Title
Terminal Airport Advertising Concessions Contract Term Extension (Ordinance S-49579)
Description
Request to authorize the City Manager, or his designee, to amend the Terminal Advertising Program Concession Lease 135006 with Lamar Airport Advertising Company, formerly known as Lamar Alliance Airport Advertising Company, to extend the term for three additional years with the Aviation Department.
Report
Summary
In January 2021, Phoenix City Council authorized the Aviation Department to extend the airport food and beverage, and retail concessionaire leases an additional three years as part of the relief efforts to offset the financial impact of the COVID-19 pandemic. The Terminal Advertising Program Concession Lease 135006 (Lease) with Lamar Airport Advertising Company (Lamar) was inadvertently omitted from the other airport concessionaire lease extensions. The Lease is set to expire on May 31, 2023. Similar to other Aviation Department airport concessionaires, Lamar experienced an unprecedented decline in sales and revenue due to the impact of reduced passenger activity - down 41 percent in 2020 and 37 percent in 2021, as well as the cancellation of approximately 50 advertising contracts.
As part of the current Lease, Lamar has contracts with two local small business Airport Concession Disadvantaged Business Enterprise (ACDBE) partners to provide support services. Throughout the financial strains experienced in 2020 and 2021, Lamar maintained these contractual agreements with their ACDBE partners and retained 100 percent of their staffing personnel with no layoffs, furloughs, or reduction of staffing levels. Additionally in June 2020, Lamar completed their required capital investment in mid-term equipment refurbishment in Terminal 3 and Terminal 4 by installing new digital displays and fixtures.
A three-year contract extension is consistent with recent guidance by the Federal Aviation Administration Office of Civil Rights that eased the pre-authorization requirement on concession contract extensions if the extension does not exceed three years.
Contract Term
The term will be extended for three additional years, expiring on May 31, 2026. The amendment will include non-discrimination language requirements and equal pay commitments consistent with the other Aviation Department airport concessionaire contracts.
Financial Impact
Lamar will continue to pay rent at the Minimum Annual Guarantee of $3,100,000, or percent rent based on gross sales, whichever is greater.
Extending the term of the Lease for three years will result in no additional cost to the Aviation Department.
Concurrence/Previous Council Action
The City Council approved:
Lease 135006 (Ordinance S-39260) on Oct. 17, 2012;
Lease 135006 - Amendment (Ordinance S-46708) on June 8, 2020;
Lease 135006 - Amendment (Ordinance S-46836) on July 1, 2020;
Lease 135006 - Amendment (Ordinance S-47197) on Dec. 16, 2020.
Location
Phoenix Sky Harbor International Airport, 2485 E. Buckeye Road
Deer Valley Airport, 702 W. Deer Valley Road
Goodyear Airport, 1658 S. Litchfield Road, Goodyear, AZ
Council Districts: 1, 8, and Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.