8a. Street Pricing Principles Motion
Item Number: 8a_motion Meeting Date: June 11, 2019 1 MOTION 2019-09: 2 A MOTION OF THE PORT OF SEATTLE COMMISSION 3 4 amending prior policy statements of the Port Commission 5 regarding street pricing principles for the Airport Dining 6 and Retail program at Seattle-Tacoma International 7 Airport; implementing an amended pricing policy for the 8 Airport Dining and Retail program; and authorizing the 9 Executive Director to take such necessary actions to 10 implement the amended pricing policy. 11 12 PROPOSED 13 JUNE 11, 2019 14 15 INTRODUCTION 16 17 The Port of Seattle Commission has previously passed two motions directing policy for the 18 Airport Dining and Retail program (the "ADR Program") at Seattle-Tacoma International Airport, 19 including policy direction with respect to prices charged by ADR Program concessionaires for 20 products and services provided at the Airport. 21 22 By motion entitled "Motion of the Port of Seattle Commission Regarding Quality Jobs, Service 23 and Employment Continuity Assurances for the Airport Dining and Retail Program," adopted 24 November 25, 2014, the Commission articulated various guiding principles for operation of the 25 ADR Program, including one principle calling for "continuation of 'street pricing' of products 26 and services." 27 28 Subsequently, by motion reflected in Port Commission Meeting Minutes dated November 24, 29 2015, Item 6.d, the Commission approved a temporary, conditional policy to authorize "street" 30 pricing plus up to ten percent (10%), with subsequent steps down year by year, to return to 31 strict street pricing effective January 1, 2020. 32 33 This motion revises the street pricing principle in the motion adopted on November 25, 2014, 34 repeals the temporary street pricing policy authorized by the motion adopted November 24, 35 2015, and establishes an amended pricing policy allowing ADR Program concessionaires to 36 charge street pricing plus a maximum of ten percent. 37 Motion 2019-09 Airport Dining and Retail Program policy direction Page 1 of 4 38 TEXT OF THE MOTION 39 40 (1) The Commission hereby amends the principles of ADR Program redevelopment within 41 the Statement of Policy Direction section of the Commission motion adopted November 42 25, 2014, to delete, in its entirety, the following principle: 43 44 5. Continuation of 'street pricing' of products and services 45 46 (2) The Commission hereby repeals, effective January 1, 2020, the temporary street pricing 47 policy established by the Commission motion adopted November 24, 2015 (Port 48 Commission Meeting Minutes dated November 24, 2015, Item 6.d). 49 50 (3) Amended Pricing Policy for ADR Concessionaires. 51 52 (a) The Commission hereby adopts and authorizes the Executive Director to implement 53 an amended street pricing policy to allow concessionaires in the ADR Program to set 54 prices at not more than ten percent (10%) above "street" prices for all products and 55 services sold at the Airport ("Amended ADR Pricing Policy"); provided, that this 56 Amended ADR Pricing Policy will only be extended to concessionaires if they offer: 57 58 1. Wages equal to or exceeding the minimum wage standards set forth in Chapter 59 7.45 of the City of SeaTac Municipal Code; 60 61 2. Payment of sick and safe time, which shall be accrued at the rate of one hour for 62 every 40 hours worked; 63 64 3. Health insurance to full-time employees, consistent with the Affordable Care 65 Act; and 66 67 4. Comply with any reasonable request from Port staff for verification of actual 68 wages paid to the tenant's employees. 69 70 The above requirements (1.) through (4.) may be waived for employers with a bona 71 fide collective bargaining agreement. 72 73 (b) The Executive Director is directed to begin implementation of this Amended ADR 74 Pricing Policy, including review and processing of ADR Program concessionaire 75 requests for approval of price adjustments based on the Amended ADR Pricing 76 Policy. 77 78 1. Beginning on January 1, 2020, eligible ADR Program concessionaires may charge 79 approved street pricing plus up to a maximum of ten percent (10%) under this 80 Amended ADR Pricing Policy. Motion 2019-09 Airport Dining and Retail Program policy direction Page 2 of 4 81 2. Until January 1, 2020, concessionaires shall continue to adhere to the current 82 street pricing policy established by the Commission motion adopted November 83 24, 2015 (Port Commission Meeting Minutes dated November 24, 2015, Item 84 6.d). Concessionaires who do not satisfy requirements (1.) through (4.) 85 identified in paragraph (a) above, as verified by the Port, shall be limited to 86 charging strict street pricing for their products and services commencing January 87 1, 2020. 88 89 (c) The Executive Director is further authorized to take all such actions as necessary to 90 implement the Amended ADR Pricing Policy described herein, including: 91 92 1. Development of (or adjustment to) procedures for review and confirmation of 93 proposed concessionaire pricing; 94 95 2. Revision to operational policies and procedure relating to pricing requirements 96 for ADR Program concessionaires; 97 98 3. Preparation and execution of necessary lease amendments, addenda and/or 99 other documentation necessary to approve pricing of ADR Program 100 concessionaire products and services and adherence to the Amended ADR 101 Pricing Policy. 102 103 STATEMENT IN SUPPORT OF THE MOTION 104 105 In taking this action the Commission intends to support the Executive Director's 106 recommendation to establish an amended policy to allow ADR Program concessionaires to 107 charge street pricing plus up to 10 percent (10%) for products and services offered at the 108 Airport. The Commission and staff have heard from large prime operators as well as small, local 109 and minority-owned concessionaires who have expressed concern regarding the increased cost 110 of doing business at the Airport and the impact of those higher costs on their ability to operate 111 viable businesses. 112 113 These cost pressures are evident in the building out and refurbishing their units, the wages and 114 benefits paid to their employees and the services that are necessary to operate their businesses 115 at the Airport (for example, security badging, parking, common area maintenance fees, unified 116 pest management, trash recycling, and adherence to Commission Resolution No. 3725). 117 118 Higher costs in these areas, together with the scheduled return to required strict street pricing 119 in January 2020, has decreased the interest of new firms in bidding for leasing opportunities at 120 the Airport and has led several current concessionaires to express concerns about their ability 121 to operate profitable businesses. 122 123 The Commission recognizes that circumstances at the Airport will continue to evolve and 124 flexibility may be necessary to reach our mutual goals of excellent customer service and Motion 2019-09 Airport Dining and Retail Program policy direction Page 3 of 4 125 attractive dining options. However, by this motion, and consistent with these goals, allowing 126 street plus 10% pricing provides concessionaires with an enhanced ability to recover their 127 higher costs, improves the opportunity for concessionaires to procure quality products and staff 128 resources, and will likely increase the number and variety of small-business and other 129 proposers for future concessions opportunities at the Airport. Motion 2019-09 Airport Dining and Retail Program policy direction Page 4 of 4
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