Title
Terminal 2 Contract Extension (Ordinance S-44326)
Description
Request to authorize the City Manager, or his designee, to enter into amendments to the Terminal 2 retail and food and beverage concession leases to extend the terms on a month-to-month basis. The Terminal 2 concession operators are currently paying percentage rent only.
Report
Summary
The Terminal 3 Modernization project will result in closing Terminal 2 and relocating all Terminal 2 airlines into Terminal 3. To accommodate the passengers in Terminal 2 until the anticipated closure, providing food and beverage and retail accommodations is necessary.
The construction schedule for the Terminal 3 Modernization project has now progressed to a point where the impacts on the Terminal 2 concession operators are clear. Therefore, the retail and food and beverage leases are currently in a month-to-month holdover status until the design and construction activities for the Terminal 3 Modernization project are completed. The leases will be amended to include a 90-day notice of closure or early termination provision, which will afford the Aviation Department the greatest flexibility in accommodating the anticipated construction schedule and any potential variations. All other terms and conditions of the leases will remain in effect during the month-to-month extension of the terms.
Contract Term
The Terminal 2 leases that will be extended on a month-to-month basis and amended are listed in Attachment A. The month-to-month extensions are expected throught the Terminal 3 Modernization project with an anticipated end date of early 2020.
Financial Impact
The Terminal 2 concession operators are currently paying percentage rent only. In 2017, the seven leases generated $1,778,828 in revenue to the City.
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 Deanna Jonovich and the Aviation Department.