HomeMy WebLinkAboutRES2023-074 OBI Seafoods Amendment 1Sponsored by: Regis
CITY OF SEWARD, ALASKA
RESOLUTION 2023-074
A RESOLUTION OF THE CITY COUNCIL OF SEWARD, ALASKA
APPROVING LEASE AMENDMENT 1 TO THE AMENDED AND
RESTATED LEASE AGREEMENT BETWEEN OBI SEAFOODS, LLC AS
ASSIGNEE OF ICICLE SEAFOODS, INC. AND THE CITY OF SEWARD.
WHEREAS, the City of Seward leased Lots 2A and 3A, Block 2, Marine Subdivision, Block
Two Replat, Plat No. 96-28 Seward Recording District, Third Judicial District State of Alaska ("the
Property") to Icicle Seafoods pursuant to terms set forth in Lease No. RE-071 on August 17, 1988;
and
WHEREAS, City of Seward Resolution 2018-055 approved a 20 year Amended and
Restated Lease of the Property with Icicle Seafoods on June 25, 2018 ("the Lease"); and
WHEREAS, Icicle assigned the Lease to Ocean Beauty Seafoods, LLC on June 1, 2020
("the Assignment"); and
WHEREAS, the Assignment recognized that Icicle remained responsible to the City under
the terms of the Lease; and
WHEREAS, on or about January 14, 2019, Icicle discovered a leak estimated to contain nine
(9) gallons of fuel on the Property ("Spill"); and
WHEREAS, Icicle timely reported the Spill to the State of Alaska, Department of
Environmental Conservation ("ADEC"); and
WHEREAS, ADEC, Icicle and OBI have agreed to a response to the Spill which requires
the City of Seward to allow an Environmental Covenant to be to be recorded against the Property
which contains containing institutional controls, including installation of a concrete cap, restrictions
on the use of the ground water, inspection and reporting requirements, and limitations on uses of the
Property; and
WHEREAS, OBI, Icicle and the City have negotiated terms on which the City will consent
to recording of the Environmental Covenant which require the' Lease be amended; and
WHEREAS, Article 32 of the Lease requires that any amendment to the Lease be in writing
and signed by the City and the Lessee; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA that:
Section 1. The Seward City Council consents to recording of the Environmental Covenant.
Section 2. The Seward City Council approves Lease Amendment 1 to the Amended and
CITY OF SEWARD, ALASKA
RESOLUTION 2023-074
Restated Lease.
Section 3. The Seward City Council finds that the essential terms and conditions of Lease
Amendment No. 1 to the Amended and Restated Lease are in the public interest.
Section 4. This resolution shall take effect 30 days from the date of posting of adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 10th
day of July, 2023.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Kris Peck,
City Clerk
(City Seal)
THE CITY OF SEWARD, ALASKA
Sue McClure, Mayor
Finch, Osenga, Calhoon, Demoss, McClure
None
Wells, Barnwell
None
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City Council Agenda Statement
Meeting Date: July 10, 2023
To: City Council
Through: Norm Regis, Acting City Manager
From: Brooks Chandler, City Attorney
Agenda Item: Resolution 2023-074: A Resolution Of The City Council Of Seward, Alaska
Approving Lease Amendment 1 To The Amended And Restated Lease
Agreement Between OBI Seafoods, LLC As Assignee Of Icicle Seafoods, Inc.
And The City Of Seward.
Background and justification:
The City of Seward has a long-standing relationship with the seafood processing industry. Icicle
Seafoods, Inc. operated a processing facility at its current location under the terms of a lease agreement
with the City. The initial lease was approved in 2008 and then extended in 2018. The lease expires in
2038. There are 2 five-year extension options.
In 2019, Icicle and Ocean Beauty Seafoods combined to form a new entity called OBI Seafoods,
LLC. The City Council approved assigning the Icicle lease to OBI in 2020.
On January 14, 2019 a fuel leak from an above ground storage tank of approximately 9 gallons
was discovered. It was reported to ADEC by Icicle shortly thereafter. A site investigation determined
there were multiple contaminants present in the soil in concentrations that required clean up. ADEC
supervised the clean up. A total clean up might have required tearing down the buildings on site to access
and investigate the full extent of contaminated soil. ADEC agreed to an alternative approach which
applied a concrete "cap" over the contamination. The City permitted the cap to be installed and the work
has been completed.
ADEC's approval was conditioned on the property owner (City of Seward) agreeing to
notification of ADEC before excavations greater than 2 feet are begun, and inspecting and maintaining
the cap. This is documented in what is called an Environmental Covenant which will be recorded with
the lease amendment.
The Lease Amendment makes Icicle responsible for complying with the Covenant and requires OBI
to cooperate with Icicle. The Amendment also identifies what happens if the building is destroyed and
specifies that future appraisals for rent adjustments must not consider any contamination or the existence of
the Environmental Covenant. The Lease Amendment makes clear the underlying obligation to return the
property to the City in the same condition as when the lease was made remains in force.
OBI and Icicle have accepted the proposed lease amendment before the Council for approval. The
City Attorney has participated in negotiations and is recommending Council approval.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan:
Strategic Plan:
Other:
Certification of Funds
Total amount of funds listed in this legislation: $
This legislation (✓):
Creates revenue in the amount of:
Creates expenditure in amount of:
Creates a savings in the amount of:
Has no fiscal impact
X
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
X
Attorney Review/ 4
X
Yes
Not applicable
City Attorney Signature:
$
$
$
9-
Administration Recommendation
X
Adopt Resolution
Other:
D-S),_,o- C-0-___,
After recording in the Seward Recording
District, Return to:
City of Seward
P.O. Box 167
Seward, AK 99664
AMENDMENT TO AMENDED AND RESTATED
LEASE AGREEMENT
This Amendment to Amended and Restated Lease Agreement ("Amendment") is
dated and effective as of the last date of signature set forth below and is by and between the
City of Seward, Alaska ("City"), a municipal corporation located in the Kenai Peninsula
Borough, State of Alaska whose mailing address is P.O. Box. 167, Seward, Alaska 99664, as
the lessor, Icicle Seafoods Inc. ("Icicle"), an Alaska corporation whose mailing address is P.O.
Box 79003, Seattle, WA 98119, as the original lessee, and OBI Seafoods, LLC, ("OBI", and,
collectively with City and Icicle, the "Parties"), an Alaska limited liability company, whose
address is F.O. Box 70739, Seattle, WA 98127, as the current lessee. This Amendment
amends that certain Amended and Restated Lease Agreement dated as of July 25, 2018
("Lease") made of record by a Memorandum of Amended and Restated Lease recorded on
September 6, 2018 as Reception No. 2018-000888-0, records of the Seward Recording
District, Third Judicial District, State of Alaska and re -recorded on September 7, 2018, as
Reception No. 2018-000895-0, records of the Seward Recording District, Third Judicial
District, State of Alaska.
WHEREAS, Icicle and the City entered into the Lease pursuant to which the City
leased the following legally described land ("Leased Land") to Icicle:
Lots 2A and 3A, Block 2, MARINE SUBDIVISION, BLOCK TWO REPLAT, as
shown on Plat 96-28, Seward Recording District, Third Judicial District, State of
Alaska, consisting of approximately 4.93 acres or 214,804 square feet, more or Tess
(Tax Parcel ID 145-240-15-LH01);
WHEREAS, pursuant to the authority granted to Icicle in Section 12.3 of the Lease,
on or about June 1, 2020, Icicle entered into an Assignment and Assumption of Lease
("Assignment") with OBI pursuant to which all of Icicle's rights, duties and obligations set
forth in the Lease were assigned to, and assumed by, OBI;
4887-9135-9496v.7 0022769-000022
WHEREAS, Section 12.3 of the Lease provides that Icicle remains obligated under
the Lease notwithstanding the Assignment;
WHEREAS, on or about January 14, 2019, Icicle discovered a leak estimated to
contain nine (9) gallons of fuel ("Spill") from a fitting on an approximately four hundred (400)
gallon above ground storage tank ("AST") which supplied a blend of approximately seventy
percent (70%) reclaimed used oil and thirty percent (30%) diesel fuel to two boilers located
in improvements on the Leased Land;
WHEREAS, Icicle timely reported the Spill to the State of Alaska, Department of
Environmental Conservation ("Alaska DEC") and has been working diligently with its
consultant, Shannon & Wilson, Inc. ("S&W") to investigate the Spill, clean up the Spill and
monitor the impact of the Spill on the Leased Land in accordance with all applicable legal
requirements under the oversight of the Alaska DEC;
WHEREAS, Alaska DEC has identified the Site as the Icicle Seafoods Seward
Facility, Alaska ADEC File #2332.38.051 (the "Contaminated Site");
WHEREAS, Icicle removed the AST and approximately 10 cubic yards of impacted
soil as part of its response action, but additional excavation activities were deemed not feasible
due to the restricted space and the integrity of adjacent structure foundations, and some portion
