Kalispell Municipal Airport Lease and Agreement to Assign (RECORDED)111
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City Clerk
P.O. Box 1997
Kalispell, MT 59903
IIIIIIIIIIIIII IIIII IIIIIIIII I III II I IIIIIIIII IIII IIIIIIII II I I IIIIIII Fees: O$$077 0016
Debbie Pierson, Flathead County MT by DD 5/3/2018 4:68 PM
KALISPELL MUNICIPAL AIRPORT
LEASE AND AGREEMENT TO ASSIGN
THIS KALISPELL MUNICIPAL AIRPORT LEASE AND AGREEMENT TO ASSIGN, made
and entered into as of the & 'day of April, 2018, hereinafter referred to as the "Airport Lease",
by and between the City of Kalispell, Montana, a Municipal Corporation, hereinafter referred to
as LESSOR and ASSIGNOR, and the Kalispell Airport Association, a Montana Corporation,
hereinafter referred to as LESSEE and ASSIGNEE,
WITNESSETH:
For and in consideration of the mutual covenants and promises and other good and
valuable consideration hereinafter set forth, the parties hereto agree as follows:
PROPERTY: LESSOR hereby leases to LESSEE and LESSEE hereby leases and hires from
LESSOR those certain premises and all appurtenances thereto situated in Kalispell, Flathead
County, Montana, as described in Exhibit "A" attached hereto and incorporated fully herein
by this reference.
2. TERM: TO HAVE AND TO HOLD the above rented premises during the full term of twenty
(20) years, which term shall begin upon the date above written and shall terminate upon the
expiration of said full twenty-year term, unless extended as hereinafter provided. The lease
may be extended upon application of the Lessee for an additional ten-year term if the
improvements in 4.b. are completed and the Runway has received a mill and overlay or, if
necessary, reconstructed. An additional 10 year extension may be granted at the end of the ten
year term extension upon the agreement of both parties. Said extension must be approved no
later than 12 months prior to the expiration of the term.
3. LESSEE CONSIDERATION/AIRPORT MANAGEMENT: As consideration for this Airport
Lease, LESSEE shall provide all management services for the operations of the airport for the
term of this lease and any extensions made thereto. LESSEE agrees that it will be solely
responsible for the airport management and hereby indemnifies the LESSOR for any damages
proven by any third party, which proximately and directly arise out of such management as
determined by a court of competent jurisdiction or by mutual agreement between the
complainant and LESSEE. The LESSOR shall maintain the obligation of codifying the
Standard Operating Procedures of the Airport and shall duly consider the input of the LESSEE
Municipal Airport Lease and Agreement to Assign
in any amendments to such existing standards.
4. USE OF LEASED PREMISES: LESSEE shall use the leased premises for the sole purpose of
operating a general aviation airport and such other business activities as are commonly
accessory to a general aviation airport. LESSEE agrees to observe all material federal, state
and municipal laws and regulations (and specifically the Standard Operating Procedures of the
Airport) as apply to a general aviation airport including those related to human and equal rights
as are currently in effect or as may come into effect in the future. LESSEE shall notify
LESSOR within fourteen (14) days of becoming aware of any breach. LESSEE shall not be
deemed to be in default of or noncompliance with any federal, state or municipal law and/or
regulation, if such noncompliance existed prior to the execution of this Airport Lease. In the
event that LESSOR believes that a breach or default on the part of LESSEE is or has transpired,
LESSOR shall give LESSEE written notice setting forth with specificity the alleged breach
and/or default and LESSEE shall have ninety (90) days to remedy such breach or default after
delivery of said notice, with the exception of conditions that pose an immediate threat to health
and safety, which shall be remedied as soon as possible.
5. MAINTENANCE AND REPAIR OF PREMISES: LESSEE agrees to maintain the above -
described premises in a condition as near as is practicable to the condition of the property at
the time of the execution of this Airport Lease and to return said property to LESSOR at the
expiration of said lease in said condition, reasonable wear and tear and damage excepted. In
the event LESSEE refuses or neglects to keep the above -mentioned premises in such order and
condition hereinabove mentioned, LESSOR shall have, after first giving ninety (90) days
written notice to repair, the right to declare this lease null and void and of no further force and
effect.
a. Stormwater Regulations: LESSOR is mandated by the federal and state governments to
monitor and enforce the Stormwater MS4 Standards within the city limits of Kalispell.
