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Quiet Skies "City Airport Study"February 1, 2010 Members of the Kalispell City Council: Enclosed is a City Airport Study prepared for the Council by concerned citizens. It is our intention to pass on to you our findings and recommendations. With these recommendations, we welcome any comments or questions. Thank you for your time in perusing our study, and for your consideration of its contents. If you have questions, please call Scott Davis, 752-1523. Respectfully submitted, Cif FindingsCity Airport Study Grou,-,c, February 1, 2010 Contents: • Press Release • Introductory Thoughts • Background and Goals of the Study Group • Recommendations in brief = Immediate and Provisional Recommendations • Factual Data Leading to an Election • Lease agreements according to Montana Code 7-8-4201 (2009) • The Lease • The Conditional Use Permits • Zoning Law Document • The Environmental Assessment • Excerpts of an Open letter to the Mayor • Independent Attorney and Auditor Signatures and Dates: "We the people of Montana grateful to God for the quiet beauty of our state......" Montana Constitution "...to preserve land for a variety of community services which serve the public health, safety and general welfare." Kalispell Zoning: Chap 27.2 Intent of "Conditional Use Permits" "Trust common-sense solutions over the advice of "experts" who stand to gain multimillion dollar contracts from their studies." "Common sense infers that if city wants to grow, and the airport wants to grow, they cannot grow in the same spot"." Airport Study Group "A tourist went to visit Victoria British Columbia Canada expecting a quaint and charming seaside experience. During the day he was surprised to hear the roar of sight-seeing planes during his morning walks and even from the veranda of the Victorian Empress Hotel. This tourist will not return to Victoria. How can the "experts" measure the number of tourists who might not return to Kalispell for the same reason: noisy airplanes? Word of mouth can sink a ship." Airport Study Group •' 11=1=1 Through interviews with government officials, study of documents, interviews with members of the public, and attendance of meetings, the Kalispell City Airport Study Group has been looking into solutions to problems related to city airport including, but not limited to: • Noise • Safety • Economics • Community development alternatives • Aviation education • Tourism • Government corruption • Burnout and fatigue of city officials The options presented here represent the result of a great deal of thought, and are intended to provide positive steps in the best interest of the entire community. The options studied include: • Leaving the airport in the present location, but managed directly by the city. *Not by a private -for profit corporation such as Red Eagle* • Building a new airport at a new location vs. FAA expansion at the present location. • Consolidating the airport with Glacier Park International Airport. LA ' i i i 1 fill Immediate1. c Provisional 2. Factual Data , i; 1 an Immediate/Provisional1. Recommendations • Have off -site, independent legal counsel analyze and report solutions on all airport leases that were drafted not following Montana Code 7-8-4201. • Immediately, and in the interim until such facts and findings are produced, all lease agreements including Red Eagle Aviation (FBO) should be amended with "conditions and limitations" to regulate flight paths, flight times/days, types of aircraft, and commercial use. This also includes commercial for -profit uses including: flight training, aerial sight seeing, charter operations. Duration of all leases shall be on a month -to -month basis until the legalities have been sorted out. • Establish a "condition of use" for the city airport as in the "conditional use permits" that the use of the Kalispell City Airport is only for private, non-profit, non-commercial use only. • City should manage the airport directly like a park ("Air Park"). Move city airport manager to where he can pursue his duties as manager and as city FBO. • Encourage without the cost of legal litigation the current FBO and all lessees to move to GPI. • Construct and enforce a fee schedule of various types to be administrated by the city manager/FBO. This will help pay to run the airport. leading2. Factual Data 1 an Election PUTT IMPROPER FfIrlImIll 1. Hire an independent Certified Public Accountant to present a financial statement on the city Airport for the past several years. 2. Do a public survey to determine the pluses and minuses of the city airport. 3. Determine the use of the airport i.e. who are the users? Where do they live? Can they be served just as well or better by GPI? 4. Have the city property in question appraised by a certified appraiser to: A. Determine the property value. B. Determine the additional revenue the property would generate if put on the tax rolls. 5. Present this information to the public and then place the issue on the ballot for qualified voters to decide. I :E •i1 i1 1i' .... .:::::. Statement: The study group has discovered that members of the city staff have neglected to follow the Montana code when signing the airport leases. According the code all leases need to be approved by the City Council. It appears to the study group the code was intentionally neglected for fear of rejection of the council and public scrutiny. Montana Code Annotated 7-8-4201 - 2009 (2) (A) EXCEPT FOR PROPERTY DESCRIBED IN SUBSECTION VOTE OF ALL THE MEMBERS OF THE COUNCIL. (b) Except for property acquired by tax deed or property described in subsection (3), if the property is held in trust for a specific purpose, THE SALE OR LEASE MUST BE APPROVED BY A MAJORITY VOTE OF 5 THE ELECTORS OF THE lUl[UNICIPALITY VOTING AT AN ELECTION CALLED FOR THAT PURPOSE. The election must be held in conjunction with a regular or primary election. (3) If a city or town owns property containing a historically significant building or monument, the city or town may sell or give the property to nonprofit organizations or groups that