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Home My WebLink About10/20/1999 - STAFF REPORTS (14) DATE: October 20, 1999 TO: City Council FROM: Director of Aviation RECOMMENDATION: That the City Council approve a Lease Agreement by and between the CITY OF PALM SPRINGS, a municipal corporation ("City"), and THE PARADIES SHOPS, a Retail Concessions Operator,("Tenant")for Retail Concessions at the Palm Springs International Airport("Airport" or"PSP"). BACKGROUND: As a component of the overall Phase IIA Terminal Expansion Plan, the Airport sought qualified retailers to operate several new concession spaces and existing retail spaces both landside and airside. As part of the Airport's Terminal Concession Development Program (TCDP), Request for Proposals (RFP 08-99) were solicited, followed by a Request to interested parties to make a formal presentation to a selection committee formed by the City Manager. At its September 15, 1999,meeting,the City Council authorized staff to enter negotiations with The Paradies Shops,Shades&Shirts Inc.and Harris Enterprise for retail concessions. Staff met with Shades & Shirts Inc., proposed for Location #10, "Sunglasses/Shades International" to no avail. Since that time, Shades& Shirts Inc.,has withdrawn from the TCDP. Additionally,Harris Enterprise withdrew prior to negotiations;however,staff made it clear to the attorney representing Harris Enterprise that we were authorized to negotiate a lease agreement. Harris Enterprise,proposed for Location#1,"Gifts to Go!" still elected to withdraw from the TCDP. The Paradies Shops operates over 250 stores from 53 airports in the United States and Canada and has more stores in more airports than anyone else in the industry. For four consecutive years(1996to 1999),The Paradies Shops has beenlheIndustry'sAward Winner (ARN's-AirportRetail News Best Airport Concessions Winner)for"Best AirportRelailer," "Retailer with Highest Regard for Customer Service" and"Best Retail Store Design." Jul references provided by executive staff members in airport management have been outstanding. There has also been an impressive amount of letters ofrecommendations from local as well as national representatives for their PGA Tour Shops, including Timothy W. Finchem,Commissioner of the PGA Tour. The Paradies Marketing Concept for Palm Springs International Airport includes,but is not limited to,Desert Marketplace&PGA Tour Shop in Locations#7& 8; and Desert News in Locations#9, 15 and 19. The Desert Marketplace will feature a creative line of Desert Spa,Desert Treasures,Desert Critters and other desert gift merchandise. The adjoining PGA Tour Shop features top brands in golf merchandise and has officially licensed merchandise of several PGA Tournaments including the Bob Hope Chrysler Classic. The Desert News will feature news/books/periodicals and convenience merchandise. A concessions agreement drafted by the City Attorney's office for the operations, management and maintenance of certain newsstands,gift shops and related facilities has been successfully negotiated and includes the following: 1) Minimum Leasehold Investment-$722,000($225 per sq. ft.) 2) Lease Term- 10 years,plus a 5 year option 3) Minimum Annual Guarantee(MAG)-$25.00 per sq. ft. or$126,000,whichever is greater in the first year. 0 Adjusted annually last n thereafter 0 MAG begins when l last new store opens for business / la 'A 4) Percentage Rentals 0-800.000 Enphmements 800,001 +EaRlanements • News/Books Periodicals/Convenience 8% 10% • PGA Tour Shop 8% 100/0 • Gifts 10% 12% • If Airport Enplanements exceed 800,000 in the fiscal year,tenant will pay the City the difference in the percentage;and • Percentage rental will be 69/ountil the last store opens forbusiness or within 120 days from the Date of Beneficial Occupancy(DBO). 5) Hours of Business shall be forty-five (45) minutes prior to the fast scheduled departure until the last departure,seven days a week,365 days a year. There are several Operational Requirements included in the proposed lease agreement for Quality of Service Standards,Pricing,Uniforms,etc. The proposed lease agreement shall be effective November 1, 1999 at 0001L. The selection committee and the Airport Commission unanimously supported and recommended the City Council's approval of the proposed Lease Agreement for Retail Concessions at Palm Springs International Airport. An Airport Key Plan,depicting the proposed store layouts,is attached for your review. A Minute Order is attached for Council consideration. a JERI R#bDLE Director of ' 'on O APPROVED City r ATTACHMENT: 1. Minute Order 2. Airport Key Plan