HomeMy WebLinkAboutRes1988-050
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sponsored by: Schaefermever
CITY OF SEWARD, ALASKA
RESOLUTION NO.88-050
OF
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
SEWARD, ALASKA, APPROVING A LEASE AGREEMENT WITH
CHUGACH ALASKA CORPORATION, INC.
WHEREAS, the City of Seward has sought proposals for
development of city-owned real property in the vicinity of the
Seward Marine Industrial Center; and
WHEREAS, the Chugach Alaska corporation,
corporation organized and existing under the laws
of Alaska and 43 USCA Sect 1601 (1971); and
Inc., is a
of the State
WHEREAS, Chugach Alaska Corporation, Inc., has proposed to
lease lands from the City of Seward adj acent to its existing
lease for the construction and operation of a forest products
manufacturing and electric co-generation facility; and
WHEREAS, the lease provides for a fair market value rent
provision and would assist the Lessee in developing its
adjacent leased land and thereby provide employment for
residents of the City of Seward and promote the growth and
stability of the economy in that the industry would be a
beneficial new industry to the community; and
WHEREAS, an appraisal of the property would not be in the
public interest and an unnecessary expense to the City of
Seward;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA, that:
section 1. A lease agreement between the City of Seward
and Chugach Alaska corporation, Inc., in substantially the form
as that attached to this Resolution as Exhibit A is approved
and the City Manager is authorized to execute the same.
section 2. It is in the public interest to not require
the disposal of the land subj ect to the lease agreement by
public bid or auction and that a negotiated lease provides the
City of Seward with the best terms and conditions of lease and
further will provide incentives to the Lessee to develop a
beneficial new industry for the City of Seward.
Section 3. An appraisal of the property is not in the
pUblic interest.
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CITY OF SEWARD, ALASKA
RESOLUTION NO. 88-050
section 4. This resolution shall take effect 30 days
following its approval.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
SEWARD, ALASKA, this 23 day of Mav , 1988.
AYES: DUNHAM,
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
THE CITY OF SEWARD, ALASKA
~L ~w4
HARRY GIESELER, MAYOR
HILTON, MEEHAN, GIESELER, NOLL, O'BRIEN, SIMUTIS
ATTEST:
v~ .j ,~Cv\.JV.L-
Linda S. Murphy, CMC
City Clerk
BY: Patricia Jones, Acting City
(City Seal)
APPROVED AS TO FORM:
HUGHES, THORSNESS, GANTZ,
POWELL & BRUNDIN, Attorneys
for the City of Seward, AK
7,..d ftI~
Fred B. Arvidson
City Attorney
Clerk
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LEASE AGREEMENT
This Agreement made and entered into effective as of the day of
, 1988, by and between the City of Seward, a municipal corporation
located in the Kenai Peninsula Borough, State of Alaska. hereinafter referred to as
"CITY" and Chugach Alaska Corporation, Inc., a corporation organized and existing
under the laws of the State of Alaska and 43 U.S.C.A {1601(1971), hereinafter referred
to as "LESSEE".
WHEREAS, CITY has agreed to lease to LESSEE and LESSEE has agreed to
lease from CITY twenty (20) acres, more or less, of properties within the boundary limits
of the City of Seward, Alaska, hereinafter referred to as the "leased land"; and
WHEREAS, CITY has constructed public port facilities in proximity to the leased
land and the City Council of the City of Seward has determined that a lease of the leased
land and construction thereon of a forest products manufacturing and/or electric co-gen-
eration facility would be in the public interest in that such a facility would provide
employment for the residents of the City of Seward, and promote the growth and stability
of the economy of Seward all as set forth more fully in Resolution 88- adopted by the
City Council of the City of Seward, Alaska; and
WHEREAS, CITY is committed to utilizing its best efforts to provide tax exempt
financing construction of public port facilities on the leased land and LESSEE agrees to
operate those facilities in accordance with any public regulatory or financing require-
ments; and
WHEREAS, it is the intent of this LEASE to alleviate from CITY the entire
burden of compliance with present or future environmental regulations or controls with
respect to the leased land; and
WHEREAS the parties agree that the leased land is one of few parcels within the
Seward Marine Industrial Center suitable for forest products manufacturing and/or elec-
tric co-generation activities and that the City of Seward has made a substantial investment
in public facilities adjacent or in proximity to the leased land with the objective of
providing employment and economic activities for the community; and
WHEREAS, LESSEE has agreed to make substantial private investment in facili-
ties on the leased land and to opportunities within the City of Seward, Alaska.
"
NOW THEREFORE, for and in consideration of the mutual promises and
covenants hereinafter contained, the parties hereto agree as follows:
CITY ~ apply f!Jr any necessary tidelands le~ from the appropriate govern-
mental agenCIes havmg title to those lands. LESSEE will cooperate in that application
process and both parties will assist the other in expediting the application and grant pro-
cess. H CITY obtains a lease to the tidelands adjacent to the leased land then it will
provide LESSEE-for no additional consideration other than that contained in this lease-
rights of access across said tidelands adequate for LESSEE's intended operations of a
forest products manufacturing and/or electric co-generation facility. LESSEE agrees to
pay whatever charges might be incurred by CITY either in the form of lease payments to
the governmental agency having title to the tidelands, or any other permits or agency fees
as they- become due. Any such charges shall not be subject to credits against rent under
ARTICLE 6. LESSEE may contest the amount of applicability of any of those charges
but LESSEE will not allow any lapse or default under any applicable leases or permits.
At the request of LESSEE, CITY shall, from time to time, execute and deliver or
join in execution and delivery of such documents as are appropriate, necessary or
required to impose upon the leased land and in accordance with the terms of this Aree-
ment covenants, conditions and restrictions providing for the granting of uses 0 the
leased land, or any part thereof, the establishment of party walls, the establishment of
mutual and reciprocal parking rights or rights of in~ess 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 the lease for whatever reason.
b) Any such matters of a permanent nature extending bel~~d the lease
term shall not be granted without the prior written approval of C . In any of
the foregoing instances referred to in this paragraph, CITY shall be without
expense therefore, and the cost and expense thereof shall be borne solely by
LESSEE.
c) At the expiration of the lease term (including any extended period) third
party improvements on the leased land other than portable equipment shall
become the property of CITY without the payment of any compensation to
LESSEE.
2.2--Future Easements. In order to provide for the more orderly commercial
development of the leased land and adjacent lands including publicly owned facilities at
the Seward Marine Industrial Center, it may be necessary, desirable or required that
street, railroad, water, sewer, drainage, gas, power line and other easements and dedica-
tions and similar rights be granted or dedicated over or within portions of the leased land.
As additional consideration for this lease, both CITY and LESSEE 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 the Seward Marine Industrial Center for the purpose of granting such
easements and dedications; provided, however, that such easements and dedications and
similar rights do not unreasonably interfere with LESSEE's efficient operation. The costs
'. of locating or relocating any public easements or restrictions of record including any relo-
cation of public road, railroad, utility, or other easement shall be at the sole cost and
expense of the party req~esting the relocat~on. CITY s~all not re~se re~so!l~ble requests
for such relocations prOVIded those relocations do not mterfere WIth or mhlblt the overall
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g) LESSEE may add/alter, or remodel improvements at LESSEE's discre-
tion during the term of this lease provided that during any period in which
LESSEE claims a rental offset under ARTICLE 6 LESSEE shan not permit the
value of the improvements to be reduced below that determined in accordance
with Section 6.1.
ARTICLE 4.-LEASE TERM.
4.1-Initial Term. The initial term of this lease shall be for a period of twenty
years, commencing on , 1988 and ending on ,2008.
4.2--0ptions to Renew. LESSEE shall have the right to extend the initial term of
this lease for four additional five year periods, called the first, second, third and fourth
option terms successively, provided:
a) That LESSEE exercises any applicable option to renew at least one hun-
dred and eighty (180) days prior to the expiration of the current lease term.
b) That LESSEE is not in default in any term or condition of this lease and
has not made an assignment of this lease without the written permission of CITY
as set forth in Article of this lease agreement.
c) LESSEE shall exercise its options to renew by sending written notice
thereof in accordance with the provisions of this lease.
ARTICLE S.--RENT.
5.l--Initial Rental Rate. During the first five (5) years of this lease, some of which
period will be the initial construction term, the annual rental rate shall be per square foot.
The rent shall be payable semi-annually in advance in equal installments on or before the
first day of and the first day of . The anniversary date of
this lease shall be thirty (30) days following the approval of this lease agreement by the
City Council of the City or Seward.
5.2--Rental A<tiustments. Not more than ninety (90) days before the fifth anniver-
sary date of the lease, and once each five years thereafter, the total annual rental due and
payable shall be adjusted to the fair market value at the hi~est and best use of the leased
land, exclusive of i~1Yovements placed thereon by LESSEE but inclusive of all improve-
ments made by C (including those made before or subsequent to this lease agree-
ment). As an aid to future appraisals the parties have attached a photographic record
collectively referenced to as Exhibit C demonstrating the condition of the leased land
prior to this lease agreement. The annual rent shall be at the fair market value at the
highest and best use of the leased land, without consideration to LESSEE's intended or
actual use of the land unless that use is coincidentally the highest and best use of the land.
5.3--Procedure for Rental Adjustment. If LESSEE objects to the appraiser's de-
termination of the fair market rental value within thirty (30) days of receipt of the report,
" i~ shall give written notice of its objection and the LESSEE shall then engage a second in-
. dependent MAl certified appraiser at its expense to make a second appraisal of the fair
market rental value as set forth in Section 5.2 above.
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which LESSEE shaD be entitled to a rental credit. LESSEE shall not be entitled to any
fractional portion beyond a full year. For example, and by way of illustration, if it is
determined that by December 31, 1990, LESSEE has constructed improvements to the
leased land with a fair market value of $12,300,000 then LESSEE shall be entitled to a
rental credit equivalent to twelve (12) years of lease payment obligations under this lease.
LESSEE shall be entitled to a credit against rent for the first year of the lease term
if it certifies that it will commence substantial construction within the tint year and if it in
fact performs that construction. It at the end of the tint lease year LESSEE has not
commenced construction and diligently and continuously continued construction, then
LESSEE shall pay the annual rental rate set forth in ARnCLE 5 within twenty (20) days
of the end of the tint lease year.
LESSEE shall be entitled to a credit against rent for the second year if it continues
construction and if in addition to the above requirements, it certifies to CITY prior to the
commencement of the second lease year that it will: 1) construct improvements on the
leased land of a value of at least Two Million Dollars ($2,000,000), and 2) that it will pro-
vide at lease 30,000 man-hours of employment in the City of Seward during the second
lease year. CITY may verify compliance with LESSEE's performance of these two condi-
tions upon reasonable doubt that LESSEE has performed and, if LESSEE has failed to
do so, it shall pay the annual rent set forth in ARTICLE 5 within sixty (60) days of the end
of the second lease year.
LESSEE shall be entitled to a credit against rent for the third and subsequent
years if it complies with Section 6.2 below; and
6.2--Permanent Eml2loyee Obli~. As set forth in Resolution 88- one of
the primary reasons for the approval of this lease agreement is the C01l1II11tment of
LESSEE to provide employment in Seward in the development of a beneficial new indus-
try--namely a forest products manufacturing and/or electric co-generation facility. In or-
der to use a credit against rent to which LESSEE is entitled under Section 6.1 above,
LESSEE must have operated during the preceding year a forest rroducts manufacturing
and/or electric co-generation facility from the leased land and, i a rental credit is to be
claimed for construction of them, LESSEE must have operated the improvements con-
structed thereon by LESSEE and to have provided employment within the city limits of
the City of Seward during the preLm one year at a level equal to 30,000 man-hours.
CITY shall have the right to verify EE's compliance with the provisions of this Ar~i-
cle by being provided quarterly certified payroll records showing the hours worked m
Seward.
LESSEE's failure to comply with this employment obligation in any year shall
result in the irrevocable loss of a full year credit against rent for that year which rent shall
be paid within sixty (60) days after the end of the lease year.
6.3--I1Iustration. As a further illustration of the mechanism contemplated by this
Article, the following example is given:
a) lease term commences February 10, 1988.
b) by September 30, 1988, LESSEE commences construction of harbor
improvements and continues construction through the end of the first year of the
lease.
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investigation, and assessment and where believed appropriate by LESSEE has modified
rEMilan. ~e4arties recognize that CITY has provided the plan and information to
EE for EE's convenience and neither party intends the CITY or its agents
(including Peratrovitch, Nottingham and Drage, Ine.) to be responsible for any errors or
omissions or misrepresentations therein short of actual fraud.
7.4- 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
a~~ments shall cost LESSEE more for its operations or use of public facilities and
C is free to do so provided only that it does not pose any ~eater burden or higher
rate upon LESSEE than upon any other similar user of the pubhc facilities.
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ARTICLE 8.-RlGHT OF FIRST REFUSAL ON ADJACENT LAND.
