TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Mukesh (Mookie) Patel
SUBJECT: Amendment to the On-
Airport Lease Agreement
for General Services
Administration Public
Services
DATE: September 8, 2026
Approved Date:
9/16/26
CO
UNCIL DISTRICT: Citywide
RECO
MMENDATION
A
dopt a resolution authorizing the City Manager or her designee to negotiate and execute the 14th Amendment to the federal On-Airport Lease Agreement between the City of San José and the United States, through the General Services Administration Public Buildings Service, to extend the term of the agreement to June 30, 2032, to set the annual rent amount retroactive to July 1, 2026, and to set fixed annual increases of three percent to the rental rate.
SUM
MARY AND OUTCOME
O
n January 1, 2016, the City of San José (City) entered into a federal On-Airport Lease Agreement (Agreement) with the United States government, through the General Services Administration Public Buildings Service (GSA), for offices and breakrooms supporting staff responsible for necessary security operations at the San José Mineta International Airport (Airport). The Agreement has historically been amended annually to adjust rental rates, fees, and charges associated with terminal cost recovery. The current amendment has established the annual fee only through June 30, 2026, however the agreement expires December 31, 2026. The amendment will set the rental rate effective retroactively to July 1, 2026, through the end of the proposed term of June 30, 2032.
To i
mprove administrative efficiency for both parties, the Airport proposed establishing a three percent annual escalation in rent for the extended lease term and proposed that the expiration date be moved to align with the City's fiscal year. GSA agreed to the proposed terms and prepared an amendment to extend the Agreement for five-and-one- COUNCIL AGENDA: 9/29/26
FILE: 26-992
ITEM: 2.8
HONORABLE MAYOR AND CITY COUNCIL
September 8, 2026
Subject: Amendment to the On-Airport Lease Agreement for General Services Administration Public Building Service
half years. The amendment will allow continued use of administrative support space throughout the terminals for necessary security operations and is expected to generate approximately $11.2 million in revenue over the extended term.
BACKGROUND
GSA is the federal agency representing the United States for purposes of the agreement. GSA enters into agreements with airports across the nation to provide breakrooms and offices that support federal security operations within airport premises pursuant to the Aviation and Transportation Security Act.
Checkpoint and baggage security screening operational areas are required to be provided without charge at airports within the contiguous United States pursuant to federal requirements. The offices and breakroom spaces covered by the agreement supports federal Transportation Security Administration personnel performing security operations at the Airport.
The existing agreement was executed on January 1, 2016, and has been amended annually to adjust the rates for office and breakroom support space. The applicable rates, fees, and charges may vary from year to year. The Airport is proposing to extend the agreement term and establish a three percent annual escalation, which would reduce the need for annual amendments and associated administrative processing.
ANALYSIS
The proposed amendment would provide GSA with the necessary breakroom and office space to support federally mandated security operations at the Airport. The amendment would also establish a longer-term agreement with consistent annual rent adjustments, reducing the administrative burden associated with processing annual amendments while maintaining the City's ongoing business relationship with GSA.
The proposed annual increase is based on the Fiscal Year 2026-2027 rate effective July 1, 2026, and establishes a consistent three percent increase each year rather than relying on annual market variability when evaluating terminal costs for rates, fees, and charges. The proposed fixed escalation provides stability in rental revenue. The proposed amendment will generate approximately $11.2 million dollars in revenue over the amendment term.
If the amendment is not executed, the Transportation Security Administration would need to make separate considerations regarding staffing at the Airport. This could affect the operational efficiency, response time, and security of the Airport, in addition to reducing anticipated rental revenue.
HONORABLE MAYOR AND CITY COUNCIL
September 8, 2026
Subject: Amendment to the On-Airport Lease Agreement for General Services Administration Public Building Service
EVALUATION AND FOLLOW-UP
No additional follow-up action with the City Council is expected at this time.
FISCAL IMPACTS
There are no costs associated with this action and the revenue for the six-year extension of this agreement is estimated at $11.24 million. Revenues have already been incorporated as part of the Airport’s Fiscal Year 2026-2027 Operating Budget and no changes are recommended to the estimated revenues due to the amendment as recommended in this memorandum.
COORDINATION
This memorandum was coordinated with the City Attorney's Office and the City Manager's Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the September 29, 2026 City Council meeting.
BOARD, COMMISSION, COMMITTEE RECOMMENDATION AND INPUT
No board, commission, or committee recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-003, Agreements/Contracts (New or Amended) resulting in no physical changes to the environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
HONORABLE MAYOR AND CITY COUNCIL
September 8, 2026
Subject: Amendment to the On-Airport Lease Agreement for General Services Administration Public Building Service
/s/
Mukesh (Mookie) Patel, C.M.
Director of Aviation
For questions, please contact Matthew Kazmierczak, Division Manager, Airport Department, at [email protected] or (408) 392-3640.