A proposal before the commission today would authorize the county mayor to negotiate and execute amendments to preferential berthing rights agreements and cruise terminal usage agreements, providing for a two-phase coronavirus recovery period.
Estimated impact to the county
Such amendments would have an estimated fiscal impact to the county of $68.5m for the first phase of the recovery period, calculated as from March through November 2020. If the no-sail order is extended, the impact would continue at approximately $7m per month until the commencement of the second phase of the recovery period. After that, the impact would be approximately $7m per month, subject to reduction based on the duration of the second phase of the recovery period and passenger volumes.
Cruise revenues average $7m per month
In a memo, Deputy Mayor Jack Osterholt noted cruise revenues are seasonal but, on average, total approximately $7m per month in guaranteed net cruise fees and approximately $1m in ancillary cruise-related revenues such as ground-transportation fees.
In the event there is no sailing by any line in the second phase of the recovery, the port could forgo the approximately $7m in monthly guaranteed revenues for 24 months, Osterholt said. However, it's expected that lines will resume sailing as soon as permitted, and they will be required to compensate the county based on their actual port usage.
$114m in unrestricted reserve
Osterholt said the port can meet all its financial obligations without further dipping into unrestricted reserves even if cruises were not to resume, until April 18. After that, PortMiami would need to take additional measures, including the extension of austerity measures and/or further use of the $114m in unrestricted reserve balance available at the start of fiscal 2020-21.
Should cruises not resume for an extended period, the unrestricted reserves would be sufficient to meet the port's cash requirements for operating expenses, including debt service, through September 2022, though at that point, the port would likely miss debt service coverage ratios, Osterholt said.