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HomeMy WebLinkAboutAgenda Bill Item 11 CITY OF;PETALUMA, CALIFORNIA AGENDA BILL •Agenda Title: Meeting Date: Review and Discussion of Spongberg Ground Lease Proposal January 16, 2001 Department: Director: Contact Person: Phone Number: City Manager Stouder Beatty 7 778 3435 Cost of Proposal: n/a Account Number: n/a Amount'Budgeted: -0- Name of Fund: n/a. Attachments to Agenda Packet Item: 1. Draft Agricultural Lease of Airport Lands 2. Initial Comments from City Attorney's Office 3. Initial Response from Mr. Spongberg Summary Statement: Mr. Charles Spongberg has proposed a=long-term lease of City-owned property SE of the airport runway for the purposes of installing an agricultural enterprise. Though not specific in the lease, Mr. Spongberg confirms that his intent is to install a vineyard. While the concept has been reviewed and supported by the Airport Commission, staff is reluctant to proceed in the development of the lease proposal until such time as the City Council has reviewed the proposal and has provided direction regarding the development of a vineyard on the property. This reluctance is in response to prior stated concerns from some Council members regarding the environmental impacts of accelerated vineyard development throughout the •'county. As noted in Ms. Goldfien's preliminary comments, additional comment and review from the Community Development Department will also be required. Staff has held this request until such time as Council direction can be.obtained. Council Priority: THIS AGENDA ITEM IS_CONSIDERED TO BE PART'OF, OR NECESSARY To, ONE OR MORE OF THE 1999-2000 PRIORITIES ESTABLISHED BY THE CITY COUNCIL ON JANUARY 30, 1999 AND MARCH 18, 2000. Priority(s): n/a Recommended City Council Action/Suggested Motion: Provide staff comments regarding the proposal to develop a vineyard operation on City-owned land associated with the airport. Reviewed by Finance Director:. Reviewed by City Attorney: Approved by C -Manager: Date: ,l 4 Date: 7✓7 Date: fuAPB- dh _Cl r dl ' s 1( Today's Date: Revision.# and Date Revised: 'de Co : • • • CITY OF PETALUMA, CALIFORNIA January 16;2001 • AGENDA REPORT FOR Agricultural Lease Of Airport Vaearif Lands 1. EXECUTIVE SUMMARY:..Mr. Charles Spongberg has proposed;a long-term lease of ten years plus two (2) ten-year extensions to plant a vineyard,or other crop m the property used as an approach zone for the Petaluma Municipal Airport. Mr. Spongberg proposes a lease of$35 per acre when not sublet and $50 per acre when sublet, plus "10%of thenet profit" generated;annually from the crop. Rent would be adjusted annually based on Bay Area Consumer Price Index, not to exceed 5% per year. 2. BACKGROUND: Mr.:Spongberg, aformer:member of the Airport Commission, has approached the City regarding a desire to plant a vineyard on vacant land at the south end'of the airport property. This area is currently open space used as an approach zone for the airport. Mr. Spongberg feels that planting of the area in crop would be beneficial to the operation of the airport, as a portion of the revenue generated from the crop would be provided to the airport to support operational cost of the airport. The City Attorney, Community Development Department and the Federal Aviation Agency require additional review of the proposal. Staff would like to provide the Council with the.concept provided by Mr. Spongberg and.obtain Council direction regarding the potentiaLlease prior to spending additional resources on the proposal. Staff has identified areas ofthe(proposal that are not recommended by the staff. Specifically, the City should not be responsible of liable financially for any aspect of this proposal, including any unanticipated reduction in the available acreage for the projects Staff has not analyzed the proposed value of the lease and has.not determined the,acreage actually available-for planting. Also, the City Manager, not the Airport Manager, should be responsible for the enforcement'of the provisions of the lease. 3. ALTERNATIVES: Provide conditions that the Council would,like to see included in the lease Provide direction regarding the Council's desire to see agricultural development of this currently open space property. 4. FrNANCIALIMPACTS: Not determined at this time. Staff would'not expect the "net" revenue to the airport to be significant depending on the value of the crop chosen and the costs associated with its planting and cultivation. 5. CONCLUSION: Staff needs Council direction previous to devoting additional time on the proposal. 6. OUTCOMES OR PERFORMANCE.MEASUREMENTSTHAT WILL IDENTIFY SUCCESSOR COMPLETION: Subject to Council direction. • 7. RECOMMENDATION:. Provide staff direction as to Council concerns and preferences. • g:lforms)2000 Agenda Bill revised 042100 • • rsa#97016.1 PETALUMA CITY AGREEMENT NO. AGRICULTURAL LEASE OF AIRPORT,VACANT LANDS THIS LEASE AGREEMENT is made and entered into as of this day of March, 2000, by and between the CITY OF PETALUMA, a political subdivision,of the STATE OF CALIFORNIA (hereinafter referred to as"City") and CHARLESGSPONGBERG (hereinafter referred to as "Tenant"). WITNESSETH WHEREAS, City,owns;and-operates the Petaluma Airport,an enterprise operation • hereafter referred to as the "Airport," which contains, in addition to current airport facilities, certain open space lands(hereinafter referred to as the "Property") which are either not needed currently for airport expansion or whose continued existence as open space is essential to current operations; and WHEREAS, the Property can be used for agricultural',purposes under certain conditions • without interfering with Airport operations; and WHEREAS, Tenant;desires to lease the Property for raising of agricultural crops; and WHEREAS, City and Tenant are willing to enter into a lease of the Property to Tenant under the terms and conditions set forth below; • NOW, THEREFORE; BE IT AGREED,as follows: 1. Premises. City hereby leases to Tenant, and Tenant hereby leases from City, the Property comprised of the areas denoted"A" through "L" and on Exhibit"A", attached hereto and incorporated by reference herein, and containing a total acreage of approximately acres. Any environmentally sensitive areas such as wetlands and vernal pools including a 25- foot setback from such sensitive areas shall be excluded from the "Property 2 Purpose,of Lease. Tenant is leasing the Propertyfor the purpose of raising and irrigating agricultural crops and will farm the Property. It is understood that'the Tenant, at his own choosing, may irrigate part or all of the Property. The tenant desires to use reclaimed waste water generated by the City at such time as-such waters are made available to the Airport Properties. - 3. Term. Unless reduced in acreage as provided in Paragraph 9, below;'or • terminated for default as provided in Paragraph 20, below, the term of this lease shall be as follows: (a) Initial Term. This lease shall be for an initial term of ten (10) years, • commencing on April 1, 2000. (b) Renewal Option. Tenant shall have an option to renew the lease for two (2) additional terms of ten (10) years each, if the following two conditions have been met at the time of each such renewal: i. Tenant is not;indefault in any respect under the terms°of this lease agreement; and. ii`. Tenant has given City written notice,of Tenants intention to renew prior to January 1 of the year in which the lease or extension thereof will expire. 4. Rent.•Rent for the Property shall be calculated and paid on an annual b'asis;'as follows: (a) Base. Rent for the.portion of the Property determined each year to be • available to Tenant shall be at the rate of$35.00 per acre per year when • not sublet or when sublet, and at the rate of$50:00 per acre per year when sublet. (b) Percentage of Crop. In addition to the base rent, Tenant shall payon an • . annual basis, tenpercent (10%) of the net profit from the crop generated • during each year of_this Agreement. The term "net profit"shall mean all revenue,generated;by crop sales, With deduction for all expenses to plant, grow, maintain, harvest and sell the crop, including, but not limited to, insurance, labor, equipment rental;fuel, seed, fertilizers,taxes, irrigation system,and agricultural development costs, any financing associated therewith and carryover prior year losses. Any expenses exceeding • revenue shall be carried:forward. Tenant shall present an.accounting of all expenses and income received from the sale of the crop. Tenant shall pay this percentage of het and provide such accounting within the first month of each successive:year of this Agreement. (c) Adjustments. i. Annual Adjustment. The above base rental rates shall be adjusted each year on March 1 byafactor equal to the percentage increase in the San Francisco-Oakland-Bay Area Consumer Price Index for • Urban Wage.Earners and Clerical Workers between January 1 and December 31 of the prior calendar year, but not to exceed an increase of more than five percent (5%) per year. 1111. • • • 5. Consent to Sublease/Mandatory Terms. City agrees that Tenant may sublet the Property for the purposes outlined in Paragraph 2, above, with Tenant solely responsible for the recruitment, selection and supervision of the sublessees,as long as Tenant abides by the following terms and conditions-in regard to any such sublease: • (a) Tenant awards the sublease on a basis, which includes the responsibility of the.sublessee as criteria; (b) Sublessee shall abide by all restrictions on use imposed by Tenant by the lease agreement between Tenant and City, and that the sublease will terminate without"financial recourse against City if the property subject to the sublease is eliminated from the lease as a-reduction in acreage by City in accordance with the provisions of Paragraph 9,below, or if the lease is terminated by City for default of Tenant,;in,accordance with the provisions of Paragraph 20; below; (c) Tenant notifies City in writing at least two.(2) weeks prior to the commencement of the sublease, informing City of the name, address, and business phone number of the sublessee, the portion of the Property being • sublet,the length of the sublease, and the purpose to which the sublessee • intends to itit'the.portion of the Property being sublet. 6. Irrigation. • (a) Consent to Irrigate. City hereby authorizes Tenant to irrigate or to allow its sublessees to;irrigate the property. City hereby agrees to make water available as needed for the continued viability of the farming operation. (b) Irrigation Facilities. i. Above-Ground Facilities. Tenant and its sublessees may irrigate using wheel.lines, except;to the extent that such-above ground facilities,in close proximity to Airport runways and appurtenances may be precluded by FAA regulations. Any wheel lines and associated equipment used in irrigation shall be and remain the property of Tenant or its sublessees.. ii: Underground System. Tenant anticipates, and City hereby authorizes.Tenant or its sublessees to commence installation of . underground irrigation systems°on areas "A" of Exhibit "A" within • six (6) years of the commencement of this lease. iii. Ownership of Underground System, If an underground irrigation • system is"constructed, it shall at the election of City at the end of the lease or extension thereof, become the property of City. iv: Access for Water tine Installation. City agrees that it will grant • Tenant or its sublessees whatever easements,or access rights that are,reasonable necessary to install lines, whether above=ground or underground,.across City owned Property to transport domestic or reclaimed water to the Property, except to the extent such easements or accessrights would conflict with FAA regulations. • (c) Grazing Where Permitted. Tenant or its sublessees may graze cattle or similar domesticated herbivores on areas of Exhibit All except when such use is inconsistent with FAA regulations or Airport operational needs, as determined in writing by the Airport Manager. Tenant sublessees are prohibited from grazing cattle or similar domesticated herbivores on, or,letting such animals grazing elsewhere on the Property to stray onto, area "A" of Exhibit "A". 7. Structures. Neither Tenant nor its sublessees shall construct any structures on the Property without the prior written consent of City. /C(z 8. Fences. Ten shall, at itsown expense, maintain in good condition and, at the written request of the:Ai . t Manager, repair all existing fences on the Property. Tenant or its sublessees shall obtain the prior:written consent of the Airport Manager before erecting any additional fences on the premises or removing any existing fences. In maintaining, repairing,;or constructing any fence which separates portions of the Property where grazing is permittedfrom those portions where grazing is prohibited,Tenant shall be responsible for ensuring that such fence is maintained, repaired, or cohstructedito a-standard sufficient to prevent,all intrusion of such animals into the areas where grazing is prohibited. • 9. Reduction in.Acreage. • (a) Purpose for Reduction.; If,duringahe term of this leaseor any extension thereof, City deterrninesthatsome;part of the Property is necessary for the expansion or improvement ofthe•Airport facilities for such purposes,as runways, buildings or parking, City may, and if required.bya state or federal agency having jurisdiction over environmentally-sensitive areas, City shall reduce the:acreage stibjectto the lease by withdrawing from.the. lease the portion'ofthe Property needed forthe'above-described use. (b) Notice of Reduction;. City shall endeavor to inform Tennant as soon as practical when considering plans for reduction of acreage. Such reduction in acreage shall'be;effectivelonly-ifCity has given Tenant:at least six (6) months prior written.noticerif City''s-actual intention to reduce the acreage, except that if such,reduction is required to comply with an order of a state or federal agency havin •jurisdiction over environmentally=sensitive areas, such notice.need only be given;thirty (30) days in advance of the reduction. 'Such notice shall include the,reason for the-reduction. Tenant shall be responsible-for notifying any affected sublessee of notice in a timely manner. • •, (c) Facility Relocation. Any relocation orremov_al'of the,facilities of Tenant or its sublessees, which is made;necessa y by the reduction in acreage, shall be done entirely at the expense of City. (d) Compensation for Reduction. The City shall reimburse the Tenant for any and all crop value, plant value and agricultural development costs incurred by the Tenant on the portions of the Property removed from the lease. Any such reimbursement value shall,be;established by an independent appraiser licensed to perform such evaluation. ,V'O 10. Grading for Improved Drainage. In order to maximize the suitability of the Property for irrigation, grading or land planing to improve drainage may be desirable. Tenant or its sublessees with the consent of Tenant shall grade or plane any portion of the Property only with the prior written consentofth • Manager, which'consent shall not be unreasonably withheld. Tenant shall obtain a`City gr ding and/or erosion permit where required by City ordinance. t t y 11. Repair and Maintenance. In addition to the specific provisions in Paragraph 8, above, pertaining to fences, Tenant shall at all times during the of the lease and any extension thereof keep and maintain or ensure that its sublessees keep:and maintain the Property in a neat and orderly condition, including removal of all;'noxious weeds,and fire hazards by grazing, harvesting, or other means not inconsistent with FAA regulations. • 12. Non-Interference'with Airport Operations. Tenant or its sublessees shall not use the Property in any manner,which interferes with Airport operations, including the creating of dust, smoke or other vision-obscuring'substances. 13. Wells/Groundwater: • (a) Tenant may, at his own expense, construct wells on the property and agrees-that it shall be responsible for maintaining at its expense all pumping equipment installed in or for such wells. (b) City.agrees that if,the County Environmental`Management Department, the Regional Water Quality Control Board, or any other duly-empowered agency requires the capping or terminating of any of the wells on the Property, then City shall consent to such capping or terminating,and such actions"shall be performed at Tenant's expense. 14. Status of Employeesiand Agents.of Tenant. It is understood,and agreed that all persons hired or engaged by Tenant or its sublessees shall be considered to be the employees or agents of Tenant or its sublessees and he employees or agents of City. 15. City's,Representative. Except as otherwise provided in this Agreement, the ifportManager=shall act as the representative of City in the administration of this lease. • r 16. Free.from.Liens. Tenant shall keep the Property free and clear of all liens which might otherwise be filed, orjudgments entered against the Property or the lease interest of Tenant or its sublessees'inthe Property due to nonpayment of labor or material costs for any • activity conducted on, or contracted for the Property by Tenant or its sublessees. 17. Hold Haimless/Indemnification. (a) Tenant`represents to City thatiit has inspected the Property, that it accepts the conditions thereof,and that it•fullyassumes any and'all risks incidental to the,use thereof.. Tenant agrees,and warrants that it will include in any sublease an Agreement-by the.sublessee, the City,shall not be liable to Tenant, its sublessees, or their'officers, employees, agents, contractors, or subcontractors, for any,personal injury or property damage suffered-by •them which may result-from hidden, latent, or other dangerous conditions - within the leased premises;;provided, however, that such:dangerous. conditions are notcaused by negligence or City, or its officers, agents, or employees. (b) Tenant shall indemnify and hold City,its officers, agents, employees, contractors and subcontractors free and harmless from any liability whatsoever, includingtliability for wrongful death, based or asserted upon any actor omission,of Tenant its sublessees, or their respective officers, agents, employees,.contractors, or subcontractors,useof the Property and responsibility in connection herewith or the condition thereof, and Tenant shall defend at its expense, including attorney fees, City and its officers, agents;employees,contractors and subcontractors in any legal action •, based upon such alleged acts or•omissions. • (c) The-specific minimum insurance coverage required by Paragraph 18, below, shall in no.waylimit.the,foregoing•obligationof Tenant to indemnify and hold harmless City or officers, employees, agents, contractors, or subcontractors: 18. Insurance. During the term of the,lease or'anyextension thereof, and thereafter as to any'incident occurring during the term of the lease or::extension thereof, Tenant'shall ' maintain and shall require:its:sublessees to maintain in full force and effect, at their own expense, policiesiof insurance, or evidence of self-insurance,-policies of insurance, ot'evidence of self= insurance;;acceptable to City,which provide-the'followingsinsurance coverage. . (a) Worker's•Compensation. Worker's Compensation. Worker's • compensation.coverage to the extent'required,by California,law. A certificate providing'City with at least 30-days prior written notice of any intended cancellation or non-renewal shall evidence such coverage. (b) Public Liability Insurance. i. Comprehensive public=liability;coverage in the combined,amount, of One'Million Dollars($1,000,000)per occurrence:for_liability for • any claims,actions, or judgments for.injury to any person, including death, or damage to the property of any person in • • • 1111, consequencezof any negligent acts or,orriissions of Tenant, its sublessees, or theirtrespective officers, employees or agents • relating to'orsin any way arisingffrom their use of the Property or responsibility in connection therewith or condition thereof during the`term of the lease or any extension thereof. ii. Such coverage shall be evidenced.bya,certificate of insurance filed with the City Clerk, which shall contain an endorsement naming City and the employees, and:agents`of City as additional insureds and provide that City shall be entitled to at least thirty (30) days prior written notice of any intended modification, cancellation or non-renewal of the policy or policies referenced in the'certificate. 19. Permits and Licenses. (a) Permits and Licenses. Tenant shall secure,'or ensure that its sublessees secure,;at the expense of Tenant or its sublessees, all necessary permits and licenses as'it or they may be required to obtain by any public agency. (b) Fees and Taxes. Tenant recognizes and;understands that this lease or any sublease may:create a possessoryinterestsubject to property taxation and that Tenant or its sublessees may be subject in consequence to their payment of such property taxes. Tenant agrees that it shall be responsible for p yi g or ensuring that its p a y such uch p ro P ert y taxes, as well as any other duly authorized fees and taxes levied on or required by any public entity in connection with the use of the Property by Tenant or its sublessees. • 20. Termination/Waiver. (a) Termination by Tenant or City for Default. Tenant and City shall each have the right to terminate this lease or any extension thereof upon at least fifteen(15) days:priorbwritten notice in the event that the other party fails to perform, keep, or observe any of its responsibilities under this lease Agreement,.within thirty (30) days after written notice of such breach or default,has been given to the defaulting-party by the non defaulting party, or in the event that the Property (exclusive of any portion withdrawn from the lease pursuant to Paragraph 9, above) is rendered unfit for Tenant's use by some:cause other than an act or omission of Tenant, or its sublessees, and cannot be restored to fitness within;a reasonable time. (b) Additional Grounds for Termination by City. City shall also have the right to terminate this lease or any extension thereof at any time for any of the following grounds: • • i, Bankruptcy. In the event a petition isfiled for voluntary or • involuntary bankruptcy by or.against Tenant, or for any other adjudication of Tenant as debtor under the bankruptcy laws. ii. Assignmentfor Creditors. In the event that Tenant makes;a general assignment•Tenant;of the legal or practical ability to perform its duties under this lease agreement. iii. Incapacity. In the event any act occurs which operates to deprive Tenant of the legal or practical ability to performits duties under this lease,agreement. iv. Abandonment/Dilscontinuance. In the event of abandonment,of the Property'or any permanent-discontinuance of use of the Property by Tenant and-its isublessees, other than for temporary fallow periods consistent with proper agricultural practices. v. Nuisance. In the eventthat'it;is determined, by any public agency, officer; or department charged with the enforcement of nuisances, that a nuisance is;occurring as a result of the use of the Property by Tenant or its sublessees and such nuisance is,not abated, or abatement commenced and reasonable progress towards full abatement made m.theopinion of such public agency, officer,or department, within thirty (30) days of written notice to Tenant.by I City. Termination pursuant to this subparagraph shall be effective only if City has given Tenant at least fifteen(15) prior written notice of termination. If.City terminates thel"ease`pursuant to this subparagraph, and it is later determined by a court of competent jurisdiction in a final judgment, not reversed on appeal,that such nuisance did not, in,fact.exist-or was timely,corrected, then Tenant shall be reimbursed by.City for any losses suffered,by Tenant as a result of such termination:procedures-if City or any of its officers' or departments was the nuisance-enforcing body, and the lease shall be considered to have never been terminated. (b) Waiver of Default. For purpose of subparagraph (a) of this Paragraph, no ' waiver by either party at any time or of any of the terms and conditions of this lease agreement shall deemed:or constructed as a waiver at any time thereafter of the same orrof any other terms or conditions contained herein • or of the strict and;timely performance of such terms and,conditions. 21. F.A.A. Assurance/Form 7460-1/Hazardous Substances Inventory. (a) City and Tenant hereby agree to abide by those.Assurancesnumbered 1 through 15 set forth in Exhibit "B," attached hereto and incorporated by reference herein. ., • • (b) Tenant shall prepare, assist, and cooperate with City in the preparation and filing of FAA Form 7460-1, as>required;by FAA,regulations for any • equipment'or aboveground facilities on the Airport (c) Tenant shall prepare and file, and require its sublessees to prepare and file, by January 1 of each°year with the Airport Manager, all annual hazardous materials;inventories required by Sections 25500 and following of the California Health and Safety Code and regulations promulgated in connection therewith. 22. Assignment; Except to the extent provided in Paragraph.5 in relation to subleases, Tenant shall not, and cannot, assign, sublet, mortgage,encumber, subordinate, hypothecate or otherwise transfer in any manner any of its rights, interest, duties, or obligations under this lease to any person or entity without the prior written consent of City being first obtained. 23. Binding on Successors/Recordation. The provisions of this lease agreement shall be binding upon-the heirs, assignsrand.successors in interest of,the:parties hereto. For this reason, the parties shall record this lease agreement hereto. 24. Notices. Any notice, demand,request, consent, approval, or communication that either party desires to give to the`.other party shall be.in the writing and either served personally or sent by prepaid, first-class mail,at the addresses noted below or such other address as • communicated to the other party in writing. All such notices sent by mail in this manner shall be deemed communicated within forty-eight (48) hours•from=the,time of mailing. City: Manager d, Retaktizottikirpert-- P. a.gos4,l' Pe-“1‘44-4 c 0 t is 3 Tenant: Charles,Spongberg 1918 Castle.Court Petaluma. CA 94954 25. Arbitration and Attorney's Fees. (a) All claims and causes of action'to enforce the provisions or to recover damages or other relief for breach of the Lease shall be resolved by binding arbitration conducted pursuant to the Commercial Arbitration Rules and all,applicable procedures of the American Arbitration Association then in effect with a single arbitrator who is an attorney with substantial real estate practice experience. The arbitrator shall have the same powers as a Superior Court Judgesto order in the award all • injunctive, declaratory or other relief or remedies which could be entered in an action filed in the Sonoma County Superior Court upon the same causes of action, and the arbitrator may retain continuing jurisdiction • when appropriates to make further determinations onto enforce the award. If the American Arbitration Association ceases to exist or its arbitration services become unavailable.within 50 miles of the City of Petaluma, a comparable arbitration service and its procedural-rules'shall be utilized. (b) The provisions of Title 9;;of.Part 3.of the California Code of Civil Procedure,including Section 1283.05 thereof permitting expanded discovery proceedings. shall be applicable to all disputes_or controversies, which are arbitrated pursuant to this Agreement; provided,;however, all discovery may proceed on ten (10) business days'notice. This agreement to arbitrate shall be specifically enforceable,under the prevailing • arbitration law. The arbitrator shall provide sufficient time for each party to reasonably complete its discovery. (c) The prevailing party in any such arbitration proceedings to enforce the provisions of this Lease or to recover damages for any breach thereof and any court action-to enforce any arbitration award or order or for other relief shall,be awarded their reasonable attorney's fees and costs incurred, • with the reasonable amount thereof to be fixed by the arbitrator of Court rendering'the award, order or judgement. NOTICE: BY INITIALING IN'THE SPACE BELOW, YOU ARE AGREEINGTO HAVE ANY DISPUTE ARISING OUT OF THE •' MATTERS INCLUDED IN THE"ARBITRATION OF DISPUTES" PROVISIONS DECIDED.BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING'UP ANY RIGHTS YOU MIGHT POSESS'TO HAVE THE DISPUTE LITIGATED IN A COURT OR BY JURY TRIAL. BY INITIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHT TO DISCOVERY'AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTE" PROVISION:-IF YOU SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TQ,ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA.CODE`OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS'ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE-TO SUBMIT DISPUTES,ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. • • • City of Petaluma Charles Spongberg Tenant 26. Severability. It is understood and agreed by the parties hereto that if any part, term or provision of this lease,agreement is found by the courts to be unlawful,invalid, or void, the validity of the remaining portions shall be construed and enforced as if the lease agreement did not contain the particular part, term or provision held to be unlawful, invalid, or void. 27. Modifications/Amendments. This lease agreement may be modified or amended only with the prior written consent of the parties. Unless otherwise specified by the Petaluma City Council in writing, the'consent;of City to such a modification or amendment shall be effective only if signified by signature of the Mayor following collective action of the Council to approve the modification of amendment. 28. Entire Agreement This lease agreement is intended by the parties hereto to be the final and exclusive expression Of the terms and conditions of the lease. 29. Effective Date. This lease agreement shall become effective as of the date of execution. • • IN WITNESS WHEREOF,this lese::agreement is hereby deemed to have been executed by the parties hereto as of the date,first above written. CITY OF PETALUMA • Mayor of the City of Petaluma "City" ATTEST: City Clerk - By TENANT • Charles Spongberg •' "Tenant" •' • • • CITY OF PETALUMA, CALIFORNIA MEMORANDUM City Attorney's Office, II English.Street, Petaluma, C4 94952. (707) 778-4362 Fax(707) 7784420 E-mail: attornev@ci.petaluma.ca.us DATE: May 15, 2000 -/1 TO: Gene Beatty, Assistant City Manager FROM: Lisa A. Goldfien,.Assistant City Attorney.,0-G(v MAC t•'r.hpr'�R� ASS'Y•OI SUBJECT: Proposal of Charles Spongberg to Lease City Airport Land for Agricultural Use At your request, I have done a superficial review of the attached draft "Agricultural Lease of Airport Vacant Lands " You indicated that a detailed review by our office should wait until after the Council has reviewed Mr,, Spongberg's proposal; therefore, I have not attempted to address any deficiencies in the specific wording of the lease provisions; or any of the substantive terms such as rent or term of they lease However, you should consider whether, if options are to be granted for the term stated in:the draft, the City would want to raise the rent to market rate at that time, rather than being limited to the base•rent as increased.bythe cost of living. My comments are as follows: 1. While the general form of the lease is fine,. it may be that the City has a standard form of lease for this type of situation. If the City does have a standard form, we would want to use that forni. • 2. Staff should verify with the Planning Department that the proposed agricultural use is consistent with the City's general plan, zoning ordinance, and any specific plan that may dictate allowed.uses of airport property. 3. Planning staff should also be consulted to determine what, if any, level of environmental review would'be required for-the proposed lease • 4. Regarding paragraph 5 ("Consent to Sublease/Mandatory Terms"), I would probably prefer that the City's consent to a sublease be required, not to be unreasonably withheld. . 1n addition, if the. City will be relying on the percentage rent to obtain.a fair rental for the property, the City may want additional provisions to ensure that any subtenant will be able to keepthe property productive 5 Regarding paragraph 6 ("Irrivation"), 1_assume the lessee would be responsible for any costs of irrigation. and this should be clarified. • Gene Beatty May 15,-2000 • Page 2 • 6. Regarding paragraph 13 ("Well's/Groundwater"), the lessee should be required to comply with,all applicable regulations for constructing any water.wells. 7. Regarding paragraph 16 ("Free from Liens"), the lessee should also defend and indemnify the City in any actions arising out of such liens, or if the City is required to take:any action to rid the propertyof any liens. 8. Consideration should be given to whether there are or might be any hazardous wastes on the property that "could,interfere with the lessee's operations, and how this possibility should be dealt within-the lease. 9. Regarding the insurance provisions of paragraph 18, the City's Risk Manager • should approve these requirements. 10, At this point, I am unable to give.an opinion on whether or not-I would recommend the binding arbitration provision in paragraph 25. Please let me know if you need any information at this time. cc: Rich Rudnanskv • • lagmenio aipori General Pile • • • 970.16.0. August 2, 2000 110, Gene Beatty Assistant City Manager City of Petaluma P.O. Box 61 Petaluma, CA 94953-0061 RE: Initial Response to Draft Lease Agreement for Airport Land Use: Spongberg Dear Gene: Thank you for your comments dated June 29, 2000. Allow,me to respond to each item by referring to the paragraph-numbers listed in your memo: L OK 2. OK 3. & 4. As with any City improvement project which involves:,a land take, the project would have to compensate:not for land value in this case, but for the valuable improvements placed on the land by the leasor. These improvements are installed to allow leasor to generate a valuable product, which will providekfor lease payments to the City. To the extend that these improvements need to be moved, the City will need to participate in these costs, potentially in the form of lease payments credits. 5. OK • 6. OK 7. We will complywith all City, State and Fed eral_regulations, including. environmental requirements. 8. OK 9. OK 10. OK 11. OK 12. OK 13. We would suggest tle addition of the following paragraph: Use and Storage of Chemicals. The leasor shall provide:a list of chemicals to be used in the operation of the agricultural project to the Planning Department. No chemicals shall be stored on the property unless prior approval is obtained by the Planning Department. 14. We suggest that binding arbitration would provide all parties with an expedient and cost effective resolution to any dispute. It is•my hope that we can finalize this lease within the next 45 days. Please call me to let nie.know what I can do to assist you in completing the approval of the agreement. Very truly yours, f • ' am �J' a�� _ u -Charles Spogberg ; • June 29, 2000 Chuck Spongberg 1918 Castle Court Petaluma, CA 94954 Dear Mr. Spongberg: I have received some initial comments fromthe City Attorney's office regarding the proposed lease. I have also provided a copy of the lease to the Planning Department for initial comtrtent,but have.not had a response • as of yet due to their limited staff and workload. I am providing my initial;comments;for your consideration. Once you have had achance to review the items:listed, please call,me and we can decide when the item can be taken to the City Council for their consideration. You may also not be aware of new regulations adopted by Sonoma County regarding-regulation Of vineyards that may impact your proposed operation. Our initial comments are attached. Sincerely, Gene Beatty Assistant City Manager • • Initial Response to Draft Lease Agreement for'Airport Land Use: Spongberg • June 29, 2000 1. ha all sections of the agreement, Airport Manager needs to be changed to City Manager. . 2. The final,contract+needs to be transferred.to a City of Petaluma document (city staff would do that). 3. Section9(c): The City will not agree to be responsible for any relocation or removal of facilities for any reason. 4. Section 9(d):, The City will not agree to be responsible for any reimbursement of crop value or development cost associated With any loss of acreage. 5. Section 10: Tenant will',be responsible to obtaining appropriate grading,permits prior to commencing any work, if approved. 6. Section 14: Last line should read"not" instead of"hot". 7. I ani trying to determine what, if any, environmental requirements need to bejmet regarding the grading and/or:introduction of vineyard or other crop into,the,area. • 8. I am also waiting to,hear what zoning;or other regulations might be.applicable to theiproposed use. 9. Regarding the right to sublease, we-would want the City to have:a requirement of prior approval by the City of such potential sub-lease. 10: The tenant wouldbe responsible for the'cost of all irrigation,including;connection and installation of the system. Cost of use of water from the City's water system would be determined by the actual water-rates being-charged to the general public.. 11. Regarding wells and groundwater, tenant would be subject to all applicable regulations regarding their installation and/or use. 12.Regarding paragraph 16,tenant should be required to defend and indemnify the City in any actions arising Out of such-liens, or if the City is required to take any action to rid the property of such liens. 13 The use'and`storage of any chemicals associated with the use of the:property . needs to be addressed in the lease. 14:I am not sure, at this time, if the City would agree to binding arbitration to settle any disputes.