Los Angeles World Airports - City Clerk Internet Site - City of Los Angeles

Los Angeles World Airports - City Clerk Internet Site - City of Los Angeles

Los Angeles World Airports January 15, 2015 TM The Honorable City Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA 90012 Subje...

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Los Angeles World Airports January 15, 2015

TM

The Honorable City Council of the City of Los Angeles City Hall, Room 395 Los Angeles, CA 90012 Subject:

LAX LA/Ontario Van Nuys

APPROVAL OF THIRD AMENDMENTS WITH AVIS RENT A CAR SYSTEM, LLC; ALAMO RENTAL (US) LLC; BUDGET RENT ACAR SYSTEM, INC.; NATIONAL RENTAL (US) LLC; DTG OPERATIONS, INC. DBA DOLLAR RENT A CAR; DTG OPERATIONS, INC. DBA THRIFTY CAR RENTAL; ENTERPRISE RENT-A-CAR COMPANY OF LOS ANGELES, LLC; HERTZ CORPORATION; FOX RENT A CAR, INC; AND ADVANTAGE OPCO, LLC DBA ADVANTAGE RENTAL A CAR AT LOS ANGELES INTERNATIONAL AIRPORT (LAX)

City of Los Angeles

Board of Airport Commissioners

In accordance with Section 606 of the City Charter, the Board of Airport Commissioners transmits for your approval the Third Amendment to ten (1 0) existing rental car concession agreements at LAX extending the term of the agreements through January 31, 2018, plus two (2) one ( 1)-year extension options.

Sean 0. Burton President

RECOMMENDATION FOR CITY COUNCIL

Valeria C. Velasco Vice President

1.

APPROVE the Third Agreements with Avis Rent A Car System, LLC; Alamo Rental (US) LLC.; Budget Rent A Car System, Inc.; National Rental (US) LLC; DTG Operations, Inc. dba Dollar Rent A Car; DTG Operations, Inc. dba Thrift Car Rental; Enterprise Rent-ACar Company of Los Angeles, LLC; Hertz Corporation; Fox Rent A Car, Inc; and Advantage Opco, LLC dba Advantage Rent A Car at LAX.

2.

CONCUR in the Board's action authorizing the Executive Director to execute the Third Agreements.

3.

FIND 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.

Eric Garcetti Mayor

Gabriel L. Eshaghian Jackie Goldberg Beatrice C. Hsu Matthew M. Johnson Dr. Cynthia A. Telles Gina Marie Lindsey Executive Director

The Board of Airport Commissioners, at their meeting held on January 15, 2015, by Resolution No. 25615 approved the attached Amendments, subject to the approval of your Honorable Body. There is no fiscal impact to the City's General Fund as a result of this action.

'

San r J. Miller- Commission Executive Assistant II BOARD OF AIRPORT COMMISSIONERS SJM:jrc cc: Trade, Commerce and Tourism Committee Councilmember LaBonge, E-file Councilmember Bonin, E-file Councilmember Buscaino, E-file. CAO {Airport Analyst), E-file CLA {Airport Analyst), E-file City Clerk's Office, E-file

1 World Way

Los Angeles

California

90045-5803 Mall P.O. Box 92216

Los Angeles

California

90009-2216 Telephone

310 646 5252

Internet

www.lawa.aero

Los Angeles World Airports TM

RESOLUTION NO. 25615

LAX LA/Ontario

Van Nuys City of Los Angeles Eric Garcetti Mayor

Board of Airpor1 Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Gabriel L. Eshaghian Jackie Goldberg Beatrice C. Hsu Matthew M. Johnson Dr. Cynthia A. Telles Gina Marie Lindsey Executive Director

BE IT RESOLVED that the Board of Airport Commissioners approved a Third Amendment to ten (1 0) existing rental car concession agreements at Los Angeles International Airport to extend the term of the agreements through January 31, 2018, plus two (2) one (1 )-year extension options exercisable by Los Angeles World Airports, as referenced in the Boardadopted staff report attached hereto and made part hereof; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Executive Director to execute said Third Amendments upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council; and BE IT FURTHER RESOLVED that said Third Amendments are exempt from competitive bidding under City Charter Section 371 (e)(1 0); and BE IT FURTHER RESOLVED that the use of competitive bidding would be undesirable and impractical at this time due to the ongoing planning for a new consolidated rental car facility (ConRAC) at Los Angeles International Airport, and the extensions will serve as a bridge agreement until the ConRAC is complete, at which time there would be new occupancy and concession agreements for the ConRAC; and BE IT FURTHER RESOLVED that 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; and BE IT FURTHER RESOLVED that 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.

oOo I hereby certify that this Resolution No. 25615 is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, January 15, 2015.

