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HomeMy WebLinkAboutResolution No. 2022-25711, KENAI CITY OF KENAI RESOLUTION NO. 2022-25 Sponsored by: Legal A RESOLUTION APPROVING THE FIFTH AMENDMENT TO THE CITY'S AIRLINE OPERATING AGREEMENT AND TERMINAL AREA LEASE TO REDUCE CERTAIN INSURANCE REQUIREMENTS FOR OPERATORS. 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, Council approved Resolution No. 2019-24 approving the Third Amendment to the airline operating agreement and terminal area lease effective July 1, 2019 for an additional twelve months due to delays in the terminal rehabilitation project; and, WHEREAS, Council approved Resolution No. 2020-35 approving the Fourth Amendment to the airline operating agreement and terminal lease that extended the term through June 30, 2025; and, WHEREAS, a Fifth Amendment is now recommended to address changes in the airline insurance market to reflect current market conditions affecting available policies. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the Kenai City Council approves the Fifth Amendment to the Airline Operating Agreement and Terminal Area Lease form as shown in Exhibit D. Section 2. That this resolution takes effect immediately upon adoption. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 20TH DAY OF APRIL, 2022. -.. (� s Brian Gabriel Sr., Mayor ATTEST: Michelle N1__S_aheFMMC, City Clerk New Text Underlined, [DELETED TEXT BRACKETED] KENAI City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 www6nai.city MEMORANDUM TO: Mayor Gabriel and Council Members FROM: Scott Bloom, City Attorney DATE: April 14, 2022 SUBJECT: Resolution 2022-25 Fifth Amendment to Airline Lease Agreement and Terminal area lease The City was notified by its newest airline operator that it was unable to obtain an insurance policy meeting the City's requirements in the airline operating agreement. The City reached out to its airport consultant, insurance broker and Ted Stevens International Airport and learned that its current insurance requirements for aircraft with 9 or fewer seats is no longer commercially available, is higher than Anchorages limit and that our consultant does not oppose lowering it. Administration recommends lowering the required limit for Airline Liability Insurance and Comprehensive General Liability for aircraft with 9 or fewer seats from $5 million to $ 2 million as shown in Exhibit D. Your consideration is appreciated. I ev KENAI City o{ Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 www1enakity MEMORANDUM TO: Mayor Gabriel and Council Members FROM: Scott Bloom, City Attorney DATE: April 20, 2022 SUBJECT: Requested Amendment to Resolution 2022-25 Resolution 2022-25 recommends a Fifth Amendment to the City's Airline Operating Agreement to adjust the City's insurance requirements for airline operators to meet current market conditions. After further consultation with the City's insurance consultants, I recommend changing Section A in Exhibit D to reflect that the City needs operators to carrier Aircraft Liability Insurance and Comprehensive Aviation Liability Insurance instead of Airline Liability Insurance and General Liability Insurance. This change protects the public and City from incidents that occur in the air and on the ground, including the terminal. Additionally, the original memorandum does not speak to the change in Subsection A. 6. That changes the passenger personal injury requirements from $25 million to $250,000. The reason for this change is because coverage cannot be provided to smaller airlines in excess of $250,000 for personal injury. The correct changes are reflected in Exhibit D attached to this memorandum. I request a council member move to amend Exhibit D by changing the first sentence in Section A. to read: "Aircraft Liability Insurance and Comprehensive Aviation Liability Insurance." Your consideration is appreciated. EXHIBIT D AIRLINE AND AFFILIATE INSURANCE REQUIREMENTS A. [AIRLINE] Aircraft Liability Insurance and Comprehensive [GENERAL] Aviation 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 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] two million dollars [($5,000,000)] ($2,000,000) 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)] two hundred and fifty thousand dollars ($250,000) 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 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 ($1,000,000) per person per occurrence. D. Workers' Compensation and Employers' Liability Insurance Statutory coverage and liability limits are required.