ADDENDUM NO. 5 - Flychicago



Thursday, February 2, 2017ADDENDUM NO. 5ForREQUEST FOR PROPOSALSForFOR BRANDED HOTEL OPERATOR MANAGEMENT SERVICES AT CHICAGO O’HARE INTERNATIONAL AIRPORT HOTELSThe following changes and/or revisions are incorporated into the above referenced RFP Document as noted. All other provisions and requirements as originally set forth remain in force and are binding. THE RESPONDENT MUST ACKNOWLEDGE RECEIPT OF THE ADDENDUM IN THE COVER LETTER SUBMITTED WITH THEIR PROPOSALS.SECTION?I:?NOTICE?OF?REVISIONS/UPDATESREVISION/UPDATE DESCRIPTIONThe CDA will be accepting additional questions on the materials presented during the Webinar until Monday, February 6, 2017 12:00 p.m. CST. Those questions, along with the questions asked during the Webinar, and the responses thereto, will be posted in another addendum which shall be issued in the near future. Additional Financial Information for the Existing Hotel has been posted in the data room as of the date of this Addendum No. 5. The map of the Socio-Economically Disadvantaged Areas as defined by the City’s Department of Planning and Development has been posted in the data room as of the date of this Addendum No. 5. SECTION II: QUESTIONS AND ANSWERS/CLARIFICATIONSPlease note that this SECTION II of Addendum No. 5 addresses all questions submitted on or before January 9, 2017 that were not answered in previously issued Addenda. Do specific MWBE firms on the project team need to be identified at the RFP stage, or can we commit to good faith efforts at this stage?CDA realizes that there are many unknowns at this stage in the process. However, the RFP does require specific identification of MBE/WBEs in Respondents’ proposals for the Technical Services/Pre-Opening Services of the Project. For the 15% ACDBE goal, applicable upon commencement of the hotel operation, specific examples of types of ACDBE participation and proposed percentages are sufficient at this early stage. At a minimum, good faith efforts to provide participation equal to or greater than the goals set forth in the RFP are required. Compliance is extremely important to the CDA and the Evaluation Committee will take the level of detail provided in Respondents’ proposals into account in their evaluation of the proposals. To calculate the percentage of ACDBE participation as requested in Proposal Form B, is the total amount based on Total Receipts (i.e. the sum of all receipts generated by this operation?) or is the total amount based on the total fees earned by the Proposer?The calculation of the ACDBE participation is measured as the percentage of the total receipts of the two hotels that are paid to certified ACDBE firms. Based on the RFP, management of the two Hotel projects in its totality is considered a single concession. Therefore, any revenue generated by any component of the operation, in which a certified ACDBE entity is the owner, joint venture partner or subtenant, will be credited towards the ACDBE goal. Proposal Form C, Schedule C, “Letter of Intent…” requests the “Value of participation by ACDBE as a percentage of concession gross revenues: ___________%”. Can the CDA please define “Concession Gross Revenues”? See Exhibit B-Special Conditions, Section II-Goals.Does Concession Gross Revenues include Guest Revenues? No. Guest revenues are revenues of the CDA and not of the manager and are thus not subject to the ACDBE requirements. However, if Guest Revenues are a component in determining the Management Fee, then the portion of the Management Fee derived from Guest Revenues would constitute a portion of the total revenues subject to the ACDBE requirement.Does concession Gross Revenues include Management Fees payable to the Proposer? No.If a coffee shop or dry cleaners or spa is subleased does “Concession Gross Revenues” consist of Gross Receipts collected by OR the Rent Collected from such subleases? If the coffee shop was ACDBE certified, would the Gross Receipts or Rent Paid by such ACDBE be counted towards the ACDBE participation goal? The gross receipts earned by that ACDBE will be counted towards the participation goal.Do contracts for goods/commodities (i.e. linens, janitorial supplies, disposables etc.) provided by MBE/WBE suppliers and count towards the required MBE/WBE/ACDBE participation percentages? How would these be calculated? If provided as part of the Technical/Pre-Opening services, MBE/WBE suppliers of goods may be used to achieve the compliance goals set forth in the RFP. 60% of expenditures for materials and supplies purchased from a MBE or WBE that is certified as a regular dealer or supplier shall be counted toward the MBE/WBE compliance goals set forth in the RFP. After the Hotels are open for business, 60% of expenditures for materials and supplies purchased from a certified ACDBE that is certified as a regular dealer or supplier shall be counted toward the 15% ACDBE