IPA. -mr,1i BOARD OF AIRPORT COMMISSIONERS REPORT TO THE. Rea ed by:

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1 ! Completed 1 1 KV Approved...ii 1, or'4 11 Los Angeles World Airports REPORT TO THE BOARD OF AIRPORT COMMISSIONERS _A -mr,1i IPA Rea ed by: r-\ Scot Feldmann, Deputy Executive Director Jake Adams, Interim LAMP Program Executive Meeting Date: GAO Review: 9/6/ Pending N/A Reviewed for Date Approval Status i By xecutive Officer Finance CEQA Procurement Guest Experience I I BY 8/17/2018 NY N NA RW 8/20/2018 NY N JH 8/28/2018 i NY ON Cond I MT 8/21/2018 NY EN Strategic Planning 8/16/2018 I NY N NA 1 SUBJECT: Authorization for Chief Executive Officer to Execute an Early Works Agreement with LA Gateway Partners, the Recommended Developer of the Landside Access Modernization Program Consolidated Rent-A-Car Facility Project at Los Angeles International Airport and Appropriate Funds for Early Works in the Not-to-Exceed Amount of $5,000,000 Authorization for Chief Executive Officer to Execute an Early Works Agreement with LA Gateway Partners, the Recommended Developer of the Landside Access Modernization Program's Consolidated Rent-A-Car Facility Project at Los Angeles International Airport, to allow the Recommended Developer to Commence Pre-Construction Activities in advance of Final Execution of the Design-Build-Finance-Operate-Maintain Agreement and Appropriate Funds for Early Works in the not-to-exceed amount of $5,000,000. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.i of the Los Angeles City CEQA Guidelines. 3. FIND that this action is part of the procurement process in compliance with Los Angeles City Ordinance Nos , and184937, passed on May 27, 2015 and May 19, 2017 allowing Los Angeles World Airports to use the competitive sealed proposal selection Page 1 CONRAC EARLY WORKS board report

2 process as provided herein and the Construction Manager at Risk, Design-Build, or Design- Build-Finance-Operate-Maintain alternative project delivery methods for the following projects, or any combination thereof: Automated People Mover, Consolidated Rent-A-Car, Multi-Modal Facilities, Central Terminal Area Parking Structures, pedestrian walkways, and a comprehensive set of roadway improvements. It also includes their components and integration into facilities and operations at Los Angeles International Airport. 4. AUTHORIZE the Chief Executive Officer to Execute an Early Works Agreement with the Recommended Developer for the Landside Access Modernization Program Consolidated Rent-A-Car Facility at Los Angeles International Airport to Allow the Developer to begin preconstruction activities in advance of final execution of the Design-Build-Finance-Operate- Maintain Agreement. 5. APPROPRIATE funds in the not-to-exceed amount of $5,000,000 for an Early Works Agreement with the Recommended Developer for the Landside Access Modernization Program Consolidated Rent-A-Car Facility at Los Angeles International Airport for preconstruction activities in advance of the final execution of the Design-Build-Finance- Operate-Maintain Agreement. DISCUSSION: 1. Purpose The Early Works Agreement is a precursor agreement to the anticipated $1.9 billion Consolidated Rent-A-Car Facility (ConRAC) Design-Build-Finance-Operate-Maintain (DBFOM) Agreement coming before the Board of Airport Commissioners (Board) in October 2018 for approval. The purpose of the Early Works Agreement is to allow LA Gateway Partners, the recommended ConRAC Developer, to commence work prior to final execution of the full ConRAC DBFOM Agreement, compensate the developer for early works performed, and provide for reimbursement of amounts paid by Los Angeles World Airports (LAWA) to the developer for early works performed when Financial Close is achieved. Authorizing the Developer to make use of this period of time is critical to maintaining the ConRAC project delivery schedule as set forth in the ConRAC Request for Proposals (RFP). Financial Close, is targeted for December The ConRAC is a critical component of the Landside Access Modernization Program (LAMP). The ConRAC will improve guest experience, serve as the terminal station of the Automated People Mover (APM), mitigate vehicle traffic in the Central Terminal Area (CTA) and surrounding communities, and create more environmentally sustainable access to Los Angeles International Airport (LAX). The ConRAC will provide 24-hours-a-day service to the tenant rental car companies, enhance the customer experience by facilitating a choice of rental car providers, create a welcoming location to drop off and pick up cars with easy access from major highways, allow ease of transfer to the CTA via the APM, and create job opportunities for the local community. Page 2 CONRAC.EARLY.WORKS board report

