5. City Airport Fee Schedule ChangeCity of Kalispell
Post Office Box 1�)97 -- Kalispefi, Montana 59903-199. -Telephone (406)758-7700 Fax(406)758-7755
REPORT: Honorable Mayor and City Council
FROM: Chris Kukulski, City Manager
SUBJECT: Kalispell City Airport Fee Schedule Change
MEETING DATE: February 26, 2004
BACKGROUND: The objective of the Kalispell City Airport is to continue to provide safe
and regulated aeronautical use for the benefit of all of the citizens of Kalispell. Since its
inception, the users of the airport have funded the airport. Leased income derived from hangars,
aviation gas tax, user fees and commercial fees generate the airport funds. Proceeds of this
revenue has provided insurance, maintenance and upkeep of the lighting and radio system at the
airport.
Updated airport hangar contracts have been discussed for several years. Over the past year, it
has become apparent that existing lease wording including contract length, liability, insurance,
safety, subleasing and fee structures required modification to move the City into the fixture as
we begin the planning for the expansion of the airport. Within the next two years, four of the
five airport leases expire and we are aware that the leasees are interested in renegotiating new
leases. In addition, we have had two new requests for immediate hangar leases and anticipate
several more once building begins. For consistancy, special requests will be handled through
the use of an addendum rather than making internal changes to each lease.
Current lease rates (adopted in Resolution No. 4804) apply. Other significant changes include:
• Paragraph 2. The term of the lease will now be 10 years rather than 20, with two
additional successive terms of 5 years each.
• Paragraph 3. Clarification regarding payment of the lease and provisions for fee
increases.
• Paragraph 4. Clarification of building standards and building expansion.
• Paragraph 5. Clarification of hangar use and sublease requirements. It requests an
administrative fee when an airport hangar space is subleased. The recommended rate is
2%.
• Paragraph 8-11. Clarification and inclusion of liability and insurance requirements.
• Paragraph 13. Clarification of building maintenance & repair.
• Appropriate language for standardization.
The Airport Advisory Board after consideration and review of the legal staff has requested the
adoption of the proposed lease effective immediately.
RECOMMENDATIONS:
FISCAL EFFECTS:
ALTERNATIVES
Respectfully submitted,
Chris Kukulski
City Manager
Council adopt the Kalispell City Airport lease.
Revenue neutral.
As recommended by Council.
HANGAR SITE LEASE
THIS Lease, made and entered into this day of
, , by and between the City of Kalispell, a
municipal corporation, hereafter referred to as CITY, and
, hereafter referred to as TENANT:
W I T N E S S E T H:
WHEREAS, the CITY operates the Kalispell City Airport, and
WHEREAS, the CITY desires, in order to provide a source of income
for airport maintenance and to increase the utilization
of said airport, to lease tracts of land to various
tenants in order that the tenants may erect structures
for the storage and protection of aircraft based at said
airport.
NOW, THEREFORE IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. The City does hereby agree to lease to TENANT, and TENANT
hires from City, those certain premises located at the
Kalispell City Airport, Kalispell, Montana, which are
specifically described in Exhibit AA@ (Projected Building
Area) which is attached to this Lease and by this
reference incorporated herein.
2. The term of this Lease shall be for ten (10) years,
commencing on the lst day of , and
ending on the 1" day of unless
sooner terminated by mutual agreement of the parties or
by one of the parties under the specific provisions
hereof. TENANT ,shall have the option to renew for up to
two (2) additional successive terms of five (5) years
each. CITY shall give TENANT sixty (60) days written
notice prior to the end of each term and TENANT shall
give CITY written notice of TENANT=S intention to
exercise said option no later than thirty (30) days from
the end of each term. Upon expiration of the forgoing
terms, TENANT shall have the right of first refusal to an
additional lease not to exceed five (5) years under such
terms and conditions as may be agreed upon at such time.
