CITY COUNCIL STAFF REPORT
DATE: AUGUST 26, 2026 CONSENT CALENDAR
SUBJECT: APPROVAL OF AMENDMENT NO. 9 TO THE EXISTING CAR RENTAL CONCESSION AGREEMENTS; AMENDMENT NO. 10 TO THE AVIS-
BUDGET CAR RENTAL CONCESSION AGREEMENT; AND
AMENDMENT NO. 1 TO THE SIXT CAR RENTAL CONCESSION
AGREEMENT, IN ORDER TO ADD STAGING SPACE WITH
CORRESPONDING FEE, INCREASE CERTAIN FIXED RENT CHARGES,
AND REVISE THE MINIMUM ANNUAL GUARANTEE AT PALM SPRINGS
INTERNATIONAL AIRPORT
FROM: Scott C. Stiles, City Manager
BY: Department of Aviation
SUMMARY:
This action will approve Amendment No. 9 to the existing car rental concession agreements, Amendment No. 10 for Avis-Budget car rental concession agreement, and Amendment No. 1 for SIXT car rental concession agreement, to add staging space with corresponding fee, increase certain fixed rent charges, and revise the Minimum Annual Guarantee (MAG) at the Palm Springs International Airport (Airport).
RECOMMENDATION:
1) Approve Amendment No. 9; Avis-Budget Amendment No. 10; and SIXT Amendment No. 1 (Attachment A) to Airport car rental concession agreements doing business as car rental agencies at the Airport which include:
Avis/Budget Car Rental, LLC (Amendment No. 10)
The Hertz Corporation (Amendment No. 9)
Enterprise Rent-A-Car, LLC dba Alamo Rent a Car / National Car Rental (Amendment No. 9)
Enterprise Rent-A-Car Company of Los Angeles (Amendment No. 9) DTG Operations, Inc. dba Dollar Rent a Car /Thrifty Car Rental (Amendment No. 9)
SIXT Rent a Car, LLC (Amendment No. 1)
2) Authorize the City Manager or designee to execute all necessary documents subject to such changes / revisions agreeable to the City Manager and City Attorney.
City Council Staff Report
August 26, 2026 -- Page 2
Approval of Amendments to Car Rental Concession Agreements at Palm Springs International Airport BUSINESS PRINCIPAL DISCLOSURE:
A copy of the Public Integrity Disclosure Form for each of the car rental companies is included as (Attachment B).
BACKGROUND:
The original five (5) Car Rental Agreements were approved after a Public Bid in 2011, with an initial term ending on June 30, 2014. At the request of City staff, the City Council has approved eight subsequent term extensions:
Amendment No. 1: Extended through June 30, 2017
Amendment No. 2: Extended through June 30, 2020
Amendment No. 3: Extended through June 30, 2021
Amendment No. 4: Extended through June 30, 2022
Amendment No. 5: Extended through June 30, 2023
Amendment No. 6: Extended through June 30, 2024
Amendment No. 7: Extended through June 30, 2025
Amendment No. 8: Extended through June 30, 2026
The SIXT Rent a Car, LLC Non-Exclusive Operating and Lease Agreement was approved by City Council on November 12, 2025 (Item 1N) to operate as a car rental concession at the Palm Springs International Airport. SIXT Rent a Car, LLC began operations at the Airport on January 18, 2026.
The car rental concession program at the Airport has historically been one of the largest sources of Airport revenue. As Palm Springs is an inbound leisure tourism market, approximately two-thirds of enplaned passengers are visitors, who are the primary customers for car rental companies. In 2019, record passenger traffic led to significant revenue generation for car rental companies. However, the COVID-19 pandemic caused an unprecedented drop in airline passenger traffic in 2020, severely impacting car rental transactions and gross receipts. Since the end of the COVID-19 pandemic, enplaned passengers, car rental transactions, and gross receipts have continued to increase as illustrated in Table 1 below.
Table 1
Calendar Year Enplaned Passengers Car Rental Transactions Car Rental Gross Receipts 2019 1,287,474 259,028 $74,399,672
2020 632,316 138,373 $44,692,255
2021 1,047,643 174,960 $70,657,398
2022 1,500,618 277,405 $104,149,629
2023 1,624,012 258,670 $104,669,120
2024 1,614,684 262,484 $101,955,431
2025 1,655,631 269,514 $101,194,097
City Council Staff Report
August 26, 2026 -- Page 3
Approval of Amendments to Car Rental Concession Agreements at Palm Springs International Airport As a part of the Airport Master Plan, the car rental counters, return lanes, and ready spaces will need to be relocated to the auxiliary car rental lot. This relocation will also provide for the terminal expansion and for the temporary Federal Inspection Site (FIS) facility. The auxiliary car rental lot will be on the north side of the Airport, currently the location of the United Service Organization (USO) and the Customs and Border Protection (CBP) offices. Ultimately, with the construction of the hybrid Consolidated Rent-A-Car facilities (CONRAC), a portion of the auxiliary car rental lot will become the Car Rental Ready facility.
The car rental concession Minimum Annual Guarantee (MAG) was reinstated in Amendment 7 (Amendment No. 8 for Avis/Budget). Pursuant to Section 5.03(A), as amended, under the MAG, the car rental concession fees, to be paid monthly (the “Monthly Percentage Payment” as defined in the Car Rental Agreements), will be calculated as the greater of either one-twelfth of the MAG or 10% of actual gross receipts.
