Approved ' Reviewed by: BOARD OF. 0I.1 REPORT L ' 4 pl._.. Ramon Olives Direc r Angeles World Airports TO THE RP RT COMMISSIONERS - g and Development Meeting Date: 3/17/2016 Completed _ Debbie CAO Review: 00 Bowers D'puty Executive Director i Pending N/A CA Reviewed for Date Approval Status By City At%rney 4 0 d Capital Budget i 1/26/2016 Operating Budget i 2/29/2016 CEQA ; 2/1112016 ; tjy O N MV Deborah Flin - Chief Executive Officer Procurement 2/17/2016 Y Ü N U NA DS fyi N DNA i RW ZY ON U Cand MT Guest Experience 3/2/2016 _l Y FIN BY SUBJECT: Lease with Federal Express Corporation at Los Angeles International Airport Approve a five -year Lease with Federal Express Corporation for property located at 5797 W. Imperial Highway at Los Angeles International Airport that will yield $303432 in the first year and approximately $1517160 over the term. 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 Ill Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 3. APPROVE the Lease with Federal Express Corporation. 4. AUTHORIZE the Chief Executive Officer to execute the Lease after approval as to form by the City Attorney. Page 1
DISCUSSION: 1. Purpose Provide Federal Express Corporation (FedEx) additional land area for its cargo operations at Los Angeles International Airport (LAX) for storage and staging of ground support equipment. 2. Prior Related Actions None. 3. Current Action FedEx has been a Los Angeles World Airports (LAWA) tenant since 1989 handling approximately 356503 tons of cargo in 2014 from its facility at 5927 West Imperial Highway under Lease LAA- 8564. Under the terms of a Use Terms Conditions permit (UTC) FedEx uses an adjacent 41600 square foot (SF) parcel of airfield land for ground equipment storage and staging to support its ground operations. An Expression of Interest (EOI) competitive process was conducted by staff to lease a 42724 vacant parcel of airfield land previously used for ground equipment storage. Three responses to the EOI were receivedwith only one from an airline. Staff recommends that the Board of Airport Commissioners (Board) approve a lease with FedEx since it is an airline with its cargo facility in close proximity to the vacant land being offered. Under the proposed Lease FedEx would combine its adjacent premises occupied under a UTC with this vacant 42724 SF parcel into one lease. The proposed Lease will allow FedEx to improve ground operation efficiencies by relocating ground equipment currently stored on an aircraft parking position under its cargo lease to this new combined area. Under the terms of the proposed Lease FedEx will repave 42724 SF of vacant cargo land at an estimated cost of $3052444. Additionally FedEx has agreed to repave 5200 SF of an LAX common -area service road that is contiguous to the proposed FedEx premises at a cost of $274716. Having FedEx responsible for this work will avoid potential problems associated with two contractors essentially working in the same area at the same time. FedEx will receive rent credit for the paving work as it benefits other LAX users and is not part of the proposed Lease. All paving work is to be completed no later than six months following the effective date of the proposed Lease. FedEx will be responsible for all maintenance and utility costs associated with the leasehold. Addressing community concerns aircraft parking is not allowed under the proposed Lease premises and FedEx will comply with LAX noise abatement procedures. Page 2
The table below provides a summary of key elements of the proposed Lease: LEASE SUMMARY TERM: Effective Date 5 years Upon execution by Executive Director DEMISED PREMISES: Land 84324 Square Feet RENT: Land Rate* Paving Rate* Monthly Rent Annual Rent Rent Credit to FedEx (for paving common -use service road) $3.23 $.75 $ 25286 $ 303432 $ 274716 over the first 36 months *Rental rates are Board -approved rates which are per square foot per year and rounded. Action Requested Staff requests the Board approve the Lease with FedEx and authorize the Executive Director to execute the Lease after approval as to form by the City Attorney. Fiscal Impact Approval of this action will result in estimated revenue to LAWA over the entire term of approximately $1517160. 4. Alternatives Considered Take No Action Taking no action is not recommended. Approval of the proposed Lease will enable FedEx to upgrade the vacant airfield land and improve cargo operation efficiencies by utilizing airfield cargo land for equipment storage and staging while optimizing use of an existing aircraft parking position which will generate additional revenue to LAWA. Page 3
STANDARD PROVISIONS: 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 exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article Ill 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 245. 4. FedEx will comply with the provisions of the Living Wage Ordinance. 5. The Small Business Enterprise Program does not apply to leases. 6. FedEx will comply with the provisions of the Affirmative Action Program. 7. FedEx has been assigned Business Tax Registration Certificate No. 0002649675-000. 8. FedEx will comply with the provisions of the Child Support Obligations Ordinance. 9. FedEx will have approved insurance documents in the terms and amounts required on file with Los Angeles World Airports prior to execution of the lease agreement. 10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors). 11. FedEx has submitted the Contractor Responsibility Program Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. FedEx must be determined by Public Works Office of Contract Compliance to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the lease agreement. 13. FedEx will be required to comply with the provisions of the First Source Hiring Program for all non -trade Airport jobs. 14. FedEx must submit the Bidder Contributions Form 55 and comply with its provisions prior to execution of the lease agreement. Page 4
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