HomeMy WebLinkAboutResolution No. 2014-29Me ch of
KENAI.ALA 5H11
Suggested by: Administration
CITY OF KENAI
RESOLUTION NO. 2014 -29
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, APPROVING
THE LEASE OF AIRPORT RESERVE LANDS BETWEEN THE CITY OF KENAI AND
SCHILLING RENTALS, LLC FOR LOT 9A, FBO SUBDIVISION LOCATED ON THE
KENAI MUNICIPAL AIRPORT AND AUTHORIZING A LEASE FORM THAT DEVIATES
FROM THE STANDARD FORM.
WHEREAS, Schilling Rentals, LLC submitted an application to lease Lot 9A, FBO
Subdivision, a City -owned property located in the Airport Reserve; and,
WHEREAS, the Applicant and City Manager have determined that based on the
proposed development that the most mutually beneficial lease term is for a five year
term with an option to extend upon further investment and which option deviates from
KMC 21.10.090- Length of Lease term; and,
WHEREAS, the Airport Commission and the Planning & Zoning Commission reviewed
the lease applications and recommended the City Manager approve the applications;
and,
WHEREAS, KMC 21.10.150 (b) allows the City Manager to enter into a land lease that
deviates from the standard lease form if the Manager believes the action is in the best
interest of the City, the lease is approved as to form by the City Attorney, and the lease
is approved by resolution of the City Council; and,
WHEREAS, it is in the best interest of the City of Kenai to deviate from the standard
lease form to authorize Schilling Rentals, LLC the option for a lease extension for its
lease of Lot 9A, FBO Subdivision upon further development and amending Article V,
Adjustment of Rent and Fees, so that rent is renegotiated in years ending in zero and
five, as these deviations encourage immediate development of Airport Reserve lands
while preserving the intent of KMC 21.10.090 and streamline the administration
process of City leases respectively; and,
WHEREAS, the City Attorney has approved the amended Lease as to form.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA, that the Lease of Airport Reserve Lands between the City of Kenai and
Schilling Rentals, LLC for Lot 9A, FBO Subdivision is approved and the City Manager
is authorized to enter into a lease form that deviates from the standard form with
respect to the Lease term and schedule for Adjustment of Rent and Fees.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 7th day of May,
2014.
Resolution No. 2014 -29
Page 2 of 2
PAT PORTER, MAYOR
,_A
""Village with a Past, Gc�y with a F"f"re"
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: (907) 283 -7535 / FAX: (907) 283 -3014
www.ci.kenai.ak.us
APPROVED BY COUNCIL.
MEMO* Date:
TO: Kenai City Council
n� THROUGH: Rick Koch, City Manager
V \ FROM: Christine Cunningham, Assistant to City Manager
DATE: May 1, 2014
SUBJECT: Resolution No. 2014 -29
Lease of Airport Reserve Lands, Lot 9A, FBO Subdivision
Kenai
Ibctli!
AR
IIIIIi
1011
The purpose of this memo is to provide additional information in support of Resolution No. 2014 -29.
The City received the attached application from Schilling Rentals, LLC to lease the referenced
property for aviation related purposes. On April 16, 2014, an Assignment of Lease for the adjacent
property, Lot 11A, was approved by City Council. The application references development of aircraft
parking, loading, and support facilities for the hangar and office space on the adjacent Lot 11A.The
City Manager and Applicant have agreed that it is most advantageous to both the City and Applicant
to provide a five year lease term with the option for the applicant to renew the lease after five years
upon completion of a development schedule with further investment meeting the lease term
requirements of KMC 21.10.090.
The City Manager referred the applications to the Airport and Planning & Zoning Commissions for
review and comment. The Airport Commission recommended approval of the lease at its April 10
meeting. The Planning & Zoning Commission found that the lease was in compliance with the Zoning
Ordinance and the Comprehensive Plan and recommended approval of the lease applications at its
April 30 meeting.
The City Manager concurred with the recommendations of the Commissions and recommends
entering into a lease that includes an option for extension as well as a rent renegotiation cycle that
conforms to the rent renegotiation cycle of other Kenai Municipal Airport leases. A deviation from the
standard lease form requires the approval of the City Council. The City Attorney has approved the
attached Lease as to form, and if Council passes Resolution No. 2014 -29, the Lease may be
executed by the parties.
Attachments
cc: Schilling Rentals, LLC
CITY OF KENAI
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
(907) 283 -7535 Ext. 223
LEASE APPLICATION
For Land Inside the Kenai Municipal Airport Reserve
FOR CITY USE ONLY
Date 4-3 -14
Signature 6'%d/
1. Name of Applicant MICHAEL SCHILLING
2. Business Name SCHILLING RENTALS LLC
3. Business Type (circle one) sole proprietor partnership corporation L.L.C. 4. AK Business License No.309122
5. Mailing Address 420 N. WILLOW STREET KENAI AK 99611
6. Telephone 907 - 283 -7556 7. Email Address RITA@GLMCORP COM
8. Kenai Peninsula Borough Sales Tax No. (if applicable) 39927
9. Land Requested: If platted, give legal description Lot 9A
If not platted, attach a site plan showing the proposed dimensions and location on the Airport.
10. Proposed Use of the Property(Be specific) Aviation Related Purposes
11. Lease Term Desired 5 years:
12. If you plan to base or service aircraft on the property, give
a. Make, type, & wingspan of the largest aircraft Bell Helipcopters w /50' rotor
b. Total number of aircraft you expect to be based or serviced on the property at one time 2 -4
13. If you plan to construct improvements or otherwise develop the property:
a. Attach a Development Plan (see attached checklist)
b. Describe the building type, construction materials, size, etc. N/A
c. Construction beginning date SUMMER OF 2014
d. Construction completion date (maximum of two years) FALL OF 2014
e. Estimated total cost of the proposed development & improvements $ $200 000 00
14. If you plan to operate a business on the property, attach a business plan (See application instructions).
15. If you would like the City to consider any additional information relating to your proposal, please put it in writing and
submit it with this application.
APPLICANT'S SIGNATURE:
Printed name:
Date:
Executive Summary
Schilling Rentals, LLC is a company that provides rental properties to support many industries,
including aircraft hanger space.
Business Description
Schilling Rentals, LLC is legally organized as a private Alaska Limited Liability Company. Support for
the Kenai Hangar on Lot11A will extend the service to the professionally constructed aircraft hangar
with offices. The support real estate at Lot9A will further expand the use of the facility located at 441
Geebee Avenue in Kenai, Alaska. The land will be leased from the City of Kenai with a 5 year term.
Market Strategies
The target market for this business is patrons of the Kenai Municipal Airport who need covered and
heated aircraft storage and maneuverability to safely handle aircraft.
Competitive Analysis
Hangar space and support real estate available to rent at the Kenai Municipal Airport is
minimal.
Design & Development Plan
The land modifications to Kenai Hangar will commence summer of 2014 and projected completion
will be approximately the Fall of 2014.
Operations and Management Plan
The manager of the hangar will coordinate rental agreements for execution with the President of the
LLC. The hangar manager will also oversee the maintenance of the building and property and assure
that the tenants use of the facility is consistent with the business plan.
Employees of the Business
When completed, the facility at Lot11A will be fully operational, employing several employees
including business owners, pilots and other aviation associated personnel. There are other
structures of similar size on the airport that the tenants employ —10 people.
Schilling Rentals, LLC
KENAI MUNICIPAL AIRPORT Lease Application for Land Inside the Kenai Municipal Airport Reserve
2. NARRATIVE
Shilling Rentals, LLC proposes to work with the city modify accesses to and subsequent usage of to Lot 9A
Street access will be from Willow St.
A. Explain how the proposed use and development of the property will conform to the Zoning Ordinance
of the City.
Subject property is zoned Light Industrial. Airports and Related Uses, Professional Offices, and Restaurants are
Principal Permitted Uses for an area zoned IL. Additionally, the IL zoning is intended for development of industrial
and commercial uses which are compatible with surrounding property, and that will not introduce any nuisance
effects to the area. Principal uses of the land will involve supplying parking of aircraft, providing for access of service
vehicles, and the transport of aircraft to the adjacent hanger located on Lot IIA. These features appear to be
compatible with other businesses and facilities in the area. (Reference: City of Kenai Zoning June 2006 map; KMC
14.20.130 Light Industrial Zone; 14.22.010 Land Use Table)
KMC 14.20.130 Light Industrial Zone states that restrictions against noise shall not apply to uses located within two
thousand (2,000) feet of the airfield landing strip. The facility is located within that measurement boundary, so
operation noises will be within parameters of the municipal code.
The residential buffer described in KMC 14.20.130 is not required for this facility, as the Subject property does not
abut a residential zone.
The requirement of KMC 14.25.015 Landscaping/site plan will be met by retaining 51 % of the natural vegetation
on site. Debris from clearing the improved portion of the site will be removed from the site.
