HomeMy WebLinkAbout2016-12-08 Council Packet - Work Sessionu
AGENDA
KENAI CITY COUNCIL WORK SESSION
DECEMBER 8, 2016 — 6:00 P.M.
KENAI CITY COUNCIL CHAMBERS
210 FIDALGO AVE., KENAI, AK 99611
http://www.kenai.city
A. Call to Order (Mayor)
B. Purpose of Meeting (Mayor)
C. Presentation /Discussion regarding Airport Leases (City Manager & Scott Bloom)
D. Public Comment (limited to 3 minutes per person)
E. Council Discussion
F. Adjournment
All meetings are open to the public and participation is encouraged. Agendas and supporting documents
are posted on the City's website at www.kenai. city. For additional information, please contact the City
Clerk's Office at 907 - 283 -8231.
Current Code Language — Airport Reserve Lands
21.10.080 Lease amendment or renewal.
(1) An application submitted by an existing tenant for an amendment, term extension, or renewal
of the tenant's lease shall be subject to the requirements and procedures of KMC 21.10.010 through
21.10.070, except that:
(a) KMC 21.10.040(b)(1), (2) and (3) shall not apply to an application that does not include a
proposal to construct new improvements on the premises;
(b) KMC 21.10.040(b)(3) shall not apply to an application that does not include a proposal to
add, delete, or alter a business authorized under the lease;
(c) The appraisal deposit under KMC 21.10.050(a)(2)(i) shall not be required for an
application for a lease amendment that, if approved, will not alter the size or value of the
premises; and
(d) The deposits under KMC 21.10.050(a)(2)(i) and (ii) shall not be required for an
application for a lease amendment that, if approved, will make only administrative changes in
the lease and will not alter the authorized use, size, or value of the premises or if the City
Manager determines the City will not incur any engineering, surveying or consulting costs.
(2) Notwithstanding subsection (1) of this section, the Council may by resolution grant a lessee the
contractual right to a lease renewal upon such terms and conditions as it determines are in the best
interests of the city.
(Ords. 2180 -2006, 2227 -2007)
21.10.090 Length of lease term.
(a) Unless the City determines a shorter lease term is in the best interest of the City, the length of
term for a lease granted for land within the Airport Reserve will be based on the amount of
investment the applicant proposes to make in the construction of new permanent improvements on
the premises during the first twenty -four (24) months following the beginning date of the lease or
lease extension.
(b) Unless the City determines a shorter lease term is in the best interest of the City, the length of
term for a lease renewal shall be based on a City- approved appraisal of the value of the permanent
improvements on the property as set forth in the table in subsection (d)(1) of this section. The
appraisal shall be performed by an independent appraiser certified under Alaska Statute 8.87 with
experience appraising airport improvements. The appraisal shall be paid for by the lessee.
(c) If the applicant proposes to make less than one hundred thousand dollars ($100,000.00) in new
permanent improvements on the premises, the maximum term of a new lease shall be five (5) years.
(d) If the applicant proposes to invest one hundred thousand dollars ($100,000.00) or more in new
permanent improvements on the premises:
(1) The maximum term of a new lease or a renewal of an expiring lease shall be determined
according to the following table:
Applicant's Investment/ Maximum
Value (in U.S. Dollars) Term of
is at Least Years
Less than $100,000
5
$100,000 — $199,000
15
$200,000 — $299,000
20
$300,000 — $399,000
25
$400,000 — $500,000
30
More than $500,000
35
(2) The maximum term extension for an existing lease shall be one (1) year for each twenty -
five thousand dollars ($25,000.00) of additional investment, provided that the total of the
remaining lease term and the extension shall not exceed thirty-five (3 5) years.
(3) A bona fide third party purchaser of airport improvements may get an extension for an
existing lease acquired with improvements based on a City- approved appraisal of the
improvements purchased. Unless the City determines a shorter lease term is in the best interest
of the City, the extension shall be based on the table in subsection (d)(1) of this section
provided no extension shall extend a lease term past thirty-five (3 5) years. The appraisal shall
be performed by an independent appraiser certified under. Alaska Statute 8.87 with experience
appraising airport improvements. The appraisal shall be paid for by the lessee.
(e) In the lease granted to the applicant, the City Manager will include a provision requiring the
applicant to substantially complete the proposed permanent improvements within a reasonable
period of time, considering the cost and nature of the improvements. Provided however, that the
time allowed shall not ordinarily exceed twenty -four (24) months after the effective date of the
lease.