agree to restore or preserve the property. The contract for the transfer of the property must contain a provision that: (a) requires the property to be preserved in its present or restored state upon any subsequent transfer; and (b) provides for the reversion of the property to the city or town for noncompliance with conditions attached to the transfer. (4) This section may not be construed to abrogate the power of the board of park commissioners to lease all lands owned by the city that were acquired for parks within the limitations prescribed by 7-16-4223. (5) A city or town may donate land or sell the land at a reduced price to a corporation for the purpose of constructing: (a) a multifamily housing development operated by the corporation for low-income housing; (b) single-family houses. Upon completion of a house, the corporation shall sell the property to a low- income person who meets the eligibility requirements of the corporation. Once the sale is completed, the property becomes subject to taxation. (C) uTiprvvilTleut$ to re^a1 grope y or luodilying, altering, or repairing H11proveme,lts to real propels y Him will enable the corporation, subject to the restrictions of Article X, section 6, of the Montana constitution, to pursue purposes specified in the articles of incorporation of the corporation, including the sale, lease, rental, or other use of the donated land and improvements. (6) Land that is transferred pursuant to subsection (5) must be used to permanently provide low-income housing. The transfer of the property may contain a reversionary clause to reflect this condition. The Conditional Use Zoning Law Statement - The intent of the conditional zoning law is..."to preserve land for a variety of community services which serve the public health, safety and general welfare." Kalispell Zoning: Chap 27.2 It appears to the study group that that the city property no longer has a "grandfather exemption", and this is indicated by the attached zoning documents. It appears further laws were broken by not obtaining proper permits. Therefore the study group recommends that the City Council amend the zoning law to reflect: 1) The Airport is a "permitted use" (It requires a permit, and is not grandfathered according to zoning law and changes and modifications made in 2005.) 2) The amended zoning law would only allow noncommercial and not for profit flights. This would allow tourism, but would eliminate the nuisance of training flights and helicopter activities. Note: In our view, at present the FBO has an unfair monopoly on commercial flight activity. In order to level the playing field all commercial flights should compete fairly at GPI. q "It is self evident that the city airport would not be eligible for a conditional use permit because noise from the airport harms the public health including: " ---sleep disturbance ---disturbance of work ---disturbance of education and learning ---disturbance of communication on private property ---fears and safety concerns of senior citizens 111111 1 1' ., "If you want to be grandfathered, you have to remain an antique" From the "Kalispell Airpark" Website: "Construction of the west apron and taxiways was approved and completed in the fall of 2005. This project consisted of installation of a new security gate, fencing, large asphalt tie down area, taxiways, underground utilities 9 and new building pads. This project was Phase I of the proposed Runway Redevelopment Plan currently being debated. " Note: There have been many other construction projects including hangars but we have been unable to obtain documentation confirmation by the city. Environmental Assessment (EA) Study Group Recommendations: ---According to David Cole at the MT Department of Commerce, the EA must be an "original work" - Boilerplate text is not in the cities' or taxpayers' interest. This must be stated in the new EA contract. (Note: the old EA was mostly boilerplate and was designed with the purpose of expansion and FAA funding.) 01 ---The engineering firm chosen must be unbiased and independent. Therefore to avoid a "conflict of interest" the engineering firm must not be eligible to bid on any potential construction project that is related to the study. ---For fairness, the timing of the EA should occur simultaneously or within the time limits of: ---The CPA financial report ---The Survey of the public ---The determination the users (as stated in our step 3 our recommendations). ---The appraisal and determination of value for revenue generation. ==aThe presentation of the information gild the election. • a , I i •, 1 • a • ---Contract should include details for decommissioning and remediation of the sight. ---Contract could include legal advice for moving lessees. ---A "how to manual" for eliminating the present FBO and having the airport managed directly by the city for non-commercial and non-profit purposes. ---An agreement that an EA for expansion should removed from agenda due to popular belief, legal hurdles, economic alternatives and the intent of "conditional use" zoning law, and the availability of GPI to serve all the commercial aviation needs including flight education. in ---Establishing air traffic restriction zones over the city. Background: The city attorney and zoning administrator have been working for too long on behalf of airport expansion to be able to give unbiased advice to the city council. They have forfeited their credibility by not complying with Montana code MCA 7-8-4201 and by misleading the public over many years. Therefore the study group recommends an independent attorney and auditor for the following purposes: ---Examine the legal ramifications and responsibilities to resolve the lease issues. ---Amend and modify of the conditional use zoning laws to not allow commercial, for profit flight activity. ---Set forth details for legal processes for decommissioning and remediation of the sight. ---To explore the denial of community development grants caused by having the airport at its` current location ---To apply for and administer the community development grant