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Agenda Item
ASR
Control 24-000263 |
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MEETING
DATE: |
05/07/24 |
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legal entity taking action: |
Board
of Supervisors |
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board of supervisors district(s): |
5 |
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SUBMITTING Agency/Department: |
John
Wayne Airport (Approved) |
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Department contact person(s): |
Charlene
V. Reynolds (949) 252-5183 |
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Amy
Goethals (949) 252-6036 |
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Subject: Approve Concession Leases for the
Concession Development Program
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ceo CONCUR |
County Counsel Review |
Clerk of the Board |
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Concur |
Approved
Agreement to Form |
Discussion |
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4/5
Vote |
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Budgeted: Yes |
Current Year
Cost: N/A |
Annual Cost: N/A |
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Staffing Impact: |
No |
# of Positions: |
Sole Source: No |
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Current Fiscal Year Revenue: See Financial
Impact Section
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Prior Board Action: 10/17/2023 #14 |
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RECOMMENDED
ACTION(S):
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1. |
Find that the project is categorically
exempt from the California Environmental Quality Act (CEQA), Class 1
(Existing Facilities), pursuant to CEQA Guidelines Section 15301. |
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2. |
Award and
execute Retail Concession Lease with HG JWA Concessionaires JV for Retail
Package One at John Wayne Airport, effective upon Board of upervisors
approval, for a term of fifteen years. |
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3. |
Award and execute Retail Concession
Lease with Paradies Lagardère @ SNA, LLC for Retail Package Two at John Wayne
Airport, effective upon Board of Supervisors approval, for a term of fifteen
years. |
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4. |
Award and
execute Food and Beverage Concession Lease for Food and Beverage Packages One
and Two with Host International, Inc. at John Wayne Airport, effective upon
Board of Supervisors approval, for a term of fifteen years. |
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5. |
Approve and execute Food and Beverage
Concession Lease with McDonald’s USA, LLC, effective upon Board of
Supervisors approval, for a term of fifteen years. |
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6. |
Authorize the
Airport Director or designee to make minor modifications and amendments to
the lease that do not materially alter the terms or financial obligations to
the County and perform all activities specified under the terms of the
lease. |
SUMMARY:
Award of the Concession Lease
Agreements with operators will allow John Wayne Airport to move forward with
the Concession Development Program implementation to redevelop and revitalize
approximately 45,000 square feet of new concessions.
BACKGROUND
INFORMATION:
In 2019, John Wayne Airport (JWA)
proposed a comprehensive four-phase Concession Development Program (CDP) that
encourages local concepts and brands to participate in its quick-serve, retail
and casual dining opportunities.
JWA retained the
services of airport planning and consulting firm Unison Consulting, LLC
(Unison) to assist with evaluating the existing concession program. In
assessing the concession program to the current economic climate, Unison and
JWA found that larger packages would yield stronger sales to maximize
proposers' interest. As a result, JWA staff recommended a total of four
packages for the solicitation (two Food and Beverage and two Retail, with
automated locations throughout).
Request For Proposal Process:
JWA staff
conducted numerous outreach meetings with the local Orange County business
community to inform them about the upcoming opportunities at JWA. Additionally,
JWA staff has coordinated with potential operators on the Airport Concession
Disadvantaged Business Enterprise Program (ACDBE), attended multiple industry
conferences and set up a concession specific website to reach potential
business partners and concessionaires.
On March 26, 2023,
the Request for Proposal (RFP) was released to the public and on July 17, 2023,
JWA received two qualified proposals for Food and Beverage Package Two, two
qualified proposals for Retail Package One and three qualified proposals for
Retail Package Two. Food and Beverage Package One did not receive a responsive
proposal. The RFP process required proposers to complete a detailed narrative
about their concepts, proposed layout with technology enhancements and
financial proforma.
Selection
of Concession Operators:
On October 17,
2023, the Board considered the proposals received and selected three
concessionaires: Host International, Inc. (Host) for Food and Beverage Package
Two, Paradies Lagardère @ SNA, LLC (Paradies) for Retail Package Two and HG JWA
Concessionaires JV (Hudson) for Retail Package One, and directed JWA staff to
negotiate lease agreements with qualified Food and Beverage operators for Food
and Beverage Package One for Board approval.
Negotiations of Food and Beverage Package One:
The RFP identified
roughly 19,418 square feet allocated to Food and Beverage as well as 9,509
allocated to Retail and reserved roughly 12,690 square feet in Terminal B for
future program planning and alternative use feasibility studies. During the
negotiations of Food and Beverage Package One, JWA staff met with qualified
operators and requested a proposal with proposed concepts and financial offer
for the Airport to review. Upon receipt, the proposals were evaluated, and each
operator requested the additional reserved space in Terminal B to improve rent
offer and overall package viability.
Recommendation:
JWA staff
concluded that Host's proposal provided for a greater rent offering and more
local concepts and recommends Host for Lease award. The total capital
investment into the terminal experience from all packages is approximately
$49,595,656. Below is an overview of the Concessions.
Food
and Beverage Packages One and Two: Host
International, Inc. (Host)
Food and Beverage Packages One and
Two with Host and its ACDBE partners will provide sixteen concepts that includes;
Tacos La Pina Dorada, Earl of Sandwich, Starbucks, Sgt Pepperoni's Pizza Store,
The Anaheim Ducks, Wahoo's Fish Taco, Panera Bread, Five Vines, Left Coast
Brewing, Dunkin, The Habit Burger Grill, Bonchon Korean Fried Chicken, Chaupain
Bakery, Auntie Anne's, OC To Go, and Mama's Comfort Food & Cocktails. The
County will contribute one million dollars to improve the area between
Terminals A and B. Currently, that area is on a raised platform, creating
separation between the passenger flow and restaurant areas. Host proposed to
reduce that area to ground level, creating an "Orange County
Experience" area that includes entertainment, sports, and dining. This
improvement will connect passenger flow to the location and improve sight lines
between Terminals A and B. This will ensure that the existing location remains
safe, functional, and a consistent revenue generator while creating a fun
Orange County experience.
Food
and Beverage Location: Terminal B: McDonald's USA, LLC (McDonald's)
JWA staff reserved a burger
location in Terminal B for future planning and received a proposal from the
current ACDBE operator, McDonald's, in Terminal A and B. McDonald's provided a
proposal that was consistent with the County-proposed master concession lease.
JWA determined that awarding the leases at one time will provide optimal
efficiency during phasing and implementation, allowing JWA to move forward with
the development phase.
Retail
Package One: HG JWA Concessionaires JV (Hudson)
Hudson was selected by the Board
for Retail Package One and will provide with its local ACDBE partners five
concepts that includes: PCH Provisions by Hudson, MAC, Jo Malone & Sunglass
Hut on the Go, Boutique Del Mar by Hudson, Brookstone, and Orange Coast
Magazine by Hudson. Hudson has over 30 years of concessions operations
throughout the United States and Canada. Hudson operates over 1,000 locations,
with 88 locations in airports.
Retail
Package Two: Paradies Lagardère @ SNA, LLC (Paradies)
Paradies was selected by the Board
for Retail Package Two and will provide with its local ACDBE partners four
concepts that includes: Harbor Exchange, Market 949, The Goods @ SNA, and SoCal
Essentials. Paradies opened its first airport store in 1960 and currently
operates in more than 1,000 locations across North America.
Construction
and Implementation of Concessions:
The preliminary construction
implementation schedule for the CDP was developed in three phases starting in
Q1 of 2025 and continuing until Q2 2027. The implementation plan takes into
account projected facility needs, passenger needs, and revenues. JWA will offer grab-and-go food and beverage
options through automated concessions and temporary units. Passengers can
expect to see these exciting new dining establishments open their doors fall of
2025.
Compliance
with CEQA:
The proposed project is Categorically
Exempt (Class 1) from the provisions of CEQA pursuant to Section 15301 because
it provides for the leasing and minor alteration of public structures and
facilities involving negligible or no expansion of use.
FINANCIAL
IMPACT:
Revenues related to the Lease are
included in Fund 280, Airport Operating Fund, FY 2023-24 Budget, and will be
included in the budgeting process for future years.
Per the concessionaires’ proforma,
the estimated annual revenue to JWA will be $11.4 million.
STAFFING
IMPACT:
N/A
ATTACHMENT(S):
Attachment
A – Retail Package One Lease with HG JWA Concessionaires JV
Attachment B – Retail Package Two Lease with Paradies Lagardère @ SNA, LLC
Attachment C – Food and Beverage Lease with Host International, Inc.
Attachment D – Food and Beverage Lease with McDonalds USA, LLC