(f) In the lease extension granted to the applicant, the City Manager will include a provision
requiring the applicant to complete the additional proposed permanent improvements within a
reasonable time period, considering the cost and nature of the improvements provided that the time
period shall not ordinarily exceed twenty -four (24) months after the effective date of the lease
extension.
(g) The City Manager will include a provision in a lease or lease extension requiring the lessee to
provide a performance bond, deposit, personal guarantee, or other security if the Manager
determines security is necessary or prudent to ensure the applicant's completion of the permanent
improvements within the time period set under subsections (e) or (f) of this section. The City
Manager will determine the form and amount of the security according to the best interest of the
City, considering the nature and scope of the proposed improvements and the financial
responsibility of the applicant.
(h) The applicant shall, within thirty (30) days after completion of the permanent improvements,
submit to the City Manager written documentation that the improvements have been completed as
required under subsection (e) or (f) of this section.
(i) If the applicant shows good cause to the City Manager, and the Manager determines the action
is not inconsistent with the City's best interest, the Manager may grant an extension that is sufficient
to allow for the completion of the permanent improvements or for submission of documentation that
the permanent improvements have been completed under this section. No extension or combination
of extensions granted will exceed twelve (12) months.
0) If, within the time required under subsection (e) or (f) of this section, including any extension
granted under subsection (i) of this section, the applicant fails to complete the required permanent
improvements, the City Manager will execute the forfeiture of the performance bond, deposit,
personal guarantee, or other security posted by the applicant under subsection (g) of this section to
the extent necessary to reimburse the City for all costs and damages, including administrative and
legal costs, arising from the applicant's failure to complete the required improvements, and initiate
cancellation of the lease or reduce the term of the lease to a period consistent with the portion of the
improvements substantially completed in a timely manner according to the best interests of the City.
(k) The City Manager shall review rates, charges and the investment/value in the chapter every
five (5) years to see if adjustments should be made.
(1) When used in this section, the following terns shall have the meanings given:
(1) "Expiring lease" means a lease with less than one (1) year of term remaining;
(2) "Existing lease" means a lease with at least one (1) year of term remaining;
(3) "Permanent improvement" means a fixed addition or change to land that is not temporary
or portable;
(i) "Permanent improvement' ' includes;
(A) A building, building addition, retaining wall, storage tank, earthwork, fill
material, gravel, and pavement, and
(B) Remediation of contamination for which the applicant is not responsible;
(ii) "Permanent improvement" excludes items of ordinary maintenance, such as glass
replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering
replacement, or pavement patching.
(Ord. 2180 -2006)
21.10.100 Rental rate determination.
(a) Beginning in 2007 and at intervals of approximately five (5) years thereafter, the City Manager
shall retain the services of an independent, qualified real estate appraiser certified under Alaska
Statute 8.87 to determine a zone -based square foot lease rate for all land within the Airport Reserve
that is under lease or available for lease based on the fair market value of the property and the
appropriate market lease rate for property within the Airport Reserve. Lease applications filed after
the effective date of this chapter but prior to completion of the initial lease rate determination shall
have a rental rate of eight percent (8 %) of fair market value until the first June 30 after the zone-
based square foot lease rate is established under this subsection, after which the lease rate shall be as
established in the zone -base square foot method described above.
(b) Following the date on which the City Manager accepts the determinations made under
subsection (a) of this section, the Manager shall establish rental amounts for leases as follows:
(1) For each new lease granted by the City under this chapter, the rental shall be as
determined under subsection(a) of this section; and
(2) For leases in existence prior to the effective date of this chapter, the lease rate shall be
determined as provided in the lease.
(c) Under this section, when determining the fair market value of the premises of an existing lease,
an appraiser shall appraise the property:
(1) In its condition as of the inception of the lease;
(2) Plus any improvements or amenities subsequently provided by the City; but
(3) Excluding any improvements or amenities provided by the City under KMC 21.10.110, if
lessee has reimbursed the City, or entered into an agreement to reimburse the City, for the cost
of the improvements or amenities.
(Ord. 2180 -2006)
21.10.110 Reimbursement for City- constructed improvements.
(a) The City Manager may include in a lease a requirement for the lessee to reimburse the City for
the City's cost o£
(1) Land clearing, gravel fill, utility extensions and other improvements or amenities on or in
direct connection with the premises, constructed by the City prior to the effective date of the
lease; or
(2) Land clearing, gravel fill, utility extensions and other improvements or amenities on or in
direct connection with the premises, which the City agrees to construct as a condition of the
lease, subject to City Council approval.
(b) The lessee shall reimburse the City for the City's cost of constructing the improvements in ten
(10) equal annual payments, plus interest at eight percent (8 %) per year on the unpaid balance or
under such terms and conditions as the Council may set by resolution. If the lease is for less than ten
(10) years, the re- payment schedule may not be longer than the term of the lease. The lessee may
pay the entire remaining balance to the City at any time during the term of the lease.
(Ords. 2180-2006, 2355-2008)
Current Code Language — Airport Outside Reserve
Lands
21.15.120 Principles and policy of lease rates.
(a) A fair return to the Airport System is mandated by the terms and conditions of the quitclaim
deed and appropriate deeds of release, granting these lands to the Airport System by the Federal
Government. To ensure a fair return, all leases for a period in excess of five (5) years shall include a
redetermination clause as of the fifth anniversary, and all lands for lease shall be appraised prior to
lease and again prior to redetermination. Lease rates:
(1) Shall be based on fair market value of the land, including an appropriate consideration of
facilities and services available (public water, public sewer, storm sewers, and other public
utilities) as determined by a qualified independent appraiser, considering the best use of the
specified land; and,
(2) Shall be eight percent (8 %) of fair market value.
(b) For leases in existence prior to the effective date of this chapter, the lease rate redetermination
shall be as provided in the lease.
(c) The City Manager shall change the rent in a lease by giving the lessee written notice at least
thirty (30) days in advance of the effective date of the change.
(d) The "Fair Market Value" of the Premises shall be equal to the then -fair market rate for similar
commercial property in the City of Kenai, Alaska (the "Relevant Area "). City shall give notice to lessee
of City's estimation of the Fair Market Value not later than thirty (30) days prior to the expiration of the
then - applicable five (5) year period, as evidenced and supported by the written opinion of an independent
real estate appraiser certified under Alaska Statute
8.87, selected and paid for by the City, familiar with the Relevant Area (the "First Appraiser ").
If lessee disagrees with such estimate, it shall advise the City in writing thereof within thirty (30)
days of lessee's receipt of such estimate, as evidenced and supported by the written opinion of a real
estate appraiser certified under Alaska Statute 8.87 (selected and paid for by lessee) familiar with
the Relevant Area (the "Second Appraiser "). The parties shall promptly meet to attempt to resolve
their differences between the First Appraiser and the Second Appraiser concerning the Fair Market
Value of the Premises. If City and lessee cannot agree upon such value then, with all deliberate
speed, they shall direct the First Appraiser and the Second Appraiser to expeditiously and mutually
select a third real estate appraiser certified under Alaska Statute 8.87 (selected and paid forjointly
by the parties) familiar with the Relevant Area (the "Third Appraiser"). Within thirty (30) days after
the Third Appraiser has been appointed, the Third Appraiser shall decide which of the two (2)
respective appraisals from the First Appraiser and the Second Appraiser most closely reflects the
Fair Market Value of the Premises. The Fair Market Value of the Premises shall irrebuttably be
presumed to be the value contained in such appraisal selected by the Third Appraiser, and the rental
shall be redetermined based on such value. Notwithstanding anything to the contrary herein, rent
shall continue to be paid at the then- applicable rate until any such new rental rate is established, and
lessee and City shall promptly pay or refund, as the case may be, any variance in the rent, without
interest thereon accruing to the extent to be paid /refunded in a timely fashion.
(Ord. 2180 -2006)
21.15.130 Reimbursement for City- constructed improvements.
(a) The City Manager may include in a lease a requirement for the lessee to reimburse the City for
the City's cost of
(1) Land clearing, gravel fill, utility extensions and other improvements or amenities on or in
direct connection with the premises, constructed by the City prior to the effective date of the
lease; or
(2) Land clearing, gravel fill, utility extensions and other improvements or amenities on or in
direct connection with the premises, which the City agrees to construct as a condition of the
lease, subject to City Council approval.
(b) The lessee shall reimburse the City for the City's cost of constructing the improvements in ten
(10) equal annual payments, plus interest at eight percent (8 %) per year on the unpaid balance or
under such terms and conditions as the Council may set by resolution. If the lease is for less than ten
(10) years, the repayment schedule may not be longer than the term of the lease. The lessee may pay
the entire remaining balance to the City at any time during the term of the lease.
(Ords. 2180 -2006, 2355 -2008)
21.15.140 Lease execution.
The lease applicant shall execute and return the appropriate lease agreement with the City of Kenai
within thirty (30) days of mailing the agreement to said applicant. The lease agreement shall be prepared
in accordance with the requirements of this title. Failure to execute and return the lease agreement within
the specified period shall result in the forfeiture of all leasing rights. (Ord. 2180 -2006)
21.15.150 Lease utilization.
Leased lands shall be utilized for purposes within the terms of the lease and in conformity with the
ordinances of the City, and in substantial conformity with the comprehensive plan. Utilization or
development for other than the allowed uses shall constitute a violation of the lease and subject the lease
to cancellation at any time. Failure to substantially complete the development plan for the land, consistent
with the proposed use and terms of the lease, shall constitute grounds for cancellation. (Ord. 2180 -2006)
21.15.160 Form of lease.
(a) When leasing land under this chapter, the City Manager shall use a standard lease form that is:
(1) Drafted to:
(i) Provide a reasonable basis for the lessee's use of the premises,
(ii) Foster the safe, effective, and efficient operation of the airport,
(iii) Conform with the applicable requirements of the KMC, including this chapter,
Alaska statutes, Federal Aviation Administration regulations, and other applicable
Federal law, and
(iv) Provide for the best interest of the City.
(2) Approved as to form by the City Attorney; and
(3) Adopted by resolution of the City Council.
(b) The City Manager may enter into a land lease that deviates from the standard form adopted
under subsection (a) of this section, if:
(1) The Manager believes the action is in the best interest of the City; and
(2) The lease is approved as to form by the City Attorney; and
(3) The lease is approved by resolution of the City Council.
Most Recent Lease Terms Approved by Non -Code Ordinance
ARTICLE III
TERM & HOLDOVER
A. TERM: Subject to Article XIV, Survey, Improvements & Performance Bonds and all other terms
and conditions of this Lease. The initial term of this Lease is for thirty-five years, from the 1st day of
, 2017 to the 30th day of 2052. As long as Lessee is in
compliance with all terms and conditions of this Lease (including any amendments), City ordinances, and
is current on all City tax liabilities, Lessee may at Lessee's sole option extend the lease for an additional
twenty year term.
B. HOLDOVER: If the Lessee holds over and remains in possession of the Premises after the
expiration, cancellation or termination of this Lease, the holding over will not operate as an extension of
the term of this Lease, but only creates a month -to -month tenancy, regardless of any rent payments
accepted by the City. The Lessee's obligations for performance under this Lease will continue during the
month -to -month tenancy. The City or Lessee may terminate the Lessee's holdover with ten days'
advance written notice.
ARTICLE IV
RENTS AND FEES
A. RENT: The rent for the Premises is $
_ per year, as established by the City
pursuant KMC 21.10.100 and as subject to adjustment under Article V of this Lease, plus
applicable sales tax. The rent shall be payable annually in advance of the first day of each year of
the term of this Lease. All payments required by this Lease must be made in U.S. dollars. If the
annual rent exceeds $2,400, the Lessee may, upon written notice to the City, choose to pay the
rent in equal monthly installments, payable in advance on or before the anniversary date of the
term of this Lease and thereafter at monthly intervals. No conversion of the payment schedule
from annual to monthly shall result in the City receiving less rent than it would have received
had the conversion not taken place.
1. Rent Credit: A rent credit may be applied for a maximum of five years of lease
payments. The credit may only include the value of site preparation work on the
leased premises to include clearing and grubbing, unclassified excavation,
classified fill and back fill, a crushed aggregate base course and utility extensions.
For the credit to be applied, all site preparation must be completed. An engineer's
estimate of value of the site work must be provided to the City and accepted prior
to work being done. An engineer's as -built drawing must be provided to the City
and accepted at the completion of the site work. Once the work is completed and
value determined, a credit will be applied to the lease payments, prorated as
necessary for the successive five years.
B. RENT PRORATED: Rental for any period less than one year shall be prorated on the
basis of the rent payable under this Lease in last full year previous to the prorating.
C. ADDITIONAL RENT: In addition to the rent specified in (a) of this Article, Lessee
agrees to pay to the appropriate parties all levies, assessments, and charges as follows:
I. Taxes pertaining to the leasehold interest of the Lessee.
2. Sales tax now enforced or levied in the future, computed upon rent payable in monthly
installments whether the Lessee pays rent under this Lease on a monthly or annual basis.
3. All taxes and assessments levied in the future by the City, as if Lessee was the legal
owner of record of the Premises.
4. Reimbursement for City constructed improvements under Article XV.
D. PAYMENTS: The Lessee shall make checks, bank drafts, or postal money orders payable to the
City of Kenai and deliver payments to City of Kenai, Finance Department, 210 Fidalgo Avenue, Suit 200,
Kenai, Alaska 99611 -7794 or any other address the City may designate in writing to the Lessee.
E. INTEREST: Beginning the day after payment is due, all unpaid rents, charges, and fees required
under this Lease will accrue interest at the rate of eight percent (8.0 %) per annum. Interest on disputed
amounts will not be charged to the Lessee if the dispute is resolved in the Lessee's favor.
F. LATE PAYMENT PENALTY: In addition to any interest payable under Provision (E) of this
Article, each time the Lessee fails to pay any rent or fee by the date required in this Lease, the City will
charge, and the Lessee shall pay, an administrative penalty of ten percent (10.0 %) of the amount due and
unpaid.
G. COURTESY BILLINGS: Lessee acknowledges that any billing statement issued by the
City is provided only as a courtesy. The Lessee is obligated to pay all rents and fees when due,
regardless of whether or not the Lessee receives a billing statement from the City.
H. LIEN AGAINST LESSEE: Any rent, charge, fee, or other consideration which is due and unpaid
at the expiration, termination, or cancellation of this Lease will be a lien against the Lessee's property,
real or personal.
I. PAYMENT OF CITY'S COSTS: The Lessee will pay all reasonable actual expenses,
costs, and attorney fees City may incur, with or without formal action, to enforce, defend, or
protect this Lease or City's rights under this Lease, including any expense incurred with respect
to environmental compliance, bankruptcy or any proceeding that involves the Lessee, the Lease,
the Premises, or improvements or personal property on the Premises. The Lessee will make
payment within 30 days of the date of each notice from City of any amounts payable under this
provision.
J. PAYMENT FOR SPECIAL SERVICES: Lessee agrees to pay the City a reasonable fee for any
special services or facilities the City agrees to perform, which the City is not otherwise obligated by this
Lease to provide and which the Lessee requests from the City in writing.
ARTICLE V
ADJUSTMENT OF RENT AND FEES
A. RENT OR FEE ADJUSTMENT: At intervals of approximately five years, the City shall, in its
sole discretion, adjust the rent or a fee payable by the Lessee under Article IV or other provision of this
lease. The amount to which the City increases or decreases any rent or fee shall be established in
accordance with KMC 21.10.100 and 21.10.160. Any rent change by the City shall be based on the fair
market value of
The Premises in its condition on the term beginning date stated in Article III; plus
2. Any improvements made by the City subsequent to that date, the cost of which is not
reimbursed by the Lessee.
No rent or fee change shall be effective until 30 days after the date of the City's written notice to
the Lessee. If the Lessee believes that any changed rent exceeds the fair market rent for the Premises, the
Lessee may appeal the rent change to the City under KMC 21.10.160.
B. CITY - CONSTRUCTED IMPROVEMENTS: Improvements constructed by the City on, or in
connection with, the Premises shall not be considered a part of the Premises for the purpose of
establishing the rent under (a) of this Article, if the Lessee, as a condition of this lease, reimburses the
City for the City's construction costs pursuant to KMC 21.10.110.
ARTICLE V
ADJUSTMENT OF RENT AND FEES
A. RENT OR FEE ADJUSTMENT: At intervals of approximately five years, the City shall, in its
sole discretion, adjust the rent or a fee payable by the Lessee under Article IV or other provision of this
lease. The amount to which the City increases or decreases any rent or fee shall be established in
accordance with KMC 21.10.100 and 21.10.160. Any rent change by the City shall be based on the fair
market value of
The Premises in its condition on the term beginning date stated in Article III; plus
2. Any improvements made by the City subsequent to that date, the cost of which is not
reimbursed by the Lessee.
No rent or fee change shall be effective until 30 days after the date of the City's written notice to
the Lessee. If the Lessee believes that any changed rent exceeds the fair market rent for the Premises, the
Lessee may appeal the rent change to the City under KMC 21.10.160.
B. CITY - CONSTRUCTED IMPROVEMENTS: Improvements constructed by the City on, or in
connection with, the Premises shall not be considered a part of the Premises for the purpose of
establishing the rent under (a) of this Article, if the Lessee, as a condition of this lease, reimburses the
City for the City's construction costs pursuant to KMC 21.10.110.
ARTICLE XII
LEASE TERMINATION
A. CANCELLATION: The City may, after 30 days' written notice to the Lessee, cancel this Lease
and recover possession of the Premises if any of the following violations occur, unless the violation is
cured within the 30 days:
1. The Lessee fails to pay when due the rents, additional rents, charges, or other sums
specified in this Lease, including any increases made under this Lease.
2. The Lessee's check for payment of any sum due under this Lease is returned for
insufficient funds.
3. The Lessee uses or authorizes the use of the Premises for any purpose not
authorized by this Lease.
4. The Lessee fails to fully perform and comply with any provision in this Lease.
5. The court enters a judgment of insolvency against the Lessee.
6. A trustee or receiver is appointed for the Lessee's assets in a proceeding brought
by or against the Lessee, or the Lessee files a voluntary petition in bankruptcy.
7. Failure by the Lessee to comply with any land development or permanent
improvement construction required by this Lease.
B. ENTRY AND RE- ENTRY: In the event that the Lease should be terminated in accordance with
this Article XII, or by summary proceedings or otherwise, or upon the Lessee's abandonment of the
Premises or a portion of the Premises, the City or its agents, servants, or representatives may,
immediately or any time thereafter, re- enter, and resume possession of the Premises or portion thereof,
and remove all persons and property therefrom, without being liable for any damages therefore. No
re -entry by the City shall be deemed an acceptance of a surrender of the Lease.
C. CONTINUING OBLIGATIONS UNTIL PREMISES VACATED: The Lessee will
continue to pay City rent after the expiration, termination, or cancellation of this lease and to
abide by the lease obligations, including providing proof of insurance coverage, through the date
Lessee relinquishes possession of and completely vacates the Premises. City will consider the
Premises completely vacated if the Lessee has
1. Remediated any environmental contamination for which the Lessee is
responsible;
2. Restored the Premises to a neat and clean physical condition acceptable to the
City.
D. REASONABLE CURE:
1. In the case of a violation that cannot be reasonably cured within 30 days, a notice
of cancellation issued by the City to the Lessee under this Article is stayed if,
within the 30 -day notice period, the Lessee begins and continues expeditious
action to cure the violation. The City will determine if a violation cannot be
reasonably cured within 30 days and what constitutes expeditious action.
2. In the case where, in City's sole determination, Lessee's violation is considered
an imminent threat to the airport, public health or safety, or the environment, City
will direct the Lessee to stop the activity immediately and may reduce the period
to cure the violation, or the City may correct the violation pursuant to (E) of this
Article.
E. RIGHT OF CITY TO PERFORM:
1. If, after 30 days following notice the Lessee fails or refuses to perform any action
required by this Lease, the City will have the right, but not the obligation, to
perform any or all such actions required by this Lease at the sole expense of the
Lessee. The City will not take action if the Lessee begins and continues
expeditious action to perform any action required by this Lease that cannot be
reasonably completed within 30 days. The City will, at its sole discretion,
determine what constitutes expeditious action and if an action cannot be
reasonably performed in 30 days. The City will submit to the Lessee an invoice
for the expenses incurred by the City in the performance by the City of any
required action. The Lessee will pay the amount of each invoice within 30 days
from issuance.
2. If Lessee fails or refuses to perform any action that has been deemed an imminent
threat the City will have the right, but not the obligation, to perform any or all
such actions required to expeditiously correct the imminent threat. Lessee shall
reimburse the City for any cost, including legal fees and administrative costs
reasonably incurred by the City in acting to correct the imminent threat violation.
F. WAVER: A waiver by the City of any default by the Lessee of any provision of this Lease will
not operate as a waiver of any subsequent default. If the City waives a default, the City is not required to
provide notice to the Lessee to restore or revive any term or condition under this Lease. The waiver by
the City of any provision in this Lease cannot be enforced or relied upon unless the waiver is in writing
and signed on behalf of the City. The City's failure to insist upon the strict performance by the Lessee of
any provision in this Lease is not a waiver or relinquishment for the future, and the provision will
continue in full force.
G. AIRPORT CLOSURE:
1. If the City closes the airport to aircraft operations for sixty days or less, this Lease
will remain in full force and effect without adjustment
2. If the City closes the Airport to aircraft operations for more than sixty days, but
not permanently, and this Lease is for aviation or direct aviation support uses, the
Lessee may, upon written notice to the City, either terminate the Lease or retain
the Lease and receive a fifty (50 %) percent rent reduction or credit for that portion
of the closure that exceeds sixty days.
3. If the City permanently closes the Airport to aircraft operations and
a. this Lease is for aviation or direct aviation support uses, the Lessee may
terminate this agreement by written notice to the City; or
b. this Lease is for non - aviation uses, the Lessee may request in writing to
have the Lease terminated. The City will consider the Lessee's request in
light of the City's best interest and either terminate the Lease, or deny the
Lessee's request in writing.
H. DISASTERS: The Lessee or City may cancel this lease upon written notice to the other party if:
the Premises becomes unusable through no fault of either party and performance
under this lease becomes impossible; or
2. the Airport becomes unusable through no fault of either party and the
performance under this lease becomes impossible.
If the Lessee elects in writing that it will continue to operate after notice from City to Lessee that the
Airport has become unusable, the Lessee's obligations under the Lease will continue, but City shall be
under no obligation to continue to perform.
Causes for termination of the lease under this provision (G) include acts of God, the public enemy, and
the United States.
I. NATIONAL EMERGENCY: If the federal government declares a national emergency, neither
party may hold the other liable for any inability to perform any part of this Lease as a result of the
national emergency.
J. SURRENDER ON TERMINATION: Except as provided otherwise in this Article XII, Lessee
shall, on the last day of the term of this Lease (including any extension or renewal thereof) or upon any
earlier termination of this Lease, surrender and deliver up the premises into the possession and use of City
without fraud or delay in good order, condition, and repair, except for reasonable wear and tear since the
last necessary repair, replacement, restoration or renewal, free and clear of all lettings and occupancies
unless expressly permitted by the City in writing, and free and clear of all liens and encumbrances other
than those created by and for loans to City.
K. OWNERSHIP AND DISPOSITION OF IMPROVEMENTS:
1. Ownership of Permanent Improvements: Permanent improvements on the
Premises, excluding Site Development Materials, constructed, placed, or
purchased by the Lessee remain the Lessee's property as long as this Lease
remains in effect, including any period of extension or holdover with the
consent of the Lessor.
2. Disposition of Site Development Materials: The Lessee acknowledges that,
once placed by the Lessee, the removal from the Premises of Site
Development Materials can damage the Premises, adversely affect surface
water drainage patterns, and destabilize adjacent structures. When placed on
the Premises by the Lessee, Site Development Materials, including building
pads, parking areas, driveways, and similar structures:
a. become a part of the realty and the property of the City of Kenai;
b. unless otherwise directed by the Lessor, must be maintained by the Lessee
throughout the term of this Lease, including any extensions and periods of
holdover; and
C. may not be removed by the Lessee without the prior written approval of
the Lessor.
3. Disposition of Personal Property and Permanent Improvements Other Than
Site Development Materials:
a. Unless the Lessor otherwise directs as provided below, when this Lease
expires, terminates, or is cancelled and is neither extended nor followed by
a successive lease, the departing Lessee may do one or more of the
following:
i. remove Lessee -owned Permanent Improvements from the
Premises, remediate any Contamination for which the Lessee is
responsible, and restore the Premises to a clean and neat
physical condition acceptable to the Lessor within 60 days after
the expiration, cancellation, or termination date of this Lease;
ii. with written approval from the Lessor, sell Lessee -owned
Permanent Improvements to the succeeding lessee, remove all
personal property, remediate, any Contamination for which the
Lessee is responsible and leave the Premises in a clean and neat
physical condition acceptable to the Lessor within 60 days after
notice from the Lessor that the Lessor has approved an
application for a lease of the Premises by another person or such
longer period specified in the notice, but in no event more than
180 days after the expiration, termination, or cancellation date
of this Lease;
elect to have the Lessor sell Lessee -owned Permanent
Improvements at public auction as provided below, remediate
any Contamination for which the Lessee is responsible, and
restore the premises to a clean and neat physical condition
acceptable to the Lessor. If the Lessor sells Permanent
Improvements under this Paragraph for removal from the
Premises, the departing Lessee's obligation under this Paragraph
continues until the Premises are remediated and restored to a
clean and neat physical condition acceptable to the Lessor after
the improvements have been removed.
b. If the departing Lessee elects to have the Lessor sell Lessee -owned
Permanent Improvements at public auction per this Section, the Lessee
shall, within 30days after the expiration, cancellation, or termination of
this Lease:
i. submit to the Lessor a written request and authorization to sell
the Permanent Improvements by public auction;
ii. provide to the Lessor an executed conveyance document
transferring clear title to the Permanent Improvements to the
successful bidder at the public auction, along with authorization
to the Lessor, as agent for the Lessee for purposes of the sale
only, to endorse the name of the successful bidder on the
conveyance document upon receipt of payment of the successful
bid price; and
before the date of the public auction, remove all personal
property, remediate any Contamination for which the Lessee is
responsible and leave the Premises in a neat and clean physical
condition acceptable to the Lessor.
