Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Airport Rental Car Leases topic
No spam. Unsubscribe anytime.
Committee recommends four SFO rental-car leases and reports closed-session settlement recommendations
Summary
The committee recommended four on-airport rental-car leases (Avis/Budget; Enterprise/Alamo/National; Hertz; SIXT) to the full Board, reviewed minimum annual guarantees and MAG vs. percentage rent, and reported in open session that two settlement ordinances considered in closed session were recommended unanimously; Chair Marr raised concerns about potential wage impacts on over 500 rental-car workers that motivated closed-session sequencing.
On May 7 the Government Audit and Oversight Committee considered four related airport items together: three lease resolutions and one resolution approving a fourth rental-car operations lease at San Francisco International Airport, and two ordinances authorizing settlements that were considered in closed session.
The leases would be five-year initial terms with two two-year extension options and include minimum annual guarantees (MAGs) for the first year. Airport staff summarized the proposed year-one MAGs as: Avis/Budget — $11,076,378; Enterprise (Alamo/National/Enterprise brands) — $16,087,548; The Hertz Corporation — $16,501,462; SIXT — $3,501,004. Airport staff said operators would pay the greater of the MAG or percentage rent (10% of gross revenues) and noted standard lease language allows MAG suspension if passenger volumes fall below an 80% threshold; given COVID-19, percentage rent is expected until traffic recovers.
Clerk John Carroll and Severn Campbell of the Budget and Legislative Analyst Office described the leases— background: the airport ran a 2018 competitive request-for-bids process, selected brands and recommended leases, and the Airport Commission previously approved the leases; litigation about wage-rate disputes delayed Board consideration until settlements were reached. Airport staff estimated roughly $343 million in initial rent over five years before pandemic adjustments but and cautioned that actual revenues will be lower while travel demand remains suppressed.
Chair Marr explained he had called settlement items (9 and 10) to closed session first because lease terms and the settlements are interdependent. Marr said he was concerned the leases and settlements could change contract terms affecting more than 500 rental-car workers represented by Teamsters locals and that a change from a prevailing wage (~$24/hour) to the airport—s minimum wage (~$18/hour) could represent a loss of over $13,000 in annual income for full-time workers. The committee convened in closed session and later reported, upon return to open session, that it had unanimously recommended both settlement ordinances to the full Board. The committee then moved to recommend the four leases to the full Board with positive recommendations and recorded unanimous ayes.
The committee record shows the motions passed; the committee asked staff to proceed with forwarding the settlements and lease resolutions to the Board for final action and any necessary public-notice or ballot steps.
