HomeMy WebLinkAboutRes1988-062
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Sponsored by: Schaefermeyer
CITY OF SEWARD, ALASKA
RESOLUTION NO. 88-062
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, AUTHORIZING THE EXECUTION OF
A LEASE AGREEMENT BETWEEN THE CITY AND SHORES IDE
PETROLEUM, INC., DBA HARBOR FUEL SERVICE
WHEREAS, the City Council of the City of Seward has on
numerous occasions found it in the public interest to
encourage private development of essential marine-related
service businesses at the Seward Marine Industrial Center;
and
WHEREAS, for several years land at the Seward Marine
Industrial Center has been available to qualified businesses
for lease to develop marine-related businesses; and
WHEREAS, the City Council of the City of Seward has a
preference to encourage the development and expansion of
existing Seward-based businesses; and
WHEREAS, Shoreside Petroleum, Inc., dba Harbor Fuel
Service, is an established Seward company with an excellent
reputation for service within the Seward area; and
WHEREAS, Shoreside Petroleum, Inc., dba Harbor Fuel
Service, has proposed to lease a parcel of land at the
Seward Marine Industrial Center for the development of a
bulk fuel storage and sales facility; and
WHEREAS, the use of the land by Lessee will provide
essential marine support services within the Seward Marine
Industrial Center and will provide a new and beneficial
industry for Seward including increased employment and
private investment; and
WHEREAS, the lease provisions provide for a fair market
value lease agreement based on consistent leasing practices
within the city and it is not in the public interest to
incur the expense of an appraisal of the property for the
initial lease rate determination; and
WHEREAS, by negotiation the city has obtained a fair
rental rate, a commitment to develop a new industry and
other commitments by the Lessee that would not have been
attainable in a public bid process;
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CITY OF SEWARD, ALASKA
RESOLUTION NO. ~-()h7
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF SEWARD, ALASKA, that:
Section 1. The City Manager is authorized to execute
on behalf of the City of Seward the lease agreement attached
hereto as Exhibit A.
Section 2. The City Council finds that it is not in
the public interest to obtain an appraisal of the property
being leased.
Section 3. This resolution shall take effect thirty
days from the date of passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, this ~ day of May , 19~.
THE CITY OF SEWARD, ALASKA
AYES:
NOES:
ABSENT:
ABSTAIN:
DUNHAM, GIESELER, HILTON, MEEHAN, NOLL, O'BRIEN, SIMUTIS
NONE
NONE
NONE
ATTEST:
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ,
POWELL & BRUNDIN, Attorneys
for the City of Seward, AK
~ ~ ~ eN" ()./\
Linda S. Murphy, CMC
City Clerk
Patricia Jones, Acting City
(City Seal)
7~ flI~
Fred B. Arvidson
City Attorney
Clerk
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LEASE AGRI::EMEN1'
THIS ~GREEMFNT dated this' day of May, 1988, is
betwe~n the CITY Of SEWARD, At.ASKA, a Home Rule Municipality
(nCITyn) and SHORESIDE PETROLEUM. INC.. and Alaska Corporation
d/b/a HARBOR FUEL SERVICE (nLESSEEn).
WHEREAS, ~he City Council of the city of Seward has on
num~[OUS occasions found it in the public interest to encourage
private developm@.nt of essential marine-related service
businesses at th~ Seward Marine Industrial Center; and
WHEREAS, Shoceside Petroleum Inc., d/b/a Harbor fuel
Service, has pr0posed to lease a parcel of land at the Seward
Marine Industrial Center for the development of a bulk fuel
storage and sales facility; and
WHER~AS, the use of the land by Lessee will provide
essential marine support services within the S€ward Marine
Indu~trial Cent.er and will provide a new and beneficial industry
for Seward including increased employment and ~rivate investment;
NOW, THEREFORE, far and in consideration of the mutual
promises and covenants herelnaft€r contained, the parties hereto
agree as followR:
ARTTCLE l.--LEASED LAND.
