17 AAC 42.245. Disposition of permanent improvements on a land lease

(a) Unless otherwise provided in the applicable land lease or in another written agreement between the department and the lessee, permanent improvements that a lessee has constructed or purchased on the premises, but not site development materials, are the lessee's property as long as the lease remains in effect, including any period of extension or holdover with consent of the department.

(b) Unless otherwise provided in a land lease or the airport manager otherwise directs under (f) of this section, at the expiration, cancellation, or termination of a lease that is neither extended nor followed by a successor lease to the same lessee, the departing lessee may do one or more of the following:

(1) remove lessee-owned permanent improvements from the premises and restore the premises to a clean and neat physical condition acceptable to the manager within 60 days after the expiration, cancellation, or termination date of the lease;

(2) sell lessee-owned permanent improvements to the succeeding lessee, remove all personal property, remediate any contamination, and leave the premises in a clean and neat physical condition acceptable to the manager within 60 days after notice from the manager that the manager has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than 180 days after the expiration, termination, or cancellation date of the lease;

(3) elect to have the manager sell lessee-owned permanent improvements at public auction under (c) and (d) of this section.

(c) If a departing lessee elects to have the airport manager sell lessee-owned permanent improvements at public auction under (b)(3) of this section, the lessee shall, within 30 days after the expiration, cancellation, or termination of the lease

(1) submit to the manager a written request and authorization to sell the permanent improvements by public auction;

(2) provide to the department an executed conveyance document transferring clear title to the permanent improvements to the successful bidder at the public auction, along with authorization to the manager, as agent for the departing lessee for purposes of the sale only, to endorse the name of the successful bidder on the conveyance document upon receipt of payment of the successful bid price; and

(3) before the date of the public auction, remove all personal property and leave the premises in a neat and clean physical condition acceptable to the manager.

(d) When selling lessee-owned permanent improvements at public auction for a departing lessee, the airport manager shall establish the terms and conditions of the sale as provided under 17 AAC 42.333. The manager shall pay the lessee any proceeds of the sale of the permanent improvements, less the administrative costs of the public auction and any financial obligation the lessee owes to the department under the lease. Payment shall be made within a reasonable time after the manager completes the sale transaction and receives the proceeds, but not to exceed 60 days. If all or a portion of the permanent improvements do not sell at public auction, the lessee shall remove those permanent improvements and restore the premises to a clean and neat physical condition acceptable to the manager within 60 days after the auction.

(e) If the lessee shows good cause to the airport manager and if it is not inconsistent with the best interest of the state, the manager shall grant an extension of time that is sufficient to allow the lessee to remove or sell lessee-owned permanent improvements or to restore premises under this section.

(f) The airport manager shall, by written notice, direct a departing lessee to remove lessee-owned permanent improvements from the premises, to remediate, consistent with applicable law, any contamination that the departing lessee caused, materially contributed to, or assumed under an assignment, and to restore the premises to a clean and neat physical condition acceptable to the manager if the manager determines that

(1) the permanent improvements are not consistent with

(A) the applicable provisions of this chapter and of any other statute or regulation, including any relating to noise or airport land use; or

(B) any written airport program or plan required for compliance with applicable federal or state law;

(2) the continuation of the permanent improvements on the premises is not in the best interest of the state; or

(3) the manager makes written findings that the permanent improvements present a hazard to public health or safety.

(g) A departing lessee to whom the airport manager has issued a direction under (f) of this section shall comply with the manager's direction within 60 days after issuance of the direction and at no cost to the department. If the departing lessee shows good cause to the manager and if it is not inconsistent with the best interest of the state, the manager shall allow in writing a longer period that is sufficient to allow the lessee to comply with the manager's direction. A departing lessee who fails to comply with a direction issued by the manager under (f) of this section shall, within 30 days of being billed by the department, reimburse the department for any costs reasonably incurred by the department, including legal and administrative costs, to enforce the manager's direction or to remove and dispose of unremoved lessee-owned permanent improvements, remediate any contamination, and restore the premises.

(h) If a departing lessee does not timely remove or sell the lessee-owned permanent improvements on a premises in accordance with the requirements of this section, any remaining permanent improvements and any remaining personal property of the departing lessee will be considered permanently abandoned. The airport manager may sell, lease, demolish, dispose of, remove, or retain the abandoned property for airport use as the manager determines is in the best interest of the state. The manager shall deposit any proceeds from the disposition of abandoned property under this subsection into the revenue fund established under AS 37.15.430 . The departing lessee shall, within 30 days after being billed by the department, reimburse the department for any costs reasonably incurred by the department, including legal and administrative costs, to demolish, remove, dispose, clear title to, or sell the abandoned property and to remediate and restore the premises.

(i) After the expiration, termination, or cancellation of a lease, the departing lessee remains responsible to pay rent to the department and to abide by all other lease obligations, including maintenance of the premises and provision of evidence of insurance coverage to the department for the premises, through the date on which the lessee relinquishes possession of and completely vacates the premises. A departing lessee will not be considered to have relinquished possession and completely vacated the premises until

(1) the lessee has

(A) remediated, consistent with applicable law, any contamination the lessee caused, materially contributed to, or assumed under an assignment; and

(B) restored the premises to a clean and neat physical condition acceptable to the airport manager; and

(2) either

(A) all of the lessee's permanent improvements and personal property on the premises have been removed or sold to a succeeding lessee under the provisions of this section; or

(B) title to the lessee's permanent improvements and personal property that remain on the premises has vested in the department.

(j) Site development work and materials, including fill material, gravel, and pavement, that a land lessee completes or places on a premises become part of the state-owned realty and property of the state upon completion or placement. The lessee

(1) must maintain the fill material, gravel, and pavement throughout the term of the lease, including any extensions and periods of holdover; and

(2) may not remove the fill material, gravel, and pavement unless the airport manager approves in writing.

(k) In this section, "departing lessee" means a lessee whose land lease has expired, been terminated, or been canceled and to whom a new lease or a lease term extension for that land has not been granted.

History: Eff. 1/14/2001, Register 157

Authority: AS 02.15.020

AS 02.15.060

AS 02.15.090

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