CITY OF KENAI ORDINANCE NO

Transcription

1 Sponsored by: Administration and Legal CITY OF KENAI ORDINANCE NO AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, REPEALING, RENAMING AND RE-ENACTING KENAI MUNICIPAL CODE CHAPTER LEASING OF AIRPORT RESERVE LANDS TO ENCOURAGE GROWTH, DEVELOPMENT AND A THRIVING AVIATION COMMUNITY THROUGH RESPONSIBLE LAND POLICIES AND PRACTICES. WHEREAS, the City s leasing program within the airport reserve has failed to accomplish the City s goals of encouraging growth and development of the airport within the last several years; and, WHEREAS, what few new leases that have been executed within the airport reserve have all deviated from the City s existing code; and, WHEREAS, the city manager s office, the finance director, airport manager, planner and legal department have worked together with consultants and reached out to airport leaseholders, users and financiers for input into improving the City s airport reserve leasing program; and, WHEREAS, the working group has reviewed other airport leasing programs inside Alaska and in other states, and the recommended program will provide a competitive environment to encourage leasing within the airport reserve in compliance with FAA regulations and deed restrictions; and, WHEREAS, many of the changes are focused on encouraging new leases through a more competitive development schedule and incentives, reducing appeals and conflict between the City and lessees, providing a defined process for beginning, renewing, extending and ending leases, balancing encouragement of new business with security for existing leaseholders, and providing an improved mechanism for rent adjustments; and, WHEREAS, this ordinance will provide an opportunity for existing leaseholders to convert to a new lease; and, WHEREAS, the Planning and Zoning Commission at its meeting of January 10, 2018 recommended ; and, WHEREAS, the Airport Commission at its meeting of January 11, 2018 recommended. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, as follows: Section 1. Repeal and Reenactment of the Kenai Municipal Code: That Kenai Municipal Code, Chapter Leasing of Airport Reserve Lands, is hereby Repealed in its entirety and Re-enacted as follows:

2 Page 2 of 26 [ AIRPORT RESERVE LAND. (A) THIS CHAPTER APPLIES TO AIRPORT-OWNED LAND WITHIN THE AIRPORT RESERVE. (B) THE PROVISIONS OF THIS CHAPTER SHALL NOT ALTER OR AMEND THE TERMS OR RIGHTS GRANTED UNDER LEASES EXISTING PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER. (C) PENDING LEASE APPLICATIONS FOR AIRPORT LAND FILED PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER SHALL BE PROCESSED AND ISSUED UNDER THE PROVISIONS OF KMC TITLES 21 AND 22 IN EXISTENCE IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER. OTHERWISE THE PROVISIONS OF THIS CHAPTER SHALL APPLY. (ORD ) LANDS AVAILABLE FOR LEASING. (A) SUBJECT TO THE PROVISIONS OF THIS CHAPTER, CITY-OWNED LAND WITHIN THE AIRPORT RESERVE MAY BE LEASED AS PROVIDED IN THIS CHAPTER UNLESS THE LAND IS IDENTIFIED IN THE LATEST FEDERAL AVIATION ADMINISTRATION- APPROVED AIRPORT LAYOUT PLAN FOR THE AIRPORT OR IN THE LATEST AIRPORT LAND USE PLAN AS BEING REQUIRED FOR THE OPERATION OR SAFETY OF THE AIRPORT, OR FOR THE CONSTRUCTION, PRESERVATION, FUTURE CONSTRUCTION, OR FUTURE EXPANSION OF FACILITIES ON THE AIRPORT, INCLUDING: (B) (1) RUNWAYS, RUNWAY SAFETY AREAS, TAXIWAYS, APRONS, WATER LANES, WATER TAXIWAYS, AND OTHER AIRCRAFT OPERATIONAL AREAS; (2) ACCESS ROADS, PUBLIC STREETS, PARKING LOTS, AND OTHER FACILITIES FOR USE BY MOTOR VEHICLES; AND (3) PUBLIC TERMINAL BUILDINGS. NOTWITHSTANDING SUBSECTION (A) OF THIS SECTION: (1) APRON SPACE MAY BE LEASED, BUT ONLY FOR AIRCRAFT FUELING, LOADING, UNLOADING, PARKING AND MANEUVERING PURPOSES; AND (2) LAND REQUIRED FOR THE FUTURE CONSTRUCTION OR FUTURE EXPANSION OF AIRPORT FACILITIES: (I) MAY BE LEASED FOR AN INTERIM PERIOD NOT EXTENDING BEYOND THE DATE ON WHICH THE CITY MANAGER DETERMINES THE LAND WILL BE REQUIRED FOR THE CONSTRUCTION OR EXPANSION, BUT (II) MAY NOT BE LEASED IF THE CITY MANAGER DETERMINES THAT GRANTING THE LEASE WOULD INTERFERE WITH, OR JEOPARDIZE, THE SAFE OPERATION OF THE AIRPORT. (ORD ) QUALIFICATIONS OF APPLICANTS OR BIDDERS.

3 Page 3 of 26 AN APPLICANT OR BIDDER FOR A LEASE IS QUALIFIED IF THE APPLICANT OR BIDDER: (A) IS AN INDIVIDUAL AT LEAST EIGHTEEN (18) YEARS OF AGE; (B) IS A GROUP, ASSOCIATION, OR CORPORATION WHICH IS AUTHORIZED TO CONDUCT BUSINESS UNDER THE LAWS OF ALASKA; OR (C) IS ACTING AS AN AGENT FOR ANOTHER AND HAS QUALIFIED BY FILING WITH THE CITY MANAGER A PROPER POWER OF ATTORNEY OR A LETTER OF AUTHORIZATION CREATING SUCH AGENCY. THE AGENT SHALL REPRESENT ONLY ONE (1) PRINCIPAL TO THE EXCLUSION OF HIMSELF OR HERSELF. THE TERM AGENT INCLUDES REAL ESTATE BROKERS AND AGENTS. (ORD ) APPLICATIONS. (A) ALL APPLICATIONS FOR LEASE OF LANDS SHALL BE SUBMITTED TO THE CITY MANAGER ON FORMS PROVIDED BY THE CITY MANAGER, TOGETHER WITH THE NON-REFUNDABLE FILING FEE AND ANY APPLICABLE DEPOSIT REQUIRED UNDER KMC THE CITY MANAGER SHALL NOT ACCEPT AN APPLICATION THAT THE MANAGER DETERMINES TO BE INCOMPLETE. UPON RECEIPT OF A COMPLETE APPLICATION, FILING FEE, AND ANY APPLICABLE DEPOSIT, THE CITY MANAGER SHALL CAUSE THE APPLICATION TO BE STAMPED WITH THE DATE AND TIME OF ITS RECEIPT. (B) WITH EVERY APPLICATION, THE APPLICANT SHALL SUBMIT: (1) A DEVELOPMENT PLAN, SHOWING AND STATING: (I) THE PURPOSE OF THE PROPOSED LEASE, (II) THE USE, NATURE, PROPOSED LOCATION ON THE PREMISES, AND ESTIMATED COST OF IMPROVEMENTS TO BE CONSTRUCTED, (III) THE TYPE OF CONSTRUCTION, (IV) THE ANTICIPATED CONSTRUCTION BEGINNING AND COMPLETION DATES (ORDINARILY TWO (2) YEARS), AND (V) WHETHER THE INTENDED USE AND PROPOSED DEVELOPMENT CONFORMS WITH THE: (A) ZONING ORDINANCE OF THE CITY, (B) COMPREHENSIVE PLAN OF THE CITY, (C) LATEST FEDERAL AVIATION ADMINISTRATION-APPROVED AIRPORT LAYOUT PLAN FOR THE AIRPORT, AND (D) THE LATEST AIRPORT LAND USE PLAN; (2) A BUSINESS PLAN, IF THE APPLICANT PROPOSES TO OPERATE A BUSINESS ON THE PROPOSED PREMISES. THE PLAN MUST INCLUDE: (I) A COMPREHENSIVE DESCRIPTION OF THE PROPOSED BUSINESS, (II) THE NUMBER OF PEOPLE THE APPLICANT EXPECTS TO EMPLOY IN THE BUSINESS DURING ITS FIRST FULL YEAR OF OPERATION;

