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HomeMy WebLinkAbout06292015 City Council Work Session Packet Seward City Council Work Session Packet Discuss Revising The City's Policy On Nominating Public Property For Disposal Or Acceptance June 29, 2015 7:00 p.m. City Council Chambers pf sew t e NA Is b 404 ♦iy • '4L o as ii. Seward City Council Work Session Discuss Revising The City's Policy On Nominating Public Property For Disposal Or Acceptance June 29, 2015 7:00 p.m. City Council Chambers Seward City Code, 2.30.225 Planning and Zoning Commission Powers and Duties •Pg•2 Seward City Code, 7.05 Acquisition and Disposal of Real Property ..Pg. 3 Seward City Code, 15.05 Land Use Planning .Pg. 11 June 22, 2015 Memorandum from City Attorney ..Pg.13 City of Seward Resolution 1994-101 Approving A Policy For Nominating Public Property For Disposal Pg. 18 City of Seward Lease Agreement Template Pg.24 Seward, AK Code of Ordinances Page 1 of 1 10 VI a)11 DrilVO On) 2.30.225. - Powers and duties. (a) The commission shall perform the following duties: (1) Interpret the provisions of this title and make compliance determinations when requested by the administrative official; (2) Review and act upon requests for variance permits, conditional use permits, and other matters requiring consideration under the Seward Zoning Code; (3) Review the City of Seward Comprehensive Plan on an annual basis and conduct a minimum of one public hearing. Said recommendations shall be forwarded to the council for consideration; and (4) Promote public interest and understanding of comprehensive planning, platting, zoning, land management and other issues relating to community planning and development. (b) The commission shall act in an advisory capacity to the city council regarding the Seward Zoning Code, Seward Comprehensive Plan, Official Zoning Map, Official Land Use Plan Map, and other duties as requested by the city council. (c) The commission shall act in an advisory capacity to the Kenai Peninsula Borough Planning Commission regarding the following matters: (1) Subdivision plat proposals; (2) Right-of-way and easement vacation petitions; (3) Kenai Peninsula Borough Comprehensive Plan and Coastal Zone Management Plan development, updates and amendments; and (4) City of Seward Comprehensive Plan amendments not otherwise delegated to the City of Seward. (Ord.426, 1976;Ord. 438, 1977;Ord. 492, § 1, 1980; Ord. 626, §2, 1989;Ord. 92-09;Ord. 94-04) about:blank 6/26/2015 Seward, AK Code of Ordinances Page 1 of 8 -Chapter 7.05. -Acquisition and Disposal of Real Property FOOTNOTE(S): --- (2) --- State Law reference— See AS 29.35.010(8) for state provisions allowing a municipality to sell, own, etc., real property; see AS 29.35.030 for state provisions allowing municipalities to exercise the powers of eminent domain; see AS 29.71.010 as to adverse possession. Article 1. - Generally FOOTNOTE(S): --- (3) --- Prior ordinance history: Ord. 520, 1984; Ord. 610, 1988; Ord. 92-05. 7.05.110 -Adoption of provisions and statutory authority. These regulations are adopted by the city council pursuant to authority vested in that body by the charter of the city and by the Alaska Land Act, AS 38.05.820, as amended. (Ord. 98-04) 7.05.115 - Definitions. For purposes of this chapter, the following terms defined have the meaning provided below unless the context requires otherwise. Acquisition means to obtain ownership or interest in and to hold real property within or outside the city boundaries by purchase, gift, donation, grant, dedication, exchange, redemption, purchase or equity of redemption, operation of law, tax or lien foreclosure, adverse possession, condemnation or declaration of taking, annexation, lease or by any other lawful means of conveyances. City means the city of Seward, Alaska. Disposition means the transfer of city interest in real property by warranty or quitclaim deed, easement, grant, permit, license, deed of trust, mortgage, contract of sale of real property, plat dedication, lease, tax deed, will, or any other lawful method or mode of conveyance or grant. Fair market value means the highest price, described in terms of money, which the property would bring if exposed for sale for a reasonable time in the open market, with a seller, willing but not forced to sell, and a buyer, willing but not forced to buy, both being fully informed of all the purposes for which the property is best adapted or could be used. Real property interest means any estate in land, including tide and submerged lands, or improvements thereon. Rights-of-way, encroachments or easements wherein no warranties are made and title is not transferred are regarded as not involving the disposal of a party's interest in real property; thus, the execution of such documents are exempt from provisions of charter section 12.3(b) and section 7.05.110, et seq. of this chapter. about:blank 3 6/26/2015 Seward, AK Code of Ordinances Page 2 of 8 Structure means any improvement, constructed or erected on or attached to the ground or another structure, including, but not limited to, awnings, refuse container racks, towers, sheds, signs and fences. Submerged lands means those lands covered by tidal waters between the line of mean low water and seaward to a distance of three geographical miles, or as may hereafter be properly claimed by the city. Tidelands means those lands which are periodically covered by tidal waters between the elevation of mean high water and mean low water or are contained within a recorded Alaska Tideland Survey. (Ord. 92-05;Ord. 98-05) 7.05.120 -Alternative means of real property acquisition or disposition. The city council may acquire or dispose of an interest in real property by negotiation, public auction, or sealed bid. (Ord. 98-04) 7.05.125 - Public hearing and notice. Prior to disposition or acquisition of a real property interest by negotiation, public auction or sealed bid, a public hearing shall be held. Notice of the public hearing shall be published in a newspaper of general circulation in the city and shall be posted in at least three public places within the city. Both posting and publication shall be done at least ten days prior to the hearing. (Ord. 98-04) 7.05.130 -Terms and conditions to be made available. The notice of public hearing shall indicate where the public may obtain the essential terms and conditions of the proposed acquisition or disposition. A copy of the terms and conditions shall be maintained for inspection at the office of the city clerk for at least ten days prior to the hearing. (Ord. 98-04) 7.05.135 -Authorizing resolution to approve terms and conditions. At any time after the hearing required in section 7.05.125, the council shall make a finding in an authorizing resolution that the essential terms and conditions and the method of acquisition or disposition are in the public interest. (Ord. 98-04) 7.05.140 - Posting copy of resolution. Upon adoption of a resolution approving an acquisition or disposition, the city clerk shall cause a true copy of same to be posted for at least 30 days in at least three public places within the city. (Ord. 98-04) 7.05.145 - Effectiveness of resolution. Objections to a resolution approving a real property acquisition or disposition may be made at any time until the resolution becomes effective. Unless rescinded or amended, any resolution adopted under this chapter automatically becomes effective 30 days after passage and posting. about:blank 4 6/26/2015 Seward, AK Code of Ordinances Page 3 of 8 (Ord. 98-04) 7.05.150 -Appraisal. (a) The city shall not sell any real property interest without first making an appraisal of the fair market value of that interest, unless the city council finds that the public interest will not be served by an appraisal. (b) If an appraisal is made, the property interest shall not be disposed of for less than the appraised fair market value, unless the city council finds by resolution that public interest will be served by disposing of the property interest for less than the appraised fair market value. (Ord. 98-04) 7.05.155 - Notice of foreclosure sale. Before property obtained through a foreclosure may be sold, notice of such sale must be sent by registered or certified mail to the last known address of the record owner at the time the foreclosure action was initiated. The notice shall be mailed at least 30 days prior to the effective date of sale. It shall contain the following information: (1) The time and date of sale; (2) The manner of sale; (3) The place of sale; and (4) Notice that until the effective time of sale the record owner has the right to repurchase the property as provided by AS 29.45. (Ord. 98-04) 7.05.160 -Adjustment to fair market value. (a) Except as provided in (b) of this section, the rent under each lease of city property shall be adjusted on July 1, 1995, and on July 1 of every fifth year thereafter during the term of the lease, to the fair market rental value of the property as of the date of adjustment. For each leased property subject to rent adjustment under this section, the city shall obtain a fair market rental value appraisal as of the date of each rent adjustment. (b) Subsection (a) of this section shall not apply to any lease of city property: (1) Authorized before the effective date of this section, except to the extent that the rent adjustment described in subsection (a) of this section has been incorporated in the terms of the lease; (2) For which the council finds that the public