Because of the extensive acreage of the property, it is essential that the LESSEE closely
cooperate with the LESSOR to assure that the Stormwater MS4 Standards are maintained.
For this reason, the LESSEE shall meet with the LESSOR for a training session on an
annual basis so that compliance may be maintained. The LESSEE shall submit its project
stormwater compliance plans to the LESSOR prior to commencement of any improvement
projects. The LESSEE agrees to remain in full compliance with the MS4 Stormwater
Standards. LESSEE shall not be deemed to be in default of or noncompliance with the said
MS4 Stormwater Standards, if such noncompliance existed prior to the execution of this
Airport Lease, but LESSEE shall, in good faith, cooperate with the LESSOR to gain
compliance for such pre-existing noncompliance.
b. Capital Investment: LESSOR and LESSEE agree to the completion of a Capital
Investment Master Plan as set forth in Exhibit B. Projects will be completed by the
LESSEE with funds reimbursed upon receipt of appropriate documentation and according
to the sources and amounts identified in Exhibit B. Projects intended to be funded in part
with tax increment funds must be completed or under contract prior to the expiration of the
respective Tax Increment District on June 30, 2020. Future projects may be added to the
Master Plan upon mutual agreement of the parties.
Municipal Airport Lease and Agreement to Assign 2
6. LESSOR'S ACCESS TO AIRPORT: For the purpose of maintaining public utilities and
accessing and inspecting city owned properties, the LESSOR requires daily access to the
Airport. In the event that maintenance activities are required that would disrupt airport
operations, the LESSOR shall provide reasonable written notice to LESSEE. The written
notice shall outline the nature, purpose, access dates, and areas affected on the Airport.
7. EXISTING AND FUTURE GROUND LEASES: LESSOR, as owner and current operator of
the airport, is obligated under certain Ground Leases that presently encumber the airport.
LESSOR agrees, as additional consideration given in this Airport Lease, that upon release of
the LESSOR by the Ground Lease Lessees from its Ground Lease obligations, the LESSEE
shall enter into an airport lease agreement(s) with those Ground Lease Lessees.
a. Two of the leased hangars are owned by the City. These leases shall remain on month
to month terms.
b. The airport lease agreements with the Ground Lease Lessees will further allow the
LESSEE to collect fees from the Ground Lease Lessees that are commensurate with
the existing Ground Leases, the term of which shall, in no event, extend beyond the
term of this Municipal Airport Lease. The new lease agreement must further contain
the following clause: "In the event that this lease is terminated the leasehold shall
transfer to the City of Kalispell, as Lessor, and shall convert to a month to month
tenancy. The City of Kalispell shall be under no obligation to continue to operate the
airport. In the event the City of Kalispell determines thereafter to close the airport,
twelve (12) months notice shall be given to lessees of the airport. Lessees shall have
the right to remove those improvements they own, but shall do so within the twelve
(12) months from notice of the airports discontinuance and shall leave the premises in
a restored condition, except that any pavement shall be left. Improvements left on the
airport property thereafter shall then become the property of the City of Kalispell
without further action on the part of the City."
c. In the event the airport is abandoned as the result of a voter initiative, this lease shall
terminate. The new lease agreement with the Ground Lease Lessees must also contain
the following clause: "This lease shall terminate immediately upon abandonment of the
airport as a result of a voter initiative. If the Ground Lease Lessee elects not to remove
the improvements as set forth above, the CITY shall pay to the Ground Lease Lessee
the fair market value of their leasehold improvements situated on the airport at the then
existing usage. The fair market value of the improvements at the then existing usage
shall be determined as follows:
The City and the Ground Lease Lessee shall each hire, at their own expense, an
appraiser to determine the fair market value of the improvements on the leased
site and owned by the Ground Lease Lessees at the then existing usage. If the
Municipal Airport Lease and Agreement to Assign 3
two (2) appraisals do not differ by more than three percent (3%), the fair market
value of the improvements 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 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 the Ground Lessee
within (60) days of the date of determination of the fair market value as set forth
above."
d. This Airport Lease shall not be effective and enforceable unless simultaneously with
the execution of this Agreement, or as near thereafter as is practicable, the LESSOR
and each of the Ground Lease Lessees shall execute an agreement that extinguishes the
existing Ground Leases and all nontax obligations of the parties thereunder, but that
permits the continuing land use of the existing Ground Leases. LESSEE shall have full
authority to negotiate and enter into a fee/lease schedule and related Ground Lease
agreements with the Ground Lease Lessees with terms that are, in all ways, otherwise
consistent with this Agreement.
8. RED EAGLE LEASE AND MANAGEMENT AGREEMENTS: LESSOR shall also release
Red Eagle from its current lease and management obligations under an agreement in which
Red Eagle agrees to release LESSOR from any and all obligations contained within those lease
and management agreements. LESSOR shall continue to own the property upon which Red
Eagle operates, but after the release of the said lease between LESSOR and Red Eagle,
LESSEE and Red Eagle shall enter into a lease that permits the continuing land use in
accordance with the terms of the prior lease referenced herein and with a fee schedule that is
commensurate with the terms of the said prior lease.
In the event the airport is abandoned as the result of a voter initiative, the lease shall terminate
and the LESSOR will pay to the Red Eagle the fair value of the remaining term of the lease.
The parties agree that they shall each obtain the opinion of an independent appraiser to evaluate
the value of the remaining lease and negotiate a final value. The LESSOR agrees that the fair
value of the remaining term of the lease should be valued as if the airport had not been
abandoned. Any decrease in the value of the lease because of the abandonment shall not be
considered by either the LESSOR's or Red Eagles' independent appraisers. If the parties
cannot agree upon the value, they agree to arbitrate the result, as set forth in the parties' lease
and be bound by the arbitrator's decision.
9. ASSIGNMENT OF HILTON GARDEN INN GROUND LEASE: LESSOR shall assign all of
its rights and obligations to LESSEE of the Ground Lease that exists between the LESSOR
and the Hilton Garden Inn. This assignment shall revert to the LESSOR in the event of the
termination of this agreement.
Municipal Airport Lease and Agreement to Assign
4
10. ZONING AND BUSINESS STANDARDS: The LESSEE shall have the management
prerogative to institute business standards for airport related activities that shall be enforceable
by the LESSEE so long as the standards are referenced in the ground leases.
11. THROUGH -THE -FENCE OPERATIONS: Although the Federal Aviation Administration
does not allow new through -the -fence operations to become established on FAA funded
airports, the City is not currently receiving or applying for any such funding. The standing
Kalispell Municipal Airport Operating Procedures defines "through -the -fence" operations but
otherwise has no restrictions against them. Therefore the approval by the LESSOR of the
Capital Investment Master Plan submitted by the LESSEE that includes new through -the -fence
operations shall be deemed an approval by both parties to such operations.
12. UTILITIES: During the entire term of this Airport Lease, LESSEE shall timely pay for
required utilities serving the leased premises, including, but not limited to, electrical, gas,
telephone, water, sewer and garbage services.
13. COST OF OPERATION: All costs of operation including the cost or providing supplies,
equipment, tools, labor and other such items and the entire cost of maintaining and operating
the general aviation airport and other appurtenances shall be the sole responsibility of LESSEE.
14. COMMERCIAL, USER AND OTHER FEES: A Schedule of Fees shall be established by
LESSEE on an annual basis and provided by LESSEE to LESSOR prior to the first day of July
of each year of this Lease. This Schedule shall be advisory to the LESSOR only and shall not
require LESSOR's approval. LESSEE, in its sole discretion, may from year to year, during
the term of this Airport Lease, increase or decrease its Schedule of Fees.
15. LESSEE'S FINANCIAL REPORTS: Annually, on or before the 30th day of June, LESSEE
shall present to LESSOR, for review, a copy of LESSEE's annual financial report completed
in accordance with generally accepted accounting principles. The LESSEE's financial records
will be subject to an audit conducted by, and at the option of, the LESSOR (internal staff or
contract auditor). The cost of such audit shall be paid by the LESSOR.
16. LESSEE'S LIABILITY INSURANCE: LESSEE shall obtain and keep in full force and effect
during the term of this lease, full general liability insurance in the amount Seven Hundred Fifty
Thousand Dollars ($750,000.00) per occurrence and One Million Five Hundred Thousand
Dollars ($1,500,000.00) aggregate with a company licensed to do business in the State of
Montana with a minimum of "A.M. Best Rating" of A-, VI; said policy of insurance shall name
LESSOR as additional named insured and be written on a "primary —noncontributory basis."
In the event the Montana legislature increases the limitations on government liability for
damages in tort LESSEE agrees to increase its liability coverage accordingly. LESSOR shall
be furnished with a certificate that such insurance is in force and the same shall provide for
reasonable notification to LESSOR prior to the same being canceled. LESSEE agrees to hold
LESSOR harmless from any and all liability of any nature, whatsoever, arising from or out of
LESSEE's possession, use, maintenance, improvement or occupancy of the property herein
described; LESSEE further agrees to defend, with legal counsel acceptable to LESSOR, and
Municipal Airport Lease and Agreement to Assign
indemnify the LESSOR against any action brought against LESSOR arising out of LESSEE's
possession, use maintenance, improvement or occupancy of said property, including but not
limited to any tort or other noncriminal legal, equitable or administrative action, whether
groundless or otherwise, arising out of an alleged act or omission occurring during the term of
this lease, at LESSEE's expense. Notwithstanding any provision in this paragraph to the
contrary, the indemnity and defense provisions set forth herein shall not apply to any claims
or demands made by any party after the execution of this Airport Lease, if such claim or
demand arises out of or as a result of any breach, noncompliance, damage or injury that is
alleged to have occurred, existed or arisen prior to the execution of this Airport Lease, even if
such claim is brought after the execution of the same.
17. FIRE INSURANCE: During the full term of this lease, LESSOR shall maintain fire insurance
adequate to cover replacement costs on the improvements owned by LESSOR on said
premises. Should the premises, during the term of this Airport Lease, suffer damages which
are covered by said fire insurance policy, LESSOR agrees to utilize all insurance
reimbursements therefore, toward rebuilding or repairing the damaged premises, or toward
providing comparable replacement facilities. The contents of buildings and fixtures located on
the premises shall be insured by LESSEE and shall be in such amounts as to assure
replacement. The parties mutually agree as to waiver of subrogation rights each with the other.
18. DEFAULT AND BANKRUPTCY: In the event that:
a. LESSEE shall commit a material default in the observance or performance of any term of
LESSEE's covenants, agreements, or obligations hereunder and such material default shall
not be corrected within ninety (90) days after written notice thereof, or
b. LESSEE shall be declared bankrupt or insolvent according to law, or, if any assignment
shall be made of LESSEE's property for the benefit of creditors;
LESSOR shall have the right thereafter, when such default continues, to re-enter and take
complete possession of the leased premises, according to law, and to declare the term of this
Airport Lease ended, and to remove LESSEE's effects, without prejudice. If LESSEE shall
default, after reasonable notice thereof, in observance or performance of any material
conditions or covenants on LESSEE's part to be observed or performed by virtue of any of the
provisions in any article of this Airport Lease, LESSOR, without being under any obligation
to do so and without thereby waiving such default, may remedy such default for the account
and at the expense of LESSEE. The parties hereby agree that in the event of material default,
the LESSOR is under no obligation to maintain the use of the property as an airport facility, is
released from all legal liability to any airport user, and may convert the property to any other
legal use by proper execution of legal process.
19. NOTICE: No notice from LESSOR to LESSEE relating to the leased premises or the
occupancy thereof, shall be deemed duly served unless personally served upon or mailed to
LESSEE, registered or certified mail, return receipt requested, postage prepaid, and addressed
to LESSEE at its address as follows:
Municipal Airport Lease and Agreement to Assign
Kalispell Airport Association, Inc.
Kalispell, Montana 59901
Any notice from LESSEE to LESSOR relating to the leased premises or the occupancy thereof,
shall be deemed duly served, if personally served upon or if mailed to LESSOR by registered
or certified mail, return receipt requested, postage prepaid, and addressed to LESSOR at the
address as follows:
Manager
City of Kalispell
201 First Avenue East
Kalispell, Montana 59901
20. TIME OF ESSENCE AND BINDING EFFECT: It is mutually agreed by and between the
parties hereto that the time of payment shall be an essential part of this Airport Lease, and that
all of the covenants and agreements herein contained shall extend to and be binding upon the
parties hereto, and their successors and assigns.
21. FORCE MAJEURE. LESSEE's obligations under this Airport Lease shall be suspended and
excused, and the time periods set forth herein shall be extended, while LESSEE is prevented
or substantially hindered or restricted, by an Event of Force Majeure, from conducting or
performing its obligations hereunder. The term "Event of Force Majeure" means any of the
following, whether actual or potential: strikes, lock outs or other labor disturbances; delays in
transportation; the inability to secure labor or materials in the open market; acts of God or the
elements; inclement or adverse weather, conditions attributable to acts of war, terrorism or
civil disturbances; acts or failures to act of LESSOR; the effect of any Laws; the failure of a
governmental authority to issue any permit, entitlement, approval or authorization within sixty
(60) days after LESSEE submits an application for the same; or any other matter or condition
beyond the reasonable control of LESSEE.
22. CONSTRUCTION INTERPRETATION AND MODIFICATION OF AIRPORT LEASE.
This Airport Lease, including any Exhibits attached hereto, contains the entire agreement
between the parties in connection with any matter mentioned herein, and all prior or
contemporaneous agreements, understandings and representations are merged herein and
superseded hereby. Should any provision of this Airport Lease be held to be invalid, void or
unenforceable, the remaining provisions hereof shall remain in full force and effect,
unimpaired by such holding. This Airport Lease shall not be interpreted as creating any
partnership or other relationship between the parties, other than that of landlord and tenant.
Any rule of construction to the effect that ambiguities are to be resolved in favor of either party
shall not be employed in the interpretation of this Airport Lease and is hereby waived. No
waiver by a party of any term or provision hereof shall be deemed a waiver of any other term
or provision, and any waiver of rights hereunder must be in writing to be effective. This
Airport Lease shall be governed by and interpreted in accordance with the laws of the state of
Montana. The use of the neuter gender includes the masculine and feminine, and the singular
number includes the plural, and vice versa, whenever the context so requires. The terms
Municipal Airport Lease and Agreement to Assign 7
"include", "includes" and "including", as used herein, are without limitation. Captions and
headings used herein are for convenience of reference only and do not affect the scope,
meaning or intent hereof. This Airport Lease may be executed with counterpart signature
pages and in duplicate originals, each of which shall be deemed an original, and all of which
shall collectively constitute a single instrument. This Airport Lease may not be amended or
modified unless and except such modifications or amendments are made in writing and
executed by all parties hereto.
23. QUIET ENJOYMENT. During the entire term of this Airport Lease, (a) LESSEE shall have
peaceful and quiet enjoyment of the leased premises, without hindrance or interruption by
LESSOR and (b) LESSOR shall protect and defend the right, title and interest of LESSEE
hereunder from any other rights, interests, title and claims of or by any person.
IN WITNESS WHEREOF, the parties have executed this lease as of the date first above
written.
ATTEST:
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City C1
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Association Secretary
CITY OF KALISPELL
D u el
ity Manager
KALISPELL AIRPORT ASSOCIATION
Municipal Airport Lease and Agreement to Assign
s
STATE OF MONTANA )
) ss.
County of Flathead )
On this )''1�Qay of &�,c C-k- , 2018, before me, a Notary Public for the State of
Montana, personally appeared Doug Russell and Aimee Brunckhorst, respectively, proved to me
to be the persons whose names are subscribed to the within instrument, and acknowledged to me
that they each executed the same in their respective authorized capacities as City Manager and
City Clerk of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year hereinabove first written.
�Jo1 Al. FUNS JUDI A. FUNK
got„ NOTARY PUBLIC for the
State of Montana
SEAS L Residing at Kalispell, Montana
My Commission Expires
OF MOQ2 February 25, 020
STATE OF MONTANA )
) ss.
County of Flathead )
Printodd Name:
NOTAR BLLC for late of Montana
Resi ing.-ai:
My Commission expires:
On this day of r`, , 2018, before me, a Notary Public for the State of
Montana, personally appeared Mctrk 7r .Ad&� i and 7-" Andapu and proved to me to
be the persons whose names are subscribed to the within instrument, and acknowledged to me
that they each executed the same in their respective authorized capacities as President and
Secretary of the Kalispell Airport Association, Inc., a Montana not for profit corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year hereinabove first written.
SEAL
1 ,
4Print
NOTARY PUBLIC for the State of Montana
Residing at:
My Commission expires:
AIMEE BRUNCKHORST
.......,
a
NOTARY PUBLIC for No
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,SEAL '
State of Montana
Residing si Lakeside, Montra
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My Commission Expires
December 4, 2020 _____l
Municipal Airport Lease and Agreement to Assign
EXHIBIT A
A parcel of land located in the NW1/4 & NW1/4 of the SW1/4 of Section 20 Township 28
North, Range 21 West P.M.,M. Flathead County, Montana as more particularly described as
Parcel 1, Parcel 2 and Parcel 3 of Certificate of Survey No. 12729 and Lot 2 of Block One of the
Plat of Airport Addition to Kalispell of record in the Office of Clerk and Recorder for Flathead
County, Montana.
Municipal Airport Lease and Agreement to Assign 10