Title
Deer Valley Airport Restaurant RCS Award at Phoenix Deer Valley Airport (Ordinance S-48472)
Description
Request to authorize the City Manager, or his designee, to enter into a Food and Beverage Lease with Kind Hospitality, Inc. at Phoenix Deer Valley Airport for seven years with one three-year renewal option. Further request to authorize the City Treasurer to accept all funds and the City Controller to disburse all funds related to this item.
Report
Summary
On Sept. 16, 2020, Phoenix City Council authorized the Aviation Department to issue a Revenue Contract Solicitation (RCS) for a new Food and Beverage operator of the restaurant at Phoenix Deer Valley Airport (DVT). The goal of the RCS was to find a viable restaurant operator to lease the Deer Valley Airport restaurant space, which had been vacant since April 2020. The RCS further sought a restaurant concept and design that would appeal to airport users and customers in the surrounding community.
Kind Hospitality, Inc. (Kind) was recommended as the successful proposer by a qualified evaluation panel.
Procurement Information
An initial RCS (RCS 21-002) was released on Oct. 20, 2020 and produced no responses. Subsequent meetings with potential proposers identified concerns with the condition of the restaurant space that would be addressed in the next RCS. This procurement (RCS 22-001) was released on July 20, 2021. One response was received and determined to be responsive.
On Dec. 16, 2021, the evaluation panel met and evaluated the proposal based on the published evaluation criteria:
- Suitability of the Proposed Restaurant Concept and Design;
- Quality and suitability of menu items;
- Qualifications and experience;
- Amount of Remodel Investment; and
- Proposed First Year Minimum Annual Guarantee (MAG).
The Panel recommendation was reached by consensus in consideration of these criteria. After a local and national outreach effort and a competitive RCS process, Kind is recommended for award of the Deer Valley Airport Restaurant Concessions Lease, with 955 out of 1000 points.
In the RCS the City anticipated the replacement of non-working kitchen fixtures at a total cost to the City of approximately $20,000. Kind has agreed to procure the replacement fixtures in exchange for rent credits not to exceed $20,000. Title to the replacement fixtures valued up to $20,000, based upon the City's valuation, will revert to the City at the end of the lease term. The City also identified needed repairs to underground plumbing and the kitchen floor. Kind has agreed to make these repairs to the building, which the City would otherwise have to complete, in exchange for rent credits not to exceed $130,000 based on estimates from qualified vendors, plus reasonable contingencies. Total rent credits for these items will not exceed $150,000.
Contract Term
If approved, the term will be seven years with one three-year option to extend to be exercised at the sole discretion of the Director of Aviation Services.
Financial Impact
Rent is based on percentage of gross sales or Minimum Annual Guarantee (MAG) of $92,001, whichever is greater. Beginning with the second lease year and each year thereafter, MAG shall be adjusted to 85 percent of the prior years' annual rent payment or 100 percent of the first year MAG, whichever is greater. Expenses to the City will include rent credits not to exceed $150,000 for replacement kitchen fixtures and building repairs. Funding is available in the Aviation Department's budget.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board recommended approval of the item on Feb. 17, 2022, by a vote of 9-0.
Public Outreach
This solicitation process included all standard and required outreach efforts including advertising in local and aviation industry publications.
Location
Phoenix Deer Valley Airport - 702 West Deer Valley Road
Council District: 1
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.