and public survey. ---Currently there are two airport managers. According to the lease with Red Eagle, Jim Pierce is responsible for managing the airport. According to job description Fred Leistiko is the airport manager. The independent counsel should determine how the city can take over the management and move Red Eagle to GPI in a fair manner. ---Is the city responsible for the negligence of the city attorney, city manager, and zoning administrator for the not following Montana State and Kalispell City Codes in drafting the leases without City Council's permission? ---Will the city insurance pay for the unlawful negligence of the city attorney and former city manager for willfully violating Montana state law. Letter to the Mayo4 Excerpts: January 20, 2010 Revised February 1, 2010 Re: Kalispell City Airport THE AIRPORT LEASE AGREEMENT FOR YOUR STUDY We have attached one of the leases between Red Eagle Aviation and the City of Kalispell signed by former city manager James Patrick and former Red Eagle Owner David Hoerner, and the transfer of lease to Jim Pierce. To our knowledge there are minimum of 17 individual lease agreements on city l� This lease and Operating Agreement (the "Agreement") entered into as of theo2Jday oft 2005, by and between the City of Kalispell, a body politic and corporate created by Mon a State Statutes ("Lessor"), and David Hoemer, d/b/a Red Eagle Aviation, licensed and with authority to do business in the State of Montana ("Lessee") or assigns. WITNESSETH.• WHEREAS, Lessor now owns,�ontrols, and operates the Kalispell City _Airport (the "Airport") in the City Kalispell, County of Flathead, State of Montana; WHEREAS, fixed base operation services are essenti to the proper accommodation of general and commercial aviation at the Airport; and 4A WHEREAS, Lessor desires to make such services available on the Airport and Lessee is qualified, ready, willing and able to provide such services. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, the parties hereby agree as follows: ARTICLE I TERM The term of this Agreement shall be for a period of twenty (20) years, plus two five year extTsions), commencing on the 1-5r day of ��{ib�"�`, 2005, and continuing through the ,i) day of — &4re, 2025 (the "Termination Date"), unless earlier terminated under the provisions of this Agreement. Lessee shall have the option, exercisable upon at least one hundred eighty (180), but not more than three hundred sixty-five (365), days' notice to Lessor prior to the Termination Date, to extend the term of the Agreement for two (2) additional period of five (5) years_ each from and after the Termination Date, upon the same terms and conditions as are contained in this Agreement. When the new runway is aligned and new FBO office and hangar are built, as Lessor intends to do, a new twenty (20) year term of the lease shall begin again, subject to the terms of the adjustments described in Article V(A)(4), with all terms and conditions of this lease applying, and with two (2) five-year extensions to that 20 year term possible thereafter. Lessee hereby leases from Lessor, the following premises, identified and shown on Exhibit A hereto (the "Premises"), together with the right of ingress and egress for both, vehicles and aircraft: land: A. Real Property as diagramed on Exhibit "A" and located within the following tract of County Tracts 1D and 1DA in Section 20, T28N R21W, according to the map or plat thereof on file and of record in the office of Clerk and Recorder of Flathead County, Montana B. Improvements on said real property, as follows: As set forth on Exhibit "A". C. Hangars, Ramp and Apron Area: As set forth on Exhibit "A". D. Fuel Storage Area: As set forth on Exhibit "A". FIXED BASED OPERATOR'S LEASE - Page 1 of 11 RIGHTS AND OBLIGATIONS OF LESSEE A. Required Services. Lessee is hereby granted the non-exclusive privilege to engage in, and Lessee agrees to engage in, the business of providing full and complete fixed base operations services at the Airport, minimum of (8) hours per day or more, three hundred sixty-five (365) days per year, excluding adverse weather and holidays, as follows: but limited to. 1. Aircraft ground guidance within the uncontrolled areas adjacent to the Premises, and ramp service, including sale and into -plane delivery of aviation fuels, lubricants and other related aviation products. 2. Apron servicing of, and assistance to, aircraft, including itinerant parking, storage and tie -down service, for both based and itinerant aircraft upon or within facilities leased to Lessee or aircraft parking areas designated by Lessor. 3. Repair and maintenance of based and transient aircraft. Lessee agrees make reasonably available or to maintain and operate a aircraft maintenance facility approved by the Federal Aviation Administration (the "FAA"), with ratings as follows: a. Engine, airframe and accessories with airframe and engine FAA approved license. b. Avionics and accessories with FAA approved license. Lessee acknowledges that no right or privilege has been granted which would operate to prevent any person, firm or corporation operating aircraft on the Airport from performing service on its own aircraft, non-commercial maintenance, with its own regular employees, including maintenance and repair services. 4. Customary accommodations for the convenience of users, including pilot lounge area, informational services, direct telephone service connections to the Flight Service Station and the United States Weather Bureau, and courtesy vehicle ground transportation to and from the parking ramp. 5. Sales of avionic and engine parts and instruments and accessories. B. Authorized Services. In addition to the services required to be provided by Lessee pursuant to Paragraph A, above, Lessee is authorized, but not required or limited, to provide the following services and to engage in the following activities as authorized by the rules and regulations of the airport: 1. Ramp service at other Airport locations, including into -plane delivery of aircraft fuel, lubricants and other related aviation products; loading and unloading of passengers, baggage, mail and freight: and providing of ramp equipment, aircraft services for transient air taxi and other persons or firms. 