MEMORANDUM 08-87

TO: Mayor Hornaday and Homer City Council

THRU: Walt Wrede, City Manager

FROM: Sheri Hobbs, Personnel/Airport Terminal Manager

DATE: May 29, 2008

RE: Sandra Thompson dba Homer Alaska Car Rental Lease

On April 30, 2008 Jeeps R Us terminated their car rental lease with the City. I was approached by two individuals requesting to lease the car rental space. I advised both that I would prepare an RFP and request proposals for the available space. I was also hoping to receive interest from another national chain. Two local proposals were received. After reviewing the financial, economic and work experience the proposal by Sandra Thompson was selected as the most qualified.

All car rentals are placed on the same terms to allow future car rental lease changes to occur simultaneously. Homer Alaska Car Rental’s lease term is July 1, 2008 to December 31, 2011.

There has been concern expressed because John Thompson has the Hertz Car Rental lease at the airport and that a monopoly might occur. The City has in the past rented two car rental spaces to the same person. I do not have concerns that leasing the space to Sandra Thompson will create a monopoly. I have also contacted Polar Car Rental at the airport and Ms. Arno has advised me that she is not concerned. The Hertz franchise does not have a concern regarding John Thompson’s car rental business because it is Sandra Thompson’s lease. If another car rental business would like to open they have that option in another location in the City. Several car rentals open businesses offsite from airports to avoid the additional costs associated with operating in an airport terminal.

Sandra Thompson has made it clear that she is requesting the lease under her name and intends to operate this business. She has the experience and resources to start this business and operate it successfully. She intends to rent vans and trucks in addition to cars. This is a full-time commitment for her and she will provide coverage at the airport 13 hours per day instead of the required 4 hours. The City receives 10% of the gross sales from a car rental business. By providing additional hours of operation over what is required in the lease the opportunity for revenue increases for both Sandra Thompson and the City. This lease will also provide two part-time jobs in the community.

RECOMMENDATION: Approve the attached lease for Sandra Thompson dba Homer Alaska Car Rental and authorize the City Manager to sign.

FISCAL IMPACT: The City collects a rental fee of $2,331.00 annually plus 10% of gross sales estimated at $8,000.