HomeMy WebLinkAboutResolution No. 2025-41A RESOLUTION APPROVING THE SIXTH AMENDMENT TO THE AIRLINE OPERATING
AGREEMENT AND TERMINAL AREA LEASE AND AUTHORIZING THE CITY TO EXECUTE THA
AMENDED AGREEMENT.
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airline operating agreement and terminal lease; and,
WHEREAS, Council approved Resolution No. 2008-27 establishing a new airline operating agreemeffl
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 airlim-
operating agreement and terminal area lease effective July 1, 2013 for a sixty -month period; and,
WHEREAS Council a�Lirroved Resolution No. 2018-43 a the Second Amendment to the airlin
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, Council approved Resolution No 2022-25 approving the Fifth Amendment to the airline
operating agreement and terminal lease to address changes in the airline insurance market to reflect
current market conditions affecting available policies effective April 20, 2022; and,
WHEREAS, City administration, working with an airport consultant, developed the Sixth Amendment to
the airline operating agreement and terminal area lease which extends the agreement for five years
beginning July 1, 2025 through June 30, 2030; and,
WHEREAS, City administration consulted with Grant Aviation, Kenai Aviation, and Aleutian Airways,
scheduled passenger airlines currently operating at the Kenai Municipal Airport regarding the agreement;
and,
WHEREAS, the Airport Commission recommended approval at their regularly scheduled meeting on
June 12, 2025; and,
WHEREAS, it is in the best interest of the City of Kenai to authorize the City Manager to enter into such
agreement on behalf of the City.
New Text Underlined; [DELETED TEXT BRACKETED]
Resolution No. 2025-41
Page 2 of 2
Section 1. That the Kenai City Council approves the sixth Amendment to the Airline Operating
Agreement and Terminal Area Lease form as shown in Exhibit 1; and,
Section 2. That the Kenai City Manager is authorized to enter into such an agreement with Grant
Aviation, Inc.
Section 3. That the Kenai City Manager is authorized to enter into such an agreement with Kenai
Aviation.
Section 4. That the Kenai City Manager is authorized to enter into such an agreement with Aleutian
Airways.
Section 6. That this Resolution takes effect immediately upon passage.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 18 TH DAY OF JUNE, 2025.
Wrfian I Gabriel Sr., Mayor
New Text Underlined; [DELETED TEXT BRACKETED]
TO: Mayor Gabriel Council Members
THROUGH: Terry Eubank, City Manager
FROW Derek Ables, Airport Manager
DATE. June 9, 2025
SUBJECT: Resolution No. 2025-41 - Approving the Sixth Amendment to the Airline
Operating Agreement and Terminal Area Lease and Authorizing the City to
Execute the Amended Agreement.
City Administration worked with an airline consultant to negotiate a five-year agreement that
beings July 1, 2025 through June 30, 2030 (Amendment 6). The City administration also met with
the airlines to discuss the 6th amendment.
year OT tne agreement nas no raTe-mcl eases.. acl I Dseioiten ToIr j,ears s armit
July 1, 2026 includes a 5% increase to the Exclusive Space, Joint Use Space, Apron/GSE Rental
Rate, and Landing Fee. Each year also includes an 18% subsidy during the winter months and
6% Subsidy during the summer months. The City will calculate the actual allocated joint use space
rental amounts based on actual passenger enplanement for the fiscal year, The administration
recommends approval of the 6th amendment.
7_111FA-WIff 631�Rl
SIXI'll AMENDMENT'
1`01'HE KENAI MUNICIPAL AIRPOR'I'AIRLINE;
OPERATING AGREEMENT' AND TERMINAL AREA LEASE
THIS SIX11-1 AMENDMENT to the Kenai Municipal Airport Airline Operating
Agreement and Terminal Area Lease (the "Sixth Amendment") is made and entered into this ------
day of 1 2025, by and between the City of Kenai, Alaska (the "City"), a political
subdivision of the State of Alaska, and ("Airline"), a corporation
organized and existing under the laws of" the State of and authorized to do business in
the State of Alaska.
RECII'ALS
The circumstances surrounding the making of this Sixth Amendment are as follows:
A. City and Airline are parties to the Airline Operating Agreement and 1'en-ninal Area
Lease (the "Agreement") dated June 1, 2008 as amended by the First Amendment dated June 1,
2013, Second Amendment dated July 1, 2016, Third Amendment dated July 1, 2019, Fourth
Amendment dated July 1, 2020, and Fifth Amendment dated April 20, 2022 (herein referred to as
the "Agreement"), under which Airline operates an Air Transportation 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 originally began on June 1, 2008
and pursuant to Amendments is set to expire to June 30, 2025 unless further amended.
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 1'erininal Apron Aircraft Parking and
GSF1' Space rentals shall be based on the rate and amount then currently approved by the City as
provided in Exhibit C.
Sixth Amendment - Airline Operating
Agreement and 'Terminal Area Lease
Page I of 5
AMENDMENTS
Section 1.1.17 of the Agreement is arnended to read in its entirety as follows:
"Signatory Airline(s)" shall mean those primarily commercial passenger service airlines
which provide Air Transportation pursuant to published schedules over specified routes
to and from the Airport and which hold the necessary authority from the FAA to provide
such transportation and that have executed substantially similar agreements to this
Agreement with the City, including term, covering the lease, use and occupancy of
facilities at the Airport. A Signatory Airline or an Affiliate of such airline must lease
Exclusive Use Space at the passenger terminal building, subject to the availability of
space solely determined at the discretion of the City and must operate at least weekly
service to the Airport on a year-round basis. Except as otherwise provided herein, no
Signatory Airline shall have any right pursuant to this Agreement to object to the City's
entry into the Agreement with any other airline.