2. Special flight services, including aerial sightseeing, aerial advertising and aerial photography. 3. The sale of new and used aircraft. 4. Flight including ground school. - % � training, g__.,_.. FIXED BASED OPERATOR'S LEASE - Page 2 of 11 AtAApt-j vjt-%iO&..)S 5. Aircraft rental. ---- - 6. Aircraft charter operations, conducted by Lessee or a subcontractor of Lessee. C. Operating Standards. In providing any of the required and/or authorized services or activities specified in this Agreement, Lessee shall operate for the use and benefit of the public and shall meet or exceed the following standards: 1. Lessee shall furnish service on a fair, reasonable and non-discriminatory basis to all users of the Airport. Lessee shall furnish good, prompt and efficient service adequate to meet all reasonable demands for its services at the Airport. Lessee shall charge fair, reasonable, and non- discriminatory prices for each unit of sale or service; provided, however, that Lessee may be allowed to make reasonable and non-discriminatory discounts, rebates or other similar types of price reductions to volume purchasers. 2. Lessee shall select and appoint a full-time manager of its o erations at the Ai ort, which may be the owner of the Lessee's business. The manager shall be qualified and experienced, and vested with full power and authority to act in the name of Lessee with respect to the method, manner and conduct of the operations of the fixed base services to be provided under this Agreement.�he mana er shall be available at the Airport during regular business hours and during the manager's absence a duly authorized subordinate shall be in charge and available at the Airport. 9 3. Lessee shall provide, at its sole expense, a sufficient number of employees to provide effectively and efficiently the services required or authorized in this Agreement. 4. Lessee shall control the conduct, demeanor and appearance of its employees, who shall be trained by Lessee and who shall possess such technical qualifications and hold such certificates of qualification as may be required in carrying out assigned duties. It shall be the responsibility of Lessee to maintain close supervision over its employees to. assure a high standard of service to customers of Lessee. 5. Lessee shall meet all expenses and payments in connection with the use of the Premises and the right and privileges herein granted, including taxes, permit fees, license fees and assessments lawfully levied or assessed upon the Premises or property at any time situated therein and thereon. Lessee may, however, at its sole expense and cost, contest any tax, fee, or assessment. ,t.1 V la -AM 0o-J OF- a9PAjA-WC4e i't -(d) 6. Lessee shall comply with all federal, state and local laws, rules and re lgu ations whichMWAM may apply to the conduct of the business contemplated, including rules —and 'regulations promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place all necessary and/or required licenses or permits. 7. Lessee shall be responsible for the maintenance and repair of the Premises and shall keep and maintain the Premises in good condition, order and repair, and shall surrender the same upon the expiration of this Agreement, in the condition in which they are required to be kept, reasonable wear and tear and damage by the elements not caused by Lessee's negligence excepted. It is expressly understood and agreed that, in providing required and authorized services pursuant to this Agreement, Lessee shall have the right to choose, in is sole discretion, its vendors and suppliers. FIXED BASED OPERATOR'S LEASE - Page 3 of 11 E FL 1 c-, �-! `F .mac ! C:-C,:--/ - D. Signs. During the term of this Agreement, Lessor shall, at its expense, place in or on the Premises a sign or signs identifying Lessee. Said sign or signs shall be of a size, shape and design, and at a location or locations, approved by Lessee and in conformance with any overall directional graphics or sign program established by Lessor. Lessee's approval shall not be withheld unreasonably. Notwithstanding any other provision of this Agreement, said sign(s) shall remain- the property- of Lessor. E. Non -Exclusive Right. It is not the intent of this Agreement to grant to Lessee the exclusive right to provide any or all of the services described in this article at any time during the term of this Agreement. Lessor reserves the right, at its sole discretion, to grant others certain rights and privileges upon the Airport which are identical in part or in whole to those granted to Lessee. However, Lessor does covenant and agree that: 1. It shall enforce all minimum standards or requirements for all aeronautical endeavors and activities conducted a the Airport; 2. Any other operator or aeronautical endeavors or activities will not be permitted to operate on the Airport under rates, terms of conditions which are more favorable than those set forth in this Agreement; and 3. It will not permit the conduct of any aeronautical endeavor or activity at the Airport except under an approved lease and/or an operating agreement. ARTICLE IV APPURTENANT PRIVILEGES A. Use of Airport Facilities. Lessee shall be entitled, in common with others authorized, to the use of all facilities and improvements of a public nature which now are or may hereafter be connected with or appurtenant to the Airport, including the use of landing areas, runways, taxiways and aircraft parking areas designated by Lessor. B. Aerial Approaches. Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent Lessee from erecting, or permitting to be erected, any building or other structure on or adjacent to the Airport which, in the opinion of Lessor, would limit the usefulness of the Airport or constitute a hazard to aircraft. ARTICLE V PAYMENTS A. Rent and Fees. In consideration of the rights and privileges granted by this Agreement, Lessee agrees to pay to Lessor during the term of this Agreement the following: --I Rent. A rental of $8,064.00 per annum for the lease of the existing office space and attached hanger (approximately - 7 7 S square feet). A rental of $9,600.00 per annum for the lease of all other hanger space on the premises (approximately (2177(- square feet). In the event the Lessor elects to remove any of the hangars, Lessee's rent shall be reduced by the monthly income Lessee has lost for each hangar removed. The monthly income loss will be calculated using the average of the three month's income to Lessee immediately prior to the hangar's removal. If all hangars are removed, Lessee shall have no rental obligations to the Lessor pursuant to this portion of the lease payments. 2. Fuel System Rent. A sum of $3,600.00 per annum on all aviation fuel sold by Lessee. This sum exclusive of the $.06 per gallon city tax. The lease of the fuel farm and pumping station is for the existing facility and will be renewed for the same length as the lease for the new office FIXED BASED OPERATOR'S LEASE - Page 4 of 11 and hangar on the new ramp. The Lessor will install a new fuel farm, av-gas and jet fuel, and self-service pumping station on the new ramp and lease the fueling facility to David Hoemer, d/b/a/ Red Eagle Aviation or his assign. 3. Fees. The sum of 120.00 per month per tie down, as needed. v3 4 -Adjustments to Rents and Fees. The rents and fees described above shall remain fixed for years one through five of this lease agreement. The rents and fees for years six through ten shall increase by two percent each year. The rents and fees for years eleven through twenty, and for each year thereafter, shall increase by three percent each year. B. Payments. 1. The rental payment specified in Paragraph A.1 and A.2, above, shall be paid monthly in advance in the sum of $1,772.00 per month, the first payment to be made on or before the first day of ,2005, and a like payment to be made on or before the first day of each month thereafter during the term of this Agreement. It is understood and agreed that the rental payments specified in Paragraph A.1 and A.2, above, and in the preceding sentence, may be adjusted pursuant to Paragraph G, below, and that each such adjustment shall result in a change in the annual and monthly rental payments. 2. The fees specified in Paragraph A.3, above, shall be paid to Lessor on or before the twentieth (20th) day following the end of each month throughout the term of this Agreement. It is understood and agreed that the fees specified herein shall be adjusted pursuant to Paragraphs AA, above and G below and that each such adjustment shall result in a change in the calculation of the monthly payments of fees. C. Landing Fees. Landing Fees are not levied at this time at the Airport; however, the Lessor reserves the right to enact such fees at a later date. In the event Lessor enacts Landing Fees, it shall, at that time, negotiate with the Lessee the extent of Lessee's obligations for collecting such fees and the proportional sharing of the fees. D. Parking Fees. Lessee shall collect aircraft tie down fees, in accordance with a schedule of tie down fees established by Lessor, for all aircraft parked in public parking areas adjacent to the Premises, elsewhere on the ramp or apron area adjacent to the Premises or on such areas as may be designated by Lessor from time to time. Fees so collected shall be reported and paid monthly to Lessor, less a 50% handling charge to be retained by Lessee, at the same time as the fees paid to Lessor pursuant to Paragraph B.2, above. E. Delinquency Charge. A delinquency charge of 5% per month shall be added to payments required by Paragraphs A, B, C and D, above, which are rendered more than ten (30) days delinquent. F. Place of Payment. All payments due Lessor from Lessee shall be delivered to the place designated in writing by Lessor. G. Renegotiation of Rent and Fees upon Vacation and Use of New Facility. The twenty (20) year term of this Lease Agreement (plus two (2) five-year extensions) shall be reinitiated under • the same terms and conditions set forth herein, at such time as the airport runway is realigned and the a current premises is vacated in exchange for a new location, as designated by the Lessor; within the aiipertf master p1an. Lessor shall, at the time of realignment and vacation, construct an FBO office facility and hanger, which will meet the business needs of the FBO/Lessee and the needs of the City Airport, within the airport master plan improvement area to accommodate and FIXED BASED OPERATOR'S LEASE - Page 5 of 11 be leased to the Lessee. The approximate location of the new FBO office will go with this document and labeled Exhibit `B". Lessor shall also give to Lessee first right to lease additional property within the airport master plan improvement area for the purpose of constructing an additional hanger and T-hangers to accommodate up to 12 aircraft. The beginning square foot rental fee for office and hanger space will be established at the then existing rate of the lease and -shall-increase-pursuant to the terms of Article V(A)(4). For example, if the new lease begins in year seven of the existing lease, the first year lease will be at the base, plus two percent, and the rent and fees for the succeeding three years shall also increase by two percent and rent and fees for all years thereafter increase. by three percent. The increases or decreases in the rent and fees to be effective as of the first day of the new lease period. It is understood and agreed that no such increase in leases or fees shall be required if Lessee is prohibited by law or regulation from passing such increase on to its customers. ARTICLE VI UTILITIES Lessee shall have the right to use the utility service facilities located on the Premises at the commencement of the term of this Agreement. In addition, should Lessee's operations require additional utility service facilities, Lessor shall, at its expense, extend such facilities to the Premises. Lessor's obligation under this provision shall be limited to