§ 13.05.080. Length of initial and extension lease term.

A.

Unless the city determines a shorter lease term is in the best interest of the city, the initial term for a lease granted for airport land will be for five years plus the fraction of the year remaining until the next June 30. For example, if a tenant leases on September 1, 2011, the initial lease term would run until June 30, 2017, a length greater than five years but never more than six years.

B.

The extension term will be based on the amount of investment the lessee makes in the construction of new permanent improvements on the premises during the initial term of the lease.

1.

Prior to the expiration of the initial lease term after completing additional improvements, the lessee will make application to the city for an extension of the lease term. The extension term following the initial term or a renewal term of an expiring lease shall be determined according to the following table:

Applicant's Investment Value (in U.S. Dollars) is at Least	Maximum Term of Years
$15,000 - $24,999	5
$25,000 - $49,999	10
$50,000 - $74,999	15
$75,000 - $99,999	20
$100,000 - $149,999	25
$150,000 or more	30

 

C.

For lease extensions the value of investment shall be determined by business records deemed to be sufficient by the city, or borough assessed value, or by an appraisal performed by an appraiser certified under Alaska Statute 8.87 with experience appraising airport improvements. The option chosen shall be at the sole discretion of the city manager. If an appraisal is the valuation method selected, the appraisal shall be paid for by the lessee.

D.

During the lease term the lessee may make additional permanent improvements to the property. Each $25,000.00 of additional improvement will authorize an additional lease term extension of five years; however, the total lease term shall not exceed 35 years.

E.

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 shall exceed 12 months.

F.

If a tenant does not improve leased property in the initial term, the lease term will not be extended. The tenant can apply for a new lease for five years, just as if they had not previously leased the land. However, in such a case, preference may be given to a new applicant who is willing to make improvements to the premises and who can provide the city with a pre-approval letter from a lender or other documentation indicating their financial ability to make the specified improvement and a signed letter of intent indicating their intent to build such improvement if the land is leased to them. The city manager may also choose to solicit bids in instances where it is in the best interest of the city to do so.

G.

If, within the time required under this section, including any extension granted under subsection E. of this section, the applicant fails to complete the required permanent improvements, the lease extension shall be deemed automatically denied without further action of the city.

(Ord. No. 2012-001, § 2(Att.), 7-25-2012)