SERVICE CONTRACT
for the
OPERATION SERVICES
of the
NORTH PLEASANT VALLEY DESALTER FACILITY
PROJECT NO. WT-11-01
between
CITY OF CAMARILLO
and
INFRAMARK, LLC
Dated as of
JANUARY 13, 2021
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TABLE OF CONTENTS
1. ARTICLE I REPRESENTATIONS AND WARRANTIES 1
2. ARTICLE II TERM 2
3. ARTICLE III CONSTRUCTION PERIOD SERVICES 3
4. ARTICLE IV OPERATION AND MANAGEMENT 6
5. ARTICLE V PERFORMANCE 26
6. ARTICLE VI MAINTENANCE, REPAIR AND REPLACEMENT 37
7. ARTICLE VII CAPITAL MODIFICATIONS 43
8. ARTICLE VIII SERVICE FEE AND OTHER PAYMENTS 46
9. ARTICLE IX BREACH, DEFAULT, REMEDIES AND TERMINATION 53
10. ARTICLE X INSURANCE, UNCONTROLLABLE CIRCUMSTANCES AND INDEMNIFICATION 63
11. ARTICLE XI SECURITY FOR PERFORMANCE 69
12. ARTICLE XII MISCELLANEOUS PROVISIONS 70
APPENDICES
1. FACILITY DESCRIPTION
2. GOVERNMENT APPROVALS
3. PERFORMANCE GUARANTEE REQUIREMENTS AND DAMAGES
4. GUARANTEED MAXIMUM UTILIZATIONS AND DEMANDS
5. SUPPLEMENTAL OPERATION AND MAINTENANCE REQUIREMENTS
6. ASSET EVALUATION PROTOCOL
7. OPERATING PROTOCOL REQUIREMENTS
8. INSURANCE REQUIREMENTS
9. EXIT TEST PROCEDURES AND STANDARDS
TRANSACTION FORMS
1. FORM OF OPERATIONS PERFORMANCE BOND
PROPOSAL FORM 1 – CONSTRUCTION PERIOD SERVICES
PROPOSAL FORM 2 – OPERATIONS PERIOD SERVICES
2. 3.
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This Service Contract, dated January 13, 2021, is by and between the CITY OF CAMARILLO, a California municipal corporation and general law city, and INFRAMARK, LLC, a Texas limited liability company.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, stipulated and agreed, the parties agree as follows:
DEFINITIONS AND INTERPRETATION
DEFINITIONS. As used in this Service Contract the following terms shall have the meanings set forth below:
“Acceptable Disposal Site” has the meaning specified in subsection 5.10(C). “Acceptance Date Conditions” has the meaning specified in subsection 4.4(A). “Acceptance Date” means the date on which Acceptance of the Facility occurs or is deemed to have occurred under Article IV.
“Affiliate” means any person directly or indirectly controlling or controlled by another person, corporation or other entity or under direct or indirect common control with such person, corporation or other entity.
“Annual Settlement Statement” has the meaning specified in subsection 8.8(A). “Annual Treated Water” means the sum of Treated Water produced in a Contract Year. “Appendix” means any of the Appendices and, as applicable, any attachments thereto, that are appended to this Service Contract and identified as such in the Table of Contents. “Applicable Law” means (1) any federal, state or local law, code or regulation, including the City’s rules, regulations and Administrative Code; (2) any formally adopted and generally applicable rule, requirement, determination, standard, policy, implementation schedule, or other order of any Governmental Body having appropriate jurisdiction; (3) any established interpretation of law or regulation utilized by an appropriate Governmental Body if such interpretation is documented by such Governmental Body and generally applicable; (4) any Governmental Approval; and (5) any consent order or decree, settlement agreement or similar agreement between the City and any Governmental Body; in each case having the force of law and applicable from time to time: (a) to the siting, permitting, design, acquisition, construction, equipping, financing, ownership, possession, start-up, testing, operation, maintenance, repair, replacement or management of water treatment systems, including the Facility; (b) to the conveyance, treatment, storage or supply of water; (c) to the air emissions therefrom; (d) to the transfer, handling, transportation or disposal of Facility By-Products; and (e) to any other i
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transaction or matter contemplated hereby (including, without limitation, any of the foregoing which pertain to water treatment, waste disposal, health, safety, fire, environmental protection, labor relations, building codes, the payment of prevailing or minimum wages and non-discrimination). Applicable Law shall be deemed to include the OSHA and the Environmental Mitigation Measures.
“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. 101 et seq., as amended from time to time and any successor statute thereto. “Bankruptcy Code” shall also include any similar state law relating to bankruptcy, insolvency, the rights and remedies of creditors, the appointment of receivers or the liquidation of companies and estates that are unable to pay their debts when due.
“Baseline Facility Record” has the meaning specified in Section 6.3 and in Appendix 6. “Billing Period” means each calendar month, except that (1) the first Billing Period shall begin on the Acceptance Date and shall continue to the last day of the month in which the Acceptance Date occurs and (2) the last Billing Period shall end on the last day of the Term of this Service Contract. Any computation made on the basis of a Billing Period shall be adjusted on a pro rata basis to take into account any Billing Period of less than the actual number of days in the month to which such Billing Period relates. “Brine” means the Facility By-Products from the reverse osmosis process, also known as concentrate, to be disposed of through the Salinity Management Pipeline pursuant to the Brine Disposal Agreement.
“Brine Disposal Agreement” means the Agreement between Calleguas Municipal Water District, City of Camarillo, and Pleasant Valley Mutual Water Company for Construction of and Use of Salinity Management Pipeline Discharge Service Connection, and any amendments thereto.
“Calleguas” means the Calleguas Municipal Water District. “Capital Modification” means any material change to any part of the Facility occurring after the Acceptance Date, including the installation of new structures, equipment, systems or technology. (Replacement of reverse osmosis membrane elements and pressure filter media are Capital Modifications pursuant to 6.1(C).) If (1) a replacement of any part of the Facility to be made by the Company pursuant to its obligations under Article VI, or (2) a capital investment, improvement or modification required to be made by the Company under Sections 4.14, 4.16, 5.8 or 9.8 can be reasonably expected to result in a material change to the Facility, such replacement, capital investment, improvement or modification shall be considered to be a Capital Modification subject to the provisions of Article VII.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., and applicable regulations promulgated thereunder, each as amended from time to time.
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“City” shall mean the City of Camarillo, a California municipal corporation and general law city. “City Fault” means (1) any breach by the City of its representations, warranties and covenants, all as set forth in this Service Contract (including the untruth of any City representation or warranty herein set forth), (2) any failure, non-performance or non-compliance by the City with respect to its obligations and responsibilities under this Service Contract, including all responsibilities and obligations relating to the operation and maintenance of the Facility not assumed by the Company to the extent not directly attributable to any Uncontrollable Circumstance, (3) any defect in the design or construction of the Facility, or Facility Equipment not supplied by the Company, other than those (if any) which the City likely would have been in a position to remedy had the Company performed its Construction Period Services consistent with the Standard of Care and its Operation Period Services consistent with the Contract Standards, (4) any failure by the City to comply with Applicable Law relating to the management, ownership, operation, maintenance, repair and replacement of the Facility, to the extent not directly attributable to any Uncontrollable Circumstance, and (5) any failure of City to obtain and maintain all state, federal, and local permits and licenses required for ownership, operation and maintenance of the Facility, which are not Contractor’s responsibility under this Agreement.
“City Indemnitee” has the meaning specified in Section 10.3. “Change in Law” means any of the following acts, events or circumstances to the extent that compliance with the change materially expands the scope, interferes with, delays or increases the cost of performing the obligations of either party:
(i) except as provided in (v) below, the adoption, amendment, promulgation, issuance, modification, repeal or written change in administrative or judicial interpretation of any Applicable Law on or after the Proposal Date, unless such Applicable Law was on or prior to the Proposal Date duly adopted, promulgated, issued or otherwise officially modified or changed in interpretation, in each case in final form, to become effective without any further action by any Governmental Body;
(ii) the order or judgment of any Governmental Body issued on or after the Proposal Date enforcing any Change in Law described in subsection (1) of this definition to the extent such order or judgment is not the result of willful or negligent action, error or omission or lack of reasonable diligence of the Company or of the City, whichever is asserting the occurrence of a Change in Law; provided, however, that the contesting in good faith or the failure in good faith to contest any such order or judgment shall not constitute or be construed as such a willful or negligent action, error or omission or lack of reasonable diligence; or iv
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(iii) except as provided in (i) and (ii) below, the denial of an application for, a delay in the review, issuance or renewal of, or the suspension, termination or interruption of any Governmental Approvals, or the imposition of a term, condition or requirement on or after the Proposal Date in connection with the issuance, renewal or failure of issuance or renewal of, any Governmental Approval to the extent that such occurrence is not the result of willful or negligent action, error or omission or a lack of reasonable diligence of the Company or of the City, whichever is asserting the occurrence of a Change in Law; provided, however, that the contesting in good faith or the failure in good faith to contest any such occurrence shall not be construed as such a willful or negligent action or lack of reasonable diligence.
It is specifically understood, however, that none of the following shall constitute a “Change in Law”:
(i) acts, events and circumstances with respect to the Domestic Water Supply Permit, to the extent that the Company has expressly assumed the permitting risk under Section 4.3;
(ii) any election by the City to require fluoridation of Treated Water; (iii) a change in the nature or severity of the actions typically taken by a Governmental Body to enforce compliance with Applicable Law which was in effect as of the Proposal Date;
(iv) any increase in any fines or penalties provided for under Applicable Law in effect as of the Proposal Date; or
(v) any act, event or circumstance that would otherwise constitute a Change in Law but that does not change the requirements imposed on the Company by the Contract Standards in effect as of the date of the Proposal. Notwithstanding any other provision contained herein, it is specifically understood that each of the Category I Additional Standards and the Category II Additional Standards are Contract Standards in effect as of the date of the Proposal. “Chief Operator” has the meaning specified in subsection 4.6(A). “Company” means Inframark, LLC., a corporation organized and existing under the laws of the State of Texas, and its permitted successors and assigns. “Company Fault” means (1) any breach by the Company of its representations, warranties and covenants, all as set forth in this Service Contract (including the untruth of any Company representation or warranty herein set forth), and (2) any failure, non-performance or noncompliance by the Company with respect to its obligations and responsibilities under this Service Contract to the extent not directly attributable to any Uncontrollable Circumstance.
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“Company Indemnitee” has the meaning specified in Section 10.5. “Consumables” means those materials, supplies and similar consumables used in connection with the operation of the Facility, which may include fuel oil, diesel fuel, cartridge filter media, gravel, office supplies and other chemicals (excluding Water Treatment Chemicals), lubricants and fuels.
“Construction Period Services” has the meaning specified in Article III. “Contract Administration Memorandum” has the meaning set forth in subsection 4.7(B). “Contract Administrator” has the meaning specified in subsection 4.6(C)). “Contract Date” means the date set forth above..
“Contract Representative” means, in the case of the Company, the individual specified in writing by the Company as the representative of the Company from time to time for all purposes of this Service Contract and, in the case of the City, the General Manager of the City or such other representative as shall be designated in writing by the General Manager from time to time.
“Contract Standards” means the standards, terms, conditions, methods, techniques and practices imposed or required by: (1) Applicable Law; (2) the Performance Guarantees; (3) Good Industry Practice; (4) the Operation and Maintenance Manual; (5) the Operating Protocol; (6) applicable written equipment manufacturers’ specifications; (7) applicable Insurance Requirements; and (8) any other standard, term, condition or requirement provided in this Service Contract to be observed by the Company. “Contract Year” means the City’s fiscal year commencing on July 1 in any year and ending on June 30 of the following year. The first Operation Period Contract Year shall be the fiscal year in which the Operation Period commences. Any computation made on the basis of a Contract Year shall be adjusted on a pro rata basis to take into account any Contract Year of less than 365 or 366 days, whichever is applicable. “Contractor” means the City’s general construction contractor, W.M. Lyles Co., or successor, responsible for constructing and commissioning the Facility. “Cost Substantiation” has the meaning described in Section 12.7. “Design Documents” means the final plans, technical specifications, drawings, record drawings and other design documents prepared in connection with the Facility. “DDW” means the California State Water Resources Control Board’s Division of Drinking Water, or any predecessor or successor agency.
“Emergency Operations Plan” has the meaning specified in Section 4.21. vi
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“Encumbrances” means any Lien, lease, mortgage, security interest, charge, judgment, judicial award, attachment or encumbrance of any kind with respect to the Facility, other than Permitted Encumbrances.
“Environmental Guarantee” has the meaning specified in Section 5.6. “EPA” means the United States Environmental Protection Agency and any successor agency. “Exit Test Plan” has the meaning specified in Appendix 9. “Extraordinary Item” has the meaning specified in Section 8.6. “Facility” means the North Pleasant Valley Desalter Facility designed by Brown and Caldwell and constructed by Contractor. The Facility includes the contact basin, pressure filters, RO feed tank and cartridge filters, backwash system, RO processes, treated water pump station, and operations building, yard piping, any related structures and equipment, and all roads, grounds, fences and landscaping appurtenant thereto inside the property and site boundaries, except the new onsite Production Well. The Facility includes influent raw water piping within the property boundary and distribution piping extending from the treated water pump station to the property boundary, and sewer lateral extending outside the property boundary to the City sanitary sewer manhole at STA - 0+11.93 as identified in the Design Documents. However, the Facility excludes the Salinity Management Pipeline starting at the fitting ROC-11, as identified in the Design Documents. All construction downstream of ROC-11 is owned and maintained by Calleguas and paid for by the City.
“Facility By-Products” means Brine, Residuals and Wastewater requiring disposal by the Company in accordance with Sections 5.12 and 5.13.
“Facility Equipment” means all manufactured equipment, property or assets, whether or not constituting personal property or fixtures, constituting part of the Facility, including tanks (other than concrete tanks), basins (other than concrete basins), process and treatment equipment, mechanical equipment, piping (with an original useful life of less than 20 years), reverse osmosis equipment and membrane elements, pressure filter equipment and media, electrical, instrumentation and controls, remote monitoring and communications, HVAC, chemical and other storage and feed systems, cranes and hoists, and any ancillary, appurtenant and support equipment and systems utilized in or at the Facility.
“Facility Site” has the meaning described in Appendix 1 upon which the Facility is located. “Facility Structures” means all structures, buildings, concrete tanks, concrete basins and piping (with an original useful life of equal to or greater than 20 years) constituting part of the Facility.
“Final Asset Evaluation” has the meaning described in Appendix 6.3. “Fixed Component” has the meaning specified in subsection 8.2(A). vii
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“Good Industry Practice” means the methods, techniques, standards and practices which, at the time they are to be employed and in light of the circumstances known or reasonably believed to exist at such time, are generally recognized and accepted as good operation, maintenance, repair, replacement and management practices in the municipal water treatment industry.
“Governmental Approvals” means all permits, licenses, authorizations, consents, certifications, exemptions, rulings, entitlements and approvals issued by a Governmental Body of whatever kind and however described which are required under Applicable Law to be obtained or maintained by any person with respect to the Operation Services. “Governmental Body” means any federal, state, regional or local legislative, executive, judicial or other governmental board, agency, authority, commission, administration, court or other body, or any official thereof having jurisdiction. “Guaranteed Maximum Electricity Demands” or “GMED” represents the maximum rate of electricity usage in kilowatts (kW) that will be used by the Facility for any 15-minute period during any month of operation.
“Guaranteed Maximum Electricity Utilizations” or “GMEU” represents the maximum amount of electricity in kilowatt-hours (kWh) that will be used by the Facility to meet the Water Delivery Guarantee delivered to the Water System defined in Section 5.3. “Hazardous Material” means any waste, substance, object or material deemed hazardous under Applicable Law including, “hazardous substances” as defined under CERCLA and “hazardous waste” as defined under RCRA.
“Independent Evaluator” means a qualified independent evaluator or evaluation firm with demonstrated skill and experience in the evaluation of utility property, not otherwise associated with the transactions contemplated hereby, selected with the mutual consent of the parties for the purpose of evaluating and determining the condition and weighted average useful life of the Facility pursuant to Section 6.3. The Independent Evaluator may be an engineer or other technical professional competent to perform such services. “Initial Term” has the meaning specified in Section 2.3. “Insurance Requirement” means any rule, regulation, code, or requirement issued by any insurance company that has issued a policy of Required Insurance under this Service Contract, as in effect during the Term of this Service Contract, compliance with which is a condition to the effectiveness of such policy.
“Legal Proceeding” means every action, suit, litigation, arbitration, administrative proceeding, and other legal or equitable proceeding having a bearing upon this Service Contract, and all appeals therefrom.
“Local Resources Program Agreement” means
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“Letter of Credit” means the irrevocable letter of credit which may be provided by the Company as an Acceptance Date Condition in accordance with the terms and conditions set forth in subsection 11.1(B).
“Loss-and-Expense” means, and is limited to, any and all actual loss, liability, forfeiture, obligation, damage, fine, penalty, judgment, deposit, charge, Tax, cost or expense relating to third-party claims for which the Company or the City, as applicable, is obligated to indemnify the other hereunder, including all reasonable fees and costs, except as explicitly excluded or limited under any provision of this Service Contract. “Mediator” means any person serving as a mediator of disputes hereunder pursuant to Section
9.13. “Metropolitan” or “MWD” means the Metropolitan Water District of Southern California. “Monitoring and Contingency Plan” means the revised monitoring plan attached to the Fox Canyon Groundwater Management Agency’s Resolution 2016-04 dated March 14, 2017. “Non-Binding Mediation” means the voluntary system of dispute resolution established by Section 9.13 for the resolution of any dispute arising under this Service Contract. “Notice to Proceed” means a written statement from the City to the Company (i) that the Facility is ready to produce and deliver Treated Water into the Water System and (ii) authorizing and directing the Company to begin Operation Services.
“Operating Protocol” means the protocol governing operation of the Facility, including all interface, coordination, and water delivery and supply policies, procedures, plans and protocols to be established, adopted and revised in accordance with Section 5.9 and Appendix 7.
“Operation and Maintenance Manual” means the manual prepared by the Company for the operation and maintenance of the Facility.
“Operation Period” means the period from and including the Acceptance Date to and including the last day of the Term.
“Operation Services” or “Services” means everything required to be furnished and done for and relating to the operation of the Facility by the Company pursuant to this Service Contract during the Operation Period. Operation Services include the employment and furnishing of all labor, materials, equipment, supplies, Consumables, tools, storage, transportation, insurance, sales, delivery and other things and kinds of services whatsoever necessary for the full performance of the Company’s operation, maintenance, repair, replacement, management, obtaining and maintaining Governmental Approvals and related obligations under this Service Contract, and all of the Company’s administrative, accounting, recordkeeping, reporting, notification and similar responsibilities of every kind whatsoever under this Service Contract pertaining to such obligations. ix
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“Operations Performance Bond” means the performance bond to be provided by the Company as an Acceptance Date Condition in accordance with the terms and conditions set forth in subsection 11.1(A) and in the form set forth in the Transaction Forms. “OSHA” means both the California Occupational Safety and Health Act, Chapter 3.2, Division 1, Title 8 of the California Code of Regulations, including all applicable regulations promulgated thereunder, and the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 650 et seq., including the applicable regulations promulgated thereunder, each as amended or superseded from time to time.
“Outfall Discharge Permit” means and refers to the Waste Discharge Requirements for Calleguas Municipal Water District, Regional Salinity Management Pipeline, Oxnard (National Pollutant Discharge Elimination System No. CA0046521, CI‐9404) and its renewals and successor permits, each as may be modified or amended from time to time.
“Overdue Rate” means the maximum rate of interest permitted by the laws of the State, if applicable, or the Prime Rate, whichever is lower.
“Performance Guarantees” means the guarantees of performance made by the Company specifically set forth in Article V and Appendix 3. “Prime Rate” means the prime rate as published in The Wall Street Journal, or a mutually agreeable alternative source of the prime rate if it is no longer published in The Wall Street Journal or the method of computation thereof is substantially modified. “Production Well” means the wells owned and operated by the City that supplies Untreated Water to the Facility. These wells can either be located offsite or on the Facility Site. “Proposal” means the document submitted by the Company in response to the City’s RFP, containing all required forms and accepted by the City. “Proposal Date” means the date on which the Company submitted its final technical proposal and price proposal in response to the RFP.
“Public Records Act” or “PRA” means the Public Records Act, California Government Code sections 6250 et seq.
“Renewal Term” has the meaning specified in Section 2.3. “Required Insurance” means the Company’s Required Operation Period Insurance, as set forth in Appendix 8.
“Required Operation Period Insurance” has the meaning specified in Appendix 8. “Residuals” means any semi-solid or solid material resulting from the treatment of Untreated Water which requires disposal as waste material.
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“Response Action” means any action taken in the investigation, removal, confinement, remediation or cleanup of a release of any Regulated Substance. “Response Actions” include any action which constitutes a “removal”, “response”, or defined by Section 101 of the CERCLA.
“remedial action” as
“RFP” means the City’s Request for Proposal to provide Contract Operations Services for the North Pleasant Valley Desalter dated June 8, 2020.
“Salinity Management Pipeline” means the Brine disposal pipeline and metering vault owned by Calleguas which is the subject of the Brine Disposal Agreement. “Security Instrument” means the Operations Performance Bond or Letter of Credit. “Security Plan” has the meaning set forth in Section 12.11. “Senior Supervisors” has the meaning specified in subsection 4.6(B). “Service Area” means all territory in which customers are served by the Water System during the Term hereof.
“Service Contract” means this Service Contract for the Operation of the North Pleasant Valley Desalter Facility, including the Appendices and the Transaction Forms, as the same may be amended or modified from time to time in accordance herewith. “Service Contract Amendment” has the meaning set forth in Section 4.8. “Service Fee” means the fee to be paid by the City to the Company as compensation for the Company’s performing the Operation Services, as calculated in accordance with Article VIII.
“Standard of Care” means the level of diligence and care customarily observed by private company operators of facilities comparable to the Facility. “State” means the State of California.
“Stated Amount” has the meaning set forth in Section 11.1. “Subcontract” means an agreement or purchase order by the Company, or a Subcontractor to the Company, as applicable.
“Subcontractor” means every person (other than employees of the Company) employed or engaged by the Company or any person directly or indirectly in privity with the Company (including all subcontractors and every sub-subcontractor of whatever tier) for any portion of the Operation Services, whether for the furnishing of labor, materials, equipment, supplies, services or otherwise.
“Substantial Completion” means the Contractor’s achievement of the potable water delivery milestone under the Contractor’s construction contract with the City and the production and delivery of Treated Water by the Facility into the Water System. The Substantial Completion date is, initially, the presumed Acceptance Date. xi
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“Target Acceptance Date” has the meaning specified in Section 4.5(D). “Tax” means any tax, fee, levy, duty, impost, charge, surcharge, assessment or withholding, or any payment-in-lieu thereof, and any related interest, penalty or addition to the tax. “Term” has the meaning specified in Section 2.3.
“Termination Date” means the last day of the Term of this Service Contract resulting from either a termination under Article IX or expiration under Article III. “Transaction Form” means any of the Transaction Forms appended to this Service Contract and identified as such in the Table of Contents.
“Transition Services” has the meaning specified in subsection 9.7(C). “Treated Water” means water made available by the Company to the City which has been treated at the Facility in accordance with Applicable Law. “Treated Water Delivery Guarantee” has the meaning set forth in Appendix 3. “Treated Water Treatment Guarantee” has the meaning set forth in Appendix 3. “Uncontrollable Circumstance” means any act, event or condition that (1) is beyond the reasonable control of the party relying on it as a justification for not performing an obligation or complying with any condition required of the party under this Service Contract, and (2) materially expands the scope, interferes with, delays or increases the cost of performing the party’s obligations under this Service Contract, to the extent that such act, event or condition is not the result of the willful or negligent act, error or omission, failure to exercise reasonable diligence, or breach of this Service Contract on the part of the party claiming the occurrence of an Uncontrollable Circumstance.
INCLUSIONS. Subject to the foregoing, Uncontrollable Circumstances shall include (without limitation) the following:
(i) a Change in Law, except as otherwise provided in the definition thereof, including a Change in Law pertaining to Taxes the effect of which is the imposition of a new State or local Tax on the private provision of water treatment services, or the imposition of a new State Tax, or an increase or decrease in the rate of a local Tax currently imposed on building materials used in the construction of the Facility or imposed for the use of sewers;
(ii) any injunction or similar order issued by a Governmental Body, provided that the Company is in compliance with the Contract Standards;
(iii) naturally occurring events (except weather conditions normal for the Service Area) such as landslides, underground movement, earthquakes, fires, tornadoes, hurricanes, floods, lightning, pandemics/epidemics and other acts of God; xii
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(iv) terrorism, sabotage or similar occurrence, acts of a declared public enemy, extortion, war, blockade or insurrection, riot or civil disturbance, or explosion caused by any of the foregoing;
(v) labor disputes, except labor disputes involving employees of the Company, its Affiliates, or Subcontractors which affect the performance of the Operation Services;
(vi) the failure of any Subcontractor (other than the Company) to furnish services, materials, chemicals or equipment on the dates agreed to, but only if such failure is the result of an event which would constitute an Uncontrollable Circumstance if it affected the Company directly, and the Company is not able after exercising all reasonable efforts to timely obtain substitutes;
(vii) the failure of any Subcontractor to furnish equipment which is critical to the Facility; but only if such failure is the result of an event which would constitute an Uncontrollable Circumstance if it affected the Company directly, and the Company is not able after exercising all reasonable efforts to timely obtain substitutes;
(viii) the failure of any appropriate Governmental Body or private utility having operational jurisdiction in the area in which the Facility is located to provide and maintain Utilities to the Facility which are required for the performance of this Service Contract, but, with respect to the electric power Utility, only to the extent provided in subsection 4.11(B);
(ix) any shortfalls in the delivery of Untreated Water to the Facility, as and to the extent provided in subsection 5.3(G);
(x) variations in the nature, condition or quality of Untreated Water, as and to the extent provided in Section 5.5 and Appendix 3;
(xi) the preemption, confiscation, diversion, destruction or other interference in possession or performance of materials or services by a Governmental Body in connection with a public emergency or any condemnation or other taking by eminent domain of any material portion of the Facility; (xii) a violation of Applicable Law by a person other than the affected party or its Subcontractors;
(xiii) with respect to the Company, any City Fault; or
(xiv) with respect to the City, any Company Fault.
EXCLUSIONS. It is specifically understood that, without limitation, none of the following acts, events or circumstances shall constitute Uncontrollable Circumstances:
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(i) any act, event or circumstance that would not have occurred but for the affected party’s failure to comply with its obligations hereunder; (ii) changes in interest rates, inflation rates, wage rates, insurance premiums, commodity prices, currency values, exchange rates or other general economic conditions;
(iii) with respect to the City, any changes in the financial condition of the City, and with respect to the Company, any changes in the financial condition of the Company, or Subcontractors affecting the ability to perform their respective obligations;
(iv) the consequences of error, neglect or omissions by the Company, any Subcontractor, any of their Affiliates or any other person in the performance of the Operation Services, including without limitation the failure of the Company or any Subcontractor to exercise reasonable diligence in anticipating or mitigating the consequences of any act, event or condition;
(v) union or labor work rules, requirements or demands which have the effect of increasing the number of employees employed at the Facility or otherwise increasing the cost to the Company of performing the Operation Services; (vi) weather conditions normal for the Service Area;
(vii) mechanical failure of equipment to the extent not resulting from a condition that is listed in the “Inclusions” Section of this definition;
(viii) except as provided in subsection 4.11(B), electric Utility power outages; (ix) failure of the Company to secure any patent or other intellectual property right which is or may be necessary for the performance of the Operation Services; or (x) except as provided in item (a) of the “Inclusions” Section of this definition, a Change in Law pertaining to Taxes.
“Untreated Water” means any water made available by the City to the Facility for treatment hereunder, irrespective of source.
“Variable Component” has the meaning specified in Section 8.2(A) “Wastewater” means any sanitary or process wastewater produced at the Facility. “Water Delivery Guarantee” has the meaning specified in subsection 5.3(A). “Water System” means the water distribution system (including all pipes, pipelines, pumping stations, mains, valves, distribution facilities and equipment, treatment works, sources of water supply, and related buildings, structures, improvements and assets) owned and managed by the City and serving the Service Area. Except as otherwise provided xiv
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herein, for purposes of this Service Contract, “Water System” shall not include the Facility.
“Water Treatment Guarantee” has the meaning specified in Section 5.2. “Water Treatment Chemicals” has the meaning specified in Appendix 5. “Weighting Factor” has the meaning specified in Appendix 6. “Working Days” means Monday through Friday, excluding holidays recognized by the City. xv
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ARTICLE I REPRESENTATIONS AND WARRANTIES
SECTION 1.1. REPRESENTATIONS AND WARRANTIES OF THE CITY. The City represents and warrants that:
A. Existence and Powers. The City is a California municipal corporation and general law city with full legal right, power and authority to enter into and to perform its obligations under this Service Contract.
B. Due Authorization. This Service Contract has been duly executed by the City pursuant to authority granted by action of the City Council, and constitutes a legal, valid and binding obligation of the City.
C. California Environmental Quality Act. Prior to the authorization of the execution of this Service Contract, the City certified an environmental impact report concerning the Facility in accordance with the California Environmental Quality Act.
SECTION 1.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In addition to any other representations and warranties made by the Company in this Service Contract, the Company represents and warrants that:
A. Existence and Powers. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, and has the authority to do business in this State and in any other state in which it conducts its activities, with the full legal right, power and authority to enter into and perform its obligations under this Service Contract.
B. Due Authorization and Binding Obligation. This Service Contract has been duly authorized, executed and delivered by all necessary corporate action of the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights from time to time in effect and equitable principles of general application.
C. No Conflict. To the best of its knowledge, neither the execution nor delivery by the Company of this Service Contract nor the performance by the Company of its obligations in connection with the transactions contemplated hereby or the fulfillment by the Company of the terms or conditions hereof (1) conflicts with, violates or results in a breach of any constitution, law, governmental regulation, by-laws or certificates of incorporation applicable to the Company or (2) conflicts with, violates or results in a breach of any order, judgment or decree, or any contract, agreement or instrument to which the Company is a party or by which the Company or any of its properties or assets are bound, or constitutes a default under any of the foregoing.
D. No Approvals Required. No approval, authorization, order or consent of, or declaration, registration or filing with, any Governmental Body is required for the 1 CC Agreement 2021-6
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valid execution and delivery of this Service Contract by the Company except as such have been duly obtained or made.
E. No Litigation. Except as disclosed in writing to the City, to the best of its knowledge, there is no Legal Proceeding, at law or in equity, before or by any court or Governmental Body pending or, to the best of the Company’s knowledge, overtly threatened or publicly announced against the Company, in which an unfavorable decision, ruling or finding could reasonably be expected to have a material and adverse effect on the execution and delivery of this Service Contract by the Company or the validity, legality or enforceability of this Service Contract against the Company, or any other agreement or instrument entered into by the Company in connection with the transactions contemplated hereby, or on the ability of the Company to perform its obligations hereunder or under any such other agreement or instrument.
F. Claims and Demands. Except as disclosed in writing to the City, to the best of its knowledge, there are no material and adverse claims and demands based in environmental, contract or tort law pending or threatened against the Company with respect to any water plant providing service to the general public designed, constructed, operated, maintained or managed by the Company.
G. Applicable Law Compliance. Except as disclosed in writing to the City, neither the Company, nor any Affiliate has knowledge of any material violation of any law, order, rule or regulation applicable to any water or wastewater plant providing service to the general public within the United States, which has been designed, constructed, operated, maintained or managed by the Company.
H. Patents and Licenses. The Company owns, or is expressly authorized to use under patent rights, licenses, franchises, trademarks or copyrights, the technology necessary for the Facility without any known material conflict with the rights of others.
ARTICLE II TERM
SECTION 2.1. EFFECTIVE DATE. This Service Contract shall become effective on the Contract Date and shall continue until the expiration of the Operation Period as specified by Section 2.3 or as sooner terminated as provided herein.
SECTION 2.2. CONSTRUCTION PERIOD. Company obligations stated under Article III, Construction Period Services, shall commence upon the Contract Date and shall continue until the Acceptance Date, which initiates the commencement of the Operation Period as specified by Section 2.3.
SECTION 2.3. OPERATION PERIOD. This Service Contract shall continue in effect for five (5) full years following the Acceptance Date (“Initial Term”), and may be renewed upon mutual 2 CC Agreement 2021-6
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agreement of the parties for up to an additional two (2) five-year renewal terms as provided in Section 2.5 (each, a “Renewal Term”; the Initial Term and any Renewal Term being referred herein as the “Term”). If this Service Contract is terminated earlier pursuant to the termination provisions under Article IX, however, the Term shall be deemed to have ended as of the date of such termination. All rights, obligations and liabilities of the parties hereto shall commence on the Contract Date, subject to the terms and conditions hereof. At the end of the Term of this Service Contract, all other obligations of the parties hereunder shall terminate, except as provided in Sections 9.7 and 9.9.
SECTION 2.4. CONVENIENCE TERMINATION RIGHT. The City shall have the right to terminate this Service Contract prior to the commencement to the Operation Period or at any time during the Operation Period exercisable in its sole discretion for any reason upon written notice to the Company pursuant to Article IX. Prior to the Operation Period, The City shall pay the Company all sums due the Company for the Construction Period Services performed from the Contract Date up to the Termination Date, subject to limitations. Upon termination under this Section 2.4, the Company shall have no further obligations under this Agreement, except as provided in Section 9.9.
SECTION 2.5. RENEWAL OPTION. This Service Contract may be renewed and extended for up to two (2) additional term of five (5) full years each (subject to convenience termination without cost to the City at any time upon 60 days’ written notice) with the parties’ mutual agreement. The Company shall give the City notice of the approaching expiration of the Initial Term and (if applicable) each Renewal Term no later than 180 days prior to such expiration.
Each party, not later than 90 days prior to the expiration of the Initial Term and (if applicable) first Renewal Term, shall give the other Company written notice of its intent whether or not to exercise its renewal option.
ARTICLE III CONSTRUCTION PERIOD SERVICES
SECTION 3.1. COMPANY OBLIGATIONS GENERALLY.
A. Term. Commencing on the Contract Date, the Company shall perform the services set forth in Article III, effective through the Construction Period ending on the Acceptance Date. Obligations of the Company under Article III shall still apply during any overlap period described by Section 4.5(B) in addition to those obligations described by Article IV, and in performing Operation Services the Company shall be bound by all information learned taken while performing Construction Period Services.
B. Service Coordination. The Company shall make every reasonable effort to maintain the stability and continuity of Company key personnel to perform professional services during the Construction Period Services and for the first two years of the Operation Period. Except in the event of a departure from the Company, the Company shall pay the City liquidated damages of $25,000 in the event of any key 3 CC Agreement 2021-6
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personnel departure during such period. The Company must notify the City and obtain City’s written approval for any changes in key personnel, which approval shall not be unreasonably withheld or delayed, to be defined in the Operation and Maintenance Manual, prior to the performance of any services by replacement personnel. Key personnel shall include the Company’s Project Manager, Chief Operator, any other personnel identified in the Proposal, and other personnel as agreed to.
C. Review. At the commencement of the Service Contract, the City shall provide the Company with complete copies of the Facility Design Documents and other supporting documentation, and the Company shall become familiar with all such material. The Company shall review the Facility Design Documents and other supporting documentation consistent with the Standard of Care, provided however that the Company shall not be required to verify that accuracy of such materials.
Should any potential operability issues arise from the review, the Company shall immediately notify the City and provide recommendations to improve operability.
SECTION 3.2. CONSTRUCTION.
A. On-Site Construction Meetings. During the Construction Period Services, the Company shall attend weekly construction progress meetings and other project meetings upon request by the City. At such meetings, discussions will be held concerning all aspects of the construction work, including construction schedule, progress payments, any change orders, shop drawings, progress photographs to the extent available, and any soil boring data and factory test results. The Company shall use all reasonable efforts to make recommendations and provide commentary regarding aspects of the construction work that may impact Company obligations during the Operation Period.
B. Changes to Construction Documents. The City may consult with the Company concerning any proposed changes to the Facility’s design. The Company shall use all reasonable efforts to address potential impacts of the proposed changes on Operation Period Services. The Company shall transmit any assessment regarding impacts of proposed changes to the City in writing.
C. Safety. During the Construction Period, Company will familiarize itself with the Contractor’s Health and Safety Plan and comply with all Contractorestablished safety requirements.
SECTION 3.3. STARTUP AND COMMISSIONING.
A. Notices. The Company will be provided written notice of the expected date of commencement of start-up operations.
B. Meetings. The Company’s Chief Operator and additional key personnel directly responsible for Facility operations will attend the pre-installation, pre-process startup, and electrical and instrumentation coordination meetings. 4 CC Agreement 2021-6
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C. Commissioning Plan Review. The Company will be provided the startup and commissioning plan prepared by the Contractor for review. The Company shall review the startup and commissioning plan, notify the City of any potential issues with the commissioning plan, and identify potential risks associated with procedures specified therein. The Company shall provide review comments in tabular format on the Contractor’s draft and final startup and commissioning plan.
D. Commissioning and Process Start-up Schedule Review. The Company shall review and comment on the Facility commissioning and process start-up schedule developed by the Contractor. Company shall review schedule to determine if activity durations are realistic, if there are missing activities, activity dependences are properly defined, appropriate float is considered, and other general considerations to determine if the Contractor’s schedule presents a clear and appropriate plan for the successful start-up and commissioning of the Facility.
E. Onsite Support. The Company will provide onsite support, assistance, and observation during Facility start-up and commissioning of up to nine (9) process areas (including without limitation filter feed pumps, greensand filters, backwash supply pumps, RO feed pumps, washwater treatment, cartridge filters, RO, decarbonator, and treated water pump station) in order to facilitate proper Facility operations and an effective transition of Facility operations from the Contractor to the Company. The operational testing and commissioning period shall be for at least 60 calendar days.
F. Training. The Company’s operations staff, including the Chief Operator, shall attend the training sessions provided by the Contractor. Training sessions shall be attended by all Company personnel proposed by the Company to staff the Facility.
G. Commissioning and Process Start-up Issues. The Company shall provide formal notice to the City of issues that arise during the Facility start-up and commissioning process that materially affect the Company’s obligations pursuant to terms of the Service Contract. Any such issue or concern identified by the Company shall be considered a potential Uncontrollable Circumstance and shall be subject to the provisions of Section 10.2.
SECTION 3.4. OPERATION AND MAINTENANCE MANUAL.
A. Company Obligations. The Company shall develop and provide the Operation and Maintenance Manual for the Facility in accordance with the Contract Standards and specific requirements set forth in Appendix 5. The Operation and Maintenance Manual shall be submitted for review a minimum of 90 days prior to the completion of Acceptance Date Conditions. The Operations and Maintenance Manual must be finalized and approved by the City a minimum of 30 days prior to the Acceptance Date. The Company shall perform all Operation Period Services substantially in compliance with the Operation and Maintenance Manual. Neither the review of, nor comment upon, nor the failure of the City to comment upon, the Operation and Maintenance Manual shall: (1) relieve the Company of any of its responsibilities 5 CC Agreement 2021-6
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under the Service Contract; (2) be deemed to constitute a representation by the City that operating the Facility pursuant to the Operation and Maintenance Manual will cause the Facility to be in compliance with this Service Contract or Applicable Law; or (3) impose any liability upon the City. The Service Contract shall control in the event of any conflict with the Operation and Maintenance Manual.
SECTION 3.5. CONSTRUCTION PERIOD COMPENSATION.
A. General. For all Construction Period Services, the City shall pay Company the fee as provided on Proposal Form 1. The total compensation, including reimbursement for actual expenses, may not exceed the amount set forth in Proposal Form 1, unless additional compensation is approved in writing by City.
B. Invoicing. Each month during the Construction Period Services, Company must furnish City with an original invoice for all services performed and expenses incurred during the preceding month in accordance with the fee schedule set forth in Proposal Form 1.
C. City Review. City will promptly review each invoice submitted by Company to determine whether the work performed and expenses incurred are in compliance with this Service Contract. In the event that no charges or expenses are disputed, the invoice will be approved and paid. In the event any charges or expenses are disputed by City, the invoice will be returned by City to Company for correction and resubmission; however, the City shall pay all undisputed portions of as set forth herein.
D. Payment. Except as to any charges for work performed or expenses incurred by Company that are disputed by City, City will cause Company to be paid within 45 days of receipt of Company's invoice. Any undisputed payment not paid by such date will accrue interest at the Overdue Rate from such date.
E. No Waiver of Defects. Payment to Company for services performed under this Agreement may not be deemed to waive any defects in the services performed by Company, even if such defects were known to City at the time of payment.
ARTICLE IV OPERATION AND MANAGEMENT
SECTION 4.1. COMPANY OBLIGATIONS GENERALLY.
A. Operation and Management Responsibility for the Facility. Commencing on the Acceptance Date, the Company shall provide State-certified staff to operate, maintain and manage the Facility on a 24-hour per day, 7-day per week basis, and shall treat Untreated Water, produce and supply Treated Water, and transport and dispose of Facility By-Products, provide all information necessary to maintain Governmental Approvals, and otherwise operate, maintain and manage the Facility so as to comply with the Contract Standards applicable to such activities. 6 CC Agreement 2021-6
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B. Transfer and Application of Industry Experience. The Company shall use reasonable efforts to transfer to and apply at the Facility the benefit of the advances and improvements in technology, management practices and operating efficiencies which are developed by the Company and industry research and development activities conducted over the full Term of this Service Contract, and which are useful and appropriate in the good faith judgment of the Company for carrying out the Operation Services in a manner which improves upon the Contract Standards; provided, however, that such obligations shall not obligate the Company to: (i) undertake any physical modifications to the Facility (including any Capital Modification); (ii) incur any additional operating, maintenance, repair or replacement costs; or (iii) accept any additional risk or liability beyond those imposed under the Contract Standards in effect as of the Contract Date, unless the City agrees to compensate the Company in a manner acceptable to the Company for undertaking such obligations.
SECTION 4.2. CITY OBLIGATIONS GENERALLY. The City, in addition to the obligations it has accepted elsewhere in this Service Contract, shall:
A. Make available to the Company upon request copies of all information relating to the Facility which is in the possession of the City and material to the Company’s performance hereunder, provided that while the Company shall review such information consistent with the Standard of Care, the Company shall not be required to verify its accuracy.
B. Grant and assure the Company access to the Facility Site for the performance of its obligations hereunder;
C. Operate and manage the Production Wells, which includes:
1. Maintain permits, authorizations, and entitlements to pump groundwater,
2. Perform maintenance and upgrades required to supply Untreated Water to the Facility up to the extraction limit described in subsection 5.3(A) and,
3. Pay for electricity, materials or supplies to maintain operation of the Production Wells.
D. Supply Untreated Water to the Facility to the extent required to permit the performance by the Company of the Operation Services in accordance with the Contract Standards; and
E. Pay the Service Fee and any other amounts due the Company in accordance with the terms and conditions of this Service Contract.
F. Operate and maintain, or cause to be maintained, the Water System, sanitary sewer system, storm water system, and Salinity Management Pipeline starting at the fitting ROC-11 that are not part of the Facility, in a manner that will prevent, to the extent practicable, any damage to the operation of the Facility. 7 CC Agreement 2021-6
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SECTION 4.3. DOMESTIC WATER SUPPLY PERMIT.
A. Authorization of Operation and Water Introduction. The Company acknowledges that the operation of the Facility and the introduction of Treated Water into the Water System are prohibited by Applicable Law until the DDW issues the Domestic Water Supply Permit.
B. City’s Responsibilities with Respect to the Domestic Water Supply Permit. The City shall have sole responsibility, on a timely basis, to prepare all information and take all actions which may be necessary in order to submit a completed application with respect to all aspects of the Domestic Water Supply Permit, and to pay all filing fees relating thereto. The City may engage with the Company during the application period to help facilitate timely approval. The City will have no liability to Company whatsoever on account of any delay in obtaining the Domestic Water Supply Permit.
SECTION 4.4. ACCEPTANCE DATE CONDITIONS.
A. Acceptance Date Conditions. The following conditions shall constitute the “Acceptance Date Conditions,” each of which must be satisfied in all material respects by the Company in order for the Acceptance Date to occur, and each of which must be and remain satisfied as of the Acceptance Date:
1. Final Operation and Maintenance Manual. The Company has in its possession a complete and approved Operation and Maintenance Manual;
2. Computerized Maintenance Management System: The Company has established and implemented a comprehensive and functional Computerized Maintenance Management System pursuant to Section 6.5;
3. Required Operation Period Insurance. The Company has obtained and submitted to the City certificates of insurance for all Required Operation Period Insurance specified in Appendix 8;
4. Required Security Instrument. The Company has obtained and delivered to the City the required Security Instrument pursuant to Section 11.1;
5. Other Required Plans and Manuals. The Company has completed all plans and reports as required by the Service Contract, including, but not limited to the Maintenance, Repair and Replacement Plan, Process Safety Management Standard and Risk Management Plan, Security Plan, and Operating Protocol;
6. Company has delivered a written certification to City confirming that (other than the City’s delivery of the Notice to Proceed) all Acceptance Date Conditions have been satisfied; and
7. The City has issued the Notice to Proceed.
SECTION 4.5. ACCEPTANCE.
A. Effect of Acceptance. Upon the occurrence of the Acceptance Date Conditions, the Operation Period shall commence and all of the Operation Period rights and obligations of the parties hereunder shall apply on a permanent basis (including the 8 CC Agreement 2021-6
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Performance Guarantees of the Company, the Service Fee payment obligations of the City, and the obligation of the Company to pay damages for any failure to meet certain of the Performance Guarantees).
B. Overlap of Construction Period and Operation Period. Ideally, the Operation Period (which commences on the Acceptance Date) and the Construction Period (which ends on the date of the issuance of the notice of Substantial Completion to the Contractor and beneficial use of the Facility by the City) are consecutive, so that Substantial Completion and Acceptance occur on or about the same date. However, if the Operation Period and construction overlap, during the period of overlap the Company’s Operation Period obligations shall still apply to the extent Company can reasonably perform such obligations during this time period. Company shall work in good faith with the City and the Contractor to allow the Contractor to complete all work at the Facility during the Operation Period.
C. Failure to Meet Acceptance Date Conditions by Target Acceptance Date. If the Facility is ready to deliver Treated Water on or after the Target Acceptance Date (as defined in Section 4.5(D) below) and the Acceptance Date Conditions required to be met by the Company have not been met, the Company shall be subject to damages in accordance with Section 5.3(C) as if the Acceptance Date occurred on the date that the Facility was ready to deliver Treated Water.
D. Facility Not Ready to Deliver Treated Water by Target Acceptance Date. The parties acknowledge that the Substantial Completion date (the initially anticipated Acceptance Date) or, if different, the date by which the Facility will be expected to deliver Treated Water, are subject to change during the Construction Period due to construction delays beyond the City’s control, and therefore the City does not know the date by which it could give a Notice to Proceed. During each month of the Construction Period, the City will inform the Company of the scheduled Substantial Completion date as indicated in the Contractor’s construction schedule updates.
Approximately ninety days before the Contractor’s then-scheduled Substantial Completion date (or, if different, the date by which the Facility will be expected to deliver Treated Water), the City will notify the Company of that date (the “Target Acceptance Date”). The Company shall be prepared to meet all Acceptance Date Conditions and begin the Operation Period on the Target Acceptance Date. If all Acceptance Date Conditions required to be met by the Company have been met by the Target Acceptance Date, but the Facility is not ready to deliver Treated Water until a date which is more than 30 days after the Target Acceptance Date, the City shall pay to the Company within 60 days of the date of the Company’s invoice supported by Cost Substantiation all reasonable additional costs and expenses incurred by the Company (and not due to Company fault) because the Operation Period could not occur within 30 days of the Target Acceptance Date. 9 CC Agreement 2021-6
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SECTION 4.6. SERVICE COORDINATION AND CONTRACT ADMINISTRATION; CONTRACT
REPRESENTATIVES
A. Company’s Chief Operator. The Company shall appoint a full-time manager of the Facility (the “Chief Operator”) who shall be licensed, trained, experienced and proficient in the management and operation of water treatment systems comparable to the Facility, shall have a Grade T-4 operator’s certification and be otherwise appropriately certified under Applicable Law, and whose sole employment responsibility shall be managing the Company’s performance of the Operation Services. The Chief Operator shall reside in Ventura County, Los Angeles County, or Santa Barbara County, California at all times during the Term of this Service Contract. The Company acknowledges that the performance of the individual serving as the Chief Operator will have a material bearing on the quality of service provided hereunder, and that effective cooperation between the City and the Chief Operator will be essential to effectuating the intent and purposes of this Service Contract.
Accordingly, not fewer than 60 days prior to the date on which any candidate for Chief Operator during the Term is proposed by the Company to assume managerial responsibility for the Facility, the Company shall: (1) provide the City with a comprehensive résumé of the candidate’s licenses, training, experience, skills and approach to management and customer relations; and (2) afford the City an opportunity to interview the candidate with respect to such matters. The City shall have the right within 30 days following such interview to disapprove the hiring of the proposed candidate, which right of disapproval shall not be exercised unreasonably.
The initial Chief Operator shall not be replaced, unless otherwise approved by the City in its sole discretion, for a period of three years after the Acceptance Date absent retirement, resignation or cessation of employment with the Company. The Company shall replace the Chief Operator at the request of the City, after notice and a reasonable opportunity for corrective action, in the event the City determines, in its reasonable discretion, that an unworkable relationship has developed between the Chief Operator and the City. Without limiting the City’s rights under this subsection, an unworkable relationship shall be deemed to have developed upon any failure of compliance indicated below:
1. failure to timely report any exceedance as required by the Contract Standards;
2. failure to timely calibrate or verify calibration of instruments and flow meters;
3. failure to respond within three (3) business days to a written request for information related to this Service Contract made by the Contract Administrator and designated as a “priority request”;
4. failure to provide any plan, proposal, report or other deliverable required hereunder with respect to Uncontrollable Circumstances or any regulatory matter by the deadline agreed upon by the parties with respect thereto;
5. failure to keep monthly maintenance logs;
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6. failure of Company staff to attend City meetings as reasonably requested, with adequate advance notice from the City;
7. failure to provide any reports required hereunder within seven (7) days after the due date;
8. failure to maintain proper certification as required by any Governmental Body;
9. failure to respond to alarms at the Facility as required hereunder; and
10. failure to properly sample, test or report the results thereof as required by Applicable Law.
B. Company’s Senior Supervisors. The Company shall appoint and inform the City from time to time of the identity of the corporate officials of the Company with direct, senior supervisory responsibility for the Facility and the performance of this Service Contract (the “Senior Supervisors”). The Company shall promptly notify the City in writing of the appointment of any successor Senior Supervisors. The Senior Supervisors shall cooperate with the City in any reviews of the performance of the Chief Operator which the City may undertake from time to time and shall give full consideration to any issues raised by the City in conducting such performance reviews.
C. City’s Contract Administrator. The City shall designate an individual or firm to administer this Service Contract and act as the City’s liaison with the Company in connection with the Operation Services (the “Contract Administrator”). The Company understands and agrees that the Contract Administrator has limited authority to the implementation of this Service Contract. Without limiting the foregoing, the Contract Administrator cannot bind the City (1) with respect to any Service Contract Amendment, (2) to any breach of the Service Contract, or (3) to incurring costs in excess of the amounts appropriated therefor. Within such limitations, the Company shall be entitled to rely on the written directions of the Contract Administrator. The Contract Administrator shall have the right at any time to issue the Company a written request for information relating to this Service Contract. The Company shall respond to any written request designated as
a business days.
“priority request” within three
D. City Approvals and Consents. When this Service Contract requires any approval or consent by the City to a Company submission, request, or report, the approval or consent shall, within the limits of the authority of subsection (C) of this Section, shall be given by the Contract Administrator in writing, and such writing shall be conclusive evidence of such approval or consent, subject to compliance by the City with the Applicable Law that generally governs its affairs. Unless expressly stated otherwise in this Service Contract, and except for requests, reports and submittals made by the Company that do not, by their terms or the terms of this Service Contract, require a response or action, if the City does not find a request, report or submittal acceptable, it shall provide written response to the Company describing its objections and the reasons therefor within 45 days of the City’s receipt thereof. If no 11 CC Agreement 2021-6
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response is received within 45 days, the request, report or submittal shall be deemed rejected, and the Company may resubmit the same, with or without modification.
However, if the express terms hereof provide that the City’s approval to the request, report or submittal may not be unreasonably delayed, the matter will be deemed accepted if the City fails to respond within 30 days of the City’s receipt of the Company’s initial request, report or submittal, and also fails to respond within five days of its receipt of a Company resubmission specifically stating that the request, report or submittal will be deemed accepted under this Service Contract provision if the City does not respond within five days of its receipt Requests, reports and submittals that do not require a response or other action by the City pursuant to some specific term of this Service Contract shall be deemed acceptable to the City if the City does not object within 30 days of receipt.
E. Communications and Meetings. Before the Operation Period, the Company shall inform the City of the telephone, cellular telephone, fax number, e-mail addresses and other means by which the Chief Operator and Senior Supervisors may be contacted. The City shall furnish to the Company comparable communications information with respect to the Contract Administrator. The Chief Operator or responsible designee shall be reachable 24 hours a day, seven days a week. The Chief Operator shall meet with the City each month to review the contents of the monthly operations reports required to be prepared pursuant to Section 4.20. The Chief Operator and, if requested by the City, the Senior Supervisors each shall attend the monthly operations meetings with the City, and all special meetings which the City may reasonably request from time to time, to review management, operational, performance and planning matters. Any issue in dispute which the parties are unable to resolve at such monthly and special meetings may be referred to Non-Binding Mediation, as provided for in Section 9.12, and the resolution of any issues resolved at such meetings or through Non-Binding Mediation shall be reflected in a Contract Administration Memorandum or a Service Contract Amendment, as applicable.
F. Complaints and Communications. The Company shall respond in a timely and effective manner to all complaints and communications received by the Company or the City regarding the treatment and distribution of water, odor and air emissions, noise, light emissions, construction or any other matter related to the Operation Services. The Company shall investigate each such complaint and communication and, if it has a valid basis, the Company shall promptly rectify the matter.
Complaints and communications concerning spillages, leaks, breaks, noise, light emissions and emergencies relating to the Facility shall be responded to within one hour, and other communications within 24 hours. All such complaints and communications shall be immediately logged and promptly responded to in writing, emailed to the City on a daily basis, and reported to the City as part of the monthly operations reports delivered pursuant to Section 4.120 The Company shall establish, maintain and make freely known a telephone number, e-mail address and 12 CC Agreement 2021-6
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mailing address to which customer or citizen complaints and communications may be directed.
SECTION 4.7. SERVICE CONTRACT ADMINISTRATION.
A. Administrative Communications. The parties recognize that a variety of contract administrative matters will routinely arise throughout the Term of this Service Contract. These matters will by their nature involve requests, notices, questions, assertions, responses, objections, reports, claims, and other communications made personally, in meetings, by phone, by mail and by electronic and computer communications. The purpose of this Section is to set forth a process by which the resolution of the matters, once resolution is reached, can be formally reflected in the common records of the parties so as to permit the orderly and effective administration of this Service Contract.
B. Contract Administration Memoranda. The principal formal tool for the administration of routine matters arising under this Service Contract between the parties which do not require a Service Contract Amendment shall be a “Contract Administration Memorandum.” A Contract Administration Memorandum shall be prepared, once all preliminary communications have been concluded, to evidence the resolution reached by the City and the Company as to matters of interpretation and application arising during the course of the performance of their obligations hereunder. Such matters may include, for example: (1) issues as to the meaning, interpretation or application of this Service Contract in particular circumstances or conditions; (2) calculations required to be made; (3) notices, waivers, releases, satisfactions, confirmations, further assurances, consents and approvals given hereunder; and (4) other similar routine contract administration matters.
C. Procedure. Either party may request the execution of a Contract Administration Memorandum. If resolution of the matter as a Contract Administration Memorandum is reached, a Contract Administration Memorandum shall be prepared by or at the direction of the City reflecting the resolution. Contract Administration Memoranda shall be serially numbered, dated, signed by the Contract Representative of each party, and co-signed by a Senior Supervisor for the Company and by the City Manager or his or her designee. The City and the Company each shall maintain a parallel, identical file of all Contract Administration Memoranda, separate and distinct from the Service Contract Amendments and all other documents relating to the administration and performance of this Service Contract.
D. Effect. Executed Contract Administration Memoranda shall serve to guide the ongoing interpretation and application of the terms and conditions of this Service Contract. However, any material change, alteration, revision or modification of this Contract, as well as any matter which either party declines in its sole discretion to resolve without a formal Contract amendment, shall be effectuated only through a formal Contract amendment authorized, approved or ratified by resolution of the governing body of the City and properly authorized by the Company. 13 CC Agreement 2021-6
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SECTION 4.8. SERVICE CONTRACT AMENDMENTS.
A. Amendments Generally. Notwithstanding the provisions of Section 4.7, no material change, alteration, revision or modification of the terms and conditions of this Service Contract shall be made except through a written amendment to this Service Contract (a “Service Contract Amendment”) duly authorized, approved or ratified by resolution of the governing body of the City and duly authorized by the Company.
B. Procedure. Service Contract Amendments shall be serially numbered, dated and signed by a Senior Supervisor for the Company and by the City. The City and the Company each shall maintain a parallel, identical file of all Service Contract Amendments, separate and distinct from the Contract Administration Memoranda and all other documents relating to the administration and performance of this Service Contract.
SECTION 4.9. STAFFING AND PERSONNEL
A. Staffing. The Company shall staff the Facility during the Term of this Service Contract in accordance with the Contract Standards with qualified personnel who meet the licensing and certification requirements of the State. The Company shall discipline or replace, as appropriate, any employee of the Company or any Subcontractor engaging in unlawful, unruly or objectionable conduct. The Company shall notify the City of any change in staffing levels and positions and shall not make any change if the new staffing level would adversely affect the ability of the Company to provide the Operation Services in accordance with the Contract Standards.
At the onset of Operation Period, the Company must have operations staff at the Facility 24-hours per day, as required by the Domestic Water Supply Permit. This initial period will remain in effect until DDW is satisfied and confident in the Facility’s operation, monitoring, alarms, and remote shutdown measures. Following this initial period, DDW may allow unmanned operation during specified hours. The labor fee will be as set forth in Article VIII.
B. Training. The Company shall be responsible for training the Chief Operator, operations supervisors and other Company personnel. The Company shall submit to the City for its review and comment a personnel training program which the Company proposes to institute in order to ensure that the Facility is managed and operated by qualified personnel throughout the Term hereof and in accordance with this Service Contract. Such personnel training program shall include the personnel training guidelines, policies and procedures established: (1) by the City, the DDW and the EPA; (2) in any Governmental Approval or operator’s certificate required or issued by any Governmental Body; and (3) in any other Applicable Law.
C. Prevailing Wage. Payment for operations and maintenance of the Facility is to be made to the Company with public funds; therefore, the Company’s operations and maintenance of the Facility are subject to California prevailing wage laws. The 14 CC Agreement 2021-6
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Company shall pay, and shall cause to be paid by its Subcontractors, prevailing wages for all labor engaged in connection with the Operations Services to the extent required by Applicable Law. The Company shall maintain registration with the California Department of Industrial Relations (DIR) in accordance with Labor Code Section 1725.5 and shall submit certified payroll reports (CPRs) to the DIR in accordance with Labor Code Section 1771.4. CPRs shall be made available for inspection by the City upon request or as otherwise provided in Applicable Law.
SECTION 4.10. TRAINING OF CITY STAFF
A. Emergency Preparedness. The Company acknowledges that the City retains the responsibility for supplying potable water in its Service Area and serving the public health, safety and welfare needs of its customers and the public generally.
Accordingly, the City shall have the right to designate, from time to time, five City officers or employees for the purpose of receiving emergency preparedness training from the Company. Such training shall be regularly repeated and renewed to be sufficient to enable any of the five officers or employees to be familiar with the equipment, supplies, processes, operations and performance of the Facility at a level which will permit such officials to properly respond to any operating or water supply emergency.
B. Ongoing Training. During operation of the Facility and at least annually during the Term of this Service Contract, the City shall have the right to send not more than five City employees to any personnel training programs offered by the Company to its personnel pursuant to subsection 4.9(B). The Company shall provide the City with notice of each personnel training program at least 15 days prior to the scheduled date(s). The Company shall be responsible for the cost of training such City employees, which costs have been priced into the Service Fee, and the City shall be responsible for all employee expenses (travel, lodging, meals, etc.) incurred while participating in such training programs.
C. Permanent Operations. In addition to the other training described in this Section, the Company shall, on not less than 30 days’ prior written notice from the City, conduct a training program for the City and its designees in order to enable the City to assume operating and management responsibility for the Facility at the expiration or earlier termination of this Service Contract. The program shall train supervisory and operating personnel in sufficient numbers and job classifications to allow the City and its designees to operate and manage the Facility with the same degree of skill and performance as the Facility is required to be operated by the Company during the Term hereof. The training afforded to City employees or designees shall be substantially equivalent to the training afforded the Company’s and Subcontractor’s employees in connection with the start-up of the Facility prior to the Acceptance Date. In addition, the Company shall permit City supervisory and operating personnel to observe the Company’s operation of the Facility for a period of up to six months prior to expiration or earlier termination of this Service Contract, which observation activities shall not interfere unreasonably with the Company’s 15 CC Agreement 2021-6
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performance of the Operation Services. All costs pertaining to the observation activities of City supervisory and operating personnel shall be borne by the City.
SECTION 4.11. ELECTRICITY SUPPLY AND CONSUMPTION
A. Primary Supply. The City shall pay all electricity bills in a timely manner, subject to annual reimbursement by the Company as part of the Annual Settlement Statement process set forth in Section 8.8 in the event that the Guaranteed Maximum Electricity Usage (GMEU) or Guaranteed Maximum Electricity Demand (GMED) amounts are exceeded as provided in Section 8.8. Notwithstanding the preceding sentence, the Company shall reimburse the City on a monthly basis in an amount equal to all fines and penalties imposed by the electricity provider resulting from the Company’s performance of this Service Contract, unless and to the extent caused by Uncontrollable Circumstances. The Company shall operate the Facility in a manner which minimizes, to the maximum extent reasonably practicable in light of its obligation to provide the Operation Services, charges for electricity use, demand, transmission and distribution which are payable by the City hereunder.
B. Back-Up Supply. The Facility is equipped with an emergency generator capable of providing continuous electricity sufficient to meet the electric power demands of critical Facility electrical loads in the event of a failure for any reason by the electric Utility to supply electricity to the Facility. The emergency generator has been sized to meet the electric power demands of the entire Facility minus one full RO treatment train. Utility failure shall be deemed to constitute an Uncontrollable Circumstance entitling the Company to price relief consisting of any additional reasonable costs incurred by the Company in operating and maintaining the back-up electric power production facilities during the outage. Utility failure shall be deemed to constitute an Uncontrollable Circumstance entitling the Company to relief from the Treated Water Delivery Guarantee only to the extent that the utility failure prevents the Company from fulfilling its Annual Treated Water obligation. The Company’s entitlement to any price or performance relief in such circumstances is subject to the mitigation requirements set forth in Section 10.2.
SECTION 4.12. OPERATION AND MAINTENANCE MANUAL
A. Company Responsibility. The Operation Services shall be performed substantially in compliance with the Operation and Maintenance Manual prepared by the Company per Section 3.4 of this Service Contract. The Company shall keep the Operation and Maintenance Manual current and shall supply the City with appropriate updates, supplements or revisions annually or at any earlier time that a material change to the Operation and Maintenance Manual is made, to be reviewed and commented on in accordance with Appendix 5. Such updates shall preserve the standards set forth in the initial Operation and Maintenance Manual. Notwithstanding any such review and comment by and discussion with the City, the Operation and Maintenance Manual shall remain, at all times, the responsibility of the Company. Neither the review of or 16 CC Agreement 2021-6
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comment upon, nor the failure of the City to comment upon, the Operation and Maintenance Manual shall: (1) relieve the Company of any of its responsibilities under this Service Contract; (2) be deemed to constitute a representation by the City that operating the Facility pursuant to the Operation and Maintenance Manual will cause the Facility to be in compliance with this Service Contract or Applicable Law; or (3) impose any liability upon the City.
B. Supplements for Capital Modifications. The Company shall prepare supplements and revisions to the Electronic Operation and Maintenance Manual which are required due to the design, construction and installation of all Capital Modifications.
The cost and expense of all such supplements and revisions shall be borne by the Company, except with respect to supplements and revisions necessitated by Capital Modifications directed by the City or required by a Change in Law or other Uncontrollable Circumstance.
C. City-Directed Changes to the Operation and Maintenance Manual. City may, from time to time during the Term of this Service Contract, direct the Company to modify its Operation and Maintenance Manual to conform with changes requested by the City. Such modifications shall be provided and reviewed in the same manner as provided in this Section with respect to the initial Operation and Maintenance Manual. The cost and expense of all such supplements and revisions shall be borne by the Company, except with respect to supplements and revisions necessitated by Capital Modifications directed by the City or required by a Change in Law or other Uncontrollable Circumstance, or by any Capital Modifications not undertaken by the Company.
SECTION 4.13. PROCESS MONITORING AND REGULATORY REPORTING PLAN A. Company Responsibility. The Company shall develop, provide and maintain the process Monitoring and Regulatory Reporting plan in accordance with the Contract Standards and the specific requirements set forth in Appendix 7 (the “Process Monitoring and Regulatory Reporting Plan”). The Operation Services shall be performed substantially in compliance with the Process Monitoring and Regulatory Reporting Plan. The Company shall keep the Process Monitoring and Regulatory Reporting Plan current and shall supply the City with appropriate updates, supplements or revisions thereto annually or at any earlier time that a material change to the Process Monitoring and Regulatory Reporting Plan is made for review.
Such updates shall preserve the standards set forth in the initial Process Monitoring and Regulatory Reporting Plan. Notwithstanding any such review and comment by and discussion with the City, the Process Monitoring and Regulatory Reporting Plan shall remain, at all times, the responsibility of the Company. Neither the review of or comment upon, nor the failure of the City to comment upon, the Process Monitoring and Regulatory Reporting Plan shall: (1) relieve the Company of any of its responsibilities under this Service Contract; (2) be deemed to constitute a representation by the City that operating the Facility pursuant to the Process 17 CC Agreement 2021-6
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Monitoring and Regulatory Reporting Plan will cause the Facility to be in compliance with this Service Contract or Applicable Law; or (3) impose any liability upon the City.
B. Supplements for Capital Modifications. The Company shall prepare supplements and revisions to the Process Monitoring and Regulatory Reporting Plan which are required due to the design, construction and installation of all Capital Modifications.
Such supplements and revisions shall be provided, reviewed and approved in the same manner as provided in this Section with respect to the initial Process Monitoring and Regulatory Reporting Plan. The cost and expense of all such supplements and revisions shall be borne by the Company, except with respect to supplements and revisions necessitated by Capital Modifications directed by the City or required by a Change in Law or other Uncontrollable Circumstance, or by any Capital Modifications not undertaken by the Company.
SECTION 4.14. SAFETY. Following the Construction Period, the Company shall maintain the safety of the Facility at a level consistent with all federal, State and local safety and health rules and regulations, and the Contract Standards. Without limiting the foregoing, the Company shall:
A. Take all necessary precautions and establish and enforce all necessary safeguards for the safety of, and provide all necessary protection to prevent damage, injury or loss by reason of or related to the operation of the Facility to:
1. all employees working at the Facility and all other persons who may be involved with the operation, construction, maintenance, repair and replacement of the Facility,
2. all visitors to the Facility,
3. all materials and equipment under the care, custody or control of the Company on the Facility Site,
4. other property constituting part of the Facility, and B. Give all notices and comply with all Applicable Laws relating to the safety of persons or property or their protection from damage, injury or loss; C. Designate a qualified and responsible employee at the Facility whose duty shall be the development and implementation of safety and health requirements at the Facility, the prevention of fires and accidents and the coordination of such activities, with federal, State, local and City officials;
D. Operate all equipment in a manner consistent with the manufacturer’s safety requirements;
E. Provide for safe and orderly vehicular movements; and F. Develop and implement a health and safety program that includes management commitment to maintaining a safe workplace, employee participation, hazard evaluation and controls, employee training and periodic inspections, hazard communications and other site-specific safety training, and a written site-specific 18 CC Agreement 2021-6
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health and safety plan designed to implement the requirements of this Section. The Company shall make all capital investments, improvements or modifications to the Facility which are or may be required under OSHA, at the Company’s costs unless due to Uncontrollable Circumstances.
SECTION 4.15. SECURITY. The Company, in accordance with the Contract Standards, shall be responsible for the security and protection of the Facility and the Facility Site. The Company shall guard against all damage or injury to such properties caused by cyber-attack, trespass, negligence, vandalism or malicious mischief of third parties, and shall operate, maintain, repair and replace all surveillance and other security equipment and assets constituting fixtures of the Facility in accordance with the Contract Standards. The Company shall comply with EPA and Water Environment Federation guidelines regarding security measures for terrorist threats and activities. The Company shall be entitled to Change in Law relief in accordance with and to the extent provided in Section 10.2 in the event that new security measures or Facility modifications are required after the Contract Date as a result of the City’s vulnerability assessment regarding security measures for terrorist threats and activities.
SECTION 4.16. COMPLIANCE WITH APPLICABLE LAW.
A. Compliance Obligation. The Company shall perform the Operation Services in accordance with Applicable Law and shall cause all Subcontractors to comply with Applicable Law, including all registration, licensing and certification requirements imposed by any Governmental Body. The Company shall comply with the terms of all Governmental Approvals and other Applicable Law pertaining to the Facility, Untreated Water, Treated Water, Facility By-Products, air emissions, noise, light emissions and odor notwithstanding the fact that the Company may not be a permittee or co-permittee on some or all of such Governmental Approvals. At the request of the City, the Company shall participate in performance evaluation surveys conducted by the DDW or the EPA.
B. Sampling, Testing and Laboratory Work. The Company shall perform and provide all sampling, laboratory testing and analyses, and quality assurance and quality control procedures and programs required by the Contract Standards. All testing laboratories shall be DDW, State and EPA certified, as applicable, for the applicable test, shall be operated in accordance with Good Industry Practice, and shall be audited and monitored by the Company for compliance with State and EPA standard test methods. All sampling and test data shall be available for review by, and reported to, the City in accordance with Section 4.20. The Company explicitly assumes the risk of incorrect sampling, testing and laboratory work and any consequences or corrections needed. The Company shall permit the City, at the City’s expense, to perform any testing, sampling or analytical procedure it deems appropriate, using the Facility, laboratory services available to the Company, or otherwise.
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C. Investigations of Non-Compliance. In connection with any actual or alleged event of non-compliance with Applicable Law, the Company shall, in addition to any other duties which Applicable Law may impose:
1. fully and promptly respond to all inquiries, investigations, inspections, and examinations undertaken by any Governmental Body;
2. attend all meetings and hearings required by any Governmental Body;
3. provide all corrective action plans, reports, submittals and documentation required by any Governmental Body, and shall provide copies of any such plan, report, submittal or other documentation to the City;
4. in conjunction with the City, communicate in a timely and effective manner with the general public as to the nature of the event, the impact on the public, and the nature and timetable for the planned remediation measures; and
5. immediately upon receipt thereof, provide the City with a true, correct and complete copy of any written notice of violation or non-compliance with Applicable Law, and true and accurate transcripts of any oral notice of noncompliance with Applicable Law, issued or given by any Governmental Body.
The Company shall furnish the City with an immediate written notice describing the occurrence of any event or the existence of any circumstance which does or may result in any such notice of violation or non-compliance to the extent the Company has knowledge of any such event or circumstance, and of any Legal Proceeding alleging such non-compliance. To the greatest extent practicable, the Company shall provide the City an opportunity to review and comment on any proposed Company response to any non-compliance with Applicable Law hereunder prior to implementing such response.
D. Fines, Penalties and Remediation. Except to the extent excused by Uncontrollable Circumstances, in the event that the Company or any Subcontractor fails at any time to comply with Applicable Law with respect to the Facility, Untreated Water, Treated Water, air emissions, odor, Facility By-Products or other environmental or operating conditions, the Company shall:
1. correct such failure and resume compliance with Applicable Law as promptly as reasonably possible;
2. pay any resulting fines, assessments, levies, impositions, penalties or other charges to the extent resulting from the Company’s breach of the Standard of Care or breach of this Service Contract;
3. indemnify, defend and hold harmless the City and the City Indemnitees in accordance with Section 10.3 from any Loss-and-Expense resulting therefrom;
4. make all capital investments, improvements or modifications (at the Company’s costs unless due to Uncontrollable Circumstances) and changes in operating and management practices which are necessary to assure that the failure of compliance with Applicable Law will not recur; and
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5. comply with any corrective action plan filed with or mandated by any Governmental Body in order to remedy a failure of the Company to comply with Applicable Law. The Company shall have the right to contest any fine or penalty imposed under this subsection so long as: (1) the Company is contesting any such action in good faith by appropriate proceedings conducted with due diligence; and (2) the City shall have no liability as a result of the failure of the Company to pay any such fine or penalty during the period of contest.
E. No Nuisance Covenant. In addition to the Company’s obligations with respect to the Environmental Guarantees set forth in Section 5.6, the Company shall keep the Facility neat, clean and litter-free at all times, ensure that the operation of the Facility does not create any odor, litter, noise, rust, corrosion, fugitive dust, vector, excessive light or other adverse environmental effects constituting, with respect to each of the foregoing, a nuisance condition under Applicable Law. Should any such nuisance condition occur which is not caused by Uncontrollable Circumstances, the Company shall, remedy the condition as soon as reasonably possible, pay any fines or penalties relating thereto (to the extent resulting from the Company’s breach of the Standard of Care or breach of this Service Contract), make all capital investments, improvements or modifications and changes in operating and management practices necessary to prevent a recurrence of the nuisance condition, and indemnify and (at the Company’s costs unless due to Uncontrollable Circumstances) hold harmless the City and the City Indemnitees from any Loss-and-Expense relating thereto in the manner provided in Section 10.3.
SECTION 4.17. OPERATING GOVERNMENTAL APPROVALS.
A. Applications and Submittals. The Company shall make all filings, applications and reports necessary to obtain and maintain all Governmental Approvals required to be made, obtained, maintained, renewed or extended by or in the name of the Company or the City under Applicable Law in order to operate the Facility as set forth in Appendix 2. The Company shall comply with all requirements of the Domestic Water Supply Permit. Except with respect to the Governmental Approvals listed in Appendix 2 and Governmental Approvals required in connection with an Uncontrollable Circumstance, the Company shall pay all permit and filing fees required in order to obtain and maintain all other Governmental Approvals for the Operation Services, regardless of the identity of the applicant. With respect to all other Governmental Approvals that are required to be obtained in the name of the City (with exception to those listed in Appendix 2), the Company shall:
1. prepare the application, and develop and furnish all necessary supporting material reasonably available to the Company;
2. supply all data and information reasonably available to the Company which may be required;
3. familiarize itself with the terms and conditions of such Governmental Approvals; 21 CC Agreement 2021-6
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4. attend all required meetings and hearings; and
5. take all other actions reasonably necessary in obtaining, maintaining, renewing, extending and complying with the terms of such Governmental Approvals.
The Company shall agree to be named as a co-permittee on any Governmental Approval if so required by the issuing Governmental Body. The Company shall manage the process of obtaining and maintaining the Governmental Approvals on behalf of the City for which it is responsible in a manner which affords the City a reasonable opportunity to review and comment on such submittals and all material documentation submitted to and issued by any Governmental Body. The City shall deliver to the Company all Governmental Approvals relating to the Facility.
B. Data and Information. All data, information and action required to be supplied or taken in connection with the Governmental Approvals required for the Operation Services shall be supplied and taken on a timely basis by the Company considering the requirements of Applicable Law and the responsibilities of the City as the legal and beneficial owner of the Facility and primary permittee. The data and information supplied by the Company to the City and all regulatory agencies in connection therewith shall be correct and complete in all material respects and shall be submitted in draft form to the City sufficiently in advance to allow full and meaningful review and comment by the City. The Company shall be responsible for any schedule and cost consequences which may result from the submission of materially incorrect or incomplete information to the extent resulting from the Company’s breach of the Standard of Care or breach of this Service Contract. The Company shall not knowingly take any action in any application, data submittal or other communication with any Governmental Body regarding Governmental Approvals or the terms and conditions thereof that would impose an unreasonable cost or burden on the City or that would contravene any City policies with respect to the matters contained therein. The City reserves the right to reject, modify, alter, amend, delete or supplement any information supplied, or term or condition proposed, by the Company which would have the effect described in the preceding sentence.
C. Non-Compliance and Enforcement. The Company shall immediately report to the City all violations of the terms and conditions of any Governmental Approval or Applicable Law pertaining to the Facility. The City shall have the right to enforce compliance with the requirements of any Governmental Approval regardless of whether a concurrent or different regulatory enforcement action has been undertaken by any other Governmental Body. Unless otherwise excused under this Service Contract, the failure of the Company to comply with any Governmental Approval shall constitute a breach of this Service Contract as well as an event of non-compliance with the Governmental Approval.
D. Reports to Governmental Bodies. The Company shall prepare all periodic reports, make all information submittals and provide all notices to all Governmental Bodies required by all Governmental Approvals and under Applicable Law with respect to the Facility, including sampling and testing results. Such reports shall contain all 22 CC Agreement 2021-6
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information required by the Governmental Body and may be identical to comparable reports prepared for the City. The Company first shall provide the City with copies of such regulatory reports for review, comment, and signature, as applicable, at least 14 days before their filing with the Governmental Body. The Company shall provide to the City copies of all final communications and reports furnished to any Governmental Body pursuant to Section 4.16 simultaneously with their submittal to the Governmental Body.
E. Potential Regulatory Change. The Company shall keep the City regularly advised as to potential changes in regulatory requirements affecting the water treatment industry and the Facility and provide recommended responses to such potential changes so as to mitigate any possible adverse economic impact on the City should a Change in Law actually occur.
SECTION 4.18. CITY ACCESS TO FACILITY. The City shall have the right at any time, on a 24- hour per day, 365-day per year basis, to visit and inspect the Facility and observe the Company’s performance of the Operation Services. The Company shall permit and facilitate access to the Facility, including, but not limited to the conference room and education center by City personnel and by agents and contractors designated by the City, and tours of the Facility by Company staff. Keys or passwords, as applicable, for the facilities or structures comprising the Facility shall be provided to the City’s Contract Administrator by the Company in accordance with the Company’s physical security plan and key control program. All visitors shall comply with the Facility Site-specific health and safety plan and rules and shall not interfere with the Company’s operations of the Facility. When visiting any portion of the Facility that is staffed by the Company at the time of the visit, all City employees, agents and contractors shall announce themselves to the staff and Company employees may elect to accompany any City employees, agents and contractors during the visit. The parties agree that the City shall have immediate access to the Facility, and no Company rule or procedure shall impede, impair or delay such access; provided that the City and its agents and contractors shall at all times comply with the Facility Site-specific health and safety plan and rules. Notwithstanding any of the foregoing, the City shall have unrestricted access to the Facility to the extent necessary to operate and manage the onsite groundwater Production Well.
SECTION 4.19. ASSET AND FINANCIAL RECORDS.
A. Facility Records. The Company shall establish and maintain a computerized information system with respect to the Facility for operations and maintenance data and process control, including the information necessary to verify calculations made pursuant to this Service Contract and demonstrate compliance with the Contract Standards. Except for information exempt from disclosure under the Public Records Act, the Company shall promptly provide the City with copies of all operations and maintenance data and other information kept by the Company in its performance of the Operation Services.
B. Availability of Facility Records to City. The Company shall make available to the City all operations, maintenance, performance, Facility By-Products management, 23 CC Agreement 2021-6
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process control and similar records. The City shall have real time, continuous computer access to such records and data, and hard copy reproduction capability, through information systems installed and maintained by the Company at a location in the City’s existing offices or a newly designated City office outside the Facility, as designated by the City. This requirement shall apply to all process data saved, managed and maintained by the Facility Supervisory Control and Data Acquisition (SCADA) historian and any process or laboratory data managed and saved in other software systems.
C. Record Documents. In addition to its obligations under Section 3.1(C), The Company shall maintain at the Facility and make available to the City upon request for review and copying all Design Documents and record drawings and documents pertaining to the Facility and similar documents relating to any Capital Modifications.
The Company shall:
1. keep current all such records to show any changes to the Facility (including valves, pipes, pumps, meters and other assets) made by the Company in the performance of the Operation Services;
2. provide advice and assistance to the City, based on such records, in establishing and maintaining any City geographic mapping and information systems; and
3. provide an updated electronic copy of all record documents to the City when such changes occur.
D. Financial Records. The Company shall prepare and maintain proper, accurate, complete and current financial books, records and accounts, in accordance with generally accepted accounting principles, with respect to all aspects of the Operation Services, including direct and indirect personnel expenses, Subcontractor costs, the costs of material, equipment and supplies, maintenance, repair and replacement items, operating expenses and overhead. These financial records shall be in form and substance sufficient to support all financial reporting, including Cost Substantiation, required hereunder. In the event the Company fails to prepare or maintain any books, records or accounts as required under this Section, the Company shall not be entitled to any requested payments or adjustments. The Company shall keep the relevant portions of the books, records and accounts maintained with respect to each Contract Year until at least the tenth anniversary of the last day of each such Contract Year (or such longer period as may be appropriate to account for any dispute then pending). For those circumstances that require Cost Substantiation under Section 12.8, except for information (if any) exempt from disclosure under the Public Records Act, the Company shall make such books and records available to the City for inspection, audit and copying upon reasonable notice during business hours. The provisions of this Section shall survive the termination of this Service Contract for not less than seven years. 24 CC Agreement 2021-6
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E. Company Financial Reports. The Company shall furnish the City, within 150 days after the end of each Contract Year, the audited year-end financial statements reported upon by the Company’s independent public accountant.
F. Inspection, Audit and Ad ustment. The City shall have the right to perform or commission an inspection or independent audit of the Company’s billing statements and, with respect to items subject to Cost Substantiation in accordance with Section
12.8, the financial information required to be kept under this Section, subject to possible reimbursement as provided in this Section. If an inspection or audit reveals that the Company has understated any amount subject to Cost Substantiation, the City shall promptly pay such amount, with interest accruing thereon at the Overdue Rate from the date of the inspection or audit finding. If an inspection or audit reveals that the Company has overstated any amount subject to Cost Substantiation, then the Company shall, at the election of the City, either immediately reimburse to the City or offset against future Service Fee payments, as a Service Fee adjustment, the overstated amount, in addition to interest, from the time such amount was initially overpaid until reimbursed or credited to the City, at the Overdue Rate. If an inspection or audit contemplated by this Section discloses an overpayment of 1% or more of the total amount that should have been properly paid by the City during the period audited, then the Company shall, in addition to the reimbursement or credit of such overpaid amount, with interest, reimburse the City for any and all costs incurred in connection with the inspection or audit. The foregoing remedies shall be in addition to any other remedies the City may have, including remedies for an Event of Default by the Company.
SECTION 4.20. PERIODIC REPORTS.
A. Monthly Operations. The Company shall provide the City with monthly operations reports no later than 15 days after the end of each Billing Period, as specified in Appendix 5.
B. Annual Operations and Maintenance Reports. The Company shall furnish the City, within 30 days after the end of each Contract Year an annual summary of the information contained in the monthly operations reports. The Company shall also perform and report to the City, as part of its annual operations and maintenance report, the results of a comprehensive performance evaluation which will review and analyze the administrative, operational and maintenance practices employed in the management of the Facility. The annual operations and maintenance report shall also include a summary of all replacements or retirement of Facility Equipment and Capital Modifications.
C. Default Reports. The Company shall provide to the City, as soon as reasonably possible after the receipt thereof, copies of any written notice of a material default, breach or non-compliance received or sent under or in connection with any material contract entered into by the Company in connection with the Operation Services. 25 CC Agreement 2021-6
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SECTION 4.21. EMERGENCIES.
A. Emergency Operations Plan. Within 180 days prior to the Acceptance Date, the Company shall provide the City with an Emergency Operations Plan, as described in Appendix 7 to be implemented in the event of an emergency, including fire, flood, weather, environmental, health, safety and other potential emergency conditions.
The plan shall:
1. provide for appropriate notifications to the City and all other Governmental Bodies having jurisdiction and for measures which facilitate coordinated emergency response actions by the City and all such other appropriate Governmental Bodies;
2. specifically include spill prevention and response measures; and
3. assure the timely availability of all personnel required to respond to any emergency (no later than one hour during nights, weekends or holidays). The emergency plan shall be reviewed by the parties annually as part of the review of the annual operations report, and updated when necessary, in accordance with the Operating Protocol.
B. Emergency Action. Notwithstanding any requirement of this Service Contract requiring City approval or consent to reports or submittals, if at any time the Company determines in good faith that an emergency situation exists such that action must be taken to protect the safety of the public or its employees, to protect the safety or integrity of the Facility, or to mitigate the immediate consequences of an emergency event, then the Company shall take all such action it deems in good faith to be reasonable and appropriate under the circumstances. As promptly thereafter as is reasonable, the Company shall notify the City of the event at an emergency phone number from a list supplied by the City, and the Company’s response thereto. The cost of the Company’s response measures shall be borne by the Company except to the extent the emergency event was caused by an Uncontrollable Circumstance, in which case the City shall bear the cost.
ARTICLE V PERFORMANCE
SECTION 5.1. WATER SYSTEM.
A. Reliance. The Company acknowledges that the Facility will constitute a primary component of the Water System and that the City, in meeting the water supply requirements of the Service Area, is providing an essential public service, and in complying with Applicable Law, will rely on the performance by the Company of its obligations hereunder.
B. Management of the Water System and the Facility. The City has and shall retain full management responsibility for the Water System. The Company shall be 26 CC Agreement 2021-6
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responsible for the operation, maintenance, repair, replacement and management of the Facility in accordance with this Service Contract.
C. Water Ownership and Limitations on Company Rights. The City is and shall remain the owner of all Untreated Water and Treated Water, notwithstanding the services provided by the Company hereunder. The Company shall not treat water other than Untreated Water and shall not use the Facility for any purpose other than the purposes contemplated hereby or to serve or benefit any person other than the City.
The Company shall not impose a fee or charge on any person for the supply of Treated Water. The only compensation to the Company for providing the Operation Services shall be the Service Fee payable by the City. Nothing in this Service Contract shall confer upon the Company any rights with respect to the City’s water rights under any applicable contract, permit or other Governmental Approval or with respect to the City’s determination of the quantity or quality of Untreated Water delivered to the Facility for treatment hereunder.
SECTION 5.2. WATER TREATMENT GUARANTEE.
A. Applicable Law Limits. Except to the extent relieved for Uncontrollable Circumstances, the Company shall operate the Facility on a continuous, uninterrupted 24-hour per day, seven-day per week basis so as to produce Treated Water from Untreated Water in compliance with the requirements of Applicable Law.
In no event shall the Company deliver Treated Water that is not in compliance with the requirements of Applicable Law.
B. Treated Water Standards. In addition to its obligations to comply with the Treated Water requirements imposed by Applicable Law as provided in subsection (A) of this Section and except to the extent relieved for Uncontrollable Circumstances, the Company shall produce Treated Water from Untreated Water in compliance with the contract requirements set forth in Appendix 3 (“Treated Water Treatment Guarantee”).
C. Breach of Water Treatment Guarantee. Except to the extent relieved for Uncontrollable Circumstances, the Company shall not be paid for supplying water that fails to comply with the Treated Water Treatment Guarantee set forth in Appendix 3. The remedies are designed to recognize the benefits of consistently high performance and the relative severity of not meeting such Treated Water Treatment Guarantee. The Company may be subject to the damages set forth in Section 5.3(C) for failing to meet the Treated Water Treatment Guarantee.
In addition to the damages that may be payable by the Company, the occurrence of certain unacceptable failure to meet Treated Water Treatment Guarantee as identified in Appendix 3 shall constitute grounds for termination of this Contract by City in accordance with Section 9.4.
The Treated Water Treatment Guarantee shall apply, except to the extent excused by Uncontrollable Circumstances, without any allowance for scheduled or unscheduled downtime for Facility maintenance, repair or replacement, which the 27 CC Agreement 2021-6
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Company acknowledges has been factored into the Treated Water Treatment Guarantee.
D. Indemnity for Loss-and-Expense from Non-Complying Treated Water. In the event that any Treated Water supplied to the Water System fails to comply with the requirements of subsections (B) and (C) of this Section, except to the extent such failure of compliance is caused by an Uncontrollable Circumstance, in addition to the payment of damages, the Company shall indemnify, defend and hold harmless the City and the City Indemnitees in accordance with Section 10.3 from any Loss-andExpense resulting from the supply of such non-complying Treated Water. This indemnity shall extend to any liability resulting from property loss or damage or death or personal injury suffered or alleged to be suffered by any party from exposure to or as a result of using or consuming such non-complying Treated Water based on any theory of recovery, including theories of product liability, toxic tort or environmental impairment. The Loss-and-Expense relating to such liabilities to third parties to which the indemnity provided in this Section extends specifically includes any special, incidental, consequential, punitive and other similar damages awarded to such third parties, notwithstanding waivers contained with respect to such damages in Section 9.11 or 10.6.
E. Change in Law Affecting Treated Water. The parties acknowledge that a Change in Law may affect Treated Water standards or impose more stringent requirements relating to equipment or processes than those established as of the Contract Date.
In the event a Change in Law occurs, the Company shall not be entitled to performance relief or additional compensation under Section 10.2 unless:
1. such Change in Law imposes a regulatory standard or operating requirement with respect to any Treated Water characteristic or parameter which is more stringent to comply with than the Contract Standards in effect as of the Contract Date applicable to such characteristic or parameter, or requires equipment or processes not then in place or practiced at the Facility; and
2. the Company is unable, after taking all mitigation measures required under Section 10.2 with respect to such a Change in Law, to avoid the necessity for such performance relief or additional compensation. In the event that a Change in Law increases the stringency of any Applicable Law standard, the Company shall nonetheless pay damages for non-compliance with respect to the more stringent standard unless the Change in Law has made such standard more stringent than the applicable Contract Standard.
SECTION 5.3. WATER DELIVERY GUARANTEE.
A. City Supply Obligation and Demand Rights. The City is authorized to extract and will endeavor to supply a maximum of 4,500 acre-feet per year of Untreated Water for operation of the Facility. Except to the extent relieved for Uncontrollable Circumstances, the Company shall deliver Treated Water from Untreated Water in 28 CC Agreement 2021-6
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accordance with the requirements set forth in Appendix 3 (“Treated Water Delivery Guarantee”).
B. Pro ected Extraction Schedule. A preliminary extraction schedule will be provided to the Company five (5) business days before the end of each month. Not later than the close of business on the last business day of each month during the Operation Period, the City shall furnish the Company with a final projected groundwater extraction schedule for the following month. The schedule shall specify the anticipated groundwater extraction amount and delivery to the Facility.
C. Water Delivery Guarantee; Damages. Except to the extent excused by Uncontrollable Circumstances and except as provided in subsection (F) of this Section, the Company shall operate the Facility so as to deliver Treated Water to the City each day during the Operation Period. Treated Water deliveries shall be measured from flow meter FW/FIT0917-01 located at the Treated Water Pump Station. At the end of each Contract Year, if the Company fails to meet the minimum Treated Water demand outlined in subsection (A) of this Section, the Company shall pay damages to the City for the cost of substitute water. The unit price of Treated Water will be based on the previous year’s calculation provided to Metropolitan and Calleguas as part of the Local Resources Program funding program. The price of substitute water will be the Calleguas Tier 1 rate in effect during the Contract Year, or the actual cost incurred by the City to secure a substitute water supply.
D. Relation of Treated Water Demand and Delivery to Service Fee. The City shall have the Treated Water demand rights, and the Company shall have the Treated Water delivery obligations, provided in this Section irrespective of the methodology established in Article VIII for determining the Service Fee.
E. Permitted Downtime for Scheduled Maintenance, Repair and Replacement Activities.
The Company shall have the right to shut down the Facility completely for maintenance, repair or replacement in each Contract Year up to a maximum of ten days (pro-rated for partial Contract Years) during the months of November through March. The Company shall provide the City 90 days’ notice of the proposed dates of Facility shutdown for scheduled maintenance. The City shall, within 30 days of receipt of the Company’s notice, determine whether to approve the proposed dates, which approval shall not be unreasonably withheld or delayed. Permitted downtime approved by the City shall not alleviate Company’s obligation to meet Treated Water demands outlined in subsection (A) of this Section.
F. City-Directed Curtailments and Shutdowns. The Company acknowledges that operating conditions in the Water System as a whole may require the City to immediately cease delivering Untreated Water to the Facility or to cease receiving Treated Water from the Facility’s Finished Water Pump Station, and that such conditions may therefore require the immediate curtailment or cessation of ordinary operations at the Facility. Such conditions may occur as a result of mechanical or structural failure within the Water System, emergency conditions originating in the Water System or other unexpected factors. The Company shall cooperate with the City during such conditions and shall curtail or cease operations at the Facility to the 29 CC Agreement 2021-6
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extent necessary to respond to such conditions immediately upon receipt by the Company’s Contract Representative or the Chief Operator of such a directive by the City’s Contract Representative. The issuance of any such directive shall constitute an Uncontrollable Circumstance for purposes of this Section, and may, but not necessarily, constitute a relief from Treated Water Delivery Guarantee only. A CityDirected Curtailment will not relieve the Company from the Treated Water Treatment Guarantee nor Environmental Guarantee as described in Appendix 3. The Company shall resume operations of the Facility within 24 hours of receipt by the Company of a written resumption directive issued by the City’s Contract Representative.
G. Monitoring and Contingency Plan. The City must comply with the groundwater Monitoring and Contingency Plan (MCP) to monitor and report on groundwater basin health and response to Facility operations. Should monitored groundwater conditions and the MCP dictate that pumping reduction contingencies must be enacted, the City will reduce Untreated Water pumping and direct the Company to reduce Treated Water production. Such a reduction in Untreated Water pumping shall constitute an Uncontrollable Circumstance for purposes of this Section, and may, but not necessarily, constitute a relief from Treated Water Delivery Guarantee only. Such a reduction in Untreated Water pumping will not relieve the Company from the Treated Water Treatment Guarantee nor Environmental Guarantee as described in Appendix
3. Should groundwater pumping be curtailed due to mandatory reductions in response to the MCP, the Company and City may amend the Service Contract in accordance with Section 4.8.
SECTION 5.4. No City Obligation to Supply or Demand Water. The City shall have the right, but not the obligation, during the Operation Period to demand Treated Water in accordance with Article V. The City shall pay the Service Fee as provided in Article VIII, but shall not be liable in damages or otherwise for any failure to demand Treated Water or to supply Untreated Water, or for the quantity or quality (except to the extent provided in Section 5.7) of Untreated Water conveyed to the Facility for treatment. Untreated Water delivery shortfalls, from any cause other than Company Fault, however, shall entitle the Company to relief from its obligations under this Section (except to the extent provided in subsection (A), but shall not relieve the Company from its obligation to comply with any other Performance Guarantee. Untreated Water shall be supplied by the City to the Facility without cost to the Company, except for those circumstances in which the Company is responsible for reimbursing the City for Untreated Water costs as provided in this Service Contract.
SECTION 5.5. PRODUCTION EFFICIENCY GUARANTEE.
A. Standards. Except to the extent relieved for Uncontrollable Circumstances, the Company shall operate the Facility to achieve a Treated Water to Untreated Water production efficiency of no less than 82% over the course of each Contract Year following the Acceptance Date.
B. Remedy for Breach of Production Efficiency Guarantee. Except to the extent relieved for Uncontrollable Circumstances, the Company shall reimburse the City for 30 CC Agreement 2021-6
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its actual costs relating to the amounts of wasted Untreated Water, as calculated over a full Contract Year, resulting from the Company’s failure to comply with the requirements of subsection (A) of this Section. The City shall mitigate its costs relating to the amounts of wasted Untreated Water that are reimbursable by the Company pursuant to this subsection and shall provide the Company with appropriate evidence of such costs.
SECTION 5.6. ENVIRONMENTAL GUARANTEES.
A. Standards. Except to the extent relieved for Uncontrollable Circumstances, the Company shall, in performing the Operation Services, comply with the environmental requirements set forth in Appendix 3 (the “Environmental Guarantees”).
B. Remedies for Failure to Meet the Environmental Guarantees. If the Company fails to meet any Environmental Guarantee, the Company shall pay all fines and penalties arising from such failure, shall indemnify, defend and hold harmless the City and the City Indemnitees in accordance with Section 10.3 for any Loss-and-Expense resulting from such failure, and shall immediately take all appropriate action necessary in accordance with Section 5.8 to remedy such failure. The City shall have the right to enforce compliance with the Environmental Guarantees regardless of regulatory action.
SECTION 5.7. UNTREATED WATER QUALITY AND UNCONTROLLABLE CIRCUMSTANCES.
A. Relief Generally. The Company shall be entitled to relief from the Performance Guarantees set forth in this Article and from its other obligations hereunder on account of variations in the nature, condition or quality of Untreated Water, only as and to the extent set forth in this Section.
B. Untreated Water Quality. Untreated Water is expected to have a range of water quality parameters, which are set forth in Appendix 3. Over time, Untreated Water quality is expected to change as poorer quality water is pumped from the groundwater basin and better-quality water infiltrates the groundwater basin. The Company shall operate the Facility across the full range of water quality parameters and meet all Performance and Environmental Guarantees.
C. Untreated Water Quality-Specified Parameters. The Company shall not be entitled to Uncontrollable Circumstances relief hereunder on account of Untreated Water quality conditions so long as concentration levels or characteristics of any Untreated Water quality parameter which is listed among the Untreated Water quality parameters are within the applicable range set forth in the NPV Desalter Raw Water Quality table (Table 3-3 of Appendix 3). If the concentration levels or characteristics of any such Untreated Water quality parameter are outside the applicable parameter range, however, the Company may be entitled to relief as negotiated between the City and Company. The Company shall be entitled to such relief only to the extent the Company actually incurs additional costs directly as a result of concentration 31 CC Agreement 2021-6
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levels or characteristics of Untreated Water are outside the applicable parameter range.
D. Untreated Water Quality-Unspecified Parameters. If the concentration levels or characteristics of any Untreated Water quality parameter which is not listed among the Untreated Water quality parameters vary at any time during the Term so as to materially and adversely affect the ability of the Company to meet the Performance Guarantees or otherwise provide the Operation Services, or materially increase the cost thereof to the Company, an Uncontrollable Circumstance shall be deemed to have occurred and the Company shall be entitled to relief as provided in Section 10.2. The Company shall provide all necessary documentation to substantiate the impacts of an Untreated Water quality parameter on the Company’s ability to meet the Performance Guarantees or otherwise provide the Operation Services. The City reserves the right to request additional information from the Company in its evaluation of the impacts of Untreated Water quality parameters on the Company’s Performance Guarantees.
SECTION 5.8. CITY REMEDIES FOR NON-COMPLIANCE WITH PERFORMANCE GUARANTEES.
A. Remedies. If the Company fails to comply with any Performance Guarantee and is not excused from performance as a result of an Uncontrollable Circumstance, the Company shall, without relief under any other Performance Guarantee, and in addition to the payment of damages and any other remedy provided herein, allowed by Applicable Law or required by a Governmental Body:
1. promptly notify the City within 24 hours of the Company’s having knowledge of any such non-compliance;
2. promptly provide the City within 24 hours with copies of any notices sent to or received from the EPA, the DDW or any other Governmental Body having regulatory jurisdiction with respect to any violations of Applicable Law;
3. pay any other resulting fines, levies, assessments, impositions, penalties or other charges resulting therefrom;
4. take any action (including making all capital investments, improvements or modifications or repairs, replacements and operating and management practices changes) necessary in order to comply with such Performance Guarantee, continue or resume performance hereunder and eliminate the cause of, and avoid or prevent recurrences of non-compliance with such Performance Guarantee;
5. promptly prepare all public notifications required by Applicable Law, and submit such notifications to the City for publication; and
6. assist the City with all public relations matters necessary to adequately address any public concern caused by such non-compliance, including, but not limited to, 32 CC Agreement 2021-6
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preparation of press releases, attendance at press conferences, and participation in public information sessions and meetings.
B. Performance Testing. The City may, at any time, require a performance test to be conducted by the Company, at the City’s cost and expense, to demonstrate that the Facility is operating in compliance with Applicable Law and Performance Guarantees. If the test is not successfully passed for any reason other than an Uncontrollable Circumstances, the Company shall reimburse the City and, at its own cost and expense, make all necessary repairs and replacements, including major repairs and replacements, or capital investments, improvements or modifications, and the test shall be re-performed at the Company’s sole cost.
SECTION 5.9. SERVICE COORDINATION. At least 60 days prior to the commencement of each Contract Year following the Acceptance Date, the Company shall update, subject to the approval of the City, the Operating Protocol consistent with the Contract Standards. The Operating Protocol shall set forth all practices, procedures and protocols which are necessary or useful in coordinating the activities of the parties hereunder, including particularly the establishment and modification of the City’s demands for Treated Water, all operational and informational communications between the City and the Company, all data and information required to demonstrate the extent to which the Facility is being operated in compliance with the Performance Guarantees. The Operating Protocol also shall provide for such matters as the parties may mutually deem necessary or desirable in the implementation of this Service Contract. The City may direct the Company to revise the Operating Protocol for the current Contract Year at any time so long as it remains consistent with the Performance Guarantees and the terms and conditions of this Service Contract. The City’s Contract Administrator and the Chief Operator shall be responsible for coordinating all matters relating to the Operating Protocol.
SECTION 5.10. METERING AND TESTING.
A. Testing. The Company shall conduct all tests of Treated Water in accordance with the Contract Standards and in accordance with the Operating Protocol. The tests shall be made at State-certified laboratories to the extent required by the Contract Standards and shall be conducted at the Company’s sole cost and expense, except to the extent such tests are required by a Change in Law or any other Uncontrollable Circumstances and are not required under the terms hereof as of the Contract Date. All Treated Water sampling and testing for contract performance shall be conducted at the testing locations identified in the testing and sampling standards set forth in the Operating Protocol and the other Contract Standards. The City shall have the right to approve all testing locations.
B. Metering and Weighing. The City shall maintain in good working order, and repair and replace when necessary, devices capable of: (1) metering the daily total volume of Untreated Water; and (2) metering separately the daily total volume of Treated Water delivered to the City. The Company shall maintain in good working order, and repair and replace when necessary, devices at the Facility capable of: (1) metering 33 CC Agreement 2021-6
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or weighing the daily total amount of Facility By-Products for disposal; and (2) any other metering or weighing requirement imposed by Applicable Law and this Service Contract. To the extent any metering or weighing device is incapacitated or is being tested, the Company shall estimate as accurately as reasonably practicable the data required by the Company to perform the Operation Services. This estimate and methodology shall, with the City’s approval, be used as the basis for determining the operating data required hereunder during the outage.
SECTION 5.11. RELEASES, LEAKS AND SPILLS.
A. Unauthorized Releases. The Company shall operate the Facility in such a manner that Untreated Water, Treated Water, Facility By-Products or chemicals will not contaminate, or be released, leaked or spilled on or into, or discharged to the environment, other than as permitted by the most stringent of any of the Contract Standards.
B. Notification and Reporting. The Company, while contemporaneously notifying the City, shall be responsible for fulfilling all notification of and reporting requirements established by Applicable Law related to any unauthorized release of Untreated Water, Treated Water, Facility By-Products or chemicals into the environment from or in connection with its operation and management of the Facility. The Company shall prepare a memorandum evidencing such notification and reporting and provide copies thereof to the City, along with any documents provided to the relevant Governmental Body regarding the release.
C. Site Assessment Upon Termination or Expiration. The City may conduct an assessment of the Facility Site upon expiration or earlier termination of this Service Contract to determine whether any Untreated Water, Treated Water, Facility ByProducts or chemicals have been released, leaked or spilled on or into, or discharged into the environment in violation of this Section. The Company shall be responsible for the remediation of any unauthorized release discovered by the City through any such assessment of the Facility Site in the manner and to the extent provided in subsection (D) of this Section.
D. Cleanup and Costs. The Company shall coordinate with the City and all appropriate Governmental Bodies in effectuating the prompt remediation of any unauthorized release. The Company shall, in the most expeditious manner possible under the circumstances, cause any Untreated Water, Treated Water, Facility By-Products or chemicals released without authorization to be cleaned up or remediated in accordance with Applicable Law. All costs associated with performing any such clean up and remediation measures, including any fines, assessments, penalties or damages resulting from the unauthorized release, shall be borne by the Company, except to the extent the unauthorized release of Untreated Water, Treated Water, Facility By-Products or chemicals resulted from an Uncontrollable Circumstance, in which case the appropriate portion of such costs shall be borne by the City on a reimbursable basis.
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SECTION 5.12. COMPANY DISPOSAL OF RESIDUALS.
A. Brine Management. Pursuant to the Brine Disposal Agreement with Calleguas, the City has the right to dispose of Brine generated by the Facility through the Salinity Management Pipeline. Subject to the City obtaining Calleguas’ consent to this Service Contract to the extent required by the Brine Disposal Agreement, Company acknowledges and agrees to dispose of Brine in accordance with, and subject to, the terms and conditions of the Brine Disposal Agreement and to Calleguas’s Ordinance No. 19. The Company further agrees to perform its obligations under this Agreement in a manner which, to the greatest extent reasonably practicable, will cause the City to comply with all City obligations under the Brine Disposal Agreement and Ordinance No. 19. The Company shall ensure that Brine disposal at all times complies with water quality and other requirements subject to the Brine Disposal Agreement and Ordinance No. 19, which may include, but is not limited to, performing water quality testing of Brine in accordance with the Outfall Discharge Permit.
B. Non-Brine Residuals Management. The Company shall locate an Acceptable Disposal Site, subject to the approval of the City, which shall not be unreasonably withheld or delayed, and shall make all necessary arrangements with the owner or operator thereof for the disposal of all non-Brine Residuals during the Term of this Service Contract. The Company shall collect, segregate, treat and store Residuals from treatment operations at the Facility in an enclosed building. The Company shall operate the Facility and treat Untreated Water so as to minimize the production of Residuals while complying with the Performance Guarantees. The Company shall transport all Residuals to an Acceptable Disposal Site in a safe and environmentally sound manner and in accordance with Applicable Law. All cost and expense of Residuals disposal shall be borne by the Company, except due to Uncontrollable Circumstances.
C. Acceptable Disposal Site. An “Acceptable Disposal Site”, as used herein, means either a sanitary landfill or other waste disposal or management facility, which: (1) is located in the United States; (2) does not appear on any federal or state list of sites, such as but not limited to the National Priority List or the CERCLIS list under CERCLA, maintained for the purpose of designating landfills which are reasonably expected to require remediation on account of the release or threat of release of Hazardous Materials; and (3) is being operated at the time of disposal or delivery in accordance with Applicable Law, as evidenced by the absence of any significant regulatory sanctions or any significant enforcement actions with respect to material environmental matters. The Company shall provide evidence satisfactory to the City, from time to time as requested, that the intended disposal location conforms with the requirements of this Section.
D. Transportation Operations. In the event of a release, spill, leak or loss of Residuals during transfer or transit, the Company shall immediately arrange for the clean-up of 35 CC Agreement 2021-6
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the material and transportation to an Acceptable Disposal Site, and shall pay any resulting fines, assessments, penalties or damages resulting therefrom.
E. Acceptable Disposal Site Information. The Company shall keep and maintain such logs, records, manifests, bills of lading or other documents pertaining to the Residuals as are necessary or appropriate to comply with Governmental Approvals and to monitor and confirm compliance by the Company with the requirements of this Section, and shall collect and promptly provide the City with a copy of all weights and measures data and information relating to Residuals quantities generated and disposed of hereunder.
F. Title and Documentation. The Company shall assume responsibility for proper handling and (if applicable) disposal of all Residuals, including without limitation Residuals that have been identified and classified as Hazardous Materials (“Hazardous Residuals”); provided that title to all Residuals shall remain with City.
The City shall sign all permits, manifests or similar documents required for handling, transportation or disposal of Hazardous Residuals, and except to the extent the City is required to sign by Applicable Law, the Company shall sign all permits, manifests or similar documents required for handling, transportation or disposal of Residuals other than Hazardous Materials.
SECTION 5.13. COMPANY DISPOSAL OF WASTEWATER. The Company shall manage and dispose of all Wastewater produced at the Facility during the Term of this Service Contract in accordance with Applicable Law and Camarillo Sanitary District’s Industrial Waste Discharge Requirements. The Company shall operate the Facility so as to minimize the production of Wastewater and comply with the Performance Guarantees.
SECTION 5.14. ADMINISTRATIVE SANCTIONS. Except to the extent excused by Uncontrollable Circumstances, the Company shall be liable for liquidated damages in accordance with this Section for failing to perform the following administrative obligations:
1. report any violation of any Governmental Approval or Applicable Law as required by subsection 4.17(C);
2. respond to a written request for information related to this Service Contract made by the Contract Administrator and designated as a “priority request” within three business days as required by subsection 4.6(C);
3. respond to complaints and communications received by the City or the Company as required by subsection 4.6(F);
4. report complaints or communications to the City as required by subsection
4.6(F);
5. attend City meetings, as reasonably requested, with advance notice from the City;
6. provide the City with any report, record, logs or other document required hereunder on time;
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7. respond to alarms at the Facility as required hereunder;
8. provide any plan, proposal, report or other deliverable required hereunder with respect to Uncontrollable Circumstances or any regulatory deadline agreed to by the parties thereto;
9. properly sample, test or report the results thereof as required by Applicable Law;
10. mitigate noise complaints as required by subsection 4.6(F); and Except to the extent relieved for Uncontrollable Circumstances and in addition to any other amounts payable hereunder, the Company shall pay liquidated damages of $500 per occurrence for the Company’s successive failure to comply with the above administrative obligations (3 non-compliance events for the same event or 3 non-compliance events for the different events in one Term). The Company shall have the right to discuss with the City any such liquidated damages prior to their imposition.
ARTICLE VI MAINTENANCE, REPAIR AND REPLACEMENT
SECTION 6.1. MAINTENANCE, REPAIR AND REPLACEMENT GENERALLY.
A. Maintenance, Repair and Replacements. The Company shall perform all maintenance, repair and replacement of the machinery, equipment structures, improvements and all other property constituting the Facility, shall keep the Facility in good working order, condition and repair, in a neat and orderly condition and in accordance with the Contract Standards, and shall maintain the aesthetic quality of the Facility as originally constructed. The Company shall provide or make provisions for all labor, materials, supplies, equipment, spare parts, Consumables and services which are necessary for the normal and ordinary maintenance of the Facility and shall conduct predictive, preventive and corrective maintenance of the Facility as required by the Contract Standards. (Replacement of reverse osmosis membrane elements and pressure filter media are Capital Modifications (see 6.1(C) below)).
The City’s approval for any such maintenance, repair or replacement shall not be required unless it constitutes a Capital Modification. The Company shall keep maintenance logs in accordance with the maintenance, repair and replacement plan set forth in Appendix 5.
The obligations of the Company under this Article are intended to ensure that the Facility is fully, properly and regularly maintained, repaired and replaced in order to preserve its long-term reliability, durability and efficiency, and that the Facility is returned to the City in a condition commensurate with the facility age and maintenance cycle. Nothing in this subsection shall limit the Company’s obligations with respect to the required condition of the Facility Structures and the Facility Equipment at the end of the Term under Section 6.3. Except for Capital Modifications pursuant to Article VII, the Fixed Component of the Service Fee shall 37 CC Agreement 2021-6
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constitute the only compensation available to the Company for the performance of its maintenance, repair and replacement obligations under this Article VI.
B. Repair and Maintenance of Facility Site. The Company, in accordance with Appendix 5 and the Contract Standards, shall keep the grounds of the Facility Site in a neat and orderly condition (including the cleanup of litter and debris on a daily basis or more frequently as required). The Company shall also maintain and repair all Facility Site signage, fencing and other security systems. All landscaping services for the Facility Site, including the replacement of all dead or dying vegetation, shall be performed by the City.
C. Replacement of Reverse Osmosis Membrane Elements and Pressure Filter Media.
The Company shall replace worn out, damaged or otherwise unusable (from whatever cause) reverse osmosis membrane elements (“RO Membrane”) and pressure filter media when required by Contract Standards. Any such replacement shall be treated as a Capital Modification.
1. If an RO Membrane is replaced after being in regular use for more than its remaining service life as indicated on the approved Baseline Facility Record established pursuant to Appendix 6, or is rendered unusable solely due to an Uncontrollable Circumstance, the City shall be responsible for the cost and expense of the replacement.
2. If an RO Membrane is replaced for any reason other than as provided in clause (1) above, the Company shall be responsible for the pro-rata portion of the replacement cost of the RO Membrane being replaced, based on the unused portion of the original scheduled service life of the prior RO Membrane. For example:
If:
Original service life of RO Membrane to be replaced: Five years (60 mos.) Replacement cost of new RO Membrane: $300,000
Actual service life of RO Membrane to be replaced: Three years (36 mos.) Then Company would be responsible for:
$300,000 X (1-(36/60)) = $120,000
The City shall be responsible for the remaining cost and expense of the RO Membrane replacement.
SECTION 6.2. MAINTENANCE, REPAIR AND REPLACEMENT PLAN..
A. Maintenance, Repair and Replacement Plan. Appendix 5 contains requirements for preparing the Company’s plans and schedules for the maintenance, repairs and replacements of the Facility. The plan is intended to establish a minimum standard by which to measure the Company’s performance of its ongoing maintenance, repair and replacement obligations hereunder, and to assure that no material deferred or sub-standard maintenance, repair or replacement occurs. The Company shall 38 CC Agreement 2021-6
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incorporate a maintenance, repair and replacement plan that is in substantial compliance with Appendix 5 into the Operation and Maintenance Manual. The Company shall adhere to these plans as incorporated in the Operation and Maintenance Manual, except where it can demonstrate to the City that changes are reasonable under Good Industry Practice. The timing and extent of maintenance, repair and replacement activities performed by the Company hereunder with respect to the Facility, taken as a whole, shall equal or exceed the standard set for those activities by Appendix 5, as incorporated in the Operation and Maintenance Manual. The Company shall also perform any additional maintenance, repair and replacement work which is necessary in order to comply with the Contract Standards.
SECTION 6.3. FACILITY EVALUATIONS
A. Baseline Facility Record. The Company shall, within 60 days following the Acceptance Date, photograph, videotape and prepare an itemized inventory of all property constituting the Facility, including records of assets originally installed, manufacturer and model number, identification number, original cost data, and other information identified in Appendix 6 (the “Baseline Facility Record”). The Baseline Facility Record shall be prepared by the Company in accordance with Appendix 6 and shall reflect the condition, functionality, value and useful life of the Facility as originally constructed. The purpose of the Baseline Facility Record shall be to establish an informational baseline for determining compliance by the Company with its maintenance, repair and replacement obligations under this Article.
B. Periodic Inspection of the Facility. The Company shall perform annual inspections of the Facility Equipment and Facility Structures in accordance with Appendix 6. The Baseline Facility Record shall be annually updated by the Company as required by Appendix 6.
C. Term-End Evaluation(s) of the Facility. Not more than 12 months prior to and not later than six months prior to the end of the Initial Term or any Renewal Term, or concurrently with the Termination Date resulting from an early termination of this Service Contract prior to the Initial Term, an Independent Evaluator shall conduct an evaluation of the Facility in accordance with the protocol established in Appendix 6 and shall utilize standard utility property evaluation methods. In connection with each asset evaluation, the Company shall furnish the City and the Independent Evaluator with the Baseline Facility Record and record documentation prepared pursuant to Appendix 6 and all database information developed in connection with the implementation of the Company’s computerized maintenance management system pursuant to Section 6.5. The evaluation of the Facility Structures shall determine and establish the physical condition of the Facility Structures. The evaluation of the Facility Equipment shall determine and establish the remaining useful life of the Facility Equipment as of the date of evaluation (expressed as a single number of years, carried to one decimal place), taking into account the performance capability of each piece of Facility Equipment. Each evaluation shall 39 CC Agreement 2021-6
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exclude the value of any Capital Modifications other than those made on account of Uncontrollable Circumstances or pursuant to Sections 4.14, 4.16, 5.8, 6.1 (C) or 9.8.
D. Required Condition of Facility Structures at Expiration of Initial Term or Renewal Term. At the end of the Initial Term or any Renewal Term the Facility Structures shall be in good condition, working order and repair as when new, with ordinary wear and tear excepted as determined in light of the Company’s maintenance, repair and replacement obligations under Sections 6.1 and 6.2. For the Facility Structures receiving functionality or structural integrity ratings of less than “3” (as defined in Appendix 6), the Company shall, at the City’s election, either repair such structure or make a cash payment to the City sufficient to enable the City to repair the structure.
E. Required Condition of Facility Equipment Upon Return to the City. At the end of the Initial Term or any Renewal Term the Facility Equipment shall be in a condition and state of repair such that, the remaining service life of the Facility Equipment at such time is equal to or greater than the service life in the Baseline Facility Record for each piece of Facility Equipment minus the number of years elapsed since the Acceptance Date, in accordance with Appendix 6. In the event any evaluation under this Section establishes a remaining service life deficiency which is not attributable to Uncontrollable Circumstances, the Company shall, at the election of the City, either remedy the deficiency or make a cash payment to the City sufficient to compensate the City for the value of the expected loss of use of the Facility Equipment, less (if any) previously paid by the Company under this Section.
F. Capital Modifications. In the event that Capital Modifications constituting Facility Structures are made during the Initial Term, such assets shall be returned to the City on the last day of the Initial Term in good condition, working order and repair, with ordinary wear and tear excepted as determined in light of the Company’s maintenance, repair and replacement obligations under Sections 6.1 and 6.2. In the event that Capital Modifications constituting Facility Equipment are made during the Initial Term, such Capital Modifications shall be disregarded in preparing the evaluations of the Facility to the extent provided in subsection (C) of this Section.
The weighted average useful life of all such assets as an aggregate, however, shall be separately determined in each asset evaluation, and shall be equal to or greater than the weighted average useful life for Facility Equipment as provided in subsection (E) of this Section. Reasonable conventions may be adopted in the weighting analysis to take account of the varying dates of installation.
G. [Intentionally Omitted].
H. Disputes. The City shall have the right to appoint, with the Company’s reasonable consent, an Independent Evaluator for purposes of this Section. The expense of the Independent Evaluator for all services performed shall be borne equally by the parties. The final determination by the Independent Evaluator as to any matter arising under this Section involving amounts less than $50,000 which is in dispute between the City and the Company shall be final and binding upon the parties. For disputes involving amounts greater than $50,000, the Independent Evaluator’s 40 CC Agreement 2021-6
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determination shall be advisory only, and such dispute shall be handled as provided in Sections 9.12 and 9.13. The parties may, but shall not be required to, use the same Independent Evaluator for more than one asset evaluation required by this Section.
SECTION 6.4. PERIODIC MAINTENANCE INSPECTIONS.
A. Annual Maintenance Inspection. The City may, upon reasonable written notice, perform an inspection of the Facility and relevant records of the Company each Contract Year following the Acceptance Date to determine compliance with the Contract Standards. The Company shall reasonably cooperate with the inspections, which shall not interfere unreasonably with the Company’s performance of the Operation Services. The City’s annual inspection may include the inspection of: (1) the Facility and the Facility Site; (2) all in-house and contract laboratories where tests are conducted for samples from the Facility; (3) all areas where chemicals are stored or used; and (4) all operations, maintenance, repair and replacement records kept by the Company. The City may, upon reasonable written notice, perform a full-scale inspection and review of the state of repair, working condition and performance capability of the Facility, including testing of equipment to determine its physical and operational conditions, and inspection of the general status of repairs of all Facility Equipment and Facility Structures, grounds, utility lines, spare parts, inventories, and operation, maintenance, repair and replacement records.
B. Remediation. Based on the operations and maintenance reports submitted by the Company pursuant to Section 4.20 or City inspections, the City may submit a statement to the Company detailing any deficiencies found and requiring the Company to submit a plan of remediation. If the City accepts the remediation plan, the Company shall thereupon correct all deficiencies noted. Failing such corrective action, the Service Fee shall be reduced by the amount of the City’s estimated cost of remediation. Any disputes with respect to the cause or amounts specified in the City’s statement, not resolved to the mutual satisfaction of the parties, may be submitted to Non-Binding Mediation as provided in Section 9.13 C. Unscheduled Inspections. Nothing in this Section shall limit the City’s right, on an unscheduled basis, at any time to inspect the Facility and relevant records of the Company to determine compliance with this Article.
SECTION 6.5. COMPUTERIZED MANAGEMENT SYSTEM
A. Company Responsibility. The Company shall install, populate, maintain, upgrade, repair and replace, as appropriate throughout the Term, a computerized maintenance management system that is capable of providing a record of repair and replacement of the Facility on a detailed, item-by-item basis; scheduling, carrying out, monitoring and controlling predictive, preventive and corrective maintenance programs; monitoring routine operations within the Facility; issuing work orders and purchase orders; maintaining a spare parts inventory; and issuing exception, 41 CC Agreement 2021-6
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equipment status and repair priority reports. The computerized maintenance management system shall be installed, populated with data for all Facility equipment, and fully functional prior to the Acceptance Date, and shall be modified as and when appropriate during the Term to take account of removals from and additions to the Facility. The Company shall utilize the computerized maintenance management system to provide the City with documentation which allows it to efficiently monitor compliance by the Company with its maintenance, repair and replacement obligations hereunder. The City shall have unlimited, computer-based real time, read-only access to such system from off-site locations to be determined by the City. The Company shall permit all electronic data to be replicated and provided to the City for review.
B. City-Directed Changes to Computerized Maintenance Management System. The City may, from time to time during the Term of this Service Contract, direct the Company to modify its computerized maintenance management system to conform with changes made by the City to its computerized maintenance management system. The Company’s cost and expense of any such modification shall be borne by the City, subject to Cost Substantiation.
SECTION 6.6. WARRANTIES. During the Term of this Service Contract, the Company shall be responsible for meeting the City’s operations and maintenance obligations under all manufacturers’ warranties on equipment installed in the Facility. The Company shall not commence or maintain any litigation with respect to such warranties or guarantees without the City’s consent, which shall not unreasonably be withheld if the City elects not to pursue litigation. The Company shall cooperate with and assist the City if the City, in its sole discretion, seeks to enforce warranties and guarantees through litigation or otherwise.
SECTION 6.7. LOSS, DAMAGE OR DESTRUCTION TO THE FACILITY.
A. Prevention and Repair. The Company shall use care and diligence, and shall take all appropriate precautions, to protect the Facility from loss, damage or destruction.
The Company shall report to the City and the insurers, immediately upon obtaining knowledge thereof, any damage or destruction to the Facility and as soon as practicable thereafter shall submit a full report to the City. The Company shall also submit to the City within 24 hours of receipt copies of all accident and other reports filed with, or given to the Company by, any insurance company, adjuster or Governmental Body. The parties shall cooperate so as to promptly commence and proceed with due diligence to complete the repair, replacement and restoration of the Facility to at least the character or condition thereof existing immediately prior to the loss, damage or destruction, in accordance with and subject to the procedures set forth in Articles VII and X, as applicable. The City shall have the right to monitor, review and inspect the performance of any repair, replacement and restoration work performed by the Company.
B. Insurance and Other Third-Party Payments. To the extent that any repair, replacement or restoration costs incurred pursuant to this Section can be recovered 42 CC Agreement 2021-6
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from any insurer or from another third-party, each party shall assist the other in exercising such rights as it may have to effect such recovery. Each party shall reasonably provide the other with copies of all relevant documentation at no cost to the other party and shall cooperate with and assist the other party upon request by participating in conferences, negotiations and litigation regarding insurance claims.
C. Uninsured Costs. The City shall provide all funds necessary to pay the costs of repairing, replacing and restoring the Facility in accordance with this Section and all insurance proceeds and recoveries from third parties resulting from damage to or the loss or destruction of the Facility shall be for the account of the City; provided, however, that such costs not covered by insurance proceeds or third-party payments, including any deductible amount (up to $50,000 per occurrence per claim) required to be paid in connection with any property insurance provided by the City, shall be borne by the Company to the extent the loss, damage or destruction was not caused by Uncontrollable Circumstances.
D. Repair of City and Private Property. The Company shall promptly repair or replace all private property damaged by the Company or any officer, director, employee, representative or agent of the Company in connection with the performance of, or the failure to perform, the Operation Services. The repair and replacements shall restore the damaged property, to the maximum extent reasonably practicable, to its character and condition existing immediately prior to the damage.
ARTICLE VII CAPITAL MODIFICATIONS
SECTION 7.1. CAPITAL MODIFICATIONS GENERALLY.
A. Purpose. The parties acknowledge that it may be necessary or desirable from time to time during the Operation Period to make Capital Modifications, either at the request of the Company or at the direction of the City, or to remedy Company breach or to respond to an Uncontrollable Circumstance. Capital Modifications may be appropriate or desirable, for example, to improve the performance or increase the capacity of the Facility, to address or anticipate the obsolescence of portions of the Facility, to reduce the cost to the Company of performing this Service Contract or to reduce the Service Fee payable by the City as provided in subsection (D) of this Section.
B. City Approval. The City shall have the right, in its sole discretion, to approve all Capital Modifications. All Capital Modifications shall be made and implemented in accordance with this Article. The City shall have the express right to condition its approval of Capital Modifications upon a sharing of any net cost savings expected to result therefrom. Capital modifications shall not relieve Company of any warranty obligations.
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C. Responsibility for Costs. The responsibility for the cost and expense of any Capital Modifications shall be by the City except to the extent provided in Sections 4.14, 4,16. 5.8, 6.1(C), 7.2, and 9.8.
D. Cost Savings. In the event any Capital Modification is reasonably expected to result in a net cost savings to the Company, the parties shall negotiate in good faith the extent to which any such net cost savings shall be shared with the City, and the Service Fee shall be reduced accordingly.
E. Report to Governmental Bodies. The Company shall report all Capital Modifications to DDW and any other Governmental Body for their approval and obtain any permit modifications to the extent required by Applicable Law. Any such report and permit modification application shall be subject to the City’s review and approval prior to submittal to the DDW or such other Governmental Body.
SECTION 7.2. CAPITAL MODIFICATIONS AT COMPANY REQUEST. The Company shall give the City written notice of, and reasonable opportunity to review and comment upon, any Capital Modification proposed to be made at the Company’s request. The notice shall contain sufficient information for the City to determine that the Capital Modification:
1. does not diminish the capacity of the Facility to be operated so as to meet the Contract Standards;
2. does not impair the quality, integrity, durability and reliability of the Facility;
3. is reasonably necessary or is advantageous for the Company to fulfill its obligations under this Service Contract; and
4. is feasible.
The notice shall be accompanied by a written cost proposal which includes (i) a reasonably detailed itemized budget, (ii) proposed allocation of cost between the City and the Company, including (as applicable) proposed adjustments to the Service Fee (taking into account subsection 7.1(D) as applicable), and (iii) any other information reasonably requested by the City.
The City shall have the absolute right to accept, reject or modify any Capital Modification proposed by the Company.
SECTION 7.3. CAPITAL MODIFICATIONS DUE TO UNCONTROLLABLE CIRCUMSTANCES.
Upon the occurrence of an Uncontrollable Circumstance, the City shall promptly proceed, subject to the terms, conditions and procedures set forth in Section 7.5, to make or cause to be made all Capital Modifications reasonably necessary to address the Uncontrollable Circumstance. The Company shall consult with the City concerning possible means of addressing and mitigating the effect of any Uncontrollable Circumstance, and the Company and the City shall cooperate in order to minimize any delay, lessen any additional cost and modify the Facility so as to permit the Company to continue providing the Operation Services in light of such Uncontrollable Circumstance. The design and construction costs of any such Capital Modification, and any related operation, maintenance, repair and replacement costs, shall be 44 CC Agreement 2021-6
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borne by the City. Any such Capital Modification made on account of Uncontrollable Circumstances, and any related change in the terms and conditions of this Service Contract, shall be reflected in a Service Contract Amendment.
SECTION 7.4. CAPITAL MODIFICATIONS AT CITY DIRECTION. The City shall have the right to make Capital Modifications at any time and for any reason whatsoever, whether and however the exercise of such rights affects this Service Contract so long as the Company’s rights are protected as provided in Section 4.16. The design and construction costs of any such Capital Modification made at the City’s direction under this Section, and any related operation, maintenance, repair and replacement costs, shall be borne by the City. The City shall have no obligation to direct the Company to make any Capital Modification.
SECTION 7.5. PRIMARY PROCEDURE FOR IMPLEMENTING CAPITAL MODIFICATION A. Company Conceptual Plan and City Review. The Company shall prepare and deliver to the City a conceptual plan for the implementation of the Capital Modification. The conceptual plan shall include the Company’s recommendations as to technology, design, construction, equipment, materials, and operating and performance impacts. The foregoing recommendations shall seek to allow for maximum competition in price and shall not favor the Company or any of its Affiliates. Preliminary schedule and capital and operating cost estimates shall be included, together with an assessment of possible alternatives. The conceptual plan shall specifically evaluate reasonable alternatives to the mix of Capital Modifications and changed operating and management practices which the Company is recommending. The City shall review the Company’s conceptual plan and recommendations and undertake discussions with the Company in order to reach agreement on a basic approach to the Capital Modification.
B. Capital Modification. With respect to any Capital Modification to be undertaken and as otherwise required by Applicable Law, and pursuant to the City’s purchasing policy, the City may:
1. contract with the Company on a sole source basis to implement the Capital Modification on a design/build or design/build/operate basis;
2. contract with the Company to manage a competition for design/build services to implement the Capital Modification; and
3. contract with third parties for the implementation of the Capital Modification on a traditional design/bid/build basis, with the City for the design and construction of the Capital Modification.
C. Cost Savings. In the event any Capital Modification is reasonably expected to result in a net cost savings to the Company, the parties shall negotiate in good faith the extent to which any such net cost savings shall be shared with the City, and the Service Fee shall be reduced accordingly.
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D. Report to Governmental Bodies. The Company shall report all Capital Modifications to DDW and any other Governmental Body for their approval and obtain any permit modifications to the extent required by Applicable Law. Any such report and permit modification application shall be subject to the City’s review and approval prior to submittal to DDW or such other Governmental Body.
ARTICLE VIII SERVICE FEE AND OTHER PAYMENTS BY CITY
SECTION 8.1. SERVICE FEE GENERALLY. From and after the Acceptance Date, the City shall pay the Service Fee to the Company as complete compensation for the Company’s performing the Operation Services under this Service Contract. The Service Fee shall be calculated according to this Article.
SECTION 8.2. SERVICE FEE FORMULA. The Service Fee shall be calculated in accordance with the following formula:
A. The cost components related to the operation of the Facility with which the Service Fee will be calculated are the following:
1. Fixed Component (FC) – Described in Section 8.2(B) and 8.4 herein
2. Variable Component (VC) - Water Treatment Chemicals Costs, as described in Section 8.2(B) and 8.5 herein.
3. Extraordinary Items – Any costs/credits for Extraordinary Items shall be addressed as set forth in Section 8.6.
B. The monthly Service Fee shall take into account the quantity of Treated Water produced and delivered to the City during the preceding month, and (subject to Section 8.4(B) for the first Operation Period Contract Year) shall be determined as shown in the following formula:
Monthly Service Fee = (VC × acre feet Treated Water production from preceding month) + (FC/12) + Extraordinary Items
SECTION 8.3. COSTS PAID BY CITY DIRECTLY.
A. City Costs. Separate from the Service Fee, the City will pay directly the following costs of Facility operation, subject to annual settlement pursuant to Section 8.8:
1. Electricity Usage (EU)
2. Electricity Demand (ED)
3. Brine Disposal (BD)
B. Electricity Usage and Electricity Demand. The Facility operation cost associated with the power costs for the production of Treated Water (EU and ED) shall be based on the Guaranteed Maximum Electricity Utilizations (GMEU) and Guaranteed Maximum 46 CC Agreement 2021-6
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Electricity Demands (GMED) identified in Appendix 4 (to be reflected in Appendix 4 Attachment 4A) and all other utility charges/fees as identified by the Company in the accepted power cost determination. The Company and City acknowledge that the calculation of the power costs associated with the Annual Settlement will be based on GMEU and GMED charges identified in Appendix 4, as well as other charges/fees imposed by the electricity provider and known at the time of the power cost determination for the Contract Year.
The Company shall guarantee maximum consumption of power on an annual basis.
Maximum power consumption guarantees shall include both annual power consumption in kilowatt hours and maximum monthly demand in kilowatts based upon the maximum monthly power demand for any fifteen (15) minute period during the utility’s demand cycle. Maximum annual consumption rates are identified in Appendix 4.
Sixty days (60) prior to the Acceptance Date or the start of any Contract Year, the Company shall provide the City with the projection of Electricity Usage and Electricity Demand to produce Treated Water during the Contract Year. The projection of power costs shall include a breakdown of all utility charges/fees and an explanation of the methodology used in determining annual power cost for the Contract Year. The Company shall utilize current information provided by the utility at the time the power costs determination is issued to the City. The Company shall revise the projection of power costs as required to address the City’s review comments until such time that the projection of power costs is accepted by the City.
The City shall provide notice of acceptance of the power costs determination to the Company no less than thirty (30) days prior to the start of the Contract Year.
Appendix 4 will be amended to include the City accepted GMEU and GMED. The City shall utilize the accepted power cost determination for calculation of the Annual Settlement at the end of the Contract Year.
C. Brine Disposal. The Facility operation costs associated with Brine disposal (BD) shall be based on the Brine Disposal Agreement, Calleguas Municipal Water District’s (Calleguas) Ordinance 19, and any written amendments hereto. The City will be responsible for payment to Calleguas for only Brine generated by the Facility, and only to the extent provided in the next paragraph.
The Company shall guarantee maximum production of Brine discharged from the Facility as identified in Appendix 4. Sixty days (60) prior to the Acceptance Date or the start of any Contract Year, the Company shall provide the City with the projection of Brine disposal costs during the Contract Year. The projection of Brine disposal costs shall include a breakdown of all fees and an explanation of the methodology used in determining Brine disposal costs for the Contract Year, based on the guaranteed amount. The Company shall revise the Brine disposal costs as required to address the City’s review comments until such time that the projection of Brine disposal costs is accepted by the City. The City shall provide notice of acceptance of the Brine disposal costs determination to the Company no less than thirty (30) days prior to the start of the Contract Year. Appendix 4 will be amended to include the City 47 CC Agreement 2021-6
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accepted BD. The City shall utilize the accepted Brine disposal cost determination for calculation of the Annual Settlement at the end of the Contract Year.
SECTION 8.4. DETERMINATION OF FIXED COST COMPONENT OF THE SERVICE FEE A. Basis of Fixed Component. The Fixed Component of the Service Fee in any Contract Year shall be full compensation for Operation Services to be performed by the Company in that Contract Year, which shall include, but is not necessarily limited to, costs for labor for operations and maintenance, administrative costs, repair and replacement costs (excluding Capital Modifications), security, administration, staff training, permit compliance, outside fees and all other costs not associated with the Variable Component identified herein. The breakdown of scope items associated with the Fixed Component of the Service Fee shall be as identified in Proposal Form
2. Costs not specified in the Proposal will not be eligible for inclusion in subsequent determinations of the Fixed Component.
1. The labor costs portion of the Fixed Component for full-time (24-hour per day) onsite operations and partial onsite operations will be as determined in the Proposal. Should the City determine that unmanned operation can commence during a Contract Year, then then the labor costs portion of the Fixed Component for the year will be prorated based on the number of months of full-time (24 hours per day) and the number of months at non-full-time operation.
B. Monthly Fixed Component Amount. The monthly Fixed Component (FC) amount for each month of the first Operation Period Contract Year (which may be less than 12 months) shall be 1/12th of the prorated FC included as a part of Proposal. The monthly Fixed Component (FC) amount for each month of the remaining Operation Period Contract Years of the Initial term shall be 1/12th of the prorated FC included as a part of Proposal. The monthly Fixed Component (FC) amount for each month of any Renewal Term shall be as agreed between the City and Company before the start of each Renewal Term (if any).
SECTION 8.5. DETERMINATION OF VARIABLE COST COMPONENT OF THE SERVICE FEE A. Water Treatment Chemicals Costs. Sixty days (60) prior to the Acceptance Date or the start of any Contract Year, the Company shall provide the City with the cost of Water Treatment Chemicals to be used for the production of Treated Water for that Contract Year. The Company shall provide quotations from at least three (3) suppliers for each chemical to be used by the Company for the production of Treated Water and shall identify the supplier being proposed by the Company for the supply of each chemical for the Contract Year. The dates of supplier quotations shall not exceed thirty (30) days from the date received by the City. The Company will be responsible for timely and directly paying all suppliers of Water Treatment Chemicals, without overhead or markup, and any rebates, discounts or other cost reductions must be passed through to the City. (The cost of Water Treatment Chemicals will effectively be a pass-through cost to the City.) Upon acceptance by 48 CC Agreement 2021-6
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the City, which shall be provided no less than thirty (30) days prior to the start of the Contract Year, the Company shall utilize the accepted unit cost of all Water Treatment Chemicals in the determination of the Variable Component for the Contract Year. Company’s costs to procure and manage chemical usage will be a component of the Fixed Component of the Service Fee as identified in Proposal Form 2. The Company must obtain City review and written approval of any changes made in type or concentration of Water Treatment Chemicals.
B. Determination of Variable Component. Following determination of the accepted unit cost of all Water Treatment Chemicals, Variable Component (VC) shall be determined based on the projected Annual Treated Water (ATW) as determined in Section 3.2.2 of Appendix 3, the aggregate accepted unit costs of all Water Treatment Chemicals (WTC) and the following formula:
VC = WTC / ATW
The resulting value provides the chemical unit cost per acre-foot of Treated Water which is used in determining Service Payments, as described in Section 8.2.B.
SECTION 8.6. EXTRAORDINARY ITEM CHARGE OR CREDIT.
A. General. The Extraordinary Item component of the Service Fee, which may be a charge or a credit, shall be equal to the sum of:
1. the amounts payable by City for increased operation, maintenance or other costs incurred on account of the occurrence of an Uncontrollable Circumstance which is chargeable to the City hereunder, net of any operation, maintenance or other cost savings achieved by the Company in mitigating the effects of the occurrence of such an Uncontrollable Circumstance;
2. any damages due to Company non-performance specifically provided for under Article V or any other provision hereof; plus
3. any other increase or reduction in the Service Fee provided for under any other Article of this Contract.
B. Extraordinary Items Charges - Application for Payment. Extraordinary Items Charges identified under subsection (A)(1) and (3) of this Section may be submitted by the Company for review and approval by the City on a monthly basis. The City may, at its sole discretion, pay such accepted charges through an adjustment to the as submitted monthly invoice or through the Annual Settlement Statement process as described under Section 8.8. Should such charges be paid as part of the Annual Settlement Statement process and such charges are agreed by both the City and Company to be reoccurring during any subsequent Contract Year, an adjustment shall be made to the Service Fee at the beginning of subsequent the Contract Year and no additional compensation shall be owed to the Company by the City for such accepted charges. The City, at its sole discretion, may adjust the Service Fee during the Contract Year to account for any Extraordinary Items Charges under subsection (A)(1) of this Section. Should an adjustment be made to the Service Fee during any 49 CC Agreement 2021-6
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Contract Year, the adjustment would take effect the month following acceptance of the Extraordinary Items Charge. Any costs incurred by the Company for an Extraordinary Items Charge from the time the charge was submitted to the City, until the adjustment to the Service Fee is made to account for such charges, shall be made during the Annual Settlement Statement process. Payment by the Company to the City for charges associated with Extraordinary Items identified under subsection (A)(2) and (A)(3) of this Section shall be made as part of the Annual Settlement Statement process.
C. Maximum Sewage Disposal. An evaluation of the sanitary sewer system determined that the sanitary sewer system can accept up to 260 gallons per minute from all sewage streams generated by the Facility, including from the washwater recovery unit. The Facility has been designed to not exceed this sewer discharge flowrate under normal operating conditions and if the Facility is operated in accordance with Good Industry Practice. Should the Facility discharge to the sanitary sewer system exceed this flowrate for any reason other than Uncontrollable Circumstances, Company shall be responsible for costs of cleanup and payment of associated fines and, at Company’s expense, to upgrade the Camarillo Sanitary District’s sanitary sewer system to accept higher flows, which may include upgrading and replacing City’s Lift Station No. 6 pumps, unless the Company can demonstrate that the excess flowrate would have occurred even had the Facility been operated in accordance with Good Industry Practice. Payment will be processed as an Extraordinary Item.
SECTION 8.7. ESTIMATES AND ADJUSTMENTS. If any adjustment to the Service Fee is required pursuant to any provision of this Contract, the party requesting the adjustment shall submit to the other party a written statement setting forth the cause of the adjustment, the anticipated duration of the adjustment, and the amount of the adjustment, as appropriate.
Except to the extent that a longer period is otherwise specifically provided for in this Contract, any request for adjustment of the Service Fee hereunder shall be accepted or rejected by the party receiving the request within forty-five (45) days of receipt. If the receiving party does not notify the requesting party of its rejection and the reasons therefor within such forty-five (45) day period, the request shall be deemed rejected. A rejected request may be resubmitted, with or without change, and this paragraph shall apply to such resubmitted request as it applies to an original request. Should the receiving party not notify the requesting party of its rejection or otherwise reject the requested adjustment in part or in whole, parties agree to engage in nonbinding mediation as described in Section 9.13.
SECTION 8.8. ANNUAL SETTLEMENT.
A. Generally. Within sixty (60) days after the end of each Contract Year, the Company shall provide to the City an annual settlement statement (the “Annual Settlement Statement”) setting forth the actual aggregate Service Fee payable with respect to such Contract Year and a reconciliation of such amount with the amounts actually paid by the City with respect to such Contract Year. The annual settlement process 50 CC Agreement 2021-6
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shall provide for the reconciliation of the costs described in Section 8.3 in accordance with the limitations set forth herein.
As part of the annual settlement process, the Company shall be responsible for reimbursement of any overpayment made by the City for the following, which would have been avoided had the Company met the Guaranteed Maximum Consumption and/or Production amounts identified in Appendix 4:
1. Electricity Usage (GMEU)
2. Electricity Demand (GMED)
3. Brine Disposal (BD)
In addition, the Company shall be responsible for reimbursement of any overpayment made by the City for the Variable Component resulting from differences between the estimated and actual volume of Annual Treated Water produced during the Contract Year. The actual quantity and cost of Water Treatment Chemicals used during the Contract Year shall be compared to the sum of the Variable Component of the service fee paid by the City for each month of the Contract Year. If the actual cost of Water Treatment Chemicals exceeds the total Variable Component payment for the Contract Year, the City will reimburse the Company for the additional cost. If the total Variable Component payment for the Contract Year exceeds the actual cost of Water Treatment Chemicals used during the Contract Year, the Company will reimburse the City for the amount overpaid.
If the Untreated Water quality falls outside the ranges provided by City for this Service Contract, the Company shall inform the City and provide documentation on how this Untreated Water quality deviation impacts any process treatment efficiencies and/or operating cost. The Company shall make a reasonable effort to operate the Facility during such occurrences. The Company shall be credited for any documented additional operating costs that result from such occurrences during the annual settlement.
The actual cost to the City for exceedances for the prior Contract Year will be reimbursed to the City by the Company within forty-five (45) days following acceptance by both parties of the Annual Settlement Statement. It is the intent of this Service Contract that the City and Company provide all required documentation and take all reasonable effort to mutually agree upon the final Annual Settlement Statement within forty-five (45) days from delivery of such statement to the City by the Company. Any fines and penalties imposed by the electrical utility or other service entity or governmental agency and paid by the City during the Contract Year shall be applicable in the determination of the Annual Settlement Statement.
If any amount is then in dispute or is for other reasons not definitely known at the time the Annual Settlement Statement is due, the Annual Settlement Statement shall identify the subject matter and reasons for such dispute or uncertainty and, in cases of uncertainty, shall include a good faith estimate by the Company of the amount in question. The City and Company shall in good faith attempt to resolve any disputes identified in the Annual Settlement Statement and may implement the procedures 51 CC Agreement 2021-6
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under Section 9.12, if necessary. When the dispute is resolved, or the amount otherwise finally determined, the City shall provide the Company with an amended Annual Settlement Statement which shall, in all other respects, be subject to this Section.
SECTION 8.9. BILLING AND PAYMENT.
A. Billing. The City shall pay the Service Fee in monthly installments based on the product of the amount of Treated Water produced in acre-feet for the preceding month and the VC per acre-foot plus one-twelfth of the FC plus Extraordinary Items as described herein.
B. Payment. The Company shall provide the City with an invoice by the tenth day of each month which sets forth the monthly Service Fee for the prior month showing; 1) the VC and each component thereof, 2) documentation in a form acceptable to the City confirming the amount of Treated Water produced in the prior month, 3) documentation in a form acceptable to the City for the Variable Component and all Extraordinary Items as described herein and 4) such other documentation or information as the City may reasonably require to determine the accuracy and appropriateness of the invoice, then the City shall pay the invoice within forty-five (45) days of receipt.
SECTION 8.10. BILLING AND STATEMENT DISPUTES. If the City disputes any amount billed by the Company, the City may either (1) pay the disputed amount when otherwise due, and provide the Company with a written objection indicating the amount that is being disputed and providing all reasons then known to the Company or its objection to or disagreement with such amount, or (2) pay the undisputed amount when due, and provide the Company with written objection as aforesaid within the time when the disputed amount would otherwise have been payable. In the event of a billing statement dispute, the City and Company shall in good faith attempt to resolve any billing statement disputes, and may implement the procedures under Section 9.12, if necessary. When any billing dispute is finally resolved, if payment by the City to the Company of amounts withheld or reimbursement to the City by the Company of amounts paid under protest is required, such payment or reimbursement shall be made within forty-five (45) days of the date of resolution, with interest at the Overdue Rate calculated from the date on which the payment was or would have been paid to the date on which the payment is reimbursed or paid.
SECTION 8.11. TAXES. Except as otherwise provided in this Service Contract, the Company shall be responsible for all federal, State, county and municipal Taxes and any other Tax imposed in connection with its performance of the Contract Services; provided that the City shall be responsible for all personal property and real property Taxes which may be assessed against the Facility or the Facility Site by any Governmental Body. 52 CC Agreement 2021-6
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ARTICLE IX BREACH, DEFAULT, REMEDIES AND TERMINATION
SECTION 9.1. REMEDIES FOR BREACH. The parties agree that, except as otherwise provided in herein with respect to termination rights, in the event that either party breaches this Service Contract, the other party may exercise any legal rights it may have under this Service Contract, under the Security Instrument and under Applicable Law to recover damages or to secure specific performance, and that such rights to recover damages and to secure specific performance shall ordinarily constitute adequate remedies for any such breach. Neither party shall have the right to terminate this Service Contract for cause except upon the occurrence of an Event of Default and, to the extent this Service Contract permits a cure, it has not been cured in a timely manner.
SECTION 9.2. EVENTS OF DEFAULT BY THE COMPANY.
A. Events of Default Not Requiring Previous Notice and Cure Opportunity for Termination. It shall be an Event of Default by the Company upon which the City may terminate this Service Contract, by notice to the Company, if:
1. Representations and Warranties. Any representation or warranty of the Company hereunder or in its Proposal was false or inaccurate in any material respect when made, and the legality of this Service Contract or the ability of the Company to carry out its obligations hereunder is thereby materially and adversely affected;
2. Security for Performance. The failure of the Company to obtain and maintain in full force and effect any Security Instrument required by Article XI as security for the performance of this Service Contract without excuse for Uncontrollable Circumstances;
3. Certain Performance Standards. The failure of the Company, except to the extent excused by Uncontrollable Circumstances, to: (a) supply Treated Water to the City in quantities which satisfy the annual Water Delivery Guarantee; and (b) comply with the Water Treatment Guarantee which failure permits termination in accordance with subsection 5.2(C);
4. Abandonment. The abandonment or failure to operate all or a substantial portion of the Facility for two or more consecutive days in any Contract Year, unless caused by Uncontrollable Circumstances or as permitted under Section 5.3(E);
5. Emergency Response. The failure of the Company to immediately take all appropriate action in the event that the City notifies the Company at any time that a public health or safety emergency exists or is threatened due to the Company’s failure to comply with the Contract Standards;
6. Voluntary Bankruptcy. The filing by the Company of a petition of voluntary bankruptcy under the Bankruptcy Code; the consenting of the Company to the filing of any bankruptcy or reorganization petition against the Company under the 53 CC Agreement 2021-6
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Bankruptcy Code; or the filing by the Company of a petition to reorganize the Company pursuant to the Bankruptcy Code;
7. Involuntary Bankruptcy. The issuance of an order of a court of competent jurisdiction appointing a receiver, liquidator, custodian or trustee of the Company or of a major part of the Company’s property, respectively, or the filing against the Company of a petition to reorganize the Company pursuant to the Bankruptcy Code, which order shall not have been discharged or which filing shall not have been dismissed within 90 days after such issuance or filing, respectively; B. Events of Default Requiring Previous Notice and Cure Opportunity for Termination. It shall be an Event of Default by the Company upon which the City may terminate this Contract, by notice to the Company, if: the Company fails, refuses or otherwise defaults in its duty (a) to pay any amount required to be paid to the City under this Contract within 60 days following the due date for such payment, or (b) to perform any other material obligation under this Contract (unless such default is excused by an Uncontrollable Circumstances as and to the extent provided herein), except that no such default shall give the City the right to terminate this Service Contract for cause under this subsection unless:
1. The City has given prior written notice to the Company and (if there is an Operations Performance Bond) the surety providing the Operations Performance Bond, as applicable, by stating that a specified default has occurred which gives the City a right to terminate this Service Contract for cause under this Section, and describing the default in reasonable detail; and
2. The Company has neither challenged in an appropriate forum the City’s conclusion that such a default has occurred or constitutes a material breach of this Service Contract nor corrected or diligently taken steps to correct such default within a reasonable time but not more than 60 days from the date of the notice given pursuant to item (1) above (but if the Company shall have diligently taken steps to correct such default within a reasonable period of time, the same shall not give the City the right to terminate this Service Contract for cause for so long as the Company is continuing to take such steps to correct such Event of Default).
C. Other Remedies Upon Company Event of Default. The right of termination provided under this Section upon an Event of Default by the Company is not exclusive. If this Service Contract is terminated by the City for an Event of Default by the Company, the City shall have the right to pursue a cause of action for actual damages and to exercise all other remedies which are available to it under this Service Contract, under the Security Instrument and under Applicable Law. 54 CC Agreement 2021-6
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SECTION 9.3. EVENTS OF DEFAULT BY THE CITY.
A. Events of Default Permitting Termination. Each of the following shall constitute an Event of Default by the City upon which the Company, by notice to the City, may terminate this Service Contract:
1. Failure to Pay or Perform. The failure, refusal or other default by the City in its duty: (1) to pay any reasonably undisputed amount required to be paid to the Company under this Service Contract within 60 days following the due date for such payment; or (2) to perform any non-monetary obligation under this Service Contract (unless such default is excused by an Uncontrollable Circumstance as and to the extent provided herein) which is so material that it reasonably jeopardizes the Company’s ability to perform its material obligations under this Service Contract.
B. Notice and Cure Opportunity. No such default described in subsection (A) of this Section shall constitute an Event of Default giving the Company the right to terminate this Service Contract for cause under this subsection unless:
1. The Company has given prior written notice to the City stating that a specified default has occurred which gives the Company a right to terminate this Service Contract for cause under this Section, and describing the default in reasonable detail; and
2. The City has neither challenged in an appropriate forum the Company’s conclusion that such default has occurred or constitutes a material breach of this Service Contract nor corrected or diligently taken steps to correct such default within a reasonable period of time but not more than 60 days from the date of the notice given pursuant to item (1) above (but if the City shall have diligently taken steps to correct such default within a reasonable period of time, the same shall not constitute an Event of Default for as long as the City is continuing to take such steps to correct such default).
C. Payment of Amounts Owing Through the Termination Date. Upon any termination pursuant to this Section 9.3, the Company shall also be paid all amounts due for the Operation Services performed prior to the Termination Date to be paid, as applicable, but not yet paid as of the Termination Date.
D. Work Through Disputes. Notwithstanding any other provision of this Service Contract, the Company shall not have the right to terminate or reduce its performance under this this Service Contract pursuant to this Section 9.3 if the City continues to pay all undisputed Service Fee, and any such termination shall be an additional default by the Company. Nothing herein shall prevent the Company from exercising any other right or remedy under this Service Contract or applicable law in the event of a dispute over any Service Fee or other alleged City default. Upon termination under this Section 9.4, the Company shall have no further obligations under this Agreement, except as stated in Section 9.9.
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SECTION 9.4. CITY TERMINATION OPTIONS DURING THE CONSTRUCTION PERIOD.
A. Termination Right and Fee. The City shall have the right during the Construction Period prior to the Acceptance Date, exercisable in its sole discretion for any reason upon 30 days’ written notice to the Company, to terminate this Service Contract.
Upon any such termination, the City shall pay the Company all sums due to the Company for all Construction Services performed up to the Termination Date, subject to limitations.
SECTION 9.5. CITY TERMINATION OPTIONS DURING THE OPERATION PERIOD.
A. City Termination for Cause. The City shall have the right during the Operation Period at any time to terminate this Service Contract for cause and to pursue all remedies available pursuant to this Article, without cost or liability to the City, based upon the occurrence of any Event of Default by the Company under Section 9.2.
B. City Convenience Termination Right Option during the Operation Period. The City shall have the right at any time following the Acceptance Date, exercisable in its sole discretion, for its convenience and without cause, to terminate this Service Contract upon 120 days’ written notice to the Company. If the City exercises its right to terminate this Service Contract pursuant to this Section, the City shall pay the Company, in addition to all amounts earned under this Service Contract prior to the termination date, a convenience termination fee equal to $200,000. If this Service Contract is renewed pursuant to Section 2.5, then the convenience termination fee payable during any Renewal Term shall be zero. The foregoing amounts shall be the sole and exclusive amounts payable to the Company due to a convenience termination. Under no circumstances shall the City be liable or responsible for any other amounts, including without limitation lost profits or other consequential damages.
C. Uncontrollable Circumstances. In the event an Uncontrollable Circumstance causes a total constructive loss of the Facility, or in the event an Uncontrollable Circumstance causes an extraordinary increase in City costs, and thereupon the City elects to exercise its right of convenience termination under this Section, the City shall not be required to pay the termination fee to the Company specified in subsection (B) of this Section. A “total constructive loss” for this purpose shall be deemed to have occurred: (1) if so determined by the casualty insurance carrier; or (2) if the Facility is substantially inoperable for a period of at least six months following the occurrence of the Uncontrollable Circumstance. An “extraordinary increase” in City costs shall be deemed to have occurred for this purpose if costs proposed to be paid to the Company resulting from the Uncontrollable Circumstance would cause an increase of more than 20% from the prior Contract Year in the total Service Fee payable under this Service Contract (excluding the amortization of any debt incurred by the Company for Capital Modifications resulting from Uncontrollable Circumstances) when compared to such amounts that would have been payable during the comparable periods had no Uncontrollable Circumstances occurred. 56 CC Agreement 2021-6
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D. Payment of Amounts Owing Through the Termination Date. Upon any termination pursuant to this Section 9.5, the Company shall also be paid all amounts due for the Operation Services performed prior to the Termination Date and to be paid as part of the Service Fee but not yet paid as of the date of termination.
SECTION 9.6. GENERAL PROVISIONS REGARDING CONVENIENCE TERMINATION.
A. Termination Fee Payment Contingent Upon Surrender of Possession. The City shall have no obligation to pay the applicable termination fee provided for in Section 9.5(D), except concurrently with the surrender of possession and control by the Company of the Project or the Facility, as applicable, to the City.
B. Adequacy of Termination Payment. The Company agrees that the applicable termination fee provided in Sections 9.5(D) shall fully and adequately compensate the Company and all Subcontractors for all costs of undertaking their obligations under subsection 9.7(A), foregone potential profits and any charges of any kind whatsoever (whether foreseen or unforeseen), including initial transition and mobilization costs and demobilization, employee transition and other similar winddown costs, attributable to the termination of the Company’s right to perform this Service Contract.
C. Consideration for Convenience Termination Payment. The right of the City to terminate this Service Contract for its convenience and in its sole discretion in accordance with Section 9.5(D) constitutes an essential part of the overall consideration for this Service Contract, and the Company hereby waives any right it may have under Applicable Law to assert that the City owes the Company a duty of good faith dealing in the exercise of such right.
D. Completion or Continuance by City. After the date of any termination under this Article, the City may at any time (but without any obligation to do so) take any and all actions necessary or desirable to continue and complete the Contract Services so terminated, including entering into contracts with other operators and contractors.
E. Wrongful Termination by City for Cause. In the event a termination by the City for cause is later determined to have been made wrongfully or without cause, then the termination shall be treated as a termination for convenience, and the Company shall have no greater rights than it would have had following a termination for convenience.
SECTION 9.7. OBLIGATIONS OF THE COMPANY UPON TERMINATION OR EXPIRATION.
A. Company Obligations. Upon a termination of the Company’s right to perform this Service Contract under Sections 9.2, 9.4 or 9.5, the Company shall, as applicable:
1. stop the Construction Period Services or Operation Services on the date and to the extent specified by the City;
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2. promptly take all action as necessary to protect and preserve all materials, equipment, tools, facilities and other property including all of the items described in item (6) below;
3. promptly remove from the Facility, as applicable, all equipment, implements, machinery, tools, temporary facilities of any kind and other property owned or leased by the Company (including sheds, trailers, workshops and toilets), and repair any damage caused by such removal;
4. clean the Facility, as applicable, and leave it in a neat and orderly condition;
5. subject to subsection (B) of this Section, promptly remove all employees of the Company and any Subcontractors and vacate the Facility, as applicable;
6. promptly deliver to the City a list of all supplies, materials, machinery, equipment, property and special-order items previously delivered or fabricated by the Company or any subcontractor but not yet incorporated in the Facility, as applicable;
7. provide the City with a 30-day supply of chemicals and other Consumables and a reasonable supply of spare parts in consideration of the nature and condition of the Facility, as applicable, as of the Termination Date;
8. deliver to the City the Operation and Maintenance Manual and all computer programs used at the Facility, as applicable, in the performance of the Operation Services, including all revisions and updates thereto;
9. provide the City with a list of all files relevant to the Facility, as applicable, and access and security codes with instructions and demonstrations which show how to open and change such codes;
10. deliver to the City a copy of all books and records in its possession relating to the performance of the Operation Services, except (if any) confidential or proprietary books and records which would not, if in the City’s possession, be disclosable under the Public Records Act;
11. advise the City promptly of any special circumstances which might limit or prohibit cancellation of any Subcontract (or portion thereof) applicable to the Facility;
12. promptly deliver to the City copies of all Subcontracts, together with a statement of all of the following to the extent applicable to the Facility and as permitted by the Subcontracts:
(a) the items ordered and not yet delivered pursuant to each agreement; (b) the expected delivery date of all such items;
(c) the total cost of each agreement and the terms of payment; and (d) the estimated cost of canceling each agreement;
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13. for Subcontracts (or portions thereof applicable to the Facility) which the City requests in writing, at its sole election and without obligation, to have assigned to it, reasonably assist the City in obtaining such an assignment. Nothing herein will require the Company to obtain the assignment of a Subcontract (in whole or in part) which is not assignable by the Company according to its terms, or for which the Subcontractor rejects the requested assignment. The City shall assume, and the Company shall be relieved of its obligations under, any Subcontract (or portion assigned to the City) so assigned;
14. unless the City directs otherwise, terminate all Subcontracts (or portion thereof applicable to the Facility) and make no additional agreements with Subcontractors applicable to the Facility;
15. provide the City with a list of all Facility Equipment subject to patents, licenses, franchises, trademarks or copyrights and the associated royalties and license fees associated therewith which the City will be responsible for paying on or after the Termination Date;
16. promptly transfer to the City all warranties given by any manufacturer or Subcontractor with respect to particular components of the Operation Services;
17. notify the City promptly in writing of any Legal Proceedings against the Company by any Subcontractor or other third parties relating to the termination of the Operation Services (or any Subcontracts);
18. arrange its dealings with employees such that no “successor clause” or accrued benefit liability will bind the City in the event the City determines to offer employment to the Company’s employees at the Facility following the Termination Date; and
19. take such other actions, and execute such other documents as may be necessary to effectuate and confirm the foregoing matters, or as may be otherwise necessary or desirable to minimize the City’s costs, and take no action which shall increase any amount payable by the City under this Service Contract.
B. Hiring of Company Personnel and Subcontractors.
1. Upon the termination or expiration of this Service Contract under any provision hereof, the City or any successor operator of the Facility designated by the City shall have the right to offer employment on any terms it may choose to any Company employee employed full time at the Facility. No Company employment agreement, job offer, letter or similar document may contravene this right. The City or its designated successor operator shall extend any such job offer within 60 days of the expiration or termination of this Service Contract.
2. Similarly, the City or any successor operator of the Facility may engage any Subcontractor on any terms it may choose and the Subcontractor may choose in its sole discretion to accept. No Subcontract or other agreement may contravene this right.
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3. The Company shall assist and cooperate with any such employee or Subcontractor transition in the manner reasonably requested by the City.
C. Continuity of Service and Technical Support. Upon the termination of the Company’s right to perform this Service Contract under Sections 9.2 or 9.5, or upon the expiration of this Service Contract under Section 2.1, the Company, at the request and direction of the City, shall provide for an effective continuity of service and the smooth and orderly transition of management to the City or any replacement operator in place on the termination date and designated by the City by performing the services (“Transition Services”) described in this subsection. Transition Services shall be performed for a period of up to 90 days and shall include providing technological advice and support and delivering any plans, drawings, renderings, bluelines, operating manuals, computer programs, spare parts or other information in its possession or control useful or necessary for the City or any replacement operator designated by the City to perform the Operation Services. In addition, as part of the Transition Services, the Company shall provide the City and any replacement operator with a one-time training program relating to the operation and maintenance of the Facility, including any Capital Modifications thereto. Nothing in the performance of Continuity Services will require the Company to perform or assume liability or responsibility for Operating Services following termination or expiration of this Service Contract.
D. Company Payment of Certain Costs. If termination is pursuant to Section 9.2, the Company shall be obligated to pay the costs and expenses of the Transition Services. If the Company fails to comply with any obligation under this Section, the City may perform such obligation and the Company shall pay on demand all reasonable costs thereof subject to Cost Substantiation.
E. City Payment of Certain Costs. If termination is for the convenience of the City under Section 9.5 or due to a City Event of Default pursuant to Section 9.3, or upon the expiration of this Service Contract under Section 2.1, the City shall pay to the Company within 60 days of the date of the Company’s invoice supported by Cost Substantiation all reasonable costs and expenses incurred by the Company in performing Transition Services.
SECTION 9.8. EXIT TEST. Not later than 12 months prior to the Termination Date resulting from the expiration of this Service Contract or concurrently with a termination resulting from an early termination of this Service Contract, the Company shall prepare and submit to the City for its approval a plan for exit testing of the Facility, which shall conform to the requirements of Appendix 9 in all respects. The City shall submit its comments on the exit testing plan to the Company within 30 days of receipt thereof, and the Company thereafter shall prepare a final exit testing plan, incorporating the City’s comments, for submission to the City within 30 days. The Company (or a third party at the City’s option), at the request of the City and after reasonable notice to the Company, shall perform the exit test of the Facility for compliance with Appendix 9 in the first three months of the 12-month period preceding the expiration of the Term hereof or as soon as is reasonably practicable after a termination resulting from an early termination of 60 CC Agreement 2021-6
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this Service Contract. If such test shows that the Facility is operating out of compliance with the Performance Guarantees and Appendix 9, then within 30 days of such test results, the Company shall submit to the City a plan for remediation and retesting. The City shall have 30 days to approve such plan, which approval shall not be unreasonably withheld or delayed. The Company shall make all repairs, replacements, renewals and operating changes and take all other actions (including making all capital investments, improvements or modifications) which may be necessary to enable the Facility to meet the Performance Guarantees and Appendix 9, at the Company’s sole cost and expense except to the extent due to Uncontrollable Circumstances. The Facility shall then be re-tested to demonstrate that the necessary corrective action has been taken and the Facility is in compliance with the Performance Guarantees and Appendix 9. No such testing or retesting shall relieve the Company of its obligations under this Service Contract during the performance of the test or retest.
SECTION 9.9. SURVIVAL OF CERTAIN PROVISIONS UPON TERMINATION. All representations and warranties of the parties hereto contained in Article I, each of the party’s indemnity obligations in this Service Contract with respect to events that occurred prior to the Termination Date or during the Company’s provision of the Transition Services under Section
9.7, and all other provisions of this Service Contract that so provide shall survive the termination of this Service Contract. No termination of this Service Contract shall (1) limit or otherwise affect the respective rights and obligations of the parties hereto accrued prior to the date of such termination; or (2) preclude either party from impleading the other party in any Legal Proceeding originated by a third-party as to any matter occurring during the Term of this Service Contract.
SECTION 9.10. NO WAIVERS. No action of the City or Company pursuant to this Service Contract (including any investigation or payment), and no failure to act, shall constitute a waiver by either party of the other party’s compliance with any term or provision of this Service Contract. No course of dealing or delay by the City or Company in exercising any right, power or remedy under this Service Contract shall operate as a waiver thereof or otherwise prejudice such party’s rights, powers and remedies. No single or partial exercise of (or failure to exercise) any right, power or remedy of the City or the Company under this Service Contract shall preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
SECTION 9.11. NO SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES. In no event shall either party hereto be liable to the other or obligated in any manner to pay to the other any special, incidental, consequential, punitive or similar damages based upon claims arising out of or in connection with the performance or non-performance of its obligations or otherwise under this Service Contract, or the material falsity or inaccuracy of any representation made in this Service Contract, whether such claims are based upon contract, tort, negligence, warranty or other legal theory. The waiver of the foregoing damages under this Section is intended to apply to only disputes and claims as between the City and the Company, and specifically is not intended to limit the scope of the indemnity provisions in Section 10.3, which indemnity includes all claims by third parties irrespective of the nature thereof or the relief sought thereby, or the Company’s payment of any liquidated damages amounts under this Service Contract. 61 CC Agreement 2021-6
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SECTION 9.12. FORUM FOR DISPUTE RESOLUTION. It is the express intention of the parties that all Legal Proceedings related to this Service Contract or to any rights or any relationship between the parties arising therefrom shall be solely and exclusively initiated and maintained in State court located in the County of Ventura, California or the U.S. District federal court located in Los Angeles, California. To the greatest extent permitted by law, the Company and the City each irrevocably consents to the jurisdiction of such courts in any such Legal Proceeding and waives any objection it may have to the laying of the jurisdiction of any such Legal Proceeding.
SECTION 9.13. NON-BINDING MEDIATION.
A. Rights to Request and Decline. Either party may request Non-Binding Mediation of any dispute arising under this Service Contract, whether technical or otherwise. The non-requesting party may decline the request in its sole discretion. If there is concurrence that any particular matter shall be mediated, the provisions of this Section shall apply. The costs of such Non-Binding Mediation shall be divided equally between the City and the Company.
B. Procedure. The Mediator shall be mutually acceptable to the parties who has no current or on-going relationship to either party. The Mediator shall have full discretion as to the conduct of the mediation. Each party shall participate in the Mediator’s program to resolve the dispute until and unless the parties reach agreement with respect to the disputed matter or one party determines in its sole discretion that its interests are not being served by the mediation.
C. Non-Binding Effect. Mediation is intended to assist the parties in resolving disputes over the correct interpretation of this Service Contract. No Mediator shall be empowered to render a binding decision.
D. Relation to Judicial Legal Proceedings. Nothing in this Section shall operate to limit, interfere with or delay the right of either party under this Article to commence judicial Legal Proceedings upon a breach of this Service Contract by the other party, whether in lieu of, concurrently with, or at the conclusion of any Non-Binding Mediation.
SECTION 9.14. ARBITRATION. If the parties are unable to resolve any disputes in accordance with 9.13 above, the parties may, notwithstanding Section 9.12 and in their sole mutual discretion, jointly agree to submit such dispute for binding arbitration, which shall be governed by the rules of the American Arbitration Association or such other rules as the parties may agree. The parties agree that any judgment issued as a result of any jointly agreed arbitration may be entered in any court having jurisdiction thereof. 62 CC Agreement 2021-6
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ARTICLE X INSURANCE, UNCONTROLLABLE CIRCUMSTANCES
AND INDEMNIFICATION
SECTION 10.1. INSURANCE.
A. Company Insurance. At all times during the Term of this Service Contract, the Company shall obtain and maintain the Required Insurance in accordance with Appendix 8, and shall pay all premiums with respect thereto as the same become due and payable. The Required Operation Period Insurance shall be provided as a condition precedent to the Acceptance Date and remain in effect for the Operation Period in annually (or other) renewable periods.
B. Insurers, Deductibles and City Rights. All insurance required by this Section shall be obtained and maintained from financially sound and generally recognized responsible insurance companies meeting the qualifications set forth in Appendix 8.
The insurers shall be selected by the Company with the consent of the City, which consent shall not be unreasonably withheld, and authorized to write such insurance in the State. The insurance coverage may be written with deductible amounts within the limits approved by the City as provided in Appendix 8, and the Company shall be responsible for any deductible amounts. The Company shall also be responsible for all self-insured retentions contained in its insurance coverages, as well as any excluded losses if such losses are within the liability of the Company hereunder. All policies evidencing such insurance shall provide for: (1) payment of the losses to the City, and to the Company as their respective interests may appear; and (2) at least 30 days’ prior written notice of the cancellation thereof to the Company and the City. All policies of insurance required by this Section shall be primary insurance without any right of contribution from other insurance carried by the City. The City shall have the right to fully participate in all insurance claim settlement negotiations and to approve all final insurance settlements, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, only notice to the City (not City consent) shall be required for any settlement resulting in a full and complete release of the City and all City Indemnitees.
C. Certificates, Policies and Notice. The Required Insurance, including any renewals thereof, shall be evidenced by certificates of insurance as provided herein and in Appendix 8. No later than the 30 days prior to the issuance date of each policy of Required Insurance, including any renewals thereof, the Company shall provide the City with a draft certificate of insurance for review and approval, and shall deliver the final, approved certificate of insurance to the City promptly following its issuance. The Company shall also supply the City, upon request, with copies of such policies promptly following issuance by the insurers. Not later than 60 days prior to the beginning of each Contract Year throughout the Term, the Company shall furnish certificates of insurance to the City to confirm the continued effectiveness of the Required Insurance. Whenever a Subcontractor is utilized, the Company shall either 63 CC Agreement 2021-6
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obtain and maintain or require the Subcontractor to obtain and maintain insurance in accordance with the applicable requirements of Appendix 8.
D. Maintenance of Insurance Coverage. If the Company fails to pay any premium for Required Insurance, or if any insurer cancels any Required Insurance policy and the Company fails to obtain replacement coverage so that the Required Insurance is maintained on a continuous basis, then, at the City’s election (but without any obligation to do so), the City, following 30-day notice to the Company, may pay such premium or procure similar insurance coverage from another company or companies and upon such payment by the City the amount thereof shall be immediately reimbursable to the City by the Company. The Company shall comply with all applicable Required Insurance and take all steps necessary to assure that the Facility, as applicable, remains continuously insured in accordance with the requirements of this Service Contract during the Term hereof. The failure of the Company to obtain and maintain any Required Insurance shall not relieve the Company of its liability for any losses intended to be insured thereby. Should any failure to provide continuous insurance coverage occur, the Company shall indemnify, defend and hold harmless the City and the City Indemnitees in the manner provided in Section 10.3, from and against any and all Loss-and-Expense arising out of such failure. The purchase of the Required Insurance to satisfy the Company’s obligations under this Section shall not be a satisfaction of any Company liability under this Service Contract or in any way limit, modify or satisfy the Company’s indemnity obligations hereunder.
SECTION 10.2. UNCONTROLLABLE CIRCUMSTANCES.
A. Relief from Obligations. Except as expressly provided under the terms of this Service Contract, neither party to this Service Contract shall be liable to the other for any loss, damage, delay, default or failure to perform any obligation to the extent it results from an Uncontrollable Circumstance. The parties agree that the relief for an Uncontrollable Circumstance described in this Section shall apply to all obligations in this Service Contract, except to the extent specifically provided otherwise, notwithstanding that such relief is specifically mentioned with respect to certain obligations in this Service Contract but not with respect to other obligations. The occurrence of an Uncontrollable Circumstance shall not excuse or delay the performance of a party’s obligation to pay monies previously accrued and owing under this Service Contract, or to perform any obligation hereunder not affected by the Uncontrollable Circumstance. The City shall pay the Service Fee during the continuance of any Uncontrollable Circumstance, adjusted to account for any cost reductions achieved through Company mitigation measures required by subsection (B) of this Section, as well as for any cost increases to which the Company is entitled under subsection (C) of this Section.
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thereof, followed within 15 days by a written description of (to the extent known):
(1) the Uncontrollable Circumstance and the cause thereof; and (2) the date the Uncontrollable Circumstance began, its estimated duration, the estimated time during which the performance of such party’s obligations hereunder shall be delayed, or otherwise affected. If all of the foregoing information was not known by the party asserting the occurrence of an Uncontrollable Circumstance at the time of the 15-day report, the party shall provide it as soon as reasonably possible thereafter. As soon as reasonably practicable after the occurrence of an Uncontrollable Circumstance, the affected party shall also provide the other party with a description of: (i) the amount, if any, by which the Service Fee is proposed to be adjusted as a result of such Uncontrollable Circumstance; (ii) any areas where costs might be reduced and the approximate amount of such cost reductions; and (iii) its estimated impact on the other obligations of such party under this Service Contract. The affected party shall also provide prompt written notice of the cessation of such Uncontrollable Circumstance. Whenever such act, event or condition shall occur, the party claiming to be adversely affected thereby shall, as promptly as practicable, use all reasonable efforts to eliminate the cause therefor, reduce costs and resume performance under this Service Contract. While the Uncontrollable Circumstance continues, the affected party shall give notice to the other party, before the first day of each succeeding month, updating the information previously submitted. The party claiming to be adversely affected by an Uncontrollable Circumstance shall bear the burden of proof and shall furnish promptly any additional documents or other information relating to the Uncontrollable Circumstance reasonably requested by the other party.
C. Conditions to Performance and Service Fee Relief. If and to the extent that an Uncontrollable Circumstance materially expands the scope of the Company’s obligations hereunder, materially interferes with, materially delays or materially increases the cost of the Company’s performing its obligations hereunder, the Company shall, subject to the limitations specifically provided for in this Service Contract, be entitled to relief from the performance of its obligations hereunder, the Service Fee, or any combination thereof, which properly reflects the interference with performance, the time lost or the amount of the increased cost, in each case as a result thereof, but only to the minimum extent reasonably forced on the Company by the event, and the Company shall perform all other Operation Services. The proceeds of any Required Insurance available to meet any such increased cost, and the payment by the Company of any deductible, shall be applied to such purpose prior to any determination of cost increase payable by the City under this Section. Any cost reduction achieved through the mitigating measures undertaken by the Company pursuant to subsection (B) of this Section upon the occurrence of an Uncontrollable Circumstance shall be reflected in a reduction of the amount by which the Service Fee would have otherwise been increased or shall serve to reduce the Service Fee to reflect such mitigation measures, as applicable. In the event that the Company believes it is entitled to any relief on account of an Uncontrollable Circumstance, it shall furnish the City written notice of the specific relief requested 65 CC Agreement 2021-6
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and detailing the event giving rise to the claim within 30 days after the giving of notice delivered pursuant to subsection (B) of this Section, or if the specific relief cannot reasonably be ascertained and such event detailed within such 30-day period, then within such longer period within which it is reasonably possible to detail the event and ascertain such relief. Within 30 days after receipt of such a timely submission from the Company the City shall issue a written determination as to the extent, if any, it concurs with the Company claim for performance, price or schedule relief, and the reasons therefor. The Company acknowledges that its failure to give timely notice pertaining to an Uncontrollable Circumstance as required under this Section may adversely affect the City. To the extent the City asserts that any such adverse effect has occurred and that the relief to the Company or the additional cost to be borne by the City under this subsection should be reduced to account for such adverse effect, the Company shall have the affirmative burden of refuting the City’s assertion. Absent such refutation, the reduction in relief to the Company and the reduction in additional cost to the City asserted by the City in such circumstances shall be effective. The agreement of the parties as to the specific relief to be given the Company hereunder on account of an Uncontrollable Circumstance shall be evidenced by a Contract Administration Memorandum or a Service Contract Amendment, as applicable.
D. Capital Modifications. Before proposing any adjustment to the Service Fee in its notice of requested relief under this Section, the Company shall determine whether any increased costs of operation and maintenance of the Facility resulting from an Uncontrollable Circumstance can reasonably and prudently be reduced by the undertaking of a Capital Modification. In the event that the Company makes such a determination, the Company shall so advise the City in accordance with Sections 7.3 and 7.5. The City shall thereupon determine, in its sole discretion, whether such a Capital Modification shall be undertaken and shall so advise the Company within 60 days of receipt of such notice by the Company. In no event shall the Company undertake such Capital Modification except at the express written direction of the City. In the event the City unreasonably determines not to undertake the Capital Modification, the City will be liable to the Company for the increased Facility operation and maintenance costs which would have been avoided had the City determined to undertake the Capital Modification and Company shall not be responsible for any damages, fines, or penalties that result from the City’s determination to not undertake the Capital Modification, and Company shall not be responsible for any damages, fines, or penalties that result from the City’s unreasonable determination to not undertake the Capital Modification.
SECTION 10.3. INDEMNIFICATION BY THE COMPANY. The Company shall indemnify, defend and hold harmless the City, and its elected officials, appointed officers, employees, representatives, agents and contractors (each, a “City Indemnitee”), from and against (and pay the full amount of) any and all Loss-and-Expense incurred by a City Indemnitee to third parties, including, but not limited to, amounts owed by the City under the Brine Disposal Agreement, to the extent caused by: (1) any failure by the Company to perform its obligations under this 66 CC Agreement 2021-6
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Service Contract; or (2) the negligence, willful misconduct or failure to practice Good Industry Practices by the Company or any of its officers, directors, employees, agents, representatives or Subcontractors in connection this Service Contract. The Company shall also indemnify, defend and hold harmless the City and the City Indemnitees as and to the extent provided elsewhere in this Service Contract. The Company’s indemnity obligations hereunder shall not be limited by any coverage exclusions or other provisions in any insurance policy maintained by the Company which is intended to respond to such events. The Company shall not, however, be required to reimburse or indemnify any City Indemnitee for any Loss-and-Expense to the extent caused by the negligence or willful misconduct of any City Indemnitee or to the extent attributable to any Uncontrollable Circumstance. A City Indemnitee shall promptly notify the Company of the assertion of any claim against it for which it is entitled to be indemnified hereunder, and the Company shall have the right to assume the defense of the claim in any Legal Proceeding and to approve any settlement of the claim. These indemnification provisions are for the protection of the City only and shall not establish, of themselves, any liability to third parties. The provisions of this Section shall survive termination of this Service Contract.
SECTION 10.4. INDEMNIFICATION OF FUNDING AGENCIES. As required by the Local Resources Program funding program, except for the sole negligence or willful misconduct of Metropolitan or Calleguas, as the case may be, Company agrees at its sole cost and expense to protect, indemnify, defend, and hold harmless Metropolitan and Calleguas, and their respective Board of Directors, officers, representatives, agents and employees from and against any and all claims and liability of any kind (including, but not limited to, any claims or liability for injury or death to any person, damage to property, natural resources or the environment, or water quality problems) that arise out of or relate to City’s approval, construction, operation, repair or ownership of the Project. Such indemnity shall include all damages and losses related to any claim made, whether or not a court action is filed, and shall include attorney fees, administrative and overhead costs, engineering and consulting fees and all other costs related to or arising out of such claim of liability, but shall exclude damages and losses that arise from the sole negligence or willful misconduct of Metropolitan.
The foregoing obligation relating to Calleguas shall not apply to liabilities independent of the Local Resources Program funding program agreement, including without limitation any breach of Calleguas obligations under the Brine Disposal Agreement.
SECTION 10.5. INDEMNIFICATION BY THE CITY. Except to the extent caused by an act, omission, condition or circumstance subject to Section 10.3, the City shall indemnify, defend and hold harmless the Company, and its officers, directors, employees, representatives, agents and contractors (each, a “Company Indemnitee”), from and against (and pay the full amount of) any and all Loss-and-Expense incurred by a Company Indemnitee to third parties, to the extent caused by: (1) any failure by the City to perform its obligations under this Service Contract; (2) the negligence or willful misconduct of the City or any of its officers, directors, employees, agents, representatives or contractors in connection this Service Contract; (3) any defect in the design or construction of the Facility, or Facility Equipment not supplied by the Company, other than those (if any) which the City likely would have been in a position to remedy had the Company performed its Construction Period Services consistent with the Standard of Care and 67 CC Agreement 2021-6
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its Operation Period Services consistent with the Contract Standards; and (4) any Company Loss-and-Expense under Section 10.4 for which the Company is not responsible under the standards set forth in Section 10.3.
SECTION 10.6. PROPERTY INSURANCE. The City shall procure and maintain in effect a property insurance policy providing coverage for the Facility for fire, explosion, vandalism, malicious mischief and collapse, to the extent reasonably available at a cost considered reasonable by the City. The City assumes the risks which would be insured by such a policy, whether or not the insurance is purchased; provided that the Company shall remain fully responsible for all risks to the extent caused or exacerbated by any of its acts or omissions which would not be insured by such a policy. Earthquake and flood insurance may be included at the option of the City. Such insurance shall be in an amount equal to the replacement cost of the completed Facility (without deduction for depreciation) including costs to cover professional fees, as insured by the policy. This insurance, which may be subject to deductibles not to exceed $10,000 per occurrence, shall not cover any Consumables, Water Treatment Chemicals or other personal property (other than fixtures), whether onsite, offsite or in transit, even if designated for use at the Facility. The City’s property insurance will be “excess” to any required Company insurance, including without limitation the Company’s general liability insurance. The Company shall be solely responsible for any Company Required Insurance, and the existence of the City’s property insurance will not reduce the Company and its insurers’ liability for loss arising from or relating to the acts, errors or omissions of the Company or any individual or entity for which the Company is responsible. All proceeds of any loss covered by the property policy shall be payable to the City, who shall collect and adjust such proceeds, compromise any and all claims hereunder and apply the proceeds to the repair, reconstruction or replacement of the Facility.
SECTION 10.7. WAIVER OF DAMAGES. Notwithstanding any provision to the contrary contained in this Service Contract, in no event shall either party be liable, either directly or indirectly, for any special, punitive, indirect and/or consequential damages, including damages attributable to loss of use, loss of income or loss of profit, even if such party has been advised of the possibility of such damages. The waiver of the foregoing damages under this Section is intended to apply to only disputes and claims as between the City and the Company, and specifically is not intended to limit the scope of the indemnity provisions in Section 10.3, which indemnity includes all claims by third parties irrespective of the nature thereof or the relief sought thereby, or the Company’s payment of any liquidated damages amounts under this Service Contract.
SECTION 10.8. LIMITATION OF LIABILITY. In the event that claims(s) raised by City against the Company on account of this Service Contract, or on account of the Services performed hereunder including claims by City for indemnification hereunder, is/are covered under Company's insurance policies required of the Company hereunder, Company shall not be responsible to City for any loss, damage or liability beyond the amounts contractually required hereunder and actually paid pursuant to the limits and conditions of such insurance policies.
With respect to any causes of action and/or claims raised against the Company by City that are not covered by the insurance policies required hereunder, including claims by City for 68 CC Agreement 2021-6
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indemnification, Company’s liability to City shall not exceed an aggregate amount equal to the compensation paid to Company effect during the Contract Year in which such cause of action and/or claim is raised.
SECTION 10.9. CYBER SECURITY. Provided that Company maintains cyber liability coverage as required by Appendix 8, Company’s liability for losses, damages, expenses, fines, and penalties incurred by the City or any third party as a result of a data security breach or other cyber security breach to the Facility or the City’s computer systems, operating systems, or any other technological or information systems related to the Facility and Services provided hereunder, shall be limited to amounts actually paid pursuant to the limits and conditions of such cyber liability insurance policies.
ARTICLE XI SECURITY FOR PERFORMANCE
SECTION 11.1. SECURITY INSTRUMENT. Pursuant to Section 4.4, the Company must provide either an Operations Performance Bond or Letter of Credit as an Acceptance Date Condition, to serve as security for the performance of the Operation Services by the Company.
A. The Operations Performance Bond (if provided) shall be in the initial stated amount equal to the annual Service Fee, shall be for a term of one year, and shall be continuously renewed, extended or replaced so that it remains in effect for the entire Term of this Service Contract; provided, however, that the stated amount of the Operations Performance Bond shall be adjusted each Contract Year. The Operations Performance Bond shall be issued by a surety company: (1) approved by the City and having a rating of “A” in the latest revision of the A.M. Best Company’s Insurance Report; (2) listed in the United States Treasury Department’s Circular 570, “Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies”; and (3) holding a valid certificate of authority to transact surety business in the State. If the Operations Performance Bond expires or is terminated prior to the expiration of this Service Contract, he Company shall provide a substitute Operations Performance Bond in the amount and in accordance with the provisions of this Section such that there is no gap in coverage. If Company, for any reason, fails to have in place at all times during the term of this Service Contract the Operations Performance Bond, City may, in addition to any other available remedies, (a) obtain such bond at Company’s expense and deduct the cost from the sums due Company, or (b) terminate the Service Contract for default.
B. The Letter of Credit (if provided)) shall be irrevocable direct draw letter of credit: (1) in the face amount of at least $500,000; (2) issued by commercial bank located in the United States, incorporated under the laws of the United States or of any state, having capital, surplus and undivided profits of not less than $100,000,000, and an office where draw certificates may be presented in California;(3) with an initial term of at least two years; (4) which expressly permits partial drawings; (5) permits 69 CC Agreement 2021-6
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permitting the City to draw (i) amounts owed on the City’s certification thereof, or (ii) the entire amount if (x) the Company has committed a default for which it is not entitled to cure, (y) the Company has failed to timely cure a default it is entitled to cure, or (z) failed to provide a replacement Letter of Credit 30 days before the scheduled expiration date, and (6) is otherwise in form and substance satisfactory to the City.
SECTION 11.2. MONITORING OF SURETIES. The Company shall be responsible throughout this Service Contract for monitoring the financial condition of any surety company issuing bonds under this Service Contract and for making inquiries no less often than annually to confirm that each such surety company maintains at least the minimum rating level specified in this Section.
In the event the rating of any issuing surety company falls below such minimum level, the Company shall promptly notify the City of such event and shall promptly furnish or arrange for the furnishing of a substitute or an additional bond of a surety company whose rating and other qualifications satisfy all above requirements, unless the City agrees to accept the surety company or agrees to an alternative method of assurance. Upon such notice by the Company of such an event, the City shall not unreasonably withhold its approval of such assurance.
ARTICLE XII MISCELLANEOUS PROVISIONS
SECTION 12.1. OWNERSHIP OF THE FACILITY AND USE OF THE FACILITY SITE. The Facility shall be owned by the City at all times. Operation Services provided for herein as an independent contractor and shall not have any legal, equitable, tax beneficial or other ownership or leasehold interest in the Facility. The execution of this Service Contract shall be deemed to constitute the granting of a license to the Company to access the Facility Site for all purposes of this Service Contract.
SECTION 12.2. RELATIONSHIP OF THE PARTIES. The Company is an independent contractor of the City and the relationship between the parties shall be limited to performance of this Service Contract in accordance with its terms. Neither party shall have any responsibility with respect to the services to be provided or contractual benefits assumed by the other party.
Nothing in this Service Contract shall be deemed to constitute either party a partner, agent or legal representative of the other party. No liability or benefits, such as workers compensation, pension rights or liabilities, or other provisions or liabilities arising out of or related to a contract for hire or employer/employee relationship shall arise or accrue to any party’s agent or employee as a result of this Service Contract or the performance thereof.
SECTION 12.3. AMENDMENTS. This Agreement may be amended only pursuant to a Service Contract Amendment as defined in Section 4.8.
SECTION 12.4. PROPERTY RIGHTS.
C. Protection from Infringement. The Company shall indemnify, defend and hold harmless the City and the City Indemnities in the manner provided in Section 10.3 70 CC Agreement 2021-6
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from and against any and all Loss-and-Expense arising out of or related to the infringement or unauthorized use of any patent, trademark, copyright or trade secret relating to the Operation Services. At its option, the Company shall acquire the rights of use under infringed patents or modify or replace infringing equipment with equipment equivalent in quality, performance, useful life and technical characteristics and development so that such equipment does not so infringe. The provisions of this Section shall survive termination of this Service Contract.
D. Intellectual Property Developed by the Company. All intellectual property developed by the Company at or through the use of the Facility or otherwise in connection with the performance of the Operation Services shall be owned by the Company subject to the terms and conditions of this Section, and is hereby licensed to the City on a non-exclusive, cost free, perpetual basis for use by the City and any successor operator of the Facility (but, with respect to any successor operator, only in connection with the operation of the Facility). Such intellectual property shall include technology, inventions, innovations, processes, know-how, formulas and software, whether protected as proprietary information, trade secrets, or patents.
The City shall have an irrevocable, perpetual and unrestricted right to use such intellectual property for any City purpose, whether before or following the Termination Date. Neither the City nor the Company shall license, transfer or otherwise make available such intellectual property to any third-party for remuneration except with the consent of the other, which consent may be conditioned upon mutual agreement as to the sharing of any such remuneration.
The City’s use of any such intellectual property for purposes other than in connection with the Facility shall be at its own risk and the Company shall have no liability therefor.
SECTION 12.5. INTEREST ON OVERDUE OBLIGATIONS. All amounts due hereunder, whether as damages, credits, revenue, charges or reimbursements, that are not paid when due shall bear interest at the rate of interest which is the Overdue Rate, on the amount outstanding from time to time, on the basis of a 365-day year, counting the actual number of days elapsed, and such interest accrued at any time shall, to the extent permitted by Applicable Law, be deemed added to the amount due as accrued.
SECTION 12.6. NEGOTIATED LUMP SUM PRICING OF OPERATION SERVICES FOR WHICH THE CITY IS FINANCIALLY RESPONSIBLE. This Service Contract obligates the City to pay for certain costs resulting from Uncontrollable Circumstances, City Fault and otherwise as more specifically provided herein. It is the expectation of the parties, in general, that the City will pay for such costs on a negotiated, lump sum basis, and that the lump sum price will be negotiated in advance of the Company’s performance of the work. For example, if a Change in Law occurs, as required under Section 10.2, the parties will assess the impact of the Change in Law, take all appropriate mitigation steps, determine any necessary Capital Modifications and operating changes, and agree upon lump sum pricing therefor. To facilitate such negotiations, the Company shall furnish the City with all information reasonably required by the City regarding the Company’s expected costs of performing the work and its mark-up. Once the parties agree 71 CC Agreement 2021-6
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upon the lump sum price, the Company’s actual costs of performance shall not be subject to Cost Substantiation unless after-the-fact Cost Substantiation with respect to all or a portion of the Company’s actual costs was agreed to by the parties in establishing the lump sum price.
SECTION 12.7. COST SUBSTANTIATION.
A. Cost Substantiation Generally. The Company shall provide Cost Substantiation for the costs for which the City is financially responsible hereunder, other than the Fixed Component of the Service Fee, the per unit prices of the Variable Component of the Service Fee, and the costs for which the parties have negotiated a lump sum price, all as and to the extent provided in Section 8.6. In incurring costs which are or may be subject to Cost Substantiation, the Company shall utilize competitive practices to the maximum reasonable extent (including, where practicable and except with respect to costs of the Company to which the Fixed Component of the Base Operating, obtaining three competing quotes or estimates for costs expected to be in excess of $10,000, and shall enter into subcontracts on commercially reasonable terms and prices in light of the work to be performed and the City’s potential obligation to pay for it. The City reserves the right to require competitive quotes for costs estimated to be less than $10,000 at its sole discretion.
B. Costs Requiring Cost Substantiation. Cost Substantiation shall be provided as soon as reasonably practicable after the costs which require substantiation have been incurred by the Company. Examples of costs which require substantiation include (1) work done on an emergency basis to respond to an Uncontrollable Circumstance, where it is not reasonably practicable for the parties in advance to negotiate a lump sum price for the work; and (2) work done by the Company under subsection 9.6(C) upon the expiration or termination of this Service Contract, to the extent such costs are the responsibility of the City under subsection 9.6(E). Cost Substantiation shall also be required where the parties agree that the Company shall perform work on a cost-plus basis, subject to the limitations set forth in subsection (F) of this Section.
C. Cost Substantiation Certificate. Any certificate delivered hereunder to substantiate cost shall state the amount of such cost and the provisions of this Service Contract under which such cost is chargeable to the City, shall describe the competitive or other process utilized by the Company to obtain the commercially reasonable price, and shall state that such services and materials are reasonably required pursuant to this Service Contract. The Cost Substantiation certificate shall be accompanied by copies of such documentation as shall be necessary to reasonably demonstrate that the cost as to which Cost Substantiation is required has been paid or incurred. Such documentation shall be in a format reasonably acceptable to the City and shall include reasonably detailed information concerning all Subcontracts and, with respect to self-performed work, (1) the amount and character of materials, equipment and services furnished or utilized, the persons from whom purchased, the amounts payable therefor and related delivery and transportation costs and any sales or personal property Taxes; (2) a statement of the equipment used and any rental payable therefor; (3) employee hours, duties, wages, salaries, benefits and 72 CC Agreement 2021-6
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assessments; and (4) profit, administration costs, bonds, insurance, taxes, premiums overhead, and other expenses. The Company’s entitlement to reimbursement of Cost Substantiated costs of the Company shall be subject to the limitations set forth in this Section.
D. Evidence of Costs Incurred. To the extent reasonably necessary to confirm direct costs required to be Cost Substantiated, copies of timesheets, invoices, canceled checks, expense reports, receipts and other documents, as appropriate, shall be delivered to the City, with the request for reimbursement of such costs.
E. Subcontractor Mark-Ups. The Company shall be entitled to a 10% mark-up for costs of its Subcontractors. However, as no mark-up will be added to the Company’s costs for lodging and meals or travel. neither Subcontractors nor their subcontractors will have mark-ups for costs for lodging and meals or travel.
SECTION 12.8. SUBCONTRACTORS.
A. Use Restricted. The Company shall operate the Facility with its own employees and in accordance with Article IV. Subcontractors may be used to perform other Operation Services, subject to the City’s right of approval set forth in subsection (B) of this Section.
1. Limited City Review and Approval of Permitted Subcontractors. Except as provided in the next sentence, the City shall have the right, based on the criteria provided below in this Section, to approve all Subcontractors, which approval shall not be unreasonably withheld or delayed, which the Company is permitted to engage under subsection (A) of this Section for Operation Services, which approval shall not be unreasonably withheld. City approval of Subcontractors as provided in the preceding sentence shall not be required for: (1) Affiliates of the Company; (2) equipment suppliers; (3) Governmental Bodies; and (4) Subcontractors hired by the Company for purposes of remedying an emergency situation. The Company shall furnish the City written notice of its intention to engage such Subcontractors, together with all information reasonably requested by the City pertaining to the demonstrated responsibility of the proposed Subcontractor in the following areas: (1) any conflicts of interest; (2) any record of felony criminal convictions or pending felony criminal investigations; (3) any final judicial or administrative finding or adjudication of illegal employment discrimination; (4) any unpaid federal, State, or local Taxes; and (5) any final judicial or administrative findings or adjudication of nonperformance in contracts with the City or the State. The approval or withholding thereof by the City of any proposed Subcontractor shall not create any liability of the City to the Company, to third parties or otherwise. In no event shall any Subcontract be awarded to any person debarred, suspended or disqualified from State or City contracting for any services similar in scope to the Operation Services.
2. Subcontract Terms and Subcontractor Actions. The Company shall retain full responsibility to the City under this Service Contract for all matters related to the 73 CC Agreement 2021-6
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Operation Services notwithstanding the execution or terms and conditions of any Subcontract. No failure of any Subcontractor used by the Company in connection with the provision of the Operation Services shall relieve the Company from its obligations hereunder to perform the Operation Services. The Company shall be responsible for settling and resolving with all Subcontractors all claims arising out of delay, disruption, interference, hindrance, or schedule extension caused by the Company or inflicted on the Company or a Subcontractor by the actions of another Subcontractor.
3. Indemnity for Subcontractor Claims. The Company shall pay or cause to be paid to all direct Subcontractors all amounts due in accordance with their respective Subcontracts. No Subcontractor shall have any right against the City for labor, services, materials or equipment furnished for the Operation Services. The Company acknowledges that its indemnity obligations under Section 10.3 shall extend to all claims for payment or damages by any Subcontractor who furnishes or claims to have furnished any labor, services, materials or equipment in connection with the Operation Services.
SECTION 12.9. ACTIONS OF THE CITY IN ITS GOVERNMENTAL CAPACITY. Nothing in this Service Contract shall be interpreted as limiting the rights and obligations of the City under Applicable Law in its governmental capacity (including police power actions to protect health, safety and welfare or to protect the environment), or as limiting the right of the Company to bring any action against the City, not based on this Service Contract, arising out of any act or omission of the City in its governmental capacity.
SECTION 12.10. ASSIGNMENT.
A. By the Company. The Company shall not assign, transfer, convey, lease, encumber or otherwise dispose of this Service Contract, its right to execute the same, or its right, title or interest in all or any part of this Service Contract or any monies due hereunder whatsoever prior to their payment to the Company, whether legally or equitably, by power of attorney or otherwise, without the prior written consent of the City. Any such approval given in one instance shall not relieve the Company of its obligation to obtain the prior written approval of the City to any further assignment.
Any such assignment of this Service Contract which is approved by the City, shall require the assignee of the Company to assume the performance of and observe all obligations, representations and warranties of the Company under this Service Contract, which shall remain in full force and effect during the Term hereof. The approval of any assignment, transfer or conveyance shall not operate to release the Company in any way from any of its obligations under this Service Contract unless such approval specifically provides otherwise.
B. By the City. The City may not assign its rights or obligations under this Service Contract without the prior written consent of the Company. The City may, however, assign its rights and obligations under this Service Contract, without the consent of 74 CC Agreement 2021-6
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the Company, to another Governmental Body if such assignee assumes, and is legally capable of discharging the duties and obligations of the City hereunder.
SECTION 12.11. CONFIDENTIALITY.
A. Confidential Nature of Information. The Company shall treat all information obtained from the City in the performance of this Service Contract as confidential and proprietary to the City.
B. Limitation on Use and Disclosure. The Company shall not use any information obtained as a consequence of the performance of the Operation Services for any purpose other than fulfillment of the Company’s scope of work. The Company shall not disclose any information obtained from the City or obtained as a consequence of the performance of the Operation Services to any person other than its own employees, agents or Subcontractors who have a need for the information for the performance of work under this Service Contract, unless such disclosure is specifically authorized in writing by the City.
C. Security Plan. The Company shall prepare a security plan (“Security Plan”)” to assure that information obtained from the City or as a consequence of the performance of the Operation Services is not used for any unauthorized purpose or disclosed to unauthorized persons. The Company shall advise the City of any request for disclosure of information or of any actual or potential disclosure of information.
D. Survival. The Company’s obligations under this paragraph shall survive the termination of this Service Contract.
SECTION 12.12. COMPLIANCE WITH MATERIAL AGREEMENTS. The Company shall comply with its obligations under agreements of the Company which are material to the performance of its obligations under this Service Contract. The City shall comply with its obligations under agreements of the City which are material to the performance of its obligations hereunder.
SECTION 12.13. BINDING EFFECT. This Service Contract shall inure to the benefit of and shall be binding upon the City and the Company and any assignee acquiring an interest hereunder consistent with Section 9.9.
SECTION 12.14. NOTICES.
A. Procedure. All notices, consents, approvals or written communications given pursuant to the terms of this Service Contract shall be: (1) in writing and delivered in person; (2) transmitted by certified mail, return, receipt requested, postage prepaid or by overnight courier utilizing the services of a nationally-recognized overnight courier service with signed verification of delivery; or (3) given by facsimile transmission, if a signed original is deposited in the United States Mail within two days after transmission. Notices shall be deemed given only when actually received 75 CC Agreement 2021-6
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at the address first given below with respect to each party. Either party may, by like notice, designate further or different addresses to which subsequent notices shall be sent.
B. City Notice Address. Notices required to be given to the City shall be addressed as follows:
City of Camarillo
601 Carmen Drive
City of Camarillo, CA 93010
Attn: Dave Klotzle, Director of Public Works
with a copy to:
City of Camarillo
601 Carmen Drive
City of Camarillo, CA 93010
Attn: Lucie McGovern, Deputy Director of Public Works
C. Company Notice Address. Notices required to be given to the Company shall be addressed as follows:
Inframark, LLC
95 San Benancio Road
Salinas, CA 93908
Attn: Eric Sabolsice
With copy to:
Inframark, LLC
220 Gibraltar Road, Suite 200
Horsham, PA 19044
Attn: Legal Department
SECTION 12.15. NOTICE OF LITIGATION. In the event the Company or City receives notice of or undertakes the defense or the prosecution of any Legal Proceedings, claims, or investigations in connection with the Facility, the party receiving such notice or undertaking such defense or prosecution shall give the other party timely notice of such proceedings and shall inform the other party in advance of all hearings regarding such proceedings. For purposes of this Section only, “timely notice” shall be deemed given if the receiving party has a reasonable opportunity to provide objections or comments or to proffer to assume the defense or 76 CC Agreement 2021-6
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prosecution of the matter in question, given the deadlines for response established by the relevant rules of procedure.
SECTION 12.16. FURTHER ASSURANCES. The City and Company each agree to execute and deliver such further instruments and to perform any acts that may be necessary or reasonably requested in order to give full effect to this Service Contract. The City and the Company, in order to carry out this Service Contract, each shall use all commercially reasonable efforts to provide such information, execute such further instruments and documents and take such actions as may be reasonably requested by the other and not inconsistent with the provisions of this Service Contract and not involving the assumption of obligations or liabilities different from or in excess of or in addition to those expressly provided for herein.
SECTION 12.17. LIMITED RECOURSE TO CITY. No recourse shall be had to the general fund or general credit of the City for the payment of any amount due to the Company hereunder, whether on account of the Service Fee or for any loss and expense or payment or claim of any nature arising from the performance or non-performance of the City’s obligations hereunder.
The sole recourse of the Company for all such amounts shall be to the revenues of the City’s Water System. All such revenues shall be held for the uses permitted and required thereby, and no such amounts shall constitute property of the Company.
SECTION 12.18. FACILITY TOURS. The Company shall conduct tours of the Facility during normal business hours and take visitors through such portions of the Facility as are suitable for such visitation in a manner which does not interfere with the Company’s performance of its obligations hereunder. Company shall provide required PPE, including hardhats and hairnets, safety glasses, ear protection, and other PPE as required to maintain visitor safety for tour sizes as defined in Appendix 05.
SECTION 12.19. COUNTERPARTS AND SIGNATURES. This Service Contract may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The original signature of any party to this Service Contract which is delivered electronically via email or facsimile to any other party (or that party’s counsel) shall be as effective as if such original signature were personally delivered.
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North Pleasant Valley Desalter
IN WITNESS WHEREOF, the parties have executed this Service Contract by their duly authorized representatives on the date first above written.
CITY OF CAMARILLO
Gregory Ramirez, City Manager
ATTEST:
Jeffrie Madland, City Clerk
APPROVED AS TO FORM:
Brian A. Pierik, City Attorney
INFRAMARK, LLC
By: Stephane Bouvier
Title: Chief Executive Officer
Date:
78 December 15, 2020
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Camarillo Business Tax Certificate No. 045272 Expiration Date 05/31/2022 City of Camarillo Service Contract
North Pleasant Valley Desalter Appendix 1 – Facility Description APPENDIX 1 – FACILITY DESCRIPTION
1.1 Purpose 1
1.2 Location 1
1.3 Technical Description 1
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North Pleasant Valley Desalter Appendix 1 – Facility Description APPENDIX 1 – FACILITY DESCRIPTION
1.1 PURPOSE
This appendix provides an overview of the Facility and is for information purposes only.
1.2 LOCATION
The North Pleasant Valley Desalter Facility is in the north-east boundary of the City of Camarillo, Ventura County, California. The Facility is located near the intersection of Somis Road (Highway 34) and Las Posas Road at the following address:
2727 Somis Road,
Camarillo CA, 93010
The Facility was constructed on and is adjacent to agricultural land on the north side of the Facility. The Facility boarders a church to the west and a commercial building to the south.
1.3 TECHNICAL DESCRIPTION
The Facility is a 4.5 MGD reverse osmosis groundwater treatment facility that is expected to yield approximately 3,877 acre-feet per year of potable water. Brackish groundwater for the Facility will be extracted using the City’s existing Wells A and B which are located approximately one half-mile west of the Facility site, and a new onsite production well within the Facility to be constructed by the City. The Facility includes a concrete contact basin where Untreated Water will be chlorinated and then treated using greensand media filtration to remove iron and manganese. Water will then be fed through cartridge filters and then to the reverse osmosis membranes. The water will be stabilized and disinfected before being pumped into the City’s existing potable water distribution system through the treated water pump station. The Facility also includes a washwater recovery system, an administration building with a covered parking area, and an emergency generator, capable of operating the plant at half capacity.
The following documents are attached to this Appendix:
1. North Pleasant Valley Groundwater Desalter Project Plant Package dated July 2019.
2. North Pleasant Valley Groundwater Desalter (Rebid) Conformed Specification No.
WT-11-01 Volumes 1 through 4 dated July 2019.
3. North Pleasant Valley Groundwater Desalter Preliminary Design Report dated January 2018.
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North Pleasant Valley Desalter Appendix 2 – Government Approvals APPENDIX 2 – GOVERNMENT APPROVALS
2.1 Purpose 1
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North Pleasant Valley Desalter Appendix 2 –Government Approvals APPENDIX 2 – GOVERNMENT APPROVALS
2.1 PURPOSE
The purpose of this Appendix is to provide a preliminary outline of the Governmental Approvals that are expected to be required for operation of the Facility. Table 2-1 identifies the anticipated Governmental Approvals necessary for operation of the Facility and the entity responsible for obtaining the Government Approval. As required by the Service Contract, the Company is responsible maintaining all Governmental Approvals necessary to operate the Facility irrespective of whether any such Governmental Approval is identified in this Appendix.
Table 2-1 Operation Government Approvals
Agency Permit
Entity Responsible
for Obtaining Permit Status
State Water Resources Control Board
Camarillo Sanitary District
Industrial Waste Discharge Permit City Pending
Ventura County Air Pollution Control District
Permit to Operate City Pending
Calleguas Municipal Water District
Agreement for Construction and Use
of Salinity Management Pipeline
Discharge Service Connection
City Obtained
Fox Canyon Groundwater Management Agency
Resolution 2016-04 Adjustments to
Extraction Allocation for the City of
Camarillo Regarding Special Use of
Mounded, Degraded Water in the
North Eastern Portion of the Pleasant
Valley Basin
City Obtained
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Domestic Water Supply Permit City Pending
Industrial Stormwater Permit City Pending
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North Pleasant Valley Desalter Appendix 3 –Performance Guarantee Requirements and Damages
APPENDIX 3 – PERFORMANCE GUARANTEE REQUIREMENTS AND DAMAGES
3.1 Purpose 1
3.2 Performance Guarantees 1
3.2.1 Treated Water Treatment Guarantee 1
3.2.2 Treated Water Delivery Guarantee 2
3.3 Environmental Guarantees 2
3.3.1 Generally 2
3.3.2 Ambient Conditions 2
3.3.3 Groundwater Monitoring and Contingency Program 3
3.4 Untreated Water Quality Parameters 4
3.5 Damages and Termination 5
3.5.1 Treatment Guarantee Damages 5
3.5.2 Termination 5
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APPENDIX 3 – PERFORMANCE GUARANTEE REQUIREMENTS AND DAMAGES
3.1 PURPOSE
This Appendix sets forth the requirements for certain of the Performance Guarantees and the resulting damages for failure of the Company to meet such Performance Guarantees during the Operation Period.
3.2 PERFORMANCE GUARANTEES
3.2.1 Treated Water Treatment Guarantee
The Company shall operate the Facility in such a manner that the Treated Water produced is in compliance with all Applicable Law including all enforceable primary and secondary drinking water standards established by the California State Water Resources Control Board as identified in Title 17 and Title 22 of the California Code of Regulations and all enforceable federal drinking water regulations (e.g., primary maximum contaminant levels (MCLs) promulgated by United States Environmental Protection Agency (EPA)).
In addition to meeting all primary and secondary drinking water standards, Company must meet the following Treated Water Treatment Guarantee parameters:
Table 3-1: Treated Water Treatment Guarantee parameters (1)Treated Water Treatment Guarantee parameters may be subject to refinement, pending results of the corrosion control study.
All analytical methods used to demonstrate compliance shall be according to methods approved by DDW. If a particular parameter does not have a method approved by DDW, 3-1
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Parameter Treated Water Quality(
1 )
Chloride, mg/L 65(2)
Gross Alpha, pCi/L 12
Iron, mg/L <0.1
Manganese, mg/L <0.03
pH 8.0-8.5
Sulfate, mg/L 70(2)
TDS, mg/L 250(2)
Total Hardness, mg/L as CaCO3 75-120
Calcium, mg/L N/A
Magnesium, mg/L N/A
Alkalinity
Calcium Carbonate Precipitation
Potential
Langelier Saturation Index 0-0.3
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methods currently approved by the USEPA or contained in the most recent edition of the “Standard Methods for the Examination of Water and Wastewater” shall be acceptable. All locations of points of performance measurement, all means and methods for monitoring and measuring parameters for determining compliance with the Performance Guarantees and all means and methods for comparison of measured parameters with the Performance Guarantees shall be as set forth in applicable permits and approved by DDW and the City.
3.2.2 Treated Water Delivery Guarantee
Except as provided in subsection (F) of Section 5.3 of the Service Contract with respect to Citydirected reductions and except as the Company’s obligations under the Service Contract may be limited upon the occurrence of an Uncontrollable Circumstance, when the City is extracting 4,400-4,500 acre-feet per year the City shall have the right throughout the Operation Period to demand the delivery of Treated Water to the Water System, and the Company shall operate the Facility to provide between 3,690 acre-feet/year and 3,840 acre-feet/year. If extraction of Untreated Water is reduced to an amount less than 4,400 acre-feet per year, the Company remains responsible for producing Treated Water in accordance with the Production Efficiency Guarantee in Section 5.5 of the Service Contract. The Company shall use all reasonable efforts to exceed Treated Water production of 3,840 acre-feet/year, but shall be under no obligation to do so unless any such excess deliveries can be made while operating the Facility in accordance with Applicable Law, Good Industry Practice and within its design limits, and unless the parties are able to agree on appropriate compensation therefor.
3.3 ENVIRONMENTAL GUARANTEES
3.3.1 Generally
The Company shall at all times during the Term of the Service Contract comply with all requirements set forth in the City’s Certified Final Environmental Impact Report. The Company is not required to perform monitoring of any of the Environmental Guarantees unless a complaint is filed with either the City or the Company regarding any one of the Environmental Guarantees at the Facility. The City may monitor any Environmental Guarantee at any time during the Operation Period to test the Company’s compliance with this guarantee.
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3.3.2 Ambient Conditions
The Company shall at all times during the Operation Period comply with the Environmental Guarantees defined in Table 3-2:
Table 3-2 Environmental Guarantees
No. Parameter Performance
Point of
Performance Values
Measurement
1 Noise, Leq(1 hr)
(See Note 1)
At and beyond the
Property Line
55 dBA (from 9:00 p.m. to 7:00 a.m.) and 65
dBA (from 7:00 a.m. to 9:00 p.m.), except (1) for
construction-related activities during the
Operation Period which are performed in
compliance with the City’s noise ordinance; (2)
for alarms associated with health and safety
incidents during the Operation Period; (3)
Operation Services to address an emergency
situation; and (4) operation of standby power
generators during an electric Utility power
outage.
2 Noise complaints At and beyond the
Property Line
No third-party noise complaints which are verified
by the City and the Company as a reasonable
complaint. This requirement is independent of
the other noise-related Environmental
Guarantee. (See Note 2)
3 Odors At and beyond the
Property Line
No detectable odors which are verified by
the City.
Within the Facility
Site
4 Lighting Within Facility Site On-site lighting must be shielded and directed from adjoining properties, so as to produce no
annoyance or nuisance or traffic hazard. Any
changes to onsite lighting shall require a
photometric lighting plan be approved by the
City.
5 Lighting At and beyond the
Property Line
No third-party lighting complaints which are
verified by the City and the Company as a
reasonable complaint. This requirement is
independent of the other light-related
Environmental Guarantee. (See Note 2)
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No objectionable odors.
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North Pleasant Valley Desalter Appendix 3 – Performance Guarantee Requirements and Damages
Point of
No. Parameter Performance Performance Values
Measurement
6 Other Nuisances At and beyond the
Property Line
No third-party complaints which are verified
by the City and the Company as a reasonable
complaint. This requirement is independent of
the other Environmental Guarantees. (See
Note 2)
Notes to Table 3-2:
1. Maximum permissible one-hour average sound pressure level.
2. For all other complaints, the Company and the City shall prepare a plan for resolution of the complaint and the Company shall implement the plan in a timely manner. If the plan requires any capital modifications to the Facility, the plan shall address an equitable allocation of costs between the Company and City.
3.3.3 Groundwater Monitoring and Contingency Plan
The Company shall provide operational data and information to the City upon request as needed to support activities required by the groundwater Monitoring and Contingency Plan. 3-4
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3.4 UNTREATED WATER QUALITY PARAMETERS
Table 3-3 sets forth the anticipated Untreated Water Quality Parameters referred to in subsection 5.7(C) of the Service Contract. As provided in subsection 5.7(C), if the condition, concentration or characteristics of any Untreated Water Quality Parameter are outside the applicable parameter range as provided in Table 3-3 below, the Company may be entitled to relief as negotiated between the City and the Company, if and to the extent provided in subsection 5.7(C).
Table 3-3 NPV Desalter Raw Water Quality
3-5
Parameter Range of Blended
Water Quality
Alkalinity, mg/L as CaCO3 200-330
Ammonia, mg/L 0.13-0.57
Barium, mg/L 0.03-0.05
Calcium, mg/L 157-300
Chloride, mg/L 110-180
Color, C.U. 3-10
Conductivity, µS/cm2 1430-2400
Fluoride, mg/L 0.15-0.39
Gross Alpha, pCi/L 6.5-15.7
Magnesium, mg/L 41-97
pH, S.U. 7.1-7.5
Potassium, mg/L 4.9-7.9
Silica, mg/L 28-45
Sodium, mg/L 130-210
Sulfate, mg/L 430-880
TDS, mg/L 1200-2086
Turbidity, NTU 0.1-5.1
TOC, mg/L 1.5-1.7
Total Boron, mg/L 0.46-0.87
Total Hardness, mg/L as CaCO3 560-976
Total Iron, mg/L 0.03-0.58
Total Manganese, mg/L 0.13-0.23
UV254, cm-1 0.03-0.05
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North Pleasant Valley Desalter Appendix 3 –Performance Guarantee Requirements and Damages
3.5 DAMAGES AND TERMINATION
3.5.1 Treatment Guarantee Damages
If the Company (1) fails to meet any of the Treated Water Quality objectives identified in Section 3.2.1 of this Appendix, or (2) produces Treated Water containing any water quality parameter which results in non-compliance with applicable law established by DDW as identified in Title 22 of the California Code of Regulations, the Company will not be paid for such shortfalls or non-conforming water, and shall be subject to damages in accordance with Section 5.3 (C).of the Service Contract.
3.5.2 Termination
Certain violations of the Performance Guarantees may result in termination of the Services Contract in accordance with the terms set forth in the Services Contract. 3-6
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North Pleasant Valley Desalter Appendix 4 – Guaranteed Maximum Utilizations and Demands
APPENDIX 4 – GUARANTEED MAXIMUM UTILIZATIONS AND DEMANDS
4.1 Purpose 1
4.2 Guaranteed Maximum Electricity Utilizations 1
4.3 Guaranteed Maximum Electricity Demands 1
4.4 Guaranteed Maximum Brine Disposal 1
4.5 Establishing GMEU/GMED/BD For The Facility 1
Attachments
4A Guaranteed Maximum Electricity Utilizations and Demands for Facility 4B Guaranteed Maximum Brine Disposal
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APPENDIX 4 – GUARANTEED MAXIMUM UTILIZATIONS AND DEMANDS
4.1 PURPOSE
This Appendix sets forth the Guaranteed Maximum Electricity Utilizations (GMEU), the Guaranteed Maximum Electricity Demands (GMED), and Guaranteed Maximum Brine Disposal (BD) for the Facility. The applicable GMEU, GMED, and BD will be used by the City, as part of the annual settlement process in accordance with subsection 8.8 (A) of the Service Contract.
4.2 GUARANTEED MAXIMUM ELECTRICITY UTILIZATIONS
The GMEU represents the maximum amount of electricity in kilowatt-hours (kWh) that will be used by the Facility to meet the Water Delivery Guarantee delivered to the Water System defined in Section 5.3. The GMEU should be fully substantiated broken out by individual load source, the size of load, the average operating load, and yearly usage.
4.3 GUARANTEED MAXIMUM ELECTRICITY DEMANDS
The GMED represents the maximum rate of electricity usage in kilowatts (kW) that will be used by the Facility for any 15-minute period during any month of operation.
4.4 GUARANTEED MAXIMUM BRINE DISPOSAL
The BD represents the maximum volume in acre-feet of brine that will be disposed of by the Facility as measured by Calleguas’ brine metering station.
4.5 ESTABLISHING GMEU/GMED/BD FOR THE FACILITY
See Service Contract 8.3 and 8.8
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Attachment 4A1
Guaranteed Maximum Electricity Utilizations and Demands for Facility Guaranteed Maximum
Electricity Utilizations (GMEU)
Guaranteed Maximum
Electricity Demands (GMED)
kWh kW
1 Values to be determined per Service Contract Sections 8.3 and 8.8 4A-1
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Attachment 4B2
Guaranteed Maximum Brine Disposal from Facility
Guaranteed Maximum
Brine Disposal
acre-feet
2 Values to be determined per Service Contract Sections 8.3 and 8.8 4B-1
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North Pleasant Valley Desalter Facility Appendix 5 – Supplemental Operation and Maintenance Requirements
APPENDIX 5 – SUPPLEMENTAL OPERATION AND MAINTENANCE REQUIREMENTS
5.1 Purpose 1
5.2 Operations Requirements 1
5.2.1 Objectives 1
5.2.2 Operations Generally 1
5.2.2.1 Electric Service Equipment 1
5.2.3 Operations During Power Outage 2
5.2.4 Fuel Storage and Deliveries 2
5.3 Maintenance, Repair and Replacement Requirements 2
5.3.1 Ongoing and Preventative Maintenance 2
5.3.1.1 Buildings and Grounds 3
5.3.1.2 Concrete Tanks 4
5.3.1.3 Standby Generator Systems 4
5.3.2 Maintenance, Repair, and Replacement Plan 5
5.3.2.1 Minimum Plan Requirements 5
5.3.3 Projected Equipment Repair and Replacement Plan 6
5.4 General Operation Period Requirements 6
5.4.1 Public Telephone Numbers 6
5.4.2 Monthly Operations Reports 6
5.4.3 Public Access to Facility Site 7
5.4.4 Community Outreach During Facility Operations 7
5.4.5 Identification Badges and Uniforms 8
5.4.6 Risk Management and Process Safety Management 8
5.5 City Review 8
5.5.1 General 8
5.5.2 Monthly Coordination Meetings 8
5.5.3 Governmental Body Submittals 9
5.5.4 Periodic Maintenance Inspections and Testing 9
5.5.5 Review at Completion of Operation Period 9
5.6 Greensand Material Requirements 9
5.7 Security Plan 9
5.7.1 Minimum Requirements for the Security Plan 10
Attachments
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APPENDIX 5 – SUPPLEMENTAL OPERATION AND MAINTENANCE
REQUIREMENTS
5.1 PURPOSE
The purpose of this Appendix is to supplement the requirements for the Operation Services set forth in Articles IV, V, and VI of the Service Contract.
5.2 OPERATIONS REQUIREMENTS
5.2.1 Objectives
The Company shall operate and maintain the Facility in accordance with the Service Contract and the Contract Standards. Operational decision-making shall always be based on the following operating objectives in descending order of priority:
Protection of the health, safety, and welfare of the public and operating staff; Compliance with Applicable Law;
Compliance with the Performance Guarantees;
Protection of the environment;
Protection and preservation of the Facility; and,
Maximization of operational efficiency and minimization of operational cost.
5.2.2 Operations Generally
The Company shall operate the Facility under all conditions in accordance with the Service Contract standards and as described below.
Except to the extent excused by the occurrence of an Uncontrollable Circumstance, the Company shall treat all Untreated Water delivered to the Facility and produce Treated Water without interruption in accordance with the Service Contract.
5.2.2.1 Electric Service Equipment
The Company shall operate and maintain all electric service equipment owned by the City in accordance with the requirements of Southern California Edison. The Company shall provide the electric service provider with access to all electric service equipment owned by Southern California Edison.
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5.2.3 Operations During Power Outage
During a primary electrical power outage from any cause, the Company shall maintain uninterrupted production of Treated Water in compliance with the Section 4.9 (B) of the Service Contract.
5.2.4 Fuel Storage and Deliveries
The Company shall maintain a service contract for delivery of fuel to the Facility Site when needed to facilitate continuous operation of the standby generation system. The service contract shall provide for prompt deliveries of fuel to maintain uninterrupted operation of the Facility. In addition, the Company shall always maintain on the Facility Site, except during a power outage, sufficient fuel to operate the Facility for 24 hours.
5.2.5 Staffing
The Company shall staff the Facility consistent with the Operating Protocol, Title 22 of the California Code of Regulations, State Water Board Office of Operator Certification, and the requirements of this Service Contract. The Company shall submit a staffing plan for acceptance by the City in accordance with this Service Contract that shall be maintained by the Company throughout the Operation Period. Any changes to the staffing plan that accompanied the Company’s Proposal are subject to approval by the City.
5.2.6 Post Construction Stormwater Management Plan
The Company shall prepare and implement a Post Construction Stormwater Management Plan in conformance with the City’s Industrial Stormwater Permit. The Post Construction Stormwater Management Plan shall be subject to approval by the City.
5.2.7 Water Treatment Chemicals
The following “Water Treatment Chemicals” will be required as part of the treatment process and included in the Variable Component:
Sodium Hypochlorite
Sodium Hydroxide
Ammonium Sulfate
Sodium Bisulfide
Calcium Chloride
Sulfuric Acid
Threshold Inhibitor
RO Membrane Cleaning Solution
Coagulant and Coagulant Aid.
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5.3 MAINTENANCE, REPAIR AND REPLACEMENT REQUIREMENTS
The Company shall perform maintenance, repairs, and replacements of the Facility in accordance with the Service Contract, the Contract Standards, and this Appendix.
5.3.1 Ongoing and Preventative Maintenance
The Company’s preventative maintenance plan within the Maintenance, Repair and Replacement Plan shall reflect procedures and standards consistent with Good Industry Practice. The preventative maintenance plan shall reflect that in no event shall maintenance be less frequent and less comprehensive than that specified in manufacturers’ warranties and manuals. It shall also address the inspection, leak testing, maintenance, and repair procedures for all water-bearing structures in accordance with Good Industry Practice.
The Company shall implement, populate, maintain, upgrade, repair and replace the computerized maintenance management system (CMMS) required by Section 6.5 of the Service Contract. The Company shall not change the Facility CMMS without written approval from the City. The Company shall maintain the electronic Operation and Maintenance Manual in accordance with the requirements of the Service Contract.
The Facility shall be maintained at a level adequate for the efficient, long-term reliability and preservation of the City’s capital investment.
All equipment preventative maintenance activities shall, as a minimum, meet the requirements of suppliers. The CMMS shall generate work orders that are specific to the item of equipment.
These work orders shall outline the required preventative maintenance, describing the work to be undertaken. These work orders shall be undertaken and completed promptly. The resultant preventative maintenance work shall be logged as to when the work order was issued, when completed, by whom, duration of work, and listing of consumables used in providing the required work. This information shall be continuously maintained for all equipment and presented on an annual basis to the City, as part of the annual operations report required by Section 4.18 of the Service Contract, to confirm the work is being undertaken as required so as to protect the investment in the infrastructure. The City, however, may request to review records more frequently.
The Company shall provide continuous inspection to detect any significant variance from the baseline condition of the Facility when new. Corrective action shall be taken to prevent major damage to the equipment, as well as protect warranties on new equipment.
The Company shall conduct all maintenance, repair, and replacements in a manner that does not endanger the safety of Company or City staff and visitors and residents in the vicinity of the Facility Site.
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The Company shall provide the services of factory-trained technicians, tools, and equipment to field-calibrate, test, inspect and adjust all instruments to their specified performance requirements in accordance with the manufacturer’s specifications and instructions.
Documentation of all calibrations, tests, inspections and adjustments shall be maintained and made available to the City upon request.
The Company shall maintain the Facility to such a degree that there is no visible rust or scale.
The Company shall routinely conduct energy audits to ensure that equipment is running efficiently as part of its predictive maintenance program within the Maintenance, Repair and Replacement Plan.
5.3.1.1 Buildings and Grounds
The Company shall at a minimum perform the following activities relevant to the buildings and grounds:
1. Maintain the buildings and grounds in an aesthetically attractive and clean condition.
2. Wash all windows twice a year, or more frequently, on an as-needed basis.
3. Repair all roof leaks within five days of discovery.
4. Implement regularly scheduled pest control measures.
5. Repair all plumbing leaks upon discovery.
6. Damp mop all floors twice per week or more frequently on an as-needed basis with a cleaning solution appropriate for use in the Facility. Upon discovery, all spills must be cleaned and disposed of properly.
7. Strip all floors and apply new floor finish on a periodic basis as appropriate for the type of floor.
8. Wash down walls and wall tiles at least every six months, or more frequently, as appropriate.
9. Apply paint as necessary to all painted surfaces, as appropriate. All painted surfaces shall be painted at least every five years, except for such surfaces that have maintained their original condition and would be adversely affected by frequent painting.
10. Clean all offices and restrooms routinely, but no less frequently than daily, in order to maintain them in a neat, clean and orderly state.
11. Provide for daily collection of solid waste from all receptacles and remove solid waste at least once per week.
12. Repair cracks, erosions, depressions, and potholes, and slab shifts on paved areas, sidewalks, paved access roads located within the Facility Site and other areas, as necessary.
13. Once per five-year contract period, or more frequently if required by pavement conditions, asphalt concrete pavement shall have cracks sealed and a seal coat 5-4
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applied in conformance with the most recent version of the Standards Specifications for Public Works Construction (“Greenbook”).
14. Periodically resurface paved areas, if and as necessary.
15. Maintain all fences and walls on the Facility Site
16. Recoat structural panels of buildings as needed to maintain full service life at the end of the Operations Period.
5.3.1.2 Concrete Tanks
Periodically, during scheduled Facility shutdowns, the Company shall drain, clean and inspect concrete tanks consistent with the Maintenance, Repair and Replacement Plan. Concrete tanks shall be inspected at least once every five years, except those concrete tanks that are exposed to water with a pH of 6.3 or less shall be inspected at least once every two years. If a portion of a concrete tank is exposed to water with a pH of 6.3 or less (e.g. the mixing zone near a point of acid addition), that portion of the tank shall be inspected at least once every two years.
Concrete tanks that have exposed aggregates shall be restored to original condition using a prepackaged repair mortar. Surface preparation and tank repairs shall be performed in accordance with the mortar manufacturer’s recommendations.
The Company shall repair protective coatings as necessary to protect concrete tanks from degradation.
The Company shall seal any cracks that show evidence of leakage.
5.3.1.3 Standby Generator Systems
The Company shall be responsible for the maintenance of all standby and emergency power generating systems.
5.3.1.4 Production Wells
The Company is not responsible for maintenance, upkeep, upgrades, or any costs to operate the Production Wells (whether onsite or offsite) that supply the Facility with Untreated Water.
However, Company shall be responsible for maintaining all communication equipment, including but not limited to radios, antennae, and SCADA equipment at the Facility to ensure that the Facility is communicating with the Production Wells to request Untreated Water be delivered to the Facility.
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
5.3.2 Maintenance, Repair, and Replacement Plan
At least 90 days before the scheduled Acceptance Date, the Company shall prepare and submit for the City’s review a Maintenance, Repair and Replacement Plan. After addressing the City’s comments, the Company shall submit a final Maintenance, Repair and Replacement Plan to the City prior to the initiation of the Operation Period. This plan shall be periodically updated when equipment is replaced and the plan shall be submitted to the City annually with a summary of new equipment in place. The Company shall comply with the Maintenance, Repair and Replacement Plan throughout the Operation Period.
At the end of the Initial Term, the Company shall have maintained the Facility consistent with the Contract Standards and sufficiently to achieve the requirements of Section 6.3 of the Service Contract.
Upon the Termination Date, the Company shall return the Facility to the City in accordance with the requirements of Section 6.3 of the Service Contract. In addition, the Company shall return the Facility Structures and the Facility Equipment in compliance with the requirements of Section 6.3 of the Service Contract.
5.3.2.1 Minimum Plan Requirements
The Maintenance, Repair and Replacement Plan shall define how the Company will achieve the City’s objective of quality performance, including but not limited to the following components of quality performance: 1) availability of consumables and spare parts; 2) ongoing maintenance and repair; 3) uninterrupted treatment of Untreated Water and production of Treated Water at flows established by the City; 4) appropriate and timely renewal and replacement of equipment; 5) continuous good housekeeping to preserve aesthetics and protect against deterioration; 6) cost-effective upgrades of obsolete equipment and systems; and 7) testing and demonstrating capability of new and upgraded systems.
The Maintenance, Repair and Replacement Plan shall include an equipment inventory, preventative maintenance, and related operator training. Through the use of the CMMS system, the plan shall address the tracking of groups of equipment with different useful lives, and include depreciation and the appropriate repairs, replacements, and renewals. Repair and replacement schedule shall be provided as part of the Maintenance, Repair and Replacement Plan. The Maintenance, Repair and Replacement Plan shall also describe how the Facility will be periodically taken down for maintenance.
The Maintenance, Repair and Replacement Plan shall describe the frequency of tank inspections and criteria for repairs.
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
5.3.3 Projected Equipment Repair and Replacement Plan
The Company shall perform its repair and replacement obligations under the Service Contract to maintain equipment in good working order. The Company’s obligations for all repair and replacement of equipment as needed over the Term of the Service Contract shall not be limited in any way by the inclusion of its projected equipment repair and replacement plan herein. Furthermore, the Company shall not be required to repair or replace a particular piece of equipment in a particular year solely because its projected equipment repair and replacement schedule indicates that timing.
5.4 GENERAL OPERATION PERIOD REQUIREMENTS
5.4.1 Public Telephone Numbers
The Company shall maintain throughout the Operation Period, a telephone number for receiving calls from the City related to issues at the Facility Site. The Company shall monitor the phone line 24 hours per day, 7 days per week. The Company shall respond promptly to emergency situations as provided in Section 4.19 of the Service Contract.
5.4.2 Monthly Operations Reports
No later than 90 days prior to the Acceptance Date, the Company shall submit for the City’s review and approval the proposed format of the monthly operations report required to be submitted by the Company pursuant to Section 4.18 of the Service Contract. The monthly operations report shall include, at a minimum, the following information:
1. Summary of all notices, laboratory tests, and other reports filed with or received from all Governmental Bodies pursuant to the Governmental Approvals.
2. Summary of the quantities and characteristics of Untreated Water and Treated Water produced during the prior month;
3. Summary of quantity and type of chemicals and other agents used in the treatment of Untreated Water;
4. Summary of the quantities of Facility By-Products generated during the prior month, and the nature and location of their disposition;
5. Summary of all sampling and test data required by Section 4.14(B) of the Service Contract;
6. Quantities of electricity, water and other Utility services used during such month;
7. Summary of staffing levels, job positions and workforce turnover;
8. Statement of any complaints or communications received by the Company in relation to the Operation Services, and how each complaint was addressed by the Company, all as required by Section 4.6(F) of the Service Contract;
9. List of equipment disposed of as surplus property pursuant to City of Camarillo procurement policy;
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
10. Description of the maintenance, repair, and replacement activities performed, and Capital Modifications made during the prior month and anticipated during the current month;
11. Description of maintenance backlog and status of work orders of preventative and unplanned maintenance;
12. List of machinery and equipment which was unavailable for service during the prior month, and a timetable for repair and replacement;
13. Inventory of spare parts and Consumables in storage at the end of the prior month;
14. Description of partial or total Facility or equipment shutdowns for maintenance and repairs during the prior month and anticipated during the current month;
15. Adverse conditions which may be expected to arise during the current month that may affect the ability of the Company to treat Untreated Water and produce Treated Water in accordance with the terms and conditions of the Service Contract;
16. Results of any regulatory or insurance inspections conducted during the prior month;
17. Information on any Utility outages occurring during the prior month;
18. Descriptions of any failures to meet the Performance Guarantees and data required to determine performance liquidated damages under the Service Contract, if any;
19. Results of any environmental, health or safety tests or monitoring procedures conducted by a Governmental Body during the prior month, and copies of any reports or other submittals made to or received from any such Governmental Body;
20. Notices of violations of any Governmental Approval received during the prior month;
21. A performance summary of the reverse osmosis system, including, but not limited to monthly trends of: cartridge filter differential pressure, anti-scalant dose, reverse osmosis train feed pump pressure, reverse osmosis train conductivity, total permeate conductivity, and reverse osmosis train interstage booster pump pressure.
22. List of visitors to the Facility Site in the prior month; and,
23. Other data or information required to be furnished under the Operating Protocol.
5.4.3 Public Access to Facility Site
When requested by the City, the Company shall lead a tour of the Facility approximately once per month for up to 40 people. The Company shall accommodate smaller groups of visitors on a weekly basis.
The Company shall notify the City at least 24 hours in advance of any visits to the Facility Site scheduled by persons other than the City.
5.4.4 Community Outreach During Facility Operations
The City will plan, implement and manage a comprehensive community outreach program for the Operation Period with the active and ongoing support, coordination and cooperation of the Company. The City’s outreach program may include contracting with a public relations firm to 5-8
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
provide community outreach support to City staff. All public relations activities will be conducted with and coordinated by the City. The Company shall coordinate with and provide Project information to the City or Consultant retained by the City.
The Company’s Chief Operator shall participate in annual public meetings with the community to discuss Facility impacts on the surrounding area and other issues related to Facility operations in coordination with the City. The Chief Operator shall attend meetings of the local community planning group under the direction of the City to discuss Facility operations as required by the City. For community planning group and public meetings, the Company shall conduct presentations on operations as necessary and respond to questions raised by meeting attendees. All presentation materials, including photographic renderings, shall be the responsibility of the Company. To prepare for community planning group and public meetings, the Company shall produce and submit to the City for review and approval, handouts for attendees and requested portions of the presentations in the most recent version of Microsoft PowerPoint, a minimum of four business days prior to the meeting.
5.4.5 Identification Badges and Uniforms
The Company shall provide standardized identification badges and uniforms to all on-site employees throughout the Operation Period. The Company’s employees shall wear badges and uniforms at all times when on the Facility Site.
Identification badges shall also be issued to all visitors entering secure areas at the time of arrival with records retained of the name and affiliation of the visitor, purpose of the visit, time of arrival and time of departure. The secure areas include the laboratory, control room, shop, or any of the treatment process areas, or other areas as determined in a vulnerability assessment or site security plan. The identification badge shall be surrendered at each time of departure.
5.4.6 Risk Management and Process Safety Management
The Company shall prepare and maintain a Process Safety Management Plan and Risk Management Plan if required by State and Federal regulations.
5.5 CITY REVIEW
5.5.1 General
The City will actively review the Company’s Maintenance, Repair, and Replacement Plan throughout the Term of the Service Contract. The City may assign one or more persons to observe the operation and maintenance of the Facility, to review repair and replacement records, and to provide coordination assistance to the Company to assure that the operation of the Facility is fully integrated into the operation of the Water System. 5-9
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
5.5.2 Monthly Coordination Meetings
As required by Section 4.6 of the Service Contract, monthly coordination meetings between the Company and the City shall be held at the Facility Site or other mutually agreeable location. The purpose of these meetings is to review management, operational, performance, and planning matters for the Facility, maintenance issues, the monthly operations reports, condition of the Facility, safety, housekeeping of the Facility Site, compliance with Applicable Law, Governmental Approvals and the Performance Guarantees, staffing issues, invoicing issues, public relations, and other relevant issues. The Company shall distribute copies of documentation of these meetings to all attendees and shall maintain a chronological file of such documentation, which upon request, will be made available to the City.
5.5.3 Governmental Body Submittals
The Company shall submit draft copies of all Governmental Approvals or other regulatory submittals required for the Operation Services to the City for review and comment at least 14 days prior to submittal to any Governmental Body. The Company shall address the City’s comments prior to submitting the documents to the Governmental Body and shall strictly comply with City comments identifying areas where a statement made in a submittal would be contrary to City policies or would otherwise impose an unreasonable cost or burden on the City.
5.5.4 Periodic Maintenance Inspections and Testing
The City may perform annual, biennial or unscheduled maintenance inspections of the Facility as provided in Section 6.4 of the Service Contract. The City may call for testing of the Facility at any time during the Term of the Service Contract as provided in Section 5.8(B) of the Service Contract.
5.5.5 Review at Completion of Operation Period
Requirements for the review of the Facility related to the Termination Date are provided in Section 6.3 of the Service Contract and Appendix 6.
5.6 GREENSAND MATERIAL REQUIREMENTS
Greensand filter media shall consist of hard, durable, angular, dense grains of glauconitic or silica sand coated with a manganese oxide coating that will resist degradation during shipping, handling, and usage and will be capable of maintaining a manganese oxide coating. This media shall be free of iron sulfides, clay, shale, and extraneous foreign matter. The average specific gravity shall be approximately 2.4. Average hardness shall be approximately 2 on the Moh scale. The media shall conform to the requirements of AWWA B102. 5-10
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North Pleasant Valley Desalter Facility Appendix 5 –Supplemental Operation and Maintenance Requirements
5.7 SECURITY PLAN
At least 180 days before the initiation of Acceptance Date Conditions, the Company shall prepare and submit for the City’s review a Security Plan. The Security Plan shall address security for the Facility. After addressing the City’s comments, the Company shall submit a final Security Plan to the City prior to the initiation of the Operation Period. This plan shall be periodically updated when security equipment or systems are added or modified and submitted to the City annually with a summary of the new or modified equipment or systems. The Company shall comply with the Security Plan throughout the Operation Period. The City intends to keep confidential all information and materials relating to security at the Facility Site, including the Security Plan, irrespective of whether the Company has requested the City to keep any such information and materials confidential. Notwithstanding the foregoing, the Company agrees that the City shall not be responsible or liable in any way for Loss-and-Expense that the Company may suffer from the disclosure of any such security information or materials, including the Security Plan, to third parties.
5.7.1 Minimum Requirements for the Security Plan
The Company’s Security Plan shall include at a minimum, the following information:
1. A general description of the Company’s security measures and procedures for prevention, detection, and response to terrorism, vandalism, sabotage, natural disasters, theft, accident, assault on employees, and cross-connection contamination.
2. A risk analysis of critical areas on the Facility Site and measures to secure them.
Critical areas include, but are not limited to administrative offices, chemical storage and feed facilities, RO building, electrical room and finished water pump station.
3. A description of the intrusion detection and surveillance systems.
4. A description of cyber-security measures for the Facility supervisory control and data acquisition (SCADA) system and unit process programmable logic controllers (PLCs).
5. A description of all security alarms and how and where they will be continuously monitored to ensure a rapid and effective response.
6. Staffing level dedicated to monitoring security system video images and alarms, and maintenance of security system hardware and access control database.
7. A description of means to track Company’s staff, vendors, visitors, City staff, and all other persons on the Facility Site.
8. A description of the methods to detect and respond to chemical or biological contamination of the Untreated Water, partially treated water, or Treated Water.
9. A description of Company’s plan for notifying nearby residents of emergencies at the Facility Site.
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Attachment 5A
Preliminary Maintenance, Repair and Replacement Plan
Maintenance Plan
The Company’s maintenance plan will ensure that treatment assets are transferred in satisfactory condition to the City at the end of the Service Contract Term. The Company’s objectives in implementing the maintenance, repair, and replacement program are as follows:
1. Protect and enhance the City’s new treatment facility capital assets, achieve full and extended service life for equipment and facilities, and ensure water system reliability
2. Prevent catastrophic pumping or process failure
3. Implement a comprehensive approach to planning and prioritizing maintenance work
4. Undertake all maintenance work in the most efficient and cost-effective manner
5. Optimize capital requirements for repair work and asset replacement over the longterm contract
6. Integrate activities required to maintain manufacturers’ warranties into maintenance programs
7. Perform condition assessment and risk analysis of assets to provide accurate data for future capital and asset planning
8. Establish and maintain safety, environmental, and aesthetic standards Computerized Maintenance Management System
The Company shall emphasize proper equipment and facility maintenance as part of its management approach. The Company’s maintenance program shall begin with a thorough audit and analysis of equipment condition, warranty status, and repair records. Data gathered from the analysis shall be used to populate the computerized maintenance management system (CMMS) and to establish baselines for ongoing, site-wide maintenance services. The CMMS serves as one of the key tools to guide and track onsite maintenance activities.
The Company will develop and implement a CMMS using software recommended by the Company and approved by the City. With this system, operators will monitor asset condition, schedule routine inspections, direct maintenance and repairs, manage inventory, and track distribution and collection system maintenance. The system tracks equipment performance, service history, warranty information, and repair costs. This information is used to evaluate the need for replacing or rehabilitating system components, with replacement recommended only to prevent limitations in service or failure, or when analysis demonstrates that replacement would be more cost-effective. Reports and information generated by the CMMS shall include, but not be limited to:
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1. Lifecycle costs of assets
2. Asset maintenance frequencies and histories
3. Predictive maintenance, preventive maintenance, and corrective maintenance activity status reports
4. Job completion reports
5. Work order status
6. Inventory control levels of spare parts and availability for optimization
7. Depreciated value of asset
The Company’s goals for the Facility shall protect the City’s investment as the facility is commissioned and operated through the Operations Period. The Company’s installation and implementation of the CMMS software will include:
1. A full-featured, easy-to-use CMMS that is fully accessible to the City representatives
2. Integration into other Facility functions such as operations, inventory, laboratory, and management and administration
3. Integration with the Electronic O&M Manual
4. Repair records and affiliated maintenance costs for each piece of equipment within the Facility
5. Scheduling and monitoring preventive maintenance activities
6. Work and purchase order issuance
7. A complete equipment and spare parts inventory
8. Repair warranty tracking
9. Automatic exception, equipment status, and equipment repair priority reports The Company’s CMMS will produce concise, easy-to-read equipment reports that provide specific information based on manufacturer, type, location, or operating system and subsystem. This information will include lifecycle costs, maintenance frequencies and histories, and status reports on all maintenance functions including routine and preventive maintenance, predictive maintenance, and corrective maintenance. These reports will also focus on issues such as job completion reports, work order status, and manpower utilization.
The Company will integrate the CMMS into other key computer systems at the facility, including the Electronic O&M Manual and information system. This will facilitate interaction between the various software components, such as the onsite operations control system, SCADA system, and Facility operating data.
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CMMS-Integrated Maintenance, Repair and Replacement
Maintenance activities are classified into three major categories Preventive Maintenance, Predictive Maintenance, and Corrective Maintenance, as discussed below.
The Company will conduct ordinary maintenance activities for the Facility on three levels:
routine and preventive, predictive, and corrective. By concentrating on preventive and predictive maintenance, the Company will optimize costs by protecting warranties, reducing the occurrence of expensive emergency repairs by planning maintenance activities and continuously monitoring equipment conditions, and extending equipment life to reduce future capital expenses. The Company will perform full preventive maintenance for mechanical, electrical, and instrumentation equipment according to manufacturers’ recommendations and Good Industry Practice. In addition, the Company will perform the optimal number of predictive maintenance tasks and testing on a regular basis, including oil analysis, infrared testing, and vibration analysis. The combination of these efforts will ensure that expected equipment life is reached, equipment life is extended beyond its expected life, and the potential for high-cost capital expenditures is reduced by addressing any problems before they become equipment failures.
During equipment installation and upon testing and startup, the Company will perform a comprehensive inventory of equipment and a baseline condition assessment. The Company will document all equipment including type, manufacturer, installation date and comments, warranties in effect, and manufacturers’ O&M recommendations. This data will populate the CMMS and provide the City with an initial equipment inventory at construction closeout and Facility startup.
Preventive Maintenance
Routine preventive maintenance will be the first level of maintenance. Routine maintenance involves staff members who operate the processes and equipment daily. It will be the operators’ responsibility to monitor and inspect the Facility’s operating equipment as they make rounds during their assigned shifts. They will visit and observe each process and equipment area to inspect the equipment's condition. This practice involves a “stop, look, and listen” approach. The operator stops near the equipment, looks at the oil levels, and notes any signs of oil or water leaking or loose screws or pieces of metal that may have fallen off. Finally, the operator listens to the operating equipment and notes any unusual bearing noise, such as rumbling of an unprimed pump, or noise made by a loose part vibrating on the equipment.
This routine level of maintenance provides the first defense in preventing more serious damage.
Another part of this routine maintenance requires the shift operator to dust or wipe the equipment and base area clean. This reduces problems with dirt, grease, or oil buildup on the CC Agreement 2021-6
equipment, which, if unchecked, will shorten the equipment’s operating life. This also keeps the equipment clean so future rounds can uncover any problems that may arise.
The Company will define preventive maintenance as those routine and repetitive activities required or recommended by the equipment manufacturer or industry best practices to optimize the service life of the equipment, vehicle, facility, or any component thereof. Proper preventive maintenance is the critical first line of defense against equipment deterioration and failure.
Preventive maintenance activities for major equipment will be, at a minimum, those specified by the manufacturer’s maintenance recommendations as outlined in the vendors’ O&M manuals. Work orders generated by the CMMS will outline the required maintenance and, upon completion of a work order, the CMMS will log the following information:
1. Work order issue date
2. Completion date
3. Operator performing the task
4. Duration of task
5. Number of labor hours required to complete the task
6. Parts used
Before Facility acceptance and startup, the Company team will establish a preventive maintenance task list and requirements for all mechanical, electrical, and instrumentation equipment. Preventive maintenance task descriptions will include the manufacturers’ recommended procedures and their corresponding appropriate interval for the maintenance activities to be performed. The Company will continuously review and perform all preventive maintenance task descriptions, in accordance with the schedule listed in the preventive maintenance module of the CMMS, to protect the City’s investment in the project and provide the proper amount and type of preventive maintenance to achieve optimal lifecycle costs.
The Company will verify these preventive maintenance tasks are completed by reviewing the CMMS database and its reports. The CMMS will schedule all shift and preventive maintenance activities.
Preventive maintenance tasks also include activities related to site maintenance, building janitorial services and housekeeping.
Predictive Maintenance
Under the Company’s predictive maintenance program, major electrical equipment will be scheduled for periodic testing using infrared thermography equipment to confirm that components are in good working order with no loose or faulty connections, which can cause CC Agreement 2021-6
long-term damage to other components. Readings will be recorded in the CMMS or Asset Management Program. The Company will work with equipment vendors to establish a “baseline” condition for each critical piece of equipment identified and monitor the equipment periodically for critical performance criteria. Additional predictive monitoring will include:
1. Equipment condition assessments
2. Vibration monitoring
3. Oil analysis
4. Infrared inspection
5. Motor circuit evaluation
The Company will use a predictive maintenance service structure to prevent unanticipated equipment failure due to normal wear and tear or caused by improper repair.
The Company’s CMMS-based predictive maintenance program will track the operating life of the equipment. The Company will use vendors’ baseline data to monitor the equipment operating life over time. The predictive maintenance module of the CMMS will produce graphs that plot the equipment wear through vibration and heat data entered on a yearly basis. Once these data are entered, the CMMS will project the operating life of the equipment based on manufacturers’ baseline data. This information will be useful for planning timely and costeffective equipment replacement.
Corrective Maintenance
Corrective maintenance encompasses activities required for operational continuity, safety, and performance. The Company will maintain the status of corrective maintenance work orders in the selected CMMS software, where it will be scheduled within equipment groups to save time and reduce labor costs. Based on the Company’s baseline maintenance evaluation, critical spare parts will be stocked onsite or held in reserve at a supplier’s warehouse to ensure that downtime is minimal.
As outlined throughout this section, the Company’s overall approach to maintenance management will confirm that O&M staff members perform minimal unplanned corrective maintenance. Through the Company’s proactive predictive maintenance and preventive maintenance processes, equipment conditions will be known at all times. As equipment needs are identified, evaluated, and prioritized, they will be addressed in the most cost-effective manner with the minimal impact on Facility performance. The work will be scheduled so corrective maintenance can be performed on groups of equipment to minimize the effects of the repairs and reduce overall labor costs. The CMMS database will maintain the status of all corrective maintenance work orders.
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As the Service Contract Term progresses, corrective maintenance needs may generate decision points that require expert evaluation and recommendations. This information will be searchable by equipment type, location, application, manufacturer, and repair type. By using this detailed data, the Company will work in partnership with the City to make the best overall equipment needs decisions. For example, the Company’s team will pre-determine repair costs and evaluate equipment histories to determine the repair/replace breakpoint. If an estimated repair cost exceeds the target cost/benefit ratio, the Company will make an effective decision on equipment type, size, and manufacturer to promote optimal overall system performance.
Repair and Replacement
The Company’s repair and replacement plan replaces major items over the term of the Service Contract. The Company’s approach does not defer repairs for any reason except emergencies.
Producing safe, high-quality water depends on the Company’s ability to maintain processes and equipment to the highest practical standard.
The Company will take a comprehensive, complete-lifecycle approach to protect and preserve facility assets. The Company’s specific objectives for asset management for the City include:
1. Protecting and enhancing all capital assets, extending service life of major equipment and facilities, and enhancing water treatment system reliability
2. Preventing catastrophic failure
3. Identifying current maintenance problems in existing facilities
4. Performing maintenance work efficiently and cost-effectively
5. Integrating work performed by the Company’s subcontractors to ensure proper repair records and costs are tracked
6. Optimizing capital requirements for repair work and asset replacement
7. Integrating activities required to maintain manufacturers’ warranties into maintenance programs
8. Establishing and maintaining safety, environmental, and aesthetic standards
9. Confirming systems are in place to provide quick response to maintenance issues that protect the public and equipment
10. Tracking equipment by type and expected lifecycles
11. Maintaining, repairing, or replacing all facility machinery, equipment, processes, and structures without financial burden to the City, and to meet the prescribed maintenance intervals
12. Enabling the City inspection to verify the level of maintenance; reviewing the plan annually and updating the Electronic O&M Manual, if needed and approved by the City per the Service Contract, to reflect revised renewal and replacement plan CC Agreement 2021-6
provisions
The Company is committed to a comprehensive repair and replacement program. The schedule shows major equipment and the Company’s estimated repair and replacement approach based on the Company’s experience operating similar facilities, manufacturer guidance, and the Company’s standards. The Company will apply this experience through a statistical model designed to ensure that equipment replacement is fully accounted for in the Company’s proposal under a wide variety of operating scenarios.
Maintenance Training
For all new staff, the Company maintenance specialists assigned to the transition phase will assess key skill competency gaps and formulate initial training plans and modules during startup. To support vendor-provided training, the Company will provide skills testing online, classroom instruction, videotaped maintenance and training examples (also stored online), and hands-on training.
Because safety must be a continuous part of every employee’s daily activities, it shall be integrated into every part of the Company’s training program. In addition to the specialized courses and drills already described, safety tips, warnings, and recommendations will be common elements of Standard Maintenance Procedures (SMPs) developed by the Company. The Company will also conduct special maintenance training to ensure proper tools and techniques are used at all times to avoid accident and injury.
For specific equipment instruction provided by suppliers, attendees will also receive detailed equipment information from vendor O&M Manuals, data sheets, or design criteria summary tables. Equipment training will also include mockups, cutaways, and actual equipment as instructional aids and for hands-on exercises.
Asset Management Program Objective
The Company’s asset management system supports the Company’s program to minimize the long-term cost of assets while promoting reliable and uninterrupted delivery of Treated Water.
The major functions of the Company’s asset management system are summarized below:
Effective maintenance management. The Company has structured its maintenance approach to focus on meeting the effective capacity of the facilities at a minimum of cost.
Thus, the Company’s program centers on predictive and condition-based maintenance and repair.
Effective asset rehabilitation or refurbishment and replacements. The Company will plan asset rehabilitation, refurbishment, and replacement to extend the useful life of systems and processes. The Company will select procedures to extend the life of all CC Agreement 2021-6
assets so that maintenance and replacement costs are considered carefully. Effective asset condition monitoring. The Company will monitor current condition of all equipment and measure trends in condition deterioration to plan asset rehabilitation and replacement at appropriate intervals. The Company will track financial information including repair and replacement cost at an interval agreeable to the City. Effective financial planning. The Company will track and report financial information associated with asset maintenance, rehabilitation, and replacement.
With the use of the tools described in this section, the Company will meet the needs required of an effective asset management system.
The Company’s asset management program for the City is a process of continual improvement.
The Company will take specific implementation steps toward a fully functional and effective asset management program throughout the Operation Period. Key program components will be phased in prior to the start of the Operation Period. Implementation steps include:
1. Establishing an Asset Management Team consisting of appropriate facility operations personnel and City representatives.
2. Completing an assessment and optimization strategy based on review of service levels, equipment and process performance, maintenance program results asset utilization level, and other key performance indicators.
3. Developing a formalized asset management plan and gap analysis to address deficiencies.
4. Implementing strategies to meet 1-, 5-, and 10-year asset management objectives.
The Company will apply advanced tools and approaches to meet the City's asset-monitoring and performance needs. The Company will integrate data contained in the CMMS and with the Company’s own asset management program to support a full asset management suite of tools to improve the overall lifecycle costs of the City assets.
By harnessing the power and flexibility of the distributed control and SCADA system, the Company will integrate the real-time data gathered in the field to generate maintenance activities in the CMMS program automatically. This type of integration allows for increased productivity and the continued reliability of the assets.
Asset Management Program—Effective Asset Condition Monitoring The Company will analyze the importance of an asset relative to the overall system to determine a“criticality of failure” factor. This assessment, along with the maintenance characteristics, availability of replacement parts, and an assessment of the current condition, will enable the most effective maintenance strategy to be determined for each asset. This assessment also CC Agreement 2021-6
ensures that spare part and replacement sources are planned and availability targeted to the needs of the Facility to minimize planned and unplanned downtime.
The asset condition number rating system used for the City asset condition assessments will consist of six categories.
A condition assessment team of experienced personnel will use the rating system to rate each asset by using asset maintenance records and making visual observations of each asset. Each asset will be assigned a condition rating value from 0 to 5. This condition assessment information will be stored on the project file server and will be used to create the predictive maintenance evaluation reports required.
A baseline report will be provided to the City detailing the baseline status of major equipment.
The asset management program will store the following information as a baseline for further condition assessments:
1. Vibration profile for equipment that is subject to vibration potential
2. Thermographic survey of control panels
3. Oil analysis of major lubricated equipment
4. Equipment condition rating
5. Rating system summary
6. Life expectancy
7. Electrical condition rating where appropriate
8. Run hours at inspection
9. Name of person or company performing inspection
10. Date of inspection
11. Any other specific equipment reports or tests completed Every two years, the Company will work with a third party to review the condition assessment of the major assets. These condition assessments will be conducted according to the requirements mutually agreed upon by Company, City and third-party condition assessment contractor. The Company will incorporate the assessment activities into the day-to-day maintenance activities performed throughout the year. For example, vibration tests will be conducted every 6 months on major equipment. The condition assessment information will be uploaded into the asset management program and evaluated against the baseline condition assessment information. Based on the results obtained from this data, an evaluation or audit will be performed on the maintenance management program to ensure the necessary steps are CC Agreement 2021-6
taken to extend the service life of key equipment. Any changes made to the maintenance management program will be documented and made available to the City.
Operations During the Major Annual Maintenance Period
The Company’s annual maintenance period will be sufficient to accommodate required Facility maintenance activities. Based on implementing the Company’s maintenance, repair, and replacement plan and through routine and preventive maintenance, the Company will identify major maintenance activities early, plan for them, and be prepared for timely execution in the field.
During the annual maintenance period, normal operations at the Facility will shift to managing major maintenance activities, including documenting the work performed by others and managing equipment vendors and other subcontractors who will be onsite to perform work. In addition, the Company is prepared to support the City needs during the annual maintenance period for other facilities in the City service area. In this case, the Company can compensate for other Facility shutdowns by supporting additional production if necessary.
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol APPENDIX 6- ASSET EVALUATION PROTOCOL
6.1 Baseline Facility Record and Annual Inspections 1
6.1.1 Facility Equipment 2
6.1.2 Facility Structures 2
6.2 Term-End Evaluation(s) of the Facility 3
6.2.1 Term-End Facility Equipment Evaluation(s) 3
6.2.1.1 Step 1: Estimate Service Life and Remaining Life of Facility Equipment 3
6.2.1.2 Step 2: Determining Weights to be Applied to Each Asset 5
6.2.1.3 Step 3: Determine Weighted Remaining Life 5
6.2.2 Term-End Facility Structures Evaluation(s) 6
6.2.2.1 Functionality Evaluation(s) 6
6.2.2.2 Structural Integrity Evaluation(s) 7
6.3 Evaluation Reports and Products 8
6.3.1 Baseline Facility Record 9
6.3.2 Facility Equipment 9
6.3.3 Facility Structures 9
6.3.4 Supplemental Information 9
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol APPENDIX 6- ASSET EVALUATION PROTOCOL
The purpose of this Appendix is to detail the protocol and procedures to be followed by the Company to assess the condition of the Facility pursuant to Section 6.3 of the Service Contract for compliance with its obligations under Article VI of the Service Contract.
6.1 BASELINE FACILITY RECORD AND ANNUAL INSPECTIONS
Within 60 days following the Acceptance Date, as required by Section 6.3 of the Service Contract, the Company shall develop a Baseline Facility Record (the “Baseline Facility Record”).
The Baseline Facility Record shall be a complete listing of all assets that constitute the Facility on a completed and installed basis. The Baseline Facility Record shall consist of two sections that indicate whether the asset is considered part of (1) the Facility Equipment, or (2) the Facility Structures.
The Company shall perform annual inspections of the Facility in accordance with Section 6.3 of the Service Contract and update the Baseline Facility Record accordingly. All newly added assets shall be entered in the Baseline Facility Record together with their evaluation designators, installation date, installation cost, and other information identified in this Appendix
6. All assets that are removed from the Facility shall be deleted from the Baseline Facility Record. Assets that are removed from service but left in place shall continue to be shown in the Baseline Facility Record. The Company shall provide the City a hardcopy and electronic copy of all updated Baseline Facility Record listings along with a written summary of the changes made in the Baseline Facility Record since it was last updated.
Each asset shall be assigned a unique asset number that is entered into the Baseline Facility Record along with a name or short verbal description of the asset. The asset numbers, naming conventions and nomenclature used in the Company’s computerized maintenance management system shall be used in developing the Baseline Facility Record.
The Company shall compile the Baseline Facility Record using Microsoft Excel®, Microsoft Access® or some other computer software program mutually agreed to by the parties. The master copy of the Baseline Facility Record shall be prepared in hard copy form, each page of which shall be initialed by both parties. The City shall keep the master copy of the Baseline Facility Record. The Company shall also provide the City an electronic copy of the Baseline Facility Record. Records shall be linked to equipment tags as used in CMMS and other systems, and shall be in a database format that is exportable/importable with other software 6-3
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol such as augmented reality, GIS, or other programs designed to improve operator and evaluator interface with asset condition.
6.1.1 Facility Equipment
The Baseline Facility Record applicable to Facility Equipment shall include asset number, asset name, asset manufacturer and model number, date installed, price of installed equipment, service life (in years rounded to nearest whole number), condition/status and any additional descriptions of condition/comments. Facility Equipment shall be listed as in the example tabulation for the Facility provided in Table 6-1. The service life (in years) shall be in accordance with Table 6-5. For Facility Equipment not listed in Table 6-5, the service life shall be subject to the reasonable approval of the City.
Any Facility Equipment baseline condition/status other than “New equipment, fully functioning in excellent condition” shall require the reasonable approval of the City.
The Company shall keep a record of documentation supporting the data provided in the Baseline Facility Record and maintain this record through the performance of the last Term-End Asset Evaluation. Such documentation shall include records of labor and material costs, vendor invoices, etc., to substantiate the price of installed equipment. To the extent such information comes from the City or the Contractor, the Company shall be entitled to rely on it to the same extent it is entitled to rely on other City-provided information in the Service Contract. A copy of the record of documentation shall be provided to the City along with the Baseline Facility Record. In accordance with Section 6.3 of the Service Contract, the Company shall continue to inspect the Facility Equipment annually during the Operations Period and update the Baseline Facility Record and the record of supporting documentation accordingly.
6.1.2 Facility Structures
The Company shall make an initial record of the Facility Structures. As part of the initial record, a photographic and video record shall be made of the exterior and interior of the Facility Structures, where possible. All Facility Structures shall have an initial functionality and structural integrity rating of 5 based on the rating system presented in Section 6.2.2.1 hereof.
Facility Structures shall be listed as in the example tabulations provided in Table 6-2 and Table 6-3. The Company shall also provide the City with record copies of photographs and videos on DVD as requested. In accordance with Section 6.3 of the Service Contract, the Company shall perform the evaluations of Facility Structures annually during the Operations Period and update the Baseline Facility Record accordingly. If new structures are added, the photographic and video record shall also be updated by addition of the new structures. 6-4
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol
6.2 TERM-END EVALUATION(S) OF THE FACILITY
Not more than 12 months prior to and not later than six months prior to the end of the Initial Term or any Renewal Term, as required by Section 6.3 of the Service Contract, or at any other time required by Section 6.3 of the Service Contract, the Company shall perform an evaluation of the Facility. As provided by Section 6.3(E) of the Service Contract, the Facility Equipment at the end of the Initial Term or any Renewal Term shall be in a condition and state of repair such that the remaining service life of the Facility Equipment at such time is equal to or greater than the service life in the Baseline Facility Record for each piece of Facility Equipment minus the number of years elapsed since the Acceptance Date.
6.2.1 Term-End Facility Equipment Evaluation(s)
6.2.1.1 Step 1: Estimate Remaining Life of Facility Equipment For each Term-End Facility Equipment evaluation, the Company, the City, and an Independent Evaluator shall verify the accuracy, including the proper designation of each asset, and the completeness and accuracy of the Baseline Facility Record prepared and maintained by the Company in accordance with Section 6.1 hereof. Assets removed from service but left in place shall continue to be shown in the Baseline Facility Record. However, the initial value and remaining life of these assets will be set to zero. These assets shall be designated as not included in the evaluations. An Independent Evaluator shall then estimate, for the purposes of each Term-End Asset Evaluation, as defined in Section 6.3 of this Appendix, the remaining life of all the Facility Equipment having a Replacement Value equal to or greater than $2,500 (as adjusted by the change in CPI from the Contract Date to the evaluation date) listed in the Baseline Facility Record, as provided below. Reverse osmosis membrane elements (“RO Membranes”) will be included in the Term-End Asset Evaluation, regardless of the estimated Replacement Value. An example of the information to be provided in Step 1 for the Facility Equipment is presented in Table 6-4, found at the end of this Appendix.
Remaining Life at the End of the Initial Term (and any Renewal Term) Evaluation and Method of Calculation
The Independent Evaluator shall estimate the remaining life at the end of the Initial Term and any Renewal Terms (in years, rounded to the nearest whole number) of all the Facility Equipment using the following methods and procedure.
The parties shall pre-agree on a method for converting the remaining life of an asset to its remaining life at the end of the Term. If the parties cannot agree, the remaining life at the end of 6-5
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 –Asset Evaluation Protocol the Term for an asset shall equal the remaining life for that asset at the time of the evaluation (prior to rounding) minus the time period in years rounded to one decimal place between the time of the evaluation and the end of the Term. After this calculation is performed, remaining life after the Term shall be determined by rounding.
The remaining life of an asset shall be based upon its ability to perform its intended function, taking into consideration its performance history, physical condition, availability and maintenance costs. In determining the remaining life of an asset, the Independent Evaluator shall not consider whether an asset is outmoded and, if replaced, would enhance the capabilities of the Facility.
The Independent Evaluator shall conduct the following procedures to establish the remaining life of the Facility Equipment:
visually inspect the Facility Equipment;
monitor related instrumentation to determine the assets’ physical condition and operation characteristics;
collect any measurements, readings, or other pertinent information which the Independent Evaluator deems appropriate;
review all repair, rebuild and replacement records, and consult with manufacturers; and inspect all readily accessible parts and surfaces for any installation problems; excessive vibration, noise or temperature; the condition of coatings; signs of wear or corrosion; and leakage of any fluids.
These inspection activities shall be conducted while motor-driven equipment is in operation.
For Facility Equipment with an installed cost of $100,000 (as adjusted by the change in CPI from the Contract Date to the evaluation date) or greater (as indicated in the Baseline Facility Record) or Facility Equipment designated as "Critical Assets" (as designated by the parties), diagnostic testing shall be performed to supplement and enhance the information obtained through the visual inspections with photographic and video recording and review of repair and replacement records. Such diagnostic testing may include, but is not limited to, vibration analysis, oil sampling and testing, and motor circuit analysis. In such cases, the diagnostic testing shall be conducted by manufacturer-approved personnel or other appropriate qualified service technicians. If the City and the Company agree that such diagnostic testing is unwarranted for any asset, then the Independent Evaluator may determine the remaining life without performing such tests.
If the Independent Evaluator cannot estimate the remaining life of any asset using the procedures detailed above, then, as a last resort and only with the concurrence of the City and 6-6
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol the Company, the Independent Evaluator may calculate the remaining life by subtracting the age of the asset from the original service life of the asset as established in the Baseline Facility Record. If the age of the asset is greater than the service life, then the remaining life shall be equal to zero years. The age of the asset shall be the number of days between the date it was placed into service and the date of the evaluation divided by 365, rounded to the nearest whole number.
The service life and remaining life at the end of the Term of the Facility Equipment shall be added to the Baseline Facility Record as shown by example in columns F and I of Table 6-4 found at the end of this Appendix. The development of the service life and remaining life shall take into consideration the following:
Spare parts and Consumables included in the spare parts and Consumables inventory are not included in the calculation of the remaining service life.
Obsolete and unused assets are not included in the calculation of the remaining service life.
Assets comprising the Facility Structures are not included in the calculation of the remaining service life.
6.2.1.2 Step 2: Calculate Expected Remaining Service Life The expected remaining life of Facility Equipment shall be calculated by subtracting the time elapsed from the beginning of the Term to when the Term-End evaluation is performed from the original service life as established in the Baseline Facility Record as shown in the following calculation:
Ei Oi – T
where Ei expected remaining service life of asset “i” in years O original service life of asset “i” i as established in Baseline Facility Record in years
T time elapsed from beginning of Term to date of Term-End evaluation in years
6.2.1.3 Step 3: Calculate Depreciated Facility Equipment Value Depreciated values of Facility Equipment shall be calculated using straight-line depreciation, assuming a salvage value of $0 at the end of the equipment service life and shall be based on the original service life of Facility Equipment when initially installed. Depreciated values shall be calculated as shown in the following calculation:
6-7
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol DVi Bi – (dti)(xi)
Where DVi depreciated value of asset “i”
Bi installation cost of asset “i”
dti annual depreciation charge for asset “i”
age of asset “i” in years
Bi
xi
and dti ÷ Oi
6.2.1.4 Step 4: Compare Expected Remaining Service Life with Estimated Remaining Service Life
The estimated remaining service life determined by the Independent Evaluator will be compared to the expected remaining service life as calculated in Section 6.2.1.2 above for each asset.
Where the estimated remaining service life is less than the expected remaining service life for each piece of Facility Equipment, the Company shall, at the election of the City, either remedy the deficiency or make a cash payment to the City sufficient to enable the City to remedy the deficiency as described in Section 6.3(E) of the Service Contract. The cash payment shall correspond to the difference between the expected remaining service life and estimated remaining service life multiplied by the annual depreciation charge in accordance with the following formula:
Pi (Ei – Ri)(dti)
Where Pi cash payment
Ri estimated remaining service life of asset “i” in years
6.2.2 Term-End Facility Structures Evaluation(s)
6.2.2.1 Functionality Evaluation(s)
The functionality evaluation(s) shall determine if the operating Facility Structures operate properly and perform the function for which they were intended. Facility Structures to be evaluated as part of the functionality evaluation shall include:
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol All buildings and concrete basins;
All piping with an original service life greater than 20 years, both underground and exposed;
All concrete equipment support pads and slabs on grade; All concrete vaults and junction boxes;
All stormwater retention basin structures and air gap structures; and Facility perimeter masonry walls.
As part of the functionality evaluation(s) of each Facility Structure, a functionality rating of 1 to 5 will be assigned to each of the applicable Facility Structures. The rating shall utilize the following criteria:
5 – Excellent overall condition. Asset fully functional as designed with no visible defects or wear.
4 – Good overall condition. Asset functions as needed for current operating conditions, visible signs of minor defects, and wear is less than expected. 3 – Fair overall condition. Asset functions as needed for current operating conditions, visible sign of moderate defects and expected wear. 2 – Poor overall condition. Asset operable but does not function as needed for current operating conditions. Visible signs of major defects, wear is more than expected. There may be personnel safety issues.
1 – Inoperable. Asset is non-functional, requires major repair or replacement to restore operation.
The findings of the functionality evaluation shall be tabulated on a spreadsheet such as in the Baseline Facility Record. An example tabulation is presented in Table 6-2.
6.2.2.2 Structural Integrity Evaluation(s)
The structural integrity evaluation(s) shall include visual inspection with photographic and video recording of all Facility Structures, including, but not limited to:
Buildings and concrete structures, both above and below ground, including doors, hatches, stairways, and windows;
Walkways, roads and other paved areas;
Fencing and gates;
Finish system – paint, sealants and other liquid applied finishes; and Floor, ceiling, roofs and wall system – tiles, carpeting, raised floors, and drop ceilings.
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol Structures and paved areas shall be checked for structural defects and damage, such as cracks and concrete deterioration that could reduce their service life. Finish systems shall be visually inspected to assure that they provide adequate coverage and afford the desired protection.
Occurrence of flaking, corrosion, rot and inadequate coverage should be noted. Floors, ceilings, roofs and wall systems shall be visually inspected for excess wear and damages.
As part of the structural integrity evaluation(s) of each Facility Structure, a structural integrity rating of 1 to 5 shall be assigned to each of the applicable Facility Structures. The rating shall utilize the following criteria:
5 – Excellent overall condition. No visible defects, cracking or wear. 4 – Good overall condition. Visible signs of minor defects, and wear is less than expected.
3 – Fair overall condition. Visible sign of moderate defects and expected wear. 2 – Poor overall condition. Visible signs of major defects and wear is more than expected.
1 – Imminent Failure. Extremely poor overall condition; may be significant safety or structural concerns.
The findings of the structural integrity evaluation(s) shall be tabulated on a spreadsheet such as in the Baseline Facility Record. An example tabulation is presented in Table 6-3. Video records made of the initial condition of assets, whether or not structural or other physical defects are revealed, shall be included as part of each Term-End Asset Evaluation. The location on the videotape corresponding to any listed defect shall be entered in the spreadsheet with each listing.
6.3 EVALUATION REPORTS AND PRODUCTS
The procedures followed, together with the findings and results of each asset evaluation process, shall be presented in an asset evaluation report (each, a "Term-End Asset Evaluation"). Text, spreadsheets and databases shall all be prepared using a computer software program mutually agreed to by the parties. The Independent Evaluator shall provide the City and the Company with preliminary drafts of all documents for review and comment.
Both parties shall sign final documents for each Term-End Asset Evaluation on each page for authentication and shall receive an authenticated copy of all final reports, databases, spreadsheets, video documentation and handwritten notes. 6-10
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol Each Term-End Asset Evaluation shall consist of at least the following clearly delineated sections:
The initial Baseline Facility Record;
The then-current Baseline Facility Record;
Remaining useful life of the Facility Equipment;
Functionality and structural integrity of the Facility Structures; and Supplemental information as may be determined by the Independent Evaluator.
6.3.1 Baseline Facility Record
This section of each Term-End Asset Evaluation shall include the initial Baseline Facility Record and the then-current Baseline Facility Record.
6.3.2 Facility Equipment
The Facility Equipment section of each Term-End Asset Evaluation shall include the listing of all assets with their corresponding service life, remaining life and remaining life at the end of the Term values. The procedures used to determine which assets to include in or exclude from the schedule shall be detailed. The basis for establishing service life for each asset shall be described. This section of each Term-End Asset Evaluation shall provide the remaining life of the Facility Equipment and summarize the steps followed by the Independent Evaluator to establish the remaining service life at the end of the Term. All calculations performed to determine the remaining service life at the end of the Term and any Renewal Term shall be included with the applicable Term-End Asset Evaluation.
6.3.3 Facility Structures
The Facility Structures section of each Term-End Asset Evaluation shall provide the results of the functionality evaluation and the structural integrity evaluation of the Facility Structures.
Those assets that do not exhibit physical or structural defects shall be noted as such in the Term-End Asset Evaluation with a statement regarding the overall condition. The findings of the functionality evaluation shall be tabulated on a spreadsheet. For the purposes of determining the Company’s obligations pursuant to Section 6.3(D) of the Service Contract, the Independent Evaluator shall, for structures with a functionality or structural integrity rating less than 3 as defined in Section 6.2.2.2 hereof, indicate in each instance what repairs would be needed to bring both functionality and structural integrity ratings to a minimum level of 3. 6-11
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North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol
6.3.4 Supplemental Information
This section of each Term-End Asset Evaluation shall include all supplemental information used by the Independent Evaluator, including, but not limited to, results of diagnostic testing, values of Engineering News Record Construction Costs Indices used, equipment supplier information, and notes and calculations to support its findings and conclusion. This supplemental information may be included as appendices or attachments to the Term-End Asset Evaluation. 6-12
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol Table 6-1. FACILITY EQUIPMENT EVALUATION
(Hypothetical Example as part of Baseline Facility Record) A D(1) E(1) F K
Asset
Number
* Asset Name
Manufacturer
& Model No.
Date
Installed
Price
Installed
Service
Life (in
years)
Condition /
Comments
1 RO Feed
Pump
2020 $250,000 15
2 Submersible
Pump –
Finished
Water Pump
Station
2020 $60,000 15
3 Pressure Filter 2020 $1,000,000 25
Note: *Asset numbers shall be assigned in accordance with the Company’s CMMS identification system.
(1) If equipment was not installed, purchase date and purchase prices shall be used. 6-13
B
CC Agreement 2021-6
City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol Table 6-2. FACILITY STRUCTURES FUNCTIONALITY EVALUATION (Hypothetical Example as part of Baseline Facility Record) Asset
Number *
Asset Name (&
Manufacturer) Functionality Defect(s)
Functionality
Rating
Record of
Photographs
and Videos
PIPING AND VALVES
Note: * Asset numbers shall be assigned in accordance with the Company’s CMMS identification system.
6-14
S1 None 5
S3 None 5
Influent/Backwash/RO
Feed Basin
S2 Overflow Pipe None 5
Chemical Feed
Canopy
CC Agreement 2021-6
City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 6 – Asset Evaluation Protocol Table 6-3. FACILITY STRUCTURES STRUCTURAL INTEGRITY EVALUATION (Hypothetical Example for Term-End Evaluation)
Asset
Number *
Asset Name (&
Manufacturer) Structural Integrity Defect(s)
Structural
Integrity
Rating Video Location
ABOVEGROUND SYSTEMS
Retention Basin
Headwall
B-Basin tape,
index 310
Pressure Filter
Slab
B-J tape 1, index
130
UNDERGROUND STRUCTURES
S13
Finished Water
Pump Station
Piping
Crack in pipe 2
RPS tape, index
560
WALKWAYS, ROADWAYS, FENCING AND OTHER PAVED STRUCTURES
Perimeter
Fence/Wall Numerous holes and broken gate.
RWPS tape,
index 25
Driveway at
Facility Numerous cracks and heaving
D1 tape, index
1300
Note: * Asset numbers shall be assigned in accordance with the Company’s CMMS identification system.
6-15
S4 Cracked 2
S5 Broken concrete 3
S14 2
S15 3
CC Agreement 2021-6
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City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 6 – Asset Evaluation Protocol
Table 6-4. FACILITY EQUIPMENT EVALUATION
(Hypothetical Example)
A D(1) E(1) F G H(2) I J K L
Asset
Num.* Asset Name Mfg & Model No.
Install
Date
Installed
Price
Service
Life
(years)
Annual
Depreciation
Charge (E/F)
Time
Elapsed
(years)
Expected
Remaining
Service Life
(F-G) (years)
Estimated
Remaining
Service Life
(years)
Cash
Payment
((I-J) x G) Condition/ Comments
1 RO Feed
Pump
2020 $250,000 15 $16,666.67 5 10 8 $33,333.34
2 Submersible
Pump –
Finished Water
Pump Station
2020 $60,000 15 $4,000.00 5 10 10 $0
Note: * Asset numbers shall be assigned in accordance with the Company’s CMMS identification system. (1): If equipment was not installed, purchase date and purchase prices shall be used. (2): While shown as whole numbers in this example, decimals shall be used to represent partial years. (3): The parties shall agree how to project the remaining life at the end of the Term from the remaining life calculation performed by the Independent Evaluator. If the parties cannot agree, the method presented in Section
6.2.1.1 shall apply.
6-16
3 2020 25 $40,000.00 5 20 18
-- --
B
Pressure Filter $1,000,000 $80,000.00
TOTAL -- - - - - - - - - $113,333.34 - -
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City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 6 – Asset Evaluation Protocol
Table 6-5. EQUIPMENT SERVICE LIFE
6-17
Type Asset Service Life
years)
Pumps/Blowers Vertical Turbine Pumps 20
Chemical Metering Pumps 7
Horizontal End Suction Pumps 20
Blowers 15
Electrical Motor Control Centers 25
Circuit Breakers 10
Switchboards/Switchgear 35
Generators 20
Panelboards 30
Uninterruptible Power Supplies
(UPS) 10
Variable Frequency Drives (VFDs) 20
Transformers 25
Pipe Ductile Iron 40
PVC/CPVC 22
Stainless Steel 45
Steel 35
Other
Reverse Osmosis Membrane
Elements 5
Greensand Media 15
Valves 25
Instrumentation 15
Programmable Logic Controllers
(PLCs) and Components 15
Heating, Ventilation and Air
Conditioning (HVAC) Equipment 25
Chemical Storage Tanks 20
Cartridge Filters 35
Pressure Filter Vessels 35
Reverse Osmosis Pressure Vessels 20
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North Pleasant Valley Desalter Facility
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Appendix 6 – Asset Evaluation Protocol
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Appendix 7 – Operating Protocol Requirements
APPENDIX 7- OPERATING PROTOCOL REQUIREMENTS
7.1 Content and Submittal Requirements 1
7.1.1 Emergency Operations Plan 1
7.1.2 Process Monitoring and Regulatory Reporting Plan 2
7.1.3 Annual Renewal and Periodic Updates of Operating Protocol 3 i
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North Pleasant Valley Desalter Facility
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North Pleasant Valley Desalter Facility Appendix 7 – Operating Protocol Requirements APPENDIX 7- OPERATING PROTOCOL REQUIREMENTS
The purpose of this Appendix is to supplement the requirements for the Operation Services.
7.1 CONTENT AND SUBMITTAL REQUIREMENTS
The Operating Protocol shall focus on the overall aspects of the Company operating the Facility. The Operating Protocol shall, in addition to the requirements of the Service Contract, include:
A general description of how the Facility is to be operated A description of the Company’s quality assurance (QA) and quality control (QC) procedures during the Operation Period.
A description of any operational procedures to be implemented in order to comply with the Performance Guarantees.
An overview of the treatment provided by the Facility and a general description of the function of each unit process.
A detailed description of each unit process, including, but not limited to the process function, design criteria, comprehensive list of equipment, operating conditions, controls, local and remote (manual and automatic) functions, interlocks, ancillary processes, pre startup safety checks, standard operating procedures, emergency and abnormal operating procedures, alarm responses, and reference documents.
A description of normal, start-up and shut-down operations of the Facility including an Emergency Operations Plan to be prepared in accordance with Appendix 7.1.1 hereof.
A description of the Company’s staffing organization for the Facility with descriptions of the roles and responsibilities of each staff position and the timing of hiring for any unfilled positions.
Reference to the Company’s safety procedures and training program and its site-specific procedures for complying with a Health and Safety Plan.
A description of the chemicals to be used at the Facility Site, method of delivery, and procedures for safe storage and use of the chemicals.
All requirements of Division of Drinking Water (DDW) for a complete Operations Plan.
The Operating Protocol shall include diagrams, photos, excerpts from design drawings, control strategies, and human-machine interface (HMI) graphics as necessary to describe in detail the standard operating procedures for each unit process.
The Company shall provide to the City five copies of a draft final Operating Protocol at least 180 days prior to the Scheduled Acceptance Date. The City will provide comments on the draft final Operating Protocol within 60 days. In addition, the Company shall submit a copy of the draft final Operating Protocol to DDW for its review and comment. The final Operating 7-1
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North Pleasant Valley Desalter Facility Appendix 7 – Operating Protocol Requirements Protocol, incorporating all comments on previous versions provided by the City and DDW, shall be provided to the City at least 30 days prior to the Scheduled Acceptance Date. Five bound hard copies of the final Operating Protocol shall be provided to the City, along with an electronic PDF version with bookmarks for each section and subsection.
7.1.1 Emergency Operations Plan
As part of the Operating Protocol, the Company shall develop and implement an Emergency Operations Plan that describes emergency operating procedures and the measures to be taken to resolve emergencies at the Facility Site. The Emergency Operations Plan shall address at a minimum the following:
Chemical spills
Wastewater spills
Personnel emergencies
Fire
Flood
System Overflow
Pipe, valve, or pump failure
Process failure
Power loss
Earthquake
Loss of access to any portion of the Facility Site, both short-term and long-term
7.1.2 Process Monitoring and Regulatory Reporting Plan
As part of the Operating Protocol, the Company shall develop and implement a Process Monitoring and Regulatory Reporting Plan. The plan shall be implemented to ensure that all required analyses and reports are completed fully and accurately to exacting specifications, following standard methods and procedures, in a timely manner for appropriate Governmental Bodies and in support of other performance requirements in the Service Contract. The plan shall clearly distinguish between the monitoring required to meet Applicable Law and any additional monitoring required by the Service Contract. The Process Monitoring and Regulatory Reporting Plan shall describe methods for demonstrating compliance with Performance Guarantees during operations, including:
A list of all parameters to be monitored, point(s) of performance measurement and a tentative schedule of the proposed monitoring program, describing analytical methods and sampling frequencies (i.e., continuous, daily, weekly, biweekly, monthly, or other basis).
7-2
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City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 7 –Operating Protocol Requirements Real-time data to be provided and consolidation of data to support the Company’s monthly and annual operations reports to the City required by Section 4.18 of the Contract.
A full description of how all data collected will be arithmetically averaged for comparison with water quality requirements in Applicable Law and the Performance Guarantees shall be provided and shall comply with City requirements and regulatory requirements including applicable data handling requirements of DDW.
SCADA system monitoring and control functions.
A protocol for delivering samples to the City for the City’s own testing program should the City elect to have such a program.
A schedule for updating plans necessary for regulatory compliance.
The Company shall describe how process monitoring will measure whether process technologies are performing as intended (e.g., water quality parameters and their anticipated levels, operational set points and their anticipated levels) and provide feedback to operations staff. The Process Monitoring and Regulatory Reporting Plan shall also include:
A Laboratory Manual which shall describe the Company’s approach to attaining the highest standards of laboratory performance. The manual must outline the methods for each test to be performed. The Process Monitoring and Regulatory Reporting Plan shall identify which tests will be conducted in-house and those to be performed by contract laboratories. All laboratories, including in-house laboratory facilities, performing tests must be certified by the State. In addition, the Laboratory Manual shall specify the type and model of all equipment to be used to perform tests to be conducted by the Company.
Minimum experience and qualifications of individuals and contract laboratories performing testing services.
A description of any analysis techniques that will be implemented to ensure that all regulations and standards are met. The Process Monitoring and Regulatory Reporting Plan must provide examples of any tools such as flow charts, check sheets or any other data presentation and evaluation techniques that will be utilized.
A description of all calibration techniques, QA/QC procedures, including those to be utilized for all equipment used for testing and measuring different parameters within the treatment process and at the in-house laboratory and contract laboratories. The description shall address the calibration practices, including the frequency and accuracy requirements. The calibration procedures shall consider intermediate spot and cross checks, in addition to the formal calibration periods. 7-3
CC Agreement 2021-6
City of Camarillo Service Contract
North Pleasant Valley Desalter Facility Appendix 7 – Operating Protocol Requirements The Company’s procedures for handling and storing all data generated during the Operation Period.
7.1.3 Annual Renewal and Periodic Updates of Operating Protocol The Company shall update and submit the Operating Protocol for the forthcoming Contract Year for City approval at least 60 days prior to commencement of each Contract Year. In addition, the Company shall update the Operating Protocol as directed by the City from time to time to keep the document current.
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City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 8 – Insurance Requirements
APPENDIX 8 – INSURANCE REQUIREMENTS
8.1 Required Operation Period Insurance 1
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North Pleasant Valley Desalter Facility
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Appendix 8 – Insurance Requirements
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North Pleasant Valley Desalter Facility
Service Contract
Appendix 8 – Insurance Requirements
APPENDIX 8 – INSURANCE REQUIREMENTS
8.1 REQUIRED OPERATION PERIOD INSURANCE
1. coverage listed below with respect to the performance of the Service Contract (the “Required Operation Period Insurance”):
Insurance Coverage. The Company shall obtain, pay for and maintain the insurance Type of Insurance Limits (combined single)
Commercial General Liability
Business Automobile Liability
Workers’ Compensation
As stated below
$1,000,000
Statutory Requirements
Products/Completed Operations Coverage
Cyber Liability Coverage
Pollution Liability Insurance
As stated below
As stated below
As stated below
2. Commercial General Liability Insurance. This policy must meet or exceed the requirements of Insurance Services Office (ISO) CGL Form No. CG 00 01. The amount of insurance set forth above will be on a per occurrence / general aggregate with coverage for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability. The insurance must be on an “occurrence” not a
must be no cross-liability exclusion for claims or suits by one insured against another. Limits may be no less than $5,000,000 per occurrence for all covered losses, and no less than $10,000,000 general aggregate.
“claims-made” basis. Defense costs must be paid in addition to limits. There Liability policies must be endorsed to name City, its officials, employees and agents as “additional insureds” under the insurance coverage.
The following persons or entities must also be named as additional insureds: Camarillo Sanitary District, County of Ventura, Calleguas Municipal Water District, and the State of California, its officers, agents and employees.
The policy must state that such insurance will be deemed “primary” such that any other insurance that may be carried by City, including without limitation any City-carried Facility property insurance, will be deemed “excess
No. CG 20 10 (04/13) and 20 37 (04/13), or equivalent form as determined by City. ” to that of Company. This endorsement must be reflected on ISO Form Coverage must be applicable to City and the additional insureds for injury to employees of Company, subcontractors, agents or others performing any part of the Construction Phase 8-1
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 8 – Insurance Requirements
Services or Operation Services required of Company under this Service Contract. Each policy must be endorsed to provide separate limits in the required amounts applicable to this Project only.
The Commercial General Liability policy must not contain any endorsements limiting coverage beyond the basic policy coverage for any of the following:
1. Explosion, collapse or underground hazard (XCU);
2. Products/Completed Operations Coverage;
3. Contractual liability.
3. broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Company arising out of or in connection with Facility to be performed under this Service Contract, including coverage for any owned, hired, non-owned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each accident.
Business Auto Coverage. Company must maintain automobile insurance at least as
4. providing the statutory benefits required by law with employer’s liability limits of no less than $1,000,000 per accident for all covered losses, or Company must provide evidence of an approved self-insurance program.
Workers Compensation. Company must have a State of California approved policy form
5. Products/Completed Operations Coverage. Company must provide products and completion performance coverage which must remain in effect for a minimum of five years.
6. Cyber Liability Coverage. Company must provide Cyber liability coverage with limits of at least $1,000,000.
7. be written on a Company’s standard Pollution Liability form or other form acceptable to Agency providing coverage for liability arising out of sudden, accidental and gradual pollution and remediation. The policy limit must be no less than $5,000,000 per claim and in the aggregate Pollution Liability Insurance. Pollution/Environmental Impairment Liability Insurance must dedicated solely to the Company’s operations relating to the Facility. All activities contemplated in “covered operations.” The this Service Contract must be specifically scheduled on the policy as policy must provide coverage for the hauling of waste from the project site to the final disposal location, including non-owned disposal sites.
8. other insurance coverage as may be required by applicable law or by City. City reserves the right at any time during the term of the Service Contract to change the amounts and types of insurance required by giving Company 60 days advance written notice of such change. If such change Other Insurance; Revisions to Insurance. Company may be required to obtain such 8-2
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 8 – Insurance Requirements
results in substantial additional cost to Company, City and Company may renegotiate Company’s compensation.
9. company currently authorized by the California Insurance Commissioner to transact the business of insurance in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by the City’s Risk Manager.
Acceptable Insurers. All required insurance policies must be issued by an insurance
10. policy is used to meet limit requirements, the insurance must provide coverage at least as broad as specified for the underlying coverages, and result in maintenance of the required Projectdedicated limits. Any such coverage provided under an excess or umbrella liability policy must include a “drop-down provision” providing primary coverage above a maximum $25,000 selfinsured retention for liability not covered by primary but covered by the umbrella. Coverage must be provided on a “pay-on-behalf” basis, with defense costs payable in addition to policy limits.
There may be no cross-liability exclusion precluding coverage for claims or suits by one insured against another. Coverage must be applicable to City for injury to employees of Company, its subcontractors or others performing work to satisfy Company’s obligations under this Service Contract. The scope of coverage provided is subject to approval of City following receipt of proof of insurance as required herein.
Excess or Umbrella Liability Insurance (Over Primary). If an excess or umbrella liability
11. Services or Operation Services under this Service Contract, Company must file with the City Certificates of Insurance and Endorsements evidencing the existence of all insurance required by this Service Contract, along with such other evidence of insurance or copies of policies as may reasonably be required by City. Such Certificates of Insurance and Endorsements must be in a form approved by City’s Attorney. Company must maintain current certificates and endorsements on file with City during the term of this Service Contract reflecting the existence of all required insurance. Company shall provide notices of renewal or cancellation at least 30 days of policy term expirations or any cancellation.
Certificates of Insurance and Endorsements. Prior to commencing any Construction
12. place at all times during the term of this Service Contract all of the required insurance coverage, City may, in addition to any other available remedies, (a) obtain such coverage at Company’s expense and deduct the cost from the sums due Company, (b) make a claim against the Company’s surety, or (c) terminate the Service Contract for default.
Failure to Maintain Required Insurance. If Company, for any reason, fails to have in 8-3
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 8 – Insurance Requirements
13. Contract will not be deemed to satisfy or limit Company’s indemnity obligations under this Service Contract.
Effect of Coverage. The existence of the required insurance coverage under this Service 8-4
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 7 – Operating Protocol Requirements
APPENDIX 9- EXIT TEST PROCEDURES AND STANDARDS
9.1 Exit Test Plan 1
9.2 Exit Test Procedures 3
9.2.1 General 3
9.2.2 14-Day Testing 4
9.2.3 Monitoring Requirements 4
9.2.4 Reporting Requirements 4
9.3 Exit Test Standards 5
9.4 Failure of the Exit test 6
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City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 7 – Operating Protocol Requirements
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CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
APPENDIX 9- EXIT TEST PROCEDURES AND STANDARDS
The purpose of this Appendix is to set forth the requirements for exit testing of the Facility required under Article IX of the Service Contract.
9.1 EXIT TEST PLAN
As required by Section 9.8 of the Service Contract, the Company shall prepare and submit to the City for its review and approval an exit test plan that includes the following minimum requirements:
1. Procedures for testing all water treatment and ancillary systems, including chemical systems and wash water recovery systems;
2. Procedures for testing the standby power capabilities of the Facility, including operation of the Facility on standby power;
3. Use of permanent and temporary instrumentation;
4. Organization of the test team, including responsibilities, authority, and decision making protocols;
5. Procedures for testing cathodic protection system;
6. Response procedures for unsuccessful test results including definition of threshold results that constitute overall exit test failure;
7. Testing schedule;
8. Operating and maintenance schedule during testing; and
9. Procedures for demonstrating compliance with every exit test standard.
The exit test plan shall also describe methods for demonstrating compliance with Performance Guarantees, including:
1. A list of all parameters to be monitored and measurements to be made that states sampling frequencies and includes:
a. A list of all Treated Water parameters to be monitored and a schedule of monitoring, describing analytical methods and sampling frequencies at which parameters will be monitored on a continuous or other defined basis. 9-1
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
2. Identification of equipment calibrations to be performed, descriptions of all calibration techniques to be used and timing of calibrations relative to exit testing (All instruments used in exit testing operations and to monitor and evaluate exit testing, including benchtop units, shall be calibrated in accordance with manufacturer’s requirements.), QA/QC procedures, including those to be utilized for all equipment used for testing and measuring different parameters within the treatment process and at the in-house laboratory and contract laboratories. The description shall address the calibration practices, including the frequency and accuracy requirements. The calibration procedures shall consider intermediate spot and cross checks, in addition to the formal calibration periods.
3. A full description of any analytical methods and techniques that will be utilized to ensure that all Applicable Law and Performance Guarantees are met. In addition, descriptions of how data collected will be compared with Performance Guarantees shall be in a manner that complies with City requirements and regulatory requirements including applicable data handling requirements of DDW. Provide examples of any tools such as flow charts, check sheets or any other data presentation and evaluation techniques that will be utilized.
4. Supervisory Control and Data Acquisition (SCADA) system monitoring and control functions.
5. A list of real-time data fields that will be provided to the City during exit testing.
6. A listing of all samples requested by the City and a protocol for delivering samples to the City for the City’s own testing program should the City elect to have such a program during exit testing.
The exit test plan shall also specify the form and contents of the exit test report and include specific, detailed sampling protocols to be utilized while conducting the exit tests.
Preliminary tests may be conducted at the Company’s expense; however, the results of such tests shall not be made part of the exit test report.
The exit test plan shall describe the Company’s approach and details for meeting the requirements of this Appendix.
If the 14-day exit test is terminated, it shall be restarted at the beginning of Day 1 of the 14-day exit test and the entire 14-day exit test shall be run.
The exit tests shall demonstrate the ability to treat the range of Untreated Water quality anticipated over the life of the Facility. The exit test plan shall describe how the tests will demonstrate the ability of the Facility to achieve the Performance Guarantees under the 9-2
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
extreme ranges of flow, temperature, and Untreated Water quality expected during the life of the Facility. The City shall have the right to approve the exit test period. Such approval shall not be unreasonably withheld. The Company shall not, however, change the quality or temperature of the Untreated Water other than through the normal water treatment process (i.e. the Company shall not add contaminants to the Untreated Water in order to demonstrate that the Facility can remove them).
The exit test shall have a minimum duration of 14 days and shall also have a duration sufficient to demonstrate that all Facility operations over the exit test period are in full and continuous compliance with the Performance Guarantees.
The Facility shall be operated at full design capacity over the exit testing period. However, should the water demand of the Water System be such that during the exit testing period it is not possible to operate the Facility at full design capacity, selected process units shall be operated at the maximum design rate. In such an event, the exit test plan shall identify the plan and procedures for isolating all process units such that each component of the Facility is operated at the maximum design rate for a minimum of 24 consecutive hours during the 14- day testing.
During the tests, the Company shall operate all systems within the Facility under normal operating conditions, including, but not limited to, routine equipment operation, maintenance services and chemical usage.
9.2 EXIT TEST PROCEDURES
9.2.1 General
Exit testing includes:
1. Demonstration of the ability of all components of the Facility to meet the minimum design hydraulic capacity for a 24-hour period;
2. Determination of the ability of the Facility to produce Treated Water that meets the Performance Guarantees for an uninterrupted period of at least 14 days at Flow Rates requested by the City, which will be equal to or less than the design capacity of the Facility (i.e., 14-day testing);
3. Demonstration of the proper function of the Facility upon loss of power, loss of control system, manual startup and shutdown, and automatic shutdown; 9-3
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
4. Demonstration of operation of the Facility over the full range of operation with all components free from cavitation and excessive vibration;
5. Demonstration of the ability of the Project to continue to produce an uninterrupted supply of Treated Water without primary power supply to the Facility;
6. Demonstration that the control systems function as intended without interruption; and
7. Demonstration that the Facility otherwise complies with all Performance Guarantees.
9.2.2 14-Day Testing
Performance Guarantees shall be demonstrated continuously during the 14-day test, which shall include a minimum of ten (either consecutive or non-consecutive), continuous 24-hour periods when the Facility is operating at design capacity with all normally operating units in continuous service.
The City may operate the Water System to deliver to the Facility different sources or blends of sources of Untreated Water to reflect as best as possible the full future range of Untreated Water quality the Facility is required to treat.
Environmental testing shall be performed to demonstrate each Environmental Guarantee over three 24-hour periods. Testing of the Environmental Guarantees shall be performed during periods of operation of the Facility at design capacity.
9.2.3 Monitoring Requirements
During the exit tests, the Company shall regularly monitor the Untreated Water and Treated Water for specified key parameters in order to evaluate the performance of the Facility.
These key parameters include those listed in Appendix 3 and any other parameters needed to demonstrate compliance with the Performance Guarantees. In addition, all locations of continuous monitoring shall be sampled at least twice per day and analyzed with a benchtop analyzer to confirm the results of the continuous readings.
The City may collect its own samples and analyze them at the City’s cost during exit testing to confirm the results of the Company’s analyses.
9.2.4 Reporting Requirements
The exit test report shall be prepared in accordance with the exit test plan and include at a minimum:
9-4
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
1. A certification that testing was conducted in accordance with the approved exit test plan;
2. A certification of the results of the testing with respect to each of the exit test standards.
Each exit test standard shall be addressed separately and the basis for the determination presented. This certification of the results of the testing shall include (a) a determination of the extent to which the Facility complies with the applicable Contract Standards and requirements and (b) for each Performance Guarantee, a determination of the extent to which the Facility complies with the Performance Guarantee;
3. All data measured and recorded during the tests including laboratory analyses, chemical consumption, instrument calibrations, pressures and measurements;
4. Record of equipment outages, failures and preventative maintenance;
5. Summary of test results and conclusive evidence of compliance with all test requirements;
6. All calculations used in determining test results;
7. Any other data reasonably requested by the City to be included in such reports; and
8. All certifications shall be signed by the Company.
9.3 EXIT TEST STANDARDS
The ability of the Facility to meet the following exit test standards shall be demonstrated during exit testing:
1. The Facility operated properly with only the normal compliment of employees included in the Company’s staffing plan for the Facility, with the exception of additional Company staffing related to collection and analysis of samples and other test data.
2. Compliance with the Performance Guarantees and applicable Governmental Approvals at all times.
3. Operation of the Facility at production rates consistent with the Water Delivery Guarantee.
4. All operations are consistent with Contract Standards.
5. The Project operates properly during manual and automatic shutdown and start-up.
6. The Project can deliver Treated Water at its design capacity in accordance with Section 5.3 of the Service Contract.
9-5
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City of Camarillo
North Pleasant Valley Desalter Facility
Service Contract
Appendix 9 – Exit Test Procedures and
Standards
7. The chemical systems operated as intended, including the on-site production of sodium hypochlorite.
8. The Project operates with automated and computerized systems in full and continuous operation.
9.4 FAILURE OF THE EXIT TEST
Failure to continuously demonstrate the exit test standards during the period of the exit test shall constitute a failure of the exit test. Any failure of an exit test shall require (a) correction of those components or conditions that resulted in the failure, (b) performance of a retest of the exit test after proper notification is provided to the City.
Except as noted below, any failure to meet an exit test standard during the 14-day testing shall require a repeat of the 14-day test. If failure of the exit test is solely related to failure to achieve the Environmental Guarantees, i.e., Noise, Odor, or Lighting, the only retest of the exit test required is retesting related to the specific Environmental Guarantee that was failed and such retesting must be performed over three 24-hour periods of Facility operation at its design capacity.
9-6
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Operations Service Contract Proposal Form 1 – Construction Period Services
Construction Period Services Fee
Provide a detailed estimate of labor hours separated by task, as identified in Article III of the Service Contract, for key personnel in your firm and for your subconsultant firms along with your fee. Provide any assumptions supporting the number of hours assigned by personnel for each task.
CC Agreement 2021-6
Camarillo Construction Startup and Commissioning
Estimated
Hours/ Hourly Estimated Travel
Tasks Weeks Week Rate Labor Expenses
Construction Onsite Meetings (Project Manager)
Startup and Commissioning
2 4 $150. $1,200.
4 40 $140 $22,400. $1,968.
2 40 $140 $11,200
Lab Manual (Pete S.) 2 40 $140 $11,200
1 40 $140 $5,600
1 40 $140 $5,600
Weekly construction progress meetings 52 10 $150. $78000 $48,984. Other construction meetings, as needed 4 8 $150. $4,800. Review and comment on changes to
construction documents
Chief operator (onsite full-time 16
weeks before acceptance)
16 40 $150. $96,000.
Meetings – pre-installation, pre-process
startup, electrical and I&C (included
with chief operator time)
Commission plan review (included with chief
operator time)
Commission and process startup schedule
review (included with chief operator time)
Onsite support nine process areas (included
with chief operator time)
Training (all staff for one week) 1 40 $100. $28,720.
O&M Manual Development (one onsite trip) 4 40 $140. $22,400. $1,968.
Maintenance Repair and Replacement Plan
(one onsite trip)
Baseline assessment (CMMS Load) 2 40 $140 $11,200
Process Monitoring and Regulatory
Reporting Plan – PCMP
Emergency Operations Plan 1 40 $140 $5,600
Process Safety Management and Risk
Management Plan
Security Plan and Cyber Security 2 40 $140 $11,200
Post-Construction Storm Water
Management Plan
Staffing Plan 1 20 $140 $2,800
Misc. Other Plans 1 40 $140 $5,600
Subtotal $323,520 $52,920.
Total $376,440
CC Agreement 2021-6
City of Camarillo
North Pleasant Valley Desalter Operations Service Contract Proposal Form 2 – Operations Period Services
Fixed Component Fee
Category
Operating Period
Contract Year 1
Contract Year
2*
Contract Year
3*
Contract Year
4*
Contract Year
5*
1 General Administration $298,303.78 $304,269.86 $310,355.26 $316,562.36 $322,893.61 2 Insurance and Securities $102,733.27 $104,787.93 $106,883.69 $109,021.36 $111,201.79 3 Operations Labor (Continuous Manned Operation) $1,416,857.35 $1,445,194.50 $1,474,098.39 $1,503,580.36 $1,533,651.96 4 Operations Labor (Two 8-hour Shifts) $1,211,706.40 $1,235,940.53 $1,260,659.34 $1,285,872.53 $1,311,589.98 5 Operations Labor (One 8-hour Shift) $801,115.34 $817,137.64 $833,480.40 $850,150.00 $867,153.00 6 Operator Training $8,160.00 $8,323.20 $8,489.66 $8,659.46 $8,832.65 7 Office Supplies $7,650.00 $7,803.00 $7,959.06 $8,118.24 $8,280.61 8 Maintenance, Repair, and Replacement $94,477.50 $96,367.05 $98,294.39 $100,260.28 $102,265.48 8a Cartridge Filter Replacement $38,250.00 $39,015.00 $39,795.30 $40,591.21 $41,403.03 9 Facility Site Maintenance $10,200.00 $10,404.00 $10,612.08 $10,824.32 $11,040.81 10 Utilities (Excluding Electric) $34,041.74 $34,722.57 $35,417.02 $36,125.36 $36,847.87 11 IT and SCADA Services $11,434.20 $11,662.88 $11,896.14 $12,134.06 $12,376.75 12 Chemical Procurement $52,836.00 $53,892.72 $54,970.57 $56,069.99 $57,191.39 13 Regulatory Compliance Services and Laboratory
Analysis $32,512.50 $33,162.75 $33,826.01 $34,502.53 $35,192.58 14 Vehicles $10,542.98 $10,753.83 $10,968.91 $11,188.29 $11,412.06 15 Fuel $3,332.85 $3,399.51 $3,467.50 $3,536.85 $3,607.58 Fixed Component Fee Schedule $2,121,332.16 $2,163,758.80 $2,207,033.98 $2,251,174.66 $2,296,198.15 1Operations Labor costs for reduced on-site staffing shall not be included in base Fixed Component Subtotal. Actual fixed component subtotal for the purposes of calculated the Fixed Component in Section 8.4 of the Service Contract shall be based on only one Operations Labor category above (either 3, 4, or 5). Include Line Item 3, 4, and 5 for all five contract years in the Fixed Component Fee Subtotal. *Annual price increase illustrated at 2% per year, subject to contract.
Attachment A2-15
CC Agreement 2021-6
City of Camarillo
Office of the City Manager
MEMORANDUM
DATE: June 15, 2021
TO: Mark Uribe, Director of Finance
FROM: Greg Ramirez, City Manager^j]^
SUBJECT: inframark Agreement
On January 13, 2021, the City Council approved a five-year agreement with Inframark to operate the Desalter facility. The scope of the agreement includes construction phase support and ongoing operations of the Desalter, paid for on a fixed fee basis. Annually, Infamark shall be compensated, $2,121,332 increasing by approximately 2% per year thereafter for the first five years.
Per the Agreement, the City will directly pay for electricity and brine discharge, and the City will reimburse Inframark for actual costs of chemical purchases. Section 8.5 of the Agreement requires (summarized for purposes of the memorandum):
• Sixty days (60) prior to the Acceptance Date or the start of any Contract Year, the Company shall provide the City with the cost of Water Treatment Chemicals to be used for the production of Treated Water for that Contract Year. ® The Company shall provide quotations from at least three (3) suppliers for each chemical to be used by the Company and shall Identify the supplier being proposed for the supply of each chemical for the Contract Year. The dates of supplier quotations shall not exceed thirty (30) days from the date received by the City.
» The Company will be responsible for timely and directly paying all suppliers of Water Treatment Chemicals, without overhead or markup, and any rebates, discounts or other cost reductions must be passed through to the City. (The cost of Water Treatment Chemicals will effectively be a pass-through cost to the City.) • The Company shall utilize the accepted unit cost of all Water Treatment Chemicals in the deiennination of the Variable Component for the Contract Year. The Company must obtain City review and written approval of any changes made in type or concentration of Water Treatment Chemicals.
In addition, with each reimbursement request, Inframark is required to provide copies of supplier invoices for actual costs of chemical purchases equal to the amount requested for reimbursement.
The chemicals to be used in the treatment process are estimated at annual cost of $600,000.
Although the reimbursement amount for the cost of chemicals was not included in the Agreement because it is a pass-through, the expense Is appropriated in the Annual Budget in the Water Operations Fund Account No. 860-3670-436.61-61, and therefore. Council authorization for a not to exceed amount to cover the reimbursement of actual cost of chemicals expenditure is at Budaet Adoption. ^
c: Dave Klotzle, Director of Public Works