4 Page 4 of 26 (3) A SITE PLAN, IF THE LAND THE APPLICANT DESIRES TO LEASE IS NOT A PLATTED LOT OR TRACT. THE SITE PLAN MUST SHOW THE LOCATION AND DIMENSIONS OF THE PROPOSED LEASE SITE, BUT NEED NOT BE PREPARED BY AN ENGINEER OR SURVEYOR; AND (4) A KPB TAX COMPLIANCE CERTIFICATE AND STATEMENT THAT THE APPLICANT IS CURRENT WITH ANY CHARGES, FEES, RENTS, TAXES OR OTHER SUMS DUE AND PAYABLE TO THE CITY. (C) ANYTIME DURING THE PROCESSING OF A LEASE APPLICATION, THE CITY MANAGER MAY REQUEST, AND THE APPLICANT SHALL SUPPLY, ANY CLARIFICATION OR ADDITIONAL INFORMATION THAT THE CITY MANAGER REASONABLY DETERMINES IS NECESSARY FOR THE CITY TO MAKE A FINAL DECISION ON THE APPLICATION. (ORD ) FILING FEE AND DEPOSIT. (A) WHEN SUBMITTING AN APPLICATION FOR LEASE OF LAND, THE APPLICANT SHALL PAY THE CITY THE FOLLOWING AS SET FORTH IN THE CITY S SCHEDULE OF FEES ADOPTED BY THE CITY COUNCIL: (1) PAY A NON-REFUNDABLE FILING FEE; AND (2) A DEPOSIT TO SHOW GOOD FAITH AND SECURE THE CITY IN PAYMENT OF ANY COSTS, INCLUDING: (A) AN APPRAISAL COST RECOVERY DEPOSIT, AND (B) AN ENGINEERING, SURVEYING AND CONSULTING COST RECOVERY DEPOSIT. (B) IF THE CITY DECIDES TO REJECT THE APPLICANT S APPLICATION AND NOT ENTER INTO A LEASE WITH THE APPLICANT THROUGH NO FAULT OF THE APPLICANT OR FAILURE OF THE APPLICANT TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, ANY DEPOSIT MADE UNDER SUBSECTION (A)(2) OF THIS SECTION SHALL BE RETURNED TO THE APPLICANT. (C) IF THE CITY ENTERS INTO A LEASE WITH THE APPLICANT ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION WILL BE APPLIED TO THE CITY S ENGINEERING, APPRAISAL, AND CONSULTING COSTS RELATED TO THE PROCESSING OF THE APPLICANT S APPLICATION AND ENTERING INTO THE LEASE. THE CITY WILL APPLY ANY UNUSED BALANCE OF A DEPOSIT TO THE RENT PAYABLE UNDER THE LEASE. IF THE CITY S COSTS EXCEED THE AMOUNT OF ANY DEPOSIT, THE APPLICANT SHALL PAY THE SHORTAGE TO THE CITY AS A CONDITION OF THE LEASE. (D) IF THE APPLICANT FAILS TO COMPLY WITH ANY REQUIREMENT OF THIS CHAPTER, CAUSES INORDINATE DELAY, AS DETERMINED BY THE CITY MANAGER, OR REFUSES TO SIGN A LEASE OFFERED TO THE APPLICANT, THE CITY MANAGER WILL REJECT THE APPLICANT S APPLICATION AND APPLY ANY DEPOSIT MADE BY THE APPLICANT UNDER SUBSECTION (A) OF THIS SECTION TO THE CITY S APPRAISAL, ENGINEERING, AND CONSULTING COSTS INCURRED IN CONNECTION

5 Page 5 of 26 WITH THE APPLICANT S APPLICATION. IF THE CITY S COSTS FOR APPRAISAL, ENGINEERING AND CONSULTING COSTS EXCEED THE DEPOSITS, THE APPLICANT WILL BE RESPONSIBLE FOR THESE COSTS. THE CITY WILL RETURN ANY UNUSED DEPOSIT BALANCE TO THE APPLICANT. (ORDS , ) NO RIGHT OF OCCUPANCY APPLICATION EXPIRATION. (A) SUBMITTING AN APPLICATION FOR A LEASE DOES NOT GIVE THE APPLICANT A RIGHT TO LEASE OR USE THE LAND REQUESTED IN THE APPLICATION. (B) IF THE CITY DOES NOT REJECT THE APPLICATION, AN APPLICATION SHALL EXPIRE ON THE EARLIER OF THE FOLLOWING: (1) TWELVE (12) MONTHS AFTER THE DATE STAMPED ON THE APPLICATION UNDER KMC (A) IF THE CITY AND THE APPLICANT HAVE NOT, BY THAT TIME, ENTERED INTO A LEASE, UNLESS THE COUNCIL FOR GOOD CAUSE GRANTS AN EXTENSION FOR A PERIOD NOT TO EXCEED SIX (6) MONTHS; OR (2) THE DEADLINE DATE ESTABLISHED UNDER KMC , INCLUDING ANY EXTENSION OF TIME GRANTED THEREUNDER. (ORD ) APPLICATION PROCESSING PROCEDURE. (A) INITIAL APPLICATION REVIEW BY: (1) ASSISTANT TO THE CITY MANAGER (FOR APPLICATION COMPLETENESS; CONFORMANCE WITH TITLE 21); (2) AIRPORT MANAGER (FOR CONFORMANCE WITH THE AIRPORT LAND USE PLAN, AIRPORT LAYOUT PLAN, AIRPORT MASTER PLAN, FAA REGULATIONS, AIP GRANT ASSURANCES, AND AIRPORT OPERATIONS); (3) CITY PLANNER (FOR CONFORMANCE WITH THE AIRPORT LAND USE PLAN, COMPREHENSIVE PLAN, MUNICIPAL ZONING, AND FUTURE AIRPORT IMPROVEMENT PROJECTS); AND (4) CITY MANAGER (FOR ADEQUACY OF THE APPLICANT S BUSINESS PLAN AND CONSTRUCTION FINANCING PLANS). (B) THE ABOVE STAFF SHALL PRESENT TO THE CITY MANAGER THEIR JOINT RECOMMENDATION FOR ACTION ON THE APPLICATION, SUCH AS REJECTION, APPROVAL, OR APPROVAL OF A STAFF ALTERNATIVE. (C) IF THE CITY MANAGER CONCURS WITH THE STAFF RECOMMENDATION, THE MANAGER WILL: (1) ISSUE A REJECTION LETTER, STATING THE REASONS FOR REJECTION; OR (2) REFER THE APPLICATION TO THE AIRPORT COMMISSION AND THE PLANNING AND ZONING COMMISSION FOR REVIEW AND COMMENT, TOGETHER WITH THE MANAGER S RECOMMENDATION FOR APPROVAL OR APPROVAL OF THE STAFF ALTERNATIVE; AND (3) INFORM THE CITY COUNCIL OF THE MANAGER S RECOMMENDATION.

6 Page 6 of 26 (D) IF THE CITY MANAGER REFERS THE APPLICATION TO THE COMMISSIONS, THE CITY MANAGER WILL CONSIDER THE RECOMMENDATIONS OF THE COMMISSIONS, AND: (1) ISSUE A REJECTION LETTER, STATING THE REASONS FOR REJECTION; OR (2) APPROVE THE APPLICATION OR STAFF ALTERNATIVE, AND DIRECT THE STAFF TO ISSUE THE LEASE; AND (3) INFORM THE CITY COUNCIL OF THE MANAGER S DECISION TO APPROVE OR REJECT THE APPLICATION; OR (4) OBTAIN THE CITY COUNCIL S CONCURRENCE IF THE MANAGER S DECISION TO APPROVE OR REJECT THE APPLICATION IS CONTRARY TO THE RECOMMENDATIONS OF THE COMMISSIONS. (E) AN APPLICANT WHOSE APPLICATION IS REJECTED BY THE CITY MANAGER MAY APPEAL TO THE CITY COUNCIL WITHIN FIFTEEN (15) DAYS FOLLOWING THE DATE ON WHICH THE MANAGER S REJECTION LETTER WAS HAND DELIVERED OR PLACED IN THE U.S. MAIL. (F) IF ANOTHER COMPLETE AND OTHERWISE APPROVABLE APPLICATION FOR LEASE OF THE SAME PROPERTY IS SUBMITTED BY A DIFFERENT APPLICANT BEFORE THE CITY MANAGER ENTERS INTO A LEASE WITH THE FIRST APPLICANT, THE CITY MANAGER WILL FORWARD THE APPLICATIONS, THE MANAGER S RECOMMENDATION AND THE COMMISSIONS RECOMMENDATIONS TO THE CITY COUNCIL FOR APPROVAL OF THE APPLICATION ANTICIPATED TO BEST SERVE THE INTERESTS OF THE CITY. THE COUNCIL MAY APPROVE ONE OF THE APPLICATIONS OR DIRECT THE CITY MANAGER TO AWARD A LEASE OF THE PROPERTY BY SEALED BID. (G) GROUNDS FOR THE CITY MANAGER TO REJECT AN APPLICATION INCLUDE: (1) THE APPLICANT S FAILURE TO PROVIDE ANY CLARIFICATION OR INFORMATION REQUIRED UNDER THIS CHAPTER; (2) THE APPLICANT S PROPOSED DEVELOPMENT OR USE OF THE LAND IS INCONSISTENT WITH: (A) THE ZONING ORDINANCE OF THE CITY, (B) THE COMPREHENSIVE PLAN OF THE CITY, (C) THE LATEST FEDERAL AVIATION ADMINISTRATION-APPROVED AIRPORT LAYOUT PLAN FOR THE AIRPORT, (D) ANY OBLIGATION OF THE CITY UNDER THE AIRPORT SPONSOR GRANT ASSURANCES TO THE FEDERAL AVIATION ADMINISTRATION, (E) THE LATEST AIRPORT LAND USE PLAN, OR (F) A REGULATION OF THE FEDERAL AVIATION ADMINISTRATION APPLICABLE TO THE AIRPORT;

