On October 28, 2002, the City entered into a Restaurant/Lounge Concession Agreement with Air Host Billings, Inc. (Air Host) to operate the restaurant, lounge, and concourse deli in the Airport Terminal Building for a five-year term with a five-year renewal option.  This Agreement required a Mid-Term Refurbishment Clause that required Air Host to spend at least $50,000 to maintain the appearance and furnishings of the facilities as part of the five-year renewal option.  Air Host's cost for these facility improvements was approximately $95,000.  Since this was more than the refurbishment amount that was required by the original Agreement, Air Host requested an additional two years of term over which to amortize the added costs.  The City Council subsequently approved Amendment One on February 28, 2008, and extended the term to October 31, 2014.  Near the end of that term, the Airport began the long-term planning regarding improvements to the Airport's Terminal Building.  Knowing the outcome of these improvements would have a significant impact on both the size and location of the future food/beverage and news/gift concession programs, the Airport and Air Host agreed to extend the term of the Agreement (Amendment Two) to January 31, 2016.  Subsequently, on January 29, 2016, the parties agreed to continue the concession arrangement in a holdover status of the Agreement while the design work for the Terminal project was completed.  Now that the design plans are nearing completion and the impacts to the concession space during the construction process are known, both parties desire to amend the Agreement to extend the term up to three years or through the duration of the construction of the new concession facilities, whichever comes first. This will allow Air Host to continue to operate the food/beverage concession in an alternative space and provide food/beverage services to Airport customers during the construction project.  It is estimated that a Request for Proposals (RFP) will be advertised around a year from now so that a concessionaire will be under contract to provide input into the new Food and Beverage concession space while it is still under construction.
 

City Council may:

• Approve Amendment Three extending the Concession Agreement, allowing Air Host to operate the food/beverage concession during the construction of the Terminal Expansion improvements; or
• Disapprove Amendment Three extending the Concession Agreement, allowing Air Host to operate the food/beverage concession during the construction of the Terminal Expansion improvements.

The City's current annual concession revenues for the Restaurant/Lounge Concession Agreement are approximately $154,000.  This Amendment Three ensures that the Airport will have uninterrupted food/beverage service to its customers during all phases of the Terminal Expansion Project.  Staff believes revenues may increase during the construction project due to the close proximity of the temporary deli on Concourse B to the remaining holdroom areas being used by all passengers.

Staff recommends that the City Council approve Amendment Three to the Restaurant/Lounge Concession Agreement extending the term for up to three additional years or until the new concession space is operational, to allow Air Host to operate the food/beverage concession during the final design and construction of the Airport Terminal Expansion Project.