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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 l 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. /o —?--� —���.5' Print ame i7��/J �6J�,�6:�L�' Date ' Its ��i�F.,.�' CITY OF B1tEMERTON !�- � - Z�«� Patty Le , ayor Date ATTEST: APPROVED AS TO FORM: � ` 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 r 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. /v /Lo' zd1 16 S Print Name G. .wDjp;�GzG - Date Its z CITY OF BREMERTON Patty Lent, yor Date 1 • r 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 2 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