Sites A-1, A-2, A-3/T&L PropertiesHANGAR SITE LEASE
THIS Lease, made and entered into this d day of December, 2004, by and between
THE CITY OF KALISPELL, a municipal corporation (hereafter referred to as "CITY"), and
T&L PROPERTIES, LLP, 2216 Missoula Avenue, Missoula, Montana 59802 (hereafter referred
to as "TENANT"). '
WITNESSETH:
WHEREAS, the City operates the Kalispell City Airport, and
WHEREAS, the City desires, in order to provide a source of income for airport
maintenance and to increase the utilizationof said airport, to lease tracts of land to varioustenants
in order that the tenants may erect structuresfor the storage and protection of aircraft based at said
airport.
NOW, THEREFORE IT IS AGREED BETWEEN THE PARTIES HERETO AS
FOLLOWS:
1. The CITY does hereby agree to lease to TENANT, and TENANT hires from
CITY, those certain premises located at the Kalispell City Airport, Kalispell, Montana, which are
specifically described in Exhibit AA (Projected Building Area) which is attached to this Lease
and by this reference incorporated herein. This lease is contingent upon installation and
construction by the CITY, at the sole expense of the CITY, to the following specifications:
Prior to April 1, 2005, the proposed building site must be brought to grade per the
Site Plan Specifications; prior to June 1, 2005, the sewer, water and electrical
service must be brought to the site; and prior to August 1, 2005, construction of
taxi ways and hangar ramps on site shall be completed. Taxi ways shall be
completed in accordance with the Site Plan which is attached hereto as Exhibit
AA, and by this reference incorporated herein; and hangar ramps will consist of
twenty (20) ramps at fifteen (15) feet wide by twenty-seven and one-half (27'/z)
feet long and one (1) ramp of seventeen (17) feet long by one hundred eighty
(180) feet wide.
2. The term of this Lease shall be for twenty (20) years, commencing upon
completion of installation of the above referenced utilities and improvements by the CITY, and
ending twenty (20) years thereafter, unless sooner terminated by mutual agreement of the parties
or by one of the parties under the specific provisions hereof. Tenant shall have the option to
renew for up to two (2) additional successive terms of five (5) years each. City shall give Tenant
sixty (60) days written notice prior to the end of each term and Tenant shall give CITY written
notice of TENANT'S intention to exercise said option no later than thirty (30) days from the end
of each term. Upon expiration of the forgoing terms, TENANT shall have the right of first refusal
2004 Airport Hangar Lease Page 1
to an additional lease not to exceed five (5) years under such terms and conditions as may be
agreed upon at such time.
3. TENANT agrees to pay to the CITY for the use and benefit of the CITY the sum
of sixteen cents ($.16) per square foot per year for the projected building area, which for
purposes of this provision shall be one hundred and fifty percent (150%) of the actual square
footage occupied by the hangar, herein authorized, payable as follows:
a. Upon the commencement date, TENANT shall pay the pro-rata portion of the
annual rent for the time period from the commencement date to July 1 next
succeeding.
b. On each July 1, TENANT, without demand, shall pay the annual rental to the next
succeeding fiscal year.
C. On July 1, at the commencement date of the fiscal year during which this Lease
terminates, TENANT, without demand, shall pay the pro-rata portion of the
annual rent for the time period from July 1 to the termination date of the Lease.
d. During the initial twenty (20) year term of the lease, the annual lease payment
shall increase 3% annually, from the previous year's payment. In the event
TENANT elects to exercise his option to renew this lease for two (2) subsequent
five (5) year terms, the annual lease payment shall increase by 3% as set forth
above.
e. The Airport Manager, or his designee, will be responsible for the collection of
lease payments or administrative fees for existing hangar and ground leases.
4. TENANT agrees to construct buildings for the purpose of housing light aircraft on
said land, and TENANT further agrees to construct said building, together with access to runway,
in accordance with the specifications contained in hangar construction and design standards.
