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- Nephi City enters into lease agreement with AGL Holdings for land at airport
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By Myrna Trauntvein
Times-News Correspondent
Nephi has a lease agreement with AGL Holdings (Above Ground Land Holdings) for land at the Nephi Municipal Airport that currently is occupied by a hangar and aviation fuel sales equipment and that will in the future house additional aircraft hangars and aviation-related businesses.
Randy McKnight, city administrator, said that the city owns and operates the Nephi City Municipal Airport and AGL wants to lease property from the city to engage in aviation-related and real-estate development businesses at and around the Airport.
"They want to add a hanger and a pilot services area," said McKnight.
The 22-page document with 33 articles is designed to protect both the city and AGL Holdings.
"The City hereby leases and lets to Lessee, and Lessee hereby leases and rents from City the following properties: Fuel Storage and Dispensing; Hangar Building; Office Building; Business Building and Hangar Cluster," reads the agreement.
The Hangar Building lease will be billed beginning July 15, 2016 at a starting rate of thirty cents per square foot, per year, escalating based on CPI (Consumer Price Index).
Beginning January 1, 2017, the annual lease billing will be for a calendar-year period. The Hangar Building lease will have a term of 20 years, ending on July 14, 2036. At the end of the lease term, the parties will, at AGL's option, renew lease for an additional 20 years, ending on July 14, 2056.
AGL, as lessee has the right to have all lease terms assumed by a suitable buyer, who is agreed upon by city and lessee.
"What if we choose not to lease?" asked Mark Jones, mayor.
"We cannot unreasonably withhold our approval," said McKnight.
Renewal of and assumption of the lease agreement are conditional on the lease not being in default at the time of renewal.
The Fuel Storage and Dispensing parcel will bear a rental fee of $1 per year.
In addition, a fuel-flowage fee of 3 cents per gallon will be charged for all fuel delivered to the AGL's facilities at the airport, beginning July 1, 2016. Commencing July 1, 2017, the fuel-flowage fee will be 4 cents per gallon, and commencing July 1, 2018, the fee will be 5 cents per gallon.
Fuel flowage fees will be remitted by AGL by the 15th of the month following the date of each delivery.
"The rental agreement for the Fuel Storage and Dispensing parcel has an initial term of three years, expiring June 30, 2019," said McKnight.
The Fuel Storage and Dispensing agreement will automatically be extended by an additional three years under terms and conditions negotiated between the parties, unless written notice of intent to terminate the lease is issued in writing by either party within 90 days of the lease expiration date.
AGL agrees to manage the rental by others of space in the Office Building for a period commencing July 15, 2016 and ending July 14, 2017.
This rental management agreement will automatically be extended annually unless written notice of termination of agreement between the parties is given by either party within 90 days of any lease expiration date. Lessee will pay for all metered electricity usage in the Office Building commencing July 15, 2016.
Metered utility use will be billed at rates established and revised from time to time by Nephi City.
The Hangar Cluster parcel lease will be billed at a starting rate of thirty cents per square foot, per year, escalating based on CPI. The Hangar Cluster parcel will have a term of 20 years, ending on July 14, 2036. At the end of the lease term, the parties will at Lessee's option renew lease for an additional 20 years, ending on July 14, 2056.
"Without a lease agreement there would be no sale," said McKnight.
Prior to the start of construction on the Hangar Cluster, AGL will provide a performance and payments bond, acceptable to Nephi City, to assure satisfactory completion of the building and payments to contractors and subcontractors.
AGL may use the common-use areas for the purposes for which they are designated; such common use areas include, but are not limited to roadways, walkways, and restroom facilities. Lessee shall also have the general use, in common with others authorized so to do, of all public airport facilities and improvements which are now or may hereafter be connected with or appurtenant to the airport, including city-owned approach areas, runways, taxiways, public aprons, aircraft and automobile parking areas, roadways, sidewalks, navigational and aviation aids, terminal facilities as may be constructed, or other city-owned facilities at the airport.
AGL will have the right of ingress and egress from the leased premises over and across airport-owned roadways serving the airport for its employees, representatives, agents, patrons, guests and suppliers, subject to such laws, ordinances, rules, and regulations as now or may hereafter have application at the Airport.
City hereby retains the right of ingress and egress over, through and across the leased premises at any time and the right to provide substitute ingress or egress if such becomes necessary.
With regard to signs:
AGL will not remove or demolish, in whole or in part, any improvements upon the leased premises without the prior written consent of City which may, at its discretion, condition such consent upon the obligation of lessee to contractors, subcontractors, successors, assigns, and suppliers.
"The lease supersedes and revokes all previous negotiations, arrangements, letters of intent, offers to lease, lease proposals, brochures, representation, and information conveyed," said McKnight. |
