Memorandum

City of Lawrence

Public Works

 

TO:

Charles Soules, Director of Public Works

FROM:

Jason Stowe

DATE:

December 19, 2017

RE:

Updated Lease Payment Reconciliation

 

Updated Lease Payment Reconciliation

Earlier in 2017, Finance contracted an audit of the City’s agreements, leases, and accounts receivables.  The findings of the audit concluded that some of the airport leases had not been increased per the lease agreements.  In October, staff accordingly billed an additional $14889.68 to airport lease holders. 

 

Upon legal review of the leases, some of the leases could not be increased and a revised billing was calculated amounting to a total variance of $4007.88

All the T-hangar leases come up for renewal March 31, 2018.  Staff has contracted with Aul Appraisers to provide an appraisal of the lease rates.  Additionally, staff has obtained T-hangar lease rates from other airports (attached). In January staff will propose a new lease agreement and recommended rates which could be bid if the city desires.  The timing would be to receive any new leases by the end of February so current T-hangar lease holders would receive a 30-day notice if they needed to vacate their current T-hangar.

 

As of December 5, the current outstanding balance totals $937.17, as shown below:

Great Planes – $937.17 of their $1,047.80 balance is past due. They are contesting they owe this amount

Collection of Past Due Charges

a.    Accounts past due.

·         If a payment is not made by 20 days after the due date, account is considered delinquent and will be subject to late fees.

·         Over 30 days past due, an updated bill showing past due amount will be sent.

 

b.    Accounts over 60 days. If payment is not received within 60 days, the City may take one or more of the following actions:

·         A reminder bill will be sent to avoid further collection activity.

·         Customer may be denied access to services.

 

c.     Accounts over 90 days. If payment is not received within 90 days, the City may take the following action:

·         The City’s collection agency will be forwarded the name, address, and balance due requesting them to start collection activity on collection eligible balances greater than $10.00.

·         Finance Director or designee will review/approve proposed accounts for collections, prior to submitting to the collection agency.

 

d.    Write-Offs Balances of less than $10 will be written off. If requested in writing by the customer, balance may be transferred to an active account.

·         Finance Director or designee will review/approve proposed accounts for write offs, prior to action being taken.

 

e.    Extended Payment Option.

·         If a customer cannot pay the entire amount of past due charges at one time:

·         Arrangements may be made to make partial payments over a specified period of time based on account standing.

·         If a customer does not honor the extended payment schedule, the City may stop service or take any other legal action to collect past due charges following review and approval by Finance Director or designee or reevaluated including bidding the FBO services, fuel flowage rate, lease rates, and self-fueling alternatives. 

 

Staff has also contracted Aul Appraisers to provide a commercial lease rate for the business leases the status is as follows: 

 

·      FBO/Hetrick Aviation Services – This lease is up for a 5-year automatic renewal December 31, 2018.  There are several areas that are recommended that need to be re-negotiated

 

·      Don’s Diesel – Current business owners’ lease is under review to determine the best next steps. The City does not appear to have a fully executed copy of the lease and the current owner is conducting non-aviation activity.

 

·      Gutworks, LLC – Lease was renewed in March 2002 for a 20-year term.

 

·      Alligator Inc. – Most recent lease was renewed in 2007, a new lease needs to be executed and we are currently waiting on appraisal for fair market value.

 

·      Great Plains Inc. –Lease is current until 2024 a recalculation of the CPI will be due in December of 2019.

 

·      Stuber Research Inc. – Lease will expire in 2031.  Adjusted CPI in 2017 according to lease. 

 

·      John Wise- Original lease for agricultural land was executed in 2004 and currently has an automatic renewal every year

 

·      Nun-Maker Ross- Current lease has expired. New legal descriptions are being generated to assist in drafting a new lease due to the fence encroachment to the ag land.