Session 02-04, a Regular Meeting of the Homer City Council was called to order at 7:30 p.m. by Mayor Jack Cushing at
the Homer City Hall Council Chambers located at 491 E Pioneer Avenue, Homer, Alaska, and opened with the Pledge of Allegiance.
The Council's Committee of the Whole met from 4:08 p.m. to 5:55 p.m. The regular meeting agenda items, the
development of City wide survey questions and the City's Land Leasing Policy were the items of discussion.
PRESENT: COUNCILMEMBERS: CUE, FENSKE, KRANICH, LADD, MARQUARDT, YOURKOWSKI.
STAFF: ACTING CITY MANAGER ROBL
CITY CLERK CALHOUN
AGENDA APPROVAL
(Addition of items to or removing items from the agenda will be by unanimous consent of the Council. HCC 1.24.040.)
The agenda was approved by consensus of the City Council with the following changes noted: Addition: Fenske Report to
Agenda Item 7. as Item A., Re: Legislative Trip to Juneau. Substitute: Resolution 02-14(S)
PUBLIC COMMENTS UPON MATTERS ALREADY ON THE AGENDA
Steve Zimmerman addressed the Council regarding Memorandum 02-09, adding that he likes the Memorandum a lot and
that he has been hammering on this issue for months. The policy (1) has some problems in it and even if everyone likes it as
it is, it will not hurt to look at it and see if some changes are needed. This memo raises some good questions. He stated that
he does not think privatization is a good idea, and suggested the City look at it and see. The City is better off to own the
land. Good competition is needed on the Spit and more property is needed on the Spit for small businesses. He voiced his
opinion that the lease process is difficult for a small business. He suggested that the Lease Negotiating Committee be
reviewed, there are some problems that need to be straightened out so that it is clear what the Committee is, what it does
and who is supposed to be on it. Mr. Zimmerman voiced pleasure in seeing the last item in this memorandum that deals
with the leases on the Spit with the McGees, because what the Council does with this lease is already setting a policy for
what is happening on the Spit with everyone else's leases. He advised that there are people with leases now, that are
watching this really close. These people are saying that if the City takes that guy's building, the City might take mine and
what do we do about it. He encouraged the Council to review this closely, adding that the Council knows the history of the
RFPs and what is going on. He asked the Council to see if there is a way to make this look a little better to the general
public and that Mr. McGee is getting a fair chance whether the Council wants him to have a lease or not. He thanked
Councilmember Kranich for bringing this up.
Brad Faulkner stated that he lives on a Spit lease. He commented that he guessed that for about ten plus years he has been coming in to talk at these lease deals and that he has been sitting here and watching the process; how to shepherd a lease through Planning and what it takes to maybe get one through the City Manager. He relayed that he has also looked at the results of those leases. The process is difficult, requires a lot of effort and requesting copies of leases from the City for a fee of $0.25 a page, the copies come minus all the attachments, minus transmittal letters; therefore, one is never really sure what one has received. He stated that he has made an effort to read all of the leases. He pointed out the following:
1. Every single lease has been a special deal of some kind.
2. Almost every single lease is not being kept up to the word or the letter of the lease right now, in some way there is something wrong.
3. Don't know of a single RFP that has actually generated anything.
4. Fish Factory, Happy Face and El Pescador are the only things that have happened out there and none of these were done through an RFP process.
Mr. Faulkner suggested that the real simple thing is to pick up a plat and drive down the Spit and look at the junk buildings
on the City leases and the nice buildings on the private property out there. The City Manager has decided to enforce the
McGee lease. He reported reading the Property Management Policy and Procedures Manual put out in 1995, and as
amended in 1998 to say that whoever has the lease does not get it back. He commented that he thinks the McGee lease,
during the period of the last six years, had an investment of around a quarter of a million dollars and has housed three
different fish companies, three different tourist companies, two different fish plants, and maintains four residences.
According to Mr. Faulkner, by all criteria in the Policy and Procedures Manual, that the Council is supposed to be
following, the McGee Lease scores higher than any lease during that six year period including the original Icicle Seafood's
lease, though during its time the Icicle Seafood's Lease was a more successful lease for the City of Homer. He advised that
Councilmember Yourkowski is his neighbor, has a thirty year lease and is a real good example of a lease with 5 or 6 mobile
buildings, movable with a crane. That is the kind of development the City is going to get. Mr. Faulkner informed the
Council that he is looking at building a fish plant. He voiced his knowledge that the Fish Factory did sign the lease with
Drathman saying that "he" gets the building back, because "he" kind of had them over a barrel with the $230,000 down
with Dragnet and that if the Fish Factory did not sign the lease "he" was going to take it back from them in six years. He
emphasized that the Fish Factory has a 40 year lease and there actually is something going on there. He rhetorically
commented why would he want to build a building for the City of Homer, give it back 30 years later, pay every time you
want to turn around and wondered what possible incentive is there to do that. He pointed out that he can do these fish
anywhere on the road system and does not have to buy and build buildings for the City of Homer. There are disparities in
the leases that are unbelievable, so the idea that the Council is going look at this is important. He encouraged the Council to
particularly direct the city management to make it easy for the public to access "these", adding that Planning did at least
keep a book with updated leases and the plats in it so this information did not have to be requested from the City. He voiced
his thought that the Council will come to see privatization as the best thing for the City, which would promote
development.
Marty McGee, lease holder, commented about sending the Council information, over the course of the last few months, that outlines most of his problems with the current lease policy. He advised that he has tried to engage in a debate that was on the level of discussing the lease policy and not his specific lease and situation. He relayed that "it" has not been a debate, discussion, negotiation, and there has been no feed back. Mr. McGee voiced enormous frustration, which dates back seven years when he first assumed the lease and entered into this situation. He told the Council that they needed to understand that he has about a 30 year history with the City of Homer, that he grew up with the Turkington and Manley families. He reported that he has been involved in things in Homer and bought the property from Jim Manley (2), understanding that historically noone ever faced the situation that he is facing today. The leases had always been renegotiated or continued and in fact that is consistent with the way lease policies are maintained in every other community in the state of Alaska. All leases have similar language in them, that a lease has to have an end date and some resolution when it ends. Every other leasing entity engages in a policy that preserves the value of the improvements for the people who build them, for the purposes of resale, assignment, and moving on down the chain. The only time individuals take back property; citing Anchorage, Seward, Kenai; is when it is obsolete, of no further use and basically abandoned to the lessor (3). He commented about the Alaska Administrative Code, all the state leases, wherein there is language that preserves and allows for property to be passed on from one owner to the next and for the value to be preserved, because the lessors want to see good improvements built. Mr. McGee cited that seven years ago he started out with the City of Homer knowing that they were in the middle of a change in administration and that they did not want to extend the lease at that time. He relayed thinking that he would enter into negotiations sometime in the next seven years to extend the lease and improve the property. He emphasized that he entered into that lease intending to improve the property, admitting that he knew he could not get financing and that it would be, basically, impossible without the cooperation of the City of Homer. He informed the Council that he has never received any cooperation from the City of Homer to improve the property or to extend the lease. He stated that every time he discussed improvements or ways of changing the property he was told by the Planning Director to not bother bringing this in, because the only thing the City of Homer wants is fish processing on that property. He reminded the Council that he brought them an assignment arrangement, a few years ago that was unanimously approved by the Harbor Commission. That assignment included and was going to a fish processing company that had financing in place, architectural drawings and a design to improve that portion of the property being assigned. He pointed out that this was pulled by the City Council, ambiguous conditions were put on the agreement, which had to be approved by Planning. He exclaimed to the Council that "those guys" spent almost two years trying to figure out what the Planning Department wanted beyond what they had approved, and by the time they were done they had become so frustrated that they gave up and left. Mr. McGee informed that Council that this is still a successful company not doing business in Homer, adding that this is exactly the same situation the Council has put him in. He reported that he has gone through three different processing companies, that have gone out of business, trying to develop those companies and work with those companies so that the City would have fish processing in Homer. He noted that the only ones that have been successful on that property are ones that are not actually processing fish in Homer, because it is not economic. They are buying fish and providing a market for the fishermen for fish landed in this community. Mr. McGee asserted that he has talked to every major fish processor in this state trying to establish some operation in Homer, including the ones that he formerly had as tenants. These people have even closed their offices and moved off, because they don't need that much of a presence in Homer. They can move fish across the docks and take it to their plants. Their big challenge, in every area, is to utilize the fish processing capacity that they have already invested in. That is the status of the fish processing industry in this community right now. Mr. McGee stated that he would love to continue to improve that property and bring in a tenants like Steve Zimmerman, Kevin Hogan and others who have legitimate businesses who are successful and who will support harbor oriented business and operations, and will create economic activity around the harbor. He further stated that he certainly will not improve the buildings if he knows that he will have to give these back to the City in one or two years or if the City refuses to negotiate with him about extending the lease, which according to Mr. McGee is exactly the situation with which he has had to deal. He reiterated that the frustration is enormous and wondered why anybody would invest in this and that no one that holds a lease on the Spit thinks that they are going to have to give their buildings to the City whenever their lease comes to maturity. They all think that they will be allowed to do what the Fish Factory, or any of the others, have done and assign or extend those leases. He emphasized that there is no reason why he as an individual should be singled out for that kind of treatment and that the Council is sending a message to anyone who wants to invest in the Homer Spit that it is not a good place to put a permanent investment. He added that a further message is that there will be no community backing, interjecting that he did not believe the Council wanted to send this message.
Kevin Hogan also spoke in support of Memorandum 02-09 and prefaced his remarks by saying that he would just make
comments on the processes. He advised that he is still a City resident, although he had to relocate due to the uncertainty of
his living situation. He commented on attending the Committee of the Whole meeting and that those issues should be
discussed at the regular Council meeting. Also, recently the Council has been doing second readings right after the public
hearings, there used to be a third meeting for the second reading and he encouraged the Council to go back to that process
in the public's interest. He advised that he met with the City Manager to discuss leasing a piece of property separate from
the McGee property and at that time the Manager had never heard of the McGees. Mr. Hogan relayed that the City Manager
inquired what McGees did and that he told him they do property management. He stated that the City Manager indicated
that he could do property management, and questioned the need for an out of town property manager. Mr. Hogan stated that
it appears to him that what the City is trying to do is take over somebody's viable active business and that message screams
to the business community. He advised that as a business man he would not be interested in establishing and building a
business knowing that he has to fight the City administration for survival. He voiced disappointment that there has been no
dialog with Mr. McGee, he's had a very well performing lease with tons of economic activity for the City and he stands to
lose it all. Look at what happened with the dragnet lease, that did not go out to RFP and was not allowed to come to term.
He noted that the discussion during the Committee of the Whole indicated that some of the Council was under the
impression that the Fish Factory was an assumption. He corrected that and said that the Fish Factory was a renegotiation of
the Dragnet Lease without an RFP. Mr. Hogan relayed that when that was listed with a Realtor he put in a full price offer
that was not even considered and expressed his opinion that it should have gone to RFP if it was not going to be sold. He
inquired why Mr. McGee is being singled out, why wasn't he talked to, adding that even Base Inc. was talked to
individually by certain Councilmembers. Mr. Hogan commented that he had heard people say that Base was a company
that was going to come in to Homer and take "my" business plan and put "me" out of business. He proclaimed welcoming
competition, but not from the City, voicing a preference for the City to work with the industry. He suggested that the
Council incorporate the recommendations of the Port and Harbor Commission into Memorandum 02-09, adding that the
Commission's recommendation made a lot of sense and was a simple solution in keeping with the lease policies. Not
knowing whether or not the Council had received the Port and Harbor Commission recommendations, he gave a brief
summary thereof, that it was to extend the leases 30 days past the award of the RFP. Mr. Hogan referenced an article in a
newspaper, that reports that the Administration does not feel they can RFP that property until they know whether the
buildings are going to remain or be torn down, which is, in his opinion, just a lame excuse. He voiced a thorough
confidence that the City Administration's intent was to take over the business of being a land lord, adding that all of the
tenants have received letters stating that "they" are going to take over the administration of property management. Not
particularly wanting the City of Homer as a land lord, Mr. Hogan emphasized that is why he rents from the McGees. Prior
to the Port and Harbor Commission passing their recommendation, "they" had an ad ready to go to the trade journals that
basically said, "In the up coming season we don't know where we are going to be located in Homer, because the City is
refusing to renegotiate the lease with our land lord. We will continue to try and serve your needs in Homer, however, we do
have a business in Seward. The City of Seward is very supportive of the fishing industry." He reported that "they" pulled
that copy based on the actions of the Port and Harbor Commission, however, the ad is still written and he can run it in the
next month's issue. He told the Council that he likes doing business in Homer, but it is very difficult and so much easier
doing business in Seward. He opposed the comments that the City is responsible for all of the economic activity "out
there", since that is not the case and "they" are the ones on the grounds doing the work. He encouraged the entire Council to
take a good strong look at the message they are sending, because the business community is listening and if the Council
makes a misstep it will be a long time repairing the damage.
Michele Arno, lessee at the Airport - Polar Car Rental, commented on having addressed the City before with some problems concerning some information received from Sheri Hobbs and Ron Drathman on policy changes at the Airport, adding that most of those have been smoothed out. However, for the last two years, she advised, she has been literally battling with the City of Homer mainly the actions of Ron Drathman in a denial for a renewal of a three year lease for her secondary business at the Airport, Northern Car Rentals. She reported having spent many thousands of dollars consistently on time paying her lease payments; purchasing autos, trucks, trailers, scooters and bikes; advertising; telephone; employee; and numeral expenses for this Northern Lease. She relayed the following from her point of view and opinion regarding her situation with the Northern Lease:
During the winter closure of this Northern Lease, she was out of state visiting her children who were visiting their father. She received a phone call from an employee stating that the City had denied her lease renewal, of which she had three more years. The reason cited for the denial was that her letter of renewal was not in by the 60 day requirement. Therefore, she was to unhook her phone, remove her door and pull out any business that she had in that space at the Airport, which she had to do. She took action, got an attorney, because she did not feel she was in default with the City. She spent another well over $13,000 proving her innocense regarding default. She then found out that the City withdrew all the default charges and, instead, stated that because her letter was not in on time they were still not going to renew the Northern Lease.
According to Ms. Arno: Sheri Hobbs stated that the City did have a practice of sending out renewal notices for leases, that
there were no terminations of leases based on late renewal notices, and that it has never been a concern to the City in the
past if the lease renewal came in on time or not. Sheri Hobbs continued to say that after a meeting with Ron Drathman they
decided/made the decision to not send Northern a lease renewal reminder. There have been copies of late letters accepted
by the City in many different leases. In question are the actions of the City Administration mainly on what was his
underlying reason for not wanting this new rental business at the Airport. Ms. Arno stated that she has spent much time and
money getting permission from FAA and the City of Homer to rent scooters at that premises, a service which Homer does
not have. She stated that she lost everything her attorney fees, all the money invested in this business, and the scooters,
bikes and everything are in storage. She queried if the City is going to send out renewal notices, or say that it does not
matter, then all of a sudden take $30,000 or $40,000 out of her pocket and say so what, we want somebody else in there.
She voiced thorough disappointment with the actions of the City in this case. She stated that "they" rely on the act of law,
which her lease says that she did have to have a 60 day renewal notice and her lease renewal notice was 30 some days late.
Ms. Arno asserted that she had papers that Hertz was 65 days late one time and was accepted without question. She asked
where the City wants to stand on this, adding that there was a precedence set. She commented that it really does not matter,
because it is not a fact of law, but it is very disappointing to those who hold leases with the City. She relayed her fear with
doing anything with her Polar Car Rental Lease, representing seven or eight years of investment, because one little "turn
up" and the Council's administration can put her out of business, emphasizing that with one late letter the City of Homer
put Northern out of business. Ms. Arno stated that she is a single parent, a mother supporting two children, works very,
very hard, provides a service to this community, wants to continue to provide a service, but is working on broken glass
right now and is extremely financially strapped. She blamed her situation on the City Manager and that this is a very poor
way to do business. She commented that if his intentions were the 5% increase, which the Council knows all about, "they"
are doing it and it is working just fine. She wondered if the City Manager did this because Northern had three years without
the 5% increase, and wanted someone new in there that would have to pay that 5%. She questioned the Manager
conducting business this way, that she has been in this town for 36 years, has had a business with the City at the Airport
longer than any other car rental agency, has done her part, was 30 some days late on renewal notice and it cost her some
$30,000.
RECONSIDERATION
CONSENT AGENDA
(Items listed below will be enacted by one motion. If separate discussion is desired on an item, that item may be removed
from the Consent Agenda and placed on the Regular Meeting Agenda at the request of a Councilmember.)
Councilmember Ladd requested that Ordinance 02-07 be placed under Ordinances as Item A.
A. Homer City Council regular meeting unapproved minutes of February 11, 2002. Recommend approval.
B. Ordinance 02-06, Of the City Council of Homer, Alaska Accepting and Appropriating Amendment No. 01 to the Alaska Department of Community and Economic Development, Community Development Block Grant for the South Peninsula Women's Services Renovation/Addition Shelter Project in the Amount of $36,752.00 for the Installation of an Elevator/Lift and Authorizing the City Manager to Execute the Appropriate Documents. City Manager.
Fiscal Note: Revenue and Expenditure Acct. 151-729, pass through grant additional $36,752.00 for a total grant of
$106,752.00. Recommend adoption for introduction and Public Hearing and Second Reading for March 11, 2002.
C. Ordinance 02-07, Of the City of Homer Amending Sections 21.36.030 & 21.42.010 of the Homer City Code to Modify the Zoning Process at the time of Annexation. City Manager. Recommend adoption for introduction and Public Hearing March 11, 2002, Second Reading March 25th or 26th if Council approves the meeting date change on March 11th.
Moved to Ordinance as Item. A. Ladd request
D. Resolution 02-14(S), Of the City Council of Homer, Alaska Authorizing the City Manager to Apply to the Department of Environmental Conservation for a Loan from the Alaska Clean Water Fund for Wastewater System Improvements and Authorizing the City Manager to Execute the Appropriate Documents. City Manager. Recommend adoption.
E. Resolution 02-15, Of the City Council of Homer, Alaska Authorizing the City Manager to Apply to the Department of
Environmental Conservation for a Loan from the Alaska Drinking Water Fund for Water System Improvements and
Authorizing the City Manager to Execute the Appropriate Documents. City Manager. Recommend adoption
F. Resolution 02-16, Of the Homer City Council Confirming the Appointment of Lisa Vaughn as Deputy Treasurer for Calendar Year 2002. City Manager. Recommend confirmation.
G. Memorandum 02-08, from City Clerk, Re: Restaurant/Eating Place Liquor License #3650 Renewal for Starvin'
Marvin's. Recommend voice non objection and approval.
H. Memorandum 02-10, from City Manager, Re: Sportsman Marine Supply, Inc. Consent to Assignment for Security
Purposes. Recommend approval.
Item H. Placed under New Business as Item C.
I. Memorandum 02-11, from City Manager, Re: Airport Terminal Land Lease - ADA 06600 Supplement #1 Re: Permit
for Mobile Fuellers. Recommend approval.
FENSKE/CUE - MOVED FOR THE ADOPTION OR APPROVAL OF THE RECOMMENDATIONS OF THE
CONSENT AGENDA.
YOURKOWSKI - REQUESTED ITEM H. BE PLACED UNDER NEW BUSINESS AT ITEM C.
VOTE: YES:(Excluding Item C. and Item H.) FENSKE, LADD, YOURKOWSKI, MARQUARDT, KRANICH CUE.
Motion carried.
VISITORS
A. Homer Foundation Report, Joy Steward
Joy Steward reported on the use of the City of Homer's allocation to the Homer Foundation. During the 2002 Budget cycle
the City of Homer allocated $120,000 to the Homer Foundation, designating 20% or $24,000 to be added to the City's
endowment fund. The remaining $96,000 was designated for grants to non profits that serve the residents of Homer and
was allocated as follows:
Pratt Museum - $66,000. Homer Council on the Arts - $10,000. Center for Alaska Coastal Studies - $9,000. Homer Senior
Citizens Center - $8,000. Choices for Teens - $5,000. Bunnell Street Gallery $4,000.
The policy regarding the use of the endowment funds needs to be hammered out between Ken Castner and the City
Manager. The City of Homer Foundation fund has been growing, no disbursements from that fund have been made. The
first year the City allocated $5,000, the second year $10,000 and this year $24,000 and is now at the point where it will
generate a nice sum. However, it will be a while before this will fill in the gap by the line item amount for the non profits.
ANNOUNCEMENTS/PRESENTATIONS/ BOROUGH REPORT/COMMISSION REPORTS
A. Fenske Report, Legislative Trip to Juneau.
There was a brief discussion regarding the trip to Juneau for Council to attend and testify at the Community and Regional
Affairs Joint Committee meetings about the City's Annexation proposal.
Councilmember Ladd reported that there was a presentation at Homer High School this past Saturday, in which Alaska's
Chief Justice Dana Fabe swore in 55 youngsters from the Elementary and Middle School as Youth Court attorneys. This
program provides students more ownership in their environment in the school. Conduct of the students improves with more
ownership. The students learn from students, a key to successful schools. District Court Judge Francis Neville made a
presentation. He commended Ginny Espenshade, director of the Kenai Youth Court Program, for her work and wonderful
job of instructing students regarding civics. Therefore, these students have a better understanding of the Judicial System as
well as the Legislative and Executive Branches of Government.
Mayor Cushing advised that he had the honor of representing the City at a special Court of Honor at the Methodist Church
for the Boy Scout Troop 555, earlier this evening and which is still in progress. He commended the Boy Scout Troops for
their work with Homer youth.
PUBLIC HEARING(S)
A. Ordinance 02-05, Of the City Council of Homer, Alaska Amending Homer City Code Section 1.24.020 Concerning the
Eligibility of Residents of Newly Annexed Territory for Election to City Offices. City Manager. (First Reading 02/11/02,
Public Hearing 02/25/02, Second Reading directly after public testimony.)
There was no public testimony.
KRANICH/CUE - MOVED FOR THE ADOPTION OF ORDINANCE 02-05 BY READING OF TITLE.
Councilmember Kranich noted that this is a clarification and that the ordinance solidifies the intent of all of the city
officials, the City Council, City Attorney and City Clerk regarding newly annexed residents being able to run for City Office.
VOTE: YES: KRANICH, CUE, FENSKE, LADD, YOURKOWSKI, MARQUARDT.
Motion carried.
Mayor Cushing called for a recess at 8:18 p.m., reconvening the meeting at 8:31.5 p.m.
ORDINANCE(S)
A. Consent Agenda Item C. Ordinance 02-07, Of the City of Homer Amending Sections 21.36.030 & 21.42.010 of the
Homer City Code to Modify the Zoning Process at the time of Annexation. City Manager. Recommend adoption for
introduction and Public Hearing March 11, 2002, Second Reading March 25th or 26th if Council approves the meeting date
change on March 11th.
FENSKE/CUE - MOVED FOR THE ADOPTION OF ORDINANCE 02-07 BY READING OF TITLE FOR FIRST
READING.
Councilmember Ladd voiced concern that a one year extension could be granted by the Planning Commission and therefore
the zoning of the annexed area could take two years.
LADD/KRANICH - MOVED TO AMEND PAGE 26 LINE 51, TO ADD",WITH APPROVAL OF THE HOMER CITY
COUNCIL.
VOTE:(primary amendment) YES: YOURKOWSKI, MARQUARDT, KRANICH CUE, FENSKE, LADD.
Motion carried.
Section 21.36.030. That section now reads:
21.36.030 Zoning of annexed areas. Zoning of areas annexed to the city shall be determinedinitiated at the time of
annexation. Zoning district designations shall be completed within one year of annexation. An extension of one
year may be granted by the Homer City Advisory Planning Commission with approval of the Homer City Council.
The Council voiced consensus for the Planning Commission to address transitional zoning. Mayor Cushing asked if there
was any objection of the Council that the Planning Commission could come back to them and say something similar to
what Councilmember Fenske has said as follows:
Councilmember Fenske: "I don't know what kind of transition zone the people would be interested in, but it needs to come
from them in part or what we are doing is nods on foolish. To imagine for some reason that people are going to deviate
suddenly from, as Councilmember Marquardt points out, what they have established, doesn't seem reasonable. But it isn't
unreasonable that maybe somebody moving in or buying property tomorrow might want to take advantage of this period of
time. I wonder if this could be better addressed, instead of by creating a transitional zone having a paragraph looked at by
Planning that would maybe address it in the terms of any significant development or any development that would be
significantly different from that in the area, would have to have a special review of some kind. That way we wouldn't be
establishing zoning. We would be giving people the opportunity to address any adverse development that could affect their area."
There was lengthy discussion on this entire matter.
Mayor Cushing stated that the Council has sent the message to the Planning Commission, they can read the Council's
minutes. The Commission may have five public hearings in a transitional zone, or five public hearings within a five month
period and then a "final". The Council has let the Commission know that the Council wants them to be working on this as
soon as they can schedule it and start the public hearings.
VOTE: (main amended motion) YES: MARQUARDT, KRANICH, CUE, FENSKE, LADD, YOURKOWSKI.
Motion carried.
CITY MANAGER'S REPORT
A. City Manager's Report
B. Bid report.
Acting City Manager Robl stated that he did try to find information on the leasing issue, he did distribute this information
to the Council prior to the meeting and hoped that this would help the Council.
COMMITTEE REPORT
A. Town Square Working Group, meeting schedule and Meeting Notes of November 19th and January 31st. Requested by
Councilmember Yourkowski. City Planner/Town Square Working Group.
Councilmember Yourkowski stated that he expects the working group synopsis or minutes to be in every packet following
a working group meeting. The work of the Kachemak Heritage Land Trust, the Town Square Committee and the Town
Square working group was commended. He encourage membership in the Kachemak Heritage Land Trust, adding that their
phone number is 235-land.
B. Parking Task Force Meeting of February 19, 2002.
PENDING BUSINESS
NEW BUSINESS
A. Memorandum 02-07, from Councilmembers Fenske and Yourkowski, Re: Status Report and Administrative Review.
Recommendation: City Manager prepare for the Council by June 2, 2002 a report to include:
1. State of City, including summary of projects and their budgets.
2. List of on going projects, both active and inactive, to assist Council in prioritization for 2003/2004.
3. Suggestions for administrator review process.
FENSKE/YOURKOWSKI - MOVED FOR THE APPROVAL OF THE RECOMMENDATIONS OF MEMORANDUM
02-07.
Councilmember Fenske briefly elucidated the recommendations of the Memorandum, as listed above. He clarified that the
administrator review process is the process for evaluating the City Manager's performance.
VOTE: YES: LADD, YOURKOWSKI, MARQUARDT, KRANICH, CUE, FENSKE.
Motion carried.
Mayor Cushing called for a recess at 9:16 p.m., reconvening the meeting at 9:26 p.m.
B. Memorandum 02-09, from Councilmembers Ladd and Kranich, Re: City Lease Property on the Spit.
Recommendation:
1. Initiate a comprehensive review, followed by a report of findings to the City Council assessing if the City's Property
Management Policy for City of Homer Spit properties should be either modified or abandoned in favor of land
privatization.
2. A committee comprised of appropriate City representatives and representation from the community at large to include
Spit business be established by the City Council to address questions and related issues impacting development of City
lease property on the Homer Spit. A committee report with recommendations and findings will be returned to the City
Council in an expeditious manner.
3. Any lease agreements between the City and lessees coming to term during February 2002 or during the time that the
lease management process is under study and consideration by the committee and the City Council shall be offered a lease
extension for a period up to a maximum of six months and in keeping with all extension provisions agreed upon and stated
within specific lease agreements.
KRANICH/LADD - MOVED FOR THE ADOPTION OF THE RECOMMENDATION OF MEMORANDUM 02-09.
Councilmember Yourkowski voiced a conflict of interest.
Mayor Cushing called for a recess at 9:26 p.m. to contact the City Attorney regarding the Conflict of Interest Issue. He
reconvened the meeting at 9:52 p.m. The Mayor ruled, pursuant to the City Attorney's advise, that Councilmember
Yourkowski does indeed have a conflict. He advised that he queried the City Attorney regarding a potential conflict since
he, the Mayor, works for English Bay Native Association, a Spit land owner, and that the City Attorney's opinion was that
the Mayor does not have a conflict.
There were no objections voiced by the Council to the rulings regarding the two conflict of interest matters.
Councilmember Yourkowski excused himself from the table at 9:53 p.m.
Mayor Cushing announced that the motion is now open for deliberation.
Councilmember Kranich expressed his feeling that there are definite inequities and a lot of things lacking in the lease policy
and property management policy, as well as the policy manual not being up to date with revisions from 1995 through 1998.
A thorough review of the policy is needed and it is unfortunate that there is a lease expiring right at this time with a
possible cause for some financial hardship on a lessee. This is some definite precedent setting action. These
recommendations are appropriate.
LADD/KRANICH - MOVED TO COMBINE RECOMMENDATIONS 1 AND 2 INTO A ONE RECOMMENDATION
AND LEAVE RECOMMENDATION THREE AND TURN THAT INTO TWO. THE NEW RECOMMENDATION 1.
WOULD READ:
THAT THE CITY COUNCIL DIRECT THE CITY MANAGER TO INITIATE A STUDY OF THE CITY OF HOMER LEASE MANAGEMENT POLICY TO INCLUDE:
1. THE RFP PROCESS AND TERMINATION OF LEASE AGREEMENTS,
2. LEASE OPTIONS,
3. OTHER IDENTIFIED NEEDS.
SAID REVIEW WILL BE EVALUATED BY THE LEASE NEGOTIATING COMMITTEE AND INVOLVE A
REPRESENTATIVE OF THE SPIT BUSINESS LEASE COMMUNITY. A REPORT WILL BE SUBMITTED TO THE
COUNCIL FOR ACTION IN A TIMELY MANNER.
The Council discussion points regarding the amendment:
Leases vary from 10, 15 or 20 year limits with some having extension provisions.
Lessees with short term leases have difficulties making improvements and equipment and fixture upgrades and being able to still maintain a competitive business.
Lease agreement process with a thorough review of the policies.
Policy regarding RFP and termination portions.
To put a lot of money into a piece of property and a building that will have to be moved at the end of the lease is detrimental to the development of property, to the enhancement of the business community and to the employment opportunities in Homer.
Pros and cons of including a member of the public/spit business lease community person on the Lease Negotiation Committee.
Pros and cons of the Lease Negotiating Committee being strictly City staff.
Lease Task Force and Commission levels are where the review should take place.
FENSKE/CUE - MOVED TO AMEND THE AMENDMENT TO TAKE OUT FROM THE SECOND FROM THE LAST
LINE WHERE IT STARTS AND TO THE END OF THAT SENTENCE. (AND INVOLVE A REPRESENTATIVE OF
THE SPIT BUSINESS LEASE COMMUNITY)
Council discussed the amendment to strike involving a representative of the Spit Business Lease Community:
Lease Negotiating Committee.
Public meeting and composition.
Who appoints or determines this member of the public.
Advertise this position. Allow the public to comment on the selection of this person.
Not involving this person in any lease negotiation.
Involving this person in the review and discussion of the policy.
Having the input of one individual is not as important as getting the testimony of a lot of individuals.
Pros and cons of involving a member of the public, period.
Gathering information. "We have nothing to fear, but fear itself." Why is there a fear of information. Why not bring a product to the Council that has had as much input as can be obtained and as much broad perspective as can be obtained.
Noted couple of committees such as the Animal Shelter Design Working Group wherein Animal Care Specialists and
Animal Shelter volunteers/users/workers were asked to participate. The point being that user input is a good thing.
VOTE:(amendment to the amendment) NO: KRANICH, CUE, FENSKE, LADD, MARQUARDT.
Motion failed.
FENSKE/CUE - MOVED TO INCLUDE WHAT HAD BEEN STRUCK IN ORIGINALLY TO TAKE OUT EXCEPT
THE FIRST PARAGRAPH ON PAGE 112, AND THEN LEAVING THE AMENDED PAGE AS HAS BEEN
OFFERED.
The Mayor never stated the motion, therefore the motion was never put before the Council. Reason: This amendment was
made to the body of the memorandum. The recommendations of the memorandum, only, are before the Council.
FENSKE/CUE - MOVED TO POSTPONE ACTION ON MEMORANDUM 02-09 TO THE NEXT MEETING.
Pros and cons of postponement were discussed.
FENSKE/ - MOVED THAT WE DO NOT POSTPONE.
Motion was not recognized.
VOTE:(postponement) NO: UNANIMOUS CONSENSUS OF THE COUNCIL IN OPPOSITION TO POSTPONEMENT.
Motion failed.
VOTE:(primary amendment 1 as amended.) YES: CUE, FENSKE, LADD, MARQUARDT, KRANICH.
Motion carried.
Mayor Cushing called for a recess at 10:25 p.m., reconvening the meeting at 10:35 p.m.
Lengthy discussion continued.
Handout from the Acting City Manager was acknowledged, regarding comments by previous Councils of the lease issue
and the McGee lease, past resolutions, Port/Harbor Commission discussions and et cetera. (4) Comments from Mr. McGee
in 1998 were included. It was noted that the development plan was asked for in 1998, and that Council has yet to see a
development plan.
Mayor Cushing advised that Mr. McGee is the only lessee with a lease coming to term in February 2002, new
recommendation 2. He noted that it was a consensus of the body to bring Mr. McGee to the table.
