HomeMy WebLinkAboutRES2023-096 Breeze Inn LLC Lease PHSponsored by: Regis
Public Hearing: August 2, 2P2-E4'
CITY OF STIN. rARti, -ALASKA
RESOLL,ITION 013-096
.A. RESOLUTION OFTHE eft 11(tOUNCIL OF THE CITY OF SEWARD.,
ALASKA, AUTHORIZING 'I'M CITY MANAGER TO. ENTER INTO: A
CONSKNT ASSIGNMENT TO BREEZE 1NN, LLC, TO TILE LEASE
AGREEMENT 144-096 WITH AMIS. MINDENBEIKA,..FOR LOT 30,
BLOCK 1, MARINA StLIBDRISION, CITY. OF SEWARD:, ICENA I
PENINSULA BOROUGH PLAT 2095-11.SEWARVRECORDING DISTRICT.
THIRD JUDICIAL DISTRICT, STATE OF AIASKA. To A.IVIVAD•
ARTICLE 3 AND EXTENIMIE TERM OF THE LEASE FOR IS VTARS
AND TO ADD TWO :ME YEAR OPTIONS TO EXTVID
WHEREAS, JUr 1°(.4indenbergS ("Le.s:see") has -requeSted an assignrnern of lease to
.0=eze Inn., LLC ot the'eh:ring tease ageernerd with the City prSeward for 74.1x0 :Naar! feet!,
Truejar ke.slt,iir Lot 3II...B1r.41... Marinit CiirtifSeward,_ Kerlin Pen insulin Botougt.-.
Plat No. 2:11D.S.-8'revOrded w iiit'Sevimed.Reicortlinx District. Thittt..Intlieial. District..ate of Alaska;
and
WHERIA& Article I 4 orthe Lease provides that the Lessee sivall 'have the ril4ht s.3sign
the Imre Ewa findings by the'.Ctinnuil 1.1)Entuse,iN found 1:ri he intim public int cregt;tm
WHEREAS, itielpascsitg will continue to bgniilizod as At hotel, rokumn and Mail slop
and is ,pandsictut with current Lming EOM land use regulations: &id
WITEREAS, ttre current lease las,heeri in 'ti *netOctobet. 1.20115: mid
WHEREAS, the cwrit'1eascwiIcarnre Seplenth.er 30. 203.5;and
WtIEREAS. BreeIuuLLC. is_requesting to extend the lease I= by fiteen years and
In add two live ynaroptions lenit mid
WHERE:AS..0w eitris amending Mick 3 by adcing 3J,Interim Rental AdjustawntN,
NOW, THEREFott& RE IT RESOLVED DY lurk CIO totiNCIL OF THE
CITY OFSEviklARD, ALASKA that:
Seetion 11 The C.:4.,) Manager is hereby au.thorize,d ig enter Into. ronaeril Ito Lae
As:sietirnTlt tDThc timLLC. wsuilstaraii4,, the fnmi aslitthehtti !Viten.
Seaton 1. Thu recitals, set frith .ii rvi1r inpurpcTrated hereinbiirrerninee arid isdripted
lag finding of the City Courfcil. For the reason5 staled. an 4issigtiment tt Berefli LLC. in the
&MU prescruxiV.t thismeeting is found tp.hgui the publieinteresl_
'CITY .OF SEWMID, ALASKA
RSSOL Unit 013490
Section 3. Tile City Manugtz iSilitttrby aut horized ti amend End extend the lean with
Breime kn. t_Lcin substantially the form as presented a this meeting it round to be in ibe puhries
intermit.
Section 4. This resolution shall Lahrg affeet,30Ltiays from theAlgue anti -poNtint of
of on the date of elogitg & thit2 sale inn the lense'sile to Brevize.hin, LLC.
PASSIM AND.AITROFED! hy the City Cpungil of iheritypf AJasiga, is
e dayAsti August 2021
TIIE 'CITY OF SEWARD, ALASKA
Sou Mvditre, Mayor
AYES:
NOES:
ABSENT:
Af3STA IN:
ATTEST:
• 1-dt,
'Wells, Finch. B TIOPC1Ary
None
Dekloss, Calhom OsengNune
Kth Peck
City clerk
(City. Seal
1
1
City Council Agenda Statement
Meeting Date: August 28, 2023
To: City Council
Through: Nona Regis, Acting City Manager
From: Norm Regis, Harbormaster
Subject: Resolution 2023-096: Authorizing The City Manager To Enter Into A
Consent Assignment To Breeze Inn, LLC, To The Lease Agreement
L04-096 With Juris Mindenbergs, 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.
To Amend Article 3 And Extending The Term Of The. Lease For 18
Years And Add Two Five Year Options To Extend
Background and justification:
Juris Mindenbergs currently has Lease L04-96 containing 74,180 square feet more or less of Lot 3B
BIock 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 to assign the lease to Breeze Inn, LLC, which will
continue to use the leased land for a Hotel, Restaurant. Article 14 of the lease allows lease
assignments upon findings by Council that use is found to be in the public interest.
The current lease L04-96 will expire on September 30 2035. Breeze Inn, LLC. would like to request
an eighteen year lease extension to the original lease which would make the lease term ending date
September 30, 2053.
Breeze Inn, LLC. Is also requesting two five-year options to extend on approval of the the council.
The City is also amending Article 3 adding 3.8, which was not in the original lease.
3.8 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.
131
X
This is consistent with the methodology used in all new lease actions approved by the Council.
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
highligs 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: $ 62,000.00
This legislation (V):
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 (v):
Budgeted Line item(s):
Not budgeted
Not applicable
$ $62,000.00
$
Fund Balance Information
Affected Fund (V).
General
Boat Harbor
Motor Pool
X
Available Fund Balance
WIC
Parking
Other
Electric
Water
$
Wastewater
Healthcare
Note: amounts are unaudited
Finance Director Signature:
Su
X
Attorney Review
es Attorney Signature:
Not applicable Comments;
132
Administration Recommendation
X
Adopt Resolution
Other:
133
ASSIGNMENT OF LEASE
RE- L09-095
THIS ASSIGNMENT OF LEASE ("Assignient') made and entered into between Juris
1V1indenbergs, Lessee, 4128 148th Avenue NE, Redmond, Washington 99052, hereinafter called
"ASSIGNOR", and Breeze inn, LLC, P.O. Box 1466 Seward, Alaska. 99664, hereinafter called
"ASSIGNEE" with the consent ofthe City of Seward, hereinafter called "LESSOR".
WHEREAS, ASSIGNOR. and LESSOR, a home rule municipal corporation, organized and
existing under the laws of the State of Alaska, are parties to a Lease dated October i g', 2005, as
amended by the First Amendment to Lease Agreement dated September 7, 2006 (collectively as
amended, the `Lease"). Subject to the covenants, conditions and stipulations in the Lease,
ASSIGNOR leases from LESSOR_ the following improved real property: Lot 3, Block 1, Marina
Subdivision; City of Seward, Alaska and recorded as PIat No.2005-8 in Seward Recording District,
Third Judicial District, State of A laska, consisting ofapproxima ely 72,125 square feet, more or less.
{"Prep ises").
'WHEREAS, ASSIGNOR and ASSIGNEE are parties to a Purchase and Sale Agreement
dated June 26, 2023 ("Purchase Agreement"), which includes the sale of the .improvements on the
Premises and assignment of the Lease.
WHEREAS, this Assignment is conditioned upon the occurrence of the following two
events and shall only become effective ("Effective Date") on the date which is the later of: l) thirty
(30) days from the date and posting of adoption of a passed and approved resolution by the City
Council of Lessor authorizing the City Manager to enter into a Consent to Assignment to
ASSIGNEE, or 2) closing under the Purchase Agreement ("Closing Date"). Failure of either
condition precedent shall result in this Assignment being null and void.
