Meeting No.

744
Item 4
Appendix D

TO: The Thruway Authority Board DATE: May 12, 2020

FROM: Mark A. Hixson, P.E.
Director of Maintenance and Operations

SUBJECT: Authorizing the Authority to Enter into a Lease Agreement with Empire State
Thruway Partners for the Design, Construction, Financing, Operation and
Maintenance of the 27 Thruway Food Service Facilities Located at the Service Areas
Along the Thruway

On October 15, 2018, the Authority issued Request for Proposals No. 18C15 for

the design, construction, financing, operation and maintenance of the 27 food service

facilities located at the service areas along the New York State Thruway. As amended,

Request for Proposals No. 18C15, is referred to herein as the “RFP”.

Three responsive proposals were received by the due date of June 6, 2019. The

responsive proposals are described as follows:

1. Empire State Thruway Partners (“Empire”) proposed to invest $299,999,998 in

capital funds, with an additional $103,990,440 in renewal and replacement funds, and to

provide the Authority .84% of gross sales in rent with a guaranteed minimum of

$51,429,986 in rent over the life of the contract. Empire projected $85,380,220 gross

sales-based rent to the Authority over the life of the contract. Empire proposed primarily

new food service facilities that will be sustainable, incorporate technology driven service

enhancements and Leadership in Energy and Environmental Design (LEED) principles.

A variety of new services were also proposed, including expanded commercial offerings,

and a commitment to Taste NY and the I Love NY Program.

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2. New York Go (“NYGO”) proposed to invest $157.5 million in capital funds,

with an additional $57,035,999 in renewal and replacement funds, and to provide the

Authority 2.71% of gross sales in rent with a guaranteed minimum of $224,579,119 in

rent over the life of the contract. NYGO projected $249,048,122 gross sales-based rent

to the Authority over the life of the contract. NYGO proposed to remodel and refresh

existing facilities. Some commercial services were proposed, and the creative use of

technology to improve customer services was present.

3. Liberty Infrastructure Partners (“Liberty”) proposed to invest $181,297,883 in

capital funds, with an additional $135,973,416 in renewal and replacement funds, and to

provide the Authority 2.0% of gross sales in rent with a guaranteed minimum of

$149,149,782 in rent over the life of the contract. Liberty projected $167,125,563 gross

sales-based rent to the Authority over the life of the contract. Liberty proposed to remodel

existing facilities and open up the current floor plans to allow for greater customer flow.

Some LEED principles were incorporated, in addition to an extensive recycling program.

An Evaluation Committee reviewed the three responsive proposals, and predetermined

weights were then applied to the evaluation scores to determine the highest ranked proposer.

As a result of the evaluation, Empire was the highest ranked proposer.

The Authority obtained two independent appraisals of the Empire proposal and it was

determined that the Authority will be receiving fair market value as required by the Public

Authorities Accountability Act.

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Consistent with the RFP, principal terms of a lease agreement with Empire have

been negotiated, and finalization is anticipated shortly. Although Empire’s financing plan

will be subject to financial close provisions of the lease agreement and is not yet complete,

Empire has provided reasonable assurances, based on where they are in the project cycle,

that they are able to obtain financing for the project. The lease agreement will be effective

after it has been approved by the New York State Attorney General and the Office of the

State Comptroller; if Empire does not achieve the financing for this project either the

Authority or Empire can terminate the lease agreement under the conditions specified in

the lease agreement. It should be noted that one of these conditions is Empire’s ability to

terminate due to market disruption events, including in the worldwide financial markets.

The lease agreement will run for 33 years from the date Empire commences operation of

the first 16 food service facilities designated in the RFP. Empire will commence

operation of the remaining 11 food service facilities upon expiration of the current

contractor’s agreement at the end of 2022. The Authority has the right to terminate for

convenience subject to payment to Empire for such termination in accordance with the

lease agreement terms.

In accordance with Resolution No. 6197, the Director of Maintenance and Operations has

progressed a review pursuant to the State Environmental Quality Review Act (“SEQRA” 1) in

relation to the RFP.

1
New York State Environmental Conservation Law, Article 8, and implementing regulations, 6 NYCRR Part
617 et seq.
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Appendix D

Pursuant to SEQRA, an assessment of environmental significance of the project was

conducted, and issuance of a Determination of Non-Significance (“Negative Declaration”) is

recommended by the Authority’s Director of Maintenance and Operations. As the final scope

for each location is developed, it will be reviewed to ensure consistency with the environmental

Negative Declaration. Any changes to the Negative Declaration will be submitted to the Board

for its consideration.

Under the lease agreement, the Authority will continue to have certain maintenance

responsibilities to include: snow removal; operation of Authority owned wastewater treatment

plants to the extent the Authority continues to operate same; provision and maintenance of

motherboard signage along the highway; provision of Wi-Fi to customers; and maintenance of

certain utility infrastructure. Also, Empire will not be responsible for certain petroleum

contamination and hazardous waste that predates the term of the lease agreement as set forth in the

RFP, and the Authority is responsible for payment of certain costs that may ensue from delays

attributable to such remediation. The Authority is also liable to payment to Empire for certain

events, such as Authority-directed changes to project requirements, discriminatory changes in law

or policies directed at the project, and force majeure events. It is recommended that the Executive

Director be provided with the authorization to spend up to an aggregate of $15 million in Authority

funds payable by the Authority to Empire under the lease agreement; for expenses beyond such,

Board authorization will be sought.

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Appendix D

RECOMMENDATION:

It is recommended that the Board adopt the following resolution:

RESOLUTION NO.

AUTHORIZING THE AUTHORITY TO ENTER INTO A

LEASE AGREEMENT WITH EMPIRE STATE THRUWAY
PARTNERS LLC FOR THE DESIGN, CONSTRUCTION,
FINANCING, OPERATION AND MAINTENANCE OF
THE 27 FOOD FACILITIES LOCATED AT THE SERVICE
AREAS ALONG THE THRUWAY

RESOLVED, that the Authority hereby authorizes a

lease agreement with Empire State Thruway Partners LLC

(“Empire”) consistent with this agenda item, the RFP, and all

applicable laws and policies and also on such terms and

conditions as are in the best interest of the Authority as may

be recommended by the Chief Financial Officer, the Director

of Maintenance and Operations, the Chief Engineer and the

General Counsel and that are consistent with the aforesaid

documentation; and be it further

RESOLVED, that the Executive Director, or his

designee, shall have the authority to take all steps to

implement this Resolution, including, but not limited to:

finalizing negotiation of the lease agreement; executing the

lease agreement and any documentation that may be necessary

in connection therewith; exercising all powers reserved to the

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Appendix D

Authority under the lease agreement; managing and

administering the lease agreement; amending the provisions of

the lease agreement consistent with the terms of this Item and

other Board authorizations and suspending or terminating the

lease agreement if in the best interests of the Authority and

consistent with the terms of the lease agreement; and be it

further

RESOLVED, that subject to the availability of funds,

the Executive Director, or his designee, shall have the ability

to make payment to Empire up to the aggregate amount of

$15 million in Authority funds for monies payable to Empire

under the lease agreement; and be it further

RESOLVED, that a recommendation for a

Determination of Non-Significance (“Negative Declaration”)

regarding the environmental significance of this Board action

(“Recommendation”) pursuant to the State Environmental

Quality Review Act (SEQRA) be, and the same hereby is,

approved; and it be further

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Appendix D

RESOLVED, that this resolution be incorporated in

full in the minutes of this meeting.

________________________________
Director of Maintenance and Operations

RECOMMENDATION APPROVED:

______________________________
Executive Director