Title
Terminal 4 South 1 Concourse Retail Concessions Phase II at Phoenix Sky Harbor International Airport Request for Award
Description
Request that the Transportation, Infrastructure, and Planning Subcommittee recommend City Council approval to enter into a lease agreement with Paradies Lagardere @ PHX 2022 LLC dba Paradies Lagardere (Paradies) for the development, operation, and management of retail concessions in the new Terminal 4 South 1 Concourse (T4 S1) at Phoenix Sky Harbor International Airport for 10 years with no options to extend. The Aviation Department further requests authority to lease up to 1,500 square feet as additional support space in Terminal 4 for Paradies's operational needs.
THIS ITEM IS FOR CONSENT ACTION.
Report
Summary
On March 17, 2021, the Phoenix City Council authorized the Aviation Department to issue a Revenue Contract Solicitation (RCS) for retail concessions in new T4 S1 Concourse. This RCS was divided into two contract award phases.
The goals of the RCS were to optimize sales and revenue over the term of the lease, provide quality and unique retail merchandise to passengers, emphasize local culture in the design of the facility, and select respondents with experience operating successful retail concessions in the U.S. and/or abroad.
Procurement Information
Phase One of this RCS solicitation was issued on May 27, 2021, and contract awards for two retail concession operations were approved on Dec. 2, 2021 to Marshall Retail Group LLC dba Uptown Phoenix and InMotion.
The Aviation Department issued Phase Two of this RCS solicitation on Sept. 21, 2022, with responses due on Dec. 9, 2022. Two responses were received and deemed responsive and responsible. The evaluation panel met for the initial consensus meeting on Feb. 21, 2023, and respondent interviews were held on March 9, 2023. The panel's award recommendation was published to the City's public award website on April 11, 2023. The RCS was processed in accordance with Administrative Regulation 3.10.
An evaluation panel evaluated the responses based on the following published criteria in the RCS with total points ranging from 0 to 1,000:
- Proposed concepts and merchandise plans for each concessions space 0-250 points
- Design and quality of tenant improvements 0-200 points
- Management, marketing, operations, and technology plans 0-200 points
- Experience and qualifications of the Respondent 0-150 points
- Proposed business plan 0-100 points
- Financial return to the City 0-100 points
The consensus score and ranking for each respondent by the evaluation panel is shown below in consideration of the above criteria:
Respondents Points
Paradies Lagardere @ PHX 2022 LLC dba Paradies Lagardere 925 Points
HG PHX Concessions JV dba Hudson 835 Points
The evaluation panel selected for award: Paradies Lagardere @ PHX 2022 LLC dba Paradies Lagardere
Public Outreach
The solicitation process included all standard and required outreach efforts, including advertising in Aviation industry publications.
Contract Term
The term of the lease will be 10 years with no options to extend.
Financial Impact
The estimated annual revenue to the City will be the established Minimum Annual Guarantee (MAG) or percentage of gross sales, whichever is greater. MAG for the first year will be $400,000. The MAG will be adjusted annually thereafter at 85 percent of the prior year's annual rent or 100 percent of MAG for the first lease year, whichever is greater.
Concurrence/Previous Council Action
The Business Development Subcommittee recommended approval of the item on Aug. 3, 2023, by a vote of 2-0 and
The Phoenix Aviation Advisory Board recommended approval of the item on Aug. 17, 2023, by a vote of 7-0.
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.