HomeMy WebLinkAboutRes2020-075 Sponsored by: Meszaros
Public Hearing: September 14, 2020
CITY OF SEWARD, ALASKA
RESOLUTION 2020-075
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A
NEW LEASE WITH 4JBC, LLC FOR LOT 2 BLOCK 4, FOURTH OF
JULY CREEK SUBDIVISION, SEWARD MARINE INDUSTRIAL
CENTER, KENAI PENINSULA BOROUGH, PLAT NO. 2015-14 SEWARD
RECORDING DISTRICT, THIRD JUDICIAL DISTRICT, STATE OF
ALASKA
WHEREAS, the City is the owner of real property described as Lot 2 Block 4 Fourth of
July Creek Subdivision; and
WHEREAS,4JBC currently owns Lot 1 A Block 4 adjacent to Lot 2 Block 4; and
WHEREAS, 4JBC needs to lease additional land at the SMIC to expand his business;
and
WHEREAS, 4JBC, LLC submitted a proposal to lease Lot 2 Block 4 Fourth of July
Subdivision for a boat storage/repair yard and an industrial marine facility; and
WHEREAS, the City Manager has negotiated a lease agreement to lease Lot 2 Block 4
to 4JBC, LLC under the provisions of Seward City Code 7.05.410; 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 4JBC,
LLC in substantially the form as presented at this meeting.
Section 2. The Seward City Council has determined that the essential terms and
conditions and the method disposition of the proposed lease with 4JBC, LLC for the real
property described as Lot 2, Block 4, Fourth of July Subdivision, at 208 Nash Road located in
the City of Seward, is in the public's best interest.
Section 3. The lease shall be effective from October 14, 2020 until October 14, 2040,
with the possibility of two additional five(5) year extensions.
Section 4. This resolution shall take effect thirty(30) upon adoption.
CITY OF SEWARD,ALASKA
RESOLUTION 2020-075
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this
14th day of September, 2020.
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AYES: McClure,Baclaan,Osenga, Seese, Terry
NOES: None
ABSENT: Crites
ABSTAIN: None
ATTEST:
Brenda J. , M
City Clerk
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Agenda Statement
Meeting Date: September 14, 2020
To: City Council
Through: Scott Meszaros, City Manager 55
From: Norm Regis, Harbormaster
Agenda Item: Authorizing the City Manager to enter into a new lease with 4JBC, LLC
for Lot 2, Block 4, Fourth of July Creek Subdivision, Seward Marine
Industrial Center, Kenai Peninsula Borough, Plat No. 2015-14 Seward
Recording District, Third Judicial District, State of Alaska
BACKGROUND & JUSTIFICATION:
Patrick Marrs the owner of 4JBC (4 of July Business Center), LLC has owned Lot IA Block 4
adjacent to Lot 2 Block 4 since 2006. Though his business has grown, he has not been able to
physically expand it because the land adjacent to his property was leased out.
Lot 2 Block 4 (208 Nash Road) has recently become available and Mr. Marrs has submitted a
proposal to lease Lot 2, Block 4, Fourth of July Creek Subdivision within the Industrial Zoning
District, Seward Marine Industrial Center, 208 Nash Road. The land will be used for boat
storage/repair work and an industrial marine facility. The land is not served by utilities at this
time. Eventually, Mr. Marrs would like to construct a building on the site, but that will require
future permitting.
The City Council has previously determined that land at SMIC is available for lease.
INTENT:
To approve a long-term lease between the City of Seward and 4JBC, LLC on Lot 2 Block 4
Fourth of July Creek Subdivision within the Industrial Zoning District, Seward Marine Industrial
Center for boat storage/repair work and an industrial marine facility.
CONSISTENCY CHECKLIST: Yes No N/A
T
mprehensive Plan (3.5.1.2 page I-16): Supportthe SMICdevelopmentn to include new market trends and modern technologies for ship
air and construction, shipping of natural resource products, boat X
storage, and other com atible industries,
Strategic Plan (page 5): Attract New Industry: Develop an aggressive
2 marketing campaign which highlights the diverse resources, and quality
of life that make Seward a great place to live and establish a business or X
industry. (Pape 5)
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3. Other (list):
FISCAL NOTE:
The annual lease amount is $4,240.00 plus tax. The lease rate is based on 8% of the fair market
value ($53,000). The parcel was appraised by MacSwain Appraisals, LLC dated February 6,
2020. The leased property will be re-appraised every five years (next scheduled for 2025) and
the rent will be adjusted accordingly. Between appraisals, the rent will be adjusted each year
according to the Consumer Price Index (CPI).
Approved by Finance Department:
ATTORNEY REVIEW: Yes X No
RECONEAENDATION•
Approve Resolution 2020475 authorizing the City Manager to enter into a new lease with 4JBC,
LLC for Lot 4, Block 3 (208 Nash Road) Fourth of July Creek Subdivision in the Seward
Marine Industrial Center, Plat No 2015 I4 in the Seward Recording District, Third Judicial
District, State of Alaska.
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LEASE AGREEMENT
between
CITY OF SEWARD, ALASKA
and
4JBC LLC
Effective Date:
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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 Reserved............. 1
1.4 Property Accepted................................................................................................... 1
1.5 Permits 2
1.6 Platting....................................................................................................................2
ARTICLE2 -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............................................................................4
3.4 Effect of Late Appraisal by CITY............................................................................4
3.5 Appraisal by LESSEE......................•.................................---...................................4
3.6 Effective Date ofAdjusted 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.................................................................................................6
4.2 Obligations ofLESSEE...........................................................................................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...............................................................................................................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.................................... 10
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
11.2 Personal Property.........................................................................................
ARTICLE 12 -ASSIGNMENT OR SUBLEASE .................................................................... 13
12.1 Assignment of Lease or Subleasing....................................................................... 13
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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
ARTICLE15 -INSURANCE .................................................................................................... 14
15.1 Minimum Insurance Requirements....................................................................... 14
15.2 Subrogation Rights Waived................................................................................... 15
ARTICLE 16 - CONDEMNATION.......................................................................................... 16
ARTICLE17-ARBITRATION ............................................................................................... 16
17.1 Arbitration............................................................................................................. 16
ARTICLE 18- MAINTENANCE AND REPAIRS................................................................. 18
18.1 Normal Maintenance............................................................................................. 18
18.2 Safety Issues.......................................................................................................... 18
18.3 Cost of Repairs...................................................................................................... 18
ARTI LE 19 - ENVIRONMENTAL CONCERNS................................................................ 19
19.1 Hazardous Materials.....................................................................................•....... 19
19.2 Permits and Reporting..........................................................................................21
ARTICLE 20 -ESTOPPEL CERTIFICATES........................................................................22
ARTICLE 21 - CONDITIONS AND COVENANTS...............................................................22
ARTICLE 22 -NO WAIVER OF BREACH............................................................................22
ARTICLE 23 - TIME OF THE ESSENCE..............................................................................22
ARTICLE 24 - COMPUTATION OF TIME...........................................................................22
ARTICLE 25 - SUCCESSORS IN INTEREST.......................................................................22
ARTICLE 26 -ENTIRE AGREEMENT..................................................................................22
ARTI LE 27- GOVERNING LAW............................................................•...........................23
ARTIC LE 28 -PARTIAL INVALIDITY.................................................................................23
ARTIC LE 29 -RELATIONSHIP OF PARTIES ....................................................................23
ARTK LE 30 -INTERPRETATION........................................................................................23
ARTICLE31 - CAPTIONS .......................................................................................................23
ARTICLE 32 -AMENDMENT.................................................................................................23
ARTICLE33 -NOTICES..........................................................................................................23
ARTICLE 34 -FIRE PROTECTION.......................................................................................24
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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 4JBC LLC (the
"LESSEE"), an Alaska corporation whose mailing address is P.O. Box 1947, Seward, Alaska
99664.
WHEREAS, LESSEE has indicated its desire to lease the property known as Lot 2,
Block 4, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula
Borough, Plat No. 2015-14 recorded in the Seward Recording District, Third Judicial District,
State of Alaska, consisting of approximately 18,432 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 2, Block 4, Fourth of July Creek Subdivision, Seward Marine Industrial Center,
Kenai Peninsula Borough, Plat No. 2015-14 recorded in the Seward Recording District,
Third Judicial District, State of Alaska, consisting of approximately 18,432 square feet,
more or less.
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 Reserved.
1.4 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
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representations or warranties of CITY (other than the representations in Section 1.2
hereof), 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.
1.5 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.
1.6 Platting. In the event CITY elects to replat, CITY agrees to include the Leased Land in
such replat in accordance with the description in Section 1.3. If LESSEE requests a
replat of the Leased Land prior to that time, 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. 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.
1.7 Development of Leased Land. LESSEE shall continue to operate a boat storage/repair
work and an industrial marine facility 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 the lease the Leased Land to LESSEE. LESSEE shall not
operate any other unrelated business on the Leased Land without the consent of the
CITY.
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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
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
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 run for approximately 20 years from the Effective Date, ending at midnight on
October 14, 2040. LESSEE shall have the right to extend the term of this LEASE for two
additional five (5) year periods, provided that:
a) LESSEE exercises its option to extend at least one hundred and 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 $4,240.00. 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 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 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.
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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 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 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 19 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
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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 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 19 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 CPT 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
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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 storage/repair work and an industrial marine
facility.
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 may operate a boat repair and boat storage business 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
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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 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 join 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
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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:
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.
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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.
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 rights-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
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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, rights-of-way, 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
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
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, epidemic, pandemic, fire, flood, explosion,
earthquake/tsunami, civil disturbance, or war, the time period wherein such performance is to
occur shall be extended by that amount of time necessary to compensate for the delay.
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 action is instituted by LESSEE within the
applicable period and diligently pursued until the default is corrected.
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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.
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
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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
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or otherwise shall not preclude 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.
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,
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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 DEFENDANDEMNIFY
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 DEFENDANDEMNIFY
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
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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 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 ONE MILLION DOLLARS ($1,000,000) of Ship Repairers
Liability Insurance including"hot work" coverage and pollution liability coverage.
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. To the extent permitted by law, LESSEE hereby releases
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
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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 only 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 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. LESSEE agrees that its policies of insurance will include
such a clause or endorsement.
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, shall be submitted to an independent arbitrator
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for a settlement pursuant to the provisions of the Alaska Uniform Arbitration Act
(AS 09.43.010 et. seq.), 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. Notwithstanding the foregoing, arbitration shall not be
applicable to claims or disputes involving a requested remedy having a value of
more than FIFTY THOUSAND DOLLARS ($50,000) (exclusive of interest and
costs). All demands for arbitration and all answering statements thereto that
include any claim must contain a statement that the total sum or value in
controversy, as alleged by the party making such demand or answering statement,
is not more than FIFTY THOUSAND DOLLARS ($50,000.) The arbitrator will
not have jurisdiction, power, or authority to consider or make findings (except to
deny jurisdiction) concerning any claim, counterclaim, dispute, or other matter in
question where the amount in controversy of any such claim, counterclaim,
dispute or matter is more than FIFTY THOUSAND DOLLARS ($50,000). 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.
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) Written notice of requests for arbitration of disputes may be served by either party
to this LEASE upon the other party. 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 party, commencing with the party 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, 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
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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 good operating
condition at all times all fire, pollution, and other protective equipment, if any are placed
on Leased Land.
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
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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 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.
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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:
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
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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.
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
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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 frill force and effect with respect
to any other then existing or subsequent breach.
ARTICLE 23 -TIME OF THE ESSENCE
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
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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 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 -RELATIONSMP 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 joint 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
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
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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
PO Box 167
Seward, Alaska 99664
All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the
following address:
Patrick Marrs
PO Box 1947
Seward, Alaska 99664
Each parry 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
LESSEE shall, at its sole cost, risk, and expense, provide fire detection and protection to
its operations on the Leased Land and fire prevention to industry standards for risks to adjacent
facilities such that those risks are minimized. LESSEE shall continue to provide and maintain
industry accepted standards of fire protection such that the City of Seward's ISO rating is not
degraded by reason of LESSEE'S operation. The parties agree that with the rapid expansion of
technology in the field of fire prevention and control LESSEE's obligations hereunder may vary
during the term of this LEASE and CITY may submit LESSEE's compliance with its obligation
hereunder to arbitration not more frequently than once each five (5) years.
24
80
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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.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this /1X day ofAAAJ&5
2020,by Patrick Marrs who executed the foregoing document.
vfill
d®��'/�i� Notary Public in and for Alaska
•� "" °" �`�r My Commission Expires:
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82
4JBC LLC
September 9, 2019
To: Norm Regis, Seward Harbormaster
Seward, Alaska
Fr: Patrick Marrs
4JBC LLC
Po Box 1947
Seward, Alaska 99664
Phone 907 240 8029
Re: SMIC, property located north of the Communication North addition on the
corner of Mustang Avenue and Nash road. Raibow presently has lease.
Per our discussion last week, I am informing of my desire to lease the property
north of my existing property at the Seward Marine Industrial Center if Raibow
defaults on the lease or vacates the property.
My interest is to develop the property north from my shop/warehouse (4JBC LLC}
where Communication North Holdings LLC is located. When the market conditions
are appropriate for office/service/supply and storage buildings, 4JBC LLC will build
to suit with the expansion of SMIC. Obtaining the lease to this property will make
it easier for me to expand on my existing private property and that parcel.
I would appreciate consideration of this request if the property becomes available.
Sincerely,
Patrick Marrs
83
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SMIC Lot 2 Block 4
Parcels
Q City Limits
Location Map - 0 165 330 660Feet
Seward Marine Industrial Center :; - ' N
Rainbow Replat Lot 2 Block 4 4 JBC LLC 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 08/17/2020
84
MacSwain Associates LLC
Parcel 34
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20-3377_ City of Seward Leases
85
MacSwain Associates LLC
Subject Property Data, Analysis, & Valuation: Parcel 34
Lessee: Raibow Fiberglass& Boat Repair, LLC
Property Lease No: 15-073
Identification
Location: Southeast corner of Nash Road and Mustang
Avenue, SMIC
Legal Description: Lot 2, Block 4, 4`h of July Creek Subdivision,
SMI C
Current Use: Marine industrial
Subject Property
Photograph Y'
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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 169
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MacSwain Associates LLC
Site DescriptionSite Size/Shape: 18,432/ rectangular
Waterfrontage: None
Access/Street Improvements: Nash Road and Mustang Avenue
(gravel)
Utilities:
Public Water: None
Public Sewer: None
Electricity: None
Telephone: TclAlaska
Topography: Level
Easements and Restrictions: 10-foot utility easements on the
north and west boundaries, 5-foot
utility easements on the south and
east boundaries
Other Features: Corner site
Zoning: I, Industrial
Parking: On site, required
Assessor No: 145-340-56
Assessment Data 2019 Mill Rate: 9.29
2019 Assessed Land Value:* $69,600 ($3.78/SF)
*Assessed land value represents 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.
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MacSwain Associates LLC
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 34
No. Location Sale Date Sale Price Size (SF) Price/SF
1 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 $1 1.60
SEC of Nash Road and N/A N/A 18,432 N/A
Mustang Avenue
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 171
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MacSwain Associates LLC�
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 $2.75 to $3.00
per square foot range. This develops:
18,432 SF at $2.75/SF= $50,688
18,432 SF at $3.00/SF= $55,296
Land Valve 553,000
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