WITNESSETH, that for valuable consideration paid by the ASSIGNEE to the ASSIGNOR,
receipt whereof is hereby acknowledged, the ASSIGNOR assigns to the ASSIGNEE all of its right,
title and interest in and to the Lease to ASSIGNEE as of the Closing Date. After the Closing Date
ASSIGNOR shall have no further obligations under or liabilities arising from the Lease, except; 1)
those arising from or related to circumstances prior to the Closing Date; and 2) those based on
A.SSTGNOR's duty to defend and indemnify the Landlord pursuant to Article 15 of the Lease,
ASSIGNEE* accepts the assignment and delegation and assumes and covenants during the
continuance of said Lease term to pay the rents reserved and to perform the covenants, conditions,
and stipulations in said lease, as amended, to be performed by the ASSIGNOR, including without
limitation, Article 21 —Environmental Concerns and to keep indemnified the ASSIGNOR against
all actions, claims; and demands whatsoever in respect to the said rents, covenants, conditions, and
stipulations, or anything relating thereto.
ASSIGNOR agrees to indemnify, hold harmless and defend ASSIGNEE from and against
4876-6230-7642, k.2
136
any obligations, liabilities, costs and claims (including reasonable attorney's fees) arising as a result
of or with respect to the Lease that are attributable to the period of time prior to the Closing Date.
ASSIGNEE agrees to indemnify, hold harmless and defend ASSIGNOR from and against any
obligations, liabilities, costs and claims (including reasonable attornev's fees) arising as a result of or
with respect to the Lease that are attributable to the period of time from and after the Closing Date.
ASSIGNEE agrees to indemnify LESSOR in accordance with Article 14. l (d) of the Lease.
This Assignment shall be binding on and inure to the benefit of the ASSIGNOR and
2\SSIGNEE} their heirs, executors, administrators, successors in interest and assigns. This
Assignment shall be governed by and construed in accordance with the laws of the State of A laska.
This Assignment may be executed in multiple counterparts, which together shall constitute one and
the same agreement.
4876-623G-7642, v. 2
137
TN WITNESS WIIEREOF, the parties hereto have set their hands and seals on the dates
indicated.
ASSIGNOR:
Date
Juris Mi ndenbergs
STATE OF WASHNGTON )
ASSIGNEE:
Breeze Inn, LTC
By: Authorized Members
Late I -7 ?.
Nicole L,aVstenee
Datee/+1/3
Pamela Elting
Date131(1(10Z-3
arolf
F'3411.
`lea
TTI-IIS TS TO CERTIFY that on this 2611 ay of , 2023. personally appeared
before me the undersigned, a Notary Public in and for the StateWashington, to me knownto
Juris Mindenbergs who executed the foregoing instrument and acknowledged to me the said
instrument to be the free and voluntary act and deed, for the uses and purposes therein mentioned
of the corporation and on oath stated that they are authorized to execute said :instrument an. behalf
of the corporation.
WITNESS my hand and notarial seal the day and year first hereinabove written.
(Notary Public
State of Washington
CHRISTINE TOBIN
My Comm. Expires 07101/2027
Commission 4 208803
Ghnot"niu&--
Notary Public in and for Washington
My Commission Expires: 0-7/0 1 /202-1
138
STATE OF ALASKA
)ss
TT MD JUDICIAL DIS 1'RICT
THIS IS TO CERTIFY that on this r - day of ____ , 2023, personally appeared
before me the undersigned, a Notary Public iti and for the State of .Alaska, to me known to Colby-
Lawrence, on behalf of Breeze Inn, LLC. who executed the foregoing instrument and.
acknowledged to me the said instrument to be the free and voluntary act and deed, for the uses and
purposes therein mentioned oftbe corporation and an oath stated that he is authorized to execute
said instrument on behal f of the corporation.
WITNESS any hand and notarial seal the day and yearfitst hereinabove written.
/L
_1otary Public it and for
Alaska
My Commission Expires! 9/z /z `l
Fri
as
OTARY
Iii.;pUBLIC�*
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' 1I ITI0II1411\ ~~
STATE OF ALASKA
)ss
THIRD JUDICIAL DISTRICT
THIS IS TO CERTIFY that on this / day of L6Ei6r, 2023. personally appeared
before me the undersigned, a Notary Public in and for the State of Alaska, to me known to Nicole
Lawrence, on behalf of Breeze Inn, LF,C, who executed the foregoing instrument and
acknowledged to nle the said instrument to be the free and voluntary act and deed, for the use' and
purposes therein mentioned of the corporation and on oath stated that he is authorized to execute
said instrument on behalf of the coloration.
WITNESS my hand and notarial seal the day and year first hereinabove written.
Notary Public in and for
Alaska
My Commission Expires: Yel-112' 9
139
STA l Z OF ALASKAi
)ss
TI-FIR D JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this % day of 4 2023, personally appeared
before me the undersigned, a Notary Public in and for the State of Alaska, to me known to Pamela
Ming, on behalf of Breeze Inn, LLC_ who executed the foregoing instrument and acknowledged
to me the said instrument to be the free and voluntary act and :deed, for the uses and purposes
therein mentioned of the corporation and op oath stated that he is authorized to execute said
instrument on behalf of the corporation.
WITNESS my hand and notarial seal the day and year first bereinabove written.
t00111111111*
•
NOTARY
f`: PUBLIC,:
Omni' 00
X-
Notary Public in and for
A I aska
My Commission Expires: zs2 y
STATE OF ALASKA
)ss.
THIRD JUDICIAL DISTRICT
THIS IS TO CERTJFY that on this / day of it6ti5f , 2023, personally" appeared
before me the undersigned, a Notary Public in and for the State of Alaska, to me known to Duke
Marolf: on behalf of Breeze Inn, LLC; who executed the foregoing instrument and acknowledged
to me the said instrument to be the free and vol untau-y act and deed, for the uses and purposes
therein mentioned or the corporation and on oath stated that he is authorized to execute said
instrument on behalf of the corporation.
WITNESS ESS my hand and notarial seal the day and year first hereinabove written,
9 Notary _Palic in and for
Alaska
My Commission Expires: ?/eit/z y
140
LEASE EXTENSION AMENDMENT
(RE-04-096)
E D E CITY OF SEWARD, ALASKA,.a home rule municipal corporation. organized and
existing under the laws of the State of Alaska, hereinafter referred to as "CITY," whose address is
PO Box 167, Seward, Alaska 99664 and Breeze lnn LLC; P.O. Box 1466 Seward, Alaska 99664,
hereby agree that the lease agreement 04-096, dated October 1, 2005, as amended by the First
Amendment to Lease Agreement dated September 7, 2006 (collectively as amended, the "Lease"),
for Lot 3B, Block 1, Marina Subdivision, City of Seward, Alaska and recorded as Plat No. 2005-
8 in the Seward Recording District, Third Judicial District, State of Alaska is hereby amended as
follows:
1. Article 2 is hereby amended to read as follows:
ARTICLE 2. LEASE TERM and OPTIONS TO EXTEND
2.1 Lease 'Term, The term of this Lease the Lease Term) shall be in accordance
with the CITY'S aut(orizii g Resolution No. 2004-96 and the Resolution approving
this amendment ("the collectively :`the Resolution"). The Lease Term shall commence
October 1, 2005 ("the Effective Date") and shall be extended for and additional
eighteen (18) years ending at midnight on September 30, 205.E
2.2 Options to Extend. LESSEE shall have the right to extend the term of this
LEASE for Two additional Five year (5) year periods, provided that:
a) LESSEE exercises its option to extend at least one hundred and eighty (180) days
prior to the expiration of the then current lease term;
b) LESSEE is not in default under any term or provision of this LEASE; and
c) LESSEE shall exercise its options to extend by sending written notice in accordance
with the provisions of Article 35 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.
