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expectancy resources such as tables provided by Marshall Valuation Service. The City may <br />consider other relevant information in determining if a longer lease term is warranted, such as <br />if the proposed leasehold development is expected to generate above average returns to the <br />City or significantly improve the quality of the property. <br />Lease Amendments: Amendments to long-term leases require City Council approval. The City's <br />agreement to an amendment may be contingent upon updating sections of the lease to incorporate <br />current City standard lease provisions and an adjustment to fair market rent. <br />Subleases: A lessee may sublease all or part of the leased propertyto a qualified sub -lessee subject to <br />approval by the City. No sublease shall be approved which would be detrimental to the City's rights <br />under the master lease or for a use that is not consistent with uses allowed by the master lease. The <br />City Manager may authorize subleases which meet these/coniiitions and which do not require <br />amendment of the master lease. Unless special circumstances exist, leases shall provide for the City to <br />receive a minimum of fifty percent (50%) of the incremental gross rental revenues due to the lessee <br />from subleases. <br />Leasehold Financing; The City will not subordinate its fee interest to encumbra es placed against any <br />leasehold by a lessee. The City Manager may approve appropriate financial encumbrances of the <br />leasehold interest, which provide that all,loan_proceeds are used for authorized improvement of the <br />property until the leasehold is fully developed, in,accordance with the lease. City staff shall take <br />appropriate steps to reviewthe proposed financing and insure that loan proceeds go into the leasehold. <br />Maximum loan proceeds shall not be in excess of seventy-five percent (75%) loan -to -value, where <br />"value" refers to the leasehold improvements; as,determined by,a lender's appraisal which has been <br />reviewed and approved byrCity staff. The loan term shall not exceed the term of the lease. <br />Loans or refinancing in the form of encumbrances against the lease for the purpose of reducing equity <br />or financing the sale of leasehold interest will not be allowed until the property is fully developed for <br />uses authoriied,in the,lease^ After the property is•developed, such financing may be permitted so long <br />as there Js also substantial�beneht to be gained by the City. This may take the form of either a <br />percentage share of the loan proceeds or -an upward adjustment to the rent, either of which shall be <br />based on commercially reasonable comparables found in the market. <br />Leasehold Improvements: Leasehold improvements installed by lessees shall be removed at the lease <br />termination without cost'to the 'City, or will revert to the City, at the City's option. All leasehold <br />improvements and alterations -require prior written approval of the City Manager. <br />i <br />Maintenance and Utilities Responsibility; City leases shall require the lessee to maintain all <br />improvements on the property at its own expense and be responsible for the cost of all utilities. Leases <br />for multi -tenanted space shall include specific requirements delineating appropriate responsibilities. <br />Lease Audits: All percentage leases shall be subject to audit in the first year of operation to establish <br />proper reporting procedures and at least once every three (3) years thereafter. More frequent audits <br />may be made if appropriate. The City shall reserve the right to audit all other leases and agreements <br />subject to this Policy. <br />60A-13 <br />