RENTAL AGREEMENT

LEASE AGREEMENT

This Lease agreement, made this ______ day of ____________, 2004, by and between SEAVIEW COMMUNITY SERVICES (LESSOR) and the KENAI PENINSULA BOROUGH (KPB);

WITNESSETH:

1. Premises. LESSOR, for and in consideration of the rents, covenants, and conditions hereinafter specified to be paid, by KPB, does hereby lease to KPB, the office space more particularly described as follows:

Suite 123, containing 440 square feet located within the SeaView Community Plaza Building that is situated on Lots 32A and 40A, Block 3, Seward Townsite Subdivision, Seaview Plaza Replat, according to Plat No. 94-13, records of the Seward Recording District, Third Judicial District, State of Alaska.

for the purpose of operating a general business office for the Seward Bear Creek Flood Service Area. For the purposes of this lease, the Leased Premises, do not include basement storage units and there is only street parking.

2. Term. The lease term is one year commencing June 1, 2004 through and including May 31, 2005, unless sooner terminated as herein provided and is subject to the option to extend as provided in paragraph 13.

The KPB shall have the option to renew this lease for up to four additional one-year periods, for a total of four years, subject to KPB assembly appropriation. The monthly lease rate of $704.00 shall remain the same for the initial one-year term and for each of the four additional one-year renewal options.

3. Lease.

A. Rent. In consideration of the Lease of the premises by LESSOR, the KPB covenants to pay to the LESSOR as rental for the premises described in paragraph 1 above, the sum of $704.00 per month. Rent is due on the first day of each month.

B. Security Deposit. A security and cleaning deposit of $660.00 will be used to ensure that the premises will be left in good order, normal wear excepted, which said deposit may not be used as apportion of the last month's rent. Tenant will be responsible for any damages found upon termination of agreement. If damages are found to be in excess of the security deposit, then a bill for the remaining portion will be sent to the address of record. Any remaining portion of this deposit will be returned to the Tenant within fourteen days after vacating the premises.

C. Utilities. All utilities are included in the Lease rate.

D. Janitorial Services. LESSOR will provide janitorial services for all common areas. KPB is responsible for leased premises.

4. Covenants of KPB. The KPB hereby covenants and agrees:

A. To pay rent: The KPB will pay the said rent specified at the times and in the manner set out in paragraph 3 herein, except only in the case of fire or other casualty as herein provided.

B. Not to assign. KPB shall not assign, sublet or part with the possession of all or any part of the leased premises without the prior written consent of the LESSOR. LESSOR shall not unreasonably withhold such consent.

C. To permit LESSOR to enter. LESSOR is granted free access to premises at all times for inspection, maintenance, or repair.

D. To yield up premises. At the expiration of the term of this Lease agreement, KPB will peaceably yield up to the LESSOR the premises, in good repair in all respects, reasonable use and wear and damage by fire and other casualties excepted.

E. Alterations. KPB may not alter the premises without first obtaining prior approval of LESSOR.

5. LESSOR'S Warranties. The LESSOR covenants, guarantees and provides the following express warranties:

A. No existing restrictions interfere with the KPB'S permitted and intended use of the leased property;

B. Availability of adequate ingress and egress to leased property;

C. LESSOR has sufficient interest in property to grant tenant this leasehold;

D. KPB shall have quiet enjoyment of the premises;

E. The property is fit for its intended use;

F. LESSOR shall be responsible for all snow and ice removal from the roof, the adjacent parking area, and entrances and exits;

G. Any use, treatment, storage, or transportation of hazardous substances has been in compliance with all applicable federal, state and local laws. No hazardous substances have been released, discharged, spilled, leaked, disposed of, or omitted on, in, or under the premises. The premises are free of hazardous substance; and

H. LESSOR shall be responsible to maintain the premises in good repair at all times and shall provide adequate heat and electricity at all times.

6. Default by LESSOR/KPB. Should either KPB or LESSOR default in the performance of the obligations of any covenants of this Lease agreement and fail to fully remedy such default within thirty days after written notice by the nondefaulting party, then the Lease agreement may be terminated by written notice to the defaulting party. All rent hereunder shall abate during the period of any such default. Upon termination of this Lease agreement, LESSOR shall refund to KPB any unearned advance rent paid of KPB.

7. Subject to Annual Appropriation. Unless the Kenai Peninsula Borough Assembly by resolution provides otherwise, this lease shall automatically terminate without penalty on June 30 of any year during which the Kenai Peninsula Borough assembly fails to appropriate funds sufficient to make the lease payments on the leased property for the following fiscal year.

8. Liability and Insurance. Each party shall be responsible and liable for its own acts and omissions under this Lease agreement and shall carry insurance adequate to protect its interest.

9. Permits, Laws, and Taxes. LESSOR shall acquire and maintain in good standing all permits, licenses, and other entitlements necessary to the performance under this Lease agreement. All actions taken by the LESSOR under this agreement shall comply with all applicable statutes, ordinances, rules and regulations. LESSOR shall pay all taxes that may be due and owing to a federal, state, or local taxing entity.

10. No Waiver. No assent, expressed or implied, by either party to any breach of either party's covenants shall be deemed to be a waiver of any succeeding breach of the same covenants, nor shall any forbearance by a party to seek a remedy for any breach be deemed a waiver by that party of its rights or remedies with respect to such breach.

11. Integration. This document contains the entire lease agreement of the parties hereto. All negotiations, statement, representations, guarantees, warranties, and assurances, whether oral or written, which are in any way related to the subject matter of this Lease agreement and the performance of either party hereto, are merged and integrated into the terms of this document.

12. Modification. The parties may mutually agree to modify the terms of this agreement. Any modifications shall be in writing executed by both parties.

13. Renewal. This Lease agreement shall automatically renew for an additional period of one year per renewal term on the same term as this Lease agreement, unless either party gives written notice of the termination no later than 60 days prior to the end of the term of renewal term.

14. Interpretation and Enforcement. This agreement has been drafted following negotiations between the parties. It shall be construed according to the fair intent of the language as a whole, not for or against any party. The interpretation and enforcement of this agreement shall be governed by the laws of the State of Alaska. The entitles of sections in this agreement are not to be construed as limitations or definitions but are for identification purposes only.

15. Severability. If any section or clause of this agreement is held invalid by a court of competent jurisdiction, or is otherwise invalid under the law, the remainder of this agreement shall remain in full force and effect.

16 . Notice. Whenever notice is required hereunder, it shall be addressed as follows until written notice of change of address is given to the other party:

LESSOR: LESSEE/KPB:

Seaview Community Services Kenai Peninsula Borough

Attn: Executive Director Attn: Planning Director

P.O. Box 1045 144 N. Binkley Street

Seward, AK 99664 Soldotna, AK 99669

SEAVIEW COMMUNITY SERVICES KENAI PENINSULA BOROUGH

__________________________________ _________________________________

Melissa Witzler Stone Dale L. Bagley,

Executive Director Mayor

Date: _______________ Date: _______________

ATTEST: APPROVED AS TO LEGAL FORM

AND SUFFICIENCY:

__________________________________ ____________________________________

Linda S. Murphy, Borough Clerk Holly B. Montague

Assistant Borough Attorney

NOTARY ACKNOWLEDGMENT

STATE OF ALASKA )

) ss.

THIRD JUDICIAL DISTRICT )

The foregoing instrument was acknowledged before me this _______ day of _______, 2004, by Dale Bagley, Mayor of the Kenai Peninsula Borough, an Alaska municipal corporation, for and on behalf of the corporation.

____________________________________

Notary Public in and for Alaska

My commission expires:________________