3. TENANT agrees to pay to the CITY for the use and benefit
of the CITY the sum o $ ( ) per
square foot per year for the projected building area,
which for purposes of this provision shall be one hundred
2003 Airport Lease 1
and fifty percent (150%) of the actual square footage
occupied by the hangar, herein authorized, payable as
follows:
a. Upon the commencement date, TENANT shall pay the
pro -rates portion of the annual rent for the time
period from the commencement date to July 1 next
succeeding.
b. On each July 1, TENANT, without demand, shall pay
the annual rental to the next succeeding fiscal
year.
C. On July 1, at the commencement date of the fiscal
year during which this Lease terminates, TENANT,
without demand, shall pay the pro-rata portion of
the annual rent for the time period from July 1 to
the termination date of the Lease.
d. During the initial ten-year term of the lease, the
annual lease payment shall increase 3% annually,
from the previous year's payment. In the event
TENANT elects to exercise his option to renew this
lease for a subsequent five-year term, the annual
lease payment shall be reviewed and reset by CITY.
e. The Airport Manager or his designee will be
responsible for the collection of lease payments or
administrative fees for existing hangar and ground
leases, and for adjustments to lease fees resulting
from application of the criteria established in
part (d), above.
4. TENANT agrees to construct one building for the purpose
of housing light aircraft on said land, and TENANT
further agrees to construct said building, together with
access to runway, in accordance with the specifications
contained in hangar construction and design standards.
TENANT shall supply to CITY upon completion of the
building appropriate invoices establishing the cost of
construction of said building.
a. TENANT shall have the right, upon the termination
of this Lease, unless a lease for a further term be
negotiated, to remove the hangar structure, but
shall do so within 90 days and shall leave the
premises in a restored condition, except that any
paving shall be left.
2003 Airport Lease 2
b. If TENANT does not remove said building within such
allotted time, it shall then become the property of
CITY without further action on the part of the
CITY.
C. TENANT may expand the square footage of any
building constructed on the Airport site, subject
however to the prior written consent of CITY. In
the event CITY approves any building expansion
during the primary lease term or any extension
thereof, TENANT'S lease payments shall be adjusted
in accordance with the criteria set forth in 13.
5. TENANT shall use said property for the storage of light
aircraft and other lawful purposes necessarily incidental
thereto and for no other purpose.
a. TENANT may sublet the premises for aviation
purposes, subject however to the prior written
consent of CITY. Any such sublease shall be in
writing and shall be reviewed by CITY prior to
approval.
b. CITY'S approval of any sublease shall not relieve
TENANT of any obligation imposed by this agreement.
TENANT shall provide to CITY a signed copy of the
final sublease agreement for its file.
c. Upon approval by CITY of any sublease, an
administrative fee equal to a of the rental fee
imposed by TENANT on the sublessee, shall be paid
by TENANT to CITY throughout the term of the
sublease. This administrative fee shall terminate
upon termination of the sublease.
6. TENANT shall have the right and privilege of sale,
assignment or transfer of this Lease for the purpose
defined in 15, hereof, upon written notice to the CITY
stating the name and address of the proposed buyer,
assignee, or transferee.
a. If the CITY shall determine that said proposed
buyer, assignee, or transferee is objectionable,
any such reasonable objection shall be stated in
writing to the TENANT within twenty (20) days after
said notice.
2003 Airport Lease 3
b. The CITY shall not unreasonably withhold consent to
sell, assign, or transfer this Lease, but reserves
the right to adjust the annual rental payments
following assignment.
C. After sale or assignment by TENANT of its interest
here, TENANT shall be relieved from liability for
rental payments accruing thereon, and the buyer,
assignee, or transferee shall thereafter be liable.
d. Transferee under this paragraph shall only acquire
the balance of the term of the lease and shall be
subject to all terms and conditions of this lease,
including the obligation to provide CITY with proof
of insurance coverage as required by 18.
7, if, for any reason, the CITY discontinues aviation
operations on Kalispell City Airport site, the CITY may
terminate this lease and may elect to pay TENANT the
unamortized portion of the cost of the hangar, herein
authorized to be built. That amortization is to be
computed on a straight-line basis over the period from
the completion of the improvement up to 15 years.
