HomeMy WebLinkAboutRes1989-090
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sponsored by: Schaefermever
CITY OF SEWARD, ALASKA
RESOLUTION NO. 89-090
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, AUTHORIZING THE PURCHASE OF GRAIN
TERMINAL COMPONENTS FROM THE STATE OF ALASKA AND
AN OPERATING AGREEMENT WITH KOBUK, INC.
AND APPROPRIATING FUNDS FROM THE STATE REVENUE
SHARING FUNDS IN THE GENERAL FUND
WHEREAS, the State of Alaska purchased
components for the construction and operation in
of a grain terminal facility; and
grain terminal
the Seward area
WHEREAS, the State of Alaska has determined not to further
pursue the development of those facilities at this time; and
WHEREAS, the grain terminal components have been determined
to be excess to the needs of the State of Alaska; and
WHEREAS, the city of Seward is interested in further pursuit
of the concept of the construction and/or operation of a grain
and/or bulk storage and/or transshipment facility utilizing the
grain terminal components; and
WHEREAS, the State of Alaska solicited proposals for the
purchase of the grain terminal facilities under Proposal 27-88,
dated November 16, 1988, and
WHEREAS, the city of Seward submitted a proposal to the State
of Alaska subject to approval of the terms and conditions of the
purchase by the City Council; and
WHEREAS, Kobuk, Inc. and the city of Seward have reached
agreement on an operating agreement whereby the parties have agreed
to the terms for the storage and development or possible sale of
the grain terminal components; and
WHEREAS, the preservation of the possibility of the development
of a new and beneficial industry based on the construction and/or
operation of a grain or bulk storage and transshipment facility
would be in the public interest in that such development would
promote a new industry in the Seward area, provide employment and
assist in the development and diversification of Seward as an
important port; and
WHEREAS, if it is determined by the City Council not to be in
the public interest to develop such facilities by the terms of the
operating agreement, the parties have agreed to provide a mechanism
for the disposal of the grain terminal components and the proceeds
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 89-090
of that sale are expected to provide sufficient funds to reimburse
the city for the expenses incurred in the purchase, storage and
marketing of the components under the terms of the operating
agreement; and
WHEREAS, in order to consummate the purchase and operating
agreement, the city will expend Ten Thousand Dollars ($10,000) to
the state of Alaska for purchase which will be simultaneously
reimbursed from Kobuk, Inc., and Twenty Nine Thousand Five Hundred
sixty Eight Dollars ($29,568) to Northern Stevedoring Co, Inc., for
storage, two-thirds (2/3) of which will be simultaneously reim-
bursed from Kobuk, Inc.; and
WHEREAS, the development of the grain terminal components into
a facility would be within the scope and purposes of the city of
Seward General Fund;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that:
section 1. The city manager is authorized to execute the
required documentation to purchase the grain terminal components
from the State of Alaska including a Purchaser's Receipt and the
issuance of funds from the city in the amount of Ten Thousand
Dollars ($10,000) for the purchase.
section 2. A special revenue fund designated as Grain
Terminal Fund #124 is hereby established to account for the
transactions between Kobuk, Inc. and the expenditures in purchasing
and storing the grain terminal. The total amount appropriated for
Fiscal Year 1990 expenditures is Forty Two Thousand Seven Hundred
Forty Six Dollars and Ninety Eight Cents ($42,746.98) of which
Thirty One Thousand Eight Hundred Thirty One Dollars and Thirty Two
Cents ($31,831.32) is to be paid by Kobuk, Inc.
section 3. The sum of Ten Thousand Nine Hundred Fifteen
Dollars and Sixty six Cents ($10,915.66) is hereby appropriated
from additional State Revenue sharing Funds in the General Fund,
Account No. 100-000-335-1400 to the General Fund General Services
Miscellaneous Expense Account No. 101-118-518-10-79 to provide the
city's portion of the grain terminal expenses.
section 3. The city manager is authorized to execute the
operating agreement attached to this Resolution.
section 4. the city manager is authorized to execute a one
year storage agreement with Northern Stevedoring, Co., Inc.
