HomeMy WebLinkAboutRes2017-014Sponsored by: Hunt
CITY OF SEWARD, ALASKA
RESOLUTION 2017-014
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE EXERCISE OF OPTION NO. 1 TO THE
KENAI FJORDS TOURS LEASE 97-102 TO EXTEND THE TERM OF
THE LEASE BY FIVE YEARS, AND TO ADD INTERIM RENTAL
ADJUSTMENTS BY THE ANNUAL CPI
WHEREAS, the City is owner of real property described as Lot 5, Block 6, Seward
Small Boat Harbor Subdivision, City of Seward, Alaska and recorded as Plat No. 2000-19 in the
Seward Recording District, Third Judicial District, State of Alaska; and
WHEREAS, this parcel was leased to Kenai Fjords Tours in 1997 for a term of twenty
years, with options to extend for two additional five-year terms upon approval of the City
Council; and
WHEREAS, the parties to the lease agree to exercise the first of two five (5) year
extensions in accordance with Article 2.4 of Lease 97-102; and
WHEREAS, Kenai Fjords Tours have met all the requirements to extend this lease; and
WHEREAS, the City provides for annual Interim Rental Adjustments on all new leases,
so to be consistent with City practice, this provision is added to Lease 97-102 in this amendment;
and
WHEREAS, the request is consistent with the City's Comprehensive Plan and the
Strategic Plan.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA that:
Section 1. The Council has determined that the essential terms and conditions of the
proposed lease extension amendment with Kenai Fjords Tours for the real property described as
Lot 5, Block 6, Seward Small Boat Harbor Subdivision, City of Seward, Alaska and recorded as
Plat No. 2000-19 in the Seward Recording District, Third Judicial District, State of Alaska, are in
the public's interest.
Section 2. The City Manager is authorized to execute the lease extension amendment
with Kenai Fjords Tours in substantially the form as presented at this meeting.
Section 3. This resolution shall take effect 30 days from the date of posting and
adoption.
CITY OF SEWARD, ALASKA
RESOLUTION 2017-014
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 281h day of
March, 2017.
THE CITY OF SEWARD, ALASKA
can Bardarson, Mayor
AYES: Casagranda, Keil, Squires, McClure, Alterman, Slater, Bardarson
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
JtJanna ' MC
y Clerk
(City Seal)
1
Agenda Statement
Meeting Date: March 28, 2017
To: City Council
Through: Jim Hunt, City Manag
From: Norm Regis, Harbormaster
Agenda Item: Kenai Fjords Tours would like to extend their Lease 97-102 for 5 years
which is located on the boardwalk in the Seward Boat Harbor.
BACKGROUND & JUSTIFICATION:
Kenai Fjords Tours requested to extend their lease by utilizing one of the two remaining 5 year
extensions as stated in Lease 97-102, 2.4 Options to Extend. If approved, Kenai Fjords Tours
will have one five year extension remaining on this lease. Kenai Fjords Tours have met all the
requirements below to extend this lease.
ARTICLE 2.2 Options to Extend
LESSEE shall have the right to extend the term of this LEASE for two additional five (5)
year period, provided that:
a) LESSEE exercises its option to extend at least one hundred and eighty (180) days
prior to the expiration of the then current lease term;
b) LESSEE is not in default under any term or provision of this LEASE; and
c) LESSEE shall exercise its options to extend by sending written notice in accordance
with the provisions of Article 37 of this LEASE; and
d) The City Council of City, at the time this option is exercised, approves the extension
by resolution or ordinance.
The City has the right to adjust Tariffs and Service Fees as stated in lease 97-102 under Article
4.5 Tariffs and Other Service Fees, and is adjusting Article 3 Rental Rate, with 3.8 Interim
Rental Adjustments with a yearly CPI adjustment to have all City Leases either new or extended
on the same terms.
INTENT:
To approve a lease extension amendment between the City of Seward and Kenai Fjords Tours on
Lot 5, Block 6, Seward Small Boat Harbor Subdivision, City of Seward, Alaska and recorded as
Plat No. 2000-19 in the Seward Recording District, Third Judicial District, State of Alaska.
CONSISTENCY CHECKLIST:
Yes
No
N/A
Comprehensive Plan (document source here): Create a thriving port of
1.
Seward through harbor improvements, infrastructure expansion, and
X
implementation of management plans (page 23).
Strategic Plan (document source here): Attract New Industry:
2
Develop an aggressive marketing campaign which highlights the diverse
X
resources, and quality of life that make Seward a great place to live and
establish a business or industry. (Page 5)
3.
Other (list):
FISCAL NOTE:
There is no fiscal impact of the proposed amendment.
Approved by Finance Department: _�Gt�dta7.�itulu.o�
ATTORNEY REVIEW: Yes X No
RECOMMENDATION:
Approve Resolution 2017- 014 authorizing the City Manager to enter into a Lease Extension
Amendment with Kenai Fjords Tours for Lease 97-102 covering Lot 5, Block 6, Seward Small
Boat Harbor Subdivision, City of Seward, Alaska and recorded as Plat No. 2000-19 in the
Seward Recording District, Third Judicial District, State of Alaska.
LEASE AGREEMENT
between
CITY OF SEWARD, ALASKA
and
KENAI FJORDS TOURS, a division of
ALASKA HERITAGE TOURS, INC.
Effective Date: September 24, 1997
TABLE OF CONTENTS
.TICLE 1 — LEASED LAND ........................................
1.1
Description of Leased Land .................................. 1
1.2
Covenant of Quiet Enjoyment; Warranty of Title .................... 1
1.3
Survey of Leased Land ...................................... 2
1.4
Property Accepted "As -is °................................... 2
1.5
Development of Leased Land ... . ............................. 2
1.6
Permits................................................3
1.7
Platting................................................3
.TICLE 2
— LEASE TERM.........................................3
2.1
Term..................................................3
2.2
Interim Right to Possession .................................. 4
2.3
Lease Subject to Referendum ................................. 4
2.4
Options to Extend ......................................... 4
.TICLE 3
— RENTAL RATE ........................................ 4
3.1
Initial Rental Rate ............... I ........... I ............. 4
3.2
Rental Adjustments ........................................ 5
3.3
Procedure for Rental Adjustment ............................... 5
3.4
Effect of Late Appraisal by CITY ........... I .................. 6
3.5
Appraisal by LESSEE ......................................
