HomeMy WebLinkAboutResolution No. 2019-32Sponsored by: Administration
CITY OF KENAI
RESOLUTION NO. 2019 -32
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI , AUTHORIZING AN
AMENDMENT TO THE AIRPORT ADVERTISING CONCESSION AGREEMENT FOR THE
KENAI MUNICIPAL AIRPORT.
WHEREAS, on March 1, 2017 the Kenai City Council adopted a resolution authorizing the City
Manager to enter into an Agreement with the Concessionaire based upon certain terms and
conditions covering operation of the terminal advertising concession at the Airport; and,
WHEREAS , the terminal rehabilitation project will temporarily disrupt the Concess ionaire's
business and require additional capital investment from the Concessionaire; and,
WHEREAS , the City and the Concessionaire mutually desire to amend the existing Terminal
Advertising Concession Agreement for the benefit of both parties, by addressing costs of new
display improvements, temporary reduced fees, and a 3-year extension.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI , ALASKA:
Section 1: That the City Manager is authorized to enter into an Airport Advertising Concession
Agreement with Alaska Channel for the period of March 1, 2017 through February 28, 2025.
Section 2: That this resolution take effect immediately upon passage.
ADOPTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 15th day of May, 2019 .
BRIAN GABRIEL SR., MAYOR
AITEST:
MEMORANDUM
TO: Mayor Brian Gabriel and Kenai City Council
THROUGH: Paul Ostrander, City Manager
FROM: Mary L. Bondurant, Airport Manager
DATE: May 6, 2019
SUBJECT: Resolution 2019-32 – Terminal Advertising Concession
The terminal rehabilitation project will make extensive changes to areas in the terminal that are
currently used by the advertising concessionaire.
In order to accommodate these changes, the Airport and Alaska Channel have agreed to
modernize the wall displays bringing a visual enhancement that eyes will be drawn to when
entering the terminal building. The current displays are old and tired. New tension displays will
add to the new aesthetics, function, ambiance, and can be put any place.
Current advertisers are excited for the upgrades and new advertisers are waiting for the
completion of the terminal rehabilitation project to enter the program.
Thank you for your consideration.
First Amendment To Airport Concession Agreement with Alaska Channel Page 1 of 5
FIRST AMENDMENT TO CITY OF KENAI
KENAI MUNICIPAL AIRPORT
TERMINAL ADVERTISING CONCESSION AGREEMENT
THIS FIRST AMENDMENT is made this ___ day of May, 2019, between the City of
Kenai (City), whose address is 210 Fidalgo, Kenai, AK 99611, and Alaska Channel
(Concessionaire), whose address is 507 E. Street, Suite 206, Anchorage, AK 99501.
RECITALS
A. The City owns and operates the Kenai Municipal Airport and Airport Terminal Building
(collectively “Airport”), located in Kenai, Alaska.
B. On March 1, 2017, the Kenai City Council adopted a resolution authorizing the City
Manager to enter into an Agreement with the Concessionaire based upon certain terms and
conditions covering operation of the terminal advertising concession at the Airport.
C. The City has undertaken an extensive terminal remodel project that will temporarily disrupt
Concessionaire’s business in the terminal and require additional capital investment from the
Concessionaire once the project is complete.
D. The City and Concessionaire mutually desire to amend the existing Terminal Advertising
Concession Agreement for the benefit of both parties.
The City and Concessionaire therefore agree as follows:
1. Amend Article II- Term, of the Agreement to read as follows:
ARTICLE II-TERM
A. Term: The term of this Agreement is effective as of March 1, 2017 through midnight of
February 28, 2025, unless terminated earlier as provided herein.
B. Holding Over: If the Concessionaire holds over, provides services, and remains in
possession of the Premises without a written renewal or extension of this Agreement, the City’s
allowance of continued operations by Concessionaire does not operate as a renewal or extension
of the rights granted under this Agreement, and, instead the parties agree that this creates only a
month-to-month extension, regardless of any payment the City accepts. The Concessionaire’s
obligations to perform under this Agreement will continue until either it or the City terminates the
services under this Agreement by giving the other party at least 10 days’ written notice. The
payment due for any extended period during which services are provided without a written
extension of this Agreement is the monthly rent as it would have been due for the preceding year
and plus the applicable percentage rent due for that period of additional operation and such
payments shall be payable in the same manner.
First Amendment To Airport Concession Agreement with Alaska Channel Page 2 of 5
2. Amend Article V-Rent, Fees, Taxes and Payments, of the Agreement to read as
follows:
ARTICLE V – RENT, FEES, TAXES, AND PAYMENTS
A. For the rights and privileges granted under this Agreement, and Concessionaires agreement
to make a capital investment in the Kenai Airport Terminal as provided in the April 15, 2019
Revised Budget for Non Lit Tension Fabric Displays & 2 Digital Displays with Digital Signage,
Attached hereto as Exhibit 1, Concessionaire shall pay the City:
1. From the effective date of this First Amendment until August 1, 2020, or 6 months after
renovations are substantially completed, whichever comes later, a percentage payment of
30% of annual gross revenue plus applicable sales tax.
2. (a) After August 1, 2020, or 6 months after renovations are substantially completed,
whichever comes later, a minimum annual guaranteed amount of Nine-Thousand Dollars
($9,000), plus applicable sales tax. The percent payment, of 30% on annual gross revenue
beyond the minimum annual guaranteed amount will be retained by Concessionaire until
the total retainage equals $14,264.
