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CITY COUNCIL STAFF REPORT
DATE: May 21, 2014 CONSENT AGENDA
SUBJECT: AMENDMENT NO. 1 PALM SPRINGS INTERNATIONAL AIRPORT CAR
RENTAL AGREEMENTS A6110, A6111, A6112, A6113, AND A6114
FROM: David H. Ready, City Manager
BY: AIRPORT
SUMMARY
This action would allow for Amendment No. 1 to the existing car rental concession
agreements at Palm Springs International Airport.
RECOMMENDATION:
1. Approve Amendment No. 1 to all five airport rental car concession agreements
doing business as eight (8) car rental agencies for: Avis/Budget Car Rental, LLC;
The Hertz Corporation; Enterprise Rent-A-Car, LLC d/b/a Alamo/National Car
Rental; Enterprise Rent-A-Car Company of Los Angeles, LLC, and Dollar/Thrifty
Rent-A-Car; for a term of three additional years.
2. Authorize the City Manager to execute all necessary documents as required.
STAFF ANALYSIS:
The car rental concession program at Palm Springs International is the largest of all
airport revenue sources. With the continuing record passenger traffic being realized,
car rental revenues have reached reciprocating record amounts and rental transactions
are approaching 200,000 per year. The agreement for this concession, which is
identical for all operators, is set to expire June 30, 2014.
Historically, the airport has always instituted a five-year term for this concession,
however, under this existing agreement which is due to expire June 30th, the term was
set for three years only because of anticipated major car rental improvements initiating
construction near the end of this time frame. Because these improvements are still
undergoing the environmental review processes, the car rental stakeholders
unanimously agreed to an extension of the existing agreement with another three-year
extension. This three-year period is projected to be a sufficient amount of time to
complete the airport master plan improvements. A new car rental bid process would
ITE;,r NO. TIZ
City Council Staff Report
May 21. 2014 -- Page 2
Amendment No. 1 Airport Car Rental Concessions
then be conducted prior to the end of this term, around the early 2017 timeframe, and
include the new facility improvements with new rates and charges. Many airports,
including Los Angeles LAX Airport, have extended their car rental agreements in the
same manner.
The agreement amendment considered in this action would provide for a continuance of
the existing agreement through June 30, 2017, and incorporate a minor modification to
the fee formula as described the next section.
FISCAL IMPACT:
The rental car concession fees at PSP Airport are consistent with the industry practices
and calculated using the greater of either a minimum annual guarantee or 10% of gross
revenue. In addition to this base fee, there are fixed rents charged to each of the firms
depending on the amount of space they occupy and facilities they utilize. The
comparison below enumerates the current revenue levels guaranteed to the airport and
the fixed rents paid by the car rental companies operating at Palm Springs International
Airport.
Current MAG New Formulation
(Minimum Annual Guarantee)
1.) Hertz $1,083,900 $1,258,137
2.) Avis/Budget $1,080,000 $1,436,173
3.) Dollar/Thrifty $ 951,000 $ 754,222
4.) Alamo/National $ 870,456 $ 907,443
5.) Enterprise $ 868,123 $ 705,052
Total $4,853,479 $5,061,027
Rental Current Increased
Terminal Rent $41.18s.f. $46.70s.f.
Service Facility $ 0.77s.f. $ 0.87s.f.
Ready Spaces $1,235.70 $1,400.00 per stall annually
Overflow Spaces $ 1.30 $ 1.50 per space, daily
The new contract amendment includes a three-year term from July 1, 2014 through
June 30, 2017 with an adjusted revenue formulation projected to generate an additional
$250,000 in revenue to the airport for the first year, and continued revenue growth over
the followi two years.
! I
Thomas Nolan, Executive Director
David H. Ready, City er
Attachment: Lease Amendment No. 1
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AMENDMENT NO. 1 TO LEASE
CAR RENTAL, LLC
OPERATING AND LEASE AGREEMENT
FOR OPERATION OF A CAR RENTAL CONCESSION
AT PALM SPRINGS INTERNATIONAL AIRPORT
THIS AMENDMENT NO. 1 TO LEASE # is made and entered into this first
day of July 1, 2014, by and between the CITY OF PALM SPRINGS, a charter city and
California municipal corporation ("City"), and ("Tenant") a
corporation. City and Tenant may hereinafter be referred to individually as a "Party"
and collectively as "Parties".
