HomeMy WebLinkAboutOrdinance No. 2194-200614..
Suggested by: City Manager
CITY OF KENAI
ORDIIVANCE NO. 2194-2006
AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING
THE SALE OF APPROXIMATELY 14.784 ACRES AT LOT A BARON PARK
SUBDIVISION, 2006 REPLAT IN THE CITY OF KENAI, ALASKA AND SETTING FORTH
THE PRICE AND OTHER TERMS AND CONDITIONS OF SALE.
WHEREAS, the City of Kenai is the owner of approximately 14.784 acres at Lot A,
Baron Park Subdivision, 2006 Replat in the City of Kenai, Alaska; and,
WHEREAS, when it is found that encouragement of a new commercial enterprise
would be beneficial to the City of Kenai, KMC 21..15.170 allows the sale of City land to
be authorized by ordinance upon such terms as to price, conditions of conveyance and
othe. conditions of sale; and,
WHEREAS, Lowe's Home Improvement Warehouse, Inc, (Lowe's) wishes to purchase
the property to build a store in Kenai of not less than 100,000 square feet; and,
WHEREAS, the property is zoned General Commercial and the intended use is a
principal permitted use under the Kenai Zoning Code; and,
WHEREAS, an appraisal by Derry 8r, Associates has determined the fair market value
to be $1,650,000; and,
WHEREAS, Lowe's has agreed to pay fair market value ($1,650,000) for the property;
and,
WHEREAS, the proceeds from the sale will be placed in the Airport Land Sale
Permanent Fund pursuant to KMC 7.30; and,
WHEREAS, interest income from money placed in the Airport Land Sale Trust Fund
can be used to support airport operations; and,
WHEREAS, the purchase agreement provides that Lowe's will construct a home
improvement warehouse of at least 100,000 square feet within three years of the date
of closing of the sale; and,
WHEREAS, the City shall have a right to repurchase the property if Lowe's fails to
construct the required improvements within the allowed time period; and,
WHEREAS, the sale will be beneficial to the City of Kenai because: the proceeds will
significantly increase the size of the Airport Land Sale Trust Fund which is used to
support the operations of the Kenai Municipal Airport; it will significantly increase
sales and property tax revenue to the City of Kenai; will provide a significant number
Ordinance No. 2194-2006
Page 1Fuo
of jobs at the store and construction jobs during the project; will stimulate business
growth and customer traffic within Kenai; increase the commercial appeal of other
land owned by the City of Kenai near the store; and,
WHEREAS, the attached Purchase and Sale Agreement sets forth the price, conditions
of conveyance and other terms and conditions of the sale.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA that: the City Manager is authorized to execute the sale of Lot A, Baron Park
Subdivision, 2006 Replat in the City of Kenai as set farth in the attached Purchase
and Sale Agreement.
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this first day of
November. 2006.
~~ ~ A~~
PAT PORTER, MAYOR
ATTEST:
~~~2<';~Z,~Gs.~
Carol L. Freas, City Clerk
Approved by Finance: ~
Introduced: October 17, 2006
Adopted: November 1, 2006
Effeetive: December 1. 2006
MEMORANDUM
TO: Mayor Porter and the Kenai City Councii
FROM: C~~ Cary R. Graves, City Attorney
DATE: October 19, 2006
R~: SUMMARY OF SALE PROPOSAL T~RMS AND CONDdTIONS
The City Manager and I thought it would be helpful to the Council and general pubiic if we
provided a summary of the terms and condiYions of the proposed Iand sale to Lowe's. The
properry is I,ot A, Baron Park Subdivision, 2006 Replat. It is the same property they currently
have a lease application pending on.
Why is Lowe's requesting to purchase the property rather than iease it with a right of purchase
after development? The Iease application is governed by the city code in effect prior to the recent
airpoi-~ Iand code aznendment. The prior city eode allows it to purchase the property ~Por fair
market value after it completes it deveiopment plan (i.e. the fair market vaiue two years from
now). The uncertainty of what the purchase price wiii be in two years is a major disincentive for
Lowe's development of the project. Lowe's will not do this project if it cannot purchase the land.
Having Lowe's commit inillions of dollars to a construction project whcn it does not know what
the purchase price will be two years from now is a significant disincentive for thein fc~ do the
project.
Lowe's feels that the future price of the laud wiil rise due in part Yo Yhe fact that it wi11 have built
a store on the property and, therefore, spurred Iocal business growth and demaud for real estate.
In other words, it wili be penalized finaneially (in terms of its purchase priee) for investing
millions of dollars in Kenai. The administration feeis those eoncerns are legitimate.
KMC 21.15.070 aiiows the sale of city laud by negotiated sale when it finds "that encouragement
of a new comnlercial or indushial entexprise would be beneficial to the City of I~enai". The
price, terms a~zd conditions of the saie are fo be set forth ui the ordinance authorizing the salc. A
summary of those terms and conditions are set forth below.
1. Price. The appraisal by Derry & Associates set the fair inarket value of the property at
$1,650,000). Lowc's has agreed to pay the fair marlcet value ($1,650,000) far the land.
~~~ The proceeds will be deposited in the Aicport Land Sale Permanent Fund. The corpus of
that fund is protected from being spent by city code provision. However, interest from
that fund is used to support auport operations.
2. Lowc's will deposit $50,000 in an cserow account within five days a~fier the parties sign
the Pm-chase and Sale Agreement.
3. Closing must take place prior to February 16, 2007. The period of time prior to that is
referred to in the Purchase and Sa1e Agreement as the Peasibility Period and
<iovernmental Approvals Period. They run concurrently. During that period Lowe's may
further study the feasibility of the project ineluding goveimmental permitting
requirernents. It may cancel the sale without losing~ its escrow deposit during that time.
4. Lowe's agrees to construct a home improvement warehouse of at least 100,000 squaz~e
feet on the property wiYhin three years of closing.
5. The City wili pay a 5% sales commission to Crreg I,. 7ohnsou of Bond, Stephens &
Johnson, Inc. iV1r. Johnson is the c;ommercial realtos who got Lowe's interested in Kenai
and the particular property. The 5% coznmission rate is set by KMC 2115.190(e). That
section was taken verbatim from the previous airport code (I~tVIC 22.05.040(fl. The city
has paid commissions to oflier brokeis providing land buyers in the past. In this case tne
commission will be $82,500 ($1,650,000 x .OS = $82,500).
6. If Lowe's does not complete the constrtiiction within three years of closing, the City has
the option to reptiuchase the property and any improvements on it. The repti~rchase price
wouid be: the fair market vaiue purchase price paid by Lowe's lor the land minus (1) fair
value inarkeL value rental; (2) a$SO,OOO liquidated damages fee; and (3) any fees or costs
~~~ for removing any liens on the property; and (4) any damages to the properiy reducing iLs
value. The a~reement defines annual fair market rental value as 8% of the fau inarket
value. If Lowe's had the property for three years prior to repurchase, the tofal fair market
va(ue rental price would be: 3 x 8% of the purchase price.
Piease let me know iF you have any qu~stions regarding the Purchase and Sale Agreement or any
other issues regarding the proposed land sale.
PURCHASE ANO SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "AgreemenY) is entered into as of
, 200_, by and between THE CITY OF KENAI, a home-rule municipal
corporation of Alaska ("Seller"), and LOWE'S HIW, INC., a Washington corporation ("Buyer")
(referred to in this Agreement individually as a"Party" and collectively as the "Parties").
1. Subiect Propertv. Seller owns certain real property consisting of approximately
14,784 acres at Lot A Baron Park Subdivision, 2006 Replat, in the City of Kenai, Kenai Peninsula
Borough, Alaska, as depicted on the site plan attached hereto as Exhibit A and a legal description
of which is attached hereto as Exhibit B, both of which are incorporated herein by this reference
(the "Subject Property'). According and subject to all of the provisions of this Agreement, Seller
agrees to sell and Buyer agrees to buy the Subject Property.
2. Purchase Price. The purohase price for the Subject Property (the "Purchase
Price") shall be One Million Six Hundred Fifty Thousand Doliars ($1,650,000.00), to be paid as
follows:
2.1 Within five (5) business days after the execution of this Agreement,
Buyer shall deposit with the Escrow Holder (as defined below) eatnest money in the amount of
Fifty Thousand Dollars ($50,000.00) (together with interest thereon, the "DeposiY'). At the closing
oi the transaction contemplated by ,his. Agreement (the "C;osing"), the Deposit shal! be paid to
Seller and applied to the Purchase Price.
2.2 At or before Closing, Buyer shafl deposit with tlie Escrow Holder the
remainder of the Purchase Price in immediately available funds, which shall be paid to Seller at
Closing.
3. Title. Seller represents and warrants that Seller has good and marketable title to
the Subject Property and has entered into no other agreements for the sale or option or lease of
the Subject Property. Seller shall not permit liens or encumbrances to be filed against the
Subject Property after the date of this Agreement which will survive the Closing. Prior to the
expiration of the Feasibi~ity Period {as defined below), Buyer shall obtain a fitle commitment from
the Escrow Holder (the "Title Commitmenf") and a survey (the "Survey") of the Subject Property.
Prior to the expiration of the Feasibility Period, Buyer shali deliver to Seller, in wtiting, such
objections (the "Titfe Objections") as 8uyer may have to the Title Commitment and tlie Survey, or
to other documents referred to therein (collectively, "Title Matters"). Any Title Matter to which
Buyer does not timely object shall be deemed approved by Buyer and shall constitute a
"Permitted Exception". Seller shall have the right, but not the obligation, to attempt to cure any
Title Objection for a period of fifteen (15) days (the "Cure Period") following receipt by Seiler of
the Title Objections. Prior to the expiration of the Cure Period, Seller shall send written notice
("Selier's Cure Notice") to Buyer of which Title Objections Seller elects to cure or declines to cure.
In the event Seller fails or declines to cute such a Title Objection within such Cure Period, then,
and in such event, Buyer may (i) waive such Title Objections and proceed to Closing (in which
case such title exceptions shall become Permitted Exceptions); provided, however, in such event
Buyer shall have the right to reduce the Purchase Price in an amount equai to any amounts
expended by Buyer to remove monetary liens and monetzry encumbrances as title exceptions or
(ii) terminate this Agreement and receive a refund of the Deposit.
4. Feasibilitv Period. As a condition to Closing, Buyer, at Buyer's expense, must
have determined the Subject Property to 6e, in all respects suitable for Buyer's intended
purposes (including economic feasibility of its intended purposes). Seller hereby grants to Buyer,
its agents and employees, tfie right and license to go onto the Subject Property for the purpose of
conducting due diligence, including, without limitation, surveys, environmental and engineering
studies, physical tests, inspections, and evaluations and sampling which Buyer may require in its
755016_7.DOC Lowe's Kec~ai Peninsula: City of Kenai Yazcel
~ - . Octabor 1Q?A06
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
assessment and inspection of the Subject Property. Seller sfiall fumish Buyer with copies of any
existing recent surveys, soil tests and environmentai reports in Seller's possession. Buyer shall
have ninety (90} days after the last execution of this Agreement (fhe "Feasibility Period") to
terminate this Agreement, 6y written notice to Seller, based on Buyer's determination, in its sole
discretion, that the Subject Property is not suitabie, in which event the Deposit shall be ~eturned
to Buyer less $100.00, which amount shall be retained by Seller. The Parties may extend the
Feasibilify Period by letter agreement to a mutually acceptable date.
5. GovernmeMal Approvals Period. As a condition to Closing, Buyer, at Buyer's
expense, must have determined that Buyer will be able to obtain all approvais and permits
required by any governmental entity and utility provider subject to only those conditions which are
acceptable to Buyer in its sole discretion and Buyer must have determined that the Subject
Property is zoned to allow Buyer's intended use. Buyer and Seller shall cooperate in obtaining all
necessary permits and approvais, inciuding, but not limited to use or zoning approvals and
ingress and egress approvals (the "Governmental Approvals"). Buyer shall have ninety (90) days
after the last execution of this Agreement (the "Governmental Approvals Period") to terminate this
Agreement, by written noiice to Seller, based on Buyer's determination, in its sole discretion, that
Buyer will not be able to obtain required Governmental Approvals with conditions acceptable to
Buyer, in which event the Deposit shall be returned to Buyet less $100.00, which amount shall be
retained by Seller. The parties may extend the govetnment approval period by IeYter agreement
to a mutually acceptabie date,
6. Acauisition of Surroundinq Property. Buyer requires the acquisition of property
located at Lot 1A-4 Baron Park Subdivision, No.3, Kenai, Alaska, in addition to the Subject
Property for Buyer's intended use at this location. Accordingly, the closing of this transaction and
Buyer's obligations hereunder are conditioned on Buyer's closing on such additional property. If
the acquisition of this property fails to close Buyer may terminate this Agreement by giving written
notice to Seller, in which event the Deposit shall be retumed to Buyer less ~100.00, which
amount shall be retained by Seller.
Escrow and Closinq Matters.
7.1 Escrow Holder. Promptiy foltowing the execution of this Agreement,
Buyer shall open an escrow with First American 7itle Insurance Company, Attention Kristen
Hueter, 5 First America Way, Santa Ana, California (the "Escrow Holder"). The Escrow Holder will
utilize a title company located in Kenai Alaska to assist with ihe Closing. A copy of this
Agreement shall be provided to the Escrow Holder to advise the Escrow Holder of the terms and
conditions hereof. Escrow Hoider shall conduct the Closing pursuant to the escrow instructions of
the Parties which shali be consistent herewith.
7.2 Closin . The Closing shall take piace on the date which is the eariier of:
(i) thirty (30) days after the expiration of the Governmental Approvais Period or (ii) February 16,
2007. At Closing, Sel~er shall prepare a general warranty deed in a form satisfactory to Buyer (the
"Deed"). At Closing, Sellet shall convey title to the Subject Property to Buyer by the Deed subject
only to the Permitted Exceptions and shall tle~iver soie and exclusive possession to Buyer.
7.3 Costs. Buyer shall pay the cost of recording the Deed. Any escrow costs
pertaining to the Closing shaii be paid equally by Buyer and Seller. General real property taxes
will be prorated as of the date of Closing. Seller shall pay the premium for a standard owner's
policy of title insurance from First American Title Insurance Company and endorsements required
to address Buyer's title objections; Buyer shall pay the additional cost of extended coverage if
required by Buyer and any endorsements required by Buyer. AII other costs, including all other
recording fees, any state, county or municipal documentary stamps, transfer taxes, greenbelt or
rollback taxes, and excise taxes shall be paid by Seller. The parties agree to execute a
settlement statement prepared by the Escrow Holder that reflects payment of such costs. Each
~ 755016 9.DOC 2 Lowe's Kenai Peninsula: City of Kcnai Paroet
OctoUer10,2006
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
Parfy shall bear its own attorney's fees and costs associated with the negotiation of this
Agreement and Closing.
7.4 Other pocuments. At Closing, Seller agrees to execute a~d deliver (a) a
certification of ~onforeign status pursuant to Section 1445 of the Internai Revenue Code and (b)
customary owner's affidavits and indemnification agreements with respect to mecha~ics' liens,
Ieasehold interests and other matters in favor of the Escrow Holder as the Escrow Holder shall
reasonably require to issue the extended ALTA Owners Policy of Title Insurance.
8. Representations and Warranties. Seller represents and warrants (and will
indemnify, defend and hold Buyer harmless for claims arising out of breach of such
representations and warranties) that at Closing: (A) Seller has the power and authority to enter
into this Agreement; (B) the execution of this Agreement and consummation of the transaction
contemplated by this Agreement is not in violation of any contract, agreement, order or judgment
of any nature by which Seller is bound; (C) there is no action, suit or proceeding pending or
threatened against Seiler affecting the Subject Property; (D) there are no assessments against
the Subject Property thaf are unpaid; (E) there is no dispute involving the location of lines or
corners of the Subject Property, (F) there are no encroachments against tlie Subject Property and
(G) the Subject Property is not located within a Special Flood Hazard Area or watershed area.
9. DEFAULT.
9.1 SE~LER'S DEFAULT. IF THE SALE AND PURCHASE OF THE
Sl1BJECT PROPERTY CONTEMPLATED BY THIS AGREEMENT FAILS TO CLOSE
THROUGH NO FAULT OF BUYER, THEN EI7HER: (A) BUYER'S DEPOSIT SHALL BE
IMMEDIATELY REFUNDED TO BUYER, OR (B) BUYER AS ITS SOLE AND EXCLUSIVE
REMEDY (EXCEP7 AS PROVIDED LATER IN THIS SENTENCE) MAY BRING AN ACTION
FOR SPECIFIC PERFORMANCE OF THIS AGREEMENT; NOTW ITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED HEREIN, IF, DUE TO SELLER'S INTENTIONAL OR GROSS
MISCONDIICT, THE REMEDY OF SPECIFIC PERFORMANCE IS (i) UNAVAILABLE OR (ii}
IMPRACTICABLE BECAUSE OBTAINWG SUCH REMEDY WOULD INCREASE THE
PURCHASE PRICE OF THE SUBJECT PROPERTY BEYOND THE PURCHASE PRICE SET
FORTH HEREIN OR REQUIRE BUYER TO INCUR LIABILITIES OR OBLIGATIONS
(EXCLUDING COSTS OF ENFORCEMENT) NOT CONTEMPIATED PURSUANT TO THE
TERMS OF THIS AGREEMENT, (BY WAY OF EXAMP~E, TO CLOSE WOULD REQUlRE
BUYER TO AS5UME OR PAY OFF A MORTGAGE Ot2 DEED OF TRUST THAT SELIER
P~ACED ON 7HE SUBJECT PROPERTY THAT WAS NOT CONTEMP~ATED PURSUANT TO
THE TERMS OF THIS AGREEMENT), SELLER SHAI L BE LIABLE FOR ALL DAMAGES,
WHETHER IN CONTRACT OR TORT OR UNDER ANY LEGAL OR EQUITABLE THEORY.
92 BUYER'S DEFAULT, IF 7HE SALE AND PURCHASE OF THE
SUBJECT PROPERTY CONTEMPLATED BY TNIS AGREEMENT IS NOT CONSUMMATED
ON ACCOUNT OF BUYER'S DEFAU~T HEREUNDER, SELLER SHALL BE ENTITLED, AS ITS
SOLE AND EXCLUSIVE REMEDY HEREUNDER, TO RECEIPT OF THE DEPOSIT AS FUL~
AND COMPLETE LIQUIDATED DAMAGES FOR SUCH DEFAULT OF BUYER, THE PARTIES
ACKNOWLEDGING THAT IT IS IMPOSSIB~E TO ESTIMATE MORE PRECISELY THE
DAMAGES WHICH MIGWT BE SUFFERED BY SELLER UPON BUYER'S DEFAU~T OF THIS
AGREEMENT OR ANY DUTY ARISING IN CONNECTION OR RELATING HEREWITH.
SELLER'S ENTITLEMENT TO AND RECEIPT OF THE DEPOSIT IS INTENDED NOT AS A
PENA~TY, BUT AS FULL AND COMPLETE LIQUIDATED DAMAGES. THE RIGHT TO RETAW '
SUCH SUMS A5 FULL ~IQUIDATED DAMAGES IS SELLER'S SOLE AND EXCLUSIVE
REMEDY IN THE EVENT OF DEFAULT OR FAILURE TO PERFORM HEREUNDER BY
BUYER, AND SELLER HEREBY WAIVES AND RELEASES ANY RIGHT TO (AND NEREBY
COVENANTS THAT IT SHALL NOT) SUE BUYER AS TO ANY CLAIMS, INJURY OR LOSS
ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT: (I) FOR SPECIFIC
~ ~ 755016_7.UOC 3 Lowe's Kenai Peninsula: Ciry of Ke~ai Pa~cel
Octo6er 1Q 2006
.. .... . . ....... .... .. ..... . ...... ..... . . ....._. ... . .... _.. .. .. ... .. .. ...... . ......... .. ~
NOT SINDING UNTIL EXECUTED BY ALL PARTIES
PERFORMANCE OF THIS AGREEMENT, OR (II} TO RECOVER ACTUAL DAMAGES IN
EXCESS OF THE DEPOSIT.
Buyer's Initials:
5eller's Initials:
10. Notices. Any notices, requests or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered 6y a widely recognized national
overnight courier service or mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or by facsimile transmission, and addressed to each Party at its
address as set forth below:
To Seller: City of Kenai, Alaska
210 Fidalgo Avenue
Kenai, AK 99611-7794
Attention: Cary Graves, City Attorney
Fax: (907) 2833014
City of Kenai, Alaska
210 Fidalgo Avenue
Kenai, AK 99611-7794
Attention: Rick Koch, City Manager
Fax (907)283-3014
To Buyer: ~owe's HIW, Inc.,
1530 Faraday Avenue, Suite 140
Carlsbad, CA 92008
Attention: Rob Doane, Senior Counsel
Fax: (760)602-8421
Lowe's NIW, Inc.,
1530 Faraday Avenue, Suite 140
Carlsbad, CA 92008
Attention: Bart Hollander, Director of Real Estate Acquisition
Fax: (760) 602-1018
cc: Paul M. Harman
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Fax: {801)328-0537
Any such notice, request or other communication shali be considered given or delivered,
as the case may be, on the date of personal delivery or upon deposit in the United States mail or
with an ovemight courier as provided above. In the case of facsimile transmission, the notice
shail be deemed to be effective upon confirmation of receipt of the facsimile transmission,
provided that such notice is also hand delivered or sent by overnight carrier or through the U.S.
Mail on the day the facsimile notice is given. Rejection or other tefusal to accept or inability to
deliver because of changed address of which no notice was given shall be deemed to be receipt
of the notice, request or other communication. Any notice, request or other communication by a
Party may be given or delivered by counsel to such Party. By giving at least five (5) days prior
written notice thereof, either Party may from time to time at any time change its mailing address
hereunder.
11. Repurchase of Subiect Proqertv. Seller shall have the right and option to
repurchase the Subject Property from Buyer subject to and in accordance with the following terms
and conditions:
755016_7.DOC q, T.owe's Kenai Peninsula: Ciry of Kenai Pazcel
October 1Q 2006
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
11.1 Covenant to Ooen. Subject to any delays suffered by Buyer due to force
majeure, repair, restoration or reconstruction following casualty or condemnation or any other
exercise of the power of eminent domain, restocking or remerchandising, or labor disputes (the
"Permitted Delays"), Buyer agrees to open a home improvement warehouse of at least one
hundred thousand (100,000) square feet on the Subject Praperty to the general public for one (1)
day, adequately stocked and staffed for use as a retail store wifhin fhree (3) years after Ciosing.
In the event of default of this Section 11.1, Seller's sole remedy shall be the exercise of the
repurchase right set forth in Section 11.2 of this Agreement (the "Repurchase RighY').
11.2 Seller's Repurchase Riqht. In the event of Buyer's default under Section
11.1, Seller shall have the one (1) time right and option to repurohase the Subject property
including all improvements from Buyer for the Repurchase Price wfiich shall be an amount equa(
to the Purchase Ptice minus the Fair Market Value Rentai Value (as hereinafter defined) and
minus a Fifty Thousand Doilars ($50,000.00) liquidated damages non-completion fee and minus
any costs for removing or clearing liens occurring on the property after the closing date and minus
any damages to the property reducing its value.
11.3 Seller's Exercise of the Repurchase Right. Should Seller elect to
exercise its Repurchase Right, Seiler shall give written notice to Buyer (the "Election Notice")
within ninety (90) days of Buyer's default under Section 11.1. Should Seller fail to give the
Election Notice within the deadlines set forth in this Section 11.3, the Repurchase Riglit shall
terminate and be of no further force or effect.
11.4 Fair Market Rental Vaiue. The "Fair Market Rental Value" shall be the
fair market rental value of the Subject Property for the time period from which the Buyer acquired
fee ownership of the Subject Property until the Buyer's default under Section 11.1 of this
agreement. The yearly Fair Market Rental Value shall be Eight Percent (8%) of the Purchase
Price in Section 2 above. For example, if the property were held by the Buy~r for two years prior
to re-purchase, the total Fair Market Renial Value would be two times the yearly Fair Market
Rental Value (2 x 8% of the Purchase Price in Section 2).
11.5 Reourchase Closinq.
11.5.A The closing of the repurchase transaction contemplated in this
Section 11 (the "Repurchase Closing") shall take place on the date which is (i) thirty (30) days
foilowing the expiration of Seller's Repurchase Review Period, or, in the event Seller timely
objects to the Repurchase Commitment as outiined in Section 11.5B, (ii) forty five (45) days
following the expiration of Buyer's Repurchase Cure Period.
11.5.B At the Repurchase Closing, Buyer shall deliver into escrow with
the Title Company a statutory warranty deed (the "Repurchase Deed'), duly ezecuted and
acknowiedged so as to convey to Seller title to tfie Subject Property in fee simple, warranting title,
free and clear of all liens, restrictions, encumbrances and other matters save those which Selier
conveyed ta Buyer (which are reflected in the owner's policy of title insurance issued to Buyer on
the date of Closing and which shail be deemed to be permitted exceptions for which Seller shall
have no right to object) and subject to other reasonable encumbrances placed upon the Subject
Property subsequent to Buyer's purchase (including Fair Market Value leases or other Fair
Market Value occupancy agreements}.
Seller shall be responsible to obtain from the Title Company, at Buyer's
expense, a commitment to issue an owner's policy of title insurance for the Subject Property (the
"Repurchase CommitmenY'). Seller shall have a period of thirty (30) days from receipt of the
Repurchase Commitment in which to review such items and to deliver to Buyer in writirig such
objections as Seller may have to the Repurchase Commitment (except as to the permitted
755016 7.DOC 5 Lowe's Kenai Penuisula: City of Kenai Pazcel
October IQ 2006
NOT BINDING U?vTTL EX~CITTBD BI' ALL PARTIES
exceptions described herein)(the "Selier's Repurchase Review Period"). Any matters to which
Seller does not object within the thirty (30} day period, including all permitted exceptions and ali
matters of record at the time of Seller's initial conveyance to Buyer, shall be deemed approved by
Seller and shali constitute permitted exceptions to title. In the event Seller does timely object to
ihe Repurchase Commitment, Buyer may, for a period not to exceed thirty (30) days following
receipt by Buyer of Sel~er's objections (the "Buyer's Repurchase Cure Period"), make
commercialiy reasonable attempts to cure such objections. If after such commercialiy reasonabie
attempts are made, Buyer fails or is unable to cure such titie objections within Buyer's
Repurchase Cure Period, Seller may: (i) waive such objections and proceed to close, provided,
however, that Selier shali have the right to reduce the Repurchase Price in an amount equal to
any amounts expended by Seller to remove monetary liens and monetary encumbrances as title
exceptions as allowed in Section 112, or (ii) terminate and cancel its Repurchase Right,
whereupon the Repurchase Right shall become void and of no further force or effect, and the
Parties hereto shall have no further rights or obligations under this Section 11. Seller's election to
waive title objections or to terminate the Repurchase Right must be exercised with fifteen (15)
days following the expiration of the Repurchase Cure Period. Seller's failure to exercise such
election within said fifteen (15) day period shall be deemed a waiver of all such title objections by
Seller.
11.5.C Buyer shall prepare, at its cost, the Repurchase Deed. Seiler
shall pay the cost of recording the Deed. Any escrow costs pertaining to the Repurchase Closing
shali be paid equaily by Buyer and Sellec Buyer shall pay the premium for a standard owner's
policy of title insurance and endorsements required to address Seller's title objections; Seller shall
pay the additional cost of extended coverage if required by Seller and any endorsements required
by Seller. All unpaid atl valorem taxes shall be prorated between Buyer and Seller as of the daie
of the Repurchase Ciosing. All other costs, inciuding recording fees, any state, county, or
municipal documentary stamps, transfer taxes, roliback taxes, and excise taxes, shall be paid by
Buyer. Buyer and Sel(er agree to execute a settlement statement prepared by the Escrow Holder
that reflects payment of such costs. No brokers or real estate agents shail be utilized in such
transaction and no commissions will be due any broker or agent and each Party will indemnify the
other from any liability for any such fees or commissions incurred by it.
11.S.D At the Repurchase Closing, Buyer shall execufe and deliver any
affidavit or lien waiver reasonably requested by Seller's title insurer and a non-foreign affidavit.
Upon receipt of all documents and funds, the Title Company shall deliver the Repurchase Deed
to Seller and the Repurchase Price to Buyer.
11.6 Nonassiqnabilitv. The Repurchase Right contained in this Section 11
may not be assigned by Seller nor shall it be exercised by any party other than Seiler itseif. The
Repurchase Right shall be binding upon all successors in interest to the Subject Property. Buyer
may not assign this agreement or its rights thereon without the written consent of Seller.
11.7 Recordation. The Parties shall execute and either Party may record a
Memorandum of Agreement in the form attached hereto as Exhibit B in the official records of
Kenai Peninsula Borough, Alaska.
11.8 Default and Remedies. In the event of default by Seller or Buyer after
the Election Notice, the provisions of this Section 11 may be enforced by specific pertormance
and equitable relief by either party, it being understood and agreed that the default or breach of
the provisions of this Section 11 may create irreparable damage and harm.
11.9 Termination. The Repurchase Righf, and all rights and interests arising
under this Section 11, shall terminate and be of no further force and effect three (3} years and
one (1) day from Closing (the "Repurchase Termination Date"} unless the completion date has
755016_7.DOC 6 Lowe's Kenai Peninsula: City of Kenai Pazcel
Ocrobu 16, 2006
NOT BINDTNG UNTIL EXECUTED BY ALL PARTIES
been extended pursuant to Section 11.1. Any extension to the completion date under Section
11.1 shaii add the equivalent amount of time to the termination date under this section. Upon
expiration of the termination date, Seller wiil record at Buyer's request an appropriate document
acknowledging termination of the Repurchase Right. On the Repurchase Termination Date, Seller
shall be deemed to have waived and relinquished the Repurchase Right and all rights and
interests pertaining thereto.
12. Miscellaneous.
12.1 Commissions. Seller shall be responsible to pay any and all real estate
sales fees and commissions to Greg L. Johnson of Bond, Stephens & Johnson, Inc., pursuant to
KMC 21.15.190(e). Each Party agrees to indemnify, defend and hold the other Party harmless
against any claims for fees or commissions by brokers or agents claiming by or through the
indemnifying Party.
12.2 Damaqe or Destruction Condemnation. All risk of loss to the Subject
Property, including physical damage or destruction, shall be borne by Seller until Closing. In the
event of material damage or destruction of the Subject Property or condemnation or threat of
condemnation of all or a portion of the Subject Property, Buyer may elacf to terminate this
Agreement, in which event the Deposit shall be returned to Buyer, or may elect to proceed with
Closing, in which extent the insurance proceeds or condemnation award shali be paid to Buyer at
Closing.
12.3 Authorization. The undersigned officers of Seller and Buyer hereby
represent and warrant that ail actions necessary by their respective organizations have been
obtained and that they are authorized to enter into this Agreement and that no additionai action
will be necessary to make this Agreement Iegally binding upon such officer's organization.
12.4 Business Davs. If the time period by which any right, option or election
provided under this Agreement must be exercised, or by which any act required hereunder must
be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or
bank holiday, then such time period will be automaticaliy extended through the close of business
on the next foliowing business day.
12.5 Bindina Effect; Recordation. The terms, covenants and conditions herein
contained shall be binding upon and inure to the benefit of the heirs, successors, transferees and
assigns of tlie Parties. Buyer may, at its expense, record notice of this Agreement.
12.6 Interoretation. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and may oniy be modified by a
subsequent writing duly executed by both Parties. The Environmenfal Addendum and Exhibits A
and B attached hereto are hereby incorporated into this Agreement. This Agreement shall be
interpreted and construed only by the contents hereof, and there shall be no presumption or
standard of construction in favor of or against either Seller or Buyer.
12.7 Attornevs' Fees. In the event a Party comme~ces a Iegai proceeding to
enforce a~y of the terms of this Agreement, the prevailing Party in such action shali have the right
to recover reasonabie attorneys' fees and costs from the other Pafty to be fixed by the court in
the same action.
12.8 Survival. The provisions of Paragraphs 3, 7 and 11.1 and the indemnity
agreements contained in this Agreement shali survive any expiration or termination of this
755D16_9.DOC '~ 1-owe's Kenai Peninsula: Ciry of Kenai Parccl
Octobec 10, 2006
NOT B1NDING UNTIL EXECUTED BY ALL PARTTES
Agreement and shall not merge into any deed delivered and accepted upon the closing of the
transaction herein contemplated.
12.9 Counteroarts. This Agreement may be executed in counterparts, each of
which shall be an original and ail of which shall together constitute one and the same instrument.
12.10 Governina Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the state in which the Subject Property is located.
12.11 Time of Essence. Time is of the essence to this Agreement.
SIGNATURE PAGE TO FOLLOW
755016 7.DOC 8 Lowe's Kemi Peninsula: City of Kenai Parcel
Ocrober ]0, 2006
IN W ITNESS W HEREOF, this Agreement has been executed as of the date first above written.
SELLER:
Name:
Title:
Date: , 200_
BUYER: Lowe's HIW, Inc.,
a Washington corporation
By:
Name:
Title:
Date: , 200_
755016 7.DOC Lowe's Kenai Peninsula: City of Kenai Parcel
October IQ 2006
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
Environmental Addendum
1. Seller Disclosures. W ithin ten (10) business days of the last execution of this Agreement,
Seller shall inform Buyer of any Hazardous Materials or Release and of any underground
structures or utilities whiah are or may be present on the Subject Property and Seller shall deliver
to Buyer any documentation {for example, any title evidence, surveys, reports, studies, test
results, engineering drawings, permits or fank registrations) Sellec has within its possession or
control regarding such conditions, structures or utilities. Seiler shall immediately notify Buyer, in
writing, of any Release, as defined hereinafter, or change to any environmental information
previousiy given by Seller to Buyer, and Seiler understands that Buyer needs this information in
order to properly evaluate the Subject Property, to avoid damaging underground structures and
utilities and to avoid causing, contributing to or exacerbating the Release of a Hazardous
Materials in the course of its investigations.
2. Buver's Indemnification. Buyer agrees to pay all of the costs and expenses associated
with its investigation and testing and to repair and restore any damage to the Subject Property
caused by Buyer's investigations or testing, at Buyer's expense. Buyer also agrees to indemnify
and hold Seller harmiess from ali costs, expenses and liabilities arising out of Buyer's negligence
or wiliful misconduct or fhat of its employees, agents, consultants or contractors in performing its
evaluation of the Subject Property, except that Buyer shail have no responsibilify to Seller and
Seller hereby releases Buyer and agrees to indemnify and hold Buyer harmless from aii costs,
expenses and liabilities arising in connection with enviranmental conditions, Hazardous P.~aterials,
Releases or untlerground structures or utilities that were not disclosed to Buyer as provided in
this Addendum. Soil, rock, water, asbestos, and other samples taken from the Subject Property
shall remain the property of Seller. Buyer wili make arrangements for the lawFul disposal of any
contaminated samples and wiil pay any related transportation of disposal fees and Seiler shali
sign the manifest and any other documents required in connection with the disposal of
contaminated samples.
3. Seller's Representafions and Warranties. Seller represents and warrants to Buyer, as of the
date of this Agreement antl at Closing, that (i) the Subject Property is free from contamination by
Hazardous Materiais and the activities conducted on the Subject Property do not pose any
significant hazard to human health or the environment and do not violate any Environmental
~aws, (ii) there has been no generation, treatme~t or sforage of any Hazardous Materiais at the
Subject Property except as disdosed in writing by Seller to Buyer, (iii} there are no surtace
impoundments, lagoons, waste piles, landfills, injection wells, underground storage areas, tanks,
storage vessels, drums, containers or other facilities that held Hazartlous Materials on the
Subject Property, (iv) there is no treatment, storage or Release of Hazardous Materials on land
adjacent to the Subject Prope~ty that may constitute a risk of contamination of the Subject
Property or surface or ground water flowing to the Subject Property; and (v) there has been no
inspection, audit, inquiry, investigation, or notice or warning thereof by any Governmental
Authority regarding the presence or discharge of Hazardous Materials on the Su6ject Property.
4. Definitions.
A. "Environmental Laws" shall mean any federal, state or local statute, regulation or
ordinance or any judicial or administrative decree or decision, whether now existing or hereinafter
enacted, promulgated or issued, wifh respect to any Hazardous Materials, drinking water,
groundwater, wetlands, landfilis, open dumps, storage tanks, underground storage tanks, solid
waste, waste water, storm water runoff, waste emissions or we11s.
B. "Hazardous Materials" means each and every element, compound, chemlcal mixture,
contaminant, pollutant, material, waste or other substance which is defined, determined or
identified as hazardous or toxic under any Environmental Law, including, but not limited to,
asbestos or any substance containing asbestos, polychlorinated biphenyls, any explosives,
radioactive materials, chemicals known or suspected to cause cancer or reproductive toxicity,
755016 7.DOC 1~ Lowe's Kenai Peninsula: City oFKenai Parccl
October 10, 2066
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
pollutants, effiuents, contaminants, emissions, infectious wastes, any petroleum or petroleum-
derived waste or product or related materials and any items defined as hazardous, special or
toxic materials, substances or waste. Without limiting the generality of the foregoing, the term
shall mean and indude: "Hazardous Substances" as defined in CERCLA, the Superfund
Amendments and Reauthorization Act of 1986, or Title III of the Superfund Amendment and
Reauthorization Act, each as amended, and regulations promulgated thereunder; "Hazardous
Waste" as defined in the Resource Conservation and Recovery Act of 1976, as amended, and
regulations promulgated thereunder, Materials as defined as "Hazardous Materials" in the
Hazardous Materials Transportation Act, as amended, and regulations promulgated thereunder;
and "Chemical Substance or Mixture" as defined in the Toxic Substances Control Act; as
amended, and regulations promulgated thereunder.
C. "Governmental Authorities' means the United States, the State of Alaska and any
political subdivision thereof, and any and all agencies, departments, commissions, boards,
bureaus, bodies, councils, offices, authorities, or instrumentality of any of them, of any nature
whatsoever for any govemmental unit (federai, state, county, district, municipal, city or otherwise)
whether now or hereafter in existence.
D. "Release" shall mean any spilling, leaking, pumping, pouring, emitting, empiying,
discharging, i~jecting, storing, escaping, leaching, dumping, discarding, burying, ahandoning, or
tlisposing of Hazardous Materials into the environment.
Seller's Initials:
7550i6 7.DOC 11
Buyer's)nitials
L.owe's Kenai PeninsWa: City of Kenai Parcel
Ootbber 10, 2006
NOT BINDING UNTIL EXECUTED BY ALL PARTIES
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EXHIBIT B
Legal Description
LOT A, BARON PARK, 2006 REPLAT, ACCORDING TO THE OFFICIAL PLAT
THER~OF, FILED UNDER PLAT NUMBER 2006-25, RECORDS OF KENAI
RECORDING DISTRICT, 'I'HIRD 7UDTCTAL DTSTRTCT, STATE OF ALASKA
TAX PARCEL NUMBER: 043-360-44
755016 7.DOC Lowe's Kenai Peninsula: Ciry af Kenai Parcel
October 1 l, 2006
_ . _ _..-
NOT BINDING LNTIL EXECUTED BY ALL PARTIES
EXHIBIT C
Form of Memorandum of Agreement
Recording Requested By
And VJhen Recorded, Return To:
Paul M. Harman
Jones Waldo Holbrook & McDonough
170 South Main Street, Suite 1500
Salt Lake City, UT 84101-1644
MEMORANDUM OF AGREEMENT
TI-IIS MEMORANDUM OF AGREEMENT (this "Memorandum") ismade and
entered into as of the day of , Z00_, by and between THE CTTY OF
KENAI, ALASKA, a home-rule municipal corporation of Alaska ("Seller"), and
LOWE'S HIW, INC., a Washington corporation, ("Buyer") (individually, a"Party" and
collectively, the "Parties").
WHER~AS, Buyer and Seller have entered into that certain Purchase and Sale
Agreement of even date herewith (the "AgreemenY');
WHEREAS, the Agreement pertains to "Subjeet Property" located in the CiYy
Kenai, Kenai Peninsula Borough, Alaska and more particularly described on Schedule I
attached hereto; and
WHEREAS, the Agreement pi-ovides for notice of its tenns to be recarded against
the Subject Property in the official records of Kenai Peninsula Borough, Alaska;
NOW, THEREFORE, the Parties hereby give notice as follows:
1. Secfion 11 of the Agreement provides to Seller certain rights to repurchase the
Subject Property, on terms and conditions more fully set forth in the Agreement. The
right to repnrchase the Subject ProperCy shall terminate on the date three (3) years and
one (1) day after the date on whieh Buyer acquires fee title to the Subject Property unless
the Completion Date has been extended pursuazrt to Section 11.1 of the Purchase and Sale
Agreeinent. Any extensiou of the completion date under Secrion 11.1 shall add the
equivalent amount of time to the Termination Date of the Right of Repnrchase. Upon
expiration of the termination date, Seller will record at Buyer's request an appropriate
document acknowledging termination of the Right of Repurchase.
755016 7.DOC 14 Lowe's Kenai Peninsula: City of Kenai Parcel .
Oofobcr ]0, 2006 :
NOT I3INDING UNTIL EXECUTED BY ALL PARTIES
Signature Page for Seller:
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.
SELLER:
CITY OF KENAI, ALASKA
a home-rule municipal corporation of
Alaska
By:
Naine:
Title:
STAT~ OF )
) ss.
BOROUGH OF )
ON THTS day of , 200~ before me, the undersigned, a
Notary Publie in and foi said Bor~ugh and State, personally appeared
, to me personally known to be the person desciibed in
and who exeeuCed the foregoing instruinent, who, being by me first duly sworn; stated
that he/she is the of , a
, and that he/she executed such instrument on behalf of said
corporation by authority of its board of directors, and said person acknowledged to me
that he/she executed such instrument as the act and deed of said corporation.
iN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year last above written.
Notarq Public
Printed Name:
My Commission Expires:
755016_7.DOC 15 I.owe's Kenai Peninsula: City of Kenai Parcel
October10,2066
NOT BINDING UNTIL EXECUTED BY ALL PARTTES
Signature Page for Buyer:
STATE OF )
) ss.
COUNTY OF )
LOWE'S:
Lowe's HIW, Inc.,
a Washington corporation
By:
Name:
Title:
ON THIS day of , 200_, before me, the undersigned, a
Notary Public in vid for said County and State, personally appeared
to me personally known to be the person described in
and who executed the foregoing instrument, who, being by me first duly sworn, stated
that heJshe is the of LOWE'S HIW, iNC., a Washington
corporation, and that he/she executed such instrtzment on behalf of said corporation by
anthority of its board of directors, and said person acknowledged to me that he/she
executed snch instrmnent as the act and deed of'said corporation.
IN WITNESS WH~REOF, T have hereunto set ~ny hand and affixed my official
seal the day and year last above written.
Notary Public
Printed Name:
My Commission Expires:
755016_7.DOC 16 Lowe's Kenai Pcninsula: City of Kenai Pazcel
~ October 10, 7A06
NOT BINDING iJI~'TIL EXECUTED SY ALL PARTIES
SCHEDULE I TO EXHIBIT C
Legal Description
LOT A, BARON PARK, 2006 REPLAT, ACCORDING TO THE dFFTCTAL PLAT
THEREOF, FILED UNDER PLAT NUMBER 2006-25, RECORDS OF KENAI
RECORDIIVG DISTRICT, THIRD NDICIAL DISTRICT, STATE OF ALAST{A
TAX PARCEL NUMBER: 043-360-44
755016_7.DOC 1 ~ Lowe's Kenai Peninsula: City of Kenai Paccet
~ Ocrober 11., 2006