Installment Sale Agreement and Grant State — CleanPowerSF Sfpuc Commission, November 8, 2022

AGENDA ITEM
Public Utilities Commission
City and County of San Francisco

APPROVAL:

COMMISSION

SECRETARY

Donna Hood

DEPARTMENT

Financial Services

AGENDA NO.

10 MEETING DATE

November 8, 2022

Clean Water SRF Loan Agreement Authorization: Regular Calendar

Project Manager: Alexandra Gunnell

Amend State Revolving Fund Loan and G rant Authorization for San Francisco Westside Recycled Water Project

Summary of
Proposed
Commission Action:

Discussion and possible action to amend Resolution No. 17-0155 to authorize the General Manager of the San Francisco Public Utilities Commission (SFPUC) to execute an amendment to the Installment Sale Agreement and Grant (ISA) State Revolving Fund (SRF) loan and grant for the San Francisco Westside Recycled Water Project , increasing the not- to-exceed loan and grant amount from $186,220,000 to $191,094,031, and extending the grant agreement’s estimated construction completion date to October 7, 2024.

Background: SFPUC Involvement in the SRF Program
SFPUC has a long history of working with the State Water Resources Control Board (State Water Board) under the SRF loan program.

From 1991 to 2001, the SFPUC entered into 13 SRF loans totaling $280 million to fund a number of Wastewater Enterprise capital projects but did not seek SRF loan financing after 2001 due to interest rates and amortization terms that were less favorable than revenue bond financing. In early 2014, after seeking input from public agencies, including the SFPUC, the State Water Board i mplemented revisions to the SRF loan program to extend the amortization period to 30 years to align with conventional 30- year revenue bond terms, and to allow SRF loans to be on a parity lien basis with revenue bonds (rather than the former requirement tha
t SRF loans be issued on a
more restrictive senior lien basis). Since then , SFPUC senior management has been working closely with the State Water Board to ensure that the SFPUC would be able to resume participation in the SRF Loan Program. Since 2014, the SFPUC has executed eight Clean Water SRF loans totaling $587 million. This includes seven loans on behalf of the Wastewater Enterprise totaling $401 million, of which $8 million is in the form of principal forgiveness; and two loans on behalf of the Water Enterprise totaling $ 424 million of which $15 Execute Agreement: Authorize State Revolving Fund Loan and grant for Water Enterprise San Francisco Westside Recycled Water Project
Commission Meeting Date: November 8, 2022

million is in the form of principal forgiveness.

Legislative History
On September 22, 2015, the Commission adopted Resolution No. 15- 0196 and on January 12, 2016, the Board of Supervisors adopted Ordinance No. 3-16 amending Ordinance No. 89- 10 to authorize use of SRF loan funds for previously authorized Water Enterprise capital projects and delegate authorization to execute Water Enterprise SRF loan agreements to the Commission. On June 14, 2016, the Board of Supervisors adopted Ordinance No. 108- 16, to among other matters, appropriate grant funds to be received by the SFPUC from the State Water Board for the benefit of the Water Enterprise’s capital improvement program.

On July 11, 2017, by Resolution No. 17-0155, this Commission authorized the General Manager to enter into an Installment Sale Agreement and Grant (ISA) for a Clean Water State Revolving Fund loan for the Water Enterprise’s San Francisco Westside Recycled Water Project.

Project Description
The SF Westside Recycled Water Project diversifies and enhances the reliability of SFPUC’s water supply portfolio through the construction of all facilities to produce and deliver approximately 2 mgd of recycled water for irrigation use in the western end of San Francisco.

The current SRF loan has a not -to-
exceed total amount of
$186,220,000 that is comprised of a $171,220,000 loan at an interest rate of 1% and a $15,000,000 grant.

On September 27, 2022, by Resolution No. 22-0169, the Commission approved an extension to the duration of a construction contract related to the Westside Recycled Water Pro ject. In connection with this extension and in order to take advantage of potential additional eligible Project expenditures that may be reimbursed, an amendment to the original resolution (17-0155) was needed to authorize ( 1) an
increased loan amount of $4,874,031 to a new total not to exceed amount of $191,094,031; (2) an extension of the estimated construction completion date to October 7, 2024; and (3) extending the estimated commencement date of loan repayment to October 7, 2025.

SRF Financing Terms
The Clean Water SRF Water Recycling Funding Program provides 30-year loans at a 1% interest rate and up to $15,000,000 in grant funding through Proposition 1. This rate compares favorably to the estimated current interest cost for revenue bonds of 4.385%. The amended $176.1 million loan at 1 .00% and the $15 million grant for the SF Westside Recycled Water Project could provide an estimated $4.852 million in debt service savings per year to the Water Enterprise when compared to revenue bond financing of the $ 191.1 million project.

Financing capital projects from SRF loans differs in several Execute Agreement: Authorize State Revolving Fund Loan and grant for Water Enterprise San Francisco Westside Recycled Water Project
Commission Meeting Date: November 8, 2022

significant ways from revenue bond financing:

Reimbursement: Unlike revenue bonds where the issuer receives the proceeds at the time of the sale, SRF loans are disbursed as a reimbursement after project costs are incurred. This wil l require the use of the Enterprise’s available cash or commercial paper program to encumber contracts and pay project costs until reimbursement is made by the State. Reimbursement by the State is subject to availability of sufficient SRF program funds and not guaranteed through the duration of the project construction period. Accordingly, it is possible that the SFPUC may need to issue revenue bonds to refund any outstanding commercial paper and finance the project.

Noticing Requirements: The State require s notification from the SFPUC should any of the following events occur: substantial change in project scope; significant work stoppage (>30 days); delay completion of construction (>90 days); discovery of archeological or historical resource; discovery of
endangered or threatened species;
monitoring or demonstration events; public meeting publicizing the loan agreement; completion of project, and a report on recycled water.

SB 450 Legislation Compliance
In 2017, California Senate Bill 450 (SB 450) was enacted , requiring the governing body of a local public body to obtain and disclose good faith estimates of the following financing -related information prior to the authorization of bonds, notes or other forms of indebtedness (including the Westside Recycled Water SRF Loan):

1. True Interest Cost (TIC) of the loan.

2. Finance charge of the loan. This represents the sum of all fees and charges paid to third parties.

3. Amount of proceeds received. This represents proceeds of the loan net of the fees and charges paid to third parties and any reserves or capitalized interest funded by the loan.

4. Total payment amount . This represents the sum of all debt service payments on the loan calculated to the final maturity of the loan.

SB 450 requires that the good faith estimates be obtained from either the issuer’s municipal advisor, underwriter or third-party lender.

The following represent s a good faith reasonable estimate of certain costs for the Westside Recycled Water Project SRF Loan for purposes of compliance with SB 450, based upon information available as of October 4, 2022, Staff has consulted with its municipal advisor, Montague DeRos e & Associates LLC, and obtained estimates reflecting the expected closing date with regard to the Westside Recycled Water Project SRF Loan . Actual results may vary from these estimates.

1. True Interest Cost: 1.00%

2. Finance Charge of the Loan (reflects transaction costs of Execute Agreement: Authorize State Revolving Fund Loan and grant for Water Enterprise San Francisco Westside Recycled Water Project
Commission Meeting Date: November 8, 2022

issuance): $80,000

3. Amount of Proceeds Received for Entering into the Loan (net of reserves or capitalized interest (“CAPI”) deposits and the finance charge of the loan and grant): $176,014,031

4. Total Payment Amount (i.e., Total Net Debt Service net of Capitalized Interest, if any): $204,699,344

Result of Inaction: A delay or denial in approving this agenda item will result in higher borrowing costs for ratepayers.

Description of Scope
of Services:

This Approval Action enables the SFPUC to enter into an amendment for the Installment Sales Agreement with the State Water Board and authorizes the General Manager (or his designee) to execute the agreement and related future amendments as required for the SF Westside Recycled Water Project in an amount not to exceed $191,094,031 and estimated repayment commencement date of October 7, 2025.

SFPUC Finance staff has determined that the Clean Water SRF loan and grant provides the lowest cost currently available for ratepayers.

SFPUC staff will receive the amendment to the Installment Sales Agreement and the General Manager is required to execute the amendment within 30 days of receipt.

Environmental
Review:

On September 3, 2015, the San Francisco Planning Commission certified the Westside Recycled Water Project Final Environmental Impact Report (EIR), under case number 2008.0091E . On January 13, 2020, the Environmental Review Officer approved an Addendum that was prepared for the retrofit of existing irrigation systems in Golde n Gate Park for compliance with recycled water regulations . This decision to enter i nto an amendment for the Installment Sales Agreement with the State Water Board is within the scope of this environmental review. The EIR and Addendum can be found here:
https://sfpuc.sharefile.com/d-s3d2f6cb06c674b988bd4e1a2c74a8788

Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution

Attachments: Draft form of Amendment 3 to the Installment Sales Agreement and Grant for the Westside Recycled Water Project

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. ____________________
WHEREAS, On November 5, 2002, the voters of the City and County of San Francisco (City) approved Proposition E, codified as Article VIIIB (Section 8B.124) of the City Charter, which, among other things, authorized the San Francisco Public Utilities Commission (SFPUC) to issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City and County of San Francisco, for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or clean water facilities, or combinations of water and clean water facilities under the jurisdiction of the SFPUC, subject to the provision of certain certifications of an independent engineer retained by the SFPUC and certain certifications by the San Francisco Planning Department, which certifications shall make the findings and determinations set forth in Charter Section 8B.124; and
WHEREAS, On July 11, 2017, by Resolution No. 17-0155 (the “Original Resolution”), the Commission authorized, among other things, that certain Installment Sale Agreement and Grant, with an Eligible Start Date of August 1, 2016 (relating to Clean Water State Revolving Fund Project No. C-06-8111-110), as was, and may be, subsequently amended and restated (Installment Sale Agreement & Grant), with the State of California State Water Resources Control Board (State Water Resources Control Board), which evidences the state revolving loan made by the State Water Resources Control Board to the SFPUC to finance the San Francisco Westside Recycled Water Project (Westside Recycled Water Project); and WHEREAS, On June 12, 2018, the Board of Supervisors adopted Ordinance No. 143-18, signed by the Mayor on June 20, 2018, to, among other matters, authorize the issuance of up to $478,440,136 of Water Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the SFPUC and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the SFPUC) to finance capital projects benefiting the Water Enterprise (as defined in that certain Amended and Restated, Indenture, dated as of August 1, 2002, by and between the SFPUC and U.S. Bank Trust Company National Association, (as successor in interest to U.S. Bank, National Association), as amended and supplemented) and to declare, on behalf of the SFPUC, pursuant to Internal Revenue Service Treasury Regulation Section 1.150-2, the official intent of the SFPUC to the use of proceeds of such installment sales agreements for reimbursement purposes; and WHEREAS, On June 25, 2019, the Board of Supervisors adopted Ordinance No. 153-19, signed by the Mayor on June 28, 2019, to amend Ordinance No. 143-18, in order to, among other things, authorize an increase in the amount, from $478,440,136 to $513,524,665 of Water Revenue Bonds and other forms of indebtedness (including, installment sales agreements) authorized to be issued or entered into by the Public Utilities Commission, to finance capital projects benefiting the Water Enterprise; and

WHEREAS, On September 29, 2020, the Board of Supervisors adopted Ordinance No. 174-20, signed by the Mayor on October 1, 2020, to, among other matters, authorize the issuance of up to $347,141,218 of Water Revenue Bonds and other forms of indebtedness (including, installment sales agreements entered into by the SFPUC and the State Water Resources Control Board to secure state revolving loans made by the State Water Resources Control Board to the SFPUC) to finance capital projects benefiting the Water Enterprise and to declare, on behalf of the SFPUC, pursuant to Internal Revenue Service Treasury Regulation Section 1.150-2, the official intent of the SFPUC to the use of proceeds of such installment sales agreements for reimbursement purposes; and
WHEREAS, Pursuant to the Original Resolution on July 11, 2017, by Resolution No. 17- 0155, this Commission approved the state loan in an amount not-to-exceed $186,220,000 (principal amount), bearing interest at a rate not in excess of 12% per annum and a not-greater- than 30-year repayment term, commencing one year after the Completion of Construction (as defined in the Installment Sale Agreement & Grant) of the Project (as defined in the Installment Sale Agreement & Grant); and
WHEREAS, At the time of this Commission’s approval of the Original Resolution, the SFPUC expected and authorized that the: (a) state loan evidenced by the Installment Sale Agreement & Grant would be in an amount not to exceed $186,220,000 (principal amount), (b) Completion of Construction date for the Project was estimated to be no later than February 23, 2022, and (c) in no event could the 30-year repayment term of the state loan commence later than February 23, 2024 (the “Original Latest Repayment Commencement Date”); and WHEREAS, In order to address deficiencies in the development of the Westside Recycled Water Project, on-going schedule impacts due to COVID-related delays in material deliveries, and to provide sufficient contingency to address unanticipated changes through the remainder of the construction effort, the Commission approved an extension to the duration of a construction contract related to the Westside Recycled Water Project (the “Extended Construction Contract”) on September 27, 2022; and
WHEREAS, In connection with the Extended Construction Contract and in order to take advantage of a determination by the SFPUC and the State Water Resources Control Board of potential additional eligible Project expenditures that may be reimbursed to the SFPUC pursuant to an amendment to the Installment Sale Agreement & Grant, staff has determined that it would be necessary to enter into an amendment to the Original Resolution; and WHEREAS, On September 3, 2015, the San Francisco Planning Commission certified the Westside Recycled Water Project Final Environmental Impact Report (EIR), under case number 2008.0091E; and the EIR prepared for the Project is tiered from the Water System Improvement Program Environmental Impact Report (PEIR) adopted by this Commission in Resolution No. 08-200 dated October 30, 2008, as authorized and in accordance with CEQA and CEQA Guidelines; and on September 8, 2015, this Commission, by Resolution 15-0187, (1) approved the Project and (2) adopted CEQA Findings, including a statement of overriding considerations, and a Mitigation Monitoring and Reporting Program (MMRP) required by CEQA, and (3) authorized the General Manager of the SFPUC to implement the Project, in compliance with the Charter and applicable law, and subject to subsequent Commission action and Board of Supervisors approval, where required; and on January 13, 2020, the Environmental Review Officer approved an Addendum that was prepared for the retrofit of existing irrigation

systems in Golden Gate Park for compliance with recycled water regulations; and this decision to enter into an amendment for the Installment Sales Agreement with the State Water Board is within the scope of this environmental review; and
WHEREAS, Pursuant to this amending resolution (this “Amending Resolution”), the Commission has determined that it is necessary to amend certain portions of Section 1 of the Original Resolution and/or Exhibit A attached thereto in order to: (a) authorize a greater not-to exceed principal amount of the state loan evidenced by the Installment Sale Agreement & Grant, to $191,094,031 from $186,220,000, (b) set forth that the estimated Completion of Construction date for the Project has changed from not later than February 23, 2022 to not later than October 7, 2024, and (c) authorize an extension to the Original Latest Repayment Commencement Date, such that the 30-year repayment term would be estimated to commence no later than October 7, 2025 (the “Revised Latest Estimated Repayment Commencement Date”); now, therefore, be it resolved as follows:

Section 1. Approval of Amendments to Section 1 of Original Resolution and Exhibit A of Original Resolution.
(a) The second paragraph of Section 1 of the Original Resolution is hereby amended and restated to read as follows:
“The Public Utilities Commission hereby approves the terms of the Installment Sale Agreement and Grant in substantially the form now before this meeting to secure repayment of the state loan in an amount not to exceed $191,094,031 (principal amount), with such changes and modifications therein as shall be approved by the General Manager, in consultation with the City Attorney of the City and County of San Francisco (the “City Attorney”), provided such changes or modifications do not materially increase the financial risk to the Public Utilities Commission. The state loan evidenced by the Installment Sale Agreement and Grant shall bear interest at a rate not in excess of 12% per annum. The repayment term for the state loan shall not be greater than 30 years, commencing one year after the Completion of Construction (as defined in the Installment Sale Agreement and Grant) of the Project (as defined in the Installment Sale Agreement and Grant), all as provided in the Installment Sale Agreement and Grant now before the Public Utilities Commission. The Public Utilities Commission anticipates that a portion (approximately $15,000,000) of the state loan evidenced by the Installment Sale Agreement and Grant will be principally forgiven by the State Water Resources Control Board and will constitute grant funds.”
(b) In Exhibit A attached to the Original Resolution, and only as it relates to the Westside Recycled Water Project, the dollar amount under the column heading “Estimated Not- to-Exceed Loan/Grant Amount” shall be amended and restated to “$191,094,031”. (c) In Exhibit A attached to the Original Resolution, and only as it relates to the Westside Recycled Water Project, the date under the column heading “Estimated Construction Completion Date” shall be amended and restated to “October 7, 2024”. (d) In Exhibit A attached to the Original Resolution, and only as it relates to the Westside Recycled Water Project, the date under the column heading “30-Year Repayment Commences No Later Than” shall be amended and restated to “October 7, 2025 (estimated)”.

Section 2. Full Force and Effect of Original Resolution. Aside from the amendments made to the Original Resolution pursuant to this Amending Resolution, the Original Resolution remains in full force and effect.

Section 3. General Authority. The General Manager, the Deputy General Manager and Chief Operating Officer and the Assistant General Manager Water Enterprise and Assistant General Manager, Business Services-Chief Financial Officer, the Deputy CFO, including any person serving in an interim or acting capacity for the aforementioned positions, and other officers of the Public Utilities Commission and their duly authorized deputies and agents are hereby authorized and directed, jointly and severally, to take such actions and to execute and deliver any certificates, agreements, requests or other documents, as they may deem necessary to carry out the provisions of the Installment Sale Agreement & Grant and the Original Resolution (as amended by this Amending Resolution). In addition, the General Manager (or their designee) or the Deputy CFO (or their designee) are each authorized to enter into any amendments, restatements and/or supplements to the Installment Sale Agreement & Grant to provide for a greater not-to exceed principal amount of the state loan evidenced by the Installment Sale Agreement & Grant, the extension of the date estimated for the Completion of Construction date and an extension of the commencement date of the 30-year repayment term, provided such amendments, restatements and/or supplements do not increase the principal amount of the state loan, the maximum interest rate or the maximum term thereof approved in the Original Resolution (as amended by this Amending Resolution).

Section 4. SB 450 Compliance. The Publi c Utilities Commission acknowledges that the good faith estimates required by Section 5852.1 of the California Government Code are disclosed in the staff report and are available to the public at the meeting at which this Amending Resolution is approved.

Section 5. Ratification. That the actions approved by this Amending Resolution and heretofore taken are hereby ratified, approved and confirmed by this Public Utilities Commission.

Section 6. Effective Date. This Amending Resolution shall take effect from and after its adoption.

I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of November 8, 2022.

Secretary, Public Utilities Commission

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PUBLIC UTILITIES COMMISSION OF THE CITY AND COUNTY OF SAN FRANCISCO AND

CALIFORNIA STATE WATER RESOURCES CONTROL BOARD

INSTALLMENT SALE AGREEMENT AND GRANT

WATER ENTERPRISE OBLIGATION

SAN FRANCISCO WESTSIDE RECYCLED WATER PROJECT
CLEAN WATER STATE REVOLVING FUND PROJECT NO. C-06-8111-110

CALSTARS AGREEMENT NO. D17-01001
FI$CAL AGREEMENT NO. SWRCB0000000000D1701001

AMENDMENT NO. 3
AMOUNT: $186,220,000$191,094,031

ELIGIBLE START DATE: AUGUST 1, 2016
END DATE: JUNE 18, 2052OCTOBER 7, 2054

This Agreement executed by the State Water Board on September 19, 2017, and subsequently amended on May 22, 2019 and September 7, 2021 is hereby amended and restated to revise the Completion of Construction Date and Exhibits A, B, and C, and D (deletions shown as stricken and revisions in bold and underlined). Except as noted herein all other terms and conditions shall remain the same. Please note, page numbers may have changed.

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Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS ........................................................................................................................ 1

1.1 Definitions. ........................................................................................................................................ 1

1.2 Exhibits and Appendices Incorporated. ............................................................................................ 5 ARTICLE II REPRESENTATIONS, WARRANTIES, AND COMMITMENTS ........................................... 5

2.1 General Recipient Commitments. ..................................................................................................... 5

2.2 Authorization and Validity. ................................................................................................................ 5

2.3 No Violations. .................................................................................................................................... 5

2.4 No Litigation. ..................................................................................................................................... 5

2.5 Solvency. ........................................................................................................................................... 6

2.6 Legal Status and Eligibility. ............................................................................................................... 6

2.7 Financial Statements. ....................................................................................................................... 6

2.8 Completion of Project. ....................................................................................................................... 6

2.9 Award of Construction Contracts. ..................................................................................................... 6

2.10 Notice. .............................................................................................................................................. 6

2.11 Findings and Challenge .................................................................................................................... 8

2.12 Project Access. ................................................................................................................................. 8

2.13 Project Completion; Initiation of Operations. .................................................................................... 8

2.14 Continuous Use of Project; Lease or Disposal of Project. ................................................................ 8

2.15 Project Reports. ................................................................................................................................ 9

2.16 Federal Disadvantaged Business Enterprise (DBE) Reporting. ..................................................... 10

2.17 Records. ......................................................................................................................................... 10

2.18 Audit. .............................................................................................................................................. 11 ARTICLE III FINANCING PROVISIONS ................................................................................................ 11

3.1 Purchase and Sale of Project. ........................................................................................................ 11

3.2 Amounts Payable by the Recipient. ................................................................................................ 11 Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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3.3 Obligation Absolute. ........................................................................................................................ 13

3.4 No Obligation of the State. .............................................................................................................. 13

3.5 Disbursement of Project Funds; Availability of Funds. .................................................................... 13

3.6 Withholding of Disbursements and Material Violations. .................................................................. 14

3.7 Pledge; Rates, Fees and Charges; Additional Debt. ...................................................................... 15

3.8 Financial Management System and Standards. ............................................................................. 16

3.9 Accounting and Auditing Standards. ............................................................................................... 16

3.10 Other Assistance. ........................................................................................................................... 16 ARTICLE IV TAX COVENANTS ............................................................................................................ 16

4.1 Purpose. .......................................................................................................................................... 16

4.2 Tax Covenant. ................................................................................................................................. 16

4.3 Governmental Unit. ......................................................................................................................... 16

4.4 Financing of a Capital Project. ........................................................................................................ 17

4.5 Ownership and Operation of Project. .............................................................................................. 17

4.6 Temporary Period. .......................................................................................................................... 17

4.7 Working Capital. .............................................................................................................................. 17

4.8 Expenditure of Proceeds. ................................................................................................................ 17

4.9 Private Use and Private Payments. ................................................................................................ 17

4.10 No Sale, Lease or Private Operation of the Project. ....................................................................... 18

4.11 No Disproportionate or Unrelated Use. .......................................................................................... 18

4.12 Management and Service Contracts. ............................................................................................. 18

4.13 No Disposition of Financed Property. ............................................................................................. 19

4.14 Useful Life of Project. ..................................................................................................................... 19

4.15 Installment Payments. .................................................................................................................... 19

4.16 No Other Replacement Proceeds. .................................................................................................. 19

4.17 No Sinking or Pledged Fund. .......................................................................................................... 19

4.18 Reserve Amount. ............................................................................................................................ 19 Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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4.19 Reimbursement Resolution. ........................................................................................................... 19

4.20 Reimbursement Expenditures. ....................................................................................................... 20

4.21 Change in Use of the Project. ......................................................................................................... 20

4.22 Rebate Obligations. ........................................................................................................................ 20

4.23 No Federal Guarantee. ................................................................................................................... 20

4.24 No Notices or Inquiries from IRS. ................................................................................................... 20

4.25 Amendments. ................................................................................................................................. 20

4.26 Reasonable Expectations. .............................................................................................................. 21 ARTICLE V MISCELLANEOUS PROVISIONS ..................................................................................... 21

5.1 Amendment. .................................................................................................................................... 21

5.2 Assignability. ................................................................................................................................... 21

5.3 Bonding. .......................................................................................................................................... 21

5.4 Competitive Bidding ........................................................................................................................ 21

5.5 Compliance with Law, Regulations, etc. ......................................................................................... 21

5.6 Conflict of Interest. .......................................................................................................................... 22

5.7 Damages for Breach Affecting Tax-Exempt Status or Federal Compliance ................................... 22

5.8 Disputes. ......................................................................................................................................... 22

5.9 Governing Law. ............................................................................................................................... 23

5.10 Income Restrictions. ....................................................................................................................... 23

5.11 Indemnification and State Reviews. ............................................................................................... 23

5.12 Independent Actor. ......................................................................................................................... 23

5.13 Leveraging Covenants. ................................................................................................................... 24

5.14 Non-Discrimination Clause. ............................................................................................................ 24

5.15 No Third Party Rights. .................................................................................................................... 24

5.16 Operation and Maintenance; Insurance. ........................................................................................ 24

5.17 Permits, Subcontracting, and Remedies. ....................................................................................... 25

5.18 Prevailing Wages. ........................................................................................................................... 25 Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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5.19 Public Funding. ............................................................................................................................... 26

5.20 Recipient’s Responsibility for Work. ............................................................................................... 26

5.21 Related Litigation. ........................................................................................................................... 26

5.22 Rights in Data. ................................................................................................................................ 26

5.23 State Water Board Action; Costs and Attorney Fees. .................................................................... 26

5.24 Termination; Immediate Acceleration; Interest. .............................................................................. 26

5.25 Timeliness. ..................................................................................................................................... 27

5.26 Unenforceable Provision. ............................................................................................................... 27

5.27 Useful Life. ...................................................................................................................................... 27

5.28 Venue. ............................................................................................................................................ 27

5.29 Waiver and Rights of the State Water Board. ................................................................................. 27

EXHIBIT A - SCOPE OF WORK & INCORPORATED DOCUMENTS
EXHIBIT A - FBA –FINAL BUDGET APPROVAL

EXHIBIT B - FUNDING AMOUNT

EXHIBIT C - PAYMENT SCHEDULE

EXHIBIT D - SPECIAL CONDITIONS

EXHIBIT E - PROGRAMMATIC CONDITIONS & CROSS-CUTTERS

EXHIBIT F - SCHEDULE OF SYSTEM OBLIGATIONS

EXHIBIT G - DAVIS-BACON REQUIREMENTS

EXHIBIT H - COMPLIANCE WITH CROSS-CUTTING STATE AUTHORITIES Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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WHEREAS,

1. The State Water Board is authorized to provide funding under this Agreement pursuant to the following:
• CWSRF - Chapter 6.5 of Division 7 of the California Water Code (State Act) • CWSRF - Title VI of the federal Water Pollution Control Act (Federal Act) • Proposition 1 Water Recycling - Section 79765 - 79768 of the Water Code (Prop 1)

2. The State Water Board determines eligibility for financial assistance, determines a reasonable schedule for providing financial assistance, establishes compliance with the Federal Act, State Act, and Prop 1, and establishes the terms and conditions of a funding agreement.

3. The Recipient has applied to the State Water Board for funding for the Project described in Exhibit A of this Agreement and the State Water Board has selected the application for funding.

4. The State Water Board proposes to assist in financing the costs of the Project, and the Recipient desires to participate as a recipient of financial assistance from the State Water Board and evidence its obligation to pay Installment Payments, which obligation will be secured by Revenues, as defined herein, upon the terms and conditions set forth in this Agreement, all pursuant to the Federal Act, the State Act, and Prop 1.

NOW, THEREFORE, in consideration of the premises and of the mutual representations, covenants and agreements herein set forth, the State Water Board and the Recipient, each binding itself, its successors and assigns, do mutually promise, covenant, and agree as follows:

ARTICLE I DEFINITIONS

1.1 Definitions.

Unless otherwise specified, each capitalized term used in this Agreement has the following meaning:

"Additional Payments" means the Additional Payments described in Section 3.2(c) of this Agreement. "Agreement" means this Installment Sale Agreement and Grant, including all exhibits and attachments. "Allowance" means an amount based on a percentage of the accepted bid for an eligible project to help defray the planning, design, and construction engineering and administration costs of the Project. "Authorized Representative" means the duly appointed representative of the Recipient as set forth in the certified original of the Recipient’s authorizing resolution that designates the authorized representative by title.
"Bank" means the California Infrastructure and Economic Development Bank. “Bond Funded Portion of the Project Funds” means any portion of the Project Funds which was or will be funded with Bond Proceeds.
“Bond Proceeds” means original proceeds, investment proceeds, and replacement proceeds of Bonds.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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"Bonds" means any series of bonds issued by the Bank, the interest on which is excluded from gross income for federal tax purposes, all or a portion of the proceeds of which have been, are, or will be applied by the State Water Board to fund all or any portion of the Project Costs or that are secured in whole or in part by Installment Payments paid hereunder. "Code" as used in Article IV of this Agreement means the Internal Revenue Code of 1986, as amended, and any successor provisions and the regulations of the U.S. Department of the Treasury promulgated thereunder.
"Completion of Construction" means the date, as determined by the Division after consultation with the Recipient, that the work of building and erection of the Project is substantially complete. “CWSRF” means the Clean Water State Revolving Fund.
“Days” means calendar days unless otherwise expressly indicated. “Disbursement Period” means the period during which Project Funds may be disbursed. "Division" means the Division of Financial Assistance of the State Water Board or any other segment of the State Water Board authorized to administer this Agreement. “Eligible Start Date” means the date set forth in Exhibit B, establishing the date on or after which construction costs may be incurred and eligible for reimbursement hereunder. “Enterprise Fund” means the water enterprise fund of the Recipient in which Revenues are deposited. "Fiscal Year" means the period of twelve (12) months terminating on June 30 of any year, or any other annual period selected and designated by the Recipient as its Fiscal Year in accordance with applicable law.
"Force Account" means the use of the Recipient's own employees or equipment. “GAAP” means generally accepted accounting principles, the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. “Indenture” means the Amended and Restated Indenture, dated as of August 1, 2002, by and between the Recipient and U.S. Bank National Association, as Trustee, as originally executed and as amended or supplemented by any supplemental indenture authorized thereunder. "Initiation of Construction" means the date that notice to proceed with work is issued for the Project, or, if notice to proceed is not required, the date of commencement of building and erection of the Project. "Installment Payments" means Installment Payments due and payable by the Recipient to the State Water Board under this Agreement, the amounts of which are set forth as Exhibit C hereto. “Listed Event” means, so long as the Recipient has outstanding any System Obligation subject to Rule 15c2-12, any of the events required to be reported pursuant to Rule 15c2-12(b)(5). “Material Event” means any of the following events, if material: (a) revenue shortfalls; (b) unscheduled draws on the Enterprise Fund; (c) substitution of insurers, or their failure to perform; (d) adverse findings Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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by the Regional Water Quality Control Board; (e) litigation related to the Revenues, the System, or the Project, whether pending or anticipated; (f) any false warranty or representation made by the Recipient relevant to this Agreement; (g) loss, theft, damage, or impairment to the Revenues or the System; (h) seizure of, or levy on any collateral securing this Agreement; (i) dissolution or cessation of operations by the Recipient, termination of Recipient’s existence, insolvency of Recipient, or filing of a voluntary or involuntary bankruptcy petition by or on behalf of Recipient. "Material Obligation" means (a) any senior or parity obligation of the Recipient payable from Revenues as identified as of the date of this Agreement in Exhibit F (including the funding of debt service reserve funds or the replenishment of debt service reserve funds related to such Material Obligations), (b) the Obligation, and (c) such additional obligations as may hereafter be issued in accordance with the provisions of such obligations and this Agreement.
"Net Revenues" means all of the Revenues (but not including interest on investment of funds required to be deposited in said funds or investment earnings required to be deposited in the Improvement Fund under the Indenture) less all Operation and Maintenance Costs of the System (but not including such Operation and Maintenance Costs as are scheduled to be paid by the Recipient from moneys other than Revenues, such moneys to be clearly available for such purpose).

"Obligation" means the obligation of the Recipient to make Installment Payments and Additional Payments as provided herein, as evidenced by the execution of this Agreement, proceeds of such obligations being used to fund the Project as specified in the Project Description in Exhibit A and Exhibit A- FBA and in the documents thereby incorporated by reference. "Operations and Maintenance Costs" means, so long as outstanding Material Obligations other than the Obligation are outstanding, the definition of such term as defined under such Material Obligations, and thereafter, the reasonable and necessary costs paid or incurred by the Recipient for maintaining and operating the System, determined in accordance with GAAP, including all reasonable expenses of management and repair and all other expenses necessary to maintain and preserve the System in good repair and working order, and including all reasonable and necessary administrative costs of the Recipient that are charged directly or apportioned to the operation of the System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits, licenses, and charges to operate the System and insurance premiums; but excluding, in all cases depreciation, replacement, and obsolescence charges or reserves therefor and amortization of intangibles. "Policy" means the State Water Board's “Policy for Implementing the Clean Water State Revolving Fund,” as amended from time to time, and the WRFP Guidelines.
“Project” means the Project financed by this Agreement as described in Exhibit A, Exhibit A-FBA, and in the documents incorporated by reference herein.
"Project Completion" means the date, as determined by the Division after consultation with the Recipient, that operation of the Project is initiated or is capable of being initiated, whichever comes first. "Project Costs" means the incurred costs of the Recipient which are eligible for financial assistance under this Agreement, which are allowable costs as defined under the Policy, and which are reasonable, necessary and allocable by the Recipient to the Project under GAAP, plus capitalized interest. “Project Funds” means all moneys disbursed to the Recipient by the State Water Board pursuant to this Agreement.
“Recipient” means the Public Utilities Commission of the City and County of San Francisco.

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“Regional Water Quality Control Board” or “Regional Water Board” means the San Francisco Bay Regional Water Quality Control Board.
“Reimbursement Resolution” means the Recipient’s reimbursement resolution identified in Exhibit A of this Agreement.
"Revenues" means, all gross revenues of the System, including all charges received for and all other income and receipts derived by the Recipient or the City and County of San Francisco from the operation of the System, or arising from the System, including connection and installation charges, but excluding:

(1) any money received by or for the account of the City and County of San Francisco or the Recipient from the levy or collection of taxes,
(2) moneys received from the State of California and the United States of America and required to be deposited in restricted funds,
(3) refundable deposits made to establish credit,
(4) advances and contributions made to the City and County of San Francisco or the Recipient to be applied to construction,
(5) moneys required to be paid to the State of California and the United States of America pursuant to agreements with the City and County of San Francisco or the Recipient, (6) moneys received from insurance proceeds or the sale of or upon the taking by or under the threat of eminent domain of all or any part of the System (which moneys will be received and disposed of pursuant to the Indenture),
(7) proceeds from bonds issued by the Recipient pursuant to the Indenture or proceeds from loans obtained by the Recipient,
(8) moneys or securities received by City and County of San Francisco or the Recipient as gifts or grants, the use of which is restricted by the donor or grantor, (9) sewer service fees or charges, and
(10) any surcharge imposed by or upon the direction of any joint powers agency or other governmental entity, other than the Recipient, the City and County of San Francisco or any department or agency of the City and County of San Francisco, whether or not collected by the Recipient, the City and County of San Francisco or any department or agency of the City and County of San Francisco, for the purpose of financing improvements to the facilities comprising the System.

The term “Revenues” also includes (i) all interest, profits or other income derived from the deposit or investment of any moneys in any fund or account established under the Indenture (excluding any rebate fund and any escrow fund pledged for the payment of defeased bonds) or in any fund or account of the System and legally available to pay debt service on Material Obligations, and (ii) any other moneys, proceeds and other amounts that the Recipient determines should be “Revenues” under the Indenture.

“Rule 15c2-12(b)(5)” means Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. “SRF” means the Clean Water State Revolving Fund.
“State” means State of California.
“State Water Board” means the State Water Resources Control Board. "System" means all water recycling, and/or potable water collection, transport, treatment, storage, and/or disposal facilities, including land and easements thereof, owned by the Recipient, including the Project, and all other properties, structures or works hereafter acquired and constructed by the Recipient and determined to be a part of the System, together with all additions, betterments, extensions or Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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improvements to such facilities, properties, structures, or works, or any part thereof hereafter acquired and constructed. So long as there may be any pre-existing and outstanding Material Obligations of the Recipient other than the Obligation, the definition for the term “System” shall have the meaning assigned to the term “Enterprise” under the Indenture.
“System Obligation” means any long-term obligation of the Recipient payable from the Enterprise Fund, including this Obligation and obligations reflected in Exhibit F. “WRFP Guidelines” means the Water Recycling Funding Program Guidelines, as amended by the State Water Board on June 16, 2015.
“Year” means calendar year unless otherwise expressly indicated.

1.2 Exhibits and Appendices Incorporated.

All exhibits and appendices to this Agreement, including any amendments and supplements hereto, are hereby incorporated herein and made a part of this Agreement.

ARTICLE II REPRESENTATIONS, WARRANTIES, AND COMMITMENTS The Recipient represents, warrants, and commits to the following as of the Eligible Start Date set forth on the first page hereof and continuing thereafter for the term of the Agreement.

2.1 General Recipient Commitments.

The Recipient shall comply with all terms, provisions, conditions, and commitments of this Agreement, including all incorporated documents, and to fulfill all assurances, declarations, representations, and commitments in its application, accompanying documents, and communications filed in support of its request for financial assistance.

2.2 Authorization and Validity.

The execution and delivery of this Agreement, including all incorporated documents, has been duly authorized by the Recipient. This Agreement constitutes a valid and binding obligation of the Recipient, enforceable in accordance with its terms, except as such enforcement may be limited by law.

2.3 No Violations.

The execution, delivery, and performance by Recipient of this Agreement, including all incorporated documents, do not materially violate any provision of any law or regulation in effect as of the date set forth on the first page hereof, or result in any breach or default under any contract, obligation, indenture, or other instrument to which Recipient is a party or by which Recipient is bound as of the date set forth on the first page hereof.

2.4 No Litigation.

There are no pending or, to Recipient’s knowledge, threatened actions, claims, investigations, suits, or proceedings before any governmental authority, court, or administrative agency which materially affect or would have a material adverse effect on the financial condition or operations of the Recipient, the System, the Revenues, and/or the Project, other than as previously disclosed in writing to the State Water Board by the Recipient.

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2.5 Solvency.

None of the transactions contemplated by this Agreement will be or have been made with an actual intent to hinder, delay, or defraud any present or future creditors of Recipient. As of the date set forth on the first page hereof, Recipient is solvent and will not be rendered insolvent by the transactions contemplated by this Agreement. Recipient is able to pay its debts as they become due.

2.6 Legal Status and Eligibility.

Recipient is a duly constituted public commission of the City and County of San Francisco duly organized and validly existing pursuant to its Charter and the Constitution and the laws of the State of California, and will remain so during the term of this Agreement. Recipient shall at all times maintain its current legal existence and preserve and keep in full force and effect its legal rights and authority. Recipient shall maintain its eligibility for funding under this Agreement for the term of this Agreement.

2.7 Financial Statements.

The financial statements of Recipient previously delivered to the State Water Board as of the date(s) set forth in such financial statements: (a) are materially complete and correct; (b) present fairly the financial condition of the Recipient; and (c) have been prepared in accordance with GAAP. Since the date(s) of such financial statements, there has been no material adverse change in the financial condition of the Recipient, nor have any assets or properties essential to the proper operation of the System or to the maintenance of the Revenues reflected on such financial statements been sold, transferred, assigned, mortgaged, pledged or encumbered, except as previously disclosed in writing by Recipient and approved in writing by the State Water Board.

2.8 Completion of Project.

The Recipient shall expeditiously proceed with and complete construction of the Project in substantial accordance with Exhibit A and Exhibit A-FBA.

2.9 Award of Construction Contracts.
(a) The Recipient shall award the prime construction contract no later than the date specified in Exhibit A.

(b) The Recipient shall promptly notify the Division in writing both of the award of the prime construction contract for the Project and of Initiation of Construction of the Project. The Recipient shall make all reasonable efforts to complete construction in substantial conformance with the terms of the contract by the Completion of Construction date established in Exhibit A. Such date shall be binding upon the Recipient unless modified in writing by the Division upon a showing of good cause by the Recipient. The Recipient shall deliver any request for extension of the Completion of Construction date no less than 90 days prior to the Completion of Construction date. The Division will not unreasonably deny a timely request, but the Division may deny requests received after this time.

2.10 Notice.
(a) The Recipient shall notify the Division in writing within five (5) working days of the occurrence of the following:

(1) Material defaults on this Obligation;
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(2) Unscheduled draws on debt service reserves held for this Obligation, if any, reflecting financial difficulties;
(3) Bankruptcy, insolvency, receivership or similar event of the Recipient;

(4) Actions taken pursuant to state law in anticipation of filing for bankruptcy;

(5) Other Material Events or Listed Events; or

(6) Change of ownership of the Project or change of management or service contracts, if any, for operation of the Project.

(b) The Recipient shall notify the Division within 10 working days of the following:

(1) Material defaults on System Obligations, other than this Obligation; (2) Unscheduled draws on debt service reserves held for System Obligations, other than this Obligation, if any, reflecting financial difficulties;
(3) Unscheduled draws on credit enhancements on System Obligations, if any, reflecting financial difficulties;

(4) Substitution of credit or liquidity providers, if any, or their failure to perform;

(5) Any material litigation pending or threatened against Recipient regarding its water or wastewater capacity or its continued existence, circulation of a petition to challenge rates, consideration of dissolution, or disincorporation, or any other material threat to the Recipient’s Revenues;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices of determinations with respect to the tax status of any tax-exempt bonds;

(7) Rating changes on outstanding System Obligations, if any; or

(8) Issuance of additional parity obligations.

(1) Any substantial change in scope of the Project. The Recipient shall undertake no substantial change in the scope of the Project until written notice of the proposed change has been provided to the Division and the Division has given written approval for the change;

(2) Cessation of all major construction work on the Project where such cessation of work is expected to or does extend for a period of thirty (30) days or more;

(3) Any circumstance, combination of circumstances, or condition, which is expected to or does delay Completion of Construction for a period of ninety (90) days or more beyond the estimated date of Completion of Construction previously provided to the Division;

(4) Discovery of any potential archeological or historical resource. Should a potential archeological or historical resource be discovered during construction of the Project, the Recipient agrees that all work in the area of the find will cease until a qualified archeologist Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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has evaluated the situation and made recommendations regarding preservation of the resource, and the Division has determined what actions should be taken to protect and preserve the resource. The Recipient shall implement appropriate actions as directed by the Division;

(5) Discovery of any unexpected endangered or threatened species, as defined in the federal Endangered Species Act. Should a federally protected species be unexpectedly encountered during construction of the Project, the Recipient agrees to promptly notify the Division. This notification is in addition to the Recipient’s obligations under the federal Endangered Species Act;

(6) Any Project monitoring, demonstration, or other implementation activities such that the State Water Board and/or Regional Water Quality Control Board staff may observe and document such activities;

(7) Any public or media event publicizing the accomplishments and/or results of this Agreement and provide the opportunity for attendance and participation by state and federal representatives with at least ten (10) working days’ notice to the Division; or

(8) Completion of Construction of the Project, and actual Project Completion.

2.11 Findings and Challenge
Upon consideration of a voter initiative to reduce Revenues, the Recipient’s Authorized Representative shall make a written finding regarding the effect of such a reduction on the Recipient's ability to satisfy the rate covenant set forth in Section 3.7 of this Agreement. The Recipient’s Authorized Representative shall request, if necessary, the authorization of the Recipient’s decision-maker or decision-making body to file litigation to challenge any such initiative that it finds will render it unable to satisfy the rate covenant set forth in Section 3.7 and its obligation to operate and maintain the Project for its useful life. The Recipient shall diligently pursue and bear, if necessary, any and all costs related to such challenge. The Recipient shall notify and regularly update the State Water Board regarding any such challenge.

2.12 Project Access.

The Recipient shall ensure that the State Water Board, the Governor of the State, the United States Environmental Protection Agency, the Office of Inspector General, any member of Congress, the President of the United States, or any authorized representative of the foregoing, will have safe and suitable access to the Project site at all reasonable times during Project construction and thereafter for the term of the Obligation. The Recipient acknowledges that, except for a subset of information regarding archaeological records, the Project records and locations are public records, including but not limited to all of the submissions accompanying the application, all of the documents incorporated by Exhibit A and Exhibit A-FBA, and all reports, disbursement requests, and supporting documentation submitted hereunder.

2.13 Project Completion; Initiation of Operations.

Upon Completion of Construction of the Project, the Recipient shall expeditiously initiate Project operations.

2.14 Continuous Use of Project; Lease or Disposal of Project.

The Recipient agrees that, except as provided in the Agreement, it will not abandon, substantially discontinue use of, lease, or dispose of all or a significant part or portion of the Project during the useful Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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life of the Project without prior written approval of the Division. Such approval may be conditioned as determined to be appropriate by the Division, including a condition requiring repayment of all disbursed Project Funds of all or any portion of all remaining funds covered by this Agreement together with accrued interest and any penalty assessments that may be due.

2.15 Project Reports.
(a) Status Reports. The Recipient shall provide expeditiously status reports no less frequently than quarterly, starting with the execution of this Agreement. These reports must accompany any disbursement request and are a condition precedent to any disbursement. At a minimum the reports will contain the following information:

(1) A summary of progress to date including a description of progress since the last report, percent construction complete, percent contractor invoiced, and percent schedule elapsed;

(2) A description of compliance with environmental requirements;

(3) A listing of change orders including amount, description of work, and change in contract amount and schedule; and

(4) Any problems encountered, proposed resolution, schedule for resolution, and status of previous problem resolutions.

(b) Project Completion Report. The Recipient shall submit a Project Completion Report to the Division with a copy to the appropriate Regional Water Quality Control Board on or before the due date established by the Division and the Recipient at the time of final project inspection. The Project Completion Report must address the following:

(1) Describe the Project,

(2) Describe the water quality problem the Project sought to address,

(3) Discuss the Project’s likelihood of successfully addressing that water quality problem in the future, and

(4) Summarize compliance with environmental conditions, if applicable.

(5) If the Recipient fails to submit a timely Project Completion Report, then the State Water Board may stop processing pending or future applications for new financial assistance, withhold disbursements under this Agreement or other agreements, and begin administrative proceedings.

(c) As Needed Reports. The Recipient shall provide expeditiously, during the term of this Agreement, any reports, data, and information reasonably required by the Division, including but not limited to material necessary or appropriate for evaluation of the funding program or to fulfill any reporting requirements of the state or federal government.

(d) Recycled water reports. The Recipient shall submit annual reports for a period commencing with Completion of Construction through one (1) full year after all proposed recycled water users included in the Project are connected for service (minimum five years).

(1) Reports will be submitted in hard copy and electronically.

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(2) The first annual report is due on February 28th following the first complete calendar year of operation and shall cover the period from the Completion of Construction through the end of the first full calendar year thereafter. Subsequent annual reports are due by February 28th following the year covered. The annual reports shall be prepared in accordance with the “Water Recycling Funding Guidelines.”

(3) The reports shall briefly review the operation of the Project during the preceding year, identify current users and user contracts, provide monthly Project water deliveries to each user, the amount of fresh/potable water usage offset by the use of recycled water, and monthly amounts of water from each source delivered through Project facilities, list the funds received from other State and federal agencies for this Project during the period by agency, the amount, type of assistance (grants, loans, etc.), and a description of the facilities, components, and items the funds were used for; list the power and maintenance costs associated with the Project for the period, indicate current plans and programs for use of any Project capacity not under contract, summarize Project financial experience, describe compliance with any special conditions of this Agreement; describe direct and indirect benefits of the project to the state/local water supply and economy; describe other benefits and challenges arising from the Project; and provide such other information as may be reasonably required to evaluate Project benefits and use of Project facilities.

2.16 Federal Disadvantaged Business Enterprise (DBE) Reporting.

The Recipient shall report DBE utilization to the Division on the DBE Utilization Report, State Water Board Form DBE UR334. The Recipient must submit such reports to the Division annually within ten (10) calendar days following October 1 until such time as the "Notice of Completion" is issued. The Recipient shall comply with 40 CFR § 33.301.

2.17 Records.
(a) Without limitation of the requirement to maintain Project accounts in accordance with GAAP, the Recipient shall:

(1) Establish an official file for the Project which adequately documents all significant actions relative to the Project;

(2) Establish separate accounts which will adequately and accurately depict all amounts received and expended on the Project, including all assistance funds received under this Agreement;

(3) Establish separate accounts which will adequately depict all non-operating income received which is attributable to the Project, specifically including any interest or investment or other non-operating income attributable to assistance funds disbursed under this Agreement;
(4) Establish an accounting system which will accurately depict final total costs of the Project, including both direct and indirect costs;
(5) Establish such accounts and maintain such records as may be necessary for the State to fulfill federal reporting requirements, including any and all reporting requirements under federal tax statutes or regulations; and
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(6) If Force Account is used by the Recipient for any phase of the Project, other than for planning, design, and construction engineering and administration provided for by allowance, accounts will be established which reasonably document all employee hours charged to the Project and the associated tasks performed by each employee. Indirect Force Account costs are not eligible for funding.
(b) The Recipient shall maintain separate books, records and other material relative to the Project.

The Recipient shall also retain such books, records, and other material for itself and for each contractor or subcontractor who performed or performs work on this project for a minimum of thirty-six (36) years after Project Completion. The Recipient shall require that such books, records, and other material are subject at all reasonable times (at a minimum during normal business hours) to inspection, copying, and audit by the State Water Board, the Bureau of State Audits, the United States Environmental Protection Agency (USEPA), the Office of Inspector General, the Internal Revenue Service, the Governor, or any authorized representatives of the aforementioned. The Recipient shall allow and shall require its contractors to allow interviews during normal business hours of any employees who might reasonably have information related to such records. The Recipient agrees to include a similar duty regarding audit, interviews, and records retention in any contract or subcontract related to the performance of this Agreement.

The provisions of this section shall survive the discharge of the Recipient's Obligation and the term of this Agreement.

2.18 Audit.
(a) The Division may call for an audit of financial information relative to the Project if the Division determines that an audit is desirable to assure program integrity or if an audit becomes necessary because of state or federal requirements. If an audit is called for, the audit shall be performed by a certified public accountant independent of the Recipient and at the cost of the Recipient. The audit shall be in the form required by the Division

(b) Audit disallowances will be returned to the State Water Board.

ARTICLE III FINANCING PROVISIONS

3.1 Purchase and Sale of Project.

The Recipient hereby sells to the State Water Board and the State Water Board hereby purchases from the Recipient the Project. Simultaneously therewith, the Recipient hereby purchases from the State Water Board, and the State Water Board hereby sells to the Recipient, the Project in accordance with the provisions of this Agreement. All right, title, and interest in the Project shall immediately vest in the Recipient on the date of execution and delivery of this Agreement without further action on the part of the Recipient or the State Water Board. The State Water Board’s disbursement of funds hereunder is contingent on the Recipient’s compliance with the terms and conditions of this Agreement.

3.2 Amounts Payable by the Recipient.
(a) Installment Payments. The Recipient’s obligations under this Agreement shall be secured by Revenues and payable solely from Revenues, on parity with other parity Material Obligations, and in accordance with the underlying documents related to the outstanding Material Obligations identified in Exhibit F. Interest will accrue beginning with each disbursement. No later than one year after Completion of Construction, repayment of the principal of the Project Funds, together with all interest accruing thereon, shall be repaid annually, and shall be fully amortized by the end term date specified in Exhibit B.

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The Installment Payments are based on a standard fully amortized assistance amount with equal annual payments. The remaining balance is the previous balance, plus the disbursements, plus the accrued interest on both, less the Installment Payment. Installment Payment calculations will be made beginning one (1) year after Completion of Construction and shall be fully amortized not later than the date specified in Exhibit B. Attached as Exhibit C is a payment schedule based on the provisions of this article and an estimated disbursement schedule. Actual payments will be based on actual disbursements.

Upon Completion of Construction and submission of necessary reports by the Recipient, the Division will prepare an appropriate payment schedule and supply the same to the Recipient. The Division may amend this schedule as necessary to accurately reflect amounts due under this Agreement. The Division will prepare any necessary amendments to the payment schedule and send them to the Recipient.

The Recipient shall make each Installment Payment on or before the due date therefor. A ten (10) day grace period will be allowed, after which time a penalty in the amount of costs incurred by the State Water Board will be assessed for late payment. These costs may include, but are not limited to, lost interest earnings, staff time, bond debt service default penalties, if any, and other costs. For purposes of penalty assessment, payment will be deemed to have been made if payment is deposited in the U.S. Mail within the grace period with postage prepaid and properly addressed. Any penalties assessed will not be added to the assistance amount balance, but will be treated as a separate account and obligation of the Recipient. The interest penalty will be assessed from the payment due date.

The Recipient as a whole is obligated to make all payments required by this Agreement to the State Water Board, notwithstanding any individual default by its constituents or others in the payment to the Recipient of fees, charges, taxes, assessments, tolls or other charges ("Charges") levied or imposed by the Recipient. The Recipient shall provide for the punctual payment to the State Water Board of all amounts which become due under this Agreement and which are received from constituents or others in the payment to the Recipient. In the event of failure, neglect or refusal of any officer of the Recipient to levy or cause to be levied any Charge to provide payment by the Recipient under this Agreement, to enforce or to collect such Charge, or to pay over to the State Water Board any money collected on account of such Charge necessary to satisfy any amount due under this Agreement, the State Water Board may take such action in a court of competent jurisdiction as it deems necessary to compel the performance of all duties relating to the imposition or levying and collection of any of such Charges and the payment of the money collected therefrom to the State Water Board. Action taken pursuant hereto shall not deprive the State Water Board of, or limit the application of, any other remedy provided by law or by this Agreement.

Each Installment Payment shall be paid by check or other method agreed to by the State Water Board and in lawful money of the United States of America.

The Recipient shall not be entitled to interest earned on undisbursed funds. Upon execution of this Agreement, the State Water Board shall encumber an amount equal to the Obligation. The Recipient shall pay Installment Payments and Additional Payments from Revenues and/or other amounts legally available to the Recipient therefor. Interest on any funds disbursed to the Recipient shall begin to accrue as of the date of each disbursement. (b) Project Costs. The Recipient shall pay any and all costs connected with the Project including, without limitation, any and all Project Costs. If the Project Funds are not sufficient to pay the Project Costs in full, the Recipient shall nonetheless complete the Project and pay that portion of Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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the Project Costs in excess of available Project Funds, and shall not be entitled to any reimbursement therefor from the State Water Board.
(c) Additional Payments. In addition to the Installment Payments required to be made by the Recipient, the Recipient shall also pay to the State Water Board the reasonable extraordinary fees and expenses of the State Water Board, and of any assignee of the State Water Board's right, title, and interest in and to this Agreement, in connection with this Agreement, including all expenses and fees of accountants, trustees, staff, contractors, consultants, costs, insurance premiums and all other extraordinary costs reasonably incurred by the State Water Board or assignee of the State Water Board.

Additional Payments may be billed to the Recipient by the State Water Board from time to time, together with a statement executed by a duly authorized representative of the State Water Board, stating that the amounts billed pursuant to this section have been incurred by the State Water Board or its assignee for one or more of the above items and a copy of the invoice or statement for the amount so incurred or paid. Amounts so billed shall be paid by the Recipient within thirty (30) days after receipt of the bill by the Recipient.
(d) The Recipient may without penalty prepay all or any portion of the outstanding principal amount of the Obligation provided that the Recipient shall also pay at the time of such prepayment all accrued interest on the principal amount prepaid through the date of prepayment.

3.3 Obligation Absolute.

The obligation of the Recipient to make the Installment Payments and other payments required to be made by it under this Agreement, from Revenues, on parity with other parity Material Obligations, and in accordance with the underlying documents related to the outstanding Material Obligations identified in Exhibit F, and/or other amounts legally available to the Recipient therefor, is absolute and unconditional, and until such time as the Installment Payments and Additional Payments have been paid in full, the Recipient shall not discontinue or suspend any Installment Payments or other payments required to be made by it hereunder when due, whether or not the System or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such Installment Payments and other payments shall not be subject to reduction whether by offset or otherwise and shall not be conditional upon the performance or nonperformance by any party of any agreement for any cause whatsoever.

3.4 No Obligation of the State.

Any obligation of the State Water Board herein contained shall not be an obligation, debt, or liability of the State and any such obligation shall be payable solely out of the moneys encumbered pursuant to this Agreement.

3.5 Disbursement of Project Funds; Availability of Funds. (a) Except as may be otherwise provided in this Agreement, disbursement of Project Funds will be made as follows:
(1) Upon execution and delivery of this Agreement, the Recipient may request immediate disbursement of any eligible incurred planning and design allowance as specified in Exhibit B from the Project Funds through submission to the State Water Board of the Disbursement Request Form 260, or any amendment thereto, duly completed and executed.

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(2) The Recipient may request disbursement of eligible construction and equipment costs consistent with budget amounts referenced in Exhibit B and Exhibit A-FBA. (Note that this Agreement will be amended to incorporate Exhibit A-FBA after final budget approval.) (3) Additional Project Funds will be promptly disbursed to the Recipient upon receipt of Disbursement Request Form 260, or any amendment thereto, duly completed and executed by the Recipient for incurred costs consistent with this Agreement, along with receipt of status reports due under Section 2.15 above. (4) The Recipient shall not request disbursement for any Project Cost until such cost has been incurred and is currently due and payable by the Recipient, although the actual payment of such cost by the Recipient is not required as a condition of disbursement request. (5) Recipient shall spend Project Funds within 30 days of receipt. Any interest earned on Project Funds shall be reported to the State Water Board and may be required to be returned to the State Water Board or deducted from future disbursements. (6) The Recipient shall not be entitled to interest earned on undisbursed funds. (7) The Recipient shall not request a disbursement unless that Project Cost is allowable, reasonable, and allocable.
(8) Notwithstanding any other provision of this Agreement, no disbursement shall be required at any time or in any manner which is in violation of or in conflict with federal or state laws, policies, or regulations.
(b) The State Water Board's obligation to disburse Project Funds is contingent upon the availability of sufficient funds to permit the disbursements provided for herein. If sufficient funds are not available for any reason, including but not limited to failure of the federal or State government to appropriate funds necessary for disbursement of Project Funds, the State Water Board shall not be obligated to make any disbursements to the Recipient under this Agreement. This provision shall be construed as a condition precedent to the obligation of the State Water Board to make any disbursements under this Agreement. Nothing in this Agreement shall be construed to provide the Recipient with a right of priority for disbursement over any other agency. If any disbursements due the Recipient under this Agreement are deferred because sufficient funds are unavailable, it is the intention of the State Water Board that such disbursement will be made to the Recipient when sufficient funds do become available, but this intention is not binding.

3.6 Withholding of Disbursements and Material Violations. (a) The State Water Board may withhold all or any portion of the funds provided for by this Agreement in the event that:

(1) The Recipient has materially violated, or threatens to materially violate, any term, provision, condition, or commitment of this Agreement; or
(2) The Recipient fails to maintain reasonable progress toward completion of the Project. (b) For the purposes of this Agreement, the terms “material violation” or “threat of material violation” include, but are not limited to:
(1) Placement on the ballot of an initiative or referendum to reduce Revenues; Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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(2) Passage of such an initiative or referendum;
(3) Successful challenges by ratepayer(s) to the process used by Recipient to set, dedicate, or otherwise secure Revenues; or
(4) Any other action or lack of action that may be construed by the Division as a material violation or threat thereof.

3.7 Pledge; Rates, Fees and Charges; Additional Debt.
(a) Establishment of Enterprise Fund. In order to carry out its System Obligations, including the Obligation, the Recipient covenants that it shall establish and maintain or shall have established and maintained the Enterprise Fund. All Revenues received shall be deposited when and as received in trust in the Enterprise Fund.
(b) Pledge of Revenues. The Obligation hereunder shall be secured by a lien on and pledge of the Revenues on parity with other parity Material Obligations and in accordance with the underlying documents related to the outstanding Material Obligations identified in Exhibit F. The Recipient hereby pledges and grants such lien on and pledge of the Revenues to secure the Obligation, including payment of Installment Payments and Additional Payments hereunder. The Revenues in the Enterprise Fund shall be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the Recipient. (c) Application and Purpose of the Enterprise Fund. Subject to the provisions of any outstanding Material Obligation, money on deposit in the Enterprise Fund shall be applied and used first, to pay Operations and Maintenance Costs, and thereafter, all amounts due and payable with respect to the Material Obligations. Subject to the provisions of any outstanding Material Obligation, after making all payments hereinabove required to be made in each Fiscal Year, the Recipient may expend in such Fiscal Year any remaining money in the Enterprise Fund for any lawful purpose of the Recipient, including payment of subordinate debt. (d) Rates, Fees and Charges. The Recipient shall, to the extent permitted by law, fix, prescribe and collect rates, fees and charges for the System during each Fiscal Year which are reasonable, fair, and nondiscriminatory and which will be at least sufficient to yield during each Fiscal Year Net Revenues equal to the debt service on System Obligations, including the Obligation, for such Fiscal Year, plus any coverage ratio specified in Exhibit D of this Agreement. The Recipient may make adjustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates, fees and charges then in effect unless the Net Revenues from such reduced rates, fees, and charges will at all times be sufficient to meet the requirements of this section.

(e) Additional Debt Test.
(1) Senior Debt. The Recipient’s future debt that is secured by revenues pledged herein may not be senior to this Obligation.
(2) Additional Parity Debt. Future debt that is secured by Revenues pledged herein may be on parity with this Obligation provided the requirements related to Additional Parity Debt set forth in Exhibit D to this Agreement are met.

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3.8 Financial Management System and Standards.

The Recipient shall comply with federal standards for financial management systems. The Recipient agrees that, at a minimum, its fiscal control and accounting procedures will be sufficient to permit preparation of reports required by the federal government and tracking of Project funds to a level of expenditure adequate to establish that such funds have not been used in violation of federal or state law or the terms of this Agreement. To the extent applicable, the Recipient shall be bound by, and to comply with, the provisions and requirements of the federal Single Audit Act of 1984, Office of Management and Budget (OMB) Circular No. A-133 and 2 CFR Part 200, subpart F, and updates or revisions, thereto.

3.9 Accounting and Auditing Standards.

The Recipient must maintain project accounts according to GAAP as issued by the Governmental Accounting Standards Board (GASB). The Recipient shall maintain GAAP-compliant project accounts, including GAAP requirements relating to the reporting of infrastructure assets.

3.10 Other Assistance.

If funding for Project Costs is made available to the Recipient from sources other than this Agreement, the Recipient shall notify the Division. The Recipient may retain such funding up to an amount which equals the Recipient's local share of Project Costs. To the extent allowed by requirements of other funding sources, excess funding shall be remitted to the State Water Board to be applied to Installment Payments due hereunder, if any.

ARTICLE IV TAX COVENANTS

4.1 Purpose.

The purpose of this Article IV is to establish the reasonable expectations of the Recipient regarding the Project and the Project Funds, and is intended to be and may be relied upon for purposes of Sections 103, 141 and 148 of the Code and as a certification described in Section 1.148-2(b)(2) of the Treasury Regulations. This Article IV sets forth certain facts, estimates and circumstances which form the basis for the Recipient’s expectation that neither the Project nor the Bond Funded Portion of the Project Funds is to be used in a manner that would cause the Obligation to be classified as “arbitrage bonds” under Section 148 of the Code or “private activity bonds” under Section 141 of the Code.

4.2 Tax Covenant.

The Recipient agrees that it will not take or authorize any action or permit any action within its reasonable control to be taken, or fail to take any action within its reasonable control, with respect to the Project which would result in the loss of the exclusion of interest on the Bonds from gross income for federal income tax purposes under Section 103 of the Code.

4.3 Governmental Unit.

The Recipient is a state or local governmental unit as defined in Section 1.103-1 of the Treasury Regulations or an instrumentality thereof (a "Governmental Unit") and is not the federal government or any agency or instrumentality thereof.

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4.4 Financing of a Capital Project.

The Recipient will use the Project Funds to finance costs it has incurred or will incur for the construction, reconstruction, installation or acquisition of the Project. Such costs shall not have previously been financed with the proceeds of any other issue of tax-exempt obligations, other than with proceeds of the Recipient’s existing commercial paper program.

4.5 Ownership and Operation of Project.

The Recipient exclusively owns and, except as provided in Section 4.12 hereof, operates the Project.

4.6 Temporary Period.

The Recipient reasonably expects that at least eighty-five percent (85%) of the Bond Funded Portion of the Project Funds will be allocated to expenditures for the Project within three (3) years of the earlier of the effective date of this Agreement or the date the Bonds are issued ("Applicable Date"). The Recipient has incurred, or reasonably expects that it will incur within six (6) months of the Applicable Date, a substantial binding obligation (i.e., not subject to contingencies within the control of the Recipient or a related party) to a third party to expend at least five percent (5%) of the Bond Funded Portion of the Project Funds on Project Costs. The completion of acquisition, construction, improvement and equipping of the Project and the allocation of the Bond Funded Portion of the Project Funds to Project Costs will proceed with due diligence.

4.7 Working Capital.

No operational expenditures of the Recipient or any related entity are being, have been or will be financed or refinanced with Project Funds.

4.8 Expenditure of Proceeds.

The Bond Funded Portion of the Project Funds shall be used exclusively for the following purposes: (i) Reimbursement Expenditures (as defined in Section 4.20 below), (ii) Preliminary Expenditures (as defined in Section 4.20 below) in an aggregate amount not exceeding twenty percent (20%) of the Bond Funded Portion of the Project Funds, (iii) capital expenditures relating to the Project originally paid by the Recipient on or after the date hereof, (iv) interest on the Obligation through the later of three (3) years after the Applicable Date or one (1) year after the Project is placed in service, and (v) initial operating expenses directly associated with the Project in the aggregate amount not more than five percent (5%) of the Bond Funded Portion of the Project Funds.

4.9 Private Use and Private Payments.

No portion of the Project Funds or the Project is being, has been or will be used in the aggregate for any activities that constitute a Private Use (as defined below). No portion of the principal of or interest with respect to the Installment Payments will be secured by any interest in property (whether or not the Project) used for a Private Use or in payments in respect of property used for a Private Use, or will be derived from payments in respect of property used for a Private Use. "Private Use" means any activity that constitutes a trade or business that is carried on by persons or entities, other than a Governmental Unit. The leasing of the Project or the access by or the use of the Project by a person or entity other than a Governmental Unit on a basis other than as a member of the general public shall constitute a Private Use. Use by or on behalf of the State of California or any of its agencies, instrumentalities or subdivisions or by any local Governmental Unit and use as a member of the general public will be disregarded in determining whether a Private Use exists. Use under an arrangement that conveys priority rights or other preferential benefits is generally not use on the same basis as the general public. Arrangements Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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providing for use that is available to the general public at no charge or on the basis of rates that are generally applicable and uniformly applied do not convey priority rights or other preferential benefits. For this purpose, rates may be treated as generally applicable and uniformly applied even if (i) different rates apply to different classes of users, such as volume purchasers, if the differences in rates are customary and reasonable; or (ii) a specially negotiated rate arrangement is entered into, but only if the user is prohibited by federal law from paying the generally applicable rates, and the rates established are as comparable as reasonably possible to the generally applicable rates. An arrangement that does not otherwise convey priority rights or other preferential benefits is not treated, nevertheless, as general public use if the term of the use under the arrangement, including all renewal options, is greater than 200 days. For this purpose, a right of first refusal to renew use under the arrangement is not treated as a renewal option if (i) the compensation for the use under the arrangement is redetermined at generally applicable, fair market value rates that are in effect at the time of renewal; and (ii) the use of the financed property under the same or similar arrangements is predominantly by natural persons who are not engaged in a trade or business.

4.10 No Sale, Lease or Private Operation of the Project.

The Project (or any portion thereof) will not be sold or otherwise disposed of, in whole or in part, to any person who is not a Governmental Unit prior to the final maturity date of the Obligation. The Project will not be leased to any person or entity that is not a Governmental Unit prior to the final maturity date of the Obligation. Except as permitted under Section 4.12 hereof, the Recipient will not enter any contract or arrangement or cause or permit any contract or arrangement to be entered with persons or entities that are not Governmental Units if that contract or arrangement would confer on such persons or entities any right to use the Project on a basis different from the right of members of the general public. The contracts or arrangements contemplated by the preceding sentence include but are not limited to management contracts, take or pay contracts or put or pay contracts, and capacity guarantee contracts.

4.11 No Disproportionate or Unrelated Use.

No portion of the Project Funds or the Project is being, has been, or will be used for a Private Use that is unrelated or disproportionate to the governmental use of the Project Funds.

4.12 Management and Service Contracts.

The Recipient represents that, as of the date hereof, it is not a party to any contract, agreement or other arrangement with any persons or entities engaged in a trade or business (other than Governmental Units) that involve the management or operation of property or the provision of services at or with respect to the Project that does not comply with the standards of the Treasury Regulations, Revenue Procedure 97-13, as modified by Revenue Procedure 2001-39 and IRS Notice 2014-67, or Revenue Procedure 2016-

44. The Recipient represents that it will not be party to any such contract, agreement or arrangement with any person or entity that is not a Governmental Unit for the management of property or the provision of services at or with respect to the Project, while the Obligation (including any obligation or series thereof issued to refund the Obligation, as the case may be) is outstanding, except: (a) with respect to any contract, agreement or arrangement that does not constitute “private business use” of the Project under Code §§141(b), or (b) with respect to any contract, agreement or arrangement that complies with (i) Revenue Procedure 97-13, 1997-1 C.B. 632, as amended by Revenue Procedure 2001-39, 2001-2 C.B. 38, and as amplified by Notice 2014-67, with respect to contracts entered into before August 18, 2017 and not materially modified or extended after August 18, 2017, or (ii) Revenue Procedure 2016-44, 2016- 36 I.R.B., with respect to contracts entered into or materially modified or extended on or after August 18, 2017, or (c) with respect to any contract, agreement or arrangement that does not give rise to use of the Bond Funded Portion of the Project Funds or the Project by a non-Governmental Unit of more than the amount of such non-qualified use permitted by the Code, or (d) in the event that the Recipient receives an opinion of counsel, satisfactory to the State Water Board and the Bank and expert in the issuance of state Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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and local government bonds the interest on which is excluded from gross income under Section 103 of the Code (“Nationally-Recognized Bond Counsel”), that such contract, agreement or arrangement will not adversely affect the exclusion of the interest on the Obligation from gross income for federal income taxation purposes.

4.13 No Disposition of Financed Property.

As of the date hereof, the Recipient does not expect to sell or otherwise dispose of any portion of the Project, in whole or in part, prior to the final maturity date of the Obligation.

4.14 Useful Life of Project.

As of the date hereof, the Recipient reasonably expects that the economic useful life of the Project, commencing at Project Completion, will be at least equal to the term of this Agreement, as set forth on Exhibit B hereto.

4.15 Installment Payments.

Installment Payments generally are expected to be derived from assessments, taxes, fees, charges or other current Revenues of the Recipient in each year, and such current Revenues are expected to equal or exceed the Installment Payments during each payment period. Any amounts accumulated in a sinking fund or bona fide debt service fund to pay Installment Payments (whether or not deposited to a fund or account established by the Recipient) will be disbursed to pay Installment Payments within thirteen months of the initial date of accumulation or deposit. Any such fund used for the payment of Installment Payments will be depleted once a year except for a reasonable carryover amount not exceeding earnings on such fund or one-twelfth of the Installment Payments in either case for the immediately preceding year.

4.16 No Other Replacement Proceeds.

The Recipient will not use any of the Bond Funded Portion of the Project Funds to replace or substitute other funds of the Recipient that were otherwise to be used to finance the Project or which are or will be used to acquire securities, obligations or other investment property reasonably expected to produce a yield that is materially higher than the yield on the Bonds.

4.17 No Sinking or Pledged Fund.

Except as set forth in Section 4.18 below, the Recipient will not create or establish any sinking fund or pledged fund which will be used to pay Installment Payments on the Obligation within the meaning of Section 1.148-1(c) of the Treasury Regulations. If any sinking fund or pledged fund comes into being with respect to the Obligation before the Obligation has been fully retired which may be used to pay the Installment Payments, the Recipient will invest such sinking fund and pledged fund moneys at a yield that does not exceed the yield on the Bonds.

4.18 Reserve Amount.

The State Water Board does not require that the Recipient maintain and fund a separate account in an amount equal to one (1) year of debt service with respect to the Obligation (the “Reserve Amount”).

4.19 Reimbursement Resolution.

The “reimbursement resolution” adopted by the Recipient is incorporated herein by reference, pursuant to Exhibit A.

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4.20 Reimbursement Expenditures.

Reimbursements are disallowed, except as specifically authorized in Exhibit B or Exhibit D of this Agreement. To the extent so authorized, a portion of the Bond Funded Portion of the Project Funds may be applied to reimburse the Recipient for Project Costs paid before the date hereof, so long as the Project Cost was (i) not paid prior to sixty (60) days before the Recipient’s adoption of a declaration of official intent to finance the Project, (ii) not paid more than eighteen (18) months prior to the date hereof or the date the Project was placed-in-service, whichever is later, and (iii) not paid more than three (3) years prior to the date hereof (collectively, “Reimbursement Expenditures”), unless such cost is attributable to a “preliminary expenditure.” Preliminary expenditure for this purpose means architectural, engineering, surveying, soil testing and similar costs incurred prior to the commencement of construction or rehabilitation of the Project, but does not include land acquisition, site preparation and similar costs incident to the commencement of acquisition, construction or rehabilitation of the Project. Preliminary expenditures may not exceed 20% of the Bond Funded Portion of the Project Funds.

4.21 Change in Use of the Project.

The Recipient reasonably expects to use all Project Funds and the Project for the entire stated term to maturity of the Obligation. Absent an opinion of Nationally-Recognized Bond Counsel to the effect that such use of the Bond Funded Portion of the Project Funds will not adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to Section 103 of the Code; the Recipient will use the Bond Funded Portion of the Project Funds and the Project solely as set forth in this Agreement.

4.22 Rebate Obligations.

If the Recipient satisfies the requirements of one of the spending exceptions to rebate specified in Section

1.148-7 of the Treasury Regulations, amounts earned from investments, if any, acquired with the Bond Funded Portion of the Project Funds will not be subject to the rebate requirements imposed under Section 148(f) of the Code. If the Recipient fails to satisfy such requirements for any period, it will notify the State Water Board and the Bank immediately and will comply with the provisions of the Code and the Treasury Regulations at such time, including the payment of any rebate amount calculated by the State Water Board or the Bank.

4.23 No Federal Guarantee.

The Recipient will not directly or indirectly use any of the Bond Funded Portion of the Project Funds in any manner that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code, taking into account various exceptions including any guarantee related to investments during an initial temporary period until needed for the governmental purpose of the Bonds, investments as part of a bona fide debt service fund, investments of a reasonably required reserve or replacement fund, investments in bonds issued by the United States Treasury, investments in refunding escrow funds or certain other investments permitted under the Treasury Regulations.

4.24 No Notices or Inquiries from IRS.

Within the last 10 years, the Recipient has not received any notice of a final action of the Internal Revenue Service that determines that interest paid or payable on any debt obligation of the Recipient is or was includable in the gross income of an owner or beneficial owner thereof for federal income tax purposes under the Code.

4.25 Amendments.

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The provisions in this Article may be amended, modified or supplemented at any time to reflect changes in the Code upon obtaining written approval of the State Water Board and the Bank and an opinion of Nationally-Recognized Bond Counsel to the effect that such amendment, modification or supplement will not adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to Section 103 of the Code.

4.26 Reasonable Expectations.

The Recipient warrants that, to the best of its knowledge, information and belief, and based on the facts and estimates as set forth in the tax covenants in this Article, the expectations of the Recipient as set forth in this Article are reasonable. The Recipient is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representation made in the provisions in this Article IV.

ARTICLE V MISCELLANEOUS PROVISIONS

5.1 Amendment.

No amendment or variation of the terms of this Agreement shall be valid unless made in writing, signed by the parties and approved as required. No oral understanding or agreement not incorporated in this Agreement is binding on any of the parties.

5.2 Assignability.

The Recipient consents to any pledge, sale, or assignment to the Bank or a trustee for the benefit of the owners of the Bonds, if any, at any time of any portion of the State Water Board's estate, right, title, and interest and claim in, to and under this Agreement and the right to make all related waivers and agreements in the name and on behalf of the State Water Board, as agent and attorney-in-fact, and to perform all other related acts which are necessary and appropriate under this Agreement, if any, and the State Water Board's estate, right, title, and interest and claim in, to and under this Agreement to Installment Payments (but excluding the State Water Board's rights to Additional Payments and to notices, opinions and indemnification under each Obligation). This Agreement is not assignable by the Recipient, either in whole or in part, without the consent of the State Water Board in the form of a formal written amendment to this Agreement.

5.3 Bonding.

Where contractors are used, the Recipient shall not authorize construction to begin until each contractor has furnished a performance bond in favor of the Recipient in the following amounts: faithful performance (100%) of contract value; labor and materials (100%) of contract value. This requirement shall not apply to any contract for less than $25,000.00.

5.4 Competitive Bidding
Recipient shall adhere to any applicable state law or local ordinance for competitive bidding and applicable labor laws.

5.5 Compliance with Law, Regulations, etc.

The Recipient shall, at all times, comply with and require its contractors and subcontractors to comply with all applicable federal and state laws, rules, guidelines, regulations, and requirements. Without limitation of the foregoing, to the extent applicable, the Recipient shall:

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(a) Comply with the provisions of the adopted environmental mitigation plan, if any, for the term of this Agreement;

(b) Comply with the State Water Board's Policy;

(d) Comply with and require its contractors and subcontractors on the Project to comply with federal DBE requirements; and

(e) Comply with and require its contractors and subcontractors to comply with the list of federal laws attached as Exhibit E.

5.6 Conflict of Interest.

The Recipient certifies that its owners, officers, directors, agents, representatives, and employees are in compliance with applicable state and federal conflict of interest laws.

5.7 Damages for Breach Affecting Tax-Exempt Status or Federal Compliance In the event that any breach of any of the provisions of this Agreement by the Recipient shall result in the loss of tax-exempt status for any bonds of the State or any subdivision or agency thereof, including Bonds issued on behalf of the State Water Board, or if such breach shall result in an obligation on the part of the State or any subdivision or agency thereof to reimburse the federal government by reason of any arbitrage profits, the Recipient shall immediately reimburse the State or any subdivision or agency thereof in an amount equal to any damages paid by or loss incurred by the State or any subdivision or agency thereof due to such breach. In the event that any breach of any of the provisions of this Agreement by the Recipient shall result in the failure of Project Funds to be used pursuant to the provisions of this Agreement, or if such breach shall result in an obligation on the part of the State or any subdivision or agency thereof to reimburse the federal government, the Recipient shall immediately reimburse the State or any subdivision or agency thereof in an amount equal to any damages paid by or loss incurred by the State or any subdivision or agency thereof due to such breach.

5.8 Disputes.
(a) The Recipient may appeal a staff decision within 30 days to the Deputy Director of the Division or designee, for a final Division decision. The Recipient may appeal a final Division decision to the State Water Board within 30 days. The Office of the Chief Counsel of the State Water Board will prepare a summary of the dispute and make recommendations relative to its final resolution, which will be provided to the State Water Board’s Executive Director and each State Water Board Member. Upon the motion of any State Water Board Member, the State Water Board will review and resolve the dispute in the manner determined by the State Water Board. Should the State Water Board determine not to review the final Division decision, this decision will represent a final agency action on the dispute.

(b) This clause does not preclude consideration of legal questions, provided that nothing herein shall be construed to make final the decision of the State Water Board, or any official or representative thereof, on any question of law.

(d) This section 5.8 relating to disputes does not establish an exclusive procedure for resolving claims within the meaning of Government Code sections 930 and 930.4.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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5.9 Governing Law.

This Agreement is governed by and shall be interpreted in accordance with the laws of the State of California.

5.10 Income Restrictions.

The Recipient agrees that any refunds, rebates, credits, or other amounts (including any interest thereon) accruing to or received by the Recipient under this Agreement shall be paid by the Recipient to the State Water Board, to the extent that they are properly allocable to costs for which the Recipient has been reimbursed by the State Water Board under this Agreement.

5.11 Indemnification and State Reviews.

The parties agree that review or approval of Project plans and specifications by the State Water Board is for administrative purposes only, including conformity with application and eligibility criteria, and expressly not for the purposes of design defect review or construction feasibility, and does not relieve the Recipient of its responsibility to properly plan, design, construct, operate, and maintain the Project. To the extent permitted by law, the Recipient agrees to indemnify, defend, and hold harmless the State Water Board, the Bank, and any trustee, and their officers, employees, and agents for the Bonds, if any (collectively, "Indemnified Persons"), against any loss or liability arising out of any claim or action brought against any Indemnified Persons from and against any and all losses, claims, damages, liabilities, or expenses, of every conceivable kind, character, and nature whatsoever arising out of, resulting from, or in any way connected with (1) the System or the Project or the conditions, occupancy, use, possession, conduct, or management of, work done in or about, or the planning, design, acquisition, installation, or construction, of the System or the Project or any part thereof; (2) the carrying out of any of the transactions contemplated by this Agreement or any related document; (3) any violation, related to the Project or the financing, of any applicable law, rule or regulation, any environmental law (including, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the California Hazardous Substance Account Act, the Federal Water Pollution Control Act, the Clean Air Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, the Safe Drinking Water Act, the California Hazardous Waste Control Law, and California Water Code Section 13304, and any successors to said laws), rule or regulation or the release of any toxic substance on or near the System; or (4) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements required to be stated therein, in light of the circumstances under which they were made, not misleading with respect to any information provided by the Recipient for use in any disclosure document utilized in connection with any of the transactions contemplated by this Agreement, provided that such indemnity shall not be required for damages that are attributable to the willful misconduct or gross negligence on the part of the State Water Board. The Recipient shall also provide for the defense and indemnification of the Indemnified Parties in any contractual provision extending indemnity to the Recipient in any contract let for the performance of any work under this Agreement, and shall cause the Indemnified Parties to be included within the scope of any provision for the indemnification and defense of the Recipient in any contract or subcontract. To the fullest extent permitted by law, the Recipient agrees to pay and discharge any judgment or award entered or made against Indemnified Persons with respect to any such claim or action, and any settlement, compromise or other voluntary resolution. The provisions of this section shall survive the term of this Agreement and the discharge of the Recipient's Obligation hereunder.

5.12 Independent Actor.

The Recipient, and its agents and employees, if any, in the performance of this Agreement, shall act in an independent capacity and not as officers, employees, or agents of the State Water Board.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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5.13 Leveraging Covenants.
(a) Tax Covenant. Notwithstanding any other provision hereof, the Recipient covenants and agrees that it will comply with the Tax Covenants set forth in Article IV of this Agreement.

(b) Disclosure of Financial Information, Operating Data, and Other Information. The Recipient covenants to furnish such financial, operating and other data pertaining to the Recipient as may be requested by the State Water Board to: (i) enable the State Water Board to cause the issuance of Bonds and provide for security therefor; or (ii) enable any underwriter of Bonds issued for the benefit of the State Water Board to comply with Rule 15c2-12(b)(5). The Recipient further covenants to provide the State Water Board with copies of all continuing disclosure reports and materials concerning the Recipient required by the terms of any financing other than this Agreement and to submit such reports to the State Water Board at the same time such reports are submitted to any dissemination agent, trustee, nationally recognized municipal securities information repository, the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) website or other person or entity.

5.14 Non-Discrimination Clause.
(a) During the performance of this Agreement, Recipient and its contractors and subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, sexual orientation, physical disability (including HIV and AIDS), mental disability, medical condition (cancer), age (over 40), marital status, denial of family care leave, or genetic information, gender, gender identity, gender expression, or military and veteran status.

(b) The Recipient, its contractors, and subcontractors shall ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment.

(c) The Recipient, its contractors, and subcontractors shall comply with the provisions of the Fair Employment and Housing Act and the applicable regulations promulgated thereunder. (Gov.

Code, §12990, subds. (a)-(f) et seq.;Cal. Code Regs., tit. 2, § 7285 et seq.) Such regulations are incorporated into this Agreement by reference and made a part hereof as if set forth in full.

(d) The Recipient, its contractors, and subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.
(e) The Recipient shall include the nondiscrimination and compliance provisions of this clause in all subcontracts to perform work under the Agreement.

5.15 No Third Party Rights.

The parties to this Agreement do not create rights in, or grant remedies to, any third party as a beneficiary of this Agreement, or of any duty, covenant, obligation, or undertaking established herein.

5.16 Operation and Maintenance; Insurance.

The Recipient agrees to staff, operate and maintain all portions of the System during its useful life in accordance with all applicable state and federal laws, rules, and regulations.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
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While the Obligation shall be outstanding, the Recipient will procure and maintain or cause to be maintained insurance on the System with responsible insurers, or as part of a reasonable system of self- insurance, in such amounts and against such risks (including damage to or destruction of the System) as are usually covered in connection with systems similar to the System. Such insurance may be maintained by the maintenance of a self-insurance plan so long as any such plan provides for (i) the establishment by the Recipient of a separate segregated self-insurance fund, or self-insurance program established to accomplish similar purposes and acceptable to the State Water Board, funded in an amount determined (initially and on at least an annual basis) by the Recipient (by the division or divisions experienced in the field of risk management) and (ii) the establishment and maintenance of a claims processing and risk management program.

In the event of any damage to or destruction of the System caused by the perils covered by such insurance, the net proceeds thereof shall be applied to the reconstruction, repair or replacement of the damaged or destroyed portion of the System. The Recipient shall begin such reconstruction, repair or replacement as expeditiously as possible, and shall pay out of such net proceeds all costs and expenses in connection with such reconstruction, repair or replacement so that the same shall be completed and the System shall be free and clear of all claims and liens. If such net proceeds are insufficient to enable the Recipient to pay all remaining unpaid principal portions of the Installment Payments, if any, the Recipient shall provide additional funds to restore or replace the damaged portions of the System.

Recipient agrees that for any policy of general liability insurance concerning the construction of the Project, it will cause, and will require its contractors to cause, a certificate of insurance to be issued showing the State Water Board, its officers, agents, employees, and servants as additional insured; and shall provide the Division with a copy of all such certificates prior to the commencement of construction of the Project.

5.17 Permits, Subcontracting, and Remedies.

The Recipient shall comply in all material respects with all applicable federal, state and local laws, rules and regulations. Recipient shall procure all permits, licenses and other authorizations necessary to accomplish the work contemplated in this Agreement, pay all charges and fees, and give all notices necessary and incidental to the due and lawful prosecution of the work. Signed copies of any such permits or licenses shall be submitted to the Division before construction begins.

The Recipient shall not contract or allow subcontracting with excluded parties. The Recipient shall not contract with any party who is debarred or suspended or otherwise excluded from or ineligible for participation in any work overseen, directed, funded, or administered by the State Water Board program for which this funding is authorized. For any work related to this Agreement, the Recipient shall not contract with any individual or organization on the State Water Board’s List of Disqualified Businesses and Persons that is identified as debarred or suspended or otherwise excluded from or ineligible for participation in any work overseen, directed, funded, or administered by the State Water Board program for which funding under this Agreement is authorized. The State Water Board’s List of Disqualified Businesses and Persons is located at
http://www.waterboards.ca.gov/water_issues/programs/enforcement/fwa/dbp.shtml.

5.18 Prevailing Wages.

The Recipient agrees to be bound by all applicable provisions of State Labor Code regarding prevailing wages. The Recipient shall monitor all agreements subject to reimbursement from this Agreement to ensure that the prevailing wage provisions of the State Labor Code are being met. In addition, the Recipient agrees to comply with the provisions of Exhibit G (Davis-Bacon).

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
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5.19 Public Funding.

This Project is publicly funded. Any service provider or contractor with which the Recipient contracts must not have any role or relationship with the Recipient, that, in effect, substantially limits the Recipient's ability to exercise its rights, including cancellation rights, under the contract, based on all the facts and circumstances.

5.20 Recipient’s Responsibility for Work.

The Recipient shall be responsible for all work and for persons or entities engaged in work performed pursuant to this Agreement, including, but not limited to, contractors, subcontractors, suppliers, and providers of services. The Recipient shall be responsible for responding to any and all disputes arising out of its contracts for work on the Project. The State Water Board will not mediate disputes between the Recipient and any other entity concerning responsibility for performance of work.

5.21 Related Litigation.

Under no circumstances may the Recipient use funds from any disbursement under this Agreement to pay costs associated with any litigation the Recipient pursues against the State Water Board or any Regional Water Quality Control Board. Regardless of the outcome of any such litigation, and notwithstanding any conflicting language in this Agreement, the Recipient agrees to repay all of the disbursed funds plus interest in the event that Recipient does not complete the project.

5.22 Rights in Data.

The Recipient agrees that all data, plans, drawings, specifications, reports, computer programs, operating manuals, notes, and other written or graphic work produced in the performance of this Agreement are subject to the rights of the State as set forth in this section. The State shall have the right to reproduce, publish, and use all such work, or any part thereof, in any manner and for any purposes whatsoever and to authorize others to do so. If any such work is copyrightable, the Recipient may copyright the same, except that, as to any work which is copyrighted by the Recipient, the State reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, and use such work, or any part thereof, and to authorize others to do so, and to receive electronic copies from the Recipient upon request.

5.23 State Water Board Action; Costs and Attorney Fees.

Any remedy provided in this Agreement is in addition to and not in derogation of any other legal or equitable remedy available to the State Water Board as a result of breach of this Agreement by the Recipient, whether such breach occurs before or after completion of the Project, and exercise of any remedy provided by this Agreement by the State Water Board shall not preclude the State Water Board from pursuing any legal remedy or right which would otherwise be available. In the event of litigation between the parties hereto arising from this Agreement, it is agreed that each party shall bear its own costs and attorney fees.

5.24 Termination; Immediate Acceleration; Interest.
(a) This Agreement may be terminated by written notice during construction of the Project, or thereafter at any time prior to complete satisfaction of the Obligation by the Recipient, at the option of the State Water Board, upon violation by the Recipient of any material provision of this Agreement after such violation has been called to the attention of the Recipient and after failure of the Recipient to bring itself into compliance with the provisions of this Agreement within a reasonable time as established by the Division.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
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(b) In the event of such termination, the Recipient agrees, upon demand, to immediately repay to the State Water Board an amount equal to Project Funds disbursed hereunder, accrued interest, penalty assessments, and Additional Payments. Notwithstanding the foregoing, such repayments shall be subject to, and on parity with, the remedies of parity bondholders under the Indenture in the event of acceleration. In the event of termination, interest shall accrue on all amounts due at the highest legal rate of interest from the date that notice of termination is mailed to the Recipient to the date all monies due have been received by the State Water Board.

5.25 Timeliness.

Time is of the essence in this Agreement.

5.26 Unenforceable Provision.

In the event that any provision of this Agreement is unenforceable or held to be unenforceable, then the parties agree that all other provisions of this Agreement have force and effect and shall not be affected thereby.

5.27 Useful Life.

The Recipient warrants that the economic useful life of the Project, commencing at Project Completion, is at least equal to the term of this Agreement, as set forth in Exhibit B hereto.

5.28 Venue.

Any action arising out of this Agreement shall be filed and maintained in the Superior Court in and for the County of Sacramento, California.

5.29 Waiver and Rights of the State Water Board.

Any waiver of rights by the State Water Board with respect to a default or other matter arising under the Agreement at any time shall not be considered a waiver of rights with respect to any other default or matter.

Any rights and remedies of the State Water Board provided for in this Agreement are in addition to any other rights and remedies provided by law.

This Agreement, and any amendments hereto, may be executed and delivered in any number of counterparts, each of which when delivered shall be deemed to be an original, but such counterparts shall together constitute one document. The parties may sign this Agreement, and any amendments hereto, either by an electronic signature using a method approved by the State Water Board or by a physical, handwritten signature. The parties mutually agree that an electronic signature using a method approved by with the State Water Board is the same as a physical, handwritten signature for the purposes of validity, enforceability, and admissibility.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
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IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto.

PUBLIC UTILITIES COMMISSION OF THE
CITY AND COUNTY OF SAN FRANCISCO:

By: ____________________________________
Name: Dennis Herrera
Title: General Manager

Date: __________________________________

Approved as to form:

DAVID CHIU
City Attorney of the City and County of San
Francisco

By: ____________________________________
Name: Mark D. Blake
Title: Deputy City Attorney
Acknowledged:

STATE WATER RESOURCES CONTROL BOARD:

By: ____________________________________
Name: Joe Karkoski
Title: Deputy Director, Division of Financial
Assistance

Date: __________________________________

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – SCOPE OF WORK

A-1

1. The Recipient agrees to start construction no later than the estimated date of March 1, 2017.

2. The Completion of Construction date is hereby established as June 18, 2022October 7, 2024.

3. The Recipient agrees to ensure that its final Request for Disbursement is received by the Division no later than six months after Completion of Construction, unless prior approval has been granted by the DivisionJuly 7, 2025. Otherwise, the undisbursed balance of this Agreement will be deobligated.

4. Incorporated by reference into this Agreement are the following documents:
(a) the Final Plans & Specifications, received July 13, 2018, dated December 2016, and Addenda Nos. 1, 2, 3, 4, and 5, issued January 24, 2017, February 6, 2017, February 16, 2017, March 13, 2017, March 17, 2017, respectively, which are the basis for the construction contract to be awarded by the Recipient to S. J. Amoroso, (RW Treatment Facility); (b) the Final Plans & Specifications, received July 13, 2018, dated July 2016, and Addenda Nos. 1,2,3,4 and 5 issued August 8, 2016, August 30, 2016, September 2, 2016, September 13, 2016 and September 16, 2016, respectively, which are the basis for the construction contract to be awarded by the Recipient to JMB Construction, Co. (RW Pipeline); (c) the Final Plans & Specifications, receive January 6, 2022, dated November 2018 for the Pump Station and Reservoir and August 2019 for Irrigation Retrofits; Pump Station and Reservoir Addenda Nos. 1 and 2, issued January 29, 2019 and February 6, 2019, respectively. Irrigation Retrofit Addenda Nos. 1 through 9, issued October 15, 2019, November 8, 2019, November 15, 2019, November 19, 2019, January 3, 2020, February 20, 2020, March 27, 2020, April 22, 2020, and May 15, 2020, respectively. (cd) the Waste Discharge Requirement Order No. R2-2009-0062 and National Pollutant Discharge Elimination System Permit No.CA0037681; and
(de) the Recipient’s Reimbursement Resolution No. 15-0196 dated September 22, 2015.

5. Reporting. Status Reports due at least quarterly.

6. Project Objectives:

The Project objective is to offset the use of potable water for landscape irrigation of Golden Gate Park, Lincoln Park Golf Course, and Presidio Trust Properties by developing a recycled water treatment and distribution system in the west side area of the City.

7. Scope of Work
This Project includes facilities to produce a delivery of about 2 million 1.6 million gallons per day of recycled water for irrigation use in the western end of San Francisco. The Project includes a new recycled water treatment facility consisting of membrane filtration, reverse osmosis, and ultraviolet light disinfection; a 1.6 million gallon approximately 800,000 gallon storage reservoir; distribution pumping facilities; 6 miles approximately 8 miles of new distribution pipelines; and retrofit of existing irrigation systems for compliance with Title 22 regulations.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – SCOPE OF WORK

A-2

8. Signage.

The Recipient shall place a sign at least four feet tall by eight feet wide made of ¾ inch thick exterior grade plywood or other approved material in a prominent location on the Project site and shall maintain the sign in good condition for the duration of the construction period. The sign must include the following disclosure statement and color logos (available from the Division):

“Funding for this $186,220,000 $191,094, 031 San Francisco Westside Recycled Water Project has been provided in full or in part by the Proposition 1 – the Water Quality, Supply, and Infrastructure Improvement Act of 2014 and the Clean Water State Revolving Fund through an agreement with the State Water Resources Control Board. California’s Clean Water State Revolving
Fund is capitalized through a variety of funding sources, including grants from the United States Environmental Protection Agency and state bond proceeds.” The Project sign may include another agency's required promotional information so long as the above logos and disclosure statement are equally prominent on the sign. The sign shall be prepared in a professional manner.

The Recipient shall include the following disclosure statement in any document, written report, or brochure prepared in whole or in part pursuant to this Agreement:

“Funding for this Project has been provided in full or in part through an agreement with the State Water Resources Control Board. California’s Clean Water State Revolving Fund is capitalized through a variety of funding sources, including grants from the United States Environmental Protection Agency and state bond proceeds. The contents of this document do not necessarily reflect the views and policies of the foregoing, nor does mention of trade names or commercial products constitute endorsement or recommendation for use.”

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL
A-FBA-1

Table 1: Approved Construction Bid Amount
CONTRACTOR AMOUNT BID APPROVED COSTS1
S.J Amoroso Construction, Co.* (FBA #1) $87,597,000 $86,207,000 JMB Construction, Co.*(FBA #1) $21,729,720 $18,884,710
JMB Construction, Co.*(FBA #2) $15,633,200 $15,138,200
Fontenoy Engineering, Inc. (FBA#2) $2,483,525 $2,366,025 *A difference occurs in the amount bid vs. the approved costs due to some bid items not being eligible for construction. These items are however eligible as change order contingencies and have been allocated in the contingency budget in the table below.

1. A difference between the amount bid and the approved costs exists due to some bid items not being eligible for construction. These items are eligible as change order contingencies and have been allocated in the contingency budget in Table 2 below.

1 - BUDGET

Table 2: Approved Final Project Budget

PROJECT COST TABLE

TYPE OF WORK APPROVED BUDGET
Prop 1 Grant CWSRF 1% Loan
A. Construction
S.J. Amoroso $15,000,000 $71,207,000
JMB Construction, Co. $0 $18,884,710
To Be Determined $0 $26,416,944

B. Change Order Contingency $0 $14,648,988

C. Allowances
Planning $0 $0
Design $0 $481,523
Construction Management $0 $24,038,000
Administration $0 $15,542,835

Subtotal - C $0 $40,062,358

Totals (A+B+C) $15,000,000 $171,220,000
TOTAL $186,220,000

A-FBA-2

PROJECT COST TABLE

TYPE OF WORK APPROVED BUDGET
A. Construction
S.J. Amoroso Construction, Co. (FBA #1 – Recycled Water Treatment Facilities) $86,207,000
JMB Construction, Inc. (FBA #1 – Pipeline) $18,884,710
JMB Construction, Inc. (FBA #2 - Pump Station and Reservoir) $15,138,200 Fontenoy Engineering, Inc. (FBA #2 - Irrigation Retrofits) $2,366,025

B. Change Order Contingency $17,388,494

C. Allowances
Planning $0
Design $8,381,554
Construction Management $25,770,612
Administration $16,957,436

Subtotal - C $51,109,602

TOTAL (Subtotal A+B+C) $191,094,031
Note:
• $15,000,000 of the approved budget is anticipated to be funded using Proposition 1 Grant through the WRFP.
• $176,094,031 of the approved budget is anticipated to be funded using a CWSRF loan at a 1% interest rate.
• Adjustments may be made between line items on the final request for disbursement.

2 - PROJECT ELIGIBILITY DETERMINATION

The eligibility determinations and conditions of approval identified below are based on the review of:

• Stamped and Signed Final Plan and Specifications (P&S) for the Project received July 13, 2018, dated December 2016** and July 2016*;

• Addenda Nos. 1, 2, 3, 4, and 5 issued January 24, 2017, February 6, 2017, February 16, 2017, March 13, 2017, March 17, 2017, respectively for S.J. Amoroso Construction, Co.*.

• Addenda Nos. 1, 2, 3, 4, and 5 issued, August 8, 2016, August 30, 2016, September 2, 2016, September 13, 2016, and September 16, 2016 respectively for JMB Construction, Co.*.

• Stamped and Signed Final Plan and Specifications (P&S) for the Project received January 6, 2022, dated November 2018 for the Pump Station and Reservoir and August 2019 for Irrigation Retrofits;

A-FBA-3

• Pump Station and Reservoir Addenda Nos. 1 and 2, issued January 29, 2019 and February 6, 2019, respectively. Irrigation Retrofit Addenda Nos. 1 through 9, issued October 15, 2019, November 8, 2019, November 15, 2019, November 19, 2019, January 3, 2020, February 20, 2020, March 27, 2020, April 22, 2020, and May 15, 2020, respectively.

The eligibility determination for the bid items shown in the schedule of values provided by the Recipient are as follows:

Table 3: Eligibility Determination Agreement:

S.J. Amoroso (FBA#1):

Bid Item Description Percent Eligibility
1 Mobilization 100%
2 Demobilization 100%
3 City Representative’s Field Office 100%
4 Yard Area: Site & Utilities Demolition 100%
5 Yard Area: Civil Site Work 100%
6 Yard Area: New Piping 100%
7 Cathodic Protection 100%
8 Yard Area: New Pipe Trench, OSP 510 Fill Station Spill Containment and OSP 011 Chemical Delivery Spill Containment 100%
9 OSP 510: Demolition of Existing Chemical Building 100% 10 OSP 510: Chemical Building Area Architectural Work 100% 11 OSP 510: Chemical Building Area Structural Work 100% 12 OSP 510: Chemical Building Area Mechanical Process Work 100% 13 OSP 510: Chemical Building Mechanical HVAC Work 100% 14 OSP 510: Chemical Building Mechanical Plumbing Work 100% 15 OSP 510: Chemical Building Fire Protection Work 100% 16 OSP 510: New Chemical Building and Fill Station Electrical Power 100% 17 OSP 510: New Chemical Building and Fill Station Lighting 100% 18 OSP 510: New Chemical Building and Fill Station Communication and Instrumentation and Control (I&C) Systems 100%
19 OSP 510: New Chemical Building and Fill Station Fire Alarm System 100% 20 OSP 530: Secondary Effluent Pump and Piping Systems for OSP 530 100% 21 OSP 530: Mechanical Process System for OSP 530 Backup Sodium Hypochlorite 100%
22 OSP 530: Electrical Power System 100%
23 OSP 530: Instrumentation and Control (I&C) System 100% 24 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Excavation and Backfill 100%
25 OSP 580/581: Abandonment of Drilled Tieback Hole 100% 26 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Site and Yard Excavation Support and Protection
100%
27 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Structural Work 100%

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL

A-FBA-4

28 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Architectural Work 100%
29 OSP 580: New Westside Recycled Water Treatment Facility Mechanical Pumps 100%
30 OSP 580: New Westside Recycled Water Treatment Facility Mechanical Process Systems 100%
31 OSP 581: New Westside Recycled Water Treatment Facility Transmission Pump Station Mechanical Pumping System 100% 32A OSP 580: New Westside Recycled Water Treatment Facility Membrane Filtration System Procurement 100%
32B
OSP 580: New Westside Recycled Water Treatment Facility Membrane Filtration System—Installation for Fully Operational System
100%
33 OSP 580/581: New Westside Recycled Water Treatment Facility System and Transmission Pump Station Mechanical/HVAC Work 100% 34 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Plumbing Work 100%
35 OSP 580-/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Electrical Power System 100% 36 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Lighting System 100%
37 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Communication System 100% 38 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Fire Alarm System 100%
39 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station Security System 100%
40 OSP 580/581: New Westside Recycled Water Treatment Facility and Transmission Pump Station I&C Systems 100%
41 OSP 580/581: Landscape Site Work 100%
42 Staging Area 4 Development 100%
43 Contingency Allowance for Investigation/Assessment of Sluice Gate and Related Equipment Condition and
Refurbishment/Replacement of Observed Deficiencies
0% (See Condition 1)
44 Contingency Allowance for Additional Hazardous Material Testing and Removal 0% (See Condition 1)
45 Contingency Allowance for Additional Relocation of Underground Utilities Not Already Included in Contract Documents 0% (See Condition 1) 46 Contingency Allowance for Unforeseen or Differing Site Conditions 0% (See Condition 1)
47 Contingency Allowance for Additional Site Restoration 0% (See Condition 1) 48 Contingency Allowance for Additional Independent Inspection and Testing and Utility Locating 0% (See Condition 1)
49 Cash Allowance for City Representative Field Office Supplies 0% (See Condition 1) 50 Cash Allowance for Dispute Review Advisor and Partnering 0% (See Condition 1)

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL

A-FBA-5
51 Contingency Allowance for Additional Programming for Plant DCS System 0% (See Condition 1)
52 Contingency Allowance for Additional Work for Facility Shutdown 0% (See Condition 1) 53 Environmental Fencing 100%

JMB Construction, Co.(FBA#1):

Bid Item Description Percent Eligibility
1 Mobilization 100%
2 Demobilization 100%
3 GPS as-built drawings 100%
4 Contingency allowance for additional hazardous material testing and removal
0% (See Condition 1)
5 Contingency allowance to perform necessary work due to unforeseen conditions related to recycled water work
0% (See Condition 1)
6 Contingency allowance to perform necessary work due to unforeseen conditions related to sewer work.
0% (See Condition 1)
7 Contingency allowance to perform necessary work due to unforeseen conditions related to additional soil improvement, dewatering and soil monitoring work at locations requiring deep excavation greater than 9-feet
0% (See Condition 1)
8 Contingency allowance for removal of cable car yokes if encountered beneath the pavement related to recycled water work
0% (See Condition 1)
9 Contingency allowance for additional environmental requirements 0% (See Condition 1) 10 Cash allowance for additional independent inspection and testing for recycled water pipeline installation work
0% (See Condition 1)
11 Cash allowance for replacement of SFMTA signage 0% (See Condition 1) 12 Cash allowance for City representative field office supplies 0% (See Condition 1) 13 Cash allowance for dispute review advisor and partnering 0% (See Condition 1) 14 Cash allowance for excavation permit fee accessed by BSM 0% (See Condition 1) 15 Cash allowance for uniformed off-duty San Francisco Police Officers 0% (See Condition 1)
16 Cash allowance for City representative field office 0% (See Condition 1) 17 Cash allowance for identifying and locating water main as shown on reference plans 0% (See Condition 1)
T-1 Traffic routing for recycled water pipeline work 100% T-2 Traffic routing for paving work 100%
T-3 Traffic routing sewer work 100%
T-4 Temporary pavement marking 100%
P-1 Trench shoring and bracing per all applicable safety orders 100% P-2 Additional shoring for pipeline work 0% (See Condition 1) P-3 Excavate & backfill for 8-inch diameter pipe trench: 18” wide by 58” deep 100%
P-4 Excavate & backfill for 16-inch diameter pipe trench: 30” wide by 58” deep 100%
P-5 Additional excavation & backfill for water pipeline work 0% (See Condition 1) Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL

A-FBA-6
P-6 Furnish & install 8-inch diameter ductile iron pipe with polyethylene encasement for recycled water work 100%
P-7 Furnish & install 16-inch diameter ductile iron pipe with polyethylene encasement for recycled water work 100%
P-8 Furnish & install 8-inch diameter ductile iron pipe fittings with polyethylene encasement 100%
P-9 Furnish & install 16-inch diameter ductile iron pipe fittings with polyethylene encasement 100%

P-10

Furnish and install 16-inch ductile iron pipe inside 30-inch diameter steel casing installed by trenchless operation

100%
P-11 Jacking and receiving pits 100%
P-12 Settlement monitoring related to trenchless operation 100% P-13 Corrosion control system 100%
P-14 Exploratory potholes (2-foot wide x 3-foot long x 5-foot deep) 0% (See Condition 1) P-15
Replace 6” or 8” diameter VCP side sewers & 10” diameter VCP culvert necessary for installation of recycled water pipeline as directed by the City Representative
0% (See Condition 1)
P-16 AWSS settlement reference and monitoring points 100% P-17
Reconstruct pavement outside of recycled water T-trench and concrete base repair limit under r-drawings with 8-inch thick concrete base for water work per excavation regulations as directed by the City Representative
0% (See Condition 1)
P-18 Restoration work outside of water trench limit and paving limit for water work per PR-drawings 100%
P-19 Asphalt concrete milling outside of paving limit for water work per PR-Drawings 100%
P-20 Asphalt concrete filling outside of paving limit for water work per PR-drawings 100%
P-21 Environmental fencing 100%
M-1
Furnish and install 2-inch diameter manual air valve assemblies on 8-inch diameter ductile iron pipes with associated
appurtenances and accessories
100%
M-2
Furnish and install 2-inch diameter manual air valve assemblies on 16-inch diameter ductile iron pipes with associated
appurtenances and accessories
100%
M-3 Furnish and install 3-inch combination air valve assemblies with associated appurtenances and accessories 100%
M-4 Furnish & install 4-inch diameter blow off assemblies with associated appurtenances and accessories 100%
M-5 Furnish and install 8-inch diameter gate valves with associated appurtenances and accessories 100%
M-6 Furnish & install 16-inch diameter gate valves with associated appurtenances and accessories 100%
M-7
Furnish & install vault near the entrance to Lincoln Park with revenue flow meter, pressure reducing valve, associated appurtenances and accessories
100%

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL

A-FBA-7
M-8 Furnish & install vault at the entrance to the Presidio with Flowmeter, associated appurtenances and accessories 100% R-1 Full depth planning per 2-inch depth of cut 100%
R-2 Asphalt concrete (Type A, ½ inch maximum with medium grading) 100% R-4 8-inch thick concrete base 100%
R-5 6-inch wide concrete curb 100%
R-6 Combined 6-inch wide concrete curb and 2-ft wide concrete gutter 100% R-7 3 1/2 -inch thick concrete sidewalk 100%
R-8 Pull box “Type I” replacement 100%
R-9 Pull box “Type III” Replacement 100%
R-10 Changeable message signs 100%
R-11 Remove and reconstruct portion of traffic circle (CCSF standard

87.176) 100%

R-12

Adjust City-Owned Manhole and catch basin frame and casting to grade

0% (See Condition 1)
R-13 Adjust City-owned hydrant and watermain valve box casting cover to grade 0% (See Condition 1)
R-14 Construct standard concrete curb ramp w/ detectable surface tiles to current City standards per excavation regulations 100% R-15 8-inch thick concrete pavement or parking strip related to curb ramp work 100%
SW-1 Trench and excavation support for sewer work 100%
SW-2 Concrete manhole for 12-inch to 24-inch diameter sewers with frame and cover (per SFDPW std. plan 87.181) 100%
SW-3 Concrete catch basin with new frame and grating (per SFDPW std. plan 87.188) 100%
SW-4 12-inch diameter VCP sewer on crushed rock bedding wrapped in geotextile fabric 100%
SW-5 10-inch diameter VCP culvert within sewer work limits 0% (See Condition 1) SW-6 Television inspection of existing 6-inch or 8-inch diameter side sewers and 10-inch diameter culverts within sewer work limits 0% (See Condition 1) SW-7
Television inspection of existing 6-inch or 8-inch diameter side sewers and 10-inch diameter culverts outside of sewer work limits and within project limits
0% (See Condition 1)
SW-8 6 or 8-inch side sewer connection 0% (See Condition 1) SW-9 6-inch or 8-inch diameter VCP side sewer and 10-inch diameter culvert repair, replacement or reconstruction 0% (See Condition 1) SW-10 Post-construction television inspection of newly constructed main sewers 100%
SW-11 Post-construction television inspection of newly constructed side sewers and culverts 0% (See Condition 1)
SW-12 Cast iron water trap for catch basin including cleanout cap per SFDPW Std. Plan 87.194 0% (See Condition 1)

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT A – FINAL BUDGET APPROVAL
A-FBA-8
SW-13
Reconstruct pavement outside of sewer T-trench limit and outside of base repair work limits under R-drawings with 8-inch thick concrete base per excavation regulation as directed by the City Representative
0% (See Condition 1)
SW-14 Control density fill bedding material for water main and AWSS facilities encountered within the sewer trench prior to backfill 0% (See Condition 1)

JMB Construction Inc. (FBA#2 - Pump Station and Reservoir) Bid Item Description Percent Eligibility
1 Mobilization 100%
2 Demobilization 100%
3 Cash Allowance for City Field Office and Supplies 0% (See Condition 1) 4 Contingency Allowance for Field Office Site Restoration 0% (See Condition 1) 5 Contingency Allowance for Additional Hazardous Materials Testing and Removal 0% (See Condition 1)
6 Contingency Allowance for Unforeseen or Differing Site Conditions 0% (See Condition 1)
7 Contingency Allowance for Additional Site Restoration 0% (See Condition 1) 8 Contingency Allowance for Additional Independent
Inspection and Testing 0% (See Condition 1)
9 Cash Allowance for Dispute Review Advisor and Partnering 0% (See Condition 1) 10A West End Dump Demolition, Site Work, and Composting Operations Equipment Relocation 100%
10B West End Dump Compost Pile Relocation 100%
11 Civil Site Demolition/Relocation 100%
12 Excavation Support and Protection (Sheeting and Shoring) 100% 13 Site Work 100%
14 North Yard Piping 100%
15 Landscape 100%
16 Architectural Work - RW Pump Station 100%
17 Removable Skylight System 100%
18 Security Fence and Gate 100%
19 Pump Station Yard Trench and Slab Waterproofing 100% 20 Integral Crystalline Waterproofing 100%
21 Existing Golden Gate Park Central Reservoir North End Site Excavation and Backfill 100%
22 Cored Drill Holes on Existing Golden Gate Park Central Reservoir North Wall 100%
23 Reinforced Concrete (Shotcrete) Wall on Inside Face of Existing Golden Gate Park Central Reservoir North Wall 100% 24 New Recycled Water Reservoir Site Excavation and Backfill 100% 25 Reinforced Concrete Recycled Water Reservoir, Pump
Station, and Pump Station Yard 100%
26 Structural Steel Work for Recycled Water Reservoir, Pump Station and Pump Station Yard 100%
27 New Compost Backstop Wall Site Excavation and Backfill 100% 28 Reinforced Concrete Compost Backstop Wall and
Foundation 100%

A-FBA-9
29 Actuator Enclosure Concrete Pads Excavation and Backfill 100% 30 Actuator Enclosure Concrete Pads 100%
31 Pumps 100%
32 Piping 100%
33 Hydropneumatic Tanks and Compressed Air System 100%
34 Ventilation System 100%
35 Valves 100%
36 New Electrical Work and the New RW Pump Station 100% 37 New Electrical Work and the Existing Central Pump Station 100% 38 Electrical Commissioning 100%
39 PG&E Conduit Routing to New Transformer 100%
40 I&C Work for New RW Pump Station 100%
41 Contingency Allowance for Existing Central Pump Station I&C Work 100%
42 Furnish and Install Cathodic Protection System, Insulating Flange Kit and Test Stations on the Pipeline 100%
43 New Recycled Water Pump Station and Rservoir Security System 100%
44 Traffic Routing 100%
45 Testing of Existing Lincoln Park and Presidio Revenue Flowmeters 100%
Bid items as shown in the schedule of values provided by the Recipient

Fontenoy Engineering, Inc. (FBA #2 - Irrigation Retrofits) Bid Item Description Percent Eligibility
G1 Mobilization (No New City Trailer) 100%
G2 Demobilization 100%
G3 Cash Allowance For Additional Supplies And Equipment For City Representative's Existing Field Office 0% (See Condition 1) G4 Contingency Allowance For Additional Hazardous Material Testing And Removal 0% (See Condition 1)
G5 Contingency Allowance For Unforeseen Or Differing Site Conditions 0% (See Condition 1)
G6 Contingency Allowance For Additional Site Restoration 0% (See Condition 1) G7 Cash Allowance For Additional Independent Inspection And Testing 0% (See Condition 1)
G8 Cash Allowance For Dispute Resolution Advisor 0% (See Condition 1) G9 Cash Allowance for Partnering Fees and Expenses 0% (See Condition 1) 1 Contract Safety Requirements 100%
2 Demolition Work At Elk Glen Pump Station 100%
3 Potholing/Field Location 100%
4 Excavation Support And Protection (Sheeting And Shoring) 100% 5B Wildlife and Environmental Fencing 100%
6A Furnish And Install Recycled Water Tags 100%
6B Furnish And Install Potable Water Tags 100%
7A Replace Top Half Of Existing Two Piece I" Quick Coupling Valve With Locking Purple Thermoplastic Cover 100%

A-FBA-10
7B Replace Existing Hose Bibb With New Two Piece 1" Quick Coupling Valve With Locking Thermoplastic Cover 100%
8A Paint Hydrants Connected To Irrigation System 100%
8B Paint Standpipes Connected To Irrigation System 100% 9 Valves 100%
10 Furnish And Install 3" City Sub-Meter 100%
11A Furnish And Install 1 -Inch Backflow Preventer 100% 11B Furnish And Install 2 -Inch Backflow Preventer 100% 11C Furnish And Install 3 -Inch Backflow Preventer 100% 13 Lincoln Park Golf Course Recycled Water Point Of
Connection 100%
14 Piping 100%
15A Lake Outlet - Middle Drive Meter Vault 100%
15B Lake Outlet - Elk Glen Lake Pump Station Improvements 100% 15C Lake Outlet - Lloyd Lake Outlet Improvement 100%
16A Site Advisory Signs 100%
16B Site Advisory Decals On Hardscape 100%
17 Traffic Routing 100%
21 Furnish A-Frame Signs 100%
COV-1 COVID-19 Infectious Disease Preparedness And Response Plan (IDPRP) 0% (See Condition 1)
COV-2 COVID-19 Impacts To Construction Activities 0% (See Condition 1) Bid items as shown in the schedule of values provided by the Recipient

Eligibility Determination Conditions of Approval

1. The following bid items are considered contingencies and will be included in the Construction Contingency budget not the Construction budget: S.J. Amoroso Bid Items 43 through 52, JMB Construction, Co. bid items 4 through 17, P-2, P-5, P-14, P-15, P-17, R-12, R-13, SW-5 through SW-9 and SW-11 through SW-14.

2. Necessary insurance directly related to the construction contract and extending throughout the period of the construction contract will be eligible for CWSRF financing. This includes builder risk insurance, public liability insurance, fire, and Project specific insurance.

3. Earthquake insurance and “Act of God” insurance are ineligible for funding.

4. Asphalt pavement, corresponding improvements, and excavation and refill materials due to trenching are limited to replacement of the trench width plus one foot on each side of the trench disturbed due to the construction work of the subject contract only. Full lane width paving or slurry seal is eligible only if required by ordinance or code.

5. The cost of local permits and licenses other than those issued by the Recipient are eligible for CWSRF financing.

6. The approved change order contingency may not be increased above the approved contingency shown in Table 2. Any unclaimed construction or allowance costs may also be used towards construction change orders. The change order approval may not: (1) increase the maximum amount of the financing agreement based on Table 2: Approved Construction Budget, (2) increase the term of the financing agreement, or (3) result in a substantial change in the Project scope.

A-FBA-11

7. Review of the P&S by the Division is conducted to determine eligibility and administrative compliance with the Policy. Issuance of the FBA does not relieve the Recipient and the design engineer of their legal liability for the adequacy of the design.
3 – PROJECT COMPLETION
Project Completion Report
The Project completion report shall contain the following:

1. A description of the final constructed Project.

2. A description of the water problem the Project sought to address.

3. A discussion of the Project’s likelihood of successfully addressing that water problem in the future, and

4. Summarize compliance with environmental conditions, if applicable.

Project Completion Reporting

1. The Recipient must notify the appropriate Regional Water Board and the Division that its Project was completed by submitting a Project Completion Report to the Division with a copy to the Regional Water Board. The Project Completion Report must be submitted on or before the due date established per section XIII(B)(2) of the CWSRF Policy.

2. The State Water Board expects the Recipient to prepare and send a timely and complete report. The State Water Board may avail itself of any legal means to obtain this report. (See Water Code §13267.)

Annual Reporting for Water Recycling Projects

The Water Recycling Funding Program requires submittal of an Annual Progress Report for a period of five years following completion of construction. The due date of the report is the 28 th day of February
following the end of each calendar year after completion of construction. At minimum, the reports should cover the following topics:

1. Restate the original objective/goal of the Project.

2. Provide the total monthly and annual recycled water deliveries, and a list of recycled water users and their type of use for the approved Project by calendar year. Please present data in a table showing users vs. month. If the recycled water deliveries are supplemented with potable or fresh water by the Recipient (as opposed to the user), provide the monthly and total amounts.

3. Describe Project operation including problems encountered and any physical or operational modifications made to the Project during the year or proposed for the coming year. Describe any particular successes or problems experienced by the users.

4. Provide operation and maintenance costs of the Project for the past year. Any other cost allocated to the recycled water system should also be reported.

A-FBA-12

5. Provide the water rate structure and total revenue received during the year. For comparison purposes, include the price the users would have paid for potable or fresh water.

6. Review the progress of any activities required in the special conditions set forth in Exhibit D of the financing agreement and, if appropriate, the progress toward adding users to the recycled water system to use the remaining system capacity.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT B – FUNDING AMOUNT
B-1

1. Estimated Reasonable Cost. The estimated reasonable cost of the total Project, including associated planning and design costs is one hundred eighty-six million two hundred twenty-two thousand dollars and no cents ($186,220,000.00)one hundred ninety-one million ninety-four thousand thirty-one dollars and no cents ($191,094,031.00).

2. Project Financing. Subject to the terms of this Agreement, the State Water Board agrees to provide Project Funds in the amount of up to one hundred eighty-six million two hundred twenty-two thousand dollars and no cents ($186,220,000.00) one hundred ninety-one million ninety-four thousand thirty-one dollars and no cents ($191,094,031.00). A portion of this amount fifteen million dollars and no cents ($15,000,000.00) is anticipated to be a grant. The estimated amount of principal that will be due to the State Water Board under this Agreement is one hundred seventy-one million two hundred twenty-two thousand dollars and no cents ($171,220,000.00)one hundred seventy-six million ninety-four thousand thirty-one dollars and no cents ($176,094,031.00).

3. Payment, Interest Rate, and Charges. The Recipient agrees to make all Installment Payments according to the schedule in Exhibit C at an interest rate of one percent (1%) per annum. The Recipient agrees to pay an Administrative Service Charge in lieu of interest as reflected in Exhibit C.

The Recipient agrees to pay a Small Community Grant Fund Charge in lieu of interest as reflected in Exhibit C.

4. Contingent Grant. Contingent on the Recipient’s performance of its obligations under this Agreement, the State Water Board agrees to grant up to fifteen million dollars and no cents ($15,000,000.00) of the principal under this Agreement.

5. The term of this agreement is from August 1, 2016 to June 18, 2052October 7, 2054.

6. Budget costs are contained in the Project Cost Table, which is part of Exhibit A-FBA.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT C – PAYMENT SCHEDULE
C-1

See the attached preliminary Payment Schedule. The final Payment Schedule will be forwarded to the Recipient after all disbursements have been paid and construction of the Project has been completed.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT D – SPECIAL CONDITIONS

D-1
Technical Special Conditions as follows:

1. The Recipient shall provide proof of enrollment under the General Order for Recycled Water with the Project Completion Report. The final disbursement of the Project will be held until the notice is received by the Division of Financial Assistance.

Environmental Special Conditions as follows:

The documents identified below are incorporated by reference and the Recipient shall comply with the conditions therein:

1. In accordance with the adopted October 5, 2015 Mitigation Monitoring and Reporting Plan/Program for the Project, the Recipient shall comply with Mitigation Measures: CP-2, CP-4, CP-5 and C-CP for cultural resources, AQ-2 for air quality, BI-1 and C-BI-1 for biological resources to mitigate impacts from the above resources to a less than significant level.

2. The Recipient shall comply with the letter dated June 3, 2016 from Ryan Olah of the United States Fish and Wildlife Service (USFWS) to, Susan Stewart, Environmental Scientist at the Division of Financial Assistance of the State Water Board regarding Informal Consultation on the San Francisco Public Utilities Westside Recycled Water Project in the City and County of San Francisco, California (Clean Water State Revolving Fund (CWSRF) No. C-06-8111-110).

California Red-legged Frog Conservation Measures (summarized)

a. A qualified biologist shall survey the Project area within 48 hours before the onset of initial ground-disturbing activities and shall be present during the initial stages of vegetation clearing and ground-disturbing activities.
b. Within one week before work begins, a qualified biologist shall supervise the installation of exclusion fencing along the boundaries of the work areas to prevent entry of California red-legged frogs. The exclusion fencing shall be a minimum of three (3) feet above ground surface with an additional 4-6 inches of fence material buried and sandbagged at the lower edge as needed to prevent entry under the fence.
c. A qualified biologist shall conduct environmental awareness training in person or by video for all construction workers prior to them working on the Project. The training shall include information on species identification, avoidance measures, regulatory requirements and penalties for non- compliance. The program shall describe the life history and identification, and measures to prevent potential take, including protective measures to be implemented if sensitive species are identified or suspected to be in the work area, and penalties for handling or harming these species.
d. The biological monitor shall conduct weekly inspections of the exclusion fencing to confirm proper maintenance and inspect for California red-legged frog and other wildlife. If a California red- legged frog is found, the Recipient shall halt construction in the vicinity, and the individual frog shall be allowed to move out of the Project area of its own volition. The Recipients representative shall contact the USFWS for instruction if the individual frog will not leave the Project area.

Construction will resume in the local Project vicinity after the individual frog is out of harm’s way, as determined by the biologist.
e. During Project activities, excavations deeper than 6-inches shall be covered overnight, or an escape ramp at a 3:1 rise shall be installed; openings such as pipes where California red-legged Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT D – SPECIAL CONDITIONS

D-2
f. frogs might seek refuge shall be covered when not in use and all trash shall be contained and disposed of regularly. All trash and construction debris shall be removed from the worksite following construction.

g. Stormwater drainage during construction shall comply with the Recipient’s National Pollutant Discharge Elimination System permit. The Recipient shall develop and implement an Erosion and Sediment Control plan to reduce sedimentation and discharges of pollutants to the combined sewer system from construction site runoff. The plan shall specify minimum best management practices related to housekeeping (storage of construction materials, waste management, vehicle storage and maintenance, landscape materials, pollutant control); non stormwater management; erosion control; sediment control; run-on and runoff control; and monitoring protocols to be implemented onsite. No plastic monofilament netting shall be used for erosion control because it may entangle the California red-legged frog.

3. The Recipient shall comply with the letter (EPA_2016_0201_001) dated December 12, 2016 from Julianne Polanco of the Office of Historic Preservation (OHP), Department of Parks and Recreation to Ahmad Kashkoli, Senior Environmental Scientist at the Division of Financial Assistance of the State Water Board regarding Request for Concurrence on Adequacy of Archaeological Resources Management Plan (ARMP) and Determination of “No Historic Properties Affected” under Section 106 of the National Historic Preservation Act for San Francisco Westside Recycled Water Project, City and County of San Francisco, California; CWSRF Project No. C-06-8111-110. The letter confirms that the ARMP fulfills the requirements of 36 CFR section 800.13(a)(2) and implementation will resolve any adverse effects to unanticipated discoveries. OHP suggested a Finding of No Adverse effect is more appropriate for the Project if the ARMP is implemented as described.

The Recipient shall make no changes in the Project, construction area, or special conditions, without obtaining the appropriate and necessary prior approval(s) from the State Water Board, the OHP, and the USFWS.

REPORTING TO THE STATE WATER BOARD

The Recipient shall include the status of its environmental compliance with the measures identified in this Exhibit D in the Project Status Reports under Section 2.15 and shall report its environmental compliance efforts with these measures identified herein in the Project Completion Report for submittal to the State Water Board and the completion of Project construction.

Legal Special Conditions as follows:

1. No reserve fund or Reserve Amount shall be required as security for the Obligation.

2. Rate Covenant: At all times, and in connection with the Obligation, the Recipient shall set rates and charges so as to meet the requirements of Section 6.13 of the Indenture, including the requirement that rates and charges are set to yield Net Revenues at least equal to 1.25 times Annual Debt Service (as defined in the Indenture).

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D170100100
Project No.: C-06-8111-110
Amendment No. 2

EXHIBIT D – SPECIAL CONDITIONS

D-3

3. Additional Debt Test: The Recipient may issue additional parity debt in accordance with Sections 3.04 through Sections 3.07 of the Indenture.

4. In accordance with the Recipient’s current practice of providing quarterly financial updates to the Recipient’s governing body, not more frequently than quarterly during each Fiscal Year in which the Obligation is outstanding, the Recipient shall determine whether Net Revenues for the then current Fiscal Year (calculated on a current Fiscal Year basis and excluding any transfers from reserve funds, rate stabilization funds, or retained Revenues from any prior Fiscal Years; and calculated in accordance with the method of calculation set forth in the Indenture) are anticipated to fall below 1.1 times debt service for such Fiscal Year, and in such event, shall notify the Division within 30 days of such determination. Notwithstanding the foregoing, such determination shall not constitute a violation by the Recipient of a material provision of this Agreement provided the Recipient has sufficient Revenues to pay all Operations and Maintenance Costs and avoid any payment-related default under this Obligation, any senior payment obligation, and all parity Material Obligations in the current Fiscal Year. Within 60 days after providing such notice, the Recipient shall prepare a document detailing the Recipient’s anticipated Revenues, Operations and Maintenance Costs, and debt service requirements for the next three years, and demonstrating its abilities to make all debt service payments and pay all Operations and Maintenance Costs. The Recipient shall also detail any corrective actions the Recipient intends to undertake to ensure fiscal sustainability, including if necessary, raising rates and charges. This document must be satisfactory to the Division.

5. Recipient’s Payment Period Not to Exceed 30 Years. The Recipient’s payment period shall be no greater than 30 years, which term shall commence no later than the earlier of February 23, 2024, or the date that is one year from Completion of Construction.

EXECUTIVE ORDER N-6-22 — RUSSIAN SANCTIONS.

On March 4, 2022, Governor Gavin Newsom issued Executive Order N-6-22 (the EO) regarding Economic Sanctions against Russia and Russian entities and individuals. “Economic Sanctions” refers to sanctions imposed by the U.S. government in response to Russia’s actions in Ukraine, as well as any sanctions imposed under state law. The EO directs state agencies to terminate contracts with, and to refrain from entering any new contracts with, individuals or entities that are determined to be a target of Economic Sanctions. Accordingly, should the State Water Board determine Recipient is a target of Economic Sanctions or is conducting prohibited transactions with sanctioned individuals or entities, that shall be grounds for termination of this Agreement.

The State Water Board shall provide Recipient advance written notice of such termination, allowing Recipient at least 30 calendar days to provide a written response. Termination shall be at the sole discretion of the State Water Board.

The Recipient represents that the Recipient is not a target of economic sanctions imposed in response to Russia’s actions in Ukraine imposed by the United States government or the State of California. The Recipient is required to comply with the economic sanctions imposed in response to Russia’s actions in Ukraine, including with respect to, but not limited to, the federal executive orders identified in California Executive Order N-6-22, located at https://www.gov.ca.gov/wp- content/uploads/2022/03/3.4.22-Russia-Ukraine-Executive-Order.pdf and the sanctions identified on the United States Department of the Treasury website (https://home.treasury.gov/policy- issues/financial-sanctions/sanctions-programs-and-country-information/ukraine-russia-related- sanctions). The Recipient is required to comply with all applicable reporting requirements regarding compliance with the economic sanctions, including, but not limited to, those reporting requirements set forth in California Executive Order N-6-22 for all Recipients with one or more Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D170100100
Project No.: C-06-8111-110
Amendment No. 2

EXHIBIT D – SPECIAL CONDITIONS

D-3
agreements with the State of California with an aggregated value of Five Million Dollars ($5,000,000) or more. Notwithstanding any other provision in this Agreement, failure to comply with the economic sanctions and all applicable reporting requirements may result in termination of this Agreement.

For Recipients with an aggregated agreement value of Five Million Dollars ($5,000,000) or more with the State of California, reporting requirements include, but are not limited to, information related to steps taken in response to Russia’s actions in Ukraine, including but not limited to:

1. Desisting from making any new investments or engaging in financial transactions with Russian institutions or companies that are headquartered or have their principal place of business in Russia;

2. Not transferring technology to Russia or companies that are headquartered or have their principal place of business in Russia; and

3. Direct support to the government and people of Ukraine.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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The Recipient agrees to comply with the following federal conditions:

(A) Federal Award Conditions

(1) American Iron and Steel. Unless the Recipient has obtained a waiver from USEPA on file with the State Water Board or unless this Project is not a project for the construction, alteration, maintenance or repair of a public water system or treatment work, the Recipient shall not purchase “iron and steel products” produced outside of the United States on this Project. Unless the Recipient has obtained a waiver from USEPA on file with the State Water Board or unless this Project is not a project for the construction, alteration, maintenance or repair of a public water system or treatment work, the Recipient hereby certifies that all “iron and steel products” used in the Project were or will be produced in the United States. For purposes of this section, the term "iron and steel products" means the following products made primarily of iron or steel: lined or unlined pipes and fittings, manhole covers and other municipal castings, hydrants, tanks, flanges, pipe clamps and restraints, valves, structural steel, reinforced precast concrete, and construction materials. “Steel” means an alloy that includes at least 50 percent iron, between .02 and 2 percent carbon, and may include other elements.

(2) Wage Rate Requirements (Davis-Bacon). The Recipient shall include in full the language provided in Exhibit G of this Agreement in all contracts and subcontracts.

(3) Signage Requirements. The Recipient shall comply with the USEPA’s Guidelines for Enhancing Public Awareness of SRF Assistance Agreements, dated June 3, 2015, as otherwise specified in this Agreement.

(4) Public or Media Events. The Recipient shall notify the State Water Board and the EPA contact as provided in the notice provisions of this Agreement of public or media events publicizing the accomplishment of significant events related to this Project and provide the opportunity for attendance and participation by federal representatives with at least ten (10) working days’ notice.

(5) EPA General Terms and Conditions (USEPA GTCs). The Recipient shall comply with applicable EPA general terms and conditions found at http://www.epa.gov/ogd, including but not limited to the following:

(a) DUNS. No Recipient may receive funding under this Agreement unless it has provided its DUNS number to the State Water Board.

(b) Executive Compensation. The Recipient shall report the names and total compensation of each of its five most highly compensated executives for the preceding completed fiscal year, as set forth in the USEPA GTCs.

(c) Contractors, Subcontractors, Debarment and Suspension, Executive Order 12549; 2 CFR Part 180; 2 CFR Part 1532. The Recipient shall comply with Subpart C of 2 CFR Part 180 and shall ensure that its contracts include compliance. The Recipient shall not subcontract with any party who is debarred or suspended or otherwise excluded from or ineligible for participation in federal assistance programs under Executive Order 12549, "Debarment and Suspension". The Recipient shall not subcontract with any individual or organization on USEPA's List of Violating Facilities. The Recipient shall certify Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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that it and its principals, and shall obtain certifications from its contractors that they and their principals:

i. Are not presently debarred, suspended, proposed for
debarment, declared ineligible, or voluntarily excluded by any federal department or agency;
ii. Have not within a three (3) year period preceding this Agreement been convicted of or had a civil judgment
rendered against them for commission of fraud or a
criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or contract under a public transaction;
violation of federal or state antitrust statutes or
commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false
statements, or receiving stolen property;
iii. Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (federal, state or local) with commission of any of the offenses
enumerated in paragraph (b) of this certification; and
iv. Have not within a three (3) year period preceding this application/proposal had one or more public transactions (federal, state or local) terminated for cause or default. v. Suspension and debarment information can be
accessed at http://www.sam.gov. The Recipient
represents and warrants that it has or will include a term or conditions requiring compliance with this provision in all of its contracts and subcontracts under this
Agreement. The Recipient acknowledges that failing to
disclose the information as required at 2 CFR 180.335
may result in the termination, delay or negation of this Agreement, or pursuance of legal remedies, including
suspension and debarment.
(d) Conflict of Interest. To the extent applicable, Recipient shall comply with USEPA’s Final Financial Assistance Conflict of Interest Policy at https://www.epa.gov/grants/epas-final-financial-assistance-conflict-interest- policy. A conflict of interest may result in disallowance of costs. (e) Copyright and Patent.

ii. USEPA and the State Water Board have the right to reproduce, publish, use and authorize others to reproduce, publish and use copyrighted works or other data developed under this assistance agreement.
iii. Where an invention is made with Project Funds, USEPA and the State Water Board retain the right to a worldwide, nonexclusive, nontransferable, irrevocable, paid-up license to practice the invention owned by the Recipient.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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The Recipient must utilize the Interagency Edison extramural invention reporting system at http://iEdison.gov and shall notify the Division when an invention report, patent report, or utilization report is filed.

(f) Credit. The Recipient agrees that any reports, documents, publications or other materials developed for public distribution supported by this Agreement shall contain the following statement:

“This project has been funded wholly or in part by the United States Environmental Protection Agency and the State Water Resources Control Board. The contents of this document do not necessarily reflect the views and policies of the Environmental Protection Agency or the State Water Resources Control Board, nor does the EPA or the Board endorse trade names or recommend the use of commercial products mentioned in this document.”

(g) Electronic and Information Technology Accessibility. The Recipient is encouraged to follow guidelines established under Section 508 of the Rehabilitation Act, codified at 36 CFR Part 1194, with respect to enabling individuals with disabilities to participate in its programs supported by this Project.

(h) Trafficking in Persons. The Recipient, its employees, contractors and subcontractors and their employees may not engage in severe forms of trafficking in persons during the term of this Agreement, procure a commercial sex act during the term of this Agreement, or use forced labor in the performance of this Agreement. The Recipient must include this provision in its contracts and subcontracts under this Agreement. The Recipient must inform the State Water Board immediately of any information regarding a violation of the foregoing. The Recipient understands that failure to comply with this provision may subject the State Water Board to loss of federal funds. The Recipient agrees to compensate the State Water Board for any such funds lost due to its failure to comply with this condition, or the failure of its contractors or subcontractors to comply with this condition. The State Water Board may unilaterally terminate this Agreement if the Recipient that is a private entity is determined to have violated the foregoing.

Trafficking Victims Protection Act of 2000.

(B) Super Cross-Cutters - Civil Rights Obligations. The Recipient must comply with the following federal non-discrimination requirements:

(1) Title VI of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, and national origin, including limited English proficiency (LEP). (EPA XC HB)

(2) Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination against persons with disabilities. (EPA XC HB)

(3) The Age Discrimination Act of 1975, which prohibits age discrimination. (EPA XC HB)

(4) Section 13 of the Federal Water Pollution Control Act Amendments of 1972, which prohibits discrimination on the basis of sex. (EPA XC HB)

(5) 40 CFR Part 7, as it relates to the foregoing (EPA XC HB)

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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(C) WRRDA Conditions

(1) Architectural and engineering contracts. Where the Recipient contracts for program management, construction management, feasibility studies, preliminary engineering, design, engineering, surveying, mapping, or architectural related services, the Recipient shall ensure that such any such contract is negotiated in the same manner as a contract for architectural and engineering services is negotiated under chapter 11 of title 40, United States Code, or an equivalent State qualifications-based requirement as determined by the State Water Board.

(2) Fiscal sustainability. The Recipient certifies that it has developed and is implementing a fiscal sustainability plan for the Project that includes an inventory of critical assets that are a part of the Project, an evaluation of the condition and performance of inventoried assets or asset groupings, a certification that the recipient has evaluated and will be implementing water and energy conservation efforts as part of the plan, and a plan for maintaining, repairing, and, as necessary, replacing the Project and a plan for funding such activities.

(D) Cross-Cutters

(1) Executive Order No. 11246.

The Recipient shall include in its contracts and
subcontracts related to the Project the following provisions:
"During the performance of this contract, the contractor agrees as follows:
"(a) The contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin. Such action shall include, but not be limited to the following:
employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.
"(b) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, or national origin.
"(c) The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer, advising the labor union or workers' representative of the contractor's commitments under Section 202 of Executive Order No. 11246 of September 24, 1965, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. "(d) The contractor will comply with all provisions of Executive Order No. 11246 of Sept. 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. "(e) The contractor will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.
"(f) In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any of such rules, regulations, or orders, this contract may be cancelled, terminated or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 11246 of Sept 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.
"(g) The contractor will include the provisions of Paragraphs (1) through (7) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order No. 11246 of Sept. 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions including sanctions for noncompliance: Provided, however, That in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the contractor may request the United States to enter into such litigation to protect the interests of the United States." (2) Disadvantaged Business Enterprises (40 CFR Part 33). The Recipient agrees to comply with the requirements of USEPA’s Program for Utilization of Small, Minority and Women’s Business Enterprises. The DBE rule can be accessed at www.epa.gov/osbp . The Recipient shall comply with, and agrees to require its prime contractors to comply with 40 CFR Section 33.301, and retain all records documenting compliance with the six good faith efforts. (IUP)

(3) Procurement Prohibitions under Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, including Executive Order 11738, Administration of the Clean Air Act and the Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, or Loans; 42 USC § 7606; 33 USC § 1368. Except where the purpose of this Agreement is to remedy the cause of the violation, the Recipient may not procure goods, services, or materials from suppliers excluded under the federal System for Award Management:
http://www.sam.gov/ .

(4) Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as amended; 42 USC §§4601-4655. The Recipient must comply with the Act’s implementing regulations at 49 CFR 24.101 through 24.105.

(5) Debarment and Suspension Executive Order No. 12549 (1986). The Recipient certifies that it will not knowingly enter into a contract with anyone who is ineligible under the 40 CFR Part 32 to participate in the Project. Contractors on the Project must provide a similar certification prior to the award of a contract and subcontractors on the project must provide the general contractor with the certification prior to the award of any subcontract.

(6) The Recipient agrees that if its network or information system is connected to USEPA networks to transfer data using systems other than the Environmental Information Exchange Network or USEPA’s Central Data Exchange, it will ensure that any connections are secure.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT E – PROGRAMMATIC CONDITIONS & CROSS-CUTTERS
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(E) Geospatial Data Standards
All geospatial data created pursuant to this Agreement that is submitted to the State Water Board for use by USEPA or that is submitted directly to USEPA must be consistent with Federal Geographic Data Committee endorsed standards. Information on these standards may be found at www.fgdc.gov.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D1701001
Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT F – SCHEDULE OF SYSTEM OBLIGATIONS
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Except for the following and the Obligation evidenced by this Agreement, the Recipient certifies that it has no outstanding System Obligations and that it is in compliance with all applicable additional debt provisions of the following:

The following outstanding debt is senior to the Obligation:

Title Original Debt Amount End Date
None

The following outstanding debt is on parity with the Obligation:

Title Original Debt Amount End Date
1991 Series A Revenue Bond $70,145,682 11/01/19
2009 Series A Revenue Bond $412,000,000 11/01/39
2009 Series B Revenue Bond $412,000,000 11/01/39
2010 Series A Revenue Bond $56,945,000 11/01/30
2010 Series B Revenue Bond $417,720,000 11/01/40
2010 Series D Revenue Bond $102,725,000 11/01/21
2010 Series E Revenue Bond $344,200,000 11/01/40
2010 Series F Revenue Bond $180,960,000 11/01/30
2010 Series G Revenue Bond $351,470,000 11/01/50
2011 Series A Revenue Bond $602,715,000 11/01/41
2011 Series B Revenue Bond $28,975,000 11/01/41
2011 Series C Revenue Bond $33,595,000 11/01/41
2011 Series D Revenue Bond $55,465,000 11/01/28
2012 Series A Revenue Bond $591,610,000 11/01/43
2012 Series B Revenue Bond $16,520,000 11/01/43
2012 Series C Revenue Bond $93,750,000 11/01/32
2012 Series D Revenue Refunding Bond $24,040,000 11/01/19 2015 Series A Revenue Refunding Bond $429,600,000 11/01/36 2016 Series A Revenue Refunding Bond $763,005,000 11/01/39 2016 Series B Revenue Refunding Bond $130,815,000 11/01/30 2016 Series C Revenue Refunding Bond $259,350,000 11/01/46 Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
FI$Cal No. SWRCB0000000000D170100100
Project No.: C-06-8111-110
Amendment No. 2

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The following outstanding debt is subordinate to the Obligation:

Title Original Debt Amount End Date
Commercial Paper Notes 2017, A-1 (A-1-T) $100,000,000 07/24/2020 Commercial Paper Notes 2104, A-2 (A-2-T) $200,000,000 6/29/2018 Commercial Paper Notes 2017, A-3 (A-3-T) $100,000,000 07/23/2021 Commercial Paper Notes 2017, R-1 $100,000,000 07/25/2020 Certificates of Participation, Series 2009C $38,120,000 11/01/2022 Certificates of Participation, Series 2009D $129,550,000 11/01/2041 Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
Amendment No. 3

EXHIBIT G – DAVIS-BACON REQUIREMENTS

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For purposes of this Exhibit only, “subrecipient” or “sub recipient” means the Recipient as defined in this Agreement.

For purposes of this Exhibit only, “recipient” means the State Water Board.

I. Requirements For Sub recipients That Are Governmental Entities:

If a sub recipient has questions regarding when Davis-Bacon (DB) applies, obtaining the correct DB wage determinations, DB provisions, or compliance monitoring, it may contact the State Water Board. The recipient or sub recipient may also obtain additional guidance from DOL’s web site at http://www.dol.gov/whd/

1. Applicability of the Davis- Bacon (DB) prevailing wage requirements.

DB prevailing wage requirements apply to the construction, alteration, and repair of treatment works carried out in whole or in part with assistance made available by a State water pollution control revolving fund and to any construction project carried out in whole or in part by assistance made available by a drinking water treatment revolving loan fund. If a sub recipient encounters a unique situation at a site that presents uncertainties regarding DB applicability, the sub recipient must discuss the situation with the recipient State before authorizing work on that site.

2. Obtaining Wage Determinations.

(a) Sub recipients shall obtain the wage determination for the locality in which a covered activity subject to DB will take place prior to issuing requests for bids, proposals, quotes or other methods for soliciting contracts (solicitation) for activities subject to DB. These wage determinations shall be incorporated into solicitations and any subsequent contracts. Prime contracts must contain a provision requiring that subcontractors follow the wage determination incorporated into the prime contract.

(i) While the solicitation remains open, the sub recipient shall monitor www.wdol.gov weekly to ensure that the wage determination contained in the solicitation remains current. The sub recipients shall amend the solicitation if DOL issues a modification more than 10 days prior to the closing date (i.e. bid opening) for the solicitation. If DOL modifies or supersedes the applicable wage determination less than 10 days prior to the closing date, the sub recipients may request a finding from the State recipient that there is not a reasonable time to notify interested contractors of the modification of the wage determination. The State recipient will provide a report of its findings to the sub recipient.

(ii) If the sub recipient does not award the contract within 90 days of the closure of the solicitation, any modifications or supersedes DOL makes to the wage determination contained in the solicitation shall be effective unless the State recipient, at the request of the sub recipient, obtains an extension of the 90 day period from DOL pursuant to 29 CFR 1.6(c)(3)(iv). The sub recipient shall monitor www.wdol.gov on a weekly basis if it does not award the contract within 90 days of closure of the solicitation to ensure that wage determinations contained in the solicitation remain current.

(b) If the sub recipient carries out activity subject to DB by issuing a task order, work assignment or similar instrument to an existing contractor (ordering instrument) rather than by publishing a solicitation, the sub recipient shall insert the appropriate DOL wage determination from www.wdol.gov into the ordering instrument.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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Project No.: C-06-8111-110
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(c) Sub recipients shall review all subcontracts subject to DB entered into by prime contractors to verify that the prime contractor has required its subcontractors to include the applicable wage determinations.

(d) As provided in 29 CFR 1.6(f), DOL may issue a revised wage determination applicable to a sub recipient’s contract after the award of a contract or the issuance of an ordering instrument if DOL determines that the sub recipient has failed to incorporate a wage determination or has used a wage determination that clearly does not apply to the contract or ordering instrument. If this occurs, the sub recipient shall either terminate the contract or ordering instrument and issue a revised solicitation or ordering instrument or incorporate DOL’s wage determination retroactive to the beginning of the contract or ordering instrument by change order. The sub recipient’s contractor must be compensated for any increases in wages resulting from the use of DOL’s revised wage determination.

3. Contract and Subcontract provisions.

(a) The Recipient shall insure that the sub recipient(s) shall insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a treatment work under the CWSRF or a construction project under the DWSRF - financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, for CWSRF projects, the FY 2015 Water Resource Reform and Development Act, or for DWSRF projects, or the Consolidated Appropriations Act, 2016, the following clauses:

(1) Minimum wages.

(i) All laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. Contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (a)(1)(iv) of this section; also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such weekly period. Such laborers and mechanics shall be paid the appropriate wage rate and fringe benefits on the wage determination for the classification of work actually performed, without regard to skill, except as provided in § 5.5(a)(4). Laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein: Provided that the employer's payroll records accurately set forth the time spent in each classification in which work is performed. The wage determination (including any additional classification and wage rates conformed under paragraph (a)(1)(ii) of this section) and the Davis-Bacon poster (WH-1321) shall be posted at all times by the contractor and its subcontractors at the site of the work in a prominent and accessible place where it can be easily seen by the workers. Sub recipients may obtain wage determinations from the U.S. Department of Labor’s web site, www.dol.gov.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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(ii)(A) The sub recipient(s), on behalf of EPA, shall require that any class of laborers or mechanics, including helpers, which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. The State award official shall approve a request for an additional classification and wage rate and fringe benefits therefore only when the following criteria have been met:

(1) The work to be performed by the classification requested is not performed by a classification in the wage determination; and

(2) The classification is utilized in the area by the construction industry; and

(3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination.

(B) If the contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the sub recipient(s) agree on the classification and wage rate (including the amount designated for fringe benefits where appropriate), documentation of the action taken and the request, including the local wage determination shall be sent by the sub recipient (s) to the State award official. The State award official will transmit the request, to the Administrator of the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Washington, DC 20210 and to the EPA DB Regional Coordinator concurrently. The Administrator, or an authorized representative, will approve, modify, or disapprove every additional classification request within 30 days of receipt and so advise the State award official or will notify the State award official within the 30-day period that additional time is necessary.

(C) In the event the contractor, the laborers or mechanics to be employed in the classification or their representatives, and the sub recipient(s) do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the award official shall refer the request and the local wage determination, including the views of all interested parties and the recommendation of the State award official, to the Administrator for determination. The request shall be sent to the EPA DB Regional Coordinator concurrently. The Administrator, or an authorized representative, will issue a determination within 30 days of receipt of the request and so advise the contracting officer or will notify the contracting officer within the 30-day period that additional time is necessary.

(D) The wage rate (including fringe benefits where appropriate) determined pursuant to paragraphs (a)(1)(ii)(B) or (C) of this section, shall be paid to all workers performing work in the classification under this contract from the first day on which work is performed in the classification.

(iii) Whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof.

(iv) If the contractor does not make payments to a trustee or other third person, the contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program, Provided, That the Secretary of Labor has found, upon the written request of the contractor, that the applicable standards of the Davis-Bacon Act have been met. The Secretary of Labor may require the contractor to set aside in a separate account assets for the meeting of obligations under the plan or program.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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(2) Withholding. The sub recipient(s), shall upon written request of the EPA Award Official or an authorized representative of the Department of Labor, withhold or cause to be withheld from the contractor under this contract or any other Federal contract with the same prime contractor, or any other federally-assisted contract subject to Davis-Bacon prevailing wage requirements, which is held by the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the contractor or any subcontractor the full amount of wages required by the contract. In the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the site of the work, all or part of the wages required by the contract, the (Agency) may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased.

(3) Payrolls and basic records.

(i) Payrolls and basic records relating thereto shall be maintained by the contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work. Such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in section 1(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of hours worked, deductions made and actual wages paid. Whenever the Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in section 1(b)(2)(B) of the Davis-Bacon Act, the contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. Contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs.

(ii)(A) The contractor shall submit weekly, for each week in which any contract work is performed, a copy of all payrolls to the sub recipient, that is, the entity that receives the sub-grant or loan from the State capitalization grant recipient. Such documentation shall be available on request of the State recipient or EPA. As to each payroll copy received, the sub recipient shall provide written confirmation in a form satisfactory to the State indicating whether or not the project is in compliance with the requirements of 29 CFR 5.5(a)(1) based on the most recent payroll copies for the specified week. The payrolls shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on the weekly payrolls.

Instead the payrolls shall only need to include an individually identifying number for each employee (e.g., the last four digits of the employee's social security number). The required weekly payroll information may be submitted in any form desired. Optional Form WH-347 is available for this purpose from the Wage and Hour Division Web site at http://www.dol.gov/whd/forms/wh347instr.htm or its successor site. The prime contractor is responsible for the submission of copies of payrolls by all subcontractors. Contractors and subcontractors shall maintain the full social security number and current address of each covered worker, and shall provide them upon request to the sub recipient(s) for transmission to the State or EPA if requested by EPA, the State, the contractor, or the Wage and Hour Division of the Department of Labor for purposes of an investigation or audit of compliance with prevailing wage requirements. It is not a violation of this section for a prime contractor to require a subcontractor to provide addresses and social security numbers to the prime contractor for its own records, without weekly submission to the sub recipient(s).

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(B) Each payroll submitted shall be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify the following:

(1) That the payroll for the payroll period contains the information required to be provided under § 5.5 (a)(3)(ii) of Regulations, 29 CFR part 5, the appropriate information is being maintained under § 5.5 (a)(3)(i) of Regulations, 29 CFR part 5, and that such information is correct and complete;

(2) That each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in Regulations, 29 CFR part 3;

(3) That each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract.

(C) The weekly submission of a properly executed certification set forth on the reverse side of Optional Form WH-347 shall satisfy the requirement for submission of the “Statement of Compliance” required by paragraph (a)(3)(ii)(B) of this section.

(D) The falsification of any of the above certifications may subject the contractor or subcontractor to civil or criminal prosecution under section 1001 of title 18 and section 231 of title 31 of the United States Code.

(iii) The contractor or subcontractor shall make the records required under paragraph (a)(3)(i) of this section available for inspection, copying, or transcription by authorized representatives of the State, EPA or the Department of Labor, and shall permit such representatives to interview employees during working hours on the job. If the contractor or subcontractor fails to submit the required records or to make them available, the Federal agency or State may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. Furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 CFR 5.12.

(4) Apprentices and trainees.

(i) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they performed when they are employed pursuant to and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Office of Apprenticeship Training, Employer and Labor Services, or with a State Apprenticeship Agency recognized by the Office, or if a person is employed in his or her first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been certified by the Office of Apprenticeship Training, Employer and Labor Services or a State Apprenticeship Agency (where appropriate) to be eligible for probationary employment as an apprentice.

The allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor as to the entire work force under the registered program.

Any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated above, shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any apprentice performing work on the job site in Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. Where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman's hourly rate) specified in the contractor's or subcontractor's registered program shall be observed. Every apprentice must be paid at not less than the rate specified in the registered program for the apprentice's level of progress, expressed as a percentage of the journeymen hourly rate specified in the applicable wage determination. Apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. If the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. If the Administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. In the event the Office of Apprenticeship Training, Employer and Labor Services, or a State Apprenticeship Agency recognized by the Office, withdraws approval of an apprenticeship program, the contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved.

(ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S.

Department of Labor, Employment and Training Administration. The ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by the Employment and Training Administration. Every trainee must be paid at not less than the rate specified in the approved program for the trainee's level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. Trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. If the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed on the wage determination unless the Administrator of the Wage and Hour Division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate on the wage determination which provides for less than full fringe benefits for apprentices. Any employee listed on the payroll at a trainee rate who is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually performed. In addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. In the event the Employment and Training Administration withdraws approval of a training program, the contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved.

(iii) Equal employment opportunity. The utilization of apprentices, trainees and journeymen under this part shall be in conformity with the equal employment opportunity requirements of Executive Order 11246, as amended and 29 CFR part 30.

(5) Compliance with Copeland Act requirements. The contractor shall comply with the requirements of 29 CFR part 3, which are incorporated by reference in this contract.

(6) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses contained in 29 CFR 5.5(a)(1) through (10) and such other clauses as the EPA determines may by appropriate, and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all the contract clauses in 29 CFR 5.5.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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(7) Contract termination; debarment. A breach of the contract clauses in 29 CFR 5.5 may be grounds for termination of the contract, and for debarment as a contractor and a subcontractor as provided in 29 CFR

5.12. (8) Compliance with Davis-Bacon and Related Act requirements. All rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR parts 1, 3, and 5 are herein incorporated by reference in this contract.

(9) Disputes concerning labor standards. Disputes arising out of the labor standards provisions of this contract shall not be subject to the general disputes clause of this contract. Such disputes shall be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning of this clause include disputes between the contractor (or any of its subcontractors) and sub recipient(s), State, EPA, the U.S. Department of Labor, or the employees or their representatives.

(10) Certification of eligibility.

(i) By entering into this contract, the contractor certifies that neither it (nor he or she) nor any person or firm who has an interest in the contractor's firm is a person or firm ineligible to be awarded Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1).

(ii) No part of this contract shall be subcontracted to any person or firm ineligible for award of a Government contract by virtue of section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1).

(iii) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.

4. Contract Provision for Contracts in Excess of $100,000.

(a) Contract Work Hours and Safety Standards Act. The sub recipient shall insert the following clauses set forth in paragraphs (a)(1), (2), (3), and (4) of this section in full in any contract in an amount in excess of $100,000 and subject to the overtime provisions of the Contract Work Hours and Safety Standards Act.

These clauses shall be inserted in addition to the clauses required by Item 3, above or 29 CFR 4.6. As used in this paragraph, the terms laborers and mechanics include watchmen and guards.

(1) Overtime requirements. No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.

(2) Violation; liability for unpaid wages; liquidated damages. In the event of any violation of the clause set forth in paragraph (a)(1) of this section the contractor and any subcontractor responsible therefore shall be liable for the unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in paragraph (a)(1) of this section, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in paragraph (a)(1) of this section.

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(3) Withholding for unpaid wages and liquidated damages. The sub recipient, upon written request of the EPA Award Official or an authorized representative of the Department of Labor, shall withhold or cause to be withheld, from any moneys payable on account of work performed by the contractor or subcontractor under any such contract or any other Federal contract with the same prime contractor, or any other federally-assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in paragraph (b)(2) of this section.

(4) Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraph (a)(1) through (4) of this section and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs (a)(1) through (4) of this section. (b) In addition to the clauses contained in Item 3, above, in any contract subject only to the Contract Work Hours and Safety Standards Act and not to any of the other statutes cited in 29 CFR 5.1, the Sub recipient shall insert a clause requiring that the contractor or subcontractor shall maintain payrolls and basic payroll records during the course of the work and shall preserve them for a period of three years from the completion of the contract for all laborers and mechanics, including guards and watchmen, working on the contract. Such records shall contain the name and address of each such employee, social security number, correct classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made, and actual wages paid. Further, the Sub recipient shall insert in any such contract a clause providing that the records to be maintained under this paragraph shall be made available by the contractor or subcontractor for inspection, copying, or transcription by authorized representatives of the USEPA and the Department of Labor and the State Water Board, and the contractor or subcontractor will permit such representatives to interview employees during working hours on the job.

5. Compliance Verification.

(a) The sub recipient shall periodically interview a sufficient number of employees entitled to DB prevailing wages (covered employees) to verify that contractors or subcontractors are paying the appropriate wage rates. As provided in 29 CFR 5.6(a)(6), all interviews must be conducted in confidence.

The sub recipient must use Standard Form 1445 (SF 1445) or equivalent documentation to memorialize the interviews. Copies of the SF 1445 are available from EPA on request.

(b) The sub recipient shall establish and follow an interview schedule based on its assessment of the risks of noncompliance with DB posed by contractors or subcontractors and the duration of the contract or subcontract. Sub recipients must conduct more frequent interviews if the initial interviews or other information indicated that there is a risk that the contractor or subcontractor is not complying with DB.

Sub recipients shall immediately conduct interviews in response to an alleged violation of the prevailing wage requirements. All interviews shall be conducted in confidence."

(c) The sub recipient shall periodically conduct spot checks of a representative sample of weekly payroll data to verify that contractors or subcontractors are paying the appropriate wage rates. The sub recipient shall establish and follow a spot check schedule based on its assessment of the risks of noncompliance with DB posed by contractors or subcontractors and the duration of the contract or subcontract. At a minimum, if practicable, the sub recipient should spot check payroll data within two weeks of each contractor or subcontractor’s submission of its initial payroll data and two weeks prior to the completion date the contract or subcontract. Sub recipients must conduct more frequent spot checks if the initial spot check or other information indicates that there is a risk that the contractor or subcontractor is not Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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complying with DB. In addition, during the examinations the sub recipient shall verify evidence of fringe benefit plans and payments there under by contractors and subcontractors who claim credit for fringe benefit contributions.

(d) The sub recipient shall periodically review contractors’ and subcontractors’ use of apprentices and trainees to verify registration and certification with respect to apprenticeship and training programs approved by either the U.S Department of Labor or a state, as appropriate, and that contractors and subcontractors are not using disproportionate numbers of, laborers, trainees and apprentices. These reviews shall be conducted in accordance with the schedules for spot checks and interviews described in Item 5(b) and (c) above.

(e) Sub recipients must immediately report potential violations of the DB prevailing wage requirements to the EPA DB contact listed above and to the appropriate DOL Wage and Hour District Office listed at http://www.dol.gov/whd/america2.htm.

Public Utilities Commission of the City and County of San Francisco CALSTARS Agreement No.: D17-01001
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1. EMERGENCY DROUGHT REGULATIONS

The Recipient certifies that it complies with and shall continue to comply with the State Water Board’s Drought Emergency Water Conservation regulations in Article 22.5 of Chapter 2 of Division 3 of Title 23 of the California Code of Regulations. The Recipient will include a discussion of its implementation in reports submitted pursuant to Section 2.15 of this Agreement.

2. CALIFORNIA DEBT INVESTMENT ADVISORY COMMISSION (CDIAC)

Recipient acknowledges its responsibility to file debt obligations with the CDIAC. Recipient understands that CDIAC has waived filing fees for State Water Board SRF debt.

3. COMPLIANCE WITH STATE REQUIREMENTS

Recipient represents that is in in compliance with the following conditions precedent and agrees that it will continue to maintain compliance during the term of this Agreement:

(a) Monthly Water Diversion Reporting

Recipient must maintain compliance with Water Code section 5103, subdivision (e)(2)(A) by submitting monthly diversion reports to the Division of Water Rights of the State Water Resources Control Board.

(b) Public Works Contractor Registration with Department Of Industrial Relations

To bid for public works contracts, Recipient and Recipient’s subcontractors must register with the Department of Industrial Relations as required by Labor Code sections 1725.5 and 1771.1.

Recipient must charge each customer for actual water volume measured by water meter according to the requirements of Water Code sections 526 and 527. Section 527 further requires that such suppliers not subject to section 526 install water meters on all municipal and industrial service connections within their service area by 2025.

(d) Urban Water Management Plan

The Recipient certifies that this Project complies with the Urban Water Management Planning Act (Water Code, § 10610 et seq.). This shall constitute a condition precedent to this Agreement.

(e) Urban Water Demand Management

Recipient must comply with water conservation measures established by SBx7-7. (Water Code, Sec. 10608.56.)

(f) Delta Plan Consistency Findings

If the proposed action is covered by the Delta Plan, Recipient must submit certification of project consistency with the Delta Plan to the Delta Stewardship Council according to the requirements of Water Code section 85225 and California Code of Regulations, title 23, section 5002.

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(g) Agricultural Water Management Plan Consistency

If Recipient is an agricultural water supplier as defined by Water Code section 10608.12, Recipient must comply with Agricultural Water Management Planning requirements as mandated by Water Code section 10852.

(h) Charter City Project Labor Requirements

Recipient shall comply with the requirements of Labor Code section 1782 and Public Contract Code section 2503 as discussed in the following subparts (1) and (2).

(1) Prevailing Wage

Recipient certifies that it is eligible for state funding assistance notwithstanding Labor Code section 1782.

Specifically Recipient certifies that no charter provision nor ordinance authorizes a construction project contractor not to comply with Labor Code’s prevailing wage rate requirements, nor, within the prior two years (starting from January 1, 2015 or after) has the city awarded a public works contract without requiring the contractor to comply with such wage rate requirements according to Labor Code section 1782.

(2) Labor Agreements

Recipient certifies that no charter provision, initiative, or ordinance limits or constrains the city’s authority or discretion to adopt, require, or utilize project labor agreements that include all the taxpayer protection antidiscrimination provisions of Public Contract Code section 2500 in construction projects, and that Recipient is accordingly eligible for state funding or financial assistance pursuant to Public Contract Code section 2503.

CleanPowerSF Sfpuc CommissionNovember 8, 2022

CleanPowerSF Sfpuc Commission
November 8, 2022