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 89-090
section 5. This resolution shall take effect immediately upon
its adoption.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, this 14th day of August, 1989.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
THE CITY OF SEWARD, ALASKA
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BARR . GIESELER, MAYOR
GIESELER, DUNHAM, NOLL, O'BRIEN
NONE
HILTON, SIMUTIS
MEEHAN
APPROVED AS TO FORM:
PERKINS COlE, Attorneys for
the city of Seward, Alaska
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(City Seal)
?~ III ~,..
Fred B. Arvidson
City Attorney
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OPERATING AGREEMENT
THIS AGREEMENT, made and entered into as of the
30 -t^----
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day of ~' 1989, by and between the CITY OF SEWARD,
ALASKA ("City") and KOBUK, INC., ("Kobuk").
WIT N E SSE T H:
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WHEREAS, City has been selected by the State of Alaska
as the successful proposer under RFP 27-88 for the purchase of
grain terminal components; and
WHEREAS, the parties desire to enter into an operating
agreement for the use of the grain terminal components in which
Kobuk will provide professional, technical, marketing, and other
assistance to City.
NOW, THEREFORE, in consideration of the mutual
covenants hereinafter contained, it is agreed by and between the
parties hereto as follows:
ARTICLE l.--SCOPE OF WORK.
l.l Kobuk shall provide professional consulting, tech-
nical and marketing assistance to City a) for the maintenance,
inspection and storage of the grain terminal components, b) to
help identify, evaluate and market economically viable uses for
the grain terminal components, and c) to erect the grain
terminal components and operate the grain terminal facility in a
mutually agreeable project.
Grain Terminal Operating Agreement
August 1989
Page 1
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ARTICLE 2.--TERM AND TERMINATION.
2.l--Initial Term. The initial term of this agreement
shall coincide with the period of time during which the grain
terminal components purchased by the City under State of Alaska
RFP 27-88 remain in the City of Seward. This initial term is
three years but may be extended in accordance with the provisions
of this ARTICLE.
2. 2--TerminatigI.!~urinq Initial Term. During the
initial term of this agreement if City determines to construct
and/or operate a dry bulk storage and/or transshipment facility
using part or all of the grain terminal components, AND if Kobuk
and City cannot agree upon modifications to this agreement to
provide for the extension of this agreement to provide for that
construction and/or operation, THEN City may terminate this
agreement upon the payment to Kobuk of the amounts set forth in
Section 2.3 of this ARTICLE,
2.3--Payment on Termination.
a) All preservation expenses incurred by the
other party; and
b) all development expenses incurred by the
other party and previously agreed upon by both parties in
writing; and
c) the sum of $lO,OOO; and
d) an amount equal to one hundred fifty percent
(150%) of the sum of items (a), (b) and (c) above; and
Grain Terminal Operating Agreement
August 1989
Page 2
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e) interest on items (a), (b), and (c) above at
the rate of ten percent (lO%) annual percentage rate (simple
interest) from the date of expenditure, or in the case of item
(c) from the date of this agreement.
2.4--Termination after Initial Term. Either party
shall have the option to terminate this agreement and purchase
the grain terminal components after the expiration of the initial
term by payment to the other party the amount calculated in
Section 2.3 of this ARTICLE; provided, however, that if within
two years from the date of that payment the grain terminal
components are sold and removed from within the city limits of
the City of Seward, Alaska, then, in that event, the party
exercising the option shall be required to distribute the
proceeds of that sale in accordance with Section 3.5 of this
agreement.
2.5--Termination by Mutual Consent and Procedures for
Termination. Nothing in this agreement shall preclude the
parties from mutually agreeing, in writing to a termination of
this agreement on terms different from those provided for in this
Section and all approvals for disposition of City assets shall be
conducted in accordance with applicable provisions of the Seward
Municipal Code.
