HomeMy WebLinkAboutResolution No. 2018-12CITY OF KENAI
Sponsored by: Mayor Brian Gabriel
Vice Mayor Tim Navarre
Council Member Henry Knackstedt
RESOLUTION NO. 2018-12
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, APPROVING AN
AMENDED POLICY FOR THE SALE OF TEN SPECIFIC CITY-OWNED AIRPORT FUND
LEASED LANDS OUTSIDE THE AIRPORT RESERVE WITH SUBSTANTIAL CONSTRUCTED
LEASEHOLD IMPROVEMENTS.
WHEREAS, the City of Kenai received a Quitclaim Deed through the Federal Aviation
Administration (FAA) on December 1, 1963, to nearly 2,000 acres of land subject to certain
restrictions, including that no property shall be used , leased, sold , salvaged, or disposed of for
reasons other than for Airport purposes; and,
WHEREAS, in 2016, the City identified ten specific leases on Airport lands, as identified on
Attachment A, that were, or were intended to be outside the Airport Reserve in the very near
future, on which the lessees had constructed substantial improvements; and,
WHEREAS, the ten leased properties have been, or are available to be released for sale by the
FAA; and ,
WHEREAS, the City Council passed Resolution No . 2016-32, approving and adopting a policy for
ten specific Airport owned leased lands on July 6, 2016 to provide an equitable and uniform
purchase procedure for the current lessees to purchase the specific ten Airport-owned parcels;
and ,
WHEREAS , since the policy was adopted , none of the current lessees subject to the policy have
elected to purchase the property they lease from the City; and ,
WHEREAS , Administration formed a working group of City staff involved in land management to
evaluate and develop recommendations related to the City 's land sale and le ase program to
encourage growth, development, and a thriving business community through reasonable and
responsible land policies and practices; and
WHEREAS, an alternative whereby the net present value of the leasehold is partially offset by the
economic benefits provided by existing th riving businesses in the City such as job creation ,
economic activity, and stimulation of the business climate meets these goals; and ,
WHEREAS , a third alternative that encourages investment in existing businesses on these
leaseholds meets these goals as well ; and ,
WHEREAS, it is in the best interest of the City, Airport and lessees to approve an amendment to
the temporary policy that provides alternative methods for the sale of these properties consistent
with a City-wide land management approach.
Resolution No. 2018-12
Page 2 of 3
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA:
Section 1. That the following policy adopted for the specific ten City-owned leased lands as
identified on Attachment A attached hereto shall be amended as follows:
POLICY FOR SALE OF SPECIFIC AIRPORT LEASED LANDS
Purpose: To implement a policy regarding the sale of Airport owned property outside the
Airport reserve currently leased with substantial leasehold improvements. This Policy is intended
to provide an equitable and uniform purchase procedure for the current Lessees to purchase the
specific ten Airport owned parcels identified in Attachment A.
Disclaimer: This Policy does not provide for the sale of any specific property, but only a method
for such sale , subject to the Ordinances of the City of Kenai. Any specific sale must be separately
approved by the City Council, which may approve or disapprove any such sale, in its sole
discretion . It is intended that this Policy remain in effect [FOR A PERIOD OF NO MORE THAN
FIVE YEARS] until July 6, 2021, however, it is recognized by the City Council and Administration ,
and should be recognized by any affected Lessee, that the City Council of Kenai may amend,
modify, or rescind this Policy, or applicable City Ordinances which could affect this Policy, at any
time.
Sale Conditions:
A. If a sale is approved by the City Council of any one of the ten specified leased
properties, the sales price acceptable to the City shall be one of the following
alternatives:
i. 125% of [A] the fair market value of the [RAW] land excluding lessee-constructed
improvements as determined by an appraisal[.]; or.
ii. The fair market value of the land excluding lessee-constructed improvements as
determined by an appraisal for properties in which minimum development requirements
have been met according to the following calculation :
Value of Improvements greater than or equal to four times the Appraised Fair Market Value
of the Land
iii. The fair market value of the land excluding lessee-constructed improvements as
determined by an appraisal and a minimum new investment in the construction of new
permanent improvements on the premises equal to 25 % of the fair market va lue of the
land within three (3) years of sale.