Marty McGee was asked to come to the table and asserted that he was not at that particular meeting, having been advised
by the Planning Director that since it was on the Consent Agenda he did not need to be present. He further asserted that he
was never apprized of those conditions and the development plan that were requested, emphasizing that these have never
been brought forward to him by Mr. Drathman with regard to any proposed lease extension. He stated that this is new to
him. He stated that the plan was submitted on the assignment of one lot for the Royal Alaska part. He recalled that the
Port/Harbor Commission had refused to forward the recommendation to extend his lease on his part prior to coming
forward to the City Council. He advised that he had a hard time coming forward with a development plan that was concise
about what would happen. He reiterated that it had been forwarded to him repeatedly by the Planning Director with regard
to the use of the property to have it used for fish processing, the primary objective of the municipality. He commented on
his negotiations with Cook Inlet Processing at that time and that there were discussions about fish grinding and Sahaley
Seafoods, main occupant of the larger building that went out of business. Therefore, without a tenant that was willing to do
fish processing he was not willing to build a facility to process fish. He informed the Council that he negotiated or tried to
get four fish processors interested, who were interested in extending any operation into Homer. He suggested that he was
kind of at a deadlock at that time because the City was saying that the only thing they wanted to see was a fish processing
plant and the industry was saying they were not interested in processing fish there. He reported that the last round started
September of this year when he started talking to Mr. Drathman about the fact that this lease was coming to maturity, had
to go forward with an RFP or, Mr. McGee's preference, a renegotiation of the lease. He advised that the only response he
received was, no negotiation. He reiterated that he got nothing from Planning about what they wanted to see, which is what
he has been asking for, for quite some time. Mr. McGee voiced his willingness to "go down that road" as long as he can
find economic viability regarding any of those uses that are wanted. He noted that his current intentions go along the line of
gear storage and hardware sales and facilities for maintenance of boats. There is very little interest, other than office space,
with regard to fish processing. If requested, he certainly would provide something about redevelopment specifics with
regard to the buildings and use of the lots for a longer term plan.
Council commented:
About the Council's responsibility to balance what is in the best interest of the City as a whole with individual business desires.
The information stated in the lease document and in the lease policy.
Policy: Paragraph 2.01 of the current ground lease. Length of term. "The length of the term and if applicable the renewal option depends on at least two factors - the length of the term requested by the tenant and the amount of investment in or amount of economic activity promised by the tenant. To get a long term lease the tenant is expected to provide a large investment and generate significant economic benefit to the City e.g. taxes and good opportunities for employment. Major investment may take 20 or 30 years to amortize or pay off the construction loan, which would likely lead to approval of a lease term of that length. This approach for determining the length of the lease is required by and described in more detail in Homer City Code 18.08.070."
Mr. McGee asked the Council to remember that he is an expert in real-estate and leasing that he not only has a Bachelor's Degree, but a Master's Degree in that field in practicing as a professional appraiser. He stated that all leases by their very nature are specific in term and not perpetual. The language in this lease is very similar to language contained in most leases that have some kind of boiler plate that says at some point this lease will come to maturity and action will have to be taken before extension or renewal. He relayed his familiarity with other lease policies in other communities and that there are provisions for negotiation. Historically, in Homer, no lease has come to maturity and ended there, that in fact there is an RFP process, renegotiation process, and that the Homer policy states that the RFP process will take place and there is no assurance that the lessee will have a new lease. Mr. McGee voiced his assumption that he would have an opportunity and time to reply to the new request for proposal. He said that it would not have surprised him for the community to come forward and put in new conditions, such as specific development or activity. Since this is the most productive piece of property in its current condition and form and therefore, that should be taken into consideration. 90% of the fish being landed in Homer are being sold through this property, so it is providing a big important cog in the economic wheel of what goes on in the harbor in Homer. The other tenants are providing services to the harbor and the only ones immediately adjacent to the harbor providing these services. He voiced his thought that the Council would take into consideration that this is an industrial property by zoning and intended use, and that the appearance and condition of the yard is very similar to the other industrial properties. He stated that he would be willing, as would most lease holders, to comply if "they" wanted to put something into place to beautify the Spit and yet maintain industrial property, such as fences to obscure the clutter that goes along with the fishing industry and that type of use. He agreed that there would be desire to change the appearance of the Spit as tourism evolves, at the same time recognizing that there is a limited amount of land immediately adjacent to the small boat harbor to provide service to the commercial fleet and to the other boats, charters and so forth. Mr. McGee stated that he would have thought that as the lease came to maturity that the City would have come forth with a negotiation process of one form or another whether RFP or direct negotiation, to say what the City wants. He relayed that the City Manager told him the lease would go out to RFP in December, yet his lease has been allowed to run to maturity and, according to Mr. McGee, puts him in a very strange position. He informed the Council that he has spent $250,000 investing in this community and queried if this is to be taken into consideration or taken away. In response to the Mayor's inquiry regarding the assessment value decrease, Mr. McGee reminded the Mayor that he is the Anchorage Assessor, and replied that he challenged the assessment and cited the following:
The theory of assessment associated with this type of property is called a possessor interest valuation - it values the lease holder's interest in the property.
The fact that the end of the lease was nearing and obvious that the City was not willing to negotiate regarding the renewal of the lease is what he took to the assessor and said that the assessor had incorrectly evaluated the property.
Prior to that time and for every other lease out on the Spit, the method of assessment - residual valuation of assessment, the market value approach had been used with the assumption that every lease holder would be allowed to extend the lease. The value of the property was very similar to the fee simple value, the full value of the land and buildings.
Mr. McGee pointed out to the Council that if this policy is allowed to continue they will destroy their tax base for every other lease holder as well, because the lessee can legally challenge these and say, "Look, I only have seven years remaining on my lease. I have a fraction of the value of that property until, the lease is renewed." He suggested that every property owner should challenge these, because they are not being fairly assessed if they don't. Mr. McGee confirmed, when asked by Councilmember Ladd, that the City Manager had told him that the property/lease would be out for RFP the month of December.
Discussion continued including comments about the responsibility of the lessee to come up with development proposal and
to not wait on the City. Especially when there is a lot of financial interest one would think the lessee would come forth in a
timely manner. It was noted that Lease Policy fine tuning is needed. Putting an RFP out at the term of a lease does not
provide any options for the lessee to deal with their assets on the property; buildings, equipments, fixtures and et cetera.
Mayor Cushing pointed out that the tenants of those buildings, regardless of what the Council does with this lease, are not
going to get booted out of those buildings and those businesses will exist this summer in one form or another, if they so
choose.
Council briefly mentioned that letters were sent to the tenants from the City, stating something similar to what the Mayor had just indicated.
Councilmember Ladd began to make a motion regarding the body of the Memorandum.
A point of order regarding the body of the memorandum not being on the floor.
MAYOR CUSHING ASKED IF THERE WAS ANY OBJECTION OF THE COUNCIL TO RECOGNIZE THE ENTIRE
MEMORANDUM BEING ON THE FLOOR AT THIS TIME. (Primary amendment 2.)
There was no objection to primary amendment 2.
LADD/KRANICH - MOVED TO AMEND TO REMOVE PARAGRAPHS 2, 3 and 4 OF THE BODY OF THE
MEMORANDUM.
The following are the paragraphs in the body of the Memorandum.
Paragraph 1. The City of Homer owns numerous parcels of property on the Homer Spit. The City utilizes some lots for
municipal purposes; however, many are leased to the public in accordance with the City of Homer Property Management
Policy and Procedures manual.
Paragraph 2. The City's economic growth is directly associated with property development and management, both public
and private. The Homer Spit comprises both public and private property; however, there is an observable difference
between the two. Aside from City property managed by the Port and Harbor, buildings located on private Spit property are
better maintained, built for permanence, and are continuously upgraded to meet competitive business expectations.
Paragraph 3. Present lease agreements provide little incentive for lessees to establish permanent buildings, initiate
improvements, or upgrade equipment, fixtures and machinery that enable the lessee to remain competitive and meet
demands associated with the business world. Lease option to renew an agreement is contingent upon, but not limited to
factors determined by the City, and these conditions are often identified at the end of a lease agreement time frame. During
the term of a lease, City intentions for the property may change, and with this condition being so tenuous, the lessee
gambles when placing capital into leased property. This forces lessees to build temporary facilities and at best, design
buildings that can be removed from property upon lease termination. In addition, upgrading lease property during the tenure
of the lease is difficult as short-term loans are often not economically viable.
Paragraph 4. This memo raises questions. Should the City of Homer develop a plan to privatize some Spit property?
Would a more robust, competitive Spit environment on private property generate more revenue to the City through
increased sales, increased employment, and business longevity as opposed to annual lease revenue and sales resulting from
lease constrained business?
VOTE:(primary amendment 3.) YES: CUE, FENSKE, LADD, MARQUARDT, KRANICH.
Motion carried.
Paragraph 1. is the only remaining paragraph in the body of Memorandum 02-09. Paragraph 1. The City of Homer owns
numerous parcels of property on the Homer Spit. The City utilizes some lots for municipal purposes; however, many are
leased to the public in accordance with the City of Homer Property Management Policy and Procedures manual.
Mayor Cushing called for a recess at 11:21 p.m., reconvening the meeting at 11:26 p.m.
FENSKE/CUE - MOVED TO STRIKE NEW PARAGRAPH 2 OF THE RECOMMENDATION:
2. 3. Any lease agreements between the City and lessees coming to term during February 2002 or during the time that the
lease management process is under study and consideration by the committee and the City Council shall be offered a lease
extension for a period up to a maximum of six months and in keeping with all extension provisions agreed upon and stated
within specific lease agreements.
The message to be sent to management is that progress is desired regarding a couple of issues that are adequately addressed
in the new paragraph 1 of the recommendations and paragraph 2 goes the wrong direction. This amendment also supports
previous Councils and Task Force comments and decisions.
VOTE:(primary amendment 4.) YES: CUE, FENSKE.
NO: KRANICH, LADD, MARQUARDT.
Motion failed.
There was no further discussion.
VOTE:(main amended motion) YES: LADD, MARQUARDT, KRANICH.
NO: FENSKE, CUE.
Motion failed.
Councilmember Yourkowski returned to the table at 11:42 p.m.
C. Consent Agenda Item. H. Memorandum 02-10, from City Manager, Re: Sportsman Marine Supply, Inc. Consent to
Assignment for Security Purposes. Recommend approval.
On the floor as a separated item from the main motion on the Consent Agenda.
Recommendation: Authorize City Manager to Execute the Appropriate documents.
YOURKOWSKI/CUE - MOVED TO POSTPONE TO NEXT REGULAR MEETING UNTIL WE CAN GET SOME
INPUT FROM THE CITY MANAGER.
The Acting City Manager reported having discussed this with the City Manager and he did not believe that postponing
would hurt the business deal that lessee is trying to do.
VOTE:(postponement) There was no objection to postponement.
Motion carried.
RESOLUTIONS
COMMENTS OF THE AUDIENCE
Kevin Hogan thanked Councilmembers Marquardt, Kranich and Ladd for their efforts to try to bring some of the municipal business practices up to speed with the rest of the world. He voiced extreme disappointment in the final results of the vote, not carrying. This will send a message to the business community at large for which this Council will have to take responsibility. He advised witnessing some of the goings on with the lease policy on the Spit, an incredible amount of micro management by people who do not know what is going on out there. Mr. Hogan noted that there has been survival by just ignoring a lot of the stuff that gets passed here:
Not complying with the one way road. The replatting of Spit road properties was done to where there is no turning radius for trucks. Fortunately, no one has put up a building, therefore business can continue.
Mr. Hogan stated that there are some people who seem to think that they know what this industry is about and have not
bothered to go out "there", adding that he finds this very frustrating. As well as finding it frustrating about the message
being sent to the business community, which creates a long term impact. He commented on the City's reputation, reporting
that he caught a lot of flak, when he was on CIRCAC as the City's representative, for the City's attitude toward business. He
emphasized to the Council that what they do in this competitive environment regarding port services with Seward and
Kodiak puts Homer in a competitive disadvantage and the community as a whole is going to suffer. He asked for
reconsideration. He voiced his wish that the administration would have put as much effort into helping Mr. McGee, as they
did in confronting and fighting him, even one tenth of that confrontational energy into helping him. It appears that there are
a fair amount of materials that the Council had in their packets that the public did not have, that was generated by the
administration.
Marty McGee commented that he is certainly disappointed with the results of what has happened here tonight. He pointed
out that, earlier in the meeting when he was asked questions, there was another lease holder in the audience and no
questions were asked of him, adding that the Council had that opportunity and did not take it. He stated that there are
substantial and huge differences between the way he has been treated and the lease policy of the City of Homer. He
intimated that this is very discouraging to anybody looking from the outside. He queried that if the Council did not want the
support of the fishing industry, what did they want, adding that no one has ever told him or even began to enter into a
conversation. He emphasized that the Council has, by their action, displaced tenants. He pointed out that the buildings are
still his until the end of the month and he intends to salvage what he can. He told the Council to not fool themselves on
what their actions have been, what message they have sent to the industry and the community. He noted that he attempted
to engage in this conversation and debate on the level the Council wanted, to discuss lease policy, which was appropriate.
He advised that Councilmembers Kranich and Ladd also felt this was appropriate. Mr. McGee stated that this could have
been done months ago, which is what he attempted to do and was instead engaged by a stone wall from the municipality
with regard to what to do next, what the City wants to see in a proposal. He advised that he received no response to his
inquiry about what was unacceptable in his past proposal. He asked the Council how anyone can do business in that format.
Bill Tener commented that he was hoping that through all of these conversations, the last couple of months, that something
would have come across to the fact that somebody from out of town looking at this policy, that is not a good policy by the
previous administrations, would see that it does not work. He queried why "you" would want to slap somebody in the face
for coming into this town and wanting to do business here. The closed end leases just don't work and that is what "we" were
trying to do tonight was trying to get Council to consider modifying the lease policy so that there is still a chance for a
lessee to get the equity off or sell it to the next lessee without the City planning on now being property managers. He stated
that he really does not want to be there with the City. He pointed out that these buildings may not be up to Code and
inquired if the City is going to take on that responsibility. What are the ramifications if the City is going to be a property
manager? He shared that it is going to be a wild trip out there for "you guys". He encouraged the Council to keep this in the
hands of the people that have something that they are going to lease, since it is the property that is being leased and not the
buildings. He suggested that when "you" take on the ownership of the building they are into another arena, which is why
they are requesting the change so that they possibly have at least a chance, or somebody else has a chance of somehow
extending "his" lease or doing something by selling or trading the property for something else for the new lessee. Mr. Tener
noted that right now it is the City's and wondered why the City would want to own those buildings.
