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HomeMy WebLinkAbout12/13/2016 06H Alaska Airlines Signatory Airline Lease and Operating Agreement RESOLUTION NO. R-2016- A RESOLUTION authorizing the execution of a Signatory Airline Lease and Operating Agreement with Alaska Airlines for property located at 2300 West Washington Avenue, Yakima Air Terminal-McAllister Field. WHEREAS, City owns and operates Yakima Air Terminal-McAllister Field in accordance with applicable Federal, State and Local regulations; and WHEREAS, the airport has land available for lease within parcel number 181335-31001 which is located at 2300 West Washington Avenue; and WHEREAS, the City of Yakima and Alaska Airlines Inc, a corporation organized and incorporated in the State of Alaska, have negotiated to lease a portion of such parcel, which includes a license to operate as a Signatory Airline at the Yakima Air Terminal-McAllister Field as set forth in the "Signatory Airline Lease and Operating Agreement" attached hereto and incorporated herein by this reference; and WHEREAS, the City Council has determined that approval of such lease agreement is in the best interests of residents of the City of Yakima, and will promote the purposes of the Yakima Air Terminal-McAllister Field and the general health, safety and welfare; now, therefore BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA: The City Manager is hereby authorized to execute and administer the Signatory Airline Lease and Operating Agreement with Alaska Airlines, a corporation organized and incorporated in the State of Alaska, which lease agreement is attached hereto and incorporated herein. ADOPTED BY THE CITY COUNCIL this 13th day of December, 2016. ATTEST: Kathy Coffey, Mayor Sonya Claar Tee, City Clerk , xs .1 �5 .may s n. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 6.H. For Meeting of: December 13, 2016 ITEM TITLE: Resolution authorizing the execution of a Signatory Airline Lease and Operating Agreement with Alaska Airlines for property located at 2300 West Washington Avenue SUBMITTED BY: Robert K. Peterson,Airport Manager, 509-575-6149 SUMMARY EXPLANATION: Alaska Airlines provides air service from Yakima Air Terminal-McAllister Field to Seattle-Tacoma International Airport. To provide this service,Alaska Airlines enters into a Signatory Airline Lease and Operating Agreement to utilize the airport's terminal building, aircraft parking apron, and associated airfield. The agreement is slated to commence January 1, 2017 with a 5 year term at which point a new agreement will be established. ITEM BUDGETED: Yes STRATEGIC PRIORITY: Economic Development APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt Resolution BOARD/COMMITTEE RECOMMENDATION: N/A ATTACHMENTS: Description Upload Date Type D Resolution 12/5/2016 Resolution D Lease Agreement 12!5!2016 Contract SIGNATORY AIRLINE LEASE AND OPERATING AGREEMENT THIS Agreement made this 1St day of January, 2017, YAKIMA AIR TERMINAL— McALLISTER FIELD, a department of the City of Yakima, Washington, hereinafter referred to as "LESSOR,", and Alaska Airlines, Inc. and its Affiliates, a corporation organized and incorporated in the State of Alaska (the "LESSEE"), the parties agree as follows: WITNESSETH THAT: WHEREAS, the LESSOR is the operator of the Yakima Air Terminal located in Yakima, Washington, referred to as the "Airport"; and, WHEREAS, the parties hereto desire to enter into a Signatory Airline Lease and Operating Agreement, hereinafter referred to as "Agreement", granting the Airline the use of the Airport and its appurtenances; NOW, THEREFORE, in consideration of the premises provided herein, the rights and privileges and the mutual covenants and conditions hereinafter contained and other valuable consideration, the parties hereto agree, for themselves, their successors and assigns, as follows: 1. TERM: The term of this new Agreement shall be for five (5) years, commencing January 1, 2017, and ending December 31, 2022, and on a year-to-year basis thereafter, unless sooner terminated or canceled as herein provided. 2. PREMISES AND FACILITIES: LESSOR hereby leases to LESSEE those facilities and premises in and adjacent to the Airport Terminal Building as shown on EXHIBIT A, attached hereto and hereinafter referred to as the "Premises". 3. RENTS, FEES, AND CHARGES: LESSEE agrees to pay the following rents, fees, and charges: A. RENTS: LESSEE shall pay to LESSOR monthly, in advance, by the first of the month and no later than the fifteenth (15th) of each month, rents for the Premises demised herein as set forth on EXHIBIT B. B. LANDING FEES 1. LESSEE shall pay to LESSOR those Landing Fees (each month for the immediately prior month) as set forth on EXHIBIT C, no later than the fifteenth (15th) of every month. 