Los Angeles World Airports REPORT TO THE. Reviewed by: Debbie L. Bowers, deputy Executive Director CAP Review: re Lindsey - Executive Director i

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1 Los Angeles World Airports REPORT TO THE lteminut/ber ' Tiore Meeting Date: Approved by: (esfdirebtor, terminals Business Management 6/18/2015 Reviewed by: Debbie L. Bowers, deputy Executive Director CAP Review: Completed Pending N/A M' Reviewed for Date Approval Status By <v City Attorney (J Capital Budget 4/14/2015 BY N NA Operating Budget 5/6/2015 BYD N I )NA RW CEQA 3/25/2015 BY N VW re Lindsey - Executive Director Procurement 6/9/2015 BY ON Cund MT i DS SUB : Approval of First Amended and Restated Concession Agreements and Assignments Approve the first amended and restated food & beverage concession agreements at Los Angeles International Airport to make technical adjustments and approve assignments of two concession agreements. RECOMMENDA TIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. APPROVE consents to assignment of Agreement No. LAA-8587 from CMS Camacho Ventures to CMS Hospitality, LLC and Agreement No. LAA-8589 from DNCTHS/M/D Food Group to DN Dakota/JME LAX 8589 Farmers, LLC as referenced in this report. APPROVE the following amended and restated concession agreements with: DN Dakota/JME LAX 8589 Farmers, LLC (LAA-8589), CMS Hospitality LLC (LAA-8587) and Host International (LAA-8586), as referenced in the report. AUTHORIZE the Executive Director to execute the amended and restated concession agreements and consents to assignment upon approval as to form by the City Attorney and approval by the Los Angeles City Council.

2 DISCUSSION: 1. Purpose Make technical adjustments to the food and beverage concessions agreements in Terminals 4, 5, 7 and 8 at Los Angeles International Airport (LAX) (Agreements). 2. Prior Related Actions May 16, Board Resolution No The Board of Airport Commissioners (Board) approved award of a ten-year food and beverage concession agreement to CMS Camacho Ventures (LAA-8587). May 16, Board Resolution No The Board approved award of a ten-year food and beverage concession agreement to Host International, Inc. (Host) (LAA-8586). June 6, Board Resolution No The Board approved award of a ten-year food and beverage concession agreement to DNCTHS/M/D Food Group (DNC) (LAA-8589). 3. Current Action This action affects the following Agreements: Agreement Number LAA-8587 LAA-8586 LAA-8589 Concessionaire CMS Camacho Ventures Host International, Inc. DNCTHS/M/D Food Group Concession Type Food & Beverage Food & Beverage Food & Beverage Approval of this item will make technical changes to the Agreements to accurately depict unit delivery dates, construction periods, and rent commencement dates, and add language that strengthens Los Angeles World Airports (LAWA) oversight of the operations. Noteworthy changes to the concessions agreements are as follows: Provision Current Proposed Design/Construction Review Fee Based on estimated square footage amounts from RFP. Reflect actual square footage amounts from as-builts. Common Areas Provides Concessionaire right of ingress and egress through all Common Areas and allows City to limit those rights, without liability. Add rent abatement language in the event that access to any unit is restricted or unit closed for more than two consecutive days due to LAWA action. Page 2

3 Provision Current Proposed Reduction or Relocation of Premises Executive Director may require surrender or reconfiguration of any portion of premises or relocate any Unit and will attempt to provide substitute space. Add language which allows concessionaires to decline substitute space if it is not of equal size, configuration and exposure to enplaning passengers and requires l_awa to reduce the MMG for said unit if substitute space is declined. Buy-out Describes reimbursement from City to Concessionaire in the event premises are reduced by City. Change unamortized to undepreciated and change architectural and design cost threshold that is reimbursable from 10% to 15%. Expansion of Premises Not included in original agreement. Add section to allow LAWA to negotiate with concessionaires for operation of additional facilities following a competitive solicitation process for which only concessionaires in said terminal will be invited to participate. Penalties Assessment amounts are missing in original concession agreement. Added dollar amounts for penalty assessments if Concessionaire fails to follow defined operating rules and standards. Assignment of CMS Camacho s Ventures and DNCTHS/M/D Food Group Agreements CMS Camacho Ventures assigned and transferred its agreement (Agreement LAA-8587) to CMS Hospitality, LLC. Under this action, the Board affirms the assignment of Agreement LAA-8587 to CMS Hospitality, LLC. DNCTHS/M/D Food Group assigned and transferred its agreement (Agreement LAA-8589) to DN Dakota/JME LAX 8589 Farmers, LLC. Under this action, the Board affirms the assignment of Agreement LAA-8589 to DN Dakota/JME LAX 8589 Farmers, LLC. Page 3

