Loading...
HomeMy WebLinkAboutMiddleton Six Sons FW-1073CITY OF PASCO Agricultural Lease No. FW 1073 PARTIES: The parties to this Lease are CITY OF PASCO, a Washington Municipal Corporation ("Lessor"), and Middleton Six Sons Farms, of 1441 Pasco Kahlotus Rd., Pasco, Washington 99301 ("Lessee"). DESCRIPTION OF LEASED PROPERTY: Lessor leases to Lessee and Lessee leases from Lessor, on the terms and conditions stated below, the following described property ("premises"): A portion of the irrigated farmland located in the SE '/4 and the NW '/4 Section 11, Township 9N, Range 30 E WM, Franklin County Washington commonly known as Circle 3 and 5, (approximately 256 acres); PROCESS WATER REUSE FACILITY & 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 an alfalfa 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 standing 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 located on 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 Lessees crops and farm lands as outlined in the current City of Pasco Farm Management Plan (FMP) 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 FMP 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 FMP. The Lessee shall report to the Lessor the application and type of all commercial fertilizer applied within ten (10) days before application. Over -application of commercial fertilizers is prohibited to protect the ground water. 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 - 1 - CITY OF PASCO - Middleton Lease # FW 1073 including moisture tests taken on the Lessor's farmlands. The Lessor shall provide a contact person for coordination of the program. TERM OF LEASE: The term of this lease as to Circle 3 shall be from August 10, 2011 through October 31, 2014 and as to Circle 5 from November i, 2011 through October 31.2012; or completion of harvest whichever occurs first, unless this Lease is sooner terminated as herein provided; and further provided that the term of the lease shall be extended for a reasonable period of time to allow completion of harvest. Completion of harvest contemplates the windrowing and baling of corn stalks after harvest of the grain on Circle 5. RENT: Lessee shall pay as rent for said premises the following amounts: Rents are calculated for Circle 3 on the basis of new seeding alfalfa with rent set at $500 / acre x 128 acres = $64,000 and Circle 5, one cutting of alfalfa followed by field corn, 128 acres x $500/acre = $64,000 total for 2012 = $128.000 2012 On or before 4/30/10: first half $64,000 On or before 10/31/10: second half $64,000 Total $128,000 incl. Leasehold Tax State Leasehold Excise Tax in the amount of 12.84% of initial rent is included in the total rent. (Calculated Initial Rent = approx. $113.435.) For years 2013 and 2014, rent for Circle 3 shall be $64,000 annually with the first half due respectively $32,000 on or before April 30 and the second half, $32,000 due on or before October 31 of each respective year of this lease agreement. All payments shall be made to City of Pasco, c/o R. Henry Johnson, 2202 W. Clearwater Ave., Kennewick, WA 99336. Lessee shall have 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 15 days of sale of crops. RENTAL ADJUSTMENTS: 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 care, not meeting the IMP 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 $15.00 per acre and will be in addition to the payment of rent as described above. Said charge does not replace the responsibility of 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 - 2 - CITY OF PASCO - Middleton Lease # FW 1073 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. Irrigation Guide. (See Franklin Conservation District) 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. USES OF THE PREMISES: The premises shall be used for the raising of agricultural crops in accordance with the FMP and for no other purpose. Lessee shall grow alfalfa on Circle 3, 2012 - 2014 and a cutting of alfalfa followed by field corn on Circles 5, 2012; Said use shall be further restricted by the terms of any federal, state or local law or regulation applicable thereto, and the term of: a) Lessor's Water Permit from the State of Washington b) The Ditches and Canal Agreement between the Lessor and the United States dated August 5, 1964, recorded in Vol. 2, C.B.D. at page 504, records of Franklin County. c) The Agreement relating to Advanced Irrigation Development by Burlington Northern of Its Lands in the Greenbelt Area of the Columbia Basin Project dated October 24, 1973, recorded under Auditor's File No. 342199 in Vol. 57 at pages 363-372, records of Franklin County and 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 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. Lessee shall further adhere to the crop rotation and fertilizer requirements and/or limitations as set forth in the current "Farm Management Plan" (IMP). 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 responsible for all electrical power charges on the irrieated fields, except as limited under paragraph entitled RENTAL ADJUSTMENTS - 3 - CITY OF PASCO - Middleton Lease # FW 1073 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 a center pivot irrigation system including a well, a pipeline, a turbine pump, an electrical pump motor and switchgear. Lessee has inspected said irrigation system and accepts the same as being in proper working condition. The famishing of said irrigation system 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 cost, provided, however, that if repairs or replacement is required of the turbine pump, booster pumps or pipeline through no lack of maintenance or negligence of the Lessee, Lessor shall pay the cost of said repairs or replacement provided Lessor or its agent is afforded the 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. 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. 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 agreement requiring lessee to accept such delivery(ies) and application at the behest of 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 agreement 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. Any resolution of a claim shall be by the Lessor's insurance adjuster. LIENS: 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 - 4 - CITY OF PASCO - Middleton Lease # FW 1073 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 18% per annum 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. CHEMICALS AND FERTILIZERS: Lessee shall apply chemicals and fertilizers to the premises according to standards acceptable to the industry and consistent with the FMP. 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 fertilizers used. Lessor shall submit all chemical and fertilizer application programs to the Lessee at least ten (10) days prior to any application. 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 "Farm Management Plan." 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. 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 prevent all noxious and other weeds from encroaching upon the premises, utilizing practices approved by the local weed control authorities. 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, cost, 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 - 5 - CITY OF PASCO - Middleton Lease # FW 1073 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. 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 coverage 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 that the premiums therefor 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. INTEREST: Any amount due by the Lessee to the Lessor not paid within fifteen (15) days shall bear interest at the rate of eighteen (18%) per annum from the date due. 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. TERMINATION: At the end of the term or upon earlier termination for other cause, Lessee shall return the premises (including any equipment which has become a part thereof in as good or better condition as when received and accepted, ordinary wear and tear excepted). ASSIGNMENT: No part of the 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. Any additional rents collected by Lessee from sub -lessee above the rental owed by Lessee hereunder shall benefit Lessor herein dollar for dollar. This provision shall equally apply to - 6 - CITY OF PASCO - Middleton Lease # FW 1073 transfers arising by operation of law, or transfers to and by trustees in bankruptcy, receivers, administrators, executors and legatees. DEFAULT: The following shall be events of default: failure of Lessee to comply with any term or condition or fulfill any obligation of the Lease 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. 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. NON -WAIVER: 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. 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 prepaid, addressed as follows: LESSOR: CITY OF PASCO R. Henry Johnson 2202 W. Clearwater Ave. Kennewick, WA 99336 LESSEE: Middleton Six Sons Farms C/o William Middleton 1441 Pasco Kahlotus Rd Pasco, WA 99301 Or to such other address as may be specified from time to time by either of the parties in writing. 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. - 7 - CITY OF PASCO - Middleton Lease # FW 1073 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 the purpose of determining that the Lease is being kept and performed by the Lessee. 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. ENTIRETY OF LEASE: This document incorporates the entire agreement of the parties. No prior representation, stipulation, agreement or understanding will be valid or enforceable unless incorporated herein. DATED this- day of S' 20 /1 LE Lo LESSEE: MIDDLETON SIX SONS FARMS N 1Z11�.