7
Article 3.8 is hereby amended to read as follows:
ARTICLE 3 RENTAL RATE and INTERIM RENTAL ADJUSTMENTS
3.8 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, 2024 and on July 1 of every year thereafter (each on "Interim Rental Adjustment
Date") in an amount that reflects the increase, if any, m the cost of Living for the previous year as
stated in the Consumer Price Index, All Urban Consimlers, Anchorage, Alaska Area, All Ir-ms
1967=100 („CPI"), as published by the United States Department of Labor. Bureau of Labor
Page Iof5
141
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 accomplish as nearly the same result as if the CPI had
not been revised or ceased to be published.
3. Article 4.1 is hereby amended to read as follows:
ARTICLE 4.1 USE OF LEASED
LESSEE shall continue to operate a hotel, and restaurant throughout the term of the lease, and
failure to do so constitutes a condition of default.
4. Article 6.1(a) is amended by deleting this Article.
5. Article 11.2 is amended by deleting this Article.
6. Article 12.3 is amended by deleting this Article.
In all other respects, the Lease is to remain unchanged and in full force between the undersigned
parties.
LESSOR: LESSEE:
CITY OF SEWARD
Noma Regis, Acting City Manager
Date
Breeze Inn, LLC
By: Authorized Members
Date: 1 / ' 3
Colby Lawrence
Date: g/J/z0Z
Nicole Lawrence
Frecierick Duke Marolf
16,P
Pamela Eliri! ig
Date: S./ c _
Page 2 of 5
142
A I"I'EST:
Kris Peck, City Clerk
(City Seal)
STA FE: OF ALASKA
'TIMID JUDICIAL DISTRICT
) Ss.
)
TFIISIS TO CERTIFY that on this day of - , 2023 before
me, the undersigned, a Notary Public in and fox the State of Alaska, personally appeared Norm
Regis, known to nie and to me known to be the Acting City Manager for the City of Seward,
Alaska, and authorized to execute documents on its behalf, and is the individual named in and who
executed the foregoing document on behalf of the City of Seward for the uses and purposes therein
set forth.
WITNESS my hand and notarial seal the day and year first hereinabove written_
NOTARY PUBLIC: IN AND FOR ALASKA
My Commission Expires:
STATE OF ALASKA
)ss
THIRD JUDICIAL DISTRICT
THIS IS TO CERTIFY that on this / day of A v64 Sr , 2023, personally appeared
beforeme the undersigned, a Notary Public in and for the State of Alaska, to me known to be
Authorized Member Colby Lawrence the individual that executed the foregoing instrument and
acknowledged to metthe said instrument to be the free and voluntary act and deed, for the uses and
purposes therein mentioned of the Limited Liability Company and on oath stated that he is
authorized to execute said instrument on behalf of the Limited Liability Company .
'WITNESS my hand and notarial seal the day and year first hereinabove written:.
li:4___
1 Notary blc in and for
`(' ��, _ AlaskauMy- Go`rnmission
.•ice Expires :fs
bra:.'��1
441)2 _rf'O � 1\\
,` . Page 3 of 5
"�' effillll\\\''
143
STATE OF ALASKA )
)ss
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this f day of Au&'//61-, 2023, personally
appeared before me the undersigned, a Notary Public in and for the State of Alaska, to
me known to Nicole Lawrence, on behalf of Breeze Inn, LLC, who executed the foregoing
instrument and acknowledged to me the said instrument to be the free and voluntary act
and deed, for the uses and purposes therein mentioned of the corporation and on oath
stated that he is authorized to execute said instrument on behalf of the corporation.
WITNESS my hand and notarial seal the day and year first hereinabove written.
,•�w`I1II1dHll/yf��j
;
NOTARY
•''•. PUBLIC J
'�JI/fdf 11d 114h11��..
STATE OF ALASKA
)ss
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this 1 day of 4o6u5% , 2023, personally
appeared before me the undersigned, a Notary Public in and for the State of Alaska, to
me known to Frederick Duke Marolf, on behalf of Breeze Inn, LLC, who executed the
foregoing instrument and acknowledged to me the said instrument to be the free and
voluntary act and deed, for the uses and purposes therein mentioned of the corporation
and on oath stated that he is authorized to execute said instrument on behalf of the
corporation.
1.
NotarPublic in and for Alaska
My Commission Expires: g/� r
WITNESS my hand and notarial seal the day and year first hereinabove written.
#..t . III MH11u46,,//j�
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NOTA Y . .
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7r1
Notar`Fub1i in and for Alaska
My Commission Expires: 05/7
Page 4 of 5
144
STATE OF ALASKA
)ss
THIRD JUDICIAL DISTRICT
•i
THIS IS TO CERTIFY that on this / day of isiti6te5r , 2023, personally
appeared before me the undersigned, a Notary Public in and for the State of Alaska, to
me known to Pamela Eiting, on behalf of Breeze Inn, LLC, who executed the foregoing
instrument and acknowledged to me the said instrument to be the free and voluntary act
and deed, for the uses and purposes therein mentioned of the corporation and on oath
stated that he is authorized to execute said instrument on behalf of the corporation.
WITNESS my hand and notarial seal the day and year first hereinabove written.
/
Notary Public in and for Alaska
My Commission Expires: c/ Si / y
Page 5 of 5
145
LEASE AGREEMENT
between
CITY OF SEWARD, ALASKA
and
Juris Mindenbergs
Effective Date: October 1, 2005
146
TABLE OF CONTENTS
ARTICLE 1 - LEASED LAND - _ . „ . 1
1.1 Description of Leased Land
1.2 Covenant of Quiet Enjoyment; Warranty of Title
1.3 Survey of Leased Land , , 2
1.4 Property 2
1.5 Permits..
1.6
ARTICLE 2 - LEASE IERM ..... , „„" ,„ „--- 3
2.1 Lease Term .................... .........
2.2 Interim Right to Possession... ....... . „ _
3
23 Lease Subject to Referendum ...... ......
2.4 Termination .. ............ ....... . . ... _____ 4
2.5
ARTICLE 3 - RENTAL RATE ............ . _ 4
3.1 Initial Rental Rate ..... ............. 4
3.2 Renta/A4jus1ments . . „,„ _ , . 5
3.3 Procedure for Rental Adjustment 5
3.4 Effect of Late Appraisal by CITY . . ... 5
3.5 Appraisal by LESSEE 6
3.6 Effective Date of Adjusted Rental Rate . ..... 6
3.7 Late Payment Charge ............ 7
4.1 Use of Leased Land .. ..... .....7
4.2 Obligations of LESSEE..................... .... ...................... ........ ....._. 7
4.3 No Preferential Rights to Use Public Facilities . ......... ..... ,................. 7
4,4 Adequacy of Public Facilities ...............,., ........... . 7
4.5 Tariffs and Other Service 8
4.6 Time for Payment of Utilities and Taxes 8
4.7 Other Uses .................. . .... , . ......... 8
ARTICLE 5 - UTILITIES AND RIGHTS OF ACCESS 8
5.1 Utilities „ _„,. „ , 8
5.2 Third -Party Improvements
5.3 Easements
ARTICLE 6
6.1
6.2
ARTICLE 7
7.1
7.2
- CONSTRUCTION BY LESSEE
Improvements on Leased Land
City Review of Construction
- RETURN OF LEASED LAND/SITE CONDITIONS . 11
Return of Leased Land in Original Condition ......... 11
Return of Leased Land in Different Condition.
