Title
RT Sky Harbor, LLC Amendment to Termination Agreement (Ordinance S-52283) - District 8
Description
Request to authorize the City Manager, or his designee, to amend Termination Agreement 120545-TER-001 with RT Sky Harbor, LLC (RT) to increase the amount of reimbursement to RT for the demolition and removal of the existing building structure on the property in Sky Harbor Center at Phoenix Sky Harbor International Airport. Further request to authorize the City Controller to disburse the funds related to this item.
Report
Summary
RT leases premises in Sky Harbor Center under Ground Lease 102545 (Lease), which commenced on December 1, 2002. On March 26, 2025, the City Council approved early termination of the Ground Lease under Termination Agreement 102545-TER-001. The Termination Agreement includes provisions of a payment of $10 million to RT to buy out the remaining term of the Ground Lease with Aviation obtaining the facilities of 1,300-space parking garage, 746-space surface parking lot, and existing office building structure. The parking garage and surface parking will be used by Aviation for airport customer parking. Additionally, the Termination Agreement provided for Aviation to reimburse RT for the demolition and removal of the existing building structure in an amount of approximately $1.1 million.
Preliminary work on the demolition project revealed additional expenses related to the demolition that were not anticipated when the original $1.1 million amount was calculated. The additional expenses include archaeological investigation, additional required environmental work, removal of underground storage tank, re-routing and installation of electrical, and establishing new communications services to the garage, and additional site work to maintain garage availability for airport parking during the demolition of the building structure. These additional demolition-related expenses total amount not to exceed $1,605,526. All demolition work performed by RT will be in compliance with Title 34.
Contract Term
The amendment does not change the effective date of the Termination Agreement, which remains contingent upon the final inspection of the demolition site and receipt of all demolition-related expense documentation.
Financial Impact
If amended, the reimbursement amount for demolition and removal shall not to exceed $2,705,526, and total compensation to RT, including buyout of Ground Lease and demolition costs, shall not to exceed $12,705,526.
Concurrence/Previous Council Action
City Council previously approved Termination Agreement 120545-TER-001 with RT Sky Harbor, LLC (Ordinance S-51763) on March 26, 2025.
Location
Sky Harbor Center: 1820 E. Sky Harbor Circle South
Council District: 8
Department
Responsible Department
This item is submitted by Interim Deputy City Manager Amber Williamson and the Aviation Department.