HomeMy WebLinkAboutUnderwood Farms Lease FW-1082CITY OF PASCO
Agricultural Lease No. FW -1082
THIS AGRICULTURAL LEASE is entered into this !!-day of September, 2014, by
and between the City of Pasco, a Washington Municipal Corporation ("Lessor"), and
UnderwoodFarms LLC ("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, crop circles numbered 2/16.3.8,11, and
15 for the production of agricultural products upon the following described real property
("Premises"):
A portion of the irrigated cropland located in the N %: and center Section 11; N.W. '/4
Section 3; and W % Section 2 all in Township 9N, Range 30 E, commonly known as Circles,
2/16.3.8.11, and 15 comprising 688 acres all in Franklin County, WA.
2. Process Water Reuse Facility and Wastewater. Having been fully apprised of
the critical need to apply reuse water to the Premises at such times as may be imposed by Lessor,
arising from Lessor's obligation to timely distribute such reuse water from affiliated food
processing facilities, Lessee, shall without limitation, submit to a crop harvest scheduling plan
prepared or approved by Lessor. Lessee agrees to strictly adhere to such plan at the behest of
Lessor with the specific objective of maintaining availability of adequate field areas for the
application of reuse water to field crops.
The parties understand and acknowledge that the Leased Premises are served by two
watering systems, specifically (1) the irrigation system consisting of wells servicing the Leased
Premises, and associated pipes and other fixtures; and (2) the fruit and vegetable process
wastewater system, consisting of the offset pump station operated by Lessor, and pipelines to the
Leased Premises. The parties further understand and acknowledge that Lessor shall, subject to
the further terms hereof, have the discretion to regulate the blend of wastewater and well water
delivered to the Leased Premises for irrigation purposes.
The Lessee agrees to coordinate with the Lessor and accept vegetable and fruit process
wastewater to be applied to the Lessee's crops and farmlands as outlined in the current City of
Pasco Crop Rotation Plan and Farm Operations Report (CRP/FOR) and State Discharge Permit
No. ST5369. The Lessor shall have the final say on the wastewater application rate and
schedule. The Lessee agrees to abide by the CRP/FOR requirements including the proper
operation of the circle and well pumps, a balanced fertilizer program for the specific crop taking
into consideration the total nitrogen, nitrate, and TKN of the wastewater, well water, and
residuals in the soils as identified in the CRP/FOR. No fertilizer shall be applied upon the
premises without the Lessor's prior written consent, which consent shall not be unreasonably
withheld nor delayed. Commercial fertilizers shall not be applied in excess of suggested label
application, or in a manner inconsistent with label instructions. Lessor's management and
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a �y o3
nitrogen applied to the premises is critical to the utilization of the premises as a portion of its
Reuse Facility. Therefore, any violation of this section shall constitute a substantial breach of
this Lease. The Lessee shall report to the Lessor the results of all tests on the crops and yield.
The Lessee shall provide to the Lessor copies of any and all test results including moisture tests
taken on the Lessor's farmlands.
3. Term of Lease. The term of the Lease shall be for: (a) Circle(s) 2/16, 8, and 11
commencing on the Is' day of October. 2014 and terminating on the 15th day of Au u , 2015; (b)
Circle(s) 3 and 15 commencing on the 1st day of October, 2014 and terminating on the 315` day
of October, 2015 unless earlier terminated or renewed 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. Lessee shall give a minimum of
ten (10) days written notice to Lessor before completion of harvest or end of planting. Prior to
vacating the Leased Premises, Lessee shall leave the Leased Premises and all improvements
thereon in the state of repair and cleanliness required to be maintained by the Lessee during the
term of this Lease.
4. Rent.
(a) Lessee shall pay as rent for said Premises the following amounts:
Circle No.
Crop
Rent Per Acre
Total Rent
2/16,8,11
Potatoes
$900
$387,000
3 and 15
(15) Timothy
(3)Alfalfa/Corn
$500
$128,000
$515,000
(b) Total rent includes Washington State Leasehold Tax in the amount of 12.84% which shall
be paid by Lessor. [Calculated rent= approx. $456,398.44 (x1.1284 =total rent of $515,000.)]
(c) First half lease payments, $257.500 shall be due and payable on Anril 1. 2015 and the
second half, $257.500 on October 30, 2015.
