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Home My WebLink AboutResolution No. 2018-44tlreeityef. KENAI, AlASKA "V Sponsored by : Administration CITY OF KENAI RESOLUTION NO. 2018 • 44 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI , ALASKA, APPROVING A SECOND AMENDMENT TO THE AIRLINE OPERATING AGREEMENT AND TERMINAL AREA LEASE AND AUTHORIZING THE CITY TO ENTER INTO SUCH AGREEMENT WITH GRANT AVIATION , INC . WHEREAS , the City of Kena i is the owner and operator of the Kenai Munici pal A i rport; and , WHEREAS , the Adm inistration working with an airline consultant has developed an amendment to the current airline operating agreement and terminal area lease; and , WHEREAS , the airl ine operating agreement and terminal area lease has modernized the terminal leasing procedures and policies; and, WHEREAS , the Administration consulted with the two regularly scheduled passenger airlines currently operating at the Kenai Municipal Airport regarding the agreement; and, WHEREAS , non-signatory airlines operating out of the passenger terminal building will pay an additional 30% than signatory airlines ; and , WHEREAS , it is in the best interest of the City of Kenai to authorize the C ity Manager to enter into such agreement with Grant Aviation, Inc., on behalf of the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE C ITY OF KENAI , ALASKA: Sect ion 1. That the Kenai City Council approves the Second Amendment to the Airline Operating Agreement and Terminal Area Lease form as shown in Exhibit 1; and, Section 2. That the Kenai C ity Manager is authorized to enter into such an agreement with Grant Aviation, Inc. Section 3 . That t his resolution takes effect immediately upon adoption . ADOPTED B Y THE COUNCIL OF THE CITY OF KENAI , ALASKA, this 151 day of August, 2018. ATTEST: MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager FROM: Mary L. Bondurant – Airport Manager DATE: July 19, 2018 SUBJECT: Resolution 2018-44 – Approving Second Amendment to the Airline Operating Agreement and Terminal Area Lease for Grant Aviation, Inc. Attached to this memo is the Second Amendment to the Kenai Municipal Airport Airline Operating Agreement & Terminal Area Lease signed by Grant Aviation, Inc., for City Council approval and Administration execution. The original agreement was from 2008 to 2013 and the First Amendment from June 2013 expired on June 30, 2018. During the past months, City and Airport Administration, along with Steve Horton of Leibowitz & Horton, evaluated financial costs associated with Airport operations. The Finance Director and Airport Manager presented the evaluation with a recommendation of a 5% increase to Council during the May 24, 2018 budget work session. Due to the future terminal rehabilitation project involving changes to the airline’s exclusive and joint use areas, this amendment is for only one year. After project completion, a new agreement will be negotiated based on the final allocation of the airline areas. I recommend approval of this Second amendment to the Airline Operating Agreement and Terminal Area Lease. Thank you for your consideration. Attachment SECOND AMENDMENT TO THE KENAI MUNICIPAL AIRPORT AIRLINE OPERA TING AGREEMENT AND TERMINAL AREA LEASE THIS SECOND AMENDMENT to the Kenai Municipal Airport Airline Operating Agreement and Terminal Area Lease (the "Second Amendment") is made and entered into this 1st day of July, 2018, by and between the Gity of K nai, Naska (the "City"), a political subdivision of the State of Alaska, and ~ \cct\ C\ . . (the "Airline"), a corporation organized and existing under the Jaws of the State of W and authorized to do business in the State of Alaska. RECITALS The circumstances surrounding the making of this Second Amendment are as follows: A. City and Airline are parties to the Airline