Sandra J. Miller- Secretary BOARD OF AIRPORT COMMISSIONERS

1 World Way

Los Angeles

California

90045-5803 Mall P.O. Box 92216

Los Angeles

California

90009-2216

Telephone

310 646 5252

Internet www.lawa.aero

. . . . ., .,..,.Angeie$ .:·. · ro· tRE ·worMAirp_oi1s '

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Meeting Date:

1/15/2015

CAO Review: Reviewed for

0

Completed

181

Pending

0

N/A

Date

Armroval Status /2.1(

Capital Budget

11/12/14

181YDND NA

DS

Operating Budget

12/4/14

181YO N DNA

I RW

CEQA

11/14/14

181Y D N

vw

Procurement

11/12/14

DY ON 181 Cond

MT

SUBJECT: Amendment to Rental Car Concession Agreements Approve the Third Amendment to ten existing rental car concession agreements at Los Angeles International Airport to extend the term of the agreements through January 31, 2018, plus two one-year extension options exercisable by Los Angeles World Airports.

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. FIND that the Third Amendments are exempt from competitive bidding under City Charter Section 371 (e)(1 0). 4. FIND that the use of competitive bidding would be undesirable and impractical at this time due to the ongoing planning for a new consolidated rental car facility (ConRAC) at Los Angeles International Airport, and the extensions will serve as a bridge agreement until the ConRAC is complete, at which time there would be new occupancy and concession agreements for the ConRAC.

Page 1 THIRD AMENDMENT TO RENTAL CAR CONCESSIONS ATLAXdocx

5. APPROVE the Third Amendments to the following concession agreements: Avis Rent A Car System, LLC (LAA-8137); Alamo Rental (US) LLC. (LAA-8139); Budget Rent A Car System, Inc. (LAA-8138); National Rental (US) LLC (LAA-8140); DTG Operations, Inc. dba Dollar Rent A Car (LAA-8141); DTG Operations, Inc. dba Thrifty Car Rental (LAA-8144); Enterprise . Rent-A-Car Company of Los Angeles, LLC (LAA-8142); Hertz Corporation (LAA-8136); Fox Rent A Car, Inc. (LAA-8143); and Advantage Opco, LLC dba Advantage Rent A Car (LAA8145), as referenced in the report. 6. AUTHORIZE the Executive Director to execute the Third Amendments to the specified con~ession agreements upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council.

DISCUSSION: 1. Purpose Provide continued rental car services at Los Angeles International Airport (LAX) while bridging to development agreements related to the planning, financing and occupancy of the LAX's ConRAC.

· 2. Prior Related Actions •

January 21, 2003- Board Order No. A0-4844 The Board of Airport Commissioners (Board) approved award of concession agreements between Los Angeles World Airports (LAWA) and ten rental car companies at LAX: Avis Rent A Car System, LLC (f/kla Avis Rent A Car System, Inc.) (LAA-8137); Alamo Rental (US), LLC (f/kla Alamo Rental (US) Inc. and Alamo Rent-A-Car LLC) (LAA-8139); Budget Rent A Car System, Inc. (LAA-8138); National Rental (US) LLC (f/kla National Rental (US) Inc. and National Car Rental System, Inc.) (LAA-8140); DTG Operations, Inc. dba Dollar Rent A Car (LAA-8141); DTG Operations, Inc. dba Thrifty Car Rental (assignee to T.C.R.L.P.'s agreement) (LAA-8144); Enterprise Rent-A-Car Company of Los Angeles, LLC (LAA-8142); The Hertz Corporation (LAA-8136); Fox Rent A Car, Inc. (LAA-8143); and Simply Wheelz, LLC dba Advantage Rent A Car (assignee to Coast Leasing Corp.'s agreement) (LAA-8145) (collectively referred to as the Agreements) commencing February 1, 2003 and expiring on January 31, 2008.



December 3, 2007 - Board Order No. A0-5090 The Board approved the First Amendment to extend the term of the Agreements to January 31, 2010 and add additional provisions.



December 21, 2009- Board Order No. A0-5153 The Board approved the Second Amendment to extend the term of the Agreements, as amended, to January 31, 2015 and add additional provisions (the Agreements and the First Amendments and Second Amendments thereto collectively referred to as Agreements.

Page 2 THIRD AMENDMENT TO RENTAL CAR CONCESSIONS AT LAX.docx

3. Current Action Approval of this item will extend the term of ten existing rental car concession agreements at LAX through January 31, 2018, with two one-year LAWA-exercisable options. The extension maintains LAWA's business relationship with the above listed companies while providing sufficient time to develop occupancy and concession agreements with rental car companies for the proposed ConRAC at LAX which would include planning, programming, plan of finance, and basic business terms of concession and lease agreements for the facility. Material changes proposed to the Agreements under theThird Amendments are as follows:

Provision

Current

Proposed

Term

Expires January 31,2015

Expires January 31, 2018, with two one-year LAWA-exercisable options

Affiliates

Limits specific brands to operate under each Agreement

Concessionaires can add affiliates and fictitious business names under certain conditions provided that all "brands" operating under the Agreement utilize one consolidated shuttle operation

