May 2020
Local Assistance Procedures Manual Exhibit 15-H
Proposer/Contractor Good Faith Effort
C. The items of work made available to DBE firms including those unbundled contract work items into economically feasible units to facilitate DBE participation. It is the bidder's responsibility to demonstrate that sufficient work to facilitate DBE participation in order to meet or exceed the DBE contract goal.
Items of
Work
Proposer or Bidder
Normally Performs Item
Breakdown of
Items
Amount
($)
Percentage
Of
(Y/N) Contract
N/A – Goal has been met – See Exh 10-O1
0.00%
0.00%
0.00%
D. The names, addresses and phone numbers of rejected DBE firms, the reasons for the bidder's rejection of the DBEs, the firms selected for that work (please attach copies of quotes from the firms involved), and the price difference for each DBE if the selected firm is not a DBE:
Names, addresses and phone numbers of rejected DBEs and the reasons for the bidder's rejection of the DBEs:
May 2020
Local Assistance Procedures Manual Exhibit 15-H
Proposer/Contractor Good Faith Effort
N/A – Goal has been met – See Exh 10-O1
Names, addresses and phone numbers of firms selected for the work above:
N/A – Goal has been met – See Exh 10-O1
E. Efforts (e.g. in advertisements and solicitations) made to assist interested DBEs in obtaining information related to the plans, specifications and requirements for the work which was provided to DBEs:
N/A – Goal has been met – See Exh 10-O1
F. Efforts (e.g. in advertisements and solicitations) made to assist interested DBEs in obtaining bonding, lines of credit or insurance, necessary equipment, supplies, materials, or related assistance or services, excluding supplies and equipment the DBE subcontractor purchases or leases from the prime contractor or its affiliate:
N/A – Goal has been met – See Exh 10-O1
May 2020
Local Assistance Procedures Manual Exhibit 15-H
Proposer/Contractor Good Faith Effort
G. The names of agencies, organizations or groups contacted to provide assistance incontacting, recruiting and using DBE firms (please attach copies of requests to agencies and any responses received, i.e., lists, Internet page download, etc.):
Name of Agency/Organization Method/Date of Contact Results N/A – Goal has been met – See Exh 10-O1
H. Any additional data to support a demonstration of good faith efforts:
N/A – Goal has been met – See Exh 10-O1
May 2020
Local Assistance Procedures Manual Exhibit 15-H
Proposer/Contractor Good Faith Effort
May 2020
City of California City – RFQ for On-Call Professional Engineering Services
ATTACHMENT C
EXHIBIT 10-Q - Disclosure of Lobbying Activities
May 29, 2025 Page 33
Local AssistanceProcedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES
COMPLETE THIS FORM TO DISCLOSE LOBBYING ACTIVITIES PURSUANT TO 31 U.S.C. 1352 c. cooperative agreement
1. Type of Federal Action: 2. Status of Federal Action: 3. Report Type:
□
4. 6.
10. 12.
13. 15.
16. a. contract □ a. bid/offer/application □ a. initial b. grant b. initial award b. material change
c. cooperative agreement c. post-award
For \faterial Change Only:
e. loan guarantee year__ quarter ___ _
f. loan insurance
Name and Address of Reporting Entity
□
Congressional Di.strict, if known
Federal Department/Agency:
Federal Action Number, if known:
Name and Address of Lobby Entity
(If individual, last name, first name, Ml)
date oflast report ____ _
5. If Repo11ing Entity in No. 4 is Subawardee,
Enter Name and Address of Prime:
Congressional District, if know
7. Federal Program Name
CFDA Number,. ~
9. AwardA \;
~ Services (including
~ .rom No. IOa) G ~ 7:: name.Ml)
(attach Conti "" :\ ssary)
Amount of Payment (check all that a -0 Y Type of Payment (check all that apply) $ ______ D actual -0 "- a. retainer
"- b. one-time fee
Form of Payment (ch ~ c. conunission
O a.~ ~ d~~~
D b. in · ~ ,;<------- e deferred
- 0 _____ r. other, specify _________ _
.......:S... -vices Performed or to be performed and Datc(s) of Sci-vice, including \_:"" (s), or member(s) contacted, for Payment Indicated in Item 11:
(attach Continuation Sheet(s) if necessary)
Yes D No 0
Signature: _________________ _
Print Name:
-----------------
Title: __________________ _
Telephone No.: _________ Date: ____ _
Standard Form LLL Rev. 04-28·06
Authorized for Local Reproduction
Standard Form - LLL
d. loan
e. loan guarantee
f. loan insurance
4. Name and Address of Reporting Entity
Prime Subawardee
Tier , if known
6. 8.
10. 12. 13.
15. 16.
17. Information requested through this form is authorized by Title 31 U.S.C. Section 1352. This disclosure of lobbying reliance was placed by the tier above when his transaction was made or entered into. This disclosure is required pursuant to 31 U.S.C. 1352. This information will be reported to Congress
semiannually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Federal Use Only:
Distribution: Orig- Local Agency Project Files
Disclosure of Lobbying Activities
INSTRUCTIONS FOR COMPLETING EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES This disclosure form shall be completed by the reporting entity, whether subawardee or prime federal recipient at the initiation or receipt of covered federal action or a material change to previous filing pursuant to title 31 U.S.C. Section 1352. The □
filing of a form is required for such payment or agreement to make payment to lobbying entity 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 a covered federal action. Attach a continuation sheet for additional information if the space on the form is inadequate. Complete all items that apply for both the initial filing and material change report.
Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. Identify the type of covered federal action for which lobbying activity is or has been secured to influence, the outcome of a covered federal action.
2. Identify the status of the covered federal action.
3. Identify the appropriate classification of this report. If this is a follow-up report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last, previously submitted report by this reporting entity for this covered federal action.
4. Enter the full name, address, city, state, and zip code of the reporting entity. Include Congressional District if known. Check the appropriate classification of the reporting entity that designates if it is or expects to be a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the first tier. Subawards include but are not limited to:
subcontracts, subgrants, and contract awards under grants.
5. If the organization filing the report in Item 4 checks "Subawardee" then enter the full name, address, city, state, and zip code of the prime federal recipient. Include Congressional District, if known.
6. Enter the name of the federal agency making the award or loan commitment. Include at least one organization level below agency name, if known. For example, Department of Transportation, United States Coast Guard.
7. Enter the federal program name or description for the covered federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans and loan commitments.
8. Enter the most appropriate federal identifying number available for the federal action identification in item 1 (e.g., Request for Proposal (RFP) number, Invitation for Bid (IFB) number, grant announcement number, the contract grant. or loan award number, the application/proposal control number assigned by the federal agency). Include prefixes, e.g., "RFP-DE-90-001."
9. For a covered federal action where there has been an award or loan commitment by the Federal agency, enter the federal amount of the award/loan commitments for the prime entity identified in item 4 or 5.
10. Enter the full name, address, city, state, and zip code of the lobbying entity engaged by the reporting entity identified in Item 4 to influence the covered federal action.
11. Enter the full names of the individual(s) performing services and include full address if different from 10 (a). Enter Last Name, First Name and Middle Initial (Ml).
12. Enter the amount of compensation paid or reasonably expected to be paid by the reporting entity (Item 4) to the lobbying entity (Item 10). Indicate whether the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this is a material change report, enter the cumulative amount of payment made or planned to be made.
13. Check all boxes that apply. If payment is made through an in-kind contribution, specify the nature and value of the in-kind payment.
14. Check all boxes that apply. If other, specify nature.
15. Provide a specific and detailed description of the services that the lobbyist has performed or will be expected to perform and the date(s) of any services rendered. Include all preparatory and related activity not just time spent in actual contact with federal officials. Identify the federal officer(s) or employee(s) contacted or the officer(s) employee(s) or Member(s) of Congress that were contacted.
16. Check whether or not a continuation sheet(s) is attached.
17. The certifying official shall sign and date the form, and print his/her name title and telephone number.
Public reporting burden for this collection of information is estimated to average 30-minutes per response, including time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, D.C. 20503.
SFLLL-Instructions Rev. 06-04
:ntify the status oftbe covered federal action.