7 Page 7 of 26 (3) THE APPLICANT S PROPOSED DEVELOPMENT OR USE OF THE LAND WOULD VIOLATE A FEDERAL, STATE, OR LOCAL LAW, INCLUDING AN ORDINANCE OR REGULATION OF THE CITY; (4) THE APPLICANT S FAILURE TO REASONABLY DEMONSTRATE THE FINANCIAL VIABILITY OF THE APPLICANT S PROPOSED DEVELOPMENT OR OF THE BUSINESS THE APPLICANT PROPOSES TO OPERATE; (5) THE APPLICANT IS IN DEFAULT OF ANY CHARGES, FEES, RENTS, TAXES, OR OTHER SUMS DUE AND PAYABLE TO THE CITY; (6) THE APPLICANT IS IN DEFAULT OF A REQUIREMENT OF ANY LEASE OR CONTRACT WITH THE CITY; (7) THE APPLICATION IS REJECTED BY THE CITY COUNCIL IN FAVOR OF ANOTHER APPLICATION FOR THE SAME LAND UNDER SUBSECTION (F) OF THIS SECTION; (8) THE CITY COUNCIL DECIDES, UNDER SUBSECTION (F) OF THIS SECTION, TO REJECT ALL APPLICATIONS AND AWARD A LEASE OF THE LAND BY SEALED BID; AND (9) THE CITY MANAGER OR THE CITY COUNCIL DETERMINES THAT APPROVAL OF THE APPLICATION IS NOT IN THE BEST INTEREST OF THE CITY. (H) THE CITY COUNCIL MAY WAIVE PROVISIONS OF THIS CHAPTER TO LEASE PROPERTY OR INTERESTS IN REAL PROPERTY WITH THE UNITED STATES, THE STATE OR AN ALASKA POLITICAL SUBDIVISION WHEN IN THE JUDGMENT OF THE COUNCIL IT IS ADVANTAGEOUS TO THE MUNICIPALITY TO DO SO. (ORD ) LEASE AMENDMENT OR RENEWAL. (1) AN APPLICATION SUBMITTED BY AN EXISTING TENANT FOR AN AMENDMENT, TERM EXTENSION, OR RENEWAL OF THE TENANT S LEASE SHALL BE SUBJECT TO THE REQUIREMENTS AND PROCEDURES OF KMC THROUGH , EXCEPT THAT: (A) KMC (B)(1), (2) AND (3) SHALL NOT APPLY TO AN APPLICATION THAT DOES NOT INCLUDE A PROPOSAL TO CONSTRUCT NEW IMPROVEMENTS ON THE PREMISES; (B) KMC (B)(3) SHALL NOT APPLY TO AN APPLICATION THAT DOES NOT INCLUDE A PROPOSAL TO ADD, DELETE, OR ALTER A BUSINESS AUTHORIZED UNDER THE LEASE; (C) THE APPRAISAL DEPOSIT UNDER KMC (A)(2)(I) SHALL NOT BE REQUIRED FOR AN APPLICATION FOR A LEASE AMENDMENT THAT, IF APPROVED, WILL NOT ALTER THE SIZE OR VALUE OF THE PREMISES; AND (D) THE DEPOSITS UNDER KMC (A)(2)(I) AND (II) SHALL NOT BE REQUIRED FOR AN APPLICATION FOR A LEASE AMENDMENT THAT, IF APPROVED, WILL MAKE ONLY ADMINISTRATIVE CHANGES IN THE LEASE AND

8 Page 8 of 26 WILL NOT ALTER THE AUTHORIZED USE, SIZE, OR VALUE OF THE PREMISES OR IF THE CITY MANAGER DETERMINES THE CITY WILL NOT INCUR ANY ENGINEERING, SURVEYING OR CONSULTING COSTS. (2) NOTWITHSTANDING SUBSECTION (1) OF THIS SECTION, THE COUNCIL MAY BY RESOLUTION GRANT A LESSEE THE CONTRACTUAL RIGHT TO A LEASE RENEWAL UPON SUCH TERMS AND CONDITIONS AS IT DETERMINES ARE IN THE BEST INTERESTS OF THE CITY. (ORDS , ) LENGTH OF LEASE TERM. (A) UNLESS THE CITY DETERMINES A SHORTER LEASE TERM IS IN THE BEST INTEREST OF THE CITY, THE LENGTH OF TERM FOR A LEASE GRANTED FOR LAND WITHIN THE AIRPORT RESERVE WILL BE BASED ON THE AMOUNT OF INVESTMENT THE APPLICANT PROPOSES TO MAKE IN THE CONSTRUCTION OF NEW PERMANENT IMPROVEMENTS ON THE PREMISES DURING THE FIRST TWENTY- FOUR (24) MONTHS FOLLOWING THE BEGINNING DATE OF THE LEASE OR LEASE EXTENSION. (B) UNLESS THE CITY DETERMINES A SHORTER LEASE TERM IS IN THE BEST INTEREST OF THE CITY, THE LENGTH OF TERM FOR A LEASE RENEWAL SHALL BE BASED ON A CITY-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) IF THE APPLICANT PROPOSES TO MAKE LESS THAN ONE HUNDRED THOUSAND DOLLARS ($100,000.00) IN NEW PERMANENT IMPROVEMENTS ON THE PREMISES, THE MAXIMUM TERM OF A NEW LEASE SHALL BE FIVE (5) YEARS. (D) IF THE APPLICANT PROPOSES TO INVEST ONE HUNDRED THOUSAND DOLLARS ($100,000.00) OR MORE IN NEW PERMANENT IMPROVEMENTS ON THE PREMISES: (1) THE MAXIMUM TERM OF A NEW LEASE OR A RENEWAL OF AN EXPIRING LEASE SHALL BE DETERMINED ACCORDING TO THE FOLLOWING TABLE: APPLICANT S INVESTMENT/VALUE (IN U.S. DOLLARS) IS AT LEAST LESS THAN $100,000 5 $100,000 $199, $200,000 $299, $300,000 $399, $400,000 $500, MORE THAN $500, MAXIMUM TERM OF YEARS

9 Page 9 of 26 (2) THE MAXIMUM TERM EXTENSION FOR AN EXISTING LEASE SHALL BE ONE (1) YEAR FOR EACH TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) OF ADDITIONAL INVESTMENT, PROVIDED THAT THE TOTAL OF THE REMAINING LEASE TERM AND THE EXTENSION SHALL NOT EXCEED THIRTY-FIVE (35) YEARS. (3) A BONA FIDE THIRD PARTY PURCHASER OF AIRPORT IMPROVEMENTS MAY GET AN EXTENSION FOR AN EXISTING LEASE ACQUIRED WITH IMPROVEMENTS BASED ON A CITY-APPROVED APPRAISAL OF THE IMPROVEMENTS PURCHASED. UNLESS THE CITY 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 CERTIFIED UNDER. ALASKA 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 THE APPLICANT TO SUBSTANTIALLY COMPLETE THE PROPOSED PERMANENT IMPROVEMENTS WITHIN A REASONABLE PERIOD OF TIME, CONSIDERING THE COST AND NATURE 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 REQUIRING THE APPLICANT TO COMPLETE THE ADDITIONAL PROPOSED PERMANENT IMPROVEMENTS WITHIN A REASONABLE TIME PERIOD, CONSIDERING THE COST AND NATURE OF THE IMPROVEMENTS PROVIDED THAT THE TIME PERIOD SHALL NOT ORDINARILY EXCEED TWENTY- FOUR (24) MONTHS AFTER THE EFFECTIVE DATE OF THE LEASE EXTENSION. (G) THE CITY MANAGER WILL INCLUDE A PROVISION IN A LEASE OR LEASE EXTENSION REQUIRING THE 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 AMOUNT OF THE SECURITY ACCORDING TO THE BEST INTEREST OF THE CITY, 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 TO THE CITY MANAGER WRITTEN DOCUMENTATION THAT THE IMPROVEMENTS HAVE BEEN COMPLETED AS REQUIRED UNDER SUBSECTION (E) OR (F) OF THIS SECTION.

10 Page 10 of 26 (I) IF THE APPLICANT SHOWS GOOD CAUSE TO THE CITY MANAGER, AND THE MANAGER DETERMINES THE ACTION IS NOT INCONSISTENT WITH THE CITY S BEST INTEREST, THE MANAGER MAY GRANT AN EXTENSION THAT IS SUFFICIENT TO ALLOW 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 OF THE PERFORMANCE BOND, DEPOSIT, PERSONAL GUARANTEE, OR OTHER SECURITY POSTED BY THE APPLICANT UNDER SUBSECTION (G) OF THIS SECTION TO THE EXTENT NECESSARY TO REIMBURSE THE CITY FOR ALL COSTS AND DAMAGES, INCLUDING ADMINISTRATIVE AND LEGAL COSTS, ARISING FROM THE APPLICANT S FAILURE TO COMPLETE THE REQUIRED IMPROVEMENTS, AND INITIATE CANCELLATION OF THE LEASE OR REDUCE THE TERM 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. (L) WHEN USED IN THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE MEANINGS GIVEN: (1) EXPIRING LEASE 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 LAND THAT IS NOT TEMPORARY OR PORTABLE; (I) PERMANENT IMPROVEMENT INCLUDES; (A) A BUILDING, BUILDING ADDITION, RETAINING WALL, STORAGE TANK, EARTHWORK, FILL MATERIAL, GRAVEL, AND PAVEMENT, AND (B) REMEDIATION OF CONTAMINATION FOR WHICH THE APPLICANT IS NOT RESPONSIBLE; (II) PERMANENT IMPROVEMENT EXCLUDES ITEMS OF ORDINARY MAINTENANCE, SUCH AS GLASS REPLACEMENT, PAINTING, ROOF REPAIRS, DOOR REPAIRS, PLUMBING REPAIRS, FLOOR COVERING REPLACEMENT, OR PAVEMENT PATCHING. (ORD )

11 Page 11 of RENTAL RATE DETERMINATION. (A) BEGINNING IN 2007 AND AT INTERVALS OF APPROXIMATELY FIVE (5) YEARS THEREAFTER, THE CITY MANAGER SHALL RETAIN THE SERVICES OF AN INDEPENDENT, QUALIFIED REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 TO DETERMINE A ZONE-BASED SQUARE FOOT LEASE RATE FOR ALL LAND WITHIN THE AIRPORT RESERVE THAT IS UNDER LEASE OR AVAILABLE FOR LEASE BASED ON THE FAIR MARKET VALUE OF THE PROPERTY AND THE APPROPRIATE MARKET LEASE RATE FOR PROPERTY WITHIN THE AIRPORT RESERVE. LEASE APPLICATIONS FILED AFTER THE EFFECTIVE DATE OF THIS CHAPTER BUT PRIOR TO COMPLETION OF THE INITIAL LEASE RATE DETERMINATION SHALL HAVE A RENTAL RATE OF EIGHT PERCENT (8%) OF FAIR MARKET VALUE UNTIL THE FIRST JUNE 30 AFTER THE ZONE-BASED SQUARE FOOT LEASE RATE IS ESTABLISHED UNDER THIS SUBSECTION, AFTER WHICH THE LEASE RATE SHALL BE AS ESTABLISHED IN THE ZONE-BASE SQUARE FOOT METHOD DESCRIBED ABOVE. (B) FOLLOWING THE DATE ON WHICH THE CITY MANAGER ACCEPTS THE DETERMINATIONS MADE UNDER SUBSECTION (A) OF THIS SECTION, THE MANAGER SHALL ESTABLISH RENTAL AMOUNTS FOR LEASES AS FOLLOWS: (1) FOR EACH NEW LEASE GRANTED BY THE CITY UNDER THIS CHAPTER, THE RENTAL SHALL BE AS DETERMINED UNDER SUBSECTION(A) OF THIS SECTION; AND (2) FOR LEASES IN EXISTENCE PRIOR TO THE EFFECTIVE DATE OF THIS CHAPTER, THE LEASE RATE SHALL BE DETERMINED AS PROVIDED IN THE LEASE. (C) UNDER THIS SECTION, WHEN DETERMINING THE FAIR MARKET VALUE OF THE PREMISES OF AN EXISTING LEASE, AN APPRAISER SHALL APPRAISE THE PROPERTY: (1) IN ITS CONDITION AS OF THE INCEPTION OF THE LEASE; (2) PLUS ANY IMPROVEMENTS OR AMENITIES SUBSEQUENTLY PROVIDED BY THE CITY; BUT (3) EXCLUDING ANY IMPROVEMENTS OR AMENITIES PROVIDED BY THE CITY UNDER KMC , IF LESSEE HAS REIMBURSED THE CITY, OR ENTERED INTO AN AGREEMENT TO REIMBURSE THE CITY, FOR THE COST OF THE IMPROVEMENTS OR AMENITIES. (ORD ) REIMBURSEMENT FOR CITY-CONSTRUCTED IMPROVEMENTS. (A) THE CITY MANAGER MAY INCLUDE IN A LEASE A REQUIREMENT FOR THE LESSEE TO REIMBURSE THE CITY FOR THE CITY S COST OF: (1) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, CONSTRUCTED BY THE CITY PRIOR TO THE EFFECTIVE DATE OF THE LEASE; OR

12 Page 12 of 26 (2) LAND CLEARING, GRAVEL FILL, UTILITY EXTENSIONS AND OTHER IMPROVEMENTS OR AMENITIES ON OR IN DIRECT CONNECTION WITH THE PREMISES, WHICH THE CITY AGREES TO CONSTRUCT AS A CONDITION OF THE LEASE, SUBJECT TO CITY COUNCIL APPROVAL. (B) THE LESSEE SHALL REIMBURSE THE CITY FOR THE CITY S COST OF CONSTRUCTING THE IMPROVEMENTS IN TEN (10) EQUAL ANNUAL PAYMENTS, PLUS INTEREST AT EIGHT PERCENT (8%) PER YEAR ON THE UNPAID BALANCE OR UNDER SUCH TERMS AND CONDITIONS AS THE COUNCIL MAY SET BY RESOLUTION. IF THE LEASE IS FOR LESS THAN TEN (10) YEARS, THE RE-PAYMENT SCHEDULE MAY NOT BE LONGER THAN THE TERM OF THE LEASE. THE LESSEE MAY PAY THE ENTIRE REMAINING BALANCE TO THE CITY AT ANY TIME DURING THE TERM OF THE LEASE. (ORDS , ) LEASE UTILIZATION. LEASED LANDS SHALL BE UTILIZED FOR PURPOSES WITHIN THE SCOPE OF THE APPLICATION, THE TERMS OF THE LEASE AND IN CONFORMITY WITH THE ORDINANCES OF THE CITY, AND IN SUBSTANTIAL CONFORMITY WITH THE COMPREHENSIVE PLAN AND AIRPORT MASTER PLAN. UTILIZATION OR DEVELOPMENT FOR OTHER THAN THE ALLOWED USES SHALL CONSTITUTE A VIOLATION OF THE LEASE AND SUBJECT THE LEASE TO CANCELLATION AT ANY TIME. FAILURE TO SUBSTANTIALLY COMPLETE THE DEVELOPMENT PLAN FOR THE LAND SHALL CONSTITUTE GROUNDS FOR CANCELLATION. (ORD ) BIDDING PROCEDURE. WITH THE APPROVAL OF THE CITY COUNCIL, THE CITY MANAGER MAY DESIGNATE A SPECIFIC LOT OR LOTS TO BE LEASED THROUGH COMPETITIVE SEALED BID. IN A SEALED BID OFFERING, THE CITY MANAGER SHALL AWARD THE LEASE TO THE QUALIFIED BIDDER THAT OFFERS THE HIGHEST ONE (1) TIME PREMIUM PAYMENT, IN ADDITION TO THE LEASE RENT ESTABLISHED UNDER THIS CHAPTER. PROVIDED HOWEVER, THAT HIGH BIDDER AND THE BIDDER S LEASE PROPOSAL SHALL BE SUBJECT TO ALL PROVISIONS OF LEASE APPLICATION REVIEW AND APPROVAL UNDER THIS CHAPTER. (ORD ) LEASE EXECUTION. WHEN ISSUING A LEASE TO AN APPLICANT, THE CITY MANAGER SHALL HAND DELIVER OR MAIL THE DOCUMENT TO THE APPLICANT. THE APPLICANT SHALL HAVE THIRTY (30) DAYS FROM THE DATE ON WHICH THE LEASE IS HAND DELIVERED TO THE APPLICANT OR DEPOSITED IN THE U.S. MAIL WITHIN WHICH TO EXECUTE AND RETURN THE LEASE TO THE CITY MANAGER. IF THE APPLICANT SHOWS GOOD CAUSE TO THE CITY MANAGER, AND THE MANAGER DETERMINES THE ACTION IS NOT INCONSISTENT WITH THE CITY S BEST INTEREST, THE MANAGER WILL GRANT AN EXTENSION NOT EXCEEDING THIRTY (30) DAYS FOR THE APPLICANT TO EXECUTE AND RETURN THE LEASE. UPON THE FAILURE OF THE APPLICANT TO TIMELY EXECUTE AND RETURN THE

13 Page 13 of 26 LEASE AGREEMENT, THE CITY MANAGER SHALL WITHDRAW THE OFFER OF THE LEASE IN WRITING. (ORD ) FORM OF LEASE. (A) WHEN LEASING LAND UNDER THIS CHAPTER, THE CITY MANAGER SHALL USE A STANDARD LEASE FORM THAT IS: (1) DRAFTED TO: (I) PROVIDE A REASONABLE BASIS FOR THE LESSEE S USE OF THE PREMISES, (II) FOSTER THE SAFE, EFFECTIVE, AND EFFICIENT OPERATION OF THE AIRPORT, (III) CONFORM WITH THE APPLICABLE REQUIREMENTS OF THE KMC, INCLUDING THIS CHAPTER, ALASKA STATUTES, FEDERAL AVIATION ADMINISTRATION REGULATIONS, AND OTHER APPLICABLE FEDERAL LAW, AND (IV) PROVIDE FOR THE BEST INTEREST OF THE CITY. (2) APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) ADOPTED BY RESOLUTION OF THE CITY COUNCIL. (B) THE CITY MANAGER MAY ENTER INTO A LAND LEASE THAT DEVIATES FROM THE STANDARD FORM ADOPTED UNDER SUBSECTION (A) OF THIS SECTION, IF: (1) THE MANAGER BELIEVES THE ACTION IS IN THE BEST INTEREST OF THE CITY; (2) THE LEASE IS APPROVED AS TO FORM BY THE CITY ATTORNEY; AND (3) THE LEASE IS APPROVED BY RESOLUTION OF THE CITY COUNCIL. (ORD ) RE-EVALUATION OF RENT. (A) BEGINNING IN 2007 AND EVERY FIVE (5) YEARS THEREAFTER, THE CITY MANAGER SHALL INCREASE OR DECREASE THE RENT CHARGED IN THE LEASE TO THE AMOUNT DETERMINED UNDER KMC (B) THE CITY MANAGER SHALL CHANGE THE RENT IN A LEASE BY GIVING THE LESSEE WRITTEN NOTICE AT LEAST THIRTY (30) DAYS IN ADVANCE OF THE EFFECTIVE DATE OF THE CHANGE. (C) THE FAIR MARKET VALUE OF THE PREMISES SHALL BE EQUAL TO THE THEN- FAIR MARKET RATE FOR SIMILAR COMMERCIAL PROPERTY IN THE CITY OF KENAI, ALASKA (THE RELEVANT AREA ). CITY SHALL GIVE NOTICE TO LESSEE OF CITY S ESTIMATION OF THE FAIR MARKET VALUE NOT LATER THAN THIRTY (30) DAYS PRIOR TO THE EXPIRATION OF THE THEN-APPLICABLE FIVE (5) YEAR PERIOD, AS EVIDENCED AND SUPPORTED BY THE ZONE-BASE SQUARE FOOT LEASE RATE APPRAISAL DONE UNDER KMC (A). IF LESSEE DISAGREES WITH SUCH

