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UNIT #
ANNUAL
LEASE PMT
PRICE / SQ FT
LEASE
TERM DATE
TAX FINAL
BLDG VALUE
Estimated Cost
to Term. Lease
Al
$3,119.74
$0.180
08/01/25
$479,340
$479,340
A2
$3,119.74
$0.180
08/01/25
$367,690
$367,690
A3-1
$919.71
$0.171
02/23/27
$196,474
$1961474
A3-2
$919.71
$0.171
04/26/27
$196,474
$196,474
A3-3
$919.71
$0.171
02/23/27
$196,474
$196,474
A4
$1,770.27
$0.175
09/01/27
$103,120
$103,210
A5
$1,770.27
$0.160
12/01/28
$367,690
$367,690
A6
A7
$972.53
$0.180
08/01/24
$150,000
$100,000
A8
$972.53
$0.180
07/01/26
$187,220
$149,776
A9
A10
All
Al2
1 222.16
$0.170
10/22/16
106 700
85 360
Sub total
$15,706.37
$2,351,182
$2,242,488
Land
$10,731.57
$0.170
07/12/05
FBO
$18,624.00
09/30/25
T-Hangar
$6,000.00
Month/Month
$0
Hangar
6 000.00
Month/Month
$0
Sub Total I
$
TOTAL 6$57,061.941
i reviewing the 2009 MDOT Aeronautical report on fees paid by othergeneral airport in the state the
fees charged from all the airport vary quite a bit and ranged from Nothing to $0.20 / Sq. Ft. Of the 54
general airports that responded with a fee charged for ground rental the most common fee charged
was $.10 / sq. ft. and the fees ranged from Nothing to $0.20 / sq. ft. Kalispell was the 3rd highest rate
* Staff is not able to determine this amount.
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There are 39 assurances that airports must comply with for a term of 20 years when accepting FAA
funding.
These assurances have been reviewed by staff and a summary of these assurances would bring up 10
specific areas that are a point of discussion and consideration. This is staff interpretation and by no
means an all inclusive list.
® Maintain public access to the airport.
® Maintain a preventive maintenance program to the pavement.
® The FAA may have a possible veto on a contractor.
® Temporary closure of the airport for non -aeronautical purposes must be first approved by the
FAA. Does not include weather or climate conditions that cause a temporary closure.
® Maintain the approved noise compatibility program.
® Maintain compatibility of land uses.
® There may be a potential for federal aeronautical use of the facility or a portion of the facility.
® There are land disposal restrictions to the proportion of proceeds the FAA put into the property.
® There are land acquisition restrictions.
• Requires public process and hearings.
The remaining assurances appear to be standard requirements for use of federal funding.
11fii�/i7�►i►t1�1►
The cost of the EA is dependent upon the requirements scheduled in the Scope of Work (SOW)
and would likely fall in the range of between $25,000 and $100,000. Once the SOW has been
determined, the city will obtain a cost estimate from its consultants.
The EA is a qualified item of work that is generally reimbursable at the rate of 95% from the
FAA. The City is required to fund the study prior to its application for reimbursement.
1
The EA would be funded through the Airport Tax Increment District (TIF) which was created to
accomplish three major goals:
1. Move the athletic field north. KidSports was completed at a cost of $1,367,500.
2. Develop the airport in accordance with an approved City Airport Layout Plan. (Ongoing)
3. Create development opportunities on and near the airport. (Ongoing)
The development of the airport covers a broad range of tasks that include planning, designing,
engineering, and construction. It may also include the acquisition of additional land. The
previous EA allowed the city to move forward with the planning phase. However, a new EA is
necessary for further development of the airport. Any step toward the mitigation of the KGEZ
towers, an essential element of any funded airport development, will require a new EA.
1 1 •
The FAA's Airport Improvement Program (AIP) makes funds available to upgrade, modernize,
and build airports. These funds are derived from the collection of taxes on fuel and commercial
travel tickets. A certain amount of funds are allocated annually to the various FAA regions for
airport development. The application and award of these funds at the local level is very
competitive. The FAA plans projects at least five years in advance because there are so many
airports in need and so few funds to go around.
Once the FAA has approved an Airport Layout Plan, the airport is listed in the system for federal
funding under the AIP. It is the airport owner's responsibility to keep the project moving
forward by completing the necessary steps in the process. Although underground infrastructure
is not eligible for reimbursement, most above ground improvements are eligible at the 95% level.
