Title
Terminal 4 Retail Concession Phase Two Revenue Contract Solicitation Award Recommendation (Ordinance S-43495)
Description
Request to authorize the City Manager, or his designee, to enter into Terminal 4 Retail Concession Phase Two agreements (Leases) with the recommended retailers described and listed below.
Report
Summary
On April 22, 2015, the Phoenix City Council authorized staff to issue a single Revenue Contract Soliciation (RCS) process with two contracting phases for new retail opportunities in Terminal 4. The Aviation Department issued the Terminal 4 Retail Concession RCS on July 1, 2015.
Each RCS contracting phase included multiple contract packages to achieve a diverse and balanced retail program. Successful respondents were allowed to be awarded only one news and gift package in each contracting phase. Phasing the award and construction of the contract packages minimizes disruption to customer service and enhances competition. Phase One submittals were required on Sept. 22, 2015, and Leases were awarded on June 15, 2016.
Procurement Information
Phase Two of the Terminal 4 Retail Concessions RCS included eight packages encompassing 20 retail locations. Submittals were received on Sept. 19, 2016. No responses were received for Contract 12 (news/souvenir/open) and Contract 16 (open concept). The Evaluation Panel for this process held interviews for packages with more than one response. Interviews were held on Feb. 6 and 7, 2017. Six contracts with 16 locations are being recommended for award.
The Panel members evaluated the responses based on the following criteria established in the RCS: Proposed Concept(s) (30 points), Qualifications and Experience (20 points), Proposed Business Plan (15 points), Design and Quality of Improvements (15 points), Management Team, Operations and Marketing Plans (10 points), and Employee Incentives (10 points). The Panel recommendations were reached by consensus of the panel in consideration of the above criteria.
The City Transparency policy is in effect until all Leases from Phase Two of this RCS are awarded.
After a local and national outreach effort and conducting a competitive Revenue Contract Solicitation (RCS) process, the following companies are recommended for award to enter into the Leases:
Recommended Retailer Contract Number
Casa Unlimited Enterprises, Inc. 9
Paradies Lagardere @ PHX, LLC 10
Avila Retail Development and Management, LLC 11
Avila Retail Development and Management, LLC 13
In Motion Entertainment Group, LLC 14
Dufry Phoenix Retailers JV 15
Contract Term
Each contract will have a primary lease term of seven years with one, three-year option to be executed at the sole discretion of the Aviation Director. An Employee Retention Policy is in place requiring the successful respondents to hire current Terminal 4 retail concession employees and retain those employees for at least 90 days in a similar job classification.
Financial Impact
The minimum annual guarantee (MAG) rent for Phase Two for the seven-year initial term of the Leases is estimated to be $18.9 million.
Concurrence/Previous Council Action
The Downtown, Aviation, Economy and Innovation Subcommittee recommended City Council approval of this item on April 26, 2017, by a vote of 3-0.
Location
Phoenix Sky Harbor International Airport is located at 3400 E. Sky Harbor Blvd.
Department
Responsible Department
This item is submitted by Deputy City Manager Paul Blue and the Aviation Department.