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HomeMy WebLinkAboutMiddleton Six Sons Farms - Agriculture Lease No. 113190053CITY OF PASCO Agricultural Lease No. 113190053 (2024), THIS AGRICULTURAL LEASE is entered into this 1 st day of October, 2023, by and between the City of Pasco, a Washington Municipal Corporation ("Lessor"), and Middleton Six Sons Farms ("Lessee"). This Lease is made upon the terms and conditions and for the consideration enumerated herein. 1. Description of Leased Property. Lessor leases to Lessee, and Lessee leases from Lessor, on the terms and conditions stated below, a crop circle numbered 16 South (aka Parcel 113190053) for the production of agricultural products upon the following described real property ("Premises"): A portion of the irrigated cropland located in the NW 1/4 Section 14 Township 9N, Range 30 E, and known as Circle 16 South in Franklin County, WA - Comprising 71 acres more or less. Also in Auditors Records of Franklin County - Parcel 113190053. 2. Term of Lease — and Provisions for Termination The term of the Lease shall be for: Circle 16 South commencing on the 1 st Day of October, 2023 and terminating on the 31 st day of October, 2026; unless earlier terminated or extended as provided below. In the event this Lease terminates prior to the completion of harvest, the term of this Lease shall be extended for a reasonable period for time to allow for completion of harvest. Additionally, this Lease, during the term thereof, may be terminated by either the Lessor or Lessee for good cause AND with 60 days written notice to the other party, on the earlier of the completion of any annual crop harvest OR October 31 st of the same calendar year. Good cause for the Lessor is the necessity in its sole judgment to convert use of the premises from conventional agricultural use to food Process Water Reuse. Good cause for the Lessee is the inability on Lessee's part — due to government agency curtailment, to continue to deliver irrigation water to the premises with sufficient volume and pressure to properly irrigate and sustain the water requirements of the growing crop or the next planned subsequent crop. Rent payments that may be past due upon the date of termination shall be payable in full on or before termination of the lease agreement. Agricultural Lease - 1 3. Rent. (a) "Total Payment" shall be the annual sum of: 1) the total of all rent (rent per acre x total # of acres;) and 2) Washington State Leasehold Tax calculated on said total rent. (b) "Payment per acre" shall be the sum of rent per acre and 2) Washington State Leasehold Tax as calculated on the rent per acre amount. (c) Lessee shall pay as rent for said Premises the following amounts: Circle No. 16 South Growing Year Crop Total Acres Rent Per Acre Tax Per Acre Payment Per Acre Total Payment 16 South 2024 Wheat 71 $177.25 $22.75 $200 $14,200 16 South 2025 Onions 71 j $337.84 $62.16 $400 $28,400 16 South 2026 Potatoes 71 $337.84 $62.16 $400 $28,400 16 South 2027* TBD 71 TBD *Fourth and Fifth Year At Lessor's (City) Option Only (d) Washington State Leasehold Excise Tax shall be paid by the Lesson (e) Lease payments shall be due and payable on or before January 31 st of each respective crop year year during the term of this lease agreement. (f) All payments shall be made to the City of Pasco, c/o R. Henry Johnson, 2202 West Clearwater Avenue, Kennewick, WA 99336, or such other place as the Lessor may designate. (g) In the event the Lessee desires a change in acreage, crops, or use, prior written authorization must be received from Lessor. Approval to such change may be conditioned upon an adjustment in the payments provided above. 4. Uses of the Premises. Lessee shall put the Leased Premises to the full beneficial use in accordance with customary industry standards, permitted uses, acres, and crops designated herein. Said uses shall be further restricted by the terms of any federal, state, or local law or regulation applicable thereto, and the terms of Lessor's Water Permit from the State of Washington; together with any other encumbrance of record or known use being exercised at the time of the execution of this Lease. It is further understood and hereby acknowledged that the ultimate objective of the Lessor, with respect to this property, is to prepare and utilize the property for eventual reuse wastewater treatment and application. Accordingly, throughout each Agricultural Lease - 2 crop year during the term of this Lease, Lessor reserves the right and shall be entitled to test, inspect, investigate, survey, excavate, construct, maintain, and otherwise utilize the property constituting the Leased Premises preparatory to and/or as necessary to accomplish the stated objective in such a manner as Lessor deems appropriate. Lessee will cooperate with Lessor to facilitate such activities, and will not unreasonably hinder or delay any such activities. Lessor agrees to reimburse Lessee for crop or field damage, if any, arising from the Lessor's utilization of the Premises as set forth above. It shall be the responsibility of the Lessee to substantiate any claimed losses with evidence satisfactory to Lessor. 