PortMiami�s partner cruise lines will collectively guarantee 10.2 million passengers at PortMiami.

In preparation for increased future berth and passenger demand, PortMiami has negotiated a new Cruise Terminal Usage Agreement increasing RCG�s passenger movement guarantee by 66,350,000 and a restructured financing model for the construction of their global headquarters at PortMiami. RCG�s global headquarters will bring approximately 1,000 new RCG employees and $100 million in increased annual wages to Miami-Dade County and the Cruise Capital of the World.

In exchange for the significant commitments made by RCG in the Cruise Terminal Usage Agreement, RCG has requested that the County finance, up to a maximum of $450 million, the completion of the campus improvements for RCG�s global headquarters, which are located at PortMiami. RCG will repay the financed amount, plus interest and costs plus an additional 25% over a 30-year period. As a result of the interconnectedness of the Cruise Terminal Usage Agreement and the Second Campus Lease Amendment, following Board approval, the Cruise Terminal Usage Agreement and Second Campus Lease Amendment do not become effective until the County confirms that it will secure financing for the completion of the headquarters project subject to the financing threshold. In the event a financing package is not secured, the parties will meet to consider alternatives which could include bringing revised items back to the Board for consideration.

The successful financing of the projects contemplated in the Cruise Terminal Usage Agreement and Second Campus Lease Amendment will deepen an important economic relationship for both PortMiami and Miami-Dade County at large, in cruise and non-cruise sectors of the economy.

RCG has homeported in Miami-Dade County for more than 50 years, investing in the community, creating jobs, and generating economic benefits for the County. As this transaction demonstrates, by locating and expanding its global headquarters at PortMiami, RCG is induced to expand its strong passenger cruise presence at PortMiami, cementing PortMiami�s status as the Cruise Capital of the World. Headquarter firms contribute to the business identity of a location (i.e., PortMiami as the Cruise Capital of the World); create feedback effects with supporting industries that, in turn, locate (or relocate) their own headquarters to be in proximity to one another; and result in statistically significant benefits to the not-for-profit sector through increased charitable contributions.1

Already one of the top-15 employers in Miami-Dade County, the continuation of the campus construction will increase office space at the Port ensuring 1,000 additional employees in Miami-Dade County (over the existing 2,000 employees) and improving RCG�s ability to attract workers for decades to come. According to RCG, the additional jobs generated by the campus expansion would be high-paying jobs, with average salaries exceeding $100,000. These jobs and more than $100 million in added annual wages will add to the 30,088 jobs that, according to a 2017 economic study (the �2017 PortMiami Economic Impact Study�), are created in Miami-Dade County, directly or indirectly, by the cruise industry.

The benefits of the projects are not limited to jobs created directly at RCG. Given the magnitude of investment in these projects, the local economic impact arising out of direct, indirect, and induced construction industry-related jobs may produce nearly 10,000 jobs during construction, according to some economic studies.2 After construction, permanent employment will be created for port services, labor, transportation services, food and beverage suppliers and ancillary local purchases within Miami-Dade County. Additionally, the impact of indirect jobs touches several community-wide industries including aviation, hospitality, information technology, hotels, agriculture, manufacturing, and tourism, among others. Based on extrapolations from the 2017 PortMiami Economic Impact Study, the estimated total of permanent direct, indirect, and induced employment generated from these projects over and above RCG�s increased campus headquarters hiring for from these projects is 12,144.

This Board has previously recognized (e.g., Resolution No. R-381-21) that the cruise industry has economic impacts that extend well outside of a port�s boundaries. A study conducted by the Greater Miami Convention & Visitors Bureau revealed that, in 2019, there were approximately 1.7 million overnight cruise visitors in Miami, who spent a combined $1.1 billion in the community on hotels, food and beverage, transportation, entertainment, and shopping. Further, the 2017 PortMiami Economic Impact Study revealed that the cruise industry had an estimated positive economic impact of approximately $5.8 billion for Miami-Dade County, generating about $190 million in state and local tax revenues.

Cruise Terminal Usage Agreement
The Cruise Terminal Usage Agreement will represent RCG�s largest annual minimum passenger commitment between any cruise line and any port worldwide. Compared to RCG�s existing agreement for the use of CTG (expiring in 2033), the Cruise Terminal Usage Agreement represents an additional $2.5 billion in net funds for the County after debt service, incentive payments and deducting the net revenues of the current RCG CTG Agreement being replaced by this item.

Under the Cruise Terminal Usage Agreement, RCG�s MAG will range from 600,000 annual passenger movements during the development period, increasing to 1.5 million annual passenger movements after substantial completion of CTG, and reaching 2.1 million annual passenger movements from the 11th year of the term (substantial completion of Berth 10) through its conclusion. This represents a minimum passenger throughput guarantee of 73.7 million passengers, generating approximately $3.6 billion in gross revenues to the County and $2.7 billion in net revenues after debt service and incentives earned by RCG which is also $2.5 billion in net revenues after deducting the current CTG Agreement. This commitment compares exceptionally favorably to the annual guaranteed revenues stipulated in the current agreement.