COMMENTS OF THE CITY ATTORNEY
City Attorney Tans was not present, however, had been contacted by telephone, under Memorandum 02-09, regarding the
Yourkowski conflict of interest issue and a potential Mayoral conflict of interest.
COMMENTS OF THE CITY CLERK
City Clerk Calhoun had no comment.
COMMENTS OF THE ACTING CITY MANAGER
Acting City Manager Robl had no comment.
COMMENTS OF THE MAYOR
Mayor Cushing commented about the plowing of Beluga Lake in the vicinity of Ben Walters Park and inquired if it is the
intention of the Council that this does get plowed.
There was a consensus of the Council that this area does get plowed by the City.
Mayor Cushing noted that the Winter Olympics, held in Salt Lake City, Utah, were great and encouraged others to attend
in the future.
COMMENTS OF THE CITY COUNCIL
Councilmember Marquardt reminded the Council that he had requested feed back on the Gordon proposal on the property
adjacent to Hornaday Park. He offered to make additional copies of the proposal available for the Council. He stated that if
he does not hear from the from the Council by the next meeting he will assume that there is no interest in pursuing this
proposal and he will contact Mr. Gordon and advise him of such. Councilmember Marquardt clarified that he is not
advocating this proposal, however, it is a possibility for addressing the Woodard Creek drainage situation.
FENSKE/CUE - MOVED TO SUSPEND THE RULES TO CONTINUE PAST TWELVE. (MIDNIGHT)
VOTE:(suspension of rules) There was no objection of the Council to continuing past midnight.
Motion carried.
Councilmember Fenske stated that this is one of those night that he wished he could have slept in. He voiced sympathy for
the people in Juneau and some of the issues they have to decide on, adding that some things are just not easy. He voiced his
appreciation of the Council's thorough deliberations on the issues.
Councilmember Yourkowski voiced his disappointment that he did not get to participate in the discussion on Memorandum
02-09 and his disappointment with the action that was taken. He commented that he has some ideas for changes to the lease
policy. He reported that when the Council was in Juneau they did commit to being involved in a transition process with the
annexed citizens. He suggested that, since the administration is committed in the transition plan to hold weekly meetings, it
might be good for this to be a regular agenda item on the Committee of the Whole meeting to have a report from the
administration on those meetings and maybe take public input. He asked the Council to consider this suggestion.
There was a brief discussion and the Mayor suggested substituting one Committee of the Whole meeting a month for the
transition meeting and use the same basic format as the Committee of the Whole.
Councilmember Ladd commented about the transition meetings and designating land in the annexation area. He suggested
that the one meeting be a worksession on furthering the transition plan and making it really functional to get where the
Council/City wants to get. He voiced his concern regarding the lack of a report to the Council regarding the Steep Slope
issue, adding that legal opinion was sought. He asked for a status report on the Steep Slope issue and a time line on where
the City is going with Steep Slope. Mr. Ladd stated that work is needed on the Lease Policy Manual. He noted that there are
some issues regarding lessor and lessee responsibilities, RFP process and terms. He stated that he is going to consider
reconsideration and asked for verification that 48 hours is the time frame for reconsideration. The 48 hours was verified.
This issue is significant enough that it cannot be dropped. Councilmember Ladd voiced his concern that Memorandum
02-09 did not move forward, which was in the interest of good community relations, good business and good for the
community.
Councilmember Kranich relayed his unhappiness that Memorandum 02-09 did not pass in its highly amended form. He
stated that when people are paying the City basically $20,000/acre/year for that land, most leases are in the neighborhood of
$0.50 a square foot or more, which in ten years is $200,000. $200,000 to sit on a piece of property with zero claim to it. He
acknowledged that these people have been in business on the leased property, hopefully have contributed to the financial
strength of community by providing facilities that will, through their use, provide jobs. Some of the seafood processing will
even provide taxes back to the City, if processing takes place. He noted his displeasure at the message the Council sent, that
if a lessee happens to get on the outs with someone in City Administration and come the end of the lease, the lessee can
figure on taking their marbles and going home and erasing the circle. Councilmember Kranich stated that in that same light
and on the record he requested from the City Clerk a copy of the list of current leases identifying the renewable and non
renewable leases that would show Council the date they adopted it and if possible any follow up on that as to whether the
lessees were advised as to any changes or the status of their leases as far as being renewable or non renewable. He inquired
of the City Clerk, as a follow up on this same item, for reconsideration a person had to have voted in the affirmative and
since the motion/memorandum was not passed then those who voted yes could not call for a reconsideration and those who
voted no could.
City Clerk Calhoun verified that only those on the prevailing side could issue notice of reconsideration, therefore, only
Councilmembers Cue and Fenske could issue notice of reconsideration.
Mayor Cushing commented that an item that disturbed him was that the Lessee was totally unaware of Councilmember
Kranich's motion in 1998, requiring a plan. He asked for some back ground on that notice and since a statement was made
it warrants some review. He emphasized that this was an accusation against administration.
Councilmember Kranich suggested that, especially since this is an out of town individual, the Council sit down with the
City Manager in Executive Session and review that lease file. He voiced his presumption that the Lessee would have been
notified in writing of action taken at a Council meeting pertaining to his lease. The Executive Session would be strictly to
review that lease file for completeness.
Councilmember Fenske stated that the lease policy needs to be continually examined for flaws. He noted that out of the
discussion one of the flaws that may be in there is the position of the request for proposals and the termination of the lease
so that all parties have adequate time to "advantage, whatever advantage they have". He stated that he is anxious to see
another resolution or memorandum that will help get further information.
Councilmember Ladd stated that the issue of these leases is a concern and not just the leases on the Spit. He commented
that since coming on the Council, about 1.5 years ago, the Council has dealt with a number of leases that either have not
been completed in a timely manner or there have been associated issues, adding that he could "rattle" off four. He voiced a
concern with a person coming forward saying that they were told that the RFP was going to go out in December. He
emphasized that verbal statements made by the lessor to the lessee are verbal agreements. He voiced further concern that
there is something lacking in the lease process and encouraged the Council in future meetings to be seriously looking at the
lease agreement process and the administration thereof.
Mayor Cushing encouraged the Council to "dust off" the Lease Task Force work of 94/95, the three inch stack of lease
policy that has "put us where we are and has guided us through the last few leases in the late 90s".
ADJOURNMENT
There being There being no further business to come before the Council the meeting was adjourned at 12:15 a.m. The next
regular meeting is scheduled for Monday, March 11, 2002 at 7:30 p.m. in the Homer City Hall Council Chambers located
at 491 E. Pioneer Avenue, Homer, Alaska. The Council's Committee of the Whole is scheduled to meet at 4 p.m. on March
11, 2002, in the Homer City Hall Council Chambers.
______________________________________
MARY L. CALHOUN, CMC, CITY CLERK
Approved: __________________________
1. Policy is the Property Management Policy and Procedures Manual specifically regarding leases.
2. Jim Manley of the Manley Company Lease.
3. Example: Japan Airlines Flight Kitchen at Anchorage International Airport, exactly that situation.
4. Some of the handouts were not provided to the City Clerk.