Title 17 . Transportation and Public Facilities

Chapter 45 . Miscellaneous Provisions

Section 225. Land lease term or term extension

17 AAC 45.225. Land lease term or term extension

(a) This section applies to a land lease and to an extension of an existing land lease, except for a land lease or term extension subject to 17 AAC 45.235.

(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) Subject to the limitations in 17 AAC 45.215 and 17 AAC 45.220, after considering the factors described in (b) of this section, the department will grant, as applicable,

(1) for a lease that is not a successive lease, an initial term that will not exceed the number of years shown in the table in (i) of this section that corresponds to the greater of

(A) the amount of the applicant's initial investment, excluding financing costs, in

(i) premises, boundary, and as-built surveys;

(ii) site preparation, including excavating, geotextile fabric, filling, grading, fill material, gravel, and pavement;

(iii) permanent improvements on the premises or, if constructed for immediate state ownership, off the premises; and

(iv) remediation of contamination on or that migrated from the premises and for which the applicant is not responsible under this chapter; or

(B) the appraised fair market value or purchase price, excluding financing costs, of permanent improvements owned by the applicant on the premises;

(2) subject to (g) of this section, for an existing lease, a term extension that will not exceed the longest of, as applicable,

(A) the longest term the application would support as the initial term of a new lease under (1)(A) of this subsection, based only on improvements owned by the applicant on the premises and not previously used as the basis for determination of lease term for the existing lease, less five years;

(B) for an extension requested on the basis described in (f)(1)(B) or (f)(3) of this section, five years less than the longest term the application would support as the initial term of a new lease under (1)(B) of this subsection, based

(i) on the appraised fair market value or purchase price, excluding financing costs, of permanent improvements purchased by the applicant on the premises and not previously used as the basis for determination of lease term for the existing lease; or

(ii) only on the appraised fair market value of permanent improvements owned by the applicant on the premises; or

(C) for extension of a lease with less than one year of remaining term,

(i) the longest term the application would support as the initial term of a new lease under (1)(B) of this section, based on appraised value of improvements owned by the applicant on the premises, regardless whether previously used as the basis for determination of lease term for the existing lease; or

(ii) the number of years of remaining useful life of that applicant-owned permanent improvement on the premises with the longest remaining useful life, up to the total cumulative years of term previously granted for the lease under (1) and (2)(A) of this subsection;

(3) for a successive lease, an initial term that will not exceed the longest of, as applicable,

(A) the longest term the application would support as the initial term of a new lease under (1) of this subsection, based only on improvements owned by the applicant on the premises and not previously used as the basis for determination of lease term for the prior lease;

(B) the longest term the application would support as the initial term of a new lease under (1)(B) of this subsection, based on the purchase price, excluding financing costs, of permanent improvements purchased by the applicant on the premises and not previously used as the basis for determination of lease term for the applicant;

(C) the longest term the application would support as the initial term under (1) of this subsection, based on appraised value of improvements owned by the applicant on the premises, regardless whether previously used as the basis for determination of lease term for the applicant; or

(D) the number of years of remaining useful life of that applicant-owned permanent improvement on the premises with the longest remaining useful life, up to the total cumulative years of term granted for the prior lease under (1) and (2)(A) of this subsection.

(d) If more than one of the methods provided in (c) of this section for determining the maximum term length could be applied, the lessee has the option, except as provided in (e) of this section, to choose which method the department must use to determine the allowable term of the new lease or lease term extension.

(e) Subject to the limitations in 17 AAC 45.215 and in 17 AAC 45.220, the department may grant a lease term extension before the last year of the term of a lease only if and to the extent the applicant satisfies the requirements of (f) and (g) of this section. Notwithstanding (d) of this section, the maximum length of term that may be added under (i) of this section to a lease with more than one year of existing term remaining shall be determined under (c)(2)(A) or (B) of this section, as applicable.

(f) Before the last year of the term of a lease, to qualify for a lease term extension an applicant must

(1) either do or commit in writing to do one of the following that the department did not previously consider in setting the initial term of the lease or any subsequent lease term extension:

(A) make an additional investment in the premises that is approved by the department in an airport building permit issued under 17 AAC 45.280;

(B) purchase existing permanent improvements on the premises for a fair market price in a transaction not entered into primarily to gain a term extension;

(2) have made an additional investment in the premises that the department approved in an airport building permit or other written approval issued under 17 AAC 45.280 or under 17 AAC 40 in effect before March 28, 2002; or

(3) be required by a lending institution to obtain the term extension in order to receive financing for operating or capital expenses of the applicant's operations at an airport and commit to using that financing for that purpose.

(g) An applicant who seeks to qualify for a lease term extension under (e) of this section must support the request with the information required under 17 AAC 45.205(b) (1) - (3), as applicable.

(h) Subject to 17 AAC 45.220, the term of any extension that the department grants under (c)(2) of this section must be added

(1) to the end of any remaining term of the lease, including any earlier extensions, if the term of the extension was determined under (c)(2)(A) of this section;

(2) to the end of the lease, including any earlier extensions, less any lease or extension term then remaining, if the term extension was determined under (c)(2)(B) or (C) of this section.

(i) The department will use the following table, subject to 17 AAC 45.220, to determine the lease term or lease term extension the department will grant under (c)(1) or (c)(2) of this section:

CLICK TO VIEW TABLE

History: Eff. 3/28/2002, Register 161

Authority: AS 02.15.020

AS 02.15.060

AS 02.15.090

AS 02.15.210