re, i M1 BO D IRPORT COMMISSIONERS REPORT TO THE Y N El NA SUBJECT: Approval of Lease with Federal Express Corporation RECOMMENDATIONS:

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1 Date 10/2/ /2/2018. i 1 KV.1.10 re, Los Angeles World Airports REPORT TO THE BO D RPORT COMMSSONERS Meeting Date: te umber ere Approved by: Ram erty Services 10/18/2018..S1,1i4.41a 11-lz Reviewed by: Samson Mene stu, Chief Operating Officer _.,...t..., i M1 CAO Review: Reviewed for Completed Pending N/A Approval Status By - y A,fr--n rew Finance 10/4/2018 NY N NA RW CEQA 10/3/2018 NY N JH Deborah Flint - Chi- x- u Officer Procurement 10/2/2018 i NY ON Cond Guest Experience 1 EN EN MT BY Strategic Planning 1 Y N El NA SUBJECT: Approval of Lease with Federal Express Corporation Approve the proposed Lease with Federal Express Corporation for on-airport land at Los Angeles nternational Airport for parking of cargo aircraft and the active loading and unloading of aircraft, yielding a total of approximately $2,081,765 in land rental revenue to Los Angeles World Airports during the full term of the Lease. RECOMMENDATONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMNE that this action is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Article, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 3. APPROVE the proposed Lease with Federal Express Corporation for on-airport land at Los Angeles nternational Airport for parking of cargo aircraft and the active loading and unloading of aircraft. 4. AUTHORZE the Chief Executive Officer to execute the Lease subject to approval as to form by the City Attorney. Page 1

2 DSCUSSON: 1. Purpose To provide Federal Express Corporation (Fed Ex) with a short-term Lease for cargo aircraft parking and the active loading and unloading of aircraft. 2. Prior Related Actions November 20, LAWA (Los Angeles World Airports) staff issued Fed Ex a Use Terms and Conditions (UTC) for the use of a parking position known as JAL-1, which is adjacent to the Fed Ex cargo sorting facility at Los Angeles nternational Airport (LAX). 3. Current Action FedEx is a multinational courier delivery services company that leases property from LAWA for its cargo operations along mperial Highway. FedEx also currently occupies one aircraft parking position at 6041 West mperial Highway under a UTC. The parking position is located adjacent to its cargo sorting facility and serves as a supplemental aircraft parking position for its cargo operations. FedEx uses the JAL-1 parking position for its large Boeing 777 aircraft. The parking position consists of 96,378 square feet (SF) of paved aircraft parking land. FedEx has requested that the UTC be converted to a lease so it can make certain improvements needed to upgrade the JAL-1 parking position to accommodate its aircraft. A UTC does not allow the permittee to make improvements to LAWA property. FedEx proposes to invest approximately $1.5 million in improvements, consisting of lighting, a new aircraft tether, and the installation of 400 Hz ground power. The installation of more environmentally-friendly ground power will replace the use of portable ground power units by FedEx. The table below provides a summary of key elements of the proposed Lease: Page 2

3 Proposed Lease Summary Use: Parking of cargo aircraft and the active loading and unloading of aircraft. LAWA has the right to use the parking position on an asavailable basis. Term: Commencement Date: Options: Cancellation Provision: Demised Premises: Land Paved Aircraft Parking 3 years Upon execution of Lease by Chief Executive Officer Two one-year mutual options 180 days' notice by either party On-airport land located on the ramp at 6041 West mperial Highway 96,378 SF 96,378 SF Payment: Rate - Land' Monthly Rent2 Rate - Paved Aircraft Parking' Monthly Rent2 Required mprovements by Lessee: $3.51 per square foot per year $28, $0.81 per square foot per year $6, Total - $34, per month ($416, per year) Fed Ex will construct certain improvements within six months from the Effective Date at a cost not less than $1,500,000. Notes: 1. Land is a Board-approved rate, per Resolution Rent to be modified, as necessary, to reflect actual possession period. Adjusted annually, per Consumer Price ndex. Action Requested Staff requests the Board approve the proposed Fed Ex Lease. Fiscal mpact Approval of this Lease with Fed Ex will generate approximately $2,081,765 in revenue, exclusive of annual adjustments, during the three-year term and with the two one-year options being exercised by both parties. Further, the projected value of the proposed tenant improvements at the expiration of the Lease will allow LAWA to charge higher rents for future use of the improved property. Page 3

4 4. Alternatives Considered Take No Action Not granting the new Lease would be an option if LAWA needed regular use of the site for its own purposes. At this time, LAWA only needs intermittent use of the premises, which the Lease allows upon reasonable notice. Approval of the proposed Lease will enable Fed Ex to proceed with its investment in LAWA land, which will help increase the value of such land, resulting in higher rental rates being charged to future tenants and generation of greater revenue. STANDARD PROVSONS: 1. The issuance of permits, leases, agreements, gate and space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article ll, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 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 Fed Ex will comply with the provisions of the Living Wage/Worker Retention Ordinances. 5. The Small Business Enterprise, Local Business Enterprise/Local Small Business Enterprise Programs, and Disabled Veterans Business Enterprise Programs do not apply to leases. 6. Fed Ex will comply with the provisions of the Affirmative Action Program. 7. Fed Ex has been assigned Business Tax Registration Certificate number Fed Ex will comply with the provisions of the Child Support Obligations Ordinance. 9. Fed Ex has approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of ndependent Contractors). 11. Fed Ex has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. Fed Ex 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 lease agreement. 13. Fed Ex is required to comply with the provisions of the First Source Hiring Program for all non-trade Airport jobs. 14. This action is not subject to the provisions of the Bidder Contributions CEC Form 55. Page 4

5 Site Map LAX Airport l'o 1.m, p5, ' - of pi "t $ / i ' wpm itc4,111 nip-ir OF-4, ' '\--- M- maw Location Map / JAL-1 at 6041 W. mperial Hwy at LAX Page 5