3.6
Effective Date of Adjusted Rental Rate ........................... 6
3.7
Late Payment Charge ...................................... 7
TICLE 4
— USE OF LEASED LAND ................................. 7
4.1
Use of Leased Land ........................................ 7
4.2
Obligations of LESSEE ..................................... 7
4.3
No Preferential Rights to Use Public Facilities ..................... 7
4.4
Adequacy of Public Facilities ................................. 7
4.5
Tariffs and Other Service Fees ................ . ............... 7
4.6
Time for Payment of Utilities and Taxes ......................... 8
4.7
Other Uses..............................................8
4.8
Use of Public Docks and Port Facilities ......................... 8
TICLE 5
-- UTILITIES AND RIGHTS OF ACCESS ...................... 8
5.1
Utilities................................................8
5.2
Third -Party Improvements ............ I ............... I ..... 19
5.3
Easements..............................................9
5E AGREEMENT September 24, 1997
- Kenai Fjords Tours Page i
TICLE 6 — CONSTRUCTION BY LESSEE ........................... 10
6.1 Improvements on Leased Land ............................... 10
6.2 City Review of Construction ................................. 11
CLE 7 — RETURN OF LEASED LANDJSITE CONDITIONS ............ 11
7.1 Return of Leased Land in Original Condition ..................... 11
7.2 Return of Leased Land in Different Condition ..................... 11
TICLE 8 — FORCE MAJEURE.................................... 12
TICLE 9 — CITY ACTS OF DEFAULT .............................. 12
TICLE 10 — REMEDIES FOR CITY'S ACTS OF DEFAULT .............. 12
TICLE 11 — LESSEE'S ACTS OF DEFAULT .......................... 13
TICLE 12 — REMEDIES FOR DEFAULT BY LESSEE .................. 14
TICLE 13 — TITLE TO IMPROVEMENTS INSTALLED BY LESSEE ....... 16
13.1 Real Property Improvements ................................. 16
13.2 Personal Property ........................................ 16
TICLE 14 — SUBLEASE OR ASSIGNMENT .......................... 16
14.1 Assignment of Lease or Subleasing ............................ 16
14.2 Sublease Consent ........................................ 17
14.3 Assignment of Lease for Security .............................. 17
14.4 Assignment to Affiliate ..................................... 18
CLE 15 — LESSEE'S DUTY TO DEFEND/INDEMNIFY ................ 18
TICLE 16 — CITY'S DUTY TO DEFENDIINDEMNIFY .................. 18
TICLE 17 — INSURANCE ........................................ 18
17.1 Minimum Insurance Requirements ............................. 1S
17.2 Subrogation Rights Waived .................................. 19
TICLE 18 — CONDEMNATION .................................... 19
TICLE 19 — ARBITRATION ...................................... 20
19.1 Consent Panel ........................................... 20
19.2 Formal Arbitration ................... . ................... 20
19.3 Arbitration Awards ....................................... 20
SE AGREEMENT September 24, 1997
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"LE 20 — MAINTENANCE AND REPAIRS ......................... 20
20.1 Normal Maintenance ...................................... 20
20.2 Safety Issues ............................................ 21
20.3 Cost of Repairs .......................................... 21
TICLE 21 — ENVIRONMENTAL CONCERNS ......................... 22
21.1 Hazardous Materials ...................................... 22
21.2 Permits and Reporting ..................................... 24
TICLE 22 — ESTOPPEL CERTIFICATES ............................ 25
TICLE 23 — CONDITIONS AND COVENANTS ........................ 25
TICLE 24 — NO WAIVER OF BREACH ............................. 25
TICLE 25 — TIME OF THE ESSENCE .............................. 25
LE 26 — COMPUTATION OF TIME ............................. 25
TICLE 27 -- SUCCESSORS IN INTEREST ............................ 25
TICLE 28 — ENTIRE AGREEMENT ................................ 26
TICLE 29 — GOVERNING LAW ................................... 26
TICLE 30 — PARTIAL INVALIDITY ................................ 26
31 — RELATIONSHIP OF PARTIES .......................... 26
TICLE 32 — INTERPRETATION ................................... 26
TICLE 33 — NUMBER AND GENDER ............................... 26
CLE 34 — MANDATORY AND PERMISSIVE ....................... 26
TICLE 35 — CAPTIONS..........................................27
TICLE 36 — AMENDMENT ....................................... 27
TICLE 37 — NOTICES ........................................... 27
TICLE 38 — FIRE PROTECTION .................................. 27
SE AGREEMENT September 24, 1997
- Kenai Fjords Tours Page iii
1.
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "LEASE") is made by and between the CITY OF
'ARD (the "CITY"), a municipal corporation located in the Kenai Peninsula Borough,
of Alaska and whose mailing address is PO Box 167, Seward, Alaska 99664, and
Al FJORDS TOURS, a division of ALASKA HERITAGE TOURS, INC. (the
:SEE"), whose mailing address is PO Box 1889, Seward, Alaska 99664.
WHEREAS, LESSEE has indicated its desire to lease a parcel of land located along
boardwalk in the Small Boat Harbor, an area of approximately 1,360f square feet in size
"Leased Land"); and
WHEREAS, the City Council of CITY has determined that a lease of the Leased
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
burden of compliance with present or future environmental regulations or controls with
t to LESSEE's operations on the Leased Land during the lease term.
NOW THEREFORE, for and in consideration of the mutual promises and covenants
fter contained, the parties hereto agree as follows:
ARTICLE I — LEASED LAND
Description of Leased Land. The Leased Land is located in the City of Seward,
Alaska, The Leased Land is described as follows:
A portion of Block 6, Oceanview Subdivision, Seward Recording
District, Third Judicial District, State of Alaska, and more particularly
described as Seward Small Boat Harbor Boardwalk Lease Site No. 1,
containing 1,360 square feet, more or less.
The Leased Land is depicted on the attached Exhibit A, which is incorporated herein
by reference. The parties intend that Exhibit A serve as an description of the Leased
Land to identify the Leased Land sufficiently for purposes of public hearing and
approval of this LEASE by the City Council of CITY, and for purposes of the
revocable license granted to LESSEE in Section 2.2.