interest will be served by leasing the property for less than appraised value; or (3) Whose terms provide for adjustment of rent to fair market value more frequently than every five years. (c) Nothing in this section extends the term of any lease of city property. (Ord. 98-04) Article 2. - Disposition of Real Property by Public Auction or Sealed Bid FOOTNOTE(S): --- (4) --- Prior ordinance history: Ord. 520, 1984; Ord. 610, 1988; Ord. 92-05. about:blank 6/26/2015 Seward, AK Code of Ordinances Page 4 of 8 7.05.210 -Terms and conditions of sale. (a) The resolution authorizing the sale of real property by public auction or sealed bid shall set forth the terms and conditions of the public sale. The council shall reserve the right to reject any and all bids received. The resolution shall provide if the sale is for cash, or cash deposit and a purchase agreement. If the sale is for a cash deposit and a purchase agreement, the city manager shall prescribe the form of the purchase agreement. (b) The city manager shall designate the individual who shall conduct the sale, and such designee shall give the bidder a receipt for all moneys received by the city. A purchaser at a public sale by auction or sealed bid who fails to make such other cash payments within the time required by the authorizing resolution shall forfeit any cash deposit paid to the city. (Ord. 98-04) 7.05.215 - Location of sale. The public sale by auction shall take place at a location within the city limits as selected by the city manager. (Ord. 98-04) 7.05.220 - Procedure for sale by sealed bid. All real property interests offered for public sale by sealed bid may be sold to any person submitting an offer in writing to the council. Such offer shall be submitted in a sealed envelope marked "Real Property Bid" and must be accompanied by a check or money order made payable to the city in an amount equal to at least 20 percent of the amount bid for residential lots and ten percent of the amount bid for other parcels. (Ord. 98-04) 7.05.225 - Selection of successful bidder(s). If there is more than one bid, at a public auction or by sealed bid, for a particular or group of lots, the lot(s) shall be sold to the highest bidder(s). The highest bidder(s) shall be the one(s) whose bid(s) represents the highest total price for the property interest(s). In the event that two or more parties submit high but identical bids, the council may accept the bid first received, or reject all bids. (Ord. 98-04) 7.05.230 - Resolution accepting bids. After a sale has been conducted by public auction or sealed bid, the council, by resolution with or without public hearing, may approve all public sales of real property based on the bids received, and shall approve any purchase agreement prior to its execution by the city. The approval of any public sale by the council authorizes the city manager to take all steps and execute all instruments to complete and close the sale. (Ord. 98-04) Article 3. - Short-Term Lease Negotiation 7.05.410 - City manager authorized to negotiate short-term leases. Nothing in this chapter shall prevent the city manager from negotiating short-term leases of city property subject to council approval at the next regularly scheduled city council meeting. Such leases shall not be subject to the public hearing process, shall not exceed 120 days in length, and shall contain about:blank (9 6/26/2015 Seward, AK Code of Ordinances Page 5 of 8 no provisions for optional terms. The resolution approving such a lease may be signed and adopted immediately provided the lease form contains a provision stating that the lease is subject to suspension during the first 30 days after passage of the resolution if a sufficient referendary petition is filed in accordance with section 4.8 of the City Charter. (Ord. 520, 1984;Ord. 610, 1988;Ord. 92-05) Article 4. - Encroachments, easements and rights-of-way 7.05.510 - Easements and rights-of-way. A. Subject to applicable provisions of the Kenai Peninsula Borough Code, Title 20, Subdivisions, the city manager may, with regard to city land, negotiate and execute rights-of-way and easements not exceeding a term of 20 years. B. The city manager may negotiate and execute the acquisition of rights-of-way and easements necessary for a utility, public improvement or other public use except the city council shall, by resolution, approve acquisitions involving cash considerations or the exchange or real property valued in excess of$50,000.00. C. Any other rights-of-way and easements shall be granted or acquired only upon approval of the city council. D. The city manager may, at the direction of the city council convey, quitclaim, release, cancel, or otherwise relinquish any real property easement, right-of-way, permit or license the city may have or hold for the purpose of installing, constructing or maintaining a public improvement or utility, whenever the interest is no longer used or useful for that purpose. (Ord. 92-05;Ord. 98-05;Ord. No. 2008-018, §2, 11-24-2008) 7.05.515 - Encroachments. A. It is the city's policy not to allow new or unauthorized encroachments into any public right-of-way, land or easement. The city finds that: (i) neither the perpetuation of an existing encroachment beyond the depreciable life of the structure, nor its enlargement, expansion, improvement or extension is deemed to be in the public interest; (ii) all encroachments considered as hazardous, obstructing motorists' line of sight, impeding emergency vehicle access, or impairing snow removal, shall be removed at the earliest available opportunity; and (iii) all other encroachments shall eventually be removed over time. B. The city manager may, after determining that alternatives, including but not limited to, removal of the encroachment or vacating the right-of-way are not feasible alternatives and would not be in the public interest, and where neither public safety nor access is impaired, issue an encroachment permit for the depriciable life of the encroaching structure. 1. No permits may be issued for refuse container racks, towers, sheds, signs or fences; 2. The city may revoke the permit upon written notice of not less than twenty days nor more than six months for the construction, improvement or use by the public of public street, sidewalk, and utility projects; 3. The encroachment may not be expanded, extended, improved or enlarged; 4. Encroachment permit shall require the permittee to: a. Pay an appropriate fee as established by city council resolution; b. about:blank 7 6/26/2015 Seward, AK Code of Ordinances Page 6 of 8 Secure and maintain general liability insurance coverage based on appropriate minimum limits as determined by the city's risk manager, to protect, defend and indemnify the city during the term of the permit. The city shall be named as a certificate holder for any structure associated with a personal use single family residence; and as an additional insured party for any structure associated with an activity involving rentals, the sale of goods or services, or any business carried out for profit; c. Maintain the property in such a manner as to protect the public safety and welfare; d. At the expiration of the agreement or permit, remove the encroachment and restore the encroachment site to the surrounding grade leaving it in a clean, safe and stable condition; e. Provide other assurances as deemed appropriate by the manager in order to protect the public interest; and f. Provide an as-built survey completed by an Alaska registered surveyor which clearly delineates all encroaching structures. (Ord. 98-05) 7.05.520 - Recording. All easement and encroachment permits including applicable as-built surveys shall be recorded by the permittee in the Seward recording district, third judicial district, State of Alaska. (Ord. 98-05) Article 5. -Tidelands 7.05.610 - Purpose. These regulations implement, interpret and apply the provisions of the Alaska Land Act concerning use and disposal of tide and submerged lands and related matters and extend to and include the applicable provisions of Public Law 85-303. (Ord. 92-05) 7.05.615 - Definitions. For purposes of this article, the following terms shall be defined as follows: Coast line means the line of ordinary low water along that portion of the coast which is in direct contact with the open sea and the line marking the seaward limit of inland waters. Improvements and substantial permanent improvements means buildings, wharves, piers, drydocks and other similar types of structures permanently fixed to the tidelands or contiguous submerged lands that were constructed and/or maintained by the applicant for commercial, recreation, residential, or other beneficial uses or purposes. In no event shall fill be considered a permanent improvement when placed on tidelands solely for the purposes of disposing of waste or spoils. However, fill material actually utilized for beneficial purposes by the applicant shall be considered a permanent improvement. Mean low or lower water means the tide datum plane of the average of the low tides as has been or may be established by the United States Coast and Geodetic Survey. Mean high tide means the tidal datum plane of the average of all the high tides as has been or may about:blank 8 6/26/2015 Seward, AK Code of Ordinances Page 7 of 8 be established by the United States Coast and Geodetic Survey. Mean high water line shall be interpreted as the intersection of the datum plane of mean high water with the shore. Occupant