60D - PROPERTY DISPOSITION POLICY

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