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Home My WebLink AboutResolution No. 2019-23Sponsored by: Administration CITY OF KENAI RESOLUTION NO. 2019 -23 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, APPROVING THE THIRD AMENDMENT TO THE AIRLINE OPERATING AGREEMENT AND TERMINAL AREA LEASE AND AUTHORIZING THE CITY ENTER INTO SUCH AGREEMENT WITH CORVUS AIRLINES D/B/A RAVN ALASKA WHEREAS , the City of Kenai is the owner and operator of the Kenai Municipal Airport; and, WHEREAS, a recommendation of the 2007 Supplemental Planning Assessment was to update the City's airline operating agreement and terminal lease; and, WHEREAS, Council approved Resolution No. 2008-27 establishing a new airline operating agreement and terminal lease to modernize the airport airline terminal leasing procedures and policies and increase airport operating revenue effective June 1, 2008 for a sixty-month period; and, WHEREAS, Council approved Resolution No. 2013-31 approving the First Amendment to the airline operating agreement and terminal area lease effective July 1, 2013 for a sixty-month period; and, WHEREAS, Council approved Resolution No . 2018-43 approving the Second Amendment to the airline operating agreement and terminal area lease effective July 1, 2018 for a period of twelve months in consideration of the terminal rehabilitation project; and, WHEREAS , with the terminal rehabilitation project now scheduled for completion in February 2020, the City would have final costs along with changes to airline exclusive and joint use areas, and negotiate a five-year airline operating agreement to be effective July 1, 2021 ; and, WHEREAS, it is in the best interest of the City of Kenai to authorize the City Manager to enter into such agreement with Corvus Airlines, d/b/a RA VN Alaska, on behalf of the City . NOW, THEREFORE , BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the Kenai City Council approves the Third Amendment to the Airline Operating Agreement and Terminal Area Lease form as shown in Exhibit 1. Section 2 . That the Kenai City Manager is authorized to enter into such an agreement with Corvus Airlines, d/b/a/ RA VN Alaska. Section 3. That this resolution takes effect immediately upon adoption. Resolution No. 2019-23 Page 2 of 2 ADOPTED BY THE COUNCIL OF THE CITY OF KENAI , ALASKA, this 17th day of April , 2019. B'RIAN GABRIEL SR., MAYOR ATIEST: "(!;ff~ tt1/t/t, a Pa&'~ Ct'tf tt1/t/t, a Fat~" 210 Fidalgo Ave , Kenai , Alaska 99611 -7794 Telephone : (907) 283-75351 Fax: (907) 283-3014 www.kenai.city MEMORANDUM TO: THROUGH: FROM: DATE: SUBJECT: Mayor Brian Gabriel and Kenai City Council Paul Ostrander, City Manager Mary L. Bondurant, Airport Manager April 5, 2019 Resolution No. 2019-23 Approval Third Amendment to the Airline Operating Agreement and Terminal Area Lease for Corvus Airlines d/b/a RAVN Alaska Attached to this memo is the Third Amendment to the Kenai Municipal Airport Airline Operating Agreement and Terminal Area Lease for Council approval. The original Agreement and the First Amendment to the Agreement each were for five-year terms starting June 1, 2008 and ending June 30, 2018. Instead of negotiating another five-year agreement in 2018 due to the Terminal Rehabilitation Project, the Second Amendment term was for twelve-months , ending June 30, 2019. The project is scheduled for completion in February 2020. At that time, the City will have the final airline allocations for exclusive and joint use space and will begin negotiations for a five- year agreement based on accurate airport operation costs. I recommend approval of the Third Amendment to the Airline Operating Agreement with a term of twelve months, effective July 1, 2019 through June 30, 2020 under the same terms and conditions of the Second Amendment. Thank you for your consideration. THIRD AMENDMENT TO THE KENAI MUNICIPAL AIRPORT AIRLINE OPERA TING AGREEMENT AND TERMINAL AREA LEASE THIS THIRD AMENDMENT to the Kenai Municipal Airport Airline Operating Agreement and Terminal Area Lease (the "Third Amendment") is made and entered into this 1st day of July, 2019, by and between the City of Kenai , A laska (the "City"), a political subdivision of the State of