MEMORANDUM

TO: Timothy Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Mayor

FROM: Colette Thompson, Borough Attorney

DATE: October 25, 2001

SUBJECT: Ordinance 2001-37, authorizing a lease with option to purchase to the United States Postal Service

During the assembly committee meetings of October 9, 2001, assembly members questioned whether the language in Section 2 of this ordinance required that the property be sold at the fair market value of the land at the time of sale. The following amendment would clarify that upon exercising the option to purchase the property, the U.S. Postal Service would be required to pay the fair market value of the land at the time of sale:

Amend Sections 2 and 3 as follows:

SECTION 2. The Assembly finds that leasing this land to the United States Postal Service with an option to purchase is in the best interests of the public and the borough. This finding is based on the following facts:

a. The borough will receive a market value rental rate for the term of the lease and the fair market value of the land [upon] at the time of its sale.

b. The land will be used to provide a site for a new main post office for the Cooper Landing Community.

SECTION 3. The mayor is authorized, pursuant to KPB 17.10.100(D), Cooperative Sale or Lease, to negotiate and enter into a lease with option to purchase the above described parcel to the United States Postal Service (USPS) subject to all lease and sale conditions required by this ordinance and the applicable consistent provisions of KPB 17.10. The authorization is for negotiation solely with the USPS for a lease with option to buy. The USPS may assign the lease with option to buy after it has executed the lease. Prior to execution of the lease, pursuant to KPB 17.10.140(B)(1), the lessee shall submit a development plan, which shall disclose the use, nature of improvements, an estimate of value of the improvements, and a development and construction timetable. The development plan will specify that the building will be constructed to USPS specifications. The development plan must be approved by the mayor upon execution of the lease. The lease and sale documents must contain restrictions requiring that the land be used for a main post office for the Cooper Landing community, and that the borough will receive a market value rental rate for the term of the lease and the fair market value of the land at the time of its sale.