ARTICLE 3.--FINANCIAL.
3.1 Upon execution of this agreement, Kobuk shall pay
to eity the sum of TEN THOUSAND DOLLARS ($lO,OOO.OO),
Grain Terminal Operating Agreement
August 1989
Page 3
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3.2(a)--preservation Expenses.
City shall pay one-third (1/3) and Kobuk shall pay
two-thirds (2/3) of all preservation expenses incurred in
connection with the grain terminal components or facility.
Either party may incur reasonable preservation expenses as that
term is defined In paragraph 3.7(b); however, neither party may
incur or commit to any preservation expense expected to exceed
$5,000.00 without the written consent of the other party.
3.2(b)--Development Expenses.
Neither party may incur development expenses as that
term is defined in paragraph 3.8 without first obtaining the
written consent of the other party.
3.3 City shall, at its election, either invoice Kobuk
for its share of preservation expenses or submit to Kobuk for
direct payment bills and invoices for preservation expenses, or a
combination of the two, Kobuk shall pay the City interest at ten
percent (lO%) per annum on all invoices not paid within thirty
(30) days.
3.4 All income net of current preservation expenses
from the operations of the grain terminal facility earned during
the term of this agreement shall be applied as follows: First,
such net income shall be divided one-third (l/3) to City and
two-thirds (2/3) to Kobuk until all past preservation and
development expenses paid by the parties, plus ten percent (10%)
interest per annum, have been reimbursed. Second, $10,000.00
plus ten percent (lO%) interest per annum from the date of the
Grain Terminal Operating Agreement
August 1989
Page 4
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payment pursuant to paragraph 3.l shall be paid to Kobuk.
Thereafter, income net of preservation and development expenses
shall be divided equally between Kobuk and City.
3.5 All proceeds, net of current preservation expenses
and development expenses, including the cost of sale, realized
from sale of the grain terminal components or facility during the
term of this agreement shall be applied as follows: First, such
net proceeds shall be divided one-third (1/3) to City and
two-thirds (2/3) to Kobuk until all past preservation and
development expenses paid by the parties, plus ten percent (10%)
interest per annum, have been reimbursed. Second, $lO,OOO.OO
plus ten percent (10%) interest per annum from the date of the
payment pursuant to paragraph 3.l shall be paid to Kobuk.
Thereafter, the proceeds shall be divided equally between Kobuk
and City.
3.6 For purposes of this agreement, "preservation
expense" shall mean all expenses incurred in connection with the
maintenance, storage, and inspection of the grain terminal
components or grain terminal facility during the term of this
agreement.
3.7 For purposes of this agreement, "development
expenses" shall mean all expenss incurred in connection with the
marketing, sale, construction or operation of the grain terminal
components or grain terminal facility during the term of this
agreement.
Grain Terminal Operating Agreement
August 1989
Page 5
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3.8 Notwithstanding any other provision of this
agreement Kobuk shall have no authority to incur, and under no
circumstances shall it incur, any obligation on behalf of City or
attempt to enter into any contract obligating City without City's
prior written consent,
ARTICLE 4.--FACILITY eONSTRUCTION.
4.1 With advice from Kobuk, eity will evaluate all
reasonable proposals for the use or purchase of the grain
terminal components, including construction and operation of the
grain terminal facility, and may accept any such proposal which
City deems to be viable or which it otherwise deems to be in the
City's best interest.
4.2 In the event City elects to proceed with any
proposal which Kobuk does not wish to participate in, Kobuk may
terminate this agreement as set forth in paragraph 2.2.
4,3 Any proposal for the purchase, use or operation of
the grain terminal components or facility submitted by Kobuk will
be evaluated and treated by City in the same manner as proposals
submitted by third parties.
ARTIeLE 5.--INDEMNITY AND INSURANCE.