The Monthly Percentage Payments will be reconciled annually pursuant to Section 5.11 of the Operating and Lease Agreement for Operation of a Car Rental Concession to ensure the Annual Percentage Payment is the greater of the MAG or 10% of actual gross receipts.
In Fiscal Year (FY) 2026, the Minimum Annual Guarantee (MAG) percentage was 95%.
A survey of rental car minimum annual guarantee percentages of regional and similarly sized airports (Long Beach – LGB, Myrtle Beach – MYR, Ontario – ONT, Orange County – SNA, Tucson – TUS, San Diego – SAN) confirms that the industry standard rental car MAG is 85% for airports similar to PSP. The Rental Car Industry requested the Airport to review the Airport’s MAG percentage. In FY 2025, the Rental Car Industry operating at PSP overpaid car rental commissions owed to the City in the amount of $2,369,739.58, which had to be reimbursed to the rental car companies via checks or credits.
The Rental Car Industry operating at PSP also requested the Airport consider providing additional space close to the Airport Car Rental Return Lane and the Ready Lot to allow for quick removal of returned vehicles to a staging area and for clean vehicles to be staged for the Ready Lot.
STAFF ANALYSIS:
The Amendment extends the current car rental agreement for an additional one year and provides two (2) one-year extension options. This extension strategy will minimize operational disruptions during the construction and transitional periods, ensure consistency of service for passengers, and allow for a more comprehensive and informed Invitation to Bid (IFB) process which will include the new operational environment, ultimately leading to better long-term outcomes for the Airport and its car rental partners.
Pursuant to Section 5.03 (A), as amended, this Amendment defines the gross revenues from June 2025 through May 2026 to be used to calculate the Minimum Annual Guarantee (MAG) for each car rental company for Fiscal Year (FY) 2027. After careful analysis of City Council Staff Report
August 26, 2026 -- Page 4
Approval of Amendments to Car Rental Concession Agreements at Palm Springs International Airport the overpayments made by the rental car companies in FY 2025 and the projected cash flows from MAG payments in FY 2027, Airport Staff are recommending a decrease of the MAG percentage from 95% to 85%. This reduction will result in not having to reimburse the car rental companies an estimated $1,035,505.82 in potential overpayments of car rental commissions.
This Amendment adjusts facility rates in accordance with the Car Rental Agreements.
Pursuant to Section 5.03 (D), facility rates are to be adjusted annually to reflect CPI increases. The recommended new terminal and facility rates are listed in Table 2 below.
Table 2
Leased Space Current Annual Rates Annual Rates as of 7-1-26 Terminal Area $112.17 per sq. ft. $115.76 per sq. ft.
Service Facilities $1.51 per sq. ft. $1.56 per sq. ft.
Ready Return spaces $2,427.72 per space, annually $2,505.41 per space, annually Overflow Parking Spaces $2.61 per space per day $2.69 per space per day ACC Campus Facilities* $6.00 per sq. ft. $6.19 per sq. ft. * - Accelerator Campus Facilities (2901 E. Alejo Road, Palm Springs, CA 92262) With Airport Administration moving to the South Paseo Dorotea Administration Building, this will free up space to the north of Hangar One, currently being used as an employee parking lot. It is estimated that the Rental Car Industry can park approximately 80 vehicles in this space for staging. Airport Staff are recommending, as Airport operations permit, that space in this lot be made available to the Rental Car Industry in a fair and equitable manner. Each car rental company shall pay $200 per staging space per month for as long as they need the space.
Once all Amendments have been executed, the Airport will meet with all current car rental companies to begin the process of drafting an Invitation for Bid (IFB) that will incorporate all existing facilities and the transition to the auxiliary car rental lot. The publication of the IFB through Planet Bids will take place prior to the termination date of the executed extension to ensure a transparent and competitive procurement process that aligns with the City’s procurement policies.
ENVIRONMENTAL ASSESSMENT:
The requested City Council action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The requested action is to approve contracts for the above-mentioned services, and is exempt from CEQA pursuant to Section 15378(b), in that a “Project” does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
City Council Staff Report
August 26, 2026 -- Page 5
Approval of Amendments to Car Rental Concession Agreements at Palm Springs International Airport ALIGNMENT WITH STRATEGIC PLANNING:
Approval of this action supports City Council’s Strategic Plan Broad Goals of Economic Development, and Infrastructure and Facilities, well as the Airport’s Strategic Plan Priority 3 – Goal 2: Create Revenue Diversification Through Strategic Partnerships.
FISCAL IMPACT:
This action should result in Airport Revenues of approximately $10,166,707 from car rental gross revenue and $1,805,026 for leased space and other fees, for a total of $11,971,733 in Fiscal Year 2026-27.
REVIEWED BY:
Interim Executive Director of Aviation: Victoria Carpenter City Attorney: Geremy Holm
City Manager: Teresa Gallavan for Scott Stiles
ATTACHMENTS:
A. Car Rental Lease Amendments No. 9, Avis-Budget Car Rental Lease Amendment No. 10, and SIXT Amendment No. 1
B. Public Integrity Disclosure Forms