provided tlirough a lease agreement, definitive specifications for the scope of the lease are 

 prepared. Lessees are then selected either through direct negotiation or from a list of 

 qualified parties who have submitted proposals that comply with the lease scope 

 specifications. It is not always necessary or even advantageous for the lessee to be selected 

 through competitive bidding procedures. Applicants are usually evaluated on the basis of 

 financial status, experience, and competence as well as on the plans submitted and the 

 proposed development schedules. The design and construction must meet all requirements 

 specified in the local agency's Design Criteria document, and the lessee's development will 

 be subject to review and controls of the local authorities. 



Lessees usually are required to pay for general maintenance and repair of landscaping, 

 property and equipment, and any alteration or improvement of the leased area must be in 

 accordance with an approved master plan. All leases are subject to periodic review to ensure 

 that reasonable maintenance, modernization, and operational practices are followed. 



Leases are granted for as short a term as is consistent with sound economic policy. The 

 object of a lease in the eyes of the governing authority is to provide the best possible service 

 to the general public at the least possible cost commensurate with quality merchandising, 

 operations, and service. The lessee must be allowed to realize a reasonable return on his 

 investment while paying a fair rental to the municipality. Leasehold fees may either be 

 assessed at a flat rate or computed as a percentage of gross incomes with a yearly minimum. 

 The initial fees are often set low to allow the lessee adequate time to develop the project 

 into a profit-making enterprise. After it is operating with a profit margin, the rental fee may 

 be increased sufficiently to allow the city to realize a fair return on its overall investment in 

 the harbor, which will probably include many nonprofit features. 



Normally, long-term leases are executed under an agreement whereby all improvements 

 become the property of the city on termination of the lease period. In the event of 

 cancellation before the termination date, the improvements may be bought by the 

 municipality in accordance with a predetermined amortization schedule. 



Another method of local government sponsorship is the lease-back arrangement whereby 

 the facility is built with public funds for some special or revolving account and then 

 immediately purchased under prior agreement by a large financing firm. The purchase price 

 is returned to the special account where available for other purposes, and the financing firm 

 leases the facility back to the pubUc agency for operation and maintenance on a rental basis. 

 The primary objective of this financing system is to allow the city to develop the harbor and 

 control its operation without tying up a large expenditure of public funds over a long period 

 of time. 



Various standard provisions often included in local agency -private sector lease 

 agreements are: (a) audit of records by agency, (b) quiet possession by lessee, (c) posting of 

 performance bond by lessee, (d) entry and inspection privileges of agency, (e) reservation of 

 easement rights by agency, (f) no subletting by lessee, (g) comphance with all laws, 

 (h) adequate insurance, (i) breach of contract terms, and (j) responsibihty to receive notices. 



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