HomeMy WebLinkAboutRes2018-061Sponsored by: Hunt
CITY OF SEWARD, ALASKA
RESOLUTION 2018-061
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE ASSIGNMENT, ASSUMPTION AND
AMENDMENT OFTHE GROUND LEASE WITH VIGOR ALASKA, LLC,
FOR THE REAL PROPERTY DESCRIBED AS LOTS 1-A AND 3, BLOCK
7, FOURTH OF JULY CREEK SUBDIVISION SEWARD MARINE
INDUSTRIAL CENTER, SEWARD SHIP'S DRYDOCK REPLAT,
ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT,
THIRD JUDICIAL DISTRICT, STATE OF ALASKA, TO JAG ALASKA,
INC., THE ASSUMPTION OF THE LEASE BY JAG ALASKA, INC. AND
AMENDMENTS TO THE GROUND LEASE
WHEREAS, the city (Lessor) and Seward Ship's Drydock, Inc. (Lessee) entered into the
current ground lease in 1995; and
WHEREAS, the Ground Lease has been amended and extended, with the most recent in July
2012 extending the term until June 30, 2040; and
WHEREAS, in 2014 Seward Ship's Drydock, Inc. sold their vessel repair and coon
business operated on the leased land to Vigor Alaska -Seward LLC and requested the City's consent
for assignment of the Lease to Vigor Alaska -Seward LLC; and
WHEREAS, council approved the assignment to Vigor Alaska -Seward LLC in resolution
2014-044; and
WHEREAS, the lease authorizes assignment by the Lessee subject to city approval if the
Lessee sells its vessel repair and construction business; and
WHEREAS, Vigor Alaska -Seward LLC desires to sell and JAG Alaska, Inc. desires to
purchase the vessel repair and construction business operated on the leased land; and
WHEREAS, Vigor Alaska -Seward LLC desires to assign its lease to JAG Alaska, Inc. and
JAG Alaska, Inc. desires to assume the lease; and
WHEREAS, the City wishes to amend the lease as presented at this meeting and attached
hereto; and
WHEREAS, as a condition of consenting to the lease assignment the City has requested and
JAG Alaska, Inc. has posted a satisfactory performance and payment surety bond; and
WHEREAS, the parties have negotiated the terms ofthe lease assignment, and agree that
CITY OF SEWARD, ALASKA
RESOLUTION 2018-061
a timely and efficient transfer is in the parties' and the public's interest; and.
WHEREAS, the City Charter, provisions of which cannot be waived by the council,
requires that resolutions involving real property transfers become effective not less than thirty (30)
days following passage and approval.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The Seward City Council authorizes the Assignment and Assumption of the
Ground Lease from Vigor Alaska -Seward LLC, to JAG Alaska, Inc.
Section 2. The Ground Lease assigned to JAG Alaska, Inc. is hereby amended as presented at
this meeting and attached hereto, and the City Manager is authorized to execute same in substantially
the form presented here.
Section 3. This resolution shall take effect thirty (30) days after passage and posting.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 23rd
day of July, 2018.
THE CITY OF SEWARD, ALASKA
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ABSTAIN: None
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Agenda Statement
Meeting Date: July 23, 2018
To: City Council
Through: Jim Hunt, City Manage
From: Norm Regis, Harbormaster
Agenda Item: Assignment, Amendment and Assumption of the Shiplift ground lease with Vigor
Alaska -Seward LLC, to JAG Alaska, Inc.
BACKGROUND & JUSTIFICATION:
The City of Seward has leased a parcel of land in the Seward Marine Industrial Center for use as
a shipyard since 1988. The current ground lease was entered into with Seward Ship's Drydock
in 1995 and amended in July 2012 to extend the term until June 30, 2040. Seward Ship's
Drydock, Inc. sold its vessel repair and construction business to Vigor Alaska -Seward, LLC,
and under the terms of the Lease and with the City's consent the lease was assigned to Vigor
Alaska -Seward, LLC. in May of 2014.
Vigor Alaska -Seward, LLC has complied with the terms and conditions of the lease, including
repairs and maintenance, has sold their vessel repair and construction business to JAG Alaska,
Inc., and now desires to assign all of its interest under the lease to JAG Alaska. Inc. as
authorized under Article 8, Section 8.03 of the current lease, subject to approval of the City.
JAG Alaska, Inc., having conducted all appropriate inquiry regarding the site, agrees to accept,
assume, and agrees to keep, perform and fulfill all of the terms, covenants, conditions and
obligations of the lease. Corresponding assignment, assumption and amendments are also
required to align provisions of the Operations and Maintenance Agreement; those will also be
brought to Council.
Though the Lease contains the simple assignment clauses standard to City leases, the
administration has included amendments, acceptable to Assignee, that clarify and make
specific the performance clauses in the Lease. The administration also recommends that as a
condition of lease assignment JAG Alaska, Inc. provide a performance and payment surety
bond to the City as Lessor; the bond note is attached.
Attached are the original ground lease dated April 25, 1995, ground lease extension and amendments,
Assignment of Lease from Vigor Alaska -Seward, LLC to JAG Alaska, Inc., and bond note.
INTENT:
This resolution will authorize the assignment of the lease from Vigor Alaska -Seward, LLC, to
JAG Alaska, Inc., and amend sections of the newly assigned lease.
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CONSISTENCY CHECKLIST: Yes No NIA
Comprehensive Plan (3.5.1.2, page8): Plan for adequate port
1 infrastructure that will serve the needs of users in the main X
industrial/Alaska Railroad area and at the Seward Marine Industrial
Center (SMIC).
2 Strategic Plan (Page 7): Expand development at the Seward Marine X
Industrial Center (SMIC).
3. Other (list): X
FISCAL NOTE:
The lease rates are unchanged. There are no foreseeable costs associated with the transfer of this
lease.
Approved by Finance Department:
ATTORNEY REVIEW: Yes_X No Not Applicable
RECOMMENDATION:
Authorize assignment of the current lease from Vigor Alaska, LLC, to JAG Alaska.
Resolution 2018-061
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Assignment, Assumption and Amendment of Lease
This Assignment, Assumption and Amendment of Lease (this "Agreement") is made this
day of , 2018, by and among Vigor Alaska - Seward LLC, an Alaska limited
liability company ("Assignor"), JAG Alaska, Inc., an Alaska corporation ("Assignee"), and the
City of Seward, Alaska, an Alaska municipal corporation ("Lessor"). Assignor, Assignee and
Lessor may each be referred to as a "Party" and any two or more of them may be referred to
collectively as the "Parties".
RECITALS
A. By that certain Ground Lease dated April 25, 1995, as amended by that certain
Lease 95-094 Amendment No. 1, dated as of December 23, 1997, as further amended by that
certain Lease Amendment Number 2, dated as of January 2000, as further amended by that
certain Ground Lease Amendment No. 3, dated as of October 26, 2001, as further amended by
that certain Ground Lease Amendment No. 4, dated as of January 14, 2010, as further amended
by that certain Agreement to Extend Ground Lease, dated as of January 26, 2010, as further
amended by that certain Agreement to Extend Ground Lease, dated as of July 11, 2012, as further
amended by the Assignment, Assumption and Amendment of Lease dated as of July 8, 2014,
copies of which are attached hereto marked ANNEX A (collectively, the "Lease"), by and
between Lessor, as lessor, and Assignor or its predecessor in interest, as lessee or successor
lessee, Lessor agreed to lease to Assignor and Assignor or its predecessor agreed to lease from
Lessor all that certain tract of land with improvements situated thereon commonly known as Lots
1-A and 3 Block 7, Fourth of July Creek Subdivision Seward Marine Industrial Center (the
"Premises").
B. Assignor assumed the Lease from Seward Ship's Drydock, Inc. on or about July
8, 2014 and has occupied the Premises from that date through and including the Effective Date
described in Section 2 below ("Assignor's Occupancy").
C. Assignor wishes to sell and assign to Assignee, and Assignee wishes to purchase
from Assignor, substantially all of Assignor's assets related to the Premises, and to assume
certain specifically identified liabilities of Assignor (the "Purchase/Sale Transaction"). One of
the conditions of the Purchase/Sale Transaction is Assignor's assignment of the Lease to
Assignee, Assignee's acceptance and assumption of the Lease, and Lessor's release of Assignor
from future liability under the Lease. The Lease permits Assignor to assign the Lease, subject to
Lessor's consent. Therefore, the closing of the Purchase/Sale Transaction will be effective only
if and when the Parties have executed and delivered this Agreement and the other conditions in
Section 2 below have been satisfied or waived.
AGREEMENT
NOW, THEREFORE, in consideration of the provisions in, and intending to be legally
bound by, this Agreement, the Parties agree as follows:
507486\4005\00714097
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1. Recitals; Definitions. The recitals set forth above are incorporated in this
Agreement by reference. Capitalized terms not otherwise defined in this Agreement will have the
same meaning as in the Lease.
2. Assignment and Assumption of Lease; Release. Subject to the terms of this
Agreement and the satisfaction of the conditions in this Section 2, Assignor assigns to Assignee
all of Assignor's right, title and interest in and to the Lease (the "Assignment"). Assignee agrees
to and accepts the Assignment and assumes and agrees to keep, perform and fulfill all of the
terms, covenants, conditions and obligations otherwise required to be kept by Assignor under the
Lease that arise on and after the Effective Date described below. . Lessor releases Assignor
from any and all obligations and/or breach of the Lease that occurs on or after the Effective Date.
This Agreement will not become effective or bind any of the Parties unless and until each of the
following conditions has been satisfied (or waived) (the "Effective Date"): (a) Assignee has
posted a performance and payment surety satisfactory to Lessor; (b) each Party has executed and
delivered to each other Parties the Assignment, Assumption and Amendment of Operating
Agreement, dated the same date as the Effective Date; (c) Assignor has delivered to Assignee, in
a form satisfactory to Assignee, a Bill of Sale and Assignment for the personal property owned
by Assignor associated with the Premises (the "Bill of Sale"); and (d) Assignee has delivered to
Assignor, in immediately available funds, the consideration for that property stated in the Bill of
Sale.
3. Direct Lease. The Lease will continue in full force and effect as a direct Lease
between Lessor and Assignee, as Lessee under, and upon and subject to all of the terms,
covenants, and conditions of, the Lease.
4. Amendment to Section 4.01 Use of Premises. Lessor and Assignee hereby agree
amend and Section 4.10 of the Lease, effective as of the Effective Date, in its entirety with the
following language: The parties agree that the Premises is one of few parcels within the SMIC
suitable for vessel repair and construction and that the City has made a substantial investment in
public facilities adjacent or in proximity to the Premises with the objective of providing
opportunities for businesses such as Lessee's to operate. Consistently during the term of the
Lease, Lessee shall take all necessary actions to be capable of providing vessel repair and
construction, and shall use the Premises only for vessel repair and construction, and purposes
incidental thereto. Lessee shall operate a vessel repair and construction facility continuously
during the Lease Term. Lessee is not operating a vessel repair and construction facility
continuously on the Premises if, during any period of 60 consecutive days, the Shiplift Facility is
not used to perform vessel repair or construction work on any vessel on the Premises, or if the
Shiplift Premises are not full. If there were no business during a 60 day period to meet this
requirement, the requirement will be deemed fulfilled by having executed 6 drydocking
operations in the previous 12 month period.
5. Amendment to Section 14.06 (Notices) of the Lease. Lessor and Assignee hereby
amend Section 14.06 of the Lease, effective as of the Effective Date, to replace the Lessee's
address as follows:
JAG Alaska, Inc.
Assignment, Assumption and Amendment of Lease
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Attention:
6. Warranties and Representations. As of the Effective Date:
5.1 Lessor. Lessor represents and warrants to Assignor and to Assignee
that: (a) the documents attached as ANNEX A are collectively a true and correct copy of the
Lease immediately prior to the Effective Date; (b) other than the provisions of this Agreement,
and that certain Maintenance and Operating Agreement between Lessor and Assignor dated as of
April 1, 2012, as amended contemporaneously with this Agreement, the Lease represents the
entire agreement between Lessor and Assignor relating to the Premises and has not been
amended by any agreement, written, verbal or otherwise, between Assignor and City; (c) neither
Lessor nor Assignor has taken any action to terminate the Lease, and the Lease remains in full
force and effect and is enforceable in accordance with its terms; (d) beginning on the Effective
Date, and subject to the terms of the Lease, the Premises at all times hereafter during the term of
the Lease may be held by Assignee (or its assignee or sublessee) without any lawful interruption
by Lessor or any person or persons claiming under or through Lessor; and (e) Lessor has the
right, power, and authority to enter into this Agreement.
5.2 Assignor. Assignor represents and warrants to Lessor and to Assignee
that during the period of Assignor's Occupancy: (a) Assignor has not taken any action to
terminate the Lease prior to its expiration pursuant to its terms; (b) all material obligations under
the Lease have been complied with by Assignor (or waived in writing by Lessor), and except for
Assignor's lack of work at the Premises, no material violation of or default under any of the
terms of the Lease by Assignor has occurred, and no facts exist which, with the giving of notice
and/or the passage of time, would constitute such a violation or default or any other claim by
Lessor or Assignor under the Lease of any nature or kind; (c) Assignor has not assigned the
Lease or received notice of an assignment of the Lease by Lessor; (d) Assignor has not sublet all
or any portion of the Premises; (e) Assignor has the right, power, and authority to enter into this
Agreement.
5.3 Assignee. Assignee represents, warrants and covenants to Lessor and to
Assignor that: (a) Assignee has taken all necessary corporate action to enter into this Agreement
and carry out its provisions; (b) Assignee has the financial capacity and expertise to enter into
this Agreement and to operate a shipyard on the Premises in accordance with this Agreement;
(c) Assignee's entry into this Agreement and carrying out the provisions hereof does not violate
or conflict with the terms of any law or order of any administrative agency or the terms of any
agreement of the Assignee or any order, judicial or otherwise to which Assignee may be subject;
and (d) Assignee has the right, power, and authority to enter into this Agreement.
