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9.1 Dedications North Ohio CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE 02/27/2006 TIME 4:00 P.M. AGENDA SECTION NO: ORIGINATING DEPARTMENT: APPROVED FOR AGENDA: 9 ITEM NO. Page 1 CITY ATTORNEY BY: BY: Greg Bengtson ITEM: Resolution Number 06-6255 A resolution authorizing the Mayor to sign the Covenants and Dedications Relating to New Track Connection and Amending an Oil and Gas Lease Relating to a Producing Oil Well in Salina, Kansas. BACKGROUND: A significant component of the North Ohio Overpass project is construction of what is referred to as the Union Pacific Track Connection east of the overpass. In anticipation of the project, the City acquired the real estate necessary for construction of the track connection, including a tract owned by the Daniel C. King Trust. For the reason that a producing oil well is located on the King Tract, the King Trust retained the mineral interest in the real estate. The oil well on the tract is located just east of the location of the new track connection. The tank battery serving the well was relocated to the east of the location of the track in anticipation of the project. The proposed covenants are the basis of the ongoing relationship between the City, the retained mineral interest holder, the railroad, the oil well operator and the lessee under the oil and well gas lease. RECOMMENDED ACTION: Adopt Resolution No. 06-6255. COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION AND AMENDING AN OIL AND GAS LEASE RELATING TO A PRODUCING OIL WELL IN SALINA, KANSAS These Covenants ("Covenants") are made and entered into as of February 27, 2006, among the following parties: City of Salina, Kansas, a Kansas municipal corporation ("City") Union Pacific Railroad Company, a Delaware corporation ("Railroad") Daniel C. King & N aney L. King, Trustees of the Daniel C. King Trust dated March 13, 1998 ("Mineral Interest Holder") BEREXCO INC., a Kansas corporation ("Operator"); and Okmar Oil Company, an Ohio general partnership, Robert M. Beren, L.P., a Delaware limited partnership, and Matzliach, L.P., a Delaware limited partnership, (collectively "Oil and Gas Lessees") RECITALS A. The City entered into an agreement with the Kansas Secretary of Transportation (the "Secretary") dated April 22, 2002 (the "Original Agreement") for Kansas Department of Transportation ("KDOT") Project No. 85-K-8307-01 covering the grade separation project at North Ohio Street, over the Railroad's tracks and the Kansas and Oklahoma Railroad Company's tracks in Salina, Saline County, Kansas (the "Project"). B. As part of the Project, the City was to acquire, as a Project expense and at no cost to the Railroad, all property required for the Railroad to construct a railroad track connection located west ofMarymount Road which will connect the Railroad's Salina Subdivision at approximately Milepost 493.2 (the "Track Connection"), C. For the purpose of fulfilling its obligation to acquire the property required for the Railroad to construct the Track Connection, the City acquired by Corporation Warranty Deed dated September 29,2004, from Eastridge Development, Inc., a Kansas corporation, to the City recorded in Deed Book 1089 at pages 66-67 ofthe office ofthe Register of Deeds of Saline County, Kansas, a tract legally described on Exhibit A attached hereto and hereby made a part hereof, (the "Eastridge Tract"), COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 2 of 9 D, The mineral rights relating to the Eastridge Tract were reserved by Daniel C. King and Nancy L. King, husband and wife, (the "Kings") and their heirs, executors, and assigns, along with the right to enter the Eastridge Tract for the purpose of extraction of all oil, gas and other minerals on, in and under the Eastridge Tract as set forth in Corrective Quit Claim Deed from the Kings to Eastridge Development, Inc., dated January 1, 1997, and recorded in Deed Book 380, at pages 48-49 of the office of the Register of Deeds of Saline County, Kansas (the "Mineral Interest"); which Mineral Interest was subsequently conveyed of record to the Mineral Interest Holders, E, The Eastridge Tract is covered by an Oil and Gas Lease dated January 12, 1951, and recorded in Oil & Gas Book 6 at pages 206-207 of the office of the Register of Deeds of Saline County, Kansas, (the "Oil and Gas Lease") held by the Oil and Gas Lessees "for the sole and only purpose of mining and operating for oil and gas, and laying pipe lines, and building tanks, power stations and structures thereon to produce, save and take care of said products" and under which a currently producing oil well (the "Oil Well") is being operated by the Operator. F. Exhibit B, attached hereto and hereby made a part hereof, is a survey and legal description of the property to be conveyed by the City to the Railroad pursuant to Agreement Covering New Track Connection Near Salina, Kansas, dated May 3, 2005 (the "Track Connection Agreement") for the purpose of constructing the Track Connection (the "Track Connection Property"). G, The Operator, at the request and expense of the City, has recently relocated the tank battery that services the Oil Well so that both it and the Oil Well are located east of the Track Connection Property as it traverses the Eastridge Tract. H, The Track Connection Agreement provides that the Railroad shall construct and maintain a concrete 40-foot public street crossing (the "Public Street Crossing") within a 60-foot public street right-of-way that will be located on the Track Connection for Industrial Road at Railroad Engineering Station 17+54 (the "Crossing Area") as depicted on Exhibit C-1 and legally described on Exhibit C-2, attached hereto and hereby made a part hereof, I. The deed conveying title to the Track Connection Property from the City to the Railroad (the "Deed") includes a reservation by the City of a perpetual, nonexclusive easement on, along, over and under the Public Street Crossing Area in order for the City to dedicate the Crossing Area as a public at-grade street crossing "and to use the Crossing Area for the installation, use and maintenance of utility crossings by the City and any utility franchised or pennitted under city, state, or federal law (collectively, the "Utilities") provided; however, that such dedications by the City and the City's and general public's use of the Crossing Area for public street purposes and the Utilities' use COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 3 of 9 ofthe Crossing Area for utility crossings shall (i) not interfere with the Railroad's common carrier railroad operations on, along, over and under the Crossing Area including, without limitation, the Railroad's right to install, use and maintain any Railroad communication lines and facilities on, along, over or under the Crossing Area, (ii) not relieve the Utilities from their obligation to pay the Railroad's then current licensee fee for any utility crossings within the Crossing Area, and (iii) not relieve the Utilities from their obligation to obtain the Railroad's prior review and approval of the plans for any utility crossing within the Crossing Area, J. The City, as part ofthe Project, has caused to be reconstructed the 24-foot gravel side road (the "Side Road") which runs immediately south of the north boundary of Section 7 from Marymount Road west to the Public Street Crossing and desires to grant to the Mineral Interest Holder, the Operator, and the Oil and Gas Lessees an access easement for use of the Side Road, for so long as the Oil and Gas Lease remains in effect, as depicted on Exhibit D-l and legally described on Exhibit D-2, attached hereto and hereby made a part hereof, (the "Access Easement"), K. In order to provide for the ongoing exercise of the rights of the Mineral Interest Holder, the Lessees, and the Operator in a manner that does not interfere with the Railroad's use of the Track Connection Property, the parties' mutual interests are best served by addressing the rights of the Mineral Interest Holder, the Lessees, and the Operator in relation to the Track Connection Property by the recording of these Covenants immediately following and contingent upon the recording of the Deed on the closing date under the Track Connection Agreement (the "Closing Date") . THE PARTIES, THEREFORE, COVENANT, DEDICATE, AND AGREE: Section 1. CITY - DEDICATION OF CROSSING AREA. City hereby dedicates the Crossing Area depicted on Exhibit C-l and legally described on Exhibit C-2 as public at-grade street crossing in accordance with and subject to the tenus of the Deed. Section 2. CITY - ACCESS EASEMENT. City hereby grants to the Mineral Interest Holder, the Operator, and the Oil and Gas Lessees the Access Easement depicted on Exhibit D-l and legally described on Exhibit D-2 for use ofthe Side Road, for so long as the Oil and Gas Lease remains in effect. If any part or all of the area affected by the Access Easement is dedicated in the future as public street right-of-way, that same part or all of the Access Easement shall be deemed to have merged into the public street right-of-way. COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 4 of9 Section 3. MINERAL INTEREST HOLDER. Mineral Interest Holder agrees and covenants that, as of the Closing Date, Mineral Interest Holder relinquishes any and all right to enter upon or under any part of the Track Connection Property in the exercise of its rights under the Mineral Interest without the prior written consent ofthe Railroad; provided, however, Mineral Interest Holder may make use ofthe Public Street Crossing to the extent necessary to access that portion of the Eastridge Tract located west of the Track Connection in the exercise of its rights under the Mineral Interest. Section 4, OIL AND GAS LESSEES and OPERATOR. Oil and Gas Lessees and Operator agree and covenant that, as of the Closing Date, Oil and Gas Lessees and Operator relinquish any and all right to enter upon or under any part of the Track Connection Property in the exercise of their rights under the Oil and Gas Lease without the prior written consent of the Railroad; provided, however, Oil and Gas Lessees and Operator my make use of the Public Street Crossing to the extent necessary to access that portion of the Eastridge Tract located west of the Track Connection in the exercise of their rights under the Oil and Gas Lease, Section 5. AMENDMENT OF OIL AND GAS LEASE. To the extent the tenns ofthese Covenants and Dedications are inconsistent with the tenns of the Oil and Gas Lease, the Oil and Gas Lease is hereby amended. Section 6. COVENANTS RUNNING WITH THE LAND. These Covenants and Dedications SHALL RUN WITH THE LAND AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT of the parties, their heirs, beneficiaries, personal representatives, successors and assigns, in perpetuity, unless revoked or modified in writing upon the consent of the parties. Section 7. CONTINGENCY: RECORDING. The effective status of these Covenants and Dedications shall be contingent upon the delivery by the City, acceptance by the Railroad, and the recording ofthe Deed. These Covenants shall be recorded in the office of the Saline County Register of Deeds on the Closing Date and immediately following the recording of the Deed. IN WITNESS WHEREOF, the individuals and duly authorized officers of the parties have executed these Covenants as of the day and year first above written, COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 5 of 9 City of Salina, Kansas By: Deborah P. Divine, Mayor ATTEST: Lieu Ann Elsey, CMC, City Clerk STATE OF KANSAS, SALINE COUNTY, ss: BE IT REMEMBERED, that on this 27th day of February, 2006, before me, the undersigned, a notary public in and for the county and state aforesaid, came Deborah P. Divine, Mayor of the City of Salina, Kansas, and Lieu Ann Elsey, City Clerk, who are personally known to me to be the same persons who executed as such officers the within instrument of writing on behalf of the City of Salina, Kansas, and such persons duly acknowledged the execution of the same to be the act and deed of said City. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal the day and year last above written. Notary Public My appointment expires: COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 6 of 9 Union Pacific Railroad Company By: Tony K. Love, General Manager- Real Estate ST ATE OF NEBRASKA ) ) ss. ) COUNTY OF DOUGLAS On , 2006, before me, a Notary Public in and for said County and State, personally appeared Tony K. Love, who is the General Manager-Real Estate, of Union Pacific Railroad Company, a Delaware corporation, and who is personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to in the within instrument, and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public (Seal) COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 7 of 9 Daniel C. King, Trustee N aney L. King, Trustee STATE OF KANSAS, COUNTY OF SALINE, ss: This instrument was subscribed, sworn to, and acknowledged before me on this day of , 2006, by DANIEL C. KING and NANCY L. KING, as Trustees of the Daniel C. King Trust dated March 13, 1998. Notary Public COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 8 of 9 BEREXCO INC. By: Adam E. Beren, President STATE OF KANSAS, COUNTY OF SEDGWICK, ss: This instrument was acknowledged before me on the - day of 2006, by ADAM E. BEREN, as President of BE REX CO INC., a Kansas corporation. Notary Public Okmar Oil Company By: Robert-AB, LP., Managing General Partner By: REN Corporation, General Partner of Robert-AB, LP. By: Adam E, Beren, President STATE OF KANSAS, COUNTY OF SEDGWICK, ss: This instrument was acknowledged before me on the - day of 2006, by ADAM E, BEREN, as President ofREN Corporation, General Partner of Robert-AB, LP., Managing General Partner of Ok mar Oil Company, an Ohio general partnership. Notary Public Robert M. Beren, LP. By: BEREXCO PROPERTIES, INC., Managing General Partner By: Adam E. Beren, President STATE OF KANSAS, COUNTY OF SEDGWICK, ss: This instrument was acknowledged before me on the - day of 2006, by ADAM E, BEREN, as President of BE REX CO PROPERTIES, INC., Managing General Partner of Robert M, Beren LP., a Delaware limited partnership, Notary Public COVENANTS AND DEDICATIONS RELATING TO NEW TRACK CONNECTION Page 9 of 9 Matzliach L.P. By: Berenergy Corporation, Managing General Partner By: Robert M. Goodyear, Jr., President STATE OF , COUNTY OF , ss: This instrument was acknowledged before me on the - day of 2006, by ROBERT M. GOODYEAR, JR., as President of Berenergy Corporation, Managing General Partner of Matzliach LP" a Delaware limited partnership. Notary Public