Amends the contract with United Airlines by decreasing its unused leased space in return for an additional 10 years to the lease term.  The total United lease term will be a total of 40 years expiring on 2-28-35 (XC 2X000-07). (BUSINESS DEVELOPMENT) Amends the contract with United Airlines by decreasing its unused leased space in return for an additional 10 years to the lease term.  The total United lease term will be a total of 40 years expiring on 2-28-35 (XC 2X000-07). The last reguarly scheduled Council meeting within the 30-day review period is on    .  The Committee approved filing this bill at its meeting on 8-19-14.
As I understand it, the United Airlines lease is actually dependent on our restructuring the debt, even if we are taking action on it. First, when this proposal was before the Business Development Committee, I asked the position of other airlines since United Airlines gets far and away the most benefit from this package. Since that time, I've had occasion to talk with a representative from Southwest Airlines. Southwest was very complimentary about their working relationship with DIA and Kim Day. Despite any concerns at this point, they want to be team players and are not opposing this ordinance. That being said, there are reasons I have decided to oppose it regardless. I say this acknowledging United Airlines is crucial to the well-being of DIA and I value their presence. Valuing should not mean continual financial concessions. However, since I've been on council, we have made concessions to United numerous times. I'm going to say about five or six two years ago. We relieve them of obligations and in turn received guarantees. Those guarantees were enforceable by financial penalties if they did not deliver, and indeed they've been paying penalties. This contract wipes out those penalty agreements and as a practice it seems DIA negotiates, gets agreements and then subsequently renegotiate the deal and loses the benefits it formerly achieved. It's hard for me to to get too excited about anything that's being put forth as getting in this deal, because history shows it may be very short lived. Second, to be a level playing field among carriers is important. The portions to come later dealing with restructuring debt and modifying amateur resolution are what benefit all carriers proportionately. The total package, including this least change, is worth $45 million of airline benefit per year. For major airlines, United's scores, 35 million of the benefit. Southwest 4.5 million. And Frontier 2.5 million. A bit lopsided for a level playing field. Lastly, I discovered a troubling issue concerning timing. DIMIA gave the details of this agreement to other airlines. The Friday before council's Tuesday meeting. Needless to say, corporations need more time to evaluate such important changes if they're to have opinions or input. No matter what happens today. I urge DEA to involve their member airlines on such significant changes weeks or months earlier so they can actually have input before final decisions are made and certainly long before proposals are brought to council. That's only fair. Thank you, Councilwoman. Thoughts, Councilmember. Thank you, Mr. President. I love to bring up Patrick just to answer answer some of these questions. Obviously, I think that this is a tremendous opportunity for that airport to extend the lease of United Airlines from 2025 to 2035. But but, Patrick, perhaps a couple of questions. One, you can talk briefly about the SCOOP and Chuck financial method by which we're doing this and other airlines will benefit. And specifically addressing Councilman FATSIS, concern of the disproportionality of the payments, because I believe that's because of the proportion in which they use the airport. But go ahead. Yes. Thank you, Councilman Brooks and members of council. My name is Patrick Heck. I'm the chief financial officer for the airport. In regards to the to the second part of your question regarding the proportionality benefits, when you look at how carriers operate at the airport, they're different sizes. United has about 40% of our market, for example. And so when you they also lease approximate, they pay about 50% of the airline revenue that comes to the airport. So when you do anything to change the financial structure of the airport, that positively affects the carriers. They're going to have a larger impact from that just because of the way it's structured. That's the proportionality that Councilwoman Ford's parts mentioned in United's case, though, however, United's been at the airport. They signed a lease in 1995 to help the new airport at that time get off the ground, get it financed and get it open and united. Signed a 30 year lease in order to do that. And as a result, they have legacy airline costs from 20 years ago that other carriers haven't had the burden of. And as you all know, the airline industry has changed dramatically in the past 20 years. This is a reflection of the airport being financially successful because of that long term lease United signed and us recognizing that in order to keep them here, we need to change to adapt to the changing airline model. And so that's that's what this leases is really about. The first part of your question regarding this group and Chuck, we have debt associated with the regional airport of about two and a half billion dollars. That is still outstanding. That debt is scheduled to be paid off in 2025. As a result, our payment on our debt goes down dramatically in 2025. This scoop, and Chuck, as we call it, is taking some of that debt now and chucking it out past 2025 to take advantage of that debt fall off so that we can deliver benefits to the carriers now. I think you all know money now to the carriers is much more important than money, say, ten or 15 years from now. So this allows us to leverage that debt structure and provide savings to the carriers now. And another question, Patrick, is I think it's important to set for the public and folks for counsel to understand the climate in which we're at with United Airlines downsizing in some of these other hub airports, for example, Cleveland and things like that. And so maybe Cincinnati. Yes. Set the tone there a little bit. Certainly, the airline industry has gone through a massive amount of consolidation in the past 4 to 5 years. Delta combined with Northwest, United and Continental, Southwest and AirTran, American and U.S. Airways. So we have fewer players and fewer players means that there just needs to be less of these hubs. And I could rattle off Pittsburgh, Cleveland, Cincinnati, Memphis, Raleigh, Durham, you name it. The list goes on and on of cities that once formerly had large airline hubs that have lost them. And there cities that if you look at that list are not too dissimilar from us in a lot of ways, medium sized cities that don't necessarily have a large international traffic base where airlines make their money. And so when we look at that, it's incumbent upon us to make sure we as an airport and I want to stress this is airport funds and airport financial capabilities that are doing this. No taxpayer dollars involved here in order to keep United Airlines happy and investing in the Denver market. And that's what this deal is about. Thanks. Thank you, Councilmember. Councilman Brown. What questions have been asked? Thank you, Mr. President. Councilman Brown. And the questions or comments from members of council. Scene on Madam Secretary. Oracle Fox. No carnage. Layman Lopez. Monteiro Nevett. I. Ortega. I. Rob. I. Sheppard. Susman. Brooks Brown. Hi, Mr. President. Hi. Madam Secretary, please close the vote and announce the results. 12 eyes. One name. Both eyes one day. 686 has been ordered published. Let's go ahead and tee up the next one, which I believe is 684, called out by Councilwoman Ortega. Councilman Ortega, what would you like to do? I have a question. I'd like to know if we have someone from Parks and Recreation here that can answer my question. Hi. Patrick Wheeler with the city attorney's office. I'm here in place of Fred Weiss, who happens to be off in Italy right now. Patrick, I have a question and this is for its approving the use agreement for something called the German American Chamber of Commerce that is going to be held at Skyline Park. And my question has to do with a process that the city had set up called. I can't even remember what it stands for now. Special events and permitting. Special events and permit. And I want to know if this is one of the events that sort of came through that process, because I remember sitting through a couple of meetings and was told that we weren't going to be permitting new things or new events because that sort of overtax our various city resources, whether it was police