AGENDA
ITEM
10 AGENDA
CALEXICO California ITEM
10 CITY COUNCIL
AGENDA STAFF REPORT
DATE: September 2, 2026
TO: Honorable Mayor and City Council
APPROVED BY: Ben Martinez, City Manager ~
REVIWED BY: Karla Chaparo, Finance Director Je
PREPARED BY: Armando Orozco, Chief of Police A0
SUBJECT: Approval of a Memorandum of Understanding Between the City of Calexico and HGK Duty Free for Reimbursable Traffic Control Services
RECOMMENDATION
It is recommended that the City Council approve the Memorandum of Understanding between the City of Calexico and HGK Duty Free for the provision of reimbursable traffic control services and authorize the City Manager to execute the Agreement in substantially the form presented, subject to final review and approval by the City Attorney.
BACKGROUND
HGK Duty Free, located at 229 Imperial Avenue in Calexico, operates a commercial duty-free business near the downtown border area. Due to the location of the business and the high volume of vehicular traffic traveling southbound toward the Calexico/Mexicali Port of Entry, traffic congestion may occur during peak periods.
HGK Duty Free has requested assistance from the City of Calexico, through the Calexico Police Department and/or other authorized City personnel, for additional traffic control services in the vicinity of the business. The requested services are intended to assist with traffic circulation and congestion in the area, including traffic movements affecting ingress and egress.
The proposed Memorandum of Understanding establishes the terms under which the City may provide such services and requires HK Duty Free to reimburse the City for the costs associated with authorized services provided pursuant to the Agreement.
DISCUSSION
The proposed MOU establishes the terms under which the City may provide traffic control services in the vicinity of HGK Duty Free. Under the Agreement, the City may assign up to three (3) traffic controllers, generally Monday through Saturday during peak traffic periods. Individual assignments may be for up to six (6) hours per day, with each traffic controller limited to a maximum of 960 hours per fiscal year.
All services must be requested by HK Duty Free and approved in advance by the City. The City will retain full discretion over scheduling, staffing, deployment, and operational control of the traffic controllers. The Agreement does not guarantee HK Duty Free a minimum number of personnel or service hours, and the City may decline, modify, suspend, or cancel requested services based on staffing availability, public safety needs, operational considerations, nonpayment, or other City needs.
HGK Duty Free will reimburse the City for the costs associated with authorized traffic control services provided under the MOU, including applicable personnel, equipment usage, maintenance, replacement costs, and administrative expenses. Personnel hours and associated costs will be separately tracked for billing and reimbursement purposes.
The City will submit itemized invoices to HGK Duty Free on a monthly basis, with payment due within 30 days. The City may suspend or terminate services for nonpayment, and any suspension or termination will not relieve HK Duty Free of its obligation to pay for services previously provided.
The MOU also includes indemnification and insurance requirements intended to protect the City from liabilities associated with the requested services. Final indemnification and insurance provisions will be subject to review and approval by the City Attorney.
FISCAL IMPACT
Traffic controllers will be provided through the City's temporary staffing agency at the current contracted rate of $28.11 per hour per traffic controller. With up to three (3) traffic controllers, each limited to 960 hours per fiscal year, the maximum service level under the MOU is 2,880 personnel hours annually, resulting in a maximum estimated personnel cost of $80,956.80 per fiscal year.
HGK Duty Free will be responsible for reimbursing the City for the actual cost of authorized services provided under the MOU, as well as other applicable costs directly associated with providing the services. The City is not obligated to utilize or provide the maximum number of personnel or service hours.
Approval of the MOU does not authorize expenditures unrelated to services requested and approved under the Agreement. The Agreement is anticipated to have no net financial impact on the General Fund to the extent all costs incurred by the City are fully reimbursed by HGK Duty Free.
COORDINATED WITH:
City Manager's Office, Ben Martinez
City Attorney, Laura Estrada
Finance Director, Karla Chaparro
ALTERNATIVES
The City Council may:
1. Approve the Memorandum of Understanding between the City of Calexico and HGK Duty Free;
2. Approve the MOU with modifications;
3. Direct staff to negotiate additional terms; or
4. Decline to approve the MOU.
CONCLUSION
The proposed Memorandum of Understanding establishes a formal arrangement under which the City may provide traffic control services requested by HGK Duty Free while requiring HGK Duty Free to reimburse the City for the associated costs.
The Agreement preserves the City's discretion over staffing and deployment, establishes limits on the services that may be provided, requires advance authorization and separate tracking of reimbursable 2 services, and allows services to be suspended or terminated for nonpayment or operational considerations.
Staff recommends approval of the Memorandum of Understanding and authorization for the City Manager to execute the Agreement, subject to final review and approval by the City Attorney.
ATTACHMENT
1. Memorandum of Understanding Between HGK Duty Free and the City of Calexico for Traffic Control Services
3 ATTACHMENT NO. 1
MEMORANDUM OF UNDERSTANDING
Between the HGK Duty Free and the City of Calexico
This Memorandum of Understanding ("MOU") is entered into by and between HGK Duty Free ("HK"), located at 229 Imperial Avenue, Calexico, California 92231, and the City of Calexico ("City"), a municipal corporation. HK and the City may be referred to collectively as the "Parties."
RECITALS
a. HGK operates a commercial duty-free business within the City; b. The City, through its Police Department and/or other authorized personnel, may provide traffic control services to promote public safety and the orderly flow of traffic; c. HGK has requested that the City provide up to three (3) additional traffic controllers at specified dates, times, and locations to assist with traffic congestion and circulation in the vicinity of HGK;
d. The City is willing to provide such services subject to personnel availability, public safety needs, operational considerations, and prior City authorization; e. HK agrees to reimburse the City for the costs associated with authorized traffic control services provided pursuant to this MOU; and
f. The Parties desire to set forth the terms and conditions governing the provision of such services and the associated reimbursement obligations.
To further this intent, the Parties agree as follows:
1. Purpose
The purpose of this MOU is to establish the terms and conditions under which the City may provide up to three (3) additional traffic controllers in the vicinity of HGK Duty Free and under which HGK will reimburse the City for the costs associated with such services.
Nothing in this MOU guarantees HK a minimum number of traffic controllers or service hours.
2. Scope of Services
The City may provide traffic control services under this MOU as follows:
• Assignment of up to three (3) traffic controllers.
• Traffic direction and control at mutually agreed-upon locations in the vicinity of HGK
• Services generally Monday through Saturday at dates and times requested by HGK and approved in advance by the City, including peak traffic periods. • Traffic controllers may be assigned for up to six (6) hours per day to assist with traffic circulation and congestion in the vicinity of HGK, including traffic movements affecting ingress and egress.
All services must be requested by an authorized representative of HK and approved in advance by the City.
The City shall retain sole discretion over scheduling, staffing, deployment, and operational control of the traffic controllers. Regular City operations and public safety needs shall take priority over services requested pursuant to this MOU.
The City may decline, modify, suspend, or cancel any requested assignment based on personnel availability, public safety needs, operational considerations, nonpayment, or other City needs.
3. Compensation and Reimbursement
HGK shall reimburse the City for the costs associated with all authorized traffic control services actually provided pursuant to this MOU.
Traffic controllers are provided through the City's temporary staffing agency at the City's current contracted rate of Twenty-Eight Dollars and Eleven Cents ($28.11) per hour per traffic controller. HGK shall reimburse the City for the actual contracted cost incurred by the City for each traffic controller assigned under this MOU.
If the City's contracted temporary staffing rate changes during the term of this MOU, HGK shall reimburse the City at the City's then-current contracted rate. The City shall provide HK written notice of any change in the applicable hourly rate.
HGK shall also reimburse the City for other costs directly associated with providing the requested services, including, as applicable, equipment usage, maintenance, replacement costs, and administrative expenses.
The City shall separately track personnel hours and other costs associated with services provided pursuant to this MOU for billing and reimbursement purposes.
The City shall submit itemized invoices to HGK on a monthly basis. Payment shall be due within thirty (30) days of receipt of each invoice.
Any undisputed amounts not paid when due may accrue interest as permitted by law.
The City shall have no obligation to provide additional services while any undisputed invoice remains unpaid beyond thirty (30) days. Suspension or termination of services for depayment shall not relieve HICK of its obligation to pay for services previously
4. Term and Termination
This MOU shall commence on September 2026.
Each traffic controller assigned pursuant to this MOU shall be limited to a maximum of 960 hours of service per fiscal year. With a maximum of three (3) traffic controllers, services provided pursuant to this MOU shall not exceed 2,880 aggregate personnel hours per fiscal year.
The City is not obligated to utilize or provide the maximum number of personnel or service hours authorized under this MOU.
Upon reaching the applicable annual service-hour limit, no additional services shall be provided unless otherwise authorized through a written amendment executed by the Parties.
Either Party may terminate this MOU upon thirty (30) days' written notice to the other Party.
Notwithstanding the foregoing, the City may immediately suspend or terminate services due to public safety concerns, personnel or staffing limitations, operational needs, nonpayment, or other circumstances determined by the City to warrant immediate suspension or termination.
Termination or expiration of this MOU shall not relieve HK of its obligation to reimburse the City for services and costs incurred prior to the effective date of termination or expiration.
5. Liability and Indemnification
HGK agrees to indemnify, defend, and hold harmless the City of Calexico, its elected and appointed officials, officers, employees, agents, volunteers, and the Calexico Police Department from and against any and all claims, demands, damages, losses, liabilities, actions, costs, and expenses, including reasonable attorneys' fees, arising out of or related to the traffic control services provided pursuant to this MOU, to the extent permitted by law.
6. Insurance
HGK shall maintain, at its sole cost and expense, appropriate insurance coverage throughout the term of this MOU, including the following:
Commercial General Liability Insurance. Commercial General Liability Insurance with coverage at least as broad as Insurance Services Office occurrence form CG 00 01, or equivalent, with limits of not less than $2,000,000 per occurrence and $4,000,000 general aggregate.
Automobile Liability Insurance. Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 00 01, or equivalent, covering bodily injury and property damage with limits of not less than $1,000,000 combined single limit per occurrence.
HGK shall provide evidence of the required insurance coverage prior to commencement of services under this MOU. Any additional insured, primary and non-contributory, endorsement, or other insurance requirements shall be subject to final review and approval by the City Attorney.
7. Independent Entities
The Parties are independent entities, and nothing in this MOU shall be construed to create a partnership, joint venture, employment relationship, or agency relationship between the Parties.
8. Entire Agreement
This MOU constitutes the entire agreement between the Parties and supersedes all prior negotiations, representations, or agreements, whether written or oral, relating to the subject matter herein.
9. Amendments
This MOU may be amended only by a written document executed by authorized representatives of both Parties.
10. Governing Law
This MOU shall be interpreted in accordance with the laws of the State of California.
Venue for any legal action arising from this MOU shall be in Imperial County, California.
11. Notices
All notices permitted or required under this MOU shall be in writing and deemed given when personally delivered or deposited in the United States mail, postage prepaid, addressed as follows:
City:
City of Calexico
608 Heber Avenue
Calexico, California 92231
Attn: City Manager
HGK:
HGK Duty Free
229 Imperial Avenue
Calexico, California 92231
Attn:
12. Signatures
IN WITNESS WHEREOF, the Parties have executed this Memorandum of Understanding as of the dates set forth below.
HGK DUTY FREE
By: _
Name:
Title:
Date:
CITY OF CALEXICO
By:
Name:
Title:
Date: