HomeMy WebLinkAboutRes2020-064 Sponsored by: Meszaros
Public Hearing: August 24,2020
CITY OF SEWARD,ALASKA
RESOLUTION 2020-064
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
NEW LEASE WITH JOSEPH TOUGAS FOR LOT 4, BLOCK 3, FOURTH
OF JULY CREEK SUBDIVISION, SEWARD MARINE INDUSTRIAL
CENTER, KENAI PENINSULA BOROUGH, PLAT NO. 97-27 SEWARD
RECORDING DISTRICT, THIRD JUDICIAL DISTRICT, STATE OF
ALASKA
WHEREAS, the City is owner of certain real property known as Lot 4, Block 3, Fourth
of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough, as
shown on Plat 97-27, Seward Recording District, Third Judicial District, State of Alaska (the
"Property"); and
WHEREAS, the Property is currently unoccupied, and is at Seward Marine Industrial
Center(SMIC); and
WHEREAS,Joseph Tougas submitted a proposal to lease the Property from the City for
purposes of operating a boat repair yard and equipment storage; and
WHEREAS,the lease request is consistent with the Comprehensive Plan and the Seward
Marine Industrial Center Plan.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD,ALASKA that:
Section 1. The City Manager is hereby authorized to execute a new lease with Joseph
Tougas in substantially the form as presented at this meeting.
Section 2. The Seward City Council has determined that the essential terms and
conditions of the proposed lease with Joseph Tougas for the real Property, and the method of
disposition by lease, are in the public's interest.
Section 3.This resolution shall take effect thirty(30)days upon approval.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
24th day of August, 2020.
CITY OF SEWARD, ALASKA
RESOLUTION 2020-064
T CI SEWARD, ALASKA
Christy Terr , Mayor
AYES: Osenga, McClure, Crites, Seese, Baclaan, Terry
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
renda J. alio
City Clerk
(City See.t 02.F 4V'•,
.e6C IA 0
• SEAL '
OF � .
.ti•.r. A�P ��
LEASE AGREEMENT
between
CITY OF SEWARD, ALASKA
and
Joseph Tougas
Lot 4, Block 3
SMIC
Effective Date: [
00961686.DOC
27
TABLE OF CONTENTS
ARTICLE 1 -LEASED LAND.................................................................................................... 1
1.1 Description of Leased Land.................................................................................... 1
1.2 Covenant of Quiet Enjoyment; Warranty of Title................................................... 1
1.3 Property Accepted................................................................................................... 1
1.4 Permits.................................................................................................................... 2
1.5 Platting.................................................................................................................... 2
1.6 Development of Leased Land.................................................................................. 2
ARTICLE 2 -LEASE TERM...................................................................................................... 3
2.1 Lease Term.............................................................................................................. 3
ARTICLE 3 -RENTAL RATE ................................................................................................... 3
3.1 Initial Rental Rate................................................................................................... 3
3.2 Rental Adjustments.................................................................................................. 3
3.3 Procedure for Rental Adjustment............................................................................ 3
3.4 Effect of Late Appraisal by CITY............................................................................ 4
3.5 Appraisal by LESSEE............................................................................................. 4
3.6 Effective Date of Adjusted Rental Rate................................................................... 5
3.7 Interim Rental Adjustments..................................................................................... 5
3.8 Late Payment Charge ............................................................................................. 5
ARTICLE 4 -USE OF LEASED LAND .................................................................................... 5
4.1 Use of Leased Land................................................................................................. 5
4.2 Obligations of LESSEE........................................................................................... 6
4.3 No Preferential Rights to Use Public Facilities ..................................................... 6
4.4 Adequacy of Public Facilities................................................................................. 6
4.5 Tariffs and Other Service Fees............................................................................... 6
4.6 Time for Payment of Utilities and Taxes................................................................. 6
4.7 Other Uses .............................................................................................................. 6
4.8 Use of Public Docks and Port Facilities................................................................. 7
ARTICLE 5 -UTILITIES AND RIGHTS OF ACCESS.......................................................... 7
5.1 Utilities.................................................................................................................... 7
5.2 Third-Party Improvements...................................................................................... 7
5.3 Easements ............................................................................................................... 8
ARTICLE 6 - CONSTRUCTION BY LESSEE......................................................................... 8
6.1 Improvements on Leased Land............................................................................... 8
6.2 City Review of Construction ................................................................................... 9
ARTICLE 7 -RETURN OF LEASED LAND/SITE CONDITIONS...................................... 9
7.1 Return of Leased Land in Original Condition...................................................... 10
ARTICLE 8 -FORCE MAJEURE ........................................................................................... 10
ARTICLE 9 -LESSEE'S ACTS OF DEFAULT..................................................................... 10
ARTICLE 10 -REMEDIES FOR DEFAULT BY LESSEE .................................................. 11
ARTICLE 11 - TITLE TO IMPROVEMENTS INSTALLED BY LESSEE ....................... 13
11.1 Real Property Improvements ................................................................................ 13
00961686.DOC i
28
11.2 Personal Property................................................................................................. 13
ARTICLE 12 -ASSIGNMENT OR SUBLEASE.................................................................... 13
12.1 Assignment of Lease or Subleasing....................................................................... 13
12.2 Assignment of Lease for Security.......................................................................... 13
12.3 Assignment to Affiliate.......................................................................................... 14
ARTICLE 13 -LESSEE'S DUTY TO DEFEND/INDEMNIFY............................................ 14
ARTICLE 14 - CITY'S DUTY TO DEFEND/INDEMNIFY ................................................. 14
ARTICLE 15 -INSURANCE .................................................................................................... 14
15.1 Minimum Insurance Requirements ....................................................................... 14
15.2 Subrogation Rights Waived................................................................................... 15
ARTICLE 16 - CONDEMNATION.......................................................................................... 16
ARTICLE 17 -ARBITRATION ............................................................................................... 16
17.1 Arbitration ............................................................................................................ 16
ARTICLE 18 -MAINTENANCE AND REPAIRS................................................................. 17
18.1 Normal Maintenance ............................................................................................ 17
18.2 Safety Issues.......................................................................................................... 18
18.3 Cost of Repairs...................................................................................................... 18
ARTICLE 19 -ENVIRONMENTAL CONCERNS................................................................ 18
19.1 Hazardous Materials ............................................................................................ 18
19.2 Permits and Reporting.......................................................................................... 21
ARTICLE 20 -ESTOPPEL CERTIFICATES........................................................................ 21
ARTICLE 21 - CONDITIONS AND COVENANTS .............................................................. 21
ARTICLE 22 -NO WAIVER OF BREACH ........................................................................... 21
ARTICLE 23 - TIME OF THE ESSENCE.............................................................................. 21
ARTICLE 24 - COMPUTATION OF TIME........................................................................... 22
ARTICLE 25 - SUCCESSORS IN INTEREST....................................................................... 22
ARTICLE 26 -ENTIRE AGREEMENT ................................................................................. 22
ARTICLE 27 - GOVERNING LAW ........................................................................................ 22
ARTICLE 28 -PARTIAL INVALIDITY................................................................................. 22
ARTICLE 29 -RELATIONSHIP OF PARTIES .................................................................... 22
ARTICLE 30 -INTERPRETATION........................................................................................ 22
ARTICLE 31 - CAPTIONS ....................................................................................................... 23
ARTICLE 32 -AMENDMENT................................................................................................. 23
ARTICLE 33 -NOTICES.......................................................................................................... 23
ARTICLE 34 -FIRE PROTECTION FOR LEASED LAND IN SMIC............................... 23
00961686.DOC 11
29
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "LEASE") is made by and between the CITY OF
SEWARD (the"CITY"),a municipal corporation located in the Kenai Peninsula Borough,State of
Alaska, whose mailing address is P.O. Box 167, Seward, Alaska 99664 and Joseph Tougas (the
"LESSEE"), whose mailing address is P.O. Box 825, Seward, Alaska 99664.
WHEREAS,LESSEE has indicated its desire to lease the property known as Lot 4,Block 3,
Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough as
shown on Plat 97-27, Seward Recording District,Third Judicial District, State of Alaska,consisting
of approximately 13,521 square feet, more or less; and
WHEREAS, the City Council of CITY has determined that lease of the Leased Land (as
defined below) to LESSEE for the purposes described herein would be in the public interest; and
WHEREAS, it is the intent of this LEASE to transfer from CITY to LESSEE the entire
burden of compliance with environmental regulations or controls with respect to LESSEE's
operations on the Leased Land.