Operating Agreement and Terminal Area Lease dated June I, 2008, as amended by the First Amendment dated June 1, 2013 (hereinafter referred to as the "Agreement"), under which Airline operates an Air Transportation business and leases property at the Kenai Municipal Airport . B . Pursuant to Section 12.20 of the Agreement, the Agreement may be amended in whole or in part without further consideration upon mutual written consent of City and Airline who both herein wish to amend the Agreement. C. Pursuant to Section 2.1 of the Agreement, the term began on June I, 2013 and continued for a consecutive sixty (60) month period thereafter . D . Pursuant to Section 5.2 of the Agreement, the Landing Fee charges shall be based on the rate and amount then currently approved by the City as provided in Exhibit C. E. Pursuant to Section 5.3 of the Agreement, rei:itals for the A irline's Exclusive Use Space and Joint Use Space shall be based on the rate and amount then currently approved by the City as provided in Exhibit C . F . Pursuant to Section .4 of the Agreement, the Terminal Apron Aircraft Parking and GSE Space rentals shall be bas d on the rate and amount then currently approved by the City as provided in Exhibit C . Second Amendmen t -Airline Operating Agreement and Terminal Area Lease Page I of 5 LESSQR._ LESSEE ~ AMENDMENTS 1. Section 2.1 of the Agreement is amended to read in its entirety as follows : The term of this Agreement (the "Term") shall begin on July 1, 2018 ("Commencement Date") and shall terminate in twelve (12) consecutive months thereafter (except as it may be terminated or extended in accordance with this Agreement), and the rentals, fees, and charges shall be effective on the Commencement Date, but only in the event that the Premises are then tendered to Airline ready for use and occupancy in accordance with the terms and provisions of this Agreement. 2 . Any reference to Exhibits A and B in the Agreement or this Second Amendment shall mean the Exhibits A and B which are attached to this Second Amendment and incorporated herein by reference. 3. Any reference to Exhibit C, "Calculation of Terminal Rent, Apron Space Rent and Landing Fees" in the Agreement or this Second Amendment shall mean the Exhibit C which is attached to this Second Amendment and incorporated herein by reference, including all notes to that Exhibit C . 4. Section 5.2.1 of the Agreement is amended to read in its entirety as follows : Airline shall pay to the City within thirty (30) days following the end of each month, without demand or invoicing, landing fee charges for aircraft landings for the preceding month at the rate and in the amount then currently approved by the City as provided in Exhibit C -Airline Rate Schedule. 5. Section 5.3 .1 of the Agreement is amended to read in its entirety as follows: Airline shall pay to the City in advance, on the first day of each month, without demand or invoicing, rentals for Airline's Exclusive Use Space and Joint Use Space at the rate and in the amount then currently approved by the City as provided in Exhibit C -Airline Rate Schedule. Second Amendment -Airline Operating Agreement and Tcnninal Area Lease Page2 of S LESSQR....,___ LESSEE~ 6. Section 5.4 of the Agreement is amended to read in its entirety as follows : Airline shall pay to the City in advance, on the first day of each month, without demand or invoicing, rentals for Airline's use of the terminal apron space for the parking of aircraft and the storage of ground service equipment (GSE) at the rate and in the amount then currently approved by the City as provided in Exhibit C -Airline Rate Schedule. 