AIRPORTS AND ECONOMIC DEVELOPMENT COMMITTEE
OFFICE OF THE COMMISSION AUDITORMIAMI-DADE BOARD OF COUNTY COMMISSIONERSCOMMISSION AUDITOR’SINFORMATIONAL RESEARCHAIRPORTS AND ECONOMIC DEVELOPMENTCOMMITTEEApril 13, 20216:00 P.M.Commission ChambersYinka Majekodunmi, CPACommission AuditorOffice of the Commission Auditor (OCA)111 N.W. First Street, Suite 1030Miami, FL 33128(305) 375-2524
TABLE OF CONTENTSDEPARTMENTAL ITEMAVIATION DEPARTMENT3A (210680): Approving Airline VIP Club Lease Agreement with American Airlines, Inc 32
AEDC Meeting:April 13, 2021Research NotesItem No. 3AFile No. 210680Research: JNF / Reviewer: PGERESOLUTION APPROVING AIRLINE VIP CLUB LEASE AGREEMENT BETWEEN AMERICAN AIRLINES,INC. AND MIAMI-DADE COUNTY FOR THE CONSTRUCTION, EXPANSION, AND LEASE OF VIP CLUBSPACE AT MIAMI INTERNATIONAL AIRPORT NORTH TERMINAL GATES D-15 AND D-30 RETROACTIVETO DECEMBER 1, 2016 FOR A TERM OF 10 YEARS AND AN ANNUAL RENTAL AMOUNT OF 5,445,772.19IN THE INITIAL YEAR AND ADJUSTED EACH YEAR THEREAFTER IN ACCORDANCE WITHRESOLUTION NO. R-1054-90, COMMENCING UPON THE COMPLETION OF CONSTRUCTION ANDEXPANSION; AUTHORIZING THE COUNTY MAYOR OR COUNTY MAYOR’S DESIGNEE TO EXECUTESAME AND EXERCISE ALL RIGHTS CONFERRED THEREIN, INCLUDING TERMINATION AND TOPERFORM ALL ACTS NECESSARY TO EFFECTUATE SAME; AND DIRECTING THE COUNTY MAYOR ORCOUNTY MAYOR’S DESIGNEE TO PROVIDE THE COUNTY PROPERTY APPRAISER A COPY OF SAIDLEASEPrime Sponsor: Commissioner Rebeca Sosa, District 6Requester: Aviation Department (MDAD)Committee Action Date: N/ARESEARCH FINDINGSOCA’s review of the item produced the following findings: This item, a retroactive agreement with American Airlines for lease of space for VIP Clubs at Gates D-15 and D30, would commence at the expiration date of the previous lease, November 30, 2016. American Airlines has leasedthe space since 2006, through two separate five-year lease agreements approved administratively pursuant toResolution No. R-487-93 (enclosed). Resolution No. R-487-93, adopted by the Board on April 27, 1993, authorizedthe Mayor to execute certain standard form Aviation Department leases at rental rates established by the Board, forsuch term(s) as may be appropriate, with use and occupancy not to extend beyond five years. American Airlineshas continued to lease space under the terms of the previous agreement established under the authority of ResolutionNo. R-487-93 on a month-to-month basis for an additional four years and four months. The authorizing resolutionincorporates language stating that all leases, including month-to-month and year-to-year, where the term can beexpected to exceed five years will continue to be submitted to the Board for consideration. Thus, given that MDADapproved American Airlines’ renovation plans, construction of which commenced in October 2015 for the Gate D15 Club and in February 2016 for the Gate D-30 Club, indicating that American Airlines’ lease of this space atMiami International Airport was likely intended to be long term and beyond the authorized five years, it is unclearwhy Board approval is being sought retroactively rather than in 2016 in anticipation of the expiration of the 2011lease.FINANCIAL ANALYSISThe initial annual rental amount, 5,545,772.19, for the first year of the lease agreement beginning on December 1,2016 is to be adjusted each year thereafter on October 1st pursuant to Resolution No. R-1054-90, which authorizesMDAD to recalculate, publish and implement annually the rental rates applicable to Terminal Building Class I throughClass V rental properties and concourse use and related charges. The below table summarizes the schedule of annualrental amounts.3
AEDC Meeting:April 13, 2021Research NotesItem No. 3AFile No. 210680Figure 1 – American Airlines Rental Rates for VIP ClubsResearch: JNF / Reviewer: PGEPeriodAnnual Rental Rate10/1/16 – 9/30/17 5,545,77210/1/17 – 9/30/18* 5,995,78410/1/18 – 9/30/198,001,70210/1/19 – 9/30/208,457,51810/1/20 – 9/30/21 7,901,391TOTAL 35,902,167* The renovation of the VIP Club at Gate D-30 resulted in square footage being added, and a consequential adjustmentof the annual rental rate on August 8, 2018 from 5,624,870 to 7,850,357 producing a rental rate for the period of10/1/17 to 9/30/18 of approximately 5,995,784.The item provides for American Airlines paying the County a lump sum amount of 