NOW THEREFORE, for and in consideration of the mutual promises and covenants
hereinafter contained, the parties hereto agree as follows:
ARTICLE 1 -LEASED LAND
1.1 Description of Leased Land. The Leased Land is located in the City of Seward,Alaska. The
Leased Land is described as follows:
Lot 4,Block 3, Fourth of July Creek Subdivision, Seward Marine Industrial Center,
Kenai Peninsula Borough,as shown on Plat 97-27, Seward Recording District,Third
Judicial District, State of Alaska, consisting of approximately 13,521 square feet,
more or less (the "Leased Land").
The Leased Land is also depicted on the attached Exhibit B,which is incorporated herein by
reference.
1.2 Covenant of Quiet Enjoyment; Warranty of Title. Subject to the encumbrances as of the date
hereof,any reasonable restrictions imposed on the Leased Land as part of recording of a plat
by CITY, and the provisions of this LEASE, CITY hereby covenants and warrants that
LESSEE shall have the quiet enjoyment and possession of the Leased Land for the full term
of this LEASE.
1.3 Property Accepted "As-is." LESSEE acknowledges that it has inspected the Leased Land
and accepts the same "as-is" and without reliance on any expressed or implied
representations or warranties of CITY(other than the representations in Section 1.2 hereof),
00961686.DOC 1
30
or agents of CITY,as to the actual physical condition or characteristics thereof and the legal
description or depiction of the Leased Land in Section 1.1 or Exhibit A hereto.
1.4 Permits. LESSEE, at its sole cost, shall obtain all permits necessary to the construction and
operation of its facilities on the Leased Land. CITY may from time to time,upon request of
LESSEE, execute such documents, petitions, applications, and authorizations as may be
necessary, as the underlying fee owner, to file with an agency or public body responsible
therefor an application for conditional use permits,zoning and re-zoning,tentative and final
tract approval, or precise plan approval that may be required for the lawful construction and
operation of the facilities of LESSEE permitted on the Leased Land by the terms of this
LEASE. However,nothing in this Section shall be construed as requiring CITY to support or
approve any such application or permit requests. If the agency or public body responsible to
approve or grant such application or permit request is a City of Seward agency, department,
or board, LESSEE shall follow all City of Seward procedures, the same as any other
applicant making similar requests of the City of Seward, according to the Charter,
ordinances, resolutions, or any regulation, rules, or procedures of the City of Seward.
Nothing in this Section imposes any duty or responsibility on CITY to assist LESSEE in
obtaining any other permits or approvals,including without limitation those required by the
U.S. Army Corps of Engineers (e.g., wetland fill permits), the Environmental Protection
Agency (e.g., Clean Air Act permits), the Alaska Department of Public Facilities and
Transportation (e.g., right-of-way permits), the Alaska Department of Fish and Game, and
the Alaska Department of Environmental Conservation.
1.5 Platting. If LESSEE requests a replat of the Leased Land, CITY shall assist LESSEE in the
preparation and filing of the replat, and LESSEE shall reimburse CITY for CITY's costs in
assisting with the preparation and filing of the replat. In the event CITY elects to replat,
LESSEE agrees to sign the plat and any other documents necessary to complete the platting
or replatting of any area including all or a portion of the Leased Land. LESSEE shall accept
reasonable restrictions, easements, or plat notes as may be required by CITY or other
governmental authorities as a condition to filing the plat of the Leased Land or the plat of
CITY-owned real property adjacent to the Leased Land.
1.6 Development of Leased Land. LESSEE shall operate vessel work yard and an equipment
storage yard and uses necessary and incidental thereto on the Leased Land through the term
of the lease. LESSEE understands that construction and operations of its marine-related
business is a major consideration for the CITY's agreement to lease the Leased Land to
LESSEE.LESSEE shall not operate any other unrelated business on the Leased Land without
the written consent of the CITY.
a) CITY may withhold its consent as to any proposed business or activity which, in
CITY's sole discretion, is not desirable or compatible with the CITY's operation of
the Seward Marine Industrial Center.
b) In accordance with the provisions of Article 12,no assignment or sublease shall be
permitted, unless approved in writing by CITY. Any sublease shall be expressly
00961686.DOC 2
31
subject and subordinate to this Lease and the rights of the CITY hereunder. The
CITY may elect to not approve any proposed assignment or sublease that might result
in a business or activity that, in the CITY's sole discretion, is undesirable and/or
incompatible with the CITY's Seward Marine Industrial Center.
ARTICLE 2 -LEASE TERM
2.1 Lease Term. The term of this LEASE(the"Lease Term")shall be in accordance with CITY's
authorization in Resolution No. 2020- (the "Resolution"). The Lease Term shall
commence on the date this LEASE is signed by CITY and that date shall be the effective date
of this LEASE(the"Effective Date"). The Lease Term shall run for approximately twenty
(20) years from the Effective Date, ending at midnight on September 22, 2040. LESSEE
shall have the right to extend the term of this LEASE for two (2) additional five-year (5)
periods, provided that:
a) LESSEE exercises its option to extend at least one hundred eighty(180)days prior to
the expiration of the then current lease term;
b) LESSEE is not in default under any term or provision of this LEASE; and
c) LESSEE shall exercise its options to extend by sending written notice in accordance
with the provisions of Article 33 of this LEASE.
ARTICLE 3 -RENTAL RATE
3.1 Initial Rental Rate. Commencing on the Effective Date of this LEASE through June 30,
2021, the annual rental rate for the Leased Land shall be set at $2,800.00. Rent shall be
payable quarterly in advance upon the Effective Date of this Lease(prorated for the balance
of the current quarter)and thereafter on or before the 20th day of the month beginning each
calendar quarter: January 20, April 20, July 20 and October 20. The amount of each
quarterly payment shall be one-quarter(1/4)of the annual rental rate as initially established
or later adjusted under this Article 3.
3.2 Rental Adjustments. The annual rental payment shall be adjusted on July 1,2025,and on the
same date every five (5)years thereafter(each a"Rental Adjustment Date"). The adjusted
annual rental payment to be paid under the terms of this Lease shall be the appraised fair
market rental value(the"Fair Market Rental Value") of the Leased Land at the highest and
best use of the Leased Land. The highest and best use of the Leased Land shall be
determined without regard to LESSEE's intended or actual use of the Leased Land unless
that use is coincidentally the highest and best use of the Leased Land. CITY shall complete
such appraisal and deliver a copy of the appraisal report to LESSEE not less than ninety(90)
days before each Rental Adjustment Date.
3.3 Procedure for Rental Adjustment. To adjust the rent as of any successive Rental Adjustment
Date, CITY shall, at its own expense, retain an independent State of Alaska certified MAI
00961686.DOC 3
32
appraiser(Member,Appraisal Institute),who shall determine the"Fair Market Rental Value"
of the Leased Land in accordance with this Article 3, exclusive of improvements placed
thereon by LESSEE but inclusive of all improvements made by CITY(including those made
before or subsequent to this LEASE). The appraiser's report shall be delivered to LESSEE
not less than ninety (90) days before the Rental Adjustment Date. The appraiser's
determination of Fair Market Rental Value of the Leased Land shall constitute a final binding
determination of the Fair Market Rental Value and the adjusted annual rental rate until the
next Rental Adjustment Date,unless LESSEE objects to CITY's appraiser's determination of
the Fair Market Rental Value. In that case,LESSEE shall give written notice to CITY of its
objection within thirty(30)days of receipt of the appraiser's report, and LESSEE shall then
engage an independent State of Alaska certified MAI appraiser(Member,Appraisal Institute)
at LESSEE's expense to make an appraisal of the Fair Market Rental Value in accordance
with this Article 3.
If LESSEE's appraisal determines a Fair Market Rental Value that varies from that
determined by CITY's appraisal by no more than twenty percent (20%), then the adjusted
rental rate shall be the average of the rental rates determined by the two (2) appraisals. If
LESSEE's appraisal determines a Fair Market Rental Value that varies from CITY's
appraisal by more than twenty percent(20%),then,unless CITY and LESSEE agree on a rate
themselves, the adjusted annual rental rate of the Leased Land shall be determined in
accordance with the arbitration provisions contained in Article 17 of this LEASE.
3.4 Effect of Late Appraisal by CITY. If, for any reason, CITY does not complete the appraisal
or deliver a copy of the appraisal report to LESSEE ninety (90) days before the Rental
Adjustment Date, CITY may proceed to complete the appraisal or deliver a copy of the
appraisal report to LESSEE at any time thereafter. However,any such adjusted annual rental
rate shall not be effective until the quarterly payment due date immediately following the
date CITY delivers the appraisal report to LESSEE.
3.5 Appraisal by LESSEE. If,for any particular Rental Adjustment Date,CITY fails to obtain an
appraisal of the Fair Market Rental Value or fails to deliver the appraisal report to the
LESSEE by the Rental Adjustment Date, LESSEE may engage an independent State of
Alaska certified MAI appraiser(Member,Appraisal Institute)at LESSEE's expense to make
an appraisal under the terms of this Article 3 and submit a copy to CITY before the next
quarterly rental payment due date. However, LESSEE must notify CITY in writing within
thirty (30) days following the Rental Adjustment Date of LESSEE's election to obtain an
appraisal. If CITY objects to LESSEE's appraiser's determination of the Fair Market Rental
Value, CITY shall give written notice to LESSEE of its objection within thirty(30)days of
receipt of the appraiser's report,and CITY shall then engage an independent State of Alaska
certified MAI appraiser (Member, Appraisal Institute) at CITY's expense to make an
appraisal of the Fair Market Rental Value as of the Rental Adjustment Date and in
accordance with this Article 3. If the CITY's appraisal determines a Fair Market Rental
Value that varies from that determined by LESSEE's appraisal by no more than twenty
percent(20%),then the adjusted rental rate shall be the average of the rental rates determined
by the two appraisals. If the CITY's appraisal determines a Fair Market Rental Value that
00961686.DOC 4
33
varies from LESSEE's appraisal by more than twenty percent(20%),then,unless CITY and
LESSEE agree on a rate themselves,the adjusted annual rental rate of the Leased Land shall
be determined in accordance with the arbitration provisions contained in Article 17 of this
LEASE.
3.6 Effective Date of Adjusted Rental Rate. The adjusted annual rental rate established by this
Article 3 shall apply as of the Rental Adjustment Date if CITY provided a copy of the
appraisal report to LESSEE no later than ninety(90)days before the Rental Adjustment Date.
If the adjusted annual rental rate is based on CITY's late appraisal or late delivery of the
appraisal report to LESSEE, the adjusted rental rate shall be effective beginning with the
quarterly rental payment due date immediately following the date the CITY delivers the
appraisal report to LESSEE. Notwithstanding the above, the exercise by either CITY or
LESSEE of the objection procedure relating to rental adjustment described in this Article 3
shall not postpone LESSEE's obligation to pay rent at the rate established by CITY.
LESSEE shall pay the amount of rent as established or adjusted by CITY until the question
of objection to the rental rate is finally resolved. At such time the objection to the rental rate
is resolved,an appropriate credit or adjustment shall be made retroactive to the date the new
rental rate was established by CITY or in cases where CITY failed to obtain an appraisal or
deliver the appraisal report to the LESSEE, to the Rental Adjustment Date.
3.7 Interim Rental Adjustments. For each year in the period between each Rental Adjustment
Date, excepting the Rental Adjustment Dates, the annual rental payment shall be increased
beginning July 1, 2021, and on July 1 of every year thereafter (each on "Interim Rental
Adjustment Date")in an amount that reflects the increase,if any,in the cost of living for the
previous year as stated in the Consumer Price Index, All Urban Consumers, Anchorage,
Alaska Area,All Items 1967=100("CPI"),as published by the United States Department of
Labor,Bureau of Labor Statistics for the most recent period published immediately prior to
the Interim Rental Adjustment Date. In no event shall the rent be less than the previous year.
If the CPI is revised or ceases to be published, the CITY shall instead use such revised or
other index as most nearly approximates the CPI for the relevant period,and make whatever
adjustment in its application as may be necessary, in the CITY's sole discretion, to
accomplished as nearly the same result as if the CPI had not been revised or ceased to be
published.
3.8 Late Payment Charge. Rental payments not received by the due date shall bear interest until
paid at a rate of 10.5% per annum, or the maximum rate permitted under Alaska law,
whichever is less,plus a flat monthly late fee of$2.50,or such amount as may be established
from time to time by CITY ordinance or resolution and relating to late fees for CITY leases
generally.
ARTICLE 4 -USE OF LEASED LAND
4.1 Use of Leased Land. CITY has limited land available for lease. Use of the Leased Land by
LESSEE has been determined by the City Council of CITY to be in the public interest.
LESSEE may use the Leased Land for Boat repair work and equipment storage yard.
00961686.DOC 5
34
4.2 Obligations of LESSEE. LESSEE may use the Leased Land only in accordance with
applicable CITY zoning code provisions and provided the following conditions are met:
a) The Leased Land is to be completely cleaned and restored to its original condition,
that is, the condition existing prior to this LEASE or in better condition upon
termination of this LEASE.
b) LESSEE agrees to prohibit the use, keeping, storage, or disposal of Hazardous
Materials on the Leased Land except as permitted in Article 19 of this LEASE.
c) LESSEE shall not use the Leased Land in any manner or construct any facilities
thereon which would inhibit the use of adjacent or other lands.
d) LESSEE shall operate a boat repair and equipment storage facility on the Leased
Land.
e) Any changes to this site require prior CITY approval, through the City Manager.
4.3 No Preferential Rights to Use Public Facilities. This LEASE does not grant to LESSEE any
exclusive rights to use any public port facilities constructed or operated by CITY. LESSEE
will be subject to any tariffs,procedures,rules, and regulations of CITY concerning the use
of such facilities as they may now exist or from time to time be amended,and LESSEE shall
not be entitled to any exclusive use.
4.4 Adequacy of Public Facilities. CITY makes no representations or warranties as to the fitness
of any particular part or the whole of CITY's public facilities for the uses intended by
LESSEE,and LESSEE has inspected those facilities and has satisfied itself that the facilities
are sufficient for the intended uses by LESSEE. CITY makes no representations or
warranties of any nature with respect to the commercial practicability or accuracy of any
information provided by CITY.
4.5 Tariffs and Other Service Fees. CITY shall 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 impose any greater burden or higher rate upon LESSEE than
upon any other similar user of the public facilities.
4.6 Time for Payment of Utilities and Taxes. LESSEE will pay for utilities and taxes related to
operations on the Leased Land and LESSEE's interest in this LEASE and improvements
thereon, if any,before such obligations become delinquent; provided that LESSEE may, in
good faith and before such delinquency, contest any such charge or assessment.
4.7 Other Uses. This LEASE shall not preclude the CITY from actively seeking other and
additional tenants for space, including those who would be in competition with LESSEE or
00961686.DOC 6
35
who might be interested in leasing the Leased Land should this LEASE be terminated for any
reason.
4.8 Use of Public Docks and Port Facilities. Public docks are subject to port and harbor rules
and regulations as adopted by City Council.
ARTICLE 5 -UTILITIES AND RIGHTS OF ACCESS
5.1 Utilities. LESSEE, at LESSEE's sole cost and expense, shall provide for the extension of
public utilities to the Leased Land sufficient for LESSEE's intended operations. In so doing,
LESSEE shall comply with all CITY regulations and requirements, and the tariffs of the
affected utilities,with respect to the construction of those utilities. CITY agrees to cooperate
and assist the LESSEE, through consultation and review, in LESSEE's planning and
engineering of those improvements. All utilities will be located and sized in accordance to
CITY's Master Plan for the area leased. All such construction shall be in compliance with all
applicable building,mechanical and fire codes. Utilities constructed by the LESSEE within
the public right-of-ways or within public utility easements will normally be accepted and
maintained by CITY or utility companies may be used to serve other customers of LESSEE's
without payment of fees or reimbursement of construction cost to the LESSEE. However,
this does not preclude several lessees from agreeing to share the cost of constructing a utility
to serve their facilities. CITY or other utility company may determine that it would be to
their benefit to oversize the utility or install special fittings or equipment in order to serve
other existing or future users. The additional direct costs of such oversizing shall be borne
by CITY or other utility company. Such costs shall be limited to the supplier's cost of the
additional fittings,equipment,direct labor,and equipment costs to complete the installation.
The costs of oversizing pipe or electrical conduit shall be limited to the difference between
the supplier's price to provide the size required to serve its facility and the price of the
oversized material required by CITY or utility company.
LESSEE shall not be entitled to any refund, rebate, or payments from CITY for any rent,
investment, or costs incurred by LESSEE with respect to any required permits for
construction or operation of LESSEE's facilities on the Leased Land, it being the intent of
the parties that the risk of obtaining required permits be solely a risk undertaken by LESSEE.
5.2 Third-Party Improvements. At the request of LESSEE, CITY shall, from time to time,
execute and deliver,or j oin in execution and delivery of,such documents as are appropriate,
necessary, or required to impose upon the Leased Land in accordance with the terms of this
LEASE covenants, conditions, and restrictions providing for the granting of uses of the
Leased Land, or any part thereof, the establishment of party walls, the establishment of
mutual and reciprocal parking rights or rights of ingress or egress, or other like matters
(herein called "third-party improvements'), 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:
00961686.DOC 7
36
a) All such matters shall be limited to the Lease Term and shall terminate upon
termination of this LEASE for whatever reason.
b) Any such matters of a permanent nature extending beyond the Lease Term shall not
be granted without the prior written approval of CITY. In any of the foregoing
instances referred to in this Section,CITY shall be without expense therefor,and the
cost and expense thereof shall be borne solely by LESSEE.