TENANT shall supply to CITY upon completion of the building appropriate invoices
establishing the cost of construction of said building.
a. TENANT shall have the right, upon the termination of this Lease, unless a lease
for a further term be negotiated, to remove the hangar structure, but shall do so
within ninety (90) days, or a reasonable amount of additional time for the size of
the hangar structure, and shall leave the premises in a restored condition, except
that any paving shall be left.
b. If TENANT does not remove said building within such allotted time, it shall then
become the property of CITY without further action on the part of the CITY.
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C. TENANT may expand the square footage of any building constructed on the
Airport site, subject however to the prior written consent of CITY. In the event
CITY approves any building expansion during the primary lease term or any
extension thereof, TENANT'S lease payments shall be adjusted in accordance
with the criteria set forth in 13.
5. TENANT shall use said property for the storage of light aircraft and other lawful
purposes necessarily incidental thereto and for no other purpose. TENANT may sublet the
premises for aviation purposes, provided that commercial users shall be subject to airport
commercial user fees and regulations.
6. TENANT shall have the right and privilege of sale, assignment or transfer of this
Lease for the purpose defined in (1(5, hereof, upon written notice to the CITY, stating the name
and address of the proposed buyer, assignee, or transferee.
a. If the CITY shall determine that said proposed buyer, assignee, or transferee is
objectionable, any such reasonable objection shall be stated in writing to the
TENANT within twenty (20) days after said notice.
b. The CITY shall not unreasonably withhold consent to sell, assign, or transfer this
Lease, upon the same terms and conditions, but reserves the right to adjust the
annual rental payments following assignment, in accordance with Paragraph 3(d)
above.
C. After sale or assignment by TENANT of its interest herein, TENANT shall be
relieved from liability for rental payments accruing thereon, and the buyer,
assignee, or transferee shall thereafter be liable.
d. Transferee under this paragraph shall only acquire the balance of the term of the
lease and shall be subject to all terms and conditions of this lease, including the
obligation to provide CITY with proof of insurance coverage as required by 18.
7. If, for any reason, the CITY discontinues aviation operations on Kalispell City
Airport site, this lease shall terminate and the CITY shall pay the fair market value at the then
existing usage of the improvements constructed on the site to the TENANT. The fair market
value of the improvements at the then existing usage shall be determined as follows:
CITY and TENANT shall each hire, at their own expense, an appraiser to
determine the fair market value of the improvements constructed by TENANT at
the then existing usage on the site. If the two (2) appraisals do not differ by more
than three percent (3%), the fair market value of the improvements at the then
existing usage shall be the average of the two (2) appraisals. If there is a
difference of more than three percent (3%) between the two (2) appraisals, the
2004 Airport Hangar Lease Page 3
first two (2) appraisers shall select a third appraiser, who shall appraise the fair
market value of the improvements at the then existing usage. The parties shall
equally share the expense of the third appraiser. The average of the three (3)
appraisals shall determine the fair market value of the improvements at the then
existing usage. The CITY shall pay the fair market value of the improvements at
the then existing usage to TENANT within sixty (60) days of the date of
determination of the fair market value as set forth above.
8. TENANT shall hold harmless and indemnify the CITY from any and all liability
claims of any kind or nature, whatsoever, arising out of the erection or expansion of the building
upon the premises contemplated herein, or the use of said premises by TENANT or TENANT's
invitees or licensees. The CITY shall hold harmless and indemnify TENANT from any liability
or claims of any kind or nature arising by the operation of the City Airport, but away from the
premises which are the subject of this lease.
a. As evidence of TENANT's covenant herein, TENANT, at TENANT expense,
shall keep in force, during the term of this Lease, insurance, issued by an
insurance company, licensed to do business in Montana, protecting the CITY
against all liabilities, judgments, costs, damages and expenses which mayaccrue
against, be charged to, or recovered fromthe CITY, by reason of damage to
property of, injury to or death of any person or persons onaccount of any matter or
thing which may occur onthe demised premises.
b. Policy or policies in the amount of One Million Dollars ($1,000,000.00) per
person, per occurrence shall be field. Said insurance policy shall name the CITY,
its officers, employees and agents as additional insureds, and shall not be canceled
or materially changed without at least thirty (30) days prior notice tothe CITY, and
shall be subject to approval as to coverage by the CITY.
C. Proof of insurance coverage required by this Lease shall be provided by TENANT
to CITY at the tune of execution of this agreement. CITY reserves the right at any
time during the primary lease term orany extension thereof, to require TENANT
to provideto CITY proof of continued insurance coverage.
d. Policy limits are subject to change in accordance with §2-9-108, MCA,
Limitations on Governmental Liability for Damages in Tort. TENANT shall file
certificates of said insurance with the CITY, and said insurance shall be in full
force and effect, throughout the term of this Lease.
e. Failure or refusal by the TENANT to obtain or maintain said insurance as required
hereunder shall constitute a material breach of this Lease and, insuch event, CITY,
in its sole discretion, may terminate this Lease without liability to TENANT
2004 Airport Hangar Lease Page 4
hereunder, or elect to obtain like coverage and the cost for such coverage shall be
paid by TENANT.
9. TENANT shall be responsible for acquiring whatever insurance TENANT deems
necessary to safeguard TENANT'S interest in the TENANT's building, herein authorized, and
personal property stored in said building, and TENANT expressly covenants and agrees to assert
no claim against CITY as a result of the loss or damage to the building or personal property
belonging to TENANT or anyone else resulting from the action of any third party who is not an
employee, agent or contractor for the CITY.
a. TENANT herein covenants and agrees to take whatever steps TENANT sees fit to
take in protecting TENANT'S property and persons from loss or damageas a
result of vandalism, malicious mischief, theft or kindred losses, and agrees to
assert no such claim against the CITY incident thereto.
b. All losses suffered by TENANT resulting from criminal activity or others shall be
reported to the police. The CITY assumes no responsibility for such losses.
10. In the event that soils or other material are found on the leased site that are a
Hazardous or Deleterious Substance as defined by the Montana Comprehensive Environmental
Cleanup and Responsibility Act, §75-10-701, et seq. MCA (ACECRA), a Hazardous Substances
as defined by the Comprehensive Environmental Response, Compensation and Liability Act, 42
USC 9600, et seq. (ACERCLA), a Hazardous Waste as defined by the Montana Hazardous
Waste and Underground Storage Tank Act, §75-10-401 et seq., MCA, or the Solid Waste
Disposal Act, as amended by the Resource Conservation Recovery Act, 42 USC 6901 et seq. or
which require special remediation or disposal or disposal pursuant to any other applicable law:
a. CITY shall indemnify and save TENANT harmless from any liability for such
hazardous materials which are found on, deposited or accumulated on the
premises prior to the effective date of this lease, or subsequent to the termination
of this lease. CITY shall excavate, handle and dispose of such soils or other
material only in compliance with such statutes and regulations.
b. TENANT shall excavate, handle and dispose of such soils or other material which
are deposited or allowed to accumulate on the property during the term of this
lease only in compliance with such statutes and regulations.
C. In the event TENANT leaves any of the above described materials on the
property, the CITY, after sixty (60) days notice to TENANT, which provides to
TENANT an opportunity to remove and dispose of said materials, may, at its
option, have wastes properly disposed of and assess the costs of removal, storage,
transport and disposal to TENANT.
2004 Airport Hangar Lease Page 5
d. All Hazardous Materials must be appropriately labeled and stored.
e. In the event Hazardous Materials are spilled upon the property during the term of
this lease, it is the responsibility of TENANT to have the spill cleaned up
according to State and Federal laws and regulations. In the event that drains or
floor -sumps are contaminated, it will be the responsibility of TENANT to clean up
those systems.
f. TENANT is aware that there are significant penalties for improperly disposing of
wastes or submitting false information, including the possibility of fine and
imprisonment for knowing violations. TENANT must comply with all state,
federal and local laws pertaining to the handling and storage of hazardous
materials.
11. No construction or installation of any underground fuel storage tank dispensing
system shall be allowed upon the premises. No propane tanks shall be allowed on the premises.
12. Any utility services required by TENANT's building or for its use shall be
obtained by TENANT at TENANT's expense.
13. a. TENANT agrees that upon completion the building will be maintained in
good order, repair and safe condition and in compliance with the law. TENANT
shall make any and all additions to, or alterations or repairs in and about the land
and/or improvements which may be required and, in doing so, TENANT shall
observe and comply with all existing or future public laws, ordinances and
regulations applicable to the land or public airport land upon which the leased
premises are located.
b. TENANT shall maintain an area of ten (10) feet from the exterior walls of the
hangar or of the median point between hangars if there is less than twenty (20)
feet between hangars, free from brush and weeds. If TENANT fails to keep and
maintain the leased premises and improvements as required hereunder, CITY may
in its discretion following written notice undertake to do or have done such and
any expenses incurred by CITY shall be paid by TENANT.
TENANT shall not store personal property, equipment of any kind, or vehicles,
outside of the leased land.
14. TENANT shall be responsible for all taxes levied upon the structure erected
hereunder and any equipment or property located therein. The land is owned by the CITY and is
exempt from taxes, and the CITY agrees to maintain such tax exempt status.
2004 Airport Hangar Lease Page 6
15. TENANT shall comply with all State and Federal laws and regulations and with
the Operating Regulations of the City of Kalispell. CITY shall have the right, through its agents
or employees, for reasonable ingress and egress to inspect premises to ascertain that the terms of
this Lease are being adhered to.
16. Notices to CITY shall be sent by certified mail, postage prepaid to City Manager,
City of Kalispell, P.O. Box1997, Kalispell, Montana 59903-1997, and notices to TENANT
shall be sent by certified mail, postage prepaid to:
T&L Properties, LLP
2216 Missoula Avenue
Missoula, MT 59802
17. TENANT shall have the right to cancel and terminate this Lease and any
obligations arising hereunder by written notice to the CITY delivered within sixty (60) days
hereafter.
18. CITY reserves the right to further develop or improve, or not develop or improve,
the landing area of the airport as it sees fit, regardless of the desires or view of the TENANT, and
without interference or hindrance, provided that any such development or improvement shall not
hinder or interfere with TENANT's use of the property which is the subject of this lease.
19. This Lease shall be subordinate to the provisions and requirements of any existing
or future Lease between the CITY and the United States, relative to the development, operation
or maintenance of the airport, provided that if future development, operation or maintenance of
the airport interferes with or requires any modification of the business of TENANT, the CITY, at
its own expense, shall remedy the problem. If the problem cannot be remedied to the full
satisfaction of TENANT, the CITY shall pay to TENANT the fair market value of the
improvements constructed by TENANT on the property for the fair market value at the then
existing usage as set forth in Paragraph 7 above.
20. TENANT agrees to comply with the notification and review requirements covered
by Part 77 of the Federal AviationRegulations in the event any future structure or building is
planned for the leased premises, or in the event of any planned modification or alteration of any
present or future building or structure situated on the leased premises.
21. It is mutually agreed and understood that if TENANT should fail to make the
annual lease payments as described above, or fail to perform any condition or covenant or
condition of this Lease or fail to maintain the leased premises in a manner satisfactory to the
CITY, and such condition or conditions exist for more than ninety (90) days after written notice
is given to the TENANT, CITY may then terminate and end this Lease and re-enter and retake
possession of the premises. All buildings and improvements placed on the premises shall
2004 Airport Hangar Lease Page 7
thereupon revert to the CITY. This paragraph shall not apply to failure of TENANT to obtain or
maintain insurance under 8(b), above.
22. It is mutually agreed that this Lease shall inure to the benefit of and be binding
upon the respective parties, their heirs, successors and assigns. It is further agreed that time is of
the essence of this Lease.
23. Any change or modification of this Lease, in order to be effective, must be in
writing and signed by the respective parties.
24. In the event either party to this Lease shall be required to bring an action against
the other party to enforce this Lease, or any portion thereof, the prevailing party shall be entitled
to reasonable attorney's fees and cost therefore in addition to any damages that might be
awarded.
IN WITNESS WHEREOF, said CITY has caused this Lease to be signed on its behalf by
the Manager of said CITY and said TENANT has executed this Lease this day of
December, 2004.
CITY OF KALISPELL T&L PROPERTIES, LLP
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B By:
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Attest:
By:
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2004 Airport Hangar Lease Page 8
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