Covenant of Quiet Enj�yment, Warranty of Title. Subject to the encumbrances of
record as of the date hIpreof, any reasonable restrictions imposed on the Leased Land
as part of recording of a plat by the CITY, and the provisions of this LEASE, CITY
hereby covenants and warrants that:
I
SE AGREEMENT
- Kenai Fjords Tours
September 24, 1997
Page 1
11
1.
a) LESSEE shall have the quiet enjoyment and possession of the Leased Land for
the full term of this LEASE;
b) CITY owns the Leased Land in fee, and, subject to the conditions described in
Section 2.2, is fully empowered to enter into this Lease.
c) CITY is unaware of any prior conflicting use of the property that would
adversely affect LESSEE's intended use of the subject parcel.
.3 Survey of Leased Land. Within ninety (90) days from the date of this LEASE,
LESSEE, at its sole cost, will cause the Leased Land to be surveyed and platted by a
land surveyor registered in the State of Alaska. A copy of the drawing and
description of the Leased Land based upon this survey shall be attached to this
LEASE as Exhibit B and shall be incorporated herein by reference. The description of
the Leased Land in Exhibit B shall supersede the description in Exhibit A, and shall
be considered the correct description of the Leased Land for all purposes under this
LEASE. LESSEE shall provide CITY a copy of any and all surveys within ten (10)
days of LESSEE's receipt of any and all surveys. CITY shall have the right to
comment upon any and all surveys, but the exercise of this right shall not imply any
obligation to do so or any obligation to do so in any particular way. If CITY objects
to the surveyor's conclusions in the survey, CITY may give written notice to LESSEE
of CITY's objection within thirty (30) days of receipt of the survey. CITY shall then
engage a second land surveyor registered in the State of Alaska at CITY's expense to
make a second survey of the Leased Land. CITY shall provide LESSEE a copy of the
second survey within ten (10) days of CITY's receipt of the second survey. Unless
CITY and LESSEE agree which survey is acceptable, the acceptable survey shall be
determined in accordance with the arbitration provisions contained in Article 19 of this
LEASE.
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, or agents of CITY, as to the actual physical
condition or characteristics thereof, including but not limited to the description of the
Leased Land found in Section 1.1 and Exhibit A.
Development of Leased Land. LESSEE shall construct a building on the Leased Land,
subject to the terms and conditions described in Article 6, for the operation of
LESSEE's marine tour/retail business. LESSEE understands that construction and
operation of its marine -related business is a major consideration for CITY's agreement
to lease the Leased Land to LESSEE, and LESSEE agrees to commence the
construction of said building by no later than September 30, 1997. LESSEE shall not
operate any other business on the Leased Land without the consent of the CITY.
SE AGREEMENT September 24, 1997
- Kenai Fjords Tours Page 2
a) CITY may withhold its consent as to any proposed business or activity which,
in CITY's sole discretion, is not desirable or compatible with the CITY's
operation of the Small Boat Harbor.
b) In accordance with the provisions of Article 14, no assignment or sublease
shall be permitted, unless approved in writing by CITY. Any sublease shall be
expressly subject and subordinate to this Lease and the rights of the CITY
hereunder. The CITY may elect to not approve any proposed assignment or
sublease that might result in a business or activity that, in the CITY's sole
discretion, is undesirable and/or incompatible with the CITY's Small Boat
Harbor.
.b Permits. LESSEE, at its sole cost, shall obtain all permits necessary to the
construction and operation of its facilities on the Leased Land. CITY agrees from
time to time, upon request of LESSEE, to execute such documents, petitions,
applications and authorizations as may be necessary to obtain from the agency or
public body responsible therefor any conditional use permits, zoning and re -zoning,
tentative and final tract approval and precise plan approval that is required for the
lawful construction and operation of the facilities of LESSEE permitted on the Leased
Land by the terms of this LEASE. 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) or the Environmental Protection Agency (e.g., Clean Air Act
permits).
7 Platting. CITY intends to re -plat all the public property on a periodic basis in order
to ensure the orderly development of the property and as leases are entered into with
various tenants. CITY agrees to include the Leased Land in the next re -plat in
accordance with the description prepared by LESSEE under Section 1.3 herein. If
LESSEE requests a re -plat of the Leased Land prior to that time, CITY shall assist
LESSEE in the preparation and filing of the re -plat, and LESSEE shall reimburse
CITY for the CITY's direct costs in assisting in the preparation and filing of the re -
plat. LESSEE agrees to sign the plat and any other documents necessary to complete
the platting or re -platting 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 the CITY or other governmental authorities as a condition to record 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 Term. The term of this LEASE (the "Lease Term") shall be in accordance with
CITY's authorization Resolution No. 97- (the "Resolution"). The Lease Term
SE AGREEMENT September 24, 1997
- Kenai Fjords Tours Page 3
3.
shall commence with the effective date of the Resolution, and shall run for twenty (20)
years, ending September 23, 2017.
,.2 Interim Right to Possession. LESSEE is hereby granted a revocable license to enter
upon the Leased Land prior to the expiration of 30 days from the date of passage and
posting of the Resolution, subject to the terms of this Section. The granting of a
revocable license to LESSEE under this Section is for the convenience of LESSEE
only and does not grant any interest in the Leased Land. During the term of this
revocable license, LESSEE shall not engage in any storage of materials, clearing,
grading, excavation or construction of improvements on the Leased Land. CITY may
revoke the license granted by this Section at any time, including without limitation
upon the filing with the Clerk of CITY a petition for referendum on the Resolution.
Lease Subject to Referendum. LESSEE understands and assumes the risk that under
the Charter and Code of CITY this LEASE may be voided by referendum. The
revocable license granted in Section 2.2 shall not affect or reduce the right of the
voters of the City of Seward to reject this LEASE by referendum. LESSEE agrees
that if the Resolution is the subject of a referendum petition filed with the Clerk of
CITY during the term of the revocable license granted by Section 2.2, LESSEE shall
have no rights under this LEASE unless and until the Resolution is approved by the
voters of the City of Seward, and LESSEE shall not be entitled to any damages or any
other relief against CITY in the event the Resolution is not so approved.
A Options to Extend. LESSEE shall have the right to extend the initial term of this
LEASE for two (2) additional five- (5) year periods (cumulative extensions not to
exceed ten (10) years), provided that:
a) LESSEE exercises any applicable option to extend at least one hundred eighty
(180) days prior to the expiration of the then current lease term;
b) LESSEE is not in default under any term or provision of this LEASE;
c) LESSEE shall exercise its options to renew by sending written notice thereof in
accordance with the provisions of Article 37 of this LEASE; and
d) The City Council of CITY, at the time each option is exercised, approves the
extension by resolution or ordinance.
ARTICLE 3 — RENTAL RATE
Initial Rental Rate. Commencing on the effective date of this LEASE through
December 31, 1997, the annual rental rate for the Leased Land shall be THREE
THOUSAND TWO HUNDRED SEVENTY-EIGHT DOLLARS ($3,278).
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Commencing January 1, 1998 through June 30, 2000, an adjusted rental rate will be
calculated at a rate of TWO DOLLARS AND FORTY-ONE CENTS ($2.41) per
square foot of the Leased Land, as determined by the survey/plot plan performed on
the Leased Land in accordance to Section 1.3. Rent shall be payable quarterly in
advance on or before the 20th day of the month following the beginning of each
calendar quarter. January 20, April 20, July 20 and October 20.
2 Rental Adjustments. As soon as is practical after execution of this LEASE and before
June 30, 2000, CITY shall, at its own expense, retain an independent MAI-certified
appraiser who shall determine the "Fair Market Rental Value" of the Leased Land. On
July 1, 2000, and the date every five years thereafter (each a "Rental Adjustment
Date"), the total annual rental to be paid under the terms of this LEASE shall be
adjusted to the Fair Market Rental Value at the highest and best use of the Leased
Land, 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 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.
Procedure for Rental Adjustment. To adjust the rent as of any successive Rental
Adjustment Date, CITY may at its own expense, retain an independent MAI-certified
appraiser who shall determine the adjusted annual rental rate at the Fair Market Rental
Value of the Leased Land in accordance with Section 3.2 The appraiser's report shall
be delivered to LESSEE not less than ninety (90) days before the Rental Adjustment
Date. The appraisers 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
gives notice of objection. If LESSEE objects to the appraiser's determination of the
Fair Market Rental Value, 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 a second independent MAI-certified appraiser at LESSEE's expense to make a
second appraisal of the Fair Market Rental Value in accordance with Section 3.2.
If the second appraisal determines a Fair Market Rental Value that varies from that
determined by the first appraisal by no more than twenty percent (20%), then the
adjusted rental rate shall be the average of the rental rates determined by the
appraisals. If the second appraisal determines a Fair Market Rental Value that varies
from the first appraisal by more than twenty percent (20 %), then, unless CITY and
LESSEE agree on a rate themselves, the Fair Market Rental Value and 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.
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.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 the 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.
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 MAI-certified appraiser at LESSEE's expense to make an appraisal under
the terms of Sections 3.2 and 3.3 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 the 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 a second
independent MAI-certified appraiser at CITY's expense to make a second appraisal of
the Fair Market Rental Value as of the Rental Adjustment Date and in accordance
with Section 3.2. If the second appraisal determines a Fair Market Rental Value that
varies from that determined by the first 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 second appraisal determines a fair market Rental Value
that varies from the first appraisal by more than twenty percent (20%), then, unless
CITY and LESSEE agree on a rate themselves, the Fair Market Rental Value and 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.
b 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 the CITY provided a
copy of the appraisal report to LESSEE ninety (90) days before the Rental Adjustment
Date. 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 CITY. Notwithstanding the above, the
exercise by either CITY or LESSEE of the objection procedure relating to rental
adjustment described in 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
SE AGREEMENT September 24, 1997
- Kenai Fjords Tours Page 6
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.
7 Late Payment Charge. Rental payments not received by the due date shall bear
interest until paid at a rate of 10.5 % per annum, or the maximum rate permitted under
Alaska law, whichever is less, plus a flat monthly late fee of $2.50.
ARTICLE 4 — USE OF LEASED LAND
Use of Leased Land. CITY has limited land available for lease. Use of the Leased
Land by LESSEE has been determined by the City Council of CITY to be in the
public interest.
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) Site is to be completely cleaned and restored to its present condition or better
upon termination of this LEASE.
b) LESSEE agrees to prohibit the use, keeping, storage, or disposal of hazardous
materials on the Leased Land.
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.
43 No Preferential Rights to Use Public Facilities. This LEASE does not grant to
LESSEE any exclusive rights to use any public port public facilities constructed or
operated by CITY. LESSEE will be subject to any tariffs, procedures, rules and
regulations of CITY concerning the use of such facilities as they may now exist or
from time to time be amended, and LESSEE shall not be entitled to any exclusive use.
4 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.
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.
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b Time for Payment of Utilities and Taxes. LESSEE will pay for utilities and taxes
related to operations on the Leased Land and LESSEE's interest in this LEASE, if any,
before such obligations become delinquent; provided, that LESSEE may, in good faith
and before such delinquency, contest any such charge or assessment.
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 to LESSEE should
this LEASE be terminated for any reason.
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
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 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. CITY adopted the Uniform Building Code, 1991
edition, and all construction will be in compliance thereto. 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 oversizing shall be borne by CITY or other utility
company. Such costs shall be limited to the supplier's cost of the additional fittings,
equipment, direct labor, and equipment costs to complete the installation. The costs of
oversizing pipe or electrical conduit shall be limited to the difference between the
supplier's price to provide the size required to serve its facility and the price of the
oversized material required by the 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.
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.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 Leased Land as a commercial
unit subject, however, to the conditions that:
a) All such matters shall be limited to the Lease Term and shall terminate upon
termination of this LEASE for whatever reason.
b) Any such matters of a permanent nature extending beyond the Lease Term
shall not be granted without the prior written approval of CITY. In any of the
foregoing instances referred to in this Section, CITY shall be without expense
therefor, and the cost and expense thereof shall be bome 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.
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 agerl;�ies (including the City of Seward), public
utilities and other users or tenants of leased 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 efficient 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. Any easements or rights of access granted to
LESSEE by CITY need not be exclusive to LESSEE.
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ARTICLE 6 — CONSTRUCTION BY LESSEE
1 Improvements on Leased Land. LESSEE shall have the right to erect, maintain, alter,
remodel, reconstruct, rebuild, build and/or replace buildings and other improvements
on the Leased Land, subject to the following conditions:
a) LESSEE shall cause to be constructed on the Leased Land a building for its
marine tour/retail business by May 15, 1998.
b) The cost of any such construction, reconstruction, demolition, or of any
changes, alterations or improvements, shall be borne and paid for by LESSEE.
c) The Leased Land shall at all times be kept free of mechanic's and
materialmen's liens.
d) LESSEE shall supply CITY with a copy of all building plans and specifications
and a site plan or plans (based on a recent survey) for the Leased Land prior to
commencement of construction.
e} LESSEE, upon commencement of permissible building or construction
activities on the Leased Land, shall continue such activities through to
completion with diligence and continuity.
f) On completion of the improvements, LESSEE shall provide CITY a copy of an
as -built survey depicting the improvements as completed.
g) Any general contractor employed by LESSEE or its sublessees shall be
appropriately bonded by use of performance and labor and material payment
bonds in the customary form when cost of the work is equal to or exceeds
FIFTY THOUSAND DOLLARS ($50,000). Copies of all such bonds shall be
furnished to CITY prior to commencement of construction. If the cost of the
work is less than FIFTY THOUSAND DOLLARS ($50,000.00), LESSEE shall
provide CITY, if no performance and labor and material bonds are provided by
LESSEE, any necessary assurance 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)1, a
performance bond shall be required when the cost of the work is equal to or
exceeds FIFTY THOUSAND DOLLARS ($50,000).
IAffiliate means a person that directly or indirectly through one or more intermediaries controls, or is controlled by,
or 's under common control with, a corporation subject to the Alaska Corporations Code.
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h) CITY may, as contemplated by Alaska Statutes, give notice of non -
responsibility for any improvements constructed or effected by LESSEE on the
Leased Land.
i) LESSEE shall comply with all federal, state and local statutes and regulations
with respect to such construction including any required finding by the City
Council of Seward that such action is in the public interest.
.2 City Review of Construction. CITY shall have the right to review initial plans,
including those supplied to CITY under Section 6.1 above, and any future changes or
additions to LESSEE's facilities on the Leased Land, by reviewing the design thereof
prior to the commencement of construction. CITY shall have the right to comment
upon that design and to require LESSEE to make reasonable changes so as to avoid
interference with public operations, but the exercise of these rights shall not imply any
obligation to do so nor any obligation to do so 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 easements, rights -of -way, or setback requirements.
LESSEE shall obtain the usual and customary performance guarantees from its
contractors, and CITY shall be named as an additional insured.
ARTICLE 7 — RETURN OF LEASED LAND/SITE CONDITIONS
7 1 Return of Leased Land in Original Condition. Subject to the provisions of Article
13.1 herein, upon termination of this LEASE for any reason, LESSEE shall return the
Leased Land to CITY in the same condition, or better, as at the commencement of this
LEASE, ordinary wear and tear excepted. The Leased Land shall be free of all
Hazardous Materials and contamination arising out of or resulting from LESSEE's
operations.
7.2 Return of Leased Land in Different Condition. Notwithstanding the provisions of
Section 7.1 above, upon termination of this LEASE for any reason LESSEE may
return the Leased Land in a re -contoured or graded condition different from its
original condition provided CITY has granted written approval of LESSEE's plans for
development of the Leased Land contours, including its plans for material extraction
and final grade.
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ARTICLE S — FORCE MAJEURE
In the event either LESSEE or CITY is delayed from performance of any of its
tions under this LEASE, due to acts of God, acts of the enemies of the United States of
.ca, sabotage, war, blockade, insurrection, riot, epidemic, fire, flood, explosion,
uake/tsunami, civil disturbance or war, the time period wherein such performance is to
shall be extended by that amount of time necessary to compensate for the delay.
ARTICLE 9 — CITY ACTS OF DEFAULT
Each of the following shall be a "CITY Act of Default" under this LEASE and the
ms "acts of default" and "default" shall mean, when they are used in this LEASE, any one
more of the following events:
Failure by CITY to fulfill, observe or perform any covenants or agreements on its part
to be observed or performed under this LEASE for a period of thirty (30) days after
written notice specifying such failure, requesting that it be remedied, and stating that it
is a notice of default, has been given to CITY by LESSEE; provided, however, that if
said default is such that it cannot be corrected within the applicable period, it shall not
constitute an act of default if corrective action is instituted by CITY within the
applicable period and diligently pursued until the default is corrected.
Violation by CITY of any applicable laws or regulations of the United States, the State
of Alaska, the Kenai Peninsula Borough, or the City of Seward or any conditions of
any permits issued by agencies of the City of Seward, the Kenai Peninsula Borough,
the State of Alaska or of the United States Government pursuant to the regulations of
such agencies for a period of sixty (60) days after written notice specifying such
violation has been given by the agency to CITY; provided, however, if such violation
be such that it cannot be corrected within the applicable period, it shall not constitute
an act of default if corrective action is instituted by CITY within the applicable period
and diligently pursued until the violation is corrected. Furthermore, if CITY shall
contest such alleged violation through appropriate judicial or administrative channels,
the time period specified herein shall not commence until such proceedings are finally
determined, provided such proceedings are diligently pursued.
ARTICLE 10 — REMEDIES FOR CITY'S ACTS OF DEFAULT
Whenever an act of default by CITY shall have occurred, and any applicable period
for giving notice and any opportunity to cure shall have expired, LESSEE shall have
the following rights and remedies in addition to any rights and remedies that may be
given to LESSEE by statute, common law or otherwise:
a) Withhold payment of any rent otherwise due CITY;
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b) Refuse to proceed with any of LESSEE's other performance obligations under
this LEASE;
c) Recover whether this LEASE be terminated or not from CITY reasonable
attorney's fees and all other expenses incurred by LESSEE by reason of the
default by CITY; and
d) Declare this LEASE terminated.
2 No expiration or termination of this LEASE shall expire or terminate any liability or
obligation to perform of CITY's which arose prior to the termination or expiration
except insofar as otherwise agreed to in this LEASE.
Each right and remedy of LESSEE provided for in this LEASE shall be cumulative
and shall be in addition to every other right or remedy provided for in this LEASE,
now or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by LESSEE of any one or more of the rights and
remedies provided for in this LEASE, now or hereafter existing at law or in equity or
by statute or otherwise, shall not preclude the simultaneous or later exercise by
LESSEE of any or all other rights or remedies provided for in this LEASE, now or
thereafter existing at law or in equity or by statute or otherwise.
No delay or omission to exercise any right or power accruing following an act of
default shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and as often
as may be deemed expedient.
ARTICLE 11 -- LESSEE'S ACTS OF DEFAULT
Each of the following shall be a "LESSEE Act of Default" under this LEASE and the
.s "acts of default" and "default" shall mean, whenever they are used in this LEASE, any
or more of the following events:
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.
.2 Failure by LESSEE to observe, fulfill or perform any covenants, conditions or
agreements on its part to be observed or performed under this LEASE for a period of
thirty (30) days after written notice specifying such failure, requesting that it be
remedied, and stating that it is a notice of default, has been given to LESSEE by
CITY; provided, however, that if said default is such that it cannot be corrected within
the applicable period, it shall not constitute an act of default if corrective action is
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instituted by LESSEE within the applicable period and diligently pursued until the
default is corrected.
L3 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.
..4 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.
.5 Failure by LESSEE to construct, in accordance with Article 6 hereof, a building for its
marine tour/retail business on the Leased Land and place the facility in service by
June 1, 1998.
ARTICLE 12 — REMEDIES FOR DEFAULT BY LESSEE
Whenever an act of default by LESSEE shall have occurred, and any applicable period
giving notice and any opportunity to cure shall have expired, CITY shall have the
Dwing rights and remedies all in addition to any rights and remedies that may be given to
'Y by statute, common law or otherwise:
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
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conclusively presumed that compliance with the procedures set forth in the Alaska
Uniform Commercial Code (AS 45.09.504) with respect to sale of property shall be a
commercially reasonable disposal.
CITY may re-enter the Leased Land and take possession thereof and, except for any
personal property of LESSEE which CITY has waived its right to distrain under sub-
paragraph 12.1 above, remove all personal property of LESSEE from the Leased Land.
Such personal property may be stored in place or may be removed and stored in a
public warehouse or elsewhere at the cost of LESSEE all without service of notice or
resort to legal process, all of which LESSEE expressly waives.
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 sublessees or other
occupants of the Leased Land;
c) Recover, whether this LEASE be terminated or not, reasonable attorney's fees
from LESSEE 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 rent reserved
under this LEASE discounted to the date of such breach at the rate of eight
percent (S %) per year. If the Leased Land or any part thereof be re -let by
CITY for the unexpired term of this LEASE, CITY shall reimburse to LESSEE
upon receipt an amount not to exceed the amount received by CITY under this
paragraph.
.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.
_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.
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
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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.
2.7 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 13 — TITLE TO IMPROVEMENTS INSTALLED BY LESSEE
3.1 Real Property Improvements. All improvements constructed by LESSEE on the
Leased Land or on easements to or from the same, such as buildings, warehouses,
conveyor systems, ditches, sewer lines, water lines, dikes or berms and similar
improvements, shall become the property of CITY upon termination of this LEASE
for any reason; provided, however, that CITY may require LESSEE to remove any
improvements designated by CITY without cost to CITY.
2 Personal Property. Any other provisions of this LEASE to the contrary
notwithstanding, LESSEE, upon termination of this LEASE for any reason, may, but
need not, promptly remove, in no event later than ninety (90) days from the
termination of the LEASE, trade fixtures and equipment from the Leased Land
provided that LESSEE shall repair any damages to the Leased Land caused by such
removal.
ARTICLE 14 — SUBLEASE OR ASSIGNMENT
11.1 Assignment of Lease or Subleasing. The parties recognize that the LEASE has been
determined to be in the public interest by the City Council of CITY for the reasons set
forth in the Resolution. LESSEE may only assign or sublease tbis LEASE of the
Leased Land with CITY's prior written consent which shall be granted if the use of the
Leased Land by the proposed assignee or sublessee is:
a) Compatible with the use of adjacent lands;
b) A permitted use under the then existing zoning regulations and comprehensive
land use plan; and
c) Found to be in the public interest by the City Council of CITY to such
assignment or subletting.
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2 Sublease Consent. CITY shall review, process, and approve sublease consent requests
subject to the following:
a) LESSEE shall provide a copy of the sublease agreement to CITY, including
sublease amounts.
b) LESSEE shall remain responsible for performance of all its obligations under
the LEASE of the premises from CITY. A sublessee shall be obligated to
perform all terms and conditions of LEASE between LESSEE and CITY with
respect to the sublease of the premises, and such terms and conditions shall be
incorporated in the sublease agreement by reference.
c) LESSEE shall pay to CITY an amount equal to THIRTY-FIVE PERCENT
(35 %) of sublease amounts received under the sublease agreement in excess of
the existing Fair Market Rental Value of the Leased Land. The payment of
such sublease amounts shall be due beginning with the quarterly rental payment
due date immediately following the date the CITY approves the sublease, or in
accordance with such other payment plan as is mutually accepted by CITY and
LESSEE.
Assignment of Lease for Security. Notwithstanding Section 14.1 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 12 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 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 11.3, CITY shall
not exercise any of the remedies afforded to it under Article 12 above so long
as LESSEE or Lender remains in possession of the Leased Land and satisfies
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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.
4.4 Assignment to Affiliate. LESSEE may assign this LEASE to an affiliate of LESSEE as
that term is defined by AS 10.06.990(2); provided, however, that LESSEE's full faith
and credit shall remain obligated under this LEASE as though the assignment had not
taken place.
ARTICLE 15 — LESSEE'S DUTY TO DEFENDJINDEMNIFY
LESSEE shall defend, indemnify and hold CITY harmless from any and all liability or
is for damages, including personal injuries, death and property darnage arising out of or
.ing from LESSEE's use of the Leased Land or the use of the Leased Land by LESSEE's
ssees, agents or contractors or the public, except for damages arising from the sole
;ence or willful acts or omissions of CITY, its agents, employees, or contractors. If any
i or proceeding is brought against LESSEE by reason of any such occurrence, LESSEE
notify CITY promptly in writing of such action or proceeding.
ARTICLE 16 — CITY'S DUTY TO DEFEND/INDEMNIFY
CITY shall defend, indemnify and hold LESSEE harmless from any and all liability or
ims for damages, including personal injuries, death and property damage arising from the
e negligence or willful acts or omissions of CITY, its agents, employees, or contractors or
m conditions existing or activities occurring on the Leased Land prior to the effective date
this LEASE.
ARTICLE 17 — INSURANCE
Minimum Insurance Requirements. Prior to commencement of the Lease Term,
LESSEE shall procure and maintain, at LESSEE's sole cost and expense, commercial
general liability insurance, with limits of liability of ONE MILLION DOLLARS
($1,000,000) for all injuries and/or deaths resulting to any one person and ONE
MILLION DOLLARS ($1,000,000) Iimit from any one occurrence. Coverage under
such insurance shall also include explosion, collapse and underground property damage
hazards. Such insurance shall include contractual liability. The minimum amounts and
types of insurance provided by LESSEE shall be subject to revision 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 increases in
the cost of living, inflationary pressures, and other considerations, shall be utilized in
assessing whether the minimum insurance requirements should be increased. CITY
may notify LESSEE of any requested increase in insurance coverage.
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All insurance policies shall provide for thirty (30) days' notice of cancellation and/or
material change to be sent to CITY at the address designated in ARTICLE 37 of this
LEASE. All such policies shall be written by insurance companies legally authorized
or licensed to do business in the State of Alaska, and acceptable to CITY (Best's
Rating B+ or better). LESSEE shall furnish CITY, on forms supplied by CITY,
certificates evidencing that it has procured the insurance required herein prior to the
occupancy of the Leased Land or operation by LESSEE. Nothing herein contained
shall prevent LESSEE or CITY from placing and maintaining at CITY's or LESSEE's
own individual cost and expense, additional or other insurance as may be desired.
17.2 Subrogation Rights Waived. All of the insurance policies required above as well as
any other insurance carried by LESSEE or CITY shall provide that the insurers waive
their rights of subrogation against each other and their respective officers, servants,
agents or'employees. LESSEE and CITY further agree to waive and agree to have
their insurers waive any rights of subrogation (whether by loan receipts, equitable
assignment or otherwise), with respect to deductibles under such policies and with
respect to damage to equipment including the loss of use thereof, whether insured or
not. LESSEE shall also name CITY as an additional insured on the general liability
insurance policy maintained by LESSEE as required above, excluding coverage for
claims resulting from CITY's sole negligence.
ARTICLE 18 — CONDEMNATION
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
th Leased Land is subject. If at the time of such partial taking for public use, LESSEE
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City - Kenai Fjords Tours Page 19
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 19 — ARBITRATION
Any dispute between CITY and LESSEE with respect to any provision of this LEASE
or the rights and obligations of the parties hereunder shall be decided by arbitration, in
accordance with the provisions of this Section.
1,9.1 Consent Panel. The party desiring arbitration of a dispute shall give written notice to
that effect to the other party specifying in such notice the name and address of a
person to serve as an arbitrator. Within fifteen (15) days after receipt of such notice
the other party shall give written notice to the first party specifying the name and
address of another person designated to serve as an arbitrator.
If neither party has objected to the other's designation within fifteen (15) days of the
notice by the second party of its designation of an arbitrator, then the two chosen
arbitrators (called the "consent panel") shall select a third person agreeable to both to
become the third member of the consent panel. The consent panel may utilize
informal techniques and hold informal hearings without reference or adherence to the
rules or procedures of the American Arbitration Association. Promptly and within
thirty (30) days of concluding any proceeding the consent panel shall render its written
decision. It is the intent of this subparagraph to provide for a speedy and inexpensive
resolution of disputes provided the parties agree to such a procedure.
19.2 Formal Arbitration. If either party objects, within fifteen (15) days of the second
party's designation of an arbitrator to the other's choice of an arbitrator pursuant to
paragraph 19.1 above, or the party desiring arbitration initially decides not to use the
consent panel procedure, then the matter shall be promptly referred to the American
Arbitration Association in accordance with the then existing rules of the American
Arbitration Association.
19.3 Arbitration Awards. Any award by either a consent panel or as a result or
proceedings before a panel pursuant to the rules of the American Arbitration
Association shall be enforceable in accordance with Alaska Statutes. Any award shall
include an award of costs, interest and attorney fees to the prevailing party.
ARTICLE 20 — MAINTENANCE AND REPAIRS
20.1 Normal Maintenance_ During the entire term of this LEASE and every renewal or
extension hereof, LESSEE shall, at LESSEE's sole cost, risk and expense, maintain the
.EASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours Page 20
Leased Land, including any improvements placed thereon by LESSEE, in as good
condition as received or constructed by LESSEE, ordinary wear and tear excepted.
CITY, at CITY's sole option and expense, may, prior to the commencement of
construction by LESSEE, perform maintenance and preventative work on the Leased
Land, exclusive of improvements placed thereon by LESSEE, in order to prevent
erosion, mitigate damage to plants and animals, or prepare the Leased Land for
eventual development by LESSEE or others by grading, filling or contouring the
Leased Land. Any such work performed by CITY shall be at CITY's sole expense and
risk unless LESSEE agrees, in advance and in writing, to share such expense and risk.
LESSEE shall maintain in first class condition at all times all fire, pollution and other
protective equipment, if any are placed on Leased Land.
20.2 Safety Issues. CITY may notify LESSEE in writing of any deficiencies in the
performance of LESSEE's maintenance responsibilities as they relate to public health
or safety and LESSEE shall promptly within thirty (30) days of receipt of such notice
advise CITY in writing of its proposed schedule for performance of any work
necessary to cure such deficiencies.
If such deficiencies relate to the safety of 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.
20.3 Cost of Repairs. Should LESSEE dispute the necessity of any maintenance work as
being necessary or advisable or reasonable to protect the public facilities on adjacent
land, it may submit the matter to arbitration; provided, however, that pending the
decision of the arbitrators 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
TEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours Page 21
require updating or improvement by reason of a change in LESSEE's use of the
Leased Land or operations therefrom, LESSEE shall either construct such
improvements at LESSEE's own cost or reimburse CITY for such work at the option
of CITY.
ARTICLE 21 — ENVIRONMENTAL CONCERNS
21.1 Hazardous Materials.
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.
b) Release of CITY. Any other provision of this LEASE to the contrary notwith-
standing, LESSEE releases CITY from any and all claims, demands, penalties,
fines, judgments, liabilities, settlements, damages, costs or expenses (including,
without limitation, attorney's fees, court costs, litigation expenses, and
consultant and expert fees) arising during and after the term of this LEASE,
and resulting from the use, keeping, storage or disposal of Hazardous Material
on the site by LESSEE, or arising out of or resulting from LESSEE's
operations at the site except for those arising out of the CITY's sole negligence
or intentional misconduct. This release includes, without limitation, any and all
costs incurred due to any investigation of the site 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
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours page 22
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:
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;
Any personal injury (including wrongful death) or property damage
(real or personal) arising out of or related to such Hazardous Material;
111) Any lawsuit brought or threatened, settlement reached or government
order relating to such Hazardous Material; and/or
iv) Any violation of any laws applicable thereto; provided, however, that
this Section 21.1(d) shall apply only if the acts giving rise to the claims,
demands, penalties, fines, judgments, liabilities, settlements, damages,
costs or expenses (1) occur 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 their employers, employees, agents,
invitees, contractors, subcontractors or authorized representatives. 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) Facility Operator. For all purposes, LESSEE shall be deemed the operator of
any facility on the Leased Land.
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours Page 23
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 "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, the Resource
Conservation and Recovery Act of 1976, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Clean Water Act, and
the Superfund Amendments and Reauthorization Act of 1986.
21.2 Permits and Reporting.
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 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 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.
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours Page 24
ARTICLE 22 — 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 23 — CONDITIONS AND COVENANTS
All the provisions of this LEASE shall be deemed as running with the land, and shall
be construed to be "conditions" as well as "covenants," as though the words specifically
expressing or imparting covenants and conditions were used in each separate provision.
ARTICLE 24 — NO WAIVER OF BREACH
No failure by either CITY or LESSEE to insist upon the strict performance by the
other of any term, covenant or condition of this LEASE or to exercise any right or remedy
consequent upon a breach thereof, shall constitute a waiver of any such breach or of such
terms, covenants or conditions. No waiver of any breach shall affect or alter this LEASE, but
each and every term, covenant and condition of this LEASE shall continue in full force and
effect with respect to any other then existing or subsequent breach.
ARTICLE 25 — TIME OF THE ESSENCE
Time is of the essence of this LEASE and of each provision.
ARTICLE 26 — COMPUTATION OF TIME
The time in which any act provided by this 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 27 — SUCCESSORS IN INTEREST
Each and all of the terms, covenants and conditions in this LEASE shall inure to the
benefit of and shall be binding upon the successors in interest of CITY and LESSEE.
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours Page 25
ARTICLE 28 — ENTIRE AGREEMENT
This LEASE contains the entire agreement of the parties with respect to the matters
covered by this LEASE, and no other agreement, statement or promise made by any party
which is not contained in this LEASE shall be binding or valid.
ARTICLE 29 — GOVERNING LAW
This LEASE shall be governed by, construed and enforced in accordance with the
laws 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, including
without limitation, Chapter 7.05 of the Seward City Code.
ARTICLE 30 — PARTIAL INVALIDITY
If any provision of this LEASE is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
ARTICLE 31 — RELATIONSHIP OF PARTIES
Nothing contained in this LEASE shall be deemed or construed by the parties or by
any third person to create the relationship of principal and agent or of partnership or of joint
venture or of any association between CITY and LESSEE; and neither the method of
computation of rent, nor any other provisions contained in this LEASE nor any acts of the
parties, shall be deemed to create any relationship between CITY and LESSEE other than the
relationship of lessee and lessor.
ARTICLE 32 — INTERPRETATION
The language in all parts of this LEASE shall in all cases be simply construed
according to its fair meaning and not for or against CITY or LESSEE as both CITY and
LESSEE have had the assistance of counsel in drafting and reviewing this LEASE.
ARTICLE 33 — NUMBER AND GENDER
In this LEASE, the neuter gender includes the masculine and the feminine, and the
singular number includes the plural; the word "person" includes corporation, partnership, firm
or association wherever the context so requires.
ARTICLE 34 — MANDATORY AND PERMISSIVE
"Shall," "will" and "agrees" are mandatory; "may" is permissive .
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours page 26
ARTICLE 35 — CAPTIONS
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 36 — AMENDMENT
This LEASE is not subject to amendment except in writing executed by both parties
hereto.
ARTICLE 37 — 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:
Thomas C. Tougas
Kenai Fjords Tours, a division of
Alaska Heritage Tours, Inc.
PO Box 1889
Seward, Alaska 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 38 — FIRE PROTECTION
LESSEE shall at its sole cost, risk and expense provide fire protection to its operations
on the Leased Land and fire prevention to industry standards for risks to adjacent facilities
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours I Page 27
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 LESSEFs obligations hereunder may
vary during the term of this LEASE and CITY may submit LESSEE's compliance with its
obligation hereunder to arbitration not more frequently than once each five years.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the dates
herein set forth.
CITY:
CITY OF SEWARD
By: Ronald A.
Its: City Manq
Date:
ATTEST:
'z
City CIerk
(C 4 sew..,
•
Sl e L
STATE ;OF ALA U. )
THIRD RjbIC0I,AL' DISTRICT )
LESSEE:
KENAI FJORDS TOURS, a division of
ALASK ERITAGE TO S, INC.
By: Thomas C. Tougas
Its: President
Date: /
SUBMITTED BY:
THIS IS TO CERTIFY that on this .2AL day of r _ __) 1997, before me, the
undersigned, a Notary Public in and for the State of Alaska, personally appeared Ronald A.
Garzini, known to me and to me known to be the city manager for the City of Seward,
LEASE AGREEMENT
City - Kenai Fjords Tours
September 24, 1997
Page 28
Alaska, and authorized to execute documents on its behalf, and is the individual named in and
who executed the foregoing document on behalf of the City of Seward for the uses and
purposes therein set forth.
WITNESS my hand and notarial seal the day and year first hereinabove written.
OTA
=¢ : ° > _ Notary Public in and for A a a
Stu . 0 ° Z- My Commissio Expires:
STATE OF ALASKA )
) ss.
THIRD JUDICIAL DISTRICT )
THIS IS TO CERTIFY that on this W- day of _ __, 1997, before me, the
undersigned, a Notary Public in and for the State of Alaska, p rsonally appeared Thomas C.
Tougas, known to me and to me known to be the president of Kenai Fjords Tours, a division
of Alaska Heritage Tours, Inc., and authorized to execute documents on its behalf, and is the
individual named in and who executed the foregoing document on behalf of the corporation
for the uses and purposes therein set forth.
WITNESS my hand and notarial seal the day and year first hereinabove written.
Notary Public i a for Alas
My Commissionxpires: G%
OTA _ ..
CD —00
,f�f/rl6F
LEASE AGREEMENT September 24, 1997
City - Kenai Fjords Tours page 29