2. LESSEE shall provide to LESSOR a copy of its monthly landed weight report, including the number of landings by aircraft types, maximum gross certificated landed weight, and total landed weight by the fifteenth (15th) day of each month. 3. LESSEE shall make these same reports by the same dates for each "chartered / non-scheduled" air carrier operation handled /conducted by LESSEE. 4. LESSEE shall make these same reports by the same dates for each "chartered / non-scheduled" flight handled / conducted by LESSEE but under a military contract. 4. USE OF PREMISES A. LESSEE's use of the Premises shall be limited to its use in operating its air transportation business. LESSEE shall not permit the use of its Premises for the offering or sale to the public of any other services without the prior written consent of LESSOR. B. LESSEE shall have the exclusive use of those areas listed on EXHIBIT A for use and operating its air transportation business. C. All repair, maintenance, and overhaul work shall be performed only upon those areas designated by the LESSOR for such use. LESSEE may perform customary fueling and servicing of aircraft preparatory to loading and takeoff or immediately following landing and unloading. D. LESSEE, its agents, employees, suppliers, passengers, guests, and others doing business with LESSEE shall have the right of ingress and egress to and from the Premises and the public use areas used in connection therewith, over the Airport property and roadways, subject to rules and regulations governing the use of the Airport and as same may be promulgated by the LESSOR. 5. LESSEE's RIGHTS AND OBLIGATIONS: The parties hereto covenant and agree as follows: A. LESSEE may use the Airport and its appurtenances together with all public use areas/facilities for the purpose of conducting its business as a scheduled air carrier. The privileges shall include, but not be limited to, the use of the Airport and its appurtenances for the purpose of landing, taking off, loading, unloading, taxiing and parking its aircraft and/or support equipment. B. LESSEE's equipment used by LESSEE at the Airport shall be maintained at LESSEE's sole expense. C. LESSEE shall comply with any and all applicable Airport, federal, state, and local laws, statutes, ordinances, and regulations and shall abide by and be subject to all reasonable rules and regulations which are now promulgated by the LESSOR. D. LESSEE may provide support services for another air carrier, subject to all applicable conditions of the Agreement. 6. OPERATING AFFILIATES: An Airline that enters into an arrangement with a Signatory Airline to provide passenger service on its behalf shall be considered an "Operating Affiliate". An Operating Affiliate is defined as any air transportation company that (i) is a wholly owned subsidiary of LESSEE and/or LESSEE's parent company or, (ii) uses the same livery as LESSEE, offers seats controlled and sold by LESSEE, and otherwise operates under substantially the same trade name(s) as LESSEE at the Airport. 7. LESSOR's RIGHTS AND OBLIGATIONS A. Except as herein provided, LESSOR agrees that it will develop, operate, maintain, and keep in good repair and order the Airport and all common use and public appurtenances, facilities, and equipment provided by LESSOR. B. LESSOR shall, with notice to LESSEE, have the right to adopt and enforce reasonable rules and regulations not in conflict with federal rules and regulations with respect to the use of the Airport. 8. UTILITIES AND MAINTENANCE: The parties shall be responsible for the utilities and maintenance of the Premises as set forth on EXHIBIT A, attached hereto. The responsible party shall keep and maintain same in good condition, normal wear and tear excluded. 9. CONSTRUCTION, MAINTENANCE AND REPAIRS OF LESSEE's LEASEHOLD A. LESSEE may construct or install, at its own expense, any equipment, improvements, and facilities in any part of LESSEE's Premises. 1. No improvements, structures, alterations, or additions shall be made in LESSEE's Premises without the prior written consent of LESSOR. Such consent shall not be unreasonably withheld by LESSOR. 2. All improvements constructed by LESSEE pursuant to this section shall conform in all respects to the applicable statutes, ordinances, building codes, rules, and regulations of applicable governmental agencies as may have jurisdiction. 