Report From: Ashley Ford, Contract Services Administrative Assistant. Subject: Lease Agreement Airport Hangars C3 & C4 Henderson to Bellinger

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1 Staff Report Report To: City Council Report From: Ashley Ford, Contract Services Administrative Assistant Meeting Date: August 22, 2016 Report Code: OP Subject: Lease Agreement Airport Hangars C3 & C4 Henderson to Bellinger Recommendations: That in consideration of Staff Report OP respecting Lease Agreement Airport Hangars C3 & C4 Henderson to Bellinger, City Council approve the termination of the lease agreement between Dwayne Henderson, and the City of Owen Sound; and further THAT City Council authorize the Mayor and Clerk to execute an agreement and associated By-law between Michael Bellinger and the City of Owen Sound respecting the leasing of Hangar C3 and C4 at the Owen Sound Billy Bishop Regional Airport. Strategic Initiative: Retain and grow existing local businesses and business opportunities. Background: Mr. Michael Bellinger is requesting to enter into a new lease agreement as a result of his purchase of airport hangars C3 and C4 at the Owen Sound Billy Bishop Airport from Mr. Dwayne Henderson. The Dwayne Henderson lease was for the term January 1992 to December Prior to entering into a new lease agreement for Hangar C3 and C4, the current lease agreement with Mr. Dwayne Henderson is to be terminated. Report: Lease Agreement Airport Hangars C3 & C4 Henderson to Bellinger Page 1 of 2

2 Analysis The new lease agreement for hangar C3 and C4 will be for the period commencing August 31, 2016 and terminating on December 31, This short lease period is designed to accommodate the 2016 Service Review Process, and will be extended pending the outcome of Service Review. The rent for the 3,500 square foot of hangar space will be set at an initial yearly rate of $0.36 cents a square foot plus an annual adjustment for the increase in the Ontario Consumer Price Index. The two million dollars ($2,000,000) liability insurance certificate for these hangars is to be provided as part of the terms and conditions of the lease agreement. Financial/Budget Implications: None. Communication Strategy: Mr. Michael Bellinger will be notified once the By-law is approved by Council and executed by the Mayor and Clerk. Consultation: Manager of Contract Services, By-law Coordinator Attachments: Mr. Michael Bellinger Hangar C3 and C4 Lease Agreement Prepared By: Ashley Ford Signature on File Reviewed By: Kenneth D. Becking, P.Eng. Signature on File Submitted By: Wayne Ritchie Signature on File Report: Lease Agreement Airport Hangars C3 & C4 Henderson to Bellinger Page 2 of 2

3 THIS LEASE made the day of, 201_ Pursuant to the SHORT FORMS OF LEASES ACT, R.S.O. 1990, Chapter S. 11. BETWEEN THE CORPORATION OF THE CITY OF OWEN SOUND (the "Landlord") AND MICHAEL BELLINGER GREY ROAD 12 MEAFORD, ON N4L 1W6 (The "Tenant") WHEREAS: 1. The Landlord is a municipal corporation in the Province of Ontario; 2. Section 11(3) 2 of the Municipal Act, 2001, S.O. 2001, c. 25, as amended (the Act ) gives the Landlord jurisdiction with respect to transportation systems other than highways; 3. Section 70 of the Act empowers the Landlord to exercise its jurisdiction in relation to airports in another municipality; 4. The Landlord is the owner in fee simple of certain lands situated in the Township of Meaford, County of Grey, Province of Ontario, which lands are more fully described in the attached Schedule "A", as Hangars C3 & C4, and are called the Airport Lands in this lease. IN CONSIDERATION of the rents reserved and the covenants and agreements contained in this Lease on the part of the Tenant, the Landlord leases to the Tenant for the Term (as defined in section 1.1) and upon the conditions in this Lease that portion of the Airport Lands, together with certain rights of way, as described in the attached Schedule "B" and hereinafter referred to as the "Leased Land". Page 1 of 12

4 1. TERM 1.1 The Tenant is to hold the Leased Land for the term to be computed from the 31st day of August, 2016 and from thenceforth ensuring and to be fully completed and ended on the 31st day of December, (the Term ) 1.2 The fixed term of this lease shall not preclude the parties from negotiating a future extension of the term of this lease by way of a subsequent written agreement. Notice of the intent to request an extension of the lease or to negotiate a new lease must be provide in writing a minimum of 12 months prior to the expiry of the current lease. 2. RENT 2.1 The Tenant shall pay therefore, without abatement or set-off, rent to the Landlord as follows: A base rent of $0.36 per square foot for 3500 square feet per year totaling $1260 per year plus HST in equal monthly instalments of $ commencing on the first day of September, and on the 1 st day of the commencement of each subsequent year of the Term herein and any extension of the Term, the base rent shall be increased in proportion to the increase in the Ontario Consumer Price Index as published by Statistics Canada for the immediately preceding calendar year and that rent shall become the new base rent together with Additional Rent as referred to elsewhere in this lease. 2.2 All rent shall be paid monthly, in advance, without prior demand, to the Landlord at its address referred to in section 10.3 or at such other place as the Landlord may designate in writing. 2.3 The Tenant, hereby acknowledges that the foregoing rent payable is solely for the Leased Land and the Tenant further acknowledges and agrees that the rent provided for in this Lease shall be payable whether or not a building is erected on the Leased Land and the rent is payable, due and owing by the Tenant even in the event that the building is partially damaged or totally destroyed. 3. TAXES Page 2 of 12

5 The Tenant covenants to pay, as and when they fall due, all municipal and other real property taxes, including charges for local improvements, assessments and other rates and levies assessed, levied or imposed on the Leased Land and any improvements thereon and to provide the Landlord receipts for the payment thereof. Such taxes shall include a proportionate share of any taxes levied against the Airport Lands as a whole. The Landlord, at its sole option, may pay the taxes referred to herein on behalf of the Tenant and collect such monies from the Tenant as Additional Rent. 4. UTILITIES 4.1 The Tenant covenants to pay, as and when they fall due, all charges for electricity, gas, water and telephone service which may be supplied to the Leased Land. 5.2 Water The Landlord shall provide reasonable access to the water supply system of the Airport Lands at a central point on the limit of the Leased Lands at a time determined solely by the Landlord. Reasonable access for the purpose of this paragraph shall be defined as a sufficient supply of water to service aircraft and passengers. The Tenant shall bear the cost of connecting to the supply system and for distribution within the Leased Land. Should the Tenant install washroom facilities on the Leased Land, it must, at its own expense, provide proper sanitary disposal arrangements in accordance with the Public Health Unit requirements and must obtain the prior written approval of the Landlord. The Landlord does not guarantee the supply of water or potability thereof to the Leased Lands. 5.3 Hydro The Landlord agrees to provide the Tenant with a source of hydro at a central point on the limit of the Leased Land at a time determined solely by the Landlord. Connection to the hydro source and distribution within the Leased Land shall be at the sole expense of the Tenant. The Tenant shall comply with all Ontario Hydro guidelines. Overhead wires are entirely prohibited in connection on the Airport Lands unless the Tenant obtains the written permission of the Landlord Page 3 of 12

6 prior to erecting any overhead wires which permission shall be granted or withheld, at the sole discretion of the Landlord. 5. IMPROVEMENTS 5.1 The Tenant shall not commence any improvements to the Leased Land without the prior written approval of the Landlord. 5.2 All construction of improvements, including excavation, grading, and drainage shall be done at the sole expense of the Tenant and shall not operate to set off or abate the rent reserved herein, but such expenses shall be in addition thereto. 5.3 The Tenant shall be responsible for obtaining all municipal, provincial and federal approvals, authorizations, and permits as may be required for any improvements to or on the Leased Lands and any costs related to such approvals, authorizations, and permits. 5.4 The Tenant shall discharge at its own expense, any lien filed on the Leased Land or the Airport Lands in respect of work carried out upon the Leased Land, and it shall pay any legal costs or other costs, fees or disbursements howsoever incurred by the Landlord in connection with such lien. The Landlord may, at its sole option, discharge such liens by paying into Court or otherwise and such amounts paid are recoverable by the Landlord from the Tenant as Additional Rent. 5.5 The Tenant will indemnify and save harmless the Landlord from any claims under the provisions of the Construction Lien Act and to discharge all liabilities incurred by it in respect of such construction and to use reasonable efforts to cause any contractor or subcontractor engaged in such construction to discharge all liabilities incurred by such contractor or subcontractor. In the event any lien is registered under the Construction Lien Act, the Tenant shall pay sufficient money into Court to remove the lien on the demand of the Landlord. 5.6 Subject to paragraph 6.7 below, title to all improvements constructed upon the Leased Land shall at all times be vested in the Tenant. 5.7 Within thirty (30) days after the expiration of the term of the Lease, the Tenant shall remove the building and improvements erected upon the Leased Land solely at the cost of the Tenant, unless the term of this Lease has been extended. 5.8 In the event that the Tenant fails or refuses to remove the building at the expiration of the Lease as herein before provided, then the Tenant irrevocably Page 4 of 12

7 covenants and agrees that thereafter the title to the Leased Land and all improvements thereon may pass forthwith to the Landlord, at the option of the Landlord. The Tenant will ensure that the building is free from all and any encumbrances. 5.9 Upon cessation of any use described in paragraph 25.2 below, the Tenant shall provide the Landlord with a phased environmental assessment by a qualified professional in accordance with the Ontario Environmental Protection Act and the Tenant shall forthwith remediate any environmental contamination necessary to return the Leased Land to the condition described in the baseline environmental assessment described in paragraph 25.2 below. 6. MAINTENANCE AND REPAIR 6.1 The Tenant agrees to operate, maintain, and keep the premises in such good order and condition both inside and out as they would be kept by a reasonably careful and prudent owner and promptly to make all needed repairs and replacements as shall be reasonably necessary, including while not limiting the generality of the foregoing, the roof, foundations and appurtenances including fixtures, facilities and equipment belonging to and forming part of the Leased Land. 6.2 If the Tenant fails to maintain the building, the Landlord may, on written notice to the Tenant, perform such maintenance and repairs as the Landlord in its sole discretion deems appropriate and necessary and the cost of thereof shall be payable by the Tenant as Additional Rent. 6.3 In the event of loss, damage or partial loss or damage to the building, the Tenant shall replace or repair the building with due diligence and dispatch and in the event that the Tenant fails to repair or replace with due diligence and dispatch, the Landlord has the right to rebuild, repair or demolish and remove, at the Landlord's sole discretion, the building and the costs incurred by the Landlord in relation thereto shall be payable by the Tenant as Additional Rent, provided that, not withstanding any other provision to the contrary in the event of substantial damage or total loss which the Tenant neglects or refuses to repair or rebuild or replace with due dispatch and diligence, then the Landlord shall have the unilateral right to terminate this Lease. Page 5 of 12

8 6.4 The Tenant shall, at its own expense, repair, replace, rebuild or restore the building to their original condition. 7. INSURANCE During the term of this Lease, the Tenant shall insure or cause to be insured at its own cost and expense and shall take out and keep in force: a) Insurance against claims for personal injury, death, public liability and property damage with coverage limits of not less than $2,000,000 per incident, with recognized insurance companies acceptable to the Landlord. The Tenant shall ensure that the Landlord shall be named as an additional insured on the contracts of insurance for liability, and provide the landlord with a copy at every renewal. b) Tenants Legal Liability Insurance against fire and other perils providing for replacement cost and rebuilding of the building in the amount of at least $250,000. c) The Tenant shall effect and maintain for the duration of the lease all Risk insurance on all property owned by or for which the Tenant is legally liable in an amount of the full replacement cost and including business interruption (if applicable) for a period up to 12 months. d) At the time of execution hereof, the Tenant shall provide the Landlord with a certified copy of the policy or policies in effect. If, at any time, the Tenant fails to pay the premiums on the insurance policy, as and when they fall due, the Landlord may, but shall not be obligated to, pay such premiums on behalf of the Tenant and such payments are recoverable from the Tenant as Additional Rent. e) In the event that the Tenant operates a commercial activity as contemplated in section 25.2, The Tenant covenants that he will provide insurance coverage:, f) (i) which includes a loss of income provisions with the loss payable to the Landlord; (ii) If the Tenant undertakes commercial activities within the premises occupying the lands owned by the Landlord then the Tenant shall: provide and maintain Commercial General Liability insurance in the amount of $2,000,000 and name the Landlord as a loss payee; and Page 6 of 12

9 (iii) If storing petroleum products or chemicals, provide and maintain Pollution Liability insurance in the amount of $2,000,000 and name the Landlord as a loss payee. 8. VACANT PREMISES If the Leased Land becomes vacant and remains so for a period of one month or is used by any person other than the Tenant or for a purpose other than that for which they are leased without the written consent of the Landlord, the then current month's rent and the three (3) months rent following will immediately become due and payable and the term will at the option of the Landlord immediately be determined and the Landlord at any time thereafter may re-enter and repossess the Leased Land. 9. DISTRESS 9.1 The Tenant hereby waives and renounces the benefit of any present or future Act of the Province of Ontario taking away or limiting the Landlord's right of distress and notwithstanding any such Act, the Landlord may seize upon and sell all the Tenant's goods and chattels for payment of rent and costs. 9.2 If the rent or any part thereof shall be fifteen (15) days or more in arrears, the Landlord may distrain therefore, or if the term hereby granted shall be seized or taken in execution or in attachment by any creditor or the Tenant, or if the Tenant makes an assignment for the benefit of creditors or becomes bankrupt or insolvent, the then current rent and the next three (3) months rent shall immediately become due and be paid and this Lease at the option and election of the Landlord shall be void and the Landlord may re-enter upon the premises and hold them as if this lease had not been made provided that, except in the event of this lease being terminated, nothing contained herein shall affect or alter the Tenant s liability to pay rent for the balance of the term. 9.3 Any notice to be given hereunder shall be sufficiently given or made if hand delivered or mailed by registered mail to the City Clerk, City of Owen Sound, nd Avenue East, Owen Sound, Ontario, N4K 2H4, and to the Tenant at the address set out on page 1 of this lease; in the case of hand delivery, notice shall be deemed received on the day delivered and if sent by prepaid registered mail, notice shall be deemed to have been given two (2) days following the date of Page 7 of 12

10 mailing provided that either party may change its address by written notice to the other and in such event this paragraph shall be deemed to be amended accordingly. 9.4 The Landlord shall have the right to enter the premises for the purpose of curing any default of the Tenant, and no such entry shall be deemed to work a forfeiture or termination of this Lease unless the Landlord elects. The Landlord shall give five (5) days written notice to the Tenant of its intention to enter for such purpose and the Tenant shall reimburse the Landlord upon demand for all expenses incurred by it in remedying any Tenant's default. The Landlord shall be under no obligation to remedy any default of the Tenant and shall not incur any liability to the Tenant for any act or omission in the course of its remedying or attempting to remedy any such default, except if such act or omission is the result of the negligence of the Landlord, its agents, employees or invitees. 9.5 Any condoning, excusing or overlooking by the Landlord of any default, breach or nonobservance by the Tenant of any covenant or condition herein contained shall not act as a waiver of the Landlord's rights hereunder in respect of any continuing or subsequent default or breach. The remedies of the Landlord specified in this lease are cumulative and are in addition to any remedies of the Landlord at law or equity. 9.6 Any re-entry by the Landlord in accordance with the provisions of this Lease may at the option of the Landlord result in a termination of the Lease and of all the Tenant's rights hereunder. 11. The Tenant shall promptly pay the Landlord for all damage to the Landlord's property or to the Airport Lands and every part thereof caused by the Tenant, its employees, invitees or persons using the Tenant's facilities. 12. The Tenant shall pay upon demand any Landlord's legal costs for preparing any amendments or alteration to this Lease requested by the Tenant. 13. QUIET ENJOYMENT The Landlord covenants with the Tenant for quiet enjoyment. 14. INDEMNIFICATION Page 8 of 12

11 The Tenant covenants with the Landlord to indemnify the Landlord, its elected officials, officers and employees against all actions, suits, claims, damages, costs and liability arising out of: a) breach, violation or non-performance of any Tenant's covenant, condition and agreement in this Lease; or b) damage to property occasioned by the Tenant's use of the Leased Land and/or the Airport Lands; or c) injury to or the death of any person resulting from the Tenant's use of the Leased Land and/or the Airport Lands. 15. COMMUNICATION EQUIPMENT APPARATUS Communication equipment may be installed and operated only with the prior approval in writing from the Landlord and the Government of Canada, Department of Communications. 16. USE OF LEASED LAND OUTSIDE OF BUILDING Notwithstanding, anything herein set out, the uncovered portion or the Leased Land shall not be used except for aircraft taxiways, vehicular driveways, parking areas for motor vehicles bearing current licences. Landscaping shall be maintained at all times in a neat and tidy condition and if not so maintained, may be maintained by the Landlord and the expense for such maintenance is recoverable as Additional Rent. 17. SERVICE ROAD AND TAXIWAY The Landlord shall construct at its expense a paved service road/taxiway only up to the edge of the service road/taxiway at a time determined solely by the Landlord. The Tenant shall construct and maintain at the Tenants expense an access ramp (width of which shall not exceed twenty 20 feet) from the paved service road/taxiway to the Tenant's hangar. 18. GRASS CUTTING AND SNOW PLOUGHING The Landlord agrees to provide snow ploughing for the driveways outside of the Leased Land and for the north/south taxiway and the taxiways between the Leased Land up to the edge of the paved service road/taxiway. Tenant is Page 9 of 12

12 responsible for the removal of snow within the Leased Land. The Tenant agrees to regularly cut the grass around the Leased Land. 19. RIGHT TO ASSIGN AND SUBLET The Tenant may assign this Lease provided that the Landlord has provided prior written consent, such consent to be granted or withheld at the sole, unfettered discretion of the Landlord. The Tenant may with the written approval of the Landlord (which approval may be granted or withheld at the sole, unfettered discretion of the Landlord) sublet with the Tenant being held responsible for the terms and conditions of this Lease. 20. COVENANT NOT TO ENCUMBER The Tenant covenants not to encumber in anyway the legal title to the Airport Lands or the Leased Land. 21. APPROVAL BY TRANSPORT CANANDA OR PROVINCE OF ONTARIO The Tenant acknowledges that this Lease shall be null and void if the Province of Ontario or Transport Canada fails to approve any term or condition herein which requires such approval by law. 22. RIGHT TO INSPECT a) Upon providing the Tenant with 24 hours notice in writing, the Landlord may enter upon and inspect the Leased Land at any time during the currency of this Lease. b) The Tenant agrees to obey promptly all directions of the Airport Manager. 23. GASOLINE AND OIL STORAGE No gasoline may be stored on the Leased Land. The Tenant covenants not to keep any oil on the Leased Land other than for the Tenant's own use. 24. INTEREST ON AMOUNT OWING Where any amount is due and owing by either party to this Lease to the other, interest shall be paid on such amount commencing fifteen (15) days after the Page 10 of 12

13 date on which the amount was payable at the then applicable prime lending rate of the Royal Bank of Canada at Owen Sound, Ontario plus five per cent. 25. PERMITTED USE OF LEASED LAND 25.1 The Tenant acknowledges that the sole permitted use of the Leased Land is for storage and maintenance of aircraft and aircraft related vehicles, ie. tow tractor and personal aircraft related chattels of the Tenant, and no other uses whatsoever Without limiting the generality of the foregoing, commercial operations such as charter operations, flight schools, aircraft rental or leasing, aircraft repair, avionics repair, avionics sales, aircraft parts sales, aircraft refinishing, aircraft manufacturing, aircraft parts manufacturing, gasoline and oil sales, car rentals, and food sales may be permitted on the Leased Land if the Tenant provides a baseline phased environmental assessment by a qualified professional in accordance with the Ontario Environmental Protection Act which is acceptable to the Landlord and, if required by the Landlord, provides the insurance coverage described in paragraph 7(d) (i), (ii)and/or (iii) above. 26. RULES AND REGULATIONS The Tenant agrees to observe all rules, regulations and laws laid down by Transport Canada and the rules and regulations laid down by the Landlord or its agent concerning the proper conduct of the airport. Upon any breach of such rule or regulation by the Tenant, the Landlord may at its sole discretion immediately terminate this Lease and re-enter and take possession of the Leased Land. 27. COVENANT NOT TO REGISTER The Tenant covenants that he will not register this Lease or any Notice thereof against the title to the Airport Lands or the Leased Land. 28. BINDING EFFECT This Lease and everything herein contained shall extend to, bind and enure to the benefit of the parties hereto and their respective heirs, successors, and Page 11 of 12

14 assigns, subject to the consent of the Landlord being obtained, as hereinbefore provided, to any assignment or sublease by the Tenant. IN WITNESS WHEREOF the parties have signed or have had their authorized officers sign this lease below. Tenant name: Michael Bellinger Signature of Tenant or Tenant s authorized officer The Corporation of the City of Owen Sound Per: Mayor City Clerk Page 12 of 12

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