utilities extended by a public utility company to Lessor's property line, and nothing herein shall obligate Lessor to provide any utility to Lessee that is not otherwise available to Lessor at its property line. Such limitation shall also include the inability of Lessor to provide utility facilities or service due to the imposition of any limit on consumption or on the construction of additional utility facilities, or the allocation or curtailment of utility facilities or service by law or regulation. Lessee agrees to pay the cost of all utilities. In the event Lessee fails to pay any utility bills when due, Lessor may, at its option, pay the same and collect from Lessee the amounts so disbursed, plus interest at the rate of 1 % per month or fraction thereof. ARTICLE VII T L4 U INSURANCE A. Required Insurance. Lessee shall obtain and maintain continuously in effect at all times during the term of this Agreement, at Lessee's sole expense, the following insurance:. --------- } 1. Comprehensive general liability_ insurance protecting Lessor against any and all liability by reason of Lessee's conduct incident to the use of the Premises, or resulting from any accident occurring on or about the roads, driveways or other public places, including runways and taxiways, used by Lessee at the Airport, caused by or arising out of any wrongful act or omission of Lessee, in the minimum amount of $2,000,000.00; %' 2. Passenger liability_ insurance in the minimum amount of $100,000 per seat, and $1,000,000 per occurrence; 3. Hangar keeper's liability insurance in the minimum amount of $25,000 per aircraft; 4. Product liability insurance in the minimum amount of $100,000; 5. Fire and extended coverage insurance on all fixed improvements erected by Lessee on or in the Premises to the full insurable value thereof. The insurance specified in Paragraphs A.2 through A.5, above, shall name Lessor as an additional insured. FIXED BASED OPERATOR'S LEASE - Page 6 of 11 B. Notice. Lessor agrees to notify Lessee in writing as soon as practicable of any claim, demand or action arising out of an occurrence covered hereunder of which Lessor has knowledge, and to cooperate with Lessee in the investigation and defense thereof. ARTICLE VIII INDEMNIFICATION To the extent not covered by insurance carried in favor of Lessor, Lessee shall keep and hold harmless Lessor from and against any and all claims, demands, suits, judgments, costs and expenses asserted by any person or persons, including agents or employees of Lessor or Lessee, by reason of death or injury to persons or loss or damage to property, resulting from Lessee's operations; or anything done or omitted by Lessee, under this Agreement except to the extent that such claims, demands, suits, judgments, costs and expenses may be attributed to the acts or omissions of Lessor or its agents or employees. ARTICLE IX LESSEE AS INDEPENDENT CONTRACTOR In conducting its business hereunder, Lessee acts as, an independent contractor and not as an agent of Lessor. The selection, retention, assignmen, direction and payment of Lessee's employees shall be the sole responsibility of Lessee, and Lessor shall not attempt to exercise any control over the daily performance of duties by Lessee's employees. ARTICLE X ASSIGNMENT This agreement, or any part thereof, may not be assigned, transferred or subleased by Lessee, by process or operation of law or in any other manner whatsoever, without the prior written consent of Lessor, which consent shall not be withheld unreasonably. ARTICLE XI NON-DISCRIMINATION Notwithstanding any other or inconsistent provision of this Agreement, during the performance of this Agreement, Lessee, for itself, its heirs, personal representatives, successors in interest and assigns, as part of the consideration for this Agreement, does hereby covenant and agree, as a covenant running with the land, that: A. No person on the grounds of race, color, religion, sex, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination in; the use of the Premises. B. In the construction of any improvement on, over or under the Premises, and the furnishing of services therein or thereon, no person on the grounds of race, color, religion, sex or national origin shall be excluded from participation in, denied the benefit of, or otherwise be subjected to discrimination; C. Lessee shall use the Premises in compliance with all other requirements imposed by pursuant to Title 49, Code of Federal Regulations, Department of Transportation, 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 said regulations may be amended. D. In the event of breach of any of the above non-discrimination covenants, Lessor shall have the right to terminate this Agreement and to reenter and repossess the Premises and hold the same as if said Agreement had never been made or issued. This provision does not become FIXED BASED OPERATOR'S LEASE - Page 7 of 11 effective until the procedures of 49 CFR Part 21 have been followed and completed, including expiration of appeal rights. ARTICLE XH REQUIREMENTS OF THE UNITED STATES This Agreement shall be subject and subordinate to the provisions of any existing or future agreement between Lessor and the United States, or any agency thereof, relative to the operation or maintenance of the Airport, the execution of which has been or may be required as a condition precedent to the expenditure of federal funds for the development or operation of the Airport provided, however, that Lessor shall, to the extent permitted by law, use its best efforts to cause any such agreements to include provisions protecting and preserving the rights of Lessee in and to the Premises, and to compensation for the taking thereof, interference therewith and damage thereto, caused by such agreement or by actions of Lessor or the United States pursuant thereto. ARTICLE XIII DEFAULT AND TERMINATION A. Termination by Lessee. This Agreement shall be subject to termination by Lessee in the event of anyone or more of the following events: I . The abandonment of the Airport as =an airport yor airfield for any type, class or category of aircraft. If the airport is abandoned in any way by Lessor, the Lessor will pay to the Lessee the fair value of the remaining term of the lease(` The parties agree that they shall each obtain the s -opinion of an independent appraiser to evaluate the value of the remaining lease and negotiate a final value. The Lessor agrees that the fair value of the remaining term of the lease should be valued as if the airport had not been abandoned. Any decrease in the value of the lease because of the abandonment shall not be considered by either the City's or Lessee's independent appraisers. If the parties cannot agree upon the value, they agree to arbitrate the result, as set forth below and be bound by the arbitrator's decision. r^ #%.