Section 2.1 of the Agreement is amended to read in its entirety as follows:
The term of this amended Agreement (the "Term") shall begin on July 1, 2025
("Commencement Date") and shall terminate on June 30, 2030 (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 provisions of this Agreement.
Section 5.3.3 of the Agreement is amended to read in its entirety as follows:
5.3.3 At any time during the current Fiscal Year, the City may decide in its sole
discretion to adjust projected enplanements for the current Fiscal Year provided in
Exhibit C. Such adjustment will result in calculated adjustments to the Airline's
allocated joint use space rental amounts for the remainder of the current Fiscal Year to
reflect the Airline's percent of total enplanements resulting from the City's revised
enplanement projection. However, if only one commercial passenger airline provides
service to the Airport for the remainder of the current Fiscal Year, such adjusted
percentage shall not exceed 50% of total projected enplanements for the current Fiscal
Year.
4. Section 5.3 of the Agreement is amended to include a new subsection 5.3.5 as follows:
5.3.5 Reconciliation of Prior Year Joint Space Rental Allocations - Within sixty (60)
days of the end of each Fiscal Year of the Agreement, the City shall calculate the actual
allocated joint use space rental amounts based on actual passenger enplanements for the
preceding Fiscal Year. The City shall then calculate the amounts of joint use space rental
amounts that should have been paid by each of the Signatory Airlines during the
preceding Fiscal Year based on such actual passenger enplanements following the
Sixth Amendment - Airline Operating
Agreement and Terminal Area Lease
Page 2 of 5
LESSOR
LESSEE
M
N
calculation methodology provided in Exhibit C. Amounts paid by Signatory Airlines in
excess of actual requirements (surpluses) shall be refunded by the City to the Signatory
Airlines that conducted Air Transportation operations at the Airport during the preceding
Fiscal Year within twenty (20) days of the City's completion of the reconciliation
calculation. The City shall prepare and transmit invoices to the Signatory Airlines that
conducted Air Transportation operations at the Airport for amounts actually required in
excess of amounts paid (deficits) within twenty (20) days of the City's completion of the
reconciliation calculation. Airline shall then pay the City within twenty (20) days of the
invoice date.
If any Signatory Airline's Agreement is terminated for any reason prior to the end of
Term specified in Section 2. 1, the City in its sole discretion may conduct a reconciliation
calculation as described in this Section 5.3.5 as of the early termination date.
Under this Section 5.3.5, obligations of the City and the Signatory Airline shall survive
the expiration or earlier termination of this Agreement. Further, the City shall have the
right of offset for any reconciliation amounts it owes to the Airline against any other
obligation of the Signatory Airline to the City that is unpaid.
Section 10.2.3 of the Agreement is amended to read in its entirety as follows:
Airline may terminate this agreement if Airline terminates its Air Transportation business
at the Airport, at any time that Airline is not in default in its payments or other
obligations to City hereunder, by giving the Manager one -hundred eighty (180) days
advance written notice. Airline termination shall not be effective unless and until at least
one -hundred eighty (180) days have elapsed after written notice to City specifying the
date upon which such termination shall take effect,
Exhibit C - Airline Rate Schedule: Rental rates and fees for the first year of the
Agreement (Fiscal Year July 1, 2025 through June 30, 2026) will reflect no increases
from the prior year. For each subsequent Fiscal Year (July I through June 30) of the
Agreement, the Exclusive Space Annual Rental Rate, the Joint Use Space Annual Rental
Rate, the Apron/GSE Annual Rental Rate, and Signatory Landing Fee in Exhibit C will
reflect a 5% annual increase. For every year of the Agreement, rental rates for Joint Use
Space will be subsidized by 18% during the six month period October through March
(the "winter" months) and rental rates for Joint Use Space will be subsidized by 6%
during the six month period April through September (the "summer" months).
All other terms and conditions of the Agreement shall continue in full force and effect
except as modified by this Sixth Amendment.
Sixth Amendment - Airline Operating
Agreement and Terminal Area Lease
Page 3 of 5
LESSOR
LESSEE
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and year
stated in the individual acknowledgments below.
CITY OF KENAI
M
Terry Eubank First Last Name
Its: City Manager Its:
(If Lessee is a Corporation)
ATTEST:
fim
Sixth Amendment - Airline Operating LESSOR
Agreement and Terminal Area Lease LESSEE
Page 4 of 5
nalflfw
STATE OF ALASKA
) ss
THIRD JUDICIAL DISTRICT
The foregoing instrument was acknowledged before me this —f' day o
1 2025, by Terry Eubank, City Manager of the City of Kenai, an Alaska
municipal corporation, on behalf of the City.
Notary Public in and for Alaska
My Commission
STATE OF ALASKA
) ss
THIRD JUDICIAL DISTRICT
THIS IS TO CERTIFY the foregoing instrument was acknowledged before me this
day of —, 2025, by President of 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 forth by City Attorney
Approved by Finance Director
Return to: City Clerk
210 Fidalgo Ave.
Kenai, AK 99611
Sixth Amendment - Airline Operating LESSOR
Agreement and Ten-ninal Area Lease LESSEE
Page 5 of 5
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