8. TENANT shall hold harmless and indemnify the CITY from
any and all liability claims of any kind or nature,
whatsoever, arising out of the erection or expansion of
the building upon the premises contemplated, herein, or
the use of said premises by TENANT or TENANT=s invitees
or licensees.
a. As evidence of TENANT=s covenant herein, TENANT at
TENANT expense shall keep in force, during the term
of this Lease, insurance, issued by an insurance
company, licensed to do business in Montana,
protecting the CITY against all liabilities,
judgments, costs, damages and expenses which may
accrue against, be charged to, or recovered from
the CITY, by reason of damage to property of,
injury to or death of any person or persons on
account of any matter or thing which may occur on
the demised premises.
b. Policy or policies in the amount of Seven Hundred
and Fifty Thousand Dollars ($750,000.00) with
respect to any one person, and One Million and Five
Hundred Thousand Dollars ($1,500,000.00) with
2003 Airport Lease 4
respect to any one occurrence shall be held. Said
insurance policy shall name the CITY, its officers,
employees and agents as additional named insureds,
and shall not be canceled or materially changed
without at least thirty (30) days prior notice to
the CITY, and shall be subject to approval as to
coverage by the CITY.
C. Proof of insurance coverage required by this Lease
shall be provided by TENANT to CITY at the time of
execution of this agreement. CITY reserves the
right at any time during the primary lease term or
any extension thereof, to require TENANT to provide
to CITY proof of continued insurance coverage.
d. Policy limits are subject to change in accordance
with 12-9-108, MCA, ALimitations on Governmental
Liability for Damages in Tort.@ TENANT shall file
certificates of said insurance with the CITY, and
said insurance shall be in full force and effect,
throughout the term of this Lease.
e. Failure or refusal by the TENANT to obtain or
maintain said insurance as required hereunder shall
constitute a material breach of this Lease and, in
such event, CITY, in its sole discretion, may
terminate this Lease without liability to TENANT
hereunder, or elect to obtain like coverage and the
cost for such coverage shall be paid by TENANT.
9. TENANT shall be responsible for acquiring whatever
insurance TENANT deems necessary to safeguard TENANT=S
interest in the TENANT=s building, herein authorized, and
personal property stored in said building, and TENANT
expressly covenants and agrees to assert no claim against
CITY as a result of the loss or damage to the building or
personal property belonging to TENANT or anyone else
resulting from the action of any third party.
a. TENANT herein covenants and agrees to take whatever
steps TENANT sees fit to take in protecting
TENANT=S property and persons from loss or damage
as a result of vandalism, malicious mischief, theft
or kindred losses, and agrees to assert no such
claim against the CITY incident thereto.
2003 Airport Lease 5
b. All losses suffered
criminal activity or
the police. The CITY
such losses.
by TENANT resulting from
others shall be reported to
assumes no responsibility for
10. In the event that soils or other material are found on
the leased site that are AHazardous or Deleterious
Substances@ as defined by the Montana Comprehensive
Environmental Cleanup and Responsibility Act, 175-10-701
et seq. MCA (ACECRA@), AHazardous Substances@ as defined
by the Comprehensive Environmental Response, Compensation
and Liability Act, 42 USC 19600, et seq. (ACERCLA@),
AHazardous Waste@ as defined by the Montana Hazardous
Waste and Underground Storage Tank Act, 175-10-401 et
seq., MCA or the Solid Waste Disposal Act, as amended by
the Resource Conservation Recovery Act, 42 USC '6901 et
seq., or which require special remediation or disposal or
disposal pursuant to any other applicable law, TENANT
shall excavate, handle and dispose of such soils or other
material only in compliance with such statutes and
regulations.
a. In the event TENANT leaves any of the above
described materials on the property, the CITY may,
at its option, have wastes properly disposed of and
assess the costs of removal, storage, transport and
disposal to TENANT.
b. All Hazardous Materials must be appropriately
labeled and stored.
C. In the event Hazardous Materials are spilled upon
the property, it is the responsibility of TENANT to
have the spill cleaned up according to State and
Federal laws and regulations. In the event that
drains or floor sumps are contaminated, it will be
the responsibility of TENANT to clean up those
systems.
d. TENANT is aware that there are significant
penalties for improperly disposing of wastes or
submitting false information, including the
possibility of fine and imprisonment for knowing
violations. TENANT must comply with all state,
federal and local laws pertaining to the handling
and storage of hazardous materials..
