Retail Concession Development Leases Request for Proposals

PHASE IRetail Concession Development LeasesRequest for Proposals

Informational ConferenceMarch 30, 2011

10:00 a.m.

San Francisco International Airport

Introduction

John Reeb

Agenda

• Request for Proposal Process• Request for Proposal Document

Review• Key Lease Elements• Submittal Requirements• Overview of Ordinances• Questions & Answers

Request for Proposal Process

John Reeb

San Francisco International Airport (SFO) is owned and operated by the City & County of San Francisco and is under the jurisdiction of the Airport Commission.

The Airport Commission consists of five members who are appointed by the Mayor. The Airport is operated as a separate enterprise department of the City.

Airport Overview

Why the Competitive Process?

The San Francisco Airport Commission is required by the City and County of San Francisco, under the San Francisco Administrative Code, to:

– Conduct a competitive process and;– Award its contracts to the best responsible

proposer;

Wherein a concessionaire is given an exclusive right to occupy space at the Airport.

Informational Conference

The purpose of the conference is to:

• Review and explain the selection process and agreement specifications.

• Solicit participant feedback and recommended changes to Lease.

Interested parties are encouraged to give staff their feedback and provide recommendations in wiriting before the comment due deadline date since no changes can be made after that.

Determining the Successful ProposerAll proposals are evaluated and ranked by an evaluation

panel using the criteria published in the RFP. The successful proposer is determined by highest ranking after panel evaluation, based upon the evaluation criteria.

Award of Lease/Agreement

• The Airport Commission awards the lease.

• Proposal deposits are returned to the unsuccessful participants after award.

• If necessary, the lease is then approved by the Board of Supervisors and ratified by the Mayor.

• The successful proposer becomes a SFO tenant.

Schedule of RFP Process

Informational Meeting Wednesday, March 30, 2011

Comment Deadline: Friday, April 8, 2011No later than 5:00 p.m. (PST)

Airport Commission to Authorize Tuesday, May 3, 2011Receiving Proposals:

Addendum to RFP issued: Week of May 3, 2011

RFP Submittal Deadline: Wednesday, June 15, 2011(No later than 2:00 p.m. (PST)

Successful Proposers Identified: Week of July 4, 2011

Commission to Award Lease: July 19, 2011

*Dates may be subject to change

Request for Proposal Document Review

John Reeb

Phase I Retail Development

• Package 1: Terminal 3 B/A F News & Specialty (3 locations)

• Package 2: International Terminal News; Terminal 3 B/A E News & Specialty (4 locations)

• Package 3: International Terminal Books, Coffee & News; Terminal 3 News (3 locations)

• Package 4: Terminal 3 B/A F News

• Package 5: Terminal 3 B/A F Athletic Apparel

Ownership or Management

• Proposer must have a minimum of three (3) years within the past five (5) years (“qualifying years”) in the ownership or management of proposed concept

Gross Sales

Said business must have achieved the following gross sales per qualifying years:

Minimum Qualifications

Lease Package Minimum Gross Sales

1, 2 $1,000,000 from its retail newsstand operation, and $500,000 from its chosen specialty retail operation;

3 $1,000,000 from its retail newsstand operation, and $1,000,000 from its bookstore/café operation;

4 $1,000,000 from its retail newsstand operation;5 $500,000 from its specialty retail business.

Financial Ability• Must demonstrate financial capacity and experience to

operate the Concession Opportunity.• Airport Commission may review Proposer’s financial

performance in other projects. • The Airport Commission reserves the right to request a credit

report and additional financial information from each Proposer.

Statement of Ability to Comply• Proposer will be required to enter into a Lease that will set

forth the standard terms and conditions of the Airport Commission, including those required by the applicable local, state, and federal laws.

Minimum Qualifications Cont’d

Newly Formed Entity(ies)• Each of the principals who own an aggregate of 51% or

more must satisfy the Minimum Qualification Requirements.

• Entities proposing as joint ventures must include a copy of an executed joint venture or partnership agreement.

• Newly formed entities cannot meet the minimum qualifications through subleasing a portion of the operation.

• Entities proposing as joint ventures must include a copy of an executed joint venture or partnership agreement.

Minimum Qualifications Cont’d

Lease Specific Business Terms

Tomasi Toki

Lease Specific Key Business Terms

Package 1 – T3 News & Specialty Store Lease

Minimum Acceptable Proposal Amount

$372,000

Proposal Deposit Amount

$186,000

Term 7 Years

Rent The annual rent shall be the greater of the MAG or ;•12% of Gross Revenues achieved up to and including $500,000; plus•14% of Gross Revenues achieved from $500,000.01 up to and including $1,000,000; plus•16% of Gross Revenues achieved over $1,000,000.

Permitted Uses Two newsstands and one specialty store

Minimum Investment ($350 per sq. ft.)

$1,258,950

Premises

603 sq. ft.Newsstand

(undeveloped)

Package 1 – T3 News & Specialty Store Lease


(CY 2010 - $584,655)

1,466 sq. ft.Specialty Store(undeveloped)

Sunglass Hut(CY 2010 - $922K)

Mango(CY 2010 - $1.13M)

SFO News Connection(CY 2010 - $3.9M)


Package 2 – T3 and IT News & Specialty Store Lease


$420,000


$210,000

Term 7 Years


Permitted Uses Three newsstands and one specialty store


$1,024,800

Premises


620 sq. ft.Specialty Store(undeveloped)

1,240 sq. ft.Newsstand

(undeveloped)

KTVU 2 News(CY 2010 - $2.3M)

Premises



(CY2010 - $716K)


(CY 2010 - $230K)


Package 3 – T3 and IT News & Bookstore/Café Lease


$372,000


$186,000

Term 7 Years


Permitted Uses Two newsstands and one bookstore/ café


$1,630,300

Premises



(CY 2010 - $1.1M)

Premises


1,836 sq. ft.Bookstore/Café

(CY 2010 - $820K)


(CY 2010 - $1.4M)


Package 4 – T3, Boarding Area “F” Newsstand Lease


$250,000


$125,000

Term 7 Years


Permitted Uses On newsstand


$371,700

Premises

Package 4 – T3, Boarding Area “F” Newsstand Lease


(CY 2010 - $1,037,005)

KTVU 2 News(CY 2010 - $2.2M)


Package 5 – T3, Boarding Area “F” Athletic Apparel & Accessories LeaseMinimum Acceptable Proposal Amount

$60,000


$30,000

Term 7 Years


Permitted Uses Athletic apparel and accessories.


$373,800

Premises

Package 5 – T3, Boarding Area “F” Athletic Apparel & Accessories Lease

1,068 sq. ft.Athletic Apparel

(CY 2010 - $597K)

RFP Submittal Requirements

Tomasi Toki


• Submittal 1 Proposal Checklist

• Submittal 2 Minimum Qualification: Identity and Experience Questionnaire

• Submittal 3 Minimum Qualification: Statement of Ability to Comply

• Submittal 4 Evaluation Criteria

• Submittal 5 Minimum Annual Guarantee Offer

• Submittal 6 Proposal Bond Formats

• Submittal 7 Financial Pro Forma Format

By submitting its RFP Submittal, Proposer agrees that if the Proposal is accepted:

– Proposer will execute a lease for the Concession Opportunity on or before the deadline specified by the Airport Commission;

– Proposer accepts all terms and conditions of the RFP including the Lease. The Proposal will remain subject to the Airport Commission’s acceptance for (120) calendar days after the RFP Submittal deadline, or a later date as approved by both parties.

– Any RFP Submittal received after the RFP Submittal Deadline will be returned to the Proposer and deemed Non-Responsive.


Proposal Bond

Proposers must submit a proposal bond in one of the following formats:

Must be original and valid for minimum of 6 months. Copies of proposal bond will not be accepted.

References

Proposers must provide at least three reference letters.


$200,000 and Under $200,001 and Over•Surety Bond•Irrevocable Letters of Credit•Certificates of Deposit•Certified Checks•Cashiers Checks•Money Orders

•Surety Bond•Irrevocable Letters of Credit

RFP Evaluation and Selection

Criteria PointsProposed Concept 30Design Intent and Capital Investment 20Business Plan including 5 year proforma 20Customer Service and Quality Control 20Minimum Annual Guarantee Offer 10TOTAL 100

Submit Proposals to:Address:

Delivered to:Deputy Airport Director, Business and Financec/o Revenue Development and ManagementSan Francisco International Airport575 North McDonnell Road, Suite 3-329San Francisco, CA 94128

Mailed to:Deputy Airport Director, Business and Financec/o Revenue Development and ManagementSan Francisco International AirportP.O. Box 8097San Francisco, CA 94128

Overview of City OrdinancesJohn Reeb

City Ordinances

Airport tenants must comply with the following:

– First Source Hiring Ordinance– Nondiscrimination in Employment Program– Nondiscrimination in Contracts and Benefits

(EBO)– Labor Peace/Card Check Rule– Minimum Compensation Ordinance – Health Care Accountability Ordinance– Commuter Benefits Ordinance

First Source Hiring Ordinance

• Pursuant to Chapter 83 of the San Francisco Administrative Code, successful Proposer must agree to participate in the City's First Source Hiring Program

• This program was established by the Employment and Community Partnership Office for maintaining a pool of economically disadvantaged job applicants through its employment center and hiring fair program.

• Further information on this Program can be found onPage 23 of RFP and Section 19.19 of the Lease.

• Please contact Flynn Bradley, Manager of the Employment and Community Partnership office at (650) 821-5244.

• Pursuant to the Chapter 12B of the San Francisco Administrative Code, successful Proposer must agree to abide by a nondiscrimination in employment program, which conforms to the requirements of the San Francisco Human Rights Commission.

• This program is to ensure equity in the employment of all racial and gender groups.

• Refer to Page 23 of the RFP, for further information.

Additional information is available at http://www.sf-hrc.org

Nondiscrimination in Employment

Nondiscrimination in Contracts and Benefits• Chapter 12B of the Administrative Code (Equal Benefits

Ordinance)• Prohibits CCSF from entering into contracts or leases with

any entity that discriminates in the provision of benefits between employees with domestic partners and employees with spouses, and/or between the domestic partners and spouses of employees.

• Some covered benefits: – medical insurance– retirement plans, leaves of absence– use of company facilities – Discounts

Additional information is available athttp://www.sf-hrc.org

Labor Peace/Card Check Rule

• Airport Commission Resolution No. 00-0049

• Employees in the workplace ask management to enter into a "card check" agreement, in which management agrees to voluntarily recognize the union if a majority of employees sign authorization forms or "cards.“

• Additional info on Page 25 of RFP and Section 19.20 of the Lease.

Minimum Compensation Ordinance

• Chapter 12P of the Administrative Code• Requires tenants and their contractors at San Francisco

International Airport to provide to their covered employees:

• Effective January 1, 2011, MCO hourly wage is $11.69.

• 12 paid days off per year (or cash equivalent)• 10 days off without pay per year.

Additional information on Page 24 of RFP and Section 19.21 of the Lease.

Health Care Accountability Ordinance

• Chapter 12Q of the Administrative Code• Requires tenants to offer health plan benefits to their

covered employees or make payments to the City (DPH), or make payments directly to employees.

• Refer to Page 24 of the RFP and Section 19.23 of the Lease.

Additional information is available from the Office of Labor Standards Enforcement at www.sfgsa.org

Commuter Benefits Program

• SFO Rules & Regulations - Commuter Benefits Program (Section 10.3 - E.2.) Effective January 18, 2010

• Requires tenants with 20 or more employees to offer commuter benefits to their employees working at least 10 hours a week.

• Benefits can be one of three options; a pre-tax payroll deduction, a subsidy or free shuttle service.

Additional information is available at https://sfoconnect.com/public/sfo-rules-and-regulations

RentThe Greater of MAG or Tiered Percentage Rent

DepositOne half of the current MAG

Minimum Investment Amount$350 per square foot

Late Opening Charge$500 Per Day

Promotional Charge$1 per square foot (annually)

Common Key Business Terms

Shared Tenant Services• Tenant can choose to purchase data and telephone

services from ITT, which include:– Local, long distance telephone service– Internet– Network Services– Technical support

Other Charges• Utilities, Taxes• Employee Parking Permits - (currently $225 per Quarter)• Airport I.D. - (currently $75 per employee + $70 for

fingerprinting)

Common Key Business Terms

Insurance• General Liability• Automobile• Worker’s Compensation• Business Interruption• Business Property

Lease Deposit• Must be maintained and

updated throughout term of lease.

• Subject to annual increase based on CPI index

Tenant Improvements

Design Review Committee (“DRC”)– Reviews and approves the aesthetic design

of ALL tenant construction, renovation, and signage projects.

Concession Design Guidelines– www.flysfo.com/downloads/T2/T2Concession

Guidelines

Tenant Improvements

Building Inspection and Code Enforcement (“BICE”)– All code requirements are documented in

the Tenant Improvement Guide (“TIG”), which is available in a PDF.

– Approves construction drawings, issues permits, enforces codes.

Tenant is responsible for ALL costs associated with ALL improvements and infrastructure needs

Questions & [email protected]

www.flysfo.com

Retail Concession Development Leases Request for Proposals

Documents