Title
Southwest Airlines Cargo Transfer Point Land Lease (Ordinance S-53226) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a land lease with Southwest Airlines Co. (Southwest) for use as a Cargo Transfer Point at Phoenix Sky Harbor International Airport (PHX) for a term of three years with two one-year options to extend the term. The City Treasurer is authorized to accept all payments and revenues for purposes of this Ordinance.
Report
Summary
Southwest currently leases approximately 5,041 square feet of land (Site) located adjacent to Terminal 4 at PHX. The Site is used for cargo sorting and distribution to Southwest's aircraft. The lease expired on Dec. 31, 2023, and Southwest desires to enter into a new lease for the Site. At the expiration of the prior lease, the Site was incorporated into an amendment to Southwest's Letter of Authorization agreement for terminal rental space. However, it was later determined that given this Site was not physically connected to the Terminal 4 building, the Site should be leased as a land lease instead. Rent from 2024 to the present will be billed to Southwest after the new lease is executed.
Contract Term
The term of the lease is three years with two one-year options to extend the term at the Aviation Director's sole discretion. The term will commence retroactively on Jan. 1, 2024. If all options be exercised, the term will expire on Dec. 31, 2028.
Financial Impact
Annual base rent will be approximately $6,553 based on $1.30 per square foot rental rate, plus applicable utilities and taxes. Rent will be adjusted annually by three percent or the Consumer Price Index using the Phoenix-Mesa-Scottsdale index, whichever is greater. The total anticipated revenue over the term will be approximately $34,791.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Frank McCune and the Aviation Department.