Oakland International Airport Rental Car Concession Request for Bids Space Use Permit Significant Business Points (FINAL)

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1 Oakland International Airport Rental Car Concession Request for Bids Space Use Permit Significant Business Points (FINAL) Method of Outreach: Request for Bids (RFB) for the right to operate a nonexclusive on-airport rental car concession from the Rental Car Center at Oakland International Airport. Tentative RFB Schedule: Issue Request for Bids Fri. Jan. 27, 2017 Mandatory Pre-Bid conference Tues. Feb. 7, 2017 Submit written questions Tues. Feb. 21, 2017 Port s response to questions Tues. March 7, 2017 Submit Bids (2 p.m.) Tues. April 4, 2017 Evaluate/notify of results Mon. April 10, 2017 Submit to Port: Allocation Plan for Awarded Concession Blocks Mon. May 1, 2017 Port approval of Allocation Plan, or Port determined Allocation Plan Fri. May 5, 2017 Request Board approvals Early May 2017 Commencement of Agreement Term July 1, 2017 Number of Concessions Up to four (4) concessions to be awarded due to to be Awarded: limited operating space within the Customer Service Building, Ready/Return Area and Overflow Vehicle Storage Area of the Rental Car Center. Family/Multi-Branding: Each bidder must identify all brands owned/controlled by bidder, which bidder intends to operate at OAK. A company that owns/controls multiple brands cannot submit separate bids for separate brands. 1

2 Bid item: Initial Space Allocation: Minimum Annual Guarantee (MAG) for the first Agreement Year. Available space in Rental Car Center to be awarded by Port-designed and pre-sized concession blocks. A minimum acceptable 1 st year MAG bid is assigned to each concession block of space. Each concession block consists of space within the Customer Service Building, Ready/Return Area and Overflow Vehicle Storage Area. The blocks are sized in approximate proportion to the gross revenues reported to the Port by the existing onairport OAK RAC concessionaires for the period commencing July 1, 2015 through June 30, Minimum Acceptable 1 st Year MAG Bid Amounts and approximate space block sizes are estimated as follows: Available Ready Customer Overflow Minimum Space Return Area Service Vehicle Storage Acceptable 1 st Blocks (square Counter Area (square Year MAG Bid feet)* (linear feet)* feet)* A 153, ,688 $3,600,000 B 141, ,301 $3,400,000 C 124, ,346 $3,000,000 D 20, ,365 $500,000 Total 440,200 sf 203 lf 156,700 sf *Subject to confirmation. Port makes no express warranties or representations on accuracy. Successful bidders will select a concession block in the order of the submitted and acceptable MAG Bid, from highest MAG bid to lowest MAG bid. A successful bidder will be permitted to select a particular concession block only if its MAG Bid is equal to or in excess of the Minimum Acceptable 1st Year MAG bid assigned to that specific concession block. After selection of its 2

3 concession block, the successful bidder will identify the preferred location of its concession block in the Ready/Return Area and in the Overflow Vehicle Storage Area. The locations and sizes of the customer service counters in the Customer Service Building are predetermined, and will follow the respective concession blocks. Example: submitted: Assume the following MAG Bids are 1. $ 4.0 million 2. $ 3.6 million 3. $ 3.1 million 4. $ 500,000 Bidder #1 (highest acceptable bid assumed to be awarded Block A) has first choice and can select any concession block. Bidder with first choice must choose its location beginning at either the northwest end, or the southwest end of the Ready/Return Area. Bidder with first choice must choose its location at either the west end, or the east end of the Ryan St. site (designated for vehicle storage, overflow and employee parking). Bidder with first choice is allocated 68 linear feet of customer service counter space in the Customer Service Building and will be situated immediately adjacent to its chosen location of Ready/ Return Area. Bidder #2 (second highest acceptable bid assumed to be awarded Block B) has second choice and can select any of the remaining concession blocks. Bidder with second choice must choose its location on the opposite side of the first choice location in the Ready/Return Area, the opposite side of the 1 st choice location in the Ryan St. site. Bidder with second choice must locate its allocation of customer service counter area on the 3

4 opposite side of the first choice location in the Customer Service Building. Bidder #3 (third highest acceptable bid assumed to be awarded Block C) has third choice and can select any of the remaining concession blocks. Bidder with third choice can identify the location of its concession block in the Ready/Return Area and the Ryan St. site. The location of concession Block C must be contiguous to one of the concession blocks previously identified by Bidder #1 and Bidder #2. Bidder with third choice can locate its allocation of customer service counter area on either side of the Customer Service Building (to the extent available to maintain continuous counter space). Bidder #4 (fourth highest acceptable bid assumed to be awarded Block D) has fourth and final choice and can select the remaining and unallocated concession block. Bidder with fourth choice can locate its Port-allocated 14 linear feet of customer service counter area in the remaining space within the Customer Service Building. Successful bidders will be required to accept their awarded space blocks in as-is condition including any existing structures and improvements. The Port reserves the right to adjust the configuration of the selected and identified space blocks to ensure the overall efficient operation of the Rental Car Center. The decision of the Port will be final. In addition, siting parameters for each concession block include: 1. Each selected location must either abut the Customer Service Building, or be adjacent to either Rental Car Return Road/Sikorsky Street, or Langley Street); and 4

