AN ORDINANCE granting to the Ballard Terminal Railroad Company a railway franchise and the right, privilege and authority to locate, lay down, construct, maintain, own, and operate standard gauge railway tracks in, upon, along and across that portion of the Burlington Northern and Santa Fe Railway Company's former Fremont to Ballard, Washington Branch Line right-of-way between 6th Avenue Northwest and Northwest 67th Street for a term of thirty years, specifying terms and conditions under which this franchise is granted, and providing for acceptance of the franchise, its terms and conditions.

WHEREAS, the Burlington Northern and Santa Fe Railway Company (BNSF) has expressed its intention to abandon that part of its line between BNSF Milepost 0.09 and BNSF Milepost 02.70 in the Ballard area of the city; and

WHEREAS, in 1988 the Burlington Northern Railroad Company and The City of Seattle set forth their joint objective to maintain a permanent linear corridor along selected railroad rights-of-way for trail purposes, including the right-of-way designated as the "North Ship Canal," being the Section from Third Avenue NW to the connection with the north/south rail line at NW 68th Street, which Section includes the above Mileposts; and

WHEREAS, the City's long-held policy is also to support rail-served businesses along the selected railroad rights-of-way; and

WHEREAS, Resolution 29474, passed November 12, 1996, reiterated the City's commitment to railbanking the North Ship Canal right-of-way for trail purposes and specified a preferred location for the trail's extension; and

WHEREAS, the Ballard Terminal Railroad Company (BTRC) recently has been formed to provide rail service to businesses located in the Ballard industrial area; and

WHEREAS, BNSF intends to enter into agreements that will result in the right-of-way being railbanked and owned by the City, and the rails, ties and other track materials being owned and used for rail service by BTRC pursuant to a modified certificate of public convenience and necessity issued by the Surface Transportation Board as authorized by 49 C.F.R. 1150.21 et seq.; NOW, THEREFORE,

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Conditions of Grant

(a) That The City of Seattle ("the City") does hereby grant to Ballard Terminal Railroad Company ("Grantee"), a railway franchise and the right, privilege and authority to locate, lay down, construct, maintain, own and operate standard gauge railroad tracks in, upon, along and across Burlington Northern and Santa Fe Railway Company's current Milepost designations M.P. 0.09 to M.P. 02.70 of the existing rail line previously owned by the Burlington Northern and Santa Fe Railway Company in Ballard, for a term of thirty (30) years, expiring at 11:59 p.m. on September 29, 2027.

(b) That this ordinance shall be effective only when the following conditions are first satisfied: (i ) that an interchange agreement with Burlington Northern and Santa Fe Railway Company exists to which Grantee is a party; (ii) that the rail line has been authorized for preservation under 16 U.S.C. 1247(d) as administered by the Surface Transportation Board; (iii) that the City has acquired the rail line pursuant to 16 U.S.C. 1247(d); (iv) that Grantee has entered into an Operating Agreement with The City of Seattle in conformity to this ordinance and specifying a program of joint use permitting for interim trail use alongside rail use at least in those locations where the rail is not in street right-of-way; (v) that Grantee has obtained a modified certificate of public convenience and necessity as provided for in 49 C.F.R. 1150.21-.23 for operation of the rail line; (vi) the City's Risk Manager has approved liability insurance policies in accordance with Section 14 herein; and (vii) that the City shall not acquire any freight railroad common carrier obligations by reason of this ordinance and the Operating Agreement entered pursuant thereto.

(c) The Operating Agreement shall provide that Grantee shall not be required to pay a fee for use of City property under this ordinance, provided (i) Grantee agrees to be fully responsible for all costs of maintenance, operation, and rehabilitation of the railroad, including but not limited to maintenance of crossings, acquisition of liability insurance, maintenance of way, and all liability for accidents occurring on the property used by the railroad or arising out of railroad operations, and provided further (ii) Grantee shall provide a minimum level of freight rail service equal to 30 carloads picked up or delivered to freight rail customers on the line, per year, averaged over any three-year period, as more particularly specified in the Operating Agreement. In the event the minimum level of service is not met, or the conditions stated at Section 1 (c) (ii) are not met, the Operating Agreement shall provide that, in addition to such other remedies as may be available to the City, the City in its discretion may require Grantee to take appropriate action in conformity to instructions from the City within no less than ninety days to terminate freight rail service, including appropriate filings with any agencies with rail regulatory jurisdiction.

(d) The Director is authorized to enter into an Operating Agreement consistent with this ordinance. The Director is further authorized to allow passenger use on terms and conditions as provided in said Operating Agreement.

(e) The City may, from time to time, cooperate with Grantee in seeking grants in aid from State sources for rehabilitation of the line, provided, however, that the City shall not be liable for repayment of the grant except to the extent funds are available to the City from salvaged materials attributable to the grant in the event rail service is discontinued and provided further that the City at its option may impose a fee sufficient to recover its costs for administering the grant.

Section 2. The tracks of standard gauge railway shall be located, laid down, constructed and maintained within the portions of right-ofway described on Attachment A hereto.

Section 3. The City shall retain the same control of the streets, avenues, multi-use trails, and other rights-of-way in and across which said railway tracks shall be laid down as over other streets, avenues, multi-use trails and other rights-of-way within the City, and shall have the right at all times by general ordinance, to regulate the speed of the locomotives, cars and trains within the limits of the franchise right-of-way herein granted, and the maximum period of time for which such locomotives, cars and trains shall be allowed to blockade travel along and across the streets, avenues, multi-use trails and intersecting streets embraced in this grant, and shall have such further control and police power over such franchise rights-ofway and tracks, and the use thereof, as the City Charter and the Federal and State Constitutions and laws may now or hereafter permit. Grantee shall comply with SMC Chapter 11.66, Railroad Operation and shall erect and maintain all such safety devices, warning signs and signals, lights and appliances as may be necessary to protect and facilitate public travel across each and every track herein authorized.

Section 4. The City hereby reserves to itself and its Grantee the right to construct all public improvements (including trails) and to install and carry all public utility facilities across, underneath or above the tracks hereby authorized, and the City reserves to itself full and complete right of access to any space occupied by such tracks and to all of said franchise right-of-way, together with the right to open and excavate the ground beneath said tracks, or within said franchise right-of-way, for all purposes of construction, maintenance, repair, operation and inspection of any public utilities and public improvements which rights shall, however, be exercised in such manner as not to interfere with the safe operation of locomotives, cars and trains on said tracks. In all cases involving a possibility of such interference, or removal of lateral support or excavation beneath the tracks of Grantee, sixty (60) days' written notice shall be given Grantee, and Grantee shall, at its own cost and expense, remove, relocate, support, reinforce said tracks as necessary, provide flagging, and shall also furnish an authorized agent or representative at Grantee's own cost and expense, who shall supervise such removal, relocation, support, reinforcement or excavation or other work; provided that, in case of emergency repairs, the length of such notice may be less than sixty (60) days, but not less than twelve (12) hours.

Grantee shall have the option of requiring that any such construction, repair, renewal, maintenance or inspection of municipally owned utility be done by tunneling or jacking beneath said tracks, if such utility determines that tunneling or jacking is practicable, and upon Grantee's providing assurances, satisfactory to such municipally owned utility, that Grantee will pay the extra cost of tunneling or jacking, over the cost of open cutting. If it is necessary that such tracks should be removed, relocated, supported, or reinforced during the progress of the construction, repair, renewal, maintenance, or inspection of any municipally operated utility, or for any public improvement, Grantee shall remove or relocate said tracks and shall construct and place such support and provide a flagman as necessary, and shall attend to the replacement and readjustment of its tracks, all at its own cost and expense. Grantor may agree to assume a share of the costs for removal or replacement of track due to any such public improvement or public utility that generally parallels said tracks and requires the removal of more than 100 feet of track.

Section 5. Grantee shall be solely responsible for the maintenance and safety of the right-of-way granted herein, including all tracks and all grade crossings, and shall cooperate and coordinate with the City of Seattle Director of Transportation to assure adequate rehabilitation, repair and maintenance of all tracks and grade crossings herein authorized, all at Grantee's sole cost and expense. Grantor shall issue permits to Grantee which shall set forth the terms and conditions for railroad track work within the limits of The City of Seattle, pursuant to applicable law, including State and Federal Law.

Section 6. Grantee shall construct and maintain the tracks herein authorized so that the top of the rail thereof shall at all times conform to the street grade (except where change is made in separation of grades), and the City hereby reserves the right to change the grade of any streets, avenues or public places at any time, and when the City shall change such grade the Grantee, by acceptance of this ordinance, hereby covenants and agrees with the City, to waive any and all damages that it may sustain on account of having to readjust its tracks by reason of such change of grade. Such waiver is made upon condition that any change of grade hereafter made by the City to the streets and avenues upon which the franchise is hereby granted, shall not be unreasonable, or such as to interfere with the proper and practical operation of said track when the same shall have been adjusted to said new grade.

Section 7. Grantee shall, upon permit issued by the Director or such other body as may in the future be by law authorized to act, allow each owner or occupant of a warehouse or industry contiguous or adjacent to said track herein authorized, or to any street, avenue or other public place along or across which said tracks shall be constructed, a spur track or tracks connecting said track with such warehouse or industry; provided, however, that Grantee may require that such spur track or tracks and all street grading, surfacing or paving appertaining to the right-of-way of such spur track or tracks, be constructed and maintained at the expense of such owner or occupant of such warehouse or industry; and provided further that any such spur track shall start from such point on said track as Grantee shall determine upon as the most proper therefor; and shall be subject to such rules and regulations as to the opening and closing of switches controlling access to and as to the use of said track as Grantee may from time-to-time establish. All of the obligations and duties of Grantee expressed in this franchise shall apply with full force and effect to each and every spur track laid down, constructed, maintained or operated by Grantee connecting with the tracks or right-of-way granted in Section 1 of this franchise.

Section 8. Nothing contained in this ordinance shall be construed as granting an exclusive franchise or privilege for the use of the right-of-way described in Section 2, or any portion thereof, and the rights granted by this ordinance shall be subject to the right of the City Council to at any time hereafter, to repeal, amend or modify this ordinance and grant, with due regard to the rights of Grantee and of the interests of the public, and to cancel, forfeit and abrogate any right or privilege granted by this ordinance if the franchise hereby granted is not operated in full accordance with the provisions hereof, or at all, and at any time during the grant to acquire by purchase or condemnation, for use of the City itself, all the property of the Grantee within the limits of said streets and right-of-way at a fair and just value, which shall not include any valuation of the franchise itself, which franchise shall thereupon terminate.

Section 9. Except as herein provided, this franchise and the rights herein granted, or any interest in them, shall not be sold, assigned or mortgaged without the consent of the City by ordinance. Nor shall the same in such event accrue to the benefit of the purchaser, assignee or mortgagee unless within sixty (60) days after such consent it or they shall file with the City's Finance Department and City Clerk an acceptance of all the rights, privileges and authorities hereby granted, subject to all the conditions, restrictions, specifications and requirements herein expressed.

Section 10. (a) Grantee and any permitted successors or assigns, shall defend (with counsel approved by the City), and shall fully indemnify and hold the City and its officers, employees, and agents harmless from any and all losses, claims, actions, judgments, property damages, death, personal injuries, or damages suffered by any person or entity arising out of or resulting from (1) any occurrence of property damage, death or injury in or on the franchise right-of-way, including common carrier liability; (2) the Grantee's operations on or off the franchise right-of-way; (3) the violation of any law or breach of this Franchise Agreement or Operating Agreement by the Grantee or any of its officers and directors, employees, agents or contractors; and (4) any release of hazardous material arising out of Grantee's operations, actions or inactions. It is intended that the foregoing indemnity shall be broad and comprehensive. In the event any suit, claim or action is brought against the City, Grantee, upon notice of the commencement thereof, shall defend the same, at no cost and expense to the City, and promptly satisfy any final judgment adverse to the City or to the City and Grantee jointly; Provided, that in the event the City determines that one or more principles of governmental or public law are involved, the City retains the right to participate in such action at its own expense.

(b) The above liability shall not be diminished by the fact, if it be a fact, that any such death, injury, damage, loss, cost, or expense may have been, or may be alleged to have been, contributed to by the negligence of the City or its officers, employees, or agents, unless such negligence is solely and entirely the fault of the City.

(c) The indemnification provided by this section shall survive the termination of the Grantee's franchise, the Grantee's surrender of use and occupancy of the franchise right-of-way, and expiration of this Franchise Agreement. This indemnity is for the sole benefit of the City and shall not inure to the benefit of any third party. The Grantee waives, with respect to the City only, its immunity under RCW Title 51, Industrial Insurance, and to any other industrial insurance, workers compensation, disability, or employee benefit legislation of any jurisdiction which would otherwise be applicable.

(d) The Operating Agreement may provide additional conditions consistent with this section.

Section 11. Grantee, by its acceptance of this ordinance, does covenant and agree with The City of Seattle, that whenever the City separates the grades of existing or future streets and multi-use trails by the construction, reconstruction, renewal, maintenance, and/or widening of any overhead structure across the franchise rightof-way herein granted, Grantee will bear its proportionate share of all costs incident to the span crossing said right-of-way and the piers or abutments supporting such span. Such proportionate share shall be determined on the ratio the length of the portion of the span crossing said right-of-way bears to the total length of said span, and Grantee shall pay its aforesaid share upon proper billing therefore by the Director; provided, however, that this section shall not apply to future changes or additions to the existing 15th Avenue North West bridge structure (Ballard Bridge).

Section 12. Insurance.

(a) The Grantee shall, at all times during the term of this Agreement, obtain and maintain continuously, at its own expense, and file with the City's Risk Manager, evidence of a policy or policies of insurance satisfactory to the City's Risk Manager, as further specified in the Operating Agreement, including a policy of Comprehensive Railroad Liability Insurance for operations in an amount no less than $5,000,000 for bodily injury and property damage; provided, however, the Risk Manager may consider reducing said coverage to no less than $3,000,000 based on at least three years of experience with actual operations.

(b) The Operating Agreement shall provide such additional terms and provisions relating to insurance for rail operations (including operating by Grantee's contractors or subcontractors) as shall reasonably protect the City from liability arising out of Grantee's actions or actions.

Section 13. The Operating Agreement may provide that rail operation and rail equipment shall be inspected by the Federal Railroad Administration (FRA), Washington State Department of Transportation (WSDOT), Washington Utilities and Transportation Commission (WUTC) or successor agencies, or equivalent inspectors and that Grantee should be responsible to remedy, at Grantee's expense, all deficiencies identified in any inspection. Grantee shall be responsible to comply with all laws and regulations relating to railroad operations. Nothing herein shall reduce the City's police powers of enforcement and inspection.

Section 14. In order to claim the benefits of this ordinance and to acquire the rights, privileges and authorities hereby granted, Grantee must, within two (2) months after this ordinance becomes effective file in the office of the City's Finance Department and City Clerk a copy of a resolution duly adopted by its Board of Directors, or by the Executive Committee of said Board, which copy shall be duly certified and attested by its proper officer, under its corporate seal, or comparable documentation of acceptance approved by the Seattle City Attorney's Office, accepting the benefits of this ordinance, and the rights, privileges and authorities hereby granted, subject to all the conditions, restrictions, specifications and requirements expressed.

Section 15. Any act consistent with the authority and prior to the effective date of this ordinance is hereby ratified and confirmed.

Section 16. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the _____ day of ____________, 1997, and signed by me in open session in authentication of its passage this _____ day of _________________, 1997. _____________________________________ President _______ of the City Council

Approved by me this _____ day of _________________, 1997. ___________________________________________ Mayor

Filed by me this _____ day of ____________________, 1997. ___________________________________________ City Clerk JBB:rlh BTRORD11.doc September 30, 1997