HomeMy WebLinkAbout4390 �un d�r.�' `��'D
AGENDA BILL
CITY OF BREMERTON
CITY COUNCIL
SUBJECT: Amendment No. 2 to Lease Study Session Date: April 9, 2014
_. .
Agreement No. 4390 with Port Orchard �I COUNCIL MEETING Date: April 16, 2014
Sand 8 Gravel'� Department: Public Works & Utilities
Presenter: Bill McKinney
Phone: 360.473.5354
SUMMARY: The existing lease terminated on March 27, 2014. Port Orchard Sand & Gravel had
previously requested an extension of the existing Lease to Remove Gravel through December 31,
2015. The existing site is approximatefy 27 acres and is within the City's permitted biosolids
application site. All other terms of the agreement will remain unchanged.
ATTACHMENTS: 1). Amendment No. 2 to Lease to Remove Gravel 2) Site and Vicinity photomaps
FISCAL IMPACTS (Include Budgeted Amount): Royalties from gravel and sand mining provide a
minimum of$20,000 and up to $75,000 annually to the Water Utility.
STUDY SESSION AGENDA: � No Presentation � Full Presentation
STUDY SESSION ACTION: 0 Consent Agenda ❑ General Business ❑ Public Hearing
RECOMMENDED MOTION: Move to approve Amendment No. 2 to the Lease Agreement with Port
Orchard Sand & Gravel and authorize the Mayor to finalize and execute the agreement with
substantially the same terms and conditions as presented.
COUNCIL ACTION: �pprove ❑ Deny ❑ Table ❑ Continue ❑ No Action
Form Updated 01/25/13
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AMENDMENT NO. 2 TO
LEASE Z'O REMOVE GRAVEL
WIiEREAS, the CITY OF B1tEMERTON, a municipal corporation of the State of
Washington, "City" and PORT ORCHARD SAND AND GRAVEL,INC., a Washington corporation,
"Lessee" entered into a lease for gravel removal; and
WHEREAS, the term of the Lease commenced on September 27, 2003 and terminated on
September 27, 2013; and
WI�EREAS, the parties entered into Amendment No. 1 to Lease to extend the term of the lease
to March 27, 2014, and
WHEREAS, the parties now desire to enter into Amendment No. 2 to Lease to extend the term
of the lease to December 31, 2015;
NOW T�IEREFO1tE, for mutual consideration, City and Lessee agree as follows:
Section 2 of the Lease is hereby amended to extend the termination date of the Lease to
Remove Gravel to December 3 l, 2015.
All other terms of the Lease not specifically amended herein shall remain in full force and effect.
IN WITNESS WHEREOF the parties hereto have executed this Amendment the date and year
indicated.
PORT ORCHARD S.AND AND GIZAVEL COMPANY,INC.
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Print ame i7��/J �6J�,�6:�L�' Date
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CITY OF B1tEMERTON
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Patty Le , ayor Date
ATTEST: APPROVED AS TO FORM:
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City Clerk R er A. Lubovich, City Attorney
R:U.egal�Legal\Contracts�PUBLIC WORKS�Amendment No.2 to Lease to Remove Crravel-Port Orchazd Sand and . oc
1
Contract Number: 4390
Vendor- PORT ORCHARD SAND & GRAVEL CO INC
Subject: Gravel Removal
Department: Forestry
File Class LEG 12 -1
Begin Date: 9/27/2003
End Date- 3/27/2014
Review Date: 1/1/2014
Vault Date:
Comments: Minimum royalty per year; Amendment 1 11/1/13
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AMENDMENT 1 TO
LEASE TO REMOVE GRAVEL
WHEREAS, the City of Bremerton, a municipal corporation of the State
of Washington, "City" and Port Orchard Sand and Gravel, Inc., a Washington
corporation, "Lessee" entered into a lease for gravel removal; and
WHEREAS, the term of the Lease commenced on September 27, 2003
and shall terminate on September 27, 2013; and
WHEREAS, the parties desire to amend the Lease to extend the term
through March 27, 2014;
NOW THEREFORE, for mutual consideration, City and Lessee agree as follows
Section 2 of the Lease is hereby amended to extend the termination date
of the Lease to Remove Gravel to March 27, 2014
All other terms of the Lease not specifically amended herein shall remain in full force
and effect
IN WITNESS WHEREOF the parties hereto have executed this Amendment the
date and year indicated.
PORT ORCHARD SAND AND GRAVEL COMPANY, INC.
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Print Name G. .wDjp;�GzG - Date
Its
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CITY OF BREMERTON
Patty Lent, yor Date
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Approved as to form-
oge A. Lubovich, City Attorney
Received for filing
Shannon Corin, City Clerk
R \Legal\Legal \Contracts\PUBLIC WORKS\Amendment No 1 to Lease to Remove Gravel -Port Orchard Sand and
Gravel doc
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Contract Number:
Vendor:
Subject:
Department:
File Class:~
Begin Date:
End Date:
Review Date:
Vault Date:
Comments:
4390
PORT ORCHARD SAND & GRAVEL CO INC
Gravel Removal
Forestry
LEG 12-1
09/27/2003
09/26/2013
07/01/2013
$20000 per year minimum royalty
LEASE TO REMOVE GRAVEL
This Lease to Remove Gravel ("Lease") from real property in those portions of Sections 2
and 11, Township 23 North, Range 1 West, W.M., lying within the area covered by an
existing State surface mining permit and approved by the City and more fully described
in Exhibit "A" attached hereto and incorporated by reference herein ("Property"), made
and entered into this day by and between the City of Bremerton ("City") a municipal
corporation of the State of Washington and Port Orchard Sand and Gravel Company,
Inc., a Washington Corporation ("Lessee"), collectively referred to as the "Parties".
RECITALS
Whereas the City is the owner of the Property; and
Whereas Alpine Evergreen Company, Inc., ("Alpine") was the owner by right of
reservation of the gravel located on the Property which expires on September 27, 2003;
and
Whereas Alpine and Lessee are parties to a lease to remove gravel from the subject
premises which expires contemporaneously with the expiration of Alpine's right of
reservation; and
Whereas Lessee desires to lease from the City, and the City desires to lease to Lessee,
for the purpose of gravel removal, the Property pursuant to the terms set forth below;
NOW THI~REFORE; the parties agree as follows:
AGREEMENT
1. Grant of Lease: For and in consideration of the payments unto them by the Lessee of
the monies hereinat~er specific and the performance by Lessee of the covenants and
obligations herein provided, the City does hereby lease to Lessee the Property for the
limited purpose of processing and removing sand and gravel therefrom.
2. Term: The term of this lease shall be for a period often (10) years commencing on
September 27, 2003 (at the termination of the Alpine Lease) and terminating on
September 27, 2013, and further subject to termination as hereinai~er provided.
3. Payment: Lessee covenants and agrees to pay to the City as compensation for the
lease granted hereunder the following:
a. A royalty of fifty-seven cents ($0.57) per ton for all processed gravel taken from the
Property, and a royalty of thirty-two ($0.32) per ton for all reject sand taken from the
Property. In lieu of cash payment, the City may at its option take royalties in the form of
materials processed by lessee according to the following schedule of values:
LEASE TO REMOVE GRAVEL 1 9/24/2003
Lessee will receive a credit equal to the then existing retail price for the product sold to
the City less a ten percent (10 %) discount. Lessee shall provide the City with current
product retail prices and shall notify the City in writing as those prices are revised. This
credit will be applied to the royalty payable hereunder, but will not reduce the minimum
annual royalty. If the credit is not used to offset the royalties payable for the year in
which the materials were sold, then the credit may be carried over to future years.
b. Lessee shall review and report to the City its retail aggregate prices on or before
September 1 of each year. Should Lessee increase its retail aggregate prices the royalty
(but not the minimum annual royalty) will be increased by that same percentage. In no
event shall the royalty be less than the amounts set forth in ¶ 3(d), below.
¢. The royalties paid yearly by the Lessee to the City shall be based on the actual tonnage
removed, and the records of the Lessee shall be subject to inspection by the City, upon
three (3) days notice, at any time during Lessee's regular business hours.
d. Lessee agrees to pay to the City the minimum sum of twenty thousand dollars
($20,000) (minimum annual royalty) to be paid at the commencement of the lease, and on
or before September I of each subsequent year. This amount shall be credited against
royalties for later removal for the year. Payment for royalties in addition to the minimum
annual royalty, if any, shall be due and payable to the City on or before October 27 of
2004 and each subsequent year of this lease.
If the royalties payable for a fiscal year (September 1 to August 31 of each year) are less
than the minimum annual royalty, then the deficiency will be carded over the following
year(s) and used as credit against royalties payable in the subsequent years.
e. Existing stockpiles of processed gravel as of September 27, 2003 shall remain the
property of the Lessee for a period of one year fi.om the effective date of this agreement
and is not subject to royalty payments to the City. On or before September 27, 2003, the
parties will meet and measure the volumes oftbe existing stockpiles of processed gravel
and record the volume in writing (the "Agreed Stockpile Volume"). Alpine will be paid
the royalty due for removal of the Agreed Stockpile Volume. Payments shall be made as
the gravel is removed. Until October 1, 2004, removal of gravel up to the Agreed
Stockpile Volume will not be considered in calculating the royalties payable under
subsection 3(a) above.
4. Use: The use of the Subject Property shall be limited to the processing and removal of
gravel and sand. Any other use is prohibited. Lessee shall keep on file with the City a
current operating plan and surface mining permit issued by the Washington State
Department of Natural Resources (DNR Permit). Lessee shall obtain and furnish copies
to the City any and all permits required for the operation of the site.
Lessee shall not permit debris or refuse to be deposited on the Property.
LEASE TO REMOVE GRAVEL 2 9/24/2003
Lessee shall not make any alterations, additions, or improvements to the Property not
provided in the approved opexating plan or DNR Permit without first obtaining consent of
the City. All alterations, additions, and improvements will be at the sole cost and
expense of the Lessee. Except for the well and the well house, any buildings or
equipment will remain the property of the Lessee, which will remove those buildings and
equipment upon termination. Without limiting the foregoing, Lessee will remove the
wash plants, including the conveyor belts, the clarifying tank, and the truck scale.
The City, its agents, officers, employees and representatives may enter the Property at
any time, but the City will not have the fight to remove any gravel or sand or other
materials at the Property without the prior consent of the Lessee.
The City reserves the right to use the Property for purposes and in a manner that are
compatible and do not interfere with Lessee's operation.
5. Performance Bond: Lessee shall maintain in force and effect the performance bond
required by the DNR Permit for site reclamation. A copy of the performance bond shall
be provided to the City within 30 days of issue as required by the DNR Permit.
ii. Termination:
a. This Agreement may be terminated, at will, by either Party upon 90 days' written
notice to the other Party. This Agreement may be immediately terminated for cause by a
Party if the other Party substantially fails to perform through no fault of the terminating
Party, and the non-performing Paxty does not commence correction of the failure of
performance pursuant to paragraph 10 of this agreement.
b. Upon termination, for whatever reason, Lessee shall complete all required pit
reclamation as required by DNR reclamation plan, or other law, ordinance or authority.
Provided that: Lessee shall complete all required pit reclamation as required by 6b above
within one (1) year from the notice of termination.
c. Upon Termination: In the event of termination without cause by Lessee, or termination
for cause by the City, the Lessee shall forfeit all monies paid or due pursuant to
paragraph 3 (d). Upon termination without cause by the City, the City shall refund
monies paid pursuant to paragraph 3 (d) on a pro rata basis.
7. Indemnification: Lessee shall defend indemnify and hold the City harmless against
and from any and all claims by or on behalf of any person, firm, or corporation arising
from the conduct or management of or from any work or thing whatsoever done by
Lessee or its agents, contractors, servants or employees in or about the Subject Property.
Lessee shall further defend, indemnify and hold the City harmless against and from any
and all claims arising from any breach or default on the part of Lessee to be performed,
pursuant to the terms of this Lease, or arising from any act or negligence of Lessee or any
of its agents, contractors, servants or employees occurring during the term of this
LEASE TO REMOVE GRAVEL 3 9/24/2003
agreement on or about the Subject Property, and fi.om and against all costs, attorneys'
fees, expenses, and liabilities incurred in and about any such claim or action or
proceeding brought thereon. The provisions of this section shall survive the expiration of
this agreement.
8. Liability Insnranee: Lessee shall procure and maintain for the duration of this
agreement Commercial General Liability insurance written on an occurrence basis with
limits no less than $1,000,000.00 combined single limit per occurrence and general
aggregate for personal injury, bodily injury and property damage against claims for
injuries to persons or damage to property which may arise from or in connection with the
Lessee, its agents, contractors, or servants use of the Subject Property. The City shall be
named as an additional insured on this policy.
Prior to the commencement of this Lease, the Lessee shall provide a Certificate of
Insurance evidencing the above, together with an endorsement naming the City, its
officials, employees, agents and volunteers as an additional insured.
9. Condemnation: If the Subject Property or any part thereof shall he taken or acquired
by any entity having the right of eminent domain, either under said right or by purchase
without the exercise of said right, the City may, at its option, terminate this agreement
without paying any consideration to Lessee. No part of any award allocable to the real
property shall belong to the Lessee, BUT Lessee shall retain the right to claim damages
fi.om the condenming authority for the loss of business, moving costs, and loss of value to
trade fixtures.
10. Default: The occurrence of any of the following shall, at the option of the City, and
without notice or demand on Lessee, constitute an event of default hereunder:
a. Failure to pay any sums owing under this lease within ten (10) days after the same
becomes due.
b. Failure of Lessee to observe or perform any of Lessee's covenants and/or
agreements hereunder.
c. Lessee becomes insolvent or being adjudicated bankrupt or making an assignment
on behalf of creditors.
d. Institution by or against Lessee of any bankruptcy, insolvency, reorganization,
debt adjustment or liquidation proceeding, provided however, that Lessee shall
have ninety (90) days to obtain dismissal of any involuntary petition in
bankruptcy before being deemed to be in default.
e. Seizure or levy of any legal or governmental process upon the property placed by
Lessee upon the subject premises.
11. Remedies: Whenever an event of default shall exist and shall not have been
remedied within thirty (30) days after written notice setting forth the specific breach of
this Lease has been given by the City to Lessee, then the City may, at its option,
terminate this Lease. The remedies provided hereunder shall be in addition to any other
LEASE TO REMOVE GRAVEL 4 9/24/2003
remedies available to the City under law, and may be exercised singularly, concurrently,
or successively.
12. Non-Waiver: The failure of the City to insist upon strict performance of any of the
terms and rights contained herein, or to exercise any option conferred in one or more
instances, shall no be construed as a waiver or relinquishment of those terms and rights
and they shall remain in full force and effect.
13. Assignment: Any assignment of this Lease by the Lessee without prior written
consent of the City shall be void. Such consent shall not be unreasonably withheld.
14. Liens: Lessee shall not permit any lien or encumbrance of any kind to be placed
upon the premises which are subject of this lease. Lessee agrees that in the event any lien
is filed against the property due to the acts or failure to act of Lessee, that Lessee will,
within thirty (30) days, either discharge such lien or post a bond.
1S. Abandonment: Upon abandonment of the premises by Lessee without written
consent of the City, the City may take control of the premises including the equipment
and structures placed thereon by Lessee. Such entry and contxol by the City shall not
release Lessee fxom the obligations herein, and Lessee shall remain liable and continue
bound by this agreement unless the City, in the City's sole discretion, elects to terminate
the agreement. Lessee shall not be deemed to have abandoned the Property unless it
ceases to operate its business at the Property for a period of more than six (6) consecutive
months, unless the Lessee has indicated by word or deed, a clear and convincing intent to
abandon.
16. Notice: Any notice required to be given under this Lease shall be deemed given three
(3) days subsequent to deposit of such notice(s), properly addressed, in the United States
Mail, postage prepaid, sent by registered or certified mail, return receipt requested.
TO CITY:
City of Bremerton
ATTN: Director of Public Works & Utilities, Forestry Manager
3027 Olympus Drive
Bremerton, WA 98310
TO LESSEE:
Port Orchard Sand and Gravel Company, Inc.
ATTN: Dean Moergeli
LEASE TO REMOVE GRAVEL 5 9/24/2003
PO Box 181
Port Orchard, WA 98366
17. Governing Law: This agreement shall be governed and construed in accordance
with the laws of the State of Washington. ffany dispute arises between the City and the
Contractor arising from this agreement, resolution of that dispute shall be only through
the jurisdiction, venue and rules of the Superior Court of Kitsap County, Washington.
18. Attorneys' Fees: In any claim or suit arising from this agreement, each party shall be
responsible for payment of its own legal costs and attorneys' fees incurred in defending or
bringing such claim or lawsuit: however, nothing in this subsection shall limit the City's
right to defense and indemnification pursuant to ¶ 7.
19. Modification: No waiver, alteration, or modification of any of the provisions of this
agreement shall be binding unless in writing a signed by a duly authorized representative
of the City and Lessee.
20. Severability: If any one or more sections, subsections, or sentences of this
agreement are held unconstitutional or invalid, that decision shall not affect the validity
of the remaining portion of this agreement and the remainder shall remain in full force
and effect.
21. Captions: The captions of this Lease are inserted for convenience and are not to be
construed as pa~ of this agreement or in any way limiting the scope or intent of the
provision.
22. Entire Agreement: Lessee has inspected the Subject Property and has found the
same to be to its satisfaction. The written provisions and terms of this agreement,
together with any attached exhibits, supercede all prior verbal statements by any
representative of the City, and those statements shall not be construed as forming part of
or altering in any manner this agreement. This agreement any attached exhibits contain
the entire agreement between the parties.
LESSEE: PORT ORCHARD SAND AND GRAVEL COMPANY, INC.
LEASE TO REMOVE GRAVEL 6 9/24/2003
LESSOR: CITY OF BREMI~.RTOlq
Cary Bozeman, Mayor
?×
APPROVED AS TO FORM:
Roger A. Lubovich, City Attorney
LEASE TO REMOVE GRAVEL 7 9/24/2003