Section 17.45.225. Land lease term or term extension.

	(a)  This section describes methods for setting the term of a land lease and extending an existing land lease, including a lease in holdover, except for a land lease term or term extension subject to 17 AAC 45.235.  A term or term extension under this section is subject to the limitations of 17 AAC 45.215 and 17 AAC 45.220 and the considerations in (b) of this section.  
	(b)  In setting or extending the term for a land lease, the department will consider  
		(1) the applicant's actual or proposed development and use of the premises;  
		(2) sound airport planning and anticipated needs for security, safety, maintenance, and operation of the airport;  
		(3) future development needs of the airport;  
		(4) applicable covenants running with the land and restrictions in the state's title to airport property;  
		(5) the amount of investment, purchase price, fair market value, or remaining useful life of permanent improvements documented in the application, as applicable;  
		(6) the applicant's plan for remediation of any environmental contamination if the applicant did not cause or materially contribute to the contamination; and  
		(7) the proposed method and terms of financing the applicant's investment.  
	(c)  For a new lease that is not a successive lease, the department will grant an initial term that does not exceed the number of years shown in the table in (j) of this section that corresponds to the greater of  
		(1) the total of the applicant's  
			(A) purchase price, excluding financing costs, of pre-existing permanent improvements owned by the applicant on the premises, in compliance with (h)(2) of this section and not previously used by the applicant to set lease term;  
			(B) existing investment in permanent improvements owned by the applicant not previously used to set lease term, in compliance with (h)(1) of this section; and  
			(C) proposed new investment excluding financing costs, in an amount equal to the reasonable cost of one or more of the following, in compliance with (h)(1) of this section:  
				(i) premises, boundary, and as-built surveys;  
				(ii) permanent improvements and any associated site development work and site development materials on the premises;  
				(iii) remediation of contamination for which the applicant is not responsible under this chapter either on the premises or migrating from the premises; and  
				(iv) extension of a road, taxiway, or utility that originates on or off the airport to the premises; or  
		(2) the dollar amount of a loan in compliance with (h)(3) of this section.  
	(d)  For a successive lease, the department will grant an initial term that does not exceed the greatest of  
		(1) the number of years shown in the table in (j) of this section that corresponds to the total of the factors described in (c)(1) of this section;  
		(2) the number of years shown in the table in (j) of this section that corresponds to the total of  
			(A) the fair market value, as determined by an appraisal performed within the previous year, of existing permanent improvements owned by the applicant on the premises; and  
			(B) the applicant's proposed new investment to perform activities described in (c)(1)(C) of this section in compliance with (h)(1) of this section;  
		(3) the number of years of remaining useful life of the principal applicant-owned permanent improvement on the premises, up to the total cumulative years of term previously granted for the previous lease on the basis stated in (c)(1) of this section; or  
		(4) five years.  
	(e)  For extension of an existing lease with less than one year of remaining term or in holdover, after giving public notice of the proposed extension under 17 AAC 45.215(c) and considering the factors in (b) of this section, the department will grant a term extension that does not exceed five years less than the longest term the application would support as the initial term of a successive lease under (d) of this section.  
	(f)  For extension of an existing lease with one year or more of remaining term, after giving public notice of the proposed extension under 17 AAC 45.215(c) and considering the factors in (b) of this section, the department will grant a term extension that does not exceed five years less than the period determined under (c) of this section.  
	(g)  If more than one of the methods provided in (c) - (f) of this section can be applied to determine the maximum term of the new lease, successive lease or term extension, the lessee has the option to choose which method the department must use.  
	(h)  An application for a term or term extension under (c) - (f) of this section must include all documentation required under 17 AAC 45.230, and must satisfy each of the following conditions:  
		(1) a proposed or existing investment in the premises, not previously used to set lease term, to perform activities described in (c)(1)(C) of this section must be   
			(A) approved by the department in an airport building permit issued under 17 AAC 45.280 or in an airport building permit or other written approval under 17 AAC 40 in effect before March 28, 2002; and  
			(B) documented by the applicant's submission under 17 AAC 45.230(a)(1) no later than the later of December 31, 2008, or 60 days after the expiration of the applicable airport building permit; the department will extend this deadline for submission of documentation if the applicant shows good cause for an extension;  
		(2) the purchase price of existing permanent improvements on the premises must be  
			(A) for a purchase in a fair market transaction not entered into primarily to gain lease term;  
			(B) not previously used by the applicant as the basis for determination of lease term;  
			(C) for privately-owned permanent improvements; site development work and site development materials, including a driveway, parking area, gravel, and pavement, are ineligible for inclusion in a purchase price to support term because they become property of the state upon placement; and  
			(D) documented by the applicant's submission under 17 AAC 45.230(a)(2) no later than the later of December 31, 2008, or two years after the date of the purchase;   
		(3) the dollar amount of a loan other than for purchase of improvements on the premises may be used only to the extent  
			(A) the loan is a new loan from a bank or other commercial lending institution for operating or capital expenses of the applicant's operations at the airport;  
			(B) the bank or other commercial lending institution providing the loan conditions the loan on the term or term extension;  
			(C) the applicant applies for the extension and submits supporting documentation from the lender; and  
			(D) the dollar amount of the loan applied to support term does not exceed the fair market value of lessee-owned permanent improvements on the premises, plus any proposed investment by the applicant in new permanent improvements.  
				(i)  The term of any extension that the department grants under (e) - (f) of this section  
		(1) for term based on investment in new improvements must be added to the end of the lease; or  
		(2) for term based on purchase price must be added to the end of the lease, less any lease term or term extension remaining as of the earlier of the date of the department's consent to the lease assignment or closing of the purchase of permanent improvements.  
	(j)  The department will use the following table, to determine the maximum lease term or lease term extension the department may grant under (c) or (d) of this section:   
           Fair Market Value, Purchase
           Price, or Investment of at
               Least the Following
                  Dollar Amount                      Term of Years
                      7,500                                6
                     15,000                                7
                     22,500                                8
                     30,000                                9
                     37,500                               10
                     45,000                               11
                     52,500                               12
                     60,000                               13
                     67,500                               14
                     75,000                               15
                     82,500                               16
                     90,000                               17
                     97,500                               18
                     105,000                              19
                     112,500                              20
                     120,000                              21
                     127,500                              22
                     135,000                              23
                     142,500                              24
                     150,000                              25
                     157,500                              26
                     165,000                              27
                     172,500                              28
                     180,000                              29
                     187,500                              30
                     195,000                              31
                     202,500                              32
                     210,000                              33
                     217,500                              34
                     225,000                              35
                     232,500                              36
                     240,000                              37
                     247,500                              38
                     255,000                              39
                     262,500                              40
                     270,000                              41
                     277,500                              42
                     285,000                              43
                     292,000                              44
                     300,000                              45
                     307,500                              46
                     315,000                              47
                     322,500                              48
                     330,000                              49
                     337,500                              50
                     345,000                              51
                     352,500                              52
                     360,000                              53
                     367,500                              54
                     375,000                              55

Authorities

02.15.020;02.15.060;02.15.090;02.15.210

Notes

Reference

17 AAC 45.205
17 AAC 45.230
17 AAC 45.240
17 AAC 45.242

Authority

AS 02.15.020 AS 02.15.060 AS 02.15.090 AS 02.15.210

History

Eff. 3/28/2002, Register 161; am 3/22/2008, Register 185