The leased land granted by CITY under this lease
(heteinaEter referred to as "leased land") consists of
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the orderly development of the property and as leases are
entered into with various tenants. CIT~ agrees to include the
leased land in the next re-plat.,cE the Seward Marine Industrial
Center in accordance with the description prepared by LESSeE in
accordance with Section 1.1 above. If LESSEE requires a plat o(
the leased land prior to that time, LESSEE may request an
earlier fe-plat and, upon request. CITY sh~11 assist LESSEF in
the preparation and filing of a re-plat of the leased land. If
LESSEE requAsts a special Ie-plat LFSSEE shall reimburse CITY
Eor the CIT~'S direct costs in assisting in the preparation and
filing of that re-plat.
1.3--~oyen3nt of Quiet !njoymen~. CITY does hereby
lease the leased land to LESSE~ only for the establishment and
operation of a bulk fuel storage and sales and any incidental c
necessary activities or structures related thereto. LESSEE may
not engage in other additional lawful industrial activities on
the leased land without the consent oE CITY, A primary reason
for CITY's €nterinq into this lease agreement is the co~nitment
of LESSEE to construct and operate bulk fuel storage and sales
facilities that will complement the CITY's plan for development
of the Seward Marine Industrial Center. Subject only to
restrlctlons of title or in patent to the leased land. or
provisions nf this lease, CIty hereby covenants that LESSEE
shall have the quiet enjoyment and possession of the leased land
for any 11se authorized hereunder for the full term of this
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acceptable service location. All costs associated with
9~oviding electricaL servic@ to LESSEE's facilities and
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Lmp~ovemen~s ~re at the sole coSt and expense of LESSEE. If
needed by LESSF.E, CITY shall mak~ its best efforts to provide
tempOtdcy electrical service to the leased premises.
7., :1--!:!..ater. By September I, 1988. CITY shall make
potable water available to the leased land,
2.4--Sewer. CITY does not have funding far
construction of sewer faciLities but intends to construct those
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facilities if and when funding is available. The term -sewer-
means sanitary sewer sufficient for use by employees of LESSEE
and employees of tend~d vessels. It does not include. nor is
CITY responsible to provide. special treatment or handling
facilities Eor industrial waste. waste oil products, bunker oil
or contaminat~d WAter of any type associated with a bulk ~uel
storage and sales facility inclUding all waste petroleum and
che[l\icals. If CtTY has not constructed sewer facilities by the
time LESSEE commences operation of its repair facilities, LF.SSEE
may install te!l1tlor<lry sawer facilities (including a leech field
if appropriate) at LESSF.E's sole expense and upon approval ot
such facilities by the City enQineer and the approval of all
necessary pe~mit5 for their use including any required by the
Oepart:nent of Envi.r:mmental Quality of the State of Alaska. O~
the Environmental Protection Agency of the United States, and
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further provided T,ESSEE connects to the public sewer when
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or any pact thereof, the establishment of party walls. the
establishment of mutual and reciprocal parkinq eights or eights
of ingress or eqr~ss. or other like'matters. all of which are
for the purpose of the orderly development of the leased land as
a commercial unit subject, however, to the conditions that:
a) All Such matter-s sha 11 be lirni ted to the
lease term and shall terminate upon termination of the lease for
whatever reaSI:ln.
bl Any such matters of a permanent nature
extending beyond the lease term shall not be granted without the
prior written approval o~ CITY. In any of the foregoing
instances referred to in this para9raph. CITY shall be without
expense thereeare, and the cost and expense thereof shall be
borne solely by LFSSEE.
2.7--E:d:;Elll}ents. CITY agreels to grant non-exclusive
easements across and to the Seward Marine Industrial Center
North Dock for the transfer of bulK fuel and petroleum products
to and from the leased land and the North Dock. CITY agrees to
promptly prepare. with the assistance of LESSEE, appropriate
easement documents with respect to those easements.
2.8--FutuL'e Easements. In order to provide for the
more orderly development of the leased land and adjacent lands
including ~ubllrly Qwned facilities at the Seward Marine
Industrial Center. it may be necessary, desirable or required
~ that street, water, sewer. drainage. gas, power &ine and other
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development has been determined by the City Councll of the City
of Seward to be in the public interest.
LESSEE shall have the r1~ht to ~rect. maintain,
aLter. n:,:model, r@construct, rebuild, bui.ld and/or re~lace
buildings and other improvements on the leased land. and correct
and change the contour of the leased land subject to the
following conditions:
a) The cost of any such construction,
reconstruction, d~moli.tion. or of any changes, alterations or
improvements, shall be borne and paid for by LESSEE;
b) The leased land shall at all times be kept
free of mechanics and materialmen's liens, and LESSEE shall
pro'lide or see provided adequate workers' compensation insurance
and liability insurance for itself and its subcontractors;
c) LESSEE shall supply CITY with a copy of all
building plans and specifications and site plan(s) for the
leased land;
d) Any general contractor employed by LESSEE
shall be appropriately bonded by use of performance and l3bor
and material payment bonds when the cost of the worK is over
Fifty Thousand Dollars ($50,000), Copies of all such bonds
shall he furnished to CITY prior to commencement of
construction; and
e) CITY may, as contemplated by Alaska
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'Statutes. give notice of nonresponsibility for any improvements
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construction of a perman~nt facility and to COllunence operati.on
of the faci li.ty within one (1) year after execution of the le
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shall be cause for t~rmination at tlte option of the CITY,
3.4--0elays in Construction of Initial Facilities.
Payment (jf Rent and Emplqy!oent. In the event LESSEE or CITY is
delayed in the p~rformance of its obligations under ARTICLE 3
(Facility Constructi.on), due to acts of God such as earthquake,
flood, tidal wave, or war. the time periad wherein such
performance is to occur shall be extended by that amount of time
necessary to compensate foe the delay. The term "acts of God"
shall not be interpreted in this Section to include adv~rse
weather conditions. it being understood that weather in Seward,
Alaska, is frequently adverse. Only a flood of a magnitude of a
IOO-year event or greater shall be considered sufficient to be a
force mrtjeure under this Section.
ARTICLE 4,--RIGHT OF FIRST RF.FUSAL ON ADJACENT LAND
In recogni~ion of LESSEE's interest in expansion of its
bulk fuel storage operations beyond the l~ased land, and as
fl,Jrther inducf::!ment to LESSEE to enter into this lease agreement.
CITY hereby grants to LESSEE the right to meet or exceed any
o!fer by a third party to lease the City land within that
uutlined in GREEN consisting of approximately 30,000 square teet
adjacent to the leased land to the east on Exhibit A and not
included 1n this lease in accordance with the following
provisions:
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shall operate to terminate all of LESSEE's rights hereundec to
lease the land {or ~urchase it if the third party offer was an
offer to purchase).
d) Intent, The intent of this provision 1S to
provide for ~dditiGnal expansion room for LESS~E without
restricting CITY Erom seeking development of that land from
other parties. The parties recognize that, except for the
obligations cont~ined in this lease agreement. LESSEE shall.
during the option period, not be required to pay any additional
consideration for the right contained in this ARTICLE.
ARTICLE 5.--TERM.
The term of thi~ lease shall be as follows:
S,l--Init.t~lConstruc~,~_on Term. From and after
thirty (30) days from the date the City Council of the city of
Seward approves tnis Lease Agreement until the earlier of the
cOflunencement of operations as defined herein or twelve months
from the oate of the signing of this leas~. whichever first
OCC'.lr~, The term "commenceloent of operations" means that point
,~here LESSFE has in place at least TWO HUNDRED THOUSAND DOLLARS
($200.000) of value of permanent improvements consisting of bulk
fuel storage tanks and ancillary appurtenances. If LESSER does
not have rerm~nent improvements to the leased land with a value
of at le.,~l' ~wo Hl;NDRf::D THOUSAND DOLLARS ($200,000) within
twelve (12) months of the signing of this lease, then this lease
may be tecrninaterJ .n the opticn of CITY and CITY need not give
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ARTICLE 6,--RE~
6.1--~t~ial Rental Rate, During the first five (5)
years of this lea~~, some of whldh period will be the initial
construction term, the annual rental rate shall be TEN CENTS
($.10) pec square fQct for an annual rent of approximately THREE
THOUSAND DOLLARS ($],000) per Year. The exact rent shall be
recalclllated baS8d on the results of the survey referred to in
Section 1.1 above and an estimated fair market value of $1.25
per square foot (based on a Letter of Opinion from Appraisal
Company of Alaska dated Maech, 1987) and a rate of return of
eight percent (8\). Th~ rent shall be payable annually in
advance on or before the anniversary date of each year. The
anniversary date shall be thirty (30) days following the
approval of this lease agreement by the City Council of the City
of Seward. The parties understand that the rental rate is based
on a Letter of Opinion that pre-dates the substantial public
irnp,ovements constructed since then at the Seward Marine
Industrial Center and is substantially less than fair market
value, and that the renuced rental for the initial five (5) year
period of the lease is in consideration for LESSEE commitments
to construct facilities on the leased land and operate them.
6.2--~enta~ Adiustments. Not more than ninety (90)
days before the fifth anniversary date of the lease, and once
each five years thereaft~r throllghout the term of this lease
including renewals or extensions, the annual rental due and
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objection before the date when the new rental rate is to. be
effective. LESSEE shall then engage a second independent MAl
certif~ed appraiser at its expen~e to make a second appraisal of
the fair rental value of the leased land. L!SSEE shall furnish
CITY a copy of t~e second appraisal report. If the secand
a~prdisal reElects ry "air mark~t value rental which varies from
the firs~ appraisal by no more than ten percent (10\), then the
new rental rate of the first and second appraisal reports. If
the second appraisal reflects a fair market value rental which
varies from the first appraisal by more than ten percent (10\)/
then the new rental rate shall be determined in accordance with
the arbitr~Lloll provisions contained in ARTICLE 16.
LESSEF.'s ~bjection to the rental rate and engagement of a
second appraiser shall not postpan€ LESSEE's obligatian to pay
the annual cental dR described in CITY's notice of rental rate
based on the first appraisal. LESSEE shall deposit into a
Sepa(dte trust account the amount of rental rate as fixed by the
fi,st appr~isal until the question of rental adjustment is
resolv~d,
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ARTICLE 7.--CRF.DITS AGAINST RENT.
7.1--tnvestment Incentive. As an incentive to
~[ovide for inve~tment at the Seward Martne Industrial Center,
LESSEE shall be entitled to credit against rent if the
conditions in the following Sections are met:
7.2--Deadline and Form~~a for Credit. Until July 1,
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first appraisal by no more than ten percent (10\), then the two
appraisal values shall be averaged. If the second appraisal
reflects ~ fair market value renbal which varies from the first
appraisal by more than ten percent (10\), then, unless CITY and
LESSEE agree on a value alnong themselves, the value of
improvements shall be determined 1n acco[danc~ with the
arbitration provisions contained in ARTICLE 16 of this lease.
During the time period that the parties are in the
process of arbitrating the Fair mArket value of LESSEE's
improvements, LESSEE shall not be required to pay rent provided
the lower of th~ two appraisals would still provide for a credit
against rent.