of the Spill may remain on the Leased Land under the foundation, footings and floor of
improvements located on the Leased Land (such portion of the Spill, if any exists, hereinafter
the "Residual Contamination");
WHEREAS, the Parties and. Alaska DEC recognize the economic inefficiencies
created if the Alaska DEC were to require the existing improvements to be destroyed in order
to perform more investigation and possible clean-up activities to remove the Residual
Contamination on the Leased Land;
WHEREAS, in the spirit of cooperation, the Alaska DEC has required an
Environmental Covenant complying with Alaska Statute 46.04.300-46.04.390, adopting the
Uniform Environmental Covenants Act, recorded on
2023, as Reception No. 2023- , records of the Seward Recording District, Third
Judicial District, State of Alaska containing institutional controls, including installation of a
concrete cap at the Contaminated Site (the "Cap"), restrictions on the use of the ground water,
inspection and reporting requirements, and limitations on uses of the Leased Land as an
alternative to requiring the improvements to be destroyed in order to determine the existence
of the Residual Contamination;
WHEREAS, after recordation of the Covenant, the Alaska DEC is expected to
designate the Contaminated Site as "Cleanup Complete with Institutional Controls"; and
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4887-9135-9496v.7 0022769-000022
WHEREAS, the Parties wish to enter into this Amendment for the purposes of
evidencing their consent to the recordation of the Covenant and to allocate the responsibilities
set forth in the Covenant.
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
hereinafter contained, the Parties agree as follows:
1. The City, as the owner of the Leased Land, executed the Covenant as the
Grantor, and OBI, as the current lessee, executed the Covenant as a holder. Because Icicle
remains obligated under the Lease notwithstanding the Assignment, Icicle executed the
Covenant as an additional Holder. Icicle is recording the fully executed Covenant in the
records of the Seward Recording District, Third Judicial District, State of Alaska immediately
prior to the recordation of this Amendment. Icicle shall provide a conformed copy of the
recorded Covenant to the City, OBI and the Alaska DEC not more than ten (10) business days
after the Covenant is recorded.
2. If the Alaska DEC requires the State of Alaska, Department of Revenue
("Alaska DOR") to subordinate the deed of trust granted to the Alaska DOR to secure Icicle's
obligations to pay fish related taxes assessed under Title 43 of the Alaska Statutes, which deed
of trust was recorded in the Seward Recording District on December 15, 2015 as Reception
No. 2015-001368-0 and amended by instrument recorded on December 17, 2015 as Reception
No. 2015-001378-0, Icicle shall be responsible for obtaining such subordination or otherwise
resolving the issue of priority to the satisfaction of the Alaska DEC and the Alaska DOR. OBI
and the City hereby consent to the recordation of any documents related to resolve the priority
issue between the Alaska DEC and the Alaska DOR.
3. Except as set forth in this Section 3, Icicle is responsible for the performance
of all obligations set forth in the Covenant that are stated to be a duty of the City, OBI or both,
and Icicle shall remain responsible for such performance notwithstanding the termination of
the Lease. So long as OBI is operating the facility located on the Leased Land, OBI agrees to
(i) cooperate with Icicle and all consultants hired by Icicle to perform the obligations set forth
in the Covenant, (ii) allow Icicle and all consultants hired by Icicle to have access to the
Leased Land as necessary to perform the duties and obligations set forth in the Covenant, (iii)
post signs provided by Icicle at each end of the concrete cap setting forth the telephone number
of Icicle and a request for persons to call that number when damage to the Cap is noticed, and
(iv) inspect and annually provide Icicle with photos of the signs and Cap taken during the
fourth quarter of each calendar year. The City agrees to release Icicle from the obligations
set forth in this Amendment upon the first to occur of the following:
(a) the specific and express assumption of Icicle's obligations described in
this Amendment by a lessee other than Icicle in the form of an amendment to the Lease,
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4887-9135-9496v_7 0022769-000022
a modification to the Lease, an amendment and restatement of the Lease, a new lease,
or an agreement comparable to any of the foregoing; or
(b) the Alaska DEC's agreement to terminate the Covenant evidenced by
the recordation of a termination or similar document in the official records of the
Seward Recording District, Third Judicial District, State of Alaska.
4. The Parties acknowledge and agree that if the improvements located on the
Leased Land that currently prevent Icicle from investigating and, to the extent necessary,
remediating the Residual Contamination are ever destroyed before the occurrence of the
conditions set forth in Section 3(a) or Section 3(b), above, and such destruction allows the
economically feasible investigation and, to the extent necessary, remediation of the Residual
Contamination to meet applicable cleanup levels, Icicle will obtain the permission of the City
and the current lessee of the Leased Land (which permission shall not be unreasonably
withheld, conditioned or delayed), investigate the Residual Contamination as Icicle deems
reasonable and necessary, and, if economically feasible, remediate the Residual
Contamination to meet applicable cleanup levels. Icicle shall request a termination of the
Covenant from the Alaska DEC upon completion of the foregoing activities.
5. The City hereby consents to Icicle's construction of an impermeable cap in the
form of a concrete slab on a portion of the Leased Land at a location approved by the Alaska
DEC.
6. Any and all reports any party provides to the Alaska DEC in connection with
the activities described in this Agreement shall also be provided to the other parties hereto at
substantially the same time so long as any such party is an owner, lessee or occupant of the
land.
7. The occurrence of the Spill or the existence of the Residual Contamination or
the recording of the Covenant shall not be taken into account when an appraiser calculates the
Fair Market Rental Value pursuant to the provisions of Article 3 of the Lease for purposes of
Rental Adjustments.
8. Nothing in this Amendment modifies Icicle's or OBI's obligations under
Article 7 and Article 4.2(a) and Article 19 of the Lease with respect to the Spill.
9. Except as set forth in this Amendment, the Lease, as assigned, remains in full
force and effect.
[signatures on following page]
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4887-9135-9496v.7 0022769-000022
IN WITNESS WHEREOF, the parties hereby have sent their hand and seals the dates
herein set forth.
CITY OF SEWARD ATTEST:
By: By:
Norm Regis, Interim City Manager Brenda Ballou, City Clerk
Date:
STATE OF ALASKA
) ss.
THIRD JUDICIAL DISTRICT
The foregoing instrument was acknowledged before me this day
2023 by Norm Regis, Interim City Manager of the City of Seward, Alaska on behalf of the
City.
Notary Public in and for Alaska
My Commission expires:
5
4887-9135-9496v.7 0022769-000022
ICICLE SEAFOODS, INC.
Title: Chief Legal Officer
Date: May 19, 2023
PROVINCE OF NEW BRUNSWICK
) ss.
The foregoing instrument was acknowledged before me this ! � day of 1.8-
2023 by rorr� tlCin.�•ar— , the bi-G \i-cc of
Icicle Seafoods, Inc. on behalf of the corporation.
Notary Public •i * : �1 : nswick
Residing at:Prsic.'-
My Commis4psC�,
=fir}.
PUBLIC
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4887-9135-9496v,7 0022769-000022
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OBI SEAFOODS, LLC
By: �-
Name: T D o72- ,75
Title: ( t6
Date:
STATE OF WASHINGTON
) ss.
COUNTY
The fore oing instrument was acknowledged before me this 1 `f day of lr ,
2023 by iQUt V2oSS , the GT- D of
OBI Seafoods, LLC on behalf of the limited liability company.
Notary Public and for Washington
Residing at: Y Do 'Pb tm-2QQ -e,41uz
My Commission expires: 1 15-j 2 C
ASHLEY R. MILLER
NOTARY PUBLIC
STATE OF WASHINGTON
License Number21006569
My Commission Expires 01/15/2025
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4887-9135-9496v.7 0022769-000022