7. Environmental Matters.
6.1 Environmental Audits. Before Assignor occupied the Premises, Phase I
and Phase II environmental audits of the Premises were performed (the "2014 Audits"). A copy
of the 2014 Audits is attached as Exhibit C to the Assignment, Assumption and Amendment of
Lease dated as of July 8, 2014. Attached to this Agreement as ANNEX B is a copy of the Phase
I and any Phase 11 environmental audits of the Premises performed by Assignee prior to the
Effective Date (the "2018 Audit(s)" ). As between Lessor and Assignee, all references in the
Assignment, Assumption and Amendment of Lease
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Lease to "Baseline Audit" will mean and refer to the 2018 Audit(s). The parties agree that the
2014 Audits disclose the presence of historical releases of Hazardous Substances on the Premises
prior to Assignor's occupancy in 2014, and that the 2018 Audit(s) describes the presence of
Hazardous Substances on the Premises as of the date(s) of the 2018 Audit(s). The 2014 Audits
and the 2018 Audit(s) will be used by the Parties as an aid in determining contamination existing
on the Premises as of the dates of those audits, and for determining future environmental cleanup
responsibilities, if any, as may be required by government or third party actions.
6.2 Responsibility. Assignor will not be responsible for any Hazardous
Substances present on the Premises before the 2014 Audits, or that are brought on to the
Premises after the 2018 Audit(s), or for the exacerbation of the Hazardous Substances disclosed
in the 2014 Audits or that were first disclosed in the 2018 Audit(s). Assignee will not be
responsible for any Hazardous Substances present on the Premises before the 2018 Audit(s) or
for the exacerbation of the Hazardous Substances reflected in the 2014 Audits. Assignor will
indemnify, defend, and hold harmless Lessor and Assignee for the cleanup of any Hazardous
Substances as required by law that were brought on to the Premises after the 2014 Audits and
before the 2018 Audit(s), and for the exacerbation of those Hazardous Substances, and Assignor
will remove or cause to be removed all such Hazardous Substances to extent required by
applicable law. Assignee will indemnify, defend, and hold harmless Lessor and Assignor for the
cleanup of any Hazardous Substances that are brought on to the Premises after the 2018 Audit(s),
and for the exacerbation of those Hazardous Substances, and Assignee will remove or cause to
be removed all such Hazardous Substances to extent required by applicable law. Except to the
extent otherwise required by applicable law, Assignor or Assignee, as appropriate, will have the
exclusive and unfettered right to control the timing, nature, and content of communications with
the Alaska Department of Environmental Conservation, the United States Environmental
Protection Agency, or other federal, state or local governmental entities regarding the actual,
possible, or suspected presence of Hazardous Substances in or around the Premises.
6.3 Post -Assignment Insurance by Assignee. Assignee will obtain from a
licensed insurer a policy of premises pollution liability insurance insuring Lessor and Assignor
from claims made during the policy term for contamination that occurs during the period of
Assignee's Occupancy, which insurance will: (a) be subject to commercially reasonable terms
and exclusions, (b) have limits of liability of $1,000,000.00 per pollution condition and
$3,000,000.00 aggregate, (c) name Lessor and Assignor as insureds, and (d) be maintained in
effect for a period of four (4) years from the Effective Date. For the avoidance of doubt, a single
insurance policy that meets both the requirements of this Section 6 and Section 6 of the
Assignment, Assumption and Amendment of Operating Agreement by and among the Parties, of
even date herewith, will satisfy the requirement of this Section 6.
8. Miscellaneous:
7.1 Successors and Assigns. This Agreement will inure to the benefit and will
be binding upon the successors and assigns of each of the Parties
Assignment, Assumption and Amendment of Lease
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7.2 Interpretation. The words "includes" and "including" are not limited in
any way and mean "includes or including without limitation." The word "person" includes
individuals, corporations, partnerships, limited liability companies, co-operatives, associations
and other natural and legal persons. The term "and/or" means each and all of the persons, words,
provisions or items connected by that term; i.e., it has a joint and several meaning. The words
"will," "shall," and "must" are synonyms, and each refers to action that is mandatory rather than
optional. All documents and exhibits attached to or referenced in this Agreement are a part of
and are incorporated in this Agreement. Each Party has had an opportunity to have this
Agreement reviewed by its attorneys; therefore, no rule of construction or interpretation that
disfavors the Party drafting these Terms, or that favors the other Party, will apply to the
interpretation of this Agreement. Instead, this Agreement will be interpreted according to its fair
meaning. If there is any conflict between the provisions of the Lease and the provisions of this
Agreement, the provisions of this Agreement will control, and except as expressly amended by
this Agreement, all of the terms, covenants and conditions of the Lease will remain in full force
and effect after the Effective Date. All section and paragraph headings of this Agreement are
inserted for convenience only and will not constitute a part of this Agreement, nor will they in
any way affect its meaning, construction, interpretation or effect. This Agreement will be
construed and enforced exclusively in accordance with the laws of the State of Alaska.
7.3 Notices. All notices, requests, demands, directions and other
communications (collectively, "notices") under the provisions of this Agreement will be in
writing (including email communication) unless otherwise expressly permitted under this Lease
and will be sent by first-class or first-class express mail, or by email with confirmation in writing
mailed first-class, in all cases with charges prepaid, and any such properly given notice will be
effective when received. All notices will be sent to the applicable Party at its address in Section
14.06 of the Lease or, in the case of Assignor, to 5555 N. Channel Avenue, Portland, OR 97217,
Attn: General Counsel, or in accordance with the then unrevoked written direction from that
Party to the other Parties.
7.4 Relationship. The Parties recognize that, for purposes of this Agreement,
Assignee is a "lessee" of Lessor and "assignee" of Assignor, and nothing in the Lease or this
Agreement is intended or will be construed to create an employer/employee relationship or a
joint venture or a partnership relationship, or to allow Lessor or Assignor to exercise control or
direction over the matter or method by which Assignee performs under this Agreement.
7.5 Severability. The invalidity of any portion of this Agreement will not
affect the force and effect of the remaining valid portions of this Agreement.
7.6 Further Assurances. Each of Lessor, Assignor and Assignee will, from
time to time upon the request of any of the others, promptly and duly execute, acknowledge and
deliver any and all such further instruments and documents, and will take such further action, as
may be necessary or desirable to confirm this Agreement and to carry out its purpose and intent.
7.7 Counterparts/Execution. This Agreement may be executed in counterparts,
including by means of PDF signature pages, each of which will constitute an original and all of
which, when taken together, will constitute one and the same instrument. The exchange of copies
of this Agreement and of signature pages by electronic transmission will constitute effective
execution and delivery of this Agreement as to the Parties and such copies may be used in lieu of
the original Agreement for all purposes.
Assignment, Assumption and Amendment of Lease
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9. Lessor's Consent. Assignor and Assignee acknowledge and agree that Lessor's
consent is necessary for this Agreement. Lessor, intending to be legally bound hereby, consents
to the Assignment of the Lease by Assignor to Assignee pursuant to the terms of this Agreement.
Lessor represents and warrants that it has full power and authority to enter into and grant this
Lessor's consent under Resolution 2018- of Lessor authorizing its City Manager
to enter into this Agreement on behalf of Lessor and the Parties agree that the power and
authority of Lessor to enter into and grant this consent is subject to the terms of Resolution 2018-
Each of Assignee and Assignor have provided Lessor with certified copies of all necessary
corporate resolutions and other documents evidencing the authority of persons signing this
Agreement on their behalf and to bind them in accordance with the terms of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Assignment, Assumption and Amendment of Lease
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals by
their duly authorized officers as of the date and year set forth opposite their names below,
intending to be legally bound.
Dated:
ASSIGNOR:
VIGOR ALASKA—SEWARD LLC,
an Alaska limited liability company
By:
Name:
Title:
Dated:
ASSIGNEE:
JAG Alaska, Inc.,
a corporation
By:
Name:
Title:
Dated:
LESSOR:
CITY OF SEWARD, ALASKA,
an Alaska municipal corporation
By:
Name:
Title:
Assignment, Assumption and Amendment of Lease
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ANNEX A
The Lease
[Insert complete copy of Lease]
ANNEX B
The 2014 Audits and the 2018 Audit(s)
[Insert environmental audits]
Assignment, Assumption and Amendment of Lease
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Section 4.01— Use of Premises. The parties agree that the Premises is one of few parcels within
the SMIC suitable for vessel repair and construction and that the City has made a substantial investment
in public facilities adjacent or in proximity to the Premises with the objective of providing opportunities
for businesses such as Lessee's to operate. Lessee shall continue to offer comprehensive vessel repair
and construction services, continue to be capable of providing those services, and shall use the Premises
only for vessel repair and construction , and purposes incidental thereto. Lessee shall operate a vessel
repair and construction facility continuously during the Lease Term. Lessee is not operating a vessel
repair and construction facility continuously on the Premises if, during any period of 60 consecutive
days, Lessee the Shiplift Facility is not used to performs Re vessel repair or construction work on any
vessel on the Premises.
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From; Douglas Huff<Douglas.Huff @jagind-marine.com>
To; RonLong
39
Cc Adam Beds
Subject. Follow up to your questions as posed....
Ron,
The Corporate Resolution is comglck-d and .Josh )gill forward to y.ou later this morning -
Regarding your ei2 ironmental question----
Sent; Tue 6119/2018 6:20 AM
1- 'We did a Phase 1 as indicated below-
2- There were some items noted on the Phase 1 so we engaged a Phase 2 to be completed- There -,vas
a call late last week and the folloiring items are now in process-
a- There are 2 locations identified that require rem ediation at this time-
b- Area 1 is the solvent storage area
c- area 2 is near the fab shop
d- One location will require reporting to the DEC and potentiall-,some post clean up reporting
requirements
e- There are some localized areas that Nve have cleaned up and Vigor'vill reimburse us for
3. We believe all identified areas are Pre -Vigor. These 'kvere not identified in the 2014 stave -, due to
the timing of the inspection and the facility at that time was covered frith snow and ice-
4- Vigor is being pro -active and taking the lead to remediate these areas and will seek reimbursement
from the previous operator or insurance as applicable
-
= . The Phase 1 and Phase 2 report mill be issued post clean -rap by ERNL
Please feel free to give us a call to further discuss-
Best -
Doug
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Surety Bond
KNOW ALL MEN BY THESE PRESENTS: That we JAG Alaska Inc. (hereinafter called Principal), and North American Specialty
Insurnace Company, a corporation organized and existing under the laws of the State of New Hampshire (hereinafter called Surety),
are held and firmly bound unto the City of Seward, Alaska, an Alaska municipal corporation (hereinafter called Obligee), in the penal
sum amount of Two Hundred Fifty Thousand and 00/100 dollars ($250,000.00) for the payment whereof Principal and Surety bind
themselves, their heirs, administrators, executors, successors and assigns, jointly and severally, firmly by these presents.
WHEREAS, the Principal has by written agreement dated the 8th day of August, 2018 entered into a Contract with the Obligee for the
Assignment, Assumption and Amendment of Agreement of the Maintenance and Operating Agreement originally dated April 1 St
2012, and its subsequent amendments, commonly referred to as the "M&O Agreement", AND for the Assignment, Assumption and
Amendment of Lease originally dated April 25th, 1995, and its subsequent amendments, commonly referred to the "Lease" (hereinafter
called Agreements) which contracts are hereby referred to and made a part hereof.
NOW, THEREFORE, THE CONDITIONS OF THE ABOVE OBLIGATION is such that, if the Principal shall faithfully perform its
duties under said Agreements, then this obligation shall be null and void; otherwise it shall remain in full force and effect.
PROVIDED, HOWEVER, That this bond is subject to the following conditions:
1. In the event of default by the Principal, Obligee shall deliver to Surety by certified mail, a written statement of the fact of
such default, within thirty (30) days of the occurrence. In the event of default, the Surety will have the right and opportunity,
at its sole discretion to promptly:
a. Cure the default
b. Tender to the Obligee funds sufficient to pay the demonstrable damages sustained by Obligee as a direct result of the
default.
2. No claim, action, suit or proceeding, except as hereinafter set forth, shall be had or maintained against the Surety on this
instrument unless same be brought or instituted upon the Surety within one (1) year from termination or expiration of the
bond term.
3. No right of action shall accrue on this bond to or for the use of any person or corporation other than the Obligee named herein
or the heirs, executors, administrator or successors of Obligee.
4. The Penal Sum amount of this Bond shall not increase, absent Surety's written consent, regardless of any changes,
alterations, or modifications to the Agreements. The aggregate liability of the surety is limited to the penal sum stated herein
regardless of the number or amount of claims brought against this bond and regardless of the duration of this bond being in
force.
5. It is expressly agreed and understood by all parties to this Bond that if Obligee shall default under its obligations under the
Agreements, neither the Surety nor Principal will be responsible for its obligations hereunder
6. This bond shall expire effective 8th day of August, 2019.
7. This bond shall not bind the Surety unless the bond is accepted by the Obligee. The acknowledgement and acceptance of this
bond is demonstrated by signing where indicated below. If this obligation is not accepted by way of signature of the Obligee
below, this bond shall be deemed null and void.
Signed and sealed this 8th day of August, 2018.
PRINCIPAL: SURETY:
(seal) North American Speciality Insurance Company (seal)
(name & title) , Attorney -in -Fact
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Phase I Environmental Site
Assessment
Proled Solstice
Seward Ships Drydock
7 Mile Nash Road
Seward, Alaska
Prepared for.
Vigor Industrial, LLC April 2014
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TABLE OF CONTENTS
LIST
OF FIGURES IIT
EXECUTIVE SUMMARY 1
1.0 INTRODUCTIONAND BACKGROUND 1
I.1
PURPOSEAND AUDITORS 1
1.2
SCOPE OF WORK 1
1.3
L➢MITING AND SPECIAL CONDITIONS 2
1.3.1 Limiting Conditions during the Site Visit 2
1.3.2 Significant Assumptions 2
20 SITE
SETTING 3
2.1
LOCATION 3
2.2
NEIGHBORING PROPERTIES 3
23
TOPOGRAPHY AND HYDROLOGY 4
2.4
GEOLOGYAND HYDROGEOLOGY 4
3.0 SITE
AND OPERATIONS INFORMATION 6
3.1
GENERAL SITE DESCRIPTION 6
3.2
UTILITIES 6
3.3
PROCESSES AND MATERIAL USE 7
3.3.1 Current Operations 7
3.3.2 Discontinued Operations 7
3.4
CHEMICAL USE AND STORAGE 7
3.4.1 Underground Storage Tanks (USTs) 7
3.4.2 Aboveground Tanks (ASTs) 7
3.5
HAZARDOUS AND NON -HAZARDOUS WASTE MANAGEMENT 8
3.5.1 Hazardous Waste 8
3.5.2 Non -Hazardous Waste 8
3.6
WATER, WASTEWATER, AND STORM WATER 8
3.6.1 Water 8
3.6.2 Wastewater 9
'
3.6.3 Storm Water 10
Via.. 3.7
AIR EMISSIONS 10
fir•' 3.8
POLYCHLORINATED BIPHENYLS (PCBS) 10
3.9
VISUAL INDICATIONS OF ON -SITE IMPACTS 11
3.10
ASBESTOS-CONTAININGMATERIALS (ACMS) 11
Vigor Industrial, LLC
Phase I Environmental Site
Assessment
Project Solstice
Seward Ships Drydock
7-Mile Nash Road
Seward, Alaska
April 2014
Project Number, 0230020
Erik Ipsen, PE
Partner -in -Charge
Bob Carson
Project Geologist t
Lisa Nicholson
Project Monager
ERM-West, Inc.
1001 SW 5th Avenue, Suite 1010
Portland, Oregon 97204
T:(503)488-5282
F: (503) 488-5142
4.0
ASSESSMENT OF PAST LAND USE AND OPERATIONS 12
4.1 GENERAL INFORMATION 12
4.2 HISTORICAL ENVIRONMENTAL REPORTS 12
4.3 EVALUATION OF HISTORICAL INFORMATION SOURCES 15
4.3.1 Subject Property 16
4.3.2 Adjacent Properties and Surrounding Area 16
5.0
DATABASE AND GOVERNMENT RECORDS REVIEW 18
5.1 GOVERNMENT RECORDS REVIEW/INTERVIEWS 18
52 ENVIRONMENTAL DATABASE SEARCH 18
5.2.1 Subject Property 19
5.2.2 Surrounding Properties 19
6,0
DATA GAPS 21
70
USER AND OWNER PROVIDED INFORMATION 22
71 USER AND OWNER/OPERATOR QUESTIONNAIRES 22
7.2 TTTLERECORDS 22
7.3 ENVIRONMENTAL LIENS OR ACTTVTIYAND USE LIMITATIONS 22
7.4 SPECIALIZED KNOWLEDGE 23
7.5 COMMONLY KNOWN OR REASONABLY ASCERTAINABLE
INFORMATION 23
7.6 VALUATION REDUCTION FOR ENVIRONMENTALISSUES 23
7.7 OWNER, PROPERTY MANAGER, AND OCCUPANT INFORMATION23
78 REASONFOR PERFORMING PHASE 1 23
79 NON -REGULATORY INTERVIEWS 24
8.0
CONCLUSIONMCOMMENDA77ONS 25
9.0
QUALIFICA77ONS OF ENVIRONMENTAL PROFESSIONALS CONDUCTING
THIS ASSESSMENT 27
10.0
LIMITATIONS 28
APPENDIX A - SITE PHOTOGRAPHS
APPENDIX B - AERIAL PHOTOGRAPHS, TOPOGRAPHIC MAPS, CITY
DIRECTORIES SEARCH RESULTS, AND SANBORN FIRE
INSURANCE MAPS
APPENDIX C - SITE- AND USER -PROVIDED INFORMATION
APPENDIX D - USER AND OWNER QUESTIONNAIRES
APPENDIX E - EDR DATABASE SEARCHRESITLTS
APPENDIX F - PROFESSIONAL PROFILE
42
1.0 INTRODUCTIONAND BACKGROUND
ERM's Phase I ESA included:
1.1 PURPOSE AND AUDITORS
ERM-West, Inc. (ERM) performed a Phase I Environmental Site
Assessment (ESA) of the of the Seward Ships Drydock (SSD) operations
located at 7-Mile Nash Road, Seward Marine Industrial Complex Seward,
Alaska (the "subject property" or "site'). ERM performed the ESA at the
request of Vigor Industrial LLC (the "User") using a materiality threshold
of $250,000 per environmental issue identified. Noteworthy issues of
<$250,000 will also be identified.
The site visit was performed on 19 December 2013 by ERM assessors Ms.
Lisa Nicholson, C.P.G and Ms. Kelsey Coolidge. ERM was accompanied
on the site visit by Mr. Jim Pruitt, the owner of SSD, and the operator of
the subject property.
1.2 SCOPE OF WORK
This environmental assessment was conducted in conformance with
ERM's proposal dated 17 December 2013 and with the requirements of
American Society for Testing and Materials (ASTM) Standard E 1527-05.
Standard Practice for Environmental Site Assessments: Phase I Environmental
Site Assessment Process and the standards for conducting all appropriate
inquiries (AAi) set forth by the United States Environmental Protection
Agency (USEPA) at Title 40 of the Code of Federal Regulations (CPR) Part
312.
The assessment was conducted to evaluate and identify conditions
indicative of releases and threatened releases of hazardous substances and
petroleum products on, at, in, or to the subject property. ERM's Phase I
ESA sought to gather information regarding: (1) current and past property
users and occupancies; (2) current and past users of hazardous substances
and petroleum products; (3) waste management and disposal activities
that could have caused a release or threatened release of hazardous
substances; (4) current and past corrective actions and response activities
to address past and ongoing releases of hazardous substances at the
subject property; (5) engineering controls at the subject property; (6)
institutional controls at the subject property; and (7) properties adjoining
or located near the subject property that have environmental conditions
that could have resulted in conditions indicative of releases or threatened
releases of hazardous substances to the subject property.
fiRM 1 SMSfICf/oYWlf/nA•f ssM
2.0 SITE SETTING
LOCATION
The SSD operations are conducted on Block 7 of the Seward Marine
Industrial Center (SMIC) located at Mile 7 Nash Road, Seward, Alaska.
The total operations area includes an approximately 11-acre parcel on the
SMIC uplands. SSD leases lots 1A and 3 of Block 7. SSD has operations
outside these lease areas, including the transfer
The general location of the property and the physiographic features of the
surrounding area are shown on Figure 1, developed from the United
States Geological Survey 7.5-minute quadrangle for Seward, Alaska, dated
1995. Figure 2 provides a site layout, including leasehold boundaries.
2.2 NEIGHBORING PROPERTIES
The subject property leasehold is located in a marine industrial area across
Resurrection Bay from the Seward, Alaska townsite. The abutting
properties and nearby land use includes:
• North: City of Seward Washdown Pad (Block 7, Lot 4);
• East: The eastern portion of Block 7, Lot 4 is used for storing derelict
boats. The city moves the boats to this location when they have been
abandoned in the boat storage area. Block 6 is immediately east of
Block 7 and only Lot 1 is currently leased by Global Towers for
placement of a cell tower,
• South: The southern portion of Block 7, Lot 4 is part of the active
boatyard and two boats were parked there at the time of the site visit.
Block 8, south of Block 7 is un-leased, undeveloped land in the
alluvial fan of Fourth of July Creek; and
• West: A boat basin and dock with a 250-ton Marine SynchroLift for
pulling vessels out of the water.
Based on ERM's observations, the closest residences are located
approximately one mile north of the subject property on Nash Road. No
visual evidence of environmental concerns was observed on immediately
surrounding properties. However, as noted above, the ground surface was
covered with snow during the visit and could not be inspected.
• An on -site inspection of the subject property to evaluate current
conditions and identify areas of potential concern;
• A review of property history through interviews and aerial
photographs, city directories, ownership records, and historical
mapping
• Observation of adjacent properties and the local area to evaluate the
potential for adverse environmental impact to the subject property;
• Interviews[research of local city/county, tribal, state, and federal
records, including contracting of Environmental Data Resources, Inc.
(EDR) to identify sites of concern as required in the regulatory records
review section of the ASTM standards for a Phase l ESA, where
available; and
• Interviews with the prospective purchaser.
Photographs of the site were taken to document current conditions and
are included in Appendix A. Copies of aerial photographs, topographic
maps, City Directory Search results, and Sanborn Fire Insurance Maps are
presented in Appendix B. Property environmental records or permits,
reasonably obtainable at the time of the site visit, were reviewed and are
included in Appendix C, as appropriate. Copies of the questionnaires
(submitted to the User and Owner/Operator) are presented in Appendix
D. The EDR Database Search results were obtained and are presented in
Appendix E.
1.3 LIMITING AND SPECIAL CONDITIONS
1.3.1 Limiting Conditions during the Site Visit
During the site visit the ground was covered by approximately a foot of
snow. As a result, ERM was unable to inspect the ground conditions (e.g.,
staining) due to the snow coverage. In addition, it was not possible to
determine surface completions (i.e., pervious or impervious) at all
locations.
1.3.2 Significant Assumptions
No significant assumptions have been made.
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2.3 TOPOGRAPHYAND HYDROLOGY
The subject property is located in Seward Alaska, which lies in the south-
central portion of Alaska on the Kenai Peninsula region. Seward is
located at the north end of Resurrection Bay. The subject property is part
of the SMIC, which was constructed on the northern portion of the Fourth
of July Creek alluvial fan with quarried and/or dredged material from
Resurrection Bay. The SMIC is located at the mouth of Fourth of July creek
across Resurrection Bay from the main Seward townsite.
The property is located at an elevation of approximately 15 feet above
mean sea level, and is generally flat around the buildings and parking
areas. The overall topographic trend of the surrounding area is to the
southwest towards Resurrection Bay. Mountains surrounding the site
reach elevations of 2,000 feet within one mile of the coast. The closest
surface water features to the subject property are Carlanna Creek,
immediately northwest of the subject property, and Fourth of July Creek
located south of the subject property. The region is a temperate rainforest
with approximately 68 inches of precipitation per year.
According to the EDR report (Appendix E), the subject property is not
identified within the 100 or 500-year floodplains. The EDR report does
show the subject property is identified on the national wetlands inventory
map as containing potential wetland areas.
2.4 GEOLOGYAND HYDROGEOLOGY
The area surrounding Resurrection Bay was covered by glaciers during
the Pleistocene Epoch. Numerous glaciers are still present east of
Resurrection Bay and the Harding Icefield lies a few miles west of the
main Seward townsite.
Exposed bedrock is comprised of alternating units of greywacke and
phyllite which have experienced low-grade metamorphism. Local
sutficial deposits are comprised of alluvial -fan and fan -delta deposits and
include drift, muciflows, and landslide deposits near the mouths of
smaller tributaries including Fourth of July Creek.
Geologic maps and site data indicate the subject property is underlain by
fill, fan -delta deposits, and slightly metamorphosed sedimentary bedrock.
The steep underwater face of the alluvial fan at Fourth of July Creek
reportedly suffered submarine landslides during the 1964 earthquake.
42 128 fi•I 4
43
Spring Creek Correctional Center (northeast of the SMIC). The well is up-
3.6.3
Storm Water
gradient of the subject property.
Stormwater from SSD is currently permitted under the USEPA-issued
3.6.2
Wastewater
National Pollutant Discharge Elimination System (NPDES) permit number
AKR05CB23, issued April 21, 2009. The ADEC has primacy over the
Sanitary wastewater is discharged to the City of Seward municipal
issuance of NPDES permits (now called Alaska Pollutant Discharge
wastewater treatment system.
Elimination System [APDES) permits) in Alaska.
Mixed wastewater (from vessel washing) and stormwater from S51) is
The average annual precipitation in Seward is approximately 68 inches.
currently discharged to the Transfer Pit and an associated French drain.
Precipitation that falls on the upland subject property is captured by the
Regulators, including the USEPA, have identified the French drain as a
Transfer Pit, runs off -site by sheet flow, or infiltrates into the ground
potential Class 5 Underground Injection Control (UIC) system. However,
surface. The Transfer Pit has four sediment traps that collect the water.
the facility has not yet registered the drain as a UIC device. Stormwater is
The outlets of the sediment traps lead to a French drain system. There are
discussed below in Section 3.6.3.
no storm water outfalls from the SSD lease area to Resurrection Bay.
The management of other wastewater streams from SSD, under both
Water flowing over the work bays is not treated.
historical and current operating conditions, is discussed below.
SSD received a notice of violation (NOV) regarding their NPDES permit
3.6.2.1
Washdown Wafer from Work Bays
on June 28, 2013 based on an April 10, 2013 inspection. ERM does not have
a copy of the inspection report or the NOV, but it reportedly requires SSD
The current USEPA-issued NPDES permit authorizes the discharge of
to file monitoring reports on a timely basis and use best management
washdown water without treatment, but requires quarterly monitoring for
practices. Until the issues in the NOV are resolved, SSD is in technical
sheen in water from four sediment traps located in the Transfer pit.
violation of its lease agreement with the City of Seward.
3.6.2.2
Ballast Water
3.7
AIR EMISSIONS
The NPDES permit does not authorize the discharge of ballast water. SSD
contracts Emerald Alaska, Inc. to manage the ballast water from client
ERM did not observe reportable air emission sources on the subject
vessels.
property. However, between December 2004 and February 2007 the ADEC
received more than 20 complaints regarding fugitive dust. The ADEC file
3.6.2.3
Floodwater
for the site indicates that two Air Quality violations have been issued to
SSD; one on May 13, 2005 and one on February 23, 2007. ADEC required
No flood water comes into contact with the SSD's working surfaces. Work
SSD to develop and implement BMPs for fugitive emissions. SSD
is only performed in the three work bays located inland from the
subsequently developed a plan to control fugitive emissions; however, the
SynchroLift dock,
plan may be inadequate as fugitive emissions have continued to be the
subject of citizen complaints.
3.6.2.4
Bilge Water
The NPDES permit does not authorize the discharge of ballast water. The
3.8
POLYCHLORINATED BIPHENYLS (PCBS)
client contracts Emerald Alaska, Inc. to manage bilge water from client
vessels.
PCB results from the 2007 USEPA Site Inspection indicated that Aroclor-
1254 was present above background levels in the covered bay and in the
southern uncovered bay. One sample collected from the stockpile
eau 9 wrarceimw�o�nru�nu
eau 10 ax a..ronvatnraamu
exceeded ADEC cleanup level for PCBs of 1 milligram per kilogram
4.0
ASSESSMENT OF PAST LAND USE AND OPERATIONS
(mg/kg).
4.1
GENERAL INFORMA77ON
19
VISUAL INDICATIONS OF ON -SITE IMPACTS
Based on interviews with site personnel and a review of historical
ERM did not observe indications of on -site dumping, land disposal, or
photographs and records, the subject property is operated by SSD under
contamination during the site inspection. Other than issues with spent
an agreement with the owner, the City of Seward. Initial development
sandblast grit described previously, a review of available records did not
activities included dredging and filling to raise the site to the current
identify historical waste disposal on site,
elevation. SSD moved to the facility in 1988. The SSD facility has
undergone several improvements since initial construction,
Due to snow and ice cover, there were no observations regarding the
absence or presence of soil staining. No oil stains were observed on the
snow.
4.2
HISTORICAL ENVIRONMENTAL REPORTS
ERM was provided with several historical reports for the subject property.
3.10
ASBESTOS -CONTAINING MATERIALS (A CMS)
A summary of the reports is presented below.
Asbestos was banned in most friable building materials (spray -applied
surfacing materials and thermal system insulation) in 1978, but the
Occupational Safety and Health Administration deems spray -applied
surfacing materials, thermal system insulation materials, and vinyl
flooring materials as "presumed asbestos-contaf trig materials (PACMs)"
if they are present in pre-1981 buildings (29 CFR Parts 1910.1001 and
1926.1101).
Historical records indicate that the buildings were constructed on or after
1988. As a result, PACMs are not likely to have been used in building
construction.
According to Mr. Pruitt, small amounts of asbestos waste are generated
from repairs performed on older vessels. SSD contracts an environmental
consulting firm to abate, remove, and/or dispose of the asbestos material.
1) Seward Ship's Drydock Site Inspection, Seward, Alaska. Prepared by:
Ecology and Environment, Inc. (E&E) 2007. Prepared for: the USEPA.
E&E performed a site inspection for the USEPA in 2007. E&E collected
nineteen surface soil samples from suspected sources across the subject
property. The results indicated that:
• Benza(a)pyrene and DRO exceeded ADEC soil cleanup levels in the
Transfer Pit and the Covered Bay;
• Only DRO exceeded soil cleanup levels at the Solvent Storage Area
and Maintenance Building; and
• Benzo(a)pyrene, Aroclor-1254, and DRO exceeded cleanup levels in
the spent sandblast grit stockpile.
The report compared the sample results to a background soil sample
collected approximately upgradient of the subject property, along
Fourth of July Creek.
E&E also collected three sediment samples: two from the banks of
Resurrection Bay and one from a north -south oriented ditch that runs
overland east of the site. The results for the ditch sample indicated that
arsenic, chromium, and DRO were elevated with respect to a
background sediment sample collected approximately three miles
away. The results from the two Resurrection Bay samples were
comparable with respect to the background sample.
eau 11 1243 eau 12
44
Date
Dascriptiost
3950
The area around Fourth of July Creek is undeveloped.
1978
The area appears to still be undeveloped.
1985
Nash Road has been added. The SMIC has been filled in and the
SynchroUft dock is in place. The parcels do not appear to have been
leased yet.
swn 17 souricvrruusi..rucro,r
The identification of a site as potentially upgradient or downgradient is
based on the expected direction of groundwater flow to the west-
southwest (towards Resurrection Bay). However, given the relatively flat
topological conditions at the site and tidal fluctuations, groundwater flow
direction could be variable.
The EDR search identified the following properties in the EDR Database
Search. The subject property and properties with the potential to
adversely impact the subject property are discussed below.
5.2.1 Subject Properhj
The subject property address, Mile 7 Nash Road, was listed in the CERC-
NFRAP and ERNS databases searched by EDR.
The CERC-NFRAP listing is for hazardous waste sites that have been
removed from the inventory of CERCLIS (Comprehensive Environmental
Response, Compensation, and Liability Information System) and have
been designated "No Further Remedial Action Planned." The USEPA has
determined that the subject property does not qualify for the National
Priorities List based on existing information as of November 2007.
The subject property is listed twice the EDR report in the Emergency
Response Notification System (ERNS) as discussed below:
• On August 19, 2005 during the hauling of the 117-foot "Western
Mariner" fishing vessel, 2 quarts of used oil was discharged into
Resurrection Bay. Absorbent boom was applied to clean up the spill.
The responsible company was listed as Western Mariner LLC.
• On August 8, 2005 an employee of SSD spilled paint into Resurrection
Bay. The volume of the spill was not reported and no cleanup was
reported. Mr. Pruitt has stated that work is only performed in the
upland work bays. Mr. Pruitt has not yet responded to questions
regarding the spill.
Note that both spills occurred on the dock, which is not on the subject
property lease.
5.2.2 Surrounding Properties
Surrounding sites identified in EDWs review of available databases are
summarized in Table 4.
5.0 DATABASE AND GOVERNMENT RECORDS REVIEW
5.1 GOVERNMENT RECORDS REVIEW/INTERVIEWS
ERM reviewed available information from the USEPA Envirofacts and
ECHO internet databases, the Cry of Seward website, the ADEC website,
the Borough Assessor, and the Alaska Geographic Information System
Internet sites. Information obtained from these sources is summarized in
the appropriate sections of this report.
5.2 ENVIRONMENTAL DATABASE SEARCH
Table 4
ERM contracted EDR to conduct a database search for agency records.
The EDR Database Search results, presented in Appendix E, define and
summarize the ASTM databases reviewed in the EDR report and note if
any sites (including the subject property) were identified in the specified
radius. The locations of the sites identified in the EDR report were
evaluated to determine which sites were within the ASTM-specified
search distance from the subject property boundary. Only those sites
within the ASTM-specified distances are discussed below,
It should be noted that the computerized geocoding technology used in
the database search is based on available census data and is only accurate
to z3W feet. The EDR report provides a list of unmapped sites for which
inadequate location information was provided. ERM has reviewed the list
of "unmapped" sites to determine if these sites are within the study
radius. If the "unmapped" sites appeared likely to be within the search
radius for a specific database, they are discussed in the sections that
follow.
Sites identified within the study radii were evaluated to determine if they
are likely to have adversely impacted the subject property. The criteria
used to evaluate the potential for adverse impact to the subject property
include:
• Distance from the subject property;
• Expected depth and direction of groundwater and surface water flow;
• Expected storm water flow direction, and
• The presence/absence of documented contaminant releases at the
identified sites that have not been remedied to the satisfaction of
regulators.
sew. 18 sasrwsrawui�rsamu
Summanj of Findings front EDR Report
Radius
Database
Searched
Sites
(miles)
Found
ERNS
0,25
1
A hydraulic line burst on a crane operated by Polar Seafood
(SMIC Lots 2 and 2A, Block 9) releasing hydraulic oil to the dock
and Resurrection Bay
The number and type of sites identified in Table 5 are consistent with the
history and nature of the surrounding area. When evaluating the
potential adverse impacts of off -site properties, ERM considered their
position relative to the reported groundwater flow direction. The Polar
Seafood site is cross -gradient of the subject property with respect to
groundwater flow direction and assumed to not have a potential adverse
impact on the subject property.
F2
t 19 44 130 ra 20 :�aaaran�r„•a•,.
45
8.0 CONCLUSIONS/RECOMMENDATIONS
EM conducted a Phase I ESA of the subject property. ERM's conclusions
and opinions are based on a scope of work that followed the requirements
set forth in ASTM Standard E 1527-05 and 40 CFR 312. A summary of
ERM's conclusions and opinions is presented below. Based on the data
obtained during the site visit, the environmental database review, and
interviews with persons familiar with the site and its history, the
following RECs were identified at the site:
• Vessel washwater and site storm water are discharged to the Transfer
Pit and French drain. The quality of discharges is evaluated visually
as part of the requirements of the facility stormwater permit. The
permit only requires SSD to visually inspect the water in the Transfer
Pit for evidence of an oily sheen. Washwater and storm water comes
into contact with areas of metals and chemical use and storage
throughout the site, including fabrication, raw material storage,
painting activities, non -hazardous waste storage, and used grit
storage areas. Therefore, it is possible that organics and metals
(including copper, zinc, lead, and chromium) and possibly tributyltin,
from current or former SSD operations, may become entrained in
storm water and be discharged to the subsurface. Organics and metals
in surface water and/or sediment could pose a risk to ecological
marine receptors.
• Although wastewater is discharged to the unpaved ground surface
and to a French drain, groundwater conditions were not evaluated by
the USEPA, SSD, or Alaska Department of Environmental
Conservation (ADEC) as part of site investigations conducted
between 2007 and 2010. The investigations only addressed the
condition of shallow soil and/or intertidal sediment. In 2013, ADEC
issued a "No Further Action' letter for conditions associated with
shallow soil and sediment contamination identified at the site.
Material Compliance Issues
• ADEC and the City of Seward require SSD to comply with Best
Management Practices for their site activities. In 2012, the City
indicated that SSD is technically in default of the Lease as a result of
four unresolved Notices of Default issued by ADEC. The City
administration recommended allowing the Lease to continue,
without waiving any rights of the City, with the understanding and
expectation that environmental compliance matters will be dealt with
and resolved between SSD and DEC. Based on a 2008 ADEC fact
ERM 25 EOISrICf/Ri10p5p/�PRll btl,
9.0 QUALIFICATIONS OF ENVIRONMENTAL PROFESSIONALS
CONDUCTING THIS ASSESSMENT
Ms. Lisa Nicholson of ERM's Anchorage, Alaska, office and Mr. Bob
Carson of ERM's Portland, Oregon, office conducted this assessment. Mr,
Erik Ipsen, of ERM's Portland, Oregon, office, reviewed the contents of
this report. The professional qualifications for Ms. Nicholson, Mr. Carson„
and Mr. Ipsen are included in Appendix P.
The signatures for Ms. Nicholson, Mr. Carson, and Mr. 1psen are affixed
on the cover of this report.
We declare that, to the best of our professional knowledge and belief, we
meet the definition of Environmental Professional as defined in 40 CFR
312.10.
We have the specific qualifications based on education, training, and
experience to assess a property of the nature, history, and setting of the
subject property. We have developed and performed the AAI in
conformance with the standards and practices set forth in 40 CFR 312.
sheet, the facility was issued a Notice of Violation to SSD in February
2007 for failing to follow the dustcontrol plan they committed to in
spring 2006. City of Seward records indicate the facility continued to
receive complaints about dust control issue and received another
NOV in April 2013. No information regarding the specific NOV
issues or resolution was provided by ADEC or SSD. SSD has also not
prepared BMPs for wastewater discharges, stormwater discharges,
registered the French drain as a UIC device, or prepared a site
specific Spill Prevention Control and Countermeasure (SPCC) Plan.
De Miuinds or Other Potential Issues
While not RECs, ERM identified concerns that are summarized below and
are discussed in greater detail in the body of the report:
• The quality of the sediment in the boat basin has not been evaluated.
A recent $10 million grant to the City of Seward, for in -water and
upland improvements to SMIC, includes funds for the dredging of 5
to 10 feet of material from the boat basin. SSD indicated it has not
conducted any repair activities on or over water.
• SSD reportedly disposed of approximately 189 cubic yards of spent
sandblast grit on a private off -site property in 2004. As the result of
public complaints, ADEC investigated the disposal activities and
required SSD to excavate the material for disposal in a licensed
landfill by 2005.
10.0 LTMTTATTONS
The innocent landowner, contiguous owner, and prospective purchaser
defenses to liability under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) requires that a
person acquiring a property conduct an AAI with respect to the subject
property. ERM has conducted this ESA in accordance with the
standards for conducting an AAI set forth at 40 CPR 312. Those
standards require the application of scientific principles and
professional judgment to certain facts with resultant subjective
interpretations and exercise of discretion Professional judgments
expressed herein are based on the facts currently available within the
limits of the existing data, and data gaps identified herein, scope of
work, budget, and schedule. Those standards also require that the
client undertake certain additional inquiries,
In addition, the liability defenses under CERCLA require, among
several other things, that the client after the acquisition stop any
continuing releases, prevent any future threatened releases and prevent
or limit human, environmental or natural resource exposure to any
hazardous substance released at the subject property. Therefore, ERM
makes no warranties, express or implied, including, without limitation,
warranties as to merchantability or fitness for a particular purpose,
including any warranty that this Phase I ESA will in fact qualify client
for the innocent landowner, contiguous property owner or prospective
purchaser defense to liability under CERCLA. ERM's assessment is
limited strictly to identifying RECs associated with the subject property.
Results of this assessment are based upon the visual site inspection of
readily accessible areas of the subject property conducted by ERM
personnel, information from interviews with knowledgeable persons
regarding the site, information reviewed regarding historical uses,
information provided by contacted regulatory agencies, and review of
publicly available and practically reviewable information identifying
current and historical uses of the property and surrounding properties.
All conclusions and recommendations regarding the subject property
represent the professional opinions of the ERM personnel involved with
the project, and the results of this report should not be considered a
legal interpretation of existing environmental regulations. ERM
assumes no responsibility or liability for errors in the public data
13145 E""
46
Appendix A
Site Photographs
�Nh
rd Ship's Drydock
J ward, Alaska
R20
31
M5
n
Photograph: 5 Spent sandblast gdt stockpile ,looking north-northeast from western and of
covered work ba .
ProjectSolsticel Seward Ship's Drydock ProjectSolsticaf Seward Ship's Drydock
7 Mile Nash Road, Sewall, Alaska 46 7 Mile Nash Road, Seward, Alaska
FERM ERM Project Number 0230020 32 E ERM Project Number 0230020
ProjectSolsticel Seward Ship's Drydock
7 Mile Nash Road, Seward, Alaska
(Z M ERM Project Number 0230020
,37
Project Solstice
Mile 7 Nash Road
Seward, AK 99664
Inquiry Number: 3814690.3
December 19, 2013
440 Wheelers Farms Road
Mlnad, CT 06461
EvR�n� Environmental Data Reeour�es lnc 1100.352.005o
www.Wi ner corn
Appendix B
Aerial Photographs, Topographic
Maps, City Directories Search
Results, and Sanborn Fire
Insurance Maps
-30
Certified Sanborn® Map Report 12119n3
Site Name: Client Name:
Project Solstice ERM West
Mile 7 Nash Road 1001 SW 5th Avenue EDR
Seward, AK 99664 Portland, OR 97204
EDR Inquiry S 3814690.3 Contact: Bob Carson
The complete Sanborn Library collection has been searched by EDR, and fire insurance maps covering the target
property location provided by ERM West were Identified for the years listed below. The certified Sanborn Library search
results in this report can be authenticated by visiting www.edmetcoMsanborn and entering the cemficabon number
Only Environmental Data Resources Inc (EDR) is authonaed to grant rights for Commercial reproduction of maps by
Sanborn Library LLC, the copyright holder for the collection.
Certified Sanborn Results:
Site Name: Project Solstice
Address: Mile 7 Nash Road 1\
City, State, Zip: Seward, AK 99664
Cross Street:
P.O. # Pending
Project: Project Solstice
Certification% 77BC-4E94-AC55
UNMAPPED PROPERTY
TM Sanbom Library include. more man 1.2 million
Sanbom fire Inauranw maps, wlrkh track historical
This report cerOfies that the complete holdings of the Sanborn
property usage in appm.imately 12,000 American
Library, LLC collection have been searched based on client
cdiea era towns. collecmne warcnea:
supplied target property information, and fire insurance maps
Library
covering the target property were not found,
Ill of Congress
1/ University Publications of America
t✓EDR Private Collection
Limited Permission To Make Copies
ERM West (the client) ie permittetl to make up to THREE photocopies of this Sanbom Map [renamaal am each fire insurance map accompanying
Mis report wNly far the Irtniaa uu pf III customer. Na one ..., Man the tiler. ie authorbad to make wpiee Upon regWat node directly to an
EDR Account Eaecutive, the client may be permitted to mi- a limited number M additml pWacer- This Permssion re wMlun ed upon
compliance by the client it, customer Intl their agent. with EDR- c,pyNM policy; a wpy of which is available upon request
Disclaimer •Copynght and Trademark notice
Ns Rewn mrvem —In �nrwmalan otv— Iron a vent, n publw Intl otter sources r-Z,o Hy avalMbM to Env nr,r ,Sal Dal Reaourrea, Inc
I—EDe11, MS Rapon inn caveragelr1—.n Mr the ar0n am wmin0 popenlesticea rid exist tram nrtr source. N E%PRESSEDO,
is AUE MMATSOEVER IN CONNECTION WITH THIS REPORT ENVIRONMENTAL DATA RESOURCES, INC SPECIFICALLY DISCLAIMS THE
MAKING OF ANY SUCH WARRANTIES, INCLUDING WITHOUT LIMITATION, MERCHANTABILITY W FRNESS FOR A PARTICLUIR USE OF PURPOSE ALL
SA IS ASSUMED BY THE USER IN NO EVENT SHALL ENVIRONME— DATA RESOURCES, INC BE LIABLE TO ANYONE, WHETHER ARISING CUT OF
EEE-S O2 OMISSIONS, NEGLIGENCE, ACCIDENT OR MY OTHER CAUSE. FOR ANY LOSS OF DAMAGE, INCLUDING, WITHOUT LIMITATION. SPECIAL.
NCIUENTAL CCNSEWENTIM, OR EXEMPLARY DAMAGES ANY LIABILITY ON THE PART OF ENVIRONMENTAL DATA RESOURCES, INC IS STRICTLY
IMITED TO A REFUND OF THE AMOUNT PAID FOR THIS REPORT Pumheeer aaepl. rise Report AS le" AM analyses. en.retas, rabr9e, ewuan—WI rsk
p mepraw.. m IN. Repro are ywa.a for Illunretrve purcrAft onlya, mm to provide. m a they W r. Wned as P dug
I w medctan or a rorecaq n. MopeMfeOWt IraenN rneomrenlal S r. ednmed W In
al prdeswrel can pwlae Informnion regaranprMe emrtonmr aM e ervel risk for aM praporly AmnreenI Eally, Vre inlorrreaon povltl�ea I��ia Report Ie na to be
nsrcrixee s Mgal Mace
gr/rgm 781] by Enveonmemal Ono Resources. Im I rlgha ras — Reproduction in any meda or lonrat. in wwle or In pan, W y report a map J
vimnmental Cara Resource., - or e, aRlllates. s pr —E wltmM IF nr wnaen —
EDR eel no. (mcluOing Sanmrn are Sanbom Map) are irae ne, d Envirorxnenlal Oaa R.wuces. Inc or as annlales All A-11— na- use. herein
-A- Dunes re.ceave awrers
3814690-3 page2
48
AGREEMENT TO EXTEND GROUND LEASE
This Agreement is between the City of Seward, Alaska, an Alaska municipal corporation
("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock,
Inc., an Alaska corporation ("Lessee"), whose address is P.O. Box 944 Seward, Alaska 99664,
who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of
certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the
"Lease").
The City of Seward and the Lessee certify that certain improvements have been
completed that are necessary to extend the Lease Term in accordance with Ground Lease
Amendment No. 4 dated January 14, 2010. Lessee installed certain capital improvement projects
at the City Ship Lift Facility: Hoist Pawl Solenoid Upgrade, SMIC Cell and Dock Pile Coating,
Control System Upgrade, and Cathodic Protection System. In full consideration of the
aforementioned improvements by the Lessee, the City and Lessee agree that the subject lease
will be extended commencing July 1, 2016 and expiring June 30, 2040.
Dated this // day of _��2012
City:
CITY OF SEWARD
ames Hunt
City Manager
ATTEST:
Zrina
4 a�
f J Kinney
City Clerk
State of Alaska )
)ss
Third Judicial District )
Lessee:
SEWARD SHIP'S DRYDOCK, INC.
Ja s T. Pruitt
SE
O° tj
y p (iJ
� �� p!y�Ok9
0+y+�ke4tz..0 tl�i`¢D�s
OF
The foregoing instrument was acknowledged before me this day of� 2012 by James Hunt,
City Manager of ;``�G 1 ��;n Alaska corporatic on of the cor ration.
p'f Alt).
? Notar in a d for Ala ka
r ♦ Y
♦ puBv P My commis ion expires:
✓��3 r' of
48
49
State of Alaska )
)ss.
Third Judicial District )
The foregoing instrument was acknowledged before me this,-44 day of J Une 2012 by James T.
Pruitt, President of Seward Ship's Drydock, Inc. an Alaska corporation, on behalf of the corporation.
Notary in and for Alaska
*OrMNOTARY
to iA
B�L
\F OF
My commission expires:_
49
50
Sponsored by: Hunt
. • �:
FA A
IN ;I �.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AN
EXTENSION OF THE GROUND LEASE WITH SEWARD SHIP'S
DRYDOCK, INC. FOR THE REAL PROPERTY DESCRIBED AS LOTS 1-A
AND 3, BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION SEWARD
MARINE INDUSTRIAL CENTER, SEWARD SHIP'S DRYDOCK REPLAT,
ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT,
THIRD JUDICIAL DISTRICT, STATE OF ALASKA
WHEREAS, the City (Lessor) and Seward Ship's Drydock, Inc. (Lessee) entered into the
current Ground Lease in 1995; and
WHEREAS, the Ground Lease was extended in 2010 to 2016 to reflect the investment by
the Lessee in improvements to the shiplift facility by replacing the cathodic protection system; and
WHEREAS, the Lessee has made several other upgrades to the ship lift facility; and
WHEREAS, the Lessee has completed the shiplift controls upgrade, the hoist pawl upgrade.
partial coating of the breakwater cells, and replacement of the cathodic protection system; and
WHEREAS, the parties desire to extend the lease.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City agrees to accept the improvements based on representations by Lessee
that the work was completed and Lessee has expended $346,001.25 on the Shiplift Control System
Upgrade and $409,164.32 on the Hoist Pawl Solenoid Upgrade.
Section 2. The Ground Lease is hereby extended until June 30, 2040. The City Manager- is
authorized to enter into an Agreement to Extend Ground Lease in substantially the same form
presented at this meeting.
Section 3. This resolution shall take effect 30 days after adoption.
50
51
Council Agenda Statement
Meeting Date: June 11, 2012
From: Mack Funk, Harbormaster
Through: Jim Hunt, City Manager
Subject: Seward Ship's Drydock Ground Lease Extension
BACKGROUND & JUSTII+ICATION
The City of Seward has long pursued the development of the Seward Marine Industrial Center, and constructed
improvements to the area, including a Syncrolift Shiplift System, Ship Transfer System, and related rails, dock,
and breakwater. The current ground lease for a portion of the area immediately upland of the Shiplift Facility
has been in effect between the City and Seward Ship's Drydock, Inc. (SSDI) since 1995. In 2010, the Lease
was extended through June 30, 2016. The City Council authorized the possibility of future extensions through
June 30, 2040.
Lease extensions are based upon approved capital improvements to the Lease area or the City's Shiplift Facility
operated by SSDI (Lease, Article 2). SSDI and the City went to binding arbitration in 2008. The question
before the arbitrators centered on whether SSDI's proposed replacement of the cathodic protection system
would constitute an "improvement" for purposes of extending the Lease term when the City contended that
SSDI had not maintained or repaired the existing system that over the years deteriorated to a point where it no
longer functioned. The panel of three arbitrators decided on December 23, 2008 that SSDI was, in fact, eligible
for an extension through June 30, 2016 based on the investment made in a new Cathodic Protection system, to
replace the older system, to protect the sheet pile breakwater below the waterline.
To request an extension of the Lease term "... SSDI must submit to the City plans for an improvement ... [that]
must include an estimate of costs and a schedule for installing the improvements." On the other hand, "The
provision in the ground Lease that the improvement proposal is subject to approval by the City does not vest the
Council with additional power over Ground Lease terms." (Arbitration decision)
SSDI made numerous requests to extend the lease (several written attempts are documented over the past four
years, but none are complete in accordance with the Lease). SSDI submitted the costs of three projects that may
qualify for lease extensions: Shiplift Control System Upgrade ($346,001.25), Hoist Pawl Solenoid Upgrade
(409,164.32) and Coating of Cells & Dock Piling ($609,738.37). The total submitted costs of the three projects,
if valid, would qualify SSDI for extensions through 2040. However, each request raises significant questions.
For both the Shiplift Control System Upgrade and the Hoist Pawl Actuator Upgrade, SSDI first requested city
approval on July 29, 2009 (letter enclosed), but the request did not include a schedule. Apparently the City did
not approve the request because it was not complete and did not meet the requirements in Article 2 of the Lease
to ask for an extension of the term. The labor rate charged for this work is $44.10 per hour.
The Coating of Cells & Dock Piling did not achieve the agreed upon goal of reaching 2 feet MLLW. "A
professional acknowledged the paint was about as low as it could get. It was difficult to go to that level. In
looking at the coating, he felt it was acceptable, even though it did not meet the council's guidance from March
[2011]." (Excerpt from the City Council minutes September 26, 2011). The previous city manager
51
52
recommended that the work be deemed complete. Several months later, the City Council accepted that
recommendation, in March 2012, as part of the approval of the 5-year extension of the Maintenance and
Operating Agreement. However, the original estimated cost was $400,000 (compared to $609,738.37).
Furthermore, 72% of the total cost of the project is labor and the labor rate associated with this work is claimed
to be $63 per hour.
SSDI is technically in default of the Lease as a result of four unresolved Notices of Default issued by the Alaska
Department of Environmental Conservation. The City, as the owner of the land, may be held jointly and
severally liable for contamination caused by SSDI at the site. The administration recommends allowing the
Lease to continue, without waiving any rights of the City, with the understanding and expectation that
environmental compliance matters will be dealt with and resolved between SSDI and DEC.
The arbitration panel stated, "The City may not unreasonably withhold its consent to an improvement that SSDI
proposes in connection with exercising the option to extend the Ground Lease." The panel also emphasized
SSDI's responsibility to submit complete requests, including cost and a schedule for completion of acquiring,
installing and constructing the improvement. No requests were sent to the City that comply with Article 2 of
the Lease, and therefore no response was appropriate from the City. SSDI now asks for extensions to the Lease
term to extend the term to June 30, 2040 without the need for compliance with Article 2. The administration
has no objection, and recommends approval of an extension of the Lease term to June 30, 2040.
According to the previous city manager, the ship lift facility is currently maintained in the best condition in the
history of the Seward Marine Industrial Center (Agenda Statement September 26, 2011).
CONSISTENCY CHECKLIST:
Yes
No
N/A
F1.
Comprehensive Plan (document source here): Seward Zoning
X
2.
Strategic Plan (document source here): Seward Marine Industrial Center
Development Plan
X
[3-
Other (list):
FISCAL NOTE
The current rent collected from Seward Ship's Drydock, Inc. is $64,000 per year (plus tax).
Finance Department:
ATTORNEY REVIEW Yes_X - Limited_ No
RECOMMENDATION 0
Council approve Resolution 2012- () �O authorizing the City Manager to enter into the Extension of the
Ground Lease with Seward Ship's Drydock, Inc. through June 30, 2040 in substantially the form presented at
this meeting.
0
53
AGREEMENT TO EXTEND GROUND LEASE
This Agreement is between the City of Seward, Alaska, an Alaska
municipal corporation ("City"), whose address is P.O. Box 167, Seward, Alaska
99664, and Seward Ship's Drydock, Inc., an Alaska corporation ("Lessee"),
whose address is P.O. Box 944, Seward, Alaska 99664, who are lessor and
lessee, respectively, under that certain Ground Lease dated April 25, 1995 of
certain real property located within the Seward Marine Industrial Center, Seward,
Alaska (the "Lease").
Lessee certifies that it has completed the improvements necessary to
extend the Lease Term in accordance with the Decision and Award dated
December 23, 2008. Lessee installed a new cathodic protection system for the
Shiplift Facility, and did not obtain financing for the improvement. Pursuant to the
Decision and Award, the parties agree that "this extension period will commence
July 1, 2009 and expire June 30, 2016."
This lease amendment is without prejudice to each party's position
concerning the manner in which the "cost of improvements" is determined for
purposes of future lease extensions
Dated this,20 day of -.%am a� 2010.
City:
CITY OF SEWARD
Phillip Olakes
City Manager
C.11
AFanLewi
ST:��
MC
ity Clerk
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
)ss.
Lessee:
SEWARD SHIP'S DRYDOCK, INC.
T. Pruitt
ent
The foregoing instrument was acknowledged before me this )�day of
jab
, 2010 by Phillip Oates, City Manager of the City of Seward an Alaska
corpora 'on, on behalf of the corporation.
53
54
OTA
= m�
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
C=i" / h - /j - / --% / ";-a
Mxeq)l�
N tary in and for Alaska
(J commission expires:
)ss.
The foregoing instrument was acknowledged before me this 1^dav of
ul� 2010 by James Pruitt, President of Seward
Alaska poration, on behalf of
04' +OT A/fA
�j OFF_ ALh�11111
Ship's Drydock, Inc., an
the corporation.
X A -A
tary in and for Alaska
y commission expires:
54
55
COUNCIL AGENDA STATEMENT
Meeting Date: January l 1, 2010
From: Phillip Oates, City Manager
Subject: Seward Shi s Drydock 4"' Lease Amendment
BACKGROUND & JUSTIFICATION
The City of Seward has leased land to Seward Ship's Drydock, Inc. ("SSDDI") since 1988. The current Ground Lease was
entered into in 1995 for a Lease Term through June 30, 2009, subject to possible extensions. Maximum extensions of the
Lease Term could not exceed June 30, 2029. SSDDI requested an amendment to the Ground Lease to allow possible Lease
Term extensions through June 30, 2040. At a council work session on November 10, 2009, Jim Pruitt, President of SSDDI,
notified the City Council that an extension beyond 2029 is appropriate because the acceptance of MARAD grant fields (for
capital improvements to the City's syncrolift) would authorize an extension beyond 2029. The Ground Lease Amendment
No. 4, as presented at this meeting, grants SSDDI's request to amend the Ground Lease in this manner. No other changes
are made to the Ground Lease.
The following possible amendments were discussed and rejected because of the difficulty of reaching agreement on the
terms.
Amend Lease section 2.04. Define the type of improvement necessary to qualify for a Lease Term extension,
remove the five year provision, clarify ambiguous language.
Require a personal guarantee from James Pruitt for obligations under the Lease and the Maintenance and Operating
Agreement. (This was required by City Council in 1995 but never signed by Mr. Pruitt.)
- Require adoption of all Best Management Practices recommended by Alaska Department of Environmental
Conservation and develop a schedule for environmental compliance.
Following June 30, 2009, begin charging fair market rental value for the City's building that was constructed with
grant funds and is being used by SSDDI rent-free.
Adopt annual CPI rent increases, consistent with other City leases.
Various possible amendments to the Maintenance and Operating Agreement for the City Shiplift Facility were also
discussed and rejected.
CONSISTENCY CHECKLIST Yes No N/A
1. Comprehensive Plan X
Economic Development...
2. Strategic Plan X
Economic Base...
FISCAL NOTE
Finance Department:
ATTORNEY REVIEW Yes
RECOMMENDATION
Council approve Resolution 2010- authorizing the City Manager to enter into Ground Lease Amendment No. 4 with
Seward Ship's Drydock, Inc.
55
56
GROUND LEASE AMENDMENT NO. 4
This Ground Lease Amendment No. 4 ("Lease Amendment No. 4") is
between the City of Seward, Alaska, an Alaska municipal corporation ("City"),
whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's
Drydock, Inc., an Alaska corporation ("Lessee"), whose address is P.O. Box 944,
Seward, Alaska 99664, who are lessor and lessee, respectively, under that
certain Ground Lease dated April 25, 1995 of certain real property located within
the Seward Marine Industrial Center, Seward, Alaska (the "Lease"). This
document amends the Lease as set forth herein.
Item 1 Lease Term. Section 2.04 is amended to read as follows, with the
intent to allow maximum possible Lease Term extensions to June 30, 2040:
Section 2.04 - Extension of Lease Term. Lessee may, at its option, extend
the Lease Term for one or more additional periods which shall not, in total,
exceed 31 years. Notwithstanding any other provision of this Lease, no
extension of the Lease Term shall cause the Lease Term to expire later
than midnight on June 30, 2040. Lessee shall exercise the option granted
by this section in the manner, and subject to all of the conditions, set forth
in this section.
(a) The exercise of an option to extend the Lease Term under this section
shall be subject to the following conditions:
(1 ) Lessee shall notify Lessor of the exercising of the option in
the manner specified in (b) of this section.
(2) Before exercising the option, Lessee shall submit to City
plans for improvements to the Premises or the Shiplift Facility, an
engineer's or architect's estimate of the cost of the improvements,
and a schedule for acquiring, constructing and installing the
improvements, and City shall have given Lessee its written
approval of the proposed improvements.
(3) Lessee shall designate the portion of the proposed
improvements that it intends to finance with borrowed funds, and
shall provide City with a written commitment from a financial
institution to lend the designated amount to Lessee.
(4) Lessee shall submit to City a written estimate prepared by
the financial institution that has committed to lend funds for the
improvements of the number of years required to amortize the
borrowed amount, with interest, in payments totaling not less than
$100,000 per year.
6%
57
(5) The exercise of the option shall not extend the expiration
date of the Lease Term to a date later than five years after the date
the borrowed amount, with interest, will be amortized under the
estimate provided under (a)(4) of this section.
(b) Lessee shall give City written notice of the exercise of an option to
extend the Lease Term under this section, with the documents required
under (a) of this section, not later than 180 days before the date of
expiration of the Lease Term, as previously extended.
(c) An extension of the Lease Term under this section shall become
effective on the date of the closing of the financing of the
improvements described in the documents Lessee submits to City
to exercise the option.
Item 2: The parties acknowledge that, as a result of Ground Lease
Amendment No. 3 and the corresponding replat, the Premises are described as:
Lots 1-A and 3, Block 7, Fourth of July Creek Subdivision, Seward
Marine Industrial Center, Seward Ship's Drydock Replat, according
to Plat 2002-22, Seward Recording District, Third Judicial District,
State of Alaska.
Item 3: Other Terms of Lease. All other terms of the Lease remain in effect
and legally binding upon the parties except as expressly amended herein.
The effective date of Lease Amendment No. 4 shall be when signed by
both parties in accordance with Resolution 2010-0, 0 of the City.
City: Lessee:
CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC.
Phillip O tes lames T. Pruitt
City Manager p o-ok resident
AT EST:
0. A -.
f
an Lew'
MC I
y Clerk
4.8
57
58
STATE OF ALASKA )
)ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this � day of
a ,I _, 2010 by Phillip Oates, City Manager of the City of Seward an Alaska
corporation, n behalf of the corporation.,,
., upUB1.�G.�� C
STAT
THIRD JUDICIAL DISTRICT
Notary'in a d for Albska
My commi sion expires
}
)ss.
The foregoing instrument was acknowledged before me this,4/`rfday of
by James Pruitt, President of Seward Ship's Drydock, Inc., an
Alaska corporation, on behalf of the corporation.
1
Notary in and for Alaska
My commission expires:
?aO`.
58
59
Sponsored by: Oates
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO
AMENDMENT NO.4 TO THE GROUND LEASE WITH SEWARD SHIP'S
DRYDOCK, INC. FOR THE REAL PROPERTY DESCRIBED AS LOTS 1-A
AND 3, BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION, SEWARD
MARINE INDUSTRIAL CENTER, SEWARD SHIP'S DRYDOCK REPLAT,
ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT,
THIRD JUDICIAL DISTRICT, STATE OF ALASKA
WHEREAS, the City is the owner of the above -described real property ("Property") located
in the City of Seward, Alaska; and
WHEREAS, the City, as Lessor, leased the Property to the Seward Ship's Drydock, Inc.
since 1988, with the current Ground Lease in effect since 1995, as amended (the "Ground Lease");
and
WHEREAS, the Lease Term, as described in the Ground Lease, was for the period ending
June 30, 2009 subject to possible extensions through June 30, 2029; and
WHEREAS, Seward Ship's Drydock, Inc. desires to extend the possible maximum Lease
Term through June 30, 2040; and
WHEREAS, all other provisions of the Ground Lease remain unchanged; and
WHEREAS, the City has determined that entering into the Amendment No. 4, in
substantially the form presented at this meeting, is in the public interest and will serve a public
purpose by encouraging investment in capital improvements to the Premises or the Shiplift Facility
(each as defined in the Ground Lease); and
WHEREAS, a public hearing meeting the requirements of Seward City Code §7.05.125 was
held on January 11, 2010.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
59
60
CITY OF SEWARD
RESOLUTION 2010-002
, Section 1. The City Manager is authorized to enter into a Ground Lease Amendment No. 4
with Seward Ship's Diydock, Inc. in substantially the form as presented at this meeting to extend the
maximum Permissible Lease Tenn extensions described in Section 2.04 of the Ground Lease to June 30,
2040.
Section 2. The recitals above are incorporated herein by reference.
Sectiou3. This resolution shall take effect 30 days after passage and posting.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this I Ith
day Of January, 2010.
THE CITY OF SEWARD, ALASKA
Willard E. Dunham, Mayor
AYES: Bardarson, Smith, Keil, Shafer, Amberg, Dunham
NOES: None
ABSENT: VaIdatta
ABSTAIN: None
ATTEST:
(Lewi'`•�CM�
j
City Clerk
(City Seal)
4�
0
60
61
LEASE No: RE-95-094
LESSOR: CITY OF SEWARD
LESSEE: SEWARD SHIP'S DRYDOCK, INC.
GROUND LEASE AMENDMENT NO. 3
This Lease was originally recorded in Book 89, beginning at Page 248, Seward
Recording District, Third Judicial District, State of Alaska.
This Lease Amendment No. 3 contains 7 pages, and one Attachment A
This cover sheet has been added to this document by:
City of Seward, Harbor Department
To provide space for recording data. This cover sheet appears as the first page of the
document in the official public record.
61
62
10�1 eF13
GROUND LEASE AMENDMENT NO. 3
This Ground Lease Amendment No. 3 ("Lease Amendment No. 3") is between the
City of Seward, Alaska, an Alaska municipal corporation ("City"), whose address is P.O.
Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc., an Alaska business
corporation ("Lessee"), whose address is P.O. Box 944, Seward, Alaska 99664, who are
lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of
certain real property located within the Seward Marine Industrial Center, Seward, Alaska
(the "Lease"). City and Lessee are also parties to that certain Maintenance and Operating
Agreement dated March of 2000 pertaining to the syncrolift shiplift system located in the
Seward Marine Industrial Center adjacent to the leased premises (the "Operating
Agreement"). This document amends the Lease as set forth herein.
Item 1. Article 1 - Definitions. DELETE the definition of "Operating Agreement," and
substitute in its stead, the following new definition:
"Operating Agreement" means the Maintenance and Operating Agreement
between the City and Lessee dated March 30, 2000, as amended from time
to time.
Item 2. Parcels 1 and 2 designated on Attachment A hereto ("Parcel 1" and
"Parcel 2") are added to the leased Premises, and will require a new plat therefor. The two
parcels shall be surveyed and platted in accordance with the ordinances and regulations
of the Kenai Peninsula Borough ("Borough") at Lessee's expense with a) Parcel 1
becoming part of a single lot including the existing leased premises and including the
portion of Sorrel Road lying within Parcel 1 which portion shall be vacated as an access
right-of-way, and b) Parcel 2, including the rails, becoming a second lot. Both parties shall
support such platting in proceedings before the Borough. Approval and recording of such
a final plat of the parcels within Two Hundred Seventy (270) days following the effective
date of this Lease Amendment No. 3 to the mutual satisfaction of the parties is a condition
subsequent to the full enforceability of this Lease Amendment No. 3, as provided in Item
8.
Item 3. Article 3 - Rent. DELETE Section 3.01 - Amount of Rent and substitute in
its stead, the following new "Section 3.01 - Payment of Rent:"
Section 3.01 -Payment of Rent. Commencing on the effective date of Lease
Amendment No. 3 through December 31, 2004, the annual rent for the
Premises ("Rent") shall be set at $44,912.00, subject to the results of the
survey described in Item 2 of Lease Amendment No. 3. The -portion of Rent
for the additional land, approximately 4 acres, added by Lease Amendment
No. 3 shall be $16,912.00 per year provided that upon completion of the
survey and platting in Item 2 of -Lease Amendment No. 3; the portion of the
Rent paid for" -the additional land shall be adjusted for the actual square
footage and any overpayment will be promptly refunded or any amount due
62
63
0 (39
shall be promptly paid. Subject to Section 3.05 - Annual Rent Credits for
Deferred Maintenance, Rent shall be payable quarterly in advance upon the
effective date of Lease Amendment No. 3 (prorated for the balance of the
current quarter) and thereafter on or before the 1st day of the month
beginning each calendar quarter: January 1, April 1, July 1 and October 1.
The amount of each quarterly payment shall be one -quarter of the Rent.
Item 4. Article 3 - Rent, "Section 3.02 - Payment of Rent." DELETE "Section
3.02 a " in its entirety.
Item 5. Article 3 - Rent. DELETE Section 3.05 - Rent Credits for Deferred
Maintenance and substitute in its stead, the following new "Section 3.05 - Rent Credits for
Deferred Maintenance":
Section 3.05 - Rent Credits for Deferred Maintenance. Lessee shall be
allowed a credit to be offset against a portion of Rent due on Parcel 1 from
the commencement of the Lease Term through December 31, 2004, for the
amount actually expended by Lessee through December 31, 2004 for
Deferred Maintenance or replacement of shiplift cables. "Deferred
Maintenance" shall have the meaning as defined in the Operating
Agreement. Lessee shall receive this credit as follows:
(a) Lessee may deduct from the portion of each Rent payment due
through December 31, 2004 allocable to 5.811 acres of Parcel 1 the amount
actually expended by Lessee for Deferred Maintenance or replacement of
shiplift cables during that period.
(b) For the 5.811 acres of the Premises eligible for rent credits
only, Rent for the period through December 31, 2004 may be paid in arrears
and shall be due and payable and is conditioned upon delivery of the
statements as required by Section 3.05 of the Operating Agreement. In no
event shall rent credits exceed the Rent allocable to 5.811 acres of Parcel
1.
(c) Failure of Lessee to verify the Rent credits annually by
submitting the statements per Section 3.05 of the Operating Agreement in
a timely manner, and to pay the remainder of any Rent due under the Lease
will subject the Lessee to a monthly late charge of $2.50 plus finance
charges of 10.5% per annum on that portion of the Rent remaining unpaid,
beginning the day after which such statements are due.
Ground Lease Amendment No. 3 - Page 2
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63
64 `
Item 6. Article 4 - Use of Premises. ADD new "Section 4.07 - Additional Leased
Land:"
Section 4.07 - Additional Leased Land. Lessee shall have possession and
quiet enjoyment of the additions to the Premises described herein as of the
effective date of Lease Amendment No. 3, subject to Section 7.07. Lessee
acknowledges that it has inspected the Premises and accepts the same "as -
is" and without reliance on any expressed or implied representations or
warranties of City, its officers, employees or agents as to the presence of any
Hazardous Material, the actual physical condition or characteristics thereof,
and the legal description or depiction of the Premises. Lessee has been the
operator on the Premises since April 25, 1995 and on a portion of Parcel 1
since 1988.
Item 7. Article 4 - Use of Premises. ADD new "Section 4.08 - Public Access."
Section 4.08 - Public Access. Lessee shall conduct its operations on the
Premises in a manner that will maintain public access to the Shiplift Facility
over land owned by the City as required by the U.S. Department of
Commerce, Economic Development Administration.
Item 8. Article 7 - Termination or Expiration of Lease Term. ADD new "Section 7.07
Failure of Condition Subsequent:"
Section 7.07 - Failure of Condition Subsequent. If the condition subsequent
described in Item 2 of Lease Amendment No. 3 does not occur in the time
and in the manner as set forth therein, the Lease shall be terminated
immediately as to the additional land described therein. Lessee shall pay all
Rent that would have been due for the additional land for the period of
Lessee's possession. The Lease, as amended, shall remain in effect as to
the Premises, as defined without the additional land added in Lease
Amendment No. 3, notwithstanding the failure of the condition subsequent
described herein and the definitions of Premises shall be revised
accordingly. Items 5, 6, 7, 9, and 10 shall survive termination.
Item 9. Article 12 - Dispute Resolution. DELETE Section 12.01 - Submission of
Claims in its entirety and substitute in its stead, the following new "Section 12.01 -
Submission of Claims:"
Section 12.01 - Submission of Claims.
All Claims by a party shall be submitted to the other party by written
notice. The responsibility to substantiate a Claim shall rest with the party
making the Claim. A Claim by either party must be made within 90 days of
Ground Lease Amendment No. 3 - Page 3
C:\WINDOWS\TEMP\SSDLeaseAmendment No. 3.wpd
64
65 4
the event giving rise to the Claim, or the date the claimant first recognizes
the condition giving rise to the Claim, whichever occurs later. If a Claim is
not resolved within 60 days of its submission under this section, the claimant
may submit the Claim to Arbitration under Section 12.02 and pursuant to the
Alaska Uniform Arbitration Act, AS 09.43.010 et sea. Unless the parties
agree otherwise in writing, a Claim is waived if not submitted to Arbitration
under Section 12.02 within 90 days of the giving of the initial written notice
of the Claim under this section.
Item 10. Article 14 Miscellaneous. ADD the following new "Section 14.14 - Claims":
Section 14.14 - Claims. Lessee assumes all responsibility, risk and liability
for any claim relating to the validity or enforceability of Amendment No. 3.
Lessee shall bring no action and seek no damages or recovery as a result
of a determination that Lease Amendment No.. 3 is invalid or unenforceable,
in whole or in part, for any reason. Lessee agrees to defend and release the
City, its officials, officers, employees, agents and contractors from any and
all liability for loss or damages resulting from a decision that Lease
Amendment No. 3 is invalid or unenforceable, whether in whole or in part, for
any reason. Lessee shall accept the City's tender of a claim by a third party
against the City that Lease Amendment No. 3 is invalid or unenforceable,
and upon the City's tender shall defend against the claim at Lessee's
expense. Lessee shall not seek or recover damages from the City for any
loss or damages arising from such event. Lessee shall control the defense
of the claim but shall not settle the claim without the City's prior written
consent, which shall not unreasonably withheld. The City shall cooperate in
the defense of the claim. In the event Lease Amendment No. 3 is declared
invalid or unenforceable by a court of competent jurisdiction, a) Lessee shall
discharge any judgment in favor of the third party against Lessee or the City,
including costs and attorney's fees incurred in the litigation, but any other
attorneys's fees and costs shall be paid by the party who incurred them, b)
any improvements to the land which was added to the Premises by Lease
Amendment No. 3 shall be subject to disposition in accordance with Section
7.03 of the Lease and c) if a replat has been recorded in accordance with
Item 1 of Amendment No. 3, the Premises shall be replatted to its
configuration as it existed prior to Lease Amendment No. 3, at Lessee's sole
expense. This Section 14.14 is severable and shall survive termination of
this Lease and Lease Amendment No. 3.
Item 11. Exhibit B. DELETE Exhibit B and substitute in its stead a portion of the new
plat to be prepared in accordance with Item 2 of Lease Amendment No. 3.
Item 12. Other Terms of Lease. All terms of the Lease remain in effect and legally
binding upon the parties except as expressly amended herein.
Ground Lease Amendment No. 3 - Page 4
C:\WINDOWS\TEMP\SSDLeaseAmendment No. 3.wpd
65
66b n
The effective date of Lease Amendment No. 3 shall be when signed by both parties
in accordance with Resolution 2001-115 of the City. The parties agree to execute and
record a revised memorandum of lease reflecting the Lease terms as amended.
City:
CITY OF SEWARD
W. Scott Janke,"
City Manager
ATTEST:
Patrick Reilly
City Clerk
01-
SEAL
oiz t��jjaV�
to
c— L.; CC&
IL
CtCi(0Q0L+
Lessee:
SEWARD SHIP'S DRYDOCK, INC.
/,q/
Ames T. Pruitt
"President
Ground Lease Amendment No. 3 - Page 5
C:k\AnNDOWS\TEMP\SSDLeaseAmendment No. 3.wpd
W
67
ACKNOWLEDGMENTS
STATE OF ALASKA
) ss.
THIRD JUDICIAL DISTRICT
THIS CERTIFIES that on this ale day of Oc66, 2001, before me, a
Notary Public in and for the State of Alaska, personally appeared W. Scott Janke, known
to me and to me known to be the City Manager for the City of Seward, Alaska, and
authorized to execute documents on its behalf, and is the individual named in and who
executed the foregoing document on behalf of the City of Seward for the uses and
purposes therein set forth.
,`tt[trrrr�,.,
IN WITNESS WHERE95,�I 696b`u set my hand
u4�0� A P Y ••
•
PU�-�' ,=
Q76ta Pi
or, P`' � My Co
STATE OF ALASKA
) ss.
THIRD JUDICIAL DISTRICT )
and seal.
Vlic in and for Alas
ission Expires: t'LI-
THIS CERTIFIES that on this AL day of (Qc , 2001, before me, a
Notary Public in and for Alaska, personally appeared James Pruitt, to me known to be the
person who executed the foregoing instrument on behalf of Seward Ship's Drydock, Inc.
He acknowledged to me that she/he executed the same freely and voluntarily on behalf of
said corporation. He stated to me under oath that he is the president of the said
corporation, has been authorized by the Board of Directors of the corporation to execute
the instrument on its behalf, and has full power and authority to execute the same.
IN WITNESS WHEREOF, I hereunto set my hand and seal.
N _ No ary Public in and forcAlaska
'*' * My Commission Expires:
i ** *'OUB LIG * • ��
Ote
Of Al as
00 0 1 4 5_ ZOOI JAN 31 All: N
SEWARD � fcc REQUESTED BY
RECORDING DISTRICT
Ground Lease Amendment No. 3 - Page 6
C:IWINDOWS\TEMPISSDLeaseAmendment No. 3.wpd
67
68
CITY OF SEWARD, ALASKA
RESOLUTION 2000-010,
AYES: Blatchford, Brossow, King, Shafer
NOES: Calhoon
ABSENT: Clark, Orr
ABSTAIN: None
ATTEST:
Patrick Reilly
City Clerk
C� •�A F0;
. ".
• SEA
•
,•••.4fl1 1 •g :•.
Ns._ OF�a��
.:.
69
Sponsored by: Janke
CITY OF SEWARD, ALASKA
RESOLUTION 2001-115
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO
AMENDMENT NO. 3 TO THE LEASE AGREEMENT AND AN AMEND-
MENT NO.1 TO THE MAINTENANCE AND OPERATING AGREEMENT
WITH SEWARD SHIP'S DRYDOCK, INC. TO EXPAND THE LEASED
AREA WITHIN BLOCKS 7 AND S, FOURTH OF DULY CREEK SUBDM_
SION, SEWARD MARINE INDUSTRIAL CENTER, AND WITHIN A
PORTION OF SORREL ROAD IN TRACT A PROPOSED TO BE VACATED
AS AN ACCESS EASEMENT, SUBJECT TO CERTAIN CONDITIONS
WHEREAS, Seward Ship's Drydock, Inc. submitted a proposal on July 21, 2000 to lease
additional land within the managed parcel of the Syncro-lift facility in the Seward Marine Industrial
Center, and
WHEREAS,in accordance with the City's Lease Policies and Procedures, the Planning and
Zoning Commission reviewed the proposal and adopted its Resolution 2000-04, recommending City
Council approval of Seward Ship's Drydock request and further recommended that the City Council
examine the original multi-user concept ofthe Syncro-lift facility, and consider leasing Seward Ship's
Drydock, Inc., additional lands within the managed.parcel; and
WHEREAS, the U.S. Department of Commerce, Economic Development Administration
has approved the lease of two additional parcels of land, contingent upon maintaining public access
to the Syncro-lift Facility, and
WHEREAS Resolution 2001-090 authorized the City Manager to. negotiate a potential lease
and agreement terms, excluding Sorrel Road; and
WHEREAS, Seward Ship's Drydock, Inc. currently leaVs a 5.811 acre parcel described as
Lot 1, Block 7, Fourth of July Creek Subdivision, Seward Marine Industrial Center, and operates the
Syncro-lift facility for the City under a Maintenance and Operating Agreement with the City
("Operating Agreement"); and
WHEREAS, the requested additional lease property includes portions of the unsubdivided
remainder of Blocks 7 and 8, Fourth of July Creek Subdivision, Seward Marine Industrial Center
(generally described as a ±2 acre parcel east of Sorrel Road which includes the northwest 180 foot
dry berth rail, and a f1.5 acre parcel south of Sorrel Road which Seward Ship's Drydock currently
uses for parking and storage) and a portion of Sorrel Road in Tract A to be vacated as an easement;
and
\1PAT\C$\CURREN-1 \COUNCIL\RESOLU-1 \D1-115-1.WPD
69 91 —` 1`
70
CITY OF SEWARD, ALASKA
RESOLUTION 2001-115
Amendment No. 3 as necessary to finalize the lease amendment between the parties but without
changing the substantive terms.
Section 5. The Amendment No. 3 to the Lease shall require Lessee to survey and replat the
Premises, as shown on Exhibit A to the attached form of lease amendment, within 270 days of the
effective date of the Lease Agreement No. 3, to reflect the site dimensions and existing easements
and the like. The plat shall be subject to approval by the City through the City Manager.
Section 6. As required by Seward City Code §16.01.015(B), the City Council hereby
consents to the subdivision of city -owned Blocks 7 and 8 and Tract A, Fourth of July Creek
Subdivision, Seward Marine Industrial Center and authorizes the City Manager to sign the final plat
on behalf of the City of Seward.
Section 7. The City Manager is hereby authorized to enter into Amendment No. 1 to the
Operating Agreement, in substantial form as attached hereto and incorporated by reference, and to
make such changes as necessary to finalize the amendment but without changing the substantive
terms. The authorization in this Section is conditioned upon execution and delivery of Lease
Amendment No. 3 described above.
Section S. This resolution shall take effect thirty (30) days after its adoption and posting.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 24th
day of September, 2001.
THE CITY OF SEWARD, ALASKA
Edgar Blatchford, Mayor
AYES: Blatchfbrd, Branson, Calhoon, Clark, Orr, Shafer
NOES: None
ABSENT: Brossow
ABSTAIN: None
\\PATnC$\CURREN-1\COUNCIL\RESOLU-1\01-115-1.W PD
70
HARBOR DEPARTMENT
1300 4TH AVENUE, P.O. BOX 167, SEWARD, AK 99664
PHONE: 907 224 3138 FAX 907-224-7187
To: �. ` '` : �....) "
--------------------
From:
Firm:
Re:
Fax No
No. of Pages:
Date:
Time Sent:
If there are any
immediately,—,-,'
MM
iril� wunanussion, Please can Tne ►-iarbor Uttice (907-224-3138)
71
Sponsored By: Janke
CITY OF SEWARD, ALASKA
RESOLUTION 2000-010
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, AUTHORIZING THE AMENDMENT OF A
GROUND LEASE BETWEEN THE CITY OF SEWARD, ALASKA,
AND SEWARD SHIP'S DRYDOCK, INC.
WHEREAS, effective as of April 25, 1995, the City of Seward ("City") entered into
a lease agreement (the "Lease") with Seward Ship's Drydock, Inc. ("Lessee"),
for the real property described as Lot 1, Block 7, Seward Marine Industrial Center; and
WHEREAS, at the time the Lease was entered into, the parties additionally entered
into a Maintenance and Operating Agreement (the "Agreement") for the City's Shiplift
Facility (as defined in the Agreement); and
WHEREAS, the Agreement required Lessee to perform certain deferred maintenance
and replacement of cables for which the Lessee would receive a rent credit under the Lease;
and
WHEREAS, under the Lease the rent credits were to end April 25, 2000, following
the termination of the Agreement; and
WHEREAS, the City is simultaneously entering into a new Maintenance and
Operating Agreement for the Shiplift Facility with the Lessee for a new term of less than five
years, and the parties desire to continue rent credits under the Lease for deferred maintenance
and cable replacement; and
WHEREAS, the City Council finds that it is in the public interest to amend the Lease
and provide for the continuation of rent credits for deferred maintenance and cable
replacement of the Shiplift Facility;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA, that:
Section 1. Lease Amendment No. 2, relating to that certain Lease between the City
and Lessee dated April 25, 1995, is hereby approved in substantial form as set forth in Exhibit
A attached hereto and hereby incorporated by reference. This approval and the effectiveness
of Lease Amendment No. 2 is subject to the City and Lessee entering into a new Maintenance
and Operating Agreement for the Shiplift Facility.
ZL
]3
c00�I
CITY OF SEWARD, ALASKA
RESOLUTION 2000-009
Sponsored By: Janke
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING THE SHIPLIFT MAINTENANCE AND OPERAT-
ING AGREEMENT BETWEEN THE CITY OF SEWARD, ALASKA AND
SEWARD SHIP'S DRYDOCK, INC.
WHEREAS, since 1980 the City of Seward ("City") has provided for the development of
the Seward Marine Industrial Center ("SMIC"), and the City expended over $40. million dollars in
construction of improvements to the area, including a .synchrolift ship lift system, ship transfer
system, and related rail systems ("Shiplift Facility");
WHEREAS, by Resolution No. 95-001, the City Council approved the long term lease of
Lot 1, Block 7, SMIC ("Lease") and a Shiplift Maintenance and Operating Agreement with Seward
Ship's Drydock, Inc., and Resolution No. 95-001 was the subject of a referendum election, the result
of which upheld the aforementioned Resolution;
WHEREAS, the Lease continues in full force and effect, and pursuant to the terms of that
Lease, Seward Ship's Drydock, Inc. may request renewal of the Maintenance and Operating
Agreement if (1) the Lease term has not expired before the renewal term of the Maintenance and
Operating Agreement would commence, (2) Seward Ship's Drydock, Inc. is not in default under the
Lease, and (3) notice of intent to renew the Maintenance and Operating Agreement is given to the
City;
WHEREAS, the prerequisites for renewal of the agreement have been met, and the City
Manager has prepared a new Maintenance and Operating Agreement similar in form to the current
agreement, which new agreement shall be for a term less than five (5) years;
WHEREAS, pursuant to Seward City Code Section 6.10.130, it is determined that the public
interest would be best served by not requiring competitive proposals from potential operators of the
Shiplift Facility because the current operator has satisfactorily performed under the current
agreement, uninterrupted service will benefit the public users and the current operator, there are
economies in maintenance and operation that are achieved through an operator with an adjacent
business location, and there is a benefit in retaining the current operator's expertise and experience
in maintaining and operating the City's Shiplift Facility;
WHEREAS, Seward Ship's Drydock, Inc. agrees to continue the Shiplift Facility
maintenance requirements under the Maintenance and Operating Agreement which has limited the
City's out-of-pocket expenses relating to the Shiplift Facility;
73
74
CITY OF SEWARD
RESOLUTION 2000-009
WHEREAS, the Maintenance and Operating Agreement retains City ownership of the
Shiplift Facility and provides for the continued operation of the Shiplift Facility as a public facility
and at reasonable cost to the City and Shiplift Facility users;
WHEREAS, special expertise, experience, and training is required for the proper
maintenance and safe operation of the Shiplift Facility, and it is in the public interest to utilize the
experience and expertise of Seward Ship's Drydock, Inc. to provide efficient and safe shiplift
services in SMIC;
WHEREAS, the Shiplift Facility is important for business development -in SMIC and
economic growth in the City; and
WHEREAS, the City will have an opportunity to reevaluate the operator's performance prior
to any subsequent agreements, if any;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. For the reasons set forth in the recitals of this Resolution, which recitals are
hereby incorporated by reference as written findings of the City Council, it is determined that,
pursuant to Seward City Code Section 6.10.130, the public interest would best be served by not
requiring competitive proposals prior to approving the Maintenance arid Operating Agreement
described herein. Seward Ship's Drydock, Inc. has demonstrated its ability to maintain and operate
the Shiplift Facility, and it is unlikely that the City would be able to further reduce its expenses
related to the maintenance and operation of the Shiplift Facility through the solicitation ofproposals.
Section 2. The Maintenance and Operating Agreement attached hereto and incorporated by
reference as Exhibit A is hereby approved subject to (1) the City and Seward Ship's Drydock, Inc.
entering into an effective Lease amendment providing for continued Lease rental credits for deferred
maintenance and cable replacement of the Shiplift Facility for the approximate term of the
Maintenance and Operating Agreement and (2) Seward Ship's Drydock, Inc. providing the City a
corporate Resolution approving the agreement. The City Manager is authorized to sign this
agreement in substantial form as attached hereto on behalf of the City of Seward and may make such
changes as necessary to finalize the document for signing.
Section 3. The current Maintenance and Operating Agreement is hereby extended according
to its existing terms until the lease amendment and the new Maintenance and Operating Agreement
become effective on March 31, whichever occurs first.
74
75
Page I of I
CITY OF SEWARD, ALASKA
RESOLUTION 20W-W
11 —
Section 4. This Te$0Iu1Jofl shall take effect immediately upon its adopticsn-
PASSED AND APPROVED by the City CoutxA of the City of Sc%Naxd, Mja*a, this 28th day of
Febnia*,, 20r
THE ["IT'S' OF SEWARD, ALASKA
Is
Edgar Blatthford, Mikyor
AYES:
Blatchford, Brossow, CAllioon, King, Shafer
N011s:
Now
ABSEM:
ABSTAIN:
CIAA-, Orr
None
Al'frsr-
PF�Rcitly
letk
E
75
http: //history. cityofs eward.net/weblink7/lmageDisplay. aspx?cache=yes &sessionkey=WL1mageDisp1ay&u... 1/5/2010
76.
SEWARD RECORDING ISTRICT
LEASE 95-094 AMENDMENT NO. 1
THE CITY OF SEWARD, ALASKA, a home rule municipal corporation, organized and
existing under the laws of the state of Alaska, hereinafter referred to as "CITY", and SEWARD
SHIP'S DRYDOCK, INC., P.O. Box 944, Seward, Alaska 99664-0944, hereinafter referred to as
"LESSEE," hereby agree that the Lease between them for Lot 1 Block 7, Fourth of July Creek
Subdivision Seward Marine Industrial Center, and originally approved by City of Seward Resolution
95-001 is hereby amended as follows:
Delete ARTICLE I. --LEASED LAND, in its entirety and substitute in its stead:
ARTICLE I. --LEASED LAND. The Leased Land is located in the City of Seward, Alaska. The
Leased Land is described as follows:
Lot 1 Block 7, Fourth of July Creek Subdivision, Seward Marine Industrial
Center, Kenai Peninsula Borough Preliminary Plat No. 97-108, recorded as
Plat No. 9' 7 -47 in the Seward Recording District, Third Judicial District,
State of Alaska. The total leased area is 5.811 acres more or less.
In all other respects the lease as previously amended is to remain unchanged and in full force between
the undersigned.
IN WITNESS WHEREOF, the parties hereto have executed this document, -and it is
effective this o2 day of L�ecq, 1997.
LESSOR: LESSEE:
CITY OF SEWARD, ALASKA SEWARD SHIP'S DRYDOCK, INC.
By: 9�y: James T. Pruitt
nCity Manager Its: President
ATTEST:
Patrick Reilly,°Eity�Cle
Ci A, t o
Lease 9AO94 Anmdment Ito. 1;�;'
°9 a
76
77
LEASE AMENDMENT NUMBER 2
(RE-95-094)
THE CITY OF SEWARD, ALASKA, a home rule municipal corporation, organized and
existing under the laws of the State of Alaska, hereinafter referred to as "City," whose mailing
address is P. O. Box 167, Seward, Alaska 99664, and SEWARD SHIP'S DRYDOCK, INC.,
hereinafter referred to as "Lessee," whose mailing address is P. O. Box 944, Seward, Alaska 99664,
for and in consideration of the mutual promises and covenants hereinafter contained, hereby agree
that the lease dated April 25, 1995 between them for the real .property described in attached Exhibit
A, hereby incorporated by reference (the "Lease"), is hereby amended as follows:
DELETE Section 3.05 within Article 3. RENT and substitute, in its stead, the following:
Section 3.05 - Rent Credits For Deferred Maintenance. Lessee shall be allowed as a credit
not exceeding the amount of Rent due from the commencement of the Lease Term through
December 31, 2004, for the amount actually expended by Lessee through December 31, 2004 for
Deferred Maintenance or replacement of shiplift cables. Lessee shall receive this credit as follows:
(a) Lessee may deduct from any Rent payment due during the period ending December
31, 2004, the amount by which (i) the amount actually expended by Lessee for Deferred
Maintenance or replacement of shiplift cables, exceeds (ii) Rent for which Lessee already has
received a credit under this section.
(b) At the end of each Fiscal Year ending before January 1, 2005, City shall refund to
Lessee from Rent due and paid on or before the end of each such Fiscal Year, an amount by which
(i) the amount actually expended before the end of such Fiscal Year by Lessee for Deferred
Maintenance or replacement of shiplift cables, exceeds (ii) Rent for which Lessee already has
received a credit under this section.
In all other respects, the Lease is to remain unchanged and in full force between. the
undersigned parties.
IN WITNESS WHEREOF, the parties have executed this document and it is effective this
day of January, 2000.
CITY: LESSEE:
THE CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC.
By: W. Scott Janke By: James T. Pruitt
Seward Ship's Drydock, Inc.
Ground Lease Amendment
J:\DOCS\43374170\SSDLeaseAmendmentl.3 Page 1
77
78
STATE OF ALASKA )
)ss.
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this ' ' day of ki199_7before
me, the undersigned, a Notary Public in and for the State of Alaska, personally appeared
il}'-V' `-/f ``i-'Ak t d t known to me and to me known to be the individual named
in d who executed the foregoing document, and acknowledged to me that he signed and sealed the
same of his voluntary act and deed for the uses and purposes therein mentioned.
WITNESS my hand and notarial seal the day and year first hereinabove written.
or TE OF ALASKA
THIRD JUDICIAL DISTRICT
Notary Public in and for Alaska 14
My Commission Expires:��:lT F5�
)ss.
THIS IS TO CERTIFY that on this day of '�, 1997,
before me, the unders�nedd, a Notary Public in and for the State of Alaska, personally appeared
� known to me and to me known to be the individual
named in and who executed the foregoing document, and acknowledged to me that he signed and
sealed the same of his voluntary act and deed for the uses and purposes therein mentioned.
WITNESS my hand and notarial seal the day and year first hereinabove written.
90V 1
CatFI lA Sl.-A .
No ary Public in and for Alas a
YVE ! T E % WELSH Commission Expires:
� ��Ag
P
RETURN TO: Community Development Dept.
CITY OF SEWARD
P.O. BOx 167
Seward, AK 99664
Lease 95-094 Amendment No. 1
Sep;=ar Reco<d g DistIrie —Cc--
Date , 1
Time:
Requested by
78
79
Sponsored by: Jones
CITY OF SEWARD, ALASKA
RESOLUTION NO. 95-001
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, APPROVING THE LONG TERM LEASE
OF LOT 1, BLOCK 7, SEWARD MARINE INDUSTRIAL CENTER,
AND A SHIPLIFT MAINTENANCE AND OPERATING AGREEMENT
WITH SEWARD SHIP'S DRYDOCK
WHEREAS, at City Council's direction, the administration has negotiated two
agreements with Seward Ship's Drydock for maintenance and operation of the shiplift
facility and for the lease of adjacent city -owned upland property; and
WHEREAS, it is in the public interest to approve the agreements as attached and
incorporated herein by reference;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The long term lease of Lot 1, Block 7, Seward Marine Industrial Center,
to Seward Ship's Drydock is hereby APPROVED. A copy of the lease agreement and the
personal guaranty provided by James T. Pruitt are attached and incorporated herein by
reference.
Section 2. The shiplift maintenance and operating agreement between the City
of Seward and Seward Ship's Drydock is hereby APPROVED. A copy of the agreement
is attached and incorporated herein by reference.
Section 3. This resolution shall take effect thirty days after passage and posting
as required by law.
PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this
18th day of January, 1995.
THE CITY OF SEWARD, ALASKA
X1, �� 0,_-, -
Dave W. Crane, Mayor
79
80
BOOK B PA(j'$ ag-g
dDliNTG DISTRICT
LEASE MEMORANDUM
(WITH RENTAL AMOUNT OMITTED FOR RECORDING)
NOTICE IS HEREBY GIVEN that a lease between the CITY OF SEWARD, ALASKA, PO Box
167, Seward, Alaska 99664, a home rule municipal corporation located within the Kenai Peninsula
Borough, State of Alaska, herein called "LESSOR," and SEWARD SHIP'S DRYDOCK, INC. , PO Box
944, Seward, Alaska 99664, herein called "LESSEE," was made regarding the following described real
property:
Commencing at the northeast corner of United States Survey No. 4827 from a 5/8" x
30" rebar with an aluminum cap located, thence along the easterly line of said USS
4827, South 00°34'13" East 1,458.02 feet; thence leaving said easterly line at a right
angle thereto, South 89°25'50" West 850.80 feet to the TRUE POINT OF BEGINNING;
thence South 89025'50" West 425.00 feet; thence South 00'34'13" East 605.00 feet;
thence North 89°25'50" East 425.00 feet; thence North 00034'13" West 605.00 feet to
the TRUE POINT OF BEGINNING, containing an area of 257,125 square feet more or
less. Said property is located at 3306 Sorrel Road within the Seward Marine Industrial
Center, at Fourth of July Creek and is also described as Lot 1, Block)!, Seward Marine
Industrial Center, Fourth of July Creek Subdivision (preliminary plat), all within the
Seward Recording District, Third Judicial District, State of Alaska.
The effective lease term is April 25, 1995 through June 30, 2009. LESSEE shall have the right
to extend the lease term for one or more additional periods that shall not, in total, exceed 20 years or
cause the lease term to expire later than midnight on June 30, 2029. The original lease is on file and
available for public review in the Harbormaster's Office, 1300 Fourth Avenue, PO Box 167, Seward,
Alaska 99664.
IN WITNESS WHEREOF, the parties hereto have respectively signed this memorandum on the
dates below written.
LESSOR:
CITY OF SEWARD, ALASKA
LLUO City Manager
ATTEST:
MEMORANDUM OF LEASE
Seward Ship's Drydock,-Inc.
LESSEE:
SEWARD SHIP'S DRYDOCK, INC.
ames T. Pruitt, President
Date: /a,&0 a/9 -7
SUBMITTED BY:
Foster M. Singleton,
Page 1
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81
CO K 1 �r
'Fln7-7 3 --, 3 `' tCT
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this 23'� day of C , 199 %, before me the undersigned, a
Notary Public in and for the State of Alaska, personally appeared ZiC_ ,. L 3 �;_t ffoccl , known to
me and to me known to be the GAi city manager for the City of Seward, Alaska, and authorized
to execute documents on its behalf, and is the individual named in and who executed the foregoing
document on behalf of the City of Seward for the uses and purposes therein set forth.
WITNESS my hand and notarial seal the day and year first hereinabove written.
OF i( IAI-
YVETTE GW} WA
NOTARY PUBLic
STATE OF ALASKA )
ss.
THIRD JUDICIAL DISTRICT )
�j2/�7
;0;`tmmission
Public in and for AlaskExpires: `7
l
THIS IS TO CERTIFY that on this day of • , 199'�' before me, the undersigned, a
Notary Public in and for the State of Alaska, personally appeared James T. Pruitt, known to me and to
me known to be the president of SEWARD SHIP'S DRYDOCK, INC., and acknowledged to me that the
foregoing instrument was executed by him in his official capacity, pursuant to the authorization set forth
in the by-laws of said corporation, and that the same was executed as the free and voluntary act and
deed of the corporation for the uses and purposes therein set forth.
WITNESS my hand and notarial seal the day and year first hereinabove written.
Return to: Harbormaster
CITY OF SEWARD
PO Box 167
Seward, AK 99664
MEMORANDUM OF LEASE
Seward Ship's Drydock, Inc.
V) )tM.lit__ _ ,roa
Notary Public in and for Alask
My Commission Expires: , 1/ --goo/
RECORDED -
,aYY n ,,i 4vtrii., "E`5-`v District
lJ+v Y':�Gl: d i i`F
Daze E i ; ti
t Page 2
Time:
Requestf-ld by
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