HomeMy WebLinkAbout10/20/1999 - STAFF REPORTS (12) Date: October 20, 1999
To: City Council
From: Director of Aviation
TERMINATION AGREEMENT
RECOMMENDATION:
That the City Council approve the termination of AgreementNo.612 between the CITY OF PALM
SPRINGS,amunicipal corporation organized andexisting underthe laws ofthe State of California,
("CITY"or"LESSOR")andCA ONE SERVICES,INC.,a corporation organized and existing under
and by virtue of the laws of the State of Virginia ("CA ONE" or "LESSEE") in the form of a
Termination Agreement to be prepared by the City Attorney's office.
BACKGROUND:
As part of the Palm Springs International Airport(PSP)Terminal Expansion,Phase ILA,staff has
worked to implement a Terminal Concessions Development Program to achieve greater customer
satisfaction and increase revenue productivity. Pursuant to these objectives,a Request for Proposal
(RFP 08-99)for Speciality Retail and/or Food and Beverage outlets was prepared and solicited on
January 4, 1999. Proposals were accepted in March 1999. Since there were no proposals to food
and beverage and limited retail proposals,the next step in the process was to request that interested
parties make a formal presentation to a selection committee formed by the City Manager.
The current concession operator, CA One, elected not to submit a proposal to the RFP or to
participate in the formal presentation process. With the terminal expansion,Phase ILA,concourse
scheduled to open in November 1999 and with the CA One agreement for retail,food and beverage
due to expire in September 2000, this presented some unusual and timely obstacles. Staff was
authorized to pursue certain conditions of the agreement that would require that CA One put into
place"temporary facilities"until the end of the term of the Agreement or pursue negotiations for a
buyout of the remaining term of the existing Agreement. Staff has now completed its negotiations
with CA One for an early buyout of the Agreement. Listed below are the negotiated points,verbal
terns and conditions both parties have agreed to, pending City Council formal approval for the
Termination Agreement being prepared by the City Attorney's office.
1) The buyout shall be for a lump sum amount of$400,000, all inclusive of loss revenue
projected,cash flow,inventory and unamortized assets;
2) CA One shall have the right to negotiate with Anton AirFood(proposed food and beverage
operator)and The Paradies Shops(proposed retail operator)for those items not relevant to
the leasehold or agreement such as fixtures,furniture and food inventory. The Airport shall
assume no responsibility or obligations in said negotiations;and
3) Termination shall be effective at 23591.,October 31, 1999.
Negotiations were conducted pursuantto City Council direction within the authorizations given. At
its October 6, 1999,meeting,the Airport Commission gave its unanimous support to proceed with
the Termination Agreement. This item was included in the FY-99/00 approved budget,funds are
available in account numbers 415-6400-56036 and 415-6400-56012. There are no General Fund
dollars associated with this transaction.A Minute Order is attached for City Council consideration.
JERI .!of
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DirectorA iationAPPROD
City er 'a
ATTACHMENT-Minute Order
t)F ?ALM Sp
City of Palm Springs
: .* �• Office of the City Clerk
�•ou eo` 3200 75hquin Canyon War'palm Spnogs.Cdifomn 92262
CqI t FO RN`P TEL (760)323-8204•TDD:(760)864A527
December 3, 1999
CA One Services, Inc.
1 Delaware North Place
438 Main Street
Buffalo, NY 14202
RE: Agreement for Termination of Lease-CA One Services Inc.
Attached is one executed copy of the Agreement for Termination of Lease between CA One
Services and the City of Palm Springs, approved by the City Council on October 20, 1999, per
A3319. Agreement#4157.
Should you have any questions, please let me know.
Sincerely,
EVELY14 C. CLARKK
Assistant City Clerk
cc: Airport w/agreement
Finance w/agreement
Post Office Box 2743 0 Palm Springs, California 92263-2743
CA One Services,Inc.
Termination of Lease
AGREEMENT#4157
M06508, 10-20-99 related
AGREEMENT FOR TERMINATION OF LEAST.-- -- -- - - -
This AGRI N OR TERMINATION OF LEASE ("Termination") is made and
entered into as of theme day of October, 1999 ("Effective Date"), between the CITY OF
PALM SPRINGS, a California municipal corporation("City") and CA ONE SERVICES, INC., a
wholly owned subsidiary of Air Terminal Services, Inc., a Virginia corporation ("Lessee") with
reference to the following facts and purposes:
RECITALS
A. City and Lessee's predecessor, Fred Harvey, Inc., entered into that certain
Indenture of Lease Agreement No. 612, dated September 23, 1968, which lease was duly assigned
to Lessee on September 1, 1977, as duly amended from time-to-time (collectively the "Lease")
covering a portion of those certain premises known as Palm Springs International Airport
("Airport") as more particularly described in the Lease(the "Premises").
B. Pursuant to the Lease, Lessee is given the right to operate certain concession
facilities at the Premises for a term ending on August 31, 2000.
C. On November 3, 1993, the parties entered into that certain Supplemental Space Use
Agreement ("Supplemental Use Agreement"), granting Lessee the right to use Suite AMA
consisting of approximately 114 square feet of office space at the Airport, as more particularly
described in the Supplemental Use Agreement("Office").
D. City and Lessee desire to terminate the entire Lease and Supplemental Use
Agreement upon the terms and conditions contained in this Termination.
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, City and Lessee agree as follows:
I. AGREEMENT TO TERMINATE
1. Termination. Subject to the terms and conditions of this Termination, City and
Lessee hereby agree to terminate the Lease effective at 11:59 p.m., Pacific Standard Time on
October 31, 1999 ("Termination Date"), and the use of the Office under the Supplemental Use
Agreement as of 11:59 p.m., Pacific Standard Time on November 5, 1999 ("Office Termination
Date").
2. Consideration for Lease Termination. The consideration which Lessee agrees to
accept for the termination of the Lease effective on the Termination Date, payment of amortization
costs of any kind and any other obligations of any kind under the Lease, and termination of the
Supplemental Use Agreement, shall be the payment by City to Lessee in the amount of Four
Hundred Thousand and 00/100 Dollars ($400,000.00) ("Termination Payment"). City shall
6271014084-001413300421 4 all/19/99
-I-
i
MINUTEORDERNO. f®�
APPROVING THE TERMINATION OF AGREEMENT
NO. 612 BETWEEN THE CITY OF PALM SPRINGS,
CALIFORNIA AND CA ONE SERVICES, INC., IN A
FORM TO BE PREPARED BY CITY ATTORNEY'S
OFFICE.
I HEREBY CERTIFY that this Minute Order,approving the termination of Agreement No.
612 between the City of Palm Springs,California and CA One Services Inc.,in a form to be
prepared by City Attorney's office, was adopted by the City Council of the City of Palm
Springs,California,in a meeting thereof held on the 2011 day of October, 1999.
PATRICIA A. SANDERS
City Clerk