Coupled with RCG�s current commitment at Cruise Terminal A, upon the completion of CTG, RCG will guarantee PortMiami approximately 3.05 million annual passenger movements increasing to 3.65 million passenger movements annually during the term. This represents an increase of 66,350,000 guaranteed additional passenger movements and, RCG�s total annual passenger guarantee will reach a level that surpasses any other cruise line�s passenger guarantee at PortMiami by 62%.

Without the expansion the Port will have limited capacity for RCG�s new vessels including its largest ever, the ICON class. Previously in 2009, when RCG launched its then largest ships, the Oasis class, the County did not have a usable berth for a vessel that size, and the Oasis class of ships sailed out of another South Florida port until CTA opened in FY 2019. When the Oasis arrived after CTA was opened, it generated an additional 1.7 million passenger movements in its first year.

Most favored Port
In addition, for a 5-year period following the substantial completion of CTG, RCG agrees that its MAG at PortMiami (on a per terminal basis) will be the largest revenue guarantee at any port with sailings into the Caribbean Basin. To the extent that RCG enters into an agreement with a higher MAG with another Florida port, then the MAG under our agreement will automatically adjust to the higher MAG.

Home Port Obligation
Furthermore, commencing upon the substantial completion of CTG, RCG has pledged to homeport at least one Oasis- or Icon-class vessel at PortMiami for at least 1 cruise season per year for a minimum of 7 cruise seasons during first ten years 10-year period. RCG will also homeport 1 or more new-builds at PortMiami, including the Icon of the Seas in January 2024, for deployment to the Caribbean market.

The new CTG, which will be constructed in accordance with the County�s Sustainable Buildings Ordinance, will include solar panel arrays, a multi-level shared parking garage with ground-level intermodal facility, connecting roadways, and a provisioning building which is necessary to accommodate RCG�s newer, state-of-the-art, larger Icon-class vessels capable of accommodating up to 7,000 cruise passengers. In contrast, the existing CTG is capable of accommodating vessels with capacities of approximately 4,000 passengers. The new CTG will occupy both the site of the existing CTG and PortMiami�s administrative building, which was constructed in 1963. PortMiami�s replacement administrative building will be in a location to be subsequently determined, possibly in the garage constructed in connection with the new CTG facility; during the construction of CTG, RCG will allow PortMiami to use office space within its PortMiami office towers or its downtown Miami office space.

In addition to granting RCG preferential berthing rights at the new CTG, the Cruise Terminal Usage Agreement provides for RCG�s usage of the Shared Terminal, which is currently under construction by MSC Miami Cruise Terminal LLC (�MMCT�) and Berth 10 (accessed through the Shared Terminal). Under the lease with MMCT for the Shared Terminal, the County is required to construct Berth 10 by October 31, 2028 and guarantees revenues to MMCT based on passenger throughput. RCG�s agreement to operate from the Shared Terminal and Berth 10 offsets the cost of the Berth 10 improvements and secures a source of passenger throughput to meet the County�s commitment under its lease with MMCT, the shared terminal operator.

Finally, the Cruise Terminal Usage Agreement provides that RCG agrees to use shore power in accordance with port-wide standards, reimburse the County for electrical charges, and pay any future fees established in the Port Tariff regarding the use of shore power at any current or future shore power capable berths.

Second Campus Lease Amendment to the Campus Lease
On May 7, 2019, the Board adopted R-520-19, approving the Campus Lease between the County and RCG. The Campus Lease provides for the development of a new state-of-the-art office campus to serve as RCG�s global headquarters, including renovations to existing buildings occupied by RCG. Under the Campus Lease, RCG committed to finance the development of those improvements (with limited County contributions) and to transfer ownership to the County immediately upon their completion. With that commitment RCG�s lease payments were set at a level that accommodated their financing of the campus improvements.

On May 15, 2020, to mitigate financial risks after the COVID-19 pandemic (which resulted in the global cessation of passenger cruising), RCG, after expending approximately $70 million, suspended construction of the campus improvements. In July 2021, RCG notified the County of its intent to resume the campus improvements and requested an extension of deadlines in the Campus Lease that were impacted by the cessation. Accordingly, on July 19, 2022, the Board approved Resolution No. R-40-22, extending various deadlines under the Campus Lease.