participation goal. Are the compliance requirements a total of the Technical Services and the Pre-Opening / Operations combined? The MBE/WBE compliance requirement applies to the Technical Services and Pre-Opening Services. Once each Hotel is open and being operated, the ACDBE compliance requirement will apply.Are two separate MBE/WBE compliance required…one for the Technical Services and one for the Pre-Opening / Operations? For MBE/WBE compliance the percentage to be applied is in reference to the total Technical Services and Pre-Opening services. The Special Conditions for ACDBE posted are dated September 2015 and reference a noon-rental car concessions ACDBE goal of 37%. Is this document correct? Is the ACDBE goal for his contract 15% or 37%?The Special Conditions for ACDBE that are posted on the RFP website are the most current and up to date version. The 37% goal for non-rental car ACDBE participation is an aspirational goal for the City’s concessions program as a whole, not a contract-specific goal. The contract specific goal of 15% ACDBE participation is the goal that respondents should address in their proposals. In Proposal Form B “Airport Concession Disadvantaged Business Enterprise Plan” Question 1 states “Indicate the total proposed (ACDBE) participation: _________%” , Can the CDA please explicitly define the numerator and denominator that should be used to calculate this percentage figure [%].The numerator is any revenue generated by any component of the management of either hotel in which a certified ACDBE entity is the manager, joint venture partner with the manager, or sub-manager and the denominator is the total revenues paid under the Management Agreements for the two hotels.The CDA has set a compliance goal of 15% ACDBE for this project. Therefore, this figure should be at least 15%. Failure to identify certified ACDBE, MBE and WBE participation equal to or greater than the goals set forth in the RFP, or to demonstrate good faith efforts to achieve such goals in a Respondent’s proposal, will be grounds for the City to determine that a Respondent’s proposal is not responsive to this RFP and/or that the Respondent is not responsible. In either case, the Respondent will not be eligible for contract award under this RFP.Can the map of the Socio-Economically Disadvantaged Areas as defined by the City’s Department of Planning and Development be made available now?Yes. This has been posted in the data room as of the issuance of this Addendum No. 5.Who is paying for the improvements – CDA or City of Chicago? i.e. who will backstop a bond issuance?This question will be addressed in detail in the next Addendum.How many employees are currently on the Hilton payroll? Is detailed job/wage information available? This information is not available.Is historical utility billing information available?No. What is the budget for renovation of the existing Hilton? If not determined, how/when will this be determined?CDA has provided a preliminary pro-forma budget for both Hotels in order to obtain an apples-to-apples comparison of all proposals. CDA intends the selected respondent to work with CDA to finalize these budgets.What are the assumed/conceptual budgets for each hotel... hard cost, soft cost, FFE? Please see the response to question 15 above. Would the CDA be able to supply Financial Reports for assistance in crafting our projections for the exiting 860 room hotel as follows:Historical YE P&L from 2014Historical YE P&L from 2015Historical YE P&L from 2016 (Ideally has December Finalized)TTM Through Latest 12 month period of Actual DataMost recent 2016 YE Forecast (unless December 2016 is finalized)2017 Budget2017 Forecast if already projecting updates to the BudgetMost Recent STR ReportMost Recent Group Pace report for year 2017 and BeyondTransient Pace for 2017CDA is expecting that Respondents will provide projections based on their own expertise in the field, rather than relying on current performance. However, certain historical financial data has been posted in the data room for your reference. Can you clarify the extent of the area that the selected respondent would be responsible for operating (particularly with regard to the arcade level/underground connections to terminals)? The current retail outlets (Barber and Sundry store) will be the responsibility of the selected respondent.Are the retail storefronts on the arcade level included in the management scope? Are these spaces currently leased? Yes, the retail storefronts on the arcade level are included in the management scope. These spaces are currently leased.Will the lease retail spaces in either of the hotels (existing or new) need to use any of the airports existing concession management agreements (i.e. OTG, HMS, etc.) for the retail outlets in the hotels? If so, can the financial terms and conditions of those existing agreements be provide so that the information can be incorporated into the hotels’ retail pro-forma calculations? No. None of the retail spaces in either Hotel (existing or new) will be required to use existing concession management agreements. Regarding hotel-related retail spaces as referenced in Tab 4.d.v, for the existing hotel, does that include the retail spaces (currently a sundry store and a barber) that is on the Lower Level concourse across the corridor from the entry to the Hotel meeting room corridor entrance? Yes, the retail spaces (currently a sundry store and a barber) that are on the Lower Level concourse across the corridor from the entry way to the Hotel meeting rooms are included.What is the current total square footage of leased retail space in the existing hotel?Fitness Center, Pool, and Spa total 8,560 square feet; Retail and restaurants total 17,480 square feet; Business Center totals 500 square feet.Is CDA’s expectations/requirement that the new hotel have a similar / more / less amount of lease retail square footage than currently exists in the existing hotel? CDA’s expectation is that the lease retail square footage can accommodate hotel occupancy and provide diverse product offerings and amenities for International passengers.For the existing hotel, what is the current condition regarding any environmental remediation requirements? Are there any ACM/Lead paint / PCB remediation concerns in the current facility? When was the hotel remediated? Are there any Phase 1 and/or Phase 2 Property Conditions Assessment / Environmental Reports available?These issues will be addressed with the successful respondent and any necessary environmental remediation will be the responsibility of the CDA.For the existing hotel, does the renovation area-of-work include any of the concourse level / connecting tunnel or does the renovation work only include to the demising line of the concourse level hotel entry doors?In order to provide synergies and branding opportunities for the two areas, the renovation area of work includes the concourse tunnel that connects the retail leasing spaces to the demising line of the concourse level hotel entry way.For the existing hotel, are there as-built drawings for all areas of the existing hotel? Or at least public area and BOH area floor plans, typical guestroom floor plan, guestroom type matrix? All available information will be provided after the contract is awarded.Can an RFP Respondent include a qualified Franchisee that is a first-class operator of upper-upscale (or better) hotels?Yes, provided that a specific brand is identified for each Hotel, and that the Respondent provides a letter of approval from the brand parent company/franchisor. The franchisee, as the Respondent, will be expected to meet the criteria outlined in the RFP.Will the CDA accept proposals from Franchisees that allow for an option to select among multiple hotel flags? The CDA requires each proposal to definitively identify one single hotel flag for the existing hotel, and one single hotel flag for the proposed hotel. As such, respondents may not propose a selection of brands in one proposal.For the Existing Hotel, is there a process for the Respondent to evaluate the hotel and determine the required property improvements (PIP) to convert the Existing Hotel to XYZ brand?Evaluating the Existing Hotel to determine the property improvements necessary to bring the facility in line with the Respondent’s Brand Standards shall be done in accordance with terms and conditions set forth in the Technical Services Agreement. Will the CDA be scheduling tours of the Existing Hotel?No. Are there other programmatic elements that the CDA sees as essential?Elements that CDA considers essential have been outlined in the RFP, but the proposer is not limited to those identified. CDA encourages Respondents to suggest first class and innovative programmatic elements.Are floorplans of the existing Hilton available?No. Is the CDA considering/open to changing the room count for the Hilton?CDA is open to program adjustments, to be discussed further with successful Respondent.Please note, however, that the required information Respondents shall provide in Exhibit D and Exhibit E should use the room counts and sale-able meeting space amounts provided. Respondents shall not make any adjustments to these assumptions. CDA has updated Exhibit D to also include sale-able meeting space, which will be included with this addendum. The updated Exhibit D supersedes the previous Exhibit D, and should be used as part of a compliant response.What level of F&B service does the CDA require? E.g. is room service required? 