5.l Kobuk shall indemnify and hold City harmless from
and against any and all claims, damages, losses or liabilities
arising out of the negligent acts or omissions of Kobuk, its
Grain Terminal Operating Agreement
August 1989
Page 6
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owners, officers, agents, or employees arising out of its
performance under this agreement and resulting in any injury,
including death, to any person or damage to or loss of property.
5.2 City shall indemnify and hold Kobuk harmless from
and against any and all claims, damages, losses or liabilities
arising out of the negligent acts or omissions of City, its
owners, officers, agents, or employees arising out of its
performance under this agreement and resulting In any injury,
including death, to any person or damage to or loss of property.
5.3 In the event both parties' negligent acts or
omissions combine to cause injury or loss, they shall each
contribute in proportion according to their respective percentage
of negligence or fault causing the injury or loss and shall
indemnify one another to such extent.
5.4 Each party shall obtain and continuously carry the
following comprehensive liability insurance:
a) bodily injury and property damage liability,
including automobile, and
b) contractual liability which shall include
coverage for any liability assumed under this agreement,
to protect from and against all loss by reason of injury to
persons or damage to property.
Such insurance shall include provisions or
endorsements naming the other party, its officers, directors,
councilmembers, and employees as additional insureds and
Grain Terminal Operating Agreement
August 1989
Page 7
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prOVISIons that such policy shall not be cancelled or limits of
liability reduced without thirty (30) days' prior notice to the
other party. The limits of liability for all requirements
contained herein shall be not less than FIVE HUNDRED THOUSAND
DOLLARS ($500,000) per person, FIVE HUNDRED THOUSAND DOLLARS
($500,000) property damage, and FIVE HUNDRED THOUSAND DOLLARS
($500,000) in the aggregate from anyone occurrence.
ARTICLE 6.--MISCELLANEOUS,
6.l Kobuk shall not assign its interest or obligations
under this agreement, nor shall it hire any subcontractors to do
any work under this agreement without the prior written consent
of City, which may be withheld for any or no reason.
6.2 Each and all of the terms and conditions of this
agreement inure to the benefit of and shall be binding upon the
successors in interest of City and Kobuk.
6.3 This agreement contains the entire agreement of
the parties with respect to the matters covered by this
agreement, and no other agreement, statement, representation, or
promise made by any party which is not contained in this
agreement shall be binding or valid,
6.4 This agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Alaska.
6.5 Nothing contained in this agreement shall be
deemed or construed by the parties or by any third person to
Grain Terminal Operating Agreement
August 1989
Page 8
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create the relationship of principal and agent, or of
partnership,
or of joint venture, or of any association between City and Kobuk
other than an independent contractor relationship; and neither
the method of compensation nor any other provision contained in
this agreement nor any acts of the parties shall be deemed to
create any relationship between them other than an independent
contractor relationship,
6.6 Kobuk is an independent contractor and persons
employed by Kobuk in connection herewith shall be employees of
Kobuk and not employees of eity in any respect.
6.7 This agreement may not be altered orally,
only be amended in writing executed by both parties.
It may
6.8 All notices, demands, or requests from one party
to another shall be delivered in person or shall be sent by mail,
certified or registered, postage prepaid, to the addresses stated
in paragraph 6.9 and shall be deemed to have been given at the
time of delivery or, if mailed, three days after the date of
mailing.
6.9 All notices, demands and requests from Kobuk to
City shall be given to City at the following address:
eity Manager
City of Seward
P,O. Box l67
Seward, Alaska 99664
All notices, demands or requests from eity to Kobuk
shall be given to Kobuk at the following address:
Grain Terminal Operating Agreement
August 1989
Page 9
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Ken Ulz, President
Kobul( Fe",..! all..! ~t::t::Ll
P.O. Box l599
Fairbanks, Alaska 99707
1<0b...l.:) :LIVe -:f<_~
6.l0 Kobuk shall comply with all applicable laws,
ordinances and regulations of federal, state and local
governments and agencies.