Parking for the facility complies with KMC 14.20.250 off street parking and loading requirements.
Only parking space is planned for aircraft, aircraft loading and support vehicles on this lot. The designated parking
areas will only be for their designated uses.
Applicant: Schilling Rentals, LLC April 2014
KENAI MUNICIPAL AIRPORT Lease Application for Land Inside the Kenai Municipal Airport Reserve
Lighting will be achieved by illumination from the facility in adjacent Lot11A.
KMC 14.20.200 Accessory structures: There are no accessory structures which will
extend into setbacks or outside the parameters listed in the zoning code.
Signage is not applicable, but will comply with KMC 14.20.220 Signs should the need arise.
B. Explain how the proposed use and development of the property will conform to the Comprehensive
Plan of the City.
The Comprehensive Plan of the City encourages development of facilities that are aviation- related on airport
lands. An aircraft Hangar support development meets these criteria.
C. Explain how the proposed use and development of the property will conform to the latest
FAA - approved Airport Layout Plan for the Airport.
The Lot development complies with Kenai Municipal Airport Layout Drawing. The proposed changes will
comply with FAA ALP requirements as outlined in document RGL-5070.1
D. Explain how the proposed use and development of the property will conform to the latest Land Use
Plan for the Airport.
The subject property (Lot9A) will provide access assistance to the facility on Lot11A which is zoned GA and
Light Commercial on Sheet 11 of 13 of the latest FAA - approved Land Use Drawing. The adjacent facility meets
requirements for Kenai Municipal Code 14.20.130 Light Industrial Zone (IL Zone), an approved Principal
Permitted Use for this zoning. The adjacent facility is a metal building 75'x 75' Hangar with an attached 18'x
45' office space. Height of the building is 32'6 ". This height is within the limitations set by the current
FAA - approved Kenai Airport Master Plan drawings. The facility is used to store aircraft and the access Lot 9A
development will provide further support for the aircraft handling and storage.
Applicant: Schilling Rentals, LLC April 2014
Tarmar
N
/j ' /7
AIRCRAFT PARKING AND // j�
LOADING and SUPPORT
VEHICLES
/j AM
P5.
z7S .
ASPYALT
3 Q 9-r wroE
The access to this Lot will allow /
removal or storage of helicopters
during weather conditions that /
make opening the main overhead
door unsafe such as wind
conditions that exceed 20mph.
18' Overhead
LOT 9A STWASE
7S x75 airT
Door 1
yt/
Commercial Vehicles:/
' Loading, unloading,
jservice, deliveries' iri�
j //A
%Access Gate.rf , /
Dow FM
Willow St.
W
_W
m
z
•� 1 ,Z. t ��.. , �.
Lot 9 P
,
F Q- fir y
7A -1 ;+
FBO INOl�
4
3A
3A -1
pow 2
TR. B
f
y • TR. B
KENAI MUNICIPAL AIRPORT
LEASE OF AIRPORT RESERVE LANDS
THIS LEASE AGREEMENT entered into this day of 2014, by
and between the CITY OF KENAI, (City) 210 Fidalgo Avenue, Kenai, Alaska 99611-
7794, and SCHILLING RENTALS, LLC (Lessee) whose address is 420 N. Willow Street,
Kenai, Alaska 99611.
DEFINITIONS
For the purposes of this Lease the following terms are defined as follows:
Airport - the Kenai Municipal Airport, including all the runways, taxiways, aprons,
water lanes, water taxiways, and all City -owned real estate located within the
boundaries of the Airport Reserve as defined in KMC 21.05.010 and KMC 21.05.020.
Airport Manager - the official to whom the City Manager of the City has delegated the
authority and responsibility of managing and directing the activities of the Airport.
"Airport Manager" includes that person's authorized representative.
City - the City of Kenai, Alaska, a home rule municipal corporation of Alaska.
City Manager - the official to whom the Kenai City Council has delegated the
responsibility of managing and directing all activities of the City.
Contamination - the unpermitted presence of any released Hazardous Substance
Environmental Law - any applicable federal, state, or local statute, law, regulation,
ordinance, code, permit, order, decision, judgment of any governmental entity relating
to environmental matters, including littering and dumping.
FAA - the abbreviation for the Federal Aviation Administration.
Hazardous Substance - any substance that is defined under an Environmental Law as
hazardous waste, Hazardous Substance, hazardous material, toxic, pollutant,
contaminant, petroleum, petroleum product, or oil.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 1 of 32 Lessee:
KMC - the abbreviation for the Kenai Municipal Code.
Permanent Improvement - a fixed addition or change to land that is not temporary or
portable, including a building, building addition, gravel fill, paving, retaining wall,
storage tank, and well.
ARTICLE I
PREMISES LEASED
A. PREMISES: In consideration of Lessee's payment of the rents and performance of
all the covenants of this Lease, the City leases to the Lessee, and the Lessee leases from the
City, the following described property ( "Premises ") in the Kenai Recording District, Third
Judicial District, State of Alaska and located on the Airport; to wit:
Lot 9A, FBO Subdivision
B. NO WARRANTY: Except as may be provided in this Lease, the City makes no
specific warranties, expressed or implied, concerning the condition of the Premises
including, survey, soils, wetlands, access, and suitability or profitability for any use
including those authorized by this Lease, its environmental condition, or the presence or
absence of Hazardous Substances in, on, and under the surface. The Lessee takes the
Premises on an "as is" basis and without warranty, subject to any and all of the covenants,
terms, and conditions affecting the City's title to the Premises.
ARTICLE II
RIGHTS AND USES
A. AUTHORIZED USES:
1. USE OF PREMISES: The City authorizes the Lessee to use the Premises
for the following purposes only:
Aviation Related Purposes
2. CONTINUOUS OPERATIONS: Unless the City approves otherwise in
writing, the Lessee will operate its business on the Premises on a continuous basis,
uninterrupted by any period of closure over fifteen (15) consecutive days or thirty (30)
aggregate days within any 12 -month period of the term of this lease. The Lessee will give
the City written notice before closing the Lessee's business on the Premises for more than
ten (10) consecutive days. The notice must state the reason for the closure and the date on
which the Lessee will re -open for business. This provision does not apply to any period
during which the Lessee is unable to operate its business as a result of an act or directive of
the City, or as a result of a closure of the Airport or loss of the Lessee's buildings on the
Schilling Rentals Lease of Airport Reserve Lands City:
Page 2 of 32 Lessee:
Premises due to fire or natural disaster or order of public authority.
B. RIGHTS RESERVED TO THE CITY:
RIGHT TO GRANT TO OTHERS: The City reserves the right to grant to
others any rights and privileges not specifically granted to the Lessee on an
exclusive basis. The rights and privileges granted to the Lessee in this
Lease are the only rights and privileges granted to the Lessee by this Lease.
2. EASEMENTS: The City reserves the right to make grants to third parties
or reserve to the City easements or rights of way through, on, or above the
Premises. The City will not grant or reserve any easement or right of way
that unreasonably interferes with the Lessee's authorized uses of the
Premises.
3. INGRESS, EGRESS AND INSPECTION: The City reserves the right of
ingress to and egress from the Premises and the right to enter any part of the
Premises, including buildings, for the purpose of inspection or
environmental testing at any time. Except in the case of an emergency, all
inspections and environmental testing will be coordinated with the Lessee
to minimize interference with the Lessee's authorized uses of the Premises.
4. RIGHT OF FLIGHT: There is hereby reserved to the City, its successors
and assigns, for the use and benefit of the public, a right of flight for the
passage of aircraft in the airspace above the surface of the Premises. This
public right of flight will include the right to cause in the airspace any noise
inherent in the operation of any aircraft used for navigation or flight through
the airspace or landing at, taking off from, or operation on the Airport.
C. PROHIBITED USES:
Unless specifically authorized by this Lease or an amendment to this Lease, the following
are prohibited:
Any use of the Premises other than those authorized in this Lease.
2. Any use of the Premises that is in violation of a City Ordinance or an
Airport regulation.
3. The outside storage on the Premises of junk, salvage aircraft or vehicle
parts, non - operational support equipment, unused or damaged equipment or
material, or solid waste or debris unless allowed pursuant to a conditional
use permit under KMC 14.20 Kenai Zoning Code.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 3 of 32 Lessee:
4. The disposal on the Premises or the Airport of waste materials generated by
the Lessee, including any Hazardous Substance, slash, overburden, and
construction waste.
5. The stripping, wasting, or removing of any natural material from the
Premises without the prior written approval of the City.
6. Erecting structures or allowing growth of natural objects that would
constitute an obstruction to air navigation, or allowing any activity on the
Premises that would interfere with or be a hazard to the flight of aircraft, or
interfere with air navigation or communication facilities, serving the
Airport.
Any use or activity that is prohibited by applicable law or regulation.
ARTICLE III
TERM & HOLDOVER
A. TERM: The term of this Lease is for five (5) years, commencing on June 1, 2014
and expiring on May 31, 2019. Lessee has the option to extend this lease for an additional
term in accordance with the maximum term requirements of KMC 21.10.090 provided the
Lessee has fulfilled the required improvements pursuant to Article XIV, Paragraph B.
Lessee shall inform the City of the decision to renew this lease in writing pursuant to
Article XIII, Paragraph O, at least one - hundred - eighty (180) days prior to the expiration of
the original five (5) year lease term.
B. HOLDOVER: If the Lessee holds over and remains in possession of the Premises
after the expiration, cancellation or termination of this Lease, the holding over will not
operate as an extension of the term of this Lease, but only creates a month -to -month
tenancy, regardless of any rent payments accepted by the City. The Lessee's obligations for
performance under this Lease will continue during the month -to -month tenancy. The City
or Lessee may terminate the Lessee's holdover with ten (10) days' advance written notice.
ARTICLE IV
RENTS AND FEES
A. RENT: The rent for the Premises is $8,716.16 per year, as established by the City
pursuant KMC 21.10.100 and as subject to adjustment under Article V of this Lease, plus
applicable sales tax. The rent shall be payable annually in advance of the first day of each
year of the term of this Lease. All payments required by this Lease must be made in U.S.
dollars. If the annual rent exceeds $2,400.00, the Lessee may, upon written notice to the
City, choose to pay the rent in equal monthly installments, payable in advance on or before
the anniversary date of the term of this Lease and thereafter at monthly intervals. No
Schilling Rentals Lease of Airport Reserve Lands City:
Page 4 of 32 Lessee:
conversion of the payment schedule from annual to monthly shall result in the City
receiving less rent than it would have received had the conversion not taken place.
B. RENT PRORATED: Rental for any period less than one (1) year shall be prorated
on the basis of the rent payable under this Lease in the last full year previous to the
prorating.
C. ADDITIONAL RENT: In addition to the rent specified in (A) of this Article,
Lessee agrees to pay to the appropriate parties all levies, assessments, and charges as
follows:
Taxes pertaining to the leasehold interest of the Lessee.
2. Sales tax now enforced or levied in the future, computed upon rent payable
in monthly installments whether the Lessee pays rent under this Lease on a
monthly or annual basis.
All taxes and assessments levied in the future by the City, as if Lessee was
the legal owner of record of the Premises.
4. Reimbursement for City constructed improvements under Article XV.
D. PAYMENTS: The Lessee shall make checks, bank drafts, or postal money orders
payable to the City of Kenai and deliver payments to City of Kenai, Finance Department,
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 or any other address the City may
designate in writing to the Lessee.
E. INTEREST: Beginning the day after payment is due, all unpaid rents, charges, and
fees required under this Lease will accrue interest at the rate of eight percent (8.0 %) per
annum. Interest on disputed amounts will not be charged to the Lessee if the dispute is
resolved in the Lessee's favor.
F. LATE PAYMENT PENALTY: In addition to any interest payable under Provision
(E) of this Article, each time the Lessee fails to pay any rent or fee by the date required in
this Lease, the City will charge, and the Lessee shall pay, an administrative penalty of ten
percent (10.0 %) of the amount due and unpaid.
G. COURTESY BILLINGS: Lessee acknowledges that any billing statement issued
by the City is provided only as a courtesy. The Lessee is obligated to pay all rents and fees
when due, regardless of whether or not the Lessee receives a billing statement from the
City.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 5 of 32 Lessee:
H. LIEN AGAINST LESSEE: Any rent, charge, fee, or other consideration which is
due and unpaid at the expiration, termination, or cancellation of this Lease will be a lien
against the Lessee's property, real or personal.
I. PAYMENT OF CITY'S COSTS: The Lessee will pay all reasonable actual
expenses, costs, and attorney fees the City may incur, with or without formal action, to
enforce, defend, or protect this Lease or City's rights under this Lease, including any
expense incurred with respect to environmental compliance, bankruptcy or any proceeding
that involves the Lessee, the Lease, the Premises, or improvements or personal property on
the Premises. The Lessee will make payment within thirty (30) days of the date of each
notice from City of any amounts payable under this provision.
J. PAYMENT FOR SPECIAL SERVICES: Lessee agrees to pay the City a
reasonable fee for any special services or facilities the City agrees to perform, which the
City is not otherwise obligated by this Lease to provide and which the Lessee requests
from the City in writing.
ARTICLE V
ADJUSTMENT OF RENT AND FEES
A. RENT OR FEE ADJUSTMENT: The City shall, in its sole discretion, adjust the
rent or a fee payable by the Lessee under Article IV or other provision of this lease. The
first rent adjustment shall be made in 2015 and if applicable, approximately every five (5)
years thereafter. The amount to which the City increases or decreases any rent or fee shall
be established in accordance with KMC 21.10.100 and KMC 21.10.160. Any rent change
by the City shall be based on the fair market value of
1. The Premises in its condition on the term beginning date stated in Article III
or in the case of a lease renewal or extension, the beginning date for the
original lease; plus,
2. Any improvements made by the City subsequent to that date, the cost of
which is not reimbursed by the Lessee.
No rent or fee change shall be effective until thirty (30) days after the date of the City's
written notice to the Lessee. If the Lessee believes that any changed rent exceeds the fair
market rent for the Premises, the Lessee may appeal the rent change to the City under
KMC 21.10.160.
B. CITY - CONSTRUCTED IMPROVEMENTS: Improvements constructed by the
City on, or in connection with, the Premises shall not be considered a part of the Premises
for the purpose of establishing the rent under (A) of this Article, if the Lessee, as a
Schilling Rentals Lease of Airport Reserve Lands City:
Page 6 of 32 Lessee:
condition of this lease, reimburses the City for the City's construction costs pursuant to
KMC 21.10.110.
ARTICLE VI
ASSIGNMENT & SUBLETTING
A. INVALID WITHOUT CITY'S CONSENT: The Lessee may not assign, sublet, or
grant a security interest in, by grant or implication, the whole or any part of this Lease, the
Premises, or any improvement on the Premises without the written consent of the City.
Any proposed assignment, sublease, or security interest must be written and must be
submitted to the City bearing the original, notarized signature of all parties. The Lessee
may submit unsigned draft documents for the City's conceptual review. However, the
City's conceptual approval of a draft document may not be construed as the City's consent
to any assignment, sublease, or security interest. All provisions in this Lease extend to and
bind the assignees and sublessees of the Lessee.
B. NO WAIVER OF CONSENT: The City's consent to one assignment, sublease, or
security interest will not waive the requirement for the Lessee to obtain the City's consent
to any other assignment, sublease, or security interest.
C. ASSIGNEE / LESSEE OBLIGATIONS: An assignment must include a provision
stating that the assignee accepts responsibility for all of the assignor's (Lessee's)
obligations under this Lease, including environmental liability and responsibility.
However, unless the City specifically releases the Lessee in writing, the City may hold the
Lessee responsible for performing any obligation under this lease which an assignee fails
to perform.
D. OCCUPANCY BEFORE CITY CONSENT: An assignee or sublessee may not
occupy the Premises before the City consents to the assignment or sublease in writing.
E. CONFLICT OF PROVISIONS: In the event of a conflict between this Lease and
an assignment or a sublease, the terms of this Lease control.
F. LESSEE NOT RELIEVED OF OBLIGATIONS: The City's consent to any
sublease does not relieve or otherwise alter the Lessee's obligations under this Lease.
G. SECURITY ASSIGNMENTS AND FINANCING:
Subject to the requirements of (A) of this Article VI, the Lessee may assign
a security interest in this Lease. The security interest may be in the form of
a mortgage, deed of trust, assignment or other appropriate instrument,
provided:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 7 of 32 Lessee:
a. The security interest pertains only to the Lessee's leasehold interest;
and
b. The security interest does not pertain to or create any interest in
City's title to the Premises; and
C. The documents providing for the security interest are acceptable to
the City.
2. If the assignment of a security interest to which the City has consented shall
be held by an established lending or financial institution, including a bank,
an established insurance company and qualified pension or profit sharing
trust, and the lending institution acquires the Lessee's interest in this Lease
as a result of a foreclosure action or other remedy of the secured party, or
through any transfer in lieu of foreclosure, or through settlement of or
arising out of any pending or contemplated foreclosure action, the lending
institution may transfer its interest in this Lease to a nominee or a wholly
owned subsidiary corporation with the prior written consent of the City,
provided, the transferee assumes all of the covenants and conditions
required to be performed by the Lessee (including payment of any monies
owed by Lessee to the City under the lease). In the event of such a transfer,
the lending institution shall be relieved of any further liability under this
Lessee.
3. A holder of a security interest in this Lease consented to by the City shall
have, and be subrogated to, any and all rights of the Lessee with respect to
the curing of any default of this Lease by Lessee.