9
9
• •• •,•,• ••••• w, • • •• • 10
-1-
„ 11
.... ...• ••• . K... • • • • • • . . . 11
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147
ARTICLE 8 -
ARTICLE 9 -
ARTICLE 10
ARTICLE 11
ARTICLE 12
ARTICLE 13
13.1
13_2
ARTICLE 14
14.1
14.2
14.3
ARTICLE 15
ARTICLE 16
ARTICLE 17
17.1
17.2
ARTICLE 18
ARTICLE 19
19.1
ARTICLE 20
20.1
20.2
20.3
ARTICLE 21
21.1
21.2
ARTICLE 22
ARTICLE 23
ARTICLE 24
ARTICLE 25
ARTICLE 26
ARTICLE 27
ARTICLE 28
ARTICLE 29
ARTICLE 30
ARTICLE 31
ARTICLE 32
ARTICLE 33
ARTICLE 34
ARTICLE 35
ARTICLE 36
FORCE MAJEURE
CITY ACTS OF DEFAULT
- REMEDIES FOR CITY'S ACTS OF DEFAULT
- LESSEE'S ACTS OF DEFAULT
- REMEDIES FOR DEFAULT BY LESSEE
- TITLE TO IMPROVEMENTS INSTALLED BY LESSEE
Real Property Improvements
Personal Property
- ASSIGNMENT OR SUBLEASE
Assignment qfLease or Subleasing
Assignment of Lease for Security
Assignment to Affiliate
- LESSEE'S DUTY TO DEFEND/INDEMNIFY
- CITY'S DUTY TO DEFEND/INDEMNIFY
- INSURANCE
Minimum Insurance Requirements
Subrogation Rights Waived
- CONDEMNATION
- ARBITRATION
Arbitration...
- MAINTENANCE AND REPAIRS
Normal Maintenance .
Safety Issues
Cost of Repairs
- ENVIRONMENTAL CONCERNS
Hazardous Materials
Permits and Reporting
- ESTOPPEL CERTIFICATES
- CONDITIONS AND COVENANTS
- NO WAIVER OF BREACH
- TIME OF THE ESSENCE
- COMPUTATION OF TIME
- SUCCESSORS IN INTEREST
- ENTIRE AGREEMENT
- GOVERNING LAW
- PARTIAL DWALIDITY
- RELATIONSHIP OF PARTIES
- INTERPRETATION
- CAPTIONS
- AMENDMENT
- NOTICES
- FIRE PROTECTION
- -
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LEASE AGREEMENT
PHIS 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 Juris Mindenbergs (the
"LESSEE"), dba The Breeze Inn, whose mailing address is 4128 148th Avenue NE, Redmond,
Washington 98052.
WHEREAS, LESSEE has indicated its desire to replat Lots 3A and 7, Block 1, Marina
Subdivision, an area of approximately 1.66 acres in size, as more particularly described below; and
WHEREAS, the City Council of CITY has determined that continued lease of the Leased
Land (as defined below) to LESSEE for the purposes described herein would be in the public interest;
and
W H I REAS, it is the intent of this LEASE to transfer from CITY to LESSEE the entire
burden of compliance with present or future environmental regulations or controls with respect to
LESSEE's operations on the Leased Land during the lease term.
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, Kenai Peninsula Borough, Plat 2005-8,
Seward Recording District, Third Judicial District, State of Alaska, containing
72,125 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:
a) LESSEE shall have the quiet enjoyment and possession of the Leased Land for the
full term of this LEASE;
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b) CITY owns the Leased Land in fee, and, subject to the conditions described in
Sections 2.2 and 2.3 herein, is fully empowered to enter into this Lease; and
c) CITY is unaware of any prior conflicting use ofthe Leased Land that would adversely
affect LESSEE's intended use of the subject parcel.
1.3 Survey of Leased Land. If not completed prior to execution of this LEASE, within ninety
(90) days from the date of this LEASE, LESSEE, at its sole cost, will cause the Leased Land
to be surveyed and replatted by a land surveyor registered in the State of Alaska. A copy of
the drawing and description of the Leased Land based upon this survey shall be attached to
this LEASE as Exhibit B and shall be incorporated herein by reference. In such event, the
description of the Leased Land in Exhibit B shall supersede the description in Exhibit A, and
shall be considered the correct description of the Leased Land for all purposes under this
LEASE. LESSEE shall provide CITY a copy of any and all surveys within ten (10) days of
LESSEE's receipt of any and all surveys. CITY shall have the right to comment upon any and
all surveys, but the exercise of this right shall not imply any obligation to do so or any
obligation to do so in any particular way, If CITY objects to the surveyor's conclusions in the
survey, CITY may give written notice to LESSEE of CITY's objection within thirty (30) days
of receipt of the survey. CITY shall then engage a second land surveyor registered in the
State of Alaska at CITY's expense to make a second survey of the Leased Land. CITY shall
provide LESSEE a copy of the second survey within ten (10) days of CITY's receipt of the
second survey. Unless CITY and LESSEE agree which survey is acceptable, the acceptable
survey shall be determined in accordance with the arbitration provisions contained in Article
19 of this LEASE.
1.4 Property Accepted "As -is". LESSEE acknowledges that it has been in possession and control
of the Leased Land since 1984 under prior leases, has inspected the Leased Land, and accepts
the same "as -is" and without reliance on any expressed or implied representations or
warranties of CITY (other than the representations in Section 1.2 hereof), or agents of CITY,
as to the actual physical condition or characteristics thereof and the legal description or
depiction of the Leased Land in Section 1.1 or Exhibit A hereto.
1.5 Permits. LESSEE, at its sole cost, shall obtain all permits necessary to the construction and
operation of its facilities on the Leased Land. CITY may from time to time, upon request of
LESSEE, execute such documents, petitions, applications and authorizations as may be
necessary, as the underlying fee owner, to file with an agency or public body responsible
therefor an application for conditional use permits, zoning and re -zoning, tentative and final
tract approval, or precise plan approval that may be required for the lawful construction and
operation of the facilities of LESSEE permitted on the Leased Land by the terms of this
LEASE. However, nothing in this Section shall be construed as requiring CITYto 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,
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or board, LESSEE shall follow all City of Seward procedures, the same as any other applicant
making similar requests of the City of Seward, according to the Charter, ordinances,
resolutions, or any regulation, rules or procedures of the City of Seward. Nothing in this
Section imposes any duty or responsibility on CITY to assist LESSEE in obtaining any other
permits or approvals, including without limitation those required by the U.S. Army Corps of
Engineers (e.g., wetland fill permits), the Environmental Protection Agency (e.g., Clean Air
Act permits), the Alaska Department of Public Facilities and Transportation (e.g., right-of-
way permits), the Alaska Department of Fish and Game, and the Alaska Department of
Environmental Conservation.
1.6 Platting. In the event CITY elects to replat, CITY agrees to include the Leased Land in such
replat in accordance with the description prepared by LESSEE under Section 1.3 herein. 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 CI1 Y'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 ofthe 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
2.1 Lease Term. The term ofthis LEASE (the "Lease Term") shall be in accordance with CITY's
authorization Resolution No. 2004-96 (the "Resolution"). The Lease Term shall commence
October 1, 2005 (the "Effective Date")_ The Lease Term shall run for 30 years, ending at
midnight on September 30, 2035.
2.2 Interim Right to Possession. LESS I-+ is hereby granted a revocable license to enter upon the
Leased Land prior to the expiration of thirty (30) days from the date of passage and posting
of the Resolution, subject to the terms of this Section. The granting of a revocable license to
LESSEE under this Section is for the convenience of LESSEE only and does not grant any
interest in the Leased Land. During the term of this revocable license, LESSEE shall not
engage in any storage of materials, clearing, grading, excavation or construction of
improvements on the Leased Land. CITY may revoke the license granted by this Section at
any time, including without limitation upon the filing with the Clerk of CITY a petition for
referendum on the Resolution.
