HomeMy WebLinkAboutOrdinance No. 2230-2007Suggested by: City Manager
CITY OF KENAI
ORDINANCE NO. 2230-2007
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING
KMC 21.10.090(4)(1) and (2) BY ESTABLISHING DIFFERENT REQUIREMENTS FOR
DETERMINING THE LENGTH OF A LEASE EXTENSION AND EXTENDING THE
MAXIMUM TERM OF LEASE INCLUDING ANY EXTENSION FROM 35 TO 55 YEARS.
WHEREAS KMC 21.10.090(4)(1) provides for a maximum lease term of 35 years; and,
WHEREAS, KMC 21.10.090(4)(2) provides that lease extensions may be granted for
one year for each $25,000 of additional investments in permanent improvements; and,
WHEREAS, KMC 21.10.090(4)(2) also provides that the maximum term for a lease
including any lease extension, shall be 35 years; and,
WHEREAS, it is in the best interest of the City of Kenai to provide for lease criteria
that encourage new permanent improvements on the airport; and,
WHEREAS, increasing the possible maximum term of a Lease, including any extension,
from 35 to 55 years will encourage investment in permanent improvements at the
airport.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, that KMC 21.10.090(4)[1) and (2) are amended as follows:
21.10.090 Length of lease term.
(a) Unless the Ciry determines a shorter lease term is in the best interest of Che CiCy, the length of
term for a lease granted for land within the Airport Reserve will be based on the amount of investment the
applicanC proposes to make in the construction of new permanent improvements on the premises during
the fist twenty-four (24) months following the bepinnin~ date of the lease or lease extension.
(b) Unless the City determines a shorter lease term is in Che best interest of the City, the length of
Cenn for a lease renewal shall be based on aCity-approved appraisal of the value of the permanent
improvements on the property as set forth in the table in subsection (d)(1) of this section. The appraisal
shall be performed by an independent appraiser certified under Alaska Statute 8.87 with experience
appraising airport improvements. The appraisal shall be paid for by the lessee.
(c) PP the applicant proposes to make less than one hundred thousand dollar ($100,000.00) in new
permanent improvements on the premises, the maximum term of a new lease shall be five (5) years.
(d) It the applicant proposes to iuvesC one hundred thousand dollars ($100,000.00) or more in new
perrnanentimprovements on the premises:
(1) The maximum term of a new lease or a renewal of an expiring lease shall be deternrined
according to the following table:
Ordinance 2230-2007
Page 2 of 4
(APPLICANT'S INVESTiVIENT/ MAXIMUM
VALUE (IN U.S. DOLLARS) TEIL~VI OF
IS AT LEAST YEARS
LESS THAN $100,000 5
$100,000-$199,000 15
$200,000-$299,000 ~0
$300,000-$399,000 25
$400,000-$500,000 30
MORE THAN $500,000 35]
Applicant's InvestmenU Maximum
Value (in U.S. Dollars) Term
InYears
Less than $ 100, 000 5
$ 100 ,000 - $199 ,000 10
$ 200 .000 - $299 .999 IS
$ 300 000 - $399 999 20
$ 400 000 - $499 000 25
$ 500 000 - $599 000 30
$ 600 ,000 - $699 ,000 35
$ 700,000 - $799 ,000 40
$ 800 ,000 - $899 ,000 45
$ 900 000 - $999 000 50
More than $1,000 000 55
[(2) THE MAXIMUM TERM EXTENSION FOR AN EXISTING LEASE SHALL BE ONE
(I) YEAR FOR EACH TWENTY-FIVE THOUSAND ($25,000.00) OF ADDITIONAL
PROVIDED THAT TIIE TOTAL OF THE ItEMA1NLVG LEASE TERM AND THE
EXTENSION SHALL NOT EXCEED THIRTY-FIVE (35) YEARS.]
The maximum term for a lease (initial lease plus extension(s)) shall be fifty-five years.