14 Page 14 of 26 ESTIMATE, IT SHALL ADVISE THE CITY IN WRITING THEREOF WITHIN NINETY (90) DAYS OF LESSEE S RECEIPT OF SUCH ESTIMATE, AS EVIDENCED AND SUPPORTED BY THE WRITTEN OPINION OF A REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 WITH EXPERIENCE IN APPRAISING AIRPORT PROPERTY (SELECTED AND PAID FOR BY LESSEE) FAMILIAR WITH THE RELEVANT AREA (THE SECOND APPRAISER ). THE PARTIES SHALL PROMPTLY MEET TO ATTEMPT TO RESOLVE THEIR DIFFERENCES BETWEEN THE FIRST APPRAISER AND THE SECOND APPRAISER CONCERNING THE FAIR MARKET VALUE OF THE PREMISES. IF CITY AND LESSEE CANNOT AGREE UPON SUCH VALUE THEN, WITH ALL DELIBERATE SPEED, THEY SHALL DIRECT THE FIRST APPRAISER AND THE SECOND APPRAISER TO EXPEDITIOUSLY AND MUTUALLY SELECT A THIRD QUALIFIED REAL ESTATE APPRAISER CERTIFIED UNDER ALASKA STATUTE 8.87 WITH EXPERIENCE IN APPRAISING AIRPORT PROPERTY (SELECTED AND PAID FOR JOINTLY BY THE PARTIES) FAMILIAR WITH THE RELEVANT AREA (THE THIRD APPRAISER ). WITHIN THIRTY (30) DAYS AFTER THE THIRD APPRAISER HAS BEEN APPOINTED, THE THIRD APPRAISER SHALL DECIDE WHICH OF THE TWO (2) RESPECTIVE APPRAISALS FROM THE FIRST APPRAISER AND THE SECOND APPRAISER MOST CLOSELY REFLECTS THE FAIR MARKET VALUE OF THE PREMISES. THE FAIR MARKET VALUE OF THE PREMISES SHALL IRREBUTTABLY BE PRESUMED TO BE THE VALUE CONTAINED IN SUCH APPRAISAL SELECTED BY THE THIRD APPRAISER, AND THE RENT SHALL BE REDETERMINED BASED ON SUCH VALUE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, RENT SHALL CONTINUE TO BE PAID AT THE THEN-APPLICABLE RATE UNTIL ANY SUCH NEW RENTAL RATE IS ESTABLISHED, AND LESSEE AND CITY SHALL PROMPTLY PAY OR REFUND, AS THE CASE MAY BE, ANY VARIANCE IN THE RENT, WITHOUT INTEREST THEREON ACCRUING TO THE EXTENT TO BE PAID/REFUNDED IN A TIMELY FASHION. (ORD ) ANNUAL MINIMUM RENTAL. (A) ANNUAL MINIMUM RENTALS SHALL BE COMPUTED FROM THE APPROVED APPRAISED MARKET VALUE UTILIZING THE METHOD AS DESCRIBED IN KMC , , AND (B) UPON EXECUTION OF THE LEASE, THE LANDS BECOME TAXABLE TO THE EXTENT OF ITS LEASEHOLD INTEREST AND LESSEE SHALL PAY ALL REAL PROPERTY TAXES LEVIED UPON SUCH LEASEHOLD INTEREST IN THESE LANDS, AND SHALL PAY ANY SPECIAL ASSESSMENTS AND TAXES AS IF HE OR SHE WERE THE OWNER OF THE LAND. (C) RENT SHALL BE PAID ANNUALLY IN ADVANCE. THE PAYMENTS SHALL BE PRORATED TO CONFORM TO THE CITY OF KENAI S FISCAL YEAR BEGINNING JULY 1 AND ENDING JUNE 30. IF THE EQUIVALENT MONTHLY PAYMENT EXCEEDS TWO HUNDRED DOLLARS ($200.00), THEN THE LESSEE SHALL HAVE THE OPTION OF MAKING PAYMENTS ON A MONTHLY BASIS. (D) LESSEE SHALL BE RESPONSIBLE FOR ALL SALES TAXES APPLICABLE TO ITS OPERATIONS OR DUE ON PAYMENTS UNDER THE LEASE. (ORD )

15 Page 15 of USE PERMITS. SUBJECT TO THE APPROVAL BY THE CITY COUNCIL OF THE TERMS AND RENT, THE CITY MANAGER MAY, WITHOUT SUBJECTING THE PROPERTY TO APPRAISAL OR COMPETITIVE PROCESS, GRANT A PERMIT FOR THE TEMPORARY USE OF REAL PROPERTY OWNED BY THE CITY FOR A PERIOD NOT TO EXCEED ONE (1) YEAR AND FOR ANY PURPOSE NOT IN CONFLICT WITH THE ZONING OF THE LAND. (ORD ) ACQUISITION OF REAL PROPERTY. (A) THE CITY, BY AUTHORIZATION OF THE CITY COUNCIL, EXPRESSED IN A RESOLUTION FOR SUCH PURPOSE, MAY PURCHASE, ACQUIRE AN INTEREST IN OR LEASE REAL PROPERTY NEEDED FOR A PUBLIC USE WITHIN THE AIRPORT RESERVE ON SUCH TERMS AND CONDITIONS AS THE COUNCIL SHALL DETERMINE, BUT NO PURCHASE SHALL BE MADE UNTIL A QUALIFIED APPRAISER HAS APPRAISED THE PROPERTY AND GIVEN THE COUNCIL AN INDEPENDENT OPINION AS TO THE FULL AND TRUE VALUE THEREOF; (B) BECAUSE OF THE UNIQUE VALUE OF REAL PROPERTY, THE CITY NEED NOT ACQUIRE OR LEASE REAL PROPERTY BY COMPETITIVE BIDDING. (ORD )] Chapter LEASING AND ACQUISITION OF AIRPORT RESERVE LANDS Lease of Airport Reserve Land. (a) This chapter applies to City-owned land within the Airport Reserve. (b) The provisions of this chapter shall not alter or amend the terms, obligations or rights granted under leases existing prior to the effective date of this chapter Definitions. When used in this Chapter, the following terms shall have the meaning given below: (a) Aeronautical Use means any use land within the Airport Reserve that involves, makes possible, or is required for the operation of aircraft or that contributes to or is required for the safety of such operations. It includes, but is not limited to: Air taxi and charter operations; Scheduled or nonscheduled air carrier services; Pilot training; Aircraft rental and sightseeing; Aerial photography; Crop dusting; Aerial advertising and surveying; Aircraft sales and service; Aircraft storage; Sale of aviation petroleum products; Repair and maintenance of aircraft; Sale of aircraft parts; Parachute activities; Ultralight activities; Sport pilot activities; and Military flight operations. (b) Airport Market Analysis means an analysis that is conducted by a qualified general real estate appraiser and determines the gross changes that have occurred in the local market since the previous airport-wide appraisal as well as conducting a Lease Rate Analysis. (c) Airport Reserve means the City-owned land reserved from sale and designated under KMC and (d) Annual Rent means an amount paid to the City annually according to the terms of the lease. (e) City means the City of Kenai, its elected officials, officers, employees or agents. (f) Consumer Price Index (CPI) means the CPI for all Urban Consumers (CPI-U) for Anchorage, Alaska

16 Page 16 of 26 (g) Existing Lease means a lease with at least one (1) year of term remaining. (h) Expiring Lease means a lease with less than one (1) year of term remaining. (i) Fair Market Value means the most probable price which a property should bring in a competitive and open market as determined by a qualified independent appraiser, or the value as determined by the latest appraisal adjusted by the change in Consumer Price Index from the date of the latest appraisal. (j) Lease Extension means extending the term of an existing lease. (k) Lease Rate Analysis means an analysis of data collected from other land leases to determine whether the City s lease rate percent reflects the market. (l) Lease Rate Percent means a percentage when applied to the fair market value of land will establish a rate of rent commensurate with rental rates prevalent in the local area as determined by a qualified real estate appraiser. (m) Lease Renewal means a new lease of property currently under lease to an existing lessee or a purchaser. (n) Non-Aeronautical Use means any use of airport land that is not an aeronautical use. (o) Permanent improvement means a fixed addition or change to land that is not temporary or portable; (1) Permanent improvement includes a building, building addition, retaining wall, storage tank, earthwork, fill material, gravel, and pavement, and remediation of contamination for which the applicant is not responsible. (2) Permanent improvement excludes items of ordinary maintenance, such as glass replacement, painting, roof repairs, door repairs, plumbing repairs, floor covering replacement, or pavement patching. (p) Professional Estimate of the remaining useful life of the principle improvement means an estimate of the number of remaining years that the principle improvement will be able to function in accordance with its intended purpose prepared by a Qualified Real Estate Appraiser, engineer, or architect licensed in Alaska. (q) Qualified Independent Appraiser means a general real estate appraiser certified by the State of Alaska under AS 08.87, with experience in appraising airport property. (r) Site Development Materials means materials used for preparing a lease site for building construction or to provide a firm surface on which to operate a vehicle or aircraft; Site Development Materials include geotextile, fill, gravel, paving, utilities and pavement reinforcement materials. (s) Site Preparation Work means work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions Lands Available for Leasing. City-owned land within the Airport Reserve may be leased as provided in this Chapter unless: (a) The land is identified in the latest Federal Aviation Administration-approved Airport Layout Plan as being required for the operation or safety of the Airport or for the construction, preservation, future construction, or future expansion of facilities on the Airport, including: (1) Runways, runway safety areas, taxiways, aprons, water lanes, water taxiways, and other aircraft operational areas; (2) Access roads, public streets, parking lots, and other facilities for use by motor vehicles; and (3) Public terminal buildings.

