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HomeMy WebLinkAboutMiddleton Six Sons FW-1091CITY OF PASCO Agricultural Lease No. FW- 1091 _ THIS AGRICULTURAL LEASE is entered into this Smolt day of April, 2017, 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 Proper . Lessor leases to Lessee, and Lessee leases from Lessor, on the terms and conditions stated below, crop circles numbered 3 and 15 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 11, and SW 1/4 Section 2, Township 9N, Range 30E and commonly known as Circles 3 and 15 in Franklin County WA and comprising 256 acres. 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. Lessor reserves the right to limit the Lessee's number of crop cuttings to three (3) cuttings per season unless additional cuttings are approved, in advance, by the City. The City's approval for additional cuttings shall not be unreasonably withheld dependent upon the Lessor's operational requirements of its reuse facility. 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, and pipelines to the Leased Premises. The parties further understand and acknowledge that both systems shall be operated by Lessor, and 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 Agricultural Lease - 1 lbaC� 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 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. (a) [_] (check box if applicable). Single Season. The term of the Lease shall be for: Circles 3 and 15 commencing on the 15th day of August and terminating on the 31st day of October, 2017. unless earlier terminated or renewed as provided below. In the event this Lease terminates prior to the completion of harvest, the tern 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 tern of this Lease. (b) LI j (check box if applicable). Renewal. Lessee shall have the option to renew this Lease for two (2) additional growing seasons commencing and terminating on the dates as provided in subsection (a) above for the following calendar year conditioned upon: (i) Lessee's written notice of its intent to exercise the option to renew no later than November 30 of the current year; (ii) agreement with the Lessor as to the rent to be applicable for the renewal term as an amendment to Section 4 below by December 15 of the current year; and (iii) Lessee's prior faithful performance of the terms and conditions of this Lease. 4. Rut. (a) Lessee shall pay as rent for said Premises the following amounts: Circle Nos. Crop Rent Per Acre Total Rent 3 and 15 New Seeding Alfalfa $350 $89,600 Agricultural Lease - 2 (b) Washington State Leasehold Excise Tax shall be paid by the Lessor (c) First-half lease payment in the sum of $ 44,800 00® shall be due and payable on/or before April 15, 2017; and the second half lease payment in the sum of $44.800 shall be due and payable on/or before October 31 201. In the event of renewal, subsequent year payments shall be made on the same dates as provided above. (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. (f) For each renewal term as provided in Section 3(b) above, the Parties shall determine the rent based upon the appropriate market price, crop yields, and cost of production records of which shall be provided by the Lessee. 5. 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 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 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 Irrigation 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 Agricultural Lease - 3 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 glgy 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. Lessor 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 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. 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 Lessor, both as to performance and payment of costs, except those repairs and replacements as may be caused by the Lessee, its agents or employee's negligent acts or omissions. The Lessor shall make reasonable efforts to provide reuse wastewater that will not clog the irrigation system. Both parties, however, must assume there will be a certain amount of unclogging required Both Agricultural Lease - 4 parties agree that Lessor shall be primarily responsible for any unclogging, but also agree that in the event that Lessor is unable to do so, Lessee may perform unclogging at their discretion. Operation of the water and irrigation system shall be upon a schedule as approved by Lessor. 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 (121/6) 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. 10. Chemicals and Fertilizers. In addition to those requirements as provided in Section 2 above, 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. Any and all fences, gates, roads, field accesses, and other improvements to the property (including the irrigation system) shall be maintained by Lessor. Lessee shall eradicate weeds, particularly puncture -vine and prevent all Agricultural Lease - 5 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. 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 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 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. Agricultural Lease - 6 (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. 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 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. 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. Agricultural Lease - 7 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 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 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. Agricultural Lease - 8 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: City of Pasco c/o R. Henry Johnson 2202 West Clearwater Avenue Kennewick WA 99336 Lessee: _Middleton Six Sons Farms 1441 Pasco Kahlotus Road Pasco, WA 99301 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. Entirely_ 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 day of 201 Agricultural Lease - 9 LESSOR: City of Pasco Dave a ell, City Manager State of Washington ) SS. County of Franklin ) LESSEE: Middleton Six Sons Farms ` ► ��TO►► .. Irr•-� •i. I certify that I know or have satisfactory evidence that Dave Zabell is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath stated that he/she 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. SUBSCRIBED and SWORN to before me this/' -day of a*4__ 20J------------------ 7 TONI L. ZUNKER NOTARY PUBLIC STATE OF WASHINGTON COMMISSION EXPIRES MARCH 3, 2020 State of Washington ) SS. County of N Residing at Q My Commission Expires: the State of Washington I certify that I know or have satisfactory evidence that J�1 I I W 4W16— is the person who appeared before me, and said person acknowledged that he/she signed this instrument, on oath staled that he/she was authorized to execute � c�u�te, �the instrument and acknowledged it, as the of /�,i6i6iA&M gj n aa5,� 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 2ldaay of TI , 20jj_. Agricultural Lease - 10 NOT�ff�iii� PUKIC irt�and for th&8tate of Washington Res i ' g at My Co ission Expires: j"—