4. If, before any default has occurred in the Lease, the holder of a security
interest in this Lease consented to by the City gives the City a written notice
of the holder's post office address, the City shall thereafter:
a. By regular U.S. mail, send to the holder a copy of each notice of
default at the same time as the City gives notice of default to the
Lessee; and
b. Not accept any surrender or enter into any modification of this Lease
without the prior written consent of the holder, which the holder
shall not unreasonably delay or withhold.
5. The City will enter into a new lease of the Premises with the holder of a
security interest consented to by the City, if the City terminates this Lease
prior to its normal expiration due to a default by the Lessee. The new lease
Schilling Rentals Lease of Airport Reserve Lands City:
Page 8 of 32 Lessee:
shall be for the remainder of the term of this Lease and shall be effective as
of the termination of this Lease. The City's grant of the new lease shall be
subject to the following conditions:
a. The new lease shall be effective on the date this Lease is terminated;
b. The new lease shall be for the same rent, additional rent, and
covenants as this Lease;
C. By no later than twenty (20) days following the termination of this
Lease, the security holder must submit a written request to the City
for the new lease, together with payment of all rent, additional rent
and other sums then due to the City under this Lease.
d. The security holder shall pay to the City, at the time of the execution
and delivery of such new lease any and all sums due there under in
addition to those which would at the time of the execution and
delivery thereof be due under this Lease but for such termination,
and in addition thereto, any reasonable expenses, including legal and
attorneys' fees, to which the City shall have been subjected by
reason of such default.
e. The security holder shall, on or before the execution of the new
lease, perform all the other obligations of the Lessee under this
Lease to the extent the Lessee failed to perform them prior to the
termination of this Lease.
6. A holder of a security interest consented to by the City that takes possession
of this Lease or enters into a new lease with the City shall not be released
from the obligations and liabilities of this Lease or the new lease unless the
holder assigns its leasehold estate to an assignee who is financially capable
and otherwise qualified to undertake to perform and observe the conditions
of this Lease or the new lease and the City consents to the assignment. The
City's consent will not be unreasonably withheld. If the security holder
asserts that the City is unreasonably withholding its consent to a proposed
assignment, the dispute shall be resolved by arbitration.
ARTICLE VII
Schilling Rentals Lease of Airport Reserve Lands City:
Page 9 of 32 Lessee:
MAINTENANCE, SNOW REMOVAL & UTILITIES
A. MAINTENANCE:
1. At no cost to the City, the Lessee will keep the Premises and all
improvements on the Premises clean, neat and presentable, as reasonably
determined by the City.
2. At no cost to the City, the Lessee will provide for all maintenance and
services at the Premises as may be necessary to facilitate the Lessee's
compliance with this Lease and the Lessee's use of the Premises.
3. The Lessee shall comply with all regulations or ordinances of the City that
are promulgated for the promotion of sanitation. At no cost to the City, the
Lessee shall keep the Premises in a clean and sanitary condition, and control
activities on the Premises to prevent the pollution of water.
4. The Lessee agrees to comply with all decisions and directions of the City's
Airport Manager regarding maintenance and operation of the Airport, and
the use of the Airport by the Lessee.
B. SNOW REMOVAL:
1. At no cost to the City, the Lessee is responsible for snow removal on the
Premises. The Lessee shall dispose of snow in an off - Premises location
approved in writing by the City or provide suitable snow storage within the
boundaries of the Premises in accordance with all applicable federal and
state laws. At the request of the Airport Manager, the Lessee shall submit a
snow removal plan for the Premises to the Manager for review. Upon
approval of the Lessee's plan by the Airport Manager, the Lessee shall
conduct all snow removal operations on the Premises in accordance with the
approved plan.
2. Lessee shall not deposit snow on an apron, taxiway, safety area, or other
aircraft- maneuvering surface provided for common use by others without
the prior written approval of the Airport Manager.
3. Lessee agrees to not allow an accumulation of snow on the Premises that
would cause interference with adjoining leaseholders or other users of the
Airport.
C. UTILITIES: Unless specifically provided otherwise in this Lease, the Lessee shall,
Schilling Rentals Lease of Airport Reserve Lands City:
Page 10 of 32 Lessee:
at no cost to the City, provide for all utilities at the Premises necessary to facilitate the
Lessee's use of the Premises.
ARTICLE VIII
OPERATIONS
A. OPERATIONS ON THE AIRPORT: The Lessee will ensure that the Lessee, its
employees, guests, contractors, sublessees, and vendors that perform any activity or
function authorized under this Lease shall do so in a manner that ensures the safety of
people, the protection of public health and the environment, and the safety and integrity of
the Airport and the Premises.
B. LESSEE'S CONTROL AND RESPONSIBILITY:
The Lessee will assume full control and sole responsibility as between
Lessee and City for the activities of the Lessee, the Lessee's personnel and
employees, and anyone else acting by, on behalf of, or under the authority
of the Lessee on the Airport, including the Premises.
2. The Lessee will immediately notify the City of any condition, problem,
malfunction, or other occurrence that threatens the safety of people or the
Airport, harm to public health or the environment, or the safety or integrity
of the Premises.
C. RADIO INTERFERENCE: The Lessee will discontinue the use of any machine or
device that interferes with any government- operated transmitter, receiver, or navigation aid
until the cause of the interference is eliminated.
D. WILDLIFE: The Lessee acknowledges that a concentration of birds or other
wildlife on an airport constitutes a significant hazard to aircraft operations. The Lessee
agrees to keep the Premises clean of fish slime, fish waste, or any other material that might
attract birds or other wildlife. The Lessee accepts full responsibility to maintain the
Premises, control operations, and take all reasonable measures to prevent a concentration
of birds or other wildlife on the Premises.
E. PARKING: The Lessee will provide adequate vehicle, equipment, and aircraft
parking space on the Premises for Lessee's business or activities, or confine parking to
such other places on the Airport as may be approved or designated in writing by the
Airport Manager.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 11 of 32 Lessee:
ARTICLE IX
ENVIRONMENTAL PROVISIONS
A. HAZARDOUS SUBSTANCE:
1. The Lessee will conduct its business and/or operation on the Premises in
compliance with all environmental laws and permits. If hazardous
substances are handled on the Premises, the Lessee agrees to have properly
trained personnel and adequate procedures for safely storing, dispensing,
and otherwise handling Hazardous Substances in accordance with all
applicable federal, state, and local laws.
2. Lessee will promptly give the City notice of proceeding to abate or settle
matters relating to the presence of a Hazardous Substance on the Premises
or from Lessee's operations on the Airport. The Lessee will allow the City
to participate in any such proceedings.
B. ENVIRONMENTAL INDEMNIFICATION: If Contamination of the Premises or
other property by a Hazardous Substance occurs from the Lessee's operations on the
Premises the Lessee will indemnify, defend, and hold the City harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses, including, but not
limited to, sums paid in settlement of claims, attorney's fees, consultant fees, and expert
fees, which arise during or after the term of this Lease as a result of such Contamination.
This indemnification of the City by Lessee includes, but is not limited to, costs incurred in
connection with any investigation of site conditions or any cleanup, remediation, removal,
or restorative work required by any federal, state, or local governmental agency because of
a Hazardous Substance being present in the soil or groundwater or under the Premises or
other properties affected by the Contamination.
C. REMEDIATION:
1. In the event of a Hazardous Substance spill on the Premises, the Lessee will
immediately notify the City and the Alaska Department of Environmental
Conversation and act, promptly, at its sole expense, to contain the spill,
repair, any damage, absorb and clean up the spill area, and restore the
Premises to a condition satisfactory to the City and otherwise comply with
the applicable portions of any environmental law.
2. In addition to any notices required by this Lease, the Lessee will
immediately notify and copy the City in writing of any of the following:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 12 of 32 Lessee:
a. Any permit, enforcement, clean up, lien, removal or other
governmental or regulatory action instituted, completed, or
threatened pursuant to an Environmental Law.
b. Any claim made or threatened by any person against the Lessee or
arising from the Lessee's operations authorized by this Lease,
relating to damage, contribution, compensation, loss or injury
resulting, from, or claimed to result from any Hazardous Substances
in, on, or under the Airport; or
C. Any report made by, or on behalf of, the Lessee to any
environmental agency arising out of or in connection with any
Hazardous Substances in, on, or removed from the Premises,
including any complaints, notices, warnings, or asserted violations.
3. Remediation and restoration of the contaminated area must meet all
applicable state and federal regulations and must meet the requirements of
all governing regulatory authorities.
D. ENVIRONMENTAL AUDIT: The Lessee will provide the City with all
investigative data, test results, reports, and any other information gathered or analyzed as
part of or in relation to any Environmental Assessment, characterization or audit on the
Premises or the Airport that Lessee performs or causes to be performed after the starting
date of this Lease. The Lessee will submit the data, result, report or information to the
City within sixty (60) days following the date on which it becomes available to the Lessee.