17 Page 17 of Special Use Permits. Airport Reserve Land unavailable for lease may be utilized under a Special Use Permit approved by the City Council. A Special Use Permit may provide for temporary activities such as aircraft fueling, parking, loading and unloading, temporary cargo staging and handling, and maneuvering purposes. Subject to the approval by the City Council of the terms and rent, the City Manager may, without subjecting the property to appraisal or competitive process, grant a Special Use Permit for the temporary use of real property owned by the City for a period not to exceed one (1) year Qualifications of Applicants or Bidders. An applicant or bidder for a lease is qualified if the applicant or bidder: (a) Is an individual at least eighteen (18) years of age; (b) Legal entity which is authorized to conduct business under the laws of Alaska; or (c) Is acting as an agent for another and has qualified by filing with the City a proper power of attorney or a letter of authorization creating such agency Initial Lease Application. (a) All applications for lease of lands must be submitted to the City on an approved application form provided by the City. Applications will be dated on receipt and payment of the nonrefundable application fee as set forth in the City s schedule of fees adopted by the City Council. (b) The application form must include the following information: (1) The purpose of the proposed lease; (2) The use, nature, type and estimated cost of improvements to be constructed; (3) The dates construction is estimated to commence and be completed (ordinarily a maximum of two (2) years); and (4) A comprehensive description of the proposed business or activity intended. (c) Applications which propose a subdivision shall require the applicant to be responsible for all costs associated with the subdivision, including but not limited to any new appraisal, engineering services, surveying and consulting costs, unless in the sole discretion of the City Council, the City Council determines that the subdivision serves other Airport purposes. If the Council determines that other Airport purposes are served by the subdivision, the City Council may choose in its sole discretion to share in the subdivision costs with the applicant in whatever amount the City Council determines is reasonable given the benefit to the Airport. (d) Anytime during the processing of a lease application, the City may request, and the applicant must supply, any clarification or additional information that the City reasonably determines is necessary for the City to make a final decision on the application No Right of Occupancy Application Expiration. (a) Submitting an application for a lease does not give the applicant a right to lease or use the land requested in the application. (b) The application shall expire twelve (12) months after the date the application has been made if the City and the applicant have not, by that time, entered into a lease, unless the City Council for good cause grants an extension for a period not to exceed six (6) months Lease Application Review (a) Applications shall be reviewed by City staff for: (1) Application completeness; (2) Conformance with Municipal Ordinances;

18 Page 18 of 26 (3) Conformance with the Airport Layout Plan, Airport Master Plan, Federal Aviation Administration regulations applicable to the Airport, Airport Improvement Projects, Airport Sponsor Grant Assurances to the Federal Aviation Administration, and Airport regulations and operations; and, (4) Conformance with the Comprehensive Plan. (b) Based on the initial review and staff recommendation for action, if the City Manager determines the application is complete, the application shall be referred to the Airport Commission and the Planning and Zoning Commission for review and comment, together with the City Manager s recommendation for approval or rejection. (c) Notice of applications for new leases, renewals or extensions must be published in a newspaper of general circulation within the City. The notice must contain the name of the applicant, a brief description of the land and the date upon which any competing applications must be submitted (thirty (30) days from the date of publication). (d) The recommendations of the City Manager, Airport Commission and Planning and Zoning Commission shall be brought to the City Council. The decision whether or not to lease land or authorize a lease extension or renewal rests in the sole discretion of the City Council. (e) The City Council may waive provisions of this Chapter to lease property or interests in real property with the United States, the State of Alaska or an Alaska political subdivision when in the judgment of the City Council it is advantageous to the City to do so. (f) If the applicant is in default of any charges, fees, rents, taxes, or other sums due and payable to the City or the applicant is in default of a requirement of any lease or contract with the City a lease shall not be entered into until the deficiencies are cured Application for Lease Amendment, Extension or Renewal. (a) A request from an existing lessee for a lease amendment, extension or renewal of the lease must be submitted to the City on an application form provided by the City. Applications must be complete and dated on receipt and payment of the non-refundable application fee as set forth in the City s schedule of fees adopted by the City Council. (b) An application for an amendment must include the following information: (1) The purpose of the proposed amendment; (2) The proposed change in use or activity; and (3) A comprehensive description of the proposed business, if applicable. (c) An application for a lease extension must include the following information: (1) The use, nature, type and estimated cost of additional improvements to be constructed; (2) The dates new construction is estimated to commence and be completed (ordinarily a maximum of two (2) years). (d) An application for a lease renewal must include the following information: (1) For a lease renewal of an existing lease: (A) The use, nature, type and estimated cost of additional improvements to be constructed; (B) The dates new construction is estimated to commence and be completed (ordinarily a maximum of two (2) years). (2) For a lease renewal of an expiring lease: (A) A professional estimate of the remaining useful life of the principle improvement on the property, paid for by the applicant; or (B) A market value appraisal of the principle improvement on the property, paid for by the applicant; or

19 Page 19 of 26 (C) The purchase price of improvements in a bill of sale executed by the current lessee and proposed purchaser; and (D) The use, nature, type and estimated cost of additional improvements to be constructed, if applicable. (E) The dates new construction is estimated to commence and be completed (ordinarily a maximum of two (2) years) if applicable. (e) Applications for amendment, extension or renewal shall be processed in accordance with the Lease Application Review provisions of this Chapter. The City has no obligation to amend, renew or extend a lease and may decline to do so upon making specific findings as to why a lease renewal, extension, or amendment is not in the best interest of the City Competing Applications. If another complete and otherwise approvable application for a new lease, extension or a renewal is received for the same property within thirty (30) days from the notice of application publication date by a different applicant, City staff shall process the application and forward the application, the City Manager s recommendation and the Commissions recommendations to the City Council for approval of the application anticipated to best serve the interests of the City. The City Council may approve one of the applications, reject all the applications or direct the City Manager to award a lease of the property by sealed bid. An applicant for a renewal or extension may withdraw an application for a renewal or extension at any time prior to a decision by the City Council whether or not to approve such a renewal or extension Length of Lease Term. (a) The length of term for an initial lease shall be based on the amount of investment the applicant proposes to make in the construction of new permanent improvements on the premises as provided in the application. The City Council may offer a shorter lease term, if the City Council makes specific findings that a shorter lease term is in the best interest of the City. (b) The maximum term of an initial lease shall be determined according to the following Term Table:

20 Page 20 of 26 TERM TABLE Applicant s Investment/Value... Maximum Term of Years $ 7, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , (c) The length of term for a lease extension shall be determined according to the Term Table and based on the total amount of the investment provided in the initial lease application and the estimated cost of additional permanent improvements as provided in the

21 Page 21 of 26 application for lease extension and provided no extension shall extend a lease term past forty-five (45) years. (d) The length of term for a lease renewal of an existing lease shall be determined according to the Term Table and based on the total amount of the investment provided in the initial lease application and the estimated cost of additional permanent improvements as provided in the application. The renewal term of an existing lease pursuant to a transaction between the current lessee and a new buyer and prospective lessee will be determined by the purchase price of permanent improvements in a bill of sale and the value of proposed additional permanent improvements, if any. The term for renewal of an existing lease cannot exceed 45 years. (e) The length of term for a lease renewal of an expiring lease shall be determined according to a professional estimate of the remaining useful life of the principle improvement on the property, paid for by the applicant or the Term Table and based on the following: (1) The purchase price of real property improvements in a bill of sale executed between the lessee and proposed purchaser; or (2) A market value appraisal of the principle improvement on the property, paid for by the applicant; and (3) The estimated cost of any additional investment the applicant proposes to make in the construction of permanent improvements on the premises as provided in the application. (4) The term for renewal of an expiring lease cannot exceed 45 years. (f) Before the City approves or extends the term of a lease, permit, concession, or other interest for any use of a premises that the City has determined in writing will be needed for airport development in the future, the City will first estimate when the premises will likely be needed for airport development. A term or a term extension for use of those premises may not run beyond the time that the City estimates the premises will become needed for airport development and is subject to further extension only to the extent that need does not arise or is otherwise satisfied or deferred by the City. (g) If the initial lease, term extension, or lease renewal granted to the applicant requires construction of permanent improvements, the lease or term extension shall be subject to the following conditions: (1) The lessee to complete the proposed permanent improvements within a reasonable period of time set by the City, considering the cost and nature of the improvements. Provided however, that the time allowed shall not ordinarily exceed twenty-four (24) months after the effective date of the lease, renewal, or extension. (2) The lessee to provide a performance bond, deposit, personal guarantee, or other security if the City Council determines security is necessary or prudent to ensure the applicant s completion of the permanent improvements required in the lease, renewal, or extension. The City Council shall determine the form and amount of the security according to the best interest of the City, after a recommendation by the City Manager considering the nature and scope of the proposed improvements and the financial responsibility of the applicant. (3) At no expense to the City, the lessee must obtain and keep in force during the term of the lease, insurance of the type and limits required by the City for the activities on the premises. (4) Within thirty (30) days after completion of the permanent improvements, the lessee shall submit to the City written documentation that the improvements have been completed as required. The City Manager shall make a report to the City Council of completion as soon as reasonably practical.

