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HomeMy WebLinkAboutORDINANCE 0711-1981Am CITY OF KENAI ORDINANCE N0, 711-81 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, TO AMEND KMC 22,05.045 BY ADDING A NEW SUBSECTION TO ALLOW SALE OF LEASED LANDS TO LESSEES UNDER A CONTRACT OF SALE, WHEREAS, Ordinance No. 612-80 was adopted in order to facilitate the sale of City lands, and WHEREAS, it was provided therein under KMC 22.05.045(a)(1) that on a sale to a lessee who had placed a lien for financing upon the land the City Manager is not authorized to sell except for total cash payment unless the party holding the lien upon the land agrees to subordinate said lien to the Note and Deed of Trust to be taken by the City for the sale of land, and WHEREAS, under present market conditions and high interest rates, it appears that such lienholders are unwilling to subordinate their interest, and WHEREAS, a deed of the City's interest to a lessee would cause a merger of the interest in the lessee making the City's interest in any debt taken for payment for said land subordinate to the interest of prior recorded liens, and WHEREAS, it is desirable to facilitate sales to lessees under such conditions and to arrange for terms of payment, if possible, which would not place the City in an inferior position to lienholders, and WHEREAS, rental payments under leases are subject to renegotation every five years, and renegotations will occur three or four times during a twenty year period, and in the event of the default, the City should not receive less than the City would have received under the terms of the lease, and WHEREAS, title to the land subject to sale contract would remain in the City and only the leasehold interest would be taxable to the buyer, resulting in loss of revenue to the City, and therefore it is desirable by the City to grant a shorter term for payments so that the payments would be larger and investment income therefrom would balance the loss of such tax revenues. `�/� NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows-, Section is That the City of Kenai Code of Ordinances is hereby amended by adding a new subsection to be numbered 22.05.045(c) which shall read as follows: "(c) In order to expedite and facilitate the sale of City lands to a lessee who has placed a lien for financing upon the land, or where any other lien has attached to the land, and where lessee is unwilling or unable to pay cash for the City's interest in said land, the City Manager is hereby authorized to sell the City's interest as lessor to the lessee under a contract of sale under the following terms and conditions: "(1) The contract for sale of City's interest as lessor provided for above shall be neither acknowledged nor recorded, but will be deposited for collection with a bank selected by the City Manager, which may be changed from time to time, and which shall be the bank in which the City funds are deposited. °(2) Such contract may be assigned by buyer only with the consent of the City Manager, :;which will not be unreasonably withheld. "(3) Said contract will contain an agreement of lessee that in the event of default of payment thereunder, and in the further event that the default is not remedied and all payments brought current under said contract within 30 days aftor written notice of said default to lessee and to any holder cf mortgage, beneficiary of deed of trust, and security assignee who has given notice pursuant to KMC 21.15.100(c), the collection agent will deliver said contract to the City, and such default will be likewise considered by the parties as a default in the lease agreement between City and lessee, and lessee will agree to execute a cancellation of said lease and deliver same to the City. Such cancellation is specifically made subject to the provisions of KMC 21.15.100(d) and (e). "(4) Payments of rentals under lease agreement will be prorated to date of execution of instillment sales contract and no further payments will be required under the terms of the lease. In the event of default under the terms of the sales contract, the parties agree that all payments made thereunder will be construed to be in lieu of rental payments under the lease, and lessee will acquire no equitable interest in the land because of the contract or any payments thereunder. AP F "(5) In the event of a sale under contract under this subsection, the following terms will be applicables "fij The term of such contract shall be set by the City Manager, but it shall not exceed 15 years unless a longer period for a specific sale of land is approved by resolution of the City Council. aIiij The down payment required shall be determined by the City Manager, but shall not be less than 15% of the sales price. "fiiij Such contract principal amount shall provide for interest at the same rate as the rate set by resolution of the City Council for credit sales under a note and deed of trust pursuant to KMC 22.05.045(b)(2) above which is current on the date of execution of the contract by the City." Section 2s Any existing executory contracts for the sale of City lands to a lessee may, upon application of the purchaser, be amended to conform with the provisions of AS 22.04.045(c). PASSED BY THE COUNCIL OF THE CITY OF KENAI ALASKA, this 7th day of October, 1981. VINCENT O'REILLY,Y�OR ATTEST:—aa�ZA';� 6 J et Whelan, City Clerk First Readings Second Readings Third Readings Effective Date: September 2, 1981 September 16, 1981 October 7, 1981 November 7, 1981 0