Los Angeles
World Airports
January 15, 2015
TM
The Honorable City Council
of the City of Los Angeles
City Hall, Room 395
Los Angeles, CA 90012
Subject:
LAX
LA/Ontario
Van Nuys
APPROVAL OF THIRD AMENDMENTS WITH AVIS RENT A CAR SYSTEM,
LLC; ALAMO RENTAL (US) LLC; BUDGET RENT ACAR SYSTEM, INC.;
NATIONAL RENTAL (US) LLC; DTG OPERATIONS, INC. DBA DOLLAR
RENT A CAR; DTG OPERATIONS, INC. DBA THRIFTY CAR RENTAL;
ENTERPRISE RENT-A-CAR COMPANY OF LOS ANGELES, LLC; HERTZ
CORPORATION; FOX RENT A CAR, INC; AND ADVANTAGE OPCO, LLC
DBA ADVANTAGE RENTAL A CAR AT LOS ANGELES INTERNATIONAL
AIRPORT (LAX)
City of Los Angeles
Board of Airport
Commissioners
In accordance with Section 606 of the City Charter, the Board of Airport Commissioners
transmits for your approval the Third Amendment to ten (1 0) existing rental car concession
agreements at LAX extending the term of the agreements through January 31, 2018, plus two
(2) one ( 1)-year extension options.
Sean 0. Burton
President
RECOMMENDATION FOR CITY COUNCIL
Valeria C. Velasco
Vice President
1.
APPROVE the Third Agreements with Avis Rent A Car System, LLC; Alamo Rental (US)
LLC.; Budget Rent A Car System, Inc.; National Rental (US) LLC; DTG Operations, Inc.
dba Dollar Rent A Car; DTG Operations, Inc. dba Thrift Car Rental; Enterprise Rent-ACar Company of Los Angeles, LLC; Hertz Corporation; Fox Rent A Car, Inc; and
Advantage Opco, LLC dba Advantage Rent A Car at LAX.
2.
CONCUR in the Board's action authorizing the Executive Director to execute the Third
Agreements.
3.
FIND that this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Article Ill Class 1 (18)(c) of the Los Angeles City CEQA Guidelines.
Eric Garcetti
Mayor
Gabriel L. Eshaghian
Jackie Goldberg
Beatrice C. Hsu
Matthew M. Johnson
Dr. Cynthia A. Telles
Gina Marie Lindsey
Executive Director
The Board of Airport Commissioners, at their meeting held on January 15, 2015, by Resolution
No. 25615 approved the attached Amendments, subject to the approval of your Honorable Body.
There is no fiscal impact to the City's General Fund as a result of this action.
'
San r J. Miller- Commission Executive Assistant II
BOARD OF AIRPORT COMMISSIONERS
SJM:jrc
cc: Trade, Commerce and Tourism Committee
Councilmember LaBonge, E-file
Councilmember Bonin, E-file
Councilmember Buscaino, E-file.
CAO {Airport Analyst), E-file
CLA {Airport Analyst), E-file
City Clerk's Office, E-file
1 World Way
Los Angeles
California
90045-5803 Mall P.O. Box 92216
Los Angeles
California
90009-2216 Telephone
310 646 5252
Internet
www.lawa.aero
Los Angeles
World Airports
TM
RESOLUTION NO. 25615
LAX
LA/Ontario
Van Nuys
City of Los Angeles
Eric Garcetti
Mayor
Board of Airpor1
Commissioners
Sean 0. Burton
President
Valeria C. Velasco
Vice President
Gabriel L. Eshaghian
Jackie Goldberg
Beatrice C. Hsu
Matthew M. Johnson
Dr. Cynthia A. Telles
Gina Marie Lindsey
Executive Director
BE IT RESOLVED that the Board of Airport Commissioners approved a Third Amendment to
ten (1 0) existing rental car concession agreements at Los Angeles International Airport to
extend the term of the agreements through January 31, 2018, plus two (2) one (1 )-year
extension options exercisable by Los Angeles World Airports, as referenced in the Boardadopted staff report attached hereto and made part hereof; and
BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the
Executive Director to execute said Third Amendments upon approval as to form by the City
Attorney and upon approval by the Los Angeles City Council; and
BE IT FURTHER RESOLVED that said Third Amendments are exempt from competitive
bidding under City Charter Section 371 (e)(1 0); and
BE IT FURTHER RESOLVED that the use of competitive bidding would be undesirable and
impractical at this time due to the ongoing planning for a new consolidated rental car facility
(ConRAC) at Los Angeles International Airport, and the extensions will serve as a bridge
agreement until the ConRAC is complete, at which time there would be new occupancy and
concession agreements for the ConRAC; and
BE IT FURTHER RESOLVED that the issuance of permits, leases, agreements, gate and
space assignments, and renewals, amendments or extensions thereof, or other entitlements
granting use of existing airport facilities or its operations is exempt from the requirements of
the California Environmental Quality Act (CEQA) pursuant to Article Ill Class 1(18)(c) of the
Los Angeles City CEQA Guidelines; and
BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport
Commissioners will become final pursuant to the provisions of Los Angeles City Charter
Section 606.
oOo
I hereby certify that this Resolution No. 25615
is true and correct, as adopted by the Board of
Airport Commissioners at its Regular Meeting
held on Thursday, January 15, 2015.
Sandra J. Miller- Secretary
BOARD OF AIRPORT COMMISSIONERS
1 World Way
Los Angeles
California
90045-5803 Mall P.O. Box 92216
Los Angeles
California
90009-2216
Telephone
310 646 5252
Internet www.lawa.aero
. . . . ., .,..,.Angeie$
.:·. · ro· tRE
·worMAirp_oi1s
'
. '
:. ..........
": ··~
··········· ..... .
Meeting Date:
1/15/2015
CAO Review:
Reviewed for
0
Completed
181
Pending
0
N/A
Date
Armroval Status /2.1(
Capital Budget
11/12/14
181YDND NA
DS
Operating Budget
12/4/14
181YO N DNA
I RW
CEQA
11/14/14
181Y D N
vw
Procurement
11/12/14
DY ON 181 Cond
MT
SUBJECT: Amendment to Rental Car Concession Agreements
Approve the Third Amendment to ten existing rental car concession agreements at Los Angeles
International Airport to extend the term of the agreements through January 31, 2018, plus two
one-year extension options exercisable by Los Angeles World Airports.
RECOMMENDATIONS:
Management RECOMMENDS that the Board of Airport Commissioners:
1. ADOPT the Staff Report.
2. DETERMINE that this action is exempt from the California Environmental Quality Act
(CEQA) pursuant to Article Ill, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines.
3. FIND that the Third Amendments are exempt from competitive bidding under City Charter
Section 371 (e)(1 0).
4. FIND that the use of competitive bidding would be undesirable and impractical at this time
due to the ongoing planning for a new consolidated rental car facility (ConRAC) at Los
Angeles International Airport, and the extensions will serve as a bridge agreement until the
ConRAC is complete, at which time there would be new occupancy and concession
agreements for the ConRAC.
Page 1
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS ATLAXdocx
5. APPROVE the Third Amendments to the following concession agreements: Avis Rent A Car
System, LLC (LAA-8137); Alamo Rental (US) LLC. (LAA-8139); Budget Rent A Car System,
Inc. (LAA-8138); National Rental (US) LLC (LAA-8140); DTG Operations, Inc. dba Dollar
Rent A Car (LAA-8141); DTG Operations, Inc. dba Thrifty Car Rental (LAA-8144); Enterprise .
Rent-A-Car Company of Los Angeles, LLC (LAA-8142); Hertz Corporation (LAA-8136); Fox
Rent A Car, Inc. (LAA-8143); and Advantage Opco, LLC dba Advantage Rent A Car (LAA8145), as referenced in the report.
6. AUTHORIZE the Executive Director to execute the Third Amendments to the specified
con~ession agreements upon approval as to form by the City Attorney and upon approval by
the Los Angeles City Council.
DISCUSSION:
1. Purpose
Provide continued rental car services at Los Angeles International Airport (LAX) while
bridging to development agreements related to the planning, financing and occupancy of the
LAX's ConRAC.
· 2. Prior Related Actions
•
January 21, 2003- Board Order No. A0-4844
The Board of Airport Commissioners (Board) approved award of concession agreements
between Los Angeles World Airports (LAWA) and ten rental car companies at LAX: Avis
Rent A Car System, LLC (f/kla Avis Rent A Car System, Inc.) (LAA-8137); Alamo Rental
(US), LLC (f/kla Alamo Rental (US) Inc. and Alamo Rent-A-Car LLC) (LAA-8139);
Budget Rent A Car System, Inc. (LAA-8138); National Rental (US) LLC (f/kla National
Rental (US) Inc. and National Car Rental System, Inc.) (LAA-8140); DTG Operations,
Inc. dba Dollar Rent A Car (LAA-8141); DTG Operations, Inc. dba Thrifty Car Rental
(assignee to T.C.R.L.P.'s agreement) (LAA-8144); Enterprise Rent-A-Car Company of
Los Angeles, LLC (LAA-8142); The Hertz Corporation (LAA-8136); Fox Rent A Car, Inc.
(LAA-8143); and Simply Wheelz, LLC dba Advantage Rent A Car (assignee to Coast
Leasing Corp.'s agreement) (LAA-8145) (collectively referred to as the Agreements)
commencing February 1, 2003 and expiring on January 31, 2008.
•
December 3, 2007 - Board Order No. A0-5090
The Board approved the First Amendment to extend the term of the Agreements to
January 31, 2010 and add additional provisions.
•
December 21, 2009- Board Order No. A0-5153
The Board approved the Second Amendment to extend the term of the Agreements, as
amended, to January 31, 2015 and add additional provisions (the Agreements and the
First Amendments and Second Amendments thereto collectively referred to as
Agreements.
Page 2
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS AT LAX.docx
3. Current Action
Approval of this item will extend the term of ten existing rental car concession agreements at
LAX through January 31, 2018, with two one-year LAWA-exercisable options. The
extension maintains LAWA's business relationship with the above listed companies while
providing sufficient time to develop occupancy and concession agreements with rental car
companies for the proposed ConRAC at LAX which would include planning, programming,
plan of finance, and basic business terms of concession and lease agreements for the
facility.
Material changes proposed to the Agreements under theThird Amendments are as follows:
Provision
Current
Proposed
Term
Expires January 31,2015
Expires January 31, 2018, with two
one-year LAWA-exercisable options
Affiliates
Limits specific brands to operate under
each Agreement
Concessionaires can add affiliates
and fictitious business names under
certain conditions provided that all
"brands" operating under the
Agreement utilize one consolidated
shuttle operation
Compensation
Greater of 10% of gross revenue or
Minimum Annual Guarantee
No change
MAG
Sets Minimum Annual Guarantee as
greater of 90% of the prior year's
concession fees paid to LAWA
Resets MAG as the greater of 1)
90% of 10% gross revenue from
prior year or 2) $730,000
Alternative Fuel
Program
Requires compliance with LAWA's
alternative fuel requirement program
Continues to require compliance with
the alternative fuel requirement
program and adds fees for
noncompliance
Page3
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS AT LAX.docx
Provision
Current
Proposed
Early
Termination
Option
Concessionaire has no early
termination rights
Concessionaire has the option to
terminate the Agreement upon the
occurrence of any of the following:
1. By January 1, 2017 or a mutually
agreed upon date, the Board has not
suspended the requirement for the
concessionaire to collect a customer
facility charge (CFC) from its
customers, and LAWA and
concessionaire have not entered into
an memorandum of agreement
regarding the ConRAC (MOA);
2. By June 30, 2017, LAWA has not
obtained all approvals for the
ConRac project construction to
proceed, and LAWA and the
concessionaire have not entered into
an MOA; or
3. After January 1, 2017 or a
mutually agreed upon date, the
Board reinstates a suspended CFC
collection requirement, and LAWA
and the concessionaire have not
executed an MOA.
Not permitted
Nothing in the amended agreements
prevent LAWA from adding
additional rental car companies as
concessionaires if such companies
are subject to the same terms and
conditions as the existing
concessionaires
Additional
Concessionaires
Assignment of Advantage Agreement
In April2014, Simply Wheelz, LLC dba Advantage Rent A Car assigned Agreement LAA8145, as amended, to Advantage Opco, LLC in connection with Simply Wheelz's bankruptcy
filing. Under this action, the Board affirms the assignment of Agreement LAA-8145, as
amended, to Advantage Opco, LLC.
Conversion and Name Change for Alamo Rental (US) LLC and National Rental (US) LLC
Alamo Rental (US) LLC (f/k/a Alamo Rental (US) Inc.) and National Rental (US) LLC (f/kla
National Rental (US) Inc.) converted from corporations to limited liability corporations.
Under this action, the Board affirms the conversion and name change for those
concessionaires.
Page 4
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS AT LAX. docx
Action Requested
Staff requests the Board approve the Third Amendments to the Agreements, and authorize
the Executive Director to execute the Third Amendments after approval as to form by the
City Attorney and upon approval of the Los Angeles City Council.
Fiscal Impact
Approval of the Third Amendments will ensure LAWA will continue exceeding $70 million in
annual concession revenue and $29 million in annual CFC revenue.
4. Alternatives Considered
•
Take No Action
This would result in expiration of the existing rental car agreements at LAX thus eliminating
on-airport rental car services at LAX resulting in a significant loss of service to the traveling
public and loss of revenue to LAWA.
•
Conduct a Competitive Process
Because the benefits of the proposed ConRAC would best be realized by increasing
participation of rental car companies that serve as LAWA concessionaires, staff determined
it is not in LAWA's interest to commence a process that is designed to result in limiting the
number of concessionaires at this time. Staff will conduct a competitive process to identify
additional rental car companies seeking to serve LAX and that are prepared to agree to the
same terms and conditions in the Agreements.
STANDARD PROVISIONS:
1. The issuance of permits, leases, agreements, gate and space assignments, and renewals,
amendments or extensions thereof, or other entitlements granting use of existing airport
facilities or its operations is exempt from the requirements of the California Environmental
Quality Act (CEQA) pursuant to Article Ill, Class 1 (18) (c) of the Los Angeles City CEQA
Guidelines.
2. This agreement will be approved as to form by the City Attorney.
3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant
to the provisions of Los Angeles City Charter Section 606.
4. Concessionaires are required by contract to comply with the provisions of the Living
Wage/Service Contractor Worker Retention Ordinances.
5. Procurement Services Division has reviewed this action (File #6985) and established a 3.5%
Airport Concessions Disadvantaged Business Enterprise (ACDBE) goal for these contracts.
Concessionaires have committed to 3.5% participation. The FAA had not promulgated the
ACDBE program at the time of the original contract awards; therefore no ACDBE goal was
established in the original contracts.
Page 5
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS AT LAX.docx
6. Concessionaires are required by contract to comply with the provisions of the Affirmative
Action Program.
7. Concessionaires have each been assigned a Business Tax Registration Certificate numbeL
8. Concessionaires are required by contract to comply with the provisions of the Child Support
Obligations Ordinance.
9. Concessionaires have approved insurance documents, in the terms and amounts required,
on file with the Los Angeles World Airports.
10. This action is not subject to the provisions of Charter Section 1022 (Use of Independent
Contractor).
11. Concessionaires must submit the Contractor Responsibility Program Pledge of Compliance
and comply with the provisions of the Contractor Responsibility Program prior to execution
of the Amendment.
12. Concessionaires must be determined by Public Works, Office of Contract Compliance to be
in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the
Amendment.
13. Concessionaires will be required to comply with the provisions of the First Source Hiring
Program for all non-trade Airport jobs.
14. Concessionaires must submit the Bidder Contributions CEC Form 55 and will comply with its
provisions prior to execution of the Amendment.
Page 6
THIRD AMENDMENT TO RENTAL CAR
CONCESSIONS AT LAX.docx