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Home My WebLink About7/30/2008 - STAFF REPORTS - 2.O. iy c u N �IofliFO Cq<rF°Ra`P. CITY COUNCIL STAFF REPORT DATE: JULY 30, 2008 CONSENT CALENDAR SUBJECT: AMENDMENT NO. 2 TO AGREEMENT 4159 WITH PARADIES SHOPS, LLC, FOR CONCESSIONS AT PALM SPRINGS INTERNATIONAL AIRPORT FROM: David H. Ready, City Manager BY: Aviation Department SUMMARY This action will approve an Amendment to the current Airport Gift Concessionaire's Agreement in exchange for an investment in facilities and an enhanced service to the general public. RECOMMENDATION: 1. Approve Amendment No. 2 to Agreement No. 4159 with Paradies Shops, LLC. 2. Authorize the City Manager to execute all necessary documents. STAFF ANALYSIS The Paradies Shops, LLC currently has a 15 year agreement with the City which currently expires in 2015, to provide retail concessions at the Airport. These concessions include three newsstands and one gift/PGA shop. The Contract Amendment allows Paradies to relocate their existing shop in the new Regional Terminal to a more desirable area, adjacent to that concourse's main entry doors. This location will become a CNBC Store brand (News & Gifts) as seen in airports around the country. Paradies will invest no less than $420,000 to build-out the new CNBC Store. In order for them to obtain the required return on investment, they are requesting a four-year extension of the term through October 31, 2019. In addition, the percentage of revenue provided by Paradies to the Airport for each of their locations will increase an additional ITEM NO. City Council Staff Report July 30, 2008 — Page 2 Paradies Shops, LLC A4159, Amendment 2 2.5% above the current 8% and 10% (depending on product line) and will be effective upon completion of this new unit. FISCAL IMPACT: The Airport will be responsible for the cost of constructing the building shell at the new concourse and it is included in the current Improve/Modify/Rehab Terminal Complex Project. The cost to the Airport for this improvement is approximately $200,000. However, the improvements to gift concession offerings and the increased revenue percentage are anticipated to generate higher funds for the Airport. The amount of revenues will fluctuate each year depending on the passenger activity. Example of Fiscal Performance 07/08 Actual Gross Revenues $3,035,570 07/08 Net Revenue to Airport $ 268,590 Assuming the same gross revenues this fiscal year, 08/09, and applying new contract terms.- Approximate Net Revenue to Airport $ 343,022 GAIN $ 74,432 Thomas Nolan, Executive Director, Airport David H. Ready, City Manager Attachment: Amendment 2 to A4159 Don Hi 2 AMENDMENT NO. 2 TO LEASE AGREEMENT NO. 4159 FOR CONCESSIONS AT PALM SPRINGS INTERNATIONAL AIRPORT THIS SECOND AMENDMENT, made and entered into as of the day of , 2008, 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 WHEREAS, City is the owner of the Palm Springs International Airport, ("Airport'), and operates thereon the Palm Springs Airport Terminal building (`Terminal'). WHEREAS, City and Tenant entered into a Lease Agreement for Concessions at the Airport, Agreement No. 4159, dated November 1, 1999 ("Lease") for concessions at Palm Springs International Airport WHEREAS, City and Tenant entered into a First Amendment to the Lease dated October 22, 2007 to modify the concession space; WHEREAS, City and Tenant wish to enter into this Second Amendment to extend the Lease term through October 31, 2019; modify the Percentage Rent; and modify the concession space; WHEREAS, City and Tenant desire to delete Store No. 19 (400 square feet) and replace it with Store No. 23 — CNBC concept (1,214 square feet). Design and construction of Store No. 23 CNBC concept will require Tenant to invest or cause to be invested not less than $420,000 and Tenant has agreed to commit to such investment; AGREEMENT 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 Tenant agree as follows: 1. Subsection 1-1.1 in the Lease shall be amended in its entirety to read as follows: 1.11 The areas designated as Store Nos. 9, 14 and 23 shown on Exhibit A and Exhibit A-1 shall be utilized for the operation of News/Books Shops. Paradies Amendment No. 2 to Agreement 4159 1 Palm Springs International Airport 0000�� Exhibit "A-1° and Exhibit "B, Page 1-13°, Store No. 19, which are attached to Amendment No. 1 of this Lease, are hereby replaced with Exhibit "A 1" Store No. 23" which is attached hereto. 