Session 09-04, a Regular Meeting of the Economic Development Advisory Commission was called to order at 6:00 p.m. by Chair Hogan on May 12, 2009 at the City Hall Cowles Council Chambers located at 491 E. Pioneer Avenue, Homer, Alaska.

PRESENT: COMMISSIONER ERICKSON, FAULKNER, HOGAN, NEECE, RAVIN

COUNCILMEMBER WYTHE

STAFF: SPECIAL PROJECTS COORDINATOR HOLEN

DEPUTY CITY CLERK JACOBSEN

VISTA REPRESENTATIVE BEVIS

APPROVAL OF THE AGENDA

The agenda was approved by consensus of the Commission.

PUBLIC COMMENTS REGARDING ITEMS ON THE AGENDA

There were no public comments.

RECONSIDERATION

APPROVAL OF MINUTES

A. March 10, 2009 Regular Meeting Minutes

The minutes were approved by consensus of the Commission.

STAFF AND COUNCIL REPORT

Special Projects Coordinator reviewed her staff report that was included in the packet.

Councilmember Wythe commented about the May 11 City Council meeting.

PUBLIC HEARING

There were no items for public hearing.

PENDING BUSINESS

A. Lease Policies

a. Letter to Lease Committee from Jennifer McLay, Wells Fargo Bank dated May 6, 2009 Re: Recommendations for Changes to City Lease Document as Back up

The Commission discussed HCC 18.08.180(a) and refining the suggested language “Assessments landowner needs to pay improvement or allow the lessee to vote on the LID assessment needs to be in proportion to the leasehold interest in terms of remaining lease”

Points raised in discussion included:

· When buying a piece of property and it has an assessment normally the purchaser assumes the payment on the assessments. In a lease situation if there are 4 years on the lease and the lease has a 15 year assessment, the assessment should be against the lease.

· This amendment would help align the code and the policies. Code takes precedence and its language should be broader.

· The intent of the amendment is to allow the lessee to vote regarding the assessment.

· As it stands now a lease holder has the responsibility of paying with out the option of voting.

· An option for wording could be “The lessee shall be allowed to vote on LID assessments affecting the lease. Annual LID assessments will be paid as long as the lessee owns the lease and will accrue to any future lessee.”

· In the instance of an apartment, the owner would be responsible for the assessment and could incorporate it in the fee that is charged for the rent.

· In the instance of the City, the lessee has to pay for the assessments and upgrades.

ERICKSON/NEECE MOVED TO TAKE MR. FAULKNERS SUGGESTION “THE LESSEE SHALL BE ALLOWED TO VOTE ON LID ASSESSMETNS AFFECING THE LEASE. ANNUAL LID ASSESSMENTS WILL BE PAID AS LONG AS THE LESSEE OWNS THE LEASE AND WILL ACCRUE TO ANY FUTURE LESSEE” AND ADD “SUBJECT TO LEGAL REVIEW”.

There was brief discussion that it would be HCC 18.08.180 as to how it would be broken down in code as items b, c, and d.

VOTE: NON OBJECTION UNAINMOUS CONSENT

Motion carried.

Discussion ensued regarding the Property Management and Policy Procedures manual. Chair Hogan reviewed the amendment to each chapter and action was taken on each section as follows:

Chapter 7

Discussion of annual lease rent shall equal 8% of the Borough assessed valuation of the raw land because the appraisers have no standards to base the fair market value. This is an attempt at making a standard. Appraisals are also costly and take a lot of time.

Chapter 8

8.1

It is the policy of the City of Homer to provide for a reconsideration process so that a fully responsive bidder may seek remedies to actions by the City Council, or Lease Committee, that he or she may believe are in error, unfair, or otherwise unsatisfactory. ~~The reconsideration provisions apply only to final approval of a lease by the City Council.~~

In striking the final sentence it gives a level of appeal to the action of the lease committee to the City Council.

FAULKNER/ERICKSON MOVED TO ADD THE WORDS OR LEASE COMMITTEE AFTER REMEDY TO ACTIONS BY THE CITY COUNCIL AND LEAVE EVERYTHING ELSE IN LIKE IT IS.

