Memorandum 16-177 Bob's Trophy Charters Lease

Memorandum 16-177

TO:                       MAYOR BRYAN ZAK & HOMER CITY COUNCIL             

THROUGH:       PORT & HARBOR ADVISORY COMMISSION

FROM:                 LEASE ADVISORS

DATE:                  NOVEMBER 2, 2016

SUBJECT:         BOB’S TROPHY CHARTERS LEASE ASSIGNMENT & PROPOSAL

Port and Harbor Staff received news October 2016 from David and Diane Morris, owners of Alaska High Hopes/Bob’s Trophy Charters, that they found a potential buyer for their fishing charter business.  A lease proposal and request for lease assignment was received from Todd Strand October 24, 2016 wishing to enter into a new 20-year lease with the City.  Both parties are wishing to finalize the business purchase before the end of this year.  Attached is the business proposal, supporting letters from the Morris’, and correspondence from the City to both parties regarding any outstanding zoning issues that would need to be resolved before a lease assignment/new lease could be approved.

The Lease Advisors reviewed the lease proposals at their November 1, 2016 meeting.  As per the Lease Policies and Procedures, the proposal must go before the Port and Harbor Advisory Commission for recommendations and then to City Council for approval.

The Lease Advisors recommend to City Council that the lease assignment request be granted to Bob’s Trophy Charters and a new long-term lease be awarded to Mr. Todd Strand, dba Bob’s Trophy Charters.  Mr. Strand has provided sufficient information to the City to show that Bob’s Trophy Charters is being sold to a responsible party and can continue operating it as a viable fishing charter business.  It was further agreed by the Lease Advisors that a new lease be awarded without the parcel being advertised through the Request for Proposals process.  The assignment and new lease is contingent upon the Morris’ and Mr. Strand resolving two zoning code issues, which are detailed in the attached letter dated November 2, 2016.

  Below are some highlighted details of the proposed lease:

2.01 Lease of Property: Tract 1-B, KPB 181-031-18, consists of 6,692 square feet.
3.01 Lease Term: New term is a 20-year lease, with two 5-year extensions.
4.01 Base Rent:  The annual base rent will be no more than $6,256.80 and is subject to change as determined by lease negotiations and/or if a current appraisal is needed.  Rent will be subject to annual CPI increases and 5-year appraisals.
6.02 Required Improvements: Proposed improvements include exterior painting of building by October 1, 2017.
8.01 Subleases: At this time, there are no proposed subleases.  If Mr. Strand chooses to enter into a contract with the company that currently maintains antennas on the building then he will formally request approval to sublease.

Recommendation

The City Manager and Port and Harbor Staff recommends approving Resolution 16-116, approving an assignment of lease for Bob’s Trophy Charters on Tract 1-B and awarding Todd Strand, dba Bob’s Trophy Charters a 20-year lease with two, five-year options for Tract 1-B, Fishing Hole Subdivision No. 2, with an annual base rent of $6,256.80 (subject to change as determined by lease negotiations and/or ordered appraisal if needed), and authorizing the City Manager to move forward with lease negotiations and execute the appropriate documents.

Attached:          Todd Strand dba Bob’s Trophy Charters Lease Proposal

                              Letter to Morris’ & Strand’s Re: Zoning Code Issues dated November 2, 2016

Fiscal Note: Bob’s Trophy Charters’ Annual Base Rent will be $6,256.80, subject to change as determined by lease negotiations and/or ordered appraisal if needed; lease rate is adjusted annually per the Consumer Price Index.