CITY OF COSTA MESA
REGULAR CITY COUNCIL AND HOUSING AUTHORITY*
Agenda - Final Amended
City Council Chambers
77 Fair Drive
6:00 PMTuesday, September 2, 2025
*Note: All agency memberships are reflected in the title "Council Member" 4:00 P.M. Closed Session
Council Member Marr will be attending the meeting via Zoom Webinar from:
1127 Gambel Oak Way, Park City UT.
The City Council meetings are presented in a hybrid format, both in-person at City Hall and as a courtesy virtually via Zoom Webinar. If the Zoom feature is having technical difficulties or experiencing any other critical issues, and unless required by the Brown Act, the meeting will continue in person.
TRANSLATION SERVICES AVAILABLE / SERVICIOS DE TRADUCCIÓN DISPONIBLE Please contact the City Clerk at (714) 754-5225 to request language interpreting services for City meetings. Notification at least 48 hours prior to the meeting will enable the City to make arrangements.
Favor de comunicarse con la Secretaria Municipal al (714) 754-5225 para solicitar servicios de interpretación de idioma para las juntas de la Ciudad. Se pide notificación por lo mínimo 48 horas de anticipación, esto permite que la Ciudad haga los arreglos necesarios.
Members of the public can view the City Council meetings live on COSTA MESA TV (SPECTRUM CHANNEL 3 AND AT&T U-VERSE CHANNEL 99) or
http://costamesa.granicus.com/player/camera/2?publish_id=10&redirect=true and online at youtube.com/costamesatv.
Closed Captioning is available via the Zoom option in English and Spanish.
1 REGULAR CITY COUNCIL AND HOUSING
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Agenda - Final Amended September 2, 2025
Members of the public are welcome to speak during the meeting when the Mayor opens the floor for public comment. There is no need to register in advance or complete a comment card. When it's time to comment, line up at one of the two podiums in the room and wait for your turn. Each speaker will have up to 3 minutes (or as directed) to address the City Council.
To maintain a respectful and orderly atmosphere during the meeting, attendees shall refrain from using horns or amplified speakers. Signs and props may be brought into the Chamber, provided they do not hinder the visibility of other attendees. The possession of poles, sticks, or stakes is strictly prohibited.
All attendees must remain seated while in the chamber until instructed by the Presiding Officer to approach and line up for public comment. To ensure safety and maintain order during the proceedings, standing or congregating in the aisles or foyer is strictly prohibited.
Further information regarding the City's regulations on addressing the City Council and expected conduct during meetings are available at the following links.
Title 2: Administration
§ 2-61: Conduct while addressing the council.
https://ecode360.com/42609578
Title 2: Administration
§ 2-64: Disorderliness by members of the audience.
https://ecode360.com/42609598
As a courtesy, the public may participate via the Zoom option.
Zoom Webinar: (For both 4:00 p.m. and 6:00 p.m. meetings) Please click the link below to join the webinar:
https://us06web.zoom.us/j/89982812676?pwd=oX6BGzSScr92QUVyg1m0SN8HSTnoqj.1 Or sign into Zoom.com and “Join a Meeting”
Enter Webinar ID: 899 8281 2676/ Password: 772583
• If Zoom is not already installed on your computer, click “Download & Run Zoom” on the launch page and press “Run” when prompted by your browser. If Zoom has previously been installed on your computer, please allow a few moments for the application to launch automatically.
• Select “Join Audio via Computer.”
• The virtual conference room will open. If you receive a message reading, “Please wait for the host to start this meeting,” simply remain in the room until the meeting begins.
• During the Public Comment Period, use the “raise hand” feature located in the participants’ window and wait for city staff to announce your name and unmute your line when it is your turn to speak. Comments are limited to 3 minutes, or as otherwise directed.
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Agenda - Final Amended September 2, 2025
Participate via telephone: (For both 4:00 p.m. and 6:00 p.m. meetings) Call: 1 669 900 6833 Enter Webinar ID: 899 8281 2676/ Password: 772583 During the Public Comment Period, press *9 to add yourself to the queue and wait for city staff to announce your name/phone number and press *6 to unmute your line when it is your turn to speak. Comments are limited to 3 minutes, or as otherwise directed.
Note, if you have installed a zoom update, please restart your computer before participating in the meeting.
Additionally, members of the public who wish to make a written comment on a specific agenda item, may submit a written comment via email to the City Clerk at [email protected].
Any written communications, photos, or other materials for copying and distribution to the City Council that are 10 pages or less, can be e-mailed to [email protected], submitted to the City Clerk’s Office on a flash drive, or mailed to the City Clerk’s Office. Kindly submit materials to the City Clerk AS EARLY AS POSSIBLE, BUT NO LATER THAN 12:00 p.m. on the day of the meeting.
Comments received by 12:00 p.m. on the day of the meeting will be provided to the City Council, made available to the public, and will be part of the meeting record.
Please know that it is important for the City to allow public participation at this meeting. If you are unable to participate in the meeting via the processes set forth above, please contact the City Clerk at (714) 754-5225 or [email protected] and staff will attempt to accommodate you. While the City does not expect there to be any changes to the above process for participating in this meeting, if there is a change, the City will post the information as soon as possible to the City’s website.
Note that records submitted by the public will not be redacted in any way and will be posted online as submitted, including any personal contact information. All pictures, PowerPoints, and videos submitted for display at a public meeting must be previously reviewed by staff to verify appropriateness for general audiences. This includes items submitted for the overhead screen during the meeting. Items submitted for the overhead screen should be 1 page and provided to the City Clerk prior to the start of the meeting. No links to YouTube videos or other streaming services will be accepted, a direct video file will need to be emailed to staff prior to each meeting in order to minimize complications and to play the video without delay. The video must be one of the following formats, .mp4, .mov or .wmv. Only one file may be included per speaker for public comments, for both videos and pictures. Please e-mail to the City Clerk at [email protected] NO LATER THAN 12:00 Noon on the date of the meeting. If you do not receive confirmation from the city prior to the meeting, please call the City Clerks office at 714-754-5225.
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Agenda - Final Amended September 2, 2025
Note regarding agenda-related documents provided to a majority of the City Council after distribution of the City Council agenda packet (GC §54957.5): Any related documents provided to a majority of the City Council after distribution of the City Council Agenda Packets will be made available for public inspection. Such documents will be posted on the city’s website and will be available at the City Clerk's office, 77 Fair Drive, Costa Mesa, CA 92626.
All cell phones and other electronic devices are to be turned off or set to vibrate. Members of the audience are requested to step outside the Council Chambers to conduct a phone conversation.
Free Wi-Fi is available in the Council Chambers during the meetings. The network username available is: CM_Council. The password is: cmcouncil1953.
As a LEED Gold Certified City, Costa Mesa is fully committed to environmental sustainability.
A minimum number of hard copies of the agenda will be available in the Council Chambers.
For your convenience, a binder of the entire agenda packet will be at the table in the foyer of the Council Chambers for viewing. Agendas and reports can be viewed on the City website at https://costamesa.legistar.com/Calendar.aspx. Las agendas y los informes se pueden ver en español en el sitio web de la Ciudad en
https://www.costamesaca.gov/trending/current-agendas/spanish-city-council-agendas.
In compliance with the Americans with Disabilities Act, Assistive Listening headphones are available and can be checked out from the City Clerk. If you need special assistance to participate in this meeting, please contact the City Clerk at (714) 754-5225. Notification at least 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR 35.102.35.104 ADA Title II].
En conformidad con la Ley de Estadounidenses con Discapacidades (ADA), aparatos de asistencia están disponibles y podrán ser prestados notificando a la Secretaria Municipal. Si necesita asistencia especial para participar en esta junta, comuníquese con la oficina de la Secretaria Municipal al (714) 754-5225. Se pide dar notificación a la Ciudad por lo mínimo 48 horas de anticipación para garantizar accesibilidad razonable a la junta. [28 CFR
35.102.35.104 ADA Title II].
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Agenda - Final Amended September 2, 2025
CLOSED SESSION - 4:00 P.M.
CALL TO ORDER
ROLL CALL
PUBLIC COMMENTS Members of the public are welcome to address the City Council only on those items on the Closed Session agenda. Each member of the public will be given a total of three minutes to speak on all items on the Closed Session agenda.
CLOSED SESSION ITEMS:
1. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATION OF LITIGATION - TWO CASES
Pursuant to California Government Code Section 54956.9 (d)(2), Potential Litigation.
2. CONFERENCE WITH LEGAL COUNSEL - INITIATION OF LITIGATION - ONE CASE Pursuant to California Government Code Section 54956.9 (d)(4), Potential Litigation.
3. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (d)(1) Name of Case: RDK Group Holdings, LLC v. City of Costa Mesa, Orange County Superior Court Case No. 30 2025 0149581 CU WM WJC
4. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (d)(1) Name of Case: Farrell Harrison v. City of Costa Mesa, et al., Orange County Superior Court Case No. 30-2025-01495293-CU-WM-CJC
5. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (d)(1) Name of Case: Insight Psychology and Addiction, Inc. v. City of Costa Mesa, U.S. District Court, Central District of California, Case No. 8:20 cv 00504 JVS JDE
6. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (d)(1) Name of Case: Perdomo, et al. v. Noem, et al.,
United States District Court for the Central District of California Case No. 2:25-cv-05605-MEMF-SP
7. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (d)(1) Name of Case: DBO Investments CM, LLC v. Costa Mesa
Orange County Superior Court Case No. 30-2023-01360125-CU-CR-NJC.
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Agenda - Final Amended September 2, 2025
REGULAR MEETING OF THE CITY COUNCIL AND HOUSING AUTHORITY SEPTEMBER 2, 2025 – 6:00 P.M.
JOHN STEPHENS
Mayor
MANUEL CHAVEZ ANDREA MARR Mayor Pro Tem - District 4 Council Member - District 3
ARLIS REYNOLDS LOREN GAMEROS Council Member - District 5 Council Member - District 2
JEFF PETTIS MIKE BULEY Council Member - District 6 Council Member - District 1
KIMBERLY HALL BARLOW CECILIA GALLARDO-DALY City Attorney Interim City Manager
CALL TO ORDER
NATIONAL ANTHEM AND PLEDGE OF ALLEGIANCE
MOMENT OF SOLEMN EXPRESSION
[Per Council Policy 000-12, these presentations are made by community volunteers stating their own views. The City Council disclaims any intent to endorse or sponsor the views of any speaker.]
ROLL CALL
CITY ATTORNEY CLOSED SESSION REPORT
PRESENTATIONS:
1. Proclamation: 2025 Hunger Action Month
PUBLIC COMMENTS – MATTERS NOT LISTED ON THE AGENDA
Comments on Presentations and Consent Calendar items may also be heard at this time. Comments are limited to 3 minutes, or as otherwise directed.
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COUNCIL MEMBER COMMITTEE REPORTS, COMMENTS, AND SUGGESTIONS Each council member is limited to 3 minutes. Additional comments will be heard at the end of the meeting.
1. Council Member Pettis
2. Council Member Buley
3. Council Member Gameros
4. Council Member Marr
5. Council Member Reynolds
6. Mayor Pro Tem Chavez
7. Mayor Stephens
REPORT – CITY MANAGER
REPORT – CITY ATTORNEY
CONSENT CALENDAR
All matters listed under the Consent Calendar are considered to be routine and will be acted upon in one motion. There will be no separate discussion of these items unless members of the City Council, staff, or the public request specific items to be discussed and/or removed from the Consent Calendar for discussion.
1. PROCEDURAL WAIVER: WAIVE THE FULL READING OF ALL
ORDINANCES AND RESOLUTIONS
25-422
RECOMMENDATION:
City Council and Housing Authority approve the reading by title only and waive further reading of Ordinances and Resolutions.
2. READING FOLDER 25-423
RECOMMENDATION:
City Council receive and file Claims received by the City Clerk and authorize staff to reject any and all Claims: Warren Franklin, Carolyn Hanson, Craig Marshall, Daisy Martinez.
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Agenda - Final Amended September 2, 2025
3. ADOPTION OF WARRANT RESOLUTION 25-404
RECOMMENDATION:
City Council approve Warrant Resolution No. 2739.
1. Summary Check Registration 7-25-2025
2. Summary Check Registration 7-31-2025
3. Summary Check Registration 8-7-2025
4. Summary Check Registration 8-14-2025
Attachments:
4. MINUTES 25-424
RECOMMENDATION:
City Council approve the minutes of the Special Closed Session meetings of July 1, 2025 and July 8, 2025.
1. 07-01-2025 Draft Minutes
2. 07-08-2025 Draft Minutes
Attachments:
5. AGREEMENT FOR A SCHOOL RESOURCE OFFICER PROGRAM
BETWEEN THE CITY OF COSTA MESA AND NEWPORT-MESA
UNIFIED SCHOOL DISTRICT FOR FISCAL YEAR 2025-2026
25-386
RECOMMENDATION:
Staff recommends the City Council:
1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2025-26.
2. Authorize the Interim City Manager to execute the agreement.
1. Costa Mesa SRO Agreement FY25-26
2. 2025-26 SRO Projection
Attachments:
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Agenda - Final Amended September 2, 2025
6. MAINTENANCE SERVICES AGREEMENTS FOR ON-CALL HVAC
MAINTENANCE AND REPAIRS
25-416
RECOMMENDATION:
Staff recommends the City Council:
1. Approve and authorize the Interim City Manager and the City Clerk to execute a two-year Maintenance Services Agreement (MSA) to provide on-call Heating, Ventilation and Air-Conditioning (HVAC) mechanical automation system repairs and maintenance services, with three ( 3) one-year renewal periods, in an aggregate amount not to exceed $200,000 annually in a form as approved by the City Attorney to:
• FM Thomas
• Harbor Pointe
• Southland Industries
2. Authorize the Interim City Manager and the City Clerk to execute the agreements and any authorized amendments to the agreements.
1. On-Call HVAC Maintenance Services AgreementsAttachments:
AT THIS TIME COUNCIL WILL ADDRESS ANY ITEMS PULLED FROM THE CONSENT
CALENDAR
------------------------------END OF CONSENT CALENDAR-------------------------------
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PUBLIC HEARINGS:
(Pursuant to Resolution No. 05-55, Public Hearings begin at 7:00 p.m.)
1. INTRODUCTION OF AN ORDINANCE ADDING CHAPTER XVI
(PROHIBITION ON SALE OR DISTRIBUTION OF NITROUS OXIDE)
TO TITLE 11 (OFFENSES-MISCELLANEOUS) OF THE COSTA MESA
MUNICIPAL CODE TO ESTABLISH REGULATIONS PROHIBITING
THE UNLAWFUL SALE OR DISTRIBUTION OF NITROUS OXIDE IN
THE CITY
25-379
RECOMMENDATION:
Staff recommends the City Council introduce for first reading, by title only, Ordinance No. 2025-xx, adding Chapter XVI (Prohibition on Sale or Distribution of Nitrous Oxide) to Title 11 (Offenses-Miscellaneous) of the Costa Mesa Municipal Code to establish regulations prohibiting the unlawful sale or distribution of nitrous oxide in the City.
1. Draft OrdinanceAttachments:
2. FINAL ENVIRONMENTAL IMPACT REPORT (SCH NO. 2024060115),
GENERAL PLAN AMENDMENT, REZONE, SPECIFIC PLAN
AMENDMENT, MASTER PLAN, VESTING TENTATIVE PARCEL MAP,
DENSITY BONUS, AND DEVELOPMENT AGREEMENT FOR HIVE
LIVE, A THREE-PHASED, 1,050-UNIT, RESIDENTIAL DEVELOPMENT WITH 3,692-SQUARE-FOOT RETAIL COMPONENT AT 3333 SUSAN
STREET
25-421
RECOMMENDATION:
Staff recommends the City Council continue the open public hearing to the October 7, 2025, City Council meeting.
Agenda Report
1. Continuation Request
Attachments:
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Agenda - Final Amended September 2, 2025
3. APPEAL OF THE DIRECTOR OF DEVELOPMENT SERVICES ’
DETERMINATION THAT CANNABIS BUSINESS PERMIT MQ- 21-15
FOR A CANNABIS STOREFRONT LOCATED AT 2301 NEWPORT
BOULEVARD (CULTURE CANNABIS CLUB) IS NON-OPERATIONAL
AND ABANDONED
25-394
RECOMMENDATION:
Staff recommends the City Council:
1. Find that the appeal is not subject to the California Environmental Quality Act per California Public Resources Code Section 15268.
2. Uphold the Director of Development Services’ determination that Cannabis Business Permit MQ-21-15 is nonoperational and abandoned pursuant to Costa Mesa Municipal Code Section 9-495( h)(16) and find that the Permit is invalid and of no further force and effect.
Agenda Report
1. Resolution
2. Appeal Application
3. Notice of Abandonment and Eviction
Attachments:
OLD BUSINESS:
1. SECOND READING AND ADOPTION OF AN ORDINANCE TO
REZONE THE PROJECT SITE FROM ADMINISTRATIVE AND
PROFESSIONAL (AP) TO MULTIPLE FAMILY RESIDENTIAL ( R3)
FOR THE 142 UNIT RESIDENTIAL OWNERSHIP PROJECT LOCATED
AT 3150 BEAR STREET (MERITAGE HOMES)
25-403
RECOMMENDATION:
Staff recommends that the City Council give second reading to and adopt Ordinance No. 2025-05 to approve the rezone for subject property from Administrative & Professional (AP) to Multiple Family Residential (R3).
Agenda Report
1. Ordinance No. 2025-05
Attachments:
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Agenda - Final Amended September 2, 2025
2. AWARD OF THE TEWINKLE PARK LAKES REPAIR AND
REHABILITATION PROJECT, CITY PROJECT NO. 24-12, AND
FINDING OF CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
CATEGORICAL EXEMPTION
25-390
RECOMMENDATION:
Staff recommends the City Council:
1. Make a finding of California Environmental Quality Act (CEQA) categorical exemption pursuant to CEQA Guidelines section 15301.
2. Adopt plans, specifications, and working details for the TeWinkle Park Lakes Repair and Rehabilitation Project, City Project No. 24-12.
3. Award a Public Works Agreement (PWA) for construction to Houalla Enterprises, Ltd. (dba Metro Builders & Engineers Group, Ltd.) 2610 Avon Street, Newport Beach, California 92663 in the amount of $2,459,777, and authorize a ten percent (10%) contingency in the amount of $245,978 for unforeseen costs related to this project.
4. Authorize the Interim City Manager and the City Clerk to execute the PWA for Houalla Enterprises, Ltd. (dba Metro Builders & Engineers Group, Ltd.) and future amendments to the agreement within Council authorized limits.
ENVIRONMENTAL DETERMINATION:
The proposed action is exempt from the California Environmental Quality Act (CEQA). The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change in the environment. In addition, the proposed action is exempt under section 15301 relating to the operation, repair, maintenance, permitting, and /or minor alteration of existing public facilities.
1. Bid Reduction Summary
2. PWA
Attachments:
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Agenda - Final Amended September 2, 2025
3. AWARD OF A PROFESSIONAL SERVICES AGREEMENT FOR
CATEGORY 6A (CAT 6A) STRUCTURED CABLING AND VERKADA
CAMERA INSTALLATION WITH BCS CONSULTANTS
25-388
RECOMMENDATION:
Staff recommends the City Council:
1. Authorize the Interim City Manager and City Clerk to execute a Professional Services Agreement (PSA) for network cable and camera installation to BCS Consultants, 9910 Irvine Center Drive, Irvine, CA 92618 in the amount of $740,684 for a two-year term, with the option for a one (1) one-year renewal.
2. Authorize a five percent (5%) contingency in the amount of $37,034 for unforeseen costs.
3. Authorize the Interim City Manager or designee to execute future authorized amendments to the agreement.
1. RFP 25-05
2. BCS PSA
3. BCS Proposal
4. BCS Revised Proposal
Attachments:
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Agenda - Final Amended September 2, 2025
4. REQUEST FOR CITY COUNCIL DIRECTION REGARDING THE
RESULTS OF THE ORANGE COUNTY POWER AUTHORITY (OCPA)
FEASIBILITY STUDY
25-417
RECOMMENDATION:
Staff is requesting that the City Council:
1. Receive and file the feasibility study conducted by the Orange County Power Authority (OCPA) and the corresponding presentation led by OCPA;
2. Provide direction on the substantial staff research required to evaluate joining OCPA; and
3. Direct staff to identify available funding for any costs associated with Costa Mesa’s potential membership in OCPA.
1. OCPA Feasibility Study
2. OCPA Rates Commercial Customers 3-24-25
3. OCPA Rates Residential Customers 3-24-25
4. OCPA- 2025-26 Fiscal Year Operating Budget
Attachments:
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NEW BUSINESS:
1. AWARD OF THE FAIRVIEW ROAD ACTIVE TRANSPORTATION AND REHABILITATION PROJECT, CITY PROJECT NO. 25-10, STATE
PROJECT NO. CRASL- 5312(106), AND FINDING OF CALIFORNIA
ENVIRONMENTAL QUALITY ACT (CEQA) CATEGORICAL
EXEMPTION
25-389
RECOMMENDATION:
Staff recommends the City Council:
1. Make a finding of California Environmental Quality Act (CEQA) categorical exemption pursuant to CEQA Guidelines section 15301.
2. Adopt plans, specifications, and working details for the Fairview Road Active Transportation and Rehabilitation Project, City Project No. 25-10, State Project No. CRASL-5312(106).
3. Award a Public Works Agreement (PWA) for construction to Hardy & Harper, Inc., 32 Rancho Circle, Lake Forest, California 92630, in the amount of $2,860,000, and authorize a ten percent (10%) contingency in the amount of $286,000 for unforeseen costs related to this project.
4. Authorize the Interim City Manager and the City Clerk to execute the PWA for Hardy & Harper, Inc ., and future amendments to the agreement within Council authorized limits.
ENVIRONMENTAL DETERMINATION:
The proposed action is exempt from the California Environmental Quality Act (CEQA). The action involves an organizational or administrative activity of government that will not result in the direct or indirect physical change in the environment. In addition, the proposed action is exempt under section 15301 relating to the operation, repair, maintenance, permitting, and /or minor alteration of existing public facilities.
1. Bid Abstract
2. PWA
Attachments:
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Agenda - Final Amended September 2, 2025
2. UPDATE ON SUPPORT SERVICES AND ASSISTANCE FOR
RESIDENTS AND TRACKING OF AT-FAULT EVICTIONS
25-418
RECOMMENDATION:
Staff recommends the City Council:
1. Receive and file staff ’s update on the donation of $100,000 to two local non-profit organizations, Enough for All Fund ( $50,000) and Someone Cares Soup Kitchen ($50,000) to provide assistance to impacted residents.
2. Request direction on tracking at- fault evictions.
3. UPDATE ON OPTIONS FOR LEGAL ASSISTANCE FOR RESIDENTS
AND POTENTIAL PARTICIPATION IN LAWSUIT CHALLENGING
ROAMING IMMIGRATION ENFORCEMENT PATROLS
25-436
RECOMMENDATION:
Staff recommends the City Council:
1. Receive and file this update on options to provide legal defense funding to assist residents in connection with federal immigration enforcement and direct staff accordingly.
2. Consider whether and how to participate in Perdomo, et al. v. Noem, et al ., United States District Court for the Central District of California, Case No . 2:25-cv-05605-MEMF-SP.
1. Order granting TRO - Perdomo
2. Court of Appeal Order Upholding TRO - Perdomo
3. Los Angeles, et al. Amicus Brief
Attachments:
ADDITIONAL COUNCIL /BOARD MEMBER COMMITTEE REPORTS, COMMENTS, AND
SUGGESTIONS
ADJOURNMENT
16 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-422 Meeting Date: 9/2/2025
TITLE:
PROCEDURAL WAIVER: WAIVE THE FULL READING OF ALL ORDINANCES AND
RESOLUTIONS
RECOMMENDATION:
City Council and Housing Authority approve the reading by title only and waive further reading of Ordinances and Resolutions.
17 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-423 Meeting Date: 9/2/2025
TITLE:
READING FOLDER
DEPARTMENT: City Manager’s Office/City Clerk’s Division RECOMMENDATION:
City Council receive and file Claims received by the City Clerk and authorize staff to reject any and all Claims: Warren Franklin, Carolyn Hanson, Craig Marshall, Daisy Martinez.
18 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-404 Meeting Date: 9/2/2025
TITLE:
ADOPTION OF WARRANT RESOLUTION
DEPARTMENT: FINANCE DEPARTMENT
PRESENTED BY: CAROL MOLINA, FINANCE DIRECTOR
CONTACT INFORMATION: CAROL MOLINA, FINANCE DIRECTOR AT (714) 754-5243 RECOMMENDATION:
City Council approve Warrant Resolution No. 2739.
BACKGROUND:
In accordance with Section 37202 of the California Government Code, the Director of Finance or their designated representative hereby certify to the accuracy of the following demands and to the availability of funds for payment thereof.
FISCAL REVIEW:
Funding Payroll Register No. 25-15 On Cycle for $4,358,854.04, 25-15 “A”Off Cycle for $0, 25-16 On Cycle for $4,222,130.29, 25-17 On Cycle for $4,350,741.39, and City operating expenses for $8,209,148.49.
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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-424 Meeting Date: 9/2/2025
TITLE:
MINUTES
DEPARTMENT: City Manger’s Office/City Clerk’s Division
RECOMMENDATION:
City Council approve the minutes of the Special Closed Session meetings of July 1, 2025 and July 8, 2025.
103
Minutes – Special Closed Session July 1, 2025 Page 1 of 2
SPECIAL CLOSED SESSION MEETING OF THE CITY COUNCIL
JULY 1, 2025 – 5:00 P.M. - MINUTES
CALL TO ORDER – The Special Closed Session meeting was called to order by Mayor Stephens at 5:01 p.m.
ROLL CALL
Present: Council Member Buley, Council Member Gameros, Council Member Marr (Via Zoom Webinar), Council Member Pettis, Council Member Reynolds, Mayor Pro Tem Chavez, and Mayor Stephens.
Absent: None.
Ms. Hall Barlow, City Attorney requested to add to the Closed Session agenda Existing Litigation, Pursuant to California Government Code Section 54956.9 (b)(1) Ayman Ahmed Abdulmagid v. City of Costa Mesa, Orange County Superior Court Case No. 30-2024-01402612-CU-MC-CJC due to the item requiring action prior to the next regularly scheduled City Council meeting and arose after the posting of the current agenda.
PUBLIC COMMENTS:
Cynthia McDonald, Costa Mesa, spoke on the selection of a new City Manager.
MOVED/SECOND: Mayor Stephens/Mayor Pro Tem Chavez
MOTION: Add Existing Litigation, Pursuant to California Government Code Section 54956.9 (b)(1) Ayman Ahmed Abdulmagid v. City of Costa Mesa, Orange County Superior Court Case No. 30-2024-01402612-CU-MC-CJC item as requested by the City Attorney to the Closed Session agenda.
The motion carried by the following roll call vote:
Ayes: Council Member Buley, Council Member Gameros, Council Member Marr, Council Member Pettis, Council Member Reynolds, Mayor Pro Tem Chavez, and Mayor Stephens.
Nays: None.
Absent: None.
Abstain: None.
Motion carried: 7-0
SPECIAL CLOSED SESSION ITEM:
1. PUBLIC EMPLOYEE APPOINTMENT
Pursuant to California Government Code Section 54957(b)(1) Title: City Manager
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Minutes – Special Closed Session July 1, 2025 Page 2 of 2
2. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
Pursuant to California Government Code Section 54956.9 (b)(1) Name of Case: Ayman Ahmed Abdulmagid v. City of Costa Mesa Orange County Superior Court Case No. 30-2024-01402612-CU-MC-CJC.
Ms. Hall Barlow, City Attorney stated she did not expect reportable action from the Closed Session.
City Council recessed at 5:06 p.m. for Closed Session.
ADJOURNMENT – Mayor Stephens adjourned the Special Closed Session meeting at 6:24 p.m. and there was no reportable action taken.
Minutes adopted on this 2nd day of September, 2025.
___________________________
John Stephens, Mayor
ATTEST:
___________________________
Brenda Green, City Clerk
105
Minutes – Special Closed Session July 8, 2025 Page 1 of 1
SPECIAL CLOSED SESSION MEETING OF THE CITY COUNCIL
JULY 8, 2025 – 4:30 P.M. - MINUTES
CALL TO ORDER – The Special Closed Session meeting was called to order by Mayor Stephens at 4:30 p.m.
ROLL CALL
Present: Council Member Buley, Council Member Gameros, Council Member Marr, Council Member Pettis, Council Member Reynolds, Mayor Pro Tem Chavez, and Mayor Stephens.
Absent: None.
PUBLIC COMMENTS – NONE.
CLOSED SESSION ITEMS:
1. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATION OF LITIGATION - ONE CASE
Pursuant to California Government Code Section 54956.9 (d)(2), Potential Litigation.
City Council recessed at 4:31 p.m. for Closed Session.
ADJOURNMENT – Mayor Stephens adjourned the Special Closed Session meeting at 5:02 p.m.
Minutes adopted on this 2nd day of September, 2025.
___________________________
John Stephens, Mayor
ATTEST:
___________________________
Brenda Green, City Clerk
106
CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-386 Meeting Date: 9/2/2025
TITLE:
AGREEMENT FOR A SCHOOL RESOURCE OFFICER PROGRAM BETWEEN THE CITY OF COSTA MESA AND NEWPORT-MESA UNIFIED SCHOOL DISTRICT FOR FISCAL YEAR 2025- 2026
DEPARTMENT: POLICE DEPARTMENT
PRESENTED BY: SCOTT STAFFORD, LIEUTENANT
CONTACT INFORMATION: SCOTT STAFFORD, LIEUTENANT, (714) 754-5675 RECOMMENDATION:
Staff recommends the City Council:
1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2025-26.
2. Authorize the Interim City Manager to execute the agreement.
BACKGROUND:
In 2001, the Costa Mesa Police Department began an SRO Program with NMUSD. The program consisted of two full-time police officers to staff Costa Mesa’stwo high schools and one intermediate school. The program was viewed as a tremendous success and a benefit to all parties involved.
Since then, the City and NMUSD have entered into annual agreements in connection with the SRO Program. In September 2022, the Department committed a third officer to the SRO Program, which was outlined in the SRO Program agreement for FY 2023-24.
ANALYSIS:
Since the SRO Program’sinception, the primary mission of the SROs has been to prevent and deter school violence before it occurs. SROs help mitigate problems that might otherwise result in an emergency call for police services, thereby reducing the burden on Patrol Services and protecting those in the learning environment. SROs accomplish this by their presence on campus and regular interaction with school staff and students. In addition, SROs are a resource for students to advise on potential issues, which the SROs can proactively address and mitigate.
SROs are present on school campuses to ensure the safety and security of our schools. Additionally, SROs respond to and handle all criminal acts occurring on school campuses or in the immediate vicinity. In this respect, SROs conduct the initial investigation on a variety of crimes such as child abuse, assaults, thefts, graffiti, and narcotics-related crimes. Furthermore, SROs also provide
107
File #: 25-386 Meeting Date: 9/2/2025
immediate and direct support to the school administration and campus security staff.
The current SRO agreement between the City of Costa Mesa and the Newport-Mesa Unified School District covers the period of July 1, 2024 through June 30, 2025. The proposed agreement for July 1, 2025 through June 30, 2026 maintains the same structure, terms, and scope of services as the existing agreement. Pursuant to the proposed agreement, the City will continue to assign three full- time Costa Mesa Police Department officers to serve as School Resource Officers at Costa Mesa High School, Estancia High School, and Back Bay High School, with additional support provided to other District schools in Costa Mesa as needed. The District will reimburse the City for 50% of the total salary and benefit costs of the assigned officers, and 100% of the costs for supplemental services requested for special events. The only substantive changes from the current agreement are the increase in salary and benefit costs for the officers and access to any camera or security systems.
ALTERNATIVES:
No other alternatives have been considered. If the SRO Program were discontinued, the Police Department would have to utilize staffing from Patrol Services to handle any campus-related calls for service. This alternative would draw upon the resources in the field and render them temporarily unavailable in other parts of the community. There would also be a lack of consistency in the services provided to the School District.
FISCAL REVIEW:
The combined annual salaries and benefits expense for three officers amounts to $1,136,604.
NMUSD’sshare of this cost, which is $568,302, covers fifty percent (50%) of the total salaries and benefits. The remaining portion of the officers’ salaries and benefits, is included in the Police Department’s FY 2025-26 adopted budget.
LEGAL REVIEW:
The City Attorney’s Office has reviewed this report and the agreement and approved them as to form.
CITY COUNCIL GOALS AND PRIORITIES:
This item supports the following City Council Goal: Strengthen the Public’sSafety and Improve the Quality of Life.
CONCLUSION:
Staff recommends the City Council:
1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2025-26.
2. Authorize the Interim City Manager to execute the agreement.
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1 SRO Agreement 2025-2026
SCHOOL RESOURCE OFFICER SERVICES AGREEMENT
BETWEEN THE CITY OF COSTA MESA
AND THE NEWPORT-MESA UNIFIED SCHOOL DISTRICT
FOR THE 2025-2026 FISCAL YEAR
T
HIS SCHOOL RESOURCE OFFICER SERVICES AGREEMENT (“Agreement”) is entered into as of the 1st day of July, 2025 (“Effective Date”) by and between the CITY OF COSTA MESA, a municipal corporation (“City”), and the NEWPORT-MESA UNIFIED SCHOOL DISTRICT, a political subdivision of the State of California (“District”).
RECITALS
A. Cit
y is a municipal corporation duly organized and validly existing under the Constitution and the laws of the State of California.
B. D
istrict is a political subdivision of the State of California located in Orange County, California, and is organized and exists pursuant to the laws of the State of California.
C. D
istrict is in need of services as part of the School Resource Officer Program (“SRO Program”), as more fully described herein (the “Services”).
D. D
istrict is authorized to enter into this Agreement pursuant to the laws of the State of California.
E. C
ity employs sworn peace officers specially trained, experienced and competent to provide the Services and City is willing to provide the Services to District on the terms and in the manner provided in this Agreement.
F. T
his Agreement is not intended to modify any program or service provided by City to District as of the Effective Date except as expressly provided herein.
G. C
ity and District are joining together in a collaborative effort to provide School Resource Officers (“SROs”) to work with the school communities to help provide a safe and secure environment for all.
H. I
t is the stated goal of this Agreement to have a working partnership between the City and the District so as to provide a safe and secure learning environment for all students and to encourage a positive learning experience.
N
OW THEREFORE, for and in consideration of the mutual covenants and conditions set forth herein, City and District agree as follows:
1.0. TERM
ATTACHMENT 1
109
2 SRO Agreement 2025-2026
The term of this Agreement shall commence on the Effective Date and continue for a period of one ( 1) year, ending on June 30, 2026, unless previously terminated as provided herein.
2.0. CITY’S DUTIES
2.1. Scope of Services. The Services shall include the following required and discretionary services designed to promote safety in the learning environment, which shall be provided at District schools located within the City, including Costa Mesa High School (“CMHS”), Estancia High School (“EHS”), Early College High School, Back Bay High School (“BBHS), TeWinkle Middle School, and any elementary schools in need of SRO presence, as requested by District.
(a) Required Services. City shall perform the following services:
(i) Assign three (3) full-time sworn officers employed by the Costa Mesa Police Department (“CMPD”) to the function of SROs.
(ii) Establish and maintain a liaison between District personnel, CMPD personnel, and stakeholders in the juvenile justice system.
(iii) Serve as a resource to District employees, such as administrators, faculty and security personnel, as well as students and their guardian(s) on law enforcement -related issues including crime prevention and investigations.
(iv) Assign one SRO to CMHS, one SRO to EHS, and one SRO to BBHS.
