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HomeMy WebLinkAboutResolution No. 2017-45CITY OF KENAI RESOLUTION NO. 2017-45 Sponsored by: Administration A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, CONSENTING TO A RENEWAL OF LEASE OF CERTAIN AIRPORT LANDS WITHIN THE AIRPORT RESERVE BETWEEN THE CITY OF KENAI, LESSOR, AND DEWAYNE BENTON, LESSEE, ON PROPERTY DESCRIBED AS LOT 3, BLOCK 4, GENERAL AVIATION APRON NUMBER ONE. WHEREAS, on September 4, 1992, the City entered into a Lease with ERIK BARNES, d/b/a BARNES ENTERPRISES, Lessee, for City -owned lands described as follows: Lot Three (3), Block Four (4), General Aviation Apron No. 1, according to the amended Plat thereof, filed under Plat No. 2004-20, Records of the Kenai Recording District, Third Judicial District, State of Alaska; and WHEREAS, said Lease of Airport Lands, hereinafter referred to as Lease, was recorded in Book 405 at Pages 409 — 431, on September 11, 1992, in the Kenai Recording District, Third Judicial District; and, WHEREAS, the Lease was assigned to RUSSELL G. WINGER, and recorded on April 25, 2003, under document number 2003-005009-0; and, WHEREAS, the Lease was amended to reflect a change of use from "aircraft storage" to "aircraft storage and maintenance" by that certain Assignment of Lease and Amendment to Lease recorded on April 25, 2003, under document number 2003-005009-0 ; and, WHEREAS, the term of the original Lease wa Subsequently, the City and Lessee, RUSSELL for a term of five (5) years, recorded on June 0; and, five (5) years, and expired on June 30, 2012. WINGER, entered into a Lease of Airport Lands 2, 2012, under document number 2012 -005446 - WHEREAS, the Lessee, RUSSELL WINGER, assigned the Lease to DEWAYNE BENTON, by that Assignment recorded on May 25, 2016, under document number 2016-004426-0; and, WHEREAS, the five (5) year term of the Lease expires on June 30, 2017. On April 21, 2017, the Lessee, DEWAYNE BENTON, submitted an application to renew the Lease; and, WHEREAS, the Lessee's application does not include a proposal to construct new improvements on the premises, or a proposal to add, delete, or alter a business authorized under said lease, the maximum lease amount provided under Kenai Municipal Code 21.10.090(d)(1) is five (5) years; and, WHEREAS, On June 8, 2017, the Airport Commission recommended approval of the Lease renewal; and, Resolution No. 2017-45 Page 2 of 2 WHEREAS, on June 14, 2017, the Planning & Zoning Commission recommended approval of the Lease renewal. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That a Lease of Airport Reserve Lands be executed by the CITY OF KENAI, Lessor, and DEWAYNE BENTON, Lessee on certain Airport Lands described as Lot 3, Block 4, General Aviation Apron No. 1. Further, the City Manager is authorized to execute Lease of Airport Reserve Lands on behalf of the City. Section 2. This resolution takes effect immediately upon passage PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 5th day of July, 2017 R IAN GAME' SR., MAYOR v210 Fidalgo Ave, Kenai, Alaska 99611-7794 Telephone: (907) 283-7535 1 Fax: (907) 283-3014 Me city of www.kenai.city V MEMORANDUM TO: Mayor Brian Gabriel and Kenai City Council THROUGH: Paul Ostrander, City Manager-. 49' FROM: Matt Kelley, City Planner Ak DATE: May 31, 2017 SUBJECT: Resolution No. 2017 — 45, Lease Renewal DeWayne Benton Lot 3, Block 4, General Aviation Apron —170 Granite Point Court DeWayne Benton, currently leases the above-described property located inside the Airport Reserve for "aircraft storage and maintenance", since the lease was assigned to him on May 9, 2016. Said lease has a lease term of five years and will expire on June 30, 2017. Accordingly, Mr. Benton has submitted an application for a five-year renewal of his lease with a proposed expiration date of June 30, 2022. The subject parcel is zoned Airport Light Industrial (ALI). Pursuant to KMC 14.22.010 — Land Use Table the proposed use of the parcel consisting of aircraft storage and maintenance would fall under Airport Compatible Uses. This use is a principally permitted use and is therefore consistent with the Airport Light Industrial Zoning District. Furthermore, the Comprehensive Land Use Plan designation is Airport Industrial. It is defined as "...intended to support continued development at the Kenai Municipal Airport. It is intended for those lands reserved for the airport and its future expansion are included in this classification. Residential uses may be considered appropriate provided the residential use is associated with and secondary to the primary industrial use." The continued use of the subject parcel as an aircraft hangar is consistent with the Airport Industrial Comprehensive Plan Land Use designation. At their regular meeting of June 8, 2016, the Airport Commission recommended that the lease renewal be extended for a period of 8 years. KMC 21.10.090(d)(1) — Length of Term details the requirements of a lease renewal based on the applicants investment into the subject property. Based on the submitted application, the applicant has indicated that they do not plan to make any additional investment into the subject property and would therefore, have an investment of less than $100,000. Therefore, since the application does not include a proposal to construct new improvements on the premises, or a proposal to add, delete, or alter a business authorized under the lease, the maximum term of the lease allowed under Kenai Municipal Code is five years. Staff therefore recommends that the City enter into a new lease using the current lease form approved by City Council, establish rents using the latest Airport Reserve Zone -Based Appraisal, prepared by McSwain & Associates on February 18, 2015, and amend the lease renegotiation cycle in the lease so that the first renegotiation of rent would take place in 2020 rather than 2022, the year in which the proposed lease would expire. Thank you for your consideration. KENAI MUNICIPAL AIRPORT LEASE OF AIRPORT RESERVE LANDS THIS LEASE AGREEMENT entered into this day of 2017 b and between the CITY OF KENAI, ("City") 210 Fidalgo Avenue, Kenai, Alaska 99611-7794, and DeWAYNE BENTON, individually, whose address is P.O. Box 2646, Kenai, AK 99611 ("Lessee"). DEFINITIONS For the purposes of this Lease the following terms are defined as follows: Airport - the Kenai Municipal Airport, including all the runways, taxiways, aprons, water lanes, water taxiways; and all City -owned real estate located within the boundaries of the Airport Reserve as defined in KMC 21.05.010-020. 2. Airport Manager - the official to whom the City Manager of the City has delegated the authority and responsibility of managing and directing the activities of the Airport. "Airport Manager" includes that person's authorized representative. 3. City - the City of Kenai, Alaska, a home rule municipal corporation of Alaska. 4. City Manager - the official to whom the Kenai City Council has delegated the responsibility of managing and directing all activities of the City. 5. Contamination - the unpermitted presence of any released Hazardous Substance. 6. Environmental Law - any applicable federal, state, or local statute, law, regulation, ordinance, code, permit, order, decision, judgment of any governmental entity relating to environmental matters, including littering and dumping. 7. FAA - the abbreviation for the Federal Aviation Administration. 3. Hazardous Substance - any substance that is defined under an Environmental Law as hazardous waste, Hazardous Substance, hazardous material, toxic, pollutant, contaminant, petroleum, petroleum product, or oil. LEASE OF AIRPORT LANDS Page 1 of 33 9. KMC - the abbreviation for the Kenai Municipal Code. 10. Permanent Improvement - a fixed addition or change to land that is not temporary or portable, including a building, building addition, gravel fill, paving, retaining wall, storage tank, and well. ARTICLE I PREMISES LEASED A. PREMISES: In consideration of Lessee's payment of the rents and performance of all the covenants of this Lease, the City leases to the Lessee, and the Lessee leases from the City, the following described property ("Premises") in the Kenai Recording District, Third Judicial District, State of Alaska and located on the Airport; to wit: Lot 3, Block 4, General Aviation Apron No. 1, according to the amended Plat thereof, filed under Plat No. 2004-20, recorded in the Kenai Recording District, Third Judicial District, State of Alaska. B. NO WARRANTY: Except as may be provided in this Lease, the City makes no specific warranties, expressed or implied, concerning the condition of the Premises including, survey, soils, wetlands, access, and suitability or profitability for any use including those authorized by this Lease, its environmental condition, or the presence or absence of Hazardous Substances in, on, and under the surface. The Lessee takes the Premises on an "as is" basis and without warranty, subject to any and all of the covenants, terms, and conditions affecting the City's title to the Premises. ARTICLE II RIGHTS AND USES A. AUTHORIZED USES USE OF PREMISES: The City authorizes the Lessee to use the Premises for the following purposes only: Aircraft Storage and Maintenance. 2. CONTINUOUS OPERATIONS: Unless the City approves otherwise in writing, the Lessee will operate its business on the Premises on a continuous basis, uninterrupted by any period of closure over 15 consecutive days or 30 aggregate days within any 12 -month period of the term of this lease. The Lessee will give the City written notice before closing the Lessee's business on the Premises for more than 10 consecutive days. The notice must state the reason for the closure and the date on which the Lessee will re -open for business. This provision does not apply to any period during which the Lessee is unable to operate its business LEASE OF AIRPORT LANDS Page 2 of 33 as a result of an act or directive of the City, or as a result of a closure of the Airport or loss of the Lessee's buildings on the Premises due to fire or natural disaster or order of public authority. B. RIGHTS RESERVED TO THE CITY. 1. RIGHT TO GRANT TO OTHERS: The City reserves the right to grant to others any rights and privileges not specifically granted to the Lessee on an exclusive basis. The rights and privileges granted to the Lessee in this Lease are the only rights and privileges granted to the Lessee by this Lease. 2. EASEMENTS: The City reserves the right to make grants to third parties or reserve to the City easements or rights of way through, on, or above the Premises. The City will not grant or reserve any easement or right of way that unreasonably interferes with the Lessee's authorized uses of the Premises. 3. INGRESS, EGRESS AND INSPECTION: The City reserves the right of ingress to and egress from the Premises and the right to enter any part of the Premises, including buildings, for the purpose of inspection or environmental testing at any time. Except in the case of an emergency, all inspections and environmental testing will be coordinated with the Lessee to minimize interference with the Lessee's authorized uses of the Premises. 4. RIGHT OF FLIGHT: There is hereby reserved to the City, its successors and assigns, for the use and benefit of the public, a right of flight for the passage of aircraft in the airspace above the surface of the Premises. This public right of flight will include the right to cause in the airspace any noise inherent in the operation of any aircraft used for navigation or flight through the airspace or landing at, taking off from, or operation on the Airport. C. PROHIBITED USES Unless specifically authorized by this Lease or an amendment to this Lease, the following are prohibited: 1. Any use of the Premises other than those authorized in this Lease. 2. Any use of the Premises that is in violation of a City Ordinance or an Airport regulation. LEASE OF AIRPORT LANDS Page 3 of 33 3. The outside storage on the Premises of junk, salvage aircraft or vehicle parts, non- operational support equipment, unused or damaged equipment or material, or solid waste or debris unless allowed pursuant to a conditional use permit under KMC 14.20. 4. The disposal on the Premises or the Airport of waste materials generated by the Lessee, including any Hazardous Substance, slash, overburden, and construction waste. 5. The stripping, wasting, or removing any natural material from the Premises without the prior written approval of the City. 6. Erecting structures or allowing growth of natural objects that would constitute an obstruction to air navigation, or allowing any activity on the Premises that would interfere with or be a hazard to the flight of aircraft, or interfere with air navigation or communication facilities, serving the Airport. 7. Any use or activity that is prohibited by applicable law or regulation. ARTICLE III TERM & HOLDOVER A. TERM: The term of this Lease is for five (5) years, from the I st day of July, 2017 to the 30th day of June, 2022. B. HOLDOVER: If the Lessee holds over and remains in possession of the Premises after the expiration, cancellation or termination of this Lease, the holding over will not operate as an extension of the term of this Lease, but only creates a month-to-month tenancy, regardless of any rent payments accepted by the City. The Lessee's obligations for performance under this Lease will continue during the month-to-month tenancy. The City or Lessee may terminate the Lessee's holdover with ten (10) days' advance written notice. ARTICLE IV RENTS AND FEES A. RENT: The rent for the Premises is $5,040 per year, as established by the City pursuant KMC 21.10.100 and as subject to adjustment under Article V of this Lease, plus applicable sales tax. The rent shall be payable annually in advance of the first day of each year of the term of this Lease. All payments required by this Lease must be made in U.S. dollars. If the annual rent exceeds $2,400, the Lessee may, upon written notice to the City, choose to pay the rent in equal monthly installments, payable in advance on or before the anniversary date of the term of this Lease and thereafter at monthly intervals. No conversion of the payment schedule from annual to monthly shall result in the City receiving less rent than it would have received had the conversion not taken place. LEASE OF AIRPORT LANDS Page 4 of 33 B. RENT PRORATED: Rental for any period less than one (1) year shall be prorated on the basis of the rent payable under this Lease in the last full year previous to the prorating. C. ADDITIONAL RENT: In addition to the rent specified in (A) of this Article, Lessee agrees to pay to the appropriate parties all levies, assessments, and charges as follows: 1. Taxes pertaining to the leasehold interest of the Lessee. 2. Sales tax now enforced or levied in the future, computed upon rent payable in monthly installments whether the Lessee pays rent under this Lease on a monthly or annual basis. 3. All taxes and assessments levied in the future by the City, as if Lessee was the legal owner of record of the Premises. 4. Reimbursement for City constructed improvements under Article XV. D. PAYMENTS: The Lessee shall make checks, bank drafts, or postal money orders payable to the City of Kenai and deliver payments to City of Kenai, Finance Department, 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 or any other address the City may designate in writing to the Lessee. E. INTEREST: Beginning the day after payment is due, all unpaid rents, charges, and fees required under this Lease will accrue interest at the rate of eight percent (8.01/o) per annum. Interest on disputed amounts will not be charged to the Lessee if the dispute is resolved in the Lessee's favor. F. LATE PAYMENT PENALTY: In addition to any interest payable under Provision (E) of this Article, each time the Lessee fails to pay any rent or fee by the date required in this Lease, the City will charge, and the Lessee shall pay, an administrative penalty of ten percent (10.0%) of the amount due and unpaid. G. COURTESY BILLINGS: Lessee acknowledges that any billing statement issued by the City is provided only as a courtesy. The Lessee is obligated to pay all rents and fees when due, regardless of whether or not the Lessee receives a billing statement from the City. H. LIEN AGAINST LESSEE: Any rent, charge, fee, or other consideration which is due and unpaid at the expiration, termination, or cancellation of this Lease will be a lien against the Lessee's property, real or personal. I. PAYMENT OF CITY'S COSTS: The Lessee will pay all reasonable actual expenses, costs, and attorney fees City may incur, with or without formal action, to enforce, defend, or protect this Lease or City's rights under this Lease, including any expense incurred with respect LEASE OF AIRPORT LANDS Page 5 of 33 to environmental compliance, bankruptcy or any proceeding that involves the Lessee, the Lease, the Premises, or improvements or personal property on the Premises. The Lessee will make payment within 30 days of the date of each notice from City of any amounts payable under this provision. J. PAYMENT FOR SPECIAL SERVICES: Lessee agrees to pay the City a reasonable fee for any special services or facilities the City agrees to perform, which the City is not otherwise obligated by this Lease to provide and which the Lessee requests from the City in writing. ARTICLE V ADJUSTMENT OF RENT AND FEES A. RENT OR FEE ADJUSTMENT: Beginning in 2007 and, thereafter, at intervals of approximately five (5) years, the City shall, in its sole discretion, adjust the rent or a fee payable by the Lessee under Article IV or other provision of this lease. The first rent adjustment shall be made in 2020. The amount to which the City increases or decreases any rent or fee shall be established in accordance with KMC 21.10.100 and 21.10.160. Any rent change by the City shall be based on the fair market value of: 1. The Premises in its condition on the tern beginning date stated in Article III or in the case of a lease renewal or extension, the beginning date for the original lease; plus 2. Any improvements made by the City subsequent to that date, the cost of which is not reimbursed by the Lessee. No rent or fee change shall be effective until 30 days after the date of the City's written notice to the Lessee. If the Lessee believes that any changed rent exceeds the fair market rent for the Premises, the Lessee may appeal the rent change to the City under KMC 21.10.160. B. CITY -CONSTRUCTED IMPROVEMENTS: Improvements constructed by the City on, or in connection with, the Premises shall not be considered a part of the Premises for the purpose of establishing the rent under (A) of this Article, if the Lessee, as a condition of this lease, reimburses the City for the City's construction costs pursuant to KMC 21.10.110. ARTICLE VI ASSIGNMENT & SUBLETTING A. INVALID WITHOUT CITY'S CONSENT: The Lessee may not assign, sublet, or grant a security interest in, by grant or implication, the whole or any part of this Lease, the Premises, or any improvement on the Premises without the written consent of the City. Any proposed assignment, sublease, or security interest must be written and must be submitted to the City bearing the original, notarized signature of all parties. The Lessee may submit unsigned draft documents for the City's conceptual review. However, the City's conceptual approval of a draft LEASE OF AIRPORT LANDS Page 6 of 33 document may not be construed as the City's consent to any assignment, sublease, or security interest. All provisions in this Lease extend to and bind the assignees and sub -lessees of the Lessee. B. NO WAIVER OF CONSENT: The City's consent to one assignment, sublease, or security interest will not waive the requirement for the Lessee to obtain the City's consent to any other assignment, sublease, or security interest. C. ASSIGNEE / LESSEE OBLIGATIONS: An assignment must include a provision stating that the assignee accepts responsibility for all of the assignor's (Lessee's) obligations under this Lease, including environmental liability and responsibility. However, unless the City specifically releases the Lessee in writing, the City may hold the Lessee responsible for performing any obligation under this Lease, which an assignee fails to perform. D. OCCUPANCY BEFORE CITY CONSENT: An assignee or sub -lessee may not occupy the Premises before the City consents to the assignment or sublease in writing. E. CONFLICT OF PROVISIONS: In the event of a conflict between this Lease and an assignment or a sublease, the terms of this Lease control. F. LESSEE NOT RELIEVED OF OBLIGATIONS: The City's consent to any sublease does not relieve or otherwise alter the Lessee's obligations under this Lease. G. SECURITY ASSIGNMENTS AND FINANCING: 1. Subject to the requirements of (A) of this Article VI, the Lessee may assign a security interest in this Lease. The security interest may be in the form of a mortgage, deed of trust, assignment or other appropriate instrument, provided: a. the security interest pertains only to the Lessee's leasehold interest; b. the security interest does not pertain to or create any interest in City's title to the Premises; and C. the documents providing for the security interest are acceptable to the City. 2. If the assignment of a security interest to which the City has consented shall be held by an established lending or financial institution, including a bank, an established insurance company and qualified pension or profit sharing trust, and the lending institution acquires the Lessee's interest in this Lease as a result of a foreclosure action or other remedy of the secured party, or through any transfer in lieu of foreclosure, or through settlement of or arising out of any pending or contemplated foreclosure action, the lending institution may transfer its interest in this Lease to a nominee or a wholly LEASE OF AIRPORT LANDS Page 7 of 33 owned subsidiary corporation with the prior written consent of the City, provided, the transferee assumes all of the covenants and conditions required to be performed by the Lessee (including payment of any monies owed by Lessee to the City under the lease). In the event of such a transfer, the lending institution shall be relieved of any further liability under this Lessee. 3. A holder of a security interest in this Lease consented to by the City shall have, and be subrogated to, any and all rights of the Lessee with respect to the curing of any default of this Lease by Lessee. 4. If, before any default has occurred in the Lease, the holder of a security interest in this Lease consented to by the City gives the City a written notice of the holder's post office address, the City shall thereafter a. by regular U.S. mail, send to the holder a copy of each notice of default at the same time as the City gives notice of default to the Lessee; and b. not accept any surrender or enter into any modification of this Lease without the prior written consent of the holder, which the holder shall not unreasonably delay or withhold. 5. The City will enter into a new lease of the Premises with the holder of a security interest consented to by the City, if the City terminates this Lease prior to its normal expiration due to a default by the Lessee. The new Lease shall be for the remainder of the term of this Lease and shall be effective as of the termination of this Lease. The City's grant of the new lease shall be subject to the following conditions: a. the new lease shall be effective on the date this Lease is terminated; b. the new lease shall be for the same rent, additional rent, and covenants as this Lease; c. By no later than the twentieth (20a) day following the termination of this Lease, the security holder must submit a written request to the City for the new lease, together with payment of all rent, additional rent and other sums then due to the City under this Lease. d. The security holder shall pay to the City, at the time of the execution and delivery of such new Lease any and all sums due thereunder in addition to those which would at the time of the execution and delivery thereof be due under this Lease but for such termination, and in addition thereto, any reasonable expenses, including legal and attorneys' fees, to which the City shall have been subjected by reason of such default. LEASE OF AIRPORT LANDS Page 8 of 33 e. The security holder shall, on or before the execution of the new Lease, perform all the other obligations of the Lessee under this Lease to the extent the Lessee failed to perform them prior to the termination of this Lease. 6. A holder of a security interest consented to by the City that takes possession of this Lease or enters into a new lease with the City shall not be released from the obligations and liabilities of this Lease or the new lease unless the holder assigns its leasehold estate to an assignee who is financially capable and otherwise qualified to undertake to perform and observe the conditions of this Lease or the new lease and the City consents to the assignment. The City's consent will not be unreasonably withheld. If the security holder asserts that the City is unreasonably withholding its consent to a proposed assignment, the dispute shall be resolved by arbitration. ARTICLE VII MAINTENANCE, SNOW REMOVAL & UTILITIES A. MAINTENANCE 1. At no cost to the City, the Lessee will keep the Premises and all improvements on the Premises clean, neat and presentable, as reasonably determined by the City. 2. At no cost to the City, the Lessee will provide for all maintenance and services at the Premises as may be necessary to facilitate the Lessee's compliance with this Lease and the Lessee's use of the Premises. 3. The Lessee shall comply with all regulations or ordinances of the City that are promulgated for the promotion of sanitation. At no cost to the City, the Lessee shall keep the Premises in a clean and sanitary condition, and control activities on the Premises to prevent the pollution of water. 4. The Lessee agrees to comply with all decisions and directions of the City's Airport Manager regarding maintenance and operation of the Airport, and the use of the Airport by the Lessee. B. SNOW REMOVAL 1. At no cost to the City, the Lessee is responsible for snow removal on the Premises. The Lessee shall dispose of snow in an off -Premises location approved in writing by the City or provide suitable snow storage within the boundaries of the Premises in accordance with all applicable federal and state laws. At the request of the Airport Manager, the Lessee shall submit a snow removal plan for the Premises to the Manager for review. Upon approval of the Lessee's plan by LEASE OF AIRPORT LANDS Page 9 of 33 the Airport Manager, the Lessee shall conduct all snow removal operations on the Premises in accordance with the approved plan. 2. Lessee shall not deposit snow on an apron, taxiway, safety area, or other aircraft - maneuvering surface provided for common use by others without the prior written approval of the Airport Manager. 3. Lessee agrees to not allow an accumulation of snow on the Premises that would cause interference with adjoining leaseholders or other users of the Airport. C. UTILITIES. Unless specifically provided otherwise in this Lease, the Lessee shall, at no cost to the City, provide for all utilities at the Premises necessary to facilitate the Lessee's use of the Premises. ARTICLE VIII OPERATIONS A. OPERATIONS ON THE AIRPORT: The Lessee will ensure that the Lessee, its employees, guests, contractors, sub -lessees, and vendors that perform any activity or function authorized under this Lease shall do so in a manner that ensures the safety of people, the protection of public health and the environment, and the safety and integrity of the Airport and the Premises. B. LESSEE'S CONTROL AND RESPONSIBILITY The Lessee will assume full control and sole responsibility as between Lessee and City for the activities of the Lessee, the Lessee's personnel and employees, and anyone else acting by, on behalf of, or under the authority of the Lessee on the Airport, including the Premises. 2. The Lessee will immediately notify the City of any condition, problem, malfunction or other occurrence that threatens the safety of people or the Airport, harm to public health or the environment, or the safety or integrity of the Premises. C. RADIO INTERFERENCE: The Lessee will discontinue the use of any machine or device that interferes with any government -operated transmitter, receiver, or navigation aid until the cause of the interference is eliminated. D. WILDLIFE: The Lessee acknowledges that a concentration of birds or other wildlife on an airport constitutes a significant hazard to aircraft operations. The Lessee agrees to keep the Premises clean of fish slime, fish waste, or any other material that might attract birds or other wildlife. The Lessee accepts full responsibility to maintain the Premises, control operations, and take all reasonable measures to prevent a concentration of birds or other wildlife on the Premises. LEASE OF AIRPORT LANDS Page 10 of 33 E. PARKING: The Lessee will provide adequate vehicle, equipment, and aircraft parking space on the Premises for Lessee's business or activities, or confine parking to such other places on the Airport as may be approved or designated in writing by the Airport Manager. ARTICLE IX ENVIRONMENTAL PROVISIONS A. HAZARDOUS SUBSTANCE The Lessee will conduct it business and/or operation on the Premises in compliance with all environmental laws and permits. If hazardous substances are handled on the Premises, the Lessee agrees to have properly trained personnel and adequate procedures for safely storing, dispensing, and otherwise handling Hazardous Substances in accordance with all applicable federal, state and local laws. 2. Lessee will promptly give the City notice of proceeding to abate or settle matters relating to the presence of a Hazardous Substance on the Premises or from Lessee's operations on the Airport. The Lessee will allow the City to participate in any such proceedings. B. ENVIRONMENTAL INDEMNIFICATION If Contamination of the Premises or other property by a Hazardous Substance occurs from the Lessee's operations on the Premises the Lessee will indemnify, defend, and hold the City harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses, including, but not limited to, sums paid in settlement of claims, attorney's fees, consultant fees, and expert fees, which arise during or after the term of this Lease as a result of such Contamination. This indemnification of the City by Lessee includes, but is not limited to, costs incurred in connection with any investigation of site conditions or any cleanup, remediation, removal, or restorative work required by any federal, state, or local governmental agency because of a Hazardous Substance being present in the soil or groundwater or under the Premises or other properties affected by the Contamination. C. REMEDIATION In the event of a Hazardous Substance spill on the Premises, the Lessee will immediately notify the City and the Alaska Department of. Environmental Conversation and act, promptly, at its sole expense, to contain the spill, repair, any damage, absorb and clean up the spill area, and restore the Premises to a condition satisfactory to the City and otherwise comply with the applicable portions of any environmental law. LEASE OF AIRPORT LANDS Page 11 of 33 2. In addition to any notices required by this Lease, the Lessee will immediately notify and copy the City in writing of any of the following: A. Any permit, enforcement, clean up, lien, removal or other governmental or regulatory action instituted, completed, or threatened pursuant to an Environmental Law. B. Any claim made or threatened by any person against the Lessee or arising from the Lessee's operations authorized by this Lease, relating to damage, contribution, compensation, loss or injury resulting, from, or claimed to result from any Hazardous Substances in, on, or under the Airport; or C. Any report made by, or on behalf of, the Lessee to any environmental agency arising out of or in connection with any Hazardous Substances in, on, or removed from the Premises, including any complaints, notices, warnings, or asserted violations. 3. Remediation and restoration of the contaminated area must meet all applicable state and federal regulations and must meet the requirements of all governing regulatory authorities. D. ENVIRONMENTAL AUDIT The Lessee will provide the City with all investigative data, test results, reports, and any other information gathered or analyzed as part of or in relation to any Environmental Assessment, characterization or audit on the Premises or the Airport that Lessee performs or causes to be performed after the starting date of this Lease. The Lessee will submit the data, result, report or information to the City within 60 days following the date on which it becomes available to the Lessee. E. RELEASE OF LESSEE The City releases the Lessee from liability to the City for Contamination and the presence of Hazardous Substances that existed prior to the commencement date of this lease unless caused or materially contributed to by the Lessee. F. SURVIVAL OF OBLIGATIONS The obligations and duties of the City and Lessee under Article IX of this lease shall survive the cancellation, termination or expiration of this lease. LEASE OF AIRPORT LANDS Page 12 of 33 ARTICLE X INDEMNIFICATION & INSURANCE A. INDEMNIFICATION I. The Lessee will indemnify, hold harmless, and defend the City, its officers, agents, and employees from and against any and all liabilities, losses, suits, administrative actions, claims, awards, judgments, fines, demands, damages, injunctive relief or penalties of any nature or kind to the full extent of the loss or obligation for property damage, personal injury, death, violation of any regulation or grant agreement, or any other injury or harm resulting from or arising out of any acts or commission of or omission by the Lessee, his agents, employees, customers, invitees or arising out of the Lessee's occupation or use of the premises demised or privileges granted, and to pay all costs connected therewith. This indemnification of the City by the Lessee shall include sums paid in settlement of claims, attorney fees, consultant fees, expert fees, or other costs and expenses, directly or indirectly arising from, connected to or on account of this Lease as it relates to the Lessee, the Lessee's activities at or relating to the Airport, or any act or omission by the Lessee, or by any of its officers, employees, agents, contractors or sub -lessees. These indemnity obligations are in addition to, and not limited by, the Lessee's obligation to provide insurance, and shall survive the expiration or earlier termination of this Lease. 2. The Lessee shall give the City prompt notice of any suit, claim, action or other matter affecting the City to which Paragraph 1, above, may apply, together with a copy of any letter by an attorney on behalf of a complainant, any complaint filed in court, and any notice or complaint by any regulatory agency. The City shall have the right, at its option, to participate cooperatively in the defense of, and settlement negotiations regarding, any such matter, without relieving the Lessee of any of its obligations under this provision. 3. As to any amount paid to others for personal injury or property damage with respect to which an act or omission of the City is a legal cause, notwithstanding Paragraph 1 of this section, the Lessee and the City shall reimburse each other according to the principles of comparative fault. If liability to a third party is subject to apportionment according to comparative fault under this provision, the Lessee and the City shall seek in good faith to achieve non judicial agreement as apportionment of fault as between themselves. This apportionment of liability between the City and the Lessee shall not be construed to affect the rights of any person who is not a party to this Lease. B. INSURANCE: At no expense to the City, the Lessee will obtain and keep in force during the term of this Lease, insurance of the type and limits required by this provision. Where specific limits are set, they will be the minimum acceptable limits. If the Lessee's policy contains higher limits, the City will be entitled to coverage to the extent of the higher limits. At the time insurance is obtained by the Lessee, all insurance shall be by a company/corporation rated "A-" or better by A.M. Best. The following policies of insurance are required with the LEASE OF AIRPORT LANDS Page 13 of 33 following minimum amounts: 1. Commercial General Liability, including Premises, all operations, property damage, products and completed operations, and personal injury and death, broad -form contractual, with a per -occurrence limit of not less than $1,000,000 combined single limit. If this lease authorizes the Lessee to engage in the sale or the commercial dispensing or storage of aviation fuel, the policy must not exclude of the Lessee's fuel handling activities. This policy must name the City as an additional insured. 2. Commercial Automobile Coverage with not less than $1,000,000 combined single limit per occurrence. This insurance must cover all owned, hired, and non -owned motor vehicles used by the Lessee. 3. Workers Compensation Insurance. The Lessee will provide and maintain, for all employees, coverage as required under AS 23.30.045, and, where applicable, any other statutory obligations. The policy must waive subrogation against the City. 4. The Lessee will provide the City with proof of insurance coverage in the form of an insurance policy or a certificate of insurance, together with proof that the premiums have been paid, showing the types and monetary limits of coverage secured. All insurance required by this provision must provide that the City be notified at least 30 days prior to any termination, cancellation, or material change in the insurance coverage. 5. If the Lessee's insurance coverage lapses or is cancelled, Lessee will immediately, upon written notice by the City, halt all operations on the Airport, including the Premises. The Lessee will not resume operations until the City receives evidence that the Lessee has obtained current insurance coverage meeting the requirements of this Lease. 6. The City may, at intervals of not less than five years from the beginning date of the term of this Lease and upon written notice to Lessee, revise the insurance requirements required under this Lease. City's determination to revise the insurance requirements will be based on the risks relative to the Lessee's operations, any insurance guidelines adopted by the City, and any change in applicable law. 7. If the Lessee subleases all or any portion of the Premises under the provisions of this Lease, the Lessee will require the sub -lessee to provide to the insurance coverage required of the Lessee under this Article X. LEASE OF AIRPORT LANDS Page 14 of 33 ARTICLE XI LAWS & TAXES A. COMPLIANCE WITH LAW: Lessee shall comply with all applicable laws, ordinances, and regulations of public authorities now or hereafter in any manner affecting the Airport, the Premises or the sidewalks, alleys, streets, and ways adjacent to the Premises, or any buildings, structures, fixtures and improvements or the use thereof, whether or not any such laws, ordinances, and regulations which may be hereafter enacted involve a change of policy on the part of the governmental body enacting the same. Lessee agrees to hold City financially harmless: 1. From the consequences of any violation of such laws, ordinances, and/or regulations; and 2. From all claims for damages on account of injuries, death, or property damage resulting from such violation. B. UNLAWFUL ACTIVITY: The Lessee shall not permit any unlawful use, occupation, business, or trade to be conducted on the Premises contrary to any law, ordinance, or regulation, including zoning ordinances, rules and regulations. C. LICENSES AND PERMITS: The Lessee will obtain all necessary licenses and permits, pay all taxes and special assessments lawfully imposed upon the Premises, and pay other fees and charges assessed under applicable law. Nothing in this Lease prevents the Lessee from challenging any taxes or special assessments to the appropriate authority. D. LITIGATION: The KMC, including regulations promulgated thereunder, and the laws of the State of Alaska will govern in any dispute between the Lessee and City. If a dispute continues after exhaustion of administration remedies, any lawsuit must be brought in the courts of the State of Alaska, in Kenai, Alaska. E. LESSEE TO PAY TAXES: Lessee shall pay all lawful taxes and assessments which, during the term of this Lease may become a lien upon or which may be levied by the State, Borough, City, or any other tax levying body, upon any taxable possessory right which Lessee may have in or to the Premises or improvements on the Premises by reason of its use or occupancy or the terms of this Lease provided, however, that nothing in this provision shall prevent Lessee from contesting any increase in a tax or assessment under any applicable law, ordinance, or regulation. F. PARTIAL INVALIDITY: If any term, provision, condition, or part of this Lease is declared by a court of competent jurisdiction to be invalid or unconstitutional, the remaining terms, provisions, conditions, or parts shall continue in full force and effect as though the declaration had not been made. LEASE OF AIRPORT LANDS Page 15 of 33 ARTICLE XII LEASE TERMINATION A. CANCELLATION: The City may, after 30 days' written notice to the Lessee, cancel this Lease and recover possession of the Premises if any of the following violations occur, unless the violation is cured within the 30 days: The Lessee fails to pay when due the rents, additional rents, charges, or other sums specified in this Lease, including any increases made under this Lease. 2. The Lessee's check for payment of any sum due under this Lease is returned for insufficient funds. The Lessee uses or authorizes the use of the Premises for any purpose not authorized by this Lease. 4. The Lessee fails to fully perform and comply with any provision in this Lease. 5. The court enters a judgment of insolvency against the Lessee. 6. A trustee or receiver is appointed for the Lessee's assets in a proceeding brought by or against the Lessee, or the Lessee files a voluntary petition in bankruptcy. Failure by the Lessee to comply with any land development or permanent improvement construction required by this Lease. B. ENTRY AND RE-ENTRY: In the event that the Lease should be terminated in accordance with this Article XII, or by summary proceedings or otherwise, or upon the Lessee's abandonment of the Premises or a portion of the Premises, the City or its agents, servants, or representatives may, immediately or any time thereafter, re-enter, and resume possession of the Premises or portion thereof, and remove all persons and property therefrom, without being liable for any damages therefore. No re-entry by the City shall be deemed an acceptance of a surrender of the Lease. C. CONTINUING OBLIGATIONS UNTIL PREMISES VACATED: The Lessee will continue to pay City rent after the expiration, termination, or cancellation of this lease and to abide by the lease obligations, including providing proof of insurance coverage, through the date Lessee relinquishes possession of and completely vacates the Premises. City will consider the Premises completely vacated if the Lessee has; Remediated any environmental contamination for which the Lessee is responsible; and LEASE OF AIRPORT LANDS Page 16 of 33 2. Restored the Premises to a neat and clean physical condition acceptable to the City. D. REASONABLE CURE 1. In the case of a violation that cannot be reasonably cured within 30 days, a notice of cancellation issued by the City to the Lessee under this Article is stayed if, within the 30 -day notice period, the Lessee begins and continues expeditious action to cure the violation. The City will determine if a violation cannot be reasonably cured within 30 days and what constitutes expeditious action. 2. In the case where, in City's sole determination, Lessee's violation is considered an imminent threat to the airport, public health or safety, or the environment, City will direct the Lessee to stop the activity immediately and may reduce the period to cure the violation, or the City may correct the violation pursuant to (E) of this Article. E. . RIGHT OF CITY TO PERFORM: 1. If, after 30 days following notice the Lessee fails or refuses to perform any action required by this Lease, the City will have the right, but not the obligation, to perforin any or all such actions required by this Lease at the sole expense of the Lessee. The City will not take action if the Lessee begins and continues expeditious action to perform any action required by this Lease that cannot be reasonably completed within 30 days. The City will, at its sole discretion, determine what constitutes expeditious action and if an action cannot be reasonably performed in 30 days. The City will submit to the Lessee an invoice for the expenses incurred by the City in the performance by the City of any required action. The Lessee will pay the amount of each invoice within 30 days from issuance. 2. If Lessee fails or refuses to perform any action that has been deemed an imminent threat the City will have the right, but not the obligation, to perform any or all such actions required to expeditiously correct the imminent threat. Lessee shall reimburse the City for any cost, including legal fees and administrative costs reasonably incurred by the City in acting to correct the imminent threat violation. F. WAIVER: A waiver by the City of any default by the Lessee of any provision of this Lease will not operate as a waiver of any subsequent default. If the City waives a default, the City is not required to provide notice to the Lessee to restore or revive any term or condition under this Lease. The waiver by the City of any provision in this Lease cannot be enforced or relied upon unless the waiver is in writing and signed on behalf of the City. The City's failure to insist upon the strict performance by the Lessee of any provision in this Lease is not a waiver or relinquishment for the future, and the provision will continue in full force. LEASE OF AIRPORT LANDS Page 17 of 33 G. AIRPORT CLOSURE: 1. If the City closes the airport to aircraft operations for sixty (60) days or less, this Lease will remain in full force and effect without adjustment 2. If the City closes the Airport to aircraft operations for more than sixty (60) days, but not permanently, and this Lease is for aviation or direct aviation support uses, the Lessee may, upon written notice to the City, either terminate the Lease or retain the Lease and receive a fifty (50%) percent rent reduction or credit for that portion of the closure that exceeds sixty (60) days. 3. If the City permanently closes the Airport to aircraft operations and (a) this Lease is for aviation or direct aviation support uses, the Lessee may terminate this agreement by written notice to the City; or (b) this Lease is for non -aviation uses, the Lessee may request in writing to have the Lease terminated. The City will consider the Lessee's request in light of the City's best interest and either terminate the Lease, or deny the Lessee's request in writing. H. DISASTERS: The Lessee or City may cancel this lease upon written notice to the other party if, 1. the Premises becomes unusable through no fault of either party and performance under this Lease becomes impossible; or 2. the Airport becomes unusable through no fault of either party and the performance under this Lease becomes impossible. If the Lessee elects in writing that it will continue to operate after notice from City to Lessee that the Airport has become unusable, the Lessee's obligations under the Lease will continue, but City shall be under no obligation to continue to perform. Causes for termination of the Lease under this provision (H) include acts of God, the public enemy, and the United States. I. NATIONAL EMERGENCY: If the federal government declares a national emergency, neither party may hold the other liable for any inability to perform any part of this Lease as a result of the national emergency. J. SURRENDER ON TERMINATION: Except as provided otherwise in this Article XII, LEASE OF AIRPORT LANDS Page 18 of 33 Lessee shall, on the last day of the term of this Lease (including any extension or renewal thereof) or upon any earlier termination of this Lease, surrender and deliver up the premises into the possession and use of City without fraud or delay in good order, condition, and repair, except for reasonable wear and tear since the last necessary repair, replacement, restoration or renewal, free and clear of all lettings and occupancies unless expressly permitted by the City in writing, and free and clear of all liens and encumbrances other than those created by and for loans to City. K. OWNERSHIP AND DISPOSITION OF IMPROVEMENTS: 1. Ownership of Permanent Improvements: Permanent Improvements on the Premises, excluding Site Development Materials, constructed, placed or purchased by the Lessee remain the Lessee's property as long as this Lease remains in effect, including any period of extension or holdover with the consent of the City. 2. Disposition of Site Development Materials: The Lessee acknowledges that, once placed by the Lessee, the removal from the Premises of the Site Development Materials can damage the Premises, adversely affect surface water drainage patterns, and destabilize adjacent structures. When placed on the Premises by the Lessee, Site Development Materials, including building pads, parking area, driveways, and similar structures: a. become part of the realty and the property of the City of Kenai; b. unless otherwise directed by the City, must be maintained by the Lessee throughout the term of this Lease, including any extensions and periods holdover; and, c. may not be removed by the Lessee without the prior written approval of the City. 3. Disposition of Personal Property and Permanent Improvements Other Than Site Development Materials: a. Unless the City otherwise directs as provided below, when this Lease expires, terminates, or is cancelled and is neither extended nor followed by a successive lease, the departing Lessee may do one or more of the following: i. Remove Lessee -owned Permanent Improvements from the Premises, remediate any Contamination for which the Lessee is responsible, and restore the Premises to a clean and neat physical condition acceptable to the City within 60 days after the expiration, cancellation, or termination date of this Lease ii. with written approval from the City, sell Lessee -owned Permanent Improvements to the succeeding Lessee, remove all personal property, LEASE OF AIRPORT LANDS Page 19 of 33 remediate, any Contamination for which the Lessee is responsible and leave the Premises in a clean and neat physical condition acceptable to the City within 60 days after notice from the City that the City has approved an application for a lease of the premises by another person or such longer period specified in the notice, but in no event more than 180 days after the expiration, termination, or cancelation date of this Lease; iii. elect to have the City sell Lessee -owned Permanent Improvements at public auction as provided below, remediate any Contamination for which the Lessee is responsible, and restore the premises to a clean and neat physical condition acceptable to the City. If the City sells Permanent Improvements under this Paragraph for removal from the Premises, the departing Lessee's obligation under this Paragraph continues until the Premises are remediated and restored to a clean and neat physical condition acceptable to the City after the improvements have been removed. b. If the departing Lessee elects to have the City sell Lessee -owned Permanent Improvements at public auction per this Section, the Lessee shall, within 30 days after the expiration, cancellation, or termination of this Lease: i. submit to the City a written request and authorization to sell the Permanent Improvements by public auction; ii. provide to the City an executed conveyance document transferring clear title to the Permanent Improvements to the successful bidder at the public auction, along with authorization to the City, as agent for the Lessee for purposes of the sale only, to endorse the name of the successful bidder on the conveyance document upon receipt of payment of the successful bid price; and iii. before the date of the public auction, remove all personal property, remediate any Contamination for which the Lessee is responsible and lease the Premises in a neat and clean physical condition acceptable to the City. c. When selling Lessee -owned Permanent Improvements at public auction for the departing Lessee, the City will establish the terms and conditions of the sale. The City shall pay the Lessee any proceeds of the sale of the Permanent Improvements, less the administrative costs of the public auction and any financial obligation the Lessee owes to the City under this Lease. Payment will be made within a reasonable time after the City completes the sale transaction and receives the proceeds, but not to exceed 60 days. If all or a portion of the Permanent Improvements do not sell at public auction, the Lessee will remove LEASE OF AIRPORT LANDS Page 20 of 33 those Permanent Improvements, remediate any Contamination for which the Lessee is responsible and restore the Premises to a clean and neat physical condition acceptable to the City within 60 days after the auction. d. If the Lessee shows good cause to the City and if it is not inconsistent with the best interest of the City of Kenai, the City will grant an extension of time that is sufficient to allow the Lessee to remove or sell Lessee -owned Permanent Improvements, remediate any Contamination for which the Lessee is responsible and to restore the Premises to a clean and neat physical condition acceptable to the City. e. The City will, by written notice, direct any departing Lessee to remove Lessee - owned Permanent Improvements from the Premises, to remediate, consistent with applicable law, any Contamination for which the Lessee is responsible and to restore the Premises to a clean and neat physical condition acceptable to the City if the City determines in writing,: i. that the continued presence of the Permanent hnprovements on the Premises are not consistent with any written Airport program or plan required for compliance with applicable federal, state, or local law; ii. that the continued presence of the Permanet Improvements on the Premises is not in the best interest of the City of Kenai; or iii. that the Permanent Improvements present a hazard to public health or safety. f. The departing Lessee to whom the City has issued direction under Paragraph (e) of this Section shall comply with the City's direction within 60 days after issuance of the direction and at no cost to the City. If the departing Lessee shows good cause to the City, continues to work diligent to comply with City's direction, and if it is not inconsistent with the best interest of the City of Kenai, the City will allow in writing a longer period that is sufficient to allow the Lessee to comply with the City's direction. A departing Lessee who fails to comply with a direction issued by the City under Paragraph (e) of this Section, shall, within 30 days of being billed by the City, reimburse the City for any costs reasonably incurred by the City, including legal fees and administrative costs, to enforce the City's direction or to remove and dispose of unremoved Lessee -owned improvements, remediate any Contamination for which the Lessee is responsible and restore the Premises. g. If the departing Lessee does not timely remove or sell the Lessee -owned Permanent Improvements on the Premises in accordance with the requirements of this Section, any remaining Permanent Improvements and any remaining personal LEASE OF AIRPORT LANDS Page 21 of 33 property of the departing Lessee will be considered permanently abandoned. The City may sell, lease, demolish, dispose of, remove, or retain the abandoned property for Airport use as the City determines is in the best interest of the City of Kenai. The departing Lessee shall, within 30 days after being billed by the City, reimburse the City for any costs, to demolish, remove, dispose, clear title to, or sell abandoned property and to remediate and restore the Premises. h. After the expiration, termination, or cancellation of the Lease, including any holdover, the departing Lessee loses all right to occupy or use the premises without the express or implied consent of the City. Except as the City notifies the departing Lessee otherwise in writing, the City consents to the departing Lessee's continued use and occupancy of the Premises to diligently accomplish the requirements of this Section. Until the departing Lessee relinquishes possession of and completely vacates the Premises under Paragraph 9 of this Section and notifies the City in writing that it has relinquished and vacated the Premises, the departing Lessee shall perform the following as if the lease were still in effect, i. pay rent to the City; ii. maintain the premises; iii. provide the City with evidence of each insurance coverage if any required under the Lease; and iv. cease using the premises other than to diligently accomplish the requirements of this Section and to comply with the other requirements of the Lease i. A departing Lessee will not be considered to have relinquished possession and completely vacated the Premises until i. the departing Lessee has: (a) remediated, consistent with applicable law, any Contamination for which the Lessee is responsible; and (b) restored the Premises to a clean and neat physical condition acceptable to the City; and ii. either (a) removed all of the Lessee's Permanent Improvements and personal property from the premises or sold the Permanent Improvements LEASE OF AIRPORT LANDS Page 22 of 33 and personal property to a succeeding Lessee under the provisions of this Lease; or (b) transferred title to the Lessee's Permanent Improvements and personal Property that remain on the premises to the City. ARTICLE XIII GENERAL COVENANTS A. USE OF THE AIRPORT: Except as provided herein, any regular use of Airport lands or facilities without the written consent of the City is prohibited. This prohibition shall not apply to use of areas designated by the City for specified public uses, such as passenger terminals, automobile parking areas, and streets. B. COSTS AND EXPENSES: Costs and expenses incident to this lease, including but not limited to recording costs, shall be paid by Lessee. C. CARE OF THE PREMISES: The Lessee shall keep the Premises clean and in good order at the Lessee's own expense, allowing no damage, waste, nor destruction thereof, nor removing any material therefrom, without written permission of the City. At the expiration of the term fixed, or any earlier termination of the Lease, the Lessee will peaceably and quietly quit and surrender the premises to the City. D. CONSTRUCTION APPROVAL AND STANDARDS: Any building construction on the Premises by the Lessee must be compatible with its surroundings and consistent with the uses authorized under this Lease, as determined by the City. The Lessee must obtain the City's written approval before placing fill material, beginning any land development, or constructing or demolishing any improvements on the Premises, and before beginning any alterations, modifications, or renovation of existing structures on the Premises. The Lessee must submit to the City detailed drawings of the proposed development, alteration, modification, or renovation, together with specifications or any other information the City reasonably requires. Further, the Lessee will submit to City evidence of the Lessee's compliance with Federal Aviation Administration regulation 14 CFR Part 77. E. LEASE SUBORDINATE TO AIRPORT FINANCING REQUIREMENTS: Lessee agrees that City may modify this Lease to meet revised requirements for Federal or State grants, or to conform to the requirements of any revenue bond covenant. However, the modification shall not act to reduce the rights or privileges granted the Lessee by this Lease, nor act to cause the Lessee financial loss. F. RIGHT TO ENJOYMENT AND PEACEABLE POSSESSION: City hereby agrees and covenants that the Lessee, upon paying rent and performing other covenants, terms, and conditions of this Lease, shall have the right to quietly and peacefully hold, use, occupy, and LEASE OF AIRPORT LANDS Page 23 of 33 enjoy the Premises, except that the following shall not construed as a denial of the right of quiet or peaceable possession: 1. Any inconvenience caused by public works projects in or about the Premises; and 2. Any other entries by the City on the Premises reserved or authorized under other provisions of this Lease. G. NO PARTNERSHIP OR JOINT VENTURE CREATED: It is expressly understood that the City shall not be construed or held to be a partner or joint venture of Lessee in the conduct of the Lessee's activities or business on the Premises. The relationship between the City and the Lessee is, and shall at all times remain, strictly that of landlord and tenant, respectively. H. DISCRIMINATION: The Lessee will not discriminate on the grounds of race, color, religion, national origin, ancestry, age, or sex against any patron, employee, applicant for employment, or other person or group of persons in any manner prohibited by federal or state law. The Lessee recognizes the right of the City to take any action necessary to enforce this provision, including actions required pursuant to any federal or state law. I. AFFIRMATIVE ACTION: If required by 14 CFR Part 152, subpart E, the Lessee will undertake an affirmative action program to insure that no person will be excluded from participating in any employment activities offered by the Lessee on the grounds of race, creed, color, national origin, or sex. No person may be excluded on these grounds from participating in or receiving the services or benefits of any program or activity covered by subpart E. The Lessee further agrees that it will require its sub-organization(s) provide assurance to the City to the same effect that they will also undertake affirmative action programs and require assurances from their sub-organization(s) as required by 14 CFR, Part 152, subpart E. Tenant shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, code of Federal Regulations, DOT, Subtitle A, Office of the Secretary, Part 21, Nondiscrimination in Federally -Assisted programs of the Department of Transportation - Effectuation of Title VI of the Civil Rights Act of 1964, and as the Regulation may be amended. J. INTEGRATION, MERGER, AND MODIFICATION: This Lease sets out all the terms, conditions, and agreements of the parties and supersedes any previous understandings or agreements regarding the Premises whether oral or written. No modification or amendment of this Lease is effective unless in writing and signed on behalf of the City and the Lessee. K. RIGHT TO ADOPT RULES: City reserves the right to adopt, amend, and enforce reasonable rules and regulations governing the Airport, including the Premises. The City shall not be liable to Lessee for any diminution or deprivation of possession, or of Lessee's rights under this Lease, on account of the exercise of the City's authority reserved under this provision. Furthermore, the Lessee shall not be entitled to terminate the whole or any portion of the leasehold estate created under this Lease, by reason of the exercise of the City's authority LEASE OF AIRPORT LANDS Page 24 of 33 reserved under this provision, unless the exercise thereof so interferes with Lessee's use and occupancy of the Premises as to constitute a termination, in whole or in part, of this Lease by operation of law under the laws of the State of Alaska and of the United States made applicable to the states. L. LESSEE'S OBLIGATION TO PREVENT AND REMOVE LIENS: Lessee will not permit any liens including, but not limited to, mechanics', laborers', or materialmen's liens obtainable or available under the then existing laws, to stand against the Premises or improvements on the Premises for any labor or material furnished to Lessee or claimed to have been furnished to Lessee or to the Lessee's agents, contractors, or sub -lessees, in connection with work of any character performed or claimed to have been performed on the Premises or improvements by or at the direction or sufferance of Lessee. Provided, however, the Lessee shall have the right to provide a bond as contemplated by Alaska law and contest the validity or amount of any such lien or claimed lien. Upon a final determination of the lien or claim for lien, the Lessee will immediately pay any judgment rendered with all proper costs and charges and shall have such lien released or judgment satisfied at Lessee's own expense. M. CONDEMNATION: In the event the Premises or any part thereof shall be condemned and taken for a public or a quasi -public use, then upon payment of any award or compensation arising from the condemnation or taking, the City and the Lessee shall make a good faith effort to agree upon the division of the proceeds; 2. the abatement in rent payable during the term or any extension of the term of this Lease; and 3. other adjustments as the parties may agree upon as being just and equitable under all the circumstances. If, within thirty (30) days after the award has been paid into Court, the City and Lessee are unable to agree upon what division, abatement in rent, and other adjustments as are just and equitable, the dispute shall be determined by arbitration. N. SUCCESSORS IN INTEREST: This Lease shall be binding upon and shall inure to the benefit of the respective successors and assigns of the parties hereto, subject to such specific limitations on assignment as are provided for in this Lease. O. NOTICES: 1. Any notices required by this Lease must be in writing and must be delivered personally or mailed by certified or registered mail in a prepaid envelope. A mailed notice LEASE OF AIRPORT LANDS Page 25 of 33 a. must be addressed to the respective party at the address written on the first page of this Lease or to the latest address designated in accordance with (2) of this Provision (0); and b. shall be deemed delivered on the date it is deposited in a U.S. general or branch post office. 2. The City or the Lessee may, from time to time, designate a new address at which they will receive notices by providing the other party with written notice at least 15 days prior to the effective date of the change. An address change notice must be delivered according to the procedure set out in (1) of this Provision (0). P. RETENTION OF RENTAL: In the event the City terminates this Lease because of any breach by the Lessee, the City shall retain any unused balance of the rental payment last made by the Lessee City as partial or total liquidated damages for the breach. Q. FIRE PROTECTION: The Lessee will take all reasonable precautions to prevent, and take all necessary action to suppress destructive or uncontrolled fires and comply with all laws, regulations, and rules promulgated and enforced by the City for fire protection on the Airport. R. PERSONAL USE OF MATERIALS: No interest in coal, oil, gas or any other mineral, or in any deposit of stone or gravel valuable for extraction or utilization is included in the Premises or in the rights granted by this lease. The Lessee shall not sell or remove from the Premises for use elsewhere any timber, stone, gravel, peat moss, topsoil or any other material valuable for building or commercial purposes. S. APPROVAL OF OTHER AUTHORITIES: The granting of this lease by the City does not relieve the Lessee of the responsibility to obtain any license or permit as may be required by federal, state, or local law. T. EXECUTION BY THE PARTIES: This Lease is of no effect unless signed by the Lessee, or a duly authorized representative of Lessee, and an authorized representative of the City. U. CAPTIONS: The captions of the provisions of this Lease are for convenience only and do not necessarily define, limit, describe, or construe the contents of any provision. V. RIGHTS OF CONSTRUCTION: This Lease is intended to make public property available for private use, while at all times protecting the public interest to the greatest extent possible. Following the rule that transfers of interest in public property are to be strictly construed in favor of the public property landlord, all rights granted to the Lessee under this Lease will be strictly construed, and all rights of the City and the protections of the public interest will be liberally construed. LEASE OF AIRPORT LANDS Page 26 of 33 W. LESSEE ACKNOWLEDGEMENT: The Lessee acknowledges that the Lessee has read this Lease and fully understands its terms, that the Lessee has been fully advised or has had the opportunity of advice by separate legal counsel, and voluntarily executes this Lease. Lessee also acknowledges and agrees that the rule of interpretation under which a document is construed against the drafter will not apply to this Lease. X. APPROVAL BY CITY: Any approval required of the City by this Lease will not be unreasonably withheld. The City's approval does not waive the Lessee's legal responsibility or liability to comply with all applicable federal and state laws and regulations. ARTICLE XIV SURVEY, IMPROVEMENTS AND PERFORMANCE BOND A. SURVEY: The Lessee is solely responsible, at its sole expense, to confirm or establish the physical location of the boundaries of the Premises prior to beginning any construction thereon, including clearing grubbing, back -filling and environmental sampling. Any survey of the Premises shall be performed by a Land Surveyor registered in the State of Alaska. The Lessee shall famish the City with a copy of the plat of any survey performed on the Premises by, or on behalf of, the Lessee. B. IMPROVEMENTS. 1. REQUIRED IMPROVEMENTS: At no cost to the City, Lessee agrees to complete land development and construction of Permanent Improvements including N/A, by no later than N/A, with an appraised value of at least $N/A. In addition to the as -built drawings required by this Lease, the Lessee must submit to the City written evidence that the Lessee has completed the land development and constructed improvements on the Premises with an aggregate cost or investment of not less than $N/A. The evidence of cost must be submitted to the City within sixty (60) days of the completion of the development and improvements, but by no later than N/A. a. Costs considered toward the aggregate cost of permanent improvements include building construction, design, labor, materials, materials shipping, permits, equipment, soil testing, environmental baseline report, and environmental assessment directly related to the construction; premises and as -built surveys; site preparation, including excavation, geotextile fabric, filling, grading, fill material, gravel, and pavement, remediation of environmental contamination (unless Lessee caused or materially contributed to the contamination); and utility connection costs. b. The cost of Permanent Improvements excludes LEASE OF AIRPORT LANDS Page 27 of 33 (i) work performed by the City and not reimbursed by the Lessee; and (ii) work performed by the Lessee and reimbursed by the City. 2. FAILURE TO COMPLETE IMPROVEMENTS: If the Lessee fails to complete the required construction within the time allowed under (13)(1) of this Article, including any extensions granted, the City will execute against and the Lessee will forfeit, any bond or other guarantee given by the Lessee and, as applicable, City will a. initiate cancellation of the Lease; or b. reduce the term of the Lease to a period that is consistent with the portion of the required construction timely completed. 3. APPEARANCE: When completed, all improvements on the Premises must be neat, presentable, and compatible with the authorized use of the Premises under this Lease, as determined by the City. 4. CITY APPROVAL REQUIRED: The Lessee must first obtain the City's written approval before beginning any land development, construction or demolition of any improvements on the Premises, or before beginning any alterations, modifications, or renovation of existing structures on the Premises. The Lessee must submit to the City detailed drawings of the proposed development, alteration, modification, or renovation. Further, the Lessee will submit to City evidence of the Lessee's compliance with the FAA regulation 14 CFR Part 77. 5. CITY APPROVAL WITHHELD: The City's approval of any construction, alteration, modification, or renovation will not be withheld unless: a. the Lessee fails to demonstrate adequate financial resources to complete the project; b. the project plans, specifications, and agency approvals are incomplete; C. the proposed project would result in a violation of an applicable ordinance, regulation, or law; d. the proposed project would interfere with or is incompatible with the safety, security, maintenance, or operation of the airport; e. the proposed project is inconsistent with the Airport Master Plan; f. the proposed project is inconsistent with the terms of the lease, zoning ordinances, or the City's Comprehensive Plan; LEASE OF AIRPORT LANDS Page 28 of 33 g. the project plans do not make sufficient provision for drainage, aircraft, vehicle, and equipment parking, or for snow storage; or h. the proposed project does not conform to generally recognized engineering principles or applicable fire or building codes. 6. DEMOLITION: Prior to any demolition of any structure(s) on the Premises, Lessee will deliver to City a written scope of work that, at a minimum, lists the structure(s) that are to be demolished and the timeframe for demolition and removal of the debris from the Airport. City will review Lessee's scope for demolition and issue Lessee written approval for the work to be done. 7. BUILDING SETBACK: No building or other permanent structure may be constructed or placed within twenty (20) feet along the right-of-way of Granite Point Court and within ten (10) feet of the rear and side yard property lines. This property is not within the building restriction line so I believe the remainder of the paragraph could be deleted. 8. AS -BUILT DRAWINGS: Within sixty (60) days after completion of construction or placement of improvements upon the Premises, the Lessee will deliver to the City a copy of an as -built drawing, acceptable to the City, showing the location and dimensions of the improvements, giving distances to all Premises' boundaries. If the Lessee constructs underground improvements, the Lessee will appropriately mark the surface of the land with adequate surface markers. The type, quantity, and distance between such markers will be subject to approval of the City. 9. AIRPORT SECURITY FENCING: If any construction by the Lessee requires a realignment or alteration of an existing security fence on the Premises or boundary of the Premises, the Lessee agrees to realign or alter the fence in a manner approved in writing by the Airport Manager. Anytime the fence must be breached to allow the Lessee to complete improvement construction or fence modifications, the Lessee shall, at the Lessee's sole expense place temporary barriers to maintain the security of the Airport, as determined by the Airport Manager. If damage occurs to a security fence on the Premises or boundary of the Premises in connection with the Lessee's use or occupation of the Premises, the Lessee shall promptly repair the fence to the satisfaction of the Airport Manager. 10. DAMAGE TO IMPROVEMENTS: If Lessee's improvements on the Premises are damaged or destroyed, Lessee will cause the improvements to be repaired or rebuilt and restored to a normal function within two (2) years following the damage or destruction. If the Lessee fails to timely rebuild or restore the improvements, the City may, at its sole discretion, either reduce the term of this Lease commensurate with the estimated value of the Lessee's remaining, fully functional improvements on the Premises, or cancel this Lease. If a structure is non -conforming, the requirements of the LEASE OF AIRPORT LANDS Page 29 of 33 Kenai Zoning Code apply (see e.g., KMC 14.20.050(d). If there is any conflict between this Lease and the Kenai Zoning Code with respect to repairs or reconstruction of non- conforming structures, the requirements of the Code shall prevail. 11. DAMAGE NEAR EXPIRATION: If Lessee's improvements are damaged to the +/- extent that more than 50% of the space is unusable and the damage occurs within five years of the expiration of the term of this Lease, Lessee may remove the damaged improvements, restore the Premises and terminate this Lease. C. PERFORMANCE BOND: Prior to beginning the construction of permanent improvements required under (13)(1) of this Article, the Lessee shall submit to the City a performance bond, deposit, or other security in the amount of $N/A. The form of the bond or other security shall be subject to the City's approval. D. SURRENDER ON TERMINATION: Lessee shall, on the last day of the tern of this Lease or upon any earlier termination of this Lease, surrender and deliver upon the premises into the possession and use of City without fraud or delay in good order, condition, and repair, except for reasonable wear and tear since the last necessary repair, replacement, restoration or renewal, free and clear of all lettings and occupancies unless expressly permitted by the City in writing, and free and clear of all liens and encumbrances other than those created by and for loans to City. Upon the end of the term of this Lease, including any extension or renewal, or any earlier termination thereof, title to the buildings, improvements and building equipment shall automatically vest in City without requirement of any deed, conveyance, or bill of sale thereon. However, if City should require any such document in confirmation hereof, Lessee shall execute, acknowledge, and deliver the same and shall pay any charge, tax, and fee asserted or imposed by any and all governmental units in connection herewith. E. NOTICE OF CONSTRUCTION: The Lessee agrees to notify the City in writing three days prior to commencing any construction project valued in excess of $1,000 on the Premises. The Lessee agrees to assist in the posting of a notice of non -responsibility and maintenance of the notice on the Premises during construction. Lessee agrees that in the event the Lessee fails to notify the City as required by this Provision, the Lessee shall indemnify the City against any materialmen's liens as defined in AS 34.35.050 which arise as a result of construction on the premises. ARTICLE XV SPECIAL PROVISIONS A. CITY CONSTRUCTED IMPROVEMENTS. 1. ALTERNATIVE ONE — The City commits to construct improvements after the lease is signed. LEASE OF AIRPORT LANDS Page 30 of 33 (a) As part of the exchange of consideration of this lease, the City will, at the City's expense, cause the following improvements to be constructed on or in connection with the Premises: N/A (b) The City's total cost of the improvement construction shall not exceed $N/A without the Lessee's written concurrence. (c) The Lessee shall reimburse the City for the City's cost of constructing the improvements. The reimbursement shall be made in ten (10) equal annual payments, plus interest at eight percent (8%) per year on the unpaid balance. The Lessee may pay the entire remaining balance to the City earlier than due. (d) After completing the improvements, the City will give the Lessee written notice of the City's total cost of constructing the improvements and the date on which the Lessee's reimbursement payments shall begin, which date shall be no earlier than 60 days after the date of the City's notice. The Lessee's annual reimbursement payment for each succeeding year shall be made to the City by no later than the anniversary of date on which the first payment was due. (e) Failure by the Lessee to timely reimburse the City as required under (b) through (d) of this provision shall be grounds for termination of this Lease by the City. 2. ALTERNATIVE TWO — The City builds improvements before the Lease is signed. (a) The Lessee acknowledges that prior to the execution of this Lease; the City constructed the following improvements on or in connection with the Premises: N/A (b) The City's total cost to construct the improvements was $N/A. (c) As part of the consideration of this lease, the Lessee shall reimburse the City for the City's cost of constructing the improvements. The reimbursement shall be made in ten (10) equal annual payments, plus interest at eight percent (8%) per year on the unpaid balance. The Lessee may pay the entire remaining balance to the City earlier than due. (d) The Lessee shall make the first reimbursement payment to the City by no later than the first anniversary of the lease term beginning date given in Article III of this Lease. The Lessee's annual reimbursement payment for LEASE OF AIRPORT LANDS Page 31 of 33 each succeeding year shall be made to the City by no later than the anniversary of date on which the first payment was due. (e) Failure by the Lessee to timely reimburse the City as required under (c) and (d) of this provision shall be grounds for termination of this Lease by the City. IN WITNESS WHEREOF, the parties hereto have hereunto set their hands, the day and year stated in the individual acknowledgments below. LESSEE: DeWayne Benton M DeWayne Benton LEASE OF AIRPORT LANDS Date LESSOR: City of Kenai By: Paul Ostrander Its: City Manager Date Page 32 of 33 STATE OF ALASKA THIRD JUDICIAL DISTRICT ACKNOWLEDGMENTS ) ss. THIS IS TO CERTIFY that on this _ day of , 2017, Paul Ostrander, City Manager of the City of Kenai, Alaska, being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voluntary and authorized execution of the foregoing instrument on behalf of said City. Notary Public for Alaska My Commission Expires: STATE OF ALASKA ) ) ss. THIRD JUDICIAL DISTRICT ) THIS IS TO CERTIFY that on this _ day of , 2017. DeWayne Benton, being personally known to me or having produced satisfactory evidence of identification, appeared before me and acknowledged the voluntary and authorized execution of the foregoing instrument. ATTEST: Jamie Heinz, Acting City Clerk Approved as to Lease Form: Scott Bloom, City Attorney After Recording, Return To: City of Kenai 210 Fidalgo Ave. Kenai, AK 99611 SEAL: Notary Public for Alaska My Commission Expires: LEASE OF AIRPORT LANDS Page 33 of 33 RECEIVE:) CITY Or i�.--IAI APR 2 1 t017 PLANNING DEPARTMENT CITY OF KENAI 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 (907) 283-7535 Ext. 223 LEASE APPLICATION For Land Inside the Kenai Municipal Airport Reserve FOR CITY USE ONLY Date Signature 1. Name of Applicant J j �: („�' /, �' b i l D i'1 2. Business Name E i 3. Business Type (circle one�)1 soleproptietorclpartpersliin wrooration L.L.C. 4. AK Business License No. 5. Mailing Address(1 J7 (Q k C/o t 6. Telephone -90?'-39-YM 7. Email Address c et 41K_ e b e , q(P ea--ZC\ h a co 8. Kenai Peninsula Borough Sales Tax No. (if applicable) 9. Land Requested: If platted, give legal description L 16e P ,4 N r” n11CV1 Z tcs N If not platted, attach a site plan showing the roposed dimensions and location on the A' ort. / % { ' ii o'w l i �7'C/,�// vew J 10. Proposed Use of the Property (Be specific) 11. Lease Term Desired 5 years 12. If you plan to base or service aircraft on the property, give a. Make, type, & wingspan of the largest aircraft l i C 5 b. Total number of aircraft you expect to be based or serviced on the property at one time 13. If you plan to construct improvements or otherwise develop the property: a. Attach a Development Plan (see attached checklist) b. Describe the building type, construction materials, size, etc. r- /0 c. Construction beginning date d. Construction completion date (maximum of two years) e. Estimated total cost of the proposed development & improvements $ 14. If you plan to operate a business on the property, attach a business plan (See application instructions). 15. If you would like the City to consider any additional information relating to your proposal, please put it in writing and submit it with this annlication_ APPLICANT'S Printed i Date: _ CWil e APPLICANT'S SIGNATURE: Date: Printed name: Title: 9 n W Z c 0 0 m p LU IL ,.� t m N CO a s W a Q C,4�_ dN R Y jd N Oj� Q \ - Z Cp in d m s w0 5. ..a U OCA r