B. In order for such sale to occur subject to this Policy, the following conditions must be met:
New Text Underl ined; [D E LETED TEXT BRACKET ED)
Resolution No . 2018-12
Page 3 of 3
1. Lessee has constructed lease-hold improvements exceeding
current appraised value of [AIRPORT] the leased property.
2. Lessee is current with all financial obligations with the Ci ty.
3. Lessee will pay the City to perform a survey (if required).
4. Lessee will pay for the City to obtain an appraisal.
5. Property is outside of the Airport Reserve Boundary.
6. Property has been released for sale by the FAA.
7. Property is determined as not needed for a public purpose.
[B]C . Any conflicting prov 1s1on, procedure, law or policy provi ded in Kenai City Code has
precedent over this Policy.
Section 2. That this Resolution takes effect immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI , ALASKA, this 2 1st day of February , 2018 .
BRIEN GABRIEL, MAYOR
New Text Underlined; [DELETED TEXT BRACKETED)
'lltff~ «1/th, a PaO'~ Ct~ «1/th, a f"u.tt<l"e 11
210 Fidalgo Ave , Kenai , Alaska 99611 -7794
Telephone : (907) 283-7535 I Fax : (907) 283-3014
www.kenai.city
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Kenai City Council
Mayor Brian Gabriel
Vice Mayor Tim Navarre
Council Member Henry Knackstedt
February 13, 2018
Resolution No. 2018-12 -Amending a Policy for the Sale of Ten
Specific City-Owned Airport Fund Leased Lands
In 2016, the City Council passed Resolution No. 2016-32, approving and adopting a policy for
City-owned leased lands in a distinct land management group to provide an equitable and un iform
purchase procedure for those Lessees to purchase the property they lease from the City at 125%
of the fair market value of the land. The ten specific City-owned Airport Fund parcels are located
outside the Airport Reserve and the lessees have completed development requirements pursuant
to their lease with the City.
Resolution No. 2018-12 amends the policy approved and adopted by Resolution No . 2016-32 by
providing two alternative methods for the sale of these properties consistent with the City's new
City-wide land management approach. These alternatives encourage investment in existing
businesses on leasehold s, avoid land speculation, and recognizes that capital investments made
by existing businesses in the City, have created jobs, increased economic activity, and stimulated
the business environment.
The first added alternative allows for a sale of the land at fair market val ue to lessees that have
met a minimum development requirement. The minimum development is calculated at four times
the appraised fair market value of land . Four times the fair market value of the land represents
the investment amount that equals or exceeds the net present value of leasing the land by
quantifying the economic value of the investment to the C ity . Building valuation data as published
by the International Code Council was also utilized to estimate construction costs to assure that
the capital investment required is realistic. For example, land appraised at $100,000 or less
requires a minimum development of $400,000.
Page 2 of 2
Resolution No. 2018-12
The second added alternative allows for a sale of the land at fair market value w ith required
minimum new investment in the construction of new impro vements such as storefront
improvements, bu ilding remodels , or parking lot improvements equa l to 25% of the fair market
value of the land within three years of sale. For example , lan d appraised at $100,000 wo ul d
requ ire new investment equal to $25 ,000 .
Resolution No . 2018-12 also makes minor changes to the policy t o clarify appraisal instru ctions
and conditions that must be met in order for a sale to occur so that the polic y is consistent with
the City Code and land practices . In particular, City land appraisals are performed with the
assumption that the land is vacant and unencumbered by the lease , lands deeded to the C ity by
the FAA must be released for sale , and land must be determined as no t needed fo r a p ubl ic
purpose .
Like the prior Resolution in 2016, this Resolution does not authorize the sale of any propert y, but
instead establishes a methodology for sale should the lessee desire to purchase the property and
Council determine that it is in the City 's best interest to sell the property,
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