2. Subsection 1.1.2 in the Lease shall be amended in its entirety to read as follows: "1.1.2 The areas designated at Store Nos. 7, 8, 9, 14, and 23 shown on Exhibit A and Exhibit A-1 shall be utilized for the operation of Gift Shops. Exhibit °A-1" and Exhibit "B, Page 1-13", Store No. 19, which is attached to Amendment No. 1 of this Lease, are hereby replaced with Exhibit "A-1" Store No. 23 which is attached hereto. 3. Subsection 2.2 Percentage Rent. in the Lease shall be amended as follows: °2.2 Percentage Rent. Upon the opening of Store No. 23 Percentage Rent for all the Leased Areas shall be calculated using the following percentages of gross receipts from business operations conducted on or from all the Leased Areas: News / Books/ Periodicals/ Convenience — 10.5% PGA— 10.5% Gifts — 12.5%" 4. Section 6 in the Lease shall be amended in its entirety to read as follows: "6. TERM. The term of this amended Lease shall commence upon execution of Amendment No. 2 by City. Unless earlier terminated in accordance with Section 7 below, the term of this amended Lease shall run through and until October 31, 2019. 5. _Subsection 8.0.1 Expanded Facilities in the lease shall be amended in its entirety to read as follows. °8.0.1 Expanded Facilities. Tenant agrees to perform or have performed certain improvements or modifications to the Lease Area in accordance with all existing and applicable rules, ordinances, codes, and laws and further with the approval of the City in its sole discretion to construct and operate a CNBC concept in the New Concourse (Store No. 23. -1,214 square feet.) Tenant agrees to expend not less than the sum of$420,000 for the design and construction of the CNBC Store No. 23, Said design Paradies Amendment No. 2 to Agreement 4159 2 Palm Springs International Airport 000094 shall be submitted to the City for its approval which shall not be unreasonable withheld. Tenant further agrees that said improvements mentioned above shall be completed no later than 120 days from the turn over date of the concept shell space from City." 6. Subsection 8.5 Tenant's Assurance of Construction Completion in the Lease shall be amended in its entirety and replaced with the following: "8.5 Tenant's Failure to Timely Complete Construction. If Tenant fails to meet any or all of the commitments and/or requirements set forth in subsection 8.0.1 within the required time as provided therein, Tenant hereby acknowledges and agrees that it shall be deemed to be in default of this Lease pursuant to subsection 27.1.10 and that all rights and remedies of the City under this Lease and applicable law shall be available to City to address said default. 7. Full Force and Effect. Except as expressly modified herein all other provisions of the Concession Lease Agreement shall remain unmodified and in full farce and effect. 8. Corporate Authority. The persons executing this Amendment on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Amendment on behalf of said part, (iii) by so executing this Amendment, such party is formally bound to the provisions of this Amendment, and (iv) the entering into this Amendment does not violate any provision of any other agreement to which said party is bound. (EXECUTION PAGE FOLLOWS) Paradies Amendment No. 2 to Agreement 4159 3 Palm Springs International Airport 000H5 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 AST, FORM: ;-''i ,•� '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) islare subscribed to the within instrument is/are subscribed to the within instrument And acknowledged to me that he/she/they and acknowledged to me thathelshc/they executed the same in his/her/their authorized executed the same in his/her/their authorized capacity(ies),and that by hislher/their capacrty(les),and that by hislher/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: Paradies Amendment No, 2 to Agreement 4159 4 Palm Springs International Airport EXHIBIT "A and A-1" (See Attached) Paradies Amendment No. 2 to Agreement 4159 5 Palm Springs International Airport OGOOC7 1 i• - Cdl�it . �.t11E10- � ,.� — WES d RMQ�4OSA- �� L CJEARCOMAILIUM G 45 SF) ATH(G173 Fult%WICFRESTAIR6HCT3psF) i(T54ff)• 4 fP 1kl1Y fERC fbfi SP) 01511MUP,TGS I175 sn � � :v i { 04461 zIff 001fN5fFG11HG(700 SF) 10(GUO2 • 7 SPECTWIY GIFT(650 Z , .F5011W6RIMIFSHOP0,060MS.M ''Va • ,• TTr:��B�s,csuH@uEft�aasP� . . idltl! . 1 1 E11E Wlf181ti18 • WIFH• LhIFSdA LAIE SSA . • .• 5 .' �'p .i1i6148&S11 . 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