(b) Thereafter, Concessionaire will make payments to the City as follows: $9,000
minimum annual guaranteed amount or the percent of gross revenue payments below
(including applicable sales tax) whichever is higher:
Year One 30 %
Year Two 30 %
Year Three 30 %
Year Four 30 %
Year Five 30 %
Year Six 30 %
Year Seven 30 %
Year Eight 31 %
Concessionaire shall furnish to the Airport each month a statement showing total Gross Revenue
by advertiser, as defined herein, for the preceding month. After subsection 2(a) above is
completed, with each monthly statement, the Concessionaire shall remit to the Airport 1/12th of
the MAG and the above stated percentage of its Gross Revenue, in excess of $30,000, derived
through the end of the reporting month.
The monthly statements and payment will be paid by the 20th day of the month following the last
day of the reporting month of service. For purposes of this Agreement, annual revenue will include
all revenue earned from the first day of this Agreement and end one calendar year thereafter.
Concessionaire agrees to remit payments to the City at Kenai, City Hall, in United States currency,
First Amendment To Airport Concession Agreement with Alaska Channel Page 3 of 5
either by check, cash, bank draft, or money order. Concessionaire will submit payments free from
any claim, demand, setoff, or counterclaim of any kind against the City.
After subsection 2(a) above is completed the percentage payment payable to the City by the
Concessionaire under this Agreement shall be owned by the City when the Concessionaire’s
annual gross revenue exceeds $30,000 and at the time of each customer transaction and will be
held in trust by the Concessionaire while the funds are in Concessionaire’s custody and control.
The Concessionaire is responsible for these fees until delivered to the City. If any fees payable to
the City are lost, stolen, or otherwise unlawfully removed from the custody and control of the
Concessionaire, the Concessionaire remains responsible to the City for the revenue.
Concessionaire shall pay for all telephone service to the assigned areas. The Airport shall pay for
all heating, air conditioning and electrical service provided to the Assigned Areas.
B. Unpaid Fees: Any rent, charge, fee, liquidated damage/penalty, interest, or other
consideration due but unpaid at the expiration or cancellation of this Agreement is a charge against
the Concessionaire and its property, real or personal, at the Airport or where otherwise located.
The City has any lien rights allowed by law. Either the City or its authorized agent may provide
enforcement.
C. Taxes: Concessionaire shall pay any borough, city, or other sales and property taxes due
on base rent, percentage rent, and any other fee due under this Agreement.
D. Other Fees: The City reserves the right to impose and collect charges and fees from
Concessionaire for the following:
1. The use of specified equipment, facilities, or services when such use is
requested by Concessionaire; and/or,
2. The privilege of accessing the Airport to conduct any business other than
an on-Airport advertising concession business.
E. Audit: In addition to the audit rights specified elsewhere herein, the City (itself or through
and/or its designated representatives) reserves the right to audit Concessionaire’s books and
records at any time for the purpose of verifying the Gross Revenue. If, as a result of such an audit,
it is established by the City that Concessionaire has understated the Gross Receipts received by
3% or more (after the deductions and exclusions provided for herein), the entire expense of said
audit shall be borne by Concessionaire Any amount found to be underpaid will be assessed to
Concessionaire along with penalty, audit costs, if applicable, and interest.
E. Revenue Diversion: Concessionaire shall not cause or allow to be diverted from the Airport
any of its advertising business in any manner to avoid or reduce its Gross Revenues upon which
its financial obligations owed the City is computed. In the event Concessionaire establishes, owns,
operates, or manages during the term hereof any advertising business within five miles of the
Airport, it agrees to make all books, records, and other pertinent documents of such advertising
business available for audit by the City and/or its designated representative to ensure compliance
First Amendment To Airport Concession Agreement with Alaska Channel Page 4 of 5
with this provision. If, as a result of such an audit, it is established by the City that Concessionaire
has understated the Gross Revenues received by 3% or more (after the deductions and exclusions
provided for herein), the entire expense of said audit shall be borne by Concessionaire. Any
amount found to be underpaid will be assessed to Concessionaire along with penalty, audit costs,
if applicable and interest.
3. The concessionaire understands that FAA regulations mandate compliance with Grant Assurances and if problems develop with the extension, terms and conditions will be adjusted to the extent necessary to satisfy FAA.
4. This First Amendment and all conditions and obligations under this Amendment shall be
effective as of _________________2019, regardless of the dates of signature below.
5. Except as expressly modified or stated herein, all other terms and conditions of
the KENAI MUNICIPAL AIRPORT TERMINAL ADVERTISING CONCESSION
AGREEMENT remain in full force and effect.
CITY OF KENAI CONCESSIONAIRE
By: By:
Paul Ostrander Date Yael Kaufman Date
Its: City Manager Its: General Manager
ACKNOWLEDGMENTS
STATE 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 for State of Alaska
My Commission Expires:
STATE OF ALASKA )
) ss.
First Amendment To Airport Concession Agreement with Alaska Channel Page 5 of 5
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this ___ day of ________, 2019,
by Yeal Kaufman, General Manager of Alaska Channel, an Alaska corporation, on behalf of the
corporation.
NOTARY PUBLIC for State of Alaska
My Commission Expires:
ATTEST:
__________________________
Jamie Heinz, City Clerk
SEAL:
APPROVED AS TO FORM:
__________________________
Scott Bloom, City Attorney