-, aE -ta etT'Y Ca®G tq .— t 0 2. The default by Lessor rn the performance of any of the terms, covenants or conditions of this Agreement, an e ailure of Lessor to remedy, or undertake to remedy, to Lessee's satisfaction, such default for a period of thirty (30) days after receipt of notice from Lessee to remedy the same. 3. Damage to or destruction of all or a material part of the Premises or Airport facilities necessary to the operation of Lessee's business. 4. The lawful assumption by the United States, or any authorized agency thereof, of the operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner as to restrict substantially Lessee from conducting business operations for a period in excess of ninety (90) days. B. Termination by Lessor. This Agreement shall be subject to termination by Lessor in the event of anyone or more of the following events: 1. The default by Lessee in the performance of ano_y f the terms, covenants or conditions of this Agreement, and the failure of Lessee to remedy, or undertake to remedy, to Lessor's satisfaction, such default for a period of thirty (30) days after receipt of notice from Lessor to remedy the same. 2. Lessee files a voluntary petition in bankruptcy, including a reorganization plan, makes a general or other assignment for the benefit of creditors, is adjudicated as bankrupt or if a FIXED BASED OPERATOR'S LEASE - Page 8 of 11 receiver is appointed for the property or affairs of Lessee and such receivership is not vacated within thirty (30) days after the appointment of such receiver. C. Exercise. Exercise of the rights of termination set forth in Paragraphs A and B, above, shall be by notice to the other party within thirty (30) days following the event giving rise to the termination. D. Removal of Property. Upon termination of this Agreement for any reason, Lessee, at its sole expense, shall remove from the Premises all signs, trade fixtures, furnishings, personal property equipment and materials which Lessee was permitted to install or maintain under the rights granted herein. If Lessee shall fail to do so within thirty (30) days, then Lessor may effect such removal or restoration at Lessee's expense, and Lessee agrees to pay Lessor such expense promptly upon receipt of a proper invoice therefore. E. Causes of Breach; Waiver. 1. Neither party shall be held to be in breach of this Agreement because of any failure to perform any of its obligations hereunder if said failure is due to any cause for which it is not responsible and over which it has no control; provided, however, that the foregoing provision shall not apply to failures by Lessee to pay fees, rents or over charges to Lessor. 2. The waiver of any breach, violation or default in or with respect to the performance or observance of the covenants and conditions contained herein shall not be taken to constitute a waiver of any such subsequent breach, violation or default in or with respect to the same or any other covenant or condition hereof. ARTICLE XIII ARBITRATION Except as provided in Paragraph I of Article V of this Agreement, all claims or disputes arising out of or relating to this Agreement shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then obtaining. Notice of the demand for arbitration shall be filed in writing with the other party to the Agreement and with the American Arbitration Association and shall be made within a reasonable time after the claim or dispute has arisen. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. Except by written consent of the person or entity sought to be joined, no arbitration arising out of or relating to the Agreement shall include, by consolidation, joinder or in any other manner, any person or entity not a party to the Agreement, unless it is shown at the time the demand for arbitration is filed that (1) such person or entity is substantially involved in a common question of fact or law; (2) the presence of such person or entity is required if complete relief is to be accorded in the arbitration; and (3) the interest or responsibility of such person or entity in the matter is not insubstantial. The agreement of the parties to arbitrate claims and disputes shall be specifically enforceable under the prevailing arbitration law. Pending final decision of the arbitrator or arbitrators, the parties shall proceed diligently with the performance of their obligations under this Agreement. FIXED BASED OPERATOR'S LEASE - Page 9 of 11 ARTICLE XIV MISCELLANEOUS PROVISIONS A. Entire Agreement. This Agreement constitutes the entire understanding between the parties, and as of its effective date supersedes all prior or independent agreements between the parties covering the subject matter hereof. Any change of modification hereof must be in writing signed by both parties. B. Severability. If a provision hereof shall be finally declared void or illegal by any court or administrative agency having jurisdiction, the entire Agreement shall not be void, but the remaining provisions shall continue in effect as nearly as possible in accordance with the original intent of the parties. C. Notice. Any notice given by one party to the other in connection with this Agreement shall be in writing and shall be sent by registered mail, return receipt requested, with postage and registration fees prepaid: 1. If to Lessor, addressed to: City Manager 312 First Avenue West P.O. Box 1997 Kalispell, MT 59903-1977 2. If to Lessee, addressed to: David Hoemer Red Eagle Aviation 1880 Highway 93 South Kalispell, MT 59901 Notices shall be deemed to have been received on the date of receipt as shown on the return receipt. D. Headings. The headings used in this Agreement are intended .for convenience of reference only and do not define or limit the scope or meaning of any provision of this Agreement. E. Governing Law. This Agreement is to be construed in accordance with the laws of the State of Montana. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. l Y LESSOR: CITY OF KALISPELL LESSEE: Jam . Patrick, City Manager David H er, d/b/a Red Eagle Aviation FIXED BASED OPERATOR'S LEASE - Page 10 of 11 STATE OF MONTANA ) ) ss. County of Flathead ) On this day of Au V , 2005, before me, a Notary Public for the State of Montana, personally appeared Jams H. Patrick, City Manager of the City of Kalispell and proved to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. 'NOTq� d' SEAL tM OtO�' ' V\ STATE OF MONTANA ss. County of Flathead NOTARY P LIC State of Montana Residing at: -kej My Commission expires: 51 141 log On this c� Le day of A u!�4 ti S4' 2005, before me, a Notary Public for the State of Montana, personally appeared David Hoemer, proved to me to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. NOTARY P IC State of Montana Residing at: 1 ( Qm My Commission expires: FIXED BASED OPERATOR'S LEASE - Page 2 of 11 property that are incomplete - not signed, not council approved, improperly notarized, not notarized, and missing signing dates. Please note our concerns and the need to have this evaluated by an independent council. The Iced Eagle Lease Agreement Questions: 1. Signatures - The mayor did not sign the lease. Was it properly approved by the city council as required by MCA 7-8-4201? (No) 2. Article HIB - Authorized Services #4, #5, #6 - There are no "conditions or limitation" placed on growth. As written, the current lessee could grow and change in an ungovernable manner, causing noise problems for the residents of south ]Kalispell. This growth is not in accord with the conditional use zoning laws. Who drafted the contract? We question the quality of fairness for the citizens and fair competition for aviators as well. 'kyou want to be a grandfathered, you have to remain an antique!' (In other words, you can't have "x " amount of business and then expand to "x+" amount of business and expect to be grandfathered. Also, in their attempts to grandfather, it is our belief that the property Red Eagle sold to the city was to eliminate any through the fence operation that is not allowed by the FAA, thus circumventing any legal ramifications) 4. Article MC - Operating Standards #2 - The lease agreement states that the "manager (or a duly qualified subordinate) should be available at the airport during "regular business hours". We question whether Red Eagle Aviation is in compliance with Article III of the lease. 0 #3 - The lease requires "Compliance with local laws, rules and regulations". The flight school has received numerous nuisance complaints (city ordinance 19-10). Flight training and other activities are not in compliance with our city noise ordinance. 5. Article VH - Insurance requirements Red Eagle is required to carry five types of insurance; (see art VII); We have only been provided with one of the five. 6. Article XHI - Termination The lease states that the city may terminate the lease if the airport is abandoned. Since the lease is bogus, how do we deal with this? (Not enough insurance, nuisance, conditional use laws). PART 3 - ZONING LAWS FOR YOUR STUDY "Conditional Use Permits" & the 1993 Zoning Law We have been informed by the zoning officer, and it has been implied by the city attorney, that there is no need for a conditional use permits at this airport, and that are "nuances" in the law that are beyond our understanding, so we are seeking your legal opinion for clarification if this is correct. Highlighted points 27.20.010 - The intent is to serve public health, safety and welfare. 27.20.030 - States that Airports, Hangers and Landing fields require permits. '4 STD A 24.34.10 - The grandfather clause appears to state that a permit is required in the event of alteration, addition, enlargement, expansion or moving. 27.34.040 - The zoning administrator stated that the airport was eligible for an "Administrative Conditional Use Permit" and that the 25% clause provides an exemption. This does not appear to be true based on our reading of that law. - PART 4 - ENVIRONMENTAL ASSESSMENT RECOMMENDATIONS The following recommendations are conclusions we have made based on consultations with government officials. 1. The primary purpose of the EA should be to provide necessary information pertaining to the consolidation of the city airport with Glacier International Airport. 2. EA should be an "original work". Boilerplate material is insufficient to protect the public interest. This was brought to our attention by David Cole, Department of Commerce - Community Development 406-841-2770. 3. Findings of the EA should not be slanted or sugar coated by a firm that has a financial interest in their conclusions. Therefore, to avoid the appearance of a conflict of interest, the firm conducting the EA must not be eligible for contracts resulting from the study. This is essential to a fair and unbiased study. (David Cole) 4. EA should include a survey of the legal voting residents. 5. EA should include a list of alternative development options and address their feasibility. 6. EA should include an appraisal of the real estate value of the property. 7. EA should addressegal issues pertaining to the leaseholders and tenants. 3 I� 8. EA should address improvements/changes to zoning that may be necessary. 9. EA should provide insight and answers to how the Bozeman and Missoula airports serve the needs of the general and commercial aviation community. These insights can be used to provide a smooth consolidation process. 10. Other....