HomeMy WebLinkAboutRES2023-040 Conditional Consent Breeze Inn Lease to ZPA - FAILED1
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FAILED Sponsored by: Bower
Public Hearing: April 10, 2023
CITY OF SEWARD, ALASKA
RESOLUTION 2022-040
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING A CONDITIONAL CONSENT TO TERMINATE
LEASE BETWEEN THE CITY OF SEWARD AND JURIS MINDENBERGS
FOR LEASE OF LOT 3B, BLOCK 1, MARINA SUBDIVISION AND
APPROVING A LEASE BETWEEN THE CITY OF SEWARD AND ZPA,
LLC OF LOT 3B, BLOCK 1, MARINA SUBDIVISION [BREEZE INN]
WHEREAS, Juris Mindenbergs ("Lessee") has requested that an existing lease agreement
with the City of Seward for 74,180 square feet, more or less of Lot 3B, Block 1, Marina Subdivision,
City of Seward, Kenai Peninsula Borough, Plat No. 2005-8 recorded in the Seward Recording
District, Third Judicial District, State of Alaska ("the Property") be terminated through a Conditional
Termination of Lease Agreement ("Conditional Termination"); and
WHEREAS, the Conditional Termination is conditioned on City Council approval of a new
Lease Agreement for the Property with ZPA, LLC ("New Lease"); and
WHEREAS, Article 14 of the Lease provides that City has determined lease of the Property
to ZPA, LLC is found to be in the public interest; and that the proposed tenant is acceptable to the
City and suitable to manage any facilities on the lease site; and
WHEREAS, the lease site will continue to be utilized as a hotel, restaurant and retail shop
and is consistent with current zoning and land use regulations; and
WHEREAS, ZPA, LLC has credit -worthiness and operating experience suitable to manage
any facilities on the lease site; and
WHEREAS, the New Lease contains covenants requiring ZPA, LLC to operate the existing
hotel year round for at least 3 years and limits the authority of ZPA, LLC to assign the lease to
companies in the cruise ship passenger business or to national hotel chains.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The City Manager is hereby authorized to enter into the Conditional Termination
of Lease Agreement with Juris Mindenbergs in substantially the form as attached hereto.
Section 2. The City Manager is hereby authorized to enter into the Conditional Termination
of Lease Agreement with ZPA, LLC in substantially the form as attached hereto.
Section 3. The recitals set forth above are incorporated herein by reference and adopted as
CITY OF SEWARD, ALASKA
RESOLUTION 2023-040
findings of the City Council. For the reasons stated, the Lease Agreement with ZPA LLC, in the
form presented at this meeting is found to be in the public interest.
Section 4. This resolution shall take effect thirty (30) days from the date and posting of
adoption or on the date of closing of the sale of the improvements on the Property to ZPA, LLC
whichever is later.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10th
day of April, 2023.
THE CITY OF SEWARD, ALASKA
FAILED
Sue McClure, Mayor
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
FAILED
Brenda J. Ballou, MMC
City Clerk
(City Seal)
City Clerk's Note: This resolution was scheduled for public hearing on April 10, 2023. No member
of council made the motion to put the resolution on the floor, therefore it died and is failed.
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City Council Agenda Statement
Meeting Date: April 10, 2023
To: City Council
Through: Janette Bower, City Manager
From: Brooks Chandler, City Attorney
Agenda Item: Resolution 2023-040: Authorizing the City Manager to Enter into a
Conditional Termination of Lease Agreement with Juris Mindenbergs and a
New Lease Agreement with ZPA, LLC, for Lot 3B, Block 1, Marina
Subdivision, City of Seward, Kenai Peninsula Borough Plat 2005-8, Seward
Recording District, Third Judicial District, State of Alaska
Background and justification:
Juris Mindenbergs currently has Lease L04-96 containing 74,180 square feet more or less of Lot 3B
Block 1 Marina Subdivision, City of Seward, Alaska and recorded as Plat No.2005-8 in Seward
Recording District, Third Judicial District, State of Alaska.
Juris Mindenbergs has requested approval of a Conditional Consent to Terminate Lease Agreement
with termination conditioned on approval of a new lease to ZPA, LLC. ZPA, LLL will continue to use
the leased land for a Hotel, Restaurant and Retail shop. The Council has the authority to approve a
lease agreement of city property upon findings by Council that use by the proposed tenant is found
to be in the public interest.
The two agreements are interconnected with the proposed lease termination to become effective
on the day of Closing of the sale of existing improvements on the property to ZPA, LLC.
ZPA, LLC. is also proposing terms in a new lease that are not in the existing lease with Mr.
Mindenbergs as follows:
Article 21
Notwithstanding any other provisions of this Lease to the contrary, the following covenants shall
apply during the Lease Term and any extensions thereof:
A. Lessee shall operate the hotel located on the Leased Land, the Breeze Inn, on a year- round
basis for at least three (3) years following the Effective Date. Following that three (3)-year
period, Lessee shall operate the Breeze Inn on a year-round basis unless it becomes
commercially unreasonable, which ZPA may determine in its sole discretion in coordination
with its lender, Global Credit Union (f/k/a Alaska USA Federal Credit Union) and the SBA,
and their assigns.
B. Without limiting any CITY consent rights in Article 12, Lessee may not assign, transfer, or
sell any interest in ZPA or the Lease to a company primarily engaged in passenger cruise
and vacation travel.
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C. Lessee may not assign, transfer, or sell any interest in ZPA or the Lease to a national or
multi -national hotel chain or franchise. Lessee may not at any time during the Lease Term
cause the Breeze Inn to become a franchised hotel.
D. Although Lessee must comply with all applicable laws at all times during the Lease Term,
Lessee affirms and ratifies its obligation to comply with all municipal, state, and federal
health and safety regulations.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan: Attract new business and industry to the greater Seward area.
Strategic Plan: Attract New Industry: Develop an aggressive marketing campaign which
highlights the diverse resources, and quality of life that make Seward a great
place to live and establish a business or industry.
Other:
Certification of Funds
Total amount of funds listed in this legislation:
Th s legislation (✓):
X
Creates revenue in the amount of:
Creates expenditure in amount of:
Creates a savings in the amount of:
Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
$ 62,000.00
Unassigned Fund Balance and Available Unrestricted Cash Balance Information
Fund (✓):
General
Boat Harbor
Motor Pool
SMIC
Parking
Other
Unassigned Fund Balance*:
Available Unrestricted Cash Balance*:
Electric
Water
Wastewater
Healthcare
Finance Director Signature:
*unaudited numbers
Yes
Attorney Review
Attorney Signature:
Not applicable Comments:
Administration Recommendation
Adopt Resolution
Other:
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CHANDLER, FALCONER, MUNSON & CACCIOLA, LLP
ATTORNEYS AT LAW
SUITE 302
911 WEST EIGHTH AVENUE
ANCHORAGE, ALASKA 99501
TELEPHONE: (907) 272-8401
FACSIMILE: (907) 274-3698
bcf@bcfaklaw.com
MEMORANDUM
TO: Janette Bower
City Manager
FROM: Brooks W. Chandler, City Attorney
RE: Breeze Inn Lease Terms Comparison
DATE: March 28, 2023
You asked how the proposed new lease to ZPA compares to the existing lease terms with Mr.
Mindenberg. The most significant substantive differences are set out below.
Term- current lease runs through 2052. Proposed new lease would run through 2053.
Rent - Proposed new lease $62,000 per year. Adjusted every 5 years for changes in FMV.
Adjusted annually for CPI. The current lease was updated to add the CPI adjustment in 2022. I
am not sure what the current lease rate is.
Conditions and Covenants- Article 21. New covenants included with the proposed lease:
1. Promise to operate hotel year round "for at least 3 years and thereafter "until it
becomes commercial unreasonable which ZPA may determine in its sole discretion".
2. No assignment to "company primarily engaged in passenger cruise and vacation
travel".
3. No sale or assignment of an interest in ZPA to "a national or multi -national hotel
chain" or allow the Breeze Inn "to become a franchised hotel".
4. Affirms obligation to comply with health and safety regulations (state, city, federal).
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CONDITIONAL CONSENT TO TERMINATE LEASE
This Conditional Consent to Terminate Lease ("Agreement"), effective upon mutual
execution, is entered into by and between Juris Mindenbergs, Lessee, 4128 148th Avenue NE,
Redmond, Washington 99052 ("LESSEEE") and the City of Seward, a home rule municipal
corporation, organized and existing under the laws of the State of Alaska ("CITY").
WHEREAS, the CITY and LESSEE are parties to a Lease dated October 1st, 2005, as
amended by the First Amendment to Lease Agreement dated September 7, 2006 (collectively as
amended, the "Lease"), pursuant to which, the CITY leases to LESSEE certain property known as
Lot 3B, Block 1, Marina Subdivision, as shown on Plat 2005-8, Seward Recording District, Third
Judicial District, State of Alaska, consisting of approximately 72,125 square feet, more or less
("Leased Land").
WHEREAS, LESSEE has constructed and owns certain improvements on the Leased
Land, which LESSEE operates as the Breeze Inn ("Hotel") and wishes to sell the Hotel to ZPA
LLC, an Alaska limited liability company ("ZPA").
WHEREAS, ZPA is negotiating a new lease for the Leased Land ("New Lease").
WHEREAS, LESSEE and the CITY agree to terminate the Lease, upon the occurrence of
the following contingencies: (1) approval of the New Lease by the CITY on April 10, 2023, and
(2) closing on the purchase of the Hotel by , 2023("New Lease
Contingencies") .
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the CITY and LESSEE agree as follows:
1. Recitals. The recitals set forth above are incorporated by reference.
2. Conditional Termination. Subject to satisfaction of the New Lease Contingencies,
the City and the LESSEE agree to terminate the Lease using the form of termination attached as
Exhibit A, which shall be recorded and effective upon closing of the Hotel sale to ZPA. If the New
Lease Contingencies do not occur for any reason, this Agreement shall be void ab initio, and the
Lease will continue in full force and effect according to its terms.
3. Miscellaneous.
3.1 Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the matters covered by this Agreement, and there are no other agreements,
statements, or promises made by any party not contained in this Agreement.
3.2 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Alaska, excluding its conflict of laws rules.
Termination of Lease Agreement Page 1
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The terms of this Agreement are subject in all respects to The Code of the City of Seward, Alaska
in effect on the Effective Date, including, without limitation, Chapter 7.05 thereof.
3.3 Counterparts. This Agreement may be executed in one or more counterparts
and delivered by facsimile or other electronic transmission, each of which will be deemed to be an
original and all of which will be deemed to be one and the same instrument.
3.4 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties' respective successors and assigns.
IN WITNESS WHEREOF, CITY and LESSEE have executed this Agreement as of the
Effective Date.
CITY: LESSEE:
CITY OF SEWARD JURIS MINDENBERGS
, City Manager
Juris Mindenbergs
Date: Date:
Exhibit A — Form of Termination
Termination of Lease Agreement Page 2
4875-0235-2727, v. 1
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EXHIBIT A —FORM OF TERMINATION
SEWARD RECORDING DISTRICT
After Recording, Return To:
City of Seward
P.O. Box 167
Seward, Alaska 99664
TERMINATION OF LEASE AGREEMENT
This TERMINATION OF LEASE AGREEMENT (this "Agreement") is made and entered
into as of , 2023 (the "Effective Date"), by and between the
CITY OF SEWARD, a municipal corporation located in the Kenai Peninsula Borough, State of
Alaska ("CITY"), whose address is P.O. Box 167, Seward, Alaska 99664, and JURIS
MINDENBERGS, d/b/a The Breeze Inn ("LESSEE"), whose address is 4128 148th Ave. NE,
Redmond, Washington 98052.
RECITALS
A. CITY and LESSEE entered into that certain Lease Agreement, dated October 1,
2005, as amended by that certain First Amendment to Lease Agreement dated September 7, 2006
(collectively, the "Lease"), in which the CITY leases to LESSEE certain property known as Lot
3B, Block 1, Marina Subdivision, as shown on Plat 2005-8, Seward Recording District, Third
Judicial District, State of Alaska, consisting of approximately 72,125 square feet, more or less (the
"Leased Land").
B. LESSEE has constructed and owns certain improvements on the Leased Land,
which LESSEE operates as the Breeze Inn (the "Hotel").
C. ZPA LLC, an Alaska limited liability company ("ZPA"), purchased the Hotel from
LESSEE, and entered into a new lease with the CITY for the Leased Land (the "New Lease") as
approved by the CITY per resolution
D. Commencement of the New Lease is contingent upon termination of the Lease
pursuant to this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the CITY and LESSEE agree as follows:
1. Recitals. The recitals set forth above are incorporated herein by reference.
Termination of Lease Agreement Page 3
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4. Conditional Termination. Effective as of 12:00 a.m. on the date that the sale of the
Hotel to ZPA is closed and consummated and the New Lease is effective (such date, the
"Termination Date"), the Lease shall terminate in its entirety. The Lease shall continue in full force
and effect through 11:59 p.m. on the day before the Termination Date. On and after the
Termination Date, the Lease is and shall be of no further force or effect except for those provisions
which expressly survive the expiration or termination of the Lease. If the Termination Date does
not occur for any reason, this Agreement shall be void ab initio, and the Lease will continue in full
force and effect according to its terms.
5. Miscellaneous.
5.1 Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the matters covered by this Agreement, and there are no other agreements,
statements, or promises made by any party not contained in this Agreement.
5.2 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Alaska, excluding its conflict of laws rules.
The terms of this Agreement are subject in all respects to The Code of the City of Seward, Alaska
in effect on the Effective Date, including, without limitation, Chapter 7.05 thereof.
5.3 Counterparts. This Agreement may be executed in one or more counterparts
and delivered by facsimile or other electronic transmission, each of which will be deemed to be an
original and all of which will be deemed to be one and the same instrument.
5.4 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties' respective successors and assigns.
IN WITNESS WHEREOF, CITY and LESSEE have executed this Agreement as of the
Effective Date.
[SIGNATURE AND ACKNOWLEDGMENT PAGE FOLLOWS]
Termination of Lease Agreement Page 4
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CITY: LESSEE:
CITY OF SEWARD JURIS MINDENBERGS
, City Manager
Juris Mindenbergs
Date: Date:
ATTEST:
, City Clerk
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this day of
2023, by , City Manager of the City of Seward, Alaska, on behalf of the
City.
Notary Public in and for Alaska
My Commission Expires:
STATE OF WASHINGTON
) ss.
)
The foregoing instrument was acknowledged before me this day of
2023, by Juris Mindenbergs, to me known to be the individual named in and who executed the
foregoing instrument.
Notary Public in and for Washington
My Commission Expires:
Signature and Acknowledgment Page to Termination of Lease Agreement
4875-0235-2727, v. 1
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LEASE AGREEMENT
between
CITY OF SEWARD, ALASKA
and
ZPA, LLC
Effective Date: ,2023
TABLE OF CONTENTS
ARTICLE 1 - LEASED LAND 1
1.1 Description of Leased Land 1
1.2 Covenant of Quiet Enjoyment; Warranty of Title 1
1.3 Property Accepted 1
1.4 Permits
1.5 Platting
ARTICLE 2 -
2.1
ARTICLE 3 -
3.1
3.2
3.3 Procedure for Rental Adjustment
3.4 Effect of Late Appraisal by CITY
3.5 Appraisal by LESSEE
3.6 Effective Date of Adjusted Rental Rate
3.7 Interim Rental Adjustments
3.8 Late Payment Charge
ARTICLE 4 -
4.1
4.2
4.3 No Preferential Rights to Use Public Facilities
4.4 Adequacy of Public Facilities
4.5 Tariffs and Other Service Fees
4.6 Time for Payment of Utilities and Taxes
4.7 Other Uses
ARTICLE 5 -
5.1
5.2 Third -Party Improvements
5.3
ARTICLE 6 -
6.1
6.2
ARTICLE 7 -
7.1
ARTICLE 8 -
ARTICLE 9 -
ARTICLE 10
ARTICLE 11
11.1
11.2
ARTICLE 12
12.1
12.2
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2
LEASE TERM 2
Lease Term 2
RENTAL RATE 3
Initial Rental Rate 3
Rental Adjustments 3
3
4
4
4
5
5
USE OF LEASED LAND 5
Use of Leased Land 5
Obligations of LESSEE 5
6
6
6
6
6
UTILITIES AND RIGHTS OF ACCESS 6
Utilities 6
7
Easements 7
CONSTRUCTION BY LESSEE 8
Improvements on Leased Land 8
City Review of Construction 9
RETURN OF LEASED LAND/SITE CONDITIONS 9
Return of Leased Land in Original Condition 9
FORCE MAJEURE 9
LESSEE'S ACTS OF DEFAULT 10
- REMEDIES FOR DEFAULT BY LESSEE 11
- TITLE TO IMPROVEMENTS INSTALLED BY LESSEE 12
Real Property Improvements 12
Personal Property 12
- ASSIGNMENT OR SUBLEASE 13
Assignment of Lease or Subleasing 13
Assignment of Lease for Security 13
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12.3 Assignment to Affiliate
ARTICLE
ARTICLE
ARTICLE
15.1
15.2
ARTICLE
ARTICLE
17.1
ARTICLE
18.1
18.2
18.3
ARTICLE
19.1
19.2
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
ARTICLE
13
13 - LESSEE'S DUTY TO DEFEND/INDEMNIFY 13
14 - CITY'S DUTY TO DEFEND/INDEMNIFY 14
15 - INSURANCE 14
Minimum Insurance Requirements 14
Subrogation Rights Waived 15
16 - CONDEMNATION 15
17 - ARBITRATION 16
Arbitration 16
18 - MAINTENANCE AND REPAIRS 17
Normal Maintenance 17
Safety Issues 17
Cost of Repairs 18
19 - ENVIRONMENTAL CONCERNS 18
Hazardous Materials 18
Permits and Reporting 20
20 - ESTOPPEL CERTIFICATES 21
21 - CONDITIONS AND COVENANTS 21
22 - NO WAIVER OF BREACH 22
23 - TIME OF THE ESSENCE 22
24 - COMPUTATION OF TIME 22
25 - SUCCESSORS IN INTEREST 22
26 - ENTIRE AGREEMENT 22
27 - GOVERNING LAW 22
28 - PARTIAL INVALIDITY 23
29 - RELATIONSHIP OF PARTIES 23
30 - INTERPRETATION 23
31 - CAPTIONS 23
32 - AMENDMENT 23
33 - NOTICES 23
34 - FIRE PROTECTION 24
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LEASE AGREEMENT
THIS LEASE AGREEMENT (the "LEASE") is made by and between the CITY OF
SEWARD (the "CITY"), a municipal corporation located in the Kenai Peninsula Borough, State
of Alaska, whose mailing address is P.O. Box 167, Seward, Alaska 99664 and ZPA, LLC (the
"LESSEE"), an Alaskan limited liability company whose mailing address is 1120 E Huffman #24
PMB416 Anchorage, Alaska 99515.
WHEREAS, LESSEE has indicated its desire to lease the property known as Lot 3B,
Block 1, Marina Subdivision, as shown on Plat 2005-8, Seward Recording District, Third Judicial
District, State of Alaska, consisting of approximately 74,180 square feet, more or less; and
WHEREAS, the City Council of CITY has determined that lease of the Leased Land (as
defined below) to LESSEE for the purposes described herein would be in the public interest; and
WHEREAS, it is the intent of this LEASE to transfer from CITY to LESSEE the entire
burden of compliance with environmental regulations or controls with respect to LESSEE's
operations on the Leased Land.
NOW THEREFORE, for and in consideration of the mutual promises and covenants
hereinafter contained, the parties hereto agree as follows:
ARTICLE 1 - LEASED LAND
1.1 Description of Leased Land. The Leased Land is located in the City of Seward, Alaska.
The Leased Land is described as follows:
Lot 3B, Block 1, Marina Subdivision, as shown on Plat 2005-8, Seward Recording District,
Third Judicial District, State of Alaska, consisting of approximately 74,180 square feet,
more or less (the "Leased Land").
The Leased Land is also depicted on the attached Exhibit A, which is incorporated herein
by reference.
1.2 Covenant of Quiet Enjoyment; Warranty of Title. Subject to the encumbrances as of the
date hereof, any reasonable restrictions imposed on the Leased Land as part of recording
of a plat by CITY, and the provisions of this LEASE, CITY hereby covenants and warrants
that LESSEE shall have the quiet enjoyment and possession of the Leased Land for the full
term of this LEASE.
1.3 Property Accepted As -is." LESSEE acknowledges that it has inspected the Leased Land
and accepts the same "as -is" and without reliance on any expressed or implied
representations or warranties of CITY (other than the representations in Section 1.2
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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.
1.4 Permits. LESSEE, at its sole cost, shall obtain all permits necessary to the construction
and operation of its facilities on the Leased Land. CITY may from time to time, upon
request of LESSEE, execute such documents, petitions, applications, and authorizations as
may be necessary, as the underlying fee owner, to file with an agency or public body
responsible therefor an application for conditional use permits, zoning and re -zoning,
tentative and final tract approval, or precise plan approval that may be required for the
lawful construction and operation of the facilities of LESSEE permitted on the Leased Land
by the terms of this LEASE. However, nothing in this Section shall be construed as
requiring CITY to support or approve any such application or permit requests. If the
agency or public body responsible to approve or grant such application or permit request
is a City of Seward agency, department, or board, LESSEE shall follow all City of Seward
procedures, the same as any other applicant making similar requests of the City of Seward,
according to the Charter, ordinances, resolutions, or any regulation, rules, or procedures of
the City of Seward. Nothing in this Section imposes any duty or responsibility on CITY
to assist LESSEE in obtaining any other permits or approvals, including without limitation
those required by the U.S. Army Corps of Engineers (e.g., wetland fill permits), the
Environmental Protection Agency (e.g., Clean Air Act permits), the Alaska Department of
Public Facilities and Transportation (e.g., right-of-way permits), the Alaska Department of
Fish and Game, and the Alaska Department of Environmental Conservation.
1.5 Platting. In the event CITY elects to replat, CITY agrees to include the Leased Land in
such replat in accordance with the description in Section 1.3. If LESSEE requests a replat
of the Leased Land prior to that time, CITY shall assist LESSEE in the preparation and
filing of the replat, and LESSEE shall reimburse CITY for CITY's costs in assisting with
the preparation and filing of the replat. LESSEE agrees to sign the plat and any other
documents necessary to complete the platting or replatting of any area including all or a
portion of the Leased Land. LESSEE shall accept reasonable restrictions, easements, or
plat notes as may be required by CITY or other governmental authorities as a condition to
filing the plat of the Leased Land or the plat of CITY -owned real property adjacent to the
Leased Land.
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. 2023- (the "Resolution"). The Lease Term
shall commence on the date this LEASE is signed by CITY and that date shall be the
effective date of this LEASE (the "Effective Date"). The Lease Term shall run for
approximately 30 years from the Effective Date, ending at midnight on , 2053.
LESSEE shall have the right to extend the term of this LEASE for two additional five (5)
year period, provided that:
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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.
d) The City Council of City, at the time each option to extend is exercised, approves
the extension by resolution or ordinance.
ARTICLE 3 - RENTAL RATE
3.1 Initial Rental Rate. Commencing on the Effective Date of this LEASE through June 30,
2025, the annual rental rate for the Leased Land shall be set at sixty-five thousand
dollars($62,000). Rent shall be payable quarterly in advance upon the Effective Date of
this Lease (prorated for the balance of the current quarter) and thereafter on or before
the 20th day of the month beginning each calendar quarter: January 20, April 20, July 20
and October 20. The amount of each quarterly payment shall be one -quarter of the
annual rental rate as initially established or later adjusted under this Article 3.
3.2 Rental Adjustments. The annual rental payment shall be adjusted on July 1, 2025, and on
the same date every five years thereafter (each a "Rental Adjustment Date"). The adjusted
annual rental payment to be paid under the terms of this Lease shall be the appraised fair
market rental value (the "Fair Market Rental Value") of the Leased Land at the highest and
best use of the Leased Land. The highest and best use of the Leased Land shall be
determined without regard to LESSEE's intended or actual use of the Leased Land unless
that use is coincidentally the highest and best use of the Leased Land. CITY shall complete
such appraisal and deliver a copy of the appraisal report to LESSEE not less than ninety
(90) days before each Rental Adjustment Date.
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.
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If LESSEE's appraisal determines a Fair Market Rental Value that varies from that
determined by CITY's appraisal by no more than twenty percent (20%), then the adjusted
rental rate shall be the average of the rental rates determined by the two appraisals. If
LESSEE's appraisal determines a Fair Market Rental Value that varies from CITY's
appraisal by more than twenty percent (20%), then, unless CITY and LESSEE agree on a
rate themselves, the adjusted annual rental rate of the Leased Land shall be determined in
accordance with the arbitration provisions contained in Article 19 of this LEASE.
3.4 Effect of Late Appraisal by CITY. If, for any reason, CITY does not complete the appraisal
or deliver a copy of the appraisal report to LESSEE ninety (90) days before the Rental
Adjustment Date, CITY may proceed to complete the appraisal or deliver a copy of the
appraisal report to LESSEE at any time thereafter. However, any such adjusted annual
rental rate shall not be effective until the quarterly payment due date immediately following
the date CITY delivers the appraisal report to LESSEE.
3.5 Appraisal by LESSEE. If, for any particular Rental Adjustment Date, CITY fails to obtain
an appraisal of the Fair Market Rental Value or fails to deliver the appraisal report to the
LESSEE by the Rental Adjustment Date, LESSEE may engage an independent State of
Alaska certified MAI appraiser (Member, Appraisal Institute) at LESSEE's expense to
make an appraisal under the terms of this Article 3 and submit a copy to CITY before the
next quarterly rental payment due date. However, LESSEE must notify CITY in writing
within thirty (30) days following the Rental Adjustment Date of LESSEE's election to
obtain an appraisal. If CITY objects to LESSEE's appraiser's determination of the Fair
Market Rental Value, CITY shall give written notice to LESSEE of its objection within
thirty (30) days of receipt of the appraiser's report, and CITY shall then engage an
independent State of Alaska certified MAI appraiser (Member, Appraisal Institute) at
CITY's expense to make an appraisal of the Fair Market Rental Value as of the Rental
Adjustment Date and in accordance with this Article 3. If the CITY's appraisal 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.
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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, 2023 and on July 1 of every year thereafter (each on "Interim Rental
Adjustment Date") in an amount that reflects the increase, if any, in the cost of living for
the previous year as stated in the Consumer Price Index, All Urban Consumers, Anchorage,
Alaska Area, All Items 1967=100 ("CPI"), as published by the United States Department
of Labor, Bureau of Labor Statistics for the most recent period published immediately prior
to the Interim Rental Adjustment Date. In no event shall the rent be less than the previous
year. If the CPI is revised or ceases to be published, the CITY shall instead use such revised
or other index as most nearly approximates the CPI for the relevant period, and make
whatever adjustment in its application as may be necessary, in the CITY's sole discretion,
to accomplished as nearly the same result as if the CPI had not been revised or ceased to
be published.
3.8 Late Payment Charge. Rental payments not received by the due date shall bear interest
until paid at a rate of 10.5% per annum, or the maximum rate permitted under Alaska law,
whichever is less, plus a flat monthly late fee of $2.50, or such amount as may be
established from time to time by CITY ordinance or resolution and relating to late fees for
CITY leases generally.
ARTICLE 4 - USE OF LEASED LAND
4.1 Use of Leased Land CITY has limited land available for lease. Use of the Leased Land
by LESSEE has been determined by the City Council of CITY to be in the public interest.
LESSEE may use the Leased Land for a hotel, restaurant, bar and retail shops.
4.2 Obligations of LESSEE. LESSEE may use the Leased Land only in accordance with
applicable CITY zoning code provisions and provided the following conditions are met:
a) The Leased Land is to be completely cleaned and restored to its original condition,
that is, the condition existing prior to this LEASE or in better condition upon
termination of this LEASE.
b) LESSEE agrees to prohibit the use, keeping, storage, or disposal of Hazardous
Materials on the Leased Land except as permitted in Article 19 of this LEASE.
c) LESSEE shall not use the Leased Land in any manner or construct any facilities
thereon which would inhibit the use of adjacent or other lands.
d) LESSEE shall operate a hotel, restaurant, bar and retail shop business on the Leased
Land.
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e) Any changes to this site require prior CITY approval, through the City Manager.
4.3 No Preferential Rights to Use Public Facilities. This LEASE does not grant to LESSEE
any exclusive rights to use any public port facilities constructed or operated by CITY.
LESSEE will be subject to any tariffs, procedures, rules, and regulations of CITY
concerning the use of such facilities as they may now exist or from time to time be
amended, and LESSEE shall not be entitled to any exclusive use.
4.4 Adequacy of Public Facilities. CITY makes no representations or warranties as to the
fitness of any particular part or the whole of CITY's public facilities for the uses intended
by LESSEE, and LESSEE has inspected those facilities and has satisfied itself that the
facilities are sufficient for the intended uses by LESSEE. CITY makes no representations
or warranties of any nature with respect to the commercial practicability or accuracy of any
information provided by CITY.
4.5 Tariffs and Other Service Fees. CITY shall have the right to make amendments to its
tariffs, regulations, and scheduled fees from time to time, even if those adjustments shall
cost LESSEE more for its operations or use of public facilities, and CITY is free to do so
provided only that it does not impose any greater burden or higher rate upon LESSEE than
upon any other similar user of the public facilities.
4.6 Time for Payment of Utilities and Taxes. LESSEE will pay for utilities and taxes related
to operations on the Leased Land and LESSEE's interest in this LEASE and improvements
thereon, if any, before such obligations become delinquent; provided, that LESSEE may,
in good faith and before such delinquency, contest any such charge or assessment.
4.7 Other Uses. This LEASE shall not preclude the CITY from actively seeking other and
additional tenants for space, including those who would be in competition with LESSEE
or 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
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by the LESSEE within the public right-of-ways or within public utility easements will
normally be accepted and maintained by CITY or utility companies may be used to serve
other customers of LESSEE's without payment of fees or reimbursement of construction
cost to the LESSEE. However, this does not preclude several lessees from agreeing to
share the cost of constructing a utility to serve their facilities. CITY or other utility
company may determine that it would be to their benefit to oversize the utility or install
special fittings or equipment in order to serve other existing or future users. The additional
direct costs of such oversizing shall be borne by CITY or other utility company. Such costs
shall be limited to the supplier's cost of the additional fittings, equipment, direct labor, and
equipment costs to complete the installation. The costs of oversizing pipe or electrical
conduit shall be limited to the difference between the supplier's price to provide the size
required to serve its facility and the price of the oversized material required by CITY or
utility company.
LESSEE shall not be entitled to any refund, rebate, or payments from CITY for any rent,
investment, or costs incurred by LESSEE with respect to any required permits for
construction or operation of LESSEE's facilities on the Leased Land, it being the intent of
the parties that the risk of obtaining required permits be solely a risk undertaken by
LESSEE.
5.2 Third -Party Improvements. At the request of LESSEE, CITY shall, from time to time,
execute and deliver, or join in execution and delivery of, such documents as are
appropriate, necessary, or required to impose upon the Leased Land in accordance with the
terms of this LEASE covenants, conditions, and restrictions providing for the granting 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
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granted or dedicated over or within portions of the Leased Land. As additional
consideration for this LEASE, CITY and LESSEE each shall, at the request of the other,
join with each other in executing and delivering such documents from time to time and
throughout the Lease Term as may be appropriate, necessary, or required by the several
governmental agencies (including the City of Seward), public utilities, and other users or
tenants of CITY land for the purpose of granting such easements and dedications; provided,
however, that such easements and dedications and similar rights do not unreasonably
interfere with LESSEE's operations. The costs of locating or relocating any public
easements or restrictions of record including any relocation of public road, railroad, utility,
or other easements shall be at the sole cost and expense of the party requesting the
relocation. CITY shall not refuse reasonable requests for such relocations provided those
relocations do not interfere with or inhibit the overall development of CITY property or
other public property. Any easements or rights of access granted to LESSEE by CITY
need not be exclusive to LESSEE.
ARTICLE 6 - CONSTRUCTION BY LESSEE
6.1 Improvements on Leased Land. LESSEE shall have the right to erect, maintain, alter,
remodel, reconstruct, rebuild, build, and/or replace buildings and other improvements on
the Leased Land, subject to the following conditions:
a) The cost of any construction, reconstruction, demolition, or of any changes,
alterations, or improvements, shall be borne and paid for by LESSEE.
b) The Leased Land shall at all times be kept free of mechanic's and materialmen's
liens.
c) LESSEE shall provide CITY with a copy of all building plans and specifications
and a site development plan or plans (based on a recent survey) for the Leased Land
prior to commencement of construction.
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
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the event that LESSEE elects to construct the facility with its own personnel and
equipment, or the personnel and equipment of any corporation or person that is an
"affiliate" of LESSEE as such term is defined in AS 10.06.990(2) or Alaska limited
liability company in which LESSEE maintains a substantial membership interest, a
performance bond shall be required when the cost of the work is equal to or exceeds
FIFTY THOUSAND DOLLARS ($50,000).
f) CITY may, as contemplated by Alaska Statutes, give notice of non -responsibility
for any improvements constructed or effected by LESSEE on the Leased Land.
g)
LESSEE shall comply with all federal, state, and local statutes and regulations with
respect to such construction, including, but not limited to, all applicable building,
mechanical, and fire codes.
6.2 City Review of Construction. CITY shall have the right to review initial plans, including
those supplied to CITY under Section 6.1 hereof, and any future changes or additions to
LESSEE's facilities on the Leased Land, by reviewing the design thereof prior to the
commencement of construction. CITY shall have the right to comment upon that design
and to require LESSEE to make reasonable changes so as to avoid interference with public
operations, but the exercise of these rights shall not imply any obligation to do so nor any
obligation to do so in a particular way. LESSEE shall construct the facility in accordance
with final design specifications approved by CITY. CITY's representatives may monitor
the work and shall have access to the site at all reasonable times. LESSEE shall be solely
responsible for completing all improvements according to LESSEE's plans and
specifications and shall bear all risk, responsibility, and liability for properly surveying the
Leased Land before construction and to place all improvements on the Leased Land
without encroaching upon any land, easements, 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,
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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.
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 undismissed for a period of six (6) months
from the date of commencement thereof.
9.5 Violation by LESSEE of any laws or regulations of the United States, or of the State of
Alaska, or any conditions of any permits issued by agencies of the City of Seward, the
Kenai Peninsula Borough, the State of Alaska, or of the United States Government
applicable to LESSEE's use of the Leased Land, pursuant to the regulations of such
agencies, for a period of sixty (60) days after written notice specifying such violation has
been given by the agency charged with the enforcement of such laws, regulations, or
permits to LESSEE; provided, however, if such violation be such that it cannot be corrected
within the applicable period, it shall not constitute an act of default if corrective action is
instituted by LESSEE within the applicable period and diligently pursued until the
violation is corrected. Furthermore, if LESSEE shall contest such alleged violation through
appropriate judicial or administrative channels, the time period specified herein shall not
commence until such proceedings are finally determined provided such proceedings are
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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.
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,
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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 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.
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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 relet the Leased Land
unless Lender fails to cure the default or breach within a reasonable period of time
thereafter; and
b) If the default for which notice is given is a breach of Section 9.3, CITY shall not
exercise any of the remedies afforded to it under Article 10 above so long as
LESSEE or Lender remains in possession of the Leased Land and satisfies
LESSEE's obligations under the terms of this LEASE. Upon foreclosure or other
assertion of its security interest, Lender may further assign, transfer, or dispose of
its interests, provided that any subsequent assignee, purchaser, or transferee shall
remain bound by each and every term of this LEASE.
12.3 Assignment to Affiliate. Notwithstanding Section 12.1 above, LESSEE may assign this
LEASE to an affiliate of LESSEE as that term is defined by AS 10.06.990(2) or Alaska
limited liability company in which LESSEE maintains a substantial membership interest;
provided, however, that LESSEE's full faith and credit shall remain obligated under this
LEASE as though the assignment had not taken place.
ARTICLE 13 - LESSEE'S DUTY TO DEFEND/INDEMNIFY
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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 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.
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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 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
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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. seq.), as it now exists or may hereafter be amended from time to
time, and judgment on the award may be entered in any Superior Court in the State
of Alaska. Notwithstanding the foregoing, arbitration shall not be applicable to
claims or disputes involving a requested remedy having a value of more than FIFTY
THOUSAND DOLLARS ($50,000) (exclusive of interest and costs). All demands
for arbitration and all answering statements thereto that include any claim must
contain a statement that the total sum or value in controversy, as alleged by the
party making such demand or answering statement, is not more than FIFTY
THOUSAND DOLLARS ($50,000.) The arbitrator will not have jurisdiction,
power, or authority to consider or make findings (except to deny jurisdiction)
concerning any claim, counterclaim, dispute, or other matter in question where the
amount in controversy of any such claim, counterclaim, dispute or matter is more
than FIFTY THOUSAND DOLLARS ($50,000). The costs and expenses of
arbitration shall be shared equally by the parties, and each party shall bear its own
attorney's fees and costs.
b) Arbitration procedures shall be applicable only to contract, negligence, and similar
claims arising from or related to this LEASE, and shall not be used to resolve or
determine any claim based upon fraud, intentional misrepresentation, nor any claim
based on conduct that is a felony crime in the State of Alaska.
c) Written notice of requests for arbitration of disputes may be served by either party
to this LEASE upon the other party. Arbitration of any dispute or claim shall be
determined by a single arbitrator selected from a list of not less than five (5)
arbitrators obtained from the presiding Superior Court Judge or other appropriate
judicial officer in Anchorage, Alaska. The arbitrator shall be a person who (a) has
not less than five (5) years legal experience in the State of Alaska prior to
appointment; and (b) such legal experience includes substantial experience with
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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 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
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of establishing both the need and urgency to perform such maintenance work. As soon as
practicable following receipt of said engineer's determinations and recommendations, if
the report requires repair then LESSEE shall pay the cost of the report and perform such
work in accordance therewith at LESSEE's cost, risk, and expense.
18.3 Cost of Repairs. Should LESSEE dispute the necessity of any maintenance work as being
necessary or advisable or reasonable to protect the public facilities on adjacent land, it may
submit the matter to arbitration; provided, however, that pending the decision of the
arbitrator it shall fully comply with the maintenance requests. If an arbitration award
should ultimately find that the repairs were not necessary then LESSEE may either deduct
from future rental payments the cost of such repairs or be reimbursed therefor. In deciding
whether repairs requested by CITY or required by an engineering report are necessary, the
arbitration panel is to give primary consideration to the safety and welfare of the Seward
port facilities and the citizens of Seward in light of the highest standards in the industry.
If any facility or service provided by CITY to the Leased Land shall become inadequate
due to changes in environmental control standards or should any facility require updating
or improvement by reason of a change in LESSEE's use of the Leased Land or operations
therefrom, LESSEE shall either construct such improvements at LESSEE's own cost or
reimburse CITY for such work at the option of CITY.
ARTICLE 19 - ENVIRONMENTAL CONCERNS
19.1 Hazardous Materials.
a) Condition of Site. LESSEE has had full opportunity to examine the site for the
presence of any Hazardous Material and accepts the site in "as is" condition.
LESSEE may elect, at LESSEE's sole cost, to conduct a baseline soils test prior to
execution of this LEASE.
b) Release of CITY. Any other provision of this LEASE to the contrary
notwithstanding, LESSEE releases CITY from any and all claims, demands,
penalties, fines, judgments, liabilities, settlements, damages, costs, or expenses
(including, without 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.
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i) LESSEE shall not cause or permit any Hazardous Material to be brought
upon, kept, or used in or about the Leased Land except for such Hazardous
Material as is necessary to conduct LESSEE's authorized use of the Leased
Land.
ii) Any Hazardous Material permitted on the Leased Land as provided in this
paragraph, and all containers therefor, shall be used, kept, stored, and
disposed of in a manner that complies with all Environmental Laws or other
laws or regulations applicable to such Hazardous Material.
iii) LESSEE shall not discharge, leak, or emit, or permit to be discharged,
leaked, or emitted, any material into the atmosphere, ground, ground water,
sewer system, or any body of water, if such material (as reasonably
determined by the City, or any governmental authority) does or may, pollute
or contaminate the same, or may adversely affect the (a) health, welfare, or
safety of persons, whether located on the Leased Land or elsewhere; or (b)
condition, use, or enjoyment of the Leased Land or any other area or
personal property.
iv) LESSEE hereby agrees that it shall be fully liable for all costs and expenses
related to the use, storage, and disposal of Hazardous Material kept or
brought on the Leased Land by LESSEE, its authorized representatives and
invitees, and LESSEE shall give immediate notice to CITY of any violation
or potential violation of the provisions of this subparagraph.
d) Indemnification of CITY. Any other provision of this LEASE to the contrary
notwithstanding, LESSEE shall defend, indemnify, and hold CITY harmless from
and against any claims, demands, penalties, fines, judgments, liabilities,
settlements, damages, costs, or expenses (including, without limitation, attorney,
consultant and expert fees, court costs, and litigation expenses) of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of or in any way
related to:
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
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iv) Any violation of any laws applicable thereto; provided, however, that this
Section 19.1(d) shall apply only if the acts giving rise to the claims,
demands, penalties, fines, judgments, liabilities, settlements, damages,
costs, or expenses (1) occur prior to or during the term of this LEASE; and
(2) arise, in whole or in part, from the use of, operations on, or activities on
the Leased Land by LESSEE or LESSEE's predecessors in interest,
employees, agents, invitees, contractors, subcontractors, authorized
representatives, subtenants, or any other persons. The provisions of this
subparagraph shall be in addition to any other obligations and liabilities
LESSEE may have to CITY at law or equity and shall survive the
transactions contemplated herein and shall survive the termination of this
LEASE.
e) Operator. For all purposes, LESSEE shall be deemed the operator of any facility
on the Leased Land.
f) Hazardous Material Defined. As used in this LEASE, Hazardous Material is any
substance which is toxic, ignitable, reactive, or corrosive or which is regulated by
any Environmental Law. Hazardous Material includes any and all material or
substances which are defined as industrial waste, hazardous waste, extremely
hazardous waste, or a hazardous substance under any Environmental Law.
Notwithstanding any statutory petroleum exclusion, for the purposes of this
LEASE, the term Hazardous Material includes, without limitation, petroleum,
including crude oil or any fraction thereof, petroleum soaked absorbent material,
and other petroleum wastes.
g)
Environmental Law Defined. As used in this LEASE, Environmental Laws include
any and all local, state, and federal ordinances, statutes, and regulations, as now in
force or as may be amended from time to time, relating to the protection of human
health and the environment, as well as any judgments, orders, injunctions, awards,
decrees, covenants, conditions, or other restrictions or standards relating to same.
Environmental Laws include, by way of example and not as a limitation of the
generality of the foregoing, Alaska Statutes Title 46, the Resource Conservation
and Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Clean Water Act, and the Superfund
Amendments and Reauthorization Act of 1986.
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
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City Manager, may order LESSEE to immediately cease any operations or activities
on the Leased Land if the same is being carried out without necessary permits, in
violation of the terms of any permit or Environmental Law, or contrary to this
LEASE.
b) Correspondence With and Reports to Environmental Agencies. LESSEE shall
immediately (the same or the next business day) provide CITY with copies of all
correspondence and notice, including copies of all reports between LESSEE and
any state, federal, or local government or agency regulating Hazardous Material
which relates to LESSEE's operations on or use of the Leased Land.
ARTICLE 20 - ESTOPPEL CERTIFICATES
Either party shall at any time and from time to time upon not less than ten (10) days' prior
written request by the other party, execute, acknowledge, and deliver to such party, or to its
designee, a statement in writing certifying that this LEASE is unamended and in full force and
effect (or, if there has been any amendment thereof, that the same is in full force and effect as
amended and stating the amendment or amendments), that there are no defaults existing (or, if
there is any claimed default, stating the nature and extent thereof), and stating the dates to which
the rent and other charges have been paid in advance.
ARTICLE 21 - CONDITIONS AND COVENANTS
All the provisions of this LEASE shall be construed to be "conditions" as well as
"covenants," as though the words specifically expressing or imparting covenants and conditions
were used in each separate provision.
Notwithstanding any other provisions of this Lease to the contrary, the following
covenants shall apply during the Lease Term and !3,ny extensions thereof:
A. Lessee shall operate the hotel located on the Leased Land, the Breeze Inn, on a
year- round basis for at least three (3) years following the Effective Date.
Following that three (3)-year period, Lessee shall operate the Breeze Inn on a
year-round basis unless it becomes commercially unreasonable, which ZPA may
determine in its sole discretion in coordination with its lender, Global Credit
Union (f/k/a Alaska USA Federal Credit Union) and the SBA, and their assigns.
B. Without limiting any CITY consent rights in Article 12, Lessee may not assign,
transfer, or sell any interest in ZPA or the Lease to a company primarily engaged
in passenger cruise and vacation travel.
C. Lessee may not assign, transfer, or sell any interest in ZPA or the Lease to a
national or multi -national hotel chain or franchise. Lessee may not at any time
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during the Lease Term cause the Breeze Inn to become a franchised hotel.
D. Although Lessee must comply with all applicable laws at all times during the
Lease Term, Lessee affirms and ratifies its obligation to comply with all
municipal, state, and federal health and safety regulations.
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
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.
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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.
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
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All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the
following address:
ZPA LLC
1120 E Huffman #24 PMB 416
Anchorage, AK 99515
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.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the dates
herein set forth.
CITY:
CITY OF SEWARD
LESSEE:
ZPA, LLC
Janette Bower, City Manager Charles E. Jackson, Member
Date: Date:
ATTEST:
Brenda Ballou, City Clerk
STATE OF ALASKA
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this day of
2023, by Janette Bower, City Manager of the City of Seward, Alaska, on behalf of the City.
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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
2023, by Charles E Jacksoon who executed the foregoing document on behalf of ZPA, LLC as a
member of the [limited liability company/corporation].
25
Notary Public in and for Alaska
My Commission Expires:
289
Breeze Inn Lot3B Block 1
Geographic Information Systems
144 North Binkley Street, Soldotna, Akaska 99669
This map is a user generated static output from an Internet mapping site and is for reference only. Data layers that appear on this map may or may not
be accurate, current, or otherwise reliable. It is not to be used for navigation.
DATE PRINTED: 1/14/2022
Legend
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Town Low/Seasonal; Other
Proposed
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Red: Band_1
Green: Band_2
■ Blue: Band_3
Notes
Type any notes here.
290
February 10, 2023
Dear Janette,
I have enclosed a draft (new) lease agreement between the City and ZPA LLC for
the Breeze Inn site utilizing what we understand is the City's current lease form. Consistent
with current practice and ZPA's lending requirements, the lease term is set for 40 years.
The development provisions were removed because development has long been completed
at the site. I note that Articles 9 and 10 of the existing tenant's lease for this property (with
respect to the City's default and the tenant's remedies) are not present in the enclosed draft
lease, as the City's current lease form clearly does not invite these provisions any longer.
In addition to using the City's most current lease form and terms, ZPA is proposing
the enclosed operating covenants for incorporation into the lease. ZPA is committed to
operating the Breeze Inn in the best interest of the community, and in a commercially
reasonable, fiscally responsible manner. We believe the attached proposed covenants
address many of the concerns voiced at the January 9 City Council meeting, in addition to
a range of other topics ZPA is open to discussing with the City. We are not aware of any
other lessee making similar commitments; however, we feel it is important to correct some
of the misconceptions and incorrect assumptions some members of the public raised, and
do our best to address those regardless of merit.
The enclosed list is not intended to serve as a comprehensive or exhaustive list, and
we welcome discussion on these and any other matters with respect to the lease that the
City believes is important to the success of this tenant and owner of the Breeze Inn.
Thank you in advance for your prompt attention to this matter. The current tenant,
Juris Mindenbergs, has a strong desire to close on the sale of the Breeze Inn prior to the
2023 summer operating season, so time is of the essence in order to ensure that ZPA can
arrange for successful 2023 operations.
Please do not hesitate to contact us if you have any concerns about the proposal or
ZPA's plans for the Breeze Inn.
Sincerel
Ristine Casagranda
Enclosure: Proposed Lease Operating Covenants
Draft New Lease between City of Seward and ZPA LLC
291
DocuSign Envelope ID: 0C4CD045-66FC-4BBF-ADC9-DCD50B5B3A02
Friday, February 24, 2023
To the City Manager:
Juris Mindenbergs and the City of Seward ("City") are parties to a Lease dated
October 1st, 2005, as amended by the First Amendment to Lease Agreement dated
September 7, 2006 (collectively as amended, the "Mindenbergs Lease"), relating to
the improved real property located at Lot 3, Block 1, Seward Small Boat Harbor
Subdivision ("Premises").
As part of his ongoing effort to transfer his business to new ownership, Juris
Mindenbergs supports the efforts by ZPA, LLC ("ZPA") to reach agreement with
the City on terms and conditions for a new lease for the Premises ("ZPA Lease").
Mindenbergs' support of the ZPA Lease is contingent upon: (1) Council approving
the ZPA Lease by April 1, 2023; (2) Council agreeing to terminate the Mindenbergs
Lease using a commercially reasonable form of lease termination approved by City
counsel and Mindenbergs' counsel releasing Mindenbergs from all Lease
obligations except those expressly surviving termination under the Lease; and (3)
make the ZPA Lease commencement and Mindenberg Lease termination effective
as of the date of recording on the Premise transfer.
2/24/2023
Sincerely,
,—DocuSigned by:
�VM lJ kll/l. V,J
'-68EDB39F57364A8...
Juris Mindenbergs
292