E. RELEASE OF LESSEE: The City releases the Lessee from liability to the
City for Contamination and the presence of Hazardous Substances that existed prior to the
commencement date of this lease unless caused or materially contributed to by the Lessee.
F. SURVIVAL OF OBLIGATIONS: The obligations and duties of the City
and Lessee under Article IX of this lease shall survive the cancellation, termination, or
expiration of this lease.
ARTICLE X
INDEMNIFICATION & INSURANCE
A. INDEMNIFICATION:
1. The Lessee will indemnify, hold harmless, and defend the City, its officers,
agents, and employees from and against any and all liabilities, losses, suits,
administrative actions, claims, awards, judgments, fines, demands,
damages, injunctive relief or penalties of any nature or kind to the full
extent of the loss or obligation for property damage, personal injury, death,
Schilling Rentals Lease of Airport Reserve Lands City:
Page 13 of 32 Lessee:
violation of any regulation or grant agreement, or any other injury or harm
resulting from or arising out of any acts or commission of or omission by
the Lessee, his agents, employees, customers, invitees or arising out of the
Lessee's occupation or use of the Premises demised or privileges granted,
and to pay all costs connected therewith. This indemnification of the City
by the Lessee shall include sums paid in settlement of claims, attorney fees,
consultant fees, expert fees, or other costs and expenses, directly or
indirectly arising from, connected to or on account of this Lease as it relates
to the Lessee, the Lessee's activities at or relating to the Airport, or any act
or omission by the Lessee, or by any of its officers, employees, agents,
contractors or sublessees. These indemnity obligations are in addition to,
and not limited by, the Lessee's obligation to provide insurance, and shall
survive the expiration or earlier termination of this Lease.
2. The Lessee shall give the City prompt notice of any suit, claim, action or
other matter affecting the City to which Subsection (A)(1), above, may
apply, together with a copy of any letter by an attorney on behalf of a
complainant, any complaint filed in court, and any notice or complaint by
any regulatory agency. The City shall have the right, at its sole option, to
participate cooperatively in the defense of, and settlement negotiations
regarding, any such matter, without relieving the Lessee of any of its
obligations under this provision.
3. As to any amount paid to others for personal injury or property damage with
respect to which an act or omission of the City is a legal cause,
notwithstanding Subsection (A)(1) of this Article, the Lessee and the City
shall reimburse each other according to the principles of comparative fault.
If liability to a third party is subject to apportionment according to
comparative fault under this provision, the Lessee and the City shall seek in
good faith to achieve non judicial agreement as to apportionment of fault as
between themselves. This apportionment of liability between the City and
the Lessee shall not be construed to affect the rights of any person who is
not a party to this Lease.
B. INSURANCE: At no expense to the City, the Lessee will obtain and keep in force
during the term of this Lease, insurance of the type and limits required by this provision.
Where specific limits are set, they will be the minimum acceptable limits. If the Lessee's
policy contains higher limits, the City will be entitled to coverage to the extent of the
higher limits. At the time insurance is obtained by the Lessee, all insurance shall be by a
company /corporation rated "A -" or better by A.M. Best. The following policies of
insurance are required with the following minimum amounts:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 14 of 32 Lessee:
1. Commercial General Liability, including Premises, all operations, property
damage, products and completed operations, and personal injury and death,
broad -form contractual, with a per - occurrence limit of not less than
$1,000,000 combined single limit. If this lease authorizes the Lessee to
engage in the sale or the commercial dispensing or storage of aviation fuel,
the policy must not exclude of the Lessee's fuel handling activities. This
policy must name the City as an additional insured.
2. Commercial Automobile Coverage with not less than $1,000,000 combined
single limit per occurrence. This insurance must cover all owned, hired,
and non -owned motor vehicles used by the Lessee.
3. Workers Compensation Insurance. The Lessee will provide and maintain,
for all employees, coverage as required under AS 23.30.045, and, where
applicable, any other statutory obligations. The policy must waive
subrogation against the City.
4. The Lessee will provide the City with proof of insurance coverage in the
form of an insurance policy or a certificate of insurance, together with proof
that the premiums have been paid, showing the types and monetary limits of
coverage secured. All insurance required by this provision must provide
that the City be notified at least thirty (30) days prior to any termination,
cancellation, or material change in the insurance coverage.
5. If the Lessee's insurance coverage lapses or is cancelled, Lessee will
immediately, upon written notice by the City, halt all operations on the
Airport, including the Premises. The Lessee will not resume operations
until the City receives evidence that the Lessee has obtained current
insurance coverage meeting the requirements of this Lease.
6. The City may, at intervals of not less than five (5) years from the beginning
date of the term of this Lease and upon written notice to Lessee, revise the
insurance requirements required under this Lease. City's determination to
revise the insurance requirements will be based on the risks relative to the
Lessee's operations, any insurance guidelines adopted by the City, and any
change in applicable law.
7. If the Lessee subleases all or any portion of the Premises under the
provisions of this Lease, the Lessee will require the sublessee to provide to
the insurance coverage required of the Lessee under this Article X.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 15 of 32 Lessee:
ARTICLE XI
LAWS & TAXES
A. COMPLIANCE WITH LAW: Lessee shall comply with all applicable laws,
ordinances, and regulations of public authorities now or hereafter in any manner affecting
the Airport, the Premises or the sidewalks, alleys, streets, and ways adjacent to the
Premises, or any buildings, structures, fixtures and improvements or the use thereof,
whether or not any such laws, ordinances, and regulations which may be hereafter enacted
involve a change of policy on the part of the governmental body enacting the same. Lessee
agrees to hold City financially harmless:
1. From the consequences of any violation of such laws, ordinances, and /or
regulations; and
2. From all claims for damages because of injuries, death, or property damage
resulting from such violation.
B. UNLAWFUL ACTIVITY: The Lessee shall not permit any unlawful use,
occupation, business, or trade to be conducted on the Premises contrary to any law,
ordinance, or regulation, including zoning ordinances, rules, and regulations.
C. LICENSES AND PERMITS: The Lessee will obtain all necessary licenses and
permits, pay all taxes and special assessments lawfully imposed upon the Premises, and
pay other fees and charges assessed under applicable law. Nothing in this Lease prevents
the Lessee from challenging any taxes or special assessments to the appropriate authority.
D. LITIGATION: The KMC, including regulations promulgated there under, and the
laws of the State of Alaska will govern in any dispute between the Lessee and City. If a
dispute continues after exhaustion of administration remedies, any lawsuit must be brought
in the courts of the State of Alaska, in Kenai, Alaska.
E. LESSEE TO PAY TAXES: Lessee shall pay all lawful taxes and assessments
which, during the term of this Lease may become a lien upon or which may be levied by
the State, Borough, City, or any other tax levying body, upon any taxable possessory right
which Lessee may have in or to the Premises or improvements on the Premises by reason
of its use or occupancy or the terms of this Lease provided, however, that nothing in this
provision shall prevent Lessee from contesting any increase in a tax or assessment under
any applicable law, ordinance, or regulation.
F. PARTIAL INVALIDITY: If any term, provision, condition, or part of this Lease is
declared by a court of competent jurisdiction to be invalid or unconstitutional, the
remaining terms, provisions, conditions, or parts shall continue in full force and effect as
though the declaration had not been made.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 16 of 32 Lessee:
ARTICLE XII
LEASE TERMINATION
A. CANCELLATION: The City may, after thirty (30) days written notice to the
Lessee, cancel this Lease and recover possession of the Premises if any of the following
violations occur, unless the violation is cured within the thirty (30) days:
1. The Lessee fails to pay when due the rents, additional rents, charges, or
other sums specified in this Lease, including any increases made under this
Lease.
2. The Lessee's check for payment of any sum due under this Lease is
returned for insufficient funds.
3. The Lessee uses or authorizes the use of the Premises for any purpose not
authorized by this Lease.
4. The Lessee fails to fully perform and comply with any provision in this
Lease.
5. The court enters a judgment of insolvency against the Lessee.
6. A trustee or receiver is appointed for the Lessee's assets in a proceeding
brought by or against the Lessee, or the Lessee files a voluntary petition in
bankruptcy.
7. Failure by the Lessee to comply with any land development or permanent
improvement construction required by this Lease.
B. ENTRY AND RE- ENTRY: In the event that the Lease should be terminated in
accordance with this Article XII, or by summary proceedings or otherwise, or upon the
Lessee's abandonment of the Premises or a portion of the Premises, the City or its agents,
servants, or representatives may, immediately or any time thereafter, re- enter, and resume
possession of the Premises or portion thereof, and remove all persons and property there
from, without being liable for any damages therefore. No re -entry by the City shall be
deemed an acceptance of a surrender of the Lease.