In recognition of LESSEE's interest in expansion of its operations beyond the
leased land, and as further inducement to LESSEE to enter into this lease agreement,
CITY hereby grants to LESSEE the right to meet or exceed any offer by a third party to
lease the City land within that outlined in red on Exhibit A and not included in this lease
in accordance with the following provisions:
a) Option period. This right to lease may only be exercised by LESSEE
during the first five (5) years of this Agreement, that is to say, on or before
,1993.
b) Lease in g(Y.)d standing. The right may only be exercised by LESSEE if
LESSEE is not in default under any terms of this lease agreement, has performed
in a timely manner all obligations to be performed by LESSEE, and has not
transferred or assigned any of LESSEE's interest in this lease agreement to any
party without CITY's prior written permission having been obtained by LESSEE.
This right to lease additional land is intended to provide LESSEE with expansion
opportunities and not to allow LESSEE to speculate or otherwise benefit from any
increase in the value of the land subject to this option.
c) Exercise option. If CITY receives a bona fide offer to lease or purchase
the land subject to this Article and if the City Council finds that such a lease or
purchase would be in the public interest, then LESSEE shall have a period of
thirty (30) days from the date of the passage of the Resolution of the City Council
of the City of Seward making such a determination to exercise its right to either
lease or purchase the land on the same terms and conditions as those contained in
the offer to lease or the purchase agreement approved by the City Council.
LESSEE's failure to exercise this right within the time period designated shall
operate to terminate all of LESSEE.'s rights hereunder to lease the land (or
purchase it if the third party offer was an offer to purchase).
d) Intent. The intent of this provision is to provide for additional
expansion room for LESSEE without restricting CITY from seeking development
of that land from other parties. The parties recognize that, except for the
obligations contained in this lease agreement. LESSEE shall, during the option
period, not be required to pay any additional consideration for the right contained
10 this Article.
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c) Recover whether this lease be terminated or not from CITY reasonable
attorney's fees and all other expenses incurred by LESSEE by reason of the
default by CITY.
d) Declare this lease terminated.
. ,. e) No .exp.iration or termination of t~ lease shall, expire or terminate any
lIability or oblIgatIOn to perform of CITY's which arose poor to the termination or
expiration except insofar as otherwise agreed to in this lease.
f) Each right and remedy of LESSEE provided for in this lease shall be
cumulative and shall be in addition to every other ri~t or remedy provided for in
this lease, now or hereafter existing at law or inrmty or by statute or otherwise
and the exercise or beginning of the exercise by EE of anyone or more of th~
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.
g) 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.
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ARTICLE 12...LESSEE'S ACTS OF DEFAULT.
Each of the followin~ shall be a "LESSEE Act of Default" under this lease and the
terms "acts of default" and' default" shall mean, whenever they are used in this lease, any
one or more of the following events:
a) Failure by LESSEE to pay promptly when due, and in no event later
than twenty (20) days from the due date thereof, the rentals required to be paid
under this lease or failure to promptly pay all sums due City including public fees
or user charges for adjacent public facilities, electrical, sewer or other service
charges.
b) Failure by LESSEE to observe, fulfill or perform any 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,
requestin~at it be remedied, and stating that it is a notice o( default, has been
given to SEE 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.
c) The making by LESSEE of an assignment for the benefit of creditors,
the filing of a petition in bankruptcy by LESSEE, the adjudication of LESSEE as
insolvent or bankrupt, the petition or application by LESSEE to any tribunal for
any receiver or any trustee for itself or for any substantial part of its property; or
the commencement of any proceeding relating to LESSEE under any bankruptcy,
insolvency, reorganization, arrangement or readjustment of debt law or statute.or
similar law or statute of any jurisdiction, whether now or hereafter in effect which
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t) Recover an amount to be due immediately on breach equal to the rent
reserved under this lease discounted to the date of such breach at the rate of eight
percent (8%) per year. If the leased land or any part thereof be re-Iet by CITY for
the unexpired term of this lease, CITY shall reimburse to LESSEE upon receipt
an amount not to exceed the amount received by CITY under this paragraph.
g) If LESSEE does not immediately surrender ~ssession of the leased
land after termination by CITY and upon demand by CITY, CITY may forthwith
enter into and upon and repossess the leased land and expel LESSEE without
being deemed guilty in any manner of trespass and without prejudice to any
remedies which might otherwise be used for arrears of rent or breach of covenant.
h) No expiration or termination of this lease shall expire or terminate any
liability or obligation to perform of LESSEE's which arose pnor to the termination
or expiration except insofar as otherwise agreed to in this lease.
i) 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 anyone 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.
j) 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 14.-TITLE TO IMPROVEMENTS INSTALLED BY LESSEE.
