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HomeMy WebLinkAbout1989-04-24 Council Minutes - Special Meetingil KENAI CITY COUNCIL MINUTES SPECIAL MEETING, APRIL 24, 1989 - 6:30 P.M. Vice Mayor Measles Presiding 1. PLEDGE OF ALLEGIANCE 2. ROLL CALL Present: McComsey, Measles, Monfor, O'Reilly, Smalley, Swarner Absent: Mayor Williams 3. Transfer Area of Responsibility for Economic Impact Study of Oil Spill from Council to Economic Development District and Rescind Funding Request MOTION: Councilwoman Monfor moved to rescind $9500 that was to go to the Economic Development' Commission for the Economic Impact Study of the oil Spill and have the City now become a part of the Kenai Borough Study, seconded by Councilman McComsey VOTE: Motion passed by unanimous consent Note: The following portion of the minutes are verbatim. 4. Discussion: Modifications to Dairy Queen ,Contract Vice Mayor Measles asked the City Attorney to bring the Council up to date on the contract. City Attorney Rogers: This is the first I've seen of this document, it was sitting in front of my chair when I got down here. I have talked with Mr. Ischi, I have talked with Mr. Ischi's lawyer, Mr. Ischi's lawyer and I agreed that you couldn't vitiate the contract documents to the extent that he had been asking the City to do. I told Mr. Ischi that I didn't care to discuss the matter any further with him as far as negotiating is concerned because we couldn't. And we're prepared to go out and rebid the project. We did indicate that without violating the contract documents that we felt we could work in a penalty provision that said, upon, you know, breach of the lease or vacating or quitting the premises that there would be a penalty equal to two years of the lease. Which would give them some relief. Obviously, from this letter, that is not amenable to him. His attorney didn't get back to me after initially talking with him. I feel very uncomfortable, once you have bid, City property you have a prevailing bid, that all of a sudden somebody wants to come in and renegotiate the terms of it because at some point you step KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 2 over that line that says you had a public bid of a facility and you now have a negotiated arrangement with one individual and you've heard from other businesses in the community that feel that even as it is under our procedures that the property is going for not enough and we also have had some discussion about changing the rate of return on City property because of those comments that have been made. On the other hand, Mr. Ischi obviously feels that it's too much. But I'm not in a position to negotiate it. Councilwoman Swarner arrived at 6:40 P.M. I've talked with the administration. Mr. Brighton I think will concur with me on the matter. I've had contact with one Council member on the thing, asking what's up. And like I say this,. today's the 24th, this is the end of the 23rd and this is the first I've seen of this document. I don't know what Mr. Ischi thought a ten year lease was. The fact that he didn't have an opportunity to obtain legal counsel was perhaps unfortunate. I don't know why, but be that as it may, I don't think a legal education is necessary to ascertain what a ten year lease is that you're responsible for the term of the lease, there are obligations on both sides of legal documents such as that. If the Council wants to acquiesce to this I'll try and draft something along those lines. I will not represent that it'll hold water should it be challenged. Because I think that what he's asking for is to, in effect, initiate the, a major portion or term of the contract documents and if that's the way it's going to go lets rebid it. City Manager may have, we may have some other interest, I don't know, the City Manager may want to address that. Vice Mayor Measles: Was Mr. Ischi wanting to be here tonight? City Attorney Rogers: Just to remind the Council where we're at now on this, the premium is $100 so in effect the lease rate is at the appraised, 6% of the appraised valuation. And, those figures come out in such a manner I think, if you take the building it's about $1.6some cents a square foot and that doesn't include the land that goes with it. Its Spur frontage. I don't know how one calculates in say the acreage that goes with it, put a value on that or not, but, you're looking at about 3,000 square feet I think. City Manager Brighton: He's altering what the Council has established as policy over previous years in that, to require a signing by the person in addition to, in his corporate capacity.' And to agree to this would be a moving away from the policy that the Council has followed over these past several years. Secondly, it's a major alteration of bid contracts and it would just appear to m9 to be simpler to rebid the situation in order to avoid falling in