6.11 The language and all parts of this agreement shall
in all cases be simply construed according to its fair meaning
and not for or against City or Kobuk as both City and Kobuk have
had opportunity for the assistance of attorneys in drafting and
reviewing this agreement,
ARTICLE 7.--ARBITRATION.
7.1 Any dispute between City and Kobuk with respect to
any provision of this agreement or the rights and obligations of
the parties hereunder shall be decided by arbitration, In
accordance with the provisions of this paragraph.
a) Consent panel, The party desiring
arbitration of a dispute shall give written notice to that effect
to the other party specifying in such notice the name and address
of a person to serve as an arbitrator on its behalf. Within
fifteen (15) days after receipt of such notice, the other party
shall give written notice to the first party specifying the name
and address of a person designated to serve as an arbitrator on
its behalf.
If neither party has objected to the other's
Grain Terminal Operating Agreement
August 1989
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designation within fifteen (l5) days of the notice by the second
party of its designation of an arbitrator, then the two chosen
arbitrators (called the "consent panel") shall select a third
person agreeable to both parties to become the third member of
the consent panel. The consent panel may utilize informal
techniques and hold informal hearing without reference or
adherence to the rules or procedures of the American Arbitration
Association. Promptly and within thirty (30) days of concluding
any proceeding, the consent panel shall render its written
decision. It is the intent of this subparagraph to provide for a
speedy and inexpensive resolution of disputes provided the
patties agree to such a procedure.
b)
Formal arbitration.
If, within fifteen (15)
days of the second party's designation of an arbitrator, either
party objects to the others' choice of an arbitrator pursuant to
subparagraph (a) above, or the first party initially decides not
to use the consent panel procedure, then the matter shall be
promptly referred to the American Arbitration Association in
accordance with the then existing rules of the American
Arbitration Association.
7.2 Any award by either a consent panel or as a result
of proceedings before a panel under the rules of the American
Arbitration Association shall be enforceable in accordance with
Alaska Statutes. Any award shall include an award of costs,
interest and attorneys' fees.
In addition, as a punitive measure
Grain Terminal Operating Agreement
August 1989
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to encourage the parties to amicably resolve their differences,
the panel must award the prevailing party an additional amount
equal to those costs, interest and attorneys' fees.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and affixed their seals the day and year first above
written.
CITY
City of Seward, Alaska
City Manager
ATTEST:
APPROVED AS TO FORM:
PERKINS COIE
Attorneys for City of Seward
City elerk
Gordon J Tans
KOBUK
Kobuk,
Grain Terminal Operating Agreement
August 1989
Page l2
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STATE OF ALASKA
)
) ss.
)
THIRD JUDICIAL DISTRIeT
THIS IS TO CERTIFY that on this day of August,
1989, before me, the undersigned, a Notary Public in and for the
State of Alaska, personally appeared DARRYL seHAEFERMEYER and
LINDA MURPHY, known to me and to me known to be the City Manager
and City Clerk of the City of Seward, and known to be the
individuals named in and who executed the foregoing document, and
they acknowledged to me that they were authorized to execute the
foregoing document by authority granted them in the Municipal
Code of Ordinances for said eity and 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 DISTRIeT
THIS IS TO CERTIFY that on this ,JS day of August,
1989, before me, the undersigned, a Notary Public in and for the
State of Alaska, personally appeared Kf!.t III ('{AI OIL
of KOBUK, INC., known to me and to me known to be the individual
named in and who executed the foregoing document, and he acknow-
ledged to me that he was authorized to execute the foregoing
document by authority granted him in the Bylaws or by resolution
of the Board of Directors of said corporation for the uses and
purposes therein set forth.
WITNESS
first hereinabove
my hand and
written(
I
notarial seal the day and year
890/ajw
Grain Terminal Operating Agreement
August 1989
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