4 Action Requested Staff requests the Board approve the proposed first amended and restated Agreements and assignments, and authorize the Executive Director to execute the first amended and restated Agreements and the consents to assignment after approval as to form by the City Attorney and approval by the Los Angeles City Council. Fiscal Impact Approval of the first amended and restated Agreements will not change the amount of revenue generated by these agreements. 4. Alternatives Considered Take No Action The existing Agreements do not reflect the true construction delivery dates, rent commencement dates, and contain other errors and omissions that hinder administration of these Agreements. APPROPRIATIONS: Approval of this action will not require appropriation from LAWA s Capital Budget. STANDARD PROVISIONS: 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 involving negligible or no expansion of use and/or alteration or modification of the facilities or its operations beyond that previously existing or permitted is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18) (c) of the Los Angeles City CEQA Guidelines. This agreement will be approved as to form by the City Attorney. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 606. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC are required by contract to comply with the provisions of the Service Contractor Worker Retention and/or Living Wage Ordinances. Procurement Services reviewed these actions and established Airport Concessions Disadvantaged Business Enterprise (ACDBE) Program participation goals. Concessionaires proposed ACDBE participation and have achieved ACDBE participation to date as listed below: Page 4

5 Concessionaire Agreement ACDBE ACDBE Goal Pledge ACDBE Achievement Host International, Inc. LAA % 10.00% 97.94% CMS/Camacho Ventures LAA % % % DNCTHS/M/D Food Group LAA % 10.73% 0% For contract LAA-8586, Procurement Services reviewed the package. No specific ACDBE level of participation was set for this project as no subcontracting opportunities were identified; however, Host International, Inc. proposed 10% ACDBE participation and has achieved 97.94% participation to date. For contract LAA-8587, Procurement Services reviewed.the package and set no specific ACDBE level of participation for the project as no subcontracting opportunities were identified; however, CMS/Camacho Ventures proposed 100% ACDBE participation and has achieved 100% participation as it is a certified ACDBE firm. For contract LAA-8589, Procurement Services reviewed the package and established a 10% ACDBE level of participation. DNCTHS/M/D Food Group originally proposed 32% ACDBE participation, however, Procurement Services determined that only 10.73% could be attributed to be commercially useful function as defined under the Federal ACDBE Rules and Regulations. The ACDBE partner, Marbella Management, was unable to perform the scope of work based on the joint venture agreement. DNCTHS/M/D Food Group assigned Agreement LAA-8589 to DN Dakota/JME LAX 8589 Farmers, LLC, who has proposed 13% ACDBE participation. 6. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC are required by contract to comply with the provisions of the Affirmative Action Program. 7. All concessionaires have been assigned Business Tax Registration Certificate numbers as follows: Host International, Inc CMS Hospitality, LLC DN Dakota/JME LAX 8589 Farmers, LLC (DN), (Dakota), (JME) 8. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC are required by contract to comply with the provisions of the Child Support Obligations Ordinance. 9. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports. 10. As these are concession agreements, the CAO has determined that this action is exempt from the provisions of Charter Section 1022 (Use of Independent Contractor). Page 5

6 11. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC have submitted the Contractor Responsibility Program Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC have been determined by Public Works, Office of Contract Compliance to be in compliance with the provisions of the Equal Benefits Ordinance. 13. Host International, Inc., CMS Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC will be required to comply with the provisions of the First Source Hiring Program for all nontrade LAX Airport jobs. 14. Host International, Inc., CMS/Hospitality LLC, and DN Dakota/JME LAX 8589 Farmers, LLC has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions. Page 6