14.1--Real Property Improvements. All improvements constructed by LESSEE on
the leased land or on easements to or from 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 the termination of this lease but with the following
conditions:
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a) If during the term of this lease in which the LESSEE has accumulated
but has unused rental credits in accordance with ARTICLE 6 of this lease the
lease is terminated by reason of a default by CITY, and subject to any applicable
arbitration decision affirming that default LESSEE may remove any
improvements installed or constructed by LESSEE; provided, however, that
LESSEE shall repair any damage to the leased land caused by such removal.
b) If during that portion of this lease term in which the LESSEE has
accumulated but has not used all rental credits in accordance with ARTICLE 6 of
this lease the lease is terminated by reason of a default by LESSEE, and subject to
any applicable arbitration decision affirming that default, all improvements shall
become the property of CITY.
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agents or contractors or from conditions existing or activities occurring on the leased land
prior to the lease.
ARTICLE It.-INSURANCE.
Prior to commencement of construction of any facilities on the leased land,
LESSEE shall procure and maintain, at LESSEE's sole cost and expense, comprehensive
seneral liability insurance, with limits of liability of for all
mjuries and/or deaths resulting to any one person and from
anyone occurrence. The limit of liability for property damage shall be
for each occurrence and aggregate. Coverage under such insurance shall also include
explosion, collapse and underground property damage hazards. Such insurance shall
include a broadform contractual endorsement. For non-owned watercraft of LESSEE or
its customers any ''watercraft exclusion" in the comprehensive liability insurance policy
shall be eliminated. Protection and indemnity insurance shall be provided with the same
limits as the comprehensive liability insurance for the use of LESSEE-owned watercraft.
LESSEE shall also provide fire and extended coverage insurance for any buildings,
equipment, machinery, vessels of customers or any other property stored or beinlJ worked
on by LESSEE upon the leased land at replacement value rather than origmal cost.
LESSEE shall provide Workmen's Compensation Insurance and insurance under the
Harbor Workers and Longshoremen's Compensation Act, and warehouse and motor
vehicle insurance and any other insurance required under any permit or tariff of the City
of Seward, Alaska. The minimum amounts and types of insurance provided by LESSEE
shall be subject to revision in accordance with standard insurance practices, m order to
provide continuously throughout the term of this agreement and any extensions hereof, a
level of protection consonant with good business practice and accepted standards in the
industry. Such factors as 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 may notify LESSEE of any requested increase
in insurance coverages.
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 of
this lease. All such policies shall be written by insurance companies le~lly authorized or
licensed to do business in the State of Alaska, and acceptable to CITY (Best's Rating A or
better). LESSEE shall furnish CITY, on forms supplied by CITY, certificates evidencing
that it has procured the insurance required herein prior to the occupancy of the leased
land or operation by LESSEE. 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.
At least annually, commencing on the first anniversary date of this lease and
ann~~l~ thereafter throughout the term of this lease, LESSEE shall procure and submit
to C a written report from a reputable insurance broker acceptable to CITY that the
broker has reviewed the types and amounts of coverage of insurance obtained by
LESSEE and the operations of LESSEE and in the opinion of the broker the coverage
complies with LESSEE's obligations under this lease.
All of the insurance policies required above as well as any other insurance carried
by LESSEE or CITY shall provide that the insurers waive their rights of subrogation
against CITY and LESSEE and their respective officers, servants, agents or emf'loyees.
LESSEE further agrees to waive and agrees to have its insurers waive any nghts of
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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 parties
agree to such a procedure.
b) Formal Arbitration. If either party objects, within fifteen (15) days of
the second party's designation of an arbitrator to the others choice of an arbitrator
pursuant to paragraph (a) above, or the first party initially decides not to use the
consent panel procedure, then the matter shan be promptly referred to the
American Arbitration Association in accordance with the then existing rules of the
American Arbitration Association.
c) Arbitration Awards. Any award by either a consent panel or as a result
or proceedings before a panel pursuant to 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 attorney fees.
ARTICLE 21.-MAlNTENANCE AND REPAIRS.