3 2. Prior Related Actions April 16, Resolution No The Board requested the Los Angeles City Council consider and approve an ordinance to allow use of Alternate Project Delivery Methods and Competitive Sealed Proposal Selection Process (CSPSP) for Design-Build, Design-Build-Operate and Maintain, and Construction Manager at Risk Contracts for delivery of select Capital Improvement Projects related to the LAMP at LAX. On May 26, 2015, the City Council approved Ordinance No authorizing the use of alternate project delivery methods as requested, Council File February 16, Resolution No Recommendation for City Council to approve an ordinance, amending the Los Angeles Administrative Code and otherwise authorizing the Board to allow use of certain requirements and procedures for procurements and contracts related to LAMP at LAX under Ordinance and clarifying the intent of said ordinance with regard to contractor-provided project financing. April 19, Resolution No Authorization to release an RFP to qualified short-listed firms to submit proposals to design, build, finance, operate, and maintain a ConRAC Facility for LAMP at LAX. 3. Current Action Today, Staff is notifying the Board of LAWA's intent to recommend the award of a 28-year Design-Build-Finance-Operate-Maintain Agreement to LA Gateway Partners, the developer found to be the Lowest Ultimate Cost Proposer (LUCP) to deliver the ConRAC Project. Staff's recommendation that LA Gateway Partners be the Developer to deliver the ConRAC Project and today's recommendation that the Board authorize the execution of an Early Works Agreement with LA Gateway Partners are the latest steps in a rigorous, competitive selection process carried out over approximately two years. This procurement process engaged some of the most innovative and respected firms in the global transportation and infrastructure delivery industries. Staff has full confidence in the determination of LA Gateway Partners as the LUCP. Taking the step today to enter into the Early Works Agreement with the recommended developer is an affirmation of that determination and a critical precursor to executing the DBFOM Agreement to deliver the ConRAC project at LAX. The full DBFOM Agreement will come before the Board in October Background The ConRAC Proiect The ConRAC, an approximately 5.3 million square foot facility, will serve the tenant rental car companies 24 hours per day. It will mitigate vehicle congestion in the CTA and surrounding communities by eliminating car rental shuttle buses, improving pedestrian safety. The ConRAC will enhance the customer experience by facilitating a choice of rental car providers, create a welcoming location to drop off and pick up cars with easy access Page 3 CONRAC EARLY WORKS board report

4 from major highways, allow ease of transfer to the CTA via the APM, and create job opportunities for the local community. The ConRAC is to be delivered through a Public Private Partnership (P3) DBFOM development deal. The Early Works Agreement under current consideration is a precursor agreement to the full DBFOM Agreement that will come before the Board in December The scope of work in the ConRAC DBFOM Agreement includes design and construction of the following: Ready/return facility used by customers to pick up and drop off cars to the various tenant car rental companies Idle storage facilities to allow for the natural ebb and flow of the car rental peaks and troughs Quick turnaround (QTA) facilities to enable cars to be fueled, cleaned, and maintained Customer Service Building (CSB) facility to allow transactions to be completed with a plaza area where customers can meet friends or family, pick up a coffee or snack, and relax prior to starting their journey The ConRAC APM station enabling fast connections to and from the CTA Various roadway improvements to facilitate ConRAC access and mitigate traffic both during and after construction. DBFOM Agreement Staff will be recommending that LAWA enter into a 28-year agreement with LA Gateway Partners for the design, construction, financing, and operations and maintenance of the ConRAC. The 28-year agreement is divided into an approximate four-year Design and Construction (D&C) period and 24 years of Operations and Maintenance (O&M). LAWA will make periodic and milestone payments to LA Gateway Partners during and upon completion of the D&C period, covering a portion of the costs of design and construction. LAWA will then make availability payments to LA Gateway Partners on an annual basis covering the remaining costs of construction, financing, and operations and maintenance. The elements of the contract are described in more detail in the following sections. Design and Construction LA Gateway Partners is responsible for the design and construction of the ConRAC. The LA Gateway Partners proposal, including the proposed aesthetic design, is included as part of the contract documents. LA Gateway Partners is responsible for meeting all of the requirements of the contract specifications included in the RFP as well as any additional commitments made within their proposal. These provisions include requirements related to performance of the work including but not limited to things such as Maintenance of Traffic (MOT), Stakeholder Outreach and Communication, and Project Safety and Security. LA Gateway Partners has also proposed additional Inclusivity commitments. These commitments are discussed in more detail later in the report. The D&C period of the project will commence with LAWA's execution of the Early Works Agreement. LA Gateway Partners has a contractual obligation to meet an operational readiness deadline of March 2023 as well as an interim milestone of August 2021 to deliver the shell of the ConRAC APM station to the APM developer. Page 4 CONRAC.EARLY WORKS board report

