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HomeMy WebLinkAbout2021-02-01 Agenda Packet AGENDA City Council/Public Financing Authority Regular Meeting Monday, February 1, 2021 at 6:00 PM MAYOR AND CITY COUNCIL KIM CARR, Mayor TITO ORTIZ, Mayor Pro Tem BARBARA DELGLEIZE, Councilmember DAN KALMICK, Councilmember NATALIE MOSER, Councilmember ERIK PETERSON, Councilmember MIKE POSEY, Councilmember Virtual Location Huntington Beach, CA STAFF OLIVER CHI, City Manager MICHAEL E. GATES, City Attorney ROBIN ESTANISLAU, City Clerk ALISA BACKSTROM, City Treasurer On March 17, 2020, Governor Newsom issued Executive Order N-29-20, which allows a local legislative body to hold public meetings via teleconferencing, and to make public meetings accessible telephonically or otherwise electronically to all members of the public seeking to observe and to address the local legislative body. PUBLIC PARTICIPATION/ZOOM ACCESS: In keeping with the Governor’s mandate to limit in-person gatherings that can spread COVID-19, the Monday, February 1, 2021 meeting of the Huntington Beach City Council will be held virtually. The City offers several ways to view City Council meetings live or on-demand. Council meetings are livestreamed on HBTV Channel 3 (replayed on Tuesday’s at 10:00 a.m., and Wednesday’s at 6:00 p.m.). In addition, live and archived meetings for on-demand viewing can be accessed from https://huntingtonbeach.legistar.com/calendar, or from any Roku or Apple device by downloading the Cablecast Screenweave App and searching for the City of Huntington Beach channel. PUBLIC COMMENTS: At 6:00 PM, individuals wishing to attend the meeting to provide a comment on agendized or non- agendized items may enter Zoom Webinar ID 971 5413 0528 via computer device, or by phone at (669) 900-6833. The Webinar can be accessed here: https://huntingtonbeach.zoom.us/j/97154130528. Attendees utilizing computer devices to request to speak may select the “Raise Hand” feature in the Webinar Controls section. Attendees entering the Webinar and requesting to speak by phone can enter *9 to enable the “Raise Hand” feature, followed by the *6 prompt that unmutes their handheld device microphone. Attendees will be prompted to speak when the Clerk announces their name or the last three digits of their phone number. Speakers are encouraged, but not required to identify themselves by name. Each person may have up to 3 minutes to speak, but the Mayor, at her discretion, may reduce the time allowance if warranted by the volume of calls. The Public Comment process will only be active during designated portions of the agenda (Public Comment and/or Public Hearing). After a speaker concludes their comment, their microphone will be muted, but they may remain in Webinar attendance for the duration of the meeting. Members of the public unable to attend the Zoom Webinar but interested in communicating with the City Council on agenda- related items, are encouraged to submit a written (supplemental) communication via email at SupplementalComm@Surfcity- hb.org, or City.Council@surfcity-hb.org. Supplemental Communications received by 2:00 PM on Tuesday, January 19, 2021 will be distributed to the City Council prior to consideration of agenda-related items, posted to the City website, and announced, but not read, at the meeting. All Supplemental Communications will be included in the administrative record. MEETING ASSISTANCE NOTICE: In accordance with the Americans with Disabilities Act, services are available to members of our community who require special assistance to participate in public meetings. If you require special assistance, 48-hour prior notification will enable the City to make reasonable arrangements for an assisted listening device (ALD) for the hearing impaired, American Sign Language interpreters, a reader during the meeting and/or large print agendas. Please contact the City Clerk's Office at (714) 536-5227 for more information. 1 AGENDA February 1, 2021City Council/Public Financing Authority 5:00 PM - COUNCIL CHAMBERS CALL TO ORDER ROLL CALL Peterson, Kalmick, Ortiz, Carr, Posey, Moser, Delgleize ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS ON CLOSED SESSION ITEMS (Received After Agenda Distribution) PUBLIC COMMENTS PERTAINING TO CLOSED SESSION ITEMS (3 Minute Time Limit) - Anyone wishing to provide a comment on a Closed Session item may join Zoom Webinar ID 971 5413 0528 via computer device, or by calling (669) 900-6833 (see agenda cover sheet for request to speak instructions). Individuals will be prompted to speak when the Clerk announces their name or the last three digits of their phone number. Speakers are encouraged, but not required to identify themselves by name. Each speaker may have up to 3 minutes to speak; however, the time allowance may be reduced if warranted by the volume of speakers. RECESS TO CLOSED SESSION CLOSED SESSION ANNOUNCEMENT(S) 21-1041.Mayor Carr to announce: Pursuant to Government Code § 54957.6, the City Council takes this opportunity to publicly introduce and identify designated representatives: Oliver Chi, City Manager, and Travis Hopkins, Assistant City Manager, who will be participating in today's Closed Session discussions regarding labor negotiations with: Huntington Beach Municipal Teamsters (HBMT) and Management Employees’ Organization (MEO). CLOSED SESSION 21-0862.CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION. Initiation of Litigation Pursuant to Paragraph (4) of Subdivision (d) of Section 54956.9: Number of cases, one (1) - Appeal of Southern California Association of Governments (SCAG) Final Regional Housing Needs Assessment (RHNA) Methodology for the Sixth Housing Element Cycle. 21-0873.CONFERENCE WITH LEGAL COUNSEL-EXISTING LITIGATION. Page 1 of 7 2 AGENDA February 1, 2021City Council/Public Financing Authority (Paragraph (1) of subdivision (d) of Section 54956.9). Name of case: Brewster (Terri Lynn) v. City of Huntington Beach; OCSC Case No. 30-2020-01160094. 21-0884.CONFERENCE WITH LABOR NEGOTIATORS (Gov. Code section 54957.6.) Agency designated representatives: Oliver Chi, City Manager and Travis Hopkins, Assistant City Manager. Employee Organizations: Huntington Beach Municipal Teamsters (HBMT) and Management Employees' Organization (MEO). 6:00 PM – COUNCIL CHAMBERS RECONVENE CITY COUNCIL/PUBLIC FINANCING AUTHORITY MEETING ROLL CALL Peterson, Kalmick, Ortiz, Carr, Posey, Moser, Delgleize PLEDGE OF ALLEGIANCE INVOCATION In permitting a nonsectarian invocation, the City does not intend to proselytize or advance any faith or belief. Neither the City nor the City Council endorses any particular religious belief or form of invocation. 21-1035.Janet Ewell, Member of the Greater Huntington Beach Interfaith Council CLOSED SESSION REPORT BY CITY ATTORNEY AWARDS AND PRESENTATIONS 21-0906.Mayor Carr to recognize Black History Month throughout the month of February 2021 21-0917.Mayor Carr to present information about the City’s various Town Hall Series on topics including COVID-19, Community Choice Energy, and Homelessness ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS (Received After Agenda Distribution) PUBLIC COMMENTS (3 Minute Time Limit) - At approximately 6:00 PM, individuals wishing to Page 2 of 7 3 AGENDA February 1, 2021City Council/Public Financing Authority provide a comment on agendized or non-agendized items may join Zoom Webinar ID 971 5413 0528 via computer device, or by calling (669) 900-6833 (see agenda cover sheet for request to speak instructions). Individuals will be prompted to speak when the Clerk announces their name or the last three digits of their phone number. Public comments will only be heard during this portion of the agenda. Speakers are encouraged, but not required to identity themselves by name. Each speaker may have up to 3 minutes to speak; however, the time allowance may be reduced if warranted by the volume of speakers. To accommodate the amount of business provided on tonight’s agenda, speakers will be provided a 15-minute window to raise their hands. COUNCIL COMMITTEE - APPOINTMENTS - LIAISON REPORTS, AB 1234 REPORTING, AND OPENNESS IN NEGOTIATIONS DISCLOSURES 21-0838.Approve Amendment to the 2021 Council Liaison List Approve amendment to the 2021 Council Liaison List as presented by Mayor Carr. Recommended Action: CITY MANAGER'S REPORT 21-0949.Update of the City COVID-19 Response Plan and Vaccination Update 21-09810.Downtown Outdoor Dinning Program Update CITY TREASURER'S REPORT 21-05111.Receive and File the City Treasurer's December 2020 Quarterly Investment Summary Report Motion to receive and file the City Treasurer’s Quarterly Investment Report for December 2020, pursuant to Section 17.0 of the Investment Policy of the City of Huntington Beach . Recommended Action: CONSENT CALENDAR 21-04212.Approve and Adopt Minutes Approve and adopt the City Council/Public Financing Authority regular meeting minutes dated January 19, 2021 , as written and on file in the office of the City Clerk. Recommended Action: 21-06313.Adopt Resolution No. 2021-08 approving the 2021 Investment Policy Recommended Action: Page 3 of 7 4 AGENDA February 1, 2021City Council/Public Financing Authority Adopt Resolution No. 2021-08, “A Resolution of the City Council of the City of Huntington Beach Approving the Statement of Investment Policy 2021 .” 21-10114.Consider positions on Local, State and Federal Issues, as recommended by the City Council Intergovernmental Relations Committee (IRC) A) Adopt Resolution No. 2021-11, “A Resolution Expressing Support for Actions that will Further Strengthen Local Governance and Authority Over Housing-Related Issues in Huntington Beach”; and/or B) Approve a letter of support for the Federal Communications Commission’s Emergency Broadband Benefit Program; and/or C) Approve a letter in opposition to oil and gas drilling off Southern California coast through the Bureau of Ocean Energy Management’s National Outer Continental Shelf Oil and Gas Leasing Program. Recommended Action: 21-09915.Consider adoption of the 2021 City Council Work Plan Adopt the 2021 City Council Work Plan. Recommended Action: 21-08916.Approve the COVID-19 Small Business Micro Grant Program Approve the COVID-19 Small Business Micro Grant Program. Recommended Action: 21-05617.Approve Agreement for Professional Engineering and Environmental Consulting Services between the City of Huntington Beach and Moffatt & Nichol for the Davenport Bridge Project in Huntington Harbour Approve and authorize the Mayor and City Clerk to execute the Agreement for Professional Engineering and Environmental Consulting Services between the City of Huntington Beach and Moffatt & Nichol in the amount of $487,314.70. Recommended Action: 21-06118.Approve 3-Year Professional Services Contracts for As-Needed Environmental Engineering Services with Geosyntec Consultants, Inc., Environmental Engineering Contracting, Inc. (EEC Environmental), Huitt-Zollars, Inc., and CWE Page 4 of 7 5 AGENDA February 1, 2021City Council/Public Financing Authority A) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Geosyntec Consultants, Inc. for As-Needed Environmental Engineering Services; and , B) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Environmental Engineering Contracting, Inc. for As-Needed Environmental Engineering Services; and, C) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Huitt-Zollars, Inc. for As-Needed Environmental Engineering Services; and, D) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and CWE for As-Needed Environmental Engineering Services. Recommended Action: 21-07319.Approve Final Tract Map No. 18068 and Subdivision Agreement for the Shorehouse Residential Subdivision by C3 DLG 414 Main Street, LLC at 414 - 424 Main Street A) Approve Final Tract Map No. 18068 and accept the offer of easements pursuant to findings and requirements (Attachment No. 1); and , B) Approve and authorize the Mayor and City Clerk to execute the Subdivision Agreement by and between the City of Huntington Beach and C3 DLG 414 Main Street, LLC, Inc. (Attachment No. 6); and, C) Accept Faithful Performance Bond No. PB02497501239, Labor and Material Bond No. PB02497501239 and Monument Bond No. PB02497501240 as sureties for the installation of the subdivision’s required public improvements and survey monumentation (Attachment No. 7); and, D) Instruct the City Clerk to file the respective bonds with the City Treasurer and notify the Surety, Philadelphia Indemnity Insurance Company of this action. Recommended Action: 21-07620.Adopt Ordinance No. 4225 (Zoning Map Amendment No. 17-001), and Page 5 of 7 6 AGENDA February 1, 2021City Council/Public Financing Authority Ordinance No. 4226 (Development Agreement No. 19-001) - Magnolia Tank Farm Approved for introduction 1/19/2021 - Vote: 5-2 (Peterson, Carr - No) A) Adopt Ordinance No. 4225, “An Ordinance of the City of Huntington Beach Amending the Huntington Beach Zoning and Subdivision Ordinance to Rezone the Real Property Generally Located on the Westside of Magnolia Street at Banning Avenue from PS-O-CZ (Public-Semipublic - Oil Production Overlay - Coastal Zone Overlay) to SP-18-CZ (Specific Plan - Coastal Zone Overlay)(Zoning Map Amendment No. 17-001);” and, B) Adopt Ordinance No. 4226, “An Ordinance of the City of Huntington Beach Adopting a Development Agreement By and Between the City of Huntington Beach and SLF-HB Magnolia, LLC (Developer)(Development Agreement No. 19-001).” Recommended Action: ADMINISTRATIVE ITEMS 21-08521.Consider Maintaining Membership with the Orange County Power Authority (OCPA), a Community Choice Energy (CCE) Joint Power Authority (JPA) The City Council has the following options: A) Maintain membership in the Orange County Power Authority Community Choice Energy Joint Power Authority, OR B) Withdraw from the Orange County Power Authority, and direct staff to complete all requisite documents necessary to terminate our participation in the CCE JPA. Recommended Action: COUNCILMEMBER ITEMS 21-09622.Submitted by Councilmember Moser - Consider directing staff to prepare a temporary ordinance that limits the fees paid by restaurants to third party delivery services during the COVID-19 pandemic I recommend that the City Council direct staff to prepare a temporary ordinance that places a 15% cap on fees paid by restaurants and a 5% cap on non-delivery fees paid by customers until current COVID-19 restrictions on both indoor and outdoor dining are lifted. Recommended Action: Page 6 of 7 7 AGENDA February 1, 2021City Council/Public Financing Authority 21-10223.Submitted by Mayor Carr, Councilmember Posey, and Councilmember Kalmick - Consideration of a No Confidence Vote in Mayor Pro Tem Tito Ortiz, and Removing him from the Mayor Pro Tem Leadership Role We recommend that the City Council vote to do the following: 1. Conduct a City Council vote of no confidence in Mr. Ortiz. 2. Remove Mr. Ortiz from his current leadership role as Mayor Pro Tem. 3. Identify an alternate member of the City Council to serve as Mayor Pro Tem for the remainder of this year. Recommended Action: COUNCILMEMBER COMMENTS (Not Agendized) ADJOURNMENT The next regularly scheduled meeting of the Huntington Beach City Council/Public Financing Authority is Tuesday, February 16, 2021, at 4:00 PM in the Civic Center Council Chambers, 2000 Main Street, Huntington Beach, California. INTERNET ACCESS TO CITY COUNCIL/PUBLIC FINANCING AUTHORITY AGENDA AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL MEETINGS AT http://www.huntingtonbeachca.gov Page 7 of 7 8 City of Huntington Beach File #:21-104 MEETING DATE:2/1/2021 Mayor Carr to announce: Pursuant to Government Code § 54957.6, the City Council takes this opportunity to publicly introduce and identify designated representatives: Oliver Chi, City Manager, and Travis Hopkins, Assistant City Manager, who will be participating in today's Closed Session discussions regarding labor negotiations with: Huntington Beach Municipal Teamsters (HBMT) and Management Employees’ Organization (MEO). City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™9 City of Huntington Beach File #:21-086 MEETING DATE:2/1/2021 CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION. Initiation of Litigation Pursuant to Paragraph (4) of Subdivision (d) of Section 54956.9: Number of cases, one (1) - Appeal of Southern California Association of Governments (SCAG) Final Regional Housing Needs Assessment (RHNA) Methodology for the Sixth Housing Element Cycle. City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™10 City of Huntington Beach File #:21-087 MEETING DATE:2/1/2021 CONFERENCE WITH LEGAL COUNSEL-EXISTING LITIGATION. (Paragraph (1) of subdivision (d) of Section 54956.9). Name of case: Brewster (Terri Lynn) v. City of Huntington Beach; OCSC Case No. 30-2020-01160094. City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™11 City of Huntington Beach File #:21-088 MEETING DATE:2/1/2021 CONFERENCE WITH LABOR NEGOTIATORS (Gov. Code section 54957.6.) Agency designated representatives: Oliver Chi, City Manager and Travis Hopkins, Assistant City Manager. Employee Organizations: Huntington Beach Municipal Teamsters (HBMT) and Management Employees' Organization (MEO). City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™12 City of Huntington Beach File #:21-103 MEETING DATE:2/1/2021 Janet Ewell, Member of the Greater Huntington Beach Interfaith Council City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™13 City of Huntington Beach File #:21-090 MEETING DATE:2/1/2021 Mayor Carr to recognize Black History Month throughout the month of February 2021 City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™14 City of Huntington Beach File #:21-091 MEETING DATE:2/1/2021 Mayor Carr to present information about the City’s various Town Hall Series on topics including COVID-19, Community Choice Energy, and Homelessness City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™15 City of Huntington Beach File #:21-083 MEETING DATE:2/1/2021 Approve Amendment to the 2021 Council Liaison List Approve amendment to the 2021 Council Liaison List as presented by Mayor Carr. City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™16 2021 COUNCIL LIAISON LIST CITIZEN BOARDS, COMMISSIONS, COMMITTEES, AND TASK FORCES (Citizen Members Appointed to Four-Year Terms) *Revised 2-01-2021 Citizen Group Council Liaisons Meeting Date/Place 1. Children’s Needs Task Force Ortiz, Moser 4th Thurs., B-8, 4:00 PM, Bi-Monthly (Aug, Oct, Dec, Feb, Apr, June) 2. Citizen Infrastructure Advisory Board Individual Appointments 5:00 PM, Utilities Yard, 19021 Huntington St.; meets twice per year 3. Citizen Participation Advisory Board Individual Appointments 1st Thurs., B-8, 6:00 PM 4. Community Services Commission Individual Appointments 2nd Wed, Chambers, 6:00 PM 5. Design Review Board Peterson, Kalmick 2nd Thurs, B-8, 3:30 PM 6. Environmental Board Kalmick, Moser 3rd Wed., 6:00 PM, Central Library, Room B 7. Finance Commission Individual Appointments 4th Wed., 5:00 PM (Location varies month to month: B-7, B-8, Caucus Room, or Finance CR #2) 8. Fourth of July Executive Board Peterson, Posey 1st Wed., B-8, 6:00 PM 9. Harbor Commission Peterson, Ortiz 4th Thurs., Monthly, B-7, 5:00 PM 10. Historic Resources Board Peterson, Posey 3rd Wed. Monthly, B-7, 5:00 PM 11. Human Relations Task Force Carr, Moser 1st Tues, Central Library, Room B, 6:45 PM 12. Investment Advisory Board Individual Appointments 3rd Thursday (January, April, July, October), Room B-7 6:30 PM 13. Jet Noise Commission Delgleize, Kalmick 4th Monday, 5:30 p.m., Central Library 14. Library Board Kalmick, Ortiz 3rd Tues, Central Library, 5:00 PM 15. Mobile Home Advisory Board Carr, Posey 4th Mon, B-8, 5:00 PM –Quarterly (January, April, July, October) 16. Personnel Commission Carr, Posey 3rd Wed, B-8, 5:30 PM 17. Planning Commission Individual Appointments 2nd & 4th Tues; 5:00 PM - Study Session; 6:00 PM - Meeting (Council Chambers) 18. Public Works Commission Individual Appointments 3rd Wednesday, Utilities Yard, 5:00 PM 19. Youth Board Carr, Moser 2nd Mon, 3:30 PM, 5th Floor Conf. Room (No Meetings – June, July, August) 17 CITY OF HUNTINGTON BEACH Other City and Citizen Committees (Created by City Council Action) Citizen Group Council Liaisons Meeting Date/Place 1. Specific Events Committee (governed by MC 13.54) and Executive Events Committee Delgleize, Ortiz Weekly, Wednesday, City Hall-Room B-8, 11:00 AM (Effective November 28, 2018) COMMUNITY GROUPS (Citizen Members Not Appointed by City Council) Citizen Group Council Liaisons Meeting Date/Place 1. Central Park Council Subcommittee Delgleize, Moser 3rd Wednesday, Room B-8, 4:00 – 6:00 PM 2. Huntington Beach Council on Aging Delgleize, Carr 1st Thurs, Senior Center (EMG, Room 1), 9:00 AM 3. Huntington Beach Downtown Business Improvement District (BID) Board Meeting Carr, Moser 2nd Thursday, Art Center, 9:00 AM 4. Neighborhood Watch Posey, Ortiz 2nd Tues, Police Dept, 2nd Flr. Investigation Conf. Room, 6:30 PM (No meeting July, Aug, Dec) 5. Oak View Task Force Carr, Ortiz 3rd Thursday of March, June, September, December @ 4:00 PM, Oak View Elementary 6. Sister City Association Carr, Delgleize 2nd Wednesday, Central Library (Room TBD), 6:00 PM 18 CITY OF HUNTINGTON BEACH COUNCIL COMMITTEES Council Committee Council Committee Members Meeting Date/Place 1. Beautification, Landscape, & Tree Delgeize, Moser, Ortiz 4th Tues, Public W orks Conf. Rm, 4:30 PM 2. Communications Committee Carr, Delgleize, Posey 4th Monday, 3:00 PM, Quarterly: January, April, July, October 3. Downtown Task Force Carr, Peterson, Ortiz As needed 4. Economic Development Committee (Mayor, Mayor Pro Tem, Immediate Past Mayor –prescribed) Carr, Ortiz, Peterson Downtown – Same as above. 2nd Wed., B-8, 2:00 PM (EDC) Quarterly (Jan., Apr., July, Oct.) 4th Wednesday, B-8, 2:00 p.m. (Downtown Issues) 5. Homeless Task Force (Ad Hoc) Delgleize, Moser, Ortiz 3rd Wednesday, 3 p.m., Zoom or CR #1 6. Intergovernmental Relations Carr, Posey, Ortiz 3rd Wednesday, 4 p.m., Zoom or B-7 7. Oversight Board _Carr_________ (Mayor’s appointee & OCSD rep.) As needed 8. Santa Ana River & Parkway Comm. Posey, Delgleize As needed 9. School District/City Meeting Moser, Carr, Ortiz 2nd Monday, Quarterly (March, June, September, December), 3:30 PM, Room B-7 10. Southeast Area Carr, Ortiz, Peterson 4th Wednesday, every two months (January, March, May, July, September, November) at 4:30 PM 11. Strategic Plan Committee (Ad Hoc) Carr, Kalmick, Moser As needed 12. Sunset Beach Area Carr, Peterson, Ortiz As needed (Room B-8) 19 COMMUNITY & REGIONAL AGENCIES AND COMMITTEES (Appointed by Mayor) Name of Agency/Committee Appointee Meeting Times 1. California Coastal Coalition Board Kalmick, Moser 2-3 meetings/year, various places 2. HB Chamber Government Affairs Committee Posey, Kalmick 4th Wed. 8:00 AM, Chamber of Commerce office, 15744 Goldenwest St., Bldg. 22 3. Visit Huntington Beach Board Meeting Carr, Delgleize (Alternate) Currently these are not on a set schedule. Calendar will be updated as meeting notices are received. 4. League of California Cities, Coastal Cities Group N/A Monthly as scheduled by the State League. May go to bi-monthly 5. Orange County Coastal Coalition Posey, Ortiz (Day & Month – TBD), 9:00 AM, Newport Beach Library, 1000 Avocado Ave. 6. O.C. Council of Governments OCCOG Posey; Carr (Alternate) 4th Thurs, 10:30 AM, Monthly, currently by teleconferencing only. 7. O.C. Sanitation District $212.50 per meeting Administration Committee Carr; Kalmick (Alternate) Carr; Kalmick (Alternate 4th Wed, 6:00 PM, Currently by telephonically/via teleconferencing. Sanitation District, Fountain Valley, (Plus Committee assigned by Chair) 10844 Ellis Ave., FV 2nd Wed., 5 p.m. (Same as above) 8. O.C. Mosquito and Vector Control District $100 per meeting Posey 3rd Thurs, 3:00 PM.,13001 Garden Grove Blvd. 9. OCTA Board of Directors Meeting $100 per meeting Delgleize (as elected by City Selection) 2nd & 4th Monday, 9:00 AM, Currently via Zoom. OCTA Headquarters, 550 S. Main St., Orange – Conf. Room 07-08 10. Santa Ana River Flood Protection Agency (SARFPA) Delgleize, Posey (Alternate) 4th Thurs, 4:00 PM, O.C. Water District Office, 18700 Ward St., Fountain Valley - Executive Committee Meetings: January, March, May, July, September; Full Agency Meetings: June, November 11. Southern California Association of Governments (SCAG) District 64 Delegate* $120 per meeting Posey 1st Thurs, 9:00 AM – 2:00 PM. (approximately) Currently via Zoom. SCAG Offices, Downtown L.A. 12. West O.C. Water Board (WOCWB) $100 per quarterly meeting Moser, Peterson 3rd Wednesday, 4:00 PM, (January, April, July and October), Utilities Operations Building, 19001 Huntington St. **Change 20 CITY COUNCIL APPOINTMENTS BY STATE & REGIONAL AGENCIES (FOR INFORMATIONAL PURPOSES ONLY) Name of Agency/Committee Appointments 1. City Selection Committee-- Held with League of Cities O.C. Division Meeting Mayor or Council Member designee (prescribed) 2. League of California Cities – Executive Steering Committee, Orange County Division 3. League of California Cities – Housing, Community and Economic Development Policy Committee (Meetings occur quarterly Jan, Apr, June, & Sept. Thurs. 4. League of California Cities – Public Safety Policy Committee (Meetings occur quarterly: Jan, Apr, June, & Sept. Thurs. 5. League of California Cities – Community Services Policy Committee (Meetings occur quarterly: Jan, Apr, June, & Sept. Thurs. 6. League of California Cities –Administrative Services Policy Committee 7. Orange County Transportation Authority Board (2 & 4 Monday each month at 9:00 AM) Contact: Wendy Knowles at 560-5676 8. OCTA Citizen Advisory Committee 9. SCAG –Transportation & Communications Committee 1st Thurs, 10 am, SCAG Offices, Downtown L.A. 10. SCAG –Community, Economic, & Human Development 1st Thurs, 10 am, SCAG Offices, Downtown L.A. 11. Orange County Waste Management Commission Meets quarterly-2nd Thursday in March, June, September & December 21 City of Huntington Beach File #:21-094 MEETING DATE:2/1/2021 Update of the City COVID-19 Response Plan and Vaccination Update City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™22 City of Huntington Beach File #:21-098 MEETING DATE:2/1/2021 Downtown Outdoor Dinning Program Update City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™23 City of Huntington Beach File #:21-051 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Alisa Backstrom, City Treasurer Subject: Receive and File the City Treasurer's December 2020 Quarterly Investment Summary Report Statement of Issue: Receive and File the City Treasurer’s Quarterly Investment Report for December 2020, pursuant to Section 17.0 of the Investment Policy of the City of Huntington Beach. Financial Impact: Not applicable. Recommended Action: Motion to receive and file the City Treasurer’s Quarterly Investment Report for December 2020, pursuant to Section 17.0 of the Investment Policy of the City of Huntington Beach. Alternative Action(s): Deny or critique the quarterly report. Analysis: Not applicable. Environmental Status: Not applicable. Strategic Plan Goal: Strengthen long-term financial and economic sustainability Attachment(s): 1. Treasurer’s Quarterly Investment Report for December 2020 2. Treasurer’s PowerPoint Presentation for December 2020 City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 City of Huntington BeachQuarterly Investment Report Quarter Ending: December 2020 Prepared by: Alisa Backstrom, MBA, CCMT, CPFIM City Treasurer 57 Economic and Market Overview Ongoing public health crisis continues to negatively affect economic activity and employment Unemployment rate for December remained unchanged at 6.7% Federal Reserve maintained Fed Funds rate at 0.00%-0.25% Historically low U.S. Treasury Rates: 12/31/19 12/31/20 % Chg 2-Year Treasury:1.58%0.13%92% 10-Year Treasury:1.92%0.93% 52% 58 Interest Rates –U.S. Treasury Rates (12 mo. Moving Average) 10-yr 5-yr 2-yr 59 Portfolio Summary As of 12/31/20 Investment Type / Market Value: •Federal Agencies -$51.0MM •LAIF -$41.6MM •Treasury Securities -$8.3MM •MTN (IADB) -$15.7MM •Corporate Bonds -$52.6MM •OCIP -$75MM TOTAL PORTFOLIO: $244.3MM60 Investments by Type As of December 31, 2020 61 Monthly Activity:Quarterly Activity: Purchases/Deposits: •$34 million LAIF deposits Total: $34 million Calls/Maturities: •$19 million LAIF withdrawals Total: $19 million Purchases/Deposits: •$67.1 million LAIF deposits •$35.1 million OCIP deposits Total: $102.2 million Calls/Maturities: •$27.1 million Federal Agencies •$53 million LAIF withdrawals •$2.5 million Corporate Bonds Total: $82.6 million 62 Portfolio Earnings -As of December 31, 2020 Current Year -Month December 2020:$272,920 vs. budget: $150,000 Current Fiscal Year 2020/21 Through 12/31:$1,836,598 vs. budget:$1,300,000 Effective Rate of Return December 2020: 1.45% YTD Fiscal Year: 1.59% Benchmark December 2020: 0.42% 12-month moving average 1.5-year Treasury 63 Selected Investment Policy Compliance Requirements The portfolio is in compliance with all relevant State regulations and the City’s Investment Policy. INVESTMENT TYPE MAXIMUM MATURITY MAXIMUM SPECIFIED % OF PORTFOLIO/ MAXIMUM PER ISSUER MINIMUM QUALITY REQUIREMENTS IN COMPLIANCE? U.S. Treasury Obligations 5 years None None YES U.S. Government Agency Obligations 5 years None None YES IBRD, IFC, IADB 5 years 10%"AA" Rating YES Corporate Notes 5 years 30%/10%"A" Rating YES Local Agency Investment Fund (LAIF) N/A Up to $75,000,000 None YES Maximum Maturities No more than 50% of portfolio maturing over 4 years.YES 64 Summary Safety –No principal losses Liquidity –Sufficient funds for operating needs Effective Rate of Return -December 1.45% Prudently managed –No compliance issues Positive contributor to City –Payment of operational expenses 65 City of Huntington Beach File #:21-042 MEETING DATE:2/1/2021 REQUEST FOR COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Robin Estanislau, CMC, City Clerk PREPARED BY:Robin Estanislau, CMC, City Clerk Subject: Approve and Adopt Minutes Statement of Issue: The City Council/Public Financing Authority regular meeting minutes of January 19, 2021, require review and approval. Financial Impact: None. Recommended Action: Approve and adopt the City Council/Public Financing Authority regular meeting minutes dated January 19, 2021, as written and on file in the office of the City Clerk. Alternative Action(s): Do not approve and/or request revision(s). Analysis: None. Environmental Status: Non-Applicable. Strategic Plan Goal: Non-Applicable - Administrative Item Attachment(s): 1. January 19, 2021 CC/PFA regular meeting minutes City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™66 Minutes City Council/Public Financing Authority Regular Meeting; Special Meetings of the Housing Authority and Successor Agency City of Huntington Beach Tuesday, January 19, 2021 6:00 PM – Virtual Meeting Huntington Beach, California 92648 A video recording of this meeting is on file in the Office of the City Clerk, and archived at www.surfcity-hb.org/government/agendas/ 6:00 PM — VIRTUALLY HOSTED VIA ZOOM WEBINAR ID 971 5413 0528. CALLED TO ORDER THE CITY COUNCIL/PUBLIC FINANCING AUTHORITY REGULAR MEETING, AND SPECIAL MEETINGS OF THE HUNTINGTON BEACH HOUSING AUTHORITY AND THE SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF HUNTINGTON BEACH — 6:00 PM ROLL CALL Present: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize Absent: None PLEDGE OF ALLEGIANCE — Led by Councilmember Moser INVOCATION In permitting a nonsectarian invocation, the City does not intend to proselytize or advance any faith or belief. Neither the City nor the City Council endorses any particular religious belief or form of invocation. 1. 21-055 Deacon Matt Calabrese of Saints Simon and Jude Catholic Church and member of the Greater Huntington Beach Interfaith Council AWARDS AND PRESENTATIONS 2. 21-045 Mayor Carr presented a video describing the operations of the Huntington Beach Navigation Center by Mercy House Mayor Carr encouraged people to go to www.HBHomelessSolutions.com which includes resources for homeless individuals as well as residents and property owners. This site has all of the information pertaining to the Navigation Center whether your interest is accessing services or offering assistance. Mayor Carr thanked everyone who is involved in the effort to provide shelter and services for those in greatest need within the community. 67 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 2 of 28 3. 21-046 Mayor Carr accepted the Best Public-Private Partnership Award for the OneHB Small Business Program from the Orange County Business Council Mayor Carr recognized the OneHB Business Support campaign and a culmination of the City's effort to assist small businesses impacted by COVID-19. Through a partnership between philanthropy and community support, funds are raised to provide $5,000 micro grants to help small businesses keep their doors open and local residents employed. Conner Medina, Government Affairs Manager, Orange County Business Council (OCBC), stated that this award recognizes visionary leaders and dedicated staff for their accomplishments in providing small business support. 4. 21-043 Mayor Carr presented the Mayor’s HB Excellence Award to Heather Dodd, Office Assistant II, Community and Library Services Department Mayor Carr explained that HB Mayor's Excellence Award recipients are selected by their peers, and introduced Randy Pesqueira, Senior Supervisor, to congratulate Heather Dodd for receiving this recognition. Mr. Pesqueira shared that Ms. Dodd is someone who speaks in kindness and compassion, and was instrumental in coming up with creative ways to maintain contact with the community's senior citizens when the Senior Center had to be closed last March. Her efforts resulted in the “Senior Center in a Box” program that provides items for assorted activities that can be done at home. When the program started there were approximately 200 people driving through to pick up a box, and by December, they needed 400 boxes to meet the demand for this very popular program. Heather was described as exceptionally organized, and instrumental in leading the program that helps so many of the seniors living alone in isolation during this time of COVID-19. Heather expressed her appreciation for the acknowledgement, and thanked her team of co-workers for their support for a project idea that required a lot of "above and beyond" extra effort from everyone. Mayor Carr thanked Heather for being a shining example of what makes the Senior Center outstanding and finding unique ways to provide services in safe and comforting ways. ANNOUNCEMENT OF SUPPLEMENTAL COMMUNICATIONS (Received After Agenda Distribution) Pursuant to the Brown "Open Meetings" Act, City Clerk Robin Estanislau announced supplemental communications that were received by her office following distribution of the Council Agenda packet. City Manager’s Report #6. (21-049) PowerPoint communication entitled COVID-19 Update submitted by City Manager, Oliver Chi. #6. (21-049) My HB Comment, including the “Mask Use in the Context of COVID-19” Interim guidance guide authored by the World Health Organization, received from Burton Tarvin. Consent Calendar #8. (20-2115) Memo submitted by City Clerk, Robin Estanislau amending the December 21, 2020 minutes. #18. (20-2116) Thirty-three (33) emails regarding the adoption of Ordinance No. 4224 amending the HBMC by adding Chapter 5.120 (Short-Term Rentals) from: Albert Levassiur Kathryn Levassiur Bianca Ung 68 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 3 of 28 Mirta Seitz Steve Carlson Donald Dupuy Diann Davisson Kevin Plummer Sail Inc. (2) Richard Rule Maegan Rule Dru Kitchen Scott B. Jacob Canter Manny Moreno Tony Diaz Judy Jew Andre Valdez Waltraud Mattern Joseph Anello Rookie K. Lauren T. Jay C. Danielle W. Linda Kalicki Julie Kimmel Anonymous (2) Doran Solis Mike Hermanns Jesse Rocco Pat & Shelley Love Councilmember Items #22. (21-060) A letter regarding the proposed change to the City Council Meeting days received from Amory Hanson. #23. (21-059) An email regarding the reaffirming of the City’s commitment to the Declaration of Policy About Human Dignity received from Mary Adams Urashima. #24 (21-057) Letter from State Senator, California District 34, Thomas J. Umberg regarding the proposed condemnation of violence at the U.S. Capitol, and of the affirmation of the City’s commitment to American Democratic Principles and Practices. #24. (21-057) Seventeen (17) emails regarding the proposed condemnation of violence at the U.S. Capitol, and of the affirmation of the City’s commitment to American Democratic Principles and Practices received from: Alison Tovar Connie Garver & Mark Hutchinson Megan Blash Sean Patrick Small Connie Boardman Kathleen Brown Rebecca Spongberg Natalie Elder Craig Framptom Mary Adams Urashima Regina Magee Zeta Heiter Bonnie Gruttadauria Janet Michels Cindy Perz Janice Janssen Orecchia Linda K. Law PUBLIC COMMENTS (3-Minute Time Limit) — 27 Speakers via Zoom The number [hh:mm:ss] following the speakers' comments indicates their approximate starting time in the archived video located at http://www.surfcity-hb.org/government/agendas. Galen Pickett was called to speak and commended Council for Councilmember Items No. 23 (21-059) regarding reaffirming the City's commitment to the Declaration of Policy About Human Dignity, and No. 24 (21-057) condemning the seditious acts of violence at the U. S. Capitol on January 6, 2021. (00:24:39) Dale Martinez, a long-time resident of Huntington Beach, was called to speak and stated her support for Councilmember Item No. 23 (21-059) regarding reaffirming the City's commitment to the Declaration of Policy About Human Dignity, suggested that some of the words could be updated, and requested that the Council consider no longer allowing Civil War re-enactments in public parks or places. Ms. Martinez also thanked Mr. Chris Epting for his local historical videos. (00:26:43) 69 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 4 of 28 Oscar Rodriguez, a life-long resident of Huntington Beach and Co-Founder of Oak View ComUNIDAD, was called to speak and shared some of ComUNIDAD's recent activities to improve the quality of life in Oak View as well as surrounding residents in need. He requested Council's assistance in meeting some of the Oak View COVID-19 challenges including testing and vaccine resource information in Spanish, as well as technological assistance for downloading apps. (00:31:06) Debbi Parrott was called to speak and stated her support for Councilmember Item No. 24 (21-057) condemning the seditious acts of violence at the U. S. Capitol on January 6, 2021, and shared her opinions on the recent public actions of Mayor Pro Tem Ortiz. (00:34:23) Caller #999, Christopher Lundgren, a 45-year resident of Huntington Beach, was called to speak and stated his support for Consent Calendar Item No. 18 (20-2116) to adopt Ordinance No. 4224 regarding Short-Term Rentals, and asked for modification of Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm by not approving the luxury hotel and requiring more affordable housing. (00:35:35) Libby Frolichman was called to speak and stated her support for Councilmember Items No. 23 (21-059) regarding reaffirming the City's commitment to the Declaration of Policy About Human Dignity, and No. 24 (21-057) condemning the seditious acts of violence at the U. S. Capitol on January 6, 2021. For Councilmember Item No. 22 (21-060), Libby suggested that if Council meeting dates are changed, they be moved to the second and fourth, rather than first and third, Tuesday of each month. (00:37:21) Oscar Carrillo, a resident on Newland Street, was called to speak and shared his dismay at suddenly finding the curb painted red, without any notice, at the front of his home and shared some of the issues this has created. Mayor Carr asked that he send her an email for follow-up. (00:38:33) Louise Burke was called to speak and stated her support for Consent Calendar Item No. 18 (20-2116) regarding adopting Ordinance No. 4224 and Short-Term Rentals. (00:42:03) Ian Fletcher was called to speak and stated his support for Consent Calendar Item No. 18 (20-2116) regarding adopting Ordinance No. 4224 and Short-Term Rentals. (00:43:29) Nancy Buchoz, a long-time resident of Southeast Huntington Beach, was called to speak and shared her opposition and opinions on Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (00:44:54) Danielle Wilson, Unite Here Local 11 Hotel Workers Union, was called to speak and stated support for Consent Calendar Item No. 18 (20-2116) regarding adopting Ordinance No. 4224 and Short-Term Rentals. (00:48:06) Senorina Estrada, Unite Here Local 11 Hotel Workers Union, was called to speak and stated her support for Consent Calendar Item No. 18 (20-2116) regarding adopting Ordinance No. 4224 and Short-Term Rentals. (00:48:57) Caller #056, Kelly Kelly, a resident of Huntington Beach, was called to speak and stated her support for Councilmember Item No. 24 (21-057) condemning the seditious acts of violence at the U. S. Capitol on January 6, 2021, and shared her opinions on recent public actions of Mayor Pro Tem Ortiz. (00:49:25) 70 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 5 of 28 Kathryn Levassiur, long-time Huntington Beach resident and Founder of Huntington Beach Short-Term Rental (STR) Alliance, was called to speak, and stated the Alliance's request that no action be taken on Consent Calendar Item No. 18 (20-2116) regarding adoption of Ordinance No. 4224 and Short-Term Rentals to allow time for additional considerations. (00:52:01) Caller #951, a short-term, whole-home, un-hosted rental owner in Huntington Beach, was called to speak and asked Council to delay action on Consent Calendar Item No. 18 (20-2116) until all existing hosts are provided an opportunity to obtain an Short-Term Rental permit. (00:55:33) Eric Silkenson was called to speak and shared his opinions on allowing Federal Agents to arrest people in Huntington Beach; as a teacher at Edison High School in the Magnolia Tank Farm neighborhood, stated his opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm re- zoning effort; and stated support for Councilmember Item No. 22 (21-060) to consider changing City Council meeting days to Tuesday. Mr. Silkenson also shared his opinions on the recent actions of Mayor Pro Tem Ortiz. (00:58:05) Amory Hanson, a Candidate for City Council in 2022 and member of the Huntington Beach Historic Resources Board, was called to speak and stated his opposition to Councilmember Item No. 22 (21- 060) to consider changing City Council meeting days to Tuesday. Mr. Hanson also requested that this meeting be adjourned in memory of recently deceased W. Russell Paxson who served two non- consecutive terms as Scout Master for Huntington Beach Troop 1, was a WWII Veteran, and Former Member of the Huntington Beach Independence Day Board and positively impacted many people. (01:00:03) Bill Erickson, a resident of Huntington Beach since 1982, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (01:02:09) Jaime Gomez, a resident of Costa Mesa, was called to speak and stated his support for Consent Calendar Item No. 18 (20-2116) regarding Short-Term Rentals, and opposition to the luxury hotel component for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (01:04:32) Kevin, a life-long resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (01:05:46) David Girty, an 8-year resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (01:07:39) Caller #024, Project Director for Orange County Environmental Justice, was called to speak and recommended that the City Council not move forward with Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because in their opinion, the Environmental Impact Report is not complete. (01:10:25) Victor Valladares, life-long resident of Huntington Beach and Co-Founder of Oak View ComuNIDAD, was called to speak and shared projects the community has provided since the COVID-19 pandemic started to assist residents. Mr. Valladares requested the City's cooperation to get more resources for the Oak View community especially related to vaccines. Mr. Valladares also shared his opinions related to recent public actions of Mayor Pro Tem. (01:11:28) 71 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 6 of 28 Jonah Breslau, Los Angeles Alliance for a New Economy (LAANE), was called to speak and stated support for Consent Calendar Item No. 18 (20-2116) regarding Short-Term Rentals. (01:14:16) Dennis Lorton, a life-long resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (01:15:23) Nicholas Stemper, a Huntington Beach homeowner, was called to speak and stated his support for Consent Calendar Item No. 18 (20-2116) regarding Short-Term Rentals. (01:18:56) Tony Bisson, a resident in Southeast Huntington Beach, adjacent to LaBard Park, was called to speak and stated that removal of the parking area and court fence with the recent park renovations has negatively impacted the noise level in his home. He requested that at least minimum hours of operation should be posted to prevent use of the facilities before 7 a.m. or after 9 p.m., and that the lights go off at 9 p.m. rather than 10 p.m. (01:22:08) COUNCIL COMMITTEE — APPOINTMENTS — LIAISON REPORTS, AB 1234 REPORTING, AND OPENNESS IN NEGOTIATIONS DISCLOSURES Councilmember Peterson reported that he is releasing Nancy Buchoz from the Citizen's Infrastructure Advisory Board (CIAB). Councilmember Posey reported attending an Orange County Power Authority Board meeting where Chief Executive Officer Brian Probolsky and Chief Operating Officer Antonia Castro-Graham were hired. Councilmember Posey thanked his fellow Councilmembers for agreeing to extend his representative position with the Southern California Association of Governments (SCAG). Councilmember Kalmick reported that the Orange County Power Authority Board meeting also addressed organizational issues, as well as possible policies for adding new cities in the future. Councilmember Kalmick also reported a meeting with the Huntington Beach Police Managers' Association, and stated he was sworn in as the Alternate for both the Orange County Transportation Authority (OCTA) and Orange County Sanitation District (OCSD). Councilmember Moser reported meeting with the Huntington Beach Police Managers' Association, attending a Youth Board meeting, participating in a Downtown Business Improvement District (DBID) meeting, and a meeting of the Human Relations Task Force which currently has two openings for which applications are being accepted from interested residents. Councilmember Moser also announced that COVID-19 meetings will be provided in Spanish, with the next Spanish Townhall meeting scheduled for January 28th. Councilmember Delgleize reported attending an Orange County Transportation Authority (OCTA) Board meeting where the new Board members were seated, and an update on the 405 Freeway Improvement project was provided. Mayor Carr reported attending a Downtown Business Improvement District (DBID) meeting, a Human Relations Task Force meeting, a City Selection meeting of Mayors to elect representatives to serve on regional boards. Mayor Carr also attended a meeting with State representatives to gain knowledge of current issues related to the COVID-19 vaccine, and a Virtual Townhall COVID-19 meeting is scheduled for January 20 which will be taped and available for viewing afterwards. 72 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 7 of 28 CITY MANAGER’S REPORT 5. 21-048 Ascon Landfill Site Update City Manager Chi introduced Assistant City Manager Travis Hopkins who presented a PowerPoint communication entitled: Ascon Landfill Site Update with slides titled: Odor Assessment Field Investigation, Technical Advisor, How to Stay Informed, and Questions or Concerns Councilmember Delgleize and Manager Hopkins discussed that currently there is no date set for continued remediation on the site as Ascon continues working with the Department of Toxic Substances Control (DTSC) and Air Quality Management District (AQMD) for the necessary permits. 6. 21-049 Update of the City COVID-19 Response Plan and Vaccination Update City Manager Chi and Fire Chief Haberle jointly presented a PowerPoint communication entitled City of Huntington Beach COVID-19 Update with slides titled: COVID-19 Situational Overview, COVID-19 US Totals, Nationwide COVID-19 Metrics 7-day Average Lines, COVID-19 - US Cases by Day, COVID-19 California Totals, Currently Hospitalized with COVID-19, Change in Currently Hospitalized: Today vs. Previous Week, COVID-19 Orange County Trends, COVID-19 Orange County Hospital Capacity, COVID-19 Huntington Beach Numbers, Situation Summary, Current COVID-19 Situation for Orange County, Orange County ICU Status, HBFD EMS Response Impacts, Vaccine Protocols Changing Daily!, Operation Independence, Current Vaccine Eligibility, Vaccine Registration, Virtual Vaccine Town Hall Series, and Questions Mayor Carr, City Manager Chi and Councilmember Moser shared that the January 20th Virtual Townhall Vaccine meeting can be accessed at bit.ly/hbcovid_jan20, and people can subscribe to the Huntington Beach YouTube channel and then be automatically notified when something new is posted. 7. 21-050 Regional Housing Needs Assessment (RHNA) Appeal Update City Manager Chi thanked City Attorney Gates and Community Development staff members, particularly Community Development Associate Planner Nicolle Aube, for their efforts with this appeal before the Southern California Association of Governments (SCAG), and reported that the City's current Regional Housing Needs Assessment (RHNA) is approximately 13,300 new units. Manager Chi stated that SCAG approved the request of City Attorney Gates for a continuance to January 25, 2021. Councilmember Posey and City Manager Chi discussed the potential technical error that SCAG used to determine the RHNA number for Huntington Beach by defining Beach Boulevard is a high-quality transit area. If it is determined that Beach Boulevard is not a high-quality transit area, then the Huntington Beach RHNA number could potentially be reduced by about 3,600 units. City Attorney Gates explained that the City is actually challenging the methodology used to determine RHNA numbers, and presenting facts such as Huntington Beach does not have a job center, or magnet of attraction, like many other cities do, and that Huntington Beach has 8 miles of coastline with wetlands and preserves that are protected from development. 73 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 8 of 28 Community Development Director Ursula Luna-Reynosa stated that most cities have appealed their RHNA numbers on the issue of methodology which is not the purpose of the current regional process, but Huntington Beach's appeal focused on a number of City-specific situations for SCAG to consider. Councilmember Kalmick and Director Luna-Reynosa discussed that if the RHNA number for Huntington Beach is reduced, SCAG could be expected to provide a re-count for the region. CONSENT CALENDAR 8. 20-2115 Approved and Adopted Minutes A motion was made by Posey, second Delgleize to approve and adopt the City Council/Public Financing Authority regular meeting minutes dated December 21, 2020, as written and on file in the office of the City Clerk, as amended by Supplemental Communication. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 9. 21-008 Conducted Annual Review of the City Code of Ethics A motion was made by Posey, second Delgleize to direct the City Clerk to record in the official minutes that the City Code of Ethics was presented to the City Council, City Manager, Chairpersons, and City Department Directors for their review and distribution as required by Resolution No. 2016-73. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 10. 20-2091 Received and filed the updated Huntington Beach City Council Manual 2021 digitally compiled to incorporate policy information previously adopted by resolution A motion was made by Posey, second Delgleize to receive and file the updated Huntington Beach City Council Manual 2021. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 11. 21-027 Received and filed a status update on the 6th Cycle Regional Housing Needs Assessment (RHNA) process A motion was made by Posey, second Delgleize to receive and file the Regional Housing Needs Assessment process status update. 74 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 9 of 28 The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 12. 21-064 Approved recommendations by Council Liaisons Mayor Carr and Councilmember Posey to appoint Katherine Elford, Patricia Quintana, and Cindy Vellucci to the Personnel Commission A motion was made by Posey, second Delgleize to approve the appointment of Katherine Elford and Patricia Quintana for the remainder of the term of July 1, 2020, through June 30, 2022, and Cindy Vellucci for the remainder of the term of July 1, 2019, through June 30, 2021, as recommended by the Council Liaisons to the Personnel Commission. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 13. 21-029 Adopted Resolution 2021-06 Identifying the Terms and Conditions for Fire Department Response Away from their Official Duty Station and Assigned to an Emergency Incident A motion was made by Posey, second Delgleize to adopt Resolution 2021-06, "A Resolution of the City Council of the City of Huntington Beach Identifying the Terms and Conditions for Fire Department Response Away from their Official Duty Station and Assigned to an Emergency Incident." The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 14. 21-031 Adopted Successor Agency Resolution Nos. 2021-01 and 2021-02 approving the Recognized Obligation Payment Schedule (ROPS) and Administrative Budget for the Huntington Beach Successor Agency for the period of July 1, 2021, through June 30, 2022, in accordance with Health and Safety Code Section 34177 and related actions A motion was made by Posey, second Delgleize to adopt Resolution No. 2021-01, "A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Successor Agency Administrative Budget for the Period July 1, 2021, through June 30, 2022;" and, adopt Resolution No. 2021-02, "A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Recognized Obligation Payment Schedule for the Period July 1, 2021 - June 30, 2022 ('ROPS 21-22')." The motion carried by the following vote: 75 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 10 of 28 AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 15. 21-028 Approved and authorized execution of Vote Center Entry Permit (License) Agreements with the County of Orange for use of the Huntington Beach Civic Center, Huntington Beach Central Library, and Murdy Community Center as Vote Centers for the March 9, 2021, Special Municipal Election A motion was made by Posey, second Delgleize to approve and authorize the City Manager to execute "Vote Center Entry Permit (License) Agreements" with the County of Orange approved as to form by the City Attorney on the following sites: Huntington Beach Civic Center, Meeting Room B-7, 2000 Main Street, Huntington Beach from Thursday, February 25, 2021 through Wednesday, March 10, 2021 (11- day Vote Center); and, Huntington Beach Central Library, Rooms C/D, 7111 Talbert Avenue, Huntington Beach from Thursday, February 25, 2021 through Wednesday, March 10, 2021 (11-day Vote Center); and, Murdy Community Center, Studio, 7000 Norma Drive, Huntington Beach from Thursday, March 4, 2021 through Wednesday, March 10, 2021 (4-day Vote Center); and, Authorize the City Manager to execute future Vote Center Entry Permit (License) Agreements with the County of Orange in a form approved by the City Attorney. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 16. 20-2077 Approved a three-year contract with Waymakers in the amount of $109,790, for management of Victim and Witness Assistance Services A motion was made by Posey, second Delgleize to approve and authorize the "Professional Services Contract between the City of Huntington Beach and Waymakers for Victim and Witness Assistance Services." The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 17. 21-033 Approved and authorized execution of an Affordable Housing Agreement between the City, the Housing Authority and Beach Housing Partners, LP (Jamboree Housing Corporation) for a 43-unit senior affordable housing project located at 18431 Beach Blvd. A motion was made by Posey, second Delgleize to approve the Agreement by and between the City and Developer; and, authorize and direct the City Manager to finalize and execute the "Affordable Housing Agreement By and Among the City of Huntington Beach, California, The Huntington Beach Housing Authority, and Beach Housing Partners LP, A California Limited Partnership" attached hereto, in a form approved by the City Attorney; and, authorize and direct the City Manager to execute any other documents and budgetary actions necessary to implement said Agreement. 76 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 11 of 28 The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 18. 20-2116 Adopted Ordinance No. 4224 amending the Huntington Beach Municipal Code by adding Chapter 5.120 (Short-Term Rentals) Approved for introduction 12/21/2020 — Vote: 7-0 A motion was made by Posey, second Delgleize to adopt Ordinance No. 4224, "An Ordinance of the City Council of the City of Huntington Beach Amending the Huntington Beach Municipal Code by Adding Chapter 5.120, Regulating Short-Term Rentals" (Attachment 1). The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None PUBLIC HEARING 19. 19-1172 Certified Environmental Impact Report No. 17-001 by adopting Resolution No. 2021-01; Approved CEQA Findings of Fact with a Statement of Overriding Considerations; Approved with modifications General Plan Amendment No. 17- 001 by adopting Resolution No. 2021-02, Zoning Map Amendment No. 17-001 by approving for introduction Ordinance No. 4225, Zoning Text Amendment No. 17- 005 by adopting Resolution No. 2021-03, Local Coastal Program Amendment No. 17-001 by adopting Resolution No. 2021-04, and Development Agreement No. 19- 001 by approving for introduction Ordinance No. 4226; and, Executed an Indemnification Agreement (Magnolia Tank Farm) City Manager Chi introduced Community Development Director Ursula Luna-Reynosa who introduced Senior Planner Ricky Ramos who presented a PowerPoint communication entitled Magnolia Tank Farm, with slides entitled: Project Site, Request (7), and Planning Commission. Councilmember Posey, Director Luna-Reynosa and Planner Ramos discussed the PS (public/semi- public) zoning definition, what is currently permitted per Municipal Code, the requirements for Zoning Administrator and Planning Commission, and an alternate proposal that focuses on Senior Care, which would require a Conditional Use Permit. Councilmember Posey confirmed with Planner Ramos that the current zoning allows the highest intense use of the space, and the proposed zoning change in this item would reduce the intensity of the space. Councilmember Posey further confirmed that if this zoning change is not adopted, there could be expected a higher intensity of use which would translate into more car trips with the least economic benefit to the City. Councilmember Moser, Planner Ramos, and Director Luna-Reynosa discussed the types of open space designated within the City, and confirmed that while this parcel may appear to be open space, it is not currently zoned as such but rather as public/semi-public, and therefore approving this item would not be reducing the City's open space, but in fact would require a portion of the project to be designated for public space. 77 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 12 of 28 Mayor Carr discussed with Planner Ramos that the Planning Commission saw several significant and unavoidable impacts, including noise from pile driving. The project applicants indicated they will not be using this technique, and the project specifications state that pile driving will not be allowed. Planner Ramos added that a noise study will be required once the project is further along, and must implement noise mitigation methods such as perimeter block wall, or specific area glass enclosures, if necessary. Mayor Pro Tem Ortiz, Director Luna-Reynosa and Planner Ramos discussed this project’s proximity to the neighboring Ascon cleanup area. Staff confirmed that the project developer is in communications with the Department of Toxic Substances Control (DTSC), and that Ascon in the midst of searching for alternative ways to mitigate the odor issue, and has retained consultants to assist with proper Southeast area community communication. Councilmember Kalmick and Planner Ramos discussed the latest reports on noise levels related to the AES plant, where noise readings are actually lower than what was projected in the Environmental Impact Report (EIR). There was further discussion on the nexus for putting a pause on this project because of contamination issues on a neighboring property, and Director Luna-Reynosa confirmed that there has not been any evidence that supports the suggestion that the soil contamination on Ascon land has migrated to the current project site. Director Luna-Reynosa also confirmed that the contamination previously found on the Magnolia Tank Farm parcel has been remediated, and in July 2020 DTCS provided a letter stating that the Magnolia Tank Farm has been cleaned up and is now safe for residential development. Director Luna-Reynosa explained that tonight's legislative actions on this item change land use designation, and the appropriate time to condition a project is when the subdivision plan is ready for review, first by the Planning Commission, and then by the City Council. Councilmember Kalmick confirmed with staff that the Coastal Commission will be involved in the process, a public hearing will be required, and the issues of noise and contamination at Ascon will continue to be addressed throughout this years-long process. Councilmember Moser and Director Luna-Reynosa discussed that any required environmental standards would be discussed appropriately in the future, rather than at this time. Councilmember Posey, Director Luna-Reynosa and Planner Ramos discussed that if Council put the land use change on pause, it would not prevent potential use under the current PS zone; however, if the land use change is approved it would actually provide more time for better analyzing what the development will look like, and eliminate the possibility of a higher-intensity use. Mayor Carr opened the Public Hearing for Item No. 19 (19-1172) regarding the Magnolia Tank Farm. Pursuant to the Brown "Open Meetings" Act, City Clerk Robin Estanislau announced supplemental communications that were received by her office following distribution of the Council Agenda packet: Public Hearing #19 (19-1172) PowerPoint presentation entitled Magnolia Tank Farm (Staff) submitted by Community Development Director, Ursula Luna-Reynosa. 78 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 13 of 28 #19 (19-1172) PowerPoint presentation entitled Magnolia Tank Farm (Developer) submitted by Community Development Director, Ursula Luna-Reynosa. #19 (19-1172) Late Communications regarding Magnolia Tank Farm submitted by Senior Planner, Ricky Ramos. #19. (19-1172) Four Hundred Twenty-eight (428) emails regarding the proposed Magnolia Tank Farm project received from: Marlo Mole (3) Mark Burdette Josh Mallory Lee Ann Poe David Girty Bob Patterson Lisa Kichline Steve LaMotte Elizabeth Hansburg Les Card Michelle Weedon Jacqueline Brodt Jennifer Ward Susan Fulbright Van Uffelen Dave Garofalo Steve PonTell (2) David Swartz Steven Geier Tim Harris Vance Bennett CJ Remington Jeff Stevens Casey Thomas Cassy Murrey T. Teichmann Scott McKean Hersel Zahab David I. Juan Munoz Austin Deuel Ryan Deuel Manya Nikitin Ed & Nancy Deuel John Skulavik Mike Finn David Wetzel Jackie Harry Kari Moreno Marty Donahue John Van Holt Stephen Edwards Fred Nikitin Kimberly Engh Jessamyn Garner Geno Mulachy Dasha Samarin Lance Huante John Bobie Jamie Gambo Manya Mucha Dave & Manya Mucha Roger Parker Christina Sakamoto Roland Weedon Kim E. (2) Larry McNeely (3) Connie Hynes (2) Paul Cressler (2) Brian Schrieber Craig Frampton Tim Kearns Miguel Prieto B. Benton Kim Burns Dane Aleksic Robin Titcher Sean McDonough Ed Laird Thoby Cathy Martin Ron Smith Megan Greene John Mcree Monica White Marlene Tewis Doreen Abegg Rebecca Carmack Kathleen Dougherty Aaron Arellano Suanne White Phil Santia Jean Gerstner Andrew Montana Susan Fulbright Carol Vohs David Swartz Gail Shultes Chad Gravina Silvana Sarkis Gary Tarkington Ayperi Demircioglu Peter Bedford Beverly Barkley Jacquie Bethel Jenny Teo Charla Kabana Jennifer Lambert Nora Ammon Sheila Zhao Connie Kim Katherine Janish Janet Jackson John Leehey HBPOA Donna Dillon Ernesto Medrano (2) John Hanna Lisa Reincke Michael Tryon Brad Bailey Kelly McCarty Nancy Buchoz Mostafa Nagaty Greg Dillon Robyn Sladek Teresa Kennedy Jakki Tonkovich Dina Rochford LeeAnn Poe Casey McKeon 79 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 14 of 28 Kari Moreno Jake Knox Scott Gump Dean Maher John Villa (2) Cheryl Knox Mickey Capuano Marc Domingo Arthur Villa Jr. Juan Munoz Tony Diaz Nick Vella Kenneth & Judith Emanuel Jason Melschau Karen Malatesta Mark Sisco Ronald Neal Judy Fike Louis Carrier Bobbie Jean Blair Adam Mohamed Cathy Martin Meagan Blades Christine Pyle Adam Deermount Shannon Powell Donald Hawkins Nancy Wager Dan Gillen Jimmy Elrod Luciana Bar Peter Alpine Shirley Costello Kristi Hampshire William Seibert Ruth Massie Chris Bustos Cherry Matinas George Davis Aaron Arellano Steven Ballard Peggy Mcintosh Philip Widetick Ngoc Hoang Sharon Toland Danae Lucas Norman Whitford Stephen Halcum Raul Montes Alan Caouette Milton Dardis Jamene Utt Sean Doyle Caitlin Turner Steven Geier Kati Moore Roger Schiefelbein Dan Boldt Mary Jo Baretich Alle Madrid Maria Young Jennifer Greenlief Maria Howarth Steve Farnsworth Laurie Ellen Park Leslie Golson Sklyer Smith Rusi Alamshaw Peter Jencks Christopher Lundgren Mike Gatlin Allie Paige Jaclyn Van De Wetering Jack Delulio David Purtell Jose Gasca Frank Ferrara Skylar Sextro Joe Schiavone Autumn Hise Anna Child Nicole Helm Sandra Crabb Anthony Dibb Mina Thompson Denise Rockwell Mari Vierra Juan Rojas Ann Phan Anthony Soos Zeki Dal Lisa Gmerek Rodney Haggstrom Sue Claycomb Ella Ruffino Danielle Riley Brandon Hupka Dami Shepard William Anselmo Kelan Long Andy Trinh Nick Ross Thomas Miller Lauren Perez Brandin Bull Brian Gorelick Victoria Cernok Jamie Slade Liz Richardson Margarita Vasquez Stacy Kirk Deborah Smith Elisabeth James Honnavalli Vydyanath Janet Day David Comfort Belinda Pereira Erin Rands Ernest Aguilar Corinn van der Lugt Joslin de Diego Sydelle Ibarra Brandon Petersen Susan Aton Diana Dodson Carlee Darr Amanda Galath Kayla Landeros La Brooks Maria Waldron Mary C. Gonzales Alex McKay Donna Miller Tony Arnado Teresa Vu Cooper Carrasco Alexander Cox Arin Kenyon Annilise Flanagan-Frankl Ginger Leibfreid Rebecca Holland Mary Jane Malek James Furtsch Robyn Rosenberg 80 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 15 of 28 Joelle & Todd Palombo Teag Turner Drew Vandalia Jon Atkinson George Baker Lisa Gottschalk Makenna Redden Lisa Ayres-Smith Megan McElroy Stephen Gregory Carla Flower Michael Polsky Denise Marble Melody Price Joel Bernstein Joe De La Torre Kyle Farinella Jessica Perez Bonnie Carroll Carolyn Teresa Paige Clenney Tracy Harpel Tori Maricich Benjamin Will CJ Stites Diane Tran Victor Evangelista Sam Halterman Emma Clark Amy Aceves Jenea Olson Jennifer Tilzer Kenneth Claycomb Claude van Plato Lori Jones Terry Hoffman Samantha Delapa Barbara Williams Lucas Beato Sandra Silverman Maddie Pierson Sofia Astwood Cheryl Johnston Tiffany Feliciano Lucas Woodfin Tricia Lindquist Maria De La Cruz Casey Howell Ellen Brenan Rich Martucci Aria Ferreyra April Williams Sonya Sandoval Lucas Blankenhorn Michael Kral Cherie Smith Elizabeth Kitchens Sven Sianez Autumn Digiovanni Renee Aherne Melissa Hill Amy Gebhard Rod Robey Whitney VanRuyven Sherri Taylor Melanie Borton Thomas Cavalieri (2) Rhonda King Rudy Morgan Adam Weiner Kathryn Levassiur Dolores Cruz Roger Quital Donna Little Jamie Grey Cindy Hayden Suzanne Boesing Cynthia Preston John Kroepil Michael Crose Scott LeMay Lee Rockway Rochelle Gartner (2) Whitney O’Callaghan Lisa Gonzalez Blake Nuttall Daniel Niemiec Mary Cumella Dallas Weaver Bruce Jacobs Sophia Merrill Cheryl Stankovich Francine Karuntzos Michelle Andreasen Danielle Wilson Bonnie Panlasigui Barry Kuhnke Rebecca Saraf Jacqueline Barrios Teresa Weissman Holly Hanes Paula Ringen Mary Jo Pompura Mindy Freeland Skylar Boulton Andrea Rolf Suzanne Hart Mary & Raul Carlos Jeff Turner Judy Fleenor (2) Litta Cecchi Deborah Goldstick Nicole Burmaster Laura Burmaster Mechaelle-Ann Allen Lisa Swanson Ron Ferber Geoff Smith Yvonne Mauro Loretta Smith Joan Griggs Debi Luther Chris Hall Debbi Randall Michael Burmaster Mary Franklin-Young Mitchell Wilson Damian Giatti Bob Stubbs Steven LaMotte John Bossinakis Kelsey Irvin Ian Harvey William R. Erickson Doran Solis Carol & Thomas Pilgrim (2) Wendy Bucknum Mike Hermanns Rob Pool Stephanie Stichka Ella Thomas Greg Thomas Rich Backstrom Joshua Canter 81 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 16 of 28 Randal R. Sanders Christina Christensen Julie Rose Brian Allen Kristin Steinbach Rich Gomez James O'Malley, Vice President, Shopoff Realty Investments and project applicant, shared a PowerPoint communication entitled Magnolia Tank Farm with slides entitled Review and Approval, Tank Farm Property/This Land Use, Tank Farm Property/To This Land Use, Community Benefits (9), Development Agreement Benefits (6), Environmental Clearance Confirmation, DTSC Clearance, Tank Farm Outreach, Outreach Timeline, and Magnolia Tank Farm Thanks You. (02:56:50) Public Hearing Speakers — 40 via Zoom Due to the number of public speakers in que, Mayor Carr announced each speaker would have two (2) minutes of time to speak. (03:04:07) Danielle Wilson, Unite Here Local 11, was called to speak and stated opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm due to the expected negative impacts on air quality from a luxury hotel. (03:04:16) Adam Wood, nearly 40-year resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the expected revenue generation, acres of coastal conservation, new parks and trails, and job generation with the hotel component of the project. (03:05:57) Senorina Estrada, Unite Here Local 11 and employee in the hotel industry, was called to speak and shared her opinions in opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the plan for a luxury hotel. (03:07:46) Eric Nelson, Executive Board Member, Orange County Building Industry Association, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because it is compatible with the existing community, it offers great amenities, and will help to ease statewide housing availability and affordability. 03:09:12) Ernesto Medrano, Council Representative, Los Angeles and Orange Counties Building and Construction Trades Council, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because it will transform what is now an eyesore, with a vibrant hotel and mixed-use community which will dramatically improve the value and aesthetics of the area, as well as provide a mutually beneficial agreement with the Building and Construction Trades Council for local hiring and creation of local middle-class careers in the construction trade. (03:11:20) Les Card, a 45-year resident of Orange County, member of the Building Industry Association, Orange County Business Council, and leader of a local environmental consulting firm, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm based on the housing component and local area improvements. (03:13:48) DB, Representative of the Huntington Beach Police Officers' Association (HBPOA), was called to speak and played a recorded message from HBPOA President Yasha Nikitin who could not be available to speak at this time. President Nikitin stated the full support and endorsement of the HBPOA for Public 82 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 17 of 28 Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm which will bring jobs, revenue and housing to a crime-ridden and inactive site. (03:15:55) John Hanna, 55-year resident of Orange County, representing the Southwest Regional Council of Carpenters, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as a quality project that will serve the City well through increased revenue, retail and housing. (03:17:44) Kelly McCarty, a 29-year resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as an excellent example of adaptive re-use of the site, transforming it into a vibrant, mixed-use community that blends well with the Surf City lifestyle. (03:20:08) Jennifer Ward, Senior Vice President, Advocacy in Government Affairs, Orange County Business Council, was called to speak and stated enthusiastic support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm for the additional housing it will provide to spur economic growth. (03:21:24) Elizabeth Hansburg, Co-Founder and Director, People for Housing Orange County, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm based on the additional housing this project will provide. (03:23:27) Nicole, a 20-year resident of Huntington Beach, was called to speak and stated her and her husband's support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the additional housing this project will provide. (03:25:32) Jordan Sisson, Unite Here Local 11, was called to speak and stated opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm due to fatal EIR flaws, and efficiency thresholds expected to exceed benchmarks proposed by the South Coast Air Quality Management District (SCAQMD), and Southern California Association of Governments (SCAG), and recommended any action be delayed to re-circulate the EIR, or approve without the luxury hotel component. (03:26:48) Caller #008, Steve LaMont, a resident living near Beach Boulevard and Atlanta Avenue, and was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the housing element which in his opinion is movement in the right direction. (03:28:59) Chad Cunningham (& Kelly Berg), 8-year resident of Huntington Beach, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because it will provide economic benefits including both short-term and long-term jobs across various industries, area beautification through additional trails, parks and viewpoints, and added housing. (03:30:39) Michelle (& Bill) Halligan, long-time Huntington Beach residents, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because the project will recycle the land for new housing, parks, retail and a hotel to serve the tourist industry. (03:32:08) Mike (& Jayne) Ruane, Vice President, National Core, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because the transition to 83 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 18 of 28 the new land designation is appropriate, it creates affordable housing to meet a critical need, as well as housing for all economic levels. (03:33:13) Dina Rochford, a life-long resident of Huntington Beach, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because this land is long overdue for improvement. (03:34:39) Tara Barton, a long-time resident of Huntington Beach, was called to speak and shared her opinions about the current zoning, use of developer funds, little to no affordable or low-income housing options, in supporting her opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm. (03:35:09) Steve Greyshock, who grew up in Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because he sees this as an opportunity for a legacy project that will improve the City's future. (03:37:25) Tom Grable, Immediate Past Chair, Building Industry Association of Southern California, and a builder of 200 homes in Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the statewide housing shortage and the project’s incredible balance of housing, commercial, retail, parks, trails and environmental open space. (03:38:23) Caller #999 Christopher Lundgren, a 45-year resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm, except for the hotel option, because as a member of Unite Here Local 11, he believes the existing hotels need to significantly recover from COVID-19 before additional hotel rooms are developed, and asked for a community definition of affordable housing. (03:40:22) Charla, a 20-year homeowner in Huntington Beach located on reclaimed Chevron land, was called to speak and stated her support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because in her opinion it is a great way to showcase the marshland, and replace an eyesore and dump with a project that will revitalize the area. (03:42:32) Rick Wood, long-time resident of Huntington Beach, Immediate Past President, Orange County Building Industry Association, and involved in the recent re-development project at what had been Franklin School, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because housing is very much in demand in Huntington Beach, the current zoning should be corrected, and the Shopoff project is well designed with appropriate uses. (03:44:15) Ted Grove, a 25-year resident of Huntington Beach, a Land Development Engineer and member of the Orange County Building Industry Association, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because he sees this plan as appropriate for the location, including the substantial public amenities, which will result in a revitalization of the area. (03:46:10) Peter Vanek, 30-year resident of Orange County, and former City of Huntington Beach Planner, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia 84 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 19 of 28 Tank Farm and shared his delight at finally seeing a viable plan for turning what was a contaminated site into a vibrant part of the community. (03:47:27) Jaime Gomez, a resident of Costa Mesa, was called to speak and stated his opposition to the luxury hotel option for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because of the significant increase it could have on greenhouse gas emissions, and lack of proper analysis on the project's potential impact on climate change and air quality. (03:48:52) John Villa, a resident of southeast Huntington Beach for 17 years, and Executive Director, Huntington Beach Wetlands Conservancy (HBWC), was called to speak and stated HBWC's support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because Shopoff Realty Investments has been very open with their plan to provide increased access to the wetlands adjacent to their site, are using materials for safe habitats for residents, and have addressed every concern that was raised by HBWC during the Environmental Impact Report (EIR) process. (03:50:42) Dan was called to speak and stated he would like to hear more from people opposed to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm, and related some questions he had for Consent Calendar Item No. 18 (20-2116) regarding Short-Term Rentals. (03:52:58) Nasser Mustafa, a 26-year resident of Huntington Beach, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because this plan is better than the potential for industrial development, and in his opinion Shopoff has done a good job of reaching out to the community and responding to concerns. (03:54:47) Michelle Weedon, a resident of southeast Huntington Beach, was called to speak and stated her support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because the contamination has been remediated per the Department of Toxic Substances Control, and in her opinion the Shopoff plan for new homes and amenities will increase existing neighborhood home values. (03:56:50) Dane Aleksic, a resident of Huntington Beach and building industry worker, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) as he believes the proposed homes would provide housing opportunities for some people currently living in apartments as well as for empty nesters, plus the proposed hotel and access to the wetlands will all provide a positive transformation. (03:58:30) Bill Watt, a 50-year Orange County home builder, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as a high-quality project, and stated his opinion that the hotel component alone will be a unique asset for Huntington Beach. (04:00:09) Joshua Ruiz, a 17-year resident and member of the Building Industry Association, was called to speak and stated his support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as he believes it would be a major improvement comparable to the improvements from the Brightwood development near the Warner Avenue wetlands. (04:01:48) Sunti Kumjim, President, Orange County Chapter, Building Industry Association, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because Shopoff has addressed the broader needs of the community with benefits for existing area 85 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 20 of 28 residents, visitors, and for the City's finances, and the project will also help with the extreme housing shortage. (04:03:07) Wendy Bucknum, Mission Viejo Councilmember, Southern California Association of Governments (SCAG) Regional Board Member and SCAG Regional Housing Needs Assessment (RHNA) Committee Member, was called to speak and stated her support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as she sees this as a project that will help maintain, if not increase, area property values in addition to the other benefits already described. (04:04:31) Rich Gomez, a 46-year resident of Huntington Beach, South West Regional Council of Local Carpenters member, and representing 700 Union Carpenters who reside in Huntington Beach, was called to speak and stated support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm as it is expected to provide good-paying construction jobs for the local skilled and trained workforce which will help keep additional monies in Huntington Beach, as well as follow the example of a number of prominent Huntington Beach projects he named which have successfully reclaimed land previously considered eyesores. (04:06:51) Caller #867, Austin Lynch, Organizing Director, Unite Here Local 11 representing hotel workers, was called to speak and stated opposition for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm, because in his opinion this project will not be affordable for most hotel workers, and it will decrease their coastal access, and negatively impact environmental health. (04:09:00) Mr. Mottles was called to speak and stated his opposition to Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because it will be adjacent to the Ascon site which the Department of Toxic Substances Control (DTSC) had previously stated was fine until the area residents demanded mitigation action, and asked that City Council focus their time and energy on cleaning up the Ascon site and actually improving the neighborhood before any more development is approved. (04:10:29) Gretchen Fuog, a resident of Huntington Beach, was called to speak and stated her support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm, because in her opinion Shopoff has done a good job of presenting the project which meets the balanced needs of the neighborhood, and is expected to provide a much needed economic and housing boost to the community. (04:13:00) Caller #383, Deborah Shales, a 36-year resident of Huntington Beach, was called to speak and stated her support for Public Hearing Item No. 19 (19-1172) regarding the Magnolia Tank Farm because the site has been cleaned up, the proposed zoning change will be more beneficial to the community, and the wetland education portion of the project will benefit generations to come. (04:15:36) City Clerk Robin Estanislau announced there were no more public speakers. Mayor Carr closed the Public Hearing for Item No. 19 (19-1172). (04:17:24) Councilmember Peterson stated that he doesn't think a hotel is compatible with the surrounding residential neighborhood, expressed concerns regarding the building heights the zoning change would allow, and concerns that the clean-up of the Ascon site could impact the Tank Farm site. Councilmember Posey stated support for this project because it is only a zoning change being considered which will match and extend the existing single family neighborhood zone to the east of this 86 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 21 of 28 project, and this will have a positive economic and housing appreciation impact. Councilmember Posey also clarified that to the best of his knowledge the Coastal Commission requires lodging accommodations as part of this project. He further stated allowing for additional housing will provide upward mobility which will provide an opportunity for other housing changes throughout the community. Councilmember Delgleize and Director Luna-Reynosa discussed California Coastal Commission (CCC) requirements such as visitor-serving uses including retail and lodging, necessitates changing the zoning. Director Luna-Reynosa explained that the Coastal Act prioritizes a hotel or lodge as open to the public vs. an entirely residential project which "privatizes" a coastal asset, and added the CCC will also have affordable lodging requirements which must be met for CCC approval. There was also discussion on building height for a hotel or lodge as well as for the residential homes, the quid pro quo for development agreements which are codified under local and/or state laws, and proposed timeline from zoning change approval, including CCC approval, design plans, public hearings, building permits, and construction which would take a number of years for project completion. Mayor Pro Tem Ortiz stated his support for efforts to improve the Magnolia Tank Farm site, but also has concerns related to the Ascon site, and stated his expectation that Council will at the same time focus on what needs to be done with the Ascon site in protecting the health of the residents, and asked if Shopoff could be of any assistance in also addressing the Ascon issues. Councilmember Kalmick stated he has reviewed all of the documentation and believes the Planning Commission actually addressed all of the concerns the public has expressed. He clarified with staff the content of the DTSC letter which states that the property has been deemed suitable for residential development, and Director Luna-Reynosa explained there are different standards for different purposes and residential development requires the highest standard of remediation. Councilmembers Kalmick and Peterson discussed additional text in the DTSC letter stating that the approval does not certify that the facility does not pose any environmental or public health threat, and does not remove any liability associated with past hazardous waste. Councilmember Peterson also explained that the CCC will have a public hearing before making their final decision on whether or not to approve this project, and including a hotel in the plans is expected to improve the chances of the project receiving approval. Councilmember Kalmick and Director Luna-Reynosa continued discussions on the DTSC letter and staff's recommendation to include a hotel in the plans because of their understanding that the CCC would be unlikely to approve a totally residential project. Director Luna-Reynosa introduced Environmental Consultant Mr. Mauricio who has experience dealing with DTSC, and explained that the two referenced letters addressed two different projects and at the present time it is agreed that conditions on one site do not affect conditions on the other site. Councilmember Kalmick stated that in his review of all of the background material for this site, he believes approving the zoning change will protect the area from additional heavy industry businesses, and explained his logic for supporting this item to ensure a successful project with the lowest impact to the neighborhood. Councilmember Moser stated her support of Councilmember Kalmick's comments and stated her support for a project where the benefits outweigh the challenges. Councilmember Moser also stated 87 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 22 of 28 her interest in simultaneously maintaining focus on the proper remediation for Ascon, as well as to ensure that building out the Magnolia Tank Farm includes benchmarks and standards that will mitigate greenhouse gas emissions. Councilmember Moser and Planner Ramos discussed that if Shopoff decided to sell the land, any new owner would have to repeat this whole process if they wanted to change anything that has been approved by City Council and the California Coastal Commission. At 11:00 PM, pursuant to Resolution No. 2015-46, a motion was made by Posey, second Kalmick to continue conducting business past 11:00 PM. With no objections, the meeting continued. Mayor Carr stated she would not be supporting this item because of her concerns with the project’s plans to build homes adjacent to a power plant that operates 24/7, and is next to the Ascon site. She stated her support for cleaning up the site, and the importance of housing, jobs, and revenue, but can’t support this project at this site. Mayor Carr explained that health and safety are the most important issues that must remain the top priority for all decisions. A motion was made by Delgleize, second Posey to Certify Environmental Impact Report No. 17-001 as adequate and complete in accordance with CEQA requirements and adopt Resolution No. 2021-01, "A Resolution of the City Council of the City of Huntington Beach Certifying the Final Environmental Impact Report (SCH#2017101041)for the Magnolia Tank Farm Project" (Attachment No. 2); and, approve CEQA Findings of Fact with a Statement of Overriding Considerations (Attachment No. 18); and, approve with modifications General Plan Amendment No. 17-001 and adopt Resolution No. 2021-02, "A Resolution of the City Council of the City of Huntington Beach Approving General Plan Amendment No. 17-001" (Attachment No. 3), Zoning Map Amendment No. 17-001 with findings (Attachment No. 1) and after the City Clerk reads by title approve for introduction Ordinance No. 4225, "An Ordinance of the City of Huntington Beach Amending the Huntington Beach Zoning and Subdivision Ordinance to Rezone the Real Property Generally Located on the Westside of Magnolia Street at Banning Avenue from PS-O-CZ (Public-Semipublic - Oil Production Overlay - Coastal Zone Overlay) to SP-18-CZ (Specific Plan - Coastal Zone Overlay)(Zoning Map Amendment No. 17-001)" (Attachment No. 4), Zoning Text Amendment No. 17-005 with findings (Attachment No. 1) and Planning Commission and staff revisions (Attachment No. 25) and adopt Resolution No. 2021-03, "A Resolution of the City Council of the City of Huntington Beach Adopting Zoning Text Amendment No. 17-005 by Creating the Magnolia Tank Farm Specific Plan (SP-18) to Apply to Real Property on the West Side of Magnolia Street at Banning Avenue" (Attachment No. 5), Local Coastal Program Amendment No. 17-001 with findings (Attachment No. 1) and adopt Resolution No. 2021-04, "A Resolution of the City Council of the City of Huntington Beach Adopting Local Coastal Program Amendment No. 17-001 and Requesting Certification by the California Coastal Commission" (Attachment No. 6), Development Agreement No. 19-001 with findings (Attachment No. 1) and after the City Clerk reads by title, approve for introduction Ordinance No. 4226, "An Ordinance of the City of Huntington Beach Adopting a Development Agreement By and Between the City of Huntington Beach and SLF-HB Magnolia, LLC (Developer)(Development Agreement No. 19-001)" (Attachment No. 7); and execute an Indemnification Agreement Between the City of Huntington Beach and SLF-HB Magnolia, LLC (Attachment No. 21) (staff recommendation). The motion carried by the following vote: AYES: Delgleize, Ortiz, Posey, Moser, and Kalmick 88 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 23 of 28 NOES: Peterson, and Carr 20. 20-2112 Adopted Resolution No. 2021-05 Increasing Residential Trash Rates Effective February 1, 2021, and Ratifying the Methodology for Future Rate Adjustments City Manager Chi introduced Public Works Director Sean Crumby who presented a PowerPoint communication entitled: Public Hearing to Adopt Resolution 2021-05 Proposed Residential Trash Rate Increase, with slides titled: Solid Waste Program - Summary of Issue, Background Information (3), AB 1594 - Cost of Compliance, Proposed Rates, Notification (Proposition 218), Proposed Rate Increase, and Questions Councilmember Posey confirmed with Director Crumby that the $.98 rate increase is required to fund an unfunded mandate from the State, and this fee is a pass-through, which means if the fee is not increased, the City will have to continue spending reserves of $560,000 annually, and the current reserves will only last for another three and-a-half months. Councilmember Delgleize confirmed with Director Crumby that this increase in costs is a result of State laws that changed the organics and green waste processes to no longer allow green waste to be used as landfill cover, and penalties will be assessed for non-compliance. Councilmember Kalmick and Director Crumby agreed that there should be conversations with State representatives looking for State resources or funding for this mandate, and Director Crumby confirmed the amount of this proposed increase is just a cost recovery. Mayor Carr opened the Public Hearing for this item. Pursuant to the Brown "Open Meetings" Act, City Clerk Robin Estanislau announced supplemental communications that were received by her office following distribution of the Council Agenda packet: Public Hearing #20. (20-2112) PowerPoint communication submitted by Public Works Director, Sean Crumby, titled City of Huntington Beach – Public Works Department – Public Hearing to Adopt Resolution 2021-05 Proposed Residential Trash Rate Increase. City Clerk Estanislau announced there were no public speakers. Mayor Carr closed the Public Hearing for this item. A motion was made by Delgleize, second Posey to adopt Resolution No. 2021-05, "A Resolution of the City Council of the City of Huntington Beach Adjusting and Ratifying Residential Trash Rates by the Formula Established in the Revised and Restated Refuse Collection and Disposal Services Franchise Agreement," increasing the Residential Trash Rate $0.98 per household per month effective February 1, 2021, and ratifying the methodology for future rate adjustments. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 89 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 24 of 28 21. 21-010 Adopted Resolution No. 2021-07 Approving Amendment No. 4 (SUBSTANTIAL) to the 2019-20 Annual Action Plan and Amendment No. 2 (SUBSTANTIAL) to the 2020-21 Annual Action Plan for the Community Development Block Grant and HOME Investment Partnerships Programs City Manager Chi introduced Community Development Deputy Director Steve Holtz who presented a PowerPoint communication entitled Substantial Amendments to the 2019/20 and 2020/21 Annual Action Plans for CDBG & Home Programs with slides titled: Background, 2019-20 Annual Action Plan Amendment, 2020-21 Annual Action Plan Amendment, Jamboree Senior Housing Project, Substantial Amendments to the 2019/20 and 2020/21 Annual Action Plans for CDBG & Home Programs. Councilmember Peterson and Director Holtz discussed that TBA/rental assistance funding comes from the Home Program, and the administration of that program is not an eligible Home Program expense so the proposal is to use CDBG funds, or all Federal entitlement grant funds. Councilmember Delgleize and Director Holtz discussed the approximately $3M in available grant funds will require $169,000 from the City's Affordable Housing Trust fund to cover all costs. Mayor Carr and Director Holtz discussed the process related to any projects being cancelled this year, and Director Holtz explained there would have to be a new application next year. Mayor Carr opened the Public Hearing for this item. Pursuant to the Brown "Open Meetings" Act, City Clerk Robin Estanislau announced supplemental communications that were received by her office following distribution of the Council Agenda packet: Public Hearing #21. (21-010) PowerPoint communication entitled Substantial Amendments to the 2019-20 & 2020-21 Annual Action Plans for CDBG & Home Programs submitted by Community Development Director, Ursula Luna-Reynosa and Community Development Deputy Director, Steve Holtz. City Clerk Estanislau announced there were no public speakers. Mayor Carr closed the Public Hearing for this item. A motion was made by Delgleize, second Kalmick to adopt Resolution No. 2021-07, "A Resolution of the City Council of the City of Huntington Beach Approving Amendment No. 4 (SUBSTANTIAL) to the 2019-20 Annual Action Plan and Amendment No. 2 (SUBSTANTIAL) to the 2020-21 Annual Action Plan" for the Community Development Block Grant and HOME Investment Partnerships Programs, and authorize the City Manager to take all administrative and budgetary actions necessary to execute the Action Plan program amendments. The motion carried by the following vote: AYES: Peterson, Kalmick, Ortiz, Carr, Posey, Moser, and Delgleize NOES: None 90 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 25 of 28 COUNCILMEMBER ITEMS 22. 21-06 Item Submitted by Mayor Carr Approved — Consider changing City Council Meeting Days to the First and Third Tuesday of each month Mayor Carr explained her recommendation is to allow for one extra day for the public to provide agenda-related communications, and Councilmembers time to prepare for meetings, with the Agenda still released on the previous Wednesday. She also stated she does not expect this change, if approved, to happen immediately. Councilmember Posey shared several of his initial concerns, stated support for an extra day to communicate with staff and hear from the public and suggested an effective date in May or June. Councilmember Kalmick stated he was aware that school district meetings are usually on Tuesdays which may create a conflict for some residents, suggested if Tuesday is a holiday the Council meeting be moved ahead one day, and stated his support for making this change effective on June 1. Councilmember Mosher stated her support for the additional preparation time, and shared her concerns related to potential conflict with school district board meetings, Surf City Nights, and possibly City Board and Commission meeting dates. She also stated support for implementing this change in June. Mayor Carr stated that her review of school district board meeting dates shows most meet on the second and fourth Tuesday, but there could be occasional overlaps. Councilmember Peterson stated he has never had an issue communicating with staff on Thursday or Monday to be prepared for a Monday meeting, and he cannot support changing to Tuesday as this change would be disruptive to his work week. A motion was made by Carr, second Kalmick to recommend that the City Council direct the City Manager to develop and bring back for formal City Council review the protocols and procedures necessary to change our City Council meeting days to the first and third Tuesday of each month, as amended to initiate the change as early as June 1st. The motion carried by the following vote: AYES: Delgleize, Ortiz, Carr, Posey, Moser, and Kalmick NOES: Peterson 23. 21-059 Item Submitted by Mayor Carr and Councilmember Moser Approved — Consider Reaffirming the City’s Commitment to the Declaration of Policy About Human Dignity Mayor Carr explained that each new Council should have the opportunity to reaffirm the City's Human Dignity Declaration, and that is why this item is presented now. Mayor Carr read what she feels are pertinent parts of the Declaration, and suggested that the language be brought current when it is reaffirmed by the 2022 Council. 91 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 26 of 28 Councilmember Moser stated this is an opportunity to look to the future where all people are welcomed in the community. She explained the history of why and how the Declaration was created in 1996, and shared that she sees the Declaration as providing a reminder that Huntington Beach is an inclusive community for its residents and visitors, and emphasized the importance of the Human Relations Task Force. Councilmember Posey stated support for Councilmember Moser's suggestion that the Human Relations Task Force be tasked to review the Declaration for any language updates. Councilmember Delgleize stated her support for tasking the Human Relations Task Force with updating the Declaration's language. Mayor Pro Tem Ortiz stated his full support for this item, and apologized for not controlling his emotions at TK Burger recently, and added that comments connecting him to white supremacist ideology are false. He has served in the military and remains focused on protecting and serving the residents of Huntington Beach. Councilmember Peterson stated he does not support having the Human Relations Task Force re- writing the Declaration of Policy about Human Dignity. A motion was made by Carr, second Moser to recommend that the City Council take action to reaffirm the City's commitment to its Declaration of Policy About Human Dignity, and direct the Human Relations Task Force to develop and submit for City Council consideration an outreach plan through which the City can continuously share details regarding our commitment to the Declaration of Policy About Human Dignity, as amended to include review of Declaration language. The motion carried by the following vote: AYES: Delgleize, Ortiz, Carr, Posey, Moser, and Kalmick NOES: Peterson 24. 21-057 Item Submitted by Councilmembers Moser, Delgleize and Kalmick Approved – Condemn the seditious acts of violence at the U. S. Capitol on January 6, 2021, and affirm the City’s unwavering commitment to American Democratic Principles and Practices Councilmember Moser stated that as an American, patriot and leader, she condemns the violence and conspiracy theories that fueled the violence at the U.S. Capitol on January 6, 2021. She quoted language "We support and defend the Constitution," as a portion of a statement written on January 12, 2021, from the Joint Chiefs of Staff representing every branch of the military, which inspired bringing this Councilmember Item forward. Councilmember Delgleize thanked Councilmember Moser for spearheading this, explained her emotional reaction to the violence at the U. S. Capitol, and described acceptable methods for resolving disagreements through truth and conversations. Councilmember Kalmick described his reactions to the violence, stated that in order to stop something it must first be declared as wrong, and he feels it is important to let the residents of Huntington Beach 92 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 27 of 28 know that their elected officials believe in the rule of law and support the democratic foundation of our country. Councilmember Peterson stated his opinion that City Council time and effort should be focused on local issues, referencing other acts of civil unrest occurring across the Country. He added that he does not support violence or insurrection, but questioned why Council is using staff time to address an incident in D.C. that will be handled by law enforcement. Councilmember Posey stated he understands Councilmember Peterson's position, but will support this item because he condemns the violence. Mayor Pro Tem Ortiz stated he also agrees with Councilmember Peterson's comments, that he expects law enforcement will provide justice, and he also condemns the violence in D.C. Councilmember Moser responded to Councilmember Peterson and Mayor Pro Tem Ortiz by stating her opinion that there is a huge difference between demonstrations or protests against systemic oppression or equality, versus the insurrection and violence at the U. S. Capitol, suggesting it is wrong to compare the incidents. Mayor Carr shared that as a Councilmember she swore an oath to defend and uphold the Constitution of the State of California, and the United States, and this action is about defending American democratic principles and condemning violence. A motion was made by Moser, second Kalmick to recommend that the City Council unequivocally condemn the act of sedition and insurrection at the U.S. Capitol on January 6, and affirm Huntington Beach's unwavering commitment to American democratic principles and practices. The motion carried by the following vote: AYES: Delgleize, Carr, Posey, Moser, and Kalmick NOES: Peterson ABSTAIN: Ortiz COUNCILMEMBER COMMENTS (Not Agendized) Mayor Carr reminded everyone of the Virtual Townhall COVID-19 meeting on January 20. Councilmember Posey thanked the City for recognizing Daniel "Dano" Patton, a member of the hot rod and surfing communities, with a banner on Main Street after his recent, untimely death. Councilmember Delgleize recognized Scout Leader W. Russell Paxson. ADJOURNMENT at 12:22 AM on Wednesday, January 20, 2021, in memory of W. Russell Paxson, to the next regularly scheduled meeting of the Huntington Beach City Council/Public Financing Authority on Monday, February 1, 2021, at 4:00 PM in the Civic Center Council Chambers, 2000 Main Street, Huntington Beach, California. 93 City Council/Public Financing Authority Regular and Housing Authority and Successor Agency Special Meeting Minutes January 19, 2021 Page 28 of 28 INTERNET ACCESS TO CITY COUNCIL/PUBLIC FINANCING AUTHORITY AGENDA AND STAFF REPORT MATERIAL IS AVAILABLE PRIOR TO CITY COUNCIL MEETINGS AT http://www.huntingtonbeachca.gov __________________________________________ City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach and Secretary of the Public Financing Authority, Housing and Parking Authorities, and Successor Agency to the Former Redevelopment Agency of the City of Huntington Beach, California ATTEST: ______________________________________ City Clerk-Secretary ______________________________________ Mayor-Chair 94 City of Huntington Beach File #:21-063 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Alisa Backstrom, City Treasurer Subject: Adopt Resolution No. 2021-08 approving the 2021 Investment Policy Statement of Issue: Pursuant to California Government Code, the Treasurer of the local agency may render an annual statement of investment policy to the legislative body for consideration and adoption. The City Treasurer, with the assistance of the Investment Advisory Board, has prepared an updated investment policy. Financial Impact: Not applicable. Recommended Action: Adopt Resolution No. 2021-08, “A Resolution of the City Council of the City of Huntington Beach Approving the Statement of Investment Policy 2021.” Alternative Action(s): Do not adopt Resolution No. 2021-08. Analysis: The City Treasurer is responsible for the administration of the investments of City of Huntington Beach. The purpose of the Investment Policy is to establish cash management and investment guidelines for the investment of the City’s unexpended cash balances, which exclude employee retirement funds, funds governed by bond indenture agreements,and other funds managed separately. This policy shall apply to each investment transaction and the entire portfolio, which must comply with the California Government Code, Sections 53600 through 53683, and all other applicable laws and regulations. The City’s Investment Policy may be rendered annually to the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity,and return. The attached Investment Policy has been reviewed by the City’s Investment Advisory Board and approved as to form by the City of Huntington Beach Printed on 1/27/2021Page 1 of 3 powered by Legistar™95 File #:21-063 MEETING DATE:2/1/2021 City Attorney. The investment policy has previously been reviewed and certified by the California Municipal Treasurers Association, which was founded in 1958 and whose mission is to lead in promoting and enhancing the fiduciary responsibility and integrity of individuals responsible for public funds. The Investment Advisory Board reviewed the policy at its meeting of January 21, 2021. There is one update to the Investment Policy for 2021, which is the addition of the Orange County Investment Pool in Section 10. Authorized and Suitable Investments . During 2020, the City became a voluntary participant of the Orange County Investment Pool (OCIP). The City Council approved Resolution No. 2020-40 on June 15, 2020, to allow for investment in the OCIP. This is allowable in the California Government Code 53684 as noted: Unless otherwise provided by law, if the treasurer of any local agency determines that the local agency has excess funds which are not required for immediate use, the treasurer may, upon the adoption of a resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to this section and with the consent of the county treasurer, deposit the excess funds in the county treasury for the purpose of investment by the county treasurer pursuant to Section 53601 or 53635, or Section 20822 of the Revenue and Taxation Code. This investment option was added to provide additional short-term investing options to the City. With historically low interest rates, the available investment options offered very little yield. As of the end of June 2020, when the City began investing in the OCIP, the 2-year and 5-year US Treasury yields were at 0.16% and 0.29%, respectively, while the gross yield for OCIP for June 2020 was 1.261%. While it is not the first objective to reach for yield in this portfolio, having an additional option for short -term investing with overnight liquidity was a prudent decision. Government Code Section 27100.1 states that funds deemed to be held in trust by the County Treasurer on behalf of the depositing entity or public official shall not be deemed funds or assets of the County. As such, there is no correlation between the Orange County General Fund cash reserves and the City’s funds on deposit in the OCIP. Such invested funds remain the property of the City while on deposit, and they will be returned directly to the City upon demand. The City may invest up to a maximum limit of $75 million in the OCIP, similar to the limit of our investment in the California State Pool - LAIF. The OCIP is governed by the same Government Codes as the City. For further information on the OCIP, please go to:<https://www.ttc.ocgov.com/investments> Environmental Status: Not applicable. Strategic Plan Goal: Strengthen long-term financial and economic sustainability Attachment(s): 1. Resolution No. 2021-08 of the City Council of the City of Huntington Beach adopting the 2021 Investment Policy City of Huntington Beach Printed on 1/27/2021Page 2 of 3 powered by Legistar™96 File #:21-063 MEETING DATE:2/1/2021 2. 2021 Investment Policy City of Huntington Beach Printed on 1/27/2021Page 3 of 3 powered by Legistar™97 98 1 CITY OF HUNTINGTON BEACH STATEMENT OF INVESTMENT POLICY 2021 99 2 CITY OF HUNTINGTON BEACH STATEMENT OF INVESTMENT POLICY 2021 TABLE OF CONTENTS SECTION 1.0 Purpose..................................................................................................................... 3 2.0 Policy ........................................................................................................................ 3 3.0 Scope......................................................................................................................... 3 4.0 Prudence .................................................................................................................. 4 5.0 Objective .................................................................................................................. 4 6.0 Investment Advisory Board ................................................................................... 5 7.0 Delegation of Authority .......................................................................................... 5 8.0 Ethics and Conflicts of Interest ............................................................................. 6 9.0 Authorized Financial Dealers & Institutions ....................................................... 6 10.0 Authorized & Suitable Investments ...................................................................... 7 11.0 Portfolio Adjustment ............................................................................................ 13 12.0 Collateralization .................................................................................................... 13 13.0 Safekeeping and Custody ..................................................................................... 14 14.0 Diversification ....................................................................................................... 14 15.0 Maximum Maturities ............................................................................................ 15 16.0 Internal Control .................................................................................................... 15 17.0 Performance Standards ........................................................................................ 16 18.0 Reporting ............................................................................................................... 17 19.0 Investment Policy Adoption ................................................................................ 18 Glossary ................................................................................................................. 19 100 3 CITY OF HUNTINGTON BEACH Statement of Investment Policy 1.0 Purpose: This policy is intended to provide guidelines for the prudent investment of the City’s unexpended cash balances, and to outline the policies to assist in maximizing the efficiency of the City’s cash management system while meeting the daily cash flow demands of the City. 2.0 Policy: The investment practices and policies of the City of Huntington Beach are based upon California state law and prudent money management. 3.0 Scope: This investment policy applies to all financial assets as indicated in Section 3.1 below of the City of Huntington Beach. These funds are accounted for in the City’s Comprehensive Annual Financial Report. 3.1 Funds: The City Treasurer is responsible for investing the unexpended cash in the City Treasury for all funds, except for the employee’s pension funds, which are invested separately by CALPERS, those funds which are invested separately by the City Treasurer under bond indenture agreements, and funds which are invested separately by the City Treasurer or trustees under other agreements approved by Council such as the Retiree Medical Trust, the Post-Employment Section 115 Trust and the Supplemental Pension Trust. The City Treasurer will strive to maintain the level of investment of this cash (that is not to be utilized for operating cash flow in the next six months), as close as possible to 100%. These funds are described in the City’s annual financial report and include: 3.1.1 General Fund 3.1.2 Special Revenue Funds 3.1.3 Capital Project Funds 3.1.4 Enterprise Funds 3.1.5 Trust and Agency Funds 3.1.6 Debt Service Funds 101 4 3.1.7 Infrastructure Funds 3.1.8 Capital Improvement Reserve Funds 3.1.9 Any new fund created by the legislative body, unless specifically exempted This investment policy applies to all transactions involving the financial assets and related activity of the foregoing funds. It is the City’s policy to pool funds for investment purposes to provide efficiencies and economies of scale. Investing through a pooled account will provide for greater use of funds by allowing for a more efficient cash flow, a reduction in transaction costs and a greater access to the market. 