REPORT TO THE CITY COUNCIL FROM: HENRY THOMPSON, Director of Aviation Airports Department BY: MELISSA GARZA-PERRY, Airports Properties Manager Airports Department SUBJECT ..Title Actions related to the News & Convenience Concession Agreement with HG Fresno Concessionaires JV, at Fresno Yosemite International Airport (FAT). (Council District 4) 1. Adopt a finding of Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act Guidelines; and 2. Approve a News & Convenience Concessions Agreement (Agreement) with HG Fresno Concessionaires JV, for News & Convenience Concessions at Fresno Yosemite International Airport for the term of fifteen (15) years. The amount of potential revenue generated by this Agreement is $623,437 annually, this includes $461,617 from percentage sales and $161,820 from space rent. Total anticipated revenue during the full term of the Agreement is approximately $9,351,555 plus annual CPI adjustments for space rent. ..Body RECOMMENDATION Staff recommends that City Council (Council) award a fifteen-year term Agreement to HG Fresno Concessionaires JV (Hudson) for News & Convenience Concessions. The amount of potential revenue generated by this Agreement is $623,437 annually, this includes $461,617 from percentage sales and $161,820 from space rent. Total anticipated revenue during the full term of the Agreement is approximately $9,351,555 plus annual CPI adjustments for space rent. This Agreement is in connection to the award by Council on April 27, 2023, for RFP bid file 12300507. EXECUTIVE SUMMARY The City of Fresno Airports Department (Airports), solicited proposals through the Request for Proposals (RFP) competitive bid process for both Food & Beverage (F&B) and News & Convenience (N&C) concessions at FAT's terminal. The current concessions programs at FAT have been in place for more than 20 years. Since the introduction of the current programs, passenger traffic has grown exponentially. The current programs reached their terms' end dates on December 31, 2022. Consequently, the Department felt this would be a great time to introduce a new, locally inspired, concessions program. The proposed Agreement has a term of fifteen years. The current rates are $40.00 per square foot (annually) for usable concession space, and $20.00 per square foot (annually) for support, office, and storage spaces. These proposed rates will also be subject to annual Consumer Price Index (CPI) adjustments, which are not to exceed 5.00% annually. There is a 10.00% fee for all gross revenue earned by each concessionaire. Through a comprehensive review and interview process, guided by the Purchasing Division, the Committee determined that Hudson presents the best proposal for N&C Concessions at FAT. Hudson met the goals and criteria set forth in this RFP that is needed to implement a new N&C concessions program that is "top tier" for FAT passengers, Hudson proposes well-known local and national vendors that will provide FAT's passengers with diverse retail and convenience options throughout the day and night. The current N&C contract ended on December 31, 2022. Since that time that contract has remained in holdover until this RFP's completion. This Agreement is part of the first phase of the new concessions program that includes concepts for the existing concession locations, the transition from the current concession program, to building out the new facilities and opportunities for Hudson. The second phase will include concepts for the expansion concession locations (which the successful proposer(s) have the right of first refusal to develop the future locations, once the terminal expansion is completed). This phased approach will provide the opportunity to share with Council proposed final concepts. BACKGROUND The RFP for new concessions was released on October 5, 2022. It was distributed via Planet Bids as handled by the City of Fresno's Purchasing Division (Purchasing). This RFP was also posted on FAT's website, in the Business Journal, sent to all local Chambers of Commerce, and published in national airport/aviation industry pages such as American Association of Airport Executives (AAAE), Airport Minority Advisory Council (AMAC), Airport Experience News (AXN), Airports Council International (ACI-NA), and Southwest Chapter of American Association of Airport Executives (SWAAAE). The goal of this RFP was to solicit proposals to provide "top tier" concessions (N&C) experience to FAT's passengers, employees, and public who use the facilities for commercial and general aviation flights. The goal also included bringing local and national vendors into the terminal building that represent the Central Valley's diversity. Prior to issuing the RFP, the Airports Department presented a workshop to the Council on March 24, 2022, consisting of the vision for the program and the planned outreach process for local concessionaires and vendors. At that time, Council provided feedback and conveyed they wanted the concession programs to represent local restaurants and vendors in the area. The Airports Department took this feedback into consideration and incorporated everything into its outreach approach. With that direction, the Department worked extensively with Unison Consulting to create a Community Outreach Program and an RFP that focused on the products and services offered in the Central Valley. Six (6) Community Outreach sessions were offered, which consisted of three (3) in-person and three (3) virtual sessions, to help educate the local community regarding the processes and requirements of operating at a commercial airport, such as FAT. The aim of these sessions was to allow for maximum community participation. The RFP for N&C concessions was released on October 5, 2022. An in-person on-site Pre-Bid meeting was held on November 15, 2022, that included a walkthrough of the terminal building to show the available concessions locations. Proposals were originally due on January 3, 2023, but were extended to January 17, 2023, and where they were revealed in a public bid opening. Responsive and responsible proposals were received from two (2) bidders: Hudson Group Retail, LLC, for a combined Food & Beverage and News & Convenience Concessions, and Hudson Group Retail, LLC (Hudson), for News & Convenience Concessions only. Interviews were conducted with all the bidders by the Evaluation Committee. Based on the criteria of this RFP and the bids/proposals submitted, it was determined by the Evaluation Committee that Hudson is the best fit for N&C Concessions at FAT's terminal. The City Attorney's Office has reviewed and approved both proposed Concessions Agreements as to form. Risk Management has reviewed and approved all insurance requirements. ENVIRONMENTAL FINDINGS This is not a "project" for the purpose of CEQA pursuant to CEQA Guidelines Section 15378. LOCAL PREFERENCE Local preference is not applicable to this Project pursuant to Fresno Municipal Code 4-109(b). FISCAL IMPACT The N&C Concessions Agreement will provide for monthly rental revenue in the form of space rental per square footage, office space, and support/storage space in the form; and 10% of gross revenue from each of the terminal concession locations. All revenue will be deposited into the Airports Enterprise Fund and will contribute to the operation and maintenance of FAT. There is no impact to the General Fund or ratepayers of the City of Fresno from this item. Attachments: - Proposed Concessions Agreements - Final Exhibit Package - F&B-N&C Presentation