Title
Authorization to Enter into a New Ground Lease Agreement with Swissport Fueling, Inc. for Fueling Operations Center Facility (Ordinance S-51417) - District 8
Description
Request to authorize the City Manager, or his designee, to enter into a new ground lease agreement (New Ground Lease) with Swissport Fueling, Inc. (Swissport Fueling) for a fueling operations facility at Phoenix Sky Harbor International Airport (PHX). Further request to authorize the City Treasurer to accept all funds related to the New Ground Lease.
Report
Summary
Under Ground Lease No. 132521, Swissport Fueling leases approximately 33,000 square feet of land for a fueling operations facility. This facility is used to coordinate aircraft fueling operations and house Swissport Fueling's fueling trucks. This facility will be displaced to accommodate the construction of Taxiway Uniform and the future airside development related to the new West Terminal. Ground Lease No. 132521 will expire on February 23, 2025. Aviation staff requests to terminate Ground Lease No. 132521 effective December 31, 2024, and enter into a New Ground Lease commencing January 1, 2025, to align the same commencement date and termination date for this New Ground Lease with two additional ground leases with Swissport Fueling at PHX. The New Ground Lease will include provisions for Swissport Fueling to relocate its fueling operations center facility to an airfield location that will not be impacted by upcoming PHX construction projects. This relocation will be at Swissport's expense and in accordance with the PHX tenant improvement process.
Contract Term
The term of the New Ground Lease is five years commencing on January 1, 2025, and expiring on December 31, 2029. Provisions of the New Ground Lease will include five, one-year options to extend the term at the sole discretion of the Aviation Director.
Financial Impact
Rental rate for the first year of the New Ground Lease will be $1.40 per square foot, which is approximately $46,200 annual revenue. Rent will be adjusted annually based on the Phoenix-Mesa-Scottsdale Consumer Price Index or three percent, whichever is greater. Total revenue anticipated over the term of the New Ground Lease will be approximately $462,000, if all options to extend the term are exercised.
Concurrence/Previous Council Action
The Phoenix Aviation Advisory Board recommended approval of this item on October 17, 2024, by a 5-0 vote.
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.