RECITALS
WHEREAS, on July 1, 2011, City and Tenant entered into that certain lease
with Car Rental LLC for rental car concession services ("Agreement"), for
Tenant's lease and operation at Palm Springs International Airport ("Airport"). As more
specifically described in the Agreement;
WHEREAS, the parties wish to amend the Agreement pursuant to the terms of
Amendment No. 1 as follows;
AGREEMENT
NOW THEREFORE, in consideration of the City's covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, City and Tenant mutually agree as follows:
Premises: Each rental car agency shall retain the existing rental
location for customer ticketing and transactions along with
vehicle maintenance buildings and adjacent vehicle
storage. Ready and return car spaces will be subject to
existing terms and conditions of the Lease Agreement.
Term: Commencing on the Effective Date through June 30, 2017.
Early Lease Termination: The tenant is advised that the Airport is planning to
construct a new rental car center or to substantially
renovate the existing rental car center, and such
construction or renovation will impact the Airport's ability to
manage the rental car facility. The City Manager, in his
sole discretion, has the authority to terminate the Lease
during the term if (a) the construction of the new rental car
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center is substantially complete prior to June 30, 2014 or
(b) the rental car facilities renovations requires a relocation
of the Tenants. In the event the City Manager exercises
this early termination, the Airport shall meet and confer with
representatives from each rental car concession and
provide Tenant a six month written notice of the early
termination and a transition plan for comparable space to
conduct the rental car concession services.
Rental Rate Adjustment: Commencing for the term of this agreement:
Current Effective July 1, 2014
$41.18 s.f.p.a. Terminal Rent $46.70 square foot per annum
$ 0.77 s.f.p.a. Service Facility $ 0.87 square foot per annum
$1 ,235.70 per Ready Parking $1,400.00 per stab annually
$1.30 Overflow Parking Spaces $1.50 per day
Effective July 1, 2014 and annually thereafter, the minimum
annual rent shall be automatically adjusted to the greater of
either (a) or (b) immediately below, to be paid monthly:
(a) Ninety Five percent (95%) of the prior year's 10%
gross revenue figure. Based on the annual
revenue from June 1st through May 31s' of the
prior year.
(b) Ten percent (10%) of gross annual revenue as
defined in the current agreement.
Full Force and Effect: Except as expressly modified herein all other provisions of
the Agreement shall remain unmodified and in full force
and effect.
Corporate Authority: The persons executing this Agreement on behalf of the
parties hereto warrant that (i) such party is duly organized
and existing, (ii) they are dully authorized to execute and
deliver this Amendment on behalf of said party, (iii) by so
executing this Amendment, such party is formally bound to
the provisions of the Amendment, and (iv) the entering into
this Amendment does not violate any provision of any other
agreement to which said party is bound.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the date first
written above.
ATTEST: CITY OF PALM SPRING
a municipal corporation
By: By:
City Clerk City Manager
APPROVED AS TO FORM:
By:
City Attorney
CONTRACTOR: Check one: _Individual _Partnership_Corporation
Corporations require two notarized signatures: One from each of the following: A. Chairman of Board,
President, or any Vice President: AND B. Secretary, Assistant Secretary, Treasurer, Assistant
Treasurer, or Chief Financial Officer.
By: By:
Signature (notarized) Signature (notarized)
Name: Name:
Title: Title:
State of State of
County of County of
On before me, On before me,
personally appeared personally appeared
who proved to me on the basis of satisfactory who proved to me on basis of satisfactory
evidence to be the person(s) whose name(s) evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument is/are subscribed to the within instrument
and acknowledged to me that he/she/they and acknowledged to me that he/she/they
executed the same in his/her/their authorized executed the same in his/her/their authorized
capacity(ies), and that by his/her/their capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), signatures(s) on the instrument the person(s)
or the entity upon behalf of which the or the entity upon behalf of which the
person(s)acted, executed the instrument. person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY I certify under PENALTY OF PERJURY
under the laws of the State of California that under the laws of the State of California that
the foregoing paragraph is true and correct. the foregoing paragraph is true and correct.
WITNESS my hand and official seal. WITNESS my hand and official seal.
Notary Signature: Notary Signature:
Notary Seal: Notary Seal:
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