MEMORANDUM 07-59

TO: Mayor Hornaday and Homer City Council

FROM: Lease Committee

DATE: April 3, 2007

SUBJECT: Lease and Development Proposal / Harbor Leasing LLC

Harbor Leasing LLC has submitted a lease application and development proposal for LOT 12 C on Fish Dock Road. The proposal was submitted in response to the recent RFP issued by the City for leases on City owned property on the Spit. The primary user of the proposed facility will be the Auction Block.

The Lease Committee reviewed this proposal on March 20, 2007. After reviewing the proposal, the Committee found that it was responsive to the FRP and that it substantially meets the objectives of the City contained in the RFP, HCC 18.08, and the City Property Management Policies and Procedures (Lease Policies). Since that time, the staff has checked references and asked some follow-up questions of the applicant. The Lease Committee forwarded this proposal to the Port and Harbor Commission for review along with a favorable recommendation. The Harbor Commission was scheduled to discuss this proposal at its regular meeting on March 28 but a quorum was not present.

The proposal consists of a building that encompasses approximately 6,400 square feet. This includes a 40’ by 100’ by 18’ engineered steel building, an attached 61’ by 15’ by 13” shed roof, and a 40’ by 16’ prefab refrigeration unit. Paving, landscaping, screening, and drainage improvements are included. The proposed development main uses include primary and secondary seafood processing, warehouse space, cold storage, dock operations support, and associated office space. A second phase of the development may include maintenance and fisherman support facilities.

The Auction Block currently employs 11 fulltime staff and up to 60 seasonal workers. It is anticipated that the number employed could increase as a result of this development. The applicant estimates that this development will produce approximately $300,000 per year or more in revenues to the City from fish taxes, property taxes, fees, and rent. The applicant hopes to begin construction on the utilities and foundation as soon as June 15 of this year if all goes well.

If the Council wants to proceed with this proposal, the next steps would be for the City Manager to get a recommendation from the Port and Harbor Commission, begin negotiating a lease with the applicant, and bring the lease document back to the Council for final approval.

RECOMMENDATION: The Lease Committee recommends that the City Council approve this development proposal in concept and authorize the City Manager to enter into lease negotiations with the applicant.