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CITY OF PULLMAN P.O. Box 249, Pullman, WA 99163-0249 (509) 334-4555 FAX (509) 334-2751 August 22, 1996 Jim Potts, Chair, Whitman County Commissioners Paul Agidius, Mayor, City of Moscow Jean Wardwell, President, Pullman Civic Trust Re Interim Trail Use and Railbanking Contract Enclosed you will find a' executed Contract for Interim Trail Use and Railbanking between the Palouse River Railroad Company and Pullman, Washington; Whitman County, Washington; and Moscow, Idaho. I have also included the Memorandum of Understanding (As to interpretation of contract provision) for your files. It is exciting to see the project progress to this point. Thank you for the work you have done. Sincerely, Ralph W. Dannenberg Director of Public Services c w/o enc: Mike Werner, Whitman County Ron Shirley, Whitman County Gary Riedner, City of Moscow Dale Pernula, City of Moscow Nancy Mack, Pullman Civic Trust 96-44 ---PAGE BREAK--- MEMORANDUM OF UNDERSTANDING (AS TO INTERPRETATION OF CONTRACT PROVISION) This Memorandum of Understanding is entered into by the signatory entities hereto effective from and after the date each of the signatory entities executes a certain document entitled Contract Interim Trail Use and Railbanking Palouse River Railroad Company Pullman, WA; Whitman county, WA; Moscow, ID dated July 29, 1996 hereinafter referred to as the Contract. WHEREAS, the undersigned entities have formed together in a coalition of cooperation for the purpose of each securing an Interim Trail Use and Railbanking Agreement under 16 U.S.C. 1247(d) within their respective jurisdictions and have entered into the aforementioned Contract in furtherance of this purpose; and, WHEREAS, paragraph 4 Indemnities. of the aforementioned Contract contains the following language: Purchaser shall be responsible for defense of any litigation contesting the right of the parties hereto to enter into or effectuate this Agreement under the National Trails Systems Act, 16 u.s.c. 1247(d). ; and, WHEREAS, the signatory entities to this Memorandum of Understanding each desire to set f orth more specifically their understanding of their intent as to how the aforementioned contract provision will be understood and interpreted among the signatory entities; now, therefore, The signatory entities understand f rom and after each signatory and agree that: entity hereto signs the aforementioned Contract the contract provision quoted above contained in Paragraph 4 Indemnities. of the Contract shall be interpreted among the signatory entities hereto to mean Each Purchaser entity shall be responsible for only defense of litigation contesting the right of the Railroad, and not other Purchaser entities, to enter into or effectuate this Contract under the National Trails Systems Act 16 U.S.C. 1247(d) within that Purchaser entity's parcel as described in each quit claim deed to be issued. Page 1 of 3 Pages ---PAGE BREAK--- neither the Contract nor this Memorandum of Understanding are intended or shall be considered a joint exercise of powers as contemplated by I.e. §67-2326 through 2333 and related statutes, or Chapter 3 6 . 34 R. C. H. (Inter local Cooperation Act). < Unders ood and Agreed to by the City of Pullman this day of 1996. CITY OF PULLMAN, a municipal corporation of the:;2t . e of HashLn':ton By: UY o Mayor proved as to form: Understood and Agreed to by the County of Whitman this ; day of tlu , 1996. couNi OF HHITMAN, a municipal corporation of·. the State of Wash; /Y/J , B:/M JJ CU-t B !(t2 !mwi" . By . By: CommissJ.oner Attested by: =t{U&ed t1u:hM._. Cler of the Boara ·whitman County Presecuting Attorney Page 2 of 3 Pages ---PAGE BREAK--- Understood and Agreed to by the City of Moscow this /9 :r/"1 day of /9WCH-i'C , 1996 . CITY OF MOSCOW, a municipal corporation of the State of Idaho By: C 4 : Mayor · ATTEST: Page 3 of 3 Pages ---PAGE BREAK--- 29 July 1996 Contract Interim Trail Use and Railbanking Palouse River Railroad Company PUllman, WA; Whitman County, WA; Moscow, I D Whereas City of PUllman and county of Whitman (municipal corporations of the State of Washington), and city of Moscow (a municipal corporation of the State of Idaho) (hereinafter collectively referred to as "PUrchaser") wish to cooperate in preserving a transportation corridor for possible future rail reactivation and for interim use as a trail; Whereas PUllman Civic Trust (hereinafter referred to as "Civic Trust") (a Washington State non-profit corporation) is prepared to make payments sufficient to defer administrative and overhead costs incurred by Blue Mountain Railroad Company d/b/a Palouse River Railroad Company (hereinafter referred to as "Railroad") (a Washington corporation) in entering into this agreement; Whereas Railroad, although planning to continue to provide freight rail service between PUllman and Moscow through Whitman County, does not require its existing corridor for that purpose and is prepared to cooperate with Purchaser in preserving that corridor for possible future rail reactivation and in making the corridor available for trail use; Whereas Purchaser and Railroad agree that preserving the corridor for possible future rail reactivation and for interim trail use is in the best interests, now and in the future, of the citizens of Pullman, Moscow, Whitman County and the surrounding area; and Whereas the corridor reactivation region, Civic Trust wishes to facilitate preservation of for interim trail use and possible future rail ("railbanking") in the best interests of the Purchaser, Railroad and Civic Trust hereby agree as follows: 1. Action at S T B. Purchaser and Railroad shall cooperate in, and use their best efforts to complete all necessary, filings at the Surface Transportation Board (STB) for notices of interim trail use (railbanking) or abandonment for the line ("premises" or "line") more particularly described as M P 19.0 (approx.) at Kamiaken street in Pullman to M P 27.50 at Line Street in Moscow; provided, however, the any reference to the line shall not be deemed to include the following two segments: M P 25.50 to 26.10 (Segment A) and MP 19.30 to 19.75 (Segment 1 ---PAGE BREAK--- The parties acknowledge that they separate notices of exemption or (separate proceedings) for various necessary. may cooperate in filing petitions for exemption portions of the line if 2. Donation of line and administrative fee. Railroad agrees to donate, and Purchaser agrees to acquire all real estate interests held by Railroad in the above line, including all bridges, culverts, similar structures and ballast, but not including track, (ii) ties, (iii) other track material and (iv) the two large bridges in Pullman. Railroad also agrees to donate, and Purchaser agrees to acquire, an easement for a trail in Segment A and Segment B, in order to provide a continuous trail suitable for bicycle, walking, equestrian and other compatible uses. civic Trust agrees to pay an administrative fee in the amount of fifty thousand dollars ($50,000.00) in cash to pay administrative and overhead costs incurred by Railroad for this transaction. Railroad shall retain and otherwise ""'tf!Ðose of all track, ties, and other track material, and the two large bridges in Pullman. Railroad will arrange for Burlington Northern Railroad or third parties to install a switch to serve the Wilbur-Ellis facility from the Burlington Northern line. Notwithstanding any other provision of this agreement, Civic Trust shall be the sole party to this agreement responsible for payment of the $50, 000 for administrative and overhead costs incurred by Railroad for this transaction. In particular, Purchaser shall not be responsible for any payments to Railroad under this agreement or by reason of this agreement. Civic Trust shall be responsible for payment of the $50,000 as follows: Civic Trust shall pay twenty five thousand dollars ($25,000) to Railroad within ten business days of the effective date of the order of the Surface Transportation Board authorizing application of section S of the National Trails System Act, 16 U.S. C. § 1247 to the corridor, unless the effective date is stayed. If more than one proceeding before the Surface Transportation Board is initiated, the initial $2 5, ooo payment shall be due within ten business days of the effective date of the last order authorizing application of said section S unless the effective date is stayed. Provided the order remains fully effective, the Civic Trust shall pay the remainder due (namely, the final $25,000) no later than one calendar year from the date of the initial payment. (ii) Civic Trust represents that it has an option to obtain a loan in the amount of $25, 000 for purposes of making said final payment, and, in the event no other source of funding emerges, Civic Trust agrees to exercise said option to ensure that the final payment is timely made. Upon request by Railroad received at least ten days prior to closing, Civic Trust will supply a letter from the third party (or parties) who have agreed to make said loan, affirming that the loan funds are 2 ---PAGE BREAK--- available and that the loan will be made if necessary. (iii) Other than the obligation to pay the $50,000 for administrative and overhead costs incurred by the Railroad for this transaction, Civic Trust shall not be responsible for any action or failure to act under this agreement, ( B) for management of the property Purchaser acquires pursuant to this agreement in any way, or ( C) for any claims or liability of any kind arising out of this agreement, or arising out of the use or occupancy of the property by any party, whether that claim is asserted by Railroad, Purchaser, or a third party, including attorneys' fees, costs, expenses and damages of all kinds. In no event shall Civic Trust be regarded as an owner of any interest in the property. Except as provided in subparagraph Railroad shall cause all track, ties, and other track material to be removed from the line by December 31, 1996, subject to reasonable extensions due to weather or other good cause. In the event closing occurs before all track, ties, and other track material is removed, Railroad shall have a right of entry for removal of same, provided, however, that Railroad shall be solely liable for any injuries or claims for damages arising out of Railroad's actions and inactions on the corridor. In the event salvage must be expedited to accommodate deadlines imposed by state agencies in connection with trail construction grants, Railroad shall take all reasonable steps to expedite salvage so as to permit compliance with such deadlines. The premises, including all structures, shall be conveyed AS IS, WHERE IS, with no representations as to usability for any particular use; provided, however, that Railroad shall comply with the following conditions upon salvage or removal of track and ties from the property: the premises shall be reasonably cleaned of railroad debris, including broken ties and tie butts, where not employed for continued rail use; (ii) bridges and culverts shall not be damaged, normal wear and tear excepted, except that the two large bridges in Pullman shall be removed; (iii) all road crossiÑgs shall be restored to a fashion acceptable to the jurisdiction responsible for said crossing, or, if a private crossing, in a reasonable fashion, employing suitable material and compaction to provide a smooth and reliable surface; (iv) private property rights shall be respected; and salvage operations shall comply with all applicable federal, state and local regulations or requirements relating to said activity on the premises. Payment of the administrative fee provided in this agreement shall not be withheld due to, or conditioned upon resolution of, any disputes relating to compliance with this subparagraph. As additional consideration for this transaction, Purchaser shall furnish legal counsel retained by Purchaser to 3 ---PAGE BREAK--- provide legal assistance, and shall pay the costs and fees incurred by said legal counsel, including any charge by the Surface Transportation Board (ST for the issuance of a notice (or notices) of interim trail use (NITU) invoking section S of the National Trails system Act, 16 u.s.c. § 1247 for the property to be acquired. In the event this contract is terminated for failure to achieve a condition, Purchaser shall bear all costs incurred to date in providing legal assistance to obtain a NITU (or NITU's). Railroad shall cooperate by and timely providing such information, including verified statements, as are reasonably required to pursue the issuance of a NITU (or NITU's). Railroad shall be responsible for any separate legal counsel retained by Railroad, including any costs arising from delay in providing verified statements or other information necessary for the issuance of a NITU (or NITU's). The trail easements conveyed by Railroad to Purchaser Òn Segment A and Segment B shall encompass all property south of a line ten feet south of the existing centerline of the railroad, and such other land as in all events to ensure that Purchaser can install and maintain a recreational trail no less than ten feet in width with suitable shoulders in addition with a continuous link to the trail on the roadbed of the line to be acquired pursuant to application of 16 u.s.c. § 1247 As between the parties, Purchaser shall be solely resRonsible for all claims of personal injury, property damage, or environmental contamination which arise from Purchaser's use of either or both of these easements, and shall indemnify the other parties to this agreement from losses arising from any such claims, including payment of attorneys' fees. (ii) In the event Railroad determines to cease rail service to Segment A or Segment B, Railroad agrees, at the request of Purchaser, to railbank such Segment (or both Segments) and to convey same to Purchaser for interim trail and railbanking purposes, provided, however, that Purchaser will pay any filing fees and supply counsel or pay for the attorneys' fees associated with obtaining railbanking authority. (iii) It is understood and agreed by the parties that Railroad shall control, and have the right to lease or license (for the duration of the easement) all portions of the corridor in the area of the easements, provided, however, that this right shall not extend to property more than 10 fee t south of the 'centerline of the existing track, and that in all events Purchaser shall have the right to install and to maintain a recreational trail no less than ten feet in width with suitable shoulders in addition through Segment A and Segment B. (iv) Conveyance of trail easements shall not be deemed an abandonment of the rail line in Segment A or Segment B, and the parties acknowledge that both Segments remain under the jurisdiction of the STB as portions of actively operating railroad. 4 ---PAGE BREAK--- 3. Title and condition. The real estate constituting the premises shall be transferred pursuant to three quitclaim deeds, one with City of Pullman as grantee for all property covered by this agreement within the boundaries of the City of Pullman; one with County of Whitman as grantee for all property covered by this agreement within the boundaries of Whitman County but outside the boundaries of Pullman; and one with City of Moscow as grantee for all property covered by this agreement within the State of Idaho. Separate quitclaim deeds of easement shall be issued for the easements in Segment A and Segment B. Each qui tclaim deed shall be wi thou t warranties or representations of title, and subject to all rights, easements and reservations in place or of record, but indicate that the property is transferred pursuant to an STB order applying section 8 of the National Trails System Act, 16 u.s.c. 12 4 7 • For so long as the property is railbanked, Railroad shall retain a right to re-acquire for freight railroad purposes the railroad line for $50, 000 (escalated a t an annual rate of three per cent from the date of purchase}, plus the cost of any trail or trail-related improvements installed on the line by Purchaser or i ts assignees or successors in interest; provided, however, that the initial $50,000 (or portion thereof in the event of rail reactivation of only a portion of the line, inclusive of accumulated 3% interest} shall be repaid to the Civic Trust or its successor, and provided, further, that the cost of trail or trail-related improvements is established by documents evincing the costs claimed. Railroad represents that i t is aware of no toxic substances or adverse environmental conditions on the premises but makes no warranties in this regard. Railroad shall remain liable, to the extent otherwise provided by law, after closing for all toxic substances or environmental hazards existing upon the corridor prior to closing, and Purchaser or its assignee shall be liable, to the extent otherwise provided by law, for all toxic substances or environmental hazards which come into existence on the premises after closing. Unless otherwise limited by law, the party to whom responsibility is allocated for a particular liability or liabilities pursuant to this paragraph shall defend and hold harmless the other party from any and all suits, claims, loss, costs, damage or injury, on account of that liability or liabilities. Purchaser shall have a right of entry to inspect the premises prior to closing, including the right to take soil tests and surveys. Purchaser shall provide Railroad with copies of all environmental surveys, tests, or reports. Should Purchaser upon inspection ascertain the presence of toxic substances or environmental hazards, Purchaser at its discretion may decline to close on the line. 4. Indemnities. Subject to statutory limitations, City of Pullman, County of Whitman, and City of Moscow shall indemnify and hold Railroad and Civic Trust harmless from any and all liability, costs or expense, including attorneys• fees, arising 5 ---PAGE BREAK--- after the date of closing with respect to claims arising with respect to the property each obtained by deed from Railroad, but not with respect to claims arising with respect to property deeded the other two by the railroad. This indemnity shall apply to claims for injuries, death or property loss or damage, other than (in the case of the Railroad) for liability arising from salvage operations by or under the authority of Railroad on the property, or from other activities of the Railroad. PUrchaser shall be responsible for defense of any litigation contesting the right of the parties hereto to enter into or effectuate this Agreement under the National Trails Systems Act, 16 u.s.c. 1247(d). Railroad will indemnify and hold PUrchaser and Civic Trust harmless from any and all liability, cost or expense, including attorneys' fees, incurred by or assessed against PUrchaser or Civic Trust arising before the date of closing on account of injuries, death, or property loss or damage resulting from Railroad's acts or omissions in connection with Railroad's use, operation or maintenance of the premises. 5. successors and assigns. Wherever referred to herein, the term PUrchaser shall imply, mean and apply to the PUrchaser, any successors, assigns, heirs, or duly authorized agents, who shall be severally and collectively liable for any and all performance hereunder, except as provided in !4 above. Wherever referred to herein the term Seller or Railroad shall imply, mean and apply to the Railroad, any successors, assigns, or duly authorized agents, who shall be severally and collectively liable for any and all performance hereunder. The term Civic Trus t shall imply, mean and apply to Civic Trust, its successors, assigns, or duly authorized agents. 6. Liens of Seller's mortgages. Railroad shall deliver to PUrchaser, who shall place of record, good and sufficient releases of the liens of Railroad 1 s mortgages at the time of closing. 7. Other liens. Any judgment against Railroad which may appear of record as a lien against the premises prior to closing shall be settled and satisfied 'by Railroad if and when it is judicially de termined to be valid, and Railroad hereby indemnifies the Purchaser for all loss arising out of Railroad's failure to have a judgment lien so settled and satisfied. 8. General real estate taxes. Real estate taxes payable or paid in the year the deed is delivered shall be prorated by Railroad and PUrchaser as of the date on which the deed is delivered on the basis of the most recent ascertainable taxes assessed against the subject property, or as may be equitably apportioned thereto by the Railroad if the property is not separately assessed. PUrchaser shall be responsible for the payment of any and all taxes that may be levied or assessed against the conveyed premises from and after the date of 6 ---PAGE BREAK--- closing. 9. Transfer taxes. Responsibility for any and all documentary stamps in the amount prescribed by statute, and to pay any and all required transfer taxes, excise taxes and any and all fees incidental to recordation of the conveyance instrument shall be allocated to Purchaser. 10. Notices and demands. All notices, demands, payments and o ther instruments required or permitted to be given or served by either party shall be in writing and deemed to have been given or served by either party if sent by registered or certified mail, or express mail, addressed to the o ther party at the address shown as follows, unless otherwise specifically provided in this contract: for City of Pullman, City of Pullman Att: City supervisor P.O. Box 249 Pullman, WA 99163-0249 (509) 334-4555 fax: (509) 334-2751 for county of Whitman, for city of Moscow, for Civic Trust, for Railroad, Whitman County Parks and Recreation Att: Director North 310 Main Street Colfax, WA 99111 (509) 397-6238 fax: (509) 397-6239 City of Moscow Att: City supervisor P.O. Box 9203 Moscow, Idaho 83843 (208) 8 83-7000 Fax: (208) 8 83-7018 Pullman Civic Trust % Nancy Mack 910 SE Sunnymead Way Pullman, WA 99163 (509)335-0945 andjor %Jean Wardwell 1145 N.W. Clifford Pullman, WA 99163 (509) 334-5636 President Blue Mountain Railroad Co. 709 N.10th Walla Walla, WA 99362 7 ---PAGE BREAK--- (509) 522-1464 fax: (509) 522-8213 11. Application of 16 u.s.c. 1247Cdl. This donation and transfer is entered into pursuant to section 8 of the National Trails Systems Act, 16 u.s.c. 1247 and other applicable authorities, and this contract shall be interpreted to conform to said 16 U.S. C. 124 7 • Purchaser shall not be obligated to proceed to closing unless an order rendering section 8 applicable to the premises (defined as the entire corridor, or those portions defined above with a breakpoint at the Wilbur-Ellis facility) is effective. In the event rail service is ever restored to the premises, reimbursement shall be provided as indicated in paragraph 3 herein. In the event the Surface Transportation Board, or any other federal or state authority having jurisdiction over any part of this conveyance, shall impose additional terms or conditions upon this conveyance and transaction, including terms and conditions arising from amendments to current laws or statutes, either party may terminate this agreement without liability to the other. 12. Continued Service. Purchaser and Railroad acknowledge that a condition of Purchaser's entry into this agreement is that Railroad continue to provide service to existing customers in city of Pullman and Whitman County. Purchaser and Railroad acknowledge that Railroad intends to continue to do so on trackage rights obtained over a parallel Burlington Northern rail line. 13. Closing. The obligation of Railroad to convey the premises and to comply with all of the terms and conditions of this Agreement, as well as the obligation of Civic Trust to pay the administrative fee and Purchaser to comply with all other terms and conditions set forth in this Agreement, is subject to the prior satisfaction of the conditions set forth in this Agreement, unless waived in writing by the parties. After execution of this Agreement and satisfaction of the conditions precedent, the parties agree to fix a time, date and location for consummation and closing of the transactions contemplated in this Agreement, provided however, that closing for purposes of deed transfer shall occur by December 31, 1996, or as soon thereafter as all conditions precedent are satisfied and the Railroad supplies acceptable quitclaim deeds under section 8 of the Trails Act. 14. Assignment of easements and leases. Railroad retains all rights to grant leases, licenses, permits and easements of any kind whatsoever in the premises as to Segments A and B to the extent not inconsistent with !2 (iii). All other leases, licenses, permits and easements, whether or not of record, shall be assigned to whichever of the three purchasing parties 8 ---PAGE BREAK--- city of Pullman, County of Whitman, City of Moscow) is acquiring the underlying property of the Railroad with respect to the property covered by the lease, license, permit or easement, or shall be assigned as that purchasing party directs in writing, or cancelled, upon transfer of the premises to that party. Revenues shall be prorated as of closing. Railroad makes no represe n ta tions or warran ties as to the validity or enforceability of the leases, licenses, permits and easements so assigned. 15. Internal Revenue Code. Neither Purchaser nor Civic Trust is a foreign person as the term is used and defined in section 1445 of the Internal Revenue Code of 1954, as amended andt'·the regulations promulgated thereunder. 16. Delivery of deeds. Railroad shall tender draft forms of deed to City of Pullman, County of Whitman, and City of Moscow a t least two weeks prior to scheduled closing for review, comment and final approval. A t closing, Railroad is authorized to deliver each of the three deeds provided under this agreement unto and in the name of any assignee(s) designated by City of Pullman, county of Whitman, or City of Moscow, for their respective sections, provided the purchasing party for that section and its assignee(s) have duly and properly executed an assignment of this agreement prior to closing and such assignments have been forwarded to Railroad within fifteen days prior to closing. 17. Interim trail manager. City of Pullman, County of Whitman and City of Moscow may assign this agreement, or its responsibilities as trail manager under this agreement, insofar as the agreement or responsibilities relate to property for which the respective purchasing party is grantee, to a third party or parties provided that such parties are qualified to serve as railbankerjinterim trail manager. Should any of the three purchasing parties or its assignee ever determine to rescind interim trail use and railbanking, such party or its assignee shall give Railroad and Civic Trust sixty days advance notice in wri ting. Should Railroad (with civic Trust concurrence) or civic Trust identify another party willing to act as interim trail managerjrailbanker during that period, that purchasing party or its assignee shall cause the property in question to be transferred to the substitute party for continued interim trail use and railbanking, and shall cooperate in all respects with respect to any proceedings required in connection with said transfer. 18. Additional warranties. Each individual executing this Agreement on behalf of an entity represents and warrants that he or she is duly authorized to execute and deliver this Agreement on behalf of said entity in accordance with duly adopted organizational documents or agreements and if appropriate a 9 ---PAGE BREAK--- resolution of the entity, and that this Agreement is upon said entity in accordance with its terms. binding \ Accepted by City of Pullman this day of Al%h'd, 1996. City of Pullman, a municipal corporation of the State of Washington By: ATTEST: Finance L'x} (ky'K as to foÎ, Q c A ttorney Accepted by County of Whitman this COUNTY a municipal State of Washington ?@ABCBo7Q Commissioner Attested by: 1iarrA/ A6yo a t? /l n7}/l9d1 >;kz (/ilu/ 4>?kr? i tman county PrÏsecuting Attorney 10 day of 21 v , 1996. ---PAGE BREAK--- Accepted by City of Moscow this 1' 7"'day of /?V