the pitfalls that might be waiting around the corner for us by altering a public advertised bid. C, • i KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 3 Councilman McComsey: That's going to take what, another sixty to ninety days? City Attorney Rogers: Whatever it takes, yes. But I'd rather have that then no recourse. You don't have a lease here. Councilwoman O'Reilly: I think there's probably a couple of unfortunate circumstances that, but I can't see a major alteration without putting it out to bid to other people, it's changing the rules after the fact. I have a problem with that. I think the easiest thing to is to rebid it. (inaudible) City Attorney Rogers: It may very well be that the next time around Mr. Ischi will, be the sole bidder and somehow he will get it for less than what it is. However, remember we, it's dictated that we get more value for these and that's dictated, these are FAA lands and so there will be a minimum. Councilman McComsey: In the bid documents it says that if he does not keep his lease and does not make the payments that we will sue him for everything that he has? City Attorney Rogers: No, we'll avail ourselves of legal recourse and he signing as an individual and his obligation is a ten year lease. We're entitled to the rents for a period of ten years. Assuming that after half of that period is passed he defaults on it, then what we would do, we would not be able to sue him at that time for the full amount of the lease. You're not entitled to the remainder of the lease until it's due. So there's five years before you could collect it. Number one. Number two, you're under a legal obligation as land holder to what they call mitigate your damages. We let the premises. So the extent you relet the premises to somebody else that diminishes the amount the defaulting tenant owes you. Conceivably there'd be a net nothing that he owes you because you may rent it for more. If you rent it for less the difference between what you get in rent and what he promised to pay is your measure of damages. So for him to say his obligation is $2500000 is very misleading. Either he totally misunderstands the concept or he wishes, you know, to make that argument because it sounds, you know, outrageous that one would be saddled with that big a debt. I would assume, and the reason that I propose the two year penalty provision to Dale Dolifka and he thought it was a good idea at the time, subject to approval of his client which wasn't forthcoming evidently, was because with a two year period of damages one could assume that you would relet the premises within two years so the two year period becomes a liquidated damages provision in effect. That we would get immediately, okay, and we might make money off that. We might not. It could be that the place is in disrepair, it could be, you know, a number of things could happen. But looking forward at this time it look like a reasonable period for a penalty provision. Also, it was a small enough change to the contract documents that I feel that I could prevail in any KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 4 challenge in the courts. So it worked to his advantage to limit his outside exposure so he could plan for it as a businessman. It worked to our advantage in that it gave us something should he default on the lease and the place have to go out for another RFP which could take, reasonably speaking, a year. 'Specially'if it happened in the winter months. Plus our extra efforts and all the administrative time, we'd have compensation for that. So that's why we proposed that and we only proposed it after he came to us complaining about his exposure on this. We were seeking a means of accommodating him, accommodating the City, get the document signed and get the thing in operations. It's as far as we felt we could legally go. From that point he wanted more. Obviously, from this letter. Which I'm now for the first time reading tonight. Councilman McComsey: It was leased before the two years it would still be the $43,000 or whatever it is? City Attorney Rogers: It would be the two years. That, yes, it would. Councilman McComsey: If in the ten years and you lease it then you're not obligated for the full ten years, just whatever that's in the middle. That's it's leased ..... City Attorney Rogers: No. Yea, if we didn't have the penalty provision in there and let's assume in the fifth year he defaulted on the lease and walked. He's obligated for five more years. Right? However, deduct from that five years, any rents that we get from reletting the place and the court will not allow us to ' sit on our hands and say we're not going to relet it we're just going to collect the rent every month from this guy and we'll sue him every month or every year. You can't do that. You have to make a reasonable effort to relet the premises. Any rents that you get from that reletting in the fifth year, the other five years hypothetically, go to reduce the indebtedness he has under the lease to us, okay. So that we're not entitled to more than what we originally bargained for, okay. We're not entitled to a windfall. As a result of his misfortune. We're entitled to the benefit of our bargain and that's it. So it could be without the penalty provision, just as the documents are now, that if he walked it's conceivable he turned out getting more than what he would if we had the penalty provision two year penalty provision in there. You follow me? Councilman McComsey: Yes City Attorney Rogers: We don't know looking forward that's why they call them liquidated damages. You set a figure you think will cover the emergencies and contingencies, looking forward, but without knowing that so it may be more, it may be less. And r� 0 KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 5 that's what I was discussing with his attorney and, ah, evidently wasn't acceptable. Councilman McComsey: If the rent went higher, than that would just mean he didn't have to pay ... but if the rent went lower he might have to make up the difference. City Attorney Rogers: Exactly. Councilwoman O'Reilly: Maybe you explained this but I didn't get it. Suppose Mr. Ischi agreed to the two year deal that you were talking about last week and suppose he started a business and paid his lease for like eight months and then things went really bad. Is he liable for twelve, sixteen months? Additional? City Attorney Rogers: No, he's liable for two years additional. Councilwoman O'Reilly: Not counting the eight months he's already paid. City Attorney Rogers: He's got the eight• months he's paid plus he owes us two years lease rate. From the date of the breach or termination of the lease. Councilwoman O'Reilly: Two years from that date. City Attorney Rogers: That's right. Pete Ischi: I don't know at what point I can put my input in ... Vice Mayor Measles: Yes, go ahead Mr. Ischi. Pete Ischi: 604 Laurel Drive in Kenai. First of all, its kind of misleading what the City Attorney has said. I had sent a letter April 7th to the City Attorney and it wasn't the exact letter. The only clause that's different in this letter is losses. But I've got a copy of the letter that I sent. My wife delivered it to your secretary and ...... (Mr. Ischi walked away from the microphone) I just don't want it to make it sound like a total idiot. Cause I have gone through some of the steps. City Attorney Rogers: Well the additional language you have in this one appears, "nor could they sue us on the unused portion of the ten year lease. Pete Ischi: Correct. I have that on this new ... City Attorney Rogers: Right, that's in this contract and not in the one you gave us. That's a pretty major difference I ..... Pete Ischi: Okay. But I did, I did bring you a letter you have got, I have talked .... City Attorney Rogers: I have one I have talked to you as I , KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 6 indicated to the Council number of times on the telephone, I chose not to after a while because it was getting to be an adversarial situation. Pete Ischi: Anyways the one, the problem that I foresee it sounds really good that if in five years I go broke, that if somebody comes in and leases the building again, that if the rent, I mean if its stays only vacant for six months I may not be liable for any rent. But the problem is the only time I'm going to go broke is if the economy goes down and if the economy goes down, you've seen how hard it is lease the building right now. If the economy goes down more I don't feel you're going to be able to lease that building so that thing could sit vacant for another five years and then I am liable for however many years. I mean it could be eight years, whatever. You know. I don't plan on going broke but I'm trying to cover my other assets. The one thing that I was under the impression when I did put my offer in as I thought you could sign in a corporation capacity. Where my other assets would not be touched. Wouldn't bother me a bit if I didn't have another job or land or anything then I couldn't lose nothing. I've got too much at stake to take this kind of gamble. Now your clause that you talked to Dale about I never agreed to that. Dale, you know said that's up to me strictly, one reason he didn't get back to you is he said you didn't really want to talk, you know you had ,. your mind made up what you wanted. He didn't want to get involved with .... City Attorney Rogers: Excuse me, it's not making up my mind, its what I feel is legally ..... Pete Ischi: Okay, correct, that's what I mean what you felt was legal. But on the two year ... I would not even object to your two year clause but like Marge O'Reilly brought it up, if I were to go broke six months from now the remaining, you know, time, in the