HomeMy WebLinkAbout103-07 RESOLUTIONRESOLUTION NO. 103-07
A RESOLUTION APPROVING A THIRTY-YEAR GROUND LEASE
WITH WALKER PROPERTIES II L.P. FOR THE CONSTRUCTION OF A
HANGAR BUILDING AT THE FAYEI'IEVILLE MUNICIPAL AIRPORT,
DRAKE FIELD.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas, hereby
approves a Thirty Year Ground Lease with Walker Properties II L.P. for the
construction of a hangar building at the Fayetteville Municipal Airport, Drake Field VIrfo,%,
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ATTEST: FAYETTEVILLE:
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SONDRA E. SMITH, City Clerk/Treasurer
PASSED and APPROVED this 5th day of June, 2007.
APPROVED:
DAN COODY, Mayor
LEASE AGREEMENT
Ground Lease
This Lease Agreement (this "Lease") entered into effective as of the '*k day of J
, 2007 ("Effective Date"), by and between the CITY OF FAYETTEVILLE, ARKANSAS
and WALKER PROPERTIES II, L.P., an Arkansas limited partnership ("Walker Properties").
WHEREAS, the City of Fayetteville owns and operates the Fayetteville Municipal Airport,
Drake Field (the "Airport"), situated in Washington County in the State of Arkansas; and
WHEREAS, the purpose of this Lease is to provide Airport land for the construction of an
aircraft hangar ("Hangar") with access to the runway and taxiways; and
WHEREAS, Walker Properties' aviation -related activities will significantly contribute to the
economic vitality of the Airport through fuel purchases, flight activity, maintenance activity and
commerce conducted via the air transportation portal of the City of Fayetteville; and
WHEREAS, Walker Properties desires to lease from City of Fayetteville certain ground for
the construction of an aircraft hangar and ramp as described below (the "Leased Premises"):
A TRACT OF LAND 175 FT. X 125 FT. (TOTALING 21,875 SQ. FT.)
LOCATED AT THE FAYETTEVILLE MUNICIPAL AIRPORT - DRAKE
FIELD AND MORE PARTICULARLY SET FORTH AND SHOWN ON
EXHIBIT A, ATTACHED HERETO AND MADE A PART HEREOF,
ONCE COMPETED TO HAVE AN ADDRESS OF 4390 SOUTH SCHOOL
AVENUE.
NOW, THEREFORE, the Parties hereto agree as follows:
1. LEASEHOLD. The City of Fayetteville does hereby grant, demise and lease unto Walker
Properties certain premises situated in Washington County, Arkansas, within the boundaries of the
Fayetteville Municipal Airport - Drake Field. Walker Properties will be responsible for all
improvements to the Leased Premises.
A. Title Commitment. The City of Fayetteville shall, within thirty (30) days after the
Effective Date, cause to be furnished to Walker Properties a current Title Commitment (the "Title
Commitment") issued by Heritage Land Title of Arkansas, Inc., 2153 E. Joyce Blvd., Suite 201
Fayetteville, AR 72703 ("Title Company") effective as of the date which is on or after the
Commencement Date showing the City of Fayetteville as the record title owner of the Leased
Premises. The Title Commitment shall evidence Title Company's agreement to issue to or for City
of Fayetteville a Leasehold Policy of Title Insurance covering Walker Properties' leasehold estate in
standard form insuring Walker Properties' leasehold estate to the Leased Premises as good and
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indefeasible subject to the terms of such policy. The City of Fayetteville shall, within such thirty
(30) day period, cause the Title Company to deliver to Walker Properties legible copies of all
documents and plats, if any, to which the Title Commitment refers. The amount of the Title Policy
shall be an amount equal to the actual cost of the Hangar, and the premium for the Title Policy shall
be the sole expense of Walker Properties.
B. Survey. Within thirty (30) days after the Effective Date, the City of Fayetteville shall
deliver to Walker Properties and the Title Company, survey documentation for the 1 Pased Premises
sufficient to permit Walker Properties to determine the location of existing structures, boundary
lines, encroachments and easements (including easements for utilities and for ingress and egress.
C. Environmental Assessment. Walker Properties may procure, at its expense, and
deliver a copy thereof to City of Fayetteville within sixty (60) days following the Effective Date a
written report by a qualified environmental audit professional or company (to include a Phase I
Environmental Site Assessment), acceptable to both City of Fayetteville and Walker Properties,
dated within such sixty (60) day period, stating that as of the date of said report there is no evidence
or indication of the presence of any environmental contamination or Hazardous Substances (as
defined in Section 6.B. hereof) on or under the Leased Premises. The report shall utilize readily
available sources of data and an inspection of the Leased Premises. The report shall also include
historical uses of the Leased Premises. The report shall certify there are no actual or potential
environmental problems based on the current and past uses of the Leased Premises that would
indicate violation of any federal, or state, or local law, rule, or regulation, specifically including, but
not limited to, the Federal Clean Air Act, the Resource Conservation and Recovery Act, as amended,
42 USC Section 6901 et seq. ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 USC Section 9601 et seq. ("CERCLA"), the
Hazardous Materials Transportation Act, as amended, 49 US.0 Section 1802 et seq. ("HMTA"), the
Federal Water Pollution Control Act ("FWPC") or the Occupational Safety Health Act ("OSHA")
D. Review Period. Walker Properties shall a period (the "Review Period") of ninety
(90) days following the Effective Date in which to notify City of Fayetteville in writing of any
objections Walker Properties has to any matters shown on the Title Commitment, the Survey or the
Environmental Assessment, or matters made known to Walker Properties by virtue of Walker
Properties' inspection of the Leased Premises which materially and adversely affect Walker
Properties' use of the Lease Premises. In addition, Walker Properties shall be permitted during the
Review Period to determine that necessary utilities are available to Walker Properties at reasonable
costs and that Walker Properties will be able to prepare the site for hangar construction at reasonable
costs. Any other provision herein to the contrary notwithstanding, Walker Properties objects to all
existing liens (other than liens securing the payment of taxes assessed or to be assessed for the
current year), all exceptions set forth in the Title Commitment arising on or after the effective date of
this Lease. All objections raised in the manner herein provided are hereafter called"Objections".
(All exceptions not objected to shall be considered the "Permitted Title Exceptions"). In the event
City of Fayetteville fails, refuses or is unable to cause the removal of any Objections within thirty
(30) days after receipt of Walker Properties' notice in writing, either (1) this Lease may be
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terminated in its entirety by or on behalf of Walker Properties by giving City of Fayetteville written
notice to such effect on or before the thirtieth (30th) day following the end of such thirty (30) day
"cure" period, whereupon all parties hereto shall be released and relieved of further obligations,
liabilities or claims hereunder; or (2) any such objections may be waived in writing by or on behalf
of Walker Properties.
2. TERM. The term of this Lease is thirty (30) years ("Initial Term"), beginning on (a) the
date on which a building permit is issued by the City of Fayetteville or (b) the one hundred twentieth
(120th) day after the execution and approval of this Lease by the City of Fayetteville, whichever first
occurs (the "Lease Commencement Date") and terminating at midnight on the last day of the
calendar month ending immediately preceding the thirtieth anniversary of the Lease Commencement
Date (viz., , 2037), unless otherwise terminated, canceled or extended as set forth
herein below. Walker Properties will commence development of the property at the earliest possible
time consistent with the requirements of the City of Fayetteville Code of Ordinances and the Unified
Development Ordinance. Should Walker Properties be unable to complete the project within nine
(9) months after the Lease Commencement Date, the City of Fayetteville shall have the right to
terminate this Lease.
A. Option to Extend. Provided that Walker Properties has complied with and
performed all conditions, covenants, and terms of this J ease without any uncured defaults by Walker
• Properties that are not otherwise in the process of being resolved, Walker Properties shall have the
option to extend this I ease for one (1) additional period of twenty (20) years ("Extension Term")
under the same terms and conditions herein, which option shall be deemed automatically exercised
by Walker Properties at the end of the Initial Term unless Walker Properties shall affirmatively act to
negate such automatic exercise by written notice to terminate delivered to the City of Fayetteville not
less than one hundred eighty (180) days prior to the expiration of the Initial Term.
B. Additional Extension. Any extension beyond the fifty (50) years included
within the Initial Term and any Extension Term shall be upon mutually agreeable terms and
conditions to be negotiated by the parties at that time.
3. RENTAL FEES. During the first five (5) years of the term of this Lease, Walker Properties
agrees to pay City of Fayetteville an annual ground rental fee of ten cents ($0.20) per square foot of
total leased ground space. I eased ground space totals 21.875 square feet. Annual rental due the City
of Fayetteville is Tour Thousand Three Hundred Seventy Five Dollars and No cents ($4,375.00).
Said rental is to be paid in advance in yearly installments on the Lease Commencement Date and
each anniversary thereof during the lease term.
A. Rent Adjustments. Rental charges payable hereunder shall be reviewed every five
(5) years, not fewer than sixty (60) days prior to the end of the current five-year period, and the rental
charges for the next five (5) years of the lease term will be adjusted, effective as of the first day of
such ensuing five-year period ("Rent Adjustment Date") to reflect changes in the Consumer Price
Index (CPI) during the previous five years, using the formula and definitions set forth in Lease
Attachment #1; provided, however, that in no event shall the monthly rent payable hereunder be less
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than the monthly amount paid during the previous five-year period.
B. Late Charge. A delinquency charge will be imposed on payments not received by
the close of business on the tenth (10th) day after the due date. Such delinquency charge shall be the
maximum amount allowable under Arkansas law. All payments shall be delivered or mailed to: City
of Fayetteville, 113 West Mountain Street, Fayetteville, Arkansas 72701.
4. UTILITIES AND JANITORIAL SERVICES. Walker Properties shall be responsible for
the payment of all utilities associated with the hangar facility to be construction upon the Leased
Premises, including but not limited to, electric, gas, heating, water/sewer, and trash removal. The
City of Fayetteville shall not be required to furnish to Walker Properties any facilities or services of
any kind, such as, but not limited to, water/sewer, trash removal, electricity, or gas. Any such
facilities or services required by Walker Properties for their use and purposes shall be their sole and
exclusive responsibility and Walker Properties agrees to hold City of Fayetteville harmless from any
responsibility or liability therefor.
5. TERMS AND CONDITIONS; QUIET ENJOYMENT. Walker Properties agrees to
comply with and abide by all terms and conditions set forth in this Lease. The City of Fayetteville
covenants and agrees that, subject to the terms and provisions of this Lease, if and for such period of
time as Walker Properties keeps and performs, in all material respects, each and every covenant,
agreement, term, provision and condition herein contained on the part or on behalf of Walker
Properties to be kept or performed, Walker Properties shall be entitled to quietly and peacefully hold,
occupy and enjoy the Leased Premises and Walker Properties' rights under this Lease during the
entire lease term.
6. USE OF THE PREMISES. Walker Properties agrees that the Leased Premises shall be
used and occupied only as an aircraft hangar and for related, lawful purposes.
A. Flammable Material. Walker Properties further agrees not to store any flammable
material on the Leased Premises other than a limited supply of aircraft fuel, oils and agents necessary
for the operation of an aircraft hangar.
B. Hazardous Substance. Other than as may required or incidental to its use of the
Leased Premises as an aircraft hangar, Walker Properties shall not cause or permit any Hazardous
Substance to be used or stored on or in the Leased Premises without first obtaining the City of
Fayetteville's written consent. If Hazardous Substances are used, stored, generated or disposed of on
or in the Leased Premises or if the Leased Premises or any other Airport property becomes
contaminated in any manner for which Walker Properties is responsible or legally liable, Walker
Properties shall indemnify and hold harmless the City of Fayetteville from any and all claims,
damages, fines, judgments, penalties, costs, liabilities, or losses (including, without limitation any
damages caused by loss or restriction of rentable or usable space as part of the Leased Premises)
arising during or after the term hereof and arising as a result of contamination of the Leased Premises
by Walker Properties, its agents, employees and invitees. This indemnification includes, without
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limitation, all costs incurred by the City of Fayetteville by reason of any investigation of the Airport
or any cleanup, removal or restoration mandated by a federal, state, local agency or political
subdivision. As used herein "Hazardous Substances" means and includes (1) "hazardous wastes"
as defined by the RCRA, (2) "hazardous substances" as defined by the CERCLA, and (3) "hazardous
materials" as defined by the HMTA.
C. Use of Engines. Walker Properties shall not start or operate aircraft engines within
the hangar facility to be constructed on the Leased Premises and shall not allow such operations by
any other person.
7. USE OF THE AIRPORT. Walker Properties is granted the use, in common with others
similarly authorized, and without charge, ,of the Airport, together with all facilities, equipment,
improvements, and services which have been or may hereafter be provided at or in connection with
the Airport from time to time including, but not limited to, the landing field and any extensions
hereof or additions thereto, roadways, runways, ramps, aprons, taxiways, flood lights, landing lights,
beacons, control tower, signals, radio aids, and all other conveniences for take -off, flying and/or
landing.
A. Municipal Regulations. Walker Properties agrees to observe and obey City of
Fayetteville's Ordinances and Regulations with respect to the use of the Leased Premised and
Airport; provided, however, such Ordinances and Regulations shall be consistent with public safety
and with all city, county, state and federal ordinances, rules and regulations.
B. Federal Regulations. Walker Properties agrees to abide by the rulings of the Federal
Aviation Administration with respect to the use of the Leased Premises. The Minimum Standards for
Fayetteville Municipal Airport, Drake Field (herein referred to as the "Airport Minimum
Standards") are made part of this Lease by reference as if included herein word for word.
8. REPAIRS, MAINTENANCE AND APPEARANCE.
A. Tenant Obligations. Walker Properties shall at all times during the term of this
Lease, at Walker Properties' expense, keep and maintain in good repair and safe condition the
Leased Premises and the equipment and appurtenances, both inside and outside, structural and non-
structural, extraordinary and ordinary, whether or not necessitated by wear, tear, obsolescence or
defects, latent or otherwise. When used herein, the term "repair" shall include all necessary
replacements, renewals, alterations, additions, and betterments. Walker Properties acknowledges
that Walker Properties shall be responsible for the repair and maintenance necessary to maintain the
structural integrity of the hangar. Walker Properties will at all times maintain the Leased Premises
in a clean, orderly, and attractive condition, and shall not allow the accumulation of rubbish, trash,
refuse and any unsightly conditions or fire hazards on the Leased Premises. Walker Properties shall
be responsible for mowing and the upkeep of the outside grounds of the Leased Premises. Walker
Properties shall be responsible for all anitorial services and trash removal from the Leased Premises.
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B. Standard of Care. The necessity for and adequacy of repair to the Lease Premises,
pursuant to subparagraph 8.A. hereof, shall be measured by the standard which is appropriate for
improvements of similar construction in an around the City of Fayetteville and also shall meet the
requirements and standards set out and promulgated by the City of Fayetteville in the City of
Fayetteville Code of Ordinances and the Unified Development Ordinance.
C. Reimbursement for Expenses. Walker Properties agrees to reimburse City of
Fayetteville for all sums expended by it in performing repairs or maintenance required of or caused
to be made by the City of Fayetteville pursuant to the regulations and rules of the City of Fayetteville
mentioned in subparagraph 8.B. above as a result of failure by Walker Properties to maintain or
repair the Leased Premised as required.
9. ALTERATIONS AND IMPROVEMENTS. Walker Properties is hereby authorized to
make, during hangar construction, any alterations, additions and improvements which Walker
Properties deems to be necessary and desirable to the interior and exterior of the hangar to be
constructed on the Leased Premises, provided such alterations, additions and improvements meet all
City of Fayetteville requirements.
A. Post -Construction. Alterations and Improvements. Following completion of
construction, Walker Properties shall not be entitled to make any major or material alterations,
additions or changes to the exterior of the said hangar without the City of Fayetteville's prior written
consent, which consent shall not be unreasonably withheld or delayed.
B. Ownership of Alterations and Improvements. Walker Properties acknowledges
and agrees that the hangar itself, and all such alterations, additions and improvements, including
paneling, partitions, railings, floors, ceilings and the like, shall become the property of the City of
Fayetteville upon the termination of this Lease (and any extensions hereto).
C. Personal Property. All movable fixtures, telephone equipment, machinery and
equipment relating to an aircraft hangar, and all computer systems, furniture, fumishings, and other
items of personal property ("Tenant Property") purchased or leased by Walker Properties or
Sunrise Aviation, LLC ("Sunrise"), and installed by Walker Properties or Sunrise at its own cost and
expense prior to and during the lease teen shall remain the property of Walker Properties and/or
Sunrise which shall, subject to City of Fayetteville's rights under Section 13 hereof, be removed
within sixty (60) days after any termination of this Lease. At the termination of the Lease, the
Hangar shall become the property of the City of Fayetteville. "Movable fixtures" shall include all
Walker Properties and Sunrise signage, logos, marks, or anything else that is unique to Walker
Properties and/or Sunrise.
10. INSURANCE. Walker Properties shall obtain and maintain property insurance coverage for
the repair or replacement of the .hangar to be constructed upon the Leased Premises, with an
insurance company licensed to do business in the State of Arkansas, naming the City of Fayetteville
and the Fayetteville Municipal Airport and their respective trustees, agents, officers, and employees
as additional insureds on the policy, and Walker Properties shall provide the Airport Administration
Office with a Certificate of Insurance upon request from time to time during the term of this Lease.
Walker Properties acknowledges that it is Walker Properties' responsibility to maintain insurance on
Walker Properties' personal property including any aircraft to be kept in the hangar on the Leased
Premises.
11. SUB -LEASING AND ASSIGNMENT. Walker Properties shall not be entitled to sub -lease
or assign the Walker Properties' interest in this Lease Agreement except as provided herein.
A. Subleasing. Walker Properties may sub -lease the Leased Property so long as Walker
Properties remains primarily liable to the City of Fayetteville for the performance of all of the
tenant's and sub -tenant's obligations under this Lease; provided, that Walker Properties shall not be
required to remain primarily liable if the sublessee is approved by the City of Fayetteville as being
financially capable of performing its obligations of sublessee, which approval shall not be
unreasonably conditioned, withheld or delayed.
B. Assignment. Except as permitted by Section 17 hereof with respect to the right to
mortgage its leasehold interest and. the resulting rights of the mortgagee to convey its interest to a
purchaser in foreclosure, Walker Properties shall not assign its interest in this Lease Agreement
without first obtaining the written permission of the City of Fayetteville; provided however, that
Walker Properties may, in any event, assign its interest in this Lease Agreement for a One Hundred
and Eighty (180) day period to a qualified intermediary, in order for Walker Properties to accomplish
a tax deferred exchange under Section 1031 of the Internal Revenue Code. A request by Walker
Properties for the City of Fayetteville's approval of an assignment of this Lease shall not be
unreasonably conditioned, withheld or delayed for more than twenty (20) days after a written request
for approval shall have been delivered by Walker Properties to the City of Fayetteville, and any such
delay shall be deemed to constitute the City's acquiescence in and approval of any such assignment -
approval request, and in the absence of explicit provisions to the contrary set forth within therein,
any such approval shall be deemed to imply Walker Properties'; release from all further liability
under this Lease.
12. EVENTS OF DEFAULT. The following shall be "events of default" under this Lease, and
the terms "events of default' or "default" shall mean, whenever they are used herein, any one or
more of the following:
(i) Walker Properties' shall fail to pay when due and owning any rentals
hereunder and such nonpayment shall continue for twenty (20) days after written notice
thereof to Walker Properties by the Airport or the City of Fayetteville;
(ii) Walker Properties shall voluntarily abandon, desert or vacate the Leased
Premises;
(iii) Walker Properties shall fail to comply with the insurance requirements
imposed hereunder; or
(iv) Walker Properties shall fail to observe or perform any other of its obligations
hereunder, and such failure shall continue unremedied for twenty (20) days after the City of
Fayetteville shall have given to the Walker Properties written notice specifying such default.
Provided, the Airport may grant Wacker Properties such additional time as shall be
reasonably required to correct any such default if Walker Properties has instituted corrective
action and diligently is pursuing the. same.
13. REMEDIES UPON LESSEE'S DEFAULT. Whenever an event of default of Walker
Properties shall occur, the City of Fayetteville may pursue any available right or remedy at law or
equity including the nght, at the City of Fayetteville's exclusive option, to deliver to Walker
Properties written notice of termination, specifying the date upon which the Lease will terminate.
A. Reentry and Surrender of Possession. In the event of termination, Walker
Properties' rights to possession of the Leased Premises shall cease immediately upon the
effective date of such termination. The City of Fayetteville may then reenter and take
possession of the Leased Premises and Walker Properties shall forthwith surrender
possession of the Leased Premises.
B. Tenant Liabilities. Upon termination of this Agreement, Walker Properties
shall be liable for payment of':
(1) All sums accrued through the date of termination;
(2) The reasonable costs incurred by the City of Fayetteville to re -let the
Leased Premises, or any portion thereof; and
(3) The reasonable cost incurred by the City of Fayetteville to restore the
Leased Premised or any portion thereof to the condition in which they originally were
leased, ordinary wear and tear excepted.
C. Re -letting. All rentals received by the City of Fayetteville from re -letting the
Leased Premises after the termination of this Agreement shall be credited against the
outstanding rental balance. The acceptance by the City of Fayetteville of any rentals from
Walker Properties after the termination of this Agreement shall not reinstate this Agreement.
D. Attorney Fees. Upon such notice of termination by reason of the occurrence
of an uncured event default, Walker Properties agrees to vacate the Leased Premises
immediately upon the effective date of any such termination. Should it become necessary for
City of Fayetteville to resort to judicial process to enforce the terms of this Agreement, or
reclaim possession of the Leased Premises, Walker Properties agrees to pay a reasonable
attomey's fee.
E. Removal of Tenant's Property. Notwithstanding anything to the contrary
herein, upon the expiration of this Lease, or its sooner termination for any reason, in addition
to its right to remove movable fixtures and personal property, Walker Properties shall have
not less than thirty (30) days to enter the Leased Premises and remove all signage and all
other items bearing any of marks or logos of Walker Properties or Sunrise Aviation.
14. EXPIRATION OR TERMINATION. On the expiration or other termination of this Lease,
Walker Properties' right to use the Leased Premises shall cease, and Walker Properties shall vacate
the premises without unreasonable delay. All property installed, erected or placed by Walker
Properties in, on, or about the Leased Premises hereunder shall be deemed to become and remain the
property of City of Fayetteville; provided, however, that Walker Properties shall have the right at any
time during the term of this Agreement, or any renewal or extension hereof, and for an additional
period of seven (7) days after the expiration or other termination of this Agreement, to remove any or
all of Walker Properties' property, subject to Walker Properties' obligation to repair all damage to
the Leased Premises, if any, resulting from such removal. Any and all property not removed by
Walker Properties prior to the expiration of the aforesaid seven (7) day period shall thereupon
become a part of the Leased Premises and title thereto shall thereupon vest in City of Fayetteville.
15. TERMINATION OF AIRPORT. In the event that the Fayetteville Municipal Airport
facility and property are at some point no longer used for aviation purposes, Walker Properties may
remain in possession of the Leased Premises until the end of the lease term with the right to use the
Leased Premises for any use allowable under Arkansas law or, in the alternative, may terminate this
Lease without further obligation to pay rent hereunder.
16. TAXES. Walker Properties shall pay, as and when due, all ad valorem taxes and
assessments upon the Leased Premises and upon all personal property located upon the Leased
Premises which are assessed during the lease term.
17. MORTGAGING OF LEASEHOLD. Walker Properties is hereby given the absolute right
without the City of Fayetteville's consent to mortgage its interest in the Leased Premises, provided
that no such mortgage shall extend to or affect the fee, the reversionary interest, or the estate of City
of Fayetteville in and to the Leased Premises and building (hangar facility complex) to be erected
thereon. If, before any default occurs in this Lease, the holder of any such mortgage gives the City of
Fayetteville a written notice containing the holder's name and office address, the City shall give the
holder a copy of each notice of default by Walker Properties at the same time that City gives such
notice to Walker Properties. Each copy of such notice shall be deemed duly given to the holder
when mailed to the holder at its last post office address furnished to the City of Fayetteville. The
City of Fayetteville shall accept performance by the holder of any such mortgage of any obligation of
this Lease that Walker Properties is required to perform, with the same force and effect as if
performed by Walker Properties, provided that at the time of such performance the City is furnished
with satisfactory evidence that the person, firm or corporation tendering such performance or
payment has the claimed interest in the Leased Premises. The holder of such mortgage shall have ten
(10) days after receipt of any such notice of default within which to cure any default in the payment
of rent or additional rent under this Lease, and a reasonable time within which to cure any other
default.
18. INDEMNITY.
A By Walker Properties. Walker Properties agrees to indemnify City of Fayetteville
against any liability for injuries to persons or damage to property caused by Walker Properties' gross
negligent use or occupancy of the Leased Premises; provided, however, that Walker Properties shall
not be liable for any personal-injury, damage or loss occasioned by the negligence of City of
Fayetteville or its agents or employees, and provided further, that each party shall give prompt and
timely notice of any claim made or suit instituted which in any way directly or indirectly affects or
might affect either party, and each party shall have the right to compromise and defend the same to
the extent of its own interest.
B. By City of Fayetteville. To the fullest extent permitted by law, the City of
Fayetteville shall indemnify, defend and hold harmless Walker Properties, its Manager, employees,
subtenants and agents from and against any and all claims, actions, damages liabilities, losses, liens,
proceedings and demands ("Claims") arising from the City of Fayetteville's willful or grossly
negligent conduct, or the willful or grossly negligent conduct of the City's employees, agents or
contractors, and all costs, expenses (including reasonable attomey fees and expenses incurred in or in
connection with each such claim or action or proceeding brought thereon. In addition, the City of
Fayetteville shall defend, indemnify and hold Walker Properties harmless from and against any and
all Claims against Walker Properties arising from the violation by the City of Fayetteville, its tenants
or predecessors in title, of any violation Environmental Law or the presence of Hazardous Substance
on or under the Leased Premises, or; for the remediation of any contamination or release for which
the City, its tenants or predecessors in title are legally responsible. Upon written notice and demand
from Walker Properties, the City of Fayetteville shall resist and defend against any such Claim by
counsel chosen by the City, which counsel shall be reasonably satisfactory to Walker Properties The
Cityand its counsel shall keep Walker Properties fully apprised at all times of the status of such
defense. This clause shall not be construed to waive that tort immunity as set forth under Arkansas
Law.
19. NON -WAIVER. Neither the waiver by City of Fayetteville of any breach of this Lease by
Walker Properties of any provision hereof nor any forbearance by the Airport to seek a remedy for
any such breach shall operate as a waiver of any other breach by Walker Properties.
20. NOTICES. Any notice or consent required by this Agreement shall be sufficient if sent by
Certified U.S. Mail, return receipt requested, postage paid, to the following addresses:
CITY OF FAYETTEVILLE:
Airport Administration Office
4500 S. School Avenue, Suite F
Fayetteville, Arkansas 72701
PH: 479-718-7642
FAX: 479-718-7646
WALKER PROPERTIES, II L.P.
Walker Development, Inc. General Partner
1657 W. Sunrise Mountain Rd.
Fayetteville, Arkansas 72701
PH: 479-521-2101
FAX: 479-585-2292
21. GOVERNING LAW. This Agreement shall be construed under the laws of the State of
Arkansas..
22. BINDING NATURE. All the covenants, conditions, and provisions under this Lease shall
extend to and bind the legal representatives, successors, and assign of the respective parties hereof.
23. INTEGRATION. The contents of this Lease as executed by the parties shall be considered
the entire agreement conceming this ground lease.
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IN WITNESS WHEREOF, the parties have executed this Lease on the day and year first above
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ATTEST* GO;`GTON '`
By: aat.e,,nuuuuuu
Son. ra Smith, City Clerk and Treasurer
written.
CITY OF FAl, TTEVI _E, ARKANSAS
By:
ATTEST:
Dan Coody, Mayor
WALKER PROPERTIES, II, L.P.
By: Walker Development, Inc.,
General Partner
By Att-4 111G•A
Jo i alker President
BY: �nbbtio ` Q SL/•—.
TiTEbbie Walker,
Secretary of Walker Development, Inc.
General Partner of Walker Properties II, L.P.
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LEASE ATTACHMENT NUMBER ONE
Rent adjustments shall be made as of each Rent Adjustment Date for the ensuing five-year period of
the lease term (or extension thereof) and shall be determined by the following formula:
Rent as last established or adjusted under this Lease
multiplied by:
Elm
1 + Current Index - Base Index
Base Index
one percent (1 %) of the Rent established under this Lease
Where, "Current Index" shall be the CPI (D-1 Consumer Price Index A11 City Average, all
items groups, subgroups and special groups, published monthly in the Monthly Labor Review of the
Bureau of Labor Statistics of the United States Department of Labor) for the month immediately
prior to the applicable Rent Adjustment Date, and "Base Index" shall be the CPI for the month
immediately prior to the Commencement Date or the last most recent Rent Adjustment Date,
whichever is applicable.
In no event, however, shall the Rent for any period be less than the Rent as last adjusted
under this Lease. In the event that such CPI is no longer published or otherwise available, the
adjustment provided for herein shall be by using the successor (or the most nearly comparable
successor) index thereto, adjusted as appropriate to the applicable dates.
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•
•
Ray M. Boudreaux
•
Submitted By
City of Fayetteville
Staff Review Form
City Council Agenda Items
or
Contracts
6/5/2007
City Council Meeting Date
Aviation & Economic Development
Division
Action Required:
Pt5.;
/5762
/03
14/ktr-
flope is
11
General Government
Department
Action Required: Approve a Lease with Walker Properties, Contact: Walker Development, Inc. General Partner, 1657
W Sunrise Mountain Rd., Fayetteville, AR 72701, 479-521-2101 ph., 479-585-2292 fax.
REVENUE
4,375.00
Cost of this request
5550.0955.4457.00
Account Number
Project Number
Budgeted Item
X
elP
Departn Director
ty Attorney
34,000.00
12,835.31
Chrgs-Sery
Program Category / Project Name
Airport Revenue
Funds Used to Date Program / Project Category Name
21,164.69
Remaining Balance
Budget Adjustment Attached
Airport
Fund Name
LP a
5r%(h
Date
Finance and Internal Service Director
Mayor
Comments:
.5-1-1- 67
Date
N. /2//37
Date
Previous Ordinance or Resolution #
Original Contract Date:
Original Contract Number:
Received in Mayor's Office
ENTERED
City Council Meeting of: June 5, 2007
Agenda Item Number:
CITY COUNCIL AGENDA MEMO/STAFF CONTRACT REVIEW MEMO
TO: Mayor and members of the City Coun
• THRU: Staff/Contract Review Committee
FROM: Ray M. Boudreaux, Director, Aviation and Ecgbomic Development
DATE: May 18, 2007
SUBJECT: Approve ground lease with Walker Properties for the construction of
a Hangar Building on the Fayetteville Municipal Airport, Drake Field
RECOMMENDATION: Approve the lease of land on the West Side General Aviation
Apron for the construction of a corporate hangar. Initial term of the lease is 30 years with a
renewal term of 20 years. Rate is $.20 per square foot increased by the CPI + 1% at five
year intervals
DISCUSSION: Walker Properties will initially hangar a recently acquired Lear 40. The
building will include hangar space and office and waiting space for passengers and crew.
The lease was approved by the Airport Board at their March 14, 2007 Board Meeting.
BUDGET IMPACT: The initial lease rate is $4,375.00 per year
Attachments: Lease
Staff Review Form
Aviation and Economic Development Department
Fayetteville Municipal Airport, Drake Field
4500 South School Avenue, Suite F
. Fayetteville, Arkansas 72701
Ray M. Boudreaux, Director
•
RESOLUTION NO. •
A RESOLUTION APPROVING A THIRTY-YEAR GROUND
LEASE WITH WALKER PROPERTIES II L.P. FOR
CONSTRUCTION OF A HANGAR BUILDING
FAYETTEVILLE MUNICIPAL AIRPORT, DRA
BE IT RESOLVED BY THE CI COUN O THE QI' OF
FAYETTEVILLE, ARKANSAS:
Section 1. That t. rs_ Counc
hereby approves ._e Y roun
the construction of $ I ane' .uildi
Drak
Fayetteville as,
r Properti• I L.P. for
Municipal Airport,
day of June, 2007.
ATTEST:
By:
AN COODY, Mayor SONDRA E. SMITH, City Clerk/Treasurer
LEASE AGREEMENT
Ground Lease
This Lease Agreement (this "Lease") entered into effective as of the day of
, 2007 ("Effective Date"), by and between the CITY OF FAYETTEVILLE, ARKANSAS
and WALKER PROPERTIES II, L.P., an Arkansas Limited partnership ("Walker Properties").
WHEREAS, the City of Fayetteville owns and operates the Fayetteville Municipal Airport,
Drake Field (the "Airport"), situated in Washington County in the State of Arkansas; and
WHEREAS, the purpose of this Lease is to provide Airport land for the construction of an
aircraft hangar ("Hangar") with access to the runway and taxiways; and
WHEREAS, Walker Properties' aviation -related activities will significantly contribute to the
economic vitality of the Airport through fuel purchases, flight activity, maintenance activity and
commerce conducted via the air transportation portal of the City of Fayetteville; and
WHEREAS, Walker Properties desires to lease from City of Fayetteville certain ground for
the construction of an aircraft hangar and ramp as described below (the "Leased Premises"):
A TRACT OF LAND 175 FT. X 125 FT. (TOTALING 21,875 SQ. FT.)
LOCATED AT THE FAYETTEVILLE MUNICIPAL AIRPORT - DRAKE
FIELD AND MORE PARTICULARLY SET FORTH AND SHOWN ON
EXHIBIT A, ATTACHED HERETO AND MADE A PART HEREOF,
ONCE COMPETED TO HAVE AN ADDRESS OF 4390 SOUTH SCHOOL
AVENUE.
NOW, THEREFORE, the Parties hereto agree as follows:
1. LEASEHOLD. The City of Fayetteville does hereby grant, demise and lease unto Walker
Properties certain premises situated in Washington County, Arkansas, within the boundaries of the
Fayetteville Municipal Airport - Drake Field. Walker Properties will be responsible for all
improvements to the Leased Premises.
A. Title Commitment. The City of Fayetteville shall, within thirty (30) days after the
Effective Date, cause to be furnished to Walker Properties a current Title Commitment (the "Title
Commitment") issued by a reputable "Title Company" effective as of the date which is on or after
the Commencement Date showing the City of Fayetteville as the record title owner of the Leased
Premises The Title Commitment shall evidence Title Company's agreement to issue to or for City
of Fayetteville a Leasehold Policy of Title Insurance covering Walker Properties' leasehold estate in
standard form insuring Walker Properties' leasehold estate to the Leased Premises as good and
indefeasible subject to the terms of such policy. The City of Fayetteville shall, within such thirty
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(30) day period, cause the Title Company to deliver to Walker Properties legible copies of all
documents and plats, if any, to which the Title Commitment refers. The amount of the Title Policy
shall bean amount equal to the actual cost of the Hangar, and the premium for the Title Policy shall
be the sole expense of Walker Properties.
B. Survey. Within thirty (30) days after the Effective Date, the City of Fayetteville shall
deliver to Walker Properties and the Title Company, survey documentation for the Leased Premises
sufficient to puniit Walker Properties to determine the location of existing structures, boundary
lines, encroachments and easements (including easements for utilities and for ingress and egress.)
C. Environmental Assessment. Walker Properties may procure, at its expense, and
deliver a copy thereof to City of Fayetteville within sixty (60) days following the Effective Date a
written report by a qualified environmental audit professional or company (to include a Phase I
Environmental Site Assessment), acceptable to both City of Fayetteville and Walker Properties,
dated within such sixty (60) day period, stating that as of the date of said report there is no evidence
or indication of the presence of any environmental contamination or Hazardous Substances (as
defined in Section 6.B. hereof) on or under the Leased Premises. The report shall utilize readily
available sources of data and an inspection of the Leased Premises. The report shall also include
historical uses of the Leased Premises. The report shall certify there are no actual or potential
environmental problems based on the current and past uses of the Leased Premises that would
indicate violation of any federal, or state, or local law, rule, or regulation, specifically including, but
not limited to, the Federal Clean Air Act, the Resource Conservation and Recovery Act, as amended,
42 USC Section 6901 et seq. ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 USC Section 9601 et seq. ("CERCLA"), the
Hazardous Materials Transportation Act, as amended, 49 US.0 Section 1802 et seq ("HMTA"), the
Federal Water Pollution Control Act ("FWPC") or the Occupational Safety Health Act ("OSHA")
D. Review Period. Walker Properties shall be entitled to a period (the "Review
Period") of ninety (90) days following the Effective Date in which to notify City of Fayetteville in
writing of any objections Walker Properties has to any matters shown on the Title Commitment, the
Survey or the Environmental Assessment, or matters made known to Walker Properties by virtue of
Walker Properties' inspection of the Leased Premises which materially and adversely affect Walker
Properties' use of the Lease Premises. In addition, Walker Properties shall be permitted during the
Review Period to determine that necessary utilities are available to Walker Properties at reasonable
costs and that Walker Properties will be able to prepare the site for hangar construction at reasonable
costs Any other provision herein to the contrary notwithstanding, Walker Properties objects to all
existing liens (other than liens securing the payment of taxes assessed or to be assessed for the
current year), and all exceptions set forth in the Title Commitment arising on or after the effective
date of this Lease. All objections raised in the manner herein provided are hereafter called
"Objections". (All exceptions not objected to shall be considered the "Permitted Title
Exceptions") In the event City of Fayetteville fails, refuses or is unable to cause the removal of any
Objections within thirty (30) days after receipt of Walker Properties' notice in writing, either (1) this
Lease may be terminated in its entirety by or on behalf of Walker Properties by giving City of
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Fayetteville written notice to such effect on or before the thirtieth (30th) day following the end of
such thirty (30) day "cure" period, whereupon all parties hereto shall be released and relieved of
further obligations, liabilities or claims hereunder, or (2) any such objections may be waived in
writing by or on behalf of Walker Properties.
2. TERM. The term of this Lease is thirty (30) years ("Initial Term"), beginning on (a) the
date on which a building permit is issued by the City of Fayetteville or (b) the one hundred twentieth
(120th) day after the execution and approval of this Lease by the City of Fayetteville, whichever first
occurs (the "Lease Commencement Date") and terminating at midnight on the last day of the
calendar month ending immediately preceding the thirtieth anniversary of the Lease Commencement
Date (viz., , 2037), unless otherwise terminated, canceled or extended as set forth
herein below. Walker Properties will commence development of the property at the earliest possible
time consistent with the requirements of the City of Fayetteville Code of Ordinances and the Unified
Development Ordinance. Should Walker Properties be unable to complete the project within nine
(9) months after the Lease Commencement Date, the City of Fayetteville shall have the right to
terminate this Lease
A. Option to Extend. Provided that Walker Properties has complied with and
performed all conditions, covenants, and terms of this Lease without any uncured defaults by Walker
Properties that are not otherwise in the process of being resolved, Walker Properties shall have the
option to extend this Lease for one (1) additional period of twenty (20) years ("Extension Term")
under the same terms and conditions herein, which option shall be deemed automatically exercised
by Walker Properties at the end of the Initial Term unless Walker Properties shall affirmatively act to
negate such automatic exercise by written notice to terminate delivered to the City of Fayetteville not
less than one hundred eighty (180) days prior to the expiration of the Initial Term.
B. Additional Extension. Any extension beyond the fifty (50) years included
within the Initial Term and any Extension Term shall be upon mutually agreeable terms and
conditions to be negotiated by the parties at that time.
3. RENTAL FEES. During the first five (5) years of the term of this Lease, Walker Properties
agrees to pay City of Fayetteville an annual ground rental fee of ten cents ($0.20) per square foot of
total leased ground space. Leased ground space totals 21,875 square feet. Annual rental due the City
of Fayetteville is Four Thousand Three Hundred Seventy Five Dollars and No cents ($4,375.00).
Said rental is to be paid in advance in yearly installments on the Lease Commencement Date and
each anniversary thereof during the lease term.
A. Rent Adjustments. Rental charges payable hereunder shall be reviewed every five
(5) years, not fewer than sixty (60) days prior to the end of the current five-year period, and the rental
charges for the next five (5) years of the lease term will be adjusted, effective as of the first day of
such ensuing five-year period ("Rent Adjustment Date") to reflect changes in the Consumer Price
Index (CPI) during the previous five years, using the formula and definitions set forth in Lease
Attachment #1, provided, however, that in no event shall the monthly rent payable hereunder be less
than the monthly amount paid during the previous five-year period.
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B. Late Charge. A delinquency charge will be imposed on payments not received by
the close of business on the tenth (10`") day after the due date. Such delinquency charge shall be the
maximum amount allowable under Arkansas law. All payments shall be delivered or mailed to: City
of Fayetteville, 113 West Mountain Street, Fayetteville, Arkansas 72701.
4. UTILITIES AND JANITORIAL SERVICES. Walker Properties shall be responsible for
the payment of all utilities associated with the hangar facility to be constructed upon the Leased
Premises, including but not limited to, electric, gas, heating, water/sewer, and trash removal. The
City of Fayetteville shall not be required to furnish to Walker Properties any facilities or services of
any kind, such as, but not limited to, water/sewer, trash removal, electricity, or gas. Any such
facilities or services required by Walker Properties for their use and purposes shall be their sole and
exclusive responsibility and Walker Properties agrees to hold City of Fayetteville harmless from any
responsibility or liability therefor.
5. TERMS AND CONDITIONS; QUIET ENJOYMENT. Walker Properties agrees to
comply with and abide by all terms and conditions set forth in this Lease. The City of Fayetteville
covenants and agrees that, subject to the terms and provisions of this Lease, if and for such period of
time as Walker Properties keeps and performs, in all material respects, each and every covenant,
agreement, term, provision and condition herein contained on the part or on behalf of Walker
Properties to be kept or performed, Walker Properties shall be entitled to quietly and peacefully hold,
occupy and enjoy the Leased Premises and Walker Properties' rights under this Lease during the
entire lease term.
6. USE OF THE PREMISES. Walker Properties agrees that the Leased Premises shall be
used and occupied only as an aircraft hangar and for related, lawful purposes.
A. Flammable Material. Walker Properties further agrees not to store any flammable
material on the Leased Premises other than a limited supply of aircraft fuel, oils and agents necessary
for the operation of an aircraft hangar.
B. Hazardous Substance. Other than as may required or incidental to its use of the
Leased Premises as an aircraft hangar, Walker Properties shall not cause or permit any Hazardous
Substance to be used or stored on or in the Leased Premises without first obtaining the City of
Fayetteville's written consent. If Hazardous Substances are used, stored, generated or disposed of on .
or in the Leased Premises or if the Leased Premises or any other Airport property becomes
contaminated in any manner for which Walker Properties is responsible or legally liable, Walker
Properties shall indemnify and hold harmless the City of Fayetteville from any and all claims,
damages, fines, judgments, penalties, costs, liabilities, or losses (including, without limitation any
damages caused by loss or restriction of rentable or usable space as part of the Leased Premises)
arising during or after the term hereof and arising as a result of contamination of the Leased Premises
by Walker Properties, its agents, employees, and invitees. This indemnification includes, without
limitation, all costs incurred by the City of Fayetteville by reason of any investigation of the Airport
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