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04/08/1991 - MinutesCITY OF PORT ORCHARD PUBLIC WORKS DEPARTMENT 8 April 1991 TO: Public Property Committee FM: City Engineer RE: Committee Minutes The Public Property Committee met at 7:30 AM, Monday, 8 April at the Family Pancake House to discuss the proposed lease with RV Associates. Members present were Carolyn Powers, Mack Grable and Jesse Smith. Representing RV were Red Lumsden and Steve Davis. Also present was Larry Curles. The participants discussed the preliminary lease that was provided. Red Lumsden had the following concerns: Paragraph III can be read in such a way that the City would get ten percent of the gross revenue of any business located on the leased area. (It was explained that the paragraph will be re -written to say that the City would get ten percent of any sub -lease rental that RV would get from businesses on the leased land.) The east tip of the triangle is swamp and that should not be valued as highly as developable land. If RV constructed a road on the property, would it become a city street or would he have to pay rent for that road for the years to come. The following points were brought out, as discussed by paragraph: I. The actual western limit of Area 2, the rectangle would have to be established. Only a portion of the rectangle is zoned for industrial purposes and the western portion is public property. The Planner will be consulted to determine how much of the western portion of the area can be cleared and excavated without violating land use policies. It is possible that RV can excavate that area in the industrial zone and slope that area currently covered by dormant deciduous trees. The evergreen trees would remain. II. The rent would be a flat amount based on a cost per acre. The Committee recommended $150 per acre per month. RV countered with $100 per acre per month, They pointed out that $150 is close to what they pay in an establish Industrial Park which already has roads and utilities RV expects to construct a new water main and road across the leased property. Since they expect to invest approximately $40,000, they feel the rent should be adjusted. If RV subleases this property, they do not object to providing 10% of that sublease revenue to the City. Rather than re -appraising the property every five years, RV suggested that the rent be adjusted every five years with a CPI indicator. III. There were no objections to this paragraph. Calculation of the revenue would be based on trust and the City would have the right to call for an audit. IV. No disagreement. V. The road would have to be constructed to established city standards. once it was up to standards, the City would assume ownership and maintenance responsibilities. The City would not assume this responsibility until the road is paved. VI. No discussion VII. No discussion. VIII. The rental amount is subject to discussion. Besides seeking a lower monthly amount, the participants agreed that the swamp land could not be developed and its acreage would not be used in rent calculations. The Committee felt that this paragraph should be clarified by stating the termination of any portion of the lease cannot be completed until the road is accepted by the City and the excavation is completed. (This clarification was discussed by the, Committee members after RV members had left.) IX. No discussion. RV`s attorney has not seen the lease as of yet. X. No objections. XI. XII, XIII, XIV No discussion. The Committee feels that the following are issues that the Council should address: 1. How much per acre should be the rent. 2. How long should the lease be. It is proposed to be a twenty year lease. 3. Is 20% of timber or gravel revenue from the lease property acceptable? 4 Is 10% of sub lease revenue acceptable? Lt�AFT REAL PROPERTY LEASE AGREEMENT THIS LEASE is made and executed on the day of 1991, by and between the CITY OF PORT ORCHARD, a municipal corporation and existing under the laws of the State of Washington, herein referred to as LESSOR, and RV ASSOCIATES, herein referred to as LESSEE. I. DEMISE AND DESCRIPTION OF PREMISES For and in consideration of mutual covenants hereinafter contained, Lessor hereby agree to lease, let and demise unto the Lessee the following properties: AREA 1: AREA 2: II. The term of the lease shall be until 1 July 2011. The rent shall be per month. If a revenue producing business is situated on the leased land, the City shall receive ten percent (10%) of the gross revenues each month. In addition to the rent and the percentage of revenues, the Lessee shall pay the lease hold tax as charged by the State of Washington. Rental and tax payments shall be payable in full, without deductions, on or before the fifteenth day of each month. During the years of 1996, 2001 and 2006, the Lessor reserves the right to have the property appraised by either a certified or noncertified real estate appraiser. The Lessor may adjust the monthly rental rate to reflect the current land value, as based on the appraisal. _ IV. The Lessee has the right to harvest the timber and excavate the ground for cut and fill purposes. The City shall receive twenty percent (20%) of any revenues resulting from the sale of the timber and gravel/soil on the leased property. This revenue from sale of resources shall be in addition to any rent payments. The Lessee has the right to terminate lease rights of Area 2, as described in Section II. Terminations of portions of the leased area will be completed in writing. For the first five years of this lease, the rental rate will be based on $150 per acre per month. The total lease for the remaining Area 1 will be based on this figure or the adjusted figure as based on the new appraisal as described in Section III. IX. Lessor shall not be liable for any loss, damage or injury of any kind to any person or property arising from any use of the leased premises or any part thereof, or caused by or arising from any act or omission of Lessee or any of its agents, employees, sublessees, licenses or invitees or by or from any accident on the leased premises or any fire or other casualty thereon or occasioned by the failure of Lessee to maintain said premises or to cause the same to be maintained in safe condition or by any nuisance made or suffered thereon, or arising from any other cause whatsoever. Lessee, as a material part of the consideration of this lease, hereby waives all claims and demands against Lessor and hereby indemnifies and agrees to hold Lessor entirely free and harmless from all liability for costs of other persons for any such loss, damage or injury, together with all costs, reasonable attorney fees and expenses arising therefrom. Lessee shall provide Lessor a certificate of insurance listing the Lessor as a Named Insured on the Lessee's policy which shall have minimum coverage of $500,000 Bodily Injury and $500,000 Property Damage or $1,000,000 combined Bodily Injury and Property Damage. X. Lessee shall not sublease, assign or transfer this lease or any interest therein, without prior written consent of Lessor, and a consent to assignment shall not be deemed to be a consent to any subsequent assignments, any such assignment without prior consent shall be void, and shall, at the option of the Lessor, terminate this lease. XI. In the event the Lessee shall fail to keep and perform any of the covenants and agreements herein contained including the payment of rent, Lessor may terminate this lease by giving written notification to Lessee. Lessee shall not be deemed to be in default of the covenants and agreements hereunder unless Lessor shall first give to the Lessee five (5) calendar days written notice of such default, and Lessee fails to cure such default within the five (5) day period. In the event of any such lease termination, Lessor in addition to the other rights and remedies it may have, shall have immediate right of reentry and may remove all persons and property from the premises.