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Item 1.F.
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| City Council Regular | |
| Date: | 12/16/2024 |
| Title: | Amendment No. 3 to Automobile Parking Concession Agreement |
| Presented by: | Jeff Roach |
| Department: | Airport |
| Presentation: | No |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends the City Council approve Amendment No. 3 to the Automobile Parking Concession Agreement with SP Plus, adding 127 new parking stalls for revenue collection, setting the parking rates to accommodate the fifth lot, requiring SP Plus to deploy the new digital scan and pay platform and software upgrades, and adding one year to the Agreement term.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
SP Plus, formerly known as Standard Parking, has been the public parking lot concessionaire at the Airport for a number of years, with the most recent Agreement beginning in 2012. In Montana there are only two concessionaires that typically vie for and operate at the commercial service airports, SP Plus and Republic Parking. Over the years and multiple concession agreements with SP Plus, as parking needs increased, the Airport has worked with the company to upgrade both the parking lots and parking lot control equipment, bring additional parking spaces online, and introduce express credit card pay lanes.
With the upgrade project in 2015, the Airport reconstructed the Airport's old employee parking lot into a new 234 stall Long Term Premium Lot parking area. That project included a new entry merge lane, an entry plaza, an express credit card exit area, and a by-pass lane to the existing pay booth for those customers wanting to pay with cash. With this upgrade, SP Plus invested an additional $224,000 for: (a) the additional parking control equipment for the Premium Lot, and (b) upgrading the existing Long and Short Term Lots' revenue control system so that all ticket dispensing, credit card exit, and manual revenue control equipment would be compatible and current once the Premium Parking Lot was opened. In exchange for SP Plus' investment, the City approved a term extension on the concession agreement to expire on December 31, 2021.
In 2019, with the new air service provided by American Airlines and the return of Frontier Airlines, the demand for public parking spaces increased, with long-term parking frequently overflowing into a lot that was not part of the Concession Agreement and therefore not generating any revenue. Staff once again worked with SP Plus on a solution to add parking revenue control equipment to the North Overflow Lot. SP Plus invested $135,000 for the additional parking control equipment to incorporate the 223 stall North Overflow Parking Lot into revenue generation, as well as performed software updates for the parking control equipment in all the Airport's public parking lots. With the addition of the revenue control equipment for the added parking lot, the concessionaire received additional revenue from that lot. Staff also negotiated a new revenue percentage during the three-year term extension. Previously, SP Plus provided the Airport with 80.5% of gross revenues collected. Staff negotiated with SP Plus to increase the percentage rate for the three-year extension to 82.57% of gross revenues, adding approximately $62,000 per year to the Airport's revenues.
As enplanements are continuing to increase, the public parking lots are once again often full, especially during special events, holidays, peak seasonal travel, and frequently overflow beyond the four current paid surface lots. The frequent overflow requires use of the last overflow lot known as the South Overflow lot. This parking lot is not included in the Concession Agreement and results in lost parking revenue for both the concessionaire and the Airport. SP Plus has proposed an easy-to-deploy, digital scan and payment platform solution for the South Overflow lot and would also deploy this solution to the North Overflow lot that has been experiencing frequent equipment problems especially during cold weather. The solution can be deployed in time for the upcoming December holiday travel season. There would be no equipment, software, or construction costs for the City. Staff feel that with the increased revenue potential, this is a favorable deal for the City.
In order to incorporate the South Overflow Lot into the current Automobile Parking Concession Agreement, staff is requesting the City Council approve Amendment Three to the Automobile Parking Concession Agreement with SP Plus. The Amendment will (1) incorporate the new South Overflow Lot into the Agreement, adding 127 parking spaces to the paid public lot inventory, (2) provide a digital scan and payment platform needed to operate the South Overflow Lot, (3) update all the revenue control software for the North Overflow Lot with the same digital scan and payment platform and (4) add one year to the existing Concession Agreement's term (to expire on December 31, 2025).
With the upgrade project in 2015, the Airport reconstructed the Airport's old employee parking lot into a new 234 stall Long Term Premium Lot parking area. That project included a new entry merge lane, an entry plaza, an express credit card exit area, and a by-pass lane to the existing pay booth for those customers wanting to pay with cash. With this upgrade, SP Plus invested an additional $224,000 for: (a) the additional parking control equipment for the Premium Lot, and (b) upgrading the existing Long and Short Term Lots' revenue control system so that all ticket dispensing, credit card exit, and manual revenue control equipment would be compatible and current once the Premium Parking Lot was opened. In exchange for SP Plus' investment, the City approved a term extension on the concession agreement to expire on December 31, 2021.
In 2019, with the new air service provided by American Airlines and the return of Frontier Airlines, the demand for public parking spaces increased, with long-term parking frequently overflowing into a lot that was not part of the Concession Agreement and therefore not generating any revenue. Staff once again worked with SP Plus on a solution to add parking revenue control equipment to the North Overflow Lot. SP Plus invested $135,000 for the additional parking control equipment to incorporate the 223 stall North Overflow Parking Lot into revenue generation, as well as performed software updates for the parking control equipment in all the Airport's public parking lots. With the addition of the revenue control equipment for the added parking lot, the concessionaire received additional revenue from that lot. Staff also negotiated a new revenue percentage during the three-year term extension. Previously, SP Plus provided the Airport with 80.5% of gross revenues collected. Staff negotiated with SP Plus to increase the percentage rate for the three-year extension to 82.57% of gross revenues, adding approximately $62,000 per year to the Airport's revenues.
As enplanements are continuing to increase, the public parking lots are once again often full, especially during special events, holidays, peak seasonal travel, and frequently overflow beyond the four current paid surface lots. The frequent overflow requires use of the last overflow lot known as the South Overflow lot. This parking lot is not included in the Concession Agreement and results in lost parking revenue for both the concessionaire and the Airport. SP Plus has proposed an easy-to-deploy, digital scan and payment platform solution for the South Overflow lot and would also deploy this solution to the North Overflow lot that has been experiencing frequent equipment problems especially during cold weather. The solution can be deployed in time for the upcoming December holiday travel season. There would be no equipment, software, or construction costs for the City. Staff feel that with the increased revenue potential, this is a favorable deal for the City.
In order to incorporate the South Overflow Lot into the current Automobile Parking Concession Agreement, staff is requesting the City Council approve Amendment Three to the Automobile Parking Concession Agreement with SP Plus. The Amendment will (1) incorporate the new South Overflow Lot into the Agreement, adding 127 parking spaces to the paid public lot inventory, (2) provide a digital scan and payment platform needed to operate the South Overflow Lot, (3) update all the revenue control software for the North Overflow Lot with the same digital scan and payment platform and (4) add one year to the existing Concession Agreement's term (to expire on December 31, 2025).
ALTERNATIVES
City Council may:
- Approve Amendment Three to the Automobile Parking Concession Agreement; or,
- Not Approve Amendment Three to the Automobile Parking Concession Agreement.
FISCAL EFFECTS
The Airport estimates that at 50% use of the South Overflow lot, this Amendment will add around $206,000 of annual revenue during the one-year extension. Total annual parking revenues are projected to be between $2,900,000 to $3,200,000 depending on passenger traffic. Additionally, the Airport will not be required to provide any capital outlay for new equipment or software updates and will benefit from the percent revenues generated from the additional parking spaces, estimated to be about $170,000 for the one-year extended period.