Title
Federal Express Corporation, United Parcel Service, Inc., Worldwide Flight Services, Inc. Amendments to Extend Lease Terms (Ordinance S-50559)
Description
Request to authorize the City Manager, or his designee, to amend Ground Leases with Federal Express Corporation (FedEx), United Parcel Service, Inc. (UPS), and Worldwide Flight Services, Inc. (WFS) to extend the lease terms to April 5, 2027 at Phoenix Sky Harbor International Airport (PHX).
Report
Summary
FedEx, UPS, and WFS lease parking lot space in the East Tonto Lot (Lot) at PHX to provide parking and storage for tractor trailers and automobiles. Each lease has a different termination date. The Aviation Department has identified the Lot as a location that may be displaced to accommodate future airport growth and development. To accommodate redevelopment of the Lot, staff requests to extend the leases to be coterminous on the same contract expiration date of April 5, 2027, and include two one-year options to extend at the sole discretion of the Aviation Director.
Contract Term
Lease terms are as follows: FedEx Lease 134887 for approximately 60,000 square feet of space is scheduled to terminate on Oct. 31, 2024, UPS Lease 153576 for approximately 87,120 square feet of space is scheduled to terminate on Jan. 31, 2024, and WFS Lease 154728 for approximately 43,560 square feet of space is scheduled to terminate on April 5, 2024. With this action, all three leases will be amended to co-terminate on April 5, 2027. Provisions of the amendments will include two one-year options to extend, which may be exercised at the sole discretion of the Aviation Director.
Financial Impact
Current annual rent from FedEx, UPS, and WFS is approximately $286,621. Total revenue anticipated over the extended terms of the leases, if the extension options are exercised will be approximately $1,146,363.
Concurrence/Previous Council Action
City Council previously approved:
- FedEx Ground Lease 134887 (Ordinance S-38889) on June 6, 2012;
- FedEx Ground Lease 134887 Amendment (Ordinance S-41188) on Oct. 1, 2014;
- FedEx Ground Lease 134887 Amendment (Ordinance S-45977) on Aug. 28, 2019;
- UPS Ground Lease 153576 (Ordinance S-46766) on June 17, 2020; and
- WFS Ground Lease 154728 (Ordinance S-47106) on Nov. 18, 2020.
This Amendment was approved by:
- The Phoenix Aviation Advisory Board, Business and Development Subcommittee on Jan. 4, 2024 by a vote of 3-0.
- The Phoenix Aviation Advisory Board on Jan. 18, 2024 by a vote of 6-0.
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.