RCG desires to resume construction of its global headquarters, consolidate its employment at PortMiami (Miami-Dade County), and provide space to complete its hiring program; however, with RCG prioritizing its new ship build program, and much of the growth coming to Miami-Dade County upon approval of the Cruise Terminal Usage Agreement, RCG has requested to reverse the financing role, with the County undertaking the financing of the campus improvements, subject to a maximum project amount of $450 million. Under this arrangement, RCG will repay the County 100% of its outlay via a revised rent schedule reflecting a more typical owner-funded facility structure lease including coverage of owner�s debt service required in connection with such financing.. In concert with the Second Campus Lease Amendment, RCG has agreed to the above-described Cruise Terminal Usage Agreement for CTG, Shared Terminal, and Berth 10.

Financing Contingency
Under the proposed Second Campus Lease Amendment, the County is responsible for financing the completion of the campus improvements via the issuance of Seaport revenue bonds or other mutually agreed financing mechanism up to a maximum of $450 million. RCG is required to accept any financing proposal offered by the County that would result in lease payment increases of $44 million per year over thirty years or less (�Financing Threshold"). Once the financing is agreed upon, the County will issue a financing confirmation notice, which will trigger the effectiveness of the Cruise Terminal Usage Agreement and set in motion the below-described Construction Agency Services Agreement, which provides for RCG�s supervision of the construction of the campus improvements.

If the County is unable to secure adequate financing for the campus improvements or if the financing exceeds the Financing Threshold, RCG can accept the higher amount or either (a) reduce the total financing amount and provide for bridge financing until alternative financing is secured or (b) suspend the project and renegotiate in good faith a further amendment to reflect the delay in financing without increasing the County�s exposure. If, however, the total anticipated costs of the project were to exceed the maximum project cost, RCG would have the option to either (a) descope the project in coordination with the Port or (b) fund all excess costs on its own. In any case, the projects will not commence until the County is able to issue a financing confirmation notice, whereby the County confirms that it will secure the $450 million necessary to finance the campus improvements on such terms in accordance with the Second Campus Lease Amendment.

Project Scope
As construction agent for the County, RCG will contract for the construction of the campus improvements, which include (a) constructing a new building and parking garage, various surface parking areas throughout the Campus, (b) performing enhancements and improvements to the 1050 Building and 1080 Building, and (c) developing other portions of the campus.

During redevelopment of CTG, which includes demolition of the existing PortMiami administration building, RCG will provide temporary office space for PortMiami personnel upon 90 days� prior notice, but not earlier than January 2024, through and up to three years after CTG is constructed. This will provide PortMiami sufficient time to relocate, design, bid and construct its new office location. During such time when the County has possession of the temporary offices, RCG lease payments will be reduced.

Maximum Project Cost, Revised Rent Schedule and Payment Guarantee
The original Rent Schedule comprised lease payments in excess of $311 million through the initial term, or $430 million if both 5-year renewal options were exercised. Such schedule has been revised to include the County�s financing of the project, the capitalization of any interest that would otherwise be due under the financing during the development period, and any reserve requirements established as part of the financing arrangements. The updated rental schedule provides lease payments to cover 125% of these costs as shown in Exhibit 1 to the Lease.

As an additional guarantee, within 30 days of the Lease Term Commencement Date, RCG will deposit $10 million as Pre-Paid Rent (or a letter of credit in the same amount), which shall be applied to the Campus Rent obligation commencing in the 11th year of the term or be used to cure any defaults. In addition, as a precaution against an unanticipated bankruptcy the Second Campus Lease Amendment provides that the initiation of bankruptcy (or similar) proceedings may, in the County�s option, result in an extension of the guarantees set forth in the Cruise Terminal Usage Agreement or result in the termination of both the Campus Lease and Cruise Terminal Usage Agreement accelerating the guaranteed receipt of cruise revenues.

Maintenance Obligations and Credit
This Second Campus Lease Amendment also accounts for RCG taking over the maintenance responsibilities of all campus improvements, including the existing buildings, beginning July 1, 2023, instead of the current contractual date of April 1, 2033. In return, RCG will be entitled to receive an annual credit toward the Campus Rent in an amount equal to 100% of the actual annual cost of all maintenance and repair services, but not to exceed $750,000 and subject to County review and approval of the applicable invoices. Starting on April 1, 2033, and continuing for the duration of the term, the annual credit shall be reduced to 50% of the actual annual cost of all maintenance and repair services provided by RCG, but not to exceed $1 million. This obligation by RCG includes capital maintenance and replacements of building systems and infrastructure as needed over the life of the lease and relieves the County�s obligation for these future costs and services. When the lease ends the building will be returned in good condition commensurate with a well-maintained building of similar age.

Transfer of Ownership
The Campus Lease is further amended to provide that the County shall own the Campus Improvements during construction as they are being financed by the County. On or before thirty (30) days from the Effective Date of this amendment, RCG shall transfer title to the existing campus improvements to the County, free and clear of any liens or any encumbrances of any kind whatsoever, and at no cost to the County.


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Jimmy Morales
Chief Operations Officer