6,749,755.69 for additional rentalcharges due from December 1, 2016 through February 28, 2021 as a result of the addition of 1,312 square feet to theVIP Club at Gate D-15 effective December 1, 2016 and the addition of 16,107 square feet to the VIP Club at Gate D30 effective August 8, 2018.MDAD estimates that American Airlines will pay the County a minimum of 75,600,000 throughout the 10-year leaseterm.ADDITIONAL INFORMATIONThis item was deferred at the April 9, 2019 Board meeting. When the item was presented then, the annual rental amountwas 8,002,330.98 the first year of the lease and was to be recalculated each year thereafter, with the estimation thatAmerican Airlines would pay the County a minimum of 80,000,000 over the 10-year lease term, which was scheduledto commence upon the resolution becoming effective rather than being retroactive.Domestic airline passengers are at less than 40% and foreign travel is at approximately 15% of 2019 levels, as reportedby Bloomberg. As a result of relief provided by the federal government in the American Rescue Plan Act of 2021,American Airlines was able to rescind 13,000 planned furloughs. The American Rescue Plan included 15 billion forairlines and airline contractors.4
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Agenda Item o.4-27-93RESOLUTION NO.5(d)(3)R-487-93RESOLUTION AUTHORIZING COUNTY MANAGER TOEXECUTE CERTAIN STANDARD FORM AVIATIONDEPARTMENT LEASES; AUTHORIZING AVIATIONDIRECTOR TO EXECUTE CERTAIN ADMINISTRATIVELEASES; AUTHORIZING AVIATION DIRECTOR TOISSUE DEFAULT NOTICES AND TO IMPLEMENTTERMINATION PROVISIONS OF AVIATION DEPARTMENTLEASESWHEREAS, this Board desires to accomplish the purposesoutlined in the accompanying memorandum, a copy of which isincorporated herein by reference,NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTYCOMMISSIONERS OF DADE COUNTY, FLORIDA, that this Board herebyauthorizes the County Manager or his designee to execute standardAviation Department leases for the use and occupancy of realproperty at the County Airport System facilities for aviation andaviation related purposes, at rental rates established by thisBoard, and for such term(s) as may be appropriate, with use andoccupancy not to extend beyond five years under the authority ofthis Resolution, as set forth in the accompanying memorandum fromthe County Manager; and further, this Board authorizes theAviation Director or his designee to execute administrativeleases for the use and occupancy of real property at the CountyAirport System facilities for aviation and aviation relatedpurposes, at rental rates established by this Board for term(s)of month-to-month, with use and occupancy not to extend beyondsix months under the authority of this Resolution, as set forthin the said memorandum; and further, this Board authorizes the84
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CONTRIBUTORSPhillip G. Edwards, Esq., Research ManagerJacqueline N. Fernandez, J.D., Research AnalystThe Office of the Commission Auditor, Miami-Dade Board of County CommissionersThe Office of the Commission Auditor (OCA) was established in September 2002 by Ordinance 03-2 toprovide support and professional analysis of the policy, service, budgetary and operational issues beforethe Miami-Dade Board of County Commissioners. The Commission Auditor's duties include reporting tothe Board of County Commissioners on the fiscal operations of County departments, as well as whether thefiscal and legislative policy directions of the Commission are being efficiently and effectively implementedThese research notes, prepared in collaboration with the Miami Dade County departments as subject matterexperts, is substantially less detailed in scope than an audit in accordance with the Generally AcceptedAuditing Standards (GAAS). The OCA plans and performs the review to obtain sufficient, appropriateevidence to provide a reasonable basis for its findings and conclusions based on its objectives; accordingly,the OCA does not express an opinion on the data gathered by the subject matter expert(s).
Apr 13, 2021 · VIP Club at Gate D-15 effective December 1, 2016 and the addition of 16,107 square feet to the VIP Club at Gate D-30 effective August 8, 2018. MDAD estimates t hat American A irlines will pay the County a
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