SUBJECT: APPROVAL OF AMENDMENTS TO SERVICE CENTER GROUND LEASES FOR ON-AIRPORT RENTAL CAR OPERATORS
COUNCIL DISTRICT: City -Wide
Approval
of fourth amendments to the service center ground leases with Avis Rent A Car System,
Inc., Budget Rent A Car Systems, Inc., Dollar Rent A Car Systems, Inc. and The
Hertz Corporation, and a fifth amendment to the ground lease with National Car
Rental System, Inc., to add temporary car storage space for each company, with
annual estimated combined revenue to the City of $295,487.
Background
Avis Rent A Car System, Inc., Budget Rent A Car Systems, Inc., Dollar Rent A Car Systems, Inc., The Hertz Corporation and National Car Rental System, Inc. operate on-Airport rental car concessions at San Jose International Airport under separate concession agreements. In addition, as part of their operations, the rental car companies lease space at the Airport for use as service center sites and for the storage of vehicles under separate ground leases.
On June 10, 1997, Council approved the extension of the terms of the concession agreements and leases for all operators through June 30, 1998.
Subsequently, on June 30, 1998, Council approved the extension of the on-Airport concession agreements and the ground leases through June 30, 2001.
On December 7, 1999, the City Council approved the extension of the terms of the concession agreements and ground leases for all operators through March 31, 2005.
As rental car operations continue to increase each year, the need for additional space has become more acute, as the rental car companies endeavor to maintain a high level of customer service.
Analysis
On a temporary basis, the Airport is able to provide approximately 142,747 square feet of additional space for the storage of vehicles. The additional space is located to the north of Terminal A, in a former overflow parking lot on Airport Boulevard. The use of this additional temporary storage space helps to reduce congestion on the roadways by allowing the rental car companies to store vehicles on the Airport, instead of driving vehicles to an off-Airport site. The use of this site is intended to be temporary, as the area is scheduled to be used for other Airport improvement projects in the future.
The amendments provide that the Director of Aviation may execute amendments to the agreement that provide only for the expansion, contraction or relocation of the leased premises at no change in the rental rates set in the agreement. The tenants will pay a rental rate of $2.07 per square foot per year, which was established by a recent appraisal of Airport property, for the use of the space.
Not applicable.
This item has been coordinated with the Risk Manager and the City Attorney’s Office.
Resolution #67380.
Ralph G. Tonseth
Director of Aviation
Airport Department