C. CONTINUING OBLIGATIONS UNTIL PREMISES VACATED: The Lessee
will continue to pay City rent after the expiration, termination, or cancellation of this lease
and to abide by the lease obligations, including providing proof of insurance coverage,
through the date Lessee relinquishes possession of and completely vacates the Premises.
City will consider the Premises completely vacated if the Lessee has;
Schilling Rentals Lease of Airport Reserve Lands City:
Page 17 of 32 Lessee:
1. Remediated any environmental contamination for which the Lessee is
responsible; and
2. Restored the Premises to a neat and clean physical condition acceptable to
the City.
D. REASONABLE CURE:
1. In the case of a violation that cannot be reasonably cured within thirty (30)
days, a notice of cancellation issued by the City to the Lessee under this
Article is stayed if, within the 30 -day notice period, the Lessee begins and
continues expeditious action to cure the violation. The City will determine
if a violation cannot be reasonably cured within thirty (30) days and what
constitutes expeditious action.
2. In the case where, in City's sole determination, Lessee's violation is
considered an imminent threat to the airport, public health or safety, or the
environment, the City will direct the Lessee to stop the activity immediately
and may reduce the period to cure the violation, or the City may correct the
violation pursuant to (E) of this Article.
E. RIGHT OF CITY TO PERFORM:
1. If, after thirty (30) days following notice of the Lessee fails or refuses to
perform any action required by this Lease, the City will have the right, but
not the obligation, to perform any or all such actions required by this Lease
at the sole expense of the Lessee. The City will not take action if the Lessee
begins and continues expeditious action to perform any action required by
this Lease that cannot be reasonably completed within thirty (30) days. The
City will, at its sole discretion, determine what constitutes expeditious
action and if an action cannot be reasonably performed in thirty (30) days.
The City will submit to the Lessee an invoice for the expenses incurred by
the City in the performance by the City of any required action. The Lessee
will pay the amount of each invoice within thirty (30) days from issuance.
2. If Lessee fails or refuses to perform any action that has been deemed an
imminent threat the City will have the right, but not the obligation, to
perform any or all such actions required to expeditiously correct the
imminent threat. Lessee shall reimburse the City for any cost, including
legal fees and administrative costs reasonably incurred by the City in acting
to correct the imminent threat violation.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 18 of 32 Lessee:
F. WAIVER: A waiver by the City of any default by the Lessee of any provision of
this Lease will not operate as a waiver of any subsequent default. If the City waives a
default, the City is not required to provide notice to the Lessee to restore or revive any term
or condition under this Lease. The waiver by the City of any provision in this Lease
cannot be enforced or relied upon unless the waiver is in writing and signed on behalf of
the City. The City's failure to insist upon the strict performance by the Lessee of any
provision in this Lease is not a waiver or relinquishment for the future and the provision
will continue in full force.
G. AIRPORT CLOSURE:
1. If the City closes the airport to aircraft operations for sixty (60) days or less,
this Lease will remain in full force and effect without adjustment.
2. If the City closes the Airport to aircraft operations for more than sixty (60)
days, but not permanently, and this Lease is for aviation or direct aviation
support uses, the Lessee may, upon written notice to the City, either
terminate the Lease or retain the Lease and receive a fifty percent (50 %)
rent reduction or credit for that portion of the closure that exceeds sixty (60)
days.
3. If the City permanently closes the Airport to aircraft operations and:
a. This Lease is for aviation or direct aviation support uses, the Lessee
may terminate this agreement by written notice to the City; or
b. This Lease is for non - aviation uses, the Lessee may request in
writing to have the Lease terminated. The City will consider the
Lessee's request in light of the City's best interest and either
terminate the Lease, or deny the Lessee's request in writing.
H. DISASTERS:
The Lessee or City may cancel this Lease upon written notice to the other party if:
1. The Premises becomes unusable through no fault of either party and
performance under this Lease becomes impossible; or
2. The Airport becomes unusable through no fault of either party and the
performance under this Lease becomes impossible.
If the Lessee elects in writing that it will continue to operate after notice from City to
Lessee that the Airport has become unusable, the Lessee's obligations under the Lease will
Schilling Rentals Lease of Airport Reserve Lands City:
Page 19 of 32 Lessee:
continue, but City shall be under no obligation to continue to perform.
Causes for termination of the Lease under this provision (H) include acts of God, the
public enemy, and the United States.
I. NATIONAL EMERGENCY: If the federal government declares a national
emergency, neither party may hold the other liable for any inability to perform any part of
this Lease as a result of the national emergency.
J. SURRENDER ON TERMINATION: Except as provided otherwise in this Article
XII, Lessee shall, on the last day of the term of this Lease (including any extension or
renewal thereof) or upon any earlier termination of this Lease, surrender and deliver up the
premises into the possession and use of City without fraud or delay in good order,
condition, and repair, except for reasonable wear and tear since the last necessary repair,
replacement, restoration or renewal, free and clear of all lettings and occupancies unless
expressly permitted by the City in writing, and free and clear of all liens and encumbrances
other than those created by and for loans to City.
ARTICLE XIII
GENERAL COVENANTS
A. USE OF THE AIRPORT: Except as provided herein, any regular use of Airport
lands or facilities without the written consent of the City is prohibited. This prohibition
shall not apply to use of areas designated by the City for specified public uses, such as
passenger terminals, automobile parking areas, and streets.
B. COSTS AND EXPENSES: Costs and expenses incident to this Lease, including
but not limited to recording costs, shall be paid by Lessee.
C. CARE OF THE PREMISES: The Lessee shall keep the Premises clean and in
good order at the Lessee's own expense, allowing no damage, waste, nor destruction
thereof, nor removing any material there from, without written permission of the City. At
the expiration of the term fixed, or any earlier termination of the Lease, the Lessee will
peaceably and quietly quit and surrender the premises to the City.
D . CONSTRUCTION APPROVAL AND STANDARDS: Any building construction
on the Premises by the Lessee must be compatible with its surroundings and consistent
with the uses authorized under this Lease, as determined by the City. The Lessee must
obtain the City's written approval before placing fill material, beginning any land
development, or constructing or demolishing any improvements on the Premises, and
before beginning any alterations, modifications, or renovation of existing structures on the
Premises. The Lessee must submit to the City detailed drawings of the proposed
development, alteration, modification, or renovation, together with specifications or any
Schilling Rentals Lease of Airport Reserve Lands City:
Page 20 of 32 Lessee:
other information the City reasonably requires. Further, the Lessee will submit to City
evidence of the Lessee's compliance with Federal Aviation Administration Regulation 14
CFR Part 77.
E. LEASE SUBORDINATE TO AIRPORT FINANCING REQUIREMENTS:
Lessee agrees that the City may modify this Lease to meet revised requirements for Federal
or State grants, or to conform to the requirements of any revenue bond covenant.
However, the modification shall not act to reduce the rights or privileges granted the
Lessee by this Lease, nor act to cause the Lessee financial loss.
F. RIGHT TO ENJOYMENT AND PEACEABLE POSSESSION: City hereby
agrees and covenants that the Lessee, upon paying rent and performing other covenants,
terms, and conditions of this Lease, shall have the right to quietly and peacefully hold, use,
occupy, and enjoy the Premises, except that the following shall not construed as a denial of
the right of quiet or peaceable possession:
1. Any inconvenience caused by public works projects in or about the
Premises; and
2. Any other entries by the City on the Premises reserved or authorized under
other provisions of this Lease.
G. NO PARTNERSHIP OR JOINT VENTURE CREATED: It is expressly
understood that the City shall not be construed or held to be a partner or joint venture of
Lessee in the conduct of the Lessee's activities or business on the Premises. The
relationship between the City and the Lessee is, and shall at all times remain, strictly that
of landlord and tenant, respectively.
H. DISCRIMINATION: The Lessee will not discriminate on the grounds of race,
color, religion, national origin, ancestry, age, or sex against any patron, employee,
applicant for employment, or other person or group of persons in any manner prohibited by
federal or state law. The Lessee recognizes the right of the City to take any action
necessary to enforce this provision, including actions required pursuant to any federal or
state law.
I. AFFIRMATIVE ACTION: If required by 14 CFR Part 152, subpart E, the Lessee
will undertake an affirmative action program to insure that no person will be excluded
from participating in any employment activities offered by the Lessee on the grounds of
race, creed, color, national origin, or sex. No person may be excluded on these grounds
from participating in or receiving the services or benefits of any program or activity
covered by subpart E. The Lessee further agrees that it will require its suborganization(s)
provide assurance to the City to the same effect that they will also undertake affirmative
Schilling Rentals Lease of Airport Reserve Lands City:
Page 21 of 32 Lessee:
action programs and require assurances from their suborganization(s) as required by 14
CFR, Part 152, subpart E.