GATE I Airport Koy Plan GVE +i�_i �� o IE oaf 4 31 oC'\ $FAIILES BFS� $FAIItES BEST GATE E ��s i3i�FiGUM SECURR CH Tell v Paradies Shops Airport Concessions Lease AGREEMENT#4159 M06510, 10-20-99 Related LEASE AGREEMENT FOR CONCESSIONS AT THE PALM SPRINGS INTERNATIONAL AIRPORT THIS LEASE AGREEMENT FOR CONCESSIONS AT THE PALM SPRINGS INTERNATIONAL AIRPORT (herein "Lease") is made and entered into this 1st day of November, 1999 ("Effective Date"), by and between the City OF PALM SPRINGS, a municipal corporation ("City"), and PARADIES SHOPS, LLC, a Georgia limited liability company a subsidiary of THE PARADIES SHOPS, a Georgia Corporation("Tenant"). RECITALS A. City is the owner of the Pahn Springs International Airport (the "Airport"), and operates thereon the Palm Springs Airport Terminal building ("Terminal"). B. City and Tenant wish to enter into this Lease for the operation and maintenance of certain newsstands, gift shops and related facilities at those locations within those areas in the Terminal depicted at Exhibit "A" ("Lease Area"), and to more clearly set forth the respective obligations of each party relating thereto. C. City and Tenant have executed that certain Option Agreement granting Tenant the option to lease the Lease Area upon the terms set forth in this Lease, and upon the City's approval of Tenant's preliminary construction plans, construction contract documents and proof of financing for Tenant's development of the Lease Area, as further set forth in the Option Agreement. A copy of the Option Agreement is attached hereto as Exhibit "C". D. By executing this Lease, the parties acknowledge that Tenant has satisfied those conditions in the Option Agreement required therein prior to the execution of this Lease. E. City's decision to enter into this Lease with Tenant is based upon Tenant's experience, Proposal and inspection of the Terminal and acceptance thereof. COVENANTS In consideration of the foregoing Recitals and the mutual covenants and conditions contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Services of Tenant and Use of Park. 1.1 Tenant Scope of Services. City's primary purpose for entering into this Lease is to promote the development of news, books, sundries and gift concessions to serve the public at the Terminal on a nonexclusive basis. In compliance with all terms and conditions of this Lease, Tenant shall provide certain services at the Lease Area to serve the public at the Airport, which services shall generally include the operation, management, and maintenance of (i) news and gift concessions, which shall provide for the sale of newspapers, books, magazines, 627/014084-0014/3231000.4 a10/29/99 -1- O� ?ALM S U A City of Palm Springs Office of the City Clerk Al P 32007.6quia Gnym way•Palm Spnngs,GL(ama 92262 Cq[I FO RN\ TEL (760)3234204•Too.(760)864-9527 November 22, 1999 The Paradies Shops 5950 Fulton Industrial Blvd. S.W. Atlanta, Georgia 30336 Attn: Dick Dickson, President RE: Agreement 4159-Paradies Shops, Inc. Dear Mr. Dickson: Attached is one executed copy of the agreement for contractual services as referenced above between Paradies Shops, Inc., and the City of Palm Springs, approved by the City Council on October 20, 1999, by M06510, Agreement#4159. Certificates of Insurance should be provided, naming the City of Palm Springs as an additional insured, for General Liability for $1,000,000 CSL; Personal Property Insurance - at full replacement value and shall provide plate glass coverage; Automobile Liability for$500,000 CSL; and Worker's Compensation in California Statutory requirements. Further, the cancellation clause shall state as follows: Should any of the above-described policies be canceled before the expiration date thereof, the issuing company will mail 30 days written notice to the certificate holder named to the left. Should you have any questions, please let me know. Sincerely, EVELYN C. CLARK, CMC Assistant City Clerk cc: Airport w/agreement Finance w/agreement File I:\USERS\EV BLYNC\Agreements\CONTRACT.pamdies.wpd Post Office Box 2743 0 Palm Springs, California 92263-2743 MINUTE ORDER NO. �O APPROVING ALEASEAGREEMENTBETWEENTHE CITY OF PALM SPRINGS AND THE PARADIES SHOPS FOR RETAIL CONCESSIONS AT THE PALM SPRINGS INTERNATIONAL AIRPORT. I HEREBY CERTIFY that this Minute Order,approving a Lease Agreement between the City of Palm Springs and the Paradies Shops for retail concessions at the Palm Springs International Airport, was adopted by the City Council of the City of Pahn Springs, California, in a meeting thereof held on the 20'day of October 1999. PATRICIA A. SANDERS City Clerk � - b I