Committee forwards airport concession amendments and new Terminal 2 retail leases to full Board

The Budget and Finance Committee forwarded to the full Board an airport-led package that included Amendment No. 8 to the duty-free concession (DFS) lease and four Terminal 2 retail leases (bookstore, chocolate specialty shop, electronics store and spa).

Cathy Weidner (San Francisco Airport) said Amendment No. 8 would exercise two 21-year options, maintain the base-year CPI for calendar 2011 and include an estimated $2,400,000 in tenant improvements for duty-free stores across the international terminal; airport revenue staff said the current minimum annual guarantee (MAG) from DFS is $26,400,000. "The DFS lease encompasses 43 stores covering 63,67,000 square feet of terminal space," Weidner said, and airport staff described the extension as financially beneficial to the airport and city.

Budget analyst Mr. Rose recommended clarifying the amendment language to require that DFS expend a minimum of $2,400,000 for facility renovations rather than leaving the figure ambiguous. Rose also noted that, under the requested option period, the DFS MAG would total $184,800,000 over seven years.

Kathy Widener (San Francisco Airport) presented four Terminal 2 retail leases selected through an RFP process covering a total of 7,303 square feet and carrying estimated minimum rent payable to the airport of approximately $1,000,000 a year in new retail rent; the total tenant-improvement obligation across the Terminal 2 tenants was shown in the analysts' report as $2,556,050 and estimated first-year receipts at roughly $1,018,634.

A single member of the public offered a brief sung comment urging better airport concessions; no substantive public testimony was received. The committee moved the airport items forward with recommendation to the full Board and asked staff to reconcile minimum tenant-improvement language for the DFS amendment with the other leases.