HomeMy WebLinkAboutAdden 10 LAG-10-001
Amendment No.10
AMENDMENT NO. 10 TO LEASE AGREEMENT LAG-10-001
(City of Renton to The Boeing Company)
THIS AMENDMENT No. 10 to Lease Agreement LAG-10-001 ("Amendment No. 10") is entered into
by the City of Renton, a Washington municipal corporation, and The Boeing Company, a Delaware
corporation, with reference to that certain lease designated as LAG-10-001 as amended as of the
date of entry of this Amendment No. 10,which is the ZI day of P y, 2018(the "Lease").
RECITALS:
1. WHEREAS, under the Lease, the City of Renton ("Landlord") has leased to The Boeing
Company("Tenant") certain land areas, facilities, and buildings (the "Premises")on the
Renton Municipal Airport, Renton,Washington (the "Airport"), until May 31, 2030; and
2. WHEREAS,Tenant is obligated to pay rental amounts as shown in the Lease's table in
Section 4.a., Minimum Monthly Rent; and
3. WHEREAS, Amendment 7-15 to the Lease amended the Minimum Monthly Rent to be
$107,578.98, plus Leasehold Excise Tax,and continuing until the sixth (6th) anniversary of
the Commencement Date of the Lease, which was determined to be June 1, 2016; and
Land Rental Rate Adjustment
4. WHEREAS, on January 8, 2015, a new land rental rate was established through an
arbitration process at$0.7252 per square foot per year; and
5. WHEREAS, as of June 1, 2016,the land rental rate was due for adjustment using the
arbitrated lease rate of$0.7252 per square foot per year, and continuing until the next
Adjustment Date, which is determined to be June 1, 2019; and
6. WHEREAS,Tenant is also responsible to Landlord for a land rental rate back-payment for
the period between June 1, 2016 and the date of entry of this Amendment No. 10; and
Through the Fence Access Fee Adjustment
7. WHEREAS, Landlord and Tenant have a Through the Fence Access Agreement under the
Lease; and
8. WHEREAS, in Amendment No. 2 to the Lease, on June 1, 2013,the Through the Fence
Access Fee was determined to be an annual amount of$288,171.35, and continuing until
the sixth (6th) anniversary of the Commencement Date of the Lease, which was
determined to be June 1, 2016; and
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9. WHEREAS, under section 4.A of Attachment A to the original lease LAG-10-001,the
automatic adjustment to the Through the Fence Access Fee is to be calculated using the
Consumer Price Index-Urban (CPI-U); and
10. WHEREAS,the CPI-U for April 2013 was 240.823 and the CPI-U for April 2016 is 253.815,
and the difference between the CPI-U of April 2016, as compared to April 2013, is 5.4%
(253.815/240.823 = 1.054 or 5.4%); and
11. WHEREAS, as of June 1, 2016,the Through the Fence Access fee was due for adjustment,
and using the CPI-U such adjustment brought the annual amount to$303,732.60
($288,171.35 X 1.054), and continuing until the next Adjustment Date,which is determined
to be June 1, 2019; and
12. WHEREAS,Tenant is also responsible to Landlord for a Through the Fence Access Fee back-
payment for the period between June 1, 2016 and the date of entry of this Amendment
No. 10; and
Building Rental Rate Adjustment
13. WHEREAS, as of June 1, 2016,the building rental amount was due for adjustment. In
anticipation of that date and pursuant to the Lease section 4.b.2, in a letter dated March
10, 2016, Landlord notified Tenant by certified letter that the building rental rates would
be readjusted using a means other than the Consumer Price Index-Urban; and
14. WHEREAS, in August 2016, Landlord contracted with McKee Appraisal to conduct an
independent market appraisal of Airport buildings to determine fair market rent, and
McKee Appraisal prepared an appraisal report dated September 12, 2016 (the "September
2016 appraisal"); and
15. WHEREAS,Tenant and Landlord disagreed as to September 2016 appraisal's estimate of
fair market rent for Tenant's buildings 5-45 and 5-50,which ultimately led to additional
appraisal work. Specifically, Tenant engaged Valbridge Property Advisors which prepared a
September 25, 2017 appraisal report of the fair market rent of Tenant's buildings 5-45 and
5-50(the "September 2017 appraisal"), and Landlord engaged McKee Appraisal to review
the September 2017 appraisal. In response, McKee Appraisal prepared a December 13,
