Los Angeles World Airports

TM

RESOLUTION NO. 26115

BE IT RESOLVED that the Board of Airport Commissioners approved two (2) Equipment Acquisition Agreements with Tom Bradley International Terminal Equipment Company to acquire upgrades to the baggage handling systems in the Tom Bradley International Terminal and the Midfield Satellite Concourse at Los Angeles International Airport, as referenced in the Board-adopted staff report attached hereto and made part hereof; and

LAX

Van Nuys

City of Los Angeles

Eric Garcetti Mayor

BE IT FURTHER RESOLVED that the Board of Airport Commissioners authorized the Chief Executive Officer to execute two (2) Equipment Acquisition Agreements with Tom Bradley International Terminal Equipment Company upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council; and

Board of Airport Commissioners

Sean 0. Burton President

Valeria C. Velasco Vice President BE IT FURTHER RESOLVED that the issuance of permits, leases, agreements, gate and

space assignments, and renewals, amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations Is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III Class 1(18)(c) of the Los Angeles City CEQA Guidelines; and

Jeffery J. Daar Gabriel L. Eshaghian Beatrice C. Hsu Nolan V. Rollins Dr. Cynthia A. Telles

Deborah Flint , . .Chief Executive Officer BE IT FURTHER RESOLVED that actions taken on this item by the Board of Airport

Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 373.

0O0

I hereby certify that this Resolution No. 26115 is true and correct, as adopted by the Board of Airport Commissioners at its Regular Meeting held on Thursday, November 17, 2016.

Sandra J. Miller - SecretaryBOARD OF AIRPORT COMMISSIONERS

mm\Hi'

I u ■

i t

1 World Way Los Angeles California 90045-5803 Mail RO. Box 92216 Los Angeles California 90009-2216 Telephone 310 646 5252 Internet www.lawa.aero

1H1I mm m/*H85«p

u>

wm

'Los Angeles World Airports ”1] imlre'REPORT TO THE

BOARD pF/yRPOfiT COMMISSIONERS%1ftMy-.$$!•*K

-■ II11

Meeting Date:

/jfx )AApproved bjj^Dave Jones, Airline ^rop^rty and C lions Services 11/17/2016

(

LJ(j_tAx □ Completed

Reviewed by: Debbie Bowers, Deputy executive Director, Commercial Development Group

PendingCAP Review:

□ N/A

L UJKf Reviewed for Date Approval Status ByCity Capital Budget

Operating Budget

CEQA

viet0Y □ N □ NA

OYQ N DNA

BY □ N

me1

II10/13/2016 NM

Deborah Ffim - ChieHExecutive Officer 10/20/2016 BY DN □ Corn)Procurement MT

nh/iLGuest Experience 0YDN '

SUBJECT: Approval of Equipment Acquisition Agreements with Tom Bradley International Equipment Company

Approve two Equipment Acquisition Agreements with Tom Bradley International Terminal Equipment Company, in amounts not to exceed $185,000,000 and $75,000,000 respectively, to acquire upgrades to the baggage handling system in the Tom Bradley International Terminal and the new Midfield Satellite Concourse at Los Angeles International Airport.

RECOMMENDA TIONS:

Management RECOMMENDS that the Board of Airport Commissioners:

1. ADOPT the Staff Report.

DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines.

APPROVE the Equipment Acquisition Agreement with Tom Bradley International Terminal Equipment Company in an amount not to exceed $185,000,000 to install baggage handling system equipment for the Midfield Satellite Concourse.

2.

3.

Page 1TBITEC EQUIPMENT OCT 6 VERSION.docx

APPROVE the Equipment Acquisition Agreement with Tom Bradley International Terminal Equipment Company in an amount not to exceed $75,000,000 to make improvements to the baggage handling system in Tom Bradley International Terminal.

4.

AUTHORIZE the Chief Executive Officer to execute the two Equipment Acquisition Agreements with Tom Bradley International Terminal Equipment Company upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council.

5.

APPROPRIATE funds in the amount of $185,000,000 to purchase new baggage handling system equipment for the Midfield Satellite Concourse and $75,000,000 to purchase improvements to the baggage handling system in Tom Bradley International Terminal.

6.

DISCUSSION:

Purpose1.

Provide baggage handling equipment necessary to support airline operations in the new Midfield Satellite Concourse (MSC) and Tom Bradley International Terminal (TBIT) at Los Angeles International Airport (LAX).

Prior Related Actions2.

• May 19, 2014, Resolution No. 25413 (DA-4909)The Board of Airport Commissioners (Board) approved an Equipment Acquisition Agreement with Tom Bradley International Terminal Equipment Company (TBITEC) in an amount not to exceed $49,750,000 to acquire upgrades to the baggage handling system in TBIT.

3. Current Action

TBITEC is a nonprofit airline consortium formed to design, finance, install, and operate and maintain passenger and aeronautical support equipment at LAX. TBITEC leases, operates and maintains the aeronautical equipment including the baggage system in TBIT pursuant to Lease and License Agreement LAA-8600 (Lease). Section 8.03(b) of the Lease allows Los Angeles World Airports (LAWA), subject to Board approval, to acquire equipment that TBITEC procures and installs if the useful life will extend beyond the term of the Lease and the capital costs of the equipment are typically included in the terminal rent pursuant to the Los Angeles International Airport Passenger Terminal Tariff.

On May 19, 2014, pursuant to Section 8.03 (b) of the Lease, the Board approved an equipment acquisition agreement in an amount not to exceed $49,750,000 to acquire upgrades to the inline Checked Baggage Inspection System (CBIS) that were needed to support the new TBIT gates. This baggage system upgrade project is on track to be complete by May, 2017.