5 2. Each selected concession block must be as close to rectangular shaped as possible. Initial Term: Extension Term(s): Five (5) years commencing July 1, 2017 and expiring on June 30, Subject to Board of Port Commissioners approval of submitted bids. Port and concessionaire will have the mutual option to extend for two (2) additional terms of five (5) years each, on 180 days written notice prior to expiration of Initial Term, or first Extended Term, subject to RAC operator not being in default. First Extended Term: Commences on July 1, 2022 and expires on June 30, Second Extended Term: Commences July 1, 2027 and expires on June 30, Port s notice of election to exercise an Extended Term will include, but not be limited to the following: Space reallocation in accordance with reallocation methodology and implementation schedule (described in Reallocation ). Appraisal of fair market rental value of Customer Service Building, Ready/Return and Overflow/Storage rental rates. Re-establishing the MAG for the 1 st year of each Extended Term (described below in Minimum Annual Guarantee - MAG). Mutual execution of an appropriate amendment to the Space Use Permit In the event the Port and a Concessionaire cannot agree on terms of an Extension Term within ninety (90) days of the date of Port s written extension notice, the thencurrent term of the Space Use Permit shall expire, and 5

6 the Concessionaire will vacate its Rental Car Center space on the date of expiration of the applicable term. Percentage Fees: Gross Receipts: Concession Fee: Minimum Annual Guarantee (MAG): An amount equal to ten percent (10%) of Gross Receipts that are in excess of the MAG that is payable to the Port. All-inclusive (similar to gross receipts definition in current Space Use Permit). The sum of MAG and percentage fees, paid to the Port during any agreement year, as reported annually to the Port in concessionaire s independent auditor s report. Paid in equal monthly installments, equal to the applicable MAG for each year of the Initial Term, 1 st, and 2 nd Extended Term(s). Initial Term: July 1, 2017 through June 30, 2022 Year 1: 1st Year MAG Bid Year 2 5: Greater of, 85% of prior year Concession Fees paid, or MAG for Agreement Year 1. 1 st Extended Term: July 1, 2022 through June 30, 2027: Year 6: Re-set MAG in proportion to concessionaire s gross revenues reported to Port (Car Rental Summary) for Agreement Year 4 (July 1, 2020 through June 30, 2021). Year 7 10: Greater of, 85% of prior year Concession Fees paid, or MAG for Agreement Year 6. 2 nd Extended Term: July 1, 2027 through June 30, 2032: Year 11: Re-set MAG in proportion to concessionaire s gross revenues reported to Port (Car Rental Summary) for Agreement Year 9 (July 1, 2025 through June 30, 2026). Year 12-15: Greater of, 85% of prior year Concession Fees paid, or MAG for Agreement Year 11. 6

7 Example: In Year 2, concessionaire pays $2 million dollars in concession fees. 85% of $2 million dollars = $1.7 million. Commencing in Year 3 (commencing July 1, 2019), the MAG is the greater of $1.7 million dollars, or 1 st Year MAG Rent: Concessionaire will pay fair market rental value for: Assigned Ready/Return Area and Overflow Vehicle Storage Area and proportionate share of Rental Car Center Common Areas, at $0.32/s.f./month. Assigned Customer Service Building Area and proportionate share of Customer Service Building Common Area, at the rate of $1.23/s.f./month. Monthly rental rates are subject to annual adjustment on each Agreement Year anniversary date (Initial Term and Extended Term(s)) in accordance with changes to the Consumer Price Index for the prior 12-month period, but not less than the monthly rental rate during the 1st and subsequent years of Initial (and Extended) Term(s). Performance Deposit: Minimum factor of three (3) times the average monthly billings or payments due as stated in Port Policy AP509 at the commencement of the Initial and Extended Term(s). Performance Deposit to be adjusted annually, and in proportion to other adjustments to MAG, monthly rents and other routine monthly billings as established and throughout the Initial Term, and as established and throughout each 5-year period of the subsequent Extended Term(s). Capital Improvements: Capital improvements to the Rental Car Center (Oakland International Airport - Rental Car Center Re-Design Project), are envisioned to be completed prior to the 7

8 Additional Capital Improvements: To be determined. OAK RAC RFB Addendum #1 commencement of the Initial Term. A full set of construction drawings and construction specifications describing the scope of work to be attached to the RFB document. Project costs will be paid from CFC funds. Reallocation: Reallocation of Ready/Return Areas and Overflow Vehicle Storage Areas will be evaluated by the Port, i) 30 months from the commencement of the Initial Term, ii) at the commencement of the 1 st and 2 nd Extended Term(s), and, iii) 30 months from the commencement of the 1 st and 2 nd Extended Terms ONLY IF there is a five (5) or more percentage point change in the market share of one concessionaire, or a two and one-half (2 ½) percentage point change in the market share of any two concessionaires compared to the market shares at the most recent reallocation evaluation date which resulted in a reallocation for the preceding 30 month period, or if no reallocation has occurred then as compared to the initial MAG bid share. Example: Reallocation that takes effect at month 31 of the Initial Term (January 1, 2020) will be measured by percentage point changes in market share, shall be measured between Initial MAG Bid share (as of July 1, 2017) and reported market share of concessionaires at the end of month 24 (June 30, 2019) affects Ready Return Area and Storage/Overflow Area only. Reallocation that takes effect at month 61 commencing July 1, 2022, (1 st Extended Term) will be measured by percentage point changes in reported market shares as of January 1, 2020, if a reallocation 8