C. When selling Lessee -owned Permanent Improvements at public auction for
the departing Lessee, the Lessor will establish the terms and conditions of
the sale. The Lessor shall pay the Lessee any proceeds of the sale of the
Permanent Improvements, less the administrative costs of the public
auction and any financial obligation the Lessee owes to the Lessor under
this Lease. Payment will be made within a reasonable time after the
Lessor completes the sale transaction and receives the proceeds, but not to
exceed 60 days. If all or a portion of the Permanent Improvements do not
sell at public auction, the Lessee will remove those Permanent
Improvements, remediate any Contamination for which the Lessee is
responsible and restore the Premises to a clean and neat physical condition
acceptable to the Lessor within 60 days after the auction.
d. If the Lessee shows good cause to the Lessor and if it is not inconsistent
with the best interest of the City of Kenai, the Lessor will grant an
extension of time that is sufficient to allow the Lessee to remove or sell
Lessee -owned Permanent Improvements, remediate any Contamination
for which the Lessee is responsible and to restore the Premises to a clean
and neat physical condition acceptable to the Lessor.
e. The Lessor will, by written notice, direct the departing Lessee to remove
Lessee -owned Permanent Improvements from the Premises, to remediate,
consistent with applicable law, any Contamination for which the Lessee is
responsible and to restore the Premises to a clean and neat physical
condition acceptable to the Lessor if the Lessor determines in writing:
that the continued presence of the Permanent Improvements
on the Premises are not consistent with any written Airport
program or plan required for compliance with applicable
federal, state, or local law;
ii. that the continued presence of the Permanent Improvements on
the Premises is not in the best interest of the City of Kenai; or
iii. that the Permanent Improvements present a hazard to public health
or safety.
f. The departing Lessee to whom the Lessor has issued direction under
Paragraph 5 of this Section shall comply with the Lessor's direction within
60 days after issuance of the direction and at no cost to the Lessor. If the
departing Lessee shows good cause to the Lessor, continues to work
diligently to comply with Lessor's direction, and if it is not inconsistent
with the best interest of the City of Kenai, the Lessor will allow in writing
a longer period that is sufficient to allow the Lessee to comply with the
Lessor's direction. A departing Lessee who fails to comply with a
direction issued by the Lessor under Paragraph 5 of this Section, shall,
within 30 days of being billed by the Lessor, reimburse the Lessor for any
costs reasonably incurred by the Lessor, including legal fees and
administrative costs, to enforce the Lessor's direction or to remove and
dispose of unremoved Lessee -owned improvements, remediate any
Contamination for which the Lessee is responsible and restore the
Premises.
g. If the departing Lessee does not timely remove or sell the Lessee -owned
Permanent Improvements on the Premises in accordance with the
requirements of this Section, any remaining Permanent Improvements and
any remaining personal property of the departing Lessee will be
considered permanently abandoned. The Lessor may sell, lease, demolish,
dispose of, remove, or retain the abandoned property for Airport use as the
Lessor determines is in the best interest of the City of Kenai. The
departing Lessee shall, within 30 days after being billed by the Lessor,
reimburse the Lessor for any costs reasonably incurred by the Lessor,
including legal and administrative costs, to demolish, remove, dispose,
clear title to, or sell the abandoned property and to remediate and restore
the Premises.
h. After the expiration, termination, or cancellation of the Lease, including
any holdover, the departing Lessee loses all right to occupy or use the
premises without the express or implied consent of the Lessor. Except as
the Lessor notifies the departing Lessee otherwise in writing, the Lessor
consents to the departing Lessee's continued use and occupancy of the
Premises to diligently accomplish the requirements of this Section. Until
the departing Lessee relinquishes possession of and completely vacates the
Premises under Paragraph 9 of this Section and notifies the Lessor in
writing that it has relinquished and vacated the Premises, the departing
Lessee shall perform the following as if the lease were still in effect,
i. pay rent to the Lessor;
ii. maintain the premises;
iii. provide the Lessor with evidence of each insurance coverage, if
any, required under the Lease; and
iv, cease using the premises other than to diligently accomplish the
requirements of this Section, and to comply with the other
requirements of the Lease.
i. A departing Lessee will not be considered to have relinquished possession
and completely vacated the Premises until
i. the departing Lessee has:
(a) remediated, consistent with applicable law, any
Contamination for which the Lessee is responsible;
and
(b) restored the Premises to a clean and neat physical
condition acceptable to the Lessor; and
ii. either
(a) removed all of the Lessee's Permanent Improvements and
personal property from the premises or sold the Permanent
Improvements and personal property to a succeeding
Lessee under the provisions of this Lease; or
(b) transferred title to the Lessee's Permanent Improvements and personal
property that remain on the premises to the Lessor