sixteen months, I wouldn't object that I'd have to pay that but to pay two years if I only go two years I still have to come up with $45,000 cash you stipulated otherwise you would come back for the full remaining balance on the lease, correct? City Attorney Rogers: That's not correct. Pete Ischi: That's what came across to me. City Attorney Rogers: We would come back for the two years rental. That would be the maximum we could go after you for. Under the terms of the lease. Pete Ischi: The way Dale had talked to me about it he says if I did not have the cash money, if I defaulted, whatever time, you know, in that period time, that if I didn't have the cash money up front to settle on this two year that you would have the option, he said the City would have the option to come back on me for the full ten year lease, is the way he stated it. s KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 7 City Attorney Rogers: Yes if you did not pay the two years. Pete Ischi: Okay. Okay, if I didn't have $45,000 sittin the bank to pay the City, if I'm goingto g have any money because I'm going to try tork epTthenthing alive long as I can. I wouldn't object Yas be covered on this where there'd beautwoow i think the City could couldn't Just � Year clause where I go in there and leave. But, I don't know the proper terminology, but where it declines, where if I go six months, if I go a year, then I would have to pay a years', the remaining years' balance. City Attorney Rogers: What happens if you're successful for three years. Pete Ischi: Okay, I don't know if you can write it up that it goes two years and then two years so that you're covered. I'm going to improve the building also, I'm putting money into the place so you're getting something out of it in that respect too. I'm not going in there and trashing the building. I'm not going to sink that kind of money in there. That's not m y gal. plan on going broke. I'm trying to cover myself if Iodo. Youdon't know, you don't know what the economy is going to do around here. And you're talking about putting the place up for bid again. Granted, you can do that, but if anybody wants to go in fast food they need the summer months to survive the winter. If they donut get in fairly quick they're not going to make it. People have talked about renting that building to something else or leasing it as something else. That's designed for that food. It would cost somebody so much money to go in there to remodel that building, nobody's going to sink that kind of money into and then be liable for ten years on top of it and they're going to lose two ways around. I've seen where Burger King put $300,000 into remodeling their building. That's what they say. You know, you're not going to get somebody to do that here cause they'll probably go Dairy Queen or something else if they can get the franchise. I'm not out to take the City. I'm trying to make it fair for everybody all the way around. But I feel there's got to be some kind of escape clause in there because I don't have that kind of money laying around where .. I've got too many other assets to lose. Councilman Smalley: Based on information from Council, probably the closest we would feel comfortable with is that two year clause, two years from the point if You were ever fault Years from that. If we do anything other than that oiteseems. like we're going against our bid package, our bid proposals. Pete Ischi: But to me that sounds like if you can do that, how can you do that and you couldn't do anything else is m I mean isn't that considered a change there too. Y question. o • i KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 8 Councilman Smalley: I guess it depends upon legal counsels interpretation of the change. Pete Ischi: Yes City Attorney Rogers: What I try to do is look at it from the perspective of how far I thought we could go without having some real exposures out of a challenge. That's as far as I feel can go. If you get into a schedule of diminishing liability tied to the duration that the premises was used you have a drafting problem, you have nego... you're into direct negotiations, with this individual who's saying I like this but I don't like that let's change this, and then you are in fact renegotiating the contract. Here, we have changed it by use of a so called penalty clause. Penalty having connotations of good for us bad for them, sort of thing. As opposed, when in fact;, you're limiting the liability. You backed off, you're getting less than what you bargained for. Okay. But, I felt, that we could permissibly do that. But what he's suggesting going beyond that, no, we're going to get into bargaining, we're going to get into a schedule situation that has to be drafted in, we're going to be redrafting all through the thing. Vice Mayor Measles: Councilwoman Monfor. Councilwoman Monfor: Just for point of