:ntify the appropriate classification of this report. If this is a follow-up report caused by a mate · :viously report.ed, enter the year and quarter in which the change occurred. Enter the date o · ,ort by this reporting entity for this covered federal action. ,G. ter the full name, address, city, state, and zip code of the reporting entity. lnclu Y ct ifknow1 xopriate classification of the reporting entity that designates ifit is or expec -i.. , ward recipient ~ of the subawardee, e.g., the first subawardee of the prime is the first ti -<).. Y ut are not limited icontracts, subgrants, and contract awards under grants. ~ V J1e organization filing the report in Item 4 checks "Subawar r t: ~ ame, address, city, state, and . · prime federal recipient. Include Congressional District · V ter the name of the federal agency making the aw -(_ :\ t. Include at least one organization level ~ncy name, if known. ror example, Departm y nited States Coast Guard. ter the federal program name or descri ,0 ~ demi action (item I). If known, enter the full Catah mestic Assistance (CFDA) numb '-' e agreements, loans and loan commitments. ter the most appropriate fe ~ r available for the federal action identification in item I (e.g., R >posal (RFP) nw1.1ber, I ~ \: ~ number, gmnt announcement number, the contmct grant. or loan a~ , appiication/propo · \, gned by the fedeml agency). Include prefixes, e.g., "RFP-DE-90-001." 0 re has been an award or loan commitment by the Federal agency, enter the fee ~ or the prime entity identified in item 4 or 5.
~ s, city, state, and zip code of the lobbying entity engaged by the reporting entity identifiec ederal action.
mes of the individual(s) perfonning services and include full address if different from IO (a). Enter ~nrl 1',f;,1,11,. rn;t;~1 n.ifl\
City of California City – RFQ for On-Call Professional Engineering Services
ATTACHMENT D
Signed copy of Proposer’s ACKNOWLEDGEMENT of the draft Contract May 29, 2025 Page 34
Local Assistance Procedures Manual Exhibit 10-R
A&E Boilerplate AgreementLanguage
ARTICLE XXXIV 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 XXXV SIGNATURES
(Name of LOCAL AGENCY) (Name of CONSULTANT)
(Signature) (Signature)
(Name of Signer) (Name of Signer)
Date:
Date:
"PROPOSER's ACKNOWLEDGEMENT: "I have received and reviewed the sample CONSULTANT CONTRACT. My signature below shall signify our firm's acceptance of said contract if our firm is selected for awarding a contract for the project as described in said RFP.
Juan M. Pantoja
By: Printed Name
0//2
Signature
May 2023
=21
THE BAKERSFIELD CALIFORNIAN
4900 CALIFORNIA AVE STE 100A
BAKERSFIELD, CA 93309
Proof of Publication
Ad Number: 468815 PO #:
Edition: CALC Run Times 2
Class Code LEGAL NOTICES
Start Date 04/30/2025 Stop Date 05/07/2025
CITY OF CALIFORNIA CITY Billing Lines 14.00 Inches 1.3940294 21000 HACIENDA BLVD Total Cost $ 257.06 Account 89113
CALIFORNIA CITY CA 93505
us
Billing CITY OF CALIFORNIA CITY
Address 21000 HACIENDA BLVD
CALIFORNIA CITY CA 93505
us
STATE OF CALIFORNIA
COUNTY OF KERN
I AM A CITIZEN OF THE UNITED STATES AND A RESIDENT
OF THE COUNTY AFORESAID: I AM OVER THE AGE OF
EIGHTEEN YEARS, AND NOT A PARTY OR INTERESTED
IN THE ABOVE ENTITLED MATTER. I AM THE ASSISTANT
PRINCIPAL CLERK OF THE PRINTER OF THE
BAKERSFIELD CALIFORNIAN, A NEWSPAPER OF
GENERAL ClRCULATION, PRINTED AND PUBLISHED
DAILY IN THE CITY OF BAKERSFIELD COUNTY OF KERN,
AND WHICH NEWSPAPER HAS BEEN ADJUDGED A
NEWSPAPER OF GENERAL CIRCULATION BY THE SUPERIOR
COURT OF THE COUNTY OF KERN, STATE OF CALIFORNIA,
UNDER DATE OF FEBRUARY 5, 1952, CASE NUMBER 5761O;
THAT THE NOTICE, OF WHICH THE ANNEXED IS A PRINTED
COPY, HAS BEEN PUBLISHED IN EACH REGULAR AND
ENTIRE ISSUE OF SAID NEWSPAPER
AND NOT IN ANY SUPPLEMENT THEREOF ON THE
FOLLOWING DATES, TO WIT:
04/30/2025 05/07/2025
Solicitor I.D.: O
First Text
REQUEST FOR QUALIFICATION
Ad Number 468815
FORQUAimCATIONSFOR
ON-CALLPRO ONALENGINEERINGSl!RVICES
FORFEDEKAI.AND STATEFUNDRDPROJJ!CTS
City af.Callfanda Cf1y 21000 HadendaBlvd. Callfomla Chy, CA 93505 Dau:lteltased: Aprll30, 2025
, Propcsa]sareduepJ1Drto3:00PMODMay29,2025 I
Contact Joe Bamgan, Pnbllc Wom Dlrectar:J:.m omladty-ca.govI (760)373-7162,fora copyoftheBFPon1sltwww . ugov
ApJ1130,May7.2025
468815
ALL IN YEAR 2025
I CERTIFY (OR DECLARE) UNDER PENALTY OF PERJURY
THAT THE FOREGO NG IS TRUE AND CORRECT.