22 Page 22 of 26 (5) If the applicant shows good cause to the City Council, and the City Council determines the action is in the best interest of the City, the City Council may grant an extension of the time allowed to complete permanent improvements by Resolution that is sufficient to allow for the completion of the permanent improvements or for submission of documentation that the permanent improvements have been completed. No extension or combination of extensions granted shall exceed twelve (12) months or cause the total time allowed to complete permanent improvements to exceed thirty-six (36) months. (6) If, within the time required the applicant fails to complete the required permanent improvements the City shall: (A) If the application is for a new lease or lease renewal, execute the forfeiture of the performance bond, deposit, personal guarantee, or other security posted by the applicant under subsection (2) of this section to the extent necessary to reimburse the City for all costs and damages, including administrative and legal costs, arising from the applicant s failure to complete the required improvements, and initiate cancellation of the lease or reduce the term 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. (B) If the application is for a lease extension, the City shall terminate the amendment extending the term of the lease or reduce the term of the extension at the City s sole discretion Principles and Policy of Lease Rates. (a) Annual rent shall be computed by multiplying the fair market value of the land by the lease rate percentage for each parcel inside the airport reserve. The annual rent for each parcel inside the airport reserve shall be published in the City s schedule of fees adopted by the City Council; and (b) The City shall determine the Fair Market Value of all land within the Airport Reserve annually based on the latest appraisal conducted for the City by a qualified real estate appraiser and adjusted annually based on the rate of inflation determined by the Consumer Price Index; and (c) The City shall conduct an Airport Market Analysis once every ten (10) years to determine whether a market adjustment in either fair market value or lease rate percentage is in the best interests of the City; and (d) If the City determines from the Airport Market Analysis that a market adjustment to the lease rate percentage is in the best interests of the City, the new lease percentage shall be utilized to compute annual rents for the next fiscal year; and (e) If the Airport Market Analysis or extraordinary circumstances determine a fair market value adjustment is in the best interests of the City, the City shall retain the services of an independent, real estate appraiser certified under Alaska state statutes with experience in appraising airport property to determine the Fair Market Value of all land within the Airport Reserve and shall use these values to compute annual rents for the next fiscal year. (f) The City shall adjust the annual rent of a lease by giving the lessee written notice at least thirty (30) days in advance of the expiration of the previous adjustment period; and (g) The annual rent of any individual lease may not increase by more than 50% based on CPI in any given five (5) year time period for leases for aeronautical purposes. The annual rent may be adjusted by an Airport Market Analysis or Appraisal resulting in an increase greater than 50 % in any given five year period for all leases; and

23 Page 23 of 26 (h) If a lessee disagrees with the proposed change in rent, (excluding CPI determinations, which cannot be appealed) and cannot informally resolve the issue with the City the lessee must: (1) Provide notice of appeal in writing within ninety (90) days supported by the written appraisal of a qualified real estate appraiser, selected and paid for by lessee (the Second Appraiser ); and (2) The City and the lessee shall promptly meet to attempt to resolve their differences between the First Appraiser and the Second Appraiser concerning the fair market value of the premises or lease rate percentage; and (3) If the City and lessee cannot agree upon such value then, with all deliberate speed, they shall direct the First Appraiser and the Second Appraiser to expeditiously and mutually select a third qualified real estate appraiser, paid for jointly by the parties (the Third Appraiser ); and (4) Within thirty (30) days after the Third Appraiser has been appointed, the Third Appraiser shall decide which of the two (2) respective appraisals from the First Appraiser and the Second Appraiser most closely reflects the fair market value or lease rate percentage of the premises; and (5) The fair market value or lease rate percentage of the premises shall irrefutably be presumed to be the value contained in such appraisal selected by the Third Appraiser, and the rent shall be re-determined based on such value; and (6) Notwithstanding anything to the contrary herein, rent shall continue to be paid at the then-applicable rate until any such new rental rate is established, and lessee and the City shall promptly pay or refund, as the case may be, any variance in the rent, without interest thereon accruing to the extent to be paid/refunded in a timely fashion Temporary Development Incentives (a) The City Council may include in a lease a temporary rent incentive to encourage investment as follows: (1) A credit may be applied toward rent for a maximum of five (5) years. The credit may only include the value of site preparation work on the leased premises to include clearing and grubbing, unclassified excavation, classified fill and back fill, a crushed aggregate base course and utility extensions. (2) An estimate of the value of the work, including a scope of work, prepared by a qualified engineer licensed to work in Alaska must be provided to the City and accepted prior to work being performed. (3) Any changes to the estimate of the value of the work or scope of work must be provided to the City and accepted prior to work being performed. (4) For the credit to be applied, the approved scope of work must be completed. (5) A certification from a qualified engineer that the accepted scope of work has been completed must be provided to the City and accepted at the completion of the site preparation work. (6) Credit will be limited to original qualified engineer s estimate unless another amount is accepted by the City in advance of work being completed. (7) Once the work is completed as proposed and the qualified engineer s certification of completion has been received, a credit shall be applied to the lease payments, prorated as necessary for a maximum of five (5) years.

24 Page 24 of Ownership of Improvements. (a) Permanent improvements on the premises, excluding site development materials, constructed, placed, or purchased by the lessee remain the lessee s property as long as a lease for the premises remains in effect with the lessee, including renewals, any period of extension approved by the City pursuant to the provisions of this Chapter, or any period of holdover. (b) Unless otherwise provided in a land lease or the department otherwise directs under (f) of this section, at the expiration, cancellation, or termination of a lease that is neither extended nor followed by a successive lease, the departing lessee may do one or more of the following: (1) remove lessee-owned permanent improvements from the premises, remediate any contamination for which the lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City within 90 days after the expiration, cancellation, or termination date of the lease; or (2) sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination for which the lessee is responsible, and leave the premises in a clean and neat physical condition acceptable to the City within 60 days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than 180 days after the expiration, termination, or cancellation date of the lease; (c) If the lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for airport use as the City determines is in the best interest of the City. The lessee shall, within 30 days after being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate and restore the premises. (d) Site development materials that a lessee completes or places on a premises become part of the City-owned realty and property of the City upon completion or placement. The lessee (1) Must maintain the site development work and site development materials throughout the term of the lease or successive lease, including any extensions and periods of holdover; and (2) May not remove the site development materials unless the City approves in writing Lease Utilization. Leased lands shall be utilized for purposes within the scope of the application, the terms of the lease and in conformity with the ordinances of the City, and in substantial conformity with the Comprehensive Plan and Airport Master Plan. Utilization or development for other than the allowed uses shall constitute a violation of the lease and subject the lease to cancellation at any time Bidding Procedure. With the approval of the City Council, the City Manager may designate a specific lot or lots to be leased through competitive sealed bid. In a sealed bid offering, the City Manager shall award the lease to the qualified bidder utilizing a procurement procedure which may consider qualitative factors in addition to the amount of any one (1) time premium payment to be paid by the successful

25 Page 25 of 26 bidder. Provided however, that high bidder and the bidder s lease proposal shall be subject to all provisions of lease application review and approval under this chapter Lease Execution. When issuing a lease to an applicant, the City shall hand deliver or mail the document to the applicant. The applicant shall have sixty (60) days from the date on which the lease is hand delivered to the applicant or mailed within which to execute and return the lease to the City Manager. If the applicant shows good cause to the City Manager, and the Manager determines the action is not inconsistent with the City s best interest, the Manager shall grant an extension not exceeding sixty (60) days for the applicant to execute and return the lease. Upon the failure of the applicant to timely execute and return the lease agreement, the City Manager shall withdraw the offer of the lease in writing Form of Lease. (a) When leasing land under this chapter, the City Manager shall use a standard lease form that is: (1) Drafted to: (A) Provide a reasonable basis for the lessee s use of the premises, (B) Foster the safe, effective, and efficient operation of the airport, (C) Conform with the applicable requirements of the KMC, including this chapter, Alaska statutes, Federal Aviation Administration regulations, and other applicable Federal law, and (D) Provide for the best interest of the City. (2) Approved as to form by the City Attorney; and (3) Adopted by resolution of the City Council. (b) The City Manager may enter into a land lease that deviates from the standard form adopted under subsection (a) of this section, if: (1) The City Manager believes the action is in the best interest of the City; (2) The lease is approved as to form by the City Attorney; and (3) The lease is approved by resolution of the City Council Payments. (a) Upon execution of the lease, the lands become taxable to the extent of its leasehold interest and lessee shall pay all real property taxes levied upon such leasehold interest in these lands, and shall pay any special assessments and taxes as if the lessee was the owner of the land. (b) Rent shall be paid annually in advance. The payments shall be prorated to conform to the City of Kenai s fiscal year beginning July 1 and ending June 30. The lessee shall have the option of making payments on a monthly basis. (c) Lessee shall be responsible for all sales taxes applicable to its operations or due on payments under the lease Acquisition of Real Property. The City, by authorization of the City Council, expressed in a resolution for such purpose, may purchase, acquire an interest in or lease real property needed for a public use within the airport reserve on such terms and conditions as the Council shall determine, but no purchase shall be made except for Fair Market Value as determined by an appraisal performed by a qualified real estate appraiser.

