Title
Consent to Assignment of Leases from Fox Rent A Car, Inc. to Europcar Mobility Group (Ordinance S-46151)
Description
Request to authorize the City Manager, or his designee, to consent to the assignment of Rental Car Concession Agreement No. 146863 (Concession Agreement), Rental Car Center Lease No. 146864 (RCC Lease), and Airport Land Lease Agreement No. 118863 (Land Lease) from Fox Rent A Car, Inc. (Fox) to Europcar Mobility Group USA LLC (Europcar). All terms and conditions of the Agreement and Leases will remain the same.
Report
Summary
Fox operates concession space for a storefront service counter in the Customer Service Building at the Rental Car Center (RCC). Fox also leases a vehicle service site at the RCC, which includes part of an office building, carwash, fueling facility, and parking area. In addition, Fox leases approximately 6,893 square feet of parking space located west of 16th Street near the RCC. Fox was awarded space in the RCC based on its revenue market share resulting from the last revenue contract solicitation in 2017. Fox is in the process of completing a transaction under which Europcar will purchase 100 percent of Fox's outstanding capital stock. The Agreement and Leases require the City's prior approval to the sale of the stock, which will result in a transfer of control in Fox as a result of Europcar’s pending purchase of Fox's outstanding stock. Fox’s financial position will be strengthened under its ownership by Europcar, a subsidiary of Europcar Mobility Group, which operates a 27 percent market share in Europe.
Contract Term
The Concession Agreement and Leases will expire on Dec. 31, 2022, but may be extended for an additional five years if the City, in its sole discretion, exercises its options to extend the terms.
Financial Impact
There is no change in the financial terms of the Concession Agreement or Leases. The Concession Agreement is set at the greater of 10 percent of gross sales or the minimum annual guarantee of $1,353,047. Fox also collects and remits a $6 per day customer facility charge for each day a car is rented. Rent for the RCC Lease is based on ground rent, which is currently $0.79 per square foot and subject to adjustment according to the Phoenix-Mesa-Scottsdale CPI Index, along with its annual share of operation and maintenance (O&M) expenses. For fiscal year 2020, the O&M expenses are projected to be $516,965. Rent for the Land Lease is $6,225.54 monthly subject to annual CPI adjustments.
Location
Phoenix Sky Harbor International Airport Rental Car Center, 1805 Sky Harbor Circle
Council District: 8
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Aviation Department.