Title
United Parcel Service Inc. Ground Lease at Phoenix Sky Harbor International Airport (Ordinance S-47702)
Description
Request to authorize the City Manager, or his designee, to enter into a ground lease for up to 43,560 square feet (approximately one acre) with United Parcel Service, Inc. at Phoenix Sky Harbor International Airport for a term of five years with two five-year options to extend the term.
Report
Summary
United Parcel Service, Inc.(UPS) is an air cargo operator in the South Air Cargo (SAC) facility at Phoenix Sky Harbor International Airport. UPS currently occupies approximately 30,000 square feet (0.68 acres) of undeveloped graveled property under a temporary parking lot license agreement for the staging and storage of tractor trailers during peak season at 2908 E. Old Tower Road. UPS also currently occupies approximately one acre in the East Tonto Lot under a ground lease for employee parking. UPS shuttles employees from the East Tonto Lot to the SAC at its own expense.
UPS now desires to lease and develop the undeveloped graveled property occupied under the license for employee parking. UPS will develop the property into a paved employee parking lot following City Code within the first two years of the lease term. During the lease term, the undeveloped gravel property will only be used for tractor trailer staging and storage. After the property is developed into a paved parking lot, UPS will be allowed to have employees park on the property. UPS will then utilize the East Tonto Lot for tractor trailer staging and storage.
Contract Term
The term is five years with two five-year options to extend the term, which may be exercised at the sole discretion of the Director of Aviation Services.
Financial Impact
Rent for the first year of the term will be approximately $45,738 ($1.05 per-square-foot). Rent will be adjusted annually using the Phoenix-Mesa-Scottsdale Consumer Price Index, but not to exceed three percent. Total anticipated revenue over the term, if all options are exercised, is approximately $686,070.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board recommended this item for approval on May 20, 2021, by a vote of 8-0.
Location
Phoenix Sky Harbor International Airport - 3400 E. Sky Harbor Blvd.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.