On December 18, 2014, the Board approved a design-build contract to construct the MSC. LAWA expects that most passengers boarding aircraft in the MSC will be processed through TBIT. New baggage equipment must be installed to route checked baggage from TBIT to the aircraft that will depart from MSC gates. Additionally, the existing inline CBIS in TBIT must be expanded to provide the increased capacity needed to process the additional

Page 2TBITEC EQUIPMENT OCT 6 VERSION.docx

checked baggage that will be processed through this system to support the MSC gates and improved guest experience.

The MSC-North construction project will build the facility, including new ramp, basement areas, and tunnels necessary for installation of new baggage conveyors and a baggage tray transport system between TBIT and the MSC. Installing new baggage handling equipment will require sections of the existing TBIT inline CBIS to be taken out of service while the system remains in use, which creates operational risk for LAWA and TBIT airlines. To mitigate this risk, TBITEC has agreed to manage the design and construction of the new MSC baggage system while continuing to operate the existing system. The scope of the first phase to install baggage handling equipment in the MSC and connect to the TBIT baggage handling systems is summarized in the table below. Upon completion of construction,LAWA will acquire the equipment at the actual cost of construction, not to exceed $185,000,000, pursuant to the proposed Equipment Acquisition Agreement.

DescriptionImprovements

Design and installation of equipment to support Early Baggage Storage, sortation and make-up systems at the MSC, all of which will connect to the new Independent Carrier System via the west tunnel

MSC Early Bag Storage, Baggage Sortation & Make-Up

Design and installation of equipment to support Early Baggage Storage, sortation and make-up systems at the new North Baggage Handling Facility, all of which will connect to the new Independent Carrier System via the north tunnel

North Early Bag Storage, Baggage Sortation & Make-Up

Design and installation an Independent Carrier System (ICS) for the outbound bag delivery and empty ICS returns between the TBIT, the MSC, and North BHS Facility via the new East, North, and West tunnels.

Independent Carrier System

$185.000.000Not to Exceed Project Cost

The second phase of work will increase the capacity of the TBIT inline CBIS to 5,500 bags per hour to adequately process all the checked baggage generated by operations in TBIT and the MSC. The scope of this second phase is shown in the table below. Upon completion of construction, LAWA will acquire the equipment at the actual cost of construction, not to exceed $75,000,000, pursuant to the proposed Equipment Acquisition Agreement.

Page 3TBITEC EQUIPMENT OCT 6 VERSION.docx

Equipment and Improvements Description

Checked Baggage In-line System/Checked Baggage Reconciliation Area

Removal of TBIT conveyor-lane based early baggage storage and outbound sortation and make up systems and the removal and replacement of TBIT CBIS/CBRA systems and re-work of check in and delivery conveyor systems to interface with the new CBIS/CBRA systems.

$75.000.000Not to Exceed Project Cost

Action Requested

Staff requests the Board approve the proposed Equipment Acquisition Agreement, authorize the Chief Executive Office to execute the Equipment Acquisition Agreement, upon approval as to form by the City Attorney and upon approval by the Los Angeles City Council, and appropriate capital funds in the amount of $185,000,000 and $75,000,000 to fund this work and associated soft costs.

Fiscal Impact

The Midfield Satellite Concourse-Bradley West Baggage Enhancements Project is an approved capital project at LAX that includes the cost of the Equipment Acquisition Agreement. Capital costs incurred on these projects will be recovered through terminal rates and charges.

4. Alternatives Considered

• Perform the required work through a LAWA construction contractor

Installing new baggage handling equipment will require sections of the existing TBIT inline CBIS to be taken out of service while the system remains in use. LAWA staff determined the operational and service interruption risk of renovating an active baggage handling system is better borne by the airlines than by LAWA or its contractors because the airlines and their consortium are better able to design, schedule and plan the impacts around their operations and flight schedules.

APPROPRIATIONS:

The Midfield Satellite Concourse-Bradley West Baggage Enhancement Project is an approved capital project at LAX. Staff request funds in the not-to-exceed amount of $75,000,000 be appropriated and allocated from the LAX Revenue Fund to WBS Element 1.17.14A-700 to improve the baggage handling system in TBIT. Staff also request funds in the not-to-exceed amount of $185,000,000 be appropriated and allocated from the LAX Revenue fund to WBS Element 1.17.15A-700 for the installation of the baggage handling system equipment for the Midfield Satellite Concourse.

Page 4TBITEC EQUIPMENT OCT 6 VERSION, docx

STANDARD PROVISIONS:

1. The issuance of permits, leases, agreements, gate and space assignments, and renewals amendments or extensions thereof, or other entitlements granting use of existing airport facilities or its operations Is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Article III, Class 1 (18)(c) of the Los Angeles City CEQA Guidelines.

2. This item is subject to approval as to form by the City Attorney.

3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section 373.

4. This action is not subject to the provisions of the Service Contractor Worker Retention and Living Wage Ordinances.

5. This action is not subject to the provisions of the SBE Program.

6. This action is not subject to the provisions of the Affirmative Action Program.

7. This action does not require a Business Tax Registration Certificate.

8. This action is not subject to the provisions of the Child Support Obligations Ordinance.

9. This action is not subject to the insurance requirements of the Los Angeles World Airports.

10. This action is not subject to the provisions of City Charter Section 1022 (Use of Independent Contractors.

11. This action is not subject to the provisions of the Contractor Responsibility Program.

12. This action is not subject to the provisions of the Equal Benefits Ordinance.

13. This action is not subject to the provisions of the First Source Hiring Program.

14. This action is not subject to the provisions of Bidder Contributions CEC Form 55.

Page 5TBITEC EQUIPMENT OCT 6 VERSION.dOCX