Title
American Airlines Cargo Transfer Point Land Lease - Amendment (Ordinance S-47697)
Description
Request to authorize the City Manager, or his designee, to execute an amendment to American Airlines Cargo Transfer Point Lease Agreement 146359 at Phoenix Sky Harbor International Airport to add five, one-year options to extend the term of the Lease that may be exercised at the sole discretion of the Director of the Aviation Department.
Report
Summary
The City’s existing Lease Agreement 146359 (Lease) with American Airlines (AA) is for approximately 85,233 square feet of land at Phoenix Sky Harbor International Airport (Airport) that supports AA’s operation of a cargo transfer point (C-Point). AA’s C-Point operation was to be relocated during the initial term to enable the construction of Terminal 3’s (T3) second North Concourse. Due to the impact of the COVID-19 pandemic, the Airport's construction of the new T3 Concourse has been delayed indefinitely. The Aviation Department and AA would like to amend the term to allow AA’s continued use of the existing C-Point until it is required to relocate.
Contract Term
The amendment will add five one-year options to extend the term that may be exercised at the sole discretion of the Director of the Aviation Department.
Financial Impact
Rent for the first year of the extended term will be approximately $86,213 ($1.01 per square feet), plus applicable tax. Rent will be adjusted annually thereafter according to the Consumer Price Index using the Phoenix-Mesa index. Total anticipated rent over the five-year extended term, if all options are exercised, will be approximately $431,068.
Concurrence/Previous Council Action
The City Council approved Lease Agreement 146359 (Ordinance S-37523) on Nov. 17, 2010.
Location
Phoenix Sky Harbor International Airport - 3400 E. Sky Harbor Blvd.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.