The length of the extension(s) shall be determined according to the following table:
Ordinance 2230-2007
Page 3 of 4
Applicant's Investment/ Maximum
Value (in U.S. Dollars)
is at Least
$ 75 000 - $100,000 Extension
Term of
Years
5
$ 100,000 - $199,000 10
$ 200,000 - $299,999 IS
$ 30Q,000 - $399,999 20
$ 400.000 - $499,000 25
$ 500,000 - $599,000 30
$ 600.000 - $699.000 35
~ 700,000 - $799,000 40
$ 800,000 - $899,000 45
$ 900,000 - $999,000 50
(3) A bona fide third party purchaser of airport improvements may get an extension for an
existing lease acquired with improvements based on aCity-approved appraisal of the
improvements pm'chased. Unless the Ciry determines a shorter lease term is in the best
interest of the City, the extension shall be based on the table in subsection (d)(1) of this
section provided no extension shall extend a lease term past thirty-five (35) years. The
appraisal shall be performed by an independent appraiser cerCified under tllaska Statute
8.87 with experience appraising airport improvements. The appraisal shall be paid for by
the lessee.
(e) In the lease granted to the applicant, the City Manager will include a provision requiring Che
applicant to substantially complete the proposed permanent improvements within a reasonable period of
time, considering the cost and natm~e of the improvements. Provided however, that the time allowed shall
not ordinarily exceed twenty-four (24) months after the effective date of the lease.
(f) In the lease extension granted to the applicant, the City Manager will include a provision
regniring the applicant to complete the additional proposed permuient improvements within a reasonable
time period, considering the cost and nature of Che improvements provided that the time period shall not
ordinarily exceed twenty-four (2A) months after the effective date of the lease extension.
(g) The City Manager will include a provision in a lease or lease extension requiring Che lessee to
provide a performance bond, deposit, personal guarantee, or other security if the Manager determines
security is necessary or prudent to ensure the applicant's completion of the permanent improvements
within the time period set under subsections (e) or (f) of this section. The City Manager will determine the
form and a~nounC of the security according to the best interest of the Ciry, considering the nature and
scope of the proposed improvements and the financial responsibility of the applicant.
(h) The applicant shall, within thirty (30) days after completion of the permanent improvements,
submit Co the Ciry Manager written documentation that the improvements have been completed as
required under subsection (e) or (f) of this section.
(i) if the applicant shows good cause to the City Manager, and the Manager determhies the
action is not inconsistent with the City's best interest, the Muiager may grant an
Ordinance 2230-2007
Page 4 of 4
extension that is sufficient to al]ow for the completion of the permanent improvements or
for submission of documentation that the permanent improvements have been completed
under this section. No extension or combination of extensions granted will exceed twelve
(12) months.
(j) If, within the time required under subsection (e) or (f) of this section, including any extension
granted under subsection (i) of this section, the applicant fails to complete the required permanent
improvements, the City Manager will execute the forfeiture o'F the performance bond, deposit, personal
guarantee, or other security posted by the applicant render subsection (g) of this section to the extent
neeessarry to reimburse the City for all costs and damages, including administrative and Iega1 costs,
arising from the applicant's faflure to complete the required improvements, and initiate cancellation of the
lease or reduce the Cerm of the lease to a period consistent with the portion of the improvements
substantially completed in a timely manner according to the best interests of the City,
(k) The City Manager shall review rates, charges and the investment/value in the chapter every five
(5) years to see if adjustments should be made.
(I) When used in this section, the following terms shall have the meanings given:
(1) `Expiring tease" means a lease with less than one (1} year of term remaining;
(2) "Existing lease" means a lease with at least one (1) year of term remaining;
(3) "Permanent improvement" means a fixed addition or change to laud that is not temporary
or portable;
(i} "Permanent improvement" includes;
(A) A building, building addition, retaining wall, storage tank, earthwork, fill
matei7al, gravel, and pavement, and
(B) Remediation of contamination for which the applicant is not responsible;
(ii) "Permanent improvemenP' excludes items of ordinary maintenance, such as glass
replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering
replacement, or pavement patching.
PASSED BY THE COUNCIL OF THE CITY OF NAI, ALASKA, this 16th day of May,
2007. ~-----~
PAT PORTER, MAYOR
ATTEST:
-~ ~~~''
Carol L. Freas, City Clerk
Introduced: May 2, 2007
Adopted: May 16, 2007
Effective: June I6, 2007