clarification for myself. If, he had to leave the premises because of business and we were in the two year clause he had to pay the two years. Is that a payment that the City demands up front. I mean like the day he says I htive to walk out of my lease you say fine, give us a check or is that something that, what kind of time are we talking. City Attorney Rogers: We could have, we could have a, a liability for that and I feel that it would be permissible to say that is his ultimate liability. And not put a time which means we'd have to sue him for it. Councilwoman Monfor: And when we .... City Attorney Rogers: And we'll say his exposure is he agrees that he will pay this, if he doesn't we'll sue him for it. Councilwoman Monfor: And by everything else that we've always done him signing this lease agreement we could go after everything he has, his home, his wages from the other shop ... City Attorney Rogers: Oh yea. Otherwise that prevents the SeaCatch situation. Serendipity Inc. Where, if a person is going to go under the first thing you do is get all the assets out of there so there isn't anything to go after when it does go under. And this City has been stuck that was before as you recall. Councilwoman Monfor: Would we take into consideration the assets KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 9 that he put back into the business say new equipment or anything else would that be an asset or what would we look at that as. City Attorney Rogers: It depends on whether it's a fixture, trade fixture, or what they call personal property. But the general credit of the individual contracting in the City or with the City is what we have always looked for as security for the City to ensure that people will fulfill their contracts and if they don't that the City doesn't stand to lose. It's unfortunate that anybody does but as between the two parties its my position.to see the City comes out ... Vice Mayor Measles: Councilman McComsey. Councilman McComsey: It seems as in the lease, where it talks about what is it a five year .. something in there? City Attorney Rogers: There's a reappraisal at the end of five years. Councilman McComsey: A new appraisal. City Attorney Rogers: Yea. Any, any, under our code any property for lease of lands in access of five years must have the reappraisal. Councilman McComsey: Then after how many years..could he opt to buy this. City Attorney Rogers: He can opt to buy it at any time during the first nine years. Councilman McComsey: (Inaudible) City Attorney Rogers: At the then current appraised value. Vice Mayor Measles: Councilwoman O'Reilly. Councilwoman O'Reilly: I would, there's another scenario I would like to run by the attorney. Suppose that Mr. Ischi can come to an agreement on the two year thing, and suppose he operates the business for three years very successfully and then there's a terrible downturn in the economy. Then what's his liability. City Attorney Rogers: Two years. Councilwoman O'Reilly: Two years, so then anything up to the, I see. Councilman Smalley: Two years from the date of default. Vice Mayor Measles: If I understand what Mr. Ischi is asking for really, what it boils down to is a two year lease renewable .. for a period of ten years. KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 10 Pete Ischi: Well, not really, I guess what I'm, I mean the ton years set I realize that can't be adjusted. I guess what I'm saying is where my liability wouldn't go over two years, you know, my liability, I mean. The lease would still be ten years but the most that anybody could go after me was two years but then if I went six months that it, you know, it wouldn't be two years, it would be less than six months. Vice Mayor Measles: So essentially that would be a two year lease because you could walk out of there only the last day of the. second year and have no liability. Pete Ischi: Okay, I have another ... City Manager Brighton: Mr. Chairman, the thing wrong with that is that that puts all of the liability upon the City of Kenai. Whose going to be liable for eight years on that lease. Vice Mayor Measles: I guess the other problem too, the way the bid package is written, and with the past leases that the city has, I don't think we can negotiate that point without putting it out to bid and making all bidders aware that this is an option. It's something that every lease holder that the City has could come back and sue the City if we were to negotiate this point on this lease. Pete Ischi: I have a question, I can understand the legal problems and this, and why would the penalty clause have to be two years if we can set a penalty clause why couldn't we put a lower penalty clause in there. I mean you're adjusting the penalty clause but why fix it at two years which is a heck of a lot of money still, I mean ... City Attorney Rogers: Well, we've taken the penalty clause from 