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ji 0*.j1 otb- 1 I Los Angeles World Airports REPORT TO THE BOAR OF A - PORT COMMISSIONERS Meeting Date:!ten h ber Approved Ramon OliVares, Dir- or, Pro.

.. Approval Status By Finance 9/22/2017 IllY El N NA RW AVM, - -_ tray etrah 4Pef Executive Officer CEQA 9/25/2017 Procurement : 9/22/2017 Guest Experience oib.

Approve Amended and Restated Lease LAA-4747A with Swissport Cargo Services, L.P.

1 ji 0*.j1 otb- 1 I Los Angeles World Airports REPORT TO THE BOAR OF A - PORT COMMISSIONERS Meeting Date:!ten h ber Approved Ramon OliVares, Dir- or, Pro.erty Services 10/5/2017 Reviewed by: CAO Review: Completed A.1 / A A D-IpTie Bowers, Chi f Commercial Officer Pending, N/A..... i Reviewed for Date... Approval Status By Finance 9/22/2017 IllY El N NA RW AVM, - -_ tray etrah 4Pef Executive Officer CEQA 9/25/2017 Procurement : 9/22/2017 Guest Experience oib.lit 7 EY N JH Y EN CI Cond CRW R1Y N 13 y SUBJECT: Approval of Amended and Restated Lease LAA-4747A with Swissport Cargo Services, L.P. Approve Amended and Restated Lease LAA-4747A with Swissport Cargo Services, L.P. at Los Angeles International Airport to extend the term by one year and that will generate approximately $2,445,083 in revenue during the extended term. 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 III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines. 3. APPROVE Amended and Restated Lease LAA-4747A with Swissport Cargo Services, L.P., and associated rental rates. 4. AUTHORIZE the Chief Executive Officer to execute Amended and Restated Lease LAA- 4747A upon approval as to form by the City Attorney and approval by the City Council. Page 1 Swissport Board Report Sept 21. RO

DISCUSSION: 1. Purpose To allow Swissport Cargo Services, L. P. (Swissport) to continue its airline cargo handling services at Los Angeles International Airport (LAX). 2.

(Gateway) for property located at 11001 Aviation Boulevard known as Parcel 1. May 6, 1987 - Board Order No.

2 DISCUSSION: 1. Purpose To allow Swissport Cargo Services, L. P. (Swissport) to continue its airline cargo handling services at Los Angeles International Airport (LAX). 2. Prior Related Actions October 10, Board Order No (LAA-4747) The Board of Airport Commissioners (Board) approved a 26-year Lease with Gateway Freight Services, Inc. (Gateway) for property located at Aviation Boulevard known as Parcel 1. May 6, Board Order No (LAA-4747A) The Board approved the First Amendment to Gateway's Lease to add Parcel 2 and to extend the term to November 4, Current Action Since 1984, Swissport, which changed its name from Gateway in 2004, has occupied two cargo facilities at the Imperial Cargo Complex at LAX under one Lease. Swissport warehouses and handles cargo for Alaska Airlines Inc., Cargolux Airlines International S.A., WestJet Airlines Ltd., Aeroflot Russian Airlines, Air Tahiti Nui, Ethiopian Airlines, Hainan Airlines Co., Ltd., Hawaiian Airlines, Inc., Turk Hava Yollari A 0 (Turkish Airlines), and WOW Air. Swissport is one of eight cargo handlers at LAX, and processed approximately 103,470 tons of cargo through the two facilities in Its facilities are currently operating at maximum capacity, based on current industry standards. The proposed Amended and Restated Lease will extend the term by one year. This will allow staff time to conduct a competitive process for the two cargo facilities, and will also help minimize any adverse impact on Swissport's airline customers in the event Swissport is not the successor lessee. Staff expects that completion of the competitive process will occur prior to expiration of the extended term. Pursuant to terms of the Lease, all improvements on Parcel 2 will revert to Los Angeles World Airports (LAWA) at expiration of the existing term, November 4, As such, Swissport will pay rent for the improvements at that time, in addition to land rent. Proposed rental rates in the table below are comparable with rates for similar facilities at LAX. The proposed Amended and Restated Lease provides that Swissport remain responsible for all required maintenance and utilities. Page 2

The table below provides a summary of other key elements of the proposed Amended and Restated Lease: LEASE SUMMARY Term Extension Commencement/Effective Date Current None November 5, 1984 Proposed

3176 acres cargo land; 50,819 square feet of warehouse/office space. Building (warehouse/office) - 98,619 square feet Parcel 2-1.5873 acres of cargo land.