Tenant shall use the premises in compliance with all other requirements imposed by or
pursuant to title 49, code of Federal Regulations, DOT, Subtitle A, Office of the Secretary,
Part 21, Nondiscrimination in Federally- Assisted programs of the Department of
Transportation - Effectuation of Title VI of the Civil Rights Act of 1964, and as the
Regulation may be amended.
J. INTEGRATION, MERGER, AND MODIFICATION: This Lease sets out all the
terms, conditions, and agreements of the parties and supersedes any previous
understandings or agreements regarding the Premises whether oral or written. No
modification or amendment of this Lease is effective unless in writing and signed on
behalf of the City and the Lessee.
K. RIGHT TO ADOPT RULES: City reserves the right to adopt, amend, and enforce
reasonable rules and regulations governing the Airport, including the Premises. The City
shall not be liable to Lessee for any diminution or deprivation of possession, or of Lessee's
rights under this Lease, on account of the exercise of the City's authority reserved under
this provision. Furthermore, the Lessee shall not be entitled to terminate the whole or any
portion of the leasehold estate created under this Lease, by reason of the exercise of the
City's authority reserved under this provision, unless the exercise thereof so interferes with
Lessee's use and occupancy of the Premises as to constitute a termination, in whole or in
part, of this Lease by operation of law under the laws of the State of Alaska and of the
United States made applicable to the states.
L. LESSEE'S OBLIGATION TO PREVENT AND REMOVE LIENS: Lessee will
not permit any liens including, but not limited to, mechanics', laborers', or material men's
liens obtainable or available under the then existing laws, to stand against the Premises or
improvements on the Premises for any labor or material furnished to Lessee or claimed to
have been furnished to Lessee or to the Lessee's agents, contractors, or sublessees, in
connection with work of any character performed or claimed to have been performed on
the Premises or improvements by or at the direction or sufferance of Lessee. Provided,
however, the Lessee shall have the right to provide a bond as contemplated by Alaska law
and contest the validity or amount of any such lien or claimed lien. Upon a final
determination of the lien or claim for lien, the Lessee will immediately pay any judgment
rendered with all proper costs and charges and shall have such lien released or judgment
satisfied at Lessee's own expense.
M. CONDEMNATION: In the event the Premises or any part thereof shall be
condemned and taken for a public or a quasi - public use, then upon payment of any award
or compensation arising from the condemnation or taking, the City and the Lessee shall
make a good faith effort to agree upon:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 22 of 32 Lessee:
1. The division of the proceeds; and
2. The abatement in rent payable during the term or any extension of the term
of this Lease; and
3. Other adjustments as the parties may agree upon as being just and equitable
under all the circumstances.
If, within thirty (30) days after the award has been paid into Court, the City and Lessee are
unable to agree upon what division, abatement in rent, and other adjustments as are just
and equitable, the dispute shall be determined by arbitration.
N. SUCCESSORS IN INTEREST: This Lease shall be binding upon and shall inure
to the benefit of the respective successors and assigns of the parties hereto, subject to such
specific limitations on assignment as are provided for in this Lease.
O. NOTICES:
Any notices required by this Lease must be in writing and must be delivered
personally or mailed by certified or registered mail in a prepaid envelope.
A mailed notice:
a. Must be addressed to the respective party at the address written on
the first page of this Lease or to the latest address designated in
accordance with (2) of this Provision (0); and
b. Shall be deemed delivered on the date it is deposited in a U.S.
general or branch post office.
2. The City or the Lessee may, from time to time, designate a new address at
which they will receive notices by providing the other party with written
notice at least fifteen (15) days prior to the effective date of the change. An
address change notice must be delivered according to the procedure set out
in (1) of this Provision (0).
P. RETENTION OF RENTAL: In the event the City terminates this Lease because of
any breach by the Lessee, the City shall retain any unused balance of the rental payment
last made by the Lessee City as partial or total liquidated damages for the breach.
Q. FIRE PROTECTION: The Lessee will take all reasonable precautions to prevent,
and take all necessary action to suppress destructive or uncontrolled fires and comply with
all laws, regulations, and rules promulgated and enforced by the City for fire protection on
the Airport.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 23 of 32 Lessee:
R. PERSONAL USE OF MATERIALS: No interest in coal, oil, gas or any other
mineral, or in any deposit of stone or gravel valuable for extraction or utilization is
included in the Premises or in the rights granted by this lease. The Lessee shall not sell or
remove from the Premises for use elsewhere any timber, stone, gravel, peat moss, topsoil
or any other material valuable for building or commercial purposes.
S. APPROVAL OF OTHER AUTHORITIES: The granting of this Lease by the City
does not relieve the Lessee of the responsibility to obtain any license or permit as may be
required by federal, state, or local law.
T. EXECUTION BY THE PARTIES: This Lease is of no effect unless signed by the
Lessee, or a duly authorized representative of Lessee, and an authorized representative of
the City.
U. CAPTIONS: The captions of the provisions of this Lease are for convenience only
and do not necessarily define, limit, describe, or construe the contents of any provision.
V. RIGHTS OF CONSTRUCTION: This Lease is intended to make public property
available for private use, while at all times protecting the public interest to the greatest
extent possible. Following the rule that transfers of interest in public property are to be
strictly construed in favor of the public property landlord, all rights granted to the Lessee
under this Lease will be strictly construed, and all rights of the City and the protections of
the public interest will be liberally construed.
W. LESSEE ACKNOWLEDGEMENT: The Lessee acknowledges that the Lessee has
read this Lease and fully understands its terms, that the Lessee has been fully advised or
has had the opportunity of advice by separate legal counsel, and voluntarily executes this
Lease. Lessee also acknowledges and agrees that the rule of interpretation under which a
document is construed against the drafter will not apply to this Lease.
X. APPROVAL BY LESSOR: Any approval required of the Lessor by this Lease will
not be unreasonably withheld. The Lessor's approval does not waive the Lessee's legal
responsibility or liability to comply with all applicable federal and state laws and
regulations.
ARTICLE XIV
SURVEY, IMPROVEMENTS AND PERFORMANCE BOND
A. SURVEY: The Lessee is solely responsible, at its sole expense, to confine or
establish the physical location of the boundaries of the Premises prior to beginning any
construction thereon, including clearing grubbing, back - filling and environmental
sampling. Any survey of the Premises shall be performed by a Land Surveyor registered
Schilling Rentals Lease of Airport Reserve Lands City:
Page 24 of 32 Lessee:
in the State of Alaska. The Lessee shall furnish the City with a copy of the plat of any
survey performed on the Premises by, or on behalf of, the Lessee.
B. IMPROVEMENTS:
1. REQUIRED IMPROVEMENTS: At no cost to the City, Lessee agrees to
complete land development and construction of Permanent Improvements
including construction of an access ramp and secure access from Willow
Street, by no later than June 1, 2016. In addition to the as -built drawings
required by this Lease, the Lessee must submit to the City written evidence
that the Lessee has completed the land development and constructed
improvements on the Premises.
The evidence of cost must be submitted to the City within sixty (60) days of
the completion of the development and improvements, but by no later than
N /A.
a. Costs considered toward the aggregate cost of permanent
improvements include building construction, design, labor,
materials, materials shipping, permits, equipment, soil testing,
environmental baseline report, and environmental assessment
directly related to the construction; premises and as -built surveys;
site preparation, including excavation, geotextile fabric, filling,
grading, fill material, gravel, and pavement, remediation of
environmental contamination (unless Lessee caused or materially
contributed to the contamination); and utility connection costs.
b. The cost of Permanent Improvements excludes:
i. Work performed by the City and not reimbursed by the Lessee;
and,
ii. Work performed by the Lessee and reimbursed by the City.
2. FAILURE TO COMPLETE IMPROVEMENTS: If the Lessee fails to
complete the required construction within the time allowed under (13)(1) of
this Article, including any extensions granted, the City will execute against
and the Lessee will forfeit, any bond or other guarantee given by the Lessee
and, as applicable, City will:
a. Initiate cancellation of the Lease; or
Schilling Rentals Lease of Airport Reserve Lands City:
Page 25 of 32 Lessee:
b. Reduce the term of the Lease to a period that is consistent with the
portion of the required construction timely completed.
3. APPEARANCE: When completed, all improvements on the Premises must
be neat, presentable, and compatible with the authorized use of the Premises
under this Lease, as determined by the City.
4. CITY APPROVAL REQUIRED: The Lessee must first obtain the City's
written approval before beginning any land development, construction, or
demolition of any improvements on the Premises, or before beginning any
alterations, modifications, or renovation of existing structures on the
Premises. The Lessee must submit to the City detailed drawings of the
proposed development, alteration, modification, or renovation. Further, the
Lessee will submit to the City evidence of the Lessee's compliance with the
FAA Regulation 14 CFR Part 77.
