Title
Ground Lease with KOR Medical Arizona, LLC. (Ordinance S-49235)
Description
Request to authorize the City Manager, or his designee, to enter into a Ground Lease with KOR Medical Arizona, LLC (KOR Medical) for 56,628 square feet (1.3 acres) of Phoenix Sky Harbor International Airport (PHX) owned vacant property at 120 S. & 130 S. 29th St., Phoenix, Ariz.
Report
Summary
PHX acquired 120 S. 29th St. (APN 121-60-011) in October 2001 and 130 S. 29th St. (APN 121-60-013B) in January 2000. Since acquisition, both properties have been vacant. KOR Medical owns the building at 175 S. 29th St., a property across the street from the PHX owned property. KOR Medical is requesting to enter into a Ground Lease with PHX for the purpose of constructing a paved employee parking lot in support of KOR Medical’s business. KOR Medical will have one year to construct a paved parking lot on the premises in strict compliance with the Phoenix City Code. KOR Medical’s paved parking lot improvements are subject to the Aviation Department’s Tenant Improvement Process.
Contract Term
The lease term will be two years, with five one-year options to renew, to be exercised at the sole discretion of the Director of Aviation Services. The term and rent shall commence upon the Tenant's receipt of a Certificate of Completion for the development of the parking lot.
Financial Impact
Rent for the first year of the lease will be approximately $59,459.40 per year ($1.05 per square foot). Rent will be adjusted annually commencing one year after the Rent Commencement date based on the Consumer Price Index for Phoenix-Mesa-Scottsdale, not to exceed three percent during any given year. Total anticipated rent from this lease over the term, if all options are exercised, will be approximately $416,215.80, not including CPI.
Concurrence/Previous Council Action
The Business and Development Subcommittee recommended approval of this item on Nov. 3, 2022 by a vote of 3-0.
The Phoenix Aviation Advisory Board recommended approval of this item on Nov. 17, 2022 by a vote of 9-0.
Location
Phoenix Sky Harbor International Airport - 120 S. & 130 S. 29th St., Phoenix, Ariz.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.