26 Page 26 of 26 Section 2. Leaseholders of existing leases may within two years of the effective date of this Ordinance convert their current lease to a new lease form approved by the City Council and governed by the Kenai Municipal Code enacted by this Ordinance, except that the existing lease terms will not be extended only by virtue of the lease conversion. Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC (f), this ordinance shall take effect 30 days after adoption. ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 17 th day of January, ATTEST: BRIAN GABRIEL SR., MAYOR Jamie Heinz, City Clerk Introduced: January 3, 2018 Enacted: January 17, 2018 Effective: February 16, 2018

27 'Vitiate (Q/t/t, tl Pa.f~ Ct'tf /Q/t/v tl rat~ II 210 FidalgoAve, Kenai, Alaska Telephone: (907) I Fax: (907) MEMORANDUM TO: COPY: Mayor Brian Gabriel and Kenai City Council Paul Ostrander, City Manager FROM: Scott Bloom, City Attorney Y~ DATE: January 3, 2018 SUBJECT: Leasing of Airport Reserve Lands/Ordinance No This Ordinance is the product of an effort by City administration to develop a leasing program at the airport designed to encourage growth, development and a thriving aviation community. The City manager's office, finance department, planning department, airport administration and legal department worked closely with Steve Pavish, an airport consultant, and a team from the McDowell group throughout the process. The team received input from leaseholders, financial institutions, airport users, City commissions, and the Council. Some of the specific main goals the working group tackled included: 1. Making the leasing program more competitive with other airports to attract new leases and retain existing lease holders; 2. Reducing large changes in rental rates from year to year; 3. Developing a process for rent increases that reduced controversy and appeals; 4. Simplifying the application process; 5. Standardizing the leasing process and providing transparency; and 6. Providing an exit process for leaseholders. These goals were addressed as follows: 1. Reducing development requirements, increasing the length of potential leases, allowing ownership of improvements, providing development incentives, and allowing current lessees to convert to new leases; 2. Establishing a process of rental increases based on a consumer price index and implementing a cap on rent increases for aviation related leases; 3. Eliminating a zone based appraisal process on a five year cycle and moving to a market analysis approach based on a regular ten year cycle;

28 Page 2 of 5 Subject 4. Eliminating application deposit fees, simplifying the review process and providing clear instruction; 5. Codifying expectations and opportunities, improving readability of the code, providing definitions of key terms; 6. Providing for lessee ownership of improvements and improving/ simplifying renewal and extension provisions. If Ordinance No is enacted by the Council, the sponsors of the Ordinance will bring additional legislation forward appropriately revising the City's fee schedule and a new lease form for approval. This Ordinance has been scheduled for review and recommendation by the Planning and Zoning Commission on January 10, 2018 and the Airport Commission on January 11, The Ordinance repeals and re-enacts the Chapter as a whole because the proposed amendments are so numerous and sections are reorganized in a manner that makes standard line by line legislative formatting almost impossible to follow. Below is a comparative analysis between the new Chapter proposed by Ordinance No and the existing code: The title of the Chapter which now reads "Leasing and Acquisition of Airport Reserve Lands" was amended to include the word "acquisition" as the last section of the Chapter, section provides for City acquisition of airport reserve lands Lease of Airport Reserve Lands, is amended in the title to reflect that it applies to leasing of airport reserve lands. Section (a) is amended to reflect that the City owns the property, not the airport independently, consistent with the deeds from the FAA that transferred the land to the City for airport purposes. Section (b) was amended to clarify that the code does not alter terms, obligations... or rights under existing leases enacted before the effective date of the ordinance. The prior section (c) was deleted in its entirety as conversion of existing leases is addressed in the Ordinance itself (Section 2), and the legal department's preference is not to codify provisions that are only relevant for a short time period Definitions, as proposed in the Ordinance is a new section organizing and providing important definitions that did not previously exist in the code. This is intended to provide transparency and clarity for all users Lands Available for Leasing, is primarily just re-worded for clarity and readability Special Use Permits, is a new section of code addressing special use permits. Use permits were previously addressed in at the end of the Chapter. The new code section provides additional details on what special use permits are intended for, such as fueling, parking, unloading, and maneuvering. Special use permits cannot exceed one year Qualifications of Applicants or Bidders, is materially the same as the existing code providing for qualifications of applicants or bidders for airport reserve leases with minor housekeeping amendments. Consistent with other changes in the proposed Ordinance this section is amended to not require submission material to be provided directly to the City Manager, (power of attorney documents in this case) but instead to the "City" as lease application forms will designate what departments in the City will receive specific documents.

29 Page 3 of 5 Subject Initial Lease Applications, addresses initial lease applications. The title is amended from the current code section to clarify that it governs only initial lease applications, as opposed to applications for renewal or extension. Subsection (a) deviates from the existing code primarily in that it removes references to the City Manager, provides for fees to be paid as provided in the City's fee schedule, does not include an initial review for completeness, and does not require a deposit. Providing for fees in the City's fee schedule instead of in the code allows fees to be adjusted without having to enact a code amendment. An application deposit was removed because it provides a barrier to the application process that is not necessary. Subsection (b) which governs what must be submitted in the initial lease application requires less information than what is in the existing code. Much of the information required previously, such as conformance with various planning documents will be verified by staff during the review process. Similarly, the new section does not require verification of a business's good financial standing at the lease application submittal stage. Subsection (c) provides guidance when a subdivision is needed for a lease. This new section provides more detail as to the process for a subdivision then what was previously included in Rather than requiring a deposit for a subdivision as required in the old KMC , this section makes the lease applicant directly responsible for the costs of the subdivision unless the City Council chooses to share in the cost of a subdivision that has a greater benefit to the Airport. Subsection (d) puts the applicant on notice that the City can request further information or clarification on any subject as needed No Right of Occupancy - Application Expiration, was previously titled "filing fee and Deposit" in the existing code and addressed filing fees and application deposits. This section is no longer needed because filing fees are in the fee schedule and application deposits are not required in the proposed Ordinance addresses application expirations and occupancy rights during the application period as provided in in the existing code. The differences in as proposed and in the current code are relatively minor, with the exception that additional time beyond the 12 months and 6 month optional extension is not provided based on time for the applicant to sign as provided for in the new section addressing lease execution Lease Application Review, in the proposed ordinance is similar to in the existing code. The section which addresses review of lease applications has been renamed "Lease Application Review" from "Application processing procedure." Changes were made to simplify and improve clarity in the process so all parties understand what to expect. Major changes include: The new section does not specify who in the City reviews specific documents. The new section does not provide for the City Manager to be able to reject complete applications, but instead provide a recommendation for approval or rejection to the Planning and Zoning Commission and Airport Commission. The new section provides for publication of lease applications with a date provided for which any competing applications must be provided.

30 Page 4 of 5 Subject The new section provides for the leases to be brought to the City Council for approval or rejection along with the City Managers Recommendation and the Commission's recommendations. The section maintains a waiver provision in the existing code for leases to other governmental entities Application for Lease Amendment, Extension or Renewal, is similar to the existing code provision "Lease amendment or renewal." This new section is much more comprehensive than the existing code and breaks each proposed action out individually. This new section makes a distinction between a renewal of a lease that only has less than one year and renewals with more term remaining. For an expiring lease, a new term can be granted based not only on additional investment, but on the estimated remaining useful life of the property, a market value appraisal or the purchase price of the improvements from a proposed purchaser. The concept is to avoid unnecessary expensive appraisals if possible, and to provide security to an existing lessee who has maintained their property Competing Applications, is a new section of code addressing the procedure for dealing with competing applications. This is more relevant now that all lease applications will be advertised and open to competition. This allows the City to consider better opportunities for the airport during times of renewal or extension, but also provides security to existing lessee's in that they can withdraw their application prior to any decision by Council if they feel they are in jeopardy of losing their existing rights to a new competing application Length of Lease Term, replaces the existing addressing the length of lease terms. The new proposed terms are significantly less onerous on developers. Previously a $99,000 development would only provide a five year lease, under the new proposed terms a developer could get a 17 year lease for the same investment. Additionally, terms of 45 years are offered which comply with FAA requirements, while previously a 35 year lease was the most a developer could receive. A 45 year lease under the proposed table would require an investment of $307,500, while under the old table $500,000 or more is required for a 35 year lease. The new term table is competitive with other airport leasing programs, whereas the prior term table was one of the most onerous in the state. The new section of code is intended to be more comprehensive and easier to follow for all parties. It specifically addresses various options for new leases, extensions and renewals Principles and Policy of Lease Rates, addresses lease rates in comparison to the existing Rather than basing lease rates on an appraisal completed every five years, as provided in the existing section, this new section establishes a rate and makes annual adjustments based on Anchorage CPI with a market analysis once every ten years to determine whether adjustments need to be made. This new process is intended to provide more certainty to lessees while providing a reasonable rate of return to the airport. The new process is intended to avoid large rate changes once every five years. The process allows for irregular market analysis's or even an appraisal should market conditions indicate that such an examination is warranted. For example, if the LNG project happens and the market changes dramatically, the City could study the market and make necessary changes to the lease rates to reflect market conditions. There is also a cap in place for aviation related leases as allowed by the FAA (non-aviation leases are required to be at fair market value.) However, the cap only applies to CPI increases and