means any person as defined herein, or his successor in interest, who actually occupied for any business, residential, or other beneficial purpose, tidelands, or tidelands and submerged lands contiguous thereto, within the city, on or prior to January 3, 1959, with substantial permanent improvements. The holder of a permit of clearance in respect to interference of navigation, or of a special use permit from a government agency will not qualify as an "occupant" unless such entry on the land had, through exercise of reasonable diligence, resulted in actual occupancy and substantial permanent improvements as hereinafter mentioned. No person shall be considered an occupant by reason of having (a) placed a fish trap in a position for operation or storage upon the tide, shore, or submerged land; (b) placed a set net or piling thereof or any other device or facility for taking of fish; (c) placed pilings or dolphins for log storage or other moorage; (d) placed floats or vessels upon the tide, shore or submerged land; (e) placed telephone, power or other transmission facilities, roads, trails or other improvements not requiring exclusive use or possession of tide or contiguous submerged lands; or(f) claimed the land by virtue of some form of constructive occupancy. Where land is occupied by a person other than the owner of the improvements thereon, the owner of the improvements shall, for the purposes of this definition, be considered the occupant of such lands. Occupied and developed means the actual use, control, and occupancy, but not necessarily residence, of the tide and contiguous submerged land by the establishment thereon of substantial permanent improvements. Permit preference means the privilege of the upland owner to acquire first choice over other non- preference right claimants to a permit for like use and enjoyment of city owned tide or contiguous submerged lands abutting his property. Person means any person, firm, organization, cooperative association, partnership or other entity legally capable of owning land or an interest therein. Pierhead line means the line fixed by the Department of the Army Corps of Engineers that is parallel to the existing mean low tide line at such distance offshore from the mean low tide line that the pierhead line shall encompass, landward and no more, all stationary man-made structures (but shall not encompass any part of breakwaters, bridges, or piers used for vessel dockage which part extends beyond such a parallel line marking the seaward extremity of other man-made structures) which were in existence as of February 1, 1957, to seaward of the city. Preference right subject to the established classifications, means and includes the right of an occupant to acquire by grant, purchase, or otherwise, at the election of the occupant, except as otherwise limited or prescribed in these regulations, any tract or tracts of tidelands, or tide and submerged land contiguous thereto, occupied or developed by such occupant on and prior to January 3, 1959. Preference right, Class I means a right claimed by persons who occupied and developed tide and contiguous submerged lands seaward of the city on and prior to September 7, 1957, after executing a waiver to the city and state of all right such occupant may have had pursuant to Public Law 85-303. about:blank 9 6/26/2015 Seward, AK Code of Ordinances Page 8 of 8 Upon execution of the waiver, such persons or their successors in interest have the right to acquire such occupied and developed tide and contiguous submerged lands from the city for consideration not in excess of the cost of survey, transferring and conveying of title. Preference Right, Class II means a right claimed by Class I Preference Right claimants who decline to execute a waiver to the state and city of any rights such occupants may have acquired pursuant to Public Law 85-303 (71 Stat. 623). It shall be mandatory for the city to honor the application from the occupant after the Secretary of the Army has submitted to the Secretary of the Interior, the Governor of Alaska and the city manager, maps showing the pierhead line established by the Corps of Engineers with respect to the land claimed. Upon proof of such occupancy, such persons have the right to acquire such tidelands and contiguous submerged lands from the city for a consideration not in excess of the cost of survey, transferring and conveying title. Preference Right, Class III means a right claimed by persons who occupied and developed tidelands and contiguous submerged lands after September 7, 1957, and who continued to occupy them on January 3, 1959. Upon proof of such occupancy, such persons have the right to acquire such tidelands and contiguous submerged lands for a consideration not in excess of the cost of appraisal, survey, administering and transferring title, plus the appraised fair market value of the land claimed, exclusive of any value accruing from improvements or development, such as fill material, buildings or structures. Upland owner means that land owner whose upland property abuts the line of mean high tide. (Ord. 92-05) 7.05.620 - Preference to upland owners. Should the city decide to dispose of interest in any tide or submerged land, the city shall grant to the owner of upland property adjacent to said tide and submerged land a first preference to acquire said interest over other applicants/bidders. The upland owner shall be notified by certified mail or by a posting of a notice for three consecutive weeks of his right to exercise his preference. The upland owner shall then have 90 days to exercise this preference under this section. If the preference is not exercised by the upland owner, then the city may dispose of the tide and submerged land to others. It shall not be required that the city offer its tide and submerged lands for disposal should the city determine that it is not in its best interests to dispose of such land. The city may itself make such use of its tide and submerged lands as it may consider in the public interest without offering the tide and submerged lands to others. (Ord. 92-05) 7.05.625 - Preference right application. An occupant claiming a class I, class II, or class III preference right may apply for preference rights within two years from the effective date of the ordinance adopting these regulations. Any preference right for which an application is not filed within this period shall be forfeited. Completed applications shall be submitted to the city manager on forms supplied by the city. (Ord. 92-05) about:blank I 0 6/26/2015 Chapter 15.05. - Land Use Planning 15.05.010. -Seward Comprehensive Plan. From time to time, upon recommendation of the city council, the Kenai Peninsula Borough assembly shall by ordinance modify, adopt and implement the Seward Comprehensive Plan. The plan is a public declaration of policies reflecting community goals as expressed by citizens, and is meant to guide the actions of elected officials in setting forth the goals, objectives, and policies governing the future development within the city. (Ord. 626, § 3. 1989) 15.05.015. - Incorporation of additional documents. For the purposes of this title the following documents as initially enacted and thereafter amended are adopted by reference as part of the Seward Comprehensive Plan: (1) Seward Airport Land Use and Development Plan (Dec. 1985). (2) Emergency Preparedness Plan (May 1986). (3) Plan of Action—Seward Fire Department(May 1986). (4) Seward Small Boat Harbor Uplands Management Plan (Nov. 1983). (5) Seward Marine Industrial Center Development Plan (Jan. 1995). (6) Seward Boat Harbor Master Plan (March 1993). (7) Municipal Lands Management Plan (May 1995). (Ord. 626. § 3, 1989: Ord 95-17, § 2) 15.05.020. - Land use plan—Purpose. A part of the comprehensive plan is the development of a land use classification system on which to base zoning and to guide the land use regulation system. Such a classification system should provide a balanced, compatible land use mix, in order to separate incompatible uses and minimize conflict between land uses. 926 ; 1989) 15.05.025. - Land use districts—Established, definitions. (a) Established. The city is hereby divided into land use districts which shall be bounded and defined as shown on the official land use map. This official map, together with all explanatory matter thereon, as exhibited at the time of public hearing, is hereby adopted by reference and declared to be a part of this chapter. (b) Definitions—Purpose. (1) Rural residential district (RR). Intended to provide for stable, quiet, low density (one or two dwelling units per acre) detached single-family residential development, free from other uses except those which are both compatible and convenient to residents of such a district including recreational, religious and educational facilities of an appropriate scale and design complementary to the neighborhood character. (2) Single-family residential district (R1). Intended to provide for stable and quiet low to medium density (one to five dwelling units per acre) detached, single-family residential development, Page 1 i ' free from other uses except those which are both compatible and convenient to residents of such a district. (3) Two-family residential district (R2). Medium density (one to seven dwelling units per acre) transitional housing area with a mix of single and two-family units, free from other uses except those which are both compatible and convenient to residents of such a