8a draft Motion 2020-13 Lease Adjustment
Item Number: _8a_ Meeting Date: June 9, 2020 1 2 3 4 5 MOTION 2020-13: 6 A MOTION OF THE PORT OF SEATTLE COMMISSION 7 8 to authorize adjustments to leases and other financial 9 terms for airport dining and retail tenants. 10 11 PROPOSED 12 JUNE 9, 2020 13 14 INTRODUCTION 15 The COVID-19 global pandemic is an unprecedented public health emergency that impacts the 16 lives of everyone in the region and state. The Port of Seattle's top priorities during this difficult 17 time are keeping employees, tenants, concessionaires, contractors, workers, customers, 18 travelers and residents safe, while simultaneously strengthening our critical aviation and 19 maritime infrastructure to advance trade and commerce and to support jobs, small and diverse 20 businesses, and environmental sustainability. 21 22 At Seattle-Tacoma International Airport (SEA), a sustainable base of dining and retail (ADR) 23 tenants is essential to the Port's overall budget and the passenger experience thatthe airport 24 needs to provide in order to attract travelers. However, drastic reductions in air travel combined 25 with Washington state's Stay Home, Stay Healthy order that limits dining and retail operations 26 have put the financial futures of ADR businesses at risk. Loss of these businesses would not only 27 impact the Port's budget in short-term lost revenue but also result in significant cost of replacing 28 these businesses such as procurement and build-out costs for new tenants. 29 30 Therefore, the Commission believes strongly that it is in the best interest of the Port and the 31 financial sustainability of SEA to provide adjustments to ADR tenant leases and other financial 32 terms to support the short and long-term viability of SEA's ADR program and all of its ADR 33 tenants. T hese immediate decisions will provide certainty to the Port's partners and support 34 regional economic recovery. The Commission and the Executive Director will continue to evaluate 35 and adjust this approach as new information becomes available. 36 37 TEXT OF THE MOTION 38 39 The Port of Seattle Commission hereby provides the following direction to Port leadership: 40 41 1) The Commission authorizes the Executive Director to extend the leases of current ADR 42 tenants by three years, with the exception of ADR kiosk tenants who will receive one 43 additional year of term. 44 Motion 2020-13 a Motion to authorize adjustments to leases and other financial terms for airport dining and retail tenants Page 1 of 2 45 2) The Commission authorizes the Executive Director to temporarily suspend the Minimum 46 Annual Guarantee (MAG) for ADR tenants through the end of 2020. The Port will revisit 47 the MAG prior to the end of 2020 and will decide how MAG will be handled in 2021. 48 49 STATEMENT IN SUPPORT OF THE MOTION 50 The Port Commission's actions on April 1, 2020 authorized short-term economic relief to 51 airlines, concessionaires and tenants operating at Seattle-Tacoma International Airport to 52 address impacts of the health and economic crisis resulting from the COVID-19 pandemic. 53 54 The Commission also authorized the Executive Director to approve further relief depending on 55 the economic conditions facing businesses on airport and non-airport Port properties. On April 56 24 and May 12, the Executive Director granted further assistance for airlines, the airport dining 57 and retail (ADR) concessionaires and certain other businesses at the airport. However, in 58 recognition of the significant challenges faced by ADR tenants (both lack of customers and 59 state-imposed restrictions), airport staff continued consideration and analysis of potential 60 financial relief for SEA's ADR businesses, including discussions about further financial relief with 61 representatives of the Small Business Airport Action Committee (SBAAC), which represents a 62 number of women-owned and minority ADR businesses. 63 64 The proposed changes to ensure the financial sustainability of these tenants are justified by the 65 Port's strong interest in taking actions to preserve those businesses in order to serve travelers 66 when the economy recovers. These lease and financial term changes will provide a greater 67 opportunity for ADR tenants to offset losses from the COVID-19 economic impacts and will 68 substantially benefit the Port by promoting ADR tenant financial stability during the COVID-19 69 emergency, postponing through lease extensions the need to incur the substantial costs of 70 procuring new tenants and leases for ADR spaces, and supporting the long-term viability of the 71 ADR program and its readiness to ramp-up as soon as possible once passenger enplanements 72 begin to return to normal levels. Motion 2020-13 a Motion to authorize adjustments to leases and other financial terms for airport dining and retail tenants Page 2 of 2
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