City of Homer

LEASE COMMITTEE

January 21, 2008 3:00 pm

Cowles Council Chambers

Meeting Synopsis

Session 08-01, a Meeting of the Lease Committee was called to order at 3:07 p.m. on January 21, 2008 by Otto Kilcher at the Homer City Hall Cowles Council Chambers located at 491 E. Pioneer Avenue, Homer, Alaska.

PRESENT: Regina Harville, Finance Director; Beth McKibben, City Planner; Steve Dean, Port & Harbor Director; Philip Alderfer, public committee member; Otto Kilcher, Chairman Port & Harbor Advisory Commission

STAFF: Walt Wrede, City Manager; Lisa Ellington, Port & Harbor Administrative Secretary

APPROVAL OF AGENDA

The agenda was approved by consensus of the Committee.

PUBLIC COMMENTS REGARDING ITEMS ON THE AGENDA - None

APPROVAL OF MINUTES – No previous minutes

VISITORS - Mike Disler and later Kevin Hogan

PUBLIC HEARING – None

PENDING BUSINESS - None

NEW BUSINESS

a. Election of Chairman

Committee discussed the newly constituted lease committee which consists of the City Planning Director, City Finance Director, Port & Harbor Director, a member from the public, a representative from the Port & Harbor Advisory Commission, and a representative from the Economic Development Committee, whose first meeting is February 12 thus no member present for this meeting. Otto commented that John Velsko a member of the Port & Harbor Advisory Commission has participated before but was unavailable to attend this meeting.

DEAN/MCKIBBEN MOTION TO ELECT OTTO KILCHER AS ACTING CHAIRMAN FOR THIS MEETING AND REVISIT THE ISSUE AT THE NEXT LEASE COMMITTEE MEETING WHEN ALL MEMBERS ARE PRESENT.

Motion carried.

Committee discussed the confidential nature of the proposals and the need for Executive Session since these meetings are now public. The City Manager stated that he and Steve had received guidance from City Attorney Gordon Tans on agendas and proper subject matter for Executive Session.

DEAN/MCKIBBEN REQUEST FOR EXECUTIVE SESSION PURSUANT TO AS 44.62.310 (C) (1). MATTERS, THE IMMEDIATE KNOWLEDGE OF WHICH WOULD CLEARLY HAVE AN ADVERSE EFFECT UPON THE FINANCES OF THE CITY OF HOMER. CLARIFIED FURTHER BY KILCHER TO DISCUSS AGENDA ITEMS 1b THROUGH 1g DURING EXECUTIVE SESSION.

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried.

Lease Committee adjourned and reconvened at approximately 4:50pm.

ALDERFER/HARVILLE MOTION TO RETURN TO REGULAR SESSION

The motion was approved by consensus of the Committee.

Acting Chair Kilcher clarified for the record the reason for the Executive Session. It was to protect the City against any liability and be held accountable to protect the confidential matters of the potential lessees in regard to their financial information as well as their business plans. We opted to discuss the lease proposals in their entirety during Executive Session because we are not familiar enough with the rules of the Freedom of Information Act that if we discuss a part of the lease in public than how much of that proposal would be available under the FOIA. We will need to consult with the city attorney. No official actions were taken during Executive Session. Committee member Alderfer added that the proposals were submitted in confidence and they should be considered by the Committee in confidence.

b. Evaluation of proposals received for Tract 1B

DEAN/HARVILLE THE LEASE COMMITTEE RECOMMENDS THAT THE HOMER CITY COUNCIL APPROVE THE PROPOSAL SUBMITTED BY BOB’S TROPHY CHARTERS FOR A LONG TERM LEASE OF TRACT 1B AND AUTHORIZES THE CITY MANAGER TO ENTER INTO LEASE NEGOTIATIONS. THE LEASE COMMITTEE FURTHER RECOMMENDS THAT THE TERM OF THE LEASE IS NOT TO EXCEED TEN YEARS AND THAT THE LEASE RATE IS NO LESS THAN FAIR MARKET RENT AS ESTABLISHED BY APPRAISAL. FURTHER CLARIFIED THAT THE APPRAISAL HAS BEEN ORDERED BY THE HOMER CITY COUNCIL AND IS EXPECTED BY MID FEBRUARY.

Discussed that the length of the lease has the support of the Port & Harbor Commission so their hands aren’t tied for future use of the Tract.

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried.

c. Evaluation of proposals received for Tract 1C

DEAN/MCKIBBEN THE LEASE COMMITTEE RECOMMENDS THAT THE HOMER CITY COUNCIL APPROVE THE PROPOSAL SUBMITTED BY SPORTSMAN’S SUPPLY FOR A LONG TERM LEASE OF TRACT 1C AND AUTHORIZES THE CITY MANAGER TO ENTER INTO LEASE NEGOTIATIONS. THE LEASE COMMITTEE FURTHER RECOMMENDS THAT THE TERM OF THE LEASE IS NOT TO EXCEED TEN YEARS AND THAT THE LEASE RATE IS NO LESS THAN FAIR MARKET RENT AS ESTABLISHED BY APPRAISAL.