3. During the term of this Agreement, title to all improvements, structures, alterations or additions erected or installed in/on the Premises by LESSEE shall remain with LESSEE. B. No trade fixtures shall be installed inside or outside the building without the prior written consent of LESSOR and all such installations shall be in accordance with any reasonable conditions related thereto then stated in writing by LESSOR. 10. ENVIRONMENTAL STANDARDS Except for conditions prior to the original occupancy of the assigned area by LESSEE, LESSEE agrees to accept responsibility for full compliance with any and all applicable present and future federal, state, and local rules, regulations, restrictions, ordinances, statutes, laws, and/or other orders of any governmental entity regarding the use, storage, handling, distribution, processing and/or disposal of hazardous wastes, hazardous chemicals, toxic chemicals, toxic substances, pollutants, contaminants, or other similarly regulated substances (hereinafter referred to as "hazardous substances") in and on the space subject to this permit. Said hazardous substances shall include, but not be limited to: gasoline; diesel; jet fuel; lubricating oils; hydraulic fluid; deicing fluids, and cleaning fluids. Except for conditions existing prior to the original occupancy of the assigned area by LESSEE, in the case of any hazardous substance spill, leak, discharge, or improper storage on the LESSEE's assigned area, or contamination of the LESSEE's assigned area by the LESSEE or its contractor(s), or subcontractor(s), employee(s), and agent(s), the LESSEE agrees to make or cause to be made any necessary repairs or corrective actions as well as to clean up and remove any spill, leakage, discharge, release, or contamination. In the case of any hazardous substance spill, leak, discharge, release, or contamination by the LESSEE or its contractor(s), or subcontractor(s), employee(s), and agent(s), in, on, or around the assigned area, or as may be discharged or released in, on, around, or under the adjacent property which affects in any way other property of the LESSOR, or its tenants, the LESSEE agrees to make or cause to be made any necessary corrective actions. in accordance with requirements of all applicable environmental laws, regulations, and permits, to clean up and remove any spill, leakage, discharge, release, or contamination to the reasonable satisfaction of LESSOR. If the LESSEE fails to repair, clean up, properly dispose of, or take any other corrective actions as required herein, the LESSOR may (but shall not be required to) take all steps it deems necessary to properly repair, clean up, or otherwise correct the conditions resulting from the spill, leak, discharge, release, or contamination. any such repair, clean up, or corrective action taken by the LESSOR shall be at the LESSEE's cost and expense, and the LESSEE shall indemnify and pay for and/or reimburse the LESSOR for any and all costs (including any administrative costs) the LESSOR incurs as a result of any repair, clean up, or corrective action it takes. The LESSEE shall promptly supply the LESSOR with copies of all forms, reports, correspondence, and submissions made by the LESSEE to any governmental entity regarding any hazardous substance spill, leak, discharge, or clean-up, including test results. 11. DAMAGE OR DESTRUCTION A. If the LESSEE's Premises are partially damaged by fire or other casualty, but not rendered untenable, the same shall be repaired with due diligence by LESSOR. The Premises shall be repaired or restored at LESSOR's expense to essentially the same condition at that which existed prior to such damage. If such damage is caused by negligence of LESSEE, it shall be the responsibility of LESSEE to pay all loss, damage, and costs not covered by insurance proceeds. B. If the LESSEE's Premises are completely destroyed by fire or other casualty or so damaged as to remain untenable for more than thirty (30) days, the rent shall be abated for the period from the date of such occurrence until such space is temporarily replaced with other space sufficient to allow LESSEE to operate, LESSOR shall notify LESSEE within thirty (30) days of the occurrence of such casualty whether it intends to repair or reconstruct the damaged Premises. If the LESSOR elects not to repair or reconstruct, this Agreement shall terminate on the date of notification by LESSOR. In such event, LESSOR agrees to use its best efforts to obtain adequate substitute space for LESSEE. 12. SECURITY: The parties recognize their respective obligations for security on the Premises as prescribed by the Department of Homeland Security (DHS) /Transportation Security Administration (TSA) and Federal Aviation Administration Regulations (FARs), and agree to employ such measures as are necessary to prevent or deter the unauthorized access. 13. INDEMNITY and WAIVER OF DAMAGES: LESSEE shall indemnify, defend and hold harmless the LESSOR, City of Yakima, and their officers, employees, agents, volunteers and designated representatives from and against any and all claims, actions, demands, damages, civil penalties, charges, judgments, losses, and liabilities, including reasonable attorneys fees, resulting from, arising out of, related to, or caused by, LESSEE's negligence, and/or intentional torts, except to the extent such is due to the negligence or willful misconduct of LESSOR. 14. INSURANCE: LESSEE shall, at its own expense, maintain insurance in full force and effect during the term of this Agreement in such amounts as to meet the limits outlined in EXHIBIT D, attached hereto. Such insurance shall name the LESSOR and the City of Yakima as additional insureds, and shall be primary and not contributory to any other insurance coverage that may be available to any such additional insured. 15. MUTUALLY NEGOTIATED WAIVER OF EMPLOYER'S IMMUNITY UNDER TITLE 51 RCW LESSEE agrees, intends, and promises that its duty to indemnify and their officers, employees, agents, and volunteers under this Lease shall be fully effective regardless of any provision of Title 51 RCW (Washington's Industrial Insurance Act) to the contrary. Accordingly, based upon mutual negotiation between LESSEE and the LESSOR, LESSEE hereby expressly waives its immunity from tort liability under Title 51 RCW, but only to the extent such immunity would otherwise limit LESSOR and/or the City of Yakima or and of their officers, employees, agents, and volunteers' legal rights under this Agreement or other applicable law to be fully defended, indemnified, and held harmless by LESSEE from claims or suits by LESSEE's workers or employees, or any assignee of or anyone subrogated to any of their rights or interests, for injuries or losses experienced by LESSEE's workers or employees caused by the acts or omissions of LESSEE, or by the acts or omissions of anyone directly or indirectly employed by or under contracted with LESSEE or anyone for whose acts LESSEE might be liable absent the provisions of Title 51 RCW. 16. LESSOR's RIGHT OF CANCELLATION/ABATEMENT: In addition to any conditions as specified herein and all other remedies available to the LESSOR, this Agreement shall be subject to cancellation by the LESSOR should any one or more of the following occur: A. If LESSEE shall make a general assignment for the benefit of creditors, or file a voluntary petition in bankruptcy or a petition or answer seeking its reorganization or the readjustment of its indebtedness under the federal bankruptcy laws or any other similar law or statute of the United States or any state, or government, or consent to the appointment of a receiver, trustee or liquidator of all or substantially all of the property of the LESSEE; B. If LESSEE shall voluntarily abandon or discontinue the conduct and operation of its air transportation business at the Airport for a continuous period of ninety (90) days, except when such abandonment is caused by fire, earthquake, war, strike, or other calamity beyond the LESSEE's control; C. If LESSEE fails to keep any of the material covenants, terms or conditions of this Agreement and the failure to remedy such breach for a period of sixty (60) days after written notice from LESSEE of the existence of such a breach 17. LESSEE's RIGHT OF CANCELLATION/ABATEMENT A. LESSEE, upon ceasing operations at the Airport, shall have the right to terminate this Agreement upon two (2) months written notice and shall remain obligated to pay rents, fees, and charges which accrue during said two (2) months. If another air carrier agrees to assume all or part of LESSEE's Premises, such obligations shall be reduced by the amount assumed by such replacement air carrier(s). B. In addition to all other remedies available to LESSEE, this Agreement shall be subject to cancellation by LESSEE should any one of the following occur: 1. The permanent abandonment of the Airport as an air carrier airport; 2. The breach of any material covenants, terms or conditions of this Agreement to be kept, performed, and observed by LESSOR and the failure to remedy such breach for a period of sixty (60) days after written notice from LESSEE of the existence of such a breach; 3. The inability of LESSEE to conduct its business at the Airport in substantially the same manner and to the same extent as theretofore conducted, for a period of at least ninety consecutive (90) days, because of(1) any law, or (2) any rule, order, judgment, decree, regulation or other action or non-action of any governmental authority, board, agency or officer having jurisdiction thereof, without fault of LESSEE; 4. The taking of the whole or any part of the Premises by the exercise of any right of condemnation or eminent domain. 18. ASSIGNMENT AND SUBLETTING A. Neither LESSEE nor any assignee of LESSEE shall in any manner assign, sublet, transfer, or encumber any of LESSEE's rights in and to the Agreement without the prior written consent of LESSOR. Such consent shall not be unreasonably withheld. An Operating Affiliate may occupy LESSEE Premises, if such Operating Affiliate has met the requirements contained herein. B. LESSEE shall have the right to assign all of its rights and interests under this Agreement to any successor to its business through merger, consolidation, or voluntary sale or transfer, in which event the consent of LESSOR shall not be required. 19. NONDISCRIMINATION: To the extent required by law, LESSEE does hereby covenant and agree that no person, on the grounds of race, color, religion, sex, sexual orientation, age, marital status, handicap, or national origin, shall be unreasonably excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in LESSEE's personnel policies and practices or in the use or operation of LESSEE's services or facilities. 20. PRIOR AND COLLATERAL AGREEMENTS: This Agreement shall constitute the entire Agreement between the parties and no other stipulation, agreement, or understanding, written or oral, expressed or implied of the parties hereto or of their agents, relating to the lease and use of the Premises demised and identified herein, shall limit or modify its terms. This Agreement shall, as of the commencement date hereof, cancel and supersede all prior agreements, written or oral, express or implied, between the parties for the rights granted herein. This Agreement shall not be subject to modification or change except by written instrument duly signed by both parties. 21. SEVERABILITY: If any term or provision of this Agreement shall to any extent be held invalid or unenforceable, the remaining terms and provisions of this Agreement shall not be affected thereby, but each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 22. NOTICES: All payments, demands and notices required herein shall be deemed to be properly served if hand delivered, or if sent by certified or registered mail, postage prepaid, to the following addresses: LESSOR: Yakima Air Terminal 2406 West Washington Ave, Suite B Yakima, WA 98903 Attention: Airport Manager LESSEE: Alaska Airlines, Inc. CRE. ept. ail _alaskaair.com P.O. Box 68900 Seattle, WA 98168-0900 Attention: Corporate Real Estate Dept. (SEAPZ) Overnight Deliveries Only: 19300 International Blvd. SeaTac, WA 98188 IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. LESSOR: YAKIMA AIR TERMINAL - McALLISTER FIELD 2406 W. Washington Avenue, Suite B Yakima, Washington 98903 (509) 575-6149 - phone (509) 575-6185 - fax Cliff Moore, City Manager Date STATE OF WASHINGTON County of Yakima I certify that I know or have satisfactory evidence that Cliff Moore signed this instrument, on oath stated that he is authorized to execute this instrument and acknowledged it as the City Manager to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Date By: Notary Public Appointment Expires LESSEE: Alaska Airlines, Inc. P.O. Box 68900 Seattle, WA 98168-0900 Attention: Corporate Real Estate Dept. (SEAPZ) Overnight Deliveries Only: 19300 International Blvd. SeaTac, WA 98188 (206) 392-5164 - phone (206) 392-5031 - FAX Teri K Sato, Airport Real Estate Manager Alaska Airlines Date STATE OF WASHINGTON County of I certify that I know or have satisfactory evidence that Ms. Teri Sato signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Manager to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Date By: Notary Public Appointment Expires EXHIBIT A LEASED PREMISES Yakima Air Terminal-McAllister Field Alaska Airlines Terminal Leased Area A ALARMED EMERGENCY E%17 AWARP;iEE E IERGErdCY EXIT EXCLUSIVE#ASE:.. ATE3 GATE d G . LAS ... PAL1 : O {A ":....yt A GATE 2 AREA AGATESPA .EC..m�rERa, aQARcrux AN1. GATE 9 _ [ I CCM 4ASE•:. ♦ I:. .. J" BAGGAGE — : 1 , w CLEFS EXCLUSIVE USE: ALASKA AIRLILLE S sw -A� . Tt Y neEaATaaNskne aAs 'BRAKE,.% ikj,. + . ; xvw 3 T Y ._ _1' k r w ,„,-... . s* UPDATED AIR TERMINAL tv9CHI.l:ESTER FiEL[7. �J5't3ATED AkJUST,2o91 EXHIBIT B RENTS RENTAL FOR EXCLUSIVE TERMINAL BUILDING SPACE Effective January 1, 2017, rental for the Exclusive Leased Premises in the Terminal Building, as described in Section 3, shall be at the following rate: 3,452 Square feet as described in EXHIBIT A $24.95 Per square foot per year RENTAL FOR COMMON BAGGAGE CLAIM AREA Effective January 1, 2017, the rental for the Common Baggage Claim Area in the Terminal Building, as described in Section 3, shall be at the following rate: 844 Square feet as described in EXHIBIT A $24.95 Per square foot per year. PRO RATA SHARE — MULTIPLE SIGNATORY CARRIERS LESSOR shall establish a schedule of the pro rata rental due by each LESSEE which uses the baggage claim area and other common use areas, and LESSEE agrees to pay its stated pro rata amounts monthly. The pro rata schedule shall be subject to recomputation each January 1 and July 1 during the term hereof, based upon twenty percent (20%) of the charge being divided equally among all Air Carrier Lessees, and the remaining eighty percent (80%) based upon the ratio of enplaned passengers of each Carrier Lessee to the total enplaned passengers of all Carrier Lessees for the preceding six-month period. With the addition of one or more other signatory airlines, LESSOR may consider a pro rata of the following types of facilities and/or equipment in addition to those listed as "exclusive use" and baggage claim areas in this Agreement: EXCLUSIVE USE: exclusive use of the waiting /queue area in front of the ticket counter including any electronic ticketing kiosks that might be installed whether those kiosks might be installed inside or outside of the terminal area; exclusive use of gates; exclusive use of Lessee aircraft parking spots common use of passenger waiting area in the non-sterile area COMMON USE: common use of passenger waiting area in the sterile area; common use of airport- provided equipment such as Ground Support Equipment (GSE) including but not limited to boarding stairs (self-powered or manual); ADA passenger equipment lift; aircraft tug(s); aircraft tow bar(s); ramp lighting equipment required for additional security and/or aircraft maintenance purposes; employee parking spaces; cargo-freight vehicle parking space(s), etc. The aforesaid rentals may be increased as necessitated by the LESSOR'S Airport Budget effective January 1st each calendar year provided that LESSEE shall provide sixty (60) days prior written notice requesting a review of the rents and landing fees. At the written request of the LESSEE made on or before November 1 of each year, LESSOR shall furnish LESSEE a copy of its most current budget report showing revenues and expenditures for both the current and one year prior. LESSOR shall notify LESSEE in writing of capital improvement projects over $25,000 which would be included in the rate base of the airport. Within thirty (30) days, LESSOR shall meet with LESEE for the purpose of discussing revenues and expenditures related to said capital improvements. LESSOR agrees to fully consider the comments and recommendations of LESSEE prior to finalizing the operating budget or capital improvement project. EXHIBIT C LANDING FEE Maximum Certificated Gross Landing Weight (MCGLW) —defined: The maximum gross weight due to design or operational limitations at which an aircraft is permitted to land. Effective January 1, 2017, LESSEE shall pay an amount of$1.29 per one thousand (1,000) pounds of Maximum Certificated Gross Landing Weight (MCGLW as defined above) for each landing made by LESSEE'S aircraft. The aforesaid landing fee may be increased as necessitated by the LESSOR'S Airport Budget effective January 1st each calendar year provided that LESSOR upon written request of LESSEE shall furnish LESSEE sixty (60) days prior written notice requesting a review of the rents and landing fees. EXHIBIT D INSURANCE REQUIREMENTS Indemnification The parties agree that LESSEE is and shall always be deemed to be an independent contractor and operator and not an agent or employee of LESSOR with respect to its acts or omissions hereunder. At no expense to LESSOR, LESSEE shall defend against and indemnify fully and save harmless LESSOR including its officers, agents and employees, the City of Yakima and their elected and appointed officials, employees and agents, from any and all liability, damages, suits, claims, actions, judgments or decrees, including all expenses incidental to the investigation and defense thereof, including reasonable attorney fees, based upon or arising out of damages or injuries to third persons or their property, caused or occasioned by the use or occupancy of the premises and privileges hereunder; provided, however, that LESSEE shall not be liable for any injury damage or loss occasioned solely by the sole negligence of LESSOR, its agents or employees. LESSOR shall give to LESSEE prompt and reasonable notice of any such claims or actions and LESSEE shall have the right to investigate compromise and defend the same to the extent of its interest. LESSEE shall defend, indemnify and hold LESSOR harmless with respect to acts or omissions of its nominee. For claims by LESSOR for indemnity only, LESSEE specifically and expressly waives any immunity under industrial insurance, RCW 51 or the like and LESSEE acknowledges that this waiver was mutually negotiated, provided, however, that LESSEE shall not be liable for any injury, damage or loss occasioned solely by the sole negligence of LESSOR, its agents or employees. The LESSEE shall keep and hold the Yakima Air Terminal, the City of Yakima, their elected and appointed officials, agents and employees, free and harmless from any and all claims and actions, loss, damage, expense or cost, including reasonable attorneys fees, incidental to the investigation and defense thereof, resulting from, arising out of or caused by actions of LESSEE, resulting in any liability under the Federal Comprehensive Environmental Response Compensation Liability Act on 1980, as amended, 42 U.S.C. 9601 et seq.; Hazardous Materials Transportation Act, 49 U.S.C. 1801 et. seq.; Resource Conservation and Recovery Act, 42 U.S.0 6901 et seq.; the Clean Water Act, 42 U.S.0 1251 et seq.; the Washington Environmental Policy Action, RCQ Ch. 43.21C, the Washington Water Pollution Control Act, RCW Ch. 90.48.010 et seq.; the Washington Hazardous Waste Management Act, RCW Ch. 70.105, the Washington Model Toxic Control Act, RCW Ch. 70.105D, and the regulation promulgated thereunder, or any applicable local or state environmental ordinance, statute, law, rule or regulation. Insurance LESSEE shall maintain all insurance hereunder with insurance carriers reasonably satisfactory to LESSOR and with an A.M. BEST rating of A- VII or better or an equivalent rating from a recognized rating agency. All policies shall name the City of Yakima, its elected officials, officers, servants, agents and employees, as additional insured as their interests may appear hereunder. LESSEE shall furnish LESSOR, certificates evidencing all insurance required hereunder upon execution of this Lease and thereafter annually upon renewal of the policies. LESSEE agrees to reimburse LESSOR for any damage to the premises caused by the occupancy of LESSEE or employees of LESSEE, in the performance of their duties. Fire insurance. LESSEE shall insure for fire and extended coverage risks of all LESSEE's improvements on the Leased Premises. Such insurance shall be in an amount equal to the full insurable replacement value of such improvements. All fire insurance policies shall contain loss payable endorsements in favor of the parties as their respective interest may appear hereunder. LESSOR agrees that any payments received by it from such insuring companies by reason of loss under the policy or policies shall be applied toward repair and reconstruction of sad leasehold improvements, subject to the provisions of Paragraph 10.01 and 10.03 hereof. Public Liability, including but not limited to bodily injury, property damage and personal injury for airfield operations, and terminal operations. Promptly after the execution of this Lease, LESSEE shall provide comprehensive general liability insurance in protection of LESSOR, its officers, agents, and employees, the City of Yakima and their elected and appointed officials, employees and agents. LESSEE shall provide such public liability insurance for a minimum sum of$100,000,000 for bodily injury, personal injury and property damage, Combined Single Limit per occurrence. Insurance Adjustment LESSEE shall pay any increase in LESSOR's insurance rates or premiums that shall be caused by the character of the occupation of the premises by LESSEE. In addition, all insurance coverage that LESSEE is required to procure and maintain during the term of the Lease shall be subject to adjustment beginning on January 1, 2017, and each one (1) year period thereafter, to such levels as deemed necessary by LESSOR due to appreciation in value of personal and real property subject to this lease. Insurance— Failure of LESSEE If LESSEE shall neglect to maintain the necessary insurance required by Article IX, LESSOR may renew or procure such insurance. Any insurance premiums paid by LESSOR shall be considered as additional rent, and shall confer upon LESSOR all rights and remedies provided in this Lease in the event of default. In addition, LESSEE shall pay to LESSOR a monthly sum equal to one and one-half percent (1.5) of the insurance premium paid as a delinquency charge.