Title
Authorization to Enter into a New Ground Lease Agreement with Swissport Fueling, Inc. for Ground Support Equipment Fuel Storage Facility (Ordinance S-51419) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a new ground lease agreement (New Ground Lease) with Swissport Fueling, Inc. (Swissport Fueling) for a ground support equipment fuel storage facility at Phoenix Sky Harbor International Airport (PHX). Further request to authorize the City Treasurer to accept all funds related to the New Ground Lease.
Report
Summary
Under Facility Lease No 132684, Swissport Fueling leases approximately 3,983 square feet of a fuel storage facility, including two fuel tanks. Upcoming PHX airfield projects, including West Hold Bay Expansion and TRACON building demolition, will require relocation of the fuel storage facility. The Facility Lease is set to expire on December 31, 2024, and Swissport Fueling desires to enter a New Ground Lease to build a new fuel storage facility to continue their fueling operations at PHX. The New Ground Lease will have the same commencement date and termination date as two other ground leases with Swissport Fueling and PHX. The New Ground Lease will also include provisions for Swissport Fueling to relocate the new fuel storage facility to a similar-sized PHX airfield location that will not be impacted by upcoming airport construction projects. The new fuel storage facility and equipment relocation will be at Swissport Fueling's expense and in accordance with the PHX's tenant improvement process.
Contract Term
The term of the New Ground Lease is five years commencing on January 1, 2025, and expiring on December 31, 2029. Provisions of the New Ground Lease will also include five, one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
Rental rate for the first year will be $1.40 per square foot, which is approximately $5,576 annual revenue. Rent will be adjusted annually based on the Phoenix-Mesa-Scottsdale Consumer Price Index or three percent, whichever is greater. Total revenue anticipated over the term of the New Ground Lease will be approximately $55,762, if all options to extend are exercised.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board recommended approval of this item on October 17, 2024, by a 5-0 vote.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.