Title
Request to Issue Air Cargo Development Revenue Contract Solicitation at Phoenix Sky Harbor International Airport
Description
Request to authorize the City Manager, or his designee, to issue an Air Cargo Development Revenue Contract Solicitation (RCS) to solicit a developer to redevelop approximately 1,219,680 square feet (approximately 28 acres) within the northwest corner of Phoenix Sky Harbor International Airport (PHX) into an air cargo services development.
Report
Summary
The northwest corner at PHX currently consists of hangars, covered aircraft parking, and other buildings. Most of the buildings and asphalt in this area are at the end of their useful life. In October 2021, the Aviation Department (AVN) issued a Request for Information (RFI) to potential users and developers for possible redevelopment ideas for this aging and underutilized land in the northwest corner of PHX. The RFI received six responses: three for the development of hangars and aircraft support facilities, and three for air cargo development. AVN is now seeking a qualified developer to develop approximately 28 acres for air cargo, including air cargo buildings (warehouse), aircraft aprons, and supporting structures. The successful respondent will enter into a ground lease with AVN.
Procurement Information
AVN will conduct an RCS to select a successful respondent. Responsive and responsible respondents will be evaluated according to the following evaluation criteria:
- Qualifications and Experience
- Experience of Key Personnel
- Method of Approach to Design, Build and Operate an Air Cargo Facility
- Proposed Design Concepts
- Sustainability
The highest ranked respondent will be recommended for award of a ground lease.
The City’s Transparency Policy will be in effect when the RCS is released and throughout the RCS process.
Public Outreach
The RCS process will include all standard and required outreach efforts and will conduct targeted outreach efforts to attract interest for each of these unique contracting opportunities.
Contract Term
The term of the contract will be 30 years with one ten-year option to extend at the sole discretion of the Director of Aviation Services.
Financial Impact
Current rent for undeveloped land at PHX is $1.05 per square foot. Annual revenue for this ground lease will be approximately $1,280,664 per year. Rent shall be adjusted every three years on the rent commencement date according to the Phoenix-Mesa-Scottsdale Consumer Price Index, or three percent, whichever is greater. Rent will never be adjusted to an amount less that the first year's rent or rent for the previous year. Total anticipated rent over the term of the lease will be approximately $38,419,920 if the extension option is exercised.
Concurrence/Previous Council Action
The Business and Development Subcommittee recommended approval of this item on Sept. 1, 2022 by a vote of 2-0.
The Phoenix Aviation Advisory Board recommended approval of this item on Sept. 15, 2022 by a vote of 6-0.
The Transportation, Infrastructure and Planning Subcommittee recommended approval of this item on Oct. 19, 2022 by a vote of 4-0.
Location
Phoenix Sky Harbor International Airport, 2415-2799 E. Air Lane
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.