(d) 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. Lessee shall have the City of Pasco included as payee on any
check received by the Lessee from the sale of crops from these Premises as long as there
is any rental or other charges for repair and maintenance due and owing by the Lessee.
All payments shall be remitted within fifteen (15) days of sale of crops.
(e) 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.
5. Rental Adiustments. Lessor retains the right to assess additional charges for
circles which are not planted in a timely fashion to cover crops where and when appropriate for
best cultural case, not meeting the CRP/FOR crop schedules, or on which wind erosion occurs.
The extent of the charge shall be at the discretion of the Lessor, and will not exceed $20.00 per
acre and will be in addition to the payment of rent as described above. Said charge does not
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supplant the responsibility of the Lessee to establish a cover crop. Lessee agrees that since
Lessor is responsible for the cost of electrical power to distribute irrigation water to the Leased
Premises, it is justified for Lessor to impose reasonable limits on total irrigation water used.
Accordingly, Lessor may at its sole discretion add an assessment to Lessee's final annual rental
payment of an amount equal to the actual cost of power to distribute irrigation water to the
Leased Premises when water usage for "best -practice" crop production exceeds the standard for
the subject crop requirements in the relevant area of Franklin County as expressed in the
Washington Imgation Guide. Water applied at the preference of Lessor for the sole purpose of
consuming "process re -use water" shall not be considered as contributory to the "crop
production" application expressed herein.
6. 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, in compliance with the CRP/FOR. 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 reuse wastewater treatment and application. Accordingly,
throughout each 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, including without limitation,
by requiring Lessee to accept reuse wastewater for disposal on the Premises in such quantities
and at such times as determined by Lessor. 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.
7. Crop Damage from Application of Wastewater. Lessor states that with respect
to any timing, quantity, or quality of reuse wastewater which may be delivered to Lessee and
applied to Lessee's crops under provisions of this Lease requiring Lessee to accept such
delivery(ies) and application on the behest of the Lessor, it is the intent of Lessor not to cause
crop damage by such application of wastewater, nor to disavow responsibility for damage which
might demonstrably occur on said crops solely from such application. However, the parties to
this Lease having previously observed the nature of wastewater applications are fully cognizant
not only of the uncertainties relating to the developing technology of the process, but also of the
difficulty in proving crop loss as having been exclusively caused by said waste applications.
Accordingly, while Lessor shall make every reasonable effort to avoid delivering wastewater at
such times and under such circumstances as are likely to cause harm to crops, the burden of
proof of any damage claimed by Lessee to have been caused to crops of Lessee, shall rest solely
with Lessee.
8. Water and Irrigation System. Lessee shall be responsible for all costs of
operating the irrigation system on the Leased Premises, provided; however, that Lessor shall be
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responsible for the payment of irrigation power charges except as limited under Section 5 herein.
Lessee shall not be responsible for the cost of reuse water pumped to the Leased Premises by
Lessor.
The Leased Premises come equipped with center pivot irrigation systems, including
wells, pipelines, turbine pumps, and electrical pump motors and switchgear. Lessee has
inspected said irrigation system and accepts the same as being in proper working condition. The
furnishing of said irrigation shall imply no warranty on the part of the Lessor to provide or
guarantee an adequate water supply or the continued operation of the irrigation system. All
maintenance, repair, and replacement of parts of said irrigation system shall be the obligation of
the Lessee, both as to performance and payment of costs, provided, however, that if repairs or
replacement is required of the turbine pumps, pump motors, booster pumps, associated electrical
wiring and switch gear, or pipelines through no lack of maintenance of negligence of the Lessee,
Lessor shall pay the cost of said repairs or replacement provided Lessor or its agent is afforded a
reasonable opportunity to affect the timing and location of the needed repairs in order to
ascertain reasonableness in the cost of any such repair. The Lessor shall make reasonable efforts
to provide reuse wastewater that will not clog the irrigation system. The Lessee, however, must
assume there will be a certain amount of unclogging required by the Lessee. Operation of the
water and irrigation system shall be upon a schedule as approved by Lessor.
Attached, marked "Exhibit B", is a list of some repair maintenance items regularly
required of the irrigation system. Attached, marked "Exhibit C", are the operating and
maintenance instructions specifically for the pump. Lessee agrees to timely and regularly follow
said operating and maintenance instructions and to perform the maintenance herein specified or
required. Maintenance and repair shall include any work required as a result of the negligent or
wrongful act of others, except those of the Lessor. In the event Lessee fails to perform or pay for
appropriate maintenance, repair, or replacement, Lessor may elect to do so and shall be entitled
to recover the expense from the Lessee. Exercise of said election shall not constitute a waiver of
Lessee's duty and responsibility to maintain, repair, and replace parts of the irrigation system.
9. 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.
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10. 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
standards stated within the CRP/FOR. 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.
11. 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
to a cover crop to the specifications of the Lessor within fifteen (15) days after each harvest, as
appropriate and consistent with the overall objective of the CRP/FOR. Crops will be rotated so
that potatoes will not be planted two (2) years consecutively in the same field. 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 for this practice. Grazing of crop aftermath is not permitted.
12. 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. All fences, gates, and other
improvements to the property (including the irrigation system) shall be maintained in good
condition and given up upon termination of the Lease in as good a condition as received at the
commencement of this Lease, ordinary wear and tear excepted. 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 accesses in good, passable condition,
particularly when roadway and access damage tends to become severe during periods of high
truck volume to the reasonable satisfaction of the Lessor.
13. 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. Toric. 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
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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,
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 parry 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.
14. 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.
15. 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.
Agricultural Lease - 6
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 further agrees to obtain and maintain at its expense all-risk comprehensive
insurance on the irrigation equipment, in a reasonable amount to be determined upon
consultation with Lessor, to guard against loss for the duration in which Lessee exercises custody
and control of such equipment, from fire, freeze, crash, collision and other hazards common to
such equipment.
16. 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.
17. Improvements. All improvements placed upon the Premises during the term of
this Lease shall become a part of the Premises and the property of the Lessor, unless the Lessor
agrees otherwise. Lessor may require Lessee to remove any property placed upon the Premises
which the Lessor deems unfit to remain thereon at the termination of the Lease. If the Lessee
fails to remove the same when so requested, Lessor may do so and charge the expenses thereof to
the Lessee.
18. Sublease or Assignment Prohibited. 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. This provision shall equally
apply to transfers arising by operation of law, or transfers to any by trustees in bankruptcy,
receivers, administrators, executors, and legatees.
19. 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
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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 parry entitled to an additional judgment
against the other for their reasonable attorneys' fees and costs incurred incident to said action.
Waiver by either party 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.
20. 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,
addressed as follows:
Lessor: Lessee:
City of Pasco Underwood Farms, LLC
c/o R. Henry Johnson 358 Clovemook St.
2202 West Clearwater Avenue Richland, WA 9935
Kennewick WA 99336
Or to such other addresses as may be specified from time to time by either of the parties
in writing.
21. 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.
22. 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.
23. 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.
24. 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.
DATED this 15u' day of September , 2014.
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LESSOR:
City of Pasco
wave Zabe anager
State of Washington )
ss.
County of -Franklin )
LESSEE:
Underwood Farms, LLC
A�
By: '1
Authorized Officer
I certify that I know or have satisfactory evidence that �>y� 1D& is the
person who appeared before me, and said person acknowledged thatjjg�she signed this instrument, on
oath stated that&khe was authorized to execute the instrument and acknowledged it, as the City Manager
of 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.
`tj��j3 and SWORN to before me this day of� 206
�.`��� ss;ori FAF';-.00 �{
_ •o
0�
NOTARY PUBLIC in andr State of Washington
Residing at
"� j'� 1``�. My Commission Expires:
State of Washington )
: SS.
County of 74- )
I certify that I know or have satisfactory evidence thatiG�•,� fva, C is the person
who appeared before me, and said person acknowledged that @se he signed this instrument, on oath stated
that Qi /she was authorized to execute the instrument and acknowledged it, as the
of 4�,,,o, L('—, 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 V day of/4�, 20/
1``Nuuupr���
`�6 OSBI 6 js
EA,e
NOTARY NOTARY PUVIC in and for the State of Washington
-
col PUBLIC — Residing
z 7 :• .'0�� My Commission Expires: �f �r
EXHIBIT A
LEGAL DESCRIPTION
A portion of the irrigated cropland located in the N '/2 and center Section 11; N.W. '/4
Section 3; and W '% Section 2 all in Township 9N, Range 30 E, commonly known as Circles,
2/16,3,8, 11, and 15 comprising 688 acres all in Franklin County, WA.
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