CITY APPROVAL WITHHELD: The City's approval of any construction,
alteration, modification, or renovation will not be withheld unless:
a. the Lessee fails to demonstrate adequate financial resources to
complete the project;
b. the project plans, specifications, and agency approvals are
incomplete;
C. the proposed project would result in a violation of an applicable
ordinance, regulation, or law;
d. the proposed project would interfere with or is incompatible with the
safety, security, maintenance, or operation of the airport;
e. the proposed project is inconsistent with the Airport Master Plan;
f. the proposed project is inconsistent with the terms of the Lease,
zoning ordinances, or the City's Comprehensive Plan;
g. the project plans do not make sufficient provision for drainage,
aircraft, vehicle, and equipment parking, or for snow storage; or
h. the proposed project does not conform to generally recognized
engineering principles or applicable fire or building codes.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 26 of 32 Lessee:
6. DEMOLITION: Prior to any demolition of any structure(s) on the
Premises, Lessee will deliver to the City a written scope of work that, at a
minimum, lists the structure(s) that are to be demolished and the timeframe
for demolition and removal of the debris from the Airport. City will review
Lessee's scope for demolition and issue Lessee written approval for the
work to be done.
7. BUILDING SETBACK: No building or other permanent structure may be
constructed or placed within twenty (20) feet of any lot line of the Premises
without City's prior written approval. In addition, no building or other
permanent structure may be constructed or placed within N/A feet of any
boundary line of the Premises which fronts on a landing strip, taxiway, or
apron.
AS -BUILT DRAWINGS: Within sixty (60) days after completion of
construction or placement of improvements upon the Premises, the Lessee
will deliver to the City a copy of an as -built drawing, acceptable to the City,
showing the location and dimensions of the improvements, giving distances
to all Premises' boundaries. If the Lessee constructs underground
improvements, the Lessee will appropriately mark the surface of the land
with adequate surface markers. The type, quantity, and distance between
such markers will be subject to approval of the City.
9. AIRPORT SECURITY FENCING: If any construction by the Lessee
requires a realignment or alteration of an existing security fence on the
Premises or boundary of the Premises, the Lessee agrees to realign or alter
the fence in a manner approved in writing by the Airport Manager.
Anytime the fence must be breached to allow the Lessee to complete
improvement construction or fence modifications, the Lessee shall, at the
Lessee's sole expense place temporary barriers to maintain the security of
the Airport, as determined by the Airport Manager. If damage occurs to a
security fence on the Premises or boundary of the Premises in connection
with the Lessee's use or occupation of the Premises, the Lessee shall
promptly repair the fence to the satisfaction of the Airport Manager.
10. DAMAGE TO IMPROVEMENTS: If Lessee's improvements on the
Premises are damaged or destroyed, Lessee will cause the improvements to
be repaired or rebuilt, and restored to normal function within two (2) years
following the damage or destruction. If the Lessee fails to timely rebuild or
restore the improvements, the City may, at its sole discretion, either reduce
the term of this Lease commensurate with the estimated value of the
Lessee's remaining, fully functional improvements on the Premises, or
cancel this Lease.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 27 of 32 Lessee:
11. DAMAGE NEAR EXPIRATION: If Lessee's improvements are damaged
to the extent that more than fifty percent (50 %) of the space is unusable and
the damage occurs within five years of the expiration of the term of this
Lease, Lessee may remove the damaged improvements, restore the
Premises and terminate this Lease.
C. PERFORMANCE BOND: Prior to beginning the construction of permanent
improvements required under (B)(1) of this Article, the Lessee shall submit to the City a
performance bond, deposit, or other security in the amount of $N /A. The form of the bond
or other security shall be subject to the City's approval.
D. SURRENDER ON TERMINATION: Lessee shall, on the last day of the term of
this Lease or upon any earlier termination of this Lease, surrender and deliver upon the
premises into the possession and use of City without fraud or delay in good order,
condition, and repair, except for reasonable wear and tear since the last necessary repair,
replacement, restoration or renewal, free and clear of all lettings and occupancies unless
expressly permitted by the City in writing, and free and clear of all liens and encumbrances
other than those created by and for loans to City. Upon the end of the term of this Lease,
including any extension or renewal, or any earlier termination thereof, title to the
buildings, improvements and building equipment shall automatically vest in City without
requirement of any deed, conveyance, or bill of sale thereon. However, if City should
require any such document in confirmation hereof, Lessee shall execute, acknowledge, and
deliver the same and shall pay any charge, tax, and fee asserted or imposed by any and all
governmental units in connection herewith.
E. NOTICE OF CONSTRUCTION: The Lessee agrees to notify the City in writing
three (3) days prior to commencing any construction project valued in excess of $1,000.00
on the Premises. The Lessee agrees to assist in the posting of a notice of
non - responsibility and maintenance of the notice on the Premises during construction.
Lessee agrees that in the event the Lessee fails to notify the City as required by this
Provision, the Lessee shall indemnify the City against any material men's liens as defined
in AS 34.35.050 which arise as a result of construction on the premises.
ARTICLE XV
SPECIAL PROVISIONS
A. CITY CONSTRUCTED IMPROVEMENTS.
1. ALTERNATIVE ONE — The City commits to construct improvements after
the lease is signed.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 28 of 32 Lessee:
a. As part of the exchange of consideration of this lease, the City will,
at the City's expense, cause the following improvements to be
constructed on or in connection with the Premises:
i. N /A;
ii. N /A;
iii. N /A.
b. The City's total cost of the improvement construction shall not
exceed $N /A without the Lessee's written concurrence.
C. The Lessee shall reimburse the City for the City's cost of
constructing the improvements. The reimbursement shall be made
in ten (10) equal annual payments, plus interest at eight percent
(8 %) per year on the unpaid balance. The Lessee may pay the entire
remaining balance to the City earlier than due.
d. After completing the improvements, the City will give the Lessee
written notice of the City's total cost of constructing the
improvements and the date on which the Lessee's reimbursement
payments shall begin, which date shall be no earlier than sixty (60)
days after the date of the City's notice. The Lessee's annual
reimbursement payment for each succeeding year shall be made to
the City by no later than the anniversary of date on which the first
payment was due.
C. Failure by the Lessee to timely reimburse the City as required under
(b) through (d) of this provision shall be grounds for termination of
this Lease by the City.
2. ALTERNATIVE TWO — The City builds improvements before the lease is
signed.
a. The Lessee acknowledges that prior to the execution of this lease,
the City constructed the following improvements on or in
connection with the Premises:
i. N /A;
ii. N /A;
iii. N /A.
b. The City's total cost to construct the improvements was $N /A.
Schilling Rentals Lease of Airport Reserve Lands City:
Page 29 of 32 Lessee:
C. As part of the consideration of this Lease, the Lessee shall reimburse
the City for the City's cost of constructing the improvements. The
reimbursement shall be made in ten (10) equal annual payments,
plus interest at eight percent (8 %) per year on the unpaid balance.
The Lessee may pay the entire remaining balance to the City earlier
than due.
d. The Lessee shall make the first reimbursement payment to the City
by no later than the first anniversary of the Lease term beginning
date given in Article III of this Lease. The Lessee's annual
reimbursement payment for each succeeding year shall be made to
the City by no later than the anniversary of date on which the first
payment was due.
e. Failure by the Lessee to timely reimburse the City as required under
(c) and (d) of this provision shall be grounds for termination of this
Lease by the City.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and
year stated in the individual acknowledgments below.
LESSEE
SCHILLING RENTALS, LLC
Name of Representative, Title Date
ACKNOWLEDGEMENT
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this _ day of
2014, by SCHILLING RENTALS, LLC, being personally known to me
or having produced satisfactory evidence of identification, appeared before me and
acknowledged the voluntary and authorized execution of the foregoing instrument on
behalf of said corporation.
Notary Public for Alaska.
My Commission Expires:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 30 of 32 Lessee:
(If Lessee is a Corporation)
ATTEST:
Name
Title
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
APPROVED BY COUNCIL
Date: Sf--T I1q --<�rK4
THE CITY OF KENAI,
Administration
Rich Koch, Its: City Manager
ACKNOWLEDGEMENT
) ss.
Date
THIS IS TO CERTIFY that on this day of 2014,
RICK R. KOCH, City Manager of the City of Kenai, Alaska, being personally known to
me, appeared before me and acknowledged the voluntary and authorized execution of the
foregoing instrument on behalf of said City.
Notary Public for Alaska.
My Commission Expires:
ATTEST:
Sand4,Modigh, Cit Jerk
SEAL:
Schilling Rentals Lease of Airport Reserve Lands City:
Page 31 of 32 Lessee:
APPROVED ""EASE FORM:
Scott Bloom, City Attorney
Approved by Finance Director:
Airport Commission recommended approval on April 10, 2014
Planning & Zoning Commission recommended approval on April 23, 2014
Return to:
City of Kenai
210 Fidalgo Avenue
Kenai, AK 99611
Schilling Rentals Lease of Airport Reserve Lands City:
Page 32 of 32 Lessee: