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07232018 City Council Packet
Agenda PackeT r�. �P f a s ,.+',Ara •. � .. � �.t A .,: .,'-. �,,..- �, "Backyard Critter"by Stefan Nilsson Monday, July 23, 2018 City Council Chambers Beginning at 7:00 p.m. 1 1963 1965 2005 The City of Seward,Alaska CITY COUNCIL MEETING AGENDA AII-AmericaCity {Please silence all cellular phones during the meeting} July 23, 2018 7:00 p.m. Council Chambers David Squires 1. CALL TO ORDER Mayor 2. PLEDGE OF ALLEGIANCE Term Expires 2019 3. ROLL CALL 4. CITIZEN COMMENTS ON ANY SUBJECT EXCEPT Marianna Keil THOSE ITEMS SCHEDULED FOR PUBLIC HEARING Vice Mayor [Those who have signed in will be given the first opportunity to speak. Term Expires 2018 Time is limited to 3 minutes per speaker and 36 minutes total time for this agenda item.] Ristine Casagranda 5. APPROVAL OF AGENDA AND CONSENT AGENDA Council Member [Approval of Consent Agenda passes all routine items indicated by asterisk(*). Consent Agenda items are not considered separately unless a Term Expires 2018 council member so requests. In the event of such a request, the item is returned to the Regular Agenda] Sue McClure Council Member 6. SPECIAL ORDERS,PRESENTATIONS AND REPORTS Term Expires 2019 A. Proclamations and Awards 1. Recognizing Linda Lasota for her service on the Historic Suzi Towsley Preservation Commission Council Member B. Chamber of Commerce Report Term Expires 2019 C. City Manager Report ....................................... Pg. 4 D. Other Reports and Presentations—None Jeremy Horn Council Member Term Expires 2019 Sharyl Seese Council Member Term Expires 2018 James Hunt City Manager Brenda Ballou City Clerk Will Earnhart City Attorney City of Seward, Alaska Council Agenda July 23, 2018 Page I 1 7. PUBLIC HEARINGS [Those who have signed in will be given the first opportunity to speak. Time is limited to 5 minutes per speaker. Anyone wishing to speak a second time may do so only after all other persons have spoken, and then for I minute.] A. Ordinances for Public Hearing & Enactment 1. Ordinance 2018-003, To Revise Seward City Code 3.40, Grievance Procedure. This ordinance was introduced on June 25, 2018, had a public hearing on July 9, 2018, and is coming tonight for a second public hearing and enactment. Pg. 10 B. Resolutions Requiring Public Hearing 1. Resolution 2018-053, Authorizing The Competitive Sale Of The Property Described As West 1/z Of Lots 19 And 20, Block 30 Original Townsite Of Seward, Tax Parcel ID No. 14813010, 408 Madison, For The Amount Of $40,052 To Mary Lutz In Accordance With Seward City Code Section §7.05. ................................... Pg. 20 2. Resolution 2018-061, Authorizing The Assignment, Assumption And Amendment Of The Ground Lease With Vigor Alaska, LLC, For The Real Property Described As Lots 1-A And 3, Block 7, Fourth Of July Creek Subdivision Seward Marine Industrial Center, Seward Ship's Drydock Replat, According To Plat 2002-22, Seward Recording District, Third Judicial District, State Of Alaska, To JAG Alaska, Inc., The Assumption Of The Lease By JAG Alaska, Inc. And Amendments To The Ground Lease. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... Pg. 26 3. Resolution 2018-062, Authorizing The City Manager To Enter Into A Lease With Exit Marine, LLC For Block 5 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. .................................. Pg. 82 4. Resolution 2018-063, Authorizing The City Manager To Enter Into A Lease With Exit Marine, LLC For The Unsubdivided Section Of Block 6 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. ... Pg. 120 8. UNFINISHED BUSINESS 1. Resolution 2018-034, Authorizing A Cost Of Living Increase Of 2.1% For 2018 And A Separate 2.1% For 2019 For All Non-IBEW Employees With The Exception Of The City Manager And City Clerk, And Appropriating Funds. This item was postponed from the July 9, 2018 meeting and has an amendment pending. ... Pg. 158 9. NEW BUSINESS A. Resolutions 1. Resolution 2018-064, Authorizing The Assignment, Assumption And Amendment Of The Maintenance And Operating Agreement Of The Shiplift And Dry Dock Area To JAG, Alaska, Inc. ...................................................................... Pg. 163 City of Seward, Alaska Council Agenda July 23, 2018 Page 2 2 3 B. Other New Business Items *1. Approval of July 9, 2018 Regular Meeting Minutes. ............................... Pg. 211 *2. Appoint Bruce Jaffa to the Port& Commerce Advisory Board (PACAB) with a term to expire July, 2021. ................................................................... Pg. 220 3. Discuss and give to direction to the City Attorney to hire outside counsel, Anchorage attorney Joe Levesque, to review the recall petition against Towsley. ......... Pg. 221 4. Discuss supporting the Chamber of Commerce's request for Silver Salmon Derby sponsorship. ........................................................................... Pg. 222 10. INFORMATIONAL ITEMS AND REPORTS (No Action Required) A. On-Going City Projects and Goals. ................................................. Pg. 223 It. COUNCIL COMMENTS 12. CITIZEN COMMENTS 13. COUNCIL AND ADMINISTRATION RESPONSE TO CITIZEN COMMENTS 14. EXECUTIVE SESSION A. Go into Executive Session to evaluate the City Clerk. 15. ADJOURNMENT City of Seward, Alaska Council Agenda July 23, 2018 Page 3 3 4 CITY OF SEWARD Jim Hunt, City Manager P.O. Box 167 Telephone (907)224-4047 Seward,AK 99664 Facsimile (907) 224-4038 MANAGER'S REPORT JULY 9—JULY 23 The following purchase orders between $10,000 and $50,000 have been approved by the City Manager since the last council meeting: NONE ADMINISTRATION Seward Blue Ocean meeting Safety Area meeting Meetings with citizens Met with attorneys Lobbying filing completed $30,000,000 for new Coast Guard Alaska infrastructure passed out of the House in D.C. Thank you letter sent to President Trump regarding the Lowell Point Road Disaster Declaration CHC Meeting Assistant Manager Ron Long resigned. Thank you Ron for your dedication, wisdom, and long uncompensated hours for the citizens and nearby residents of Resurrection Bay. HARBOR • Conducted meetings with Hamilton Construction and R&M for the Breakwater project on 7/12/18, 7/19/18. • The 330 ton is shut down until around the 27th of July. The new concrete approach has been poured and needs time to cure before the Travelift can drive on it. • Conducted meetings with PND on the South Harbor Launch Ramp. The 100% design is out and should go out to bid this week. • The new Fisherman Float is in place and electrical and water are being installed. • The fence is up at the North Dock. • The piling now installed at the North Dock and we are waiting on the fenders to be installed. That should be about mid-July or early August. • Starting to prepare for Seward Silver Salmon Derby which is August 1 lth— 19th. PUBLIC WORKS Director: There were and are still several projects involving right-of-way work and road closures. Please be watchful for construction workers and drive slowly through those areas. Contractor work in all the alleys downtown for communication lines, including borings under the paved roads is to begin mid-July. Alleys between Jefferson and Railway are listed for work. The Lowell Canyon water tank refurbishment project will start construction upgrades next week. Please be aware of the equipment and workers in that area and keep a safe distance from their operations. Recent precipitation and excessive gravel bed loading has caused Japp Creek to come out of the channel Water,Wastewater Utilities: Wastewater employees have added floating aerators to the lagoons to assist with the increased summer influent volumes. The Water Department's Consumer Confidence Report was mailed to all and is on the City Web site as well. 4 5 Streets: After July 15 we can start brushing operations along the roadways. The Migratory Bird Act had changes made last December on the Federal level to allow unintentional "take", thus allowing construction projects to continue. We are uncertain of challenges to this ruling and are set to start operating this year as in the past. Next year we may be able to start earlier. Shop: The shop has been working with all Public Works divisions doing repairs and covering absences. Preventive maintenance efforts have been paying off in fewer breakdowns. The repairs on older trucks and equipment is starting to warrant looking into replacements. Buildings: Flooring replacement is underway in the Community Center basement. The new flooring will be a great improvement for the Senior Center. Massive Bed loading of gravel in Japp Creek 4 Japp Creek high-flow waters upstream along levee wall. . w w 5 6 PARKS AND RECREATION Teen &Youth Center • Summer camps are full. We have worked to allow an additional 10 kids from the wait list into camp each week. • TYC received a$500 grant from Seward Prevention Coalition to provide equipment to the quiet room for campers and teens. (Harmon Construction is upgrading the flooring, through a Senior Citizen's Center project.) • TYC Leadership Council hosted the dunk tank, a bouncy house and a float in the parade on Independence Day. • We have been on several trips this summer with the campers including a hike to Portage Glacier, the Alaska Botanical Gardens, a Tonsina camp out, a camp out at Kelly Lake Cabin and a Family Campout at Trail River Campground, zip lining with Stony Creek Canopy Adventure, and a Major Marine Tour. • Upcoming trips include, kayaking with Adventure 60 North and Nikiski pool fun. Teen Rec Room • "Cooking with Catie" on Tuesday's replaces Taco Tuesday's and provides skills and meals for teens and `tweens. • Wednesday, Thursday, and Friday night themes. The teens are giving positive feedback for the programs that we have had so far, especially for the swimming and campfire. • The TRR summer hours: Tuesday through Friday from 5:30 pm to 9 pm. The attendance is around 11 teens who frequently enjoy programs, hikes, swimming, snacks and computers. Each week, there are more teens who are frequently enjoying the space provided, including another new teen to Seward. Park Maintenance & Campgrounds • Campgrounds revenues are on pace to bring in $875,000, well over the $820,000 from 2017. • Adams Street and Wellington restroom painting. Many compliments from the public. • Successful Independence Day Campground and Park operations • Playground maintenance and repair • Thanks to the Electric Department for the Shower House electrical repair. Our customers were very happy to have hot water back after four days without it. • Williams Park site repair and construction • Parks staff working hard in both City cemeteries. We are receiving grateful, enthusiastic compliments from the public as the cemeteries become safer. Parking • Parking sold more seasonal permits by July 10 than all of 2017. • We are sending invoices to scofflaws with multiple tickets. • We remain short-staffed, but we are catching up on physical improvements like striping and signs, etc. Sports & Rec • Windsong Youth Soccer league has 10 more players than last year. • Indoor programs at Sports & Rec are starting to slightly increase in attendance. There is a weekly, hot game of pick-up basketball Thursday nights. • Staff is looking ahead to recruiting and organizing adult volleyball, basketball and racquetball. 6 7 COMMUNITY LIBRARY AND MUSEUM June 2018 Statistics • 18800 Front Door Counter • 787 Museum Admission • 819 Movie@2 Admission • 38 Programs • 3943 Alaska Library Catalog Circulation for Seward • 688 Library Users in Seward • 428 Alaska Digital Library Circulation for Seward • 10 Passport Applications • 8 Notaries • 6 Proctored Exams • 91 Room Uses • 1118 Public Computer Sessions New Library Material We have lots of new books and videos being added to our collections for all ages nearly every day this summer. This includes board books, Jr graphic novels, Young Adult books and more! Stop by and "check them out!!!" Can't find what you're looking for? We may be able to place a hold on it from another library in the Alaska Library Catalog Consortium, or you may make request to add it to our collection or borrow it through an Interlibrary Loan. Ongoing Programs Seward Summer Reading Program Registration is open all summer long! If you missed our Kick Off Party, don't worry, it's not too late to have a chance to read 50 hours and get opportunities to win generous prizes from local businesses! Over 200 patrons have signed up to read and win by the end of the Summer! Come to the Seward Community Library today to register! LEGO Club is every Wednesday 4:00pm-5:00pm throughout the summer in the Community or Meeting Room depending on availability. Every week has a building challenge and once participants have completed the challenge of the week they can enjoy FREE Play with our 20,000+piece LEGO collection! All ages welcome. Play Time is every Saturday 12:00pm-4:00pm in the Children's Room. Come check out a fun selection of themed books, a new assortment of toys, and other activities through the Summer! We just put out 75 new board books and picture books in the Children's Room! Come enjoy our newest books! Summer Movie Matinee every Saturday 4:00pm-6:00pm in the Community Room. Our last Summer Movie Matinee will be on July 28th featuring Peter Rabbit(2018). Peter Rabbit and his three sisters enjoy spending their days in Mr. McGregor's vegetable garden. When one of McGregor's relatives suddenly moves in, he's less than thrilled to discover a family of rabbits in his new home. A battle of wills soon breaks out as the new owner hatches scheme after scheme to get rid of Peter -- a resourceful rabbit who proves to be a worthy and wily opponent. 7 8 Upcoming Programs Moderate Kite Making Workshop with Tim Morrow: Tuesday,July 24,2018 4:OOpm-6:OOpm in the Community Room. KITE MAKING ROUND TWO! Kite Making Workshops are popular programs and now we have a more difficult kite-building workshop for our more advanced kite makers! Don't worry it won't be too hard! Guaranteed fun for ages 7 and up. } 1 Seward Summer Reading Program Closing Celebration Saturday,August 4,2018 1:OOpm-3:OOpm at the Library& Museum! This Closing Celebration will have FREE ice cream floats, a FUN activity, LIVE music, and our GRAND PRIZE RAFFLE! We could not have had such a successful program this year without the generous prize contributions from these local business sponsors: The Alaska Railroad, Major Marine Tours, Kenai Fjords Tours, Urbachs, Woody's Thai Kitchen, The Alaskan Bag Lady, Hamajang, Sweet Darlings, Resurrection Rentals, Sunny Cove Sea Kayaking, Kayak Adventures World Wide, The Apex Gym, and Seward Ocean Excursions. ELECTRIC Number of new Job Orders started since Jan. 1, 2018: (24) Construction season is upon us. If you would like to start a job order for new construction the process now starts at the Electric Department. If you have any questions please call (907) 224-4073. Juliana came up to speed very fast as our temporary admin and she has been a great help/asset. Her positive attitude and good nature have been enjoyable for everyone that comes in the building. Lagoon UG project is very near completion, we are seeking the permits necessary to take down the lines and contact the necessary equipment and personnel to assist the linemen. Most known meter exchange issues have been resolved(some meters either had questionable readings and/or needed to be verified and/or reprogramed). The additional 2S demand meters have arrived and will be processed and deployed in the coming weeks. 8 9 The crew's excavator was vandalized/batteries stolen. The required paperwork was filed, but if anyone has information regarding the incident please contact the police department. A Memorandum of Understanding (MOU)between the six Railbelt Utilities regarding a commitment to form the Railbelt Reliability Council (RRC)to develop future economic projects to benefit all Railbelt ratepayers is nearing completion. This document will be submitted to the council by resolution for approval in the near future. The document, once signed by all six utilities, will then be filed with the Regulatory Commission of Alaska(RCA). FINANCE The finance department is finalizing statistical tables, MD&A, transmittal information, etc. for the Comprehensive Annual Financial Report for year ended December 31, 2017. Once final data and formatting adjustments are made and the pension allocation data from the State of Alaska is finalized, we will go to press with our CAFR document and post the document online. Finance has attended meetings with Providence leadership to update the long-term financial plan for ensuring the availability of funding to pay the City's revenue bonds on the long-term care facility which mature in August 2033. Those discussions include identifying the need for a deeper dive on recent issues related to capital and operating shortfalls resulting from inadequate rebase-year rate reimbursements associated with previous (lower) census, healthcare cost inflation in excess of rate inflation allowances, more recent cost increases associated with the increased census, etc. The parties have agreed to develop a plan to address the shortfalls, which will be brought before the City Council for discussion when complete. The parties had previously anticipated a two-month lag in operational cost reimbursements, but the inadequate reimbursement rates are causing the liability to rise to the point where the City will need to assist in covering the operational shortfall or begin to incur unnecessary interest costs associated with essentially borrowing from PAMC to finance cash flow. Finance has been preparing for upcoming Council work sessions, including the pending session regarding the Co-Applicant Agreement between the City of Seward and the Seward Community Health Center. The original intent behind a co-applicant federally qualified health center was to ensure that the CHC served as a safety net for all of Seward's healthcare providers, ensuring cooperation among provides, rather than competition. The City Council and the CHC Board of Directors serve as equals in determining the overall scope of services at the clinic, to ensure that Seward's healthcare system remains strong and collaborative. The City supports eliminating the requirement that CHC employees be deemed City employees, as the original purpose of that requirement was to ensure that the CHC had access to employee benefit programs that a new start may not have access to, in addition to ensuring potential employees of a start-up CHC, that there was additional staffing support to ensure a smooth and financially viable new-start clinic. Finance staff is conducting due diligence reviews of historical data, current market conditions and valuations, etc. with respect to the inquiries from two electric utilities interested in opening discussions with the City with respect to the potential sale/acquisition of the City of Seward Electric System. The City has forwarded funding for the building modifications and CT scanner and lab equipment purchases to Providence, which is moving forward quickly with plans to modify the building to incorporate space to move the CT scanner indoors, along with other project components. We will update Council as additional information becomes available. The department is preparing the City's comprehensive financial policies (including debt service policies, financial policies, investment policies, budget policies, etc.) to be brought forward to Council for discussion and adoption in the Fall. 9 10 Sponsored by: Hunt Introduction: June 25, 2018 Public Hearing: July 9, 2018 Public Hearing: July 23, 2018 Enactment: July 23, 2018 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, TO REVISE SEWARD CITY CODE 3.40, GRIEVANCE PROCEDURE. WHEREAS,the current grievance procedure was drafted in 1977 and last updated in 2000; and WHEREAS, the current grievance procedure requires a citizen appeal board for all grievances, regardless of the nature of the complaint; and WHEREAS, the current time limits are not practical; and WHEREAS,the current procedure provides the same process for all grievances regardless of due process rights; and WHEREAS, the proposed amendments provide more practical time limits; and WHEREAS, the proposed amendments provide a heightened procedure for significant disciplinary matters. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, HEREBY ORDAINS that: Section 1. Seward City Code Section 3.40 is amended as follows: (Deletions are Bold Strikethrou Additions are Bold Underline; June 25t' edits in italics) Chapter 3.40. Grievance Procedure 3.40.010. Policy 3.40.015. Discussion of a problem with supervisor. 3.40.020. Definition of a grievance. 3.40.04725. Supervision of grievance procedure. 3.40.025. Diseussion of a problem with sup 3.40.030. Grievance procedure steps. 10 11 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 3.40.035. Employee representation. 3.40.045. Violation of r-oeedur-e. 3.40.0-540. Time limits. 3.40.0-545. Extension of time limits. 3.40.0650. No discrimination or reprisals. 3.40.010. Policy. It is the policy of the City of Seward to treat all employees equitably and fairly in matters affecting their employment. Pursuant to SCC 3.25.035(a), probationary employees,including seasonal employees, are excluded from this grievance procedure, but may approach their supervisor or the appropriate authority to report violations of City code or policy. employee of the eity will be pr-ovided ample oppor-tunity to tinder-stand and resolve matt affeeting employment whieh the employee doetiments as being a violation of r-tiles and regulatio The presentation of any grievance shall be the right of each employee without fear of reprisal. The purpose of this article is to resolve disputes at the lowest level possible. Informal resolution is encouraged. The City has an open-door policy and all employees are encouraged to discuss matters of concern with members of management,including the City Manager at any time,without having to file a formal grievance. (Ord 437, 1977) 3.40.015. Discussion of a problem with supervisor. Any employee having a problem regarding employment shall first and promptly discuss the problem with the immediate supervisor. If the problem is not settled and the problem is defined as a grievance,the employee has the right to present the grievance in accordance with the procedure outlined in Section 3.40.030. No employee shall be intimidated, harassed, retaliated against or reflect in their evaluation because they bring forward a problem,concern or grievance. (Ord 437, 1977, Ord 2000-011, $1, 2000) 3.40.020. Definition of a grievance. A grievance is a written complaint by the employee or group of employees alleging a specific violation of rights under or failure to apply a section or sections of the city charter,city code, personnel rules and regulations or misapplication or interpretation thereof, or departmental rules and regulations, which directly pertain to the terms or conditions of employment of such employee or group of employees by the City of Seward. 11 12 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 A grievance is not to resolve general complaints or concerns regarding other employees. Complaints are resolved at the department level. Personnel policies and Code guide the behavior and actions of employees; the grievance process addresses the violation, misapplication or interpretation, or neglect of those policies and Code. Where there is disagreement about whether a matter is defined as a complaint or a grievance,the appointing authority's decision shall prevail. Where an employee disagrees with the appointing authority's decision, the employee may document the disagreement for placement in their personnel file. (Orr. 437, 1977) 3.40.0-125. Supervision of grievance procedure. The appointing authority(City manager,or in regard to the City Clerk's office,the City Clerk shall oversee the handling of all employee grievances so that they are processed in accordance with the procedures stated in this chapter. Supervisors and department heads shall keep the appointing authority and Personnel Officer informed of all grievances in progress. Assistance in understanding the grievance procedure will be provided by the Personnel Officer if requested. (Ord 437, 1977; Ord 610, 1988; Ord 95-05) employment of sueh employee or- gr-oup of employees_by the City of Seivar-d. emoWyee- (Ord-. 4 ' 977) 12 13 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 (Ord-. 4 ; 1977—; Ord-. 2000 011, R 1, 2000) 3.40.030. Grievance procedure steps. A. General grievances. Disciplinary grievances involving dismissal, demotion, or unpaid suspension of more than one week for regular non-appointed employees will proceed directly to hearing in section B below. All other grievances shall be handled in the following manner: Step 1. The aggr-ieved employee or-gr-oup of employees shall present the gr-ievanee or-ally to the immediat within five wor-king days of its oeetir-r-enee,not ineluding the day of the period. The super-visor- shall give an or-a! reply within three wor-king days of the date of presentation of the g i t ineluding the date of presentation-. An employee shall present their grievance to their immediate supervisor within fifteen (15) working days from the time of occurrence of the problem. The supervisor shall attempt to resolve the problem within ten (10)working days after the grievance is timely received from the employee. ��t if s shall e r-edueed to wr-iting,dated,signed by the aggrieved employee or-gr-oup of employees and shall be presented to the department head within wor-king days after- the super-visor- s or-a! reply is given. The department head shall reply in wr-iting to the- i ithin wor-king days of the date of the presentation of the wr-itten gr4evanee, not ineluding the day of the presentation. If the employee has not received an answer from the immediate supervisor within ten (10) working days,or if the employee feels the answer received is not satisfactory,s/he will reduce to writing the facts and circumstances of the grievance and present the written statement to their Department Head within ten (10)working days after the supervisor's deadline in Step One. The Department Head will investigate the grievance and meet with the employee to discuss the grievance within five (5) working days. The Department Head will notify the employee of their decision within five (5) days following the meeting date. In regard to employees of the Office of the City Clerk,non-disciplinary grievances not resolved at Step 1 will be forwarded to Council in a confidential informational memorandum and will not proceed to Step 3. Step 3. if the_grievanee Step 2, if the gr-ievanee of any other- employee or- gr-oup of employees is not sett! i In- S t e"r 2, the wr-itte - . shall be presented along with all pertinent eor-r-espondenee,r-eeor-ds and infor-mation neetimulated to date to the eity manager- within wor-king days after- the department head's r-e en, not ineluding the day the response is giveni-with a eopy 13 14 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 going to the department head. The eity manager may meet with the aggrieved employee or group of employees,the immediate supervisory personnel and the department head. The eity manager shall reply to the grievanee in writing within working days of the date of pr-esentati of the written gr-ievanee,not ineluding the day of pr-esenta .If the employee has not received an answer from the Department Head within five(5)working days,or if the employee believes the answer received is not satisfactory,s/he may appeal in writing to the City Manager within five(5)working days after the supervisor's final deadline in Step Two.The City Manager,or Acting City Manager,will investigate the grievance and meet with the employee to discuss the grievance within five(5)working days.The City Manager,or Acting City Manager,will notify the employee of their decision within five (5) days following the meeting date. For any grievance not involving a substantive disciplinary action (unpaid suspension of more than one week,demotion or termination of employment)and not involvinz the violation,misapplication, or interpretation or ne-lect of federal, state, or city code, the decision of the City Manager is final. The City manager shall maintain a confidential file containing all Step 3 grievance responses and will provide a general summary of the prior year for review by the City Council annually in executive session,without identifying specific employee information. B. Significant disciplinary grievances and violations of City Code. 1. Within seven (7) calendar days of an employee's receipt of a timely request for arbitration, the Personnel Officer shall secure the assignment of a hearing officer from the State ofAlaska Office ofAdministrative Hearings, under AS 44.64.030(b), or shall provide the employee with a list of names of at least three (3) Alaskan arbitrators. To be included on this list, a proposed arbitrator shall be a member in good standing with the Alaska Bar Association,preferably with at least five(5)years ofexperience in employment law;be a current or retired judge with the Alaska Court System; or be an arbitrator in good standing with a recognized state or national association of arbitrators, such as the American Arbitration Association. The employee shall have seven (7) calendar days from receipt of the list to select an arbitrator from the list. Once an arbitrator is appointed, the parties shall confer with the arbitrator and select an acceptable date for the arbitration. Unless otherwise noted by the director, the arbitration shall be held at City Hall. 2. The arbitrator shall conduct the hearing according to generally accepted standards and procedures for grievance arbitration. The fact that the City may have considered the merits of the grievance at any point of the grievance procedure shall not constitute a waiver of the City's right to contest the arbitrability of the underlying grievance. 14 15 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 3. The employee may be represented at arbitration by a duly authorized representative. If the employee will be represented at arbitration, written notice of such representation shall be provided to the Personnel Officer at least ten (10)calendar days before the date set for the arbitration. Once the Personnel Officer receives notice of such representation, the City shall communicate directly with the representative on all matters concerning the arbitration, unless otherwise agreed to by the representative. 4. The arbitrator shall have no authority to add to, alter, delete, or modem any statute, regulation, ordinance, or labor agreement, or to issue any award on a matter not raised in the complaint filed by the employee. The arbitrator shall not make any award involving payment to a party for events, actions, or omissions giving rise to the grievance. 5. The decision ofthe arbitrator shall be final and binding on all parties and shall only be subject to appeal in the superior court in accordance with AS 9.43.120 9.43.150. Either party may make application to the superior court to enforce a decision of the arbitrator. 6. In the application of this section, the term "employee" shall include any duly authorized representative of the employee who alleges a grievance. 7. Nothing in this section shall be construed to prevent settlement of a grievance by mutual agreement of the parties at any time. The expenses of the arbitrator shall be borne by the city. 8. Submission ofa grievance to arbitration shall not act as a stay ofany action unless a stay is expressly approved by the manager or his designee. 9. The provisions for grievance or arbitration contained in this section shall not apply to employees who have not successfully completed the probationary period required by Code at the time of the alleged action or omissions, or to executive employees. Probationary employees may be subject to discipline without grievance appeal or pre-disciplinary hearing and may be terminated in accordance with SCC 3.25.035(a). 3.40.035. Employee representation. Each employee shall be afforded an opportunity to be represented at each of the above steps by a representative of his/her choice. Employees shall contact and discuss their problems with their representative only during break periods,lunch hour,before or after work or at any other time when they are not on duty. However, grievance hearings may be held during work hours. 15 16 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 (Ord 437, 1977; Ord 2000-011, §1, 2000) All appeals fFom diseiplinar-y netion shall be initiated at Step 3 of the gr4evanee pr-oeedur-e-. ( -Pd-. 4 ' 977) 3.40.045. Violation of r-oeedur-e. Any employee who takes a gr-ievable issue outside the eity without first attempting4& diseiplinar-y netion. However-, nothing in this ehapter- shall be deemed to r-evoke any legal means of redress to the e r+s 3.40.0-40. Time limits. (a) If the grievance procedures are not initiated within the time limits established by this chapter,the employee shall be considered as having waived his/her right to grieve the particular violation and initiation of a grievance for the same act or omission is thereafter barred. (b) Any grievance not taken to the next step of the grievance procedure within the time limits established by this chapter shall be considered settled on the basis of the last reply made and received in accordance with the provisions of this chapter. (c) If the city fails to meet or answer any grievance within the time limits prescribed for such action by this chapter, such grievance shall automatically advance to the next step. (d) if the gr-ievanee hearing before the appeal board under- step 4 of the gr4evanee pr-oeedur-e is not held within 90 days 4om the date of the hearing r-equest, the — . ee shall be eonsider-ed abandoned and the matter- shall end, exeept if failtwe to hold the hearing is eaused by the eity's r-eNsal to meet at any time dur-ing that period,it shall be deemed that the eity has eonsider-ed the gr-ievanee to be in favor- of the gr-ievant and shall resolve the matter- aeeor-ding4-)'.- (Ord 437, 1977; Ord 610, 1988; Ord 2000-011, § 1, 2000) 3.40.0-45. Extension of time limits. 16 17 CITY OF SEWARD, ALASKA ORDINANCE 2018-003 The time limits prescribed in this chapter for the initiation and completion of the steps of the grievance procedure may be extended by mutual consent of the parties so involved. Likewise, any step in the grievance procedure may be eliminated by mutual consent. Mutual consent shall be indicated in writing and shall be signed by all parties. Although all efforts should be made to comply with the time limits for initiation and completion of the steps in this grievance procedure,each time limit may be waived for excusable neglect or impossibility such as illness or planned leave. (Ord 437, 1977; Ord 610, 1988) 3.40.0650. No discrimination or reprisals. Employees are entitled to have grievances resolved without fear of recrimination or penalty. Employees shall be free from interference,restraint, coercion,discrimination or reprisal in utilizing or for utilizing the grievance procedures contained in this chapter. Employees shall be free from interference, restraint, coercion, discrimination or reprisal in testifying in a grievance procedure conducted under this chapter. (Ord. 437, 1977; Ord. 92-23) Section 2. This ordinance shall take effect ten (10) days following its enactment,but does not apply to current grievances at Step 2 or above. ENACTED by the City Council of the City of Seward, Alaska,this 23rd day of July, 2018. THE CITY OF SEWARD,ALASKA David Squires,Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk 17 18 Agenda Statement Meeting Date: To: City Council Through: City Manager Jim Hun From: City Attorney Agenda Item: Grievance Ordinance BACKGROUND & JUSTIFICATION: Seward City Code Chapter 3.40 was originally adopted in 1977 and subject to minor revisions in 1988, 1992, 1995,and 2000. There has been confusion as to what constitutes a grievable action (a violation of code or policy pertaining to the terms and conditions of employment, i.e. suspension,demotion,reduction in pay,or discharge)versus a personnel policy complaint having its own resolution process but not affecting the employee's terms of employment, or an operational complaint that is not subject to a formal procedure(an offensive co-worker for example.)Personnel policies and Code guide the behavior and actions of employees;the grievance process addresses the violation,misapplication or neglect of those policies and Code. All employees are protected under personnel policies and the law from harassment and unfair treatment, and resolution requires supervisory discretion and management actions beyond the mere interpretation of code or policy. It has also been noted that questions regarding response deadlines and the applicability of the process to employees not defined as regular employees has not been clear. Again,all employees are protected under personnel policies and the law from harassment and unfair treatment and are encouraged to address any concerns with their supervisors. The grievance process applies to all employees except probationary employees. Probationary employees may be discharged if in the opinion of the appointing authority they will not achieve satisfactory status within the probationary period. The proposed revisions outline the purpose and intent of the grievance procedure to resolve issues at the lowest possible level and to encourage communication. The changes seek to clarify, within the ordinance, exactly which employees are eligible to file grievances and what constitutes a grievance versus a complaint. The code also simplifies the procedure and time limits to make the process more accessible. The proposed revisions also allow for additional flexibility in regard to time limits within the procedure. These revisions are based on the input of employees,citizens,and the administration over the course of three work sessions, and the review of numerous grievance policies from other jurisdictions. 18 19 INTENT: To simplify the grievance procedure and define terms to make the process more accessible to employees. CONSISTENCY CHECKLIST: 7Ye No NIA 1. Comprehensive Plan (document source here): x 2. Strategic Plan (document source here): x 3. Other (list): FISCAL NOTE: No fiscal impact. Approved by Finance Department: ATTORNEY REVIEW: Yes X No Not Applicable RECOMMENDATION: Ordinance 2018-003 19 20 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-053 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE COMPETITIVE SALE OF THE PROPERTY DESCRIBED AS WEST 1/2 OF LOTS 19 AND 20, BLOCK 30 ORIGINAL TOWNSITE OF SEWARD,TAX PARCEL ID NO.14813010,408 MADISON, FOR THE AMOUNT OF $40,052 TO MARY LUTZ IN ACCORDANCE WITH SEWARD CITY CODE SECTION §7.05 WHEREAS,in 2012 and 2013,the City took possession through the tax foreclosure process, the West 1/z of Lots 19 and 20, Block 30 Original Townsite of Seward located on the north side of Madison Street between Fourth and Fifth Avenues in Seward; and WHEREAS, the City obtained title to the property from the Kenai Peninsula Borough in accordance with Non-Code Ordinance 2013-012, Section 2; and WHEREAS, the Seward City Council passed Resolution 2016-053 on August 22, 2016, authorizing the administration to abate,demolish and dispose of the structures and appurtenances on the property, which was completed in 2017; and WHEREAS,Non-Code Ordinance 2017-003 was introduced on September 25,2017,with public hearing and enactment on October 9, 2017, authorizing disposal of the property by competitive sealed bid at a minimum bid price of $36,700, reflecting the 2017 Kenai Peninsula Borough property assessment on the land, considered to be lower than fair market value, but covering the City's costs of property foreclosure and clean-up; and WHEREAS,the City advertised for competitive sealed bids and received a single responsive and responsible bid in the amount of$40,042 from Mary Lutz who included the required bid deposit equal to 20%in addition to the remainder of the amount of the bid price totaling the full amount of the bid, equal to $40,052, making it unnecessary to enter into a Purchase Agreement; and WHEREAS, Seward City Code§7.05.125 requires that prior to disposition of areal property interest by sealed bid,a public hearing shall be held,and SCC §7.05.145 determines an effective date for real property disposition to be 30 days after passage and posting. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Seward City Council determined by Non-Code Ordinance 2013-012 that it has no public purpose for West 1/z of Lots 19 and 20, Block 30 Original Townsite of Seward. Section 2. The Seward City Council authorized disposal of West 1/z of Lots 19 and 20,Block 20 21 CITY OF SEWARD,ALASKA RESOLUTION 2018-053 30 Original Townsite of Seward with tax parcel ID number 14813010 located at 408 Madison, by competitive sealed bid at a minimum bid price of$36,700 and the City received a single bid in the amount of$40,052 from Mary Lutz. Section 3. The Seward City Council finds it to be in the public interest to sell this parcel in accordance with Non-Code Ordinance 2017-003,per the recitals stated above which are incorporated herein as findings of the City Council, and the City Council authorizes the sale and transfer of this property as is, where is, with no warranties, and for less than fair market value, to Mary Lutz. Section 4. This resolution shall take effect thirty (30) days after approval. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 29t' day of May, 2018. THE CITY OF SEWARD, ALASKA David Squires,Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) 21 22 Agenda Statement Meeting Date: May 29, 2018 ' To: City Council Through: Jim Hunt, City Mana From: Kristin Erchinger, Finance Director Agenda Item: Competitive Sale of 408 Madison (former D.E. Wood Property) BACKGROUND & JUSTIFICATION: The City assumed ownership through the tax foreclosure process of the West '/2 of Lots 19 and 30, Block 30 Original Townsite Seward located on the north side of Madison Street between Fourth and Fifth Avenues,in 2012/2013. The property was formerly owned by D.E. Wood and was foreclosed on by the Kenai Peninsula Borough,after which the City obtained title in accordance with Section 2 of Non-Code Ordinance 2013-012. The City Council passed Resolution 2015-053 on August 22,2016, authorizing the clean-up of the property which was completed in 2017,and then enacted Non-Code Ordinance 2017-003 on October 9,2017,authorizing the property to be disposed of utilizing competitive sealed bids,for a minimum price of$36,700. The City advertised for competitive sealed bids both in newspapers and by posting a banner on the property, and obtained a single bid in the amount of$40,042 from Mary Lutz, which is found to be responsible and responsive, and the administration recommends sale of this parcel to Mary Lutz as is, where is, and with no warranties. INTENT: To sell the property located at 408 Madison to Mary Lutz for the amount of$40,052 which amount has been paid in full by purchaser. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan (p. 11 Community Appearance;p. 15 "Encourage home ownership opportunities";p. 15 "Encourage construction on 1. vacant sites in areas of the city already established";p. 20 "Evaluate X for disposal city-owned lands which have not been dedicated to a public purpose. '): Strategic Plan (p. 9 "Encourage construction of residential housing., 2. p. 10 "Promote construction on vacant sites in established areas of the X ci . Ex"P. I8 " and availability of ear-round housin . ').� 3 Other (Non-Code Ordinance 2013-012; Non-Code Ordinance 2017- 003; Resolution 2016-053): 22 23 FISCAL NOTE: The bid price on this property will be used to repay the City for incurred costs including, but not limited to, the following: the foreclosure process, staffing and legal fees, property demolition, asbestos abatement, disposal of debris and appurtenances, advertising,etc. Any funds in excess of final project costs, will be handled in accordance with Alaska State law. Approved by Finance Department: ATTORNEY REVIEW: Yes X No Not Applicable RECOMMENDATION: Council approve Resolution 2018-053 authorizing the competitive sale of the property described as West 1/2 of Lots 19 and 20, Block 30 Original Townsite of Seward, Tax Parcel ID No. 14813010 for the amount of$40,052 to Mary Lutz. 23 24 AFTER RECORDING RETURN TO: City of Seward P.O. Box 167 Seward, Alaska 99664 QUITCLAIM DEED The Grantor, CITY OF SEWARD, ALASKA, a home rule municipal corporation of the State of Alaska, whose address is P.O. Box 167, Seward, Alaska 99664, for and in consideration of the sum of Ten Dollars ($10) and other good and valuable consideration in hand paid, the receipt of which is hereby acknowledged, quitclaims to Grantee, MARY LUTZ, whose address is PO Box 230311 Anchorage, Alaska 99523, all of Grantor's right, title, and interest it has, if any, in the real property described as: WEST '/2 OF LOTS 19 AND 20, BLOCK 30 ORIGINAL TOWNSITE OF SEWARD, Plat No. S-1 , Seward Recording District, Third Judicial District, State of Alaska, (KPB tax parcel no. 148-130-10) containing 0.07 acres more or less. TOGETHER WITH all the improvements thereon, if any, and all rights of the Grantor to any and all hereditaments and appurtenances hereto, and SUBJECT TO any taxes and assessments, exceptions, reservations, restrictions, conditions, covenants, easements, rights-of-way, encroachments either of record or ascertainable by physical inspection. DATED this day of , 2018. 1 24 25 GRANTOR: CITY OF SEWARD James Hunt, City Manager STATE OF ALASKA ) ) ss: THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of . 2018, by James Hunt, City Manager of the City of Seward, an Alaska municipal corporation, on behalf of the City. Notary Public in and for Alaska My commission expires: 2 25 26 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-061 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE ASSIGNMENT, ASSUMPTION AND AMENDMENT OF THE GROUND LEASE WITH VIGOR ALASKA,LLC, FOR THE REAL PROPERTY DESCRIBED AS LOTS 1-A AND 3,BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION SEWARD MARINE INDUSTRIAL CENTER, SEWARD SHIP'S DRYDOCK REPLAT, ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT, THIRD JUDICIAL DISTRICT,STATE OF ALASKA,TO JAG ALASKA, INC.,THE ASSUMPTION OF THE LEASE BY JAG ALASKA,INC.AND AMENDMENTS TO THE GROUND LEASE WHEREAS,the city (Lessor)and Seward Ship's Drydock,Inc. (Lessee)entered into the current ground lease in 1995; and WHEREAS,the Ground Lease has been amended and extended,with the most recent in July 2012 extending the term until June 30, 2040; and WHEREAS, in 2014 Seward Ship's Drydock, Inc. sold their vessel repair and construction business operated on the leased land to Vigor Alaska-Seward LLC and requested the City's consent for assignment of the Lease to Vigor Alaska-Seward LLC; and WHEREAS, council approved the assignment to Vigor Alaska-Seward LLC in resolution 2014-044; and WHEREAS,the lease authorizes assignment by the Lessee subject to city approval if the Lessee sells its vessel repair and construction business; and WHEREAS, Vigor Alaska-Seward LLC desires to sell and JAG Alaska, Inc. desires to purchase the vessel repair and construction business operated on the leased land; and WHEREAS,Vigor Alaska-Seward LLC desires to assign its lease to JAG Alaska,Inc. and JAG Alaska, Inc. desires to assume the lease; and WHEREAS, the City wishes to amend the lease as presented at this meeting and attached hereto; and WHEREAS, as a condition of consenting to the lease assignment the City has requested and JAG Alaska, Inc. has posted a satisfactory performance and payment surety bond; and WHEREAS,the parties have negotiated the terms of the lease assignment,and agree that 26 27 CITY OF SEWARD,ALASKA RESOLUTION 2018-061 a timely and efficient transfer is in the parties' and the public's interest;and. WHEREAS, the City Charter, provisions of which cannot be waived by the council, requires that resolutions involving real property transfers become effective not less than thirty(30) days following passage and approval. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The Seward City Council authorizes the Assignment and Assumption of the Ground Lease from Vigor Alaska-Seward LLC, to JAG Alaska, Inc.. Section 2.The Ground Lease assigned to JAG Alaska,Inc.is hereby amended as presented at this meeting and attached hereto,and the City Manager is authorized to execute same in substantially the form presented here. Section 3. This resolution shall take effect thirty (30) days after passage and posting. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 23rd day of July 2018. THE CITY OF SEWARD,ALASKA David Squires,Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) 27 28 Agenda Statement Meeting Date: July 23, 2018 To: City Council Through: Jim Hunt, City Manage 3j From: Norm Regis, Harbormaster Agenda Item: Assignment, Amendment and Assumption of the Shiplift ground ]case with Vigor Alaska-Seward LLC,to JAG Alaska,Inc. BACKGROUND & JUSTIFICATION: The City of Seward has leased a parcel of land in the Seward Marine Industrial Center for use as a shipyard since 1988. The current ground lease was entered into with Seward Ship's Drydock in 1995 and amended in. July 2012 to extend the term until June 30, 2040. Seward Ship's Drydock, Inc. sold its vessel repair and construction business to Vigor Alaska-Seward, LLC, and under the terms of the Lease and with the City's consent the lease was assigned to Vigor Alaska-Seward, LLC. in May of 2014. Vigor Alaska-Seward,LLC has complied with the terms and conditions of the lease, including repairs and maintenance,has sold their vessel repair and construction business to JAG Alaska, Inc., and now desires to assign all of its interest under the lease to JAG Alaska. Inc. as authorized under Article 8, Section 8.03 of the current lease, subject to approval of the City. JAG Alaska,Inc.,having conducted all appropriate inquiry regarding the site,agrees to accept, assume, and agrees to keep, perform and fulfill all of the terms, covenants, conditions and obligations of the lease. Corresponding assignment, assumption and amendments are also required to align provisions of the Operations and Maintenance Agreement;those will also be brought to Council. Though the Lease contains the simple assignment clauses standard to City leases, the administration has included amendments, acceptable to Assignee, that clarify and make specific the performance clauses in the Lease. The administration also recommends that as a condition of lease assignment JAG Alaska, Inc. provide a performance and payment surety bond to the City as Lessor; the bond note is attached. Attached are the original ground lease dated April 25, 1995,ground lease extension and amendments, Assignment of Lease from Vigor Alaska-Seward, LLC to JAG Alaska, Inc., and bond note. INTENT: This resolution will authorize the assignment of the lease from Vigor Alaska-Seward, LLC, to JAG Alaska, Inc., and amend sections of the newly assigned lease. 28 29 CONSISTENCY CHECKLIST: Yes FNoNIA Comprehensive Plan (3.5.1.2,page$): Plan for adequate port 1 infrastructure that will serve the needs of users in the main X industrial/Alaska Railroad area and at the Seward Marine Industrial Center(SMIC). 2 Strategic Plan (Page 7): Expand development at the Seward Marine X Industrial Center(SMIC). 3. Other (list): X FISCAL NOTE: The lease rates are unchanged. There are no foreseeable costs associated with the transfer of this lease. Approved by Finance Department: ATTORNEY REVIEW: Yes No Not Applicable RECOMMENDATION: Authorize assignment of the current lease from Vigor Alaska, LLC, to JAG Alaska. Resolution 2018-061 29 30 Assignment,Assumption and Amendment of Lease This Assignment, Assumption and Amendment of Lease (this "Agreement") is made this day of , 2018, by and among Vigor Alaska - Seward LLC, an Alaska limited liability company ("Assignor"), JAG Alaska, Inc., an Alaska corporation ("Assignee"), and the City of Seward, Alaska, an Alaska municipal corporation ("Lessor"). Assignor, Assignee and Lessor may each be referred to as a "Party" and any two or more of them may be referred to collectively as the "Parties". RECITALS A. By that certain Ground Lease dated April 25, 1995, as amended by that certain Lease 95-094 Amendment No. 1, dated as of December 23, 1997, as further amended by that certain Lease Amendment Number 2, dated as of January 2000, as further amended by that certain Ground Lease Amendment No. 3, dated as of October 26, 2001, as further amended by that certain Ground Lease Amendment No. 4, dated as of January 14, 2010, as further amended by that certain Agreement to Extend Ground Lease, dated as of January 26, 2010, as further amended by that certain Agreement to Extend Ground Lease, dated as of July 11, 2012, as further amended by the Assignment, Assumption and Amendment of Lease dated as of July 8, 2014, copies of which are attached hereto marked ANNEX A (collectively, the "Lease"), by and between Lessor, as lessor, and Assignor or its predecessor in interest, as lessee or successor lessee, Lessor agreed to lease to Assignor and Assignor or its predecessor agreed to lease from Lessor all that certain tract of land with improvements situated thereon commonly known as Lots 1-A and 3 Block 7, Fourth of July Creek Subdivision Seward Marine Industrial Center (the "Premises"). B. Assignor assumed the Lease from Seward Ship's Drydock, Inc. on or about July 8, 2014 and has occupied the Premises from that date through and including the Effective Date described in Section 2 below ("Assignor's Occupancy"). C. Assignor wishes to sell and assign to Assignee, and Assignee wishes to purchase from Assignor, substantially all of Assignor's assets related to the Premises, and to assume certain specifically identified liabilities of Assignor (the "Purchase/Sale Transaction"). One of the conditions of the Purchase/Sale Transaction is Assignor's assignment of the Lease to Assignee, Assignee's acceptance and assumption of the Lease, and Lessor's release of Assignor from future liability under the Lease. The Lease permits Assignor to assign the Lease, subject to Lessor's consent. Therefore, the closing of the Purchase/Sale Transaction will be effective only if and when the Parties have executed and delivered this Agreement and the other conditions in Section 2 below have been satisfied or waived. AGREEMENT NOW, THEREFORE, in consideration of the provisions in, and intending to be legally bound by, this Agreement, the Parties agree as follows: 507486\4005\00714097 30 31 1. Recitals, Definitions. The recitals set forth above are incorporated in this Agreement by reference. Capitalized terms not otherwise defined in this Agreement will have the same meaning as in the Lease. 2. Assignment and Assumption of Lease, Release. Subject to the terms of this Agreement and the satisfaction of the conditions in this Section 2, Assignor assigns to Assignee all of Assignor's right, title and interest in and to the Lease (the "Assignment"). Assignee agrees to and accepts the Assignment and assumes and agrees to keep, perform and fulfill all of the terms, covenants, conditions and obligations otherwise required to be kept by Assignor under the Lease that arise on and after the Effective Date described below. . Lessor releases Assignor from any and all obligations and/or breach of the Lease that occurs on or after the Effective Date. This Agreement will not become effective or bind any of the Parties unless and until each of the following conditions has been satisfied (or waived) (the "Effective Date"): (a) Assignee has posted a performance and payment surety satisfactory to Lessor; (b) each Parry has executed and delivered to each other Parties the Assignment, Assumption and Amendment of Operating Agreement, dated the same date as the Effective Date; (c) Assignor has delivered to Assignee, in a form satisfactory to Assignee, a Bill of Sale and Assignment for the personal property owned by Assignor associated with the Premises (the "Bill of Sale"); and (d) Assignee has delivered to Assignor, in immediately available funds, the consideration for that property stated in the Bill of Sale. 3. Direct Lease. The Lease will continue in full force and effect as a direct Lease between Lessor and Assignee, as Lessee under, and upon and subject to all of the terms, covenants, and conditions of, the Lease. 4. Amendment to Section 4.01 Use of Premises. Lessor and Assignee hereby agree to amend and Section 4.10 of the Lease, effective as of the Effective Date, in its entirety with the following language: The parties agree that the Premises is one of few parcels within the SMIC suitable for vessel repair and construction and that the City has made a substantial investment in public facilities adjacent or in proximity to the Premises with the objective of providing opportunities for businesses such as Lessee's to operate. Consistently during the term of the Lease, Lessee shall take all necessary actions to be capable of providing vessel repair and construction, and shall use the Premises only for vessel repair and construction, and purposes incidental thereto. Lessee shall operate a vessel repair and construction facility continuously during the Lease Term. Lessee is not operating a vessel repair and construction facility continuously on the Premises if, during any period of 60 consecutive days, the Shiplift Facility is not used to perform vessel repair or construction work on any vessel on the Premises, or if the Shiplift Premises are not full. If there were no business during a 60 day period to meet this requirement, the requirement will be deemed fulfilled by having executed 6 drydocking operations in the previous 12 month period. 5. Amendment to Section 14.06 (Notices) of the Lease. Lessor and Assignee hereby amend Section 14.06 of the Lease, effective as of the Effective Date, to replace the Lessee's address as follows: JAG Alaska, Inc. Assignment,Assumption and Amendment of Lease Page 2 507486\4005\00714097 31 32 Attention: 6. Warranties and Representations. As of the Effective Date: 5.1 Lessor. Lessor represents and warrants to Assignor and to Assignee that: (a)the documents attached as ANNEX A are collectively a true and correct copy of the Lease immediately prior to the Effective Date; (b) other than the provisions of this Agreement, and that certain Maintenance and Operating Agreement between Lessor and Assignor dated as of April 1, 2012, as amended contemporaneously with this Agreement, the Lease represents the entire agreement between Lessor and Assignor relating to the Premises and has not been amended by any agreement, written, verbal or otherwise, between Assignor and City; (c) neither Lessor nor Assignor has taken any action to terminate the Lease, and the Lease remains in full force and effect and is enforceable in accordance with its terms; (d) beginning on the Effective Date, and subject to the terms of the Lease, the Premises at all times hereafter during the term of the Lease may be held by Assignee (or its assignee or sublessee) without any lawful interruption by Lessor or any person or persons claiming under or through Lessor; and (e) Lessor has the right, power, and authority to enter into this Agreement. 5.2 Assignor. Assignor represents and warrants to Lessor and to Assignee that during the period of Assignor's Occupancy: (a) Assignor has not taken any action to terminate the Lease prior to its expiration pursuant to its terms; (b) all material obligations under the Lease have been complied with by Assignor (or waived in writing by Lessor), and except for Assignor's lack of work at the Premises, no material violation of or default under any of the terms of the Lease by Assignor has occurred, and no facts exist which, with the giving of notice and/or the passage of time, would constitute such a violation or default or any other claim by Lessor or Assignor under the Lease of any nature or kind; (c) Assignor has not assigned the Lease or received notice of an assignment of the Lease by Lessor; (d) Assignor has not sublet all or any portion of the Premises; (e) Assignor has the right, power, and authority to enter into this Agreement. 5.3 Assignee. Assignee represents, warrants and covenants to Lessor and to Assignor that: (a) Assignee has taken all necessary corporate action to enter into this Agreement and carry out its provisions; (b) Assignee has the financial capacity and expertise to enter into this Agreement and to operate a shipyard on the Premises in accordance with this Agreement; (c) Assignee's entry into this Agreement and carrying out the provisions hereof does not violate or conflict with the terms of any law or order of any administrative agency or the terms of any agreement of the Assignee or any order,judicial or otherwise to which Assignee may be subject; and (d) Assignee has the right, power, and authority to enter into this Agreement. 7. Environmental Matters. 6.1 Environmental Audits. Before Assignor occupied the Premises, Phase I and Phase II environmental audits of the Premises were performed (the "2014 Audits"). A copy of the 2014 Audits is attached as Exhibit C to the Assignment, Assumption and Amendment of Lease dated as of July 8, 2014. Attached to this Agreement as ANNEX B is a copy of the Phase I and any Phase 11 environmental audits of the Premises performed by Assignee prior to the Effective Date (the "2018 Audit(s)"). As between Lessor and Assignee, all references in the Assignment,Assumption and Amendment of Lease Page 3 507486\4005\00714097 32 33 Lease to "Baseline Audit" will mean and refer to the 2018 Audit(s). The parties agree that the 2014 Audits disclose the presence of historical releases of Hazardous Substances on the Premises prior to Assignor's occupancy in 2014, and that the 2018 Audit(s) describes the presence of Hazardous Substances on the Premises as of the date(s) of the 2018 Audit(s). The 2014 Audits and the 2018 Audit(s) will be used by the Parties as an aid in determining contamination existing on the Premises as of the dates of those audits, and for determining future environmental cleanup responsibilities, if any, as may be required by government or third party actions. 6.2 Responsibility. Assignor will not be responsible for any Hazardous Substances present on the Premises before the 2014 Audits, or that are brought on to the Premises after the 2018 Audit(s), or for the exacerbation of the Hazardous Substances disclosed in the 2014 Audits or that were first disclosed in the 2018 Audit(s). Assignee will not be responsible for any Hazardous Substances present on the Premises before the 2018 Audit(s) or for the exacerbation of the Hazardous Substances reflected in the 2014 Audits. Assignor will indemnify, defend, and hold harmless Lessor and Assignee for the cleanup of any Hazardous Substances as required by law that were brought on to the Premises after the 2014 Audits and before the 2018 Audit(s), and for the exacerbation of those Hazardous Substances, and Assignor will remove or cause to be removed all such Hazardous Substances to extent required by applicable law. Assignee will indemnify, defend, and hold harmless Lessor and Assignor for the cleanup of any Hazardous Substances that are brought on to the Premises after the 2018 Audit(s), and for the exacerbation of those Hazardous Substances, and Assignee will remove or cause to be removed all such Hazardous Substances to extent required by applicable law. Except to the extent otherwise required by applicable law, Assignor or Assignee, as appropriate, will have the exclusive and unfettered right to control the timing, nature, and content of communications with the Alaska Department of Environmental Conservation, the United States Environmental Protection Agency, or other federal, state or local governmental entities regarding the actual, possible, or suspected presence of Hazardous Substances in or around the Premises. 6.3 Post-Assignment Insurance by Assignee. Assignee will obtain will obtain from a licensed insurer a policy of premises pollution liability insurance insuring Lessor and Assignor from claims made during the policy term for contamination that occurs during the period of Assignee's Occupancy, which insurance will: (a) be subject to commercially reasonable terms and exclusions, (b) have limits of liability of $1,000,000.00 per pollution condition and $3,000,000.00 aggregate, (c) name Lessor and Assignor as insureds, and (d) be maintained in effect for a period of four (4) years from the Effective Date. For the avoidance of doubt, a single insurance policy that meets both the requirements of this Section 6 and Section 6 of the Assignment, Assumption and Amendment of Operating Agreement by and among the Parties, of even date herewith, will satisfy the requirement of this Section 6. 8. Miscellaneous: 7.1 Successors and Assigns. This Agreement will inure to the benefit and will be binding upon the successors and assigns of each of the Parties Assignment,Assumption and Amendment of Lease Page 4 507486\4005\00714097 33 34 7.2 Interpretation. The words "includes" and "including" are not limited in any way and mean "includes or including without limitation." The word "person" includes individuals, corporations, partnerships, limited liability companies, co-operatives, associations and other natural and legal persons. The term "and/or" means each and all of the persons, words, provisions or items connected by that term; i.e., it has a joint and several meaning. The words "will," "shall," and "must" are synonyms, and each refers to action that is mandatory rather than optional. All documents and exhibits attached to or referenced in this Agreement are a part of and are incorporated in this Agreement. Each Party has had an opportunity to have this Agreement reviewed by its attorneys; therefore, no rule of construction or interpretation that disfavors the Party drafting these Terms, or that favors the other Party, will apply to the interpretation of this Agreement. Instead, this Agreement will be interpreted according to its fair meaning. If there is any conflict between the provisions of the Lease and the provisions of this Agreement, the provisions of this Agreement will control, and except as expressly amended by this Agreement, all of the terms, covenants and conditions of the Lease will remain in full force and effect after the Effective Date. All section and paragraph headings of this Agreement are inserted for convenience only and will not constitute a part of this Agreement, nor will they in any way affect its meaning, construction, interpretation or effect. This Agreement will be construed and enforced exclusively in accordance with the laws of the State of Alaska. 7.3 Notices. All notices, requests, demands, directions and other communications (collectively, "notices") under the provisions of this Agreement will be in writing (including email communication) unless otherwise expressly permitted under this Lease and will be sent by first-class or first-class express mail, or by email with confirmation in writing mailed first-class, in all cases with charges prepaid, and any such properly given notice will be effective when received. All notices will be sent to the applicable Party at its address in Section 14.06 of the Lease or, in the case of Assignor, to 5555 N. Channel Avenue, Portland, OR 97217, Attn: General Counsel, or in accordance with the then unrevoked written direction from that Party to the other Parties. 7.4 Relationship. The Parties recognize that, for purposes of this Agreement, Assignee is a "lessee" of Lessor and "assignee" of Assignor, and nothing in the Lease or this Agreement is intended or will be construed to create an employer/employee relationship or a joint venture or a partnership relationship, or to allow Lessor or Assignor to exercise control or direction over the matter or method by which Assignee performs under this Agreement. 7.5 Severability. The invalidity of any portion of this Agreement will not affect the force and effect of the remaining valid portions of this Agreement. 7.6 Further Assurances. Each of Lessor, Assignor and Assignee will, from time to time upon the request of any of the others, promptly and duly execute, acknowledge and deliver any and all such further instruments and documents, and will take such further action, as may be necessary or desirable to confirm this Agreement and to carry out its purpose and intent. 7.7 Counterparts/Execution. This Agreement may be executed in counterparts, including by means of PDF signature pages, each of which will constitute an original and all of which, when taken together, will constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by electronic transmission will constitute effective execution and delivery of this Agreement as to the Parties and such copies may be used in lieu of the original Agreement for all purposes. Assignment,Assumption and Amendment of Lease Page 5 507486\4005\00714097 34 35 9. Lessor's Consent. Assignor and Assignee acknowledge and agree that Lessor's consent is necessary for this Agreement. Lessor, intending to be legally bound hereby, consents to the Assignment of the Lease by Assignor to Assignee pursuant to the terms of this Agreement. Lessor represents and warrants that it has full power and authority to enter into and grant this Lessor's consent under Resolution 2018- of Lessor authorizing its City Manager to enter into this Agreement on behalf of Lessor and the Parties agree that the power and authority of Lessor to enter into and grant this consent is subject to the terms of Resolution 2018- Each of Assignee and Assignor have provided Lessor with certified copies of all necessary corporate resolutions and other documents evidencing the authority of persons signing this Agreement on their behalf and to bind them in accordance with the terms of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Assignment,Assumption and Amendment of Lease Page 6 507486\4005\00714097 35 36 IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals by their duly authorized officers as of the date and year set forth opposite their names below, intending to be legally bound. Dated: ASSIGNOR: VIGOR ALASKASEWARD LLC, an Alaska limited liability company By: Name: Title: Dated: ASSIGNEE: JAG Alaska, Inc., a corporation By: Name: Title: Dated: LESSOR: CITY OF SEWARD, ALASKA, an Alaska municipal corporation By: Name: Title: Assignment,Assumption and Amendment of Lease Page 7 507486\4005\00714097 36 37 ANNEX A The Lease [Insert complete copy of Lease] ANNEX B The 2014 Audits and the 2018 Audit(s) [Insert environmental audits] Assignment,Assumption and Amendment of Lease Page 8 507486\4005\00714097 37 38 Section 4.01— Use of Premises.The parties agree that the Premises is one of few parcels within the SMIC suitable for vessel repair and construction and that the City has made a substantial investment in public facilities adjacent or in proximity to the Premises with the objective of providing opportunities for businesses such as Lessee's to operate. Lessee shall continue to offer comprehensive vessel repair and construction services, continue to be capable of providing those services, and shall use the Premises only for vessel repair and construction , and purposes incidental thereto. Lessee shall operate a vessel repair and construction facility continuously during the Lease Term. Lessee is not operating a vessel repair and construction facility continuously on the Premises if, during any period of 60 consecutive days,lessee the Shiplift Facility is not used to performs He vessel repair or construction work on any vessel on the Premises. 38 From; Douglas Huff<Douglas.Huff Zvjag mind-marine.com> Sent; Tue 6/1912018 6;20 AM To; RQALong Cc; Adam Belo Subjed: Follow up to your questions as posed.... Ron- C3 'The Corporate Resolution is completed and Josh iNill forward to you later this morning- Regarding Four environmental question-_-- I- We did a Phase I as indicated below- There ivere some items noted can the Phase I so we engaged a Phase 2. to be completed- There was a call late last v,-eek and the follov ing items are now in process- a- There are 2 locations identified that require remediation at this time- b- Area I is the solvent storage area c- Area 2 is near the tab shop d- One location will require reporting to the DEC and potentially- some post clean up rep ordng requirements — e- There are some localized areas that ive have cleaned up and Vigor 1.611 reimburse us for 3- -We believe all identified areas are Pre--Vigor- These ivere not identified in the 2014 survey due to the timing of the inspection and the facilit-y at that time was covered with sno-,v and ice_ 4- 'Vigor is being pro-active and taking the lead to rem ediate these areas and ;,i11 seek reimbursement from the previous operator or insurance as applicable- =- The Phase I and Phase ?. report -,611 be issued post clean-up by E.R.M. Please feel free to give us a call to further discuss- Best_ Doug 39 I�� 40 Surety Bond KNOW ALL MEN BY THESE PRESENTS:That we JAG Alaska Inc. (hereinafter called Principal),and North American Specialty Insumace Company,a corporation organized and existing under the laws of the State of New Hampshire(hereinafter called Surety), are held and firmly bound unto the City of Seward,Alaska,an Alaska municipal corporation(hereinafter called Obligee),in the penal sum amount of Two Hundred Fifty Thousand and 00/100 dollars($250,000.00)for the payment whereof Principal and Surety bind themselves,their heirs,administrators,executors, successors and assigns,jointly and severally,firmly by these presents. WHEREAS,the Principal has by written agreement dated the 81" day of August,2018 entered into a Contract with the Obligee for the Assignment,Assumption and Amendment of Agreement of the Maintenance and Operating_Agreement originally dated April 1 yt, 2012,and its subsequent amendments,commonly referred to as the"M&O Agreement", AND for the Assignment,Assumption and Amendment of Lease originally dated April 25' , 1995,and its subsequent amendments,commonly referred to the"Lease" (hereinafter called Agreements)which contracts are hereby referred to and made a part hereof. NOW,THEREFORE,THE CONDITIONS OF THE ABOVE OBLIGATION is such that,if the Principal shall faithfully perform its duties under said Agreements,then this obligation shall be null and void;otherwise it shall remain in full force and effect. PROVIDED,HOWEVER,That this bond is subject to the following conditions: 1. In the event of default by the Principal,Obligee shall deliver to Surety by certified mail,a written statement of the fact of such default,within thirty(30)days of the occurrence. In the event of default,the Surety will have the right and opportunity, at its sole discretion to promptly: a. Cure the default b. Tender to the Obligee funds sufficient to pay the demonstrable damages sustained by Obligee as a direct result of the default. 2. No claim,action,suit or proceeding,except as hereinafter set forth,shall be had or maintained against the Surety on this instrument unless same be brought or instituted upon the Surety within one(1)year from termination or expiration of the bond term. 3. No right of action shall accrue on this bond to or for the use of any person or corporation other than the Obligee named herein or the heirs,executors,administrator or successors of Obligee. 4. The Penal Sum amount of this Bond shall not increase,absent Surety's written consent,regardless of any changes, alterations,or modifications to the Agreements. The aggregate liability of the surety is limited to the penal sum stated herein regardless of the number or amount of claims brought against this bond and regardless of the duration of this bond being in force. 5. It is expressly agreed and understood by all parties to this Bond that if Obligee shall default under its obligations under the Agreements,neither the Surety nor Principal will be responsible for its obligations hereunder 6. This bond shall expire effective 81h day of August,2019. 7. This bond shall not bind the Surety unless the bond is accepted by the Obligee. The acknowledgement and acceptance of this bond is demonstrated by signing where indicated below. If this obligation is not accepted by way of signature of the Obligee below,this bond shall be deemed null and void. Signed and sealed this 81" day of August,2018. PRINCIPAL: SURETY: (seal) North American Speciality Insurance Company (seal) (name&title) Attorney-in-Fact THE ABOVE TERMS AND CONDITIONS OF THIS BOND HAVE BEEN REVIEWED AND ACCEPTED BY THE(OBLIGEE). ACKNOWLEDGED AND ACCEPTED BY OBLIGEE: BY: PRINTED NAME/TITLE: DATE: PLEASE RETURN A COPY OF ACCEPTED BOND TO: VT4%Insurance Group 1175 W.Long Lake Suite 200 Troy,MI 48098 Vigor Industrial,LL.0 Phase I Environmental Site Assessment Project Solstice Seward Ships Drydock 7-Mile Nash Road Seward,Alaska +.. April 2014 Project Number,0230020 Erik Ipsen,PE Parbier4ii-Charge Phase I Environmental Site Bob Carson Project Geologist Assessment � Gl --- PrajeM Soistice Seward Ships Drydock 7 Mile Nash Road Lisa Nicholson Seward,Alaska Project Manager Prepared far. Vigor Industrial,LLC April 2014 ERM-West,Inc. 1001 SW 5th Avenue,Suite 1010 Portland,Oregon 97204 www.erm.com - T:(503)4$8-5782 F:(503)488-5142 The worlds leading sustainab(ilty consultancy ERM 7 TABLE OF CONTENTS 4.0 ASSESSMENT OF PAST LAND USE AND OPERATIONS 12 LIST OF FIGURES III 4.1 GENERAL INFORMATION 12 EXECUTIVE SUMMARY 1 4.2 HISTORICAL ENVIRONMENTAL REPORTS 12 1.0 INTRODUCTION AND BACKGROUND 4.3 EVALUATION OFHISTORICALINFORMAT70NSOURCES is 1 4.3.1 Subject Properhj 16 I.1 PURPOSEAND AUDITORS 1 4.3.2 Adjacent Properties and Surrounding Area 16 1.2 SCOPE OF WORK 1 5.0 DATABASE AND GOVERNMENT RECORDS R EVIEW 18 1.3 LIMITING AND SPECIAL CONDITIONS 2 5.1 GOVERNMENT RECORDS REVIEW/INTERWEWS 18 2.3.1 Limiting Conchtions during the Site Visit 2 5.2 ENVIRONMENTAL DATABASE SEARCH 18 1.3.2 Significant Assumptions 2 5.2.2 Subject Property 19 20 SITE SETTING 3 5.2.2 Surrounding Properties 19 2.1 LOCATION 3 6.0 DATA GAPS 21 2.2 NEIGHBORING PROPERTIES 3 70 USER AND OWNER PROVIDED INFORMATION 22 2.3 TOPOGRAPHY AND HYDROLOGY 4 7.1 USER AND OWNER/OPERATOR QUESTIONNAIRES 22 2.4 GEOLOGYANDHYDROGEOLOGY 4 7.2 TITLERECORDS 22 3.0 SITE AND OPERATIONS INFORMATION 6 7.3 ENVIRONMENTAL LIENS OR ACTIVITYAND USE LIMITATIONS 22 3.1 GENERAL SITE DESCRIPTION 6 7.4 SPECIALIZED KNOWLEDGE 23 3.2 UTILITIES 6 75 COMMONLY KNOWN OR REASONABLY ASCERTAINABLE 3.3 PROCESSES AND MATERIAL USE 7 INFORMATION 23 3.3.1 Current Operations 7 7.6 VALUA77ONRF-DUCTION FOR ENVIRONMENTAL ISSUES 23 3"12 Discontinued Operations 7 7.7 OWNER,PROPERTY MANAGER,AND OCCUPANT INFORMATION23 3.4 CHEMICAL USE AND STORAGE 7 3.4.1 Underground Storage Tanks(USTs) 7 Z8 REASON FOR PERFORMING PHASE l 23 3.4.2 Aboveground Tarrks(ASTs) 7 7.9 NON-REGULATORY INTERVIEWS 24 3.5 HAZARDOUS AND NON-HAZARDOUS WASTE MANAGEMENT 8 8.0 CONCLUSIONS/RECOMMENDATIONS 25 3.5.1 Hazardous Waste 8 9.0 QUALITICA77ONS OF ENVIRONMENTAL PROFESSIONALS CONDUCTING 3.5.2 Non-Hazardous Waste 8 THIS ASSESSMENT 27 3.6 WATER,WASTEWATER,AND STORM WATER 8 1&0 LIMITATIONS 3.6.1 Water 8 28 3.6.2 Wastewater 8 APPENDIX A-SITE PHOTOGRAPHS 3.6.3 Storm Water 10 APPENDIX B-AERIAL PHOTOGRAPHS,TOPOGRAPHIC MAPS,CITY $a.. 3.7 AIR EMISSIONS 10 DIRECTORIES SEARCH RESULTS,AND SANBORN FIRE err INSURANCE MAPS 3.8 POLYCHLORINATED BIPHENYLS(PCBS) 10 APPENDIX C-STTE-AND USER-PROVIDED INFORMATION 3.9 VISUAL INDICATIONS OF ON-SITE IMPACTS 11 APPENDIX D-USER AND OWNER QUESTIONNAIRES 3.10 ASBESTOS-CONTAINING MATERIALS(ACMS) 11 APPENDIX E-EDR DATABASE SEARCHRESULTS APPENDIX F-PROFESSIONAL PROFILE i 1 24? it 42 1.0 INTRODUCTIONAND BACKGROUND ERM's Phase I ESA included: • An on-site inspection of the subject property to evaluate current conditions and identify areas of potential concern; 1.1 PURPOSE AND AUDITORS • A review of property history through interviews and aerial ERM-West,Inc.(ERM)performed a Phase I Environmental Site photographs,city directories,ownership records,and historical y Assessment(ESA)of the of the Seward Ships Drydock(SSD)operations mapping; located at 7-Mile Nash Road,Seward Marine Industrial Complex Seward, Observation of adjacent properties and the local area to evaluate the Alaska(the"subject property"or"site').ERM performed the ESA at the potential for adverse environmental impact to the subject property; request of Vigor Industrial LLC(the"User")using a materiality threshold of$250,i&O per environmental issue identified.Noteworthy issues of • Interviewsfresearch of local city/county,tribal,state,and federal <$250,000 will also be identified. records,including contracting of Environmental Data Resources,Inc. (EDR)to identify sites of concern as required in the regulatory records The site visit was performed on 19 December 2013 by ERM assessors Ms. review section of the ASTM standards for a Phase I ESA,where Lisa Nicholson,C.P.G and Ms.Kelsey Coolidge.ERM was accompanied available;and on the site visit by Mr.Jim Pruitt,the owner of 55D,and the operator of Interviews with the prospective purchaser. the subject property. Photographs of the site were taken to document current conditions and are included in Appendix A.Copies of aerial photographs,topographic 1.2 SCOPE OF WORK maps,City Directory Search results,and Sanborn Fire Insurance Maps are This environmental assessment in conformance with presented in Appendix B.Property environmental records or permits, This e essment was c a proposal dated es December o13 and with the requirements of reasonably obtainable at the time of the site visit,were reviewed and are American Society for Testing and Materials(ASTM)Standard E 1527-05. included in Appendix C,d appropriate. tor)Copies of the questionnaires Standard Practice for Environmental Site Assessments:Phase I Environmental (submitted to the User and Owner/Operator)are Presented in Appendix fo D.The EDR Database Search results were obtained and are presented in Site Assessment Process and thestandards for conducting all appropriate Appendix E. inquiries(AAi)set forth by the United States Environmental Protection Agency(USEPA)at Title 40 of the Code of Federal Regulations(CPR)Part 312. 1.3 LIMITING AND SPECIAL CONDITIONS The assessment was conducted to evaluate and identify conditions 1.3.1 Limiting Conditions during the Site Visit indicative of releases and threatened releases of hazardous substances and petroleum products on,at,in,or to the subject property.ERM's Phase I During the site visit the ground was covered by approximately a foot of ESA sought to gather information regarding:(1)current and past property snow. As a result,ERM was unable to inspect the ground conditions(e.g., users and occupancies;(2)current and past users of hazardous substances staining)due to the snow coverage. In addition,it was not possible to and petroleum products;(3)waste management and disposal activities determine surface completions(i.e.,pervious or impervious)at all that could have caused a release or threatened release of hazardous locations. substances;(4)current and past corrective actions and response activities to address past and ongoing releases of hazardous substances at the 1.3.2 Significant Assumptions subject property;(5)engineering controls at the subject property;(6) institutional controls at the subject property;and(7)properties adjoining No significant assumptions have been made. or located near the subject property that have environmental conditions that could have resulted in conditions indicative of releases or threatened releases of hazardous substances to the subject property. fiRM 1 SMaflCf/oYWa/natif.m. EM.I 2 wxarltt/vaaof/nMti4M. 2.0 SITE SETTING 2.3 TOPOGRAPHYAND HYDROLOGY The subject property is located in Seward Alaska,which lies in the south- 2.1 LOCA77ON central portion of Alaska on the Kenai Peninsula region.Seward is located at the north end of Resurrection Bay.The subject property is part The SSD operations are conducted on Block 7 of the Seward Marine of the SMIC,which was constructed on the northern portion of the Fourth Industrial Center(SMIC)located at Mile 7 Nash Road,Seward,Alaska. of July Creek alluvial fan with quarried and/or dredged material from The total operations area includes an approximately 11-acre parcel on the Resurrection Bay.The SMIC is located at the mouth of Fourth of July creek SMIC uplands.SSD leases lots lA and 3 of Block 7.SSD has operations across Resurrection Bay from the main Seward townsite. outside these lease areas,including the transfer The property is located at an elevation of approximately 15 feet above The general location of the property and the physiographic features of the mean sea level,and is generally flat around the buildings and parking surrounding area are shown on Figure 1,developed from the United areas.The overall topographic trend of the surrounding area is to the States Geological Survey 7.5-minute quadrangle for Seward,Alaska,dated southwest towards Resurrection Bay.Mountains surrounding the site 1995.Figure 2 provides a site layout,including leasehold boundaries. reach elevations of 2,000 feet within one mile of the coast.The closest surface water features to the subject property are Carlanna Creek, immediately northwest of the subject property,and Fourth of July Creek 2.2 NEIGHBORING PROPERTIES located south of the subject property.The region is a temperate rainforest with approximately 68 inches of precipitation per year. The subject property leasehold is located in a marine industrial area across Resurrection Bay from the Seward,Alaska townsite.The abutting According to the EDR report(Appendix E),the subject property is not properties and nearby land use includes: 'identified within the 100 or 500-year floodplains.The EDR report does • North:City of Seward Washdown Pad(Block 7,Lot 4); show the subject property is identified on the national wetlands inventory map as containing potential wetland areas. • East:The eastern portion of Block 7,Lot 4 is used for storing derelict boats.The city moves the boats to this location when they have been abandoned in the boat storage area.Block 6 is immediately east of 2.4 GEOLOGYAND HYDROGEOLOGY Block 7 and only Lot 1 is currently leased by Global Towers for placement of a cell tower; The area surrounding Resurrection Bay was covered by glaciers during • South:The southern portion of Block 7,Lot 4 is part of the active the Pleistocene Epoch.Numerous glaciers are still present east of Resurrection Bay and the Harding Icefield lies a few miles west of the boatyard and two boats were parked there at the time of the site visit. main Seward townsite. Block 8,south of Block 7 is un-leased,undeveloped land in the alluvial fan of Fourth of July Creek;and Exposed bedrock is comprised of alternating units of greywacke and • West:A boat basin and dock with a 250-ton Marine SynchroLift for phyllite which have experienced low-grade metamorphism.Local pulling vessels out of the water. surficial deposits are comprised of alluvial-fan and fan-delta deposits and include drift,muciflows,and landslide deposits near the mouths of Based on ERM's observations,the closest residences are located smaller tributaries including Fourth of July Creek. approximately one mile north of the subject property on Nash Road. No visual evidence of environmental concerns was observed on immediately Geologic maps and site data indicate the subject property is underlain by surrounding properties.However,as noted above,the ground surface was fill,fan-delta deposits,and slightly metamorphosed sedimentary bedrock. covered with snow during the visit and could not be inspected. The steep underwater face of the alluvial fan at Fourth of July Creek reportedly suffered submarine landslides during the 1964 earthquake. ffM 3 42 128 fM.l4 43 Spring Creek Correctional Center(northeast of the SMIC).The well is up- 3.6.3 Storm Water gradient of the subject property. Stcrmwater from SSD is currently permitted under the USEPA-issued 3.6.2 Wastewater National Pollutant Discharge Elimination System(NPDES)permit number AKR05CB23,issued April 21,2009.The ADEC has primacy over the Sanitary wastewater is discharged to the City of Seward municipal issuance of NPDES permits(now called Alaska Pollutant Discharge wastewater treatment system Elimination System[APDES)permits)in Alaska. Mixed wastewater(from vessel washing)and storrmwater from SSD is The average annual precipitation in Seward is approximately 68 inches. currently discharged to the Transfer Pit and an associated French drain. Precipitation that falls on the upland subject property is captured by the Regulators,including the USEPA,have identified the French drain as a Transfer Pit,runs off-site by sheet flow,or infiltrates into the ground potential Class 5 Underground Injection Control(UIC)system.However, surface.The Transfer Pit has four sediment traps that collect the water. the facility has not yet registered the drain as a UIC device, Stormwater is The outlets of the sediment traps lead to a French drain system.There are discussed below in Section 3.6.3. no storm water outfalls from the SSD lease area to Resurrection Bay. The management of other wastewater streams from SSD,under both Water flowing over the work bays is not treated. historical and current operating conditions,is discussed below. SSD received a notice of violation(NOV)regarding their NPDES permit 3.6.2.1 Washdown Wafer from Work Bays on June 28,2013 based on an April 10,2013 inspection.ERM does not have a copy of the inspection report or the NOV,but it reportedly requires SSD The current USEPA-issued NPDES permit authorizes the discharge of to file monitoring reports on a timely basis and use best management washdown water without treatment,but requires quarterly monitoring for practices.Until the issues in the NOV are resolved,SSD is in technical sheen in water from four sediment traps located in the Transfer pit. violation of its lease agreement with the City of Seward. 3.6.2.2 Ballast Witter 17 AIR EMISSIONS The NPDES permit does not authorize the discharge of ballast water.SSD contracts Emerald Alaska,Inc.to manage the ballast water from client ERM did not observe reportable air emission sources on the subject vessels. property.However,between December 2004 and February 2007 the ADEC received more than 20 complaints regarding fugitive dust.The ADEC file 3.6.2.3 Floodwater for the site indicates that two Air Quality violations have been issued to SSD;one on May 13,2005 and one on February 23,2007.ADEC required No flood water comes into contact with the SSD's working surfaces.Work SSD to develop and implement BMPs for fugitive emissions.SSD is only performed in the three work bays located inland from the subsequently developed a plan to control fugitive emissions;however,the SynchroLift dock. plan may be inadequate as fugitive emissions have continued to be the subject of citizen complaints. 3.6,14 Bilge Water The NPDES permit does not authorize the discharge of ballast water.The 3.8 POLYCHLORINATED BIPHENYLS(PCBS) client contracts Emerald Alaska,Inc.to manage bilge water from client vessels. PCB results from the 2007 USEPA Site Inspection indicated that Aroclor- 1254 was present above background levels in the covered bay and in the southern uncovered bay.One sample collected from the stockpile an. 9 wtmxximw�oinrus�a, esu 10 ax xerovvatnrwimu exceeded ADEC cleanup level for PCBs of 1 milligram per kilogram CO ASSESSMENT OFPAST LAND USE AND OPERATIONS (rag/kg) 41 GENERAL INFORMATION 19 VISUAL INDICATIONS OF ON-SITE IMPACTS Based on interviews with site personnel and a review of historical ERM did not observe indications of on-site dumping,land disposal,or photographs and records,the subject property is operated by SSD under contamination during the site inspection.Other than issues with spent an agreement with the owner,the City of Seward.Initial development sandblast grit described previously,a review of available records did not activities included dredging and filling to raise the site to the current identify historical waste disposal on site, elevation.SSD moved to the facility in 1988.The SSD facility has undergone several improvements since initial construction, Due to snow and ice cover,there were no observations regarding the absence or presence of soil staining.No oil stains were observed on the snow. 4.2 HISTORICAL ENVIRONMENTAL REPORTS ERM was provided with several historical reports for the subject property. 3.10 ASBESTOS-CONTAINING MATERIALS(ACME) A summary of the reports is presented below. Asbestos was banned in most friable building materials(spray-applied 1)Seward Ship's Drydock Site Inspection,Seward,Alaska.Prepared by: surfacing materials and thermal system insulation)in 1978,but the Ecology and Environment,Inc.(E&E)2007.Prepared for:the USEPA. Occupational Safely and Health Administration deems spray-applied surfacing materials.thermal system insulation materials,and vinyl E&E performed a site inspection for the USEPA in 20M. E&E collected flooring materials as"presumed asbestos-containing materials(PACMs)" nineteen surface soil samples from suspected sources across the subject if they are present in pre-1981 buildings(29 CFR Parts 1910.1001 and property.The results indicated that: 1926.1101). • Benzm(a)pyrene and DRO exceeded ADEC soil cleanup levels in the Historical records indicate that the buildings were constructed on or after Transfer Pit and the Covered Bay; 1988.As a result,PACMs are not likely to have been used in building a Only DRO exceeded soil cleanup levels at the Solvent Storage Area construction. and Maintenance Building;and According to Mr.Pruitt,small amounts of asbestos waste are generated • Benzo(a)pyrene,Aroclor-1254,and DRO exceeded cleanup levels in from repairs performed on older vessels.SSD contracts an environmental the spent sandblast grit stockpile. consulting firm to abate,remove,and/or dispose of the asbestos material. The report compared the sample results to a background soil sample collected approximately upgradient of the subject property,along Fourth of July Creek. E&E also collected three sediment samples:two from the banks of Resurrection Bay and one from a north-south oriented ditch that runs tea+' overland east of the site.The results for the ditch sample'indicated that arsenic,chromium,and DRO were elevated with respect to a background sediment sample collected approximately three miles away.The results from the two Resurrection Bay samples were comparable with respect to the background sample. E. a ou¢r,mwmainnamu 1293 r 12 44 Date D.scriptba 5.0 DATABASEAND GOVERNMENT RECORDS REVIEW 1950 The.—around Fourth of 1„ty Creek is undeveloped. 1978 The arcs appears to still be undeveloped. 5.1 GOVERNMENTRECORDS REVIEW/INTERVIEWS 1985 Nash Road has been added.The SMIC has been filled inand the ERM reviewed available information from the LISEPA Envirofacts and SymbroUft dock is in plea.The parcels do not appear to have been ECHO internet databases,the City of Seward website,the ADEC website, leased yet. the Borough Assessor,and the Alaska Geographic Information System Internet sites.Information obtained from these sources is summarized in the appropriate sections of this report. 5.2 ENVIRONMENTAL DATABASE SEARCH ERM contracted EDR to conduct a database search for agency records. The EDR Database Search results,presented in Appendix E,define and summarize the ASTM databases reviewed in the EDR report and note if any sites(including the subject property)were identified in the specified radius.The locations of the sites identified in the EDR report were evaluated to determine which sites were within the ASTM-specified search distance from the subject property boundary.Only those sites within the ASTM-specified distances are discussed below, It should be noted that the computerized geocoding technology used in the database search is based on available census data and is only accurate to t300 feet.The EDR report provides a list of unmapped sites for which inadequate location information was provided.ERM has reviewed the list of"unmapped"sites to determine if these sites are within the study radius.If the"unmapped"sites appeared likely to be within the search radius for a specific database,they are discussed in the sections that follow. Sites identified within the study radii were evaluated to determine if they are likely to have adversely impacted the subject property.The criteria used to evaluate the potential for adverse impact to the subject property include: Distance from the subject property; • Expected depth and direction of groundwater and surface water now; + Expected storm water flow direction,and The presence/absence of documented contaminant releases at the identified sites that have not been remedied to the satisfaction of regulators. swn 17 souricvruormt+ruimn rw 18 sasrKvawmiwsami. The identification of a site as potentially upgradient or downgradient is Table 4 Summary of Findings front EDR Report based on the expected direction of groundwater flow to the west- southwest(towards Resurrection Bay).However,given the relatively flat Radio. topological conditions at the site and tidal fluctuations,groundwater flow Database searched site. direction could be variable. (miles) Found ERNS 0,25 1 The EDR search identified the following properties in the EDR Database A hydraulic line beat on.crane operated by polar seafood Search.The subject property and properties with the potential to (SNBC Lots 2 and 2A,Block 9)releasing hydraulic oil to the dock adversely impact the subject property are discussed below. and Re.urrection Bay 5.2.1 Subject Property The number and type of sites identified in Table 5 are consistent with the history and nature of the surrounding area.When evaluating the The subject property address,Mile 7 Nash Road,was listed in the CERC- potential adverse impacts of off-site properties,ERM considered their NFRAP and ERNS databases searched by EDR. position relative to the reported groundwater flow direction.The Polar Seafood site is cross-gradient of the subject property with respect to The CERC-NFRAP listing is for hazardous waste sites that have been groundwater flow direction and assumed to not have a potential adverse removed from the inventory of CERCLIS(Comprehensive Environmental impact on the subject property. Response,Compensation,and Liability Information System)and have been designated"No Further Remedial Action Planned."The LiSEPA has determined that the subject property does not qualify for the National Priorities List based on existing information as of November 2007. The subject property is listed twice the EDR report in the Emergency Response Notification System(ERNS)as discussed below: • On August 19,2005 during the hauling of the 117-foot'Western Mariner"fishing vessel,2 quarts of used oil was discharged into Resurrection Bay.Absorbent boom was applied to clean up the spill. The responsible company was listed as Western Mariner LLC. • On August 8,2005 an employee of SSD spilled paint into Resurrection Bay.The volume of the spill was not reported and no cleanup was reported.Mr.Pruitt has stated that work is only performed in the upland work bays.Mr.Pruitt has not yet responded to questions regarding the spill. Note that both spills occurred on the dock,which is not on the subject property lease. 522 Surrounding Properties Surrounding sites identified in EDR's review of available databases are summarized in Table 4. eau 19 a ka,«ugm,.asm,. 44 130 r.M 20 said+mi.n rmi. 45 8.0 CONCLUSIONS/RECOMMENDATIONS sheet,the facility was issued a Notice of Violation to SSD in February 2007 for failing to follow the dustcontrol plan they committed to in spring 2006.City of Seward records indicate the facility continued to EM conducted a Phase I ESA of the subject property. ERM's conclusions receive complaints about dust control issue and received another and opinions are based on a scope of work that followed the requirements NOV in April 2013. No information regarding the specific NOV set forth in ASTM Standard E 1527-05 and 40 CFR 312.A summary of issues or resolution was provided by ADEC or SSD.SSD has also rot ERM's conclusions and opinions is presented below.Based on the data prepared BMPs for wastewater discharges,stormwater discharges, obtained during the site visit,the environmental database review,and registered the French drain as a UIC device,or prepared a site interviews with persons familiar with the site and its history,the specific Spill Prevention Control and Countermeasure(SPCC)Plan. following RECs were identified at the site: + Vessel washwater and site storm water are discharged to the Transfer De Minimfs or Other Potential Issues Pit and French drain.The quality of discharges is evaluated visually as part of the requirements of the facility stormwater permit.The While not RECs,ERM identified concerns that are summarized below and permit only requires SSD to visually inspect the water in the Transfer - are discussed in greater detail in the body of the report: Pit for evidence of an oily sheen.W ashwater and storm water comes • The quality of the sediment in the boat basin has not been evaluated. into contact with areas of metals and chemical use and storage A recent$10 million grant to the City of Seward,for in-water and throughout the site,including fabrication,raw material storage, upland improvements to SMIC,includes funds for the dredging of 5 painting activities,non-hazardous waste storage,and used grit to 10 feet of material from the boat basin. SSD indicated it has not storage areas.Therefore,it is possible that organics and metals conducted any repair activities on or over water. (including copper,zinc,lead,and chromium)and possibly tributyltin, from current or former SSD operations,may become entrained in SSD reportedly disposed of approximately 189 cubic vards of spent storm water and be discharged to the subsurface.Organics and metals sandblast grit on a private off-site property in 2004. As the result of in surface water and/or sediment could pose a risk to ecological public complaints,ADEC investigated the disposal activities and marine receptors. required SSD to excavate the material for disposal in a licensed • Although wastewater is discharged to the unpaved ground surface landfill by 2005. and to a French drain,groundwater conditions were not evaluated by the USEPA,SSD,or Alaska Department of Environmental Conservation(ADEC)as part of site investigations conducted between 2007 and 2010.The investigations only addressed the condition of shallow soil and/or intertidal sediment In 2013,ADEC issued a"No Further Action'letter for conditions associated with shallow soil and sediment contamination identified at the site. Material Compliance Issues • ADEC and the City of Seward require SSD to comply with Best Management Practices for their site activities.In 2012,the City indicated that SSD is technically in default of the Lease as a result of four unresolved Notices of Default issued by ADEC.The City administration recommended allowing the Lease to continue, without waiving any rights of the City,with the understanding and expectation that environmental compliance matters will be dealt with and resolved between SSD and DEC. Based on a 2008 ADEC fact e.0 25 sasrieriaeaeai.r.i�mi, 26 ,asrrce,mx«ar..nn v., 9.0 QUALIFICATIONS OF E107RONME.WTAL PROFESSIONALS 10.0 LIMITATTONS CONDUC77AfG THIS ASSESSMENT The innocent landowner,contiguous owner,and prospective purchaser Ms.Lisa Nicholson of ERM's Anchorage,Alaska,office and Mr-Bob defenses to liability under the Comprehensive Environmental Carson of ERM's Portland,Oregon,office conducted this assessment.Mr, Response,Compensation and Liability Act(CERCLA)requires that a Erik Ipsen,of ERM's Portland,Oregon,office,reviewed the contents of person acquiring a property conduct an AAI with respect to the subject this report.The professional qualifications for Ms.Nicholson,Mr.Carson„ property.ERM has conducted this ESA in accordance with the and Mr.1psen are included in Appendix F. standards for conducting an AAI set forth at 40 CFR 312.Those standards require the application of scientific principles and The signatures for Ms.Nicholson,Mr.Carson,and Mr.1psen are affixed professional judgment to certain facts with resultant subjective on the cover of this report. interpretations and exercise of discretion Professional judgments expressed herein are based on the facts currently available within the We declare that,to the best of our professional knowledge and belief,we limits of the existing data,and data gaps identified herein,scope of meet the definition of Environmental Professional as defined in 40 CFR work,budget,and schedule.Those standards also require that the 31110. client undertake certain additional inquiries, We have the specific qualifications based on education,training,and in addition,the liability defenses under CERCLA require,among experience to assess a property of the nature,history,and setting of the several other things,that the client after the acquisition stop any subject property.We have developed and performed the AAI in continuing releases,prevent any future threatened releases and prevent conformance with the standards and practices set forth in 40 CFR 312 or limit human,environmental or natural resource exposure to any hazardous substance released at the subject property.Therefore,ERM makes no warranties,express or implied,including,without limitation, warranties as to merchantability or fitness for a particular purpose, including any warranty that this Phase I ESA will in fact qualify client for the innocent landowner,contiguous property owner or prospective purchaser defense to liability under CERCLA. ERM's assessment is limited strictly to identifying RECs associated with the subject property. Results of this assessment are based upon the visual site inspection of readily accessible areas of the subject property conducted by ERM personnel,information from interviews with knowledgeable persons regarding the site,information reviewed regarding historical uses, information provided by contacted regulatory agencies,and review of publicly available and practically reviewable information identifying current and historical uses of the property and surrounding properties. All conclusions and recommendations regarding the subject property represent the professional opinions of the ERM personnel involved with the project,and the results of this report should not be considered a legal interpretation of existing environmental regulations. ERM assumes no responsibility or liability for errors in the public data .. 27 ....... 13145 e• 28 46 Appendix A Site Photographs Photo re h: t Transfer Pit looking weal Photograph: 2 Covered work bay looking northwest ProJectSolstfce/Seward Ship's Drydoek J 7 Mile Nash Road,Seward,Alaska R ERM Project Number 023DD20 - u5�� taper �---r � }•-j��`��,Y�J'�',1t. 31 r Photograph: 3 Covered bay looking west. Photograph: 5 Spent sandblast grit stockpile,looking norttri-nartheast from western and of covered work bay. Photograph: 4 Southern uncovered bay showing work stations and snow cover,looking east. Photograph: 6 Lift dock,looking west across dock toward Resurrection Bay. "ectSolsticel Seward Ship's Drydock ProJectSolsticaf Seward Ship's Drydock 7 Mile Nash Road,Seward,Alaska 46 7 Mile Nash Road,Seward,Alaska FERM ERM Project Number 0230020 132 E ERM Project Number 0230020 :z t-- a d- 1 Appendix B Aerial Photographs, Topographic Maps,Cihj Directories Search Results,and Sanborn Fire Insurance Maps Photograph:7 Aboveground storage tanks of dbsel and gasoline,looking east.Lined containment can be seen a einst buNdin walls M k p�1a 6! Photograph: 8 Used oil burner and tank in Machine Shop,located at southwest corner of building ProjectSolstice/Seward Ship's Drydock 7 Mile Nash Road,Seward,Alaska ERM Project Number 0230020 31 Certified Sanborn®Map Report 12n9/13 Site Name: Client Name: Project Solstice Project Solstice ERM West Mile 7 Nash Road Mile 7 Nash Road 1001 SW 5th Avenue EDR`, Seward,AK 99664 Portland,OR 97204 Seward,AK 99664 EDR Inquiry f 3614690.3 Contact: Bob Carson The complete Sanborn Library collection has been searched by EDR,and fire insurance maps covering me target Inquiry Number:3814690.3 property location provided by ERM West were identified for the years fisted below The cemfied Sanborn Library search results in this report can be authenticated by visiting wYrw edrnet comidanborn and entering the certification number December 19,2013 Only Environmental Data Resources Inc(EDR)is authoat,ed to grant rights for commercial reproduction of maps by Sanborn Library L-C,the copyright holder for the collection. Certified Sanborn Project ect S Site Nm ae: Protect Solstice Address: Mile 7 Nash Road City,State,Zip: Seward,AK 99664 Cross Street: P.O.4 Pending Project: Project Solstice Certification fir 77BC-4E94-AC55 Ifar *"'h The Sanborn Library include.more can 1.2 mlllon UNMAPPED PROPERTY Sanborn fire ineurenw map..-I,back haMncal This report certifies that the complete holdings of the Sanborn proper'usage in op—SrUnaty 12,000 Amas,n Library, LLC collection have been searched based on client ghee am toMna.wllaatlon..eamnedCertified : SanbornO 1Reportsupplied target property information, and fire insurance maps covering the target property were not found. ✓Library of Congress ✓Umvenaly Publications of America ✓EDR Private Collection Limited Permission To Make Copies ERM West(lire clienn Is permitted s make up to THREE photocopies Pf this Senbom Map tranar,.W each are insurance map accompanying Ma repod a is ly form r,kma u.e of se caetomer.Na ore omer than me client is IUNI aac!W make oopks Upon rwuaat made d,NA,dv m an EDR ASR,ra E...Utve.the client may be pemlitted to make a limited number of edddioral photocapin.Th.pelmlesion Is conartioned upon ci m damn.by the client it,customer Intl their agents with EDR'copynght policy;a wpy of Mich is avi lMble upon request Diadaimsr-Copyright and Trademark notice a Rewn mraalm eaten nlMmalan oM.elrap Irons a variety M WNP Intl Wrer.aurc.e reaeorabty available Io Envvonmenlal 0 W Resources In rcluaetl imm_ wHAeatc 11 IMormat TIONiMtargetanteurrwrTEVIRCRMdAL'esl.tfromanar ESIN.NOWARRANTY EXPRESSEDOR AOE VMATSOEVFT ISCWNECTItw WRN THIS RATI. ENVm WABITAI'All RESOURCES,INC SPECIFICALLY PI.)SP SE THE RISK _EC OF ANY SUCH WARRANTIES,INCLUDING WITHOUT LIMITATION,MERCHANTABILITY INCFRNE56 POT APARTI E M USE OR PURPOSE ALL Sk IS ASSUMED SI THE USER IN NO EVEM SHALL ENVIRONMENTAL DATA RESOURCES,IN UM LIABLE TO ING Wr Vv11ETHER ARISING art L, RRORS OR OMISSIONS NEGLIGENCE,ACCIDENT OR I IS OTHER CAUSE FOR ANY LOSS OE ENVIRONMENTAL INCLUDING WEST R ES INCIXJ,SPECIAL. IM TEL REF No OF HE OR AMOUNT PURY DAMAGES ANY LIABILITY ON THE PART W ENVIRONMENTAL DATA RESOURCES,IN IS STRICTLY IMITF I rt A REFUND de THE AMOUNT PAID FOR THIS REPORT ivIller iy A M ms Aa me d t t.AM.ralAS, egad"aortae,a ted I.K Ml rck wlaetl m I I,Report ant It la Mr eunaaa III.AS only,a rot lrA M Ponds,".,R Nay M iraelpeiea I.Pwsa^9 I Int IA an or.... RSAS,any dSknansnMl mk M ray AS Na e I Eweonmprevl R.M.I I,In.peda-ban mtruea as A l ad+de p"vaa repamllq.ba emlronmeaal dak is arty propody Aaa neMo IIY,da IryPInMlon pwlma m Mrc Report M awrgm M13 W Emimnmareal Delp INAMS as,Inc All nama reaervad.Repr-Mim In ercy maba w!onset in wlxMe or r Pan ap.d env reNA a m a ee 440 WINles farms Woad Ewiron,mval DIM RNA a 1.Pre.aeulMes,I.Pmm—...pro,vmaen pemaeon n (eE DR Mdfam,CT 06461 EDR ant AS Iogoe(IrcIWIrq Sanborn am AA-Map)I,.t1dameda a EnvromanMl Dell RAMInc or da aaAatn All filer aaaamade used eraln are -I alrOnmental Data Readur�es lnc aoo.352.Iw5o Rop.m a mae,ae,aAR.w.rer. aa^+earnetcam ��tt Tf7.1 A_�t 3914sta0-3 Pill 2 48 AGREEMENT TO EXTEND GROUND LEASE This Agreement is between the City of Seward, Alaska, an Alaska municipal corporation ("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc., an Alaska corporation ("Lessee"), whose address is P.O. Box 944 Seward, Alaska 99664, who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the "Lease"). The City of Seward and the Lessee certify that certain improvements have been completed that are necessary to extend the Lease Term in accordance with Ground Lease Amendment No. 4 dated January 14, 2010. Lessee installed certain capital improvement projects at the City Ship Lift Facility: Hoist Pawl Solenoid Upgrade, SMIC Cell and Dock Pile Coating, Control System Upgrade, and Cathodic Protection System. In full consideration of the aforementioned improvements by the Lessee, the City and Lessee agree that the subject lease will be extended commencing July 1, 2016 and expiring June 30, 2040. A Dated this It day of �^ , 2012 City: Lessee: CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. OE ames Hunt Ja s T. Pruitt City Manager Pre, ��PPnt p�iii-12044 b+ ATTEST: Of 51:WLYs J rC r . 41* q -4 4 .`is� Johanna Kinney ' City Clerk Nrr k� W p 1r State of Alaska t�P Third Judicial District ) The foregoing instrument was acknowledged before me this_Lk ay of 2012 by James Hunt, City Manager of the �r1g�' 5eiru �r an Alaska corporatio on of the cor ration. *�kll Oay Q p4AR� o Notary in a id for Ala ka t pvg%,\1 kr My commis ion expires: of �I 411110 48 49 State of Alaska ) )ss. Third Judicial District ) The foregoing instrument was acknowledged before me this,-4�"d?ay of I Unf 2012 by James T. Pruitt, President of Seward Ship's Drydock, Inc. an Alaska corporation, on behalf of the corporation. 4 tvEz,lia, Notary in and for Alaska My commission expires:_ M&)--43 NOTAN PUBLIC 7 0 F �� 49 50 Sponsored by: ffitiit CITY OF SEWARD, ALASKA RESOLUTION 2012-038 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AN EXTENSION OF THE GROUND LEASE WITH SEWARD SHIP'S DRYDOCK,INC.FOR THE REAL PROPERTY DESCRIBED AS LOTS I-A AND 3, BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION SEWARD MARINE INDUSTRIAL CENTER,SEWARD SHIP'S DRYDOCK REPLAT, ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT, THIRD JUDICIAL DISTRICT, STATE OF ALASKA WHEREAS,the City(Lessor) and Seward Ship's Drydock,Inc. (Lessee) entered into the current Ground Lease in 1995; and WHEREAS, the Ground Lease was extended in 2010 to 2016 to reflect the investment by the Lessee in improvements to the shiplift facility by replacing the cathodic protection system* and WHEREAS, the Lessee has made several other upgrades to the ship lift facility; and WHEREAS,the Lessee has completed the shiplift controls upgrade,the hoist pawl upgrade. partial coating of the breakwater cells, and replacement of the cathodic protection system; and WHEREAS, the parties desire to extend the lease. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA that: Section 1. The City agrees to accept the improvements based on representations by Lessee that the work was completed and Lessee has expended$3)46,001.25 on the Shiplift Control System Upgrade and $409,164.3)2 on the Hoist Pawl Solenoid Upgrade. Section2. The Ground Lease is hereby extended until June 30,2040. The City Manager is authorized to enter into an Agreement to Extend Ground Lease in substantially the same form presented at this meeting. Section 3. This resolution shall take effect 30 days after adoption. 50 51 Council Agenda Statement Meeting Date: June 11, 2012 a From: Mack Funk, Harbormaster Through: Jim Hunt, City Manager Subject: Seward Ship's Drydock Ground Lease Extension BACKGROUND & JUSTII+ICATION The City of Seward has long pursued the development of the Seward Marine Industrial Center,and constructed improvements to the area,including a Syncrolift Shiplift System, Ship Transfer System,and related rails,dock, and breakwater. The current ground lease for a portion of the area immediately upland of the Shiplift Facility has been in effect between the City and Seward Ship's Drydock, Inc. (SSDI) since 1995. In 2010, the Lease was extended through June 30,2016. The City Council authorized the possibility of future extensions through June 30, 2040. Lease extensions are based upon approved capital improvements to the Lease area or the City's Shiplift Facility operated by SSDI (Lease, Article 2). SSDI and the City went to binding arbitration in 2008. The question before the arbitrators centered on whether SSDI's proposed replacement of the cathodic protection system would constitute an "improvement" for purposes of extending the Lease term when the City contended that SSDI had not maintained or repaired the existing system that over the years deteriorated to a point where it no longer functioned. The panel of three arbitrators decided on December 23,2008 that SSDI was,in fact,eligible for an extension through June 30,2016 based on the investment made in a new Cathodic Protection system,to replace the older system, to protect the sheet pile breakwater below the waterline. To request an extension of the Lease term"...SSDI must submit to the City plans for an improvement ... [that] must include an estimate of costs and a schedule for installing the improvements." On the other hand, "The provision in the ground Lease that the improvement proposal is subject to approval by the City does not vest the Council with additional power over Ground Lease terms." (Arbitration decision) SSDI made numerous requests to extend the lease(several written attempts are documented over the past four years,but none are complete in accordance with the Lease). SSDI submitted the costs of three projects that may qualify for lease extensions: Shiplift Control System Upgrade ($346,001.25), Hoist Pawl Solenoid Upgrade (409,164.32)and Coating of Cells&Dock Piling($609,738.37). The total submitted costs of the three projects, if valid,would qualify SSDI for extensions through 2040. However,each request raises significant questions. For both the Shiplift Control System Upgrade and the Hoist Pawl Actuator Upgrade, SSDI first requested city approval on July 29,2009(letter enclosed),but the request did not include a schedule. Apparently the City did not approve the request because it was not complete and did not meet the requirements in Article 2 of the Lease to ask for an extension of the term. The labor rate charged for this work is $44.10 per hour. The Coating of Cells & Dock Piling did not achieve the agreed upon goal of reaching 2 feet MLLW. "A professional acknowledged the paint was about as low as it could get. It was difficult to go to that level. In looking at the coating,he felt it was acceptable,even though it did not meet the council's guidance from March [2011]." (Excerpt from the City Council minutes September 26, 2011). The previous city manager 51 z 52 recommended that the work be deemed complete. Several months later, the City Council accepted that recommendation, in March 2012, as part of the approval of the 5-year extension of the Maintenance and Operating Agreement. However, the original estimated cost was $400,000 (compared to $609,738.37). Furthermore,72%of the total cost of the project is labor and the labor rate associated with this work is claimed to be $63 per hour. SSDI is technically in default of the Lease as a result of four unresolved Notices of Default issued by the Alaska Department of Environmental Conservation. The City, as the owner of the land, may be held jointly and severally liable for contamination caused by SSDI at the site. The administration recommends allowing the Lease to continue, without waiving any rights of the City, with the understanding and expectation that environmental compliance matters will be dealt with and resolved between SSDI and DEC. The arbitration panel stated,"The City may not unreasonably withhold its consent to an improvement that SSDI proposes in connection with exercising the option to extend the Ground Lease." The panel also emphasized SSDI's responsibility to submit complete requests, including cost and a schedule for completion of acquiring, installing and constructing the improvement. No requests were sent to the City that comply with Article 2 of the Lease,and therefore no response was appropriate from the City. SSDI now asks for extensions to the Lease term to extend the term to June 30, 2040 without the need for compliance with Article 2. The administration has no objection, and recommends approval of an extension of the Lease term to June 30, 2040. According to the previous city manager,the ship lift facility is currently maintained in the best condition in the history of the Seward Marine Industrial Center (Agenda Statement September 26, 2011). CONSISTENCY CHECKLIST: Yes No N/A F1. Comprehensive Plan (document source here): Seward Zoning X Strategic Plan (document source here): Seward Marine Industrial Center X 2' Development Plan F Other (list): I+ISCAL NOTE The current rent collected from Seward Ship's Drydock, Inc. is $64,000 per year (plus tax). Finance Department: A4.t�� �� ATTORNEY REVIEW Yes_X - Limited_No RECOMMENDATION Council approve Resolution 2012-0 DU authorizing the City Manager to enter into the Extension of the Ground Lease with Seward Ship's Drydock, Inc. through June 30, 2040 in substantially the form presented at this meeting. 53 AGREEMENT TO EXTEND GROUND LEASE This Agreement is between the City of Seward, Alaska, an Alaska municipal corporation ("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc., an Alaska corporation ("Lessee"), whose address is P.O. Box 944, Seward, Alaska 99664, who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the "Lease"). Lessee certifies that it has completed the improvements necessary to extend the Lease Term in accordance with the Decision and Award dated December 23, 2008. Lessee installed a new cathodic protection system for the Shiplift Facility, and did not obtain financing for the improvement. Pursuant to the Decision and Award, the parties agree that "this extension period will commence July 1, 2009 and expire June 30, 2016." This lease amendment is without prejudice to each party's position concerning the manner in which the "cost of improvements" is determined for purposes of future lease extensions Dated this,26"5 day of -.%ani a 2010. City: Lessee: CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. � � GIiYyLc4 �zu-� Phillip Olakes ,,,,,,,Ames T. Pruitt City Managera etident ATT ST: EAL k � an Lewi MC ���� ��� ity Clerk ®0; 0 "4, � ,V,, STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this �day of jab , 2010 by Phillip Oates, City Manager of the City of Seward an Alaska corpora 'on, on behalf of the corporation. 53 54 ����\tt�I(►►//// NN ®T°''�e- o� N tary in and for Alaska 9'EOF A�Pry, � I( Vl�y commission expires: ►►��ttt STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) jThe foregoing instrument was acknowledged before me this IA-day of I lk i`V , 2010 by James Pruitt, President of Seward Ship's Drydock, Inc., an Alaska poration, on behalf of the corporation. ���ettau►///� L•Dp�� � tary in and for Alaska e -Q y commission expires:UBL OF 54 � 55 COUNCIL1 AGENDA STATEMENT Meeting Date: January 11, 2010 From: Phillip Oates,City Manager Subject: Seward Ship's Drydock 4"'Lease Amendment BACKGROUND&JUSTIFICATION The City of Seward has leased land to Seward Ship's Drydock,Inc.