8b. Airport Dining and Retail Lease Group 5 Presentation
ITEM NO: 8b_Supp MEETING DATE: June 11, 2019 Sea-Tac Airport Dining & Retail Lease Group 4 & 4A Results and Lease Group 5 Proposed Opportunities June 11, 2019 1 ADR Drivers Excellent customer service Improved travelling experience Generate revenue for reinvestment in Airport Economic opportunities for the region 2 Commission Guidance for the ADR Master Plan Encourage broad business participation Use flexible competitive leasing processes to accommodate all types of business Create new opportunities for small, disadvantaged and local businesses Maximize employment continuity for qualified employees Continue 'street pricing' of products and services Improve efficiency and affordability in the unit build out process Establish job quality expectations in competitive processes Strengthen the local Pacific Northwest sense of place Specific Commission guidance in 2012 and 2014 for the ADR Program 3 Commission Goals for the ADR Master Plan Grow sales per enplanement by at least 40 percent Reach and remain within the top 10 North American airports as ranked by sales per enplanement Grow gross revenues to the Port by 50 percent Grow employment by 40 percent Grow the share of sales generated by small, disadvantaged, and/or local businesses to 40 percent Create an aspirational objective of increasing ACDBE gross sales to 25 percent of total sales Specific Commission goals for the ADR Program 4 Airport Dining & Retail Performance Metrics 70 60 50 40 2014 Baseline 30 2018 Results 20 12.15 13.49 17.01 54.8 61.5 45.4 51.4 19.9 2025 Goals 10 40 25 0 41 21.9 SPE ($) Gross Revenue to % Total Gross Sales % ACDBE Gross the Port ($m) from Small, Local Sales & Disadvantage Business Strong ADR business performance 5 Airport Dining & Retail Performance Metrics 2500 2000 2014 Baseline 1500 1640 2115 2296 2018 Results 1000 2025 Goal 500 0 Employment (full-time & part-time) Strong ADR performance 6 Outreach Update 6 PortGen sessions in 2018 attended by 300 694 firms are registered on ADR leasing website as of March 1, 2019 ADR staff presented draft LG5 opportunities at the Airport Experience Conference in February ADR staff held a local outreach presentation in March Outreach efforts have increased awareness, understanding, and participation 7 Employment Continuity Pool Update Port contracted with Airport Jobs in July 2016 to: Create an employee database Assist in evaluation of needs and match qualified candidates Facilitate interviews and track outcomes As of Q3 2018, 593 employees have registered and have been placed in an airport or related job Employment Continuity Pool is working well 8 Lease Group 4 & 4A New Requirements Required compliance with Proposition 1 back wages and benefits Quantified scoring for Quality Jobs Revised joint venture scoring Points awarded for Pacific Northwest Sense of Place Required labor peace agreement with proposal Limited award opportunities for individual firms Changes to reflect Commission guidance 9 Lease Group 4 & 4A Results 58 proposals were received 28 firms (and/or joint ventures) submitted proposals 11 firms were new to the Airport and the competitive process Multiple proposals received for 10 of the 13 opportunities 26 of the 28 firms that submitted proposals had some form of ACDBE, small or locally-owned business inclusion Outreach spurred strong competition for Lease Group 4 & 4A opportunities 10 Pacific NW Sense of Place Scoring Lease Group 4 and 4A proposers were allotted points for proposing a concept that met the RFP/CEP definition of the Pacific Northwest Sense of Place Further FAA guidance prohibited the use of state, local or geographic preference in the evaluation of bids or proposals Criteria for NW Sense of Place will be modified in accordance with FAA guidance Pacific Northwest Sense of Place Scoring Criterion 11 Addressing Lease Group 5 Challenges Airport environment presents special challenges for business which leads to higher costs for planning, building and operating dining and retail spaces. Cost of preparing proposals for leasing opportunities Construction costs and risk of delays Staffing requirements higher than non-airport locations Security requirements Addressing high cost of doing business at Airport 12 Options Considered Increase pricing flexibility to cover higher costs and recoup investment Create incentives and lower barriers for participation in solicitation Investigate lowering build-out costs and speeding project delivery Extend lease terms Modify percentage rent Modify labor peace requirements Wide Range of Options Researched 13 Executive Director's Recommendations Modify the pricing policy to street plus up to 10% Implement a pilot program for Lease Group 5 to provide $5,000 investment incentive payments to non-selected CEP proposers Continue current lease and rent practices Retain labor peace requirement Investigate lowering build-out costs and speeding project delivery Align PNW Sense of Place scoring with guidance from the FAA Continue engagement with ADR stakeholders for program improvements Balancing various stakeholder perspectives 14 Lease Group 5 Schedule Projected Date Action June 18, 2019 Advertise opportunities (via leasing website and various local and national media) July 1, 2019 Training sessions for interested businesses June - September 2019 90 days for proposal preparation September 18, 2019 Responses due October 2019 Port Team completes their evaluations November 2019 Notification to successful proposers Update Commission on Lease Group 5 results December 2019 Lease negotiations and execution Efficient schedule from advertisement to lease execution 15 Exhibits Evaluation Criteria Company Experience, Financial Capability: 200 points (13%) Concept Development: 250 points (17%) Unit Design, Materials and Capital Investment: 250 points (17%) Financial Projections and Rent Proposal: 200 points (13%) Management, Staffing and Environmental: 200 points (13%) Job Quality, Employment and Service Continuity: 200 points (13%) Small Business Participation: 200 points (13%) TOTAL POINTS 1500 points (100%) Evaluation criteria balance values important to the Port 17 Lease Group 5 Opportunities 3 Food and Beverage 2 Specialty Retail 2 Passenger Services New opportunities 18 Lease Group 5 Opportunities Category Package # # of Locations (unit #) Approximate SF FB-1 1 (NS-10) 1,300 Food and FB-2 1 (NS-25) 3,440 Beverage FB-3 1 (NSM-26) 6,780 SR-1 1 (NS-12) 1,840 Specialty Retail SR-2 1 (NS-14) 1,890 PS-1 1 (NS-11) 580 Passenger Services PS-2 1 (NS-13) 1,740 New opportunities 19 New opportunities ready for the marketplace 20 New opportunities ready for the marketplace 21 New opportunities ready for the marketplace 22 New opportunities ready for the marketplace 23 New opportunities ready for the marketplace 24 New opportunities ready for the marketplace 25 New opportunities ready for the marketplace 26
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