HomeMy WebLinkAboutRES2025-035 OBI Lease AmendmentSponsored by: Sorensen
CITY OF SEWARD, ALASKA
RESOLUTION 2025-035
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, APPROVING THE SECOND AMENDMENT TO THE
AMENDED AND RESTATED LEASE AGREEMENT BETWEEN OBI
SEAFOODS, LLC AS ASSIGNEE OF ICICLE SEAFOODS, INC. AND THE
CITY OF SEWARD
WHEREAS, the City of Seward ("City") leased Lots 2A and 3A, Block 2, Marine
Subdivision, Block Two Replat, Plat No. 96-28 Seward Recording District, Third Judicial District
State of Alaska ("the Property") to Icicle Seafoods, Inc. ("Icicle") pursuant to terms set forth in
Lease No. RE-071 on August 17, 1988; and
WHEREAS, City Resolution 2018-055 approved an Amended and Restated Lease of the
Property with Icicle Seafoods on June 25, 2018, which shall expire on December 31, 2038, unless
extended ("the Lease"); and
WHEREAS, Section 12.3 of the Lease provides that the Lessee named in the Lease may
assign the Lease to an affiliate of Lessee or of its parent company or to an Alaska limited liability
company in which Lessee or its parent company maintains a substantial membership interest; and
WHEREAS, pursuant to Section 12.3 of the Lease, Icicle assigned the Lease to OBI
Seafoods, LLC ("OBI") effective June 1, 2020 ("the Assignment"); and
WHEREAS, the Assignment recognized that Icicle remained responsible to City under the
terms of the Lease; and
WHEREAS, on or about on or about January 14, 2019, Icicle discovered a leak estimated
to contain nine (9) gallons of fuel on the Property ("Spill") and timely reported the Spill to the
State of Alaska, Department of Environmental Conservation ("ADEC"); and
WHEREAS, after City's adoption of Resolution 2023-074 on July 10, 2023, an
Environmental Covenant and an Amendment to the Lease were entered into to reflect the
agreement of Icicle and OBI regarding actions that must be taken regarding the Spill and the
consent of City, as the Property owner, to such actions; and
WHEREAS, due to errors in the Environmental Covenant and Amendment to the Lease,
a Corrective Environmental Covenant and a Corrective Amendment to Amended and Restated
Lease Agreement were recorded on October 13, 2023, as Document Nos. 2023-000847-0 and
2023-000848-0, respectively, (First Amendment) which constitute the final versions of the
documents; and
WHEREAS, ADEC has recently confirmed that the institutional controls listed in the
Corrective Environmental Covenant are adequate temporary controls and that no further action is
CITY OF SEWARD, ALASKA
RESOLUTION 2025-035
Page 2 of 3
required until the next report to ADEC is due in 2028; and
WHEREAS, Icicle wishes to transfer all of its membership in OBI to Silver Bay Seafoods,
L.L.C. ("Silver Bay") and to be released from future obligations arising under the Lease, as
amended, excluding its obligations under the First Amendment and any Icicle obligations which
survive termination of the Lease; and
WHEREAS, Silver Bay began in 2007 as a single salmon processing facility in Sitka,
Alaska and has grown to one of the largest seafood companies in Alaska, operating thirteen
domestic processing facilities throughout Alaska and the West Coast and is owned by 600
fishermen who supply the company's state-of-the-art processing plants with wild -caught,
sustainably harvested seafood that is sold to customers worldwide; and
WHEREAS, the City Council has reviewed public information available to it, and believes
that the transfer of all of Icicle's interest in OBI to Silver Bay and the release of Icicle from future
obligations under the Lease, as amended, excluding its obligations under the First Amendment and
any Icicle obligations which survive the termination of the Lease, is in the best interests of City;
and
WHEREAS, Article 32 of the Lease requires that any amendment to the Lease be in
writing; and
WHEREAS, the Seward City Council finds that the essential terms and conditions of the
Second Amendment to the Amended and Restated Lease are in the public interest.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
Section 1. The Seward City Council approves the terms of the Second Amendment to the
Amended and Restated Lease Agreement ("Second Amendment"), attached herein.
Section 2. As of the effective date of the Second Amendment as described in Section 4
therein, the Seward City Council releases Icicle and its parent company from all future obligations
arising from the Lease, as amended, excluding its obligations described in the Second Amendment.
Section 3. This resolution shall take effect 30 days from the date of posting of adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska this 14th
day of April 2025.