("SSDDI")since 1988. The current Ground Lease was entered into in 1995 for a Lease Term through June 30,2009,subject to possible extensions. Maximum extensions of the Lease Term could not exceed June 30,2029. SSDDI requested an amendment to the Ground Lease to allow possible Lease Term extensions through June 30,2040. At a council work session on November 10,2009,Jim Pruitt,President of SSDDI, notified the City Council that an extension beyond 2029 is appropriate because the acceptance of MARAD grant fields(for capital improvements to the City's syncrolift)would authorize an extension beyond 2029. The Ground Lease Amendment No.4,as presented at this meeting,grants SSDDI's request to amend the Ground Lease in this manner. No other changes are made to the Ground Lease. The following possible amendments were discussed and rejected because of the difficulty of reaching agreement on the terms. Amend Lease section 2.04. Define the type of improvement necessary to qualify for a Lease Term extension, remove the five year provision,clarify ambiguous language. Require a personal guarantee from James Pruitt for obligations under the Lease and the Maintenance and Operating Agreement. (This was required by City Council in 1995 but never signed by Mr. Pruitt.) - Require adoption of all Best Management Practices recommended by Alaska Department of Environmental Conservation and develop a schedule for environmental compliance. Following June 30,2009,begin charging fair market rental value for the City's building that was constructed with grant funds and is being used by SSDDI rent-free. Adopt annual CPI rent increases, consistent with other City leases. Various possible amendments to the Maintenance and Operating Agreement for the City Shiplift Facility were also discussed and rejected. CONSISTENCY CHECKLIST Yes No N/A 1. Comprehensive Plan X Economic Development... 2. Strategic Plan X Economic Base... FISCAL NOTE Finance Department: ATTORNEY REVIEW Yes RECOMMENDATION Council approve Resolution 2010- authorizing the City Manager to enter into Ground Lease Amendment No.4 with Seward Ship's Drydock, Inc. 55 56 GROUND LEASE AMENDMENT NO. 4 This Ground Lease Amendment No. 4 ("Lease Amendment No. 4") is between the City of Seward, Alaska, an Alaska municipal corporation ("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc., an Alaska corporation ("Lessee"), whose address is P.O. Box 944, Seward, Alaska 99664, who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the "Lease"). This document amends the Lease as set forth herein. Item 1 Lease Term. Section 2.04 is amended to read as follows, with the intent to allow maximum possible Lease Term extensions to June 30, 2040: Section 2.04 - Extension of Lease Term. Lessee may, at its option, extend the Lease Term for one or more additional periods which shall not, in total, exceed 31 years. Notwithstanding any other provision of this Lease, no extension of the Lease Term shall cause the Lease Term to expire later than midnight on June 30, 2040. Lessee shall exercise the option granted by this section in the manner, and subject to all of the conditions, set forth in this section. (a) The exercise of an option to extend the Lease Term under this section shall be subject to the following conditions: (1 ) Lessee shall notify Lessor of the exercising of the option in the manner specified in (b) of this section. (2) Before exercising the option, Lessee shall submit to City plans for improvements to the Premises or the Shiplift Facility, an engineer's or architect's estimate of the cost of the improvements, and a schedule for acquiring, constructing and installing the improvements, and City shall have given Lessee its written approval of the proposed improvements. (3) Lessee shall designate the portion of the proposed improvements that it intends to finance with borrowed funds, and shall provide City with a written commitment from a financial institution to lend the designated amount to Lessee. (4) Lessee shall submit to City a written estimate prepared by the financial institution that has committed to lend funds for the improvements of the number of years required to amortize the borrowed amount, with interest, in payments totaling not less than $100,000 per year. 56 57 (5) The exercise of the option shall not extend the expiration date of the Lease Term to a date later than five years after the date the borrowed amount, with interest, will be amortized under the estimate provided under (a)(4) of this section. (b) Lessee shall give City written notice of the exercise of an option to extend the Lease Term under this section, with the documents required under (a) of this section, not later than 180 days before the date of expiration of the Lease Term, as previously extended. (c) An extension of the Lease Term under this section shall become effective on the date of the closing of the financing of the improvements described in the documents Lessee submits to City to exercise the option. Item 2: The parties acknowledge that, as a result of Ground Lease Amendment No. 3 and the corresponding replat, the Premises are described as: Lots 1-A and 3, Block 7, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Seward Ship's Drydock Replat, according to Plat 2002-22, Seward Recording District, Third Judicial District, State of Alaska. Item 3: Other Terms of Lease. All other terms of the Lease remain in effect and legally binding upon the parties except as expressly amended herein. The effective date of Lease Amendment No. 4 shall be when signed by both parties in accordance with Resolution 2010-0,0 of the City. City: Lessee: CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. zya,I WW Phillip O tes James T. Pruitt City Managerresident AT EST: A -. f an Lew' MC I y Clerk 57 58 [ ! STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this it day of t2010 by Phillip Oates, City Manager of the City of Seward an Alaska corporation,bn behalf of the corporation. RIcy//o���� 'VAR �"% Notary in a for A ska ♦_ My commission expires: C 19 ao PUB1,.XG j OR STATL� `� ) ���Ait i 1911 )ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this %Stday of C by James Pruitt, President of Seward Ship's Drydock, Inc., an Alaska corporation, on behalf of the corporation. Notary in and for Alaska My commission expires: i .d� C� Ay° 58 59 Sponsored by: Oates CITY OF SEWARD, ALASKA RESOLUTION 2010-002 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AMENDMENT NO. 4 TO THE GROUND LEASE WITH SEWARD SHIP'S DRYDOCK,INC.FOR THE REAL PROPERTY DESCRIBED AS LOTS I-A AND 3, BLOCK 7, FOURTH OF JULY CREEK SUBDIVISION, SEWARD MARINE INDUSTRIAL CENTER,SEWARD SHIP'S DRYDOCK REPLAT, ACCORDING TO PLAT 2002-22, SEWARD RECORDING DISTRICT, THIRD JUDICIAL DISTRICT, STATE OF ALASKA WHEREAS,the City is the owner of the above-described real property("Property")located in the City of Seward, Alaska; and WHEREAS, the City, as Lessor, leased the Property to the Seward Ship's Drydock, Inc. since 1988,with the current Ground Lease in effect since 1995, as amended(the "Ground Lease"); and WHEREAS, the Lease Tema, as described in the Ground Lease, was for the period ending June 30, 2009 subject to possible extensions through June 30, 2029; and WHEREAS, Seward Ship's Drydock, Inc. desires to extend the possible maximum Lease Tenn through June 30, 2040; and WHEREAS, all other provisions of the Ground Lease remain unchanged; and WHEREAS, the City has determined that entering into the Amendment No. 4, in substantially the form presented at this meeting, is in the public interest and will serve a public purpose by encouraging investment in capital improvements to the Premises or the Shiplift Facility (each as defined in the Ground Lease); and WHEREAS,a public hearing meeting the requirements of Seward City Code§7.05.125 was held on January 11, 2010. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: 59 60 CITY OF SEWARD RESOLUTION 2010-002 Section 1. The City Manager is authorized to enter into a Ground Lease Amendment No. 4 with Seward Ship's Diydock, Inc. in substantially the form as presented at this meeting to extend the maximum permissible Lease Tenn extensions described in Section 2.04 of the Ground Lease to June 30, 2040. Section 2. The recitals above are incorporated herein by reference. Section 3. This resolution shall take effect 30 days after passage and posting. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 1 lth day of January, 2010. THE CITY OF SEWARD, ALASKA Willard E. Dunham, Mayor AYES: Bardarson, Smith, Keil, Shafer, Amberg, Dunham NOES: None ABSENT: Valdatta ABSTAIN: None ATTEST: Jea,dLewis,`•,CM(/� City Clerk (City Seal) �, ,y� a'attcaosm'ao �� 60 61 e r-^a (Dq LEASE No: RE-95-094 LESSOR: CITY OF SEWARD LESSEE: SEWARD SHIP'S DRYDOCK, INC. GROUND LEASE AMENDMENT NO. 3 This Lease was originally recorded in Book 89, beginning at Page 248, Seward Recording District, Third Judicial District, State of Alaska. This Lease Amendment No. 3 contains 7 pages, and one Attachment A This cover sheet has been added to this document by: City of Seward, Harbor Department To provide space for recording data. This cover sheet appears as the first page of the document in the official public record. 61 62 GROUND LEASE AMENDMENT NO. 3 This Ground Lease Amendment No. 3 ("Lease Amendment No. 3") is between the City of Seward, Alaska, an Alaska municipal corporation ("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc., an Alaska business corporation ("Lessee"), whose address is P.O. Box 944, Seward, Alaska 99664, who are lessor and lessee, respectively, under that certain Ground Lease dated April 25, 1995 of certain real property located within the Seward Marine Industrial Center, Seward, Alaska (the"Lease"). City and Lessee are also parties to that certain Maintenance and Operating Agreement dated March of 2000 pertaining to the syncrolift shiplift system located in the Seward Marine Industrial Center adjacent to the leased premises (the "Operating Agreement"). This document amends the Lease as set forth herein. Item 1. Article 1 - Definitions. DELETE the definition of"Operating Agreement," and substitute in its stead, the following new definition: "Operating Agreement" means the Maintenance and Operating Agreement between the City and Lessee dated March 30, 2000, as amended from time to time. Item 2. Parcels 1 and 2 designated on Attachment A hereto ("Parcel 1" and "Parcel 2") are added to the leased Premises, and will require a new plat therefor. The two parcels shall be surveyed and platted in accordance with the ordinances and regulations of the Kenai Peninsula Borough ("Borough") at Lessee's expense with a) Parcel 1 becoming part of a single lot including the existing leased premises and including the portion of Sorrel Road lying within Parcel 1 which portion shall be vacated as an access right-of-way, and b) Parcel 2, including the rails, becoming a second lot. Both parties shall support such platting in proceedings before the Borough. Approval and recording of such a final plat of the parcels within Two Hundred Seventy (270) days following the effective date of this Lease Amendment No. 3 to the mutual satisfaction of the parties is a condition subsequent to the full enforceability of this Lease Amendment No. 3, as provided in Item 8. Item 3. Article 3 - Rent. DELETE Section 3.01 - Amount of Rent and substitute in its stead, the following new "Section 3.01 - Payment of Rent:" Section 3.01 -Payment of Rent. Commencing on the effective date of Lease Amendment No. 3 through December 31, 2004, the annual rent for the Premises ("Rent") shall be set at $44,912.00, subject to the results of the survey described in Item 2 of Lease Amendment No. 3. The-portion of Rent for the additional land, approximately 4 acres, added by Lease Amendment No. 3 shall be $16,912.00 per year provided that upon completion of the survey and platting in Item 2 of.Lease Amendment No. 3; the portion of the Rent paid for"-the additional land shall be adjusted for the actual square footage and any overpayment will be promptly refunded or any amount due 62 63 J-0 (39 q shall be promptly paid. Subject to Section 3.05 - Annual Rent Credits for Deferred Maintenance, Rent shall be payable quarterly in advance upon the effective date of Lease Amendment No. 3 (prorated for the balance of the current quarter) and thereafter on or before the 1st day of the month beginning each calendar quarter: January 1, April 1, July 1 and October 1. The amount of each quarterly payment shall be one-quarter of the Rent. Item 4. Article 3 - Rent, "Section 3.02 - Payment of Rent." DELETE "Section 3.02(a)" in its entirety. Item 5. Article 3 - Rent. DELETE Section 3.05 - Rent Credits for Deferred Maintenance and substitute in its stead, the following new"Section 3.05- Rent Credits for Deferred Maintenance": Section 3.05 - Rent Credits for Deferred Maintenance. Lessee shall be allowed a credit to be offset against a portion of Rent due on Parcel 1 from the commencement of the Lease Term through December 31, 2004, for the amount actually expended by Lessee through December 31, 2004 for Deferred Maintenance or replacement of shiplift cables. "Deferred Maintenance" shall have the meaning as defined in the Operating Agreement. Lessee shall receive this credit as follows: (a) Lessee may deduct from the portion of each Rent payment due through December 31, 2004 allocable to 5.811 acres of Parcel 1 the amount actually expended by Lessee for Deferred Maintenance or replacement of shiplift cables during that period. (b) For the 5.811 acres of the Premises eligible for rent credits only, Rent for the period through December 31, 2004 may be paid in arrears and shall be due and payable and is conditioned upon delivery of the statements as required by Section 3.05 of the Operating Agreement. In no event shall rent credits exceed the Rent allocable to 5.811 acres of Parcel 1. (c) Failure of Lessee to verify the Rent credits annually by submitting the statements per Section 3.05 of the Operating Agreement in a timely manner, and to pay the remainder of any Rent due under the Lease will subject the Lessee to a monthly late charge of $2.50 plus finance charges of 10.5% per annum on that portion of the Rent remaining unpaid, - beginning the day after which such statements are due. Ground Lease Amendment No. 3- Page 2 C:\WINDOWS\TEMPkSSDLeaseAmendment No.3.wpd 63 64 ` Item 6. Article 4 - Use of Premises. ADD new "Section 4.07 - Additional Leased Land:" Section 4.07 -Additional Leased Land. Lessee shall have possession and quiet enjoyment of the additions to the Premises described herein as of the effective date of Lease Amendment No. 3, subject to Section 7.07. Lessee acknowledges that it has inspected the Premises and accepts the same"as- is" and without reliance on any expressed or implied representations or warranties of City, its officers, employees or agents as to the presence of any Hazardous Material, the actual physical condition or characteristics thereof, and the legal description or depiction of the Premises. Lessee has been the operator on the Premises since April 25, 1995 and on a portion of Parcel 1 since 1988. Item 7. Article 4 - Use of Premises. ADD new "Section 4.08 - Public Access." Section 4.08 - Public Access. Lessee shall conduct its operations on the Premises in a manner that will maintain public access to the Shiplift Facility over land owned by the City as required by the U.S. Department of Commerce, Economic Development Administration. Item 8. Article 7-Termination or Expiration of Lease Term. ADD new"Section 7.07 - Failure of Condition Subsequent:" Section 7.07- Failure of Condition Subsequent. If the condition subsequent described in Item 2 of Lease Amendment No. 3 does not occur in the time and in the manner as set forth therein, the Lease shall be terminated immediately as to the additional land described therein. Lessee shall pay all Rent that would have been due for the additional land for the period of Lessee's possession. The Lease, as amended, shall remain in effect as to the Premises, as defined without the additional land added in Lease Amendment No. 3, notwithstanding the failure of the condition subsequent described herein and the definitions of Premises shall be revised accordingly. Items 5, 6, 7, 9, and 10 shall survive termination. Item 9. Article 12 - Dispute Resolution. DELETE Section 12.01 - Submission of Claims in its entirety and substitute in its stead, the following new "Section 12.01 - Submission of Claims:" Section 12.01 - Submission of Claims. All Claims by a party shall be submitted to the other party by written notice. The responsibility to substantiate a Claim shall rest with the party making the Claim. A Claim by either party must be made within 90 days of Ground Lease Amendment No. 3- Page 3 C:\WINDOWS\TEMP\SSDLeaseAmendment No.3.wpd 64 65 the event giving rise to the Claim, or the date the claimant first recognizes the condition giving rise to the Claim, whichever occurs later. If a Claim is not resolved within 60 days of its submission under this section, the claimant may submit the Claim to Arbitration under Section 12.02 and pursuant to the Alaska Uniform Arbitration Act, AS 09.43.010 et seq. Unless the parties agree otherwise in writing, a Claim is waived if not submitted to Arbitration under Section 12.02 within 90 days of the giving of the initial written notice of the Claim under this section. Item 10. Article 14 Miscellaneous. ADD the following new "Section 14.14 - Claims": Section 14.14 - Claims. Lessee assumes all responsibility, risk and liability for any claim relating to the validity or enforceability of Amendment No. 3. Lessee shall bring no action and seek no damages or recovery as a result of a determination that Lease Amendment No.. 3 is invalid or unenforceable, in whole or in part, for any reason. Lessee agrees to defend and release the City, its officials, officers, employees, agents and contractors from any and all liability for loss or damages resulting from a decision that Lease Amendment No. 3 is invalid or unenforceable,whether in whole or in part,for any reason. Lessee shall accept the City's tender of a claim by a third party against the City that Lease Amendment No. 3 is invalid or unenforceable, and upon the City's tender shall defend against the claim at Lessee's expense. Lessee shall not seek or recover damages from the City for any loss or damages arising from such event. Lessee shall control the defense of the claim but shall not settle the claim without the City's prior written consent, which shall not unreasonably withheld. The City shall cooperate in the defense of the claim. In the event Lease Amendment No. 3 is declared invalid or unenforceable by a court of competent jurisdiction, a) Lessee shall discharge any judgment in favor of the third party against Lessee or the City, including costs and attorney's fees incurred in the litigation, but any other attorneys's fees and costs shall be paid by the party who incurred them, b) any improvements to the land which was added to the Premises by Lease Amendment No. 3 shall be subject to disposition in accordance with Section 7.03 of the Lease and c) if a replat has been recorded in accordance with Item 1 of Amendment No. 3, the Premises shall be replatted to its configuration as it existed prior to Lease Amendment No. 3, at Lessee's sole expense. This Section 14.14 is severable and shall survive termination of this Lease and Lease Amendment No. 3. Item 11. Exhibit B. DELETE Exhibit B and substitute in its stead a portion of the new plat to be prepared in accordance with Item 2 of Lease Amendment No. 3. Item 12. Other Terms of Lease. All terms of the Lease remain in effect and legally binding upon the parties except as expressly amended herein. Ground Lease Amendment No. 3 - Page 4 C:\WINDOWS\TEMP\SSDLeaseAmendment No.3.wpd 65 66 ,� The effective date of Lease Amendment No. 3 shall be when signed by both parties in accordance with Resolution 2001-115 of the City. The parties agree to execute and record a revised memorandum of lease reflecting the Lease terms as amended. City: Lessee: CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. W. Scott Janke/ Ames T. Pruitt City Manager President ATTEST: Patrick Reilly City Clerk S � e � SEAL Pi e s e � ` a� to c ; CtCi(OQOL+ Ground Lease Amendment No. 3- Page 5 C:\WINDOWS\TEMP\SSDLeaseAmendment No.3.wpd 66 67 a� C, L ACKNOWLEDGMENTS STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) THIS CERTIFIES that on this C day of )JD t— 2001, before me, a Notary Public in and for the State of Alaska, personally appeared W. Scott Janke, known to me and to me known to be the City Manager for the City of Seward, Alaska, and authorized to execute documents on its behalf, and is the individual named in and who executed the foregoing document on behalf of the City of Seward for the uses and purposes therein set forth. Itttttrrrr,, IN WITNESS WHERE J: &rQ,-set my hand an seal. v. purl- •s� '"" v�c?Y• ota P lic in and for Alas ° PN_ \\� My Co iEl Expires: l'U STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) THIS CERTIFIES that on this day of 2001, before me, a Notary Public in and for Alaska, personally appeared James Pruitt, to me known to be the person who executed the foregoing instrument on behalf of Seward Ship's Drydock, Inc. He acknowledged to me that she/he executed the same freely and voluntarily on behalf of said corporation. He stated to me under oath that he is the president of the said corporation, has been authorized by the Board of Directors of the corporation to execute the instrument on its behalf, and has full power and authority to execute the same. IN WITNESS WHEREOF, I hereunto set my hand and seal. \\1jiI11//// N_ No ary Public in and for laska My Commission Expires: /© , Co d� 0 00 14 5 ZOOI JAN 31 All: IQ SEWARD � REOUESTED BY RECORDING DISTRICT Ground Lease Amendment No. 3 - Page 6 C:\WINDOWS\TEMP\SSDLeaseAmendment No.3.wpd 67 68 CITY OF SEWARD, ALASKA RESOLUTION 2000-010, AYES: Blatchford, Brossow, King, Shafer NOES: Calhoon ABSENT: Clark, Orr ABSTAIN: None ATTEST: Patrick Reilly City Clerk a *�MZI *s *ems*► ....•.0.... Crr �ps ' ' ® i .0..di L • �-1 • 68 69 Sponsored by: Janke CITY OF SEWARD,ALASKA RESOLUTION 2001-115 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO AMENDMENT NO. 3 TO THE LEASE AGREEMENT AND AN AIVIEND- MENT NO. 1 TO THE MAINTENANCE AND OPERATING AGREEMENT WITH SEWARD SHIP'S DRYDOCK, INC. TO EXPAND THE LEASED AREA WITHIN BLOCKS 7 AND S,FOURTH OF DULY CREEK SUBDIVI- SION, SEWARD MARINE INDUSTRIAL CENTER, AND WITHIN A PORTION OF SORREL ROAD IN TRACT A PROPOSED TO BE VACATED AS AN ACCESS EASEMENT, SUBJECT TO CERTAIN CONDITIONS WHEREAS, Seward Ship's Drydock, Inc. submitted a proposal on July 21, 2000 to lease additional land within the managed parcel of the Syncro-lift facility in the Seward Marine Industrial Center, and WHEREAS,in accordance with the City's Lease Policies and Procedures, the Planning and Zoning Commission reviewed the proposal and adopted its Resolution 2000-04, recommending City Council approval of Seward Ship's Drydock request and further recommended that the City Council examine the original multi-user concept ofthe Syncro-lift facility, and consider leasing Seward Ship's Drydock,Inc., additional lands within the managed.parcel; and WHEREAS, the U.S. Department of Commerce, Economic Development Administration has approved the lease of two additional parcels of land, contingent upon maintaining public access to the Syncro-lift Facility, and WHEREAS Resolution 2001-090 authorized the City Manager to.negotiate a potential lease and agreement terms, excluding Sorrel Road; and WHEREAS,Seward Ship's Drydock, Inc. currently leaVs a 5.811 acre parcel described as Lot 1,Block 7,Fourth of July Creek Subdivision, Seward Marine Industrial Center, and operates the Syncro-lift facility for the City under a Maintenance and Operating Agreement with the City ("Operating Agreement"); and WHEREAS, the requested additional lease property includes portions of the unsubdivided remainder of Blocks 7 and 8, Fourth of July Creek Subdivision, Seward Marine Industrial Center (generally described as a±2 acre parcel east of Sorrel Road which includes the northwest 180 foot dry berth rail, and a f1.5 acre parcel south of Sorrel Road which Seward Ship's Drydock currently uses for parking and storage)and a portion of Sorrel Road in Tract A to be vacated as an easement; and \1PAT\C$\CURREN-1\COUNCIL\RESOLU-1\D1-115-1.WPD 69 � - 70 CITY OF SEWARD, ALASKA RESOLUTION 2001-115 Amendment No. 3 as necessary to finalize the lease amendment between the parties but without changing the substantive terms. Section 5. The Amendment No. 3 to the Lease shall require Lessee to survey and replat the Premises, as shown on Exhibit A to the attached form of lease amendment, within 270 days of the effective date of the Lease Agreement No. 3, to reflect the site dimensions and existing easements and the like. The plat shall be subject to approval by the City through the City Manager. Section 6. As required by Seward City Code §16.01.015(B), the City Council hereby consents to the subdivision of city-owned Blocks 7 and 8 and Tract A, Fourth of July Creek Subdivision, Seward Marine Industrial Center and authorizes the City Manager to sign the final plat on behalf of the City of Seward. Section 7. The City Manager is hereby authorized to enter into Amendment No. 1 to the Operating Agreement, in substantial form as attached hereto and incorporated by reference, and to make such changes as necessary to finalize the amendment but without changing the substantive terms. The authorization in this Section is conditioned upon execution and delivery of Lease Amendment No. 3 described above. i j Section S. This resolution shall take effect thirty(30) days after its adoption and posting. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 24th day of September, 2001. THE CITY OF SEWARD,ALASKA Edgar Blatchford,Mayor AYES: Blatchfbrd,Branson, Calhoon, Clark, Orr, Shafer NOES: None ABSENT: Brossow ABSTAIN: None \\PATnC$\CURREN-1\COUNCIL\RESOLU-1\01-115-1.W PD 70 7 r I� 0 SEWARD HARBOR DEPARTMENT 1300 4TH AVENUE, P.O. BOX 167, SEWARD, AK 99664 PHONE: 907 224 3138 FAX 907-224-7187 FAX COVER SHEET To: �. ` 1�'` :�....) " From: Firm: Re: Fax No No. of Pages: Date: Time Sent: 4,4 c_— t If there are any ,Z this transmission, please call the Harbor Office (907-224-3138) immediately. 71 72 kI!ldigS oql iol wamai V 13upundp pue aomualuipw Mau v o}ui iiuualua aassarl pine XI!D aqj 01100Cgns s!Z-oN*uawpuaunv aseaZ jo ssauancioa a aqj pie Ivno ccIde snl,l, 'aoua.�ajai Xq paleloclioout�Cqa racl pie ova eau pacloejje I!q!gxg ui q:zoj jas s'e uz.zoj Iellumsgns u!panoiddr Xgoiaq s! `966I `SZ I!IdV pajup aassa?pine X11D aqj uoamiaq asea-I umWoo jqj of Suilr1ai `Z 'oN juawpuouiV asea-I 'T umpaS :lvgl `VxSVrIV `gHvm3S 30 A,LIa alll AO ZIOAIIIOO ALTO gHs AS QaArIOSaH.LI gg`3XOA3HaHs`MOAT `XvI!oud kI!Id.4S aqi jo wauuaoeldw algeo pine aou'euawpatu panadap joj si!pa.io Huai jo uo!ltnulluoo agj IOJ ap!nold pine asva7 aqi puauze of isaialui ollgnd;Dgl ui si i!jqi spug pounoo Aj!D aqj`SVaHaHM pine `juawoovIdai algeo put, aoueuaiumw pa.uadap joj asea-I aqj.iapun silpa jo juai onulluoo o1 wisap sallied aqj pine `sivaX ang ueclj ssalio weal mau'e.poi aassa-I acli qi!m Xvg!ou3 U!IdigS aqi joj wauuaw9V 5uguiadp pine aoutuawiPW mou v olu! i?uuama XIsnoau'elInuzls s! XjiD aclj `SVaHaHM pine `.woma.iEV oqj jo uolltluluual aqj 5uimotioj `OOOZ `SZ IudV pua oi wom si!pwo wai oqj aseaq oqj apun `SVg2IHHM pine `asua atI� spun�ipazo �uat an!aoaz pinom aassaZ atI�go!gm roj solgeo jo ivauuaoeldw pie aoutualul uz pa.uadap urelzao uz.uojjad of aassa-I pa ilnbcm juawoa d?V aqj`S VaHaHM pine `.(juauzawgV aqj ui paugap su) Xl!I!oe3 !Id.gS s,XI!D QqT .iod («Iuauzaolgv,, aqT) wauuaw3V iiuilviadp pine aoueualulew P olu! paniva Xllvuolllppe sallied oql `oiui paiaiuo sum asua-I aqj auzll aqj it, `SVanaHM pine `njuaD ILulsnpul ouuuW pitmaS `L =tool- `I joj se paquosap Xvadold teal Qqj zoj `(«aasso-I„) 'oul `joopSj(I s,drgS pirmaS gjjm(,astol, aqj) juauuaai3v aseal t, mu!poniva(«�i�!�„)piemaS jo AuD aqj `966I `SZ IudV jo sP 9nlIoaS0 `SVgHgHM 'DAII `?IOOQAH([ SAMS (MVMgS (INV `VXSV'IV `(MVMgS dO ALI3 gHs Na3A all gSVgrI GNf1OH-9 V 30 .LNalVGN51 iV 3H,L OAZIZMOHZIIV `VXSVrIV `(MVMgS 90 A.LIO aHs ,IO rH3AIIIOO AID all L 30 AIOI.LIIrIOSaU V OI0-OOOZ AIOLLfi'IOS32I V?ISVrIV (Mvmas 30 A.LIO a}luer :Xff paaosuodS 72 73 C ���`� Sponsored By: Janke CITY OF SEWARD,ALASKA ` RESOLUTION 2000-009 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA,APPROVING THE SHIPLIFT MAINTENANCE AND OPERAT- ING AGREEMENT BETWEEN THE CITY OF SEWARD, ALASKA AND SEWARD SHIP'S DRYDOCK, INC. WHEREAS, since 1980 the City of Seward ("City") has provided for the development of the Seward Marine Industrial Center("SMIC"), and the City expended over$40.million dollars in construction of improvements to the area, including a synchrolift ship lift system, ship transfer system, and related rail systems ("Shiplift Facility"); WHEREAS, by Resolution No. 95-001, the City Council approved the long term lease of Lot 1,Block 7, SMIC("Lease")and a Shiplift Maintenance and Operating Agreement with Seward Ship's Drydock,Inc.,and Resolution No. 95-001 was the subject of a referendum election,the result of which upheld the aforementioned Resolution; WHEREAS, the Lease continues in full force and effect, and pursuant to the terms of that Lease, Seward Ship's Drydock, Inc. may request renewal of the Maintenance and Operating Agreement if(1) the Lease term has not expired before the renewal term of the Maintenance and Operating Agreement would commence, (2) Seward Ship's Drydock,Inc. is not in default under the Lease, and (3) notice of intent to renew the Maintenance and Operating Agreement is given to the City; I WHEREAS, the prerequisites for renewal of the agreement have been met, and the City Manager has prepared a new Maintenance and Operating Agreement similar in form to the current agreement, which new agreement shall be for a term less than five (5) years; WHEREAS,pursuant to Seward City Code Section 6.10.130,it is determined that the public interest would be best served by not requiring competitive proposals from potential operators of the Shiplift Facility because the current operator has satisfactorily performed under the current jagreement, uninterrupted service will benefit the public users and the current operator, there are economies in maintenance and operation that are achieved through an operator with an adjacent business location, and there is a benefit in retaining the current operator's expertise and experience in maintaining and operating the City's Shiplift Facility; WHEREAS, Seward Ship's Drydock, Inc. agrees to continue the Shiplift Facility maintenance requirements under the Maintenance and Operating Agreement which has limited the City's out-of-pocket expenses relating to the Shiplift Facility; 73 74 CITY OF SEWARD RESOLUTION 2000-009 WHEREAS, the Maintenance and Operating Agreement retains City ownership of the Shiplift Facility and provides for the continued operation of the Shiplift Facility as a public facility and at reasonable cost to the City and Shiplift Facility users; WHEREAS, special expertise, experience, and training is required for the proper maintenance and safe operation of the Shiplift Facility, and it is in the public interest to utilize the experience and expertise of Seward Ship's Drydock, Inc. to provide efficient and safe shiplift services in SMIC; WHEREAS, the Shiplift Facility is important for business development in SMIC and economic growth in the City; and WHEREAS,the City will have an opportunity to reevaluate the operator's performance prior to any subsequent agreements, if any; NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. For the reasons set forth in the recitals of this Resolution, which recitals are hereby incorporated by reference as written findings of the City Council, it is determined that, pursuant to Seward City Code Section 6.10.130, the public interest would best be served by not requiring competitive proposals prior to approving the Maintenance aftd Operating Agreement described herein. Seward Ship's Drydock, Inc.has demonstrated its ability to maintain and operate the Shiplift Facility, and it is unlikely that the City would be able to further reduce its expenses related to the maintenance and operation of the Shiplift Facility through the solicitation ofproposals. Section 2. The Maintenance and Operating Agreement attached hereto and incorporated by reference as Exhibit A is hereby approved subject to (1) the City and Seward Ship's Drydock, Inc. entering into an effective Lease amendment providing for continued Lease rental credits for deferred maintenance and cable replacement of the Shiplift Facility for the approximate term of the Maintenance and Operating Agreement and (2) Seward Ship's Drydock, Inc. providing the City a corporate Resolution approving the agreement. The City Manager is authorized to sign this agreement in substantial form as attached hereto on behalf of the City of Seward and may make such changes as necessary to finalize the document for signing. Section 3. The current Maintenance and Operating Agreement is hereby extended according to its existing terms until the lease amendment and the new Maintenance and Operating Agreement become effective on March 31, whichever occurs first. 74 75 Page I of I CITY OF SEWARD,ALASKA RESOLUTION 20W-CM Section 4. This resolutiofl shall take cf—fccl immediately upon its adoption- PASSED AND APPROVED by the UtY CoulxA of the City of ScwaTd,AI&5ka,this 28th day of Febmary,20W. THE["IT'S'OF SEW--XRD,ALASKA Is F . dg ar Bla M tthford, ikyor , AYES: Blatchford,Brossotip,CAllioon,King,Shafer NOES: Now ABSEM: CIAA-,Orr ABSTAIN: None PFC � Rcitly leek ems. i 75 http://history.cityofs eward.net/weblink7/lmageDisplay.aspx?cache=yes&sessionkey=WL1mageDisp1ay&u... 1/5/2010 76, LEASE 95-094 AMENDMENT NO. 1 THE CITY OF SEWARD, ALASKA, a home rule municipal corporation, organized and existing under the laws of the state of Alaska, hereinafter referred to as "CITY", and SEWARD SHIP'S DRYDOCK,INC.,P.O. Box 944, Seward, Alaska 99664-0944, hereinafter referred to as "LESSEE," hereby agree that the Lease between them for Lot 1 Block 7, Fourth of July Creek Subdivision Seward Marine Industrial Center, and originally approved by City of Seward Resolution 95-001 is hereby amended as follows: Delete ARTICLE I. --LEASED LAND, in its entirety and substitute in its stead: ARTICLE I.—LEASED LAND. The Leased Land is located in the City of Seward, Alaska. The Leased Land is described as follows: Lot 1 Block 7, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough Preliminary Plat No. 97-108, recorded as Plat No.97-Z7 in the Seward Recording District, Third Judicial District, State of Alaska. The total leased area is 5.811 acres more or less. In all other respects the lease as previously amended is to remain unchanged and in full force between the undersigned. IN ES WITNS WHEREOF, the parties hereto have executed this document, -and it is effective this 2 day of L.ecayK,64,-, , 1997, LESSOR: LESSEE: CITY OF SEWARD, ALASKA SEWARD SHIP'S DRYDOCK, INC. By: ` James T. Pruitt Xd'j' City Manager Its: President ATTEST: i oee Patrick Reilly°Cltyy?Cle Ci i a 1 Lease 9AO94 Armndment 40. 11,' 1 76 77 LEASE AMENDMENT NUMBER 2 (RE-95-094) THE CITY OF SEWARD,ALASKA,a home rule municipal corporation,organized and existing under the laws of the State of Alaska, hereinafter referred to as "City," whose mailing address is P. O. Box 167, Seward, Alaska 99664, and SEWARD SHIP'S DRYDOCK, INC., hereinafter referred to as "Lessee,"whose mailing address is P. O.Box 944,Seward,Alaska 99664, for and in consideration of the mutual promises and covenants hereinafter contained,hereby agree that the lease dated April 25, 1995 between them for the real.property described in attached Exhibit A, hereby incorporated by reference (the "Lease"), is hereby amended as follows: DELETE Section 3.05 within Article 3. RENT and substitute, in its stead, the following: Section 3.05 -Rent Credits For Deferred Maintenance. Lessee shall be allowed as a credit not exceeding the amount of Rent due from the commencement of the Lease Term through December 31, 2004, for the amount actually expended by Lessee through December 31, 2004 for Deferred Maintenance or replacement of shiplift cables. Lessee shall receive this credit as follows: (a) Lessee may deduct from any Rent payment due during the period ending December 31, 2004, the amount by which (i) the amount actually expended by Lessee for Deferred Maintenance or replacement of shiplift cables, exceeds (ii) Rent for which Lessee already has received a credit under this section. (b) At the end of each Fiscal Year ending before January 1, 2005, City shall refund to Lessee from Rent due and paid on or before the end of each such Fiscal Year, an amount by which (i) the amount actually expended before the end of such Fiscal Year by Lessee for Deferred Maintenance or replacement of shiplift cables, exceeds (ii) Rent for which Lessee already has received a credit under this section. In all other respects, the Lease is to remain unchanged and in full force between.the undersigned parties. IN WITNESS WHEREOF,the parties have executed this document and it is effective this day of January, 2000. CITY: LESSEE: THE CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC. By: W. Scott Janke By: James T. Pruitt Seward Ship's Drydock,Inc. Ground Lease Amendment J:\DOCS\43374170\SSDLeaseAmendmentl.3 Page 77 78 STATE OF ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this ' ') day of ki 199_7before me, the undersigned, a Notary Public in and for the State of Alaska, personally appeared il}'-V' `-/ f ``�-'ll k t d known to me and to me known to be the individual named in d who executed the foregoing document, and acknowledged to me that he signed and sealed the same of his voluntary act and deed for the uses and purposes therein mentioned. 0' �TE WITNESS my hand and notarial seal the day and year first hereinabove written. Notary Public in and for Alaska My Commission Expires:ALASKA ) )ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this 2-3" day of , 1997, before me, the undersi ned, a Notary Public in and for the State of Alaska, personally appeared L, ( known to me and to me known to be the individual named in and who executed the foregoing document, and acknowledged to me that he signed and sealed the same of his voluntary act and deed for the uses and purposes therein mentioned. WITNESS my hand and notarial seal the day and year first hereinabove written. 90V . Cat FIz IA SI—A . 5`afe qfA1t1s:4'j No ary Public in and for Alas a &z A9 nO:AR P011M C Commission Expires: RETURN TO: Community Development Dept. CITY OF SEWARD RECORDED_ P.O. BOx 167 Sep;=ark Reco<d g Distiric —Cc-- Seward, AK 99664 date Q 1 Time: <191 Requested by �€ Lease 95-094 Amendment No. 1 2 78 79 Sponsored by: Jones CITY OF SEWARD, ALASKA RESOLUTION NO. 95-001 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING THE LONG TERM LEASE OF LOT 1, BLOCK 7, SEWARD MARINE INDUSTRIAL CENTER, AND A SHIPLIFT MAINTENANCE AND OPERATING AGREEMENT WITH SEWARD SHIP'S DRYDOCK WHEREAS, at City Council's direction, the administration has negotiated two agreements with Seward Ship's Drydock for maintenance and operation of the shiplift facility and for the lease of adjacent city-owned upland property; and WHEREAS, it is in the public interest to approve the agreements as attached and incorporated herein by reference; NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The long term lease of Lot 1, Block 7, Seward Marine Industrial Center, to Seward Ship's Drydock is hereby APPROVED. A copy of the lease agreement and the personal guaranty provided by James T. Pruitt are attached and incorporated herein by reference. Section 2. The shiplift maintenance and operating agreement between the City of Seward and Seward Ship's Drydock is hereby APPROVED. A copy of the agreement is attached and incorporated herein by reference. Section 3. This resolution shall take effect thirty days after passage and posting as required by law. PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 18th day of January, 1995. THE CITY OF SEWARD, ALASKA l Dave W. Crane, Mayor 79 80 t3OO{B I PAGE a` 5 LEASE MEMORANDUM (WITH RENTAL AMOUNT OMITTED FOR RECORDING) NOTICE IS HEREBY GIVEN that a lease between the CITY OF SEWARD, ALASKA, PO Box 167, Seward, Alaska 99664, a home rule municipal corporation located within the Kenai Peninsula Borough, State of Alaska, herein called "LESSOR," and SEWARD SHIP'S DRYDOCK, INC. , PO Box 944, Seward, Alaska 99664, herein called "LESSEE," was made regarding the following described real property: Commencing at the northeast corner of United States Survey No. 4827 from a 5/8" x 30" rebar with an aluminum cap located, thence along the easterly line of said USS 4827, South 00034'13" East 1,458.02 feet; thence leaving said easterly line at a right angle thereto, South 89°25'50" West 850.80 feet to the TRUE POINT OF BEGINNING; thence South 89°25'50" West 425.00 feet; thence South 00'34'13" East 605.00 feet; thence North 89°25'50" East 425.00 feet; thence North 00034'13" West 605.00 feet to the TRUE POINT OF BEGINNING, containing an area of 257,125 square feet more or less. Said property is located at 3306 Sorrel Road within the Seward Marine Industrial Center, at Fourth of July Creek and is also described as Lot 1, Block'7� eward Marine Industrial Center, Fourth of July Creek Subdivision (preliminary plat), all within the Seward Recording District, Third Judicial District, State of Alaska. The effective lease term is April 25, 1995 through June 30, 2009. LESSEE shall have the right to extend the lease term for one or more additional periods that shall not, in total, exceed 20 years or cause the lease term to expire later than midnight on June 30, 2029. The original lease is on file and available for public review in the Harbormaster's Office, 1300 Fourth Avenue, PO Box 167, Seward, Alaska 99664. IN WITNESS WHEREOF, the parties hereto have respectively signed this memorandum on the dates below written. LESSOR: LESSEE: CITY OF SEWARD, ALASKA SEWARD SHIP'S DRYDOCK, INC. _ e-lyV-- k4ioft City Manager ,tames T. Pruitt, President Date: /,D,fa, c7 7 Date: /a ad�7 ATTEST: SUBMITTED BY: ck Reilly, City Cher �� Foster M. Singleton, Har aster I It 0 Sea�n::�.� • p 6 r-j Oa ' R+J MEMORANDUM OF LEASE Page 1 Seward Ship's Drydock,-tnc. 80 8-1 /+ CO K 6q P,�r STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this 23'�day of C , 199%, before me the undersigned, a Notary Public in and for the State of Alaska, personally appeared Zi4_ L 3 �;_t ffoccl, known to me and to me known to be the GAi city manager for the City of Seward, Alaska, and authorized to execute documents on its behalf, and is the individual named in and who executed the foregoing document on behalf of the City of Seward for the uses and purposes therein set forth. WITNESS my hand and notarial seal the day and year first hereinabove written. OFFi(IAI- 2/�7 No Public in and for Alaska �'ETTE` s ''}SA Commission Exp Tres: STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this day of • , 199'�' before me, the undersigned, a Notary Public in and for the State of Alaska, personally appeared James T. Pruitt, known to me and to me known to be the president of SEWARD SHIP'S DRYDOCK, INC., and acknowledged to me that the foregoing instrument was executed by him in his official capacity, pursuant to the authorization set forth in the by-laws of said corporation, and that the same was executed as the free and voluntary act and deed of the corporation for the uses and purposes therein set forth. WITNESS my hand and notarial seal the day and year first hereinabove written. Notary Public in anfor Alask My Commission Expires: , - 1/ --goo/ Return to: Harbormaster CITY OF SEWARD �'� ° G PO Box 167 Seward, AK 99664 AR Y PUBLIC', RECORDED - ,aYY n ,,i 4vtr1., District '�lh lJ+v Y':�Gl:d S i`F Date E t; MEMORANDUM OF LEASE { Page 2 Seward Ship's Drydock, Inc. Time: r,*'T Requestedby 81 82 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-062 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A LEASE WITH EXIT MARINE, LLC FOR BLOCK 5 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 the owner of real property described as Block 5 Fourth of July Creek Subdivision; and WHEREAS, Exit Marine currently has a lease and is conducting business at Lot 4 Block 4 Fourth of July Creek Subdivision which Council approved in resolution 2018-004; and WHEREAS, Exit Marine needs to lease additional land to expand their business at SMIC; and WHEREAS, Exit Marine, LLC submitted a proposal to lease Block 5 Fourth of July Subdivision for a boat repair/storage yard, net mending, equipment storage, future education and training center with employee housing; and WHEREAS, Exit Marine has submitted an application with the State of Alaska for their Storm Water Prevention Pollution Plan as required; and WHEREAS, the City Manager has negotiated a long term lease agreement with Exit Marine 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 Council has determined that the essential terms and conditions and the method disposition of the proposed lease with Exit Marine, LLC for the real property described as Block 5, Fourth of July Subdivision, located in the City of Seward, is in the public's best interest. Section 2. The City manager is authorized to execute a new lease with Exit Marine, LLC in substantially the form as presented at this meeting. 82 83 CITY OF SEWARD,ALASKA RESOLUTION 2018-062 Section 3. This resolution shall take effect thirty (30) days after its adoption. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 23rd day of July, 2018. THE CITY OF SEWARD,ALASKA Dave Squires,Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) 83 84 Agenda Statement Meeting Date: July 23, 2018 ' To: City Council Through: Jim Hunt, City Manager From: Norm Regis, Harbormaster Agenda Item: Exit Marine, LLC New Lease at Block 5, Seward Marine Industrial Center BACKGROUND & JUSTIFICATION: Exit Marine currently is conducting business with a lease on Lot 4 Block 4 Seward Marine Industrial Center, in which council approved in Resolution 2018-004. As their business continues to grow Exit Marine needs to lease additional property at SMIC. Exit Marine sees great potential at SMIC and the needs of the community. On this new proposed lease site Exit Marine would have more vessel storage/work sites to include equipment storage, net mending facility future training and education area and employee housing. Mr. Saunders: a.) Submitted an application with the State of Alaska for a Stonn Water Pollution Prevention Plan (S WPPP) as required. b.) Shall comply with all Seward City Code requirements. 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 Exit Marine, LLC on Block 5 Fourth of July Creek Subdivision within the industrial zoning District, Seward Marine Industrial Center for boat repair, marine operations, storage and employee housing. CONSISTENCY CHECKLIST: Yes No N/A Comprehensive Plan (page 116 3.5.1.2): Support the SMIC 1 Development Plan to include new market trends and modern X technologies for ship repair and construction, shipping of natural resource products, boat storage, and other compatible industries, Strategic Plan (document source here): Attract New Industry: 2 Develop an aggressive marketing campaign which highlights the diverse X resources, and quality of life that make Seward a great place to live and establish a business or indusqy. Pa e 5 3. Other (list): 84 85 FISCAL NOTE: The annual rent is $33,558.00 plus tax. The lease rate is based on 8% of fair market value. The parcel will be reappraised in 2020. Approved by Finance Department: J&= ATTORNEY REVIEW: Yes X No RECOMMENDATION: Approve Resolution 2018- authorizing the City Manager to approve a new lease with Exit Marine, LLC. Resolution 2018-062 85 86 LEASE AGREEMENT between CITY OF SEWARD, ALASKA and Exit Marine, LLC Effective Date: 12018 1 86 87 TABLE OF CONTENTS ARTICLE 1 -LEASED LAND.................................................................................................... 3 1.1 Description of Leased Land.................................................................................... 3 1.2 Covenant of Quiet Enjoyment; Warranty of Title................................................... 3 1.3 Reserved.................................................................................................................. 3 1.4 Property Accepted................................................................................................... 4 1.5 Permits....................................................................................................................4 1.6 Platting.................................................................................................................... 4 1.7 Development of Leased Land 4 ARTICLE 2 -LEASE TERM...................................................................................................... 5 2.1 Lease Term.............................................................................................................. 5 ARTICLE 3 -RENTAL RATE ................................................................................................... 5 3.1 Initial Rental Rate................................................................................................... 5 3.2 Rental Adjustments.................................................................................................. 5 3.3 Procedure for Rental Adjustment............................................................................ 6 3.4 Effect of Late Appraisal by CITY............................................................................ 6 3.5 Appraisal by LESSEE............................................................................................. 6 3.6 Effective Date of Adjusted Rental Rate................................................................... 7 3.7 Interim Rental Adjustments..................................................................................... 7 3.8 Late Payment Charge ............................................................................................. 8 ARTICLE 4 -USE OF LEASED LAND .................................................................................... 8 4.1 Use of Leased Land................................................................................................. 8 4.2 Obligations ofLESSEE........................................................................................... 8 4.3 No Preferential Rights to Use Public Facilities ..................................................... 8 4.4 Adequacy of Public Facilities................................................................................. 8 4.5 Tariffs and Other Service Fees ............................................................................... 9 4.6 Time for Payment of Utilities and Taxes................................................................. 9 4.7 Other Uses .............................................................................................................. 9 ARTICLE 5 -UTILITIES AND RIGHTS OF ACCESS.......................................................... 9 5.1 Utilities.................................................................................................................... 9 5.2 Third-Party Improvements.................................................................................... 10 5.3 Easements ............................................................................................................. 10 ARTICLE 6 - CONSTRUCTION BY LESSEE....................................................................... 11 6.1 Improvements on Leased Land............................................................................. 11 6.2 City Review of Construction ................................................................................. 12 ARTICLE 7 -RETURN OF LEASED LAND/SITE CONDITIONS.................................... 12 7.1 Return of Leased Land in Original Condition...................................................... 12 ARTICLE 8 -FORCE MAJEURE ........................................................................................... 12 ARTICLE 9 -LESSEE'S ACTS OF DEFAULT..................................................................... 13 ARTICLE 10 -REMEDIES FOR DEFAULT BY LESSEE .................................................. 14 ARTICLE 11 - TITLE TO IMPROVEMENTS INSTALLED BY LESSEE........................ 15 11.1 Real Property Improvements ................................................................................ 15 1 87 88 11.2 Personal Property................................................................................................. 16 ARTICLE 12 -ASSIGNMENT OR SUBLEASE .................................................................... 16 12.1 Assignment of Lease or Subleasing....................................................................... 16 12.2 Assignment of Lease for Security.......................................................................... 16 12.3 Assignment to Affiliate.......................................................................................... 17 ARTICLE 13 -LESSEE'S DUTY TO DEFEND/INDEMNIFY ............................................ 17 ARTICLE 14 - CITY'S DUTY TO DEFEND/INDEMNIFY ................................................. 17 ARTICLE 15 -INSURANCE .................................................................................................... 17 15.1 Minimum Insurance Requirements ....................................................................... 17 15.2 Subrogation Rights Waived................................................................................... 18 ARTICLE 16 - CONDEMNATION.......................................................................................... 19 ARTICLE 17 -ARBITRATION ............................................................................................... 19 17.1 Arbitration............................................................................................................. 19 ARTICLE 18 -MAINTENANCE AND REPAIRS................................................................. 20 18.1 Normal Maintenance ............................................................................................ 20 18.2 Safety Issues..........................................................................................................21 18.3 Cost of Repairs......................................................................................................21 ARTICLE 19 -ENVIRONMENTAL CONCERNS................................................................ 22 19.1 Hazardous Materials ............................................................................................ 22 19.2 Permits and Reporting.......................................................................................... 24 ARTICLE 20 -ESTOPPEL CERTIFICATES........................................................................ 25 ARTICLE 21 - CONDITIONS AND COVENANTS .............................................................. 25 ARTICLE 22 -NO WAIVER OF BREACH ........................................................................... 25 ARTICLE 23 - TIME OF THE ESSENCE.............................................................................. 25 ARTICLE 24 - COMPUTATION OF TIME........................................................................... 25 ARTICLE 25 - SUCCESSORS IN INTEREST.......................................................................25 ARTICLE 26 -ENTIRE AGREEMENT ................................................................................. 25 ARTICLE 27 - GOVERNING LAW........................................................................................ 26 ARTICLE 28 -PARTIAL INVALIDITY................................................................................. 26 ARTICLE 29 -RELATIONSHIP OF PARTIES .................................................................... 26 ARTICLE 30 -INTERPRETATION ....................................................................................... 26 ARTICLE 31 - CAPTIONS ....................................................................................................... 26 ARTICLE 32 -AMENDMENT................................................................................................. 26 ARTICLE 33 -NOTICES..........................................................................................................27 ARTICLE 34 -FIRE PROTECTION....................................................................................... 27 Exhibit A - Personal Guarantee Exhibit B - Environmental Compliance Plan Exhibit C - Leased Parcel 2 88 89 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, who's mailing address is P.O. Box 167, Seward, Alaska 99664 and Exit Marine, LLC (the "LESSEE"), an Alaska corporation whose mailing address is 281 S Conquest Circle, Wasilla, Alaska 99623. WHEREAS, LESSEE has indicated its desire to lease the property known as Block 5, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough, Plat No. 97-27 recorded in the Seward Recording District, Third Judicial District, State of Alaska, consisting of approximately 186,436 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 ofLeased Land. The Leased Land is located in the City of Seward, Alaska. The Leased Land is described as follows: Block 5, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough, Plat No. 97-27 recorded in the Seward Recording District, Third Judicial District, State of Alaska, consisting of approximately 186,436 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. 3 89 90 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 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 or Exhibit A hereto. 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. hi 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 operate a vessel maintenance/storage facility, net mending, equipment storage and employee housing 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 4 90 91 the Leased Land to LESSEE. LESSEE shall not operate any other unrelated business on the Leased Land without the 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 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. 2018- (the "Resolution"). The Lease Term shall run for approximately 20 years from the Effective Date, ending at midnight on July 23, 2038. 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, 2019, the annual rental rate for the Leased Land shall be set at $33,558.00. 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, 2020, and on the same date every five years thereafter (each a "Rental Adjustment Date"). The 5 91 92 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 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 6 92 93 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 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, 2019 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 7 93 94 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 storage, boat repair work, net mending, equipment storage and employee housing. 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, boat storage, net mending, equipment storage and employee housing businesses 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 8 94 95 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 Tams 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 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 9 95 96 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 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; 10 96 97 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. 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. hi 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 11 97 98 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, 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, 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. 12 98 99 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. 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 un-dismissed 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, of the State of Alaska and the City of Seward, 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 13 99 100 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 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. 14 100 101 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 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 II - 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. 15 101 102 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, 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 relets 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. 16 102 103 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 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 17 103 104 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 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 18 104 105 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 for a settlement pursuant to the provisions of the Alaska Uniform Arbitration Act (AS 09.43.010 et. seg.), 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, 19 105 106 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 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 20 106 107 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. 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 21 107 108 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. 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, 22 108 109 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 subparagraph shall be in addition to any other obligations and liabilities LESSEE may have to CITY at law or equity and shall survive the 23 109 110 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 24 110 111 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 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 25 111 112 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 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. 26 112 113 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 PO Box 167 Seward, Alaska 99664 All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the following address: Exit Marine, LLC 281 S. Conquest Circle Wasilla, Alaska 99623 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 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. 27 113 114 IN WITNESS WHEREOF, the parties hereto have set their hands and seals the dates herein set forth. CITY: LESSEE: CITY OF SEWARD EXIT MARINE,LLC Jim Hunt, City Manager Mikel Saunders, Owner Date: Date: ATTEST: Brenda Ballou, City Clerk 28 114 115 STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of , 2018, by Jim Hunt, 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 day of , 2018, by Mikel Saunders who executed the foregoing document on behalf of Exit Marine, LLC Notary Public in and for Alaska My Commission Expires: 29 115 11 Mailing Address: 281 S. Conquest Circle,Wasilla,AK 99623 Tel: (907)357-2900 Fax: (907) 357-2930 "> Norm Regis—Harbormaster PO BOX 167 Seward AK 99664 May 4, 2018 RE. Commercial Land Lease—SMIC Dear Mr. Regis, Exit Marine, LLC would like to make a formal request to enter into a commercial lease with the City of Seward for Block 5 and the un--subdivided remainder of Block 6 of 4"of July of Creek Subdivision. Exit Marine's intended use for the property is as follows: 1. Repair of commercial vessels 2. Storage of vessels under repair 3. Net mending facilities for commercial fishing fleet 4. Employee housing for marine trade workers and fish plant workers S. Space for training and education 6. Equipment storage for boat yard rolling stock 7. Container storage for the fishing fleet Additional space is critical for the continued growth of Exit Marine.The current lease space will soon be occupied by boat repair structures.This will leave insufficient yard space for jobs in-progress and parking of support equipment. Exit Marine has the capability to develop the requested lease land to meet its needs. Problem Without question,Seward is at the top of this list when it comes to location and facilities to support Alaska's Maritime Industries. Despite this obvious fact, other competing ports are receiving a larger piece of the pie than they deserve.This imbalance is caused in large part by a lack of marine service contractors in Seward. Solution Exit Marine(EM)operating as a full-service boat yard will become a key player in the Seward Marine Industry. We are committed to growing the industry to match the world class facilities Seward provides. EM will work hard to keep local boats in the Seward economy and will make attracting outside vessels top priority. EM will provide Seward with high paying off-season jobs. We will support local suppliers and subcontractors.The importance of local small businesses for Seward's economy cannot be overstated. Management Team Laura Schneider,General Manager and Kenneth Cardwell, Operations Manager are Seward locals committed to the community with 30 years combined experience in the marine industry.They are both former commercial fishermen with strong relationships in the fleet and are passionate about providing the support necessary to grow Seward as a homeport of choice for working boats. Market Exit Marine is targeting primarily commercial vessels up to 120ft with a secondary market consisting of recreational vessels up to 12011. EM will perform maintenance, repair, and refit with a skilled local team. Specialty trades will be subcontracted to local specialty contractors. 1 Physical Address: 3408 Morris Ave,Seward,AK 99664 Email: laura@exitmarinia.com Web:www.exitmarine.com 116 14 Mailing Address:281 S.Conquest Circle, Wasilla,AK 99623 Tei: (907)357-2900 Fax: (907) 357-2930 Status and Timeline—Current Facility A: Repair yard earthworks(completed Fall 2017) 8: Electrical Install (Completed winter 2017) C:Blast and Paint building 40 x 80 with removable end (Completed spring 2018) D:Steel Truss Carpentry shop 40 x 40(Anticipated fall 2018) E:Steel Truss Repair facility to accommodate travel lift with removable end (Anticipated Fall 2019) Exit Marine has chosen Seward for its operations for the following reasons: • Location: proximity to Anchorage,favorable highway, airport and rail access. • Facilities: by far the best overall port and harbor infrastructure. • Local Government:Seward is a town that is supportive of maritime industries. • Industries: High volume tourist traffic, major shipping hub,fishing fleet. • Market:Seward is an underserved market with a short summer revenue window. • Competition: Limited competition that is over-extended and underperforming, managed in an"old school fashion" with a "we are your only option"attitude. In summary, Exit Marine promises Seward a contractor they will be proud of.We will be engaged in the community helping Seward reach its true potential. Thank you in advance for your consideration. Feel free to let us know if you have any other questions. Yours sincerely, L ra Schneider General Manager Exit Marine, LLC (907)631-1385 2 Physical Address:3408 Morris Ave,Seward,AK 99664 Email: laura@exitmarine.com Web:www.exitmarine.com 117 118 - Bioek s 1 c 1 n. a a� �3ax'x.F ti,,x o�� �m(��f$evo�u®t� m,�53.49•�a "'a Iznl 5R. i'i w� I 8� � �y n, S`,. "!u s3.9s•W y 'cF- a se951 a 1 0,2' I Block 8 ea.00' g a=1 ! xaP25 Qi'E ,5]5.10' � 3 80'Sy�,.p trees p.pR,ogr Eaaarien< �,• 50' ZaA61' ,2BS.i9' eti SprRn9 hee4 pepineyr EoeemM, w'-- Rae„- _ P I `�' ` K o s (xe9'zs•u'E xm.�') I S i I $ o 112 je7z— Ls071. iA'Ue: pa.W �r8.34' 42).00' 34P.W' ,ebAe 60.M' 381.>e' i ]b E S$u,a Sg oIR I zn.s,' � ,ra.zs' 4xz.00' 3u,eo' I Se493',Yw ,die!' 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RaW Iron ,s tbut4 od 01' ISBY16'14'W,008.00')NB9'IB'il'F Iaw.iS' Unem6dMded 9a2.30 - w � o as Ia �� � � `•�"�fr 3 - x g f`a a d� S'88 D A m ^tea A s� x e qi ,s� s z w n e E 3 sas�:vu°m L, R 5 s - 5 i `3 z N H V JIF 118 it ,Y ryM+ x ] I P F N f KPB Parcel Viewer 4 Printed: May 23, 2018 119 120 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-063 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE CITY MANAGER TO ENTER INTO A LEASE WITH EXIT MARINE, LLC FOR THE UNSUBDIVIDED SECTION OF BLOCK 6 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 the owner of real property described as Block 5 Fourth of July Creek Subdivision; and WHEREAS, Exit Marine currently has a lease and is conducting business at Lot 4 Block 4 Fourth of July Creek Subdivision which Council approved in resolution 2018-004; and WHEREAS, Exit Marine needs to lease additional land to expand their business at SMIC; and WHEREAS, Exit Marine, LLC submitted a proposal to lease the Unsubdivided section Block 6 Fourth of July Subdivision for a boat repair/storage yard, net mending, equipment storage, future education and training center with employee housing; and WHEREAS, Exit Marine has submitted an application with the State of Alaska for their Storm Water Prevention Pollution Plan as required; and WHEREAS, the City Manager has negotiated a long term lease agreement with Exit Marine 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 Council has determined that the essential terms and conditions and the method disposition of the proposed lease with Exit Marine, LLC for the real property described as the Unsubdivided section of Block 6, Fourth of July Subdivision, located in the City of Seward, is in the public's best interest. Section 2. The City manager is authorized to execute a new lease with Exit Marine, LLC in substantially the form as presented at this meeting. 120 121 CITY OF SEWARD,ALASKA RESOLUTION 2018-063 Section 3. This resolution shall take effect thirty (30) days after approval. PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 23rd day of July, 2018. THE CITY OF SEWARD,ALASKA Dave Squires,Mayor AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) 121 122 Agenda Statement Meeting Date: July 23, 2018 To: City Council - Through: Jim Hunt, City Manage From: Norm Regis, Harbormaster Agenda Item: Exit Marine, LLC New Lease on the Unsubdivided portion of Block 6, Seward Marine Industrial Center BACKGROUND & JUSTIFICATION: Exit Marine currently is conducting business with a lease on Lot 4 Block 4 Seward Marine Industrial Center, in which council approved in Resolution 2018-004. As their business continues to grow Exit Marine needs to lease additional property at SMIC. Exit Marine sees great potential at SMIC and the needs of the community. On this new proposed lease site Exit Marine would have more vessel storage/work sites to include equipment storage, net mending facility future training and education area and employee housing. Mr. Saunders: a.) Submitted an application with the State of Alaska for a Storm Water Pollution Prevention Plan (SWPPP) as required. b.) Shall comply with all Seward City Code requirements. 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 Exit Marine, LLC on the Unsubdivided remainder of Block 6 Fourth of July Creek Subdivision within the industrial zoning District, Seward Marine Industrial Center for boat repair, marine operations, storage and employee housing. CONSISTENCY CHECKLIST: Yes FNo N/A Comprehensive Plan (page 116 3.5.1.2): Support the SMIC I F Development Plan to include new market trends and modern X technologies for ship repair and construction, shipping of natural resource products,, boat storage, and other compatible industries, Strategic Plan (document source here): Attract New Industry: 2 Develop an aggressive marketing campaign which highlights the diverse X resources, and quality of life that make Seward a great place to live and establish a business or industry. (Page 5 122 123 3. Other {`list): FISCAL NOTE: The annual rent is $47,672.00 plus tax. The lease rate is based on 8% of fair market value. The parcel will be reappraised in 2020. Approved by Finance Department: �1 ATTORNEY REVIEW: Yes X No RECOMMENDATION: Approve Resolution 2018- authorizing the City Manager to approve a new lease with Exit Marine, LLC. Resolution 2018-063 123 124 LEASE AGREEMENT between CITY OF SEWARD, ALASKA and Exit Marine, LLC Effective Date: 12018 1 124 125 TABLE OF CONTENTS ARTICLE 1 -LEASED LAND.................................................................................................... 3 1.1 Description of Leased Land.................................................................................... 3 1.2 Covenant of Quiet Enjoyment; Warranty of Title................................................... 3 1.3 Reserved.................................................................................................................. 3 1.4 Property Accepted................................................................................................... 4 1.5 Permits....................................................................................................................4 1.6 Platting.................................................................................................................... 4 1.7 Development of Leased Land 4 ARTICLE 2 -LEASE TERM...................................................................................................... 5 2.1 Lease Term.............................................................................................................. 5 ARTICLE 3 -RENTAL RATE ................................................................................................... 5 3.1 Initial Rental Rate................................................................................................... 5 3.2 Rental Adjustments.................................................................................................. 6 3.3 Procedure for Rental Adjustment............................................................................ 6 3.4 Effect of Late Appraisal by CITY............................................................................ 6 3.5 Appraisal by LESSEE............................................................................................. 6 3.6 Effective Date of Adjusted Rental Rate................................................................... 7 3.7 Interim Rental Adjustments..................................................................................... 7 3.8 Late Payment Charge ............................................................................................. 8 ARTICLE 4 -USE OF LEASED LAND .................................................................................... 8 4.1 Use of Leased Land................................................................................................. 8 4.2 Obligations ofLESSEE........................................................................................... 8 4.3 No Preferential Rights to Use Public Facilities ..................................................... 8 4.4 Adequacy of Public Facilities................................................................................. 9 4.5 Tariffs and Other Service Fees ............................................................................... 9 4.6 Time for Payment of Utilities and Taxes................................................................. 9 4.7 Other Uses .............................................................................................................. 9 ARTICLE 5 -UTILITIES AND RIGHTS OF ACCESS.......................................................... 9 5.1 Utilities.................................................................................................................... 9 5.2 Third-Party Improvements.................................................................................... 10 5.3 Easements ............................................................................................................. 10 ARTICLE 6 - CONSTRUCTION BY LESSEE....................................................................... 11 6.1 Improvements on Leased Land............................................................................. 11 6.2 City Review of Construction ................................................................................. 12 ARTICLE 7 -RETURN OF LEASED LAND/SITE CONDITIONS.................................... 12 7.1 Return of Leased Land in Original Condition...................................................... 12 ARTICLE 8 -FORCE MAJEURE ........................................................................................... 12 ARTICLE 9 -LESSEE'S ACTS OF DEFAULT..................................................................... 13 ARTICLE 10 -REMEDIES FOR DEFAULT BY LESSEE .................................................. 14 ARTICLE 11 - TITLE TO IMPROVEMENTS INSTALLED BY LESSEE........................ 15 11.1 Real Property Improvements ................................................................................ 15 1 125 126 11.2 Personal Property................................................................................................. 16 ARTICLE 12 -ASSIGNMENT OR SUBLEASE .................................................................... 16 12.1 Assignment of Lease or Subleasing....................................................................... 16 12.2 Assignment of Lease for Security.......................................................................... 16 12.3 Assignment to Affiliate.......................................................................................... 17 ARTICLE 13 -LESSEE'S DUTY TO DEFEND/INDEMNIFY ............................................ 17 ARTICLE 14 - CITY'S DUTY TO DEFEND/INDEMNIFY ................................................. 17 ARTICLE 15 -INSURANCE .................................................................................................... 17 15.1 Minimum Insurance Requirements ....................................................................... 17 15.2 Subrogation Rights Waived................................................................................... 18 ARTICLE 16 - CONDEMNATION.......................................................................................... 19 ARTICLE 17 -ARBITRATION ............................................................................................... 19 17.1 Arbitration............................................................................................................. 19 ARTICLE 18 -MAINTENANCE AND REPAIRS................................................................. 20 18.1 Normal Maintenance ............................................................................................ 21 18.2 Safety Issues..........................................................................................................21 18.3 Cost of Repairs......................................................................................................21 ARTICLE 19 -ENVIRONMENTAL CONCERNS................................................................ 22 19.1 Hazardous Materials ............................................................................................ 22 19.2 Permits and Reporting.......................................................................................... 24 ARTICLE 20 -ESTOPPEL CERTIFICATES........................................................................ 25 ARTICLE 21 - CONDITIONS AND COVENANTS .............................................................. 25 ARTICLE 22 -NO WAIVER OF BREACH ........................................................................... 25 ARTICLE 23 - TIME OF THE ESSENCE.............................................................................. 25 ARTICLE 24 - COMPUTATION OF TIME........................................................................... 25 ARTICLE 25 - SUCCESSORS IN INTEREST.......................................................................25 ARTICLE 26 -ENTIRE AGREEMENT ................................................................................. 26 ARTICLE 27 - GOVERNING LAW........................................................................................ 26 ARTICLE 28 -PARTIAL INVALIDITY................................................................................. 26 ARTICLE 29 -RELATIONSHIP OF PARTIES .................................................................... 26 ARTICLE 30 -INTERPRETATION ....................................................................................... 26 ARTICLE 31 - CAPTIONS ....................................................................................................... 26 ARTICLE 32 -AMENDMENT................................................................................................. 27 ARTICLE 33 -NOTICES..........................................................................................................27 ARTICLE 34 -FIRE PROTECTION....................................................................................... 27 Exhibit A - Personal Guarantee Exhibit B - Environmental Compliance Plan Exhibit C - Leased Parcel 2 126 127 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, who's mailing address is P.O. Box 167, Seward, Alaska 99664 and Exit Marine, LLC (the "LESSEE"), an Alaska corporation whose mailing address is 281 S Conquest Circle, Wasilla, Alaska 99623. WHEREAS, LESSEE has indicated its desire to lease the property known as Un- subdivided remainder of Block 6, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough, Plat No. 97-27 recorded in the Seward Recording District, Third Judicial District, State of Alaska, consisting of approximately 264,844 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 ofLeased Land. The Leased Land is located in the City of Seward, Alaska. The Leased Land is described as follows: Unsubdivided remainder of Block 6, Fourth of July Creek Subdivision, Seward Marine Industrial Center, Kenai Peninsula Borough, Plat No. 97-27 recorded in the Seward Recording District, Third Judicial District, State of Alaska, consisting of approximately 264,844 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. 3 127 128 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 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 or Exhibit A hereto. 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. hi 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 operate a vessel maintenance/storage facility, net mending, equipment storage and employee housing through the term of the lease. LESSEE understands that construction and operations of its 4 128 129 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. 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. 2018- (the "Resolution"). The Lease Term shall run for approximately 20 years from the Effective Date, ending at midnight on July 23, 2038. 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, 2019, the annual rental rate for the Leased Land shall be set at $47,672.00. 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. 5 129 130 3.2 Rental Adjustments. The annual rental payment shall be adjusted on July 1, 2020, 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. 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 6 130 131 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 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, 2019 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 7 131 132 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 storage, boat repair work, net mending, equipment storage and employee housing. 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, boat storage, net mending, equipment storage and employee housing businesses 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. 8 132 133 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 Tams 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 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 9 133 134 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 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 10 134 135 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. 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 11 135 136 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, 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, fire, flood, explosion, 12 136 137 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. 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 un-dismissed 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, of the State of Alaska and the City of Seward, 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 13 137 138 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 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. 14 138 139 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 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 15 139 140 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, 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 relets 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 16 140 141 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 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. 17 141 142 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 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 18 142 143 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 for a settlement pursuant to the provisions of the Alaska Uniform Arbitration Act (AS 09.43.010 et. seg.), 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 19 143 144 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 evidence in the record, shall be additional grounds for modifying or vacating an arbitration decision. ARTICLE 18 -MAINTENANCE AND REPAIRS 20 144 145 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. 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. 21 145 146 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. iii) LESSEE shall not discharge, leak, or emit, or permit to be discharged, leaked, or emitted, any material into the atmosphere, ground, ground 22 146 147 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 23 147 148 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. 24 148 149 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 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 25 149 150 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 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. 26 150 151 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 PO Box 167 Seward, Alaska 99664 All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the following address: Exit Marine, LLC 281 S. Conquest Circle Wasilla, Alaska 99623 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 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. 27 151 152 IN WITNESS WHEREOF, the parties hereto have set their hands and seals the dates herein set forth. CITY: LESSEE: CITY OF SEWARD EXIT MARINE,LLC Jim Hunt, City Manager Mikel Saunders, Owner Date: Date: ATTEST: Brenda Ballou, City Clerk 28 152 153 STATE OF ALASKA ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of , 2018, by Jim Hunt, 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 day of , 2018, by Mikel Saunders who executed the foregoing document on behalf of Exit Marine, LLC Notary Public in and for Alaska My Commission Expires: 29 153 C154 Mailing Address: 281 S. Conquest Circle,Wasilla,AK 99623 Tel: (907)357-2900 Fax: (907) 357-2930 Norm Regis—Harbormaster PO BOX 167 Seward AK 99664 May 4, 2018 RE. Commercial Land Lease—SMIC Dear Mr. Regis, Exit Marine, LLC would like to make a formal request to enter into a commercial lease with the City of Seward for Block 5 and the un--subdivided remainder of Block 6 of 4"of July of Creek Subdivision. Exit Marine's intended use for the property is as follows: 1. Repair of commercial vessels 2. Storage of vessels under repair 3. Net mending facilities for commercial fishing fleet 4. Employee housing for marine trade workers and fish plant workers S. Space for training and education 6. Equipment storage for boat yard rolling stock 7. Container storage for the fishing fleet Additional space is critical for the continued growth of Exit Marine.The current lease space will soon be occupied by boat repair structures.This will leave insufficient yard space for jobs in-progress and parking of support equipment. Exit Marine has the capability to develop the requested lease land to meet its needs. Problem Without question,Seward is at the top of this list when it comes to location and facilities to support Alaska's Maritime Industries. Despite this obvious fact, other competing ports are receiving a larger piece of the pie than they deserve.This imbalance is caused in large part by a lack of marine service contractors in Seward. Solution Exit Marine(EM)operating as a full-service boat yard will become a key player in the Seward Marine Industry. We are committed to growing the industry to match the world class facilities Seward provides. EM will work hard to keep local boats in the Seward economy and will make attracting outside vessels top priority. EM will provide Seward with high paying off-season jobs. We will support local suppliers and subcontractors.The importance of local small businesses for Seward's economy cannot be overstated. Management Team Laura Schneider,General Manager and Kenneth Cardwell, Operations Manager are Seward locals committed to the community with 30 years combined experience in the marine industry.They are both former commercial fishermen with strong relationships in the fleet and are passionate about providing the support necessary to grow Seward as a homeport of choice for working boats. Market Exit Marine is targeting primarily commercial vessels up to 120ft with a secondary market consisting of recreational vessels up to 12011. EM will perform maintenance, repair, and refit with a skilled local team. Specialty trades will be subcontracted to local specialty contractors. 1 Physical Address: 3408 Morris Ave,Seward,AK 99664 Email: laura@exitmarinia.com Web:www.exitmarine.com 154 14 Mailing Address:281 S.Conquest Circle, Wasilla,AK 99623 Tei: (907)357-2900 Fax: (907) 357-2930 Status and Timeline—Current Facility A: Repair yard earthworks(completed Fall 2017) 8: Electrical Install (Completed winter 2017) C:Blast and Paint building 40 x 80 with removable end (Completed spring 2018) D:Steel Truss Carpentry shop 40 x 40(Anticipated fall 2018) E:Steel Truss Repair facility to accommodate travel lift with removable end (Anticipated Fall 2019) Exit Marine has chosen Seward for its operations for the following reasons: • Location: proximity to Anchorage,favorable highway, airport and rail access. • Facilities: by far the best overall port and harbor infrastructure. • Local Government:Seward is a town that is supportive of maritime industries. • Industries: High volume tourist traffic, major shipping hub,fishing fleet. • Market:Seward is an underserved market with a short summer revenue window. • Competition: Limited competition that is over-extended and underperforming, managed in an"old school fashion" with a "we are your only option"attitude. In summary, Exit Marine promises Seward a contractor they will be proud of.We will be engaged in the community helping Seward reach its true potential. Thank you in advance for your consideration. Feel free to let us know if you have any other questions. Yours sincerely, L ra Schneider General Manager Exit Marine, LLC (907)631-1385 2 Physical Address:3408 Morris Ave,Seward,AK 99664 Email: laura@exitmarine.com Web:www.exitmarine.com 155 156 - Bioek s 1 c 1 n. a a� �3ax'x.F ti,,x o�� �m(��f$evo�u®t� m,�53.49•�a "'a Iznl 5R. i'i w� I 8� � �y n, S`,. "!u s3.9s•W y 'cF- a se951 a 1 0,2' I Block 8 ea.00' g a=1 ! xaP25 Qi'E ,5]5.10' � 3 80'Sy�,.p trees p.pR,ogr Eaaarien< �,• 50' ZaA61' ,2BS.i9' eti SprRn9 hee4 pepineyr EoeemM, w'-- Rae„- _ P I `�' ` K o s (xe9'zs•u'E xm.�') I S i I $ o 112 je7z— Ls071. iA'Ue: pa.W �r8.34' 42).00' 34P.W' ,ebAe 60.M' 381.>e' i ]b E S$u,a Sg oIR I zn.s,' � ,ra.zs' 4xz.00' 3u,eo' I Se493',Yw ,die!' 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RaW Iron ,s tbut4 od 01' ISBY16'14'W,008.00')NB9'IB'il'F Iaw.iS' w � o as Ia �� � � `•�"�fr 3 - x g f`a a d8 S'88 D A m ^tea A s� x e qi ,s� s z w n e E 3 sas�:vu°m L, R 5 s - 5 i `3 z N H V JIF 156 it ,Y ryM+ x ] I P F N f KPB Parcel Viewer 4 Printed: May 23, 2018 157 158 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-034 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA,AUTHORIZING A COST OF LIVING INCREASE OF 2.1% FOR 2018 AND A SEPARATE 2.1% FOR 2019 FOR ALL NON-IBEW EMPLOYEES WITH THE EXCEPTION OF THE CITY MANAGER AND THE CITY CLERK,AND APPROPRIATING FUNDS WHEREAS, during the 2018/2019 Budget process, the preliminary budget proposed to eliminate five positions from the General Fund to address the adverse impacts to Seward of recent state budget cuts amounting to more than $650,000, plus the addition over the past few years of $440,000 in new annual debt associated with the acquisition of a 330-ton boat lift at SMIC and a road improvement general obligation bond,and while employees received no cost of living increase, the City's merit increases and progressive increases were restored; and WHEREAS, to avoid layoffs in 2018/2019, one position went unfilled in Finance, one position is to be eliminated in the City Shop mid-way through 2018 with another Shop position slated to be cut in 2019,nearly all overtime was eliminated from the General Fund,a vacancy factor of$150,000 was built into the budget necessitating equivalent personnel savings from hiring delays in order to meet the budget, and two custodial positions were added back to the budget through a combination of short-term savings from one-time grant administrative fees paying for SMIC debt in 2018/2019; and WHEREAS, the City Council agreed to consider reinstating some level of cost of living increase upon determining the City's financial performance results from 2017, and the estimated 2017 surplus is expected to be at least $220,000, after having transferred $254,544 to the capital acquisition fund in 2017; and WHEREAS,the City Council desires to authorize a cost of living increase in the amount of 2.1%for 2018 for all non-IBEW employees, excluding the city manager and the city clerk,and 2.1% for 2019 for all non-IBEW employees, excluding the city manager and the city clerk, with the understanding that budget resources are becoming more and more constrained as cities throughout Alaska feel the downstream impacts of State budget cuts,and it becomes more and more difficult to sustain status quo services and employment levels, given these budgetary constraints. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section t. A cost of living increase in the amount of 2.1%is hereby authorized for all non- IBEW employees, not including contract personnel, in regular employment status as of April 9, 2018, retroactive to their date of hire or January 1, 2018, whichever is later. 158 159 CITY OF SEWARD,ALASKA RESOLUTION 2018-034 Section 2. A cost of living increase in the amount of 2.1%is hereby authorized for all non- IBEW employees,not including contract personnel,in regular employment status as of January 1,2019 and is effective the first day of the first full pay period beginning January, 2019. Section 3. In the event a new union is formed before the effective date of either of the authorized cost of living increases proposed by this resolution, all non-IBEW-union employees, other than the city manager and the city clerk, shall also be eligible to receive these cost of living increases, subject to the rights of the union to negotiate a labor contract. Section 4. The 2018 personnel budget is hereby amended and funds are appropriated as follows: 1)General Fund personnel budget increased$109,894 from the General Fund reserves account no. 01000-0000-3400; 2) Harbor Fund personnel budget increased $18,697 from the Harbor Fund reserves account no. 11000-0000-3400; 3)Parking Fund personnel budget increased$2,812 from the Parking Fund reserves account no. 13000-0000-3400; 4) Electric Fund personnel budget increased $7,954 from the Electric Fund reserves account no. 15000-0000-3400;5)Water Fund personnel budget increased $5,791 from the Water Fund reserves account no. 17000-0000-3400; and 6) Sewer Fund personnel budget increased $4,446 from the Sewer Fund reserves account no. 18000-0000-3400. Section 5. The 2019 personnel budget is hereby amended and funds are appropriated as follows: 1)General Fund personnel budget increased$113,793 from the General Fund reserves account no. 01000-0000-3400; 2) Harbor Fund personnel budget increased $19,196 from the Harbor Fund reserves account no. 11000-0000-3400; 3)Parking Fund personnel budget increased$2,873 from the Parking Fund reserves account no. 13000-0000-3400; 4) Electric Fund personnel budget increased $7,876 from the Electric Fund reserves account no. 15000-0000-3400;5)Water Fund personnel budget increased $5,910 from the Water Fund reserves account no. 17000-0000-3400; and 6) Sewer Fund personnel budget increased $4,546 from the Sewer Fund reserves account no. 18000-0000-3400. Section 6. This resolution shall take affect immediately upon its adoption. PASSED AND APPROVED by the City Council of the City of Seward,Alaska,this 9t'day of July, 2018. THE CITY OF SEWARD, ALASKA David Squires,Mayor 159 160 CITY OF SEWARD,ALASKA RESOLUTION 2018-034 AYES: NOES: ABSENT: ABSTAIN: ATTEST: Brenda J. Ballou, MMC City Clerk (City Seal) 160 161 ..Agenda Statement Meeting Date: April 9, 2018 To: City Council Through: Jim Hunt, City Manager From: Kristin Erchinger, Finance Director Agenda Item: Authorize 2.1%cost of living adjustment for 2018 and 2019 for all employees excluding the MEW union employees, city manager and city clerk BACKGROUND & JUSTIFICATION: Early in the process of preparing the 2018/2019 budget, the City Council and administration shared the goal of funding a cost of living increase for City employees. A series of significant State budget cuts flowing through to the City from 2015 to 2018, have constrained the City budget, making it difficult to maintain existing service and staffing levels let alone offer pay raises to City employees. For example,funding for community jails has declined $320,000,the State has vacated a number of offices in City Hall reducing lease revenues by$15,000,State revenue sharing has declined more than$200,000,dispatch contracts have declined$12,500,and other routine State funding sources have declined. During the preparation of the 2016/2017 Budget,to balance the budget and avoid layoffs,employee merit increases and cost of living increases were frozen in 2016 and 2017 and subsequently - based on positive 2015 financial performance - Council reinstated a one percent one-time bonus to employees on August 6, 2016. During the 2018/2019 budget process,revenue projections fell short of meeting expenditure requirements and to avoid layoffs, one position was delayed in Finance.one position was identified for elimination in the City Shop mid-way through 2018, another Shop position was identified for elimination in 2019, nearly all overtime was eliminated from the General Fund budget, a vacancy factor of $150,000 was built into the budget requiring an equivalent level of personnel cost savings from hiring delays, and two custodial positions were eliminated and then added back to the budget through a combination of short-term savings generated from one-time grant administrative fees to pay annual SMIC debt rather than the General Fund in 2018/2019. When passing the budget for 2018/2019, Council and administration shared the desire to review the City's 2017 financial performance to determine the feasibility of reinstating some measure of cost of living increases after year- end. Based on preliminary figures from year-end close, it appears the General Fund will close the year with a surplus of at least$220,000 after the City transferred$254,544 to the Capital Acquisition Fund during the year. The cost of a 2.1% cost of living in each of 2018 and 2019 is estimated at$109,894 and$113,793, respectively for the General Fund. The cost of living of 2.1% each year is available to all employees of the City except those in the IBEW union, the city manager and the city clerk, as the pay for those employees is negotiated by separate contract. INTENT: To authorize a 2.1% cola in 2018 and a 2.1% additional cola in 2019 for all employees of the City except IBEW union employees, the city manager and the city clerk. In the event a separate union is formed, employees of that union will be entitled to receive this cola for both 2018 and 2019, subject to the union's right to negotiate a labor contract. 161 162 CONSISTENCY CHECKLIST: Yes No NIA 1. Comprehensive Plan X 2. Strategic Plan : X 3. Other (list): FISCAL NOTE: The impact of the 2.1%cola in 2018 is $149,594 for all funds, and for 2019 is $154,194 for all funds. Approved by Finance Department: ATTORNEY REVIEW: Yes No X RECOMMENDATION: �,J City Council approve Resolution 2018-L3,+authorizing a cost of living increase for non-IBEW employees with the exception of the city manager and city clerk, in the amount of 2.1% for 2018 and another 2.1% for 2019, and appropriating funds. 162 163 Sponsored by: Hunt CITY OF SEWARD,ALASKA RESOLUTION 2018-064 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, AUTHORIZING THE ASSIGNMENT, ASSUMPTION AND AMENDMENT OF THE MAINTENANCE AND OPERATING AGREEMENT OF THE SHIPLIFT AND DRY DOCK AREA TO JAG,ALASKA,INC. WHEREAS,the City(Lessor)and Seward Ship's Dry Dock, Inc. (Lessee)entered into the current ground lease in 1995 and Maintenance and Operating Agreement in 2012; and WHEREAS,City Council authorized the amendment and assignment of the Ground Lease to Vigor Alaska— Seward LLC with the passage of Resolution 2014-044 on May 12, 2014, and from Vigor Alaska— Seward LLC to JAG Alaska, Inc. with Resolution 2018-061 on July 23, 2018; and WHEREAS, City Council authorized the amendment and assignment of the Maintenance and Operating Agreement to Vigor Alaska—Seward LLC with the passage of Resolution 2014-050 on May 27, 2014; and WHEREAS, the City requires Vigor Alaska-Seward LLC (the "Assignor") to enter into an Assignment and Assumption Agreement(the"Agreement")with JAG Alaska,Inc.for the operation of the City's shiplift on the leased parcels as a condition of the purchase and sale of the vessel repair and construction business operated on the leased parcels and the related Assignment, Assumption and Amendment of the Lease between Assignor and Assignee; and WHEREAS,the Agreement is attached and will go into effect immediately upon approval of this resolution. NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA that: Section 1. The City Manager is authorized and directed to sign, on behalf of the City of Seward, the Assignment and Assumption Agreement, in the form substantially presented at this meeting, with JAG Alaska, Inc. Section 2. This resolution shall take effect immediately after adoption. 163 164 Agenda Statement Meeting Date: June 25, 2018 ' To: Seward City Council - From: Jim Hunt, City Manager Agenda Item: JAG Alaska, Inc. Maintenance and Operating Agreement BACKGROUND & JUSTIFICATION: The City of Seward leased land to and had a Maintenance and Operating Agreement with Seward Ship's Drydock, Inc. from 1988 until 2014. In 2014 both the ground lease and Maintenance and Operating Agreement were amended and assigned to Vigor Alaska-Seward LLC. With the passage of Resolution l 2018-XXX the ground lease was assigned to JAG Alaska. In order for the new lessee to begin operation the City of Seward requires JAG Alaska, to enter into a reassigned Maintenance and Operations Agreement. Amendments to the agreement are to change the commencement date of the agreement to the date of enactment of this resolution, and changing the names and Notice address of the assignee. Attached is the Maintenance and Operating Agreement for assignment, in substantial form,to accompany the ground lease for the Premises to JAG Alaska, Inc. INTENT: This resolution will authorize and direct the City Manager to enter into the assigned Maintenance and Operating agreement with JAG Alaska, Inc. CONSISTENCY CHECKLIST: Yes No NIA Comprehensive Plan(3.5.1.2,pagel6):Plan for adequate port infrastructure 1. that will serve the needs of users in the main industrial/Alaska Railroad X area and at the Seward Marine Industrial Center SMIC . Strategic Plan ((Page 7): '"Expand development in the Seward Marine 2' Industrial Center." X 3. Other (list): X FISCAL NOTE: The Maintenance and Operating Agreement does not impact the lease rates, and assigning the agreement has no direct fiscal impact. Approved by Finance Department: ATTORNEY REVIEW: Yes X No Not Applicable 164 165 RECOMMENDATION: Approve authorizing the assignment of the Maintenance and Operating Agreement of the City Shiplift and accompanying leased area to JAG Alaska, Inc. Resolution 2018-064 165 166 Assignment, Assumption and Amendment of Agreement This Assignment, Assumption and Amendment of Agreement (this "Agreement") is made this day of , 2018, by and among Vigor Alaska - Seward LLC, an Alaska limited liability company ("Assignor"), JAG Alaska, Inc., an Alaska corporation ("Assignee"), and the City of Seward, Alaska, an Alaska municipal corporation ("City"). Assignor, Assignee and City may each be referred to as a "Party" and any two or more of them may be referred to collectively as the "Parties". RECITALS A. By that certain Maintenance and Operating Agreement, dated as of April 1, 2012, and as amended by the Assignment, Assumption and Amendment of Operating Agreement, adopted as of June 1, 2014, copies of which are attached hereto marked ANNEX A (the "M&O Agreement"), by and between City and Assignor or its predecessor in interest, Assignor agreed to operate and maintain a shiplift facility owned by City (the"Shiplift Premises"). B. The M&O Agreement provides, among other things, the right of Assignor to assign the M&O Agreement, subject to the consent of the City. C. Assignor wishes to sell and assign to Assignee, and Assignee wishes to purchase from Assignor, substantially all of Assignor's assets related to the Shiplift Premises, and to assume certain specifically identified liabilities of Assignor (the "Purchase/Sale Transaction"). One of the conditions precedent to the Purchase/Sale Transaction is Assignor's assignment of the M&O Agreement to Assignee and Assignee's acceptance and assumption of the M&O Agreement, and City's release of Assignor from future liability under the M&O Agreement. The M&O Agreement permits Assignor to assign the M&O Agreement, subject to City's consent. Therefore, the closing of the Purchase/Sale Transaction will be effective only if and when the Parties have executed and delivered this Agreement and the other conditions in Section 2 below have been satisfied or waived. AGREEMENT NOW, THEREFORE, in consideration of the provisions in, and intending to be legally bound by, this Agreement, the Parties agree as follows: 1. Recitals, Definitions. The recitals set forth above are incorporated in this Agreement by reference. Capitalized terms not otherwise defined in this Agreement will have the same meaning as in the M&O Agreement. 2. Assignment and Assumption of M&O Agreement, Release. Subject to the terms of this Agreement and the satisfaction of the conditions in this Section 2, Assignor assigns to Assignee all of Assignor's right, title, and interest in and to the M&O Agreement (the "Assignment"). Assignee agrees to and accepts the Assignment and assumes and agrees to keep, perform, and fulfill all of the terms, covenants, conditions and obligations otherwise required to be kept by Assignor under the M&O Agreement that arise on and after the Effective Date described below. Lessor releases Assignor from any and all obligations and/or breach of the Lease that 507486\4005\00714195 166 167 occurs on or after the Effective Date. This Agreement will not become effective or bind any of the Parties unless and until each of the following conditions has been satisfied (or waived) (the "Effective Date"): (a) Assignee has posted a performance and payment surety satisfactory to Lessor; (b) (b) Assignor has delivered to Assignee, in a form satisfactory to Assignee, a Bill of Sale and Assignment for the personal property owned by Assignor associated with the Shiplift Premises (the"Bill of Sale"); and (c) Assignee has delivered to Assignor, in immediately available funds, the consideration for that property stated in the Bill of Sale. 3. Direct Agreement. The M&O Agreement will continue in full force and effect as a direct agreement between City and Assignee, as Operator under, and upon and subject to all of the terms, covenants, and conditions of, the M&O Agreement. 4. Amendment to M&O Agreement. City and Assignee hereby amend the M&O Agreement, effective as of the Effective Date, to provide as follows: 4.1 Term. Section 2.01 of the M&O Agreement is deleted in its entirety and substituted with the following: "The Agreement Term commences on July [] 2018, and unless sooner terminated as provided herein ends at the earlier of (i) date of expiration or termination of the Lease term, and(ii)the fifth anniversary of July [] 2018". 4.2 Notices. Operator's notice address provided for in Section 7.04 of the M&O Agreement is deleted in its entirety and substituted with the following: JAG Alaska, Inc. 225 East Chicago St. Jonesville, MI 49250 Attention: Tim Jagielski 5. Warranties and Representations. As of the Effective Date and except as otherwise disclosed in the M&O Agreement: 5.1 C. . City represents and warrants to Assignor and to Assignee that: (a) the documents attached as ANNEX A are collectively a true and correct copy of the M&O Agreement immediately prior to the Effective Date; (b) other than the provisions of this Agreement and that certain Ground Lease dated as of April 25, 1995, as amended, the M&O Agreement represents the entire agreement between City and Assignor relating to the Shiplift Premises and has not been amended by any agreement, written, verbal or otherwise, between Assignor and City; (c) neither City nor Assignor has taken any action to terminate the M&O Agreement, and the M&O Agreement remains in full force and effect, enforceable in accordance with its terms; (d) beginning on the Effective Date, and subject to the terms of the M&O Agreement, the Shiplift Premises at all times hereafter during the term of the M&O Agreement may be used by Assignee (or its assignee or sublessee) without any lawful interruption by City or any person or persons claiming under or through City; and (e) City has the right, power, and authority to enter into this Agreement. 5.2 Assignor. Assignor represents and warrants to City and to Assignee that during the period of Assignor's Operation of the Shiplift Premises: (a) Assignor has not taken any Assignment,Assumption and Amendment of Agreement Page 2 507486\4005\00714195 167 168 action to terminate the M&O Agreement; (b) all material obligations under the M&O Agreement have been complied with by Assignor (or waived by Lessor), no material violation of or default under any of the terms of the M&O Agreement by Assignor has occurred, and no facts exist which, with the giving of notice and/or the passage of time, would constitute such a violation or default by Assignor under the M&O Agreement; (c) Assignor has not assigned the M&O Agreement to any other person nor has Assignor received notice of an assignment of the M&O Agreement by City; (d) Assignor has not delegated all or any portion of the operation of the Shiplift Premises to any other person; and (e) Assignor has the right, power, and authority to enter into this Agreement. 5.3 Assignee. Assignee represents, warrants and covenants to City and to Assignee that: (a) Assignee has taken all necessary corporate action to enter into this Agreement and carry out its provisions; (b) Assignee has the financial capacity and expertise to enter into this Agreement and to operate the Shiplift Premises in accordance with this Agreement; (c) Assignee's entry into this Agreement and carrying out its provisions does not violate or conflict with the terms of any law or order of any administrative agency or the terms of any agreement of the Assignee or any order,judicial or otherwise to which Assignee may be subject; and (d) Assignee has the right, power, and authority to enter into this Agreement. 6. Environmental Matters. Section 6 (Environmental Matters) of the parties' Assignment, Assumption and Amendment of Lease dated the same date as this Agreement (the "Assignment of Lease"), is incorporated in this Agreement by this reference. All references to "Lessor" in Section 6 of the Assignement of Lease will mean and refer to the City. All other capitalized terms that are used in Section 6 of the Assignment of Lease will have the meanings assigned to those terms in this Agreement, or if those terms are not defined in this Agreement, they will have the meanings assigned to those terms in the Assignment of Lease. 7. Miscellaneous: 7.1 Successors and Assigns. This Agreement will inure to the benefit and will be binding upon the successors and assigns of each of the Parties. 7.2 Interpretation. The words "includes" and "including" are not limited in any way and mean "includes or including without limitation." The word "person" includes individuals, corporations, partnerships, limited liability companies, co-operatives, associations and other natural and legal persons. The term "and/or" means each and all of the persons, words, provisions or items connected by that term; i.e., it has a joint and several meaning. The words "will," "shall," and "must" are synonyms, and each refers to action that is mandatory rather than optional. All documents and exhibits attached to or referenced in this Agreement are a part of and are incorporated in this Agreement. Each Party has had an opportunity to have this Agreement reviewed by its attorneys; therefore, no rule of construction or interpretation that disfavors the Party drafting these Terms, or that favors the other Party, will apply to the interpretation of this Agreement. Instead, this Agreement will be interpreted according to its fair meaning. If there is any conflict between the provisions of the M&O Agreement and the provisions of this Agreement, the provisions of this Agreement will control, and except as expressly amended by this Agreement, all of the terms, covenants and conditions of the M&O Agreement will remain in full force and effect after the Effective Date. All section and paragraph headings of this Agreement are inserted for convenience only and will not constitute a part of this Agreement, nor will they in any way Assignment,Assumption and Amendment of Agreement Page 3 507486\4005\00714195 168 169 affect its meaning, construction, interpretation or effect. This Agreement will be construed and enforced exclusively in accordance with the laws of the State of Alaska. 7.3 Notices. All notices, requests, demands, directions and other communications (collectively, "notices") under the provisions of this Agreement will be in writing (including email communication) unless otherwise expressly permitted under this Agreement and will be sent by first-class or first-class express mail, or by email with confirmation in writing mailed first-class, in all cases with charges prepaid, and any such properly given notice will be effective when received. All notices will be sent to the applicable Party at its address in Section 7.04 of the M&O Agreement (as amended by this Agreement) or, in the case of Assignor, to 5555 N. Channel Avenue, Portland, OR 97217, Attn: General Counsel, or in accordance with the then unrevoked written direction from that Party to the other Parties. 7.4 Relationship. The Parties recognize that nothing in the M&O Agreement or this Agreement is intended or will be construed to create an employer/employee relationship or a joint venture or a partnership relationship, or to allow City or Assignor to exercise control or direction over the matter or method by which Assignee performs under this Agreement. 7.5 Severability. The invalidity of any portion of this Agreement will not affect the force and effect of the remaining valid portions of this Agreement. 7.6 Further Assurances. Each of City, Assignor, and Assignee will, from time to time upon the request of any of the others, promptly and duly execute, acknowledge and deliver any and all such further instruments and documents, and will take such further action, as may be necessary or desirable to confirm this Agreement and to carry out its purpose and intent. 7.7 Counterparts/Execution. This Agreement may be executed in counterparts, including by means of PDF signature pages, each of which will constitute an original and all of which, when taken together, will constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by electronic transmission will constitute effective execution and delivery of this Agreement as to the Parties and such copies may be used in lieu of the original Agreement for all purposes. 8. City's Consent. Assignor and Assignee acknowledge and agree that City's consent is necessary for this Agreement. City, intending to be legally bound hereby, consents to the Assignment of the M&O Agreement by Assignor to Assignee pursuant to the terms of this Agreement. City represents and warrants that it has full power and authority to enter into and grant this City's consent. Each of Assignee and Assignor have provided City with certified copies of all necessary corporate resolutions and other documents evidencing the authority of persons signing this Agreement on their behalf and to bind them in accordance with the terms of this Agreement. [SIGNATURES FOLLOW ON NEXT PAGE] Assignment,Assumption and Amendment of Agreement Page 4 507486\4005\00714195 169 170 IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals by their duly authorized officers as of the date and year set forth opposite their names below, intending to be legally bound. Dated: ASSIGNOR: VIGOR ALASKASEWARD LLC, an Alaska limited liability company By: Name: Title: Dated: ASSIGNEE: JAG Alaska, Inc., a corporation By: Name: Title: Dated: LESSOR: CITY OF SEWARD, ALASKA, an Alaska municipal corporation By: Name: Title: Assignment,Assumption and Amendment of Agreement Page 5 507486\4005\00714195 170 171 ANNEX A ANNEX A Page 1 507486\4005\00714195 171 172 City draft of 2/29/2012 MAINTENANCE AND OPERATING AGREEMENT between CITY OF SEWARD, ALASKA and SEWARD SHIP'S DRYDOCK, INC. Dated as of April 1, 2012 17288 173 .~ ~~ TABLE OF CONTENTS PAGE ARTICLE Definitions ........... .............................................2 ARTICLE General Provisions--.'—.--..--.'-------..—.5 Section 2.01 - Agreement Term ..................................................................5 Section 2.02 ' Specific Use Restrictions......................................................5 Section 2.O8 ~ Environmental Matters .........................................................5 Section 2.O4 - Protection Against Liens............................................... .......7 Section 2.05 - No Preferential Rights tD Use Port Facilities ........................B Section 2.06 - Security for ShhdUf Promises ............................................... B Section 2.07 - Leasing and Use Of Managed Parcel ...................................8 Section 2.0B - Inspection bv City.................................................................8 ARTICLE Operation and Maintenance of Shiplift Facili ----..9 SgO1kon3.O1 - Revenue...............................................................................9 Section 3.02 - Annual Facility Costs......................................... ..................9 Section 3~O3 - Operation OfShbdift Facility..................................................8 Section 3.U4 ' Maintenance ofAccounts; Statements;.............................. 1O - Section O.U5 - Operating Plan .................. ................................... ............ 1O -�~ Section 3.06 ' Inventory ........... ................................................................ 11 Section O.O7 - Rates and Charges ----------.-------..-- 11 ARTICLE — ................ Section 4.01 - Operator's Duty h] Indemnify.............................................. 11 Section 4.O2 - Insurance Requirements.................................................... 11 ARTICLE Assignment 13 Section 5.O1 ' AssigOnlgOtof Agreement.........— .................................... 13 Section 5J}2 ' Assignment ........................................................................ 13 ARTICLE 13 Section 6.01 - Events Of Default............................................ —................ 13 Section 6.02 - Remedies for Default bv Operator..................... ................ 14 Section 6.03 - NO Waiver of Breach .......................................................... 14 Section6.04 - Cure bv City ....................................................................... 15 ARTICLE Miscellaneous 15 Section7.01 -Time..................................................................... ............. 15 Section 71}2 Entire Agreement.......................................................... .... 15 City of Seward and Seward Inc. � Maintenance and Operating Agreement �� 189 174 Section 7.03 - Relationship of Parties ....................................................... 15 Section 7.04 Notices............................................................................... 15 Section 7.05 - Binding Effect..................................................................... 16 Section 7.06 Severability......................................................................... 16 Section 7.07 -Amendments...................................................................... 16 Section 7.08 - Execution in Counterparts.................................................. 16 Section 7.09 - Applicable Law; Jurisdiction ............................................... 16 Section7.10 Captions............................................................................. 16 Exhibit A - Deferred Maintenance Exhibit B - Description of SMIC Exhibit C - Fencing Specifications Exhibit D - Maintenance Tasks and Schedule Exhibit E - Inventory of Spare Parts City of Seward and Seward Ship's Drydock,Inc. Maintenance and Operating Agreement 17490 175 MAINTENANCE AND 6PERATING AGREEMENT i This Maintenance and Operating greement (this "Agreement") is made as of April 1, 2012 between the City of Sewa , Alaska, an Alaska municipal corporation I ("City"), whose address is P.O. Box 167, Seward, Alaska 99664, and Seward Ship's Drydock, Inc. ("Operator"), whose address it P.O, Box 944, Seward, Alaska 99664. WHEREAS, since 1980 City has provided for the development of the Seward Marine Industrial Center (the "SMIC"), and City expended over $40 million in construction of improvements to the area, including a Syncrolift Shiplift System, Ship Transfer System and related rail systems (tl e "Shiplift Facility"); and WHEREAS, City and Operator were Lessor and Lessee, respectively, under a lease agreement effective as of September 2, 1988, as amended (the "Prior Lease"), a memorandum of which was recorded at Bo k 53, Page 255, Seward Recording District, I Third Judicial District, State of Alaska, un er which Operator leased from City certain real property located in the SMIC, as desc ibed in the Prior Lease to operate a vessel repair and construction facility; and WHEREAS, the continued maintena ce and operation of the Shiplift Facility is important to the profitable operation of perator's vessel repair and construction business on the Premises; and WHEREAS, the voters of the City of Seward in 1992 rejected two specific proposals for the sale or lease of the Shiplift Facility to Operator, and the City desires to transfer to Operator maintenance and ope ating responsibility for the Shiplift Facility without a sale or lease of the Shiplift Facilit in accordance with the voters' preference; and WHEREAS, an arbitrators' decision and order dated January 8, 1993, set forth certain rights of City and Operator under the Prior Lease, including the determination that City could not enforce any penalty against 9Aerator or a period of 24 months after the date of the arbitrators' decision and order or until January 9, 1995), with respect to Operator's failure to construct a permanent covered repair building capable of enclosing a vessel 300 feet in length (the "300-Foot Building"); and I WHEREAS, the City Council of City cl�clined to extend the time for construction of the 300-foot building, requesting that in IiO of constructing the 300-Foot Building Operator assume all expenses of operating a d maintaining the Shiplift Facility; and City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page I Vol 176 -D WHEREAS, City and Operator entered into a new lease and are Lessor and S110111' Lessee, respectively, under a lease agreement dated April 25, 1995, as amended, whereby Operator was relieved of the obligation to construct the 300-Foot Building, and Operator simultaneously entered into that certain Maintenance and Operating Agreement dated April 25, 1995 ("Initial Agreement") to assume the expense of maintaining and operating the Shiplift Facility; and WHEREAS, following expiration of the Initial Agreement the parties entered into a Maintenance and Operating Agreement dated March 30, 2000, which has been amended and extended nine times; and WHEREAS, the work described as "Deferred Maintenance" in Exhibit A has been completed by the Operator; and WHEREAS, the parties have determined that it is in their respective interests to continue their relationship for the maintenance and operation of the Shiplift Facility by entering into this Agreement, and the Operator agrees to assume the continued expense of maintaining and operating the Shiplift Facility; NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows: ARTICLE 1 Definitions The following terms will have the meanings indicated below unless the context clearly requires otherwise: "Agreement" means this Maintenance and Operating Agreement, as amended from time to time. "Agreement Term" means the duration of this Agreement as set forth in Section 2.01. .'Annual Facility Costs" means annual costs of the Shiplift Facility as described in Section 3.02. "Auditor" means an independent certified public accountant or firm of certified public accountants engaged by the City. "City" means the City of Seward, Alaska. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 2 176 92 177 "Environmental Laws" means all 'local, state and federal laws, ordinances, regulations and orders related to environm ntal protection; the use, storage, generation, production, treatment, emission, discharg remediation, removal, disposal or transport of any Hazardous Substance; or any of er environmental matter, including without limitation any of the following statutes: (i) Federal Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C.I Sections 6901-6991K; I (ii) Federal Comprehens ve Environmental Response Compensation, and Liability ct of 1980, as amended, 42 U.S.C. Sections 9601-9675; (iii) Federal Clean Air Act, 42 J.S.C. Sections 7401-7642; 1 (iv) Federal Hazardous Materi I Transportation Control Act of 1970, as amended, 49 U.S.C. ections 1801-1812; (v) Federal Clean Water Act o 1977, as amended, 33 U.S.C. Sections 1251-1387; (vi) Federal Insecticide, Fun icide, and Rodenticide Act, as amended, 7 U.S.C. Sections 2 01-2671; i (vii) Federal Toxic Substa0ces Control Act, 15 U.S.C. Sections 2601-2671; (viii) Federal Safe Drinking V ater Act, 42 U.S.C. Sections 300f-300i-26; and (ix) Title 46 of the Alaska Statutes. "Event of Default" means any of the e ents described in Section 6.01. "Fiscal Year" means the calendar yea "Hazardous Substances" means any 4ubstoace or material defined or designated as hazardous or toxic waste, hazardous orxni c material, a hazardous, toxic or radioactive substance, or other similar ter ' by any Environmental Laws, and shall include any such substance or material as ay hereafter become defined or designated as hazardous or toxic material by any Enviro mental Laws. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 3 178 Lease" means the ground lease of the Premises between City and Operator, dated as of April 25, 1995, as amended from time to time. "Maintenance and Operation Costs" means the actual and necessary costs of maintaining and operating the Shiplift Facility, including without limitation the reasonable expenses of management, repair and other expenses necessary to maintain the Shiplift Facility in good repair and working ordor, roaconable amounts for administration, overhead, insurance, utilities, consulting and technical services, employer costs (including pension costs), taxes (but not payments in lieu of taxes), charges payable pursuant to any licenses, permits or other authorizations of any agency or regulatory body having lawful jurisdiction, and other similar costs, but excluding depreciation (or reserves therefor), amortization of intangibles or other bookkeeping entries of a similar nature, and the costs of capital additions, replacements, betterments, extensions or improvements to the Shiplift Facility. "Managed Parcel" means the area within the SMIC designated as such on Exhibit B hereto, which is south of the fence on the northern boundary of the Premises constructed by Operator under Section 2.06, and which is not part of the Premises or the Shiplift Facility, "Maintenance" means all of the repair, maintenance and replacement of parts and equipment for the Shiplift Facility as further described in Article 3 and Exhibit D. "Operator" means Seward Ship's Drydock, Inc., an Alaska corporation, its successors and assigns. "Port Facilities" means all public port facilities owned or operated by City from time to time, including without limitation the Shiplift Facility. "Premises" means the land plus any improvements described as such in the Lease. .Revenue" means all of the following fees or charges for use of the Shiplift Facility: lift fees; receipts for labor to operate the syncrolift facility in raising or lowering a vessel; uplands day lay charges; and moorage and wharfage on the Shiplift Facility dock. "SMIC" means the Seward Marine Industrial Center, consisting of the area shown on the site map in Exhibit B hereto. City of Seward and Seward Ships Drydock, Inc. Maintenance and Operating Agreement Page 4 17894 179 11okw "Shiplift Facility" means the Syncro ift Shiplift System in the SMIC, including the mechanical shiplift and all associated e#pment, all upland rails not located on the Premises or other leased property, the side transfer cradle assembly, the shiplift dock, and 33 connected cofferdam cells comprising the south breakwater. "Shiplift Premises" means the Shiplif`1 Facility and the Managed Parcel. ARTIQLE 2 General rovisions Section 2.01 - Agreement Term. Th Agreement Term commences April 1, 2012, and unless sooner terminated as provide herein ends at the earlier of (i) date of expiration or termination of the Lease term, i nd (ii) March 31, 2017. Section 2.02 - Specific Use Restrlctio s. Operator shall not commit any waste of the Shiplift Premises. Operator shall use, perate and maintain the Shiplift Facility in accordance with all laws and regulations governing such use, operation and mainte- nance. Operator will not use the Shiplift Premises in any manner which would constitute a public nuisance. Section 2.03 - Environmental Matters. operator covenants and agrees as follows: (a) Operator will not cause or prm the Shiplift Premises to be used to generate, manufacture, refine, transport, treltsittore, handle, dispose, transfer, produce or process any Hazardous Substance, except in compliance with all applicable Environmental Laws, nor shall Operator cause or permit, as a result of any intentional or unintentional act or omission on the part oft operator or any other user or occupant of the Shiplift Premises, the release of anyj Hazardous Substance onto the Shiplift Premises. (b) Operator will at all times in all Ospects use its best efforts to comply, and will use its best efforts to cause all other users of the Shiplift Premises to comply, with all Environmental Laws, including without limitation undertaking the following specific actions: (i) Operator will, at its own expense, 1procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required by all Environmental aws, including without limitation permits required for discharge of (appropriately treate ) Hazardous Substances into the ambient air or any sanitary sewers servicing the Ship ift Premises; and (ii) except as discharged into the ambient air or a sanitary sewer in st ict compliance with all applicable Environ- mental Laws, any and all Hazardous Substan es to be treated and/or disposed of by the City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 5 180 D Operator will be removed and transported solely by duly licensed transporters to a duly licensed treatment and/or disposal facility for final treatment and/or disposal (except when applicable Environmental Laws permit on-site treatment or disposal in a sanitary landfill). (c) If the presence, release, threat of release, placement on the Shiplift Premises, or the generation, transportation, storage, treatment or disposal at the Shiplift Premises of any Hazardous Substance (i) gives rise to liability (including without limitation a response action, remedial action or removal action) under any Environmental Law, (ii) causes a significant public health effect, or (iii) pollutes or threatens to pollute the environment, Operator shall, at its sole expense, promptly take any and ail remedial and removal action necessary to clean-up the Shiplift Premises and mitigate exposure to liability arising from the Hazardous Substance, whether or not required by law. (d) Operator shall maintain a complete file, which may be inspected at any reasonable time by City containing copies of all correspondence, permits or other material between Operator and any federal, state or other governmental authority related to Hazardous Substances at the Shiplift Premises, (e) Operator shall give City within 24 hours (i) written notice and a copy of any notice or correspondence it receives from any federal, state or other governmental authority regarding Hazardous Substances on the Shiplift Premises or which affect or will affect the Shiplift Premises, or expenses or losses incurred or expected to be incurred by Operator or any government agency to study, assess, contain or remove any Hazardous Substances on or near the Shiplift Premises, and (ii) written notice of any knowledge or information Operator obtains regarding the release or discovery of Hazardous Substances on the Shiplift Premises. (f) Operator agrees to indemnify, hold harmless and defend City, and the officers, employees and agents of City, from and against any and all claims, demands, damages, losses, liens, liabilities, penalties, fines, lawsuits and other proceedings and costs and expenses (including attorneys' fees), arising directly or indirectly from or out of, or in any way connected with: (i) The failure of Operator to comply with its covenants and agreements contained in this section; (ii) Any activities on the Shiplift Premises which directly or indirectly result in the Shiplift Premises becoming contaminated with Hazardous Substanc- es; City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 6 180 96 181 (III) The discovery of Haz rdous Substances on the Shiplift Premises; and (iv) The clean-up of Haza�dous Substances from the Shiplift Premises without regard to (1) the nature of the activities producing the Hazardous Sub- stances, and (2) the identity of the p rson conducting such activities. (g) The provisions of this section, including the obligation to indemnify, shall survive the termination or expiration of the greement Term. (h) Nothing in this section shall, prejudice or impair the rights or claims of Operator against any person or entity oth r than City with respect to the presence of Hazardous Substances as set forth (I) Operator may, at its own expense, conduct an environmental audit of the Shiplift Premises, and provide a copy of t e audit report to City, within 60 days of the date the Agreement Term commences. if the audit report identifies Hazardous Substances at the Shiplift Premises, eit er (I) within 120 days after the date the Agreement Term commences the parties hall agree in writing on the extent to which each party is responsible for such Hazard us Substances, or (ii) this Agreement shall terminate at the end of such 120-day period., Section' 2.04 - Protection Against Liens. (a) Operator shall not permit to be enforced against the Shiplift Facility or any rt of it any mechanic's or materialman's lien arising from any work of improvement, how ver it may arise. However, Operator may in good faith and at Operator's own expense ntest the validity of any such asserted lien, claim or demand, provided Operator has fur ished the bond required in AS 34.35.072 (or any comparable statute hereafter enacted fo providing a bond freeing the Shiplift Facility from the effect of such a lien claim). Operat r shall defend and indemnify City against all liability and loss of any type arising out oft, performed on the Shiplift Facility by Operator, together with reasonable attorneys' fees and all costs and expenses incurred by City In negotiation, settling, defending, or otherwise protecting against such claims. (b) If Operator does not cause t be recorded the bond described in AS any 34.35.072 or otherwise protect the property under y alternative or successor statute, and a final judgment has been rendered 0ainst Operator by a court of competent jurisdiction for the foreclosure of a mech nic's or materialman's lien claim, and if Operator fails to stay the execution of the judgment by lawful means or to pay the judgment, City shall have the right, but not t 'Ee duty, to pay or otherwise discharge, stay, or prevent the execution of any such judgme t or lien or both. Operator shall reimburse City for all sums paid by City under this par graph, together with all City=s reasonable City of Seward and Seward Ships Drydock, Inc. Maintenance and Operating Agreement Page 7 182 attorneys' fees and costs, plus interest on those sums, fees, and costs at the rate of 10,5 11004 percent per year from the date of payment until the date of reimbursement. (c) City may give notice of non-responsibility for any work performed by Operator on the Shiplift Facility. (d) On completion of any substantial work of improvement during the Agreement Term, Operator shall file or cause to be filed a notice of completion. Ope- rator hereby appoints City as Operator's attorney-in-fact to file the notice of completion on Operator's failure to do so after the work of improvement has been substantially completed. Section 2.05 - No Preferential Rights to Use Port Facilities. This Agreement does not grant any exclusive or preferential right to use any of City's Port Facilities, except that Operator shall have a preferential right to use the Shiplift Facility. Operator's use of City's Port Facilities shall be subject to the applicable tariffs, procedures, rules and regulations of City in effect from time to time. Section 2.06 - Security for Shiplift Premises. Operator shall limit access to the Shiplift Premises by constructing and maintaining at Operator's expense a fence in accordance with the specifications, and at the location designated, in Exhibit C hereto. Operator shall provide City and its lessees with 24 hour access to the Managed Parcel. Section 2.07 - Leasing and Use of Managed Parcel. r. (a) City reserves the right from time to time to lease all or any part of the Managed Parcel, to use all or any part of the Managed Parcel for any purpose, and to permit others to use all or any part of the Managed Parcel, provided that: (1) Notwithstanding Section 2.03, Operator shall not be responsible for any Hazardous Substances on the Managed Parcel resulting from the leasing or use of the Managed Parcel under this subsection, and any lease of the Managed Parcel by City shall incorporate obligations of the lessee in the terms of Section 2.03 for the benefit of City and Operator, Upon the termination of any such lease or use of the Managed Parcel, City at its own expense, shall conduct an environmental audit of the area subject to the lease or use, and provide a copy of the audit report to Operator. As between City and Operator, City shall be responsible for any Hazardous Substance revealed by the report that was not reported to be present at the commencement of the lease or use. (2) Notwithstanding Article IV, Operator shall not be responsible for indemnity or insurance with respect to the leasing or use of the Managed Parcel under City of Seward and Seward Ships Drydock, Inc. Maintenance and Operating Agreement Page 8 18298 183 this subsection, and any lease of the Managed Parcel by City shall incorporate obligations of the lessee in the terms of Article IV for the benefit of City and Operator. (b) Operator may use all or an part of Managed Parcel for the temporary storage of vessels at the current day la charge stated in City's harbor tariff. This permission for use by Operator may be r voked by City at any time. Unless City and Operator agree otherwise, any other uselly Operator of the Managed Parcel shall be subject to rental charge per square foot equal to double the per square foot rent represented by the currently effective Rent (nder the Lease. Section 2.08 - Inspection by City.' City may at any time enter the Shiplift Premises, for the purpose of inspection t determine Operator's compliance with the terms of this Agreement. Such inspection may include the taking of samples of soil or water, and the reviewing and copying of ny records relating to the operation of the Shiplift Facility. ARTI�LE 3 Operation and Mainte�ance of Shiplift Facility Section 3.01 - Revenue. Operator hall have the right to collect and retain all Revenue received from the Shiplift Facility, nd Operator shall account separately for all Revenue received by Operator. Section 3.02 - Annual Facility Costs. lOperator shall pay the Annual Facility Costs for each Fiscal Year. Annual Facility Costs consist of the following, properly incurred or paid during each Fiscal Year: (a) Maintenance and Opera�lon Costs of the Shiplift Facility; and i (b) Amounts which may be Facility, equired to pay the costs of major renewals or replacements of the Shiplift to the extent that such costs are not covered by insurance. Section 3.03 - Operation of Shiplift ilit Fa �a i"t (a) Operator shall at all times m intain, preserve and keep, or cause to be maintained, preserved and kept, the Shiplif Facility and all additions and betterments thereto and extensions thereof and every pa and parcel thereof in good repair, working order and condition and will from time to time make or cause to be made all necessary and proper repairs, renewals and roplacerne is thereto and may from time to time make City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 9 1 1,W tb� 184 or cause to be made extensions and betterments thereto, and Operator will at all times operate or cause to be operated the Shiplift Facility in a safe and efficient manner in accordance with the manufacturer's instructions for operation, and at a reasonable cost. Operator will comply with all terms and conditions of all licenses and permits which are of material importance to the operation of the Shiplift Facility Operator shall maintain a Certificate of Class and maintain a fully functioning cathodic protection system. (b) Operator shall perform Maintenance of the Shiplift Facility in accordance with the maintenance schedule prepared by City and Operator and attached as Exhibit D hereto. This schedule provides for maintenance in accordance with the recommendations of Norton Corrosion and Pearlson Shiplift Corporation and their successors, and shall be kept in conformance with the maintenance recommendations of Pearlson Shiplift Corporation. This schedule provides for major renewals and replacements to the Shiplift Facility, which shall be modified from time to time in accordance with the recommendations of Lloyd's Registry of Shipping, (c) Operator shall permit the Shiplift Facility to be operated only by persons that Operator determines to be qualified, competent and otherwise fit to perform their assigned duties in the operation of the Shiplift Facility. Formal training is the responsibility of Operator and can be obtained from Pearlson Shiplift Corporation or others. I (d) Agents of City may enter the Shiplift Facility at all times to inspect the Shiplift Facility or observe its operation. If City observes the Shiplift Facility being operated in an unsafe manner or in a manner that does not conform to the manufacturer's instructions for operation, City may order Operator to cease operating the Shiplift Facility until the problem has been corrected. (e) Operator shall, at its own expense, schedule annual inspections of the Shiplift Facility by Norton Corrosion, Pearlson Shiplift Corporation, Lloyd's Register of Shipping and such specialty consultants as may be required by Pearlson Shiplift Corporation or Lloyd's Register of Shipping, and promptly provide to City a copy of the report of each such inspection. (f) Operator shall maintain reasonable hours of Shiplift Facility operation, and reasonable procedures for Shiplift Facility operation, that accommodate all members of the public desiring to use the services of the Shiplift Facility. In operating the Shiplift Facility, Operator shall not discriminate against any member of the public desiring to use the Shiplift Facility with respect to hours of operation, services offered, scheduling of operations, or any other aspect to Shiplift Facility operation. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 10 114411' 184100 185 Section 3.04 Maintenance of AccOunts andStatements; . Operator shall keep proper books of account for the Shiplift Facility which shall be kept in accordance with Generally Accepted Accounting Principles i Operator shall prepare, and submit to City, statements showing in reasonable detail in ome and expenses of the Shiplift Facility for each Fiscal Year, including Revenues, aounts expended for maintenance, renewals and replacements of and capital additions �o the Shiplift Facility. Such statements shall be filed with City within 120 days of the close of each Fiscal Year. Section 3.05 - Operating Plan. Prior to the beginning of each Fiscal Year, Operator shall prepare and file with City a operating plan for the ensuing Fiscal Year. The operating plan shall include an estimat of Revenues and Annual Facility Costs and a schedule for repairs and maintenance to b performed during the Fiscal Year. Section 3.06 - Inventory. Operator all maintain on hand the inventory of spare parts for the operation and maintenance of t j e Shiplift Facility as shown in Exhibit E, and Operator shall transfer that inventory to C it upon the expiration or earlier termination of the Agreement Term. Section 3.07 - Rates and Charges. 'th each annual operating plan submitted to City, Operator shall propose rates and char es for the use of the Shiplift Facility. Such rates and charges shall not discriminate al Ong users of a class of service or among different classes of service. Rates and charges do not discriminate among classes of service if they are reasonably related to the cost of providing each class of service, allocated according to Generally Accepted A counting Principles. ARTICLE 4 Indemnity; linsurance Section 4.01 - Operator's Duty to In qMnfffy. In addition to any other duty to indemnify or defend City, Operator shall defidind, indemnify and hold harmless City from any and all claims, actions and demands f r death or injury to persons or damage to property, arising from the use of the Shi lift Facility during the term of the Initial Agreement and the Agreement Term by Operator, Operator's contractors, agents, officers, employees and invitees, or the gene al public. Section 4.02 - Insurance Requirements. During the Agreement Term, Operator shall procure and maintain at its expense the insurance described in this section subject to the terms and conditions set forth in this se tion. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 11 186 (a) Operator shall procure and maintain the following insurance under this Agreement: (1) Commercial general liability and automobile insurance, with limits of liability of $5,000,000 for all injuries, deaths or property damage resulting to any one person and $5,000,000 limit from any one occurrence. Coverage under such insurance shall also include explosion, collapse and underground property damage hazards. Such insurance shall include a blanket contractual liability endorsement. For non-owned watercraft of Operator or its customers any "watercraft exclusion" in the commercial liability insurance policy shall be eliminated. Protection and indemnity insurance shall be provided with the same limits as the commercial liability insurance for the use of Operator-owned watercraft. (2) All risk physical damage insurance for any buildings, equipment, machinery any other property upon the Shiplift Facility at replacement value rather than original cost. (3) Workers Compensation Insurance and insurance under the Harbor Workers and Longshoremen's Compensation Act. (4) Coverage for vessels in the care, custody or control of Operator (ship repairer's liability) with limit of liability of $5,000,000. (5) Environmental impairment liability or pollution legal liability insurance for all bodily injury and property damage to parties other than Operator caused by pollution emanating from the Premises, with limit of liability of$1,000,000. (6) Marine Liability Insurance and any other insurance required under any permit or tariff of City. (b) The minimum amounts and types of insurance required under this Section shall be subject to revision in accordance with standard insurance practices, in order to provide continuously throughout the Agreement Term a level of protection consonant with good business practice and accepted standards in the industry. Such factors as increases in the cost of living shall be utilized in assessing whether the minimum insurance requirements should be increased. City shall notify Operator of any required increase in insurance coverage. (c) All insurance policies shall provide for 30 days' notice to City of cancellation and/or material change in policy terms. 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. Operator shall furnish City, on forms approved by City, certificates City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 12 186 102 187 evidencing that it has procured the insurance required herein prior to the operation of the Shiplift Facility by Operator, Operators all be liable for all deductibles under any insurance policy obtained by Operator and r this Agreement. Nothing herein contained shall prevent Operator or City from placing and maintaining at City's or Operator's own individual cost and expense, additional or o er insurance as may be desired. (d) On October 1, 2011, and annually thereafter throughout the Agreement Term, Operator shall procure and submit: to City a written report from a reputable insurance broker acceptable to City that the!broker has reviewed the types and amounts of coverage of insurance obtained by per or and the operations of Operator and in the opinion of the broker the coverage com lies with Operator's obligations under this Agreement. (e) All of the insurance policies required above as well as any other insurance carried by Operator or City shall provide that the insurers waive their rights of subrogation against City and Operator and their respective officers, servants, agents or employees, Operator further agrees to waiv and agrees to have its insurers waive any� � u I rights of subrogation (whether by loan rece,, ,s, equitable assignment or otherwise), with respect to deductibles under such policies and with respect to damage to equipment including the loss of use thereof, whether in, ured or not, Operator shall also name City as an additional insured on the general liabi ity insurance policy maintained by Operator as required above, excluding coverage for laims resulting from City's sole negligence. Operator shall promptly and without reques, by City supply City copies of all insurance 1�tw binders and policies. ARTICLE 5 Assig ment -di Section 5.01 - Assignment of Agree ent. The parties recognize that a material reason for the finding by the City Council of Sewardthat it is in the public interest to enter into this Agreement with Operator is Opera ors experience in operating vessel repair and construction facilities on the Premises. Except as provided in Section 5.02, any assignment of this Agreement by Operator shall be void, and any attempt by Operator to assign this Agreement gives City the right immediately to terminate this Agreement. Section 5.02 - Assignment. Notwiths nding Section 5.01, Operator may assign its entire interest under this Agreement to a person to whom Operator sells its vessel I I repair and construction business, provided, that the assignee and the terms of the assignment shall be subject to approval by Ci�y- City .of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement i Page 13 188 ARTICLE 6 Default; Remedies Section 6.01 - Events of Default. Each of the following shall be an act of default under this Agreement and the terms "acts of default" and "default" shall mean, whenever they are used in this Agreement, any one or more of the following events: (a) Failure by Operator to observe, fulfill or perform any covenants, conditions or agreements on its part to be observed or performed under this Agreement for a period of 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 Operator 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 Operator within the applicable period and diligently pursued until the default is corrected. (b) The making by Operator of an assignment for the benefit of creditors, the filing of a petition in bankruptcy by Operator, the adjudication of Operator as insolvent or bankrupt, the petition or application by Operator 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 Operator 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 months from the date of commencement thereof. (c) Any event of default under the Lease. Section 6.02 - Remedies for Default by Operator. Whenever an act of default by Operator 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: (a) City may terminate this Agreement and re-enter the Shiplift Facility and take possession thereof, (b) Recover, whether this Agreement be terminated or not, damages incurred by City by reason of the breach or default by Operator. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 14 188104 189 (c) No expiration or termination f this Agreement shall expire or terminate any liability or obligation to perform of Opera or's which arose prior to the termination or I expiration except insofar as otherwise afire d in this Agreement. (d) Each right and remedy of ity provided for in this Agreement shall be cumulative and shall be in addition to ev ry other right or remedy provided for in this Agreement or now or hereafter existing at 1,w 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 Agreement or ow or hereafter existing at law or in equity or by statute or otherwise shall not preclude �he simultaneous or later exercise by City of any or all other rights or remedies provided for in this Agreement or now or thereafter existing at law, or in equity or by statute or therwise. Section 6.03 - No Waiver of Breachl. No failure by City to insist upon the strict performance by Operator of any term, co onant or condition of this Agreement or to exercise any right or remedy consequent up n a breach thereof, shall constitute a waiver of any such breach or of such terms, coven nts or conditions. No waiver of any breach shall affect or alter this Agreement, but eac and every term, covenant and condition of this Agreement shall continue in full force, and effect with respect to any other then existing or subsequent breach. Section 6.04 - Cure by City. City shall have the right, but not the obligation, to cure any default of Operator under this Ag eement if Operator fails to cure the default within the time allowed under Section 6.01. jAny cost incurred by City in effecting such a cure shall be payable by Operator upon do and, and shall bear interest at a rate of 15% per annum until paid. ARTICLE 7 Miscellineous Section 7.01 - Time. Time is of the e sence of each provision of this Agreement, The time in which any act is to be performed under this Agreement 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. Section 7.02 - Entire Agreement. This Agreement contains the entire agreement of the parties with respect to the matters overed by this Agreement, and no other agreement, statement or promise made by� any party which is not contained in this Agreement shall be binding or valid. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 15 190 Section 7.03 Relationship of Parties. Nothing in this Agreement, and no performance of either party hereunder shall cause the relationship of the parties to be that of principal and agent, partners or joint venturers, or cause the parties to be associated in any manner other than as owner and independent contractor. Section 7.04 - Notices. All notices required or authorized to be given by either party under this Agreement shall be in writing and shall be served personally or sent by registered mail as follows: City of Seward P.O. Box 167 Seward, Alaska 99664 Attention: City Manager Seward Ship's Drydock, Inc. P.O. Box 944 Seward, Alaska 99664 Attention: President Notice by mail shall be deemed to have been given at the time of mailing. Each of the above addressees may, by written notice to the other, designate any further or different addresses to which subsequent notices shall be sent. In addition, the parties hereto may agree to any other means by which subsequent notices may be sent. Section 7.05 - Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon City and Operator and their respective successors and assigns. Section 7.06 - Severabilit . In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provisions hereof. Section 7.07 - Amendments. This Agreement may be amended only by a writing signed by City and Operator. Section 7.08 - Execution in Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.09 - Applicable Law• Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Alaska. Any civil action brought by any party under this Agreement shall be commenced and maintained in the Superior Court, Third Judicial District, State of Alaska, at Anchorage. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 16 190106 191 Section T•in ,2. The captions or headings in this Agreement are for convenience only and no Way define, limit or describe the scope or intent of any provisions or sections of this Agreement. City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 17 11%W 10�,91 192 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ` City: CITY OF SEWARD Jame �nt City ger ATTEST: 146t AP- ,J hanna Kinney, CMCj rty Clerk 04sly��pg�' '��y�la.pI►`�BO ee � �.;ts`, .,r�i��''s Operator: SEWARD SHIPS DRYDOCK, INC. Ja es T. Pruitt �,g�srssx&Gust% President City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 18 192108 193 Exhibit A-Deferred Maintenance DEFERRED MAIN�ENANCE PROGRAM BacNN transfer pit COMPLETED Renew oil | | h gear box COMPLETED Motor reseal 11 COMPLETED Brake | COMPLETED Batter Ue repair COMPLETED Coat fasteners COMPLETED Rail alignment COMPLETED Motor dip/bake dip/bake 7 ea. COMPLETED Line amplifiersCOMPLETED Paint gear box COMPLETED Paint |steel on platformCOMPLETED Cleaning and tightening electrical connections COMPLETED Repair of wooden decking onplatform Replace sill boards COMPLETED Cathodic mtectisystem COMPLETED Coating pipe pile m splash zone (utilizing existing material) Coating ofO8 cofferdam cells COMPLETED Cables$12.000x28 COMPLETED Motor Cover Repair(vop|aom) COMPLETED Repair control house doors COMPLETED Repair air control system / COMPLETED Erosion � COMPLETED _ �— Wiring and conduit for warping capstan COMPLETED Lower sheave bearings | COMPLETED Winch junction boxes COMPLETED Repair support pile COMPLETED Repair winch covers COMPLETED City of 8awo,d and Seward Ship'e Drydook^ Inc. Maintenance and Operating Agreement PmQe18 I%W 194 1j Exhibit B-Description of SMIC [Attach Plat Map) City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement page 20 194110 195 Exhibit B Maintenance and OperatingA Ireement between City� of Seward, Alaska and Seward Ships Drydock, Inc. dated a4 of April 1, 2012 fit d Lie S N I _ JJ rl•. [� 3 as� t3 t5!' 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W((. �;D l,- _J — OOWI •Yi "y•rvVr3 4ei~�`u fwH J.1fY—mil _ _— d N S'��7. -� _� __._ .➢R➢(.ILS ! 3�y !FOrrl x</-ruW N3a";:ae LLI �iZ�•n�a� 1�s oT L C C*gib. �-a4� f{s5� _n ot„ :�+g" ni?�i V i<., yv r �$•o eg�4ai.bi'oG �Z$m ,N 1ii^ 5 � h •"yL���'6�:me^yi. w ..^,33$ li v � � •�c S�S 5 8-"$.y'>5,.�� w 2�yA,Y n � R yV s "u _,... � �Ou�l�rm�' ��z OI '@�E.n EQ Si$��'�,➢y ��Irv. •� ,� i i hn Ik n `` � �rr�fiao�Vo7• Ao Y� ,2i k - b ark b:^ � I '/ 9�r_a•�oEyr u'-➢Ka3A .I �h rll I Y n122S�'SW �z " 0 fsi 55.^22Fln"LdVEu!a r•1� 4 �` k I? 1 5 111 7t1 say-;8°xeaocr."r•br. a .H o ➢ 0 0 A a 196 Exhibit C - Fencing Specifications [Attach map showing Fence and Managed Parcel] City of Seward and Seward Ship's Drydock, Inc. Maintenance and Operating Agreement Page 21 196112 197 _ ,, Jan-21-2000 03:t4cn From-SEWARD BOA7 HARBOR +9072247187 T-077 P.016 t �&5 2' 1.L27'3E +3'E U -- ---max 3 � �KaJ' Exhrbrt C_Fencing Saec6f,,ar �i T ta . q`_ �J•C0'3*'13°t4, &C5 oo`_ f i't A v � ��bJAi?D I�►u I i l> �'cc s,tlP�y jo r E� l e , -- — F11✓ tS FGNGE Wlt t- PJ&• cr V v r l I I INAt- V E�I W N FC- AND AS-4- Ac6p,7cLa A-rF-- P» or -rHe 4-;Z EZF !NQ'ff G.; i f'1_iRPGSF�. ot.11,.Y. 'Tlity 020051 1G: O9 RGCEIiUGD FROW-1•9 97 2 2471 67 II 197 11� - 1ee r� Exhibit D-Maintenance Tasks and Schedule � In addition to other obligations in this Agreement, all maintenance of the Shiplift Facility shall accomplish and conform with the guidelines in the operation and maintenance manuals, G-2787 and 5- 2751. as published by NB Gynunn|dt and current standards set by Peadoon Ship|iR Corporation Maintenance Records P022 — Seward Ships Drydook Company (as included herein in Exhibit D\, Norton Corrosion, and Lloyds ofLondon. City ofSeward and Seward Ship'o Drydock' Inc. Maintenance and Operating Agreement Pwge2Q ^� 198114 199 PF-A-FILSON �HIPLIFT MAINTENANCE RECORDS P022—SEWARD SHIPS DRYDOCK CO. OVERVIEW Periodic Inspection and maintenance is required to assure the safe, reliable operation of your shiplift and transfer system. The foll wing forms, charts and logs will provide a checklist and comprehensive record f your compliance with recommended maintenance procedures. A loose leaf n ebook should be used to file all completed check sheets.A more stringent maintenanc schedule may be implemented if it is found to be necessary to accomplish the intent o the maintenance program or to maintain a specific classification requirement. The appropriate record sheet(s)for the maintenance activity to be completed should be copied and used to record all maintenance tasks carried out. Each sheet must be signed and dated by th�fperson responsible for the maintenance of I the shiplift transfer system upon completion the tasks on the sheet. Each week one of the Weekly MaIntena ce Record forms must be completed and placed in the shiplift maintenance log book. 1 Each third month one Additional Three Monthly Maintenance Record must be completed and placed In the shiplift maintentrice log book,along with the Weekly Form. Each sixth month one Additional Six Monthly Maintenance Record must be completed and placed In the shiplift malnten nce log book, along with the Weekly and Three Monthly Forms. Each year one Addiflonal Annual Maintenance Record must be completed and placed In the shiplift maintenance log book, along with the Weekly, Three Monthly and Six Monthly Forms. In addition, tasks to be completed less freq ently should be entered as comments on the Additional Annual Maintenance Recor . These tasks include: 1. Every two years, repaint the hoists as necessary, 2. Every two years,repaint cradles. 3. Every five years, change all gearbox oil, unless testing has shown an earlier change was necessary, 4. Every eight years, strip and examine �ne set of upper sheave bearings, The bearings should be renewed if there is an 'sign of pitting, If there is a need to renew the bearings, then all bearings of an equal life must also be stripped and examined. 6. Every eight years or 2,000 operating ho rs, whichever occurs first, all hoist wire ropes must have been replaced (unless egular NDT rope evaluation is combined with semi-annual visual and annual destru tive testing of one wire rope). 6. Every ten years, strip the motors. Clean nd examine the stator windings for signs of damaged Insulation. Renew the bearin s and reassemble. PSC-PO22-SMR-110118-RO j Page:I of 9 Pearlson Shiplift Corporation a 12030 SWI14th Place, lami,Fladda 33176 gmaf);1nrb@sb1pIIft.cotn Correspondence: Post Office Box 560100,Miami,FL 33256-01 0 Main-(305)720-2536 Pax:(305)596-7161 i tru�i 200 PEMLSON SHIPLIFT MAINTENANCE RECORDS P022—SEWARD SHIPS DRYDOCK CO. WEEKLY MAINTENANCE RECORD Refer to Maintenance Manual for details of tasks to be performed. arjamal Shiplift Platform 1. Inspect platform decking. 2. Lubricate the lower sheave bearings. 77 3. Verify the platform has been run at least 6 feet. Visually Inspect the wire rope lubrication and Shiplift Hoist 4.Ropes replenish as required. ❑ I ShIpIlItTransfer 6. Lubricate the wheel bearings of all cradles which Systorn I have been submerged. The above tasks are to be completed each week. Comments and Observations- The above tasks have been completed: [ YES nNO Signed: Date: PSC-P022-SAIR-1101 18-RO page,2 Of 9 Pearlson Shiplift Corporation Q 12030SWI14th Place,Miami,Florida 33176 Email:infoOslilpill'tcoin Correspondence: Post Office Box 560100,Miami,Fl,33256-0100 * main:(305)720-2536 Fax:(305)595-7161 200 116 201 It PEARLSON HIPLIFT MAINTENANCE RECORDS P022-SEWARD SHIPS DRYDOCK CO, ADDITIONAL THREE MONTH MAINTENANC E ECORD Refer to Maintenance Manuel ford0talls,of tasks to be perrormed. 19 N- M Ropes Hoist Rotate rope reels in�storage. 171 2. Inspect load call tra sducer pin and and-rotation I I bracket.Check that able connectors are t!ght. -ShIptiff Hoist 3, Checkthe enclosed ear drive oil level,_ Shiplift Transfer Visually inspect trey and inside flanges of cradle 4. n System wheats. The above tasks are to be completed wft�the Weekly Maintenance Tasks. Comments ajad Obsez-vations: The above tasks have been completed: C1 Y I ES MNO, Signed: Date: PsGP022-5UR-1 10118-A0 Pago.3 of 9 Pearlson Shiplift Corporation o 12030SW 114th Place, tams,Florld,03176 a &maO:Info@shipiifr.com Correspondence:Post Office Box 560100,Miami,FL 33256-010 o Main-(305)720-2536 fax,(305)595-7161 202 - i. P'EARi.ARLSStJN SHIPLIFT MAINTENANCE RECORDS P022—SEWARD SHIPS DRYDOCK CO. ,ADD QN+L Slk MONTHMAINTENANCE 4 t Refer to Malntenanoe Manual for details of tasks to be performer!. (Rope Inspection and Test Results to be recorded on Rope Inspection LoglChart} (Brake Inspection to be recorded on Brake Inspection Log) Clean limit switch actuator plate and paint as Shiplift Platform 1 required.Check actuator plate fasteners for ❑ tightness. Shiplift He Visually inspect the wire ropes for broken wires and ❑ Ropes 2' wear.Enter results on Wire Rope Inspection Charts. Shiplift Hoists 3• Lubricate upper sheave bearings,pawl pivot,hoist ❑ frame bearings. 4 Lubricate limit switch actuator mechanisms In the ❑ hoist limit switch box. 5. Strip brake, Inspect,clean out dust and check brake ❑ torque and solenoid air gap. Check Hoist Junction and Limit Switch enclosures 6 are clean and watertight. Check all glands&cables ❑ and tighten all electrical connections. Shiplift Transfer 7 Visually inspect rails and fasteners. ❑ system 8. Visually Inspect transfer cradle paint ❑ 9 Check cradle and STC wheel U-bolts for torque. ❑ Note any signs of movement and misalignment. The above tasks must be completed in addltlon to the Weekly and Three Monthly tasks. Comments and Observations: The above task has been completed: [1 YES ❑NO Signed: pate: PSC-PO22-SMR 110118-RO Pege:4 of 0 Pearlson Shipllftcorporation 12030 SW 114th Place,Miami,Florida 33176 a Email:info@shiplift,com Correspondence: Post Office Box56olo0,Miami,FL 33256-0100 a Main:(305)720-2536 Fax:(305)696.7161 202 118 iI 203 PEARLSON I$HIPLIFT MAINTENANCE RECORDS P022—SEWARD SHIPS DRYDOCK Co. WT DDITIONALANNUALMAl EN0icEREC0FqD Refer to Maintenance Manual 7 datalls of tasks to be performed. I (Lower Sheave Inspection to be recorded on Lower Sheave Inspection Log,) ShIplIft Platform Check steel structu e(corrosion,welds and rotective coating ❑ 2. p Strip and examine at least two lower sheaves. Wpm Wire 3. Complete a Visual Or NDT examination of selected Ropes I I ropes,Record findings on Rope Inspection Record. 1 4. 1 Remove one rove and test to destruction, I I Shiplift Hoists 5, 1 Check pawl linkage.Adjust as reguired, S. I Inspect Limit switches(NLU, FLU and PLS). Li Complete a visual a 4 amination of 10%of the:�7. enck ; a sample of oil from each ❑ nearl tees test Indicates it Is necessa!y, 8. Meager test all hoist otors. Shiplift Load Verify Calibration of t e Load Monitoring System. Monitoring 9. Install the temporary upport beams and ❑ adjust/repair where r qwired. System Shiplift Transfer 10, Check 25%of wheel for wear and disassemble and System Inspect 10% 11. Check that rail levelaa' nd rail joints are within ❑ tolerances. 12, Check the condition 0 the Side Transfer Carriage ❑ I I steel and.deckIng. Shiplift Control Check all electrical co nections in the Control 13. Console and Motor C4 ntrol Center.Functional check ❑ System the entire Control syst�m in all modes of operation. The above tasks are to be completed with t e Weekly, Three Monthly and Six monthly tasks —Comments and Observations, The above tasks have been completed: ❑ ES MNO Signed: Date. PSC-P022-SMR-110118-RO Page,5of9 Pearlson Shiplift Corporation 12030SW 114th Mace,Mlamf,Florida 33176 a [imail,Mfo@shipliftcom Correspondence: Post Office Box 560100,Miami,171,3=6.01(0 a Main:(305)720-2536 Faro(305)595-7161 ,%NOW 2V0 204 •- � � - SHIPLIFT MAINTENANCE RECORDS P022—SMARD SHIPS DRYOOCK CO. WNER SHEAVE • 1 • lip vTltl x�flE?Erb; l '3 !lcRtT��: OF I =W E Omqlmll e I Cyr>" fit.=..... !� -ti +mr x a �w Comments and Observations, PSC-PQ22-5MR4 id?18-Ro page;8 of 9 Pearlson Shiplift Corporation n 12030 SW 114th Place,Miami,Florida 33176 • Email:info@shipliftcom Correspondence: Post Office Box$60100,Miami,FL 33256-0100 o Main:(305)720.2536 Fax:(306)S95-7161 204 120 i 205 PMRLSON �,� w.»,, §LUPUFT ._ PHIPLIFT (MAINTENANCE RECORDS P022—SEWARD SHIPS DRYDOCK Co. MOTOR/BRAKE INSPECTION r •tijafYi'11t 2y':d'.0' ;._,=x SY•yl..'.•.• 5vF4 .+at.: .t1AL' N ,:if.:r° •::t'.f{» le`•17A�E• DA �?DA'•i'��::�:r "a'':c,:i`.ii 7. Af AF " AF Q AF x s Is—rumaig r: F v F e rra. i xt:' 1a AF A R d AP B+ ) O AF 'I QAP AF 3L F F ::^rt.il' F 'i�;?4•. F �.... -. 66 z`. - ' v t x.•+'aikltrro,:.::' :r;:....�q'rtva,,�;' P° G ": r ae I F• ka v TAN;• ,. WW' 7 hl8Y5} _ •'a UCj�' �&,^.' :.mf:.�; :pj rk"33f:}:••lP:i'R AF AF TQR4[lE.;• AF =jt tjGlE is AF •i.':'rxit:!! •'u:�{a:!ei F {; F ;te:c.,.`lA .3�i':,.�5• tH`:•,•,, {�r,e •q�.�-.px.,. `...+•. •:•z�.r"; x� r..;y'ce,cn•tt�:�,r ( d1P'a AF AF ;/I11ftf{3 !as AFA)i23 py AF Y•7t ut f �.;•..•S�f l,{"'�' ::h S:^•..i`�t7'd' tw Yi�r..,5 a C) t� F 'ar: 1cr'k; F ;fxh` t r F � F P. G REP�;IA� k, i •`� �t�.,�.' Ri i; !;1'"''=.> ; r* c"ED INNI' , :fi; t•';�'ns}tx?r: ••r:iT.��._ �y' mpuryasxa�t r r-aI�„O,��a�=x � rat =��,HO•.�#? E1�E 1F•.'%i aME"� �O�, lrv,•xtin; asj!Fil +'l• •t .x 5.f9gkl�1' AF Rfrl AF ;� ,p �`E�� AF ?{,F7ir3� AF t��70R ,� F � 3? ; F F;:r a . F Ciyu a f g!. 5, AF l�A{SA' AF vrA,�xi3AR"s AFAGPp. AF yy ir`� '�. rat ',•,.s�:•=}:.�1';,.;•=.. F `t i ':4�i' <" S. •7' ft�,4.aiai::.>;� F 'ht V.n•�.f:�-C: F �t:i`::5i7;'�,t F '�fwSf'."if:�.° :iii�'iF�f2�''::•e: r>YP%{ �f'"a,� s'ar:pfi��j:p,.;,:,: )S�% •H=:�+fiVtf )rC3G� 'e ir,`i Ril :�.�' kw�•,.er�,,.�'?°, ' `.'tti'rws:�r�? itx.,.».>m»t•.t,.�3a� —Comments and Observations: PSC.P022-SMR-110118-RO Page:7 of 8 I Pearison ShipliftCorporatlon a 12030 SW 114th Place,M ami,Florida 33176 o Emall:100@3hipliftcoln Correspondence; Post Office Box 560100,Ward,FL 33256-010 Main:(305)720-2536 Fax:(305)595.7161 20''. i 206PEARLSON F30t)01-t SHIPLIFT MAINTENANCE RECORDS P022--SEWARD SHIPS DRYDOCK Co. WIRE ROPE INSPECT16NCHART I• E. I 1 I '•si.t�::��ss;;.ii''I:;i2.'...:..,+,..z.�..:r�:-,r.:;•;••s""'•'"t•'ii . .Fsi'r r:r;i= :'iYsf<;x.�•fti..-..•.: UiStiA4I0SPEC'110N• '• ;p ' :t l)1:INSP 8 i `_ .r, -RRO$1Q1z ;'oSCQ r 't'T { .!• s. ?�� _., .... . iL'.z?:.`•p ;S� '- .� �_+:.,;:-'.s!+':a .,y.:�:if. ti::a�'� ,t�:•x"§.v:Fa;+�iJ.'.,sls �'�Tdt'.�a. :!3;ftd:a�. ❑Pass p Fail ❑Pass p Fail ❑Pass ❑Fall ❑Pass ❑ Fail ❑Pass ❑Fail ❑Pass ❑Fail ❑Pass p Fail ❑Pass ❑Fall p Pass ❑Fail ❑Pass ❑Fail PSC-Po22-SMR-110118-4RO Papa:8Of9 PearisonShipliitCorporation 12030 SW 114th Place,Miami,Florida 33176 o Pimail:Info©shiplift.com Correspondence: Post Office Sox 560100,Miami,Ft,33256-0100 Main:(305)720-2536 Fax:(305)595-7161 206 122 2( a � MAINTENANCE RECORDS P022—SEWARD SNIPS DRYDOCK CO. WjRE ROPE INSPECTION • 0 O I PSC-Po22-SMR-110118-RO Page:9 of.9 Pearlsor.Shipiifr Corporation 12030 SW 114th Plate,Miami,Florida 33176 Email:in"shll4ffkcom -mot Correspondence:Post OMce Box560100,Miami,FL 33256.0100 • Main:(305)720.2536 Pax:(30S)595-7S61 C�~ V 207 208 HARBOR 1177 P.006 F-182 E414-t+ iyi OR LIMIST hMAQ-Aa±Lo. 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H12-NA Op&, Howie AP Kr 0 25 Wive ID NvotbO31 I Drskt-Colt 3 �. eke f tut"D". pussy Kit t ,, Right LmS Cables 2 Left l�� lrte 1 Sywrrolo hawemori, list PwKv 210 126 211 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page CALL TO ORDER The July 9,2018 regular meeting of the Seward City Council was called to order at 7:00 p.m. by Mayor David Squires. OPENING CEREMONY Lt. Doreen Valadez led the Pledge of Allegiance to the flag. ROLL CALL There were present: David Squires presiding and Marianna Keil Ristine Casagranda Sue McClure Suzanne Towsley Jeremy Horn Sharyl Seese comprising a quorum of the Council; and Ron Long, Assistant City Manager Brenda Ballou, City Clerk Katie Davies, City Attorney Absent—None CITIZEN COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING Cindy Ecklund wanted to discuss recycling, and was concerned that Seward was the only city on the peninsula that required mandatory garbage pickup. She thought that if garbage service was required then perhaps recycling should also be required, or else don't make garbage pickup mandatory.Ecklund wished to encourage and support recycling efforts;she also wanted to dispel the rumors that Seward did not have recycling capabilities. Karin Sturdy reported that revenues throughout the Parks&Recreation Department were up. She thanked Cody Beck and Dustin Phillips for volunteering to coach the youth soccer league. The Teen&Youth Center Summer Camp Program had been expanded to accommodate 60 campers every week. APPROVAL OF AGENDA AND CONSENT AGENDA Motion (Keil/Casagranda) Approval of Agenda and Consent Agenda Towsley added an item to Other New Business to schedule a work session to discuss the transfer of the Vigor lease. 211 212 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Motion Passed Unanimous The clerk read the following approved consent agenda items: Resolution 2018-059, Accepting A Grant In The Amount Of $990.00 From The Alaska Highway Safety Office For The FFY2018 High Visibility Enforcement— DUI Event During The Period Of Independence Day (July 1-5,2018)And Appropriating Funds. Approval of the June 25, 2018 Regular Meeting Minutes. SPECIAL ORDERS, PRESENTATIONS AND REPORTS Proclamations & Awards —None Borough Assembly Report. Kenn Carpenter said the borough mayor had vetoed an additional $625,000 for a counseling program at the school district; Carpenter would be bringing forward a resolution on July 19, 2018 to take $600,000 from the maintenance budget to cover the cost of the counselor.As well,there was$206,000 cut from the Kenai Peninsula Tourism Marketing Council (KPTMC); the assembly had requested documentation from KPTMC to demonstrate their claim of having a 4:1 rate of return, but the assembly had not yet received anything to support that claim. Carpenter commended the Seward Chamber of Commerce for the work they did to promote Seward. City Manager Report.Assistant City Manager Ron Long reported the following purchase orders between$10,000 and$50,000 have been approved by the City Manager since the last council meeting: None. Administration had received a couple of inquiries about the Air Force Rec Camp property; currently, the platting of that property was underway. There had been two expressions of interest from other utilities about Seward's electric utility;Long would keep council informed as discussions developed. The owner of the boarded up building on Fourth Avenue downtown had been in touch with administration;he was working on a solution and would stay in touch.Finally,Long reminded everyone that there were recycling bins located at the South Harbor Uplands. In response to McClure,Long confirmed again that the overhead electric lines at the lagoon were not activated, and would be taken down in late August to early September. Casagranda received a call late last night from a local business owner complaining about the noise from an adjacent business. The adjacent business had a letter from the city manager exempting the business from the after-hours noise and activity. In response, Long said, historically, the city made this accommodation in order to mitigate public safety concerns; specifically, Long said this was for the cleaning of the Safeway parking lot.In response to Casagranda,Long said there would be an opportunity for the city to work with Safeway and come up with a less disruptive plan for next year. 212 213 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Casagranda thanked Parks & Recreation for the information provided during citizen comments, and said a couple of citizens had asked if that information could be included in the City Manager Report going forward so as not to restrict citizens' opportunity to speak during a meeting. City Attorney Report. Katie Davies reported that the firm had worked on the grievance procedures, public records requests, leases, and had been preparing for next week's work session about conflicts of interest,ethics,and public records requests.In response to Casagranda,Davies said the firm had so far spent less than ten hours preparing for the work session,but would be ramping up over the next week; the work session would be Wednesday, July 18, 2018 starting at 5:30 p.m. In response to Casagranda, Erchinger said legal fees came from its own budget line item. Other Reports,Announcements and Presentations Presentation of the City's Draft 2017 Financial Report by BDO, USA Inc. PUBLIC HEARINGS Ordinances for Public Hearing & Enactment Ordinance 2018-003, To Revise Seward City Code 3.40, Grievance Procedure. This ordinance was introduced at the June 25, 2018 meeting. Tonight is the first of two public hearings scheduled for this ordinance. This ordinance will come back at the July 23, 2018 meeting for a second public hearing and enactment. Motion (Kell/Casagranda) Enact Ordinance 2018-003 Long stated there had been no suggested changes received by administration since the introduction of this ordinance. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. No one appeared to address the Council and the public hearing was closed. Casagranda wished to return to the original concept of having a citizen panel hear grievances, rather than involve the state Office of Administrative Hearings (OAH). Towsley concurred. Erchinger clarified that the OAH would furnish a hearing officer,and this would not require the city to hire anyone; she asserted this would enable a more independent third-party review. Motion to Postpone (Casagranda/Towsley) Postpone the enactment of Ordinance 2018- 003 to the July 23, 2018 meeting. Motion to Postpone Approved Unanimous 213 214 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Ordinance 2018-004, Amending Portions Of Seward City Code 15.10.140 Definitions; 15.10.215 Parking; 15.10.220 Development Requirements; 15.10.220 Development Requirements Table; And 15.10.226 Land Uses Allowed Table. Motion (Keil/Casagranda) Enact Ordinance 2018-004 City Planner Jackie Wilde said there had been six work sessions held by the Planning& Zoning Commission to review development requirements,particularly with regards to small square footage living spaces, defining and adding studio apartments, addressing set-backs, and promoting open space.Wilde added that these changes would support more high-density housing options in the future. Notice of the public hearing being posted and published as required by law was noted and the public hearing was opened. Tom Tougas asked council to consider increasing the square footage in the definition of a Studio Apartment from 350 square feet to 500 square feet. No one else appeared to address the Council and the public hearing was closed. Motion to Amend (Casagranda/Towsley) Amend Ordinance 2018-004 in the definition of "Studio Apartment" by striking the words,"...less than 350 square feet..."and replacing it with, "...less than 500 square feet..." Wilde said the 350 square foot definition came from multiple discussions with the building and fire departments, but she didn't see a reason why it couldn't be increased. Motion To Amend Passed Unanimous Main Motion Passed Unanimous UNFINISHED BUSINESS Resolutions Resolution 2018-034, Authorizing A Cost Of Living Increase Of 2.1% For 2018 And A Separate 2.1% For 2019 For All Non-IBEW Employees With The Exception Of The City Manager And City Clerk,And Appropriating Funds. The original motion was made by Casagranda and seconded by McClure on April 9, 2018, and then postponed to tonight's meeting. There were no amendments made to the resolution, and the main motion is now back on the floor. Motion to Amend(Casagranda/Towsley) Amend the title of Resolution 2018-034 by 214 215 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page adding the words,"and any employees who received external equity in the past two years," after the words, "...and city clerk..." In response to McClure, Erchinger explained the difference between internal equity and external equity: internal equity was a valuation based on job description factors,and external equity was a valuation based on the comparison of positions inside the city with positions outside of the city. Erchinger went on to say that there were some positions in the budget that were noted with asterisks, which indicated that those positions were eligible for external equity or for specific pay changes for temporarily-added responsibilities. McClure would not support this amendment because she thought it would be unfair. In response to Seese, Erchinger said the temporary pay change was only in effect for as long as the additional responsibilities were assigned, and then the employee went back to their regular rate of pay. In response to Casagranda, Erchinger confirmed that external equity was approved by the city manager. Erchinger confirmed that the COLA proposed in tonight's resolution would increase the rates of pay permanently and would not be a one-time "bonus." Squires expressed concern about excluding certain employees from this COLA. Motion to Postpone (Casagranda/Towsley) Postpone Resolution 2018-034 to the July 23, 2018 meeting. Motion to Postpone Withdrawn In response to Keil, Erchinger said this resolution would exclude every contract employee, including the city manager, city clerk, and all IBEW members. Motion to Postpone (Casagranda/Towsley) Postpone Resolution 2018-034 to the July 23, 2018 meeting. Motion to Postpone Passed Yes: Seese, Towsley, Casagranda, Horn, McClure No: Keil, Squires NEW BUSINESS Resolutions Resolution 2018-058,Authorizing$1,300,000 In Funding For Hospital Building Modifications And Purchase Of Replacement CT Scanner And Lab Equipment Which Has Reached The End Of Useful Life,And Appropriating Funds. Motion (Keil/Casagranda) Approve Resolution 2018-058 215 216 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Long said this was a classic rent-versus-own argument for a critical piece of hospital equipment. Erchinger said this was a concern for patient safety and comfort. The CT scanner saw approximately 350 patients each year. The CT scanner failed in February 2018;the rent cost$23,000 per month,or$280,000 per year,for the temporary unit. The old unit was a 16-slice unit and the new one would be a 32-slice unit,which would also expose patients to less radiation.Erchinger explained that this resolution proposed purchasing a new CT scanner,as well as making some alterations to the building to allow the equipment to be housed indoors, improve lab standards, and upgrade heating, cooling, and plumbing. McClure reminded everyone that she had recently sponsored a resolution to support a new CT scanner. Council suspended the rules to speak with Kimberly Strehlow. Kimberly Strehlow was the Radiology Supervisor at Providence Seward Medical & Care Center, and said there would be no lack of services offered during the construction period. The hospital would be able to maintain x-ray and ultrasound services, as well as CT scans and lab services, throughout the construction process. Council went back on the rules. Motion Passed Unanimous Resolution 2018-060, Authorizing The City Manager To Enter Into A Contract With Jaffa Construction For The Repair And Refurbishment Of The Lowell Canyon 400,000 Gallon Water Storage Tank In An Amount Not To Exceed $548,376.00 And Appropriating Funds. Motion (Kell/Casagranda) Approve Resolution 2018-060 Public Works Director Doug Schoessler said a 2011 study required repairs on this water storage tank,but the project was only coming to fruition now due to other demands that took priority. In response to Squires, Schoessler confirmed the 400,000-gallon tank would be out of service during the project, but there was a second, smaller 200,000-gallon tank that would remain operational throughout the project. Motion to Amend (Casagranda/Kell) Amend Resolution 2018-060 in Section 3 by striking the words, "...general funds..." and replacing them with,"...water fund..." Motion to Amend Passed Unanimous In response to Seese, Schoessler said there was no contingency built into this contract; Long clarified that this had been a hard money bid, and so contingency was not a factor. Main Motion Passed Unanimous 216 217 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Council recessed at 8:37 p.m. Council resumed at 8:42 p.m. Other New Business Discuss progress on organization chart updates. (Towsley) Long provided council with a laydown called"City of Seward Staffing* Chart". Erchinger said this chart reflected all full-time and part-time employees, and did not include seasonal employees. In response to Casagranda, Erchinger said this particular organization chart could be included in the budget, but would likely not be included in the CAFR due to federal reporting restrictions. Discuss ballot initiative to form an area-wide utility board, and direct the city attorney and administration to prepare the ballot initiative. (Towsley) Towsley wished to bring this topic up for discussion, as she was trying to respond to citizen concerns about escalating electric rates. Keil thought the intention was good, but was concerned with legal ramifications; she suggested having the city attorney take a look at the situation. Davies agreed with the recommendation for having the city attorney's office look into it. McClure, Horn, and Seese concurred. Council directed the city attorney to research the legalities of this issue, and various options for regulatory versus advisory,city authority,owners versus customers,etc.then bring it back to council. Council would discuss scheduling a work session on this topic at the July 23, 2018 meeting. Schedule a work session to discuss the current status and renewal of the Health Resources and Services Administration (HRSA) Grant for the Seward Community Health Center. (Squires) Council scheduled a work session on Tuesday, July 24, 2018 at 5:00 p.m. Schedule a work session to discuss the transfer of the Vigor lease. Council scheduled a work session on Monday, July 23, 2018 at 6:00 p.m. INFORMATIONAL ITEMS AND REPORTS Clerk's Report on Public Records Requests for June, 2018. On-Going City Projects and Goals. City of Seward Financial Reports through January April, 2018. COUNCIL COMMENTS 217 218 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page Towsley thanked administration for the organization chart, and Public Works for installing Lowell Point Road signage. There was a citizen contingency from the Nash Road area that was interested in reducing the speed limit to 45 miles per hour on that road. Towsley had also received a call from the concerned business owner about the after-hours noise complaint. McClure thanked city workers and Police Department for making the Fourth of July safe and fun. McClure also received the noise complaint phone call. McClure suggested the roof of the refurbished water tower at Lowell Canyon could be decorated so that the drone coverage of the Mt. Marathon Race could pick it up. Casagranda said it was a great Fourth of July. Seese thanked Erchinger for the city financial reports, and Ecklund for her comments about recycling. She also thanked Schoessler for fixing the signs at the jeep trail. Squires enjoyed the Fourth of July, and commended the city employees and chamber volunteers for doing a great job. He thought there may be an opportunity to work with the garbage contractor to collect recyclables. Long commended Police Officer Morgan Woodard for saving a life this week. CITIZEN COMMENTS Cindy Ecklund followed up on her earlier comments by saying that during tonight's meeting by saying she left the meeting and drove out to the South Harbor Uplands to check what recyclables were accepted there: glass, cardboard, aluminum, and newspaper. At the transfer facility they collected glass, plastic 91, plastic 92, aluminum, mixed paper, and flattened cardboard. Ecklund reminded everyone that keeping recyclables clean and not contaminated was critical. Craig Ambrosiani thanked council for approving the funding for the CT scanner. Ambrosiani stated that the Seward Community Health Center(SCHC)began the process of setting aside funds for capital improvements last year,but based on the discussions tonight,he was confused about whether that funding would remain intact. He also wondered whether the SCHC's future funding would still be available. Patrick Messmer said the APEA union election had taken place: Patrick Messmer was president, Kyle Campbell was vice president, and Mikael Kinney was secretary/treasurer. COUNCIL AND ADMINISTRATION RESPONSE TO CITIZEN COMMENTS Keil commented that the garbage contract was in place by a vote of the public. Erchinger responded to the inquiry about the capital budget for the SCHC:to the extent that the city was financially able to honor the agreement to contribute to the SCHC's facility expansion,it would be great. There had been some fairly significant events since that original commitment was made, however, that may impact future funding, including tonight's discussion, the impact of the 218 219 City of Seward,Alaska City Council Minutes July 9, 2018 Volume 39,Page opening of a 120-bed long-term care facility in the Mat-Su Valley,and the opening of another private facility elsewhere. Erchinger said the most important responsibility was that 1% of sales tax was pledged to repay the bonds on the long-term care facility, which would be required through 2034. ADJOURNMENT The meeting was adjourned at 9:32 p.m. Brenda J. Ballou, MMC David Squires City Clerk Mayor (City Seal) 219 220 RECEIVED JUL 0 3 2018 POR AND COMMERCE ADVISORY BOARD (PACAB) OFFICE OF 01E CITY CLERK APPLICATION NAME: STREET ADDRESS: ` ' - '� { > MAILING ADDRESS:�_ •� HOME TELEPHONE: :1 �`-�_ 't =x BUSINESS PHONE: .. r EMAIL: ,. i- LENGTH OF RESIDENCY IN THE SEWARD AREA: ` PRESENTLY EMPLOYED AS: � `� c. = t _......_ List any special training, education or background you have which may help you as a member of the Board: ct- s Have you ever been involved in port operations'? If so, briefly describe your involvement: I am specifically interested in serving on the Port and Commerce Advisory Board because: Have you ever served on a similar board elsewhere'? Yes or No If yes, where? � r �'�> When? Are you available for meetings at noon (second Wednesday of each month)? Yes car No If appointed, are you 411inb to travel occasionally)? (`Yes o' No SIGNATURE DATE 220 221 LEVESQUE LAW GROUP, LLC Joseph N.Levesque,Principal Attorney Joseph Levesque graduated from Seattle University School of Law in 1986 and began working as a prosecutor for the Alaska District Attorney's office in Kenai. Mr. Levesque served as Borough Attorney at the North Slope Borough and has since focused his practice representing Alaskan municipalities. Mr. Levesque established Levesque Law Group, LLC in 2012 following two decades of providing legal representation to municipal and private clients throughout Alaska. The Firm was founded on a simply philosophy: That clients from every sector have the right to successful, competent and effective legal services, and that the quality of those services should never differ according to the client's size or standing within a community. Having lived and represented parties in some of Alaska's largest, smallest, and most remote communities, Mr. Levesque understands that the needs of his clients differ in as many ways as Alaska's people. Because of this Levesque Law Group, LLC is dedicated to ensuring that each of its clients' particular interests always guide the scope of their representation. Attorney Levesque is a licensed member of both the Alaska and Washington State Bar Associations, as well as a member of the National Association of Bond Lawyers. MUNICIPAL& PUBLIC ENTITY REPRESENTATION Levesque Law Group has provided legal services to Alaska's municipalities, both large and small regarding the following issues: General Municipal Governance and Public Meetings Act Compliance; Comprehensive Municipal Planning; Assessment and Enforcement of Municipal Tax Ordinances; Employment and Management of Municipal Employees; Drafting,review,execution and management of municipal Contracts; Land Use Management and Zoning; Creation and Issuance of Municipal Bonds; Drafting and review of municipal ordinances; Election Law and procedures; Acquisition and disposition of Public Property; Following are select examples of Levesque Law Group's Municipal and Public Entity Representation: In Re; 2011 Redistricting Cases,2012 (Alas. LEXIS 178 (Alaska December 28,2012); In Re: 2001 Redistricting Cases,47 P.3d 1089 (Alaska 2002); Sea Hawk Seafoods,Inc.v. City of Valdez,282 P.3d 359 (Alaska 2012); Gillis v. Aleutians East Borough,258 P.3d 118 (Alaska 2011); Taranto v.North Slope Borough, 909 P.2d 354(Alaska 1996); Brown v. Personnel Board for the City of Kenai; Hearing Officer, City of Wasilla,In the Matter of the Appeal of Matanuska Electric Association; North Slope Borough v. Department of Defense,Iodine-131,Human rights; and Special Counsel to Anchorage Assembly re special assessment appeal. 221 222 Seward.com P' EIVEO ��aSl�a Srar�S�iC�f. 'JL 1 6 2018 2 a FF!CE OF THE 3 Cf`^I CLERK Seward Chamber of Commerce Conference and Visitors Bureau 13 July 2018 Dear Mayor Squires and City Council Members, As we enjoy these beautiful summer days, the Seward Chamber of Commerce staff is gearing up for the much anticipated 63rd Silver Salmon Derby to be held on August 11 - 19, 2018. Last year almost 7,000 anglers purchased entry tickets, 2158 fish were turned in accounting for 15,813 Ibs! Because of this very successful fishing derby, the Seward Chamber has been able to maintain the Coho smolt rearing program from Cook Inlet Aquaculture Association for the past several years. In addition, the SSD Scholarship for $2,000 has been awarded annually to SHS Seniors entering into fisheries management and/or marine biology courses. As you are well aware, the Seward Silver Salmon Derby® continues to be a big draw for our seaside town N filling up campgrounds, lodging facilities, restaurants, shops and stores. Large and small businesses alike welcome the huge economic impact. The City of Seward has been a longtime sponsor for $5,000 which is awarded to the Second Place Prize winner for the second heaviest Coho landed during the Derby. We sincerely hope the City will be able to continue the tradition of helping to host the greatest derby in Alaska! On behalf of the Seward Chamber Board of Directors, I am sincerely, Cindy Clock Executive Director Seward Chamber of Commerce PO Box 749 Seward, Alaska 99664 222 223 CITY PROJECTS & GOALS Updated for July 23, 2018 City Council meeting The following list of City Council projects and goals was reviewed, discussed, and updated at the February 12, 2018 City Council meeting. 1. ADA ACCESSIBLE PARKING AT CITY HALL Council directed the city clerk to provide a history of why the location for municipal elections was moved from City Hall to the K.M. Rae Building, as it related to ADA accessibility. City Clerk history and status provided February 27, 2018. First floor restrooms currently under renovation to provide one large ADA-accessible family restroom, in addition to one men's and one women's restroom. The first floor restrooms in City Hall were completed May 14, 2018. Fifth Avenue parking is not practical due to challenges with grade and distance; Adams Street parking must be reserved for Police Department access; Public Works is currently researching the feasibility of a modification to the SE corner of the back lot, as well as modifications to second floor restrooms. 2. SET LOCATION FOR SATELLITE FIRE STATION AND PUBLIC WORKS BUILDING Administration is currently reviewing a concept public private proposal to house the Quint (ladder truck) on the city-side of the bay. 3. DISCUSSION ON AIR FORCE RECREATION CAMP SITE Council held a joint work session with the Planning & Zoning Commission on February 28, 2018. Directed administration to have Community Development bring forward multiple land use concepts. (Previous council work session was held September 25, 2017). April 9, 2018 work session to discuss development concepts. Following April 9, 2018 work session, administration has initiated the rezone of the property to Auto Commercial (AC), the replatting of lots generally as presented at the work session, and the creation of a subdivision and utility development plan. 4. SALTWATER HEAT PUMP PROJECT The state capital budget approved $725,000 for this project; currently awaiting Governor Walker's signature. Administration is working with the design engineer to update costs and ROI models in order to identify any potential funding shortfall and prepare strategies for additional funding sources, if necessary. 5. ENERGY EFFICIENCY OF CITY HALL 6. GROUND TRANSPORTATION FOR AMBULANCE SERVICES Directed administration to provide an update on ground transportation for ambulance services. 7. ANIMAL SHELTER IMPROVEMENTS (Council passed Resolution 2017-035, Authorizing Replacement Of The Roof Of The Seward Animal Shelter, In An Amount Not To Exceed$6,851.00, And Appropriating Funds.) March 19, 2018 work session; directed administration to look into potential locations and funding options. Resolution 2018-049 approved at the May 29, 2018 meeting, authorizing the creation of the Animal Shelter Relocation Fund and approving start-up funds. 223 224 8. RESEARCH ELECTED/APPOINTED OFFICIAL TELECONFERENCING POSSIBILITIES FOR MEETINGS Directed the city attorney to provide advice on teleconferencing possibilities for elected and appointed officials. City Attorney opinion provided February 14, 2018. 9. UPDATE THE KPB TSUNAMI WARNING MESSAGE TO INCLUDE SPECIFIC REFERENCE TO THE LOCAL RADIO STATION (91.7/106.1) Directed administration to provide an update on the status of modifying the tsunami warning announcement to include specific radio information, and also request the borough add a sticker to their brochures which identifies the Seward radio station. Resolution 2018-019 designated KIBH-FM 91.7 as the city's official radio station for emergencies, and authorized the City Manager to work with borough to include radio station information in tsunami warning broadcasts. 10. INCENTIVIZE FAMILY ENTERTAINMENT-TYPE BUSINESSES TO COME TO SEWARD It.AFFORDABLE HOUSING(INCLUDING SUMMER WORKER HOUSING) Council will hold a work session in May, 2018. (Previous council work sessions were held on May 22, 2017, June 12, 2017, and July 11, 2017) 12. SEWARD COMMUNITY HEALTH CARE CENTER EXPANSION Directed administration to provide an update on the Seward Community Health Care Center expansion. March 12, 2018 council meeting authorized to pay up to $1,500 in travel expenses for Jean Bardarson to travel with city representatives to Washington, DC in April, 2018 (April 14-18, 2018 trip to Washington, DC) 13. BUILDING MAINTENANCE 14. LED LIGHT CONVERSIONS 15. EXPLORE POSSIBILITIES FOR CREATING A REVENUE STREAM FOR THE ANIMAL SHELTER AND SOS PETS 16. PURSUE AVENUES TO INCREASE WINTER RECREATION OPPORTUNITIES 17. CONDUCT CITY-WIDE DISASTER EXERCISE TO INCLUDE MOVING RESOURCES, EVACUATION FO THE PUBLIC, ENGAGING OUTSIDE AGENCIES, AND PUBLIC INFORMATION DISSEMINATION 18. EXTEND CITY UTILITIES INTO VIABLE AREAS TO SUPPORT FUTURE RESIDENTIAL HOUSING 224 225 COUNCIL COMMITTEES 1. February 26, 2018, council created an Ad Hoc Committee consisting of Council Member Horn, Council Member Casagranda, and Mayor Squires to work with administration to develop a Request for Proposals for conducting a third party investigation of city personnel matters. Update: At the May 29, 2018 council meeting, the city manager was directed to contact the DCRA and arrange for an audit of administration, personnel, and council. Based on the results ofthat event, council will decide whether or not to continue with this committee. 225 226 July 201 July August 2018 SuMo TuWa Th Th Fr Sa SuMo TuWe Th Fr Sa 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 30 31 Sun Mon Tue Wed Thu Fri Sat Jul 1 2 3 4 5 6 7 7:00pm 10:30p m P&Z Mtg (Council Chambers) 8 9 10 11 12 13 14 6:00pm 7:00pm CCWS 7:00pm 10:30p m CC Mtg 00 (Chambers) 15 16 17 18 19 20 21 6:00pm 9:30pm 6:30pm 10:00p P&Z WS m HP Mtg (Chambers) (Chambers) N Ln '-1 7 22 23 24 25 26 27 28 7:00pm 10:30p mCCMtg 5pmCCWS (Chambers) SCHC °N° Co-Applicant N 6 pm CC WS Grant Vigor 29 30 31 Aug 1 2 3 4 v rn a o N 5 7/13/2018 8:46 AM 226 227 August September August 2018 SuM Th o TuWe Th Fr Sa SuMo TuWe Th Fr Fr Sa 1 2 3 4 1 5 6 7 8 9 10 11 2 3 4 5 6 7 8 12 13 14 15 16 17 18 9 10 11 12 13 14 15 19 20 21 22 23 24 25 16 17 18 19 20 21 22 26 27 28 29 30 31 23 24 25 26 27 28 29 30 Sun Mon Tue Wed Thu Fri Sat Jul 29 30 31 Aug 1 2 3 4 Candidate v Packets aAccepted August 1-15 5 6 7 8 9 10 11 7:00pm 10:30p m P&Z Mtg (Council Chambers) rn Q 12 13 14 15 16 17 18 7:00pm 10:30p 6:30pm 10:00p m CC Mtg m HP Mtg (Chambers) (Chambers) oo N r-1 p1 7 Q 19 20 21 22 23 24 25 6:00pm 9:30pm P&Z WS (Chambers) N Q� rl c STATE PRIMARY 26 27 28 29 30 31 Sep 1 7:00pm 10:30p m CC Mtg (Chambers) a a, N N m Q 7/13/2018 8:46 AM 227 228 S September2018 October2018 September 2018 SuMoTuWuWe Th Fr Sa SuMoTuWe Th Fr Sa 1 1 2 3 4 5 6 2 3 4 5 6 7 8 7 8 9 10 11 12 13 9 10 11 12 13 14 15 14 15 16 17 18 19 20 16 17 18 19 20 21 22 21 22 23 24 25 26 27 23 24 25 26 27 28 29 28 29 30 31 30 Sun Mon Tue Wed Thu Fri Sat Aug 26 27 28 29 30 31 Sep 1 n. Q) N m 7 Q 2 3 4 5 6 7 8 6:00pm 7:00pm 12:00pm 2:00p P&Z-SBCFA m PACAB `I HOLIDAY Joint ws Mtg 7:00pm 10:30p v m P&Z Mtg (Council Chambers) 9 10 11 12 13 14 15 7:00pm 10:30p m CC Mtg (Chambers) rn a n 16 17 18 19 20 21 22 6:00pm 9:30pm 12:OOpm 2:00p P&Z WS m PACAB (Chambers) Work Session (Chambers) CL a 6:30pm 10:00p V^ m HP Mtg (Chambers) 23 24 25 26 27 28 29 7:00pm 10:30p m CC Mtg (Chambers) N a a 30 Oct 1 2 3 4 5 6 o ELECTION o DAY a N 7/13/2018 8:46 AM 228