ITEM TITLE:
Approval of a Recommendation to City Council to Authorize Lease Assignment and Amendment of Lease Agreements with Peter Pan Seafoods Company, LLC for Tract T South Harbor Subdivision, Tract L Harbor Subdivision, Tract F Harbor Subdivision, Tract C Harbor Subdivision, and a 39,376 Square Foot Portion of USS 495 Tidelands to Silver Bay Seafoods-Valdez, LLC
SUBMITTED BY: Nicole LeRoy, Planner
FISCAL NOTES:
Expenditure Required: N/A
Unencumbered Balance: N/A
Funding Source: N/A
RECOMMENDATION:
Approve recommendation to City Council to authorize lease assignment and amendment of lease agreements with Peter Pan Seafoods Company, LLC for Tract T South Harbor Subdivision, Tract L Habor Subdivision, Tract F Harbor Subdivision, Tract C Harbor Subdivision, and a 39,376 square foot portion of USS 495 Tidelands to Silver Bay Seafoods-Valdez, LLC.
SUMMARY STATEMENT:
Representatives from Silver Bay Seafoods-Valdez, LLC approached staff with the request to assign and assume all the lease agreements held by Peter Pan Seafoods Company, LLC prior to closing of a sale agreement with the company. The details of the individual lease agreements are referenced below.
Three of the lease agreements have annual rental rates of 6% of appraised value, as was the fair rental value set forth in Valdez Municipal Code at the time they were executed. In addition to assigning the lease agreements to Silver Bay Seafoods-Valdez, LLC, staff recommends amending those leases to increase the rental rate to 10% of the appraised value annually per Valdez Municipal Code 4.08.010 as a part of this action.
Per Valdez Municipal Code, the Ports and Harbors Commission and Planning and Zoning Commission shall make a recommendation to the City Council on the decision to approve all the lease assignment and amendments. The Ports and Harbor Commission is also considering a recommendation to City Council on April 17, 2024.
If approved by City Council, staff will work with Silver Bay Seafoods-Valdez, LLC and the City Attorney to execute assignment documents transferring the lease holder interest from the former company, Peter Pan Seafoods Company, LLC to Silver Bay Seafoods-Valdez, LLC. Except for annual rental rate for three of the agreements as detailed below, all other terms, covenants, and conditions of said lease, and amendments, shall remain in full force and effect.
Tract C of the Amended Plat of the South Portion of Mineral Creek Subdivision and Harbor Subdivision less the west 41 feet and the Northern portion of ATS 620, less the west 41 feet, per Doc. No. 1990-000591-0 VRD.
In June 1990, the City of Valdez entered into a lease for Tract C Harbor Subdivision with Peter Pan Seafoods, Inc. commencing June 4, 1990, and ending on the last day of June 2039. This agreement is for the construction of a 60’ x 120’ building for a sujiko operation (see attached lease.)
This lease is subject to reappraisal every five years for the purpose of adjusting fair rental value. The property was last appraised in 2020 and was valued at $193,000.00.00. Lessee currently pays 6% of appraised value for the property annually, as this was the fair rental value set forth in Valdez Municipal Code at the time the agreement was executed. The property will be reappraised in 2025 and the rental payment amount adjusted at that time. Staff recommends amending the lease as part of this action to increase the rental rate to 10% of appraised value annually to meet the current fair rental value rate set in Valdez Municipal Code 4.08.010.
Tract F of the Amended Plat of South Portion of Mineral Creek Subdivision and Harbor Subdivision (Plat No. 86-4), per Doc No. 2004-000099-0 VRD.
In May 1988, the City of Valdez entered into a lease for Tract F Harbor Subdivision, with Peter Pan Seafoods, Inc. commencing May 8, 1988, and ending the last day of June 2039. This agreement is for the use of providing housing to the lessee’s employees (see attached lease.)
This lease is subject to reappraisal every five years for the purpose of adjusting fair rental value. The property was last appraised in 2023, it was valued at $80,000.00. Lessee currently pays 6% of appraised value for the property annually, as this was the fair rental value set forth in Valdez Municipal Code at the time the agreement was executed. Staff recommends amending the lease as part of this action to increase the rental rate to 10% of appraised value annually to meet the current fair rental value rate set in Valdez Municipal Code 4.08.010.
Tract L of the Amended Plat of South Portion of Mineral Creek Subdivision and Harbor Subdivision (Plat No. 86-4)
In July 1984, the City of Valdez entered into a lease with Uncle Jim’s Alaska Seafoods, Inc. for fifty-five years, ending the last day of June 2039. This agreement is for the use of a fish processing plant, seafood restaurant, or other closely related purpose (see attached lease.) This agreement was assumed by Peter Pan Seafoods, Inc. in 1989 and they took over management of the property.
This lease is subject to reappraisal every five years for the purpose of adjusting fair rental value. The last time the property was appraised was in 2024, it was valued at $300,000.00. Lessee currently pays 6% of appraised value for the property annually, as this was the fair rental value set forth in Valdez Municipal Code at the time the agreement was executed. Staff recommends amending the lease as part of this action to increase the rental rate to 10% of appraised value annually to meet the current fair rental value rate set in Valdez Municipal Code 4.08.010.
Tract T South Harbor 2014 Subdivision, per Doc. No. 2015-000079-0 VRD.
In February 2013, the City of Valdez entered into a lease with Peter Pan Seafoods, Inc. for Tract T South Harbor 2014 Subdivision. This lease was amended in 2014 to extend the term of the agreement commencing September 15, 2014, and ending the last day of June 2039. The property is being leased for the construction, operation, and maintenance of a fish oil plant (see attached lease agreement and amendments.) Section 5.02 of the lease agreement requires the lessee to develop a fish oil plant. Construction of this facility was intended to begin in 2015, however, the property remains undeveloped. Silver Bay Seafoods-Valdez, LLC desires to amend the lease of the property for parking and accessory storage associated with the neighboring fish processing plant facilities.
This lease agreement is subject to reappraisal every five years for the purpose of adjusting fair rental value. The last time the property was appraised was in 2022, it was valued at $140,000.00. Lessee currently pays 10% of the appraised value annually for the property.
Tidelands 39,376 sq. ft., a Portion of USS 495 Tidelands, per Doc. No. 2013-000782-0
In December 2001, the City of Valdez entered into a lease for a 39,376 square foot portion of USS 495 Tidelands, with Peter Pan Seafoods, Inc. on October 1, 2002, for twelve years, commencing December 1, 2001, and ending the last day of November 2013 with six five-year renewal options. This agreement is for the use of a fish processing dock in the small boat harbor.
This lease agreement was amended twice exercising the first and second of six five-year renewal options in the agreement, extending the lease term to the last day of November 2023. In addition to assigning the lease interest to Silver Bay Seafoods-Valdez, LLC, the lease will be amended to utilize the third of six five-year renewal options, extending the lease term to the last day of November 2028.
This lease is subject to reappraisal every five years for the purpose of adjusting fair rental value. The last time the property was appraised was in 2021, it was valued at $40,000.00. Lessee currently pays 10% of appraised value for the property annually.