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CITY OF SEWARD, ALASKA
RESOLUTION 2025-035
Page 3 of 3
THE CITY OF SEWARD, ALASKA
cal ye -
Sue McClure, Mayor
AYES: Osenga, Finch, Barnwell, Crites, Warner, Wells, McClure
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
Kris Peck
City Clerk
(City Seal)
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SEAL
City Council Agenda Statement
Meeting Date: April 14, 2025
To: City Council
Through: Kat Sorensen, City Manager
From: Tony Sieminski, Harbormaster
Subject: Resolution 2025-035: Approving the Second Amendment to the Amended
and Restated Lease Agreement Between OBI Seafoods, LLC as Assignee
of Icicle Seafoods, Inc. and the City of Seward
Background and Justification:
The City of Seward ("the City") has a long-standing relationship with the seafood
processing industry. Icicle Seafoods, Inc. ("Icicle") has owned and operated a processing
facility at its current location for many years under the terms of a lease agreement with the City.
The current form of the lease agreement was entered into in 2018. The lease expires in 2038,
with two (2) five-year extension options.
In 2019, Icicle and Ocean Beauty Seafoods, LLC, created a new entity called OBI
Seafoods, LLC ("OBI"). Icicle holds a substantial membership interest in OBI, and in 2020,
Icicle assigned the lease to OBI pursuant to Section 12.3 of the lease agreement which
specifically allowed such an assignment. Since the 2020 season, OBI has operated the seafood
processing plant under the terms of the lease. Throughout this period, Icicle has remained liable
and obligated under the lease for the performance of OBI's obligations.
On or around January 14, 2019, Icicle discovered a leak estimated to contain nine (9)
gallons of fuel on the ground leased from the City and timely reported the spill to the State of
Alaska, Department of Environmental Conservation ("ADEC"). ADEC supervised the cleanup,
but all parties recognized that a total clean up might have required tearing down the buildings
on site to access and investigate the full extent of the contaminated soils. ADEC agreed to an
alternative approach in which Icicle installed a concrete cap over the contamination.
In response to the spill, the parties entered into an Amendment to the Amended and
Restated Lease Agreement and an Environmental Covenant to reflect the agreement of Icicle
and OBI regarding actions that must be taken regarding the spill and the consent of the City, as
the owner of the land, to such actions. A Corrective Environmental Covenant and a Corrective
Amendment to Amended and Restated Lease Agreement were recorded on October 13, 2023,
as Reception Nos. 2023-000847-0 and 2023-000848-0, respectively, each of which contained
information omitted from the recorded prior versions.
Recently, the City was informed that Icicle is planning to sell all of its membership
interest in OBI to Silver Bay Seafoods, LLC ("Silver Bay"). Silver Bay began in 2007 as a single
salmon processing facility in Sitka, Alaska and has grown to one of the largest seafood
companies in Alaska, operating thirteen domestic processing facilities throughout Alaska and
the West Coast. Silver Bay is owned by 600 fishermen who supply the company's state-of-the-
art processing plants with wild -caught, sustainably harvested seafood that is sold to customers
worldwide.
Under the terms of the lease, Icicle's prior assignment of its interest in the lease to OBI
remains valid if Icicle maintains a substantial membership interest in OBI and remains obligated
under the lease. Icicle is now seeking to amend the lease to allow: (i) Icicle to transfer all of its
interest in OBI to Silver Bay with the consent of the City, and (ii) for the City to release Icicle
from all obligations arising under the lease after Icicle has transferred its interest in OBI to Silver
Bay, excluding Icicle's obligations under the current and previous amendments to the Amended
and Restated Lease Agreement referenced above and their obligations under the lease that
survive lease termination.
As it relates to the environmental contamination and remediation efforts on the City's
land, Icicle will have a continuing obligation for both to ensure that the public remains protected,
and the public does not assume the burdens for any responses to environmental concerns in the
future. Outside of the lease amendment, Icicle and Silver Bay have entered into a separate
agreement that delineates their respective obligations. The terms of the lease ensure that OBI
retains the obligation to return the property to the City in the same condition as when the lease
was made.
OBI and Icicle have accepted the proposed lease amendment that is before the Council
for approval. The City Attorney participated in drafting the lease amendment language.