4.0 Prudence: The standard of prudence to be used by the City Treasurer shall be the “prudent investor” standard. This shall be applied in the context of managing an overall portfolio. The “Prudent Investor Rule” provides, pursuant to California Government Code Section 53600.3, that investments shall be made with judgment and care—under circumstances then prevailing—which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The City Treasurer and any designee of the City Treasurer, as investment officers acting in accordance with written procedures and the investment policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported to the City Council in a timely fashion and appropriate action is taken to control adverse developments. 5.0 Objective: Consistent with this aim, investments are made under the terms and conditions of California Government Code Section 53600, et seq. Criteria for selecting investments and the absolute order of priority are: 5.1 Safety: Safety of principal is the foremost objective of the investment program. Investments of the City of Huntington Beach shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. 102 5 5.2 Liquidity: The investment portfolio will remain sufficiently liquid to enable the City of Huntington Beach to meet all reasonably anticipated operating requirements and to maintain compliance with any indenture agreement, as applicable. Liquidity is essential to the safety of principal. Furthermore, since all possible cash demands cannot be anticipated, the portfolio will invest primarily in securities with active secondary and resale markets. 5.3 Return on Investments: The investment portfolio shall be designed with the objective of attaining a market-average rate of return throughout budgetary and economic cycles (market interest rates), within the City of Huntington Beach’s investment policy’s risk parameters and the cash flow needs of the City. See also Section 17.0. 6.0 Investment Advisory Board: By City Charter, the City Treasurer is the custodian of all public funds of the City of Huntington Beach. The City Council members may each appoint one Huntington Beach resident to serve on an Investment Advisory Board for the purpose of advising the City Treasurer and the City Council on the City’s investment program. The Investment Advisory Board will review the investment portfolio for compliance with the adopted investment policy on a quarterly basis and will prepare an Annual Report. 7.0 Delegation of Authority: In accordance with the State of California Government Code § 53607, the City Council delegates investment authority to the City Treasurer for a period of one year and such investment authority must be renewed annually. Adoption of this policy constitutes delegation of investment authority to the City Treasurer for the following year unless revoked in writing. Within the City Treasurer’s office, the responsibility for the day to day investment of City funds will be the City Treasurer and may be delegated to such deputy chosen by the City Treasurer in the absence of the City Treasurer (as allowable per State of California Government Code § 41006). The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. 103 6 8.0 Ethics and Conflicts of Interest: In addition to state and local statutes relating to conflicts of interest, all persons involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officers are required to file annual disclosure statements as required for "public officials who manage public investments" (as defined and required by the Political Reform Act and related regulations, being Government Code Sections 81000 and the Fair Political Practices Commission (FFPC)). 9.0 Authorized Financial Dealers and Institutions: The City Treasurer will maintain a list of the financial institutions and broker/dealers authorized to provide investment and depository services and will perform an annual review of the financial condition and registrations of such qualified providers. The City Treasurer will also require annual audited financial statements to be on file for each company. The City shall annually send a copy of the current investment policy to all financial institutions and broker/dealers approved to do business with the City. As far as feasibly possible, all money belonging to, or in the custody of, a local agency, including money paid to the City Treasurer or other official to pay the principal, interest, or penalties of bonds, shall be deposited for safekeeping in national or state chartered banks, savings associations, federal associations, credit unions, or federally insured industrial loan companies in this state selected by the City Treasurer or other official having legal custody of the money; or may be invested in the investments set forth in Section 10.0. To be eligible to receive local agency money, a bank, savings association, federal association, or federally insured industrial loan company shall have received an overall rating of not less than "satisfactory" in its most recent evaluation by the appropriate federal financial supervisory agency of its record of meeting the credit needs of California's communities, including low- and moderate-income neighborhoods. In order to be approved by the City, the dealer must be a “primary” dealer or regional dealer that qualifies under Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capitol Rule). The institution must have an office in California. The dealer must be experienced in institutional and public fund trading practices and familiar with the 104 7 California Government Code as related to investments appropriate for the City; and, other criteria as may be established in the investment procedures. All broker/dealers and financial institutions who desire to become qualified bidders for investment transactions must submit a “Broker/Dealer Application” and related documents relative to eligibility including a current audited annual financial statement, U4 form for the broker, proof of state registration, proof of Financial Industry Regulatory Authority, Inc. (“FINRA”) certification and a certification of having read and understood the City’s investment policy and agreeing to comply with the policy. Capital requirements for registered government securities brokers and dealers shall meet or exceed the requirements as set forth by the Securities and Exchange Commission Rule 15C3-1 (Uniform Net Capitol Rule). Such companies shall also have a minimum of five years of operation. 10.0 Authorized and Suitable Investments: The City is authorized by California Government Code Section 53600, et. seq. to invest in specific types of securities. Investments not specifically listed below are deemed inappropriate and are prohibited: A. BANKERS ACCEPTANCES, maximum 25% of portfolio (up to 40% with City Council approval). Maximum term of 180 days. Banks must have a short term rating of at least A1/P1 and a long-term rating of “A” or higher as provided by a nationally recognized statistical rating organization (“NRSRO”). No more than 10 percent of the agency’s money may be invested in the bankers accepta nces of any one commercial bank pursuant to this section. B. NEGOTIABLE CERTIFICATES OF DEPOSIT, maximum 30% of portfolio. Maximum term of 3 years (up to 5 years with City Council approval). May be issued by a nationally or state-chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally- licensed or state-licensed branch of a foreign bank. Issuer must have a short term rating of A1/P1 and a long term rating of “A” or higher as provided by an NRSRO. No more than 10 percent of the agency’s money may be invested in negotiable certificates of deposit of any one issuer. C. COMMERCIAL PAPER, maximum 25% of portfolio. Maximum term of 270 days. Commercial paper must be of "prime" quality of the highest ranking or of the highest letter and number rating as provided by an NRSRO. The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph (2): 105 8 (1) The entity meets the following criteria: (A) Is organized and operating in the United States as a general corporation. (B) Has total assets in excess of five hundred million dollars ($500,000,000). (C) Has debt other than commercial paper, if any, that is rated "A" or higher by an NRSRO. (2) The entity meets the following criteria: (A) Is organized within the United States as a special purpose corporation, trust, or limited liability company. (B) Has program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond. (C) Has commercial paper that is rated "A-1" or higher, or the equivalent, by an NRSRO. Split ratings (i.e. A2/P1) are not allowable. No more than 10 percent of the outstanding commercial paper of any single corporate issue may be purchased. No more than 10 percent of the agency’s money may be invested in Commercial Paper of any one issuer. D. BONDS ISSUED BY THE STATE OF CALIFORNIA OR ANY OF THE OTHER 49 UNITED STATES. Maximum term of 5 years. Bonds must have an “A” rating or higher by an NRSRO. No more than 10 percent of the agency’s money may be invested in state bonds of any one issuer. E. BONDS ISSUED BY THE CITY OR ANY LOCAL AGENCY WITHIN THE STATE OF CALIFORNIA. Maximum term of 5 years. Bonds must have an “A” rating or higher by an NRSRO. No more than 10 percent of the agency’s money may be invested in city or local agency bonds of any one issuer. F. OBLIGATIONS OF THE UNITED STATES TREASURY. Maximum term of 5 years. United States Treasury bills, bonds and notes or certificates of indebtedness, for which the faith and credit of the United States are pledged for the payment of principal and interest. There is no limit on the percentage of the portfolio that can be invested in this category. G. U.S. GOVERNMENT AGENCY SECURITIES (FEDERAL AGENCIES). Maximum term of 5 years. Obligations, participations or other instruments of or issued by a federal agency or a United States government-sponsored enterprise. There is no limit on the percentage of the portfolio that can be invested in this category. H. REPURCHASE AGREEMENT. Maximum term of 3 months. Investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed 3 months. A Master Repurchase Agreement must be signed with the bank or broker/dealer who is selling the securities to the City. I. REVERSE-REPURCHASE AGREEMENTS. (Requires City Council approval for each transaction). 106 9 Reverse repurchase agreements or securities lending agreements may be utilized only when all of the following conditions are met: (A) The security to be sold on reverse repurchase agreement or securities lending agreemen t has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale. (B) The total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio. (C) The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security. (D) Funds obtained, or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty (by way of a reverse repurchase agreement or securities lending agreement), shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturit y date of the same security. Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security, shall only be made with primary dealers of the Federal Reserve Bank of New York or with a nationally or state-chartered bank that has or has had a significant banking relationship with a local agency. (A) For purposes of this chapter, "significant banking relat ionship" means any of the following activities of a bank: (i) Involvement in the creation, sale, purchase, or retirement of a local agency's bonds, warrants, notes, or other evidence of indebtedness. (ii) Financing of a local agency's activities. (iii) Acceptance of a local agency's securities or funds as deposits. J. MEDIUM-TERM CORPORATE NOTES, maximum 30% of portfolio with a maximum remaining maturity of 5 years or less. Notes eligible for investment must be rated “A” or higher by an NRSRO. No more than 10 percent of the agency’s money may be invested in medium-term corporate notes of any one issuer. K. TIME DEPOSITS-CERTIFICATES OF DEPOSIT (non-negotiable certificates of deposit). Maximum term of 3 years. 107 10 Deposits must be made with banks or savings & loan that have a short term rating of A1/P1 or a long-term rating of at least an “A” rating or higher by an NRSRO. No more than 10 percent of the agency’s money may be invested in time-deposits of any one issuer L. MONEY MARKET FUNDS, maximum 15% of portfolio. No more than 10 percent of the agency’s surplus funds may be invested in shares of beneficial interest of any one Money Market fund. Local agencies may invest in “shares of beneficial interest” issued by diversified management companies which invest only in direct obligations in U.S. Treasury bills, notes and bonds, U.S. Government Agencies and repurchase agreements with a weighted average of 60 days or less. They must have the highest rating from at least two NRSROs, must maintain a daily principal per share value of $1.00 per share and distribute interest monthly, and must have a minimum of $500 million in assets under management. The purchase price of the shares may not include commission. M. THE LOCAL AGENCY INVESTMENT FUND (LAIF) LAIF is a special fund of the California State Treasury through which any local government may pool investments. The City may invest up to the maximum allowable by the State Treasurer’s Office (currently $75,000,000). Investments in LAIF are highly liquid and may be converted to cash within 24 hours. N. JOINT POWERS AUTHORITY INVESTMENTS Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (q), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. The City may invest up to $20,000,000 per joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria: (1) The adviser is registered or exempt from registration with the Securities and Exchange Commission. (2) The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive. (3) The adviser has assets under management in excess of five hundred million dollars ($500,000,000). O. SUPRANATIONALS United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), or Inter-American Development Bank (IDB), with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated “AA” or better by an NRSRO and shall not exceed 10 percent of the agency’s moneys that may be invested pursuant to this section. 108 11 P. ORANGE COUNTY INVESTMENT POOL (OCIP) As provided for in California Government Code Section 53684, the local agency may invest excess funds which are not required for immediate use. The OCIP is a pooled fund managed by the Orange County Treasurer pursuant to California Government Code sections 53601 and 53635. The City may invest up to Seventy-five million $75,000,000 in the OCIP. 109 12 INVESTMENT TYPE MAXIMUM MATURITY MAXIMUM SPECIFIED % OF PORTFOLIO/ MAXIMUM PER ISSUER MINIMUM QUALITY REQUIREMENTS Bankers' Acceptances 180 days 25% (up to 40% with Council approval) / 10% A1/P1, "A" Rating Negotiable Certificates of Deposit 3 years (Up to 5 years with Council approval) 30% / 10% A1/P1, "A" Rating Commercial Paper 270 days 25% / 10% A1, "A" Rating State Obligations-- CA And Others 5 years None / 10% "A" Rating City/Local Agency of CA Obligations 5 years None / 10% "A" Rating U.S. Treasury Obligations 5 years None None U.S. Government Agency Obligations 5 years None None Supranationals: IBRD, IFC, IDB 5 years 10% "AA" Rating Repurchase Agreements 3 Months None None Reverse Repurchase Agreements 92 days 20% of the base value of the portfolio. Requires City Council Approval None Medium-Term Corporate Notes 5 years 30% / 10% "A" Rating Non-negotiable Certificates of Deposit 3 years None / 10% A1/P1, "A" Rating Money Market Mutual Funds 60 days 15% / 10% "AAA" Rating Local Agency Investment Fund (LAIF) N/A Up to $75,000,000 None Orange County Investment Pool (OCIP) N/A Up to $75,000,000 None Joint Powers Authority N/A None / $20,000,000 See 10.0N above 110 13 10.1 Investment Pools/Money Market funds: The City Treasurer or designee shall be required to investigate all local government investment pools and money market mutual funds prior to investing and performing at least a quarterly review thereafter while the City is invested in the pool or the money market fund. LAIF is authorized under provisions in Section 16429.1 of the California Government Code as an allowable investment for local agencies even though some of the individual investments of the pool are not allowed as a direct investment by a local agency. The Orange County Investment Pool is maintained for the County and other non-County entities for the purpose of benefiting from economies of scale through pooled investment activities and is authorized by Government Code Section 27130. The County is authorized by Government Code Section 53600 et seq. to invest in specific types of securities. These codes are the same as are applicable to investment by the City. 11.0 Portfolio Adjustments: California government code section 53601 states that if a percentage limitation for a particular category of investment is specified, then that percentage is applicable only at the date of purchase. Should any investment listed in section 10.0 exceed a percentage-of- portfolio limitation or a percentage-by-issuer limitation due to an incident such as fluctuation in portfolio size, the affected securities may be held to maturity to avoid losses. When no loss is indicated, the Treasurer may consider reconstructing the portfolio basing his/her decision on the expected length of time the portfolio will be unbalanced. As well, the credit criteria listed herein refers to the credit rating at the time the security is purchased. If a security held in the portfolio is downgraded by an NRSRO to a level below the quality required by this investment policy, the City Treasurer will review the credit and make a determination as to whether to sell or retain such security. The City Treasurer will review the portfolio for such compliance no less than quarterly. 12.0 Collateralization: Under provisions of the California Government Code, California banks, and other depository institutions are required to secure the City’s deposits by pledging government securities with a value of 110 % of principal and accrued interest. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of City’s total deposits. Collateral will always be held by an 111 14 independent third party. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the City and retained. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day. The City Treasurer, at his/her discretion, may waive the collateral requirement for deposits that are fully insured (current limit is $250,000) by the Federal Deposit Insurance Corporation. The right of collateral substitution is granted. The City Treasurer or designee shall ensure that all demand deposits that exceed the FDIC limit (currently $250,000) shall be fully collateralized with securities authorized under state law and this Investment Policy. 13.0 Safekeeping and Custody: All City investments shall have the City of Huntington Beach as its registered owner, and all interest and principal payments and withdrawals shall indicate the City of Huntington Beach as the payee. All securities will be held with a qualified financial institution, contracted by the City as a third party custodian with a separate custodial agreement (does not apply to insured Certificates of Deposit, money market funds, or the Local Agency Investment Fund). All agreements and statements will be subject to review annually by external auditors in conjunction with their audit. All securities shall be acquired by the safekeeping institution on a “Delivery-Vs-Payment” (DVP) basis. For Repurchase Agreements, the purchase may be delivered by book entry, physical delivery or by third - party custodial agreement consistent with the Government Code. The transfer of securities to the counterparty bank’s customer book entry account may be used for book entry delivery. The City Treasurer or designee shall require a Broker Trade confirmation for all trades. 14.0 Diversification: The City’s investment portfolio will be diversified to mitigate incurring unreasonable and avoidable risks associated with concentrating investments in specific security types, maturity segment, or in individual financial institutions. 112 15 A. Credit risk, defined as the risk of loss due to failure of the insurer of a security, shall be mitigated by investing in those securities with an "A" or above rating and approved in the investment policy and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the City’s cash flow. B. Market risk, defined as the risk of market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by structuring the portfolio so that securities mature as much as possible in conjunction with major cash outflows, thus minimizing the need to sell securities prior to their maturity. It is explicitly recognized herein, however, that in a diversified portfolio, occasional measured losses are inevitable and must be considered within the context of overall investment return. The City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. 15.0 Maximum Maturities: To the extent possible, the City of Huntington Beach will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than five (5) years from the date of purchase, unless the legislative body has granted express authority to make that investment either specifically, or as a part of an investment program approved by the City Council. The City of Huntington Beach shall not permit more than 50% of its investment portfolio to be invested in securities with maturities over four years. 16.0 Internal Control: The City Treasurer and the Finance Department shall establish a system of internal controls designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, or unanticipated market changes. No investment personnel may engage in an investment transaction except as provided for under the terms of this policy and the procedure established by the City Treasurer. The external auditors shall annually review the investments with respect to the investment policy. This review will provide internal control by assuring compliance with policies and procedures for the investments that are selected for testing. Additionally, account reconciliation and verification of general ledger balances relating to the purchasing or maturing of investments and allocation of interest on investments to fund balances shall be performed by the Finance Department and approved 113 16 by the City Treasurer. To provide further protection of City funds, written procedures prohibit the wiring of any City funds without the authorization of at least two of the four designated City officials: 1. City Treasurer 2. Treasury Manager 3. Chief Financial Officer 4. Assistant Chief Financial Officer 17.0 Performance Standards: This investment policy shall be reviewed at least annually by the Investment Advisory Board and the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity, and return, and its relevance to current law and financial and economic trends. The moneys entrusted to the City Treasurer will be primarily a passively managed portfolio. However, the City Treasurer will make best efforts to observe, review, and react to changing conditions that affect the portfolio. 17.1 Market Yield (Benchmark): The investment portfolio shall be managed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s investment risk constraints and cash flow. Investment return becomes a consideration only after the basic requirements of investment safety and liquidity have been met. Because the investment portfolio is designed to operate on primarily a ‘hold-to-maturity’ premise, and because of the safety, liquidity, and yield priorities, the performance benchmark that will be used by the Treasurer to determine whether market yields are being achieved shall be the 12-month moving average of the interpolated 1.5-Year Constant Maturity Treasury (CMT) rate. This interpolated rate shall be utilized in order to best match the average duration of the portfolio. However, since return on investment is the least important objective of the investment portfolio, the benchmark will be used only as a reference tool. The reporting of a benchmark does not imply that the City Treasurer will add additional risk to the investment portfolio in order to attain or exceed the benchmark. The prohibition of highly speculative investments precludes pursuit of gain or profit through unusual risk and precludes investments primarily directed at gains or profits from conjectural fluctuations in market prices. The City Treasurer will not directly pursue any investments that are 114 17 leveraged or deemed derivative in nature. However, as long as the original investments can be justified by their ordinary earning power, trading in response to changes in market value can be used as part of ongoing portfolio management. 18.0 Reporting: The City Treasurer shall submit a quarterly report to the City Council, City Manager, Chief Financial Officer and the Investment Advisory Board within 30 days following the end of the quarter. This report will include the following elements pursuant to State law and Government Accounting Standard Board (GASB) #40: 18.1 Type of investment 18.2. Institution/Issuer 18.3 Purchase Date 18.4 Date of maturity 18.5 Amount of deposit or cost of the investment 18.6 Face value of the investment 18.7 Current market value of securities and source of valuation 18.8 Rate of interest 18.9 Interest earnings 18.10 Statement relating the report to its compliance with the Statement of Investment Policy or the manner in which the portfolio is not in compliance 18.11 Statement on availability of funds to meet the next six month’s obligations 18.12 Monthly and Year to date City Treasurer Budget Amounts for Interest Income 18.13 Percentage of Portfolio by Investment Type 18.14 Days to Maturity for all Investments 18.15 Comparative report on Monthly Investment Balances & Interest Yields 18.16 Monthly transactions This quarterly report shall be placed on the City Council Agenda for Council and public review. In addition, a commentary on capital markets and economic conditions may be included with the report. The City Treasurer shall submit to the City Council, City Manager and Chief Financial Officer a monthly report listing the above stated (18.1 – 18.16) financial transactions. 115 18 19.0 Investment Policy Adoption: By virtue of a resolution of the City Council of the City of Huntington Beach, the Council shall acknowledge the receipt and filing of this annual statement of investment policy for the respective year. 116 19 GLOSSARY AGENCIES: Federal agency securities. ASKED: The price at which securities are offered. (The price at which a firm will sell a security to an investor.) BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. The drafts are drawn on a bank by an exporter or importer to obtain funds to pay for specific merchandise. An acceptance is a high grade negotiable instrument. BASIS POINT: One one-hundredth of a percent (i.e. 0.01%) BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) BROKER: A broker brings buyers and sellers together for a commission. He/she does not take a position. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CD’s are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. 117 20 COMMERCIAL PAPER: Short term unsecured promissory note issued by a corporation (including limited liability companies) to raise working capital. These negotiable instruments are purchased at a discount to par value or at par value with interest bearing. Commercial paper is issued by corporations such as General Motors Acceptance Corporation, IBM, Bank of America, etc. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City. It includes combined statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material and a detailed Statistical section. COUPON: a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions; buying and selling for his/her own account. DEBENTURE: An unsecured bond backed only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is 118 21 derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale is considered to be at a discount. DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value (e.g. US Treasury Bills). DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions (e.g. S&L’s, Small business firms, students, farmers, farm cooperatives, and exporters). FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A Federal agency that insures bank deposits, currently up to $250,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve though open-market operations. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other presidents serve on a rotating basis. The committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. 119 22 FEDERAL RESERVE SYSTEM: The central bank of the United States created by congress and consisting of a seven-member Board of Governors in Washington, D.C.; 12 regional banks and approximately 38 percent of the 8,039 commercial banks in the United States are members of the Federal Reserve System. National banks must be members; state- chartered banks may join if they meet certain requirements. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and a reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase-reverse agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. 120 23 NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (“NRSRO”): Firms that review and assess the creditworthiness of an obligor as an entity or with respect to specific securities or money market instruments and express their opinion in the form of a letter rating. A credit rating agency may apply to the SEC for registration as a nationally recognized statistical rating organization (“NRSRO”). The primary rating agencies are Standard & Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc. NEGOTIABLE CERTIFICATES OF DEPOSIT: Unsecured obligations of the financial institution, bank or savings and loan, bought at par value with the promise to pay face value plus accrued interest at maturity. They are high-grade negotiable instruments, paying a higher interest rate than regular certificates of deposit. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See “Asked” and “Bid”. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit: Sales have the opposite effect. Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC)-registered securities broker/dealers, banks and a few unregulated firms. 121 24 PRUDENT PERSON RULE: An investment standard. In some states, the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state—the so-called “legal list”. In other states, the trustee may invest in a security if it is one that would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity; on a bond, the current income return. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FHLMC, etc.) and Corporations, which have imbedded option (e.g. call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. 122 25 SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See “Uniform Net Capital Rule”. SMALL BUSINESS ADMINISTRATION (SBA): The portion of these securities which are guaranteed by Federal government to provide financial assistance through direct loans and loan guarantees to small businesses. Cash flows from these instruments may not be in equal installments because of prepayments. SUPRANATIONAL SECURITIES: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), or Inter-American Development Bank (IDB), with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated “AA” or better by an NRSRO and shall not exceed 10 percent of the agency’s moneys that may be invested pursuant to this section. TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than 10 years. TREASURY NOTES: Intermediate-term coupon bearing U.S. Treasury having initial maturities of from one year to ten years. 123 26 UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker/dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) Income Yield is obtained by dividing the current dollar income by the current market price for the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus an y discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. 124 City of Huntington Beach File #:21-101 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Travis K. Hopkins, Assistant City Manager Subject: Consider positions on Local, State and Federal Issues, as recommended by the City Council Intergovernmental Relations Committee (IRC) Statement of Issue: On January 27, 2021, the Intergovernmental Relations Committee (IRC), comprised of Mayor Kim Carr and Council Member Mike Posey (absent Mayor Pro Tem Tito Ortiz) met to discuss current local, state and federal issues, with relevance to Huntington Beach. Following discussion, the IRC chose to take positions on three issues, which are being presented to the City Council for approval. Financial Impact: None Recommended Action: A) Adopt Resolution No. 2021-11, “A Resolution Expressing Support for Actions that will Further Strengthen Local Governance and Authority Over Housing-Related Issues in Huntington Beach”; and/or B) Approve a letter of support for the Federal Communications Commission’s Emergency Broadband Benefit Program; and/or C) Approve a letter in opposition to oil and gas drilling off Southern California coast through the Bureau of Ocean Energy Management’s National Outer Continental Shelf Oil and Gas Leasing Program. Alternative Action(s): Do not approve one or more recommended actions and direct staff accordingly. Analysis: On January 27, 2021, the IRC met to review and discuss local, state and federal issues, with relevance to Huntington Beach. The following is an analysis of the issues that the Committee chose to take positions on and are presenting to the City Council for approval: 1. SUPPORT/ADOPT - Resolution No. 21-XXXX - A Resolution of the City Council of the City of Huntington Beach Expressing Support for Actions that will Further Strengthen Local Governance and Authority Over Housing-Related Issues in Huntington Beach Over the past several years, State legislators have proposed numerous housing-related bills that aimed to supersede the authority of local jurisdictions to determine what constitutes appropriate land use City of Huntington Beach Printed on 1/27/2021Page 1 of 3 powered by Legistar™125 File #:21-101 MEETING DATE:2/1/2021 to supersede the authority of local jurisdictions to determine what constitutes appropriate land use policies and practices for their respective communities. While a majority of housing bills introduced in the State Legislature were not signed into law in 2020, the City expects that many will be re-introduced during this new legislative cycle. In anticipation of this development, the IRC recommends that the City Council adopt this Resolution to highlight their support for actions that strengthen local governance and authority over land and housing-related issues in Huntington Beach. 2.OPPOSE - Oil and Gas Off-Shore Drilling Through the Bureau of Ocean Energy Management’s National Outer Continental Shelf Oil and Gas Leasing Program Under the Trump Administration, the Bureau of Ocean Management released an initial framework in 2018 to open up oil drilling opportunities and production on the Outer Continental Shelf. This program has the potential to promote drilling off Southern California’s coasts, which contribute greatly to the City’s tourism economy. With the transition to the Biden Administration, the program had been put on pause indefinitely, albeit without any statements to disband the program. As such, the IRC wishes to proactively submit a letter of opposition to discourage the Biden Administration from continuing this program off Huntington Beach shores in the future. 3. SUPPORT - The Federal Communications Commission’s Emergency Broadband Benefit Program The Consolidated Appropriations Act, passed in December 2020, established an Emergency Broadband Connectivity Fund of $3.2 billion to support the Emergency Broadband Benefit Program. This program will reimburse qualified and participating broadband providers for discounts (up to $50/month) provided to eligible low-income households and households that experienced a substantial loss of income due to COVID-19. Households are also eligible to receive a $100 one time discount for devices procured from the provider during this time. The program’s goal is to provide high quality connectivity to these households during the pandemic. The Federal Communications Commission is responsible for designing and implementing this program and is currently accepting public comment from providers and municipalities. Environmental Status: Not applicable. Strategic Plan Goal: Non-Applicable - Administrative Item Attachment(s): 1. Resolution No. 2021-11, “A Resolution Expressing Support for Actions that will Further Strengthen Local Governance and Authority Over Housing-Related Issues in Huntington Beach” 2. Opposition Letter to Oil and Gas Off-Shore Drilling Through the Bureau of Ocean Energy Management’s National Outer Continental Shelf Oil and Gas Leasing Program 3. FCC Public Notice - Wireline Competition Bureau Seeks Comment on Emergency Broadband Connectivity Fund Assistance City of Huntington Beach Printed on 1/27/2021Page 2 of 3 powered by Legistar™126 File #:21-101 MEETING DATE:2/1/2021 City of Huntington Beach Printed on 1/27/2021Page 3 of 3 powered by Legistar™127 RESOLUTION NO. 2021-11 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH EXPRESSING SUPPORT FOR ACTIONS THAT WILL FURTHER STRENGTHEN LOCAL GOVERNANCE AND AUTHORITY OVER HOUSING AND LAND USE ISSUES IN HUNTINGTON BEACH. WHEREAS, the legislature of the State of California continues to propose a number of bills addressing a range of housing issues at the local level; and WHEREAS, the majority of these bills propose broad, “one size fits all” policies that undermine the authority of local governing bodies to determine land use policies and practices that best suit their communities; and WHEREAS, the State has introduced numerous housing / land use related bills which impose broad mandates which do not take into account the needs and differences of jurisdictions throughout the State, and in so doing, imposes a variety of unfunded mandates on local communities; and WHEREAS, it is of great importance to the City of Huntington Beach that we retain our ability to determine for ourselves land use and housing related priorities over decisions that include, but are not limited to, the following: determination of projects that require review beyond a ministerial approval; identifying the appropriate parking requirements for various locales within our City boundaries; the housing plans and programs that are suitable and practical for our community; and other related matters; and WHEREAS, the City Council of the City of Huntington Beach feels strongly that our local government is the agency that is best suited to assess the needs of our community, and the City does not support the State’s increasing efforts to deprive our City Council of self-determination with regard to land use and housing matters. NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as follows: We support actions that strengthen local governance and authority over housing and land use issues in Huntington Beach. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the ________ day of __________, 2020. __________________________ Mayor REVIEWED AND APPROVED INITIATED AND APPROVED: __________________________ __________________________ City Manager Assistant City Manager APPROVED AS TO FORM __________________________ City Attorney 128 January XX, 2021 Walter Cruickshank, Ph.D. Acting Director Bureau of Ocean Energy Management 1849 C Street, NW Washington, DC 20240 Dear Acting Director Cruickshank: On behalf of the City of Huntington Beach, we would like to express our opposition to opening up oil and gas drilling off the Southern California coast through the Bureau of Ocean Energy Management’s proposed National Outer Continental Shelf (OCS) Oil and Gas Leasing Program. We applaud the recent Biden Administration action to pause new leases for offshore drilling, and urge that more consideration be given to local needs in areas surrounding proposed oil drilling. The City of Huntington Beach values our ocean waters and coastline, which provide habitat to an array of wildlife including marine mammals, birds, and fish. Our ocean and beaches also help attract millions of annual visitors to the City for recreation, entertainment, and relaxation. Our local economy is dependent on coastal tourism and the health of our marine ecosystem. While we are heartened by the current pause on new offshore drilling leases, we are concerned that any reconsideration of lease sales off the Southern California coast in the future would put these coastal resources at risk of oil spills and further damage. Previous offshore oil and gas leasing off the California coast has resulted in oil spills that caused environmental devastation and hurt localities dependent on coastal tourism. If offshore drilling should return, we propose that the Southern California region receive the same waiver to exempt additional lease sales as the State of Florida received from the previous administration. Previously, the State of Florida was removed from consideration in the Bureau’s draft proposal due to the state’s reliance on coastal tourism. We request that any federal actions be consistent in this nature, and request that our coastline should also be exempt from any new oil or gas leasing if the proposed program should be revisited. As the Bureau pauses its new National OCS Program, we urge you to take the time allotted to work with coastal communities like the City of Huntington Beach to develop a national energy strategy that does not jeopardize the wellbeing of our local economies and the protection of our marine ecosystem. Thank you for your consideration of this request. Sincerely, Kim Carr Mayor City of Huntington Beach, California Cc: Senator Dianne Feinstein Senator Alex Padilla Representative Michelle Steel 129 PUBLIC NOTICE Federal Communications Commission 45 L Street, NE Washington, D.C. 20554 News Media Information 202 / 418-0500 Internet: https://www.fcc.gov TTY: 1-888-835-5322 DA 21-6 Released: January 4, 2021 WIRELINE COMPETITION BUREAU SEEKS COMMENT ON EMERGENCY BROADBAND CONNECTIVITY FUND ASSISTANCE WC Docket No. 20-445 Comments Due: January 25, 2021 Reply Comments Due: February 16, 2021 On December 27, 2020, the President signed the Consolidated Appropriations Act, 2021 (Consolidated Appropriations Act or Act).1 Section 904 of Division N – Additional Coronavirus Response and Relief, Title IX – Broadband Internet Access Service, in the Consolidated Appropriations Act establishes an Emergency Broadband Connectivity Fund of $3.2 billion and directs the Federal Communications Commission (Commission) to use that fund to establish an Emergency Broadband Benefit Program, under which eligible households may receive a discount off the cost of broadband service and certain connected devices during an emergency period relating to the COVID-19 pandemic, and participating providers can receive a reimbursement for such discounts.2 The Act also directs the Commission to provide a public comment period of 20 days and a public reply comment period of 20 days before establishing the rules for this program.3 By this public notice, the Wireline Competition Bureau (Bureau) seeks comment on the provision of assistance from the Emergency Broadband Connectivity Fund and through the Emergency Benefit Program and other related matters, consistent with the Congressional directive. Emergency Broadband Benefit Program. Pursuant to the Consolidated Appropriations Act, the Emergency Broadband Benefit Program will use available funding from the Emergency Broadband Connectivity Fund to support participating providers’ provision of certain broadband services and connected devices to qualifying households. To participate in the program, a provider must elect to participate and either be designated as an eligible telecommunications carrier or be approved by the Commission.4 Participating providers will make available to eligible households a monthly discount off the standard rate for an Internet service offering and associated equipment, up to $50.00 per month. On Tribal lands, the monthly discount may be up to $75.00 per month.5 Participating providers will receive reimbursement from the Emergency Broadband Benefit Program for the discounts provided. Participating providers that also supply an eligible household with a laptop, desktop computer, or tablet 1 Consolidated Appropriations Act, 2021, H.R. 133, 116th Cong. (2020) (enacted), available at https://www.congress.gov/bill/116th-congress/house-bill/133/text (Consolidated Appropriations Act) (enrolled bill). 2 Consolidated Appropriations Act, 2021, H.R. 133, div. N, tit. IX, § 904(b)(1) (2020). Section 904 of the Act is reproduced in its entirety in the attached Appendix. 3 See id. § 904(c)(2). 4 Id. § 904(a)(12), (d)(2). 5 Id. § 904(a)(7). 130 Federal Communications Commission DA 21-6 2 (connected device) for use during the emergency period may receive a single reimbursement of up to $100.00 for the connected device, if the charge to the eligible household for that device is more than $10.00 but less than $50.00. An eligible household may receive only one supported device.6 Providers must submit certain certifications to the Commission to receive reimbursement from the program,7 and the Commission is required to adopt audit requirements to ensure provider compliance and prevent waste, fraud, and abuse.8 In implementing the Emergency Broadband Benefit Program, the Consolidated Appropriations Act permits the Commission to apply rules contained in part 54 of the Commission’s rules,9 exempts the Commission from certain rulemaking requirements under the Administrative Procedure Act and the Paperwork Reduction Act,10 and grants the Commission authority to use the services of the Universal Service Administrative Company (USAC) to implement the Emergency Broadband Benefit Program.11 USAC is an independent, not-for-profit corporation designated as the permanent administrator of the Universal Service Fund by the Commission.12 We propose to use USAC’s services to administer the Emergency Broadband Benefit Program, as described in detail below. Participating Providers. We first seek comment on the eligibility and election process for participating providers. Eligible telecommunications carriers designated pursuant to section 214(e) of the Communications Act may participate in the Emergency Broadband Benefit Program without seeking approval from the Commission. Providers that are not designated as eligible telecommunications carriers must meet the requirements established by and be approved by the Commission to participate in the Emergency Broadband Benefit Program. The Commission is required to establish an expedited process for such approval and “to automatically approve as a participating provider a broadband provider that has an established program as of April 1, 2020, that is widely available and offers internet service offerings to eligible households and maintains verification processes that are sufficient to avoid fraud, waste, and abuse.”13 Participation in the program is voluntary, and a provider must affirmatively “elect” to participate.14 We propose to require all providers that wish to participate in the Emergency Broadband Benefit Program to submit a notice to USAC indicating their election. We propose that such notice indicate, at least: (1) the states in which it plans to participate, (2) a statement that, in each such state, it was a “broadband provider” within the meaning of the Consolidated Appropriations Act as of December 1, 2020, (3) whether it seeks to participate in each state because it is either a designated eligible telecommunications carrier or is seeking designation by the Commission to participate (or both), (4) whether the provider intends to distribute connected devices in each such state, (5) a description of any Internet service offerings for which it plans to seek reimbursement in each state, and (6) documentation demonstrating the standard rates for the services for which it may claim reimbursement 6 Id. § 904(b)(5). 7 Id. § 904(b)(6). 8 Id. § 904(b)(7). 9 See id. § 904(f). 10 See id. § 904(h) (establishing that 5 U.S.C. § 553 shall not apply to a regulation promulgated under § 904(c) or a rulemaking proceeding to promulgate such a regulation and that a collection of information conducted or sponsored under the regulations required by § 904(c) shall not constitute a collection of information for the purposes of 44 U.S.C. §§ 3501-3531). 11 Id. § 904(i)(5). 12 See 47 CFR §§ 54.701 et seq. 13 H.R. 133, div. N, tit. IX § 904(d)(2). 14 Id. § 904(a)(12)(B). 131 Federal Communications Commission DA 21-6 3 from the Emergency Broadband Benefit Program. We expect this information will facilitate USAC’s timely processing of election notices as well as administration of the program. We seek comment on this proposal. What other information is necessary in the notice of election to ensure efficient processing of qualifying providers? The Consolidated Appropriations Act only offers an Emergency Broadband Benefit for an Internet service offering,15 which the statute defines as a “broadband internet access service provided by [a broadband] provider to a household, offered in the same manner, and on the same terms, as described in any of such provider’s offerings for broadband internet access service to such household, as on December 1, 2020.”16 Similarly, the Consolidated Appropriations Act limits the Emergency Broadband Benefit to be “no more than the standard rate” for an Internet service offering (and associated equipment),17 which it defines as “the monthly retail rate for the applicable tier of broadband internet access service as of December 1, 2020, excluding any taxes or other governmental fees.”18 To avoid processing elections for providers that cannot receive any reimbursement, we construe the statute as limiting participation to broadband providers offering service as of December 1, 2020. Similarly, we believe the submission of documentation demonstrating the standard rates for the services for which a provider may claim reimbursement from the Emergency Broadband Benefit Program will allow USAC to more quickly verify that a broadband provider does in fact qualify to participate and will facilitate the processing of claims. We seek comment on these views. What is the most efficient method for having participating providers submit this standard rate information? We also seek comment on how the Commission should interpret the “standard rate” for supported offerings. For example, how should we address promotional rates that were offered by a participating provider as of December 1, 2020? How should we address contract rates (of varying lengths) in determining the standard rate? We note that an Internet service offering is limited to those “offered in the same manner, and on the same terms, as described in any of such provider’s offerings for broadband internet access service to such household”;19 how should we interpret that limitation? For example, what documentation would show that a service at a particular rate was actually offered in a particular state? Should we require documentation demonstrating that a certain number or percentage of the providers’ subscribers had purchased service at that rate prior to the creation of the Emergency Broadband Benefit Program? If the standard rates for Internet access service plans offered by the provider are not uniform across all areas it serves, we propose that the provider specify the standard rates for such plans for each area of each state in which it plans to participate and provide supporting documentation. In the event that the provider’s standard rates are uniform across the areas it serves, we propose that the provider submit supporting documentation for those rates. A participating provider will be required to interact with both the Commission and USAC to participate in the program. As such, we expect that a broadband provider will have already registered with the Commission and USAC and received both an FCC Registration Number and a Service Provider Identification Number before filing an election notice. And we propose that a provider will include this information in its election notice. We seek comment on this proposal. We propose to accept elections on a rolling basis throughout the Emergency Broadband Benefit Program. Should the Commission adopt a specific timeframe for acting on provider elections? Once USAC has reviewed an election notice and verified the broadband provider is eligible to participate, how should it inform applicants of that determination? Should such a determination apply only prospectively, 15 Id. § 904(a)(7). 16 Id. § 904(a)(9). 17 Id. § 904(b)(6)(A). 18 Id. § 904(a)(13). 19 Id. § 904(a)(9). 132 Federal Communications Commission DA 21-6 4 or be effective as of the date the election notice was properly and completely filed? What information should USAC disclose to the public about election notices as well as its determinations? The Consolidated Appropriations Act provides that the Commission “shall expedite the ability of all participating providers to access the Lifeline National Eligibility Verifier (National Verifier) and National Lifeline Accountability Database for the purposes of determining whether a household is an eligible household.”20 We propose that all participating providers be required to have their agents and other enrollment representatives registered with the Representative Accountability Database, as previously recommended by the Office of the Inspector General for the Lifeline program, as a best practice to minimize waste, fraud, and abuse. Should participating providers be subject to any other Commission regulations or USAC requirements for those databases? Are there any regulations or requirements of those systems that should not apply to participating providers? Commenters, however, should take into consideration that such systems must comply with applicable federal requirements on information privacy and information security. To access the databases, participating providers will be required to accept USAC’s OnePortal Terms and Conditions, agreeing that their access is conditioned on their compliance with federal laws regarding privacy, data security, and breach notification. We propose that once USAC has verified a broadband provider’s election notice, it should expeditiously process and prioritize registrations from such providers and take any other steps needed to facilitate access by participating providers to these databases. Designating Broadband Providers Where They Are Not Eligible Telecommunications Carriers. For a broadband provider that is not designated as an eligible telecommunications carrier in a particular area to participate in the Emergency Broadband Benefit Program, it must “meet[] requirements established by the Commission . . . and [be] approved by the Commission.”21 The Consolidated Appropriations Act requires the Commission to adopt an “expedited” process to approve such broadband providers,22 and further requires the Commission to “automatically approve” a broadband provider that has an “established program” as of April 1, 2020, that is “widely available” and offers internet service offerings to eligible households and “maintains verification processes that are sufficient to avoid fraud, waste, and abuse.”23 We seek comment on how these terms should be interpreted. We seek comment on how the Commission should implement these provisions. Although the Commission cannot require a broadband provider to become an eligible telecommunications carrier to participate,24 we do draw on our experience with the Lifeline program to propose two “requirements.” First, we propose that any broadband provider seeking to participate make the Emergency Broadband Benefit available across all of its service areas in each of the states in which it is approved to participate.25 We seek comment on this proposal and on our authority for such a requirement. Second, we propose that broadband providers adopt a plan to combat waste, fraud, and abuse similar to the compliance plans required of non-facilities-based carriers seeking approval to participate in the Lifeline program.26 We seek comment on this proposal. Should the Commission require that compliance plans be approved before a provider may begin participating in the program, and how should the Commission balance the 20 Id. § 904(b)(3). 21 Id. § 904(a)(12)(A)(ii). 22 Id. § 904(d)(2)(A). 23 Id. § 904(d)(2)(B). 24 Id. § 904(a)(12)(B). 25 For a broadband provider that is designated as an eligible telecommunications carrier in some parts of a state but not others, this would include all such areas where it is not so designated. 26 See Wireline Competition Bureau Provides Guidance for the Submission of Compliance Plans Pursuant to the Lifeline Reform Order, Public Notice, 27 FCC Rcd 2186 (WCB Feb. 29, 2012). 133 Federal Communications Commission DA 21-6 5 need to ensure that participating providers are equipped to comply with program rules against the Act’s requirement that the Commission establish an expedited approval process?27 We propose to require broadband providers that wish to participate in the Emergency Broadband Benefit Program in areas where they are not designated as eligible telecommunications carriers to submit an application to the Commission. We propose that such an application may be submitted concurrently with an election notice to USAC. We propose that such notice indicate, at least: (1) the states in which it plans to participate, (2) the service areas in which the provider has the authority, if needed, to operate in each state but has not been designated an eligible telecommunications carrier, (3) documentation of the provider’s plan to combat waste, fraud, and abuse, (4) whether it seeks automatic approval because it offers an established program in each state, and (5) if seeking such automatic approval, documentation that the broadband provider has a qualifying established program in such states. We expect that a broadband provider will have already registered with the Commission and received an FCC Registration Number before filing such an application, and we propose that the provider must include such number with its application. We expect this information will facilitate the Commission’s timely processing of applications to participate as well as administer the program. We seek comment on this proposal. What other information is necessary in the application to ensure efficient processing of qualified applicants? We seek specific comment on the processing of applications seeking automatic approval in one or more states. Should the Commission prioritize review of such applications before all others? Should the Commission immediately approve an application to the extent it seeks automatic approval, subject to later verification and potential revocation? If so, we propose that the Commission should complete any such verification before any payments are made to such an applicant. Or should the Commission verify that an applicant qualifies for automatic approval before issuing an approval? In that case, should the Commission make such approval effective as of the date of the application’s proper filing? What showing must an applicant make to demonstrate it had a qualifying established plan? At a minimum, we expect the provider to explain the eligibility criteria and other pertinent information about a provider’s existing low-income or COVID–19 program28 including with specificity that it was “widely available” “as of April 1, 2020.”29 How should the Commission assess such filings? Should the Commission pay special attention to established programs that target groups vulnerable during the pandemic, such as low- income households, Americans living in rural or Tribal areas, communities of color, students, veterans, or the newly unemployed? Should a complete and sufficient plan to combat waste, fraud, and abuse (as required for all applicants) suffice to show that an established plan “maintains verification processes that are sufficient to avoid fraud, waste, and abuse” or must an applicant make a separate showing on that point? If the latter, what documentation should be required of such applicants? We propose to accept applications on a rolling basis throughout the Emergency Broadband Benefit Program. Should the Commission delegate to the Wireline Competition Bureau authority to review and approve (or deny) applications? Should the Commission adopt a specific timeframe for acting on provider applications? Once the Commission has reviewed an application and approved (or denied) an application, how should it inform applicants of that determination? What information should the Commission disclose to the public about applications as well as its determinations? Tracking and Verifying Household Eligibility. The Consolidated Appropriations Act defines the Emergency Broadband Benefit as “a monthly discount for an eligible household applied to the actual amount charged to such household” with certain monetary limits on how much is available per household.30 In addition, a “participating provider may receive reimbursement for no more than 1 27 H.R. 133, div. N, tit. IX § 904(d)(2). 28 Id. § 904(a)(6)(E). 29 Id. § 904(d)(2)(B). 30 Id. § 904(a)(7). 134 Federal Communications Commission DA 21-6 6 connected device per eligible household.”31 We note that a household that is eligible for the Emergency Broadband Benefit is not disqualified by participating in the Lifeline program and also may receive both benefits, either on the same or different services.32 The Consolidated Appropriations Act refers to “eligible households,”33 but does not define “household.” We seek comment on using the definition of “household” provided in our Lifeline rules34 for purposes of administering the Emergency Broadband Benefit Program. To track the eligibility of households and prevent duplicative support, we propose to require all participating providers to track enrollments of eligible households in the Emergency Broadband Benefit Program in the National Lifeline Accountability Database. This proposal would require that the National Lifeline Accountability Database be able to associate a subscriber record with up to two providers—one Lifeline provider and one Emergency Broadband Benefit provider. Should the Commission apply the same processes used for Lifeline participation in the National Lifeline Accountability Database to the Emergency Broadband Benefit Program?35 Where two or more subscribers reside at the same address, should the Commission require the subscriber to certify that no other person in the subscriber’s economic household is receiving a benefit through the Emergency Broadband Benefit Program?36 Should there be a limitation on the number of benefits per address regardless of the number of households at that address? Should additional enrollments at a single residential address require a separate, more rigorous verification process? Should eligible households be allowed to receive more than one connected device through the Emergency Broadband Benefit Program, for example, if they change service to a new participating provider? We seek comment on how to identify and prevent duplicative support. We next seek comment on the verification of eligibility for households. A household may qualify for the Emergency Broadband Benefit if at least one member of the household: (1) meets the qualifications for participation in the Lifeline program;37 (2) has been approved to receive benefits under the free and reduced price lunch program under the Richard B. Russell National School Lunch Act38 or the school breakfast program under section 4 of the Child Nutrition Act of 1966;39 (3) has experienced a substantial loss of income since February 29, 2020;40 (4) has received a Federal Pell Grant under section 31 See id. § 904(b)(5). 32 See id. § 904(e) (“Nothing in this section shall affect the collection, distribution, or administration of the Lifeline Assistance Program . . . .”). If a household is applying their Lifeline benefit and Emergency Broadband Benefit to the same broadband service, the household is limited to receiving the total price of the service or the combined maximum Lifeline and Emergency Broadband Benefit, whichever is lower. 33 Id. § 904(a)(6). 34 See 47 CFR § 54.400(h) (“A ‘household’ is any individual or group of individuals who are living together at the same address as one economic unit. A household may include related and unrelated persons. An ‘economic unit’ consists of all adult individuals contributing to and sharing in the income and expenses of a household. An adult is any person eighteen years or older. If an adult has no or minimal income, and lives with someone who provides financial support to him/her, both people shall be considered part of the same household. Children under the age of eighteen living with their parents or guardians are considered to be part of the same household as their parents or guardians.”). 35 See 47 CFR § 54.404(b)-(c). 36 See 47 CFR § 54.410(g). 37 47 CFR § 54.409(a)-(b). 38 See 42 U.S.C. § 1751 et seq. 39 See 42 U.S.C. § 1773. 40 H.R. 133, div. N, tit. IX § 904(a)(6)(C) (income loss must be “documented by layoff or furlough notice, application for unemployment insurance benefits, or similar . . .”). We seek comment on how to define a (continued….) 135 Federal Communications Commission DA 21-6 7 401 of the Higher Education Act of 196541 in the current award year; or (5) meets the eligibility criteria for a participating provider’s existing low-income or COVID–19 program, subject to approval by the Commission and any other requirements deemed by the Commission to be necessary in the public interest.42 Participating providers may not disqualify a household because a “member of the household has any past or present arrearages with a broadband provider.”43 Participating providers must verify the eligibility of a household for the Emergency Broadband Benefit either by: (1) directing applicants to the National Verifier and the National Lifeline Accountability Database, (2) relying on a school to verify participation in the free and reduced price lunch program or the school breakfast program, or (3) using the provider’s eligibility verification process if such process is approved by the Commission.44 First, for providers that seek to use the National Verifier and National Lifeline Accountability Database, we propose to require eligible households to directly interact with the National Verifier to apply for the Emergency Broadband Benefit Program, as is currently required for the Lifeline benefit. Second, for providers that rely on a school to verify eligibility based on participation of a member of the household in the free and reduced price lunch program or the school breakfast program,45 we propose that a provider identify the school it relied on when enrolling a household in the National Lifeline Accountability Database. What information should such a provider be required to submit or maintain in such a case? For example, should the information submitted about the school be sufficient for USAC to verify that the school is in fact enrolled in that the free and reduced price lunch program under the Richard B. Russell National School Lunch Act (42 U.S.C. § 1751 et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. § 1773)? Would a school’s participation in the E-Rate program facilitate any needed verification? Should the Commission require the provider to submit or document the name of qualifying student(s) (with express parental consent, if necessary) so that enrollment can be confirmed?46 The USDA Community Eligibility Provision allows the nation’s highest poverty schools and districts to serve breakfast and lunch at no cost to all enrolled students without collecting household applications, thereby effectively qualifying the entire school or school district for these programs. In those schools, the household has not individually applied and been approved for benefits under the programs identified in section 904(a)(6)(B). We seek comment on how households with students in these Community Eligibility Provision schools should be considered eligible households for the Emergency Broadband Benefit Program. More broadly, how can the Commission facilitate the ability of schools to connect with their students for the purposes of remote learning? Third, for providers that use their own alternative verification process,47 we propose that a provider identify the process used when enrolling a household in the National Lifeline Accountability Database. In order to use such a process, a participating provider must submit information detailing the verification process to the Commission and explain why that process is sufficient to avoid waste, fraud, and abuse. The Commission shall then determine within seven days of receipt of the information whether “substantial loss of income since February 29, 2020” and additional types of documentation that would demonstrate such a loss. Id. Should households with an income currently above a certain level be excluded from the program even if they have experienced a substantial loss of income? If so, how should that level be defined? 41 See 20 U.S.C. § 1070a. 42 H.R. 133, div. N. tit. IX § 904(a)(6). 43 Id. § 904(a)(6). 44 Id. § 904(b)(2). 45 Id. § 904(b)(2)(C). 46 See 47 CFR § 54.409(a)(2) (permitting a consumer’s dependent to qualify the household). 47 H.R. 133, div. N, tit. IX § 904(b)(2)(B). 136 Federal Communications Commission DA 21-6 8 the proposed process is sufficient. What information should be provided to the Commission?48 We propose to allow alternative verification methods that are at least as stringent as the methods used by the National Verifier. What criteria should the Commission consider in determining whether a provider’s proposal is sufficient to avoid waste, fraud, and abuse in the Emergency Broadband Benefit Program?49 We propose to periodically review the alternative process to determine whether the participating provider is abiding by the representations it has made about this process. What other measures should the Commission take both before and after an alternative verification process has been approved to avoid waste, fraud, and abuse? What documentation and records should providers be required to keep to allow the Commission and Office of Inspector General to audit the providers’ eligibility determinations? Should the Commission delegate to the Wireline Competition Bureau authority to review and approve (or deny) proposed alternative verification processes? Covered Services and Devices. The Consolidated Appropriations Act defines “internet service offering”50 and defines “broadband Internet access service” as eligible for reimbursement with the meaning given to that term in section 8.1(b) of the Commission’s rules.51 We seek comment on whether the Commission should provide any further clarity regarding services that are eligible for reimbursement in the Emergency Broadband Benefit Program. We seek comment on whether the Commission should provide any further clarity on Internet service offerings and associated equipment52 that are eligible for reimbursement in the Emergency Broadband Benefit Program. Would associated equipment include, for example, the monthly rental costs for modems and/or routers that are offered as part and parcel of an Internet service offering? Is there other customer-premises equipment that should be eligible for reimbursement? The Consolidated Appropriations Act defines a “connected device” eligible for reimbursement as “a laptop or desktop computer or tablet.”53 We seek comment on whether the Commission should provide any further clarity regarding devices that are eligible for reimbursement in the Emergency Broadband Benefit Program. In particular, is there a commonly understood definition of tablet to ensure that the available funds are directed toward their intended purpose? Alternatively, are there end user devices, such as mobile phones, that plainly are excluded as a connected device in the program? How would we distinguish between smaller tablets and larger mobile phones? We recognize that as a result of the COVID-19 pandemic, Americans are continuing to rely on telework, telemedicine, and virtual learning in order to comply with social distancing measures.54 Participating in these activities requires not only a broadband connection but also a device that can support video conferencing platforms, particularly for households with students. Because the Act provides that a member of a household that participates in the free and reduced price lunch or the school breakfast programs, or is the recipient of a Pell grant in the current award year qualifies a household for 48 Id. § 904(b)(2)(B). 49 See GAO-15-593SP, A Framework for Managing Fraud Risks in Federal Programs (2015); see also Payment Integrity Information Act of 2019, Pub. L. No. 116-117, 134 Stat. 133 (Mar. 2, 2020); GAO-14-704G (2014), Standards for Internal Control in the Federal Government (2014). 50 H.R. 133, div. N, tit. IX § 904(a)(9). 51 See id. § 904(a)(1) (citing 47 CFR § 8.1(b)). 52 See id. § 904(a)(7). 53 See id. § 904(a)(4). 54 See Lifeline and Link Up Reform and Modernization, Order, 35 FCC Rcd 2729 (WCB Mar. 17, 2020) (temporarily waiving Lifeline recertification and reverification requirements); Lifeline and Link Up Reform and Modernization, Order, 35 FCC Rcd 2954 (WCB Nov. 16, 2020) (extending waiver of Lifeline recertification and reverification requirements to February 28, 2021). 137 Federal Communications Commission DA 21-6 9 participation in the program,55 we conclude that the Emergency Broadband Benefit Program is, in part, designed to ensure that program beneficiaries are able to meaningfully access and participate in remote learning during the COVID-19 pandemic. To ensure that eligible households with students are able to use their benefit to participate in such activities, we propose that a connected device provided through the Emergency Broadband Benefit Program should be expected to support video conferencing platforms and other software essential to ensure full participation in online learning. We seek comment on whether the Commission should impose minimum system requirements for connected devices supported by this program and, if so, what those system requirements should be. Reimbursement. We propose to provide reimbursement for discounted services and connected devices provided once a provider has elected to participate in the Emergency Broadband Benefit Program.56 We propose that participating providers be reimbursed through the Lifeline Claims System administered by USAC, and subject to all the requirements of the Lifeline Claims System.57 In submitting claims, we propose the providers include sufficient detail so that USAC and the Commission can verify that each claimed household has been appropriately enrolled in the National Lifeline Accountability Database and that the discount does not exceed the standard rate for the applicable service tier (or $100 for a connected device). Such information would facilitate the swift verification that claims are valid and meet the requirements of the statute.58 We seek comment on these proposals. The Consolidated Appropriations Act also requires that a participating provider, when seeking reimbursement, submit a certification that: the amounts they are seeking are not more than the standard rate;59 each household for which the provider is seeking reimbursements will not be charged for an offering if the standard rate is less than or equal to the broadband benefit or will not be charged more than the difference between the standard rate and the broadband benefit;60 the household will not be charged an early termination fee if it later terminates a contract;61 each household was not subject to a mandatory waiting period;62 and each household will be subject to a participating provider’s generally applicable terms and conditions.63 We propose that these certifications accompany each request for reimbursement, in addition to an annual certification by participating providers. We propose to require each certification be submitted under penalty of perjury. What other certifications should be added as a prerequisite to reimbursement? We seek comment whether a participating provider should be required to submit additional documentation to receive reimbursement for a connected device provided to the household. The 55 H.R. 133, div. N, tit. IX § 904(b)(6)(B) & (D). 56 We note that the Consolidated Appropriations Act established the Emergency Broadband Connectivity Fund in the United States Treasury and, unless exempted, the fund is subject to government-wide statutes governing the administration of federal funds. See, e.g., 31 U.S.C. § 3301 et seq. 57 Wireline Competition Bureau Provides Guidance on the Lifeline Reimbursement Payment Process Based on NLAD Data, Public Notice, 33 FCC Rcd 128 (WCB Jan. 10, 2018). Providers are required to submit a reimbursement request based on the number of subscribers enrolled in National Lifeline Accountability Database on the snapshot date. Providers must review the snapshot report, validate the subscribers for which they are requesting reimbursement, indicate a reason for any unclaimed subscribers, and review, correct, and certify the requested reimbursement amount. Further information on the Lifeline Claims System can be found on USAC’s website at https://www.usac.org/lifeline/reimbursement/lifeline-claims-system/. 58 H.R. 133, div. N, tit. IX § 904(b)(4)-(5). 59 Id. § 904(b)(6)(A). 60 Id. § 904(b)(6)(B)(i). 61 Id. § 904(b)(6)(B)(ii). 62 Id. § 904(b)(6)(B)(iii). 63 Id. § 904(b)(6)(B)(iv). 138 Federal Communications Commission DA 21-6 10 Consolidated Appropriations Act requires the eligible household to make a financial contribution between $10 and $50 to the cost of the connected device in order for the participating provider to receive reimbursement. In order to receive reimbursement for a connected device, we propose to require that a participating provider certify that the household receiving the device has received the emergency broadband benefit from the provider and has made a financial contribution between $10 and $50 for such a device.64 We also propose that such providers retain documentation proving that the eligible household made a financial contribution towards the cost of the connected device, as well as the amount thereof.65 Finally, the Consolidated Appropriations Act permits reimbursement of up to $100 for the connected device but does not limit such reimbursement to a “standard rate” as it does for Internet service offerings. Should the Commission also require a participating provider to demonstrate the retail value or the costs of connected devices to prevent waste? Benefits for those on Tribal lands. The Act provides that eligible households on Tribal lands may receive a discount of no more than $75 for Internet access service provided through this benefit.66 For efficiency, we propose to use the same definition of Tribal lands as used in the Lifeline program,67 and to allow members of households on such Tribal lands to use their participation in the same Tribal programs permitted under the Lifeline program to qualify for the Emergency Broadband Benefit Program, in addition to other permitted means of qualifying.68 Moreover, for purposes of determining whether a household resides on Tribal lands, we propose using the processes USAC has in place for identifying the location of a consumer’s residence within the Lifeline program. We seek comment on applying the definition of Tribal lands and using existing USAC processes for verifying that an eligible household lives on Tribal lands and is therefore eligible to receive the increased monthly discount. Moreover, we seek comment on our proposal to rely on a household’s participation in the Tribal-specific assistance programs. Are there other accommodations the Commission should consider to ensure that eligible households on Tribal lands and the providers that serve them are able to participate in the Emergency Broadband Benefit Program? Promoting Awareness. We next seek comment on the best methods to publicize the availability of the services and connected devices supported by the Emergency Broadband Benefit Program. Should participating providers have any obligation under the program’s rules to publicize the availability of the benefit? What are the most effective means of publicizing this benefit to the communities most in need? We seek comment on this idea and on best practices employed by providers with existing low-income broadband plans to reach low-income households. We also seek comment on whether the Commission or USAC should also take steps to publicize the program to supplement the outreach of the participating providers. Should USAC conduct outreach to current Lifeline subscribers? What outreach activities 64 Id. § 904(b)(5), (6)(C). 65 Id. § 904(b)(6)(C). 66 Id. § 904(a)(7). 67 Tribal lands include “any federally recognized Indian tribe's reservation, pueblo, or colony, including former reservations in Oklahoma; Alaska Native regions established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688); Indian allotments; Hawaiian Home Lands - areas held in trust for Native Hawaiians by the state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920 July 9, 1921, 42 Stat. 108, et. seq., as amended; and any land designated as such by the Commission for purposes of this subpart pursuant to the designation process in § 54.412.” 47 CFR § 54.400(e). 68 47 CFR § 54.409(b). A consumer residing on Tribal lands can qualify for Lifeline if they participate, a dependent or someone else in their household participates in certain in Tribal-specific assistance programs, including: Bureau of Indian Affairs general assistance; Tribally administered Temporary Assistance for Needy Families; Head Start (only those households meeting its income qualifying standard); or the Food Distribution Program on Indian Reservations. 139 Federal Communications Commission DA 21-6 11 conducted by the Commission or USAC would most effectively promote awareness among potentially eligible households? Finally, we seek comment on using other civic entities to publicize the availability of these funds. Are there measures schools, libraries and other local institutions can take to encourage participation in this program? Should the Commission or USAC promote the availability of these funds to other universal service program participants? We seek comment on these ideas in an effort to identify the most efficient way to broadcast the awareness of this program to potential recipients. Auditing. The Consolidated Appropriations Act provides that the Commission shall adopt audit requirements to ensure that participating providers are in compliance with the program requirements and to prevent waste, fraud, and abuse in the Emergency Broadband Benefit Program.69 Moreover, within one year of the date of the enactment of the Act, the Commission’s Office of Inspector General must conduct an audit of the disbursements made to a representative sample of participating providers.70 We seek comment on the audit requirements the Commission should impose on providers participating in the Emergency Broadband Benefit Program. We propose to direct USAC to conduct audits, in addition to any audits conducted by the Commission’s Office of Inspector General. Should the Commission use the same or similar audit procedures currently used for Lifeline providers to audit compliance with the rules of the Emergency Broadband Benefit Program? What documentation should the Commission require participating providers to retain to permit auditors to assess compliance with the program rules? What documentation retention policies should the Commission place on providers? How long should participating providers retain documentation after the end of the program? We propose implementing the same documentation requirements as are in the Lifeline program, including a requirement that participating providers retain records for as long as the subscriber receives support from the Emergency Broadband Connectivity Fund, but no less than the three full preceding calendar years, and to provide that documentation to the Commission or USAC upon request.71 We seek comment on that proposal as well as whether the Commission needs to add any other documentation retention requirements. What steps should the Commission take, and what guidance should the Commission provide USAC with, to ensure integrity in the Emergency Broadband Benefit Program during the duration of the program? Enforcement. We next seek comment on the ability of the Commission to impose administrative forfeitures and other penalties on program participants found to be in violation of the program rules and requirements. The Consolidated Appropriations Act declares that a violation of this section or any regulation promulgated under this section “shall be treated as a violation of the Communications Act of 1934 or a regulation promulgated under such Act.”72 Moreover, the Commission is compelled to enforce this section and the associated regulations “in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Communications Act 69 H.R. 133, div. N, tit. IX § 904(b)(7). The Act also specifies that a finding of waste, fraud, abuse, or an improper payment (as such term is defined in section 2(d) of the Improper Payments Information Act of 2002 (31 U.S.C. § 3321 note))” identify a) the participating provider; b) the amount of funding disbursed to the participating provider; c) the amount of disbursements identified as an improper payment; d) the extent to which the funding identified as an improper payment was reimbursement for a connected device or reimbursement for an internet service offering; e) whether, in the case of a connected device, such device, or the value thereof, has been recovered; f) whether funds from the Emergency Broadband Connectivity Fund were made available by the participating provider to a person outside of the eligible household; and g) whether any funds from the Emergency Broadband Connectivity Fund were made available to reimburse a participating provider for an emergency broadband benefit made available to an eligible household in which all members of such household necessary to satisfy the eligibility requirements described in subsection (a)(6) were deceased. Id. 70 Id. § 904(b)(8). 71 See 47 CFR § 54.417(a). 72 H.R. 133, div. N, tit. IX § 904(g). 140 Federal Communications Commission DA 21-6 12 of 1934 were incorporated into and made a part of this section.”73 Consistent with this statutory direction, we propose to use the Commission’s existing, statutorily permitted enforcement powers to, for example, initiate investigations and impose administrative forfeitures. We also propose to withhold program funds from participants found to be in violation of the Emergency Broadband Benefit Program rules. We seek comment on these proposals. Should we also withhold program funding from participants found to be in violation of other Commission rules, particularly those Commission rules pertaining to the Commission’s universal service fund programs? We also seek comment on the application of the Commission’s suspension and debarment rules to program participants. Should the Commission make this new program subject to its existing suspension and debarment rules,74 and would doing so be consistent with the statutory scheme?75 The Consolidated Appropriations Act also provides a safe harbor provision stating that the Commission may not enforce a violation of this section 904 using section 501, 502, or 503 of the Communications Act of 1934, or any rules of the Commission promulgated under such sections, if a participating provider demonstrates that it relied in good faith on information provided to such provider to make any verification required by subsection 904(b)(2).76 Section 904(b)(2) imposes a duty on participating providers to verify whether a household is eligible to receive the service and devices supported by this program. Considering that section 904(b)(2) requires providers to verify household eligibility but also permits them, among other measures, to rely upon an unspecified alternative verification process, how will the Commission determine good faith reliance required by this exception? What should constitute good faith reliance? We seek comment on this safe harbor provision. Application of Part 54 Regulations. In addition to the specific instances identified above, we seek comment on applying the regulations contained in subpart E of part 54 to the Emergency Broadband Benefit Program, to the extent that those rules do not conflict with the Emergency Broadband Benefit Program parameters established by the Act. We propose to use the authority granted by the Consolidated Appropriations Act to use USAC’s services to implement the Emergency Broadband Benefit Program,77 including administering approvals and elections of participating providers, determinations of household eligibility, including whether a household resides on Tribal lands, by relying upon the USAC-administered National Verifier, National Lifeline Accountability Database, Representative Accountability Database, and Lifeline Claims System for the provider reimbursement process, call centers for program support, provider and consumer outreach, and conducting program audits. We seek comment on this approach. Are there other functions of the program that should be administered by USAC? We also seek comment on whether some of the regulations contained in subpart H of the Commission’s rules, which pertain to USAC’s functions as administrator of the Universal Service Fund, should be applied to the Emergency Broadband Benefit program. For example, we propose to apply sections 54.702(c) of the Commission’s rules (prohibiting USAC from making policy, interpreting unclear provisions of the statute or rules, or interpreting the intent of Congress). Should other rules pertaining to audits (e.g. sections 54.707 and 54.717) and Commission review of USAC decisions (sections 54.719-54.725) apply to the Emergency Broadband Benefit program? We seek comment on which provisions of Subpart H would, if applied, facilitate effective administration of the program. We also propose to reimburse USAC for its costs in performing 73 Id. 74 See 47 CFR § 54.8 (rules regarding suspension and debarment). 75 See H.R. 133, div. N, tit. IX § 904(f) (“Nothing in this section shall be construed to prevent the Commission from providing that the regulations in part 54 of title 47, Code 15 of Federal Regulations, or any successor regulation, shall apply in whole or in part to the Emergency Broadband Benefit Program, shall not apply in whole or in part to such Program, or shall be modified in whole or in part for purposes of application to such Program.”). 76 Id. § 904(j). 77 Id. § 904(i)(5). 141 Federal Communications Commission DA 21-6 13 these functions, within the cap placed on administrative expenses provided by the Act, and seek comment on that proposal.78 We also seek comment on whether the Commission should apply any additional rules to the Emergency Broadband Benefit Program. For example, for subscribers who do not pay an end-user fee for their supported service, should the participating provider be required to measure data usage to ensure the benefit is actually being used? Alternatively, what other measures may the participating provider use to ensure the benefit for which they are reimbursed is actually used or the beneficiary wishes to continue to receive the service (such as an affirmative response to a written communication)? Additionally, how can the Commission ensure that subscribers who receive the Emergency Broadband Benefit are able to discontinue their monthly benefit or transfer their benefit to a different participating provider? Should the Commission enable subscribers to initiate those de-enrollments or transfers directly with USAC, in addition to the procedures required in the Commission’s Lifeline rules?79 Program Reporting and Conclusion. The Consolidated Appropriations Act provides that “[a]t the conclusion of the Emergency Broadband Benefit Program, any participating eligible households shall be subject to a participating provider’s generally applicable terms and conditions.”80 The Emergency Broadband Benefit Program will conclude at the end of the emergency period81 or when the amount appropriated to the Emergency Broadband Connectivity Fund is expended,82 whichever is sooner. In light of this statutory language, how should providers be required to explain these terms and conditions to eligible households prior to or upon initial enrollment? Is there other information that should be provided to eligible households before enrollment or while the service is being supported by the program to ensure eligible households understand the scope of the program and the impact of fund exhaustion on the program discount? The FCC is subject to both general government-wide reporting obligations and reporting obligations in the Consolidated Appropriations Act specific to pandemic relief legislation. In particular, we note that the CARES Act oversight provisions have been incorporated by reference in the Consolidated Appropriations Act by expanding the definition of “covered funds” found in the CARES Act appropriation riders.83 As such, commenters should take into consideration the information requirements and reporting obligations associated with such oversight provisions. In addition to such requirements (which include public disclosures of spending), how should the Commission keep stakeholders informed during the duration of the program regarding the funds remaining in the Emergency Broadband Connectivity Fund? We seek comment on the information the Commission should share about disbursements made from the Fund and at what intervals. We also seek comment on how the Commission should administer the conclusion of the program. What notice should the Commission give to participating providers? How should participating providers give notice to eligible households that their benefit will conclude after a certain date? What precipitating events should trigger such notice, and what information should be included in that notice? Filing Requirements. Pursuant to section 1.419 of the Commission’s rules, 47 CFR § 1.419, interested parties may file comments on or before January 25, 2021, and reply comments on or before 78 See id. § 904(i)(3) (“Amounts in the Emergency Broadband Connectivity Fund shall be available to the Commission for reimbursements from participating providers under this section, and the Commission may not use more than 2 percent of such amounts to administer the Emergency Broadband Benefit Program.”). 79 See 47 CFR § 54.405(e). 80 See H.R. 133, div. N, tit. IX § 904(b)(10). 81 See id. § 904(a)(8). 82 See id. § 904(i)(2). 83 See Consolidated Appropriations Act, 2021, H.R. 133, div. O, tit. VIII—Pandemic Response Accountability Committee Amendments § 801, Amendment to the Pandemic Response Accountability Committee (2020). 142 Federal Communications Commission DA 21-6 14 February 16, 2021.84 All filings should refer to WC Docket No. 20-445. Filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission. Comments may be filed by paper or by using the Commission’s Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). Electronic Filers: Comments and replies may be filed electronically via ECFS: http://www.fcc.gov/ecfs. Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. Filings can be sent by commercial overnight courtier or by first-class or overnight U.S. Postal Service mail.85 Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701. U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L St, NE, Washington, DC 20554. People with Disabilities. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (tty). Ex Parte Rules. Proceedings in this Notice shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission’s ex parte rules.86 Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter’s written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in these proceedings should familiarize themselves with the Commission’s ex parte rules. 84 See 47 CFR § 1.4(j) (filing dates that would otherwise fall on a holiday shall be filed on the next business day). 85 In response to the COVID-19 pandemic, the FCC has closed its current hand-delivery filing location at FCC Headquarters. We encourage outside parties to take full advantage of the Commission’s electronic filing system. Any party that is unable to meet the filing deadline due to the building closure may request a waiver of the comment or reply comment deadline, to the extent permitted by law. FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Filing, Public Notice, DA 20-304 (rel. Mar. 19, 2020). https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy. 86 See 47 CFR §§ 1.1200(a), 1.1206. 143 Federal Communications Commission DA 21-6 15 For further information, please contact Eric Wu, Attorney Advisor, Telecommunications Access Policy Division, Wireline Competition Bureau at (202) 418-1543 or by email at Eric.Wu@fcc.gov. - FCC – 144 Federal Communications Commission DA 21-6 16 APPENDIX CONSOLIDATED APPROPRIATIONS ACT, 2021 DIVISION N—ADDITIONAL CORONAVIRUS RESPONSE AND RELIEF TITLE IX—BROADBAND INTERNET ACCESS SERVICE SEC. 904. BENEFIT FOR BROADBAND SERVICE DURING EMERGENCY PERIOD RELATING TO COVID–19. (a) DEFINITIONS.—In this section: (1) BROADBAND INTERNET ACCESS SERVICE.—The term ‘‘broadband internet access service’’ has the meaning given such term in section 8.1(b) of title 47, Code of Federal Regulations, or any successor regulation. (2) BROADBAND PROVIDER.—The term ‘‘broadband provider’’ means a provider of broadband internet access service. (3) COMMISSION.—The term ‘‘Commission’’ means the Federal Communications Commission. (4) CONNECTED DEVICE.—The term ‘‘connected device’’ means a laptop or desktop computer or a tablet. (5) DESIGNATED AS AN ELIGIBLE TELECOMMUNICATIONS CARRIER.—The term ‘‘designated as an eligible telecommunications carrier’’, with respect to a broadband provider, means the broadband provider is designated as an eligible telecommunications carrier under section 214(e) of the Communications Act of 1934 (47 U.S.C. 214(e)). (6) ELIGIBLE HOUSEHOLD.—The term ‘‘eligible household’’ means, regardless of whether the household or any member of the household receives support under subpart E of part 54 of title 47, Code of Federal Regulations (or any successor regulation), and regardless of whether any member of the household has any past or present arrearages with a broadband provider, a household in which— (A) at least one member of the household meets the qualifications in subsection (a) or (b) of section 54.409 of title 47, Code of Federal Regulations (or any successor regulation); (B) at least one member of the household has applied for and been approved to receive benefits under the free and reduced price lunch program under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773); (C) at least one member of the household has experienced a substantial loss of income since February 29, 2020, that is documented by layoff or furlough notice, application for unemployment insurance benefits, or similar documentation or that is otherwise verifiable through the National Verifier or National Lifeline Accountability Database; (D) at least one member of the household has received a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) in the current award year, if such award is verifiable through the National Verifier or National Lifeline Accountability Database or the participating provider verifies eligibility under subsection (a)(2)(B); or (E) at least one member of the household meets the eligibility criteria for a participating provider’s existing low-income or COVID–19 program, subject to the requirements of subsection (a)(2)(B) and any other eligibility requirements the Commission may consider necessary for the public interest. 145 Federal Communications Commission DA 21-6 17 (7) EMERGENCY BROADBAND BENEFIT.—The term ‘‘emergency broadband benefit’’ means a monthly discount for an eligible household applied to the actual amount charged to such household, which shall be no more than the standard rate for an internet service offering and associated equipment, in an amount equal to such amount charged, but not more than $50, or, if an internet service offering is provided to an eligible household on Tribal land, not more than $75. (8) EMERGENCY PERIOD.—The term ‘‘emergency period’’ means the period that— (A) begins on the date of the enactment of this Act; and (B) ends on the date that is 6 months after the date on which the determination by the Secretary of Health and Human Services pursuant to section 319 of the Public Health Service Act (42 U.S.C. 247d) that a public health emergency exists as a result of COVID–19, including any renewal thereof, terminates. (9) INTERNET SERVICE OFFERING.—The term ‘‘internet service offering’’ means, with respect to a broadband provider, broadband internet access service provided by such provider to a household, offered in the same manner, and on the same terms, as described in any of such provider’s offerings for broadband internet access service to such household, as on December 1, 2020. (10) NATIONAL LIFELINE ACCOUNTABILITY DATABASE.—The term ‘‘National Lifeline Accountability Database’’ has the meaning given such term in section 54.400 of title 47, Code of Federal Regulations (or any successor regulation). (11) NATIONAL VERIFIER.—The term ‘‘National Verifier’’ has the meaning given such term in section 54.400 of title 47, Code of Federal Regulations, or any successor regulation. (12) PARTICIPATING PROVIDER.—The term ‘‘participating provider’’ means a broadband provider that— (A) (i) is designated as an eligible telecommunications carrier; or (ii) meets requirements established by the Commission for participation in the Emergency Broadband Benefit Program and is approved by the Commission under subsection (d)(2); and (B) elects to participate in the Emergency Broadband Benefit Program. (13) STANDARD RATE.—The term ‘‘standard rate’’ means the monthly retail rate for the applicable tier of broadband internet access service as of December 1, 2020, excluding any taxes or other governmental fees. (b) EMERGENCY BROADBAND BENEFIT PROGRAM.— (1) ESTABLISHMENT.—The Commission shall establish a program, to be known as the ‘‘Emergency Broadband Benefit Program’’, under which the Commission shall, in accordance with this section, reimburse, using funds from the Emergency Broadband Connectivity Fund established in subsection (i), a participating provider for an emergency broadband benefit, or an emergency broadband benefit and a connected device, provided to an eligible household during the emergency period. (2) VERIFICATION OF ELIGIBILITY.—To verify whether a household is an eligible household, a participating provider shall— (A) use the National Verifier or National Lifeline Accountability Database; (B) rely upon an alternative verification process of the participating provider, if— (i) the participating provider submits information as required by the Commission regarding the alternative verification process prior to seeking reimbursement; and 146 Federal Communications Commission DA 21-6 18 (ii) not later than 7 days after receiving the information required under clause (i), the Commission— (I) determines that the alternative verification process will be sufficient to avoid waste, fraud, and abuse; and (II) notifies the participating provider of the determination under subclause (I); or (C) rely on a school to verify the eligibility of a household based on the participation of the household in the free and reduced price lunch program or the school breakfast program described in subsection (a)(6)(B). (3) USE OF NATIONAL VERIFIER AND NATIONAL LIFELINE ACCOUNTABILITY DATABASE.—The Commission shall— (A) expedite the ability of all participating providers to access the National Verifier and National Lifeline Accountability Database for purposes of determining whether a household is an eligible household, without regard to whether a participating provider is designated as an eligible telecommunications carrier; and (B) ensure that the National Verifier and National Lifeline Accountability Database approve an eligible household to receive the emergency broadband benefit not later than 2 days after the date of the submission of information necessary to determine if such household is an eligible household. (4) REIMBURSEMENT.—From the Emergency Broadband Connectivity Fund established in subsection (i), the Commission shall reimburse a participating provider in an amount equal to the emergency broadband benefit with respect to an eligible household that receives such benefit from such participating provider during the emergency period. (5) REIMBURSEMENT FOR CONNECTED DEVICE.—A participating provider that, during the emergency period, in addition to providing the emergency broadband benefit to an eligible household, supplies such household with a connected device may be reimbursed up to $100 from the Emergency Broadband Connectivity Fund established in subsection (i) for such connected device, if the charge to such eligible household is more than $10 but less than $50 for such connected device, except that a participating provider may receive reimbursement for no more than 1 connected device per eligible household. (6) CERTIFICATION REQUIRED.—To receive a reimbursement under paragraph (4) or (5), a participating provider shall certify to the Commission the following: (A) That the amount for which the participating provider is seeking reimbursement from the Emergency Broadband Connectivity Fund established in subsection (i) for providing an internet service offering to an eligible household is not more than the standard rate. (B) That each eligible household for which the participating provider is seeking reimbursement for providing an internet service offering discounted by the emergency broadband benefit— (i) has not been and will not be charged— (I) for such offering, if the standard rate for such offering is less than or equal to the amount of the emergency broadband benefit for such household; or (II) more for such offering than the difference between the standard rate for such offering and the amount of the emergency broadband benefit for such household; (ii) will not be required to pay an early termination fee if such eligible household elects to enter into a contract to receive such internet service offering if such household later terminates such contract; (iii) was not, after the date of the enactment of this Act, subject to a mandatory waiting period 147 Federal Communications Commission DA 21-6 19 for such internet service offering based on having previously received broadband internet access service from such participating provider; and (iv) will otherwise be subject to the participating provider’s generally applicable terms and conditions as applied to other customers. (C) That each eligible household for which the participating provider is seeking reimbursement for supplying such household with a connected device has not been and will not be charged $10 or less or $50 or more for such device. (D) A description of the process used by the participating provider to verify that a household is an eligible household, if the provider elects an alternative verification process under paragraph (2)(B), and that such verification process was designed to avoid waste, fraud, and abuse. (7) AUDIT REQUIREMENTS.—The Commission shall adopt audit requirements to ensure that participating providers are in compliance with the requirements of this section and to prevent waste, fraud, and abuse in the Emergency Broadband Benefit Program. A finding of waste, fraud, or abuse or an improper payment (as such term is defined in section 2(d) of the Improper Payments Information Act of 2002 (31 U.S.C. 3321 note)) identified by the Commission or the Inspector General of the Commission shall include the following: (A) The name of the participating provider. (B) The amount of funding made available from the Emergency Broadband Connectivity Fund to the participating provider. (C) The amount of funding determined to be an improper payment to a participating provider. (D) A description of to what extent funding made available from the Emergency Broadband Connectivity Fund that was an improper payment was used for a reimbursement for a connected device or a reimbursement for an internet service offering. (E) Whether, in the case of a connected device, such device, or the value thereof, has been recovered. (F) Whether any funding from the Emergency Broadband Connectivity Fund was made available to a participating provider for an emergency broadband benefit for a person outside the eligible household. (G) Whether any funding from the Emergency Broadband Connectivity Fund was made available to reimburse a participating provider for an emergency broadband benefit made available to an eligible household in which all members of such household necessary to satisfy the eligibility requirements described in subsection (a)(6) were deceased. (8) RANDOM AUDIT REQUIRED.—Not later than 1 year after the date of the enactment of this Act, the Inspector General of the Commission shall conduct an audit of a representative sample of participating providers receiving reimbursements under the Emergency Broadband Benefit Program. (9) NOTIFICATION OF AUDIT FINDINGS.—Not later than 7 days after a finding made by the Commission under the requirements of paragraph (7), the Commission shall notify the Committee on Energy and Commerce of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate with any information described in such paragraph that the Commission has obtained. (10) EXPIRATION OF PROGRAM.—At the conclusion of the Emergency Broadband Benefit Program, any participating eligible households shall be subject to a participating provider’s generally applicable terms and conditions. (c) REGULATIONS REQUIRED.— 148 Federal Communications Commission DA 21-6 20 (1) IN GENERAL.—Not later than 60 days after the date of the enactment of this Act, the Commission shall promulgate regulations to implement this section. (2) COMMENT PERIODS.—As part of the rulemaking under paragraph (1), the Commission shall— (A) provide a 20-day public comment period that begins not later than 5 days after the date of the enactment of this Act; (B) provide a 20-day public reply comment period that immediately follows the period under subparagraph (A); and (C) during the comment periods under subparagraphs (A) and (B), seek comment on— (i) the provision of assistance from the Emergency Broadband Connectivity Fund established in subsection (i) consistent with this section; and (ii) other related matters. (d) ELIGIBILITY OF PROVIDERS.— (1) RELATION TO ELIGIBLE TELECOMMUNCATIONS CARRIER DESIGNATION.—The Commission may not require a broadband provider to be designated as an eligible telecommunications carrier in order to be a participating provider. (2) EXPEDITED APPROVAL PROCESS.— (A) IN GENERAL.—The Commission shall establish an expedited process by which the Commission approves as participating providers broadband providers that are not designated as eligible telecommunications carriers and elect to participate in the Emergency Broadband Benefit Program. (B) EXCEPTION.—Notwithstanding subparagraph (A), the Commission shall automatically approve as a participating provider a broadband provider that has an established program as of April 1, 2020, that is widely available and offers internet service offerings to eligible households and maintains verification processes that are sufficient to avoid fraud, waste, and abuse. (e) RULE OF CONSTRUCTION.—Nothing in this section shall affect the collection, distribution, or administration of the Lifeline Assistance Program governed by the rules set forth in subpart E of part 54 of title 47, Code of Federal Regulations (or any successor regulation). (f) PART 54 REGULATIONS.—Nothing in this section shall be construed to prevent the Commission from providing that the regulations in part 54 of title 47, Code of Federal Regulations, or any successor regulation, shall apply in whole or in part to the Emergency Broadband Benefit Program, shall not apply in whole or in part to such Program, or shall be modified in whole or in part for purposes of application to such Program. (g) ENFORCEMENT.—A violation of this section or a regulation promulgated under this section shall be treated as a violation of the Communications Act of 1934 (47 U.S.C. 151 et seq.) or a regulation promulgated under such Act. The Commission shall enforce this section and the regulations promulgated under this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Communications Act of 1934 were incorporated into and made a part of this section. 149 Federal Communications Commission DA 21-6 21 (h) EXEMPTIONS.— (1) CERTAIN RULEMAKING REQUIREMENTS.—Section 553 of title 5, United States Code, shall not apply to a regulation promulgated under subsection (c) or a rulemaking proceeding to promulgate such a regulation. (2) PAPERWORK REDUCTION ACT REQUIREMENTS.—A collection of information conducted or sponsored under the regulations required by subsection (c) shall not constitute a collection of information for the purposes of subchapter I of chapter 35 of title 44, United States Code (commonly referred to as the Paperwork Reduction Act). (i) EMERGENCY BROADBAND CONNECTIVITY FUND.— (1) ESTABLISHMENT.—There is established in the Treasury of the United States a fund to be known as the Emergency Broadband Connectivity Fund. (2) APPROPRIATION.—There is appropriated to the Emergency Broadband Connectivity Fund, out of any money in the Treasury not otherwise appropriated, $3,200,000,000 for fiscal year 2021, to remain available until expended. (3) USE OF FUNDS.—Amounts in the Emergency Broadband Connectivity Fund shall be available to the Commission for reimbursements to participating providers under this section, and the Commission may use not more than 2 percent of such amounts to administer the Emergency Broadband Benefit Program. (4) RELATIONSHIP TO UNIVERSAL SERVICE CONTRIBUTIONS.—Reimbursements provided under this section shall be provided from amounts made available under this subsection and not from contributions under section 254(d) of the Communications Act of 1934 (47 U.S.C. 254(d)). (5) USE OF UNIVERSAL SERVICE ADMINISTRATIVE COMPANY PERMITTED.—The Commission shall have the authority to avail itself of the services of the Universal Service Administrative Company to implement the Emergency Broadband Benefit Program, including developing and processing reimbursements and distributing funds to participating providers. (j) SAFE HARBOR.—The Commission may not enforce a violation of this section under section 501, 502, or 503 of the Communications Act of 1934 (47 U.S.C. 501; 502; 503), or any rules of the Commission promulgated under such sections of such Act, if a participating provider demonstrates to the Commission that such provider relied in good faith on information provided to such provider to make the verification required by subsection (b)(2). 150 City of Huntington Beach File #:21-099 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Travis K. Hopkins, Assistant City Manager Subject: Consider adoption of the 2021 City Council Work Plan Statement of Issue: On January 5, 2021, the City Council conducted their 2021 Strategic Planning Workshop to identify overall goals and objectives for integration into the City’s annual work plan. The seminar was facilitated by a team from Pat West Consulting, and through the discussion, the City Council identified the following 5 priority policy focus areas for 2021, which were identified for achievement while concurrently prioritizing the fiscal stability of the overall organization. 1. Community Engagement 2. Homelessness Response 3. Economic Development & Housing Organizational Fiscal Stability 4. Infrastructure & Parks 5. COVID-19 Response For each of the priority policy areas, specific strategic goals and defined objectives were also identified, and a summary deck of the City Council’s 2021 work plan priorities is included as an attachment to this report. Once adopted, the work plan will serve to focus and prioritize the City’s efforts as we move through 2021. Financial Impact: The fiscal impact of specific projects will be considered separately as they are developed. Recommended Action: Adopt the 2021 City Council Work Plan. Alternative Action(s): Do not adopt the 2021 City Council Work Plan, and provide staff with additional direction. Analysis: City of Huntington Beach Printed on 1/27/2021Page 1 of 3 powered by Legistar™151 File #:21-099 MEETING DATE:2/1/2021 The City Council held a strategic planning workshop on January 5, 2021, which was facilitated by Pat West Consulting. During the meeting, the City Council discussed key policy priorities and reached consensus on prioritizing five key priority policy areas, to include Community Engagement, Homelessness Response, Economic Development & Housing, Infrastructure & Parks, and COVID-19 Response. Further, the City Council prioritized the need to pursue goals identified within each priority policy area while maintaining the overall financial stability of the City organization. The attached 2021 City Council strategic planning workshop summary deck is included as an attachment to this report, and highlights the following key priority policy areas, along with the corresponding identified goals: 1. Community Engagement Priorities o Strategic Goal: Improve Communication Mechanisms Utilized by the City o Strategic Goal: Improve Community / Constituent Engagement Experience 2. Homelessness Response Priorities o Strategic Goal: Enhance Existing Homeless Response Efforts o Strategic Goal: Develop Homeless Response Solutions to Address the Root Causes of Homelessness o Strategic Goal: Position Huntington Beach to be a Regional Leader in Addressing Homelessness, Mental Health, and Other Related Issues 3. Economic Development & Housing Priorities o Strategic Goal: Develop City Programs Aimed at Supporting, Promoting, and Diversifying our Economic Base o Strategic Goal: Utilize Updates to the City’s Housing Element and Land Use Policies as an Economic Development Tool o Strategic Goal: Pursue Policies and Projects to Increase the Local Housing Supply 4. Infrastructure & Park Priorities o Strategic Goal: Develop a Plan to Address Major Facility Needs for the Police Station, Civic Center, Lake Fire Station, and Corporate Yard o Strategic Goal: Prioritize Park and Community Center Improvements in the City’s CIP Budget o Strategic Goal: Develop Multi-Modal and Active Transportation Infrastructure Projects (Inclusive of Disability Access), Especially in the City’s Downtown Resort District o Strategic Goal: Develop Smart City Policies While Prioritizing Broadband / Small Cell Access Throughout the Community 5. COVID-19 Response Priorities o Strategic Goal: Provide Consistent COVID-19 Public Information, and Support Vaccination Efforts o Strategic Goal: Pursue COVID-19 Programs that Promote Economic Recovery Efforts City of Huntington Beach Printed on 1/27/2021Page 2 of 3 powered by Legistar™152 File #:21-099 MEETING DATE:2/1/2021 In addition to the 5 priority policy areas, Organizational Fiscal Sustainability was identified as a continued area of importance, with the goal of maintaining the overall financial sustainability of the City organization. Environmental Status: Not applicable. Strategic Plan Goal: Non-Applicable - Administrative Item Attachment(s): 1. 2021 City Council Strategic Planning Work Plan City of Huntington Beach Printed on 1/27/2021Page 3 of 3 powered by Legistar™153 February 1, 2021 2021 Strategic Planning Workshop Recap City Council Identified Goals & Objectives 154 2 2021 Strategic Planning Workshop Background The City Council held a 2021 Strategic Planning Session on January 5, 2021 at Central Library Meeting was facilitated by Pat West Consulting Through the workshop, the City Council identified 5 priority policy areas, to be achieved while concurrently prioritizing fiscal stability for the City organization 1.Community Engagement 2.Homelessness Response 3.Economic Development & Housing 4.Infrastructure & Parks 5.COVID-19 Response Organizational Fiscal Stability 155 3 Community Engagement 156 4 Community Engagement Priorities •Improve communication mechanisms utilized by the City •Improve community / constituent engagement experience Strategic Goals Defined Objectives –Update the City’s main website –Create a City data platform and performance dashboard –Develop and standardize new information campaign tools –Increase use of virtual town hall meetings during the pandemic –Establish a dialogue series to heal / improve community discord –Create and institute a social media policy for elected officials & staff –Coordinate a virtual Citizen’s Academy Program –Review and modernize City board / commission structure –Develop a volunteer coordination program –Coordinate a Charter Review process –Develop strategic partnerships with community groups –Examine creation of a small business roundtable –Examine campaign finance reform options –Examine ethics policy reform options –Examine annexation of Bolsa Chica 157 5 Homelessness Response 158 6 Homelessness Response Priorities •Enhance existing homeless response efforts •Develop homeless response solutions to address the root causes of homelessness •Position Huntington Beach to be a regional leader in addressing homelessness, mental health, and other related issues Strategic Goals Defined Objectives –Establish a full-time position dedicated to addressing homeless issues –Conduct regular quality-of-life enforcement activities –Define with data what success at the navigation center looks like –Engage community organizations in developing response programs >Examine homelessness prevention program partnerships –Establish a CAHOOTS-style mobile crisis response program in HB –Develop new mental health and addiction response programs –Integrate response efforts into the Be Well OC / OCHCA ecosystem –Pursue a City-sponsored permanent supportive housing project –Explore development of new job training programs –Develop new regional partnerships with homeless response agencies –Create public outreach programs addressing these topics –Support State regulations on sober living homes & body brokering 159 7 Economic Development & Housing 160 8 Economic Development & Housing Priorities •Develop City programs aimed at supporting, promoting, and diversifying our economic base •Utilize updates to the City’s Housing Element and land use policies as an economic development tool •Pursue policies and projects to increase the local housing supply Strategic Goals Defined Objectives –Institute the City’s new economic development strategy >Assess viability of green industry growth / incubator in HB –Review allowance of retail cannabis sales in HB –Develop a plan to attract millennials and Gen Z to HB –Review need to develop a local hiring preferences ordinance –Review legality of existing City food truck rules –Consider partnering with GWC on developing a job training program –Assess viability / economic benefits of instituting a climate action plan –Review and relax the City’s parking ratio regulations for all zones –Enable mixed uses (retail, housing, R&D, breweries) in industrial zones –Develop land-use changes to encourage redevelopment of strip-malls –Institute inclusionary housing program rule updates –Pursue a City-sponsored permanent supportive housing project –Pursue missing middle / workforce housing development projects –Develop a RHNA compliance plan, to include BECSP updates 161 9 Infrastructure & Parks 162 10 Infrastructure & Park Priorities •Develop a plan to address major facility needs for the Police Station, Civic Center, Lake Fire Station, and Corporate Yard •Prioritize park and community center improvements in the City’s CIP budget •Develop multi-modal and active transportation infrastructure projects (inclusive of disability access), especially in the City’s downtown resort district •Develop smart city policies while prioritizing broadband / small cell access throughout the community Strategic Goals Defined Objectives –Examine viability of the public-private PGF program (Long Beach) –Include design, build, finance, and maintenance project components –Prioritize park / community center CIP projects, with a key focus on: >Edison, Marina, Bluff Top, & Rodgers Sr. Ctr. Parks; Shipley-to-Shore Trail; Central Library Fountain; Oak View Community Center –Develop a Citywide ATP plan which prioritizes various transit modes >In particular, assess viability of rail in appropriate transit corridors –Develop a downtown resort district connectivity plan –Identify a long-term plan for 2nd block of Main Street –Reconstitute the Smart Cities Council Task Force –Develop broadband access plans in appropriate community locations –Update underground policy to ease telecom / broadband expansions 163 11 COVID -19 Response 164 12 COVID -19 Response Priorities •Provide consistent COVID-19 public information, and support vaccination efforts •Pursue COVID-19 programs that promote economic recovery efforts Strategic Goals Defined Objectives –Coordinate regular distribution of COVID-19 information –Facilitate virtual town hall series on vaccination related details –Serve as a role model for COVID-19 guidelines to facilitate reopening –Continue to maintain access to all City services during the pandemic –Develop small businesses economic support programs –Address the long term future of Main Street –Support regulatory flexibility to help businesses recover quickly –Review applicability of relevant Federal and State support programs –Consider instituting a local eviction moratorium 165 13 Organizational Fiscal Sustainability 166 14 Organizational Fiscal Sustainability •Maintain the overall financial sustainability of the City organization Strategic Goals Defined Objectives –Develop and institute a plan to balance the City’s budget –Coordinate development of a General Fund Reserve Policy –Develop and institute a sustainable plan to finalize labor contracts –Analyze the need to update and modernization the City’s UUT 167 15 Appendix A: Pat West Strategic Planning Workshop Deck 168 16 169 17 170 18 171 19 172 20 173 21 174 22 175 23 176 24 177 25 178 26 179 27 180 28 181 29 182 30 183 31 184 32 185 33 186 34 187 35 188 36 189 37 190 38 191 39 192 40 193 41 Appendix B: Staff Strategic Planning Workshop Deck 194 Overview of Current Key City Issues January 5, 2021 City of Huntington Beach City Council Strategic Planning Workshop 195 43 Review of Key Issues Facing City •It is important that the City Council identify and prioritize overall organizational goals and objectives –With the vast majority of City resources being devoted to maintaining existing operations, City Council prioritization of goals / objectives is critical from a resource allocation perspective •The following items have been identified as key issues by staff which merit attention / consideration by the City Council –COVID-19 response –City budget / fiscal situation –Homelessness response –City facility capital improvement needs –Labor relations –Development / RHNA issues –Economic development strategy –CIP efforts 196 44 1. COVID -19 Response •Maintain Public Access to all City Services –Keep workforce safe and available to continue providing access to existing services •Economic Recovery –$650K in small business grants to distribute –OneHB micro grant program –Temporary emergency use permit program –2nd block of Main Street in Downtown •Vaccination Process –Assist with Countywide vaccine distribution efforts 197 45 2. City Budget / Fiscal Position •FY 20/21 budget is balanced after implementation of a major Citywide restructuring plan this past year –The program instituted reduced GF expenditures by ~$6M / year 198 46 2. City Budget / Fiscal Position •Future fiscal concerns continue to exist given significant annual CalPERS Unfunded Accrued Liability (UAL) pension cost increases –UAL payments will increase by ~$10M annually within the next 4 years •To address this pending fiscal situation, the City will have to consider further cuts, revenue adjustments, or a possible refinancing of our UAL pension debt –Refinancing is possible given our current historically low interest rate environment (where rates of ~3% are feasible) compared with the existing 7% CalPERS discount rate 199 47 2. City Budget / Fiscal Position •100% refinancing of existing UAL debt load •80% refinancing of total existing UAL debt load 200 48 3. Homelessness Response Efforts •Streamline / improve existing Homeless Task Force (HTF) outreach efforts –Improve internal City processes to facilitate greater outreach efforts by the HTF •Institute consistent quality of life enforcement plans –Engage regular, appropriate, and well planned enforcement activities •Upstream of the shelter –permanent supportive housing –Jamboree housing project –Inclusionary housing ordinance updates •Downstream of the shelter –mobile crisis response + mental health resources –Explore development of a CAHOOTS-model mobile crisis response program in partnership with OC HCA –Become integrated into the Be Well OC mental health & substance abuse ecosystem 201 49 4. City Facility Capital Improvement Needs •Significant facility capital needs have been identified within the 1.75 million square feet of building space managed by the City –Police Station Modernization:~$25M –Downtown Lake Fire Station:~$3M –Civic Center Modernization:~$3M •Given the scale / costs associated with the improvements needed in HB, staff has performed a cursory review of the Performance Guaranteed Facility (PGF) program utilized by the City of Long Beach to develop their new civic center plaza –Under the PGF program, Long Beach contracted with a project company to design, build, finance, and maintain a new grand civic plaza –Per the PGF agreement, project costs did not exceed Long Beach’s existing annual maintenance expenditures, and the firm also agreed to maintain the new civic center for a 40-year period 202 50 5. Implement New Economic Development Strategy •Develop a refined, targeted, data- driven, and focused economic development strategy, centered on the following relevant areas: –Housing S trategy –Retail S trategy –Commercial / Office / Industrial Strategy –City Initiated ED Programs 203 51 6. Development / RHNA Issues •Key development projects in the pipeline –Magnolia Tank Farm –Giesler school site (Brookfield project) –Proposed Bella Terra housing project •RHNA / Housing Element update –Under the current preliminary 6th Cycle RHNA allocation, HB is required to zone for 13,337 new housing units –6th Cycle is currently set to begin in October 2021 204 52 7. Labor Relations •Of our 9 bargaining units, 6 have expired Memoranda of Understanding (MOUs) ASSOCIATION MOU STATUS MOU TERM APPROX. # OF MEMBERS Huntington Beach Municipal Teamsters (HBMT)Expired 10/01/19 – 09/30/20 358 Management Employees’ Organization (MEO)Expired 11/01/19 – 10/31/20 97 Huntington Beach Firefighters’ Association (HBFA)Through June 2021 07/01/18 – 06/30/21 115 Fire Management Association (FMA)Expired 10/01/15 – 09/30/17 8 Marine Safety Management Association (MSMA)Expired 04/01/16 – 03/31/18 12 Surf City Lifeguard Employees’ Association (SCLEA)Expired 01/01/18 – 06/30/19 183 Police Officers’ Association (POA)Through June 2023 01/01/20 – 06/30/23 242 Police Management Association (PMA)Expired 01/01/18 – 06/30/20 11 Non-Associated (NA)Indefinite 07/18/16 –Indefinite 21 205 53 8. Ongoing CIP Efforts •City’s current FY 20/21 CIP budget includes $24.6M in capital enhancements, including the following key initiatives –Edison Community Center –Edison Park Upgrade –Marina Park Upgrade –Bluff Top Park –Rodgers Senior Center Park Redevelopment –Central Library Fountain Restoration –Central Library / Park Public Art Project –Library Facility Master Plan –Parks & Recreation Master Plan Update –Oak View Family Resource Center Planning –Street Paving Program –Water Infrastructure Projects –City Fiber Optic Network Expansion 206 Questions? 207 City of Huntington Beach File #:21-089 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Dahle Bulosan, Chief Financial Officer Subject: Approve the COVID-19 Small Business Micro Grant Program Statement of Issue: The City of Huntington Beach has received $648,000 in CARES Act funding from the County of Orange to support small businesses affected by COVID-19. Staff is recommending the approval of the COVID-19 Small Business Micro Grant Program to provide direct relief to small businesses in Huntington Beach. Financial Impact: The City entered into a subrecipient agreement with the County of Orange to receive $648,000 in funding to allocate to small businesses within Huntington Beach. Per the subrecipient agreement, up to 3.5% or $22,680 of the funding may be used to administer the program. No General Fund appropriations are requested to administer the program. Recommended Action: Approve the COVID-19 Small Business Micro Grant Program. Alternative Action(s): Do not approve the program as presented, and direct staff accordingly Analysis: On December 15, 2020, the Orange County Board of Supervisors approved allocating $648,000 to provide economic support to small businesses impacted by the COVID-19. Staff is recommending approval of the COVID-19 Small Business Micro Grant Program outlined below. This program is designed to supplement other COVID-19 funding sources made available to small businesses by the State and Federal government. On November 30, 2020, Governor Gavin Newsom announced that the State of California would provide $500 million in direct relief grants for eligible small businesses impacted by COVID-19 restrictions,and proposed an additional $575 million in direct relief on January 5, 2021,as part of the proposed 2021-22 budget,for a total of $1.075 billion. The Federal Government also extended the Paycheck Protection Program established by the City of Huntington Beach Printed on 1/27/2021Page 1 of 4 powered by Legistar™208 File #:21-089 MEETING DATE:2/1/2021 The Federal Government also extended the Paycheck Protection Program established by the CARES Act to provide $659 billion to support small businesses. The proposed City COVID-19 Small Business Micro Grant Program was modeled after the successful OneHB Micro Grant program,managed by CIELO, which provides $5,000 in grant funding to small businesses with 2 to 10 employees in Huntington Beach. Over 7,000,or 70%,of the City’s businesses have less than 10 employees. The proposed grant program would assist these businesses that make up a significant portion of Huntington Beach’s business community. COVID-19 Small Business Micro Grant Program The COVID-19 Small Business Micro Grant Program is intended to help support small businesses in Huntington Beach who need assistance due to adverse economic effects of the Coronavirus (COVID- 19) public health emergency. Grants will be distributed in the amount of $5,000 as reimbursement for allowable expenses on a first -come,first-served basis to eligible businesses that provide all necessary documentation. Per the Subrecipient Agreement with the County of Orange, all expenses are required to be incurred during the period that begins on December 31, 2020,and ends on June 30, 2021. Grant applications will be accepted starting April 5, 2021,to allow businesses time to incur expenses within the allowable time period and compile required documentation. Eligibility Criteria To be eligible for the grant program, applicants must be able to meet the following eligibility requirements: ·Employs no fewer than two (2) and no more than ten (10) full or part-time W-2 employees ·Independently owned and operated with the principal office located in Huntington Beach ·Currently has a valid business license in the City of Huntington Beach ·Has been negatively affected by COVID-19 and will attest by statement to this in the application ·Businesses that have not yet received any COVID-19 grants from the City of Huntington Beach will be prioritized ·Does not promote, sell, or advertise any products, ideas, or services that fail to comply with all applicable laws, acts, regulations, rules and ordinances ·Is not under current governmental investigation,nor currently a party to a civil or criminal matter, nor has any outstanding violations, citations or other issues that would put them in a situation other than in good standing with the City ·Is not owned (in whole or in part) or related to any individuals who are currently employees of the City of Huntington Beach or who are currently an elected or appointed official representing the City of Huntington Beach ·Complies with all grant funding requirements included in the Subrecipient Agreement with the City of Huntington Beach Printed on 1/27/2021Page 2 of 4 powered by Legistar™209 File #:21-089 MEETING DATE:2/1/2021 ·Complies with all grant funding requirements included in the Subrecipient Agreement with the County of Orange ·Per Federal guidelines, eligible businesses are those that meet at least one of the following criteria: o Business must have been deemed non-essential and forced to close o Sales/Revenues must be down more than 25% since the start of the COVID-19 pandemic o Business must have laid off at least 1 part-time or full-time employee Allowed use of funds:Rent/lease payment, mortgage interest payment, utilities, personal protective equipment, and other COVID-19 related operational or safety expenses. Program Administration Staff is currently evaluating consultants to administer the grant program. Per the subrecipient agreement with the County, up to 3.5%,or $22,680,of the funding may be used for administrative costs. Staff will select the best qualified consultant to manage the COVID-19 Small Business Micro Grant Program. Proposed Program Timeline In order to distribute these funds to small businesses in our community as quickly as possible, while ensuring the program is thoroughly marketed to all segments of the business community to maximize awareness, fairness, and participation, staff is proposing the following program timeline: Date Action Item 02/01/2021 City Council meeting to consider program 02/08/2021 Select Consultant to Administer the Program 02/16/2021 Online and paper application finalized. 02/22/2021 Consultant and the City will begin marketing the program with a press release, electronic flyer, social media posts, and targeted outreach. 03/01/2021 Webinar to introduce the program and answer questions from the business community, led by Consultant 03/15/2021 2nd Webinar to introduce the program and answer questions from the business community, led by Consultant 04/05/2021 Application portal opens at 8:00 a.m. 04/09/2021 Application portal closes at 5:00 p.m. 04/12/2021 Consultant begins reviewing applications 04/19/2021 - Ongoing Consultant begins distributing grant awards after final review and verification by the City. Grants are awarded based on a first-come, first-served basis to eligible small businesses that provide all necessary documentation. City of Huntington Beach Printed on 1/27/2021Page 3 of 4 powered by Legistar™210 File #:21-089 MEETING DATE:2/1/2021 Environmental Status: Not applicable. Strategic Plan Goal: Strengthen long-term financial and economic sustainability Attachment(s): 1. Subrecipient Agreement Between the County of Orange and the City of Huntington Beach for Coronavirus Relief Funds for Economic Support Provided by the City City of Huntington Beach Printed on 1/27/2021Page 4 of 4 powered by Legistar™211 Page 1 of 8 SUBRECIPIENT AGREEMENT BETWEEN THE COUNTY OF ORANGE AND THE CITY OF HUNTINGTON BEACH FOR ECONOMIC SUPPORT PROVIDED BY THE CITY This Subrecipient Agreement (the “Agreement”) is made and entered into by and between the County of Orange, a political subdivision of the State of California, hereinafter referred to as “County,” and the City of Huntington Beach, a municipal corporation, hereafter referred to as “Subrecipient,” with the County and Subrecipient referred to as “Party,” or collectively as “Parties.” WHEREAS, on February 26, 2020, the County Health Officer declared a local health emergency based on an imminent and proximate threat to public health from the introduction of a novel coronavirus (named “COVID-19”) in Orange County (the “COVID-19 Emergency”); and WHEREAS, on March 2, 2020, the Board of Supervisors adopted Resolution No. 2020-11 ratifying the local health emergency declared by the County’s Health Officer; and WHEREAS, on March 4, 2020, the Governor of the State of California declared a State of Emergency to exist in California as a result of the threat of COVID-19; and WHEREAS, the State, like the Nation, continues to record a surge in the level of community spread of COVID-19 resulting in a Statewide increase in the number of new hospital admissions from 777 on November 15, to 1,651 on December 2; and WHEREAS the rise in cases, if it continues, risks overwhelming the ability of California hospitals to deliver healthcare to its residents suffering from COVID-19 and from other illnesses requiring hospital care; and WHEREAS, on December 3, 2020, California health officials announced a Regional Stay at Home Order that will be triggered if Intensive Care Unit (ICU) capacity drops below 15 percent in a given region; and WHERAS, the Regional Stay at Home Order instructs Californians to stay at home as much as possible to limit mixing with other households that can lead to COVID-19 spread; and DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 212 Page 2 of 8 WHEREAS, on December 10, 2020, the Southern California region was at 9% ICU capacity, and the Regional Stay at Home Order remained in effect in the County of Orange; and WHEREAS the COVID-19 pandemic and the necessary physical distancing measures implemented have impacted many businesses, leading to business closures, loss of employee hours and wages, and layoffs; and WHEREAS the Orange County Board of Supervisors has allocated $10 million in General Funds equally between the five supervisorial districts for economic support initiatives for small businesses in response to COVID-19; and WHEREAS, pursuant to the authority delegated by the Orange County Board of Supervisors, a total of $2 million will be distributed to Orange County cities located in the Second District of the Orange County Board of Supervisors (the “Second District”) on a per capita basis based on the 2010 population figures provided by the United States Census Bureau for the economic support of small businesses located within the jurisdictional boundaries of each city grant recipient; and WHEREAS, in order to provide funds for the Subrecipient to pay expenditures it has or will incur providing economic support to small businesses in the Second District due to the COVID-19 public health emergency, the Parties have agreed that the County shall transfer the grant amount described herein to Subrecipient. NOW, THEREFORE, the Parties mutually agree as follows: 1. TERM OF AGREEMENT. The term of this Agreement begins on the date when fully executed by the Parties, and terminates on July 31, 2021, or when all of the Parties’ obligations under this Agreement are fully satisfied, whichever occurs earlier. 2. USE OF GRANT AMOUNT. a. Subrecipient shall use the grant amount provided under this Agreement to pay for Eligible Expenses that: (1) are necessary expenditures incurred due to the public health emergency with respect to COVID-19; and (2) were incurred during the period that begins on December 31, 2020 and ends on June 30, 2021. DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 213 Page 3 of 8 b. The term “Eligible Expenses,” as used in this Agreement, shall mean expenses incurred and paid for by Subrecipient for the provision of economic support to Small Businesses located in the Second District in connection with the COVID-19 public health emergency, including expenditures related to the provision of grants to Small Businesses to reimburse the costs of business interruption caused by required closures and unemployment insurance costs related to the COVID-19 public health emergency if such costs will not otherwise be reimbursed by the federal government. c. The term “Small Business,” as used in this Agreement, shall mean an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located within the jurisdictional boundaries of Subrecipient, at least one officer of which is domiciled in Orange County, California, and which, together with affiliates, has 100 or fewer employees, and average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years, or is a manufacturer with 100 or fewer employees. d. The following is a nonexclusive list of expenditures that shall not constitute Eligible Expenses payable from the grant amount: (1) Subrecipient administrative costs that exceed 3.5 percent of the grant amount set forth in Paragraph 3(a) of this Agreement. (2) Damages covered by insurance. (3) Expenses that have been or will be reimbursed under any federal program, such as the reimbursement by the federal government pursuant to the CARES Act of contributions by States to State unemployment funds. (4) Reimbursement to donors for donated items or services. (5) Workforce bonuses other than hazard pay or overtime. (6) Severance pay. (7) Legal settlements. e. Subrecipient must utilize the grant amount in accordance with all Federal and State laws. DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 214 Page 4 of 8 3. PAYMENT OF GRANT AMOUNT a. The County shall pay Subrecipient a grant amount of $648,000 within 10 business days of the full execution of this Agreement. All of Subrecipient’s expenditures of the grant amount must be for costs as described in Paragraph 2 of this Agreement. The grant amount represents the amount allocated to Subrecipient based on population pursuant to the authority delegated by the Board of Supervisors to the County Executive Officer on December 15, 2020. b. It is understood that the County makes no commitment to fund this Agreement beyond the terms set forth herein. c. If Subrecipient has not spent any portion of the grant amount it has received under this Agreement to cover Eligible Expenses by June 30, 2021, Subrecipient shall return to the County by July 31, 2021 the amount remaining unspent as of June 30, 2021. 4. STATUTES AND REGULATIONS APPLICABLE TO GRANT. Subrecipient must comply with all applicable requirements of State, Federal, and County of Orange laws, executive orders, regulations, program and administrative requirements, policies and any other requirements governing this Agreement. Subrecipient must comply with applicable State and Federal laws and regulations pertaining to labor, wages, hours, and other conditions of employment. Subrecipient must comply with new, amended, or revised laws, regulations, and/or procedures that apply to the performance of this Agreement. These requirements include, but are not limited to: a. Office of Management and Budget (OMB) Circulars. Subrecipient must comply with OMB Circulars, as applicable: OMB Circular A-21 (Cost Principles for Educational Institutions); OMB Circular A-87 (Cost Principles for State, Local, and Indian Tribal Governments); OMB Circular A-102 (Grants and Cooperative Agreements with State and Local Governments); Common Rule, Subpart C for public agencies or OMB Circular A-110 (Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non- Profit Organizations); OMB Circular A-122 (Cost Principles for Non-Profit Organizations); OMB Circular A-133 (Audits of States, Local Governments, and Non-Profit Organizations. DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 215 Page 5 of 8 b. Political Activity Prohibited. None of the funds, materials, property, or services provided directly or indirectly under this Agreement may be used for any partisan political activity, or to further the election or defeat of any candidate for public office. Funds provided under this Agreement may not be used for any purpose designed to support or defeat any pending legislation or administrative regulation. c. Tax Reporting. Subrecipient is responsible for any tax reporting requirements that arise from Subrecipient’s distribution of economic support to Small Businesses, including the filing of any required tax forms with the IRS and the issuance of any required tax forms to recipients of economic support from the Subrecipient. 5. REPORTS. a. Progress Report. On March 15, 2021, Subrecipient shall provide a report to the County that shall: (1) identify the Eligible Expenses paid from the grant amount; (2) identify the name and location of each Small Business receiving economic support funded by the grant amount and the amounts paid to each Small Business; (3) demonstrate how Subrecipient used the grant amount consistent with the use requirements of Paragraph 2; and (4) identify the balance of the grant amount that Subrecipient has not spent. b. Final Report. Upon the earlier of Subrecipient’s expenditure of the balance of the grant amount or July 15, 2021, Subrecipient shall provide a report to the County that shall: (1) identify the Eligible Expenses paid from the grant amount; (2) identify the name and location of each Small Business receiving economic support funded by the grant amount and the amounts paid to each Small Business; (3) demonstrate how Subrecipient used the grant amount consistent with the use requirements of Paragraph 2; and (3) identify the balance of the grant amount that Subrecipient has not spent, if any. c. The Subrecipient shall provide a certification signed by its chief executive officer with each report required under this Paragraph 5 that the statements contained in the report are true and that the expenditures described in the report comply with the uses permitted under Paragraph 2. d. Subrecipient shall maintain supporting documentation for the reports required by this Paragraph 5 consistent with the requirements of Paragraph 6. DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 216 Page 6 of 8 6. RECORDS MAINTENANCE. Records, in their original form, must be maintained in accordance with requirements prescribed by the County with respect to all matters specified in this Agreement. Original forms are to be maintained on file for all documents specified in this Agreement. Such records must be retained for a period four (4) years after termination of this Agreement and after final disposition of all pending matters. “Pending matters” include, but are not limited to, an audit, litigation or other actions involving records. Records, in their original form pertaining to matters covered by this Agreement, must at all times be retained within the County of Orange unless authorization to remove them is granted in writing by the County. 7. RECORDS INSPECTION. At any time during normal business hours and as often as either the County or the Auditor General of the State of California may deem necessary, Subrecipient must make available for examination all of its records with respect to all matters covered by this Agreement. The County and the Auditor General of the State of California each have the authority to audit, examine and make excerpts or transcripts from records, including all Subrecipient's invoices, materials, payrolls, records of personnel, conditions of employment and other data relating to all matters covered by this Agreement. Subrecipient agrees to provide any reports requested by the County regarding performance of this Agreement. With respect to inspection of Subrecipient’s records, the County may require that Subrecipient provide supporting documentation to substantiate Subrecipient’s expenses with respect to the Subrecipient’s use or expenditure of the grant amount. 8. INDEPENDENT CONTRACTOR. The Subrecipient shall be considered an independent contractor and neither the Subrecipient, its employees, nor anyone working under the Subrecipient shall be considered an agent or an employee of County. Neither the Subrecipient, its employees nor anyone working under the Subrecipient shall qualify for workers’ compensation or other fringe benefits of any kind through County. 9. PERMITS, LICENSES, APPROVALS, AND LEGAL OBLIGATIONS. Subrecipient shall be responsible for obtaining any and all permits, licenses, and approvals required for performing any work under this Agreement. Subrecipient shall be responsible for observing and complying with any applicable Federal, State, or local laws, or rules or regulations affecting any such work. Subrecipient shall provide copies of permits and approvals to the County upon request. 10. INDEMNITY. The Subrecipient agrees to indemnify, defend with counsel approved in writing by County, and hold County, its elected and appointed officials, officers, employees and agents and those special districts and agencies which DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 217 Page 7 of 8 County’s Board of Supervisors acts as the governing Board harmless from any claims, demands or liability of any kind or nature, including but not limited to personal injury or property damage, arising from or related to the Subrecipient’s receipt, distribution or expenditure of the grant amount under this Agreement. The provisions of this paragraph shall survive the termination of this Agreement. 11. NOTICES. Any and all notices, requests, demands and other communications contemplated, called for, permitted, or required to be given hereunder shall be in writing. Any written communications shall be deemed to have been duly given upon actual in-person delivery, if delivery is by direct hand, or upon delivery on the actual day of receipt or no greater than four (4) calendar days after being mailed by US certified or registered mail, return receipt requested, postage prepaid, whichever occurs first. The date of mailing shall count as the first day. All communications shall be addressed to the appropriate party at the address stated herein or such other address as the parties hereto may designate by written notice from time to time in the manner aforesaid. Subrecipient: Oliver Chi City Manager City of Huntington Beach 2000 Main Avenue Huntington Beach, CA 92648 County: Denis Bilodeau County of Orange County Executive Office 333 W. Santa Ana Blvd., 3rd Floor Santa Ana, CA 92701 12. DEFAULTS. Should either Party fail for any reason to comply with the contractual obligations of this Agreement within the time specified by this Agreement, the non-breaching Party reserves the right to terminate the Agreement, reserving all rights under State and Federal law. DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 218 Page 8 of 8 13. ATTORNEY FEES. In any action or proceeding to enforce or interpret any provision of this Agreement, each Party shall bear its own attorney’s fees, costs, and expenses. 14. ENTIRE CONTRACT: This Agreement contains the entire contract between the Parties with respect to the matters herein, and there are no restrictions, promises, warranties or undertakings other than those set forth herein or referred to herein. No exceptions, alternatives, substitutes, or revisions are valid or binding on the parties unless authorized by the Parties in writing. 15. AMENDMENTS. No alteration or variation of the terms of this Agreement shall be valid unless made in writing and signed by the parties; no oral understanding or agreement not incorporated herein shall be binding on either of the Parties; and no exceptions, alternatives, substitutes, or revisions are valid or binding on County unless authorized by County in writing. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day and year dated below. CITY OF HUNTINGTON BEACH COUNTY OF ORANGE A California Municipal Corporation A political subdivision of the State of California By: __________________________ By: ___________________________ City Manager Chief Executive Officer Date: _________________________ Date: ______________________________ By: ____________________________ By: _________________________________ City Attorney Supervising Deputy County Counsel Date: _________________________ Date: _______________________________ DocuSign Envelope ID: 1BFA2B23-256A-4B5E-8533-6CAC6E356511 12/24/202012/28/2020 12/28/2020 12/28/2020 219 City of Huntington Beach File #:21-056 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Sean Crumby, Director of Public Works Subject: Approve Agreement for Professional Engineering and Environmental Consulting Services between the City of Huntington Beach and Moffatt & Nichol for the Davenport Bridge Project in Huntington Harbour Statement of Issue: The Public Works Department requires professional structural engineering and environmental consulting services to support staff for the design and regulatory approvals required to perform improvements on the existing Davenport Drive bridge over Weatherly Channel in Huntington Harbour. Financial Impact: Funds for the project are available in the Highway Bridge Replacement & Rehabilitation Account No. 96185001.82800. Recommended Action: Approve and authorize the Mayor and City Clerk to execute the Agreement for Professional Engineering and Environmental Consulting Services between the City of Huntington Beach and Moffatt & Nichol in the amount of $487,314.70. Alternative Action(s): Do not approve the agreement and direct staff to request proposals from other engineering firms for bridge design services. The project could be delayed up to one year and may forfeit the available grant funding. Analysis: In an effort towards meeting the City’s strategic plan goal to enhance and maintain infrastructure, Public Works staff requested for and has successfully obtained federal funding through the Caltrans Highway Bridge Program to perform preventive maintenance work on the existing Davenport Drive bridge over Weatherly Channel in Huntington Harbour. As Public Works does not have the required expertise in house, proposals to provide the necessary City of Huntington Beach Printed on 1/27/2021Page 1 of 2 powered by Legistar™220 File #:21-056 MEETING DATE:2/1/2021 professional engineering and environmental consulting services were requested and submitted in compliance with the provisions of Chapter 3.03 of the City’s Municipal Code, as well as Chapter 10 of the Caltrans Local Assistance Procedures Manual, due to the federal funding involved. Two proposals were received and evaluated. Staff determined Moffatt & Nichol to be the top ranked consultant using the required qualifications-based selection process. Consequently, staff recommends approval of the 5-year term contract with Moffatt & Nichol. Generally, the contract scope of work includes inspecting the bridge and analyzing the alternative methods of repair; preparing plans, specifications and cost estimates; obtaining the required environmental and regulatory permit approvals; providing construction engineering support; and providing environmental monitoring services during construction. Environmental Status: Not applicable. Strategic Plan Goal: Enhance and maintain infrastructure Attachment(s): 1. Agreement for Professional Engineering and Environmental Consulting Services between the City of Huntington Beach and Moffatt & Nichol City of Huntington Beach Printed on 1/27/2021Page 2 of 2 powered by Legistar™221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 Business Auto Policy Policy Endorsement WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US (WAIVER OF SUBROGATION) THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. This endorsement modifies insurance provided under the following: AUTO DEALERS COVERAGE FORM BUSINESS AUTO COVERAGE FORM MOTOR CARRIER COVERAGE FORM With respect to coverage provided by this endorsement, the provisions of the Coverage Form apply unless modified by the endorsement. This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below. Named Insured: MOFFATT & NICHOL Endorsement Effective Date: 11/22/2020 SCHEDULE Name(s) Of Person(s) Or Organization(s): ANY PERSON OR ORGANIZATION FOR WHOM OR WHICH YOU ARE REQUIRED BY WRITTEN CONTRACT OR AGREEMENT TO OBTAIN THIS WAIVER FROM US. YOU MUST AGREE TO THAT REQUIREMENT PRIOR TO LOSS. Information required to complete this Schedule, if not shown above, will be shown in the Declarations. The Transfer Of Rights Of Recovery Against Others To Us condition does not apply to the person(s) or organization(s) shown in the Schedule, but only to the extent that subrogation is waived prior to the "accident" or the "loss" under a contract with that person or organization. BUA 6056712989 Endorsement No: 16; Page: 1 of 1 Policy Page: 34 of 141 Underwriting Company: Transportation Insurance Company, 151 N Franklin St, Chicago, IL 60606 Form No: CA 04 44 10 13 Endorsement Effective Date: Policy No: Policy Effective Date: 11/22/2020Endorsement Expiration Date: © Copyright Insurance Services Office, Inc., 2011 307 SCA 23 500D (Ed. 10/11) HIJKLMN THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EXTENDED COVERAGE ENDORSEMENT – BA PLUS This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM I. LIABILTY COVERAGE A. Who Is An Insured The following is added to Section II, Paragraph A.1., Who Is An Insured: 1. a.Any incorporated entity of which the Named Insured owns a majority of the voting stock on the date of inception of this Coverage Form;provided that, b.The insurance afforded by this provision A.1.does not apply to any such entity that is an "insured" under any other liability "policy" providing "auto" coverage. 2.Any organization you newly acquire or form, other than a limited liability company, partnership or joint venture, and over which you maintain majority ownership interest. The insurance afforded by this provision A.2.: a.Is effective on the acquisition or formation date, and is afforded only until the end of the policy period of this Coverage Form, or the next anniversary of its inception date, whichever is earlier. b.Does not apply to: (1)"Bodily injury" or "property damage" caused by an "accident" that occurred before you acquired or formed the organization; or (2)Any such organization that is an "insured" under any other liability "policy" providing "auto" coverage. 3.Any person or organization that you are obligated to provide Insurance where required by a written contract or agreement is an insured, but only with respect to legal responsibility for acts or omissions of a person for whom Liability Coverage is afforded under this policy. 4.An "employee" of yours is an "insured" while operating an "auto" hired or rented under a contract or agreement in that "employee's" name, with your permission, while performing duties related to the conduct of your business. "Policy," as used in this provision A. Who Is An Insured,includes those policies that were in force on the inception date of this Coverage Form but: 1.Which are no longer in force; or 2.Whose limits have been exhausted. B. Bail Bonds and Loss of Earnings Section II, Paragraphs A.2.a.(2) and A.2.a.(4)are revised as follows: 1.In a.(2),the limit for the cost of bail bonds is increased from $2,000 to $5,000, and 2.In a.(4),the limit for the loss of earnings is increased from $250 to $500 a day. C. Fellow Employee Section II, Paragraph B.5 does not apply. Such coverage as is afforded by this provision C. is excess over any other collectible insurance. II. PHYSICAL DAMAGE COVERAGE A. Towing Section III. Paragraph A.2.,is revised to include Light Trucks up to 10,000 pounds G.V.W. B. Glass Breakage – Hitting A Bird Or Animal – Falling Objects Or Missiles The following is added to Section III, Paragraph A.3.: With respect to any covered "auto," any deductible shown in the Declarations will not apply to glass breakage if such glass is repaired, in a manner acceptable to us, rather than replaced. C. Transportation Expenses Section III, Paragraph A.4.a.is revised, with respect to transportation expense incurred by you, to provide: a.$60 per day, in lieu of $20; subject to b.$1,800 maximum, in lieu of $600. D. Loss of Use Expenses Section III, Paragraph A.4.b.is revised, with respect to loss of use expenses incurred by you, to provide: a.$1,000 maximum, in lieu of $600. E. Personal Property The following is added to Section III, Paragraph A.4. SCA 23 500D Copyright, CNA Corporation, 2000.Page 1 of 3 (Ed. 10/11)Includes copyrighted material of the Insurance Services Office used with its permission. Policy #6056712989 308 CNA PARAMOUNT Blanket Additional Insured -Owners,Lessees or Contractors -with Products-Completed Operations Coverage Endorsement This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART It is understood and agreed as follows: I.WHO IS AN INSURED is amended to include as an Insured any person or organization whom you are required by written contract to add as an additional insured on this coverage part,but only with respect to liability for bodily injury,property damage or personal and advertising injury caused in whole or in part by your acts or omissions,or the acts or omissions of those acting on your behalf: A.in the performance of your ongoing operations subject to such written contract;or B.in the performance of your work subject to such written contract,but only with respect to bodily injury or property damage included in the products-completed operations hazard,and only if: 1.the written contract requires you to provide the additional insured such coverage;and 2.this coverage part provides such coverage. II.But if the written contract requires: A.additional insured coverage under the 11-85 edition,10-93 edition,or 10-01 edition of CG2010,or under the 10- 01 edition of CG2037;or B.additional insured coverage with "arising out of"language;or C.additional insured coverage to the greatest extent permissible by law; then paragraph I.above is deleted in its entirety and replaced by the following: WHO IS AN INSURED is amended to include as an Insured any person or organization whom you are required by written contract to add as an additional insured on this coverage part,but only with respect to liability for bodily injury,property damage or personal and advertising injury arising out of your work that is subject to such written contract. III.Subject always to the terms and conditions of this policy,including the limits of insurance,the Insurer will not provide such additional insured with: A.coverage broader than required by the written contract;or B.a higher limit of insurance than required by the written contract. IV.The insurance granted by this endorsement to the additional insured does not apply to bodily injury,property damage,or personal and advertising injury arising out of: A.the rendering of,or the failure to render,any professional architectural,engineering,or surveying services, including: 1.the preparing,approving,or failing to prepare or approve maps,shop drawings,opinions,reports,surveys, field orders,change orders or drawings and specifications;and 2.supervisory,inspection,architectural or engineering activities;or B.any premises or work for which the additional insured is specifically listed as an additional insured on another endorsement attached to this coverage part. V.Under COMMERCIAL GENERAL LIABILITY CONDITIONS,the Condition entitled Other Insurance is amended to add the following,which supersedes any provision to the contrary in this Condition or elsewhere in this coverage part: 6056712992CNA75079XX(10-16)Policy No: 26Page1of2EndorsementNo: CONTINENTAL CASUALTY COMPANY 11/22/2020EffectiveDate: MOFFATT & NICHOLInsuredName: Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission.20020009260567129925392309 CNA PARAMOUNT Blanket Additional Insured -Owners,Lessees or Contractors -with Products-Completed Operations Coverage Endorsement Primary and Noncontributory Insurance With respect to other insurance available to the additional insured under which the additional insured is a named insured,this insurance is primary to and will not seek contribution from such other insurance,provided that a written contract requires the insurance provided by this policy to be: 1.primary and non-contributing with other insurance available to the additional insured;or 2.primary and to not seek contribution from any other insurance available to the additional insured. But except as specified above,this insurance will be excess of all other insurance available to the additional insured. VI.Solely with respect to the insurance granted by this endorsement,the section entitled COMMERCIAL GENERAL LIABILITY CONDITIONS is amended as follows: The Condition entitled Duties In The Event of Occurrence,Offense,Claim or Suit is amended with the addition of the following: Any additional insured pursuant to this endorsement will as soon as practicable: 1.give the Insurer written notice of any claim,or any occurrence or offense which may result in a claim; 2.send the Insurer copies of all legal papers received,and otherwise cooperate with the Insurer in the investigation, defense,or settlement of the claim;and 3.make available any other insurance,and tender the defense and indemnity of any claim to any other insurer or self-insurer,whose policy or program applies to a loss that the Insurer covers under this coverage part.However, if the written contract requires this insurance to be primary and non-contributory,this paragraph 3.does not apply to insurance on which the additional insured is a named insured. The Insurer has no duty to defend or indemnify an additional insured under this endorsement until the Insurer receives written notice of a claim from the additional insured. VII.Solely with respect to the insurance granted by this endorsement,the section entitled DEFINITIONS is amended to add the following definition: Written contract means a written contract or written agreement that requires you to make a person or organization an additional insured on this coverage part,provided the contract or agreement: A.is currently in effect or becomes effective during the term of this policy;and B.was executed prior to: 1.the bodily injury or property damage;or 2.the offense that caused the personal and advertising injury; for which the additional insured seeks coverage. Any coverage granted by this endorsement shall apply solely to the extent permissible by law. All other terms and conditions of the Policy remain unchanged. This endorsement,which forms a part of and is for attachment to the Policy issued by the designated Insurers,takes effect on the effective date of said Policy at the hour stated in said Policy,unless another effective date is shown below,and expires concurrently with said Policy. 6056712992CNA75079XX(10-16)Policy No: 26Page2of2EndorsementNo: CONTINENTAL CASUALTY COMPANY 11/22/2020EffectiveDate: MOFFATT & NICHOLInsuredName: Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission. 310 <MARKETABLE PRODUCT NAME> Architects, Engineers and Surveyors General Liability Extension Endorsement It is understood and agreed that this endorsement amends the COMMERCIAL GENERAL LIABILITY COVERAGE PART as follows. If any other endorsement attached to this policy amends any provision also amended by this endorsement, then that other endorsement controls with respect to such provision, and the changes made by this endorsement with respect to such provision do not apply. TABLE OF CONTENTS 1.Additional Insureds 2.Additional Insured - Primary And Non-Contributory To Additional Insured’s Insurance 3.Additional Insured – Extended Coverage 4.Boats 5.Bodily Injury – Expanded Definition 6.Broad Knowledge of Occurrence/ Notice of Occurrence 7.Broad Named Insured 8.Contractual Liability – Railroads 9. Estates, Legal Representatives and Spouses 10. Expected Or Intended Injury – Exception for Reasonable Force 11. General Aggregate Limits of Insurance – Per Location 12.In Rem Actions 13.Incidental Health Care Malpractice Coverage 14.Joint Ventures/Partnership/Limited Liability Companies 15.Legal Liability – Damage To Premises 16.Liquor Liability 17.Medical Payments 18.Non-owned Aircraft Coverage 19.Non-owned Watercraft 20. Personal And Advertising Injury – Discrimination or Humiliation 21.Personal And Advertising Injury - Contractual Liability 22.Property Damage – Elevators 23. Retired Partners, Members, Directors And Employees 24.Supplementary Payments 25.Unintentional Failure To Disclose Hazards 26. Waiver of Subrogation – Blanket 27.Wrap-Up Extension: OCIP, CCIP or Consolidated (Wrap-Up) Insurance Programs CNA74858XX (1-15) Page <Current Page No> of <Total Pages> «PolUWCompany» Insured Name: «CusChangeName» Policy No: Endorsement No: Effective Date: «PolNumber» «Sequence» «EndoEffectiveDate» Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission. Policy #6056712992 311 <MARKETABLE PRODUCT NAME> Architects, Engineers and Surveyors General Liability Extension Endorsement 1.ADDITIONAL INSUREDS a.WHO IS AN INSURED is amended to include as an Insured any person or organization described in paragraphs A. through I. below whom a Named Insured is required to add as an additional insured on this Coverage Part under a written contract or written agreement, provided such contract or agreement: (1) is currently in effect or becomes effective during the term of this Coverage Part; and (2) was executed prior to: (a) the bodily injury or property damage; or (b) the offense that caused the personal and advertising injury, for which such additional insured seeks coverage. b.However, subject always to the terms and conditions of this policy, including the limits of insurance, the Insurer will not provide such additional insured with: (1) a higher limit of insurance than required by such contract or agreement; or (2) coverage broader than required by such contract or agreement, and in no event broader than that described by the applicable paragraph A. through I. below. Any coverage granted by this endorsement shall apply only to the extent permissible by law. A. Controlling Interest Any person or organization with a controlling interest in a Named Insured, but only with respect to such person or organization’s liability for bodily injury, property damage or personal and advertising injury arising out of: 1.such person or organization’s financial control of a Named Insured; or 2.premises such person or organization owns, maintains or controls while a Named Insured leases or occupies such premises; provided that the coverage granted by this paragraph does not apply to structural alterations, new construction or demolition operations performed by, on behalf of, or for such additional insured. B. Co-owner of Insured Premises A co-owner of a premises co-owned by a Named Insured and covered under this insurance but only with respect to such co-owner’s liability for bodily injury, property damage or personal and advertising injury as co-owner of such premises. C. Engineers, Architects or Surveyors Engaged By You An architect, engineer or surveyor engaged by the Named Insured, but only with respect to liability for bodily injury, property damage or personal and advertising injury caused in whole or in part by the Named Insured’s acts or omissions, or the acts or omissions of those acting on the Named Insured’s behalf: a.in connection with the Named Insured’s premises; or b.in the performance of the Named Insured’s ongoing operations. But the coverage hereby granted to such additional insureds does not apply to bodily injury, property damage or personal and advertising injury arising out of the rendering of or failure to render any professional services by, on behalf of, or for the Named Insured, including but not limited to: 1.the preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifications; or 2.supervisory, inspection, architectural or engineering activities. D. Lessor of Equipment CNA74858XX (1-15) Page <Current Page No> of <Total Pages> «PolUWCompany» Insured Name: «CusChangeName» Policy No: Endorsement No: Effective Date: «PolNumber» «Sequence» «EndoEffectiveDate» Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission. Policy #6056712992 312 <MARKETABLE PRODUCT NAME> Architects, Engineers and Surveyors General Liability Extension Endorsement With respect to this provision’s requirement that additional insured status must be requested under a written contract or agreement, the Insurer will treat as a written contract any governmental permit that requires the Named Insured to add the governmental entity as an additional insured. I. Trade Show Event Lessor 1.With respect to a Named Insured’s participation in a trade show event as an exhibitor, presenter or displayer, any person or organization whom the Named Insured is required to include as an additional insured, but only with respect to such person or organization’s liability for bodily injury, property damage or personal and advertising injury caused by: a.the Named Insured’s acts or omissions; or b.the acts or omissions of those acting on the Named Insured’s behalf, in the performance of the Named Insured’s ongoing operations at the trade show event premises during the trade show event. 2.The coverage granted by this paragraph does not apply to bodily injury or property damage included within the products-completed operations hazard. 2.ADDITIONAL INSURED - PRIMARY AND NON-CONTRIBUTORY TO ADDITIONAL INSURED’S INSURANCE The Other Insurance Condition in the COMMERCIAL GENERAL LIABILITY CONDITIONS Section is amended to add the following paragraph: If the Named Insured has agreed in writing in a contract or agreement that this insurance is primary and non- contributory relative to an additional insured's own insurance, then this insurance is primary, and the Insurer will not seek contribution from that other insurance. For the purpose of this Provision 2., the additional insured's own insurance means insurance on which the additional insured is a named insured. Otherwise, and notwithstanding anything to the contrary elsewhere in this Condition, the insurance provided to such person or organization is excess of any other insurance available to such person or organization. 3.ADDITIONAL INSURED – EXTENDED COVERAGE When an additional insured is added by this or any other endorsement attached to this Coverage Part, WHO IS AN INSURED is amended to make the following natural persons Insureds. If the additional insured is: a.An individual, then his or her spouse is an Insured; b.A partnership or joint venture, then its partners, members and their spouses are Insureds; c.A limited liability company, then its members and managers are Insureds; or d.An organization other than a partnership, joint venture or limited liability company, then its executive officers, directors and shareholders are Insureds; but only with respect to locations and operations covered by the additional insured endorsement’s provisions, and only with respect to their respective roles within their organizations. Please see the ESTATES, LEGAL REPRESENTATIVES, AND SPOUSES provision of this endorsement for additional coverage and restrictions applicable to spouses of natural person Insureds. 4.BOATS Under COVERAGES, Coverage A – Bodily Injury And Property Damage Liability, the paragraph entitled Exclusions is amended to add the following additional exception to the exclusion entitled Aircraft, Auto or Watercraft: This exclusion does not apply to: CNA74858XX (1-15) Page <Current Page No> of <Total Pages> «PolUWCompany» Insured Name: «CusChangeName» Policy No: Endorsement No: Effective Date: «PolNumber» «Sequence» «EndoEffectiveDate» Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission. Policy #6056712992 313 <MARKETABLE PRODUCT NAME> Architects, Engineers and Surveyors General Liability Extension Endorsement services performed for the Named Insured under the Named Insured’s direct supervision. All limitations that apply to employees and volunteer workers also apply to anyone qualifying as an Insured under this Provision. 24.SUPPLEMENTARY PAYMENTS The section entitled SUPPLEMENTARY PAYMENTS – COVERAGES A AND B is amended as follows: A. Paragraph 1.b. is amended to delete the $250 limit shown for the cost of bail bonds and replace it with a $5,000. limit; and B. Paragraph 1.d. is amended to delete the limit of $250 shown for daily loss of earnings and replace it with a $1,000. limit. 25.UNINTENTIONAL FAILURE TO DISCLOSE HAZARDS If the Named Insured unintentionally fails to disclose all existing hazards at the inception date of the Named Insured’s Coverage Part, the Insurer will not deny coverage under this Coverage Part because of such failure. 26.WAIVER OF SUBROGATION - BLANKET Under CONDITIONS, the condition entitled Transfer Of Rights Of Recovery Against Others To Us is amended to add the following: The Insurer waives any right of recovery the Insurer may have against any person or organization because of payments the Insurer makes for injury or damage arising out of: 1.the Named Insured’s ongoing operations; or 2.your work included in the products-completed operations hazard. However, this waiver applies only when the Named Insured has agreed in writing to waive such rights of recovery in a written contract or written agreement, and only if such contract or agreement: 1.is in effect or becomes effective during the term of this Coverage Part; and 2.was executed prior to the bodily injury, property damage or personal and advertising injury giving rise to the claim. 27.WRAP-UP EXTENSION: OCIP, CCIP, OR CONSOLIDATED (WRAP-UP) INSURANCE PROGRAMS Note: The following provision does not apply to any public construction project in the state of Oklahoma, nor to any construction project in the state of Alaska, that is not permitted to be insured under a consolidated (wrap-up) insurance program by applicable state statute or regulation. If the endorsement EXCLUSION – CONSTRUCTION WRAP-UP is attached to this policy, or another exclusionary endorsement pertaining to Owner Controlled Insurance Programs (O.C.I.P.) or Contractor Controlled Insurance Programs (C.C.I.P.) is attached, then the following changes apply: A. The following wording is added to the above-referenced endorsement: With respect to a consolidated (wrap-up) insurance program project in which the Named Insured is or was involved, this exclusion does not apply to those sums the Named Insured become legally obligated to pay as damages because of: 1.Bodily injury, property damage, or personal or advertising injury that occurs during the Named Insured’s ongoing operations at the project, or during such operations of anyone acting on the Named Insured’s behalf; nor 2.Bodily injury or property damage included within the products-completed operations hazard that arises out of those portions of the project that are not residential structures. B. Condition 4. Other Insurance is amended to add the following subparagraph 4.b.(1)(c): This insurance is excess over: CNA74858XX (1-15) Page <Current Page No> of <Total Pages> «PolUWCompany» Insured Name: «CusChangeName» Policy No: Endorsement No: Effective Date: «PolNumber» «Sequence» «EndoEffectiveDate» Copyright CNA All Rights Reserved. Includes copyrighted material of Insurance Services Office, Inc., with its permission. Policy #6056712992 314 315 BLANKET WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT This endorsement changes the policy to which it is attached effective on the inception date of the policy unless a different date is indicated below. (The following "attaching clause" need be completed only when this endorsement is issued subsequent to preparation of the policy). This endorsement, effective 12:01 AM forms a part of Policy No. Issued to By We have a right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against any person or organization with whom you have a written contract that requires you to obtain this agreement from us, as regards any work you perform for such person or organization. The additional premium for this endorsement shall be % of the total estimated workers compensation premium for this policy. WC 04 03 61 Countersigned by ______________________________ (Ed. 11/90) Authorized Representative 11/22/2020 WC 019-39-7907 MOFFATT & NICHOL NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. 2.00 316 City of Huntington Beach File #:21-061 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Sean Crumby, Director of Public Works Subject: Approve 3-Year Professional Services Contracts for As-Needed Environmental Engineering Services with Geosyntec Consultants, Inc., Environmental Engineering Contracting, Inc. (EEC Environmental), Huitt-Zollars, Inc., and CWE Statement of Issue: The Public Works and Fire Departments require environmental engineering services on an as- needed basis to support staff for General Environmental Engineering consultation and the implementation of programs/inspections in support of the City’s National Pollution Discharge Elimination System (NPDES) Permit with the State of California as well as overall Water Quality programs, as administered and implemented by Public Works staff. Financial Impact: The Fiscal Year 2020/21 approved budget for the Fire Department has funds in the amount of $640,000 under professional services. The Fiscal Year 2020/21 approved budget for the Public Works Department has funds in the amount of $2,650,000 under professional services. Total maximum value of the contracts is $2,400,000 over a three-year period, used on an as-needed basis. Recommended Action: A) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Geosyntec Consultants, Inc. for As-Needed Environmental Engineering Services; and, B) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Environmental Engineering Contracting, Inc. for As-Needed Environmental Engineering Services; and, C) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year City of Huntington Beach Printed on 1/27/2021Page 1 of 3 powered by Legistar™317 File #:21-061 MEETING DATE:2/1/2021 extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and Huitt-Zollars, Inc. for As-Needed Environmental Engineering Services; and, D) Approve and authorize the Mayor and City Clerk to execute a 3-year (with optional 1 year extension), not-to-exceed $600,000 Professional Services Contract between the City of Huntington Beach and CWE for As-Needed Environmental Engineering Services. Alternative Action(s): Do not authorize these contracts and direct staff accordingly. Analysis: On October 19, 2020, the City advertised a Request for Qualifications (“RFQ”) for As-Needed Environmental Engineering Services. Proposals were requested and submitted in compliance with Chapter 3.03 of the Huntington Beach Municipal Code. Six (6) proposals were received for As- Needed Environmental Engineering services. In accordance with qualifications-based selected procurement per the Federal “Brooks Act,” State SB 419,and the City of Huntington Beach Municipal Code Section 3.03 “Professional Services,” the Department of Public Works established a review board consisting of the following subject matter experts from the Public Works and Fire Departments who evaluated and ranked the proposals: Environmental Services Manager, Fire Protection Analyst, and Senior Administrative Analyst. The ranking criteria included: ·Clarity of Proposal ·Firm Qualifications ·Staff Qualifications & Experience ·Understanding & Methodology ·Local Vendor Preference ·References The four (4) contracts recommended for Council approval are for as-needed environmental engineering consultation for General Environmental services and Water Quality programs. These services have historically been utilized to supplement City staff to meet inspection requirements and as an extension of staff,and to provide required expertise for unique projects in support of the City’s National Pollution Discharge Elimination System (NPDES) Permit with the State of California as well as overall Water Quality programs, as administered and implemented by Public Works staff. The selection process included a review of the written proposals and a check of references provided by the firms. Each firm stated their environmental engineering category of expertise with their proposal, and proposals were then evaluated and ranked by the three (3) review board members (subject matter experts). After conducting the entire evaluation process and reference checks, the committee determined that Geosyntec, EEC Environmental, Huitt-Zollars, and CWE are the most qualified firms to meet the needs of the City,and most qualified to provide as-needed environmental engineering services,as well as providing competitive proposals for future projects. Attachment 2 is a summary of the evaluations as conducted by the review board members. In the aggregate, across all four (4) professional service contracts, the Public Works Department will City of Huntington Beach Printed on 1/27/2021Page 2 of 3 powered by Legistar™318 File #:21-061 MEETING DATE:2/1/2021 In the aggregate, across all four (4) professional service contracts, the Public Works Department will not exceed the respective budget appropriations for the requested professional services. Throughout the contract term of the four (4) professional contract service agreements, the Public Works Department may utilize the services of each of the four (4) on-call professional services contracts, or perhaps just one. The on-call, as-needed contracts will provide the Department greater flexibility in obtaining the expert environmental engineering professional services needed from the various firms under contract. Environmental Status: Not applicable. Strategic Plan Goal: Enhance and maintain high quality City services Attachment(s): 1. Request for Qualifications (RFQ) 2. Summary Evaluation Sheets 3. Professional Services Contract between the City of Huntington Beach and Geosyntec, Inc. for As-Needed Environmental Engineering Services 4.Professional Services Contract between the City of Huntington Beach and Environmental Engineering Contracting, Inc. for As-Needed Environmental Engineering Services 5.Professional Services Contract between the City of Huntington Beach and Huitt-Zollars, Inc. for As-Needed Environmental Engineering Services 6.Professional Services Contract between the City of Huntington Beach and CWE for As-Needed Environmental Engineering Services City of Huntington Beach Printed on 1/27/2021Page 3 of 3 powered by Legistar™319 REQUEST FOR QUALIFICATIONS FOR ON-CALL ENVIRONMENTAL ENGINEERING SERVICES Public Works Department CITY OF HUNTINGTON BEACH Released on October 19, 2020 320 ON-CALL ENVIRONMENTAL ENGINEERING SERVICES REQUEST FOR QUALIFICATIONS (RFQ) 1. BACKGROUND The City of Huntington Beach Public Works Department is seeking to retain as-needed services from qualified environmental engineering firms to supplement City staff for various types of City funded projects and Federal or State funded project. The City intends to contract with at least two environmental engineering firms to provide services on an “as-needed” basis as supplemental resources are required. The contract will be for a 3-year term with the option to extend the contract for one year. The City will issue task orders for each project based upon the scope of services, qualifications, work schedule and reasonableness of the fee. For task orders greater than $30,000, the City will typically solicit proposals from more than one qualified consultant. The task order assignments will be awarded such that their specified duration do not exceed the contract term. Upon execution of the contracts, the City may elect to solicit proposals from all consultants for individual projects. The City will communicate, in writing via e- mail, the needs for each project based upon a scope of services, work schedule, and fee proposal submitted to the City for its review and approval. The City will be instituting a Disadvantaged Business Enterprise (DBE) goal of 2% for this contract, pending approval from Caltrans. An addendum will be issued per schedule below if the DBE goal is revised per Caltrans. Appendix E is the Caltrans approved City’s Quality Assurance Program. In order to submit a qualifications package, your firm must provide five (5) references indicating that you have contracted directly with a public agency located in Orange County/Los Angeles County within the last five (5) years and have successfully completed tasks in at least one category listed below with the current management staff for that category. Due to logistical and time sensitive items related to city projects, the City is requesting that any firm submitting a proposal be within a 25-mile radius of City of Huntington Beach City Hall. The City may elect to contract with more than one consultant based upon their field of expertise. To qualify for the RFQ, your firm must completely comply with at one least four of the five items listed below: Category: General • Provide at least 3 projects preparing Preliminary Environmental Studies; • Provide at least 3 projects preparing and/or reviewing Grant Applications. Category: Water Quality • Provide at least 3 projects preparing documentation in reviewing, evaluating, and recommending LID BMPs for storm water systems; • Provide at least 3 projects performing commercial/industrial water quality inspections to 321 comply with NPDES requirements; • Provide at least 3 projects performing Fats, Oils, and Grease (FOG) inspections. 2. SCHEDULE OF EVENTS This request for proposal will be governed by the following schedule: Release of RFQ October 19, 2020 Deadline for Written Questions October 30, 2020 Responses to Questions Posted on Web November 5, 2020 Proposals are Due November 13, 2020 Proposal Evaluation Completed November 18, 2020 Approval of Contract December 22, 2020(tentative) 3. SCOPE OF WORK The City is seeking qualified environmental engineering consultants with experience under the following capacity: General • Prepare, assist, and review Preliminary Environmental Studies; • Review of project plans and specifications; • Perform field investigations; • Provide site assessment and preliminary studies; • Prepare and review engineering analysis reports; • Prepare and review technical and research studies; • Process and review Grant and Federal Funding Applications; • Assist in the development of City specifications; • Provide training to City staff on various environmental review processes. Water Quality • Assist in reviewing, evaluating, and recommending various Low Impact Development BMPs for storm water systems; • Perform commercial/industrial water quality inspections for compliance with latest NPDES regulations; • Perform inspections of food service establishments under the Fats, Oils, & Grease (FOG) Control Program; • Assist in reviewing and preparing documentations in various aspects of water discharge permits from applicable regulatory agencies; • Assist with the development and implement of In general, the consultant shall perform environmental engineering services on an “as-needed” basis for various projects assigned by the City. The scope of work for any one project may involve all phases of project development and may include but not be limited to the following: Monitoring and Inspections • Perform maintenance, monitoring, and inspections of City’s facilities in accordance to 322 requirements by various applicable regulatory agencies; • Provide testing and sampling of various constituents and media. Studies and Reports • Prepare reports and studies that utilize sound practical environmental engineering analysis and principles; • Prepare documentations that comply with applicable regulatory agency requirements for permitting; • Review 3rd party reports and studies, and provide City staff with comments and recommendations. Grant Applications • Assist in preparing various grant applications to obtain additional sources of funding for various proposed City projects. Preliminary Engineering • Perform site investigation, prepare alternatives by providing recommendations and analyses that describes the advantages of each alternative, and prepare estimates of probable cost for each alternative; • Prepare preliminary plans, cost estimates, engineering details, and support calculations. Construction Documents • Prepare engineering calculations and designs, plans, specifications, cost estimates, and contract bidding documents. Permits • Assist in obtaining approvals from applicable regulatory agencies for environmental, and/or other permits as may be required. Bidding Stage • Assist the City in answering bidders’ questions, attend pre-bid conferences, and job walks, prepare addendums, and analyze bids. Construction Stage • Attend pre-construction conferences; • Monitor construction schedule, visit construction sites as required for progress and quality of evaluation; • Assist the engineer, contractor, construction manager/contract administrator, and inspector with interpretation of plans and specifications, analysis of changed conditions, development of corrective action, review of shop drawings and other submittals, and the review and negotiation of change orders; • Prepare “as-built” drawings. 4. PROPOSAL FORMAT GUIDELINES Interested contractors are to provide the City of Huntington Beach with a thorough proposal using the following guidelines: 323 Proposal should be typed and should contain no more than 20 typed pages using a 12-point font size, including transmittal letter and resumes of key people, but excluding Index/Table of Contents, tables, charts, and graphic exhibits. Each proposal will adhere to the following order and content of sections. Proposal should be straightforward, concise and provide “layman” explanations of technical terms that are used. Emphasis should be concentrated on conforming to the RFQ instructions, responding to the RFQ requirements, and on providing a complete and clear description of the offer. Proposals, which appear unrealistic in the terms of technical commitments, lack of technical competence or are indicative of failure to comprehend the complexity and risk of this contract, may be rejected. The following proposal sections are to be included in the bidder’s response: A. Vendor Application Form and Cover Letter and Caltrans forms • Complete Appendix A, “Request for Proposal-Vendor Application Form” and attach this form to the cover letter. Teaming is allowed. A cover letter, not to exceed three pages in length, should summarize key elements of the proposal. An individual authorized to bind the consultant must sign the letter. The letter must stipulate that the proposal price will be valid for a period of at least 180 days. Indicate the address and telephone number of the contractor’s office located nearest to Huntington Beach, California and the office from which the project will be managed. Consultants are advised to familiarize themselves with the responsibilities and requirements in the Caltrans Local Assistance Procedures Manual (link provided in Appendix D) and complete ALL attached Caltrans forms in Appendix D and included in the proposal. (Forms will not be counted toward the page count.) B. Background and Project Summary Section The Background and Project Summary Section should describe your understanding of the City, the work to be done, and the objectives to be accomplished. Refer to Scope of Work of this RFP. C. Methodology Section Provide a detailed description of the approach and methodology to be used to accomplish the Scope of Work of this RFP. The Methodology Section should include: 1) An implementation plan that describes in detail (i) the methods, including controls by which your firm manages projects of the type sought by this RFP; (ii) methodology for soliciting and documenting views of internal and external stakeholders; (iii) and any other project management or implementation strategies or techniques that the respondent intends to employ in carrying out the work. 2) Detailed description of efforts your firm will undertake to achieve client satisfaction and to satisfy the requirements of the "Scope of Work" section. 3) Detailed project schedule, identifying all tasks and deliverables to be performed, durations for each task, and overall time of completion. 4) Detailed description of specific tasks you will require from City staff. Explain what the respective roles of City staff and your staff would be to complete the tasks specified in the Scope of Work. 324 D. Staffing Provide a list of individual(s) who will be working on this project and indicate the functions that each will perform. Include a resume for each designated individual. Upon award and during the contract period, if the contractor chooses to assign different personnel to the project, the Contractor must submit their names and qualifications including information listed above to the City for approval before they begin work. E. Qualifications The information requested in this section should describe the qualifications of the firm, key staff and sub-contractors performing projects within the past five years that are similar in size and scope to demonstrate competence to perform these services. Information shall include: 1) Names of key staff that participated on named projects and their specific responsibilities with respect to this scope of work. 2) A summary of the your firm’s demonstrated capability, including length of time that your firm has provided the services being requested in this Request for Proposal. 3) Provide at least five local references that received similar services from your firm. The City of Huntington Beach reserves the right to contact any of the organizations or individuals listed. Information provided shall include: ♦ Client Name ♦ Project Description ♦ Project start and end dates ♦ Client project manager name, telephone number, and e-mail address B. Cost Proposal/Rate Sheet (Separate Document) In an effort to save time, interested proposers shall concurrently submit a detailed cost proposal for all services and materials anticipated to complete the work, and/or professional service rate sheet as a separate document and uploaded under the Cost File. Cost proposals shall include all personnel by classification, hours and hourly billing rates. Due to the nature of the work that will involve Federal or State funding, the following shall apply for Consultants submitting: • Cost proposals shall be provided using Caltrans’ LAPM, Exhibit 10-H, and shall include all personnel by classification, hours and hourly billing rates (see Appendix D). Any proposed travel and/or mark-ups on outside services shall also be noted. The Cost Proposal shall note if there are any changes, or not, to the proposed rate(s) over time. • Due to the nature of the work, state and federal prevailing wages will apply. Consultants shall not pay less than the maximum prevailing wage between the state and federal wage determinations for the same classifications. • Include an executed Exhibit 10-K "Consultant Certification of Contract Costs and Financial Management System" for prime and all sub-consultants. A copy of 325 Exhibit 10-K is provided in Appendix D – Caltrans Forms. Due to federal contract provisions, no contract will be awarded to a consultant without an adequate financial management system as required by 48 CFR Part 16.301-3, 49 CFR Part 18, and 48 CFR Part 31. 6. PROCESS FOR SUBMITTING QUALFICATIONS City typically will advertised RFQ through PlanetBids.com, and will also advertise with local newspaper when a contract may be pertained to Federal or State grant funded projects. Interested firms are to provide the City with a thorough qualifications package using the following instructions: • Download RFQ Via the PlanetBids.com web site for the City as shown below, you will register and download the RFQ. o https://www.planetbids.com/portal/portal.cfm?CompanyID=15340 • Submission of Qualifications Package Complete written proposals must be submitted electronically in PDF file format via the Planetbids.com website no later than 4:00 p.m. (P.S.T) on November 13, 2020. Proposals will not be accepted after this deadline. Standard mail, faxed or e-mailed proposals will not be accepted. • Content of Proposal The proposal must be submitted using the format as indicated in the proposal format guidelines. • Preparation of Proposal Each proposal shall be prepared simply and economically, avoiding the use of elaborate promotional material beyond those sufficient to provide a complete, accurate and reliable presentation. • Inquiries Questions about this RFP must be directed in writing through the PlanetBids Q&A tab no later than 5:00 p.m. (PST) October 30, 2020 for response. From the date that this RFQ is issued until a firm is selected and the selection is announced, firms are not allowed to communicate for any reason with any City employee other than the contact name listed with this RFQ, except during the pre-proposal conference. Refer to the Schedule of Events of this RFQ or the City webpage to determine if a pre-proposal conference has been scheduled. The City reserves the right to reject any proposal for violation of this provision. No questions other than written will be accepted, and no response other than written will be binding upon the City. 326 • Conditions for Proposal Acceptance This RFQ does not commit the City to award a contract or to pay any costs incurred for any services. The City, at its sole discretion, reserves the right to accept or reject any or all proposals received as a result of this RFQ, to negotiate with any qualified source, or to cancel this RFQ in part or in its entirety. All proposals will become the property of the City of Huntington Beach, USA. If any proprietary information is contained in the proposal, it should be clearly identified. 7. EVALUATION CRITERIA The City’s evaluation and selection process is based upon Qualifications Based Selection (QBS) for professional services. The City may use some or all of the following criteria in its evaluation and comparison of proposals submitted. The criteria listed are not necessarily an all-inclusive list. The order in which they appear is not intended to indicate their relative importance. The ranking will consist of the basic proposal for clarity and following all directions. Additionally, points will be awarded for Qualifications, Understanding and Methodology, and Staffing in each category. The Consultants in the top ranking will have References Checked, and an Interview, if necessary. The following evaluation criteria are taken from Caltrans LPAM, Exhibit 10-B, in Appendix D. A. Understanding of the Work to be Done (25 points) B. Experience with Similar Kinds of Work (20 points) C. Quality of Staff for Work to be Done (15 points) D. Capability of Developing Innovative or Advanced Techniques (10 points) E. Familiarity with State and Federal Procedures (10 points) F. Financial Responsibility (10 points) G. Demonstrated Technical Ability (10 points) A ranking will be performed with the subtotal score for each category (100 points max) and only the top contenders will be considered further. H. Reference Check - The City may also contact and evaluate the Consultant’s and sub- consultant’s references; contact any Consultant to clarify any response; contact any current users of a Consultant’s services; solicit information from any available source concerning any aspect of a proposal; and seek and review any other information deemed pertinent to the evaluation process. I. Business License - The Consultant will be required to have a valid City Business License. http://www.huntingtonbeachca.gov/files/users/finance/business-license-application.pdf J. Interview - After written proposals have been reviewed, discussions with prospective firms may or may not be required. If scheduled, the oral interview or video/voice conference interview, at the City’s discretion, will be a question/answer format for clarifying the intent of any portions of the proposal. The individual from your firm that will be directly responsible for carrying out the contract, if awarded, must be present at the oral interview or video/voice conference interview. K. A Notification of Intent to Award may be sent to the Consultant selected. Award is contingent upon the successful negotiation of final contract terms. Negotiations shall be confidential and not subject to disclosure to competing Consultants unless an agreement is reached. If contract 327 negotiations cannot be concluded successfully, the City may negotiate a contract with the next highest scoring Consultant or withdraw the RFQ. Due to the nature of the work that will involve Federal or State funding, the following shall apply for Consultants submitting: • The successful firm may be selected by Caltrans for an audit or review through a risk based approach. It is recommended that interested proposers be familiar with Caltrans audit procedures including contract audits, incurred cost audits, financial management system reviews, ICR audits, and risk assessments. The successful firm will be asked to provide a completed ICR schedule prepared in accordance with applicable CFRs, a completed AASHTO Internal Control Questionnaire (ICQ), and a copy of the prior fiscal year and most recently completed fiscal year ICR Schedules and audited report by an independent CPA. Additionally, the successful firm must provide a CPA audited ICR report and a copy of the CPA audited financial statements. • The City reserves the right to waive informalities and to contract with multiple firms or reject all proposals at its sole discretion. Consultants are encouraged to keep their proposals brief and relevant to the specific work required. 8. STANDARD TERMS AND CONDITIONS • Amendments The City reserves the right to amend this RFP prior to the proposal due date. All amendments and additional information will be posted to the Huntington Beach Procurement Registry, Huntington Beach - Official City Web Site - Business - Bids & RFP's; bidders should check this web page daily for new information. • Cost for Preparing Proposal The cost for developing the proposal is the sole responsibility of the bidder. All proposals submitted become the property of the City. • Contract Discussions Prior to award, the apparent successful firm may be required to enter into discussions with the City to resolve any contractual differences. These discussions are to be finalized and all exceptions resolved within one (1) week from notification. If no resolution is reached, the proposal may be rejected and discussions will be initiated with the second highest scoring firm. See Appendix B for a sample agreement. • Confidentiality Requirements The staff members assigned to this project may be required to sign a departmental non- disclosure statement. Proposals are subject to the Freedom of Information Act. The City cannot protect proprietary data submitted in proposals. • Financial Information The City is concerned about bidders’ financial capability to perform, therefore, may ask you to provide sufficient data to allow for an evaluation of your firm’s financial capabilities. 328 • Insurance Requirements City Resolution 2008-63 requires that licensees, lessees, and vendors have an approved Certificate of Insurance (not a declaration or policy) on file with the City for the issuance of a permit or contract. Within ten (10) consecutive calendar days of award of contract, successful bidder must furnish the City with the Certificates of Insurance proving coverage as specified in Appendix C. Failure to furnish the required certificates within the time allowed will result in forfeiture of the Proposal Security. • Federally Funded Projects The selected consultant(s) may be asked to submit task orders related to federally funded grant projects. Therefore, in accordance with Title 2 of the Code of Federal Regulation §200.323, in the case that only one bid is received that is both responsive and received from a qualified and responsible bidder, the City reserves the right to negotiate pricing prior to award. Bidder agrees to provide sufficient cost and pricing information for such negotiations. In accordance with Title 2 of the Code of Federal Regulation §200.310 (b), a local preference will not be applied when evaluating offers and determining contract award. However, as noted earlier in this Request for Proposal, due to logistical and time sensitive items related to city projects, the City is requesting that any firm submitting a proposal be within a 25-mile radius of City of Huntington Beach City Hall. The proposer certifies that it and its subcontractors will not and have not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C 1352. List as a disclosure any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award by Proposer or Proposer’s subcontractors. • DBE Information Interested firms shall ensure that certified DBE firms have the opportunity to participate in the performance of the contract and must take all necessary and reasonable steps to facilitate participation by DBE firms for such assurance. The City of Huntington Beach will be instituting a Disadvantaged Business Enterprise (DBE) goal of 2% for this contract, unless it is revised through an addendum to the RFQ. Attention is directed to the requirements in Exhibit 10-I "Notice to Proposers DBE Information" provided in Appendix D – Federal Forms. The successful firm will be required to execute Exhibit 10-02 "Consultant Contract DBE Information", included in Appendix D – Federal Forms, for each Task Order that is reimbursed with federal funds. At the end of the Task Order the consultant will be required to prepare and execute Exhibit 17-F "Final Report - Utilization of Disadvantaged Business Enterprise (DBE), First-Tier Sub-consultant". A copy of Exhibit 17-F is provided in Appendix D – Federal Forms. 329 • Standard Form of Agreement The consultant will enter into an agreement with the City based upon the contents of the RFQ and the consultant’s response. The City’s standard form of agreement is included, along with any other potentially more restrictive terms and conditions as outlined in Caltrans’ LAPM, Exhibit 10-R as Appendix B. The consultant shall carefully review the agreement, especially the indemnity and insurance provisions, as the standard form of agreement will not be changed, and must be accepted as is. Assuming the consultant is agreeable with no exceptions, a statement to that effect shall be included in the qualifications submittal. • Disclaimer This RFQ does not commit the City to either issue a RFP, award a contract, or to pay any costs incurred in the preparation of the RFQ response. The City reserves the right to extend the due date for the RFQ, accept or reject any or all qualifications submittals received as a result of this request, negotiate with any qualified consultant or cancel this RFQ in part or in its entirety without penalty. • Assigned Representatives The City will assign a responsible representative to administer the contract and to assist the consultant in obtaining information. The consultant shall also assign a responsible representative (project manager) and an alternate, who shall be identified in the RFQ response. The consultant’s representative will remain in responsible charge of the consultant’s duties from the notice-to-proceed through project completion. If the consultant’s primary representative should be unable to continue with the project, then the alternate representative identified in the RFQ response shall become the project manager. Any substitution of representatives or sub-consultants identified in the RFQ response shall first be approved in writing by the City’s representative. The City reserves the right to review and approve/disapprove all key staff and sub-consultant substitution or removal, and may consider such changes not approved to be a breach of contract. Please carefully review the Sample Agreement (Appendix B) and Insurance Requirements (Appendix C) before responding to the Request for Qualifications enclosed herein. The terms of the agreement, including insurance requirements have been mandated by City Council and can be modified only if extraordinary circumstances exist. Your response to the Request for Qualifications must indicate if you are unwilling or unable to execute the agreement as drafted as well as providing the insurance requirements. The City will consider this in determining responsiveness to the Request for Proposal. 330 APPENDIX A Request for Qualifications-Vendor Application Form 331 1 of 2 REQUEST FOR PROPOSAL VENDOR APPLICATION FORM TYPE OF APPLICANT:  NEW  CURRENT VENDOR Legal Contractual Name of Corporation: ______________________________________ Contact Person for Agreement: ____________________________________________________ Corporate Mailing Address: ________________________________________________ City, State and Zip Code: __________________________________________________ E-Mail Address: _________________________ Phone: ________________________ Fax: ________________________ Contact Person for Proposals: ______________________________________________________ Title:______________________________ E-Mail Address: ______________________ Business Telephone: _________________________ Business Fax: ________________ Is your business: (check one)  NON PROFIT CORPORATION  FOR PROFIT CORPORATION Is your business: (check one)  CORPORATION  LIMITED LIABILITY PARTNERSHIP  INDIVIDUAL  SOLE PROPRIETORSHIP  PARTNERSHIP  UNINCORPORATED ASSOCIATION 332 2 of 2 Names & Titles of Corporate Board Members (Also list Names & Titles of persons with written authorization/resolution to sign contracts) Names Title Phone ___________________________________ ________________ ___________________ ___________________________________ ________________ ___________________ ___________________________________ ________________ ___________________ ___________________________________ ________________ ___________________ ___________________________________ ________________ ___________________ ___________________________________ ________________ ___________________ Federal Tax Identification Number: __________________________________________ City of Huntington Beach Business License Number: _____________________________ (If none, you must obtain a Huntington Beach Business License upon award of contract.) City of Huntington Beach Business License Expiration Date: __________________________ 333 APPENDIX B Sample City Agreement 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 APPENDIX C City’s Insurance Requirements 352 HB Insurance Matrix_revised 4-7-16 (2).xlsx 1 of 4 Automobile Liability General Liability Professional Liability Property Insurance Workers' Comp Additional Insured Endorsements Contractors: Any persons or entities who contract with the City and/or provide services to the City which are readily available and efficiently procured by competitive bidding. Permittees: Any persons or entities who make application to the City for any use of or encroachment upon any public street, waterway, pier, or City property. Vendors: Any persons or entities who transfers property or goods to the City which may or may not involve delivery and/or installation. CITY OF HUNTINGTON BEACH INSURANCE REQUIREMENTS Note 2 - Workers' Compensation Exemption: If entity has no employees, a signed Declaration of Non-Employee Status form is required. Note 1 - Automobile Liability: The City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers must be named as certificate holder and as additional insured by separate attached endorsement. Permittees who do not use vehicles or equipment in connection with the permit shall not be required to provide auto insurance. To be exempt from this requirement, permittees must execute a declaration such as Exhibit 1 attached. Huntington Beach City Council Resolution No. 2008-63 requires submittal of certificates of insurance evidencing the following minimum limits with a California admitted carrier with a current A.M. Best’s Rating of no less than A:VII. See Exhibits A1 - 4 for sample forms. Email: Justin.Wessels@surfcity-hb.org or Heather.Campbell@surfcity-hb.org Phone: 714-374-5378 or 714-536-5210. Fax: 714-536-5212. Vendor Type Minimum Insurance Requirements Any deductible other than those allowed in this matrix, self-insured retentions or similar forms of coverage limitations or modifications must be approved by the Risk Manager and City Attorney of the City of Huntington Beach. NOTE: Waivers and / or modifications are discouraged and will be considered only under extraordinary circumstances. As required by the State of California, with Statutory Limits and Employer’s Liability Insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease. (See Note 2 below.) Include the policy number and Additional Insured Endorsement Requirement statement below. (See Note 3 below.) Minimum of $1,000,000 per occurrence for bodily injury, personal injury and property damages. Allows up to $1,000 deductible.(See Note 1 below.) Combined single limit bodily injury and property damage. Minimum of $1,000,000 per occurrence. Allows up to $5,000 deductible. (Additional Insured Endorsement is always required with General Liability Ins.) Note 3 - Additional Insured Endorsement Requirements: The City, its officers, elected or appointed officials, employees, agents, and volunteers are to be covered as additional insureds by separate attached endorsement(s) as respects liability arising out of action performed by or on behalf of the contractor, products and completed operations of the contractor, premises owned, occupied or used by the contractor, or automobiles owned, leased or borrowed by the contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City. 353 HB Insurance Matrix_revised 4-7-16 (2).xlsx 2 of 4 Automobile Liability General Liability Professional Liability Property Insurance Workers' Comp Additional Insured Endorsements CITY OF HUNTINGTON BEACH INSURANCE REQUIREMENTS Huntington Beach City Council Resolution No. 2008-63 requires submittal of certificates of insurance evidencing the following minimum limits with a California admitted carrier with a current A.M. Best’s Rating of no less than A:VII. See Exhibits A1 - 4 for sample forms. Email: Justin.Wessels@surfcity-hb.org or Heather.Campbell@surfcity-hb.org Phone: 714-374-5378 or 714-536-5210. Fax: 714-536-5212. Vendor Type Minimum Insurance Requirements Any deductible other than those allowed in this matrix, self-insured retentions or similar forms of coverage limitations or modifications must be approved by the Risk Manager and City Attorney of the City of Huntington Beach. NOTE: Waivers and / or modifications are discouraged and will be considered only under extraordinary circumstances. Design Professionals: Professional service contractors who contract with the City and/or provide architectural and/or engineering services to the City. Professional Services: Services that involve the exercise of professional discretion and independent judgment based on an advanced or specialized knowledge, expertise or training gained by formal studies or experience or services which are not readily or efficiently procured by competitive bidding pursuant to HB Muni Code 3.02. Services includes but are not limited to those services provided by appraisers, architects, attorneys, engineers, instructors, insurance advisors, physicians and other specialized consultants. 4) The reporting of circumstances or incidents that might give rise to future claims. 1) The policy retroactive date coincides with or precedes the professional services contractor’s start of work (including subsequent policies purchased as renewals or replacements). 2) The professional services contractor will make every effort to maintain similar insurance during the required extended period of coverage following project completion, including the requirement of adding all additional insureds. 3) If insurance is terminated for any reason, professional services contractor agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this agreement or permit. Claims made policies are acceptable if the policy further provides that: Minimum of $1,000,000 per occurrence and in the aggregate. Allows up to $10,000 deductible. 354 HB Insurance Matrix_revised 4-7-16 (2).xlsx 3 of 4 Automobile Liability General Liability Professional Liability Property Insurance Workers' Comp Additional Insured Endorsements CITY OF HUNTINGTON BEACH INSURANCE REQUIREMENTS Huntington Beach City Council Resolution No. 2008-63 requires submittal of certificates of insurance evidencing the following minimum limits with a California admitted carrier with a current A.M. Best’s Rating of no less than A:VII. See Exhibits A1 - 4 for sample forms. Email: Justin.Wessels@surfcity-hb.org or Heather.Campbell@surfcity-hb.org Phone: 714-374-5378 or 714-536-5210. Fax: 714-536-5212. Vendor Type Minimum Insurance Requirements Any deductible other than those allowed in this matrix, self-insured retentions or similar forms of coverage limitations or modifications must be approved by the Risk Manager and City Attorney of the City of Huntington Beach. NOTE: Waivers and / or modifications are discouraged and will be considered only under extraordinary circumstances. Licensees/Lessees: Any persons or entities who contract with the City for the use of public property. Combined single limit bodily injury and property damage. Minimum of $1,000,000 per occurrence. Allows up to $5,000 deductible. (Additional Insurance Endorsement is always required with General Liability Ins.) Full replacement cost with no coinsurance penalty provision. As required by the State of California, with Statutory Limits and Employer’s Liability Insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease. (See Note 1 below.) Include the policy number and Additional Insured Endorsement Requirement statement below.(See Note 2.) Note 1 - Workers' Compensation Exemption: If entity has no employees, a signed Declaration of Non-Employee Status form is required. Note 2 - Additional Insured Endorsement Requirements: The City, its officers, elected or appointed officials, employees, agents, and volunteers are to be covered as additional insureds by separate attached endorsement(s) as respects liability arising out of action performed by or on behalf of the contractor, products and completed operations of the contractor, premises owned, occupied or used by the contractor, or automobiles owned, leased or borrowed by the contractor. The coverage shall contain no special limitations on the scope of protection afforded to the City. 355 HB Insurance Matrix_revised 4-7-16 (2).xlsx 4 of 4 Minimum Insurance Requirements Professional Liability Design Professionals: Professional service contractors who contract with the City and/or provide architectural and/or engineering services to the City. Professional Services: Services that involve the exercise of professional discretion and independent judgment based on an advanced or specialized knowledge, expertise or training gained by formal studies or experience or services which are not readily or efficiently procured by competitive bidding pursuant to HB Muni Code 3.02. Services includes but is not limited to those services provided by appraisers, architects, attorneys, engineers, instructors, insurance advisors, physicians and other specialized consultants. CITY OF HUNTINGTON BEACH INSURANCE REQUIREMENTS Huntington Beach City Council Resolution No. 2008-63 requires submittal of certificates of insurance evidencing the following minimum limits with a California admitted carrier with a current A.M. Best’s Rating of no less than A:VII. Any deductible other than those allowed in this matrix, self-insured retentions or similar forms of coverage limitations or modifications must be approved by the Risk Manager and City Attorney of the City of Huntington Beach. NOTE: Waivers and / or modifications are discouraged and will be considered only under extraordinary circumstances. 4) The reporting of circumstances or incidents that might give rise to future claims. Vendor Type Claims made policies are acceptable if the policy further provides that: Minimum of $1,000,000 per occurrence and in the aggregate. Allows up to $10,000 deductible. 1) The policy retroactive date coincides with or precedes the professional services contractor’s start of work (including subsequent policies purchased as renewals or replacements). 2) The professional services contractor will make every effort to maintain similar insurance during the required extended period of coverage following project completion, including the requirement of adding all additional insureds. 3) If insurance is terminated for any reason, professional services contractor agrees to purchase an extended reporting provision of at least two (2) years to report claims arising from work performed in connection with this agreement or permit. 356 APPENDIX D Caltrans Local Area Procedures Manual (January 2020) Link to Manual: https://dot.ca.gov/-/media/dot-media/programs/local- assistance/documents/lapm/lapm.pdf Required forms start on next page. 357 Local Assistance Procedures Manual EXHIBIT 10-B Suggested Consultant Evaluation Sheet EXHIBIT 10-B SUGGESTED CONSULTANT EVALUATION SHEET * CONSULTANT/FIRM NAME: Criteria Max Points Rating Understanding of the work to be done 25 Experience with similar kinds of work 20 Quality of staff for work to be done 15 Capability of developing innovative or advanced techniques 10 Familiarity with state and federal procedures 10 Financial responsibility 10 Demonstrated Technical Ability 10 Total 100 Evaluator Contract Office Print Name: Initials: Signature: Date: Date: *Notes: 1. To maintain the integrity of a competitive negotiation/qualifications based selection procurement, the total of all allowable non-qualifications based evaluation criterion (such as local presence or DBE participation) cannot exceed ten (10) percent of the total evaluation criteria. The ten percent limitation applies only to non- qualifications based evaluation criterion and should not be considered as a limitation for specific DBE contract goals established by a contracting agency in accordance with its approved DBE program. (see http://www.fhwa.dot.gov/programadmin/172qa_07.cfm). 2. For projects other than “Architectural & Engineering” services, as defined in Section 10.1, cost is one of the criteria, or may be the sole criterion. DBE participation by the consultant shall not be used as one of the criteria listed above. 3. The evaluation criteria and suggested maximum points shown above are not mandatory, but are recommended in the interest of maintaining consistency among the hundreds of agencies utilizing federal or state funds. 4. The evaluation criteria and weighted values must be identified in the RFP. If the RFP has different evaluation criteria or weighted values then the information above would have to be changed to match. The Contract Office is to initial and date in the space provided to verify that the criteria and weighted values used in the evaluation sheet are appropriate and that the sheet has been completed correctly. 5. Caltrans participation on the interview panel does not relieve the local agency of its responsibility to ensure that proper procurement procedures are followed and requirements are met. Distribution: Local Agency Project Files Page 1 of 1 Last Updated February 12, 2015 358 Local Assistance Procedures Manual EXHIBIT 10-H1 Cost Proposal EXHIBIT 10-H1 COST PROPOSAL Page 1 of 3 COST-PLUS-FIXED FEE OR LUMP SUM OR FIRM FIXED PRICE CONTRACTS (DESIGN, ENGINEERING AND ENVIRONMENTAL STUDIES) Note: Mark-ups are Not Allowed ☐Prime Consultant ☐ Subconsultant ☐ 2nd Tier Subconsultant Consultant __________________________________________________________ Project No. _______________________ Contract No. ____________________ Date ____________________ DIRECT LABOR Classification/Title Name Hours Actual Hourly Rate Total ____________________________ ____________________________ ____________________________ ____________________________ ________ ________ ________ ________ LABOR COSTS a)Subtotal Direct Labor Costs b)Anticipated Salary Increases (see page 2 for calculation) _______________ _______________ c) TOTAL DIRECT LABOR COSTS [(a) + (b)] _______________ INDIRECT COSTS d)Fringe Benefits (Rate: _____ ) f)Overhead (Rate: _____ ) e)Total Fringe Benefits [(c) x (d)] _______________ g)Overhead [(c) x (f)] _______________ h) General and Administrative (Rate: ___ __ ) i) Gen & Admin [(c) x (h)] _______________ FIXED FEE j) TOTAL INDIRECT COSTS [(e) + (g) + (i)] _______________ k) TOTAL FIXED FEE [(c) + (j)] x fixed fee ______ ] ______________ l)CONSULTANT’S OTHER DIRECT COSTS (ODC) – ITEMIZE (Add additional pages if necessary) Description of Item Quantity Unit Unit Cost Total l) TOTAL OTHER DIRECT COSTS m)SUBCONSULTANTS’ COSTS (Add additional pages if necessary) Subconsultant 1: Subconsultant 2: Subconsultant 3: Subconsultant 4: m) TOTAL SUBCONSULTANTS’ COSTS n) TOTAL OTHER DIRECT COSTS INCLUDING SUBCONSULTANTS [(l)+(m)] ___________________ TOTAL COST [(c) + (j) + (k) + (n)] _____________________ NOTES: 1.Key personnel must be marked with an asterisk (*) and employees that are subject to prevailing wage requirements must be marked with two asterisks (**). All costs must comply with the Federal cost principles. Subconsultants will provide their own cost proposals. 2.The cost proposal format shall not be amended. Indirect cost rates shall be updated on an annual basis in accordance with the consultant’s annual accounting period and established by a cognizant agency or accepted by Caltrans. 3.Anticipated salary increases calculation (page 2) must accompany. Page 1 of 9 January 2020 359 Local Assistance Procedures Manual EXHIBIT 1 0-H1 Cost Proposal EXHIBIT 10-H 1 COST PROPOSAL Page 2 of 3 COST-PLUS-FIXED FEE OR LUMP SUM OR FIRM FIXED PRICE CONTRACTS (CALCULATIONS FOR ANTICIPATED SALARY INCREASES) 1.Calculate Average Hourly Rate for 1st year of the contract (Direct Labor Subtotal divided by total hours) Direct Labor Total Hours per Avg 5Year Subtotal per Cost Cost Proposal Hourly Contract Proposal Rate Duration = $250,000.00 500 $50.00 Year 1 Avg Hourly Rate 2.Calculate hourly rate for all years (Increase the Average Hourly Rate for a year by proposed escalation%) Avg Hourly Rate Proposed Escalation Year 1 $50.00 +2%= $51.00 Year 2 Avg Hourly Rate Year 2 $51.00 +2%= $52.02 Year 3 Avg Hourly Rate Year 3 $52.02 +2%= $53.06 Year 4 Avg Hourly Rate Year 4 $53.06 +2%= $54.12 Year 5 Avg Hourly Rate 3.Calculate estimated hours per year (Multiply estimate% each year by total hours) Estimated % Completed Total Hours per Cost Total Hours per Each Year Proposal Year Year 1 20.0% 5000 = 1000 Estimated Hours Year 1 Year 2 400% 5000 = 2000 Estimated Hours Year 2 Year 3 15.0% 5000 = 750 Estimated Hours Year 3 Year 4 15.0% 5000 = 750 Estimated Hours Year 4 Years 100% 5000 = 500 Estimated Hours Year 5 Total 100% Total = 5000 4.Calculate Total Costs including Escalation (Multiply Average Hourly Rate by the number of hours) Avg Hourly Rate Estimated hours Cost per (calculated above) (calculated above) Year Year 1 $50.00 1000 $50,000.00 Estimated Hours Year 1 = Year 2 $51.00 2000 $102,000.00 Estimated Hou rs Year 2 = Year 3 $52.02 750 $39,015.00 Estimated Hours Year 3 = Year 4 $53.06 750 $39,795.30 Estimated Hou rs Year 4 = Years $54.12 500 = $27,060.80 Estimated Hours Year 5 Total Direct Labor Cost with Escalation $257,871.10 = Direct Labor Subtotal before Escalation = $250,000.00 Estimated total of Direct Labor Salary Transfer to Page 1 = Increase $7,871.10 NOTES: 1.This is not the only way to estimate salary increases. Other methods will be accepted if they clearly indicate the %increase, the # of years of the contract, and a breakdown of the labor to be performed each year. 2.An estimation that is based on direct labor multiplied by salary increase % multiplied by the# of years is not acceptable.(i e. $250,000 x 2% x 5 yrs= $25,000 is not an acceptable methodology) 3.This assumes that one year will be worked at the rate on the cost proposal before salary increases are granted. 4.Calculations for anticipated salary escalation must be provided. Page 2 of 9 January 2020 360 _ Local Assistance Procedures Manual EXHIBIT 10-H1 Cost Proposal EXHIBIT 10-H 1 COST PROPOSAL Page 3 of 3 Certification of Direct Costs: I, the undersigned, certify to the best of my knowledge and belief that all direct costs identified on the cost proposal{s) in this contract are actual, reasonable, allowable, and allocable to the contract in accordance with the contract terms and the following requirements: 1. Generally Accepted Accounting Principles {GAAP) 2. Terms and conditions of the contract 3. Title 23 United States Code Section 112 -Letting of Contracts 4. 48 Code of Federal Regulations Part 31 -Contract Cost Principles and Procedures 5. 23 Code of Federal Regulations Part 172 -Procurement, Management, and Administration of Engineering and Design Related Service 6. 48 Code of Federal Regulations Part 9904 - Cost Accounting Standards Board {when applicable) All costs must be applied consistently and fairly to all contracts. All documentation of compliance must be retained in the project files and be in compliance with applicable federal and state requirements. Costs that are noncom pliant with the federal and state requirements are not eligible for reimbursement. Local governments are responsible for applying only cognizant agency approved or Caltrans accepted Indirect Cost Rate{s). Prime Consultant or Subconsultant Certifying: Name: ______________ _ Title*: Signature: ____ _ _ ____ __ ____ _ Date of Certification {mm/dd/yyyy): _ Email: ______ ______ __ _ Phone Number: Address: ________________________________ _ *An individual executive or financial officer of the consultant's or subconsultant's organization at a level no lower than a Vice President or a Chief Financial Officer, or equivalent, who has authority to represent the financial information utilized to establish the cost proposal for the contract. List services the consultant is providinq under the proposed contract: Page 3 of 9 January 2020 361 Local Assistance Procedures Manual EXHIBIT 10-H2 Cost Proposal EXHIBIT 10-H2 COST PROPOSAL Page 1 of3 SPECIFIC RATE OF COMPENSATION (USE FOR ON-CALL OR AS-NEEDED CONTRACTS) (CONSTRUCTION ENGINEERING AND INSPECTION CONTRACTS) Note: Mark-ups are Not Allowed Consultant _________________ _ D Prime Consultant D Subconsultant D 2nd Tier Subconsultant Project No. _________ _ Contract No. --------Participation Amount $ ________ _ Date ---- For Combined Rate Fringe Benefit% + General &Administrative% = Combined ICR% OR For Home Office Rate Fringe Benefit % + General &Administrative% = Home Office ICR% For Field Office Rate Frinqe Benefit % + General &Administrative% = Field Office ICR% = Fee % BILLING INFORMATION CALCULATION INFORMATION Name/Job Title/Classification 1 Hourly Billing Rates2 Str aight 3 OT(1.5x) OT(2x) Effective Date of Hourly Rate From To Actual or Avg. Hourly Rate4 % or$ Increase Hourly Range -for Classifications Only John Doe -Project Manager* Civil Engineer II $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 01/01/2016 01/01/2017 01/01/2018 12/31/2016 12/31/2017 12/31/2018 $0.00 $0.00 $0.00 0.0% 0.0% Not Applicable Sue Jones-Construction Engineeri1nspector Engineer I $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 01/01/2016 01/01/2017 01/01/2018 12/31/2016 12/31/2017 12/31/2018 $0.00 $0.00 $0.00 0.0% 0.0% Not Applicable Buddy Black -Claims Engineer Engineer Ill Land Surveyor ** $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 01/01/2016 01/01/2017 01/01/2018 01/01/2016 01/01/2017 01/01/2018 12/31/2016 12/31/2017 12/31/2018 12/31/2016 12/31/2017 12/31/2018 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0.0% 0.0% 0.0% 0.0% Not Applicable $00-$00 $00-$00 $00-$00 Technician $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 01/01/2016 01/01/2017 01/01/2018 12/31/2016 12/31/2017 12/31/2018 $0.00 $0.00 $0.00 0.0% 0.0% $00-$00 $00-$00 $00-$00 (Add pages as necessary) Page 4 of 9 January 2020 362 Local Assistance Procedures Manual EXHIBIT 10-H2 Cost Proposal NOTES: 1. Key personnel must be marked with an asterisk (*) and employees that are subject to prevailing wage requirements must be marked with two asterisks (**).All costs must comply with the Federal cost principles. Subconsultants will provide their own cost proposals. 2. The cost proposal format shall not be amended. 3. Billing rate= actual hourly rate * (1 + ICR) * (1 + Fee). Indirect cost rates shall be updated on an annual basis in accordance with the consultants annual accounting period and established by a cognizant agency or accepted by Caltrans. All costs must comply with the Federal cost principles for reimbursement. 4. For named employees and key personnel enter the actual hourly rate. For classifications only, enter the Average Hourly Rate for that classification. EXHIBIT 10-H2 COST PROPOSAL Page2ot3 SPECIFIC RATE OF COMPENSATION (USE FOR ON-CALL OR AS-NEEDED CONTRACTS) (CONSTRUCTION ENGINEERING AND INSPECTION CONTRACTS) Consultant __________________ _ □ Prime Consultant □ Subconsultant Project No. __________ _ Contract No. -----------Date ________ _ SCHEDULE OF OTHER DIRECT COST ITEMS (Add additional pages as necessary) Description of Item Quantity Unit Unit Cost Total Subconsultant 1: Subconsultant 2: Subconsultant 3: Subconsultant 4: Subconsultant 5: Note: Add additional pages if necessary. NOTES: 1. List other direct cost items with estimated costs. These costs should be competitive in their respective industries and supported with appropriate documentation. 2. Proposed ODC items should be consistently billed regardless of client and contract type. 3. Items when incurred for the same purpose, in like circumstance, should not be included in any indirect cost pool or in the overhead rate. 4. Items such as special tooling, will be reimbursed at actual cost with supporting documentation (invoice). 5. Items listed above that would be considered "tools of the trade" are not reimbursable as other direct cost 6. Travel related costs should be pre-approved by the contracting agency and shall not exceed current State Department of Personnel Administration rules. Page 5 of 9 January 2020 363 Local Assistance Procedures Manual EXHIBIT 10-H2 Cost Proposal 7. If mileage is claimed, the rate should be properly supported by the consultant's calculation of their actual costs for company vehicles. In addition, the miles claimed should be supported by mileage logs. 8. If a consultant proposes rental costs for a vehicle, the company must demonstrate that this is its standard procedure for all of their contracts and that they do not own any vehicles that could be used for the same purpose. 9. The cost proposal format shall not be amended. All costs must comply with the Federal cost principles. 10. Add additional pages if necessary. 11. Subconsultants must provide their own cost proposals. Page 6 of 9 January 2020 364 Local Assistance Procedures Manual EXHIBIT 10-H2 Cost Proposal EXHIBIT 10-H2 COST PROPOSAL Page 3 of 3 Certification of Direct Costs: I, the undersigned, certify to the best of my knowledge and belief that all direct costs identified on the cost proposal(s) in this contract are actual, reasonable, allowable, and allocable to the contract in accordance with the contract terms and the following requirements: 7. Generally Accepted Accounting Principles (GAAP) 8. Terms and conditions of the contract 9. Title 23 United States Code Section 112 -Letting of Contracts 10. 48 Code of Federal Regulations Part 31 -Contract Cost Principles and Procedures 11. 23 Code of Federal Regulations Part 172 -Procurement, Management, and Administration of Engineering and Design Related Service 12 . 48 Code of Federal Regulations Part 9904 -Cost Accounting Standards Board (when applicable) All costs must be applied consistently and fair1y to all contracts. All documentation of compliance must be retained in the project files and be in compliance with applicable federal and state requirements. Costs that are nonc ompliant with the federal and state requirements are not eligible for reimbursement. Prime Consultant or Subconsultant Certifying: Name: ______________ _ Title*: ______________ _ Signature�: _____________ _ Date of Certification (mm/dd/yyyy): Email: ______________ _ Phone Number: ___________ _ Address: ________________________________ _ * An individual executive or financial officer of the consultant's or subconsultant's organization at a level no lower than a Vice President or a Chief Financial Officer, or equivalent, who has authority to represent the financial information utilized to establish the cost proposal for the contract. List services the consultant is providing under the proposed contract: Page 7 of 9 January 2020 365 Local Assistance Procedures Manual EXHBIT 10-H3 Cost Proposal EXHIBIT 10-HJ COST PROPOSAL Page 1 of 2 COST PER UNIT OF WORK CONTRACTS (GEOTECHNICAL AND MATERIAL TESTING) Note: Mark-ups are Not Allowed □ Prime Consultant □ Subconsultant □ 2nd Tier Subconsultant Consultant __________________ _ Project No. _________ _ Contract No. ---------Date ------- Unit/Item of Work: (Example: Log of Test Boring for Soils Report, or ADL Testing for Hazardous Waste Material Study} Include as many Items as necessary. DIRECT LABOR Hours Billing Hourly Rate {$) Total{$) Professional {Classification)* Sub-professional/Technical** EQUIPMENT 1 {with Operator) EQUIPMENT 2 {with Operator) Consultant's Other Direct Costs (ODC)-Itemize: Description of Item Quantity Unit Unit Cost Total Subconsultant 1: Subconsultant 2: Subconsultant 3: Subconsultant 4: Subconsultant 5: Nole: Attach addtllonal pages if necessary. TOTAL COST PER UNIT OF WORK NOTES: 1 . Key personnel must be marked with an asterisk (*) and employees that are subject to prevailing wage requirements must be marked with two asterisks (**). All costs must comply with the Federal cost principles. Subconsultants will provide their own cost proposals. The cost proposal format shall not be amended. 2. Hourly billing rates should include prevailing wage rates and be consistent with publicly advertised rates charged to all clients (Commercial, Private or Public). 3. Mobilization/De-mobilization is based on site location and number and frequency of tests/items. 4. ODC items shall be based on actual costs and supported by historical data and other documentation. 5. ODC items that would be considered "tools of the trade' are not reimbursable. 6. Billing Hourly Rates must be actual, allowable, and reasonable. Page 8 of 9 January 2020 366 _ _ Local Assistance Procedures Manual EXHBIT 10-H3 Cost Proposal EXHIBIT 10-H3 COST PROPOSAL Page 2 of 2 Certification of Direct Costs: I, the undersigned, certify to the best of my knowledge and belief that all direct costs identified on the cost proposal{s) in this contract are actual, reasonable, allowable, and allocable to the contract in accordance with the contract terms and the following requirements: 13. Generally Accepted Accounting Principles {GAAP) 14. Terms and conditions of the contract 15. Title 23 United States Code Section 112 -Letting of Contracts 16. 48 Code of Federal Regulations Part 31 -Contract Cost Principles and Procedures 17. 23 Code of Federal Regulations Part 172 -Procurement, Management, and Administration of Engineering and Design Related Service 18. 48 Code of Federal Regulation Part 9904 -Cost Accounting Standards Board {when applicable) All costs must be applied consistently and fair1y to all contracts. All documentation of compliance must be retained in the project files and be in compliance with applicable federal and state requirements. Costs that are nonc ompliant with the federal and state requirements are not eligible for reimbursement. Prime Consultant or Subconsultant Certifying: Name: ______________ _ Title*: ______________ _ Signature�: _____________ _ Date of Certification {mm/dd/yyyy...._____ : _ Email: ______________ Phone Number,_,_: ___________ Address: ________________________________ _ * An individual executive or financial officer of the consultant's or subconsultant's organization at a level no lower than a Vice President or a Chief Financial Officer, or equivalent, who has authority to represent the financial information utilized to establish the cost proposal for the contract. List services the consultant is providinq under the proposed contract: Page 9 of 9 January 2020 367 I Local Assistance Procedures Manual EXHBIT 10-1 Notice to Proposers DBE Information EXHIBIT 10-1 NOTICE TO PROPOSERS DBE INFORMATION (Federally funded projects only) The Agency has established a DBE goal for this Contract of _____ 1. 2. 3. 4. TERMS AS USED IN THIS DOCUMENT •The term "Disadvantaged Business Enterprise" or "DBE" means a for-profit small business concern owned and controlled by a socially and economically disadvantaged person(s) as defined in Title 49, Code of Federal Regulations (CFR), Part 26.5. •The term "Agreement" also means "Contract." •Agency also means the local entity entering into this contract with the Contractor or Consultant. •The term "Small Business" or "SB" is as defined in 49 CFR 26.65. AUTHORITY AND RESPONSIBILITY A.DBEs and other small businesses are strongly encouraged to participate in the performance of Contracts financed in whole or in part with federal funds (See 49 CFR 26, "Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs"). The Consultant must ensure that DBEs and other small businesses have the opportunity to participate in the performance of the work that is the subject of this solicitation and should take all necessary and reasonable steps for this assurance. The proposer must not discriminate on the basis of race, color, national origin, or sex in the award and performance of subcontracts. B.Proposers are encouraged to use services offered by financial institutions owned and controlled by DBEs. SUBMISSION OF DBE INFORMATION If there is a DBE goal on the contract, Exhibit 10-01 Consultant Proposal DBE Commitment must be included in the Proposal. In order for a proposer to be considered responsible and responsive, the proposer must make good faith efforts to meet the goal established for the contract. If the goal is not met, the proposer must document adequate good faith efforts. All DBE participation will be counted towards meeting the contract goal; therefore, all DBE participation shall be collected and reported. Exhibit 10-02 Consultant Contract DBE Information must be included in best qualified consultant's executed consultant contract. Even if no DBE participation will be reported, the successful proposer must execute and return the form. DBE PARTICIPATION GENERAL INFORMATION It is the proposer's responsibility to be fully informed regarding the requirements of 49 CFR, Part 26, and the Department's DBE program developed pursuant to the regulations. Particular attention is directed to the following: A.A DBE must be a small business firm defined pursuant to 13 CFR 121 and be certified through the California Unified Certification Program (CUCP). B.A certified DBE may participate as a prime consultant, subconsultant, joint venture partner, as a vendor of material or supplies, or as a trucking company. C.A DBE proposer not proposing as a joint venture with a non-DBE, will be required to document one or a combination of the following: 1.The proposer is a DBE and will meet the goal by performing work with its own forces. 2.The proposer will meet the goal through work performed by DBE subconsultants, suppliers or trucking companies. 3.The proposer, prior to proposing, made adequate good faith efforts to meet the goal. Page 1 of 2 January 2020 368 Local Assistance Procedures Manual EXHBIT 10-1 Notice to Proposers DBE Information D. A DBE joint venture partner must be responsible for specific contract items of work or clearly defined portions thereof. Responsibility means actually performing, managing, and supervising the work with its own forces. The DBE joint venture partner must share in the capital contribution, control, management, risks and profits of the joint venture commensurate with its ownership interest. E. A DBE must perform a commercially useful function pursuant to 49 CFR 26.55, that is, a DBE firm must be responsible for the execution of a distinct element of the work and must carry out its responsibility by actually performing, managing and supervising the work. F. The proposer shall list only one subconsultant for each portion of work as defined in their proposal and all DBE subconsultants should be listed in the bid/cost proposal list of subconsultants. G. A prime consultant who is a certified DBE is eligible to claim all of the work in the Contract toward the DBE participation except that portion of the work to be performed by non-DBE subconsultants. 5. RESOURCES A. The CUCP database includes the certified DBEs from all certifying agencies participating in the CUCP. If you believe a firm is certified that cannot be located on the database, please contact the Caltrans Office of Certification toll free number 1-866-810-6346 for assistance. B. Access the CUCP database from the Department of Transportation, Office of Civil Rights website 1. Click on the link titled Disadvantaged Business Enterprise; 2. Click on Search for a DBE Firm link; 3. Click on Access to the DBE Query Form located on the first line in the center of the page. Searches can be performed by one or more criteria. Follow instructions on the screen. 6. MATERIALS OR SUPPLIES PURCHASED FROM DBES COUNT TOWARDS THE DBE GOAL UNDER THE FOLLOWING CONDITIONS: A. If the materials or supplies are obtained from a DBE manufacturer, count 100 percent of the cost of the materials or supplies. A DBE manufacturer is a firm that operates or maintains a factory, or establishment that produces on the premises the materials, supplies, articles, or equipment required under the Contract and of the general character described by the specifications. B. If the materials or supplies purchased from a DBE regular dealer, count 60 percent of the cost of the materials or supplies. A DBE regular dealer is a firm that owns, operates or maintains a store, warehouse, or other establishment in which the materials, supplies, articles or equipment of the general character described by the specifications and required under the Contract are bought, kept in stock, and regularly sold or leased to the public in the usual course of business. To be a DBE regular dealer, the firm must be an established, regular business that engages, as its principal business and under its own name, in the purchase and sale or lease of the products in question. A person may be a DBE regular dealer in such bulk items as petroleum products, steel, cement, gravel, stone or asphalt without owning, operating or maintaining a place of business provided in this section. C. If the person both owns and operates distribution equipment for the products, any supplementing of regular dealers' own distribution equipment shall be, by a long-term lease agreement and not an ad hoc or Agreement-by-Agreement basis. Packagers, brokers, manufacturers' representatives, or other persons who arrange or expedite transactions are not DBE regular dealers within the meaning of this section. D. Materials or supplies purchased from a DBE, which is neither a manufacturer nor a regular dealer, will be limited to the entire amount of fees or commissions charged for assistance in the procurement of the materials and supplies, or fees or transportation charges for the delivery of materials or supplies required on the job site, provided the fees are reasonable and not excessive as compared with fees charged for similar services. Page 2 of 2 January 2020 369 Local Assistance Procedures Manual Exhibit 10-K Consultant Annual Certification of Indirect Costs and Financial Management System EXHIBIT 10-K CONSULTANT ANNUAL CERTIFICATION OF INDIRECT COSTS AND FINANCIAL MANAGEMENT SYSTEM (Note: If a Safe Harbor Indirect Cost Rate is approved, this form is not required.) Consultant’s Full Legal Name: Important: Consultant means the individual or consultant providing engineering and design related services as a party of a contract with a recipient or sub-recipient of Federal assistance. Therefore, the Indirect Cost Rate(s) shall not be combined with its parent company or subsidiaries. Indirect Cost Rate: Combined Rate % OR Home Office Rate % and Field Office Rate (if applicable) % Facilities Capital Cost of Money % (if applicable) Fiscal period * * Fiscal period is annual one year applicable accounting period that the Indirect Cost Rate was developed (not the contract period). The Indirect Cost Rate is based on the consultant’s one-year applicable accounting period for which financial statements are regularly prepared by the consultant. I have reviewed the proposal to establish an Indirect Cost Rate(s) for the fiscal period as specified above and have determined to the best of my knowledge and belief that: • All costs included in the cost proposal to establish the indirect cost rate(s) are allowable in accordance with the cost principles of the Federal Acquisition Regulation (FAR) 48, Code of Federal Regulations (CFR), Chapter 1, Part 31 (48 CFR Part 31); • The cost proposal does not include any costs which are expressly unallowable under the cost principles of 48 CFR Part 31; • The accounting treatment and billing of prevailing wage delta costs are consistent with our prevailing wage policy as either direct labor, indirect costs, or other direct costs on all federally- funded A&E Consultant Contracts. • All known material transactions or events that have occurred subsequent to year-end affecting the consultant’s ownership, organization, and indirect cost rates have been disclosed as of the date of this certification. I am providing the required and applicable documents as instructed on Exhibit 10-A. Financial Management System: Our labor charging, job costing, and accounting systems meet the standards for financial reporting, accounting records, and internal control adequate to demonstrate that costs claimed have been incurred, appropriately accounted for, are allocable to the contract, and comply with the federal requirements as set forth in Title 23 United States Code (U.S.C.) Section 112(b)(2); 48 CFR Part 31.201-2(d); 23 CFR, Chapter 1, Part 172.11(a)(2); and all applicable state and federal rules and regulations. Our financial management system has the following attributes: • Account numbers identifying allowable direct, indirect, and unallowable cost accounts; • Ability to accumulate and segregate allowable direct, indirect, and unallowable costs into separate cost Page 1 of 2 March 2018 370 Local Assistance Procedures Manual Exhibit 10-K Consultant Annual Certification of Indirect Costs and Financial Management System accounts; • Ability to accumulate and segregate allowable direct costs by project, contract and type of cost; • Internal controls to maintain integrity of financial management system; • Ability to account and record costs consistently and to ensure costs billed are in compliance with FAR; • Ability to ensure and demonstrate costs billed reconcile to general ledgers and job costing system; and • Ability to ensure costs are in compliance with contract terms and federal and state requirement Cost Reimbursements on Contracts: I also understand that failure to comply with 48 CFR Part 16.301-3 or knowingly charge unallowable costs to Federal-Aid Highway Program (FAHP) contracts may result in possible penalties and sanctions as provided by the following: • Sanctions and Penalties -23 CFR Part 172.11(c)(4) • False Claims Act -Title 31 U.S.C. Sections 3729-3733 • Statements or entries generally -Title 18 U.S.C. Section 1001 • Major Fraud Act -Title 18 U.S.C. Section 1031 All A&E Contract Information: • Total participation amount $___________________ on all State and FAHP contracts for Architectural & Engineering services that the consultant received in the last three fiscal periods. • The number of states in which the consultant does business is . • Years of consultant’s experience with 48 CFR Part 31 is . • Audit history of the consultant’s current and prior years (if applicable) ☐ Cognizant ICR Audit ☐ Local Gov’t ICR Audit □ Caltrans ICR Audit ☐ Federal Gov’t ICR Audit ☐ CPA ICR Audit I, the undersigned, certify all of the above to the best of my knowledge and belief and that I have reviewed the Indirect Cost Rate Schedule to determine that any costs which are expressly unallowable under the Federal cost principles have been removed and comply with Title 23 U.S.C. Section 112(b)(2), 48 CFR Part 31, 23 CFR Part 172, and all applicable state and federal rules and regulations. I also certify that I understand that all documentation of compliance must be retained by the consultant. I hereby acknowledge that costs that are noncompliant with the federal and state requirements are not eligible for reimbursement and must be returned to Caltrans. Name**: _ Title**: Signature: Date of Certification (mm/dd/yyyy): Email**: Phone Number**: **An individual executive or financial officer of the consultant’s or subconsultant’s organization at a level no lower than a Vice President, a Chief Financial Officer, or equivalent, who has authority to represent the financial information used to establish the indirect cost rate. Note: Both prime and subconsultants as parties of a contract must complete their own Exhibit 10-K forms. Caltrans will not process local agency’s invoices until a complete Exhibit 10-K form is accepted and approved by Caltrans Audits and Investigations. Distribution: 1) Original -Local Agency Project File 2) Copy -Consultant 3) Copy -Caltrans Audits and Investigations Page 2 of 2 March 2018 371 Local Assistance Procedures Manual Exhibit 10-O2 Consultant Contract DBE Commitment EXHIBIT 10-O2 CONSULTANT CONTRACT DBE COMMITMENT 1. Local Agency: 2. Contract DBE Goal: 3. Project Description: 4. Project Location: 5. Consultant's Name: 6. Prime Certified DBE: 7. Total Contract Award Amount: 8. Total Dollar Amount for ALL Subconsultants: 9. Total Number of ALL Subconsultants: 10. Description of Work, Service, or Materials Supplied 11. DBE Certification Number 12. DBE Contact Information 13. DBE Dollar Amount Local Agency to Complete this Section 14. TOTAL CLAIMED DBE PARTICIPATION $ 20. Local Agency Contract Number: 21. Federal-Aid Project Number: 22. Contract Execution Date: Local Agency certifies that all DBE certifications are valid and information on this form is complete and accurate. 23. Local Agency Representative's Signature 24. Date 25. Local Agency Representative's Name 26. Phone 27. Local Agency Representative's Title % IMPORTANT: Identify all DBE firms being claimed for credit, regardless of tier. Written confirmation of each listed DBE is required. 15. Preparer's Signature 16. Date 17. Preparer's Name 18. Phone 19. Preparer's Title DISTRIBUTION: 1. Original – Local Agency 2. Copy – Caltrans District Local Assistance Engineer (DLAE). Failure to submit to DLAE within 30 days of contract execution may result in de-obligation of federal funds on contract. ADA Notice: For individuals with sensory disabilities, this document is available in alternate formats. For information call (916) 654-6410 or TDD (916) 654- 3880 or write Records and Forms Management, 1120 N Street, MS-89, Sacramento, CA 95814. Page 1 of 2 July 23, 2015 372 Local Assistance Procedures Manual Exhibit 10-O2 Consultant Contract DBE Commitment INSTRUCTIONS – CONSULTANT CONTRACT DBE COMMITMENT CONSULTANT SECTION 1. Local Agency -Enter the name of the local or regional agency that is funding the contract. 2. Contract DBE Goal -Enter the contract DBE goal percentage as it appears on the project advertisement. 3. Project Description -Enter the project description as it appears on the project advertisement (Bridge Rehab, Seismic Rehab, Overlay, Widening, etc). 4. Project Location -Enter the project location as it appears on the project advertisement. 5. Consultant’s Name -Enter the consultant’s firm name. 6. Prime Certified DBE - Check box if prime contractor is a certified DBE. 7. Total Contract Award Amount -Enter the total contract award dollar amount for the prime consultant. 8. Total Dollar Amount for ALL Subconsultants – Enter the total dollar amount for all subcontracted consultants. SUM = (DBEs + all Non-DBEs). Do not include the prime consultant information in this count. 9. Total number of ALL subconsultants – Enter the total number of all subcontracted consultants. SUM = (DBEs + all Non-DBEs). Do not include the prime consultant information in this count. 10. Description of Work, Services, or Materials Supplied -Enter description of work, services, or materials to be provided. Indicate all work to be performed by DBEs including work performed by the prime consultant’s own forces, if the prime is a DBE. If 100% of the item is not to be performed or furnished by the DBE, describe the exact portion to be performed or furnished by the DBE. See LAPM Chapter 9 to determine how to count the participation of DBE firms. 11. DBE Certification Number -Enter the DBE’s Certification Identification Number. All DBEs must be certified on the date bids are opened. 12. DBE Contact Information -Enter the name, address, and phone number of all DBE subcontracted consultants. Also, enter the prime consultant’s name and phone number, if the prime is a DBE. 13. DBE Dollar Amount - Enter the subcontracted dollar amount of the work to be performed or service to be provided. Include the prime consultant if the prime is a DBE. See LAPM Chapter 9 for how to count full/partial participation. 14. Total Claimed DBE Participation -$: Enter the total dollar amounts entered in the “DBE Dollar Amount” column. %: Enter the total DBE participation claimed (“Total Participation Dollars Claimed” divided by item “Total Contract Award Amount”). If the total % claimed is less than item “Contract DBE Goal,” an adequately documented Good Faith Effort (GFE) is required (see Exhibit 15-H DBE Information - Good Faith Efforts of the LAPM). 15. Preparer’s Signature -The person completing the DBE commitment form on behalf of the consultant’s firm must sign their name. 16. Date -Enter the date the DBE commitment form is signed by the consultant’s preparer. 17. Preparer’s Name -Enter the name of the person preparing and signing the consultant’s DBE commitment form. 18. Phone -Enter the area code and phone number of the person signing the consultant’s DBE commitment form. 19. Preparer’s Title -Enter the position/title of the person signing the consultant’s DBE commitment form. LOCAL AGENCY SECTION 20. Local Agency Contract Number -Enter the Local Agency contract number or identifier. 21. Federal-Aid Project Number -Enter the Federal-Aid Project Number. 22. Contract Execution Date -Enter the date the contract was executed. 23. Local Agency Representative’s Signature - The person completing this section of the form for the Local Agency must sign their name to certify that the information in this and the Consultant Section of this form is complete and accurate. 24. Date -Enter the date the DBE commitment form is signed by the Local Agency Representative. 25. Local Agency Representative’s Name -Enter the name of the Local Agency Representative certifying the consultant’s DBE commitment form. 26. Phone -Enter the area code and phone number of the person signing the consultant’s DBE commitment form. 27. Local Agency Representative Title -Enter the position/title of the Local Agency Representative certifying the consultant’s DBE commitment form. Page 2 of 2 July 23, 2015 373 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language Exhibit 10-R: A&E BOILERPLATE AGREEMENT LANGUAGE (For Local Assistance Federal-aid Projects) NOTE TO LOCAL AGENCY -BE SURE THAT YOUR LEGAL STAFF REVIEWS AND APPROVES ALL CONSULTANT CONTRACTS BEFORE EXECUTION. THIS AGREEMENT LANGUAGE IS RECOMMENDED LANGUAGE. MODIFY AS RECOMMENDED BY YOUR OWN LEGAL STAFF AND TO FIT YOUR PARTICULAR REQUIREMENTS AND PROJECT. THE FISCAL AND FEDERAL PROVISIONS ARE REQUIRED IN ALL FEDERALLY FUNDED CONTRACTS. THE ORIGINAL INTENT OF THE ARTICLE SHALL REMAIN, IF MODIFIED BY YOUR LEGAL STAFF. This exhibit contains fiscal requirements from 2 CFR 200 and may be used for state-only funded contracts as well. TABLE OF CONTENTS Page ARTICLE I INTRODUCTION..................................................................................................... 3 ARTICLE II CONSULTANT’S REPORTS OR MEETINGS ARTICLE XV PROHIBITION OF EXPENDING LOCAL AGENCY, STATE, OR FEDERAL ....................................................... 4 ARTICLE III STATEMENT OF WORK ...................................................................................... 5 ARTICLE IV PERFORMANCE PERIOD ................................................................................... 6 ARTICLE V ALLOWABLE COSTS AND PAYMENTS ............................................................. 6 ARTICLE VI TERMINATION ................................................................................................... 11 ARTICLE VII COST PRINCIPLES AND ADMINISTRATIVE REQUIREMENTS .................... 11 ARTICLE VIII RETENTION OF RECORD/AUDITS ................................................................ 12 ARTICLE IX AUDIT REVIEW PROCEDURES ....................................................................... 12 ARTICLE X SUBCONTRACTING ........................................................................................... 13 ARTICLE XI EQUIPMENT PURCHASE AND OTHER CAPITAL EXPENDITURES .............. 15 ARTICLE XII STATE PREVAILING WAGE RATES ............................................................... 16 ARTICLE XIII CONFLICT OF INTEREST ............................................................................... 19 ARTICLE XIV REBATES, KICKBACKS OR OTHER UNLAWFUL CONSIDERATION ......... 20 FUNDS FOR LOBBYING ........................................................................................................ 20 ARTICLE XVI NON-DISCRIMINATION CLAUSE AND STATEMENT OF COMPLIANCE .... 20 ARTICLE XVII DEBARMENT AND SUSPENSION CERTIFICATION .................................... 22 ARTICLE XVIII DISADVANTAGED BUSINESS ENTERPRISES (DBE) PARTICIPATION ... 22 ARTICLE XIX INSURANCE .................................................................................................... 26 ARTICLE XX FUNDING REQUIREMENTS ............................................................................ 27 ARTICLE XXI CHANGE IN TERMS ........................................................................................ 27 ARTICLE XXII CONTINGENT FEE ......................................................................................... 27 ARTICLE XXIII DISPUTES ..................................................................................................... 27 Page 1 of 32 September 2020 374 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE XXIV INSPECTION OF WORK ............................................................................... 28 ARTICLE XXV SAFETY .......................................................................................................... 28 ARTICLE XXVI OWNERSHIP OF DATA ................................................................................ 29 ARTICLE XXVII CLAIMS FILED BY LOCAL AGENCY’s CONSTRUCTION CONTRACTOR 29 ARTICLE XXVIII CONFIDENTIALITY OF DATA .................................................................... 30 ARTICLE XXIX NATIONAL LABOR RELATIONS BOARD CERTIFICATION ...................... 30 ARTICLE XXX EVALUATION OF CONSULTANT ................................................................. 30 ARTICLE XXXI PROMPT PAYMENT FROM THE LOCAL AGENCY TO CONSULTANT .... 31 ARTICLE XXXII NOTIFICATION ............................................................................................ 32 ARTICLE XXXIII CONTRACT ................................................................................................. 32 ARTICLE XXXIV SIGNATURES ............................................................................................. 32 Page 2 of 32 September 2020 375 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language B. C. D. E. F. ARTICLE I INTRODUCTION This AGREEMENT is between the following named, hereinafter referred to as, CONSULTANT and the following named, hereinafter referred to as, LOCAL AGENCY: The name of the “CONSULTANT” is as follows: Incorporated in the State of The Project Manager for the “CONSULTANT” will be The name of the “LOCAL AGENCY” is as follows: The Contract Administrator for LOCAL AGENCY will be The work to be performed under this AGREEMENT is described in Article III Statement of Work and the approved CONSULTANT’s Cost Proposal dated . The approved CONSULTANT’s Cost Proposal is attached hereto ( ) and incorporated by reference. If there is any conflict between the approved Cost Proposal and this AGREEMENT, this AGREEMENT shall take precedence. CONSULTANT agrees to the fullest extent permitted by law, to indemnify, protect, defend, and hold harmless LOCAL AGENCY, its officers, officials, agents, employees and volunteers from and against any and all claims, damages, demands, liability, costs, losses and expenses, including without limitation, court costs and reasonable attorneys’ and expert witness fees, arising out of any failure to comply with applicable law, any injury to or death of any person(s), damage to property, loss of use of property, economic loss or otherwise arising out of the performance of the work described herein, to the extent caused by a negligent act or negligent failure to act, errors, omissions, recklessness or willful misconduct incident to the performance of this AGREEMENT on the part of CONSULTANT, except such loss or damage which was caused by the sole negligence, or willful misconduct of LOCAL AGENCY, as determined by a Court of competent jurisdiction. The provisions of this section shall survive termination or suspension of this AGREEMENT. CONSULTANT in the performance of this AGREEMENT, shall act in an independent capacity. It is understood and agreed that CONSULTANT (including CONSULTANT's employees) is an independent contractor and that no relationship of employer-employee exists between the Parties hereto. CONSULTANT's assigned personnel shall not be entitled to any benefits payable to employees of City. LOCAL AGENCY is not required to make any deductions or withholdings from the compensation payable to CONSULTANT under the provisions of the AGREEMENT, and is not required to issue W-2 Forms for income and employment tax purposes for any of CONSULTANT's assigned personnel. CONSULTANT, in the performance of its obligation hereunder, is only subject to the control or direction of the LOCAL AGENCY as to the designation of tasks to be performed and the results to be accomplished. Any third party person(s) employed by CONSULTANT shall be entirely and exclusively under the direction, supervision, and control of CONSULTANT. CONSULTANT hereby indemnifies and holds LOCAL AGENCY harmless from any and all claims that may be made against City based upon any contention by any third party that an employer-employee relationship exists by reason of this AGREEMENT. Page 3 of 32 September 2020 376 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language G. Except as expressly authorized herein, CONSULTANT's obligations under this AGREEMENT are not assignable or transferable, and CONSULTANT shall not subcontract any work, without the prior written approval of the LOCAL AGENCY. However, claims for money due or which become due to CONSULTANT from City under this AGREEMENT may be assigned to a financial institution or to a trustee in bankruptcy, without such approval. Notice of any assignment or transfer whether voluntary or involuntary shall be furnished promptly to the LOCAL AGENCY. H. CONSULTANT shall be as fully responsible to the LOCAL AGENCY for the negligent acts and omissions of its contractors and subcontractors or subconsultants, and of persons either directly or indirectly employed by them, in the same manner as persons directly employed by CONSULTANT. I. No alteration or variation of the terms of this AGREEMENT shall be valid, unless made in writing and signed by the parties authorized to bind the parties; and no oral understanding or agreement not incorporated herein, shall be binding on any of the parties hereto. J. The consideration to be paid to CONSULTANT as provided herein, shall be in compensation for all of CONSULTANT’s expenses incurred in the performance hereof, including travel and per diem, unless otherwise expressly so provided. ARTICLE II CONSULTANT’S REPORTS OR MEETINGS (Choose either Option 1 or Option 2) (Option 1 -Use paragraphs A & B below for standard AGREEMENTs) A. CONSULTANT shall submit progress reports at least once a month. The report should be sufficiently detailed for the LOCAL AGENCY’s Contract Administrator to determine, if CONSULTANT is performing to expectations, or is on schedule; to provide communication of interim findings, and to sufficiently address any difficulties or special problems encountered, so remedies can be developed. B. CONSULTANT’s Project Manager shall meet with LOCAL AGENCY’s Contract Administrator, as needed, to discuss progress on the AGREEMENT. (Option 2 -Use paragraphs A & B below for on-call AGREEMENTs) A. CONSULTANT shall submit progress reports on each specific project in accordance with the Task Order. These reports shall be submitted at least once a month. The report should be sufficiently detailed for LOCAL AGENCY’s Contract Administrator or Project Coordinator to determine, if CONSULTANT is performing to expectations, or is on schedule; to provide communication of interim findings, and to sufficiently address any difficulties or special problems encountered, so remedies can be developed. B. CONSULTANT’s Project Manager shall meet with LOCAL AGENCY’s Contract Administrator or Project Coordinator, as needed, to discuss progress on the project(s). Page 4 of 32 September 2020 377 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE III STATEMENT OF WORK (Insert Appropriate Statement of work including a Description of the Deliverables) in the following sections. If a section does not apply to the AGREEMENT, state “Not Applicable to this AGREEMENT.”) A. CONSULTANT Services Detail based on the services to be furnished should be provided by CONSULTANT. Nature and extent should be verified in the negotiations to make precise statements to eliminate subsequent uncertainties and misunderstandings. Reference to the appropriate standards for design or other standards for work performance stipulated in CONSULTANT AGREEMENT should be included. Describe acceptance criteria, and if the responsible CONSULTANT/engineer shall sign all Plans, Specifications and Estimate (PS&E) and engineering data furnished under the AGREEMENT including registration number. Environmental documents are not considered complete until a Caltrans District Senior Environmental Planner signs the Categorical Exclusion, a Caltrans Deputy District Director signs the Finding of No Significant Impact, or the Caltrans District Director signs the Record of Decision (see LAPM Chapter 6: Environmental Procedures, and the Standard Environmental Reference). B. Right of Way State whether Right of Way requirements are to be determined and shown by CONSULTANT, whether land surveys and computations with metes and bounds descriptions are to be made, and whether Right of Way parcel maps are to be furnished. C. Surveys State whether or not the CONSULTANT has the responsibility for performing preliminary or construction surveys. D. Subsurface Investigations State specifically whether or not CONSULTANT has responsibility for making subsurface investigations. If borings or other specialized services are to be made by others under the supervision of CONSULTANT, appropriate provisions are to be incorporated. Archaeological testing and data recovery guidance can be found in the Standard Environmental Reference. E. Local Agency Obligations All data applicable to the project and in possession of LOCAL AGENCY, another agency, or government agency that are to be made available to CONSULTANT are referred to in the AGREEMENT. Any other assistance or services to be furnished to CONSULTANT are to be stated clearly. F. Conferences, Site Visits, Inspection of Work This AGREEMENT provides for conferences as needed, visits to the site, and inspection of the work by representatives of the LOCAL AGENCY, State, and/or FHWA. Costs incurred by CONSULTANT for meetings, subsequent to the initial meeting shall be included in the fee. G. Checking Shop Drawings For AGREEMENTs requiring the preparation of construction drawings, make provision for checking shop drawings. Payment for checking shop drawings by CONSULTANT may be included in the AGREEMENT fee, or provision may be made for separate payment. H. CONSULTANT Services During Construction Page 5 of 32 September 2020 378 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language The extent, if any of CONSULTANT’s services during the course of construction as material testing, construction surveys. etc., are specified in the AGREEMENT together with the method of payment for such services. I. Documentation and Schedules AGREEMENTs where appropriate, shall provide that CONSULTANT document the results of the work to the satisfaction of LOCAL AGENCY, and if applicable, the State and FHWA. This may include preparation of progress and final reports, plans, specifications and estimates, or similar evidence of attainment of the AGREEMENT objectives. J. Deliverables and Number of Copies The number of copies or documents to be furnished, such as reports, brochures, sets of plans, specifications, or Right of Way parcel maps shall be specified. Provision may be made for payment for additional copies. ARTICLE IV PERFORMANCE PERIOD A time must be set for beginning and ending the work under the AGREEMENT. The time allowed for performing the work is specified; it should be reasonable for the kind and amount of services contemplated; and it is written into the AGREEMENT. If it is desirable that Critical Path Method (CPM) networks, or other types of schedules be prepared by CONSULTANT, they should be identified and incorporated into the AGREEMENT. A. This AGREEMENT shall go into effect on ( ), contingent upon approval by LOCAL AGENCY, and CONSULTANT shall commence work after notification to proceed by LOCAL AGENCY’S Contract Administrator. The AGREEMENT shall end on ( ), unless extended by AGREEMENT amendment. B. CONSULTANT is advised that any recommendation for AGREEMENT award is not binding on LOCAL AGENCY until the AGREEMENT is fully executed and approved by LOCAL AGENCY. Use paragraph C below in addition to paragraphs A & B above for on-call AGREEMENTs. On-call AGREEMENTs shall be 5 years maximum. C. The period of performance for each specific project shall be in accordance with the Task Order for that project. If work on a Task Order is in progress on the expiration date of this AGREEMENT, the terms of the AGREEMENT shall be extended by AGREEMENT amendment prior to the expiration of the contract to cover the time needed to complete the task order in progress only. The maximum term shall not exceed five (5) years. ARTICLE V ALLOWABLE COSTS AND PAYMENTS (Choose either Option 1, 2, 3, or 4) (Option 1 -Use paragraphs A through K below for Cost-Plus-Fixed Fee AGREEMENTs. Use Exhibit 10-H1: Cost Proposal Format) A. The method of payment for this AGREEMENT will be based on actual cost plus a fixed fee. LOCAL AGENCY will reimburse CONSULTANT for actual costs (including labor costs, employee benefits, travel, equipment rental costs, overhead and other direct costs) incurred by CONSULTANT in performance of the work. CONSULTANT will not be reimbursed for actual costs that exceed the estimated wage rates, employee benefits, travel, equipment rental, overhead, and other estimated costs set forth in the approved CONSULTANT’S Cost Proposal, unless additional reimbursement is provided for by AGREEMENT amendment. In no event, will CONSULTANT be reimbursed for overhead costs at a rate that exceeds LOCAL AGENCY’s approved overhead rate set forth in the Page 6 of 32 September 2020 379 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language B. C. D. E. F. G. H. I. J. Cost Proposal. In the event, that LOCAL AGENCY determines that a change to the work from that specified in the Cost Proposal and AGREEMENT is required, the AGREEMENT time or actual costs reimbursable by LOCAL AGENCY shall be adjusted by AGREEMENT amendment to accommodate the changed work. The maximum total cost as specified in Paragraph “I” of this Article shall not be exceeded, unless authorized by AGREEMENT amendment. The indirect cost rate established for this AGREEMENT is extended through the duration of this specific AGREEMENT. CONSULTANT’s agreement to the extension of the 1-year applicable period shall not be a condition or qualification to be considered for the work or AGREEMENT award. In addition to the allowable incurred costs, LOCAL AGENCY will pay CONSULTANT a fixed fee of $( ). The fixed fee is nonadjustable for the term of the AGREEMENT, except in the event of a significant change in the scope of work and such adjustment is made by AGREEMENT amendment. Reimbursement for transportation and subsistence costs shall not exceed the rates specified in the approved Cost Proposal. When milestone cost estimates are included in the approved Cost Proposal, CONSULTANT shall obtain prior written approval for a revised milestone cost estimate from the Contract Administrator before exceeding such cost estimate. Progress payments will be made monthly in arrears based on services provided and allowable incurred costs. A pro rata portion of CONSULTANT’s fixed fee will be included in the monthly progress payments. If CONSULTANT fails to submit the required deliverable items according to the schedule set forth in Article III Statement of Work, LOCAL AGENCY shall have the right to delay payment or terminate this AGREEMENT. No payment will be made prior to approval of any work, nor for any work performed prior to approval of this AGREEMENT. CONSULTANT will be reimbursed promptly according to California Regulations upon receipt by LOCAL AGENCY’s Contract Administrator of itemized invoices in duplicate. Invoices shall be submitted no later than thirty (30) calendar days after the performance of work for which CONSULTANT is billing. Invoices shall detail the work performed on each milestone and each project as applicable. Invoices shall follow the format stipulated for the approved Cost Proposal and shall reference this AGREEMENT number and project title. Final invoice must contain the final cost and all credits due LOCAL AGENCY including any equipment purchased under the provisions of Article XI Equipment Purchase. The final invoice should be submitted within sixty (60) calendar days after completion of CONSULTANT’s work. Invoices shall be mailed to LOCAL AGENCY’s Contract Administrator at the following address: The total amount payable by LOCAL AGENCY including the fixed fee shall not exceed $( ). For personnel subject to prevailing wage rates as described in the California Labor Code, all salary increases, which are the direct result of changes in the prevailing wage rates are reimbursable. Page 7 of 32 September 2020 380 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language (Option 2 -For Cost per Unit of Work AGREEMENTs, replace paragraphs A & B of Option 1 with the following paragraphs A, B, and C and re-letter the remaining paragraphs. Adjust as necessary for work specific to your project. Use Exhibit 10-H3: Cost Proposal Format). A. The method of payment for the following items shall be at the rate specified for each item, as described in this Article. The specified rate shall include full compensation to CONSULTANT for the item as described, including but not limited to, any repairs, maintenance, or insurance, and no further compensation will be allowed therefore. B. The specified rate to be paid for vehicle expense for CONSULTANT’s field personnel shall be $( ) per approved Cost Proposal. This rate shall be for fully equipped vehicle(s) specified in Article III Statement of Work, as applicable. The specified rate to be paid for equipment shall be, as listed in the approved Cost Proposal. C. The method of payment for this AGREEMENT, except those items to be paid for on a specified rate basis, will be based on cost per unit of work. LOCAL AGENCY will reimburse CONSULTANT for actual costs (including labor costs, employee benefits, travel, equipment-rental costs, overhead and other direct costs) incurred by CONSULTANT in performance of the work. CONSULTANT will not be reimbursed for actual costs that exceed the estimated wage rates, employee benefits, travel, equipment rental, overhead and other estimated costs set forth in the approved Cost Proposal, unless additional reimbursement is provided for, by AGREEMENT amendment. In no event, will CONSULTANT be reimbursed for overhead costs at a rate that exceeds LOCAL AGENCY approved overhead rate set forth in the approved Cost Proposal. In the event, LOCAL AGENCY determines that changed work from that specified in the approved Cost Proposal and AGREEMENT is required; the actual costs reimbursable by LOCAL AGENCY may be adjusted by AGREEMENT amendment to accommodate the changed work. The maximum total cost as specified in Paragraph “I,” of this article shall not be exceeded unless authorized by AGREEMENT amendment. (Option 3 -Use paragraphs A through P for Specific Rates of Compensation Agreements [such as on- call Agreements]. This payment method shall only be used when it is not possible at the time of procurement to estimate the extent or duration of the work or to estimate costs with any reasonable degree of accuracy. The specific rates of compensation payment method should be limited to AGREEMENTs or components of AGREEMENTs for specialized or support type services where the CONSULTANT is not in direct control of the number of hours worked, such as construction engineering and inspection. Use Exhibit 10-H2: Cost Proposal Format). A. CONSULTANT will be reimbursed for hours worked at the hourly rates specified in the CONSULTANT’s approved Cost Proposal. The specified hourly rates shall include direct salary costs, employee benefits, prevailing wages, employer payments, overhead, and fee. These rates are not adjustable for the performance period set forth in this AGREEMENT. CONSULTANT will be reimbursed within thirty (30) days upon receipt by LOCAL AGENCY’S Contract Administrator of itemized invoices in duplicate. B. In addition, CONSULTANT will be reimbursed for incurred (actual) direct costs other than salary costs that are in the approved Cost Proposal and identified in the approved Cost Proposal and in the executed Task Order. C. Specific projects will be assigned to CONSULTANT through issuance of Task Orders. Page 8 of 32 September 2020 381 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language D. E. F. G. H. I. J. K. After a project to be performed under this AGREEMENT is identified by LOCAL AGENCY, LOCAL AGENCY will prepare a draft Task Order; less the cost estimate. A draft Task Order will identify the scope of services, expected results, project deliverables, period of performance, project schedule and will designate a LOCAL AGENCY Project Coordinator. The draft Task Order will be delivered to CONSULTANT for review. CONSULTANT shall return the draft Task Order within ten (10) calendar days along with a Cost Estimate, including a written estimate of the number of hours and hourly rates per staff person, any anticipated reimbursable expenses, overhead, fee if any, and total dollar amount. After agreement has been reached on the negotiable items and total cost; the finalized Task Order shall be signed by both LOCAL AGENCY and CONSULTANT. Task Orders may be negotiated for a lump sum (Firm Fixed Price) or for specific rates of compensation, both of which must be based on the labor and other rates set forth in CONSULTANT’s approved Cost Proposal. CONSULTANT shall be responsible for any future adjustments to prevailing wage rates including, but not limited to, base hourly rates and employer payments as determined by the Department of Industrial Relations. CONSULTANT is responsible for paying the appropriate rate, including escalations that take place during the term of the AGREEMENT. (Local Agency to include either (a) or (b) below; delete the other one) (a) Reimbursement for transportation and subsistence costs shall not exceed State rates. (b) Reimbursement for transportation and subsistence costs shall not exceed the rates as specified in the approved Cost Proposal. CONSULTANT will be responsible for transportation and subsistence costs in excess of State rates. When milestone cost estimates are included in the approved Cost Proposal, CONSULTANT shall obtain prior written approval in the form of an AGREEMENT amendment for a revised milestone cost estimate from the Contract Administrator before exceeding such estimate. Progress payments for each Task Order will be made monthly in arrears based on services provided and actual costs incurred. CONSULTANT shall not commence performance of work or services until this AGREEMENT has been approved by LOCAL AGENCY and notification to proceed has been issued by LOCAL AGENCY’S Contract Administrator. No payment will be made prior to approval or for any work performed prior to approval of this AGREEMENT. A Task Order is of no force or effect until returned to LOCAL AGENCY and signed by an authorized representative of LOCAL AGENCY. No expenditures are authorized on a project and work shall not commence until a Task Order for that project has been executed by LOCAL AGENCY. CONSULTANT will be reimbursed within thirty (30) days upon receipt by LOCAL AGENCY’S Contract Administrator of itemized invoices in duplicate. Separate invoices itemizing all costs are required for all work performed under each Task Order. Invoices shall be submitted no later than thirty (30) calendar days after the performance of work for which CONSULTANT is billing, or upon completion of the Task Order. Invoices shall detail the work performed on each milestone, on each project as applicable. Invoices shall follow the format stipulated for the approved Cost Proposal and shall reference this AGREEMENT number, project title and Task Order number. Credits due LOCAL AGENCY that include any equipment purchased under the provisions of Article XI Equipment Purchase, must be reimbursed by CONSULTANT prior to the expiration or termination Page 9 of 32 September 2020 382 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language of this AGREEMENT. Invoices shall be mailed to LOCAL AGENCY’s Contract Administrator at the following address: L. The period of performance for Task Orders shall be in accordance with dates specified in the Task Order. No Task Order will be written which extends beyond the expiration date of this AGREEMENT. M. The total amount payable by LOCAL AGENCY for an individual Task Order shall not exceed the amount agreed to in the Task Order, unless authorized by amendment. N. If CONSULTANT fails to satisfactorily complete a deliverable according to the schedule set forth in a Task Order, no payment will be made until the deliverable has been satisfactorily completed. O. Task Orders may not be used to amend the language (or the terms) of this AGREEMENT nor to exceed the scope of work under this AGREEMENT. P. The total amount payable by LOCAL AGENCY for all Task Orders resulting from this AGREEMENT shall not exceed $ ( ). It is understood and agreed that there is no guarantee, either expressed or implied that this dollar amount will be authorized under this AGREEMENT through Task Orders. (Option 4 -Use paragraphs A through E below for lump sum agreements. Use Exhibit 10-H1: Cost Proposal Format) A. The method of payment for this AGREEMENT will be based on lump sum. The total lump sum price paid to CONSULTANT will include compensation for all work and deliverables, including travel and equipment described in Article III Statement of Work. No additional compensation will be paid to CONSULTANT, unless there is a change in the scope of the work or the scope of the project. In the instance of a change in the scope of work or scope of the project, adjustment to the total lump sum compensation will be negotiated between CONSULTANT and LOCAL AGENCY. Adjustment in the total lump sum compensation will not be effective until authorized by AGREEMENT amendment and approved by LOCAL AGENCY. B. Progress payments may be made monthly in arrears based on the percentage of work completed by CONSULTANT. If CONSULTANT fails to submit the required deliverable items according to the schedule set forth in Article III Statement of Work, LOCAL AGENCY shall have the right to delay payment or terminate this AGREEMENT in accordance with the provisions of Article VI Termination. C. CONSULTANT shall not commence performance of work or services until this AGREEMENT has been approved by LOCAL AGENCY and notification to proceed has been issued by LOCAL AGENCY’S Contract Administrator. No payment will be made prior to approval of any work, or for any work performed prior to approval of this AGREEMENT. D. CONSULTANT will be reimbursed within thirty (30) days upon receipt by LOCAL AGENCY’S Contract Administrator of itemized invoices in duplicate. Invoices shall be submitted no later than thirty (30) calendar days after the performance of work for which CONSULTANT is billing. Invoices shall detail the work performed on each milestone, on each project as applicable. Invoices shall follow the format stipulated for the approved Cost Proposal and shall reference this AGREEMENT Page 10 of 32 September 2020 383 ). Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language number and project title. Final invoice must contain the final cost and all credits due LOCAL AGENCY that include any equipment purchased under the provisions of Article XI Equipment Purchase. The final invoice must be submitted within sixty (60) calendar days after completion of CONSULTANT’s work unless a later date is approved by the LOCAL AGENCY. Invoices shall be mailed to LOCAL AGENCY’s Contract Administrator at the following address: E. The total amount payable by LOCAL AGENCY shall not exceed $( ARTICLE VI TERMINATION A. This AGREEMENT may be terminated by LOCAL AGENCY, provided that LOCAL AGENCY gives not less than thirty (30) calendar days’ written notice (delivered by certified mail, return receipt requested) of intent to terminate. Upon termination, LOCAL AGENCY shall be entitled to all work, including but not limited to, reports, investigations, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date, whether completed or not. B. LOCAL AGENCY may temporarily suspend this AGREEMENT, at no additional cost to LOCAL AGENCY, provided that CONSULTANT is given written notice (delivered by certified mail, return receipt requested) of temporary suspension. If LOCAL AGENCY gives such notice of temporary suspension, CONSULTANT shall immediately suspend its activities under this AGREEMENT. A temporary suspension may be issued concurrent with the notice of termination. C. Notwithstanding any provisions of this AGREEMENT, CONSULTANT shall not be relieved of liability to LOCAL AGENCY for damages sustained by City by virtue of any breach of this AGREEMENT by CONSULTANT, and City may withhold any payments due to CONSULTANT until such time as the exact amount of damages, if any, due City from CONSULTANT is determined. D. In the event of termination, CONSULTANT shall be compensated as provided for in this AGREEMENT. Upon termination, LOCAL AGENCY shall be entitled to all work, including but not limited to, reports, investigations, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date, whether completed or not. ARTICLE VII COST PRINCIPLES AND ADMINISTRATIVE REQUIREMENTS A. The CONSULTANT agrees that 48 CFR Part 31, Contract Cost Principles and Procedures, shall be used to determine the allowability of individual terms of cost. B. The CONSULTANT also agrees to comply with Federal procedures in accordance with 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. C. Any costs for which payment has been made to the CONSULTANT that are determined by subsequent audit to be unallowable under 48 CFR Part 31 or 2 CFR Part 200 are subject to repayment by the CONSULTANT to LOCAL AGENCY. D. When a CONSULTANT or Subconsultant is a Non-Profit Organization or an Institution of Higher Education, the Cost Principles for Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards shall apply. Page 11 of 32 September 2020 384 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE VIII RETENTION OF RECORD/AUDITS For the purpose of determining compliance with Gov. Code § 8546.7, the CONSULTANT, Subconsultants, and LOCAL AGENCY shall maintain all books, documents, papers, accounting records, Independent CPA Audited Indirect Cost Rate workpapers, and other evidence pertaining to the performance of the AGREEMENT including, but not limited to, the costs of administering the AGREEMENT. All parties, including the CONSULTANT’s Independent CPA, shall make such workpapers and materials available at their respective offices at all reasonable times during the AGREEMENT period and for three (3) years from the date of final payment under the AGREEMENT. LOCAL AGENCY, Caltrans Auditor, FHWA, or any duly authorized representative of the Federal government having jurisdiction under Federal laws or regulations (including the basis of Federal funding in whole or in part) shall have access to any books, records, and documents of the CONSULTANT, Subconsultants, and the CONSULTANT’s Independent CPA, that are pertinent to the AGREEMENT for audits, examinations, workpaper review, excerpts, and transactions, and copies thereof shall be furnished if requested without limitation. ARTICLE IX AUDIT REVIEW PROCEDURES A. Any dispute concerning a question of fact arising under an interim or post audit of this AGREEMENT that is not disposed of by AGREEMENT, shall be reviewed by LOCAL AGENCY’S Chief Financial Officer. B. Not later than thirty (30) calendar days after issuance of the final audit report, CONSULTANT may request a review by LOCAL AGENCY’S Chief Financial Officer of unresolved audit issues. The request for review will be submitted in writing. C. Neither the pendency of a dispute nor its consideration by LOCAL AGENCY will excuse CONSULTANT from full and timely performance, in accordance with the terms of this AGREEMENT. D. CONSULTANT and subconsultant AGREEMENTs, including cost proposals and Indirect Cost Rates (ICR), may be subject to audits or reviews such as, but not limited to, an AGREEMENT audit, an incurred cost audit, an ICR Audit, or a CPA ICR audit work paper review. If selected for audit or review, the AGREEMENT, cost proposal and ICR and related work papers, if applicable, will be reviewed to verify compliance with 48 CFR Part 31 and other related laws and regulations. In the instances of a CPA ICR audit work paper review it is CONSULTANT’s responsibility to ensure federal, LOCAL AGENCY, or local government officials are allowed full access to the CPA’s work papers including making copies as necessary. The AGREEMENT, cost proposal, and ICR shall be adjusted by CONSULTANT and approved by LOCAL AGENCY Contract Administrator to conform to the audit or review recommendations. CONSULTANT agrees that individual terms of costs identified in the audit report shall be incorporated into the AGREEMENT by this reference if directed by LOCAL AGENCY at its sole discretion. Refusal by CONSULTANT to incorporate audit or review recommendations, or to ensure that the federal, LOCAL AGENCY or local governments have access to CPA work papers, will be considered a breach of AGREEMENT terms and cause for termination of the AGREEMENT and disallowance of prior reimbursed costs. E. CONSULTANT’s Cost Proposal may be subject to a CPA ICR Audit Work Paper Review and/or audit by the Independent Office of Audits and Investigations (IOAI). IOAI, at its sole discretion, may review and/or audit and approve the CPA ICR documentation. The Cost Proposal shall be adjusted by the CONSULTANT and approved by the LOCAL AGENCY Contract Administrator to conform to the Work Paper Review recommendations included in the management letter or audit recommendations included in the audit report. Refusal by the CONSULTANT to incorporate the Work Paper Review recommendations included in the management letter or audit Page 12 of 32 September 2020 385 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language recommendations included in the audit report will be considered a breach of the AGREEMENT terms and cause for termination of the AGREEMENT and disallowance of prior reimbursed costs. 1. During IOAI’s review of the ICR audit work papers created by the CONSULTANT’s independent CPA, IOAI will work with the CPA and/or CONSULTANT toward a resolution of issues that arise during the review. Each party agrees to use its best efforts to resolve any audit disputes in a timely manner. If IOAI identifies significant issues during the review and is unable to issue a cognizant approval letter, LOCAL AGENCY will reimburse the CONSULTANT at an accepted ICR until a FAR (Federal Acquisition Regulation) compliant ICR {e.g. 48 CFR Part 31; GAGAS (Generally Accepted Auditing Standards); CAS (Cost Accounting Standards), if applicable; in accordance with procedures and guidelines of the American Association of State Highways and Transportation Officials (AASHTO) Audit Guide; and other applicable procedures and guidelines}is received and approved by IOAI. Accepted rates will be as follows: a. If the proposed rate is less than one hundred fifty percent (150%) -the accepted rate reimbursed will be ninety percent (90%) of the proposed rate. b. If the proposed rate is between one hundred fifty percent (150%) and two hundred percent (200%) -the accepted rate will be eighty-five percent (85%) of the proposed rate. c. If the proposed rate is greater than two hundred percent (200%) -the accepted rate will be seventy-five percent (75%) of the proposed rate. 2. If IOAI is unable to issue a cognizant letter per paragraph E.1. above, IOAI may require CONSULTANT to submit a revised independent CPA-audited ICR and audit report within three (3) months of the effective date of the management letter. IOAI will then have up to six (6) months to review the CONSULTANT’s and/or the independent CPA’s revisions. 3. If the CONSULTANT fails to comply with the provisions of this paragraph E, or if IOAI is still unable to issue a cognizant approval letter after the revised independent CPA audited ICR is submitted, overhead cost reimbursement will be limited to the accepted ICR that was established upon initial rejection of the ICR and set forth in paragraph E.1. above for all rendered services. In this event, this accepted ICR will become the actual and final ICR for reimbursement purposes under this AGREEMENT. 4. CONSULTANT may submit to LOCAL AGENCY final invoice only when all of the following items have occurred: (1) IOAI accepts or adjusts the original or revised independent CPA audited ICR; (2) all work under this AGREEMENT has been completed to the satisfaction of LOCAL AGENCY; and, (3) IOAI has issued its final ICR review letter. The CONSULTANT MUST SUBMIT ITS FINAL INVOICE TO LOCAL AGENCY no later than sixty (60) calendar days after occurrence of the last of these items. The accepted ICR will apply to this AGREEMENT and all other agreements executed between LOCAL AGENCY and the CONSULTANT, either as a prime or subconsultant, with the same fiscal period ICR. ARTICLE X SUBCONTRACTING A. Nothing contained in this AGREEMENT or otherwise, shall create any contractual relation between the LOCAL AGENCY and any Subconsultants, and no subagreement shall relieve the CONSULTANT of its responsibilities and obligations hereunder. The CONSULTANT agrees to be Page 13 of 32 September 2020 386 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language as fully responsible to the LOCAL AGENCY for the acts and omissions of its Subconsultants and of persons either directly or indirectly employed by any of them as it is for the acts and omissions of persons directly employed by the CONSULTANT. The CONSULTANT's obligation to pay its Subconsultants is an independent obligation from the LOCAL AGENCY's obligation to make payments to the CONSULTANT. B. The CONSULTANT shall perform the work contemplated with resources available within its own organization and no portion of the work shall be subcontracted without written authorization by the LOCAL AGENCY Contract Administrator, except that which is expressly identified in the CONSULTANT’s approved Cost Proposal. C. Any subagreement entered into as a result of this AGREEMENT, shall contain all the provisions stipulated in this entire AGREEMENT to be applicable to Subconsultants unless otherwise noted. D. CONSULTANT shall pay its Subconsultants within Fifteen (15) calendar days from receipt of each payment made to the CONSULTANT by the LOCAL AGENCY. E. Any substitution of Subconsultants must be approved in writing by the LOCAL AGENCY Contract Administrator in advance of assigning work to a substitute Subconsultant. F. Prompt Progress Payment CONSULTANT or subconsultant shall pay to any subconsultant, not later than fifteen (15) days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed CONSULTANT on account of the work performed by the subconsultants, to the extent of each subconsultant’s interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from CONSULTANT or subconsultant to a subconsultant, CONSULTANT or subconsultant may withhold no more than 150 percent of the disputed amount. Any violation of this requirement shall constitute a cause for disciplinary action and shall subject the licensee to a penalty, payable to the subconsultant, of 2 percent of the amount due per month for every month that payment is not made. In any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees and costs. The sanctions authorized under this requirement shall be separate from, and in addition to, all other remedies, either civil, administrative, or criminal. This clause applies to both DBE and non-DBE subconsultants. G. Prompt Payment of Withheld Funds to Subconsultants The LOCAL AGENCY may hold retainage from CONSULTANT and shall make prompt and regular incremental acceptances of portions, as determined by the LOCAL AGENCY, of the contract work, and pay retainage to CONSULTANT based on these acceptances. The LOCAL AGENCY shall designate one of the methods below in the contract to ensure prompt and full payment of any retainage kept by CONSULTANT or subconsultant to a subconsultant. (Choose either Method 1, Method 2, or Method 3 below and delete the other two.) Method 1: No retainage will be held by the LOCAL AGENCY from progress payments due to CONSULTANT. CONSULTANTS and subconsultants are prohibited from holding retainage from subconsultants. Any delay or postponement of payment may take place only for good cause and with the LOCAL AGENCY’s prior written approval. Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions, and other remedies specified in Section 3321 of the California Civil Code. This requirement shall not be construed to Page 14 of 32 September 2020 387 I Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language limit or impair any contractual, administrative or judicial remedies, otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT, deficient subconsultant performance and/or noncompliance by a subconsultant. This clause applies to both DBE and non-DBE subconsultants. Method 2: No retainage will be held by the LOCAL AGENCY from progress payments due to CONSULTANT. Any retainage kept by CONSULTANT or by a subconsultant must be paid in full to the earning subconsultant within 15 days after the subconsultant’s work is satisfactorily completed. Any delay or postponement of payment may take place only for good cause and with the LOCAL AGENCY’s prior written approval. Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions, and remedies specified in Section 3321 of the California Civil Code. This requirement shall not be construed to limit or impair any contractual, administrative or judicial remedies, otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT, deficient subconsultant performance and/or noncompliance by a subconsultant. This clause applies to both DBE and non-DBE subconsultants. Method 3: The LOCAL AGENCY shall hold retainage from CONSULTANT and shall make prompt and regular incremental acceptances of portions, as determined by the LOCAL AGENCY of the contract work and pay retainage to CONSULTANT based on these acceptances. CONSULTANT or subconsultant shall return all monies withheld in retention from all subconsultants within 15 days after receiving payment for work satisfactorily completed and accepted including incremental acceptances of portions of the contract work by the LOCAL AGENCY. Any delay or postponement of payment may take place only for good cause and with the LOCAL AGENCY’s prior written approval. Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions, and other remedies specified in Section 3321 of the California Civil Code. This requirement shall not be construed to limit or impair any contractual, administrative or judicial remedies otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT; deficient subconsultant performance and/or noncompliance by a subconsultant. This clause applies to both DBE and non-DBE subconsultants. Any violation of these provisions shall subject the violating CONSULTANT or subconsultant to the penalties, sanctions and other remedies specified therein. These requirements shall not be construed to limit or impair any contractual, administrative, or judicial remedies otherwise available to CONSULTANT or subconsultant in the event of a dispute involving late payment or nonpayment by CONSULTANT, deficient subcontract performance, or noncompliance by a subconsultant. ARTICLE XI EQUIPMENT PURCHASE AND OTHER CAPITAL EXPENDITURES A. Prior authorization in writing by LOCAL AGENCY’s Contract Administrator shall be required before CONSULTANT enters into any unbudgeted purchase order, or subcontract exceeding five thousand dollars ($5,000) for supplies, equipment, or CONSULTANT services. CONSULTANT shall provide an evaluation of the necessity or desirability of incurring such costs. B. For purchase of any item, service, or consulting work not covered in CONSULTANT’s approved Cost Proposal and exceeding five thousand dollars ($5,000), with prior authorization by LOCAL AGENCY’s Contract Administrator, three competitive quotations must be submitted with the request, or the absence of proposal must be adequately justified. C. Any equipment purchased with funds provided under the terms of this AGREEMENT is subject to the following: Page 15 of 32 September 2020 388 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language 1. CONSULTANT shall maintain an inventory of all nonexpendable property. Nonexpendable property is defined as having a useful life of at least two years and an acquisition cost of five thousand dollars ($5,000) or more. If the purchased equipment needs replacement and is sold or traded in, LOCAL AGENCY shall receive a proper refund or credit at the conclusion of the AGREEMENT, or if the AGREEMENT is terminated, CONSULTANT may either keep the equipment and credit LOCAL AGENCY in an amount equal to its fair market value, or sell such equipment at the best price obtainable at a public or private sale, in accordance with established LOCAL AGENCY procedures; and credit LOCAL AGENCY in an amount equal to the sales price. If CONSULTANT elects to keep the equipment, fair market value shall be determined at CONSULTANT’s expense, on the basis of a competent independent appraisal of such equipment. Appraisals shall be obtained from an appraiser mutually agreeable to by LOCAL AGENCY and CONSULTANT, if it is determined to sell the equipment, the terms and conditions of such sale must be approved in advance by LOCAL AGENCY. 2. Regulation 2 CFR Part 200 requires a credit to Federal funds when participating equipment with a fair market value greater than five thousand dollars ($5,000) is credited to the project. ARTICLE XII STATE PREVAILING WAGE RATES A. No CONSULTANT or Subconsultant may be awarded an AGREEMENT containing public work elements unless registered with the Department of Industrial Relations (DIR) pursuant to Labor Code §1725.5. Registration with DIR must be maintained throughout the entire term of this AGREEMENT, including any subsequent amendments. B. The CONSULTANT shall comply with all of the applicable provisions of the California Labor Code requiring the payment of prevailing wages. The General Prevailing Wage Rate Determinations applicable to work under this AGREEMENT are available and on file with the Department of Transportation's Regional/District Labor Compliance Officer (https://dot.ca.gov/programs/construction/labor-compliance). These wage rates are made a specific part of this AGREEMENT by reference pursuant to Labor Code §1773.2 and will be applicable to work performed at a construction project site. Prevailing wages will be applicable to all inspection work performed at LOCAL AGENCY construction sites, at LOCAL AGENCY facilities and at off-site locations that are set up by the construction contractor or one of its subcontractors solely and specifically to serve LOCAL AGENCY projects. Prevailing wage requirements do not apply to inspection work performed at the facilities of vendors and commercial materials suppliers that provide goods and services to the general public. C. General Prevailing Wage Rate Determinations applicable to this project may also be obtained from the Department of Industrial Relations website at http://www.dir.ca.gov. D. Payroll Records 1. Each CONSULTANT and Subconsultant shall keep accurate certified payroll records and supporting documents as mandated by Labor Code §1776 and as defined in 8 CCR §16000 showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the CONSULTANT or Subconsultant in connection with the public work. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following: a. The information contained in the payroll record is true and correct. Page 16 of 32 September 2020 389 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language b. The employer has complied with the requirements of Labor Code §1771, §1811, and §1815 for any work performed by his or her employees on the public works project. 2. The payroll records enumerated under paragraph (1) above shall be certified as correct by the CONSULTANT under penalty of perjury. The payroll records and all supporting documents shall be made available for inspection and copying by LOCAL AGENCY representatives at all reasonable hours at the principal office of the CONSULTANT. The CONSULTANT shall provide copies of certified payrolls or permit inspection of its records as follows: a. A certified copy of an employee's payroll record shall be made available for inspection or furnished to the employee or the employee's authorized representative on request. b. A certified copy of all payroll records enumerated in paragraph (1) above, shall be made available for inspection or furnished upon request to a representative of LOCAL AGENCY, the Division of Labor Standards Enforcement and the Division of Apprenticeship Standards of the Department of Industrial Relations. Certified payrolls submitted to LOCAL AGENCY, the Division of Labor Standards Enforcement and the Division of Apprenticeship Standards shall not be altered or obliterated by the CONSULTANT. c. The public shall not be given access to certified payroll records by the CONSULTANT. The CONSULTANT is required to forward any requests for certified payrolls to the LOCAL AGENCY Contract Administrator by both email and regular mail on the business day following receipt of the request. 3. Each CONSULTANT shall submit a certified copy of the records enumerated in paragraph (1) above, to the entity that requested the records within ten (10) calendar days after receipt of a written request. 4. Any copy of records made available for inspection as copies and furnished upon request to the public or any public agency by LOCAL AGENCY shall be marked or obliterated in such a manner as to prevent disclosure of each individual's name, address, and social security number. The name and address of the CONSULTANT or Subconsultant performing the work shall not be marked or obliterated. 5. The CONSULTANT shall inform LOCAL AGENCY of the location of the records enumerated under paragraph (1) above, including the street address, city and county, and shall, within five (5) working days, provide a notice of a change of location and address. 6. The CONSULTANT or Subconsultant shall have ten (10) calendar days in which to comply subsequent to receipt of written notice requesting the records enumerated in paragraph (1) above. In the event the CONSULTANT or Subconsultant fails to comply within the ten (10) day period, he or she shall, as a penalty to LOCAL AGENCY, forfeit one hundred dollars ($100) for each calendar day, or portion thereof, for each worker, until strict compliance is effectuated. Such penalties shall be withheld by LOCAL AGENCY from payments then due. CONSULTANT is not subject to a penalty assessment pursuant to this section due to the failure of a Subconsultant to comply with this section. E. When prevailing wage rates apply, the CONSULTANT is responsible for verifying compliance with certified payroll requirements. Invoice payment will not be made until the invoice is approved by the LOCAL AGENCY Contract Administrator. F. Penalty 1. The CONSULTANT and any of its Subconsultants shall comply with Labor Code §1774 and §1775. Pursuant to Labor Code §1775, the CONSULTANT and any Subconsultant shall forfeit Page 17 of 32 September 2020 390 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language to the LOCAL AGENCY a penalty of not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing rates as determined by the Director of DIR for the work or craft in which the worker is employed for any public work done under the AGREEMENT by the CONSULTANT or by its Subconsultant in violation of the requirements of the Labor Code and in particular, Labor Code §§1770 to 1780, inclusive. 2. The amount of this forfeiture shall be determined by the Labor Commissioner and shall be based on consideration of mistake, inadvertence, or neglect of the CONSULTANT or Subconsultant in failing to pay the correct rate of prevailing wages, or the previous record of the CONSULTANT or Subconsultant in meeting their respective prevailing wage obligations, or the willful failure by the CONSULTANT or Subconsultant to pay the correct rates of prevailing wages. A mistake, inadvertence, or neglect in failing to pay the correct rates of prevailing wages is not excusable if the CONSULTANT or Subconsultant had knowledge of the obligations under the Labor Code. The CONSULTANT is responsible for paying the appropriate rate, including any escalations that take place during the term of the AGREEMENT. 3. In addition to the penalty and pursuant to Labor Code §1775, the difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the CONSULTANT or Subconsultant. 4. If a worker employed by a Subconsultant on a public works project is not paid the general prevailing per diem wages by the Subconsultant, the prime CONSULTANT of the project is not liable for the penalties described above unless the prime CONSULTANT had knowledge of that failure of the Subconsultant to pay the specified prevailing rate of wages to those workers or unless the prime CONSULTANT fails to comply with all of the following requirements: a. The AGREEMENT executed between the CONSULTANT and the Subconsultant for the performance of work on public works projects shall include a copy of the requirements in Labor Code §§ 1771, 1775, 1776, 1777.5, 1813, and 1815. b. The CONSULTANT shall monitor the payment of the specified general prevailing rate of per diem wages by the Subconsultant to the employees by periodic review of the certified payroll records of the Subconsultant. c. Upon becoming aware of the Subconsultant’s failure to pay the specified prevailing rate of wages to the Subconsultant’s workers, the CONSULTANT shall diligently take corrective action to halt or rectify the failure, including but not limited to, retaining sufficient funds due the Subconsultant for work performed on the public works project. d. Prior to making final payment to the Subconsultant for work performed on the public works project, the CONSULTANT shall obtain an affidavit signed under penalty of perjury from the Subconsultant that the Subconsultant had paid the specified general prevailing rate of per diem wages to the Subconsultant’s employees on the public works project and any amounts due pursuant to Labor Code §1813. 5. Pursuant to Labor Code §1775, LOCAL AGENCY shall notify the CONSULTANT on a public works project within fifteen (15) calendar days of receipt of a complaint that a Subconsultant has failed to pay workers the general prevailing rate of per diem wages. 6. If LOCAL AGENCY determines that employees of a Subconsultant were not paid the general prevailing rate of per diem wages and if LOCAL AGENCY did not retain sufficient money under the AGREEMENT to pay those employees the balance of wages owed under the general prevailing rate of per diem wages, the CONSULTANT shall withhold an amount of moneys due Page 18 of 32 September 2020 391 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language the Subconsultant sufficient to pay those employees the general prevailing rate of per diem wages if requested by LOCAL AGENCY. G. Hours of Labor Eight (8) hours labor constitutes a legal day's work. The CONSULTANT shall forfeit, as a penalty to the LOCAL AGENCY, twenty-five dollars ($25) for each worker employed in the execution of the AGREEMENT by the CONSULTANT or any of its Subconsultants for each calendar day during which such worker is required or permitted to work more than eight (8) hours in any one calendar day and forty (40) hours in any one calendar week in violation of the provisions of the Labor Code, and in particular §§1810 to 1815 thereof, inclusive, except that work performed by employees in excess of eight (8) hours per day, and forty (40) hours during any one week, shall be permitted upon compensation for all hours worked in excess of eight (8) hours per day and forty (40) hours in any week, at not less than one and one-half (1.5) times the basic rate of pay, as provided in §1815. H. Employment of Apprentices 1. Where either the prime AGREEMENT or the subagreement exceeds thirty thousand dollars ($30,000), the CONSULTANT and any subconsultants under him or her shall comply with all applicable requirements of Labor Code §§ 1777.5, 1777.6 and 1777.7 in the employment of apprentices. 2. CONSULTANTs and subconsultants are required to comply with all Labor Code requirements regarding the employment of apprentices, including mandatory ratios of journey level to apprentice workers. Prior to commencement of work, CONSULTANT and subconsultants are advised to contact the DIR Division of Apprenticeship Standards website at https://www.dir.ca.gov/das/, for additional information regarding the employment of apprentices and for the specific journey-to- apprentice ratios for the AGREEMENT work. The CONSULTANT is responsible for all subconsultants’ compliance with these requirements. Penalties are specified in Labor Code §1777.7. ARTICLE XIII CONFLICT OF INTEREST A. During the term of this AGREEMENT, the CONSULTANT shall disclose any financial, business, or other relationship with LOCAL AGENCY that may have an impact upon the outcome of this AGREEMENT or any ensuing LOCAL AGENCY construction project. The CONSULTANT shall also list current clients who may have a financial interest in the outcome of this AGREEMENT or any ensuing LOCAL AGENCY construction project which will follow. B. CONSULTANT certifies that it has disclosed to LOCAL AGENCY any actual, apparent, or potential conflicts of interest that may exist relative to the services to be provided pursuant to this AGREEMENT. CONSULTANT agrees to advise LOCAL AGENCY of any actual, apparent or potential conflicts of interest that may develop subsequent to the date of execution of this AGREEMENT. CONSULTANT further agrees to complete any statements of economic interest if required by either LOCAL AGENCY ordinance or State law. C. The CONSULTANT hereby certifies that it does not now have nor shall it acquire any financial or business interest that would conflict with the performance of services under this AGREEMENT. D. The CONSULTANT hereby certifies that the CONSULTANT or subconsultant and any firm affiliated with the CONSULTANT or subconsultant that bids on any construction contract or on any Agreement to provide construction inspection for any construction project resulting from this AGREEMENT, has established necessary controls to ensure a conflict of interest does not exist. Page 19 of 32 September 2020 392 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language An affiliated firm is one, which is subject to the control of the same persons, through joint ownership or otherwise. ARTICLE XIV REBATES, KICKBACKS OR OTHER UNLAWFUL CONSIDERATION The CONSULTANT warrants that this AGREEMENT was not obtained or secured through rebates, kickbacks or other unlawful consideration either promised or paid to any LOCAL AGENCY employee. For breach or violation of this warranty, LOCAL AGENCY shall have the right, in its discretion, to terminate this AGREEMENT without liability, to pay only for the value of the work actually performed, or to deduct from this AGREEMENT price or otherwise recover the full amount of such rebate, kickback or other unlawful consideration. ARTICLE XV PROHIBITION OF EXPENDING LOCAL AGENCY, STATE, OR FEDERAL FUNDS FOR LOBBYING (Include this article in all AGREEMENTs where federal funding will exceed $150,000. If less than $150,000 in federal funds will be expended on the AGREEMENT; delete this article and re-number the subsequent articles.) A. The CONSULTANT certifies, to the best of his or her knowledge and belief, that: 1. No State, Federal, or LOCAL AGENCY appropriated funds have been paid or will be paid, by or on behalf of the CONSULTANT, to any person for influencing or attempting to influence an officer or employee of any local, State, or Federal agency, a Member of the State Legislature or United States Congress, an officer or employee of the Legislature or Congress, or any employee of a Member of the Legislature or Congress in connection with the awarding or making of this AGREEMENT, or with the extension, continuation, renewal, amendment, or modification of this AGREEMENT. 2. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a member of Congress in connection with this AGREEMENT, the CONSULTANT shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions. B. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31 U.S.C. §1352. Any person who fails to file the required certification shall be subject to a civil penalty of not less than ten thousand dollars ($10,000) and not more than one hundred thousand dollars ($100,000) for each such failure. C. The CONSULTANT also agrees by signing this document that he or she shall require that the language of this certification be included in all lower tier subagreements, which exceed one hundred thousand dollars ($100,000), and that all such subrecipients shall certify and disclose accordingly. ARTICLE XVI NON-DISCRIMINATION CLAUSE AND STATEMENT OF COMPLIANCE A. The CONSULTANT’s signature affixed herein and dated shall constitute a certification under penalty of perjury under the laws of the State of California that the CONSULTANT has, unless exempt, complied with the nondiscrimination program requirements of Gov. Code §12990 and 2 CCR § 8103. Page 20 of 32 September 2020 393 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language B. During the performance of this AGREEMENT, CONSULTANT and its subconsultants shall not deny the AGREEMENT’s benefits to any person on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status, nor shall they unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status. CONSULTANT and subconsultants shall insure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. C. CONSULTANT and subconsultants shall comply with the provisions of the Fair Employment and Housing Act (Gov. Code §12990 et seq.), the applicable regulations promulgated there under (2 CCR §11000 et seq.), the provisions of Gov. Code §§11135-11139.5, and the regulations or standards adopted by LOCAL AGENCY to implement such article. The applicable regulations of the Fair Employment and Housing Commission implementing Gov. Code §12990 (a-f), set forth 2 CCR §§8100-8504, are incorporated into this AGREEMENT by reference and made a part hereof as if set forth in full. D. CONSULTANT shall permit access by representatives of the Department of Fair Employment and Housing and the LOCAL AGENCY upon reasonable notice at any time during the normal business hours, but in no case less than twenty-four (24) hours’ notice, to such of its books, records, accounts, and all other sources of information and its facilities as said Department or LOCAL AGENCY shall require to ascertain compliance with this clause. E. CONSULTANT and its subconsultants shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other Agreement. F. CONSULTANT shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under this AGREEMENT. G. The CONSULTANT, with regard to the work performed under this AGREEMENT, shall act in accordance with Title VI of the Civil Rights Act of 1964 (42 U.S.C. §2000d et seq.). Title VI provides that the recipients of federal assistance will implement and maintain a policy of nondiscrimination in which no person in the United States shall, on the basis of race, color, national origin, religion, sex, age, disability, be excluded from participation in, denied the benefits of or subject to discrimination under any program or activity by the recipients of federal assistance or their assignees and successors in interest. H. The CONSULTANT shall comply with regulations relative to non-discrimination in federally- assisted programs of the U.S. Department of Transportation (49 CFR Part 21 -Effectuation of Title VI of the Civil Rights Act of 1964). Specifically, the CONSULTANT shall not participate either directly or indirectly in the discrimination prohibited by 49 CFR §21.5, including employment practices and the selection and retention of Subconsultants. I. CONSULTANT, subrecipient or subconsultant will never exclude any person from participation in, deny any person the benefits of, or otherwise discriminate against anyone in connection with the award and performance of any contract covered by 49 CFR 26 on the basis of race, color, sex, or national origin. In administering the LOCAL AGENCY components of the DBE Program Plan, CONSULTANT, subrecipient or subconsultant will not, directly, or through contractual or other Page 21 of 32 September 2020 394 I Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language arrangements, use criteria or methods of administration that have the effect of defeating or substantially impairing accomplishment of the objectives of the DBE Program Plan with respect to individuals of a particular race, color, sex, or national origin. ARTICLE XVII DEBARMENT AND SUSPENSION CERTIFICATION A. The CONSULTANT’s signature affixed herein shall constitute a certification under penalty of perjury under the laws of the State of California, that the CONSULTANT or any person associated therewith in the capacity of owner, partner, director, officer or manager: 1. Is not currently under suspension, debarment, voluntary exclusion, or determination of ineligibility by any federal agency; 2. Has not been suspended, debarred, voluntarily excluded, or determined ineligible by any federal agency within the past three (3) years; 3. Does not have a proposed debarment pending; and 4. Has not been indicted, convicted, or had a civil judgment rendered against it by a court of competent jurisdiction in any matter involving fraud or official misconduct within the past three (3) years. B. Any exceptions to this certification must be disclosed to LOCAL AGENCY. Exceptions will not necessarily result in denial of recommendation for award, but will be considered in determining responsibility. Disclosures must indicate the party to whom the exceptions apply, the initiating agency, and the dates of agency action. C. Exceptions to the Federal Government Excluded Parties List System maintained by the U.S. General Services Administration are to be determined by FHWA. ARTICLE XVIII DISADVANTAGED BUSINESS ENTERPRISES (DBE) PARTICIPATION A. CONSULTANT, subrecipient (LOCAL AGENCY), or subconsultant shall take necessary and reasonable steps to ensure that DBEs have opportunities to participate in the contract (49 CFR 26). To ensure equal participation of DBEs provided in 49 CFR 26.5, The LOCAL AGENCY shows a contract goal for DBEs. CONSULTANT shall make work available to DBEs and select work parts consistent with available DBE subconsultants and suppliers. CONSULTANT shall meet the DBE goal shown elsewhere in these special provisions or demonstrate that they made adequate good faith efforts to meet this goal. It is CONSULTANT’s responsibility to verify that the DBE firm is certified as DBE at date of proposal opening and document the record by printing out the California Unified Certification Program (CUCP) data for each DBE firm. A list of DBEs certified by the CUCP can be found here. All DBE participation will count toward the California Department of Transportation’s federally mandated statewide overall DBE goal. Credit for materials or supplies CONSULTANT purchases from DBEs counts towards the goal in the following manner: • 100 percent counts if the materials or supplies are obtained from a DBE manufacturer. • 60 percent counts if the materials or supplies are purchased from a DBE regular dealer. Page 22 of 32 September 2020 395 I - I Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language • Only fees, commissions, and charges for assistance in the procurement and delivery of materials or supplies count if obtained from a DBE that is neither a manufacturer nor regular dealer. 49CFR26.55 defines "manufacturer" and "regular dealer." This AGREEMENT is subject to 49 CFR Part 26 entitled “Participation by Disadvantaged Business Enterprises in Department of Transportation Financial Assistance Programs”. CONSULTANTs who enter into a federally-funded agreement will assist the LOCAL AGENCY in a good faith effort to achieve California's statewide overall DBE goal. B. The goal for DBE participation for this AGREEMENT is_________%. Participation by DBE CONSULTANT or subconsultants shall be in accordance with information contained in Exhibit 10- O2: Consultant Contract DBE Commitment attached hereto and incorporated as part of the AGREEMENT. If a DBE subconsultant is unable to perform, CONSULTANT must make a good faith effort to replace him/her with another DBE subconsultant, if the goal is not otherwise met. C. CONSULTANT can meet the DBE participation goal by either documenting commitments to DBEs to meet the AGREEMENT goal, or by documenting adequate good faith efforts to meet the AGREEMENT goal. An adequate good faith effort means that the CONSULTANT must show that it took all necessary and reasonable steps to achieve a DBE goal that, by their scope, intensity, and appropriateness to the objective, could reasonably be expected to meet the DBE goal. If CONSULTANT has not met the DBE goal, complete and submit Exhibit 15-H: DBE Information – Good Faith Efforts to document efforts to meet the goal. Refer to 49 CFR Part 26 for guidance regarding evaluation of good faith efforts to meet the DBE goal. D. Contract Assurance Under 49 CFR 26.13(b): CONSULTANT, subrecipient or subconsultant shall not discriminate on the basis of race, color, national origin, or sex in the performance of this contract. CONSULTANT shall carry out applicable requirements of 49 CFR 26 in the award and administration of federal-aid contracts. Failure by the CONSULTANT to carry out these requirements is a material breach of this contract, which may result in the termination of this contract or such other remedy as the recipient deems appropriate, which may include, but is not limited to: (1) Withholding monthly progress payments; (2) Assessing sanctions; (3) Liquidated damages; and/or (4) Disqualifying CONSULTANT from future proposing as non-responsible E. Termination and Substitution of DBE Subconsultants CONSULTANT shall utilize the specific DBEs listed to perform the work and supply the materials for which each is listed unless CONSULTANT or DBE subconsultant obtains the LOCAL AGENCY’s written consent. CONSULTANT shall not terminate or substitute a listed DBE for convenience and perform the work with their own forces or obtain materials from other sources without authorization from the LOCAL AGENCY. Unless the LOCAL AGENCY’s consent is provided, the CONSULTANT shall not be entitled to any payment for work or material unless it is performed or supplied by the listed DBE on the Exhibit 10-02 Consultant Contract DBE Commitment form, included in the Bid. Page 23 of 32 September 2020 396 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language The LOCAL AGENCY authorizes a request to use other forces or sources of materials if CONSULTANT shows any of the following justifications: 1. Listed DBE fails or refuses to execute a written contract based on plans and specifications for the project. 2. The LOCAL AGENCY stipulated that a bond is a condition of executing the subcontract and the listed DBE fails to meet the LOCAL AGENCY’s bond requirements. 3. Work requires a consultant's license and listed DBE does not have a valid license under Contractors License Law. 4. Listed DBE fails or refuses to perform the work or furnish the listed materials (failing or refusing to perform is not an allowable reason to remove a DBE if the failure or refusal is a result of bad faith or discrimination). 5. Listed DBE's work is unsatisfactory and not in compliance with the contract. 6. Listed DBE is ineligible to work on the project because of suspension or debarment. 7. Listed DBE becomes bankrupt or insolvent. 8. Listed DBE voluntarily withdraws with written notice from the Contract 9. Listed DBE is ineligible to receive credit for the type of work required. 10. Listed DBE owner dies or becomes disabled resulting in the inability to perform the work on the Contract. 11. The LOCAL AGENCY determines other documented good cause. CONSULTANT shall notify the original DBE of the intent to use other forces or material sources and provide the reasons and provide the DBE with 5 days to respond to the notice and advise CONSULTANT and the LOCAL AGENCY of the reasons why the use of other forces or sources of materials should not occur. CONSULTANT’s request to use other forces or material sources must include: 1. One or more of the reasons listed in the preceding paragraph. 2. Notices from CONSULTANT to the DBE regarding the request. 3. Notices from the DBEs to CONSULTANT regarding the request. If a listed DBE is terminated or substituted, CONSULTANT must make good faith efforts to find another DBE to substitute for the original DBE. The substitute DBE must perform at least the same amount of work as the original DBE under the contract to the extent needed to meet or exceed the DBE goal. F. Commitment and Utilization The LOCAL AGENCY’s DBE program must include a monitoring and enforcement mechanism to ensure that DBE commitments reconcile to DBE utilization. The LOCAL AGENCY shall request CONSULTANT to: 1. Notify the LOCAL AGENCY’s contract administrator or designated representative of any changes to its anticipated DBE participation 2. Provide this notification before starting the affected work Page 24 of 32 September 2020 397 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language 3. Maintain records including: • Name and business address of each 1st-tier subconsultant • Name and business address of each DBE subconsultant, DBE vendor, and DBE trucking company, regardless of tier • Date of payment and total amount paid to each business (see Exhibit 9-F Monthly Disadvantaged Business Enterprise Payment) If CONSULTANT is a DBE CONSULTANT, they shall include the date of work performed by their own forces and the corresponding value of the work. If a DBE is decertified before completing its work, the DBE must notify CONSULTANT in writing of the decertification date. If a business becomes a certified DBE before completing its work, the business must notify CONSULTANT in writing of the certification date. CONSULTANT shall submit the notifications to the LOCAL AGENCY. On work completion, CONSULTANT shall complete a Disadvantaged Business Enterprises (DBE) Certification Status Change, Exhibit 17-O, form and submit the form to the LOCAL AGENCY within 30 days of contract acceptance. Upon work completion, CONSULTANT shall complete Exhibit 17-F Final Report – Utilization of Disadvantaged Business Enterprises (DBE), First-Tier Subcontractors and submit it to the LOCAL AGENCY within 90 days of contract acceptance. The LOCAL AGENCY will withhold $10,000 until the form is submitted. The LOCAL AGENCY will release the withhold upon submission of the completed form. In the LOCAL AGENCY’s reports of DBE participation to Caltrans, the LOCAL AGENCY must display both commitments and attainments. G. A DBE is only eligible to be counted toward the AGREEMENT goal if it performs a commercially useful function (CUF) on the AGREEMENT. CUF must be evaluated on an agreement by agreement basis. A DBE performs a Commercially Useful Function (CUF) when it is responsible for execution of the work of the AGREEMENT and is carrying out its responsibilities by actually performing, managing, and supervising the work involved. To perform a CUF, the DBE must also be responsible, with respect to materials and supplies used on the AGREEMENT, for negotiating price, determining quality and quantity, ordering the material and installing (where applicable), and paying for the material itself. To determine whether a DBE is performing a CUF, evaluate the amount of work subcontracted, industry practices, whether the amount the firm is to be paid under the AGREEMENT is commensurate with the work it is actually performing, and other relevant factors. H. A DBE does not perform a CUF if its role is limited to that of an extra participant in a transaction, AGREEMENT, or project through which funds are passed in order to obtain the appearance of DBE participation. In determining whether a DBE is such an extra participant, examine similar transactions, particularly those in which DBEs do not participate. I. If a DBE does not perform or exercise responsibility for at least thirty percent (30%) of the total cost of its AGREEMENT with its own work force, or the DBE subcontracts a greater portion of the work of the AGREEMENT than would be expected on the basis of normal industry practice for the type of work involved, it will be presumed that it is not performing a CUF. J. CONSULTANT shall maintain records of materials purchased or supplied from all subcontracts entered into with certified DBEs. The records shall show the name and business address of each Page 25 of 32 September 2020 398 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language DBE or vendor and the total dollar amount actually paid each DBE or vendor, regardless of tier. The records shall show the date of payment and the total dollar figure paid to all firms. DBE CONSULTANT’s shall also show the date of work performed by their own forces along with the corresponding dollar value of the work. K. If a DBE subconsultant is decertified during the life of the AGREEMENT, the decertified subconsultant shall notify CONSULTANT in writing with the date of decertification. If a subconsultant becomes a certified DBE during the life of the AGREEMENT, the subconsultant shall notify CONSULTANT in writing with the date of certification. Any changes should be reported to LOCAL AGENCY’s Contract Administrator within thirty (30) calendar days. L. After submitting an invoice for reimbursement that includes a payment to a DBE, but no later than the 10th of the following month, the prime contractor/consultant shall complete and email the Exhibit 9- F: Disadvantaged Business Enterprise Running Tally of Payments to business.support.unit@dot.ca.gov with a copy to the Agency. M. Any subcontract entered into as a result of this AGREEMENT shall contain all of the provisions of this section. ARTICLE XIX INSURANCE (Choose either Option 1 or Option 2) (Option 1 -for AGREEMENT with a scope of services that may require the CONSULTANT or subconsultant to work within the operating state or Local Agency Highway Right of Way; where there would be exposure to public traffic or construction operations). A. Prior to commencement of the work described herein, CONSULTANT shall furnish LOCAL AGENCY a Certificate of Insurance stating that there is general comprehensive liability insurance presently in effect for CONSULTANT with a combined single limit (CSL) of not less than one million dollars ($1,000,000) per occurrence. B. The Certificate of Insurance will provide: 1. That the insurer will not cancel the insured’s coverage without thirty (30) calendar days prior written notice to LOCAL AGENCY. 2. That LOCAL AGENCY, its officers, agents, employees, and servants are included as additional insureds, but only insofar as the operations under this AGREEMENT are concerned. 3. That LOCAL AGENCY will not be responsible for any premiums or assessments on the policy. C. CONSULTANT agrees that the bodily injury liability insurance herein provided for, shall be in effect at all times during the term of this AGREEMENT. In the event said insurance coverage expires at any time or times during the term of this AGREEMENT, CONSULTANT agrees to provide at least thirty (30) calendar days prior notice to said expiration date; and a new Certificate of Insurance evidencing insurance coverage as provided for herein, for not less than either the remainder of the term of the AGREEMENT, or for a period of not less than one (1) year. New Certificates of Insurance are subject to the approval of LOCAL AGENCY. In the event CONSULTANT fails to keep in effect at all times insurance coverage as herein provided, LOCAL AGENCY may, in addition to any other remedies it may have, terminate this AGREEMENT upon occurrence of such event. Page 26 of 32 September 2020 399 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language (Option 2 - for AGREEMENTs with a scope of services that will not require the CONSULTANT or subconsultant to work within the operating state or Local Agency Highway Right of Way where there would be exposure to public traffic or construction CONSULTANT operations). CONSULTANT is not required to show evidence of general comprehensive liability insurance. ARTICLE XX FUNDING REQUIREMENTS A. It is mutually understood between the parties that this AGREEMENT may have been written before ascertaining the availability of funds or appropriation of funds, for the mutual benefit of both parties, in order to avoid program and fiscal delays that would occur if the AGREEMENT were executed after that determination was made. B. This AGREEMENT is valid and enforceable only if sufficient funds are made available to LOCAL AGENCY for the purpose of this AGREEMENT. In addition, this AGREEMENT is subject to any additional restrictions, limitations, conditions, or any statute enacted by the Congress, State Legislature, or LOCAL AGENCY governing board that may affect the provisions, terms, or funding of this AGREEMENT in any manner. C. It is mutually agreed that if sufficient funds are not appropriated, this AGREEMENT may be amended to reflect any reduction in funds. D. LOCAL AGENCY has the option to terminate the AGREEMENT pursuant to Article VI Termination, or by mutual agreement to amend the AGREEMENT to reflect any reduction of funds. ARTICLE XXI CHANGE IN TERMS A. This AGREEMENT may be amended or modified only by mutual written agreement of the parties. B. CONSULTANT shall only commence work covered by an amendment after the amendment is executed and notification to proceed has been provided by LOCAL AGENCY’s Contract Administrator. C. There shall be no change in CONSULTANT’s Project Manager or members of the project team, as listed in the approved Cost Proposal, which is a part of this AGREEMENT without prior written approval by LOCAL AGENCY’s Contract Administrator. ARTICLE XXII CONTINGENT FEE CONSULTANT warrants, by execution of this AGREEMENT that no person or selling agency has been employed, or retained, to solicit or secure this AGREEMENT upon an agreement or understanding, for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees, or bona fide established commercial or selling agencies maintained by CONSULTANT for the purpose of securing business. For breach or violation of this warranty, LOCAL AGENCY has the right to annul this AGREEMENT without liability; pay only for the value of the work actually performed, or in its discretion to deduct from the AGREEMENT price or consideration, or otherwise recover the full amount of such commission, percentage, brokerage, or contingent fee. ARTICLE XXIII DISPUTES Prior to either party commencing any legal action under this AGREEMENT, the parties agree to try in good faith, to settle any dispute amicably between them. If a dispute has not been settled after forty-five Page 27 of 32 September 2020 400 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language (45) days of good-faith negotiations and as may be otherwise provided herein, then either party may commence legal action against the other. (Choose either Option 1 or Option 2) (Option 1 -Use paragraphs A through C below for all AGREEMENTs without PS&E submittal) A. Any dispute, other than audit, concerning a question of fact arising under this AGREEMENT that is Contract Administrator and ( ), who may consider written or verbal information submitted by CONSULTANT. B. Not later than thirty (30) calendar days after completion of all work under the AGREEMENT, CONSULTANT may request review by LOCAL AGENCY Governing Board of unresolved claims or disputes, other than audit. The request for review will be submitted in writing. C. Neither the pendency of a dispute, nor its consideration by the committee will excuse CONSULTANT from full and timely performance in accordance with the terms of this AGREEMENT. not disposed of by agreement shall be decided by a committee consisting of LOCAL AGENCY’s (Option 2 -Replace Paragraph B, above, with the following for AGREEMENTs requiring the submission of PS&E) B. Not later than thirty (30) calendar days after completion of all deliverables necessary to complete the plans, specifications and estimate, CONSULTANT may request review by LOCAL AGENCY Governing Board of unresolved claims or disputes, other than audit. The request for review will be submitted in writing. ARTICLE XXIV INSPECTION OF WORK CONSULTANT and any subconsultant shall permit LOCAL AGENCY, the State, and the FHWA if federal participating funds are used in this AGREEMENT; to review and inspect the project activities and files at all reasonable times during the performance period of this AGREEMENT. ARTICLE XXV SAFETY A. CONSULTANT shall comply with OSHA regulations applicable to CONSULTANT regarding necessary safety equipment or procedures. CONSULTANT shall comply with safety instructions issued by LOCAL AGENCY Safety Officer and other LOCAL AGENCY representatives. CONSULTANT personnel shall wear hard hats and safety vests at all times while working on the construction project site. B. Pursuant to the authority contained in Vehicle Code §591, LOCAL AGENCY has determined that such areas are within the limits of the project and are open to public traffic. CONSULTANT shall comply with all of the requirements set forth in Divisions 11, 12, 13, 14, and 15 of the Vehicle Code. CONSULTANT shall take all reasonably necessary precautions for safe operation of its vehicles and the protection of the traveling public from injury and damage from such vehicles. (Add the following paragraph to all AGREEMENTs, which may require trenching of five feet or deeper) D. CONSULTANT must have a Division of Occupational Safety and Health (CAL-OSHA) permit(s), as outlined in Labor Code §6500 and §6705, prior to the initiation of any practices, work, method, Page 28 of 32 September 2020 401 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language operation, or process related to the construction or excavation of trenches which are five (5) feet or deeper. ARTICLE XXVI OWNERSHIP OF DATA A. It is mutually agreed that all materials prepared by CONSULTANT under this AGREEMENT shall become the property of City, and CONSULTANT shall have no property right therein whatsoever. Immediately upon termination, City shall be entitled to, and CONSULTANT shall deliver to City, reports, investigations, appraisals, inventories, studies, analyses, drawings and data estimates performed to that date, whether completed or not, and other such materials as may have been prepared or accumulated to date by CONSULTANT in performing this AGREEMENT which is not CONSULTANT’s privileged information, as defined by law, or CONSULTANT’s personnel information, along with all other property belonging exclusively to City which is in CONSULTANT’s possession. Publication of the information derived from work performed or data obtained in connection with services rendered under this AGREEMENT must be approved in writing by City. B. Additionally, it is agreed that the Parties intend this to be an AGREEMENT for services and each considers the products and results of the services to be rendered by CONSULTANT hereunder to be work made for hire. CONSULTANT acknowledges and agrees that the work (and all rights therein, including, without limitation, copyright) belongs to and shall be the sole and exclusive property of City without restriction or limitation upon its use or dissemination by City. C. Nothing herein shall constitute or be construed to be any representation by CONSULTANT that the work product is suitable in any way for any other project except the one detailed in this Contract. Any reuse by City for another project or project location shall be at City’s sole risk. D. Applicable patent rights provisions regarding rights to inventions shall be included in the contracts as appropriate (48 CFR 27 Subpart 27.3 -Patent Rights under Government Contracts for federal- aid contracts). E. LOCAL AGENCY may permit copyrighting reports or other agreement products. If copyrights are permitted; the AGREEMENT shall provide that the FHWA shall have the royalty-free nonexclusive and irrevocable right to reproduce, publish, or otherwise use; and to authorize others to use, the work for government purposes. ARTICLE XXVII CLAIMS FILED BY LOCAL AGENCY’s CONSTRUCTION CONTRACTOR A. If claims are filed by LOCAL AGENCY’s construction contractor relating to work performed by CONSULTANT’s personnel, and additional information or assistance from CONSULTANT’s personnel is required in order to evaluate or defend against such claims; CONSULTANT agrees to make its personnel available for consultation with LOCAL AGENCY’S construction contract administration and legal staff and for testimony, if necessary, at depositions and at trial or arbitration proceedings. B. CONSULTANT’s personnel that LOCAL AGENCY considers essential to assist in defending against construction contractor claims will be made available on reasonable notice from LOCAL AGENCY. Consultation or testimony will be reimbursed at the same rates, including travel costs that are being paid for CONSULTANT’s personnel services under this AGREEMENT. C. Services of CONSULTANT’s personnel in connection with LOCAL AGENCY’s construction contractor claims will be performed pursuant to a written contract amendment, if necessary, extending the termination date of this AGREEMENT in order to resolve the construction claims. Page 29 of 32 September 2020 402 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE XXVIII CONFIDENTIALITY OF DATA A. All financial, statistical, personal, technical, or other data and information relative to LOCAL AGENCY’s operations, which are designated confidential by LOCAL AGENCY and made available to CONSULTANT in order to carry out this AGREEMENT, shall be protected by CONSULTANT from unauthorized use and disclosure. B. Permission to disclose information on one occasion, or public hearing held by LOCAL AGENCY relating to the AGREEMENT, shall not authorize CONSULTANT to further disclose such information, or disseminate the same on any other occasion. C. CONSULTANT shall not comment publicly to the press or any other media regarding the AGREEMENT or LOCAL AGENCY’s actions on the same, except to LOCAL AGENCY’s staff, CONSULTANT’s own personnel involved in the performance of this AGREEMENT, at public hearings, or in response to questions from a Legislative committee. D. CONSULTANT shall not issue any news release or public relations item of any nature, whatsoever, regarding work performed or to be performed under this AGREEMENT without prior review of the contents thereof by LOCAL AGENCY, and receipt of LOCAL AGENCY’S written permission. (For PS&E contracts add paragraph F, below, to paragraphs A through E, above) E. All information related to the construction estimate is confidential, and shall not be disclosed by CONSULTANT to any entity, other than LOCAL AGENCY, Caltrans, and/or FHWA. All of the materials prepared or assembled by CONSULTANT pursuant to performance of this Contract are confidential and CONSULTANT agrees that they shall not be made available to any individual or organization without the prior written approval of City or except by court order. If CONSULTANT or any of its officers, employees, or subcontractors does voluntarily provide information in violation of this Contract, City has the right to reimbursement and indemnity from CONSULTANT for any damages caused by CONSULTANT releasing the information, including, but not limited to, City’s attorney’s fees and disbursements, including without limitation experts’ fees and disbursements. ARTICLE XXIX NATIONAL LABOR RELATIONS BOARD CERTIFICATION In accordance with Public Contract Code §10296, CONSULTANT hereby states under penalty of perjury that no more than one final unappealable finding of contempt of court by a federal court has been issued against CONSULTANT within the immediately preceding two-year period, because of CONSULTANT’s failure to comply with an order of a federal court that orders CONSULTANT to comply with an order of the National Labor Relations Board. ARTICLE XXX EVALUATION OF CONSULTANT CONSULTANT’s performance will be evaluated by LOCAL AGENCY. A copy of the evaluation will be sent to CONSULTANT for comments. The evaluation together with the comments shall be retained as part of the AGREEMENT record. Page 30 of 32 September 2020 403 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE XXXI PROMPT PAYMENT FROM THE LOCAL AGENCY TO CONSULTANT The LOCAL AGENCY shall make any progress payment within 30 days after receipt of an undisputed and properly submitted payment request from CONSULTANT on a professional service contract. If the LOCAL AGENCY fails to pay promptly, the LOCAL AGENCY shall pay interest to the contractor, which accrues at the rate of 10 percent per annum on the principal amount of a money judgment remaining unsatisfied. Upon receipt of a payment request, the LOCAL AGENCY shall act in accordance with both of the following: (1) Each payment request shall be reviewed by the LOCAL AGENCY as soon as practicable after receipt for the purpose of determining that the payment request is a proper payment request. (2) Any payment request determined not to be a proper payment request suitable for payment shall be returned to CONSULTANT as soon as practicable, but not later than seven (7) days, after receipt. A request returned pursuant to this paragraph shall be accompanied by a document setting forth in writing the reasons why the payment request is not proper. Page 31 of 32 September 2020 404 Local Assistance Procedures Manual EXHBIT 10-R A&E Boilerplate Agreement Language ARTICLE XXXII NOTIFICATION All notices hereunder and communications regarding interpretation of the terms of this AGREEMENT and changes thereto, shall be effected by the mailing thereof by registered or certified mail, return receipt requested, postage prepaid, and addressed as follows: CONSULTANT: ,Project Manager LOCAL AGENCY: , Contract Administrator ARTICLE XXXIII CONTRACT The two parties to this AGREEMENT, who are the before named CONSULTANT and the before named LOCAL AGENCY, hereby agree that this AGREEMENT constitutes the entire AGREEMENT which is made and concluded in duplicate between the two parties. Both of these parties for and in consideration of the payments to be made, conditions mentioned, and work to be performed; each agree to diligently perform in accordance with the terms and conditions of this AGREEMENT as evidenced by the signatures below. ARTICLE XXXIV SIGNATURES (Name of Signer) (Name of Signer) Date: Date: Page 32 of 32 September 2020 405 I I I I I I I I I Local Assistance Procedures Manual Exhibit 17-F Final Report-Utilization of Disadvantaged Business Enterprises (DBE) and First-Tier Subcontractors EXHIBIT 17-F FINAL REPORT-UTILIZATION OF DISADVANTAGED BUSINESS ENTERPRISES (DBE) AND FIRST-TIER SUBCONTRACTORS 1. Local Agency Contract Number 2. Federal-Aid Project Number 3. Local Agency 4. Contract Completion Date 5. Contractor/Consultant 6. Business Address 7. Final Contract Amount 8. Contract Item Number 9. Description of Work, Service, or Materials Supplied 10. Company Name and Business Address 11. DBE Certification Number 12. Contract Payments 13. Date Work Completed 14. Date of Final Payment Non-DBE DBE 15. ORIGINAL DBE COMMITMENT AMOUNT $ 16. TOTAL List all first-tier subcontractors/subconsultants and DBEs regardless of tier whether or not the firms were originally listed for goal credit. If actual DBE utilization (or item of work) was different than that approved at the time of award, provide comments on an additional page. List actual amount paid to each entity. If no subcontractors/subconsultants were used on the contract, indicate on the form. I CERTIFY THAT THE ABOVE INFORMATION IS COMPLETE AND CORRECT 17. Contractor/Consultant Representative’s Signature 18. Contractor/Consultant Representative’s Name 19. Phone 20. Date I CERTIFY THAT THE CONTRACTING RECORDS AND ON-SITE PERFORMANCE OF THE DBE(S) HAS BEEN MONITORED 21. Local Agency Representative’s Signature 22. Local Agency Representative’s Name 23. Phone 24. Date DISTRIBUTION: Original – Local Agency, Copy – Caltrans District Local Assistance Engineer. Include with Final Report of Expenditures ADA NOTICE: For individuals with sensory disabilities, this document is available in alternate formats. For information, call (916) 445-1233, Local Assistance Procedures Manual TTY 711, or write to Records and Forms Management, 1120 N Street, MS-89, Sacramento, CA 95814. Page 1 of 2 July 23, 2015 406 Local Assistance Procedures Manual Exhibit 17-F Final Report-Utilization of Disadvantaged Business Enterprises (DBE) and First-Tier Subcontractors INSTRUCTIONS – FINAL REPORT-UTILIZATION OF DISADVANTAGED BUSINESS ENTERPRISES (DBE) AND FIRST-TIER SUBCONTRACTORS 1. Local Agency Contract Number -Enter the Local Agency contract number or identifier. 2. Federal-Aid Project Number -Enter the Federal-Aid Project Number. 3. Local Agency - Enter the name of the local or regional agency that is funding the contract. 4. Contract Completion Date -Enter the date the contract was completed. 5. Contractor/Consultant -Enter the contractor/consultant’s firm name. 6. Business Address -Enter the contractor/consultant’s business address. 7. Final Contract Amount -Enter the total final amount for the contract. 8. Contract Item Number - Enter contract item for work, services, or materials supplied provided. Not applicable for consultant contracts. 9. Description of Work, Services, or Materials Supplied - Enter description of work, services, or materials provided. Indicate all work to be performed by DBEs including work performed by the prime contractor/consultant’s own forces, if the prime is a DBE. If 100% of the item is not to be performed or furnished by the DBE, describe the exact portion to be performed or furnished by the DBE. See LAPM Chapter 9 to determine how to count the participation of DBE firms. 10. Company Name and Business Address - Enter the name, address, and phone number of all subcontracted contractors/consultants. Also, enter the prime contractor/consultant’s name and phone number, if the prime is a DBE. 11. DBE Certification Number -Enter the DBE’s Certification Identification Number. Leave blank if subcontractor is not a DBE. 12. Contract Payments - Enter the subcontracted dollar amount of the work performed or service provided. Include the prime contractor/consultant if the prime is a DBE. The Non-DBE column is used to enter the dollar value of work performed by firms that are not certified DBE or for work after a DBE becomes decertified. 13. Date Work Completed -Enter the date the subcontractor/subconsultant’s item work was completed. 14. Date of Final Payment - Enter the date when the prime contractor/consultant made the final payment to the subcontractor/subconsultant for the portion of work listed as being completed. 15. Original DBE Commitment Amount -Enter the “Total Claimed DBE Participation Dollars” from Exhibits 15-G or 10-O2 for the contract. 16. Total - Enter the sum of the “Contract Payments” Non-DBE and DBE columns. 17. Contractor/Consultant Representative’s Signature - The person completing the form on behalf of the contractor/consultant’s firm must sign their name. 18. Contractor/Consultant Representative’s Name - Enter the name of the person preparing and signing the form. 19. Phone - Enter the area code and telephone number of the person signing the form. 20. Date -Enter the date the form is signed by the contractor’s preparer. 21. Local Agency Representative’s Signature -A Local Agency Representative must sign their name to certify that the contracting records and on-site performance of the DBE(s) has been monitored. 22. Local Agency Representative’s Name -Enter the name of the Local Agency Representative signing the form. 23. Phone - Enter the area code and telephone number of the person signing the form. 24. Date -Enter the date the form is signed by the Local Agency Representative. Page 2 of 2 July 23, 2015 407 APPENDIX E City of Huntington Beach Caltrans Approved Quality Assurance Program (January 2016) 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 425 426 427 428 429 430 431 432 433 434 435 436 437 438 Public Works Environmental Consulting Services Points JM SE CD Ave Total Scores Rank 25 Understanding of the work to be done Firm #1 25 25 20 23 70 1 Firm #2 23 23 24 23 70 1 Firm #3 21 20 20 20 61 4 Firm #4 20 25 22 22 67 3 Firm #5 19 20 17 19 56 5 Firm #6 21 25 22 23 68 2 20 Experience with similar kinds of work Firm #1 20 20 18 19 58 1 Firm #2 18 20 19 19 57 2 Firm #3 16 18 17 17 51 5 Firm #4 18 20 18 19 56 3 Firm #5 15 20 15 17 50 6 Firm #6 17 20 17 18 54 4 15 Quality of staff for work to be done Firm #1 14 15 15 15 44 4 Firm #2 13 13 15 14 41 3 Firm #3 14 15 13 14 42 2 Firm #4 14 15 13 14 42 2 Firm #5 12 15 12 13 39 5 Firm #6 13 15 12 13 40 4 10 Capability of developing innovative or advanced techniques Firm #1 8 5 10 8 23 3 Firm #2 8 8 10 9 26 1 Firm #3 9 5 8 7 22 4 Firm #4 8 8 8 8 24 2 Firm #5 9 5 7 7 21 5 Firm #6 8 5 8 7 21 5 439 10 Familiarity with state and federal procedures Firm #1 8 10 8 9 26 4 Firm #2 9 10 10 10 29 1 Firm #3 9 10 8 9 27 3 Firm #4 9 10 9 9 28 2 Firm #5 8 10 7 8 25 5 Firm #6 10 10 8 9 28 2 10 Financial responsibility Firm #1 10 10 10 10 30 1 Firm #2 10 8 10 9 28 2 Firm #3 10 5 7 7 22 4 Firm #4 10 10 10 10 30 1 Firm #5 10 10 6 9 26 3 Firm #6 10 5 7 7 22 4 10 Demonstrated technical ability Firm #1 10 10 10 10 30 1 Firm #2 10 10 10 10 30 1 Firm #3 10 10 8 9 28 2 Firm #4 10 10 10 10 30 1 Firm #5 8 8 6 7 22 4 Firm #6 8 10 9 9 27 3 JM SE CD Ave Total Scores Rank Firm #1 95 95 91 94 281 1 Firm #2 91 92 98 94 281 1 Firm #3 89 83 81 84 253 4 Firm #4 89 98 90 92 277 2 Firm #5 81 88 70 80 239 5 Firm #6 87 90 83 87 260 3 440 441 442 443 444 445 446 447 448 449 450 451 452 453 454 455 456 457 458 459 460 461 462 463 464 465 466 467 468 469 470 471 472 473 474 475 476 477 478 479 480 481 482 483 484 485 486 487 488 489 490 491 492 493 494 495 496 497 498 499 500 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529 530 531 532 533 534 535 536 537 538 539 City of Huntington Beach File #:21-073 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Ursula Luna-Reynosa, Director of Community Development Subject: Approve Final Tract Map No. 18068 and Subdivision Agreement for the Shorehouse Residential Subdivision by C3 DLG 414 Main Street, LLC at 414 - 424 Main Street Statement of Issue: Transmitted for City Council consideration is Final Tract Map No. 18068 for the Shorehouse Residential Subdivision by C3 DLG 414 Main Street, LLC at 414 - 424 Main Street (east side of Main Street between Orange Avenue and Pecan Avenue). This map consolidates six parcels into a 0.42 acre parcel for condominium purposes. Financial Impact: Not applicable. Recommended Action: A) Approve Final Tract Map No. 18068 and accept the offer of easements pursuant to findings and requirements (Attachment No. 1); and, B) Approve and authorize the Mayor and City Clerk to execute the Subdivision Agreement by and between the City of Huntington Beach and C3 DLG 414 Main Street, LLC, Inc. (Attachment No. 6); and, C) Accept Faithful Performance Bond No. PB02497501239, Labor and Material Bond No. PB02497501239 and Monument Bond No. PB02497501240 as sureties for the installation of the subdivision’s required public improvements and survey monumentation (Attachment No. 7); and, D) Instruct the City Clerk to file the respective bonds with the City Treasurer and notify the Surety, Philadelphia Indemnity Insurance Company of this action. Alternative Action(s): The City Council may make the following alternative motion(s): 1. Deny Final Tract Map No. 18068 and the Subdivision Agreement/Bonds. City of Huntington Beach Printed on 1/27/2021Page 1 of 3 powered by Legistar™540 File #:21-073 MEETING DATE:2/1/2021 2. Continue Final Tract Map No. 18068 and the Subdivision Agreement/Bonds and direct staff accordingly. Analysis: A. PROJECT PROPOSAL: Applicant: C3 DLG 414 Main Street LLC, 1024 Bayside Drive, Suite 365, Newport Beach, CA 92660 Property Owner: Peter Zehnder, HB Main L.P., 124 Tustin Ave., Ste. 200, Newport Beach, CA 92663 Engineer: Jones, Cahl & Associates, 18090 Beach Blvd. #12, HB CA 92648 Surety: Philadelphia Indemnity Insurance Company, One Bala Plaza, Suite 100, Bala Cynwyd, PA 19004-0950 Location: 414 - 424 Main Street (east side of Main Street between Orange Avenue and Pecan Avenue General Plan: M-Sp (Mixed Use - Specific Plan Overlay) Zone: SP5-CZ-District 1 (Downtown Specific Plan - Coastal Zone Overlay - Downtown Core) No. of Acres: 0.42 acres No. of Numbered Lots: 1 No. of Lettered Lots:0 No. of Units:20 B. BACKGROUND: On January 23, 2018, the Planning Commission approved Tentative Tract Map No. 18068 to subdivide approximately 0.42 acres into one numbered lot for condominium purposes. The Planning Commission also recommended approval of Conditional Use Permit No. 17-008, Coastal Development Permit No. 17-003 and Special Permit No. 17-001 as part of the proposed project. The Planning Commission discussed the proposed parking, the construction dates, and construction truck routes. A motion was made by Kalmick, seconded by Grant, to approve Tentative Tract Map No. 18068 with findings and modified conditions of approval, carried by the following vote: AYES: Crowe, Scandura, Kalmick, Mandic, Grant NOES: Ray, Garcia City of Huntington Beach Printed on 1/27/2021Page 2 of 3 powered by Legistar™541 File #:21-073 MEETING DATE:2/1/2021 ABSTAIN: NONE ABSENT: NONE Motion Approved C. RECOMMENDATION: The final map has been examined and certified by the City Engineer as being in substantial compliance with the conditions of approval of the tentative map, as approved by the Planning Commission on January 23, 2018. Additionally, presented for City Council approval and acceptance are the required Subdivision Agreement (between the City and C3 DLG 414 Main Street, LLC) and Bonds pursuant to the City’s Zoning and Subdivision Ordinance and the State’s Subdivision Map Act. Environmental Status: The actions to accept Final Tract Map No. 18068 and the respective Subdivision Agreement with Bonds is exempt from the requirements of the California Environmental Quality Act pursuant to Section 15268(b). Strategic Plan Goal: Enhance and maintain infrastructure Attachment(s): 1. Findings and Requirements for Acceptance of the Final Map 2. Vicinity Map 3. Final Map No. 18068 4. Planning Commission Notice of Action for Tentative Tract Map No. 18068 with Findings and Conditions of Approval 5. Tentative Tract Map No. 18068 6. Subdivision Agreement 7. Bonds (Faithful Performance, Labor and Material, Monument) City of Huntington Beach Printed on 1/27/2021Page 3 of 3 powered by Legistar™542 ATTACHMENT NO. 1 FINDINGS AND REQUIREMENTS FOR ACCEPTANCE OF FINAL MAP Findings for Acceptance of Final Map: 1. Final Tract Map No. 18068 is in conformance with the California Subdivision Map Act, the City of Huntington Beach Subdivision Ordinance and Tentative Tract Map No. 18068 conditions of approval, as approved by the Planning Commission. Requirements: 1. Accept the easement dedication for Street and Public Utility purposes over Main Street and Alley. 2. The City Clerk shall file the following bonds with the City Treasurer: a. Faithful Performance Bond No. PB02497501239 b. Labor and Material Bond No. PB02497501239 c. Monument Bond No. PB02497501240 3. The City Clerk shall affix her signature to the map and release it for recordation by the County of Orange. 543 VICINITY MAP FINAL TRACT MAP NO. 18068 (SHOREHOUSE – 414-424 MAIN STREET) Slater Avenue City of Fountain Valley Subject Site Newland Street Subject Property 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 ATTACHMENT NO. 1.16 RCVD. 07.07.17 561 ATTACHMENT NO. 1.17 562 ATTACHMENT NO. 1.18 563 ATTACHMENT NO. 1.19 564 565 566 567 568 569 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609 610 City of Huntington Beach File #:21-076 MEETING DATE:2/1/2021 Adopt Ordinance No. 4225 (Zoning Map Amendment No. 17-001), and Ordinance No. 4226 (Development Agreement No. 19-001) - Magnolia Tank Farm Approved for introduction 1/19/2021 - Vote: 5-2 (Peterson, Carr - No) A) Adopt Ordinance No. 4225, “An Ordinance of the City of Huntington Beach Amending the Huntington Beach Zoning and Subdivision Ordinance to Rezone the Real Property Generally Located on the Westside of Magnolia Street at Banning Avenue from PS-O-CZ (Public-Semipublic - Oil Production Overlay - Coastal Zone Overlay) to SP-18-CZ (Specific Plan - Coastal Zone Overlay) (Zoning Map Amendment No. 17-001);” and, B) Adopt Ordinance No. 4226, “An Ordinance of the City of Huntington Beach Adopting a Development Agreement By and Between the City of Huntington Beach and SLF-HB Magnolia, LLC (Developer)(Development Agreement No. 19-001).” Attachment(s): 1. Ordinance No. 4225 for ZMA No. 17-001 2. Ordinance No. 4226 for DA No. 19-001 3. Draft Development Agreement City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™611 612 613 Page A-1January 2019 Draft The land referred to in this policy is situated in the County of Orange, State of California, and is described as follows: Parcel 1: (A.P.N. 114-150-36) That portion of the southeast quarter of the southeast quarter of Section 13, Township 6 South, Range 11 West, San Bernardino Base and Meridian, in the Rancho Las Bolsas, in the City of Huntington Beach, County of Orange, State of California, as shown on a map recorded in Book 51 page 14 of miscellaneous maps, in the office of the County Recorder of said County, lying easterly of the easterly line of that certain strip of land 145.00 feet wide, described and designated as Parcel D1-104 in the final order of condemnation had in Case No. 80955 of the Superior Court of the State of California, in and for the County of Orange, a certified copy of which was recorded September 8, 1961 in Book 5842 page 7 of Official Records. Except therefrom the “severed property” as described in Part B of the Grant Deed from the Southern California Edison Company, a corporation, recorded August 4, 2003 as Instrument No. 2003000931976 of Official Records. Also excepting therefrom: “All oil, gas, petroleum and other mineral or hydrocarbon substances in and under or which may be produced from that certain portion of the hereinabove described as Parcels 1 and 2 together with the right to use those portions only of said lands which underlie a plane parallel to and five hundred (500) feet below the present surface of said lands, for the purpose of prospecting for, developing and/or extracting said oil, gas, petroleum and other mineral or hydrocarbon substances from said lands by means of wells drilled into said subsurface of said land from drill sites located on other land, it being expressly understood and agreed that said grantor, their successors and assigns, shall have no right to enter upon the surface of said lands or to use said lands or any portion thereof to said depth of five hundred (500) feet, for any purpose whatsoever”, as reserved in the Deed from Dorothy Constance Smith recorded July 30, 1962 in Book 6194 page 470 of Official Records. Exhibit A Legal Description and Map 614 Page A-2 January 2019 Draft Parcel 2: (A.P.N. 114-481-32) That portion of the northeast quarter of fractional Section 24, Township 6 South, Range 11 West, San Bernardino Base and Meridian, in the Rancho Las Bolsas, in the City of Huntington Beach, County of Orange, State of California, as shown on a map recorded in Book 51 page 14, in the office of the County Recorder of said County, described as follows: Beginning at the intersection of the northerly line of said fractional Section 24 with the northeasterly right of way line of the Orange County Flood Control District’s “Huntington Beach Channel” as described in the final order of condemnation recorded in Book 5591 page 500, et seq. of Official Records in the office of the County Recorder of said County; thence north 89° 32’ 40” east along said northerly line of fractional Section 24 a distance of 360.17 feet to the southwesterly corner of that certain real property described and designated as “Parcel Two” in that certain road easement to the City of Huntington Beach recorded October 13, 1967 in Book 8418 page 439 of said Official Records, said southwesterly corner being also a point in a curve concave to the northwest having a radius of 950.00 feet from which point a radial line of said curve bears north 57° 33’ 35” west; thence southwesterly along said curve through a central angle of 10° 37’ 14” an arc distance of 176.10 feet; thence tangent to said last mentioned curve 80.37 feet to a point in a curve in said northeasterly right of way line of the Orange County Flood Control District’s “Huntington Beach Channel”, said last mentioned curve being concave to the northeast and having a radius of 4,717.50 feet from which point a radial line of said curve bears north 43° 40’ 03” east; thence northwesterly along said last mentioned curve, through a central angle of 01° 10’ 00” an arc distance of 96.06 feet; thence tangent to said curve north 45° 09’ 57” west 181.36 feet to the point of beginning. Except therefrom the “Severed Property” as described in Part B of the Grant Deed from the Southern California Edison Company, a corporation, recorded August 4, 2003 as Instrument No. 2003000931976 of Official Records. Basis of Bearing: Bearings shown hereon are based upon the centerline of Magnolia Street being north 00° 17’ 10” west as shown on Record of Survey 2005-1075 filed in Book 232 pages 1-10, of Records of Survey, Records of Orange County, California. 615 616 617 Exhibit B Amended Zoning Map Excerpt of District Maps 14 and 29 618 619 620 and SLF-HB Magnolia, LLC, a Delaware limited liability company DEVELOPMENT AGREEMENT NO. [ ] A DEVELOPMENT AGREEMENT BETWEEN CITY OF HUNTINGTON BEACH 1032/034040-0002 14187091.1 a10/21/19 19-7923/215210 -1- 621 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -1- DEVELOPMENT AGREEMENT NO. [ ] This Development Agreement (hereinafter “Agreement”) is entered into as of this day of , 2021 by and between the City of Huntington Beach, California (hereinafter “CITY”), and SLF-HB Magnolia LLC, a California limited liability company (hereinafter “OWNER”): RECITALS WHEREAS, CITY is authorized to enter into binding development agreements with persons having legal or equitable interests in real property for the development of such property, pursuant to Huntington Beach Zoning and Subdivision Ordinance (HBZSO) Chapter 246; and WHEREAS, This Agreement constitutes a current exercise of CITY’S Charter City authority to provide predictability to OWNER in the development approval process by vesting the permitted uses, density, intensity of use, and timing and phasing of development consistent with the Development Plan in exchange for OWNER’S commitment to provide significant public benefits to CITY as set forth in Section 4, below; and WHEREAS, OWNER has filed an application with the CITY requesting, in part, the CITY to enter into a development agreement in accordance with the HBZSO Chapter 246; and WHEREAS, the CITY finds and determines that the health, safety and welfare will be enhanced and better served by entering into this Agreement because, in part, this Agreement will provide the CITY with additional housing as well as funding that may be used to enhance CITY recreational facilities, parks, playground equipment and affordable housing in accordance with and in implementation of numerous general plan goals and policies of the CITY; and WHEREAS, the provision by OWNER of these aforementioned public benefits allows the CITY to realize significant economic, and social benefits it would not otherwise gain without this Agreement; and WHEREAS, the environmental impacts, if any, of the Project and this Agreement have been analyzed pursuant to the California Environmental Quality Act (“CEQA”) (Pub. Res. Code section 21000 et seq.); and WHEREAS, this Agreement and the Project are consistent with the Huntington Beach General Plan, Local Coastal Program, and any specific plan, as amended, applicable thereto; and WHEREAS, in consideration of this Agreement the CITY and OWNER have complied with all applicable legal requirements for notice, public hearings, findings, votes, and other procedural matters. 622 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -2- COVENANTS NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS AND EXHIBITS. 1.1 Definitions. The following terms when used in this Agreement shall be defined as follows: 1.1.1 “Agreement” means this Development Agreement. corporation. 1.1.2 “CITY” means the City of Huntington Beach, a California municipal 1.1.3 “City Council” means the duly elected city council of the City of Huntington Beach. 1.1.4 “Commencement Date” means the Effective Date of this Agreement. 1.1.5 “Development” means the improvement of the Property for the purposes of completing the structures, improvements and facilities comprising the Project including, but not limited to: grading; the construction of infrastructure and public facilities related to the Project whether located within or outside the Property; the construction of buildings and structures; and the installation of landscaping. “Development” does not include the maintenance, repair, reconstruction or redevelopment of any building, structure, improvement or facility after the construction and completion thereof. 1.1.6 “Development Approvals” means all permits and other entitlements for use subject to approval or issuance by CITY in connection with development of the Property including, but not limited to: (a) General Plan, general plan amendments, specific plans and specific plan amendments; (b) tentative and final subdivision and parcel maps; (c) conditional use permits, architectural review, and plot plans; (d) Zoning, Zoning Map amendments, and zoning text amendments; (e) Local Coastal Program and local coastal program amendments; and, (f) grading and building permits. 623 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -3- 1.1.7 “Development Exaction” means any requirement of CITY in connection with or pursuant to any Land Use Regulation or Development Approval for the dedication of land, the construction of improvements or public facilities, or the payment of fees in order to lessen, offset, mitigate or compensate for the impacts of development on the environment or other public interests. 1.1.8 “Development Impact Fee” a monetary exaction other than a tax or special assessment, whether established for a broad class of projects by legislation of general applicability or imposed on a specific project on an ad hoc basis, that is charged by a local agency to the applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project, but does not include park “in lieu” fees specified in Government Code Section 66477, fees for processing applications for governmental regulatory actions or approvals, affordable housing fees, or fees collected under development agreements adopted pursuant to Article 2.5 of the Government Code (commencing with Section 65864) of Chapter 4. 1.1.9 “Development Plan” means the plan for development of the Property as set forth in Exhibit “C” consisting of a Residential Parcel, a Hotel Parcel, an Open Space Park Parcel, and an Open Space Conservation Parcel. 1.1.10 ““Effective Date” means the date this Agreement is approved in final form by the California Coastal Commission in accordance with Government Code section 65869. 1.1.10 "Final Inspection” means the City has undertaken a final inspection in accordance with HBZO section 110.3.11 and ”finaled” the permit allowing human occupation/use of the structure. “Hotel Improvements” shall mean those on-site hotel improvements set forth on pp. 3-22 through 3-23 of the Magnolia Tank Farm Specific Plan and set forth in Exhibit “C.” 1.1.11 “Land Use Regulations” means all ordinances, resolutions, codes, rules, regulations and official policies of CITY governing the development and use of land, including, without limitation, the permitted use of land, the density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions for reservation or dedication of land for public purposes, and the design, improvement and construction standards and specifications applicable to the development of the Property. “Land Use Regulations” does not include any CITY ordinance, resolution, code, rule, regulation or official policy, governing: (a) the conduct of businesses, professions, and occupations; (b) taxes (special or general) and assessments; (c) the control and abatement of nuisances; (d) the granting of encroachment permits and the conveyance of rights and interests that provide for the use of or the entry upon public property; 624 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -4- (e) the exercise of the power of eminent domain. “OWNER” means the persons and entities listed as OWNER on page 1 of this Agreement and their successors in interest to all or any part of the Property. “Open Space Park Improvements” shall mean those on-site open space improvements set forth on pp. 3-5 and 3-17 through 3-22 of the Magnolia Tank Farm Specific Plan and set forth in Exhibit “C.” “Open Space Conservation Improvements” shall mean shall mean those on-site open space conservation improvements set forth on pp. 3-4 and 3-16 through 3-19 of the Magnolia Tank Farm Specific Plan and set forth in Exhibit “C.” 1.1.12 “Mortgagee” means a mortgagee of a mortgage, a beneficiary under a deed of trust or any other security-device lender, and their successors and assigns. 1.1.13 “Project” means the development of the Property contemplated by the Development Plan as such Plan may be further defined, enhanced or modified pursuant to the provisions of this Agreement. 1.1.14 “Property” means the real property as set forth in Exhibit “A” and Exhibit “B” to this Agreement. 1.1.15 “Public Benefit” refers to those benefits provided to the CITY and the community by OWNER pursuant to Section 4 below. 1.1.16 “Reservation of Rights” means the rights and authority excepted from the assurances and rights provided to OWNER under this Agreement and reserved to CITY under Section 2.3 of this Agreement. 1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement: Exhibit “A” – Legal Description of the Property. Exhibit “B” – Map showing Property and its location. Exhibit “C” – Development Plan – Vested Entitlements. Exhibit “D” – Hotel Quality Standards Exhibit “E” Magnolia/Hamilton Improvements GENERAL PROVISIONS. 625 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -5- 1.3 Binding Effect of Agreement. The Property is hereby made subject to this Agreement. Development of the Property shall be carried out in accordance with the Land Use Regulations, which are fully vested by this Agreement, in effect as of the Effective Date. The Property Development, as authorized by future approvals, shall be carried out in accordance with the terms of the Development Plan, the Land Use Regulations in effect as of the Effective Date, and this Agreement. 1.4 Ownership of Property. OWNER represents and covenants that it is the owner of the fee simple title to, or has an equitable interest in, the Property or a portion thereof. 1.5 City Council Findings. The City Council finds that: 1.5.1 This Agreement is consistent with the City’s General Plan, and Local Coastal Program as amended. 1.5.2 This Agreement is consistent with all provisions of Chapter 246 of the HBZSO, the CITY’s Municipal Code, and the State Subdivision Map Act. 1.5.3 This Agreement will not be detrimental to the health, safety and general welfare; and will not adversely affect the orderly development of property. 1.5.4 The City Council has considered the fiscal effect of this Agreement on the CITY and the effects on the housing needs of the region in which the CITY is situated and has balanced these needs against the public service needs of its residents and available fiscal and environmental resources. 1.5.5 This Agreement ensures a desirable and functional community environment, provides effective and efficient development of public facilities, infrastructure, and services appropriate for the development of the Project, enhances effective utilization of resources within the CITY. 1.5.6 This Agreement provides public benefits beyond those which are necessary to mitigate the development of the Project. 1.5.7 This Agreement strengthens the public planning process, encourages private participation in comprehensive planning and reduces costs of development and government. 1.5.8 This Agreement enhances the health, safety and welfare and the CITY is better served by entering into this Agreement. 1.6 Term. The term of this Agreement shall commence on the date (the “Commencement Date”) that is the Effective Date, and shall continue for a period of fifteen (15) years thereafter, unless this term is modified, extended or terminated pursuant to the provisions of this Agreement. 626 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -6- 1.7 Assignment. 1.7.1 Right to Assign. OWNER shall have the right to sell, transfer or assign the Property in whole or in part (provided that no such partial transfer shall violate the Subdivision Map Act, Government Code Section 66410, et seq.) to any person, partnership, joint venture, firm or corporation at any time during the term of this Agreement with the prior written consent of the CITY, which shall not be unreasonably withheld; provided, however, that any such sale, transfer or assignment shall include the assignment and assumption of the rights, duties and obligations arising under or from this Agreement and be made in strict compliance with the following conditions precedent: (a) No sale, transfer or assignment of any right or interest under this Agreement shall be made unless made together with the sale, transfer or assignment of all or a part of the Property. (b) Before any such sale, transfer or assignment, OWNER shall notify CITY, in writing, of such sale, transfer or assignment and obtain CITY’s consent as set forth above, and shall provide CITY with an draft agreement (“Assignment and Assumption Agreement”), in a form reasonably acceptable to CITY Attorney, by the purchaser, transferee or assignee and providing therein that the purchaser, transferee or assignee expressly and unconditionally assumes all the duties, obligations, agreements, covenants, waivers of OWNER under this Agreement, including, without limitation, the covenants not to sue and waivers contained in Sections 6.2 and 7.4 hereof. Any sale, transfer or assignment not made in strict compliance with the foregoing conditions shall be void and constitute a default by Owner under this Agreement. Notwithstanding the failure of any purchaser, transferee or assignee to execute the agreement required by Paragraph (b) of this Subsection 1.7.1, the burdens of this Agreement shall be binding upon such purchaser, transferee or assignee, but the benefits of this Agreement shall not inure to such purchaser, transferee or assignee until and unless such agreement is executed. 1.7.2 Release of Transferring Owner. Notwithstanding any sale, transfer or assignment, a transferring OWNER shall continue to be obligated under this Agreement with respect to the transferred Property or any transferred portion thereof, unless such transferring OWNER is given a release in writing by CITY, which release shall be provided by CITY upon the full satisfaction by such transferring OWNER of the following conditions: (a) OWNER no longer has a legal or equitable interest in all or any part of the Property subject to the transfer. (b) OWNER is not then in default under this Agreement. (c) OWNER has provided CITY with the notice and executed agreement required under Paragraph (b) of Subsection 1.7.1 above. 627 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -7- (d) The purchaser, transferee or assignee provides CITY with security equivalent to any security previously provided by OWNER to secure performance of its obligations hereunder. 1.7.3 Subsequent Assignment. Any subsequent sale, transfer or assignment after an initial sale, transfer or assignment shall be made only in accordance with and subject to the terms and conditions of this Section. 1.7.4 Utilities. The Project shall be connected to all utilities necessary to provide adequate water, sewer, gas, electric, and other utility service to the Project, prior to final inspections and/or the issuance of a certificate of occupancy for any portion of the Project, as applicable. 1.7.5 Sale to Public and Completion of Construction. The provisions of Subsection 1.7.1 shall not apply to the sale or lease (for a period longer than one year) of any lot that has been finally subdivided and is individually (and not in "bulk") sold or leased to a member of the public or other ultimate user. This Agreement shall terminate with respect to any lot and such lot shall be released and no longer be subject to this Agreement without the execution or recordation of any further document upon satisfaction of both of the following conditions: (a) The lot has been finally subdivided and individually (and not in "bulk") sold or leased (for a period longer than one year) to a member of the public or other ultimate user; and (b) A Final Inspection or certificate of occupancy has been issued for a building on the lot, and the fees for such lot set forth in this Agreement have been paid. 1.8 Amendment or Cancellation of Agreement. This Agreement may be amended or canceled in whole or in part only by written consent of all parties in the manner provided for in HBZSO or Government Code Section 65868. This provision shall not limit any remedy of CITY or OWNER as provided by this Agreement. 1.9 Termination. This Agreement shall be deemed terminated and of no further effect upon the occurrence of any of the following events: (a) Expiration of the stated term of this Agreement as set forth in Section 1.6. (b) Entry of a final judgment setting aside, voiding or annulling the adoption of the ordinance approving this Agreement. (c) Completion of the Project in accordance with the terms of this Agreement including passing final inspection and/or issuance of all required permits and acceptance by CITY or applicable public agency of all required dedications. Termination of this Agreement shall not constitute termination of any other land use entitlements approved for the Property. Upon the termination of this Agreement, no party shall 628 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -8- have any further right or obligation hereunder except with respect to any obligation to have been performed prior to such termination or with respect to any default in the performance of the provisions of this Agreement that has occurred prior to such termination or with respect to any obligations that are specifically set forth as surviving this Agreement. 1.10 Notices. (a) As used in this Agreement, "notice" includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. (b) All notices shall be in writing and shall be considered given either: (i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) on the date of delivery shown in the records of a standard overnight delivery service. All notices shall be addressed as follows: If to CITY: City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attn: City Manager Telephone: (714) 536-8465 Copy to: City Attorney’s Office 2000 Main Street Huntington Beach, CA 92648 Attn: Michael Gates Telephone: (714) 536-5538 If to OWNER: SLF-HB Magnolia, LLC 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: John Santry Telephone: (949) 769-6714 Copy to: Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, CA 92694 Attn: John A. Ramirez Telephone: (714) 662-4610 (c) Either party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or to a different address, or both. Notices given before actual receipt of notice of change shall not be 629 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -9- invalidated by the change. 2. DEVELOPMENT OF THE PROPERTY. 2.1 Rights to Develop. Subject to the terms of this Agreement including the Reservation of Rights, OWNER shall have the vested right to develop the Property in accordance with the Land Use Regulations in existence on the Effective Date and to the extent this Agreement permits. Except as expressly provided otherwise herein, the Project is subject to all Land Use Regulations and Development Approvals in effect on the Effective Date that are required to complete the Project as contemplated by the Development Plan. Except as otherwise provided in this Agreement, the permitted uses of the Property, the density and intensity of use, the maximum height and size of proposed buildings, and provisions for reservation and dedication of land for public purposes shall be those set forth in the Land Use Regulations and Development Approvals in effect on the Effective Date. OWNER shall comply with all mitigation measures and conditions of approval as required to be undertaken pursuant to any discretionary approval, including any CEQA document, with respect to the Project. This Agreement shall not apply to Development Approvals which have not been approved prior to Effective Date. 2.2 Effect of Agreement on Land Use Regulations. In connection with any Development Approvals issued following the Effective Date and except as specifically provided otherwise herein, CITY may exercise its discretion in accordance with the Land Use Regulations then in effect, as provided by this Agreement, including, but not limited to, the Reservation of Rights. CITY shall accept for processing, review and take action on all applications for subsequent development approvals. 2.3 Reservation of Rights. 2.3.1 Limitations, Reservations and Exceptions. Notwithstanding any other provision of this Agreement, the following regulations shall apply to the development of the Property: (a) Processing fees and charges of every kind and nature imposed by CITY to cover the estimated actual costs to CITY of processing applications for Development Approvals or for monitoring compliance with any Development Approvals granted or issued. (b) Procedural regulations relating to hearing bodies, petitions, applications, notices, findings, records, hearings, reports, recommendations, appeals and any other matter of procedure. (c) Regulations, policies and rules governing engineering and construction standards and specifications applicable to public and private improvements, including, without limitation, all uniform codes adopted by the CITY and any local amendments to those codes adopted by the CITY, including, without limitation, the CITY's Building Code, Plumbing Code, Mechanical Code, Electrical Code, and Grading 630 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -10- Ordinance. (d) Regulations imposing Development Exactions; provided, however, that no such subsequently adopted Development Exaction shall be applicable to development of the Property unless such Development Exaction is applied uniformly to development located either throughout the CITY or within a defined area of benefit which includes the Property. No such subsequently adopted Development Exaction shall apply if its application to the Property would physically prevent development of the Property for the uses and to the density or intensity of development set forth in the Development Plan. In the event any such subsequently adopted Development Exaction fulfills the same purposes, in whole or in part, as the fees set forth in Section 4 of this Agreement, CITY shall allow a credit against such subsequently adopted Development Exaction for the fees paid under Section 4 of this Agreement to the extent such fees fulfill the same purposes. (e) Health and safety regulations that may be in material conflict with this Agreement but that are necessary to protect the residents of the project or the immediate community from a condition perilous to their health or safety. To the extent possible, any such regulations shall be applied and construed so as to provide OWNER with the rights and assurances provided under this Agreement. (f) Regulations that are not in material conflict with this Agreement or the Development Plan. Any regulation, whether adopted by initiative or otherwise, limiting the rate or timing of development of the Property shall be deemed to materially conflict with the Development Plan and shall therefore not be applicable to the development of the Property. (g) Regulations that are in material conflict with the Development Plan; provided OWNER has given written consent to the application of such regulations to development of that Property in which the OWNER has a legal or equitable interest. (h) Regulations that impose, levy, alter or amend fees, charges, or Land Use Regulations relating to consumers or end users, including, without limitation, trash can placement, service charges and limitations on vehicle parking. (i) Regulations of other public agencies, including Development Impact Fees adopted or imposed by such other public agencies, although collected by CITY. (j) For purposes of clarity, it is acknowledged that development of the Property will require the submission and approval of various implementation permits, including, but not limited to subdivision maps. City shall retain discretion in acting upon such future permits, consistent with the terms of this Agreement. 2.3.2 Modification or Suspension by State or Federal Law. In the event that State, County or Federal laws or regulations, enacted after the Effective Date of this Agreement, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of 631 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -11- this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations; provided, however, that this Agreement shall remain in full force and effect to the extent it is not inconsistent with such laws or regulations and to the extent such laws or regulations do not render such remaining provisions impractical to enforce. 2.4 Regulation by Other Public Agencies. It is acknowledged by the parties that other public agencies not within the control of CITY may possess authority to regulate aspects of the development of the Property separately from or jointly with CITY and this Agreement does not limit the authority of such other public agencies. 2.5 Timing of Development. Because the California Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal. 3d 465, that the failure of the parties in that case to provide for the timing of development resulted in a later-adopted initiative restricting the timing of development to prevail over the parties’ agreement, it is the specific intent of the Parties to provide for the timing of the Project in this Agreement. To do so, the Parties acknowledge and provide that OWNER shall have the right, but not the obligation, to complete the Project in such order, at such rate, at such times, and in as many development phases and sub-phases as OWNER deems appropriate in its sole subjective business judgment subject the following: The on-site Open Space Park Improvements and Open Space Conservation Improvements shall be completed prior to Final Inspection for the first dwelling unit. The Hotel shall receive a certificate of occupancy prior to the Final Inspection for the 175th dwelling unit. 2.6 Conditions, Covenants and Restrictions. Except as imposed as a condition in a discretionary permit, OWNER shall have the ability to reserve and record such covenants, conditions, and restrictions (CC&Rs) against the Property as OWNER deems appropriate. Such CC&Rs may not conflict with this Agreement or the General Plan. Before recording any CC&Rs, OWNER shall provide a copy of the CC&Rs to the City for review and approval by the City Attorney. The City Attorney’s review shall be limited to determining if the CC&Rs substantially comply with this Agreement and all laws in effect . Within thirty (30) days after receiving a copy of the proposed CC&Rs from OWNER, as evidenced by written confirmation of receipt from the City Attorney, the City Attorney shall provide OWNER with either (i) a statement that the CC&Rs comply with this Agreement (“CC&R Approval”) or (ii) written comments identifying each aspect of the CC&Rs which the City Attorney believes not to be in compliance with this Agreement and/or law(a “Statement of Non-Compliance”). If the City Attorney fails to provide OWNER with either CC&R Approval or a Statement of Non- Compliance within thirty (30) days following a written request by OWNER, City shall be deemed to have approved the CC&Rs and OWNER may record the CC&Rs against the Property. If the City Attorney provides a Statement of Non-Compliance, OWNER shall have thirty (30) days in which to respond to the Statement of Non-Compliance. Upon submittal of OWNER’s response, the procedure described above for the initial submittal and City Attorney review of proposed CC&Rs shall again be followed. This procedure shall be followed until OWNER either (1) receives CC&R Approval, (2) submits the compliance issues to binding arbitration pursuant 632 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -12- to the rules of the American Arbitration Association, (3) files an action for declaratory relief in Orange County Superior Court seeking a judicial determination of the compliance of the proposed CC&Rs, or (4) an agreement is otherwise reached between the Parties allowing for the recording of the CC&Rs. The CC&Rs may run with the land and bind OWNER’s successors and assigns. Except as provided above, any dispute between the Parties regarding the City’s approval or rejection of the CC&Rs shall be subject to immediate and binding arbitration pursuant to the rules of the American Arbitration Association. 3. PUBLIC BENEFITS. 3.1 Public Benefits. The Project will serve to re-vitalize an under-developed site, will provide on and off site infrastructure upgrades; will provide additional property and sales tax revenues to the CITY. In addition, the Project will provide monetary funds to improve the CITY’s open space and recreational facilities by providing funding in a total amount that would allow the CITY, should it so choose in the future and in compliance with all laws, including but not limited to City Charter section 612 (Measure C), to implement the public improvements listed below. Nothing in this Agreement obligates the City to use the monetary funds provided by the OWNER for such improvements, and the City Council may use the funds provided by OWNER for any lawful purpose at its sole and absolute discretion. However, the monetary funds to be provided by OWNER to the CITY pursuant to this Agreement may fund the following public improvements: 3.1.1 Banning Branch Library. $1,000,000.00 (ONE MILLION DOLLARS) is being provided by OWNER. This amount could fund improvements to the Banning Branch Library. 3.1.2 Edison Park Improvements. $800,000.00 (EIGHT HUNDRED THOUSAND DOLLARS) is being provided by OWNER. This amount could fund the reconfiguration of the exterior of Edison Park, including but not limited to the relocation of some of the current amenities to a more functional location within Edison Park and construction of new patron serving amenities if funding permits. 3.1.3 Play Equipment and Park Improvements at Seely Parks. $400,000.00 (FOUR HUNDRED THOUSAND DOLLARS) is being provided by OWNER. This amount could fund play equipment and/or other park improvements at Seely Park, with any remaining funds after improvements have been completed to be used at Edison Park for park improvements. 3.1.4 Banning Avenue Beautification. $300,000.00 (THREE HUNDRED THOUSAND DOLLARS) is being provided by OWNER. This amount could fund the creation of landscape improvements along Banning Avenue. 633 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -13- 3.2 Timing of Payments; No Restrictions on Use of Funds by City. The sum total to be provided by OWNER to City pursuant to Section 4.1 of the Agreement is $2,500,000.00 (TWO MILLION FIVE HUNDRED THOUSAND DOLLARS). OWNER shall provide payment to CITY as follows: $1,000.000.00 (ONE MILLION DOLLARS) concurrent with the issuance of the building permit for the first dwelling unit; $1,000,000.00 (ONE MILLION DOLLARS) prior to Final Inspection of the first dwelling unit; and $500,000.00 (FIVE HUNDRED THOUSAND DOLLARS) prior to Final Inspection of the 125th dwelling unit. CITY may use the monetary funds provided by OWNER pursuant to this Agreement for any lawful purpose but will prioritize the monetary funds for capital improvement projects located within a one mile radius of the Property that are deemed to improve the quality of life for residents within the area. The obligations to provide payments set forth above shall survive any termination of this Agreement. 3.3 Magnolia/Hamilton Improvements. In addition, the project design includes extensive improvements to be constructed by OWNER to the intersection of Magnolia and Hamilton and along the adjacent ASCON property frontage on Magnolia Street (e.g., full width street improvements; including but not limited to sidewalk, curb, gutter, streetlights, undergrounding of utilities, signalization improvements, etc.). The City will allow OWNER to underground utilities located along Magnolia Street within the public right of way for the portion adjacent to the ASCON property as well as the portion adjacent to the PROPERTY. The Hamilton Street improvements include full width street improvements as well with the exception of undergrounding of utilities. Provided that OWNER is able to obtain access at no-charge to construct said improvements, said improvements shall be completed prior to Final Inspection of the 125th dwelling unit. The Magnolia/Hamilton Improvements are set forth in Exhibit “E.” 3.4 Hotel Quality Standards. The Hotel quality standards and amenities shall be those set forth on Exhibit “D”. 3.5 The CITY acknowledges the Project and this Agreement must be approved by the California Coastal Commission (“CCC”) prior to the Agreement taking effect. The CITY also acknowledges the CCC may request that changes be made to the Development Plan. Thus, the public benefits set forth herein are predicated on the Development Plan being approved by the CITY. 3.6 Development Impact Fees. 3.6.1 Amount of Fee. The Development Impact Fees in effect at the time of Building Permit issuance in accordance with the City’s HBZSO shall be charged to the Project. 3.6.2 Time of Payment. The fees required pursuant to Subsection 3.6.1 shall be paid to CITY in accordance with the terms of such ordinance(s). 3.6.3 Fee Credits. OWNER shall be entitled to credit against the fees required pursuant to Subsection 4.6.1 in accordance with the terms of such ordinance(s). 634 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -14- 3.7 Timing of Construction of Off-Site Infrastructure. Approval of any building permits on the Property shall be conditioned upon CITY's determination, in its reasonable discretion, that sufficient progress is being made on construction of off-site infrastructure serving development of OWNER's Property. Construction of the off-site infrastructure adjacent to Owner’s Property shall be completed prior to Final Inspection for the first dwelling unit. Construction of the Magnolia Hamilton Improvements shall be subject to section 3.3. 4. REVIEW FOR COMPLIANCE. 4.1 Periodic Review. The CITY shall review this Agreement annually, on or before the anniversary of the Effective Date, in order to ascertain the compliance by OWNER with the terms of the Agreement. OWNER shall submit an Annual Monitoring Report, in a form acceptable to the City Manager, within thirty (30) days after written notice from the City Manager. The Annual Monitoring Report shall be accompanied by an annual review and administration fee sufficient to defray the estimated costs of review and administration of the Agreement during the succeeding year. The amount of the annual review and administration fee shall be set annually by resolution of the City Council. 4.2 Special Review. The City Council may order a special review of compliance with this Agreement at any time. The City Manager, or his or her designee, shall conduct such special reviews. 4.3 Procedure. (a) During either a periodic review or a special review, OWNER shall be required to demonstrate good faith compliance with the terms of the Agreement. The burden of proof on this issue shall be on OWNER. (b) Upon completion of a periodic review or a special review, the City Manager, or his or her designee, shall submit a report to the Planning Commission setting forth the evidence concerning good faith compliance by OWNER with the terms of this Agreement and his or her recommended finding on that issue. (c) If the Planning Commission finds and determines on the basis of substantial evidence that OWNER has complied in good faith with the terms and conditions of this Agreement, the review shall be concluded. (d) If the Planning Commission finds and determines on the basis of substantial evidence that OWNER has not complied in good faith with the terms and conditions of this Agreement, the Commission may recommend to the City Council modification or termination of this Agreement. OWNER may appeal a Planning Commission determination pursuant to this Section 5.3(d) pursuant to CITY’s rules for consideration of appeals in zoning matters then in effect. Notice of default as provided under Section 6.3 of this Agreement shall be given to OWNER prior to or concurrent with proceedings under Section 5.4 and Section 5.5. 635 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -15- 4.4 Proceedings Upon Modification or Termination. If, upon a finding under Section 5.3, CITY determines to proceed with modification or termination of this Agreement, CITY shall give written notice to OWNER of its intention so to do. The notice shall be given at least ten (10) calendar days prior to the scheduled hearing and shall contain: (a) The time and place of the hearing; (b) A statement as to whether or not CITY proposes to terminate or to modify the Agreement; and, (c) Such other information that the CITY considers necessary to inform OWNER of the nature of the proceeding. 4.5 Hearing on Modification or Termination. At the time and place set for the hearing on modification or termination, OWNER shall be given an opportunity to be heard. OWNER shall be required to demonstrate good faith compliance with the terms and conditions of this Agreement. The burden of proof on this issue shall be on OWNER. If the City Council finds, based upon substantial evidence, that OWNER has not complied in good faith with the terms or conditions of the Agreement, the City Council may terminate this Agreement or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of the CITY. The decision of the City Council shall be final. 4.6 Certificate of Agreement Compliance. If, at the conclusion of a Periodic or Special Review, OWNER is found to be in compliance with this Agreement, CITY shall, upon request by OWNER, issue a Certificate of Agreement Compliance ("Certificate") to OWNER stating that after the most recent Periodic or Special Review and based upon the information known or made known to the City Manager and City Council that: (1) this Agreement remains in effect; and (2) OWNER is not in default. The Certificate shall be in recordable form, shall contain information necessary to communicate constructive record notice of the finding of compliance, shall state whether the Certificate is issued after a Periodic or Special Review and shall state the anticipated date of commencement of the next Periodic Review. OWNER may record the Certificate with the County Recorder. Whether or not the Certificate is relied upon by assignees or other transferees or OWNER, CITY shall not be bound by a Certificate if a default existed at the time of the Periodic or Special Review, but was concealed from or otherwise not known to the City Manager or City Council. 5. DEFAULT AND REMEDIES. 5.1 Remedies in General. It is acknowledged by the parties that CITY would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that neither CITY nor OWNER shall be liable in damages and both OWNER and CITY covenant not to sue for damages or claim any damages: 636 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -16- (a) For any breach of this Agreement or for any cause of action that arises out of this Agreement; or (b) For the taking, impairment or restriction of any right or interest conveyed or provided under or pursuant to this Agreement; or (c) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement. 5.2 Release. Except for non-monetary remedies, OWNER, for itself, its successors and assignees, hereby releases CITY, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, including, but not limited to, any claim or liability, based or asserted, pursuant to Article I, Section 19 of the California Constitution, the Fifth and Fourteenth Amendments to the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon CITY because it entered into this Agreement or because of the terms of this Agreement. OWNER hereby acknowledges that it has read and is familiar with the provisions of California Civil Code Section 1542, which is set forth below: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” By initialing below, OWNER hereby waives the provisions of Section 1542 in connection with the matters that are the subject of the foregoing waivers and releases. Owner's Initials 5.3 Termination or Modification of Agreement for Default of OWNER. CITY may terminate or modify this Agreement for any failure of OWNER to perform any material duty or obligation of OWNER under this Agreement, or to comply in good faith with the terms of this Agreement (hereinafter referred to as "default"); provided, however, CITY may terminate or modify this Agreement pursuant to this Section only after providing written notice to OWNER of default setting forth the nature of the default and the actions, if any, required by OWNER to cure such default and, where the default can be cured, OWNER has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. 637 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -17- 5.4 Termination of Agreement for Default of CITY. OWNER may terminate this Agreement only in the event of a default by CITY in the performance of a material term of this Agreement and only after providing written notice to CITY of default setting forth the nature of the default and the actions, if any, required by CITY to cure such default and, where the default can be cured, CITY has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default. 6. LITIGATION. 6.1 Third Party Litigation Concerning Agreement. OWNER shall defend, at its expense, including attorneys' fees, indemnify, and hold harmless CITY, its agents, officers and employees from any claim, action or proceeding against CITY, its agents, officers, or employees to attack, set aside, void, or annul the approval of this Agreement, or the approval of any permit granted pursuant to this Agreement. CITY shall promptly notify OWNER of any claim, action, proceeding or determination included within this Section 8.1, and CITY shall cooperate in the defense. If CITY fails to promptly notify OWNER of any such claim, action, proceeding or determination, or if CITY fails to cooperate in the defense, OWNER shall not thereafter be responsible to defend, indemnify, or hold harmless CITY. CITY may in its discretion participate in the defense of any such claim, action, proceeding or determination. 6.2 Environmental Assurances. OWNER shall indemnify and hold CITY, its officers, agents, and employees free and harmless from any liability, based or asserted, upon any act or omission of OWNER or City, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors for any violation of any federal, state or local law, ordinance or regulation relating to any environmental laws or regulations including but not limited to CEQA the CCA, CERCLA, industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and OWNER shall defend, at its expense, including attorneys' fees, CITY, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. CITY may in its discretion participate in the defense of any such action. 6.3 Reservation of Rights. With respect to Section 7.1 and Section 7.2 herein, CITY reserves, the right to either (1) approve the attorney(s) that the indemnifying party selects, hires or otherwise engages to defend the indemnified party hereunder, which approval shall not be unreasonably withheld, or (2) conduct its own defense; provided, however, that the indemnifying party shall reimburse the indemnified party forthwith for any and all reasonable expenses incurred for such defense, including attorneys' fees, upon billing and accounting therefor. 6.4 Challenge to Existing Land Use Approvals. By accepting the benefits of this Agreement, OWNER, on behalf of itself and its successors in interest, hereby expressly agrees and covenants not to sue or otherwise challenge any land use approval affecting the Property and in effect as of the Effective Date. Such agreement and covenant includes, without limitation, the 638 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -18- covenant against any direct suit by OWNER or its successor in interest, or any participation, encouragement or involvement whatsoever that is adverse to CITY by OWNER or its successor in interest, other than as part of required response to lawful orders of a court or other body of competent jurisdiction. OWNER hereby expressly waives, on behalf of itself and its successors in interest, any claim or challenge to any land use approval affecting the Property and in effect as of the Effective Date. In the event of any breach of the covenant or waiver contained herein, CITY shall, in addition to any other remedies provided for at law or in equity, be entitled to: (a) impose and recover (at any time, including after sale to a member of the public or other ultimate user) from the party breaching such covenant or waiver, the full amount of Development Impact Fees that the breaching party would have been required to pay in the absence of this Development Agreement; and (b) impose any subsequently adopted land use regulation on those land use approvals for which the breaching party had not, as of the time of such breach, obtained a building permit. OWNER hereby acknowledges that it has read and is familiar with the provisions of California Civil Code Section 1542, which is set forth below: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” By initialing below, OWNER hereby waives the provisions of Section 1542 in connection with the matters that are the subject of the foregoing waivers and releases. Owner's Initials 6.5 Survival. The provisions of Sections 8.1 through 8.5, inclusive, shall survive the termination of this Agreement. 6.6 Litigation Deposit. Within ten (10) business days of OWNER receiving notification from CITY that any claim, action or proceeding covered by Section 6.1 above has been filed, OWNER shall make a monetary deposit in an interest bearing account with CITY in an amount to be mutually agreed upon by the Parties at that time after discussing the budget required to defend such claim, action or proceeding and/or settlement thereof. If OWNER fails to make the deposit as required by this Section 6.6, CITY shall have the right to rescind (i) any Development Approvals as defined in Section 1.1.6 above issued or granted by CITY and (ii) this Development Agreement. 639 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -19- 7. MORTGAGEE PROTECTION. The parties hereto agree that this Agreement shall not prevent or limit OWNER, in any manner, at OWNER's sole discretion, from encumbering the Property or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Property. CITY acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with OWNER and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. CITY will not unreasonably withhold its consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement. Any Mortgagee of the Property shall be entitled to the following rights and privileges: (a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Property made in good faith and for value, unless otherwise required by law. (b) The Mortgagee of any mortgage or deed of trust encumbering the Property, or any part thereof, which Mortgagee, has submitted a request in writing to the CITY in the manner specified herein for giving notices, shall be entitled to receive written notification from CITY of any default by OWNER in the performance of OWNER's obligations under this Agreement. (c) If CITY timely receives a request from a mortgagee requesting a copy of any notice of default given to OWNER under the terms of this Agreement, CITY shall provide a copy of that notice to the Mortgagee within ten (10) days of sending the notice of default to OWNER. The Mortgagee shall have the right, but not the obligation, to cure the default during the remaining cure period allowed such party under this Agreement. (d) Any Mortgagee who comes into possession of the Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Property, or part thereof, subject to the terms of this Agreement. Notwithstanding any other provision of this Agreement to the contrary, no Mortgagee shall have an obligation or duty under this Agreement to perform any of OWNER's obligations or other affirmative covenants of OWNER hereunder, or to guarantee such performance; provided, however, that to the extent that any covenant to be performed by OWNER is a condition precedent to the performance of a covenant by CITY, the performance thereof shall continue to be a condition precedent to CITY's performance hereunder, and further provided that any sale, transfer or assignment by any Mortgagee in possession shall be subject to the provisions of Section 1.7 of this Agreement. 8. MISCELLANEOUS PROVISIONS. 8.1 Recordation of Agreement. This Agreement and any amendment or cancellation thereof shall be recorded with the Orange County Recorder by the Clerk of the City Council within ten (10) days after the City enters into the Agreement, in accordance with Section 65868.5 of the Government Code. If the parties to this Agreement or their successors in interest amend or cancel this Agreement, or if the CITY terminates or modifies this Agreement as provided herein for failure of the OWNER to comply in good faith with the terms and conditions of this Agreement, the City 640 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -20- Clerk shall have notice of such action recorded with the Orange County Recorder. 8.2 Entire Agreement. This Agreement sets forth and contains the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements that are not contained or expressly referred to herein. No testimony or evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement. 8.3 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby to the extent such remaining provisions are not rendered impractical to perform taking into consideration the purposes of this Agreement. Notwithstanding the foregoing, the provision of the Public Benefits set forth in Section 3 of this Agreement, including the payment of the Development Impact Fees set forth therein, are essential elements of this Agreement and CITY would not have entered into this Agreement but for such provisions, and therefore in the event such provisions are determined to be invalid, void or unenforceable, this entire Agreement shall be null and void and of no force and effect whatsoever. 8.4 Interpretation and Governing Law. This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California. This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all parties having been represented by counsel in the negotiation and preparation hereof. 8.5 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement. 8.6 Singular and Plural. As used herein, the singular of any word includes the plural. 8.7 Joint and Several Obligations. If at any time during the Term of this Agreement the Property is owned, in whole or in part, by more than one OWNER, all obligations of such OWNERS under this Agreement shall be joint and several, and the default of any such OWNER shall be the default of all such OWNERS. Notwithstanding the foregoing, no OWNER of a single lot that has been finally subdivided and sold to such OWNER as a member of the general public or otherwise as an ultimate user shall have any obligation under this Agreement except as expressly provided for herein. 8.8 Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter. 8.9 No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the parties and their successors and assigns. No other person shall have 641 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -21- any right of action based upon any provision of this Agreement. 8.10 Force Majeure. Neither party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of God, fires, wars, riots or similar hostilities, strikes and other labor difficulties beyond the party's control, (including the party's employment force), government regulations, court actions (such as any action challenging the validity of the Project Approvals, restraining orders or injunctions), or other causes beyond the party's control. If any such events shall occur, the Term of this Agreement and the time for performance by either party of any of its obligations hereunder shall be extended by the written agreement of the parties for the period of time that such events prevented such performance, provided that the Term of this Agreement shall not be extended under any circumstances for more than ten (10) years. 8.11 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefited thereby of the covenants to be performed hereunder by such benefited party. 8.12 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest to the parties to this Agreement. All provisions of this Agreement shall be enforceable as equitable servitudes and constitute covenants running with the land. Each covenant to do or refrain from doing some act hereunder with regard to development of the Property: (a) is for the benefit of and is a burden upon every portion of the Property; (b) runs with the Property and each portion thereof; and (c) is binding upon each party and each successor in interest during ownership of the Property or any portion thereof. 8.13 Counterparts. This Agreement may be executed by the parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the parties had executed the same instrument. 8.14 Jurisdiction and Venue. Any action at law or in equity arising under this Agreement or brought by a party hereto for the purpose of enforcing, construing or determining the validity of any provision of this Agreement shall be filed and tried in the Superior Court of the County of Orange, State of California, and the parties hereto waive all provisions of law providing for the filing, removal or change of venue to any other court. 8.15 Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the development of the Project is a private development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between CITY and OWNER is that of a government entity regulating the development of private property and the owner of such property. 8.16 Further Actions and Instruments. Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreement. 642 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -22- Upon the request of either party at any time, the other party shall promptly execute and file or record such required instruments and writings and take any actions as may be reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions contemplated by this Agreement. 8.17 Eminent Domain. No provision of this Agreement shall be construed to limit or restrict the exercise by CITY of its power of eminent domain. 8.18 Agent for Service of Process. In the event OWNER is not a resident of the State of California or it is an association, partnership or joint venture without a member, partner or joint venturer resident of the State of California, or it is a foreign corporation, then in any such event, OWNER shall file with the City Manager, upon its execution of this Agreement, a designation of a natural person residing in the State of California, giving his or her name, residence and business addresses, as its agent for the purpose of service of process in any court action arising out of or based upon this Agreement, and the delivery to such agent of a copy of any process in any such action shall constitute valid service upon OWNER. If for any reason service of such process upon such agent is not feasible, then in such event OWNER may be personally served with such process and such service shall constitute valid service upon OWNER. OWNER is amenable to the process so served, submits to the jurisdiction of the Court so obtained and waives any and all objections and protests thereto. 8.19 Authority to Execute. The person or persons executing this Agreement on behalf of OWNER warrants and represents that he or she/they have the authority to execute this Agreement on behalf of his or her/their corporation, partnership or business entity and warrants and represents that he or she/they has/have the authority to bind OWNER to the performance of its obligations hereunder. 643 1032/034040-0002 14187091.1 a10/21/19 215210/19-7923 -23- IN WITNESS WHEREOF, the parties hereto have executed this Development Agreement on the last day and year set forth below. OWNER SLF-HB Magnolia, LLC a Delaware limited liability company City Attorney By:__ Name: Title: Dated: CITY CITY OF HUNTINGTON BEACH, a California municipal corporation By:_ Mayor Dated: ATTEST: By:_ City Clerk APPROVED AS TO LEGAL FORM: 644 1032/034040-0002 14187091.1 a10/21/19 -24- EXHIBIT “A” 645 1032/034040-0002 14187091.1 a10/21/19 -25- LEGAL DESCRIPTION Real property in the City of Huntington Beach, County of Orange, State of California, described as follows: PARCEL 1: (APN: 114-150-36) THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 13, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 51 PAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, LYING EASTERLY OF THE EASTERLY LINE OF THAT CERTAIN STRIP OF LAND 145.00 FEET WIDE, DESCRIBED AND DESIGNATED AS PARCEL D1-104 IN THE FINAL ORDER OF CONDEMNATION HAD IN CASE NO. 80955 OF THE SUPERIOR COURT OF THE STATE OF CALIFORNIA, IN AND FOR THE COUNTY OF ORANGE, A CERTIFIED COPY WHICH WAS RECORDED SEPTEMBER 8, 1961 IN BOOK 5842 PAGE 7 OF OFFICIAL RECORDS. EXCEPT THEREFROM THE "SEVERED PROPERTY" AS DESCRIBED IN PART B OF THE GRANT DEED FROM THE SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION, RECORDED AUGUST 4, 2003 AS INSTRUMENT NO. 2003000931976 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM: "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN AND UNDER OR WHICH MAY BE PRODUCED FROM THAT CERTAIN PORTION OF THE HEREINABOVE DESCRIBED AS PARCELS 1 AND 2 TOGETHER WITH THE RIGHT TO USE THOSE PORTIONS ONLY OF SAID LANDS WHICH UNDERLIE A PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE PRESENT SURFACE OF SAID LANDS, FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID LANDS BY MEANS OF WELLS DRILLED INTO SAID SUBSURFACE OF SAID LAND FROM DRILL SITES LOCATED ON OTHER LAND, IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT SAID GRANTOR, THEIR SUCCESSORS AND ASSIGNS, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF SAID LANDS OR TO USE SAID LANDS OR ANY PORTION THEREOF TO SAID DEPTH OF FIVE HUNDRED (500) FEET, FOR ANY PURPOSE WHATSOEVER", AS RESERVED IN THE DEED FROM DOROTHY CONSTANCE SMITH RECORDED JULY 30, 1962 IN BOOK 6194 PAGE 470 OF OFFICIAL RECORDS. PARCEL 2: (APN: 114-481-32) THAT PORTION OF THE NORTHEAST QUARTER OF FRACTIONAL SECTION 24, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 51 PAGE 14, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF SAID FRACTIONAL SECTION 24 WITH THE NORTHEASTERLY RIGHT OF WAY LINE OF THE ORANGE COUNTY FLOOD CONTROL DISTRICT'S "HUNTINGTON BEACH CHANNEL" AS DESCRIBED IN THE FINAL ORDER OF CONDEMNATION RECORDED IN BOOK 5591 PAGE 500,ET SEQ. OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH 89° 32' 40" EAST ALONG SAID NORTHERLY LINE OF FRACTIONAL SECTION 24 A DISTANCE OF 360.17 FEET TO THE SOUTHWESTERLY CORNER OF THAT CERTAIN REAL PROPERTY DESCRIBED AND DESIGNATED AS "PARCEL TWO" IN THAT CERTAIN ROAD EASEMENT TO THE CITY OF HUNTINGTON BEACH 646 1032/034040-0002 14187091.1 a10/21/19 -26- RECORDED OCTOBER 13, 1967 IN BOOK 8418 PAGE 439 OF SAID OFFICIAL RECORDS, SAID SOUTHWESTERLY CORNER BEING ALSO A POINT IN A CURVE CONCAVE TO THE NORTHWEST HAVING A RADIUS OF 950.00 FEET FROM WHICH POINT A RADIAL LINE OF SAID CURVE BEARS NORTH 57° 33' 35" WEST; THENCE SOUTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 10° 37' 14" AN ARC DISTANCE OF 176.10 FEET; THENCE TANGENT TO SAID LAST MENTIONED CURVE 80.37 FEET TO A POINT IN A CURVE IN SAID NORTHEASTERLY RIGHT OF WAY LINE OF THE ORANGE COUNTY FLOOD CONTROL DISTRICT'S "HUNTINGTON BEACH CHANNEL", SAID LAST MENTIONED CURVE BEING CONCAVE TO THE NORTHEAST AND HAVING A RADIUS OF 4,717.50 FEET FROM WHICH POINT A RADIAL LINE OF SAID CURVE BEARS NORTH 43° 40' 03" EAST; THENCE NORTHWESTERLY ALONG SAID LAST MENTIONED CURVE, THROUGH A CENTRAL ANGLE OF 1° 10' 00" AN ARC DISTANCE OF 96.06 FEET; THENCE TANGENT TO SAID CURVE NORTH 45° 09' 57" WEST 181.36 FEET TO THE POINT OF BEGINNING. EXCEPT THEREFROM THE "SEVERED PROPERTY" AS DESCRIBED IN PART B OF THE GRANT DEED FROM THE SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION, RECORDED AUGUST 4, 2003 AS INSTRUMENT NO. 2003000931976 OF OFFICIAL RECORDS. PARCEL 3: EASEMENTS FOR FIRE WATER SYSTEMS, VEHICULAR ACCESS, FUEL SYSTEMS, AND SUCH OTHER PURPOSES INCIDENTAL THERE TO, CREATED BY THAT CERTAIN FOP FACILITY EASEMENT AGREEMENT DATED JULY 31, 2003 BETWEEN SOUTHERN CALIFORNIA EDISON COMPANY AND PACIFIC TERMINALS LLC, A DELAWARE LIMITED LIABILITY COMPANY, RECORDED AUGUST 4, 2003 AS INSTRUMENT NO. 2003000931980 OF OFFICIAL RECORDS, OVER THE FOLLOWING LAND: THAT PORTION OF THE WEST ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 13 IN TOWNSHIP 6 SOUTH RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, SHOWN ON A MAP IN BOOK 43 PAGE 2 OF RECORDS OF SURVEY, BEING THE PARCEL OF LAND SHOWN AS PARCEL 3 ON LOT LINE ADJUSTMENT NO. 97-3 RECORDED DECEMBER 8, 1997 AS INSTRUMENT NO. 19970628491 OF OFFICIAL RECORDS OF SAID COUNTY, FURTHER DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF NEWLAND STREET (ALSO BEING THE NORTH-SOUTH CENTERLINE OF SAID SECTION 13) AND THE WESTERLY PROLONGATION OF THE NORTH LINE OF PARCEL 1 AS SHOWN ON SAID MAP; THENCE SOUTH 00° 16' 41" WEST 578.88 FEET (SHOWN ON SAID MAP AS S 00° 40' 50" E) ALONG SAID NORTH-SOUTH CENTERLINE OF SAID SECTION 13 AS SHOWN ON SAID MAP TO THE TRUE POINT OF BEGINNING; THENCE SOUTH 53° 56' 04" EAST 248.54 FEET; THENCE SOUTH 35° 31' 50" WEST 6.04 FEET; THENCE SOUTH 54° 28' 10" EAST 536.14 FEET; THENCE SOUTH 76° 14' 35" EAST 53.96 FEET TO THE NORTHWESTERLY PROLONGATION OF THAT CERTAIN COURSE DESCRIBED AS "SOUTH 56° 32' 30" EAST 369.07 FEET, MORE OR LESS" ALONG THE SOUTHERLY LINE OF THE LAND CONVEYED TO A. C. THORPE BY DEED RECORDED JUNE 13, 1917 IN BOOK 302 PAGE 69 OF DEEDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE SOUTH 55° 17' 06" EAST 301.06 FEET ALONG SAID PROLONGATION AND SAID LINE; THENCE NORTH 00° 00' 00" EAST 435.68 FEET; THENCE NORTH 54° 42' 53" WEST 175.17 FEET; THENCE NORTH 00° 00' 00" EAST 338.21 FEET' THENCE NORTH 90° 00' 00" WEST 357.07 FEET; THENCE SOUTH 27° 47' 17" WEST 128.15 FEET TO THE NORTHERLY LINE OF THE SOUTHWEST ONE-QUARTER OF THE SOUTHEAST ONE-QUARTER OF SAID SECTION 13; THENCE NORTH 89° 29' 32" WEST 373.23 FEET ALONG SAID NORTHERLY LINE TO SAID NORTH- SOUTH CENTERLINE OF SAID SECTION 13 AS SHOWN ON SAID MAP; THENCE SOUTH 00° 16' 41" WEST 117.92 FEET ALONG SAID NORTH-SOUTH CENTERLINE (SHOWN ON SAID MAP AS S 00° 40' 50" E) TO THE TRUE POINT OF BEGINNING. 647 1032/034040-0002 14187091.1 a10/21/19 -27- EXCEPTING THEREFROM; ALL STRUCTURES AND IMPROVEMENTS, FACILITIES, SYSTEMS, FIXTURES AND EQUIPMENT OF ANY KIND NOW OR HEREAFTER LOCATED ON SAID LAND, WHETHER ABOVE OR BELOW THE LAND SURFACE, WHETHER REAL OR PERSONAL PROPERTY, AND WHETHER PERMANENT OR TEMPORARY, INCLUDING WITHOUT LIMITATION, ALL BUILDING, SHEDS, ENERGY PLANTS, TANKS, PIPELINES (INCLUDING METERS, CONNECTIONS, VALVES AND OTHER ASSOCIATED EQUIPMENT), CABLES, WIRES, CONDUITS, CABLE TRAYS, TRENCHES, MAINS, LINES, DUCTS, FENCES, TOWERS, ANTENNAE, TUNNELS, SCREENING WALLS, AWNINGS, RETAINING WALLS, IRRIGATION AND DRAINAGE PIPES AND FACILITIES, LIGHTNING FIXTURES AND SIGNS, CONVEYED TO AES HUNTINGTON BEACH, L.L.C. BY DEED RECORDED JUNE 16, 1998 AS INSTRUMENT NO. 98- 0379306 OF OFFICIAL RECORDS, UNDER THE TERMS AND CONDITIONS SET FORTH THEREIN. PARCEL 4: AN UNDIVIDED ONE-HALF INTEREST IN AND TO THE EASEMENTS (THE "EASEMENTS") FOR THE VARIOUS PURPOSES CONTAINED THEREIN, AS RESERVED, DEFINED AND SET FORTH IN THE GRANT DEED EXECUTED BY SOUTHERN CALIFORNIA EDISON COMPANY, A CALIFORNIA CORPORATION, RECORDED MAY 7, 2001 AS INSTRUMENT NO. 20010286988 OF OFFICIAL RECORDS OF ORANGE COUNTY, AS SUCH EASEMENTS RELATE TO THE EPTC PROPERTY MORE PARTICULARLY DESCRIBED IN THAT CERTAIN GRANT DEED DATED JULY 31, 2003 BETWEEN SOUTHERN CALIFORNIA EDISON COMPANY, A CALIFORNIA CORPORATION, AS GRANTOR, AND PACIFIC TERMINALS LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS GRANTEE, RECORDED AUGUST 4, 2003 AS INSTRUMENT NO. 2003000931976 OF OFFICIAL RECORDS, WHEREIN SAID GRANTOR CONVEYED THE FOP PROPERTY TO SAID GRANTEE, OVER THE FOLLOWING LAND: THAT PORTION OF THE WEST ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 13 IN TOWNSHIP 6 SOUTH RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, SHOWN ON A MAP IN BOOK 43 PAGE 2 OF RECORDS OF SURVEYS, BEING THAT PARCEL OF LAND SHOWN AS PARCEL 4 ON LOT LINE ADJUSTMENT NO. 97-3 RECORDED DECEMBER 8, 1997 AS INSTRUMENT NO. 19970628491 OF OFFICIAL RECORDS OF SAID COUNTY, FURTHER DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE CENTER LINE OF NEWLAND STREET (ALSO BEING THE NORTH-SOUTH CENTERLINE OF SAID SECTION 13) AND THE WESTERLY PROLONGATION OF THE NORTH LINE OF PARCEL 1 AS SHOWN ON SAID MAP; THENCE SOUTH 89° 27' 18" EAST, 1,220.30 FEET ALONG THE NORTH LINE OF SAID PARCEL 1 TO A LINE THAT IS PARALLEL WITH AND WESTERLY 100 FEET FROM THE EAST LINE OF THE WEST ONE-HALF OF THE SOUTHEAST ONE- QUARTER OF SECTION 13, SAID PARALLEL LINE ALSO BEING THE EAST LINE OF SAID PARCEL 1; THENCE SOUTH 00° 17' 00" WEST 96.13 FEET ALONG SAID EAST LINE TO A POINT OF INTERSECTION WITH THE SOUTHWESTERLY RIGHT OF WAY OF THE ORANGE COUNTY FLOOD CONTROL DISTRICT HUNTINGTON BEACH CHANNEL AS DESCRIBED IN PARCEL NO. D1-104 IN THE AMENDED FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF WHICH WAS RECORDED NOVEMBER 1, 1963 IN BOOK 6788 PAGES 915 THROUGH 922, INCLUSIVE, OF OFFICIAL RECORDS, COUNTY OF ORANGE, STATE OF CALIFORNIA, SAID POINT OF INTERSECTION ALSO BEING THE BEGINNING OF A NON-TANGENT CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 312.69 FEET, THROUGH WHICH A RADIAL LINE BEARS NORTH 87° 30' 32" EAST; THENCE SOUTHERLY 15.27 FEET, ALONG SAID SOUTHWESTERLY RIGHT OF WAY AND SAID NON-TANGENT CURVE THROUGH A CENTRAL ANGLE OF 02° 47' 51" TO THE BEGINNING OF A REVERSE CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 2,462.50 FEET; THENCE SOUTHEASTERLY 703.87 FEET ALONG SAID SOUTHWESTERLY RIGHT OF WAY AND SAID REVERSE CURVE THROUGH A CENTRAL ANGLE OF 16° 22' 38" TO SAID EAST LINE OF THE WEST 648 1032/034040-0002 14187091.1 a10/21/19 -28- ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 13 AS SHOWN ON A MAP RECORDED IN BOOK 74 PAGE 11 OF RECORDS OF SURVEY, OF SAID COUNTY; THENCE SOUTH 00° 17' 00" WEST 679.10 FEET ALONG SAID EAST LINE OF THE WEST ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 13 TO THE SOUTHERLY LINE OF THE LAND CONVEYED TO A. C. THORPE BY DEED RECORDED JUNE 13, 1917 IN BOOK 302 PAGE 69 OF DEEDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH 47° 42' 57" WEST ALONG SAID SOUTHERLY LINE 42.21 FEET; THENCE CONTINUING ALONG SAID SOUTHERLY LINE NORTH 55° 21' 57" WEST 83.13 TO SAID EASTLINE OF PARCEL 1 AND THE SOUTHEASTERLY CORNER OF SAID PARCEL 1 AS SHOWN ON SAID MAP RECORDED IN BOOK 42 PAGE 2 OF RECORDS OF SURVEY; THENCE NORTH 00° 17' 00" EAST ALONG SAID EAST LINE OF SAID PARCEL 1, 268.17 FEET; THENCE SOUTH 74° 13' 00" WEST 256.65 FEET TO SAID SOUTHERLY LINE OF SAID LAND CONVEYED TO A. C. THORPE, PAGE 69 OF DEEDS; THENCE NORTH 55° 17' 06" WEST ALONG SAID SOUTHERLY LINE 9.69 FEET; THENCE NORTH 00° 00' 00" EAST 435.68 FEET; THENCE NORTH 54° 42' 53" WEST 175.17 FEET; THENCE NORTH 00° 00' 00" EAST 338.21 FEET; THENCE NORTH 90° 00' 00' WEST 357.07 FEET; THENCE SOUTH 27° 47' 17" WEST 128.15 FEET TO THE NORTHERLY LINE OF THE SOUTHWEST ONE- QUARTER OF THE SOUTHEAST ONE-QUARTER OF SAID SECTION 13; THENCE NORTH 89° 29' 32" WEST 373.23 FEET ALONG SAID NORTHERLY LINE TO SAID NORTH-SOUTH CENTERLINE OF SAID SECTION 13 AS SHOWN ON SAID MAP; THENCE NORTH 00° 16' 41" EAST 460.96 FEET ALONG SAID NORTH-SOUTH CENTERLINE (SHOWN ON SAID MAP AS S 00° 40' 50" E) TO THE TRUE POINT OF BEGINNING. EXCEPTING THEREFROM; ALL STRUCTURES AND IMPROVEMENTS, FACILITIES, SYSTEMS, FIXTURES AND EQUIPMENT OF ANY KIND NOW OR HEREAFTER LOCATED ON SAID LAND, WHETHER ABOVE OR BELOW THE LAND SURFACE, WHETHER REAL OR PERSONAL PROPERTY, AND WHETHER PERMANENT OR TEMPORARY, INCLUDING WITHOUT LIMITATION, ALL BUILDING, SHEDS, ENERGY PLANTS; TANKS, PIPELINES (INCLUDING METERS, CONNECTIONS, VALVES AND OTHER ASSOCIATED EQUIPMENT), CABLES, WIRES, CONDUITS, CABLE TRAYS, TRENCHES, MAINS, LINES, DUCTS, FENCES, TOWERS, ANTENNAE, TUNNELS, SCREENING WALLS, AWNINGS, RETAINING WAILS, IRRIGATION AND DRAINAGE PIPES AND FACILITIES, LIGHTING FIXTURES AND SIGNS, CONVEYED TO AES HUNTINGTON BEACH, L.L.C. BY DEED RECORDED JUNE 16, 1998 AS INSTRUMENT NO. 98-0 79306 OF OFFICIAL RECORDS, UNDER THE TERMS AND CONDITIONS SET FORTH THEREIN. PARCEL 5: AN UNDIVIDED INTEREST IN AND TO THE EASEMENTS AND OTHER RIGHTS ( THE "EASEMENTS") FOR THE VARIOUS PURPOSES CONTAINED THEREIN, FOR ACCESS, PIPELINE, FUEL OIL TANKS AND RELATED PURPOSES AS RESERVED, DEFINED AND SET FORTH IN THAT CERTAIN GRANT DEED DATED SEPTEMBER 21, 2001 BY AND BETWEEN SOUTHERN CALIFORNIA EDISON COMPANY, AS GRANTOR, AND THE HUNTINGTON BEACH WETLANDS CONSERVANCY, AS GRANTEE, RECORDED IN THE OFFICIAL RECORDS ON OCTOBER 5, 2001 AS INSTRUMENT NO. 20010705328, AS SUCH EASEMENTS RELATE TO THE EPTC PROPERTY MORE PARTICULARLY DESCRIBED IN THAT CERTAIN GRANT DEED DATED JULY 31, 2003 BETWEEN SOUTHERN CALIFORNIA EDISON COMPANY, A CALIFORNIA CORPORATION, AS GRANTOR, AND PACIFIC TERMINALS LLC, DELAWARE LIMITED LIABILITY COMPANY, AS GRANTEE, RECORDED AUGUST 4, 2003 AS INSTRUMENT NO. 2003000931976 OF OFFICIAL RECORDS, WHEREIN SAID GRANTOR CONVEYED THE FOP PROPERTY TO SAID GRANTEE, OVER THE FOLLOWING LAND: PARCEL A OF PARCEL 5: THOSE PORTIONS OF THE FRACTIONAL SOUTHWEST ONE-QUARTER OF SECTION 13; THE WEST ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 13 AND THE NORTHEAST ONE- QUARTER OF SECTION 24 IN TOWNSHIP 6 SOUTH RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF 649 1032/034040-0002 14187091.1 a10/21/19 -29- ORANGE, STATE OF CALIFORNIA, SHOWN ON A MAP IN BOOK 43 PAGE 2 OF RECORDS OF SURVEY, BEING THE PARCEL OF LAND SHOWN AS PARCEL 2 ON LOT LINE ADJUSTMENT NO. 97-3 RECORDED DECEMBER 8, 1997 AS INSTRUMENT NO. 97-0628491 OF OFFICIAL RECORDS OF SAID COUNTY. EXCEPTING THEREFROM; "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN AND UNDER OR WHICH MAY BE PRODUCED FROM THAT CERTAIN PORTION OF THE LAND HEREINABOVE DESCRIBED WHICH LIES NORTHEASTERLY OF A LINE THAT IS PARALLEL WITH AND 200 FEET NORTHEASTERLY MEASURED AT RIGHT ANGLES, FROM THE NORTHEASTERLY LINE OF THE PACIFIC COAST (STATE) HIGHWAY, 100.00 FEET WIDE, WHICH CERTAIN PORTION OF LAND IS HEREINAFTER REFERRED TO AS AREA 'A', TOGETHER WITH THE RIGHT TO USE THAT PORTION ONLY OF SAID AREA 'A' WHICH UNDERLIES A PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE PRESENT SURFACE OF SAID AREA 'A', FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID AREA 'A' BY MEANS OF WELLS DRILLED INTO THE SUBSURFACE OF SAID AREA 'A' FROM DRILL SITES LOCATED ON OTHER LAND, IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT, SAID GRANTOR, HER HEIRS AND ASSIGNS, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF SAID AREA 'A' OR TO USE SAID AREA 'A' OR ANY PORTION THEREOF TO SAID DEPTH OF FIVE HUNDRED (500) FEET, FOR ANY PURPOSE WHATSOEVER" AS RESERVED IN THE DEED FROM DAISY THORPE HOOK RECORDED APRIL 24, 1956 IN BOOK 3485 PAGE 268 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM; "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN AND UNDER OR WHICH MAY BE PRODUCED FROM THE REMAINDER OF THE LAND FIRST HEREINABOVE DESCRIBED WHICH SAID REMAINDER OF LAND IS HEREINAFTER REFERRED TO AS AREA 'B', TOGETHER WITH THE RIGHT TO USE THAT PORTION ONLY OF SAID AREA 'B' WHICH UNDERLIES A PLANE PARALLEL TO AND ONE HUNDRED (100) FEET BELOW THE PRESENT SURFACE OF SAID AREA B', FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID AREA 'B' BY MEANS OF WELLS DRILLED INTO THE SUBSURFACE OF SAID AREA 'B' FROM DRILL SITES LOCATED ON OTHER LAND, IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT SAID GRANTOR, HER HEIRS AND ASSIGNS, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF SAID AREA 'B' OR TO USE SAID AREA 'B' OR ANY PORTION THEREOF TO SAID DEPTH OF ONE HUNDRED (100) FEET, FOR ANY PURPOSE WHATSOEVER" AS RESERVED IN THE DEED FROM DAISY HORPE HOOK RECORDED APRIL 24, 1956 IN BOOK 3485 PAGE 268 OF OFFICIAL RECORDS. FURTHER EXCEPTING THEREFROM; "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN AND UNDER OR WHICH MAY BE PRODUCED FROM THAT CERTAIN PORTION OF THE HEREINABOVE DESCRIBED LAND WHICH LIES NORTHEASTERLY OF A LINE THAT IS PARALLEL WITH AND 200 FEET NORTHEASTERLY MEASURED AT RIGHT ANGLES, FROM THE SOUTHWESTERLY LINE OF SAID HEREINABOVE DESCRIBED LAND, WHICH CERTAIN PORTION OF SAID LAND IS HEREINAFTER REFERRED TO AS AREA 'A', TOGETHER WITH THE RIGHT TO USE THAT PORTION ONLY OF SAID AREA 'A' WHICH UNDERLIES A PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE PRESENT SURFACE OF SAID AREA 'A', FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID AREA 'A' BY MEANS OF WELLS DRILLED INTO THE SUBSURFACE OF SAID AREA 'A' FROM DRILL SITES LOCATED ON OTHER LAND, IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT SAID GRANTOR, ITS SUCCESSORS AND ASSIGNS, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF SAID AREA 'A' OR TO USE SAID AREA 'A' OR ANY PORTION THEREOF TO SAID DEPTH OF FIVE HUNDRED (500) 650 1032/034040-0002 14187091.1 a10/21/19 -30- FEET, FOR ANY PURPOSE WHATSOEVER" AS RESERVED IN THE DEED FROM MILLS LAND AND WATER COMPANY RECORDED OCTOBER 24, 1956 IN BOOK 3688 PAGE 275 OF OFFICIAL RECORDS. FURTHER EXCEPTING THEREFROM; "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN AND UNDER OR WHICH MAY BE PRODUCED FROM THE REMAINDER OF SAID HEREINABOVE DESCRIBED LAND, WHICH REMAINDER OF LAND IS HEREINAFTER REFERRED TO AS AREA 'B', TOGETHER WITH THE RIGHT TO USE THAT PORTION ONLY OF SAID AREA 'B' WHICH UNDERLIES A PLANE PARALLEL TO AND ONE HUNDRED (100) FEET BELOW THE PRESENT SURFACE OF SAID AREA 'B', FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID AREA 'B' BY MEANS OF WELLS DRILLED INTO THE SUBSURFACE OF SAID AREA 'B' FROM DRILL SITES LOCATED ON OTHER LAND, IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT SAID GRANTOR, ITS SUCCESSORS AND ASSIGNS, SHALL HAVE NO RIGHT TO ENTER UPON THE SURFACE OF SAID AREA 'B' OR TO USE SAID AREA B' OR ANY PORTION THEREOF TO SAID DEPTH OF ONE HUNDRED (100) FEET, FOR ANY PURPOSE WHATSOEVER" AS RESERVED IN THE DEED FROM MILLS LAND AND WATER COMPANY, RECORDED OCTOBER 24, 1956 IN BOOK 3688 PAGE 275 OF OFFICIAL RECORDS. PARCEL B OF PARCEL 5: THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 13 IN TOWNSHIP 6 SOUTH RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 51 PAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY AND THAT PORTION OF THE NORTH EAST QUARTER OF THE NORTHEAST QUARTER OF SECTION 24 IN TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, ALSO IN SAID CITY OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 51 PAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND AS THE NORTHERLY PORTION OF SAID SECTION 24 IS SHOWN ON A MAP FILED IN BOOK 6 PAGE 6 OF RECORD OF SURVEYS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BOUNDED AS FOLLOWS: ON THE WEST BY THE WESTERLY LINE OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER OF SAID SECTION 13; ON THE SOUTHWEST BY THE SOUTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO A. C. THORPE RECORDED JUNE 13, 1917 IN BOOK 302 PAGE 69 OF DEEDS; ON THE NORTHEAST BY THE SOUTHWESTERLY LINE OF A STRIP OF LAND 145.00 FEET WIDE AS DESCRIBED IN PARCEL NO. D1-104 IN THE AMENDED FINAL ORDER OF CONDEMNATION, A CERTIFIED COPY OF WHICH WAS RECORDED NOVEMBER 1, 1963 IN BOOK 6788 PAGE 915 OF OFFICIAL RECORDS; AND ON THE SOUTHEAST BY THE FOLLOWING DESCRIBED LINE: BEGINNING AT THE MOST SOUTHERLY CORNER OF THE LAND DESCRIBED IN THE DEED TO SOUTHERN CALIFORNIA_ EDISON COMPANY, A CORPORATION, DATED APRIL 6, 1956 AND RECORDED APRIL 24, 1956 IN BOOK 3485 PAGE 268 OF OFFICIAL RECORDS AND SAID POINT BEING IN A LINE THAT IS PARALLEL WITH AND 100.00 FEET NORTHEASTERLY, MEASURED AT RIGHT ANGLES, FROM THE NORTHEASTERLY LINE OF THE 40.00 FOOT RIGHT OF WAY OF THE SOUTHERN PACIFIC RAILROAD COMPANY AS DESCRIBED IN THE DEED RECORDED DECEMBER 20, 1905 IN BOOK 123 PAGE 96 OF DEEDS; THENCE SOUTH 55° 28' 30" EAST, ALONG SAID PARALLEL LINE, 1,40.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE AT RIGHT ANGLES NORTH 34° 31' 30" EAST, 1,05.00 FEET MORE OR LESS, TO THE SOUTHWESTERLY LINE OF THE HEREINABOVE DESCRIBED STRIP OF LAND, 145.00 FEET WIDE. EXCEPTING THEREFROM; "ALL MINERALS, GAS, OIL, PETROLEUM, NAPHTHA AND OTHER 651 1032/034040-0002 14187091.1 a10/21/19 -31- HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND AS EXCEPTED AND RESERVED IN VARIOUS INSTRUMENTS OF RECORD" AS SET FORTH IN THE DEED FROM ORANGE COUNTY FLOOD CONTROL DISTRICT RECORDED APRIL 28, 1964 IN BOOK 7022 PAGE 413 OF OFFICIAL RECORDS. EXCEPTING THEREFROM; ALL STRUCTURES AND IMPROVEMENTS, FACILITIES, SYSTEMS, FIXTURES AND EQUIPMENT OF ANY KIND NOW OR HEREAFTER LOCATED ON SAID LAND, WHETHER ABOVE OR BELOW THE LAND SURFACE, WHETHER REAL OR PERSONAL PROPERTY, AND WHETHER PERMANENT OR TEMPORARY, INCLUDING WITHOUT LIMITATION, ALL BUILDING, SHEDS, ENERGY PLANTS, TANKS, PIPELINES (INCLUDING METERS, CONNECTIONS, VALVES AND OTHER ASSOCIATED EQUIPMENT), CABLES, WIRES, CONDUITS, CABLE TRAYS, TRENCHES, MAINS, LINES, DUCTS, FENCES, TOWERS, ANTENNAE, TUNNELS, SCREENING WALLS, AWNINGS, RETAINING WALLS, IRRIGATION AND DRAINAGE PIPES AND FACILITIES, LIGHTING FIXTURES AND SIGNS, CONVEYED TO AES HUNTINGTON BEACH, L.L.C. BY DEED RECORDED JUNE 16, 1998 AS INSTRUMENT NO. 98- 0379306 OF OFFICIAL RECORDS, UNDER THE TERMS AND CONDITIONS SET FORTH THEREIN. PARCEL C OF PARCEL 5: THOSE PORTIONS OF SECTIONS 13 AND 24 IN TOWNSHIP 6 SOUTH RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 51 PAGE 14, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS A WHOLE AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF THE LAND DESCRIBED IN THE DEED TO SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION, DATED APRIL 6, 1956 AND RECORDED APRIL 24, 1956 IN BOOK 3485 PAGE 268 OF OFFICIAL RECORDS, SAID POINT BEING IN A LINE THAT IS PARALLEL WITH AND 100 FEET NORTHEASTERLY, MEASURED AT RIGHT ANGLES, FROM THE NORTHEASTERLY LINE OF THE 40.00 FOOT RIGHT OF WAY OF THE SOUTHERN PACIFIC RAILROAD COMPANY AS DESCRIBED IN THE DEED RECORDED DECEMBER 20, 1905 IN BOOK 123 PAGE 96 OF DEEDS; THENCE SOUTH 55° 28' 30" EAST, ALONG SAID PARALLEL LINE, 1,040.00 FEET; THENCE AT RIGHT ANGLES, NORTH 34° 31' 30" EAST 1,020.23 FEET MORE OR LESS, TO THE SOUTHWESTERLY LINE OF THE 145.00 FOOT STRIP OF LAND DESCRIBED AND DESIGNATED AS PARCEL D 1-1-106 OF THE LIS PENDENS IN AN ACTION ENTITLED "ORANGE COUNTY FLOOD CONTROL DISTRICT, PLAINTIFF, VERSES DAISY E. HURLEY THORPE, AT AL., DEFENDANTS," FILED IN CASE NO. 80955 OF THE SUPERIOR COURT OF THE STATE OF CALIFORNIA, IN AND FOR THE COUNTY OF ORANGE, A CERTIFIED COPY OF SAID LIS PENDENS BEING RECORDED MARCH 5, 1959 IN BOOK 4615 PAGE 6 OF OFFICIAL RECORDS; THENCE NORTHWESTERLY, ALONG SAID SOUTHWESTERLY LINE, BEING A CURVE CONCAVE TO THE NORTHEAST AND HAVING A RADIUS OF 2,462.50 FEET, AN ARC DISTANCE OF 973.34 FEET, MORE OR LESS, TO THE EASTERLY LINE OF THE WEST HALF OF THE SOUTHEAST QUARTER OF SAID SECTION 13; THENCE, ALONG SAID EASTERLY LINE, SOUTH 00° 47' 10" EAST, 686.66 FEET, MORE OR LESS, TO THE SOUTHERLY LINE OF THE LAND CONVEYED TO BY WILLOW LAND COMPANY TO A. C. THORPE, RECORDED JUNE 13, 1917 IN BOOK 302 PAGE 69 OF DEEDS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG SAID SOUTHERLY LINE NORTH 48° 45' WEST 36.61 FEET; THENCE NORTH 56° 32' 30" WEST 88.8 FEET, MORE OR LESS, TO THE NORTHEASTERLY CORNER OF THE LAND DESCRIBED IN THE DEED TO SOUTHERN CALIFORNIA EDISON COMPANY RECORDED IN BOOK 3485 PAGE 268 OF OFFICIAL RECORDS; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LAST MENTIONED LAND, SOUTH 61° 05' 51" WEST 1,013.12 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. 652 1032/034040-0002 14187091.1 a10/21/19 -32- EXCEPTING THEREFROM; THAT PORTION THEREOF LYING WITHIN THE LAND DESCRIBED AND DESIGNATED AS PARCEL 2 IN THE DEED TO R. C. A. COMMUNICATIONS, INC., A DELAWARE CORPORATION, RECORDED MARCH 30, 1935 IN BOOK 741 PAGE 315 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM; THAT PORTION THEREOF LYING WITHIN THE LAND DESCRIBED IN THE DEED TO GENEVA DEEBLE, AND OTHERS, RECORDED DECEMBER 28, 1935 IN BOOK 792 PAGE 470 OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM; THAT PORTION THEREOF LYING WITHIN THE LAND DESCRIBED AS "PARCEL NO. 100396" IN THE FINAL ORDER OF CONDEMNATION FILED AUGUST 23, 1996 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA, IN AND FOR THE COUNTY OF ORANGE, UNDER ACTION NO. 681 121, ENTITLED THE PEOPLE OF THE STATE OF CALIFORNIA, PLAINTIFF VS. SOUTHERN CALIFORNIA EDISON COMPANY, DEFENDANT, A CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 4, 1996 AS INSTRUMENT NO. 96- 0451028 OF OFFICIAL RECORDS. EXCEPTING THEREFROM; "ALL OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES IN, ON, UNDER OR WHICH MAY BE PRODUCED FROM SAID LAND, TOGETHER WITH THE RIGHT TO USE THAT PORTION ONLY OF SAID LAND WHICH UNDERLIES A PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE PRESENT SURFACE OF SAID LAND, FOR THE PURPOSE OF PROSPECTING FOR, DEVELOPING AND/OR EXTRACTING SAID OIL, GAS, PETROLEUM AND OTHER MINERAL OR HYDROCARBON SUBSTANCES FROM SAID LAND BY MEANS OF WELLS DRILLED INTO THE SUBSURFACE OF SAID LAND FROM DRILL SITES LOCATED ON OTHER LAND, WITHOUT HOWEVER, THE RIGHT TO ENTER UPON THE SURFACE OF SAID LAND OR TO USE SAID LAND OR ANY PORTION THEREOF TO SAID DEPTH OF FIVE HUNDRED (500) FEET FOR ANY PURPOSE WHATSOEVER" AS RESERVED IN THE FINAL ORDER OF CONDEMNATION FILED AUGUST 16, 1963 IN ACTION NO. 100040 IN THE SUPERIOR COURT, STATE OF CALIFORNIA, IN AND FOR THE COUNTY OF ORANGE, ENTITLED SOUTHERN CALIFORNIA EDISON COMPANY, PLAINTIFF VS. DAISY THORPE HOOK, ET AL., DEFENDANTS, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 16, 1963 IN BOOK 6679 PAGE 964 OF OFFICIAL RECORDS. APN: 114-150-36 and 114-481-32 653 1032/034040-0002 14187091.1 a10/21/19 -33- EXHIBIT “B” (Map of the Property) 654 -34- 14187091.1 a10/21/19 Property Location 1032/034040-0002 655 -35- 14187091.1 a10/21/19 EXHIBIT “C” (Development Plan – Vested Entitlements) [Insert as applicable] General Plan Amendment No. [ ] Specific Plan No. [ ] Zoning Map Amendment No. [ ] Zoning Text Amendment No. [ ] Local Coastal Program Amendment No. [ ] 1032/034040-0002 656 1032/034040-0002 14187091.1 a10/21/19 -36- EXHIBIT “D” (Hotel Quality Standards) The Hotel shall have a minimum AAA rating of 3-Diamond, or its equivalent. Generally, the hotel’s quality, standards, design, decor, and amenities shall be comparable to the Shorebreak Hotel located at the Strand in downtown Huntington Beach. The amenities and quality standards listed below shall be incorporated into the Lodge’s design. Design  A unique and distinctive contemporary and rustic design that reflects the beach and surf culture of the City and of the adjacent Huntington Beach Wetlands.  The beach/wetlands design theme shall be prominently incorporated into the landscaping, building structure & design, lobby and common areas, decor, and guest rooms through the use of distinctive design elements, different decorative materials, and architectural features. Entrance  A pronounced covered drive-through entrance with minimum capacity of at least two car depth and width and valet parking.  At least three additional features e.g., bench seating, double entry doors, automatic entry doors, revolving doors, entry vestibule, enhanced façade or driving surface.  An enhanced front desk area with multiple guest service capability that is part of a spacious common area. Amenities  Full-service restaurant, lounge and bar, grab and go option, room service, and a gift shop.  Resort style pool and spa area with an expanded outdoor seating areas and additional recreational facilities (i.e., ping pong, bocce ball, paddle ball).  Wetlands interpretive programs offered to Lodge guests and the public conducted by environmentalists knowledgeable about the Huntington Beach Wetlands ecosystem.  At least 8,000 square feet of comprehensive, flexible event and meeting space with a business center. 657 1032/034040-0002 14187091.1 a10/21/19 -37- Guest Rooms  Range from at least 310 to 415 square feet in size with suites up to 500 square feet.  Forty of the guest rooms will be affordable as defined in the Magnolia Tank Farm Specific Plan and will offer equivalent finishes as the market rate rooms.  Feature significant enhancements including, but not limited to, additional seating area, large workspace, quality bedding, refrigerator, technology enhancements, and significant decorative enhancements to the bedroom and bathroom. 658 1032/034040-0002 14187091.1 a10/21/19 -38- EXHIBIT “E” MAGNOLIA/HAMILTON IMPROVEMENTS (to be revised to include undergrounding of 12 kv distribution line along Magnolia adjacent to ASCON) 659 City of Huntington Beach File #:21-085 MEETING DATE:2/1/2021 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO:Honorable Mayor and City Council Members SUBMITTED BY:Oliver Chi, City Manager PREPARED BY:Travis K. Hopkins, Assistant City Manager Subject: Consider Maintaining Membership with the Orange County Power Authority (OCPA), a Community Choice Energy (CCE) Joint Power Authority (JPA) Statement of Issue: On December 10, 2020, the City approved the required Ordinance, Resolution, and JPA agreement necessary for Huntington Beach to join the Orange County Power Authority (OCPA), a Community Choices Energy (CCE) Joint Power Authority (JPA). The decision was made to join the CCE at that time for a variety of reasons, including the following: ·The potential for ongoing electrical power cost savings when compared against rates charged by SCE. ·By joining in December 2020, the City would be considered a Founding Party member, which places Huntington Beach onto the JPA Executive Board Committee. ·The agreements expressly allowed for any participating agency to withdraw from the JPA for any reason and without any liability or cost by March 1, 2021 (subsequently, the withdrawal deadline was extended to April 1, 2021). Given those factors, as part of the determination to join the OCPA, the City Council also directed that staff complete a full assessment of the proposed JPAs feasibility plan, and bring those findings back for review at the City’s February 1, 2021 meeting. At that time, the City Council would make a final determination on whether or not to participate in the CCE. Subsequently, staff coordinated with MRW & Associates (MRW), an independent firm that was hired to assess the OCPAs implementation plan. A summary of MRWs findings (see attached report assessing OCPA) is as follows: ·The OCPA CCE is expected to be financially feasible. City of Huntington Beach Printed on 1/27/2021Page 1 of 6 powered by Legistar™660 File #:21-085 MEETING DATE:2/1/2021 ·The MRW analysis confirmed that OCPA is projected to be able to provide power at rates lower than Southern California Edison. ·The MRW assessment identified that the financial margins when comparing projected OCPA rates against SCE rates are the smallest during the first 2-3 years of operation , and that the margins increase over substantially over time. ·The financial analysis found that OCPA’s Implementation Plan is generally sound, developed utilizing reasonable and conservative assumptions. MRW did identify that the projections for the amount of initial working capital that OCPA would need could be slightly understated. o Of note, given that the City of Irvine is assuming all of the initial risk / start-up costs, this does not seem to of particular concern regarding the viability of OCPA. ·The OCPA agreement helps minimizes potential financial risk for Huntington Beach by specifically stating that the agencies are not required to make any financial contributions or payments to OCPA, and that OCPA has no right to require a contribution or payment. ·A benefit of remaining a member of OCPA is that the City of Irvine has agreed to provide up- front funding for implementation, start-up costs, as well as collateral funds in order to secure all of the needed initial financing. At this time, the City Council has the option to maintain membership with the OCPA JPA , or withdraw from the CCE organization with no cost or liability impacts. Financial Impact: There is no direct fiscal impact from joining the OCPA JPA. Per the JPA agreement, participating agencies are not required to make any financial contribution. Rather, the City of Irvine has agreed through the JPA agreement to cover all initial start-up costs associated with establishing the new OCPA entity. Those costs that Irvine has agreed to cover include the following: ·OCPA agency start-up costs, which are estimated at $2.5M. ·Initial working capital cash collateral of up to $5M for costs associated with procuring a working capital loan. Under the OCPA JPA agreement, Founding Party members have no financial obligation to the CCE entity being formed, which provides financial protections for Huntington Beach. The OCPA JPA agreement specifically states that the debts of the OCPA cannot be transferred to its member cities, nor can the OCPA compel a member city to financially contribute to the OCPA. Therefore , the City’s General Fund should not be impacted by maintaining membership, nor will membership impact the City’s credit rating. Recommended Action: The City Council has the following options: City of Huntington Beach Printed on 1/27/2021Page 2 of 6 powered by Legistar™661 File #:21-085 MEETING DATE:2/1/2021 A) Maintain membership in the Orange County Power Authority Community Choice Energy Joint Power Authority, OR B) Withdraw from the Orange County Power Authority, and direct staff to complete all requisite documents necessary to terminate our participation in the CCE JPA. Alternative Action(s): Do not select either of the options and direct staff accordingly. Analysis: In 2018, the City of Irvine initiated a feasibility study to assess the possibility of implementing a CCE program for their community. Those efforts evolved over the past two years, and in 2020, Irvine extended an invitation to all Orange County municipalities, asking interested parties to consider joining them in forming a CCE JPA, which has since been named the Orange County Power Authority (OCPA). A total of five (5) agencies are currently part of the JPA, including the cities of Fullerton, Buena Park, Lake Forest, Huntington Beach, and Irvine. These five jurisdictions are considered the Founding Party member agencies in the JPA and will be placed on the JPAs Executive Board Committee. Also of note, per OCPA staff, there are currently up to 10 other cities reviewing participation in OCPA. CCE Background CCEs are a mechanism authorized in California in 2002 by Assembly Bill 117, whereby local electrical service customers are provided with options when it comes to determining from where they purchase their power. Under the CCE set-up, customers can continue to procure their electrical power through their current utility provider (in the case of Huntington Beach, that would be Southern California Edison), or they can opt to have a local municipal government (or a coalition of local governments) procure electrical power on their behalf. Typically, CCEs are established with larger environmental or social goals in mind, such as increasing the share of power procured from renewable sources. In addition, CCEs have been shown to provide slight cost savings (around 1-2% decrease) over traditional investor-owned utility operations. Of note, establishing a CCE does not mean completely severing ties with the investor-owned utility, given that the utility agency still owns and manages the distribution lines that transmit electrical power to homes and businesses. Further, the utility company still meters each customer’s power usage, and continues to send customers their electrical bill. Under the CCE model, what changes is the entity which purchases electricity on behalf of the customer; rather than the utility company performing that role, the responsibility is transferred to the newly-formed local entity. The Orange County Power Authority The City of Irvine led an effort that in December 2020 to create a regional CCE Joint Power Authority named the Orange County Power Authority (OCPA). Currently, the OCPA consists of five (5) City of Huntington Beach Printed on 1/27/2021Page 3 of 6 powered by Legistar™662 File #:21-085 MEETING DATE:2/1/2021 founding member agencies; Buena Park, Fullerton, Irvine, Lake Forest, and Huntington Beach. Additionally, currently there are up to 10 other Orange County cities that are considering joining the OCPA. Of note, the original five members of OCPA, which includes Huntington Beach, are Founding Party Members and automatically placed on the JPA’s Executive Committee. Any other agency that joins will be considered Additional Party member. Given the uncertain nature of which agencies are looking to join the JPA, it is difficult to model precise fiscal data for the proposed OCPA entity. However, Irvine has commissioned a detailed fiscal analysis to assess various possible scenario through a 10-year pro forma document, a copy of which is included as an attachment to this report. Per that assessment, the proposed OCPA was identified as being financially viable, with the following key summary findings: ·OCPA would be able to repay the City of Irvine’s start-up and working capital loans, and build up proper financial reserves, during the first 5-7 years of operation. ·After initial debt service costs are repaid, it is estimated that a significant amount of net income will be available to the OCPA for use towards customer program or additional electrical rate discounts. OCPA Financial and Operational Analysis The City Council directed staff to provide a financial analysis of the OCPA and present to the City Council prior to the JPA no-risk opt out deadline. At the City’s request, MRW & Associates (MRW) completed an independent analysis of OCPA’s financial viability, reviewed the OCPA Implementation Plan, and provide an analysis of risks and benefits if of remaining in the OCPA. MRW’s report found that OCPA provides a financially viable option for the City to participate in a CCE with lower risk than establishing a stand-alone CCE with the following key findings: Financial Analysis The MRW independent analysis performed found the OCPA program is financially feasible, confirming that the OCPA’s projected margin between the OCPA operating costs to provide power is projected lower than the SCE energy generation rate. This means OCPA will be able to provide energy wither at a lower rate or competitive with SCE. The tightest margins will occur during the first few years of operation and will increase over time. The MRW model projects the margin between OCPA power costs and SCE power costs will start near 1 cent/Kwh, and will increase to over 3.0 cents/kwh over the next 10 years. MRW states that a CCE is feasible, but is not risk-free. OCPA will be participating in a competitive power market and subject to evolving state requirements and regulations. While an OCPA rate discount in the long run should be achievable, market prices and SCE rate volatility could combine to, in some isolated years, occasionally prevent the CCA from offering lower rates than SCE. Implementation Plan MRW found that the OCPA Implementation plan uses assumptions that are generally sound, confirming that the underlying customer phase-in, assumed power prices, operating costs, and City of Huntington Beach Printed on 1/27/2021Page 4 of 6 powered by Legistar™663 File #:21-085 MEETING DATE:2/1/2021 CCA revenues are all reasonable or conservative. MRW stated that they feel the amount of collateral provided by Irvine is lower than what may be required when OCPA secures the financing. Opt-Out Risk Customers may choose to opt-out of a CCA service before, during, or even after a CCE is formed. Most recent CCEs launched have only experienced very modest opt-out rates of around 2-3%. MRW modeled a high opt-out rate of 30%, and even at that level, the CCE remained financially viable. Governance Model Options The MRW evaluation found that joining the a JPA such as the OCPA would provide benefits from increased negotiation and buying power for power purchases, access to better financing terms for borrowing, and operation efficiencies gained by combining management and operating functions such as billing and accounting. The tradeoff to the benefits of joining a JPA are that decision making will be allocated amongst the participating parties as opposed to a single agency entity. A benefit to the OCPA JPA, participating agencies are not required to make any financial contribution. Rather, the City of Irvine has agreed through the JPA agreement to cover all initial start-up costs associate with establishing the new OCPA entity as well as cash collateral up to $5 million for power purchase financing. If the City chose to form a stand-alone CCE enterprise they would be required to fund the start-up capital and financial guarantee. By participating with OCPA, these financial burdens are being met by Irvine and not required of Huntington Beach. Greenhouse Gas (GHG) In order for OCPA to achieve GHG saving, the CCE will be required to acquire energy above the state renewable requirements. This would include purchasing energy from hydroelectric facilities (which is carbon-free but do not qualify as “renewable” under state law) or increase the renewable content of its electricity supply above that required by the state. The MRW independent analysis confirms the OCPA studies and implementation plan is generally sound and that maintaining membership is viable option for the City of Huntington Beach should the Council choose to participate in a CCE. Additionally, maintaining membership in OCPA, will provide the additional benefits of no implementation costs, reduced financial risk and reduced administrative and ongoing management costs. Environmental Status: Not applicable. Strategic Plan Goal: Enhance and maintain high quality City services Attachment(s): 1. Community Choice Energy for the City of Huntington Beach and Review of Orange County Power Authority City of Huntington Beach Printed on 1/27/2021Page 5 of 6 powered by Legistar™664 File #:21-085 MEETING DATE:2/1/2021 2. OCPA Implementation Plan 3. Orange County Power Authority Joint Powers Agreement City of Huntington Beach Printed on 1/27/2021Page 6 of 6 powered by Legistar™665 Community Choice Energy for the City of Huntington Beach and Review of Orange County Power Authority Prepared by: MRW & Associates, LLC 1736 Franklin Street, Ste 700 Oakland, CA 94612 January 27, 2021 666 This report was prepared by MRW & Associates. MRW has been working on Community Choice Aggregation (CCA) issues since they were authorized by the California State Legislature in 2002. MRW has prepared and critiqued numerous CCA feasibility plans and is providing rate forecasting and other ongoing support to CCAs throughout the state. This Study is based on the best information available at the time of its preparation, using publicly available sources for all assumptions to provide an objective assessment regarding the prospects of CCA operation in the City. It is important to keep in mind that the findings and recommendations reflected herein are substantially influenced by current market conditions within the electric utility industry and state regulations, both of which are subject to sudden and significant changes. 667 CCA Review for Huntington Beach January 2021 MRW & Associates, LLC Table of Contents Executive Summary ................................................................................................................ i  Main Findings ................................................................................................................................ i  CCA Background ............................................................................................................................ii  Huntington Beach and OCPA’s Electric Loads ................................................................................. iii  Financial Results ........................................................................................................................... iv  Analysis Underlying the OCPA Implementation Plan ...................................................................... v  Risks and Risk Management .......................................................................................................... vi  Chapter 1. Introduction ......................................................................................................... 1  What is a CCA? ............................................................................................................................. 1  Possible OCPA Objectives ............................................................................................................. 1  Rate Competitiveness and Financial Stability .................................................................................... 1  Contribute to Greenhouse Gas Reduction Program Objectives ........................................................ 2  Additional Objectives ........................................................................................................................ 2  Reaching CCA Objectives ............................................................................................................... 4  Financial ............................................................................................................................................ 4  Climate Change Mitigation ................................................................................................................ 4  Renewables – What Does It Mean to be 100% Green? ..................................................................... 5  How are CCAs financially competitive with the utilities? .................................................................. 5  Status of CCAs in California ........................................................................................................... 6  CCA Evolution .................................................................................................................................... 9  Chapter 2.  MRW Financial Study Methodology and Key Inputs ........................................... 12  OCPA and Huntington Beach Loads and CCA Load Forecasts ......................................................... 12  Forecasting ...................................................................................................................................... 15  CCA Power Supplies ..................................................................................................................... 15  Regulatory Procurement Requirements .......................................................................................... 15  Power Supply Portfolio and Cost Assumptions ............................................................................... 18  Pro Forma Elements and CCA Costs of Service .............................................................................. 21  Pro Forma Elements ........................................................................................................................ 22  Startup Costs ................................................................................................................................... 22  Reserves .......................................................................................................................................... 24  Administrative and General Cost Inputs .......................................................................................... 24  SCE Rate and PCIA Forecasts ........................................................................................................ 25  SCE Generation Rates ...................................................................................................................... 25  PCIA ................................................................................................................................................. 26  Chapter 3. Financial Analysis Results ................................................................................... 28  Sensitivity to Key Inputs .............................................................................................................. 31  Rate Savings Currently Offered by CCAs ....................................................................................... 32  Chapter 4: Review of Implementation Plan ......................................................................... 34  Implementation Plan Approach ................................................................................................... 34  Implementation Plan Assumptions .............................................................................................. 34  Opt‐Out ........................................................................................................................................... 35  668 CCA Review for Huntington Beach January 2021 MRW & Associates, LLC Power Costs ..................................................................................................................................... 36  Other Power Procurement Related Costs ....................................................................................... 37  CCA Operating Costs ........................................................................................................................ 38  CCA Financing .................................................................................................................................. 38  SCE Rates ......................................................................................................................................... 39  PCIA ................................................................................................................................................. 40  Conclusions ................................................................................................................................. 41  Chapter 5: Risks & Mitigating Strategies .............................................................................. 42  Financial Risk to City .................................................................................................................... 42  Opt‐Out Risk ................................................................................................................................ 42  Rate and PCIA Uncertainty ........................................................................................................... 43  CPUC “Financial Security Requirement” Risk ................................................................................ 44  Direct Access and Competitive Retail Services .............................................................................. 44  Energy Risk Management ............................................................................................................ 45  Legislative and Regulatory Risks................................................................................................... 45  Chapter 6. Governance Model Options ................................................................................ 47  Forming a Single City Agency ....................................................................................................... 47  Forming or Joining a Joint Powers Agency .................................................................................... 48  Chapter 7. Conclusions ........................................................................................................ 50  669 CCA Review for Huntington Beach January 2021 MRW & Associates, LLC List of Acronyms AB Assembly Bill BNI Binding Notice of Intent C&I Commercial and Industrial CAISO California Independent System Operator Cal-CCA California Community Choice Association CCA Community Choice Aggregator/Aggregation CCEA California Choice Energy Authority CEC California Energy Commission CO2e Carbon Dioxide Equivalent CPA Clean Power Alliance CPUC California Public Utilities Commission CRS Cost Responsibility Surcharge CTC Competition Transition Charge DA Direct Access DEG Distributed Energy Generation DOE Department of Energy EE Energy Efficiency ESP Energy Service Provider EV Electric Vehicle FERC Federal Energy Regulatory Commission FiT Feed-in-Tariff GGRP Greenhouse Gas Reduction Program GHG Greenhouse Gas GTSR Green Tariff Shared Renewable GTSR-GR Green Tariff Shared Renewable - Green Rate GWh Gigawatt Hour IOU Investor-Owned Utility IRP Integrated Resource Planning kW Kilowatt kWh Kilowatt Hour LSE Load Serving Entity MCE Marin Clean Energy 670 CCA Review for Huntington Beach January 2021 MRW & Associates, LLC MT Metric Ton MWh Megawatt Hour NREL National Renewable Energy Laboratory O&M Operations and Maintenance OCPA Orange County Power Authority PCIA Power Charge Indifference Adjustment PG&E Pacific Gas & Electric POLR Provider of Last Resort PPA Power Purchase Agreement PPP Public Purpose Program PSPS Public Safety Power Shutoffs PV Photovoltaic RA Resource Adequacy REC Renewable Energy Credit RFP Request for Proposal RPS Renewable Portfolio Standard SB Senate Bill SC Scheduling Coordinator SCE Southern California Edison SDG&E San Diego Gas and Electric SJCE San Jose Clean Energy SVCEA Silicon Valley Clean Energy Authority 671 CCA Review for Huntington Beach January 2021 i MRW & Associates, LLC Executive Summary The City of Huntington Beach (the City) is currently a member city of the Orange County Power Authority (OCPA) Community Choice Aggregation (CCA) program but has the option to withdraw from the JPA within a certain timeframe and with no consequences. The City requested MRW & Associates (MRW) to provide an independent analysis of OCPA’s financial viability, to review the OCPA Implementation Plan, and to provide an analysis of the risks the City would face if it remained in the OCPA. Main Findings The general conclusions of this study are as follows: 1. MRW’s independent analysis performed here finds that the OCPA CCA program is projected to be financially feasible. That is, over the long run the CCA would likely be able to offer Orange County residents and businesses power that is priced at or a few percent lower than that offered by Southern California Edison (SCE). 2. The financial margins are smallest during the first years of operation, due to the initial investment in startup costs, loan repayments, and SCE rates. As such, OCPA’s targeted rate discount of 2% may not be achievable during the first years of operation; however, beyond 2023, OCPA’s rates should be lower than SCE’s rates. 3. While feasible, CCA formation is not risk-free. OCPA will be participating in a competitive power market and subject to evolving state requirements and regulations. While an OCPA rate discount in the long run should be achievable, market prices and SCE rate volatility could combine to, in some isolated years, occasionally prevent the CCA from offering lower rates than SCE. 4. The financial analysis underlying OCPA’s Implementation Plan is generally sound. That is, the underlying customer phase-in, assumed power prices, operating costs, and CCA revenues are all reasonable or conservative. Our primary concern with the Implementation Plan is with the financing assumptions, which may be understating OCPA’s initial working capital requirement. 5. OCPA’s Joint Powers Agreement specifically states that the debts of the OCPA cannot be transferred to its member cities, nor can the OCPA compel a member city to financially contribute to the OCPA. As such, the City’s General Fund should not be impacted by joining OCPA, nor would its membership negatively impact the City’s credit rating or ability to borrow.1 If Huntington Beach chose to form a stand-alone CCA enterprise, the City would have to provide a short-term loan to the CCA enterprise and provide a financial guarantee that provides the start-up capital to the CCA. As a member 1 Note that MRW is not a law firm and that these conclusions do not represent a legal opinion, only a laymen’s reading of the JPA document. 672 CCA Review for Huntington Beach January 2021 ii MRW & Associates, LLC of OCPA, these financial burdens are being met by Irvine and are therefore not applicable to Huntington Beach. 6. Forming a CCA does not guarantee greenhouse gas (GHG) savings. Achieving GHG reductions requires the CCA to do more than just meet the state renewable requirements; it requires the CCA to either acquire energy from large hydroelectric facilities (which are carbon-free but do not qualify as “renewable” under State law) or increase the renewable content of its electricity supply beyond that required by the State. CCA Background California Assembly Bill 117, passed in 2002, established Community Choice Aggregation in California, for the purpose of providing the opportunity for local governments or special jurisdictions to procure and provide electric power for their residents and businesses. Under existing rules administered by the California Public Utilities Commission (CPUC) an investor- owned utility (IOU), such as Southern California Edison (SCE), must use its transmission and distribution system to deliver the electricity supplied by a CCA in a non-discriminatory manner. That is, it must provide these electricity delivery services at the same price and at the same level of reliability to customers supplied by a CCA as it does for its own full-service customers. CCAs are now quite common in California. There are currently 23 CCAs providing power in the State, with at least another half-dozen planning on doing so in the next two years. As shown in Figure ES-1, CCAs are expected to serve over 63 GWhs in the State by the end of 2021, with some projecting that by the mid-2020s between 50 to 80 percent of the load in the three main IOU service territories will be served by non-utility entities (CCAs and Direct Access providers). Figure ES-1. California CCA Load Growth *Source: Cal-CCA. Values for 2020 and 2021 are estimates. 5,400 12,300 24,300 44,400 50,040 63,130 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 CCA Growth 2019‐2021 California CCAs: Annual Load 2016 ‐2021 (GWh)* CCA 2016 CCA 2017 CCA 2018 CCA 2019 CCA 2020 CCA 2021 2016‐2019 673 CCA Review for Huntington Beach January 2021 iii MRW & Associates, LLC Huntington Beach and OCPA’s Electric Loads Table ES-1 shows that OCPA’s total annual electric load in 2019 is about 4,500 GWh with 1,000 GWh of that load coming from Huntington Beach. OCPA has over 330,000 customer accounts, of which 86,000 (23%) are in Huntington Beach. For comparison, Irvine’s load will make up about 42% of OCPA’s, load, Fullerton 15% and Lake Forest and Buena Park each at 10%. Table ES-1. Potential OCPA Customers and Associated Load  Huntington Beach OCPA (Total)    Customers Annual Load  (MWh) Customers Annual Load  (MWh)  Residential 75,940 418,684 288,041 1,579,280  Small Commercial 8,732 92,635 32,138 368,188  Medium Commercial 1,145 233,810 6,216 1,452,384  Large Commercial & Industrial 26 287,178 191 1,028,396  Other* 539 12,833 4,032 82,769  Total 86,382 1,045,139 330,617 4,511,017  *e.g., streetlights, traffic control, agriculture/pumping.  As shown above and in Figure ES-2 below, Huntington Beach has a higher percentage of residential load compared to the other OCPA members and a lower percentage coming from small commercial and the “other” category (streetlights, pumping, and agriculture). Figure ES-2. Huntington Beach Load Distribution  ‐  200,000  400,000  600,000  800,000  1,000,000  1,200,000  1,400,000  1,600,000  1,800,000 Residential Small Commercial Medium Commercial & Industrial Large Commercial & Industrial Other* Huntington Beach Other OCPA CCAsCities 674 CCA Review for Huntington Beach January 2021 iv MRW & Associates, LLC Financial Results Figure ES-3 shows the forecast of average MRW-modeled OCPA costs and SCE’s generation rates. The bars in the chart show the forecasts of the major cost components of CCA operation, while the single line shows the forecast of SCE’s generation rate. When the bars are below the black line, the CCA’s average operating costs will be below the SCE generation rate; meaning that it can offer power to customers at a rate lower than or competitive with SCE. As is clearly seen in the figure, the average cost of power provided by the CCA is consistently below the SCE generation rate, although much closer in the first few years of OCPA operation. The bottom-most green segment represents the cost of renewable power to the CCA. The brown segment is for the costs of non-renewable, wholesale market power. This segment slowly decreases, as renewable power increases. (Because renewables are currently more costly than market power, the analysis assumes OCPA will initially meet the State’s minimum renewable power content requirement and ramp up as the requirements increase). The light blue segment is for capacity. That is, the CCA must demonstrate that it has the generating capacity (in megawatts) to ensure that it can serve all its load. The gray segment is for debt service, operations, franchise fees, and uncollectibles. The yellow segment is for carbon cap and trade allowances. Note that for practical purposes, the cost of carbon cap-and-trade allowances would be built into the purchase price of natural gas-fired market resources. However, because it is an important variable on its own, the costs are shown separately. Figure ES-3. Average OCPA Cost Projection versus SCE Generation Rate 0.00 2.00 4.00 6.00 8.00 10.00 12.00 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031¢/kWhPCIA GHG O/M Capacity Other Energy Renewable IOU Does not include the reserve fund or other programs  675 CCA Review for Huntington Beach January 2021 v MRW & Associates, LLC The top-most pink segment is for the Power Charge Indifference Adjustment (PCIA), a fee paid to SCE to ensure that the operation of the CCA does not strand SCE’s remaining bundled customers with costs associated with power purchased on behalf of customers who have shifted to the CCA. The black line represents SCE’s average generation rate. To forecast SCE’s generation rates, the comparison model used information regarding SCE’s utility-owned generation, power contracts, power market costs, and by closely tracking changes in SCE revenues and costs through its filings in several CPUC proceedings. In particular, it takes the most recent SCE filing of generation rates and applies the known and anticipated changes to the wholesale power market prices and SCE’s power purchase contracts. Table ES-2 shows the “margin” between the CCA’s costs (including the PCIA) and SCE’s generation rate (i.e., the difference between the top of the CCA cost columns and the SCE generation rate line in the above figure). The margin between the CCA’s cost and SCE’s generation rates need not go fully to offering rate savings. In fact, during the first few years, the CCA’s set their rates so that most of the margin between their ongoing costs and SCE’s generation rates is set aside for financial reserves and paying down the initial startup loans. Once the financial reserve targets are met and the start-up loans paid off, CCAs typically use a portion of the margin for programs serving their residents and businesses, purchasing greater amounts of renewable power, and providing greater rate discounts that could be offered during the first years. It is up to the CCA Board of Directors to balancing these competing uses (i.e., rate discounts, programs, financial reserves, and greener power). Table ES-2. Projected OCPA Margins*  2022 First 3 years  (2022‐24)  First 5 years  (2022‐2026)  2nd 5 years  (2027‐2031)  10‐Years  (2022‐2031)  ¢/kWh (average) 1.0 1.2 1.6 2.9 2.2  *Without rate savings, reserve contributions or program funding  Analysis Underlying the OCPA Implementation Plan Overall, the assumptions and analysis in the Implementation Plan are sound. That is, the underlying customer phase-in, assumed power prices, operating costs, and CCA revenues are all reasonable or conservative. However, we note the following concerns. First, the Implementation Plan does not reflect the State’s changing policy concerning Local Resource Adequacy. While this does not impact the overall competitiveness of the OCPA, it should be addressed in any future documents. Second, the Implementation Plan’s generation rate is on average about 5% lower than MRW’s projections while significantly overestimating the PCIA. The PCIA overestimation more than makes up for the low generation rate and results in a net level of 676 CCA Review for Huntington Beach January 2021 vi MRW & Associates, LLC conservatism in the Implementation Plan’s financial position. Third, MRW believes that the Implementation Plan may be underestimating the initial working capital requirements. The Implementation plan assumes $15.5 million for starting and a working capital loan/line of credit, $2.5 million directly from the city of Irvine and $13 million from a third party. This represents about 30 days of average cash flow in the first year, in which, the phase-in is only a fraction of the load would be served. MRW’s more conservative analysis assumes that the working capital loan / line of credit would be for 60 days of cash flow assuming the full load is served. San Diego Community Power (SDCP) provides another data reference. OCPA’s load is projected to be about 62% of that of SDCP. SDCP required $40 million initial line of credit. Simply scaling SDCP’s requirement down to OCPA suggests an initial bank load/line of credit around $25 million. We note that Irvine has agreed to provide up to $5 million collateral and a loan guarantee if required for the power purchase loan requirements. (Exhibit D, section 1.3 of the JPA agreement). While Irvine’s commitment may provide sufficient backstop for OPCA financing, it cannot be known until OCPA secures financing. Risks and Risk Management The primary risk faced by a CCA is that it cannot provide power to its residents and businesses at a competitive price. (Many of the factors that can impact the CCA’s price position are explored in the sensitivity analyses). This risk is caused not only by changes to the power market but also changing regulatory requirements SCE. The primary way that a CCA can address these risks is to use sound power procurement and risk management practices. While complex, these practices are well known and implementable. The risk of joining OCPA to the City’s general fund is minimal. OCPA’s Joint Powers Agreement specifically states that the debts of the OCPA cannot be transferred to its member cities, nor can the OCPA compel a member city to financially contribute to the OCPA. As such, the City’s General Fund should not be impacted by joining OCPA, nor would its membership negatively impact the City’s credit rating or ability to borrow.2 If Huntington Beach chose to form a stand-alone CCA enterprise, the City would have to provide a short-term loan to the CCA enterprise and provide a financial guarantee to the bank or other financial institution that provides the start-up capital to the CCA. As a member of OCPA, these financial burdens are being met by Irvine and are therefore not applicable to Huntington Beach. 2 Note that MRW is not a law firm and that these conclusions do not represent a legal opinion, only a laymen’s reading of the JPA document. 677 CCA Review for Huntington Beach February 2021 1 MRW & Associates, LLC Chapter 1. Introduction What is a CCA? California Assembly Bill 117, passed in 2002, established Community Choice Aggregation in California, for the purpose of providing the opportunity for local governments or special jurisdictions to procure and provide electric power for their residents and businesses. Under existing rules administered by the California Public Utilities Commission, an investor- owned utility (IOU) must use its transmission and distribution system to deliver the electricity supplied by a CCA in a non-discriminatory manner. That is, it must provide these delivery services at the same price and at the same level of reliability to customers supplied by a CCA as it does for its own full-service customers. By state law, an IOU also must provide all metering and billing services, its customers receiving a single electric bill each month from the IOU, which would differentiate the charges for generation services provided by the CCA as well as charges for IOU delivery services. Money collected by the IOU on behalf of the CCA must be remitted in a timely fashion (e.g., within 3 business days). As a power provider, the CCA must abide by the rules and regulations placed on it by the state and its regulating agencies, such as maintaining demonstrably reliable supplies and fully cooperating with the State’s power grid operator. However, the State has no rate-setting authority over the CCA; the CCA may set rates as it sees fit so as to best serve its constituent customers. This is in contrast to SCE, which require approval by the California Public Utility Commission to set its rates. Per California law, when a CCA is formed all the electric customers within its boundaries will be placed, by default, onto CCA service. However, customers retain the right to return to SCE service at will, subject to whatever administrative fees the CCA may choose to impose— typically $5 for a residential customer and $25 for a non-residential customer. Possible OCPA Objectives The feasibility of a CCA program is a function of that program’s ability to meet the sponsoring city’s or JPA’s goals and objectives. This section lays out the typical CCA goals and objectives and how they might apply to Huntington Beach. Rate Competitiveness and Financial Stability OCPA has set a goal to offer rates that are competitive with the projected generation rates offered by the incumbent electric utility, Southern California Edison (SCE). “Competitive” here means that the CCA, over the long run, could offer rates that are equal to or less than those offered by SCE. It does not mean that in every year a specific rate savings is offered. In fact, some CCAs have had to offer rates slightly higher than those offered by their host utilities during one or more of their first few years. We note that they did not experience significant opt- outs because of this. 678 CCA Review for Huntington Beach February 2021 2 MRW & Associates, LLC In addition, the CCA would be committed to providing equitable treatment of all classes of customers without undue discrimination in setting rates. At the same time, the rates would have to generate sufficient revenue to the CCA, so all liabilities are covered in a manner consistent with an investment-grade entity. The CCA should not move forward unless there is confidence that both rate competitiveness and financial stability can be achieved. The CCA would also intend to offer long-term rate stability to its customers as well as maintain its own financial condition. This could be accomplished through conservative phasing in of customers and projects; establishing and maintaining appropriate lines of credit and financial reserves; and contracting with only experienced and financially solid providers of goods and services. Contribute to Greenhouse Gas Reduction Program Objectives In October 2017, the City of Huntington Beach updated its General Plan to include a Greenhouse Gas Reduction Program (GGRP), which includes greenhouse gas (GHG) emissions reduction targets and general emissions reduction strategies. As discussed later, a CCA, if it is financially able and so chooses, can contribute to the City meeting its GGRP objectives. It must be noted that California is moving toward a carbon-free electricity policy. Senate Bill 100, which was signed into law by Governor Brown on September 17, 2018, increases the renewable power content requirement of all retail power providers, including utilities and CCAs, from 50% to 60% by 2030. The bill also says, “that it is the policy of the state that eligible renewable energy resources and zero-carbon resources supply 100% of retail sales of electricity to California end-use customers by December 31, 2045,” and that all state agencies regulating electricity build this goal into their planning. This effectively means that the difference between the electricity carbon content of the CCA following the City’s GGRP and remaining with status quo utility service may not be significant. Additional Objectives While maintaining rate competitiveness, financial stability, and contributing to the City’s GGRP are non-negotiable objectives, a CCA can also serve as a vehicle to pursue other objectives that benefit the CCA and SCE Rates A CCA provides only generation services: the actual power that CCA customers use. The incumbent utility, SCE, would still deliver the power to the home or business, even though the CCA is providing the power. Therefore, the CCA customer would still pay the SCE delivery rates, but instead of paying SCE’s generation rates, they would pay the CCA’s generation rates. CCA customers also pay an additional fee so that the remaining SCE customers are not harmed by the CCA (the “PCIA” charge). Because a customer pays the same delivery rates no matter who provides their power, the rate comparisons here focus on the CCA rate (plus the PCIA charge) versus SCE’s generation rate. 679 CCA Review for Huntington Beach February 2021 3 MRW & Associates, LLC City, its residents, and businesses. Examples of additional objectives could include the following: Economic development. A CCA can potentially contribute to local economic development in two ways. First, if the CCA offers reduced electricity rates, additional dollars can flow into the local economy as households and businesses spend their incomes on items and services other than electricity. Second, the CCA can offer programs that allow households and businesses to reduce their power consumption, such as energy efficiency and distributed energy resources. Local jobs and employment. Beyond the potential jobs that could result from the economic stimulus of possibly lower rates, the CCA can more directly incentivize and support local job creation. This includes employing residents in CCA administration, using local contractors for energy efficiency programs, and distributed energy generation (e.g., rooftop solar installers and maintainers). The CCA can also partner with local community colleges and/or trades apprenticeship programs to support quality local job opportunities. Prioritization of renewable power development. Beyond support of locally sited distributed energy generation (“DEG,” e.g., rooftop solar), a CCA may prioritize siting larger, grid connected DEG and utility-scale renewable project locally. Local citizen input and participation. A primary purpose of a CCA is to better reflect its community’s interests and values than a large- scale, investor-owned utility like SCE can. This is illustrated in the CCA’s objective of supporting the City’s GGRP. However, it can go beyond this; the CCA can commit to creating opportunities for citizens to provide input into its programs and policies. Power primer The California Independent System Operator (CAISO) manages the balance between electricity load and supply on its system for both CCAs and IOUs. Each utility, CCA or energy service provider (ESP) on the CAISO system provides, each day, a forecast of its load and the resources it will be using to meet that load. These load serving entities’ (LSEs) forecasts are updated throughout the day by the LSE’s “scheduling coordinator.” The CAISO also maintains markets for power plants to be standing by to meet unexpected load, or to back off production if load is lower than forecasted. For LSE planning and procurement purposes, electricity supply consists of two components: energy in kilowatt hours (kWh), and capacity or demand in kilowatts (kW). Using an analogy of a railroad car: the size of the car represents capacity; and the goods inside the car represent energy. A CCA must purchase both energy (kWh) to meet its customer’s consumption needs and capacity to account for customer demand. The CCA must always purchase both the correct amount of energy (kWh) and an adequate amount of capacity to meet its customers’ energy requirements. As such, the CCA must appropriately forecast both the energy usage (kWh) and peak demand (kW) requirements of its customers. 680 CCA Review for Huntington Beach February 2021 4 MRW & Associates, LLC Reaching CCA Objectives Financial As noted above, OCPA would expect to offer rates that are competitive with those offered by SCE. At the same time, the rates would have to generate sufficient revenue for the CCA so that all liabilities are covered in a matter consistent with an investment-grade entity. The CCA would not move forward unless there is confidence that both rate competitiveness and financial stability can be achieved. The CCA would also intend to offer long-term rate stability to its customers as well as maintain its own financial condition. This will be accomplished through conservative phasing in of customers and projects; establishing and maintaining appropriate lines of credit and financial reserves; and contracting with only experienced and financially solid providers of goods and services. We assume that OCPA would be a financially independent enterprise with no funds or debts co- mingling with City of Huntington Beach or any other member’s, General Fund. It will establish reserve funds commensurate with the working capital, operating reserves, and contingency requirements of the enterprise. To do so, the CCA would have to develop a rate design that recovers sufficient revenue to adequately fund these reserves in the intermediate term. Climate Change Mitigation As noted above, the City has included the GGRP in its General Plan. According to the GGRP, the mission for the reduction plan is to:  Quantify greenhouse gas emissions, both existing and projected over a specified time period, resulting from activities within a defined geographic area.  Establish a level, based on substantial evidence, below which the contribution to greenhouse gas emissions from activities covered by the plan would not be cumulatively considerable.  Identify and analyze the greenhouse gas emissions resulting from specific actions or categories of actions anticipated within the geographic area.  Specify measures or a group of measures, including performance standards, that substantial evidence demonstrates, if implemented on a project-by-project basis, would collectively achieve the specified emissions level.  Establish a mechanism to monitor the plan’s progress toward achieving the level and to require amendment if the plan is not achieving specified levels.3 Through the GGRP, as well as existing actions taken by the City of Huntington Beach, the City has set a GHG emissions target of 570 metric tons (MT) CO2e by 2040. This target value 3 City of Huntington Beach General Plan, October, 2, 2017. 681 CCA Review for Huntington Beach February 2021 5 MRW & Associates, LLC signifies a large reduction from the estimated future GHG emissions value of 66 MT CO2e in 2040 if the GGRP and existing reduction actions are not utilized.4 To the extent that the carbon content of the power provided by the CCA is lower than that provided by SCE, the CCA can contribute to meeting the GGRP’s 2040 aspiration. Renewables – What Does It Mean to be 100% Green? Most CCAs offer rate options to customers that are “100% Green;” that is, the power consumed by customers on these rates is fully provided by qualifying renewable resources. Other CCAs have a goal of being 100% Green by a certain date (e.g., the newly formed San Diego Community Power intends to be fully green by 2035). The ability of a CCA or a customer to rely fully on renewable power is accurate within the framework of power procurement, but not necessarily transparent to the lay audience. When a CCA is sourced fully by renewable power, it does not mean that for each hour of the day, 100% of the power injected into the California power grid by the CCA (that is, by the renewable generators owned or under contract to the CCA) will be renewable. There will be hours of the day where the CCA’s solar resources will be generating more electricity than the CCA’s customers are consuming. This power is sold into the CAISO’s wholesale market. There will also be hours of the day when the CCA’s load is greater that their renewable resources’ output, at which point they purchase power from the CAISO wholesale market. Currently, to be 100% renewable, the CCA’s renewable resources would need to generate as much power as the CCA’s customers consume, albeit not necessarily at the same time. This is analogous to the “net-zero” energy home, where, over the course of a year, the solar panels on the house generate in total as much (or more) power than the house uses, but with some hours having the solar panels inject power into the grid while in others it takes power from the grid. In the long run, in the late 2020s and beyond, the “balancing” function of the non-renewable generators in the wholesale market will likely be replaced in part with energy storage systems, such as pumped hydroelectric or batteries. At the point when fossil resources are not needed, one can say that the CCA—and the California Grid—is 100% renewable/carbon free. How are CCAs financially competitive with the utilities? All but two active CCAs in California currently offer rates that are at or lower than their incumbent utility, be it SCE, Pacific Gas & Electric (PG&E) or San Diego Gas & Electric (SDG&E). CCAs’ ability to do this, even with the exit fees (PCIA), is attributable to three factors. First, the CCAs serving coastal areas do not have to serve as much air conditioning load as their incumbent utilities as a whole. (SCE also serves inland regions that are much warmer than coastal areas, while coastal CCAs do not.) Because air conditioning loads often occur at the times of the day with the highest priced wholesale power, they are more costly to serve. 4 General Plan Update: Program Environmental Impact Report, Prepared by Atkins for the City of Huntington Beach, August 2017. 682 CCA Review for Huntington Beach February 2021 6 MRW & Associates, LLC Second, the incumbent utilities have in their portfolios some relatively expensive, generally renewable, power purchase contracts. This raises the utilities’ rates, but also begs the question of what happens when those contracts expire. Two things happen. First, the Power Change Indifference Amount (PCIA) fee is reduced because it is the mechanism to capture the above- market costs of these expensive power contracts and pass them on to customers who were on utility service when the contracts were signed. Second, at worst, the utility will be participating equally in the same wholesale power and renewable markets as the CCA. Third, the incumbent utilities are still under the jurisdiction of the California Public Utilities Commission (CPUC). This means that each and every power purchase contract the utility enters into goes through a cumbersome vetting process and must be approved by the full CPUC. Furthermore, the utilities must often comply with non-economic directives from the CPUC, which is why they have the expensive contracts in their portfolio in the first place. CCA procurement is not so tightly bound by the state; they can be nimbler in responding to market movement and have much greater control over their purchasing, hedging, and risk management than the incumbent utilities. It is these latter points that give the existing CCAs confidence that they will be able to compete even after the higher-priced contracts in the incumbent utilities’ portfolios expire. Status of CCAs in California Even though the enabling legislation was enacted in 2002, the first CCA to provide power, Marin Clean Energy (MCE), did not enroll customers until 2010. For the next five years, others investigated CCA formation, with a few early adopters stepping up in 2014 through 2016. As shown in Figure 1, once these early adopters showed that CCAs could work, the flood gates opened in 2017. By the end of 2021, CCAs are expected to serve over 63 GWhs, with some projecting that by the mid-2020s between 50 to 80 percent of the load in the three main IOU service territories will be served by non-utility entities (CCAs and Direct Access providers). Figure 1. California CCA Load Growth 5,400 12,300 24,300 44,400 50,040 63,130 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 CCA Growth 2019‐2021 California CCAs: Annual Load 2016 ‐2021 (GWh)* CCA 2016 CCA 2017 CCA 2018 CCA 2019 CCA 2020 CCA 2021 683 CCA Review for Huntington Beach February 2021 7 MRW & Associates, LLC Table 1 lists the active CCAs in California, including those that have announced intended launches in 2021, along with their location and governance structure. As the table shows, most of the current CCAs are in PG&E’s service area, but the growth in 2020 came from new CCAs in SCE’s territory. Currently, there is only one small CCA in SDG&E’s territory, Solana Energy Alliance, but two large JPAs in the San Diego region are intending to begin service in 2021. The table also shows that the majority of CCAs are organized as joint powers authorities (JPAs). There are also many smaller cities in SCE’s area that use the “JPA Light” model, in which the CCA is technically a city enterprise that relies upon the California Choice Energy Authority (CCEA) to provide the technical operations. There are also three stand-alone city CCA enterprises, King City, San Francisco, and San Jose. Table 1. CCAs in California CCA IOU Type Formed Load, GWh5  CCAs Currently Delivering Power in California  Clean Power San Francisco PG&E City May 2016 3,135  East Bay Community Energy PG&E JPA Jan.2018 6,200  Marin Clean Energy PG&E JPA May 2010 5,275  Central Coast Community Energy  (formerly Monterey Bay Community  Power)  PG&E JPA March 2018 3,202  Peninsula Clean Energy PG&E JPA Oct. 2016 3,600  Pioneer Community Energy PG&E JPA 2018 NA  Redwood Coast Energy Authority PG&E JPA May 2017 699  San Jose Clean Energy PG&E City Sept. 2018 3,286  Silicon Valley Clean Energy PG&E JPA April 2017 3,898  Sonoma Clean Power PG&E JPA May 2014 2,502  Valley Clean Energy Alliance PG&E JPA Dec. 2016 682  King City Community Power PG&E City July 2018 35  Clean Power Alliance SCE JPA Feb. 2018 10,295  Apple Valley Choice Energy SCE City; CCEA April 2017 260  Lancaster Choice Energy SCE City; CCEA May 2015 600  Pico Rivera Innovative Muni’l Energy SCE City; CCEA Sept. 2017 220  Rancho Mirage Energy Authority SCE City; CCEA May 2018 300  San Jacinto Power SCE City; CCEA April 2018 170  5 2019 Load (GWh) reported by CalCCA: https://cal-cca.org/cca-impact/ 684 CCA Review for Huntington Beach February 2021 8 MRW & Associates, LLC CCA IOU Type Formed Load, GWh5  Desert Community Energy SCE JPA April 2020 640  Western Community Energy SCE JPA April 2020 1,285  Baldwin Park SCE City; CCEA Oct. 2020 255  Pomona SCE City; CCEA Oct. 2020 655  Solana Energy Alliance SDG&E City June 2018 37  Planned Launch  Palmdale SCE City; CCEA 2021 655  Hanford PG&E City; CCEA 2021 285  Commerce SCE City; CCEA 2021 460  Drafted Ordinances for Implementation as Soon as 2021  San Diego Community Power SDG&E JPA 2021 6,800  North SD County CCA SDG&E JPA 2021 2,750  Butte County PG&E JPA 2021 1,080  Figure 2 shows the 2019 annual loads of several active California CCAs. Three observations can be made from this figure. First, Clean Power Alliance (CPA), the CCA that serves Los Angeles and Ventura counties along with selected communities therein, is the largest CCA in California by load—nearly twice the size of the second largest CCA, East Bay Community Energy. Second, were Huntington Beach to join OCPA, OCPA would be one of the largest CCAs in California by load, indicating that economies of scale would have been reached. Third, Huntington Beach’s load would make up almost a quarter of OCPA’s total load (dark green segment of the OCPA bar). 685 CCA Review for Huntington Beach February 2021 9 MRW & Associates, LLC Figure 2. California Active CCA Loads (Annual GWhs, 2020) CCA Evolution Over the first years of operation, many California CCAs have been evolving from a simple commodity procurement entity—providing power, albeit greener, at a competitive rate. After a year or two (or more), many CCAs have expanded into providing targeted and specialized customer programs that while customized for their communities, are variations of services provided by their host IOU or are generally proven in the industry. Examples of this include CCAs like MCE, which has exercised its right to apply for energy efficiency (EE) program funding from the CPUC.6 To do so, it must file various plans explicitly detailing what they intend to do in the EE program along with reporting requirements and protocols to verify that the energy savings that is projected will occur. If approved, the CCA receives money that is collected in IOU rates through the Public Purpose Program (PPP) rate element. Another example of this second phase of CCA evolution is offering rooftop solar programs and feed-in- 6 Note that customers taking commodity service from a CCA are still eligible to participate in EE programs administered by their host IOU, regardless of whether or not the CCA is administering their own PPP-funded EE programs or not. 686 CCA Review for Huntington Beach February 2021 10 MRW & Associates, LLC tariffs (FiTs) for local renewable generation projects that connect “in front of” the customer meter. A third example is installing additional electric vehicle (EV) charging stations and encouraging EV purchasing and leasing. The third phase in evolution observed with California CCAs is the movement into innovative and less common power-related programs and services. These are programs that are not common in California or elsewhere and may be more in the “demonstration” part of the program/technology lifecycle. Examples of these programs include Sonoma Clean Power’s efforts to electrify the areas that were destroyed in wildfires (i.e., work with PG&E to perhaps not provide gas service to these areas) or the microgrid programs being pursued by Redwood Coast Energy Authority and Monterey Bay Community Power (now known as Central Coast Community Energy). Table 2, below, shows a range of the programs being pursued by some California CCAs. These non-commodity program offerings are becoming the focus of CCAs in the state. At the Business of Local Energy Symposium, a large CCA-oriented conference held in June 2019 in Irvine, CA, the speakers, panels, and presentations overwhelmingly focused on innovation that CCAs can do and are doing.7 None addressed power procurement or cost competitiveness. 7 https://theclimatecenter.org/the-business-of-local-energy-symposium-2019-presentations/ 687 CCA Review for Huntington Beach February 2021 11 MRW & Associates, LLC Table 2. Sample California CCA Program Offerings8 8 https://cal-cca.org/cca-programs/ 688 CCA Review for Huntington Beach February 2021 12 MRW & Associates, LLC Chapter 2. MRW Financial Study Methodology and Key Inputs This chapter summarizes the key inputs and methodologies used to evaluate the cost- effectiveness and cost-competitiveness of OCPA relative to SCE under different scenarios. It considers the regulatory requirements that OCPA would need to meet (e.g., compliance with renewable portfolio standard (RPS) requirements), the resources that the City has available or could obtain to meet these requirements, and the SCE rates against which the CCA would compete. It also describes the pro forma analysis methodology that is used to evaluate the financial feasibility of the CCA. The load and rate forecasts go out 10 years— from 2022, the earliest a CCA could be formed, through 2031. While all forecasting contains uncertainty, the years beyond 2030 are particularly uncertain and should be seen as broadly indicative and not predictive. OCPA and Huntington Beach Loads and CCA Load Forecasts A fundamental operational role of a CCA is to forecast customer electricity needs in the short, medium, and long terms. Power procurement and day-to-day decision-making rely heavily on short-term forecasts of consumer demand for power, while procurement planning requires forecasts of longer-term loads. Procurement must also account for the risks associated with demand forecasting and develop appropriate risk mitigation strategies. Though it is not possible for any entity to predict with absolute certainty future energy demand; logical, data-driven, industry-standard methodologies for load forecasting will be used to provide the foundation of future procurement. Because OCPA is still hypothetical and has yet to serve any customers, the CCA’s estimated load to be served is based on historical consumption data from SCE. Of course, if the CCA moves forward the load forecast will be continually updated and refined to reflect ongoing economic development in the Huntington Beach and the other four cities and changes in load from energy efficiency and distributed generation. As shown in Table 3, OCPA has over 330,000 customer accounts compared to the 86,000 customers in Huntington Beach. OCPA’s total annual electric load in 2019 is about 4,500 GWh, with 1000 GWh of that load demand coming from Huntington Beach. As shown in both the table and in Figure 3, Huntington Beach has a higher percentage of residential load compared to the other OCPA cities and a lower percentage coming from small commercial and the “other” category (street and traffic lights, pumping, agriculture). 689 CCA Review for Huntington Beach February 2021 13 MRW & Associates, LLC Table 3. Potential OCPA Customers and Associated Load for 2019  OCPA Huntington Beach H.B. Percent of OCPA     Customers  Annual  Load  (MWh)  Customers  Annual  Load  (MWh)  Customers Annual  Load   Residential 288,041  418,684  75,940  1,579,280  26% 27%  Small Commercial9 32,138  92,635  8,732  368,188  27% 25%  Medium Commercial 6,216  233,810  1,145  1,452,384  18% 16%  Large Commercial &  Industrial 191  287,178  26  1,028,396  14% 28%  Other* 4,032  12,833  539  82,769  13% 16%  Total 330,617  1,045,139  86,382  4,511,017  26% 23%  *e.g., streetlights, traffic control, agriculture/pumping. Figure 3. Huntington Beach Load Distribution 2019 9 In this study, Schedule GS-1 is “Small Commercial” and Schedules GS-2 and GS-3 are classified as “Medium Commercial.”  ‐  200,000  400,000  600,000  800,000  1,000,000  1,200,000  1,400,000  1,600,000  1,800,000 Residential Small Commercial Medium Commercial & Industrial Large Commercial & Industrial Other* Huntington Beach Other OCPA CCAs 690 CCA Review for Huntington Beach February 2021 14 MRW & Associates, LLC Figure 4, below shows the potential monthly load for the OCPA. The highest load months are in the summer, while the lowest are in November and the spring. This is attributable to the cities in OCPA using air conditioning in the summer and heating in the winter. There is a 39% difference between the highest load month and lowest load month. This means OCPA will need to acquire less “resource adequacy” capacity to cover their summer peaking loads as compared to other CCAs. 10 Figure 4. OCPA Load (Monthly, 2019) To be able to project the cost of buying power for the CCA, one must not only know how much must be purchased, but when. This is accomplished using load profiles: the breakdown of the total load into hourly consumption values. SCE provided an hourly load profile for different rate classes and monthly data for each city. Figure 5 below illustrates the 24-hour load curve for OCPA. It compares the average day in the highest load month of August with the peak day of the year, September 4th. The peak hour was 3 pm on September 4th with a load of nearly 900 MWh. This is the maximum capacity needed for the CCA and is the basis for the OCPA’s resource adequacy requirement in September. Compare this to the peak on an average August day where the peak hour was also 3 pm and the peak load was 805 MWh. The significant difference between the two maximum loads highlights the load volatility in the CCA. It is also interesting that the load peaks so early in the day, an afternoon peak will pair well with solar resources. 10 The ratio of the usage in the highest-load month to the lowest-load month for OCPA is 1.4; for the City of Riverside, a municipal utility, the ratio of the highest-load month to the lowest-load month is 1.7. (City of Riverside Public Utilities, 2018 Integrated Resource Plan, September 26, 2018. page 2-2.) 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 MWhMedium C & I Other* Large C & I Small Commercial Residential 691 CCA Review for Huntington Beach February 2021 15 MRW & Associates, LLC Figure 5. OCPA Load Shape Peak Day Vs Peak Month Forecasting The CCA’s base load forecast through 2031 reflects the annual average growth rate from the California Energy Commission’s most recent electricity demand forecast for SCE’s planning area. CCA Power Supplies The cost to provide power is by far the largest expenditure a CCA makes. A CCA the size of OCPA should expect to spend over $200 million per year for wholesale power. The OCPA power supply plan will be guided by legislative requirements, regulatory mandates, and CCA policies, as well as future market dynamics. Regulatory Procurement Requirements California places a number of important power-procurement requirements on all “load serving entities” (LSEs) in California (e.g., utilities like SCE and CCAs). These requirements apply to all LSEs and thus can limit the options that a CCA can pursue to lower costs or implement lower-GHG emitting power portfolios. Renewable Energy. One of these requirements is the renewable portfolio standard (RPS). This requirement has been in place since 2002 with passage of Senate Bill (SB) 1078, which set a requirement that 20% of retail electricity sales be served by renewable resources by 2017. Since then, the RPS requirement has been accelerated and expanded by subsequent legislation, most recently by SB 100 passed in 2018. SB 100 requires all LSEs to procure 50% of their power 0 100 200 300 400 500 600 700 800 900 1000 123456789101112131415161718192021222324Load (MWh)Hour Peak Day  Average August Day  692 CCA Review for Huntington Beach February 2021 16 MRW & Associates, LLC from renewable resources by 2026 and 60% by 2030.11 SB 100 also sets a state-wide policy goal of having 100% of the electric power met by renewable or carbon-free resources (e.g., large hydroelectric dams) by 2045. This means that SCE is subject to the same renewable resource mandates under SB 100 as OCPA will be. Unless OCPA makes an explicit decision to exceed the state requirements, it would be offering no incremental renewable “benefits” to the City. This is why many existing CCAs’ goals are often to accelerate the implementation of green power above and beyond the state’s mandates and goals. Energy Storage. Assembly Bill (AB) 251 requires LSEs to procure energy storage capacity. The storage mandate was implemented by the California Public Utility Commission (CPUC) through a requirement that CCAs procure energy storage equal to one percent of their forecasted 2020 peak load. CCAs must demonstrate progress towards meeting this target in biennial advice letter filings and must have the energy storage capacity in place by 2024. Some energy storage technologies, especially lithium-ion batteries, have fallen steeply in cost in recent years, though they are still relatively expensive compared to supply resources and demand response. Battery costs are expected to continue to fall, suggesting there is a benefit to deferring procurement until required by the mandate. Resource Adequacy. Since 2006, all LSEs, including CCAs, that are participants in the CAISO balancing area and under the jurisdiction of the CPUC are responsible for complying with Resource Adequacy (RA) obligations required under Assembly Bill 380 (codified as Section 380 of the Public Utilities Code and implemented by CPUC rulemaking). There are three components to the RA compliance program: 1) System capacity requirements to meet expected peak loads in the entire CAISO balancing area. 2) Local capacity requirements to meet contingency needs in locally constrained areas; and 3) Flexible capacity requirements to meet the largest continuous three-hour ramp in each month. Specifically, to meet the System RA requirement, load serving entities must contract for 115% of their projected monthly peak demand as determined by the CPUC in consultation with the California Energy Commission (CEC) load forecasts. The peak demand forecasts are based on a 1-in-2 (average) weather year. Year-ahead filings must show that the LSE has contracted for 90% of the projected System RA requirement in summer months (May-September). The forecasts must be updated on a month-ahead basis and show that 100% of the requirement has been contracted. 11 In practice, the utility code establishes multi-year compliance periods ending in 2020, 2024, 2027 and 2030, with the average renewable energy supply as a percentage of retail sales for each compliance period required to be 33%, 44% 52% and 60%, respectively. 693 CCA Review for Huntington Beach February 2021 17 MRW & Associates, LLC The Local RA requirement must be met by LSEs with customers in 10 local reliability areas identified by the CAISO. The Local RA requirement is based on the CAISO’s assessment of the generation needed in the local area. Beginning with the 2020 compliance year,12 the Local RA requirements are set three years ahead and updated each year.13 On June 11, 2020, the CPUC adopted a framework (D. 20-06-002) that designated a central buyer for the procurement of multi-year Local RA in the SCE and SCE distribution areas, beginning in 2021. Currently, both SCE and SCE serve as central procurement entities for their distribution service areas and have begun procuring Local RA for the 2023 compliance year. Therefore, SCE would act as the Local RA procurer for any future CCA that served Huntington Beach. The CAISO also determines the required Flexible RA needs operating criteria. Currently there are three flexible capacity categories with varying must-offer obligations, energy limits and number of starts, with associated requirements for how much of each category may be used to meet the LSE’s obligation. LSEs must demonstrate the purchase of 90% of their flexible RA requirement in their annual RA filing, and 100% of the requirement in their monthly RA filings.14 There is a bilateral market for RA capacity, with standardized products for each type of RA capacity. Integrated Resource Planning (IRP). In addition to its role as the authority for implementing the state’s RA program, the CPUC also has an active rulemaking to “Develop an Electricity Integrated Resource Planning Framework and to Coordinate and Refine Long-Term Procurement Planning Requirements” (R. 16-02-007). This program requires each California LSE to file a procurement plan that demonstrates that it is contributing its pro rata share to meeting the State’s GHG reduction goals while maintaining sufficient generating and storage capacity to maintain a reliable power grid. On November 11, 2019, the CPUC issue a decision (D.19-11-016) that addressed the potential for system resource adequacy shortages in SCE’s area due to the impending retirement of 3,750 MW of once-through cooled (OTC) generation by December 31, 2020 as well as the risk of additional non-OTC retirements. The decision recommended that the State Water Resources Control Board extend OTC compliance deadlines for the impacted power plants and required additional procurement of 3,300 MW of system-level RA capacity by all LSEs serving load 12 The “compliance year” is the year in which the RA resources are used to meet the LSE’s RA requirements for that year. For example, an LSE must demonstrate in 2019 that it has adequate RA capacity under contract for the 2020 RA compliance year. 13 Note that Local RA capacity is a substitute for System RA capacity. However, the converse is not always true, meaning that System RA capacity might not help an LSE meet its Local RA requirements. 14 Flexible RA can substitute for System RA and possibly for Local RA but the converse is not always true: System and Local RA resources might not help an LSE meet its Flexible RA obligations. 694 CCA Review for Huntington Beach February 2021 18 MRW & Associates, LLC within the CAISO balancing area. Because this analysis assumes that OCPA begins service in 2023, it will not need to take any special action to comply with these directives. Power Supply Portfolio and Cost Assumptions Operating within the regulatory framework described above, MRW has developed sample electric supply portfolios for use in evaluating the economics of CCA formation in Huntington Beach. These sample portfolios are a proxy for a working portfolio that would be developed using a more rigorous assessment of costs and risk attributes developed as part of an implementation plan and ultimately through direct engagement with market participants via a request for proposals process. With RPS requirements increasing to 62% of load during the period of analysis, renewable resource assumptions are the primary driver of portfolio costs. After accounting for the hourly CCA load shape and the generation profile of resources in the renewable energy portfolio, the residual net short is assumed to be met with market purchases at hourly market prices forecast by S&P Global. Likewise, resource adequacy requirements are estimated based on peak loads and after accounting for net qualifying capacity from renewable resources. The remaining capacity need is assumed to be purchased at a forecasted market price as described below. Renewable The cost of renewable energy from solar photovoltaic (PV) facilities has steadily fallen since the establishment of the California RPS mandate in 2002. Looking forward, solar PV prices are expected to continue to decline, although perhaps at a slower rate as the technology matures and if import tariffs continue to be applied. At the same time, the incremental value of solar energy is decreasing as more and more solar resources are added to the electrical system, leading at times to conditions where solar energy must be curtailed to avoid over generation. Thus, there are advantages to a diversified supply portfolio including wind, geothermal and biomass, as well as energy storage. Figure 6 below shows the assumed mix of renewable resources in Supply Scenario 1: meeting but not exceeding the State’s renewable portfolio requirement, e.g., 50% by the end of 2026, with incremental hydroelectric power so that the CCA has the same net GHG output as SCE. In the first few years, the RPS requirement will be met using contracts for unspecified in-state renewable generation, with some generation from power purchase agreements (PPAs) with existing solar resources. Over time, the reliance on unspecified in-state renewables decreases and is replaced with PPAs with specific wind resources as well as PPAs with solar bundled with storage facilities. This reflects a reasonable balance of renewable resources: wind and solar are generally complementary in California—that is, when solar output is high, wind output is low. 695 CCA Review for Huntington Beach February 2021 19 MRW & Associates, LLC Figure 6. Renewable Power Generation by Source Assumed renewable power prices are shown in Figure 10. The 2022 prices are consistent with current reported renewable contract prices from other load-serving entities, including California CCAs and municipal utilities.15 With the rate of utility-scale solar PV cost declines flattening in recent years, we assume a slight increase in solar PV costs over the forecast period. Based on data provided by Lawrence Berkeley Laboratory, solar combined with battery storage is assumed to be available at a $5/MWh premium relative to solar-only projects and to follow the same trends as utility-scale solar. For local solar and solar plus storage, we assume projects are likely to be commercial scale (i.e., large rooftop), so we relied on NREL’s U.S. Solar Photovoltaic System Cost Benchmark and Cost-Reduction Roadmap for Residential Solar Photovoltaics Report for Commercial PV, which show declines from 2020 costs through 2030.16 For wind prices we relied on the DOE’s Wind Vision report to establish a forecasted price for 2020 through 2040 and continued the price trend for subsequent years.17 “Index+” refers to the cost of a Bundled Renewable Energy Credit (“Bucket 1” REC) whose associated energy is priced at the CAISO hourly market price. The REC value is assumed to be $15/MWh, remaining level in nominal dollars. Alternative renewable energy costs are explored in the sensitivity scenarios. 15 https://emp.lbl.gov/sites/default/files/2020_utility-scale_solar_data_update.pdf 16 https://www.energy.gov/eere/solar/sunshot-2030 17 https://www.energy.gov/sites/prod/files/WindVision_Report_final.pdf, Figure 3-12. 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031MWh/yearSolar + Storage  RECs  Solar   Wind  696 CCA Review for Huntington Beach February 2021 20 MRW & Associates, LLC Figure 7. Projected Average Renewable Power Costs Wholesale Power Costs The residual net load after accounting for renewable energy supplies is assumed to be supplied from wholesale market purchases, either from the day-ahead market operated by the CAISO or through bilateral contracts with similar market pricing. To forecast market prices, we used S&P Global Market Intelligence’s 2020 3rd Quarter Forecast for CAISO SP15 Hourly Energy Prices. S&P Global provides 20-year forward-looking wholesale electricity and capacity price projections based on forward market prices and fundamentals-based modeling relying on data from regulatory filings, planning guidelines, coal plant retirements, firm construction plans, and additions of renewable energy. Figure 8 shows the average hourly price comparison of the 10-year price forecast. In real terms, there is little difference in the peak period energy prices across years. However, as increased renewables are built over the 10-year period, the mid-day prices during high solar hours are anticipated to get more depressed and evening prices are forecast to rise. In California, electricity prices are often set by gas-fired resources operating on the margin. However, as increasing supplies of renewable energy are added to the system, there are periods where prices are being set by zero or even negative marginal cost resources. As a result, market prices have been trending downward, especially during seasons and periods of the day when loads are low and solar output is high. The modeling provided by S&P shows a continuation of the trend, with prices falling during the middle of the day and increasing in the morning and evening when gas- fired resources are needed to meet peak loads outside of the solar supply period. Figure 8 presents the average hourly shape of forecasted SP15 CASIO market prices over a 10-year period. Price data for individual months or days demonstrate even greater variation across the hours of a day. 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031S/MWh/YearWind PPA Solar+Stor PPA Solar PPA Index + 697 CCA Review for Huntington Beach February 2021 21 MRW & Associates, LLC Figure 8. Assumed Market Prices (2022-2031) Capacity Costs As noted above, CCAs are also responsible for complying with Resource Adequacy (RA) obligations. These products are typically contracted on a short-term basis (e.g., year-ahead). There has historically been an excess supply of both system and flexible capacity in the market, leading to depressed prices for these products. This changed dramatically in 2019, when RA prices doubled. MRW predicts that the system RA price will continue to fluctuate between $6.00/MWh to $9.00/MWh, but that the flexible RA price will remain stable. Traditionally, CCAs have also bought local RA, but as of 2023, CCAs in SCE’s territory will no longer be responsible for acquiring local RA. SCE will purchase and allocate local RA to CCAs. The specifics of this new process are still being worked out in regulatory filings and future analysis will be needed to see how this new model will affect costs. Pro Forma Elements and CCA Costs of Service This section outlines the main elements of the pro forma analysis, the assumptions underlying the elements and the output results. The analysis also includes a comparison between the generation-related costs that would be paid by OCPA customers and the generation-related costs that would be paid by SCE bundled service customers. Costs paid by CCA customers include all CCA-related costs (i.e., supply portfolio costs and administrative and general costs) and exit fee payments that CCA customers will be required to make to SCE. 0 5000 10000 15000 20000 25000 30000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23$/MWh2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 698 CCA Review for Huntington Beach February 2021 22 MRW & Associates, LLC Pro Forma Elements Figure 9 provides a schematic of the pro forma analysis, outlining the input elements of the analysis and the output results. As discussed in previous sections, supply portfolio costs are informed and affected by CCA loads, by the requirements the CCA will need to meet (or will choose to meet) such as with respect to renewable procurement, and by CCA participation levels. Administrative and general costs are discussed further below. Figure 9. Pro forma Analysis Startup Costs Startup costs are the costs OCPA will incur before operations begin. Table 4 shows the estimated CCA startup costs. They are based on the experience of existing CCAs as well as from other CCA technical and feasibility assessments. If Huntington Beach were to move forward with OCPA, these values would be refined based on more detailed projections. Inputs: selection of cities, scenarios, and sensitivity cases Load Forecast Market Power Price Forecast Supply Costs Forecast Adm. Costs Forecast Assessment of CCA viability and CCA customer rates vs. PG&E customer rates Exit fees Forecast Local renewable cost forecast Generation Rates paid by Huntington Beach/OCPA Customers 699 CCA Review for Huntington Beach February 2021 23 MRW & Associates, LLC Table 4. Estimated Start-Up and Annual Ongoing Costs Typically, the city forming a CCA would directly pay for the initial start-up costs, such as the technical study. In this situation, the City of Irvine has offered to supply the collateral for a bank loan to finance the initial start-up costs. Once the CCA is formed by City Council action, the CCA would issue an RFP for banking services. These would set up a short-term loan or line of credit to pay back the city its CCA expenditures and fund ongoing start-up costs until the CCA is operational. At that point, the short-term loans could be rolled into a longer-term loan that would also include working capital.    Item  Cost One‐time or Ongoing?  Professional Services/Consulting $150,000 Ongoing at reduced level  Staffing  $2,100,000 Ongoing, lower initially  Administrative and General costs $250,000 Ongoing at reduced level  SCE Fees $10,000 One‐time  CAISO deposit $500,000 One‐time  Power contracting, portfolio and rate design, scheduling  $350,000 Ongoing, lower initially  Integrated Resource Plan/Long‐Term Procurement $150,000 Ongoing, lower initially  Marketing strategy and brand development $75,000 Ongoing at reduced level  Website $20,000 Ongoing at reduced level  PR/Advertising $60,000 Ongoing at reduced level  Customer Notifications $260,000 One‐time  Community Sponsorships, etc.  $5,000 Ongoing, lower initially  General Counsel Services  $120,000 Ongoing, lower initially  Legal review of power supply and other vendor contracts  $75,000 Ongoing at reduced level  Cal‐CCA Membership $200,000 Ongoing, lower initially  Regulatory Monitoring, Reporting and Compliance $100,000 Ongoing, lower initially  Total: $4,400,000    Working Capital (3 months cash flow at full service) ~$60,000,000 One‐time; maximum line  of credit amount  Total: $64 million   700 CCA Review for Huntington Beach February 2021 24 MRW & Associates, LLC Working capital reflects the fact that a business will have bills to pay prior to receiving payment from its customers. This amount would cover the timing lag between when invoices for power purchases (and other account payables) must be remitted and when income is received from the customers. Per industry standard, total working capital is set to equal three months of CCA revenue, or approximately $64 million when the OCPA is fully operational (i.e., serving all potential customers.)18 Initially, the working capital is provided by a bank on credit to the CCA. Typical power purchase contracts require payment for the prior month’s purchases by the 20th of the current month. Customers’ payments are typically received 60 to 90 days from when the power is delivered. These startup costs are assumed to be financed over 5 years at 5% interest.19 Historically, CCAs have paid down their start-up loans much more quickly. Reserves CCAs to date have all committed to setting aside revenues into a reserve fund to account for times in the short-term when its costs may not allow it charge rates that are competitive to SCE. For this study, we assume that the CCA will endeavor to set aside revenues until a reserve fund reaches an amount equal to 50% of its annual revenue (e.g., 50% of $324 million = a reserve fund goal of $165 million). After the reserve target is met, it is held at the target level or drawn upon so that the desired CCA rate is achieved. If the reserve is drawn upon, the rate reserve is replenished in the next year in which headroom is available. Administrative and General Cost Inputs Administrative and general costs cover the everyday operations of the CCA, including costs for billing, data management, customer service, employee salaries, contractor payments, and fees paid to SCE. Table 5, below summarizes the assumed ongoing administrative and general costs. These costs are assumed to trend with inflation. 18 CCAs frequently “phase-in” their service, initially offering service to a smaller subset of customers and then expanding service to the remaining customers over the following months or years. 19 5% is currently equal to the prime rate plus 175 basis points. 701 CCA Review for Huntington Beach February 2021 25 MRW & Associates, LLC Table 5. Ongoing Administrative and General Costs   2021 2022 2023 2024  SCE Fees, $/cust./month $0.13  $0.13  $0.14  $0.14   Data Management Fees $/cust./mo.   $1.00  $1.00  $1.00   Administration – Labor20 $330,000  $1,300,000  $2,100,000  $2,200,000   Administration‐ Non‐Labor $25,000  $260,000  $150,000  $160,000   Outreach‐communications $80,000  $160,000  $67,000  $68,000   Professional Services $150,000  $330,000  $560,000  $580,000   Data Management Fees $0  $2,500,000  $3,900,000  $3,900,000   SCE Metering and Billing Fees $0  $500,000  $510,000  $530,000   Total $590,000  $3,300,000  $7,300,000  $7,400,000   SCE Rate and PCIA Forecasts SCE Generation Rates Forecasts of SCE’s generation rates and exit fees are necessary to compare the projected rates that customers would pay as OCPA customers to the projected rates and fees they would pay as bundled SCE customers. To ensure a consistent and reliable financial analysis, a 10-year bottoms-up forecast of SCE rates was developed using market prices that are consistent with those used in the forecast of the OCPA’s supply costs. The forecasted costs include the cost of SCE’s existing resource portfolio, adding in market purchases only when necessary to meet projected demand. To develop this forecast, the key cost drivers of each of SCE’s generation rate components were examined, separately evaluating costs for renewable and non-renewable energy purchases, for SCE-owned generation facilities, and for capacity purchases. The study assumed that near-term changes to SCE’s generation portfolio would be driven primarily by modest increases in underlying gas market prices. In 2028-2030, consistent with the OCPA forecast, the SCE must pay higher prices for incremental capacity and resource adequacy, reflecting the tightening of the capacity market at that time. 20 See page 60 for staffing estimate details. 702 CCA Review for Huntington Beach February 2021 26 MRW & Associates, LLC The forecast further assumes that SCE is compliant with the renewable and carbon-free requirements ordered in Senate Bill 100: a minimum of 60% renewable content in 2030 and a trajectory that would, when extrapolated, result in carbon-free power in 2045. In fact, given the current SCE renewable portfolio and the loss of load from the OCPA, SCE would need minimal if any new renewables to meet the 2030 goal. The forecast for SCE’s generation resources is based on publicly available data and forecasts. We relied on the market price forecast produced by S&P Global to estimate the cost of market purchases. However, since SCE protects data that would reveal its detailed net short position, we were unable to perform the hourly analysis completed for Huntington Beach and instead relied on average market prices to develop estimates of the cost of SCE market purchases. Over the 10-year period, the study forecasts that SCE’s generation rates will escalate by an average of 3% per year. This forecast is show in Figure 10, below. Figure 10. Forecast SCE Average Generation Rates PCIA The Power Charge Indifference Adjustment (PCIA) is a fee charged by SCE intended to prevent customers that remain with SCE bundled service from paying for energy generation procured on behalf of customers that have since switched to CCA service. More specifically, it pays for the above-market costs of SCE generation resources that were acquired, or which SCE committed to acquire, prior to the customer’s departure to CCA. The total cost of these resources is compared to a market-based price benchmark to calculate the “stranded costs” associated with these resources, and CCA customers are charged what is determined to be their fair share of the 703 CCA Review for Huntington Beach February 2021 27 MRW & Associates, LLC stranded costs through the PCIA. Bundled customers also pay the PCIA, which is embedded into their commodity portion of their total rate. The PCIA is not paid directly by the CCA, but by the individual customers taking CCA service. Thus, it does not appear explicitly on the CCA’s books, however it must be accounted for in any CCA cost analysis. While both CCA customers and customers that choose to remain in SCE bundled service pay this fee, it appears as a separate line item for CCA customers and is embedded in the energy generation costs of SCE bundled customers. To forecast the PCIA, this study used the formula and approach dictated by the Alternative Proposed Decision of Assigned Commissioner Carla Peterman in Commission Rulemaking 17- 06-026, which was approved by the Commission on October 11, 2018. In addition, the market price and SCE portfolio assumptions used in the PCIA calculations are consistent with those used to forecast SCE’s generation rates. This study forecasts the PCIA charge by directly modeling expected changes to PCIA-eligible resources and to the market-based price benchmark. Based on our modelling, we expect the PCIA to remain close to 2¢ per kWh through 2023. After 2023, the PCIA is forecast to decrease markedly to about 1.5¢ per kWh and to continue a steady decline through 2031. The decline is mainly caused by the expiration of many of the costlier renewable power contracts entered into by SCE, which decreases the total stranded costs. MRW’s forecast of the PCIA charge through 2031 is shown in Figure 11. As such, it can be anticipated that the savings from lower PCIA rates will result in lower CCA rates over time. Figure 11. Forecast Average PCIA 704 CCA Review for Huntington Beach February 2021 28 MRW & Associates, LLC Chapter 3. Financial Analysis Results Costs and benefits are evaluated by comparing total average cost to serve the CCA customer (cents per kWh or dollar per MWh) (including PCIA) to SCE generation rates. The pro forma results for the first 10 years of the OCPA are summarized in this chapter. Supply Scenario assumes that the OCPA simply complies with the State’s requirements concerning renewable power. It starts in 2022 with 37% of its power being met using renewable resources and escalates this faction to 62% by 2031. The non-renewable output is assumed to be met using system power from the CAISO. Figure 12 shows the forecast of average MRW-modeled OCPA costs and SCE’s generation rates. The bars in the chart show the forecasts of the major cost components of CCA operation, while the single line shows the forecast of SCE’s generation rate. When the bars are below the black line, the CCA’s average operating costs will be below the SCE generation rate; meaning that it can offer power to customers at a rate lower than or competitive with SCE. As is clearly seen in the figure, the average cost of power provided by the CCA is consistently below the SCE generation rate, although much closer in the first few years of OCPA operation. The bottom-most green segment represents the cost of renewable power to the CCA. The brown segment is for the costs of non-renewable, wholesale market power. This segment slowly decreases, as renewable power increases. (Because renewables are currently most costly than market power, the analysis assumes OCPA will initially meet the State’s minimum renewable power content and ramp up as the requirements increase). The light blue segment is for capacity. That is, the CCA must demonstrate that it has the generating capacity (in megawatts) to ensure that it can serve all its load. The gray segment is for debt service, operations, franchise fees, and uncollectibles. The yellow segment is for carbon cap and trade allowances. Note that for practical purposes, the cost of carbon cap-and-trade allowances would be built into the purchase price of natural gas-fired market resources. However, because it is an important variable on its own, the costs are shown separately. The top-most pink segment is for the Power Charge Indifference Adjustment (PCIA), a fee paid to SCE to ensure that the operation of the CCA does not strand SCE’s remaining bundled customers with costs associated with power purchased on behalf of customers who have shifted to the CCA. The black line represents SCE’s average generation rate. To forecast SCE’s generation rates, the comparison model used information regarding SCE’s utility-owned generation, power contracts, power market costs, and by closely tracking changes in SCE revenues and costs through its filings in several CPUC proceedings. In particular, it takes the most recent SCE filing of generation rates and applies the known and anticipated changes to the wholesale power market prices and SCE’s power purchase contracts. 705 CCA Review for Huntington Beach February 2021 29 MRW & Associates, LLC Figure 12. Average OCPA Cost Projection versus SCE Generation Rate As shown in Figure 12, the costs of CCA operation are consistently below that of the SCE rate. This difference between the top of the CCA cost columns and the SCE rate line represents the operating “margin.” the CCA may do a combination of one or more of three things with this margin:  Rate Savings: The CCA can keep its rates as the cost of operations and allow the margin to flow fully to customers through lower electric rates. (i.e., if the margin is 0.5¢/kWh, then the CCA could offer rates that are 0.5¢/kWh less than SCE while still covering all its costs).  Reserves: The CCA can charge customers the same rate as SCE to retain the margin and build up cash reserves for a rainy day.  Programs: The CCA can eventually use the margin to fund other energy-related services, such as providing incentives for customers to purchase an EV, install energy- efficient home upgrades, install solar PV, etc. In practice, CCAs use the margin for all three purposes: they set a rate that is marginally lower than SCE’s and then use the remaining margin for cash reserves or programs. In 2022, this “margin” between CCA average cost and SCE rate is about 1¢/kwh, increasing to about 3¢/kwh in 2031. Note that this does not mean that the CCA can or will fully pass on this margin as rate savings to its customers (Table 6). In fact, during the first few years, the CCA’s set their rates so that most of the margin between their ongoing costs and SCE’s generation 0.00 2.00 4.00 6.00 8.00 10.00 12.00 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031¢/kWhPCIA GHG O/M Capacity Other Energy Renewable IOU Does not include the reserve fund or other programs  706 CCA Review for Huntington Beach February 2021 30 MRW & Associates, LLC rates is set aside for financial reserves and paying down the initial startup loans. Once the financial reserve targets are met and the start-up loans paid off, CCA’s typically use a portion of the margin for programs serving their residents and businesses, purchasing greater amounts of renewable power, and providing greater rate discounts that could be offered during the first years. It is up to the CCA Board of Directors to balancing these competing uses (i.e., rate discounts, programs, financial reserves, and greener power). Table 6. Projected OCPA Margins*  2022 First 3 years  (2022‐24)  First 5 years  (2022‐2026)  2nd 5 years  (2027‐2031)  10‐Years  (2022‐2031)  ¢/kWh (average) 1.0 1.2 1.6 2.9 2.2  *Without rate savings, reserve contributions or program funding  For the CCA, GHG savings is achieved when the average GHG emissions from the set of generation resources used by the CCA is less than the average GHG emissions from SCE. Unless the CCA procured GHG-free power above and beyond California’s renewable requirement, SCE’s average GHG emission will be less than the CCAs. This result is caused by SCE not only meeting the state-requirement minimum renewable content, but also using other non-renewable but still GHG-free power sources: large hydroelectric dams and nuclear power from the Palo Verde Nuclear Generating Station, of which SCE is a partial owner. The GHG- emitting portfolios for Power Supply Scenario 1 and SCE are shown in Table 7. Table 7. 2022 CCA (Supply Scenario 1) and 2019 SCE Power Content  OCPA SCE21  Renewable 37% 35%  Hydro  8%  Nuclear  8%  GHG‐Free 37% 51%  Gas  16%  System 63% 33%  Total 100% 100%  21SCE Power Mix from SCE's 2019 Power Content Label Template_v2 707 CCA Review for Huntington Beach February 2021 31 MRW & Associates, LLC Sensitivity to Key Inputs The results shown in the scenarios above reflect expected market conditions and outcomes with variations only in the amount and type of renewable generation. However, it is unlikely that the conditions assumed in these scenarios will occur exactly as assumed. In order to evaluate the robustness of the analysis, the key variables were identified, and analyses conducted with other assumptions for those key variables to “stress test” the assumptions. The four variables with the greatest potential impact on the overall average cost of the CCA were investigated: (1) Higher Renewable Supply Costs (2) Higher PCIA (3) Lower SCE Rates (4) High Opt-Out The specific assumptions on the sensitivity scenarios are shown in Table 8. Table 8. Sensitivity Case Definitions Sensitivity Case Definition Base Supply Scenario 1 Higher renewable costs Renewable costs 25% higher than Base Higher PCIA PCIA 33% higher than calculated in Base Lower SCE Rate SCE rates 10% lower than in Base Higher Opt‐Out 30% opt‐out versus 5‐10% opt‐out in Base Figure 13 summarizes the CCA margins resulting from the modeling of the sensitivity cases. The figure shows the margin in cents per kilowatt-hour between the SCE rate and the average cost for the CCA to serve its load, including the PCIA, but without any rate discounts or contributions to reserves. When the bar is positive, then the CCA’s cost of service is less than SCE’s generation rates, which means the CCA can offer a rate discount, contribute to reserves, or fund programs. Consistent with the rest of the analysis, the margins are the smallest during the first years of operation, suggesting that the targeted rate discount may not be achievable during the first few years of OCPA operation. 708 CCA Review for Huntington Beach February 2021 32 MRW & Associates, LLC Figure 13. Sensitivity Results Rate Savings Currently Offered by CCAs To assist customers, each CCA must offer a “Joint Rate Comparison” document that summarizes what an average monthly bill would be for each rate schedule that the CCA offers and the analogous rate and average bill available from their incumbent utility. These can be found on both the CCAs’ and utilities’ websites.22 Based on these Joint Rate comparisons, Figure 14 shows the residential rate savings currently offered by operating CCAs relative to their host utility’s rates. The values were calculated using the lowest cost rate offering for each of the CCAs and their utility’s base rate (i.e., not a utility green tariff). As the figure shows, none of the CCAs in SCE’s territory and only three state-wide are currently offering a residential rate discount equal to or greater than 2%-- the target savings level of OCPA. Two CCAs in Northern California, in fact, have residential rates that are currently higher than their host utility. These data support MRW’s assessment that the margins in the next few years will likely be particularly tight for CCAs. As such, we are skeptical that OCPA will be able to offer the full 2% savings until 2023 or later. 22 E.g., https://cleanpoweralliance.org/wp-content/uploads/2020/11/SCE-and-CPA-Joint-Rate-Comparison- October-2020-2018-Vint.pdf ; https://www.sce.com/sites/default/files/inline- files/SCE%20and%20DCE%20Joint%20Rate%20Comparison%20Effective%20April%2013%202020%201.pdf 0.0 0.5 1.0 1.5 2.0 2.5 2022 2022‐2026 2022‐2031¢/kWhBase High Renewable Prices Higher PCIA Prices Low SCE portfolio costs High Opt‐Out 709 CCA Review for Huntington Beach February 2021 33 MRW & Associates, LLC Figure 14. CCA Residential Rate Savings as of January 13, 20201 (lowest cost CCA offering versus standard utility rate) 710 CCA Review for Huntington Beach February 2021 34 MRW & Associates, LLC Chapter 4: Review of Implementation Plan This section reviews the analytical approach, assumptions, and results of the OCPA Implementation Plan pro forma financial analysis and compares the key assumptions and results against the independent analysis conducted by MRW. Table 9 summarizes MRW’s findings on the financial analysis underlying the OCPA Implementation Plan. Each entry is discussed in the following sections. Table 9. Implementation Plan Assumption Summary   Conservative Reasonable Potential  Issue   Modeling Approach     Load  Assumptions  Load Forecast     Line Losses      Opt‐Out Rate      CCA Power  Assumptions  CCA Power Portfolio     Wholesale Power Prices     Renewable Power Prices     RA Costs   X  CCA Admin.  and Other Cost  Assumptions  Startup Costs     Financing Costs   X  Admin. Costs     SCE Rate  Assumptions  PCIA     SCE Generation Rate   X  Implementation Plan Approach The Implementation Plan’s financial analysis approach is sound and complete. It includes all the necessary expense and revenue categories and modeled a CCA program’s pro forma cash flow accurately. Implementation Plan Assumptions This section reviews each of the major assumptions that the Implementation Plan makes and opines on the reasonableness of the assumptions. While most of the assumptions made by the 711 CCA Review for Huntington Beach February 2021 35 MRW & Associates, LLC Implementation Plan were reasonable, two of the assumptions were understated or outdated. Additionally, many of the assumptions that the Implementation Plan characterizes as “conservative” MRW would consider reasonable, but not necessarily conservative. Opt-Out The magnitude of the costs and revenues a CCA program incurs depends upon the electric load that it serves. MRW finds the Implementation Plan’s load analysis and forecast to be reasonable-to-conservative. The Implementation Plan’s forecast begins with actual electric load data provided by SCE and assumes conservative opt-out rates: 5% for residential accounts and 10% for commercial/industrial accounts. (That is, 5% of eligible residential customers and 10% of eligible commercial customers would choose not to take service from OCPA). With one notable exception, opt-out rates seen by recent CCA program launches have been less than this, making the assumption conservative. The exception is the Clean Power Alliance of Southern California (CPA), the CCA that serves Los Angeles and Ventura counties, which experienced a much higher opt-out rate, closer to 50%, for its largest industrial customers. This was because CPA chose not to offer rates that were lower than SCE’s for this customer class, but instead chose to set rates at levels equal to CPA’s cost to provide power to them. Because the CPA rates were higher, and this class is especially sensitive to power costs, a large fraction of the industrial customers declined to take service from CPA. (This issue of competitive rate setting is discussed in greater detail in the Risk section of this report.) The Implementation Plan shows that OCPA would not offer service to all its customers at once, but would instead offer service in three phases: commercial and industrial customers in Phase 1 (April); and residential customers in Phase 2 (October); and those customers with net-metered solar in Phase 3 (to be determined). This roll-out is sound for three reasons. First, it is simpler to begin serving only a small number of customers, so as to work out the metaphorical kinks on less sensitive accounts before rolling out to the general public. Second, due to SCE’s rate design, CCA revenues for the larger commercial classes in SCE’s territory are much higher in the summer months than in the winter or spring (Figure 15). Thus, it can be advantageous to phase in the commercial loads before the summer to take advantage of the higher margins. Because of the higher margins in the summer months, MRW suggests that the OCPA consider delaying Phase 1 to June when the rates are higher rather than in April, when SCE’s generation rates are very low. 712 CCA Review for Huntington Beach February 2021 36 MRW & Associates, LLC Figure 15. SCE Monthly Average Generation Rates (2021)23 Third, since the CCA’s rates will, at least initially, be tied to SCE’s, it is better to phase in new customers a month or two after SCE’s rates are set. For example, SCE implements major rate changes, including the PCIA, at the beginning of the calendar year. What exactly those January 1 rates will be is not fully known until late December. Thus, if the CCA was launching on January 1, too, it would have to estimate what SCE’s rates would be months in advance in order to go through its own rate-setting process. These guesses could very well be wrong and require an adjustment within the first months of service, a logistical and customer-relations gaffe better avoided. Power Costs As the Implementation Plan notes, around 90% to 95% of a CCA’s program’s costs are associated with the procurement of power. As such, the assumptions concerning the costs, sources, and mixes of the power are particularly important. Wholesale Power Prices. The Implementation Plan relied upon a reputable source for wholesale power prices, S&P Global, which is consistent with MRW’s selected forecast of long-term wholesale power prices in California. Renewable Power. Given the total amount of renewable power being purchased in each scenario, the next question is whether the Implementation Plan’s assumed sources of renewable 23 These projected rates are based on the PG&E rates effective on January 1, 2021. 0 2 4 6 8 10 12 c/kWhResidential Commercial Industrial Note the large difference  between commercial and  industrial summer and  winter rates.  713 CCA Review for Huntington Beach February 2021 37 MRW & Associates, LLC power and the associated costs are reasonable. The Implementation Plan’s approach to renewable power costs differed from MRW’s. Unlike MRW’s analysis, which assumes explicit types of renewable power (PCC1 RECs, stand-alone solar, wind, solar+storage), the Implementation Plan assumed a simple combination of PCC1 RECS and unspecified “renewable” contracts. Figure 16 compares the MRW renewable power cost assumptions and the assumptions built into the Implementation Plan. While the two differ, the Implementation Plan’s assumptions appear reasonable. Figure 16. Comparison of Renewable Resource Costs Other Power Procurement Related Costs As discussed, the OCPA must demonstrate it has enough physical power supply capacity to meet its projected peak demand plus a 15% reserve margin, on a monthly basis. The Implementation Plan assumes the cost of basic (“system”) RA to be $6.50/kW per month, escalated at 3% per year. While this is higher than the value used in the CCA Feasibility Study for the City of Irvine,24 it is at the low end of what we would consider reasonable. In addition to the system RA, all utilities and CCAs must all meet local capacity requirements to meet contingency needs in locally constrained areas (i.e., areas that need to have generation located within it because there is not enough transmission alone capacity to serve that area’s needs). The Local RA requirement is based on the CAISO’s assessment of the generation 24 See links at https://www.cityofirvine.org/energy/community-choice-energy 714 CCA Review for Huntington Beach February 2021 38 MRW & Associates, LLC needed in the local area. Beginning with the 2020 compliance year,25 the Local RA requirements are set three years ahead and updated each year.26 On June 11, 2020, the CPUC adopted a framework (D. 20-06-002) that fundamentally changed the requirements for Local RA. That decision designated PG&E and SCE to be responsible for all the Local RA in their respective service areas, beginning in 2023. Therefore, SCE will be responsible for all the Local RA for OCPA and all other CCAs within its service area. This has two implications for the Implementation Plan’s financial analysis. First, the analysis should not reflect any local RA costs beginning in 2023. Second, the policy change would also reduce SCE’s generation rate. (This can be seen in Figure 17, where MRW’s forecast slightly decreases in 2023 while in the Implementation Plan forecast the 2023 SCE rate increases.) From the perspective of OCPA competitiveness with SCE, these two impacts tend to cancel each other out. Therefore, while the Implementation Plan does not correctly address Local RA, it does not change in the competitiveness position of OCPA. CCA Operating Costs As noted, ~95% of a CCA’s costs are associated with power procurement, leaving the remaining 5% with CCA operating costs. The Implementation Plan thoroughly presents what types of activities a new CCA program should expect along with providing reasonable detailed estimates for the costs of those activities. CCA Financing The Implementation Plan anticipates “one or more rounds of financing, inclusive of prospective direct term loans between OCPA and its Member Agencies, will be necessary to support OCPA Program implementation,” with any subsequent capital requirements met through OCPA’s accrued financial reserves.27 MRW understands that “loans from its Member Agencies” refers to the $2.5 million loan from the City of Irvine. OCPA currently projects repaying this loan by 2027, subject to change based on final power prices. The Implementation Plan projects that its full start-up and working capital requirements for the OCPA Program will be $15.5 million, or $13 million beyond the Irvine loan. The Implementation Plan assumes that the remaining financing will be primarily via a short-term loan or letter of credit, which would allow OCPA to draw cash as required. Requisite financing would need to be arranged no later than the first quarter of 2021. 25 The “compliance year” is the year in which the RA resources are used to meet the LSE’s RA requirements for that year. For example, an LSE must demonstrate in 2019 that it has adequate RA capacity under contract for the 2020 RA compliance year. 26 Note that Local RA capacity is a substitute for System RA capacity. However, the converse is not always true, meaning that System RA capacity might not help an LSE meet its Local RA requirements. 27 Implementation Plan, page 36. 715 CCA Review for Huntington Beach February 2021 39 MRW & Associates, LLC MRW finds the start-up cost estimate to be reasonable, but the working capital amount to be low. The Implementation Plan assumes 30 days of cash or line of credit. MRW expects that a financer would require something closer to 60 days of working cash. Second, MRW notes that in addition to the loan by Irvine, OCPA’s financer will likely require a guarantor to any short- term loan or line of credit. Section 1.3 of the draft Loan Agreement between the City of Irvine and OCPA includes an agreement by Irvine to post “necessary cash collateral, not to exceed $5,000,000, in order for the Authority to secure a credit facility for its Launch Costs for additional working capital associated with power procurement and operational support.” Collateral in excess of the $5 million will likely have to be from an OCPA Member or Members. The experience of the most recent large CCA formed, San Diego Community Power (SDCP), is instructive of what is currently required for CCA financing. Because of its projected narrow operating margin—which is similar to that shown in the Implementation Plan—and general uncertainties facing CCAs, SDCP’s finance provider required SDCP to have $5 million in collateral in order for it to provide a $5 million pre-launch loan plus a $35 million line of credit.28 OCPA’s load is projected to be about 62% of the load of SDCP. SDCP required $40 million initial line of credit. Simply scaling SDCP’s requirement down to OCPA suggests an initial bank load/line of credit around $25 million. We note that Irvine has agreed to provide up to $5 million collateral and a loan guarantee if required for the power purchase loan requirements. (Exhibit D, section 1.3 of the JPA agreement). While Irvine’s commitment may likely provide a sufficient backstop for OPCA financing, it cannot be known until OCPA secures financing. SCE Rates Critical to the cost-effectiveness of OCPA is the rates it can offer relative to those offered by SCE. Thus, the forecast of SCE’s generation rates and PCIA are equally as important as the forecast costs to operate the CCA program.29 The Implementation Plan appears to perform its forecast of SCE generation rates by starting at the known 2020 SCE generation rates and escalates them at 2% per year. Figure 17 shows the Implementation Plan’s and MRW’s rate forecast. While the two are relatively consistent, MRW’s is about 5% (0.4¢/kWh) lower than that shown in the Implementation Plan. A 0.4¢/kWh decrease in rates translates to a $13 million decrease in CCA revenue, which could in some years hamper the OCPA’s ability to offer its target rate savings. 28 See SDCP April 23, 2020 Board Packet, Staff Report on Item 4, at https://www.sdcommunitypower.org/board- meetings. 29 Recall, for a customer to financially benefit from CCA service, the CCA rate plus the PCIA must be less than SCE’s generation rate. 716 CCA Review for Huntington Beach February 2021 40 MRW & Associates, LLC However, as discussed below, these lower generation rates would be offset by the Implementation Plan’s very conservative PCIA assumption discussed below. Figure 17. SCE Generation Rate Forecasts PCIA The Power Charge Indifference Adjustment (PCIA) is a fee charged by SCE to prevent customers that remain with SCE bundled service from paying for energy generation procured on behalf of customers that have since switched to CCA service. More specifically, it pays for the above-market costs of SCE generation resources that were acquired, or which SCE committed to acquire, prior to the customer’s departure to CCA. Bundled customers also pay the PCIA, but it is embedded into the commodity portion of their total rate. The PCIA is the single largest uncertainty in a CCA analysis. It can vary significantly from year to year, depending upon the wholesale power market, the costs of RA, the costs of renewables, and how well the prior years’ PCIAs collected the correct amount so as to keep non-CCA customers whole. It can increase up to 0.5¢/kWh (roughly 25%) year over year due to market changes but can increase even more due to insufficient funds being collected in the PCIA. The Implementation Plan starts with the current PCIA and escalates it at 5% per year through 2030. As seen in Figure 18, the PCIA assumption in the Implementation Plan differs markedly from MRW’s PCIA forecast. The two differ because MRW modeled the PCIA in a bottoms-up fashion, using the commission prescribed formula with assumptions consistent with the rest of the forecast, while the Implementation Plan escalated current PCIA rate. As shown below, the Implementation Plan’s assumed PCIA is very conservative relative to MRW’s forecast. 717 CCA Review for Huntington Beach February 2021 41 MRW & Associates, LLC Figure 18. PCIA Rate Forecasts Conclusions Overall, the assumptions and analysis in the Implementation Plan are sound. However, we note the following concerns. First, the Implementation Plan does not address the changing state policies concerning Local RA. Second, the Implementation Plan’s generation rate is on average about 5% lower than MRW’s forecast, while significantly overestimating the PCIA. The overestimated PCIA more than makes up for the low generation rate, so the net effect is conservative. Third, MRW believes that the Implementation Plan may be understating the financing assumptions for launching a CCA. While Irvine’s commitment to provide the startup loan and financial collateral may likely provide a sufficient backstop for OPCA financing, it cannot be known until OCPA secures financing. 718 CCA Review for Huntington Beach February 2021 42 MRW & Associates, LLC Chapter 5: Risks & Mitigating Strategies As discussed so far, there are clear benefits to CCA formation, but there are also risks. This chapter lists many of the larger risks that OCPA would face—and in fact all CCAs must deal with—along with summaries of how the CCA can address the risk. If Huntington Beach were to pursue CCA, it should create a risk management plan that would flesh out more specific risk policies and proceedings. Financial Risk to City A single-city CCA is assumed to be formed as a financially independent enterprise, with no dollars flowing into or out of the City’s general fund. As such, the general fund cannot be drawn upon by the CCA’s creditors, nor can CCA dollars flow into the general fund. In the event that Huntington Beach joined OCPA, the JPA agreement defines the rights and responsibilities of each member of the CCA. With respect to financial support, Section 5.6 of the OCAP JPA agreement addresses Member contributions and payments. That section explicitly states, “except as otherwise specified herein, the Parties are not required under this Agreement to make any financial contribution of payments to the Authority, and the authority shall have no right to require such a contribution or payment.” (§5.6) It goes on to say, “Unless otherwise agreed to by the Parties, the debts, liabilities and obligations of the agency shall not be the debts, liabilities and obligations, either jointly or severally, of the members” of the Authority. (§5.7) Still, a OCPA Member may, “in its sole discretion,” agree to assume of the Authority’s debts, liabilities, or obligations. (§5.7) (Note that MRW is not a law firm and does not offer a legal opinion as to the financial obligations of OCPA Members to the Authority.) Nonetheless, starting up a CCA often requires a credit-worthy entity to backstop its initial financing. Some, such as CleanPowerSF, use the balance sheet from its existing power enterprise to backstop initial financing. Others have relied upon their host city or county as a backstop to initial financing. For example, MCE’s initial bank loans for working capital were guaranteed by Marin County and the Town of Fairfax. After approximately six years, the CCA had demonstrated its creditworthiness and the guarantees were lifted. Still, the JPA cannot place any financial obligations or risks onto any of its members without that member’s approval. Opt-Out Risk Customers may choose to opt-out of a CCA service before or during their transfer to CCA, or in fact at any time. (Reduced CCA participation due to high rates is addressed in Section B, below). The opt-out risk comes at two district time periods. The first is the initial roll-out of the CCA program. The most recent CCA launches have experienced only very modest opt-outs: around two to three percent of the eligible customers have elected not to take service from their CCA. If there are negative communications to Huntington Beach citizens and businesses during the initial roll out (e.g., bad press of some sort), then the opt-out rate could increase. Second, customers could choose to leave CCA service after the initial opt-out period. The most likely driver of this opt-out risk is expanding Direct Access (DA) eligibility, which is addressed in more detail below. 719 CCA Review for Huntington Beach February 2021 43 MRW & Associates, LLC Mitigation: The experience of the prior CCAs suggests that opt-outs at the beginning of service tend to be in a relatively narrow range, allowing for some predictability in initial opt-outs. In addition, prudent power procurement strategies will allow for a reasonable uncertainty in load, especially uncertainty associated with DA expansion, without having to either dump power at a loss or purchase excessive amounts at high spot market prices. CCAs also can charge an “exit fee” akin to the PCIA to customers who have left CCA service after power contracts have been signed to serve their load, but to date none have been imposed. Rate and PCIA Uncertainty A primary goal of a CCA is to offer power to Huntington Beach residents and businesses at a competitive price relative to SCE. In this circumstance, competitiveness is tied to the rate offered by SCE. A number of factors can cause OCPA’s net power costs to exceed SCE’s costs. OCPA will have in place risk management plans and options to both mitigate these risks by lowering rates passed on to customers back down to a competitive rate as well as to address unexpected risks. Changes to SCE Generation Rates: There could be circumstances that result in SCE’s generation’ rates being less than OCPA’s. Assuming that SCE’s rates are based on its cost of service, OCPA obviously has little or no ability to influence the rates that SCE offers. Mitigation: While OCPA has little ability to affect SCE’s generation rates, it can take proactive steps to mitigate the impact of reductions in SCE’s generation rate. These steps are discussed below. Changes to SCE’s PCIA Rate: Assembly Bill 117, which established the Community Choice Aggregation program in California, included a provision that states that the customers that remain with the utility should be “indifferent” to the departure of customers from utility service to CCA service. This has been broadly interpreted by the CPUC to mean that the departure of customers to CCA service cannot cause the rates of the remaining utility “bundled” customers to go up. To maintain bundled customer rates, the CPUC has instituted an exit fee, known as the “Power Charge Indifference Amount” or “PCIA” that is charged to all CCA customers. The PCIA is intended to ensure that generation costs incurred by SCE before a customer transitions to CCA service are not shifted to remaining SCE bundled service customers. Thus, for an OCPA customer to realize an economic benefit (i.e., pay the same or less for electricity), the sum of the OCPA charges plus the PCIA must be lower than SCE’s generation rate. Mitigation: The PCIA is established at the CPUC. To ensure that this charge is properly calculated and that it is correctly allocated to OCPA customers, it will be necessary for OCPA to monitor and possibly actively participate in the regulatory proceedings in which the CPUC sets the PCIA. 720 CCA Review for Huntington Beach February 2021 44 MRW & Associates, LLC CPUC “Financial Security Requirement” Risk Pursuant to CPUC Decision 05-12-041, a new CCA must include in its registration packet evidence of insurance or bond that will cover costs as potential re-entry fees, specifically, the cost to SCE if the CCA were to suddenly fail and be forced to return all its customers back to SCE bundled service. Currently, a bond amount for CCAs is set at $147,000. This CCA bond amount covers SCE’s administrative cost to reintegrate a failed ESP’s customers back into bundled service, plus any positive difference between market-based costs for SCE to serve the unexpected load and SCE’s retail generation rates. Since the CCA bonding requirement has been in place, retail rates have always exceeded wholesale market prices, and thus CCAs’ bond requirements have been simply equal to the modest administrative cost. Mitigation: During normal conditions, the CCA Bond amount will not be a concern. However, during a wholesale market price spike, the bond amount could potentially increase to millions of dollars. But the high bond amount would likely be only short term, until more stable market conditions prevailed. Also, it is important to note that high power prices (that would cause a high bond requirement) would also depress SCE’s PCIA and would also raise SCE’s rates, which would in turn likely provide the CCA sufficient headroom to handle the higher bonding requirement and keep its customers’ overall costs competitive with what they would have paid had they remained with SCE. Direct Access and Competitive Retail Services The most likely driver of opt-out risk is expanding Direct Access eligibility. As noted earlier, about 15% of the load in SCE’s territory is served through Direct Access, with an additional 3% likely to have occur in 2020 due to the limited expansion of the DA cap from SB 237. In addition to modestly expanding the availability of DA service, SB 237 also directed the CPUC to report to the Legislature by June 1 of 2020, a deadline that the Commission missed on how to open DA completely for all non-residential customers. The CPUC’s report on how to fully open DA service was delayed due to the outbreak of COVID-19, and preliminary Staff Report was eventually issued in September 2020. The Staff Report recommended that ESP’s demonstrate obligation compliance by submitting robust IRPs and meeting their procurement, RA, and RPS requirements before further DA is opened. If legislation directs further reopening of nonresidential DA, then a re-opening schedule of increments of 10 percent of eligible non- residential load per year should be used under the condition that each expansion meets IRP, RA, and RSP requirements and allows LSEs to fully comply with RA requirements. A fully opened DA market would allow any commercial or industrial customer to switch its provider to a third- party, potentially reducing OCPA’s revenue and creating a mismatch between its wholesale power portfolio and the CCA’s load. Additional expansions are possible, if not likely. If they come to pass, CCAs will have to compete with the DA providers on price and/or other services. Mitigation: As stated earlier, CCAs’ history suggests that opt-outs at the beginning of service tend to be minor. Prudent power procurement strategies will allow for a reasonable uncertainty in load, including potential DA expansion, without having to dump power or purchase power at high spot prices. CCAs also can charge an “exit fee” akin to the PCIA to customers who have 721 CCA Review for Huntington Beach February 2021 45 MRW & Associates, LLC left CCA service after power contracts have been signed to serve their load, but to date none have been imposed. Energy Risk Management A Load Serving Entity (LSE) that is formed as a CCA faces financial risk of procuring energy, capacity, Renewable Energy Credits (RECs) and carbon-free energy (if needed) at a cost that exceeds the revenue that it receives from its retail customers. The other risks that are faced by the CCA roll up into the overarching risk of buying products and operating the CCA at a cost that exceeds revenue. Mitigation:The CCA must establish a sound risk management program that forms the structure for measuring, monitoring, and managing risk. This section describes the elements that comprise risk, components, and functions of a Risk Management Program, and approaches that can be used to manage risk. CCA Risk Management plans can be found on their respective websites.30 Legislative and Regulatory Risks As noted above, the CCA must meet various procurement requirements established by the State and implemented by the CPUC or other agencies. Regulatory risk, which changes the rules under which CCAs operate, affects the CCA’s ability to maintain stable procurement activities, manage costs to its customers, and compete with the local incumbent utility and direct access providers. Regulation of the electric utility sector that affects CCAs at the federal level is provided by the Federal Energy Regulatory Commission (FERC) which regulates the CAISO and at the state level by the California Public Utilities Commission (CPUC) which implements legislation passed by the California State Legislature and signed into law by the governor. Although CCAs are not directly regulated by the CPUC but rather their own local governing bodies, the CPUC is tasked with implementing details of legislation signed into law. The risk to CCAs is in changes in the regulatory environment that affects the CCAs ability to attract, compete for, and retain customers, the products that it has already procured, and procurement practices going forward. Major issues that are currently evolving include:  Direct Access  Resource Adequacy31 30 E.g., San Jose Clean Energy: http://www.sanjoseca.gov/DocumentCenter/View/77619; Silicon Valley Clean Power: https://www.svcleanenergy.org/wp-content/uploads/2019/03/2019-Risk-Management-Policy-F.pdf. 31 For example, on September 12, 2019, the CPUC issued a proposed decision requiring electric system reliability procurement for 2021-2023 in the Integrated Resource Planning proceeding, Rulemaking 16-02-007. That proposed decision directs Southern California Edison to procure 1,745 MW of Resource Adequacy with a start date ranging between August 1, 2021 and August 1, 2023. Although the decision is not final, if it holds, and Southern California Edison moves forward, it most likely will be long Resource Adequacy and will need to re-sell it or have it allocated to Load Serving Entities. 722 CCA Review for Huntington Beach February 2021 46 MRW & Associates, LLC  Power Charge Indifference Adjustment  Renewable Energy Purchase Requirement  Power Content Label Reporting  Central Procurement Entity  Energy Provider of Last Resort (POLR) These include procuring sufficient resource adequacy capacity of the proper type and meeting RPS requirements that are evolving.32 Additional rules and requirements might be established. These could affect the economic performance of the CCA. There are potential risks associated with legislative proceedings that affect the Power Charge Indifference Adjustment (PCIA), which is a fee ($/kWh) charged by IOUs to cover the generation costs incurred before a customer changed to a new service provider, such as a CCA. The fee fluctuates per year based on the difference between an IOU’s actual generation cost and the current market value of its generation portfolio. The PCIA charge also varies per customer based on the date or “vintage” they enrolled with an alternative provider. CCAs are concerned with changes in the PCIA since significant increases in the PCIA can affect the rate competitiveness of CCAs with IOUs. Legislation that affects RA creates risks for CCAs since all CCAs, like IOUs and Energy Service Providers (ESPs), have RA obligations. These obligations require LSEs to procure a specific amount of capacity so that this capacity is available to the CAISO in order to ensure electric service reliability. Drastic changes in RA requirements, particularly increases in obligation, would concern any LSE, especially since recently there was a decrease in available resource adequacy capacity in 2019. Due to the rise in wildfire risks over the past several years, CCAs are following legislation that addresses wildfire mitigation and public safety power shutoffs (PSPS). Some CCAs are focused on insulating their customers from potential wildfire risks and subsequent power shutoffs. Mitigation: Regulatory and legislative risk can only be managed though close monitoring of the relevant proceedings at the CPUC and legislation in Sacramento and intervening where needed to advocate for the CCA. If Huntington Beach pursues CCA, the organization should consider teaming with other CCA, such as through the Cal-CCA trade organization on regulatory and legislative monitoring. 32 Rules to establish RPS requirements under the new 50% RPS mandate established by SB 100 are currently being debated at the CPUC. 723 CCA Review for Huntington Beach February 2021 47 MRW & Associates, LLC Chapter 6. Governance Model Options In addition to selecting an operating structure, the City will decide between three primary governance options for the CCA: 1. Where the City is the sole government agency responsible for the CCA’s creation and operation, 2. Participation with other agencies in a Joint Powers Agency (JPA), where multiple agencies share oversight responsibilities for the new agency; or 3. Joining an existing CCA JPA. Forming a Single City Agency In a sole jurisdiction approach, the City maintains full flexibility—and responsibility—for developing policies and procedures. This means that they can be tailored to and responsive to the City’s stakeholders and constituents only and based upon their own objectives. The City would be responsible for setting policy priorities in general and making specific decisions about power generation, staffing policies, local economic development activities and strategies, the formulation of financial and debt policies, and the development of EE, demand response, electric vehicle (EV), and distributed generation programs. Along with greater autonomy, the City would assume all risk, liability, and costs associated with operating the CCA. In this case, the likely path would be for the City to establish the CCA as an enterprise fund, and work with appropriate legal counsel to explore options for controls and structural safeguards to insulate it and minimize risk to the City’s general fund. The City would need to establish the CCA as an enterprise. Enterprises are commonly used for public utilities such as electric, water and wastewater, or other city functions where a public service is operated and provided in a manner similar to a business enterprise, where fees and charges are collected for services provided, and accounting and budgeting are separate from a city’s general fund. Setting the CCA up as an enterprise provides a structure where the revenues and expenditures are separated into different funds, budgeted for on their own, and reported on their own financial statements. In an enterprise, financial transactions are reported like business activity accounting; revenues are recognized when earned and expenses are recognized when incurred. Establishing an enterprise fund provides management and CCA customers with more visibility and accountability, and the ability to more easily separate and measure performance, analyze the impact of management decisions, determine the cost of providing electric service, and use this information to develop cost-of-service electric rates. Enterprise accounting will allow the City to demonstrate to customers, the public and other stakeholders, that the cost of power is being recovered through its rates, and not being subsidized or comingled with other City funds or functions. Within the City-Only option, the City would determine if it is to be a fully in-house operation with existing or added City Staff, or if the City would outsource some of all of the activities, 724 CCA Review for Huntington Beach February 2021 48 MRW & Associates, LLC with the City only administering contracts and managing vendors. Examples of some of the categories of operating activities that would need to be performed in-house or outsourced:  Power procurement, scheduling  Finance, budgeting, and accounting  Coordinating with SCE on billing  Customer service  Communications, outreach and public relations  Specific programs such as demand response, EE, EV, or rooftop solar PV  Regulatory monitoring and compliance, CPUC filings, etc. The likely best short-term option would be to outsource the highly technical functions, and maintain some of the management, planning, and other public-facing functions like communications in-house. The range of options depends upon the degree of operating control the City wishes to maintain, the costs associated with maintaining those functions, and the degree of risk it is willing to accept on its own, or delegate to (and pay) third-party providers to assume. No matter the amount of outsourcing, a CCA of Huntington Beach’s size would eventually (i.e., within the first three years) require a core staff of experienced professionals for CCA-specific operations. This would include:  Executive Director  Finance Director  Data/IT manager  Power resources/procurement director  Customer relations/outreach director  Account service manager  General Counsel  Regulatory affairs director If the CCA were to pursue additional services, such as their own energy efficiency, rooftop solar, or other customer-facing program, more managers would be needed. Additionally, many of these would be supported by 1 or 2 support analyst professionals, some of whom could be shared with other Huntington Beach departments. All larger CCA have dedicated staffs of 15 – 40 employees. For example, San Jose Clean Energy (SJCE) is a larger city with an enterprise CCA. Its planning documents show an eventual staff of 20. Forming or Joining a Joint Powers Agency The second option would be the formation of a JPA, where the JPA is an independent agency that operates on behalf of the public agencies which are party to its creation. This is the option that OCPA is currently offering the City of Huntington Beach. In this approach, the City 725 CCA Review for Huntington Beach February 2021 49 MRW & Associates, LLC effectively shares responsibility with the other agencies participating in the JPA. The divisions of these responsibilities and the sharing of decision-making authority would be determined at the time the JPA is created. Other critical ‘ground rules’ would also need to be negotiated and memorialized, such as financial and possibly staffing commitments of each participating agency, and the composition of the board and voting procedures. Sections 6500 to 6536 of the California Government Code constitute the enabling legislation for Joint Powers Authorities, and the Public Utilities Code allows a CCA program to be carried out under a joint powers agreement between entities that each have the capacity to implement a CCA program individually. A JPA may be formed when it is to the advantage of two or more public entities with common powers to combine resources, or when local public entities wish to pool with other public entities to save costs and/or gain economies. It can also be employed to provide the JPA with powers and authority that participating entities might not have on their own. A JPA is a legal and separate public entity with the ability to enter contracts, issue debt, and provide public services, among other things, and like the City, it would have broad powers related to the operation and management of the CCA, and the study, promotion, development, and conduct of electricity-related projects and programs. The JPA structure may reduce the risks of implementing a CCA program to the City by immunizing the financial assets of the City and the other participating agencies, and distributing the risks and costs associated with the CCA among the participating entities. It could also provide the benefits of scale and economy for certain aspects of CCA operation, such as power procurement or back office billing and accounting functions. A CCA operated under a JPA could benefit from increased negotiating and buying power for power purchases, access to better financing terms for borrowing, and operating efficiencies gained by combining back-office functions such as billing and accounting. These benefits would accrue to customers through better pricing for power and debt, and ultimately more competitive electric rates. A larger JPA could also wield more political influence, which could be beneficial when participating in CPUC or other regional or state regulatory, legislative, or policy making activities. Key tradeoffs to the benefits of a JPA are that decision making is allocated amongst the parties and management independence is diminished. Objectives of participating agencies will likely differ, and reduced autonomy can manifest when setting priorities for local generation, economic development activities, and the importance of support programs. When the JPA is formed, a Board must be appointed to set policy and make decisions. The makeup of this board is subject to negotiation among the participating entities but would likely be made up of elected officials from each participating agency. The process of determining the makeup of the board and each respective members’ voting weight can be based on several factors, such as the percentage of customers or load or relative financial contribution, but in any case, decision making is certainly more complicated. The number of stakeholder interests and priorities are multiplied, and in many cases, reaching consensus on key decisions is more complex and time- consuming than if only one agency were involved. 726 CCA Review for Huntington Beach February 2021 50 MRW & Associates, LLC Chapter 7. Conclusions Overall, establishing a CCA in Orange County, such as the OCPA, appears feasible. Given current and expected market and regulatory conditions, a CCA should be able to, over the long run, offer its residents and business customers electric rates that are less than that available from SCE. Sensitivity analyses suggest that these results are relatively robust. Nonetheless, the margins are tight in the first few years which could prevent the OCPA from offering a rate discount or contributing to financial reserves. This conclusion is supported by the rate savings offered by the current CCAs, only three of which are offering residential rate savings of 2% (the OCPA target) or more. OCPA could conceivably reduce the amount greenhouse gases associated with the consumption of electricity in Orange County, but only under certain circumstances. Because SCE’s supply portfolio has significant carbon-free generation (large hydroelectric and nuclear generators), the CCA must contract for significant amounts of carbon-fee power above and beyond the required qualifying renewables in order to actually reduce Orange County’s electric carbon footprint. Therefore, if carbon reductions are a high priority for the CCA, a concerted effort to contract with hydroelectric or other carbon-free generators would be needed. Huntington Beach’s two options for CCA are forming a City-only enterprise or joining OCPA. The primary benefits of forming a Huntington Beach-only CCA are more local control over procurement practices and budgets and being able to offer services that are better tailored to Huntington Beach. The primary benefits of forming or joining OCPA are forgoing the need for the City to provide startup funding and loan guarantees, faster implementation, reduced risk, and reduced administrative burden on City Staff, both in CCA formation and in ongoing management. 727 Orange County Power Authority COMMUNITY CHOICE AGGREGATION IMPLEMENTATION PLAN AND STATEMENT OF INTENT December 28, 2020 728 i Orange County Power Authority Implementation Plan Table of Contents TABLE OF CONTENTS .................................................................................................................................................... I CHAPTER 1 – INTRODUCTION ...................................................................................................................................... 1 ORGANIZATION OF THIS IMPLEMENTATION PLAN....................................................................................................................... 2 AB 117 CROSS REFERENCES ................................................................................................................................................. 3 CHAPTER 2 - AGGREGATION PROCESS ......................................................................................................................... 4 INTRODUCTION ................................................................................................................................................................... 4 PROCESS OF AGGREGATION .................................................................................................................................................. 4 CONSEQUENCES OF AGGREGATION ......................................................................................................................................... 5 Rate Impacts .............................................................................................................................................................. 5 Local Economic Development Impacts ...................................................................................................................... 6 Renewable Energy Impacts ........................................................................................................................................ 6 Energy Efficiency Impacts .......................................................................................................................................... 7 CHAPTER 3 – ORGANIZATIONAL STRUCTURE ............................................................................................................... 8 ORGANIZATIONAL OVERVIEW ................................................................................................................................................ 8 GOVERNANCE .................................................................................................................................................................... 8 MANAGEMENT ................................................................................................................................................................... 9 Administration ........................................................................................................................................................... 9 Finance ....................................................................................................................................................................... 9 Marketing & Public Affairs ....................................................................................................................................... 10 Power Resources & Energy Programs ...................................................................................................................... 11 Electric Supply Operations ....................................................................................................................................... 11 Local Energy Programs ............................................................................................................................................ 12 Governmental Affairs & General Counsel ................................................................................................................ 12 CHAPTER 4 – STARTUP PLAN & FUNDING .................................................................................................................. 14 STARTUP ACTIVITIES .......................................................................................................................................................... 14 Staffing and Contract Services ................................................................................................................................. 15 Capital Requirements............................................................................................................................................... 15 FINANCING PLAN .............................................................................................................................................................. 15 CHAPTER 5 – PROGRAM PHASE-IN ............................................................................................................................ 16 ADDITIONAL MEMBERS ROLL-OUT ....................................................................................................................................... 16 NEW RESIDENTIAL AND NON-RESIDENTIAL CUSTOMERS ........................................................................................................... 16 CHAPTER 6 – LOAD FORECAST & RESOURCE PLAN ..................................................................................................... 17 INTRODUCTION ................................................................................................................................................................. 17 RESOURCE PLAN OVERVIEW ................................................................................................................................................ 18 SUPPLY REQUIREMENTS ..................................................................................................................................................... 20 CUSTOMER PARTICIPATION RATES ........................................................................................................................................ 20 CUSTOMER FORECAST ........................................................................................................................................................ 21 Sales Forecast .......................................................................................................................................................... 22 Capacity Requirements ............................................................................................................................................ 22 RENEWABLES PORTFOLIO STANDARDS ENERGY REQUIREMENTS ................................................................................................. 25 Basic RPS Requirements ........................................................................................................................................... 25 OCPA’s Renewables Portfolio Standards Requirement ............................................................................................ 26 Purchased Power ..................................................................................................................................................... 29 Renewable Resources .............................................................................................................................................. 29 Energy Efficiency ...................................................................................................................................................... 29 729 i Orange County Power Authority Implementation Plan Demand Response ................................................................................................................................................... 29 Distributed Generation ............................................................................................................................................ 30 CHAPTER 7 – FINANCIAL PLAN ................................................................................................................................... 32 DESCRIPTION OF CASH FLOW ANALYSIS ................................................................................................................................. 32 COST OF CCA PROGRAM OPERATIONS .................................................................................................................................. 32 REVENUES FROM CCA PROGRAM OPERATIONS ...................................................................................................................... 32 CASH FLOW ANALYSIS RESULTS ........................................................................................................................................... 33 CCA PROGRAM IMPLEMENTATION PRO FORMA ..................................................................................................................... 33 OCPA FINANCING ............................................................................................................................................................ 36 CCA PROGRAM START-UP AND WORKING CAPITAL ................................................................................................................. 36 RENEWABLE RESOURCE PROJECT FINANCING .......................................................................................................................... 36 CHAPTER 8 – RATE SETTING, PROGRAM TERMS AND CONDITIONS ........................................................................... 37 INTRODUCTION ................................................................................................................................................................. 37 RATE POLICIES .................................................................................................................................................................. 37 Rate Competitiveness .............................................................................................................................................. 37 Rate Stability ............................................................................................................................................................ 38 Equity Among Customer Classes .............................................................................................................................. 38 Customer Understanding ......................................................................................................................................... 38 Revenue Sufficiency ................................................................................................................................................. 39 Rate Design .............................................................................................................................................................. 39 Custom Pricing Options ............................................................................................................................................ 39 Net Energy Metering................................................................................................................................................ 39 Disclosure and Due Process in Setting Rates and Allocating Costs among Participants .......................................... 39 CHAPTER 9 – CUSTOMER RIGHTS AND RESPONSIBILITIES .......................................................................................... 41 CUSTOMER NOTICES .......................................................................................................................................................... 41 TERMINATION FEE ............................................................................................................................................................. 42 CUSTOMER CONFIDENTIALITY .............................................................................................................................................. 42 RESPONSIBILITY FOR PAYMENT ............................................................................................................................................ 43 CUSTOMER DEPOSITS ........................................................................................................................................................ 43 CHAPTER 10 - PROCUREMENT PROCESS .................................................................................................................... 44 INTRODUCTION ................................................................................................................................................................. 44 PROCUREMENT METHODS .................................................................................................................................................. 44 KEY CONTRACTS ............................................................................................................................................................... 44 Electric Supply Contract ........................................................................................................................................... 44 Data Management Contract .................................................................................................................................... 45 ELECTRIC SUPPLY PROCUREMENT PROCESS ............................................................................................................................ 46 CHAPTER 11 – CONTINGENCY PLAN FOR PROGRAM TERMINATION .......................................................................... 47 INTRODUCTION ................................................................................................................................................................. 47 TERMINATION BY OCPA .................................................................................................................................................... 47 TERMINATION BY MEMBERS ............................................................................................................................................... 48 APPENDIX – OCPA JOINT POWERS AGREEMENT ........................................................................................................ 47 730 CHAPTER 1 – Introduction 1 Orange County Power Authority Implementation Plan Chapter 1 – Introduction Orange County Power Authority (OCPA) is a public agency located within Orange County, formed for the purpose of implementing a community choice aggregation program (CCA). Member Agencies of the OCPA includes five (5) cities all of which are municipalities located within Orange County, and together the “Members” or “Member Agencies,” have elected to allow OCPA to provide electric generation service within their respective jurisdictions. Currently, the following Members Agencies comprise OCPA:  City of Buena Park  City of Fullerton  City of Huntington Beach  City of Irvine  City of Lake Forest This Implementation Plan and Statement of Intent (“Implementation Plan”) describes OCPA’s plans to implement a CCA program for applicable electric customers within the jurisdictional boundaries of the County that currently take bundled electric service from Southern California Edison (“SCE”). The OCPA Program will provide electricity customers the opportunity to join together to procure electricity from competitive suppliers, with such electricity being delivered over SCE’s transmission and distribution system. The planned start date for the Program is April 1, 2022. All current SCE customers within OCPA’s service area will receive information describing the CCA Program and will have multiple opportunities to choose to remain full requirement (“bundled”) customers of SCE, in which case they will not be enrolled. Thus, participation in the OCPA Program is completely voluntary; however, customers, as provided by law, will be automatically enrolled according to the anticipated phase-in schedule later described in Chapter 5 unless they affirmatively elect to opt- out. Implementation of OCPA will enable customers within OCPA’s service area to take advantage of the opportunities granted by Assembly Bill 117 (“AB 117”), the Community Choice Aggregation Law. OCPA’s primary objectives in implementing this Program are to provide cost competitive electric services; promote economic development, reduce electric sector greenhouse gas emissions (“GHGs”) within the County; stimulate renewable energy development; implement distributed energy resources; promote energy efficiency and demand reduction programs; and sustain long-term rate stability for residents and businesses through local control. The prospective benefits to consumers include stable and competitive electric rates, increased renewable and other low-GHG emitting energy supplies, and the opportunity for public participation in determining which technologies are utilized to meet local electricity needs. To ensure successful operation of the Program, OCPA will solicit energy suppliers and marketers through a competitive process and will negotiate with one or more qualified suppliers throughout the summer and fall of 2021. Final selection of OCPA’s initial energy supplier(s) will be made by 731 CHAPTER 1 – Introduction 2 Orange County Power Authority Implementation Plan OCPA following administration of the aforementioned solicitation process and related contract negotiations. Information regarding the anticipated solicitation process for OCPA’s initial energy services provider(s) is contained in Chapter 10. The California Public Utilities Code provides the relevant legal authority for OCPA to become a Community Choice Aggregator and invests the California Public Utilities Commission (“CPUC” or “Commission”) with the responsibility for establishing the cost recovery mechanism that must be in place before customers can begin receiving electrical service through the OCPA Program. The CPUC also has the responsibility for registering OCPA as a Community Choice Aggregator and ensuring compliance with basic consumer protection rules. The Public Utilities Code requires that an Implementation Plan be adopted at a duly noticed public hearing and that it be filed with the Commission in order for the Commission to determine the cost recovery mechanism to be paid by customers of the Program in order to prevent shifting of costs to bundled customers of the incumbent utility. On December 22, 2020, at a duly noticed public hearing, the OCPA Board considered and adopted this Implementation Plan, through Resolution 2020-05. The Commission has established the methodology that will be used to determine the cost recovery mechanism, and SCE has approved tariffs for imposition of the cost recovery mechanism. Finally, each of OCPA’s Members has adopted an ordinance to implement a CCA program through its participation in OCPA, and each of the Members has adopted a resolution permitting OCPA to provide service within its jurisdiction. With each of these milestones accomplished, OCPA submits this Implementation Plan to the CPUC. Following the CPUC’s certification of its receipt of this Implementation Plan and resolution of any outstanding issues, OCPA will take the final steps needed to register as a CCA prior to initiating the customer notification and enrollment process. Organization of this Implementation Plan The content of this Implementation Plan complies with the statutory requirements of AB 117. As required by Public Utilities Code Section 366.2(c)(3), this Implementation Plan details the process and consequences of aggregation and provides OCPA’s statement of intent for implementing a CCA program that includes all of the following:  Universal access;  Reliability;  Equitable treatment of all customer classes; and  Any requirements established by State law or by the CPUC concerning aggregated service. 732 CHAPTER 1 – Introduction 3 Orange County Power Authority Implementation Plan The remainder of this Implementation Plan is organized as follows: Chapter 2: Aggregation Process Chapter 3: Organizational Structure Chapter 4: Startup Plan & Funding Chapter 5: Program Phase-In Chapter 6: Load Forecast & Resource Plan Chapter 7: Financial Plan Chapter 8: Rate setting Chapter 9: Customer Rights and Responsibilities Chapter 10: Procurement Process Chapter 11: Contingency Plan for Program Termination Appendix: OCPA Joint Powers Agreement The requirements of AB 117 are cross-referenced to Chapters of this Implementation Plan in the following table. AB 117 Cross References AB 117 REQUIREMENT IMPLEMENTATION PLAN CHAPTER Statement of Intent Chapter 1: Introduction Process and consequences of aggregation Chapter 2: Aggregation Process Organizational structure of the program, its operations and funding Chapter 3: Organizational Structure Chapter 4: Startup Plan & Funding Chapter 7: Financial Plan Disclosure and due process in setting rates and allocating costs among participants Chapter 8: Rate setting Rate setting and other costs to participants Chapter 8: Rate setting Chapter 9: Customer Rights and Responsibilities Participant rights and responsibilities Chapter 9: Customer Rights and Responsibilities Methods for entering and terminating agreements with other entities Chapter 10: Procurement Process Description of third parties that will be supplying electricity under the program, including information about financial, technical and operational capabilities Chapter 10: Procurement Process Termination of the program Chapter 11: Contingency Plan for Program Termination 733 CHAPTER 2 – Aggregation Process 4 Orange County Power Authority Implementation Plan Chapter 2 - Aggregation Process Introduction This chapter describes the background leading to the development of this Implementation Plan and describes the process and consequences of aggregation, consistent with the requirements of AB 117. Beginning in 2018, the City of Irvine began investigating formation of a CCA, pursuant to California state law, with the following objectives: 1) provide cost-competitive electric services; 2) promote local economic development; 3) reduce greenhouse gas emissions related to the use of electric power within the County; and 4) increase the use of renewable energy resources relative to the incumbent utility. A technical feasibility study for a CCA Program serving the City was completed County in January 2020. After nearly 11 months of collaborative work by representatives of the Member Agency city governments plus independent consultants, local experts and stakeholders, OCPA was formed in November 2020 for purposes of implementing the OCPA Program. Subsequently, OCPA approved this Implementation Plan through a duly noted public hearing, complying with the standards stated in California Public Utilities Code Section 366.2. OCPA is continuing discussions with additional Cities regarding membership in the JPA. This Implementation Plan will be updated if and when additional Cities become partners in OCPA. The OCPA Program represents a culmination of planning efforts that are responsive to the expressed needs and priorities of the citizenry and business community within the Member Agencies. OCPA plans to offer choices to eligible customers through the creation of innovative programs for voluntary purchases of renewable energy, net energy metering to promote customer-owned renewable generation, energy efficiency, demand responsiveness to promote reductions in peak demand, distributed energy generation, customized pricing options for large energy users, and support of local renewable energy projects through offering of a standardized power purchasing agreement or Feed-In Tariff. The analysis contained in this Plan does not include non-residential direct access customers as it is assumed that customers taking direct access service from a competitive electricity provider will continue to remain with their current supplier. Process of Aggregation Before they are enrolled in the Program, prospective OCPA customers will receive two written notices in the mail from OCPA that will provide information needed to understand the Program’s terms and conditions of service and explain how customers can opt-out of the Program, if desired. All customers that do not follow the opt-out process specified in the customer notices will be automatically enrolled, and service will begin at their next regularly scheduled meter read date no later than thirty days following the date of automatic enrollment, subject to the service phase- in plan described in Chapter 5. Non-residential Direct Access and Standby customers will not be 734 CHAPTER 2 – Aggregation Process 5 Orange County Power Authority Implementation Plan automatically enrolled. The initial enrollment notices will be provided to the first phase of customers in November 2021. Initial enrollment notices will be provided to subsequent customer phases consistent with statutory requirements and based on schedule(s) determined by OCPA. These notices will be sent to customers in subsequent phases twice within 60 days of automatic enrollment. Customers enrolled in the OCPA Program will continue to have their electric meters read and to be billed for electric service by the distribution utility (SCE). The electric bill for Program customers will show separate charges for generation procured by OCPA as well as other charges related to electricity delivery and other utility charges assessed by SCE. After service initiation, customers will have approximately 60 days (two billing cycles) to opt-out of the OCPA Program without penalty and return to the distribution utility (SCE). OCPA customers will be advised of these opportunities via the distribution of two additional enrollment notices provided within the first two months of service. Customers that opt-out between the initial cutover date and the close of the post enrollment opt-out period will be responsible for Program charges for the time they were served by OCPA but will not otherwise be subject to any penalty for leaving the program. Customers that have not opted-out within thirty days of the fourth enrollment notice will be deemed to have elected to become a participant in the OCPA Program and to have agreed to the OCPA Program’s terms and conditions, including those pertaining to requests for termination of service, as further described in Chapter 9. Consequences of Aggregation Rate Impacts OCPA customers will pay the generation charges set by OCPA and no longer pay the costs of SCE generation. Customers enrolled in the Program will be subject to the Program’s terms and conditions, including responsibility for payment of all Program charges as described in Chapter 9. OCPA’s rate setting policies described in Chapter 8 establish a goal of providing rates that are competitive with the projected generation rates offered by the incumbent distribution utility (SCE). OCPA will establish rates sufficient to recover all costs related to operation of the Program, and actual rates will be adopted by OCPA’s Board. Initial OCPA Program rates will be established following approval of OCPA’s inaugural program budget, reflecting final costs from the OCPA Program’s energy supplier(s). OCPA’s rate policies and procedures are detailed in Chapter 8. Information regarding final OCPA Program rates will be disclosed along with other terms and conditions of service in the pre‑ enrollment and post‑ enrollment notices sent to potential customers. Once OCPA gives definitive notice to SCE that it will commence service, OCPA customers will generally not be responsible for costs associated with SCE’s future electricity procurement contracts or power plant investments. Certain pre‑existing generation costs and new generation costs that are deemed to provide system‑wide benefits will continue to be charged by SCE to CCA 735 CHAPTER 2 – Aggregation Process 6 Orange County Power Authority Implementation Plan customers through separate rate components, called the Cost Responsibility Surcharge and the New System Generation Charge. These charges are shown in SCE’s electric service tariffs, which can be accessed from the utility’s website, and the costs are included in charges paid by both SCE bundled customers as well as CCA and Direct Access customers.1 Local Economic Development Impacts The indirect effects of creating a OCPA includes the effects of increased commerce, and disposable income. The technical feasibility study completed for Orange County included an input-output- (IO) analysis that analyzed indirect effects of implementing a CCA. The IO model turns on the assumption that forming a CCA will lead to lower energy rates for their customers. Three types of impacts are analyzed in the IO model. These are described below. Local Investment – OCPA may choose to implement programs to incentivize investments in local distributed energy resources (DER). Participants in OCPA may pursue local clean DER. These resources can be behind the meter or community projects where several customers participate in a centrally located project (e.g. “community solar”). This demand for local renewable resources will lead to an increase in the manufacturing and installation of DER, and lead to an increase in employment in the related manufacturing and construction sectors. Increased Disposable Income – OCPA retail rates may be lower that SCE rates creating more disposable income for individuals and greater revenues for businesses. These cost savings could then lead to more investment by individuals and businesses for personal or business purposes. This increase in spending could result in increased employment for multiple sectors such as retail, construction, and manufacturing. Environmental and Health Impacts – With the creation of a CCA, such as OCPA, other non- commerce indirect effects will occur. These may be environmental, such as improved air quality or improved human health due to the CCA potentially utilizing more renewable energy sources versus continuing use of traditional energy sources which may have a greater GHG footprint. Renewable Energy Impacts A second consequence of the Program will be a likely increase in the proportion of energy generated and supplied by renewable resources. The resource plan includes procurement of renewable energy sufficient to meet California’s prevailing renewable energy procurement mandate for all enrolled customers. OCPA customers will also have the opportunity to participate in a 100 percent renewable supply option. To the extent that customers choose 100 percent renewable energy option, the renewable content of OCPA’s aggregate supply portfolio will further increase. Initially, requisite renewable energy supply will be sourced through one or more power purchase agreements. Over time, however, OCPA will likely consider independent development of new local renewable generation resources. OCPA seeks to establish a resource portfolio that encourages the use and development of cost-effective local renewable and distributed energy resources. 1 For SCE bundled service customers, the Power Charge Indifference Adjustment element of the Cost Responsibility Surcharge is contained within the tariffed Generation rate. Other elements of the Cost Responsibility Surcharge are set forth in SCE’s tariffs as separate rates/charges paid by all customers (with limited exceptions). 736 CHAPTER 2 – Aggregation Process 7 Orange County Power Authority Implementation Plan Energy Efficiency Impacts A third consequence of the Program will be an anticipated increase in energy efficiency program investments and activities. The existing energy efficiency programs administered by the distribution utility are not expected to change as a result of OCPA Program implementation. OCPA customers will continue to pay the public benefits surcharges to the distribution utility, which will fund energy efficiency programs for all customers, regardless of generation supplier. The energy efficiency investments ultimately planned for the OCPA Program, as described in Chapter 6, will follow OCPA’s successful application for and administration of requisite program funding (from the CPUC) to independently administer energy efficiency programs within its jurisdiction. Such programs will be in addition to the level of investment that would continue in the absence of OCPA-administered energy efficiency programs. Thus, the OCPA Program has the potential for increased energy savings and a further reduction in emissions due to expanded energy efficiency programs. 737 CHAPTER 3 – Organizational Structure 8 Orange County Power Authority Implementation Plan Chapter 3 – Organizational Structure This section provides an overview of the organizational structure of OCPA and its proposed implementation of the CCA program. Specifically, the key agreements, governance, management, and organizational functions of OCPA are outlined and discussed below. Organizational Overview On November 20, 2020, OCPA formed its Board of Directors to serve as its Governing Board. The Board is responsible for establishing OCPA Program policies and objectives and overseeing OCPA’s operation. On December 16, 2020, the Board appointed an Interim Executive Director to manage the operation of OCPA in accordance with policies adopted by the Board. When OCPA receives CPUC certification, the Executive Director will proceed to appoint staff and contractors to manage OCPA’s activities. These activities include support services (administration, finance and IT), marketing and public affairs (community outreach, key account management and customer advocacy), supply acquisition (energy trading, contract negotiation and system development), and legal and government affairs. Governance The OCPA Program will be governed by OCPA’s Board, which shall include two appointed designees from the City of Irvine (initially) and one appointed designee for each of the other Members. OCPA is a joint powers agency created on November 20, 2020 and formed under California law. The Members of OCPA include five (5) municipalities located within Orange County, all of which have elected to allow OCPA to provide electric generation service within their respective jurisdictions. OCPA’s Board will be comprised of representatives appointed by each of the Members in accordance with the JPA agreement with the exception of the City of Irvine, who will appoint two directors until start-up funds are repaid. The OCPA Program will ultimately be operated under the direction of an executive director appointed by the Board, with legal and regulatory support provided by a Board appointed General Counsel. The Board’s primary duties are to establish program policies, approve rates and provide policy direction to the Executive Director, who has general responsibility for program operations, consistent with the policies established by the Board. The Board has elected a Chairman and Vice Chairman and may establish an Executive Committee, Finance Committee, and Community Advisory Committee. In the future, the Board may also establish other committees and sub-committees, as needed, to address issues that require greater expertise in particular areas. OCPA may also form various standing and ad hoc committees, as appropriate, which would have responsibility for evaluating various issues that may affect OCPA and its customers and would provide analytical support and recommendations to the Board in these regards. 738 CHAPTER 3 – Organizational Structure 9 Orange County Power Authority Implementation Plan Management The OCPA Board of Directors has appointed an Interim Executive Director, who has management responsibilities over functional areas of Administration & Finance, Marketing & Public Affairs, Power Resources & Energy Programs, and Government Affairs as well as OCPA’s General Counsel. In performing the obligations to OCPA, the Executive Director may utilize a combination of internal staff and/or contractors. Certain specialized functions needed for program operations, namely the electric supply and customer account management functions described below, may be performed initially by third‑party contractors. The organization chart below illustrates the management structure proposed for OCPA. Major functions of OCPA that will be managed by the Executive Director are summarized below. Some of these functions will, at least initially, be fulfilled by outside consultants. Administration OCPA’s Executive Director is responsible for managing the organization’s human resources and administrative functions and will coordinate with the OCPA Board, as necessary, with regard to these functions. The functional area of administration will include oversight of employee hiring and termination, compensation and benefits management, identification and procurement of requisite office space and various other issues. Finance The Executive Director is also responsible for managing the financial affairs of OCPA, including the development of an annual budget, revenue requirement and rates; managing and maintaining cash flow requirements; arranging potential bridge loans as necessary; and other OCPA Board of Directors Director Power Resources Director Administration and Finance Community Outreach Manager Executive Director 739 CHAPTER 3 – Organizational Structure 10 Orange County Power Authority Implementation Plan financial tools. Revenues via rates and other funding sources (such as a rate stabilization fund, when necessary) must, at a minimum, meet the annual budgetary revenue requirement, including recovery of all expenses and any reserves or coverage requirements set forth in bond covenants or other agreements. OCPA will have the flexibility to consider rate adjustments within certain ranges, administer a standardized set of electric rates, and may offer optional rates to encourage policy goals such as economic development or low-income support programs, provided that the overall revenue requirement is achieved. OCPA may also offer customized pricing options such as dynamic pricing or contract-based pricing for energy intensive customers to help these customers gain greater control over their energy costs. This would provide such customers – mostly larger energy users within the commercial sector – with greater rate-related flexibility than what is currently available. OCPA’s finance function will be responsible for arranging financing necessary for any capital projects, preparing financial reports, and ensuring sufficient cash flow for successful operation of the OCPA Program. The finance function will play an important role in risk management by monitoring the credit of energy suppliers so that credit risk is properly understood and mitigated. In the event that changes in a supplier’s financial condition and/or credit rating are identified, OCPA will be able to take appropriate action, as would be provided for in the electric supply agreement(s). Marketing & Public Affairs The marketing and public affairs functions include general program marketing and communications as well as direct customer interface ranging from management of key account relationships to call center and billing operations. OCPA will conduct program marketing to raise consumer awareness of the OCPA Program and to establish the OCPA “brand” in the minds of the public, with the goal of retaining and attracting as many customers as possible into the OCPA Program. Outgoing communications will also promote OCPA’s customer programs. Additionally, OCPA will communicate with key policy makers at the State and local level, community business and opinion leaders, and the media. In addition to general program communications and marketing, a significant focus on customer service, particularly representation for key accounts, will enhance OCPA’s ability to differentiate itself as a highly customer‑focused organization that is responsive to the needs of the community. OCPA will also establish a customer call center designed to field customer inquiries and routine interaction with customer accounts. The customer service function also encompasses management of customer data. Customer data management services include retail settlements/billing‑related activities and 740 CHAPTER 3 – Organizational Structure 11 Orange County Power Authority Implementation Plan management of a customer database. This function processes customer service requests and administers customer enrollments and departures from the OCPA Program, maintaining a current database of enrolled customers. This function coordinates the issuance of monthly bills through the distribution utility’s billing process and tracks customer payments. Activities include the electronic exchange of usage, billing, and payments data with the distribution utility and OCPA, tracking of customer payments and accounts receivable, issuance of late payment and/or service termination notices (which would return affected customers to bundled service), and administration of customer deposits in accordance with credit policies of OCPA. The customer data management services function also manages billing-related communications with customers, customer call centers, and routine customer notices. OCPA will initially contract with a third party that has demonstrated the necessary experience and administers an appropriate customer information system to perform the customer account and billing services functions. Power Resources & Energy Programs OCPA must plan for meeting the electricity needs of its customers utilizing resources consistent with its policy goals and objectives as well as applicable legislative or regulatory mandates. OCPA’s long-term resource plans (addressing the 10 to 20-year planning horizon) will comply with California Law and other pertinent requirements of California regulatory bodies. OCPA may develop and administer complementary energy programs that may be offered to OCPA customers, including green pricing, energy efficiency, net energy metering, feed-in-tariff or local resource portfolios, and various other programs that may be identified to support the overarching goals and objectives of OCPA. OCPA will develop integrated resource plans that meet program supply objectives and balance cost, risk and environmental considerations. Integrated resource plans are planning documents used by electric utilities to produce least cost resource planning by looking at both supply-side (solar, natural gas) and demand-side (energy efficiency) resources. Such integrated resource plans will also conform to applicable requirements imposed by the State of California. Integrated resource planning efforts by OCPA will make maximum use of demand side energy efficiency, distributed generation and demand response programs as well as traditional supply options which rely on structured wholesale transactions to meet customer energy requirements. Integrated resource plans will be updated and adopted by OCPA on an annual basis. Electric Supply Operations Electric supply operations encompass the activities necessary for wholesale procurement of electricity to serve end use customers. These highly specialized activities include the following:  Electricity Procurement – assemble a portfolio of electricity resources to supply the electric 741 CHAPTER 3 – Organizational Structure 12 Orange County Power Authority Implementation Plan needs of Program customers.  Risk Management – application of standard industry techniques to reduce exposure to the volatility of energy and credit markets and insulate customer rates from sudden changes in wholesale market prices.  Load Forecasting – develop load forecasts, both long-term for resource planning and short- term for the electricity purchases and sales needed to maintain a balance between hourly resources and loads.  Scheduling Coordination – scheduling and settling electric supply transactions with the CAISO. OCPA will initially contract with one or more experienced and financially sound third-party energy services providers to perform all electric supply operations for the OCPA Program. These requirements include the procurement of energy, capacity and ancillary services, scheduling coordinator services, short-term load forecasting and day-ahead and real- time electricity trading. Local Energy Programs A key focus of the OCPA Program will be the development and implementation of local energy programs, including energy efficiency programs, distributed generation programs (i.e. behind the meter solar or community projects), and other energy programs responsive to community interests. These programs are likely to be phased in during the first several years of operations. The implementation of such programs will follow the identification of requisite funding sources. OCPA will eventually administer energy efficiency, demand response and distributed generation programs that can be used as cost-effective alternatives to procurement of supply- resources. OCPA will attempt to consolidate existing demand side programs into this organization and leverage the structure to expand energy efficiency offerings to customers throughout its service territory, including the CPUC application process for third party administration of energy efficiency programs and use of funds collected through the existing public benefits surcharges paid by OCPA customers. Governmental Affairs & General Counsel The OCPA Program will require ongoing regulatory and legislative representation to manage various regulatory compliance filings related to resource plans, resource adequacy, compliance with California’s Renewables Portfolio Standard (“RPS”), and overall representation on issues that will impact OCPA, its Members and customers. OCPA will maintain an active role at the CPUC, the California Energy Commission, the California Independent System Operator, the California legislature and, as necessary, the Federal Energy Regulatory Commission. In coordination with the Executive Director and Board of Directors, OCPA has retained outside 742 CHAPTER 3 – Organizational Structure 13 Orange County Power Authority Implementation Plan legal counsel in the areas of general counsel and regulatory advice/engagement to support OCPA’s administrative operations and governance, review contracts, monitor regulatory proceedings and provide overall legal support related to the various activities of OCPA. 743 CHAPTER 4 – Startup Plan & Funding 14 Orange County Power Authority Implementation Plan Chapter 4 – Startup Plan & Funding This Chapter presents OCPA’s plans for the start-up period, including necessary expenses and capital outlays. The start-up period is defined as the period where OCPA requires financing for implementation. The start-up period is split into pre-launch and post-launch expenses. The pre- launch period is estimated to start January 1, 2021 and end on March 31, 2022 when OCPA plans to begin service to customers. Pre-launch expenses include overhead and notification for program implementation. Post launch financing includes working capital and annual debt repayment. As described in the previous Chapter, OCPA may utilize a mix of staff and contractors in its CCA Program implementation. Startup Activities The initial program startup activities include the following:  Hire staff and/or contractors to manage implementation  Identify qualified suppliers (of requisite energy products and related services) and negotiate supplier contracts o Electric supplier and scheduling coordinator o Data management provider (if separate from energy supply) o Define and execute communications plan o Customer research/information gathering  Media campaign o Key customer/stakeholder outreach o Informational materials and customer notices  Customer call center  Post CCA bond and complete requisite registration requirements  Pay utility service initiation, notification and switching fees  Perform customer notification, opt-out and transfers  Conduct load forecasting  Establish rates  Legal and regulatory support  Financial management and reporting Other costs related to starting up the OCPA Program will be the responsibility of the OCPA Program’s contractors (and are assumed to be covered by any fees/charges imposed by such contractors). These may include capital requirements needed for collateral/credit support for electric supply expenses, customer information system costs, electronic data exchange system costs, call center costs, and billing administration/settlements systems costs. 744 CHAPTER 4 – Startup Plan & Funding 15 Orange County Power Authority Implementation Plan Staffing and Contract Services Personnel in the form of OCPA staff or contractors will be added incrementally to match workloads involved in forming the new organization, managing contracts, and initiating customer outreach/marketing during the pre-operations period. During the startup period, minimal personnel requirements would include an Executive Director, a General Counsel, and other personnel needed to support regulatory, procurement, finance and communications activities. For budgetary purposes, it is assumed that 5 to 10 full‑time equivalents (staff or contracted professional services) supporting the above listed activities would be engaged during the initial start‑up period. Following this period, additional staff and/or contractors may be retained, as needed, to support the roll‑out of additional value‑added services (e.g., efficiency projects) and local generation projects and programs. Capital Requirements The start‑up of the CCA Program will require capital for three major functions: (1) staffing and contractor costs; (2) deposits and reserves; and (3) working capital. Based on OCPA’s anticipated start-up activities and phase-in schedule, a total need of $15.5 million has been identified to support the aforementioned functions. The finance plan in Chapter 7 provides some additional detail regarding OCPA’s expected capital requirements and general Program finances. Related to OCPA’s initial capital requirement, this amount is expected to cover staffing and contractor costs during startup and pre‑startup activities, including direct costs related to public relations support, technical support, and customer communications. Requisite deposits and operating reserves of $13 million are reflected in the initial capital requirement, including the following items: 1) operating reserves to address anticipated cash flow variations (as well as operating reserve deposits that will likely be required by OCPA’s power supplier(s)); 2) requisite deposit with the California Independent System Operator prior to commencing market operations; and 3) SCE financial security requirement ($147,000). In addition, the CCA bond posted to the CPUC ($100,000) is included in the total capital requirements of $13 million. Operating revenues from sales of electricity will be remitted to OCPA beginning approximately sixty days after the initial customer enrollments. This lag is due to the distribution utility’s standard meter reading cycle of 30 days and a 30-day payment/collections cycle. OCPA will need working capital to support electricity procurement and costs related to program management, which is included in OCPA’s initial capital requirements. Financing Plan OCPA’s initial capital requirement will be provided via a combination of cash contributions from the Member Agencies and loans from conventional financial institutes. These loans will be repaid by OCPA no later than June 30, 2027. OCPA will recover the principal and interest costs associated with the start‑up funding via retail generation rates charged to OCPA customers. 745 CHAPTER 5 – Program Phase-In 16 Orange County Power Authority Implementation Plan Chapter 5 – Program Phase-In OCPA will roll out its service offering to customers over the course of three phases: Phase 1. All Non-Residential Accounts (April 1, 2022) Phase 2. Residential Accounts (October 1, 2022) Phase 3. Net Energy Metering Accounts (Various) This approach provides OCPA with the ability to initiate its program with sufficient economic scale before building to full program integration for an expected customer base of approximately 288,963 accounts, post customer opt-out. OCPA will offer service to all customers on a phased basis, which is expected to be completed within 24 months of initial service to Phase 1 customers. The Program is targeted to begin on or about April 1, 2022, subject to a decision to proceed by OCPA. At start-up, OCPA anticipates serving approximately 35,742 larger customer accounts, comprised of all non-residential accounts within Member Agency jurisdictions. Depending on final wholesale power prices, the balance of the OCPA customers will be launched in October 2022. Net energy metering accounts will be phased into OCPA at the time of their annual true-up. Additional Members Roll-Out Cities can join OCPA at any time they decide to join. This leaves room for OCPA to expand its territory. On a regular basis, an updated Plan will be submitted to the CPUC, if any new members join the Program, however, load will not be served until the next year, in accordance with the Resource Adequacy Proceeding and Resolution E-4907. Prior to submitting an updated Plan, OCPA will work with SCE on the timeline to begin service and will provide notification to the CPUC staff that an update will be submitted. New Residential and Non-Residential Customers For any new customers moving into the OCPA service territory after it has begun servicing load, OCPA intends to provide service to all customer classes (i.e., Residential, Commercial, and NEM customers) during one billing cycle. However, if a customer moves into the OCPA region prior to April 1, enrollment, OCPA will begin to service the load-based timeline stated above. 746 CHAPTER 6 – Load Forecast & Resource Plan 17 Orange County Power Authority Implementation Plan Chapter 6 – Load Forecast & Resource Plan Introduction This chapter describes the planned mix of electric resources that will meet the energy demands of OCPA customers using a diversified portfolio of electricity supplies. Several overarching policies govern the resource plan and the ensuing resource procurement activities that will be conducted in accordance with the plan. These key polices are as follows:  OCPA will manage a diverse resource portfolio to increase control over energy costs and maintain competitive and stable electric rates.  OCPA will likely seek to increase use of renewable energy resources and distributed energy resources in order to reduce reliance on fossil‑fueled electric generation for purposes of reducing electric sector GHG emissions.  OCPA will likely apply for the administration of energy efficiency program funding to help customers reduce energy costs through administration of enhanced customer energy efficiency, distributed generation, and other demand reducing programs.  OCPA will benefit the area’s economy through lower electric bills and investment in local infrastructure, energy projects and energy programs. OCPA’s initial resource mix will include a proportion of renewable energy meeting California’s prevailing RPS procurement mandate. As the OCPA Program moves forward, incremental renewable supply additions will be made based on resource availability as well as economic goals of the OCPA Program to achieve increased renewable energy content over time. OCPA’s commitment to renewable generation adoption may involve both direct investment in new renewable generating resources, partnerships with experienced public power developers/operators and purchases of renewable energy from third party suppliers. The plan described in this section would accomplish the following:  Procure energy through one or more contracts with experienced, financially stable energy suppliers sufficient to offer three distinct generation rate tariffs: 1) 100 percent renewable energy; 2) 50 percent renewable energy; and 3) a program service option that includes a proportion of renewable energy meeting California’s prevailing renewable energy procurement mandate.  Member agencies will choose the default option into which their customers will be enrolled when service begins. After enrollment, customers will be allowed to participate in any of the three available energy supply options.  Continue increasing renewable energy supplies over time to meet or exceed state mandates, subject to resource availability and economic viability.  Actively pursue energy efficiency projects and programs using program revenues, in collaboration with the other efficiency program administrators in the region. 747 CHAPTER 6 – Load Forecast & Resource Plan 18 Orange County Power Authority Implementation Plan Additionally, if OCPA is successful in applying for administration of public funding to support locally administered efficiency programs, it will even more robustly work to reduce net electricity purchases within the region.  Encourage distributed renewable generation in the local area through the offering of a net energy metering tariff, a possible standardized power purchase agreement or “Feed ‑In Tariff,” and other creative, customer‑focused programs targeting increased access to local renewable energy sources. OCPA will comply with regulatory rules applicable to California load serving entities. OCPA will arrange for the scheduling of sufficient electric supplies to meet the demands of its customers. OCPA will adhere to capacity reserve requirements established by the CPUC and the CAISO designed to address uncertainty in load forecasts and potential supply disruptions caused by generator outages and/or transmission contingencies. These rules also ensure that physical generation capacity is in place to serve OCPA’s customers, even if there were a need for the OCPA Program to cease operations and return customers to SCE. In addition, OCPA will be responsible for ensuring that its resource mix contains sufficient production from renewable energy resources needed to comply with the statewide RPS (33 percent renewable energy by 2020, increasing to 60 percent by 2030). The OCPA resource plan will meet or exceed all of the applicable regulatory requirements related to resource adequacy and the RPS. Resource Plan Overview To meet the aforementioned objectives and satisfy the applicable regulatory requirements pertaining to OCPA’s status as a California load serving entity, OCPA’s resource plan includes a diverse mix of power purchases, renewable energy, distributed energy, new energy efficiency programs, demand response and distributed generation. A diversified resource plan minimizes risk and volatility that can occur from overreliance on a single resource type or fuel source, and thus increases the likelihood of rate stability. The ultimate goal of OCPA’s resource plan is to reduce electric sector GHG emissions while offering competitive generation rates to participating customers. The planned power supply is initially comprised of power purchases from third party electric suppliers and, in the longer‑term, may also include renewable generation assets owned or controlled by OCPA. Once the OCPA Program demonstrates it can operate successfully, OCPA may begin evaluating opportunities for investment in renewable generating assets, subject to then‑current market conditions, statutory requirements, financial constraints and regulatory considerations. Any renewable generation owned by OCPA, or controlled under long‑term power purchase agreement with a power developer, could provide a portion of OCPA’s electricity requirements on a cost‑of‑service basis. A cost-of-service basis means that the cost of power is based on the variable cost to operate the generation asset. Depending upon market conditions and, importantly, the applicability of tax incentives for renewable energy development, electricity purchased under a cost‑of‑service arrangement can be more cost‑effective than purchasing 748 CHAPTER 6 – Load Forecast & Resource Plan 19 Orange County Power Authority Implementation Plan renewable energy from third party developers, which will allow the OCPA Program to pass on cost savings to its customers through competitive generation rates. Any investment decisions will be made following thorough environmental reviews and in consultation with qualified financial and legal advisors. As an alternative to direct investment, OCPA may consider partnering with an experienced power developer and could enter into a long‑term (20‑to‑30 year) power purchase agreement that would support the development of new renewable generating capacity. Such an arrangement could be structured to reduce the OCPA Program’s operational risk associated with capacity ownership while providing its customers with all renewable energy generated by the facility under contract. This option may be attractive to OCPA as it works to achieve increasing levels of renewable energy supply and competitive rate levels for its customers. OCPA’s resource plan will integrate supply-side resources (solar, natural gas etc.) with programs that will help customers reduce their energy costs through improved energy efficiency and other demand-side measures. As part of its integrated resource plan, OCPA will actively pursue, promote and ultimately administer a variety of customer energy efficiency programs that can cost- effectively displace supply‑side resources. OCPA’s indicative resource plan for the years 2022 through 2031 is summarized in the following table. Note that OCPA’s projections reflect a portfolio mix of 36% renewable resources and 64% conventional resources. Subject to the availability of funds, a sizable percentage of the conventional resources reflected in the following table will be replaced with GHG‑free resources. 749 CHAPTER 6 – Load Forecast & Resource Plan 20 Orange County Power Authority Implementation Plan Table 1 Orange County Power Authority Proposed Resource Plan (GWh) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 OCPA Demand (GWh) Retail Demand 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334 Distributed Generation 0 0 0 0 0 0 0 0 0 0 Energy Efficiency 0 0 0 0 0 0 0 0 0 0 Losses and UFE 134 231 232 234 235 237 238 240 241 243 TOTAL DEMAND 2,533 4,355 4,382 4,409 4,437 4,464 4,492 4,520 4,548 4,576 OCPA Supply (GWh) Total Renewable Resources 864 1,608 1,660 1,879 2,101 2,198 2,340 2,483 2,584 2,600 Total Conventional Resources 1,670 2,746 2,722 2,530 2,336 2,266 2,152 2,037 1,964 1,976 TOTAL SUPPLY 2,533 4,355 4,382 4,409 4,437 4,464 4,492 4,520 4,548 4,576 Energy Open Position 0 0 0 0 0 0 0 0 0 0 Supply Requirements OCPA power supply requirements are developed based on the customer and consumption data provided by SCE for the Member Agencies. Program participation rates are applied such that 95% of residential and 90% of non-residential customers are included in the load forecast. Hourly load profiles, developed by SCE, are applied to customer rate classes and summed up to develop OCPA system loads by month and hour. The electric sales forecast and load profile will be affected by OCPA’s plan to introduce the OCPA Program to customers in phases, and the degree to which customers choose to remain with SCE during the customer enrollment and opt-out periods. OCPA’s phased roll-out plan and assumptions regarding customer participation rates are discussed below. Customer Participation Rates Customers will be automatically enrolled in the OCPA Program unless they opt-out during the customer notification process conducted during the 60-day period prior to enrollment and continuing through the 60-day period following commencement of service. For all phases, OCPA anticipates a 90-95% participation of SCE bundled service customers, based on reported opt-out rates for the Clean Power Alliance, Western Community Energy, Sonoma Clean Power and Lancaster Choice Energy CCA programs plus the increase in the cap on Direct Access service. It is assumed that new and existing non-residential Direct Access (DA) customers will continue to remain with their current electricity supplier. The participation rate is not expected to vary significantly among customer classes, in part due to the fact that OCPA will offer three distinct rate tariffs that will address the needs of cost- 750 CHAPTER 6 – Load Forecast & Resource Plan 21 Orange County Power Authority Implementation Plan sensitive customers as well as the needs of both residential and business customers that prefer a highly renewable energy product. The assumed participation rates will be refined as OCPA’s public outreach and market research efforts continue to develop. Customer Forecast Once customers enroll in each phase, they will be switched over to service by OCPA on their regularly scheduled meter read date over an approximately thirty-day period. Approximately 700 service accounts per day will be switched over during the first month of service. The estimated number of accounts by rate class is shown in Table 2 below. Table 2 Orange County Power Authority Eligible Retail Service Accounts Not Adjusted for Participation Rates OCPA Customers Phase 1 Eligible Accounts Phase 2 Eligible Accounts Residential -- 271,260 Small Commercial 32,138 32,138 Medium Commercial 5,755 5,755 Large Commercial 461 461 Industrial 191 191 Street Lighting & Traffic 3,635 3,635 Agricultural & Pumping 397 397 Total 42,576 313,836 OCPA assumes that customer growth will generally offset customer attrition (opt-outs) over time, resulting in a relatively stable customer base (0.6% annual growth) over the noted planning horizon. OCPA believes that its assumptions regarding the offsetting effects of growth and attrition are reasonable in consideration of the historical customer growth within Orange County and the potential for continuing customer opt‑outs following mandatory customer notification periods. The forecast of service accounts (customers) served by OCPA for each of the next ten years is shown in the following table: 751 CHAPTER 6 – Load Forecast & Resource Plan 22 Orange County Power Authority Implementation Plan Table 3 Orange County Power Authority Retail Service Accounts (End of Year) OCPA Customers 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Residential 261,000 262,618 264,246 265,885 267,533 269,192 270,861 272,540 274,230 275,930 Small Commercial 29,000 29,180 29,361 29,543 29,726 29,910 30,096 30,282 30,470 30,659 Medium Commercial 5,000 5,031 5,062 5,094 5,125 5,157 5,189 5,221 5,253 5,286 Large Commercial 378 380 383 385 387 390 392 395 397 400 Industrial 159 160 161 162 163 164 165 166 167 168 Street Lighting & Traffic 3,000 3,019 3,037 3,056 3,075 3,094 3,113 3,133 3,152 3,172 Agricultural & Pumping 341 343 345 347 350 352 354 356 358 361 Total 298,878 300,731 302,596 304,472 306,359 308,259 310,170 312,093 314,028 315,975 Sales Forecast OCPA’s forecast of GWh sales reflects the roll-out and customer enrollment schedule shown above. Annual energy requirements are shown below in GWh. Table 4 Orange County Power Authority Annual Energy Requirements (GWh) 2022 to 2031 OCPA Energy Requirement (GWh) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Retail Energy 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334 Losses and UFE 134 231 232 234 235 237 238 240 241 243 Total Load Requirement 2,533 4,355 4,382 4,409 4,437 4,464 4,492 4,520 4,548 4,576 Capacity Requirements The CPUC’s resource adequacy standards applicable to the OCPA Program require a demonstration one year in advance that OCPA has secured physical capacity for 90 percent of its projected peak loads for each of the five months May through September, plus a minimum 15 percent reserve margin. On a month-ahead basis, OCPA must demonstrate 100 percent of the peak load plus a minimum 15 percent reserve margin. A portion of OCPA’s capacity requirements must be procured locally, from the SCE area as defined by the CAISO. Local area resource needs will be defined by the CPUC annually based on the capacity study. A local resource for OCPA is likely to be located within the LA Basin area on the Figure below. Local resources ensure system reliability within areas that are not constrained by transmission capacity. 752 CHAPTER 6 – Load Forecast & Resource Plan 23 Orange County Power Authority Implementation Plan Figure 1 CAISO Local Capacity Area Map 2 The local capacity requirement is a percentage of the total (SCE service area) local capacity requirements adopted by the CPUC based on OCPA’s forecasted peak load. OCPA must demonstrate compliance or request a waiver from the CPUC requirement as provided for in cases where local capacity is not available. OCPA is also required to demonstrate that a specified portion of its capacity meets certain operational flexibility requirements under the CPUC and CAISO’s flexible resource adequacy framework. The estimated forward resource adequacy requirements for 2022 through 2024 are shown in the following tables.3 2 CAISO. 2021 Local Capacity Area Technical Study Draft. October 24, 2019. 3 The figures shown are estimates. The OCPA’s resource adequacy requirements will be subject to modification due to application of certain coincidence adjustments and resource allocations relating to utility demand response and energy efficiency programs, as well as generation capacity allocated through the Cost Allocation Mechanism. These adjustments are addressed through the CPUC’s resource adequacy compliance process. 753 CHAPTER 6 – Load Forecast & Resource Plan 24 Orange County Power Authority Implementation Plan Table 5 Orange County Power Authority Forward Capacity and Reserve Requirements (MW) 2021 to 2023 Month 2022 2023 2024 January 641 645 February 565 549 March 590 594 April 384 565 568 May 417 613 617 June 425 625 629 July 484 748 752 August 485 777 782 September 404 683 688 October 663 667 671 November 555 558 562 December 624 628 632 OCPA’s plan ensures that sufficient reserves will be procured to meet its peak load at all times. OCPA’s projected annual capacity requirements are shown in the following table: Table 6 Orange County Power Authority Capacity Requirements (MW) 2022 to 2031 Demand (MW) 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Retail Demand 628 736 740 745 750 754 759 763 768 772 Losses and UFE 35 41 41 42 42 42 42 43 43 43 Total Net Peak Demand 663 777 782 787 792 796 801 806 811 816 Reserve Requirement (%) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Capacity Reserve Requirement 99 117 117 118 119 119 120 121 122 122 Capacity Requirement Including Reserve 762 894 899 905 910 916 921 927 932 938 Local capacity requirements are a function of the SCE area resource adequacy (RA) requirements and OCPA’s projected peak demand. OCPA will need to work with the CPUC’s Energy Division and staff at the California Energy Commission to obtain the data necessary to calculate its monthly local capacity requirement. A preliminary estimate of OCPA’s annual local capacity requirement for the ten-year planning period ranges from approximately 331 MW to 408 MW as 754 CHAPTER 6 – Load Forecast & Resource Plan 25 Orange County Power Authority Implementation Plan shown in the following table: Table 7 Orange County Power Authority Estimated Local Capacity Requirements (MW) 2022 to 2031 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 OCPA Peak 663 777 782 787 792 796 801 806 811 816 Local Capacity Req. (% of Peak) 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% OCPA Local Capacity Req., Total 331 389 391 393 396 398 401 403 405 408 The CPUC assigns local capacity requirements during the year prior to the compliance period; thereafter, the CPUC provides local capacity requirement true-ups for the second half of each compliance year. Local capacity requirements apply to a three-year process where an LSE must show 100% local RA compliance for the first 2 years and 50% for the third year. The rules around RA requirements are being reviewed as part of the central procurement proceeding. OCPA will coordinate with SCE and appropriate state agencies to manage the transition of responsibility for resource adequacy from SCE to OCPA during CCA program phase-in. For system resource adequacy requirements, OCPA will make month-ahead showings for each month that OCPA plans to serve load, and load migration issues would be addressed through the CPUC’s approved procedures. OCPA will work with the California Energy Commission and CPUC prior to commencing service to customers to ensure it meets its local and system resource adequacy obligations through its agreement(s) with its chosen electric supplier(s). Renewables Portfolio Standards Energy Requirements Basic RPS Requirements As a CCA, OCPA will be required by law and ensuing CPUC regulations to procure a certain minimum percentage of its retail electricity sales from qualified renewable energy resources. For purposes of determining OCPA’s renewable energy requirements, the same standards for RPS compliance that are applicable to the distribution utilities are assumed to apply to OCPA. California’s RPS requires OCPA purchase a minimum of 60% renewable energy by 2030. OCPA will also adopt an integrated resource plan in compliance with SB 350. OCPA understands that various details related to this planning requirement are continuing to be developed, and OCPA intends to monitor and participate, as appropriate, in pertinent proceedings to promote the preparation and submittal of a responsive planning document. Furthermore, OCPA will ensure that all long-term renewable energy contracting requirements, as imposed by SB 350, will be satisfied through appropriate transactions with qualified suppliers and will also reflect this intent 755 CHAPTER 6 – Load Forecast & Resource Plan 26 Orange County Power Authority Implementation Plan in ongoing resource planning and procurement efforts. In September of 2018, Governor Brown signed into law SB 100, which calls for all electricity supplies in the State to be “carbon-free” by 2045. The legislation is important for all LSEs in that is tightens the RPS targets even from SB 350. While the PCC categorization has not been determined, the overall targets in SB 100 are as follows: • 50% eligible renewable energy by 2026 • 60% eligible renewable by 2030 • 100% carbon free by 2045 (note “carbon-free” vs. “renewable”). Table 8 summarizes the various California targets. Table 8 California Renewable Portfolio Standards and Greenhouse Gas Mandates Target Date: 2017 2020 2026 2030 2045 RPS Goal 20% 33% 50% 60% 100%1 Year Passed 2002 (SB 1078) 2011 (SB 21X) 2018 (SB 100) 2018 (SB 100) 2018 (SB 100) 1 100% carbon free, 60% renewable. For the purposes of meeting the RPS, what qualifies a resource as renewable varies by the resource’s location and type of contract. Resources which have their first point of interconnection or are delivered directly to the California grid (Balancing Authorities within California) and are contracted for by the LSE as energy bundled with their renewable energy credits (RECs) qualify as Portfolio Content Category 1 (PCC1) resources. Resources which sell energy and RECs together but are not necessarily connected to the California grid and not delivered simultaneously (i.e. the energy may be “shaped” into flat blocks of power) qualify as PCC2 resources. RECs sold independently of the energy produced qualify as PCC3 resources. Current RPS mandates are provided in the table below. OCPA’s Renewables Portfolio Standards Requirement OCPA’s annual RPS procurement requirements, as specified under California’s RPS program, are shown in the table below. When reviewing this table, it is important to note that OCPA projects increases in energy efficiency savings as well as increases in locally situated distributed generation capacity, resulting in only a slight upward trend in projected retail electricity sales. 756 CHAPTER 6 – Load Forecast & Resource Plan 27 Orange County Power Authority Implementation Plan Table 9 Orange County Power Authority RPS Requirements (GWh) 2022 to 2031 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Retail Sales 2,399 4,124 4,150 4,175 4,201 4,228 4,254 4,280 4,307 4,334 Renewable Energy Purchase 864 1,608 1,660 1,879 2,101 2,198 2,340 2,483 2,584 2,600 % of Current Year Retail Sales 36% 39% 40% 45% 50% 52% 55% 58% 60% 60% 65% Long-Term Contracts 561 1,045 1,079 1,221 1,365 1,429 1,521 1,614 1,680 1,690 Table 10 illustrates additional details for renewable procurement and long-term procurement. The table does not include an estimate for the minimum margin of procurement (MMOP) at this time. The MMOP is the amount by which OCPA will over- acquire renewable resources to hedge against the risk of underperformance. OCPA plans to revise and adopt an MMOP through the IRP process and to include an estimate in its RPS procurement plan. OCPA notes that existing CCAs vary in their assessment of MMOP. Some CCAs do not adopt a specific MMOP since their base power portfolio exceeds the RPS requirement. Others assess an MMOP varying from 2% to 10%. MMOP will be established through OCPA power procurement and risk policies. 757 Orange County Power Authority Implementation Plan Table 10 OCPA Renewable Procurement 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Net Retail Sales (MWh) 2,399,094 4,124,068 4,149,699 4,175,490 4,201,442 4,227,554 4,253,829 4,280,268 4,306,870 4,333,638 Annual Procurement Target (MWh) 863,674 1,608,386 1,659,880 1,878,971 2,100,721 2,198,328 2,339,606 2,482,555 2,584,122 2,600,183 Minimum Margin of Procurement* (MWh) Annual L/T Procurement Target (MWh) 561,388 1,045,451 1,078,922 1,221,331 1,365,469 1,428,913 1,520,744 1,613,661 1,679,679 1,690,119 % of L-T Procurement Target 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% Forecasted L-T Procurement (MWh) 561,388 1,045,451 1,078,922 1,221,331 1,365,469 1,428,913 1,520,744 1,613,661 1,679,679 1,690,119 % of L/T Procurement Forecasted 65% 65% 65% 65% 65% 65% 65% 65% 65% 65% Surplus of L-T Procurement (MWh) 0 0 0 0 0 0 0 0 0 0 *At this time OCPA has not yet evaluated a minimum margin of procurement for renewable energy. 758 CHAPTER 6 – Load Forecast & Resource Plan 29 Orange County Power Authority Implementation Plan Purchased Power Power purchased from power marketers, public agencies, generators, or utilities will be a significant source of supply during the first several years of OCPA Program operation. OCPA will initially contract to obtain all of its electricity from one or more third party electric providers under one or more power supply agreements, and the supplier(s) will be responsible for procuring the specified resource mix, including OCPA’s desired quantities of renewable energy, to provide a stable and cost- effective resource portfolio for the Program. Renewable Resources OCPA will initially secure necessary renewable power supply from its third-party electric supplier(s). OCPA may supplement the renewable energy provided under the initial power supply contract(s) with direct purchases of renewable energy from renewable energy facilities or from renewable generation developed and owned by OCPA. At this point in time, it is not possible to predict what projects might be proposed in response to future renewable energy solicitations administered by OCPA, unsolicited proposals or discussions with other agencies. Renewable projects that are located virtually anywhere in the Western Interconnection can be considered as long as the electricity is deliverable to the CAISO control area, as required to meet the Commission’s RPS rules and any additional guidelines ultimately adopted by OCPA. The costs of transmission access and the risk of transmission congestion costs would need to be considered in the bid evaluation process if the delivery point is outside of OCPA’s load zone, as defined by the CAISO. Energy Efficiency OCPA’s energy efficiency goals will reflect a commitment to increasing energy efficiency within the County, expanding beyond the savings achieved by SCE’s programs. To promote the achievement of this goal, OCPA will likely complete the CPUC application process for third party administration of energy efficiency programs and use of funds collected through the existing public benefits surcharges paid by OCPA customers. To the extent that OCPA is successful in this application process, it will seek to maximize end-use customer energy efficiency by facilitating customer participation in existing utility programs as well as by forming new programs that will displace OCPA’s need for traditional electric procurement activities. Additional details related to OCPA’s energy efficiency plan will be developed once OCPA Program phase-in is underway. Demand Response Demand response programs provide incentives to customers to reduce demand upon request by the load serving entity (i.e., OCPA), reducing the amount of generation capacity that must be maintained as infrequently used reserves. Demand response programs can be cost effective alternatives to procured capacity that would otherwise be needed to comply with California’s resource adequacy requirements. The programs also provide rate benefits to customers who have the flexibility to reduce or shift consumption for relatively short periods of time when generation capacity is most scarce. Like energy efficiency, demand response can be a win/win proposition, providing economic benefits to the electric supplier as well as customer service benefits. 759 CHAPTER 6 – Load Forecast & Resource Plan 30 Orange County Power Authority Implementation Plan In its ruling on local resource adequacy, the CPUC found that dispatchable demand response resources as well as distributed generation resources should be counted for local capacity requirements. This resource plan will likely anticipate that OCPA’s demand response programs would partially offset its local capacity requirements. SCE offers several demand response programs to its customers, and OCPA intends to recruit those customers that have shown a willingness to participate in utility programs into similar programs offered by OCPA. OCPA may also adopt a demand response program that enables it to request customer demand reductions during times when capacity is in short supply or spot market energy costs are exceptionally high. Appropriate limits on customer curtailments, both in terms of the length of individual curtailments and the total number of curtailment hours that can be called should be included in OCPA’s demand response program design. It will also be important to establish a reasonable measurement protocol for customer performance of its curtailment obligations and deploy technology to automate customer notifications and responses. Performance measurement should include establishing a customer specific baseline of usage prior to the curtailment request from which demand reductions can be measured. OCPA may utilize experienced third-party contractors to design, implement and administer its demand response programs. Distributed Generation Consistent with OCPA’s policies and the state’s Energy Action Plan, clean distributed generation is a component of the integrated resource plan. OCPA will work to promote deployment of photovoltaic (PV) plus storage systems within OCPA’s service territory, with the goal of optimizing the use of the available incentives that are funded through current utility distribution rates and public benefits surcharges. OCPA also plans to implement a net energy metering program and possibly a feed-in- tariff to promote local investment in distributed generation. There are clear environmental benefits and strong customer interest in distributed PV systems. To support such systems, OCPA may provide direct financial incentives from revenues funded by customer rates to further support use of solar power or other renewable resources within the local area. Due to the increasing penetration of solar PV in California’s energy mix, OCPA will also consider incentives for behind the meter solar plus storage projects. With regard to OCPA’s prospective net energy metering program, it is anticipated that OCPA will adopt a program that would allow participating customers to sell excess energy produced by customer-sited renewable generating sources to OCPA. Such a program would be generally consistent with principles identified in Assembly Bill 920 (“AB 920”), which directed the CPUC to establish and implement a compensation methodology for surplus renewable generation produced by net energy metered facilities located within the service territories of California’s large investor owned utilities, including SCE. However, OCPA may choose to offer enhanced compensation structures, relative to those implemented as a result of AB 920, as part of the direct incentives that may be established to promote distributed generation development within Orange County. To the 760 CHAPTER 6 – Load Forecast & Resource Plan 31 Orange County Power Authority Implementation Plan extent that incentives offered by OCPA improve project economics for its customers, it is reasonable to assume that the penetration of distributed generation within the County would increase. 761 CHAPTER 7 – Financial Plan 32 Orange County Power Authority Implementation Plan Chapter 7 – Financial Plan This Chapter examines the monthly cash flows expected during the startup and customer phase- in period of the OCPA Program and identifies the anticipated financing requirements. It includes estimates of program startup costs, including necessary expenses and capital outlays. It also describes the requirements for working capital and long-term financing for the potential investment in renewable generation, consistent with the resource plan contained in Chapter 6. Description of Cash Flow Analysis OCPA’s cash flow analysis estimates the level of capital that will be required during the startup and phase-in period. The analysis focuses on the OCPA Program’s monthly costs and revenues and specifically accounts for the phased enrollment of OCPA Program customers described in Chapter 5. Cost of CCA Program Operations The first category of the cash flow analysis is the Cost of CCA Program Operations. To estimate the overall costs associated with CCA Program Operations, the following components were taken into consideration:  Electricity Procurement  Ancillary Service Requirements  Grid Management and other CAISO Charges  Scheduling Coordination  Exit Fees  Staffing and Professional Services  Data Management Costs  Administrative Overhead  Billing Costs  CCA Bond and Security Deposit  Pre-Startup Cost  Debt Service Revenues from CCA Program Operations The cash flow analysis also provides estimates for revenues generated from CCA operations or from electricity sales to customers. In determining the level of revenues, the analysis assumes the customer phase-in schedule described herein, and assumes that OCPA charges a standard, default electricity tariff similar in rate design as the generation rates of SCE for each customer class and an optional 100% renewable energy tariff, both at a premium reflective of incremental renewable power costs. More detail on OCPA Program rates can be found in Chapter 8. In general, CCA 762 CHAPTER 7 – Financial Plan 33 Orange County Power Authority Implementation Plan generation rates are expected to be 20-30% lower than SCE generation rates to account for the PCIA rate charged to CCA customers. Cash Flow Analysis Results The results of the cash flow analysis provide an estimate of the level of capital required for OCPA to move through the CCA startup and phase-in periods. This estimated level of capital is determined by examining the monthly cumulative net cash flows (revenues from CCA operations minus cost of CCA operations) based on assumptions for payment of costs or other cash requirements (e.g., deposits) by OCPA, along with estimates for when customer payments will be received. This identifies, on a monthly basis, what level of cash flow is available in terms of a surplus or deficit. The cash flow analysis identifies funding requirements in recognition of the potential lag between revenues received and payments made during the phase-in period. The estimated financing requirements for the startup and phase-in period, including working capital needs associated with all three phases of customer enrollments, was determined to be $15.5 million. This $15.5 million will be covered via $2.5 million in cash outlay from the City of Irvine and roughly $13 million from financial institutions. CCA Program Implementation Pro Forma In addition to developing a cash flow analysis which estimates the level of working capital required to move OCPA through full CCA phase-in, a summary pro forma analysis that evaluates the financial performance of the CCA program during the phase-in period is shown below. The difference between the cash flow analysis and the CCA pro forma analysis is that the pro forma analysis does not include a lag associated with payment streams. In essence, costs and revenues are reflected in the month in which service is provided. All other items, such as costs associated with CCA Program operations and rates charged to customers remain the same. Cash provided by financing activities are shown in the pro forma analysis as are the payments for debt service. The results of the pro forma analysis are shown in the following tables. In particular, the summary of CCA program startup and phase-in addresses projected OCPA Program operations for the period beginning January 2021 through December 2031.4 OCPA has also included a summary of Program reserves, which are expected to accrue over this same period of time. 4 Costs projected for staffing & professional services and other administrative & general relate to energy procurement, administration of energy efficiency and other local programs, generation development, customer service, marketing, accounting, finance, legal and regulatory activities necessary for program operation. 763 34 Orange County Power Authority Implementation Plan Table 11 OCPA 10-Year Pro Forma 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Revenues from Operations ($) Electric Sales Revenues for CCE $0 $159,153,839 $258,745,572 $263,271,475 $258,480,484 $262,537,580 $265,418,956 $269,097,975 $271,936,858 $274,738,599 $285,555,703 Less Uncollected Accounts $0 $795,769 $1,293,728 $1,316,357 $1,292,402 $1,312,688 $1,327,095 $1,345,490 $1,359,684 $1,373,693 $1,427,779 Total Revenues for CCA $0 $158,358,070 $257,451,844 $261,955,118 $257,188,082 $261,224,892 $264,091,862 $267,752,485 $270,577,174 $273,364,906 $284,127,924 Cost of Operations ($) Block Energy Purchases $82,303,089 $125,785,751 $124,184,542 $115,170,755 $111,516,665 $101,943,339 $97,859,441 $93,674,492 $90,593,344 $90,723,327 RPS Adders and Long-Term Energy $17,105,348 $39,363,554 $41,250,983 $47,582,645 $53,929,147 $58,405,483 $63,220,341 $67,896,565 $71,529,617 $72,155,610 Resource Adequacy $25,315,557 $45,047,355 $47,505,682 $50,283,976 $53,126,324 $56,129,338 $59,302,100 $62,654,206 $66,195,793 $69,937,571 Everything Else $12,122,663 $20,895,425 $21,614,984 $22,539,900 $23,263,758 $25,253,021 $26,937,643 $28,635,523 $30,342,289 $31,960,530 Total Cost of Power Supply $0 $136,846,658 $231,092,085 $234,556,191 $235,577,275 $241,835,893 $241,731,181 $247,319,525 $252,860,786 $258,661,042 $264,777,037 Operating & Administrative Data Management $0 $867,484 $3,834,572 $3,935,573 $4,047,890 $4,154,510 $4,263,937 $4,376,247 $4,491,515 $4,609,819 $4,731,239 Scheduling Coordinator $0 $340,000 $516,800 $527,136 $538,563 $549,334 $560,321 $571,527 $582,958 $594,617 $606,509 SCE Fees (includes billing)$0 $8,338 $36,193 $36,418 $36,663 $36,891 $37,120 $37,351 $37,583 $37,817 $38,052 Consulting Services $586,500 $993,582 $923,251 $941,716 $960,550 $979,761 $999,357 $1,019,344 $1,039,731 $1,060,525 $1,081,736 Staffing $656,370 $1,248,010 $2,103,498 $2,166,460 $2,213,406 $2,257,674 $2,302,828 $2,348,884 $2,395,862 $2,443,779 $2,492,655 General & Administrative expenses $24,480 $302,548 $207,682 $244,446 $249,743 $254,738 $259,833 $265,029 $270,330 $275,737 $281,251 Debt Service Payment on Financing $0 $2,292,855 $2,751,426 $3,613,981 $3,613,981 $3,613,981 $458,571 $0 $0 $0 $0 Total O&A Costs $1,267,350 $6,052,817 $10,373,421 $11,465,730 $11,660,797 $11,846,889 $8,881,966 $8,618,383 $8,817,978 $9,022,294 $9,231,442 Total Cost of Operations $1,267,350 $142,899,475 $241,465,506 $246,021,921 $247,238,072 $253,682,783 $250,613,147 $255,937,908 $261,678,764 $267,683,336 $274,008,479 Net Income ($1,267,350) $15,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $13,478,715 $11,814,577 $8,898,409 $5,681,570 $10,119,445 Cash From Operations and Financing Net Income From Operations ($1,267,350) $15,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $13,478,715 $11,814,577 $8,898,409 $5,681,570 $10,119,445 Cash from Financing $2,500,000 $13,000,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Cash Available $1,232,650 $28,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $13,478,715 $11,814,577 $8,898,409 $5,681,570 $10,119,445 Net Income Allocation Reserve Fund Contribution $416,663 $28,458,595 $15,986,339 $15,933,197 $9,950,009 $7,542,109 $9,718,568 $0 $0 $0 $2,079,499 Money Available for Discretionary Programs $475,987 $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570 $8,039,946 Total Cash Outlays $1,232,650 $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570 $8,039,946 Rate Stabilization Reserve Balance $416,663 $28,875,258 $44,861,597 $60,794,793 $70,744,803 $78,286,912 $88,005,480 $88,005,480 $88,005,480 $88,005,480 $90,084,980 Reserve Balance Target $416,663 $46,980,649 $79,385,920 $80,883,919 $81,283,750 $83,402,559 $82,393,363 $84,143,970 $86,031,375 $88,005,480 $90,084,980 CCA Total Bill $485,278,313 $876,756,236 $900,502,297 $915,604,019 $940,253,495 $964,455,280 $990,212,406 $1,015,918,138 $1,042,407,959 $1,070,562,853 SCE Total Bill $494,209,857 $892,307,669 $915,810,576 $931,263,827 $955,792,818 $980,967,890 $1,006,806,059 $1,033,324,792 $1,060,542,014 $1,088,476,124 Difference $8,931,544 $15,551,434 $15,308,279 $15,659,808 $15,539,324 $16,512,609 $16,593,653 $17,406,654 $18,134,055 $17,913,271 Total Bill Savings 2%2%2%2%2%2%2%2%2%2% Generation Rate Discount 4%4%4%4%4%4%4%4%4%4% 764 35 Orange County Power Authority Implementation Plan Table 12 Orange County Power Authority Reserves Summary 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Reserve Additions Operating Reserve Contr. $28,875,258 $44,444,934 $31,919,535 $25,883,206 $17,492,119 $17,260,678 $9,718,568 $0 $0 $2,079,499 Cash from Financing $15,500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Additions $44,375,258 $44,444,934 $31,919,535 $25,883,206 $17,492,119 $17,260,678 $9,718,568 $0 $0 $2,079,499 Reserves Outlays Start-Up Funding Payments $0 $0 $862,555 $862,555 $862,555 $0 $0 $0 $0 $0 Working Capital Repayment $2,292,855 $2,751,426 $2,751,426 $2,751,426 $2,751,426 $458,571 $0 $0 $0 $0 New Programs $0 $0 $0 $0 $0 $3,760,146 $11,814,577 $8,898,409 $5,681,570 $8,039,946 Total Reserve Outlays $3,276,465 $5,639,788 $14,375,635 $14,226,893 $12,707,456 $10,338,615 $19,423,723 $17,225,072 $16,421,966 $16,232,700 Rate Stabilization Reserve Balance $28,875,258 $44,861,597 $60,794,793 $70,744,803 $78,286,912 $88,005,480 $88,005,480 $88,005,480 $88,005,480 $90,084,980 765 CHAPTER 7 – Financial Plan 36 Orange County Power Authority Implementation Plan The surpluses achieved during the phase-in period serve to build OCPA’s net financial position and credit profile and to provide operating reserves for OCPA in the event that operating costs (such as power purchase costs) exceed collected revenues for short periods of time. In addition, financial surpluses could be used to increase renewable and GHG-free resources within OCPA’s resource mix. OCPA Financing It is anticipated that one or more rounds of financing, inclusive of prospective direct term loans between OCPA and its Member Agencies, will be necessary to support OCPA Program implementation. Subsequent capital requirements will be self-funded from OCPA’s accrued financial reserves. The anticipated financing approach is described below. CCA Program Start-up and Working Capital As previously discussed, the anticipated start-up and working capital requirements for the OCPA Program are $15.5 million. This amount is dependent upon the electric load served by OCPA, actual energy prices, payment terms established with the third-party supplier and program rates. This figure would be refined during the startup period as these variables become known. Once the OCPA Program is up and running, these costs would be recovered from customers through retail rates. The City of Irvine has provided $2.5 million in initial funding for start-up costs. OCPA currently projects repaying this loan by 2027, subject to change based on final power prices. It is assumed that the remaining financing will be primarily secured via a short-term loan or letter of credit, which would allow OCPA to draw cash as required. Requisite financing would need to be arranged no later than the first quarter of 2021. Renewable Resource Project Financing OCPA may consider project financings for renewable resources, likely local wind, solar, biomass or geothermal as well as energy efficiency projects. These financings would only occur after a sustained period of successful OCPA Program operation and after appropriate project opportunities are identified and subjected to appropriate environmental review. OCPA’s ability to directly finance projects will likely require a track record of five to ten years of successful program operations demonstrating strong underlying credit to support the financing. In the event that such financing occurs, funds would include any short-term financing for the renewable resource project development costs, and financing would likely extend over a 20- to 30-year term. The security for such bonds would be the revenue from sales to the retail customers of OCPA. 766 CHAPTER 8 – Rate Setting, Program Terms and Conditions 37 Orange County Power Authority Implementation Plan Chapter 8 – Rate Setting, Program Terms and Conditions Introduction This chapter describes the initial policies proposed for OCPA in setting its rates for electric aggregation services. These include policies regarding rate design, rate objectives and provision for due process in setting Program rates. Program rates are ultimately approved by OCPA’s Board. OCPA would retain authority to modify program policies from time to time at its discretion. Rate Policies OCPA will establish rates sufficient to recover all costs related to operation of the OCPA Program, including any reserves that may be required as a condition of financing and other discretionary reserve funds that may be approved by OCPA. As a general policy, rates will be uniform for all similarly situated customers enrolled in the OCPA Program throughout the service area of OCPA. The primary objectives of the rate setting plan are to set rates that achieve the following:  Rate competitive tariff option including a proportionate quantity of renewable energy meeting California’s prevailing renewable energy procurement mandate  100 percent renewable energy supply option  Allow individual member agencies to choose the default energy supply option into which their customers will be enrolled  Allow customers to participate in any of the three energy supply options after enrollment  Rate stability  Equity among customers in each tariff  Customer understanding  Revenue sufficiency Each of these objectives is described below. Rate Competitiveness OCPA’s primary goal is to offer its customers competitive rates for electric services relative to the incumbent utility SCE. As planned, the value provided by the OCPA Program will also include options for a higher proportion of renewable energy and reduced GHG emissions relative to the incumbent utility, enhanced energy efficiency and customer programs, community focus, local investment and control. OCPA currently plans to offer customers rates that are lower than SCE’s bundled rates. Final rates for the launch phase will be subject to final power price bids. As previously discussed, the OCPA Program will offer increased renewable energy supply to 767 CHAPTER 8 – Rate Setting, Program Terms and Conditions 38 Orange County Power Authority Implementation Plan program customers, relative to the incumbent utility, by offering three distinct rate tariffs. The initial renewable energy content provided under OCPA’s base Tariff will meet California’s prevailing renewable energy procurement mandate, and OCPA will endeavor to increase this percentage on a going forward basis, subject to operational and economic constraints. OCPA will also offer its customers a 50% and 100% renewable energy Tariff, which will supply participating customers with reflective renewable energy supply at rates equal to the procurement cost for those portfolios. Participating qualified low- or fixed-income households, such as those currently enrolled in the California Alternate Rates for Energy (CARE) program, will be automatically enrolled in the standard Tariff and will continue to receive related discounts on monthly electricity bills through SCE. Rate Stability OCPA will offer stable rates by hedging its supply costs over multiple time horizons and by including longer-term renewable energy supplies that exhibit stable costs. OCPA will attempt to maintain general rate design parity with SCE to ensure that OCPA Program rates are not drastically different from the competitive alternative. Equity Among Customer Classes OCPA’s initial rates will be set at a discount to the rates offered by SCE, subject to final power price bids. The level of the discount will depend upon the default product chosen by the Member Agency. Rate differences among customer classes will reflect the rates charged by the local distribution utility as well as differences in the costs of providing service to each class. Rate benefits may also vary among customers within the major customer class categories, depending upon the specific rate designs adopted by OCPA. Customer Understanding The goal of customer understanding involves rate designs that are relatively straightforward so that customers can readily understand how their bills are calculated. This not only minimizes customer confusion and dissatisfaction but will also result in fewer billing inquiries to the OCPA Program’s customer service call center. Customer understanding also requires rate structures to reflect rational rate design principles (i.e., there should not be differences in rates that are not justified by costs or by other policies such as providing incentives for conservation). 768 CHAPTER 8 – Rate Setting, Program Terms and Conditions 39 Orange County Power Authority Implementation Plan Revenue Sufficiency OCPA Program rates must collect sufficient revenue from participating customers to fully fund OCPA’s annual budget. Rates will be set to collect the adopted budget based on a forecast of electric sales for the budget year. Rates will be adjusted as necessary to maintain the ability to fully recover all of costs of the OCPA Program, subject to the disclosure and due process policies described later in this chapter. To ensure rate stability, funds available in OCPA’s rate stabilization fund may be used from time to time to augment operating revenues. Rate Design OCPA will generally match the rate structures from the utilities’ standard rates to avoid the possibility that customers would see significantly different bill impacts as a result of changes in rate structures that would take effect following enrollment in the OCPA Program. In October 2020, SCE began to move bundled residential customers toward default time-of-use rates. OCPA anticipates that rates implemented at launch will be based on default SCE TOU rates. OCPA will review SCE rate structure changes and finalize the OCPA rate structures closer to the proposed launch date. Custom Pricing Options OCPA may work to develop specially‑tailored rate and electric service products that meet the specific load characteristics or power market risk profiles of larger commercial and industrial customers. This will allow such customers to have access to a wider range of products than is currently available under the incumbent utility and potentially reduce the cost of power for these customers. OCPA may provide large energy users with custom pricing options to help these customers gain greater control over their energy costs. Some examples of potential custom pricing options are rates that are based on an observable market index (e.g., CAISO prices) or fixed priced contracts of various terms. Net Energy Metering As planned, customers with on‑site generation eligible for net metering from SCE will be offered a net energy metering rate from OCPA. Net energy metering allows for customers with certain qualified solar or wind distributed generation to be billed on the basis of their net energy consumption. The objective is that OCPA’s net energy metering tariff will apply to the generation component of the bill, and the SCE net energy metering tariff will apply to the utility’s portion of the bill. OCPA plans to pay customers for excess power produced from net energy metered generation systems in accordance with the rate designs adopted by OCPA. Disclosure and Due Process in Setting Rates and Allocating Costs among Participants Initial program rates will be adopted by OCPA following the establishment of the first year’s operating budget prior to initiating the customer notification process. Subsequently, OCPA will prepare an annual budget and corresponding customer rates. Any proposed rate adjustment will be made to the Board of Directors and ample time will be given to affected customers to provide comment on the proposed rate changes. 769 CHAPTER 8 – Rate Setting, Program Terms and Conditions 40 Orange County Power Authority Implementation Plan After proposing a rate adjustment, OCPA will furnish affected customers with a notice of its intent to adjust rates. The notices may be issued via separate mail to affected customers, as part of the regular billing and/or placed on the various social media options. The notice will provide a summary of the proposed rate adjustment and will include a link to the OCPA Program website where information will be posted regarding the amount of the proposed adjustment, a brief statement of the reasons for the adjustment and the mailing address of OCPA to which any customer inquiries relative to the proposed adjustment, including a request by the customer to receive notice of the date, time and place of any hearing on the proposed adjustment, may be directed. 770 CHAPTER 9 – Customer Rights and Responsibilities 41 Orange County Power Authority Implementation Plan Chapter 9 – Customer Rights and Responsibilities This chapter discusses customer rights, including the right to opt‑out of the OCPA Program and the right to privacy of customer usage information, as well as obligations customers undertake upon agreement to enroll in the CCA Program. All customers that do not opt out within 30 days of the fourth enrollment notice will have agreed to become full status program participants and must adhere to the obligations set forth below, as may be modified and expanded by the OCPA Board from time to time. By adopting this Implementation Plan, OCPA will have approved the customer rights and responsibilities policies contained herein to be effective at Program initiation. OCPA retains authority to modify program policies from time to time at its discretion. Customer Notices At the initiation of the customer enrollment process, a total of four notices will be provided to customers describing the Program, informing them of their opt-out rights to remain with utility bundled generation service and containing a simple mechanism for exercising their opt-out rights. The first notice will be mailed to customers approximately sixty days prior to the date of automatic enrollment. A second notice will be sent approximately thirty days later. OCPA will likely use its own mailing service for requisite enrollment notices rather than including the notices in SCE’s monthly bills. This is intended to increase the likelihood that customers will read the enrollment notices, which may otherwise be ignored if included as a bill insert. Customers may opt out by notifying OCPA using the OCPA Program’s designated telephone- based or internet opt‑out processing service. Should customers choose to initiate an opt‑out request by contacting SCE, they would be transferred to the OCPA Program’s call center to complete the opt-out request. Consistent with CPUC regulations, notices returned as undelivered mail would be treated as a failure to opt out, and the customer would be automatically enrolled. Following automatic enrollment, at least two notices will be mailed to customers within the first two billing cycles (approximately sixty days) after OCPA service commences. Opt‑out requests made on or before the sixtieth day following start of OCPA Program service will result in customer transfer to bundled utility service with no penalty. Such customers will be obligated to pay charges associated with the electric services provided by OCPA during the time the customer took service from the OCPA Program, but they will otherwise not be subject to any penalty or transfer fee from OCPA. Customers who establish new electric service accounts within the Program’s service area will be automatically enrolled in the OCPA Program and will have sixty days from the start of service to opt out if they so desire. Such customers will be provided with two enrollment notices within this sixty-day post enrollment period. Such customers will also receive a notice detailing OCPA’s privacy policy regarding customer usage information. OCPA will have the authority to implement entry fees for customers that initially opt out of the Program, but later decide to participate. 771 CHAPTER 9 – Customer Rights and Responsibilities 42 Orange County Power Authority Implementation Plan Termination Fee Customers that are automatically enrolled in the OCPA Program can elect to transfer back to the incumbent utility without penalty within the first two months of service. After this free opt-out period, customers will be allowed to terminate their participation but may be subject to payment of a Termination Fee. Customers that relocate within OCPA’s service territory would have OCPA service continued at their new address. If a customer relocating to an address within OCPA’s service territory elected to cancel OCPA service, the Termination Fee could be applied. Program customers that move out of OCPA’s service territory would not be subject to the Termination Fee. If deemed applicable by OCPA, SCE would collect the Termination Fee from returning customers as part of OCPA’s final bill to the customer. For illustrative purposes, OCPA Termination Fees could be set at $5 per residential account and $25 per non-residential account. Actual fee amounts and requirements to impose Termination Fees are subject to a final determination by OCPA. If adopted, the Termination Fee would be clearly disclosed in the four enrollment notices sent to customers during the sixty-day period before automatic enrollment and following commencement of service. The fee could also be changed prospectively by OCPA subject to applicable customer noticing requirements. Customers electing to terminate service after the initial notification period would be transferred to SCE on their next regularly scheduled meter read date if the termination notice is received a minimum of fifteen days prior to that date. Such customers would also be liable for the nominal reentry fees imposed by SCE and would be required to remain on bundled utility service for a period of one year, as described in the utility CCA tariffs. Customer Confidentiality OCPA will establish policies covering confidentiality of customer data that are fully compliant with the required privacy protection rules for CCA customer energy usage information, as detailed within Decision 12‑08‑045. OCPA will maintain the confidentiality of individual customer data including service addresses, billing addresses, telephone numbers, account numbers and electricity consumption, except where reasonably necessary to conduct business of OCPA or to provide services to customers, including but not limited to where such disclosure is necessary to (a) comply with the law or regulations; (b) enable OCPA to provide service to its customers; (c) collect unpaid bills; (d) obtain and provide credit reporting information; or (e) resolve customer disputes or inquiries. OCPA will not disclose customer information for telemarketing, e‑mail or direct mail solicitation. Aggregate data may be released at OCPA’s discretion. 772 CHAPTER 9 – Customer Rights and Responsibilities 43 Orange County Power Authority Implementation Plan Responsibility for Payment Customers will be obligated to pay OCPA Program charges for service provided through the date of transfer including any applicable Termination Fees. Pursuant to current CPUC regulations, OCPA will not be able to direct that electricity service be shut off for failure to pay OCPA bills. However, SCE has the right to shut off electricity to customers for failure to pay electricity bills, and SCE Electric Rule 23 mandates that partial payments are to be allocated pro rata between SCE and the CCA. In most circumstances, customers would be returned to utility service for failure to pay bills in full and customer deposits (if any) would be withheld in the case of unpaid bills. SCE would attempt to collect any outstanding balance from customers in accordance with Rule 23 and the related CCA Service Agreement. The proposed process is for two late payment notices to be provided to the customer within 30 days of the original bill due date. If payment is not received within 45 days from the original due date, service would be transferred to the utility on the next regular meter read date, unless alternative payment arrangements have been made. Consistent with the CCA tariffs, Rule 23, service cannot be discontinued to a residential customer for a disputed amount if that customer has filed a complaint with the CPUC and that customer has paid the disputed amount into an escrow account. Customer Deposits Under certain circumstances, OCPA customers may be required to post a deposit equal to the estimated charges for two months of CCA service prior to obtaining service from the OCPA Program. A deposit would be required for an applicant who previously had been a customer of SCE or OCPA and whose electric service has been discontinued by SCE or OCPA during the last twelve months of that prior service arrangement as a result of bill nonpayment. Such customers may be required to reestablish credit by depositing the prescribed amount. Additionally, a customer who fails to pay bills before they become past due as defined in SCE Electric Rule 11 (Discontinuance and Restoration of Service), and who further fails to pay such bills within five days after presentation of a discontinuance of service notice for nonpayment of bills, may be required to pay said bills and reestablish credit by depositing the prescribed amount. This rule will apply regardless of whether or not service has been discontinued for such nonpayment 5. Failure to post deposit as required would cause the account service transfer request to be rejected, and the account would remain with SCE. 5 A customer whose service is discontinued by OCPA is returned to SCE generation service. 773 CHAPTER 10 - Procurement Process 44 Orange County Power Authority Implementation Plan Chapter 10 - Procurement Process Introduction This chapter describes OCPA’s initial procurement policies and the key third party service agreements by which OCPA will obtain operational services for the OCPA Program. By adopting this Implementation Plan, OCPA will have approved the general procurement policies contained herein to be effective at Program initiation. OCPA retains Authority to modify Program policies from time to time at its discretion. Procurement Methods OCPA will enter into agreements for a variety of services needed to support program development, operation and management. It is anticipated that OCPA will generally utilize Competitive Procurement methods for services but may also utilize Direct Procurement or Sole Source Procurement, depending on the nature of the services to be procured. Direct Procurement is the purchase of goods or services without competition when multiple sources of supply are available. Sole Source Procurement is generally to be performed only in the case of emergency or when a competitive process would be an idle act. OCPA will utilize a competitive solicitation process to enter into agreements with entities providing electrical services for the program. Agreements with entities that provide professional legal or consulting services, and agreements pertaining to unique or time sensitive opportunities, may be entered into on a direct procurement or sole source basis at OCPA’s discretion. Authority for terminating agreements will generally mirror the Authority for entering into such agreements. Key Contracts Electric Supply Contract OCPA will initiate service using supply contracts with one or more qualified providers to supply sufficient electric energy resources to meet OCPA customer demand as well as applicable resource adequacy requirements, ancillary and other necessary services. OCPA may complete additional solicitations to supplement its energy supply and/or to replace contract volumes provided under the original contract. OCPA would begin such procurement sufficiently in advance of contract expiration so that the transition from the initial supply contract occurs smoothly, avoiding dependence on market conditions existing at any single point in time. OCPA will solicit the services of a certified Scheduling Coordinator to schedule loads and resources to meet OCPA customer demand. OCPA may designate the primary supplier to be responsible for day‑to‑day energy supply operations of the OCPA Program and for managing the predominant supply risks for the term of the contract. The primary supplier will ensure OCPA meets renewable energy mandates as well as resource-specific mandates such as the storage requirement.6 Finally, the primary supplier may be responsible for ensuring OCPA’s compliance with all applicable 6 Assembly Bill 2514 requires LSEs to procure energy storage targets by 2020 774 CHAPTER 10 - Procurement Process 45 Orange County Power Authority Implementation Plan resource adequacy and regulatory requirements imposed by the CPUC or FERC. OCPA will be commencing the requisite competitive solicitation process to identify its initial energy supplier(s). OCPA anticipates executing the electric supply contract for Phase 1 loads in late 2021. The contracts for Phase 2 loads will be executed shortly thereafter. Resource adequacy may be acquired prior to the rest of power supply in order to meet CPUC requirements. Data Management Contract A data manager will provide the retail customer services of billing and other customer account services (electronic data interchange or EDI with SCE, billing, remittance processing and account management). Recognizing that some qualified wholesale energy suppliers do not typically conduct retail customer services whereas others (i.e., direct access providers) do, the data management contract may be separate from the electric supply contract. It is anticipated that a single contractor will be selected to perform all of the data management functions.7 The data manager is responsible for the following services:  Data exchange with SCE  Technical testing  Customer information system  Customer call center;  Billing administration/retail settlements  Settlement quality meter data reporting  Reporting and audits of utility billing Utilizing a third party for account services eliminates a significant expense associated with implementing a customer information system. Such systems can impose significant information technology costs and take significant time to deploy. Separation of the data management contract from the energy supply contract gives OCPA greater flexibility to change energy suppliers, if desired, without facing an expensive data migration issue. OCPA will be commencing the requisite competitive solicitation process to identify its data management services provider. It is anticipated that OCPA will execute a contract for data management services by January 31, 2021. 7 The contractor providing data management may also be the same entity as the contractor supplying electricity for the program. 775 CHAPTER 10 - Procurement Process 46 Orange County Power Authority Implementation Plan Electric Supply Procurement Process In the latter half of 2021, OCPA plans to solicit proposals for shaped energy, renewable energy, carbon free energy and resource adequacy capacity from a highly qualified pool of suppliers. OCPA will also solicit proposals for scheduling coordinator services from a separate bidder. Contract negotiations will commence immediately following proposal evaluation. It is anticipated that selection of the final suppliers will be made by OCPA in early 2022. 776 Chapter 11 – Contingency Plan for Program Termination 47 Orange County Power Authority Implementation Plan Chapter 11 – Contingency Plan for Program Termination Introduction This chapter describes the process to be followed in the case of OCPA Program termination. By adopting the original Implementation Plan, OCPA will have approved the general termination process contained herein to be effective at Program initiation. In the unexpected event that OCPA would terminate the OCPA Program and return its customers to SCE service, the proposed process is designed to minimize the impacts on its customers and on SCE. The proposed termination plan follows the requirements set forth in SCE’s tariff Rule 23 governing service to CCAs. OCPA retains authority to modify program policies from time to time at its discretion. Termination by OCPA OCPA will offer services for the long term with no planned Program termination date. In the unanticipated event that OCPA decides to terminate the Program, each of its Member Agencies would be required to adopt a termination ordinance or resolution and provide adequate notice to OCPA consistent with the terms set forth in the JPA Agreement. Following such notice, OCPA’s Board would vote on Program termination subject to voting provisions as described in the JPA Agreement. In the event that OCPA affirmatively votes to proceed with JPA termination, OCPA would disband under the provisions identified in its JPA Agreement. After any applicable restrictions on such termination have been satisfied, notice would be provided to customers six months in advance that they will be transferred back to SCE. A second notice would be provided during the final sixty‑days in advance of the transfer. The notice would describe the applicable distribution utility bundled service requirements for returning customers then in effect, such as any transitional or bundled portfolio service rules. At least one year of advance notice would be provided to SCE and the CPUC before transferring customers, and OCPA would coordinate the customer transfer process to minimize impacts on customers and ensure no disruption in service. Once the customer notice period is complete, customers would be transferred en masse on the date of their regularly scheduled meter read date. OCPA will post a bond or maintain funds held in reserve to pay for potential transaction fees charged to the Program for switching customers back to distribution utility service. Reserves would be maintained against the fees imposed for processing customer transfers (CCASRs). The Public Utilities Code requires demonstration of insurance or posting of a bond sufficient to cover reentry fees imposed on customers that are involuntarily returned to distribution utility service under certain circumstances. The cost of re-entry fees is the responsibility of the energy services provider or the community choice aggregator, except in the case of a customer returned for default or because its contract has expired. OCPA will post financial security in the appropriate amount as 777 Chapter 11 – Contingency Plan for Program Termination 48 Orange County Power Authority Implementation Plan part of its registration materials and will maintain the financial security in the required amount, as necessary. Termination by Members The JPA Agreement defines the terms and conditions under which Members may terminate their participation in the program. 778 Appendices Orange County Power Authority Implementation Plan Appendix – OCPA Joint Powers Agreement This page intentionally left blank. Attachment begins on the next page. 779 55695.00001\33485367.1 1 ORANGE COUNTY POWER AUTHORITY JOINT POWERS AGREEMENT This Joint Powers Agreement (“Agreement”), effective as of the date specified in Section 1.2, below, which is November __, 2020 (“Effective Date”) is made and entered into pursuant to the Joint Exercise of Powers Act (California Government Code § 6500 et seq.) relating to the joint exercise of powers among the parties set forth in Exhibit A. All parties that execute this Agreement prior to December 31, 2020 shall be designated individually as “Founding Party” and collectively as “Founding Parties”. All cities, counties, or other public agencies added as parties to this agreement after December 31, 2020 shall be designated individually as “Additional Party” and collectively “Additional Parties”. The term “Party” refers individually to any Founding Party or Additional Party, and the term “Parties” refers collectively to the Founding Parties and the Additional Parties. RECITALS A. In 2002, Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public Utilities Code Sections 218.3, 366, 394, 394.25, 331.1 366.2, and 381.1) was signed into law allowing customers to aggregate their electrical loads as members of their local community with public agencies designated as community choice aggregators, and allowing such public agencies to aggregate the electrical load of interested consumers within their jurisdictional boundaries and purchase electricity on behalf of those consumers. B. In 2006, Assembly Bill 32 (Stat. 2006, Ch. 488, codified at Health and Safety Code Sections 38500 et seq.), known as the Global Warming Solutions Act, was signed into law, mandating a reduction in greenhouse gas emissions to 1990 levels by 2020. C. In 2015, Senate Bill 350 (Stat. 2015, Ch. 547, codified at Health and Safety Code Section 44258.5; Labor Code Section 1720; Public Resources Code Sections 25302.2, 25310, 25327 and 25943; and Public Utilities Code Sections 237.5, 337, 352, 359, 365.2, 366.3, 399.4, 399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, 454.51, 454.52, 454.55, 454.56, 701.1, 740.8, 740.12, 9505, 9620, 9621, 9622, and Article 17 (commencing with Public Utilities Code Section 400)) was signed into law, mandating a reduction in greenhouse gas emissions to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050. D. In 2018, Senate Bill 10 (Stat.f 2018, Ch. 312, codified at Public Utilities Code sections 399.11, 399.15, 399.30, and 454.53) was signed into law, directing that the Renewables Portfolio Standard to be increased to 60 percent renewables by 2030 and establishing a policy for eligible renewable energy resources and zero-carbon resources to supply 100 percent of electricity retail sales to California end-use customers by 2045. E. The Parties each hold various powers under California law, including, but not limited to, the power to purchase, supply, and aggregate electricity for themselves and customers within their jurisdictions in accordance with Public Utilities Code Sections 333.1 and 366.2; they are therefore properly empowered to enter into this Agreement under the Joint Exercise of Powers Act (Government Code Section 6500 et seq., the “Act”). DocuSign Envelope ID: E6953DE9-EDE5-471C-AC16-82834D472329 20 780 781 782 783 784 785 786 787 788 789 790 791 792 793 794 795 796 797 798 799 800 801 802 803 804 805 806 807 ORANGE COUNTY POWER AUTHORITYJOINT POWERS AGREEMENTThis Joint Powers Agreement ("Agreement"), effective as of the date specified in Section1.2, below, which is November _, 2020 ("Effective Date") is made and entered into pursuant tothe Joint Exercise of Powers Act (California Government Code § 6500 etseq.) relating to thejointexercise of powers among the parties set forth in Exhibit A. All parties that execute this Agreementprior to December 31 , 2020 shall be designated individually as "Founding Party" and collectivelyas "Founding Parties", All cities, counties, or other public agencies added as parties to thisagreement after December 31, 2020 shall be designated individually as "Additional Party" andcollectively "Additional Parties". The term "Party" refers individually to any Founding Party orAdditional Party, and the term "Parties" refers collectively to the Founding Parties and theAdditional Parties.RECITALSA. In 2002, Assembly Bill 117 (Stat. 2002, Ch. 838, codified at Public Utilities CodeSections 218.3,366,394» 394.25, 331.1 366.2, and 381.1) was signed into law allowing customersto aggregate their electrical loads as members of their local community with public agenciesdesignated as community choice aggregators, and allowing such public agencies to aggregate theelectrical load of interested consumers within their jurisdictional boundaries and purchaseelectricity on behalf of those consumers.B. In 2006, Assembly Bill 32 (Stat. 2006, Ch. 488, codified at Health and Safety CodeSections 38500 et seq.), known as the Global Wanning Solutions Act, was signed into law,mandating a reduction in greenhouse gas emissions to 1990 levels by 2020.C. In 2015, Senate Bill 350 (Stat, 2015, Ch. 547, codified at Health and Safety CodeSection 44258.5; Labor Code Section 1720; Public Resources Code Sections 25302.2, 25310,25327 and 25943; and Public Utilities Code Sections 237.5, 337, 352, 359, 365.2, 366.3, 399.4,399.11, 399.12» 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, 454.51,454.52, 454.55, 454.56,701.1, 740.8, 740.12, 9505, 9620, 9621, 9622, and Article 17 (commencing with Public UtilitiesCode Section 400)) was signed into law, mandating a reduction in greenhouse gas emissions to 40percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050.D, In 2018, Senate Bill 10 (Stat,f2018, Ch. 312, codified at Public Utilities Codesections 399.11, 399.15, 399.30, and 454.53) was signed into law, directing that the RenewablesPortfolio Standard to be increased to 60 percent renewables by 2030 and establishing a policy foreligible renewable energy resources and zero-carbon resources to supply 1 00 percent of electricityretail sales to California end-use customers by 2045.E. The Parties each hold various powers under California law, including, but notlimited to, the power to purchase, supply, and aggregate electricity for themselves and customerswithin their jurisdictions in accordance with Public Utilities Code Sections 333.1 and 366.2; theyare therefore properly empowered to enter into this Agreement under the Joint Exercise of PowersAct (Government Code Section 6500 etseq., the "Act"),155695,00001\33485367.1808 F. The purposes for entering into this Agreement are more fully specified insubsection 1.4 below, but principally consist of the study, promotion, development, funding,financing) purchasing, conduct, operation, and management of energy, energy efficiency andconservation, and other energy-related and community choice aggregation programs (the "CCAProgram"), through which the following objectives may be advanced: (a) reducing greenhousegas emissions related to the use of power throughout the Parties' Jurisdictions and neighboringregions; (b) providing electric power and other forms of energy to customers at a competitive cost;(c) carrying out programs for ratepayers of all income levels to reduce energy consumption; (d)stimulating and sustaining the local economy by developing local jobs in renewable andconventional energy; and (e) promoting long-term electric rate stability, energy security andreliability for residents through local control of electric generation resources.G. The Founding Parties desire to establish a separate public agency, known as theOrange County Power Authority ("Authority"), under the Act and consistent with Assembly Bill117, in order to collectively implement the CCA Program, and to exercise any powers common tothe Authority's members to further these purposes.H. The Parties have each adopted an ordinance electing to participate as a group in acommunity choice aggregation program through the Authority, as authorized by California PublicUtilities Code § 366.2(a)(12)(B).AGREEMENTNOW, THEREFORE, in consideration of the mutual promises, covenants, and conditionshereinafter set forth, it is agreed by and among the Parties as follows:SECTION 1. FORMATION OF AUTHORITY1.1 Creation of Agency. Pursuant to the Act there is hereby created a public entity tobe known as The Orange County Power Authority, Pursuant to Section 6507 of the Act, theAuthority is a public agency separate from the Parties. The jurisdiction of the Authority shall beall territory within the geographic boundaries of the Parties; however, the Authority may, asauthorized under applicable law, undertake any action outside such geographic boundaries as isnecessary to accomplish its purpose.1.2 Effective Date and Term. This Agreement shall become effective and the Authorityshall exist as a separate public agency on the date this Agreement is executed by at least twoParties. The Authority shall continue to exist, and this Agreement shall be effective, until thisAgreement is terminated In accordance with this Agreement, subject to the rights of a Party towithdraw from the Authority.1.3 Parties. The names, particular capacities, and addresses of the Parties are shownon Exhibit A, as it may be amended from time to time.1.4 Purpose. The purpose of this Agreement is to establish an independent publicagency in order to exercise powers common to each Party to implement the CCA Program, and to55695.00001\334 85 367,1809 exercise all other powers necessary and incidental to accomplishing this purpose. This Agreementauthorizes the Authority to provide opportunities by which the Parties can work cooperatively tocreate economies of scale and implement sustainable energy initiatives that reduce energy demand,increase energy efficiency^ provide consumer choice and cost savings, and advance the use ofclean, efficient, and renewable resources in the region for the benefit of all the Parties and theirconstituents, including, but not limited to, establishing and operating a CCA Program (collectively,the "Purpose"), The Parties intend for this Agreement to be used as a contractual mechanism bywhich they are authorized to participate in the CCA Program and achieve the Purpose. The Partiesintend that other agreements shall define the terms and conditions associated with theimplementation of the CCA Program and any energy programs approved by the Authority.SECTION 2. POWERS OF AUTHORITY2.1 Powers. The Authority shall have all powers common to the Parties and suchadditional powers accorded to it by law. The Authority is authorized, in its own name, to exerciseall powers and do all acts necessary and proper to carry out the provisions of this Agreement andfulfill its Purpose, including, but not limited to, each of the following powers:2.1.1 Serve as a forum for the consideration, study, and recommendation ofenergy services for the CCA Program;2.1.2 To make and enter into any and all contracts to effectuate the purpose ofthis Agreement, including, but not limited to, those relating to the purchase or sale ofelectrical energy or attributes thereof, and related service agreements;2.1.3 To employ agents and employees, including, but not limited to, engineers,attorneys, planners, financial consultants, and separate and apart therefrom to employ suchother persons, as it deems necessary;2.1.4 To acquire^ contract, manage, maintain, and operate any buildings, works,or improvements, including, but not limited to, electric generation resources;2,1.5 To acquire property by eminent domain, or otherwise, except as limited bySection 6508 of the Act, and to hold or dispose of property;2.1.6 To lease or license any property;2.1.7 To sue and be sued in its own name;2.1.8 To incur debts, liabilities, and obligations, including, but not limited to,loans from private lending sources pursuant to its temporary borrowing powers, such asCalifornia Government Code § 53850 ef seq. and authority under the Act;2.1,9 To form subsidiary or independent corporations or entities, if appropriate,to carry out energy supply and energy conservation programs, or to take advantage oflegislative or regulatory changes;55695.00001\33485367.f810 2.1.10 To issue revenue bonds and other forms of indebtedness;2.1.11 To apply for, accept, and receive all licenses, permits, grants, loans, or otherassistance from any federal, state, or local agency;2.1.12 To submit documentation and notices, register, and comply with orders,tariffs, and agreements for the establishment and implementation of the CCA Program andother energy and climate change programs;2.1.13 To adopt rules, regulations, policies, bylaws, and procedures governing theoperation of the Authority;2.1.14 To receive loans, gifts, contributions, and donations of property, funds,services, and other forms of financial assistance from persons, firms, corporations, and anygovernmental entity;2.1.15 To make and enter into service agreements relating to the provision ofservices necessary to plan, implement, operate and administer the CCA Program and otherenergy programs, including the acquisition of electric power supply and the provision ofretail and regulatory support services;2.1.16 To receive revenues from sale of electricity and other energy-relatedprograms;2.1.17 To partner or otherwise work cooperatively with other CCAs on theacquisition of electric resources, joint programs, advocacy and other efforts in the interestsof the Authority; and2.1.18 To the extent not specifically provided In this Agreement, to exercise anypowers authorized by the member agencies to achieve the Authority's objectives and suchfurther powers not specifically mentioned herein, but common to Parties, and authorizedby the California Government Code.2,2 Additional Powers to be Exercised. In addition to those powers common to eachof the Parties, the Authority shall have those powers that may be conferred upon it by law and bysubsequently enacted legislation.2.3 Manner of Exercising Powers. The powers specified in subsections 2.1 and 2.2shall be exercised by the Board (as defined in subsection 3.1, below), unless otherwise delegatedto a committee of the Board or the Chief Executive Officer of the Authority in accordance with aBoard adopted poiicy or action. All such powers shall be exercised in the manner set forth in thisAgreement.2.4 Limitation on Exercise of Powers: The powers of the Authority are subject to therestrictions upon the manner of exercising power possessed by the City of Irvine, California and55695.00001 \33485367.1811 any other restrictions on exercising the powers of the Authority that may be adopted by theAuthority's Board of Directors.SECTIONS: GOVERNANCE3.1 General Governance; Board of Directors. The governing body of the Authorityshall be a Board of Directors ("Board") consisting of one director for each Party appointed inaccordance with subsection 3.2, except the City of Irvine whose governing body shall appoint twodirectors (the "Irvine Directors"), Notwithstanding the foregoing, the governing body of the Cityof Irvine shall appoint one director upon the full satisfaction and repayment of the Capital Loan,as defined in subsection 5.5.3.2 Appointment of Directors. The governing body of each Party shall appoint anddesignate in writing the Director(s) who shall be authorized to act for and on behalf of the Partyon matters within the powers of the Authority. The governing body of each Party shall also appointand designate in writing an alternate Director(s) who may vote in matters when the regular Directoris absent from a Board meeting. The governing bodies of the Founding Parties may, in their solediscretion, elect to appoint their respective Director(s) prior to the Effective Date, in which casesuch appointment(s) to the Board shall take effect on the Effective Date. The persons appointedand designated as the regular Director and the alternate Director shall be a member of thegoverning body of the Party when appointed.3.3 Terms of Office. Each regular and alternate Director shall serve a term of fouryears. If at any time a vacancy occurs on the Board, a replacement shall be appointed by thegoverning body to fill the position of the previous Director within ninety (90) days of the date thatsuch position becomes vacant. Replacement Dit'ectors shall serve until the scheduled expirationof the four year term of the Board member that they replace.3.4 Quorum. A majority of the Directors of the entire Board shall constitute, and isnecessary to constitute, a quorum, except that less than a quorum may adjourn a meeting from timeto time in accordance with law.3.5 Powers of the Board of Directors. The Board may exercise all the powersenumerated in this Agreement and shall conduct all business and activities of the Authorityconsistent with this Agreement and any bylaws, operating procedures, and applicable law.3.6 Executive Committee. The Board shall establish an executive committeeconsisting of a smaller number of Directors upon the Authority's membership consisting of nineor more members. The initial members of the executive committee shall be the Directors of theFounding Members with the chair of the Board serving as chair of the Executive Committee.3.7 Committees. The Board may establish committees as the Board deems appropriateto assist the Board in carrying out its functions and implementing the purposes of this Agreement,In accordance with subsection 2.3, the Board may delegate to any committees that consist solelyof Board members any of the powers specified in subsection 2,1, except for the power to acquireproperty by eminent domain specified in subsection 2.1.5. Committees that include or consist ofnon-Board members shall be advisory only.555695.00001 \33485367.1812 3.8 Director Compensation. The Board shall adopt policies establishing compensationattendance at Board and Committee meetings and work performed by each Director on behalf ofthe Authority as well as policies for the reimbursement of expenses incurred by each Director;provided that in no instance shall the per meeting or per day compensation be less than thecompensation provided to directors of the Orange County Sanitation District,3.9 y_otmg_by the Board of Directors.3.9,1 Equal Vote. Each Director or participating alternate shall have one vote.Except as provided for in Sections 3.9,2, 3.9.3 and 3.9.4, action of the Board on all matters shallrequire an affirmative vote of a majority of all Directors who are present at the subject meeting("Equal Vote"),3.9.2 Voting Shares Vote. Immedmtely after (and during the same Board Meetingas) an affirmative or tie Equal Vote, two or more Directors shall have the right to request andconduct a Voting Shares Vote (defined below) to reconsider that action approved by the EqualVote. In the event of a Voting Shares Vote where the City oflrvine appoints two Directors to theBoard and one or more Irvine Directors requests a Voting Shares Vote, a Party other than the Cityof Trvine must constitute the second Director for purposes of having the right to request andconduct a Voting Shares Vote, A "yes" vote on the Voting Shares Vote shall be a vote to reverseand reject the Equal Vote; a "no" vote on the Voting Shares Vote shall be a vote to affirm theEqual Vote. For Voting Shares Votes, votes shall be weighted as described in subsection 3.9.3. A"yes" vote on a Voting Shares Vote shall require (/) for votes requiring a majority under subsection3.9.1, more than fifty percent (50%) of the voting shares of all Directors voting; (») for votesrequiring a supermajority oftwo-thirds under this Agreement, sixty-seven percent (67%) or moreof the voting shares of all Directors voting; and (ui) for votes requiring a supefmajority of threequarters under this Agreement more than seventy-five percent (75%) of the voting shares of allDirectors voting. All votes taken pursuant to this subsection 3.9.2 shall be referred to as a "VotingShares Vote." If a Voting Shares Vote yields a "no" vote, the legal effect is to affirm the EqualVote with respect to which the Voting Shares Vote was taken. If the Voting Shares Vote succeeds,the legal effect is to nullify the Equal Vote with respect to which the Voting Shares Vote wastaken. If the underlying Equal Vote was a tie, the Voting Shares Vote replaces that tie vote. Noaction may be taken solely by a Voting Shares Vote without first having taken an Equal Vote.3.9.3 Votine Shares Formula. When a Voting Shares Vote is requested by two ormore Directors, voting shares of each Director shall be determined by the following formula:(Annual Energy Use/Total Annual Energy) x 100For purposes of this formula (a) "Annual Energy Use" means (Q for the first two years followingthe Effective Date> the annual electricity usage, expressed in kilowatt hours ((<kWh"), within thejurisdiction of the Party appointing the Director(s) and (/'/) following the second anniversary of theEffective Date, the annual electricity usage, expressed in kWh, of accounts within the jurisdictionof the Party appointing the Director(s) that are served by the Authority, and (b) "Total AnnualEnergy" means the sum of all Parties' Annual Energy Use, The initial values for Annual Energy55695.0000 H33485367.1813 use are designated in Exhibit B and the initial voting shares are designated in Exhibit C. BothExhibit B and Exhibit C shall be adjusted annually as soon as reasonably practicable after January1 of each year, but no later than March 1 of each year, subject to the approval of the Board. Votingshares attributable to Irvine shall be divided equally between the Irvine Directors.3.9.4 Special Votins,3.9.4.1 Two-Thirds Supermaioritv Votes. An affirmative vote oftwo-thirds of theDirectors of the entire Board shall be required to take any action on the following (/) issuingor repayment of bonds loans or other forms of debt; (//) adding or removing Parties on orafter January 1, 2021; (?/'/) amending or terminating this Agreement or adopting oramending the bylaws of the Authority; and (/v) terminating the CCA Program.3,9.4,2 Three-Fourths Supermaioritv Votes. An affirmative vote ofthree-fourths ofthe Directors of the Board shall be required to initiate any action for eminent domain andno eminent domain action shall be approved within the jurisdiction of a Party without theaffirmative vote of such Party's Director (or both Jrvine Directors, if applicable, in the caseof eminent domain action within the City oflrvine).3.9.4.3 Advance Notice of Special Voting. At least thirty (30) days advance writtennotice to the Parties shall be provided for all special voting items under subsection 3.9.4.1and/or subsection 3.9.4.2. Such notice shall include a copy of all substantive documentsnecessary to meaningfully deliberate and consider the proposed vote (e.g., any proposedamendment to this Agreement or the bylaws of the Authority). The Authority shall alsoprovide prompt written notice to all Parties of the action taken, which shall include anyresolution, ordinance, rule, policy, agreement, filing or other operative document (if any)adopted or approved by the Board.3.10 Officers.3.10.1 Chair and Vice Chair, The Directors shall select from among themselves aChair and a Vice-Chair. The Chair shall be the presiding officer of all Board meetings.The Vice-Chair shall serve in the absence of the Chair. The term of office of the Chair andVice-Chair shall continue until the expiration of the office of the Directors serving in suchpositions. There shall be no limit on the number of terms held by the Chair and the Vice"Chair. The office of either the Chair or Vice-Chair shall be declared vacant and a newselection shall be made if: (;) the person serving dies, resigns, or becomes legally unableto fulfill his or her duties, or (b) the Party that appointed the Chaff or Vice-Chair withdrawsfrom the Authority pursuant to the provisions of this Agreement.3.10.2 Secretary. The Secretary shall be responsible for keeping the minutes of allmeetings of the Board and all other official records of the Authority.3.10.3 Treasurer/Audltor. In accordance with California Government Code §6505.5, the Board shall appoint a qualified person to act as the Treasurer and a qualifiedperson to act as the Auditor, neither of whom need be members of the Board. The Treasurer755695.0QOO)\33485367,1814 and the Auditor shall possess the powers of, and shall perform those functions required ofthem by California Government Code §§ 6505> 6505.5, and 6505.6, and by all otherapplicable laws and regulations and amendments thereto,3.11 Meetings. The Board shall provide for its regular meetings, the date, hour, andplace of which shall be fixed by resolution of the Board. Regular, adjourned, and special meetingsshall be called and conducted in accordance with the provisions of the Ralph M. Brown Act>California Government Code § 54950 etseq,3.12 Chief Executive Officer. The Board shall appoint a Chief Executive Officer. TheChief Executive Officer shall be the chief administrative officer of the Authority, and shall beSecretary of the Board, The powers and duties of the Chief Executive Officer shall be thosedelegated and/or assigned to the Chief Executive Officer by duly adopted action of the Board,3.13 Additional Officers and Emplovees. The Board shall have the power to authorizesuch additional officers and assistants as may be necessary and appropriate, including retainingone or more administrative service providers for planning, implementing, and administering theCCA Program. Such officers and employees may also be, but are not required to be, officers andemployees of the Parties,3.14 Bonding Requirement. The officers or persons who have charge of, handle, or haveaccess to any property of the Authority shall be the members of the Board, the Treasurer, theExecutive Director, and any such officers or persons to be designated or empowered by the Board.Each such officer or person shall be required to file an official bond with the Authority in anamount which shall be established by the Board. Should the existing bond or bonds of any suchofficer be extended to cover the obligations provided herein, said bond shall be the official bondrequired herein. The premiums on any such bond attributable to the coverage required herein shallbe the appropriate expenses of the Authority.3.15 Audit. The records and accounts of the Authority shall be audited annually by anindependent certified public accountant with the final audit completed within six months of thefiscal year end,and copies of such audit report shall be filed with the State Controller, and eachParty no later than fifteen (15) days after receipt of said audit by the Board.3.16 Privileges and Immunities from Liability. All of the privileges and immunitiesfrom liability, exemption from laws, ordinances and rules, all pension, relief, disability, workers'compensation, and other benefits which apply to the activities of officers, agents, or employees ofa public agency when performing their respective functions shall apply to the officers, agents, oremployees of the Authority to the same degree and extent while engaged in the performance ofany of the functions and other duties of such officers, agents, or employees under this Agreement.None of the officers, agents, or employees directly employed by the Authority shall be deemed,by reason of such employment to be employed by the Parties (or any of them).55695.0000t\33485,367.1815 SECTION 4: ADDITIONAL PARTIES AND IMPLEMENTATION OF CCA PROGRAM4.1 Additional Parties. An incorporated city or county, or other public agency asauthorized by California Public Utilities Cod^ § 331.1, may become a member of the Authorityand a Party to this Agreement upon satisfaction of the following:4.1,1 Adoption of a resolution by the governing body of the proposed additionalparty approving the Agreement, and requesting participation and an intent to join theAuthority;4.1,2 Adoption by the Board of a resolution authorizing participation of theproposed additional party;4,1.3 Satisfaction of any additional conditions as established by the Board orapplicable laws or regulations; and4,1.4 Execution of the Agreement by the proposed additional party.4.2 Continuine Particifiatjon. The Parties acknowledge that participation in the CCAProgram may change by the addition or withdrawal or termination of a Party. The Parties agreeto participate in good faith with additional members as may later be added. The Parties also agreethat the withdrawal or termination of a Party shall not affect the enforceability of this Agreementas to the remaining Parties, or the remaining Parties' continuing obligations under this Agreement,4.3 Implementation ofCCA Program. The Authority shall cause to be prepared animplementation plan meeting the requirements of California Public Utilities Code § 366.2("Implementation Plan") and any applicable regulations of the California Public UtilitiesCommission ("CPUC"), The Board shall approve the Implementation Plan prior to it being filedwith the CPUC. The Authority, acting by and through the Board, shall take all such steps as arenecessary and appropriate to implement the Implementation Plan and the CCA Program in amanner consistent with this Agreement.4.4 Power Supply. The Board will establish power supply options for the Authority.The Authority's power supply options will include, but not be limited to, renewable and GHG-freebase product that is equivalent to the minimum required by law. Each Party may select its powersupply base product for the ratepayers in its jurisdiction. Each Party shall also have the flexibilityto achieve its climate goals without impeding any other Party from doing the same.4.4 Authority Documents. The Parties acknowledge and agree that the operations ofthe Authority will be implemented through various program documents and regulatory filings dulyadopted by the Board, including, but not limited to, bylaws, an annual budget, and plans andpolicies related to the CCA Program. The Parties agree to abide by and comply with the terms andconditions of all such Authority documents that may be approved or adopted by the Board.4.5 Termination of CCA Proeram. Nothing contained in this Agreement shall beconstrued to limit the discretion of the Authority to terminate the implementation or operation of55695.00001\33485367.1816 the CCA Program at any time, so long as such termination is in accordance with any applicablerequirements of state law and the voting procedures specified in subsection 3.9.4.1, above.SECTIONS: FINANCIAL PROVISIONS5,1 Fiscal Year. The Authority's fiscal year shall be twelve (12) months commencingJuly I of each year and ending June 30 of the succeeding year.5.2 Treasurer. The Treasurer for the Authority shall be the depository for the Authority.The Treasurer of the Authority shall have custody of all funds and shall provide for strictaccountability thereof in accordance with California Government Code § 6505.5 and otherapplicable laws. The Treasurer shall perform all of the duties required in California GovernmentCode § 6505 et seq. and all other such duties as may be prescribed by the Board.5.3 Depository & Accounting. All funds of the Authority shall be held in separateaccounts in the name of the Authority and not commingled with the funds of any Party or any otherperson or entity. Disbursement of such funds during the term of this Agreement shall be accountedfor in accordance with generally accepted accounting principles applicable to governmentalentities and pursuant to California Government Code § 6505 et seq. and other applicable laws.There shall be a strict accountability of all funds. All revenues and expenditures shall be reportedregularly to the Board. The books and records of the Authority shall be promptly open toinspection by the Parties at all reasonable times,5.4 Budget. The Board shall establish the budget for the Authority, and may from timeto time amend the budget to incorporate additional income and disbursements that might becomeavailable to the Authority for its purposes during a fiscal year.5,5 City of It'vine Initial Funding of Authority. The Authority shall, concurrent withthe execution of this Agreement, enter into an agreement that covers repayment to the City ofIrvine of(/) funding and collateral provided by the City of Irvine to the Authority to facilitate start-up and launch costs for the Authority and the CCA Program, and (//) costs incurred by the City(including staff, consultant, and legal expenses, and associated allocated overhead andadministrative expenses) in connection with the study and analysis of the CCA, the formation ofthe Authority, and the creation of the Implementation Plan (the "Capital Loan Agreement" orthe "Capital Loan"), The Capital Loan shall be repaid from customer charges for electricalservices to the extent permitted by law when the CCA Program becomes operational. The formof the Capital Loan Agreement is attached hereto as Exhibit D, The Authority shall enter into theCapital Loan Agreement so long as its final form is substantially consistent with the forin attachedas Exhibit D,5.6 No Requirement for Contributions or Payments. Except as otherwise specifiedherein, the Parties are not required under this Agreement to make any financial contributions orpayments to the Authority, and the Authority shall have no right to require such a contribution orpayment.5.6.1 Notwithstanding subsection 5.6, the Board may adopt a membership fee tobe paid by Additional Parties upon entering into the Agreement, which1055695.00001\33485367.1817 membership fee shall be established (if at all) by the Board and may covera reasonable estimate of the transactional and other costs incurred by theAuthority in processing the addition of the Additional Party to theAuthority.5.6.2 Notwithstanding subsection 5,6, the Authority and a Party may mutuallyand voluntarily enter into an agreement to provide the following: (?)contributions of public funds for the purposes set foith in thisAgreement; (f7) advances of public funds for the purposes set forth in thisAgreement, such advances to be repaid as provided by such writtenagreement; or (/») its personnel, equipment or property.5.6,3 For the avoidance of doubt, nothing in this Agreement requires, nor shallthe Authority for any reason ever require, that any Party adopt any local tax,assessment, fee or charge for the benefit of the Authority.5.7 Oblieations of the Authority. Unless otherwise agreed by the Parties, the debts,liabilities, and obligations of the agency shall not be the debts, liabilities, and obligations^ eitherjointly or severally, of the members of the agency. A Party may, in its sole discretion, agree toassume one or more of the debts, liabilities, and obligations of the Authority if, and only if, suchParty, with the approval of its governing body, agrees in writing to assume any such debts,liabilities, or obligation of the Authority.SECTION 6: WITHDRAWAL AND TERMINATION6.1 Rieht to Withdraw,6,1.1 Riehtto Withdraw Prior to March 1. 2021. Except for the City oflrvine, aParty may withdraw from the Authority for any reason and without liability or cost prior to March1,2021 upon providing the Authority fifteen (1 5) days advance written notice.6.1.2 Rieht to Withdraw After March 1. 2021, Except for the withdrawalprovided for in Section 6.1,1, a Party may withdraw its membership in the Authority, effective asof the beginning of the Authority's fiscal year, by giving no less than one hundred eighty (180)days advance written notice of its election to do so, which notice shall be given to the Authorityand each Party. Withdrawal of a Party shall require an affirmative vote of the Party's governingboard. A Party that withdraws from the Authority pursuant to this subsection may be subject tocertain continuing liabilities as described in this Agreement. The withdrawing Party and theAuthority shall execute and deliver alt further instruments and documents, and take any furtheractions as may be reasonably necessary to effectuate the orderly withdrawal of such Party.6.2 Involuntary Termination. This Agreement may be terminated with respect to aParty for material non-compliance with provisions of this Agreement upon a two-thirds vote of theentire Board (excluding the vote of the Party subject to possible termination) taken in accordancewith subsection 3.9.4.1, Prior to any vote to terminate this Agreement with respect to a Party,written notice of the proposed termination and the reason(s) for such termination shall be delivered1155695.0000 ]\334 85 367.1818 to the Party whose termination is proposed at least thirty (30) days prior to the regular Boardmeeting at which such matter shall first be discussed as an agenda item. The written notice ofproposed termination shall specify the particular provisions of this Agreement that the Party hasallegedly violated with supporting documentation. The Pm'ty subject to possible termination shallhave the opportunity at the next regular Board meeting following the eKpiration of the thirty-day(30) day notice period to respond to any reasons and allegations that may be cited as a basis fortermination. The Party's response shall be evaluated at a public meeting prior to a vote regardingtermination. A Party that has had its membership in the Authority terminated may be subject tocertain continuing liabilities^ as described in subsection 6,3. If the Board votes to terminate aParty's membership in the Authority, the effective date of the termination shall be scheduled bythe Boafd, in its reasonable disct'etlon, to ensure adequate time for the transition of the terminatedParty's CCA Program customers to another electricity provider. The Parties expressly intend,agree and acknowledge that a Board action to terminate a Party's membership in the Authorityshall be upheld so long as it is not arbitt'ary and capricious, and is supported by substantialevidence.6.3 Continuine Liability: Refund. Upon a withdrawal of a Party under subsection 6,1.2or involuntary termination of a Party under subsection 6,2, the Party shall be responsible for anyclaims, demands, damages, or liabilities attributable to the Party through the effective date of Itswithdrawal or involuntary termination. Such Party also shall be responsible liable to the Authorityfor (a) any damages, losses, or costs incurred by the Authority which result directly from theParty's withdrawal or termination, including, but not limited to, costs arising from the resale ofcapacity, electricity, or any attribute thereof no longer needed to serve such Party's load, andremoval of customers from the CCA Program resulting from the withdrawal or termination of theParty; and (b) any costs or obligations associated with the Party's participation in any program inaccordance with the program's terms, provided such costs or obligations were incurred prior to thewithdrawal of the Party. Except as otherwise specified, such Party shall not be responsible for anyclaims^ demands, damages, or liabilities commencing or arising after the effective date of theParty's withdrawal or involuntary termination. From and after the date a Party provides notice ofits witlidrawal or is terminated, the Authority shall reasonably and in good faith seek to mitigateany costs and obligations to be incurred by the withdrawing or terminated Party under thissubsection through measures reasonable under the circumstances; provided, however, that thisobligation to mitigate does not impose any obligation on the Authority to transfer any cost orobligation directly attributable to the membership and withdrawal or termination of thewithdrawing or terminated Party to the ratepayers of the remaining Parties. Further the liability ofthe withdrawing or terminated Party shall be based on actual costs or damages incurred by theAuthority and shall not include any penalties or punitive charges imposed by the Authority. TheAuthority may withhold funds otherwise owing to the Party or may require the Party to depositsufficient funds with the Authority, as reasonably determined by the Authority, to cover the Party'sliability for the costs described above. The withdrawing or terminated Party agrees to pay anysuch deposit determined by the Authority in consultation with a third party audit firm. Any amountof the withdrawing or terminated Party's funds held on deposit with the Authority above that whichis required to pay any liabilities or obligations shall be returned to that Party. In the implementationof this subsection 6.3, the Parties intend, to the maximum extent possible, without compromisingthe viability of ongoing Authority operations, that any claims, demands, damages. or liabilitiescovered hereunder, be funded from the rates paid by CCA Program customers located within the125 5695.00001\33'185367,1819 service territory of the withdrawing Party, and not from the general fund of the withdrawing Partyitself. The liability of a withdrawing Party under this subsection shall be only to the Authority andnot to any other Party.6.4 Termination of Agreement. This Agreement may be terminated by vote of theBoard in accordance with subsection 3.9,4.1, or by mutual agreement of all the Parties approvedby majority votes of their respective governing bodies, provided, however, that this subsectionshall not be construed as linniting the rights of a Party to withdraw in accordance with Section 6.6,5 Disposition of Authority Assets Upon Termination of Aereement. Upontermination of this Agreement, any surplus money or assets in possession of the Authority for useunder this Agreement, after payment of all liabilities, costs, expenses, and charges incurred by theAuthority, shall be returned to the then-existmg Parties in proportion to the contributions made byeach.SECTION 7: MISCELLANEOUS PROVISIONS7.1 Dispute Resolution. The Parties and Authority shall make efforts to settle alldisputes arising out of or in connection with this Agreement. Before exercising any remedyprovided by law, a Party or Parties and the Authority shall engage in nonbinding mediation in themanner agreed to by the Party or Parties and the Authority, In the event that nonbinding mediationdoes not resolve a dispute within one hundred twenty (120) days after the demand for mediationis made, any Party or the Authority may pursue any all remedies provided by law.7.2 Liability of Directors. Officers. and Employees. The Directors, officers, andemployees of the Authority shall use ordinary care and reasonable diligence in the exercise of theirpowers and in the performance of their duties pursuant to this Agreement. No current or formerDirector, officer, or employee will be responsible for any act or omission by another Director,officer, or employee. The Authority shall defend^ indemnify, and hold harmless the individualcurrent and former Directors, officefs, and employees for any acts or omissions in the scope oftheir employment or duties in the manner provided by California Government Code § 995 et seq.Nothing in this subsection shall be construed to limit the defenses available under the law to theParties, the Authority, or its Directors, officers, or employees.7.3 Indemnification. The Authority shall acquire such insurance coverage as the Boarddeems necessary to protect the interests of the Authority, the Parties, and the Authority sratepayers. The Authority shall indemnify, defend, and hold harmless the Parties and each of theirrespective board members or council members, officers^ agents, and employees, from any and allclaims, losses, damages, costs, injuries, and liabilities of every kind to the extent arising directlyor indirectly from the conduct, activities, operations, acts, and omissions of the Authority underthis Agreement.7.4 Assignment. The rights and duties of a Party may not be assigned or delegatedwithout the advance written consent of all other Parties, Any attempt to assign or delegate suchrights or duties without express written consent of all other Parties shall be null and void. ThisAgreement shall inure to the benefit of, and shall be binding upon, the successors and assigns ofthe Parties. This subsection does not prohibit a Party from entering into an independent agreement1355695,0000 n334B5367.1820 with another entity regarding the financing of that Party's contributions to the Authority (if any),or the disposition of proceeds which that Party receives under this Agreement, so long as suchindependent agreement does not affect, or purport to affect, the rights and duties of the Authorityor the Parties under this Agreement.7.5 SeverabUitv, If any part of this Agreement is held, determined, or adjudicated tobe illegal, void, or unenforceable by a court of competent jurisdiction, the remainder of thisAgreement shalt be given effect to the fullest extent reasonably possible,7.6 Further Assurances. Each Party agrees to execute and deliver all furtherinstruments and documents, and take any further action that may be reasonably necessary toeffectuate the purposes of this Agreement7.7 Counterparts. This Agreement may be executed in two or more counterparts, eachof which shall be deemed an original, but all ofwhidi together shall constitute but one and thesame instrument.7.8 Notices. Any notice authorized or required to be given pursuant to this Agreementshall be valldly given if served in writing either personally, by deposit in the United States mail,first class postage prepaid with return receipt requested, or by a recognized courier service to theaddresses specified on Exhibit A. Notices given (a) personally or by courier service shall beconclusively deemed received at the time of delivery and receipt and (b) by mail shall beconclusively deemed given 48 hours after the deposit thereof (excluding Saturdays, Sundays andholidays) if the sender receives the return receipt. All notices shall be addressed to the office ofthe clerk or secretary of the Authority or Party, as the case may be, or such other person designatedin writing by the Authority or Party. Notices given to one Party shall be copied to all other Parties.Notices given to the Authority shall be copied to all Parties.[Signature to Follow on Next Page]1455695,00001\33485367.1821 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as evidenced by thesignatures belowMEMBER AGENCY:CITYOFIRVINEBy:.Name:Title:Dated:Approved as to Form:City AttorneyApproved as to Form:_, 2020Special CounselCITY OF FULLERTONCITY OF HUNTINGTON BEACHMay^n. <t&htn<AjUu)City Clerk _ /W^City ManagerApprove<| as to Form\^jL [}By:Name:Title:Dated:_,2020Approved as to Form:City Attorney55695.00001V33485367.115822 EXHIBIT ALIST OF PARTIESFounding Members:City of Irvine City of Fullertou1 Civic Center Plaza 303 W. Commonwealth Ave.Irvine, CA 92606 Fullerton, CA 92832City ofHuntington Beach2000 Main StreetHuntington Beach, CA 9264855695.0000 H33526931.1823 EXHIBITSANNUAL ENERGY USAGE BY JURISDICTIONCity ofBuena Park2CityofFullertonCity ofHuntington BeachCity^flrvineCity of Lake ForestTotal2019AnnualLoadGWh14506761,0461,9374594,5691. Annual energy usage is preliminary data and has not been validated by Southern California Edison(SCE) at the time of execution of the Agreement. This Exhibit will be updated without requiringan amendment of the Agreement upon SCE validation of the data.2. City's 2019 annual load is an estimated value that may change pending preliminary and validateddata from SCE.55695.00001\33526896.1824 EXHIBIT CPARTY VOTING SHARESCity of Buena ParkCityofFullertonCity ofHuntington BeachCityoflrvineCity of Lake ForestTotalEstimatedVotingShare19.8%14.8%22.9%42.4%10.0%100.0%1. Estimated Voting Share is based on Exhibit B (Annual Energy Usage by Jurisdiction). Annualenergy usage is preliminary data and has not been validated by Southern California Edison (SCE)at the time of execution of the Agreement. This Exhibit will be updated without requiring anamendment of the Agreement upon SCE validation of the data.55695.00001\33526896.1825 EXHIBIT DFORM OF CAPITAL LOAN AGREEMENTAGREEMENT BETWEEN THE CITY OF IRVINE AND THE ORANGE COUNTYPOWER AUTHORITY FOR THE ADVANCE OF FUNDS FOR IMPLEMENTATIONOF A COMMUNITY CHOICE ENERGY PROGRAMThis Agreement, effective _ ("Effective Date"), is by and between theCITY OF IRVINE, a municipal corporation and charter city ("City"), and the ORANGECOUNTY POWER AUTHORITY, a California joint powers authority ("Authority"), for thepurpose of stating the terms for an advance of funds from the City to be repaid to City by theAuthority as provided herein. City and Authority shall be referred to individually as a "Party"collectively as the "Parties."RECITALSA. On _, the Authority was formed by participating Orange County cities,including the City, to administer a community choice aggregation ("CCA") program within theJui'isdictional boundaries of its members in Orange County,B. Prior to formation of the Authority, the City funded a feasibility study, peer review, andother activities necessary to evaluate the feasibility and implementation of a CCA program. TheCity also funded certain costs to form the Authority and implement the CCA program for itselfand the Authority's founding members.C. As expressly stated in that certain document entitled, Orange Coimfy Power AzdhorHyJoint Powers Agreement, at Section 5.5, which is incorporated herein by this reference, it wasagreed upon by the parties thereto that the City would be reimbursed by the Authority for allcosts regarding the feasibility and implementation of the CCA program, contingent upon theAuthority's launch of the CCA program.D. The City estimates that its costs to study, form and implement the Authority are$250,000, which include, but are not limited to, costs for its feasibility study, peer review, Citystaffing, legal costs, member and stakeholder outreach, and formation of the Authority("Formation Costs"),E, The City estimates that the Authority will need approximately $2,500,000 for workingcapital to pay for implementation costs through a projected launch of the CCA program in 2022("Pre-Launch Costs").F. The City farther estimates that the Authority will need up to an additional $8,000,000 to$20,000,000 in the form of a credit facility for operational support and power procurement aswell as other cash flow needs, and that any such credit facility may require cash collateral froman Authority member between $2,000,000 to $5,000,000 ("Launch Costs").1955695.00001\33485367,t826 G. The Parties desire to enter into this Agreement to document the Authority's repaymentobligations to the City for all such funds expended on behalf of, or in support of, the formation ofthe Authority and implementation of the CCA program.AGREEMENTNOW THEREFORE, in consideration of their mutual promises and obligations, {heParties hereby agree as follows:1. City Loan to the Authority.1.1. Formation Costs. The Authority acknowledges that the City has expended certainCity funds toward Formation Costs and agrees to reimburse the City for such costs in an amountnot to exceed $250,000 dollars, subject to the repayment provisions herein.1.2. Pre-Launch Costs. The City agrees to loan the Authority Pre-Launch Costs in theamount of $2,500,000 by January 1, 2021, which shall be used by the Authority for workingcapital costs associated with the Authority's launch, anticipated in 2022.1.3 Launch Costs, The City agrees to post the necessary cash col lateral, not to exceed$5,000,000, in order for the Authority to secure a credit facility for its Launch Costs foradditional working capital associated with power procurement and operational support (CreditAgreement"), The City will also provide a loan for Launch Costs if needed by the Authorityshould a Credit Agreement be unavailable or insufficient to cover the Authority's workingcapital needs. The terms and conditions of any City loan to the Authority for Launch Costs(excluding the cash collateral requirement above) shall be negotiated and agreed upon in anamendment to this Agreement, subject to the reasonable approval of the Parties. The Authorityshall provide the City with the Authority's pro forma demonstrating the amount needed for theaforementioned City loan.1.4. City Loan Amount. Formation Costs, Pre-Launch Costs, and Launch Costs shallbe collectively referred to herein as "City Loan Amount."2. Repayment; Interest.2.1 Repayment Date. The Authority shall repay the City Loan Amount to City, plusinterest, no fater than the repayment date, which shall be January 1» 2027. The Partiesacknowledge that they may modify the Repayment Date for the Launch Costs in an amendmentto this Agreement depending on the terms and conditions of the Credit Agreement.2.2 Interest Rate. In accordance with subsection 2.3, interest shall be paid on al!outstanding portions of the City Loan Amount that bear interest. The interest rate on anyoutstanding amount shall be calculated according to the sum of the following calculation of eachrespective quarter:2055695.0000I\33485367,1827 Prmdpalx Quarterly Interest Rate x (No. of Days m Quarfer/No. of Days mYear)Where "Principal" is the relevant funding ofthe City Loan Amount as described herein;Quarterly Interest Rate is the gross earnings for the respective quarter as reported in the Cityoflrvine Treasurer's monthly investment report found on the Treasurers websitehttps://w\vw.citvofn'vinc.or2/adininisti'ativc-set'vicos"departinent/investincnt"policies-and-t'eportc;"No. of Days in Quarter" is the sum of days of each month that make up each respectivequarter; and "No. of Days in Year" is 365, except in leap years^ in which the number of days intheyearshEillbe366.The City Loan Amount shall bear interest as follows:a. Formation Costs shall bear no interest whatsoever and shall be repaid to Cityas reimbursement for out-of-pocket expenses by the Repayment Date.LL Pre-Launch Costs shal 1 bear interest beginning January I , 2021 through theRepayment Date as estimated and set forth on Exhibit A, attached hereto.£^ Launch Costs for the Cit/s collateral associated with the CreditAgreement shall bear interest beginning on the effective date of the CreditAgreement. Launch Costs for amendment to this Agreement as set forthin subsection 1.3, through the Repayment Date,In the event the City Loan Amount, along with any and all interest owed pursuant to this Section2» are not repaid by the Repayment Date, any such amounts that remain outstanding shall accrueinterest at the rate specified by law for prejudgment interest.3. City_Liabiljtv; HpIcHTarmless; Indemnification.3.1 City Liability. The Authority acknowledges and agrees that by lending said fundsto the Authority, the City does not assume any debt, liability, obligation^ or duty whatsoever withrespect to the Authority's operations, liabilities, business, or transactions.3,2. Hold Harmless/lndemnification. The Authority shall hold harmless, indemnifyand defend the City, its elected officials, officers, employees, and agents from and against anyand all claims, suits or actions of every kind which arise out of the performance ornonperformance of the Authority's covenants, responsibilities, and obligations under thisAgreement, and which result fi'om the negligent or wrongful acts of the Authority or its boardmembers, officers, employees, or agents. City shall hold harmless, indemnify and defend theAuthority, its board members, officers, employees and agents from and against any and allclaims, suits or actions of any kind which arise out of the performance or non-performance of theCity's covenants, responsibilities and obligations under this Agreement and which result fromthe negligent or wrongful acts of the City or its elected officials, officers, employees or agents.In the event of concurrent negligence of the City, its officer or employees, and the Authority, itsofficers and employees, the liability for any and all claims for injuries or damages to persons2155695.00001V33485367.1828 and/or property or any other loss or costs which arise out of the terms, conditions, covenants orresponsibilities of this Agreement shall bo apportioned according to the California theory ofcomparative negligence.4. General Provisions.4.1. Audit. Prior to January 1, 2023, the City may audit the Authority's expenditureofPre-Launch Costs to confirm that such expenditures have been made consistent with thepurposes of this Agreement.4.2 Waiver. The waiver by City or Authority of any term, covenant, or conditionherein contained shall not be deemed to a waiver of such term, covenant, or condition or anysubsequent breach of the same or any other term, covenant, or condition herein contained.4.2. Successors and Assigns/Assi&nment. The terms of this Agreement shall applyand bind the heirs, successors, executors, administrators and assigns of the Parties. No Partymay assign this Agreement without the express written consent of the other Party, which shallnot be unreasonably withheld.4.3. Entiretv/Amendment. This Agreement contains the entire understanding betweenthe Parties relating to the obligations of the Parties described herein. No provision of thisAgreement may be amended or added to except by an agreement in writing signed by the Partiesor their respective successors in interest. This Agreement shall not be effective or binding untilfully executed by both Parties.4.4. Venue & Choice of Law, This Agreement shall be governed by and construedunder the laws of the State of California, In the event of any legal action to enforce or interpretthis Agreement, the sole and exclusive venue shall be a court ofcompetentjurisdictlon located inOrange County, California.4.5. Independent Entities. This Agreement is by and between two independententities and is not intended to and shall not be construed to create the relationship of agent,servant, employee, partnership, joint venture, joint employer, or association.4.6. Authority to Execute Aereement. The Parties each warrant that they have theauthority to execute this Agreement and that all actions have occurred, and all necessaryapprovals or consents have been obtained to allow each party to enter into this Agreement.4.7. Notices. All notices provided for herein shall be in writing and shall be deliveredto the appropriate parties as provided below:For City: Attn; City ManagerCityoflrvine1 Civic Center PlazaIrvine, CA 926062255695,00001\33485367.1829 For Authority: TBD//2355695,00001\3348S367.1830 TN WITNESS WHEREOF, Authority and City have executed this Agreement on thedate set forth below.CITYOFIRVINEDate:By:.Title:Approved as to Form:City AttorneyORANGE COUNTY POWER AUTHORITYDate:By:.Title:Approved as to Form:General Counsel2455695.00001V3348S367.1831 EXHIBIT APRE-LAUNCH COSTS INTEREST SCHEDULELoan BorrowerLoan Amount/Pre-LaunchLoan Start DateLoan Maturity DateEstimated Interest Rate3/31/20216/30/20219/30/202112/31/20213/31/20226/30/20229/30/202212/31/20223/31/20236/30/20239/30/202312/31/20233/31/20246/30/20249/30/202412/31/20243/31/20256/30/20259/30/202512/31/20253/31/20266/30/20269/30/202612/31/2026Orange County Power Authority$2,500,0001/1/20211/1/20271.75% See Note on Interest RatePeriod Interest10,787.6710,907,5311,027,4011,027.4010,787.6710,907.5311,027.4011,027.4010,787.6710,907.5311,027.4011,027.4010,877,7310,877.7310,997.2710,997.2710/787.6710,907.5311,027.4011,027.4010,787.6710,907.5311,027.4011,027.40Pre-Launch LoanTotal Due 1/1/2027Cumulative Interest$10,787.6721,695.2132,722.6043,750.0054,537.6765,445.2176,472.6087,500.0098,287.67109,195.21120,222.60131,250.00142,127.73153,005.46164,002.73175,000.00185,787.67196,695.21207,722.60218,750.00229,537.67240,445,21251,472.60$262,500.00$2»500/)00.00$2,762,500.00Note;Interest Rate is based on the average of last sixmonths of interest earned on the City's investmentportfolio,55695.00001\33485367.125832 City of Huntington Beach2000 Main Street ^ Huntington Beach, CA 92648(714) 536-5227 • www.huntingtonbeachca.govOffice of the City ClerkRobin Estanislau, City ClerkDecember 18, 2020City of IrvineAttn; City Manager1 Civic Center PlazaIrvine, CA 92606Dear City Manager:Enclosed is a partially executed original of the "Orange County Power Authority JointPowers Agreement" and a certified copy of "Resolution No. 2020 - A Resolution of theCity Council of the City of Huntington Beach, Approving the Orange County JointPowers Authority Agreement and Authorizing the Implementation of a CommunityChoice Aggregation Program" approved by the Huntington Beach City Council onDecember 10, 2020.Upon complete execution, please return a copy of the fully executed agreement to us.Please mail the Agreement to:Robin EstanislauCity Clerk2000 Main Street, 2nd FloorHuntington Beach CA 92648Your attention to this matter is greatly appreciated.Sincerely,^iw^ W-dnifMM)Robin Estanislau, CMCCity ClerkRE:dsEnclosuresSister Cities: Anjo, Japan • Waitakere, New Zealand833 City of Huntington Beach File #:21-096 MEETING DATE:2/1/2021 Submitted by Councilmember Moser - Consider directing staff to prepare a temporary ordinance that limits the fees paid by restaurants to third party delivery services during the COVID-19 pandemic I recommend that the City Council direct staff to prepare a temporary ordinance that places a 15% cap on fees paid by restaurants and a 5% cap on non-delivery fees paid by customers until current COVID-19 restrictions on both indoor and outdoor dining are lifted. City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™834 CITY OF HUNTINGTON BEACH CITY COUNCIL MEETING – COUNCIL MEMBER ITEMS REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: NATALIE MOSER, COUNCIL MEMBER DATE: FEBRUARY 1, 2021 SUBJECT: CONSIDER DIRECTING STAFF TO PREPARE A TEMPORARY ORDINANCE THAT LIMITS THE FEES PAID BY RESTAURANTS TO THIRD PARTY DELIVERY SERVICES DURING THE COVID-19 PANDEMIC The COVID-19 crisis has placed extreme financial pressures on restaurants, due in large part to the restrictions that have been placed on indoor and outdoor dining. As such, restaurants have had to rely heavily on third party delivery apps such as Postmates, Grubhub, DoorDash and Uber Eats to generate sufficient revenue to stay in business and keep staff employed. These third party apps require restaurants to pay high delivery fees that can at times exceed 30% of the cost of each order. Some restaurants pay these fees directly, which reduces their operating margins, while others have had to increase menu prices, which discourages potential customers. Noting that restaurants have been disproportionately impacted during COVID-19, several cities have adopted temporary ordinances to limit the fees that third party apps can charge restaurants during the pandemic. For example, the City of Los Angeles implemented fee caps of 15% and 5% for delivery and non-delivery fees that restaurants have paid. Further, the Los Angeles regulations also mandate that 100% of tips go directly to the drivers. Other cities that adopted similar measures in California include Alhambra, Palm Springs, and San Francisco. Of note, these measures are temporary and are set to expire upon the end of the pandemic or the lifting of indoor dining COVID-19 restrictions, whichever comes first. I believe a similar ordinance in Huntington Beach is necessary to support our struggling restaurant industry, which is a major contributor to the vibrant economy that our City is well known for. Many of our restaurants have had to reimagine their business models and incur unforeseen expenses to comply with COVID-19 health and safety guidelines. By instituting a temporary cap on the fees that third party apps can charge our restaurants, the City can help alleviate some of the COVID-19 burden that our restaurants have had to face of late. RECOMMENDED ACTION I recommend that the City Council direct staff to prepare a temporary ordinance that places a 15% cap on fees paid by restaurants and a 5% cap on non-delivery fees paid by customers until current COVID-19 restrictions on both indoor and outdoor dining are lifted. 835 City of Huntington Beach File #:21-102 MEETING DATE:2/1/2021 Submitted by Mayor Carr, Councilmember Posey, and Councilmember Kalmick - Consideration of a No Confidence Vote in Mayor Pro Tem Tito Ortiz, and Removing him from the Mayor Pro Tem Leadership Role We recommend that the City Council vote to do the following: 1. Conduct a City Council vote of no confidence in Mr. Ortiz. 2. Remove Mr. Ortiz from his current leadership role as Mayor Pro Tem. 3. Identify an alternate member of the City Council to serve as Mayor Pro Tem for the remainder of this year. City of Huntington Beach Printed on 1/27/2021Page 1 of 1 powered by Legistar™836     CITY OF HUNTINGTON BEACH  CITY COUNCIL MEETING – COUNCIL MEMBER ITEMS REPORT    TO:    THE HONORABLE MAYOR AND CITY COUNCIL    FROM:    KIM CARR, MAYOR      MIKE POSEY, COUNCIL MEMBER      DAN KALMICK, COUNCIL MEMBER    DATE:    FEBRUARY 1, 2021    SUBJECT:  CONSIDERATION OF A NO CONFIDENCE VOTE IN MAYOR PRO TEM TITO ORTIZ, AND  REMOVING HIM FROM THE MAYOR PRO TEM LEADERSHIP ROLE    On  December  7 th,  Council  Member  Tito  Ortiz  was  selected  unanimously  by  his  fellow  council  members to serve in a leadership role as Mayor Pro Tem for the City  of  Huntington  Beach.   Unfortunately,  Mr.  Ortiz  has  failed  to  perform  at  a  level  expected  for  this  position  and  has  demonstrated little commitment to serving in the role with honor and dignity.  His unprofessional  demeanor and poor judgement have raised concerns among residents, local business owners, and  his fellow council members.  The Huntington Beach community expects local elected officials to take  their governing responsibilities seriously and we whole heartedly agree.    Included in the City Council manual is an article from the Institute for Local Government, titled “The  Ethics of Speaking One’s Mind.”  In part, that article reads as follows:    “When one works in the public sector, and particularly as one moves up the levels of the  organizational hierarchy in the public sector, one becomes less and less a ’public citizen’ and  more and more a ’public servant’ … Being a public servant may constrain your activities in  many ways, including the open expression of personal views.  Having the right to engage in an  activity doesn’t mean exercising that right is necessarily the best course of action.”    Based on the way Mr. Ortiz has chosen to conduct himself during his time as a public servant, we are  asking that the City Council consider the following:     Issue a City Council vote of no confidence in Mr. Ortiz as Mayor Pro Tem.       Remove Mr. Ortiz from his current leadership role as Mayor Pro Tem, and identify another  member of the City Council to serve in that position.    RECOMMENDED ACTION  We recommend that the City Council vote to do the following:    1. Conduct a City Council vote of no confidence in Mr. Ortiz.    2. Remove Mr. Ortiz from his current leadership role as Mayor Pro Tem.    3. Identify an alternate member of the City Council to serve as Mayor Pro Tem for the remainder  of this year.  837