The remaining 5% is the responsibility of the airport owner. If listed as a federal project, the 5%
that is the owner's responsibility could be reduced to 2%2 % with grant and loan money from the
State of Montana Aeronautics Board.
Several different lease forms have been used at the airport over the past 80 years. Some of the
older leases had special provisions as trade-offs for work or construction done by tenants. After
studying the Grant Assurances from the FAA, it was determined to convert all leases to a
standard format that treated all leaseholders equally and include assurances for potential
investors.
As a part of the first phase of the airport development and at council's direction to move ahead,
the northwest corner of the airport was improved with funds obtained through a bond and with
12 new potential hangar sites opened for development. The interested investors and their
financing banks required certain terms and protections from the City if private money was going
to be invested in the airport. These concerns were addressed in the new lease form that was
approved by the city council on March 1, 2004. The significant lease terms of this form are a 20
year term with two 5-year options at the discretion of the city, along with an automatic 3%
escalation clause in the rent and the compulsory insurance requirements. There is also a clause
in the lease that provides some protection to the investor in the event of airport closure.
(Information concerning the lease approval on March 1, 2004 and an amendment on October 4,
2004 is attached)
The FBO (Fixed Based Operator) lease is customized to address the specific obligations of the
FBO. The FBO is located on property recently purchased by the City and leased back to the
tenant.
There are currently two private enterprises located adjacent to the airport that conduct some level
of business with the airport operations. This type of activity is referred to by the FAA as a
"through -the -fence" operation and is disfavored by the FAA. The EA should recommend
alternatives for the City to address these situations.
' 1 :7 �1►t�7 �CKI717�/_1:Z�1>E*71��:7 Z�T'� 17 �T:l Cl�ti
Reference to designation of city airport as being improved to B-I or B-II standards is a reference
to the federal ARC coding system. The ARC is a coding system used to relate airport design
criteria to the operational and physical characteristics of the airplanes intended to operate at the
airport.
The first component of the ARC is depicted by a letter and relates to aircraft approach speed.
(A, B, C, D, E)
The second component, a Roman numeral, is to clarify the design group and relates to airplane
wing span and tail height. (I, II, III, IV, V, VI)
Airport design requires the selection of the ARC and then the lowest designated or planned
approach visibility minimums for the runway. An upgrade in the first component of the ARC
may result in an increase in airport design standards. An upgrade in the second component of the
ARC will result in an increase in airport design standards. An evaluation of the current use of
the airport is essential to the successful redevelopment of the airport.
Increase in Runway Safety Area (RSA)
Increase in Object Free Area (OFA)
Increase in runway design standards:
• Weight limitations: based on fleet usage
o Runway width: 60' versus 75'
o Runway length: optional
o Taxiway width: 25' versus 35'
Increase in runway and taxiway separation
Also present: City Manager Chris Kukulski, City Attorney Charles .Harball, City Clerk Theresa
White, Police Chief Frank Garner, Fire Chief Randy Brodehl, Public Works Director Jim Hansz,
Finance Director Array Robertson, Community Development Director Susan Moyer and Tri-City
Senior Planner Narda Wilson,
Mayor Kennedy called the meeting to order and led the Pledge of Allegiance.
There was no discussion.
The motion carried unanimously upon vote.
B. CONSENT AGENDA APPROVAL
1. Council Minutes — Regular Meeting — February 17, 2004
2. Council Minutes — Snecial Meeting — February 23, 2004
3. Ordinance 1492 — Skateboard Park Regulations — 2nd Reading
4. Postpone Acceptance of Proposal for Comprehensive Plan — North Fire Station
City Airport Fee Schedule Change
There was no discussion.
The motion carried unanimously upon roll call vote.
Node.
David Graham, 128 West Bluegrass Drive, spoke in favor of Agenda Item #5, the Orchard Village
Preliminary Plat. He said he's proud to be part of a project that takes an "eyesore" area and develops
it into a beautiful multi -family community.
Don Bennett, President of 1st Citizens Bank in Columbia Falls and Chairman. of the Port Authority,
spoke in favor of Agenda Item #1, the StreanVSolectron and TeleTech agreements. He said the City
and the community will benefit from this proposal and he hopes the Council supports it.
Kalispell City Council Minutes
March 1, 2004
Page 1
City of Kalispell
Post Office Box 1997 - KaRspeft, Montana 59903-1997 -Telephone (406)758-7700 z+ax(406)758-7758
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 future as
we begin the planning for the expansion of the airport. Within the next two years, four of the
five airport leases empire 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.