Total amount of funds listed in this legislation:
This legislation (✓):
Creates revenue in the amount of:
Creates expenditure in amount of:
Creates a savings in the amount of:
Has no fiscal impact
Funds are (✓):
Budgeted Line item(s):
Not budgeted
Not applicable
Affected Fund (✓):
General
Boat Harbor
Motor Pool
Available Fund Balance
SMIC
Parking
Other
Electric
Water
$
Wastewater
Healthcare
Note: amounts are unaudited
Yes
Finance Director Signature:
Attorney Review
Attorney Signature: /s Kody George
Not applicable Comments:
-‘1- 94""ti'
Administration Recommendation
Adopt Resolution
Other:
After recording in the Seward Recording
District, return to:
City of Seward
P.O. Box 167
Seward, AK 99664
SECOND AMENDMENT TO AMENDED AND RESTATED
LEASE AGREEMENT
This Second Amendment to Amended and Restated Lease Agreement ("Second
Amendment") is made (with an effective date as described in Section 4, below) by and between
the City of Seward, Alaska ("City"), a municipal corporation located in the Kenai Peninsula
Borough, State of Alaska whose mailing address is P.O. Box 167, Seward, Alaska 99664, as
the lessor, Icicle Seafoods Inc. ("Icicle"), an Alaska corporation whose mailing address is P.O.
Box 79003, Seattle, Washington 98119, as the original lessee, and OBI Seafoods, LLC, ("OBI",
and, collectively with City and Icicle, the "Parties"), an Alaska limited liability company, whose
address is P.O. Box 70739, Seattle, Washington 98127, as the current lessee.
This Second Amendment amends that certain "Amended and Restated Lease
Agreement" dated as of July 25, 2018 ("Original Lease") made of record by a Memorandum of
Amended and Restated Lease recorded on September 6, 2018 as Document No. 2018-000888-
0, records of the Seward Recording District, Third Judicial District, State of Alaska and re-
recorded on September 7, 2018, as Document No. 2018-000895-0, records of the Seward
Recording District, Third Judicial District, State of Alaska, as amended by that certain
Corrective Amendment to Amended and Restated Lease Agreement recorded on October 13,
2023, as Document No. 2023-000848-0, records of the Seward Recording District, Third
Judicial District, State of Alaska ("Corrective Amendment" or "First Amendment"). A history
of the agreements executed by the Parties follows.
WHEREAS, Icicle and City entered into the Original Lease setting forth the terms
under which City leased the following legally described land ("Leased Land") to Icicle:
Lots 2A and 3A, Block 2, MARINE SUBDIVISION, BLOCK TWO REPLAT, as
shown on Plat 96-28, Seward Recording District, Third Judicial District, State of
Alaska, consisting of approximately 4.93 acres or 214,804 square feet, more or less (Tax
Parcel ID 145-240-15-LH01);
WHEREAS, pursuant to Section 12.3 of the Original Lease, on June 1, 2020, Icicle
entered into an Assignment and Assumption of Lease ("Assignment") with OBI pursuant to
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which all of Icicle's rights, duties and obligations set forth in the Original Lease were assigned
to, and assumed by, OBI;
WHEREAS, Section 12.3 of the Original Lease provides that Icicle remains obligated
under the Original Lease notwithstanding the Assignment;
WHEREAS, on or about January 14, 2019, Icicle discovered a leak estimated to contain
nine (9) gallons of fuel ("Spill") from a fitting on an approximately four hundred (400) gallon
above ground storage tank ("AST") which supplied a blend of approximately seventy percent
(70%) reclaimed used oil and thirty percent (30%) diesel fuel to two boilers located in
improvements on the Leased Land;
WHEREAS, Icicle timely reported the Spill to the State of Alaska, Department of
Environmental Conservation ("Alaska DEC") and worked diligently with its consultant
Shannon & Wilson, Inc. to investigate the Spill, clean up the Spill and monitor the impact of
the Spill on the Leased Land in accordance with all applicable legal requirements under the
oversight of the Alaska DEC;
WHEREAS, Alaska DEC identified the site as the Icicle Seafoods Seward Facility,
Alaska ADEC File #2332.38.051 (the "Contaminated Site");
WHEREAS, Icicle removed the AST and approximately 10 cubic yards of impacted
soil as part of its response action, but additional excavation activities were deemed not feasible
due to the restricted space and the integrity of adjacent structure foundations, and some portion
of the Spill may remain on the Leased Land under the foundation, footings and floor of
improvements located on the Leased Land (such portion of the Spill, if any exists, hereinafter
the "Residual Contamination");
WHEREAS, the City required an Amendment to the Original Lease to be entered into
to set forth the obligations of the Parties related to the Residual Contamination;
WHEREAS, an Environmental Covenant was recorded on July 26, 2023 as Document
No. 2023-000555-0, records of the Seward Recording District, Third Judicial District, State of
Alaska ("Original EC") which did not include appendices A-C referenced in the Original EC
and was thereafter corrected by Document No. 2023-000847-0, recorded on October 13, 2023
in the Seward Recording District, Third Judicial District, State of Alaska ("Corrective EC")
which contained appendices A-C that were omitted from the Original EC;
WHEREAS, an Amendment to Amended and Restated Lease was recorded on July 26,
