Consideration and Approval of Amendment to Lease Agreements: Flagstaff Airport Rental Car Concessions, IFB 2011-09A: Amendment to leases with: Avis Budget Car Rental LLC, Alamo Rental Car/National Car Rental, The Hertz Corporation, and Enterprise Rent-A-Car companies. (Amendment to current leases with car rental companies for a three-year renewal in lieu of the two one-year renewals)

To continue revenue sources for the Airport.

The Airport is guaranteed to receive revenue from the rental car concessions of at least $452,610 per year.

Maintain standard of service to the community.

Yes, with the approval of the current lease agreements on January 18, 2011.

1.) Approve amendment to the lease extension for three (3) years. 
2)  Do not approve the amendment to the lease extension and approve a one (1) year lease extension per the current terms and conditions of the lease agreement(s).
3.) Do not approve any extension to the lease agreement(s). With a non-approval, a result would be a loss of revenue for the Airport and a new procurement process would need to be conducted.

An Invitation for Bids for Rental Car Concession was held in November 2010, with Council approval on January 18,2011. The terms of the lease agreement(s) were for an initial three (3) year term with two (2) additional one (1) year extensions subject to approval by the City Council and Lessee. The initial three (3) year term expired on January 31, 2014. Both the Airport and Lessees would prefer to perform an amendment to the current lease agreement(s) allowing for a final three (3) year extension to the lease with the current fixed rent, concession fee, annual guarantee and percentage fee of gross revenues.

Under the current financial climate it would be difficult to get a better financial agreement than the current agreement. Within the next  thirty (30) months a second air carrier will be in place and increase the value of this lease. By executing an amendment to the current lease agreement(s), the City of Flagstaff is able to maintain the revenue  for the Airport without jeopardizing a reduced bid rate, which is advantageous to  the City. The 2010 Invitation for Bids created a substantial increase in revenues for the City, as well as a substantial operational cost to the lessees to provide the car rental service.  Because of these substantial operational costs, incurred by the lessees, allowing for a final three (3) year extension to the lease will allow the lessees to offset some of these operational costs and the City to continue bringing in a significant revenue stream.

The Airport is guaranteed to receive revenue from the rental car concessions of at least $452,610 per year.

Rental cars at the Airport help the tourism, business and local interests.

N/A