3 The table below provides a summary of other key elements of the proposed Amended and Restated Lease: LEASE SUMMARY Term Extension Commencement/Effective Date Current None November 5, 1984 Proposed Additional one (1) year No Change Expiration Cancellation Provision Demised Premises November 4, 2017 November 4, 2018 None 30-day (LAWA option) Parcel acres of Land (cargo) acres cargo land; 50,819 square feet of warehouse/office space. Building (warehouse/office) - 98,619 square feet Parcel acres of cargo land. Auto Pavaing - 45,178 square feet Aircraft Paving - 19,849 square feet Building Rental Rate* Land Rate* Aircraft Paving Rate* Auto Paving Rate* Annual Rent Annual Adjustment $19.00/SF/YR $19.50 $3.38/SF/YR No Change $ 0.78/SF/YR No Change $ 0.40/SF/YR No Change $1,454, $2,445,083 Based on the Consumer Price Index with a 2% minimum increase. Same *Building rate is based on an appraisal and is comparable to other similar on-airport facilities at LAX; standard Board-approved land and paving rates apply. Action Requested Staff requests the Board approve the Amended and Restated Lease and associated rental rates, and authorize the Chief Executive Officer to execute after approval as to form by the City Attorney and approval by the Los Angeles City Council. Page 3

Fiscal Impact Approval of this Amended and Restated Lease will generate approximately $2,445,083 in revenue, exclusive of annual adjustments, over the extended term. 4.

The proposed Lease will enable Swissport to continue servicing its airline customers and will also minimize any adverse impact on those customers, in the event Swissport is not the successor lessee.

4 Fiscal Impact Approval of this Amended and Restated Lease will generate approximately $2,445,083 in revenue, exclusive of annual adjustments, over the extended term. 4. Alternatives Considered Take No Action Taking no action is not recommended. The proposed Lease will enable Swissport to continue servicing its airline customers and will also minimize any adverse impact on those customers, in the event Swissport is not the successor lessee. APPROPRIATIONS: No appropriations are requested for this item. 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 item 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 This action is not subject to the provisions of the Living Wage/Service Contractor Worker Retention Ordinances. 5. The Small Business Enterprise Program does not apply to leases. 6. Swissport Cargo Services, L.P. will comply with the provisions of the Affirmative Action Program. 7. Swissport Cargo Services, L.P. has been assigned Business Tax Registration Certificate number Swissport Cargo Services, L.P. will comply with the provisions of the Child Support Obligations Ordinance. 9. Swissport Cargo Services, L.P. has 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 City Charter Section 1022 (use of Independent Contractors). Page 4

5 11. Swissport Cargo Services, L.P. has submitted the Contractor Responsibility Program Pledge of Compliance and will comply with the provisions of the Contractor Responsibility Program. 12. Swissport Cargo Services, L.P. has been determined by Public Works, Office of Contract Compliance to be in compliance with the provisions of the Equal Benefits Ordinance. 13. Swissport Cargo Services, L.P. will be required to comply with the provisions of the First Source Hiring Program for all non-trade Airport jobs. 14. Swissport Cargo Services, L.P. has submitted the Bidder Contributions CEC Form 55 and will comply with its provisions. Page 5

, LAX Cargo Warehouse 54,836 $19.86 LAA-8534A Polar Air Cargo Inc. 5761 W. Imperial Hwy., LAX Cargo Warehouse 58,799 $19.

6 Rental Rate Comparison Table Tenant Name & Building Rental Rate Property Address Improvement Type Lease Number Area/SF /Building (PSFPY) Lufthansa -Cargo 5721 W. Imperial Hwy., LAX Cargo Warehouse 83,500 $18.33 LAA-8899 China Airlines Ltd - Cargo Aviation Blvd., LAX Cargo Warehouse 54,836 $19.86 LAA-8534A Polar Air Cargo Inc W. Imperial Hwy., LAX Cargo Warehouse 58,799 $19.51 LAA-8942 Air France - Cargo 5721 W. Imperial Hwy., LAX Cargo Warehouse 64,620 $19.38 LAA-8621 Delta Airlines - Cargo Aviation Blvd., LAX Cargo Warehouse 90,900 $19.50 LAA-8833 Page 6

7 WAMartch'ester,Ay ot5tre-sten Parcel 1 Irn'rer i al:ill Wrja to, =IItalt ef-, 2013 Goog le Data CSUMB SFML, CA OPC Sit ap Location Map Page 7

` /1- -O " T BOARD COMMISSIONERS REPORT. /) /n/1 Reviewed for Date Approval Status By ity Atto TO THE. r a. .-.rila

` /1- -O T BOARD COMMISSIONERS REPORT. /) /n/1 Reviewed for Date Approval Status By ity Atto TO THE. r a. .-.rila .-.rila 1 NM 1 MT BOARD! / /F. / ' :!1 ' Los Angeles REPORT A -O " T World Airports TO THE Approved b, Ra on Oliva -s, Dir ce-, Proper Services ` /1- _Ai. Reviewed by: D -.bie Bowers, Dep ' y Executive