2023, as Document No. 2023-000554-0, records of the Seward Recording District, Third
Judicial District, State of Alaska which acknowledged OBI's status as the lessee but did not
include the recording information for the Original EC and was thereafter corrected by
Document No. 2023-000848, recorded on October 13, 2023 in the Seward Recording District,
Third Judicial District, State of Alaska (the "First Amendment");
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WHEREAS, The First Amendment contained the recording information for the
Corrective EC and sets out the duties, responsibilities and obligations of the City, Icicle and
OBI regarding the Residual Contamination and cleanup;
WHEREAS, Icicle wishes to sell its membership interest in OBI to Silver Bay
Seafoods, L.L.C. ("Silver Bay"), an Alaska limited liability company, and be released from all
its obligations arising on or after the closing date of such sale, excluding Icicle's obligations
under the First Amendment, which include obligations under Article 7 (Return of Leased
Land/Site Conditions), Article 4.2(a) (cleanup and restoration of the land to its original
condition), and Article 19 (Environmental Concerns) of the Original Lease with respect to the
Spill;
WHEREAS, this Second Amendment does not constitute a specific and express
assumption of Icicle's obligations by another lessee as contemplated in the First Amendment
Section 3(a);
WHEREAS, Icicle and Silver Bay have entered into a separate agreement setting forth
the duties and obligations of each of them regarding environmental contamination related
obligations including but not limited to those at the Contaminated Site; and
WHEREAS, the Parties wish to enter into this Second Amendment for the purposes of
evidencing their consent to amend the Original Lease, as amended, to reflect the change of
ownership of OBI and the release of Icicle from its obligations arising under the Original Lease,
as previously amended and as further amended hereby, excluding its obligations under the First
Amendment;
NOW, THEREFORE, for and in consideration of the mutual promises and covenants
hereinafter contained, the Parties agree as follows:
1. All references to the Lease in this Second Amendment shall mean the Original
Lease as amended by the First Amendment and as additionally amended by this Second
Amendment.
2. Article 25 is amended to read as follows (additions in italics):
25.1 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.
25.2 Notwithstanding Section 25.1, if an interested party (including a party with a
partial interest in LESSEE) transferring its interest to a non -affiliate wishes to
be conditionally released from some or all of the terms, covenants, and conditions
in this LEASE, (i) such transfer shall require CITY's prior consent, in CITY's
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sole discretion; and (ii) CITY may, in CITY's sole discretion, release the
transferring party from some or all obligations under the LEASE arising on or
after the closing date of such transfer of interest to a non -affiliate.
3. City hereby consents to the sale of all of Icicle's interest in OBI to Silver Bay
and releases Icicle from all its obligations under the LEASE, as amended herein, arising on or
after the closing date of such sale of interest to Silver Bay, excluding those obligations under
the Corrective Amendment and any Icicle obligations that survive the termination of Icicle as
the Lessee. Icicle remains liable for its own actions arising while it was the lessee named in the
Lease and for actions of OBI arising prior to such closing date. From and after the effective
date of this Second Amendment set forth in paragraph 4 below, the term "LESSEE" as used in
the Lease shall mean OBI.
4. This Second Amendment is dated and effective as of the later of (i) the last date
of signature set forth below, or (ii) the closing of the sale of Icicle's membership interests in
OBI to Silver Bay.
5. Except as set forth in this Second Amendment, the Lease, as assigned, remains
in full force and effect.
[signatures on following page]
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IN WITNESS WHEREOF, the parties hereby have sent their hand and seals the dates
herein set forth.
CITY OF SEWARD ATTEST:
By: By:
Kat Sorensen, City Manager Kris Peck, City Clerk
Date:
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
The foregoing instrument was acknowledged before me this day
2025 by Kat Sorensen, City Manager of the City of Seward, Alaska on behalf of the City.
Notary Public in and for Alaska
My Commission expires:
5
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ICICLE SEAFOODS, INC.
By:
Name:
Title:
Date:
PROVINCE OF NEW BRUNSWICK
) ss.
The foregoing instrument was acknowledged before me this day of
2025 by , the of
Icicle Seafoods, Inc. on behalf of the corporation.
Notary Public in and for New Brunswick
Residing at:
My Commission expires:
6
4906-4763-5501v.7 0022769-000034
OBI SEAFOODS, LLC
By:
Name:
Title:
Date:
STATE OF WASHINGTON )
) ss.
COUNTY )
The foregoing instrument was acknowledged before me this day of
2025 by , the of
OBI Seafoods, LLC on behalf of the limited liability company.
Notary Public in and for Washington
Residing at:
My Commission expires:
7
4906-4763-5501v.7 0022769-000034