2.3 Lease Subject to Referendum. LESSEE understands and assumes the risk that under the
Charter and Code of CITY this LEASE may be voided by referendum. The revocable license
granted in Section 2.2 shall not affect or reduce the right ofthe voters of the City of Seward
to reject this LEASE by referendum. LESSEE agrees that if the Resolution approving this
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LEASE is the subject of a referendum petition filed with the Clerk of CITY during the tenin of
the revocable license granted by Section 2.2, LESSEE shall have no rights under this LEASE
unless and until the Resolution is approved by the voters of the City of Seward, and LESSEE
shall not be entitled to any damages or any other relief against CITY in the event the
Resolution is not so approved.
2.4 Termination. This LEASE shall terminate at midnight on September 30, 2035. Except for
extensions as provided in Section 2.5 below, this LEASE is not subject to renewal.
2.5 Options to Extend. LESSEE shall have the right to extend the term of this LEASE for three
(3) additional five (5) year periods (cumulative extensions not to exceed fifteen (15) years),
provided that:
a) LESSEE exercises any applicable 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;
c) LESSEE shall exercise its options to extend by sending written notice thereof in
accordance with the provisions of Article 35 of this LEASE; and
The City Council of CITY, at the time each option to extend is exercised, approves
the extension by resolution or ordinance.
2.6 Prior Leases. Leases RE-67-03 8 and RE-84-03 7, encompassing the Leased Land, are hereby
terminated upon the Effective Date of this LEASE; provided, however, that all terms and
covenants under such prior leases relating to the lessee's agreement to protect, indemnify,
defend and save harmless CITY from all liabilities arising under each such prior lease shall
survive termination_
ARTICLE 3 - RENTAL RATE
3.1 Initial Rental Rate. Commencing on the Effective Date of this LEASE through December
31, 2005, the annual rental rate for the Leased Land shall be sixty-four cents ($.64) per square
foot. CITY and LESSEE agree to use 72,125 square feet for purposes of computing the
initial annual rental rate, even if the actual area of the Leased Land is slightly more or less. If
a survey later shows the area to be different from the agreed size, the new measurement will
be used for computing subsequent rental payments. Past rental payments will not be
refunded, in full or part, if a subsequent survey depicts an area measurement less than 72,125
square feet.
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Effective January 1, 2006 through June 30, 2010, the annual rental rate for the Leased Land
shall be set at $56,000. 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, 2010, 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
ofthe 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 ofFair Market Rental Value ofthe 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 ofits
objection within thirty (30) days of receipt of the appraiser's report, and LESSEE shall then
engage an independent. State of Alaska certified MAI appraiser (Member, Appraisal Institute)
at LESSEE's expense to make an appraisal of the Fair Market Rental Value in accordance
with this Article 3.
If LESSEE'S appraisal determines a Fair Market Rental Value that varies from that
determined by CITY's appraisal by no more than twenty percent (20%), then the adjusted
rental rate shall be the average of the rental rates determined by the two appraisals. If
LESSEE'S appraisal determines a Fair Market Rental Value that varies from CITY's
appraisal by more than twenty percent (20%), then, unless CITY and LESSEE agree on a rate
themselves, the adjusted annual rental rate of the Leased Land shall be determined in
accordance with the arbitration provisions contained in Article 19 of this LEASE.
3.4 Effect of Late Appraisal by CITY. If, for any reason, CITY does not complete the appraisal
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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 T,FSSEE 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
J.FSSEE 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. Ifthe 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 LES SEE 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 LESSER Notwithstanding the above, the exercise by either CITY or
LESSEE of the objection procedure relating to rental adjustment described in this Article 3
shall not postpone LESSEE's obligation to pay rent at the rate established by CITY. LESSEE
shall pay the amount of rent as established or adjusted by CITY until the question of objection
to the rental rate is finally resolved. At such time the objection to the rental rate is resolved,
an appropriate credit or adjustment shall be made retroactive to the date the new rental rate
was established by CITY or in cases where CITY failed to obtain an appraisal or deliver the
appraisal report to the LESSEE, to the Rental Adjustment Date.
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3.7 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.
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.
LESSEE agrees to prohibit the use, keeping, storage, or disposal of Hazardous
Materials on the Leased Land except as permitted in Article 21 of this LEASE.
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 develop the Leased Land according to the site development plan
provided to and approved by CITY, through the City Manager. The preliminary site
development plan is attached to this LEASE as Exhibit C and incorporated herein by
reference. Any changes to this site development plan require CITY approval, through
the City Manager, prior to additional construction. LESSEE' s failure to obtain CITY
approval of any changes to the site development plan or LESSEL's failure to
construct the improvements according to the site development plan, shall be a
LESSEE Act of Default under this LEASE.
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 ofPublic 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 itselfthat the facilities
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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 LES SEE
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 LES SEE 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.
ARTICLE 5 - UTILIrJES 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 LES SEE's intended operations. In so doing,
LESSEE shall comply with all CITY regulations and requirements, and the tariffs of the
affected utilities, with respect to the construction of those utilities. CITY agrees to cooperate
and assist the LESSEE, through consultation and review, in LESSEE's planning and
engineering of those improvements. All utilities will be located and sized in accordance to
CITY's Master Plan for the area leased. All such construction shall be in compliance with all
applicable building, mechanical and fire codes. Utilities constructed by the LESSEE within
the public right-of-ways or within public utility easements will normally be accepted and
maintained by CITY or utility companies maybe used to serve other customers of LES SEE'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.
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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 ofthe
parties that the risk of obtaining required permits be solely a risk undertaken by LESSEE.
52 Third -Party Improvements. At the request of T,FSSEF, 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.
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.
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 LES SEE.
5.3 Easements. In order to provide for the orderly development of the Leased Land and adjacent
lands, it may be necessary, desirable or required that street, railroad, water, sewer, drainage,
gas, power line and other easements and dedications and similar rights be granted or
dedicated over or within portions of the Leased Land. As additional consideration for this
LEASE, CITY and LESSEE each shall, at the request of the other, join with each other in
executing and delivering such documents from time to time and throughout the Lease Term as
may be appropriate, necessary, or required by the several governmental agencies (including
the City of Seward), public utilities and other users or tenants of CITY land for the purpose
of granting such easements and dedications; provided, however, that such easements and
dedications and similar rights do not unreasonably interfere with LFSSEE'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 ofthe party requesting the relocation. CITY shall not refuse reasonable requests for
such relocations provided those relocations do not interfere with or inhibit the overall
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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) LESSEE shall cause to be constructed and operated on the Leased Land a northward
extension to the existing hotel, including a lobby, entry way and parking. This
construction is to be completed by April 1, 2006.
b) The cost of any such construction, reconstruction, demolition, or of any changes,
alterations or improvements, shall be borne and paid for by LESSEE.
c) The Leased Land shall at all times be kept free of mechanic's and materialmen's liens.
d) In a manner consistent with Section 4.2, 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.
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.
f) Any general contractor employed by LESSEE or its sublessees 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 ($50,000.00), 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,
g) CITY may, as contemplated by Alaska Statutes, give notice of non -responsibility for
any improvements constructed or effected by LESSEE on the Leased Land.
h) LESSEE shall comply with all federal, state and local statutes and regulations with
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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 Sections 4.2 and 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 inspect 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 13.1
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 of Lease RE-67-038 and
Lease RE-84-037, 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 or prior to this LEASE.
7.2 Return of Leased Land in Different Condition. Notwithstanding the provisions of Section
7.1 above, upon termination of this LEASE for any reason LESSEE may return the Leased
Land in a re -contoured or graded clean, safe, and stable condition different from its original
condition provided CITY grants written approval of LESSEE's plans for development ofthe
Leased Land contours, including its plans for material extraction and final grade.
ARTICLE 8 - FORCE MAJEURE
In the event either LESSEE or CITY is delayed from perfoimuance of any of its obligations
under this LEASE due to acts of God, acts of the enemies of the United States of America, sabotage,
blockade, insurrection, riot, epidemic, fire, flood, explosion, earthquake/tsunami, civil disturbance, or
war, the time period wherein such performance is to occur shall be extended by that amount of time
necessary to compensate for the delay.