7. Section 4.1.3 of the Agreement is amended to read in its entirety as follows: Airline hereby leases the terminal apron space for the parking of aircraft and the storage of ground service equipment (GSE) being more particularly delineated on Exhibit E, as the same may be amended from time-to-time. 8. The tenns of the Agreement shall continue in full force and effect except as modified by this Second Amendment. Second Amendment • Airline Operating Agreement and Tenninal Area Lease Page 3 of S LESSO~ LESSEE~ IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and year stated in the ind ividual acknowledgments below. LESSOR: CITY OF KENAI By: Paul Ostrander -City Manager LESSEE: ----' , .2;:__, I,,, ll.lC ,.\ By: Robert M Kelley Name -Title President ............,-===:...::;..;...:..:.~~~~~- (If Lessee is a Corporation) ATIE~ i c -~ -cJ C ~ ""\1.,.e,,J-~ Name and Title STA TE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this 25th day of May 2018, Robert M Kelley (name), President (title) of Grant Aviation. Inc. , being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voluntary and authorized execution of the foregoing instrument on behalf of said Corporation. ~"''''"'''''' ~ ...... :-<CE A '11, --'::>o ........ ~O.n'•, ~ ,, '• "'T.. , : ... • ·-~ ,, i ~ _.· N0]"-1 -._ .z ~ ;-..: :· '· ~)-~~tary , 0 •(J) .<:i "' • 11."'t ~ % :-1 u13LIG : •• , Co I -:> • i",>. • "' I.~·"' .... a .. • , • • ,, .1' • !'V .. 1' ~ ·-.,01: Alli-CO~.··~_: ,, o... •• .. ""' -.. ,~ '••··· '"': . • 11 • ~/J/res · ~~'i ---Second Amendment -Airhne Operltti,l\,,~,, .............. .. Agreement and Terminal Area Lease Page 4 of 5 LESSOR_ LESSEE ~....._ STATE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this __ day of 2018, PAUL OSTRANDER, City Manager of the City of Kenai, Alaska, being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voluntary and authorized execution of the foregoing instrument on behalf of said City. Notary Public for Alaska My Commission expires : Approved by Kenai City Council ----------- Approved as to lease form by City Attorney S ~ Approved by Finance Director __ _ Approved by City Manager __ _ Return to: City Attorney 210 Fidalgo Ave. Kenai, AK 99611 Second Amendment • Airline Operating Agreement and Tcnninal Area Lease Page 5 of 5 ----- LESS~ LESSEE~ - CJ • I ------- I I \L 10 -- ,------, ---;------D----; -___ OJ:::::....:::::....::::=-~=-=-:;;;:-~--.....11.--,r 2l 21 -----~ ~ 22 Ji . 1 0 ;S+llfW 0 D 0 0 WINCE-CORTHELL-BRYSON JOll HO; I REYllEll: s.21-11 "-._QllU..wMGr---·-···-~-.______ ~ a 2ll J / THIS DRAWING IS NOT TO SCALE LESSOR ~~~~~~~~~~~~~ LESSEE ~~~~~~~~~~~~- KENAI MUNICIPAL AIRPORT EXHIBIT A EXCLUSIVE SPACE KENAI, ALASKA - I I I :L 10 -------..... ---- r ,--------1 ----------~---0 0 u Baggage Breakdown 111'88 9605.F. 0 0 " WINCE-CORTHELL-BRYSON 0 40 /. ................... -...... I ........ . ........ • 11 -.....__ ......_ _____ i!._ ......___ __ _ - I / THIS DRAWING IS NOT TO SCALE LESSOR------------- LESSEE ------------- -----1-T#t"A"-. KENAI MUNICIPAL AIRPORT EXHIBIT B JOINT USE SPACE KENAI, ALASKA •DR lllflt ~........_.._.,,.,. ______ ~ ENA_fxhC_201&-19_02.123 EXHIBITC AIRLINE RA TE SCHEDULE KENAI MUNICIPAL AIRPORT City of Kenai, Alaska 17-May-18 Calcutatlon of Tennlnal Rent, Apron Space Rent and Landing Fees Area Description Exclusive use space: Room #8 34,35,36A,36B,37 Joint use space; Baggage make -up area Baggage breakdown area Baggage claim area Passenger holdroom, arrival and departure hallways Total Terminal Rent Terminal Apron Aircraft Parking & GSE Space Rent Landing Fees Grant NOTES: nd Fees Leased/ Used Space (sq ft) 1,026 2,400 960 1,200 182'4 7410 10730 (3) Projected LandedWgt 1 000#8 34158 2018/19 Tenninal Rent (1) Allocated Base PrforYear Preliminary Rental Rate Enplanement Joint Rental (psfpy) Percentage Amount axb c $33.85 Enplaned Pax 21,422 $20.51 23.8% $11,732 $20.51 23.8% $4,693 $33.85 23.8% $9,683 $33.85 23.8% $14 719 2018/19 Terminal (1) Rental Rate $0.52 (1) Landing Fee Rate $1.70 2018/19 Landin Fees (1) Rental rates and fees are scheduled to increase by 5% for each year of the agreement. (2) The Joint Rent Subsidy percentage applies a rental amount reduction provided by the Airport. (3) Aircraft landed weights are estimated -actual landing fees are to be based on actual weight 2nd Amendment -Airline Operating Agreement and Terminal Area Lease Page2 of2 (2) Joint Rent Subsidy Reduction 20% ($2,346 ($939 ($1,93 $2,9'44 Rental Amount $34,732 $9,385 $3,754 $7,747 s11 n5 $67394 Apron Space Rent $5570 LESSO~R...._ __ LESSEE~ ENA_ExhC_2013-19_02.123 EXHfBITC AIRLINE RA TE SCHEDULE KENAI MUNICIPAL AIRPORT City of Kenai, Alaska Calculation of Terminal Rent, Apron Space Rent and Landing Fees Area Desaiption Exclusive use space: Room #s 28,29,30,31 Joint use space; Baggage make-up area Baggage breakdown area Baggage claim area Passenger holdroom, arrival and departure hallways 17-May-18 Total Terminal Rent L--.......:...=:....L...--------------------L__..:~~~ Tennlnal Apron Aircraft Par1clng & GSE Space Rent Landing Fees RAVN AIHka -Total Rent and Fees NOTES: (3) Projected LandedWgt (1 000#6) 127,493 2018119 Land" F mg ees (1) Landing Fee Rate $1.70 (1} Rental rates and ~ are scheduled to Increase by 5% for each year of the agreement. (2) The Joint Rent Subsidy percentage applies a rental amount reduction provided by the Airport. (3) Aircraft landed weights are estimated -actual landing fees are to be baaed on actual weight. 2nd Amendment -Airtine Operating Agreement and Terminal Area Lease Page 1 of2 Landing Fees $216.117 t~76 95( LESSO~ LESSEE~ EXHIBITD AIRLINE AND AFFILIATE INSURANCE REQUIREMENTS A. Airline Liability Insurance and Comprehens ive General Liability Insurance Insurance limits of liability for Airline and each of its individual Affiliates shall be determined by the capacity in passenger seats of the largest aircraft in Airline's and its Affiliate's fleet as follows : 1. Not less than one hundred fifty million dollars ($150,000,000) per occurrence for airlines operating aircraft of one hundred (100) seats or more; 2. Not less than one hundred million dollars ($100,000,000) per occurrence for airlines operating aircraft of between sixty (60) and ninety-nine (99) seats; 3. Not less than fifty million dollars ($50,000,000) per occurrence for airJines operating aircraft of between twenty (20) and fifty-nine (59) seats; 4. Not less than twenty million doJlars ($20,000,000) per occurrence for airlines operating aircraft of nineteen (19) or fewer seats; 5. Not less than five million dollars ($5,000,000) per occurrence for airlines operating aircraft of nine (9) or fewer seats; 6. Passenger personal injury not less than twenty-five million dollars ($25,000,000) per occurrence and in the annual aggregate with respect to non-passenger personal injury. B. Hangar Keepers Liability Insurance (If Applicable) Hangar keepers liability insurance in an amount adequate to cover any non-owned property in the care, custody and control of Airline or any of its individual Affiliates on the Airport, but in any event in an amount not Jess than five million dollars ($5,000,000). C . Automobile Liability Insurance Automobile liability insurance in an amount adequate to cover automobile insurance while on Airport premises in an amount not less than one million dollars ($1,000,000) per person per occurrence. D. Workers' Compensation and Employers' Liability Insurance Statutory coverage and liability limits are required . Airline Operating Agreement _ _LESSOR __ and Terminal Arca Lease LESSEE ~ -:::::---:::::------r-- '-= GRANT PASSENGER 10,730 S .F. SAFETY ZONE --D"'"' -... ._ g RAVN 31,755 S .F. -~; i.: r WINCE-CORTHELL·BRYSON '-------.--.IOll "°' ' ll£Vl&EO: ..... ,. .,,.,,.,---'-...°"-"'-.G~oot-··--·-- -~------------ KENAI MUNICIPAL AIRPORT EXHIBIT E APRON AIRCRAFT PARKING KENAI, ALASKA