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 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.  The last upgrade project was in 2015, when the Airport reconstructed the Airport's old employee parking lot into a new 234 stall Express 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 Express 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 Express Lot was opened. In exchange for SP Plus' investment, the City approved an extension of term on the concession agreement to December 31, 2021.

With the new service provided by American Airlines and most recently the return of Frontier Airlines, the demand for public parking spaces has increased, with long term parking frequently overflowing into a lot that is not part of the Concession Agreement and therefore not generating any revenue.  Staff has once again worked with SP Plus on a solution to add parking revenue control equipment to the North Overflow Lot.  SP Plus will invest $135,000 for the additional parking control equipment to incorporate the 223 stall North Overflow Parking Lot into revenue generation, as well as perform software updates for the parking control equipment in all of the Airport's public parking lots.  

With the addition of the revenue control equipment for the added parking lot, the Concessionaire will receive additional revenue from that lot. Therefore, staff also negotiated a new revenue percentage during the three-year term extension.  Currently, SP Plus provides the Airport 80.5% of gross revenues collected. Since other Montana airports are receiving a few percentage points more of the gross revenue than the Billings Airport, staff negotiated with SP Plus to increase the percentage rate for the three-year extension.  Subsequently, during the three-year extension, the Airport will receive 82.57% of gross revenues adding approximately $62,000 per year to the Airport's revenues.  Staff feels that with the $135,000 infrastructure investment and the increased percentage of gross revenue, that this is a favorable deal for the City.
 
In order to incorporate the North Overflow Lot into the current Automobile Parking Concession Agreement, staff is requesting that the City Council approve Amendment Two to the Automobile Parking Concession Agreement with SP Plus.  The Amendment will (1) incorporate the new North Overflow Lot into the Agreement, adding 223 parking spaces to the paid public lot inventory, (2)  provide the revenue control equipment needed to operate this lot, (3) update all the revenue control software for all public parking lots to be compliant with new technology compliance standards, (4) add an additional three years (to December 31, 2024) to the existing Concession Agreement's term to allow the investment to be amortized over the remaining term, and (5) establish an increased percentage of revenues the Airport will receive during the extended three-year term.
 
 

City Council may:

• Approve Amendment Two to the Automobile Parking Concession Agreement as set forth; or
• Decline to approve Amendment Two and direct staff on how to proceed.

The Airport estimates that this Amendment will add around $62,000 of annual revenues during the three-year extension or $186,000.  Additionally, the Airport will not be required to provide a capital outlay of $135,000 for new equipment and software updates.  Total annual revenues should be between $2,400,000 to $2,500,000 depending on passenger traffic.  In Fiscal Year 2019, the Airport received $2,411,000 in revenues from the parking operation.  Staff anticipates that number to be higher in Fiscal Year 2020 due to higher traffic numbers.  Once the new rate is effective in the last three years of the Agreement, the revenues will be closer to the $2,500,000.

Staff recommends the City Council approve Amendment Two to the Automobile Parking Concession Agreement with SP Plus, adding  223 new parking stalls for revenue collection, setting the parking rates to accommodate the fourth lot, requiring SP Plus to install $135,000 of new parking revenue control equipment and software upgrades, adding three years to the Agreement Term, and establishing the increased percentage of revenues the Airport will receive during the additional three years.