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HomeMy WebLinkAbout2015-075-08/18/2015-AUTHORIZING THE EXECUTION OF A MINERAL NON-DEVELOPMENT LEASE AT SOAPSTONE PRAIRIE NATURAL AREA WITH RESOLUTION 2015-075 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE EXECUTION OF A MINERAL NON-DEVELOPMENT LEASE AT SOAPSTONE PRAIRIE NATURAL AREA WITH THE STATE LAND BOARD WHEREAS, the City is the owner of properties located in northern Latimer County known as Soapstone Prairie Natural Area("Soapstone"); and WHEREAS, the City generally does not own the mineral rights associated with Soapstone; and WHEREAS, approximately one-third of the mineral rights under Soapstone are owned by the State of Colorado's State Land Board, which reserved the mineral rights when it conveyed surface ownership of portions of Soapstone to the City over ten years ago; and WHEREAS, the State Land Board owns land and mineral rights around the state that it manages for the financial support of Colorado's schools and other public institutions; and WHEREAS, to protect the natural and cultural resources at Soapstone from unwanted mineral development, in particular oil and gas drilling, City Natural Areas staff has been negotiating with the State Land Board to acquire a non-development lease for 3,800 acres of state-owned minerals on Soapstone; and WHEREAS, a draft of the proposed Mineral Non-Development Lease between the City and the State Land Board is attached as Exhibit "A" and incorporated herein by reference (the "Lease"); and WHEREAS, under the terms of the Lease the City would pay the State Land Board $387,226 over a period of five years in exchange for the state agreeing not to develop its mineral rights on Soapstone for the next twenty years; and WHEREAS, the Land Conservation and Stewardship Board considered the Lease at its regular meeting on August 12 and recommended that the City Council authorize it; and WHEREAS, Section 29-1-203 of the Colorado Revised Statutes allows governments to cooperate or contract with one another to provide any function, service or facility lawfully authorized to each of the cooperating or contracting units; and WHEREAS, under Section 1-22 of the City code, intergovernmental agreements and other cooperative arrangements between the City and other governmental entities are to be submitted to the City Council for review, unless they fit within one of the exceptions that permit authorization by the City Manager. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, that the City Manager is hereby authorized to enter into the Mineral Non- Development Lease between the City and the State Land Board in substantially the form attached hereto as Exhibit "A", with such modifications, additional terms and conditions, or future - 1 - amendments as the City Manager, in consultation with the City Attorney, determines are necessary or appropriate to protect the interests of the City or to effectuate the purposes of this Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 18th day of August, A.D. 2015. OF FORrc +SEAL`N Mayor ATTE,S,T: °Oao° City Clerk - 2 - oe_co�' STATE OF COLORADO STATE BOARD OF LAND COMMISSIONERS „ems o 1127 Sherman Street, Suite#300, Denver,CO 80203 MINERAL NON-DEVELOPMENT LEASE NO. LT, THIS AGREEMENT (Agreement), dated this day of - 2015 (the Effective Date)made and entered into by and between the STATE OF COLORADO, acting by and through the STATE BOARD OF LAND COMMISSIONERS, whose address is 1127 Sherman Street, Room 300, Denver, CO 80202, hereinafter called the State, and THE CITY OF FORT COLLINS, COLORADO, a Municipal Corporation, whose address is 300 LaPorte Avenue, P. 0. Box 580, Fort Collins, CO 80522, hereinafter called the Surface Owner: WITNESSETH WHEREAS, the Surface Owner has applied for a mineral development restriction covering all minerals underlying the land described below and has paid a filing fee in the amount of$0.00; and, WHEREAS, said application has been approved by the State; and, WHEREAS, the Surface Owner is the record owner of the surface interest of the land covered hereby, or is the designated agent or trustee for the record owner or owners (proof of said ownership to be furnished at the State's request); and, WHEREAS, to protect the surface, the Surface Owner desires to acquire from the State an agreement to restrict the development of the mineral estate owned by the State; and, THEREFORE, for and in consideration of the premises and subject to any existing mineral leases in effect at the time this Agreement is executed, the State covenants and agrees that it wit( not lease, or cause to be developed, any and all minerals owned by the State, except as described herein, in the following land (the Subject Lands), situated in the County of Larimer, State of Colorado, more particularly described as follows: ACRES SUBDIVISION SEC.TWP.RGE. PATENTS 410.78 Lots 1,2 3 4 S2N2 N2S2 SESE 20- 12N-68W Yes 440 E2NE NWNW S2NW SW S2SE 28- 12N- 68W Yes 474.88 NE S2 30- 12N-68W Yes 640 ALL 32- 12N-68W Yes 640 ALL 36- 12N-69W Yes 636.40 ALL 4- 11 N-68W Yes 630.70 ALL 16- 11N-68W Yes Containing 3,872.7 acres, more or less. FUND: School (NOTE: The State assumes no responsibility for the accuracy of the legal descriptions to the extent that such descriptions were furnished by the Surface Owner nor does it admit any liability for loss or damage due to inaccuracy on the Surface Owner's part in describing the land subject to this Agreement.) - Subject to the following existing mineral leases: None 1. TERM--The term of this Agreement shall be twenty (20)years from the hour of twelve o'clock noon on the date hereof, to the hour of twelve o'clock noon on , 2035. 2. RENTS -- The Surface Owner shall pay to the State total compensation of$387,226.00, payable in five equal installments of$77,445.20 each, commencing on the date that this Agreement is signed by the Surface Owner and continuing annually on or before each of the next four anniversary dates of the Effective Date of this Agreement. SLB 241 4 Revised 08/2015 Page 1 of 4 3. PENALTIES--A penalty shall be imposed for, but not limited to, late payments, improper payments, violation of any covenant of this lease,or false statements made to the State. Penalties shalt be determined by the State and may be in the form of, but not limited to, interest, fees, and fines. 4. SURRENDER --The Surface Owner may at any time surrender and cancel this Agreement insofar as the same covers all or any portion of the land herein, provided that this surrender clause shall become inoperative immediately and concurrently with the institution of any suit in any court of law by the Surface Owner, the State, or any assignee of either to enforce this Agreement or any of its terms, express or implied. If this Agreement is terminated for any reason, no rental or bonus refund shall be made, nor will rental or bonus be transferred or credited in any way to another account. All paid up rental and bonus shall be forfeited unless otherwise agreed to by the State. 5. RECEIPT FOR PAYMENTS--This Agreement shalt not be in effect until the State has received cash or the cash proceeds of any check tendered in payment for fees, bonus, or rental. All payments shalt be made on or before the date due and any default may subject this Agreement to cancellation as set out in Paragraph 13. 6. TRANSFER AND ASSIGNMENT--The parties expressly agree that the mineral development restrictions set forth in this Agreement run with the land,and shalt be binding upon all subsequent owners of all or any portion of the land covered hereby. - If a portion of the subject surface estate is sold or transferred and an assignment of the mineral development restriction for that parcel is approved, a new agreement shalt be issued to the assignee covering the assigned land, containing the same terms and conditions as this Agreement and limited as to term as this Agreement is limited, and the assignor shall be released and discharged from all further obligations and liabilities as to that portion so assigned. An assignment shall not extend the term of this Agreement. 7. PROTECTION FROM OFFSET DRAINAGE-- In case of offset drainage from the Subject Lands, the Surface Owner will be offered an oil and gas lease or will allow the State to offer an oil and gas lease to a third party lessee, allowing development of oil or gas owned by the State underlying this surface or, in lieu of leasing,Surface Owner may pay an in-lieu royalty based on technical information and set by the State. Offset drainage is defined as a producing oil and gas well dritled on a spacing unit or legal location where any portion of the spacing unit or legal location is adjoining the Subject Lands. B. NO RIGHT TO DEVELOP MINERALS-- Except as expressly set forth herein, this Agreement does not give the Surface Owner any authority to explore for, prospect, develop, extract or use any minerals owned by the State. 9. UNIT AGREEMENTS-- In the event the State permits the Subject Lands herein to be unitized or pooled with other lands, the terms of this Agreement shalt be modified to conform to such unit agreement. 10. GOVERNMENT CONTROL--Any matter over which the United States Government assumes exclusive control is exempted from any of the provisions of this Agreement. 11. EXTENSION --Any request for an extension of the term of this Agreement will not be considered prior to the last year of the Agreement term. All requests must be in writing. The granting of an extension will be at the option of the State. 12. COMPLIANCE WITH LAW-- Nothing in this Agreement shall be construed as a waiver by the State of any right or remedy given to it by law for the administration of State-owned minerals, or construed in a manner that requires either party to violate applicable federal, state or local laws. 13. FORFEITURE--Upon failure or default of the Surface Owner or its assignee to comply with any of the provisions or covenants hereof, the State is hereby authorized to cancel this Agreement, and such cancellation shalt extend to, and include, all rights hereunder as to the whole of the tract so claimed or possessed by the Surface Owner or its assignee so defaulting, but shalt not extend to nor affect the rights of any surface owner or approved assignee claiming land separated from this Agreement by assignment: provided, that in the event of any such default or failure to comply With any of the terms and conditions hereof,the State shall, before any such cancellation may be made, send by certified mail to the Surface Owner or assignee so defaulting, to the post office address of the Surface Owner or assignee, as shown by the records of the State, a notice of intention to cancel for such default, specifying the same,and if Within thirty(30)days from the date of mailing said notice, the Surface Owner or assignee shall have paid all rents or bonuses in default, and shall have begun in good faith to correct such other default as may have been specified, and shall thereafter diligently prosecute the correction of such default,there shall not be a cancellation therefor. If such default is not corrected,or correction thereof is not begun in good faith as hereinabove required,within thirty(30)days after the mailing of such notice, this Agreement will SLB 241 4 Revised 08/2015 Page 2 of 4 terminate and be cancelled by operation of this paragraph without further action by the State,or further notice to the Surface Owner, 14. FALSE STATEMENTS-- Misrepresentation or false statements on the part of the applicant or Surface Owner,or failure to comply with any of the conditions set out in this Agreement or in the application which is a part hereof, may subject this Agreement to cancellation by the State. 15. CONDEMNATION -- If the State's mineral estate shall be taken in any condemnation proceeding, this Agreement shall automatically terminate as of the date of taking. The award for such condemnation shall be paid to the State. If only a portion of the mineral estate is taken by condemnation, the State may, at its option, terminate this Agreement or terminate only that portion of the Agreement covering the mineral estate so taken. 16. SUCCESSORS CLAUSE --The benefits and obligations of this Agreement shall inure to and be binding upon the heirs, legal representatives, successors or assigns of the Surface Owner. 17. APPROPRIATION -- Surface owner obligations hereunder are subject to annual appropriation of funds sufficient and intended therefor by Surface Owner's City Council, in its sole discretion, however, failure to pay the Paragraph 2 - Rents obligations will result in termination of this Agreement as set out in Paragraph 13 of this Agreement. IN WITNESS WHEREOF, The parties hereto have executed the foregoing, the same to be effective as of the day and year first above written. STATE: COLORADO STATE BOARD OF LAND COMMISSIONERS Pete Mllonas, Minerals Director ATTEST State of COLORADO County of The foregoing instrument was acknowledged before me this_day of , 2015 by Pete Milonas, in his capacity as Minerals Director of Colorado State Board of Land Commissioners,as being authorized to execute same. (SEAL) Notary Public My Commission Expires SLg 241-4 Revised 08/2015 Page 3 of 4 SURFACE OWNER: CITY OF FORT COLLINS, COLORADO, A Municipal Corporation By: Darin A. Atteberry, City Manager ATTEST: APPROVED AS TO FORM: City Clerk Assistant City Attorney State of COLORADO County of Larimer The foregoing instrument was acknowledged before me this day of 2015, by Darin A. Atteberry as City Manager for the City of Fort Collins, Colorado, as being authorized to execute same. (SEAL) Notary Public My Commission Expires SL8241-4 - Revised 08/2015 Page 4 of 4