Alaska, and Corvus Airlines dba Ravn Alaska (the "Airline"), a corporation organized and existing under the laws of the State of Washington and authorized to do business in the State of Alaska. RECITALS The circumstances surrounding the making of this Third Amendment are as follows: A. City and Airline are parties to the Airline Operating Agreement and Terminal Area Lease (the "Agreement") dated June 1, 2008 as amended by the First Amendment dated June l, 2013 and Second Amendment dated July 1, 2016 (herein referred to as the "Agreement"), under which Airline operates an Air Transpo1tation 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 1, 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, rentals for the Airline'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 5.4 of the Agreement, the Terminal Apron Aircraft Parking and GSE Space rentals shall be based on the rate and amount then currently approved by the City as provided in Exhibit C . Third Amendment -Airline Operating Agreement and Terminal Area Lease Page 1 of 3 LESSOR LESSEE AMENDMENTS I . Section 2.1 of the Agreement is amended to read in its entirety as follows: T he term of this Agreement (the "Term") shall begin on July I , 2019 ("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 provi sions of this Agreement. 2. The terms of the Agreement shall continue in full force and effect except as modified b y this Third Amendment. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and year stated in the individual acknowledgments below . CITY OF KENAI Paul Ostrander Its: City Manager (If Lessee is a Corporation) ATTEST: Name Title CORVUS AIRLINES DBA RA VN ALASKA John Mannion Its: Chief Financial Officer Third Amendment -Airline Operating Agreement and Terminal Area Lease LESSOR LESSEE Page 2 of 3 STA TE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this _ day of ______ , 2019, by Paul Ostrander, City Manager of the City of Kenai, an Alaska municipal corporation , on behalf of the City. Notary Public in and for Alaska My Commission expires: __ _ ST A TE OF ALASKA ) )ss THIRD JUDICIAL DISTRICT ) THIS JS TO CERTIFY the foregoing instrument was acknowledged before me this __ day of , 2019, by John Mannion, Chief Financial Officer of Corvus Airlines dba Ravn Alaska., an Alaska corporation, on behalf of the corporation. Notary Public in and for Alaska My Commission expires: __ _ Approved by Kenai City Council ________________ _ Approved as to lease form by City Attorney ------------- Approved by Finance Director------------------ Approved by City Manager------------------- Return to: City Clerk 210 Fidalgo Ave. Kenai , AK 99611 Third Amendment -Airline Operating Agreement and Terminal Area Lease Page 3 of 3 LESSOR LESSEE I I I I 1L -- " CJ a .J'~::J.== -== -= _. -m 10 ,------, ----------0 a a ~ '2 40 1- 22 ~ 29 a 0 D D 1• I _J ---..... ' I. ·-=i-~ -......./.........._ I L --.---_,,,.. _,,,...-----....... ........ '' . --.:.. L -:::r '-.. ....__..,-_,,,.. ......_ '= ~ ---___...,... -----I / T HIS DRAWING IS NOT TO SCALE r WINCE-CORT HELL-BRYSON JOllHO: l REYISCD: HMI ~OIU.'ifM..--- ~ ~ LESSOR ~~~~~~~~~~~~~~ LESSE E~~~~~~~~~~~~~~ KENA I MUNICIPAL AIRPORT EXHIBIT A EXCLUSIVE SPAC E KENAI, ALA.SKA I I I I I 1L ....._ ------ Cl • ~ -=: -z:::;. ~ - 10 ------ ~ " 't ,-------, 42 Baggage Breakdown area 960 S.F. rea ------ 0 D ~ co ii ~. la a. II> 40 Baggage Makeup /Vea 2 ,4005.F. !lLL. ~ ~ 33 JE~~ 0 D D a lr~:913°;¥9. 21 IS i _J L7 ---c __,, ----- ~ ----............ ,,.....,... _...--~ .,,.,.... /. -.........,, I / '-..... 'I '~ ....... '~ ----_: I 1 ------~ -, THI S DRAWING IS NOT TO SCALE LESSOR-------------~ LE SSE E -------------~ r ~ WINCE -CORTHELL-BRYSON JOll NO: 2007.o4G l AEYISl!l), fNI 'A• -ROV!MllorT5 ,_...,_" --···~ .......... ·-----""'---·-__.J KENAI MUNICIPAL AIRPORT EXHIBIT B JOINT U SE SPACE KENAI , ALASKA ENA_ExhC_2018-19_02.123 EXHIBIT C AIRLINE RA TE SCHEDULE KENAI MUNICI PAL AIRPORT City of Kenai, Alaska 17-May-18 Calculation of Terminal Rent, Apro n Space Rent and Landing Fees Grant Avl<>tion 2018/19 Tenni nal Rent Lea sed/ (1) A ll ocated (2) Used Base Prior Year Preliminary Joint Rent Area Space Renta l Ra te Enplanement Joint Rental Subsid y Rental