5. Water and Irrigation System. Lessee shall be responsible for all costs of operating the irrigation system on the Leased Premises, and shall be responsible for the payment of irrigation power charges. The premises are equipped with an irrigation system owned and installed by the Lessee, and Lessee shall be responsible for the operation, care and repair of said system at all times throughout the term of this Lease Agreement 6. Liens. (a) Lessee shall pay as due all claims for work done on and for services rendered or materials furnished to the Premises which are done for the account of the Lessee as herein provided. Lessee shall keep the Premises free of any liens and indemnify, defend and hold the Lessor harmless from all costs, damages, or charges, including attorney's fees, necessary to discharge such liens. Lessor, at its option, may pay the amount of any claim or lien and add said amount as additional rent with interest at the rate of twelve percent (12%) per annum, or the maximum amount permitted by statute, on said amount paid from the date of payment. Payment of a claim or lien amount shall not constitute a waiver of any right or remedy which Lessor would otherwise have on account of Lessee's default in this or any other term of the Lease. (b) The Lessor may file and maintain a landlord or crop lien in order to secure any payment or obligation required under this Lease. 7. Chemicals and Fertilizers. Lessee shall apply chemicals and fertilizers to the Leased Premises according to standards applicable to the industry and consistent with the current best practice standards. Lessor shall not incur any responsibility or liability to any third party for the negligent or wrongful acts of the Lessee related to the chemicals and/or fertilizers used or its application, and shall defend, indemnify, and hold Lessor harmless from any damages resulting from such negligent or wrongful act of the Lessee. 8. Erosion Control and Crop Rotation. Lessee shall follow an effective program of soil erosion control, particularly against wind and water. Lessee agrees to plant the Premises Agricultural Lease - 3 to a cover crop to the specifications of the Lessor within fifteen (15) days after each harvest, as appropriate. Crops will be rotated so that potatoes will not be planted two (2) years consecutively in the same field without the express consent of Lessor. The planting of two consecutive crops on the same land with the intent of obtaining a harvest from both crops within the same crop year (double cropping) is prohibited without the express written permission of Lessor. The Lessor reserves the right with the granting of such permission to assess additional rents from Lessee as applicable and appropriate for this practice. Grazing of crop aftermath is not permitted. 9. Premises Maintenance. Lessee shall not commit or permit to be committed any waste, strip, damage to, or misuse of the Premises. All farming operations shall be conducted in a husbandlike manner according to standards of the industry. Any and all fences, gates, roads, field accesses, and other improvements to the property (including the irrigation system) shall be maintained by Lessee. Lessee shall eradicate weeds, particularly puncture -vine and prevent all noxious and other weeds from encroaching upon the Premises, utilizing practices approved by the local weed control authorities and to the reasonable satisfaction of the Lessor. Lessee also agrees to maintain roads and field access in good, passable condition. 10. Deleterious, Hazardous. Toxic. or Harmful Substances.. (a) Deleterious Material. The Lessee shall not make, or suffer to be made, any filling in of the lease Premises or any deposit of rock, earth, ballast, refuse, garbage, waste matter, chemical, biological or other wastes, hydrocarbons, any other pollutants, or other matter within or upon the lease Premises, except as approved in writing by the Lessor. If the Lessee fails to remove all non -approved fill material, refuse, garbage, wastes or any other of the above materials from the lease Premises, the Lessee agrees that the Lessor may, but is not obligated to, remove such materials and charge the Lessee for the cost of removal and disposal. (b) Hazardous. Toxic. or Harmful Substances. The Lessee shall not keep on or about the lease Premises, any substances now or hereinafter designated as or containing components now or hereinafter designated as hazardous, toxic, dangerous, or harmful, and/or which are subject to regulation as hazardous, toxic, dangerous, or harmful by any federal, state or local law, regulation, statute or ordinance (hereinafter collectively referred to as "Hazardous Substances") unless such are necessary to carry out the Lessee's permitted use(s) under Section 6 above, and unless the Lessee fully complies with all federal, state and local laws, regulations, statutes, and ordinances, now in existence or as subsequently enacted or amended. (c) The Lessee shall: (1) Immediately notify the Lessor of (i) all spills or releases of any Hazardous Substance affecting the lease Premises, (ii) all failures to comply with any federal, state, or local law, regulation or ordinance, as now enacted or as subsequently enacted or amended, (iii) all inspections of the lease Premises by, Agricultural Lease - 4 or any correspondence, orders, citations, or notifications from any regulatory entity concerning Hazardous Substances affecting the lease Premises, (iv) all regulatory orders or fines or all response or interim cleanup actions taken by or proposed to be taken by any government entity or private party concerning the lease Premises; and (2) On request, provide copies to the Lessor of any and all correspondence, pleadings, and/or reports received by or required of the Lessee or issued or written by the Lessee, or on the Lessee's behalf with respect to the use, presence, transportation, or generation of Hazardous Substances related to the Leased Premises. (d) The Lessee shall be. fully and completely liable to the Lessor, and shall indemnify, defend, and hold harmless the Lessor and its agents and employees, with respect to any and all damages, costs, fees (including attorneys' fees and costs), penalties (civil and criminal), and cleanup costs assessed against or imposed as a result of the Lessee's use, disposal, transportation, generation, and/or sale of Hazardous Substances, or that of the Lessee 's employees, agents, assigns, contractors, subcontractors, licensees, invitees, and for any breach of this subsection. 11. Indemnification. Lessee has inspected and accepts the Premises as he finds them. Lessee agrees to assume all risk of, and indemnify, defend with legal counsel acceptable to Lessor, and hold harmless the Lessor from any loss, costs, liability, claim or expense on account of personal injury to or death of any persons whosoever including, but not limited to, employees of the Lessor and damage to or destruction of property to whomsoever belonging including, but not limited to, property of the Lessor, resulting in whole or in part, directly or indirectly, arising from the Lessee's use of the Premises or exercise of rights herein granted. Nothing herein contained, however, shall be construed as indemnification against the sole negligence of the Lessor, its officers, employees, or agents. 12. Insurance. Lessee agrees, during the term of this Lease or any renewals thereof, to carry general liability insurance for personal injury and property damage liability, and to maintain workmen's compensation coverages as required by law. General liability insurance policies shall name Lessor as an insured and be with an insurance carrier acceptable to Lessor. Such insurance shall provide for property damage liability coverage of at least $100,000 and personal injury coverage of at least $1,000,000 for each occurrence and in the aggregate. Lessee shall furnish Lessor with certificate indicating that such insurance is in force and the premiums therefore have been paid. Lessee agrees to be personally responsible for the repair or replacement of any Lessor - owned irrigation equipment component or other improvement to the property damaged by the Lessee or Lessee's officers, employees, or agent, or as a result of their negligent acts or omissions. Agricultural Lease - 5 13. Interest. Any amount due by the Lessee to the Lessor not paid within fifteen (15) days shall bear interest at the rate of twelve (12%) per annum, or the maximum amount permitted by statute, from the date due. 14. Sublease or Assignment meted. No part of this Lease or the Leased Premises may be assigned, mortgaged, subleased, or otherwise transferred, without the prior written consent of the Lessor. With such consent, the Lessor reserves the right to change the terms and conditions of the Lease as it may affect the assignee. All terms of any sub -leasing agreement shall be fully transparent to Lessor upon its request for same, including name and resume of sub -lessee and rent amount and payment schedule. This provision shall equally apply to transfers arising by operation of law, or transfers to any trustees in bankruptcy, receivers, administrators, executors, and legatees. 15. Default. The following shall be events of default: (a) failure to pay rent on or before the date provided in Section 4 above; (b) failure of Lessee to comply with any term or condition or fulfill any obligation of the Lease, other than the payment of rent, within fifteen (15) days after written notice by Lessor specifying the nature of the default with reasonable particularity, or abandonment by the Lessee of the property; and (c) failure to pay, when due, any tax, assessment, or payment required under the terms of this Lease. If the default is of such a nature that it cannot be completely remedied within the fifteen (15) day period, this provision shall be complied with if Lessee begins correction of the default within the fifteen (15) day period and thereafter proceeds with reasonable diligence and in good faith to effect the remedy as soon as practical. In the event the default is not remedied as provided above, Lessor shall have the right to re-enter, take possession of the Premises, and remove any persons or property by legal action or by self-help with the use of reasonable force and without liability for damages. Such right shall be cumulative and in addition to all other remedies available to the Lessor under applicable law. Lessor may recover reasonable attorney's fees and costs expended to enforce the provisions hereof. In the event of an uncured default, Lessor may initiate an action, without further notice, for an unlawful detainer or for damages with venue being placed in Franklin County, Washington, and with the substantially prevailing party entitled to an additional judgment against the other for their reasonable attorneys' fees and costs incurred incident to said action. Waiver by either parry of strict performance of any provision of this Lease shall not be a waiver of or prejudice the party's right to require strict performance of the same provision in the future or of any other provision. 16. Notices. Any notice under this Lease shall be deemed given when actually delivered or when deposited in the United States mail, as certified mail, postage prepared, Agricultural Lease - 6 addressed as follows: City of Pasco — Public Works Department. 525 N 3rd, P.O. Box 293; Pasco, WA 99301 17. Succession. Subject to the above -stated limitations on assignment of Lessee's interest, this Lease shall be binding upon and inure to the benefit of the parties, their respective personal representatives, successors, and assigns. 18. Inspection of the Premises. Lessor reserves the right to itself and its agents to go upon the Premises at reasonable and proper times to inspect the same for purpose of determining that the Lease is being kept and performed by the Lessee. 19. Time is of the Essence. The parties acknowledge and agree that time is of the essence with respect to all of the terms, conditions and provisions of this Lease. 20 Entirety of Lease. This document and its exhibits, incorporates the entire agreement of the parties. No prior representation, stipulation, agreement, or understanding will be valid or enforceable unless incorporated herein. Any changes or additions to this Lease or its attached exhibits shall be in writing and executed by the parties hereto. Neither the Lessor, nor the Lessee shall be bound by verbal or implied agreements. Agricultural Lease - 7 DATED this ( day of �1Ab`Qt/d . 2023. LESSOR: City of Pasco Adam Lincoln, City Mpirager State of Washington ) ss. County of Franklin ) LESSEE: Middleton Six Sons Farms I certify that I know or have satisfactory evidence that Adam Lincoln is the person who appeared before me, and said person acknowledged tha he she signed this instrument, on oath stated that he he was authorized to execute the instrument and acknowledged it, as the City Manager o the CITY OF PASCO, a Washington municipal corporation, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. SUBSCRIBED and SWORN to before me this _'2)(2��day of Qr C 20,R3. NICOLE EDWARDS NOTARY PUSUC #23024488 STATE OF WASHWGTON NOTARY PUBLIC in and for the State of Washington COMMISSION EXPIRES JUNE 7 2027 Residing at My Commission Expires: S State of Washington ) ss. County of Franklin ) SUBSCRIBED and SWORN to before me this day of , 20_jj. Notary Pub Sbte of Wnbiuo• OTARY PUBLIC in and for the State of Washington JANETTE SALAZAR ROIMERO Residing at VA(,ky, � � LICENSE # 19'EX MY COMMISSION EXPIRES My Commission Expires: P bI Ha 202 V JA N UA RY 6. 2026 Agricultural Lease - 8