HomeMy WebLinkAbout184-18 RESOLUTION113 West Mountain Street
Fayetteville, AR 72701
(479)575-8323
Resolution: 184-18
File Number: 2018-0413
KERZEN PROPERTIES, LLC:
A RESOLUTION TO APPROVE A TWENTY (20) YEAR GROUND LEASE AGREEMENT WITH
KERZEN PROPERTIES, LLC FOR AIRPORT PROPERTY LOCATED AT 4240 SOUTH SCHOOL
AVENUE FOR THE CONSTRUCTION OF A 100' X 75' HANGAR, WITH AN OPTION TO EXTEND
THE GROUND LEASE FOR AN ADDITIONAL FIVE (5) YEAR TERM, AND WITH A FIRST
RIGHT OF REFUSAL TO LEASE THE PROPERTY FOR AN ADDITIONAL FIVE (5) YEARS
AFTER THE HANGAR BECOMES THE PROPERTY OF THE CITY
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 twenty (20)
year ground lease agreement, a copy of which is attached to this Resolution, with Kerzen Properties,
LLC for airport property located at 4240 South School Avenue for the construction of a 100' x 75'
hangar, along with an option to extend the ground lease for an additional five (5) year term at a rental
rate of $750.00 per year for the discount period and $1,875.00 for the remainder of the term and any
extension term.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves the inclusion of
a first right of refusal in favor of Kerzen Properties, LLC to lease the property for an additional five (5)
years after the ground lease agreement expires and the hangar and other improvements become the property
of the City at terms to be agreed upon by the City and Kerzen Properties, LLC at the time the
option is exercised.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordanto
sign the ground lease agreement.
Page 1 Printed on 8122118
Resolution: 184-18
File Number- 2018-0413
PASSED and APPROVED on 8/21/2018
Approved:
Attest:
Sondra E. Smith, City Clerk, �R Ef.R r�Z
_v; FAYETfEVILLE'�
r • ■ �r
TO
Page 2 Printed on 8122118
City of Fayetteville, Arkansas
Text File
File Number: 2018-0413
Agenda Date: 8/21/2018 Version: 1
In Control: City Council Meeting
Agenda Number: A. 11
KERZEN PROPERTIES, LLC:
113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Status: Passed
File Type: Resolution
A RESOLUTION TO APPROVE A TWENTY (20) YEAR GROUND LEASE AGREEMENT WITH
KERZEN PROPERTIES, LLC FOR AIRPORT PROPERTY LOCATED AT 4240 SOUTH SCHOOL
AVENUE FOR THE CONSTRUCTION OF A 100' X 75' HANGAR, WITH AN OPTION TO EXTEND
THE GROUND LEASE FOR AN ADDITIONAL FIVE (5) YEAR TERM, AND WITH A FIRST RIGHT
OF REFUSAL TO LEASE THE PROPERTY FOR AN ADDITIONAL FIVE (5) YEARS AFTER THE
HANGAR BECOMES THE PROPERTY OF THE CITY
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 twenty (20) year
ground lease agreement, a copy of which is attached to this Resolution, with Kerzeh Properties, LLC for
airport property located at 4240 South School Avenue for the construction of a 100' x 75' hangar, along with
an option to extend the ground lease for an additional five (5) year term at a rental rate of $750.00 per year for
the discount period and $1,875.00 for the remainder of the term and any extension term.
ection 2: That the City Council of the City of Fayetteville, Arkansas hereby approves the inclusion of a first
right of refusal in favor of Kerzen Properties, LLC to lease the property for an additional five (5) years after the
ground lease agreement expires and the hangar and other improvements become the property of the City at
terms to be agreed upon by the City and Kerzen Properties, LLC at the time the option is exercised.
Section 3: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign
the ground lease agreement.
City of Fayetteville, Arkansas Paye 1 Printed on 8/22/2018
City of Fayetteville Staff Review Form
2018-0413
Legistar File ID
8/3/2018
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
Summer Fallen 8/2/2018
Submitted By Submitted Date
Action Recommendation:
AIRPORT SERVICES (760)
Division / Department
Staff recommends approval and signature of the Mayor on a ground lease with Kerzen Properties for land located
at 4240 S. School Avenue to construct a 100'X 75' hangar.
Account Number
Project Number
Budgeted Item? NA
Does item have a cost? No
Budget Adjustment Attached? NA
Purchase Order Number:
Change Order Number:
Original Contract Number:
Comments:
Budget Impact:
Current Budget
Funds Obligated
Current Balance
Item Cost
Budget Adjustment
Remaining Budget
Fund
Project Title
!$ 1
Previous Ordinance or Resolution #
Approval Date:
V20180321
CITY OF
FAYETTEVI LLE
ARKANSAS
MEETING OF AUGUST 21, 2018
TO: Mayor and City Council
THRU: Don Marr, Chief of Staff
Terry Gulley, Transportation Services Director
FROM: Summer Fallen, Airport Services Manager
DATE: August 2, 2018
SUBJECT: Ground Lease with Kerzen Properties
CITY COUNCIL MEMO
RECOMMENDATION:
Staff recommends approval and signature of the Mayor on a ground lease with Kerzen
Properties for land located at 4240 S. School Avenue to construct a 100' X 75' hangar.
BACKGROUND:
Kerzen Properties currently rents two T -Hangars at Drake Field.
DISCUSSION:
Kerzen Properties will construct at 100' X 75' corporate hangar at Drake Field
BUDGET/STAFF IMPACT:
Kerzen Properties will pay $750 per year during the 18 -month discount period, and $1,875
per year after the discount period has expired.
Attachments:
Staff Review Form
City Council Memo
Ground Lease
Exhibit A
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
Lease Agreement
between "Che Cite of Fayetteville, Arkansas
And
Tenant
The purpose of this Lease Agreement is to establish an agreement between the City of
Fayetteville, Arkansas ("CITY") and .Kerzen Properties, LLC ("Lessee") for the use of space for
the construction of an aircraft hangar and associated aprons and taxilanes as described below.
I . .Leased Premises. For and in consideration of the rents, covenants and
agreements herein entered into and agreed upon by LESSEE as obligations to the CITY, the
CITY lets, leases and demises unto LESSEE, subject to the terms and conditions contained
herein, the following described property ;situated in Washington, County, Arkansas:
A certain tract of land located at 4240 S. School on Drake Field for construction of a 100'
x 75' hangar as shown on Exhibit A, attached hereto and made a part hereof.
2. Term. The initial term is for twenty (20) years beginning on SEPTEMBER Is`,
2018, and shall end on August 31, 2038 unless otherwise terminated, canceled or extended as set
forth hereinbelow:
a. LESSEE shall have eighteen (18) months from SEPTEMBER 1, 2018 (the
"'Discount Period") to begin construction of the hangar. The CITY or LESSEE
may terminate this lease at any time by giving the other party thirty (30) days
written notice of termination during the first eighteen (18) months following the
SEPTEMBER 1, 2018 date, or prior to the ground breaking for the new facility,
whichever occurs earlier. The Discount Period may be extended by up to an
additional eighteen (18) months upon written agreement of CITY and .LESSEE.
Failure to begin construction before MARCH 1, 2020 (or the expiration of any
extended period agreed upon by the parties pursuant to this subsection) shall be an
automatic cancellation of this ground lease.
b. Option to Extend. LESSEE shall have the option to extend the lease term of this
lease for one (1.) period of five (5) years if LESSEE has satisfied the following
conditions:
i. LESSEE has complied with and performed all condition~, covenants, and
terms of the Agreement without any defaults known to LESSEE, or any
defaults that are not otherwise in the process of being resolved in the
manner provided in this Agreement.
ii. Notice of LESSEE'S request to renew has been made and presented in
writing to the City at least one hundred twenty (120) days prior to the
expiration of the initial term.
iii. The amount of rental fees shall have been successfully negotiated and
agreed to by the parties for the extended lease term.
c. First Right of Refusal and Option to Lease Upon Expiration. Upon the expiration
of the final extension period provided in paragraph 2(b) above, at which time any
alterations, additions, and improvements become the property of the City,
LESSEE shall have the first right of refusal to lease the Leased Premises for an
additional five --year term for rental in an amount mutually agreed upon by the
parties in a separate lease agreement. LESSEE shall provide notice of its exercise
of this right in the manner provided in this agreement up to one hundred twenty
(120) days prior to the expiration of the final extension period. If notice of the
intent to exercise the right of first refusal is not received by the CITY by the day
this agreement expires then the right shall be forfeited. If a new lease agreement is
not executed by the parties within ninety (90) days of the expiration of this
agreement then this right of first refusal shall be forfeited and LESSEE shall
immediately remove all of LESSEE'S personal property from the Leased
Premises.
3. Rent. LESSEE agrees to pay to CITY for the Discount Period set forth in
paragraph 2.A above a discounted annual ground rental fee of ten cents ($0.10) per square foot of
total leased ground space. Annual rental due for this .Discount Period is SEVEN HUNDRED
FIFTY DOLLARS (S750). The discounted rate shall expire at the end of Discount Period
(including any extension agreed upon by the parties pursuant to paragraph 2.A above) or upon
the issuance of a Final Certificate of Occupancy, whichever shall occur first.
Upon the expiration of the Discount Period, LESSEE agrees to pay to CITY an annual ground
rental rate of twenty-five cents ($0.25) per square foot of total leased ground space. Annual
rental due for this period of time is ONE THOUSAND EIGHT HUNDRED SEVENTY-FIVE
DOLLARS ($1875).
Rental payments during the Discount Period shall be paid in advance on the first day of each
month beginning AUGUST 1, 2018. Rental payments after the Discount Period shall be paid in
advance in yearly installments on the first (lay following the issuance of a final certificate of
occupancy. If paid annually or in increments of" five (5) years or less, rental charges shall be
reviewed every five (5) years and the rental charges for the next five (5) years of the lease term
will be adjusted up to reflect the Consumer .Price Index (CPI) plus one (1) percent, using the
formula on :Exhibit B attached hereto and trade a part hereof.
A delinquency charge shall be imposed on payments not received by the close of business on the
tenth (10`x') day after the due date. Such delinquency charge shall be the maximum amount
allowable under Arkansas law. Payments shall be delivered or mailed to: City of Fayetteville,
113 W. Mountain St., Fayetteville, Arkansas 72701.
If LESSEE exercises the option to lease upon expiration of this agreement LESSEE agrees to
pay the amount mutually agreed upon by the parties in a separate agreement. LESSF"E shall
continue to pay monthly rental in the amount paid during the final :month of this agreement
during any holdover period of up to ninety (90) days while a new lease agreement is being
finalized and executed.
4. Use. LESSEE. agrees to use the leased premises only as an aircraft hangar and
any other related lawful purposes.
a. Flammable Material: LESSEE agrees not to store any flammable material on the
leased premises other than a limited supply of oils and agents necessary for the
operation of an aircraft hangar.
b. Hazardous Substances. LESSEE shall not cause or permit any hazardous
substances to be used or stored on or in the leased premises without first obtaining
CITY'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 become contaminated in any manner for which LESSEE is
responsible or legally liable, LESSEE shall indemnify and hold harmless CITY
from any and all claims, damages, fines, judgments, penalties, costs, liabilities or
losses (including, without .limitation, a decrease in value of the leased premises or
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
that contamination by LESSEE, or LESSEE'S agents, employees or invitees.
This indemnification includes, without limitation, any costs incurred because of
any investigation of the airport or any cleanup removal or restoration mandated by
a federal, state, or local agency or political subdivision.
c. LESSEE shall not start or operate aircraft engines within the facility to be
constructed on the leased premises and shall not allow such operations by any
other person.
5. Use of the airport. LESSEE is granted the use, in common, without charge,
with others similarly authorized, 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 form time to time including, but not limited to, the landing field and any
extensions hereof or additions thereto, roadways, runways, ramps, aprons, taxiways, floodlights,
landing lights, beacons, control tower, signals, radio aids, and all other conveniences for flying,
landings and takeoffs.
LESSEE agrees to observe and obey the CI T'Y's ordinances and regulations with respect to use
of the leased premises and airport as well as all applicable county, state or federal regulations or
laws. LESSEE agrees to abide by "The Minimum Standards for the Fayetteville Municipal
Airport Drake Field" a copy of which is attached hereto as Exhibit C and made a part hereof.
Special provisions for the use of fuel storage facilities are attached as Exhibit D and are made a
part hereof.
G. Repairs, Maintenance and Appearance. LESSEE shall at all times during the
terra of this agn•een7ent, it their 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 due to wear, tear, obsolescence or
defects, latent or othenvise. When used herein, the term "repairs" shall include all necessary
replacements, renewals, alterations, additions and betterments. LESSEE acknowledges that it is
responsible for the repairs and maintenance necessary to maintain the structural integrity of the
hangar. LESSEE shall at all times maintain the leased premises in a clean, orderly, and attractive
condition and will :not allow the accumulation of rubbish, trash, refuse or any other unsightly
condition or fire hazard on the leased premises. LESSEE shall be responsible for the mowing
and upkeep of the outside grounds of the leased premises. LESSEE shall be responsible for all
janitorial services and trash removal from the leased premises.
In the event LESSEE fails to repair or maintain the leased premises as' required, CITY may enter
the leased premises for the purpose of making such repairs necessary to maintain the structural
integrity of the hangar or to perforin any maintenance required to keep the leased premises in a
clean, orderly and attractive condition. LESSEE shall be liable for any costs incurred by the
CITY in the event CITY exercises its authority due to LESSEE'S failure to make necessary
repairs or perform other required maintenance work.
7. Alterations and Improvements. Following issuance of a final certificate of
occupancy for the hangar and office space to be constructed on the leased premises, LESSEE
shall have prior written consent from the CITY, meeting all CITY requirements, to make any
alterations, additions and improvements LESSEE deems necessary and desirable to the interior
of the leased premises. LESSEE shall not be entitled to make any major or material alterations,
additions or changes to the exterior of the leased premises without the CITY's written consent.
LESSEE acknowledges and agrees that all such alterations, additions, attachments and
improvements including, but not limited to, paneling, partitions, railings, floors, ceilings and the
like, shall become the property of the CITY upon the termination of this agreement.
S. Insurance. LESSEE shall obtain and maintain sufficient insurance coverage for
the repair or replacement of the leased premises and any adjacent improv-ernents, with an
insurance company licensed to do business in the State of Arkansas, naming the CITY as an
Additional Insured on the policy. LESSEE shall provide the Airport Services Manager Nvith a
valid certificate of� insurance at all times (luring the term of this agreement. LESSEE
acknowledges that it is its responsibility to .maintain insurance on any personal property on the
leased premises.
q. Sub -Leasing and Assignment. LESSEE shall not assign this lease or sublet the
Leased Premises without prior written consent of the CITY. Consent for any assignment or
subletting shall only be considered at the same rates as established in Paragraph 3 above. Any
such assignment or subletting shall in no way relieve LESSEE from liability for the obligations
imposed by this lease. LESSEE may only be released from liability by a specific written release
executed by the Cl`.FY.
10, Events of Default, The following shall be Events of Default under this
agreement;
a. LESSEE shall fail to pay when due and owing any rent and such nonpayment
Continues for twenty days after written notice by the CITY,
b. LESSEE voluntarily abandons, deserts or vacates the leased premises;
c. LESSEE fails to comply with the insurance requirements set forth above.
d. LESSEE fails to observe or perforin any other obligation under the terms of this
agreement and such failure is unremedied for twenty (20) days after the CITY has
provided written notice specifying such default. CITY may, but is not required to,
grant LESSEE such additional time as is reasonably required to correct any such
default if LESSEE has instituted corrective action and are diligently pursuing the
same; or
e. LESSEE fails to provide and maintain any security assurances required under the
terms of this agreement.
11. Remedies Upon Default. Whenever an .Event of Default shall occur., and at its
exclusive option, CITY may deliver to LESSEE written notice of termination specifying the date
upon which the agreement shall terminate. In the event of te.rnnination, LESSEE'S rights to
possession of the leased premises shall immediately cease. CITY may reenter and take
possession of the leased premises and LESSEE shall surrender possession. Upon termination,
LESSEE shall be liable to CITY for payment of:
a. All rents and sums accrued tlu-ough the date of termination.
b, The reasonable costs incurred by CITY to re -let the leased premises, or any
portion thereof; and
c. The reasonable cost incurred by CITY to restore the leased premises or any
portion thereof to the condition in which they were originally leased, ordinary
wear and tear excepted; and
d. Reasonable attorney's fees and costs related to the termination of the lease
agreement including those incurred through the judicial process if LESSEE fails
to vacate.
All rental payments received by CITY from re --letting the leased premises after termination of
this agreement shall be credited against the LESSEE'S Outstanding Rental :Balance. The
acceptance by CITY of any rent payments by LESSEE after termination of this agreement shall
not be considered a reinstatement or waiver of any other remedies available to CITY.
CITY may also pursue any other available right or remedy available to it in the event of default.
12. Expiration or Termination. LESSEE hereby agrees that upon termination of
this lease by expiration or by earlier termination for any reason whatsoever, it will remove its
property from the leased premises immediately. All property installed, erected or placed by
LESSEE in, on, or about the leased premises shall be deemed to remain the property of CITY.
13. Closure of airport. In the event that the Fayetteville Municipal Airport facility
and property are no longer used by the CITY for aviation purposes, LESSEE may remain in
possession of the premises until the end of the lease terns with the right to use the premises for
any use allowable under Arkansas law.
14. Tares. LESSEE shall pay 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.
15. Indemnity. LESSEE agrees to indemnify the CITY against any liability for
injuries to persons or damage to property caused by LESSEE'S gross negligent use or occupancy
of the leased premises, provided, however, that LESSEE shall not be liable for any personal
injury, damage or loss occasioned by the negligence of the CITY or its agents or employees, and
provided further that each party shall give prompt and timely notice of any claire made or suit
instituted which ntay in any way directly or indirectly affect either party. Each party shall have
the right to compromise and defend the same to the extent of its own interest. This clause shall
not be construed to waive that tort immunity granted to the CITY milder Arkansas law.
16. Non -Waiver. It is agreed that the failure of CITY to invoke any of the available
remedies under this lease or under law in the event of one or more breaches or defaults by
LESSEE under the lease shall not be construed as a waiver of such provisions. and conditions and
shall not prevent the CITY from involving such remedies in the event of any future breach or
default.
t7, Notices, Any notice or consent required by this agreeinent shall be sufficient if
sent by Certified Mail, return receipt requested, postage paid, to the following addresses:
LESSEES
Kerzen Properties, LLC
Attn: Burt Hanna, Manager
P.O. Box 3557
Fayetteville, Arkansas 72701
CITY
Pity of Fayetteville
ATTN: Airport Director
113 W. Mountain Street
Fayetteville, Arkansas 72701
18, Succession. This lease agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors and assigns.
19. Severability. Each paragraph of this lease agreement is severable from all other
paragraphs. In the event any court of competent jurisdiction determines that any paragraph or
subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and
subparagraphs will remain in fill force and effect.
20. Interpretation. This lease agreement shall be interpreted according to and
enforced under the laws of the State of Arkansas.
21. Entire Agreement. This lease agreement contains the entire agreement of both
parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This
lease agreement supersedes all prior agreements, contracts and understandings of any kind
between the parties relating to the Subject matter Hereof. This agreement may be executed in all
or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
CITY OF FAYETTEVILLE: KERZEN PROPERTIES, LLC
By:
- X- 7) -
By:
L N 'L AN, Magor
Printed Name: -
ATTEST:
By: 4A& 6-, Lcff
SONDRA SMI `
�U : FAYirTO
�17EV►L1-�
Title:-�"�
r
If