9 9 OAK RAC RFB Addendum #1 occurred on June 20, 2019, or as compared to MAG bid share if a reallocation did not occur on June 30, 2019, and reported market share of concessionaires as of December 31, Reallocation at this point affects Ready/Return Area, Storage/Overflow Area, along with Customer Service Building. Port will provide a written Reallocation Notice with Market Share supporting data, detailing changes in Market Share among the concessionaires for the Reallocation Period. For the First Reallocation Period, changes will be measured based on the difference between a concessionaire s Initial MAG Bid as a percentage of all successful MAG Bids, and the totality of reported Gross Receipts as a percentage of Gross Receipts for all concessionaires, on the date that is 180 days prior to the initial 30- month Reallocation Date. Successive 30-month Reallocation Periods will measure changes in Market Share based on each concessionaire s reported Gross Receipts as a percentage of reported Gross Receipts for all concessionaires from 180 days prior to the previous Reallocation Date, to 180 days prior to the upcoming Reallocation Date. the most recent reallocation evaluation date which triggered a reallocation of space and the upcoming reallocation evaluation date. Concessionaires will have 45 days from the Reallocation Notice Date to submit a Reallocation Plan to the Port evidencing unanimous agreement among all concessionaires to the Plan. If the concessionaires do not submit a unanimously agreed-upon Reallocation Plan to the Port, the Port s Aviation Director, or his designee will formulate a Port Reallocation Plan. The concessionaires will have

10 14 days to unanimously agree on the Port Reallocation Plan. If the concessionaires are unable to reach unanimous agreement, the Port shall proceed to implement the Port Reallocation Plan. Bid/market share date for reallocation evaluation Reallocation Notice Date Deliver Reallocation Plan to Port Port final Notice of Reallocation Reallocation Effective Date July 1, 2017 June 30, 2019 August 14, 2019 September 30, 2019 January 1, 2020 January 1, 2020 December 31, 2021 February 14, 2022 March 31, 2022 July 1, 2022 (*) July 1, 2022 June 30, 2024 August 14, 2024 September 30, 2024 January 1, 2025 January 1, 2025 December 31, 2026 February 14, 2027 March 31, 2027 July 1, 2027 (*) July 1, 2027 June 30, 2029 August 14, 2029 September 30, 2029 January 1, 2030 January 1, 2030 December 31, 2031 February 14, 2032 March 31, 2032 July 1, 2032 (if applicable) Reallocation costs will be paid by affected concessionaires as follows: Fifty percent (50%) shared equally, and; Fifty percent (50%) by market share Concessionaires that do not fully comply with the Reallocation Plan, or (if applicable) the Port Reallocation Plan, will be subject to fines and liquidated damages as determined at the sole discretion of the Aviation Director. Management and Operation of Common Busing System: Management and Operation of Rental Car Center: Concessionaires will contract with a 3 rd party to operate and maintain. Port will reimburse concessionaires from CFC collections. Concessionaires will contract with a 3 rd party to operate and maintain Rental Car Center. Rental Car Center 10

11 O&M standards: Per standards to be contained in new Space Use Permit and as further described in those certain Third Party Agreements known as: Oakland International Airport Interim Rental Car Facilities Industry Agreement dated April 7, 2002, and; Amendment No. 1 to Industry Agreement (undated and not fully executed circa 2002), and; Second Amendment to Oakland International Airport Interim Rental Car Facilities Industry Agreement dated March 24, 2008, and; Oakland Rental Car Management Committee Consulting and Management Services Agreement dated August 1, 2002, and; First Amendment to the Oakland Rental Car Management Committee Consulting and Management Services Agreement dated June 25, 2008, and; Second Amendment to the Oakland Rental Car Management Committee Consulting and Management Services Agreement dated June 20, Environmental Compliance Approvals: Concessionaire s individual responsibility continues. Port assumes no responsibility or liability whatsoever. Maintain current agreement language (subject to review by Port Attorney). All terms and conditions of this business points summary, the forthcoming RFB and Space Use Permit are subject to and dependent on review and approval by the Board of Port Commissioners. 11

AGENDA REPORT. Bryant L. Francis C.M., Director of Aviation Chris Chan, Director of Engineering. J. Christopher Lytle, Executive Director

AGENDA REPORT. Bryant L. Francis C.M., Director of Aviation Chris Chan, Director of Engineering. J. Christopher Lytle, Executive Director AGENDA REPORT Resolution: Budget Approval and Related Authorizations for Construction of Rental Car Center Improvements, Oakland International Airport (Aviation) MEETING DATE: 12/15/2016 AMOUNT: $6,723,000