FISCAL EFFECTS:
ALTERNATIVES:
Respectfully submitted,
Chris Kukulski
City Manager
Council adopt the Kalispell City Airport lease.
Revenue neutral.
As recommended by Council.
n
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:
I. 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 1st 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 of $ ( ) 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-rata 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, TENANTIS 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 % 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 tc
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 TENA.NT=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 CXTY, 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 TENAItT".P 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 '2-9-108, 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 '9600, et seq. (ACERCLA@),
AHazardous Waste@ as defined by the Montana Hazardous
Waste and Underground Storage Tank Act, '75-10-401 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
shall be entitled to reasonable attorneys 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 KA.LISPELL
so
Attest:
Attest:
2003 Airport Lease 9
Manager
TENANT
U0112.4on
This resolution sets the length of new construction leases at the City airport to twenty years and
requires all new construction lease holders to enter into a Developers Agreement with the City.
Peters moved Resolution 4941, a resolution to allow the term of hangar leases at the Kalispell
City Airport to extend to twenty years if so required by third party financing and to require
new construction lease holders to enter into a Developers Agreement with the City of Kalispell.
The motion was seconded.
Moyer gave a staff report explaining "new construction" leases would run a term of twenty years or
the life of the financing up to twenty years with two five-year options to extend.
Hafferman said when he joined the Council in 2002 he was informed the airport improvements
would amount to approximately seven million dollars, of which FAA would contribute ninety
percent. He said the City's portion would be obtained from the sale of property dedicated for use by
the airport. Hafferman said he's consistently supported airport improvements, making sure the
million dollars promised to the airport was not used for other projects. He added, however, on
September 9th of this year he learned that the "movers and shakers" are anticipating using tax
increment to finance utilities. Hafferman said during a work session held on September 20th, he
learned there was "a move afoot" to extend the life of the airport tax increment district which is due
to retire in 2006, He commented if that occurs, the taxpayers will be losers for a longer period of
time. Hafferman. said his support has since "flip-flopped" and be will not support the airport project,
or any project that uses taxpayer monies for development.
Mayor Kennedy commented she is confused by Hafferman-s statement and asked him if he is
speaking in favor or opposition to the issue of amending the airport leases.
Hafferman said he's not in favor of changing anything at the airport as long as there is a movement
to use tax increment funds.
Olson stated he had asked for an escape clause in the agreement and asked if one was included.
Moyer answered the agreement states twenty years or the term of the financing. She said if the bank
indicates that a fifteen year lease is adequate, then that's what it will be.
Peters said be understands Hafferman's point and asked if the Council will eventually get to discuss
running services to the airport.
Moyer said when it comes to the airport, the City is the developer and it's the City's responsibility to
make that property as viable as possible. She said it doesn't do the City any good to build a hangar
without any paving to get there, or any utilities once you are there.
Peters said he just wants to make sure that issue is discussed with the Council in the future, but as far
as this resolution, he doesn't have any problem approving a twenty year lease to make the airport
more attractive to build hangars.
Kalispell City Council Minutes
October 4, 2004
Page 7
Herron asked if a twenty year lease is available if someone wants to pay cash.
Moyer said the twenty year lease is strictly tied to financing. Someone wanting to pay cash would be
offered a ten year lease.
Herron commented from a business standpoint, that doesn't make sense.
Olson noted the lease holder would have the option of two additional five year terms.
The motion carried upon roll call vote with Atkinson, Gabriel, Herron, Kenyon, parson,
Olson, Peters and Mayor Kennedy voting in favor, and Hafferman voting against.
Resolution 4942 amends the current policy and application process fortax increment financing in all
urban renewal districts.
a 1 :• x■ :�, 1 �. 1 ., t 1 '- ` 1 1 1: 1 1 a
NI
redevelopment projects of Kalispell. The motionseconded.
.Moyer gave a staff report explaining that some of the revisions include changing the interest rate and
terms on TIF loans and deleting various sections of the policy that are no longer applicable.
Atkinson said Hafferman had his opportunity to speak on tax increment funds and he'd like to
comment on the positive side. He said in a tax increment district "the taxes that happen right now
stay the same and those taxes go to the County, the School District and the City. Anything from this
date forward, the increment goes to a fund that helps to develop the property within that tax
increment district for a certain period of time. At the end of that period of time, that increment gets
split up the way it normally does, to the County, the City and the School District." Atkinson said the
reason the entities agree to relinquish some of the taxes over the period of the tax increment district
is so that the economy can develop and the tax base becomes higher. He said it's essentially the
foregoing of money to receive more money at a later date.
