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Airport asks supervisors to approve lease amendments for tenants displaced by Boarding Area E demolition
Summary
San Francisco International Airport seeks Board approval to amend four concession leases affected by Boarding Area E demolition, including buyouts of remaining tenant investments (~$905,000 total), replacement premises in the new boarding area and waiver of minimum guarantees until reopening. The budget analyst recommended approval; the committee forwarded the resolution.
San Francisco International Airport staff asked the Budget and Finance Subcommittee to approve a second amendment to four domestic-terminal concession leases affected by demolition of Boarding Area E.
Kathy Widener, representing the Airport, told the committee the project expanded beyond a straight seismic upgrade into a redesign that requires demolition, relocation and reconstruction of tenant premises. That redesign pushed reopening from summer 2012 into early 2013; staff now project substantial tenant work that justifies waiving minimum annual guarantees and reimbursing unamortized tenant investments.
"The second amendment will continue the existing changes previously approved by the board, and seeks authorization to buy out the unamortized investment in building costs from the tenants, totaling approximately $906,000," Widener said. The amendment also includes replacement premises of similar size in the new boarding area and replacement of remaining lease terms with a new 10-year term that would commence when the boarding area reopens.
The budget analyst confirmed the airport’s estimate of $905,009.53 in one-time reimbursements and reported that projected percentage rent will exceed the revised minimum guarantees once the new boarding area is in operation. Airport revenue staff estimated an estimated 8.9% sales increase for affected tenants in the redesigned space, producing roughly 10% more rent for the airport.
The committee heard brief public comment and moved the resolution forward with the budget analyst’s recommendation.
Next steps: item will appear on the Board agenda as forwarded by the committee.