DATED(T BAKERSFIELD CALIFORNIA
!;
RESOLUTION NO. 25-3157
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CALIFORNIA CITY AUTHORIZING THE CITY MANAGERTO EXECUTE
THE CONTRACT WITH BHT ENGINEERING, INC. FOR ON-CALL
PROFESSIONAL ENGINEERING SERVICES FOR LOCAL, STATE, AND
FEDERALLY FUNDED PROJECTS
The City Council of the City of California City (hereafter referred to as the “City”) does resolve as follows:
WHEREAS, the City needs On-Call Professional Engineering Services for local, state, and federal Funded Projects; and
WHEREAS, the City advertised the RFP for On-Call Professional Engineering Services for local, state, and federally funded projects on April 30, 2025, with submittals due by May 7, 2025, on the City’s Website and in the Bakersfield Californian; and WHEREAS, two proposals were received and evaluated, and the City determined that BHT Engineering, Inc. was the lowest responsive bidder.
NOW, THEREFORE BE IT RESOLVED, DETERMINED, AND ORDERED BY
THE CITY COUNCIL OF THE CITY OF CALIFORNIA CITY, CALIFORNIA, AS FOLLOWS:
SECTION 1: The City hereby authorizes the City Manager to sign a new agreement with BHT Engineering Inc. with an expiration date of June 30, 2030 and with a maximum contract sum in the amount of ($ ).
SECTION 2: City Clerk shall certify to the passage and adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED by the City Council of the City of California City, this day of 2025.
Marquette Hawkins
Mayor
----------------------
ATTEST: APPROVED AS TO FORM:
4921-1132-1950 v1 Page 1 of 2
Leanndrea Weible Victor M. Ponto,
Acting City Clerk City Attorney
CERTIFICATION
I, Leanndrea Weible, Interim City Clerk of the City of California City, California, hereby certify that the foregoing resolution was duly adopted at a meeting of the City Council of said City at its meeting held on the of 2025, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of California City, California, this day of , 2025.
Leanndrea Weible
Acting City Clerk
NB 3
COUNCIL AGENDA ITEM
September 9, 2025
TO:
FROM:
SUBJECT:
Honorable Mayor and Members of the City Council
Christopher Lopez, City Manager
Discuss and Provide Direction Regarding the City’s Financial Issues and Provide Direction on Beginning the Neutral Evaluation Process BACKGROUND:
The City has historically utilized a special tax to fund various operations for the community. Due to the loss of Measure C in 2024, the City made several reductions in personnel to offset some of the reductions, as well as putting forward various items to increase revenues.
As additional background to the City’s budget issues, he City adopted its FY 24/25 Budget on March 25, 2025, which utilized fund balance to balance the budget. On July 8, 2025, the Mayor and Council adopted the FY 25/26 Budget with the use of fund balance again to balance the budget.
The City has now adopted two budgets in the last six months that utilized fund balance to balance its operating budgets.
Over the last year, the City has asked voters to approve an extension of Measure C, which generated approximately $6M in revenues to fund public safety in the city, which expired on June 30, 2024 to help alleviate the City’s budget situation. Voters have not approved these initiatives, resulting in a lack of ongoing revenues to support city operations. In July 2025, the Mayor and City Council received polling results from registered voters that identified the lack of public support for a tax measure to fund critical operations in the City. As a result, the Council directed staff not to prepare items for a ballot measure asking voters to approve a special parcel tax to fund critical operations.
While various adjustments have been made to the budget, with the most notable one resulting in the elimination of 19 positions and saving $1.3M, there remains significant budget and service delivery issues in the community. Numerous residents have noticed these impacts, including the lack of maintenance at City facilities, and staff only responding to items on an emergency basis due to lack of staffing and funding.
General Fund Overview
The general fund is the primary operating fund for the City. The general fund pays for many of the services offered to the City’s residents including city personnel for Planning, Public Works Administration, Clerk’s Office, a portion of Police and Fire Department costs, and Recreation NB 3
programming. While many cities fund public safety primarily through the general fund, California City has funded the bulk of its public safety departments through a special tax for public safety.
Relying on a special tax measure with an expiration date for such a critical function has the effect of funding a primary function of local government with a temporary funding stream. Funding a core element of local government with a temporary revenue is not a best practice as it locks the city into a guaranteed crises every few years if there is no funding mechanism to take over the finite revenue stream. With the expiration of Measure C, this created a significant hole in the City’s budget since it relied on a temporary measure to fund public safety.
The pattern of temporarily funding such core functions of government has locked the City into a pattern of instability and resulted in many issues for the California City community.
Historical Review of Special Tax Revenues and Expenditures: BudgetProblem While Measure C covered a significant portion of the City’s public safety costs, the City ran deficits in these operations for many years. This means that even with the allocation of Measure C, or other special tax revenues, the city was unable to contain its expenditures within the revenues generated for public safety. The table below lists the total revenues, and the respective expenditures over the last ten years. The numbers included below are taken from the city’s audited financial statements, which can be viewed on the Finance Department website.
Fiscal Year
Ended
Public Safety
Revenues
Expenditures Excess (deficiency) of
revenues over (under)
expenditures
2015 $ 6,753,885 $ 7,307,711 $ (553,826)
2016 $ 6,794,075 $ 8,153,345 $ (1,359,270)
2017 $ 6,658,706 $ 8,632,413 $ (1,973,707)
2018 $ 6,934,156 $ 6,884,488 $ 49,668
2019 $ 7,787,816 $ 8,043,685 $ (255,869)
2020 $ 7,283,017 $ 8,857,956 $ (1,574,939)
2021 $ 7,704,425 $ 7,330,376 $ 374,049
2022 $ 7,583,090 $ 8,414,445 $ (831,355)
2023 $ 7,229,442 $ 7,593,986 $ (364,544)
2024 $ 6,621,949 $ 8,588,388 $ (1,966,439)
In the last ten years, and based on the City’s audited financial statements, the city exceeded its public safety expenditures in eight of the last ten years. This means that the city’s special tax for public safety was only covering a portion of the City’s public safety costs. The additional funding necessary to cover this expense was covered through the general fund.
Use of Fund Balance to Balance the Budget
The use of fund balance to cover ongoing expenditures is not a recommended practice. Given the city’s accrual of fund balance in the general fund, the City is able to utilize this funding in order NB 3
to balance the city’s budget. This deficit spending should be remedied, and a long-term solution is necessary to remove the City’s reliance on one time funding.
Utilizing fund balance is not a viable long-term strategy and will eventually lead to fiscal insolvency.
Additionally, the elimination of personnel in 2024 had the effect of lessening total general fund expenditures and thereby lessening the deficit for the fiscal year. Those reductions in personnel did come at a service cost since there is currently no maintenance staff to perform duties at the parks, city hall, senior center, and other core functions of the City. Reductions in maintenance and operations expenditures have also provided significant savings to the community, but the City is grappling with conditions related to service insolvency, as its unable to meet basic demands for service.
Financial Health Indicators
When reviewing various items that provide an indication to the City’s financial health, the following items should raise concern as it relates to the City’s financial health, which are currently being utilized by the City:
1. Use of fund balance to balance the budget
2. Net operating deficits in the general fund
3. City is unable to keep pace with aging of capital assets outside of public safety
4. General fund subsidies occur in enterprise funds including the Airport Fund and the Golf Course Fund
5. Nonrecurring revenues from development have been utilized to fund operating costs (use of one-time revenue from development projects)
6. Public service levels do not need the standards and needs in the community These practices are indicative of the broader issues related to the City’s ability to remain solvent into the future.
Insolvency:
California City has experienced significant stress due to ongoing deficits that have resulted in the inability to provide core services to the community. Without additional painful cuts to critical and vital services, and in the absence of new revenue sources, the City is headed towards fiscal insolvency. Opportunity still exists for the City of California City to addressitsfinancial condition, but it will require significant, difficult, and challenging conversations related to how to move the City towards financial sustainability.
It should be noted that according to John Knox and Marc Levinson, who wrote the document titled, Avoiding and Using Chapter 9 in Times of Fiscal Stress, they state that “filing for bankruptcy protection under chapter 9 should be considered a last resort, to be effected only after every effort has been made to avoid it.”
NB 3
They also state that, “In these circumstances, painful cuts in service levels, employee compensation and other expenses may be required, as well as increased revenues through higher taxes or fees.”
As an overview, the information below is included to illustrate the process by which a public agency seeks bankruptcy protection.
Eligibility to File for Bankruptcy Protection
In a presentation provided to the League of California Cities by individuals who represented the City of San Bernardino during their bankruptcy, they note the following items to be eligible for bankruptcy protection:
To be eligible, must:
1. Be a municipality
2. Be authorized under state law and meet any state requirements a. In CA under AB 506, either engage in “neutral evaluation process” (i.e. mediation) or declare a fiscal emergency
3. Be insolvent
4. Desire to effect a plan of adjustment
5. Negotiate with creditors or show negotiations would be impracticable
6. Show that petition was filed in good faith
Neutral Evaluation Process
California Government Code - GOV § 53760.3 spells out the process regarding the Neutral Evaluation Process which is a step necessary to file for bankruptcy protection. This section of the code is attached to this staff report for reference.
Relevant portions of the process are included below for reference:
A local public entity may initiate the neutral evaluation process if the local public entity is or likely will become unable to meet its financial obligations as and when those obligations are due or become due and owing. The local public entity shall initiate the neutral evaluation by providing notice by certified mail of a request for neutral evaluation to all interested parties as defined in Section 53760.1.
(b) Interested parties shall respond within 10 business days of receipt of notice of the local public entity’s request for neutral evaluation.
(c) (1) The local public entity and the interested parties agreeing to participate in the neutral evaluation shall, through a mutually agreed-upon process, select the neutral evaluator to oversee the neutral evaluation process and facilitate all discussions in an effort to resolve their disputes. (2) If the local public entity and interested parties fail to agree on a neutral evaluator within seven days after the interested parties have responded to the notification sent by the public entity, the public entity shall select five qualified neutral evaluators and provide their names, references, and backgrounds to the participating interested parties. Within three business days, a majority of NB 3
participating interested parties may strike up to four names from the list. If a majority of participating interested parties strikes four names, the remaining candidate shall be the neutral evaluator. If the majority of participating parties strikes fewer than four names, the local public entity may choose which of the remaining candidates shall be the neutral evaluator. (d) A neutral evaluator shall have experience and training in conflict resolution and alternative dispute resolution and shall meet at least one of the following qualifications:
(1) At least 10 years of high-level business or legal practice involving bankruptcy or service as a United States Bankruptcy Judge.
(2) Professional experience or training in municipal finance and one or more of the following issue areas:
(A) Municipal organization.
(B) Municipal debt restructuring.
(C) Municipal finance dispute resolution.
(D) Chapter 9 bankruptcy.
(E) Public finance.
(F) Taxation.
(G) California constitutional law.
(H) California labor law.
(I) Federal labor law.
RECOMMENDATION:
It is recommended that the Council discuss and direct the City Attorney and City Manager’s Office to begin the neutral evaluation process.
ATTACHMENTS:
1. Government Code Text
2024 Californ ia Cod e
Govern m en t Cod e - GOV
TITLE 5 - LOCAL AGENCIES
DIVISION 2 - CITIES,COUNTIES,AND
OTHER AGENCIES
PART 1 - POWERS AND DUTIES
COMMON TOCITIES,COUNTIES,AND
OTHER AGENCIES
CHAPTER 4 - Fin a n cia l Affairs
ARTICLE 5 - Bankrup t cy
Se ct ion 53760.3.
Un ive r sa l Cit a t ion :
CA Govt Code § 53760.3 (2024)
53760.3. (a ) A local pub lic entity m ay in itia te the ne utral evaluation process if the local public entity is or like ly will becom e unab le to m e e t its financia l ob ligations as and when those obligations are due or becom e due and owing. The local pub lic entity sha ll initiate the neutral eva luation by providing notice by certified m a il of a request for ne utral evalu ation to a ll in terested parties as defined in Section 53760.1.
(b) ) Interested parties shall respond with in 10 business days of receipt of notice of the local pub lic entity’s request for neutral evaluation. (c) (1) The local public entity and the in terested parties agree in g to participate in the neutral eva luation sha ll, through a m utua lly agreed-upon process, select the neutral eva luator to oversee the ne utral eva luation process and facilitate a ll d is cussions in an effort to resolve their d is putes. (2) If the local public entity and in terested parties fa il to agree on a neutral eva lu ator within seve n days after the in terested parties have re sponded to the notification sent by the pub lic entity, the pub lic entity shall select five qualified neutral e va luators and provide the ir nam e s, references, and backgrounds to the participating interested parties. With in three business days, a m a jority of participating in terested parties m ay strike up to four nam es from the lis t. If a m a jority of particip a ting intereste d parties strikes four nam es, the rem a ining candidate sha ll be the neutral eva luator. If the m a jority of participating parties strikes fewer than four nam es, the local public entity m ay choose which of the rem a ining candidates sha ll be the neutral eva lu a tor. (d) ) A neutral evaluator shall have experie nce and tra in ing in conflict resolution and a ltern ative dispute re solution and sha ll m e et at least one of the following qua lifica tio ns:
(1) At least 10 years of high-level business or legal practice in vo lving bankruptcy or service as a United States Bankruptcy Judge.
(2) Professional experience or tra ining in m un icipa l finance and one or m ore of the following issue areas:
(A) Mun icip a l organ iza tion.
(B) Mun icipa l debt restructuring.
(C) Mun icipa l finance d ispute reso lution.
(D) Chapter 9 bankruptcy.
(E) Pub licfinance.
(F) Taxation.
(G) Californ ia constitu tional law.
(H) Californ ia labor law.
(I) Federal labor law.
(e) ) The neutral evalua tor shall be im partial, ob je ctive, indepe nde nt, and free from prejud ice . The neutral evaluator shall not act with partiality or pre jud ice based on any participant’s personal characteristics, background, va lu es or be lie fs, or
perform ance during the neutral evaluation process.
(f) The neutral eva lu ator sha ll avoid a conflict of in terest or the a ppearance of a conflict of in terest during the neutral eva lu ation process. The ne utral eva lu ator sha ll m ake a reasonable inquiry to determ ine whether there are any facts that a reasonable in d ividual wou ld consider like ly to create a potentia l or actual conflict of interest. Notwithstand ing subdivision (n ), if the ne utral evaluator is inform ed of the existence of any facts that a reasonable individual would conside r like ly to create a potential or actual conflict of interest, the neutral eva luator sha ll disclose these facts in writing to the local pub lic entity and a ll intereste d parties in vo lved in the neutral eva lu ation. If any party to the neutral eva lu ation objects to the neutral eva luator, that party shall notify a ll other parties to the ne utral evaluation, includ ing the ne utral evaluator, with in 15 days of receipt of the notice from the neutral eva luator, the ne utral eva luator sha ll withdraw and a new neutral eva luator sha ll be se lected .
(g) Prior to the ne utra l evaluation process, the neutral evaluator shall not estab lis h another relationship with any of the partie s in a m anner that wou ld raise questions about the integrity of the ne utral eva luation, except that the neutral eva luator m ay conduct further ne utral evaluations regard ing other pote ntial local pub lic e ntities that m ay involve som e of the sam e or sim ilar constituents to a prior m ediation. (h) ) The neutral eva lu ator sha ll conduct the neutral eva lu ation process in a m anner that prom otes voluntary, uncoerced decisionm aking in wh ich each party m akes
free and inform ed choices regard ing the process and outcome . (i) The neutral eva luator sha ll not impose a settlem ent on the parties. The ne utral eva lu ator sha ll use his or her best efforts to assist the parties to reach a satisfactory resolution of their d is putes. Sub je ct to the d is cretion of the neutral evaluator, the neutral eva luator m ay m ake oral or writte n recom m endations for settlem e nt or p la n of read justm e nt to a party priva te ly or to a ll partie s jointly. (j) The neutral evaluator shall inform the local pub lic e ntity and a ll parties of the provisions of Chapter 9 relative to other chapters of the bankruptcy codes. Th is instruction shall h igh light the lim ited authority of United States bankruptcy judges in Chapter 9 such as the lack of flexibility ava ilab le to judges to re duce or cram down de bt repaym e nts and sim ilar efforts not availab le to reorganize the operations of the city that m ay be ava ilab le to a corporate entity. (k) The neutral eva lu ator m ay request from the parties docum entation and other inform a tion that the neutral evaluator believes m ay be helpful in assisting the parties to address the ob liga tions betwee n them . Th is docum entation m ay include the status of funds of the local pub lic entity that clearly d is tingu is hes between general funds and special funds, and the proposed plan of read jus tm ent pre pared by the lo cal pub lic entity.
(l) The neutral eva luator sha ll provide counsel and guidance to a ll parties, sha ll not be a legal representative of any party, and sha ll not have a fiducia ry duty to any party.
(m ) In the event of a settlem e nt with a ll inte rested parties, the ne utral eva luator m ay assist the parties in negotiating a prepetitioned, preagreed plan of read jus tm ent in connection with a potential Chapter 9 filing. (n) ) If a t any tim e during the ne utral evaluation process the local pub lic entity and a m a jority of the representatives of the intere sted parties participating in the ne utral eva luation wish to re m ove the neutral eva luator, the local public entity or any in terested party m ay m ake a request to the other in tereste d parties to rem ove the neutral eva luator. If the local public entity and the m a jority of the intereste d parties agree that the ne utral eva luator should be rem oved, the parties sha ll se lect a new neutral eva lu ator.
(o) ) The local public entity and a ll in terested parties participating in the neutral evaluation process shall negotiate in good fa ith. (p) ) The local public entity and in terested pa rties sha ll provide a representative of each party to atte nd a ll neutral eva lu ation sessions. Each representative sha ll have the authority to settle and resolve d is putes or shall be in a position to present any proposed settlem e nt or p la n of read justm e nt to the parties participating in the neutral eva lu ation.
(q) ) The parties shall m a intain the confide ntiality of the ne utral evaluation process and shall not d is close statem ents m ade, inform a tion d is closed, or docum ents
prepared or produced, during the neutral evaluation process, a t the conclusion of the ne utral evaluation process or during a ny bankruptcy procee d ing unless e ither of the follo wing occur:
(1) All persons that conduct or otherwise participate in the ne utral evaluation expressly agree in writing, or orally pursuant to Section 1118 of the Evidence Code, to d is closure of the com m unication, docum ent, or writing. (2) The inform a tion is deem ed necessary by a judge presid ing ove r a bankruptcy proceed ing pursuant to Chapter 9 of Title 11 of the United States Code to determ ine e ligib ility of a m un icipa lity to proceed with a bankruptcy proceed ing pursuant to Section 109(c) of Title 11 of the United States Code. (r) The neutral evalua tion established by th is process shall not la st for m ore than 60 days following the date the eva lu ator is se le cted, unless the local public entity or a m a jo rity of participating in tereste d parties e lects to extend the process for up to 30 add itiona l days. The neutral evaluation process shall not la st for m ore than 90 days following the date the eva lu ator is se lected unless the local public entity and a m a jo rity of the in tere sted parties agree to an extension. (s) ) The local pub lic entity shall pay 50 percent of the costs of ne utral evaluation, including, but not lim ited to, the fees of the evaluator, and the cre d ito rs shall pay the ba lan ce, unless otherwise agreed to by the parties. (t) The neutral evaluation process shall end if any of the following occur:
(1) The parties execute a settlem ent agree m ent.
(2) The parties reach an agreem ent or proposed plan of readjustm ent that requires the approval of a bankruptcy judge.
(3) The neutral eva lu ation process has exceeded 60 days following the date the neutral eva luator was se lected , the parties have not reached an agreem ent, and ne ith er the local public entity or a m a jo rity of the in terested parties e lects to extend the ne utral eva lu ation process past the in itial 60-day tim e period. (4) The local public entity initia ted the ne utral evaluation process pursuant to subd ivis ion (a ) and received no responses from intereste d parties with in the tim e specified in subd ivis ion (b ).
(5) The fiscal cond ition of the local pub lic e ntity deteriorates to the point that a fiscal em ergency is declared pursuant to Se ction 53760.5 and necessitates the nee d to file a pe tition and e xercise powers pursuant to app lica b le fede ral bankruptcy la w.
(u) ) If the 60-day tim e period for neutral eva luation has exp ire d, includ ing any extension of the neutral eva lu ation past the in itial 60-day tim e period pursuant to subd ivis ion (r), and the neutral evaluation is com p le te with d iffe rences resolved, the neutral eva lu ation sha ll be concluded. If the neutral eva lu ation process does not resolve a ll pend ing d is putes with cred ito rs the local pub lic entity m ay file a petition and exercise powers pursuant to app lica b le federal bankruptcy law if, in the opinion of the governing board of the local pub lic entity, a bankruptcy filing is necessary.
(Amended by Sta ts. 2012, Ch. 162, Sec. 68. (SB 1171) Effective Ja nuary 1, 2013.)