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Home My WebLink AboutRes2010-002 Sponsored by: Oates ittEw CITY OF SEWARD, ALASKA RESOLUTION 2010 -002 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: 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 Drydock, Inc. in substantially the form as presented at this meeting to extend the maximum permissible Lease Term extensions described in Section 2.04 of the Ground Lease to June 30, 2040. Section 2. The recitals above are incorporated herein by reference. Section 3. 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 11 day of January, 2010. THE CITY OF SEWARD, ALASKA "Olf yi 6/ Willard E. Dunham, Mayor j AYES: Bardarson, Smith, Keil, Shafer, Amberg, Dunham NOES: None ABSENT: Valdatta ABSTAIN: None ATTEST: ( I Je. ( Lewis,' Ci Clerk (City Seal) . Of S E Pkg 1 %% •., mo d.... ...• .. *. III • • • �r 0 gsv • ., OF � a • �.. COUNCIL AGENDA STATEMENT se fi ,,r•it,A Meeting Date: January 11, 2010 From: Phillip Oates, City Manager qt quo Subject: Seward Ship'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 funds (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 - QDaauthorizing the City Manager to enter into Ground Lease Amendment No. 4 with Seward Ship's Drydock, Inc. 30 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. 31. (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. Rem 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- of the City. City: Lessee: CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. �/ Phillip Oates fames T. Pruitt City Manager President ATTEST: Jean Lewis, CMC City Clerk 32 STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of , 2010 by Phillip Oates, City Manager of the City of Seward an Alaska corporation, on behalf of the corporation. Notary in and for Alaska My commission expires: STATE OF ALASKA ) THIRD JUDICIAL DISTRICT ) /Pb The foregoing instrument was acknowledged before me this,R /�tday of W , 201CF by James Pruitt, President of Seward Ship's Drydock, Inc., an Alaska corporation, on behalf of the corporation. s jniCkilb ( 4/7 ,,� -�= <° .. Notary in and for Alaska \ ''' ;' My commission expires: / 2 `�d (}�� r4 NOTARY ` p 11 * P1USLUC * 1 r OF 0- 33