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried

d. Evaluation of proposals received for Lot 9A

DEAN/ALDERFER THE LEASE COMMITTEE RECOMMENDS THAT KENAI RIVER SEAFOODS PROVIDE ADDITIONAL INFORMATION TO SUPPLEMENT THEIR PROPOSAL SPECIFICALLY CLARIFYING SITE PLANS, FINANCIAL STATEMENT, COMPENSATION, AND VALUE OF INVESTMENT AND THAT INFORMATION IS PROVIDED IN APPROXIMATELY 30 DAYS AND THAT THEY COULD POSSIBLY BE AVAILABLE AT THE NEXT LEASE COMMITTEE MEETING TO ANSWER ANY QUESTIONS.

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried.

e. Evaluation of proposals received for Lot 10A

The proposal from the Auction Block, Kevin Hogan President was for Lots 9A and 10A combined.

DEAN/MCKIBBEN THE LEASE COMMITTEE REQUESTS INFORMATION ABOUT THE STATUS OF ONGOING NEGOTIATIONS ON LOT 12C AND HOW IT WOULD INFLUENCE OUR ABILTIY TO EVALUATE THE PROPOSAL ON LOTS 9A AND 10A.

Discussion about it being appropriate given that we have asked the respondent who submitted an application only on Lot 9A to get more information to us before we make any decisions about the combined application for lot 9A and 10A. That is the reason I’ll support the motion (Philip)

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried.

f. Evaluation of proposals received for Lot 13B

DEAN/ALDERFER THE LEASE COMMITTEE FOUND THE PROPOSAL FROM GOURMET ALASKA SEAFOODS FOR LOT 13B TO BE NONRESPONSIVE.

Discussion summarized best by referring to the application and Mr. Wrede’s letter to respondent the last time they submitted a proposal there was not adequate information to give the Lease Committee confidence that they could carry out the business plan. The reason it matters and the reason we need it is the fiduciary responsibility to the citizens of the City that any lease we enter into has the strong likelihood of success. Applicant was encouraged to get some backers/partners and resubmit.

Roll Call Vote: Harville – yes; McKibben – yes; Alderfer – yes; Dean – yes; Kilcher – yes

Motion carried.

g. Update on lease negotiations between City of Homer and Harbor Leasing LLC for Lot 12C

The Lease Committee was advised that the negotiations continue between the City and Harbor Leasing LLC for Lot 12C and that was a point the Lease Committee wanted clarification in order to evaluate the proposal before them for Lots 9A and 10A.

Mr. Hogan of Harbor Leasing LLC was than asked to respond. Mr. Hogan said the Lease Committee is responsible for negotiations not the City Manager and the boilerplate lease is not approved by the City Council. When asked why he applied for 9A and 10A with the option that the 9A and 10A proposal should be withdrawn if the 12C is successfully negotiated, Mr. Hogan said they are different proposals. If he would choose which was the best for the City, it would be the 9A and 10A proposal.

COMMENTS OF THE AUDIENCE -

Mr. Hogan continued explaining his dissatisfaction with the lease process. He questions the Executive Session for the Lease Committee, the zoning for Tracts 1B & 1C, the RFP for 9a just being advertised locally, and 9A’s proposal discussed today not being ruled nonresponsive.

COMMENTS OF THE STAFF - None

COMMENTS OF THE COUNCILMEMBER (If one is assigned) -

COMMENTS OF THE CHAIR – Mr. Kilcher thanked Mr. Hogan for his comments and reminded him that he is on the Port & Harbor Commission and he voted on approving the Bob’s Trophy Charters and Sportsman’s Supply proposals. The action taken here was pretty much what the Port & Harbor Commission instructed. He took exception with him bringing it up here. In regards to how we are working, we are just starting out and need help and we are working on how to make it work properly.

COMMENTS OF THE COMMITTEE –

Ms. Harville said that this is the beginning and we are trying to weed through accountability and there is no fraudulent intent. This is the first time we have been in public forum and are just learning how to handle things, there is very confidential information and we are unsure of where the lines should be drawn for Executive Session.

Mr. Dean echoed what Ms. Harville said. It is difficult to discuss a proposal without discussing the business plan. In some instances the business plan is confidential. They don’t want to expose their entire business plan to the public and to competitors. What we are trying to do is make this process a lot more transparent than it has ever been in the past and we are going to get there in fits and starts but that is our intention. So it is that contradiction between protecting the privacy of the proposers and keeping the public informed in the process, it is just the beginning.

Mr. Alderfer said as the member of this committee who is appointed as the public member to represent the public interest I take very seriously that responsibility. I disagree with some of the comments that have been made here today. I take seriously the responsibility that is charged to the Lease Committee in this Policy Manual which says our role is to review lease policies and procedures, not leases and to advise the City Manager or their designee on the terms, purposes, stipulation and negotiation approach - not to negotiate the lease itself. There are even more issues of confidentiality in business planning and appropriate approaches to business planning that should take place in a different forum.

Ms. McKibben – no comment

ADJOURN

There being no further business to come before the Committee, Acting Chair Kilcher adjourned the meeting at 5:26 p.m.

  Lisa Ellington, Port & Harbor Administrative Secretary       

Approved: 2/19/08