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BELLS FLATS TR B-1 OF TR B - Supplemental InformationAMENDMENT TO Material Sales Contract Aleutian Materials, Inc. Tract's B -1 and B -2, Bells Flats Subdivision AMENDMENT, made this 27 day of ilD Grt' , 2000, by and between the KODIAK ISLAND BOROUGH, "KIB ", and ALEUTIAN MATERIALS Inc., "AMI": WHEREAS, the contract entered into between the parties,did not make provisions for the payment of real property taxes assessed on the Premises; and, WHEREAS, the parties agreed to an amendment to the contract on Sept. 7, 1984; and, WHEREAS, the method used for dealing with property taxes in that amendment does not comply with State Law, which requires the payment of property taxes and does not allow KIB the legal authority to exempt possessory interests in real property; and, WHEREAS, AMI requests the option to renew for an additional 5 years pursuant to the agreement, NOW, THEREFORE, in consideration of the promises and mutual covenants of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties hereby adopt this amendment, and agree that Paragraph 6 of the Material Sales Contract dated July 7, 1982 and amended September 7, 1984, shall be amended as follows: 6. Annual Use Fee. (a) An annual use fee will be paid to KIB by the AMI on each anniversary data occurring during the term of the contract. The annual use fee for the tract of land described in Section 1 above is $5,000 and resulted from competitive bidding on June 24, 1982. No refund will be made to AMI for any portion of a year remaining if this contract is terminated or cancelled. (b) The annual use fee of $5,000 will be reduced dollar for dollar for the amount of property taxes paid on the premises during the calendar year assessed against AMI's possessory interest in KIB's land if the annual use fee is timely paid in full. If AMI does not timely pay in full this section does not apply and the annual fee of $5,000 will be due in addition to the property taxes lawfully assessed against the Premises. FURTHER: AMI acting in good faith is in complete compliance with all provisions of the agreement and pursuant to Article 5 of the agreement a timely request for renewal of the option for extension having been received, parties agree that Article 4 of the Material Sales Contract dated July 7, 1982 and amended September 7, 1984 and further amended by this document shall be further amended as follows: 4. Term. The term of this contract is twenty five (25) years, beginning on July 1, 1982, and ending on June 30, 2007, (the balance of this section remains in force and unchanged). IN WITNESS WHEROF, the parties have executed this Amendment to the Material Sales Contract the day and year first written above. 1 OWNER: KODIAK ISLAND BOROUGH By David Jensen, Boro CONTRACTOR: ALEUTIAN MATERIALS By 'k} John Zbitnoff, Vice President STATE OF ALASKA } } THIRD JUDICIAL DISTRICT } ss: THIS IS TO CERTIFY that on the day of L{ , 2000, before me, the undersigned, a Notary P blic in an he State of Alaska, duly commissioned and sworn as such, personally appeared �� `l d -iLvk , to me known to be the Manager of the KODIAK ISLAND BOROUGH, a Municipal Corporation, and known to me to be the person who executed the within Amendment to the Material Sales' Contract on behalf of the Municipal Corporation herein named, and acknowledged to me that the same was signed as a free act and deed of said Municipal Corporation for the uses and purposes therein stated and pursuant to its ordinances or a resolution of its Assembly. WITNESS_�,,.��:«;,; d notarial seal the da and - • first written above. THIRD JUDICIAL DISTRICT } } } ss: Notary Pub is in and for Alaska My commission expires Q,/-( l // THIS IS TO CERTIFY that on the ,O) day of Odo box- • , 2000, before me, the undersigned, a Notary Public 'n and or the State of Alaska, duly commissioned and sworn as such, personally appeared 7n L vi i-h o 1 , known by me to be the Vice President of Aleutian Materials Inc., a corporation, and known to me to be the person who executed the within Amendment to the Material Sales Contract on behalf of the corporation herein named, and acknowledged to me that the same was signed as a free act and deed of said corporation for the uses and purposes therein .stated and pursuant to its Bylaws or a resolution of its Board of Directors. • WITNESS my hand and notarial seal the da and y first written above. Notary Public in and for Alaska i My commission expires �-/ 41 !�� COOtaQ* -D,q- Kodiak Island Borough OFFICE of the 11 /1ANAGER 710 Mill Bay Road Kodiak, Alaska 99615 Phone (907) 486-9301 (907) 486 -9374 E -mail: djensen @kib.co.kodiak.ak.us October 19, 2000 Final Finding and Decision Extension of Material Sales Contract Aleutian Materials, Inc. Tract's B -1 and B -2, Bells Flats Subdivision Requested Action: Aleutian Materials Inc. has submitted a request to amend the existing Material Sales Contract with the Kodiak Island Borough by adding 5 years to the contract generating a new termination date of June 30, 2007. Legal Authority: This action is taken pursuant to authority granted under AS 29.20.500 and KIB 2.20.030 J. 2. and by extension the Material Sales Contract Section 5 Option to Renew.1 Discussion: In response to the applicant's request, a compliance review of the contract, case file and property..was.conducted. Numerous items were found on -site that resulted in a Notice of Default dated 9/27/2000. The items referenced in the Notice are required to be cured prior to granting of the extension request. The existing contract is in force and the Kodiak Island Borough cannot unreasonably deny the applicants request. Pertinent Issues: As part of the review it was found that the amendment to the lease2 illegally exempted the taxable possessory interest in the property in violation of AS 29.45.0303 and must be deleted. It is important to point out that the basis and logic for the exemption still applies, in that at the time of bidding there was no notice to the bidders that the property would be subject to possessory interest property taxes except for improvements. ' 5. Option to Renew. This contract may be renewed for one -five (5) year period. Said option to renew can be requested by written notice to the Owner not less than sixty (60) days prior to the expiration date specified in Section 4 above. 2 KIB Resolution No. 89 -32 -R Passed and Approved 7/6/89. 3AS 29.45.010 (c) If a tax is levied on real property the tax must be assessed, levied, and collected as provided in this chapter. AS 29.45.030 (a) (1) (A), a private leasehold, contract, or other interest in the property is taxable to the extent of the interest. Logic dictates that the bid price of $5,000 per tract per annum would have been affected if the property tax liability was known. I think an appropriate solution to this problem would be credit the annual payment for the amount of taxes paid pertains to the taxable interest in the land. Any improvements or personal property taxes should not be part of the credit as they were not associated with the original bid. This process would bring us into compliance with State Law and should not adversely affect the financial position of the lessee as the property tax is estimated to be less then the annual fee. Another issue is the use of the property for storage and maintenance of equipment not related to gravel extraction. A residential structure was also found on the property and based on our attorney's advice, both of these uses of the property are not allowed.4 Another issue is the asphalt plant on the site and whether that is an allowable use under the agreement. My research of the records found that this is an allowable use under the agreement 5 Findings: In order to fully comply with the agreement and State Law, the attached amendment will need to be completed clarifying the treatment of property taxes and extending the Contract term. The Contractor has removed the residential structure and all equipment, machinery and . other items of personalty not directly associated and necessary for the extraction and remanufacturing of gravel resources and is in compliance with the Agreement. 'PGA— Ccu-CU 4. l9, a000 . Pat Carlson, Assessor -Lands Manager, Kodiak Island Borough Date I, the undersigned, have reviewed the application, case file and the property and find the applicant is in compliance with the applicable B orough ordinances regarding zoning and permitting. i� ecr 1611,7200v ob Scholze, Date Acting Community Development Director, Kodiak Island Borough I, the undersigned, have reviewed KIB's financial records of the applicant pertaining to the contract payments and royalty fees and find that there are no outstanding financial liabilities and the required bonding is in force. 761,-4 1/4, C2 ,/7/ Karl Short, Date Finance Director, Kodiak Island Borough 4 Att. Op. Steven Gray Esq., 5/31/89 Pg. 4, Para 2, "Use of the property for storage of other equipment'and . machinery, or use of the property for living purposes is clearly not allowed by the Material Sales Contract. 5 Att. Op. Joel Bolger, Esq. 7/24/84. Final Decision: The administrative findings presented above have been reviewed and considered. A review of the case file and a physical inspection of the facility has been conducted and the applicant has been found in full compliance with the existing material sales contract. The following amendments are incorporated by agreement of the parties as authorized by Section 31 of the Agreement. Pursuant to the authority granted me I hereby approve an extension of the existing material- sales contract until June 30, 2007. David Jensen Manager, Kodi Borough Date • Kodiak Island Borough OFFICE of the MANAGER 710 Mill Bay Road •Kodiak, Alaska 99615 Phone (907) 486-9301 Fax (907) 486-9374 E-mail: djensen@kib.co.kodiak.ak.us October 19, 2000 Mr. John Zbitnoff, Vice President Aleutian Materials, Inc. P.O. Box 223 Kodiak, AK 99615 Dear Mr. Zbitnoff: I am writing in regard to the Notice of Default of the Material Sales Contract between your firm and the Kodiak Island Borough. After a staff review of the operation and contract we • determined that there were certain parts of the operation that were not in compliance with the contract. Due to your quick and diligent efforts, all of the items of concern have been adequately addressed and your operation is in full compliance with the Contract. The Notice of Default is hereby rescinded and no further action is required. David Jensen Manager, Kodiak Is ou kok Date