C) At the expiration of the Lease Term (including any extended period) third-party
improvements on the Leased Land other than portable equipment shall become the
property of CITY without the payment of any compensation to LESSEE.
5.3 Easements. In order to provide for the orderly development of the Leased Land and adjacent
lands,it may be necessary,desirable,or required that street,railroad,water,sewer,drainage,
gas, power line, and other easements and dedications and similar rights be granted or
dedicated over or within portions of the Leased Land. As additional consideration for this
LEASE, CITY and LESSEE each shall, at the request of the other,join with each other in
executing and delivering such documents from time to time and throughout the Lease Term
as may be appropriate, necessary, or required by the several governmental agencies
(including the City of Seward),public utilities, and other users or tenants of CITY land for
the purpose of granting such easements and dedications; provided, however, that such
easements and dedications and similar rights do not unreasonably interfere with LESSEE's
operations. The costs of locating or relocating any public easements or restrictions of record
including any relocation of public road, railroad, utility, or other easements shall be at the
sole cost and expense of the party requesting the relocation. CITY shall not refuse
reasonable requests for such relocations provided those relocations do not interfere with or
inhibit the overall development of CITY property or other public property. Any easements or
rights of access granted to LESSEE by CITY need not be exclusive to LESSEE.
ARTICLE 6 - CONSTRUCTION BY LESSEE
6.1 Improvements on Leased Land. LESSEE shall have the right to erect, maintain, alter,
remodel,reconstruct,rebuild,build,and/or replace buildings and other improvements on the
Leased Land, subject to the following conditions:
a) The cost of any construction, reconstruction, demolition, 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 mechanic's and materialmen's
liens.
C) LESSEE shall provide CITY with a copy of all building plans and specifications and
a site development plan or plans(based on a recent survey)for the Leased Land prior
to commencement of construction.
00961686.DOC g
37
d) LESSEE is solely responsible for resurveying and locating improvements on the
Leased Land in such manner not to violate building setback requirements or encroach
into right-of-ways or easements. On completion of any improvements,LESSEE shall
provide CITY a copy of an as-built survey depicting the improvements as completed
on the Leased Land.
e) Any general contractor employed by LESSEE shall be appropriately bonded by use of
performance and labor and material payment bonds in the customary form when cost
of the work is equal to or exceeds FIFTY THOUSAND DOLLARS ($50,000).
Copies of all such bonds shall be furnished to CITY prior to commencement of
construction. If the cost of the work is less than FIFTY THOUSAND DOLLARS
($50,000), LESSEE shall provide CITY, if no performance and labor and material
bonds are provided by LESSEE, any necessary assurances or guarantees that the
contemplated work will be performed by the general contractor or by LESSEE. In
the event that LESSEE elects to construct the facility with its own personnel and
equipment, or the personnel and equipment of any corporation or person that is an
"affiliate" of LESSEE as such term is defined in AS 10.06.990(2) or Alaska limited
liability company in which LESSEE maintains a substantial membership interest, a
performance bond shall be required when the cost of the work is equal to or exceeds
FIFTY THOUSAND DOLLARS ($50,000).
f) CITY may,as contemplated by Alaska Statutes,give notice of non-responsibility for
any improvements constructed or effected by LESSEE on the Leased Land.
g) LESSEE shall comply with all federal, state, and local statutes and regulations with
respect to such construction, including, but not limited to, all applicable building,
mechanical, and fire codes.
6.2 City Review of Construction. CITY shall have the right to review initial plans, including
those supplied to CITY under Section 6.1 hereof, and any future changes or additions to
LESSEE's facilities on the Leased Land, by reviewing the design thereof prior to the
commencement of construction. CITY shall have the right to comment upon that design and
to require LESSEE to make reasonable changes so as to avoid interference with public
operations, but the exercise of these rights shall not imply any obligation to do so nor any
obligation to do so in a particular way. LESSEE shall construct the facility in accordance
with final design specifications approved by CITY. CITY's representatives may monitor the
work and shall have access to the site at all reasonable times. LESSEE shall be solely
responsible for completing all improvements according to LESSEE's plans and
specifications and shall bear all risk, responsibility, and liability for properly surveying the
Leased Land before construction and to place all improvements on the Leased Land without
encroaching upon any land, easements, right-of-ways, or setback requirements. LESSEE
shall obtain the usual and customary performance guarantees from its contractors,and CITY
shall be named as an additional insured.
ARTICLE 7 -RETURN OF LEASED LAND/SITE CONDITIONS
00961686.DOC 9
38
7.1 Return of Leased Land in Original Condition. Subject to the provisions of Article 11.1
herein, upon termination of this LEASE for any reason, LESSEE shall return the Leased
Land to CITY in the same condition as at the commencement this LEASE,subject to normal,
non-abusive use. The Leased Land shall be free of all Hazardous Materials and
contamination arising out of or resulting from or occurring during LESSEE's operations or
use of the Leased Land during this LEASE.
ARTICLE 8 -FORCE MAJEURE
Except as to the acts of default enumerated in Article 9, Sections 9.1-9.2 and 9.4-9.6,in the
event either LESSEE or CITY is delayed from performance of any of its obligations under this
LEASE, due to acts of nature, acts of the enemies of the United States of America, sabotage,
blockade,insurrection,riot,fire,flood,explosion,earthquake/tsunami,civil disturbance,or war,and
which are not due to the fault or neglect of any such party and beyond its reasonable control,the time
period wherein such performance is to occur shall be extended by that amount of time necessary to
compensate for the delay. Prior to claiming relief under this Article,the party claiming the benefits
of this Article shall,within five(5)days after the occurrence of the force maj eure event upon which
it relies,give written notice to the other party stating its intention to claim the benefits of this section
and shall state the reason or reasons for such claim. The failure to provide such notice will constitute
a waiver of the right to claim the benefits provided by this clause.No party shall be permitted to rely
upon this Article to avoid any obligations under the LEASE on account of the novel coronavirus
(COVID-19)or any impacts relating to COVID-19,or any similar epidemic or pandemic,it being the
parties understanding that such a pandemic or epidemic is reasonably foreseeable. This Article shall
not be used to excuse the LESSEE's obligation to pay rent or additional rent due under this LEASE.
ARTICLE 9 -LESSEE'S ACTS OF DEFAULT
Each of the following shall be a"LESSEE Act of Default"under this LEASE and the terms
"acts of default" and"default"" shall mean,whenever they are used in this LEASE,any one or more
of the following events:
9.1 Failure by LESSEE to pay promptly when due, and in no event later than twenty (20) days
from the due date thereof, the rent required to be paid under this LEASE.
9.2 Failure by LESSEE to comply with Section 4.1 of this LEASE.
9.3 Failure by LESSEE to observe, fulfill or perform any covenants, conditions, or agreements
on its part to be observed or performed under this LEASE, other than payment of rent or
compliance with Section 4.1, for a period of thirty (30) days after written notice specifying
such failure,requesting that it be remedied, and stating that it is 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 of default if corrective
00961686.DOC
10 39
action is instituted by LESSEE within the applicable period and diligently pursued until the
default is corrected.
9.4 The making by LESSEE of an assignment for the benefit of creditors,the filing of a petition
in bankruptcy by LESSEE,the adjudication of LESSEE as insolvent or bankrupt,the petition
or application by LESSEE to any tribunal for any receiver or any trustee for itself or for any
substantial part of its property;or the commencement of any proceeding relating to LESSEE
under any bankruptcy,insolvency,reorganization,arrangement,or readjustment of debt law
or statute or similar law or statute of any jurisdiction, whether now or hereafter in effect
which shall remain undismissed for a period of six (6) months from the date of
commencement thereof.
9.5 Violation by LESSEE of any laws or regulations of the United States, or of the State of
Alaska,or any conditions of any permits issued by agencies of the City of Seward,the Kenai
Peninsula Borough, the State of Alaska, or of the United States Government applicable to
LESSEE's use of the Leased Land,pursuant to the regulations of such agencies,for a period
of sixty(60)days after written notice specifying such violation has been given by the agency
charged with the enforcement of such laws, regulations, or permits to LESSEE; provided,
however,if such violation be such that it cannot be corrected within the applicable period,it
shall not constitute an act of default if corrective action is instituted by LESSEE within the
applicable period and diligently pursued until the violation is corrected. Furthermore, if
LESSEE shall contest such alleged violation through appropriate judicial or administrative
channels, the time period specified herein shall not commence until such proceedings are
finally determined provided such proceedings are diligently pursued;provided,however,that
any such extension of time shall not be effective if the effect of the interim administrative or
judicial action is to cause a stoppage,interruption,or threat to the activities of any person or
entity other than those of LESSEE.
9.6 Failure of LESSEE to maintain its operations within the Leased Land or to keep the public
rights of way clear.
ARTICLE 10 -REMEDIES FOR DEFAULT BY LESSEE
Whenever an 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 following rights
and remedies all in addition to any rights and remedies that may be given to CITY by statute,
common law, or otherwise:
10.1 CITY may distrain for rent due any of LESSEE's personal property which comes into
CITY's possession. This remedy shall include the right of CITY to dispose of personal
property distrained in any commercially reasonable manner. It shall be conclusively
presumed that compliance with the procedures set forth in the Alaska Uniform Commercial
Code (AS 45.29.601-.628) with respect to sale of property shall be a commercially
reasonable disposal.
00961686.DOC
11 40
10.2 CITY may re-enter the Leased Land and take possession thereof and,except for any personal
property of LESSEE which CITY has waived its right to distrain under Section 10.1 above,
remove all personal property of LESSEE from the Leased Land. Such personal property may
be stored in place or may be removed and stored in a public warehouse or elsewhere at the
cost of LESSEE all without service of notice or resort to legal process,all of which LESSEE
expressly waives.
10.3 In addition to the above, CITY may:
a) Declare this LEASE terminated;
b) Collect any and all rents due or to become due from subtenants or other occupants of
the Leased Land;
c) Recover from LESSEE, whether this LEASE be terminated or not, reasonable
attorney's fees and all other expenses incurred by CITY by reason of the breach or
default by LESSEE;
d) Recover an amount to be due immediately on breach equal to the unpaid rent for the
entire remaining term of this LEASE.
e) Recover all damages incurred by CITY by reason of LESSEE's default or breach,
including, but not limited to, the cost of recovering possession of the Leased Land,
expenses of reletting, including costs of necessary renovation and alteration of the
premises, reasonable attorney's fees, and any real estate commissions actually paid.
f) Remove or require the removal of any improvements constructed without CITY
approval or constructed contrary to site development plans approved by CITY and
recover all costs and expense incurred by CITY to remove violating improvements.
10.4 If LESSEE does not immediately surrender possession of the Leased Land after termination
by CITY and upon demand by CITY,CITY may forthwith enter into and upon and repossess
the Leased Land and expel LESSEE without being deemed guilty in any manner of trespass
and without prejudice to any remedies which might otherwise be used for arrears of rent or
breach of covenant.
10.5 No expiration or termination of this LEASE shall expire or terminate any liability or
obligation to perform of LESSEE's which arose prior to the termination or expiration except
insofar as otherwise agreed to in this LEASE.
10.6 Each right and remedy of CITY provided for in this LEASE shall be cumulative and shall be
in addition to every other right or remedy provided for in this LEASE or now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by CITY of any one or more of the rights and remedies provided for in this LEASE
or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude
00961686.DOC
12 41
the simultaneous or later exercise by CITY of any or all other rights or remedies provided for
in this LEASE or now or thereafter existing at law, or in equity or by statute or otherwise.
10.7 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 construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be deemed
expedient.
ARTICLE 11 - TITLE TO IMPROVEMENTS INSTALLED BY LESSEE
11.1 Real Property Improvements. All improvements constructed by LESSEE or its predecessors
on the Leased Land or on easements to or from the same, such as buildings, warehouses,
conveyor systems, ditches, sewer lines, water lines, dikes or berms and similar
improvements, shall become the property of CITY upon termination of this LEASE for any
reason; provided, however, that CITY may require LESSEE to remove any improvements
designated by CITY and without cost to CITY, and at LESSEE's sole cost ad expense.
11.2 Personal Property. Any other provisions of this LEASE to the contrary notwithstanding,
LESSEE, upon termination of this LEASE for any reason, may, but need not, promptly
remove, in no event later than ninety (90) days from the termination of the LEASE, trade
fixtures and equipment from the Leased Land provided that LESSEE shall repair any
damages to the Leased Land caused by such removal.
ARTICLE 12 -ASSIGNMENT OR SUBLEASE
12.1 Assignment of Lease or Subleasing. The parties recognize that this LEASE has been
determined to be in the public interest by the City Council of CITY for the reasons set forth
in the approving Resolution. The rights and duties created by the LEASE are personal to
LESSEE and CITY has granted the LEASE in reliance upon the individual character and
financial capability of LESSEE. Therefore,LESSEE shall not assign or sublease this LEASE
without CITY's prior written consent, in CITY's sole discretion.
12.2 Assignment of Lease for Security. Notwithstanding Section 12.1 above, LESSEE may
assign, encumber, or mortgage its interest in this LEASE or improvements on the Leased
Land,by deed of trust or other security instrument, to an institutional lender("Lender")for
development of or operations on the Leased Land,provided that Lender shall be subject to all
obligations of LESSEE under the terms of this LEASE upon foreclosure. CITY shall furnish
Lender, at the address provided to CITY by Lender in writing,with notice of any default or
breach of LESSEE under this LEASE. Lender shall have the right(without being required to
do so and without thereby assuming the obligations of LESSEE under this LEASE)to make
good such default or breach within thirty (30) days after written notice specifying such
breach. Notwithstanding the provisions of Article 10 above, no "LESSEE Act of Default"
shall exist until expiration of thirty (30) days after such notice is furnished to Lender;
provided,
00961686.DOC
13 42
a) If Lender, with respect to any default or breach other than a failure to make any
required payment of rent or other money,shall undertake within thirty(30)days after
notice to cure the default or breach and shall diligently and in good faith proceed to
do so, CITY may not terminate this LEASE or relet the Leased Land unless Lender
fails to cure the default or breach within a reasonable period of time thereafter; and
b) If the default for which notice is given is a breach of Section 9.3, CITY shall not
exercise any of the remedies afforded to it under Article 10 above so long as LESSEE
or Lender remains in possession of the Leased Land and satisfies LESSEE's
obligations under the terms of this LEASE. Upon foreclosure or other assertion of its
security interest, 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.
12.3 Assignment to Affiliate. Notwithstanding Section 12.1 above, LESSEE may assign this
LEASE to an affiliate of LESSEE as that term is defined by AS 10.06.990(2) or Alaska
limited liability company in which LESSEE maintains a substantial membership interest;
provided, however, that LESSEE's full faith and credit shall remain obligated under this
LEASE as though the assignment had not taken place.
ARTICLE 13 —LESSEE'S DUTY TO DEFEND/INDEMNIFY
LESSEE shall defend,indemnify,and hold harmless CITY,its officials, employees,agents,
and contractors from any and all liability or claims for damages, including personal injuries,
environmental damage,death and property damage arising out of or resulting from LESSEE's use of
the Leased Land or the use of the Leased Land by LESSEE's sublessees, assignees, agents,
contractors, or the public, except for damages arising from the sole negligence or willful acts or
omissions of CITY, its officials, employees, agents, or contractors. If any action or proceeding is
brought against LESSEE by reason of any such occurrence,LESSEE shall notify CITY promptly in
writing of such action or proceeding.
ARTICLE 14 - CITY'S DUTY TO DEFEND/INDEMNIFY
CITY shall defend,indemnify and hold LESSEE harmless from any and all liability or claims
for damages, including personal injuries, death, and property damage arising from the sole
negligence or willful acts or omissions of CITY, its officials, employees, agents, or contractors.
ARTICLE 15 -INSURANCE
15.1 Minimum Insurance Requirements. Prior to commencement of the Lease Term or LESSEE'S
occupancy of the Leased Land, LESSEE shall procure and maintain, at LESSEE's sole cost
and expense,comprehensive commercial general liability insurance with limits of liability of
not less than TWO MILLION DOLLARS($2,000,000)for all injuries and/or deaths resulting
to any one person and TWO MILLION DOLLARS ($2,000,000) limit from any one
occurrence. The comprehensive commercial general liability insurance shall include
00961686.DOC
14 43
coverage for personal injury,bodily injury, and property damage or destruction. Coverage
under such policies of insurance shall include collapse and underground property damage
hazards. Contractual liability insurance coverage in the amount of not less than TWO
MILLION DOLLARS ($2,000,000) is also required.
LESSEE shall obtain owned and non-owned automobile liability insurance with limits of
liability of not less than ONE MILLION DOLLARS($1,000,000)per occurrence combined
single limit for bodily injury and property damage.
LESSEE shall also maintain workers' compensation insurance as required under Alaska law.
The minimum amounts and types of insurance provided by LESSEE shall be subject to
revision at the sole discretion of CITY in accordance with standard insurance practices, in
order to provide continuously throughout the term of this LEASE and any extensions hereof,
a level of protection consonant with good business practice and accepted standards in the
industry. Such factors as changes in the type of or extent of use of the Lease Land,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 shall
notify LESSEE of any required increase in insurance coverage.
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 33 of this LEASE. All
such policies shall be written by insurance companies legally authorized or licensed to do
business in the State of Alaska and acceptable to CITY(Best's Rating B+or better). CITY
shall be listed as an additional insured under all insurance policies. LESSEE shall furnish
CITY,on forms approved by CITY,certificates evidencing that it has procured the insurance
required herein prior to the occupancy of the Leased Land or operation by LESSEE.
Insurance policy deductibles are subject to approval by CITY. Nothing herein contained
shall prevent LESSEE or CITY from placing and maintaining at CITY's or LESSEE's own
individual cost and expense,additional or other insurance as may be desired. The minimum
insurance requirements under this LEASE shall not act to limit LESSEE's liability for any
occurrence and shall not limit LESSEE's duty to defend and indemnify CITY for claims
related to this LEASE or the Leased Land.
15.2 Subrogation Rights Waived. LESSEE agrees that its policies of insurance will include a
waiver of subrogation clause or endorsement releasing CITY, its elected and appointed
officials, employees and volunteers, and others working on behalf of CITY from any and all
liability or responsibility to LESSEE or anyone claiming through or under LESSEE by way
of subrogation or otherwise,for any loss of any kind(including damage to property caused by
fire or any other casualty),even if such loss shall have been caused by the fault or negligence
of the CITY,its elected or appointed officials,employees or volunteers,or others working on
behalf of the CITY. This provision shall be applicable and in full force and effect with
respect to loss or damage occurring during the time of LESSEE's occupancy or use
(including LESSEE's occupancy or use prior to the Effective Date of this LEASE), and
LESSEE's policies of insurance shall contain a clause or endorsement to the effect that such
00961686.DOC
15 44
release shall not adversely affect or impair such policies or prejudice the right of LESSEE to
recover thereunder except as against CITY (including its elected and appointed officials,
employees and volunteers, and others working on behalf of CITY) during the time of
LESSEE's occupancy or use.
ARTICLE 16 - CONDEMNATION
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 against 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 in the event of a single award to CITY which includes
specific damages for loss of LESSEE's leasehold interest, 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, LESSEE shall make a
good faith determination as to whether or not the taking of the part of the Leased Land designated for
condemnation will prevent it from continuing to operate on the Leased Land. If LESSEE determines
in good faith that the condemning of such part of the Leased Land will prevent it from continuing to
operate on the Leased Land, LESSEE may notify CITY in writing to this effect, and this LEASE
shall then be terminated for all purposes effective fifteen(15)days from the date LESSEE sends such
notice to CITY, or at such other later date as LESSEE shall specify in its notice, and such
termination shall be treated in the same manner as a termination at the expiration of the term of this
LEASE. LESSEE shall, as a condition precedent to such termination, remove all encumbrances,
debts, and liens to which the Leased Land is subject. If at the time of such partial taking for public
use,LESSEE determines that such partial taking will not prevent it from continuing to operate,then
LESSEE and CITY shall negotiate an equitable and partial abatement of the rent beginning to be
effective on the actual date when LESSEE is effectively prevented from utilizing the condemned
land.
ARTICLE 17 -ARBITRATION
17.1 Arbitration.
a) Disputes between the parties with respect to the performance of this LEASE that
cannot be resolved by the parties,may be submitted to an independent arbitrator for a
settlement pursuant to the provisions of the Alaska Uniform Arbitration Act
(AS 09.43.300 et. sec.), as it now exists or may hereafter be amended from time to
time,and judgment on the award may be entered in any Superior Court in the State of
Alaska. Either party may submit to the other party a request for arbitration or the
party receiving a request shall have twenty(20)days to consent,in writing,to the use
of arbitration to resolve the dispute. Failure of either party to consent will preclude
the use of arbitration for that dispute. The costs and expenses of arbitration shall be
shared equally by the parties, and each party shall bear its own attorney's fees and
costs.
00961686.DOC
16 45
b) Arbitration procedures shall be applicable only to contract, negligence, and similar
claims arising from or related to this LEASE, and shall not be used to resolve or
determine any claim based upon fraud, intentional misrepresentation,nor any claim
based on conduct that is a felony crime in the State of Alaska.
c) Arbitration of any dispute or claim shall be determined by a single arbitrator selected
from a list of not less than five (5) arbitrators obtained from the presiding Superior
Court Judge or other appropriate judicial officer in Anchorage, Alaska. The
arbitrator shall be a person who(a)has not less than five(5)years legal experience in
the State of Alaska prior to appointment; and (b) such legal experience includes
substantial experience with long-term commercial real property transactions. Each
party shall be provided with a copy of the list and shall be afforded a maximum of ten
(10) working days to become familiar with the qualifications of the prospective
arbitrators. The arbitrator shall be selected by each parry,commencing with the parry
demanding the arbitration, striking one name from the list until only a single name
remains.
d) Arbitration hearings shall be conducted in Anchorage,Alaska or such other location
as the parties may agree. Each party shall produce at the request of the other party,at
least thirty (30) days in advance of such hearing, (i) the names, addresses, phone
numbers, and email addresses for all witnesses who may testify at the hearing; and
(ii) all documents to be submitted at the hearing and such other documents as are
relevant to the issues or likely to lead to relevant information.
e) In deciding the claim or dispute, the arbitrator shall follow applicable Alaska law,
and the written decision shall be supported by substantial evidence in the record.
Failure to apply Alaska law, or entry of a decision that is not based on substantial
evidence in the record, shall be additional grounds for modifying or vacating an
arbitration decision.
ARTICLE 18 -MAINTENANCE AND REPAIRS
18.1 Normal Maintenance. During the entire term of this LEASE and every extension hereof,if
any, LESSEE shall, at LESSEE's sole cost, risk and expense, maintain the Leased Land,
including any improvements placed thereon by LESSEE,in as good condition as received or
constructed by LESSEE, subject to normal,non-abusive use. CITY, at CITY's sole option
and expense, may, prior to the commencement of construction by LESSEE, perform
maintenance and preventative work on the Leased Land, exclusive of improvements placed
thereon by LESSEE, in order to prevent erosion, mitigate damage to plants and animals, or
prepare the Leased Land for eventual development by LESSEE or others by grading,filling,
or contouring the Leased Land. Any such work performed by CITY shall be at CITY's sole
expense and risk unless LESSEE agrees, in advance and in writing, to share such expense
and risk. LESSEE shall maintain in first class condition at all times all fire,pollution, and
other protective equipment, if any are placed on Leased Land.
00961686.DOC
17 46
18.2 Safety Issues. CITY may notify LESSEE in writing of any deficiencies in the performance of
LESSEE's maintenance responsibilities as they relate to public health or safety and LESSEE
shall promptly within thirty(30)days of receipt of such notice advise CITY in writing of its
proposed schedule for performance of any work necessary to cure such deficiencies.
If such deficiencies relate to the safety of LESSEE's operation such that the surrounding land
and port facilities are exposed to risk, unnecessary potential hazards, or a risk to the public
interest(as distinguished from a business risk),or if CITY is not satisfied with the proposed
schedule 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 who shall
furnish to CITY a comprehensive survey and report for the purpose of establishing both the
need and urgency to perform such maintenance work. As soon as practicable following
receipt of said engineer's determinations and recommendations,if the report requires repair
then LESSEE shall pay the cost of the report and perform such work in accordance therewith
at LESSEE's cost, risk, and expense.
18.3 Cost of Repairs. Should LESSEE dispute the necessity of any maintenance work as being
necessary or advisable or reasonable to protect the public facilities on adjacent land,it may
submit the matter to arbitration; provided, however, that pending the decision of the
arbitrator it shall fully comply with the maintenance requests. If an arbitration award should
ultimately find that the repairs were not necessary then LESSEE may either deduct from
future rental payments the cost of such repairs or be reimbursed therefor. In deciding
whether repairs requested by CITY or required by an engineering report are necessary, the
arbitration panel is to give primary consideration to the safety and welfare of the Seward port
facilities and the citizens of Seward in light of the highest standards in the industry.
If any facility or service provided by CITY to the Leased Land shall become inadequate due
to changes in environmental control standards or should any facility require updating or
improvement by reason of a change in LESSEE's use of the Leased Land or operations
therefrom, LESSEE shall either construct such improvements at LESSEE's own cost or
reimburse CITY for such work at the option of CITY.
ARTICLE 19 -ENVIRONMENTAL CONCERNS
19.1 Hazardous Materials.
a) Condition of Site. LESSEE has had full opportunity to examine the site for the
presence of any Hazardous Material and accepts the site in "as is" condition.
LESSEE may elect, at LESSEE's sole cost, to conduct a baseline soils test prior to
execution of this LEASE.
b) Release of CITY.Any other provision of this LEASE to the contrary notwithstanding,
LESSEE releases CITY from any and all claims, demands, penalties, fines,
judgments, liabilities, settlements, damages, costs, or expenses (including, without
00961686.DOC
18 47
limitation,attorney's fees,court costs,litigation expenses,and consultant and expert
fees)arising prior to,during,and after the term of this LEASE,and resulting from the
use, keeping, storage, or disposal of Hazardous Material on the Leased Land by
LESSEE or its predecessors in interest,or arising out of or resulting from LESSEE's
operations at the Leased Land or the operations of its predecessors in interest at the
Leased Land except for those claims arising out of CITY's sole negligence or
intentional misconduct. This release includes, without limitation, any and all costs
incurred due to any investigation of the Leased Land or any cleanup, removal, or
restoration mandated by a federal,state,or local agency or political subdivision or by
law or regulation.
c) Use of Hazardous Materials on the Site.
i) LESSEE shall not cause or permit any Hazardous Material to be brought
upon, kept, or used in or about the Leased Land except for such Hazardous
Material as is necessary to conduct LESSEE's authorized use of the Leased
Land.
ii) Any Hazardous Material permitted on the Leased Land as provided in this
paragraph, and all containers therefor, shall be used, kept, stored, and
disposed of in a manner that complies with all Environmental Laws or other
laws or regulations applicable to such Hazardous Material.
iii) LESSEE shall not discharge,leak,or emit,or permit to be discharged,leaked,
or emitted, any material into the atmosphere, ground, ground water, sewer
system, or any body of water, if such material (as reasonably determined by
the City,or any governmental authority)does or may,pollute or contaminate
the same,or may adversely affect the(a)health,welfare,or safety of persons,
whether located on the Leased Land or elsewhere; or (b) condition, use, or
enjoyment of the Leased Land or any other area or personal property.
iv) LESSEE hereby agrees that it shall be fully liable for all costs and expenses
related to the use, storage, and disposal of Hazardous Material kept or
brought on the Leased Land by LESSEE, its authorized representatives and
invitees, and LESSEE shall give immediate notice to CITY of any violation
or potential violation of the provisions of this subparagraph.
d) Indemnification of CITY. Any other provision of this LEASE to the contrary
notwithstanding, LESSEE shall defend, indemnify, and hold CITY harmless from
and against any claims,demands,penalties,fines,judgments,liabilities,settlements,
damages, costs, or expenses (including,without limitation, attorney, consultant and
expert fees,court costs,and litigation expenses)of whatever kind or nature,known or
unknown, contingent or otherwise, arising out of or in any way related to:
00961686.DOC
19 48
i) The presence, disposal,release, or threatened release of any such Hazardous
Material which is on or from the Leased Land, soil, water, ground water,
vegetation, buildings, personal property, persons, animals, or otherwise;
ii) Any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Material or any use of
the Leased Land;
iii) Any lawsuit brought or threatened, settlement reached, or government order
relating to such Hazardous Material or any use of the Leased Land; and/or
iv) Any violation of any laws applicable thereto; provided, however, that this
Section 19.1(d)shall apply only if the acts giving rise to the claims,demands,
penalties, fines, judgments, liabilities, settlements, damages, costs, or
expenses(1)occur prior to or during the term of this LEASE;and(2)arise,in
whole or in part, from the use of, operations on, or activities on the Leased
Land by LESSEE or LESSEE's predecessors in interest, employees, agents,
invitees, contractors, subcontractors,authorized representatives,subtenants,
or any other persons. The provisions of this subparagraph shall be in addition
to any other obligations and liabilities LESSEE may have to CITY at law or
equity and shall survive the transactions contemplated herein and shall
survive the termination of this LEASE.
e) Operator. For all purposes,LESSEE shall be deemed the operator of any facility on
the Leased Land.
f) Hazardous Material Defined. As used in this LEASE, Hazardous Material is any
substance which is toxic,ignitable,reactive,or corrosive or which is regulated by any
Environmental Law. Hazardous Material includes any and all material or substances
which are defined as industrial waste,hazardous waste, extremely hazardous waste,
or a hazardous substance under any Environmental Law. Notwithstanding any
statutory petroleum exclusion, for the purposes of this LEASE, the term Hazardous
Material includes,without limitation,petroleum,including crude oil or any fraction
thereof, petroleum soaked absorbent material, and other petroleum wastes.
g) Environmental Law Defined. As used in this LEASE,Environmental Laws include
any and all local, state, and federal ordinances, statutes, and regulations, as now in
force or as may be amended from time to time, relating to the protection of human
health and the environment, as well as any judgments, orders, injunctions, awards,
decrees, covenants, conditions, or other restrictions or standards relating to same.
Environmental Laws include, by way of example and not as a limitation of the
generality of the foregoing,Alaska Statutes Title 46,the Resource Conservation and
Recovery Act of 1976,the Comprehensive Environmental Response,Compensation
and Liability Act of 1980,the Clean Water Act,and the Superfund Amendments and
Reauthorization Act of 1986.
00961686.DOC
20 49
19.2 Permits and Reporting.
a) Permits Required by Other Governmental Agencies. LESSEE shall obtain all permits
or approvals required by any applicable law or regulation. Copies of all such permits
shall be provided to CITY prior to LESSEE commencing work under this LEASE.
LESSEE shall promptly make all reports to any federal, state, or local government or
agency required by any permit or Environmental Law,including reports of any spill
or discharge of Hazardous Material. The CITY, through the City Manager, may
order LESSEE to immediately cease any operations or activities on the Leased Land
if the same is being carried out without necessary permits,in violation of the terms of
any permit or Environmental Law, or contrary to this LEASE.
b) Correspondence with and Reports to Environmental Agencies. LESSEE shall
immediately (the same or the next business day) provide CITY with copies of all
correspondence and notice,including copies of all reports between LESSEE and any
state, federal, or local government or agency regulating Hazardous Material which
relates to LESSEE's operations on or use of the Leased Land.
ARTICLE 20 -ESTOPPEL CERTIFICATES
Either party shall at any time and from time to time upon not less than ten (10) days' prior
written request by the other party,execute,acknowledge,and deliver to such party,or to its designee,
a statement in writing certifying that this LEASE is unamended and in full force and effect (or, if
there has been any amendment thereof, that the same is in full force and effect as amended and
stating the amendment or amendments),that there are no defaults 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 21 - CONDITIONS AND COVENANTS
All the provisions of this LEASE shall be construed to be "conditions" as well as
"covenants," as though the words specifically expressing or imparting covenants and conditions were
used in each separate provision.
ARTICLE 22 -NO WAIVER OF BREACH
No failure by either CITY or LESSEE to insist upon the strict performance by the other of
any term,covenant, or condition 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 terms, covenants, or
conditions. 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 breach.
ARTICLE 23 - TIME OF THE ESSENCE
00961686.DOC
21 50
Time is of the essence of this LEASE and of each provision.
ARTICLE 24 - COMPUTATION OF TIME
The time in which any act provided by this LEASE is to be done by shall be computed by
excluding the first day and including the last,unless the last day is a Saturday, Sunday, or a holiday,
and then it is also excluded.
ARTICLE 25 - SUCCESSORS IN INTEREST
Each and all of the terms,covenants, and conditions in this LEASE shall inure to the benefit
of and shall be binding upon the successors in interest of CITY and LESSEE.
ARTICLE 26 -ENTIRE AGREEMENT
This LEASE contains the entire agreement of the parties with respect to the matters covered
by this LEASE, and no other agreement, statement, or promise made by any party which is not
contained in this LEASE shall be binding or valid.
ARTICLE 27 - GOVERNING LAW
This LEASE shall be governed by, construed, and enforced in accordance with the laws of
the State of Alaska. The terms of this LEASE are subject in all respects to the Charter and Code of
Ordinances of CITY in effect on the date of this LEASE, and as they may be hereafter amended,
including, without limitation, Chapter 7.05 of the Seward City Code.
ARTICLE 28 -PARTIAL INVALIDITY
If any provision of this LEASE is held by a court of competent jurisdiction to be invalid,
void,or unenforceable,the remainder of the provisions shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated.
ARTICLE 29 -RELATIONSHIP OF PARTIES
Nothing contained in this LEASE shall be deemed or construed by the parties or by any third
person to create the relationship of principal and agent or of partnership or of j oint venture or of any
association between CITY and LESSEE; and neither the method of computation of rent, nor any
other provisions contained in this LEASE,nor 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 30 -INTERPRETATION
00961686.DOC
22 51
The language in all parts of this LEASE shall in all cases be simply construed according to its
fair meaning and not for or against CITY or LESSEE as both CITY and LESSEE have had the
opportunity to seek assistance of counsel in drafting and reviewing this LEASE.