There was discussion to keep the last line.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 1

1.1

~~D. It is the policy of the City to lease property for a specific purpose or use. Leasing for the purpose of speculation and/or subleasing land will be discouraged.~~

1.2

The Lease Committee described herein shall be responsible for reviewing this policy manual and making recommendations to the City Council as needed, ~~advising the City Manager or designee as to terms, stipulations, and negotiating approach with respect to leases,~~ evaluating lease applications, and making recommendation to the City Council regarding proposed leases.
~~The City Manager or designee is responsible for all lease negotiation activities and for implementing and administering the lease policies and procedures.~~

B. The Lease committee may delegate the responsibility for negotiating and administrating leases.

C. The City Council has responsibility for approving and adopting the lease policies and for final approval of all leases over six months in duration.

RAVIN/ERICKSON SO MOVED FOR THE AMENDMENTS IN CHAPTER 1.

There was discussion that the motion included all the suggested amendments in chapter 1.

VOTE: NON OBJECTION: UNANIMOUS CONSENT.

Chapter 2

ERICKSON/FAULKNER MOVED TO ACCEPT THE AMENDMENTS DELETING THE RED AND ACCEPTING THE GREEN. [i]

2.2 PROCEDURES

~~The City Manager shall establish a Lease Committee that will consist of the Finance Director, the City Planner, the Port and Harbor Director,~~ The Mayor shall appoint, with confirmation by the Council, a Lease Committee that will consist of one member of the Economic Development Commission, one member of The Port and Harbor Commission, a City Council member, and two at large members of the public. An additional commission as determined appropriate by the City Manager, and one member of the public. The Manager shall consult with the Chair of the Commissions to determine who from the Commission and who from the public might best serve the Committee and not be subject to conflicts of interest. The Lease Committee may consult with department ~~heads such as, the Fire Chief, Police Chief and the Public Works Director and the City Manager~~ city administrative staff or outside professionals as needed and appropriate.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 3

3.2 Procedures

E. The City Council may restrict specific City properties to certain uses or classes of use. Such properties will be available for leasing only such uses. The City Council has in the past restricted the use of lots immediately adjacent to the Fish Dock to activities directly related to commercial fishing. Similarly, it has restricted uses on lots adjacent to the Deep Water Dock to marine industrial uses with an emphasis on shipping and cargo handling. The purpose for these restrictions is to encourage growth in targeted economic sectors, to insure that the City receives the maximum benefits from the large investment the public has made in those docks, and to provide land for businesses that require close proximity to the docks in order to operate efficiently and profitably.

There was discussion about a letter in a previous packet from Jennifer McLay from Wells Fargo regarding the financability of restricted use properties. In restricting beyond what the zoning restrictions are then banks finance to a lesser degree. The intent of deleting this is not to encourage misuse of property, but for zoning to be the mechanism for restricting what is going on.

RAVIN/ERICKSON SO MOVED TO DELETE 3.2 E.

There was brief discussion regarding the zoning and difficulty of development on the spit.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 5

5.2 A.

7. All other required attachments requested on the application form including, but not limited to, the following documentation: applicant information, plot plan, development plan, insurance, proposed subleases, environmental information, ~~agency approvals and permits, fees,~~ financial information, partnership and corporation statement, certificate of good standing issued by an entity’s state of domicile, and references.

RAVIN/ERICKSON MOVED TO AMEND ITEM 7.

There was discussion that those are post lease steps that are done more in the construction phase.

VOTE: NON OBJECTION: UNANIMOUS

Motion carried.

Chapter 10

10.2

C. All improvements constructed upon leased property become the property of the City upon termination of the lease unless otherwise provided in the lease, or agreed to by the parties in writing, the lessee shall on or before the lease termination date remove all improvements the lessee is ~~authorized or~~ required to ~~remove and~~ restore the property to the same condition it was in at the time the lease was executed by the lessee.

The lessee shall, during the course of the lease term, be subject to and responsible for payment of assessments related to local improvement districts, payment of its share of the cost of capital improvement projects completed by the City that benefit the property pursuant to the provisions of HCC 18.08.180, and the cost of connection to utilities pursuant to the provisions of HCC 18.08.190. These obligations shall be in proportion to the leasehold interest.

RAVIN/ERICKSON SO MOVED TO ACCEPT THE CHANGES ON PAGE 34.

There was brief discussion confirming that the suggested amendment to the code would carry forward to this.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 11

11.2

The initial term of leases shall be related to a large degree upon the magnitude of the lessee’s financial investment and the value and usefulness of improvements that lessee will make ~~and leave~~ on the property ~~upon the termination of the lease.~~ It shall also be related, to a lesser degree, upon lessee’s financing and the reasonable amortization requirements of the lessee and financing agency. Generally speaking, the larger the investment, ~~and the greater the value and usefulness of permanent improvements that will remain on the property after termination of the lease,~~ the longer the lease period.

RAVIN/ERICKSON MOVED TO ACCEPT THE CHANGES ON PAGE 35.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 11

11.2

H. At expiration or termination of a lease the city will reimburse improvements at fair market value then rfp the package as a whole business package.

RAVIN/ERICKSON MOVED TO ADD ITEM H.

There was brief discussion.

ERICKSON/NEECE MOVED TO POSTPONE DISCUSSION ON ITEM H, I J, K TO A WORKSESSION.

There was brief discussion that this area needs a little more refinement.

VOTE (Motion to postpone): NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

The Commission agreed to meet Monday June 1, 2009 at 6 p.m. in the Council Chambers and want the Port and Harbor Commission to attend.

Chapter 12

~~CHAPTER 12: LEASE RATE ADJUSTMENTS~~

~~12.1 POLICY~~

~~It is the policy of the City of Homer to adjust lease rental rates from time to time in order to compensate for inflation, increases in the cost of living, and changing real estate market conditions.~~

~~12.2 PROCEDURES~~

All leased properties shall be appraised every fifth year. The appraisal shall be conducted by an Alaska Certified General Real estate Appraiser. Appraisals shall be subject to the following:

The lease rate shall be adjusted upward based upon increased property appraisal values. This periodic adjustment compensates for changing market conditions in the area by determining the fair rental value. In the event that an appraisal reveals that fair market rent has declined, the lessee may petition the City for an amendment to the lease and reduction in the lease rate. The City is under no obligation to do so. Any reduction in lease rates must be approved by the City Council and the motion to do so must include a statement regarding why the action is in the public interest.
~~The cost of the appraisal shall be borne by the lessee. The parties shall select the appraiser by mutual agreement and arrange for the appraisal.~~
~~All properties shall be appraised within 6 months prior to the anniversary date of the adjustment year. The newly adjusted lease rate will take effect on the anniversary date.~~

B. In addition, all rental rates shall be adjusted annually based upon changes in the Anchorage Consumer Price Index (CPI). No CPI adjustments shall be made in the initial year of the lease or in any year in which an appraisal adjustment occurs.

ERICKSON/RAVIN MOVED TO ADOPT THE AMEDMENT TO CHAPTER 12.

It was noted that it will change this from being an every five year process will be an annual process with the Borough Assessor.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

Chapter 13

CHAPTER 13~~: SUB-LEASES~~

13.1 ~~POLICY~~SUB LEASES are subject to the following:

It is the policy of the City of Homer that City land should be leased for a specific use or purpose approved by the City. City land shall not be leased for the purpose of speculation. Individual business structures unrelated to the primary permitted use that are owned by the lessee or subtenants of the lessee shall be discouraged.

~~13.2 PROCEDURES~~

~~If a potential lessee intends to sub-lease City owned property, this intention shall be clearly stated and described in the original lease application and proposal.~~
~~In order for a sub-lease to be approved, the right to sub-lease, and the terms and conditions thereon, must be specifically included and stated in the underlying base lease.~~
All sub-leases must be in writing and executed by the parties. All sub-leases must approved by the City Council after a recommendation is provided by the City Manager and the Lease Committee. Approval must be granted prior to occupancy of the leased premises by the sub-tenant.
~~All amendments to sub-leases must be in writing and approved by the City Council prior to becoming effective.~~
Sub-leasing shall not be used as a method to accomplish the transfer of interest in the entire leasehold.
All sub-leases must comply with applicable zoning, parking, sign, flood, and other applicable local ordinances and state and federal statutes.
All sub-leases are subject to the base lease and all sub-tenants must comply with the relevant provisions of the base lease as identified by the Lease Committee. ~~Sub leases of City land are subject to additional rent pursuant to HCC 18.08.120.~~
~~Sub-leasing within a building may be approved provided that the terms and conditions of such are clearly set out and described in the original base lease.~~

I. Partnerships: The City may consider and approve a lease and development plan that consists of two or more independent businesses that finance, construct, and occupy the same building or improvements. The businesses, business relationship, and proposed uses must be approved by the City in advance. Partnerships such as this are not considered to be a sub-lease.

J. Developers/Investors: The City may consider proposals from developers who wish to construct buildings and/or other improvements for the purpose of sub- leasing, if all tenants of the building or land are engaged in activities that are permitted by applicable zoning codes and restricted uses as approved by the Council in effect at the time. The lessee will be in violation of the lease if he/she sub-leases for uses other than those permitted by the lease.

ERICKSON/FAULKNER MOVED TO ACCEPT ALL THE CHANGES.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

RAVIN/NEECE MOVED TO POSTPONE DISCUSSION OF 13.3 TO THE WORKSESSION.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

ERICKSON/NEECE MOVED TO POSTPONE THE REMAINING FOUR PAGES TO THE WORKSESSION.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

RAVIN/ERICKSON MOVED TO INCLUDE JENNIFER MCLAY’S LETTER IN THE WORKSESSION DISCUSSION.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

ERICKSON/NEECE MOVED TO DISCUSS THE GROUND LEASE AT THE WORKSESSION.

Chair Hogan commented that the Commission has been tasked with looking at the lease policy. Regarding the Ground Lease agreement that was included in the packet, he is unsure if that is in their pervue or not, but it is in the global sphere of what they are discussing and is very important, so important in fact that it should be before the Council for approval. He reiterated his concern of overstepping their marching orders, but other Commissioners expressed that it is important to review it as well.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

B. CEDS Development

There was brief discussion with Ms. Bevis regarding the CEDS. The CEDS should be consistent with the Comprehensive Plan as the Comprehensive Plan is the basic policy document for the City, then other policies need to be consistent with it.

It was the consensus of the Commission to postpone further discussion to the next regular meeting.

NEW BUSINESS

A. Mount Redoubt eruption impacts

NEECE/FAULKNER MOVED TO DISCUSS.

There was no discussion.

VOTE: NON OBJECTION: UNANIMOUS CONSENT

Motion carried.

There was discussion that the City needs to get out and deal with the ash. Special Projects Coordinator Holen explained some of what the City has been doing to deal with it. Point was raised that it would be beneficial if the City and State could coordinate their resources in the clean up. It was noted that there were economic disruptions to Homer, such as the halibut season started and there was tons of fish on the tarmac at Anchorage, as well as other. Those disruptions need to at least be noticed.

B. Transportation Infrastructure

There was consensus to postpone this to the next agenda.

INFORMATIONAL MATERIALS

A. Kachemak Bay Shorebird Festival

B. Carol’s notes from her reading of Boom Town USA: The 7 ½ Keys to Success in Small Towns and An Economic Development Toolbox: Strategies and Methods

C. KPEDD Executive Director Report

D. Items of Possible Interest from Recent City Council Meeting

COMMENTS OF THE AUDIENCE

There were no audience comments.

COMMENTS OF CITY STAFF

There were no staff comments

COMMENTS OF THE COUNCIL MEMBER

There were no Councilmember Comments

COMMENTS OF THE CHAIR

Chair Hogan commented it was a productive meeting and thanked the group.

COMMENTS OF THE COMMISSION MEMBERS

Commissioner Neece thanked everyone.

Commissioner Erickson expressed her appreciation to who ever it was that got the bathrooms at the ball field working this last weekend. She is proud of the Commission for their progress.

Commissioner Ravin welcomed Ms. Bevis.

Commissioner Faulkner welcomed Ms. Bevis and wished her good luck.

ADJOURN

There being no more business to come before the Commission the meeting was adjourned at p.m. The next regular meeting is scheduled for June 9, 2009 at 6:00 p.m. in the City Hall Cowles Council Chambers. There is a Worksession scheduled for June 1, 2009 at 6:00 p.m. in the City Hall Cowles Council Chambers.

MELISSA JACOBSEN, CMC, DEPUTY CITY CLERK

Approved: