Hilton Land LeaseCr,;/ of Kalis-ell
312 1 st Ave East U
Kalispell, MT 59901 SIT`- �d...
180184-FT LEASE OF KALISPELL CITY PROPERTY
TO KALISPELL HOTELS, LLC
This Lease Agreement (the "Agreement") entered into as of the I ay of July, 2006,
by and between the City of Kalispell, a body politic and corporate created by Montana State
Statutes ("Lessor"), and Kalispell Hotel,,er,' LLC, a Montana Limited Liability Company, of P.O.
`J Box 1068, 741 Lakeside Blvd., Lakeside, MT 59922, (-Lessee").
WITNESSETH:
WHEREAS, Lessor now owns, controls, and operates the Kalispell City Airport (the
"Airport") and adjacent real property in the City Kalispell, County of Flathead, State of Montana;
--4
WHEREAS, Lessee is constructing a hotel and conference center facility adjacent to the
`? Kalispell City Airport and requires parking space that exceeds the amount of land that it owns;
and
WHEREAS, it is in the best interests of the Lessor to lease a portion of its airport property
and adjacent real property to the Lessee for the purposes of fulfilling the Lessee's parking
requirements of the hotel and conference facility.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
J TERM
The term of this Agreement shall be for a period of ; 1 ETY-NINE (99) years,
commencing on the date that Lessee receives its certificate of occupancy from the City of
i4J Kalispell, and continuing for ninety-nine years, unless earlier terminated under the provisions of
s, this Agreement.
ARTICLE II
LEASED PREMISES
` Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the following
premises comprising 63,223 square feet, described as shown by maps and legal description
`-' attached hereto as Exhibit "A" and incorporated fully herein by this reference.
ARTICLE [II
`~ RIGHTS AND OBLIGATIONS OF LESSEE
A. Required Services. Lessor hereby grants a leasehold to Lessee in the above -described
premises, and Lessee agrees to construct a hotel, conference center and restaurant facility
consistent with the plans it submitted and were accepted by the City of Kalispell in the Planned
Unit Development Agreement dated May 2006. Lessee further agrees that it and its assigns are
bound to continue to operate the hotel, conference center and restaurant facility during the term of
the lease and that the lease shall terminate if those services are ever discontinued.
B. Wellhead Protection. The City of Kalispell owns and operates a water well site
contiguous to the above -described leased premises. The City completed a Source Water
Delineation and Assessment Program designed to protect a portion of the underground aquifer
that provides potable water to the City's five groundwater wells. The program reduces the threat
of groundwater contamination by controlling the type of uses that can occur within a 100-foot
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€ 0C� 13135 Dr
radius of each well (i.e., the CONTROL ZONE). The following is a list of uses that the Lessee is
not permitted within the CONTROL ZONE.
1. Discharge. Lessee shall discharge, or cause, or permit the discharge of regulated
substances to the groundwater or surface water that may have a deleterious aftect on the
groundwater in the City, unless the discharge complies with federal, state, and local regulations.
2. Septic Tank Systems. No septic system, wastewater disposal system, sewer pipe,
sewage lift station, French drain, or class V injection well, shall be located within the CONTROL
ZONE.
3. On -Site Sewage Disposal. Lessee shall not place, maintain, or operate on -site sewage
disposal from a septic tank or wastewater treatment plant within the CONTROL ZONI F. neon any
lot abutting any portion of any public street in which such portion of such street a public sewer is
laid. Lessee shall not place, maintain, or operate on -site sewage disposal such as a septic tank
system within the CONTROL ZONE.
4, Petroleum Products. Lessee shall not discharge any petroleum product(s), treated or
untreated, in the CONTROL ZONE.
5. Underground Storage Tanks. No underground storage tanks used to store regulated
substances may be installed in the CONTROL ZONE for any type of purpose.
6. my Wells andlor Storm Water Detention Ponds. Lessee shall not direct the
discharge of any regulated substance, directly or indirectly, into the groundwater by the use of a
dry well, detention pond, retention pond, or storm water swale.
7. Solid Waste Disposal. It shall be unlawful to place or maintain any solid waste
disposal, transfer, or processing facility, or any hazardous material waste disposal, transfer, or
processing facility within the CONTROL ZONE.
8. Storage Containers. All regulated substances outside of the CONTROL ZONE shall
be stored in suitable containers to reduce the chance; for the substances to be accidentally
introduced into the environment. These storage containers shall be product -tight and shall be
provided with secondary containment. Defective storage containers shall be removed from
service for repair or disposal in accordance with local, state, and federal standards.
9. Secondary Containment. Where secondary containment is required, it shall be
constructed of a material of sufficient structural integrity and composition to contain the required
capacity of liquids and not be structurally weakened because of contact with the discharge of the
regulated substance to be contained. The material shall be free of cracks, joints, gaps, or other
imperfections, which would allow leakage through the containment material. This containment
can take many forms such as trays under containers, floor curbing or other systems designed to
hold materials or liquids that may discharge from containers holding regulated substances.
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C. Compliance with Laws. Lessee shall comply with all federal, state and local laws, rules
and regulations which may apply to the conduct of the business contemplated, including rules and
regulations promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place
all necessary and/or required licenses or permits.
D. Maintenance and Repair. Lessee shall be responsible for the maintenance and repair of
the leased premises and shall keep and maintain the leased premises in good condition, order and
repair, and shall surrender the same upon the expiration of this Agreement, in the condition in
which they are required to be kept, reasonable wear and tear and damage by the elements not
caused by Lessee's negligence excepted.
E. Parking and Access for Red Eagle Aviation. Until such time as the airport expansion is
completcd and the business known as Red Eagle Aviation is moved from its present location next
to the subject premises, ten parking spaces within Tract 4 of the leased premises shall be
designated as daytime (6:00am to 6:00pm) reserved parking for employee and guest parking of
Red Eagle Aviation and used by Red Fagle Aviation for fuel truck access to its leased premises.
ARTICLE IV
APPURTENANT PRIVILEGES
Use of Airport Facilities. Lessee shall be entitled, in common with others authorized, to the use
of all facilities and improvements of a public nature which now are or may hereafter be connected
with or appurtenant to the Airport, including the use of landing areas, runways, taxiways and
aircraft parking areas designated by Lessor.
ARTICLE V
PAYMENTS
A. Lease Rate. In consideration of the rights and privileges granted by this Agreement, Lessee
agrees to pay to Lessor during the first year of the term of this Agreement the sum equal to at
least S.16 per square foot per year.
B. Payments. The annual lease payment specified above shall be paid annually no later than the
151 day of July, the first payment, being prorated and paid in advance on the date the certificate of
occupancy is issued.
C. Lfa&C_Rate Escalation. Each third year, on July I", the Lease Rate shall be increased to reflect
a three percent annual increase in the lease rate with the annual per square foot rate rounded to the
nearest penny. The first Lease Rate Escalation shall occur on July 1, 2009 and shall increase the
Lease Rate to (.01748 basis) $.17 per square foot per year.
D. Delinquency Charge. A delinquency charge of 5% per month shall be added to payments
required which are rendered more than ten (10) days delinquent.
E. PIace of Payment. All payments due Lessor from Lessee shall be delivered to the City of
Kalispell at P.O. Box 1997, Kalispell, MT 59903-1997.
ARTICLE VI
UTILITIES
Lessee shall have the right to use the utility service facilities located on the Premises at
the commencement of the term of this Agreement. In the event Lessee fails to pay any utility
bills when due, Lessor may, at its option, pay the same and collect from Lessee the amounts so
disbursed, plus interest at the rate of 1 % per month or fraction thereof.
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ARTICLE VII
INSURANCE
A. Required Insurance. Lessee shall obtain and maintain continuously in effect at all times
during the term of this Agreement, at Lessee's sole expense, General I.iahility coverage on the
premises in the minimum amount of $750,000 per occurrence and $1,500,000 aggregate which
policy shall name the City of Kalispell as an additional named insured. These minimums shall be
adjusted accordingly in the event Montana Law is amended to increase the liability limits of local
governments.
B. Notice. Lessor agrees to notify Lessee in writing as soon as practicable of any claim, demand
or action arising out of an occurrence covered hereunder of which Lessor has knowledge, and to
cooperate with Lessee in the investigation and defense thereof.
ARTICLE VIII
INDEMNIFICATION
To the extent not covered by insurance carried in favor of Lessor, Lessee shall keep and
hold harmless Lessor from and against any and all claims, demands, suits, judgments, costs and
expenses asserted by any person or persons, including agents or employees of Lessor or Lessee,
by reason of death or injury to persons or loss or damage to property, resulting from Lessee's
operations; or anything done or omitted by Lessee, under this Agreement except to the extent that
such claims, demands, suits, judgments, costs and expenses may be attributed to the acts or
omissions of Lessor or its agents or employees.
ARTICLE IX
ASSIGNMENT
This agreement, or any hart thereof, may not be assigned, transferred or subleased by
Lessee, by process or operation of law or in any other manner whatsoever, without the prior
written consent of Lessor, which consent shall not be withheld unreasonably.
ARTICLE X
NON-DISCRIMINATION
Notwithstanding any other or inconsistent provision of this Agreement, during the
performance of this Agreement, Lessee, for itself, its heirs, personal representatives, successors in
interest and assigns, as part of the consideration for this Agreement, does hereby covenant and
agree, as a covenant running with the land, that:
A. No person on the grounds of race, color, religion, sex, or national origin shall be
excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination
in; the use of the Premises.
B. hi the construction of any improvement on, over or under the Premises, and the
furnishing of services therein or thereon, no person on the grounds of race, color, religion, sex or
national origin shall be excluded from participation in, denied the benefit of, or otherwise be
subjected to discrimination;
C. Lessee shall use the Premises in compliance with all other requirements imposed by
pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A,
Office of the Secretary, Part 21, Nondiscrimination in Federally Assisted Programs of the
Department of Transportation -Effectuation of Title VI of tha Civil Rights Act of 1964, and as
said regulations may be amended.
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D, In the event of breach of any of the above non-discrimination covenants, Lessor shall
have the right to terminate this Agreement and to reenter and repossess the Premises and hold the
same as if said Agreement had never been made or issued. This provision does not become
effective until the procedures of 49 CFR Part 21 have been followed and completed, including
expiration of appeal rights.
ARTICLE XI
REQUIREMENTS OF THE UNITED STATES
This Agreement shall be subject and subordinate to the provisions of any existing or
future agreement between Lessor and the United States, or any agency thereof, relative to the
operation or maintenance of the Airport, the execution of which has been or may be required as a
condition precedent to the expenditure of federal funds for the development or operation of the
Airport provided, however, that Lessor shall, to the extent permitted by law, use its best efforts to
cause any such agreements to include provisinn, Protecting and preserving the rights of Lessee in
and to the Premises, and to compensation for the taking thereof, interference therewith and
damage thereto, caused by such agreement or by actions of Lessor or the United States pursuant
thereto.
ARTICLE XII
DEFAULT AND TERMINATION
A. Termination by Lessee. This Agreement shall be subject to termination by Lessee in the event
of anyone or more of the following events:
1. The default by Lessor in the performance of any of the terms, covenants or conditions
of this Agreement, and the failure of Lessor to remedy, or undertake to remedy, to Lessee's
satisfaction, such default for a period of thirty (30) days after receipt of notice from Lessee to
remedy the same.
2. Damage to or destruction of all or a material part of the Premises necessary to the
operation of I..e„ee',, business.
3. The lawful assumption by the United States, or any authorized agency thereof, of the
operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner
as to restrict substantially Lessee from conducting business operations for a period in excess of
ninety (90) days.
B. Termination by Lessor. This Agreement shall be subject to termination by Lessor in the event
of anyone or more of the following events:
1. The default by Lessee in the performance of any of the terms, covenants or conditions
of this Agreement, and the failure of Lessee to remedy, or undertake to remedy, to Lessor's
satisfaction, such default for a period of thirty (30) days after receipt of notice from Lessor to
remedy the same.
2. Lessee files a voluntary petition in bankruptcy, including a reorganization plan, makes
a general or other assignment for the benefit of creditors, is adjudicated as bankrupt or if a
receiver is appointed for the property or affairs of Lessee and such receivership is nut vacated
within thirty (30) days after the appointment of such receiver.
C. Excrcisc. Exercise of the rights of termination set forth in Paragraphs A and B, above, shall he
by notice to the other party within thirty (30) days following the event giving rise to the
termination.
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D. Removal of Property. Upon termination of this Agreement for any reason, Lessee; at its sole
expense, shall remove from the Premises all signs, trade fixtures, furnishings, personal property
equipment and materials, which Lessee was permitted to install or maintain under the rights
granted herein. If Lessee shall fail to do so within thirty (30) days, then Lessor may effect such
removal or restoration at Lessee's expense, and Lessee agrees to pay Lessor such cxpcusc
promptly upon receipt of a proper invoice therefore.
E. Causes of Breach; Waiver.
1. Neither party shall be held to be in breach of this Agreement because of any failure to
perform any of its obligations hereunder if said failure is due to any cause for which it is not
responsible and over which it has no control; provided, however, that the foregoing provision
shall not apply to failures by Lessee to pay fees, rents or over charges to Lessor.
2. The waiver of any breach, violation or default in or with respect to tlx; perforniancc or
observance of the covenants and conditions contained herein shall not be taken to constitute a
waiver of any such subsequent breach, violation or default in or with respect to the same or any
other covenant or condition hereof.
ARTICLE XHI
ARBITRATION
Except as provided in Paragraph I of Article V of this Agreement, all claims or disputes
arising out of or relating to this Agreement shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then obtaining. Notice of
the demand for arbitration shall be filed in writing with the other party to the Agreement and with
the American Arbitration Association and shall be made within a reasonable time after the claim
or dispute has arisen. The award rendered by the arbitrators shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having jurisdiction thereof.
Except by written consent of the person or entity sought to be joined, no arbitration
arising out of or relating to the Agreement shall include, by consolidation, joinder or in any other
manner, any person or entity not a party to the Agreement, unless it is shown at the time the
demand for arbitration is filed that (1) such person or entity is substantially involved in a common
question of fact or law; (2) the presence of such person or entity is required if complete relief is
to be accorded in the arbitration; and (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.
The agreement of the parties to arbitrate claims and disputes shall be specifically
enforceable under the prevailing arbitration law.
Pending final decision of the arbitrator or arbitrators, the parties shall proceed diligently
with the performance of their obligations under this Agreement.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
A. Entire Agreement. This Agreement constitutes the entire understanding between the parties,
and as of its effective date supersedes all prior or independent agreements between the parties
covering the subject matter hereof. Any change of modification hereof must be in writing signed
by both. parties.
B. Severability. If a provision hereof shall be finally declared void or illegal by any court or
administrative agency having jurisdiction, the entire Agreement shall not be void, but the
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remaining provisions shall continue in effect as nearly as possible in accordance with the original
intent of the parties.
C. Notice. Any notice given by one party to the other in connection with this Agreement shall be
in writing and shall be sent by regiswrcd mail, return rcccipt requested, with postage and
registration fees prepaid:
1. If to Lessor, addressers to -
City Manager
P.O. Box 1997
Kalispell, NIT 59903-1997
2. If to Lessee, addressed to:
Robert Voelker
Gateway Hospitality Group
8920 Canyon Falls Blvd., Ste. 125
Twinsburg, OH 44087
(T)440-336-0853
(F)330-405-9898
Notices shall be deemed to have been received on the date of receipt as shown on the
return receipt.
D. Headings. The headings used in this Agreement are intended for convenience of reference
only and do not define or limit the scope or meaning of any provision of this Agreement.
E. Governing. This Agreement is to be cunstrucd in accordance with the laws of the State
of Montana.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR:
CITY OF KALISPELL
7 es H. Patrick, City Manager
LESSEE:
KALISPELL JgOTELS, LLO
Robert fJoelker, Managing Member
f '
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Dated: 11/29/2006
STATE OF Montana
ss.
COUNTY OF FWbe.-4
On November% 2006, before me a Notary Public, personally appeared James H. Patrick, known
,/-
to me --to be the City Manager/of City of Kalispell.
Signature of Notarial Officer
Notary Public for tf)e,/State of Montana
Al
Residing in:
Commission Expires: x�
Page 2 of 2
200633,31
STATE OF MONTANA
ss.
County of Flathead
On this _day of July, 2006, before me, a Notary Public for the State of Montana,
personally appeared James H. Patrick, City Manager of the City of Kalispell and proved to me to
be the person whose name is subscribed to the within instrument, and acknowledged to me that he
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first writtcu.
NOTARY PUBLIC State of Montana
Residing at:�� r
My Commission expires:
fiTATE OF 1 t )
ss.
County of 1 e "-C` )
On this 1'� day of July, 2006, before me, a Notary Public for the State of C k , O ,
personally appeared Robert Voelker, as managing member of Kalispell Hotels, LLC, a Montana
limited liability company, proved to me to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first written.
NOTARY PUBLIC State of t; o
Residing at•''ka.s.-
My Commission expires. Z -1t, a-B u= T,-'- i`--'h`1- C'
DENNIS HALLAHAN
Notary Public, State of Ohio, Portage Count}
My Commission Exoires r=ab. 16, 2010
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i�.Xtlilil i "H"
PURPOSE OF SURVEY: LEASE DESCRIPTIONS
DESCRIPTION:
FOUR TRACTS OF LAND, SITUATED, LYING, AND BEING IN THE NORTH HALF
OF THE NORTHWEST QUARTER OF SECTION 20, TOWNSHIP 28 NORTH, RANGE
21 WEST, P.M.,M., FLATHEAD COUNTY, MONTANA, AND MORE PARTICULARLY
DESCRIBED AS FOLLOWS TO WIT:
TRACT 1
A portion of Lot 2, Block 1 of AIRPORT ADDITION to Kalispell, a
subdivision records of Flathead County, Montana; Commencing at the
southeast corner of said Lot 2 which is a found iron pin; Thence
S56044' 00"W 42.60 feet to a set iron pin being the TRUE POINT OF
BEGINNING of the tract of land herein described; Thence
continuing S56°44'00"W 107.54 feet to a found iron pin being the
southwest corner of said Lot 2; Thence N32049128"W 149.96 feet to
a found iron pin being the northwest corner of said Lot 2; Thence
N56°43'33"E 149.17 feet to a set iron pin on the west right-of-way
of U.S_ Highway No. 93 being the northeast corner of said Lot 2;
Thence S33011'38"E 84.97 feet along said right-of-way to a set
iron pin; Thence leaving said right-of-way S56°44100"W 42.60 feet
to a set iron pin; Th.enr:e S33°11138"E 65.00 feet to the to the
point of beginning containing 0.452 acre (19673 square feet)
more or less, subject to and together with all appurtenant
casements of record.
TRACT 2
BEGINNING at the southwest corner of Lot 2, Block 1 of AIRPORT
ADDITION to Kalispell, a subdivision records of Flathead County,
mulitaria, which is a found iron pin; Thence S56046' 53"W 149.99 feet
to a found iron pin being the northeast corner of a tract of land
as shown and described on Deed Exhibit Book 507, page 117, records
of Flathead County, Montana; Thence S56047126"W 73.33 feet along
the north boundary of said Deed Exhibit to a set iron pin; Thence
N33 16'13"W 149.72 feet to a set iron pin on the south boundary of
Lot iA of the Resubdivision eL Lot 1, Block 1 AIRPORT ADDITION to
Kalispell, a subdivision records of Flathead County, Montana;
Thence N56043'33"E 224.48 feet to a found iron pin being the
northwest corner of Lot 2, Block 1 of AIRPORT ADDITION to
Kalispell, a subdivision records of Flathead County, Montana;
Thence S32049'28"E 149.96 feet to the point of beginning and
containing 0.770 acre (33550 square feet) more or less, subject
to and together with all appurtenant easements of record.
TRACT 3
Commencing at the southwest corner of Lot 2, Block 1 of AIRPORT
ADDITION to Kalispell, a subdivision records of Flathead County,
Montana, which is a found iron pin; Thence S56°46'53"W 149.99 feet
to a found iron pin being the northeast corner of a tract of land
as shown and described on Deed Exhibit Book 507, page 11"l, records
of Flathead County, Montana, being the TRUE POINT OF BEGINNING of
the tract of land herein described; Thence S330161131,'E 278.38
feet along the east boundary of said Deed Exhibit to a set iron
pin; Thence S56043146"W 13.33 feet to a set iron pin; Thence
N3301611.3"w 205.69 feet to a set iron pin; Thence S56"47'24"W 60.00
feet to a set iron pin; Thence N33`'16'13"W 72.71 feet to a set
iron pin on the north boundary of said Deed Exhibit; Thence
N56047126"E 73.33 fPpt to the point of beginning and containing
0.185 acre (8073 square feet) more or less, subject to and
together with all appurtenant easements of record.
BEGINNING at the southwest corner of Tract 1 as shown and
described on Certificate of Survey No. 17045, records of Flathead
Cc Linty, Montana, which is a found iron pin; Thence S56052' 03"W
13.33 feet to a set iron pin; Thence N33016113"W 144.56 feet to a
set iron pin; Thence N560'43' 47"E 13.33 feet to a set iron pin on
the west bouridciry of said Tract 1; Thence S33°16' 13"W 144. 59 feet
to the point of beginning and containing 0.044 acre (1927 square
feet) more or less, subject to and together with all appurtenant
easements of record.