Compensation

Greater of 10% of gross revenue or Minimum Annual Guarantee

No change

MAG

Sets Minimum Annual Guarantee as greater of 90% of the prior year's concession fees paid to LAWA

Resets MAG as the greater of 1) 90% of 10% gross revenue from prior year or 2) $730,000

Alternative Fuel Program

Requires compliance with LAWA's alternative fuel requirement program

Continues to require compliance with the alternative fuel requirement program and adds fees for noncompliance

Page3 THIRD AMENDMENT TO RENTAL CAR CONCESSIONS AT LAX.docx

Provision

Current

Proposed

Early Termination Option

Concessionaire has no early termination rights

Concessionaire has the option to terminate the Agreement upon the occurrence of any of the following: 1. By January 1, 2017 or a mutually agreed upon date, the Board has not suspended the requirement for the concessionaire to collect a customer facility charge (CFC) from its customers, and LAWA and concessionaire have not entered into an memorandum of agreement regarding the ConRAC (MOA); 2. By June 30, 2017, LAWA has not obtained all approvals for the ConRac project construction to proceed, and LAWA and the concessionaire have not entered into an MOA; or 3. After January 1, 2017 or a mutually agreed upon date, the Board reinstates a suspended CFC collection requirement, and LAWA and the concessionaire have not executed an MOA.

Not permitted

Nothing in the amended agreements prevent LAWA from adding additional rental car companies as concessionaires if such companies are subject to the same terms and conditions as the existing concessionaires

Additional Concessionaires

Assignment of Advantage Agreement In April2014, Simply Wheelz, LLC dba Advantage Rent A Car assigned Agreement LAA8145, as amended, to Advantage Opco, LLC in connection with Simply Wheelz's bankruptcy filing. Under this action, the Board affirms the assignment of Agreement LAA-8145, as amended, to Advantage Opco, LLC. Conversion and Name Change for Alamo Rental (US) LLC and National Rental (US) LLC Alamo Rental (US) LLC (f/k/a Alamo Rental (US) Inc.) and National Rental (US) LLC (f/kla National Rental (US) Inc.) converted from corporations to limited liability corporations. Under this action, the Board affirms the conversion and name change for those concessionaires.

Page 4

THIRD AMENDMENT TO RENTAL CAR CONCESSIONS AT LAX. docx

Action Requested Staff requests the Board approve the Third Amendments to the Agreements, and authorize the Executive Director to execute the Third Amendments after approval as to form by the City Attorney and upon approval of the Los Angeles City Council.

Fiscal Impact Approval of the Third Amendments will ensure LAWA will continue exceeding $70 million in annual concession revenue and $29 million in annual CFC revenue.

4. Alternatives Considered •

Take No Action

This would result in expiration of the existing rental car agreements at LAX thus eliminating on-airport rental car services at LAX resulting in a significant loss of service to the traveling public and loss of revenue to LAWA. •

Conduct a Competitive Process

Because the benefits of the proposed ConRAC would best be realized by increasing participation of rental car companies that serve as LAWA concessionaires, staff determined it is not in LAWA's interest to commence a process that is designed to result in limiting the number of concessionaires at this time. Staff will conduct a competitive process to identify additional rental car companies seeking to serve LAX and that are prepared to agree to the same terms and conditions in the Agreements.

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 agreement will be approved 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 606. 4. Concessionaires are required by contract to comply with the provisions of the Living Wage/Service Contractor Worker Retention Ordinances. 5. Procurement Services Division has reviewed this action (File #6985) and established a 3.5% Airport Concessions Disadvantaged Business Enterprise (ACDBE) goal for these contracts. Concessionaires have committed to 3.5% participation. The FAA had not promulgated the ACDBE program at the time of the original contract awards; therefore no ACDBE goal was established in the original contracts. Page 5 THIRD AMENDMENT TO RENTAL CAR CONCESSIONS AT LAX.docx

6. Concessionaires are required by contract to comply with the provisions of the Affirmative Action Program. 7. Concessionaires have each been assigned a Business Tax Registration Certificate numbeL 8. Concessionaires are required by contract to comply with the provisions of the Child Support Obligations Ordinance. 9. Concessionaires have approved insurance documents, in the terms and amounts required, on file with the Los Angeles World Airports. 10. This action is not subject to the provisions of Charter Section 1022 (Use of Independent Contractor). 11. Concessionaires must submit the Contractor Responsibility Program Pledge of Compliance and comply with the provisions of the Contractor Responsibility Program prior to execution of the Amendment. 12. Concessionaires 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 Amendment. 13. Concessionaires will be required to comply with the provisions of the First Source Hiring Program for all non-trade Airport jobs. 14. Concessionaires must submit the Bidder Contributions CEC Form 55 and will comply with its provisions prior to execution of the Amendment.

Page 6 THIRD AMENDMENT TO RENTAL CAR CONCESSIONS AT LAX.docx