Agenda Item AGENDA STAFF REPORT ASR Control 22-000683
MEETING DATE:	09/13/22
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	5
SUBMITTING Agency/Department:	John Wayne Airport (Approved)
Department contact person(s):	Charlene Reynolds (949) 252-5183
	Evanna Barbic (949) 252-5232

Subject: Approve Amendment Three to Concession Lease with Bambuza OC Ventures, LLC

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

4/5 Vote

Budgeted: Yes

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

No

# of Positions:

Sole Source: No

Current Fiscal Year Revenue: See Financial Impact Section

Funding Source: Fund 280: 100%

County Audit in last 3 years: No

Prior Board Action: 1/11/2022 #18, 12/10/2019 #21, 8/27/2019 #20, 3/26/2019 #29

RECOMMENDED ACTION(S):

Approve and execute Amendment Number Three to the Specialty Concession Lease with Bambuza OC Ventures, LLC dba the Coffee Bean & Tea Leaf, to modify the Leased Premises locations and permitted use, modify the Minimum Annual Guarantee for coffee locations and authorize Percentage Rent for Sambazon Acai Bowl Kiosk in Terminal B.

SUMMARY:

Approval of the lease amendment will allow Bambuza OC Ventures, LLC dba the Coffee Bean & Tea Leaf to operate a Sambazon Acai Bowl concession in Terminal B on Percentage Rent. In addition, this Amendment will remove two of the four previously awarded coffee locations on the non-secure side of John Wayne Airport and reassign one of the remaining two coffee locations in Terminal C.

BACKGROUND INFORMATION:

On March 26, 2019, the Board of Supervisors (Board) authorized the release of a Request for Qualifications (RFQ) and the Request for Proposals (RFP) to qualified respondents and authorized John Wayne Airport (JWA) to empanel a qualified group of experts to review the responsive proposals for the Phase I Concession Development Program. The Phase I Concession Development Program included two Casual Dining & Bar Lease locations, a Specialty Coffee Lease with four locations and one Quick Serve Lease location. The purpose of the program was to bring new local and regional businesses to JWA and improve the guest experience. On June 4, 2019, JWA received proposals from qualified respondents, and on August 27, 2019, the Board awarded four separate Leases for a 10-year term to Bambuza OC Ventures, LLC dba the Coffee Bean & Tea Leaf (Bambuza), California Coast Food & Beverage, LLC (Brodard), Mission Yogurt, Inc. (Taps Fish House) and Greenleaf JWA, LLC.

On December 10, 2019, the Board approved Amendment Number One to the Leases to update the Tenant Infrastructure Fee to accurately reflect the cost recovery and long-term amortization of airport concession infrastructure improvements.

On January 11, 2022, the Board approved Amendment Number Two to extend the term of the Lease to 13 years with two additional one-year lease extension options at the Airport Director’s discretion.

Current Lease Space Locations

The current Bambuza Lease contains four coffee locations: A post-security location on the departure level in Terminal C between gates 19 and 20, a pre-security location in Terminal C baggage claim, a pre-security location on the departure level in Terminal C by the security checkpoint and another pre-security location in Terminal A baggage claim.

Proposed Lease Amendments

JWA seeks Board approval to amend the lease locations for Bambuza, modify the permitted use, modify the Minimum Annual Guarantee for the coffee locations, and authorize Percentage Rent for the Sambazon Acai Bowl (Sambazon) location. The proposed Lease Amendment recommends the elimination of two of the undeveloped pre-security sites in Terminal A and the Terminal C security checkpoint. The Terminal A location is in close proximity to the Terminal B baggage claim coffee site, and there is insufficient demand to support two coffee locations within this pre-security area. The Terminal C checkpoint location is in close proximity to the Transportation Security Administration security screening area, and passengers presently cannot take drinks through the security line.

Proposed Modified Leased Premises locations:

JWA requests that Bambuza be permitted to build out their current interim lease space in Terminal C as a permanent location. Bambuza is currently operating in the former Starbucks kiosk between gates 16 and 17, and will rebuild this location and provide the investment as stipulated in their proposal. Rebuilding in this location will reduce congestion in the formerly proposed area near gate 19.

JWA further requests approval to allow Bambuza to operate a Sambazon kiosk on the post-security departure level in Terminal B between gates 10 and 11. This location was not programmed into the Phase I concession program. Sambazon, a local Newport Beach company, will fill the need for quick and healthy food options featuring acai bowls. This will be Sambazon’s first airport location. Bambuza estimates $218,981 in rent revenue to JWA in the first year of operation.

Concession Location	Current Lease Annual Rent Revenue*	Amendment Three Modification	Amendment Three Annual Rent Revenue*
Coffee - Terminal C Pre-Security (Baggage Claim)	$169,400	No Change	$169,400
Coffee - Terminal C Post-Security (Gate 19)	$87,500	Eliminate	$0
Coffee - Terminal C Pre-Security (Security Checkpoint)	$35,200	Eliminate	$0
Coffee - Terminal A Pre-Security (Baggage Claim)	$61,500	Eliminate	$0
Coffee - Terminal C Post-Security (Gate 16/17)	$0	Add	$87,500
Sambazon - Terminal B Post-Security (Gate 10/11)	$0	Add	$218,981**
Total	$353,600		$475,881

*Forecast based on Minimum Annual Guarantee (MAG) for all coffee locations and percentage rent for Sambazon.

**Sambazon's percentage rent forecast is based on Bambuza's pro-forma estimated gross receipts.

Proposed Leased Premises to remain:

Terminal C Baggage Claim, Pre-Security: JWA staff recommends moving forward with the development of this coffee location as there is high visibility and a strong passenger traffic flow. The tenant will build out this location in its entirety and provide the investment as stipulated in their proposal.

Compliance with CEQA: The proposed project was previously determined to be Categorically Exempt from the California Environmental Quality Act pursuant to Section 15301 (Class 1) of the CEQA Guidelines on August 27, 2019, when it was originally approved because the exemption provides for equipment installation and maintenance of an existing facility involving negligible or no expansion of existing use. The proposed project is still consistent with this determination.

FINANCIAL IMPACT:

Revenues related to the concession lease are included in Fund 280, Airport Operating Fund, FY 2022-23 Budget, and will be included in the budgeting process for future years.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Amendment Number Three to Bambuza OC Ventures, LLC Lease