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ARTICLE 9 - CITY ACTS OF DEFAULT
Each of the following shall be a "CITY Act of Default" under this LEASE and the teens
"acts of default" and "default" shall mean, when they are used in this LEASE, any one or more of
the following events:
9.1 Failure by CITY to fulfill, observe or perform any covenants or agreements on its part to be
observed or performed under this LEASE 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 CITY by LESSEE; 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 CITY within the applicable period and diligently pursued
until the default is corrected.
9.2 Violation by CITY of any applicable laws or regulations of the United States, the State of
Alaska, the Kenai Peninsula Borough, or the City of Seward or any conditions of any permits
issued by agencies of the City of Seward, the Kenai Peninsula Borough, the State of Alaska or
of the United States Government 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 to
CITY; 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
CITY within the applicable period and diligently pursued until the violation is corrected.
Furthermore, if CITY shall contest such alleged violation through appropriate judicial or
administrative channels, the time period specified herein shall not commence until such
proceedings are finally determined, provided such proceedings are diligently pursued.
ARTICLE 10 - REMEDIES FOR CITY'S ACTS OF DEFAULT
10.1 Whenever an act of default by CITY shall have occurred, and any applicable period for giving
notice and any opportunity to cure shall have expired, LESSEE shall have the following rights
and remedies in addition to any rights and remedies that may be given to LESSEE by statute,
common law or otherwise:
a) Withhold payment of any rent otherwise due CITY to the extent of CITY' s default;
b) Recover from CITY, whether this LEASE be terminated or not, reasonable attorney's
fees and all other expenses incurred by LESSEE by reason of the default by CITY;
and/or
c) Declare this LEASE terminated.
10.2 No expiration or termination of this LEASE shall expire or terminate any liability or
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obligation to perform of CITY's which arose prior to the termination or expiration except
insofar as otherwise agreed to in this LEASE.
10.3 Each right and remedy of LESSEE provided for in this LEASE shall be cumulative and shall
be in addition to every other right or remedy provided for in this LEASE, now or hereafter
existing at law or in equity or by statute or otherwise, and the exercise or beginning of the
exercise by LESSEE of any one or more of the rights and remedies provided for in this
LEASE, now or hereafter existing at law or in equity or by statute or otherwise, shall not
preclude the simultaneous or later exercise by LESSEE of any or all other rights or remedies
provided for in this LEASE, now or thereafter existing at law or in equity or by statute or
otherwise.
10.4 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 - 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 TEASE, any one or more of
the following events:
11.1 Failure by LESSFF 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.
11.2 Failure by LESSEE to construct in accordance with Articles 4 and 6 hereof, a northward
extension of the hotel, a new lobby, entry way and parking on the Leased Land and place the facilities
in service by April 1, 2006.
11.3 Failure by LESSEE to observe, fulfill or perform any other covenants, conditions or
agreements on its part to be observed or performed under this LEASE 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.
11.4 The making by LESSEE of an assignment for the benefit of creditors, the filing of a petition in
bankruptcy by LESSEE, the adjudication of I .F S SEE 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
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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_
11.5 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 T.FSSEE within the
applicable period and diligently pursued until the violation is corrected. Furthermore, if
LESSEE shall contest such alleged violation through appropriate judicial or administrative
channels, the time period specified herein shall not commence until such proceedings are
finally determined provided such proceedings are diligently pursued; provided, however, that
any such extension of time shall not be effective if the effect of the interim administrative or
judicial action is to cause a stoppage, interruption or threat to the activities of any person or
entity other than those of LESSEE.
ARTICLE 12 - 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:
12.1 CITY may distrain for rent due any ofLESSEE'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.
12.2 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 sub -paragraph 12.1
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 LES SEE all without service of notice or resort to legal process, all of
which LESSEE expressly waives.
12.3 In the event LESSEE fails to construct, in accordance with Article 4 and 6 hereof, a
northward extension of the hotel, a new lobby, entry way, and parking on the Leased Land
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and place the facilities in service by April 1, 2006, LESSEE shall, at LESSFRs sole expense,
replat the Leased Land by December 31, 2006 to the original plat lines described in the prior
leases and amendments referred to as the City of Seward's Lease Numbers RE-67-038 and
RE-84-037. If reversion to the prior plat lines is necessitated, LESSEE shall restore, no later
than September 1, 2006, improvements on the Leased Land to the same location and
condition existing on the Effective Date. In the event of LES SEE's failure to comply with this
Section, the City shall have all other rights and remedies described in this Article 12.
12.4 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 from I ESSEE an amount to be due immediately on breach equal to the
unpaid rent for the entire remaining term of this LEASE provided that if the CITY
relets the Leased Land for the unexpired term of this LEASE, the CITY will refund
such excess amounts, if any, after deducting all of the CITY' s expenses in or in
connection with reletting (including without limitation all repossession costs,
brokerage commissions, legal expenses, administrative expenses, costs of advertising,
and preparations for reletting) as such excess amounts are received by the CITY, but
in no event shall the refund exceed the amount recovered from LESSEE;
Recover all damages incurred by CITY by reason of LESSEE's default or breach
including, but not limited to, the cost of recovering possession of the Leased Land,
expenses of reletting including costs of necessary renovation and alteration of the
premises, reasonable attorney's fees and any real estate commissions actually paid.
f) Remove or require the removal of any improvements constructed without CITY
approval or constructed contrary to site development plans approved by CITY and
recover all costs and expense incurred by CITY to remove violating improvements.
12.5 If LESSEE does not immediately surrender possession of the Leased Land after termination
by CITY and upon demand by Cl' 1 Y, 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.
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12.6 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.
12.7 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,
12.8 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 13 - TITLE TO IMPROVEMENTS INSTALLED BY LESSEE
13.1 Real Property Improvements. All improvements constructed by LESSEE 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.
13.2 Personal Property. Any other provisions of this LEASE to the contrary notwithstanding,
LESSEE, upon termination of this LEASE for any reason, may, but need not, promptly
remove, in no event later than ninety (90) days from the termination of the LEASE, trade
fixtures and equipment from the Leased Land provided that LESSEE shall repair any damages
to the Leased Land caused by such removal_
ARTICLE 14 - ASSIGNMENT OR SUBLEASE
14.1 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 this LEASE without
CITY's prior written consent, in CITY's sole discretion. LESSEE may sublease a portion of
the Leased Land or buildings or improvements located thereon only with CITY's prior
written consent, which consent shall be granted if
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The use of the Leased Land by the proposed sublessee is compatible with the use of
adjacent lands;
b) The proposed use is a permitted use under the then existing zoning regulations and
comprehensive land use plan;
c) LESSEE has made a written request to sublease a portion of the Leased Land or
buildings or improvements located thereon and provided CITY with a copy of the
sublease agreement. The sublease agreement shall state that it is subject to and
subordinate to this LEASE and any amendments thereto;
d) The sublessee shall agree to defend, indemnify and hold harmless the CITY, its
officials, employees, and agents, from any and all liability or claims for damages,
including personal injuries, death and property damage arising out ofor resulting from
sublessee' s use of the Leased Land by themselves, their agents, contractors, guests or
the public, except for damages arising from the sole negligence or willful acts or
omissions of CITY, its officials, employees, agents, or contractors;
LES SEE's full faith and credit shall remain obligated under this LEASE as though the
sublease had not taken place;
f) The sublessee assumes and agrees in writing to pay and perform all ofthe obligations
of LESSEE hereunder including, without limitation, Article 21- Environmental
Concerns; and
The sublessee has credit -worthiness and operating experience suitable to manage any
sublet facilities located on the Leased Land.