As needed, the SROs will share the responsibility of providing Services to the other District schools in the City, subject to the discretion of the Costa Mesa Chief of Police (“Chief of Police”) to make assignment changes.
(b) Discretionary Services. City may, in the sole discretion of the SRO and/or the Chief of Police, perform the following services:
(i) Conduct patrol activities in and around the designated campuses.
(ii) Conduct preliminary and follow-up investigations of crimes that occur on or near the designated campuses.
2.2. Selection and Supervision of SROs. The Chief of Police will determine those individuals best suited for the assignment to the SRO Program in accordance with City’s employment procedures and conditions and advise the District of the eligible candidates. The Chief of Police will consider input from the District representative as to the selection of the SROs, but the Chief of Police shall have the sole discretion in the 110
3 SRO Agreement 2025-2026
selection of the SROs. The Chief of Police’s selections shall be final. The SROs shall perform the Services under the supervision and control of the Chief of Police.
2.3. Vehicles, Equipment, and Uniforms. Except as otherwise provided in this Agreement, City shall furnish all vehicles, equipment, and uniforms as may be required to support the SROs assigned to the District pursuant to this Agreement. City agrees that each SRO will perform his/her duties in full police uniform. The uniform will include safety equipment designated for use by sworn field personnel pursuant to CMPD policies and practices.
2.4. Schedule of Services; SRO Assignment . City shall schedule each SRO such that each SRO provides services four (4) days a week for ten (10) hours each day (“Normal Work Week”). The SROs will spend a minimum of seventy-five percent (75%) of their time allocated in this Agreement in and around the assigned schools. City shall use its best efforts to ensure that the same person provides Services to the same campus except when he/she is on paid leave or otherwise absent. Subject to provisions of relevant City personnel policies or labor agreements, City shall use its best efforts to schedule SROs so that at least one (1) SRO is on duty each day that school is in session and that each SRO can be present during special school activities. On the days that there is only one (1) SRO on duty during the week, he/she shall serve as the SRO for both CMHS , EHS, and BBHS and will also be available to assist, if needed, any other District school in the City.
2.5. District Security . The Services performed by SROs pursuant to this Agreement are not intended to supplant those provided by existing District security personnel. District may request security services from City pursuant to other provisions of this Agreement.
3.0. DISTRICT’S DUTIES
3.1. Compensation. District shall compensate City for the Services as set forth herein.
3.2. Access to Student Records. District shall designate the SROs as designated school officials for student records purposes. SROs shall have access to students’ education records when there is a legitimate educational interest in the records.
Pursuant to the Family Educational Rights and Privacy Act of 1974 (FERPA), the SROs may only use the personally identifiable information contained in a student’s record for the purposes for which the disclosure is made, such as for promoting school safety and the physical security of students. SROs shall not redisclose personally identifiable information from a student’s educational record to any other outside sources, including the CMPD, without consent, unless the redisclosure meets an exception to consent in FERPA.
3.3. School Site Cameras and Security. District shall ensure SROs have access to cameras, security systems and tip-reporting systems for Costa Mesa schools. 111
4 SRO Agreement 2025-2026
3.4. Staff Liaison . District designates its Director of Student and Community Services, or an alternate as designated by the Superintendent, as a liaison to the CMPD to facilitate communication between District personnel and the SROs and to coordinate the SROs’ activities with District activities and events.
3.5. Cooperation. District personnel shall cooperate with the SROs to facilitate the performance of Services pursuant to this Agreement.
3.6. Special Events; Supplemental Services. The SRO Program shall not supplant or alter the existing District practice of hiring CMPD personnel for the purpose of policing special events. District may request in writing that City provide additional services beyond the Normal Work Week by a SRO during evening or weekend events, such as Parent -Teacher Association (PTA) meetings, Back -to-School Night(s), Open House(s), sporting event(s), dance(s), prom(s) or other District -sponsored events. City shall use its best efforts to provide the requested servic es by the SRO assigned to the campus at which the event or activity is scheduled. If the District has requested an SRO’s presence at an event, or requested supplemental services to be provided by an SRO, District agrees that District shall compensate City for such supplemental services in accordance with this Agreement.
4.0. COMPENSATION
4.1. Compensation. For Services provided during the Normal Work Week, District shall pay City fifty percent (50%) of the total compensation paid each SRO under this Agreement, as invoiced by City to District. The term “total compensation” includes salary and benefits as those exist on the Effective Date and as set forth in E xhibit “A,” attached hereto and incorporated herein by this reference, and as such salary and benefits are modified from time to time during the term of this Agreement.
4.2. Supplemental Services. If District requests additional services beyond the Normal Work Week for special events, District shall pay City one hundred percent (100%) of the costs that City incurs in providing the additional services as requested by the District, with the understanding that City is generally required to pay SROs at least one and one-half (1.5) times their regular rate of pay for overtime.
4.3. Method of Billing. At the end of each quarter, City will invoice District for the SRO costs incurred during that quarter. District shall pay City’s invoice within thirty (30) days of receipt of the invoice. If City provides supplemental services as provided herein, City will invoice District for such supplemental services following the provision of such services and District shall pay such invoice within thirty (30) days of receipt of an invoice from City.
4.4. Extended Closure of Schools. Should there be an extended closure of District schools (longer than 30 days) due to an unforeseen event that diminishes the need of SRO’s on school campuses and allows City to redeploy SROs to other agency 112
5 SRO Agreement 2025-2026
duties, City will assume 80% of the costs of SRO’s after the 30th consecutive day of such a closure while the District will continue to be responsible for 20% of the such costs.
Equally shared costs of SRO’s between the District and the City would resume once the District begins normal operations that includes the re- entry of students onto District campuses.
5.0. GRANT ADMINISTRATIVE REQUIREMENTS
City and District will be responsible for their own respective grant monies received, if any, in connection with the SRO Program, including all administrative duties and responsibilities. This includes receipt and disbursement of funds, financial reporting and grant management issues.
6.0. TERMINATION
District or City may terminate this Agreement without cause any time, by giving thirty (30) days’ written notice to the other party. In the event of termination, District shall compensate City for Services performed through the effective date of the termination. City shall continue to provide Services after notice to terminate and during the thirty (30) day notice period, unless District, in the notice, requests that City not perform Services.
7.0. INDEMNIFICATION
7 .1. District Obligations . District agrees to defend, indemnify and hold harmless City, its elected and appointed officials, officers, agents, employees, and volunteers from and against any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys’ fees, arising out of or in any way connected with the District’s negligent performance of this Agreement. District assumes workers’ compensation liability for injury or death of its officers, agents, employees and volunteers, and, except as provided herein, assumes no workers’ compensation responsibility for the elected and appointed officials, officers, and employees of the City.
7 .2. City Obligations . City agrees to defend, indemnify and hold harmless District, its officers, agents, employees and volunteers harmless from and against any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys’ fees, arising out of or in any way connected with City’s negligent performance of this Agreement. Except as provided herein, City assumes workers’ compensation liability for injury or death of its elected and appointed officials, officers, and employees, and assumes no workers’ compensation responsibility for the officers, agents, employees and volunteers of the District.
8.0. ASSIGNMENT
This Agreement may not be assigned or transferred by either party without the express written consent of the other party.
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6 SRO Agreement 2025-2026
9.0. NOTICE / REPRESENTATIVES
City and District have designated the following representatives to receive notices and act on their agency’s behalf in the administration of this Agreement. Notices shall be deemed given when personally delivered to the District or City representative or three (3) days after the date the notice is deposited in the United States mail, first -class postage prepaid, and addressed as set forth below.
CITY: Chief of Police
Costa Mesa Police Department
99 Fair Drive
Costa Mesa, CA 92626
DISTRICT: Superintendent of Schools
Newport-Mesa Unified School District
2985 Bear Street
Costa Mesa, CA 92626
10.0. NO THIRD-PARTY BENEFICIARIES
This Agreement is entered into for the sole benefit of City and District and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right in, under or to this Agreement.
11.0. INDEPENDENT CONTRACTOR
The parties understand and agree that in performing the Services under this Agreement, City, and any person employed by or contracted with City to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of the District.
12.0. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with respect to any matter referenced herein and supersedes any and all other prior writings and oral negotiations. This Agreement may be modified only in writing, and signed by the parties in interest at the time of such modification. The terms of this Agreement shall prevail over any inconsistent provision in any other contract document appurtenant hereto, including exhibits to this Agreement.
13.0. ATTORNEYS’ FEES
In the event that litigation is brought by any p arty in connection with this Agreement, the prevailing party shall be entitled to recover from the opposing p arty all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party 114
7 SRO Agreement 2025-2026
in the exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions, or provisions hereof.
14.0. GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California.
15.0. AMENDMENTS
Only a writing executed by the parties hereto or their respective successors and assigns may amend this Agreement.
16.0. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.
[Signatures appear on following page.]
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8 SRO Agreement 2025-2026
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by and through their respective authorized officers, as of the date first written above.
CITY OF COSTA MESA
Cecilia Gallardo-Daly
Interim City Manager
ATTEST:
Brenda Green
City Clerk
NEWPORT-MESA UNIFIED SCHOOL DISTRICT
Sara Jocham, Ed.D.
Assistant Superintendent of Student Support Services
Date:
APPROVED AS TO FORM:
Kimberly Hall Barlow
City Attorney
Date:
APPROVED AS TO FORM:
General Counsel
116
EXHIBIT A
SCHOOL RESOURCE OFFICER SALARIES FOR 2025-2026
117
Amount per Officer
Salaries 138,537$
Special Pays
(POST/Uniform/Liason/Retention/Bilingual) 36,612
Medicare Tax 3,002
Health Insurance Benefit 29,028
Employer 457(b) Contribution 2,855
Retirement Benefit 152,712
Insurance
(Workers Comp/Liability/Unemployment) 16,123
378,868
x 3
Total Costs for Three Officers 1,136,604$
x 50%
NMUSD share at 50% 568,302$
City of Costa Mesa
School Resource Officer Program
Fiscal Year 2025-2026
ATTACHMENT 2
118
City of Costa Mesa
School Resource Officer Program
Costs by Officer
Fiscal Year 2025-2026
July 2025 through
June 2026 JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN Total Compensation
Monthly Salary 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 131,940 Other Comp 2,474 2,474 2,474 2,474 2,474 2,474 2,474 2,474 2,474 2,474 2,474 2,474 29,687 Medical 2,419 2,419 2,419 2,419 2,419 2,419 2,419 2,419 2,419 2,419 2,419 2,419 29,028 Medicare 242 242 242 242 242 242 339 242 242 242 242 242 3,002 Employer 457(b) 231 231 231 231 231 231 313 231 231 231 231 231 2,855 Retirement 12,248 12,248 12,248 12,248 12,248 12,248 17,985 12,248 12,248 12,248 12,248 12,248 152,712 Bilingual 5% 577 577 577 577 577 577 577 577 577 577 577 577 6,926 Unemployment 18 18 18 18 18 18 18 18 18 18 18 18 217 Workers Comp 1,159 1,159 1,159 1,159 1,159 1,159 1,159 1,159 1,159 1,159 1,159 1,159 13,910 General Liability 166 166 166 166 166 166 166 166 166 166 166 166 1,996 Holiday Cash Out 6,597 6,597
Total Monthly Comp One Officer 30,530$ 30,530$ 30,530$ 30,530$ 30,530$ 30,530$ 43,043$ 30,530$ 30,530$ 30,530$ 30,530$ 30,530$ 378,868$ Retirement Calculation JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN Monthly Salary 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ 10,995$ Other Comp/Bilingual/Holiday 3,051 3,051 3,051 3,051 3,051 3,051 9,648 3,051 3,051 3,051 3,051 3,051 Uniform Pay (PERS) 37 37 37 37 37 37 37 37 37 37 37 37 Total Retirement 14,083 14,083 14,083 14,083 14,083 14,083 20,680 14,083 14,083 14,083 14,083 14,083 Employer Rate 86.970% 12,248 12,248 12,248 12,248 12,248 12,248 17,985 12,248 12,248 12,248 12,248 12,248 City's Retirement Cost 12,248 12,248 12,248 12,248 12,248 12,248 17,985 12,248 12,248 12,248 12,248 12,248 Notes to estimate compensation (per Lt. Everett) for agreement. These assumptions are based on replacing SRO officers as needed. - assume all officers at top step for entire year
- assume all officers receive 10% Advanced POST and 7.5% Liason Pay - assume all officers receive Bilingual Pay 5% top step Senior Police Officer - assume all officers cash out 104 holiday hours (13 holidays x 8 hours each) - assume all officers at highest PERS % including UAL, 86.970% for 25/26 - assume all officers receive Uniform Pay subject to PERS reporting - assume all officers receive 1.75% employer contribution to 457(b) (0.5% of base salary plus 1.25% all retirement earnings) - assume all officers receive 5% Retention/Longevity Pay for 10 years sworn service (effective 6/29/25) 119
CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-416 Meeting Date: 9/2/2025
TITLE:
MAINTENANCE SERVICES AGREEMENTS FOR ON-CALL HVAC MAINTENANCE AND
REPAIRS
DEPARTMENT: PUBLIC WORKS DEPARTMENT /GENERAL SERVICES
PRESENTED BY: RAJA SETHURAMAN, PUBLIC WORKS DIRECTOR
CONTACT INFORMATION: PATRICK BAUER, DEPUTY PUBLIC WORKS DIRECTOR, (714) 754-5029
RECOMMENDATION:
Staff recommends the City Council:
1. Approve and authorize the Interim City Manager and the City Clerk to execute a two-year Maintenance Services Agreement (MSA) to provide on-call Heating, Ventilation and Air- Conditioning (HVAC) mechanical automation system repairs and maintenance services, with three (3) one-year renewal periods, in an aggregate amount not to exceed $200,000 annually in a form as approved by the City Attorney to:
• FM Thomas
• Harbor Pointe
• Southland Industries
2. Authorize the Interim City Manager and the City Clerk to execute the agreements and any authorized amendments to the agreements.
BACKGROUND:
The Building Maintenance section of the Public Works Department is responsible for the maintenance and repair of 160 pieces of HVAC equipment throughout City facilities, including rooftop units, package units, boiler pumps, fan coils, exhaust fans, and mini-split systems.
These HVAC units serve approximately 130,000 square feet of building and office space spanning across 16 facilities. Of these 16 facilities, there are eight (8) that operate 24/7, which include six (6) Fire Stations, the Police Department Headquarters and Communications Center, and the City’s Bridge Shelter.
Proper and routine maintenance of HVAC systems is essential for several reasons, including optimizing energy efficiency, protecting employee health, and preserving the longevity of the equipment. As significant capital investments, HVAC systems require consistent upkeep to avoid
120
File #: 25-416 Meeting Date: 9/2/2025
equipment. As significant capital investments, HVAC systems require consistent upkeep to avoid costly replacements. Regular maintenance extends the lifespan of the components by ensuring that they are operating within their designed parameters. Neglecting maintenance can lead to deterioration or malfunction, which can trigger system-wide issues that lead to more significant damage requiring higher-expenditure repairs. Regular inspection and servicing prevent unexpected failures and high repair costs while ensuring compliance with health and safety regulations.
ANALYSIS:
On May 13, 2025, the City issued a Request for Proposals (RFP) on PlanetBids for on-call HVAC mechanical automation system repairs and maintenance services; five (5) responsive proposals were received. All proposals were reviewed for compliance with the City’sRFP, and evaluated based on the method of approach, qualifications, experience, staffing, and cost proposal.
To ensure an objective selection process, an evaluation committee made up of various City staff was assembled, and all members evaluated proposals independently. After a thorough evaluation of the proposals, the evaluation committee finds FM Thomas, Harbor Pointe, and Southland Industries to be well qualified to provide on-call HVAC mechanical automation system repairs and maintenance services.
Below is the ranking of the proposals received:
Score Rank
FM Thomas 1200 1
Harbor Pointe Air 1015 2
Southland Industries 955 3
Southwest Mechanicals 845 4
Couts Heating Cooling 800 5
FM Thomas Air Conditioning has been in business since 1974. It is well known for its quality workmanship and has a reputation as one of Southern California's premier commercial HVAC contractors. They have been working on City HVAC systems for the last decade.
Harbor Pointe Air Conditioning & Control Systems, Inc. has been serving Orange, Los Angeles, and Riverside counties since 1989. Over the years, Harbor Pointe has developed expertise in air conditioning service, installations, energy management, retrofitting and maintenance. Harbor Pointe has successfully completed HVAC projects for the City of Costa Mesa in the past.
Southland Industries, founded in 1949, specializes in HVAC (Heating, Ventilation, and Air Conditioning) systems. They offer a range of services, including design, engineering, installation, maintenance, and emergency repairs for HVAC systems in various building types.
Therefore, staff recommends awarding the top three (3) HVAC companies with a two-year agreement with three (3) one-year renewal periods in an aggregate amount not to exceed $200,000 annually.
ALTERNATIVES:
The alternative to this Council action would be to reject all proposals and re-advertise the RFP.
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File #: 25-416 Meeting Date: 9/2/2025
The alternative to this Council action would be to reject all proposals and re-advertise the RFP.
However, this may not result in better quality proposals for the requested services and would also cause equipment down time and considerable delays in repairs needed to the Air Conditioning systems running.
FISCAL REVIEW:
Funding for this MSA is budgeted in the FY 2025-26 Adopted Budget in various funds, including but not limited to the General Fund (Fund 101), Behavioral Health Fund (Fund 229), and Capital Improvement Fund (Fund 401). Additional funding up to the approved annual limit will be requested in future fiscal years’ budgets.
LEGAL REVIEW:
The City Attorney’sOffice has reviewed this agenda report, prepared the MSA (Attachment 1), and approves them as to form.
CITY COUNCIL GOALS AND PRIORITIES:
This agreement works toward achieving the following City Council goals:
· Strengthen the Public’s Safety and Improve the Quality of Life. · Maintain and Enhance the City’s Facilities, Equipment and Technology. · Advance Environmental Sustainability and Climate Resiliency.
CONCLUSION:
Staff recommends the City Council:
1. Approve and authorize the Interim City Manager and the City Clerk to execute a two-year MSA to provide on-call HVAC mechanical automation system repairs and maintenance services, with three (3) one-year renewal periods, in an aggregate amount not to exceed $200,000 annually in a form as approved by the City Attorney to:
· FM Thomas
· Harbor Pointe
· Southland Industries
2. Authorize the Interim City Manager and the City Clerk to execute the agreements and any authorized amendments to the agreements.
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1 F.M. Thomas Air Conditioning, Inc.
Maintenance Services Agreement
Form Rev. 10-30-24
CITY OF COSTA MESA
MAINTENANCE SERVICES AGREEMENT
WITH
F.M. THOMAS AIR CONDITIONING, INC.
THIS MAINTEN
ANCE SERVICES AGREEMENT (“Agreement”) is made and entered into this 2nd day of September, 2025 (“Effective Date”), by and between the CITY OF COSTA MESA, a municipal corporation (“City”), and F.M. THOMAS AIR CONDITIONING , INC., a California corporation. (“Contractor”).
W I T N E S S E T H
:
A. City proposes to
utilize the services of Contractor as an independent contractor to provide on-call HVAC mechanical automation system repairs and maintenance services of City property, as more fully described herein; and
B. Contractor repres
ents that it has the experience and expertise to properly perform such services and holds all necessary licenses to practice and perform the services; and C. City and Contr
actor desire to contract for the services and desire to set forth their rights, duties and liabilities in connection with the performance of such services; and D. No official or
employee of City has a financial interest, within the provisions of Sections 1090-1092 of the California Government Code, in the subject matter of this Agreement.
NOW, THEREFO
RE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows:
1.0. SERVICES PRO
VIDED BY CONTRACTOR
1.1. Scope of Servi
ces. Contractor shall provide the services described in the City ’s Request for Proposal, RFP No. 25-22 (“RFP”), attached hereto as Exhibit “A ,” and Contractor’s response to City’s RFP (the “Proposal”) attached hereto as Exhibit “B,” both incorporated herein (the “Services”).
1.2. Prevaili
ng Wage Requirements.
(a) Prevailing
Wage Laws. Contractor is aware of the requirements of Chapter 1 (beginning at Section 1720, et seq.) of Part 7 of Division 2 of the California Labor Code, as well as Title 8, Section 16000, et seq. of the California Code of Regulations (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “public works” and “maintenance” projects. This project is a “maintenance” project and requires compliance with the Prevailing Wage Laws. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.
ATTACHMENT 1
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(b) Payment of Prevailing Wages. Contractor shall pay the prevailing wage rates for all work performed under this Agreement. When any craft or classification is omitted from the general prevailing wage determinations, Contractor shall pay the wage rate of the craft or classification most closely related to the omitted classification. A copy of the general prevailing wage rate determination is on file in the Office of the City Clerk and is incorporated into this Agreement as if fully set forth herein. Contractor shall post a copy of such wage rates at all times at the project site(s).
(c) Legal Working Day. In accordance with the provisions of Labor Code Section 1810, et seq., eight (8) hours is the legal working day. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of the Labor Code regarding eight (8)-hour work day and 40-hour work week requirements, and overtime, Saturday, Sunday, and holiday work. Work performed by Contractor’s or any subcontractor’s employees in excess of eight (8) hours per day, and 40 hours during any one week, must include compensation for all hours worked in excess of eight (8) hours per day, or 40 hours during any one week, at not less than one and one-half times the basic rate of pay. Contractor shall forfeit as a penalty to City Twenty -Five Dollars ($25.00), or any greater penalty set forth in the Labor Code, for each worker employed in the execution of the work by Contractor or by any subcontractor(s) of Contractor, for each calendar day during which such worker is required or permitted to the work more than eight (8) hours in one calendar day or more than 40 hours in any one calendar week in violation of the Labor Code.
(d) Apprentices. Contractor shall comply with the provisions of Labor Code Section 1777.5 concerning the employment of apprentices on public works projects. Contractor shall be responsible for ensuring compliance by its subcontractors with Labor Code Section 1777.5.
(e) Payroll Records. Pursuant to Labor Code Section 1776, Contractor and any subcontractor(s) shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by Contractor or any subcontractor in connection with this Agreement. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following: (1) The information contained in the payroll record is true and correct; and (2) The employer has complied with the requirements of Sections 1771, 1881, and 1815 of the Labor Code for any work performed by his or her employees on this project. The payroll records shall be certified and shall be available for inspection at all reasonable hours in accordance with the requirements of Labor Code Section 1776.
(f) Registration with DIR. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of Labor Code Section 1771 and Labor 124
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Code Section 1725.5 requiring registration with the DIR.
1.3. Performance to Satisfaction of City. Contractor agrees to perform all the work to the complete satisfaction of City. Evaluations of the wor k will be done by City’s Maintenance Services Manager or his or her designee. If the quality of work is not satisfactory, City in its discretion has the right to:
(a) Meet with Contractor to review the quality of the work and resolve the matters of concern;
(b) Require Contractor to repeat the work at no additional fee until it is satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Compliance with Applicable Law . Contractor warrants that it shall perform the services required by this Agreement in compliance with all applicable Federal and California employment laws, including, but not limited to, those laws related to harassment, workplace violence, discrimination, minimum hours and wages; occupational health and safety; fair employment and employment practices; workers’ compensation insurance and safety in employment; and all other Federal, State and local laws and ordinances applicable to the services required under this Agreement. Contractor shall indemnify and hold harmless City from and against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature and description including attorneys’ fees and costs, presented, brought, or recovered against City for, or on account of any liability under any of the above-mentioned laws, which may be incurred by reason of Contractor’s performance under this Agreement.
1.5. Non-Discrimination. In performing this Agreement, Contractor shall not engage in, nor permit its agents to engage in, discrimination in employment of persons because of their race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military or veteran status, except as permitted pursuant to section 12940 of the Government Code.
1.6. Non-Exclusive Agreement. Contractor acknowledges that City may enter into agreements with other contractors for services similar to the Services in this Agreement or may have its own employees perform services similar to those Services contemplated by this Agreement.
1.7. Delegation and Assignment. Contractor may not delegate or assign this Agreement, in whole or in part, to any person or entity without the prior written consent of City.
Contractor may engage a subcontractor(s) as permitted by law and may employ other personnel to perform services contemplated by this Agreement at Contractor’s sole cost and expense.
1.8. Confidentiality. Employees of Consultant in the course of their duties may have access to financial, accounting, statistical, and personnel data of private individuals and employees of City, or confidential information relating to the City’s computer and security systems and programs. Consultant covenants that all data, documents, discussion, or other information developed or received by Consultant or provided for performance of this Agreement are deemed 125
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confidential and shall not be disclosed by Consultant without written authorization by City. City shall grant such authorization if disclosure is required by law. All City data shall be returned to City upon the termination of this Agreement. Consultant’s covenant under this Section shall survive the termination of this Agreement.
2.0. COMPENSATION AND BILLING
2.1. Compensation. Contractor shall be paid in accordance with the fee schedule set forth in Exhibit C. Contractor’ s total annual compensation shall not exceed Two Hundred Thousand Dollars ($200,000.00).
2.2. Additional Services. Contractor shall not receive compensation for any services provided outside the Scope of Services set forth in this Agreement without amending this Agreement as provided herein. It is specifically understood that oral requests and/or approvals of such additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Contractor may submit invoices to the City for approval on a progress basis, but no more often than two times a month. Said invoice shall be based on the total of all Contractor’s services which have been completed to City’s sole satisfaction. City shall pay Contractor’s invoice within forty-five (45) days from the date City receives said invoice. Each invoice shall describe in detail, the S ervices performed, the date of performance, and the associated time for completion.
2.4. Records and Audits. Records of Contractor ’s S ervices shall be maintained in accordance with generally recognized accounting principles and shall be made available to City for inspection and/or audit at mutually convenient times throughout the term of this Agreement through three (3) years after its termination.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The Services shall be performed in strict compliance with Exhibits A and B. Failure to commence work in a timely manner and/or diligently pursue work to completion may be grounds for termination of this Agreement.
3.2. Excusable Delays . Neither party shall be responsible for delays or lack of performance resulting from acts beyond the reasonable control of the party or parties. Such acts shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance w ith laws or regulations, riots, acts of war, pandemics (excluding COVID -19) or any other conditions beyond the reasonable control of a party.
4.0. TERM AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a period of two (2) years, ending on September 1, 2027, unless previously terminated as provided herein or as otherwise agreed to in writing by the parties. The Agreement may be extended by three (3) additional one (1) year periods upon mutual written agreement of both parties.
4.2. Notice of Termination. City reserves and has the right and privilege of canceling, 126
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suspending or abandoning the execution of all or any part of the work contemplated by this Agreement, with or without cause, at any time, by providing written notice to Contractor . The termination of this Agreement shall be deemed effective upon receipt of the notice of termination.
In the event of such termination, Contractor shall immediately stop rendering services under this Agreement unless directed otherwise by the City.
4.3. Compensation. In the event of termination, City shall pay Contractor for reasonable costs incurred and Services satisfactorily performed up to and including the date of City’s written notice of termination. Compensation for work in progress shall be prorated based on the percentage of work completed as of the effective date of termination in accordance with the fees set forth herein.
5.0. INSURANCE
5.1. Minimum Scope and Limits of Insurance. Contractor shall obtain, maintain, and keep in full force and effect during the life of this Agreement all of the following minimum scope of insurance coverages with an insurance company admitted to do business in California, rated “A,” Class X, or better in the most recent Best’ s Key Insurance Rating Guide, and approved by City:
(a) Commercial general liability, including premises -operations, products/completed operations, broad form property damage, blanket contractual liability, independent contractors, personal injury or bodily injury with a policy limit of not less than One Million Dollars ($1,000,000.00) per occurrence. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non-owned vehicles, with a policy limit of not less than One Million Dollars ($1,000,000.00) combined single limit per accident for bodily injury and property damage.
(c) Workers’ compensation insurance as required by the State of California.
Contractor agrees to waive, and to obtain endorsements from its workers ’ compensation insurer waiving subrogation rights under its workers ’ compensation insurance policy against the City, its officers, agents, employees, and volunteers arising from work performed by Contractor for the City and to require each of its subcontractors, if any, to do likewise under their workers’ compensation insurance policies.
5.2. Endorsements. The commercial general liability insurance policy and business automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: “The City of Costa Mesa and its elected and appointed boards, officers, officials, agents, employees, and volunteers are additional insureds with respect to: liability arising out of activities performed by or on behalf of Contractor p ursuant to its contract with City; products and completed operations of Contractor; premises owned, occupied or used by 127
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Contractor; automobiles owned, leased, hired, or borrowed by Contractor.”
(b) Notice: “Said policy shall not terminate, be suspended, or voided, nor shall it be cancelled, nor the coverage or limits reduced, until thirty (30) days after written notice is given to City.”
(c) Other insurance: “ Contractor’s insurance coverage shall be primary insurance as respects the City of Costa Mesa, its officers, officials, agents, employees, and volunteers. Any other insurance maintained by the City of Costa Mesa shall be excess and not contributing with the ins urance provided by this policy.”
(d) Any failure to comply with the reporting provisions of the policies shall not affect coverage provided to the City of Costa Mesa, its officers, officials, agents, employees, and volunteers.
(e) Contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a deductible or self-insured retention to provide such coverage, the amount of such deductible or self-insured retention shall be approved in advance by City. No policy of insurance issued as to which the City is an additional insured shall contain a provision which requires that no insured except the named insured can satisfy any such deductible or self-insured retention.
5.4. Certificates of Insurance. Contractor shall provide to City certificates of insurance showing the insurance coverages and required endorsements described above, in a form and content approved by City, prior to performing any services under this Agreement.
5.5. Non-limiting. The insurance provisions contained in this Agreement shall not be construed as limiting in any way, the indemnification provisions contained in this Agreement, or the extent to which Contractor may be held responsible for payments of damages to persons or property.
5.6. Excess Coverage. To the extent that Contractor maintains any insurance coverage(s) in amounts or types which are not expressly called out in this Agreement, such additional coverage(s) shall be deemed to be required by this Agreement.
6.0. GENERAL PROVISIONS
6.1. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to any matter referenced herein and supersedes any and all other prior writings and oral negotiations. This Agreement may be modified only in writing, and signed by the parties in interest at the time of such modification. The terms of this Agreement shall prevail over any inconsistent provision in any other contract document appurtenant hereto, including exhibits to this Agreement.
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6.2. Representatives. The C ity Manager or his or her designee shall be the representative of City for purposes of this Agreement and may issue all consents, approvals, directives and agreements on behalf of the City, called for by this Agreement, except as otherwise expressly provided in this Agreement.
Contractor shall designate a representative for purposes of this Agreement who shall be authorized to issue all consents, approvals, directives and agreements on behalf of Contractor called for by this Agreement, except as otherwise expressly provided in this Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with Contractor in the performance of this Agreement.
Contractor shall designate a Project Manager who shall represent it and be its agent in all consultations with City during the term of this Agreement. Contractor or its Project Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices. Any notices, documents, correspondence or other communications concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile or mail and shall be addressed as set forth below. Such communication shall be deemed served or delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through regular United States mail.
IF TO CONTRACTOR: IF TO CITY:
F.M. Thomas Air Conditioning, Inc.
231 Gemini Avenue
Brea, CA 92821
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: (714) 738-1062 Tel: (714) 754-5289
Attn: Michael Feyka, Vice President Attn: Daniel Jojola
Courtesy copy to:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Attn: Finance Dept. | Purchasing
6.5. Drug-free Workplace Policy. Contractor shall provide a drug-free workplace by complying with all provisions set forth in City ’s Council Policy 100-5, attached hereto as Exhibit “D” and incorporated herein by reference. Contractor’s failure to conform to the requirements set forth in Council Policy 100-5 shall constitute a material breach of this Agreement and shall be cause for immediate termination of this Agreement by City.
6.6. Attorneys’ Fees. In the event that litigation is brought by any party in connection with this Agreement, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in the 129
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exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions, or provisions hereof.
6.7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California.
6.8. Assignment. Contractor shall not voluntarily or by operation of law assign, transfer, sublet or encumber all or any part of Contractor’s interest in this Agreement without City ’s prior written consent. Any attempted assignment, transfer, subletting or encumbrance shall be void and shall constitute a breach of this Agreement and cause for termination of this Agreement.
Regardless of City’s consent, no subletting or assignment shall release Contractor of Contractor’s obligation to perform all other obligations to be performed by C ontractor hereunder for the term of this Agreement.
6.9. Indemnification and Hold Harmless. Contractor agrees to defend, indemnify, hold free and harmless the City, its elected officials, officers, agents and employees, at Contractor’s sole expense, from and against any and all claims, actions, suits or other legal proceedings brought against the City, its elected officials, officers, agents and employees arising out of the performance of the Contractor, its employees, and/or authorized subcontractors, of the work undertaken pursuant to this Agreement. The defense obligation provided for hereunder shall apply without any advance showing of negligence or wrongdoing by the Contractor , its employees, and/or authorized subcontractors, but shall be required whenever any claim, action, complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the Contractor, its employees, and/or authorized subcontractors, and/or whenever any claim, action, complaint or suit asserts liability against the City, its elected officials, officers, agents and employees based upon the work performed by the Contractor, its employees, and/or authorized subcontractors under this Agreement, whether or not the Contractor , its employees, and/or authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Contractor shall not be liable for the defense or indemnification of the City for claims, actions, complaints or suits arising out of the sole active negligence or willful misconduct of the City. This provision shall supersede and replace all other indemnity provisions contained either in the City ’s specifications or Contractor’s Proposal, which shall be of no force and effect.
6.10. Independent Contractor . Contractor is and shall be acting at all times as an independent contractor and not as an employee of City. Contractor shall have no power to incur any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Contractor or any of Contractor’s employees, except as set forth in this Agreement. Contractor shall not, at any time, or in any manner, represent that it or any of its or employees are in any manner agents or employees of City. Contractor shall secure, at its sole expense, and be responsible for any and all payment of Income Tax, Social Security, State Disability Insurance Compensation, Unemployment Compensation, and other payroll deductions for Contractor and its officers, agents, and employees, and all business licenses, if any are required, in connection with the services to be performed hereunder. Contractor shall indemnify and hold City harmless from any and all taxes, assessments, penalties, and interest asserted against City by reason of the 130
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independent contractor relationship created by this Agreement. Contractor further agrees to indemnify and hold City harmless from any failure of Contractor to comply with the applicable worker’s compensation laws. City shall have the right to offset against the amount of any fees due to Contractor under this Agreement any amount due to City from Contractor as a result of Contractor’s failure to promptly pay to City any reimbursement or indemnification arising under this paragraph.
6.11. PERS Eligibility Indemnification. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Contractor and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
6.12. Cooperation. In the event any claim or action is brought against City relating to Contractor’s performance or services rendered under this Agreement, Contractor shall render any reasonable assistance and cooperation which City might require.
6.13. Conflict of Interest. Contractor and its officers, employees, associates and subcontractors, if any, will comply with all conflict of interest statutes of the State of California applicable to Contractor’s services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section 1090.
During the term of this Agreement, Contractor and its officers, employees, associates and subcontractors shall not, without the prior written approval of the City Representative, perform work for another person or entity for whom Contractor is not currently performing work that would require Contractor or one of its officers, employees, associates or subcontractors to abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.14. Prohibited Employment. Contractor will not employ any regular employee of City while this Agreement is in effect.
6.15. Order of Precedence. In the event of an inconsistency in this Agreement and any of the attached Exhibits, the terms set forth in this Agreement shall prevail . If, and to the extent this Agreement incorporates by reference any provision of any document, such provision shall be deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and conditions of this Agreement and those of any such provision or provisions so incorporated by reference, this Agreement shall govern over the document referenced.
6.16. Costs. Each party shall bear its own costs and fees incurred in the preparation 131
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and negotiation of this Agreement and in the performance of its obligations hereunder except as expressly provided herein.
6.17. Binding Effect. This Agreement binds and benefits the parties and their respective permitted successors and assigns.
6.18. No Third Party Beneficiary Rights . This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right in, under or to this Agreement.
6.19. Headings. H eadings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.
6.20. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement and have had an adequate opportunity to review each and every provision of the Agreement and submit the same to counsel or other consultants for review and comment. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties and in accordance with its fair meaning. There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
6.21. Amendments . Only a writing executed by the parties hereto or their respective successors and assigns may amend this Agreement.
6.22. Waiver. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the party against whom enforcement of a waiver is sought. The waiver of any right or remedy in respect to any occurrence or event shall not be deemed a waiver of any right or remedy in respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
6.23. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable in any circumstance, such determination shall not affect the validity or enforceability of the remaining terms and provisions hereof or of the offending provision in any other circumstance. Notwithstanding the foregoing, if the value of this Agreement, based upon the substantial benefit of the bargain for any party , is materially impaired, which determination made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
6.24. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.
6.25. Corporate Authority . The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by doing so the parties hereto are formally bound to the provisions of this 132
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Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their respective authorized officers, as of the date first above written.
CONTRACTOR
__________________________________ Date: __________________________ Signature
Michael Feyka, Vice President
CITY OF COSTA MESA
__________________________________ Date: __________________________ Cecilia Gallardo-Daly
Interim City Manager
ATTEST:
__________________________________
Brenda Green
City Clerk
APPROVED AS TO FORM:
__________________________________ Date: __________________________ Kimberly Hall Barlow
City Attorney
APPROVED AS TO INSURANCE:
__________________________________ Date: __________________________ Ruth Wang
Risk Management
APPROVED AS TO CONTENT:
__________________________________ Date: __________________________ Daniel Jojola
Project Manager
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DEPARTMENTAL APPROVAL:
__________________________________ Date: __________________________ Raja Sethuraman
Director of Public Works
APPROVED AS TO PURCHASING:
__________________________________ Date: __________________________ Carol Molina
Finance Director
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EXHIBIT A
REQUEST FOR PROPOSALS (RFP No. 25-22)
136
137
138
RFP25.22.C06221
If clarification or interpretation of this solicitation is considered necessary by City, a written addendum shall be issued, and the information will be posted on PlanetBids. Any interpretation of, or correction to, this solicitation will be made only by addendum issued by the City’s Purchasing Department. It is the responsibility of each Proposer to periodically check PlanetBids website to ensure that it has received and reviewed all addenda to this solicitation. The city will not be responsible for any other explanations, corrections to, or interpretations of the documents, including any oral information.
2. Schedule of Events: This Request for Proposal shall be governed by the following schedule:
Release of RFP May 13, 2025
Deadline for Written Questions May 20, 2025, at 11:00 a.m.
Responses to Questions Posted May 22, 2025
Proposals are Due May 28, 2025, by 2:00 p.m.
Approval of Contract TBD
**All dates are subject to change at the discretion of the City.
3. Proposer’s Minimum Requirements: Interested and qualified Proposers that can demonstrate their ability to successfully provide the required services outlined in Appendix A – Scope of Services, of this RFP are invited to submit a proposal, provided they meet the following requirements. All requirements must be met at the time of the proposal due date. If these requirements are not met, the proposal may not receive further consideration, as determined at the sole discretion of the City.
a. The proposer must have a period of five (5) Years experience in the performance in HVAC maintenance as specified in this RFP.
b. The proposer must possess a valid C20, C4, C38 Licenses
c. The proposer must be registered with the “DIR” Department of Industrial Relations.
d. The proposer must have a planning/project Manager/Supervisor assigned to the contract with minimum of (5) Five years’ experience within the last 8 years providing services equivalent or similar to services identified in this RFP.
e. Contractor will be required to abide by the prevailing wage laws as required by state law, Appendix D.
II. GENERAL INSTRUCTIONS AND PROVISIONS
1. Proposal Format Guidelines: Interested entities or contractors are to provide the City of Costa Mesa with a thorough Proposal using the following guidelines: Proposal should be typed and should contain no more than 25 typed pages using a 12- point font size, including cover letter, Index/Table of Contents, tables, charts, and graphic exhibits, but excluding resumes of key people and pricing forms. Each Proposal will adhere to the following order and content of sections. Proposal should be straightforward, concise and provide “layman” explanations of technical terms that are used. Emphasis should be concentrated on conforming to the RFP instructions, responding to the RFP requirements, and on providing a complete and clear description of the offer. Proposals which appear unrealistic in terms of technical commitments, 139
RFP25.22.C06221
lack of technical competence or are indicative of failure to comprehend the complexity and risk of this contract may be rejected. The following Proposal sections are to be included in the Proposer’s response:
• Cover Letter: A cover letter, not to exceed two pages in length, should summarize key elements of the Proposal. An individual authorized to bind the Contractor must sign the letter. Indicate the address and telephone number of the contractor’s office located nearest to Costa Mesa, California, and the office from which the project will be m anaged. And include proposed working relationship among the offering agency and subcontractors, if applicable.
• Background and Project Summary Section : The Background and Project Summary Section should describe your understanding of the City, the work to be done, and the objectives to be accomplished. Refer to Scope of Services, Appendix A of this RFP.
• Project Approach and Methodology: Provide a detailed description of the approach and methodology that will be used to fulfill each requirement listed in the Scope of Services of this RFP. The section should include:
1. Describes familiarity of project and demonstrates understanding of work and project objectives moving forward.
2. Detailed description of efforts your firm will undertake to achieve client satisfaction and to satisfy the requirements of the "Scope of Services" section.
3. Detailed project schedule, identifying all tasks and deliverables to be performed, durations for each task, and overall time of completion.
4. A proposed schedule indicating stages of work, time frames, and ability to perform the required services in a timely manner shall be included in the proposal
5. Proposers are encouraged to provide additional innovative and/or creative approaches for providing the service that will maximize efficient, safe, and cost - effective operations or increased performance capabilities. • Qualifications & Experience of the Firm : Describe the qualifications and experience of the organization or entity performing services/projects within the past eight years that are similar in size and scope to demonstrate competence to perform these services. Information shall include:
1. Relevant experience, specific qualifications, and technical expertise of the firm and sub-consultants to provide construction management services.
2. Submit a description of the organization’s qualifications, experience and abilities that make it uniquely capable of providing the services specified in the Scope of Work.
3. If the owner is a corporation please provide Name of corporation, corporate office street address, city, state, and zip code, state where incorporated, date of incorporation, first and last name of officers, local office address, city, state & zip, and the date local office opened its doors for business.
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4. If the owner is a partnership or joint venture, please provide Name of partnership or joint venture, principal office street address, city, state, and zip code, state of organization, date of organization, first and last name of general partner(s), local office address, city, state, and zip code, and date local office opened its doors for.
5. Provide a list of current and previous contracts like the requirements for this project in Costa Mesa, including all public agencies served (if any). For each, provide a brief description of the scope of work performed, the length of time you have been providing services, and the name, title, and telephone number of the person who may be contacted regarding your organization’s service record. • Financial Capacity: The City is concerned about the proposers’ financial capability to perform and therefore is requesting copies of audited financials from the past three years to allow an evaluation of firm’s financial capabilities.
• Key Personnel: It is essential that the Proposer provide adequate experienced personnel, capable of and devoted to the successful accomplishment of work to be performed under this contract. The Proposer must agree to assign specific individuals to the key positions.
o Provide a project team organization chart, identifying those who will perform the work, including a list of similar types of projects in which they have been directly involved is required.
o The Supervisors will be the primary contract person to represent your firm and shall be the person to conduct the presentation, if invited an interview during the evaluation phase of the RFP.
o Sub-contractors, if any, shall be identified with the same requirements as the proposer. Upon award and during the contract period, if the Contractor chooses to assign different personnel to the project, the Contractor must submit their names and qualifications including information listed above to the City for approval before they begin work.
• Cost Proposal: Provide a fee schedule/pricing information which must include hourly rates for each category of employee or sub-consultants required to perform the services, quarterly service rate, labor rate, emergency call rate, after hour rate, and overtime rate as set forth in the Scope of Work. The City shall not provide reimbursement for business or travel-related expenses, materials, fees, licensing or other costs incurred; therefore, such costs must be absorbed in the hourly rate. Proposals shall be valid for a minimum of 180 days following submission.
• Disclosure: Please disclose all past or current business and personal relationships with any current Costa Mesa elected official, appointed official, City employee, or family member of any current Costa Mesa elected official, appointed official, or City employee. Any past or current business relationship may not disqualify the firm from consideration.
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• Sample Maintenance Services Agreement: The firm selected by the City will be required to execute a Maintenance Services Agreement with the City. A sample of the Agreement is enclosed as Appendix B but may be modified to suit the specific services and needs of the City. If a Proposer has any exceptions or conditions to the Agreement, these must be submitted for consideration with the Proposal. Otherwise, the Proposer will be deemed to have accepted the form of Agreement.
• Checklist of Forms to Accompany Proposal: As a convenience to Proposers, following is a list of the forms Appendix C included in this RFP, which should be included with Proposals:
1. Vendor Application Form
2. Company Profile & References
3. Ex Parte Communications Certificate
4. Disclosure of Government Positions
5. Disqualifications Questionnaire
6. Bidder/Applicant/Contractor Campaign Contribution
2. Process for Submitting Proposals:
• Content of Proposal: The Proposal must be submitted using the format as indicated in the Proposal format guidelines.
• Preparation of Proposal : Each Proposal shall be prepared simply and economically, avoiding the use of elaborate promotional material beyond those sufficient to provide a complete, accurate and reliable presentation.
• Cost for Preparing Proposal : The cost for developing the Proposal is the sole responsibility of the Proposer. All Proposals submitted become the property of the City.
Cost proposal shall be submitted in a separate file. The cost proposal is confidential and will be unsealed after all proposals have been reviewed, and the most qualified consultant has been selected. Proposals shall be valid for a minimum of 180 days following submission.
• Forms to Accompany Proposal: Appendix C forms shall be attached at the end of the Proposal except for the Cost Proposal which shall be submitted in a separate file.
• Number of Proposals: Submit one (1) PDF file format copy of your proposal in sufficient detail for thorough evaluation and comparative analysis.
• Submission of Proposals: Complete written Proposals must be submitted electronically in PDF file format via the planetbids.com website not later than 2:00 p.m. (P.S.T) on May 28, 2025. Proposals will not be accepted after this deadline. Proposals received after the scheduled closing time will not be accepted. It shall be the sole responsibility of the Proposer to see that the proposal is received in proper time. Faxed or e-mailed Proposals will not be accepted. NO EXCEPTIONS.
• Inquiries: Questions about this RFP must be posted in the Q & A tab on Planetbids no later than May 20, 2025, at 11:00 A.M. The City reserves the right not to answer all questions. 142
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The City reserves the right to amend or supplement this RFP prior to the Proposal due date.
All addendum(s), responses to questions received, and additional information will be posted on Planetbids.
From the date that this RFP is issued until a firm or entity is selected and the selection is announced, firms or public entities are not allowed to communicate outside the process set forth in this RFP with any City employee other than the contracting officer listed above regarding this RFP. The City reserves the right to reject any Proposal for violation of this provision. No questions other than posted on Planetbids will be accepted, and no response other than written will be binding upon the City.
• Conditions for Proposal Acceptance : This RFP does not commit to the City to award a contract or to pay any costs incurred for any services. The City, at its sole discretion, reserves the right to accept or reject any or all Proposals received because of this RFP, to negotiate with any qualified source(s), or to cancel this RFP in part or in its entirety. The City may waive any irregularity in any Proposal. All Proposals will become the property of the City of Costa Mesa, USA. If any proprietary information is contained in the Proposal, it should be clearly identified.
• Insurance & W-9 Requirements:
Upon recommendation of contract award, Contractor will
be required to submit the following documents with ten (10) days of City notification, unless otherwise specified in the solicitation:
Insurance - City requires that licensees, lessees, and vendors have an approved Certificate of Insurance (not a declaration or policy) or proof of legal self-insurance on file with the City for the issuance of a permit or contract. Within ten (10) consecutive calendar days of award of contract, successful Bidder must furnish the City with the Certificates of Insurance proving coverage as specified in the sample contract.
W-9 – Current signed form W -9 (Taxpayer Identification Umber & Certification) which includes Contractor’s legal business name(s).
3. Evaluation Criteria: The City’s evaluation and selection process will be conducted in accordance with Chapter V, Article 2 of the City's Municipal Code (Code). In accordance with the Code, the responsive responsible proposer shall be determined based on evaluation of qualitative factors. At all times during the evaluation process, the following criteria will be used.
Sub-criteria are not necessarily listed in order of importance. Additional sub-criteria that logically fit within a particular evaluation criterion may also be considered even if not specified below.
1. Project Approach & Methodology ------- 45%
2. Qualifications & Experience of Firm ------- 25%
3. Key Personnel ---- 20%
4. Cost Proposal ----- 10%
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4. Evaluation of Proposals and Selection Process: In accordance with its Municipal Code, the City will adhere to the following procedures in evaluating Proposals. An Evaluation Committee, which may include members of the City's staff and possibly one or more outside experts, will screen and review all Proposals according to the weighted criteria set forth above.
While price is one basic factor for award, it is not the sole consideration.
A. Responsiveness Screening : Proposals will first be screened to ensure responsiveness to the RFP. The City may reject as non-responsive any Proposal that does not include the documents required to be submitted by this RFP. At any time during the evaluation process, the City reserves the right to request clarifications or additional information from any or all Proposers regarding their Proposals.
B. Initial Proposal Review: The Committee will initially review and score all responsive written Proposals based upon the Evaluation Criteria set forth above. The Committee may also contact the Proposer’s references. Proposals that receive the highest evaluation scores may be invited to the next stage of the evaluation process. The City may reject any Proposal in which a Proposer’s approach or qualifications are not considered acceptable by the City. An unacceptable Proposal is one that would have to be substantially rewritten to make it acceptable. The City may conclude the evaluation process at this point and recommend award to the highest ranked consultant or proceed to interview the highest ranked consultants.
C. Interviews, Presentation, Reference Checks, Revised Proposals, Discussions:
Following the initial screening and review of Proposals, the Proposers included in this stage of the evaluation process may be invited to participate in an oral interview and make a presentation. Interviews /presentations, if held, are tentatively scheduled for the week of June 23 and will be conducted at City of Costa Mesa City Hall, 77 Fair Drive, Costa Mesa, CA 92626 or virtually at the discretion of the City . The dates are subject to change. The individual(s) from the Proposer’s organization that will be directly responsible for carrying out the contract, if awarded, should be present at the oral interview/presentation. The oral interview may, but is not required to, use a written question/answer format for the purpose of clarifying the intent of any portions of the Proposal.
In addition to conducting an oral interview, the City may during this stage of the evaluation process also contact and evaluate the Proposer’s references, contact any Proposer to clarify any response or request revised or additional information, contact any current users of a Proposer’s services, solicit information from any available source concerning any aspect of a Proposal, and seek and review any other information deemed pertinent to the evaluation process.
Following the conclusion of this stage of the evaluation process, the Committee will again rank all Proposers according to the evaluation criteria set forth above. The Committee may conclude the evaluation process at this point and make a recommendation for the award. Once the highest ranked consultant is identified, t he City will open the Cost Proposal and enter negotiations.
Recommendation for the award is contingent upon the successful negotiation of final contract terms. Negotiations shall be confidential and not subject to disclosure to 144
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competing Proposers unless an agreement is reached. If contract negotiations cannot be concluded successfully within a time determined by the City, the City may terminate negotiations and commence negotiations with the next highest scoring Proposer or withdraw the RFP.
5. Protests: Failure to comply with the rules set forth herein may result in rejection of the protest.
Any proposals accepted pursuant to the formal procurement procedure set forth in the Proposal procedure may be appealed in accordance with the following procedure:
• The Proposer shall file the written notice of appeal with the P urchasing Officer at least ten (10) working days prior to proposal award date specified in the notice of recommendation to award.
• The written notice of appeal must include specifics as to the nature of the appeal. • The Proposer must provide any and all documentation to support the appeal. • The purchasing officer will respond in writing to the Proposer within five (5) working days.
• In the event the appeal is denied by the purchasing officer, the Proposer may appeal the purchasing officer’s ruling to the C ity Council at the next available council meeting.
6. Accuracy of Proposals: Proposers shall take all responsibility for any errors or omissions in their Proposals. Any discrepancies in numbers or calculations shall be interpreted to reflect the cost to the City.
If prior to the contract award, a Proposer discovers a mistake in their Proposal which renders the Proposal unwilling to perform under any resulting contract, the Proposer must immediately notify the facilitator and request to withdraw the Proposal. It shall be solely within the City's discretion as to whether withdrawal will be permitted. If the solicitation contemplated evaluation and award of "all or none" of the items, then any withdrawal must be for the entire Proposal. If the solicitation provided for evaluation and award on a line item or combination of items basis, the City may consider permitting withdrawal of specific line item(s) or combination of items.
7. Responsibility of Proposers: The City shall not be liable for any expenses incurred by potential Contractors in the preparation or submission of their Proposals. Pre- contractual expenses are not to be included in the Contractor’s Pricing Sheet. Pre- contractual expenses are defined as, including but not limited to, expenses incurred by Proposer in:
• Preparing Proposal in response to this RFP.
• Submitting that Proposal to the City.
• Negotiating with the City any matter related to the Proposal; and, • Any other expenses incurred by the Proposer prior to the date of the award and execution, if any, of the contract.
8. Confidentiality: The California Public Records Act (Cal. Govt. Code Sections 6250 et seq.) mandates public access to government records. Therefore, unless information is exempt from disclosure by law, the content of any request for explanation, exception, or substitution, response to this RFP, protest, or any other written communication between the City and Proposer, shall 145
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be available to the public. The City intends to release all public portions of the Proposals following the evaluation process at such a recommendation made to the City Council.
If the Proposer believes any communication contains trade secrets or other proprietary information that the Proposer believes would cause substantial injury to the Proposer’s competitive position if disclosed, the Proposer shall request that the City withhold from disclosure the proprietary information by marking each page containing such proprietary information as confidential. Proposer may not designate its entire Proposal as confidential nor designate its Price Proposal as confidential.
Submission of a Proposal shall indicate that, if Proposer requests that the City withhold from disclosure information identified as confidential, and the City complies with the Proposer’s request, Proposer shall assume all responsibility for any challenges resulting from the non- disclosure, indemnify and hold harmless the City from and against all damages (including but not limited to attorney’s fees and costs that may be awarded to the party requesting the Proposer information), and pay any and all costs and expenses related to the withholding of Proposer information. Proposer shall not make a claim, sue, or maintain any legal action against the City or its directors, officers, employees, or agents concerning the disclosure, or withholding from disclosure, of any Proposer information. If Proposer does not request that the City withhold from disclosure information identified as confidential, the City shall have no obligation to withhold the information from disclosure and may release the information sought w ithout any liability to the City.
9. Ex Parte Communications : Proposers and Proposers’ representatives should not communicate with the City Council members about this RFP. In addition, Proposers and Proposers’ representatives should not communicate outside the procedures set forth in this RFP with an officer, employee, or agent of the City, including any member of the evaluation panel, except for the RFP Facilitator, regarding this RFP until after Contract Award. Proposers and their representatives are not prohibited, however, from making oral statements or presentations in public to one or more representatives of the City during a public meeting.
A "Proposer" or "Proposer's representative" includes all the Proposer's employees, officers, directors, consultants and agents, any subcontractors or suppliers listed in the Proposer's Proposal, and any individual or entity who has been requested by the Proposer to contact the City on the Proposer's behalf. Proposers shall include the Ex Parte Communications Form, Appendix C with their Proposals certifying that they have not had or directed prohibited communications as described in this section.
10. Conflict of Interest: The Proposer warrants and represents that it presently has no interest and agrees that it will not acquire any interest which would present a conflict of interest under California Government Code Sections 1090 et seq., or Sections 87100 et seq., during the performance of services under any Agreement awarded. The Proposer further covenan ts that it will not knowingly employ any person having such an interest in the performance of any Agreement awarded. Violation of this provision may r esult in any Agreement awarded being deemed void and unenforceable.
11. Disclosure of Governmental Position: In order to analyze possible conflicts that might prevent a Proposer from acting on behalf of the City, the City requires that all Proposers disclose in their 146
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Proposals any positions that they hold as directors, officers, or employees of any governmental entity. Additional disclosure may be required prior to contract award or during the term of the contract. Each Proposer shall disclose whether any owner or employee of the firm currently hold positions as elected or appointed officials, directors, officers, or employees of a governmental entity or held such positions in the past twelve months using the attached Disclosure of Government Positions Form, Appendix C.
12. Conditions to Agreement: The selected Proposer will execute a Maintenance Services Agreement for Services with the City describing the Scope of Services to be performed, the schedule for completion of the services, compensation, and other pertinent provisions. The contract shall follow the sample form of Agreement provided as Appendix B to this RFP.
All Proposers are directed to particularly review the indemnification and insurance requirements set forth in the sample A greement. The terms of the agreement, including insurance requirements, have been mandated by the City and can be modified only if extraordinary circumstances exist.
Submittal of a Proposal shall be deemed acceptance of all the terms set forth in this RFP and the sample agreement for services unless the Proposer includes with its Proposal, in writing, any conditions or exceptions requested by the Proposer to the proposed Agreement.
13. Disqualification Questionnaire: Proposers shall complete and submit, under penalty of perjury, a standard form of questionnaire inquiring whether a Proposer, any officer of a proposer, or any employee of a Proposer who has a proprietary interest in the Proposer, has ever been disqualified, removed, or otherwise prevented from proposing on, or completing a federal, state, or local government project because of a violation of law or safety regulation and if so, to explain the circumstances. A Proposal may be rejected on the basis of a Proposer, any officer or employee of such Proposer, having been disqualified, removed, or otherwise prevented from proposing on, or completing a federal, state, or local project because of a violation of law or a safety regulation, Appendix C.
14. Standard Terms and Conditions: The City reserves the right to amend or supplement this RFP prior to the Proposal due date. All addendum(s) and additional information will be posted via PlanetBids. Proposers should check this web page daily for new information. 147
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APPENDIX A
SCOPE OF SERVICES
FOR
ON-CALL HVAC MECHANICAL AUTOMATION SYSTEM REPAIRS AND MAINTENANCE
SERVICES
1.0 SCOPE OF WORK
The Contractor shall retain professional personnel who have successfully and competently provided municipal facility HVAC maintenance and repair services on projects of similar scope and complexity. It shall be the Contractor’s responsibility to develop and implement a routine maintenance program to effectively maintain, to the satisfaction of the CITY representative, all aspects of HVAC systems in CITY defined facilities. Contractor shall perform air -handling unit maintenance which includes but is not limited to; all services recommended by manufacturer; replacing air filters at least quarterly, at all serviced buildings. For the purpose of this contract, routine preventative HVAC maintenance including automation maintenance, programming and troubleshooting were applicable shall be defined as scheduled routine inspection and proactive service of HVAC systems to facilitate heating/cooling with a minimal downtime. The routine maintenance and all repairs shall be provided in accordance with the highest standards of the industry, skill, workmanship, applicable trade practices, meet warranties and in conformance to all applicable laws, codes and regulations. The successful Proposer’s maintenance program and repairs shall, at a minimum, include but not limited to the specifications outlined herein.
Preventive maintenance services shall be provided by the Service Company on all equipment and associated devices related to the HVAC systems as outlined in this RFP referenced in “Exhibit A” “HVAC Equipment List” The Contractor shall furnish all personnel, parts, materials, test equipment, tools, and Services in conformance with the terms and conditions as outlined below in this RFP.
2.0 GENERAL REQUIREMENTS
2.1 ANNUAL MAINTENANCE
The proposer will perform at minimum, scheduled annual preventive maintenance in accordance with a Program of standard routines as determined by your experience, equipment application, and equipment operating hours that are recommended by each equipment manufacturer and location. This service is designed to optimize the reliability and efficiency of the equipment, extend the useful life of the City’s equipment, and provide proactive indications of excessive wear and damage to HVAC systems before a catastrophic failure occurs during the next operating season. The proposer will also provide recommendations for additional service(s) that will better enhance equipment performance. The equipment included under this service is itemized in the HVAC Equipment List; see EXHIBIT A of this document. Preventative maintenance of all zone controls including but not limited to thermostats, VAV's, actuators, valves, relays, pneumatic control lines, switches, motors, and related equipment will be covered under Contractor’s proposal. Calibration of thermostats, actuators, and velocity controllers will be performed quarterly.
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2.2 QUARTERLY
The successful bidder shall check, change and supply all filters as needed on a quarterly basis during the normal operating season. Biocide tablets shall also be supplied and placed in condensate pans. Upon completion of the Quarterly Inspection a single written signed report shall be submitted to the owner noting any filters that required attention, repairs made or needed and any other potential problems or abnormalities noted.
2.3 MONTHLY
A visual walk thru inspection shall be made once per month. Any missed coils or filters that are dirty shall be cleaned or changed at the contractor’s expense.
2.4 HVAC AIR FILTER CHANGING SERVICE
This service will maintain indoor air quality by changing filters quarterly and minimizing dust and particles from collecting on ductwork. This service will ensure proper flow through cooling and heating coils, thus preventing restrictions in airflow, leading to higher system and energy efficiency. In the event the air filtering material or cleaning requires different frequencies than indicated (due to experience or changes in operating conditions), the Contractor shall make the necessary adjustment at no additional cost to the CITY.
2.5 HVAC BELT INSPECTION & CHANGING SERVICE
This service will maintain the reliability and functionality of the units by inspecting drive belts quarterly and replacing belts that are worn or damaged. This service will ensure proper tension and friction on the belts, maintaining the efficiency and reliability of the equipment. In the event a belt fails between maintenance periods, it will be assumed the Contractor failed to inspect/replace it properly and the contractor will be required to replace it at no extra cost to the CITY.
2.6 AIR COOLED CONDENSER COIL CLEANING
This service will improve airflow across condenser coils, improve heat transfer and extend the life of the compressors. Coil cleaning consists of cleaning the outside surface of the condensing unit coils to remove any airborne particles, dirt build- up by using a brush, high pressure air, chemical with low pressure wash or chemical with high pressure wash based on the condition of outside environment and coil accessibility.
2.7 EVAPORATOR COIL AND CLEANING
The proposer will clean air handling unit evaporator coils that will help improve air circulation in the air distribution system, and reduce dust and dirt that is in the system. Coils will be cleaned bi-annually. Coil cleaning consists of cleaning the surface of the evaporator coil to remove dust and dirt particles that have collected on the evaporator coil. Coils will be cleaned using a vacuum cleaner and/or other devices that allow the proper cleaning of the coil.
3.0 SPECIFIC WORK REQUIREMENTS
3.1 ROOFTOP PACKAGED UNITS
Preventative maintenance service to be performed quarterly per manufacturer’s recommendation. Some Examples:
• Filters changed quarterly on a minimum basis or as required. • Lock out and tag out equipment as required.
• Check all electrical wiring & connections; tighten as required. 149
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• Check all motor starter contactor surfaces for wear.
• Clean electrical control enclosures.
• Lubricate air handling unit motor bearings and fan bearings, if applicable. • Check air handling unit belts for wear.
• Check belt tension and sheave alignment.
• Change belt and change as required.
• Check all mounting hardware, tighten as needed.
• Check and calibrate controls.
• Check condition of evaporator coils. Chemically clean as required.
Preventative maintenance service to be performed annually:
• Check and clean condensate drains, drain line and pan. • Inspect air handling unit fan assembly.
• Lubricate condenser motors as required.
• Chemically clean condenser coil and fan blades.
• Check structural integrity of unit.
• Check and calibrate controls.
3.2 EXHAUST FANS
Preventative maintenance service to be performed annually per manufacturer’s recommendation:
• Check all electrical wiring and connections and tighten. • Check all motor starter contactor surfaces for wear.
• Clean starter and electrical control enclosures.
• Lubricate motor bearings and fan bearings.
• Check exhaust fan belts for wear, replace as required. • Check belt tension and sheave alignment. Adjust as required. • Inspect exhaust fan unit assembly.
• Check all mounting hardware. Tighten as required.
3.3 PACKAGE, GAS HEAT/ ELECTRIC COOL
Preventive maintenance: Same as Package units except add:
• Check integrity of heat exchanger
• Check and adjust burners for proper flames.
• Check for proper combustion and flue gas relief.
• Record discharge temperature, heating and cooling modes. • Record return air temperature.
• Check and adjust operating and safety controls.
3.4 DAMPERS
• Perform maintenance quarterly.
• Clean and lubricate components.
• Check operation of dampers.
• Check and adjust operating and safety controls.
3.5 ROOFTOP MAKE-UP AIR UNITS
Preventative maintenance service to be performed quarterly per manufacturer’s recommendation.
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• Clean motor and lubricate if equipped with grease fittings. • Check fan wheel for imbalance. Clean fan wheel if dirty and oily. • Check heat exchanger for cracks.
• Check burner to see that the orifices are clear of any dirt or debris. • Check all the sensors and safety devices.
4.0 MAINTENANCE COSTS
4.1 REGULAR MAINTENANCE WORK
The proposal shall clearly explain the scope of work included in the price for regular maintenance work and any work that is specifically excluded. All rates shall be inclusive of all charges including but not limited to the charges for overhead, profit, labor, equipment, tools, and all other costs.
4.2 WORK BEYOND SCOPE OF AGREEMENT
Bidders shall submit labor and material rates for repair and maintenance work beyond the scope of the Preventative Maintenance Agreement. Rates shall be provided for normal working hours as well as for nights, weekends and holidays.
5.0 SUPPLEMENTAL WORK
5.1 EXTRAORDINARY MAINTENANCE
Contractors be expected to be capable of repairing or replacing failed or worn moving parts (such as: bearings, motor rotors, motor starters, seals, gears, burners, actuators, controls and switches). Prior to beginning any repair or replacement, Contractor will troubleshoot the system to diagnose the system’s problems and provide a written analysis of such troubleshooting. The City shall not incur any extra charge for this analysis which will include an itemized listing of the equipment/parts that are proposed to be repaired or replaced. All work beyond and in addition to the routine Maintenance scope of the contract shall be considered Extraordinary Maintenance and will require that an estimate for that proposed work be provided to the Building Maintenance Superintendent or his or her designee for consideration.
5.2 WRITTEN ESTIMATE
The Contractor shall provide a written estimate to the City for approval prior to Performing any extraordinary maintenance. All written estimates shall include labor costs as shown on bid sheet. Final invoices shall contain original estimate and actual receipts for parts, materials, and equipment. Mileage will not be reimbursable.
6.0 RESPONSIBILITIES
The CITY and the Contractor’s responsibilities are as follows:
6.1 FURNISHED ITEMS
The City will supply onsite storage at the CITY’s Corp Yard warehouse for storing the Contractors provided air filters.
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CONTRACTOR
6.2 PROJECT MANAGER
6.2.1 The Contractor shall provide a full -time Project Manager with 5 years of experience in managing projects of similar size and scope as contained in this Statement of Work.
6.2.2 The Contractor’s Project Manager shall act as a central point of contact with the Maintenance Supervisor and shall have full authority to act for the Contractor on all matters relating to the daily operation of the Contract.
6.2.3 The Contractor shall provide a telephone number where the Project Manager may be reached on a twenty-four (24) hour per day basis. The Project Manager must be available at all hours, 365 days per year.
6.2.4 The Contractor’s Project Manager shall be able to effectively communicate, in English, both orally and in writing.
6.3 PERSONNEL
6.3.1 The Contractor must provide a minimum of two (2) certified technicians. One is required to have at least ten (10) years of refrigeration, and/or mechanical, and control experience.
This is to ensure the CITY always has access to at least one (1) certified technician within 4-hour response time of the serviced facilities. Both technicians must have overall knowledge of all the equipment at each of the properties. Both technicians should be qualified to work on HVAC systems. Contractors shall maintain all eq uipment in accordance with the manufacturer’s recommendation.
6.3.2 The CITY requires the Contractor, at the Contractor’s expense, to conduct background security checks on their employees assigned to the Contract.
7.0 UNIFORM / IDENTIFICATION
7.0.1 The Contractor’s employees assigned to the Contract shall always wear an appropriate uniform. The uniform must display the Contractor’s company name. All uniforms, as required and approved by the CITY, will be provided by the Contractor, at the Contractor’s expense. See EXHIBIT 1
7.0.2 The Contractor’s employees must wear visible identification when working under the Contract on CITY property. The identification shall be:
• Contractor-issued photo ID
7.0.3 The Contractor’s employees must sign in and out at the receptionist desk at the beginning and ending of each workday.
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7.1 MATERIALS AND EQUIPMENT
The Contractor is responsible for the purchase of all materials/equipment to provide the needed services. The Contractor shall use materials and equipment that are safe for the environment and safe for use by the Contractor’s employee.
7.2 TRAINING
The Contractor shall provide training programs for all new employees and continuing in-service training for all employees. All employees should be trained in their assigned tasks and in the safe handling of equipment. All equipment shall be checked daily for safety. All employees must wear safety and protective gear according to Cal-OSHA standards.
7.3 PERIODIC MEETINGS
Contractor is required to attend a periodically scheduled meeting. Failure to attend will cause an assessment of fifty dollars ($50.00). See EXHIBIT 1
8.0 HOURS / DAYS OF WORK
CITY Maintenance office hours are from 7:00 a.m. to 4:00 p.m. CITY offices are closed on the following Holidays:
• News Years Day
• Martin Luther King Day
• Presidents Day
• Memorial Day
• Independence Day
• Labor Day
• Veterans Day
• Thanksgiving Day
• Christmas Day
9.0 QUALITY CONTROL PLAN
The Contractor shall establish and utilize a comprehensive Quality Control Plan to assure the CITY a consistently high level of service throughout the term of the Contract. The Plan shall be submitted to the CITY for review. The plan shall include, but not be limited to the following:
The Contractor shall provide a spring and fall inspections report that will be fully documented in a written format. Each piece of equipment inspected shall have an individual work sheet denoting at a minimum the following items: Unit #, Unit Model and Brand, Unit size, the area serviced by unit, unit location, date, service technician and a complete listing of all service information checked on the unit. The completed written report shall be submitted to the owner in a 3 -ring binder no later than one week after the inspection is completed.
The Contractor will provide a standard proof of work documentation, and date & time stamped photos of work in progress during preventive maintenance following completion of all work. The documents must include sufficient information to identify facility where work was performed, 153
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purpose of work, date and timework was performed, parts used, type and amounts of chemicals/refrigerants, and name/cert # of technician(s) executing the work.
10.0 QUALITY ASSURANCE PLAN
The CITY will evaluate the Contractor’s performance under this Contract using the following quality assurance procedures:
10.1 PERFORMANCE REQUIREMENTS SUMMARY (EXHIBIT 1)
The CITY shall use a Performance Requirements Summary (PRS) chart, Technical Exhibit 1, to monitor the Contractor’s work performance and efforts to remedy all deficiencies throughout the term of this Contract. The chart shall contain, at a minimum, the following:
• Each section of the Contract/SOW referenced and identified. • The standard of performance (description of the work requirement) • The method to be used to monitor work performance
• The fees/deductions to be assessed for each service that is not satisfactory
All listings of services used in the PRS are intended to be completely consistent with the Contract and the SOW, and are not meant in any case to create, extend, revise, or expand any obligation of the Contractor beyond that defined in the Contract and the SOW. In any case of apparent inconsistency between services as stated in the Contract and the SOW and this PRS, the meaning apparent in the Contract and the SOW will prevail. If any service seems to be created in this PRS which is not clearly and forthrightly set forth in the Contract and the SOW, that apparent service will be null and void and place no requirement on the Contractor.
When the Contractor’s performance does not conform to the requirements of this Contract, the CITY will have the option to apply the following non-performance remedies:
• Require the Contractor to implement a formal corrective action plan, subject to approval by the CITY. In the plan, the Contractor must include reasons for the unacceptable performance, specific steps to return performance to an acceptable level, and monitoring methods to prevent recurrence.
• Reduce payment to the Contractor by a computed amount based on the penalty fee(s) in the PRS.
• Reduce, suspend or cancel this Contract for systematic, deliberate misrepresentations or unacceptable levels of performance.
• Failure of the Contractor to comply with or satisfy the request(s) for improvement of performance or to perform the neglected work specified within ten (10) days shall constitute authorization for the CITY to have the service(s) performed by others. The entire cost of such work performed by others because of the Contractor’s failure to 154
RFP25.22.C06221
perform said service(s), as determined by the CITY, shall be credited to the CITY on the Contractor’s future invoice.
10.2 PERIODIC PERFORMANCE REVIEWS
The CITY will conduct periodic reviews to evaluate the Contractor’s performance.
10.3 CONTRACT DEFICIENCY NOTICE
The CITY will make verbal notification to the Contractor of a Contract deficiency as soon as the deficiency is identified. The problem should be resolved within a period mutually agreed upon by the CITY and the Contractor.
If resolution of the deficiency does not result from the verbal notification, the CITY will determine whether a formal Contract Deficiency Notice shall be issued. Upon receipt of this document, the Contractor is required to respond in writing to the CITY within five (5) workdays, acknowledging the reported deficiencies or presenting contrary evidence. A plan for the correction of all deficiencies identified in the Contract Discrepancy Report shall be submitted to the CITY within ten (10) workdays.
10.4 CITY OBSERVATIONS
In addition to divisional contracting staff, other CITY personnel may observe performance, activities, and review documents relevant to this Contract at any time during normal business hours. However, these personnel may not unreasonably interfere with the Contractor’s performance.
11.0 ADDITION/DELETION OF SERVICES
The CITY reserves the right to add or delete services during the term of the Contract. The Contractor’s fees will be adjusted by negotiation between the CITY and the Contractor.
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EXHIBIT 1
PERFORMANCE REQUIREMENTS SUMMARY (PRS) CHART
Reference Standard of
Performance
Monitoring Method Deductions
SOW Section 7.0.1
Uniforms
Contractor to ensure
all employees wear
approved uniforms
Inspection &
Observation
$50 per occurrence
SOW Section 7.3 CITY
required meetings
Contractor attendance
at all monthly or as
required meetings
Observation of
Attendance
$50 per occurrence
SOW Section 10.1
Maintenance Reports
100% Completion of
Required Services
Acceptance &
Inspection of Reports
$50 per occurrence
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RFP25.22.C06221
EXHIBIT A
HVAC EQUIPMENT LIST
Balearic Center 1975 Balearic Drive
Package Units
Manufacturer Model # Serial #
Carrier 38VMA060HDS3-1 2718V00373
40VMW030---3 2319V00581
40VMW030---3 2319V00582
Carrier 48VLNE600903-TP 0420F48692
Fujitsu AOUH30PLAS1 NUQ 001534
ASUH30PLAS NUC000081
Communications 79 Fair Drive
Package Units
Manufacturer Model # Serial #
Carrier 48VGNA3606060 1019C41742
Carrier 48TCLA06A2A6A0A0A0 0515C56473
Carrier 48HCDD12A2D6A0A0G0 1319P37810
Carrier 48LVNB3606030TP 0215C22328
Exhaust Fan
Lorencook 9UC10d
Lorencook 9UC15D
Lorencook 9UC15D
Lorencook 10UC10D
Lorencook Return
Air
16CV
Infrared Gas Heater app bay
Dayton 21MK93
Dayton 21MK93
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RFP25.22.C06221
Dayton 21MK93
Old Corporation Yard - 2300 Placentia Ave
Package Units
Manufacturer Model # Serial #
Carrier 48VLNA6009030TP 2614C39025
Carrier 25HCE448A500 4122E01136
FJ4DNXC48 3223F01374
New Corporation Yard - 2310 Placentia Ave
Package Units
Manufacturer Model # Serial #
York CZF06013CA W1B2566351
York YCJF24S41S1A W1E2800649
Air handlers
Lenox CH602D6 6014C09825
Lenox GS15Q3/4X-80-2 4689B02269
Exhaust Fan
B8563-01
Downtown Recreation Center - 1860 Anaheim Ave
Package Units
Manufacturer Model # Serial #
Carrier 48HJE012561 3500G30504
Carrier 48HJE006531 3200G20725
Carrier 48HJE008531 3900g34167
Carrier 48HJE004531 3300G24746
Make Up Air Units Heat
Modine 8000 CFM HFG400SMRLN20D2 1025200-1288
Modine 8000 CFM HFG400SMRLN20D2 1025200-1289
Modine 1850 CFM HFG150SMRLN20D2 1025200-1290
Modine 1870 CFM HFG150SMRLN20D2 1025200-1291
Exhaust Fans
Lorencook 135ACE-B
Lorencook 135ACE-B
Lorencook 150 ACRU 5B
Lorencook 135ACE-B
Lorencook 135ACE-B
Lorencook GEM GN-340
Lorencook GEM GN-340
Lorencook LITTLE GEM II
Lorencook LITTLE GEM II
Mesa Verde Library - 2969 Mesa Verde Drive East
Manufacturer Model # Serial #
York ZH102N10N2AAA5A N1M1414302
York ZH102N10N4AAA5A N1H1257787
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RFP25.22.C06221
Donald Dungan Library - 1855 Park Ave
Manufacturer Model # Serial #
Daikin RPS042D
Boilers
LOCHINVAR KBN400 1813 109717160
LOCHINVAR KBN400 1813 109717161
Boiler Pumps
Wilo STRATIS 3X3
Wilo STRATIS 3X3
Wilo STRATIS 1.25X3
Wilo STRATIS 1.25X3
Split System Fan Coil Unit
Daikin FAQ24NPVJU
Daikin FTXN24NMVJU
Daikin FTXN24NMVJU
Daikin FTXN24NMVJU
Daikin FTXN18NMVJU
Daikin FXMQ48PBVJU
Daikin FXMQ72MVJU
Daikin FTXN24NMVJU
Daikin FAQ24NPVJU
Air Cooled Condensing Unit
Daikin RXYQ48TAVJU
Daikin RXN24NMVJU
Daikin RXN12NMVJU
Daikin RXN12NMVJU
Daikin RXN18NMVJU
Daikin RXTQ48TAVJU
Daikin RXTQ60TAVJU
Daikin RXN24NMVJU
Exhaust Fans
Greenheck CUE-161-VG
Greenheck SQ-98-VG
Fire Station # 1 - 2803 Royal Palm Dr
Manufacturer Model # Serial #
VRF heat recovery
unit
Daikin REYQ168TTJU 1709073218
Condensing Unit
Daikin RXS24LVJU E013544
Supply fan
Greenheck RSF-90-7-X 15161375 17J
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RFP25.22.C06221
Exhaust Fan
GreenHeck SWB-124
GreenHeck G-060-D
GreenHeck G-070-D
GreenHeck CSP-A200
GreenHeck CSP-A200
GreenHeck CSP-A125
GreenHeck CSP-A125
GreenHeck CSP-A125
GreenHeck CSP-1110
Fan Coil
Daikin FXMQ24PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ12PBVJU
Daikin FXMQ18PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ15PBVJU
Daikin FXMQ24PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ07PBVJU
Daikin FXMQ24PBVJU
Daikin FTXS24LVJU
AAON dehumidifier 256162 202501-AYCD06506
Fire Station # 2 - 800 Baker St
Manufacturer Model # Serial #
Carrier 48HCLA06A0A3A0A0A0 1115C79295
Fire Station # 3 - 1865 Park Ave
Manufacturer Model # Serial #
Rheem RQNA-B024JK 000 7260F310710036
Rheem RQNA-B024JK 000 7260F240707261
Rheem RQNA-B024JK 000 7260F200706879
Rheem RQNA-B036JK 000 7262F290710193
Apparatus Bay Heaters
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RFP25.22.C06221
Reznor XL-45 ACD3183N180
Reznor XL-45 ACD3183N181
Hood Exhaust
G. C. BREIDERT
CO
L01512
Fire Station # 4 - 2300 Placentia Ave
Manufacturer Model # Serial #
Carrier 50VT-C30-30TP 0418C22656
Carrier 48HCLA06A0A3A0A0A0 3618C79322
Hood Exhaust
Exhaust Fan
Fire Station # 5- 2450 Vanguard Way
Manufacturer Model # Serial #
Trane YFH211F4L0AA 120710473D
Exhaust Fan 1
Exhaust Fan 2
Hood Exhaust
Fire Station # 6 - 3350 Sakioka Drive
Manufacturer Model # Serial #
Carrier 48DJD006530 4391G45269
Carrier 48DJD005510 6210500
Carrier 48hCCLA04A2A5A0A0A0 2712C50199
Carrier 48DJD005510 4691G52010
Exhaust Fan 1
Exhaust Fan 2
Lorencook 100C10D
Westside Police Substation - 567 W. 18th St
Manufacturer Model # Serial #
Carrier 50VT-C48-30TP 4721F48480
Rheem RQNJ-A048JK 000 7243F050704327
Rheem RQNJ-B060JK 000 7472F080705452
Rheem RQNJ-B060JK 000 7472F090704112
International
Comfort
PHAD60N1K3 DYMC60G2
Historical Society - 1870 Anaheim Ave
Manufacturer Model # Serial #
Carrier 24AHA460A500 4521X33602
Carrier 24AHA460A500 5021X26662
58SUA080E211220
Neighborhood Community Center - 1845 Park Ave
Manufacturer Model # Serial #
Daikin DPS012A
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RFP25.22.C06221
Daikin DPS012A
Exhaust Fan 1 SP-A110
Exhaust Fan 2 SFD-7.5-VG
Exhaust Fan 3 CUE-090-VG
Fan Coil
Daikin FBQ36PVJU
Daikin FBQ42PVJU
Daikin FBQ42PVJU
Daikin FTK24NMVJU
Daikin FDXS12LVJU
Daikin FTK12NMVJU
Daikin FBQ36PVJU
Air Cooled Condensing Unit
Daikin RZQ36PVJU9
Daikin RZQ42PVJU9
Daikin RXS12LVJU
Daikin RZQ42PVJU9
Daikin RZQ36PVJU9
Daikin RK12NMVJU
Daikin RK24NMVJU
Bridge Shelter 3175 Airway Ave
Carrier 48GCLM05A2C6A0A3A0 4220C88021
Carrier 48HCDD07A2C6A0A3G0 4120P85853
Carrier 48GCLM05A2C6A0A3A0 4220C88022
Carrier 48HCDD07A2C6A0A3G0 4120P85852
Carrier 48GCLM06A2C6A0A3A0 4220C88086
Carrier 48GCLM06A2C6A0A3A0 4220C88084
Carrier 48GCLM06A2C6A0A3A0 4220C88085
Toshiba RAV-SP180AT2-UL 91220032
Restroom exhaust
cook
135R5B 135 ACRU 138SL29657 00/0000701
Captive Aire DU180HFA
Econo-Air Part# CD-O A2-IH-1
Amerian Panel FW3678.11THWNL-F
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EXHIBIT B
CONTRACTOR’S PROPOSAL
163
164
165
F. M. THOMAS AIR CONDITIONING, INC.
Contractor’s
License # 313574 231 Gemini Avenue, Brea, CA 92821 (800)660-0891 FAX(714)738-0886 (714)738-1062
May 26, 2025
Stephanie Uru
eta
City of Costa Mesa
77 Fair Drive
Costa Mesa, Ca 92628
LETTER OF INTRODUCTION
Thank you for conside
ring F.M. Thomas Air Conditioning for your service needs. We have been in business for over 50 years and have factory certified technicians on all makes and models.
F.M. Thomas has been the contractor of record for the City for the past 12 years. We have met and exceeded all of the expectations made of us, as well as implemented multiple procedures to maximize the efficiency of the HVAC systems operations.
Additionally, we
have worked closely with the City to start moving forward with a nonproprietary controls system for City buildings. So far we have completed the Senior Center and are discussing other critical buildings such as City Hall.
Our methodology and thor
ough service procedures have created the following value to the City and have allowed up to maintain very positive relationships with City facilities Staff, including Nick, Tung, Howard, and Doug Lovell.
• We provide Journe
yman technicians to conduct the maintenance, rather than tradesmen.
These technicians have 10+ years of experience and have the knowledge to recognize issues and potential issues and resolve them immediately. • Service issues are immediately brought to the attention of City staff; allowing for discussions and quotes to make the necessary repairs
• Other issues, outside of HVAC, are brought to the attention of City staff to minimize cost and loss of service to the City. These items include clogged roof drains, water leaks into the building, loose electrical connections, and broken doors/hatches. • Maintenance tasks are promptly completed as scheduled • Multiple journeymen are assigned to the City who have a broad range of qualifications, including the following certifications: NATE, NCI, Daiken, Honeywell, Johnson Controls, Siemens, Carrier and Danfoss/Yasakawa drives. • Strong working relationship with Siemens, ensuring that controls issues we cannot resolve in house will be resolved with the same urgency as if we were doing it. • Our long-term relationship with the City allows for our internal staff, including our dispatcher and project manager, to correctly assign technicians based upon need and to follow all of the City rules and procedures correctly the first time. 2 166
• No OSHA/safety violations or City policy violations over the past 8 years.
We are a full-service air-conditioning company with the ability to service complex systems, service DDC / pneumatic controls, replace ductwork/piping, retrofit existing systems, and replace systems with our own forces.
• Air conditioning service, repairs and planned maintenance. • Replacement of HVAC equipment and control systems.
• Extended warranty on air conditioning equipment.
Additionally, we have service agreements with some of the largest clients in Southern California, including the Los Angeles City General Services Division, LA Unified School District, City of Downey, City of Huntington Park, City of La Mirada, El Monte Union High School District, and Anaheim Union High School District.
We are fully compliant with DIR and City certified payroll requirements.
We have the following contractor licenses: B, C-4, C-20, and C-38
We are a licensed General Contractor and can handle prime contract HVAC related work. Please see our website for more information about the company. www.fmthomas.com.
• Honeywell controls authorized Contractor.
• Carrier CCN and I-Vu Certified Integrator.
• Licensed and bonded up to $2.5 million per job.
Our lead technicians are all Journeymen with 10+ years of experience. They have training and experience with Screw and centrifugal chillers, multi-stack chillers, VFDs, cooling towers, large packaged equipment, boilers, pumps, and variable flow split systems. Additionally, they have been full time lead technicians for the past 5 years and has managed other large public facilities, such as the City of Huntington Park, the City of La Mirada, and Huntington Beach School District.
I am your administrative point of contact. I have worked at F.M. Thomas for the past 20 years and am currently the Vice president of the company. I oversee large account management (companywide) and deal with a variety of issues, from initial kick off meetings, site walk through and surveys, billing disputes, and monthly meetings.
If you have any questions, please feel free to give me a call. .
Sincerely,
Michael Feyka, Vice President
Toll Free (800) 660-0891
[email protected]
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168
169
Understanding of Ser
vice Agreement: We recommend monthly, quarterly, semi-annual and annual maintenance services per ASHRAE 180 and the City service standard procedures. These include common activities, such as checking pressure drops across filters, washing coils, monthly chemical treatment (closed loop), annual refrigerant leak inspections, tightening electrical connections, verifying good operation of thermostats and control devices, replacing belts annually, lubrication of bearings, dampers, and linkages, checking sight glasses, and inspection for cleanliness of condenser tubes, condenser coils, and running systems in heating and cooling modes to verify good operation. The end goal is to provide the City with factory level maintenance and to regularly report unscheduled repairs so that action can be taken to make the corrections. We routinely replace minor components as per the contract to mitigate larger scale repairs.
Typical components include contactors, capacitors, belts, transformers, and fuses.
We agree with the City a
ssessment of maintenance procedures and intend to follow them as per below:
SCOPE OF WORK
1. General Requ
irements
F.M. Thomas Air
Conditioning shall provide all labor and materials necessary to provide four (4) Quarterly scheduled operational inspections including an annual shutdown inspection and service on ea ch piece of equipment to be performed in April/May of each year. We will also provide (12) Monthly Walk around visits to review site conditions. Al l inspections and preventive maintenance service shall be performed in accordance with manufacture r recommendations and specifications. F.M. Thomas Air Conditioning shall also provide parts and labor for emergency repairs at the contract rate.
1.1.1 Equipment
F.M. Thomas Air
Conditioning shall inspect all major system components quarterly (or as required) and perform scheduled pre ventive maintenance per manufacturer specifications and recommendations. Thi s shall include but not be limit ed to the items listed in the City Attached specifications.
a. Please note th
at repairs recommended due to maintenance specific items shall be handled on a separate time and materials agreement.
1.1.2 P arts
Parts used in Quarterly
and Annual inspections (or as required) shall be included at no additional charge
a. Please note that repairs recommended due to maintenance specific items shall be handled on a separate time and materials agreement.
1.1.3 Work Pl an
F.M. Thomas Air
Conditioning shall provide a complete work plan to ensure all requirements of the contract are accomplished as specified. The work plan shall include, but not be limited to monthly, Quarterly and annual checklists (or as required) and an emergency response plan including a 6 170
guaranteed r esponse time. ( 1 hours for critica l systems and 2- 4 hours for after -hour emergencies)
1.1.4 S ecurity
On site per sonnel shall
wear a uniform be aring the company name whil e in the building. On site personnel shall sign the logbook located in the main lobby each time they enter or leave the building.
Keys can be checked out at the main lobby desk and must be returned when leaving the premises.
1.1.5 Safety
F.M. Thomas Air
Conditioning shall observe and compel its employees to observe and exercise all necessary caution and di scretion to avoid inj ury to per sons or damag e to property of any kind.
F.M. Thomas Air Conditioning shall be responsible for compliance with all OSHA, EPA, AQM D and other state, federal and local laws. F.M. Thomas Air Conditioning shall maintain MSDS sheets for all chemicals used.
a) Safety procedures specific to the City, including, but not lim ited to, vests, hard hats, steel toed boots, gantry’s, Arc flash suites, lockout/tagout, and HEPA carts shall be used/followed without exception as appropriate.
1.1.6 D amage
In the event of
damage to City property as a r esult of F.M. Thomas Air Conditioning’s operations, the City will perform the necessary repairs and deduct the cost from subsequent payments to the F.M.
Thomas Air Conditioning.
1.1.7 Emergency Re
pairs
a. F.M. Thomas Air
Conditioning shall guarantee a maximum four (4) hour response time for emergency service calls, seven (7) days a week, twenty-four (24) hours a day, including holidays.
b. Labor and parts sh all be billed at the rate specified on the price sheet. c. If parts are not imme
diately available or the work cannot be performed at that time, F.M.
Thomas Air Conditioning shall do everything possible to expedite delivery and/or discuss alternatives with the Facilities Manager.
d. F.M. Thomas Air
Conditioning shall maintain good working relationships with equipment manufacturers, suppliers and sub-contractors needed to fulfill the contract requirements.
ABOUT F.M. THOM
AS AIR CONDITIONING
About F.M. Thomas Air
Conditioning: F.M. Thomas Air Conditioning has been in continuous business with the same owners for 45 years. We specialize in public works HVAC service, repair, and retrofit. We have staff and systems in place to handle common issues such as administrative paperwork, certified payroll, monthly billings, and technical meetings with City staff. Our technical staff regularly participates in technical training classes and is fully versed in repair and maintenance of packaged, applied/built up, and DDC controls. Our typical response time for service calls is same day or next day. We have other accounts 7 171
in the Inland Empire and can typically respond within 2-4 hours. Our call back rate for the past 10 years has been less than 1% of our total service volume.
Resumes of supervi
sors
Tom Feyka - Pres
ident
Forty-six years of industry experience. Founding owner of F.M. Thomas Air Conditioning, Inc. President for thirty-eight years.
• Education: AA degree from Los Angeles Trade Technical College, 45 class credits from business school at East Los Angeles Community college. Numerous factory technical schools. • Business Beliefs:
Management – provide recognition of technical, sales and office staff. Create a learning opportunity to maintain technical leadership in our industry, encourage and direct policy to insure customer satisfaction, cost awareness, professional attitude, safety, quality workmanship and profitability. • Monitor:
F.M. Thomas controller provides weekly financial performance work sheets compared to budget, bi- weekly sales/financial meetings to evaluate performance, monthly supervisor meetings to update field matters and better understand the effect of F.M. Thomas policies. • Modify:
Objective adjustment(s) to F.M. Thomas budgets/goals when feedback indicates revision is necessary. Seek outside input from banker, bonding agent, CPA, insurance as reference data to move forward with changes as economy improves or declines.
Matt Kisvardy - F
ield Supervisor
Twenty-one years in commercial HVAC as field technician, overhaul mechanic and troubleshooter. Matt has attended factory training classes from McQuay, York, Carrier and Trane equipment manufacturers. He is also qualified to work on Carrier IVu Controls.
Jim Vandie – Journeyma
n Mechanic.
Twenty-five years in commercial HVAC as field technician, overhaul mechanic and troubleshooter. Jim is NATE certified, TAB certified (air balance), Daiken, Honeywell, Fujitsu and certified by Edison as a qualified energy services technician. He has a strong background in optimizing the energy consumption of systems through fine tuning of HVAC systems (air side and refrigeration side).
George Anthony -
Controls Specialist
Thirty-nine years as a Controls Specialist, expert service, design and commissioning of Carrier DDC systems. Provides both on-site and telephone engineering support for DDC controls.
Rick Lizzaraga – Journe
yman
Eighteen years in commercial HVAC as field technician, overhaul mechanic and troubleshooter. Rick has attended factory training classes from York, Carrier and Trane equipment manufacturers. He has been one of the lead technicians servicing the City and is familiar with the processes and procedures required. 8 172
Tim Lane – Manager, Sheetmetal Estimator
Twenty-two years in commercial HVAC as a sheetmetal Estimator. Tim is responsible for application and estimation of design and spec work. Tim is also familiar with large package units, fan coils and split systems for any type of installation. Don has worked in hospitals, schools, police and fire departments as well as other types of commercial and industrial buildings.
Michael Feyka – Vice P res
ident
Lead project manager and Sales engineer. Michael personally manages a dozen other City accounts of similar size and scope to this project. He has a various training certificates in Honeywell DDC controls, Economizer / demand control ventilation, and Edison sponsored indoor air quality certifications.
Jeremy Truelove – Project Management
Twenty-one years in the commercial HVAC industry with extensive administrative/project management of HVAC construction projects.
Thank you again for considering F.M. Thomas Air Conditioning for your service needs. Attached are some support documents which further detail our company and abilities to service your account.
Sincerely,
Michael Feyka, Vice-President
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F. M. THOMAS AIR CONDITIONING, INC.
Contractor’s License # 313574 231 Gemini Avenue, Brea, CA 92821 (800)660-0891 FAX(714)738-0886 (714)738-1062
May 26, 2025
Stephanie Urueta
City of Costa Mesa
77 Fair Drive
Costa Mesa, Ca 92628
METHOD OF APPROACH
Ref: RFQ 25-22 HVAC Maintenance and Repairs
Stephanie Urueta,
F.M. Thomas Air Conditioning, Inc. is in a unique position to provide HVAC Maintenance and Repair for The City. As the City’s contractor of record for the past 12 years, we have the greatest knowledge of the specific systems of the City, as well as the history of performance of each unit. We also have established routines, service procedures, and access points. We have particular expertise in the DDC Controls and the integration of nonproprietary systems into the City’s systems.
Most of our technicians have been with our company for over 20+ years and can work on equipment ranging from package units and split systems to chillers, air handlers and Daiken split systems. We currently have 20 technicians who can respond to your job sites for emergency and non- emergency service calls. We are a class B general contractor with additional licenses in C-20 Heating, Ventilation and Air Conditioning, C- 4 Boilers, as well as in C-38 Refrigeration.
Our technicians are all factory certified and receive ongoing training to ensure that they perform to the highest levels of customer satisfaction. Additionally, our technicians bring their work vehicles home with them each night; our response time to emergency and non- emergency situations is outstanding because we are able to respond to calls in a timely fashion. Emergency calls are responded to within 2 hours, which is within your range of needed service.
Our dispatcher is a former service technician of 19 years and has an intimate knowledge of the types of maintenance and service issues that occur with the City . Due to his knowledge, he can evaluate the trouble call request and dispatch the proper technician to the call. During normal working hours (Monday through Friday, 7:00 am to 3:30pm), he is able to dispatch a technician to any of your job sites. During off -hours, we also have an answering service which alerts our on-call technicians to respond immediately.
10 174
All contracts and accounts are additionally serviced by an Account Manager and our Sales Manager, Tom Feyka, who has been with the company for over 40 years and has nearly 50 years of experience in the HVAC industry.
Per the scope of work, we will have the proper technician visit the job site on an as - needed basis to perform the necessary items listed to properly check your heating, ventilation and air conditioning services to keep them operating at optimal conditions.
Additionally, we will abide by the scope of work and provide proper documentation noting the conditions of your units, and any repairs that may be necessary. If a written estimate for repairs is required, or the work needs to be bid on, our technician(s) will work with the Account Manager and Sales Manager to provide the District with a quotation for repairs and/or replacement.
Standard Procedures:
1. Implementation – A superintendent, Foreman, and Lead technician are assigned to your account. (See Org chart). We conduct a job start meeting prior to the contract start and routine follow up meeting to ensure expectations and outcomes are being achieved. The technician are assigned primary responsibility for the outcome of the services, which provides accountability to the City and FM Thomas.
a. Provide supervisors with schedules, completion dates, and recommended repairs
b. Provide City staff with proposals for minor repairs (under $1,000) c. Identify tasks and deliverables
2. Defined schedule of services - Per the City’s schedule of services, our dispatcher and project manager will develop a work schedule. This schedule will be discussed and periodically reviewed with the lead technician(s)
3. Supervision - A qualified journeyman will be assigned your account. He will be tasked with routinely doing supervisor walks of the properties each month as maintenance is completed. This allows us to proactively identify items of concern before they become emergencies
4. Client Satisfaction – F.M. Thomas already understands the needs of the City due to our 8 years of servicing the City. We understand the schedules and expectations of different members of the City staff, including Tung, Nick, and Howard and they understand the capabilities of our lead technicians, James and Jim Vandie.
5. Needs from the City – Due to our long service history, we only need a few items from the city.
a. Keys to all appropriate buildings
b. Schedules of operation
c. Any access restrictions per building
6. Proactive maintenance – We look for key indicators of future service problems when completing maintenance. Recommendations are made to repair/replace 11 175
these items in order to prevent future down time These items include, but are not limited to, the following:
a. Check amperages of motors
b. Check temperature splits (should always be 20 degrees for DX equipment) c. Verify the system has the factory charge
d. Check contactors
e. Verify thermostats are calibrated and programmed correctly f. Check air flow across coils and wash coils if needed g. Verify the volume of air produced is being received at the grilles and at the correct temperatures (for example a 5 ton system produces 1950 cfm at 55 degrees)
h. Check TXV and filter driers for obstructions and replace as needed i. Check for leaks (condensate, oil, lubricants)
j. Keep the job site clean. Having an orderly and unobstructed view of the systems allows for problems to present themselves more easily and demonstrates the quality of services provided.
k. Check belt condition, tensions and adjustment of pulleys l. Replace filter quarterly and check air flow across filters for obstructions
7. Communication – It is key to have a good relationship with the facilities manager. By having weekly discussions of current activities and monthly review meetings, the facilities manager is able to understand and justify why certain repairs need to be done.
8. Innovative and creative approaches – We have identified some of the cost saving measures at the City to ensure efficient operation. a. Salt air conditions lead to degradation and blocking of condenser coils.
Ensuring the coils are clean and air flow thru the coils is accurate is key to maintaining the correct 20-degree delta T
b. Tighten electrical connections at each service. This will mitigate nuisance calls and inefficient use of electricity
c. Identify and repair minor water and refrigerant leaks. This will mitigate compressor/ fan motor failures and water damage issues to the roof. d. Replace old disconnects and contactors to reduce the potential of damage and injury to equipment and staff
e. Clean out roof drains to minimize water leaks/damage to the roof
If you have any questions regarding our procedures or the above work plan, please do not hesitate to contact us.
Sincerely,
Michael Feyka,
Vice President
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F. M. THOMAS AIR CONDITIONING, INC.
Contractor’s License # 313574 231 Gemini Avenue, Brea, CA 92821 (800)660-0891 FAX(714)738-0886 (714)738-1062
May 26, 2025
Stephanie Urueta
City of Costa Mesa
77 Fair Drive
Costa Mesa, Ca 92628
QUALITY CONTROL MANAGEMENT PLAN
Introduction: F.M. Thomas Air Conditioning is a service company by trade. This means that dealing with quality control is an integrated part of the business. We make thousands of service calls per year, and it is not uncommon that 1-2% of them lead to complaints and unsatisfactory outcomes; It is, after all, a business of dealing with problems.
Quality Assurance Program: Many companies use long and drawn out professionally written procedure manuals for Quality Assurance, and that’s great, but they often fail to live up to such expectations because Quality Assurance ultimately comes down to the staff on the ground working together for a common good outcome. F.M. Thomas excels at Quality Assurance for the following reasons:
a. Experience: We have 2 generations (50 years) of direct experience in customer service; in fact, we are one of the few companies in the commercial space that has a higher percentage of service revenue than construction revenue. a. We currently maintain (7) other large scale maintenance accounts. b. Long Term Outlook: All of our lead technicians have been with the company for more than 20 years, all of our office staff have been with us more than 10 years, and our best accounts have been with us for more than 10 years. Stability, consistency, and reliability lead to people being invested in the best outcomes for our customers. c. Investment in Fundamentals: We have a strict policy of following factory standards in service and repair. When the technician completes the job, the system meets all of the requirements of optimal performance, including the correct amperages, temperatures, pressures, mechanical tolerances, refrigerant measurements and software accuracy.
Additionally, there are no oil spots, grinding bearings, or flashing error codes.
Policies and Procedures (abbreviated): We discuss policies and procedures in greater detail on our method of approach, Business Prospectus, and Letter of Introduction • Subcontractors: We mitigate performance issues with subcontractors much the same way as field staff, stability, reliability, and consistency; What this means for the County is that we use common vendors whom we develop common processes with to ensure good outcomes.
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We ensure performance through the following specific procedures:
o Annual job start meetings:
Define FMT Expectations of the subs.
Emphasis OEM procedures to be followed.
Confirm they have the lead technicians’ contact information. Define customer on site policies and procedures (such as parking) Confirm that uniforms and lettered trucks are being used. Verify staff are being screened annually with background checks and drug screenings.
Define pricing and quoting policies and confirm existing pricing is accurate to scope of work.
Define lay down locations for stock and locations of available trash disposal.
• Inspections:
Our Service foreman will take pictures and inspect the performance of the equipment comparable to the customer’s expected services. Deficiencies will be noted, and services will be completed.
Walk around inspections will be done to check for common red flags such as scale and rust build up.
Service Foreman will conduct routine meetings with lead technician(s) to ensure their procedures and expectations are followed.
• Quality Control documentation: Included in our proposal are common forms that are filled out, such as inspection checklists and work order tickets, that define who, where and when equipment was serviced.
o Records are maintained per customer both digitally and physically at our site.
Our dispatcher is a former technician of 19 years and is fully capable of reading and interpreting customer requests for clarification of records. • Warranty: We have a policy of 1-year parts and labor warranties on work completed.
Upon notification of a warranty, we will immediately dispatch a technician to inspect the issue and determine the warranty status. Warranty items are repaired with the same urgency as non-warranty repairs.
o Should the issue not be a warranty, or the trouble call is a combination of warranty and non-warranty, the warranty work will be completed, and a quote will be provided for the non-warranty work.
• Equipment: Most of the equipment used to perform the services needed are on our trucks. Enclosed is a list of truck stock typically carried to perform HVAC maintenance and repair. Additionally, FMT equipment used will be the following:
o Use of on-site storage of filters and belts
o Hoses to be left in accessible locations on site for quick service. o Extra bottles of common refrigerant left on site (R134a, R410a, R22) o Common rigging equipment, such as come a longs, for rigging of motors and compressors.
o Storage of extra rock salt for Annex cooling tower
o Storage of surplus nonchemical Brine treatments for HQ water treatment (inside mechanical room)
o Storage of 4-6 surplus in line filters for chilled water lines o 6’ and 10’ ladders
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Common Problem:
1. Complaints: Customer is not satisfied with the outcome due to either administrative or production outcomes
2. Unsatisfactory outcomes: The end result does not meet expectations (ex. The boiler is not producing 180-degree water at the designated flow rate.)
Solution:
1. Define the problem. (common)
a. Set point is wrong.
b. Flame sensors or controllers malfunctioning
c. Tube bundle is rotted out / compromised.
d. The blower motor failed.
2. Store common parts for emergency repairs (such as belts and fuses)
3. Recommend replacement of components subject to common failure on a schedule a. Contactors every 2-3 years
b. Fan capacitors annually
c. Belts annually
d. Wash evaporator coils annually)
e. Replace backup batteries annually (thermostats)
f. Replace liquid line driers (5 years)
4. Conduct Eddy currents every 5-7 years to verify no leaks. (chillers)
5. Clean fire boxes annually
6. Exercise valves to ensure they don’t freeze up (hydronic systems)
7. Review weather conditions and re-evaluate startup schedules on expected cold days (pre-heat building prior to 7 am)
If you have any questions, please feel free to give me a call. .
Sincerely,
Toll Free (800) 660-0891
[email protected]
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F.M. Thomas Air Conditioning, Inc.
Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
46 187
F.M. THOMAS AIR CONDITIONING, INC.
Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
Table of Contents
Page
Independent Accountant’s Review Report 1
Financial Statements:
Balance Sheet 2
Statement of Income and Retained Deficit 3
Statement of Cash Flows 4
Notes to Financial Statements 5
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189
F.M. THOMAS AIR CONDITIONING, INC.
Balance Sheet
See Independent Accountant's Review Report
ASSETS
Current Assets:
Cash $ 856,766
Contract receivables, net of allowance for doubtful accounts of $5,000 1,012,445 Employee retention credit receivable 211,730
Inventory 149,573
Prepaid expenses 68,915
Contract assets 22,364
Total Current Assets 2,321,793
Property and Equipment, net of accumulated depreciation 553,865 Right-of-Use Asset - Operating Lease, net of accumulated amortization 254,787 Note Receivable - Stockholder 184,911
Deposits 3,710
$ 3,319,066
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 124,188
Accrued expenses 315,309
Current portion of long-term debt 55,999
Current portion of Economic Injury Disaster Loan 47,425 Current portion of lease liability - operating lease 101,121 Contract liabilities 101,632
Total Current Liabilities 745,674
Economic Injury Disaster Loan, net of current portion 1,952,575 Long-Term Debt, net of current portion 215,766
Lease Liability - Operating Leases, net of current portion 153,666 Total Liabilities 3,067,681
Stockholders' Equity:
Common stock, $10 par value, 25,000 authorized,
1,000 issued and outstanding 10,000
Additional paid-in capital 250,000
Retained deficit (8,615)
Total Stockholders' Equity 251,385
$ 3,319,066
December 31, 2022
See accompanying notes to financial statements. 2
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F.M. THOMAS AIR CONDITIONING, INC.
Statement of Income and Retained Deficit
Year Ended December 31, 2022
See Independent Accountant's Review Report
Contract Revenues $ 5,568,179
Contract Costs 3,984,587
Gross Profit 1,583,592
Operating Expenses 1,688,713
Loss from Operations (105,121)
Other (Income) Expense:
Other income (157,837)
Interest income (8,216)
Interest expense 34,664
Total Other Income (131,389)
Income Before Income Taxes 26,268
Income Tax Expense 800
Net Income 25,468
Retained Deficit, beginning (34,083)
Retained Deficit, ending $ (8,615)
See accompanying notes to financial statements. 3
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F.M. THOMAS AIR CONDITIONING, INC.
Statement of Cash Flows
Year Ended December 31, 2022
See Independent Accountant's Review Report
Cash Flows from Operating Activities:
Net income $ 25,468
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation 159,123
Changes in operating assets and liabilities:
Contract receivables (214,105)
Prepaid expenses 1,010
Contract assets (6,413)
Accounts payable (126,410)
Accrued expenses 35,552
Deposits (3,710)
Contract liabilities (97,803)
Net Cash Used by Operating Activities (227,288)
Cash Flows Used by Investing Activity:
Purchases of property and equipment (93,893)
Cash Flows from Financing Activities:
Note receivable - stockholder, net 193
Payments on note payable (358,193)
Proceeds from Economic Injury Disaster Loan 1,500,000
Net Cash Provided by Financing Activities 1,142,000
Net Change in Cash 820,819
Cash, beginning 35,947
Cash, ending $ 856,766
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest $ 34,664
Cash paid during the year for operating leases $ 103,200 Supplemental Disclosure of Noncash Investing and Financing Activities:
Property and equipment acquired under financing agreement $ 313,382 Right-of-use asset - operating leases
recognized with adoption of ASC 842, Leases (Note 1) under lease liability $ 354,862 See accompanying notes to financial statements. 4
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
5 Note 1 - Business Activity and Summary of Significant Accounting Policies Business Activity
F.M. Thomas Air Conditioning, Inc. (the “Company”), a California S corporation, incorporated in 1975, is a licensed contractor engaged in the retrofitting and servicing of air conditioning and heating systems. The Company serves governmental, industrial, and commercial agencies. In connection with its normal business activities, the Company may be required to acquire performance, bid and/or payment bonds. The surety issuing the bonds has recourse against certain assets of the Company in the event the surety is required to honor the bonds. The lengths of contracts vary, but contracts are typically completed in less than one year. For financial statement presentation, the normal operating cycle is one year.
Revenue and Cost Recognition
Construction Contracts
In the process of performing its construction contracts with customers, the Company considers each contract to be one performance obligation, unless circumstances dictate otherwise. This evaluation requires significant judgement.
Payment terms and conditions in customer contracts vary. Contract payments are generally due in installments as specified in the contracts. Revenue for financial reporting purposes is recognized over time as the performance obligations are satisfied on an ongoing basis. Progress toward completion of the Company’s contracts is measured by the percentage of cost incurred to date to estimated total costs for each contract. This method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change significantly within the near term.
Changes in job performance, job conditions, and estimated profitability may result in revisions to revenues and costs, which are generally recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from variable consideration are accounted for as changes in estimates in the current period.
Variable consideration may include incentives for completing a contract early or on time, penalties for not completing a contract on time, claims for which the Company has enforceable rights, or contract modifications/change orders in which the scope of modification has been approved, but the price has not been determined or approved.
Recognition of variable consideration is limited to an amount that the Company estimates will not result in a significant reversal of revenue in future periods. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. During the year ended December 31, 2022, the Company made revisions in estimates to certain contracts that were in progress at December 31, 2022. The net effect of the changes caused a $22,064 decrease in 2022 gross profits from that which would have been reported had the revised estimates been used as the basis of recognition of contract profits in the preceding year.
Contract costs include all direct material, service cost, subcontractor, labor, and other direct costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. Costs of abnormal inefficiencies or wasted resources (material or labor) are excluded when measuring progress and are expensed as incurred. The Company recognizes revenue for the transfer of uninstalled and unmodified materials to the customer, but only in an amount equal to the cost of the materials. Selling, general, and administrative costs are charged to expense as incurred.
The Company warranties its work to comply with both statutory and contractual requirements, therefore, the lengths of warranties vary. The Company did not incur significant warranty cost for the year ended December 31, 2022.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
6 Note 1 - Business Activity and Summary of Significant Accounting Policies, continued Revenue and Cost Recognition, continued
Repair and Service Contracts
The Company provides repair, replacement, and emergency services to customers for air conditioning and heating systems. The Company also provides maintenance services to customers under maintenance contracts with service periods of typically twelve months. The Company considers each repair and service contract to be one performance obligation unless circumstances dictate otherwise. This evaluation requires significant judgement.
For repair and service contracts for which the Company has the right to consideration from the customer in an amount that corresponds directly with the value to the customer of the performance completed to date, the Company recognizes revenue as services are performed. For these contracts, the Company typically bills the customer a fixed amount for each hour of labor provided, as well as a fixed markup on materials used. Revenue recognized on these contracts is calculated in the amount to which the Company has a right to invoice for services performed.
For repair and service contracts that do not meet the preceding criteria, the Company recognizes revenue over time using the same methodology used for construction contracts. In these circumstances, the Company utilizes the cost-based input method because management considers total cost to be the best available measure of progress.
Service contracts are typically billed upon completion of the service. Repair contracts are typically billed in advance and in installments over the service period. Payment terms and conditions for service and maintenance contracts vary.
Contract Assets and Contract Liabilities
The contract asset, “Costs and estimated earnings in excess of billings on contracts in progress,” represents revenues recognized in excess of amounts billed. The contract asset, “Contract retention,” represents amounts held back for payment by an owner until certain contractual obligations have been completed by the company. The contract liability, “Billings in excess of costs and estimated earnings on contracts in progress,” represents billings in excess of revenues recognized. Contract assets and liability are reported on a net basis for each contract.
Contract Receivables
Contract receivables are recorded when invoices are issued. Contract receivables are written off when they are determined to be uncollectible. The Company considers historical losses, review of specific problem accounts, existing economic conditions in the construction industry, and the financial stability of its customers when estimating its allowance for doubtful accounts. The Company had an allowance for doubtful accounts of $5,000 at December 31, 2022.
Generally, the Company considers contract receivables past due after 90 days. Contract receivables over 90 days totaled $128,643 at December 31, 2022, of which $24,200 was collected subsequent to December 31, 2022. When practical, the Company may file statutory liens on projects where collection problems are anticipated. The liens serve as collateral for contract receivables.
Inventory
Inventory, consisting primarily of parts and materials, is stated at the lower of cost (first-in, first-out method) and net realizable value.
Property and Equipment
The Company records property and equipment at cost. The cost of property and equipment is depreciated using the straight-line method over the estimated useful lives of the depreciable assets. Leasehold improvements are depreciated over the shorter of the remaining term of the lease or their estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. Major additions are capitalized. When property and equipment is sold or retired, the cost and accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
7 Note 1 - Business Activity and Summary of Significant Accounting Policies, continued Leases
Adoption of New Policy
Effective January 1, 2022, the Company adopted Accounting Standards Update (ASU) 2016-02 Leases, which hereinafter will be referred to as “ASC Topic 842”, using the permitted modified retrospective method. The standard provides guidance on the recognition, measurement, presentation, and disclosure of leases. The new standard supersedes previous accounting principles generally accepted in the United States of America (U.S. GAAP) guidance on leases and requires substantially all leases to be reported on the balance sheet as right-of-use assets and lease liabilities, as well as additional disclosures (See Note 8). Upon adoption, the Company recognized right- of-use assets and lease liabilities of $354,862. Management has analyzed the provisions contained in ASC Topic 842 and determined that there is no impact on retained earnings as of January 1, 2022, due to the adoption of the new policy.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, contract receivables, contract assets, note receivable – stockholder, accounts payable, contract liabilities, long-term debt, and operating lease, for which their current carrying amounts approximate fair market value as of December 31, 2022.
Income Taxes
The Company has elected to be taxed under the provisions of subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporation income taxes on its taxable income. Instead, the stockholders separately account for their proportionate share of the Company’s items of income, deductions, losses and credits. Income of the Company is subject to California franchise tax. The Company is subject to certain state and local taxes, which have been recorded in the financial statements.
Accounting for Uncertain Tax Positions
The Company adheres to the accounting standards regarding “Accounting for Uncertain Tax Positions.” This accounting standard provides detailed guidance for financial statement recognition, measurement and disclosure of uncertain tax positions. It requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will not be substantiated under examination. The Company files income tax returns in the United States and various state and local jurisdictions. The Company had no uncertain tax positions as of April 25, 2023.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
Significant estimates used in preparing these financial statements include depreciation expense and estimated cost to complete, which have a direct effect on gross profit.
Subsequent Events
The Company has evaluated subsequent events through April 25, 2023, which is the date the financial statements were available to be issued.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
8 Note 2 - Contract Receivables
Contract receivables consist of the following at December 31, 2022:
Completed contracts $ 927,171
Contracts in progress 90,274
1,017,445
Less allowance for doubtful accounts (5,000)
$ 1,012,445
At January 1, 2022, the contract receivable balance for completed contracts and contracts in progress, net of allowance for doubtful accounts of $5,000, was $798,340.
Note 3 - Contract Assets and Contract Liabilities
Costs, estimated earnings and billings to date on contracts in progress are as follows at December 31, 2022:
Costs incurred on contracts in progress $ 199,349
Estimated earnings 91,595
290,944
Less billings to date (374,487)
$ (83,543)
Included in the accompanying balance sheet under contract assets and contract liabilities:
Costs and estimated earnings in excess of billings on
contracts in progress (underbillings) $ 21,336
Billings in excess of costs and estimated earnings on
contracts in progress (overbillings) (104,879)
$ (83,543)
Contract assets and contract liabilities are presented as follows as of December 31, 2022:
Contract Assets:
Costs and estimated earnings in excess of billings on
contracts in progress (underbillings) $ 21,336
Contract retention 4,275
Less contract retention reclassified from contract liabilities (3,247) $ 22,364
Contract Liabilities:
Billings in excess of costs and estimated earnings on
contracts in progress (overbillings) $ 104,879
Less contract retention reclassified to contract assets (3,247) $ 101,632
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
9 Note 3 - Contract Assets and Contract Liabilities, continued At January 1, 2022, the balance of contract assets was $15,951 and the balance of contract liabilities was $199,435.
Note 4 - Property and Equipment
Property and equipment consists of the following at December 31, 2022:
Useful Lives
Vehicles 5 years $ 2,307,163
Leasehold improvements 15 - 39 years 230,767
Computers and software 5 years 148,490
Machinery and equipment 5 years 90,468
Furniture and fixtures 5 years 58,262
2,835,150
Less accumulated depreciation (2,281,285)
$ 553,865
Note 5 - Employee Retention Credit
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for an Employee Retention Credit (ERC), which is a refundable tax credit against certain employment taxes. The Company determined that it qualifies for the tax credit under the CARES Act in 2021. During the year ended December 31, 2021, the Company claimed $211,730 related to the ERC. At December 31, 2022, the Company was still due refunds in the amount of $211,730, which is recorded as a current receivable on the balance sheet as the Company expects to receive the remaining balance within the next twelve months.
Note 6 - Long-Term Debt
Long-term debt consists of the following at December 31, 2022:
$ 271,765
Less current portion of long-term debt (55,999)
$ 215,766
Notes payable to various financial institutions, secured by vehicles, due in aggregate monthly payments ranging from $656 to $2,335, including interest ranging from 1.90% to 6.59%, maturing through October 2027.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
10 Note 6 - Long-Term Debt, continued
Following is a summary of future principal payments at December 31, 2022:
Year Ending
December 31,
2023 $ 55,999
2024 53,613
2025 55,846
2026 59,105
2027 47,202
$ 271,765
Note 7 - Economic Inquiry Disaster Loan Program
The Economic Inquiry Disaster Loan Program (EIDL) consists of the following at December 31, 2022:
$ 2,000,000
Less current portion of EIDL (47,425)
$ 1,952,575
Note payable totaling $500,000 granted under the EIDL program approved by the Small Business Administration (SBA). In 2022, the Company received additional EIDL proceeds of $1,500,000.
The loan terms require certain use of loan proceeds. Advances accrue interest at 3.75% per annum and monthly principal and interest payments of $10,061 beginning from January 1, 2023.
All remaining unpaid principal and interest is due and payable by August 31, 2050. The loan is secured by substantially all the assets of the Company and guaranteed by the Company's stockholder.
Following is a summary of future principal payments:
Year Ending
December 31,
2023 $ 47,425
2024 49,234
2025 51,113
2026 53,063
2027 55,087
Thereafter 1,744,078
$ 2,000,000
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
11 Note 8 - Leasing Arrangements
The Company leases office and shop space from a related party through common ownership under a long-term operating lease agreement expiring in June 2025. Base monthly payments were $8,600 as of December 31, 2022.
Lease expense under related party operating leases was $103,200 for the year ended December 31, 2022, of which $51,600 was included in contract costs.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized for these leases on a straight-line basis over the lease term. The lease agreements do not contain any material residual value guarantees.
The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how the Company determines the discount rate, the lease term, and the lease payments.
When the discount rate implicit in a lease is not readily determinable, the Company calculates the lease liability using the risk-free rate.
The following summarizes the operating right-of-use asset as of December 31, 2022:
Operating lease right-of-use asset $ 354,862
Accumulated amortization (100,075)
$ 254,787
The amounts contractually due on lease liabilities were as follows at December 31, 2022:
Year Ending
December 31,
2023 $ 103,200
2024 103,200
2025 51,600
Total lease payments 258,000
Less interest (3,213)
Present value of lease liability $ 254,787
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
12 Note 8 - Leasing Arrangements, continued
Supplemental balance sheet information related to leases as of December 31, 2022 was as follows:
Weighted average remaining lease term - Operating lease 2.5 Weighted average discount rate - Operating lease 1.04%
Related party leases include the following information at December 31, 2022:
Operating lease right-of-use assets $ 254,787
Operating lease liabilities $ 254,787
Operating lease expense $ 103,200
Operating cash flows from operating leases $ 103,200
Note 9 - Employee Benefit Plan
Profit Sharing 401(k) Plan
The Company sponsors a Profit Sharing 401(k) plan covering all non-union employees who satisfy the eligibility requirements. Employees may contribute up to the annual permissible dollar limit in effect for the plan year, subject to certain federal income tax limitations. The Company may make a matching contribution based on the participant’s salary deferrals with certain limitations and may make an additional discretionary profit-sharing contribution.
Employee contributions are 100% vested and employer contributions vest according to a vesting schedule. The Company made $185,033 in profit-sharing contributions and no matching contributions for the year ended December 31, 2022.
Note 10 - Related Party Transactions
The Company has made an election, available to private companies, related to the reporting of related parties that are under common control. Under this election, if specific criteria are met, the Company is not required to consolidate its commonly controlled related parties. The Company believes it has met the requirements and is not consolidating its commonly controlled related parties.
Note Receivable - Stockholder
The Company has a note receivable due from its sole stockholder. The note is unsecured and bears interest at the applicable federal rate of 4.19%. The balance outstanding on the note was $184,911 at December 31, 2022. Unpaid principal and accrued interest are due on demand. The Company does not expect to collect the outstanding balance within one year, therefore, the balance has been classified as long term. Interest income related to the note was $7,517 for the year ended December 31, 2022.
Leasing Arrangements
Information about related party leasing activity is included in Note 8.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2022
See Independent Accountant’s Review Report
13 Note 11 - Concentration of Credit Risk
Cash
The Company maintains its cash in bank deposit accounts that are insured by the Federal Deposit Insurance Corporation (FDIC) up to a limit of $250,000 per depositor. The Company has not experienced any losses in its bank deposit accounts and believes it is not exposed to any significant credit risk on cash.
Major Customers
Contract receivables result from performance under contracts with various customers. A single customer represented 24% of company’s contract receivables or retention for the year ended December 31, 2022. A single customer represented 31% of total revenue for the year ended December 31, 2022. The Company’s credit risk related to contract receivables is minimized by the Company’s rights under lien laws on construction contracts subject to those laws.
Note 12 - Backlog
Backlog represents the amount of revenue the Company expects to realize from work to be performed on contracts in progress at year-end, letters of intent, and contractual agreements on which work has not begun.
The following schedule shows a reconciliation of backlog representing signed contracts, in existence at December 31, 2022:
Balance, January 1, 2022 $ 687,251
New contracts and contract adjustments 5,200,122
5,887,373
Less contract revenue earned during the year (3,646,268) Balance, December 31, 2022 $ 2,241,105
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Conditioning, Inc.
FINANCIAL STATEMENTS
Year Ended December 31, 2023
See Independent Accountant’s Review Report
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F.M. THOMAS AIR CONDITIONING, INC.
Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
Table of Contents
Page
Independent Accountant’s Review Report 1
Financial Statements:
Balance Sheet 2
Statement of Operations and Retained Deficit 3
Statement of Cash Flows 4
Notes to Financial Statements 5
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Balance Sheet
See Independent Accountant's Review Report
ASSETS
Current Assets:
Cash $ 563,251
Contract receivables, net of allowance for credit losses of $5,000 1,225,620 Inventory 149,573
Prepaid expenses 92,832
Contract assets 21,754
Total Current Assets 2,053,030
Property and Equipment, net of accumulated depreciation 743,721 Right-of-Use Asset - Operating Lease, net of accumulated amortization 153,666 Note Receivable - Stockholder 476,437
Deposits 3,710
$ 3,430,564
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 410,835
Accrued expenses 328,285
Current portion of long-term debt 93,520
Current portion of Economic Injury Disaster Loan 23,045 Current portion of lease liability - operating lease 102,178 Customer deposits 24,000
Contract liabilities 101,575
Total Current Liabilities 1,083,438
Long-Term Debt, net of current portion 345,827
Economic Injury Disaster Loan, net of current portion 1,976,955 Lease Liability - Operating Lease, net of current portion 51,488 Total Liabilities 3,457,708
Stockholders' Deficit:
Common stock, $10 par value, 25,000 authorized,
1,000 issued and outstanding 10,000
Additional paid-in capital 250,000
Retained deficit (287,144)
Total Stockholders' Deficit (27,144)
$ 3,430,564
December 31, 2023
See accompanying notes to financial statements. 2
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F.M. THOMAS AIR CONDITIONING, INC.
Statement of Operations and Retained Deficit
Year Ended December 31, 2023
See Independent Accountant's Review Report
Contract Revenues $ 7,213,639
Contract Costs 5,435,322
Gross Profit 1,778,317
Operating Expenses 1,937,260
Gain on Sale of Property and Equipment (15,800)
Loss from Operations (143,143)
Other (Income) Expense:
Interest income (19,978)
Other income (64)
Interest expense 153,624
Total Other Expense 133,582
Loss Before Income Taxes (276,725)
Income Tax Expense 804
Net Loss (277,529)
Retained Deficit, beginning (8,615)
Stockholder Distributions (1,000)
Retained Deficit, ending $ (287,144)
See accompanying notes to financial statements. 3
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F.M. THOMAS AIR CONDITIONING, INC.
Statement of Cash Flows
Year Ended December 31, 2023
See Independent Accountant's Review Report
Cash Flows from Operating Activities:
Net loss $ (277,529)
Adjustments to reconcile net loss to net cash from operating activities Depreciation 185,692
Gain on sale of property and equipment (15,800)
Changes in operating assets and liabilities:
Contract receivables (213,175)
Employee Retention Credit receivable 211,730
Prepaid expenses (23,917)
Contract assets 610
Accounts payable 286,647
Accrued expenses 12,976
Customer deposits 24,000
Contract liabilities (57)
Net Cash Provided by Operating Activities 191,177
Cash Flows from Investing Activities:
Proceeds from sale of property and equipment 15,800
Purchases of property and equipment (21,342)
Net Cash Used by Investing Activities (5,542)
Cash Flows from Financing Activities:
Note receivable - stockholder, net (291,526)
Payments on note payable (186,624)
Stockholder distributions paid (1,000)
Net Cash Used by Financing Activities (479,150)
Net Change in Cash (293,515)
Cash, beginning 856,766
Cash, ending $ 563,251
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest $ 153,624
Cash paid during the year for income taxes $ 804
Cash paid during the year for operating leases $ 111,000 Supplemental Disclosure of Noncash Investing and Financing Activity:
Property and equipment acquired under financing agreement $ 354,206 See accompanying notes to financial statements. 4
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
5 Note 1 - Business Activity and Summary of Significant Accounting Policies Business Activity
F.M. Thomas Air Conditioning, Inc. (the Company), a California S corporation, incorporated in 1975, is a licensed contractor engaged in the retrofitting and servicing of air conditioning and heating systems. The Company serves governmental, industrial, and commercial agencies. In connection with its normal business activities, the Company may be required to acquire performance, bid and/or payment bonds. The surety issuing the bonds has recourse against certain assets of the Company in the event the surety is required to honor the bonds. The lengths of contracts vary, but contracts are typically completed in less than one year. For financial statement presentation, the normal operating cycle is one year.
Revenue and Cost Recognition
Construction Contracts
In the process of performing its construction contracts with customers, the Company considers each contract to be one performance obligation, unless circumstances dictate otherwise. This evaluation requires significant judgement.
Payment terms and conditions in customer contracts vary. Contract payments are generally due in installments as specified in the contracts. Revenue for financial reporting purposes is recognized over time as the performance obligations are satisfied on an ongoing basis. Progress toward completion of the Company’s contracts is measured by the percentage of cost incurred to date to estimated total costs for each contract. This method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change significantly within the near term.
Changes in job performance, job conditions, and estimated profitability may result in revisions to revenues and costs, which are generally recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from variable consideration are accounted for as changes in estimates in the current period.
Variable consideration may include incentives for completing a contract early or on time, penalties for not completing a contract on time, claims for which the Company has enforceable rights, or contract modifications/change orders in which the scope of modification has been approved, but the price has not been determined or approved.
Recognition of variable consideration is limited to an amount that the Company estimates will not result in a significant reversal of revenue in future periods. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. During the year ended December 31, 2023, the Company made revisions in estimates to certain contracts that were in progress at December 31, 2022. The net effect of the changes caused a $18,648 increase in 2023 gross profits from that which would have been reported had the revised estimates been used as the basis of recognition of contract profits in the preceding year.
Contract costs include all service cost, labor, direct material, subcontractor and other direct costs and those indirect costs related to contract performance, such as insurance, tools, depreciation, payroll tax expense, employee benefits, supplies, repairs and indirect labor cost applied. Costs of abnormal inefficiencies or wasted resources (material or labor) are excluded when measuring progress and are expensed as incurred. The Company recognizes revenue for the transfer of uninstalled and unmodified materials to the customer, but only in an amount equal to the cost of the materials. Selling, general, and administrative costs are charged to expense as incurred.
The Company warranties its work to comply with both statutory and contractual requirements, therefore, the lengths of warranties vary. The Company did not incur significant warranty cost for the year ended December 31, 2023.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
6 Note 1 - Business Activity and Summary of Significant Accounting Policies, continued Revenue and Cost Recognition, continued
Repair and Service Contracts
The Company provides repair, replacement, and emergency services to customers for air conditioning and heating systems. The Company also provides maintenance services to customers under maintenance contracts with service periods of typically twelve months. The Company considers each repair and service contract to be one performance obligation unless circumstances dictate otherwise. This evaluation requires significant judgement.
For repair and service contracts for which the Company has the right to consideration from the customer in an amount that corresponds directly with the value to the customer of the performance completed to date, the Company recognizes revenue as services are performed. For these contracts, the Company typically bills the customer a fixed amount for each hour of labor provided, as well as a fixed markup on materials used. Revenue recognized on these contracts is calculated in the amount to which the Company has a right to invoice for services performed.
For repair and service contracts that do not meet the preceding criteria, the Company recognizes revenue over time using the same methodology used for construction contracts. In these circumstances, the Company utilizes the cost-based input method because management considers total cost to be the best available measure of progress.
Service contracts are typically billed upon completion of the service. Repair contracts are typically billed in advance and in installments over the service period. Payment terms and conditions for service and maintenance contracts vary.
Contract Assets and Contract Liabilities
The contract asset, “Costs and estimated earnings in excess of billings on contracts in progress,” represents revenues recognized in excess of amounts billed. The contract asset, “Contract retention,” represents amounts held back for payment by an owner until certain contractual obligations have been completed by the company. The contract liability, “Billings in excess of costs and estimated earnings on contracts in progress,” represents billings in excess of revenues recognized. Contract assets and liability are reported on a net basis for each contract.
Contract Receivables
Effective January 1, 2023, the Company adopted Accounting Standards Update (ASU) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This update requires the use of a forward-looking expected credit loss model for instruments within its scope, including contract receivables and contract retention, and replaces the previous incurred loss impairment model. The expected credit loss model requires management to estimate current expected credit losses over the lifetime of the assets by considering all reasonable and supportable information, including historical experience, current conditions, and reasonable and supportable forecasts affecting collectability. Management has analyzed the provisions contained in Topic 326 and determined that there is no impact on retained earnings as of January 1, 2023, due to the adoption of the new policy.
Contract receivables are recorded when invoices are issued and are presented in the balance sheet net of the allowance for credit losses. Contract receivables are written off against the allowance when they are determined to be uncollectible. The allowance for credit losses is estimated based on expected credit losses considering the Company’s historical losses, existing economic conditions in the construction industry, and the financial stability of its customers. Based on these factors, the Company had an allowance for credit losses of $5,000 at December 31, 2023.
Generally, the Company considers contract receivables past due after 90 days. Contract receivables over 90 days totaled $58,468 at December 31, 2023, of which $35,130 was collected subsequent to December 31, 2023. When practical, the Company may file statutory liens on projects where collection problems are anticipated. The liens serve as collateral for contract receivables.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
7 Note 1 - Business Activity and Summary of Significant Accounting Policies, continued Inventory
The Company maintains parts and materials on revolving basis for its fleet of vehicles. Inventory is valued based on management’s estimate. Management has determined inventory recorded reflects net realizable value.
Property and Equipment
The Company records property and equipment at cost. The cost of property and equipment is depreciated using the straight-line method over the estimated useful lives of the depreciable assets. Leasehold improvements are depreciated over the shorter of the remaining term of the lease or their estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. Major additions are capitalized. When property and equipment is sold or retired, the cost and accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized.
Leases
The Company adheres to the accounting standard for leases, which provides detailed guidance for financial statement recognition, measurement, and disclosure of leases. The significant policies used by the Company to assist in determining the financial statement treatment of leasing arrangements are described in Note 7.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, contract receivables, contract retention, note receivable - stockholder, accounts payable, contract liabilities, long-term debt, and lease liability, for which their current carrying amounts approximate fair market value as of December 31, 2023.
Income Taxes
The Company has elected to be taxed under the provisions of subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporation income taxes on its taxable income. Instead, the stockholders separately account for their proportionate share of the Company’s items of income, deductions, losses and credits. Income of the Company is subject to California franchise tax. The Company is subject to certain state and local taxes, which have been recorded in the financial statements.
Accounting for Uncertain Tax Positions
The Company adheres to the accounting standards regarding “Accounting for Uncertain Tax Positions.” This accounting standard provides detailed guidance for financial statement recognition, measurement and disclosure of uncertain tax positions. It requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will not be substantiated under examination. The Company files income tax returns in the United States and various state and local jurisdictions. The Company had no uncertain tax positions as of December 31, 2023.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates used in preparing these financial statements include depreciation expense and estimated cost to complete, which have a direct effect on gross profit.
Subsequent Events
The Company has evaluated subsequent events through March 26, 2024, which is the date the financial statements were available to be issued.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
8 Note 2 - Contract Receivables
Contract receivables consist of the following at December 31, 2023:
Completed contracts $ 599,152
Contracts in progress 631,468
1,230,620
Less allowance for credit losses (5,000)
$ 1,225,620
At January 1, 2023, the contract receivable balance for completed contracts and contracts in progress, net of allowance for credit losses of $5,000, was $1,012,445.
Note 3 - Contract Assets and Contract Liabilities
Costs, estimated earnings and billings to date on contracts in progress are as follows at December 31, 2023:
Costs incurred on contracts in progress $ 477,622
Estimated earnings 170,793
648,415
Less billings to date (733,990)
$ (85,575)
Included in the accompanying balance sheet under contract assets and contract liabilities:
Costs and estimated earnings in excess of billings on
contracts in progress (underbillings) $ 21,754
Billings in excess of costs and estimated earnings on
contracts in progress (overbillings) (107,329)
$ (85,575)
Contract assets and contract liabilities are presented as follows as of December 31, 2023:
Contract Assets:
Costs and estimated earnings in excess of billings on
contracts in progress (underbillings) $ 21,754
Contract retention 5,754
Less contract retention reclassified from contract liabilities (5,754) $ 21,754
Contract Liabilities:
Billings in excess of costs and estimated earnings on
contracts in progress (overbillings) $ 107,329
Less contract retention reclassified to contract assets (5,754) $ 101,575
At January 1, 2023, the balance of contract assets was $22,364 and the balance of contract liabilities was $101,632.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
9 Note 4 - Property and Equipment
Property and equipment consists of the following at December 31, 2023:
Useful Lives
Vehicles 5 years $ 2,611,151
Leasehold improvements 15 - 39 years 230,767
Computers and software 5 years 148,490
Machinery and equipment 5 years 90,468
Furniture and fixtures 5 years 58,262
3,139,138
Less accumulated depreciation (2,395,417)
$ 743,721
Note 5 - Long-Term Debt
Long-term debt consists of the following at December 31, 2023:
$ 439,347
Less current portion of long-term debt (93,520)
$ 345,827
Notes payable to various financial institutions, secured by vehicles, due in aggregate monthly payments of $9,642, including interest ranging from 0.90% to 7.99%, maturing through October 2029.
Following is a summary of future principal payments at December 31, 2023:
Year Ending
December 31,
2024 $ 93,520
2025 97,807
2026 103,209
2027 87,337
2028 28,891
Thereafter 28,583
$ 439,347
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
10 Note 6 - Economic Inquiry Disaster Loan Program
The Economic Inquiry Disaster Loan Program (EIDL) consists of the following at December 31, 2023:
$ 2,000,000
Less current portion of EIDL (23,045)
$ 1,976,955
Note payable totaling $500,000 granted under the EIDL program approvedby the Small Business Administration (SBA). In 2022, the Company received additional EIDL proceeds of $1,500,000.
The loan terms require certain use of loan proceeds. Advances accrue interest at 3.75% per annum and monthly principal and interest payments of $10,061 beginning from July 1, 2024. All remaining unpaid principal and interest is due and payable by August 31, 2050. The loan is secured by substantially all the assets of the Company and guaranteed by the Company's stockholder.
Following is a summary of future principal payments:
Year Ending
December 31,
2024 $ 23,045
2025 47,405
2026 49,214
2027 51,092
2028 53,041
Thereafter 1,776,203
$ 2,000,000
Note 7 - Leasing Arrangements
The Company leases office and shop space from a related party through common ownership under a long-term operating lease agreement expiring in June 2025. Base monthly payments were $8,600 as of December 31, 2023.
Lease expense under related party operating leases was $111,000 for the year ended December 31, 2023. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized for these leases on a straight-line basis over the lease term. The lease agreements do not contain any material residual value guarantees.
The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how the Company determines the discount rate, the lease term, and the lease payments.
When the discount rate implicit in a lease is not readily determinable, the Company calculates the lease liability using the risk-free rate.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
11 Note 7 - Leasing Arrangements, continued
The following summarizes the operating right-of-use asset as of December 31, 2023:
Operating lease right-of-use asset $ 354,862
Accumulated amortization (201,196)
$ 153,666
The amounts contractually due on operating lease liability were as follows at December 31, 2023:
Year Ending
December 31,
2024 $ 103,200
2025 51,600
Total lease payments 154,800
Less interest (1,134)
Present value of lease liability $ 153,666
The following summarizes the line items in the income statement which include the components of lease expense for the year ended December 31, 2023:
Operating lease expense
Operating lease costs, included in indirect contract costs $ 51,600 Operating lease costs, included in operating expenses 51,600 Short-term lease costs, included in contract costs 3,900 Short term-lease costs, included in operating expenses 3,900 Total lease cost $ 111,000
Supplemental balance sheet information related to leases as of December 31, 2023, was as follows:
Weighted average remaining lease term - Operating lease 1.5 Weighted average discount rate - Operating lease 1.04%
Related party lease include the following information at December 31, 2023:
Operating lease right-of-use asset $ 153,666
Operating lease liability $ 153,666
Operating lease expense $ 111,000
Operating cash flows from operating lease $ 111,000
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
12 Note 8 - Employee Benefit Plan
Profit Sharing 401(k) Plan
The Company sponsors a Profit Sharing 401(k) plan covering all non-union employees who satisfy the eligibility requirements. Employees may contribute up to the annual permissible dollar limit in effect for the plan year, subject to certain federal income tax limitations. The Company may make a matching contribution based on the participant’s salary deferrals with certain limitations and may make an additional discretionary profit-sharing contribution.
Employee contributions are 100% vested and employer contributions vest according to a vesting schedule. The Company made $225,396 in profit-sharing contributions and no matching contributions for the year ended December 31, 2023.
Note 9 - Related Party Transactions
The Company has made an election, available to private companies, related to the reporting of related parties that are under common control. Under this election, if specific criteria are met, the Company is not required to consolidate its commonly controlled related parties. The Company believes it has met the requirements and is not consolidating its commonly controlled related parties.
Note Receivable - Stockholder
The Company has a note receivable due from its sole stockholder. The note is unsecured and bears interest at the applicable federal rate of 4.71%. The balance outstanding on the note was $476,437 at December 31, 2023. Unpaid principal and accrued interest are due on demand. The Company does not expect to collect the outstanding balance within one year, therefore, the balance has been classified as long-term. Interest income related to the note was $15,043 for the year ended December 31, 2023.
Leasing Arrangements
Information about related party leasing activity is included in Note 7.
Note 10 - Concentration of Credit Risk
Cash
The Company maintains its cash in bank deposit accounts that are insured by the Federal Deposit Insurance Corporation (FDIC) up to a limit of $250,000 per depositor. The Company has not experienced any losses in its bank deposit accounts and believes it is not exposed to any significant credit risk on cash.
Major Customers
Contract receivables result from performance under contracts with various customers. A single customer represented 36% of company’s contract receivables or retention for the year ended December 31, 2023. No single customer represented more than 20% of total revenue for the year ended December 31, 2023. The Company’s credit risk related to contract receivables is minimized by the Company’s rights under lien laws on construction contracts subject to those laws.
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F.M. THOMAS AIR CONDITIONING, INC.
Notes to Financial Statements
Year Ended December 31, 2023
See Independent Accountant’s Review Report
13 Note 11 - Backlog
Backlog represents the amount of revenue the Company expects to realize from work to be performed on contracts in progress at year-end, letters of intent, and contractual agreements on which work has not begun.
The following schedule shows a reconciliation of backlog representing signed contracts, in existence at December 31, 2023:
Balance, January 1, 2023 $ 2,241,105
New contracts and contract adjustments 4,286,131
6,527,236
Less contract revenue earned during the year, less service revenue of $2,333,286 (4,880,353) Balance, December 31, 2023 $ 1,646,883
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Balance Sheet
As of 12/31/24
FM Thomas Air Conditioning05/27/2025 11:30:58 AM Page 1 of 2 Assets
Current Assets
100 - Petty Cash 1,300.00
101 - Pacific Premier Bank - General 80,611.11
103 - Pacific Premier Bank - EIDL 203,047.68
104 - Pacific Premier Bank - Payroll 39,738.60
110 - Accrued Interest 7,517.00
111 - Accounts Receivable 994,340.92
114 - Accts Receivable- Other 28,201.70
116 - Accts Receiv- Retentions 27,662.70
119 - Allowance for bad debt (5,000.00)
125 - Inventory 149,573.19
149 - Costs in Excess of Billings 245,365.82
150 - Ret Rcvble reclas to Contract (3,247.00)
154 - Prepaid Insurance 117,120.04
159 - Prepaid Other (0.21)
266 - Ret Recvble reclas fr Contract 3,247.00
Total Current Assets 1,889,478.55
Fixed Assets
167 - Furniture Fixtures 58,262.02
171 - Shop Equipment 90,468.00
173 - Autos Trucks 2,616,204.95
174 - Accum Depr- Autos Trucks 47,652.00
177 - Computer Equipment 148,490.00
178 - Accum Depr- All (2,596,284.90)
180 - Leasehold Improvements 230,766.78
Total Fixed Assets 595,558.85
Other Assets
194 - Other Assets 397,510.89
195 - Deposits 3,710.45
197 - ROU Asset - Operating Lease 354,862.00
198 - Amortization - Operating Lease (100,075.00)
Total Other Assets 656,008.34
Total Assets 3,141,045.74
Liabilities
Current Liabilities
201 - Salaries & Wages Payable 13,282.00
203 - Vacation Pay Payable 6,475.36
212 - Accts Payable- Trade 243,752.58
230 - 401K Payable 59.68
231 - Medical Insurance Payable 110,010.39
232 - PW Wage Benefits Payable 56,362.58
240 - Sales Tax Payable 3,240.19
245 - Current Portion LTD 138,529.00
250 - Payroll Tax Pay - FIT (9,500.24)
251 - Payroll Tax Pay - FICA 5,182.24
252 - Payroll Tax Pay - FUTA 560.24
76 217
Balance Sheet
As of 12/31/24
FM Thomas Air Conditioning05/27/2025 11:30:58 AM Page 2 of 2 253 - Payroll Tax Pay - SIT 8,639.21
254 - Payroll Tax Pay - SDI 615.03
255 - Payroll Tax Pay - SUI (6,405.63)
262 - Garnishment-Oscar 1,178.02
263 - Garnishment-Corey 390.00
270 - Billings in Excess of Cost 127,604.90
272 - Warranty Reserve 499.91
274 - Deferred Revenue 19,730.00
282 - Operating Lease Liability - LT 153,666.00
283 - Operating Lease Liability - ST 101,121.00
Total Current Liabilities 974,992.46
Long-Term Liabilities
290 - Note Payable Shareholders (143,882.83)
293 - MB Finance Auto Loan 174,106.56
294 - PPP stimulus loan 1,618.61
295 - Notes Payable (83,579.55)
296 - EIDL (SBA) Loan 1,839,015.00
299 - A/P Suspense 2,320.98
Total Long-Term Liabilities 1,789,598.77
Total Liabilities 2,764,591.23
Capital
310 - Capital Stock 10,000.00
312 - Paid In Capital 250,000.00
320 - Retained Earnings (124,548.75)
Net Profit (Loss) 241,003.26
Total Capital 376,454.51
Total Liabilities & Capital 3,141,045.74
77 218
Income Statement
01/01/24 To 12/31/24
Current Year Prior Year
Current Period % YTD % Current Period % YTD %
FM Thomas Air Conditioning05/27/2025 11:33:00 AM Page 1 of 2 Income
400 - Contract Job Sales 4,816,363.18 59.2 4,816,363.18 59.2 4,870,191.46 67.6 4,870,191.46 67.6 420 - Discounts Allowed - A/R (25.73) 0.0 (25.73) 0.0 (62.51) 0.0 (62.51) 0.0 440 - WIP Adjustment to Jobs 217,005.08 2.7 217,005.08 2.7 (3,369.81) -0.1 (3,369.81) -0.1 450 - Repair Service Sales 2,256,158.05 27.7 2,256,158.05 27.7 1,719,479.69 23.9 1,719,479.69 23.9 455 - Service Agreement Sales 850,726.14 10.5 850,726.14 10.5 613,868.54 8.5 613,868.54 8.5 Total Income 8,140,226.72 100.0 8,140,226.72 100.0 7,200,107.37 100.0 7,200,107.37 100.0 Direct Job Expenses
541 - Cost of Contracts- Labor 1,650,940.26 20.3 1,650,940.26 20.3 1,686,300.03 23.4 1,686,300.03 23.4 542 - Cost of Contracts- Mat'l 1,543,898.43 19.0 1,543,898.43 19.0 1,501,160.17 20.9 1,501,160.17 20.9 543 - Cost of Contracts- Subco 467,164.38 5.7 467,164.38 5.7 522,070.63 7.3 522,070.63 7.3 545 - Cost of Contracts- Other 199,240.41 2.5 199,240.41 2.5 81,279.05 1.1 81,279.05 1.1 551 - Service Cost- Labor 1,285,498.40 15.8 1,285,498.40 15.8 1,271,871.71 17.7 1,271,871.71 17.7 552 - Service Cost- Material 256,364.40 3.2 256,364.40 3.2 232,779.05 3.2 232,779.05 3.2 553 - Service Cost- Subcon 0.00 0.0 0.00 0.0 605.00 0.0 605.00 0.0 555 - Service Cost- Other 8,612.08 0.1 8,612.08 0.1 24,998.68 0.4 24,998.68 0.4 556 - PM materials - Not taxed 97,092.01 1.2 97,092.01 1.2 81,842.66 1.1 81,842.66 1.1 Total Direct Job Expenses 5,508,810.37 67.7 5,508,810.37 67.7 5,402,906.98 75.0 5,402,906.98 75.0 Gross Profit 2,631,416.35 32.3 2,631,416.35 32.3 1,797,200.39 25.0 1,797,200.39 25.0 Indirect Expenses
601 - Vacation/Holiday/Personal Time 142,884.47 1.8 142,884.47 1.8 123,078.40 1.7 123,078.40 1.7 603 - Payroll Tax Expense 137,637.67 1.7 137,637.67 1.7 133,993.68 1.9 133,993.68 1.9 604 - Insurance- Workers' Comp 61,739.63 0.8 61,739.63 0.8 59,544.10 0.8 59,544.10 0.8 606 - PW Benefits (3,598.26) -0.0 (3,598.26) -0.0 (4,170.61) -0.1 (4,170.61) -0.1 615 - Insurance - Medical 241,392.83 3.0 241,392.83 3.0 198,271.74 2.8 198,271.74 2.8 620 - Small Tools 14,974.70 0.2 14,974.70 0.2 41,827.31 0.6 41,827.31 0.6 621 - Uniforms 34,777.28 0.4 34,777.28 0.4 30,822.74 0.4 30,822.74 0.4 622 - Service Supplies 541.31 0.0 541.31 0.0 81,608.39 1.1 81,608.39 1.1 623 - Shipping Costs 0.00 0.0 0.00 0.0 154.45 0.0 154.45 0.0 624 - Plans and blueprints 2,546.29 0.0 2,546.29 0.0 3,061.40 0.0 3,061.40 0.0 643 - Fleet Maintenance Costs 91,881.20 1.1 91,881.20 1.1 95,674.03 1.3 95,674.03 1.3 657 - Less: Admin Vehicle Maint. 830.21 0.0 830.21 0.0 705.54 0.0 705.54 0.0 660 - Gas & Oil 152,288.33 1.9 152,288.33 1.9 152,489.56 2.1 152,489.56 2.1 680 - Depreciation- Indirect 120,000.00 1.5 120,000.00 1.5 120,000.00 1.7 120,000.00 1.7 690 - Shop Rent 50,000.00 0.6 50,000.00 0.6 55,500.00 0.8 55,500.00 0.8 696 - Indir Labor Cost Applied (1,047,895.66) -12.9 (1,047,895.66) -12.9 (1,092,560.73) -15.2 (1,092,560.73) -15.2 Total Indirect Expenses 0.00 0.0 0.00 0.0 0.00 0.0 0.00 0.0 G & A Expenses
700 - Salaries - Sales 367,610.35 4.5 367,610.35 4.5 254,294.09 3.5 254,294.09 3.5 701 - Salaries & Wages-Officer 153,309.92 1.9 153,309.92 1.9 38,401.67 0.5 38,401.67 0.5 702 - Salaries & Wages- Other 694,977.54 8.5 694,977.54 8.5 677,702.50 9.4 677,702.50 9.4 703 - Payroll Tax Expense 99,897.51 1.2 99,897.51 1.2 77,692.11 1.1 77,692.11 1.1 704 - Insurance- Workers' Comp 4,053.60 0.1 4,053.60 0.1 4,139.29 0.1 4,139.29 0.1 706 - Employee Benefits 72,948.45 0.9 72,948.45 0.9 56,777.97 0.8 56,777.97 0.8 78 219
Income Statement
01/01/24 To 12/31/24
Current Year Prior Year
Current Period % YTD % Current Period % YTD %
FM Thomas Air Conditioning05/27/2025 11:33:00 AM Page 2 of 2 708 - Life Insurance 4,809.18 0.1 4,809.18 0.1 6,412.24 0.1 6,412.24 0.1 709 - Insurance Medical 183,598.87 2.3 183,598.87 2.3 111,202.62 1.5 111,202.62 1.5 710 - Insurance-Gen Liability 185,314.00 2.3 185,314.00 2.3 151,532.75 2.1 151,532.75 2.1 712 - Dues and Subscriptions 14,184.54 0.2 14,184.54 0.2 11,262.03 0.2 11,262.03 0.2 720 - Office Supplies 29,284.43 0.4 29,284.43 0.4 27,887.35 0.4 27,887.35 0.4 725 - Office Equipment 6,865.65 0.1 6,865.65 0.1 5,682.12 0.1 5,682.12 0.1 730 - Telephone 31,660.33 0.4 31,660.33 0.4 33,204.84 0.5 33,204.84 0.5 732 - Utilities 17,620.08 0.2 17,620.08 0.2 17,811.30 0.3 17,811.30 0.3 740 - Rent 50,000.00 0.6 50,000.00 0.6 55,500.00 0.8 55,500.00 0.8 743 - Legal and Accounting 137,159.00 1.7 137,159.00 1.7 113,151.71 1.6 113,151.71 1.6 749 - Entertainment 1,685.31 0.0 1,685.31 0.0 0.00 0.0 0.00 0.0 750 - Business Promotion 14,457.81 0.2 14,457.81 0.2 19,641.08 0.3 19,641.08 0.3 754 - Professional Development 3,978.17 0.1 3,978.17 0.1 4,420.15 0.1 4,420.15 0.1 758 - Sales Dept Promotions 50,942.68 0.6 50,942.68 0.6 54,985.18 0.8 54,985.18 0.8 760 - Repair & Maintain- Autos 647.85 0.0 647.85 0.0 2,975.52 0.0 2,975.52 0.0 764 - Rep & Main- Building 104,087.94 1.3 104,087.94 1.3 54,425.21 0.8 54,425.21 0.8 766 - Gas and Oil 24,429.93 0.3 24,429.93 0.3 24,092.89 0.3 24,092.89 0.3 772 - Outside Services 9,489.54 0.1 9,489.54 0.1 210.00 0.0 210.00 0.0 780 - Taxes and Licenses 11,844.37 0.2 11,844.37 0.2 5,201.77 0.1 5,201.77 0.1 782 - Bank Charges 28,677.80 0.4 28,677.80 0.4 24,618.87 0.3 24,618.87 0.3 783 - Computer Maintenance 50,702.22 0.6 50,702.22 0.6 50,743.74 0.7 50,743.74 0.7 786 - Bad Debt 0.00 0.0 0.00 0.0 15,867.00 0.2 15,867.00 0.2 788 - Interest 5,421.11 0.1 5,421.11 0.1 6,735.43 0.1 6,735.43 0.1 790 - Depreciation 42,000.00 0.5 42,000.00 0.5 33,000.00 0.5 33,000.00 0.5 982 - State Income Taxes 800.00 0.0 800.00 0.0 1,804.00 0.0 1,804.00 0.0 Total G & A Expenses 2,402,458.18 29.5 2,402,458.18 29.5 1,941,375.43 27.0 1,941,375.43 27.0 Income from Operations 228,958.17 2.8 228,958.17 2.8 (144,175.04) -2.0 (144,175.04) -2.0 Other Income (Expenses)
800 - Interest Income 12,045.09 0.2 12,045.09 0.2 12,452.02 0.2 12,452.02 0.2 810 - Gain/Loss-Sale Fix Asset 0.00 0.0 0.00 0.0 (12,512.00) -0.2 (12,512.00) -0.2 820 - Other Income 0.00 0.0 0.00 0.0 28,266.47 0.4 28,266.47 0.4 Total Other Income (Expenses) 12,045.09 0.2 12,045.09 0.2 28,206.49 0.4 28,206.49 0.4 Net Profit (Loss) 241,003.26 3.0 241,003.26 3.0 (115,968.55) -1.6 (115,968.55) -1.6 79 220
EXHIBIT C
FEE SCHEDULE
221
222
CONTRACTOR CUSTOMER
Signature (Sales Rep.)
Michael Feyka, Vice President May 26, 2025
Signature (Authorized Rep.)
Print Name & Title Date Print Name & Title Date
PREVENTATIVE MAINTENANCE PROGRAM
The benefits of using F.M. Thomas Air Conditioning include:
• Longevity in the commercial HVAC industry – since 1974. • Services provided 24/7
• Continuing education for technicians
• Use of quality parts and materials
• Efficiency: lowers utility costs, waste and administrative issues • On-site project management and support services
• Warranty for 1 year parts and Labor
• Extended life of equipment
Bi-Monthly Maintenance plan (June, September, December, March)
Package Units / Heat Pumps
- Replace air filters BI-ANNUALLY
- Check: refrigerant charge, belts, sheaves, coils, drains, drain pans, motor operation, (Annual) - Replace belts (Annual)
- Refrigerant leak check (Annual)
o Provide a quote for repairs if needed.
- Check: compressor oil, crankcase heater, coupling alignment, vibration eliminators, auxiliary equipment, operating and safety controls, refrigerant charge, oil level and pressure. - Inspect: leak potential
- Lubricate fan and motor bearings per manufacturer recommendation. Lubricate linkages and dampers. - Inspect: filters, unit panels, roof curb flashing, electrical connections, relays, contactors, operational controls, temperate, equipment safety.
- Replace air Filters (Bi-Monthly)
- Check blower housing and clean as needed.
- Check operation in heating and cooling modes.
- Check all system pressures.
- Check voltage supply.
- Inspect and clean condenser coil as needed. (Annual) o Includes blowing out and/or exterior water. If the coil is plugged through too deeply, we will provide customer a quote to fix.
- Inspect evaporative coil (Annual)
o If coil is excessively sweating or has poor air flow, a quote will be provided to repair or replace - Verify operation of Reversing valve
- Verify integrity of mechanical and electrical connections 223
- Verify operation of thermostat.
- Blow out condensate traps with CO2 (Annual)
- Wash out / clean and Disinfect condensate pan (Annual)
Exhaust Fans
- Inspect: belts, starters, disconnects and contacts.
- Inspect: motors and bearings.
- Replace belts (annually)
Central Fan Systems – Air Handlers (QUARTERLY)
- Check: heating and cooling coils, strainers, drains and drain pans, fan operation, air intake screen, motor mounts and vibration pads, motor operation, nuts, bolts, belts and sheaves, fan assembly. - Inspect: filters, electrical connections, contactors. - Lubricate: motor and fan bearings, dampers and linkage. - Replace air filters QUARTERLY
- Replace belts (Annual)
- Blow out condensate traps (Annual)
- Wash out / clean condensate pans (Annual)
- Visually inspect exposed ductwork and external piping for insulation and vapor barrier for integrity. - Check fan belt tension. Check for belt wear and replace if necessary to ensure proper operation. (Annually) Check sheaves for evidence of improper alignment or evidence of wear - Check for proper operation of cooling or heating coil for damage or evidence of leaks. Clean as required. - Check air filter fit and housing seal integrity.
- Check the control box for dirt, debris and/or loose terminations. Clean and tighten as needed. - Check motor contactor for pitting or other signs of damage. - Check fan blades and fan housing. Clean as needed to ensure proper operation. - Check for proper damper operation.
- Visually inspect areas of moisture accumulation for biological growth. - Check condensate pump. (if applicable)
Water Source Heat pumps
- Replace filters QUARTERLY at each service.
- Check fan and motor bearings per manufacturer recommendation. Check linkages and dampers. - Inspect: filters, unit panels, roof curb flashing, electrical connections, relays, contactors, operational controls, temperate, equipment safety.
- Check belts – Replace (annually)
- Wash coils (annually)
- Check temperature splits.
- Check coils for water leaks. Quote repairs as needed. - Check thermostats for proper operation. Calibrate annually. - Check amperage draws on compressors and fan motors.
- Check drain pans / drain lines for blockages / leaks. Blow out drain lines with compressed air. - Check strainers and P-trap; cleanout QUARTERLY as needed. - Exercise ball valves (annually)
- Check pneumatic / Electric controls and tighten wire nuts / terminations as needed. - Check UV lamp (if applicable.) quote replacement if needed. - Check air filter housing for integrity.
- Check fan blades and fan housings. Replace fasteners to ensure integrity and fit/function of equipment. - Check controls panels. Tighten loose connections and blow out panel with compressed air (annually) 224
- Check drive alignment, wear, seating, and operation.
- Check motor contactors for pitting or other signs of damage. - Check refrigerant system for refrigerant leaks (annually). - Check for evidence of buildup or fouling of coils and drain pans. Provide quotes as needed for extensive cleaning.
- Provide routine cleaning and disinfecting of drain pans (Annually) - Check coil fins. Brush fins with comb if possible. Report damaged coils as needed. - Check pressure drop and GPM through coils (annually). - Check insulation for sweating or rust. Provide report of findings with quote - Check condensate pump for proper operation.
- Check: compressor oil, crankcase heater, coupling alignment, vibration eliminators, auxiliary equipment, operating and safety controls, refrigerant charge, oil level and pressure. - Check amperage across crankcase heaters, compressors, and fan motors
*** See additional Scope of work as noted in in Appendix A
EQUIPMENT LIST
A/C Unit MODEL # DESCRIPTION MANUFACTURER SIZE See Exhibit A
Notes: Filter sizes will be confirmed on first service. Filters shall be stored on site.
Unit model numbers and sizes will be verified prior to first visit.
NOTE: THE GENERAL CONDITIONS ARE A PART OF THIS AGREEMENT
F.M. Thomas Air Conditioning, Inc. herein FMT
A. ALL SERVICES OUTLINED IN THIS PROPOSAL WILL BE PERFORMED DURING REGULAR WORKING HOURS, 8:00 A.M. TO 4:30 P.M., MONDAY THRU FRIDAY. IF THE CUSTOMER REQUIRES OVERTIME, FMT WILL BE REIMBURSED FOR THE PREMIUM
PORTION OF WAGES PAID (INCLUDING PAYROLL TAXES AND INSURANCE), PLUS A REASONABLE ALLOWANCE FOR LOSS OF PRODUCTIVITY CAUSED BY THE OVERTIME.
B. ADDITIONAL WORK: F MT AGREES TO SUPPLY THE MATERIAL, LABOR, TRUCK CHARGES, AS SPECIFICALLY LISTED HEREIN. IF ADDITIONAL WORK IS REQUIRED BY THE CUSTOMER OR ADDITIONAL WORK IS REQUIRED TO MEET EQUIPMENT MANUFACTURER’S
SPECIFICATION(S) OR CUSTOMER REQUIRED DESIGN AND/OR PREFERENCE CRITERIA, PREVENT DAMAGE TO THE STRUCTURE,
PERSON(S) OR CONTENTS, INCLUDING THE WORK PROVIDED BY THIS PROPOSAL AND CONTRACT, SATISFY GOVERNMENTAL HEALTH, SAFETY AND BUILDING CODES, RULES AND LAWS OF A.Q.M.D. AND/OR EPA, OR OTHER GOVERNMENTAL AUTHORITY(S) SUCH WORK WILL BE AT ADDITIONAL COST.
C. WARRANTY: 1) F.M. THOMAS AIR CONDITIONING, INC., AGREES TO WARRANT THE LABOR FOR A PERIOD OF (1) YEAR AND
MATERIALS FOR A PERIOD OF ONE YEAR FROM DATE OF LAST WORKORDER, AND THAT ALL PARTS REPLACED, MATERIALS FURNISHED, AND WORK ACCOMPLISHED, IS FREE FROM DEFECT IN MATERIAL AND WORKMANSHIP. 2) REFRIGERANT
REPLACEMENT WARRANTY INCLUDING LABOR INVOLVING NEW EQUIPMENT SOLD, INSTALLED AND MAINTAINED BY FMT IS ONE YEAR. 3) REFRIGERANT REPLACEMENT WARRANTY INCLUDING LABOR INVOLVING SERVICE /REPAIR /MODIFICATIONS /RETROFIT AND MAINTENANCE WORK IS LIMITED TO 30 DAYS FROM LAST WORKORDER DATE.
225
D. ACCEPTANCE: THIS PROPOSAL IS SUBJECT TO ACCEPTANCE WITHIN 30 DAYS FROM QUOTATION OF ABOVE LISTED WORK.
E. TERMS: TIME IS OF THE ESSENCE, PAYMENT IN FULL, 10 DAYS FROM INVOICE DATE OF ABOVE LISTED WORK.
F. PAYMENTS: FOR WORK COMMENCED AND COMPLETED IN ANY ONE CALENDAR MONTH, CUSTOMER WILL PAY THE CONTRACT PRICE IN FULL IN CASH UPON COMPLETION OF THE WORK. OTHERWISE, CUSTOMER WILL PAY THE PRICE IN CASH IN PROGRESS PAYMENTS FOR WORK COMPLETED THRU THE END OF EACH MONTH.
G. ATTORNEY’S FEES: IF EITHER PARTY HERETO COMMENCES AN ACTION AGAINST THE OTHER ARISING OUT OF, OR IN CONNECTION
WITH THIS PROPOSAL AND CONTRACT, THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER FROM THE LOSING PARTY, REASONABLE ATTORNEY’S FEES AND COSTS OF SUIT. THE VENUE FOR LEGAL ACTION(S) SHALL BE THE NORTH ORANGE COUNTY MUNICIPAL/SUPERIOR COURT, OR THE FEDERAL DISTRICT COURT OF LOS ANGELES.
H. INSURANCE: FMT WILL SUPPLY WORKER’S COMPENSATION INSURANCE IN THE FORMS AND AMOUNT REQUIRED BY LAW. IN
ADDITION, FMT SHALL SUPPLY THE LIABILITY INSURANCE DESCRIBED IN A CERTIFICATE OF INSURANCE WHICH IS ATTACHED TO THIS PROPOSAL, OR WHICH IN THE ABSENCE OF SUCH ATTACHMENT WILL BE SUPPLIED THE CUSTOMER ON REQUEST.
I. RIGHT TO STOP WORK: FMT SHALL HAVE THE RIGHT TO STOP WORK IF PAYMENTS ARE NOT MADE WHEN DUE UNDER THIS CONTRACT AND MAY KEEP THE JOB IDLE UNTIL ALL PAYMENTS HAVE BEEN RECEIVED.
J. INDEMNITY: FMT WILL INDEMNITY AND HOLD HARMLESS CUSTOMER FROM LOSS OR DAMAGE TO PERSONS OR PROPERTY ARISING DIRECTLY FROM FMT PERFORMANCE OF THE WORK AND CAUSED BY ANY NEGLIGENT ACTS OF FMT OR IT’S EMPLOYEES.
A. CUSTOMER TO MAKE AVAILABLE TO CONTRACTOR’S PERSONNEL PERTINENT MATERIAL SAFETY DATA SHEETS (MSDS) AS SPECIFIED BY OSHA’S HAZARD COMMUNICATIONS STANDARD REGULATIONS.
B. HAZARDOUS SUBSTANCES: FMT’S IMPLIED OBLIGATION UNDER THIS PROPOSAL AND AGREEMENT DOES NOT INCLUDE
IDENTIFICATION OF, REMOVAL/ABATEMENT/DISPOSAL/STUDIES OR TESTS OF ANY ASBESTOS PRODUCT(S) OR OTHER HAZARDOUS SUBSTANCE(S). UPON THE EVENT OR ENCOUNTER OF ANY SAID PRODUCT(S) AND/OR SUBSTANCE(S). FMT RESERVES THE RIGHT TO SUSPEND IT’S WORK UNTIL SAID SUBSTANCE(S) OR PRODUCT(S) ARE REMOVED.
C. DIFFERING SITE CONDITIONS: IF FMT ENCOUNTERS SUBSURFACE OR LATENT PHYSICAL CONDITIONS AT THE SITE, DIFFERING
MATERIALLY FROM THOSE INDICATED IN THE BID DOCUMENTS, OR FOUND DURING THE SITE JOB WALK, OR UNKNOWN PHYSICAL
CONDITIONS, OF AN UNUSUAL NATURE, DIFFERING MATERIALLY FROM THE CONDITION(S) RELIED UPON IN THIS PROPOSAL AND
CONTRACT, FMT WILL PROMPTLY NOTIFY THE CUSTOMER IF SUCH CONDITIONS CAUSE AN INCREASE OR DECREASE IN THE COST OF,
OR THE TIME REQUIRED FOR PERFORMANCE OF ANY PART OF THE WORK, AN EQUITABLE ADJUSTMENT IN PRICE SHALL BE MADE AND THE CONTRACT TIME MODIFIED ACCORDINGLY.
D. FORCE MAJEURE: FMT SHALL NOT BE DEEMED IN DEFAULT NOR BE LIABLE FOR DAMAGES FOR ANY FAILURE OR DELAY IN PERFORMANCE OF IT’S WORK WHICH ARISE OUT OF CAUSE BEYOND IT’S REASONABLE CONTROL. SUCH CAUSES MAY INCLUDE, WITHOUT LIMITATION, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT EITHER IN IT’S SOVEREIGN OR
CONTRACTUAL CAPACITY, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, MATERIAL SHORTAGES, OR UNUSUALLY SEVERE WEATHER. IN THE EVENT THE WORK IS DELAYED BY SUCH CAUSES, THE TIME FOR PERFORMANCE WILL BE EXTENDED ACCORDINGLY.
E. SHOULD GOVERNMENTAL “PLAN CHECK” DEPARTMENT(S) REQUIRE ADDITIONAL WORK BEYOND THE SPECIFIED WORK DEFINED IN THIS PROPOSAL, SUCH WORK REQUIRED BY “PLAN CHECK” DEPARTMENT SHALL REQUIRE AN EQUITABLE PRICE ADJUSTMENT TO COVER FMT’S COSTS, LABOR, OVERHEAD, TIME ALLOWED AND PROFIT.
F. UNLESS SPECIFICALLY LISTED IN THIS PROPOSAL, INSTALLATION OR REPAIR OF VIEW SCREEN(S), STRUCTURAL ENGINEERING OR
WORK, PATCH, REPAIR AND PAINTING, ACCESS LADDER(S) OR ROOF HATCH(S), ROOF PATH WAYS, REPAIRS TO LAWN AND(OR) LANDSCAPE SPRINKLERS OR DAMAGE TO SIDE WALKS, CURBS AND PARKING LOTS ARE EXCLUDED.
G. THE WITHIN DESIGN IS EXCLUSIVELY OWNED BY F.M. THOMAS AIR CONDITIONING, INC. AND IS NOT INTENDED FOR PUBLICATION.
EXHIBITION HEREIN IS SOLELY FOR THE PURPOSE OF AFFECTING A SALE, OR TRANSFER, OF THE DELINEATED AIR CONDITIONING, TEMPERATURE CONTROLS AND OR REFRIGERATION INSTALLATION.
H. CONTRACTORS ARE REQUIRED BY LAW TO BE LICENSED AND REGULATED BY THE CONTRACTOR’S STATE LICENSE BOARD. ANY QUESTIONS CONCERNING A CONTRACTOR MAY BE REFERRED TO THE REGISTRAR OF THE BOARD WHOSE ADDRESS IS: CONTRACTOR’S STATE LICENSE BOARD, 9835 GEOTHE ROAD, SACRAMENTO, CALIFORNIA 95821.
I. INTEGRATION OF OLD AND NEW EQUIPMENT: BUYER RECOGNIZES THAT THE OPERATION OF THE BUILDING SYSTEMS WILL NECESSARILY DEPEND UPON NEW EQUIPMENT INSTALLED BY F.M. THOMAS, OPERATING IN CONJUNCTION WITH EXISTING EQUIPMENT PART(S). SUCH OLDER EQUIPMENT/PART(S) MAY BE IN POOR CONDITION, AND IN NEED OF REPAIR, AND/OR LACKS STATE OF THE ART TECHNOLOGY. F.M. THOMAS HAS NOT BEEN REQUESTED, NOR PAID, TO REPLACE CERTAIN EXISTING EQUIPMENT, PIPING AND SIMILAR ITEMS. SOME OF THIS EQUIPMENT MAY SUFFER FROM DEFERRED MAINTENANCE PROBLEMS. BUYER AGREES TO ACCEPT THE WORK IN ACCORDANCE WITH F.M. THOMAS’ PROPOSAL IN LIGHT OF THE FACT THAT THE BUILDING SYSTEMS WILL HAVE A MIXTURE OF OLD AND NEW EQUIPMENT AFTER F.M. THOMAS HAS COMPLETED ITS WORK.
J. FMT WILL NOT MAKE WARRANTY REPAIRS OR REPLACEMENT OF DAMAGES NECESSITATED BY REASON OF NEGLIGENCE OR MISUSE
OF EQUIPMENT OR SYSTEM COMPONENT(S) BY OTHER PERSON(S) OR PARTY(S), INCLUDING OWNERS AGENTS AND EMPLOYEES OR OWNERS SUBCONTRACTOR(S).
226
227
1 Harbor Pointe Air Conditioning & Control Systems, Inc.
Maintenance Services Agreement
Form Rev. 10-30-24
CITY OF COSTA MESA
MAINTENANCE SERVICES AGREEMENT
WITH
HARBOR POINTE AIR CONDITIONING & CONTROL SYSTEMS, INC.
THIS MAINTENANCE SERVICES AGREEMENT (“Agreement”) is made and entered into this 2
nd day of September, 2025 (“Effective Date”), by and between the CITY OF COSTA MESA, a municipal corporation (“City”), and HARBOR POINTE AIR CONDITIONING & CONTROL SYSTEMS, INC., a California corporation. (“Contractor”).
W I T N E S S E T H :
A. City proposes to utilize the services of Contractor as an independent contractor to provide on-call HVAC mechanical automation system repairs and maintenance services of City property, as more fully described herein; and
B. Contractor represents that it has the experience and expertise to properly perform such services and holds all necessary licenses to practice and perform the services; and
C. City and Contractor desire to contract for the services and desire to set forth their rights, duties and liabilities in connection with the performance of such services; and
D. N o official or employee of City has a financial interest, within the provisions of Sections 1090-1092 of the California Government Code, in the subject matter of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONTRACTOR
1.1. Scope of Services. Contractor shall provide the services described in the City ’s Request for Proposal, RFP No. 25-22 (“RFP”), attached hereto as Exhibit “A ,” and Contractor’s response to City’s RFP (the “Proposal”) attached hereto as Exhibit “B,” both incorporated herein (the “Services”).
1.2. Prevailing Wage Requirements.
(a) Prevailing Wage Laws. Contractor is aware of the requirements of Chapter 1 (beginning at Section 1720, et seq.) of Part 7 of Division 2 of the California Labor Code, as well as Title 8, Section 16000, et seq. of the California Code of Regulations (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “public works” and “maintenance” projects. This project is a “maintenance” project and requires compliance with the Prevailing Wage Laws. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.
228
2 Harbor Pointe Air Conditioning & Control Systems, Inc.
Maintenance Services Agreement
Form Rev. 10-30-24
(b) Payment of Prevailing Wages. Contractor shall pay the prevailing wage rates for all work performed under this Agreement. When any craft or classification is omitted from the general prevailing wage determinations, Contractor shall pay the wage rate of the craft or classification most closely related to the omitted classification. A copy of the general prevailing wage rate determination is on file in the Office of the City Clerk and is incorporated into this Agreement as if fully set forth herein. Contractor shall post a copy of such wage rates at all times at the project site(s).
(c) Legal Working Day. In accordance with the provisions of Labor Code Section 1810, et seq., eight (8) hours is the legal working day. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of the Labor Code regarding eight (8)-hour work day and 40-hour work week requirements, and overtime, Saturday, Sunday, and holiday work. Work performed by Contractor’s or any subcontractor’s employees in excess of eight (8) hours per day, and 40 hours during any one week, must include compensation for all hours worked in excess of eight (8) hours per day, or 40 hours during any one week, at not less than one and one-half times the basic rate of pay. Contractor shall forfeit as a penalty to City Twenty -Five Dollars ($25.00), or any greater penalty set forth in the Labor Code, for each worker employed in the execution of the work by Contractor or by any subcontractor(s) of Contractor, for each calendar day during which such worker is required or permitted to the work more than eight (8) hours in one calendar day or more than 40 hours in any one calendar week in violation of the Labor Code.
(d) Apprentices. Contractor shall comply with the provisions of Labor Code Section 1777.5 concerning the employment of apprentices on public works projects. Contractor shall be responsible for ensuring compliance by its subcontractors with Labor Code Section 1777.5.
(e) Payroll Records. Pursuant to Labor Code Section 1776, Contractor and any subcontractor(s) shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by Contractor or any subcontractor in connection with this Agreement. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following: (1) The information contained in the payroll record is true and correct; and (2) The employer has complied with the requirements of Sections 1771, 1881, and 1815 of the Labor Code for any work performed by his or her employees on this project. The payroll records shall be certified and shall be available for inspection at all reasonable hours in accordance with the requirements of Labor Code Section 1776.
(f) Registration with DIR. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of Labor Code Section 1771 and Labor 229
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Code Section 1725.5 requiring registration with the DIR.
1.3. Performance to Satisfaction of City. Contractor agrees to perform all the work to the complete satisfaction of City. Evaluations of the wor k will be done by City’s Maintenance Services Manager or his or her designee. If the quality of work is not satisfactory, City in its discretion has the right to:
(a) Meet with Contractor to review the quality of the work and resolve the matters of concern;
(b) Require Contractor to repeat the work at no additional fee until it is satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Compliance with Applicable Law . Contractor warrants that it shall perform the services required by this Agreement in compliance with all applicable Federal and California employment laws, including, but not limited to, those laws related to harassment, workplace violence, discrimination, minimum hours and wages; occupational health and safety; fair employment and employment practices; workers’ compensation insurance and safety in employment; and all other Federal, State and local laws and ordinances applicable to the services required under this Agreement. Contractor shall indemnify and hold harmless City from and against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature and description including attorneys’ fees and costs, presented, brought, or recovered against City for, or on account of any liability under any of the above-mentioned laws, which may be incurred by reason of Contractor’s performance under this Agreement.
1.5. Non-Discrimination. In performing this Agreement, Contractor shall not engage in, nor permit its agents to engage in, discrimination in employment of persons because of their race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military or veteran status, except as permitted pursuant to section 12940 of the Government Code.
1.6. Non-Exclusive Agreement. Contractor acknowledges that City may enter into agreements with other contractors for services similar to the Services in this Agreement or may have its own employees perform services similar to those Services contemplated by this Agreement.
1.7. Delegation and Assignment. Contractor may not delegate or assign this Agreement, in whole or in part, to any person or entity without the prior written consent of City.
Contractor may engage a subcontractor(s) as permitted by law and may employ other personnel to perform services contemplated by this Agreement at Contractor’s sole cost and expense.
1.8. Confidentiality. Employees of Consultant in the course of their duties may have access to financial, accounting, statistical, and personnel data of private individuals and employees of City, or confidential information relating to the City’s computer and security systems and programs. Consultant covenants that all data, documents, discussion, or other information developed or received by Consultant or provided for performance of this Agreement are deemed 230
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confidential and shall not be disclosed by Consultant without written authorization by City. City shall grant such authorization if disclosure is required by law. All City data shall be returned to City upon the termination of this Agreement. Consultant’s covenant under this Section shall survive the termination of this Agreement.
2.0. COMPENSATION AND BILLING
2.1. Compensation. Contractor shall be paid in accordance with the fee schedule set forth in Exhibit C. Contractor’ s total annual compensation shall not exceed Two Hundred Thousand Dollars ($200,000.00).
2.2. Additional Services. Contractor shall not receive compensation for any services provided outside the Scope of Services set forth in this Agreement without amending this Agreement as provided herein. It is specifically understood that oral requests and/or approvals of such additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Contractor may submit invoices to the City for approval on a progress basis, but no more often than two times a month. Said invoice shall be based on the total of all Contractor’s services which have been completed to City’s sole satisfaction. City shall pay Contractor’s invoice within forty-five (45) days from the date City receives said invoice. Each invoice shall describe in detail, the S ervices performed, the date of performance, and the associated time for completion.
2.4. Records and Audits. Records of Contractor ’s S ervices shall be maintained in accordance with generally recognized accounting principles and shall be made available to City for inspection and/or audit at mutually convenient times throughout the term of this Agreement through three (3) years after its termination.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The Services shall be performed in strict compliance with Exhibits A and B. Failure to commence work in a timely manner and/or diligently pursue work to completion may be grounds for termination of this Agreement.
3.2. Excusable Delays . Neither party shall be responsible for delays or lack of performance resulting from acts beyond the reasonable control of the party or parties. Such acts shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance w ith laws or regulations, riots, acts of war, pandemics (excluding COVID -19) or any other conditions beyond the reasonable control of a party.
4.0. TERM AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a period of two (2) years, ending on September 1, 2027, unless previously terminated as provided herein or as otherwise agreed to in writing by the parties. The Agreement may be extended by three (3) additional one (1) year periods upon mutual written agreement of both parties.
4.2. Notice of Termination. City reserves and has the right and privilege of canceling, 231
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suspending or abandoning the execution of all or any part of the work contemplated by this Agreement, with or without cause, at any time, by providing written notice to Contractor . The termination of this Agreement shall be deemed effective upon receipt of the notice of termination.
In the event of such termination, Contractor shall immediately stop rendering services under this Agreement unless directed otherwise by the City.
4.3. Compensation. In the event of termination, City shall pay Contractor for reasonable costs incurred and Services satisfactorily performed up to and including the date of City’s written notice of termination. Compensation for work in progress shall be prorated based on the percentage of work completed as of the effective date of termination in accordance with the fees set forth herein.
5.0. INSURANCE
5.1. Minimum Scope and Limits of Insurance. Contractor shall obtain, maintain, and keep in full force and effect during the life of this Agreement all of the following minimum scope of insurance coverages with an insurance company admitted to do business in California, rated “A,” Class X, or better in the most recent Best’ s Key Insurance Rating Guide, and approved by City:
(a) Commercial general liability, including premises -operations, products/completed operations, broad form property damage, blanket contractual liability, independent contractors, personal injury or bodily injury with a policy limit of not less than One Million Dollars ($1,000,000.00) per occurrence. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non-owned vehicles, with a policy limit of not less than One Million Dollars ($1,000,000.00) combined single limit per accident for bodily injury and property damage.
(c) Workers’ compensation insurance as required by the State of California.
Contractor agrees to waive, and to obtain endorsements from its workers ’ compensation insurer waiving subrogation rights under its workers ’ compensation insurance policy against the City, its officers, agents, employees, and volunteers arising from work performed by Contractor for the City and to require each of its subcontractors, if any, to do likewise under their workers’ compensation insurance policies.
5.2. Endorsements. The commercial general liability insurance policy and business automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: “The City of Costa Mesa and its elected and appointed boards, officers, officials, agents, employees, and volunteers are additional insureds with respect to: liability arising out of activities performed by or on behalf of Contractor p ursuant to its contract with City; products and completed operations of Contractor; premises owned, occupied or used by 232
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Contractor; automobiles owned, leased, hired, or borrowed by Contractor.”
(b) Notice: “Said policy shall not terminate, be suspended, or voided, nor shall it be cancelled, nor the coverage or limits reduced, until thirty (30) days after written notice is given to City.”
(c) Other insurance: “ Contractor’s insurance coverage shall be primary insurance as respects the City of Costa Mesa, its officers, officials, agents, employees, and volunteers. Any other insurance maintained by the City of Costa Mesa shall be excess and not contributing with the ins urance provided by this policy.”
(d) Any failure to comply with the reporting provisions of the policies shall not affect coverage provided to the City of Costa Mesa, its officers, officials, agents, employees, and volunteers.
(e) Contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a deductible or self-insured retention to provide such coverage, the amount of such deductible or self-insured retention shall be approved in advance by City. No policy of insurance issued as to which the City is an additional insured shall contain a provision which requires that no insured except the named insured can satisfy any such deductible or self-insured retention.
5.4. Certificates of Insurance. Contractor shall provide to City certificates of insurance showing the insurance coverages and required endorsements described above, in a form and content approved by City, prior to performing any services under this Agreement.
5.5. Non-limiting. The insurance provisions contained in this Agreement shall not be construed as limiting in any way, the indemnification provisions contained in this Agreement, or the extent to which Contractor may be held responsible for payments of damages to persons or property.
5.6. Excess Coverage. To the extent that Contractor maintains any insurance coverage(s) in amounts or types which are not expressly called out in this Agreement, such additional coverage(s) shall be deemed to be required by this Agreement.
6.0. GENERAL PROVISIONS
6.1. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to any matter referenced herein and supersedes any and all other prior writings and oral negotiations. This Agreement may be modified only in writing, and signed by the parties in interest at the time of such modification. The terms of this Agreement shall prevail over any inconsistent provision in any other contract document appurtenant hereto, including exhibits to this Agreement.
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6.2. Representatives. The C ity Manager or his or her designee shall be the representative of City for purposes of this Agreement and may issue all consents, approvals, directives and agreements on behalf of the City, called for by this Agreement, except as otherwise expressly provided in this Agreement.
Contractor shall designate a representative for purposes of this Agreement who shall be authorized to issue all consents, approvals, directives and agreements on behalf of Contractor called for by this Agreement, except as otherwise expressly provided in this Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with Contractor in the performance of this Agreement.
Contractor shall designate a Project Manager who shall represent it and be its agent in all consultations with City during the term of this Agreement. Contractor or its Project Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices. Any notices, documents, correspondence or other communications concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile or mail and shall be addressed as set forth below. Such communication shall be deemed served or delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through regular United States mail.
IF TO CONTRACTOR: IF TO CITY:
Harbor Pointe Air Conditioning
720 South Richfield Road
Placentia, CA 92870
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: (657) 275-9188 Tel: (714) 754-5289
Attn: Gregory S. Perez, President/CEO Attn: Daniel Jojola
Courtesy copy to:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Attn: Finance Dept. | Purchasing
6.5. Drug-free Workplace Policy. Contractor shall provide a drug-free workplace by complying with all provisions set forth in City ’s Council Policy 100-5, attached hereto as Exhibit “D” and incorporated herein by reference. Contractor’s failure to conform to the requirements set forth in Council Policy 100-5 shall constitute a material breach of this Agreement and shall be cause for immediate termination of this Agreement by City.
6.6. Attorneys’ Fees. In the event that litigation is brought by any party in connection with this Agreement, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in the 234
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exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions, or provisions hereof.
6.7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California.
6.8. Assignment. Contractor shall not voluntarily or by operation of law assign, transfer, sublet or encumber all or any part of Contractor’s interest in this Agreement without City ’s prior written consent. Any attempted assignment, transfer, subletting or encumbrance shall be void and shall constitute a breach of this Agreement and cause for termination of this Agreement.
Regardless of City’s consent, no subletting or assignment shall release Contractor of Contractor’s obligation to perform all other obligations to be performed by Contractor hereunder for the term of this Agreement.
6.9. Indemnification and Hold Harmless. Contractor agrees to defend, indemnify, hold free and harmless the City, its elected officials, officers, agents and employees, at Contractor’s sole expense, from and against any and all claims, actions, suits or other legal proceedings brought against the City, its elected officials, officers, agents and employees arising out of the performance of the Contractor, its employees, and/or authorized subcontractors, of the work undertaken pursuant to this Agreement. The defense obligation provided for hereunder shall apply without any advance showing of negligence or wrongdoing by the Contractor , its employees, and/or authorized subcontractors, but shall be required whenever any claim, action, complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the Contractor, its employees, and/or authorized subcontractors, and/or whenever any claim, action, complaint or suit asserts liability against the City, its elected officials, officers, agents and employees based upon the work performed by the Contractor , its employees, and/or authorized subcontractors under this Agreement, whether or not the Contractor , its employees, and/or authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Contractor shall not be liable for the defense or indemnification of the City for claims, actions, complaints or suits arising out of the sole active negligence or willful misconduct of the City. This provision shall supersede and replace all other indemnity provisions contained either in the City ’s specifications or Contractor’s Proposal, which shall be of no force and effect.
6.10. Independent Contractor . Contractor is and shall be acting at all times as an independent contractor and not as an employee of City. Contractor shall have no power to incur any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Contractor or any of Contractor’s employees, except as set forth in this Agreement. Contractor shall not, at any time, or in any manner, represent that it or any of its or employees are in any manner agents or employees of City. Contractor shall secure, at its sole expense, and be responsible for any and all payment of Income Tax, Social Security, State Disability Insurance Compensation, Unemployment Compensation, and other payroll deductions for Contractor and its officers, agents, and employees, and all business licenses, if any are required, in connection with the services to be performed hereunder. Contractor shall indemnify and hold City harmless from any and all taxes, assessments, penalties, and interest asserted against City by reason of the 235
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independent contractor relationship created by this Agreement. Contractor further agrees to indemnify and hold City harmless from any failure of Contractor to comply with the applicable worker’s compensation laws. City shall have the right to offset against the amount of any fees due to Contractor under this Agreement any amount due to City from Contractor as a result of Contractor’s failure to promptly pay to City any reimbursement or indemnification arising under this paragraph.
6.11. PERS Eligibility Indemnification. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Contractor and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
6.12. Cooperation. In the event any claim or action is brought against City relating to Contractor’s performance or services rendered under this Agreement, Contractor shall render any reasonable assistance and cooperation which City might require.
6.13. Conflict of Interest. Contractor and its officers, employees, associates and subcontractors, if any, will comply with all conflict of interest statutes of the State of California applicable to Contractor’s services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section 1090.
During the term of this Agreement, Contractor and its officers, employees, associates and subcontractors shall not, without the prior written approval of the City Representative, perform work for another person or entity for whom Contractor is not currently performing work that would require Contractor or one of its officers, employees, associates or subcontractors to abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.14. Prohibited Employment. Contractor will not employ any regular employee of City while this Agreement is in effect.
6.15. Order of Precedence. In the event of an inconsistency in this Agreement and any of the attached Exhibits, the terms set forth in this Agreement shall prevail . If, and to the extent this Agreement incorporates by reference any provision of any document, such provision shall be deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and conditions of this Agreement and those of any such provision or provisions so incorporated by reference, this Agreement shall govern over the document referenced.
6.16. Costs. Each party shall bear its own costs and fees incurred in the preparation 236
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and negotiation of this Agreement and in the performance of its obligations hereunder except as expressly provided herein.
6.17. Binding Effect. This Agreement binds and benefits the parties and their respective permitted successors and assigns.
6.18. No Third Party Beneficiary Rights . This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right in, under or to this Agreement.
6.19. Headings. H eadings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.
6.20. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement and have had an adequate opportunity to review each and every provision of the Agreement and submit the same to counsel or other consultants for review and comment. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties and in accordance with its fair meaning. There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
6.21. Amendments . Only a writing executed by the parties hereto or their respective successors and assigns may amend this Agreement.
6.22. Waiver. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the party against whom enforcement of a waiver is sought. The waiver of any right or remedy in respect to any occurrence or event shall not be deemed a waiver of any right or remedy in respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
6.23. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable in any circumstance, such determination shall not affect the validity or enforceability of the remaining terms and provisions hereof or of the offending provision in any other circumstance. Notwithstanding the foregoing, if the value of this Agreement, based upon the substantial benefit of the bargain for any party , is materially impaired, which determination made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
6.24. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.
6.25. Corporate Authority . The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by doing so the parties hereto are formally bound to the provisions of this 237
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Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their respective authorized officers, as of the date first above written.
CONTRACTOR
__________________________________ Date: __________________________ Signature
Gregory S. Perez, President/CEO
CITY OF COSTA MESA
__________________________________ Date: __________________________ Cecilia Gallardo-Daly
Interim City Manager
ATTEST:
__________________________________
Brenda Green
City Clerk
APPROVED AS TO FORM:
__________________________________ Date: __________________________ Kimberly Hall Barlow
City Attorney
APPROVED AS TO INSURANCE:
__________________________________ Date: __________________________ Ruth Wang
Risk Management
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APPROVED AS TO CONTENT:
__________________________________ Date: __________________________ Daniel Jojola
Project Manager
DEPARTMENTAL APPROVAL:
__________________________________ Date: __________________________ Raja Sethuraman
Director of Public Works
APPROVED AS TO PURCHASING:
__________________________________ Date: __________________________ Carol Molina
Finance Director
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EXHIBIT B
CONTRACTOR’S PROPOSAL
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
EXHIBIT C
FEE SCHEDULE
259
HARBOR POINTE 2025 MAINTENANCE CONTRACT PRICING
LOCATION QUARTERLY PRICE ANNUAL PRICE
Balearic Center 1975 Balearic Drive 1288.75 5155.00
Communications 79 Fair Drive
1570.03 6280.13
Old Corporation Yard - 2300 Placentia Ave
1220.37 4881.46
New Corporation Yard - 2310 Placentia Ave
1299.22 5196.86
Downtown Recreation Center - 1860 Anaheim Ave
2202.40 8809.58
Mesa Verde Library - 2969 Mesa Verde Drive East
1220.91 4883.63
Donald Dungan Library - 1855 Park Ave
5262.29 21049.15
Fire Station # 1 - 2803 Royal Palm Dr
5509.35 22037.38
Fire Station # 2 - 800 Baker St
1233.10 4932.38
Fire Station # 3 - 1865 Park Ave
1505.99 6023.94
Fire Station # 4 - 2300 Placentia Ave
1246.59 4986.34
Fire Station # 5- 2450 Vanguard Way
1475.76 5903.05
Fire Station # 6 - 3350 Sakioka Drive
1545.36 6181.44
Westside Police Substation - 567 W. 18th St
1493.41 5973.64
Historical Society - 1870 Anaheim Ave
1332.30 5329.18
Neighborhood Community Center - 1845 Park Ave
3972.75 15891.00
Bridge Shelter - 3175 Airway Ave
3086.96 12347.82
TOTAL 36465.49 145861.97
2025 BILLING RATES FOR MECHANIC, MATERIAL, AND SUBCONTRACTOR / RENTAL EQUIPMENT
DESCRIPTION HOURLY RATE
MECHANIC REGULAR TIME (M-F) 7AM TO 4 PM 180
MECHANIC OVERTIME 270
MECHANIC HOLIDAY 360
CONTROLS LABOR - REGULAR TIME
195
CONTROLS LABOR - OVERTIME
292.50
CONTROLS LABOR - HOLIDAY
390
DESCRIPTION
RATE
MATERIAL MARK UP 20%
RENTAL EQUIPMENT MARK UP
20%
PROPRIETARY CONTROLS SUBCONTRACTOR
20%
260
HARBOR POINTE 2026 MAINTENANCE CONTRACT PRICING
LOCATION QUARTERLY PRICE ANNUAL PRICE
Balearic Center 1975 Balearic Drive 1333.86 5335.43
Communications 79 Fair Drive
1624.98 6499.93
Old Corporation Yard - 2300 Placentia Ave
1263.08 5052.31
New Corporation Yard - 2310 Placentia Ave
1344.69 5378.75
Downtown Recreation Center - 1860 Anaheim Ave
2279.48 9117.92
Mesa Verde Library - 2969 Mesa Verde Drive East
1263.64 5054.55
Donald Dungan Library - 1855 Park Ave
5446.47 21785.87
Fire Station # 1 - 2803 Royal Palm Dr
5702.17 22808.69
Fire Station # 2 - 800 Baker St
1276.25 5105.01
Fire Station # 3 - 1865 Park Ave
1558.70 6234.78
Fire Station # 4 - 2300 Placentia Ave
1290.22 5160.86
Fire Station # 5- 2450 Vanguard Way
1527.42 6109.66
Fire Station # 6 - 3350 Sakioka Drive
1599.45 6397.79
Westside Police Substation - 567 W. 18th St
1545.68 6182.72
Historical Society - 1870 Anaheim Ave
1378.93 5515.70
Neighborhood Community Center - 1845 Park Ave
4111.80 16447.19
Bridge Shelter - 3175 Airway Ave
3195.00 12779.99
TOTAL 37741.79 150967.15
2026 BILLING RATES FOR MECHANIC, MATERIAL, AND SUBCONTRACTOR / RENTAL EQUIPMENT
DESCRIPTION HOURLY RATE
MECHANIC REGULAR TIME (M-F) 7AM TO 4 PM 186.30
MECHANIC OVERTIME 279.45
MECHANIC HOLIDAY 372.60
CONTROLS LABOR - REGULAR TIME
201.83
CONTROLS LABOR - OVERTIME
302.74
CONTROLS LABOR - HOLIDAY
403.65
DESCRIPTION
RATE
MATERIAL MARK UP 20%
RENTAL EQUIPMENT MARK UP
20%
PROPRIETARY CONTROLS SUBCONTRACTOR
20%
261
HARBOR POINTE 2027 MAINTENANCE CONTRACT PRICING
LOCATION QUARTERLY PRICE ANNUAL PRICE
Balearic Center 1975 Balearic Drive 1380.54 5522.17
Communications 79 Fair Drive
1681.86 6727.43
Old Corporation Yard - 2300 Placentia Ave
1307.29 5229.14
New Corporation Yard - 2310 Placentia Ave
1391.75 5567.01
Downtown Recreation Center - 1860 Anaheim Ave
2359.26 9437.05
Mesa Verde Library - 2969 Mesa Verde Drive East
1307.87 5231.46
Donald Dungan Library - 1855 Park Ave
5637.10 22548.38
Fire Station # 1 - 2803 Royal Palm Dr
5901.75 23606.99
Fire Station # 2 - 800 Baker St
1320.92 5283.69
Fire Station # 3 - 1865 Park Ave
1613.25 6453.00
Fire Station # 4 - 2300 Placentia Ave
1335.37 5341.49
Fire Station # 5- 2450 Vanguard Way
1580.88 6323.50
Fire Station # 6 - 3350 Sakioka Drive
1655.43 6621.71
Westside Police Substation - 567 W. 18th St
1599.78 6399.12
Historical Society - 1870 Anaheim Ave
1427.19 5708.75
Neighborhood Community Center - 1845 Park Ave
4255.71 17022.84
Bridge Shelter - 3175 Airway Ave
3306.82 13227.29
TOTAL 39062.76 156251.02
2027 BILLING RATES FOR MECHANIC, MATERIAL, AND SUBCONTRACTOR / RENTAL EQUIPMENT
DESCRIPTION HOURLY RATE
MECHANIC REGULAR TIME (M-F) 7AM TO 4 PM 192.82
MECHANIC OVERTIME 289.23
MECHANIC HOLIDAY 385.64
CONTROLS LABOR - REGULAR TIME
208.89
CONTROLS LABOR - OVERTIME
313.34
CONTROLS LABOR - HOLIDAY
417.78
DESCRIPTION
RATE
MATERIAL MARK UP 20%
RENTAL EQUIPMENT MARK UP
20%
PROPRIETARY CONTROLS SUBCONTRACTOR
20%
262
HARBOR POINTE 2028 MAINTENANCE CONTRACT PRICING
LOCATION QUARTERLY PRICE ANNUAL PRICE
Balearic Center 1975 Balearic Drive 1428.86 5715.45
Communications 79 Fair Drive
1740.72 6962.89
Old Corporation Yard - 2300 Placentia Ave
1353.04 5412.16
New Corporation Yard - 2310 Placentia Ave
1440.47 5761.86
Downtown Recreation Center - 1860 Anaheim Ave
2441.84 9767.35
Mesa Verde Library - 2969 Mesa Verde Drive East
1353.64 5414.56
Donald Dungan Library - 1855 Park Ave
5834.39 23337.57
Fire Station # 1 - 2803 Royal Palm Dr
6108.31 24433.23
Fire Station # 2 - 800 Baker St
1367.16 5468.62
Fire Station # 3 - 1865 Park Ave
1669.72 6678.86
Fire Station # 4 - 2300 Placentia Ave
1382.11 5528.44
Fire Station # 5- 2450 Vanguard Way
1636.21 6544.82
Fire Station # 6 - 3350 Sakioka Drive
1713.37 6853.47
Westside Police Substation - 567 W. 18th St
1655.77 1623.09
Historical Society - 1870 Anaheim Ave
1477.14 5908.56
Neighborhood Community Center - 1845 Park Ave
4404.66 17618.64
Bridge Shelter - 3175 Airway Ave
3422.56 13690.25
TOTAL 40429.96 161719.82
2028 BILLING RATES FOR MECHANIC, MATERIAL, AND SUBCONTRACTOR / RENTAL EQUIPMENT
DESCRIPTION HOURLY RATE
MECHANIC REGULAR TIME (M-F) 7AM TO 4 PM 199.57
MECHANIC OVERTIME 299.35
MECHANIC HOLIDAY 399.14
CONTROLS LABOR - REGULAR TIME
216.20
CONTROLS LABOR - OVERTIME
324.31
CONTROLS LABOR - HOLIDAY
432.40
DESCRIPTION
RATE
MATERIAL MARK UP 20%
RENTAL EQUIPMENT MARK UP
20%
PROPRIETARY CONTROLS SUBCONTRACTOR
20%
263
HARBOR POINTE 2029 MAINTENANCE CONTRACT PRICING
LOCATION QUARTERLY PRICE ANNUAL PRICE
Balearic Center 1975 Balearic Drive 1478.87 5915.49
Communications 79 Fair Drive
1801.65 7206.59
Old Corporation Yard - 2300 Placentia Ave
1400.40 5601.59
New Corporation Yard - 2310 Placentia Ave
1490.88 5963.53
Downtown Recreation Center - 1860 Anaheim Ave
2527.30 10109.21
Mesa Verde Library - 2969 Mesa Verde Drive East
1401.02 5604.07
Donald Dungan Library - 1855 Park Ave
6038.60 24154.38
Fire Station # 1 - 2803 Royal Palm Dr
6322.10 25288.39
Fire Station # 2 - 800 Baker St
1415.01 5660.02
Fire Station # 3 - 1865 Park Ave
1728.16 6912.62
Fire Station # 4 - 2300 Placentia Ave
1430.49 5721.94
Fire Station # 5- 2450 Vanguard Way
1693.47 6773.89
Fire Station # 6 - 3350 Sakioka Drive
1773.34 7093.34
Westside Police Substation - 567 W. 18th St
1713.73 6854.90
Historical Society - 1870 Anaheim Ave
1528.84 6115.36
Neighborhood Community Center - 1845 Park Ave
4558.82 18235.29
Bridge Shelter - 3175 Airway Ave
3542.35 14169.14
TOTAL 41845.01 167380.02
2029 BILLING RATES FOR MECHANIC, MATERIAL, AND SUBCONTRACTOR / RENTAL EQUIPMENT
DESCRIPTION HOURLY RATE
MECHANIC REGULAR TIME (M-F) 7AM TO 4 PM 206.55
MECHANIC OVERTIME 309.83
MECHANIC HOLIDAY 413.11
CONTROLS LABOR - REGULAR TIME
223.77
CONTROLS LABOR - OVERTIME
335.66
CONTROLS LABOR - HOLIDAY
447.53
DESCRIPTION
RATE
MATERIAL MARK UP 20%
RENTAL EQUIPMENT MARK UP
20%
PROPRIETARY CONTROLS SUBCONTRACTOR
20%
264
1 Form Rev. 10-30-24 Southland Industries MSA
CITY OF COSTA MESA
MAINTENANCE SERVICES AGREEMENT
WITH
SOUTHLAND INDUSTRIES
THIS MAINTENANCE SERVICES AGREEMENT (“Agreement”) is made and entered into this 2nd day of September, 2025 (“Effective Date”), by and between the CITY OF COSTA MESA, a municipal corporation (“City”), and SOUTHLAND INDUSTRIES , a California corporation (“Contractor”).
W I T N E S S E T H :
A. City proposes to utilize the services of Contractor as an independent contractor to provide on-call HVAC mechanical automation system repairs and maintenance services, as more fully described herein; and
B. Contractor represents that it has the experience and expertise to properly perform such services and holds all necessary licenses to practice and perform the services; and
C. City and Contractor desire to contract for the services and desire to set forth their rights, duties and liabilities in connection with the performance of such services; and
D. N o official or employee of City has a financial interest, within the provisions of Sections 1090-1092 of the California Government Code, in the subject matter of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the parties hereby agree as follows:
1.0. SERVICES PROVIDED BY CONTRACTOR
1.1. Scope of Services. Contractor shall provide the services described in the City ’s Request for Proposal, RFP No. 25-22 (“RFP”), attached hereto as Exhibit “A ,” and Contractor’s response to City’s RFP (the “Proposal”) attached hereto as Exhibit “B,” both incorporated herein (the “Services”).
1.2. Prevailing Wage Requirements.
(a) Prevailing Wage Laws. Contractor is aware of the requirements of Chapter 1 (beginning at Section 1720, et seq.) of Part 7 of Division 2 of the California Labor Code, as well as Title 8, Section 16000, et seq. of the California Code of Regulations (“Prevailing Wage Laws”), which require the payment of prevailing wage rates and the performance of other requirements on “public works” and “maintenance” projects. This project is a “maintenance” project and requires compliance with the Prevailing Wage Laws. Contractor shall defend, indemnify and hold the City, its elected officials, officers, employees and agents free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.
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(b) Payment of Prevailing Wages. Contractor shall pay the prevailing wage rates for all work performed under this Agreement. When any craft or classification is omitted from the general prevailing wage determinations, Contractor shall pay the wage rate of the craft or classification most closely related to the omitted classification. A copy of the general prevailing wage rate determination is on file in the Office of the City Clerk and is incorporated into this Agreement as if fully set forth herein. Contractor shall post a copy of such wage rates at all times at the project site(s).
(c) Legal Working Day. In accordance with the provisions of Labor Code Section 1810, et seq., eight (8) hours is the legal working day. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of the Labor Code regarding eight (8)-hour work day and 40-hour work week requirements, and overtime, Saturday, Sunday, and holiday work. Work performed by Contractor’s or any subcontractor’s employees in excess of eight (8) hours per day, and 40 hours during any one week, must include compensation for all hours worked in excess of eight (8) hours per day, or 40 hours during any one week, at not less than one and one-half times the basic rate of pay. Contractor shall forfeit as a penalty to City Twenty -Five Dollars ($25.00), or any greater penalty set forth in the Labor Code, for each worker employed in the execution of the work by Contractor or by any subcontractor(s) of Contractor, for each calendar day during which such worker is required or permitted to the work more than eight (8) hours in one calendar day or more than 40 hours in any one calendar week in violation of the Labor Code.
(d) Apprentices. Contractor shall comply with the provisions of Labor Code Section 1777.5 concerning the employment of apprentices on public works projects. Contractor shall be responsible for ensuring compliance by its subcontractors with Labor Code Section 1777.5.
(e) Payroll Records. Pursuant to Labor Code Section 1776, Contractor and any subcontractor(s) shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by Contractor or any subcontractor in connection with this Agreement. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following: (1) The information contained in the payroll record is true and correct; and (2) The employer has complied with the requirements of Sections 1771, 1881, and 1815 of the Labor Code for any work performed by his or her employees on this project. The payroll records shall be certified and shall be available for inspection at all reasonable hours in accordance with the requirements of Labor Code Section 1776.
(f) Registration with DIR. Contractor and any subcontractor(s) of Contractor shall comply with the provisions of Labor Code Section 1771 and Labor 266
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Code Section 1725.5 requiring registration with the DIR.
1.3. Performance to Satisfaction of City. Contractor agrees to perform all the work to the complete satisfaction of City. Evaluations of the wor k will be done by City’s Maintenance Services Manager or his or her designee. If the quality of work is not satisfactory, City in its discretion has the right to:
(a) Meet with Contractor to review the quality of the work and resolve the matters of concern;
(b) Require Contractor to repeat the work at no additional fee until it is satisfactory; and/or
(c) Terminate the Agreement as hereinafter set forth.
1.4. Compliance with Applicable Law . Contractor warrants that it shall perform the services required by this Agreement in compliance with all applicable Federal and California employment laws, including, but not limited to, those laws related to harassment, workplace violence, discrimination, minimum hours and wages; occupational health and safety; fair employment and employment practices; workers’ compensation insurance and safety in employment; and all other Federal, State and local laws and ordinances applicable to the services required under this Agreement. Contractor shall indemnify and hold harmless City from and against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature and description including attorneys’ fees and costs, presented, brought, or recovered against City for, or on account of any liability under any of the above-mentioned laws, which may be incurred by reason of Contractor’s performance under this Agreement.
1.5. Non-Discrimination. In performing this Agreement, Contractor shall not engage in, nor permit its agents to engage in, discrimination in employment of persons because of their race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military or veteran status, except as permitted pursuant to section 12940 of the Government Code.
1.6. Non-Exclusive Agreement. Contractor acknowledges that City may enter into agreements with other contractors for services similar to the Services in this Agreement or may have its own employees perform services similar to those Services contemplated by this Agreement.
1.7. Delegation and Assignment. Contractor may not delegate or assign this Agreement, in whole or in part, to any person or entity without the prior written consent of City.
Contractor may engage a subcontractor(s) as permitted by law and may employ other personnel to perform services contemplated by this Agreement at Contractor’s sole cost and expense.
1.8. Confidentiality. Employees of Consultant in the course of their duties may have access to financial, accounting, statistical, and personnel data of private individuals and employees of City, or confidential information relating to the City’s computer and security systems and programs. Consultant covenants that all data, documents, discussion, or other information developed or received by Consultant or provided for performance of this Agreement are deemed 267
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confidential and shall not be disclosed by Consultant without written authorization by City. City shall grant such authorization if disclosure is required by law. All City data shall be returned to City upon the termination of this Agreement. Consultant’s covenant under this Section shall survive the termination of this Agreement.
2.0. COMPENSATION AND BILLING
2.1. Compensation. Contractor shall be paid in accordance with the fee schedule set forth in Exhibit C. Contractor’ s total annual compensation shall not exceed Two Hundred Thousand Dollars ($200,000.00).
2.2. Additional Services. Contractor shall not receive compensation for any services provided outside the Scope of Services set forth in this Agreement without amending this Agreement as provided herein. It is specifically understood that oral requests and/or approvals of such additional services or additional compensation shall be barred and are unenforceable.
2.3. Method of Billing. Contractor may submit invoices to the City for approval on a progress basis, but no more often than two times a month. Said invoice shall be based on the total of all Contractor’s services which have been completed to City’s sole satisfaction. City shall pay Contractor’s invoice within forty-five (45) days from the date City receives said invoice. Each invoice shall describe in detail, the S ervices performed, the date of performance, and the associated time for completion.
2.4. Records and Audits. Records of Contractor ’s S ervices shall be maintained in accordance with generally recognized accounting principles and shall be made available to City for inspection and/or audit at mutually convenient times throughout the term of this Agreement through three (3) years after its termination.
3.0. TIME OF PERFORMANCE
3.1. Commencement and Completion of Work. The Services shall be performed in strict compliance with Exhibits A and B. Failure to commence work in a timely manner and/or diligently pursue work to completion may be grounds for termination of this Agreement.
3.2. Excusable Delays . Neither party shall be responsible for delays or lack of performance resulting from acts beyond the reasonable control of the party or parties. Such acts shall include, but not be limited to, acts of God, fire, strikes, material shortages, compliance w ith laws or regulations, riots, acts of war, pandemics (excluding COVID -19) or any other conditions beyond the reasonable control of a party.
4.0. TERM AND TERMINATION
4.1. Term. This Agreement shall commence on the Effective Date and continue for a period of two (2) years, ending on September 1, 2027, unless previously terminated as provided herein or as otherwise agreed to in writing by the parties. The Agreement may be extended by three (3) additional one (1) year periods upon mutual written agreement of both parties.
4.2. Notice of Termination. City reserves and has the right and privilege of canceling, 268
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suspending or abandoning the execution of all or any part of the work contemplated by this Agreement, with or without cause, at any time, by providing written notice to Contractor . The termination of this Agreement shall be deemed effective upon receipt of the notice of termination.
In the event of such termination, Contractor shall immediately stop rendering services under this Agreement unless directed otherwise by the City.
4.3. Compensation. In the event of termination, City shall pay Contractor for reasonable costs incurred and Services satisfactorily performed up to and including the date of City’s written notice of termination. Compensation for work in progress shall be prorated based on the percentage of work completed as of the effective date of termination in accordance with the fees set forth herein.
5.0. INSURANCE
5.1. Minimum Scope and Limits of Insurance. Contractor shall obtain, maintain, and keep in full force and effect during the life of this Agreement all of the following minimum scope of insurance coverages with an insurance company admitted to do business in California, rated “A,” Class X, or better in the most recent Best’ s Key Insurance Rating Guide, and approved by City:
(a) Commercial general liability, including premises -operations, products/completed operations, broad form property damage, blanket contractual liability, independent contractors, personal injury or bodily injury with a policy limit of not less than One Million Dollars ($1,000,000.00) per occurrence. If such insurance contains a general aggregate limit, it shall apply separately to this Agreement or shall be twice the required occurrence limit.
(b) Business automobile liability for owned vehicles, hired, and non-owned vehicles, with a policy limit of not less than One Million Dollars ($1,000,000.00) combined single limit per accident for bodily injury and property damage.
(c) Workers’ compensation insurance as required by the State of California.
Contractor agrees to waive, and to obtain endorsements from its workers ’ compensation insurer waiving subrogation rights under its workers ’ compensation insurance policy against the City, its officers, agents, employees, and volunteers arising from work performed by Contractor for the City and to require each of its subcontractors, if any, to do likewise under their workers’ compensation insurance policies.
5.2. Endorsements. The commercial general liability insurance policy and business automobile liability policy shall contain or be endorsed to contain the following provisions:
(a) Additional insureds: “The City of Costa Mesa and its elected and appointed boards, officers, officials, agents, employees, and volunteers are additional insureds with respect to: liability arising out of activities performed by or on behalf of Contractor p ursuant to its contract with City; products and completed operations of Contractor; premises owned, occupied or used by 269
6 Form Rev. 10-30-24 Southland Industries MSA
Contractor; automobiles owned, leased, hired, or borrowed by Contractor.”
(b) Notice: “Said policy shall not terminate, be suspended, or voided, nor shall it be cancelled, nor the coverage or limits reduced, until thirty (30) days after written notice is given to City.”
(c) Other insurance: “ Contractor’s insurance coverage shall be primary insurance as respects the City of Costa Mesa, its officers, officials, agents, employees, and volunteers. Any other insurance maintained by the City of Costa Mesa shall be excess and not contributing with the ins urance provided by this policy.”
(d) Any failure to comply with the reporting provisions of the policies shall not affect coverage provided to the City of Costa Mesa, its officers, officials, agents, employees, and volunteers.
(e) Contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
5.3. Deductible or Self Insured Retention. If any of such policies provide for a deductible or self-insured retention to provide such coverage, the amount of such deductible or self-insured retention shall be approved in advance by City. No policy of insurance issued as to which the City is an additional insured shall contain a provision which requires that no insured except the named insured can satisfy any such deductible or self-insured retention.
5.4. Certificates of Insurance. Contractor shall provide to City certificates of insurance showing the insurance coverages and required endorsements described above, in a form and content approved by City, prior to performing any services under this Agreement.
5.5. Non-limiting. The insurance provisions contained in this Agreement shall not be construed as limiting in any way, the indemnification provisions contained in this Agreement, or the extent to which Contractor may be held responsible for payments of damages to persons or property.
5.6. Excess Coverage. To the extent that Contractor maintains any insurance coverage(s) in amounts or types which are not expressly called out in this Agreement, such additional coverage(s) shall be deemed to be required by this Agreement.
6.0. GENERAL PROVISIONS
6.1. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to any matter referenced herein and supersedes any and all other prior writings and oral negotiations. This Agreement may be modified only in writing, and signed by the parties in interest at the time of such modification. The terms of this Agreement shall prevail over any inconsistent provision in any other contract document appurtenant hereto, including exhibits to this Agreement.
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6.2. Representatives. The C ity Manager or his or her designee shall be the representative of City for purposes of this Agreement and may issue all consents, approvals, directives and agreements on behalf of the City, called for by this Agreement, except as otherwise expressly provided in this Agreement.
Contractor shall designate a representative for purposes of this Agreement who shall be authorized to issue all consents, approvals, directives and agreements on behalf of Contractor called for by this Agreement, except as otherwise expressly provided in this Agreement.
6.3. Project Managers. City shall designate a Project Manager to work directly with Contractor in the performance of this Agreement.
Contractor shall designate a Project Manager who shall represent it and be its agent in all consultations with City during the term of this Agreement. Contractor or its Project Manager shall attend and assist in all coordination meetings called by City.
6.4. Notices. Any notices, documents, correspondence or other communications concerning this Agreement or the work hereunder may be provided by personal delivery, facsimile or mail and shall be addressed as set forth below. Such communication shall be deemed served or delivered: a) at the time of delivery if such communication is sent by personal delivery; b) at the time of transmission if such communication is sent by facsimile; and c) 48 hours after deposit in the U.S. Mail as reflected by the official U.S. postmark if such communication is sent through regular United States mail.
IF TO CONTRACTOR: IF TO CITY:
Southland Industries
12131 Western Avenue
Garden Grove, CA 92841
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Tel: (657) 533-4122 Tel: (714) 754-5289
Attn: Abbie Fletcher Attn: Daniel Jojola
Courtesy copy to:
City of Costa Mesa
77 Fair Drive
Costa Mesa, CA 92626
Attn: Finance Dept. | Purchasing
6.5. Drug-free Workplace Policy. Contractor shall provide a drug-free workplace by complying with all provisions set forth in City ’s Council Policy 100-5, attached hereto as Exhibit “D” and incorporated herein by reference. Contractor’s failure to conform to the requirements set forth in Council Policy 100-5 shall constitute a material breach of this Agreement and shall be cause for immediate termination of this Agreement by City.
6.6. Attorneys’ Fees. In the event that litigation is brought by any party in connection with this Agreement, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in the 271
8 Form Rev. 10-30-24 Southland Industries MSA
exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions, or provisions hereof.
6.7. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California.
6.8. Assignment. Contractor shall not voluntarily or by operation of law assign, transfer, sublet or encumber all or any part of Contractor’s interest in this Agreement without City ’s prior written consent. Any attempted assignment, transfer, subletting or encumbrance shall be void and shall constitute a breach of this Agreement and cause for termination of this Agreement.
Regardless of City’s consent, no subletting or assignment shall release Contractor of Contractor’s obligation to perform all other obligations to be performed by C ontractor hereunder for the term of this Agreement.
6.9. Indemnification and Hold Harmless. Contractor agrees to defend, indemnify, hold free and harmless the City, its elected officials, officers, agents and employees, at Contractor’s sole expense, from and against any and all claims, actions, suits or other legal proceedings brought against the City, its elected officials, officers, agents and employees arising out of the performance of the Contractor, its employees, and/or authorized subcontractors, of the work undertaken pursuant to this Agreement. The defense obligation provided for hereunder shall apply without any advance showing of negligence or wrongdoing by the Contractor , its employees, and/or authorized subcontractors, but shall be required whenever any claim, action, complaint, or suit asserts as its basis the negligence, errors, omissions or misconduct of the Contractor, its employees, and/or authorized subcontractors, and/or whenever any claim, action, complaint or suit asserts liability against the City, its elected officials, officers, agents and employees based upon the work performed by the Contractor, its employees, and/or authorized subcontractors under this Agreement, whether or not the Contractor , its employees, and/or authorized subcontractors are specifically named or otherwise asserted to be liable.
Notwithstanding the foregoing, the Contractor shall not be liable for the defense or indemnification of the City for claims, actions, complaints or suits arising out of the sole active negligence or willful misconduct of the City. This provision shall supersede and replace all other indemnity provisions contained either in the City ’s specifications or Contractor’s Proposal, which shall be of no force and effect.
6.10. Independent Contractor . Contractor is and shall be acting at all times as an independent contractor and not as an employee of City. Contractor shall have no power to incur any debt, obligation, or liability on behalf of City or otherwise act on behalf of City as an agent.
Neither City nor any of its agents shall have control over the conduct of Contractor or any of Contractor’s employees, except as set forth in this Agreement. Contractor shall not, at any time, or in any manner, represent that it or any of its or employees are in any manner agents or employees of City. Contractor shall secure, at its sole expense, and be responsible for any and all payment of Income Tax, Social Security, State Disability Insurance Compensation, Unemployment Compensation, and other payroll deductions for Contractor and its officers, agents, and employees, and all business licenses, if any are required, in connection with the services to be performed hereunder. Contractor shall indemnify and hold City harmless from any and all taxes, assessments, penalties, and interest asserted against City by reason of the 272
9 Form Rev. 10-30-24 Southland Industries MSA
independent contractor relationship created by this Agreement. Contractor further agrees to indemnify and hold City harmless from any failure of Contractor to comply with the applicable worker’s compensation laws. City shall have the right to offset against the amount of any fees due to Contractor under this Agreement any amount due to City from Contractor as a result of Contractor’s failure to promptly pay to City any reimbursement or indemnification arising under this paragraph.
6.11. PERS Eligibility Indemnification. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement claims or is determined by a court of competent jurisdiction or the California Public Employees Retirement System (PERS) to be eligible for enrollment in PERS as an employee of the City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City.
Notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the contrary, Contractor and any of its employees, agents, and subcontractors providing service under this Agreement shall not qualify for or become entitled to, and hereby agree to waive any claims to, any compensation, benefit, or any incident of employment by City, including but not limited to eligibility to enroll in PERS as an employee of City and entitlement to any contribution to be paid by City for employer contribution and/or employee contributions for PERS benefits.
6.12. Cooperation. In the event any claim or action is brought against City relating to Contractor’s performance or services rendered under this Agreement, Contractor shall render any reasonable assistance and cooperation which City might require.
6.13. Conflict of Interest. Contractor and its officers, employees, associates and subcontractors, if any, will comply with all conflict of interest statutes of the State of California applicable to Contractor’s services under this Agreement, including, but not limited to, the Political Reform Act (Government Code Sections 81000, et seq.) and Government Code Section 1090.
During the term of this Agreement, Contractor and its officers, employees, associates and subcontractors shall not, without the prior written approval of the City Representative, perform work for another person or entity for whom Contractor is not currently performing work that would require Contractor or one of its officers, employees, associates or subcontractors to abstain from a decision under this Agreement pursuant to a conflict of interest statute.
6.14. Prohibited Employment. Contractor will not employ any regular employee of City while this Agreement is in effect.
6.15. Order of Precedence. In the event of an inconsistency in this Agreement and any of the attached Exhibits, the terms set forth in this Agreement shall prevail . If, and to the extent this Agreement incorporates by reference any provision of any document, such provision shall be deemed a part of this Agreement. Nevertheless, if there is any conflict among the terms and conditions of this Agreement and those of any such provision or provisions so incorporated by reference, this Agreement shall govern over the document referenced.
6.16. Costs. Each party shall bear its own costs and fees incurred in the preparation 273
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and negotiation of this Agreement and in the performance of its obligations hereunder except as expressly provided herein.
6.17. Binding Effect. This Agreement binds and benefits the parties and their respective permitted successors and assigns.
6.18. No Third Party Beneficiary Rights . This Agreement is entered into for the sole benefit of City and Contractor and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right in, under or to this Agreement.
6.19. Headings. H eadings contained in this Agreement are included solely for convenience and are not intended to modify, explain or to be a full or accurate description of the content thereof and shall not in any way affect the meaning or interpretation of this Agreement.
6.20. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement and have had an adequate opportunity to review each and every provision of the Agreement and submit the same to counsel or other consultants for review and comment. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the parties and in accordance with its fair meaning. There shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
6.21. Amendments . Only a writing executed by the parties hereto or their respective successors and assigns may amend this Agreement.
6.22. Waiver. The delay or failure of either party at any time to require performance or compliance by the other of any of its obligations or agreements shall in no way be deemed a waiver of those rights to require such performance or compliance. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a duly authorized representative of the party against whom enforcement of a waiver is sought. The waiver of any right or remedy in respect to any occurrence or event shall not be deemed a waiver of any right or remedy in respect to any other occurrence or event, nor shall any waiver constitute a continuing waiver.
6.23. Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be unenforceable in any circumstance, such determination shall not affect the validity or enforceability of the remaining terms and provisions hereof or of the offending provision in any other circumstance. Notwithstanding the foregoing, if the value of this Agreement, based upon the substantial benefit of the bargain for any party , is materially impaired, which determination made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.
6.24. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.
6.25. Corporate Authority . The persons executing this Agreement on behalf of the parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said parties and that by doing so the parties hereto are formally bound to the provisions of this 274
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Agreement.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their respective authorized officers, as of the date first above written.
CONTRACTOR
__________________________________ Date: __________________________ Signature
Craig Gonzalez, General Service Manager
CITY OF COSTA MESA
__________________________________ Date: __________________________ Cecilia Gallardo-Daly
Interim City Manager
ATTEST:
__________________________________
Brenda Green
City Clerk
APPROVED AS TO FORM:
__________________________________ Date: __________________________ Kimberly Hall Barlow
City Attorney
APPROVED AS TO INSURANCE:
__________________________________ Date: __________________________ Ruth Wang
Risk Management
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APPROVED AS TO CONTENT:
__________________________________ Date: __________________________ Daniel Jojola
Project Manager
DEPARTMENTAL APPROVAL:
__________________________________ Date: __________________________ Raja Sethuraman
Public Works Director
APPROVED AS TO PURCHASING:
__________________________________ Date: __________________________ Carol Molina
Finance Director
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EXHIBIT B
CONTRACTOR’S PROPOSAL
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Proposal to provide On-Call HVAC mechanical automation system repairs and maintenance service for:
City of Costa Mesa - Public Works Department
PROPOSAL
Prepared for:
City of Costa Mesa - Public Works
Department
RFP No. 25-22
Attn: Stephanie Urueta
Southland Industries
12131 Western Avenue
Garden Grove, CA 92841
Lic #: 114040
CONTENTS
A. COVER LETTER
.....................................................................................................3 B. BACKGROUND AND PROJECT SUMMARY ..........................................................5 C. PROJECT APPROACH AND METHODOLOGY......................................................6 D. QUALIFICATIONS AND EXPERIENCE ..................................................................11 E. FINANCIAL CAPACITY .........................................................................................12 F. KEY PERSONNEL ..................................................................................................13 G. PROPOSED MAINTENANCE SCHEDULE ............................................................18 APPENDIX C: FORMS ..............................................................................................19 280
City of Costa Mesa - public works departmentSouthland Industries 3 A. COVER LETTER
May 28, 2025
City of Costa Mesa- Public Works Department
RFP NO. 25-22
Stephanie Urueta
77 Fair Drive
Costa Mesa, CA 92626
RE: City of Costa Mesa | On-Call HVAC Mechanical Automation System Repairs and Maintenance Services RFP
Southland Industries is pleased to present this Request for Proposal (RFP) response to the City of Costa Mesa for HVAC Mechanical Automation System Repairs and Maintenance Services. It is Southland’s hope our response clearly communicates our 76 years of HVAC service expertise, our experience working with municipalities and our dedication to service excellence.
We understand the City of Costa Mesa is seeking a partner with HVAC expertise to perform HVAC maintenance and repair, as well as automation maintenance services as part of a comprehensive routine maintenance program to be developed by the selected firm.
Southland Industries is a client-first mechanical and controls service organization that has been a fixture in Southern California since its founding in 1949. We are a national leader in HVAC design, construction, and maintenance; and are expert providers of HVAC maintenance, repair and installation services to municipal and public works clients with complex systems.
Southland will support the City of Costa Mesa from our Garden Grove, CA facility located at 12131 Western Avenue, Garden Grove, CA 92841.
Our resources are robust in Southern California and include a 160,900 SF fabrication shop in Southland’s Garden Grove, CA, location. Our efforts to improve fabrication details, knowledge, material handling, and installation methods ensure that we consistently deliver innovative solutions to our clients. The Garden Grove, CA location also houses our service team and our 24/7 service dispatch center. Southland will wholly support all of the City of Costa Mesa HVAC maintenance needs without the need to subcontract any tasks.
The Southland service team that supporting the City of Costa Mesa will be based in Garden Grove, CA. It will include a project manager with 26 years of experience developing HVAC programs and providing said services to clients. The service technicians assigned to the City of Costa Mesa have more than 10 years of experience and include supervisors, foremen and journeymen with a range of certifications. Although Southland service technicians must respond within a four-hour window to emergency service requests, typically they respond to an emergency service request within two hours.
In addition to performing scheduled Southland monthly, quarterly, and annual HVAC and controls maintenance, upon engagement Southland will conduct a comprehensive inspection of all equipment and make recommendations to the City of Costa Mesa to enhance equipment performance.
Southland holds the following contractor licenses: C-20, C-4, C-38, C-16, C-36, C-43 and B. We are also fully compliant with the Department of Industrial Relations (DIR). Southland’s DIR number is 1000000657.
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City of Costa Mesa - public works departmentSouthland Industries 5 B. BACKGROUND AND PROJECT SUMMARY
Southland welcomes the opportunity to describe to the City of Costa Mesa our understanding of HVAC maintenance and of the work to be done to support the City’s HVAC maintenance needs.
Southland has provided HVAC services, among other trades, for 76 years. We have extensive experience supporting municipal and public works clients service maintenance needs.
We work closely with our service clients from award of contract to develop a strong transparent relationship that will facilitate seamless and transparent communication to ensure mutually successful partnership. Southland and the City of Costa Mesa will work closely to implement a service plan and schedule that will leverage our trained and certified service team members, our ability to respond to emergencies in under four hours (typically within two hours), and monthly meetings to discuss service needs and equipment performance improvements.
UNDERSTANDING OF SCOPE OF SERVICES
Southland Industries has reviewed the sample service agreement provided as Appendix B and we do concure with the City’s assessment of necessary maintenance procedures. We are aligned with your expectations.
In fact, Southland Industries recommends a comprehensive HVAC maintence program that includes monthly, quarterly, and annual services in accordance with ASHRAE 180 and the City of Costa Mesa’s service standards. Typical tasks include inspecting pressure drops across filters, washing coils, performing monthly chemical treatments (closed loop), conducting annual refrigerant leak inspections, tightening electrical connections, verifying thermostat and control functionality, replacing belts annually, and lubricating bearings, dampers, and linkages, and other tasks as outlined in our proposed schedule.
Southland will deliver high-quality service maintenance and repairs while proactively identifying and reporting unscheduled repairs anc correct the issue(s) to mitigate their risk. In our Project Approach and Methodology section we will further discuss the procedures Southland will engage to successfully meet and exceed the City’s scope of services requested as outlined in this RFP. 283
City of Costa Mesa - public works departmentSouthland Industries 6 C. PROJECT APPROACH AND METHODOLOGY
Southland views HVAC Maintenance as the cornerstone of efficient facility operation. As a controls and mechanical service company, Southland looks at systems and root causes rather than just individual components. This allows us to understand the facility holistically by evaluating, troubleshooting, and repairing mechanical issues accordingly. We believe that this proposal offers a comprehensive method in achieving the desired results and goals for the City of Costa Mesa. Our team has customized a very thorough maintenance approach to significantly reduce the costs of maintenance, while still delivering the highest quality maintenance and customer service.
Southland understands that properly maintained systems extend the expected life cycle of equipment and can significantly reduce ongoing operating costs. When this is done consistently year after year, our clients can use these cost savings to invest in their businesses. Southland approaches maintenance as a proactive and preventative solution. We work to get ahead of the unforeseen emergencies that ruin budgets and demand sacrifices to planned projects or investments.
Our clients expect us to protect some of their most valuable assets. To do this properly requires a lot of experience, expertise, foresight, and a deep understanding for how all the various parts and pieces of a system work together. Our team of experts look to identify the vulnerable and troublesome areas of those systems. This analysis takes into account the type of facility the equipment is serving, the age and condition of the equipment and components, our client’s masterplan, and their financial budgets to accomplish their stated objectives. We analyze all this data to design a solution tailored to fit the needs of the individual client. Then, based on our decades of industry experience we collaborate with our clients to generate a multiyear plan to prevent, address, and repair equipment deficiencies. These predictions allow us to schedule repairs or shutdowns that don’t disrupt business operations or budgets.
CAPACITY
With a field staff of 27 technicians and a dedicated 24-hour dispatch team Southland is extremely confident in our ability to complete the HVAC Responsibilities outlined in the City of Costa Mesa’s RFP.
Our Southern California office houses the largest sheet metal prefabrication shop on the West Coast, dozens of mechanical, electrical, and HVAC controls engineers and an entire Energy division focused on implementing energy reduction strategies for our clients. All of these services are available to the City of Costa Mesa and are executed within the Southland organization.
Our team’s vast experience and dedication to providing multifaceted solutions and excellent customer service means we will successfully execute any service request by the City of Costa Mesa in a timely manner.
RESPONDING TO NON-EMERGENCY AND EMERGENCY ISSUES
Southland employs a fully staffed Service and Dispatch team to ensure your on-call requests and repairs are completed in a timely manner. Other than reaching out to your primary representative, Southland has our Dispatch team standing by 24/7 to provide support. Once our Dispatch team receives the request, we dispatch the appropriate technician immediately. The technician’s first objective is to get the system back online and educate the client on what failed and how we fixed it so it can be prevented from happening again in the future. If the repair requires additional visits, the technician gathers all the necessary information needed to provide an estimate for the repair. The technician does not leave without our client’s satisfaction and a clear path forward.
For non-emergency service, clients may also use our service dispatch email. This email is monitored during business hours and is an efficient way to communicate and document any follow up or questions with our team. This email includes multiple members of our team, ensuring that the City of Costa Mesa receives the most up to date and informed response possible. This is a perfect way to get hold of our service dispatch team throughout the day for those non-urgent needs. 284
City of Costa Mesa - public works departmentSouthland Industries 7 However, for those who prefer to call us for an immediate conversation our dispatch team is only a phone call away. Once our technician arrives at the facility, he will troubleshoot the problem reported using our “Root Cause Analysis” methodology and diagnose the best way to proceed.
If the problem can be resolved while onsite, we will do so and check out with your on-site contact to debrief them before leaving the facility. If additional parts or labor are needed to complete the repair, our technician will leave the unit in the safest possible condition, report our findings to your facility contact, and explain our plan of action before leaving your facility. Our technician will share his findings with our Proposal Specialist who will prepare a quote and a detailed scope of work for your consideration. Our primary representative will then work with the appropriate contact at Montclair Place to determine how best to proceed.
Emergency telephone numbers of management level supervisory personnel:
Craig Gonzalez, Sale and Service Manager, Mobile: 562.244.7836
COMMUNICATION
To Southland, communication is the most important part of any service program. We enter into each client partnership understanding that we are being invited to a very important role to support our client’s goals. To achieve this, it is critical to quickly and effectively communicate issues, possible solutions and plans for quick implementation.
Effective communication begins with our service technicians and the City of Costa Mesa’s on-site point of contact. Our service technicians are our day-to-day representatives and take the lead in building partnerships with the appropriate contacts within your organization, beginning with your dedicated onsite personnel.
Although there is constant communication between our technicians and your key personnel, we also utilize technology and administrative support resources to keep detailed archives of our maintenance logs, proposals, and continuous updates to our ongoing outlook for scheduled repairs and upgrades. Our team will create a dedicated OneHub platform as your one-stop, cloud-based data storage that keeps all records of equipment information, repair orders, invoices, and service reports. The documentation available on this platform will help the City of Costa Mesa keep track of our performance to ensure we are meeting expectations, identify equipment trends, analyze the amount of repairs, and serve as a historical reference for system performance. The City of Costa Mesa will have full access to this software and will receive email notifications each time a document is uploaded. The benefit of keeping an electronic log assures standardization of procedures for your facility and becomes a management tool for our clients to review with their owners and peers. This guarantees the coordination and prioritization of service procedures for your listed equipment.
In tandem with the OneHub platform, we utilize the MobileTec system, which provides our technicians with specific tasking for each individual piece of equipment to ensure proper maintenance is always completed on all equipment. MobileTec is used to sign in and out of service visits and provides an emailed report at the end of each maintenance service, service call, or equipment installation. Additionally, you will receive a follow-up phone call or email after each service performed to ensure that Southland executed our responsibilities to your great satisfaction.
OBJECTIVES AND TECHNIQUES
ROOT CAUSE ANALYSIS
Southland has adopted a methodology of “Root Cause Analysis” and believes the proper method of service is based on three items: Determine the problem, Identify the Cause, and Develop and implement a solution.
Determine the Problem
The first step is to determine the problem of the system, or in other words, if a zone is too hot or cold, or the central plant has an alarm. The key word is system. Rather than view the controls as 285
City of Costa Mesa - public works departmentSouthland Industries 8 individual components, Southland views the components and each piece of equipment is part of the system. It is important for us to provide our services based on this concept. Adjustments or failures of components impact the overall system. Adjusting a thermostat because it is hot or cold does not necessarily address the root cause of the problem. It may be a dirty condenser coil or a worn belt, creating the original hot or cold complaint, adjusting the thermostat will only require a second call which may annoy the tenant.
Southland believes in understanding the system process. In doing this we will help to identify the specific problem of the actual component. In many cases, Southland will use the capacity of our in-house resources to assure we truly understand what the problem is. By taking these extra steps, Southland can get down to the root cause of the problem.
Identify the Cause
Once the problem has been identified, the next step is to determine the cause of the problem, or in other words what part of your system has failed. Southland will investigate the cause for deficiencies, document those items, and then review them with our client and provide multiple solutions, if warranted.
Determining the root cause of the problem is essential in developing the correct solution. Making repairs without determining the root cause of the problem will only leave an avenue for repeat failures and service calls.
Develop and Implement a Solution
Once the problem is identified and the cause reviewed, the solution can then be implemented.
These solutions may be multifaceted and if needed, Southland will provide multiple solution approaches or recommendations.
The solution can be as simple as adjusting a system controller, or as complicated as solving a design deficiency. Again, Southland will utilize the resources of our experienced staff, along with our in-house engineering capabilities to develop the final solution. Providing the right solution prevents repeat calls on the same problems.
APPROACH TO THE SCOPE OF WORK
The core of our maintenance approach is building a relationship with the City of Costa Mesa personnel to ensure we establish a consistent schedule that can be relied upon. Not only is a consistent and predictable schedule a key to success, but consistent and predictable service technicians are equally important. The more our service technicians continue to become familiar with your staff and the equipment, the better we can service your facilities.
Southland Maintenance Start-Up Process
One of Southland’s Standards of Service is our Maintenance Start-Up Process. During this process, our Although Southland service technicians must respond within a four-hour window to emer-gency service requests, typically they respond to an emergency service request within two hours. Upon completion of the Maintenance Start-Up Process, our Service Department compiles all findings and meet with your team to discuss the report and collaborate on the best plan moving forward. To perform this process correctly requires a considerable investment in time and resources, but it has proven time after time to provide clients with the best return on their investment as quickly as possible.
Account Manager
Your dedicated Account Manager is responsible for ensuring all of our in-house documentation, OneHub archive, MobileTec service reports, invoices, service orders, maintenance visits, and all of your expectations are being met. Assigning an Account Manager has been extremely valuable for both our clients and our service teams. Your account manager will be your regular point of contact and will manage documentation and quality assurance processes. 286
City of Costa Mesa - public works departmentSouthland Industries 9 Quarterly Maintenance
During our quarterly maintenance visits, we will expand our team even further to include two HVAC technicians. During this service, we will provide a detailed service tasking report for every piece of equipment and upload them to the OneHub archive. We plan to perform the quarterly maintenance over a two-week period. During these thorough maintenance visits, we will document each task performed and record any recommended repairs. This documentation will be shared with you upon completion of maintenance so that we can then collaborate with you on the best path forward.
Annual Maintenance
During Annual Maintenance, we will deploy the largest team of technicians to your facilities. We plan to dispatch three HVAC technicians. We estimate it will take a total of three weeks to perform proper annual maintenance on all equipment. As with the quarterly maintenance visits we will be thoroughly servicing, documenting, and reporting everything we perform or find to be deficient. To continue our quality assurance strategy, we will focus on verifying the equipment is back in great working order and the areas around the equipment are clean and orderly, subsequent to the conclusion of the annual maintenance visit.
Southland has found that planning regular meetings for focused and organized conversations around performance and our partnership is a small investment of time that provides a great deal of continued value to the relationship.
Quality Control Plan
Southland’s approach to work includes a thorough quality control plan that is customized to each client’s specific maintenance program. When Southland works with the City of Costa Mesa to establish your maintenance schedule, we will establish a comprehensive quality control plan that includes Spring and Fall inspections. After each quality control inspection, we will document our findings in a written condition report that we will submit to the City of Costa Mesa one week after the inspection is conducted.
The graphic below provides a high-level overview of Southland’s proposed equipment maintenance schedule for the City of Costa Mesa. On the following page is a proposed schedule indicating all tasks and deliverables to be performed.
PROPOSED PROJECT MAINTENANCE SCHEDULE FOR EQUIPMENT
• Quarterly
maintenance
visit
• Filters
• Belts
• Pre-winter start
up
• Annual boilers,
furnaces, heat
pumps, heaters
• Annual coil
condenser
washing
• Annual
Evaporator Coil
Cleaning
• Quarterly
Maintenance
on all other
equipment
• Pre-summer
start up
• Annual AC
• Annual
Evaporator Coil
Cleaning
• Quarterly
Maintenance
on all other
equipment
• Quarterly
maintenance
meeting
• Filters
• Belts
The graphic below illustrates at a high-level the quarterly and annual tasks Southland will perform during our visits. Our service technicians will maintian the City’s equipment such that you will feel our presence in between our quarterly onsite sessions. 287
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City of Costa Mesa - public works departmentSouthland Industries 11 E. FINANCIAL CAPACITY
Southland Industries requires a completed NDA agreement for the release of our audited financial statements. To request an NDA for your company, please contact Paige Semeja, Corporate Proposal Coordinator, at [email protected].
For more information, please contact Kim Sandiego, Southland Corporate Controller, at ksanddiegoind.com.
Southland understands the importance of transparency at all times when dealing with clients and potential clients. While we undergo the NDA process, in the table below Southland is sharing our fiscal year revenue for the past three years; and our projected revenue for FY 2025.
FISCAL YEAR REVENUE
FY 2022 1,400,000,000
FY 2023 2,000,000,000
FY 2024 2,800,000,000
FY 2025 Est. 3.5B
Southland Industries Revenue
We look forward to sharing our audited financial statements after we have executed mutual NDAs.
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City of Costa Mesa - public works departmentSouthland Industries 13 Project Profiles
The following project profiles provide examples of HVAC maintenance, repairs, and other various projects completed within the public sector.
City of Newport Beach - Various Service, Maintenance, and Repairs Southland was awarded a three-year HVAC maintenance contract with the City of Newport Beach in the spring of 2020. The contract includes maintenance and repair services for the Newport Beach Civic Center as well as on-call services. The City of Newport Beach is an influential, progressive city here in Orange County, making their decision to look for a quality maintenance contractor a leading example in Orange County.
Our Southland team focused on building a thorough and specific maintenance program to ensure the City of Newport Beach met their stated facility goals. Throughout the process, Southland used innovative solutions to overcome all the added challenges created by COVID-19 restrictions. In a testament to our quality performance and customer service, our contract was expanded just six months later to include a service contract to maintain the city’s Controls system.
The controls contract also includes upgrades to the control system’s sequence of operations. We are excited to continue growing our partnership with Newport Beach over the course of our three- year contract term and beyond.
City of Lakewood - Various Service, Maintenance, and Repairs Southland was awarded a contract in 2023 with the City of Lakewood to perform maintenance at 23 of the City’s office and administrative buildings, including mechanical equipment rooms and the City Council chambers.
Long Beach Utilities District - HVAC Maintenance Services Southland was awarded a contract in 2021 with Long beach Utilities to perform maintenance at the Long Beach Utilities District. The maintenance now includes the addition of the gas buildings in 2023. Southland performs maintenance and repairs on the administration building, water treatment plant, pump station, and gas buildings. Southland’s scope includes on-call maintenance, weekly site surveys, monthly tasked visits, and quarterly and annual maintenance on over two hundred pieces of varied equipment.
Compton Unified School District - Various Service, Maintenance and Repairs Southland performed demolition and installation work to replace four split systems, 41 package units, and 20 wall mount heat pumps betwee two Compton Unified School District campuses.
Southland provided all Carrier and Bard equipment to comply with District standards, in addition to the installation of brand new thermostats in each unit. All work was performed at two separate high school campuses.
Southland had been proudly providing maintenance service to the District since 2013, several years before the start of this project. After this project was completed, in the wake of the COVID-19 pandemic, the District initiated a maintenance and filter change program with Southland in support of their re-opening plans. Southland is currenlty servicing over 1,500 units throughout the District.
Orange Coast College - Chiller Preventative Maintenance Program in Costa Mesa, CA In 2011, OCC began its partnership with Southland with a preventative maintenance program for chillers located at their Costa Mesa campus. We have continued our relationship with the College and District to become a valued vendor providing repair and replacement services. Recently, we completed a ventilation assessment, surveying all equipment and parts in the system and making recommendations to improve indoor air quality across the campus.
City of Garden Grove - Various Service, Maintenance and Repairs $9.6 M, design build HVAC, plumbing, and controls project for upgrades to the Garden Grove Civic Center. Project includes the construction of a three-story, 105K SF public safety facility. 291
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APPENDIx C FORMS
APPENDIX C FORMS
Vendor Application Form
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APPENDIx C FORMS
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APPENDIx C FORMS
23 J | WORK METHODOLOGY
Disqualification Questionnaire
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APPENDIx C FORMS
Disclosure of Government Positions
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EXHIBIT C
FEE SCHEDULE
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City of Costa Mesa - public works departmentSouthland Industries 2
SOUTHLAND INDUSTRIES COST PROPOSAL
Southland is pleased to provide the City of Costa Mesa with our Cost Proposal for On-Call HVAC Mechanical Automation System Repairs and Maintenance Services relevant to RFP No. 25.22.
Year Over Year Contract Price
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
$108,113.00 $111,356.00 $114,697.00 $118,137.00 $121,682.00 • HVAC Preventative Maintenance Services, which described in this RFP, will be bid at an annual total amount.
• Start date to be determined by the City of Costa Mesa. • Year 1 is 2025 - 2026
• Year 2 is 2026 -2027
• Year 3 is 2027 - 2028
• Year 4 is 2028 - 2029
• Year 5 is 2029 - 2030
Preferred Maintenance Agreement Client Mechanical T&M Rates* 2-hour minimum for normal business days, 4-hour minimum for overtime or holidays Straight time (M-F 7:00 a.m.–4:00 p.m) $165.00 per hour Over time (M-F 4:00 p.m.–7:00 a.m, Saturday
& Sunday) $247.50 per hour
Holidays $330.00 per hour
Vehicle Charge $80.00 per truck, per day
Fuel Surcharge $25.00 per truck, per day
* T&M labor rates are subject to change based upon Union negotiations and Southland’s field operating costs. 306
City of Costa Mesa - public works departmentSouthland Industries 3 Preferred Maintenance Agreement Client Controls T&M Rates* 2-hour minimum for normal business days, 4-hour minimum for overtime or holidays Straight time (M-F 7:00 a.m.–4:00 p.m) $190.00 per hour Over time (M-F 4:00 p.m.–7:00 a.m, Saturday
& Sunday) $285.00 per hour
Holidays $380.00 per hour
Vehicle Charge $80.00 per truck, per day
Fuel Surcharge $25.00 per truck, per day
* T&M labor rates are subject to change based upon Union negotiations and Southland’s field operating costs.
FOR INFORMATIONAL PURPOSES ONLY PERCENTAGE
Material Mark Up 20%
Rental Mark Up 20%
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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 25-379 Meeting Date: 9/2/2025
TITLE:
INTRODUCTION OF AN ORDINANCE ADDING CHAPTER XVI (PROHIBITION ON SALE OR DISTRIBUTION OF NITROUS OXIDE) TO TITLE 11 (OFFENSES-MISCELLANEOUS) OF THE
COSTA MESA MUNICIPAL CODE TO ESTABLISH REGULATIONS PROHIBITING THE
UNLAWFUL SALE OR DISTRIBUTION OF NITROUS OXIDE IN THE CITY DEPARTMENT: POLICE DEPARTMENT
PRESENTED BY: JASON CHAMNESS, CAPTAIN
CONTACT INFORMATION: JASON CHAMNESS, CAPTAIN, (714) 754-5272 RECOMMENDATION:
Staff recommends the City Council introduce for first reading, by title only, Ordinance No. 2025-xx, adding Chapter XVI (Prohibition on Sale or Distribution of Nitrous Oxide) to Title 11 (Offenses- Miscellaneous) of the Costa Mesa Municipal Code to establish regulations prohibiting the unlawful sale or distribution of nitrous oxide in the City.
BACKGROUND:
From January 2020 through May 2025, Costa Mesa has seen a concerning rise in nitrous oxide- related activity, posing increasing risks to public safety. Incident reports involving nitrous oxide (found property, possession, or use) have steadily increased, with a 100% rise from 2023 to 2024. Calls for service related to nitrous oxide similarly increased by 125% during the same period. Arrests associated with nitrous oxide offenses also grew by 125% from 2023 to 2024, reflecting enhanced enforcement efforts alongside the growing prevalence of abuse. Additionally, the report noted a slight increase of nitrous oxide involvement in traffic collisions and overdose cases. Since 2020, there has been two overdose deaths likely associated to nitrous oxide. The continued escalation of these incidents underscores the need for targeted prevention, and enforcement at the point of sale, to address the public health and safety impacts of nitrous oxide abuse in Costa Mesa.
This ordinance is being brought forward in response to concerns raised by City Council members, community, and law enforcement professionals about the escalating misuse of nitrous oxide for intoxication and the absence of a local law prohibiting its sale and distribution. The adoption of this ordinance will align Costa Mesa with several neighboring jurisdictions that have already enacted similar regulations to better safeguard community health and safety.
Often referred to as “laughinggas,”“nox,”or “whippets,”nitrous oxide is a colorless and odorless gas