2017 supplement(the "December 2017 appraisal")to the September 2016 appraisal; and
16. WHEREAS, after review of the 2016 and 2017 appraisal work, Landlord and Tenant agree
that the fair market rent for Tenant's buildings 5-08 and 5-09 (building 5-08: $8.40 per
square foot per year; building 5-09: $4.80 per square foot per year)was determined in the
September 2016 appraisal,the fair market rent for Tenant's building 5-45 ($7.80 per
square foot per year)was determined by the income approach method in the September
2016 appraisal, and the fair market rent for Tenant's building 5-50($6.50 per square foot
per year)was determined in the December 2017 appraisal; Landlord and Tenant further
agree that the adjusted building rent should be set using these values, plus Leasehold
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Excise Tax, and continuing until the next Adjustment Date,which is determined to be June
1, 2019; and
17. WHEREAS,Tenant is also responsible to Landlord for a building rental rate backpayment
for the period between June 1, 2016 and the date of entry of this Amendment No. 10; and
Utilities Beyond the Boundary of the Premises
18. WHEREAS, prior to the Lease Commencement Date of June 1, 2010,Tenant had installed
subsurface utilities for power, communications,fire systems, and compressed air pipe
improvements on Airport property beyond the boundary of the premises under LAG 877-
65 dated June 1, 1965, as amended ("Prior Lease"); and
19. WHEREAS, under the Prior Lease, off-premises utilities were not installed within areas
established by recorded easements or assessed lease rental rates; and
20. WHEREAS, as a provision of the lease negotiations,the Parties agreed to continue their
practice of not assessing lease rental rates for the off-premises utilities that were installed
prior to June 1, 2010; and
21. WHEREAS,Tenant is authorized to maintain and repair these pre-existing off-premises
utilities upon providing Landlord adequate notice and obtaining required construction
permits, ; and
22. WHEREAS, Landlord and Tenant agree that off-premises utilities installed from the date of
this Amendment forward shall be installed within easements and shall be subject to
assessment of lease rental rates; and
23. WHEREAS, Landlord will allow installation of new off-premises utilities with the required
easement to be provided within three months of completion of the installation of said
utilities, and easement lease rates will be assessed retroactively to the date the installation
is complete; and
24. WHEREAS, Landlord and Tenant agree that easement documents should be prepared,
executed, and recorded that will, after legal descriptions for easement areas have been
obtained pursuant to Section 9 of this Amendment No. 10, cover all of Tenant's off-
premises utility improvements (whether installed before or after June 10, 2010)
(collectively,the "Off-Premises Utilities"); and
25. WHEREAS, easements created for pre-existing off-premises utilities shall not be subject to
the assessment of an easement lease; and
26. WHEREAS, if a new utility is installed within an existing utility easement,there will not be
an additional easement lease assessment; and
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27. WHEREAS, utility easements will measure a minimum of ten feet wide; and
Order of Amendments to the Master Lease
28. WHEREAS a draft rent adjustment amendment was previously circulated between the
Parties as Amendment No. 8 to the Master Lease, but that document was not executed,
and the Parties subsequently executed an Amendment No. 9 to the Master Lease. To
avoid confusion,the Parties are proceeding with this amendment as Amendment No. "10,"
and it is anticipated that there will be no amendment numbered "8" to the Master Lease;
NOW,THEREFORE, IN CONSIDERATION OF THE TERMS AND CONDITIONS HEREIN CONTAINED AND
FOR OTHER GOOD AND VALUABLE CONSIDERATION,THE RECEIPT AND SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED, LANDLORD AND TENANT AGREE AS SET FORTH BELOW:
WITNESSETH:
Landlord and Tenant hereby amend the Lease (the Master Lease agreement, LAG-10-001, as
subsequently amended), in the following respects.
1. Definitions. The "Master Lease" means lease LAG-10-001 but excludes the amendments to LAG-
10-001. "Lease" means the Master Lease and Amendment Nos. 1, 2, 3,4, 5, 6, 7, 9, and 10 to the
Master Lease. There is no Amendment No. 8 to the Master Lease. All terms used in this
Amendment No. 10 that are defined in this Lease are used here as they are there defined.
2. Landlord and Tenant agree to a land rental rate of$0.7252 per square foot per year for the land
areas subject to the Lease and the land rental rate for utility easement areas shall be 33%of the
land rental rate; provided that the land rental rate shall not apply to land occupied by Off-Premises
Utilities that existed outside of the leased Premises prior to the Lease Commencement Date of
June 1, 2010.
3. Landlord and Tenant agree to the following building rental rates per square foot per year for the
building areas subject to the Lease:
5-08: $8.40
5-09: $4.80
5-45: $7.80
5-50: $6.50
756/760: $9.12
4. Effective June 1, 2016, Section 4.a. Minimum Monthly Rent, of LAG 10-001 is amended to read
as follows:
4. RENT AND FEES:
4.a. Minimum Monthly Rent: Tenant shall pay to Landlord a Minimum Monthly Rent in the
sum of ONE HUNDRED TWENTY THOUSAND FORTY-SIX DOLLARS AND EIGHT CENTS
($120,046.08),which amount is one-twelfth of the Total Annual Rent shown in the chart
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Amendment No.10
below, PLUS Leasehold Excise Tax as described in Section 5 of the Lease, without deduction,
offset, prior notice or demand, payable promptly in advance on the first day of each and every
month during the Term. All such payments shall be made to the City of Renton,Airport
Administration Office, Renton Municipal Airport, 616 West Perimeter Road, Unit A, Renton,
Washington 98057. The Minimum Monthly Rent is computed as follows:
Building Annual Rate 1'
Exhibit Parcel/Building Description Land SF SF per SF Annual Rent
A Land Position A-1 and 5-08/5-09 124,489 - $0.7252 $90,279.42
A Building 5-08 - 27,297 $8.40 $229,294.80
A Building 5-09 - 11,200 $4.80 $53,760.00
B Land Positions A-2,A-3,and 5-50 132,896 - $0.7252 $96,376.18
B Building 5-50 - 38,394 $6.50 $249,561.00
C Land A-4thru A-9&Compass Rose 467,809 - $0.7252 $339,255.09
D North Bridge Access 16,778 - $0.7252 $12,167.41
E Apron B 174,073 - $0.7252 $126,237.74
F Substation B-1(lease terminated) $0.00 $0.00
G Land 5-45 57,130 - $0.7252 $41,430.68
G Building 5-45 - 3,256 $7.80 $25,396.80
I Utility Installations Aprons A to B 22,148 $0.24 $5,315.52
1 Land 760 56,923 - $0.7252 $41,280.56
1 Building 756 - 325 $9.12 $2,965.68
1 Building 760 - 1,174 $9.12 $10,710.00
K Land 770 86,848 - $0.7252 $62,982.17
L Land 820 73,849 - $0.7252 $53,555.29
Total Annual Rent(plus Leasehold Excise Tax)= $1,440,568.33
Note relating to Exhibit B: The Parties acknowledge that in 2009 and 2010,the Tenant made
a substantial capital investment in improvements to the 5-50 Building, including numerous
alterations to the structure as well as improvements within the building. Tenant's financial
investment as well as these improvements and Tenant's use of the building as a paint hangar
have made this a unique building. Pursuant to provisions in the prior lease, Renton will assume
ownership of this building on June 1, 2010. So,while Landlord will charge Tenant rent for its
use,the Parties have agreed to treat this building differently from other buildings in certain
provisions of this Lease. The rental rate for the 5-50 Building shall adjust according to the
terms set out in this Paragraph 4, EXCEPT that in those years when the Minimum Monthly Rent
is adjusted to the "then current market rent", pursuant to Paragraph 4.b.2, below,the parties
agree that the appraisal (or other form of analysis to determine fair market rental) relating to
the 5-50 Building shall evaluate the building as an aircraft hangar, and as if the improvements
made by Tenant in 2009-2010,and described in Paragraph 4.d, below, had not been made.
However, the Parties agree that the condition of the building, as it is maintained by Boeing,
shall be considered in the appraisal (or other form of analysis)to determine the fair market
rental.
5. The difference between the Total Annual Rent amount of $1,440,568.33 shown in Section 4 of
this Amendment No. 10 and the Total Annual Rent amount of$1,290,947.73 shown in Section 2 of
Amendment No. 7 to the Lease is One Hundred Forty-Nine Thousand Six Hundred Twenty Dollars
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and Sixty Cents ($149,620.60) OR$12,468.38 per month ($149,620.60/12) per month (the "Back-
payment Monthly Rate for Rent Adjustment"), PLUS Leasehold Excise Tax. Within thirty(30) days
of the date of entry of this Amendment No. 10,Tenant shall pay to Landlord a lump sum of the
Back-payment Monthly Rate for Rent Adjustment for the period beginning June 1, 2016 and ending
with the first day of the month AFTER this Amendment No. 10 is entered into, PLUS Leasehold
Excise Tax. For example, if this Amendment No. 10 is entered into on April 2, 2018, the amount
due from Tenant to Landlord shall be $286,772.74(Calculation: Back-payment Monthly Rate for
Rent Adjustment of$12,468.38 times 23 months(June 1, 2016 to May 1, 2018)), PLUS Leasehold
Excise Tax.
6. Effective June 1, 2016, Section 4 of Attachment A to LAG-10-001 (Through The Fence Access
Agreement) is amended to read as follows:
4. Payment of Access Fee: Boeing shall pay to City an annual Through the Fence Access Fee in
the annual amount of Three Hundred Three Thousand Seven Hundred Thirty-Two Dollars and
Sixty Cents ($303,732.60), payable in equal monthly installments on the first day of each
month during the term of the Lease (including extensions thereof), subject to increases set out
below.
7. The difference between the Through the Fence Access Fee established in Section 6 of this
Amendment No. 10 and the Through the Fence Access Fee established in Section 3 of Amendment
No. 2 to the Lease is One Thousand Two Hundred Ninety-Six Dollars and Seventy-Seven Cents
($1,296.77) per month (Calculation: ($303,732.60-$288,171.35)/ 12) (the "Through the Fence
Monthly Back-payment"). Within thirty(30) days of the date of entry of this Amendment No. 10,
Tenant shall pay to Landlord a lump sum of the Through the Fence Monthly Back-payment for the
period beginning June 1, 2016 and ending with the first day of the month AFTER this Amendment
No. 10 is entered into. For example, if this Amendment No. 10 is entered into on April 2, 2018,the
amount due from Tenant to Landlord shall be$29,825.71 (Calculation: Through the Fence Monthly
Back-payment of$1,296.77 times 23 months (June 1, 2016 to May 1, 2018)).
8. Off-Premises Utilities shall be treated differently depending on when and where they were
installed. For this purpose, Off-Premises Utilities are divided into three categories as follows:
(A) The first category comprises Off-Premises Utilities installed prior to June 1, 2010.
These are referred to as"Type A Installations". Landlord hereby grants to Tenant an easement for
all Type A Installations. The easement area for each such easement is the area actually occupied
by such installation and a five-foot wide corridor on either side of such installations. Such
easement areas are referred to as "Type A Easement Areas."
(B) The second category comprises Off-Premises Utilities installed on or after June 1,
2010 within Type A Easement Areas. Such installations are referred to as Type B Installations.
Since Type B Easements are co-terminus with Type A Easements, Landlord hereby grants to Tenant
an easement for all Type B Installations, including those installed on, prior to, or after the effective
date of this Amendment No. 10. Whenever a utility installed within a Type A Easement Area
requires enlargement or expansion of the easement beyond the boundary of the Type A Easement,
the added easement area will be treated as a Type C Easement Area.
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(C) The third category comprises Off-Premises Utilities installed on or after June 1,
2010 outside Type A Easement Areas. Such installations are referred to as Type C Installations.
With respect to Type C Installations that were installed prior to the date of this Amendment
No. 10, Landlord hereby grants Tenant an easement. With respect to any Type C Installation that
Tenant wishes to install after the effective date of this Amendment No. 10,Tenant shall request
the written consent of Landlord to install such Type C Installation. Landlord will not unreasonably
withhold, condition, or delay its consent. The easement area for such Type C Installation easement
(whether the Off-Premises Utilities were installed prior to or after the effective date of this
Amendment No. 10) is the area actually occupied by such installation and a five-foot wide corridor
on either side of such installations. Such easement areas are referred to as "Type C Easement
Areas".
The easements granted to Tenant with respect to each Type A Installation, each Type B
Installation, and each Type C Installation shall include the right to keep, maintain, install, renew,
repair, and replace Off-Premises Utilities installed on the Airport property. Except to the extent in
conflict with the terms of any utility easement,Tenant may from time to time access non-leased
areas on the Airport property to maintain, upkeep, repair and replace its Off-Premises Utilities,
subject to the terms of Section 10a of the Lease and accomplished in a manner so as to not
interfere with or increase the maintenance activities of Landlord upon the public areas of the
Airport. Tenant acknowledges that it will be Tenant's responsibility to obtain any permits required
to perform work in connection with any or all of the Off-Premises Utilities. Landlord acknowledges
that Tenant will not be required to obtain any licenses or access agreements in order to access any
Off-Premises Utilities.
Tenant shall not be required to pay rent or any other charge for any easement areas containing
Type A Installations or Type B Installations. Tenant shall pay rent for all Type C Installations at a
rate equal to one-third (1/3) the land rental rate for the Type C Easement Areas, and shall comply
with the provisions of Recital 23 herein.
9. Landlord and Tenant acknowledge that as of the effective date of this Amendment No. 10,
Tenant does not have sufficient information on the location of the Off-Premises Utilities to permit
Tenant to draft easement agreements to cover Type A Installations, Type B Installations, or Type C
Installations. When Tenant becomes aware of the location of any Off-Premises Utilities,Tenant
will cause a survey of such located Off-Premises Utilities to be prepared and will present such
surveys to Landlord as Tenant gains information on the location of separately identifiable Off-
Premises Utilities. Landlord and Tenant acknowledge that Tenant is paying rent for the Type C
Installation identified in Exhibit I (as specified in the table in Section 4a of this Amendment No. 10).
With respect to any other Type C Installation,Tenant shall make a retroactive lump sum payment
back to the date of installation, consistent with the provisions of Recital 23 herein. The parties will
negotiate two easement agreements, one that addresses the Type A Easement Area ("Type A
Easement"), and one that addresses the Type C Easement Area ("Type C Easement"). Such
easement agreements shall be amended from time to time as the Off-Premises Utilities are
identified and surveyed.The parties will negotiate such easement agreements in good faith and
will execute them in recordable form. Tenant will be responsible for recording such easement
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agreements in the records of King County. The Lease shall be amended from time to time to
reflect changes in Minimum Monthly Rent resulting in changes to the Type C Easement. Lease
amendments shall not be required for changes to the Type A Easement.
10. Miscellaneous provisions applicable to this Amendment No. 10.
10.a This Amendment No. 10 will be effective on the date of entry first made above.
10.b This Amendment No. 10 may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which,together, shall constitute but one and the same
instrument.
10.c This Amendment No. 10 shall be governed by the laws of the State of Washington,
without reference to its choice of law rules.
10.d As amended by this Amendment No. 10,the Lease continues in full force and
effect in accordance with its terms. On and after the date of entry of this Amendment No. 10,the
Lease shall be deemed amended by this Amendment No. 10 and all references in the Lease to "this
Agreement," "this Lease," "herein," "hereof," and the like shall be deemed to be references to the
Lease as amended by this Amendment No. 10.
This Amendment No. 10 is executed by Landlord and Tenant as of the date first written above.
THE BOEING COMPANY CITY OF RENTON
a Delaware Corporation a Mu ' ipal Corporation
ClitNr
Prin/ ��-.�®- Jeffrey A. Nunn Denis Law
Title: �� Auth rized Signatory Mayor /7/0
Date signed: Date signed:
Attest: Y ;
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Jas. A. Seth
Ci Clerk �/ %, 4A 4')
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4���R'�rEDSE?'(6
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Date attested: & `\\`��
Approved as to legal form:
Shane Moloney
City Attorney
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