After the fair market value of the improvements
constructed by LESSEE has been determined, the number of months
of rental credit to which L[SSEE shall be entitled shall be
computed by diVldinc,j that value by the sum of EIGHTY THOUSAND
DOLLARS ($80.000). The resulting figure. up to a maximum of
thre~ (J) ye~(s, shall represent the number ot years to which
LFSSEE shall be entitled to a rental credit. LESSER shall not
be entitled to any fractional portion beyond a full month. For
example. and by W:3y of i.llustration, if it is determined that by
July 1, 1989, LESSEE has constructed improvements to the leased
land with a fair market value of TWO HUNDRED THOUSAND DOLLARS
($200,000) then LESSEE shall b@ entitlprl to a rental credit
equi.valent to two (;') months of lease paYII\cnt obligations under
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Industrial Center are exposed to risK or hazards, or a risk to
the public interest (as distinguished from a business risk), or
if the City is not satisfied with ~he quality of construction or
the conduct of LESSEE's business, the City may engage an
independent engineering consultant well versed and experienced
in bulk fuel storage and sales facilities who shall furnish to
the City a comprehensive survey and report for the purpose of
establishing wh~ther the work by LESSEE poses an unreasonable
risk to adjacent public port facilities pUblic waters or
adjacent private facilities. and if that survey discloses an
unreasonable risk then LESSEE shall pay the costs of the survey
and irnmediHely take whatever remedial steps are reported as
necessary to eliminate that risk or reduce it to an acceptable
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If LESSEE disputes the CITY's selection of an
engineer, then it shall promptly, and within ten (10) days oE
such selection provide CITY with the names of three independent
engineering consultants well versed and experienced in bulk fuel
stocage and sales Eacilities and CITY may utilize anyone of the
~hree listed by LESSEE, or in the alternative, CITY may submit
the names of two additional engineers. The parties then shall
~romptly meet and mulually agree on an acceptable engineer. If
they are una hIe to agree within five days of the date LESSEE has
submitted its list. then both parties shall promptly and
'~onfidentially rank their choice o! engineers in the same manner
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no representations or warranties as to any particular part or
the whole of CITY's public facilities with respect to their
fitness for the uses intended b~ LESSEE. and LESSEE has
inspected those facilities and has examined the ~13ns and
specificationR of those facilities under construction and has
satisfied itself that the capacities of the Eacilities are
sufficient for the intended uses by LESSEE.
8.5--TariEfs and Other Service fees. CITY shall
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have the right to make amendments to its tariffs, regulations
and scheduled fees from time to time even if those adjustments
shall cost LESSEE more for its operations or use of public
facilities and CITY is free to do so; provided only that it does
not pose any greater burden or higher rate upon LESSEE than upar
any other similar user of the public facilities.
CITY agrees to file for approval with the Federal
Maritime Commission any required amendments to its existing
tariff to facilitat:.) .3CC€SS to. J.FSSF.F.'s hydrants and headers.
CITY agrees to not unreasonably refuse LESSFF's appl icatiorl for
any required terminal use perm\ts as may be required by LESSEE
to operate LESSEE's facilities.
8.6--Riqht to Prov\de Substitute_..~~ased Land,
Development of the Seward Marine Industrial Center by the City
of Seward is in its formative. beginning stages and both CITY
and LESSEE see the possibility of a change in the final layout
of all im~'ovements to the Seward Marine Industrial Center.
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thereof, 1) the rentals required to be paid under this lease.
or 2) ~11 sums due City including public fees or user charges
for adJacent public facilities,'ll:dectr:ical, sewer or other
service charges or 3) any taxes or assessments on real or
personal property due either CITY or the Kenai Borough.
b) Failure by LESSEE to observe, fulfill or perform
any covenants. conditions or agreements on its part to be
observed or [lerfOClned under this lease for a periOd of thirty
(30) days after written notice specifying such failure.
requesting that i~ be remedied. and stating that a notice of
default has been given to LESSEE by CITY; provided. however.
that if said default is such that it cannot be corrected within
the applicable period, it shall not constitute an act af default
if corrective action is instituted by LESSEE within the
applicable period and diligently pursued until the default IS
correctl:ld.
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c) The makin9 by LESSEE of an assiQnment for the
benefit of creditors, the filing of a petition in bankruptcy by
{,FSSFF, the adjudi.cation of LESSEE as insolvent or bankrupt, the
petition or application by LESSEE to any tribunal for any
receiver or any tr~stee for itself or for any substantial part
of its property; or the commencement of any proceeding relating
to LESSF.F. under any bankruptcy, insolvency, reorganization,
arrangement or ceadjLlstrr.ent of debt law or stAtllte or si.mi lar
law or statute of any jurisdiction, whether now or hereafter in
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facility have and ret3in financial backing;
2) thnt operation of the facility be by a
res~ectable operator;
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3) that the facilities be constructed and
operated in accordance vrith applicable envlronmental laws and
regulations and with! sensitivity for environmental pratecti0n.
f) Any failure of LESSEE to fulfill its construction
obligations under Sectlon 3.2 of this Lease.
ARTICLE lQ,--REMEDtES FOR DFFAULT.
Whenever 3n act of default by LESSEE shall have occurred.
and any applicable period for giving notice and any opportunity
to cure shall have expired, CITY shall have the fallowing rights
and remedies (all in addition to any rights and remedies that
may bE:: given to CITY by statut.e. common law or otherwise):
a) To declare the term of this lease terminated,
b) CITY may distrain for rent due any of LESSE~'s
personal property which comes into CITY's ~ossession. This
remedy shall include the right of CITY to dispose of property
distrained in any commercially reasonable manner. It shall be
conclusively pcesumed that compliance with provision of the
Alaska Uniform Commercial Code (A.S. 45.09.504) with respect to
sale of property shall be a commercially reasonable disposal.
c) Collect any and all rents due or to become due
from sub-tenants or other occupants af the leased land.
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d) Recover an amount to be due immediately upon
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later exercise by CITY of any or all other rights or remedies
provided for in this le~se or now or thereafter eX1sting at law,
or in equity or by statute or ~bhecwise.
h) No delay or omission to exercise any right or
power accruing following an act of default shall impair any such
right or power or shall be con~trued to be a waiver thereof, but
any such right and power may be exercised from time to time Ind
as often as :nay be deemed expedient.
ARTICLE ll.--REAL PROPERTY IMPROVEMF.NTS.
All impcovem~nts constructed by LESSEE on the leased land
or on easement~ to or from same, such as buildings, storage
tanks, warehouses, conveyor system ditches, sewer lines, water
lines, dikes or berms, and similar improvements, shall become
the property of CITY upon the termination of this lease except
that any other provisions of this lease to the contrary
notwithstanding, LESS~E, upon termination of this le3se for any
reason, may, bul need not, remove and retain title to all
improvements including tradl:! fixtures and equipment from the
leased land provided that LESSe~ sh!11 repair any dama~es to the
leased land caused by such removal; provided, howaver, LESSEE
shall be required to remove and cover any underground structures
exposed by any cemnval or trade fixtures and equipment.
LESSEE's unencumbered ptoperty interest in any trade fixtures 0r
equi.pment not so removed by LESSEI:: shall pass to CITY. LESSEE
shall return the leased land to its original condition plus any
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development of or operations on the leased land provided that
the lender shall be subject to all Obligations of LESSEE under
the terms of this lS3se agreemeQ~. Upon foreclosure or other
assertion of its security interest, a lender may further assign,
transfer, or dispose of its interests provided that any
subsequent assignee, purchaser or transferee shall remain bound
by each and every term of this lease agreement.
l2.3--Assiqnme~t to Affiliate. LESSEE may not enter into
any assignment, transfer, or any reorganization, sale of assets
or stock, merger, or acquisition whereby more than fifty percent
(50\) of the control of LESSEE is transferred to an entity other
than one in turn owned or in which LESSEE's owners have more
than fifty percent (50\) ownership or voting control without thp
prior written permission af CITY. The intent of this provision
is not to restrict LESSEE's ability to finance, re-finance or in
other ways expand its operations, but rather to prevent
responsibility for the operation and management of the facility
being transferred to some other party or entity without CITY's
consent which shall not be unreasonably withheld,
ARTICLE 13.--INOEMNIFICATION.
LESSEE agrees to defend, indemnify and hold CITY harmless
from any and all claims for damages. including personal injuries
and prop€cty damage arising out of or resulting from LESSEE's
use of the leased land or the use of the leased land by L~SSEE's
sub-lessees, agents or contractors or the public, except for
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Compensation Act, and warehouse and motOr vehicle insurance and
any other insurance required under any permit 0' tariff OF the
City of Seward, Alaska. The minimu. amounts and types of
insurance provided by LESSF.E shall be subject to revision 1n
accordance with standard insurance practices, in order to
provide continuously throughout the term of this agreement and
any extensions hereoE, a level of protection consonant with good
business practice and accepted standards in the industry. Such
factors as increases in the cost of living, inflationary
pressures, and other considerations, shall be utilized in
assessing whether the minimum insurance requirements should be
increased. CITY may notify LESSEE of any requested increase in
insurance coverages,
All insurance policies shall provide for thirty (30)
days' notice of cancellation and/or material change to be sent
to CITY at the address designated in ARTICLE 34 of this lease,
All such pOlicies shall be written by insurance companies
legally alltho,ized or licensed to do business in the State of
Alaska, and acceptable to CITY (Best's Rating B+ or better).
LESSEE shall furnish CITY, on forms supplied by CITY,
certificates evidencing that it has procured the insurance
required herein prior to the occupancy oE the leased land O(
operation by LESS~c. Nothing herein containen ~hall prevent
LESSEE or ~ITY from placing and maintaining at CITY's ar
'L~SSEE's own individual cost and expense, additional or other
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not, except for deductibles and/or damage to equipment and loss
of use thereof sustained through damages arising from the sole
negligence or willful acts or omissdons of CITY, its agents,
employees or contractors. LESSEE shall also name CITY as an
additional insured on the general liability insurance policy
maintained by LESSEE as (~quired above, excluding coverage for
claims resulting from CITY'R sole neQligence,
ARTICI,F. 15. hCONDEMNAT ION,
If all or any part of the leased land is condemned for a
public use by any government agency or other duly authorized
entity, CITY and LESSEE shall each make a claim aQainst the
condemning or taking authority for the amount of any damage
incurred by or done to them respectively as a result of the
taking. Neither LESSEE nor CITY shall have any rights in or to
any award made to the other by the condemning authority;
provided, that 1n the event of a single award to CITY which
includes specific damages for loss of LESSEE's leasehold
inte,est, CITY shall transmit to LESSEE the amount of such
specific damages so found, if any.
If part, but not all, of the leased land is condemned for
pUblic use LESSE~ shall make a good faith determination 8S to
whethec oc not the taking of the part of the leased land
designated for condemnation wlll prevent i~ from continuing to
operate on the leased land. If LESSEE determines in good faith
,~hat the condemning of such part of the leased land will prevent
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days after receipt of such notice the other party shall give
written notice to the first party specifying the name and
address of a person desiinated to s~~ve as an arbitrator on its
beha 1f '
If neither party has objected to the others designation
within fifteen (15) days of the notice by the second party of
its representative of an arhirrator, then the two chosen
arbitrators (called the "consent panel") shalL seLect a third
person agreeable to both to become the third member of the
consent panel. The consent panel may utilize informal
technique~ and hold informal hearing without reference ar
adherence to the rules or procedures of the American Arbitration
Association. Promptly and within thirty (30) days of concluding
any ~roceeding the consent panel shall render its written
decision. It is the intent of this subparagraph to provide for
a ~peedy and inexpensive resolution of disputes provided the
parties agree to such a procedure.
b) Formal Arbitration. If either party objects,
within fifteen (15) days of the second party's designation of an
arbitrator to the others choice of an arbitrator pursuant to
Paragraph (a) above, or the first party initially decides not to
use the consent pan€l procedure, then the matter shall be
pr0mptly referred to the Amerlcan Arbitration Associatian ln
accordance with the th~n existing rules of the Amertcan
'Arbitration Association.
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condition at all timc~ all fire, pOllution and other pratective
equipment.
CITY may ~eriodicallYI inspect the leased land and
facilities constructed thereon in order to ascertain the
condition of the public portion of the premises but the exercise
of this right shall not imply any obligation to do so nar any
obligation to do so in any particular way.
17.2--Safety !ssues, CTTY may notify LESSEE in
writing of any deficiencies in the performance of LESSEE's
maintenance responsibilities as they retate to public health or
safety and LESSE~ shall promptly within five (5) days of receipt
of such notice advise CITY in writing of its proposed schedule
for performance of any work necessary to cure such deficiencies.
tf such deficiencies relate to the safety of
LESSEE's operation such that the surrounding land and part
facilities are exposed to risk, unnecessary potential hazards,
or a risk to the public interest (as distinguished from a
business risk), O( if CITY is not satisfied with the praposed
sch~dute of repairs either because of the delays therein or the
scope of the repairs, then CITY may engage an independent
engineering consultant well-versed and experienced in bulk fuel
storage and sales facilities who shall furnish to CrT~ a
comprehensive survey and report for the purpQ~e of establishing
both the need and urgency to perform such maintenance work, As
'. soon as practicable fallowing receipt of said engineer's
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any amendment thereof, that the same is in full force and effect
as amended and stating the alllendment or amendments), that there
are no d~faults existing (or, if there is any claimed default,
stating the nature and extent thereof); and stating the dates to
which the rent and other charges have been paid in advance.
ARTICLE 19.--CONDITIONS AND COVENANTS,
All the provisions of this lease shall be deemed as
runnlng with the land, and shall be construed to be .condition~.
as well as .covp-nants", as though the wards specifically
expressing or imparting covenants and conditions were used in
each separate provision.
ARTIC!,F, 20.--NQ WAIVER OE' BREACH.
No failure by either CTTY or LESSEE to insist upan the
strict performance by the other of any term, covenant or
conditlon of this lease or to exercise any right or remedy
consequent upon a breach thereof, shall constitute a waiver of
any such breach or of such ter.ms, covenant or condition. No
waiver of any breach shall affect or alter this lease, but each
and every term, covenant and condition of this lease shall
continue in full force and effect with respect to any other then
existing or subsequent br@ach.
ARTICLE 21.--TTME OF ESSENCE.
Time is of the essence of this len!';E'! and of each
provision.
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relationship of principal and agent or of partnership or of
joint venture or of any association between CITY and LESSEE; and
neithet' the [oet:hod at: computation1of rent, nor any other
provisions contained in this lease nar any acts of the parties,
shall be deemed to create any relationship between CITY and
LESSEE other than the relationship of lessee and lessor.
ARTICLE 28 ,--INTERPRETATION.
The language in all parts of this lease shall in all
case~ be Simply construed according to its Eair meaning and not
for or against CITY or LESSEE as both CITY and LESSEE have had
th~ assistance of attorneys in drafting and reviewinq this lease.
AR'I'ICT.F. 29.--NUM8ER AND GENDER.
In this lease, the neuter gender includes the masculine
and thp- feminine, and the singular number includes the plural:
the word "person" includes corporation, partnership, firm or
association wherever the context so requires.
ARTICLF. 30.--MANDATORY AND PERMISSIVE.
"Shall", "will" and "agrees" are mandatory: "may. is
"ermissive.
ARTICLE 31.--CAPTIONS,
Captions of the paragraphs and subparagraphs of this
lease are for convenience and reference only, and the words
<::ontainE!d therein shall in no way be held to explain, mOdify,
ampl i fy or aid in the interpretation, construction or meaning of
the provision~ of this lease.
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IN WlTNESS WHEREOF, the parties hereto have set their
hands and seals the date first hereinbefore set forth.
"
CITY:
CITY OF SEWARD
BY:
City Manage-r
ATTEST:
City Cl@ck
LESSEE:
.
BY:
Its
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ,
POWELL & BRUNDIN
Attorneys for the
City of Seward
BY:
Fred 8. Arvidson
.
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