5 LAWA also has certain contractual obligations during the D&C period under the DBFOM Agreement. These include: Delivering access to the property required to build, operate, and maintain the ConRAC in accordance with the dates listed in the RFP Completion of certain enabling projects Facilitating interagency coordination with the project's third party stakeholders, such as City of Los Angeles (City) Departments responsible for review and approvals Facilitating interfaces between the ConRAC Developer and other projects such as the APM and Roadways, Utilities and Enabling works Failure on the part of LAWA to achieve any of these obligations could result in additional costs or delays to the project. LA Gateway Partners has assumed a number of risks related to construction, including design risks. However, similar to other construction projects, LAWA maintains certain risks associated with the construction including: Certain unforeseen site conditions including paleological/archeological, endangered species, discovery of unknown or misidentified utilities Force Majeure such as earthquake or tidal wave Terrorism Government issuance of injunctions, restraining orders, or other legal actions that prohibit prosecution of the work LA Gateway Partners' proposed costs for design and construction are $1,011,163,121, which is approximately 9% below the engineer's estimate. LAWA will make periodic and milestone payments to LA Gateway Partners during and upon completion of construction. These payments will partially cover the cost of design and construction. LA Gateway Partners will finance the remaining cost of D&C and will include this cost and finance costs in the availability payments discussed below. Operations and Maintenance LA Gateway Partners will be responsible for O&M of the ConRAC for a period of 24 years. This includes: ConRAC buildings and support systems e.g. air conditioning, drainage, etc. Vertical transportation elements e.g. elevators and escalators Car rental maintenance facilities e.g. car wash, fuel and fluids systems, etc. Associated refurbishment and replacement schedules At the end of the 24-year O&M period, LA Gateway Partners is required to hand the ConRAC back to LAWA with a minimum of three-years remaining life. The condition at handback will be determined by an independent engineer. Upon initiation of operations, LAWA is responsible for making availability payments to LA Gateway Partners. These availability payments include the non-lawa funded cost of construction, annual O&M costs, and the costs of financing. Performance requirements, as well as deductions associated with failure to meet the requirements, are included within the Page 5 CONRAC EARLY WORKS board report