district. (4) Multi-family residential district (R3). Intended to provide opportunities for a higher density residential setting with a mix of housing units which are predominately multi-family units close to concentrations of public services, employment and/or recreation. This district may provide a transition between more intensive districts and lower density residential areas if sufficient screening and design features are provided to protect multi-family residences from undesirable effects. (5) Urban residential district (UR). Intended to allow an area of higher density mixed residential uses from detached single-family housing to multi-family apartments in conjunction with compatible low impact professional office uses in the area surrounding the downtown business district. (6) Office/residential district (OR). Intended to provide for medium density residential, commercial and office development designed to act as a transition zone between the high density central business district and surrounding medium-high density residential districts. (7) Harbor commercial district (HC). Provides an area for water-dependent or water-related uses with particular emphasis on transportation, tourist, recreational, commercial or industrial enterprises which derive major economic or social benefit from a harbor location. (8) Auto commercial district (AC). Intended to provide areas to accommodate highway-oriented commercial activities such as offices, certain institutional uses, and limited personal services and retail uses requiring substantial outdoor activity, traffic and parking, and which also serve the offices and nearby residential areas, and which do not materially detract from nearby residential areas. (9) Central business district (CBD). Provides for an area of convenient, attractive, concentrated commercial development primarily intended for retail, financial, entertainment and professional services occurring within enclosed structures. Regulations applying to this zone are designed to encourage a compact group of businesses of the type which are mutually beneficial and located close enough together to encourage walk-in trade. (10) Industrial district (I). Established as a district in which the principal use of land is for business, manufacturing, processing, fabricating, repair, assembly, storage, wholesaling and distributing operations, which may create some nuisance and which are not properly associated nor compatible with residential land uses. It is intended to provide environmental safeguards for people employed in or visiting the district. Some visual amenity is expected in this district to make it compatible with adjoining residential or business districts. (11) Institutional district (INS). Public and private educational, administrative, government and health care uses, including public land reserve for future public development. The development standards are intended to set a high standard to assure that the activities provide visual amenity to the surrounding area. (12) Parks district (P). Is intended to designate park, recreation and commemorative property owned by the city, state or federal governments for recreation and other compatible public purposes. (13) Resource management district (RM). Lands which are generally undeveloped and cannot be precisely zoned due to inadequate information on the extension of public services and utilities; the suitability of the land to support commercial, residential, industrial or public uses; and other possible environmental consideration. (Ord. 626, § 3. 1989: Ord. 649, § 2, 1991) Page 2 '1 WOHLFORTH I BRECHT I CARTLEDGE A PROFESSIONAL CORPORATION Julius J. Brecht TELEPHONE Cynthia L. Cartledge ATTORNEYS AT LAW 907.276.6401 William A. Earnhart FACSIMILE Michael Gatti 900 WEST 5TH AVE NUE, SUITE 600 907.276.5093 Nathaniel Parr ANCHORAGE, ALASKA 99501 -2048 WEBSITE Eric E. Wohlforth WWW.AKATTY.COM MEMORANDUM TO: Jean Bardarson, Mayor FROM: William A. Earnhart, City Attorney DATE: June 22, 2015 SUBJECT: Additional Procedures Regarding the Disposal of Real Property QUESTION PRESENTED The City Council ("Council") of the City of Seward ("City") has requested the Administration and City Attorney consider recommending additional procedures regarding the disposal of real property. This request was made in reference to Resolution No. 94-101 "Procedures for Nominating Public Lands for Lease" (attached), duly adopted by the Council on August 8, 1994. Resolution No. 94-101 was followed and compliance noted in resolution statements for about ten years. From 2005 to today, compliance notation with Resolution No. 94-101 has been irregular. Although, as explained below, that does not necessarily mean that the requirements of Resolution No. 94-101 have not been fulfilled. The City's current Code of Ordinances ("Code") and procedures are consistent with those of other municipalities and with best practices. The Council retains significant discretion to add in additional procedures with regard to any particular real property transfer. The Council needs to make its concerns and expectations of the Administration clear in regard to land transfers. A continuing dialogue on this is essential. However, because real property transfers can be very individually distinct, the City Attorney does not recommend additional mandatory procedures to be applied for all transactions. BACKGROUND The home rule charter ("Charter") of the City directs that the Council shall provide in the Code for procedures whereby the City may sell, lease, grant, or otherwise dispose of real property.' Pursuant to the Charter, the Code prescribes the manner in which the City may transfer any interest in City property. These rules govern sales, 1 City of Seward Charter § 12.3. I.\Does\43371001\(-Real Property\M2 Mayor Re Disposal Of Real Property Docx �3 Jean Bardarson, Mayor Re. Additional Procedures Regarding the Disposal of Real Property June 22, 2015 Page 2 permits, leases, dedications, or any other lawful conveyances of any property interest of the City, other than a right-of-way or easement with no warranty or transfer of title. Under the Code, the City is permitted to dispose of real property interests by negotiation, public auction, or by sealed bid.2 In all cases, a public hearing is required, with notice given to the public at least ten days prior by publication and by posting in three public places in the City.3 The terms and conditions of the proposed conveyance must be made public and the notice must indicate where those terms and conditions may be found.4 Following the mandatory public hearing, the Council may, by authorizing resolution, find that the proposed disposition and its terms and conditions are in the public interest.5 This resolution must be posted for 30 days before becoming effective.6 In the case of the negotiated sale of a property interest, the City must obtain an appraisal of the fair market value of the interest and shall not dispose of the interest for less than that amount, unless the Council resolves that the public interest will not be served by requiring an appraisal or by setting the price at fair market value.' Under the Code, the City Manager has the authorization to negotiate short-term leases of City property of terms of no more than 120 days, subject to Council approval by resolution at the next regularly scheduled Council meeting, without notice and a public hearing. The resolution approving such a lease may be effective immediately upon adoption, so long as the lease provides that the lease is subject to suspension within the first 30 days if a sufficient referendary petition is filed.8 Pursuant to the Code, the Seward Planning and Zoning Commission ("Commission") was created,9 in part, to act in an advisory capacity to the Council regarding land use matters and City planning. The Council may request for the Commission to review proposed land transfers and provide a recommendation, but the Council is not obligated to request or follow such recommendations. If the proposed use of the property by the lessee or transferee would require rezoning or a conditional use permit, then it will be necessary to consult with the Commission to determine if the intended use is harmonious with the Seward Zoning Code and the Seward Comprehensive Plan. 2 SCC 7.05.120. 3 SCC 7.05.125. 4 SCC 7.05.130. 5 SCC 7.05.135. 6 SCC 7.05.140-.145. ' SCC 7.05.150-.160. 8 SCC 7.05.410. 9 SCC 2.30.210. I.\Docs\43371001\X-Real Property\M2 Mayor Re Disposal Of Real Property Docx '4 Jean Bardarson, Mayor Re: Additional Procedures Regarding the Disposal of Real Property June 22, 2015 Page 3 As a result, the Commission already has substantial influence over land leases entered into by the City, which, as a standard practice, observe existing zoning ordinances and make them part of the agreement. Land sales are also restricted by Borough zoning as well, as discussed above; any proposed use of land that does not comply with existing zoning will have to be referred to the Commission for possible rezoning. The City's standard form of lease agreement includes safeguards as to the use of city land in harmony with the Comprehensive Plan, among many protections for the City. For example, Sections 1.5 and 1 .6 require code compliance. Article 4 of the lease governs use restrictions and guidelines. Section 4.2 requires that any use of leased land must comply with the City's zoning code, and, in addition, such use must be limited to the use for which the land was leased. Failure to comply with the use limitations constitutes a default by lessee under the standard lease, allowing the City to declare the lease terminated. Article 6 contains extensive requirements with regard to lessee's construction of improvements. REQUIREMENTS OF RESOLUTION NO. 94-101 Resolution No. 94-101 was passed on August 8, 1994, prior to the development of the Seward Comprehensive Plan in 1996. The highlights of the resolution are that the Commission was to review all recommendations regarding disposal of City-owned lands not otherwise designated for lease and development, and conduct detailed review of proposed construction. It also provides relatively extensive procedures for the Administration and staff in developing proposals and lease administration, including a requirement that lessee pays a fee for administrative time in developing the lease. The procedures contain useful concepts, but are largely obsolete or redundant due to development of the Comprehensive Plan and designated development patterns, and a standardized City lease. The lease policies and procedures in Resolution No. 94-101 are separated into three distinct transactions. The first, "Procedures for Nominating Public Lands for Lease," is largely obsolete with the adoption of the Comprehensive Plan and designation of land for development. The third section, "Lease Administration Policies and Procedures," is largely a restatement of our standard lease terms and practices, and appears to be followed, although Counsel has not audited Seward's many leases. The exception being the requirement of an administrative fee to be charged the lessee to offset Seward's costs; this fee has not been directly charged in recent history, if ever. It has been administratively difficult to assign direct actual costs to each lease and a "flat rate" administrative has been judged to be unfair. With the City working as a landlord, the administrative expenses are presumably included in the lease rate. The second section, "Lease Proposal Policies and Procedures," is more problematic. These procedures were clearly intended for new nominations of public I.\Docs\43371001\X-Real Property\M2 Mayor Re Disposal Of Real Property Docx i5 Jean Bardarson, Mayor Re: Additional Procedures Regarding the Disposal of Real Property June 22, 2015 Page 4 property for development and are for large scale, quasi-public developments, such as the SeaLife Center. This section requires the Commission to review and comment on every site plan prior to Council review and approval of the site plan and finding the transaction to be in the "public interest." It also requires proof of financing prior to the start of the lease negotiation process and a performance bond prior to lease negotiations. These added delays and costs in the process are a tremendous impediment in leasing smaller parcels already designated for development, such as in the Small Boat Harbor or at the Seward Marine Industrial Center. Smaller businesses cannot afford to wait and extra 60 days and generally cannot have proof of financing construction prior to having a lease. ASSESSMENT The key issue is what steps are required prior to land leases or sales or other transfers to protect the interest of the City. Currently, as discussed above, any transaction involving a change of zoning or change in the Comprehensive Plan is to be reviewed by the Commission. Additionally, pursuant to Resolution No. 94-101, all leases are to be reviewed by the City Attorney as to form. The City code does not require attorney review of resolutions and contracts unless "upon request" of the City Manager or Clerk.10 A statement as to whether the transfer fits within the Comprehensive Plan or other discussion and a fiscal note have been traditionally part of the agenda statement provided by staff. We note that the Council at any time can send a proposed transaction to the Commission for review and recommendations, which has occurred on numerous occasions in the past. The Council also has the power to require the Administration and/or staff to further research issues and address any concerns regarding development or the parties to the transaction. Staff and the Administration use their specialized knowledge and skill to evaluate economic and site plan issues. The Council can establish a standing committee or an ad hoc committee at any time to review land transactions proposed to the Council. We do not recommend adding additional mandatory standards in addition to Resolution No. 94-101 , as it would unduly infringe on the separation between administrative and legislative action. The Council legally retains all administrative duties and powers not delegated to the City Manager (with the exception of personnel actions which are exclusively delegated to the City Manager by Charter Article 3.6).11 Primary responsibility for negotiating contracts has been delegated to the City Manager and his 10 SCC 2.15.030. See also, SCC 3.05.015. I\Docs\43371001\X-Real Property\M2 Mayor Re Disposal Of Real Property Docx �� Jean Bardarson, Mayor Re: Additional Procedures Regarding the Disposal of Real Property June 22, 2015 Page 5 staff due to their specialized knowledge and skill.12 The City Manager is hired for his administrative qualifications.13 The role of the Council is ultimately to protect the interests of the City and to approve transactions, including asking all relevant questions as to any aspect which may affect the citizens of Seward, economically or otherwise. However, these duties are in the context of "policymaking" and supervising the Administration. It is not for the Council to negotiate the contracts. SCC 7.05 is clear that the Council is to approve or disapprove contracts and make findings regarding the public interest. Council can condition approval of a transaction, but does not amend the contract or lease itself. It is for the Administration to develop these transactions, including very complicated leases and sales agreements.14 All leases and sales are subject to further evaluation by the City and must comply with building codes, borough platting, Seward zoning, and all other applicable regulations regardless of whether a specific language is contained within the lease or the sales agreement. The standards in Resolution No. 94-101, if not withdrawn, should be amended to reflect that the second section, "Lease Proposal Policies and Procedures," does not apply to land already designated for development. Further, the administrative fee provision in section three, "Lease Administration Policies and Procedures" at paragraph A, should be eliminated. The Council, collectively and individually, can and should communicate to the Administration its concerns and expectations, including what provisions it expects in leases and other contracts and in Agenda Statements. This is best accomplished through written or oral statements/directions/memoranda rather than a binding resolution. No land interest can happen without Council approval. The Council always has the last word in development. cc: Jim Hunt, City Manager 12 See, for example, SCC 2.20.035(4) (City Manager to "negotiate such contracts and leases as the council may authorize."); SCC 7.05.230 ("city manager to take all steps . . . to complete and close the sale"); see also, SCC 7.05.135 (Council to approve the "essential terms and conditions" are in the public interest). 13 Seward City Charter § 5.4(a). 14 SCC 2.20.035(4). I:\Docs\43371001\X-Real Property\M2 Mayor Re Disposal Of Real Property Docx 1 11 Sponsored by: Jones • CITY OF SEWARD, ALASKA RESOLUTION NO. 94-101 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, APPROVING A POLICY FOR NOMINATING PUBLIC PROPERTY FOR DISPOSAL WHEREAS, the city regularly receives unsolicited proposals to lease city land; and WHEREAS, the city has no written policy regarding the identification and nomination of public lands for disposal; and WHEREAS, it is in the public interest to adopt such policies; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. City of Seward Lease Policies and Procedures, a copy of which is attached and incorporated herein by reference, is hereby ADOPTED. • Section 2. All ll pnor resolutions in conflict herew it h are re hereby RESCINDED. Section 3. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 8th day of August, 1994. THE CITY OF SEWARD, ALASKA 1)a e. u.9. CA,et,, i Dave W. Crane, Mayor AYES: Anderson, Bencardino, Crane, Krasnansky and Sieminski NOES: Darling ABSENT: O'Brien ABSTAIN: None • a CITY OF SEWARD, ALASKA RESOLUTION NO. 94-101 ATTEST: APPROVED AS TO FORM: Wohlforth, Argetsinger, Johnson & Brecht, Attorneys for the city of Seward, Alaska 0,-:-/ L1 . a ,4 -. e . S. IPh', CM / ,E0 City Attorney City Clerk (City Seal) 161 City of Seward, Alaska • Lease Policies and Procedures PROCEDURES FOR NOMINATING PUBLIC LANDS FOR LEASE The following procedures have been adopted by the Seward City Council to allow the public to nominate city owned lands not otherwise designated as available for lease development: A. Any person may make written nomination to the City Council for the city to dispose of public lands without divulging specific development ideas or purposes. B. If requested by the City Council,city staff will research and prepare a report on titles, covenants, deeds, zoning, land use planning, other land restrictions, and any planned public uses associated with the nominated lands. C. The Planning and Zoning Commission will review and make a recommen- dation to the City Council regarding the pros and cons of disposing of the nominated parcel. • D. The City Council will hold a public hearing on the disposal of the nominated property and, by resolution, will make a determination as to whether or not to dispose of the nominated lands. If the City Council finds that it is in the public interest to dispose of the nominated lands, the resolution shall specify the method of disposal, i.e., lease, sale, negotiation, bid, or request for proposals. E. If the City Council finds it in the public interest to lease the nominated land, the City Manager shall proceed with the disposal process following polices and procedures outlined in the City Code and this resolution. LEASE PROPOSAL POLICIES AND PROCEDURES The following procedures have been adopted by the Seward City Council to guide prospective lessees and the city administration in handling proposals on city-owned lands designated for lease disposal A. The prospective Lessee shall submit to the City Manager a written P P tY g development plan, including a conceptual site plan, building elevation drawings, a construction schedule, and proof of project financing. B. The lease development proposal shall be submitted to the Planning and . Zoning Commission at their next regular meeting, for review and written recommen- City of Seward,Alaska Resolution No. 94-101 Attachment A Page 1 zo dations, including any special lease conditions the Commission determines to be in the • public interest. C. The proposal along with written Planning Commission and staff comments and recommendations shall be submitted to the City Council, at the next regularly scheduled meeting, subject to agenda deadlines. D. Not later than 30 days following presentation to Council, the City Council shall determine whether it is in the public interest to proceed with lease negotiations. E. Upon directing the administration to proceed with the lease negotiations, the prospective Lessee shall, within 30 calendar days, deposit with the city a cash performance bond in an amount not less than one-half the first year's lease payment as estimated by the city administration. 1.. If the prospective Lessee does not diligently pursue lease negotiations within 60 days of the date that the Council consents to the commencement of said negotiations, the entire performance bond shall be retained by the city as liquidating damages. 2.. If the city and the prospective Lessee reach an impasse and are unable to come to terms on a lease agreement, the performance bond shall be returned to the prospective Lessee after deducting lease document preparation costs incurred by the city. Such costs shall include, but not be limited to, appraisals, attorney and actual staff costs, advertising and other incidental expenses. F. If the city and the prospective Lessee reach an agreement on lease terms, the lease documents shall be signed by the prospective Lessee, approved as to form by the City Attorney and forwarded to the City Clerk. Once the Clerk receives the properly signed lease agreement, a public hearing will be advertised and held in accordance with provisions of the Seward City Code, and the lease agreement will be presented to the City Council for action. G. If the proposed lease is approved by the City Council, the resolution approving the lease and the lease agreement shall be posted for thirty days as required by the City Code. Barring the filing of a sufficient referendum petition to set aside the lease, the lease shall then become effective 30 days after passage and posting. Once the lease agreement becomes effective, the city shall deduct from the performance bond all lease preparation costs incurred by the city, including but not limited to appraisals, attorney and staff time, advertising and other incidental costs. The remainder of the performance bond, if any, shall be credited towards the rents due, and the Lessee shall be billed in accordance with the city's quarterly lease billing cycle. • City of Seward,Alaska Resolution No. 94-101 Attachment A Page 2 LI H. In the event the City Council fails to approve the lease agreement within • 60 days of the date the negotiated lease agreement is first presented to the City Council, the total cash performance bond shall be returned to the prospective Lessee. I. The City Council may waive any or all of these requirements as it deems necessary to ensure successful completion of the lease negotiations. LEASE ADMINISTRATION POLICIES AND PROCEDURES The following procedures have been adopted by the Seward City Council to guide lessees and the city in the fair conduct of business associated with lease administration: A. Fees set by resolution of the City Council will be assessed to cover administrative time, copying costs, phone calls, postage, legal notices and other costs associated with processing all lease assignments,amendments,and sublet consent actions requested by lessees. Additionally, lessee will pay all recording fees and will reimburse the city of city attorney time in connection with the requested action or actions. B. Lease assignments and sublet consent requests will be reviewed,processed and approved as administrative functions subject to: 1. All taxes (real, personal and sales), utilities, lease payments, assess ments, licenses and insurance must be current. • 2. All appropriate fees must be paid in advance. 3. City sublet approval will not be required for individual tenant space rentals in buildings designed with separate retail and office spaces. 4. Following evaluation and administrative determination,the city may require a personal guarantee by lessees requesting assignments to corporations which are principally owned by lessee and created for tax and liability purposes. 5. Each sublessee must provide proof of insurance in accordance with the principal lease, naming the city as an insured party. 6. The city must be provided a copy of any sublet agreements,including lease amounts,so that the city may forward this information to city appraisers for future fair market value determinations. Copies of the sublet agreements, including lease amounts, will be provided to the City Council at the next regular Council meeting. C. Amendments to leases that change the essential terms and conditions (lease rate, term, land area, or development conditions) may be approved only by resolution of the City Council. Such requested amendments will be scheduled for Council action 0 only after the following terms have been met: City of Seward,Alaska Resolution No. 94-101 Attachment A Page 3 22- 1. All taxes (real, personal and sales), utilities, lease payments, assess 0 ments, licenses and required insurance must be current; 2. All appropriate fees must be paid in advance; and 3. The lessee's signature(s) must be in place on all required documents. III III City of Seward,Alaska Resolution No. 94-101 Attachment A Page 4 Z3 LEASE AGREEMENT between CITY OF SEWARD, ALASKA and Effective Date: [ ] 2 4 TABLE OF CONTENTS ARTICLE 1 - LEASED LAND 1 1.1 Description of Leased Land 1 1.2 Covenant of Quiet Enjoyment; Warranty of Title 1 1.3 Reserved 1 1.4 Property Accepted 1 1.5 Permits 2 1.6 Platting 2 ARTICLE 2 - LEASE TERM 2 2.1 Lease Term 2 ARTICLE 3 - RENTAL RATE 3 3.1 Initial Rental Rate 3 3.2 Rental Adjustments 3 3.3 Procedure for Rental Adjustment 3 3.4 Effect of Late Appraisal by CITY 4 3.5 Appraisal by LESSEE 4 3.6 Effective Date of Adjusted Rental Rate 4 3.7 Interim Rental Adjustments 4 3.8 Late Payment Charge 5 ARTICLE 4 - USE OF LEASED LAND 5 4.1 Use of Leased Land 5 4.2 Obligations of LESSEE 5 4.3 No Preferential Rights to Use Public Facilities 5 4.4 Adequacy of Public Facilities 6 4.5 Tariffs and Other Service Fees 6 4.6 Time for Payment of Utilities and Taxes 6 4.7 Other Uses 6 ARTICLE 5 - UTILITIES AND RIGHTS OF ACCESS 6 5.1 Utilities 6 5.2 Third-Party Improvements 7 5.3 Easements 7 ARTICLE 6 - CONSTRUCTION BY LESSEE 8 6.1 Improvements on Leased Land 8 6.2 City Review of Construction 8 ARTICLE 7 - RETURN OF LEASED LAND/SITE CONDITIONS 9 7.1 Return of Leased Land in Original Condition 9 ARTICLE 8 -FORCE MAJEURE 9 ARTICLE 9 -LESSEE'S ACTS OF DEFAULT 9 ARTICLE 10 - REMEDIES FOR DEFAULT BY LESSEE 10 ARTICLE 11 -TITLE TO IMPROVEMENTS INSTALLED BY LESSEE 12 11.1 Real Property Improvements 12 11.2 Personal Property 12 i 2 ARTICLE 12 -ASSIGNMENT OR SUBLEASE 12 12.1 Assignment of Lease or Subleasing 12 12.2 Assignment of Lease for Security 12 12.3 Assignment to Affiliate 13 ARTICLE 13 -LESSEE'S DUTY TO DEFEND/INDEMNIFY 13 ARTICLE 14 - CITY'S DUTY TO DEFEND/INDEMNIFY 13 ARTICLE 15 - INSURANCE 13 15.1 Minimum Insurance Requirements 13 15.2 Subrogation Rights Waived 14 ARTICLE 16 - CONDEMNATION 14 ARTICLE 17-ARBITRATION 15 17.1 Arbitration 15 ARTICLE 18 - MAINTENANCE AND REPAIRS 16 18.1 Normal Maintenance 16 18.2 Safety Issues 17 18.3 Cost of Repairs 17 ARTICLE 19 -ENVIRONMENTAL CONCERNS 17 19.1 Hazardous Materials 17 19.2 Permits and Reporting 20 ARTICLE 20 - ESTOPPEL CERTIFICATES 20 ARTICLE 21 - CONDITIONS AND COVENANTS 20 ARTICLE 22 -NO WAIVER OF BREACH 20 ARTICLE 23 -TIME OF THE ESSENCE 20 ARTICLE 24- COMPUTATION OF TIME 21 ARTICLE 25 - SUCCESSORS IN INTEREST 21 ARTICLE 26 -ENTIRE AGREEMENT 21 ARTICLE 27- GOVERNING LAW 21 ARTICLE 28 - PARTIAL INVALIDITY 21 ARTICLE 29 -RELATIONSHIP OF PARTIES 21 ARTICLE 30 -INTERPRETATION 21 ARTICLE 31 - CAPTIONS 21 ARTICLE 32 -AMENDMENT 22 ARTICLE 33 -NOTICES 22 ARTICLE 34 - FIRE PROTECTION 22 ii 2P LEASE AGREEMENT THIS 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 (the"LESSEE"), whose mailing address is , Seward AK . WHEREAS,LESSEE has indicated its desire to lease the property known as , as shown on Plat - , Seward Recording District,Third Judicial District, State of Alaska, consisting of approximately square feet, more or less; and WHEREAS, the City Council of CITY has determined that lease of the Leased Land (as defined below)to LESSEE for the purposes described herein would be in the public interest; and WHEREAS, it is the intent of this LEASE to transfer from CITY to LESSEE the entire burden of compliance with environmental regulations or controls with respect to LESSEE's operations on the Leased Land. 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: , as shown on Plat - , Seward Recording District,Third Judicial District,State of Alaska,consisting of approximately 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 LESSEE shall have the quiet enjoyment and possession of the Leased Land for the full term of this LEASE. 1.3 Reserved. 1.4 Property Accepted "As-is. " LESSEE acknowledges that it 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 2'1 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 CITY to 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, 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 in Section 1.3. 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 CITY'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 of the 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 of this LEASE (the "Lease Term") shall be in accordance with CITY's authorization in Resolution No. 201_- (the"Resolution"). The Lease Term shall commence on the date this LEASE is signed by CITY and that date shall be the effective date of this LEASE (the "Effective Date"). The Lease Term shall run for approximately years from the Effective Date, ending at midnight on . LESSEE shall have the right to extend the term of this LEASE for additional 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 2 20 (c) LESSEE shall exercise its options to extend by sending written notice in accordance with the provisions of Article 33 of this LEASE. ARTICLE 3 - RENTAL RATE 3.1 Initial Rental Rate. Commencing on the Effective Date of this LEASE through June 30, 2015, the annual rental rate for the Leased Land shall be set at $4034.21. 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 1,2015,and on the same date every five years thereafter (each a "Rental Adjustment Date"). The adjusted annual rental payment to lie 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 of the 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 of Fair Market Rental Value of the 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 of its 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 2't 3.4 Effect of Late Appraisal by CITY If,for any reason,CITY does not complete the appraisal 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 LESSEE 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 LESSEE 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. If the 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 LESSEE 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 LESSEE. 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. 3.7 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, 2014 and on July 1 of every year thereafter (each on "Interim Rental 4 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. 3.8 Late Payment Charge. Rental payments not received by the due date shall bear interest until paid at a rate of 10.5%1:;e '`annum, or the maximum rate permitted under Alaska law, whichever is less,plus a ftat`fiionthly 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 detet'inined by the City Council of CITY to be in the public interest. LESSEE may use the Leased Land for Boat repair work. 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. (b) LESSEE agrees to prohibit the use, keeping, storage, or disposal of Hazardous Materials on the Leased Land except as permitted in Article 19 of this LEASE. (c) 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 operate a boat repair and fiberglass business on the Leased Land. (e) Any changes to this site require prior CITY approval, through the City Manager. 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. 5 61 4.4 Adequacy of Public 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 itself that the facilities 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 LESSEE 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 L'aiid and LESSEE's interest in this LEASE and improvements thereon,if any,before such obligations become delinquent;provided,that LESSEE 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. 4.8 Use of Public Docks and Port Facilities. Public docks are subject to port and harbor rules and regulations as adopted by City Council. ARTICLE 5 UTILITIES 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 LESSEE'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 may be used to serve other customers of LESSEE'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 6 111 1 1 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. 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 of the parties that the risk of obtaining required permits be solely a risk undertaken by LESSEE. 5.2 Third-Party Improvements. 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 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 Leaed'L'and 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. (b) Any such matters of a permanent nature extending beyond the Lease Term shall not be granted withbut'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. (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. 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 LESSEE'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 of the party requesting the relocation. CITY shall not refuse reasonable requests for such relocations provided those relocations do not interfere with or inhibit the overall 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. 33 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) The cost of any construction, reconstruction, demolition, or of any changes, alterations, or improvements, shall be borne and paid for by LESSEE. (b) The Leased Land shall at all times be kept free of mechanic's and materialmen's liens. (c) 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. (d) 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. (e) Any general contractor employed by LESSEE 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), 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. In the event that LESSEE elects to construct the facility with its own personnel and equipment, or the personnel and equipment of any corporation or person that is an "affiliate"of LESSEE as such term is defined in AS 10.06.990(2)or Alaska limited liability company in which LESSEE maintains a substantial membership interest, a performance bond shall be required when the cost of the work is equal to or exceeds FIFTY THOUSAND DOLLARS ($50,000). (f) CITY may,as contemplated by Alaska Statutes,give notice of non-responsibility for any improvements constructed or effected by LESSEE on the Leased Land. (g) LESSEE shall comply with all federal,state,and local statutes and regulations with 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 Section 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 8 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 monitor 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 11.1 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 this LEASE, 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 this LEASE. ARTICLE 8 -FORCE MAJEURE In the event either LESSEE or CITY is delayed from performance of any of its obligations under this LEASE due to acts of nature, 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. ARTICLE 9 -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 LEASE,any one or more of the following events: 9.1 Failure by LESSEE 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. 9.2 Failure by LESSEE to comply with Section 4.1 of this LEASE. 9.3 Failure by LESSEE to observe, fulfill or perform any covenants,conditions,or agreements on its part to be observed or performed under this LEASE, other than payment of rent or compliance with Section 4.1, 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 9 a� action is instituted by LESSEE within the applicable period and diligently pursued until the default is corrected. 9.4 The making by LESSEE of an assignment for the benefit of creditors,the filing of a petition in bankruptcy by LESSEE,the adjudication of 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 shall remain undismissed for a period of six (6) months from the date of commencement thereof. 9.5 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 LESSEE 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. 9.6 Failure of LESSEE to maintain its operations within the Leased Land or to keep the public rights of way clear. ARTICLE 10 -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: 10.1 CITY may distrain for rent due any of LESSEE'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. 10 No 10.2 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 Section 10.1 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 LESSEE all without service of notice or resort to legal process,all of which LESSEE expressly waives. 10.3 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 an amount to be due immediately on breach equal to the unpaid rent for the entire remaining term of this LEASE. (e) 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. 10.4 If LESSEE does not immediately surrender possession 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. 10.5 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. 10.6 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. 11 �� 10.7 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 -TITLE TO IMPROVEMENTS INSTALLED BY LESSEE 11.1 Real Property Improvements. All improvements constructed by LESSEE or its predecessors 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. 11.2 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 12 -ASSIGNMENT OR SUBLEASE 12.1 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 or sublease this LEASE without CITY's prior written consent, in CITY's sole discretion. 12.2 Assignment of Lease for Security. Notwithstanding Section 12.1 above, LESSEE 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 of or operations on the Leased Land,provided that Lender shall be subject to all obligations of LESSEE 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 LESSEE under this LEASE. Lender shall have the right(without being required to do so and without thereby assuming the obligations of LESSEE 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 10 above, no "LESSEE Act of Default" shall exist until expiration of thirty (30) days after such notice is furnished to Lender; provided, (a) 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 12 38 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 (b) If the default for which notice is given is a breach of Section 9.3, CITY shall not exercise any of the remedies afforded to it under Article 10 above so long as LESSEE 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 of its 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. 12.3 Assignment to Affiliate. Notwithstanding Section 12.1 above, LESSEE may assign this LEASE to an affiliate of LESSEE as that term is defined by AS 10.06.990(2) or Alaska limited liability company in which LESSEE maintains a substantial membership interest; provided, however, that LESSEE's full faith and credit shall remain obligated under this LEASE as though the assignment had not taken place. ARTICLE 13 -'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 14 - 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. ARTICLE 15 - INSURANCE 15.1 Minimum Insurance Requirements. Prior to commencement of the 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. 13 31 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 of use of the 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 33 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 indemnify CITY for claims related to this LEASE or the Leased Land. 15.2 Subrogation Rights Waived To the extent permitted by law,LESSEE hereby releases CITY, 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 16 - CONDEMNATION 14 40 If all or any part of the 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 of the 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 LESSEE'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 LESSEE determines in good faith that the condemning of such part of the Leased Land will prevent it from continuing to operate on the Leased Land, LESSEE 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 LESSEE 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 LESSEE 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. ARTICLE 17-ARBITRATION 17.1 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 et. sec q.), 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 ($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 ($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 ($50,000). The costs and expenses of arbitration shall be shared equally by the parties, and each party shall bear its own attorney's fees and costs. 15 41 (b) 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. (c) 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 (5) 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 of the 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. (d) 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 18 -MAINTENANCE AND REPAIRS 18.1 Normal Maintenance. During the entire term of this LEASE and every extension hereof,if any, 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, subject to normal, non-abusive use. 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 maintain in first class condition at all times all fire,pollution, and other protective equipment, if any are placed on Leased Land. 16 18.2 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 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 scope of the 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 of the report and perform such work in accordance therewith at LESSEE's cost, risk, and expense. 18.3 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 of the 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 CITY 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 19 - ENVIRONMENTAL CONCERNS 19.1 Hazardous Materials. (a) 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's sole cost, to conduct a baseline soils test prior to execution of this LEASE. (b) Release of CITY.Any other provision of this LEASE to the contrary notwithstanding, 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 17 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. (c) Use of Hazardous Materials on the Site. (i) 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. (ii) 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. (iv) LESSEE hereby agrees that it shall be fully liable for all costs and expenses related to the use, storage, and disposal of Hazardous 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. (d) 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: 18 43 (i) 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; (ii) 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; (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 (iv) Any violation of any laws applicable thereto; provided, however, that this Section 19.1(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. (f) 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 industrial waste,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,petroleum,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 environment, 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. 19 if, 19.2 Permits and Reporting. (a) Permits Required by Other Governmental Agencies. LESSEE shall obtain all permits or approvals required by any applicable law or regulation. Copies of all such permits 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. (b) Correspondence With and Reports to Environmental Agencies. LESSEE shall immediately (the same or the next business day) 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 20 -ESTOPPEL CERTIFICATES Either party shall at any time and from time to time upon not less than ten(10) days' prior written request by the other party,execute,acknowledge,and deliver to such party,or to its designee, a statement in writing certifying that this LEASE is unamended and in full force and effect(or, if there 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 21 - 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 22 -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. ARTICLE 23 -TIME OF THE ESSENCE Time is of the essence of this LEASE and of each provision. 20 0 ARTICLE 24- 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 25 - 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 26 - 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 27 - GOVERNING LAW This LEASE shall be governed by,construed, and enforced in accordance with the laws of the 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 28 -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 29 - 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 relationship between CITY and LESSEE other than the relationship of lessee and lessor. ARTICLE 30 -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 31 - CAPTIONS 21 40 Captions of the articles,paragraphs,and subparagraphs of this 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 32 - AMENDMENT This LEASE is not subject to amendment except in writing executed by both parties hereto. ARTICLE 33 - 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: P.O. Box Seward, AK 99664 Each party shall have the right,from time to time,to designate a different address by notice given in conformity with this Article. ARTICLE 34-FIRE PROTECTION LESSEE shall, at its sole cost,risk,and expense,provide fire detection and 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 of fire prevention and control LESSEE'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 (5)years. IN WITNESS WHEREOF,the parties hereto have set their hands and seals the dates herein set forth. 22 41 CITY: LESSEE: CITY OF SEWARD Jim Hunt, City Manager Date: Date: ATTEST: Johanna Kinney, CMC City Clerk STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of ,2013, by Jim Hunt, City Manager of the City of Seward,Alaska, on behalf of the City. Notary Public in and for Alaska My Commission Expires: STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) The foregoing instrument was acknowledged before me this day of , 201 , by who executed the foregoing document on behalf of as of the [limited liability company/corporation]. 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