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HomeMy WebLinkAboutResolution 2010-199 N.C.S. 11/01/2010Resolution No. 2010 -199 N.C.S. of the City of Petaluma, California APPROVING A GROUND LEASE AGREEMENT WITH THE PETALUMA AREA PILO'T'S ASSOCIATION AT THE PETALUMA MUNICIPAL AIRPORT WHEREAS, the Petaluma Airport Commission approved the location of a donated hangar to the Petaluma Area Pilots Association (PAPA), a California nonprofit corporation, at its May 7, 2009 meeting; and, WHEREAS, PAPA desires to ground lease space from the Airport in order to use the hangar for aviation - related storage and as a meeting facility; and, WHEREAS, PAPA has been an integral part of the success of organized air shows to promote the Petaluma Municipal Airport, and throughout the years has tirelessly supported Airport projects; and, WHEREAS, Airport staff and the City Attorney have drafted a Ground Lease Agreement to stipulate the terms of the rental, including a right of first refusal for the City to purchase the hangar if it is offered for sale; and, WHEREAS, the Ground Lease Agreement will provide an annual rental income of $69 a month to the Airport for land that was previously undeveloped; and, WHEREAS, at its October 7, 2010 meeting, the Petaluma Municipal Airport Commission recommended the Ground Lease Agreement for approval. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Petaluma hereby approves the Ground Lease Agreement with the Petaluma Area Pilots Association, substantially in the form attached hereto as Exhibit A, and authorizes the City Manager to execute the Ground Lease Agreement. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the A Council of the City of Petaluma at a Regular meeting on the I" day of November, 2010, by the following vote: AYES: Barrett, Vice Mayor Glass, Harris, Healy, Rabbitt, Renee, Mayor Torliatt NOES: None ABSENT: None ABSTAIN: None ATTEST: awA� -) City Clerk City Resolution No. 2010 -199 N.C:S. Page 1 EXHIBIT A TO RESOLUTION CITY OF PETALUMA GROUND LEASE AGREEMENT FOR PRIVATELY OWNED HANGAR This Ground Lease Agreement ( "Agreement ") is made and entered into this day of , 20 , by and between the City of Petaluma, hereinafter referred to as "City" and The Petaluma Area Pilots Association, a California nonprofit corporation, hereinafter referred to as "Lessee" or "PAPA." The address of Lessee is as follows: telephone (home) (business) WHEREAS, City owns that certain real property known as the Petaluma Municipal Airport ( "Airport "); and, WHEREAS, City deems it advantageous to itself and to Airport operations to lease to Lessee certain Airport land described herein, together with certain rights and interest therein; and, WHEREAS, Lessee desires to use ground area at the Airport commonly described as P -20 (the "Premises ") for the operation of a hangar thereon for the storage of PAPA aviation - related items owned by Lessee and other aviation - related purposes, as further described herein; and, WHEREAS, Section 46 of Article VII of the Petaluma City Charter provides, in pertinent part, that no City action providing for the sale or lease of real property may be taken except by ordinance or pursuant to a general law of the State; and, WHEREAS, pursuant to Section 46 of Article VII of the Petaluma City Charter, the City Council of the City of Petaluma on May 7, 2007, adopted Ordinance No. 2268 N.C.S., codified as Chapter 16.06 of the Petaluma Municipal Code, providing for City Council approval of form lease documents for ground, hangar and tie -down leases at the Petaluma Municipal Airport and City Council approval of specialized lease arrangements and other specialized uses of the Petaluma Municipal Airport all by resolution. NOW, THEREFORE, in consideration of the promises and mutual covenants contained in this Agreement, the parties hereby agree as follows: Resolution No. 2010 -199 N.C.S. Page 2 Incorporation of Recitals The above recitals are incorporated herein as if fully set forth. 2. Lease of Premises City leases to Lessee and Lessee leases from City, in accordance with the terms of this Agreement, the Premises, solely for permitted uses as defined in Section 5 of this Agreement. The Premises may be further described in Exhibit A, the "Petaluma Airport Renter Fact Sheet," attached to and made part of this Agreement. 3. Term The term of this Agreement shall be ten (10) years, commencing on December 1 2010. 4. Lease Payments Lease payments shall be Sixty Nine Dollars ($ 69.00 ) per month, payable in advance on the first day of each and every month this Agreement remains in effect. The Lease Payment: (i) shall be calculated on a square footage basis; (ii) shall be comparable to the rate charged by City for leases of tie -down space at the Airport; and (iii) may be increased by City Council resolution upon notice of the amount and effective date of the new Lease Payment, which notice shall be provided to Lessee at least thirty (30) days in advance of the new Lease Payment effective date and in accordance with applicable law. Lessee shall pay the first month's Lease Payment to City upon execution of this Agreement. Lease Payments shall be made payable to the City of Petaluma at Post Office Box 61, Petaluma, California 94953. Lease Payments shall be deemed delinquent if not received by City within twenty (20) days of the first of each month. Upon delinquency, the Lease Payment due will automatically increase by an additional ten percent (10 %) as liquidated damages for each month or portion of a month that the Lease Payment is delinquent. If the full amount of delinquent Lease Payments, including all liquidated damages, is not brought current within thirty (30) days of the date Lease Payments under the Agreement first became delinquent, the City may, in addition to other remedies available to City, and on notice to Lessee: (i)take immediate action for collection; (ii) refer and /or assign the delinquent Lease Payments to a collection agency; (iii)commence a small claims or other action to recover delinquent Lease Payments; and /or (iv) terminate this Agreement for cause in accordance with Section 6(b), below. Lessee agrees that City's costs incurred to recover delinquent Lease Payments, including, but not limited to, reasonable attorneys' fees and the cost of staff time, will be added to the Lease Payment then due and recoverable by City, as liquidated damages. Resolution No. 2010 -199 N.C.S. Page 3 5. Permitted Use Permitted use of the Premises pursuant to this Agreement is limited to storage of PAPA's aviation - related items, including supplies and equipment but excluding aircraft, and use as a PAPA meeting facility. Storage of Lessee's belongings shall be allowed provided that such use does not otherwise conflict with this Agreement and that the hanger use is primarily aviation related. City may treat any use of the Premises by Lessee that is nova permitted use as a material breach of this Agreement, subjecting Lessee's rights hereunder to termination for cause in accordance with Section 6(b). Termination and Removal of Hangar This Agreement may be terminated as follows: a. On thirty (30) days' written notice of such termination from Lessee by certified mail or by personal delivery, in accordance with applicable law. Any such notices should be sent to City at City Hall, City of Petaluma, Office of the City Manager, Post Office Box 61, Petaluma, California 94953 and to Lessee at In the event of such termination by Lessee, City will refund to Lessee the pro -rata share of any Lease Payment amounts already received for periods after the termination effective date, provided that thirty (30) days' written notice is given as required by this Section 6(a), less any applicable deductions pursuant to this Agreement. b. For cause by either party on not less than seven (7) days' written notice to the other party for any failure to comply with any of the terms of this Agreement, in accordance with applicable law. The party giving notice of termination for cause may, in its discretion, allow the other party a reasonable period, specified in the notice, in which to cure that party's failure to comply with this Agreement. Lessee specifically waives any right Lessee may have under applicable law to a three -day (3 -day) or other period in which to cure any breach of this Agreement, should City elect not to provide such period for cure of Lessee's breach. In the event of termination for cause, subject to applicable law, Lessee will remain responsible for Lease Payments due or accrued prior to the termination date. C. Lessee shall remove its hangar from the Premises within ninety (90) days of the termination date of this Agreement, unless a sale of the hangar in compliance with Section 8 has occurred. Upon termination, and during the ninety (90)day period following the termination date within which the hangar shall be removed from the Premises, Lessee shall have no right to use the Premises, store aircraft or any materials in the hangar, and /or enter the Premises except for the purpose of removing the hangar. Lessee shall, at its sole expense, restore and /or repair any damage or modification to the Premises caused by Resolution No. 2010 -199 N.C.S. Page 4 Lessee's construction, maintenance and /or removal of its hangar from the Premises. This obligation of Lessee shall survive expiration or termination of this Agreement. Assignment, Subleasing or Delegation Lessee may not assign or sublease Lessee's rights under this Agreement or delegate any of Lessee's obligations under this Agreement without the prior written consent of City, which consent shall not be unreasonably withheld. Any purported assignment, sublease, or delegation without City's prior written City shall be void. City may treat any such purported assignment, sublease or delegation as a material breach of this Agreement, subjecting Lessee's rights hereunder to termination for cause in accordance with Section 6(b). 8 City's Right of First Refusal After Lessee's hangar is placed on the Premises, Lessee shall not sell or agree to sell the hangar without first offering it to City in accordance with this Section 8 . The word "sell" shall include any transfer, conveyance, assignment, lease, hypothecation, or pledge of all or any portion of the hangar, except for an intra- family conveyance or transfer by gift, bequest or inheritance. In the event of such intra- family conveyance or transfer, the right of first refusal granted to City in this Agreement shall remain in effect against the person holding title or any other interest in the hangar so long as the hangar is located on the Premises or elsewhere at the Airport. a. Any such sale shall be pursuant to a written offer ( "Offer ") from a Qualified Purchaser, defined as an independent third party that: (i) is not directly or indirectly owned or controlled by or under common control with Lessee, (ii) intends to purchase the hangar for its own account, and (iii) agrees to enter into the City's then - current form of Ground Lease, if the hangar is to remain on the Premises after sale. The Offer must set forth the terms and conditions for such proposed purchase, including at minimum the name of the proposed purchaser, the amount of the purchase price, an all -cash method of purchase, and a proposed closing date that shall be not less than thirty (30) days after Lessee's acceptance of the Offer. b. If Lessee receives an Offer that Lessee is willing to accept, Lessee shall promptly give City a copy of the Offer and certify in writing to City that the proposed purchaser is a Qualified Purchaser ( "Offer Notice "). C. City shall notify Lessee in writing within seven (7) days of City's receipt of the Offer Notice if City declines to exercise its Right of First Refusal Resolution No. 2010 -199 N.C.S. Page 5 ( "Declination Notice "). Otherwise, City shall have forty -five (45) days from City's receipt of the Offer Notice ( "Acceptance Period ") in which to notify Lessee of its election to purchase the hangar under the terms and conditions specified in the Offer ( "Acceptance Notice ") d. On delivery of the Acceptance Notice, Lessee and City shall complete the sale and purchase of the hangar on the terms and conditions set in the Offer. e. If the City does not timely give Lessee an Acceptance Notice, or if City gives Lessee a Declination Notice, Lessee may sell the hangar at any time within sixty (60) days after the end of the Acceptance Period or after Lessee's receipt of a Declination Notice, on the terms and conditions set forth in the Offer, free and clear of any rights of City under this Right of First Refusal, with respect to that identified sale only. As a condition of any sale, Lessee shall require the purchaser to enter into the City's then - current form of Ground Lease on or before the date of purchase of the hangar. Purchaser's failure to enter into the City's then - current form of Ground Lease on or before the date of purchase of the hangar shall constitute good cause for City's removal of the hangar and its contents, and City shall be entitled to pursue all available remedies in law or at equity. Any sale or proposed sale on terms or conditions other than as stated in the Offer, or after the expiration of the sixty (60) day period provided for in Section 8(d), shall constitute a new sale subject to all of the terms of this Right of First Refusal. g. The Right of First Refusal set forth in this Section 8 shall not be assigned by City without Lessee's prior written consent, and any assignment without such consent shall be void Construction of Improvements All hangar improvements, including any paving installed on the Premises (collectively, "Improvements "), shall be constructed and maintained at Lessee's sole expense and shall be subject to prior City approval, including but not limited to approval pursuant to the City of Petaluma Zoning Ordinance and the California Building Standards Code as adopted by the City of Petaluma. 10. Alteration of Premises. Lessee may not make any alterations, install any fixtures, or make any additions or improvements to the exterior of the hangar without the prior written consent of City. Lessee shall maintain the hangar and the Premises in good condition at its sole expense and shall comply with City requirements Resolution No. 2010 -199 N.C.S. Page 6 regarding painting and exterior conditions. Lessee shall be responsible for obtaining all required permits, including but not limited to building permits, prior to commencing work on any alterations authorized by the City pursuant to this Section 10. City may require the Lessee to remove, at Lessee's sole expense, any unauthorized alterations, fixtures, additions or improvements, and /or require the Lessee to restore the Premises to its condition prior to the commencement of the Lease term and /or the making of the unauthorized alterations, normal wear and tear excepted. If City directs the Lessee to remove unauthorized alterations and /or to restore the Premises pursuant to this Section 10, and Lessee fails to do so within any reasonable period established by City for such removal and /or restoration, City may remove such alterations and /or restore the Premises or have such alterations removed and the Premises restored, and may deduct the cost thereof from amounts otherwise payable to Lessee pursuant to this Agreement. City may treat any failure of Lessee to comply with the requirements of this Section 10 as a material breach of this Agreement subjecting Lessee's rights hereunder to termination for cause in accordance with Section 6(b). 11. Right of Entry To the maximum extent provided by law, City shall have the right to enter the Premises, including the hangar on the Premises, at all reasonable times, to: (i) inspect the Premises, including the hangar on the Premises; (ii) ensure compliance with this Agreement; and (iii) provide for the safety of the Airport and the public. City shall endeavor to provide Lessee advance notice of inspections and to permit Lessee to be present during inspections. Lessee shall provide City with a key, security code or other means of opening all Lessee - furnished locks securing the hangar on the Premises. City may treat Lessee's use of a lock to secure the hangar for which the City does not have a key as a material breach of this Agreement subject to termination for cause in accordance with Section 6(b). In addition to other remedies of the City, City may remove or have such locks removed without notice to Lessee and at Lessee's expense. City may deduct the cost of lock removal not paid by the Lessee from any funds payable to Lessee pursuant to this Agreement. 12. Government Regulations Lessee shall comply with all statutes, ordinances and regulations of the federal, state, county and municipal authorities presently in effect, or which hereafter may become effective, pertaining to the use of the Premises, and /or the use of the Airport pursuant to this Agreement. City may treat Lessee's failure to comply with such statutes, ordinances and regulations as a Resolution No. 2010 -199 N.C.S. Page 7 material breach of this Agreement, subjecting Lessee's rights hereunder to termination for cause in accordance with Section 6(b). 13. Indemnification Lessee shall indemnify, defend with counsel acceptable to City, and hold harmless City and its officers, officials, employees, agents and volunteers from and against any and all liability, loss, damage, claims, expenses, and costs (including, without limitation, attorneys' fees and costs and fees of litigation) (collectively, "Liability ") of every nature arising out of or in connection with: (i) the operation of the aircraft specified in Exhibit A; (ii) Lessee's use of the Premises (including the hangar on the Premises); (iii) Lessee's use of the Airport; and /or (iv) Lessee's failure to comply with any of its obligations pursuant to in this Agreement. Notwithstanding the foregoing, to the extent that this Agreement is deemed a "construction contract" within the definition of Civil Code Section 2783, as may be amended from time to time, such indemnity shall not include Liability for the active negligence of City. This indemnity shall survive the expiration or termination of this Agreement 14. Insurance Lessee shall procure and maintain in effect for the duration of this Agreement insurance in accordance with this Section 14 and Exhibit B, which is attached to and made a part of this Agreement. Exhibit B sets forth the minimum kinds and amounts of insurance that Lessee must maintain pursuant to this Agreement, as well as required endorsements and other requirements. Insurance required pursuant to this Section 14 and Exhibit B may be modified in the sole discretion of the City's Risk Manager or City Manager. Any such approved insurance modifications will be by written amendment to this Agreement in accordance with Section 16. City may treat Lessee's failure to maintain the required insurance in effect for the duration of this Agreement as a material breach of this Agreement, subjecting Lessee's rights hereunder to termination for cause in accordance with Section 6(b). 15. Statutory Notice Possessory Interest Tax Lessee is advised that under California Revenue and Taxation Code Section 107.6, execution of this Agreement may create a possessory interest in Lessee subject to property taxation. Lessee hereby agrees that if such possessory interest is created and is subject to property taxation, Lessee shall be solely responsible for the payment of said property taxes levied on any such interest. 16. Amendment This Agreement may be amended only by a written instrument executed by authorized representatives of each party. Resolution No. 2010 -199 N.C.S. Page 8 17. Construction The parties agree that, notwithstanding Civil Code section 1654, any uncertainty in the Agreement shall not be construed against the drafter of the Agreement. 18. Governing Law; Venue This Agreement shall be enforced and interpreted under the laws of the State of California and the City of Petaluma. Venue for any action arising from or brought in connection with this Agreement shall be in a court of competent jurisdiction in the County of Sonoma, State of California. 19. Non - Waiver The failure to enforce any provision of this Agreement or the waiver thereof in a particular instance shall not be construed as a general waiver of any part of such provision, and the provision shall remain in full force and effect. 20. Severability If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 21. No Third Party Beneficiaries The parties do not intend to create, and nothing in this Agreement shall be construed to create any benefit or right in any third. party. 22. Headings The headings used in this Agreement are for convenience only and are not intended to affect the interpretation or construction of any provisions herein. 23. Survival All representations and warranties of the parties and provisions of this Agreement allocating liability between City and Lessee shall survive the expiration or termination of this Agreement; as shall other provisions of this Agreement that expressly state that they are intended to survive such expiration or termination. 24. Entire Agreement This Agreement, including Exhibits A and B hereto, constitutes the entire agreement between the parties and supersedes all prior agreements or understandings, oral or written, between the parties concerning the subject matter of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. Resolution No. 2010 -199 N.C.S. Page 9 CITY City Manager ATTEST: City Clerk APPROVED AS TO FORM: Zip City Attorney APPROVED: Department Director APPROVED: Airport Manager APPROVED: Risk Manager APPROVED: Finance Director LESSEE Signature Printed Name Address City State Resolution No. 2010 -199 N.C.S. Page 10 EXHIBIT A TO HANGAR LEASE AGREEMENT PETALUMA AIRPORT RENTER FACT SHEET NAME ADDRESS CITY & ZIP PHONE & EMAIL (for airport to fill in below) SPACE NUMBER RENTAL FEE Resolution No. 2010 -199 N.C.S. Page 11 EXHIBIT B TO HANGAR LEASE AGREEMENT MINIMUM INSURANCE REQUIREMENTS FOR AIRPORT LESSEE Lessee shall not take possession under this Agreement until Lessee shall have obtained all insurance required under this Exhibit and such insurance shall have been approved by the City's Risk Manager as to carrier and sufficiency; nor shall Lessee allow any subcontractor, unless Lessee has obtained prior written City approval for subcontractor, to commence work on or within the leased premises until all similar insurance required of the Lessee and /or subcontractor shall have been so obtained and approved. All requirements herein provided shall appear either in the body of the insurance policies or as endorsements and shall specifically bind the insurance carrier. Lessee shall procure and maintain for the duration of the Agreement all necessary insurance against claims for injuries to persons or damages to property which may arise from or in connection with the Agreement. A. Minimum Scope of Insurance Coverage shall be at least as broad as: 1. Aircraft Liability Insurance Coverage - Commercial General Liability a Personal injury b Contractual Liability C. Fire Legal Liability 2. Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. 3. Such other insurance coverages and limits as may be required by the City of Petaluma. Minimum Limits of Insurance Lessee shall maintain limits no less than: 1. Commercial general Liability $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate liability is used, either the general aggregate limit shall apply separately to this Agreement or the general aggregate limit shall be twice the required occurrence limit. 2. Employer's Liability: Bodily Injury by Accident - $1,000,000 each accident Bodily injury by Disease - $1,000,000 policy limit Bodily Injury by Disease - $1,000,000 each employee 3. Such other insurance coverages and limits as may be required by the City of Petaluma. C. Deductibles and Self- Insured Retentions Any deductibles or self- insured retentions must be declared to and approved by the City of Petaluma. At the option of the City of Petaluma, either: the insurer shall reduce or eliminate such deductibles or self- insured retentions as respects the City of Petaluma, its officers, officials, employees, and volunteers; or the Lessee shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. Resolution No. 2010 -199 N.C.S. Page 12 D. Other Insurance Provisions The required aircraft liability and other applicable insurance policies are to contain, or be endorsed to contain the following provisions: 1. The City of Petaluma, its officers, officials, employees, agents and volunteers are to be covered as additional insureds as respects: liability arising out of activities performed by or on behalf of the Lessee; products and completed operations of the Lessee; premises owned, occupied or used by the Lessee. The coverage shall contain no special limitations on the scope of protection afforded to the City of Petaluma and its officers, officials, employees, agents or volunteers. 2. For any claims related to this Agreement, the Lessee's insurance coverage shall be primary insurance as respects the City of Petaluma, its officers, officials, employees, agents and volunteers. Any insurance or self - insurance maintained by the City of Petaluma, and /or its officers, officials, employees, agents or volunteers shall be excess of the Lessee's insurance and shall not contribute with it. 3. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City of Petaluma, and its officers, officials, employees, agents or volunteers. 4. The Lessee's insurance shall apply separately to each insured against whom claim is made or suit is brought except, with respect to the limits of the insurer's liability. 5. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by mail has been given to the City of Petaluma. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A -VII. Verification of Coverage Lessee shall furnish the City of Petaluma with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by the City of Petaluma before the Agreement commences. The Lessee's insurer may provide complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by the City of Petaluma. INSURANCE REMINDER THE CITY OF PETALUMA'S INSURANCE DOES NOT COVER ANY OF LESSEE'S PERSONAL PROPERTY, INCLUDING AIRCRAFT Resolution No. 2010 -199 N.C.S. Page 13