Title
Amend Unsubordinated Ground Lease 153414-Lease-001 with United Parcel Service, Inc. at Phoenix Sky Harbor International Airport (Ordinance S-53038) - District 8
Description
Request to authorize the City Manager, or his designee, to amend Unsubordinated Ground Lease 153414-Lease-001 (Lease) with United Parcel Service, Inc. (UPS) to retroactively extend the term of the Lease from May 22, 2026, through November 22, 2027, and to extend the milestone date for UPS to complete the parking lot improvements required by the Lease to November 22, 2027, and to amend the first five-year option to extend the term from five years to 3.5 years.
Report
Summary
The Aviation Department entered into the Lease with UPS to use the unimproved premises to park its air cargo trailers. The Lease has a primary term of five years with two five-year options to extend the term at the sole discretion of the Aviation Director. The Lease requires UPS to construct a parking lot on the premises. Because of construction permit timing issues, UPS was unable to complete construction of the parking lot prior to the expiration of the Lease on May 22, 2026. UPS has requested to retroactively extend the term of the Lease by 18 months to November 22, 2027, and change the milestone completion date for the parking lot improvements to November 22, 2027, and to change the first five-year option to extend the term to 3.5 years. Provided UPS completes the parking lot improvements prior to November 22, 2027, the Aviation Director may exercise the 3.5-year option to extend the term. However, if UPS fails to complete the parking lot improvements by November 22, 2027, the Lease will terminate on that date.
Contract Term
The Lease expired on May 22, 2026, and included two five-year options to extend the term at the sole discretion of the Aviation Director. The amendment will retroactively extend the term to November 22, 2027 to allow UPS to complete the parking lot. Upon completion of the parking lot, the Aviation Director may exercise the new 3.5-year option to extend, resulting in a cumulative extension ending on May 21, 2031.
Financial Impact
UPS currently pays annual rent in the amount of $51,845.57. The lease amendment will not alter the rental obligations of UPS because it only provides an administrative adjustment to extend the construction milestone completion date.
Location
2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Frank McCune and the Aviation Department.