Description (sq ft) (psfpy) Percentage Amount Reduction Amount (a) (b) (c) (a)x(b)x(cl 20% Exclus ive use space: Room #s 34 ,35,36A,36 8,37 1,026 $33.85 ---$34,732 Enplaned Pax Joint use space: 21,422 Baggage make-up area 2,400 $20.51 23.8% $11 ,732 ($2,346; $9,385 Baggage b reakdown area 960 $20.51 23.8% $4,693 ($939 $3,754 Baggage claim ar ea 1,200 $33.85 23.8% $9 ,683 ($1 ,937 $7,747 Passenger holdroom, arrival and departure hallways 1,824 $33.85 23.8% $14,719 ($2 944 $11 775 T otal T erminal Rent 7 410 l $67,394 2018/19 Terminal Aoron/GSE Scace Rent (1) Space Used Rental Rate (SQ ft) (osfovl Terminal Apron Aircraft Parking & GSE Space Rent 10,730 $0.52 2018/19 Landlna Fees (3) (1) Projected Landing Landed Wgt Fee (1,00~) Rate Landing Fees 34,158 $1 .70 Grant Aviation -Total Rent and Fees NOTES; (1 ) Renta l rates and fees are scheduled to increase by 5% for each year of the agreement. (2) The Joint Rent Subsidy percentage applies a renta l amount reduction provided by the Airport. (3) Aircraft landed weights a re estimated -actual landing fees are to be based on actual weight. 2nd Amendment -Airline Operating Agreement and Terminal A rea Lease Page 2 of 2 Apron Space Rent $5,570 Landing Fees $57,901 $130 865 LES SO R LESS EE ENA.._ExhC_2018-19_0 2.123 EXHIBIT C AIRLINE RA TE SCHEDULE KENAI MUNICIPAL AIRPORT C ity of Kenai, Alaska 17-May-18 Ca lculation of Terminal Rent, Apron Space Rent and Landing Fees RAVN Al k 2018/19 T I IR t as ca ermna e n Leased/ (1) Allocated (2) Used Base Prior Year Pre liminary Joint Rent Area Space Renta l Rate En p lanement Joint Rental Subsidy Rental Description (sq ft) (psfpy) Percentage Am ount Reduction Amount (a) (bl (c) (a)x(b)x(c) 20% Exclu s ive use space: Room #s 28 ,29,30,31 1,152 $33.85 ---$38,998 Enplaned Pax Joint use space: 68,444 Baggage make-up area 2,400 $20.51 76.2% $37,484 ($7,497 $29,987 Baggage breakdown area 960 $20.5 1 76.2% $14,994 ($2,999 $11 ,995 Baggage claim area 1,200 $33.85 Passenger holdroom, arrival and 76.2% $30,939 ($6,188; $24,751 departure hallways 1,824 $33.85 76.2% $47 027 ($9 ,405 $3 7,622 Total T erminal Rent 7,536 1 $143 352 ermma ~p ro >pace Rent 2018/19 T . I A n/GSE S Terminal Apro n Aircraft Park ing & GSE Space Rent Landin g Fees RAVN Alaska -Total Rent and Fees NOTES: Space Used (SQ fl) 31 755 (3) Projected Lan ded Wgt (1,000#sl 127,493 (1) Rental Rate (psfpy) $0.52 2018/1 La d. F 9 n mg ees {1) Landing Fee Rate $1 .70 (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 lan ded weights are estimated -actual landing f ees are to be based on actual weight. 2nd Amendment -A irlin e Operating Agreement and Terminal Area Lease Page 1 of2 Apron Space Rent $16,4 85 Landing Fees $216,117 $375 954 LESSOR LESS EE EXHIBITD AIRLI NE AND AFFILIATE INSURANCE REQUIREMENTS A Airline Liability Insw-ance and Comprehensive General Liability Insw-ance Insurance limits of liability for Airli ne and each of its individual Affiliates shall be detennined 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 airlines operating aircraft of between twenty (20) and fifty-nine (59) seats; 4 . Not less than twenty million dollars ($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 Liabi lity 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 less 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 ($1,0 00,000) per person per occurrence. D . Workers ' Compensation and Employers' Liability Insurance Statutory coverage and liability limits are required . Airline Operating Agreeme nt LESSOR and Tenninal Area Lease LESSEE '-'=c> ~ -"""-' '--= ~ == &~ i"' > • e • g •••" .... a • ._•••••• e • • o >up•~-,_.,.•• ·~40 • • •• • •• • •. •• • • p u 0e "O"" • D • R" "" o• ••""" ""••••""••a" "0 ,._,,,, "" GRANT ~ PASSENGER 10,730 S.F. ~ SAFETY ZONE RAVN 31 ,755 S.F. 1 ---c::> --ca c::::11 ezt .us. c:::. c::::. ce. :IT: CCI C... C19 .-. -=::;, C.,, ~ c:E:> c=io -==o CZ» -cnl .... ---LTJ:!IS_!'RAWINE ~NOTT<?_ S0_LE _ ___, 'r=up w'Si?w'"""i?T ~ WINCE-CORTHELL-BRYSON ---~ B-~~~~~~-.-~~~~~~ ------;08 HO; HEVl-'IED: .. 22-11 ------._ ~ -vr..ar---u .. ---···---·--- o ~-. LESSOR~~~~~~~~~~~~~~ LESSEE~~~~~~~~~~~~~~ """" ~ KENAI MUNICIPAL A IRPORT EXH IBIT E APRON AIRCRAFT PARKING KENAI, ALASKA