Title
New Lease Agreement with Arizona State Lottery at Phoenix Sky Harbor International Airport - District 8
Description
Request the Transportation, Infrastructure, and Planning Subcommittee to recommend City Council approval to enter into a new lease agreement with the State of Arizona by and through the Arizona State Lottery Commission (Arizona Lottery) for the sale of lottery tickets at Phoenix Sky Harbor International Airport (PHX).
Report
Summary
Since December 2015, Arizona Lottery has leased space in Terminal 4 under Lease 141902 to operate a pre-security retail counter location for lottery ticket sales. In September 2020, the Lease with Arizona Lottery was amended to expand its presence in Terminal 4 by adding additional lottery vending kiosks in post-security locations, adjusting the net rent revenue structure to percentage of sales generated by lottery counter and vending locations, and extending the term of the Lease to expire on December 31, 2024.
Arizona Lottery desires to enter into a new lease agreement to continue offering lottery product sales opportunities through modern, tech-friendly vending equipment and expanding lottery vending sales locations, which may include Terminal 3 and the Rental Car Center at PHX.
Procurement Information
In accordance with City of Phoenix Administrative Regulation 3.10, standard competition was waived as a result of an approved Determination Memo based on the following reason: Sole Source because Arizona Lottery is the only state-operated entity with exclusive rights to provide the sale of lottery products.
Contract Term
The lease will begin on or about January 1, 2025, with a three-year term and four one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
Arizona Lottery will pay percentage rent equal to eight percent of gross sales generated by lottery tickets sold at PHX. According to Arizona Revised Statutes section 5-555(A)(4), eight percent is the maximum payment compensation percentage to licensed sales location for lottery tickets sold. The estimated annual revenue to the City is $144,000 and will result in approximately $1,008,000 over the seven-year aggregate term of the lease.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board recommended approval of this item on November 21, 2024, by a vote of 5-0.
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.