2003 Airport Lease 6
11. No construction or installation of any underground fuel
storage tank dispensing system shall be allowed upon the
premises.
12. Any utility services required by TENANT=s building or for
its use shall be obtained by TENANT at TENANT=s expense.
13. a. TENANT agrees that upon completion the building
will be maintained in good order, repair and safe
condition and in compliance with the law. TENANT
shall make any and all additions to, or alterations
or repairs in and about the land and/or
improvements which may be required and, in doing
so, TENANT shall observe and comply with all
existing or future public laws, ordinances and
regulations applicable to the Land or public
airport land upon which the leased premises are
located.
b. TENANT shall maintain an area of ten (10) feet from
the exterior walls of the hangar or of the median
point between hangars if there is less than twenty
(20) feet between hangars, free from brush and
weeds. If TENANT fails to keep and maintain the
leased premises and improvements as required
hereunder, CITY may in its discretion following
written notice undertake to do or have done such
and any expenses incurred by CITY shall be paid by
TENANT.
C. TENANT shall not store personal property, equipment
of any kind, or vehicles, outside of the hangar.
14. TENANT shall be responsible for all taxes levied upon the
structure erected hereunder and any equipment or property
located therein. The land is owned by the CITY and is
exempt from taxes, and the CITY agrees to maintain such
tax exempt status.
15. TENANT shall comply with all State and Federal laws and
regulations and with the Operating Regulations of the
City of Kalispell. CITY shall have the right, through its
agents or employees, for reasonable ingress and egress to
inspect premises to ascertain that the terms of this
Lease are being adhered to.
2003 Airport Lease 7
16. Notices to CITY shall be sent by certified mail, postage
prepaid to City Manager, City of Kalispell, P.O. Box
1997, Kalispell, MT 59903-1997, and notices to TENANT
shall be sent by certified mail, postage prepaid to:
17. TENANT shall have the right to cancel and terminate this
Lease and any obligations arising hereunder by written
notice to the CITY delivered within 60 days hereafter.
18. CITY reserves the right to further develop or improve, or
not develop or improve, the landing area of the airport
as it sees fit, regardless of the desires or view of the
TENANT, and without interference or hindrance.
19. This Lease shall be subordinate to the provisions and
requirements of any existing or future Lease between the
CITY and the United States, relative to the development,
operation or maintenance of the airport.
20. TENANT agrees to comply with the notification and review
requirements covered by Part 77 of the Federal Aviation
Regulations in the event any future structure or building
is planned for the leased premises, or in the event of
any planned modification or alteration of any present or
future building or structure situated on the leased
premises.
21. It is mutually agreed and understood that if TENANT
should fail to make the annual lease payments as
described above, or fail to perform any condition or
covenant or condition of this Lease or fail to maintain
the leased premises in a manner satisfactory to the CITY,
and such condition or conditions exist for more than
ninety (90) days after written notice is given to the
TENANT, CITY may then terminate and end this Lease and
re-enter and retake possession of the premises. All
buildings and improvements placed on the premises shall
thereupon revert to the CITY. This paragraph shall not
apply to failure of TENANT to obtain or maintain
insurance under &8, above.
22. It is mutually agreed that this Lease shall inure to the
benefit of and be binding upon the respective parties,
2003 Airport Lease 8
their heirs, successors and assigns. It is further
agreed that time is of the essence of this Lease.
23. Any change or modification of this Lease, in order to be
effective, must be in writing and signed by the
respective parties.
24. In the event either party to this Lease shall be required
to bring an action against the other party to enforce
this Lease, or any portion thereof, the prevailing party
shah be entitled to reasonable attorney's fees and cost
therefore in addition to any damages that might be
awarded.
IN WITNESS WHEREOF, said CITY has caused this Lease to be
signed on its behalf by the Manager of said CITY and said TENANT
has executed this Lease this day of ,
CITY OF KALISPELL
Manager
Attest:
TENANT
Attest:
2003 Airport Lease 9