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<br />I <br /> <br />I <br /> <br />I <br /> <br />Sponsored by: ~ <br /> <br />CITY OF SEWARD, ALASKA <br />RESOLUTION 2001-136 <br /> <br />A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, <br />ALASKA, SUPPORTING LEGISLATION AUTHORIZING THE ALASKA <br />RAILROAD TO LEASE LAND FOR 55 YEARS <br /> <br />WHEREAS, legislation authorizing the Alaska Railroad Corporation (ARRC) to lease land <br />for 55 years will cultivate economic development in Alaska communities along the railbelt by making <br />commercial and residential development on ARRC lands more feasible; and <br /> <br />WHEREAS, ARRC's current statutory limit is a 35-year lease. Proposed legislation would <br />amend AS 42.40.285 (4) enabling the ARRC to lease lands within its Anchorage, Fairbanks, Seward <br />and Healy Tenninal Reserves for up to 55 years rather than 35 years without first gaining legislative <br />approval; and <br /> <br />WHEREAS, today, ARRC can extend leases beyond 35 years subject to a tennination clause <br />defined by AS 42.40.285 (4). The clause states ARRC can tenninate any lease with a term in excess <br />of35 years in the event the land is needed for railroad purposes after the initial 35 years; and <br /> <br />WHEREAS, financial lenders are reluctant to lend on large-scale projects requiring <br />substantial equity when there is no guarantee the land will be available beyond 35 years; and <br /> <br />WHEREAS, ARRC's statutory constraints limit the ability for developers of large-scale <br />commercial and residential projects to secure financing because certain banking regulations require <br />ground lease maturity to exceed loan maturity by 10 years; and <br /> <br />WHEREAS, when developers provide significant infrastructure or operational improvements, <br />it is beneficial to have a lengthened lease term allowing companies to amortize debt over a longer <br />span oftime; and <br /> <br />WHEREAS, increasing the lease term to 55 years would increase financing options and, <br />therefore, investor interest; and <br /> <br />WHEREAS, this change would result in increased business activity on railroad property by <br />making improvements more attractive to investor/users. This also creates long term benefits to the <br />surrounding communities by providing an economic and tax base; and <br /> <br />WHEREAS, the proposed legislation would make ARRC's leasing practices more consistent <br />with other state agencies. The University of Alaska and the Department of Natural Resources can <br />both lease land for up to 55 years. <br />