Los Angeles World Airports

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1 . i Los Angeles World Airports TM RESOLUTION NO i LAX Van Nuys City of Loa Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery J. Daar Gabriel L. Eshaghian Beatrice C. Hsu Thomas S. Sayles Dr. Cynthia A. Telles Deborah Flint Chief Executive Officer BE IT RESOLVED that the Board of Airport Commissioners approved the First Amendment to Airline Terminal Space Lease & License Agreement LAA-8528 with Hawaiian Airlines, Inc. to update certain lease terms to reflect the airline's relocation from Terminal 2 to Terminal 5 at Los Angeles International Airport, as referenced in the Board-adopted staff report attached hereto and made part hereof; and BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Chief Executive Officer or her designee to execute said First Amendment upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council; 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 III 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 is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, May 4, v Sandra J. Miller - Secretary BOARD OF AIRPORT COMMISSIONERS ov.'.'mvr-!<\ if] 1 World Way Los Angeles California Mai! RO. Box Los Angeles California Telephone Internet

2 Los Angeles World Airports REPORT TO THE OF AIRPORT COMMISSIONERS Meeting Date: Approved by: tfove Juries -miningproperty and Concession Services 5/4/2017 AyJ Xq/oIxa Reviewed by: Debbie Bowers - Chief Commercial Officer ; k CitjAAtti W CAP Review: Reviewed for Finance Date 3/15/2017 CEQA 3/15/2017 Completed Pending N/A Approval Status HY N NA I8Y N Procurement 4/26/2017 0Y DN Cand / I l Deborah Flint - CfrieLExeputive Officer Guest Experience 3/21/2017 HY ON By RW AE MT BY SUBJECT: Approval of a First Amendment to Airline Terminal Space Lease and License Agreement (LAA-8528) with Hawaiian Airlines, Inc. at Los Angeles International Airport Approve the First Amendment to the Airline Terminal Space Lease and License Agreement with Hawaiian Airlines, Inc. to facilitate relocation from Terminal 2 to Terminal 5 at Los Angeles International Airport that will generate a minimum of $1,010,000 in revenue in the first year and $1,140,000 revenue over the remaining term. RECOMMENDA TIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. APPROVE the proposed First Amendment to the Airline Terminal Space Lease and License Agreement (LAA-8528) with Hawaiian Airlines, Inc.. AUTHORIZE the Chief Executive Officer or her designee to execute the proposed First Amendment to the Airline Terminal Space Lease and License Agreement with Hawaiian Airlines, Inc., subject to approval as to form by the City Attorney and upon approval by the Los Angeles City Council. Page 1

3 DISCUSSION: 1. Purpose Enable Hawaiian Airlines, Inc. (Hawaiian) to relocate from Terminal 2 to Terminal Prior Related Actions April 19, Resolution No The Board of Airport Commissioners (Board) approved a Settlement Agreement with LAX Two Corporation (LAX Two) which among other things, terminated the forty year ground lease (LAA-5012) pursuant to which LAX Two constructed, occupied and managed Terminal 2, settled certain matters related to LAX Two occupancy of space in Terminal 2, and provided for Hawaiian to enter into a direct Airline Terminal Space Lease and License Agreement for certain space in Terminal 2. April 19, Board Order No. AO-5158 The Board approved an Airline Terminal Space Lease and License Agreement (Lease) with Hawaiian (LAA-8528), as stipulated in the Settlement Agreement pursuant to Resolution June 20, Board Resolution No The Board approved a Terminal Facilities Lease and License Agreement (LAA-8939) with Delta Air Lines, Inc. (Delta) to enable Delta to relocate to Terminals 2 and 3 (Delta Lease) subject to certain preconditions, including relocation of certain airlines, one of which is Hawaiian. 3. Current Action The Delta Lease requires the relocation of multiple airlines in accordance with the approved Airline Relocation Plan, which obligates Delta to facilitate and enable the relocation of affected airlines from Terminals 2 and 3 to Terminals 5, 6, and TBIT. The majority of the impacted airlines operate pursuant to the Los Angeles International Airport Passenger Terminal Tariff, which provides Los Angeles World Airports (LAWA) the right to relocate tenants. Hawaiian occupies space in Terminal 2 pursuant to the Lease, which must be amended to facilitate Hawaiian s relocation to Terminal 5. LAWA staff and Hawaiian determined that the existing Lease should be amended instead of replaced with a new lease because there are no property rights that need to be extended beyond the existing term of the Lease. The proposed First Amendment to the Lease will update the leased premises to reflect the new space that Hawaiian will occupy upon relocation to Terminal 5, amend the rent section to reflect LAWA s current rate setting methodology, provide Hawaiian the option to relinquish its preferential flights and become a common use carrier, and make certain other required administrative adjustments. All other terms and conditions remain unchanged. Page 2

4 The following table summarizes the First Amendment: FIRST AMENDMENT SUMMARY Terms: Original Lease: First Amendment: Commencement Date July 1, 2010 Upon Approval and Execution Relocation Date N/A Upon Hawaiian s relocation to Terminal 5 Expiration Date June 30, 2018 Same Demised Premises: Terminal 2 Terminal 5 Rent: Space Rental Rate CY17: 7,288 SF OSF $ PSFPY OSF 5,891 SF $ PSFPY Annual Space Rent (est.): $1,249,163 $1,010,000 Action Requested Staff requests the Board approve the First Amendment and authorize the Chief Executive Officer to execute the First Amendment after approval as to form by the City Attorney and approval by the Los Angeles City Council. Fiscal Impact Approval of the First Amendment will reduce the annual space rental revenue to LAWA from approximately $1,249,163 to $1,010,000, not including passenger and flight activity charges and common use fees. The reduction of revenue reflects the reduced area that Hawaiian will lease exclusively. This does not include the revenue that LAWA will receive for Hawaiian s use of common use areas, including gates and baggage claim. Overall, LAWA does not expect any reduction in total revenue received as other airlines fill in the spaces in Terminals 5 and 6 vacated by Delta, and Delta assumes the areas vacated by airlines in Terminals 2 and Alternatives Considered Take No Action This action is not recommended. Approval of the First Amendment will facilitate the relocation of Hawaiian in accordance with the approved Airline Relocation Plan. Page 3

5 APPROPRIATIONS: Approval of this action does not require an appropriation. 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 III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 2. This contract is subject to approval 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 Hawaiian is required by contract to comply with the provisions of the Living Wage/Service Contractor Worker Retention Ordinances. This action is statutorily exempt from the provisions of the Minority/Women Business Enterprise Program pursuant to Executive Directive Hawaiian is required by contract to comply with the provisions of the Affirmative Action Program. Hawaiian has been assigned Business Tax Registration Certificate No Hawaiian is required by contract to comply with the provisions of the Child Support Obligations Ordinance. Hawaiian has approved insurance documents, in the terms and amounts required, on file with Los Angeles World Airports. 10. This action is not subject to the provisions of Charter Section 1022 (Use of Independent Contractor). 11. Hawaiian has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. Hawaiian must be determined by the Public Works - Office of Contract Compliance to be in compliance with the provisions of the Equal Benefits Ordinance prior to execution of the lease amendment. 13. Hawaiian will be required to comply with the provisions of the First Source Hiring Program for all non-trade LAX jobs. 14. This action is not subject to the provisions of Bidder Contributions CEC Form 55. Page 4

Los Angeles World Airports

: Los Angeles World Airports TM RESOLUTION NO. 26187 LAX Van Nuys City of Los Angeles Eric Garcetti Mayor Board of Airport Commissioners Sean 0. Burton President Valeria C. Velasco Vice President Jeffery