100% being ten years to 20% being two years. Now you want to say 10% or one year. That's up to Council. I just, it almost gets to the point of being diminimus as they call it. In other words relative to what the exposure was originally when you get it down, I thought that two years was, was crowding it. When you get below that I think the, term is diminimus below that and it's almost as if relative to the, ultimate exposure as it was. It's hardly anything. City Manager Brighton: Let me add to what Tim's saying. The less liability you assume the more the taxpayers in the City of Kenai assume on your behalf. City Attorney Rogers: I also don't think, when you get below the two years, I think you, I think the City has some real exposure. Because then we have the facility, relet it, go out with the RF'P's, could very well take you more than a year. How long has it been on the market now? Just getting it back, what we went through, what's it been, over two years hasn't it? At the stage KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 11 where we're at now. So, if that penalty clause gets below two years I say you've got some real exposure. I thought that the two year was as far as I felt we should go, both from changing the bid document standpoint but also as far as having the City shoulder any additional liability. They're shouldering was that change. The liability equivalent to, conceivably, eight years of lease payments. Pete Ischi: You brought up a good point there which I was going to bring up next. You just mentioned that the building's been vacant for two years. You're talking two years of payments'is over $60,000 by the time you figure in the taxes that you can generate off of that plus the rent you get. If I don't open the business myself how do you know that it's not going to be another two years that that building will be vacant and you're losing $60,000 again. Now you may rent the place tomorrow but it shows in the last two times you put it up for bid there's not too many people begging for this building. And some of the people in the City I've talked to said let's get the thing rented, it's paid for, the City's already got, the taxpayers are paying for it if it's sitting there. If it's not rented. If it's rented at least some money is coming back into the City. You're guaranteed that you're getting your price that you want per month. I'm not negotiating on that. That's what it's set. He had mentioned well maybe we're too low on that price. Well there again, not too many people have been begging for this building at this low price. So at least your getting, you're going to get money out of the building. It's getting nothing sitting there right now and you can have it sitting there again for another year at least. Councilwoman O'Reilly: But an exchange for that, we could give the situation with our other lease holders. Vice Mayor Measles: I don't think there's anyone would like to see that building rented more than this Council or the Administration but at the same time we have to stay within the guidelines of our bid documents. If we go out on a limb for one lessee we'll be in the court house from now on. City Attorney Rogers: Do I have the Council's permission for the two year penalty proposal? Okay. Vice Mayor Measles: Is Council agreeable to that? Councilwoman Swarner: I have a slight problem with anything that's going to effect any of the other lessees. City Attorney Rogers: The only way I can differentiate here is this is improved property. And it's, therefore it sits in a different situation. Councilwoman Swarner: Is it the only improved property that is airport. KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 12 City Attorney Rogers: Councilwoman Swarner, than the airport. Pardon? Is this the only improved property other City Attorney Rogers: Of airport lands? I, couldn't say offhand. I think it is. But I think under the circumstances the vacancy,. the duration of the vacancy, the rest of it, the fact that we didn't have any other bidders I'd present to a court if it were challenged. Vice Mayor Measles: Could we have a motion. MOTION: Councilwoman Monfor: Okay, I'm going to make this motion but I'm not real sure .. I would move then that we would have the two year penalty clause Vice Mayor Measles: The Council would ... agree to Councilwoman Monfor: If the Council will agree to it and this is not a sliding two years, a full twenty-four months City Attorney Rogers: A full twenty-four month penalty clause upon a breach of the lease as full liquidated damages and that would be the extent of it's exposure under the lease Councilwoman Monfor: Got that Janet? City Clerk Ruotsala: No Councilwoman Monfor: I just said all that. City Attorney Rogers: Or the term of the lease. You know, if there were damages or something, that would include that. Councilman Smalley: Damages would be additional. City Attorney Rogers: Yea, if there were damages to the structure or something like that, its under the lease too. And, if that's not amenable to you Mr. Ischi, fine, say so, if it is, I'll start working on documents. Pete Ischi: I'm sorry I didn't know. City Attorney Rogers: Okay, that's fine, we'll, we'll start tomorrow then since it's not acceptable to Mr. Ischi we'll start tomorrow to relet the premises, get it in the paper as soon as we can, unless there's somebody waiting in the wings that, you know, we could give that to under the same, the same terms which I don't think we could probably I'd have to research that. Councilwoman Monfor: Does this mean that you're going to relet it under exactly the same terms that Mr. Ischi bid it on? r� L r KENAI CITY COUNCIL SPECIAL MEETING - APRIL 24, 1989 PAGE 13 City Attorney Rogers: Not necessarily. We may take a look at it, we, we'd ask Council's input and involvement. Shorter term, longer term ... Councilwoman Monfor: Maybe a shorter term. City Attorney Rogers: We have, we're bound by the appraisal. Councilwoman Monfor:We are bound by the appraisal? Vice Mayor Measles: Yes. Councilman McComsey: Maybe five years instead of ten or something? City Attorney Rogers: Well we could, the problem you get into there is, is its a policy situation. Turning it over like that, the wear and tear of start up and let down and shut down and start up, sometimes that's harder on a facility than to leave it. And, it could very well be that there'll be some other interest. Councilman McComsey: Could it be for five years with an option for another five? City Attorney Rogers: We can do it that way. Vice Mayor Measles: Councilwoman O'Reilly. Councilwoman O'Reilly: Did I understand you to say earlier Tim that the value of the land was not included in the lease? City Attorney Rogers: No no, I was saying, when I figured square footage costs, it came out to $1.63 a foot just based on square footage of the building and a rental $1740, just figuring what one would have to pay for the building lease. It's not necessarily relevant I was just trying to give a comparison of other property in the area. Councilwoman O'Reilly: But if the lease amount is based on 6% of the appraised value ... City Attorney Rogers: Appraisal includes the land. Councilwoman O'Reilly: Includes the land. Councilwoman Monfor: And that's just a recent appraisal so we're right on as far as appraising so if somebody that's across the street comes back again and says well, that's not very much money that's nothing we can do about that can we? Councilman Smalley: Until we change that .. until that is changed ■ a KENAI CITY COUNCIL • SPECIAL MEETING - APRIL 24, 1989 PAGE 14 01. 0 Vice Mayor Measles: Change that and it changes for everybody. Councilwoman Monfor: That's just effecting more .than one business. That's all of them. City Attorney Rogers: Well give me.a call if you've got any suggestions, give me a call and we'll be working on the documents and see where we're going from there. Why don't I just check back with you next Council meeting and see where we're at. Before I put it in the paper. Or do you want me to just go with it. Councilwoman Swarner: Please just go with it. Councilman Smalley: Cho with it. Councilwoman Monfor: Now, the one other thing I'd like to ask you before we end this, is there any reason why we can't just sell it. I mean, is there any reason why we can't say for sale instead of k or lease. «s, Councilman Smalley: We're obligated to get x amount of dollars out of it ... • r City Attorney Rogers: We can sell it ... Councilman Smalley: because it's airport lands is that not correct? City Attorney Rogers: yea but we can sell it. Councilwoman Monfor: But we could sell it. Vice Mayor Measles: Fair market value. City Attorney Rogers: Sure. Councilwoman Monfor: There's nothing stipulated from anything we've gone through in these proceedings that we couldn't sell it. City Attorney Rogers: And anybody coming in on a lease is going to have an option to buy it at any time. You could sign the lease and the next turn around and buy it. Councilman MCComsey: Did not one time you tell us that the state had, that the people that had it before had a five year moratorium or whatever that they could comeback in and through the state and buy this back. City Attorney Rogers: I don't recall that conversation. Councilwoman Monfor: See I briefly recall something like that too, that, Councilman McComsey: I got it somewhere, the state had it for KENAI CITY C01MCIL • SPECIAL MEETING - APRIL 24, 1989 PANE 15 r 6 five years ... Councilwoman Monfor: And that's why I asked if it could be for sale. City Attorney Rogers: I'm not aware of that, we'll take a look at the litigation report and see what it shows. Vice Mayor Measles: Any further discussion Council. Meeting adjourned at 7:15 P.M. J t A. Loper inscribing Secretary e C~�'it #17D