3-meal restaurant?Food and Beverage services consistent with the standards for upper-upscale branded hotel properties should be included in all proposals. In the interest of offering assumptions for respondents so that the CDA will receive proposals that are comparable do you have a renovation plan/schedule for the Existing Hotel? If no plan exists, should respondents propose as though there is no impairment?Renovations will begin as early as January of 2019 and shall allow for the continuous operation of the Exiting Hotel. The CDA is not publishing the expected renovation amount as this will (in part) depend on the brand/operator that is selected. Respondents should assume that the hotel will be renovated to a first-class upper upscale level in line with industry best practices and the latest design trends and standards in phases during the term of the Management Agreement for the Existing Hotel.Again for consistency across all responses, will the CDA provide a space program for the second hotel?CDA provided fixed programming assumptions for both the Existing Hotel and the New Hotel in Exhibit D and Exhibit E. CDA has updated Exhibit D to also include sale-able meeting space, which will be included with this addendum. The updated Exhibit D supersedes the previous Exhibit D, and should be used as part of a compliant response.Respondents shall provide the required information in Exhibit D and Exhibit E using these assumptions. Respondents shall not make any adjustments to these assumptions. Upon selection of a Respondent, CDA is open to discussing program adjustments at both hotels.Is the site subject to real estate taxes? If so, can you provide tax assessment history?Respondents should assume that no real estate tax will be assessed to the hotel operations; as such they should not estimate real estate taxes in their pro-forma. CDA has updated Exhibit D to remove this line item under “Fixed Charges.” The updated Exhibit D will be included with this addendum, supersedes the previous Exhibit D, and should be used as part of a compliant response.Clarify / confirm that Exhibit D in the Technical Services Agreement are OWNER RELATED project scope and costs and NOT Manager’s. The cost of the tasks set forth in Exhibit D to the Technical Services Agreement will be the responsibility of the Owner, but the Manager will be expected to advise the Owner on technical matters relating to these tasks.For the Technical Services Agreement, will the Operator be engaged as “Owner’s Agent” or “Owner’s Rep”?The Operator will be engaged as Owner’s Agent under the Technical Services Agreement, but only to the limited extent expressly set forth in that Agreement.Will the Qualified Management Agreement be subject to IRS Revenue Procedure 97-13 (the “old” QMA rules) or the updated QMA guidance issued by the IRS in August 2016 (Revenue Procedure 2016-44)? Respondents need not address whether Rev. Proc. 97-13 as amended or 2016-44 will apply to the Management Agreement but instead prepare their response within the parameters of the RFP, including without limitation Exhibit E thereto. The City, however, wishes to preserve the ability to finance some or all of the costs of the construction of the new hotel and/or renovation of the existing hotel with proceeds of tax exempt bonds. Accordingly, the City reserves the right to revise the Management Agreement if necessary to comply with the applicable Revenue Procedure, in light of subsequent guidance. If the respondent is a “Team”, does each team entity need to submit their own Economic Disclosure Statement?Yes.The RFP indicates that the Existing Hotel Financial Statements are available in the Data Room. However, we cannot locate them. Would you kindly provide them at your earliest convenience? Please include the historical management fees paid by CDA to Hilton for management of the Existing Hotel. This information has been posted in the data room as of the issuance of this Addendum No. 5.The CDA is to be applauded for including a requirement for participation by M/W/ACDBE firms in this RFP. Because of the unique nature of this opportunity, and the requirement to be certified at the time of submittal, would the CDA please consider extending the due date for the RFP to Q2 to allow more firms to apply and/or update their NAICS codes to be compliant? Would the CDA further allow certified firms to register on its website for interest similar to the way it was done for Midway?The CDA is not extending the due date for this opportunity. Further, particularly in the area of ACDBE, the CDA believes that there is ample time for firms to apply for/update NAICS code and certification prior to the commencement of hotel operation.Who is on the evaluation committee for the RFP?In accordance with City policy, this information will not be disclosed while the procurement of these services is ongoing. Section III of the RFP offers Reference Material including Existing Hotel Financial Statements, O’Hare 2021 Capital Plan, Sustainable Airport Manual, etc. This information seems to require a username and password. Please advise how to obtain access?Please follow the instructions provided on the website