E/12. ORDINANCE 1514 - EASTSIDE TRAFFIC CALMING MEASURES — 1ST
READIN
Ordinance 1514 establishes several changes in the area around Hedges School to calm neighborhood
traffic and enhance child safety.
Gabriel moved first reading of Ordinance 1514, an ordinance instituting certain traffic
calming measures on the east side of Kalispell, pursuant to Kalispell City Code 17-15 and
amending Kalispell City Code 17-54H, 17-72-1 and 17-106B, authorizing the Kalispell City
Attorney to recodify such code and declaring an effective date. The motion was seconded.
Garner and Hansz gave a staff report, explaining this is part of the Safe Routes to Schools Program
with similar traffic calming measures being looked at for Peterson, Russell and Edgerton schools.
Kalispell City Council Minutes
October 4, 2004
Page 8
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f�
Ciuy of Kalispell
Post Office Box 1997 - halispell, Montana 59903-1997 -Telephone (406)758-7700 Fax(406)758-7758
REPORT TO:
FROM:
SUBJECT:
MEETING DATE:
BACKGROUND:
The Honorable Mayor Pamela B. Kennedy and City Council
Susan Moyer, Community Development Director
Frank Garner, City Manager
Changes to Airport Leases
October 4, 2004
On September 20, 2004, Council heard at a workshop the request by the City Airport Manager regarding a need for "new
constriction" leases to run a term of twenty years or the life of the financing up to twenty years with two five ear options to extend.
The letter from GIacier Bank stating that this is standard banking practice was included in your September 20 packet.
Additionally, all new construction lease holders will enter into a Developers Agreement at the time the building permit is taken out.
The Developers Agreement will insure the new structure is placed upon the tax roles and that the taxes paid will meet a pre-
determined amount, set by the County Tax Assessor. This document will then generate a guaranteed amount of taxes in the event
future state taxing legislation results in the reduction of personal property taxes. This Developers Agreement will be similar to the
standard "payment -in -lieu of taxes" agreement used in all city developers' agreements.
RECOMMENDATION: Council approves Resolution No. 4941 adopting the change to the Airport lease document:
• Renewal of existing leases to be based on a 10-year lease with the option of two additional five year terms.
• New construction leases will run for a period of 20-years or the life of the construction financing as established by the
lending institution. This change allows flexibility for new hanger owners to negotiate with lending institutions for
permanent financing based on size and cost of the project.
FISCAL IMPACT: Based on the written interest provided to council at the September 20a' workshop, an estimated $22,000+
will be generated in an increased tax base and approximately $15,000 in annual lease payments.
ALTERNATIVES: As suggested by Council,
Respectfully submitted,
Susan Moyer, Director,
Community Development
J
ate, �f
li lank Garner,
Interim City Manager
A RESOLUTION TO ALLOW THE TERM OF HANGER LEASES AT TH"
KALISPELL ar ,► r TO EXTEND REQUIRE Is
BY THIRD PARTY FINANCING AND TO REQUIRE CONSTRUCTION
HOLDERS �s DEVELOPERS'
ti f . '
WHEREAS, on July 1, 2003 the Kalispell City Council passed Resolution No. 4804,
establishing the fee structure and lease rates for hanger leases at the Kalispell City
Airport; and
WHEREAS, on March. 1, 2004 the Kalispell City Council, by motion, approved the standard
lease form for hanger leases at the Kalispell City Airport, which standard lease
form offers a 10 year term lease with two five year extensions; and
WHEREAS, further review by Council and evidence provided by current and potential lessees
of hanger sites on the airport property indicate that investment at the airport by
means of third party financing would be impaired unless the City offers up to a
20-year term lease for third party financing in the lease improvement; and
WHEREAS, it is in the best interest of the City and the Airport Tax Increment District that the
City enter into a developer's agreement with new construction lease holders
which insures that any new structures are placed on the City tax rolls and that
such tax payments meet a predetermined amount as set by the County Tax
Assessor.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION I. The .City Manager is hereby authorized to execute hanger leases on behalf
of the City of Kalispell for terms longer than 10 years or for a term of up
to 20 years if third party financing in the lease improvement requires such
term.
SECTION II. The City shall hereafter enter into a developer's agreement with new
construction airport hanger lease holders which insures that any new
structures are placed on the City tax rolls and that such tax payments meet
a predetermined amount as set by the County Tax Assessor.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 4`h DAY OF OC , 2004.
f
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk