City of Homer

LEASE COMMITTEE UNAPPROVED

SPECIAL MEETING MINUTES

February 12, 2009

Session 09-02 a Special Meeting of the Lease Committee was called to order on February 12, 2009 at 3:04 pm by Chair Shelly Erickson at the Homer City Hall Cowles Council Chambers located at 491 E. Pioneer Avenue, Homer, Alaska.

PRESENT: SHELLY ERICKSON, ECONOMIC DEVELOPMENT ADVISORY COMMISSION

JOHN VELSKO, PORT & HARBOR ADVISORY COMMISSION

PHILIP ALDERFER, PUBLIC AT LARGE

BRYAN HAWKINS, PORT & HARBOR DIRECTOR

REGINA HARVILLE, DIRECTOR OF FINANCE

RICK ABBOUD, CITY PLANNER

STAFF: CITY MANAGER WREDE

PORT & HARBOR ADMINISTRATIVE SECRETARY ELLINGTON

DEPUTY CITY CLERK KRAUSE

Approval of the Agenda

Chair Erickson requested the agenda be amended to address Item 8. E. Review of Lease Policies under Pending Business to after New Business, Item A.

Committeemember Velsko requested agenda be amended to address Item 8. B. Review of Proposals for Lot 5 under Pending Business before Item 8. A.

There was no further discussion.

VELSKO/HARVILLE - MOVED TO AMEND THE AGENDA AS STATED.

There was no discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

Public Comments Regarding Items on the Agenda

Mr. Kevin Hogan, commented on the re-plat request of The Fish Factory; the recommendations that will be submitted by the Economic Development Advisory Commission (EDC) regarding the Lease Policy; letting of City Property with contingencies is a stop-gap solution; existing long term lessees that are in good standing deserve a stronger commitment from the City; and when the recommendations from the EDC are reviewed by the Lease Committee he hopes that they are seriously considered.

There were no further comments.

Reconsideration

There were no items for reconsideration.

Approval of the Minutes

A. Regular Meeting Minutes from January 8, 2009

Chair Erickson requested a motion to approve the minutes.

ALDERFER/HAWKINS – MOVED TO APPROVE THE MINUTES AS WRITTEN.

There was no discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

VISITORS

None.

STAFF Report/COUNCIL/Committee Reports

None.

Public Hearing

None.

Pending Business

A. Fish Factory lease-request from Fish Factory for re-platting Lots 12A and 12B

a. Memo to Lease Committee from Port & Harbor Advisory Commission dated February 6, 2009

b. Memo to Port & Harbor Advisory Commission dated January 21, 2009

Committeemember Hawkins summarized correspondence; stated his main concern was regarding issues with current number of persons living on the property is over the agreed caretaker, the short term lease, current use of the lot, if the Lease is going to be adjusted to include the 17’ x 225’ portion of the adjacent lot. He was concerned about what the Lessee was going to do to resolve these issues.

Chair Erickson noted the Port & Harbor Advisory Commission recommended and supported the re-plat of the property. Committeemember Abboud stated he did not see any benefits to re-platting the property; of re-platting an easement into an existing lot; it compromises the parent parcel; detracts from the integrity of the boundary; a lease could be made for the property on its own; it is not worth the effort; it could be addressed separately for the portion of the lot in question. Committeemember Velsko stated the Port & Harbor Advisory Commission did consider those issues but agreed that this would increase the size of the lot to equal that of Lot 12C, offering increased revenues; the owner of the Fish Factory agreed to pay for the survey; and offered a long term permanent solution.

HAWKINS/VELSKO - MOVED TO AMEND THE FISH FACTORY CURRENT LEASE TO INCLUDE THE 17’ X 225’ PORTION OF LOT 12B ADJACENT TO THE EAST LOT LINE OF 12A PROVIDED THE LESSEE MEETS ALL CITY CODE AND ORDINANCE REQUIREMENTS OF THE MARINE INDUSTRIAL ZONING DISTRICT.

Committeemember Abboud reminded the Committee that the City has no authority regarding the replat and the City has the power to grant terms through the current lease.

Chair Erickson requested clarification regarding the caretaker for the property.

Committeemember Hawkins explained that the Lessee is required to submit an application for a Conditional Use Permit. His concern is that the current use falls outside his current Lease. Further discussion by the Committee on whether this issue needs to be addressed by this Committee, the concerns regarding Health and Safety issues; accommodating but within certain guidelines; the willingness of the Lessee to work with the City; current guidelines are available in City Code; future agenda item - Marine Industrial with the Planning Department.

Committeemember Alderfer will support the motion but would prefer to handle this as an easement instead of a re-plat.

Committeemember Hawkins stressed that the motion does not support re-platting the lot but included the portion of Lot 12B into the current lease.

Further discussion determined it would be best that the addition should be specific as to the term and if the motion needed to be amended. It was determined that the current language was adequate. Chair Erickson asked if that should be included as a specific in the motion. The addition will run concurrently with the existing.

Committeemember Hawkins accepted a friendly amendment to include:

VELSKO/ Friendly Amendment - LEASE FEES TO BE AT THE SAME RATE AND TERMS.

ALDERFER/VELSKO - MOVED TO AMEND THE AMENDMENT PLACED AT THE END OF THE MOTION, AND THAT THE LEASE COMMITTEE AUTHORIZES THE CITY MANAGER TO ENTER INTO NEGOTIATIONS TO EFFECT THAT CHANGE.

Chair Erickson did not feel further negotiations were needed. City Manager Wrede explained what would take place; addressed procedures based on Chapter 4 in the Policies and Procedures; this amended lease will go to Council for approval. It is not practical to RFP a strip of land; ensure following procedures and City Code.

Chair Erickson called for the question.

VOTE. (Amendment 2) YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

VOTE. (Friendly Amendment) YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

VOTE. (Main Motion) YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

There was no further discussion.

B. Review Proposal(s) for Lot 5 (currently leased to Homer Ent. / Sport Shed) RFP due 2/6/09

a. Proposal submitted in response to RFP, Homer Enterprises, LLC

Chair Erickson requested any new information from Port & Harbor Director Hawkins.

Committeemember Hawkins responded that there was one bidder for the parcel. It was received from the current lessees. He did not have anything new to add.

Committeemember Abboud questioned if the current lessees were not going to rent out the apartments; if they were willing to submit an application regarding that use; Committeemember Alderfer commented that conversation was held regarding interior and exterior renovations would be included in the lease negotiations.

City Manager Wrede stated that it could be included in the motion anything that the Committee would like to have addressed.

Chair Erickson requested that consideration be given to allow flexibility to guarantee bank financing; Committeemember Hawkins inquired if the Committee would like to address terms at this point; City Manager Wrede stated there was flexibility in the terms negotiated; Committeemember Velsko stated he was agreeable to a twenty year term, but his concern was addressing the exterior, interior renovations an the non-conforming rental and would make a motion to that effect.

VELSKO/ABBOUD - MOVED THAT CITY MANAGER ENTER INTO NEGOTIATIONS WITH HARBOR ENTERPRISES FOR LOT 5 AKA THE SPORT SHED AND NEGOTIATIONS TO ADDRESS THE NON-CONFORMING RENTAL, EXTERIOR AND INTERIOR RENOVATIONS.

City Manager Wrede asked if length of term will be included in the motion since they were seeking a twenty year with two five year extensions. Committeemember Velsko had no opposition against the long term period requested as long as the non-conforming rentals and renovations were addressed during negotiations.

ALDERFER/ HARVILLE - MOVED TO AMEND THE MOTION TO READ, “THAT THE CITY MANAGER ENTERS INTO LEASE NEGOTIATIONS PURSUANT TO EXISTING PROPERTY MANAGEMENT POLICIES AND PROCEDURES. SPECIFICALLY CHAPTER 17, PERFORMANCE STANDARDS AND CHAPTER 11, REGARDING TYPICAL LEASE TERMS NOT EXCEEDING THIRTY YEARS.

A brief discussion regarding the ability by the lessees to acquire or accumulate the funds necessary to complete these improvements. Responses from the prospective lessees were inaudible. Chair Erickson requested clarification on any issues on the property. Committeemember Alderfer responded that the main issues were stairs, railing, and decks. The main issue was the safety of patrons not aesthetics of the property since there are currently no design codes for the Spit.

Response from the prospective Lessee offered assurance that they were willing to do what is was necessary to negotiate a lease with the City.

VOTE. (Amendment) YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

Chair Erickson requested the Clerk to read the amended motion.

MOVE THE CITY MANAGER ENTER INTO NEGOTIATIONS WITH HARBOR ENTERPRISES FOR LOT 5, AKA THE SPORT SHED PURSUANT TO EXISTING PROPERTY MANAGEMENT POLICIES AND PROCEDURES; SPECIFICALLY CHAPTER 17, PERFORMANCE STANDARDS AND CHAPTER 11, REGARDING TYPICAL LEASE TERMS NOT EXCEEDING THIRTY YEARS AND NEGOTIATIONS TO ADDRESS NON-CONFORMING RENTAL AND RENOVATIONS.

VOTE. (Main) YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

There was no further discussion.

C. Request for Proposals (RFP) for available lots in 2009

a. Memo from Port & Harbor Advisory Commission Re: 2007 Land Allocation Plan

dated February 6, 2009.

b. Memo to Port and Harbor Advisory Commission from Lease Committee dated January 21, 2009

c. Memo 09-13 from City Clerk Re: Land Allocation Joint Worksession scheduled for 2/23/09 dated January 19, 2009.

Chair Erickson opened for discussion.

Committeemember Velsko suggested that this be postponed until the next meeting to discuss.

Deputy City Clerk Krause explained the process regarding the review of the Land Allocation Plan and submitting a memo to Council containing their recommendations.

Chair Erickson then reviewed the recommendations submitted by the Port & Harbor Advisory Commission. Committeemember Velsko explained for the Committee the intent behind the recommendations made by the Port & Harbor Advisory Commission.

Chair Erickson asked for input from the Committee. She requested further clarifications on the intent of the Seldovia Ferry for Lot 21.

In depth discussion followed on Lot 21.

Chair Erickson requested if the Committee was ready to support the recommendations made by the Port & Harbor Commission.

Committeemember Alderfer had some questions on some of the recommendations, he proposed the following motion:

ALDERFER/VELSKO - MOVED THAT THE LEASE COMMITTEE ACCEPT THE RECOMMENDATION OF THE PORT & HARBOR ADVISORY COMMISSION TO MAKE AVAILABLE LOTS 19 – 26 SEEKING REQUESTS FOR PROPOSALS FOR LONG TERM LEASE AND THAT OVERSLOPE DEVELOPMENT BE USED TO GUIDE DEVELOPMENT OF THE AVAILABLE LOTS.

HAWKINS/ - MOVED OFFER A FRIENDLY AMENDMENT TO THE MOTION TO REMOVE LOT 22 FROM AVAILABILITY.

This Lot will be used for public parking for Lot 21.

ALDERFER/ VELSKO - MOVED THAT THE LEASE COMMITTEE ACCEPT THE RECOMMENDATION OF THE PORT & HARBOR ADVISORY COMMISSION TO MAKE AVAILABLE LOTS 19 THROUGH 26, EXCLUDING LOT 22 SEEKING REQUESTS FOR PROPOSALS FOR LONG TERM LEASES AND THAT OVERSLOPE DEVELOPMENT BE USED TO GUIDE DEVELOPMENT OF THE AVAILABLE LOTS.

Committeemember Alderfer was concerned that letting the Lots 19-26 as a whole would garner all kinds of responses some acceptable and others not. He recommended that they be grouped in blocks, such as 19 and/or 20, 21, 23-26. Committeemember Velsko recommended that the motion incorporates overslope development as a guideline and in those standards there are recommended business uses outlined.

Chair Erickson inquired if Lot 21 and 22 would adequately cover the needs of the Ferry and future development in that area of the Spit. Committeemember Hawkins was not sure but the Ferry company was sure it would help. City Manager Wrede stated that is something that should be included in the proposal when submitted. Chair Erickson was concerned that an additional lot should be kept for future use and as a buffer. Committeemember Alderfer pointed out that leaving out other lots would effectively orphan some lots. Chair Erickson recommended excluding Lot 23 for future use. Committeemember Velsko recommended excluding Lots 19-20 until the Ferry is running, reserve Lot 21 for parking. The City may want 19-20 for revenue parking. Committeemember Hawkins felt that this was “over-thinking” the problem. Committeemember Alderfer stated the objective was to lease more land not reserve it and he would like to see more City owned lands for lease.

Chair Erickson requested clarification on the Port & Harbor’s long range plan for these lots. Committeemember Hawkins stated previously that these lots were withheld and labeled Port Use, knowing that someone chose to make a proposal then they are open to listen to it.

There was further discussion regarding the disposition of Lots 19-26 and the best use for these lots currently and in the future. Included in the discussion was reasons why the City may want to consider holding some lots back, exercising caution, the upcoming Spit Comprehensive Plan Update, Parking Study and paving projects this summer, some interest in leasing land and operating a parking structure for trailers.

Chair Erickson called for the question.

VOTE. YES. HARVILLE, ERICKSON, ALDERFER

VOTE. NO. HAWKINS, VELSKO, ABBOUD

Motion failed.

HAWKINS/ALDERFER - MOVED TO RECOMMEND CITY COUNCIL RELEASE LOT 21 OF THE HOMER SPIT SUBDIVISION TO BE AVAILABLE FOR REQUEST FOR PROPOSALS FOR LONG TERM LEASE AND THE PROPOSERS ARE ENCOURAGED TO USE OVERSLOPE DEVELOPMENT STANDARDS.

Committeemember Abboud stated that currently there is no Overslope Development in City Code and it would take some time to implement. He requested clarification on the urgency of needing this standard in regards to the Ferry. Committeemember Hawkins stated that the Ferry was not operating until 2010. Committeemember Abboud stated that would be feasible to have something in place.

Committeemember Velsko offered a friendly amendment to include Lots 23-26. Committeemember Hawkins accepted amendment.

Motion was restated.

HAWKINS/ALDERFER – MOVED TO RECOMMEND CITY COUNCIL RELEASE LOTS 21, 23, 24, 25, 26 OF THE HOMER SPIT SUBDIVISION TO BE AVAILABLE FOR REQUEST FOR PROPOSALS FOR LONG TERM LEASE AND THE PROPOSERS ARE ENCOURAGED TO USE OVERSLOPE DEVELOPMENT STANDARDS.

There was no further discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

Chair Erickson stated she would entertain a motion for Lots 9 and 10.

VELSKO/HAWKINS - MOVED TO SEPARATE 9A AND 10A INTO INDIVIDUAL RFP’S TO MAXIMIZE THE VALUE TO THE CITY.

There was no discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

HAWKINS/ VELSKO - LEASE COMMITTEE RECOMMENDS THE REMOVAL OF LOT 12B OF THE HOMER PORT INDUSTRIAL SUBDIVISION FROM ITS CURRENT DESIGNATION OF A LOT AVAILABLE FOR LONG TERM LEASE, DUE TO THE CITY’S FISH GRINDER IS LOCATED ON THIS LOT.

There was no discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

Chair Erickson called for additional recommendations.

HAWKINS/VELSKO - MOVED THAT THE LEASE COMMITTEE RECOMMENDS LOT 13B TO BE INCLUDED IN THE RFP PROCESS.

Brief discussion regarding the existing short term leases held by Fish Buyers and the existing policy does not allow consecutive short term leases. These businesses do provide a service for the Spit and consideration should be given to designating an area that can be used for short term, seasonal business. It was determined that could be addressed during the Spit Comprehensive Plan.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

Chair Erickson asked for a motion regarding Lots 4-12.

ABBOUD/VELSKO – MOVED THAT LOTS 4-12 BE INCLUDED IN THE RFP PROCESS.

There was no discussion.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

There was a brief discussion if the Port & Harbor Advisory Commission made any recommendations to let for additional Fuel company. Committeemember Hawkins affirmed that the Commission made no designation of additional lots for that purpose.

There was no further discussion.

D. Review Proposal from Kachemak Port Services (portion of Lot 48) lease expired 2007

a. Letter from Staff to Kachemak Port Services regarding lease intentions

b. Memo Re: Kachemak Port Services Lease Proposal Dated February 5, 2009

Chair Erickson gave a brief summary on the memorandum from staff dated February 5, 2009 recommending that the City grant a five year lease to Kachemak Port Services (KPS) without going out to RFP.

Committeemember Velsko stated that the Lease Committee has two choices since it is Advisory in nature and those two choices are to send out to RFP or refer to Council for an exception. He would not support an exception that the City should comply with the existing codes and policies.

HAWKINS/ALDERFER – THE LEASE COMMITTEE RECOMMENDS THAT THE CITY MANAGER SUBMIT A RESOLUTION TO THE HOMER CITY COUNCIL TO ENTER INTO LEASE NEGOTIATIONS WITH KACHEMAK PORT SERVICES WITHOUT SENDING THE PROPOERTY OUT FOR RFP USING THE SUPPORT DOCUMENTATION FROM STAFF.

Chair Erickson requested clarification on the length of a contract with the State. Committeemember Hawkins stated they do not have a contract with the State. He responded to the following questions posed by Committeemember Alderfer:

1. If a rate escalator included in current lease?

2. Who pays the utilities?

3. What type and coverage do they maintain or are they covered under the City’s coverage?

If these topics were included into the agreement he could vote in favor of the motion.

Discussion ensued between Committeemembers over the pros and cons of letting this Lot out for RFP or that it qualifies for an exception and recommend City Council approve a five year lease. Points made by Committeemembers during discussion were:

1. Follow existing guidelines and policies to show consistency.

2. The facilities are owned by the City and unusable for any other endeavor.

3. The Lease requested is five years compared to 30 years.

4. The Business offers a valued service to the Spit and exceptional tenant.

5. The current lease expired in 2007 and there was plenty of opportunity to provide notice to renew.

Chair Erickson called for the question.

VOTE. NO. VELSKO, HARVILLE, ABBOUD

VOTE. YES. HAWKINS, ALDERFER

Motion failed.

VELSKO/ABBOUD - MOVED TO RECOMMEND SENDING OUT TO RFP THE PORTION OF LOT 48 OCCUPIED BY KACHEMAK PORT SERVICES UNDER THE SAME GUIDELINES USED FOR THE RFP ISSUED ON THE SPORT SHED.

Committeemember Velsko urged that the shortest possible RFP time be used when letting this out to RFP. He additionally wanted to assure the current Lessee that this was not a reflection on their business but that the City must follow the established and existing policies when leasing city owned properties. Chair Erickson requested clarification on who would communicate with Kachemak Port Services. There was further discussion on the language in the RFP to include in the motion. Committeemember Alderfer read the recommendation made by the Committee for the Sport Shed RFP.

VOTE. YES. NON-OBJECTION. UNANIMOUS CONSENT.

Motion carried.

E. Review of Lease Policies (originally on January 8, 2009 agenda)

a. Memo to Lease Committee from Staff dated 2/5/09

b. Lease Policy

Chair Erickson asked if there were any comments on the memo from staff dated January 2, and February 5, 2009.

Committeemember Alderfer would like to add three additional bullet points –

1. Clarify those leases or lease extensions that are granted without an RFP under certain financial circumstances.

2. That the enforcement of the lease rate adjustment, escalator or CPI is consistent as RFP are issued.

3. Review that City Code language for Chapter 18 is still in conformance with the Lease Policy.

He commented that he believes it currently does.

Further discussion included that it is important that policy reviews are done and are needed; Most of the recommendations being made are policy and implementations questions, management issues and boilerplates issues that can be easily accomplished. It was expressed that most of the protections desired were covered in the Lease Policy for the businesses and the City. Some questions posed were how will a lease be assigned or extend a lease when substantial investment has been made; it was agreed that accommodations be made to tenants in good standing because of the benefits to both parties; the lease documents can be improved as they are made; enforcement of the current zoning laws such as apartments and live-ins should be enforced by City Administration; if a lease lapses that is Administrative failure, not lessee.

Continued discussion on items that needed further clarification in the Lease Policy such as where do I go, who do I write to, how do I get my lease extended; clarification or definition of what a long term lease is; definitions needed for special and exceptional circumstances in Policies and Procedures, Item C. and A. City Manager Wrede gave an interpretation on what the intent was with those sections; the lack of consistency between applicants and the City.

Chair Erickson stated review of the Lease Policy due to definite areas of contention within the document.

City Manager Wrede commented on what complaints were heard the most frequently by Administration.

Chair Erickson requested a worksession to address the problem child areas make recommendations to submit to Council.

Committeemember Alderfer requested that the Committee decide what section or sections to review and put that on the next agenda. That they were getting nowhere just talking about that it needed to be reviewed. He feels that the policy is adequate. He noted that the concern he has personally heard expressed is more toward the individual circumstances. Chair Erickson commented that the section addressing RFP is daunting and too confusing and will drive away a potential Lessee. Committeemember Velsko agreed that need to be focused and assign-ability of the lease and enforcement of existing city code, and determine who will enforce the code. Committeemember Harville recommended one section or piece at the next meeting and decisions be made when addressing those individual sections. Chair Erickson recommended Chapter 11, Section 11.2, Item F, Lease Renewals. She recommended review of the policy and requested a date for a worksession.

Discussion was held and the best date agreed upon for a Special Meeting was Thursday March 19, 2009 3:00pm to 5:00pm. The agenda will have Chapter 11 and Chapter 14.

NEW BusinesS

A. Proposal for Lease Assignment – Happy Face Restaurant

City Manager Wrede stated that there is no supporting documentation included in the packet. They received a call from the Realtor asking for it to be removed from the agenda. He has no further information and does not know if it means they are not intending renewal.

There was a brief discussion on the availability of the Lot, less intimidating language within the Lease.

There was no further discussion.

Informational Materials

There were none.

Comments from the PUBLIC

Mr. Hogan thanked the Committee for their efforts, he commented on the Request for Proposal process with …. Statements and comments made by Mr. Hogan were inaudible due to the fluctuation in proximity to the public microphones.

Comments from the PUBLIC

adjournment