ARTICLE 31 - CAPTIONS
Captions of the articles,paragraphs, and subparagraphs of this LEASE are for convenience
and reference only, and the words contained therein shall in no way be held to explain, modify,
amplify, or aid in the interpretation, construction, or meaning of the provisions of this LEASE.
ARTICLE 32 -AMENDMENT
This LEASE is not subject to amendment except in writing executed by both parties hereto.
ARTICLE 33 -NOTICES
All notices,demands,or requests from one party to another shall be delivered in person or be
sent by mail, certified or registered, postage prepaid, to the addresses stated in this Article and to
such other persons and addresses as either party may designate. Notice by mail shall be deemed to
have been given at the time of mailing.
All notices, demands, and requests from LESSEE to CITY shall be given to CITY at the
following address:
City Manager
CITY OF SEWARD
P.O. Box 167
Seward, Alaska 99664
All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the
following address:
Joseph Tougas
P.O. Box 825
Seward, Alaska 99664
Each party shall have the right, from time to time,to designate a different address by notice
given in conformity with this Article.
ARTICLE 34 - FIRE PROTECTION FOR LEASED LAND IN SMIC
00961686.DOC
23 52
LESSEE acknowledges that the CITY OF SEWARD lacks the personnel and resources to
provide onsite fire protection in the Seward Marine Industrial Center,and emergency response time
may be longer than for other areas in Seward. LESSEE accepts the risks inherent in conducting its
operations in this area and willingly assumes,at its sole cost and risk,the obligation to provide fire
protection to its operations on Leased Land in SMIC, and fire prevention to industry standards to
minimize risks to adjacent facilities and nearby operations.
IN WITNESS WHEREOF,the parties hereto have set their hands and seals the dates herein
set forth.
CITY: LESSEE:
CITY OF SEWARD JOSEPH TOUGAS
Scott Meszaros, City Manager oseph ougaas Date: Date: OA//
2-e;'
ATTEST:
Brenda Ballou
City Clerk
STATE OF ALASKA }
} ss.
THIRD JUDICIAL DISTRICT }
The foregoing instrument was acknowledged before me this day of ,
2020, by Scott Meszaros, City Manager of the City of Seward, Alaska, on behalf of the City.
Notary Public in and for Alaska
My Commission Expires:
STATE OF ALASKA }
} ss.
009616B&DQC 24
53
THIRD JUDICIAL DISTRICT }
The foregoing instrument was acknowledged before me this � day of A"0 ,2020,
by Joseph Tougas who executed the foregoing document.
` �py..•r• NF ' Notary ublic in and for Alas�a r
v,;: •. My Gommissian Expires:
00961686-DOC 25
54
1806 Alameda Street.
CATALYST Po Box 825
Seward,AK 99664
MARINE
Phone: 1-907-362-1900
ENGINEERING Fax: 1-907-224-5900
To:
Seward Harbormaster
Norm Regis
11/21/2019
SMIC Lease lots
After our discussion November 21'2019 Catalyst Marine Engineering would like to secure
long-term leases on the two lots adjoint the eastern lot line of Sewmar. Parcel ID numbers
14534024& 14534025 totaling 0.62 acres combine. We are aware that the properties
mentioned above might be caught up for a period in transfer.Once the City of Seward is
ready to move forward with lease assignment CME will be ready to complete the assumption.
Respectfully,
Joseph C. Tougas
President/Owner
Catalyst Marine Engineering
Exhibit A
55
, � 6 'o
T ,
AN G
ANO
_1
SMIC Lot 4 Block 3
® Parcels
Q City Limits
Location Map - 0 240 480 960Feet
Seward Marine Industrial Center :;
Lot 4 Block 3 N Tougas Lease
Due to different data sources property lines and aerial imagery do not
overlay correctly. Map is to be used for orientation and reference purposes only. Drawn By: EAK 07/29/2020
56
Exhibit C
MacSwain Associates LLC
Parcel 33
0.1
� ySS l
Wl
I k�l- 'l'1 t• LL -
' S -
I /°
R'
SubjectIQ
I Ef
1. .+.
iR
T,nrd A
N
I
^' @1 i
1'7-Q.ct A
Sr
f i
e � i
i i I
I
---- `��3 r s v
c
.ptA; , I
20-3377.• ON of Seward Leases
57
MacSwain Associates LLC I Exhibit C
Subject Property Data, Analysis, & Valuation: Parcel 33
Lessee: Raibow Fiberglass &Boat Repair, LLC
Property Lease No: 13-048
Identification
Location: Southwest corner of Jellison Avenue and Olga
Street, SMIC
Legal Description: Lot 4, Block 3, 4' of July Creek Subdivision,
SMIC
Current Use: Marine industrial
3
i
Subject Property .. :;..:. .,
Photograph
Inspection Data Date Inspected: February 6, 2020
Inspected By: MacSwain Associates, LLC
Representative: No response
Sale History No known sales in the past three years
20-3377_ City of Seward Leases 165
58
maCSwain Associates LLC Exhibit C
Site Description
Site Size/Shape: 13,521 /rectangular
Waterfrontage: None
Access/Street Improvements: Jellison Avenue and Olga Street
(gravel)
Utilities:
Public Water: None
Public Sewer: None
EIectricity: None
Telephone: TeIAIaska
Topography: Level
Easements and.Restrictions: None noted
Other Features: Corner site
Zoning: 1, Industrial
Parking: On site, required
Assessor No: 145-340-24
Assessment Data 2019 Mill Rate: 8.37
2019 Assessed Land Value:* $38,900 ($2.88/SF)
*Assessed land value t epresents fee simple value estimate
Highest and Best Use The demand for land in the Seward Marine Industrial Center is
(HABU)Analysis As increasing; however, ample land remains available for development.
Vacant As additional lessees enter the SMIC market, we anticipate upward
pressure on land value. Market analysis of existing and contemplated
land uses further suggests the highest and best use of the subject would
be marine industrial.
20-3377: City of Seward Leases 166
59
MaeSwain Associates LLC I Exhibit C
Market Analysis and From the market data discussed in Chapter 7, we have selected the
Property Valuation following comparables as being the best data available.
Table of Comparables Compared to Parcel 33
No. Location Sale Date Sale Price Size (SF) Price/SF
NEC of Seward Highway 11/18 $130,000 74,923 $1.74
and Seward Park Drive
7 Leirer Subdivision 2015-2019 Varies 20,000 to $3.13'
80,000
(typical)
8 North of Port Avenue and 7/19 $475,000 95,036 $5.00
Freight Dock
12 Depot Road, Whittier 11/09 $775,193 66,827 $11.60
SWC of Jellison Avenue N/A N/A 13,521 N/A
and Olga Street
1. Current adjustment price based on typical $0.26 to$0.27/SF annual rental rate
Comparative Land Comparable 1 is a 1.72-acre parcel with Seward Highway frontage,
Value Analysis approximately three miles north of the Seward Small Boat Harbor.
The property is unzoned, and has historically been used for industrial
yard storage. Access is from Seward Park Drive,just off the highway.
By comparison, upward adjustments are necessary for inferior location
and size differential
Comparable 7 is located just north of the Small Boat Harbor in an
industrial neighborhood known as Leirer Subdivision. These
comparables are rated superior due to location, but inferior in terms of
size differential. Overall, a downward adjustment is necessary.
Comparable 8 is a recent ARRC lease transaction located north of
Port Avenue and the ARRC Freight Dock. This lease reflects a fee
value of$5.00 per square foot for 95,036 square feet. Comparatively,
this transaction is superior in terms of location. Conversely, size
differential is inferior warranting a partially-offsetting upward
adjustment. Overall, this comparable is rated superior.
Comparable 12 involves a sale in Whittier in which the ARRC
became the buyer/land lessor, and leased the land back to the original
buyer for 8% of the sale price. The sale price was$775,193, indicating
a unit value of $11.60 per square foot for 66,827 square feet. In
comparison, this transaction is rated superior due to economic
20-3377- City of Seward Leases 167
60
MacSwain Associates LLC I Exhibit C
character and conditions of sale, but inferior in terms of size
differential. Overall, a downward adjustment is necessary.
Land Value Based on the preceding analysis and a complete review of the other
Conclusion comparables, the market value is estimated to be in the $2.50 to $3.00
per square foot range. This develops:
13,521 SF at$2.50/SF=$33,803
13,521 SF at$3.00/SF= $40,563
Land Value $35,000
20-3377.` City of Seward Leases 168
61