6 DBFOM Agreement. Failure to meet the performance requirements will result in potential withheld payments. An example of the deduction table is presented below. D & C 0 & M Element Category Inclusivity Labor Required Task Small Business Participation Requirements Apprenticeship Requirements Minimum Performance Requirements Utilize the services of firms certified as SBE at least at the minimum participation levels for Design Work Hire a minimum of 75 new, local, first period apprenticeship positions during the D&C Period Damage Repair Damage Secure or make safe any damaged area within 8 hours of initial notification or observation if the damage poses an immediate threat to the safety of the users of the facility or to the facility itself Parking Maintenance Repair Tenant Employee Parking Area Any inaccessibility of 10% or less of the Tenant Employee Parking Area spaces due to maintenance or disabled vehicles shall not exceed 48 hours Non- Compliance Event Points for every 1% below the requirement for every position less than the requirement Rectification Period Interval of Recurrence D &C Non- Compliance Deductions in $ (for new or recurred events) N/A N/A Deduction will be calculated per SBE Program N/A N/A $100,000 + $20,000 for every position less than the requirement 2 N/A 30 minutes Relevant section of contract docs DBFOM A DBFOM A $2500 Part 3, Section N/A 24 hours $10,000 Part 3 Section In addition to financial deductions, LA Gateway Partners will be assessed non-compliance points for failure to meet certain operating requirements. Accumulation of non-compliance points (indicating a pervasive non-performance history) will trigger corrective measures to ensure the required performance is achieved. Corrective measures include but are not limited to: Additional oversight from LAWA, at LA Gateway Partners' expense Potential removal and replacement of subcontractors In the worst case, termination of the agreement Operations and maintenance costs are adjusted annually, indexed to inflation. The O&M costs included in LA Gateway Partners' proposal are costs that LAWA would normally incur in various other contracts over the life of the ConRAC facility's operations. The O&M costs are largely recovered from the tenant car rental companies with exceptions for certain LAWA facilities included in the ConRAC. By procuring the ConRAC through the DBFOM method, Page 6 CONRAC EARLY WORKS board report

7 LAWA obtains price certainty for basic maintenance and lifecycle costs over the life of the contract and has a mechanism to tie performance to the O&M. How this action advances a specific strategic plan goal and objective This action advances this strategic goal and objective: To develop, maintain, and operate First Class Facilities: Deliver LAMP on time and on schedule Procurement Process The process to select the team to deliver the ConRAC began in earnest in 2016 with the initiation of a Request for Qualifications (RFQ) process to identify teams qualified to deliver the ConRAC. Statements of Qualifications (SOQ) were received from six teams. After a rigorous review to determine the qualifications of the submitting teams, LAWA staff advised the Board in May 2017 that four teams were determined to be eligible to compete for the ConRAC Project. The RFP, developed and finalized through a rigorous almost year-long process that included a series of technical, commercial, and aesthetic discussions with each of the teams in competition, called for technical proposals to be submitted on July 13, The final RFP established a two-step procurement process for the ConRAC Developer which considered both the technical merits of the proposals as well as a separate financial proposal to identify the proposer presenting the Lowest Ultimate Cost to the City. The technical proposals were received, evaluated, and scored prior to submission of the financial proposals. In addition, the final technical scores were unknown to staff until the cost proposals were received and opened. The technical scores accounted for 30% of the overall score; the financial score accounted for 70% of the overall score. The graphic below represents the procurement process to date and anticipated milestones. PROCUREMENT SCHEDULE 6 off, 4e MAY 5 NOV 2 NOV 15 APR ID JUL AUG SEPT OCT NOV NOV DEC 2016 PREVJALIFY1NG ED TO. ConRAC LA GattmeiRsiiners LAX Consorztated Solutions Plenary infrastructure Airports DEVELOPER / Review Technical Meeting Commercial Discussions -11 PROPOSAL EvAntA-HoN CLOSING ACTNMES DEVELOMENT TECHNICAL PROPOSAL EVALLIATKIN PRICE PROPOSALS Page 7 CONRAC.EARLY.WORKS board report

8 Technical Proposal The RFP established evaluation criteria requirements related to the ConRAC Developer's proposed technical approach. The evaluation criteria were broken down into two categories: 1. Technical Merit 2. Architectural Appeal The technical merit category was divided into subcategories. The categories and subcategories were assigned points based on the relative importance of the category with respect to the overall project. The scoring and evaluation table is presented below. ConRAC Scoring and Evaluation Criteria (and sub -criteria) Technical Merit 1. Facility Layout, Functionality and Flexibility Points a. Efficient Tenant Operations 300 b. Ease of Use to Traveling Public and Enhanced Customer Experience 200 c. Flexibility Approach to Design and Construction 700 a. Design and Construction Management 400 b. MOT 100 c. Schedule and Interface Date Requirements Approach to Operations and Maintenance 600 a. Operation and Maintenance 400 b. Asset Management Approach to Tenant Coordination and Logistics Inclusivity 300 a. Subcontracting (SBE, LBE, LSBE, DVBE) 200 b. Local Worker, Disadvantaged Worker, and Workforce Development Sustainability 200 Architectural Appeal Total The technical proposal element of the procurement process was structured to allow classification of two tiers of proposers based on their technical submittals: Tier 1: To qualify as a Tier 1 proposer, the proposer had to achieve a minimum score of 70% of the available points in the Technical Merit category o The architectural appeal category had no minimum requirement since a determination had been made during the proposal process that the proposed designs were eligible for technical proposal submittal. Page 8 CONRAC.EARLY WORKS board report

9 Tier 2: Proposers did not achieve a minimum score of 70% of the available points in the Technical Merit category o Tier 2 proposers were not eligible for consideration of their financial proposals. Proposal Evaluation The Technical Proposals were evaluated by two separate panels: Technical Review Panel Scoring Panel The Technical Review Panel was comprised of approximately 60 subject matter experts organized around the evaluation criteria. The Technical Review Panel evaluated the proposals against the requirements of the RFP. Following a review of approximately 15 days, the Technical Review Panel developed a set of consensus comments which were presented to the Scoring Panel. The Scoring Panel was comprised of nine members, each an expert in their respective fields of transportation, infrastructure delivery, and airline operations. The Scoring Panel composition is in below table. ConRAC Independent Scoring Panelists Chief Innovation Officer LAMP Program Executive Deputy Executive Director Environmental Programs Group Deputy Executive Director Chief Development Office Deputy Executive Director Operations & Emergency Management General Manager Vice President of Operations Deputy Chief Executive Officer Director of Properties LAWA LAWA LAWA LAWA LAWA City of Los Angeles Department of Transportation (LADOT) San Diego Airport Authority (SAN) Los Angeles County Metropolitan Transportation Authority (MTA) The Hertz Group The Scoring Panel members reviewed each proposal independently and were able to request additional information from the Technical Review Panel members as needed. Following completion of the scoring process, each individual Scoring Panel member's score was delivered to the LAMP ConRAC Procurement Manager and the City Attorney where the scores were averaged to determine the final technical score for each proposer. Page 9 CONRAC. EARLY WORKS board report

10 Financial Proposal Financial proposals were received on August 7, 2018, following completion of the technical proposals evaluation and scoring. The financial proposals were evaluated by the Chief Financial Officer and a team of financial experts. Similar to the technical proposals, the financial proposals were evaluated against the scoring criteria in the RFP. The RFP included an ability to score bonus points for being under a prescribed affordability limit. Proposals were also separately assessed for both capital costs and O&M costs. Availability payment costs were compared to the lowest price and received points proportionate to the cost differential. The Recommended Developer LAWA received technical and price proposals from four developer teams: CONRAC Partners, LAX Consolidated Solutions, LA Gateway Partners, and Plenary Infrastructure Airports. After a review of the technical and financial proposals in accordance with the criteria discussed above, LA Gateway Partners was identified as the team presenting the Lowest Ultimate Cost proposal to the City. LA Gateway Partners achieved the Lowest Ultimate Cost as follows: LA Gateway Partners submitted the second highest scoring technical proposal and the financial proposal with the lowest cost and below the affordability target. LA Gateway Partners scored no lower than second place in all other technical subcategories. LA Gateway Partners presented the lowest cost for both D&C and O&M. Key members of the LA Gateway Partners team include: Equity Members: Fengate Capital Management Ltd, PCL Investments, MVI Finance LLC Lead Contractor: PCL Construction Services Inc. Lead Designer: Pierce Goodwin Alexander & Linville Inc., AC Martin Partners Inc. Lead O&M Provider: Johnson Controls Inc. QTA Manager: MVI Holdings LLC The unique features of the LA Gateway Partners proposal are discussed below in more detail: With respect to the primary facility, LA Gateway Partners' design had many enhancements. The design consolidated the areas for drop-off / pick-up, and idle storage of rental cars into one building. The design also configured the required areas into four levels resulting in a facility with operational advantages to the tenants and an enhanced customer experience with shorter travel distances. The QTA is configured to allow independent operators to access from all floors enhancing the flexibility for both reallocation as the rental car market evolves and for future uses should the market decline significantly. The design results in reducing the structural footprint resulting in approximately 10 acres of the property provided for the project being available for alternative uses by LAWA or for expansion Page 10 CONRAC. EARLY WORKS board report

11 of the facility if needed. The following figure shows LAWA's illustrative footprint from the RFP versus that of LA Gateway Partners (LAGP). LAWA RFP DESIGN Footprint Area: 1,741,146 SF LAGP DESIGN Footprint Area: 1,349,900 SF (22% reduction) P1It filiffillli M MIAMI PI I EMI EICIINI E IIXNXIIIMI #11101 RAMEY Ow IIII thilh IHI n.l WWI II Illinilfil r, H MINIM tlii _11.0 OOOOOO... Ready / Return iffrrargramie , LA Gateway Partners' organization and plans for the O&M period demonstrated a strong understanding of what will be required to assure the facility serves as fully operational facility for the tenants over the long term and provides a proven maintenance management system that will keep tenants and LAWA informed of maintenance requirements and actions. The approach will also provide a superior experience for the customers. With respect to the technical criterion of Sustainability, the LA Gateway Partners team has committed to meeting the minimum amount of solar energy (4.7 MW) required by the ConRAC RFP. The Developer will target a LEED Core and Shell v4 Gold rating with 67 LEED certification points, which will exceed the minimum requirement for LEED Silver. LA Gateway Partners also exceeded the minimum requirements by committing to install not only the required electric vehicle charging station infrastructure for 10% of all parking spaces in the project but installing complete charging stations for 6% of the parking spaces, which was not required; a 16% energy reduction and 40% water reduction over baseline (exceeding requirements by LAX Design Guideline). Tier IV diesel equipment, Real-time Energy use data to manage energy consumption, and Green Cleaning supply will also be used by the Developer as part of the commitment to the Mitigation Monitoring and Reporting Program (MMRP) and O&M requirements. Among the most important criteria to LAWA on which LA Gateway Partners excelled, was the criterion of Inclusivity. Inclusivity commitments from LA Gateway Partners are summarized in the following table. Page 11 CONRAC.EARLY.WORKS board report

12 Scoring Category Unique Features or Commitments Inclusivity Design Commitments: SBE: 18% LBE: 50% (up from 5%) LSBE: 10% (up from 3%) DVBE: 5% (up from 3%) Construction Commitments: Local Hiring & Workforce: 30% SBE: 22% LBE: 20% (up from 8%) LSBE: 5% DVBE: 5% O&M Commitments: Local / Disadvantaged Workers: 60% / 30% of hours worked SBE: 20% LBE: 7% LSBE: 5% DVBE: 5% Existing inclusivity network based on PCL's recent experience at LAX Mentoring program for up to 20 design firms PCL Construction Training Program Commitment of $50,000 to support Local Workers enrolled in apprentice programs Commitment to 100 first period apprentices (up from requirement of 75) 4-Year college pilot program with Helmets to Hardhats to support veterans First Source hiring agreement with Los Angeles Trade Technical College Given LA Gateway Partners' outstanding technical score, coupled with the most competitive price, Staff is confident in the selection of this team as the Recommended Developer to deliver the ConRAC. Thus, Staff recommends that LAWA enter into an Early Works Agreement with LA Gateway Partners. Staff will return to the Board in December 2018 to seek Board approval of the final ConRAC DBFOM Agreement. Approval of the Early Works Agreement is integral to the entire DBFOM Agreement's scope of work and price proposal. The Early Works Agreement Due to the structure of the DBFOM Agreement, the recommended developer must secure financing for the project's design and construction. The process to finalize the financing requires several months, from the recommendation of selected developer until the final DBFOM achieves Financial Close. LAWA anticipates that LA Gateway Partners will achieve Financial Close no later than the February 4, 2019 Financial Close Deadline. In the meantime, in order to maintain the ConRAC project delivery schedule and assure the key interface milestone with the APM Developer is met, LAWA seeks to execute the Early Works Agreement to allow LA Gateway Partners, the recommended ConRAC Developer, to engage in work for the approximately four-to-five months it will take to achieve final execution of the DBFOM Agreement. The Early Works Agreement was anticipated, and its structure and key provisions were set forth in Appendix F of the Instructions to Proposers (ITP) in the final ConRAC RFP. The Developer understands that it will be required to engage in early works to maximize schedule efficiency. The Developer submitted a plan for early works as part of its technical proposal. Page 12 CONRAC.EARLY WORKS board report

13 The contemplated scope of work within the Early Works Agreement is limited to pre-construction activities such as hazardous material assessments, geotechnical investigations, QTA requests for modification, site surveys, utility coordination, and utility subsurface imaging. Structure of the Early Works Agreement The Early Works Agreement, once executed, is a stand-alone agreement for the term during which it is in effect. During the term of the Early Works Agreement, LAWA will pay the developer monthly for invoiced work it performs. LAWA is obligated to pay only for work identified in the approved scope of work of the Early Works Agreement. In return, any work performed by the developer becomes the work product of LAWA, whether or not the work is completed, and even in the unlikely event that the parties do not achieve Financial Close of the DBFOM Agreement. It is important to note that the DBFOM Agreement is an "all-in" contract in which the totality of the developer's costs for design, construction, financing, operating, and maintaining the ConRAC are part of one all-inclusive price, including the cost for early works. Upon reaching Financial Close on the DBFOM Agreement, the stand-alone Early Works Agreement terminates and the terms of the DBFOM Agreement go into effect. At the commencement of the DBFOM Agreement, the developer will reimburse LAWA for any payments made on invoices submitted during the Early Works term. LAWA's funds are at risk for early works only in the unlikely event that LAWA and the developer fail to achieve Financial Close. Other key terms of the Early Works Agreement include: The Early Works Agreement contains a work plan that LAWA has approved. As stated above, LAWA is not obligated to pay for any early work not identified in the LAWAapproved work plan. The Developer must commence early works upon LAWA execution of the Early Works Agreement. No permanent construction work is permitted within the scope of the Early Works Agreement. In order to commence early works, the Developer must have in place and enforce early works insurance policies, verified by LAWA. Business Inclusivity and Workforce Development Requirements Because the Early Works Agreement is ancillary to the larger DBFOM Agreement, there is no separate business inclusivity or local hire requirements set for the Early Works Agreement. However, work that the developer performs during the term of the Early Works Agreement is subject to the design and construction contracting inclusivity requirements that will be in effect upon execution of the DBFOM Agreement, as presented in the table above. Page 13 CONRAC EARLY WORKS board report

14 Action Requested Staff requests that the Board authorize the CEO to Execute an Early Works Agreement with LA Gateway Partners, the developer recommended to deliver the LAMP ConRAC at LAX. Staff also requests that the Board appropriate funds in the not-to-exceed amount of $5,000,000 so that the recommended developer may commence pre-construction activities in advance of the execution of the ConRAC DBFOM Agreement that provided the framework and key terms of the Early Works Agreement. Fiscal Impact The Early Works Agreement is a component of the larger total ConRAC Project. The DBFOM Agreement, that will be the primary contractual agreement between LA Gateway Partners and LAWA, includes the total costs for design and construction, O&M, and the finance costs associated with the developer portion of the capital costs of construction. Over the 28-year term of the DBFOM Agreement, project fixed costs will total approximately $1.9 billion. (Staff will come back to the Board with the defined total amount upon approval of the DBFOM Agreement.) These costs are consistent with the costs LAWA would incur for the independent elements of the DBFOM Agreement (cost of construction, 24 years of O&M, finance costs) and are exclusive of other variable costs that may be paid under the contract and recovered from building tenants. Costs paid to the developer under the early works agreement will be reimbursed to LAWA following Financial Close. During the construction period, LAWA will pay the developer an estimated total of $642,446,186 in periodic and milestone payments. Following the completion of the project, LAWA will pay the developer annual availability payments (in equal monthly installments) to compensate the developer for principal, interest, and financing costs of the project as well as annual operating and maintenance costs over the 24-year operating life of the contract. The initial annual availability payment is estimated at approximately $41.8 million, and will fluctuate based on structured contractual increases and adjustment based on inflation indices. The initial payment is also subject to adjustment based on the actual financing cost incurred by the developer at Financial Close. These payments will be supported by sources of revenue including, but not limited to, Customer Facility Charges (CFC) for eligible costs, LAX non-aeronautical revenues, special facility bond proceeds, and revenues derived from expected concession and lease agreements between LAWA and rental car companies using the ConRAC. CFCs are the largest source of funding for this project. While recognizing the recent impacts of transportation network companies (TNCs) on the rental car industry, staff believes that based on its current forecast of rental car activity that there will be sufficient CFCs available to support eligible costs within the project. Page 14 CONRAC EARLY WORKS board report

15 4. Alternatives Considered Take No Action If the Board does not approve execution of the Early Works Agreement, the recommended ConRAC developer will not be able to mobilize prior to Financial Close of the DBFOM Agreement, potentially adding to the risk of not meeting the APM station handover date, and jeopardizing the passenger service availability date for the APM project and jeopardizing the operational readiness date the recommended developer is responsible for meeting under the terms of the ConRAC DBFOM Agreement. The Early Works Work Plan is part of the scope of work that the recommended developer's proposal is based upon and for which the developer is accountable under the terms of the ConRAC DBFOM Agreement. Further, the cost of early works is part of the price set by the recommended developer. Needless to say, the recommended developer's price, inclusive of its early works costs, was determinative to LA Gateway Partners being deemed to be the Lowest Ultimate Cost Proposer, (along with the team's high technical score). APPROPRIATIONS: Staff requests that for this item, funds in the not-to-exceed amount of $5,000,000 be appropriated and allocated from the LAX Revenue Fund to WBS Element A-700 (Consolidated Rent-A-Car Facility (ConRAC)) for the Early Works Agreement for preconstruction activities in advance of the final execution of the ConRAC Design-Build-Finance- Operate-Maintain Agreement. STANDARD PROVISIONS: 1. Any activity (approval of bids, execution of contracts, allocation of funds, etc.) for which the underlying project has been previously been evaluated for environmental significance and processed according to the requirements of the California Environmental Quality Act (CEQA) is exempt from further review pursuant to Article II, Section 2.i of the Los Angeles City CEQA Guidelines. The Landside Access Modernization Program Environmental Impact Report (EIR) was certified by the Board of Airport Commissioners for this project on March 2, 2017 [Resolution (2028)]. 2. This item is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section LA Gateway Partners will comply with the applicable provisions of the Living Wage Ordinance and the Labor Code of the State of California (Prevailing Wage). 5. Procurement Services has reviewed this action (File No ) and established mandatory goals of 18% SBE, 5% LBE, 3% LSBE (as a subset to LBE goal), and 3% DVBE for the Design Phase of the project and 22% SBE, 8% LBE, 5% LSBE (as a subset to LBE Page 15 CONRAC EARLY WORKS board report

16 goal), and 5% DVBE for the Construction Phase of the project. LA Gateway Partners will comply with the SBE/LBE/LSBE/DVBE requirements as amended by their proposal. 6. LA Gateway Partners will comply with the provisions of the Affirmative Action Program. 7. LA Gateway Partners must obtain a Business Tax Registration Certificate number prior to submission of first invoice. 8. LA Gateway Partners will comply with the provisions of the Child Support Obligations Ordinance. 9. LA Gateway Partners will have approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports prior to issuance of a Notice to Proceed. 10. Pursuant to Charter Section 1022, staff determined the work specified on the proposed contract can be performed more feasibly or economically by an Independent Contractor than by City employees. 11. LA Gateway Partners has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. LA Gateway Partners must be determined by Public Works, Office of Contract Compliance to be in full compliance with the provisions of the Equal Benefits Ordinance prior to execution of the contract. 13. LA Gateway Partners is required to comply with the provisions of the First Source Hiring Program for all non-trade Airport jobs. 14. LA Gateway Partners has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions Page 16 CONRA C. EARLY. WORKS board report