14.2 Assignment of Lease for Security. Notwithstanding Section 14.1 above, I.R,SSEE 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 ofor operations on the Leased Land, provided that Lender shall be subject to all
obligations ofLESSEE 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 LES SEE under this LEASE. Lender shall have the right (without being required to
do so and without thereby assuming the obligations of LES SEE 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 12 above, no "LESSEE Act of Default"
shall exist until expiration of thirty (30) days after such notice is furnished to Lender;
provided,
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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
If the default for which notice is given is a breach of Section 11.3, CITY shall not
exercise any of the remedies afforded to it under Article 12 above so long as LESSF,F
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 ofits
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.
14.3 Assignment to Affiliate. Notwithstanding Section 14.1 above, LESSEE may assign this
LEASE to an affiliate of LES SEE as that term is defined by AS 10.06.990(2)1 or to an Alaska
limited liability company in which LESSEE maintains a controlling membership interest;
provided, however, that LESSI- EI's full faith and credit shall remain obligated under this
LEASE as though the assignment had not taken place.
ARTICLE 15 - LESSEE'S DUTY TO DEFEND/INDEMNIFY
LESSEE shall defend, indemnify and hold harmless CITY, its officials, employees, agents, and
contractors from any and all liability or claims for damages, including personal injuries, environmental
damage, death and property damage arising out of or resulting from LESSEE's use of the Leased
Land or the use of the Leased Land by LESSEE's sublessees, assignees, agents, contractors or the
public, except for damages arising from the sole negligence or willful acts or omissions of CITY, its
officials, employees, agents, or contractors. If any action or proceeding is brought against LESSEE
by reason of any such occurrence, LESSEE shall notify CITY promptly in writing of such action or
proceeding.
ARTICLE 16 - 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.
Affiliate means a person that directly or indirectly through one or more inteivaediaries controls, or is controlled by, or is under common
control with, a corporation subject to the Alaska Corporation Code.
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ARTICLE 17 - INSURANCE
17.1 Minimum Insurance Requirements. Prior to commencement ofthe 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 ofuse ofthe Lease Land, increases
in the cost of living, inflationary pressures, and other considerations, shall be utilized in
assessing whether the minimum insurance requirements should be increased. CITY shall
notify LESSEE of any required increase in insurance coverage.
All insurance policies shall provide for thirty (30) days' notice of cancellation and/or material
change to be sent to CITY at the address designated in. ARTICLE 37 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 indenuiify CITY for claims
related to this LEASE or the Leased Land.
17.2 Subrogation Rights Waived. To the extent permitted by law, LES SEE hereby releases CITY,
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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 18 - CONDEMNATION
If all or any part ofthe 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
ofthe 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 LES SEE'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 LES SEE determines
in good faith that the condemning of such part ofthe Leased Land will prevent it from continuing to
operate on the Leased Land, LES SEE may notify CITY in writing to this effect, and this LEASE shall
then be terminated for all purposes effective fifteen (15) days from the date LESSEE sends such
notice to CITY, or at such other later date as LES SEE 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 LES SEE 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.
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ARTICLE 19 - ARBITRATION
19.1 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 etseq.), 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 and No/100s ($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 and
No/100s ($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
and No/100s ($50,000). The costs and expenses of arbitration shall be shared equally
by the parties, and each party shall bear its own attorneys fees and costs.
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.
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 arbitrators
obtained from the presiding Superior Court Judge or other appropriate judicial officer
in Anchorage, Alaska. The arbitrator shall be a person who (a) has not less than five
(5) years legal experience in the State of Alaska prior to appointment; and (b) such
legal experience includes substantial experience with long-term commercial real
property transactions. Each party shall be provided with a copy ofthe 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.
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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 20 - MAINTENANCE AND REPAIRS
20.1 Normal Maintenance . During the entire term of this LEASE and every extension hereof, if
any, LESSEE shall, at T,FSSEE'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 CITYs 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 LES SFF 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.
20.2 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 LES SEE'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 ofthe delays therein or the scope ofthe repairs, then CITY
may engage an independent engineering consultant well -versed and experienced who shall
furnish to CITY a comprehensive survey and report for the purpose of establishing both the
need and urgency to perform such maintenance work. As soon as practicable following
receipt of said engineer's determinations and recommendations, if the report requires repair
then LESSEE shall pay the cost ofthe report and perform such work in accordance therewith
at LESSEE's cost, risk and expense.
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20.3 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 ofthe 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 CI'I Y 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 21 - ENVIRONMENTAL CONCERNS
21.1 Hazardous Materials.
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' sole cost, to conduct a baseline soils test prior to
execution of this LEASE. LESSEE acknowledges that he has been in possession and
control of part or all of the Leased Land since May 23, 1984.
b) Release of CIl'Y. Any other provision of this LEASE to the contrary notwith-
standing, 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.
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Use of Hazardous Materials on the Site.
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.
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.
LESShh hereby agrees that it shall be fully liable for all costs and expenses
related to the use, storage and disposal ofHazardous 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_
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:
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;
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;
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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
Any violation of any laws applicable thereto; provided, however, that this
Section 21.1(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.
t) 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 "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, petrolei an, 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 environrnent, 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.
21.2 Permits and Reporting.
Permits Required by Other Governmental Agencies. I .F S SEE shall obtain all permits
or approvals required by any applicable law or regulation. Copies of all such permits
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shall be provided to CITY prior to LESSEE commencing work under this LEASE.
LESSEE shall promptly make all reports to any federal, state or local government or
agency required by any permit or Environmental Law, including reports of any spill or
discharge of Hazardous Material. The CITY, through the City Manager, may order
LESSEE to immediately cease any operations or activities on the Leased Land if the
same is being carried out without necessary permits, in violation of the terms of any
permit or Environmental Law, or contrary to this LEASE.
Correspondence With and Reports to Environmental Agencies. LESSEE shall.
immediately 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 22 - ESTOPPEL CERTIFICATES
Either party shall at any time and from time to time upon not less than ten (10) day& prior
written request by the other party, execute, acknowledge, and deliver to such party, orto its designee,
a statement in writing certifying that this LEASE is unamended and in full force and effect (or, ifthere
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 23 - CONDITIONS AND COVENANTS
All the provisions of this LEASE shall be construed to be "conditions" as well as "covenants,"
as though the words specifically expressing or imparting covenants and conditions were used in each
separate provision.
ARTICLE 24 - 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.
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ARTICLE 25 - TIME OF THE ESSENCE
Time is of the essence of this LEASE and of each provision.
ARTICLE 26 - COMPUTATION OF TIME
The time in which any act provided by this TEASE 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 27 - 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 28 - 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 29 - GOVERNING LAW
This LEASE shall be governed by, construed and enforced in accordance with the laws ofthe
State of Alaska. The terms of this LEASE are subject in all respects to the Charter and Code of
Ordinances of CITY in effect on the date of this LEASE, and as they may be hereafter amended,
including without limitation, Chapter 7.05 of the Seward City Code.
ARTICLE 30 - 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 31 - 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
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relationship between CITY and LESSEE other than the relationship of lessee and lessor.
ARTICLE 32 - 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 33 - CAPTIONS
Captions ofthe articles, paragraphs and subparagraphs ofthis 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 34 - AMENDMENT
This LEASE is not subject to amendment except in writing executed by both parties hereto.
ARTICLE 35 - NOTICES
All notices, demands or requests from one party to another shall be delivered in person or be
sent by mail, certified or registered, postage prepaid, to the addresses stated in this Article and to such
other persons and addresses as either party may designate. Notice by mail shall be deemed to have
been given at the time of mailing.
All notices, demands and requests from LESSEE to CITY shall be given to CITY at the
following address:
City Manager
CITY OF SEWARD
PO Box 167
Seward, Alaska 99664
All notices, demands or requests from CITY to LESSEE shall be given to LESSEE at the
following address:
Juris Mindenbergs
4128 148t Avenue NE
Redmond, WA 98052
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Each party sha l have the right, from time to time, to designate a different address by notice
given in conformity with this Article.
ARTICLE 36 - FIRE PROTECTION
LESSEE shall at its sole cost, risk and expense provide fire 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 offire prevention
and control LES SEE'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 years.
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� A
IN WITNESS WHEREOF, the parties hereto have .set their hands and seals the dates
herein set forth.
CITY:
CITY OF SEWARD
By:: Clark Corbridge
Its: City Manager
Date: —f o
ATTEST:
JeaLewis,
(City Seal)
C ty Cler
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
LESSEE:
Juris Mindenbergs
Date:
400114,11
140
OF.q��
!t•.•6 w�A�
'Eavry• irk Vt.
).
SS.
Thisis to certify that on the l a day of l c i j , 2006, before me, the
undersigned Notary Public in and for the State of Alaska, duly commissioned and sworn as such,
personally appeared Clark Corbridge to me and to me known to be the individual named bland who
executed the foregoing instrument on behalf of The City of Seward, and acknowledged to me that he
signed the same freely and voluntarily for the uses and purposes therein set forth.
WITNESS my hand and official seal the day and year first written above.
vs,,, PUBLIC'
°� 4r OF Air �
4!) 101����1`~
C:1Documerrts and SettingsScotttlLocal Settfngaremparary Internet Fftei1OLK17A\Breeze Inn Lease Acgieement2005. (11),dcre
NOTARY PUBLIC in and fof Alaska
My Commission Expires: - —1- 2 3 •
-30-
178
STATE OF ALASKA
ss.
THIRD JUDICIAL DISTRICT
This is to certify that on the /7y day of O , 2006, before me, the
undersigned Notary Public in and for the State of Alaska, du commissioned and sworn as such,
personally appeared Juris Mindenbergs to me and to me known to be the individual named in and
who executed the foregoing instrument and acknowledged to me that he signed the same freely and
voluntarily for the uses and purposes therein set forth.
WITNESS my hand and official seal the day and year first written above.
NOTARY PUBLIC in and for Alaska
My Commission Expires: 3 / ( / O /C
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A
L
A.
s
K
A
After Recording Return to:
City of Seward
Attention: Harbormaster
PO Box 167
Seward, AK 99664
2O '5-001447-0
Recording Dist: 314 Seward
10/2/2006 12:00 PM Pages: 1 of 3
iu
VI
1111
11
u
N
uu
FIRST AMENDMENT TO LEASE AGREEMENT
RE 2004-96
11
0
1111
1111
THE LEASE AGREEMENT dated October 1, 2005 (the "LEASE") for the
property described as:
Lot 3B, Block 1, Marina Subdivision, Kenai Peninsula Borough,
Plat 2005-8, Seward Recording District., Third Judicial District,
State of Alaska, containing 72,125 square feet, more or less (the
"Leased Land"). Lease Memorandum Recorded as 2006,001191-0.
between the CITY OF SEWARD (the "CITY"), a municipal corporation located in the
Kenai Peninsula Borough, State of Alaska, whose mailing address is P. 0= Box 167,
Seward, Alaska 99664 and Juris Mindenbergs (the "LESSEE"), dba The Breeze Inn,
whose mailing address is 4128 148Th Avenue NE, Redmond, Washington 98052 is hereby
amended as follows.
Section 6.1(a) of the Lease is deleted and replaced with:
a) LESSEE shall cause to be constructed and operated on the Leased
Landa northwardextension to the existing hotel, including a lobby, entry
way and parking. This construction is to be completed by June 1, 2007.
Section 11.2 of the Lease is deleted and replaced with:
Failure by LESSEE to construct in accordance with Articles 4 and 6
hereof, a northward extension of the hotel, a new lobby, entry way and
parking on the Leased Land and place the facilities in service by June 1,
2007.
Section 12.3 of the Lease is deleted and replaced with
In the event T ESSEE fails to construct, in accordance with Article 4 and 6
hereof, a northward extension of the hotel, a new lobby, entry way, and
parking on the Leased Land and place the facilities in service by lune 1,
i
180
2007, LESSEE shall, at LESSE.E's sole expense, replat the Leased Land
by December 31, 2007 to the original plat lines described in the prior
leases and amendments referred to as the City of Seward's Lease Numbers.
RE-67-038 and RE-84-037. If reversion to the prior plat limes is
necessitated, LESSEE shall restore, no later than September I, 2007,
improvements on the Leased Land to the same location and condition
existing on the 'Effective Date. In the event of LESSFE's failure to
comply with this Section, the City shall have all other rights and remedies.
described in this Article 12._
Section 19.1 of the Lease is amended in part as follows:
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 09.43.310 et, sect_), 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. ','The
remainder of 19.1 is unchanged.]
l other provisions of the Lease remain unchanged and in full force and effect
CITY:
CITY OF SEWARD
By:
Its:
Date.
Clark Corbridge
City Manager
AT PEST:
Tye X,:
-
Jean Lewis, CMC, City Cleric..
(City Seal)
LESSEE:
&axis Mindenbergs
11110111 IIIII 111111
181
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
)
)
)
ss.
1+� !�'���
This is to certify that on the day of tt-Yfl V , 2006, before me,
the undersigned Notary Public in and for the State ° 'JAlaska duly commissioned and.
sworn as such, personally appeared Clark Corbridge to me and to me known to be the
individual narned in and who executed the tbregoing instrument on 'behalf of The City or
Seward, and acknowledged to nie that he signed the same freely and voluntarilyy for the
uses and purposes therein set forth.
WITNESS my hand and official seal the day and year first written above.
STATE OF ALASKA
THIRD JUDICIAL. DISTRICT
ffkt&
TAVY PUBLIC in and for Alaska
y Cou,m.issionExpires: 4-/41' 007
)
)
ss_
This is to certify that on the c` day of - 7 , 2006, before me,
the undersigned Notary Public in and for the State a Alaska, duly commissioned and
sworn as such, personally appeared Juris Mindenbergs to me and to me known to be the.
individual named in and who executed the foregoing instrument and acknowledged to me
that he signed the same freely and voluntarily Ibr the uses and purposes therein set forth.
WITNESS my hand and official seal the .day and year first written above.
NOTARY P`U>lLIC in and for Alaska
My Commission Expires. / tl / —o 10
III 101 Il IIP:ill 111111
182
Breeze Inn Lot3B Block 1
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DATE PRINTED: 1/14/2022
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Notes
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183
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144 N. BINKLEY , SOLDOTNA, ALASKA 99669-7599
BUSINESS (907) 262-4441 FAX (907)262-1892
DALE BAGLEY
MAYOR
CERTIFICATE OF TAX DEPARTMENT
I, Rhonda K. Krohn, Property Tax and Collections Supervisor for the Kenai
Peninsula Borough, do hereby certify that all real property taxes levied
by the Kenai Peninsula Borough through December 31, 20,-04 have been paid
for the area(s) described as:
Subdivision: MARINA SUBDIVISION MINDENBERGS REPLAT
Parcel # 14731009-8
TO1S RO1W S03 SW0760001 MARINA SUB LOTS 1 & 7 & 8 BLK 1 Lot 7 Blo
ck 1
Parcel # 14731017-1
TO1S RO1W S03 SW0960024 MARINA SUB REPLAT OF LOTS 3 4 8 BLK 1 Lot
3A Block 1
Effective January 1, 2005 the 2005 estimated taxes of $32,575.94 were
id on the above property(s). However, if the estimated taxes are less
an the actual taxes levied on July 1, 2005, the difference is a lien
against the property(s) until paid.
Witness my hand and seal this 24th day of May, 2005.
/Z, 4,47
K. icr hn
Property Tax and Collections Supervisor
185