and enter your name and e-mail address to obtain all information posted in the Data Room. Please provide a copy of the labor peace agreement that manager will be subject to?There is no form Labor Peace Agreement. Each respondent and its partners that fall under the City's Labor Peace Agreement Ordinance requirements will enter in to their own agreement with the labor union. The City is not a party to these agreements. Completed Labor Peace Agreement forms (i.e. Exhibit F – Evidence of Signed Labor Peace Agreement and Exhibit G – Labor Peace - Small Business Exception Claim) are to be included with respondent's proposal.Does the current Clear Channel airport advertising contract apply to these hotel locations?The hotel locations described in the RFP are not currently covered by any advertising contracts held by the City or the CDA, however, this may be subject to change in the future.Is the CDA open to a longer management term or additional extensions?The CDA does not anticipate being able to offer a longer term or additional extensions. Will it be allowed for any member of the Operator team to also pursue, and be considered for, the outstanding PMO RFP or will it be considered a conflict of interest by CDA and/or the City?It will be considered a conflict of interest for the same entity to be considered for this opportunity and the PMO opportunity that is currently outstanding.Are there any circumstances under which the CDA would award contracts to separate management companies for the two hotels? This is relevant to understanding the opportunity for complexing operations and the related efficiencies. The CDA anticipates entering into agreements with a single operator for both hotels. Please describe the relationship that the Operator’s Technical Services is expected to have with the DB or DBB teams for the Hotel Projects?The Operator’s Technical Services team shall provide technical advisory and specific design services for the Hotel Projects. advise CDA and its Design Build or Design Bid Build teams, on the specific brand standards, programming, aesthetics, and systems necessary for the Hotels.participate in the review and approval of each phase of the pre-design, design, development, and construction of the Hotels in order to confirm compliance with the Operator’s unique brand standards.The Operator’s Technical Services team shall not be responsible for:managing or supervising the contractors engaged by CDA to carry out any portion of the construction or renovation of the Hotelsconstruction means, methods, techniques, sequences, or procedures; safety precautions and programs in connection with the construction; or the failure of any contractor to carry out any portion of the constructionIs it anticipated that Architects will be a part of the operator teams for this proposal, or is the expectation that Architects will submit solely on the future design-build and design-bid-build proposals?CDA does not specifically require architects to be a part of respondents’ teams. However, respondents will be expected to compile teams with the expertise necessary to complete all of the services set forth in the Technical Services and Management Agreements. In order to effectively carry out the terms of the Technical Services Agreement, an operator may wish to either use in-house architectural services or contract for them separately. In addition, the CDA does expect operator to work in coordination with CDA selected architects during the design-build and design-bid-build portion of the project(s). As such, architects or other members of the Hotel Operator’s design team will be precluded from participating in the Design-Build or Design-Bid-Build teams for the Hotels on the basis that to do so would be a conflict of interest. What is the anticipated date that the design-build and design-bid-build RFPs will be released?The CDA is not able to provide an anticipated date for the release of the design-build and design-bid-build RFPs at this time.Regarding the selection of the Design team for the Renovation and the New Hotel? (page 13, item D. Hotel Projects): Is there an anticipated time frame for the issuance of the RFP’s for DB or DBB teams?? Who will be on the selection committee for the DB and DBB teams? How will the CM or PM on the Operator teams be aligned with the Project Manager for O’Hare 21?How will the Hotel DB and DBB Design Team for the Hotels be aligned with the Lead A/E Design team for the Terminal Development?Will firms participating on the A/E Design Team for Terminal Development, or A/E Design team for Concourses, or Hotel Operator Design Team be precluded from participating in the DB or DBB teams for the Hotels?To the extent that these questions are not answered elsewhere in this Addendum No. 5, it is premature to respond to these inquiries at this time. ................
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