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21.1-Normal Maintenance. After the commencement of construction and during
the entire remaining term of this lease and every renewal or extension hereof, LESSEE
shall, at LESSEE's sole cost, risk and expense, maintain the leased land, including any
improvements placed thereon by LESSEE, in as good condition as received or
constructed by LESSEE, ordinary wear and tear excepted. CITY, at CITY's sole option
and expense, may, prior to the commencement of construction by LESSEE, perform
maintenance and preventative work on the leased land, exclusive of improvements placed
thereon by LESSEE, in order to prevent erosion, mitigate damage to plants and animals,
or prepare the leased land for eventual development by LESSEE or others by grading,
filling or contouring the leased land. Any such work performed by CITY shall be at
CITY's sole expense and risk unless LESSEE agrees, in advance and in writing, to share
such expense and risk. LESSEE shall prevent the discharge of any pollutants to any
public sewer system beyond those for which the system was designed. LESSEE shall
maintain in first class condition at all times all fire, pollution and other protective
equipment.
CITY may periodically inspect the leased land and facilities constructed thereon in
order to ascertain the condition of the public portion of the premises but the exercise of
this right shall not imply any obligation to do so nor any obligation to do so in any
particular way.
21.2--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.
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If such deficiencies relate to the safety of LESSEE's operation such that the
surrounding land and port facilities are exposed to risk, unnecessary potential hazards, or
a risk to the public interest (as distinguished from a business risk), or if CITY is not
satisfied with the proposed schedule of repairs either because of the delays therein or the
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ARTICLE 14.-CONDmONS AND COVENANTS.
All the provisions of this lease shall be deemed as running with the land, and shall
be cons. trued .to be ':conditions" as well as :'~ovenants", as t.hough the words specifically
expressmg or unparting covenants and conditions were used m each separate provision.
ARTICLE 25.-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, covenant or condition. No waiver of any breach shall affect or alter this lease, but
each and every term, covenant and condition of this lease shall continue in full force and
effect with respect to any other then existing or subsequent breach.
ARTICLE 26.- TIME OF ESSENCE.
Time is of the essence of this lease and of each provision.
ARTICLE 27.-COMPUTATION OF TIME.
The time in which any act provided by this lease is to be done by shall be computed
by excluding the first day and including the last, unless the last day is a Saturday, Sunday
or a holiday, and then it is also excluded.
ARTICLE 28.--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 29.-ENTlRE 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 30.-GOVERNING LAW.
This lease shall be governed by, construed and enforced in accordance with the
laws of the State of Alaska.
ARTICLE 31...PARTIAL INY ALIDI1Y.
If any provision of this lease is ~eld by a court o,f ,competent ju~di.ction to be
invalid, void or unenforceable, the remamder of the prOVISIons shall remam m full force
and effect and shall in no way be affected, impaired or invalidated.
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ARTICLE 39.-NOTICES.
All notices, demands and requests from LESSEE to CITY shall be given to CITY
at the following address:
City Manager
City of Seward
P.O. Box 167
Seward, AI( 99664
All notices, demands or requests from CITY to LESSEE shall be given to
LESSEE at the following address:
ARTICLE 40.--CHANGE OF ADDRESS.
Each party shall have the right, from time to time, to designate a different address
by notice given in conformity with this paragraph.
.
ARTICLE 41.--GENERATION OF ELECI1UCI1Y.
.
References are made in this Lease Agreement to an electric co-generation facility.
LESSEE intends to generate electric power and steam for its own use in its forest
products manufacturing facility and to provide LESSEE with an economical and
environmentally acceptable method of disposal of wood waste material generated in the
operation of the forest products manufacturing facility. LESSEE may from time to time
be capable of generating electric power in excess of its requirements.
CITY does not believe that LESSEE can compel CITY to purchase electric power
generated by LESSEE, but CITY does not wish to expose itself to that possibility.
LESSEE is willing to waive its present and future rights to compel CITY to purchase
LESSEE's electric power, provided that it may do so without violating any statute or
regulation, Therefore, LESSEE waives, to the extent it may without regulatory approval,
any rights it has or may later acquire to compel CITY to purchase electric power
generated by LESSEE.
City agrees to purchase as needed LESSEE's excess electric power and enter into
good faith negotiations within twelve months from the effective date of this lease
regarding such purchase provided that: (1) would not increase CITY's average cost of
purchased electric power, and (2) the power would not cost more than power which could
be purchased from other sources, and (3) would not require CITY, without City's prior
written approval, to make additional capital expenditures or incur additional operating
expenses, and (4) would not interfere with CITY's contractual relationships with its
current electric power suppliers, and (5) would not cause other damages or problems for
CITY, and (6) the excess electric power meets health and safety standards, voltage and
frequency standards, and other requirements imposed by CITY as reasonably necessary
to the operation of CITY's electric utility system.
"
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